Federal Reserve Bulletin, 1999-05

Volume 85 • Number 5 • May 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 287 U.S. INTERNATIONAL TRANSACTIONS social security, augmenting our national saving IN 1998 rate has to be the main objective. He further states that investing the social security trust U.S. external deficits widened substantially in funds in equities does little or nothing to 1998 because of the disparity between the rapid improve the overall ability of the U.S. economy pace of U.S. economic growth and sluggish to meet the retirement needs of the next century. growth abroad and also because of the decline (Testimony before the Subcommittee on Finance in the price competitiveness of U.S. goods and Hazardous Materials of the House Commitassociated with the appreciation of the dollar. tee on Commerce, March 3, 1999) The nominal current account deficit reached $233 billion in 1998, compared with $155 bil- 306 William J. McDonough, President, Federal lion in 1997; the 1998 deficit was 2.7 percent of Reserve Bank of New York, reports on the les- U.S. gross domestic product, the largest share sons learned and the actions taken to reduce the since 1987. Most of the widening in the deficit possibility that an episode like the near collapse was in trade in goods and services. The financial of Long-Term Capital Management (LTCM) and crises in Asia that emerged in the second half of the private-sector recapitalization of its fund 1997 caused U.S. exports to drop sharply in the could repeat itself in the future; he testifies that first half of 1998. Robust U.S. domestic demand he believes that the LTCM episode and the was largely responsible for the brisk rise in supervisory response to it is fundamentally imports during the year. Net investment income about two things: leverage and good judgment. was negative in 1998 for the second consecutive He further states that the work remaining to be year. Cumulative deficits in the current account, done by banks and supervisors includes the and the associated capital inflows that have per- development of more meaningful measurement sisted since 1982, have resulted in payments of risk exposure and the implementation of of fncome on foreign investment in the United effective stress-testing techniques, the measure- States growing more rapidly than receipts of ment of leverage, and the appropriate valuation income on U.S. investments abroad. The fallout of positions during periods of market stress and from the financial crises in emerging markets is illiquidity. (Testimony before the Subcommittee likely to have further negative consequences for on Capital Markets, Securities and Government US. external balances in 1999. Sponsored Enterprises of the House Committee on Banking and Financial Services, March 3, 1999) 300 INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION FOR MARCH 1999 309 Richard A. Small, Assistant Director of the Board's Division of Banking Supervision and Industrial production edged up 0.1 percent in Regulation, discusses the proposed "Know Your March, to 132.8 percent of its 1992 average. Customer" regulation and testifies that in mak- Overall capacity utilization slipped in March to ing this proposal it was the intent of the bank 80.1 percent, a level 2 percentage points below regulatory agencies to provide banks with guidits long-term average and 2Vi percentage points ance as to what programs and procedures they below its March 1998 level. should have in place to have sufficient knowledge of their customers to assist in the detection 303 STATEMENTS TO THE CONGRESS and prevention of illicit activities occurring at or Alan Greenspan, Chairman, Board of Gover- through the banks. Further, he testifies that the nors, discusses his views on investing the social proposal raised privacy concerns and that the security trust fund in equities and testifies that Federal Reserve recognizes the sensitivity of whichever direction the Congress chooses to go, this issue. (Testimony before the Subcommittee whether toward privatization or fuller funding of on Commercial and Administrative Law of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

House Committee on the Judiciary, March 4, obtain sufficient financial information to allow 1999) for a full assessment of how much and what types of risk had been assumed by large HLIs 310 Oliver Ireland, Associate General Counsel, and that banks did not sufficiently understand Board of Governors, presents the views of the the ability of HLIs to manage their risks. He Board on title X, Financial Contract Provisions, further notes that banks generally tightened the of H.R. 833, the proposed Bankruptcy Reform credit-risk-management standards for their HLI Act of 1999, and testifies that many of the exposures after the near collapse of LTCM. (Tesprovisions of the legislation incorporate, or are timony before the Subcommittee on Financial based on, recommendations of the President's Institutions and Consumer Credit of the House Working Group on Financial Markets and that Committee on Banking and Financial Services, the Board supports enactment of these provi- March 24, 1999) sions. He further states that enactment of these provisions would reduce uncertainty for mar- 322 Edward M. Gramlich, member, Board of Goverket participants as to the disposition of their nors, discusses the views of the Board on curfinancial market contracts if one of the parties rency collateral, financial netting, and consumer becomes insolvent; this reduced uncertainty issues raised by the Conference Report on the should limit risk to federally supervised finan- Bankruptcy Reform Act of 1998 and says that cial market participants, including insured the Board strongly supports the provisions of the depository institutions, and limit systemic risk. report that relate to the Federal Reserve's collat- (Testimony before the Subcommittee on Com- eral requirements and the financial contract promercial and Administrative Law of the House visions of title X of the report. Regarding the Committee on the Judiciary, March 18, 1999) currency collateral requirements, Governor Gramlich testifies that the proposed legislation 312 Laurence H. Meyer, member, Board of Goverin the report would authorize the Federal nors, discusses the Federal Reserve's supervi- Reserve to collateralize the currency with all sory actions in the aftermath of the near collapse types of discount window loans and thus assures of LTCM; he testifies that although market discicollateralization of the currency while conductpline may not have worked in preventing the ing monetary policy and making any and all LTCM event in the first place, the marketplace discount window loans that are appropriate. has reacted appropriately, and we have learned Regarding financial netting, Governor Gramlich much to carry us forward. Further, Governor testifies that the ability to terminate or close Meyer states that even more work needs to be out and net contracts and to realize collateral done to ensure that the lessons we have learned pledged in connection with these contracts is over the past two years become engrained in vital and that enactment of the provisions of standard practice and to ensure that effective title X of the report would reduce uncertainty. market discipline is brought to bear on the risk- Concerning the consumer provision, Governor taking of hedge funds and other entities that Gramlich states that the Board would like to make use of significant financial leverage. (Tespropose certain technical amendments. (Testitimony before the Subcommittee on Financial mony before the Senate Committee on Banking, Institutions and Consumer Credit of the House Housing, and Urban Affairs, March 25, 1999) Committee on Banking and Financial Services, March 24, 1999) 325 The Board of Governors in written testimony discusses the new financial technology and testi- 318 President McDonough discusses the work done fies that two things are clear: First, trying to by banking supervisors in assessing where banks regulate limits to technology by law or reguhave been deficient in their dealings with hedge lation before we are certain of its future uses funds and other highly leveraged institutions and implications would clearly unleash the law (HLIs), which has resulted in the issuance of of unintended consequences, as institutions and supervisory guidance, both internationally and markets shift geographically or develop new in the United States, with the aim of improving techniques not anticipated by the rule-creators. banks' policies and practices regarding HLIs. Second, technological change makes it ever He discusses the findings and report of the Basle more important that the process of risk measure- Committee on Banking Supervision and states ment and control keeps up with the marketplace; that the committee found that banks did not bank supervision, for example, is increasingly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

emphasizing that process, and as we learn more 355 DIRECTORS OF THE FEDERAL RESERVE from events, both the practitioners and the BANKS AND BRANCHES supervisors need to hone and adjust their meth- List of Directors, by Federal Reserve District. odology. (Testimony submitted to the Subcommittee on Capital Markets, Securities and Government Sponsored Enterprises of the House A1 FINANCIAL AND BUSINESS STATISTICS Committee on Banking and Financial Services, These tables reflect data available as of March 25, 1999) March 29, 1999. 328 ANNOUNCEMENTS A3 GUIDE TO TABULAR PRESENTATION Meeting of the Consumer Advisory Council. A4 Domestic Financial Statistics Withdrawal of the proposed "Know Your Cus- A42 Domestic Nonfinancial Statistics tomer" regulation. A50 International Statistics Issuance of two final rules amending Regulations H and Y. A63 GUIDE TO STATISTICAL RELEASES AND Revisions to the official staff commentary on Regulation M. SPECIAL TABLES Revisions to the official staff commentary on A76 INDEX TO STATISTICAL TABLES Regulation Z. Final amendments to Regulation CC. A78 BOARD OF GOVERNORS AND STAFF Joint issuance by regulatory agencies of a letter A80 FEDERAL OPEN MARKET COMMITTEE AND on the allowance for loan losses by banks. STAFF; ADVISORY COUNCILS Enforcement actions. A82 FEDERAL RESERVE BOARD PUBLICATIONS Changes in Board staff. A84 MAPS OF THE FEDERAL RESERVE SYSTEM 333 LEGAL DEVELOPMENTS Various bank holding company, bank service A86 FEDERAL RESERVE BANKS, BRANCHES, corporation, and bank merger orders; and pend- AND OFFICES ing cases. PUBLICATIONS COMMITTEE Lynn S. Fox, Chair • S. David Frost • Karen H. Johnson • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Dolores S. Smith • Richard Spillenkothen The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Multimedia Technologies Center under the direction of Christine S. Griffith, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1998 Kathryn A. Morisse, of the Board's Division of est inflows in 1997, turned to moderate outflows on International Finance, prepared this article. balance last year as the financial turmoil in the third Nancy E. Baer provided research assistance. quarter caused many countries to draw down their official reserves. U.S. external deficits widened substantially in 1998 because of the disparity between the rapid pace of U.S. economic growth and sluggish growth abroad MAJOR ECONOMIC INFLUENCES ON U.S. and also because of the decline in the price competi- INTERNATIONAL TRANSACTIONS tiveness of U.S. goods associated with the appreciation of the dollar. The nominal current account Developments in U.S. current and capital account deficit reached $233 billion in 1998, compared with transactions in 1998 were shaped by a wide variety of $155 billion in 1997; the 1998 deficit was 2.7 per- factors: financial crises in emerging markets, the cent of U.S. gross domestic product, the largest share resulting sluggishness of economic activity in emergsince 1987. ing markets and elsewhere, the effects of persistent Most of the widening in the deficit was in trade in problems in Japan, the robust expansion of the U.S. goods and services (table 1). The financial crises in economy, and the appreciation of the dollar. Asia that emerged in the second half of 1997 caused U.S. exports to drop sharply in the first half of 1998. Robust U.S. domestic demand was largely respon- Financial Crises in Emerging Markets sible for the brisk rise in imports during the year. Net investment income was negative in 1998 for the Developments in international financial markets consecond consecutive year; these were the first nega- tinued to be dominated by the unfolding crises in tives recorded since 1914. Cumulative deficits in the emerging markets that had begun in Thailand in current account, and the associated capital inflows 1997. Turbulence in Asian financial markets spread that have persisted since 1982, have resulted in pay- to other emerging markets around the globe—from ments of income on foreign investment in the United Korea, Indonesia, and other countries in Asia during States growing more rapidly than receipts of income 1997 and the first part of 1998, then to Russia last on U.S. investments abroad. summer, and shortly thereafter to Latin America, The large U.S. current account deficit last year was particularly Brazil. financed entirely by net capital inflows from private At the beginning of the year, various Asian cursources. Official capital flows, which registered mod- rencies were under pressure. The Indonesian rupiah 1. U.S. international transactions in 1994-98 Billions of dollars except as noted Change, Item 1994 1995 1996 1997 1998 1997 to 1998 Trade in goods and services, net -101 -100 -109 -NO -169 -59 Investment income, net 17 19 14 -5 -22 -17 Unilateral transfers, net -39 -35 -41 -40 -42 -2 Current account balance -124 -115 -r35 -t55 -233 -78 Official capital, net 45 99 133 15 -30 -45 Private capital, net 89 39 61 240 267 27 Statistical discrepancy -10 -23 -60 -100 -4 96 MEMO Current account as percentage of GDP -1.8 -1.6 -1.8 -1.9 -2.7 NOTE. In this and the tables that follow, components may not sum to totals SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. because of rounding. international transactions accounts. . . . Not applicable. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

288 Federal Reserve Bulletin • May 1999 1. U.S. dollar exchange rates for selected currencies 2. US. dollar exchange rate for the Russian ruble, in Asia, 1997-March 1999 1997-February 1999 January 3, 1997 = 100 January 1997 = 100 — J Thai baht — 110 — — 110 95 \ South Korean won 80 — 80 — 65 — — 65 — 50 — — 50 ^ Indonesian rupiah __ — — 35 — -v — 35 20 — 20 I 1 1 II 1 II 1 II II 1 1 1 II II 1 II 1 II II I I I! II II II 1 1 1 I II II 1 1 1 1 1 II 1 II 1 1997 1998 1999 1997 1998 1999 NOTE. U.S. dollars per unit of foreign currency. The data are daily. NOTE. U.S. dollars per ruble. The data are monthly. dropped sharply in response to several factors, includ- in Russia precipitated an increase in global financial ing rising political unrest that led ultimately to the market turbulence. resignation of President Suharto. Although the rupiah Latin American financial markets were only modrecovered substantially in the second half of the year, erately disrupted by the Asian and Russian problems it depreciated 35 percent against the dollar between during the first half of 1998. Their reaction to the December 1997 and December 1998 (chart 1). In Russian default, however, was swift and strong, and contrast, the Thai baht and Korean won, which had the prices of Latin American assets fell precipitously. declined sharply in 1997, gained more than 20 per- Brazil experienced a sharp acceleration of capital cent against the dollar over the course of 1998; policy outflows. The Mexican peso, which was also weakreforms and stable political environments helped ened by the effects of falling oil prices, depreciated boost these currencies. Between these extremes, the 18 percent against the dollar over the year (chart 3). currencies of the Philippines, Malaysia, Singapore, Argentina's currency board arrangement came under and Taiwan fluctuated in a narrower range and ended pressure but withstood it successfully. the year little changed against the dollar. The Hong Shortly after details of an IMF-led financial assis- Kong dollar came under pressure at times during the tance package for Brazil were announced in Novemyear, but its peg to the U.S. dollar remained intact at ber 1998, Brazil's Congress rejected a part of the the cost of interest rates that were at times quite high. Short-term interest rates in Asian economies other than Indonesia declined in 1998; as some stability 3. U.S. dollar exchange rates for selected currencies in Latin America, 1997-March 1999 returned to Indonesian markets near the end of the year, short-term rates in that nation began to retreat January 3, 1997 = 100 from their highs. Argentine peso As the financial storm moved to Russia (chart 2), the Russian central bank was able to defend the ruble's peg only temporarily. Faced with deep structural and political problems leading to a severe erosion in investor confidence, Russia on August 17 announced a devaluation of the ruble and a moratorium on servicing official short-term debt. Within a few days the new rate was abandoned, and the ruble fell more than 70 percent against dollar by the end of the year. The government imposed conditions on most of its foreign and domestic debt that implied substantial losses for creditors, and many Russian 1997 1998 1999 financial institutions became insolvent. The events NOTE. U.S. dollars per unit of foreign currency. The data are daily. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1998 289 government's fiscal austerity plan, sparking addi- of the year as credit disruptions, some tightening of tional financial turmoil. As the year ended, the con- macroeconomic policies, and widespread failures tinuing pressure from capital seeking to leave Brazil in the financial and corporate sectors created a high left much uncertainty about the long-run viability of degree of economic uncertainty. Output in Hong the crawling exchange rate peg. Brazil's central bank Kong also dropped in early 1998, as interest rates defended the real's crawling peg until mid-January rose sharply amid pressure on its currency peg. The 1999 but in the process is estimated to have used Asian crisis had a relatively modest impact on China. more than half of the $75 billion in foreign exchange Chinese growth remained fairly strong throughout reserves it had amassed as of last April. On Jan- 1998, despite a dramatic slowdown in exports. Later uary 13 the real was devalued 8 percent. Two days in the year, financial conditions in most of the Asian later it was allowed to float, and by the end of March crisis countries stabilized somewhat, and output in the real was 30 percent below its pre-devaluation some countries showed signs of recovery. level. On average, overall inflation in the Asian developing economies rose only moderately in 1998, as the inflationary impacts of currency depreciations in the Economic Activity Abroad region were largely offset by the deflationary influence of very weak domestic activity. The current The fallout from the financial crises triggered account balances of the Asian crisis countries swung declines in output in various countries, with the larg- into substantial surplus in 1998: Imports dropped est declines coming in emerging markets (table 2). sharply in response both to the fall-off in domestic The Asian crises also contributed to a deepening demand and to the improvement in the countries' recession in Japan last year, and as the year pro- competitive positions associated with the substantial gressed, growth in several other major foreign indus- depreciations of their currencies in late 1997 and trial economies slowed as well. early 1998. In Russia, the fall in economic activity accelerated after the August debt moratorium and ruble devalua- Developments in Emerging Markets tion, and by the end of the year output was about 10 percent below levels of a year earlier. The collapse In the countries most heavily affected in Asia— of the ruble and the monetary expansion to finance Thailand, Korea, Malaysia and Indonesia—output Russia's budget deficit led to a surge in inflation to dropped at double-digit annual rates in the first half triple-digit rates during the latter part of the year. 2. Change in real GDP in the United States and abroad, 1996-98 Percent, annual rate Half years CCoouunnttrryy 11999966 11999977 11999988 1997:H2 1998:H1 1998.H2 United States 3.9 3.8 4.2 3.6 3.7 4.8 Total foreign1 4.1 4.1 .5 3.2 -.1 1.1 Asian emerging markets2 7.0 5.1 -2.8 2.7 -6.9 1.4 Thailand 3.8 -3.8 -8.4 -6.7 -15.0 -1.4 Korea 7.0 3.7 -5.3 .2 -13.3 3.4 Malaysia 10.4 6.8 -10.1 6.5 -18.6 -.6 Indonesia 10.2 2.3 -19.6 2.9 -25.3 -13.4 Hong Kong 5.7 2.8 -5.7 -1.7 -8.4 -2.9 China 9.4 7.9 9.2 6.8 6.9 11.6 Latin America3 6.4 6.3 .9 4.4 3.1 -1.2 Mexico 7.5 7.2 2.9 4.8 3.8 1.9 Brazil 5.0 2.0 -1.9 .2 2.7 -6.2 Argentina 9.4 8.5 -0.5 9.5 5.1 -5.8 Venezuela .9 5.5 -8.2 1.2 2.2 -17.6 Japan 5.1 -.8 -3.0 .2 -3.8 -2.2 Canada 1.7 4.4 2.8 3.6 2.4 3.1 Western Europe 2.4 3.8 2.4 3.5 2.8 1.9 NOTE. Aggregate measures are weighted by moving bilateral shares in U.S. 2. Weighted average of China, Hong Kong, Indonesia, Korea, Malaysia, exports of nonagricultural merchandise. Annual data are four-quarter changes. Philippines, Singapore, Taiwan, and Thailand. Half-yearly data are calculated as Q4/Q2 or Q2/Q4 changes at an annual rate. 3. Weighted average of Mexico, Argentina, Brazil, Chile, Colombia, and The data are partly estimated. Venezuela. 1. Selected regions and countries are shown below. SOURCE. Various national sources. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

290 Federal Reserve Bulletin • May 1999 In Latin America, the pace of activity slowed only dian dollar. Exports slowed despite support from moderately in the first half of 1998, when the spill- strong U.S. demand and a weaker Canadian dollar over from the Asian financial turbulence was limited because demand for Canada's commodity exports (table 2). In contrast, the Russian financial crisis in was diminished by the Asian crisis, but imports August had a strong effect on real activity in Latin decelerated even more sharply, and thus net exports America. The effect was particularly strong in Brazil, made a positive contribution to overall Canadian where interest rates moved sharply higher in response growth. to exchange rate pressures and domestic demand Consumer price inflation continued to slow in weakened significantly. Output in Argentina declined the euro area—twelve-month inflation fell to below in the second half of 1998, and activity in Mexico 1 percent. In the United Kingdom, inflation slowed and Venezuela was depressed by lower oil export to near the government's target rate of 2x/i percent. revenues as well as by turbulence in international Canadian inflation remained low, just above 1 perfinancial markets. Inflation rates in Latin American cent, despite significant currency depreciation. countries changed little in 1998. The beginning of 1999 brought the birth of the euro, which marked the start of Stage Three of European Economic and Monetary Union (EMU). On Developments in Japan December 31, 1998, the conversion rates between the Japanese economic activity contracted in 1998 as euro and the eleven legacy currencies were deter- Japan remained in its most protracted recession of the mined. Based on these rates, the value of the euro postwar era (table 2). The plunge in business and at the moment of its inception was $1.16675. After residential investment and stagnating private con- initially holding firm, the euro depreciated against the sumption more than offset positive contributions from dollar through much of the first quarter as economic government spending and net exports. Core con- prospects in several key European countries appeared sumer prices in Japan were down slightly in 1998 on to soften. a fourth-quarter to fourth-quarter basis, and wholesale prices plunged 3V2 percent. In an effort to revive U.S. Economic Growth the economy, the Japanese government in April announced a large fiscal stimulus package that The U.S. economy grew at a vigorous pace in 1998 included temporary tax cuts and substantial increases (table 2) and appears to have continued to be robust in public works expenditures. A second sizable set of into the first quarter of 1999. Exceptional strength in fiscal stimulus measures was announced in late 1998 the real expenditures of households and businesses and is slated for implementation during 1999. In reflected strong real income growth, large gains September the Bank of Japan cut its target for the in the value of household wealth, ready access to overnight call-money rate from 0.5 percent to a low finance during most of 1998, and widespread optiof 0.25 percent in an effort to offset deflationary mism regarding the future of the economy. Inflation pressures and to support economic activity. The rate remained subdued in 1998, and the increase in the was cut again, to near zero, by March 1999. general price level was smaller than in the previous year. The slowing of price increases was in large part a reflection of sluggish conditions in the world econ- Developments in Other Foreign Industrial Countries omy, which brought declines in prices of a wide In the euro area, domestic demand strengthened mod- range of imported goods, including oil and other erately on balance over the year; employment rose primary commodities. In the domestic economy, and euro-area interest rates declined as the date for nominal hourly compensation of workers picked up monetary union approached. Net exports weakened, only slightly despite the tightness of the labor market, however, in part because of the turmoil in emerging and much of the compensation increase was offset by markets, and as a result, total output in the euro area gains in labor productivity. As a result, unit labor slowed. costs, the most important item in total business costs, rose only moderately. Output in the United Kingdom decelerated sharply as the effects of earlier monetary tightening registered on domestic demand and as exports slowed Exchange Value of the Dollar in response to the strength in sterling. Growth in Canada also fell back from its robust pace in 1997 The dollar's value, measured on a trade-weighted as domestic demand responded to interest rates hikes basis, rose almost 7 percent during the first eight aimed at blunting downward pressure on the Cana- months of 1998 and then fell, reaching a level by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1998 291 December less than 2 percent above its year-earlier Between December and March 1999, the dollar level (chart 4).1 The dollar's moves against the yen gained nearly 3 percent in terms of the broad index. were particularly large, rising more than 10 percent in the first half of the year only to fall sharply in the second half, ending the year down about 10 percent PRICES OF INTERNATIONALLY TRADED GOODS from its year-earlier level. The dollar moved less against other major currencies, ending the year down The combination of all these events abroad had a 6 percent against the mark and up 8 percent against depressing effect on prices of internationally traded the Canadian dollar. goods in 1998, particularly oil and other industrial Before the Russian default, the dollar was sup- materials and supplies. ported by the robust pace of U.S. economic activity, which at times generated expectations that monetary Primary Commodities policy would be tightened, and was in contrast to signs of weakening economic activity abroad, espe- Oil prices dropped significantly during 1998 to levels cially in Japan. Occasionally, however, the positive not seen since the price collapse of 1986 (chart 5). influence of the strong economy was countered by The average spot price for West Texas intermediate, worries about the growing U.S. external deficits. The the U.S. benchmark crude, fell from $19.91 per barrel dollar fell sharply from August to October under in the fourth quarter of 1997 to $12.87 per barrel pressure from the aftermath of the Russian financial in the fourth quarter of 1998, a 35 percent decline. meltdown, concerns that increased difficulties in The price of imported oil dropped 36 percent over Latin America might affect the U.S. economy disprothe same period. Overall, the fall in the price of portionately, and expectations of lower U.S. interest petroleum-based energy products is estimated to have rates. The broad index of the dollar's exchange value held down U.S. CPI inflation in 1998 by Vz percenteased a bit further during the fourth quarter of 1998. age point. Several factors were responsible for the slump 1. The broad index of the dollar's foreign exchange value includes in oil prices. Economic turmoil and recession led the currencies of important U.S. trading partners. Currencies of all to a dramatic contraction in Asian oil consumption. foreign countries or regions that had a share of U.S. non-oil imports or nonagricultural exports of at least Vi percent in 1997 are included in Demand was further depressed by the unusually the index. The broad index included thirty-five currencies until the warm (El Nino) winter of 1997-98. Overall, global beginning of Stage Three of European Economic and Monetary oil consumption increased V2 percent in 1998, in stark Union, on January 1, 1999, when the euro replaced the ten euro-area contrast to 1997's strong growth of 2Vz percent. On currencies. The broad index now has twenty-six currencies. A more complete description of the index may be found in Michael P. the supply side, OPEC, after making an untimely Leahy, "New Summary Measures of the Foreign Exchange Value decision to raise quotas in late 1997, increased proof the Dollar," Federal Reserve Bulletin, vol. 84 (October 1998), duction just as demand was weakening. Moreover, pp. 811-18. 4. Broad index of the U.S. dollar's foreign exchange value, 1990-March 1999 5. Oil prices, 1985-March 1999 1992= 100 Dollars per barrel . West Texas intermediate — — 35 — J — 140 — 30 ttA LYI 1 — 25 — — 120 — WWAA —— 2200 VV**..—— 1155 . Ay — 100 U.S. import VV—— 1100 1 l 1 1 1 1 1 1 1 1 I 1 1 1 1 1 1 1985 1987 1989 1991 1993 1995 1997 1999 1990 1992 1994 1996 1998 NOTE. The data are monthly. NOTE. See text note 1 for a description of the broad index. The data are SOURCE. Petroleum Intelligence Weekly, various issues, and U.S. Department monthly. of Commerce, Bureau of Economic Analysis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

292 Federal Reserve Bulletin • May 1999 1998 saw the return of substantial exports from Iraq 3. Change in prices of U.S. goods imports and exports as production there increased nearly 1 million barrels Percent, fourth quarter to fourth quarter per day from 1997 levels. Over most of the year, Item 1996 1997 1998 OPEC and non-OPEC producers attempted to curtail production in an effort to support prices. Major pro- Total goods imports -2.9 -4.3 -6.1 ducers, led by Saudi Arabia, Mexico, and Venezuela, Oil 38.8 -20.2 -35.9 -6.1 -2.5 -3.7 agreed to restrict production in March and again in Computers, peripherals, and June, but a combination of weak demand, increasing parts -18.9 -13.4 -17.8 Semiconductors -53.3 -14.9 -8.2 production by Iraq, and a high level of stocks pre- Other goods -.6 -.7 -2.1 MEMO vented any substantial firming of prices. Industrial supplies -2.8 -.1 -6.7 Prices of world non-oil primary commodities fell Total goods exports -4.7 -2.2 -3.5 13 percent in over the four quarters of 1998 (chart 6). Agricultural products -2.6 -3.2 -9.8 The financial crises in Asia, Russia, and Latin Nonagricultural goods -5.0 -2.1 -2.9 Computers, peripherals, and America, and resulting economic slowdowns, sharply parts -26.6 -19.6 -12.0 reduced demand for primary commodities. In addi- Semiconductors -33.1 -13.3 -5.4 Other goods -0.1 .5 -1.9 tion, the appreciation of the dollar—which raises the MEMO Industrial supplies -2.8 -0.5 -7.3 local-currency price of goods traded in dollars— further reduced foreign demand and encouraged for- SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, national income and product accounts; chain-weighted indexes; and Federal eign producers to turn their attention from their sag- Reserve Board. ging domestic markets to export markets.2 The world supply of many commodities also was robust because producers had boosted production levels in response and semiconductors are excluded, the import price to the high prices recorded in the mid-1990s. These declines were smaller, 2 percent, but still showed supply responses were widespread across commodia larger drop than in previous years.3 Much of the ties and were especially large for agricultural prodweakness in prices of these imported goods in 1998 ucts, such as grains, oilseeds, and coffee. was attributable to industrial supplies whose prices dropped sharply in 1998 compared with an almost zero change in price in the previous year. In contrast, Prices of U.S. Non-Oil Imports and Exports prices of other categories of imported goods, such as automotive products, consumer goods, and other Overall, U.S. non-oil import prices declined 33/4 percapital equipment (excluding computers and semicent in 1998 (table 3). When prices of computers conductors) declined at rates of 1Vz percent or less in 1998, little different from rates recorded in 1997. 2. This pattern also applied to steel. The rate of decline in the non-oil import price index slowed noticeably at the end of 1998. For many 6. Prices of world non-oil primary commodities, major categories of trade, with the notable exception 1985-March 1999 of industrial supplies, prices of imports swung to small increases in the fourth quarter from declines in 1990= 100 previous quarters. Prices of U.S. agricultural exports fell 10 percent in 1998 largely as a result of developments in world grain and oilseed markets. As described above, foreign domestic demand sagged in 1998, and the appreciation of the U.S. dollar had the effect of raising local-currency prices. In addition, world supplies of agricultural products were robust because of a lagged response to the very high agricultural prices of the 1985 1987 1989 1991 1993 1995 1997 1999 3. The indexes of prices of computers and semiconductors gener- NOTE. The data are quarterly. ally measure units of computing power. Except for prices of semi- SOURCE. International Monetary Fund, International Financial Statistics, conductors, which rose somewhat in the fourth quarter, these price index of non-oil commodity prices. indexes continued to drop at notable rates in 1998. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1998 293 mid-1990s. While much of production gains world- 7. Price competitiveness of U.S. goods, 1992-March 1999 wide reflected a return to trend-level yields, part of 1992:Q1 = 1.00 the rebound can be attributed to an increase in the amount of land devoted to these crops. These world- | Increasing price competitiveness wide production increases brought prices back to near their average levels in the early 1990s. Prices of nonagricultural exports declined 3 percent in 1998. When computers and semiconductors are excluded, the decrease in the index for export prices was smaller but still showed a drop in prices compared with earlier years. In 1998, a sharp decline in prices of exported industrial supplies contrasted — .90 with smaller price changes for other exported goods. Price increases of 1 percent or less were recorded for exported aircraft and automotive products. Price 1992 1994 1996 1998 declines of Vi percent or less were recorded for NOTE. The index is the ratio of the price of U.S. non-oil imports excluding exported consumer goods and machinery (other than computers and semiconductors to the U.S. GDP deflator. The data are quarterly. computers and semiconductors). SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis; and Federal Reserve Board. Exports International Price Competitiveness of U.S. Goods The value of exports of goods and services declined $6 billion in 1998 (table 4). Receipts for services rose The major factor contributing to gains and losses in marginally as increases in receipts from "other pri- U.S. international price competitiveness has been vate services" (mostly business, professional, techmovements in exchange rates. From the fourth quar- nical, and financial services) were nearly offset by ter of 1996 through third quarter of 1998, the dollar declines in receipts from foreign travel to the United appreciated sharply in real terms—17 percent—on a States, reduced sales of military equipment, and a broad weighted-average basis. In the fourth quarter of drop in freight and port expenditures by foreigners. 1998, the real dollar reversed some of that movement In contrast, exports of goods fell 1 percent, the first before turning up again in the first quarter of 1999. decrease recorded since 1985. Sharp declines in Over the same period, the price competitiveness goods exports to emerging markets in Asia and Japan of U.S. goods weakened steadily. Prices of U.S. were only partly offset by increased shipments to imported goods measured in dollars relative to U.S. Western Europe, Canada, and Mexico (table 5). domestic prices declined in 1998 for the third con- The value of exports to developing countries in secutive year (chart 7). Similarly, U.S. goods lost Asia dropped 18 percent, with the sharpest declines competitiveness in foreign markets. Overall, the sag- recorded in the first quarter. More than three-fourths ging price competitiveness of U.S. goods tended to of U.S. exports to that region are capital goods and hold down the expansion of exports and support the industrial supplies, sectors affected severely by the expansion of imports. financial crises. Sharp declines were recorded in metals, chemicals, lumber and building materials, power generating equipments, industrial machinery, telecommunications equipment, semiconductors, auto- DEVELOPMENTS IN U.S. TRADE motive products, and consumer goods. Deliveries of IN GOODS AND SERVICES civilian aircraft to these countries picked up strongly in the second half of the year as financing arrange- In 1998 the U.S. trade deficit in goods and services ments were completed for previously ordered planes. was substantially larger than in 1997 (table 4). The U.S. exports to Japan declined 12 percent in 1998, steep decline in the external balance reflected the with decreases in almost all major categories of trade. effects of anemic economic growth abroad on aver- Particularly large declines were recorded in the value age, robust economic growth in the United States, of exported building materials, other industrial supand declining price competitiveness of U.S. goods as plies, machinery (especially computer accessories, the dollar appreciated. peripherals and parts), automotive vehicles, and agri- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

294 Federal Reserve Bulletin • May 1999 4. U.S. international trade in goods and services, 1996-98 Billions of dollars except as noted Dollar change, Percentage change, Item 1996 1997 1998 1997 to 1998 1997 to 1998 Balance on goods and services -109 -110 -169 -59 Exports of goods and services 851 938 931 -6 -.7 Services 239 258 260 2 .8 Goods 612 679 671 -8 -1.2 Agricultural products 61 58 53 -5 -9.1 Nonagricultural goods 550 621 618 -3 -.5 Capital goods 253 295 300 5 1.6 Aircraft and parts 31 41 54 12 29.5 Computers, peripherals, and parts 44 49 45 -4 -8.3 Semiconductors 36 39 38 -1 -2.8 Other machinery and equipment 143 166 163 -3 -1.7 Industrial supplies 138 148 138 -10 -6.4 Automotive products 65 74 73 -J -1.8 Consumer goods 70 77 80 2 2.7 Food and other goods 24 26 28 2 6.2 Imports of goods and services 959 1,048 1,101 53 5.0 Services 156 171 182 11 6.5 Goods 803 877 919 42 4.8 Oil 73 72 51 -21 -28.7 Non-oil goods 731 806 868 62 7.7 Capital goods 229 254 270 16 6.4 Aircraft and parts 13 17 22 5 30.1 Computers, peripherals, and parts 62 70 73 2 3.3 Semiconductors 37 37 33 -4 -9.5 Other machinery and equipment 118 131 143 12 9.4 Industrial supplies 137 146 152 7 4.5 Automotive products 129 141 151 10 7.0 Consumer goods 171 193 216 23 11.8 Food and other goods 65 72 79 7 9.7 SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. . . . Not applicable. international transactions accounts. cultural products. On the other hand, exports of air- largely in response to the strength of Canadian craft to Japan rose strongly. domestic demand. In contrast, exports to Western Europe rose in 1998 U.S. exports to Mexico expanded more than 10 peras economic activity in Europe expanded moderately. cent in 1998, with increases spread over all major Export growth was boosted by strong rates of expan- trade categories, despite a drag on domestic demand sion of aircraft, machinery (other than computers and from the effects of lower oil prices and financial semiconductors), automotive vehicles, and consumer crises around the world. About 35 percent of U.S. goods. Similarly, exports to Canada rose in 1998 exports to Mexico was machinery, 25 percent was industrial supplies, and automotive products and consumer goods each amounted to about 15 percent. 5. US. exports of goods to its major trading partners, Exports to Mexico account for 12 percent of all U.S. 1996-98 exports and just over half of U.S. exports to Latin Billions of dollars America. Importing region 1996 1997 1998 Change, Exports to other countries in Latin America were 1997 to 1998 about the same in 1998 as in 1997. Shipments to Total goods exports 612 679 671 -8 Brazil declined, as did exports to Chile and Colom- Asia 176 183 154 -29 bia. U.S. shipments to Brazil amount to 2 percent Japan 66 65 57 -8 Other Asia1 110 118 97 -21 of U.S. exports and are primarily capital goods and industrial supplies. Latin America 109 134 142 8 Mexico 57 71 79 8 Although the quantity of exports of goods and Other countries 52 63 64 0 Brazil 12 16 15 -1 services rose slightly for the year,4 export growth was quite different between the first and second halves Canada 135 152 157 5 Western Europe 138 153 160 7 (table 6). In the first half of 1998, exports declined All other2 54 57 59 2 1. Includes China, Hong Kong, Korea, Singapore, Taiwan, Indonesia, Philip- 4. The value of exports of goods and services declined 1 percent in pines, Malaysia, and Thailand. 2. Includes Australia, New Zealand, Middle East, Eastern Europe, and Africa. 1998 (Q4/Q4), prices declined 2 percent, and quantity rose 1 percent. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. This small increase in real exports in 1998 contrasts with growth of international transactions accounts. 10 percent in each of the previous two years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1998 295 6. Change in the quantity of U.S. exports, 1997-98 7. Change in the quantity of imports, 1996-98 Percent, annual rate Percent, annual rate -- Half years Item 1996 1997 1998 1997:H2 1998:H1 1998:H2 Imports of goods and services 12 14 10 Exports of goods and services 777 ---555 888 5 12 2 Goods 13 14 11 111 000 ---111 Oil 8 4 6 Goods1 111000 ---777 111222 Non-oil1 14 15 11 Agricultural products 222000 ---111777 111888 Industrial supplies 12 8 8 Industrial supplies 333 ---666 111 Capital goods 19 24 11 Automotive vehicles and parts 9 9 16 Capital equipment 111555 ---999 222222 Consumer goods 14 15 9 Aircraft and parts 222222 444 111222222 Foods 13 9 5 Computers, peripherals, and parts .. 111333 ---444 111888 Semiconductors 111444 ---111111 333555 NOTE. Quantities are measured in chained (1992) dollars. Other machinery and equipment ... 111444 ---111333 ---222 1. Selected categories are shown below. SOURCE. U.S. Department of Commerce, national income and product Automotive vehicles and parts 999 ---111111 444 accounts. Consumer goods 111 444 ---111 NOTE. Quantities are measured in chained (1992) dollars. 1. Selected categories are shown below. kept consumption up while domestic production SOURCE. U.S. Department of Commerce, national income and product accounts. declined. Increased production in the Gulf of Mexico was insufficient to offset declines elsewhere. Smallscale production, from what are known as stripper 5 percent at an annual rate, with much of the decline wells, has been particularly hard hit by low oil prices. in agricultural products, machinery, automotive prod- Despite the increased quantity of imports, the value ucts, and industrial supplies. In the second half of the of imported oil declined 29 percent in 1998, to year, exports rebounded. Exports were boosted by a $51 billion. surge in deliveries of aircraft to developing countries Real non-oil imports grew 11 percent in 1998 in Asia and by a jump in exports of automotive parts (table 7). An expansion in a broad range of goods to U.S. producers in Canada that reflected the strong was fueled by robust growth of U.S. domestic demand demand for completed vehicles in the United States. and was supported by declines in non-oil import Exports of computers and semiconductors both prices. Reflecting the strength of spending by housepicked up in the second half of the year after declinholds and businesses in the United States, real ing in the first half.5 Most important was the decline imports of consumer goods and capital equipment in other machinery, which slowed significantly in the (other than semiconductors) advanced steadily second half of the year as the slide in economic throughout the year, and imports of non-oil industrial activity abroad (particularly Asia) began to abate. supplies rose sharply through the third quarter before leveling off in the fourth quarter. The growth of automotive imports in 1998 reflected the buoyant Imports picture for automotive sales in the United States. Although the strike against GM restrained imports The value of imports of goods and services rose of vehicles and parts from Canada and Mexico in 5 percent over the four quarters of 1998, with the third quarter and boosted imports somewhat increases recorded in all major trade categories in the fourth quarter, an important part of the surge in except oil and semiconductors (table 4). Prices of automotive imports in 1998:Q4 reflected record vehiimports declined 5 percent on average. Adjusted for cle sales in the United States in the closing months of changes in prices, imports of goods and services the year. expanded 10 percent during 1998 in response to The value of imported semiconductors, which robust growth of U.S. domestic demand. declined during most of the year, was heavily influ- The quantity of imported oil grew 6 percent in enced by the rapid price declines characteristic of the 1998 (table 7), rising to 11.2 million barrels per day. industry in recent years. U.S. domestic demand for Strong U.S. economic activity and low real oil prices semiconductors remained strong in 1998. Eighty-five percent of U.S. imports of semiconductors are from developing countries in Asia and Japan and generally 5. Nearly two-thirds of U.S. exports of semiconductors (generally are finished low-end products previously shipped to high-end products, and often for further assembly) go to developing countries in Asia and Japan, as does nearly one-third of U.S. exports those countries from the United States for testing. of computers, peripherals, and parts. Canada and Western Europe take Payments to foreigners for services rose modermore than one-fourth of U.S. exports of semiconductors and more than ately in 1998, with increases in most service categohalf of U.S. exports of computers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

296 Federal Reserve Bulletin • May 1999 ries but especially in travel (U.S. residents traveling U.S. direct investment abroad: abroad) and in other private services. Position and receipts, 1980-98 illions of dollars Billions of dollars Receipts DEVELOPMENTS IN THE NONTRADE CURRENT 1,000 100 ACCOUNT 800 80 The two major components of the current account 600 it 60 Position other than trade in goods and services are net invest- 400 40 ment income and net unilateral transfers (table 8). 200 I I 20 0 1 Investment Income 1 I I 1 I I I I I I I I I I I I 1 I I I I I 1980 1983 1986 1989 1992 1995 1998 Net investment income is the difference between the NOTE. The position data are averages using the current-cost measures as of amount that U.S. residents earn on their direct and year-end for the current and previous years. The year-end data for 1998 were constructed by adding the recorded direct investment capital flows and current portfolio investment abroad (receipts) and the amount cost adjustment during 1998 to the recorded year-end position for 1997. that foreigners earn on their direct and portfolio SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis; and investment in the United States (payments).6 Until Federal Reserve Board. 1997, net investment income had helped offset persistent trade deficits. But as the U.S. net external debt this downward trend were Korea and Thailand where has continued to rise rapidly in recent years, net profits turned up. Operations in Canada and Latin investment income has become increasingly nega- America showed smaller but still significant profit tive, moving from a $14 billion surplus in 1996 to declines of about 20 percent. On an industry basis, a $22 billion deficit in 1998. Net portfolio income income from operations in petroleum, manufacturing, became more negative during 1998 as the portfolio and commercial banking (depository institutions) liability position of the United States grew larger. In were particularly hard hit; profits in the categories of addition, net irf&ome from direct investment was "wholesale trade" and "finance, insurance and real reduced last year. estate" were above their 1997 levels. Income receipts from direct investment abroad fell despite robust growth of U.S. direct investment assets Direct Investment Income abroad in both 1997 and 1998 (chart 8). On a current cost basis, the rate of return on direct investment fell Net direct investment income—the difference between direct investment receipts from U.S. direct investment abroad and U.S. payments on foreign 9. Foreign direct investment in the United States: direct investment in the United States—fell $9 billion Position and payments, 1980-98 in 1998, to $55 billion. Receipts of income on U.S. direct investment abroad fell to $100 billion, declining about $9 billion because of slower economic growth abroad, lower petroleum prices, and in some cases, the appreciation of the dollar. Despite solid growth in income receipts from Western Europe, the overall performance showed weakness in all other geographic areas. Profits were down from 25 percent to 50 percent in areas directly affected by the Asian crisis: Japan, other Asian countries, and Australia; notable exceptions to Payments - M il 1983 1986 1989 1992 1995 1998 NOTE. The position data are averages using the current-cost measures as of year-end for the current and previous years. The year-end data for 1998 were 6. An investment is considered direct if a single owner acquires constructed by adding the recorded direct investment capital flows and current- 10 percent or more of the voting equity in a company. All other U.S. cost adjustment during 1998 to the recorded year-end position for 1997. claims on foreigners or foreign claims on the United States are SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis; and included in the other category—portfolio investment. Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1998 297 8. U.S. net investment income and unilateral transfers, 1994-98 Billions of dollars Change, Item 1994 1995 1996 1997 1998 1997 to 1998 Investment income, net 16 19 14 -22 -17 Direct investment income, net .. 52 63 66 64 55 -9 Receipts 72 93 100 109 100 -9 Payments 21 30 34 46 46 0 Portfolio investment income, net -35 -44 -52 -69 -77 Receipts 85 111 113 132 142 Payments 121 154 165 201 219 Unilateral transfers -39 -35 -41 -40 -42 SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. international transactions accounts. 2 percentage points, from 11.2 percent in 1997 to determinate of net income, the level of U.S. and 9.2 percent in 1998.7 foreign interest rates (rates of return) also play a role. Income payments on foreign direct investment The role for interest rates was particularly evident in the United States, at $46 billion for 1998, were last year as the decline in U.S. and foreign interest virtually the same as the 1997 totals, a pattern quite rates reduced the rates of return on portfolio investconsistent with the overall picture for corporate prof- ment and dampened the rise in the deficit (chart 11). its of domestic U.S. firms in 1998. In view of the strong growth of foreign investment in the United States in 1998, the level of income payments in 1998 Unilateral Transfers represents a fall-off in the rate of return of 1 percent (chart 9). Net unilateral transfers include government grant and pension payments as well as net private transfers to foreigners. In 1998, net transfers amounted to $42 bil- Portfolio Investment Income lion, about the same as in 1997. Portfolio investment income consists of dividends and interest paid on a wide range of claims and CAPITAL FLOWS liabilities. Receipts and payments are estimated by the Bureau of Economic Analysis (BEA) of the The large U.S. current account deficit last year was Department of Commerce on the basis of its esti- entirely financed by net capital inflows from private mates of holdings, dividend-payout ratios, and interest rates. Investment income does not include capital gains associated with changes in securities prices. 10. Net portfolio investment: Position and income, 1980-98 The balance on portfolio income, which is the difference between what U.S. residents earned on their Billions of dollars Billions of dollars holdings abroad and what foreign residents earned on their investment in the United States, registered a deficit of $77 billion in 1998, a gap $8 billion larger than in 1997 (table 8). The balance on portfolio income has been in deficit since 1985, and its size has broadly mirrored the net portfolio investment position (chart 10). While the net position is the primary 7. Valuing direct investment assets on a current cost basis implies adjusting the historical cost of inventories and plant and equipment to NOTE. The net position data are averages of the end-of-year net positions for reflect movements in current replacement cost indexes. In calculating the current and previous years. The year-end position for 1998 was constructed the rates of return noted in this section, we use in the denominator the by adding the recorded portfolio investment flows during 1998 to the recorded current-cost measure of the year-end direct investment position aver- year-end position for 1997. aged for the current and previous year; this position average is shown SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis; and in charts 8 and 9. Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

298 Federal Reserve Bulletin • May 1999 11. Rates of return on U.S. portfolio investment, 1988-98 Foreign official assets in the United States rose $11 billion in the first quarter of 1998 but fell $10 bil- Percent lion in the second quarter. Reductions in Japanese reserves in the United States, which were associated with foreign exchange market intervention, more than account for the second quarter decline. (An increase in official assets in the United States represents a capital inflow and a reduction in reserves represents a capital outflow.) Official outflows accelerated in the third quarter as OPEC and developing countries significantly reduced their reserves in the United States. Official flows to the United States turned positive again in the fourth quarter, but for the year as a whole foreign official assets in the United States fell 1988 1990 1992 1994 1996 1998 $22 billion. NOTE. The rates of return are annualized versions of quarterly rates calcu- The turmoil in the third quarter also affected the lated as follows: For claims (or liabilities), the numerator is total receipts (or payments) from the U.S. international transactions accounts, measured on a composition of private capital flows. Private foreign quarterly basis. The denominator is the average of end-of-quarter claims (or net purchases of U.S. corporate and government liabilities) for the current and previous quarters. To compute the numerator and denominator of the annualized rate of return, the numerators and denominators agency bonds totaled more than $100 billion in the from the four quarterly rates of return are averaged. first two quarters of 1998, somewhat above the pace The rate of return on the net position is calculated as the ratio of net investment income (annual receipts minus payments) to the annualized net of 1997. These net purchases slowed to $26 billion in position (annualized claims minus annualized liabilities). the third quarter and then rebounded to $41 billion in SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. international transactions accounts and U.S. international investment position; the fourth quarter. Private foreign net purchases of and Federal Reserve Board. U.S. Treasury securities and U.S. stocks followed a similar, but more pronounced, pattern. Net purchases sources (table 9). Official capital flows, which regis- in the first half of 1998 were followed by sales in the tered modest inflows in 1997, turned to significant third quarter and a resumption of net purchases in the outflows last year as the financial turmoil in the third fourth quarter. quarter caused many countries to draw down their U.S. net purchases of foreign securities also reofficial reserves. sponded to the financial turmoil. Net purchases were 9. Composition of US. capital flows, 1994-98 Billions of dollars 1998 IItteemm 11999966 11999977 11999988 Qi Q2 Q3 Q4 Current account balance -135 -155 -233 -47 -57 -66 -64 Official capital, net 133 15 -30 11 -13 -48 21 Foreign official assets in the United States 127 16 -22 11 -10 -46 23 U.S. official reserve assets 7 -1 -7 -0 -2 -2 -2 Other U.S. government assets -1 0 -1 -0 -0 0 -0 Private capital, net 61 240 267 39 68 87 74 Net inflows reported by U.S. banking offices -75 I 12 -47 13 45 1 Securities transactions, net 169 256 176 68 70 36 2 Private foreign net purchases of U.S. securities .. 285 344 265 75 98 19 74 Treasury securities 155 147 48 -2 27 -1 24 Corporate and other bonds 119 131 171 48 57 26 41 Corporate stocks 11 66 46 29 14 -6 8 U.S. net purchases of foreign securities -116 -88 -89 -7 -28 17 -72 Stocks -60 -41 -76 -3 -1 8 -80 Bonds -56 -47 -13 -4 -27 9 8 Direct investment, net -4 -28 64 -9 —22 7 88 Foreign direct investment in the United States ... 78 93 196 26 19 30 121 U.S. direct investment abroad -81 -122 -132 -35 •Mi -23 -33 Foreign holdings of U.S. currency 17 25 17 1 2 7 6 Other -47 -13 -2 26 4 -8 -23 Statistical discrepancy -60 -100 -4 -3 2 27 -31 SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. international transactions accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. International Transactions in 1998 299 large in the first half of 1998, totaling $35 billion. in the fourth quarter, bringing the total for the year However, net purchases fell to near zero in July and well above the 1997 record. swung to net sales in August. The pace of net sales Total recorded net capital inflows were $237 bilaccelerated through October but then abruptly turned lion in 1998, $4 billion more than the recorded curto net purchases again in November and December. rent account deficit. In 1997, recorded capital inflows Purchases of foreign securities in the fourth quarter exceeded the current account deficit by $100 billion. also include the effects of two exceptionally large This difference, the statistical discrepancy, represents foreign acquisitions of U.S. companies by the the cumulative errors in both the current and capital exchange of stock in U.S. firms for stock in the newly account data. Rapid swings in the statistical discrepestablished foreign parent firms. As a result, signifi- ancy, however, are most likely to reflect errors and cant U.S. net sales of foreign securities in the third omissions in the capital flows data, and net capital quarter shifted to huge net purchases in the fourth. inflows probably were overstated in both 1997 and Net private capital flows through banks buffered 1998. the swings in official flows and private securities transactions. Moderate net capital outflows recorded by banks during the first half of 1998 became signifi- PROSPECTS FOR 1999 cant net inflows in the third quarter when many banks brought funds into the United States to supply domes- The fallout from the financial crises in emerging tic customers who found they could not directly markets is likely to have further negative conseaccess the capital markets in the midst of the turmoil. quences for U.S. external balances in 1999. Demand In the fourth quarter, net bank inflows were almost for U.S. exports is likely to be held down by weaknil. ness in demand from trading partners in Asia and The pattern of direct investment capital flows was Latin America and by sluggish demand from other less affected by the mid-year turmoil. Foreign direct major trading partners. The appreciation of the dollar investment in the United States and U.S. direct invest- during the past two years and the associated loss in ment abroad were both very strong throughout 1998. competitiveness of U.S. goods and services is also British Petroleum's acquisition of Amoco on Decem- likely to have a negative effect on the U.S. trade ber 31 helped swell direct investment capital inflows balance in 1999. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

300 Industrial Production and Capacity Utilization for March 1999 Released for publication April 16 that reversed the February gain. The output of utilities increased 1.9 percent in March and has picked up Industrial production edged up 0.1 percent in March; noticeably, on balance, since last fall. At 132.8 perrevisions to earlier months left the level of the Febru- cent of its 1992 average, total industrial production in ary index little changed from that previously reported. March was 1.6 percent higher than it was in March In manufacturing, production remained unchanged in 1998. For the first quarter as a whole, total industrial March and was just a bit above its December level. production increased at an annual rate of just 0.7 per- The output of mines decreased 0.7 percent, a decrease cent, down noticeably from the 2 lA percent gain in Industrial production and capacity utilization Ratio scale, 1992 = 100 Percent of capacity Industrial production, market groups Ratio scale, 1992 = 100 Ratio scale, 1992= 100 _ Consumer goods ffA f - 135 _ Intermediate products 135 — Durable /v / ' — 125 125 115 115 105 105 JS / Nondurable 95 Business supplies 95 1 V 1 1 1 1 I I I! J I I I I I I I I I Ratio scale, 1992 = 100 Ratio scale, 1992 = 100 1990 1992 1994 1996 1998 1990 1992 1994 1996 1998 x of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

301 Industrial production and capacity utilization, March 1999 Industrial production, index, 1992=100 Percentage change CCCaaattteeegggooorrryyy 11999988 11999999 19981 19991 MMaarr.. 11999988 ttoo Dec.' Jan.r Feb.' Mar. p Dec.' Jan.' Feb.' Mar.p MMaarr.. 11999999 Total 132.3 132.3 132.6 132.8 .1 -.1 .3 .1 1.6 Previous estimate 132.4 132.4 132.6 .2 .0 .2 Major market groups Products, total2 124.4 124.5 124.6 124.6 .0 .0 .1 .0 1.1 Consumer goods 114.9 115.1 115.2 115.2 .1 .2 .1 .0 -.5 Business equipment 167.9 167.1 167.2 166.9 -.1 -.5 .1 -.2 4.2 Construction supplies 131.0 132.5 131.8 131.0 1.1 1.2 -.5 -.6 5.1 Materials 145.2 144.9 145.6 146.1 .4 -.2 .5 .3 2.4 Major industry groups Manufacturing 136.7 136.5 137.0 137.0 .2 -.1 .3 .0 2.2 Durable 161.5 161.5 161.9 162.0 .3 .0 .2 .1 4.4 Nondurable 111.7 111.4 111.9 111.8 .1 -.3 .4 -.1 -.5 Mining 99.0 97.4 98.0 97.3 -2.1 -1.6 .7 -.7 -8.0 Utilities 111.8 114.0 113.2 115.4 1.1 2.0 -.7 1.9 1.3 Capacity utilization, percent MEMO Capacity, cceennttaaggee 1998 1998 1999 cchhaannggee,, Average, Low, High, MMaarr.. 11999988 1967-98 1982 1988-89 ttoo Mar. Dec.' Jan.' Feb.' Mar.p MMaarr.. 11999999 Total 82.1 71.1 85.4 82.6 80.7 80.3 80.3 80.1 4.7 Previous estimate 80.7 80.4 80.3 Manufacturing 81.1 69.0 85.7 81.6 80.0 79.6 79.5 79.3 5.2 Advanced processing 80.5 70.4 84.2 80.6 79.0 78.3 78.4 78.2 6.2 Primary processing . 82.4 66.2 88.9 84.4 82.9 83.1 82.8 82.6 2.7 Mining 87.5 80.3 88.0 88.4 82.0 80.6 81.0 80.4 1.1 Utilities 87.4 75.9 92.6 90.5 88.2 89.9 89.2 90.9 .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. the fourth quarter. Overall capacity utilization slipped The output of business equipment decreased in March to 80.1 percent, a level 2 percentage points 0.2 percent in March and was 0.6 percent below its below its long-term average and V-h percentage December level. Most of the recent declines in this points below its March 1998 level. market group have been concentrated in the production of industrial and transit equipment, which decreased again in March. In addition, the production MARKET GROUPS of information processing equipment has risen more slowly in the first quarter after having expanded very The production of consumer goods was flat in March, rapidly in the fourth quarter of last year. as a rebound in the production of energy goods was The production of construction supplies, which had offset by declines in other categories. The Vi percent increased sharply between the end of 1997 and Janudecline in the production of durable consumer goods ary 1999, declined for a second month in March as was mainly caused by reductions in the output of the seasonal pickup in output was less than normal. automotive products and household appliances from The output of materials increased 0.3 percent mostly the elevated levels reached earlier this year. The because of another large increase in semiconductors production of non-energy, nondurable consumer and computer parts. Although the production of basic goods was generally weak in March. A notable metals edged up, it remained about 6 percent lower exception was the production of consumer chemicals, than in March 1998. The output of nondurable matewhich increased for the second consecutive month rials edged down in March, largely because of a after having declined, on balance, since the second decline in textile materials. Nonetheless, the output quarter of 1998. of nondurable materials has firmed since December Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

302 Federal Reserve Bulletin • May 1999 mainly because of a pickup in the production of was roughly unchanged from its December level. paper. The production of energy materials declined Increases in the production of tobacco, paper, chemiand has been weak, on balance, since last fall. cals, and rubber and plastic products were more than offset by declines in other industries; the largest losses occurred in textiles, apparel, and leather prod- INDUSTRY GROUPS ucts, which were significantly below their March 1998 levels. Durable goods production edged up 0.1 percent in The operating rate in manufacturing declined to March: Increases in furniture and fixtures, metals, 79.3 percent—2]A percentage points below its level a computer and office equipment, semiconductors, year earlier. The utilization rates for both advancedinstruments, and miscellaneous manufactures were and primary-processing industries decreased 0.2 perlargely offset by declines in other durable goods centage point. The utilization rate for mines declined industries. In particular, the output of transportation 0.6 percentage point and remained well below its equipment decreased after having posted an increase long-term average. The rebound in the output of in February, while the production of several types of utilities pushed the utilization rate up PA percentage industrial machinery continued to weaken. Nondura- points, to 90.9 percent, 3Vi percentage points above ble goods production edged down 0.1 percent and its long-term average. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

303 Statements to the Congress Statement by Alan Greenspan, Chairman, Board of well in excess of accumulated contributions has Governors of the Federal Reserve System, before the become increasingly unlikely. Those born in 1960, Subcommittee on Finance and Hazardous Materials for example, are currently calculated to receive a real of the Committee on Commerce, U.S. House of Repre- rate of return, on average, of less than 2 percent on sentatives, March 3, 1999 their cumulative contributions. Indeed, even these low rates of return for more recent cohorts likely are Preparing for the retirement of the baby boom genera- being overestimated because they are based on curtion looms as one of our nation's most difficult chal- rent law taxes and benefits. In all likelihood, short lenges, and I commend the serious efforts being made of a substantial infusion of general revenues, social here to address this important long-term problem. security taxes will have to be raised, or benefits cut, Before discussing my views on the issue of investing given that the system as a whole is still significantly the social security trust fund in equities, I would like underfunded, at least according to the intermediate to examine the more fundamental issues that any projections of the Old-Age and Survivors Insurretirement reform will have to address. ance (OASI) actuaries. For the present value of cur- The dramatic increase in the ratio of retirees to rent law benefits over the next seventy-five years to workers that seems inevitable, as the baby boom be fully funded through contributions, social security generation moves to retirement and enjoys ever- taxes would have to be raised about 2.2 percent of greater longevity, makes our current pay-as-you-go taxable payroll; to be fully funded in perpetuity, that social security system unsustainable. Furthermore, is, to ensure that taxes and interest income will the broad support for social security appears destined always be sufficient to pay benefits, social security to fade as the implications of its current form of taxes would have to be raised much more—perhaps financing become increasingly apparent. To date, about 4 percent to 5 percent of taxable payroll. with the ratio of retirees to workers having been This issue of funding underscores the critical elerelatively low, workers have not considered it a bur- ments in the forthcoming debate on social security den to share the goods and services they produce with reform because it focuses on the core of any retireretirees. The rising birth rate after World War II, ment system, private or public. Simply put, enough which, in due course, contained the growth of the resources must be set aside over a lifetime of work to ratio of retirees to workers, helped make the social fund retirement consumption. At the most rudimensecurity program exceptionally popular, even among tary level, one could envision households saving by those paying the taxes to support it. actually storing goods purchased during their work- Indeed, workers perceived it to be a good invest- ing years for consumption during retirement. Even ment for their own retirement. For those born before better, the resources that would have otherwise gone World War II, the annuity value of benefits on retire- into the stored goods could be diverted to the producment far exceeded the cumulative sum at the time of tion of new capital assets, which would, cumularetirement of contributions by the worker and his or tively, over a working lifetime, produce an even her employer, plus interest. For example, the implicit greater quantity of goods and services to be conreal rate of return on social security contributions sumed in retirement. was almost 10 percent for those born in 1905 and was The only way we will be able to finance retirement about 6 percent for those born in 1920. The real incomes that keep pace with workers' incomes is to interest rate on U.S. Treasury securities, by compari- substantially increase the national saving rate, son, has generally been less than 3 percent. increase the borrowing of foreign capital, or increase But births flattened after the baby boom, and life the output that a given capital stock, financed through expectancy beyond age sixty-five continued to rise. this saving, can produce. The crucial retirement fund- Consequently, the ratio of the number of workers ing issues center on how to increase our national contributing to social security to the number of bene- saving and how to allocate physical resources ficiaries has declined to the point that maintaining between workers and retirees in the future. We must the annuity value of benefits on retirement at a level endeavor to increase the real resources available to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

304 Federal Reserve Bulletin • May 1999 retirees without blunting the growth in living stan- But analyzing the macroeconomic effects of the dards among our working population. portfolio reallocation is much less complicated. The In this light, increasing our national saving is transfer of social security assets from U.S. Treasuries essential to any social security reform. Privatization to equities would not, in itself, have any effect on proposals that begin to address social security's exist- national saving. Thus, the underlying economic assets ing unfunded liability would significantly enhance in the economy would be unchanged, as would the domestic savings; so would fuller funding of the total income generated by those assets. Any increase current social security program. But the size of the in returns realized by social security must be offset unified budget surplus implied by such funding, many by a reduction in returns earned on private portfolios, have argued, would be politically unsustainable. The which represent, to a large extent, funds held for President, recognizing this political risk, has pro- retirement. Investing social security assets in equities posed changing the budgetary framework so as to is, then, largely a zero-sum game. To a first approxisupport a large unified budget surplus. This is a major mation, aggregate retirement resources—from both step in the right direction that, if effective, would social security and private funds—do not change. ensure that the current rise in government's positive Only an increase in national saving or an increase contribution to national saving is sustained. The large in the efficiency with which we use our saving can surpluses projected over the next fifteen years, if they help us meet the retirement requirements of the comactually materialize, would significantly reduce the ing years. Indeed, improved productivity of capital fiscal pressures created by our changing demograph- probably explains much of why the American econics. Whichever direction the Congress chooses to go, omy has done so well in recent years despite our whether toward privatization or fuller funding of comparatively low national saving rate. For producsocial security, augmenting our national saving rate tivity and standards of living to grow, financial capihas to be the main objective. tal raised in markets or generated from internal cash The Administration has also proposed investing a flow from existing plant and equipment must be portion of the social security trust fund assets in continuously directed by firms to its most profitable equities, rather than in U.S. Treasuries alone. Having uses—namely new physical capital facilities perthe trust fund invest in private securities most likely ceived as the most efficient in serving consumers' would increase its rate of return, although the multiple preferences. It is this continuous churning, increase might be less than historical rates of return this so-called creative destruction, that has become so would suggest and certainly would be less on a essential to the effective deployment of advanced properly risk-adjusted basis. But where would that technologies by this country over recent decades. higher return come from, and what would happen Looking forward, the effective application of our to private funds available for consumption in capital to its most highly valued use is going to retirement? become, if anything, more important, as we strive to If social security trust funds are shifted from U.S. increase the resources available to provide for the Treasury securities to private debt and equity instru- retirement of the baby boomers without, in the future, ments, holders of those securities in the private sector significantly reducing the consumption of workers. must be induced to exchange them, on net, for U.S. An efficient market pricing mechanism for equities Treasuries. Private pension and insurance funds, has been a key element in our superior allocation of among other holders of equities, presumably would saving into investment this past decade. Large investswap equities for Treasuries. It seems likely that a ments in equities by the social security trust funds rise in the interest rate paid on Treasuries, and per- could impair that process. haps an increase in equity prices and a reduction in As I have indicated in earlier testimony, I doubt the expected future return on equity, would be neces- that it is possible to secure and sustain institutional sary in order to induce private investors to reallocate arrangements that would insulate, over the long run, their portfolios from equities to U.S. Treasury securi- the trust funds from political pressures. These ties. If this is indeed the case, then the net increment pressures, whether direct or indirect, could result in to the government of investing the trust fund in suboptimal performance by our capital markets, equities on an ongoing basis presumably would be diminished economic efficiency, and lower overall less than the historical rates of return suggest. That standards of living than would be achieved otherwise. said, exactly what changes in bond and stock prices The experience of public pension funds seems to would result from this type of large-scale swap of bear this out. Although relevant comparisons to pri- U.S. Treasuries for equities is extremely difficult to vate plans are difficult to construct, there is evidence predict. that the average rate of return on state and local Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 305 pension funds tends to be lower than the return To the extent that a transfer of private retirement realized on comparable private pension funds, other resources to social security is deemed necessary to pooled investments, and market indexes. Of course, a fund currently promised benefits, why not do it significant part of this disparity would be eliminated directly through increased social security taxes or an were these returns adjusted for risk because public allocation of general revenues to the social security pension plans are often invested more conservatively trust fund? Whatever the Congress does, it would be than private plans. But there is evidence that returns best not to obscure the choice of real resource allocaare lower even after having accounted for differences tion with complex financial structures that merely in the portfolio allocation between stocks and bonds. reshuffle claims to real resources, without increasing For example, it has been shown that state pension them. plans that are required to direct a portion of their A collateral issue is relevant to this debate. If the investments in-state and those that make "economi- Congress were to decide to do nothing to alter the cally targeted investments" experience lower returns path of receipts and outlays projected under current as a result. Similarly, there is evidence suggesting law, a large buildup in the social security trust fund that the greater the proportion of trustees who are would occur, along with a significant on-budget surpolitical appointees, the lower the rate of return. A plus, according to the projections of the Congreslower risk-adjusted rate of return on financial assets sional Budget Office (CBO) and the Office of Manis almost invariably an indication of lower rates of agement and Budget (OMB). The consequence return on the real underlying assets on which they are would, of course, be a significant decline in the a claim. current $33/4 trillion outstanding federal debt to the As I have also indicated in previous testimony, I do public. not deny that the federal government can manage But if the unified budget is in surplus for a proequities without political interference if they are held tracted period of years, it is at least conceivable that in defined contribution funds or small defined benefit the outstanding public debt would be eliminated. I plans, such as the one run by the Federal Reserve. might add that this would be the first such occurrence Defined contribution funds, such as the federal gov- for this nation, the previous low having been ernment's Thrift Savings Plan, are effectively self- $38,000 in 1835 and 1836. policed by individual contributors, who would surely Currently, the rise in the holdings of U.S. Treasurobject were their retirement assets to be diverted to ies by the social security trust fund is accomplished investments that offered less than market returns. by the Treasury redeeming or buying back debt from But government defined benefit plans, like social the public and selling it as special series nonmarsecurity, provide guaranteed annuities that are wholly ketables to the trust fund. But should the debt to the insulated from poor investment performance. Annu- public fall to zero, there would be no additional itants look to the federal government for their retire- Treasury instruments available to the trust fund from ment incomes, not the performance of any trust funds. that source. Were the Treasury, nonetheless, to con- Thus, beneficiaries have no incentive to monitor the tinue to sell debt to the trust funds, its cash balances performance of their investments. And while the gov- at the Federal Reserve would build up. At that point, ernment's small defined benefit funds do not reach under existing policy, there would be no choice but to the asset size threshold to make them a target, a have the social security trust fund invest in private or multitrillion dollar social security trust fund presum- quasi-private agency securities. I grant that, should ably would. these circumstances arise, the decision of how to It is possible that institutions could be created that handle social security investments would become a would prevent the trust fund investments from being more pressing question. However, it is exceptionally subject to political interference. But investing the difficult for me to focus seriously on so politically social security trust funds in equities does little or improbable, though so intriguing, an event. nothing to improve the overall ability of the U.S. Of course, assessing the fiscal, financial, and ecoeconomy to meet the retirement needs of the next nomic state of the American economy in the early century. Given this lack of evident benefit, it is twenty-first century is an enormously difficult underunclear to me why we should take on the risk of taking. We cannot confidently project large surpluses interference, which, probably short of a constitutional in our unified budget over the next fifteen years, amendment, cannot be eliminated. Even if concerns given the inherent uncertainties of budget forecastabout politically driven investment were not to mate- ing. How can we ignore the fact that virtually all rialize, what would have been gained by such a huge forecasts of the budget balance have been wide of the shuffling of funds? mark in recent years? For example, as recently as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

306 Federal Reserve Bulletin • May 1999 February 1997, the OMB projected a deficit for fiscal than it currently appears. But proper fiscal planning year 1998 of $121 billion—a $191 billion error. The requires that consequences of mistakes in all direc- CBO and others made similar errors. Likewise, in tions be evaluated. If we move now to shore up the 1983, we confidently projected a solvent social secu- social security program, or replace it, in part or in rity trust fund through 2057. Our latest estimate, with whole, with a private system and subsequently find only a few changes in the program, is 2032. that we had been too pessimistic in our projections, It is possible, as some maintain, that the OASI the costs to our society would be few. If we assume actuaries are too conservative and that productivity more optimistic scenarios and they prove wrong, the growth could be far greater than is anticipated in their imbalances could become overwhelming, and finding "intermediate" estimate. If that is, in fact, our pros- a solution would be even more divisive than today's pect, the social security system is in less jeopardy problem. Statement by William J. McDonough, President, Fed- makes are how to lend and to whom. Those decisions eral Reserve Bank of New York, before the Subcom- are not easy and often involve many shades of gray. mittee on Capital Markets, Securities and Govern- One of our aims as supervisors should be to see that ment Sponsored Enterprises of the Committee on banks are using the right tools to make those judg- Banking and Financial Services, U.S. House of Repre- ments. sentatives, March 3, 1999 The importance of these issues extends beyond banks and their supervisors. Sound credit policies When I appeared before the full committee in and procedures are essential not only for the stability October, I spoke about the near-collapse of Long- of individual banks but also—and more important— Term Capital Management (LTCM) and the events for the health of the financial system and the econleading up to the private-sector recapitalization of its omy as a whole. This is because banks play a pivotal fund, Long-Term Capital Portfolio. At that time, I role in our economy as providers of credit. If banks promised you that we would take a hard look at the make poor credit decisions with respect to a borissues growing out of that experience, particularly as rower, including a hedge fund like LTCM, the finanthey affect our responsibilities as bank supervisors. I cial system and our economy will suffer. am pleased to appear before you today to report on the lessons we have learned and the actions we have taken to reduce the possibility that such an episode BASLE REPORT FINDINGS could repeat itself in the future. As I indicated last fall, three issues require particu- As you know, I chair the Basle Committee on lar attention by banks and their supervisors in the Banking Supervision, comprised of bank supervisors wake of LTCM. These are, first, the adequacy of from the G-10 countries who coordinate supervisory banks' credit analysis processes; second, the effec- policy for internationally active banks. While the tiveness of exposure measurement; and third, the role committee does not have formal legal enforcement of stress testing of counterparty exposure. In my powers, its conclusions and recommendations are remarks today I will detail the substantial progress widely implemented, both in G-10 countries and that has been made, both domestically and inter- many others. In late January, the committee issued a nationally, to address each of these supervisory report dealing with the relationship between banks concerns. and highly leveraged institutions, or HLIs. The com- But before I get into the details, let me say that I mittee's report provides a framework for addressing believe the LTCM episode and the supervisory the broader issues raised by the LTCM episode, the response to it is fundamentally about two things: policy responses of supervisors, and some key riskleverage and good judgment. Leverage is a fact of management challenges for the banking industry life in our financial world and is a key part of the going forward. risk-taking necessary for the creation of wealth. But In the United States, the Federal Reserve System, sometimes banks go too far in extending credit to the New York State Banking Department, and the their customers and counterparties. That's where Office of the Comptroller of the Currency have congood judgment comes in. I know—I've been there. I ducted target reviews of a number of large-bank was a commercial banker for twenty-two years before dealings with hedge funds. These reviews contributed becoming President of the New York Fed, and I can to the committee's work, to the Federal Reserve tell you that the most important decisions a banker System's issuance on February 1 of new guidance to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 307 financial examiners and banks, and to similar guid- age. They also did not have sufficient information to ance from the Comptroller of the Currency issued in understand HLIs' concentrations in particular mar- January. These new standards emphasize the need for kets and risk categories or their exposure to broad improvements in the credit-risk-management process trading strategies. at banks. The new standards will likely be comple- Similarly, banks generally did not sufficiently mented by a study of the implications of the LTCM understand the ability of HLIs to manage their risks. episode by the President's Working Group on Finan- Because risk profiles can change from one day to the cial Markets. next, or even from moment to moment, it is necessary Because the Basle Committee's jurisdiction is lim- for a bank to be sure that the HLI can effectively ited to matters of banking supervision and regulation, manage its business operations and risks on an ongoits primary emphasis has been on ensuring that the ing basis. In general, we did not find sufficient major banks prudently manage their risk exposures to reviews of HLIs' risk-management systems and their HLIs. The best way to achieve this is through the underlying assumptions, back-office systems used to adoption of sound practices by the industry, perhaps manage daily operations such as collateral and liquidsupplemented by incentives created through capital ity, and the major accounting and valuation policies. requirements. While it is primarily the responsibility of each banking organization to manage its risks, Exposure Measurement sound practice standards give banks and supervisors a tool to measure industry progress. If banks them- The committee also thought that banks need to selves do not follow sound practices, then supervidevelop better measures for determining the credit sors must step in and take the necessary action. exposure resulting from different types of trading The committee's report revealed a number of defiactivities. In particular, banks must develop more ciencies. In particular, the committee observed an effective measures of what is called "potential future imbalance among the key elements of the credit-riskexposure." Potential future exposure measures the management process, with too strong a reliance upon credit exposure between a counterparty and a bank collateral. This undue emphasis, in turn, caused many and how this exposure could change in the future as banks to neglect other critical elements of effective market prices fluctuate. As we have seen, such price credit risk management, including in-depth credit movements can be substantial during periods of maranalyses of counterparties, effective exposure meaket stress. The ability of banks to measure potential surement and management techniques, and the use of future exposure is crucial when dealing with HLIs. stress testing. Unfortunately, methods for calculating potential future exposure had not kept pace with the growth and complexity of HLIs. Banks' potential future Credit Approval Process exposure measures have been particularly ineffective in measuring exposures not covered by collateral. For For a bank to make sound lending decisions, it needs example, under highly volatile market conditions, a to obtain sufficient information about the borrower. bank's potential future exposure can grow beyond Supervisors routinely stress the need for banks to the value of any collateral. We expect the industry to have an effective credit approval process consisting develop more effective ways to measure and limit of formal policies and procedures, accompanied by potential future exposure, and supervisors will closely documentation of actual credit decisions. When dealmonitor progress to ensure that this occurs. ing with an HLI, a bank also must obtain comprehensive and timely financial information about that HLI's risk profile and credit quality, and it must engage in Stress Testing an ongoing credit analysis of that HLI. In addition, a bank must have a clear understanding of an HLI's The committee's report also shows that banks must operations and risk-management capabilities. The develop measures that better account for credit risk committee observed weaknesses in each of these under highly volatile market conditions. This can be areas. Let me give a few examples. achieved through what we call "stress tests," in The committee found that banks did not obtain which a bank conducts "what if" analyses of how sufficient financial information to allow for a full credit exposures to a single counterparty could grow assessment of how much and what types of risk had under extreme market conditions. These analyses been assumed by large HLIs. In particular, banks did might include a large rise or fall in interest rates, a not obtain the information needed to measure lever- major change in an exchange rate, or a flight to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

308 Federal Reserve Bulletin • May 1999 quality by investors. In the case of LTCM, stress collateral and other credit enhancements. Our examtesting could have given banks at least some warning iners will also look at internal policies and the degree of the types of exposures they could have faced last to which behavior conforms to stated policies. We fall. The critical importance of stress testing is noted have already conducted meetings with the major very explicitly in our new supervisory guidance. banks to reinforce these messages, and our examiners will conduct follow-up reviews in the course of this year. Sound Practice Guidance The sound practices document accompanying the OTHER POSSIBLE POLICY RESPONSES Basle report presents an important set of standards that will guide both banks and their supervisors. It Over the past few months, there has been significant appears that banks generally have tightened the debate about other measures that could be taken to credit-risk-management standards for their HLI expo- limit the potential risks to the financial system arising sures since the collapse of LTCM. However, it is from the activities of large, highly leveraged, unregimportant that supervisors try to ensure that progress ulated financial institutions. The Basle Committee continues. Memories tend to be short, and we want to carefully considered all the ideas that have surfaced. make sure that as markets calm down, as they have in Our report discusses a variety of options beyond the the past months, banks do not return to the old ways implementation of sound practice standards. One posof doing business. sibility is to require higher capital charges for bank The adoption and rigorous enforcement of exposures to HLIs. Indeed, a primary objective of our enhanced risk-management practices should contrib- current review of the Basle Capital Accord is to ute substantially to limiting excessive risk-taking determine how to align regulatory capital charges and leverage at HLIs. This is the case because HLIs better with the economic risks of different classes of cannot trade without access to financing and liquidity counterparties. from banks and securities firms. If each counterparty We also recognize the critical need to enhance manages its risks appropriately, the chance of conta- market transparency for the activities of HLIs and gion to other institutions and the financial markets other major market participants. The committee more broadly would be reduced substantially. It is already is working to enhance accounting and disclothis risk of contagion and financial market instability sure practices at banking institutions worldwide. that is the principal concern of central banks and Extending these efforts to all global players that have supervisors. the potential to destabilize the financial system, Along with other federal banking supervisors, the including HLIs, is of particular importance. An inter- Federal Reserve has moved quickly to implement the national group of central bankers is now studying recommendations of the Basle Committee's report. various approaches to strengthening disclosure in this As I mentioned earlier, we recently issued guidance area. to the institutions we supervise detailing sound risk- The committee also considered the advantages and management practices for the credit-risk-management disadvantages of imposing direct regulation on the of trading and derivatives activities. This document HLI industry. There are a number of critical obstacles identifies the areas that our examiners will review that would have to be overcome before a direct during their examination of trading activities. It is regulatory approach could be implemented. To be important to note that the Federal Reserve's guidance effective, any regulation would have to extend to to banks and examiners covers not only HLI and jurisdictions around the world where HLIs are charhedge fund counterparties but all other counterparty tered, some of which have more highly developed relationships. We want to ensure that banks carry and more stringent supervisory structures than others. forward the lessons of the LTCM experience to all This would require a high level of coordination potentially high-risk trading activities. involving the political, legislative, and judicial bodies In this regard, our examiners will devote particular of many countries. There is also the difficulty of attention to the.risks associated with rapidly growing, establishing a regulatory regime for HLIs that is not highly profitable, and potentially high-risk activities easily circumvented. For these reasons, I believe the and product lines. They will assess the adequacy most practical approach is to focus on financial instiof banks' reviews of counterparty creditworthiness, tutions' lending activities because such an approach exposure measurement and monitoring techniques, offers a near-term and cost-effective remedy to the stress testing, limit setting, and the appropriate use of systemic risks posed by HLIs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 309 CHALLENGES FOR THE BANKING INDUSTRY sors. High on the agenda should be the development of more meaningful measurement of risk exposure I strongly believe that both the official and private and the implementation of effective stress-testing sectors have important roles to play in addressing the techniques. Another important area that requires furchallenges arising from an increasingly complex and ther industry attention is the measurement of leverdynamic financial services industry. First and fore- age. Finally, I believe that the industry should devote most, we hold banks accountable for ensuring that more thought to the appropriate valuation of posisound credit-risk-management standards are upheld tions during periods of market stress and illiquidity— and that these keep pace with financial market inno- which is particularly relevant to the use of collateral vation. If competitive pressures lead to bad practices to protect against credit risk. in one bank or the industry as a whole, our job as These are just some of the broader issues arising supervisors is to raise standards and ensure that sound from the LTCM experience and the market turbupractices are restored. lence last fall. But I believe that we are meeting the In my remarks today, I highlighted a number of challenge and have made quick and significant shortareas in which progress has been made. Of course, term progress. there is more work to be done by banks and supervi- Statement by Richard A. Small, Assistant Director, dence in the institutions at which they bank. The Division of Banking Supervision and Regulation, Federal Reserve recognizes the sensitivity of this Board of Governors of the Federal Reserve System, issue. Second, the Federal Reserve will continue to before the Subcommittee on Commercial and Admin- recognize that participating in the government's istrative Law, Committee on the Judiciary, U.S. House programs designed to attack the laundering of proof Representatives, March 4, 1999 ceeds of illegal activities through our nation's financial institutions could enhance public confidence I am pleased to appear before the Subcommittee on in the integrity of our financial system. Third, we Commercial and Administrative Law to discuss the also will be mindful of industry concern about the proposed "Know Your Customer" regulation. As potential burden that a "Know Your Customer" you are aware, the Federal Reserve, along with the regulation might impose and that in doing so it Federal Deposit Insurance Corporation, the Office of would place banking organizations at a competitive the Comptroller of the Currency, and the Office of disadvantage as the result of obligations that would Thrift Supervision, issued a notice of proposed rule- come from the "Know Your Customer" regulation making with regard to "Know Your Customer" on that do not apply to other types of financial service December 7, 1998. organizations subject to the provisions of the Bank As a proposed regulation, there has been no final Secrecy Act, such as brokerage firms and money decision on the wording of any new regulation or, for transmitters. that matter, whether it is necessary to have a new It would be useful to provide some background regulation. The rulemaking process provides for a information about "Know Your Customer" policies period of time during which the public can comment and the purpose of the proposed rule. The concept of on the specifics of the proposal. The comment period "Know Your Customer" has been around for quite for this proposal concludes on March 8. As we are some time. Many banks today use such policies and still in the midst of the comment period, I am not able procedures to protect the integrity of their instituto provide any information with regard to the Federal tions. In addition, bankers have expressed concern Reserve's determination as to how to proceed with that there is no uniformity in the banking agencies' the proposal. No determination will be made until the and the Department of the Treasury's guidance on comment period has concluded and there has been an identifying transactions that would have to be opportunity to complete the review of the comments reported under existing suspicious activity reporting that have been submitted. regulations. As we move forward in our review of the com- In the past, there have been expressions of congresments and our determination as to whether, or how, sional interest in "Know Your Customer" regulato proceed with the proposed rule, we will carefully tions. The Annunzio-Wylie Money Laundering Act weigh three important issues. First, it has become of 1992 authorized the Department of the Treasury to clear that the proposal raises privacy concerns that prescribe minimum standards for the anti-moneyalso pose a real danger of eroding customer confi- laundering programs of all financial institutions cov- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

310 Federal Reserve Bulletin • May 1999 ered by the Bank Secrecy Act. The legislative history In an effort not to create a substantial burden for of this law and other legislation addressing the gov- the majority of banking organizations, the proposal ernment's anti-money-laundering efforts indicates sets forth the concept of developing and applying that the Congress expected that the minimum stan- "Know Your Customer" programs based on the perdards would include "Know Your Customer" poli- ceived risks associated with the various customers cies. In the Money Laundering Deterrence Act of and the types of transactions that the banks under- 1998, which was approved by the House of Represen- stood would be conducted by the customers. For the tatives near the end of the 1998 session, section 9 majority of customers, we assumed that banks would included a requirement that the Secretary of the find that they posed no or minimal risk and that their Treasury comply with the provisions of the "Know Your Customer" programs would be nothing Annunzio-Wylie Money Laundering Act by promul- more than formalizing existing procedures for identigating "Know Your Customer" regulations for finan- fying customers and following existing suspicious cial institutions within 120 days of enactment of activity reporting requirements. the legislation. The proposal also recognized that privacy was a These considerations led all of the federal bank critical issue. We specifically solicited comments on supervisory agencies, including the Federal Reserve, "whether the actual or perceived invasion of personal to develop the proposal. In proposing the "Know privacy interests is outweighed by the additional Your Customer" regulation, it was our intent to pro- compliance benefits anticipated by [the] proposal." vide banks with guidance as to what programs and To date, the response from the public on this issue procedures they should have in place to have suffi- has been unprecedented. The public comments indicient knowledge of their customers to assist in the cate that bank customers believe that the "Know detection and prevention of illicit activities occurring Your Customer" rule will result in material invasions at or through the banks. I should note that the pro- of their personal privacy interests. posal would not require banks routinely to turn over As I noted at the beginning, the comments have to the government information about their customers highlighted important issues, both with respect to and would not require banks to monitor every cus- privacy and other aspects of the proposal, that we tomer transaction. will be considering in the days ahead. Statement by Oliver Ireland, Associate General to federally supervised financial market participants, Counsel, Board of Governors of the Federal Reserve including insured depository institutions, and limit System, before the Subcommittee on Commercial and systemic risk. Administrative Law, Committee on the Judiciary, U.S. House of Representatives, March 18, 1999 I appreciate the opportunity to appear before this STATUTORY RECOGNITION OF FINANCIAL subcommittee to present the views of the Board of MARKET TRANSACTIONS Governors of the Federal Reserve System on title X, Financial Contract Provisions, of H.R. 833, the pro- Since its adoption in 1978, the Bankruptcy Code has posed Bankruptcy Reform Act of 1999. Title X been amended a number of times to recognize the includes a number of proposed amendments to the nature and significance of certain financial market Federal Deposit Insurance Act and the Bankruptcy transactions and to provide these transactions special Code as well as other statutes related to financial treatment in a bankruptcy proceeding. For example, transactions. Many of these provisions incorporate, in 1984, the code recognized the right of a repo or are based on, amendments to these statutes that market participant to liquidate a repurchase agreewere endorsed by the President's Working Group on ment without regard to the otherwise applicable auto- Financial Markets. matic stay provisions of the code. In 1990, this recog- The Board supports enactment of the provisions nition was extended to permit swap participants to recommended by the Working Group. Enactment of terminate and net swap agreements. Similar rights these provisions would reduce uncertainty for market had previously been given to stock brokers, financial participants as to the disposition of their financial institutions, and clearing agencies with respect to market contracts if one of the parties becomes insol- securities contracts and commodity brokers and forvent. This reduced uncertainty should limit market ward contract merchants with respect to commodities disruptions in the event of the insolvency, limit risk and forward contracts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 311 Similarly, in 1989 in establishing the manner of the themselves against market risk. If this process were conduct of the receivership of insured depository stayed while the trustee or the receiver for a failed institutions under federal law, the Financial Institu- counterparty determined whether to perform the contions Reform, Recovery and Enforcement Act of tract, the delay would expose the nondefaulting party 1989 provided for the termination, or closeout, and to potentially serious market risks during the pennetting of qualified financial contracts, including dency of this decision process. securities, commodity and forward contracts, and Thus, the right to terminate or close out financial repurchase and swap agreements. The Federal market contracts is important to the stability of finan- Deposit Insurance Corporation Improvement Act of cial market participants in the event of an insolvency 1991 provided further legal support for netting con- and reduces the likelihood that a single insolvency tracts between two or more financial institutions or will trigger other insolvencies due to the nondefaultmembers of a clearing organization. ing counterparties' inability to control their market risk. The right to terminate or close out protects federally supervised financial institutions, such as IMPORTANCE OF CLOSEOUT, NETTING, AND insured banks, on an individual basis, and by protect- COLLATERALS ing both supervised and unsupervised market participants, protects the markets from systemic problems The importance of improving the legal regime underof "domino failures." Further, absent termination and pinning financial markets has been recognized by the closeout rights, the inability of market participants to finance ministers of the Group of Seven countries control their market risk is likely to lead them to who, in 1997, agreed "to introduce, where necessary reduce their market risk exposure, potentially drying and appropriate, legislative measures to ensure the up market liquidity and preventing the affected marenforceability of sound netting agreements in relation kets from serving their essential risk-management, to insolvency and bankruptcy rules to reduce syscredit-intermediation, and capital-raising functions. temic risk in international transactions." In this regard, it is important to ensure that financial market participants have the ability to terminate or close out Netting and net financial market contracts and to realize on collateral pledged in connection with these contracts. Netting refers to the right to set off, or net, claims between two or more parties to arrive at a single obligation between the parties. In financial market Closeout transactions, netting can serve to reduce the credit exposure of counterparties to a failed debtor and Closeout refers to the right to terminate a contract thereby to limit "domino failures" and systemic upon an event of default and to compute a terminarisks. As an incident to limiting credit exposure, the tion value due to or due from, the defaulting party, ability to net contributes to market liquidity by pergenerally based on the market value of the contract at mitting more activity between counterparties within that time. This right is critical to the management of prudent credit limits. This liquidity can be important market risk by financial market participants. The in minimizing market disruptions because of the failvalue of most financial market contracts is volatile. ure of a market participant. While the degree of volatility varies with the nature and duration of the contract, this volatility can create significant market risk to the contracting parties. Collateral Many end users of these contracts have entered into them for hedging purposes. Dealers generally enter Frequently, credit exposure under financial market into these contracts in order to profit from meeting transactions is collateralized. This practice is most the needs of end users and other dealers. In both visible in repurchase transactions in which cash and cases, the contracts typically either hedge or are securities are exchanged at the beginning of the transhedged against market risk. Termination of the con- action and the exchange is reversed at the end of the tract allows the nondefaulting party to rehedge the transaction with appropriate adjustment for interposition in order to control that market risk. By vening interest. In addition, market participants are providing for termination of contracts on default, requiring that credit exposure under over-the-counter nondefaulting parties can remove uncertainty as to derivative transactions be collateralized. The right to whether the contract will be performed, fix the value liquidate collateral immediately is important for preof the contract at that point, and proceed to rehedge serving the liquidity of financial market participants. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

312 Federal Reserve Bulletin • May 1999 WORKING GROUP RECOMMENDATIONS TITLE X Recognizing the importance of termination or close- The provisions of title X, Financial Market Contracts, out, netting, and collateral in financial market transac- of H.R. 833 are largely based on the provisions that tions, the Secretary of the Treasury on behalf of the were endorsed by the Working Group. I understand President's Working Group on Financial Markets that in these hearings there have been some concerns transmitted to the Congress, in March 1998, proposed expressed over the effects some of the provisions of legislation that would amend the banking laws and title X may have on proceedings under the Bankthe Bankruptcy Code. The proposed legislation was ruptcy Code and potentially on other creditors of an the result of a multiyear interagency effort to make insolvent debtor. We recognize that amendments to recommendations to improve the legal regime gov- the Bankruptcy Code that affect any particular class erning certain financial market contracts in insol- of creditors are likely to impact other creditors. At vency situations. Explanatory material accompanying the same time, we believe that differing types of the proposed legislation described it as having four claims warrant differing treatment. The potential for principal purposes: effects on other creditors and the need for each recommended provision were considered in formulating To strengthen the provisions of the Bankruptcy Code and the Working Group's recommendations. We continue the FDIA that protect the enforceability of termination to believe that the recommended statutory amendand close-out netting and related provisions of certain ments weighed these considerations appropriately. financial agreements and transactions. Additional language in title X is designed to further the same ends that the Working Group sought To harmonize the treatment of the financial agreements and transactions under the Bankruptcy Code and the to further. Other provisions, such as section 1012 FDIA. on Asset-Backed Securitizations, which was not included in the Working Group's recommendations, To amend the FDIA and FDICIA to clarify that certain may foster the efficiency of the financial markets by rights of the FDIC acting as conservator or receiver promoting certainty. Nevertheless, I believe that the for a failed insured depository institution (and in some situations, rights of SIPC and receivers of certain provisions endorsed by the Working Group are suffiuninsured institutions) cannot be defeated by opera- ciently important to be pursued in this Congress even tion of the terms of FDICIA. if other provisions are not included. This concludes my prepared statement. I will be To make other substantive and technical amendments to clarify the enforceability of financial agreements and happy to address any questions that the members of transactions in bankruptcy or insolvency. the subcommittee may have. Statement by Laurence H. Meyer, Member, Board of financial institutions—in particular, hedge funds—so Governors of the Federal Reserve System, before the that they do not become a source of systemic risk or Subcommittee on Financial Institutions and Con- jeopardize taxpayer funds via the federal safety net. sumer Credit, Committee on Banking and Financial In our market-based economy, the discipline pro- Services, U.S. House of Representatives, March 24, vided by creditors and counterparties is the primary 1999 mechanism for "regulating" this risk-taking. In the case of LTCM, this discipline appears to have been I welcome this opportunity to discuss the Federal compromised. Weaknesses in several key elements of Reserve's supervisory actions in the aftermath of the the risk-management processes at some creditors and near-collapse of Long Term Capital Management counterparties were magnified by competitive pres- (LTCM). Today's hearings cover an important topic. sures, resulting in risk exposures that may not have The LTCM incident merits study to ensure that the been fully understood or adequately managed. Lesslessons it provides are sufficiently understood and than-robust risk-management systems, evidenced by that constructive action is taken to effectively reduce an overreliance on collateral, compromised both the the potential for similar events in the future, without assessment of counterparty creditworthiness and the compromising the efficiency of global capital measurement and control of risk exposures at several markets. financial institutions. The primary issues raised by the LTCM incident To be sure, the lessons stemming from this episode appear to revolve around the broad theme of how to have not gone unlearned, and there is no lack of control the leverage and risk-taking of unregulated effort to identify and implement appropriate public Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 313 policy and private-sector responses to the potential has clearly learned from the LTCM incident, and our risks posed by hedge funds. These efforts range from supervisory staff has seen significant tightening of private industry and supervisory initiatives aimed at credit standards on hedge funds as well as improvestrengthening the credit-risk-management infrastruc- ments in the risk-management processes at major tures at financial institutions, to consideration of banking institutions. Here, too, much work remains. enhanced disclosure by global financial institutions, Accordingly, we look forward to the recommendato those evaluating the costs and benefits of direct tions of the Counterparty Risk Management Policy regulation of hedge funds. Group (CRMPG) regarding private-sector initiatives Efforts to promote market discipline by strength- for enhancing the credit-risk-management practices ening the risk-management systems of creditors and of creditors and their leveraged counterparties. Subcounterparties offer the most immediate and efficient committees of this private industry group, comprised way to accomplish the desired objective of minimiz- of major international banks, securities firms, and ing the potential for systemic risk arising from the hedge funds, are investigating avenues for improving activities of hedge funds. Supervisory oversight of measures of derivative exposures and the exchange bank-risk-management practices, including the issu- of information between counterparties. The findings ance of guidance on sound practices, reinforces the of the group will reinforce the efforts to promote market discipline entailed in banks' assessment and enhancement of risk-management systems at banking surveillance of the risks taken by their counterparties. institutions and are expected to advance sound prac- The recent guidance on sound risk-management prac- tices in key areas such as the type of information that tices issued by the Basle Committee on Bank Super- can be exchanged between hedge funds and their vision, the Federal Reserve, and the Office of the counterparties without compromising hedge funds' Comptroller of the Currency (OCC) represents sig- proprietary information. nificant steps toward achieving the goal of enhancing market discipline. I commend the subcommittee's efforts to advance public awareness of these efforts SUPERVISORY EFFORTS BY THE FEDERAL by holding today's hearings on this recent supervi- RESERVE IN THE AFTERMATH OF LTCM sory guidance. Of course, public sector work on promoting more In its role as a bank supervisor, the Federal Reserve's effective market discipline on hedge funds and other primary contribution to advancing market discipline entities that might employ leverage is by no means lies in its responsibility to ensure that the riskcomplete. The guidance and other supervisory efforts management processes at individual banking organiwe are discussing here today target primarily com- zations are commensurate with the size and complexmercial banking institutions. Work under way by the ity of their portfolios. We promote the adoption of International Organization of Securities Commis- sound risk-management practices through on-site sions (IOSCO) to issue similar guidance regarding reviews and targeted examinations of banking organisecurities firms' relationships with hedge funds is zations and by regularly issuing supervisory guidance another important step. Although not directly focused to both banks and our supervisory staff. This morning on the issue of hedge funds, international efforts to I will briefly summarize recent Federal Reserve enhance public disclosure of financial institution risk efforts in both of these areas and will explain how profiles may also provide meaningful input. In this Federal Reserve supervisory guidance provides direccontext, the recent consultative paper "Recommenda- tion to banking institutions and examiners that suptions for Public Disclosure of Trading and Deriva- ports, and is consistent with, that issued by the Basle tives Activities of Banks and Securities Firms," Committee on Bank Supervision and the Office of the issued jointly last month by the Basle Committee on Comptroller of the Currency. President McDonough's Bank Supervision and IOSCO, makes an important testimony answers the subcommittee's questions contribution to the discussion of possible public pol- regarding the recent guidance on highly leveraged icy responses. In the United States, the President's institutions issued by the Basle Committee on Bank Working Group on Financial Markets is considering Supervision and the regulation of hedge funds in a number of issues and policy responses regarding other developed countries. leveraged institutions and their relationships with Immediately after the LTCM episode, the Federal their counterparties. Its report is expected in the near Reserve detailed staff from the Board of Governors future. and the Federal Reserve Bank of New York to con- Despite these various public sector initiatives, the duct special reviews at those state member banks real key to effective market discipline lies in the with significant hedge fund relationships to identify players themselves—the private sector. The market the following: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

314 Federal Reserve Bulletin • May 1999 • The nature and magnitude of bank credit expo- funds may have employed the same or comparable sures to hedge funds book leverage, LTCM's combination of size and • The comprehensiveness of banks' due diligence leverage was singular. processes regarding hedge funds Investigations of the management of the LTCM • The quantitative controls used in managing expo- account at several institutions found that an oversures to hedge funds reliance on the collateralization of the current market • The adequacy of management information sys- value of derivatives positions and the stature of tems and internal controls with regard to hedge fund LTCM's managers led to compromises in several key counterparties elements of the credit-risk-management process. In • The extent to which the LTCM relationship some cases, assessments of LTCM's creditworthiness was an exception to banks' normal hedge fund was found to be less than adequate as a result of relationships. limited information on the fund's true risk profile and risk-management capabilities. In particular, exposure Our review found that U.S. commercial banking measures and scenario analyses that could have idenexposures to hedge funds are primarily counterparty tified potential losses under stress situations were exposures arising from OTC derivatives contracts. found to be less than adequate. Overall, direct unsecured loans to hedge funds have Importantly, while LTCM was found to be atypical traditionally been a small portion of bank lending, among hedge fund counterparties, shortcomings in even at the larger global institutions. As of the third the risk management of hedge fund counterparty quarter of 1998, direct unsecured loans disbursed by exposures appeared to extend beyond this one fund. all U.S. commercial banks to hedge funds were esti- In several cases, the review team found inadequate mated at $1.7 billion, or approximately 1 percent of counterparty risk-management policies and procetier 1 capital of those banking institutions with expo- dures. In others, while formal policies and procedures sures to hedge funds. This amount represents only may have existed, gaps between policy and practices direct lending arrangements and includes $170 mil- were identified. Specifically, the review team found lion in loans dispersed by U.S. banks to LTCM under that the due diligence and ongoing risk assessments a $900 million shared national credit facility (most of of hedge funds were largely qualitative and lacked which was participated to foreign banking organiza- quantitative rigor. The review also found comprotions). It does not include the $900 million of equity mises in the limit systems and methodologies of investments in LTCM made by three U.S. banking credit exposure measurement employed, including organizations in September 1998. limited use of counterparty exposure stress testing. In As of the third quarter of 1998, only five U.S. particular, measures of the potential future exposures commercial banks had material OTC derivative expo- arising from derivative positions with hedge fund sures to hedge fund counterparties. Credit exposures counterparties were found in need of significant arising from these relationships consisted of the cur- enhancements at some banks. In general, banks rent marked-to-market value of the derivative trans- placed undue reliance on the collateralization of curactions as well as the potential exposure that might rent mark-to-market exposures and underestimated arise from future changes in these market values (the the potential exposure that could arise under difficult potential future exposure or PFE). All of the banking market conditions. institutions mark their derivative positions to market The findings of this special review served as a on a daily basis and require any net current market primary source for the Basle Supervisory Commitvalue owed to them to be fully collateralized, gener- tee's recent report, "Banks' Interactions with Highly ally with high-quality securities, such as U.S. Trea- Leveraged Institutions." Federal Reserve staff played suries or sovereign debt from Group of Ten (G-10) a major role in shaping the scope of the Basle docucountries. For those hedge funds judged to be of ments, drafted significant portions of early versions lower credit quality, banks generally require the post- of the Basle Committee's main paper, and provided ing of collateral or margin above current market significant input into its sound practices paper. Presivalues to protect against the potential future exposure dent McDonough's testimony discusses, at length, of derivative contracts with these counterparties. the content of the Basle documents including the With regard to LTCM, the review found that the sound practices they identify. fund was atypical among hedge fund counterparties The Board of Governors fully endorses both Basle in both the size of its positions and the amount of documents. The Basle guidance has been incorpoleverage it employed. While several hedge funds had rated in Federal Reserve guidance by direct reference larger net asset values (capital) than LTCM and a few in our recent Supervision and Regulation Letter, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 315 "Supervisory Guidance Regarding Counterparty be made by the Counterparty Risk Management Pol- Credit Risk Management" (S.R. 99-3). They have icy Group. been transmitted by the appropriate Federal Reserve Banks are also moving to develop more realistic Banks to all state member banks and holding compa- counterparty credit-risk-exposure measures including nies with significant hedge fund exposures and to all the development of various types of stress testing of Federal Reserve staff supervising those institutions. their credit-risk exposures to major counterparties. Moreover, the March 1999 update to the Federal Some banks are reviewing their policies regarding Reserve's Trading and Capital Markets Activities how, when, and with what type of counterparties Manual will incorporate the specific sound prac- they will require collateralization of potential future tices identified in the Basle documents in a special exposures. hedge fund subsection of its existing Counterparty In general, all of the banks reviewed last year have Credit Risk Management section. conducted their own internal assessments of lessons The results of the targeted reviews conducted in learned and, in their own self-interest, are reassessing the third and fourth quarter of 1998 have been shared their business strategies regarding hedge funds and with each institution reviewed, and supervisory plans moving forward to make necessary enhancements to tailored to each institution's particular circumstances their risk-management processes. have been developed. Supervisory staff is monitoring each bank's management of hedge fund counterparty exposures as well as the bank's efforts to address any FEDERAL RESERVE BOARD GUIDANCE ON identified risk management shortcomings. COUNTERPARTY CREDIT RISK MANAGEMENTS I understand that other G-10 bank supervisors have translated the Basle documents into the appropriate Federal Reserve supervisory guidance that is particuforeign language and transmitted them to industry larly pertinent to issues surrounding bank relationassociations or institutions with hedge fund relation- ships with hedge funds was first issued in the Federal ships. In some cases, supervisors have taken steps to Reserve's Trading Activities Manual (TAM), pubmonitor bank hedge fund exposures and bank initia- lished in 1994. This manual discusses general sound tives to enhance internal counterparty credit risk man- practices for managing the market, credit, legal, agement systems. liquidity and operating risks involved in bank trading and derivatives activities. The manual also provides guidance in other areas such as accounting, capital PRIVATE SECTOR RESPONSE IN THE requirements, financial performance measurement, AFTERMATH OF LTCM ethics and regulatory reporting, and compliance. It also provides more than thirty-five individual instru- As would be expected coming out of the LTCM event ment profiles that describe the risks and supervisory and other market difficulties in 1998, banking institu- issues involved in each product. Over the years, this tions, in their own self-interest, appear to be well manual has come to serve as a definitive industry under way in making enhancements to their credit resource on sound risk-management practices as they risk management systems. With regard to the due relate to trading and derivative activities. Revision of diligence process, banks are requesting and receiving the guidance in this manual is an ongoing process. more information from their hedge fund counterpar- The manual was substantively revised in 1998 and is ties, such as value-at-risk calculations, position con- updated each March and September. centrations, aggregate off-balance sheet positions, In 1994, the Federal Reserve also issued specific and the results of stress tests. Banks have also guidance focusing on hedge funds. Both this specific increased the rigor of the due diligence processes guidance and our manual emphasize the importance applied to hedge fund counterparties, including the of sound financial analysis of counterparties that can use of their own quantitative risk-management spe- quickly adjust their risk profiles. cialists to conduct on-site reviews of hedge fund risk- In reviewing the 1998 financial performance of management systems. Increasingly, hedge funds rec- large banking institutions, a number of general ognize that they need to provide their counterparties lessons on how, where, and why breakdowns in with more information. All parties are looking for risk-management processes can occur have been remedies short of having funds disclose specific posi- reemphasized to both banks and bank supervisors. As tion information that they feel might compromise the has been the case in most instances of bank losses, integrity of their proprietary investment strategies. It competition, the pursuit of earnings, and the general is expected that a major contribution in this area will press of business often result in the introduction of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

316 Federal Reserve Bulletin • May 1999 risk exposures for which existing risk-management sures can lead to important gaps in the assessment of infrastructures may not be sufficient. Moreover, risks to specific types of counterparties. breakdowns in risk management most often arise in The guidance specifically addresses four basic eleproduct, customer, and business lines that experi- ments of counterparty credit risk-management sysence significant growth and above-normal initial tems: the assessment of counterparty creditworthiprofitability. ness; credit-risk-exposure measurement; the use of In an effort to emphasize the importance of some credit enhancements and contractual covenants; and of the general lessons highlighted by events over the credit-risk-exposure limit-setting and monitoring syspast two years and to advance the application of these tems. With regard to the assessment of counterparty lessons in the interests of avoiding future difficulties creditworthiness, the guidance points out the need for in other areas, the Federal Reserve issued its supervi- policies and procedures that are tailored to the risk sory letter on counterparty credit-risk-management profiles of counterparties and for internal controls on February 1 of this year to provide general guid- that ensure actual practices conform with these poliance. The guidance is aimed at providing supervisors cies. In complying with this guidance in the context and bank management insights on those elements of of their hedge fund relationships, banks are expected counterparty credit-risk-management systems at large to have specific policies for assessing the unique risk complex banking organizations that may need special profiles of hedge funds, including the scope of due review and enhancement in light of the rapid changes diligence analysis and ongoing monitoring to be contaking place in banking and financial markets. The ducted, the type of information required from hedge guidance is targeted at relationships withl all types of fund counterparties, and the nature of stress testing bank counterparties, including hedge funds. It reiter- used in assessing credit exposures to hedge funds. As ates and expands upon fundamental principles of mentioned earlier, the Federal Reserve has adopted counterparty credit-risk-management that are covered the Basle Committee's recent guidance on sound in existing supervisory materials of the Federal practices governing bank relationships with hedge Reserve and other regulators, and in established funds and expects that banks' internal policies regardindustry standards. It emphasizes areas that, while ing their hedge fund relationships will be brought generally understood for several years, have become into compliance with those sound practices. increasingly important given the global linkages of In the area of exposure measurement, the Federal financial markets. In particular, the important interre- Reserve's guidance also points out that potential lationships between market and credit risks and their future exposure measures are becoming more imporeffect on the magnitude of derivative counterparty tant in managing the credit exposures of derivatives exposures, especially in times of stress, is an increas- positions. Accordingly, institutions must ensure that ingly important area that merits the attention of all potential future exposures for both secured and unsebanks engaged in derivative activities. Accord- cured positions are measured realistically and are ingly, this issue is discussed at length in our recent better incorporated into measurement and limit sysguidance. tems. It also advises institutions to step up existing From a broad perspective, the guidance advises programs to enhance credit-risk-exposure measures banking institutions to focus sufficient resources on by incorporating netting and portfolio effects. The ensuring the adequacy of all elements of their coun- need for better stress testing and scenario analysis of terparty credit-risk-management systems, especially credit exposures that incorporates the interaction of for activities, business lines and products experienc- credit and market risks is also identified. In essence, ing significant growth, above-normal profitability or the guidance points to the need for a better balance risk profiles, and large potential future exposures. between the qualitative and quantitative elements of Recognizing that strong internal controls and internal exposure assessment and management for all types audit functions are the first line of defense in avoid- of counterparties. ing problems, the guidance also advises institutions to ensure that internal audit and independent risk management functions focus on growth, profitability, CONFORMANCE OF FEDERAL RESERVE and risk criteria in targeting their reviews. Institu- SUPERVISORY GUIDANCE WITH OTHER tions are also advised to calibrate their credit risk- SUPERVISORS management policies and procedures to the risk profiles of specific types of counterparties and instru- The development of supervisory guidance on sound ments. Too often, general policies and procedures risk management, like industry practices, is an evoludeveloped to cover all types of counterparty expotionary process enhanced by experience. It could be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 317 argued that, to a large extent, the fundamental prin- sure and adjust risk tolerances accordingly. Our most ciples of assessing counterparty credit risks, the mea- recent guidance on the measurement of potential suring and stress testing of the potential future expo- future exposures and stress testing supplements this sures of derivative positions, and the dangers of prior guidance. overreliance on collateral have been well documented Perhaps the most important guidance emphasized in supervisory guidance for several years. However, by the Federal Reserve and the OCC is that which given advances in technology and the increasing advises banks and examiners to ensure that sufficient pace of financial innovation and market interdepen- risk management is targeted at new, growing, and dency, the techniques and means used to implement highly profitable activities. As mentioned above, such these principles are under constant development and areas have been the source of most bank losses. refinement. Accordingly, supervisors must endeavor In summary, the Federal Reserve believes that its to ensure that their guidance is as up to date as existing supervisory guidance on trading and derivapossible. tives activities at state member banks and bank As mentioned above, our most recent guidance holding companies is entirely consistent with, and both reemphasizes and supplements existing Federal complementary to, that of the Basle Committee on Reserve Board principles and guidelines. Although Bank Supervision and the OCC. Together, this superdifferent supervisors start from different bases of visory guidance offers a clear set of sound practices existing guidance, we believe the current body of that, when implemented appropriately, serves to Federal Reserve guidance on the risk management enhance and support market discipline by strengthof trading, derivatives, and other capital markets ening the risk-management processes of major crediactivities is entirely consistent with that issued over tors and counterparties. the years by the Basle Committee on Bank Supervision and by other U.S. bank regulators. The recent guidance released by the Basle Commit- SUPERVISORY LESSONS LEARNED tee, "Sound Practices for Interactions with Highly Leveraged Institutions (HLIs)," covers the same Events in developing and developed financial marmaterial and provides the same direction to super- kets and the various types of losses posted by bankvised institutions for a specific type of counterparty ing institutions over the past two years, including as that addressing all types of counterparties con- recent events surrounding bank hedge fund relationtained in existing Federal Reserve guidance. More- ships, have also provided supervisors and examiners over, as was mentioned above, the specific Basle with important lessons. From one perspective, we guidance has been fully incorporated in the soon to would like to think that effective supervision contribbe released updates to our Trading and Capital Mar- uted to the ability of U.S. institutions to weather the kets Activities Manual. financial storms of the past two years. Our reviews In addition, existing Federal Reserve guidance is indicated and the financial results illustrate that, while also consistent with that issued by the OCC. In its the LTCM incident and other episodes over the past most recent supplemental guidance to Banking Circu- two years may have significantly impacted earnings, lar 277 and the Comptroller's Handbook for National they did not threaten the solvency of any U.S. com- Bank Examiners, the Comptroller identifies thirteen mercial banking institution. lessons learned from events over the past two years. Still, our review of our own performance suggests Although Federal Reserve guidance on trading and room for enhancements on our part. Within the conderivative activities may use different formats, it con- text of the Federal Reserve's risk-focused approach veys the same direction and sound practices to super- to supervision, major counterparty exposures are genvised institutions embodied in each of these thirteen erally reviewed during both regular and targeted lessons. For example, the Comptroller's recent guid- reviews of banks' derivatives and counterparty credit ance discusses the need for senior management risk systems. Our internal reviews found several and the board of directors to understand the limits of cases in which examiners, like banking institutions, their price-risk-measurement systems and goes on to may have placed too much emphasis on the full emphasize the need for stress testing such exposures. collateralization of current exposures. In the past, Supervisory guidance of the Federal Reserve has examiners have generally focused supervisory long advised of the importance of stress testing mar- resources on assessing the risks entailed in unsecured ket risks and the conveyance of these reports to credit exposures. Moving forward, our guidance senior management and the board of directors so that instructs examiners to incorporate measures of potenthey can fully understand the institution's risk expo- tial future exposure in stratifying samples and select- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

318 Federal Reserve Bulletin • May 1999 ing counterparties and transactions upon which to general, have received, and continue to receive, from base targeted testing of practices and internal con- both public and private venues. Although market trols, regardless of the collateralization of cur- discipline may not have worked in preventing the rent market value exposures. Examiners are also LTCM event in the first place, the marketplace has instructed to review the results and adequacy of an reacted appropriately and we have learned much to institution's stress testing and scenario analyses in carry us forward. Banks and securities firms, in assessing both the magnitude and management of their own self-interest, have tightened their riskcredit exposure. management processes as they relate to hedge funds. The need to emphasize in-depth transaction testing Hedge funds now face a new reality of tougher counis another important supervisory lesson learned (or terparty oversight. Supervisors are also enhancing relearned) in the LTCM case, and this is emphasized their oversight of banks' hedge fund exposures. The in our supervisory guidance. The increasing complex- supervisory guidance issued by the Basle Supervisors ity of financial markets and banking activities places Committee, the OCC, and the Federal Reserve reprea premium on focusing supervisory resources at high sent an effective, quick, and needed response to an risk areas and conducting sufficient transaction important issue. This guidance effectively reinforces testing to identify variances between policy and prac- private sector initiatives to enhance counterparty tice. Increasingly this involves conducting transac- credit risk management processes. As I mentioned at tion testing with highly qualified specialists. Target- the outset, even more work needs to be done to ing resources at retaining, recruiting, and developing ensure that the lessons we have learned over the past such specialists as well as providing them automated two years become engrained in standard practice and tools to enhance their efficiency and effectiveness is a to ensure that effective market discipline is brought to top supervisory priority at the Federal Reserve. bear on the risk-taking of hedge funds and other entities that make use of significant financial leverage. In particular, we look forward to the reports and recommendations of the Counterparty Risk Manage- CLOSING ment Policy Group that will provide additional practical tools for implementing both industry and super- In closing, I would like to emphasize the significant visory sound practices in counterparty credit risk amount of attention that the LTCM incident, in parmanagement. ticular, and bank relationships with hedge funds, in Statement by William J. McDonough, President, Fed- concentrate on discussing the Federal Reserve's poleral Reserve Bank of New York, before the Subcom- icy guidance to banks regarding hedge funds—and mittee on Financial Institutions and Consumer Deputy Comptroller of the Currency Brosnan. I will Credit, Committee on Banking and Financial Ser- focus my remarks on the work done at the internavices, U.S. House of Representatives, March 24, 1999 tional level by the Basle Committee on Banking Supervision, which issued a report and sound prac- I appreciate the continued attention that you and your tice recommendations on January 28 with regard to colleagues on the subcommittee and on the Banking banks' dealings with HLIs. Committee as a whole have brought to bear on the Before I get too far into the details, let me share complex and important issues under discussion today. with you my overall approach to the issues we will be The near-failure of Long-Term Capital Manage- discussing this morning. My views have been shaped ment (LTCM) last fall raised a number of issues not only by my positions as Chairman of the Basle regarding the activities of highly leveraged institu- Committee on Banking Supervision and President of tions. Since then, banking supervisors have been hard the Federal Reserve Bank of New York but also by at work to assess where banks have been deficient in my twenty-two years of experience as a commercial their dealings with hedge funds and other highly banker. Both my private- and public-sector experileveraged institutions, which I will refer to as ence have led me to conclude that the LTCM epi- "HLIs." This work has resulted in the issuance of sode, and the proper supervisory response to it, are supervisory guidance, both internationally and in the fundamentally about two things: leverage and good United States, with the aim of improving banks' judgment. policies and practices regarding HLIs. Leverage is an important part of our financial sys- I am happy to be appearing before you with my tem. Most of the time leverage plays a positive role, colleague Governor Meyer—who I understand will resulting in greater market liquidity, greater credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 319 availability, and a more efficient allocation of many banks to neglect other critical elements of resources in our economy. But problems can arise effective credit risk management, including in-depth when financial institution^ ^ jo far in extending credit analyses of counterparties, effective exposure credit to their customers ^ lunterparties. That's measurement and management techniques, and the where good judgment comes%ii. use of stress testing. In my view, the most important decisions a banker can make are whom to do business with and how far that business relationship should be pursued. Those The Credit Approval Process judgments are not easy: One of our fundamental aims as supervisors should be to see that banks are For a bank to make sound lending decisions, it needs using the right tools to make those decisions. Because to obtain sufficient information about the borrower. banks play a pivotal role in the world economy, Supervisors routinely emphasize the need for banks the importance of these decisions cannot be to have an effective credit approval process consistunderestimated. ing of formal policies and procedures, accompanied by documentation of actual credit decisions. I should note that banks' credit exposure to LTCM was in two BASLE REPORT FINDINGS AND GUIDANCE forms: the exposure arising from the trading of financial products with LTCM, and the exposure stem- Introduction ming from loans made to LTCM. Banks' primary exposure to LTCM was through their trading activi- Let me turn to the Basle Committee on Banking ties. Loans were not a large factor in the events that Supervision, which is composed of bank supervisors transpired last fall. from the Group of Ten (G-10) countries who develop Regardless of whether a bank is a trading countersupervisory policy for internationally active banks. party with, or a direct lender to, an HLI, it must While the committee does not have formal enforce- obtain comprehensive and timely financial informament powers, its conclusions and recommendations tion about that HLI's risk profile and credit quality, are widely implemented, both in G-10 countries and and it must perform ongoing credit analysis of that in many other nations. The committee's report fo- HLI. In addition, a bank must have a clear undercuses on the relationship between banks and HLIs. standing of an HLI's operations and risk-management Our goal was to provide a framework for identifying capabilities. The committee observed weaknesses in the broader issues raised by the LTCM episode, the each of these areas. Let me give a few examples. policy responses of supervisors, and some key risk- For one, the committee found that banks did not management challenges for the banking industry obtain sufficient financial information to allow for a going forward. full assessment of how much and what types of risk Because the Basle Committee's focus is on bank- had been assumed by large HLIs. In particular, banks ing supervision and regulation, its primary emphasis did not obtain the information needed to assess leverhas been on ensuring that major banks prudently age sufficiently. They did not have sufficient informamanage their risk exposures to HLIs. The best way to tion to understand HLIs' concentrations in particular achieve this is through the adoption of sound prac- markets and risk categories, or their exposure to tices by the industry. It is primarily the responsibility broad trading strategies. of each banking organization to manage its risks. But Also, banks did not sufficiently understand the given the special role that banks play in our economy ability of HLIs to manage their risks. Because risk and the systemic risks that can occur when they do profiles can change from one day to the next, or even not function properly, banks' risk-management activi- from moment to moment, it is necessary for an HLI's ties are a legitimate public policy concern. Our sound counterparties to ensure that the HLI can effectively practice standards give banks and their supervisors manage its business operations and risks on an ongothe tools to measure industry progress toward the ing basis. goal of effective risk management. The committee's report revealed a number of deficiencies in banks' practices. In particular, the com- Exposure Measurement mittee observed an imbalance among the key elements of the credit-risk-management process, with The committee also concluded that banks should too strong a reliance upon collateral to protect against develop better measures of the credit exposure resultcredit losses. This undue emphasis, in turn, caused ing from different types of trading activities. In par- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

320 Federal Reserve Bulletin • May 1999 ticular, banks must develop more effective measures • Establish meaningful measures of potential of what is called "potential future exposure." Poten- future exposure tial future exposure measures the credit exposure • Establish mear^ ^-%redit limits, incorporating between a counterparty and a bank and how this the results of stress t £ exposure could change in the future as market prices • Monitor exposure1^ a frequent basis. fluctuate. The ability of banks to measure potential future Banks generally tightened the credit-riskexposure is crucial when dealing with HLIs. Unfortu- management standards for their HLI exposures after nately, methods for calculating potential future expo- the near-collapse of LTCM. However, it is important sure had not kept pace with the growth and complex- that supervisors ensure that progress continues. ity of HLIs. As we have seen, under volatile market Memories tend to be short, and we want to make sure conditions, a bank's exposure to HLIs can grow that as markets calm down, as they have in the past substantially. months, banks do not return to the old ways of doing In many instances, banks request HLIs to post business. collateral covering their exposures. However, a bank that does not use a realistic measurement of potential future exposure to decide how much collateral Possible Future Changes in the Capital Accord to require can later find its collateral holdings to be grossly insufficient. We expect the industry to As you know, the Basle Capital Accord is one of the develop more effective ways to measure and manage great successes of the Basle Committee. Well before potential future exposure, and supervisors will closely the events of last fall, the Basle Committee was monitor progress to ensure that this occurs. developing fundamental revisions to the accord to better reflect the many changes in financial markets and risk-management practices since the accord's Stress Testing creation in 1988. Among the G-10 supervisors, there is broad agreement that the future accord should The committee's report also shows that banks must make greater distinctions among a bank's credit risks. develop measures that better account for credit risk These discussions are continuing. under extreme market conditions. This can be The strong link between sound risk-management achieved through what we call "stress tests," where practice and the Capital Accord provides another a bank conducts "what if" analyses of how credit reason for rapid adoption of the Basle Committee's exposures to a single counterparty could grow under sound practices. The HLI report raises several importhese market conditions. These might include a large tant technical issues of relevance to the accord. For rise or fall in interest rates or a major change in an example, the committee's call for better measures of exchange rate. potential future exposure may apply to the way such More rigorous stress testing could have given exposures are measured for capital purposes in the banks at least some warning of the types of exposures accord. they faced last fall. The critical importance of stress testing is noted very explicitly in our new supervisory guidance. OTHER REGULATORY EFFORTS Sound Practice Recommendations Introduction in the Basle Committee Report One of the Basle Committee's hopes is that its sound The Basle report is accompanied by a sound practices practice recommendations will be widely impledocument that sets forth an important set of standards mented by supervisors both here and overseas. Govthat will guide both banks and their supervisors. ernor Meyer and Deputy Comptroller Brosnan will Among other things, these sound practices call upon be discussing in detail the guidance issued by the banks to Federal Reserve and the Office of the Comptroller of the Currency. I should also note that the New York • Establish clear policies governing their involve- State Banking Department recently released a report ment with HLIs on banks' hedge fund activities that supports the • Adopt credit standards addressing the specific observations and supervisory priorities set forth in risks associated with HLIs the Basle Committee report. In addition, international Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 321 supervisory bodies and supervisors from countries supervisory oversight and costs. Thus, many have outside the United States are in the process of acting chosen to organize themselves legally in jurisdictions on many of the proposals discussed here today. that offer modest supervision and low taxes. Am I pleased that so many HLIs are organized legally in what many would characterize as tax Actions Regarding Hedge Funds by havens? No. But I do not think that problems involv- International Groups and Individual Countries ing unwise exposure to HLIs can fairly be blamed on the fact that many of these entities are chartered In February, IOSCO, the International Organization offshore. To be sure, the due diligence review that of Securities Commissions, established a task force banks make for every customer should encompass on HLIs. I understand that IOSCO is focusing on the customer's place of incorporation and its securities firms' dealing with hedge funds and the ramifications. ways in which risk management and market transpar- Currently, I know of no comprehensive direct reguency can be improved, which complements the Basle lation of hedge funds in any of the G-7 countries. Committee's work concerning banks. Because banks There are, however, aspects of hedge fund activities, and securities firms are the primary counterparties of such as commodities and futures trading, that are HLIs, it is crucial that there be a coordinated supervi- subject to regulatory oversight. sory response at the international level among securi- I do not believe that it would be easy to develop a ties and bank regulators. workable approach to the direct oversight of hedge At their meeting last month, the Group of Seven funds. The reality is that imposing direct regulation (G-7) countries issued a statement endorsing the on hedge fund entities that are chartered in the major efforts of both the Basle Committee and the IOSCO. industrialized countries would likely result in the The G-7 intends to continue to review the topic of movement of all operations to sites offshore. Direct HLIs, which will be of assistance as we urge coun- regulation of hedge funds would require a high level tries to implement sound practices in this area. of coordination involving the political, legislative, I would not want to characterize or opine upon and judicial bodies of many countries. This is clearly the efforts of any one jurisdiction; many countries' beyond the jurisdiction of most banking supervisors. efforts, like ours, are under way only recently and As bank supervisors, we have opted for a strategy need time to develop and take hold. There probably that will, I believe, bring substantial near-term results. will be differences in the degree to which supervisors Our approach to improving the financial system's in different countries address the questions I have interactions with HLIs is to focus quickly and aggresdiscussed today—if only because the intensity of HLI sively on the decisions by banks that could create activities varies among countries. But on the whole, I excessive leverage or imprudent credit exposure. Perbelieve that supervisors in major countries will fol- haps our strategy can be termed "indirect," but I am low up on the recommendations issued by the Basle reasonably confident that it will succeed. Committee. CONCLUSION Direct versus Indirect Methods of Addressing HLI Safety and Soundness Chairman Roukema, I thank you and your colleagues for the opportunity to explain more about the interna- Many governments have considered or will consider tional efforts that address financial institutions' dealthe advantages and disadvantages of imposing direct ings with hedge funds. I promised quick and decisive regulation on the HLI industry. The Basle Committee action on the events that were so fresh in our minds report discussed that issue and concluded that con- when I testified before you and other members of the centrating on the behavior of banks and other coun- House Banking Committee last fall. I hope you agree terparties doing business with HLIs would yield that we have made real progress at the Basle Commiteffective and more immediate results. tee level and in the supervisory developments you A common element of many HLIs is that they are will hear about in Governor Meyer's and Deputy structured in ways that minimize their exposure to Comptroller Brosnan's testimony. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

322 Federal Reserve Bulletin • May 1999 Statement by Edward M. Gramlich, Member, Board required reserve balances have declined substantially of Governors of the Federal Reserve System, before over the past five years. the Committee on Banking, Housing, and Urban Because reserve balances, unlike currency, do not Affairs, U.S. Senate, March 25, 1999 have to be collateralized, they serve as a source of excess collateral for currency. To maintain a balance I appreciate this opportunity to appear before the between the demand for and the supply of reserve committee to present the views of the Board of balances that is consistent with the intended stance of Governors of the Federal Reserve System on cur- monetary policy, the Federal Reserve has responded rency collateral, financial netting, and consumer to the declining demand for reserves by accumulating issues raised by the Conference Report on H.R. 3150, a smaller volume of Treasury securities than it would the Bankruptcy Reform Act of 1998. The Board have in the absence of retail sweep accounts. This strongly supports section 1013 of the Conference means that the growth of retail sweep accounts has Report relating to Federal Reserve collateral require- effectively diminished the margin of excess currency ments and urges its inclusion in this year's legisla- collateral. As additional sweep programs are impletion. The Board also strongly supports the financial mented, the margin will tend to shrink further. One contract provisions of title X of the Conference can trace the effects of declining reserve balances on Report. Our testimony also offers comments on the excess currency collateral in the simplified Federal consumer provisions found in sections 112, 113, 114, Reserve balance sheet in appendix A—excess curand 1128 of the Conference Report. rency collateral was down to about $20 billion by the end of 1998 and is likely to drop further. The small margin of available collateral poses a CURRENCY COLLATERAL serious potential problem for the Federal Reserve. Although discount window borrowing has been very Section 16 of the Federal Reserve Act requires that low in recent years, it could increase substantially in the Federal Reserve collateralize Federal Reserve the future. For example, one or more banks could notes when they are issued. The list of eligible collat- experience operational problems (perhaps because of eral includes Treasury and federal agency securities, computer failures related to the century date change) gold certificates, Special Drawing Right certificates, that require a large volume of temporary funding and foreign currencies, the items in bold print on the from the discount window. These banks might not be left side of the balance sheet in appendix A.1 In able to tender the types of collateral that would addition, the legally eligible backing for currency qualify for loans under section 13. Consequently, any includes discount window loans made under sec- such loans would need to be made under other provition 13 of the Federal Reserve Act. Over the years sions of the act, and under current law they would not sections have been added to the act that permit lend- be eligible to back currency. ing by the Federal Reserve to depository institutions If the aggregate need for such loans exceeded under provisions other than section 13 and against a excess currency collateral, the Federal Reserve would broader range of collateral than is allowed under be faced with an unpalatable choice. Were the Fedsection 13. However, the currency collateralization eral Reserve to extend the credit, it would not be able requirement of section 16 has not been similarly to absorb all of the resulting excess reserves by amended, thus limiting the types of loans the Federal selling Treasury securities from its portfolio because Reserve can use to back the currency. selling the necessary amount would cause a defi- To date, the Federal Reserve has always had more ciency in currency collateral. The increase in excess than enough collateral to back Federal Reserve notes. reserves would reduce short-term interest rates, caus- In recent years, however, the margin of excess cur- ing an unintended easing of monetary policy and rency collateral has been dwindling. The primary perhaps risking inflation. The situation would persist reason for the decline in excess currency collateral until the loans were repaid. Were the Federal Reserve has been the development of retail sweep accounts. instead to refuse to make the discount loans in order Retail sweep accounts are a technique used by banks to maintain the stance of monetary policy and conto increase earnings by reducing their required tinue to collateralize the currency, the depository reserves. Because of the growth of sweep accounts, institutions seeking credit would not be able to meet their obligations, with possible adverse implications for the financial system as well as the individual 1. The attachments to this statement are available from Publications Services, Mail Stop 127, Board of Governors of the Federal depository institutions. Thus the Federal Reserve Reserve System, Washington, DC 20551, and on the Board's site on would need to choose between two of its most fundathe World Wide Web (http://federalreserve.gov). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 323 mental policy objectives—protecting the value of the fully in appendix B, the Board supports enactment of currency and preserving financial stability. the amendments recommended by the Working The legislation in section 1013 of the Conference Group. The importance of improving the legal regime Report would greatly reduce the likelihood of circum- underpinning financial markets has been recognized stances that would give rise to such difficulties. It by the finance ministers of the Group of Seven counwould authorize the Federal Reserve to collateralize tries. In this regard, the ability to terminate or close the currency with all types of discount window loans, out and net contracts and to realize on collateral not just those made under section 13. By permitting pledged in connection with these contracts is vital. all discount window loans to back the currency, the Enactment of the provisions of title X would reduce Federal Reserve would be able to collateralize cur- uncertainty in these areas. This reduced uncertainty rency fully—as the original framers of the Federal should foster market efficiency and limit market dis- Reserve Act saw fit to require—in virtually all con- ruptions in the event of an insolvency, limit risk to ceivable circumstances while conducting mone- federally supervised financial market participants, tary policy in pursuit of the nation's macroeconomic including insured depository institutions, and limit objectives and making any and all discount window systemic risk. loans that are appropriate. Closeout refers to the right to terminate a contract I might note that section 101 of S. 576, the Senate upon an event of default and to compute a terminaregulatory relief bill, would also reduce the odds that tion value due to or due from the defaulting party, the currency collateral requirement could inappropri- generally based on the market value of the contract at ately constrain Federal Reserve operations. If the that time. By providing for termination of contracts Federal Reserve were permitted to pay interest on on default, nondefaulting parties can remove uncerrequired reserve balances, as provided for in that tainty as to whether the contract will be performed, proposal, the incentives that depository institutions fix the value of the contract at that point, and proceed face to generate new retail sweep arrangements to rehedge themselves against market risk. would be greatly reduced, and some banks would The right to terminate or close out contracts is probably even dismantle such arrangements. As a important to the stability of market participants and result, the level of reserve balances should rise, pro- reduces the likelihood that a single insolvency will viding a modest additional source of funds to pur- trigger other insolvencies due to their market risk. chase collateral to back the currency. This step by Further, absent termination and closeout rights, the itself would not be adequate to address the currency inability of market participants to control their marcollateral issue, but it would help. More important, ket risk is likely to lead them to reduce their marthe prevention of further erosion in required reserve ket risk exposure, potentially drying up market balances and the possibility that they would rise liquidity and preventing the affected markets from would assist the Federal Reserve in the implementa- serving their essential risk-management, credittion of monetary policy by forestalling the possibility intermediation, and capital-raising functions. that the volatility of overnight interest rates could rise Netting refers to the right to set off, or net, claims substantially as a result of low reserve balances. The between parties to arrive at a single obligation Federal Reserve strongly supports this section of between the parties. Netting can serve to reduce the S. 576. credit exposure of counterparties to a failed debtor and thereby to limit systemic risks and to foster market liquidity. FINANCIAL NETTING Finally credit exposure under financial market transactions is frequently collateralized. The right to The Federal Reserve commends the committee for liquidate collateral immediately is important for preaddressing title X, Financial Contract Provisions, of serving the liquidity of financial market participants. H.R. 3150, Bankruptcy Reform Act of 1998, which Recognizing the importance of termination, or was considered in the last Congress. Title X of closeout, netting, and collateral, in March 1998 the H.R. 3150 included a number of proposed amend- Secretary of the Treasury, on behalf of the Presiments to the Federal Deposit Insurance Act and the dent's Working Group on Financial Markets, trans- Bankruptcy Code as well as other statutes related to mitted to the Congress proposed legislation that financial transactions. Most of these amendments would amend the banking laws and the Bankruptcy incorporated or were based on amendments to these Code. As I noted previously, the provisions of statutes that were endorsed by the President's Work- Title X, Financial Market Contracts, of H.R. 3150 ing Group on Financial Markets. As discussed more were largely based on the provisions that were Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

324 Federal Reserve Bulletin • May 1999 endorsed by the Working Group. Additional language protected debit cards that generally limit a consumin title X was designed to further the same ends that er's liability to $50 or less. Though these rules are not the Working Group sought to promote. Other provi- identical to those in the EFTA and the Board's Regusions, such as section 1012 on Asset-Backed Securiti- lation E, which implements the EFTA, these volunzations, which was not included in the Working tary rules bring consumers' liability for these debit Group's recommendations, may also foster the effi- cards more in line with the liability rules for credit ciency of the financial markets by promoting cer- cards. The voluntary rules govern all institutions tainty. I understand that there have also been con- offering these types of debit cards and thus diminish cerns expressed over this provision. Although we consumers' liability substantially. In this case we believe that this provision is beneficial, we think the believe the private sector has already acted appropriprovisions endorsed by the Working Group are suffi- ately to address the liability issue. ciently important to be pursued by the Congress even With regard to the possible need for additional if the asset securitization provision is not included. disclosures that explain how non-PIN protected debit cards differ from other credit cards, the Board is studying this matter. We have the authority under the CONSUMER PROTECTION EFTA to adopt additional disclosures but must weigh the value of additional consumer protection against The Conference Report contains a number of provi- the additional compliance costs that would be sions relating to consumer protection laws the Fed- imposed. Because the industry has already estaberal Reserve Board administers. Section 113 would lished voluntary limits on liability and the Board is direct the Board to study the adequacy of existing currently analyzing the need for additional discloprotections that limit consumers' liability for the sures, we believe the study mandated in section unauthorized use of "dual use" debit cards. Com- 113(c) of the Conference Report may be unnecessary. monly debit cards—such as those used at an auto- Section 112 of the Conference Report would mated teller machine (ATM)—can be used only if the require that the Board study the adequacy of informaconsumer provides a personal identification number tion consumers receive about the deductibility of (PIN). However, some debit cards can also be used interest paid on home-secured credit transactions. without a PIN; consumers sign a sales draft as they The Board is to consider whether additional disclowould for credit cards. Consumers' liability under the sures are necessary when the total amount of the Truth in Lending Act (TILA) for the unauthorized home-secured credit extended exceeds the fair maruse of a credit card is no more than $50; for debit ket value of the dwelling. cards, the potential loss under the Electronic Fund The Truth in Lending Act and the Board's Regula- Transfer Act (EFTA) can be much higher. Depending tion Z, which implements TILA, currently have limon how timely the consumer is in reporting the unau- ited disclosure requirements about the effect of the thorized use, the consumer's liability in the latter credit transaction on consumers' income tax liability. case may be as much as $500 and may even be Creditors offering home-secured lines of credit must unlimited if the consumer does not notify the institu- provide generic disclosures when an application is tion within sixty days of the sending of a periodic made, including a statement warning consumers to statement listing an unauthorized transaction. consult a tax adviser regarding the deductibility of Some observers have expressed concern that con- interest and other charges connected with the line of sumers using debit cards in the same way that they credit. Creditors offering purchase-money mortages use credit cards may not understand the difference in and other home-secured installment loans are not their potential risk of loss. The Conference Report required to provide any tax-related disclosures. requires that the Board study how well existing law The Board recognizes that it is useful for consumprotects consumers against unauthorized use of debit ers to be aware of the potential tax implications of cards, whether the industry has enhanced the level of home-secured credit transactions. But we have conprotection through voluntary rules, and whether addi- cerns about the study required by section 112(a). The tional amendments to the EFTA or the Board's regu- tax code is complex, and its applicability to each lations are necessary. consumer depends on personal financial information The Board believes that market discipline is pref- and additional analysis. Creditors often do not have erable to government-imposed regulations. As an all the information that would permit them to provide example of how market discipline might work, both specific meaningful tax advice to consumers. We VISA and MasterCard have already voluntarily estab- would be concerned that additional disclosures might lished rules for financial institutions offering non-PIN give consumers the impression that a creditor has Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 325 considered their individual circumstances and made a provide an example of how long it would take to pay determination about the income tax consequences. In off a $500 balance if the consumer makes only the the end, the most meaningful disclosure a creditor minimum payment and does not obtain additional could offer might be a generic statement advising the credit. These disclosures would be provided when consumer to consult a tax adviser, or in the case of the account is opened, annually, and in the case of credit that exceeds a home's fair market value, a the minimum payment disclosure, on each periodic disclosure that the tax laws may not allow a deduc- statement. tion for all the interest paid on that loan. Regarding these additional disclosures, the Board It will be very difficult to obtain the data necessary recognizes the value of ensuring that consumers betto do the study required by section 112(a). Findings ter understand the implications of making minimum would likely be based on consumer surveys that ask payments on open-end credit plans. But the Congress consumers to relate their experiences in deducting might ask whether providing similar disclosures reinterest associated with home-secured credit for peatedly, as required by this legislation, may have the income tax purposes. Taxpayers are notoriously pri- unintended effect of creating "information overload" vate about their dealings with the Internal Revenue for consumers receiving these disclosures. Here is Service, and surveys about their dealings could result where a study might be helpful. in unreliable information. Section 1128 amends TILA to prohibit creditors The third Board study, required by section 114(e) from terminating open-end credit accounts solely of the Conference Report, addresses the adequacy of because the consumer does not incur a finance charge the information consumers receive about certain bor- on the account. (Typically, these cardholders are rowing practices that may result in financial prob- "convenience users" who pay their credit card ballems. The focus of the study is consumers' practice ances in full each month.) Under the provision, crediof making only minimum payments on their credit tors could terminate an account for inactivity of three card accounts or other revolving credit plans. The months or more, but consumers who use their cards Board would be directed to use the results of the regularly and pay their balances in full could not have study to determine whether consumers need addi- their accounts terminated for that reason. tional disclosures regarding minimum payment fea- The Board generally does not favor federal laws tures beyond the minimum payment disclosures that restrict creditors' ability to determine whether added by other provisions of the bill. particular accounts or transactions are economically The Board is again concerned that there would be viable. We believe competition in the marketplace is difficulties in obtaining reliable data. For example, the better approach for motivating creditors' activithe Board is asked to consider the extent to which the ties, and the credit card market is certainly competiavailability of low minimum payments causes finan- tive. Moreover, we have concerns about the possible cial difficulties and the impact of minimum payments consequences of such a prohibition. We are not aware on default rates. We believe that these relationships that the practice of terminating accounts is prevalent are difficult, perhaps impossible, to estimate. The in the industry, but we presume that to the extent Board would be happy to work with the Congress to creditors do so, it is because the accounts are considdraft a more manageable alternative. ered unprofitable. If creditors cannot terminate these Section 114 of the Conference Report would accounts, they will likely seek to recover their costs amend TILA to require that creditors offering open- by increasing fees on convenience cardholders or for end credit plans, such as credit cards, provide addi- all their cardholders. tional disclosures about minimum payments as well In addition to these comments, the Board would as arrangements in which consumers may "skip pay- also like to bring certain technical comments on the ments" while interest continues to accrue on the consumer provisions to the committee's attention. unpaid balance. It would also require that lenders Statement Submitted by the Board of Governors of Technology is one of the three great driving forces the Federal Reserve System to the Subcommittee on that has changed the workings of the world's finan- Capital Markets, Securities and Government Spon- cial systems in the last generation. Along with globalsored Enterprises, Committee on Banking and Finan- ization and deregulation, each of which received cial Services, U.S. House of Representatives, a strong impetus from technology, technological March 25, 1999 change has created an increasingly competitive and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

326 Federal Reserve Bulletin • May 1999 efficient system that is delivering services cheaper, benefit to internal management of risks and product faster, and more conveniently to savers, borrowers, design but also as a major income-producing effort. wealth holders, and governments. In the process, of Derivatives and other newly designed products are a course, older ways of delivering services have had to significant factor in the rise in large banks' noninteradapt, change, or become less important. The way est income and doubtless are a factor in the signififinancial services are supervised and regulated cant gain in the finance industry's share of American has also had to respond and adapt to this new output in the last decade. And these profits are but a environment. small part of the economywide gain that their custom- Technology in financial systems involves the appli- ers have received from the use of the new financial cation of computers, electronics, and financial theory technology. to design, unbundle, reconfigure, deliver, and manage Is there no downside to the new financial technolthe component elements of financial instruments— ogy? Of course there is. It facilitates the rapidity with risk, maturity (or duration), yield, obligor, benefi- which shocks can be transmitted. Both market particiciary, and so on. This process sets up a new dynamic pants and policymakers now have very little time to in which financial market participants are continually make critical decisions. Another effect from the techlooking for and offering new ways to unbundle and nology is that market participants are now very relireconfigure components of financial instruments. ant on their models—both for pricing and risk man- From the supply side, these include the invention agement. These models are in turn based on historical of new computational techniques that are more relationships that may, in the event, prove to be efficient, new models for pricing financial instru- incorrect. In short, there is a concern on the part of ments, and new ways of addressing customers' per- some observers that we may have traded efficiency, ceptions of risks. From the demand side, asset hold- speed, risk-shifting, and diversification—all to indiers and borrowers have a growing appetite for vidual participant's benefits—for greater market newly engineered products that will either insulate vulnerability. them from market volatility or will allow them to Such an argument generally rests on the view that take advantage of the opportunities that result from financial technology is not only increasing risk-taking globalization. but also concentrating it in those large institutions These demands also reflect the opportunities that that are the most significant users of it. There is no the newer financial instruments provide for differenti- doubt that the new technology has played a role in ating risks and allocating them to the investors most certain leveraged trading strategies and perhaps even able and willing to bear them. By definition, this the degree of leverage throughout the economy. allocation process also enables those less willing and Those that wish to take more risk now find it easier to less able to bear risk to shift that risk away. In this do so. But we should note two important facts. First, process, financial products and asset prices are far in the derivatives market, overall exposures and risk better calibrated to the value preferences of indi- are a zero sum game: For every loser there is a vidual participants. And let us not forget, such risk- winner. Second, the losses that have emanated from shifting permits lenders to better serve risky borrow- market shocks at individual institutions have been ers. Lenders can now extend credit to these kinds of less for product lines using the new technology than borrowers, knowing that a portion of the risk can be the losses on traditional portfolios. Derivatives, for shifted to other parties willing to bear it. Technologi- example, have been bystanders to the losses in equical change in sophisticated wholesale markets makes ties, commodities, and emerging market debt— possible, it should be noted, better, cheaper, more hardly high-tech instruments—during recent periods efficient, and more widely available credit and asset of stress. Derivatives may well have intensified the choices in retail markets as well. Indeed, financial losses in underlying markets, but they were scarcely asset innovations and prices provide signals that not the major factor. only enable entrepreneurs to more precisely allocate It may well be that future significant downturns in real capital facilities to produce those goods and the economy may uncover additional risks that finanservices most valued by their customers but also open cial technology, globalization, and deregulation have new channels for pricing credit more carefully over a created, but the evidence to date suggests those addiwider spectrum of underlying risks. This process has tional risks have been quite modest, especially when undoubtedly improved national productivity growth compared to the benefits. Like all new technologies, and standards of living. it is difficult, if not impossible, to predict their future Banks and other financial institutions have clearly uses and implications. It is incumbent on policymakadopted new financial technologies not only for their ers to try to stay abreast of developments rather than Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 327 to limit technology in a futile effort to constrain risk Second, technological change makes it ever more taking. important that the process of risk measurement and Two things are clear. First, trying to regulate limits control keeps up with the realities of the marketto technology by law or regulation before we are place. Bank supervision, for example, is increasingly certain of these future uses and implications would emphasizing that process and, as we learn more from clearly unleash the law of unintended consequences, events, both the practitioners and the supervisors as institutions and markets shift geographically or need to hone and adjust their methodology. By focusdevelop new techniques not anticipated by the rule- ing on process, bank supervision can allow individual creators. A problem has to be clear before we try to technologies to develop that meet both prudential and fix it, and we must understand what the fix will do. market standards. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

328 Announcements MEETING OF THE CONSUMER ADVISORY With regard to the risk-based capital treatment of COUNCIL investments in mutual funds, state member banks or bank holding companies may continue to assign an The Federal Reserve Board announced on March 2, investment in a mutual fund to the risk category 1999, that the Consumer Advisory Council would appropriate to the highest risk-weighted asset allowhold its next meeting on Thursday, March 25, in a able under the stated investment limits in the fund's session open to the public. The council's function is prospectus or, at their option, assign the investment to advise the Board on the exercise of its responsibili- on a pro rata basis to different risk categories accordties under the Consumer Credit Protection Act and on ing to the limits of the fund's prospectus. The total other matters on which the Board seeks its advice. risk weight of the fund under either risk-weighting method may not be less than 20 percent. With regard to the leverage capital standard for state member banks, institutions with a composite WITHDRAWAL OF THE PROPOSED "KNOW YOUR rating of "1" under the Uniform Financial Institu- CUSTOMER " REGULATION tions Rating System will continue to have a minimum ratio of tier 1 capital to total assets (leverage ratio) of The Federal Reserve Board on March 23, 1999, 3.0 percent. announced withdrawal of its proposed "Know Your Other institutions will now be required to maintain Customer" regulation that was issued for public coma minimum leverage ratio of 4.0 percent, rather than ment on December 7, 1998. the previous minimum of 3.0 percent, plus an addi- The Board, acting along with the Federal Deposit tional cushion of 100 to 200 basis points. Insurance Corporation, the Office of the Comptroller The Board notes that an institution may be required of the Currency, and the Office of Thrift Supervision, to maintain higher-than-minimum capital levels if withdrew the proposal in response to comments warranted and emphasizes that an institution should received. maintain a capital level commensurate with its risk profile. The Board issued an amendment addressing the REGULATIONS H AND Y: FINAL RULES bank holding company leverage capital guidelines in June 1998. The Federal Reserve Board on March 2, 1999, issued These final rules were adopted on a joint basis two final rules amending the risk-based and leverage with the Office of the Comptroller of the Currency, capital standards for state member banks (Regula- the Federal Deposit Insurance Corporation, and the tion H—Membership of State Banking Institutions in Office of Thrift Supervision. the Federal Reserve System) and the risk-based capital standard for bank holding companies (Regulation Y—Bank Holding Companies and Change in REGULATION M: REVISIONS TO THE OFFICIAL Bank Control). The rules were effective April 1, STAFF COMMENTARY 1999. The rules address the risk-based capital treatment The Federal Reserve Board on March 31, 1999, of construction loans on presold residential proper- announced revisions to its Regulation M (Consumer ties, junior liens on one- to four-family residential Leasing) official staff commentary, which applies and properties, and investment in mutual funds. interprets the requirements of the regulation. The For state member banks and bank holding compa- revisions are effective immediately; however, complinies, there is no change in the risk-based capital ance is optional until March 31, 2000. treatment of construction loans on presold residential The revisions provide guidance on disclosures for properties or junior liens on one- to four-family resi- lease renegotiations and extensions, official fees and dential properties. taxes, multiple-item leases, and advertisements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

329 REGULATION Z: REVISIONS TO THE OFFICIAL Board, Office of the Comptroller of the Currency, and STAFF COMMENTARY Office of Thrift Supervision jointly issued the following letter to financial institutions on the allowance for The Federal Reserve Board on March 31, 1999, loan losses. announced revisions to its Regulation Z (Truth in Lending) official staff commentary, which applies Joint Interagency Letter to Financial Institutions and interprets the requirements of the regulation. The revisions are effective immediately; however, compli- Last November, the Securities and Exchange Commission, Federal Deposit Insurance Corporation, Federal Reserve ance is optional until March 31, 2000. Board, Office of the Comptroller of the Currency, and The revisions provide guidance on the prohibition Office of Thrift Supervision (the Agencies) issued a Joint against the issuance of unsolicited credit cards and on Interagency Statement in which they reaffirmed the importhe calculation of payment schedules involving pri- tance of credible financial statements and meaningful disclosure to investors and to a safe and sound financial vate mortgage insurance. system. The Joint Interagency Statement underscored the In addition, the update discusses credit sale transrequirement that depository institutions record and report actions, in which down payments include cash and their allowance for loan and lease losses in accordance property used as a trade-in, and adopts several techni- with generally accepted accounting principles (GAAP). cal amendments. We stress and continue to emphasize the importance of depository institutions having prudent, conservative, but not excessive, loan loss allowances that fall within an REGULATION CC: FINAL AMENDMENTS acceptable range of estimated losses. We recognize that today instability in certain global markets, for example, is The Federal Reserve Board on March 23, 1999, likely to increase loss inherent in affected institutions' announced final amendments to Regulation CC portfolios and consequently require higher allowances for credit losses than were appropriate in more stable times. (Availability of Funds and Collection of Checks) that Despite the issuance of the November Joint Interagency will facilitate banks' efforts for Year 2000 readiness. Statement, there is continued uncertainty among financial The amendments will allow banks that consum- institutions as to the expectations of the banking and secumate merger transactions on or after July 1, 1998, and rities regulators on the appropriate amount, disclosure, and before March 1, 2000, greater time to implement documentation of the allowance for credit losses. The Agencies now announce additional measures designed to software changes related to the merger. address this continued uncertainty. These measures are The amendments allow these banks to be treated as consistent with the Agencies' mutual objective of, and separate banks until March 1, 2001. Beginning in focus on, addressing prospectively, where feasible, issues March 2000, banks that merge will be subject to the related to improving the documentation, disclosure, and normal, one-year transition period. reporting of loan loss allowances of financial institutions. The Board's action recognizes that banks are currently dedicating their automation resources to • The Agencies are establishing a Joint Working Group, addressing Year 2000 and leap year computer comprised of policy representatives from each of the Agencies, to gain a better understanding of the proceproblems. dures and processes, including "sound practices," used The extension of the merger transition period will generally by banking organizations to determine the enable merged banks that were Year 2000 compliant allowance for credit losses. An important aspect of the to be treated as separate entities and to delay merging Joint Working Group's activities will be to receive input their systems until after the key century rollover and from representatives of the banking industry and the accounting profession on these matters, and will not leap year events of Year 2000. involve joint examinations of institutions. The common This procedure will enable these banks to avoid base of knowledge that results will facilitate the joint and reprogramming and retesting Year 2000 compliant individual efforts of the Agencies to provide improved systems before spring of 2000. The extension should guidance on appropriate procedures, documentation, and also help ensure that banks have sufficient resources disclosures to the banking industry. This will assist the banking community in complying with GAAP and will to address unanticipated Year 2000 problems that improve comparability among financial statements of may arise at the turn of the century. depository and other lending institutions. The Joint Working Group will also share information and insights concerning issues of mutual concern that may arise. JOINT ISSUANCE BY REGULATORY AGENCIES Using information gathered through the Joint Working OF A LETTER ON THE ALLOWANCE FOR LOAN Group and from representatives of the accounting profes- LOSSES BY BANKS sion and the banking industry, the Agencies will work together to issue parallel guidance, on a timely basis, and The Securities and Exchange Commission, Federal within a year on the first two items listed below, in the Deposit Insurance Corporation, Federal Reserve following key areas regarding credit loss allowances: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

330 Federal Reserve Bulletin • May 1999 Appropriate Methodologies and Supporting GAAP. The Agencies intend that these steps will enhance Documentation. The Agencies intend to issue guid- the transparency of financial information and improve marance that will suggest procedures and processes ket discipline, consistent with safety and soundness objecnecessary for a reasoned assessment of losses inher- tives. In recognition of the specialized regulatory nature of ent in a portfolio and discuss ways to ensure that the banking industry and in order to resolve ongoing uncerdocumentation supports the reported allowance. tainties in the industry, with the announcement of these Enhanced Disclosures. This guidance will ad- initiatives, the Agencies' focus, in so far as feasible, will be dress appropriate disclosures of allowances for on enhancing allowance practices going forward. credit losses and the credit quality of institutions' portfolios by identifying key areas for enhanced disclosures, including the need for institutions to disclose changes in risk factors and asset quality ENFORCEMENT ACTIONS that affect allowances for credit losses. The enhanced disclosures would contribute to better under- The Federal Reserve Board on February 25, 1999, standing by investors and the public of the risk announced the issuance of a consent order against profile of banking institutions and improve market Daniel K. Walker, senior vice president, a director, discipline. • The Agencies will work together to encourage and sup- and an institution-affiliated party of the Farmers and port the Financial Accounting Standards Board's process Merchants Bank of Long Beach, Long Beach, Caliof providing additional guidance regarding accounting fornia, a state member bank. for allowances for loan losses. The Agencies emphasize Mr. Walker, without admitting to any allegations, that GAAP requires that management's determination be consented to the issuance of the order in connection based on a comprehensive, adequately documented, and consistently applied analysis of the particular institu- with the bank's extensions of credit in 1996 to a bank tion's exposures, the effects of its lending and collection affiliate that resulted in alleged violations by the policies, and its own loss experience under comparable bank of the prior approval, collateral, documentation, conditions. and certain other requirements of sections 23A and In addition, the Agencies will support and encourage the 23B of the Federal Reserve Act (12 U.S.C. 371c and task force of the American Institute of Certified Public Accountants (AICPA) that is developing more specific 371c-l), Regulation O of the Board of Governors guidance on the accounting for allowances for credit (12 C.F.R. Part 215), and a written agreement losses and the techniques of measuring the credit loss between the Federal Reserve Bank of San Francisco inherent in a portfolio at a particular date. In particular, and the bank, dated November 10, 1993. Mr. Walker the AICPA task force will focus on providing guidance paid a fine of $12,500. on how best to distinguish probable losses inherent in the portfolio as of the balance sheet date—the guidepost The Federal Reserve Board on February 25, 1999, agreed to by the Agencies for reporting allowances in announced the issuance of a consent order against accordance with GAAP—from possible or future losses Kenneth G. Walker, president, chairman of the board not inherent in the balance sheet as of that date. Addiof directors, chief executive officer, and institutiontionally, the Agencies will ask the AICPA task force to affiliated party of the Farmers and Merchants Bank of consider recently developed portfolio credit risk measurement and management techniques that are consistent Long Beach, Long Beach, California, a state member with GAAP as part of this effort. The AICPA project bank. already has been initiated and will include representa- Mr. Walker, without admitting to any allegations, tives from the accounting profession and the banking consented to the issuance of the order in connection industry, as well as observers from the SEC and the with the bank's extensions of credit in 1996 to a bank banking agencies. • Senior staff of the Agencies will continue to meet to affiliate that resulted in alleged violations by the discuss banking industry accounting and financial disclo- bank of the prior approval, collateral, documentation, sure policy issues of interest that affect the transparency and certain other requirements of sections 23A and of financial reporting and bank safety and soundness. 23B of the Federal Reserve Act (12 U.S.C. 371c and These discussions will address progress in the applica- 371c-l), Regulation O of the Board of Governors tion of accounting and disclosure standards by banking institutions, including those impacting the allowance for (12 C.F.R. Part 215), and a written agreement credit losses, with particular focus on recently identified between the Federal Reserve Bank of San Francisco issues and trends. The meetings also will be used to and the bank, dated November 10, 1993. coordinate projects of the Agencies in areas of mutual The Federal Reserve Board, on February 25, 1999, interest. The first of these meetings was held on January 27. announced the issuance of a combined order to cease and desist and of assessment of a civil money penalty against Hogi Patrick Hyun, a former employee of The Agencies believe that the actions announced above BT Singapore, a wholly owned nonbank subsidiary will promote a better and clearer understanding among of Bankers Trust New York Corporation, New York, financial institutions of the appropriate procedures and processes for determining credit losses in accordance with New York. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 331 Mr. Hyun, without admitting to any allegations, Financial Studies Section. He will assume direct superconsented to the issuance of the order in connection visory responsibility for the Research and Inforwith his involvement in the marketing and sale of mation Systems program and will coordinate the leveraged derivative transactions to customers of division's information technology activities. He BTNYC and its subsidiaries. Mr. Hyun paid a fine received his Ph.D. from the Massachusetts Institute of $120,000. of Technology. The Federal Reserve Board announced on April 26, 1999, that S. David Frost, Staff Director for CHANGES IN BOARD STAFF Management, would retire on June 1, 1999, after sixteen years of service with the Board. The Federal Reserve Board announced on April 5, The Federal Reserve Board on March 18, 1998, 1999, that Theodore E. Allison, Assistant to the announced the appointment of Stephen R. Malphrus Board for Federal Reserve System Affairs in the as Staff Director for Management. His appointment is Office of Board Members, would retire on April 30, effective on June 1, 1999, when S. David Frost, the 1999, after more than twenty-seven years of service current Staff Director, will retire. with the Board. The Staff Director for Management coordinates The Board of Governors announced on April 13, general management and administrative functions, 1999, approval of a reorganization of the Division of including human resources, planning and budget- International Finance and the appointment to the ing, information technology, and general logistic official staff of Ralph W. Tryon as Assistant Director. support. In connection with the reorganization, the Board Mr. Malphrus joined the Board's staff in 1976. In approved changes in responsibilities for Lewis Alex- 1991 he was promoted to the position of Director ander, Peter Hooper, and Donald Adams and a change of the Board's Division of Information Resources in Mr. Adams's title from Assistant Director to Senior Management. • Adviser. Mr. Tryon first joined the Board's staff in 1979 and since 1992 has been Chief of the Trade and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

333 Legal Developments FINAL RULE—AMENDMENT TO REGULATION CC (b) Merger transactions on or after July 1, 1998, and before March 1, 2000. If banks have consummated a The Board of Governors is amending 12 C.F.R. Part 229, merger transaction on or after July 1, 1998, and before its Regulation CC (Availability of Funds and Collection of March 1, 2000, the merged banks may be considered Checks). The Board recognizes that banks are currently separate banks until March 1, 2001. dedicating their automation resources to addressing Year 2000 and leap year computer problems and may be challenged to make and test other programming changes, in- ORDERS ISSUED UNDER BANK HOLDING COMPANY cluding those that may be required to comply with Regula- ACT tion CC's merger transition provisions, without jeopardizing their Year 2000 or other programming efforts. Orders Issued Under Section 3 of the Bank Holding Therefore, the Board is amending Regulation CC to allow Company Act banks that consummate a merger on or after July 1, 1998, and before March 1, 2000, greater time to implement Bay Port Financial Corporation software changes related to the merger. Bay Port, Michigan Effective April 1, 1999, 12 C.F.R. Part 229 is amended as follows: Order Approving Formation of a Bank Holding Company and Acquisition Part 229—Availability of Funds and Collection of Checks (Regulation CC) Bay Port Financial Corporation ("Bay Port") has requested the Board's approval under section 3(a)(1) of the 1. The authority citation for Part 229 continues to read as Bank Holding Company Act ("BHC Act") (12 U.S.C. follows: § 1842(a)(1)) to become a bank holding company by acquiring Bay Port State Bank, Bay Port, Michigan ("Bank"). Authority: 12 U.S.C. 4001 et seq. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (64 2. In section 229.19, paragraph (g) is redesignated as para- Federal Register 4106 (1999)). The time for filing comgraph (g)(1), a heading is added for newly designated ments has expired, and the Board has considered the proparagraph (g)(1), and a new paragraph (g)(2) would be posal and all comments received in light of the factors set added to read as follows: forth in section 3 of the BHC Act. Bay Port is a nonoperating corporation created for the purpose of acquiring Bank. Bank is the 148th largest commercial banking organization in Michigan, controlling Section 229.19—Miscellaneous approximately $33.2 million in deposits, representing less than 1 percent of total deposits in commercial banking organizations in the state ("state deposits").1 Consumma- (g) Effect of merger transaction. tion of this proposal would result in a change in the (1) In general. *** shareholdings of the current shareholders of Bank, and (2) Merger transactions on or after July 1, 1998, and would result in one shareholder becoming the largest sharebefore March 1, 2000. If banks have consummated holder of the newly formed bank holding company by a merger transaction on or after July 1, 1998, and acquiring control of more than 25 percent of the voting before March 1, 2000, the merged banks may be shares of Bay Port. This individual is also the largest considered separate banks until March 1, 2001. shareholder of another Michigan bank holding company, 3. Section 229.40 is redesignated as section 299.40 (a), a First of Huron Corporation, Bad Axe, Michigan ("FHC").2 heading is added for newly designated paragraph (a), and a new paragraph (b) would be added to read as follows: 1. All banking data are as of June 30, 1998. Section 229.40—Effect of merger transaction. 2. The Board previously has determined that if an applicant's principal shareholder is associated with other one-bank holding companies, the proposed formation of a one-bank holding company is (a) In general. *** analyzed by the Board using the same standard that would be used for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

334 Federal Reserve Bulletin • May 1999 FHC is the 57th largest commercial banking organization The BHC Act also requires the Board, in acting on an in Michigan, controlling approximately $142.9 million in application, to consider the financial and managerial redeposits, representing less than 1 percent of state deposits. sources and future prospects of the companies and banks If the two organizations were combined, the resulting involved in a proposal, the convenience and needs of the organization would become the 44th largest commercial community to be served, and certain other supervisory banking organization in Michigan, controlling approxi- factors. mately $176.1 million in deposits, representing less than The Board has carefully considered the financial and 1 percent of state deposits. managerial resources and future prospects of Bay Port and Bay Port and FHC compete in the Huron County, Mich- Bank, the structure of the proposed transaction, the reigan, banking market.3 In the Huron County banking mar- sources of the combined organization, and other superviket, Bay Port is the fifth largest commercial banking orga- sory factors, in light of all the facts of record. As part of its nization, controlling deposits of $33.2 million, representing consideration, the Board has reviewed relevant reports of 7.6 percent of total deposits in commercial banking organi- examination and other supervisory information prepared zations in the market ("market deposits"). FHC is the by the Federal Deposit Insurance Corporation ("FDIC"). largest commercial banking organization in the market, The Board notes that Bay Port proposes to issue preferred controlling deposits of $120.4 million, representing stock as a part of the proposal and to provide additional 27.7 percent of market deposits. If the two organizations capital to Bank. As a result of the additional capital after were combined, the resulting organization would be the consummation of the proposal, Bank, which currently is largest commercial banking organization in the Huron undercapitalized, would become adequately capitalized. County banking market, controlling deposits of Based on all the facts of record, the Board concludes that $153.6 million, representing 35.3 percent of market depos- considerations relating to the financial and managerial reits. The Herfindahl-Hirschman Index ("HHI") would in- sources and future prospects of Bay Port and Bank and the crease by 422 points to 2052. other supervisory factors that the Board must consider The increase in the HHI would exceed the Department under section 3 of the BHC Act weigh in favor of approval of Justice Merger Guidelines ("Merger Guidelines").4 The of the proposal. Board notes, however, that the controlling shareholder of In considering the convenience and needs factor, the Bay Port owns only 14.4 percent of the voting shares of Board has reviewed Bank's record under the Community FHC. The shareholder, who has been a passive investor, Reinvestment Act ("CRA"),5 in light of examinations of has not been involved in the operations of either institution, the CRA performance record of Bank by the FDIC, the and numerous other shareholders own significant percent- institution's appropriate federal financial supervisory ages of FHC's voting shares. The Board also notes that agency. Bank received a "satisfactory" rating at its most even if the two organizations were combined, nine banking recent examination of CRA performance. Based on all the and thrift competitors would operate in the market, and facts of record, the Board concludes that convenience and three of these competitors, in addition to Bay Port and needs considerations, including the CRA performance FHC, would each control more than 10 percent of market record of Bank, are consistent with approval of the prodeposits. Finally, the market is reasonably attractive for posal. entry and has experienced both de novo entry and entry by Based on the foregoing, and in light of all the facts of acquisition during the past two years. Based on these and record, the Board has determined that the application all other facts of record, and for the reasons discussed in should be, and hereby is, approved. Approval of the applithis order, the Board concludes that consummation of the cation is specifically conditioned on compliance by Bay proposal is not likely to result in any significantly adverse Port and Bank with all the commitments made in conneceffects on competition or on the concentration of banking tion with the proposal. For purposes of this transaction, the resources in the Huron County banking market or in any commitments and conditions referred to in this order shall other relevant banking market. be deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law. a multibank holding company acquisition. See Nebraska State Bank, The proposal shall not be consummated before the fif- 62 Federal Reserve Bulletin 638 (1976). teenth calendar day after the effective date of this order, or 3. The Huron County banking market is approximated by Huron County, Michigan, minus Sebewaing Township. later than three months after the effective date of this order, 4. See 49 Federal Register 26,823 (June 29, 1984). Under the unless such period is extended for good cause by the Board Merger Guidelines, a market in which the post-merger HHI is more or by the Federal Reserve Bank of Chicago, acting pursuthan 1800 is considered highly concentrated. The Department of ant to delegated authority. Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors By order of the Board of Governors, effective March 22, indicating anticompetitive effects) unless the post-merger HHI is at 1999. least 1800 and the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effects of limited-purpose lenders and other nondepository financial entities. 5. 12 U.S.C. § 2901 et seq. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 335 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and proposal in meeting the convenience and needs of the Governors Kelley, Meyer, and Gramlich. Absent and not voting: community to be served.3 Governor Ferguson. C-B-G and Peoples compete in the Muscatine, Iowa, banking market.4 C-B-G is the fourth largest depository ROBERT DEV. FRIERSON institution in the market, controlling deposits of approxi- Associate Secretary of the Board mately $46.5 million, representing 8.4 percent of all deposits held by depository institutions in the market ("market C-B-G, Inc. deposits").5 Peoples is the fifth largest commercial bank- Wilton, Iowa ing organization in the market, controlling deposits of approximately $42.2 million, representing 7.7 percent of Order Approving the Acquisition of a Bank Holding market deposits. On consummation of the proposal, C-B-G Company would become the third largest depository institution in the Muscatine banking market, controlling deposits of approx- C-B-G, Inc. ("C-B-G"), a bank holding company within imately $88.7 million, representing 16.1 percent of market the meaning of the Bank Holding Company Act ("BHC deposits. The change in market concentration, as measured Act"), has requested the Board's approval under section 3 by the Herfindahl-Hirschman Index ("HHI"), would not of the BHC Act (12 U.S.C. § 1842) to acquire up to exceed the threshold level set in the Department of Justice 100 percent of the voting shares of Peoples National Cor- Merger Guidelines ("DOJ Guidelines").6 poration, Columbus Junction, Iowa ("Peoples"), and The Department of Justice has reviewed the proposal thereby acquire Peoples' subsidiary bank, Community and advised the Board that consummation of the proposal Bank, Muscatine, Iowa ("Bank").1 would not likely have any significantly adverse competi- Notice of the proposal, affording interested persons an tive effects in the Muscatine banking market or any other opportunity to submit comments, has been published (64 relevant banking market. The Federal Deposit Insurance Federal Register 5807 and 11,473 (1999)). The time for Corporation also has not objected to the proposal. filing comments has expired, and the Board has considered Based on all the facts of record, and for the reasons the application and all comments received in light of the discussed above, the Board concludes that consummation factors set forth in section 3 of the BHC Act. of the proposal would not result in a monopoly or have a C-B-G, with total consolidated assets of approximately significantly adverse effect on competition or on the con- $61.1 million, is the 174th largest commercial banking centration of banking resources in the Muscatine banking organization in Iowa, controlling deposits of approximarket or any other relevant banking market. mately $46.5 million, representing less than 1 percent of total deposits in commercial banking organizations in the Financial, Managerial, and Other Considerations state ("state deposits").2 Peoples, with total consolidated assets of approximately $93.8 million, is the 103d largest The BHC Act also requires the Board to consider the commercial banking organization in Iowa, controlling definancial and managerial resources and future prospects of posits of approximately $75.3 million, also representing the companies and banks involved in a proposal, the conveless than 1 percent of state deposits. On consummation of the proposal, C-B-G would become the 51st largest commercial banking organization in Iowa, controlling deposits of approximately $121.8 million, representing less than 3. 12 U.S.C. § 1842(c)(1). 1 percent of state deposits. 4. The Muscatine banking market consists of Muscatine County, Iowa. 5. In this context, depository institutions include commercial banks Competitive Considerations and thrift institutions. Market share data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Section 3 of the BHC Act prohibits the Board from approv- Board previously has indicated that thrift institutions have become, or ing a proposal that would result in a monopoly in any have the potential to become, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin relevant banking market. That section also prohibits the 386 (1989); National City Corporation, 70 Federal Reserve Bulletin Board from approving a proposal that may substantially 743 (1984). Thus, the Board has regularly included thrift deposits in lessen competition in any relevant banking market, unless the calculation of market shares on a 50-percent weighted basis. See, the anticompetitive effects of the proposal are clearly out- e.g., First Hawaiian, Inc., 11 Federal Reserve Bulletin 52 (1991). 6. See 49 Federal Register 26,823 (June 29, 1984). On consummaweighed in the public interest by the probable effect of the tion of the proposal, the HHI would increase by 130 points to 2560. Under the DOJ Guidelines, a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. The Department 1. C-B-G has entered into an agreement with certain shareholders of of Justice has informed the Board that a bank merger or acquisition Peoples to acquire 24.4 percent of the voting shares of Peoples, and generally will not be challenged (in the absence of other factors has indicated that it intends to make a tender offer for all the remain- indicating anticompetitive effects) unless the post-merger HHI is at ing outstanding voting shares owned by Peoples' shareholders at the least 1800 and the merger increases the HHI by more than 200 points. same price per share as in the agreement. C-B-G also would make a The Department of Justice has stated that the higher than normal HHI tender offer for 4.4 percent of the voting shares of Bank that are not thresholds for screening bank mergers for anticompetitive effects owned by Peoples. implicitly recognize the competitive effects of limited-purpose lenders 2. Asset and deposit data are as of June 30, 1997. and other nondepository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

336 Federal Reserve Bulletin • May 1999 nience and needs of the community, and certain other The proposed acquisition shall not be consummated supervisory factors. The Board has carefully considered before the fifteenth calendar day after the effective date of these factors in light of all the facts of record, including this order, or later than three months after the effective date comments from a minority shareholder of Peoples ("Prot- of this order, unless such period is extended for good cause estant"), who questioned whether C-B-G has sufficient by the Board or by the Federal Reserve Bank of Chicago, financial resources to complete the proposed transaction. acting pursuant to delegated authority. C-B-G is well capitalized under the Board's Capital By order of the Board of Governors, effective March 29, Adequacy Guidelines and would remain well capitalized 1999. after consummation of the proposal.7 In addition, C-B-G appears to be able to service the debt it would incur under Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and the proposal. The facts of record, including reports of Governors Kelley, Meyer, Ferguson, and Gramlich. examination by the appropriate federal banking agencies ROBERT DEV. FRIERSON for the institutions involved, also indicate that C-B-G, Associate Secretary of the Board Peoples and their respective subsidiary banks have long been operated by current management in a safe and sound Commerzbank AG manner and support a finding that managerial resources are satisfactory.8 Frankfurt am Main, Federal Republic of Germany The Board has carefully considered Protestant's com- Order Approving the Formation and Acquisition of a ments and all other facts of record, including the response Bank Holding Company by C-B-G and the appropriate reports of examination, in light of the statutory factors specified in the BHC Act. Commerzbank AG ("Commerzbank") has requested the Based on all the facts of record, the Board concludes that Board's approval under section 3 of the Bank Holding the financial and managerial resources and future prospects Company Act (12 U.S.C. § 1842) ("BHC Act") to become of the institutions involved are consistent with approval. a bank holding company by retaining control of Korea Considerations relating to the convenience and needs of Exchange Bank, Seoul, Korea ("KEB"). KEB owns all of the community and other supervisory factors also are conthe voting shares of California Korea Bank, Los Angeles, sistent with approval. California ("California Bank").1 Notice of the proposal, affording interested persons an Conclusion opportunity to submit comments, has been published (63 Federal Register 47,500 (1998)). The time for filing Based on the foregoing, and in light of all the facts of comments has expired, and the Board has considered the record, the Board has determined that the application application and all comments received in light of the should be, and hereby is, approved. The Board's approval factors set forth in section 3 of the BHC Act. is specifically conditioned on compliance by C-B-G with Commerzbank, with consolidated total assets of approxall the commitments made in connection with the applicaimately $386 billion, is the fourth largest banking organization. For the purposes of this action, the commitments and tion in Germany.2 Commerzbank engages in banking operconditions relied on by the Board in reaching its decision ations in the United States through branches in New York, are deemed to be conditions imposed in writing by the New York; Chicago, Illinois; and Los Angeles, California, Board in connection with its findings and decision and, as and an agency in Atlanta, Georgia. Commerzbank also such, may be enforced in proceedings under applicable engages in nonbanking activities in the United States law. through a number of subsidiaries. KEB, with $47 billion in 7. C-B-G has committed to the Board that it will seek prior approval from the Federal Reserve System before purchasing any shares of 1. Commerzbank has requested the Board's approval to control up Peoples or Bank if the purchase would cause C-B-G to be less than to 40 percent of KEB's voting shares. In July 1998, Commerzbank well capitalized. acquired newly issued shares of KEB, representing approximately 32 8. Protestant also expressed concern that the directors and officers of percent of KEB's voting shares. This investment was part of a plan to Peoples may not have properly discharged their fiduciary duties to increase KEB's capital, which was approved by the Korean Financial shareholders of Peoples in considering the proposal and alleged that Supervisory Commission. Before consummation of the investment, the management of Peoples had engaged in improper self-dealing and with the approval of the Board and the California Department of activity. As noted, C-B-G stated that it intends to purchase shares from Financial Institutions (the "Department"), KEB placed all of its all Peoples' shareholders at the same price per share, and that there are shares of California Bank in a voting trust controlled by an indepenno additional agreements or understandings to compensate the direc- dent trustee pending regulatory approval of Commerzbank's acquisitors or officers of Peoples. The Board notes that the courts have tion of California Bank. See Letter from Robert deV. Frierson, Associconcluded that the limited jurisdiction to review applications under ate Secretary of the Board, to Robert L. Tortoriello, dated July 27, the BHC Act does not authorize the Board to consider matters relating 1998. Under the terms of the trust agreement, the voting trust termionly to corporate governance and the proper compensation of share- nates if the Board and the Department approve Commerzbank's holders. See Western Bancshares, Inc. v. Board of Governors, 480 F.2d retention of its ownership interest in California Bank. The Department 749 (10th Cir. 1973). These are matters of state and federal securities approved Commerzbank's application to acquire control of California law and of state corporate law and may be raised before a court with Bank on October 19, 1998. the authority to provide Protestant with adequate relief, if deemed 2. Asset data are as of September 30, 1998, and use exchange rates appropriate. then in effect. Ranking data are as of December 31, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 337 consolidated total assets, is the third largest banking orga- regulation.8 The Board previously has determined, in applinization in Korea. KEB is the parent of California Bank, cations under the IBA, that certain German commercial which is the 78th largest depository institution in Califor- banks were subject to comprehensive consolidated supervinia, controlling less than 1 percent of total deposits in sion by their home country authorities.9 In this case, the depository institutions in the state.3 KEB also operates Board has determined that Commerzbank is supervised on branches in New York, New York; Chicago, Illinois; and substantially the same terms and conditions as those other Seattle, Washington, and an agency in Los Angeles, Cali- German commercial banks. Based on all the facts of fornia. record, the Board concludes that Commerzbank is subject The Board has carefully considered the competitive ef- to comprehensive supervision and regulation on a consolifects of the proposal in each relevant banking market, dated basis by its home country supervisor. including the Los Angeles, California, banking market.4 The BHC Act also requires the Board to determine that Commerzbank and KEB each controls less than 1 percent the foreign bank has provided adequate assurances that it of total deposits in depository institutions in each relevant will make available to the Board such information on its banking market and numerous competitors would remain operations and activities and those of its affiliates that the in each relevant banking market after consummation of the Board deems appropriate to determine and enforce compliproposal.5 Accordingly, the Board concludes that consum- ance with the BHC Act. The Board has reviewed the mation of the proposal is not likely to result in any signifi- restrictions on disclosure in jurisdictions where Commerzcantly adverse effects on competition or on the concentra- bank has material operations and has communicated with tion of banking resources in any relevant banking market.6 the relevant authorities concerning access to information. Commerzbank has committed that, to the extent not prohib- Certain Supervisory Considerations ited by applicable law, it will make available to the Board such information on the operations of Commerzbank and Under section 3 of the BHC Act, the Board may not any of its affiliates that the Board deems necessary to approve an application involving a foreign bank unless the determine and enforce compliance with the BHC Act, the bank is "subject to comprehensive supervision or regula- IBA, and other applicable federal law. Commerzbank also tion on a consolidated basis by the appropriate authorities has committed to cooperate with the Board to obtain any in the bank's home country."7 Regulation K provides that a waivers or exemptions that may be necessary in order to enable Commerzbank to make any such information availforeign bank may be considered subject to consolidated able to the Board. In light of these commitments and other supervision if the Board determines that the bank is superfacts of record, the Board has concluded that Commerzvised or regulated in such a manner that its home country bank has provided adequate assurances of access to any supervisor receives sufficient information on the worldappropriate information the Board may request. wide operations of the foreign bank, including the relationship of the bank to its affiliates, to assess the foreign bank's overall financial condition and compliance with law and Financial, Managerial, and Convenience and Needs Considerations The BHC Act also requires the Board to consider the 3. Deposit data are as of June 30, 1997. In this context, depository financial and managerial resources and future prospects of institutions include banks, savings and loan associations, and savings the banks involved and the convenience and needs of the banks. communities to be served. Commerzbank's capital ratios 4. The Los Angeles banking market is approximated by the Los Angeles Ranally Metropolitan Area. 5. Market share data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously 8. In assessing this standard, the Board considers, among other has indicated that thrift institutions have become, or have the potential factors, the extent to which the home country supervisors: to become, significant competitors of commercial banks. See, e.g., (i) ensure that the bank has adequate procedures for monitoring and Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); controlling its activities worldwide; National City Corporation, 70 Federal Reserve Bulletin 743 (1984). (ii) obtain information on the condition of the bank and its subsidiar- Thus, the Board has regularly included thrift deposits in the calcula- ies and offices through regular examination reports, audit retion of market share on a 50-percent weighted basis. See, e.g., First ports, or otherwise; Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). (iii) obtain information on the dealings with and relationship be- 6. After consummation of the proposed acquisition, California will tween the bank and its affiliates, both foreign and domestic; be the home state of both KEB and Commerzbank for purposes of the (iv) receive from the bank financial reports that are consolidated on a BHC Act and, accordingly, the proposed transaction is not barred by worldwide basis, or comparable information that permits analysection 3(d) of the BHC Act. See 12 U.S.C. §§ 1841(o)(4), 1842(d). sis of the bank's financial condition on a worldwide consoli- New York is the home state of both KEB and Commerzbank for dated basis; purposes of the International Banking Act (12 U.S.C. § 3101 et seq.) (v) evaluate prudential standards, such as capital adequacy and risk and Regulation K, and the continued operation of the existing asset exposure, on a worldwide basis. branches of Commerzbank and KEB is not barred by the International These are indicia of comprehensive consolidated supervision. No Banking Act or Regulation K. single factor is essential and other elements may inform the Board's 7. 12 U.S.C. § 1842(c)(3)(B). As provided in Regulation Y, the decision. See 12 C.F.R. 211.24(c)(l)(ii). Board determines whether a foreign bank is subject to consolidated 9. See Sudwestdeutsche Landesbank Girozentrale, 83 Federal Rehome country supervision under the standards set forth in Regula- serve Bulletin 937 (1997); West Merchant Bank Limited, 81 Federal tion K. See 12 C.F.R. 225.13(a)(4). Reserve Bulletin 519 (1995). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

338 Federal Reserve Bulletin • May 1999 exceed the minimum levels that would be required under The Fuji Bank, Limited the Basle Capital Accord, and are considered equivalent to Tokyo, Japan the capital that would be required of a U.S. banking organization. California Bank's capital ratios exceed the "well Order Approving the Acquisition of a Bank Holding capitalized" thresholds and would be unchanged by this Company transaction. The Board notes, moreover, that the proposal does not involve any expansion of the banking or nonbank- The Fuji Bank, Limited ("Fuji"), a bank holding company ing activities of KEB, and that Commerzbank's investment within the meaning of the Bank Holding Company Act in KEB has strengthened KEB's capital position and made ("BHC Act"), has requested the Board's approval under additional financial resources available to California Bank. section 3 of the BHC Act (12 U.S.C. § 1842) to acquire Based on these and all the facts of record, including more than 50 percent of the voting securities of The confidential examination and other supervisory informa- Yasuda Trust and Banking Co., Ltd., Tokyo, Japan tion concerning the foreign banks involved in the proposal ("Yasuda"), and thereby acquire Yasuda's wholly owned as well as their existing U.S. operations, the Board con- U.S. subsidiary bank, Yasuda Bank and Trust Company cludes that financial and managerial factors are consistent (U.S.A.), New York, New York ("Yasuda Bank").1 with approval, as are the other supervisory factors the Notice of the proposal, affording interested persons an Board must consider under section 3 of the BHC Act. opportunity to submit comments, has been published (64 California Bank received a "satisfactory" performance Federal Register 6,361 (1999)). The time for filing comrating at its most recent examination under the Community ments has expired, and the Board has considered the pro- Reinvestment Act (12 U.S.C. § 2901 et seq.) by the Fed- posal and all comments received in light of the factors set eral Deposit Insurance Corporation, as of January 22,1996. forth in section 3 of the BHC Act. In light of all the facts of record, the Board concludes that Fuji, with total consolidated assets of approximately convenience and needs considerations also are consistent $417 billion, is the fifth largest banking organization in with approval. Japan.2 In the United States, Fuji owns The Fuji Bank and Based on the foregoing and all other facts of record, the Trust Company, New York, New York, a state-chartered Board has determined that the application should be, and insured bank. Fuji also operates branches in New York, hereby is, approved.10 The Board's approval of the pro- New York, and Chicago, Illinois; agencies in Los Angeles, posal is expressly conditioned on Commerzbank's compli- California, and Houston, Texas; and a representative office ance with all the commitments made in connection with in New York, New York. In addition, Fuji engages through the application. The commitments and conditions relied on its nonbanking subsidiaries in a number of activities in the by the Board in reaching this decision are deemed to be United States that are permissible under section 4(c)(8) of conditions imposed in writing by the Board in connection the BHC Act. with its findings and decision and, as such, may be en- Yasuda, with total consolidated assets of approximately forced in proceedings under applicable law. $61 billion, is the 23rd largest banking organization in By order of the Board of Governors, effective March Japan. In addition to Yasuda Bank, Yasuda currently oper- 15, 1999. ates a representative office in New York, New York. Voting for this action: Vice Chair Rivlin and Governors Kelley, Competitive Considerations Meyer, Ferguson, and Gramlich. Absent and not voting: Chairman Greenspan. Fuji and Yasuda compete directly in the Metropolitan New York-New Jersey banking market.3 Consummation of ROBERT DEV. FRIERSON the proposal would result in an increase of less than one Associate Secretary of the Board point in the Herfindahl-Hirschman Index ("HHI") for the Metropolitan New York-New Jersey banking market, and the banking market would remain unconcentrated with 1. Fuji currently owns approximately 16.8 percent of Yasuda's voting shares. See The Fuji Bank, Limited, 84 Federal Reserve Bulle- 10. Commerzbank currently underwrites and deals in bank- tin 674 (1998) ("1998 Fuji/Yasuda Order"). ineligible securities through Commerzbank Capital Markets Corpora- 2. Asset and ranking data are as of March 31, 1998, and are based tion, New York, New York, pursuant to grandfather rights established on exchange rates then applicable. by section 8(c) of the IBA. See 12 U.S.C. § 3106(c)(1). The IBA 3. The Metropolitan New York-New Jersey banking market inprovides that a foreign bank's grandfather rights under section 8(c) cludes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, shall terminate two years after the date on which the foreign bank Sullivan, and Westchester Counties in New York; Bergen, Essex, becomes a bank holding company. See id. at § 3106(c)(2). Accord- Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, ingly, Commerzbank must conform any activities that it engages in Somerset, Sussex, Union, Warren, and a portion of Mercer Counties in pursuant to section 8(c) of the IBA to the requirements of the BHC New Jersey; Pike County in Pennsylvania; and portions of Fairfield Act by July 27, 2000. and Litchfield Counties in Connecticut. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 339 numerous competitors operating in the market.4 Based on comprehensive supervision and regulation on a consoliall the facts of record, the Board concludes that consumma- dated basis by its home country supervisor. tion of the proposal is not likely to result in any signifi- The BHC Act also requires the Board to determine that cantly adverse effects on competition or on the concentra- the foreign bank has provided adequate assurances that it tion of banking resources in the Metropolitan New York- will make available to the Board such information on its New Jersey banking market or any other relevant banking operations and activities and those of its affiliates that the market. Board deems appropriate to determine and enforce compliance with the BHC Act and the International Banking Act Comprehensive Consolidated Supervision and Access to ("IBA") (12 U.S.C. § 3101 et seq.). The Board has re- Information viewed restrictions on disclosure in jurisdictions where Fuji has material operations and has communicated with Under section 3 of the BHC Act, the Board may not relevant authorities concerning access to information. Fuji approve an application involving a foreign bank unless the has committed that, to the extent not prohibited by applicabank is "subject to comprehensive supervision or regula- ble law, it will make available to the Board such information on a consolidated basis by the appropriate authorities tion on the operations of Fuji and any of its affiliates that in the bank's home country."5 The Board recently deter- the Board deems necessary to determine and enforce commined in an application under the BHC Act that Fuji was pliance with the BHC Act, the IBA, and other applicable subject to comprehensive supervision and regulation on a federal law. Fuji also has committed to cooperate with the consolidated basis by its home country supervisor.6 In Board to obtain any waivers or exemptions that may be connection with this application, the Board also has re- necessary to enable Fuji to make any such information viewed the steps that the Japanese government and bank- available to the Board. In light of these commitments and ing authorities have taken to enhance the supervision of other facts of record, the Board has concluded that Fuji has Japanese banks since the Board's approval of Fuji's 1998 provided adequate assurances of access to any appropriate investment in Yasuda.7 Based on all the facts of record, the information that the Board may request. For these reasons, Board has concluded that Fuji continues to be subject to and based on all the facts of record, the Board has concluded that the supervisory factors it is required to consider under section 3(c) of the BHC Act are consistent with approval. 4. Market share data are as of June 30, 1997. The HHI for the Metropolitan New York-New Jersey banking market would remain at Financial, Managerial, and Other Supervisory 761 after consummation of the proposal. Under the revised Depart- Considerations ment of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is less than 1000 is considered to be unconcentrated. The Department of Justice has The Board also has carefully considered the financial and informed the Board that a bank merger or acquisition generally will managerial resources and future prospects of Fuji, Yasuda, not be challenged (in the absence of other factors indicating anticomand their respective subsidiaries, and the effect the proposal petitive effects) unless the post-merger HHI is at least 1800 and the would have on these resources. The Board notes that the merger increases the HHI by more than 200 points. The Department of Justice has stated that the higher than normal HHI thresholds for proposal is incidental to a corporate restructuring of Japascreening bank mergers and acquisitions for anticompetitive eifects nese banking organizations that is intended to enhance the implicitly recognize the competitive effects of limited-purpose lenders overall financial strength and future prospects of the comand other nondepository financial entities. bined organization. Fuji's reported capital levels exceed 5. 12 U.S.C. § 1842(c)(3)(B). As provided in Regulation Y, the Board determines whether a foreign bank is subject to consolidated the minimum levels that would be required under the Basle home country supervision under the standards set forth in Regula- Capital Accord, and its capital levels are considered equivtion K. See 12 C.F.R. 225.13(a)(4). Regulation K provides that a alent to the capital levels that would be required of a U.S. foreign bank may be considered subject to consolidated supervision if banking organization under similar circumstances. In addithe Board determines that the bank is supervised or regulated in such a manner that its home country supervisor receives sufficient informa- tion, Fuji recently has taken a number of actions to enhance tion on the worldwide operations of the foreign bank, including the its capital position. Fuji also has submitted information relationship of the bank and its affiliates, to assess the foreign bank's indicating that the proposal would not affect the existing overall financial condition and compliance with law and regulation. U.S. operations of Fuji or Yasuda, and would require no See 12 C.F.R. 211.24(c)(l)(ii). funding or other support from the U.S. operations of Fuji or 6. See 1998 Fuji/Yasuda Order. 7. See 1998 Fuji/Yasuda Order. Among other things, in June 1998, Yasuda. the Financial Supervisory Agency was established and assumed from The Board also has reviewed supervisory information the Ministry of Finance primary responsibility for licensing, supervis- from the home country authorities responsible for supervising, and examining private sector financial institutions in Japan, ing Fuji and Yasuda concerning the proposal and the including banks. In addition, in October 1998, the Financial Revitalization Commission was established to assume responsibility for condition of the parties, confidential financial information dealing with failures of financial institutions, managing financial from Fuji and Yasuda, and reports of examination from the crises, and inspecting and supervising financial institutions. The appropriate federal and state supervisors of the affected Financial Supervisory Agency is a subordinate agency of the Finan- organizations assessing the financial and managerial recial Revitalization Commission. The Bank of Japan retains its authorsources of the organizations. Based on all the facts of ity to examine banks, in coordination with the Financial Supervisory Agency. record, the Board has concluded that the financial and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

340 Federal Reserve Bulletin • May 1999 managerial resources and future prospects of the organiza- tion ("Company"), all in Charlotte, North Carolina.2 tions are consistent with approval, as are the other supervi- Wachovia would thereby engage in the following nonbanksory factors that the Board must consider under section 3 ing activities: of the BHC Act. Considerations related to the convenience and needs of the communities to be served also are consis- (1) extending credit and servicing loans, in accortent with approval. dance with section 225.28(b)(1) of Regulation Y (12 C.F.R. 225.28(b)(1)); Conclusion (2) engaging in activities related to extending credit, in accordance with section 225.28(b)(2) of Regu- Based on the foregoing and all the facts of record, the lation Y (12 C.F.R. 225.28(b)(2)); Board has determined that the application should be, and (3) providing leasing services, in accordance with sechereby is, approved. The Board's approval is expressly tion 225.28(b)(3) of Regulation Y (12 C.F.R. conditioned on compliance by Fuji with all the commit- 225.28(b)(3)); ments made in connection with the application. The com- (4) performing trust company functions, in accormitments and conditions relied on by the Board in reaching dance with section 225.28(b)(5) of Regulation Y its decision are deemed to be conditions imposed in writing (12 C.F.R. 225.28(b)(5)); by the Board in connection with its finding and decision (5) providing financial and investment advisory serand, as such, may be enforced in proceedings under appli- vices, in accordance with section 225.28(b)(6) of cable law. Regulation Y (12 C.F.R. 225.28(b)(6)); The transaction shall not be consummated before the (6) providing securities brokerage, riskless principal, fifteenth calendar day after the eifective date of this order, private placement, futures commission merchant, or later than three months after the effective date of this and other agency transactional services, in accororder, unless such period is extended for good cause by the dance with section 225.28(b)(7) of Regulation Y Board or the Federal Reserve Bank of New York, acting (12 C.F.R. 225.28(b)(7)); pursuant to delegated authority. (7) underwriting and dealing in government obliga- By order of the Board of Governors, effective March tions and money market instruments in which 15, 1999. state member banks may underwrite and deal under 12 U.S.C. §§ 335 and 24(7) ("bank-eligible Voting for this action: Vice Chair Rivlin and Governors Kelley, securities"), and engaging in investing and trad- Meyer, Ferguson, and Gramlich. Absent and not voting: Chairman ing activities, in accordance with section Greenspan. 225.28(b)(8)(i) and (ii) of Regulation Y (12 C.F.R. 225.28(b)(8)(i) and (ii)); ROBERT DEV. FRIERSON (8) providing management consulting advice, in ac- Associate Secretary of the Board cordance with section 225.28(b)(9)(i) of Regulation Y (12 C.F.R. 225.28(b)(9)(i)); Orders Issued Under Section 4 of the Bank Holding (9) providing data processing and data transmission Company Act services, in accordance with section 225.28(b)(14) of Regulation Y (12 C.F.R. 225.28(b)(14)); Wachovia Corporation (10) underwriting and dealing in, to a limited extent, Winston-Salem, North Carolina all types of debt and equity securities other than interests in open-end investment companies Order Approving Notice to Engage in Underwriting and ("bank-ineligible securities"); and Dealing in All Types of Debt and Equity Securities on a (11) acting as the general partner of private investment Limited Basis limited partnerships that invest in assets in which a bank holding company is permitted to invest. Wachovia Corporation ("Wachovia"), a bank holding company within the meaning of the Bank Holding Com- Notice of the proposal, affording interested persons an pany Act ("BHC Act"), has requested the Board's apopportunity to submit comments, has been published proval under section 4(c)(8) of the BHC Act (12 U.S.C. (64 Federal Register 4107 (1999)). The time for filing § 1843(c)(8)) and section 225.24 of the Board's Regulacomments has expired, and the Board has considered the tion Y (12 C.F.R. 225.24) to acquire Interstate/Johnson notice and all comments received in light of the factors set Lane, Inc. ("IJL"),1 and thereby acquire control of its forth in section 4(c)(8) of the BHC Act. subsidiaries, including Interstate/Johnson Lane Corpora- Wachovia, with total consolidated assets of approximately $65.6 billion, is the 17th largest banking organiza- 1. Wachovia also has requested the Board's approval to hold and exercise an option to acquire up to 19.9 percent of IJL's outstanding voting shares, if certain events occur. The option would expire on 2. IJL's other subsidiaries include Cap Trust Financial Advisors, consummation of the proposal described above. LLC; IJL Capital Management, Inc.; and ISC Futures Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 341 tion in the United States.3 Wachovia operates subsidiary also has determined that underwriting and dealing in bankbanks with branches in North Carolina, South Carolina, ineligible securities is consistent with section 20 of the Florida, Georgia, and Virginia and engages through other Glass-Steagall Act (12 U.S.C. § 377), provided that the subsidiaries in a broad range of permissible nonbanking company engaged in the activity derives no more than activities. IJL, with total consolidated assets of 25 percent of its gross revenues from underwriting and $652.3 million, engages directly and indirectly in a broad dealing in bank-ineligible securities.7 range of securities underwriting and dealing, securities Wachovia has committed that Company will conduct its brokerage, investment advisory, and other activities.4 underwriting and dealing activities using the methods and Wachovia proposes to acquire IJL by merging IJL with procedures and subject to the prudential limitations estaband into Wachovia, with Wachovia as the surviving corpo- lished by the Board in the Section 20 Orders. Wachovia ration. Wachovia anticipates merging its existing section also has committed that Company will conduct its bank- 20 subsidiary, Wachovia Capital Markets, Inc., Winston- ineligible securities underwriting and dealing activities Salem, North Carolina ("WCMI"), with and into Com- subject to the Board's revenue restriction.8 As a condition pany immediately on consummation of the merger between of this order, Wachovia is required to conduct the bank- Wachovia and IJL, with Company surviving the merger.5 ineligible securities activities of Company subject to the After consummation of the proposal, Company would be revenue restriction and Operating Standards established for renamed Wachovia Securities, Inc. Company is, and after section 20 subsidiaries ("Operating Standards").9 consummation of the proposal will continue to be, registered as a broker-dealer with the Securities and Exchange Other Activities Approved by Regulation or Order Commission ("SEC") under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), a member of the The Board previously has determined by regulation that National Association of Securities Dealers, Inc. credit and credit-related activities; leasing activities; trust ("NASD"), and registered as a futures commission mer- company functions; financial and investment advisory acchant with the Commodity Futures Trading Commission tivities; securities brokerage, riskless principal, private ("CFTC") under the Commodity Exchange Act (7 U.S.C. placement, futures commission merchant, and other agency §2 et seq.). Accordingly, Company is, and will continue to be, subject to the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the Employee Interlocks, Cross-Marketing Activities, and the Purchase Securities Exchange Act of 1934, the Commodity Ex- and Sale of Financial Assets Between a Section 20 Subsidiary and an change Act, the SEC, the CFTC, and the NASD. Affiliated Bank or Thrift, 61 Federal Register 57,679 (1996); Amendments to Restrictions in the Board's Section 20 Orders, 62 Federal Register 45,295 (1997); and Clarification to the Board's Section 20 Underwriting and Dealing in Bank-Ineligible Securities Orders, 63 Federal Register 14,803 (1998) (collectively, "Section 20 Orders"). The Board has determined that, subject to the framework 7. Compliance with the revenue limitation shall be calculated in accordance with the method stated in the Section 20 Orders, as of prudential limitations established in previous decisions modified by the Order Approving Modifications to the Section 20 to address the potential for conflicts of interests, unsound Orders, 75 Federal Reserve Bulletin 751 (1989); 10 Percent Revenue banking practices, or other adverse effects, underwriting Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding and dealing in bank-ineligible securities is so closely re- Companies Engaged in Underwriting and Dealing in Securities, 61 lated to banking as to be a proper incident thereto within Federal Register 48,953 (1996); and Revenue Limit on Bank-Ineligible the meaning of section 4(c)(8) of the BHC Act.6 The Board Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 68,750 (1996) (collectively, "Modification Orders"). 8. In light of the fact that Wachovia proposes to acquire Company 3. Asset and ranking data are as of September 30, 1998. as a going concern, the Board believes that allowing Company to 4. IJL currently engages in certain insurance activities and holds calculate compliance with the revenue limitation on an annualized certain investments in real estate that are not permissible for bank basis during the first year after consummation of the proposal and holding companies. Wachovia has committed to conform, within two thereafter on a rolling quarterly average basis would be consistent years of consummation of the proposal, all insurance activities of, and with the Section 20 Orders and the Glass-Steagall Act. See U.S. real estate investments held by, IJL and its subsidiaries to the require- Bancorp, 84 Federal Reserve Bulletin 483 (1998); Dauphin Deposit ments of section 4 of the BHC Act and the Board's regulations and Corporation, 77 Federal Reserve Bulletin 672 (1991). Moreover, in interpretations thereunder. Wachovia also has committed not to en- view of the fact that Company is significantly larger than WCMI and gage in any new real estate investment or development activities will survive the merger with WCMI, the management structure of the during the two-year conformance period. proposed merged company, the activities of the merging companies 5. WCMI currently underwrites and deals in, to a limited extent, and the proposed merged company, and the other aspects of this case, certain types of bank-ineligible securities. See Letter dated May 29, the Board believes the merger of WCMI and Company would not 1998, from Jennifer J. Johnson, Deputy Secretary of the Board, to disqualify Company from calculating compliance with the revenue John C. McLean, Jr. test in conformance with the annualized treatment described in this 6. See J.P. Morgan & Co. Inc., et al., 75 Federal Reserve Bulletin order. See KeyCorp, 84 Federal Reserve Bulletin 1075 (1998). 192 (1989), aff'd sub nom. Securities Industry Ass'n v. Board of 9. 12 C.F.R. 225.200. Company may provide services that are Governors of the Federal Reserve System, 900 F.2d 360 (D.C. Cir. necessary incidents to the proposed underwriting and dealing activi- 1990); Citicorp, 73 Federal Reserve Bulletin 473 (1987), aff'd sub ties. Unless Company receives specific approval under section 4(c)(8) nom. Securities Industry Ass 'n v. Board of Governors of the Federal of the BHC Act to conduct the activities independently, any revenues Reserve System, 839 F.2d 47 (2d Cir.), cert, denied, 486 U.S. 1059 from the incidental activities must be treated as ineligible revenues (1988), as modified by Review of Restrictions on Director, Officer and subject to the Board's revenue limitation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

342 Federal Reserve Bulletin • May 1999 transactional activities; bank-eligible securities underwrit- In addition, the Board has carefully considered the coming and dealing; investing and trading activities; manage- petitive effects of the proposal. To the extent that IJL and ment consulting activities; and data processing and trans- its subsidiaries offer different types of products and sermission activities are closely related to banking within the vices than Wachovia, the proposed acquisition would result meaning of section 4(c)(8) of the BHC Act.10 In addition, in no loss of competition. In those markets where the the Board previously has determined by order that private product offerings of Wachovia's nonbanking subsidiaries investment limited partnership activities are permissible overlap with the product offerings of IJL and its subsidiarfor bank holding companies when conducted within certain ies, such as securities brokerage, investment advisory activlimits.11 Wachovia has committed that it will conduct the ities, trust services, and insurance agency activities, there activities of IJL and its subsidiaries, including Company, in are numerous existing and potential competitors. Consumaccordance with the limitations set forth in Regulation Y mation of the proposal, therefore, would have a de minimis and the Board's orders and interpretations relating to each effect on competition in the market for these services, and of the proposed activities. the Board has concluded that the proposal would not have significantly adverse competitive effects in any relevant Other Considerations market. The Board expects that consummation of the proposal In order to approve this notice, the Board also must deter- would provide added convenience to the customers of mine that performance of the proposed activities is a proper Wachovia and IJL. Wachovia has indicated that consumincident to banking; that is, that the proposed activities mation of the proposal would expand the range of products "can reasonably be expected to produce benefits to the and services available to its customers and those of IJL. public, such as greater convenience, increased competition, Wachovia also has stated that the proposal would assist or gains in efficiency, that outweigh possible adverse ef- Wachovia to diversify its operations and, accordingly, fects, such as undue concentration of resources, decreased would make it less vulnerable to possible downturns in or unfair competition, conflicts of interests, or unsound individual business lines. In addition, there are public banking practices."12 As part of its review of these factors, benefits to be derived from permitting capital markets to the Board considers the financial and managerial resources operate so that bank holding companies can make potenof the notificant and its subsidiaries and the effect the tially profitable investments in nonbanking companies and transaction would have on such resources.13 from permitting banking organizations to allocate their In considering the financial resources of the notificant, resources in the manner they consider to be most efficient the Board has reviewed the capitalization of Wachovia and when such investments and actions are consistent, as in this Company in accordance with the standards set forth in the case, with the relevant considerations under the BHC Act. Moreover, under the framework established in this order Section 20 Orders and has found the capitalization of each and the Section 20 Orders, consummation of the proposal to be consistent with approval. This determination is based is not likely to result in any significantly adverse effects, on all the facts of record, including Wachovia's projections such as undue concentration of resources, decreased or of the volume of the bank-ineligible underwriting and unfair competition, conflicts of interests, or unsound bankdealing activities of Company. ing practices. The Board also has reviewed the managerial resources of each of the entities involved in this proposal in light of Based on all the facts of record, the Board has deterexamination reports and other supervisory information. In mined that performance of the proposed activities by connection with the proposal, the Federal Reserve Bank of Wachovia can reasonably be expected to produce public Richmond ("Reserve Bank") has reviewed the policies benefits that outweigh any potential adverse effects of the and procedures of Company to ensure compliance with this proposal. Accordingly, the Board has determined that the order and the Section 20 Orders, including Company's performance of the proposed activities by Wachovia is a operational and managerial infrastructure, computer, audit, proper incident to banking for purposes of section 4(c)(8) and accounting systems, and internal risk management of the BHC Act. procedures and controls. On the basis of the Reserve Bank's review and all other facts of record, including the Conclusion commitments provided in this case and the proposed managerial and risk management systems of Company, the On the basis of all the facts of record, the Board has Board has concluded that financial and managerial consid- determined that the notice should be, and hereby is, aperations are consistent with approval of the notice. proved, subject to all the terms and conditions described in this order and the Section 20 Orders, as modified by the Modification Orders. The Board's approval of the proposal extends only to activities conducted within the limitations 10. See 12 C.F.R. 225.28(b)(1), (2), (3), (5), (6), (7), (8)(i) and (ii), of this order, including the Board's reservation of authority (9)(i), and (14). to establish additional limitations to ensure that the activi- 11 .See Dresdner Bank AG, 84 Federal Reserve Bulletin 361 (1998); ties of Company are consistent with safety and soundness, Meridian Bancorp, Inc., 80 Federal Reserve Bulletin 736 (1994). avoidance of conflicts of interests, and other relevant con- 12. 12 U.S.C. § 1843(c)(8). 13. See 12 C.F.R. 225.26. siderations under the BHC Act. Underwriting and dealing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 343 in any manner other than as approved in this order is not section 9 of the Federal Reserve Act (12 U.S.C. § 321) within the scope of the Board's approval and is not autho- ("FRA") to establish branches at the locations of the rized for Company. branches to be acquired, as described in Appendix A. The Board's determination also is subject to all the terms Notice of the applications, affording interested persons and conditions set forth in Regulation Y, including those in an opportunity to submit comments, has been given in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and accordance with the BMA and the Board's Rules of Proce- 225.25(c)), and to the Board's authority to require modifi- dure (12 C.F.R. 262.3(b)). As required by the BMA, recation or termination of the activities of a bank holding ports on the competitive effects of the acquisitions were company or any of its subsidiaries as the Board finds requested from the United States Attorney General and the necessary to ensure compliance with, or to prevent evasion other federal banking agencies. The time for filing comof, the provisions and purposes of the BHC Act and the ments has expired, and the Board has considered the appli- Board's regulations and orders issued thereunder. The cation and all facts of record in light of the factors set forth Board's decision is specifically conditioned on compliance in the BMA and section 9 of the FRA. with all the commitments made in connection with the The BMA prohibits the Board from approving an applinotice, including the commitments discussed in this order cation if the proposal would result in a monopoly or would and the conditions set forth in this order and the Board be in furtherance of any attempt to monopolize the busiregulations and orders noted above. The commitments and ness of banking.3 The BMA also prohibits the Board from conditions are deemed to be conditions imposed in writing approving a proposal that would substantially lessen comby the Board in connection with its findings and decision, petition or tend to create a monopoly in any relevant and, as such, may be enforced in proceedings under appli- market, unless the Board finds that the anticompetitive cable law. effects of the proposed transaction are clearly outweighed This proposal shall not be consummated later than three in the public interest by the probable effects of the transacmonths after the effective date of this order, unless such tion in meeting the convenience and needs of the commuperiod is extended for good cause by the Board or the nity to be served.4 Reserve Bank, acting pursuant to delegated authority. Bank and the subsidiary banks of Wells compete with By order of the Board of Governors, effective March 17, each other in the Casa Grande, Flagstaff, Phoenix, and 1999. Yuma banking markets, all in Arizona.5 Consummation of the proposal would not exceed the Department of Justice Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Merger Guidelines ("DOJ Guidelines") in these markets Governors Kelley, Meyer, Ferguson, and Gramlich. and numerous competitors would remain in each market.6 The Department of Justice has advised the Board that ROBERT DEV. FRIERSON consummation of the proposal would not likely have a Associate Secretary of the Board significant adverse effect on competition in any relevant banking market. The other federal banking agencies also have been afforded an opportunity to comment and have ORDERS ISSUED UNDER BANK MERGER ACT not objected to consummation of the proposal. After carefully reviewing these and all other facts of Arizona Bank record, the Board concludes that consummation of the Tucson, Arizona proposed transaction would not be likely to result in a significantly adverse effect on competition or on the con- Order Approving Acquisition and Establishment of centration of banking resources in the Casa Grande, Flag- Branches Arizona Bank ("Bank"), a state member bank,1 has applied under section 18(c) of the Federal Deposit Insurance 3. 12 U.S.C. § 1828(c)(5)(A). 4. 12 U.S.C. § 1828(c)(5)(B). Act (12 U.S.C. § 1828(c)) (the "Bank Merger Act" or 5. Banking market definitions and data are discussed in Appen- "BMA") to acquire 15 branches in Arizona owned by dix B. Bank also would acquire four branches in banking markets with subsidiary banks of Wells Fargo & Company, San Fran- no competitive overlap. The Board notes that Bank's proposed branch cisco, California ("Wells").2 Bank also has applied under acquisitions would comply with the divestiture commitments discussed in the NorwestAVells Order. 6. Under the DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger Herfindahl-Hirschman 1. Bank is a wholly owned subsidiary of Compass Bancshares, Index ("HHI") is more than 1800 is considered to be highly concen- Birmingham, Alabama. trated. The Department of Justice has informed the Board that a bank 2. In October 1998, the Board approved the application by Norwest merger or acquisition generally will not be challenged (in the absence Corporation, Minneapolis, Minnesota, to acquire Wells Fargo & Com- of other factors indicating anticompetitive effects) unless the postpany, San Francisco, California. See Norwest Corporation, 84 Federal merger HHI is at least 1800 and the merger increases the HHI by more Reserve Bulletin 1088 (1998) ("Norwest/Wells Order"). After con- than 200 points. The Department of Justice has stated that the higher summation of the acquisition, Norwest changed its name to "Wells than normal threshold for an increase in the HHI when screening bank Fargo & Company." Bank would purchase 14 branches from Norwest mergers and acquisitions for anticompetitive effects implicitly recog- Bank Arizona, Phoenix, Arizona, and one branch from Wells Fargo nizes the competitive effects of limited-purpose and other nondeposi- Bank, N.A., San Francisco, California. tory financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

344 Federal Reserve Bulletin • May 1999 staff, Phoenix, or Yuma banking markets or any other institution's overall record of performance under the CRA relevant banking market. Accordingly, the Board has deter- by the appropriate federal financial supervisory agency.8 mined that competitive factors are consistent with ap- Bank received an "outstanding" rating in its most recent proval. CRA performance examination by its primary federal su- In reviewing this proposal under the BMA and section 9 pervisor at the time, the Federal Deposit Insurance Corpoof the FRA, the Board has considered the financial and ration, as of May 9, 1996.9 Examiners noted that Bank's managerial resources and future prospects of the existing credit applications, extensions, and denials were evenly and proposed institutions. The Board has reviewed these distributed throughout its communities, and that data subfactors in light of all the facts of record, including supervi- mitted under the Home Mortgage Disclosure Act sory reports of examination assessing the financial and (12 U.S.C. § 2801 et seq.) ("HMDA") showed favorable managerial resources of Bank. The Board notes that Bank approval rates for minority applicants.10 In addition, examwould remain well capitalized on consummation of the iners found no evidence of illegal credit practices or pracproposal. Based on all the facts of record, the Board tices that would discourage credit applications from any concludes that considerations relating to the financial and segment of Bank's delineated communities. A review of managerial resources and future prospects of the institu- Bank's credit originations, denials, and underwriting politions involved are consistent with approval. cies and procedures showed that Bank was in compliance The Board also must consider the convenience and needs with the substantive provisions of fair lending laws and of the communities to be served and take into account the that management had implemented a fair lending policy records of the relevant institutions under the Community and training program. Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). Bank offers an affordable housing program jointly with The CRA requires the federal financial supervisory agen- several southern Arizona nonprofit organizations.11 From cies to encourage financial institutions to help meet the 1996 through 1998, the bank originated 224 loans totaling credit needs of local communities in which they operate, $11.7 million through the program, which averaged apconsistent with their safe and sound operation, by requiring proximately 25 percent of the bank's mortgage lending the appropriate federal supervisory authority to take into over the three-year period. In addition, Bank received account an institution's record of meeting the credit needs almost $3 million in grants from the Federal Home Loan of its entire community, including low- and moderate- Bank of San Francisco (the "FHLB") during this period, in income ("LMI") neighborhoods, in evaluating bank acqui- many cases jointly with nonprofit organizations, to support sitions. the construction of affordable housing by area community The Board has carefully considered the convenience and groups. Bank also offers loans under several governmentneeds factor and the CRA performance records of the sponsored programs, including Federal Housing Adminisinstitutions involved in light of all the facts of record, tration and Veterans Administration loans and loans under including comments received on the applications. These the Federal National Mortgage Association's Community comments maintained that CRA performance records of Home Buyers Program. Wells's predecessor organizations in Arizona were defi- Bank participates in loan programs sponsored by the cient in several areas, including outreach efforts, housing- Small Business Administration ("SBA"), including the related and small-business lending, community develop- SBA's 7A and 504 loan programs. Small business lending ment, and low-cost banking services.7 data for 1996 and 1997 show that Bank increased the The Board carefully reviewed the CRA performance number of its small business loans (loans in amounts of records of Norwest Corporation and the former Wells less than $1 million) in its Tucson assessment area in 1997. Fargo & Company generally and specifically in Arizona in the Norwest/Wells Order. Based on all the facts of record, and for the reasons described in detail in that order, which 8. The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act provides that a CRA are incorporated herein by reference, the Board concluded examination is an important and often controlling factor in the considthat the CRA performance records of both banking organi- eration of an institution's CRA record and that reports of these zations were consistent with approval of that application. examinations will be given great weight in the applications process. The Board also has considered the CRA performance 54 Federal Register 13,742 and 13,745 (1989); see also Interagency Questions and Answers Regarding Community Reinvestment, 62 Fedrecord of Bank, which intends to extend its CRA-related eral Register 52,105 and 52,121 (1997). lending programs to the branches involved in this proposal, 9. This was Bank's third consecutive "outstanding" rating. Comin light of all the facts of record, including the performance pass Bancshares's other subsidiary bank, Compass Bank, Birmingevaluation by its appropriate federal supervisor. An institu- ham, Alabama, was rated "satisfactory," as of May 5, 1997. tion's most recent CRA performance evaluation is a partic- 10. In 1997, Bank's percentage of mortgage originations to LMI borrowers and in LMI census tracts in its Tucson assessment area ularly important consideration in the applications process exceeded the percentage of originations by lenders in the aggregate in because it represents a detailed on-site evaluation of the that area. 11. Nonprofit organizations refer prospective LMI borrowers to Bank and Bank waives the origination, underwriting, and document 7. The commenter also expressed concerns about branch closures in preparation fees on adjustable rate mortgages. Bank will make mort- LMI neighborhoods, particularly in Phoenix and Tucson. The Board gages with loan-to-value ratios of up to 89 percent without mortgage notes that no branches would be closed as a result of Bank's proposed insurance for borrowers referred by some of the participating organitransaction. zations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 345 Bank's performance in LMI census tracts in this area, as a Appendix A percentage of its total small business lending, was generally consistent with or exceeded that of lenders in the Branch Locations in Arizona aggregate in 1996 and 1997.12 Examiners found that Bank engaged in a number of 1. 419 West Central Avenue, Coolidge 85228. community development programs through loans or equity 2. 2 East Birch Avenue, Flagstaff 86001. financing, including construction financing for an afford- 3. 1992 McCulloch Boulevard North, Lake Havasu City able housing project developed by a nonprofit organiza- 86403. tion. Examiners also noted that Bank contracted with a 4. 1325 West Southern, Mesa 85202. nonprofit organization to counsel applicants on home own- 5. 4450 East Main Street, Mesa 85205. ership. Bank offers low-cost checking accounts, and exam- 6. 613 South Beeline Street Parkway, Payson 85441. iners concluded that services and hours of operation at 7. 3348 West Thomas Road, Phoenix 85017. Bank's branches were adequate to meet the needs of the 8. 6002 South Central Avenue, Phoenix 85040. communities served. 9. 302 North First Avenue, Phoenix 85003. Since its most recent performance examination, Bank 10. 781 East White Mountain Boulevard, Pinetop 85935. has continued to engage in community development activi- 11. 7201 East McDowell Road, Scottsdale 85251. ties, including affordable housing projects funded partly by 12. 7315 East Osborn Road, Scottsdale 85251. grants from the FHLB, with Bank's financing commit- 13. 211 South Carmichael Avenue, Sierra Vista 85635. ments totaling more than $19 million in 1996 and 1997. In 14. 7605 South McClintock Drive, Tempe 85284. 1998, Bank received a grant from the FHLB for construc- 15. 1599 South Fourth Avenue, Yuma 85364. tion of affordable housing for homeless individuals and couples newly reentering employment, and will offer a Appendix B bridge/construction loan with concessionary rates and fee waivers. Arizona Banking Market Definitions and Data The Board has considered the effects of the proposed acquisition on the convenience and needs of the communi- Casa Grande ties to be served in light of all the facts of record. Based on its review, and for the reasons discussed above, the Board The Casa Grande banking market is approximated by the concludes that convenience and needs considerations, in- towns of Arizona City, Casa Grande, Coolidge, Eloy, Flocluding the CRA performance records of the institutions rence, and Sacaton. Bank is the eighth largest banking and involved, are consistent with approval. thrift institution ("depository institution") in the market, The Board also concludes that the proposal is consistent controlling deposits of $600,000, and would purchase one with approval under the considerations in the FRA. Based branch controlling deposits of $9.9 million.1 After consumon the foregoing and all the facts of record, the Board mation of the proposal, Bank would become the seventh approves these applications. For purposes of this action, largest of eight competitors in the market, controlling the commitments and conditions relied on in reaching this deposits of $10.6 million, representing 3.2 percent of total decision are conditions imposed in writing by the Board deposits controlled by depository institutions in the market and, as such, may be enforced in proceedings under appli- ("market deposits"). The HHI would increase by one point cable law. to 1985. The acquisition of the branches may not be consummated before the fifteenth calendar day after the effective Flagstaff date of this order, or later than three months after the effective date of this order unless such period is extended The Flagstaff banking market is approximated by the towns by the Board or by the Federal Reserve Bank of Atlanta, of Flagstaff and Williams. Bank is the seventh largest acting pursuant to delegated authority. depository institution in the market, controlling deposits of By order of the Board of Governors, effective March 3, $800,000, and would purchase one branch controlling de- 1999. posits of $50.4 million. After consummation of the proposal, Bank would become the fifth largest of seven com- Voting for this action: Chairman Greenspan and Governors Kelley, Meyer, Ferguson, and Gramlich. Absent and not voting Vice Chair Rivlin. 1. All deposit data are as of June 30, 1997, adjusted for structural changes through December 1, 1998, and rounded to the nearest ROBERT DEV. FRIERSON $100,000. Market share data are based on calculations that include the Associate Secretary of the Board deposits of thrift institutions at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See, e.g., Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); Na- 12. The number of loans to small businesses (businesses with tional City Corporation, 70 Federal Reserve Bulletin 743 (1984). annual revenues of $1 million or less) decreased in 1997 for Bank and Thus, the Board has regularly included thrift deposits in the calculafor lenders in the aggregate, both in Bank's overall assessment area tion of market share on a 50 percent-weighted basis. See, e.g., First and in LMI areas. Hawaiian, Inc., 11 Federal Reserve Bulletin 52 (1991). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

346 Federal Reserve Bulletin • May 1999 petitors in the market, controlling deposits of $51.2 million, bank Baden-Wiirttemberg ("LBW") owns 25 percent of representing 13.2 percent of market deposits. The HHI Bank.2 All three Landesbanken are public law institutions would not increase. that serve as the central and clearing bank for the savings banks in their respective states. The Landesbanken also Phoenix provide commercial and investment banking services regionally, nationally, and internationally to both public and The Phoenix banking market is approximated by the Phoe- private entities and individuals. nix Ranally Metropolitan Area ("RMA"). Bank is the 32nd Bank engages principally in real estate activities. Bank largest depository institution in the market, controlling provides real estate financing, consulting and service activdeposits of $2.6 million, and would purchase eight ities, project development, construction and property manbranches controlling deposits of $256.7 million. After con- agement, and portfolio management. Bank has twelve ofsummation of the proposal, Bank would become the ninth fices in Germany, a branch in Great Britain, and a largest of 42 competitors in the market, controlling depos- representative office in the Netherlands. its of $259.3 million, representing 1.1 percent of market The proposed representative office would act as a liaison deposits. The HHI would not increase. with customers and potential customers. It would also solicit new business, conduct research, make property in- Yuma spections, verify external appraisals, secure title information, prepare applications for loans, and solicit investors to The Yuma banking market is approximated by the Yuma purchase such loans. RMA and the town of Welton. Bank is the ninth largest In acting on an application to establish a representative depository institution in the market, controlling deposits of office, the IBA and Regulation K provide that the Board $28,000, and would purchase one branch controlling de- shall take into account whether the foreign bank engages posits of $28.7 million. After consummation of the pro- directly in the business of banking outside of the United posal, Bank would become the sixth largest of ten compet- States, and has furnished to the Board the information it itors in the market, controlling deposits of $28.7 million, needs to assess the application adequately. The Board also representing 4.1 percent of market deposits. The HHI shall take into account whether the foreign bank and any would not increase. foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home Westdeutsche ImmobilienBank country supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. Mainz, Germany 211.24(d)(2)).3 The Board also may take into account additional standards as set forth in the IBA and Regula- Order Approving Establishment of a Representative tion K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. Office 211.24(c)(2)). As noted above, LB Rh-Pfalz, WestLB, LBW, and Bank Westdeutsche ImmobilienBank ("Bank"), Mainz, Ger- engage directly in the business of banking outside the many, a foreign bank within the meaning of the Interna- United States. Bank also has provided the Board with tional Banking Act ("IBA"), has applied under sec- information necessary to assess the application through tion 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a submissions that address the relevant issues. With respect representative office in New York, New York. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain 2. On January 1, 1999, Landeskreditbank Baden-Wiirttemberg and the approval of the Board to establish a representative Landesgirokasse-offentliche Bank und Landessparkasse were merged office in the United States. into Sudwestdeutsche Landesbank Girozentrale ("SudwestLB"). StidwestLB, which has been renamed Landesbank Baden-Wiirttemberg Notice of the application, affording interested persons an ("LBW"), is the surviving legal entity. opportunity to submit comments, has been published in a 3. In assessing this standard, the Board considers, among other newspaper of general circulation in New York, New York factors, the extent to which the home country supervisors: (New York Times, July 24, 1998). The time for filing (i) ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; comments has expired, and the Board has considered the (ii) obtain information on the condition of the bank and its application and all comments received. subsidiaries and offices through regular examination reports, Bank, with assets of $7 billion,1 was established in audit reports, or otherwise; January 1995, and is owned by three German Landesban- (iii) obtain information on the dealings with and relationship ken, which are in turn owned by various savings banks between the bank and its affiliates, both foreign and domestic; (iv) receive from the bank financial reports that are consolidated associations and municipal and state authorities. Landeson a worldwide basis or comparable information that permits bank Rheinland-Pfalz Girozentrale ("LB Rh- Pfalz") owns analysis of the bank's financial condition on a worldwide 25 percent of Bank; Westdeutsche Landesbank Girozen- consolidated basis; trale ("WestLB") owns 50 percent of Bank; and Landes- (v) evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's 1. Data are as of June 30, 1998. determination. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 347 to supervision by home country authorities, the Board cooperate with the Board to obtain any necessary consents previously has determined, in connection with applications or waivers that might be required from third parties for involving other banks in Germany, including WestLB and disclosure of such information. In addition, subject to LBW, that those banks were subject to home country certain conditions, the German supervisors may share insupervision on a consolidated basis.4 Bank and LB Rh- formation on Bank's operations with other supervisors, Pfalz are supervised by the German regulators on substan- including the Board. In light of these commitments and tially the same terms and conditions as those other banks. other facts of record, and subject to the condition described Based on all the facts of record, the Board has determined below, the Board concludes that Bank has provided adethat Bank and LB Rh-Pfalz are subject to comprehensive quate assurances of access to any necessary information supervision and regulation on a consolidated basis by their the Board may request. home country supervisors. On the basis of all the facts of record, and subject to the The Board also has taken into account the additional commitments made by Bank and its parents as well as the standards set forth in section 7 of the IBA and Regula- terms and conditions set forth in this order, the Board has tion K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. determined that Bank's application to establish the repre- 211.24(c)(2)). In this regard, the German Federal Banking sentative office should be, and hereby is, approved. Should Supervisory Office has no objection to the establishment of any restrictions on access to information on the operations the proposed representative office. or activities of Bank and its affiliates subsequently interfere With respect to the financial and managerial resources of with the Board's ability to obtain information to determine Bank, taking into consideration Bank's record of operation and enforce compliance by Bank or its affiliates with in its home country, its overall financial resources, and its applicable federal statutes, the Board may require terminastanding with its home country supervisors, the Board also tion of any of Bank's or its affiliates' direct or indirect has determined that financial and managerial factors are activities in the United States. Approval of this application consistent with approval of the proposed representative also is specifically conditioned on compliance by Bank and its parents with the commitments made in connection with office. Bank appears to have the experience and capacity to this application, and with the conditions in this order.5 The support the proposed representative office and has estabcommitments and conditions referred to above are condilished controls and procedures for the proposed representations imposed in writing by the Board in connection with tive office to ensure compliance with U.S. law. its decision, and may be enforced in proceedings under With respect to access to information about Bank's 12 U.S.C. § 1818 against Bank and its affiliates. operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates By order of the Board of Governors, effective March 1, and has communicated with relevant government authori- 1999. ties regarding access to information. Bank and its parents have committed to make available to the Board such infor- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and mation on the operations of Bank and any of its affiliates Governors Kelley, Meyer, Ferguson, and Gramlich. that the Board deems necessary to determine and enforce ROBERT DEV. FRIERSON compliance with the IBA, the Bank Holding Company Act Associate Secretary of the Board of 1956, as amended, and other applicable federal law. To the extent that the provision of such information may be prohibited by law, Bank and its parents have committed to 5. The Board's authority to approve the establishment of the proposed representative office parallels the continuing authority of the State of New York to license offices of a foreign bank. The Board's 4. See West Merchant Bank Limited, 81 Federal Reserve Bulletin approval of this application does not supplant the authority of the 519 (1995); SUdwestdeutsche Landesbank Girozentrale, 83 Federal State of New York and the New York State Banking Department Reserve Bulletin 937 (1997). No material change has occurred in the ("Department") to license the proposed office of Bank in accordance manner of supervision of the banks since those determinations. with any terms or conditions that the Department may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

348 Federal Reserve Bulletin • May 1999 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY 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. Section 3 Applicant(s) Bank(s) Reserve Bank Effective Date Ameri-National Corporation, Horizon National Bank, Kansas City March 11, 1999 Overland Park, Kansas Leawood, Kansas Bauer Management, Inc., The First National Bank, Dallas March 4, 1999 Port Lavaca, Texas Port Lavaca, Texas Bauer Investments, Ltd., Seaport Bank, Port Lavaca, Texas Seadrift, Texas BW Bancorp, Boundary Waters Community Bank, Minneapolis March 16, 1999 Woodbury, Minnesota Ely, Minnesota Capital Bancshares, Inc., The Capital Bank, St. Louis March 10, 1999 Little Rock, Arkansas Little Rock, Arkansas Carolina First Corporation, Citizens First National Bank, Richmond March 2, 1999 Greenville, South Carolina Crescent City, Florida Carthage State Bancshares, Inc., First State Bank & Trust Company, Dallas March 4, 1999 Carthage, Texas Carthage, Texas Carthage Nevada Financial Group, Inc., Carson City, Nevada Castle Creek Capital Partners Fund Rancho Santa Fe National Bank, San Francisco February 25, 1999 Ila, LP, Rancho Santa Fe, California Rancho Santa Fe, California Castle Creek Capital Partners Fund lib, LP, Rancho Santa Fe, California Castle Creek Capital Partners Fund State National Bancshares, Inc., San Francisco March 11, 1999 Ila, LP, Lubbock, Texas Rancho Santa Fe, California State National Bank of West Texas, Castle Creek Capital Partners Fund Lubbock, Texas lib, LP, Sierra Bank, Rancho Santa Fe, California Las Cruces, New Mexico Central Texas Bankshares Holdings, Hill Bancshares Holdings, Inc., Dallas March 4, 1999 Inc., Weimar, Texas Columbus, Texas Hill Bank & Trust Company, Colorado County Investment Weimar, Texas Holdings, Inc., Wilmington, Delaware Century South Banks, Inc., Independent Bancorp, Inc., Atlanta March 8, 1999 Dahlonega, Georgia Oxford, Alabama Clark County Bancshares, Inc., Memphis Bancshares, Inc., St. Louis March 4, 1999 Wyaconda, Missouri Memphis, Missouri Community Bank of Memphis, Memphis, Missouri Commerce Bancorp, Inc., Bank of Commerce, St. Louis March 1, 1999 Greenwood, Mississippi Greenwood, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 349 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Eggemeyer Advisory Corp, State National Bancshares, Inc., San Francisco March 11, 1999 Rancho Santa Fe, California Lubbock, Texas WJR Corp., Valley Bancorp, Inc., Rancho Santa Fe, California El Paso, Texas Castle Creek Capital LLC, Montwood National Bank Rancho Santa Fe, California El Paso, Texas Castle Creek Capital Partners Fund I, LP, Rancho Santa Fe, California Castle Creek Capital Partners Fund Ha, LP, Rancho Santa Fe, California Castle Creek Capital Partners Fund lib, Rancho Santa Fe, California Eggemeyer Advisory Corp., State National Bancshares, Inc., San Francisco March 11, 1999 Rancho Santa Fe, California Lubbock, Texas WJR Corp., Castle Creek Capital Partners Fund I, Rancho Santa Fe, California LP, Castle Creek Capital LLC, Rancho Santa Fe, California Rancho Santa Fe, California Castle Creek Capital Partners Fund lib, LP, Rancho Santa Fe, California Eggemeyer Advisory Corp., Rancho Santa Fe National Bank, San Francisco February 25, 1999 Rancho Santa Fe, California Rancho Santa Fe, California WJR Corp., Castle Creek Capital Partners Fund I, Rancho Santa Fe, California LP, Castle Creek Capital LLC, Rancho Santa Fe, California Rancho Santa Fe, California Castle Creek Capital Partners Fund Ila, LP, Rancho Santa Fe, California Castle Creek Capital Partners Fund lib, LP, Rancho Santa Fe, California Farmers & Merchants Bancorp, Farmers & Merchants Bank of Central San Francisco March 18, 1999 Lodi, California California, Lodi, California First American Bank Group, Ltd. First American Bank Chicago March 17, 1999 Fort Dodge, Iowa Sioux City, Iowa First Banking Company of Wayne Bancorp, Inc., Atlanta March 17, 1999 Southeast Georgia, Jesup, Georgia Statesboro, Georgia Wayne National Bank, Jesup, Georgia First Community Financial Community Savings Bank Inc., SSB, Richmond March 23, 1999 Corporation, Burlington, North Carolina Burlington, North Carolina First Financial Bancorp, Sand Ridge Financial Corporation, Cleveland March 11, 1999 Hamilton, Ohio Highland, Indiana First Sterling Banks, Inc., Georgia Bancshares, Inc., Atlanta March 15, 1999 Kennesaw, Georgia Tucker, Georgia Community Bank of Georgia, Tucker, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

350 Federal Reserve Bulletin • May 1999 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Franklin Bancshares, Inc., Franklin Bank, St. Louis March 9, 1999 Franklin, Illinois Franklin, Illinois Greater Bay Bancorp, Bay Area Bancshares, San Francisco March 23, 1999 Palo Alto, California Redwood City, California Bay Area Bank, Redwood City, California Hometown Banc Corp., Security State Bank, Kansas City March 3, 1999 Grand Island, Nebraska Sumner, Nebraska Hometown Independent Bancorp, Sunstar Bank, Chicago March 4, 1999 Inc., Washington, Illinois Morton, Illinois Morton Community Bank, Morton, Illinois Kentucky National Bancorp, Inc., Kentucky National Bank, St. Louis March 24, 1999 Elizabethtown, Kentucky Elizabethtown, Kentucky Lakeland Bancorp, Inc., High Point Financial Corporation, New York March 17, 1999 Oak Ridge, New Jersey Branchville, New Jersey The National Bank of Sussex County, Branchville, New Jersey Marine Bancshares, Inc., Marine National Bank of Naples, Atlanta March 22, 1999 Naples, Florida Naples, Florida Memphis Bancshares, Inc., Community Bank of Memphis, St. Louis March 4, 1999 Memphis, Missouri Memphis, Missouri Metroplex North Bancshares, Inc., Metroplex Bancshares, Inc., Dallas March 17, 1999 Employee Stock Ownership Plan, Celeste, Texas Celeste, Texas Millennium Bankshares Corporation, Millennium Bank N.A., Richmond March 5, 1999 Reston, Virginia Reston, Virginia Monument Bancshares, Inc., Monument National Bank, San Francisco February 18, 1999 Poland, Ohio Ridgecrest, California The Morton Community Bank Hometown Independent Bancorp, Inc., Chicago March 4, 1999 Employee Stock Ownership Plan Morton, Illinois and Trust, Morton, Illinois PFSB Bancorporation, Inc., Pigeon Falls State Bank, Minneapolis February 26, 1999 Pigeon Falls, Wisconsin Pigeon Falls, Wisconsin Pinnacle Bancorp, Inc., Pinnacle Bank of Cheyenne, Kansas City March 18, 1999 Central City, Nebraska Cheyenne, Wyoming Ripley County Bancshares, Inc., Ripley County State Bank, St. Louis February 23, 1999 Piedmont, Missouri Doniphan, Missouri Sam Houston Financial Corp., The First State Bank, Dallas March 10, 1999 Huntsville, Texas Kosse, Texas Huntsville Holdings, Inc., Wilmington, Delaware Silver State Bancorp, Silver State Bank, San Francisco March 17, 1999 Henderson, Nevada Henderson, Nevada South Branch Valley Bancorp, Inc., Shenandoah Valley National Bank, Richmond March 25, 1999 Moorefield, West Virginia Winchester, Virginia Stockmans Financial Group, Stockmans Bank, San Francisco March 18, 1999 Elk Grove, California Elk Grove, California United Community Banks, Inc., Adairsville Bancshares, Inc., Atlanta February 26, 1999 Blairsville, Georgia Adairsville, Georgia Bank of Adairsville, Adairsville, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 351 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date WCB Bancshares, Inc., Washington County Bank National Minneapolis March 17, 1999 Oakdale, Minnesota Association, Oakdale, Minnesota WJR Corp., Castle Creek Capital LLC, San Francisco February 25, 1999 Rancho Santa Fe, California Rancho Santa Fe, California Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Ambank Company, Inc., To engage de novo in making and Chicago March 16, 1999 Sioux Center, Iowa servicing loans and leasing activities Community First Bankshares, Inc., Thad Scholl Insurance Agency, LLC, Minneapolis March 15, 1999 Fargo, North Dakota Holyoke, Colorado Community Trust Financial Services Grace Financial Services, Inc., Atlanta March 8, 1999 Corp., Oakwood, Georgia Hiram, Georgia Community Loan Company, Hiram, Georgia Concord, EFS, Inc., Electronic Payment Services, Inc., St. Louis February 26, 1999 Memphis, Tennessee Wilmington, Delaware Cooperatieve Centrale Tokai Financial Services, Inc., New York March 18, 1999 Raiffeisen-Boerenleenbank B.A., Berwyn, Pennsylvania Rabobank Nederland, De Lage Landen, U.S.A., Inc., Utrecht, Netherlands New York, New York De Lage Landen International B.V., Eindhoven, Netherlands Cumberland Bancorp, Inc., The Murray Bank, Atlanta March 8, 1999 Carthage, Tennessee Murray, Kentucky Delta Bancorp, Inc., Delta Financial L.L.C., Chicago March 4, 1999 Prospect Heights, Illinois Prospect Heights, Illinois Village Mortgage L.L.C., Prospect Heights, Illinois First Ada Bancshares, Inc., Witherspoon Finance Company, Kansas City March 2, 1999 Ada, Oklahoma Ada, Oklahoma Gold Banc Corporation, Inc., CompuNet Engineering L.L.C., Kansas City March 22, 1999 Leawood, Kansas Overland Park, Kansas Marshall and Isley Corporation, ADP, Inc., Chicago March 4, 1999 Milwaukee, Wisconsin Alpharetta, Georgia NCB Holdings, Inc., Century Financial Company, LLC, Chicago March 15, 1999 Chicago, Illinois Chicago, Illinois State Street Corporation, SAVVIS Holdings Corporation, Boston March 17, 1999 Boston, Massachusetts St. Louis, Missouri Westdeutsche Landesbank WestLB Panmure Securities Inc., New York March 12, 1999 Girozentrale, New York, New York Duesseldorf, Federal Republic of Germany Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

352 Federal Reserve Bulletin • May 1999 Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Farm and Home Insurance Agency, Oakland Financial, Inc., Kansas City March 25, 1999 Inc., Oakland, Nebraska Lyons, Nebraska Farmers and Merchants National Bank, Oakland, Nebraska Tri-County Insurance, Inc., Oakland, Nebraska 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 Adams Bank & Trust, Bank of Indianola, Kansas City March 24, 1999 Ogallala, Nebraska Indianola, Nebraska Bank of Oakfield, M&I Central State Bank, Chicago March 4, 1999 Oakfield, Wisconsin Ripon, Wisconsin Citizens Bank & Trust Company, River Valley Bank & Trust, St. Louis March 19, 1999 Van Buren, Arkansas Lavaca, Arkansas First Community Bank, First Community Bank of Froid, Minneapolis March 4, 1999 Glasgow, Montana Froid, Montana Pinnacle Bank, Gretna State Bank, Kansas City March 25, 1999 Papillion, Nebraska Gretna, Nebraska Pinnacle Bank of Cheyenne, Frontier Bank of Laramie County, Kansas City March 18, 1999 Cheyenne, Wyoming Cheyenne, Wyoming Pinnacle Bank - Torrington, Pinnacle Bank of Cheyenne, Kansas City March 18, 1999 Torrington, Wyoming Cheyenne, Wyoming PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the peal 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. Independent Bankers Association of America v. Board of Gov- Folstadv. Board of Governors, No. 1:99 CV 124 (W.D. Mich., ernors, No. 98-1482 (D.C. Cir., filed October 21, 1998). filed February 17, 1999). Freedom of Information Act com- Petition for review of a Board order dated September 23, plaint. On March 23, 1999, the Board filed a motion to 1998, conditionally approving the applications of Travelers dismiss or for summary judgment. Group, Inc., New York, New York, to become a bank holding company by acquiring Citicorp, New York, New Nelson v. Greenspan, No. 1:99CV00215 (EGS) (D.D.C., filed York, and its bank and nonbank subsidiaries. January 28, 1999). Employment discrimination complaint. On March 29, 1999, the Board filed a motion to dismiss the Clarkson v. Greenspan, No. 98-5349 (D.C. Cir., filed July 29, action. 1998). Appeal of district court order granting Board's mo- Fraternal Order of Police v. Board of Governors, No. tion for summary judgment in a Freedom of Information 1:98CV03116 (D.D.C., filed December 22, 1998). Declara- Act case. On March 2, 1999, the Court granted the Board's tory judgment action challenging Board labor practices. On motion for summary affirmance of the district court dis- February 26, 1999, the Board filed a motion to dismiss the missal. action. Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAK) Inner City Press/Community on the Move v. Board of Gover- (S.D.N.Y., filed May 15, 1998). Action to freeze assets of nors, No. 98-9604 (2d Cir., filed December 3, 1998). Ap- individual pending administrative adjudication of civil Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 353 money penalty assessment by the Board. On May 26, 1998, "FDI Act"). Respondent is a former Vice President of the court issued a preliminary injunction restraining the Bankers Trust Company, New York, New York. In a Notransfer or disposition of the individual's assets and appoint- tice of Charges and of Hearing and Notice of the Assessing the Federal Reserve Bank of New York as receiver for ment of a Civil Money Penalty (the "Notice") issued those assets. October 29, 1998, the Board alleged that Respondent vio- Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed lated the law, breached his fiduciary duty, and engaged in May 4, 1998). Appeal and cross-appeal of district court unsafe and unsound banking practices in connection with order granting in part and denying in part the Board's the marketing and sale of leveraged derivative transactions. motion for summary judgment seeking prejudgment interest The Notice seeks a cease and desist order and a civil and a statutory surcharge in connection with a civil money money penalty against the Respondent. penalty assessed by the Board. On February 24, 1999, the In accordance with section 8(u)(2) of the FDI Act, court granted the Board's appeal and denied the cross- 12 U.S.C. 1818(u)(2), the Notice advised the Respondent appeal, and remanded the matter to the district court for that any hearing held in this matter would be public, unless determination of prejudgment interest due to the Board. the Board determined that an open hearing would be con- Fenili v. Davidson, No. C-98-01568-CW (N.D. California, trary to the public interest. The Notice informed Responfiled April 17, 1998). Tort and constitutional claim arising dent that he could submit a statement detailing any reasons out of return of a check. On June 5, 1998, the Board filed its why the hearing should not be public. On January 14, motion to dismiss. 1999, Respondent duly filed a motion with the Board Logan v. Greenspan, No. 1:98CV00049 (D.D.C., filed Janu- seeking a private hearing in this matter. Board Enforceary 9, 1998). Employment discrimination complaint. ment Counsel opposed the motion. Goldman v. Department of the Treasury, No. 98-9451 (11th Circuit, filed November 10, 1998). Appeal from a District Court order dismissing an action challenging Federal Re- Discussion serve notes as lawful money. Kerr v. Department of the Treasury, No. CV-S-97- In a recent case, In the Matter of Incus Co., Ltd., 85 01877-DWH (D. Nev., filed December 22, 1997). Challenge Federal Reserve Bulletin 284 (1999), the Board set forth to income taxation and Federal Reserve notes. On Septemthe standard by which such requests would be determined. ber 3, 1998, a motion to dismiss was filed on behalf of all Specifically, the Board ruled that: federal defendants. Before the Board exercises its discretion to close a To we v. Board of Governors, No. 97-71143 (9th Cir., filed hearing, there should be a substantial basis for con- September 15, 1997). Petition for review of a Board order cluding that the case reflects unusual circumstances dated August 18, 1997, prohibiting Edward Towe and that overcome the presumption in favor of open hear- Thomas E. Towe from further participation in the banking ings. In general, in light of the congressional requireindustry. On February 23, 1999, the court affirmed the ment that the proceeding be open unless "contrary to Board's order. the public interest," those circumstances should in- Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. volve serious safety and soundness concerns flowing Tex., filed August 21, 1997). Privacy Act case. from a public hearing. . . . [A] party seeking a closed hearing should be required to demonstrate how the effects of this proceeding differ so significantly from FINAL ENFORCEMENT DECISION ISSUED BY THE those involving other banks in terms of the public BOARD OF GOVERNORS interest as to warrant special treatment. Slip. op. at 3—4. In the Matter of Guillaume Henry Andrew Fonkenell Respondent's arguments do not meet the standard set out An Institution-Affiliated Party of in the Incus case. Respondent asserts that a private hearing would protect materials obtained by the Board and the Bankers Trust Company Securities and Exchange Commission in the course of their New York, New York investigations and maintained under seal by those agencies, and would protect the privacy and reputations of Docket Nos. 98-032-B-I, 98-032-CMP-I persons and firms whose conduct was the subject of investigation. He also claims that a closed hearing would assist Determination on Request for Private Hearing him in obtaining information from persons who may resist providing evidence without adequate confidentiality pro- Background tections. Finally, he asserts that holding the hearing in private would expedite and simplify the hearing process. This is an enforcement proceeding brought by the Board of These arguments are insufficient to overcome the con- Governors of the Federal Reserve System (the "Board") gressional presumption of open hearings in enforcement against Guillaume Henri Andre Fonkenell (the "Respon- matters. To the extent law enforcement agencies need to dent") pursuant to the Federal Deposit Insurance Act (the protect the confidentiality of a particular document, exist- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

354 Federal Reserve Bulletin • May 1999 ing regulations relating to hearing procedure provide than a public hearing . . . could be used to justify a private an adequate means to do so. See 12 U.S.C. 1818(u)(6); hearing in most enforcement cases, a result that would be 12 C.F.R. 263.33(b). Respondent's argument that the pri- inconsistent with the intent of the statute." In the Matter of vacy interests of third parties would be impaired by a Zbinden, 80 Federal Reserve Bulletin 360, 362 (1994). public hearing fails to present reasons why it would be Accordingly, Respondent's request for a private hearing contrary to the public interest to hold an open hearing. See is denied. Incus, slip op. at 4-5. With respect to Respondent's claim By Order of the Board of Governors, this 29th day of that a private hearing would assist him in obtaining neces- March, 1999. sary evidence, the administrative law judge handling the proceeding is empowered to issue subpoenas requiring BOARD OF GOVERNORS OF THE production of documents and attendance at depositions or FEDERAL RESERVE SYSTEM at the hearing. 12 C.F.R. 263.26, 263.27, 263.34(a). Finally, as the Board has previously held, the argument that JENNIFER J. JOHNSON "a private hearing is likely to be resolved more efficiently Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

355 Directors of Federal Reserve Banks and Branches Regional decentralization and a combination of govern- Directors are chosen without discrimination as to race, mental and private characteristics are important hallmarks creed, color, sex, or national origin. of the uniqueness of the Federal Reserve System. Under Class A directors of each Reserve Bank represent the the Federal Reserve Act, decentralization was achieved by stockholding member banks of the Federal Reserve Disdivision of the country into twelve regions called Federal trict. Class B and Class C directors represent the public and Reserve Districts and the establishment in each District of are chosen with due, but not exclusive, consideration to the a separately incorporated Federal Reserve Bank with its interests of agriculture, commerce, industry, services, labor, own board of directors. The blending of governmental and and consumers; they may not be officers, directors, or private characteristics is provided through ownership of the employees of any bank. In addition, Class C directors may stock of the Reserve Bank by member banks in its District, not be stockholders of any bank. The Board of Governors which also elect the majority of the board of directors, and designates annually one Class C director as chairman of by the general supervision of the Reserve Banks by the the board of directors of each District Bank and designates Board of Governors, an agency of the federal government. another Class C director as deputy chairman. The Board also appoints a minority of each board of Each of the twenty-five Branches of the Federal Reserve directors. Thus, there are essential elements of regional Banks has a board of either seven or five directors, a participation and counsel in the conduct of the System's majority of whom are appointed by the parent Federal affairs for which the Federal Reserve relies importantly on Reserve Bank; the others are appointed by the Board of the contributions of the directors of the Federal Reserve Governors. One of the Board's appointees is designated Banks and Branches. annually as chairman of the board of that Branch in a The following list of directors of Federal Reserve Banks manner prescribed by the parent Federal Reserve Bank. and Branches shows for each director the class of director- The names of the chairman and deputy chairman of the ship, the principal business affiliation, and the date the board of directors of each Reserve Bank and of the chaircurrent term expires. Each Federal Reserve Bank has nine man of each Branch are published monthly in the Federal members on its board of directors: The member banks elect Reserve Bulletin.1 the three Class A and three Class B directors, and the Board of Governors appoints the three directors in Class C. 1. The current list appears on page A86 of this Bulletin. Term expires DISTRICT 1—BOSTON December 31 Class A President and Chief Executive Officer, National Bank of Middlebury, 1999 G. Kenneth Perine Middlebury, Vermont President and Chief Executive Officer, Merrill Merchants Bank, 2000 Edwin N. Clift Bangor, Maine Chairman and Chief Executive Officer, Fleet Financial Group, 2001 Terrence Murray Boston, Massachusetts Class B 1999 Vacancy President and Chief Executive Officer, UNC Partners, Inc., 2000 Edward Dugger III Boston, Massachusetts Adjunct Lecturer, John F. Kennedy School of Government, 2001 Robert R. Glauber Harvard University, Cambridge, Massachusetts Class C William O. Taylor Chairman Emeritus, The Boston Globe, Boston, Massachusetts 1999 James J. Norton President, Graphic Communications International Union, Washington, D.C. 2000 William C. Brainard Professor of Economics, Yale University, New Haven, Connecticut 2001 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

356 Federal Reserve Bulletin • May 1999 Term Expires DISTRICT 2—NEW YORK December 31 Class A President and Chief Executive Officer, The Canandaigua National Bank 1999 George W. Hamlin IV and Trust Company, Canandaigua, New York Chairman and Chief Executive Officer, The Chase Manhattan Corporation, 2000 Walter V. Shipley New York, New York Chairman, President, and Chief Executive Officer, Banco Popular de 2001 Richard L. Carrion Puerto Rico, San Juan, Puerto Rico Class B Ann M. Fudge Executive Vice President, Kraft Foods, Inc., and President, Coffee & 1999 Cereals Division, Tarrytown, New York Eugene R. McGrath Chairman, President, and Chief Executive Officer, Consolidated Edison 2000 Company of New York, Inc., New York, New York Ronay Menschel President, Phipps Houses, New York, New York 2001 Class C John C. Whitehead Former Chairman, Goldman, Sachs & Co., Inc., New York, New York 1999 Vacancy 2000 Peter G. Peterson Chairman, The Blackstone Group, New York, New York 2001 BUFFALO BRANCH Appointed by the Federal Reserve Bank Louise Woerner Chairman and Chief Executive Officer, HCR, Rochester, New York 1999 William E. Swan President and Chief Executive Officer, Lockport Savings Bank, 2000 Lockport, New York Mark W. Adams Owner and Operator, Adams Poultry Farm, Naples, New York 2000 Kathleen R. Whelehan Executive Vice President, Consumer Finance Division, Marine Midland 2001 Bank, Buffalo, New York Appointed by the Board of Governors Patrick P. Lee Chairman and Chief Executive Officer, International Motion Control, Inc., 1999 Orchard Park, New York Vacancy 2000 Bal Dixit President and Chief Executive Officer, Newtex Industries, Inc., 2001 Victor, New York DISTRICT 3—PHILADELPHIA Class A David B. Lee President and Chief Executive Officer, Omega Bank, N.A., 1999 State College, Pennsylvania Harry Elwell III President and Chief Executive Officer, First National Bank of Absecon, 2000 Absecon, New Jersey Rufus A. Fulton, Jr. Chairman, President, and Chief Executive Officer, Fulton Financial 2001 Corporation, Lancaster, Pennsylvania Class B J. Richard Jones President and Chief Executive Officer, Insignia/ESG Jackson-Cross 1999 Company, Philadelphia, Pennsylvania Robert D. Burris President and Chief Executive Officer, Burris Foods, Inc., 2000 Milford, Delaware Howard E. Cosgrove Chairman and Chief Executive Officer, Conectiv (Delmarva Power and 2001 Light Company), Wilmington, Delaware Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 357 Term Expires DISTRICT 3—PHILADELPHIA—Continued December 31 Class C Joan Carter President and Chief Operating Officer, UM Holdings Ltd., 1999 Haddonfield, New Jersey Glenn A. Schaeffer President, Pennsylvania Building and Construction Trades Council, 2000 Harrisburg, Pennsylvania Charisse R. Lillie Partner, Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania 2001 DISTRICT 4—CLEVELAND Class A Tiney M. McComb Chairman and President, Heartland BancCorp, Gahanna, Ohio 1999 David S. Dahlmann President and Chief Executive Officer, Southwest National Corporation, 2000 Greensburg, Pennsylvania John R. Cochran Chairman and Chief Executive Officer, FirstMerit Corporation, 2001 Akron, Ohio Class B David L. Nichols Cincinnati, Ohio 1999 Cheryl L. Krueger-Horn President and Chief Executive Officer, Cheryl & Co., Westerville, Ohio 2000 Vacancy 2001 Class C Robert Y. Farrington Executive Secretary-Treasurer, Emeritus, Ohio State Building and 1999 Construction Trades Council, Columbus, Ohio G. Watts Humphrey, Jr. President, GWH Holdings, Inc., Pittsburgh, Pennsylvania 2000 David H. Hoag Former Chairman, The LTV Corporation, Cleveland, Ohio 2001 CINCINNATI BRANCH Appointed by the Federal Reserve Bank Judith G. Clabes President and Chief Executive Officer, Scripps Howard Foundation, 1999 Cincinnati, Ohio Phillip R. Cox President and Chief Executive Officer, Cox Financial Corporation, 1999 Cincinnati, Ohio Stephen P. Wilson President and Chief Executive Officer, Lebanon Citizens National Bank, 2000 Lebanon, Ohio Jean R. Hale President and Chief Executive Officer, Community Trust Bank, N.A., 2001 Pikeville, Kentucky Appointed by the Board of Governors George C. Juilfs President and Chief Executive Officer, SENCORP, Newport, Kentucky 1999 Wayne Shumate Chairman and Chief Executive Officer, Kentucky Textiles, Inc., 2000 Paris, Kentucky Thomas Revely III President and Chief Executive Officer, Cincinnati Bell Supply Co., 2001 Cincinnati, Ohio PITTSBURGH BRANCH Appointed by the Federal Reserve Bank Georgia Berner President, Berner International Corp., New Castle, Pennsylvania 1999 Peter N. Stephans Chairman and Chief Executive Officer, Trigon Incorporated, 1999 McMurray, Pennsylvania Thomas J. O' Shane Chairman and Chief Executive Officer, First Western Bancorp, Inc., 2000 New Castle, Pennsylvania Edward V. Randall, Jr. Management Consultant, Babst Calland Clements & Zomnir, 2001 Pittsburgh, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

358 Federal Reserve Bulletin • May 1999 Term Expires DISTRICT 4—CLEVELAND—Continued December 31 PITTSBURGH BRANCH—Continued Appointed by the Board of Governors Charles E. Bunch Senior Vice President, Strategic Planning and Corporate Services, 1999 PPG Industries, Inc., Pittsburgh, Pennsylvania John T. Ryan III Chairman and Chief Executive Officer, Mine Safety Appliances Company, 2000 Pittsburgh, Pennsylvania Gretchen R. Haggerty Vice President-Accounting and Finance, U. S. Steel Group, 2001 Pittsburgh, Pennsylvania DISTRICT 5—RICHMOND Class A President-North Carolina Banking, Wachovia Bank, N.A., 1999 J. Walter McDowell Winston-Salem, North Carolina President and Chief Executive Officer, The Bank of Tidewater, 2000 Elizabeth A. Duke Virginia Beach, Virginia Chairman Emeritus, First National Bank & Trust Co., 2001 James M. Culberson, Jr. Asheboro, North Carolina Class B Wesley S. Williams, Jr. Partner, Covington & Burling, Washington, D.C. 1999 James E. Haden President and Chief Executive Officer, Martha Jefferson Hospital, 2000 Charlottesville, Virginia Craig A. Ruppert President/Owner, Ruppert Nurseries, Inc., Laytonsville, Maryland 2001 Class C Jeremiah J. Sheehan Chairman and Chief Executive Officer, Reynolds Metals Company, 1999 Richmond, Virginia Claudine B. Malone President, Financial & Management Consulting, Inc., McLean, Virginia 2000 Irwin Zazulia President and Chief Executive Officer, Hecht's, Arlington, Virginia 2001 BALTIMORE BRANCH Appointed by the Federal Reserve Bank Morton I. Rapoport President and Chief Executive Officer, University of Maryland Medical 1999 System, Baltimore, Maryland William L. Jews President and Chief Executive Officer, Blue Cross Blue Shield of 2000 Maryland, Owings Mills, Maryland Virginia W. Smith President and Chief Executive Officer, Union National Bank, 2000 Westminster, Maryland Jeremiah E. Casey Chairman, First Maryland Bancorp, Baltimore, Maryland 2001 Appointed by the Board of Governors George L. Russell, Jr. Partner, Piper & Marbury L.L.P., Baltimore, Maryland 1999 Betty Bednarczyk International Secretary-Treasurer, Service Employees International Union, 2000 AFL-CIO, CLC, Washington, D.C. Daniel R. Baker President & Chief Executive Officer, Tate Access Floors, Inc., 2001 Jessup, Maryland CHARLOTTE BRANCH Appointed by the Federal Reserve Bank Vacancy 1999 Elleveen T. Poston President, Quality Transport, Inc., Lake City, South Carolina 2000 Cecil W. Sewell, Jr. Chairman and Chief Executive Officer, Centura Banks, Inc., 2000 Rocky Mount, North Carolina William H. Nock President and Chief Executive Officer, Sumter National Bank, 2001 Sumter, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 359 Term Expires DISTRICT 5—RICHMOND—Continued December 31 CHARLOTTE BRANCH—Continued Appointed by the Board of Governors Dennis D. Lowery Chief Executive Officer and Chairman, Continental Chemicals, 1999 Charlotte, North Carolina Joan H. Zimmerman President, Southern Shows, Inc., Charlotte, North Carolina 2000 James O. Roberson President, Research Triangle Foundation of North Carolina, 2001 Research Triangle Park, North Carolina DISTRICT 6—ATLANTA Class A Wealth Management & Investments, Morgan Stanley Dean Witter, 1999 Howard L. McMillan, Jr. Jackson, Mississippi Chairman and Chief Executive Officer, Compass Bancshares, Inc., 2000 D. Paul Jones, Jr. Birmingham, Alabama Chairman and Chief Executive Officer, First Farmers and Merchants 2001 Waymon L. Hickman National Bank, Columbia, Tennessee Class B Juanita P. Baranco Executive Vice President, Baranco Automotive Group, Morrow, Georgia 1999 John Dane III Chairman, President, and Chief Executive Officer, Halter Marine 2000 Group, Inc., Gulfport, Mississippi Suzanne E. Boas President, Consumer Credit Counseling Service, Inc., Atlanta, Georgia 2001 Class C John F. Wieland Chief Executive Officer and Chairman, John Wieland Homes and 1999 Neighborhoods, Inc., Atlanta, Georgia Paula Lovell President, Lovell Communications, Inc., Nashville, Tennessee 2000 Maria Camila Leiva Executive Vice President, Miami Free Zone Corporation, Miami, Florida 2001 BIRMINGHAM BRANCH Appointed by the Federal Reserve Bank W. Charles Mayer III Senior Executive Vice President, AmSouth Bancorporation, and President, 1999 Alabama, Tennessee, and Georgia Banking Group, AmSouth Bank, Birmingham, Alabama Roland Pugh Chairman, Roland Pugh Construction, Inc., Northport, Alabama 2000 Hundley Batts, Sr. Owner and Managing Agent, Hundley Batts & Associates, 2000 Huntsville, Alabama Robert M. Barrett Chairman and President, The First National Bank, Wetumpka, Alabama 2001 Appointed by the Board of Governors V. Larkin Martin Managing Partner, Martin Farm, Courtland, Alabama 1999 D. Bruce Carr Labor-Relations Liaison, Laborers' District Council of Alabama, 2000 Gadsden, Alabama Catherine Sloss Crenshaw President, Sloss Real Estate Group, Birmingham, Alabama 2001 JACKSONVILLE BRANCH Appointed by the Federal Reserve Bank William G. Smith, Jr. President and Chief Executive Officer, Capital City Bank Group, 1999 Tallahassee, Florida Terry R. West President and Chief Executive Officer, Jax Navy Federal Credit Union, 2000 Jacksonville, Florida Michael W. Poole Principal, Poole Carbone Capital Partners, Inc., Winter Park, Florida 2000 Harvey R. Heller President, Heller Bros. Packing Corp., Winter Garden, Florida 2001 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

360 Federal Reserve Bulletin • May 1999 Term Expires DISTRICT 6—ATLANTA—Continued DECEMBER 31 JACKSONVILLE BRANCH—Continued Appointed by the Board of Governors Marsha G. Rydberg Partner, Foley & Lardner, Tampa, Florida 1999 William E. Flaherty Chairman, Blue Cross and Blue Shield of Florida, Inc., 2000 Jacksonville, Florida Vacancy 2001 MIAMI BRANCH Appointed by the Federal Reserve Bank D. Keith Cobb Past Vice Chairman and Chief Executive Officer, Alamo Rent A Car, Inc., 1999 Ft. Lauderdale, Florida James W. Moore Past President, Gulf Utility Company, Fort Myers, Florida 1999 Carlos A. Migoya Regional President, Dade/Monroe Counties, First Union National Bank of 2000 Florida, Miami, Florida Robert H. Coords Chairman and Chief Executive Officer, SunTrust Bank, South Florida, 2001 N.A., Fort Lauderdale, Florida Appointed by the Board of Governors Mark T. Sodders President, Lakeview Farms, Inc., Pahokee, Florida 1999 Kaaren Johnson-Street Vice President, Minority Business Development and Urban Initiatives, 2000 Enterprise Florida, Inc., Coral Gables, Florida Gregg Borgeson President and Chief Executive Officer, Hellmann International 2001 Forwarders, Inc., Miami, Florida NASHVILLE BRANCH Appointed by the Federal Reserve Bank Leonard A. Walker, Jr. Chairman and Chief Executive Officer, First National Bank and Trust 1999 Company, Athens, Tennessee James E. Dalton, Jr. President and Chief Executive Officer, Quorum Health Group, Inc., 2000 Brentwood, Tennessee John E. Seward, Jr. President and Chief Executive Officer, Paty Lumber Company, 2000 Piney Flats, Tennessee Dale W. Polley President, First American National Bank, Nashville, Tennessee 2001 Appointed by the Board of Governors Michael E. Bennett Past UAW Manufacturing Advisor, Saturn Corporation, 1999 Spring Hill, Tennessee Whitney Johns Chairman and Chief Executive Officer, Whitney Johns & Company & 2000 Capital Across America, Nashville, Tennessee Frances F. Marcum Chairman and Chief Executive Officer, Micro Craft, Inc., 2001 Tullahoma, Tennessee NEW ORLEANS BRANCH Appointed by the Federal Reserve Bank Howard C. Gaines President, Military Division, First USA Partners, New Orleans, Louisiana 1999 Teri G. Fontenot President and Chief Executive Officer, Woman's Health 2000 FoundationAVoman's Hospital, Baton Rouge, Louisiana David Guidry President and Chief Executive Officer, Guico Machine Works, Inc., 2000 Harvey, Louisiana Howell N. Gage Chairman and Chief Executive Officer, Merchants Bank, 2001 Vicksburg, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 361 Term Expires DISTRICT 6—ATLANTA—Continued December 31 NEW ORLEANS BRANCH—Continued Appointed by the Board of Governors Glenn Pumpelly President and Chief Executive Officer, Pumpelly Oil Inc., 1999 Sulphur, Louisiana Vacancy 2000 Dwight H. Evans President and Chief Executive Officer, Mississippi Power Company, 2001 Gulfport, Mississippi DISTRICT 7—CHICAGO Class A Verne G. Istock Chairman, BANK ONE Corporation, Chicago, Illinois 1999 Robert R. Yohanan Managing Director and Chief Executive Officer, First Bank & Trust of 2000 Evanston, Evanston, Illinois Alan R. Tubbs President, Maquoketa State Bank and Ohnward Bancshares Inc., 2001 Maquoketa, Iowa Class B Migdalia Rivera Former Executive Director, Latino Institute, Chicago, Illinois 1999 Jack B. Evans President, The Hall-Perrine Foundation, Cedar Rapids, Iowa 2000 James H. Keyes Chairman and Chief Executive Officer, Johnson Controls, Inc., 2001 Milwaukee, Wisconsin Class C Robert J. Darnall President and Chief Executive Officer, Ispat North America, 1999 Chicago, Illinois Lester H. McKeever, Jr. Managing Partner, Washington, Pittman & McKeever, Chicago, Illinois 2000 Arthur C. Martinez Chairman and Chief Executive Officer, Sears, Roebuck and Co., 2001 Hoffman Estates, Illinois DETROIT BRANCH Appointed by the Federal Reserve Bank Denise Ilitch President, Olympia Development, Inc., Detroit, Michigan 1999 Irma B. Elder President, Troy Motors, Inc., Troy, Michigan 1999 David J. Wagner Chairman, President, and Chief Executive Officer, Old Kent Financial 2000 Corporation, Grand Rapids, Michigan Richard M. Bell President and Chief Executive Officer, The First National Bank of Three 2001 Rivers, Three Rivers, Michigan Appointed by the Board of Governors Florine Mark President and Chief Executive Officer, The WW Group, Inc., 1999 Farmington Hills, Michigan Timothy D. Leuliette President and Chief Operating Officer, Penske Corporation, 2000 Detroit, Michigan Stephen R. Polk Chairman and Chief Executive Officer, R.L. Polk & Co., 2001 Southfield, Michigan DISTRICT 8—ST. LOUIS Class A W. D. Glover Chairman and Chief Executive Officer, First National Bank of Eastern 1999 Arkansas, Forrest City, Arkansas Michael A. Alexander Chairman and President, First National Bank, Mt. Vernon, Illinois 2000 Thomas H. Jacobsen Chairman, President, and Chief Executive Officer, Mercantile 2001 Bancorporation Inc., St. Louis, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

362 Federal Reserve Bulletin • May 1999 Term Expires DISTRICT 8—ST. LOUIS—Continued December 31 Class B Executive Director, New Directions Housing Corp., 1999 Joseph E. Gliessner, Jr. Louisville, Kentucky Chairman and Chief Executive Officer, Johnson Bryce, Inc., 2000 Robert L. Johnson Memphis, Tennessee Partner, Greenwalt Company, Hazen, Arkansas 2001 Bert Greenwalt Class C Veo Peoples, Jr. Partner, Haverstock, Garrett and Roberts, St. Louis, Missouri 1999 Susan S. Elliott Chairman and Chief Executive Officer, Systems Service Enterprises, Inc., 2000 St. Louis, Missouri Charles W. Mueller Chairman, President, and Chief Executive Officer, Ameren Corporation, 2001 St. Louis, Missouri LITTLE ROCK BRANCH Appointed by the Federal Reserve Bank Mark Simmons Chairman, Simmons Foods, Inc., Siloam Springs, Arkansas 1999 Ross M. Whipple Chairman, Horizon Bank of Columbia County, 1999 Magnolia, Arkansas Lunsford W. Bridges President and Chief Executive Officer, Metropolitan National Bank, 2000 Little Rock, Arkansas Lawrence A. Davis, Jr. Chancellor, University of Arkansas at Pine Bluff, 2001 Pine Bluff, Arkansas Appointed by the Board of Governors Janet M. Jones President, The Janet Jones Company, Little Rock, Arkansas 1999 Diana T. Hueter President and Chief Executive Officer, St. Vincent Health System, 2000 Little Rock, Arkansas Vick M. Crawley Plant Manager, Baxter Healthcare Corporation, 2001 Mountain Home, Arkansas LOUISVILLE BRANCH Appointed by the Federal Reserve Bank Larry E. Dunigan Chairman and Chief Executive Officer, Holiday Management Corp. 1999 Evansville, Indiana Vacancy 1999 Frank J. Nichols Chairman, President, and Chief Executive Officer, Bank of Benton, 2000 Benton, Kentucky Orson Oliver President, Mid-America Bank of Louisville, 2001 Louisville, Kentucky Appointed by the Board of Governors Vacancy 1999 Debbie Scoppechio Chairman and Chief Executive Officer, Creative Alliance, Inc., 2000 Louisville, Kentucky Roger Reynolds President and Chief Executive Officer, Reynolds Coatings, LLC, 2001 Louisville, Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 363 Term Expires DISTRICT 8—ST. LOUIS—Continued December 31 MEMPHIS BRANCH Appointed by the Federal Reserve Bank Katie S. Winchester President, Chief Executive Officer, and Director, First Citizens National 1999 Bank, Dyersburg, Tennessee John C. Kelley, Jr. President, Memphis Banking Group, First Tennessee Bank, 1999 Memphis, Tennessee E.C. Neelly III Chief Executive Officer, First American National Bank, Iuka, Mississippi 2000 Vacancy 2001 Appointed by the Board of Governors Mike P. Sturdivant, Jr. Partner, Due West, Glendora, Mississippi 1999 Carol G. Crawley Vice President & Regional Manager, Mid-America Apartment 2000 Communities, Inc., Memphis, Tennessee Gregory M. Duckett Senior Vice President and Corporate Counsel, Baptist Memorial Health 2001 Care Corporation, Memphis, Tennessee DISTRICT 9—MINNEAPOLIS Class A Lynn M. Hoghaug President, Ramsey National Bank and Trust Co., Devils Lake, 1999 North Dakota Bruce Parker President, Norwest Bank Montana, Billings, Montana 2000 W.W. LaJoie Chief Executive Officer and Chairman, Central Savings Bank, 2001 Sault Ste. Marie, Michigan Class B Rob L. Wheeler Vice President, Wheeler Mfg. Co., Inc., Lemmon, South Dakota 1999 Kathryn L. Ogren Owner, Bitterroot Motors, Missoula, Montana 2000 Jay F. Hoeschler President and Owner, Hoeschler Corporation, La Crosse, Wisconsin 2001 Class C David A. Koch Chairman, Graco, Inc., Plymouth, Minnesota 1999 Ronald N. Zwieg President, United Food & Commercial Workers, Local 653, 2000 Plymouth, Minnesota James J. Howard Chairman, President, and Chief Executive Officer, Northern States Power 2001 Company, Minneapolis, Minnesota HELENA BRANCH Appointed by the Federal Preserve Bank Richard E. Hart President, Mountain West Bank, Great Falls, Montana 1999 Emil W. Erhardt Chairman and President, Citizens State Bank, Hamilton, Montana 2000 Sandra M. Stash, P.E. Vice President, Environmental Services, ARCO Environmental 2000 Remediation L.L.C., Anaconda, Montana Appointed by the Board of Governors Thomas O. Markle President and Chief Executive Officer, Markle's Inc., Glasgow, Montana 1999 William P. Underriner General Manager, Selover Buick Inc., Billings, Montana 2000 DISTRICT 10—KANSAS CITY Class A Dennis E. Barrett President, FirstBank Holding Company of Colorado, Lakewood, Colorado 1999 Bruce A. Schriefer President, Bankers' Bank of Kansas, Wichita, Kansas 2000 Jeffrey L. Gerhart President and Chief Executive Officer, First National Bank, Newman 2001 Grove, Nebraska Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

364 Federal Reserve Bulletin • May 1999 Term Expires DISTRICT 10—KANSAS CITY—Continued December 31 Class B Charles W. Nichols Managing Partner, Davison & Sons Cattle Company, Arnett, Oklahoma 1999 Hans Helmerich President and Chief Executive Officer, Helmerich & Payne, Inc., 2000 Tulsa, Oklahoma Frank A. Potenziani M & T Trust, Albuquerque, New Mexico 2001 Class C Executive Director, Kansas City Neighborhood Alliance, 1999 Colleen D. Hernandez Kansas City, Missouri President and Chief Executive Officer, J.E. Dunn Construction Company, 2000 Terrence P. Dunn Kansas City, Missouri Area Managing Partner, Ernst & Young LLP, Minneapolis, Minnesota 2001 Jo Marie Dancik DENVER BRANCH Appointed by the Federal Reserve Bank C.G. Mammel President and Chief Executive Officer, The Bank of Cherry Creek, N.A., 1999 Denver, Colorado Robert M. Murphy President, Sandia Properties Ltd., Co., Albuquerque, New Mexico 2000 John W. Hay III President, Rock Springs National Bank, Rock Springs, Wyoming 2000 Albert C. Yates President, Colorado State University, Ft. Collins, Colorado 2001 Appointed by the Board of Governors Teresa N. McBride Chief Executive Officer, McBride and Associates, Inc., 1999 Albuquerque, New Mexico Kathryn A. Paul Division President, Kaiser Permanente, Denver, Colorado 2000 James A. King Chief Executive Officer, BT Inc., Riverton, Wyoming 2001 OKLAHOMA CITY BRANCH Appointed by the Federal Reserve Bank William H. Braum President, Braum Ice Cream Co., Oklahoma City, Oklahoma 1999 Michael S. Samis President and Chief Executive Officer, Macklanburg-Duncan Co., 2000 Oklahoma City, Oklahoma Betty Bryant Shaull President-Elect and Director, Bank of Cushing and Trust Company, 2001 Cushing, Oklahoma W. Carlisle Mabrey III President and Chief Executive Officer, Citizens Bank & Trust Co., 2001 Okmulgee, Oklahoma Appointed by the Board of Governors Larry W. Brummett Chairman, President, and Chief Executive Officer, ONEOK, Inc., 1999 Tulsa, Oklahoma Patricia B. Fennell Executive Director, Latino Community Development Agency, 2000 Oklahoma City, Oklahoma David L. Kruse II Senior Vice President, American Airlines, Inc., Tulsa, Oklahoma 2001 OMAHA BRANCH Appointed by the Federal Reserve Bank Bruce R. Lauritzen Chairman and President, First National Bank of Omaha, 1999 Omaha, Nebraska Frank L. Hayes President, Hayes & Associates, L.L.C., Omaha, Nebraska 2000 H.H. Kosman Chairman, President, and Chief Executive Officer, Platte Valley National 2000 Bank, Scottsbluff, Nebraska Bill L. Fairfield President and Chief Executive Officer, Inacom Corp., Omaha, Nebraska 2001 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 365 Term Expires DISTRICT 10—KANSAS CITY—Continued DECEMBER 31 OMAHA BRANCH—Continued Appointed by the Board of Governors Bob L. Gottsch Vice President, Gottsch Feeding Corporation, Hastings, Nebraska 1999 A.F. Raimondo Chairman and Chief Executive Officer, Behlen Mfg. Co., 2000 Columbus, Nebraska Gladys Styles Johnston Chancellor, University of Nebraska at Kearney, Kearney, Nebraska 2001 DISTRICT 11—DALLAS Class A Gayle M. Earls President and Chief Executive Officer, The Independent BankersBank, 1999 Dallas, Texas Kirk A. McLaughlin President and Chief Executive Officer, Security Bank, Ralls, Texas 2000 Dudley K. Montgomery President and Chief Executive Officer, The Security State Bank of Pecos, 2001 Pecos, Texas Class B Dan Angel President, Stephen F. Austin State University, Nacogdoches, Texas 1999 Robert C. McNair Chairman and Chief Executive Officer, Cogen Technologies Energy Group, 2000 Houston, Texas Julie S. England Vice President, Texas Instruments, Dallas, Texas 2001 Class C James A. Martin Retired Second General Vice President, International Association of 1999 Bridge, Structural, Ornamental, and Reinforcing Iron Workers, Austin, Texas Vacancy 2000 Roger R. Hemminghaus Chairman, Ultramar Diamond Shamrock Corp., San Antonio, Texas 2001 EL PASO BRANCH Appointed by the Federal Reserve Bank James D. Renfrow President and Chief Executive Officer, The Carlsbad National Bank, 1999 Carlsbad, New Mexico Melissa W. O'Rourke President, Charlotte's Inc., El Paso, Texas 1999 Cecil E. Nix Business Manager, IBEW Local 460, Midland, Texas 2000 Lester L. Parker President, Bank of the West, El Paso, Texas 2001 Appointed by the Board of Governors Patricia Z. Holland-Branch President and Chief Executive Officer, HB/PZH Commercial 1999 Environments, Inc., El Paso, Texas Gail S. Darling Chief Executive Officer, Gail Darling, Inc., El Paso, Texas 2000 Beauregard Brite White Rancher, J. E. White, Jr. & Sons, Marfa, Texas 2001 HOUSTON BRANCH Appointed by the Federal Reserve Bank Judith B. Craven Physician/Administrator, Houston, Texas 1999 Ray B. Nesbitt President (Retired), Exxon Chemical Company, Houston, Texas 1999 Alan R. Buckwalter III Chairman and Chief Executive Officer, Chase Bank of Texas, N.A., 2000 Houston, Texas Richard Weekley Chairman, Weekley Development Company, Houston, Texas 2001 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

366 Federal Reserve Bulletin • May 1999 Term Expires DISTRICT 11—DALLAS—Continued December 31 HOUSTON BRANCH—Continued Appointed by the Board of Governors Peggy Pearce Caskey Chief Executive Officer, Laboratories for Genetic Services, Inc., 1999 Houston, Texas Malcolm Gillis President, Rice University, Houston, Texas 2000 Edward O. Gaylord Chairman, Jacintoport Terminal Company, Houston, Texas 2001 SAN ANTONIO BRANCH Appointed by the Federal Reserve Bank Juliet V. Garcia President, The University of Texas at Brownsville, Brownsville, Texas 1999 Douglas G. Macdonald President, South Texas National Bank, Laredo, Texas 1999 Arthur Emerson Vice President/General Manager, KVDA-TV 60 Telemundo, 2000 San Antonio, Texas R. Tom Roddy Chairman, Camino Real Bank, San Antonio, Texas 2001 Appointed by the Board of Governors Patty P. Mueller Vice President/Finance, Mueller Energetics Corp., Corpus Christi, Texas 1999 H.B. Zachry, Jr. Chairman and Chief Executive Officer, H.B. Zachry Company, 2000 San Antonio, Texas Ron R. Harris President and Chief Executive Officer, Pervasive Software, Austin, Texas 2001 DISTRICT 12—SAN FRANCISCO Class A E. Lynn Caswell Chairman and Chief Executive Officer, Pacific Community Banking Group, 1999 Laguna Hills, California John V. Rindlaub President, Northwest Region, Bank of America, Seattle, Washington 2000 Warren K.K. Luke Vice Chairman, President, and Chief Executive Officer, Hawaii National 2001 Bank, Honolulu, Hawaii Class B Robert S. Attiyeh Senior Vice President and Chief Financial Officer (Retired), Amgen, Inc., 1999 Thousand Oaks, California Krestine Corbin President and Chief Executive Officer, Sierra Machinery, Inc., 2000 Sparks, Nevada Byron I. Mallott Executive Director, Alaska Permanent Fund Corp., Juneau, Alaska 2001 Class C Gary Glenn Michael Chairman and Chief Executive Officer, Albertson's, Inc., Boise, Idaho 1999 Nelson C. Rising President and Chief Executive Officer, Catellus Development Corporation, 2000 San Francisco, California Sheila Denise Harris Consultant, Harris Consulting, Litchfield Park, Arizona 2001 Los ANGELES BRANCH Appointed by the Federal Reserve Bank John H. Gleason Executive Vice President, Del Webb Corporation, Phoenix, Arizona 1999 Liam E. McGee President, Southern California Banking, Bank of America, 2000 Los Angeles, California Linda Griego Managing General Partner, Engine Co. No. 28, Los Angeles, California 2000 Russell Goldsmith Chairman and Chief Executive Officer, City National Bank, 2001 Beverly Hills, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Directors of Federal Reserve Banks and Branches 367 Term Expires DISTRICT 12—SAN FRANCISCO—Continued DECEMBER 31 Los ANGELES BRANCH—Continued Appointed by the Board of Governors Lori R. Gay President, Los Angeles Neighborhood Housing Service, 1999 Los Angeles, California Lonnie Kane President, Karen Kane, Inc., Los Angeles, California 2000 William D. Jones Chairman, President, and Chief Executive Officer, CityLink Investment 2001 Corporation, San Diego, California PORTLAND BRANCH Appointed by the Federal Reserve Bank Phyllis A. Bell President, Oregon Coast Aquarium, Newport, Oregon 1999 Martin Brantley President and General Manager, Oregon's 12-KPTV, Portland, Oregon 1999 Guy L. Williams President and Chief Executive Officer, Security Bank, Coos Bay, Oregon 2000 Gary T. Duim Vice Chairman, U. S. Bancorp, Portland, Oregon 2001 Appointed by the Board of Governors Nancy Wilgenbusch President, Marylhurst University, Marylhurst, Oregon 1999 Patrick Borunda Director, Oweesta Fund, First Nation's Development Institute, 2000 Vancouver, Washington Karla S. Chambers Vice President, Stahlbush Island Farms, Inc., Corvallis, Oregon 2001 SALT LAKE CITY BRANCH Appointed by the Federal Reserve Bank J. Pat McMurray President, First Security Bank, N.A., Boise, Idaho 1999 Maria Garciaz Executive Director, Salt Lake Neighborhood Housing Services, 1999 Salt Lake City, Utah R.D. Cash Chairman, President, and Chief Executive Officer, Questar Corporation, 2000 Salt Lake City, Utah Curtis H. Harris Chairman, President, and Chief Executive Officer, Barnes Banking 2001 Company, Kaysville, Utah Appointed by the Board of Governors Nancy S. Mortensen Vice President-Marketing Services, ZCMI, Salt Lake City, Utah 1999 Barbara L. Wilson Idaho and Regional Vice President, U. S. West, Boise, Idaho 2000 Jon M. Huntsman, Jr. Vice Chairman, Huntsman Corporation, Salt Lake City, Utah 2001 SEATTLE BRANCH Appointed by the Federal Reserve Bank Tomio Moriguchi Chairman and Chief Executive Officer, Uwajimaya, Inc., 1999 Seattle, Washington James C. Hawkanson Managing Director and Chief Executive Officer, The Commerce Bank of 1999 Washington, N.A., Seattle, Washington Betsy Lawer Vice Chair and Chief Operating Officer, First National Bank of Anchorage, 2000 Anchorage, Alaska Peter H. van Oppen Chairman and Chief Executive Officer, Advanced Digital Information 2001 Corp., Redmond, Washington Appointed by the Board of Governors Boyd E. Givan Senior Vice President and Chief Financial Officer (Retired), 1999 The Boeing Company, Seattle, Washington Richard R. Sonstelie Chairman, Puget Sound Energy, Inc., Bellevue, Washington 2000 Helen M. Rockey Chairman, Brooks Sports, Inc., Bothell, Washington 2001 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance—Continued All Gross public debt of U.S. Treasury— DOMESTIC FINANCIAL STATISTICS Types and ownership A28 U.S. government securities Money Stock and Bank Credit dealers—Transactions A4 Reserves, money stock, liquid assets, and debt A29 U.S. government securities dealers— measures Positions and financing A5 Reserves of depository institutions and Reserve Bank A30 Federal and federally sponsored credit credit agencies—Debt outstanding A6 Reserves and borrowings—Depository institutions Securities Markets and Corporate Finance Policy Instruments A31 New security issues—Tax-exempt state and local governments and corporations A7 Federal Reserve Bank interest rates A32 Open-end investment companies—Net sales A8 Reserve requirements of depository institutions and assets A9 Federal Reserve open market transactions A32 Corporate profits and their distribution A32 Domestic finance companies—Assets and Federal Reserve Banks liabilities A33 Domestic finance companies—Owned and managed A10 Condition and Federal Reserve note statements receivables All Maturity distribution of loan and security holding Real Estate Monetary and Credit Aggregates A34 Mortgage markets—New homes A12 Aggregate reserves of depository institutions A3 5 Mortgage debt outstanding and monetary base A13 Money stock, liquid assets, and debt measures Consumer Credit Commercial Banking Institutions— A36 Total outstanding A3 6 Terms Assets and Liabilities A15 All commercial banks in the United States Flow of Funds A16 Domestically chartered commercial banks A17 Large domestically chartered commercial banks A37 Funds raised in U.S. credit markets A19 Small domestically chartered commercial banks A39 Summary of financial transactions A20 Foreign-related institutions A40 Summary of credit market debt outstanding A41 Summary of financial assets and liabilities Financial Markets DOMESTIC NONFINANCIAL STATISTICS A22 Commercial paper and bankers dollar 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 US. budget receipts and outlays A48 Gross domestic product and income All Federal debt subject to statutory limitation A49 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • May 1999 INTERNATIONAL STATISTICS Securities Holdings and Transactions A60 Foreign transactions in securities Summary Statistics A61 Marketable U.S. Treasury bonds and A50 U.S. international transactions notes—Foreign transactions A51 U.S. foreign trade A51 U.S. reserve assets Interest and Exchange Rates A51 Foreign official assets held at Federal Reserve A62 Foreign exchange rates Banks A52 Selected U.S. liabilities to foreign official A63 GUIDE TO STATISTICAL RELEASES AND institutions SPECIAL TABLES Reported by Banks in the United States SPECIAL TABLES A52 Liabilities to, and claims on, foreigners A53 Liabilities to foreigners A64 Assets and liabilities of commercial banks, A55 Banks' own claims on foreigners December 31, 1998 A56 Banks' own and domestic customers' claims on A66 Terms of lending at commercial banks, foreigners February 1999 A56 Banks' own claims on unaffiliated foreigners A72 Assets and liabilities of U.S. branches and agencies A57 Claims on foreign countries—Combined of foreign banks, December 31,1998 domestic offices and foreign branches A76 INDEX TO STATISTICAL TABLES Reported by Nonbanking Business Enterprises in the United States A58 Liabilities to unaffiliated foreigners A59 Claims on unaffiliated foreigners Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GNMA Government National Mortgage Association n.a. Not available GDP Gross domestic product p Preliminary HUD Department of Housing and Urban r Revised (Notation appears on column heading Development when about half of the figures in that column IMF International Monetary Fund are changed.) IO Interest only * Amounts insignificant in terms of the last decimal IPCs Individuals, partnerships, and corporations place shown in the table (for example, less than IRA Individual retirement account 500,000 when the smallest unit given is millions) MMDA Money market deposit account 0 Calculated to be zero MSA Metropolitan statistical area . . . Cell not applicable NOW Negotiable order of withdrawal ATS Automatic transfer service OCD Other checkable deposit BIF Bank insurance fund OPEC Organization of Petroleum Exporting Countries CD Certificate of deposit OTS Office of Thrift Supervision CMO Collateralized mortgage obligation PMI Private mortgage insurance CRA Community Reinvestment Act of 1977 PO Principal only FFB Federal Financing Bank REIT Real estate investment trust FHA Federal Housing Administration REMIC Real estate mortgage investment conduit FHLBB Federal Home Loan Bank Board RP Repurchase agreement FHLMC Federal Home Loan Mortgage Corporation RTC Resolution Trust Corporation 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 (i) a decrease, (2) a negative "State and local government" also includes municipalities, figure, or (3) an outflow. special districts, and other political subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • May 1999 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1998 1998 1999 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Ql Q2 Q3 Q4 Oct. Nov Dec. Jan.r Feb. Reserves of depository institutions2 1 Total -1.9 -3.8 -7.4 -1.6 -5.4 5.0 9.0 -.5 -14.1 2 Required -1.8 -2.5 -9.0 -2.3 -2.5 3.8 10.5 .8 -6.0 3 Nonborrowed -.6 -4.3 -8.4 -.4 -3.3 7.5 8.1 -2.9 -11.7 4 Monetary base3 6.8 5.3 6.8 8.9 8.4 8.9r 8.3 8.4 9.5 Concepts of money, liquid assets, and debt4 5 Ml 3.2 1.0 -2.0 5.0 6.4 99..66rr 4.7r -2.9 1.5 6 M2 7.6 7.5 6.9 11.0 11.6 10.6 10.1r 6.5 5.7 7 M3 10.3 10.1 8.6 12.9r 12.8r 13.4r n.tf 3.7 10.1 8 Debt 5.8r 6.ff 5.9r 6.3r 6.4r 7.1r 6.5' 5.7 n.a. Nontransaction components 9 In M25 9.1 9.8 9.9 13.0 13.3 11.0 11.8 9.6 7.1 10 In M3 only6 18.6 17.8 13.5 18.4r 16.3r 21.2r 113' -3.8 22.3 Time and savings deposits Commercial banks 11 Savings, including MMDAs 12.8 13.4 15.8 17.6 15.9 16.4 19.2 12.3 5.1 12 Small time7 1.0 .1 .1 .4 -.4 1.5 -4.2 -7.9 -7.7 13 Large time8'9 18.1 16.4 3.5 3.9r — 1.8r 8.1r 8.0r 10.6 -11.4 Thrift institutions 14 Savings, including MMDAs 5.7 10.8 9.0 10.1 12.5 10.9 10.8 15.0 14.3 15 Small time7 -.5 -4.4 -7.3r -6.1' - 1.8r — 10.5r —5.5r -5.2 -6.3 16 Large time8 8.6 -4.5 .5 10.4 15.2 2.7 16.4 25.6 -15.8 Money market mutual funds 17 Retail 19.2 20.9 19.0 28.4 29.0 20.5 22.3 23.2 23.7 18 Institution-only 20.9 34.7 26.6 41.8 48.5 42.2 29.5 -2.8 34.7 Repurchase agreements and Eurodollars 19 Repurchase agreements10 22.9 14.5 11.7 16.4 .4 25.4 34.0 -25.0 68.7 20 Eurodollars10 12.0 -3.3 21.7 1.6' 12.4 1.5 —20.0r -35.2 37.0 Debt components4 21 Federal .0 -1.4 -1.5 -2.0 -3.1 -.5 -.4 -2.1 n.a. 22 Nonfederal l.T 8.5r 8.3r 8.9r 9.3r 9.5r 8.6r 8.0 n.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 for discontinuities, or "breaks," associated with and Canada. Excludes amounts held by depository institutions, the U.S. government, money regulatory changes in reserve requirements. (See also table 1.20.) market funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculated 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally by summing large time deposits, institutional money fund balances, RP liabilities, adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency and Eurodollars, each seasonally adjusted separately, and adding this result to seasonally component of the money stock, plus (3) (for all quarterly reporters on the "Report of adjusted M2. Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference sectors—the federal sector (U.S. government, not including government-sponsored enterbetween current vault cash and the amount applied to satisfy current reserve requirements. prises or federally related mortgage pools) and the nonfederal sectors (state and local 4. Composition of the money stock measures and debt is as follows: governments, households and nonprofit organizations, nonfinancial corporate and nonfarm Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, commercial banks other than those owed to depository institutions, the U.S. government, and which are derived from the Federal Reserve Board's flow of funds accounts, are breakforeign banks and official institutions, less cash items in the process of collection and Federal adjusted (that is, discontinuities in the data have been smoothed into the series) and Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of month-averaged (that is, the data have been derived by averaging adjacent month-end levels). withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail credit union share draft accounts, and demand deposits at thrift institutions. Seasonally money fund balances, each seasonally adjusted separately. adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities OCDs, each seasonally adjusted separately. (overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time term) of U.S. addressees, each seasonally adjusted separately. deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail 7. Small time deposits—including retail RPs—are those issued in amounts of less than money market mutual funds. Excludes individual retirement accounts (IRAs) and Keogh $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions balances at depository institutions and money market funds. Seasonally adjusted M2 is are subtracted from small time deposits. calculated by summing savings deposits, small-denomination time deposits, and retail money 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those fund balances, each seasonally adjusted separately, and adding this result to seasonally booked at international banking facilities. * adjusted Ml. 9. Large time deposits at commercial banks less those held by money market funds, M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) depository institutions, the U.S. government, and foreign banks and official institutions. balances in institutional money funds, (3) RP liabilities (overnight and term) issued by all 10. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars d A ai v ly e ra f g i e g u o re f s Average of daily figures for week ending on date indicated Jan. 20 Jan. 27 Feb. 3 Feb. 10 Feb. 17 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 504,025 504,486 501,649 500,962 499,094 501,302 U.S. government securities2 2 Bought outright—System account 453,911 453,333 458,706 454,690 452,818 452,725 455,061 457,896 458,088 3 Held under repurchase agreements 7,685 7,056 3,310 3,820 6,291 6,281 3,674 2,895 2,292 Federal agency obligations 4 Bought outright 346 337 336 338 338 337 336 336 336 5 Held under repurchase agreements 5,3710 4,6700 3,2220 3,2560 6,0460 3,2260 2,2900 3,0600 3,3590 6 Acceptances Loans to depository institutions 7 Adjustment credit 90 201 118 697 22 105 210 90 8 Seasonal credit 105 60 100 60 40 05 60 100 0 9 Extended credit 10 Float 1,617 2,313 447 1,624 4,187 1,381 900 334 1,229 11 Other Federal Reserve assets 34,989 36,570 35,500 35,979 36,275 36,903 36,617 36,376 35,891 12 Gold stock 11,041 11,046 11,049 11,046 11,046 11,046 11,047 11,049 11,049 13 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 14 Treasury currency outstanding 26,225 26,329r 26,426 26,30 lr 26,333r 26,365r 26,397 26,411 26,425 ABSORBING RESERVE FUNDS 15 Currency in circulation 510,137r 510,602 511,483r 506,779r 506,429 508,562 511,724 16 Treasury cash hoidings 87 114 85 103 125 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,923 6,597 4,800 5,423 7,296 6,963 6,876 4,865 4,223 18 Foreign 178 186 202 189 181 184 219 217 204 19 Service-related balances and adjustments .. 6,850 7,618 7,130 7,892 7,468 7,865 7,828 7,335 6,865 20 Other 322 443 270 207 212 237 246 267 288 21 Other Federal Reserve liabilities and capital . 16,935 16,711 16,686 16,874 16,871 16,840 16,275 16,576 16,838 22 Reserve balances with Federal Reserve Banks' 9,470 9,281 8,519 4,803 11,452 8,616 7,767 9,732 7,710 End-of-month figures Wednesday figures Jan. 27 Feb. 3 Feb. 10 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 522,252 498,740 506,928 496,822 510,210 502,533 U.S. government securities2 2 Bought outright—System account 452,141 454,439 461,036 456,411 453,868 454,538 454,446 458,056 456,987 3 Held under repurchase agreements 19,674 4,485 3,558 3,700 6,140 9,891 2,075 6,651 4,101 Federal agency obligations 4 Bought outright 338 336 338 338 336 336 336 336 5 Held under repurchase agreements 10,7020 2,5350 0 4,4720 3,9580 4,0270 5900 7,3580 3,3140 6 Acceptances Loans to depository institutions 1 7 Adjustment credit 55 4 145 75 7 8 Seasonal credit 106 05 102 70 03 50 0 0 0 9 Extended credit 10 Float 1,636 164 41 1,938 4,690 435 2,024 949 3,552 11 Other Federal Reserve assets 37,744 36,721 34,294 36,115 36,435 37,689 36,281 36,789 34,176 12 Gold stock 11,046 11,048 11,047 11,046 11,046 11,046 11,046 11,049 11,049 13 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 14 Treasury currency outstanding 26,270 26,397r 26,453 26,301r 26,333r 26,365r 26,397 26,411 26,425 ABSORBING RESERVE FUNDS 15 Currency in circulation 517,484 505,528r 511,653 510,286r 508,652r 506,877r 508,311 510,773 513,016 16 Treasury cash holdings 85 120 99 126 117 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,086 7,623 4,538 5,006 7,466 7,038 5,395 4,925 4,893 18 Foreign 167 234 200 214 177 168 215 204 185 19 Service-related balances and adjustments .. 7,044 7,828r 7,034 7,892 7,468 7,865 7,829 7,335 6,865 20 Other 1,605 246 225 200 206 217 275 266 291 21 Other Federal Reserve liabilities and capital . 16,354 16,269 16,460 16,613 16,626 16,610 15,850 16,736 16,695 22 Reserve balances with Federal Reserve Banks' 19,941 7,558r 9,635 9,376 11,405 14,666 5,491 16,505 7,145 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Includes compensation that adjusts for the effects of inflation on the principal of 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged inflation-indexed securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 4. Excludes required clearing balances and adjustments to compensate for float. under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • May 1999 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1996 1997 1998 1998 1999 Dec. Dec. Dec. Aug. Sept. Oct. Nov. Dec. Jan.r Feb. 1 Reserve balances with Reserve Banks2 13,395 10,673 9,022 9,682 9,284 9,026 8,855 9,022 9,659 8,590 2 Total vault caslv 44,525 44,740 44,305 42,123 42,524 43,268 43,104 44,305 45,499 46,469 3 Applied vault cash4 37,848 37,206 35,997 35,025 34,909 35,090 35,297 35,997 36,687 36,659 4 Surplus vault cash5 6,678 7,534 8,308 7,098 7,614 8,178 7,807 8,308 8,813 9,810 5 Total reserves6 51,242 47,880 45,019 44,707 44,193 44,115 44,152 45,019 46,346 45,248 6 Required reserves 49,819 46,196 43,435 43,194 42,509 42,544 42,527 43,435 44,811 44,024 7 Excess reserve balances at Reserve Banks7 1,423 1,683 1,584 1,513 1,684 1,572 1,624 1,584 1,535 1,224 8 Total borrowings at Reserve Banks8 155 324 117 271 251 174 84 117 206 116 9 Seasonal borrowings 68 79 15 242 178 107 37 15 7 9 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1998 1999 Nov. 4 Nov. 18 Dec. 2 Dec. 16 Dec. 30 Jan. 13 Jan. 27r Feb. 10r Feb. 24 Mar. 10 1 Reserve balances with Reserve Banks2 9,509 8,520 9,028 8,949 9,057 9,551 10,019 8,750 8,233 9,438 2 Total vault cash3 42,565 43,080 43,313 43,230 45,470 45,023 44,838 49,364 45,598 42,285 3 Applied vault cash4 34,897 34,935 35,853 35,273 36,748 35,911 36,847 38,649 35,997 34,002 4 Surplus vault cash5 7,668 8,145 7,460 7,957 8,722 9,113 7,991 10,715 9,601 8,283 5 Total reserves6 44,405 43,455 44,880 44,222 45,805 45,462 46,866 47,399 44,230 43,440 6 Required reserves 42,599 41,913 43,221 42,917 43,999 43,240 45,878 46,181 43,040 42,076 7 Excess reserve balances at Reserve Banks7 1,806 1,542 1,659 1,304 1,806 2,221 988 1,217 1,189 1,363 8 Total borrowings at Reserve Banks8 103 82 79 26 195 370 68 158 112 22 9 Seasonal borrowings 79 40 20 13 18 9 5 8 9 14 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 A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit Extended credit 4/1 O 6 n /9 9 Previous rate 4/1 O 6 n /9 9 4/1 O 6 n /9 9 11/18/98 11/17/98 11/17/98 11/19/98 11/18/98 11/18/98 11/19/98 11/19/98 11/19/98 11/18/98 11/17/98 11/17/98 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or level)—All of Effective date level)—All of level)—All F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks In effect Dec. 31, 1977 1981—Nov. 2 . 13-14 13 1988—Aug. 6-6.5 6.5 6 13 13 6.5 6.5 1978—Jan. 290 6-6.5 Dec. 4 . 12 12 6.5 1989—Feb. 24 6.5-7 7 May 11 6.5-7 1982—July 20 , 11.5-12 11.5 27 7 7 12 7 23 . 11.5 11.5 July 3 7-7.25 Aug. 2 . 11-11.5 11 1990—Dec. 19 6.5 6.5 10 7.25 3 . 11 11 Aug. 21 7.75 16 . 10.5 10.5 1991—Feb. 1 6-6.5 6 Sept. 22 8 27 . 10-10.5 10 4 6 6 Oct. 16 8-8.5 30 . 10 10 Apr. 30 5.5-6 5.5 20 8.5 Oct. 12 . 9.5-10 9.5 May 2 5.5 5.5 Nov. 1 8.5-9.5 13 . 9.5 9.5 Sept. 13 5-5.5 5 3 9.5 Nov. 22 . 9-9.5 9 17 5 5 26 . 9 9 Nov. 6 4.5-5 4.5 1979—July 20 10 Dec. 14 . 8.5-9 9 7 4.5 4.5 Aug. 17 10-10.5 15 . 8.5-9 8.5 Dec. 20 3.5^1.5 3.5 20 10.5 17 . 8.5 8.5 3.5 3.5 Sept. 19 10.5-11 21 11 1984—Apr. 9 . 8.5-9 9 1992—July 3-3.5 3 Oct. 8 11-12 13 . 9 9 3 3 10 12 Nov. 21 . 8.5-9 8.5 26 . 8.5 8.5 1994—May 17 3-3.5 3.5 1980—Feb. 15 12-13 Dec. 24 . 18 3.5 3.5 19 13 Aug. 16 3.5-4 4 May 29 12-13 1985—May 20 . 7.5-8 7.5 18 4 4 30 12 24 . 7.5 7.5 Nov. 15 4-4.75 4.75 June 13 11-12 17 4.75 4.75 16 11 1986—Mar. 7 . 7-7.5 7 July 28 10-11 10 . 7 7 1995—Feb. 1 4.75-5.25 5.25 29 10 Apr. 21 . 6.5-7 6.5 9 5.25 5.25 Sept. 26 11 23 . 6.5 6.5 Nov. 17 12 July 11 . 6 6 1996—Jan. 5.00-5.25 5.00 Dec. 5 12-13 Aug. 2212 .. 5.5-6 5.5 Feb. 5.00 5.00 8 13 5.5 5.5 1981—May 5 13-14 1998—Oct. 15 4.75-5.00 4.75 14 1987--Sept. 4 . 5.5-6 Oct. 16 4.75 4.75 11 . 6 1998—Nov. 17. 4.50-4.75 4.50 Nov. 19. 4.50 4.50 In effect Apr. 16, 1999 4.50 4.50 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970\ and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on Nov. 17, 1981. charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • May 1999 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirement TTyyppee ooff ddeeppoossiitt Percentage of Effective date deposits Net transaction accounts2 1 $0 million-$46.5 million3 33333 1111122222/////3333311111/////9999988888 2 More than $46.5 million4 1111100000 1111122222/////3333311111/////9999988888 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions maintenance period beginning December 31, 1998, for depository institutions that report include commercial banks, 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 accounts include all deposits against which the account holder is permitted 4. The reserve requirement was reduced from 12 percent to 10 percent on to make withdrawals by negotiable or transferable instruments, payment orders of with- Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that drawal, or telephone or preauthorized transfers for the purpose of making payments to third report quarterly. persons or others. However, accounts subject to the rules that permit no more than six 5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits preauthorized, automatic, or other transfers per month (of which no more than three may be with an original maturity of less than 1 ]/2 years was reduced from 3 percent to 1 '/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 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts nonpersonal time deposits with an original maturity of less than 1 Vi years was reduced from 3 against which the 3 percent reserve requirement applies be modified annually by 80 percent of percent to zero on Jan. 17, 1991. the percentage change in transaction accounts held by all depository institutions, determined The reserve requirement on nonpersonal time deposits with an original maturity of 1 '/2 as of June 30 of each year. Effective with the reserve maintenance period beginning years or more has been zero since Oct. 6, 1983. December 31, 1998, for depository institutions that report weekly, and with the period 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero beginning January 14, 1999, for institutions that 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 than 1 Vi years (see note 5). Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the amount of reservable liabilities subject to a zero percent reserve requirement each year for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1998 1999 TTyypp aa ee nn dd oo ff mm ttrr aa aa tt nn uu ss rrii aa tt cc yy tt iioonn 11999966 11999977 11999988 July Aug. Sept. Oct. Nov. Dec. Jan. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 9,901 9,147 3,550 0 0 0 0 00 00 00 7. Gross sales 0 0 0 0 0 0 0 0 0 0 Exchanges 426,928 436,257 450,835 40,312 34,607 33,140 40,712 34,957 41,393 35,069 4 For new bills 426,928 435,907 450,835 40,312 34,607 33,140 40,712 34,957 41,393 35,069 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 0 986 1,038 741 662 0 0 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 30,512 41,716 46,062 2,638 6,367 2,301 2,423 5,444 2,539 2,865 9 Exchanges -41,394 -27,499 -49,434 -2,242 -8,964 -2,242 -400 -8,093 -2,555 -400 10 Redemptions 2,015 1,996 2,676 1,311 0 0 602 0 0 492 One to five years 11 Gross purchases 3,898 19,680 12,901 0 535 3,989 725 2,397 0 0 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -25,022 -37,987 -37,777 -2,638 -2,168 -2,301 -2,423 -4,574 -2,539 -2,865 14 Exchanges 31,459 20,274 37,154 1,842 5,828 2,242 0 6,013 2,555 0 Five to ten years 15 Gross purchases 1,116 3,849 2,294 0 303 351 0 862 00 0 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -5,469 -1,954 -5,908 0 -3,411 0 0 718 0 0 18 Exchanges 6,666 5,215 7,439 0 1,364 0 400 1,135 0 400 More than ten years 19 Gross purchases 1,655 5,897 4,884 0 1,769 0 1,674 698 0 615 2.0 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -20 -1,775 -2,377 0 -789 0 0 -1,589 0 0 22 Exchanges 3,270 2,360 4,842 400 1,772 0 0 945 0 0 All maturities 23 Gross purchases 17,094 44,122 29,926 0 3,593 5,377 3,140 4,619 0 615 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 2,015 1,996 4,676 1,311 0 0 602 0 0 492 Matched transactions 26 Gross purchases 3,092,399 3,577,954 4,395,430 373,285 346,245 380,594 402,581 358,438 418,538 365,779 27 Gross sales 3,094,769 3,580,274 4,399,330 371,142 348,318 382,063 400,995 359,256 420,397 363,604 Repurchase agreements 2.8 Gross purchases 457,568 810,485 512,671 52,116 39,078 63,924 40,823 2233,,888844 4499,,229966 2211,,996688 29 Gross sales 450,359 809,268 514,186 63,531 38,402 59,731 48,672 19,200 38,592 37,157 30 Net change in U.S. Treasury securities 19,919 41,022 19,835 -10,584 2,196 8,101 -3,725 8,484 8,845 -12,891 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 00 00 00 32 Gross sales 0 0 25 0 25 0 0 0 0 0 33 Redemptions 409 1,540 322 0 50 48 15 20 30 2 Repurchase agreements 34 Gross purchases 75,354 160,409 284,316 11,236 33,431 18,486 51,471 5511,,441199 4488,,881155 2233,,557777 35 Gross sales 74,842 159,369 276,266 12,341 30,625 19,953 50,032 48,785 44,285 31,744 36 Net change in federal agency obligations 103 -500 7,703 -1,105 2,731 -1,515 1,424 2,614 4,500 -8,169 37 Total net change in System Open Market Account... 20,021 40,522 27,538 -11,689 4,927 6,586 -2,301 11,098 13,345 -21,060 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market 2. Transactions exclude changes in compensation for the effects of inflation on the principal Account; all other figures increase such holdings. of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • May 1999 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1999 1998 1999 Jan. 27 Feb. 3 Feb. 10 Feb. 17 Feb. 24 Dec. 31 Jan. 31 Feb. 28 Consolidated condition statement ASSETS 1 Gold certificate account 11,046 11,046 11,049 11,049 11,048 11,046 11,048 11,047 2 Special drawing rights certificate account 9,200 9,200 9,200 9,200 9,200 9,200 9,200 9,200 3 Coin 439 459 476 476 454 358 459 464 Loans 4 To depository institutions 12 1,070 71 67 445 17 60 16 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 336 336 336 336 336 338 336 336 8 Held under repurchase agreements 4,027 590 7,358 3,314 7,223 10,702 2,535 3,884 9 Total U.S. Treasury securities 464,429 456,521 464,707 461,088 470,976 471,815 458,924 464,594 10 Bought outright2 454,538 454,446 458,056 456,987 461,106 452,141 454,439 461,036 11 Bills 197,662 196,023 198,863 197,794 199,760 194,772 196,948 198,357 12 Notes 187,403 188,335 189,105 187,764 189,793 187,895 187,403 191,126 13 Bonds 69,474 70,089 70,089 71,429 71,553 69,474 70,089 71,553 14 Held under repurchase agreements 9,891 2,075 6,651 4,101 9,870 19,674 4,485 3,558 15 Total loans and securities 468,804 458,517 472,471 464,804 478,980 482,872 461,855 468,830 16 Items in process of collection 7,289 10,577 7,815 14,831 6,803 6.933 5,325 5,176 17 Bank premises 1,301 1,300 1,302 1,301 1,303 1,300 1,299 1,302 Other assets 18 Denominated in foreign currencies3 19,802 19,242 19.249 19,257 19,265 19,767 19,235 18,702 19 All other4 16,548 15,716 16,258 13,596 14,665 16,625 16,165 14,313 20 Total assets 534,429 526,056 537,820 534,516 541,717 548,101 524,586 529,034 LIABILITIES 21 Federal Reserve notes 481,049 482,472 484,964 487,184 486,978 491,657 479,689 485,784 22 Total deposits 29,985 19,951 29,291 20,073 30,905 34,165 23,682 21,798 23 Depository institutions 22,563 13,968 23,896 14,704 25,662 26,306 15,577 16,835 24 U.S. Treasury—General account 7,038 5,395 4,925 4,893 4,753 6,086 7,623 4,538 25 Foreign—Official accounts 168 215 204 185 218 167 234 200 26 Other 217 275 266 291 271 1,605 246 225 27 Deferred credit items 6,785 7,784 6,830 10,563 6,976 5,924 4,948 4,992 28 Other liabilities and accrued dividends 4,192 3,925 4,355 4,212 4,285 4,450 4,183 4,205 29 Total liabilities 522,011 514,131 525,440 522,032 529,144 536,197 512,501 516,779 CAPITAL ACCOUNTS 30 Capital paid in 5,955 5,938 6,001 6,019 6,069 5,952 5,955 6,063 31 Surplus 5,952 5,900 5,943 5,952 5,952 5,952 5,943 5,872 32 Other capital accounts 511 86 437 512 552 0 188 320 33 Total liabilities and capital accounts 534,429 526,056 537,820 534,516 541,717 548,101 524,586 529,034 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts 600,443 598,504 600,109 n.a. n.a. 559944,,007766 600,443 n.a. Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 623,737 627,561 630,849 634,337 639,119 611,688 625,230 641,086 36 LESS: Held by Federal Reserve Banks 142,688 145,090 145,885 147,153 152,141 120,030 145,541 155,302 37 Federal Reserve notes, net 481,049 482,472 484,964 487,184 486,978 491,657 479,689 485,784 Collateral held against notes, net 38 Gold certificate account 11,046 11,046 11,049 11,049 11,048 11,046 11,048 11,047 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 460,803 462,226 464,714 466,935 466,730 471,412 459,441 465,537 42 Total collateral 481,049 482,472 484,964 487,184 486,978 491,657 479,689 485,784 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical 3. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with bills maturing within ninety days. Federal Reserve Banks—and includes compensation that adjusts for the elfects of inflation on 5. Includes exchange-translation account reflecting the monthly revaluation at market the principal of inflation-indexed securities. Excludes securities sold and scheduled to be exchange rates of foreign exchange commitments. bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1999 1998 1999 Jan. 27 Feb. 3 Feb. 10 Feb. 17 Feb. 24 Dec. 31 Jan. 29 Feb. 26 1 Total loans 12 1,070 100 67 445 18 143 445 2 Within fifteen days1 12 1,063 93 67 445 18 143 445 3. Sixteen days to ninety days 0 7 7 0 0 n.a. 0 0 4 Total U.S. Treasury securities2 464,429 456,521 464,707 461,088 470,976 467,308 458,924 470,976 5 Within fifteen days' 23,513 ' 21,242 19,188 19,247 24,996 16,325 10,051 24,996 6 Sixteen days to ninety days 97,932 95,728 99,945 96,192 98,522 99,127 110,149 98,522 7 Ninety-one days to one year 135,053 129,575 135,598 133,643 133,298 143,635 130,178 133,298 8 One year to five years 107,040 108,471 108,471 108,471 110,291 107,730 107,040 110,291 9 Five years to ten years 45,222 45,222 45,222 45,911 46,246 44,822 45,222 46,246 10 More than ten years 55,669 56,284 56,283 57,623 57,623 55,668 56,284 57,623 11 Total federal agency obligations 4,362 926 7,694 3,650 7,559 7,687 2,871 7,559 12 Within fifteen days' 4,027 590 7,358 3,314 7,248 7,349 2,535 7,248 13 Sixteen days to ninety days 25 25 25 25 0 27 25 0 14 Ninety-one days to one year 81 81 106 106 106 75 81 106 15 One year to five years 55 55 30 30 30 61 55 30 16 Five years to ten years 175 175 175 175 175 175 175 175 17 More than ten years 0 0 0 0 0 0 0 0 1. Holdings under repurchase agreements are classified as maturing within fifteen days in 2. Includes compensation that adjusts for the 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 • May 1999 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1998 1999 IItteemm D 19 e 9 c 5 . D 19 e 9 c 6 . D 19 e 9 c 7 . D 19 e 9 c 8 . July Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 56.40 50.08 46.67 44.91 44.81 45.00 44.59 44.39 44.57 44.91 44.89 44.36 2 Nonborrowed reserves4 56.14 49.93 46.35 44.79 44.56 44.73 44.33 44.21 44.49 44.79 44.68 44.24 3 Nonborrowed reserves plus extended credit5 56.14 49.93 46.35 44.79 44.56 44.73 44.33 44.21 44.49 44.79 44.68 44.24 4 Required reserves 55.12 48.66 44.99 43.32 43.45 43.48 42.90 42.81 42.95 43.32 43.35 43.14 5 Monetary base6 434.03 451.60 479.39 513.04r 494.62 498.17 502.24 505.77 509.50r 513.04r 516.64 520.74 Not seasonally adjusted 6 Total reserves7 58.02 51.52 47.97 45.17 44.69 44.81 44.31 44.24 44.29 45.17 46.34 45.26 7 Nonborrowed reserves 57.76 51.37 47.65 45.06 44.43 44.54 44.06 44.07 44.21 45.06 46.13 45.14 8 Nonborrowed reserves plus extended credit5 57.76 51.37 47.65 45.06 44.43 44.54 44.06 44.07 44.21 45.06 46.13 45.14 9 Required reserves8 56.74 50.10 46.29 43.59 43.32 43.30 42.63 42.67 42.67 43.59 44.81 44.03 10 Monetary base9 439.02 456.71 485.05 518.33r 495.28 497.49 500.99 504.51 510.19r 518.33r 520.01 519.70 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 10 11 Total reserves" 57.90 51.24 47.88 45.02 44.60 44.71 44.19 44.12 44.15 45.02 46.35 45.25 12 Nonborrowed reserves 57.64 51.09 47.56 44.90 44.34 44.44 43.94 43.94 44.07 44.90 46.14 45.13 13 Nonborrowed reserves plus extended credit5 57.64 51.09 47.56 44.90 44.34 44.44 43.94 43.94 44.07 44.90 46.14 45.13 14 Required reserves 56.62 49.82 46.20 43.44 43.24 43.19 42.51 42.54 42.53 43.44 44.81 44.02 15 Monetary base12 444.44 463.48 491.86 525.06r 502.13 504.39 507.80 511.36 516.96r 525.06r 527.59 526.85 16 Excess reserves13 1.28 1.42 1.68 1.58 1.37 1.51 1.68 1.57 1.62 1.58 1.54 1.22 17 Borrowings from the Federal Reserve .26 .16 .32 .12 .26 .27 .25 .17 .08 .12 .21 .12 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves reserves of changes in reserve requirements are available from the Money and Reserves would have been in past periods had current reserve requirements been in effect. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus changes in reserve requirements. (See also table 1.10.) (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted required reserves (line 4) plus excess reserves (line 16). those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, difference between current vault cash and the amount applied to satisfy current reserve break-adjusted total reserves (line 1) less total borrowings of depository institutions from the requirements. Federal Reserve (line 17). 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no 5. Extended credit consists of borrowing at the discount window under the terms and adjustments to eliminate the effects of discontinuities associated with regulatory changes in conditions established for the extended credit program to help depository institutions deal reserve requirements. with sustained liquidity pressures. Because there is not the same need to repay such 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve borrowing promptly as with traditional short-term adjustment credit, the money market effect requirements. of extended credit is similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for component of the money stock, plus (3) (for all quarterly reporters on the "Report of all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters Cash" and for all those weekly reporters whose vault cash exceeds their required reserves) the whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference between current vault cash and the amount applied to satisfy current reserve difference between current vault cash and the amount applied to satisfy current reserve requirements. Since February 1984, currency and vault cash figures have been measured over requirements. the computation periods ending on Mondays. 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). reserves (line 16). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1998 1999 IItteemm D 19 e 9 c 5 . D 19 e 9 c 6 . D 19 e 9 c 7 . D 19 e 9 c 8 .r Nov. Dec.r Jan.r Feb. Seasonally adjusted Measures2 1 Ml 1,126.7 1,081.3 1,074.9 1,093.3 l,089.0r 1,093.3 1,090.7 1,092.1 2 M2 3,649.1 3,823.9 4,046.6 4,402.0 4,365.3r 4,402.0 4,425.7 4,446.6 3 M3 4,618.5 4,955.6 5,404.7 5,999.6 5,940.2r 5,999.6 6,018.3 6,068.9 4 Debt 13,703.2r 14,425.2r 15,140.2r 16,084.5 IS^C 16,084.5 16,160.7 n.a. Ml components 5 Currency3 372.3 394.1 424.5 459.2 456.4 459.2 462.7 446677..66 6 Travelers checks4 8.3 8.0 7.7 7.8 7.9 7.8 7.8 7.7 7 Demand deposits5 389.4 403.0 396.5 377.5 377.0r 377.5 371.1 371.8 8 Other checkable deposits6 356.7 276.2 246.2 248.7 247.6 248.7 249.2 244.9 Nontransaction components 9 In M27 2,522.4 2,742.6 2,971.8 3,308.6 3,276.3 3,308.6 3,335.0 3,354.6 10 In M3 only8 969.4 1,131.7 1,358.0 1,597.7 l,575.0r 1,597.7 1,592.6 1,622.2 Commercial banks 11 Savings deposits, including MMDAs 775.3 905.2 1,022.9 1,189.8 1,171.1 1,189.8 1,202.0 1,207.1 12 Small time deposits9 575.0 593.7 626.1 626.1 628.3 626.1 622.0 618.0 13 Large time deposits10, 11 346.6 414.8 490.2 541.1 537.5r 541.1 545.9 540.7 Thrift institutions 14 Savings deposits, including MMDAs 359.8 367.1 377.3 415.2 411.5 415.2 420.4 425.4 15 Small time deposits9 356.7 353.8 343.2 326.0 327.5 326.0 324.6 322.9 16 Large time deposits10 74.5 78.4 85.9 89.1 87.9 89.1 91.0 89.8 Money market mutual funds 17 Retail 455.5 522.8 602.3 751.6 737.9 751.6 766.1 781.2 18 Institution-only 255.9 313.3 379.9 516.2 503.8 516.2 515.0 529.9 Repurchase agreements and Eurodollars 19 Repurchase agreements12 198.7 211.3 252.8 297.7 289.5 297.7 291.5 308.2 20 Eurodollars12 93.7 113.9 149.2 153.6 156.2 153.6 149.1 153.7 Debt components 21 Federal debt 3,638.9 3,780.6 3,798.4 3,747.4 3,748.8 3,747.4 3,740.9 n.a. 22 Nonfederal debt 10,064.2r 10,644.7r 1 l,341.8r 12,337.1 12,249.3r 12,337.1 12,419.8 n.a. Not se^ponally adjusted Measures2 23 Ml 1,152.4 1,104.9 1,097.4 1,115.3 l,094.3r 1,115.3 1,098.0 1,082.8 24 M2 3,671.7 3,843.7 4,064.8 4,418.8 4,365.7r 4,418.8 4,429.1 4,440.9 25 M3 4,638.0 4,972.5 5,420.8 6,015.8 5,945.lr 6,015.8 6,026.5 6,077.6 26 Debt 13,704.6r 14,425.5r 15,139.8r 16,085.0 15,980.4r 16,085.0 16,144.1 n.a. Ml components 27 Currency3 376.2 397.9 428.9 464.2 457.5 464.2 462.5 446666..55 28 Travelers checks4 8.5 8.3 7.9 8.0 8.1 8.0 7.9 7.9 29 Demand deposits5 407.2 419.9 412.3 392.4 381.8r 392.4 375.7 364.8 30 Other checkable deposits6 360.5 278.8 248.3 250.7 247.0 250.7 251.9 243.6 Nontransaction components 31 In M27 2,519.3 2,738.9 2,967.4 3,303.5 3,271.4 3,303.5 3,331.1 3,358.1 32 In M3 only8 966.4 1,128.8 1,356.0 1,597.0 l,579.4r 1,597.0 1,597.4 1,636.6 Commercial banks 33 Savings deposits, including MMDAs 774.1 903.3 1,020.4 1,186.7 1,167.9 1,186.7 1,197.0 1,203.2 34 Small time deposits9 573.8 592.7 625.3 625.4 628.4 625.4 622.7 619.4 35 Large time deposits10' 11 345.8 413.3 487.7 537.5 539.7r 537.5 532.2 536.1 Thrift institutions 36 Savings deposits, including MMDAs 359.2 366.3 376.4 414.1 410.4 414.1 418.6 424.0 37 Small time deposits9 355.9 353.2 342.8 325.6 327.6 325.6 324.9 323.6 38 Large time deposits10 74.3 78.1 85.4 88.5 88.3 88.5 88.8 89.1 Money market mutual funds 39 Retail 456.1 523.2 602.5 751.6 737.2 751.6 767.8 787.9 40 Institution-only 257.7 316.0 384.5 523.3 504.9 523.3 529.3 547.3 Repurchase agreements and Eurodollars 41 Repurchase agreements12 193.8 205.7 246.1 290.3 290.0 290.3 292.9 307.7 42 Eurodollars12 94.9 115.7 152.3 157.4 156.6 157.4 154.3 156.5 Debt components 43 Federal debt 3,645.9 3,787.9 3,805.8 3,754.9 3,746.6 3,754.9 3,736.6 n.a. 44 Nonfederal debt 10,058.7r 10,637.6r ll,334.0r 12,330.0 12,233.8r 12,330.0 12,407.5 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 1998 1998 1999 1999 Feb. Aug. Sept. Oct.' Nov.' Dec.' Jan.' Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24' Seasonally adjusted Assets 1 Bank credit 4,185.0r 4,341.5' 4,398.7' 4,488.1 4,528.9 4,544.7 4,523.6 4,508.0 4,519.1 4,518.7 4,501.3 4,505.5 7. Securities in bank credit 1,112.9 1,156.5 1,177.1 1,217.9 1,227.6 1,231.9 1,217.7 1,207.3 1,207.9 1,208.6 1,202.2 1,212.2 U.S. government securities 169.6' 771.1' 767.3' 774.5 790.9 793.2 794.8 793.6 790.6 790.8 792.1 796.7 4 Other securities 343.2 385.4' 409.7 443.4 436.7 438.7 422.9 413.7 417.3 417.7 410.1 415.6 Loans and leases in bank credit2 .. . 3,072.1r 3,185.0' 3,221.6' 3,270.2 3,301.3 3,312.9 3,305.9 3,300.7 3,311.2 3,310.1 3,299.1 3,293.3 6 Commercial and industrial 873.3r 907.4' 919.7' 939.1 947.5 945.2 942.3 942.1 942.3 941.7 940.7 942.5 7 Real estate 1,249.2 1,281.5 1,283.7 1,287.9 1,309.4 1,323.2 1,328.0 1,331.4 1,330.5 1,336.6 1,332.0 1,326.9 8 Revolving home equity 98.1 97.6 97.9 96.7 97.0 96.9 96.5 96.4 96.4 96.3 96.4 96.4 9 Other 1,151.0 l ^^ 1,185.8 1,191.2 1,212.3 1,226.3 1,231.6 1,235.0 1,234.1 1,240.3 1,235.6 1,230.4 10 Consumer 501.6 494.5 497.4 496.8 498.9 501.8 504.0 504.3 504.9 503.8 503.4 505.3 11 Security3 119.3 137.7 142.9 158.9 152.5 151.2 147.3 137.7 147.1 140.5 139.5 135.4 1? Other loans and leases 328.8' 363.91 378.0' 387.5 393.0 391.5 384.3 385.2 386.5 387.4 383.4 383.2 11 Interbank loans 201.1 206.2' 220.tf 220.7 220.2 215.3 217.6 221.9 222.3 214.7 220.1 232.5 14 264.6 251.6 253.3 243.2 249.6 250.2 263.5 259.7 256.2 268.7 263.9 249.2 15 Other assets5 301.1 318.1 323.3 322.5 326.8 329.0 333.7 340.5 334.2 344.5 339.4 340.3 16 Total assets6 4,895.0 5,060.2 5,137.8 5,216.6 5,267.5 5,281.1 5,2803 5,271.6 5,273.2 5,288.2 5,266.2 5,269.0 Liabilities 17 Deposits 3,159.2 3,221.7 3,244.2 3,268.0 3,311.0 3,319.2 3,339.1 3,342.3 3,347.4 3,332.5 3,357.2 3,320.3 18 Transaction 689.2 665.3 675.1 666.0 666.4 666.2 663.0 656.7 647.6 647.3 674.1 653.3 19 Nontransaction 2,470.0 2,556.4 2,569.2 2,602.0 2,644.6 2,653.0 2,676.0 2,685.6 2,699.8 2,685.2 2,683.1 2,667.1 70 Large time 660.8 680.3 685.8 697.3 708.9 701.9 712.8 715.8 716.3 714.6 714.9 716.6 71 Other 1,809.2 1,876.0 1,883.3 1,904.7 1,935.6 1,951.1 1,963.3 1,969.8 1,983.5 1,970.6 1,968.1 1,950.4 77 Borrowings 827.5 860.1' 888.8 938.9 977.8 987.0 968.3 960.0 954.8 967.5 950.3 966.4 73 From banks in the U.S 291.9r 297.4' 307.4' 317.0 326.4 323.6 319.4 314.7 316.0 320.0 310.4 317.0 74 From others 535.6r 562.7' 581.4' 621.9 651.4 663.4 648.9 645.2 638.8 647.5 639.9 649.4 75 Net due to related foreign offices 226.9 203.8 202.7 226.1 218.5 217.2 213.7 226.5 227.5 232.3 229.6 232.6 26 Other liabilities 304.0 334.9 344.2 358.8 341.3 338.4 342.9 324.9 333.8 334.9 313.3 326.6 27 Total liabilities 4,517.6 4,620.5' 4,680.0 4,791.9 4,848.6 4,861.8 4,864.0 4,853.7 4,863.5 4,867.2 4,850.4 4,845.9 28 Residual (assets less liabilities)7 377.4r 439.7' 457.8 424.7 418.9 419.3 416.3 417.9 409.7 421.0 415.8 423.1 Not seasonally adjusted Assets 79 Bank credit 4,182.7' 4,327.9' 4,385.5' 4,491.6 4,537.2 4,555.4 4,532.9 4,507.1 4,532.0 4,520.2 4,501.7 4,492.7 30 Securities in bank credit 1,116.6 1,147.9 1,164.9 1,214.2 1,227.2 1,227.0 1,220.1 1,212.5 1,219.6 1,216.5 1,206.5 1,212.6 31 U.S. government securities 768.5 766.2' 762.2' 771.9 792.1 791.8 792.3 793.0 791.0 791.5 791.0 794.1 37 Other securities 348.1' 381.7' 402.7' 442.3 435.1 435.2 427.8 419.5 428.6 424.9 415.5 418.5 33 Loans and leases in bank credit2 ... 3,066.1' S.ISO.O' 3,220.7' 3,277.4 3,310.0 3,328.4 3,312.7 3,294.6 3,312.4 3,303.7 3,295.2 3,280.1 34 Commercial and industrial 873.1' 901.4' 914.2' 937.0 946.1 943.1 939.4 941.7 940.9 939.8 941.0 941.2 35 Real estate 1,243.9 1,285.1' 1,288.7' 1,294.6 1,316.0 1,326.8 1,328.0 1,325.4 1,327.0 1,333.3 1,325.9 1,317.7 36 Revolving home equity 97.7 97.8 98.6 97.5 97.7 97.2 96.7 95.9 96.2 96.0 96.0 95.8 37 Other 1,146.2 1,187.3 1,190.1 1,197.1 1,218.3 1,229.6 1,231.2 1,229.4 1,230.7 1,237.3 1,229.8 1,221.9 38 501.1 496.2 500.2 498.7 501.4 508.1 510.8 503.8 508.0 504.8 503.5 503.7 39 Security3 120.9 133.2 139.5 159.4 153.8 154.1 147.6 139.6 149.3 141.0 141.4 136.6 40 Other loans and leases 327.1' 364.2' 378.1' 387.7 392.7 396.3 386.9 384.1 387.2 384.7 383.4 380.8 41 Interbank loans 204.1 199.2' 214.4' 216.7 226.7 225.2 224.6 225.0 230.5 219.7 225.2 227.9 4? Cash assets4 264.7 239.3 251.2 247.0 258.9 268.5 274.2 259.1 254.8 251.6 276.4 254.5 43 Other assets5 302.2 320.0 324.5 321.7 327.8 329.1 331.6 341.1 335.5 344.4 339.8 340.3 44 Total assets6 4,897.0 5,028.9 5,117.8 5,219.1 5^925 5,320.0 5,305.5 5,273.9 5,294.2 5,277.5 5,284.9 5,257.1 Liabilities 45 Deposits 3,146.4 3,211.5 3,248.4 3,271.7 3,329.6 3,351.3 3,344.1 3,328.8 3,338.0 3,311.4 3,351.9 3,297.4 46 682.5 651.9 670.4 662.0 677.1 700.0 674.5 650.1 647.5 630.1 677.3 641.9 47 Nontransaction 2,464.0 2,559.6 2,578.0 2,609.7 2,652.4 2,651.3 2,669.5 2,678.7 2,690.5 2,681.2 2,674.6 2,655.6 48 Large time 659.7 679.4 687.6 701.2 715.1 707.1 710.8 714.6 713.8 714.0 712.3 715.9 49 Other 1,804.2 1,880.2 1,890.5 1,908.5 1,937.3 1,944.2 1,958.7 1,964.1 1,976.7 1,967.2 1,962.3 1,939.6 50 Borrowings 828.0 852.8' 892.0 934.9 973.6 982.1 974.7 959.3 965.9 964.0 955.0 961.8 51 From banks in the U.S 292.8' 293.4' 306.3' 313.0 326.7 327.7 323.0 315.5 320.3 319.7 313.3 316.3 57 From others 535.2' 559.4' 585.7' 622.0 647.0 654.4 651.7 643.8 645.6 644.3 641.7 645.4 53 Net due to related foreign offices .... 225.4 203.6 202.3 223.7 216.6 218.3 215.4 226.0 224.6 230.8 229.1 235.8 54 Other liabilities 305.1 334.9 343.9 358.5 342.7 339.3 343.0 325.8 334.5 336.0 314.0 327.4 55 Total liabilities 4,505.0 4,602.8' 4,686.6 4,788.9 4,862.4 4,891.0 4,877.1 4,839.9 4,862.9 4,842.1 4,849.9 4*225 56 Residual (assets less liabilities)7 391.^ 426.1' 431.2 430.2 430.1 428.9 428.4 434.1 431.2 435.4 434.9 434.7 MEMO 57 Revaluation gains on off-balance-sheet items8 88.4 96.1 110.4 130.7 111.2 113.3 111.9 108.1 113.7 110.1 107.0 108.9 58 Revaluation losses on off-balancesheet items8 90.0 96.4 110.6 128.0 110.0 111.3 107.9 106.4 109.8 109.2 104.6 107.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • May 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1998 1998 1999 1999 Feb. Aug. Sept. Oct/ Nov/ Dec/ Jan/ Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Seasonally adjusted Assets 1 Bank credit 3,613.0 3,753. lr 3,794. lr 3,863.4 3,907.7 3,943.8 3,934.5 3,936.2 3,931.4 3,938.3 3,935.4 3,934.2 2 Securities in bank credit 915.3 944.0r 961.6 995.8 1,002.7 1,015.1 998.9 997.2 990.4 994.8 996.7 1,001.2 3 U.S. government securities 684.1 611 Xf 685.lr 694.3 710.4 712.2 710.7 711.2 706.2 707.9 711.4 713.3 4 Other securities 231.2 267.0r 276.6r 301.6 292.3 302.9 288.2 286.0 284.2 286.9 285.3 287.9 5 Loans and leases in bank credit2 2,697.7 2,809.0r 2,832.5r 2,867.5 2,905.0 2,928.7 2,935.6 2,939.0 2,941.0 2,943.5 2,938.7 2,933.0 6 Commercial and industrial 651.9 692.2 700.5 715.0 723.0 726.9 729.8 731.0 728.6 729.6 730.4 732.3 7 Real estate 1,222.1 1,257.6 l,260.2r 1,264.6 1,287.3 1,302.5 1,307.2 1,310.7 1,309.3 1,315.8 1,311.3 1,306.1 8 Revolving home equity 98.1 97.6 97.9 96.7 97.0 96.9 96.5 96.4 96.4 96.3 96.4 96.4 9 Other 1,124.0 1,160.0 1,162.3 1,167.9 1,190.3 1,205.6 1,210.7 1,214.3 1,212.9 1,219.5 1,214.9 1,209.7 10 Consumer 501.6 494.5 497.4 496.8 498.9 501.8 504.0 504.3 504.9 503.8 503.4 505.3 11 Security3 63.0 73.5 75.2 89.3 87.6 85.4 84.0 78.7 83.8 78.3 79.7 77.6 12 Other loans and leases 259.1 291. r 299.2r 301.8 308.2 312.1 310.7 314.3 314.5 316.0 313.9 311.7 13 Interbank loans 175.2 186.3r 191.6r 195.2 193.7 188.2 189.4 191.3 193.0 184.8 188.9 200.2 14 Cash assets4 231.4 217.8 219.3 207.8 216.1 216.3 228.6 225.5 223.5 234.7 230.4 213.0 15 Other assets5 259.8 282.4 285.4r 283.3 290.2 289.9 295.5 303.1 297.1 306.8 301.8 303.6 16 Total assets6 4,222.7r 4,382.6 4,433.3 4,492.1 4,550.0 4,580.3 4,590.0 4,597.9 4,586.7 4,606.5 4,598.2 4,592.7 Liabilities 17 Deposits 2,871.4 2,915.8 2,929.7 2,949.1 2,995.7 3,011.9 3,023.5 3,022.9 3,031.1 3,015.8 3,037.5 2,997.8 18 Transaction 677.7 653.1 659.8 650.8 654.1 655.5 650.7 643.3 634.6 635.0 659.6 639.5 19 Nontransaction 2,193.7 2,262.7 2,270.0 2,298.3 2,341.5 2,356.4 2,372.7 2,379.6 2,396.6 2,380.8 2,377.9 2,358.3 20 Large time 387.4 385.1 384.2 397.2 410.1 408.9 412.1 412.1 415.0 412.0 411.8 410.4 21 Other 1,806.3 1,877.7 1,885.7 1,901.1 1,931.4 1,947.6 1,960.6 1,967.6 1,981.6 1,968.8 1,966.1 1,947.9 22 Borrowings 683.1 694.7 709.9 753.6 792.2 807.7 798.4 797.0 784.7 802.1 788.4 806.8 23 From banks in the U.S 268.7 276.1 278.2 286.3 294.3 296.4 297.0 295.9 291.3 301.6 292.4 300.1 24 From others 414.3 418.6 431.7 467.3 498.0 511.3 501.5 501.2 493.3 500.5 495.9 506.7 25 Net due to related foreign offices .... 87.9 93.6 105.6 116.9 116.3 114.9 114.5 124.9 122.6 126.6 125.6 134.8 26 Other liabilities 206.8 235.5 240.2 251.5 238.2 237.6 245.7 236.4 238.3 242.0 229.8 237.6 27 Total liabilities 3,849.1 3,939.7 3,985.4 4,071.2 4,142.4 4,172.2 4,182.1 4,181.3 4,176.7 4,186.4 4,181.3 4,176.9 28 Residual (assets less liabilities)7 373.6 443.0 447.9 420.9 407.7 408.2 408.0 416.6 410.0 420.1 416.9 415.8 Not seasonally adjusted Assets 29 Bank credit 3,611.0 3,737.lr 3,786.2r 3,867.6 3,923.7 3,956.0 3,947.7 3,935.6 3,944.9 3,940.0 3,935.5 3,924.0 30 Securities in bank credit 921.8 931.3 952.8 991.8 1,007.7 1,014.4 1,007.5 1,005.3 1,005.3 1,005.7 1,003.9 1,005.5 31 U.S. government securities 683.8 671.4r 680.01 691.2 710.7 711.0 710.3 711.1 707.8 709.2 710.7 711.4 32 Other securities 238.1 259.9r 272.8 300.7 297.0 303.3 297.2 294.2 297.4 296.4 293.2 294.1 33 Loans and leases in bank credit2 2,689.2 2,805.8r 2,833.4r 2,875.7 2,916.0 2,941.6 2,940.2 2,930.3 2,939.6 2,934.3 2,931.6 2,918.5 34 Commercial and industrial 650.6 687.3 696.1 713.1 721.9 723.9 726.0 729.5 726.9 726.6 728.6 730.3 35 Real estate 1,216.6 1,261.3 1,265.1 1,271.1 1,293.8 1,306.0 1,307.1 1,304.4 1,305.8 1,312.3 1,304.9 1,296.8 36 Revolving home equity 97.7 97.8 98.6 97.5 97.7 97.2 96.7 95.9 96.2 96.0 96.0 95.8 37 Other 1,118.9 l,163.6r l,166.6r 1,173.5 1,196.0 1,208.8 1,210.3 1,208.5 1,209.5 1,216.3 1,208.9 1,201.0 38 Consumer 501.1 496.2 500.2 498.7 501.4 508.1 510.8 503.8 508.0 504.8 503.5 503.7 39 Security3 64.3 69.8 72.2 89.6 89.1 87.2 84.3 80.5 85.5 78.8 81.9 78.9 40 Other loans and leases 256.5 291.2r 299.9r 303.3 309.9 316.4 312.0 312.0 313.5 311.7 312.7 308.7 41 Interbank loans 178.2 179.2r 186.0r 191.3 200.2 198.1 196.4 194.5 201.1 189.8 193.9 195.6 42 Cash assets4 232.2 205.5 217.1 211.3 224.5 233.0 239.3 225.5 222.6 218.1 243.3 219.2 43 Other assets5 259.4 283.5 286.7 283.4 290.8 289.4 293.0 302.4 297.2 304.9 301.2 302.8 44 Total assets6 4,224.3 4,347.9 4,418.4 4,495.9 4,581.3 4,618.5 4,618.8 4,599.9 4,607.5 4,594.7 4,615.9 4,583.7 Liabilities 45 Deposits 2,860.8 2,906.9 2,932.3 2,953.3 3,015.2 3,040.9 3,030.7 3,011.5 3,024.1 2,996.5 3,036.1 2,976.0 46 Transaction 671.2 639.7 654.4 646.7 664.9 688.8 662.3 637.0 634.7 618.3 663.0 628.3 47 Nontransaction 2,189.7 2,267.2 2,277.9 2,306.6 2,350.3 2,352.0 2,368.3 2,374.5 2,389.5 2,378.2 2,373.1 2,347.7 48 Large time 387.7 387.4 387.7 400.6 415.2 409.3 411.2 411.9 414.3 412.6 412.4 409.6 49 Other 1,801.9 1,879.8 1,890.2 1,906.0 1,935.2 1,942.7 1,957.2 1,962.6 1,975.2 1,965.7 1,960.7 1,938.1 50 Borrowings 683.6 687.4 713.0 749.6 788.1 802.9 804.8 796.4 795.8 798.6 793.1 802.2 51 From banks in the U.S 269.7 272.1 277.0 282.3 294.6 300.6 300.6 296.7 295.7 301.2 295.3 299.5 52 From others 414.0 415.3 436.0 467.3 493.5 502.3 504.2 499.7 500.1 497.4 497.8 502.7 53 Net due to related foreign offices .... 85.1 96.7 106.8 115.5 113.7 111.4 112.0 123.3 120.2 124.1 124.0 134.5 54 Other liabilities 206.8 235.5 240.2 251.5 238.2 237.6 245.7 236.4 238.3 242.0 229.8 237.6 55 Total liabilities 3,836.4 3,926.6 3,992.3 4,070.0 4,155.2 4,192.8 4,193.1 4,167.5 4,178.4 4,161.2 4,183.0 4,150.3 56 Residual (assets less liabilities)7 387.8 421.4 426. lr 426.0 426.2 425.7 425.7 432.3 429.1 433.5 432.9 433.4 MEMO 57 Revaluation gains on off-balance-sheet items8 47.0 51.9 61.7 78.7 62.7 65.2 66.0 64.5 67.4 65.7 64.2 65.7 58 Revaluation losses on off-balancesheet items8 49.2 54.2 65.1 80.5 65.1 66.8 65.8 65.3 68.0 68.1 64.4 65.6 59 Mortgage-backed securities' 294.5 301.2 313.7 336.0 346.4 346.0 342.2 340.1 345.5 345.4 339.5 334.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A17 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 1998 1998r 1999 1999 Feb/ Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Seasonally adjusted Assets 1 Bank credit 2,227.4 2,307.0 2,338.0 2,393.7 2,413.8 2,431.7 2,414.5 2,411.0 2,413.2 2,416.4 2,410.1 2,406.0 2 Securities in bank credit 520.1 532.7 547.5 573.1 569.9 574.2 556.2 553.0 549.3 551.7 553.3 555.3 U.S. government securities 373.2 361.8 368.3 372.3 380.6 377.3 375.4 375.8 373.0 373.6 376.3 376.4 4 Trading account 27.3 21.3 22.0 20.9 23.4 24.2 25.9 17.9 18.5 \6.9 15.5 19.9 Investment account 345.9 340.5 346.3 351.4 357.2 353.1 349.5 357.8 354.6 357.0 360.8 356.4 6 Other securities 146.9 170.9 179.2 200.8 189.3 197.0 180.8 177.2 176.3 178.1 177.0 178.9 7 Trading account 68.2 83.1 89.5 109.1 92.8 97.6 82.7 79.6 78.6 80.1 79.5 80.9 8 Investment account 78.7 87.7 89.8 91.7 96.5 99.3 98.1 97.7 97.7 97.9 97.5 98.0 9 State and local government . 22.7 22.6 23.2 23.9 24.6 24.9 24.9 24.8 24.8 24.8 24.8 24.8 in Other 56.0 65.1 66.6 67.8 71.9 74.4 73.2 72.8 72.9 73.1 72.7 73.2 li Loans and leases in bank credit2 . . . 1,707.3 1,774.3 1,790.5 1,820.6 1,843.9 1,857.5 1,858.3 1,858.0 1,863.9 1,864.7 1,856.8 1,850.7 n Commercial and industrial 473.3 503.2 509.1 521.7 527.9 529.8 531.2 532.2 530.1 531.0 531.6 533.5 13 Bankers acceptances 1.3 1.3 1.3 1.2 1.2 1.2 1.3 1.2 1.2 1.2 1.2 1.1 14 Other 472.0 502.0 507.8 520.5 526.7 528.5 529.9 531.1 528.9 529.8 530.4 532.3 15 Real estate 683.9 688.8 686.5 687.2 699.6 707.1 703.8 704.2 704.8 709.9 704.9 698.8 16 Revolving home equity 69.8 68.6 68.9 68.0 67.7 67.4 67.3 67.5 67.5 67.5 67.5 67.5 17 Other 614.2 620.1 617.6 619.2 632.0 639.6 636.5 636.7 637.3 642.3 637.3 631.3 18 Consumer 300.2 295.9 298.9 299.7 300.6 301.7 305.5 305.0 307.1 306.0 303.5 305.0 19 Security3 57.5 67.4 68.9 82.8 80.8 79.1 77.9 72.7 77.8 72.4 73.6 71.8 20 Federal funds sold to and repurchase agreements with broker-dealers 41.3 48.0 50.2 64.7 63.6 62.8 61.7 56.3 63.1 55.9 57.4 5555..22 71 Other 16.2 19.4 18.8 18.0 17.3 16.3 16.2 16.4 14.6 16.5 16.2 16.6 22 State and local government 11.5 11.5 11.5 11.6 11.9 11.6 11.6 11.5 11.5 11.6 11.5 11.5 23 Agricultural 9.9 10.0 10.0 9.9 10.1 10.1 10.2 10.3 10.2 10.3 10.3 10.3 24 Federal funds sold to and repurchase agreements with others 6.4 10.0 12.4 12.9 12.4 16.2 1122..66 12.0 12.1 12.4 1122..11 1111..77 7.5 All other loans 77.9 88.8 93.0 93.3 97.7 96.3 97.3 97.1 98.4 98.8 96.7 95.1 26 Lease-financing receivables 86.7 98.7 100.0 101.5 102.8 105.8 108.2 112.8 112.0 112.3 112.6 113.0 27 Interbank loans 122.9 116.0 117.9 119.5 119.9 121.1 122.7 128.0 128.0 123.2 124.7 137.8 28 Federal funds sold to and repurchase agreements with commercial banks 73.2 62.7 64.4 73.9 75.6 73.9 7788..22 80.5 82.0 7766..22 7788..11 8899..33 79 Other 49.7 53.3 53.6 45.6 44.3 47.3 44.5 47.5 45.9 47.0 46.5 48.5 30 Cash assets4 167.9 151.3 151.4 141.1 147.8 148.4 158.6 156.3 153.9 165.1 157.4 148.6 31 Other assets5 200.1 219.4 220.0 215.9 218.3 216.8 220.7 228.8 223.6 229.7 227.9 229.3 32 Total assets6 2,680.6 2,7563 2,789.7 2^323 2,861.9 2^80 J2 2,878.6 2,885.7 2^80.2 2,896.1 2,881.8 2,883.4 Liabilities 33 Deposits 1,633.6 1,629.7 1,630.1 1,641.6 1,668.2 1,674.5 1,672.8 1,672.3 1,680.2 1,668.9 1,681.8 1,652.8 34 Transaction 392.0 369.9 373.6 367.2 369.6 369.3 364.9 357.9 352.7 353.0 370.1 352.6 35 Nontransaction 1,241.6 1,259.8 1,256.5 1,274.4 1,298.6 1,305.2 1,307.9 1,314.4 1,327.5 1,315.9 1,311.7 1,300.2 36 Large time 221.1 215.3 210.2 221.6 230.4 230.3 230.1 229.4 232.6 229.7 228.5 227.9 37 Other 1,020.5 1,044.6 1,046.3 1,052.8 1,068.2 1,074.8 1,077.8 1,085.0 1,094.9 1,086.1 1,083.2 1,072.2 38 Borrowings 533.3 532.1 544.8 579.7 610.3 621.9 614.7 611.1 603.2 616.1 604.0 618.8 39 From banks in the U.S 200.1 197.6 198.5 203.4 207.6 208.9 214.5 213.1 211.6 219.4 210.4 215.2 40 From others 333.1 334.4 346.4 376.3 402.7 412.9 400.3 398.0 391.6 396.7 393.7 403.6 41 Net due to related foreign offices 81.8 89.9 101.8 112.3 112.7 111.3 111.5 121.7 119.3 122.9 122.3 132.0 42 Other liabilities 178.4 204.9 209.6 220.1 206.0 205.5 213.6 203.9 206.6 209.4 197.1 204.6 43 Total liabilities 2y427.0 2,456.5 2,486.4 2,553.7 2,597.2 2,613.2 2,612.6 2,609.0 2,6093 2,6173 2,6053 2,6083 44 Residual (assets less liabilities)7 253.6 299.8 303.3 278.6 264.7 266.9 266.0 276.7 270.9 278.8 276.5 275.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • May 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks—Continued Monthly averages Wednesday figures AAAccccccooouuunnnttt 1998 1998r 1999 1999 Feb.r Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Not seasonally adjusted Assets 45 Bank credit 2,234.0 2,291.4 2,327.9 2,398.1 2,430.5 2,443.4 2,433.2 2,419.3 2,433.5 2,425.9 2,420.6 2,405.4 46 Securities in bank credit 528.7 521.0 539.4 572.1 578.1 575.4 566.2 563.1 565.8 563.8 563.2 561.9 47 U.S. government securities 374.9 357.0 363.6 371.4 383.7 377.7 376.4 377.8 376.4 376.3 378.4 376.8 48 Trading account 27.7 21.2 21.9 21.9 24.6 23.7 25.2 18.2 18.5 16.3 16.1 19.9 49 Investment account 347.2 335.8 341.6 349.5 359.1 354.0 351.2 359.6 357.9 359.9 362.3 357.0 50 Mortgage-backed securities . . 228.2 225.9 236.5 255.4 258.3 253.6 250.1 247.9 253.5 252.6 247.0 243.0 51 Other 119.0 109.9 105.2 94.1 100.8 100.4 101.1 111.7 104.4 107.3 115.3 113.9 52 One year or less 31.1 29.0 27.8 26.2 27.3 26.6 27.5 25.6 28.2 26.8 25.6 24.2 53 One to five years 54.9 49.0 44.3 37.3 38.3 38.5 37.6 46.8 38.8 42.3 49.5 49.4 54 More than five years . . . 33.0 31.9 33.1 30.7 35.3 35.2 36.0 39.3 37.4 38.3 40.2 40.3 55 Other securities 153.8 164.0 175.9 200.6 194.4 197.7 189.9 185.3 189.4 187.5 184.9 185.1 56 Trading account 75.0 76.8 86.4 108.8 96.8 97.4 90.9 87.5 91.1 89.3 87.3 87.1 57 Investment account 78.8 87.2 89.4 91.9 97.7 100.4 99.0 97.8 98.3 98.2 97.6 98.0 58 State and local government .. 22.7 22.7 23.2 24.0 24.6 25.0 24.8 24.8 24.7 24.8 24.8 24.8 59 Other 56.1 64.6 66.2 67.9 73.1 75.4 74.2 73.0 73.6 73.4 72.8 73.1 60 Loans and leases in bank credit2 . . 1,705.3 1,770.4 1,788.4 1,826.0 1,852.4 1,868.0 1,867.0 1,856.2 1,867.6 1,862.1 1,857.3 1,843.5 61 Commercial and industrial 472.4 499.8 506.2 521.5 528.0 527.4 528.3 531.2 529.1 528.8 530.5 531.8 62 Bankers acceptances 1.2 1.3 1.3 1.3 1.3 1.3 1.3 1.2 1.2 1.2 1.2 1.1 63 Other 471.2 498.6 504.9 520.2 526.7 526.1 527.0 530.0 527.9 527.6 529.3 530.7 64 Real estate 682.2 692.0 689.8 691.2 703.9 709.6 707.0 702.2 705.1 710.4 703.1 693.7 65 Revolving home equity 69.4 68.9 69.4 68.6 68.3 67.8 67.6 67.1 67.3 67.3 67.2 67.0 66 Other 374.9 385.1 381.0 382.9 394.1 398.6 394.0 386.7 390.5 394.9 387.8 377.7 67 Commercial 237.9 238.0 239.4 239.6 241.5 243.2 245.3 248.3 247.3 248.2 248.1 249.0 68 Consumer 299.8 297.5 300.9 300.6 301.6 305.7 310.6 304.7 308.9 306.6 303.7 303.9 69 Security3 58.9 63.7 65.8 83.1 82.3 80.9 78.2 74.5 79.5 72.9 75.8 73.2 70 Federal funds sold to and repurchase agreements with broker-dealers .... 42.6 45.1 47.6 65.2 65.0 63.7 62.0 58.1 65.0 56.8 59.6 56.2 71 Other 16.3 18.6 18.2 17.9 17.3 17.1 16.2 16.4 14.5 16.1 16.3 16.9 72 State and local government .... 11.5 11.5 11.6 11.7 12.0 11.7 11.6 11.5 11.4 11.5 11.5 11.5 73 Agricultural 9.6 10.3 10.3 10.1 10.1 10.1 10.1 9.9 9.9 9.9 9.9 9.8 74 Federal funds sold to and repurchase agreements with others 6.4 10.0 12.4 12.9 12.4 16.2 12.6 12.0 12.1 12.4 12.1 11.7 75 All other loans 76.5 88.1 92.5 93.8 99.2 100.3 98.0 95.5 97.7 95.4 96.0 93.1 76 Lease-financing receivables .... 88.1 97.5 98.9 101.0 102.8 106.0 110.5 114.7 114.0 114.2 114.6 114.8 77 Interbank loans 121.9 113.4 116.7 116.7 122.0 126.3 128.0 126.5 132.2 122.8 125.1 131.1 78 Federal funds sold to and repurchase agreements with commercial banks 72.4 60.8 63.8 71.3 77.3 77.7 82.0 79.2 85.9 76.0 78.3 82.7 79 Other 49.5 52.6 52.9 45.4 44.7 48.5 46.0 47.3 46.2 46.9 46.8 48.4 80 Cash assets4 168.7 141.2 149.9 144.7 153.9 161.7 168.3 156.5 153.9 152.3 168.1 153.3 81 Other assets5 200.1 219.4 220.0 215.9 218.3 216.8 220.7 228.8 223.6 229.7 227.9 229.3 82 Total assets6 2,687.2 2,727.8 2,776.6 2£37.5 2386.6 2,910-3 2^125 2,892.9 2^)04.8 2^92.6 2,903.5 2381.2 Liabilities 83 Deposits 1,626.0 1,627.3 1,636.2 1,647.8 1,681.5 1,696.1 1,681.6 1,663.6 1,675.1 1,654.1 1,682.3 1,636.4 84 Transaction 388.9 360.7 370.5 365.0 376.2 392.6 374.4 354.9 353.6 341.7 375.5 346.8 85 Nontransaction 1,237.2 1,266.6 1,265.7 1,282.8 1,305.2 1,303.6 1,307.3 1,308.7 1,321.4 1,312.5 1,306.8 1,289.6 86 Large time 221.5 217.6 213.6 224.9 235.5 230.8 229.1 229.2 231.9 230.3 229.0 227.1 87 Other 1,015.7 1,049.0 1,052.1 1,057.9 1,069.7 1,072.8 1,078.1 1,079.5 1,089.5 1,082.1 1,077.7 1,062.5 88 Borrowings 535.6 523.4 544.6 575.2 606.7 616.3 620.3 612.8 614.0 615.9 610.0 616.9 89 From banks in the U.S 201.8 192.8 196.1 199.9 209.0 213.0 217.7 214.9 215.8 220.5 213.8 215.7 90 From nonbanks in the U.S 333.8 330.6 348.5 375.3 397.6 403.2 402.7 397.9 398.2 395.4 396.3 401.2 91 Net due to related foreign offices .. . 79.0 92.9 103.0 110.9 110.1 107.8 109.0 120.1 116.9 120.4 120.8 131.8 92 Other liabilities 178.4 204.9 209.6 220.1 206.0 205.5 213.6 203.9 206.6 209.4 197.1 204.6 93 Total liabilities 2,419.1 2,448.6 2,493.4 Z354.1 2,604.2 2,625.8 2,624.5 2,600.4 2,612.6 2^99.7 2,610.2 2^89.7 94 Residual (assets less liabilities)7 .... 268.1 279.2 283.2 283.4 282.4 284.6 288.0 292.5 292.2 292.8 293.4 291.5 MEMO 95 Revaluation gains on off-balancesheet items8 47.0 51.9 61.7 78.7 62.7 65.2 66.0 64.5 67.4 65.7 64.2 65.7 96 Revaluation losses on off-balancesheet items8 49.2 54.2 65.1 80.5 65.1 66.8 65.8 65.3 68.0 68.1 64.4 65.6 97 Mortgage-backed securities9 248.7 249.7 260.6 280.8 287.1 284.1 279.6 276.7 282.7 282.3 276.3 270.7 98 Pass-through securities 166.5 161.4 167.4 189.6 196.7 194.8 192.0 187.3 192.5 191.5 187.0 183.2 99 CMOs, REMICs, and other mortgage-backed securities . . 82.2 88.4 93.2 91.2 90.4 89.3 87.7 89.4 90.3 90.8 89.3 87.6 100 Net unrealized gains (losses) on available-for-sale securities10 . .. 3.3 3.1 3.7 4.4 3.1 3.0 3.0 2.4 2.9 2.7 2.6 2.5 101 Offshore credit to U.S. residents11 . .. 36.2 35.6 36.8 38.5 39.1 38.5 38.9 38.9 39.0 39.3 39.2 38.2 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A19 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1998 1998r 1999 1999 Feb.r Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Seasonally adjusted Assets 1 Bank credit 1,385.6 1,446.1 1,456.2 1,469.7 1,493.9 1,512.0 1,519.9 1,525.2 1,518.2 1,521.9 1,525.3 1,528.2 2 Securities in bank credit 395.2 411.4 414.1 422.8 432.8 440.9 442.7 444.3 441.1 443.1 443.4 445.9 3 U.S. government securities 310.9 315.2 316.8 322.0 329.8 334.9 335.3 335.5 333.2 334.3 335.1 336.9 4 Other securities 84.3 96.1 97.3 100.8 103.0 106.0 107.4 108.8 107.9 108.9 108.4 108.9 5 Loans and leases in bank credit2 990.4 1,034.7 1,042.1 1,047.0 1,061.1 1,071.2 1,077.2 1,081.0 1,077.1 1,078.8 1,081.9 1,082.3 6 Commercial and industrial 178.6 189.0 191.3 193.3 195.1 197.1 198.6 198.7 198.5 198.6 198.8 198.8 7 Real estate 538.2 568.9 573.7 577.5 587.7 595.4 603.4 606.4 604.5 606.0 606.4 607.3 8 Revolving home equity 28.4 29.0 29.0 28.8 29.3 29.4 29.2 28.8 28.9 28.8 28.8 28.9 9 Other 509.8 539.9 544.7 548.7 558.4 566.0 574.2 577.6 575.6 577.2 577.6 578.4 10 Consumer 201.4 198.6 198.4 197.1 198.2 200.1 198.5 199.2 197.7 197.8 199.9 200.3 11 Security3 5.5 6.1 6.3 6.5 6.7 6.3 6.1 6.0 6.0 5.9 6.0 5.8 12 Other loans and leases 66.7 72.2 72.3 72.6 73.4 72.2 70.8 70.6 70.4 70.6 70.7 70.1 13 Interbank loans 52.3 70.3 73.7 75.7 73.8 67.0 66.6 63.4 65.0 61.6 64.2 62.4 14 Cash assets4 63.6 66.5 67.9 66.7 68.3 68.0 69.9 69.2 69.7 69.7 73.0 64.4 15 Other assets5 59.7 63.0 65.5 67.3 72.0 73.1 74.9 74.3 73.5 77.1 73.9 74.3 16 Total assets6 1,542.1 1,6263 1,643.6 1,659.8 1,688.1 1,700.2 1,711.5 1,7122 1,706.5 1,710.4 1,716.5 1,7093 Liabilities 17 Deposits 1,237.8 1,286.1 1,299.6 1,307.5 1,327.4 1,337.4 1,350.6 1,350.6 1,351.0 1,346.8 1,355.7 1,345.0 18 Transaction 285.7 283.2 286.2 283.6 284.5 286.1 285.8 285.4 281.9 281.9 289.5 286.8 19 Nontransaction 952.1 1,002.9 1,013.5 1,024.0 1,042.9 1,051.3 1,064.8 1,065.2 1,069.1 1,064.9 1,066.2 1,058.1 20 Large time 166.3 169.8 174.1 175.7 179.7 178.5 182.0 182.7 182.4 182.2 183.4 182.5 21 Other 785.9 833.1 839.4 848.3 863.2 872.7 882.8 882.5 886.7 882.7 882.8 875.7 22 Borrowings 149.8 162.7 165.1 173.9 181.9 185.9 183.7 185.9 181.5 186.0 184.4 188.0 23 From banks in the U.S 68.6 78.5 79.7 82.9 86.6 87.5 82.5 82.8 79.7 82.2 82.1 84.9 24 From others 81.2 84.2 85.3 91.0 95.3 98.4 101.2 103.2 101.7 103.8 102.3 103.1 25 Net due to related foreign offices .... 6.1 3.7 3.7 4.7 3.6 3.6 3.0 3.2 3.3 3.7 3.3 2.7 26 Other liabilities 28.4 30.6 30.6 31.4 32.2 32.1 32.1 32.5 31.8 32.6 32.7 33.0 27 Total liabilities 1,422.1 1,483.2 1,499.0 1,517.4 1,545.1 1,558.9 1,569.5 1,5723 1,567.4 1,569.1 1,576.1 1,568.6 28 Residual (assets less liabilities)7 120.1 143.1 144.6 142.3 143.0 141.2 142.0 139.9 139.0 141.3 140.4 140.7 Not seasonally adjusted Assets 29 Bank credit 1,377.0 1,445.7 1,458.3 1,469.5 1,493.2 1,512.5 1,514.5 1,516.3 1,511.4 1,514.1 1,514.9 1,518.6 30 Securities in bank credit 393.1 410.3 413.4 419.7 429.5 439.0 441.3 442.2 439.4 441.8 440.7 443.6 31 U.S. government securities 308.8 314.4 316.4 319.7 327.0 333.3 334.0 333.3 331.4 333.0 332.3 334.6 32 Other securities 84.3 95.9 97.0 100.0 102.6 105.6 107.3 108.9 108.0 108.9 108.4 109.0 33 Loans and leases in bank credit2 983.9 1,035.3 1,044.9 1,049.8 1,063.6 1,073.6 1,073.2 1,074.1 1,072.0 1,072.2 1,074.2 1,074.9 34 Commercial and industrial 178.2 187.5 189.9 191.6 193.9 196.6 197.7 198.3 197.8 197.9 198.2 198.5 35 Real estate 534.4 569.3 575.3 579.9 589.9 596.3 600.1 602.3 600.7 601.9 601.8 603.1 36 Revolving home equity 28.3 28.9 29.2 28.9 29.4 29.4 29.1 28.8 28.9 28.8 28.8 28.8 37 Other 506.1 540.4 546.2 551.0 560.4 567.0 570.9 573.5 571.8 573.1 573.0 574.3 38 Consumer 201.3 198.7 199.3 198.1 199.8 202.4 200.2 199.1 199.1 198.3 199.7 199.7 39 Security3 5.5 6.1 6.3 6.5 6.7 6.3 6.1 6.0 6.0 5.9 6.0 5.8 40 Other loans and leases 64.5 73.8 74.1 73.7 73.4 72.0 69.2 68.4 68.4 68.3 68.5 67.9 41 Interbank loans 56.3 65.8 69.3 74.6 78.2 71.8 68.4 67.9 68.9 67.0 68.8 64.6 42 Cash assets4 63.4 64.3 67.2 66.6 70.6 71.2 71.0 69.1 68.7 65.8 75.2 65.9 43 Other assets5 59.3 64.1 66.7 67.5 72.6 72.5 72.3 73.7 73.5 75.2 73.4 73.5 44 Total assets6 1,537.1 1,620.2 1,641.8 1,658^ 1,694.7 1,708.1 1,7063 1,707.0 1,702.7 l,70i2 1,712.4 1,702^ Liabilities 45 Deposits 1,234.8 1,279.6 1,296.2 1,305.5 1,333.8 1,344.7 1,349.0 1,347.9 1,349.1 1,342.4 1,353.8 1,339.6 46 Transaction 282.3 279.0 283.9 281.7 288.6 296.3 288.0 282.1 281.0 276.7 287.4 281.5 47 Nontransaction 952.5 1,000.6 1,012.2 1,023.8 1,045.1 1,048.5 1,061.1 1,065.8 1,068.0 1,065.8 1,066.4 1,058.1 48 Large time 166.3 169.8 174.1 175.7 179.7 178.5 182.0 182.7 182.4 182.2 183.4 182.5 49 Other 786.2 830.8 838.1 848.1 865.4 869.9 879.0 883.1 885.7 883.5 883.0 875.6 50 Borrowings 148.0 164.0 168.4 174.4 181.4 186.6 184.5 183.5 181.7 182.7 183.1 185.3 51 From banks in the U.S 67.8 79.3 80.9 82.4 85.5 87.6 82.9 81.8 79.9 80.7 81.6 83.8 52 From others 80.2 84.7 87.5 92.0 95.9 99.1 101.6 101.8 101.8 102.0 101.5 101.5 53 Net due to related foreign offices .... 6.1 3.7 3.7 4.7 3.6 3.6 3.0 3.2 3.3 3.7 3.3 2.7 54 Other liabilities 28.4 30.6 30.6 31.4 32.2 32.1 32.1 32.5 31.8 32.6 32.7 33.0 55 Total liabilities 1,4173 1,478.0 1,498.9 1,515.9 1,550.9 1,567.0 1,568.6 1,567.2 1,565.8 1,561.5 1,572J5 1,560.6 56 Residual (assets less liabilities)7 119.7 142.2 142.9 142.6 143.8 141.1 137.7 139.9 136.9 140.7 139.5 141.9 MEMO 57 Mortgage-backed securities9 45.8 51.5 53.1 55.2 59.3 61.9 62.6 63.4 62.7 63.1 63.2 63.7 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • May 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1998 1998 1999 1999 Feb. Aug. Sept. Oct. Nov.' Dec. Jan.' Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Seasonally adjusted Assets 1 Bank credit 572.1 588.4 604.6 624.7' 621.2 600.'/ 589.1 571.8 587.7 580.4 565.9 571.4 2 Securities in bank credit 197.6 212.4 215.4 222.0 224.9 216.8 218.8 210.0 217.5 213.8 205.4 211.0 3 U.S. government securities 85.5 94.1 82.2 80.3' 80.5 81.0 84.1 82.4 84.4 83.0 80.7 83.4 4 Other securities 112.0 118.4 133.2 141.8 144.4 135.7' 134.7 127.7 133.1 130.8 124.8 127.7 5 Loans and leases in bank credit2 . . . 374.5 376.0 389.1' 402.7' 396.2 384.2' 370.4 361.7 370.2 366.7 360.4 360.3 6 Commercial and industrial 221.4r 215.2' 219.2' 224.0' 224.5 218.3' 212.5 211.1 213.7 212.2 210.3 210.3 7 Real estate 27.1 23.9 23.6 23.3 22.0 20.7 20.9 20.7 21.2 20.8 20.8 20.8 8 Security3 56.4 64.2 67.6 69.6 65.0 65^ 63.3 59.0 63.3 62.2 59.8 57.8 9 Other loans and leases 69.7' 72.8' 78.7' 85.7' 84.7 79.3' 73.6 70.9 72.0 71.4 69.5 71.5 10 Interbank loans 25.9 20.0 28.4 25.4 26.5 27.1 28.2 30.5 29.3 29.9 31.3 32.3 11 Cash assets4 33.1 33.8 34.0 35.4 33.5 33.8' 35.0 34.2 32.6 34.0 33.5 36.2 12 Other assets5 41.3 35.7 37.9 39.2 36.6 39.1 38.2 37.4 37.1 37.7 37.6 36.7 13 Total assets6 6722r 677.6 704.5' 724.5 7175 7oo.r 690.2 673.7 6865 681.7 668.0 6763 Liabilities 14 Deposits 287.9 305.9 314.5 318.9 315.3 307.3 315.6 319.4 316.3 316.8 319.7 322.6 15 Transaction 11.5 12.3 15.3 15.2 12.3 10.7 12.3 13.4 13.0 12.4 14.5 13.8 16 Nontransaction 276.3 293.6 299.2 303.7 303.0 296.6 303.3 306.0 303.3 304.4 305.2 308.8 17 Borrowings 144.4 165.4' \19.ff 185.3' 185.5 179.3' 169.9 162.9 170.1 165.4 161.9 159.6 18 From banks in the U.S 23.2' 21.3' 29.2' 30.7' 32.1 27.1' 22.4 18.9 24.6 18.4 18.0 16.8 19 From others 121.2' 144.1' 149.7' 154.6' 153.4 152.1' 147.5 144.1 145.5 147.0 143.9 142.8 20 Net due to related foreign offices 139.0 110.2 97.1 109.1 102.2 102.3 99.2 101.5 104.9 105.7 104.0 97.8 21 Other liabilities 97.2 99.3 104.0 107.4 103.1 100.8 97.2 88.5 95.5 92.9 83.4 89.0 22 Total liabilities 668.5 680.9' 694.6 720.r 706.2 689.6r 681.9 672.4 686.8 680.8 669.1 669.0 23 Residual (assets less liabilities)7 3.8 -3.3' 9.9 3.8' 11.3 11.1' 8.3 1.3 -.2 .9 -1.0 7.3 Not seasonally adjusted Assets 24 Bank credit 571.7 590.8 599.3 624.0' 613.5 599.4' 585.2 571.5 587.1 580.2 566.2 568.6 25 Securities in bank credit 194.7 216.6 212.0 222.4' 219.5 212.6 212.6 207.2 214.3 210.8 202.6 207.1 26 U.S. government securities 84.7 94.8 82.2 80.8 81.4 80.7 82.0 81.9 83.1 82.3 80.3 82.7 27 Trading account 13.9 31.0 20.6 16.7 14.4 15.6 17.9 18.9 18.3 18.7 17.9 20.3 28 Investment account 70.8 63.8 61.6 64.1 67.0 65.2 64.0 63.0 64.8 63.6 62.4 62.4 29 Other securities 110.0 121.7 129.8 141.6' 138.1 131.9 130.7 125.3 131.2 128.5 122.3 124.4 30 Trading account 68.4 76.5 84.8 91.8 85.2 79.6 79.8 76.1 81.3 78.8 73.4 75.0 31 Investment account 41.6 45.2 45.0 49.8 52.8 52.3 50.9 49.3 49.9 49.7 48.9 49.3 32 Loans and leases in bank credit2 . . . 377.0 374.2' 387.3 401.6' 394.0 386.8' 372.5 364.3 372.7 369.4 363.6 361.6 33 Commercial and industrial 222.5' 214.1' 218.1' 223.9' 224.2 219.2' 213.4 212.2 214.0 213.2 212.3 210.9 34 Real estate 27.3 23.7 23.5 23.5 22.3 20.8 20.9 20.9 21.2 21.0 20.9 20.9 35 Security3 56.5 63.4 67.4 69.7 64.8 66^ 63.4 59.1 63.8 62.2 59.5 57.7 36 Other loans and leases 70.6' 73.(/ 78.3' 84.5' 82.8 19.$ 74.9 72.1 73.8 72.9 70.8 72.0 37 Interbank loans 25.9 20.0 28.4 25.4 26.5 21A 28.2 30.5 29.3 29.9 31.3 32.3 38 Cash assets4 32.6 33.8 34.1 35.7 34.4 35.5 34.9 33.6 32.2 33.5 33.2 35.3 39 Other assets5 42.8 36.5 37.9 38.3 37.0 39.8 38.7 38.7 38.3 39.5 38.6 37.5 40 Total assets6 672.7r 680.9 699.4 723.1r 7112 7015r 686.6 674.0 686.7 682.7 669.0 6735 Liabilities 41 Deposits 285.6 304.6 316.1 318.4 314.3 310.5 313.4 317.3 313.9 314.8 315.8 321.5 42 Transaction 11.3 12.2 15.9 15.2 12.3 11.2 12.2 13.1 12.8 11.8 14.3 13.6 4 4 4 3 Bo N rr o o n w tr i a n n g s s a ction 2 1 7 4 4 4 . . 3 4 2 1 9 6 2 5 . . 4 4 ' 3 r 0 a 0. . 1 f f 3 1 0 8 3 5 . . 1 3 ' 3 1 0 8 2 5 . . 1 5 2 1 9 7 9 9 . . 3 3 ' 3 1 0 6 1 9 . . 2 9 3 1 0 6 4 2 . . 2 9 3 1 0 7 1 0 . . 1 1 3 1 0 6 3 5 . . 0 4 3 1 0 6 1 1 . . 5 9 3 1 0 5 7 9 . . 9 6 45 From banks in the U.S 23.2' 21.3' 29.2' 30.7' 32.1 27.1' 22.4 18.9 24.6 18.4 18.0 16.8 46 From others \2l.2r 144.1' 149.7' 154.6' 153.4 152.1' 147.5 144.1 145.5 147.0 143.9 142.8 47 Net due to related foreign offices .... 140.3 106.9 95.6 108.1 102.9 106.9 103.4 102.7 104.4 106.7 105.0 101.3 48 Other liabilities 98.3 99.3 103.7 107.1 104.5 101.7 97.3 89.4 96.2 94.0 84.2 89.8 49 Total liabilities 668.6 676.2r 6943 718.9r 7072 6983r 684.0 6723 6845 680.8 666.9 6722 50 Residual (assets less liabilities)7 4.1 4.7' 5.1' 4.2' 4.0 3.2' 2.7 1.7 2.1 1.9 2.0 1.3 MEMO 51 Revaluation gains on off-balance-sheet items8 41.4 44.2 48.7 52.0 48.6 48.1 45.9 43.6 46.3 44.4 42.8 43.2 52 Revaluation losses on off-balancesheet items8 40.8 42.2 45.4 47.5' 44.9 44.4' 42.1 41.1 41.8 41.1 40.2 41.8 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

A22 Domestic NonfinancialS tatistics • May 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 1999 IItteemm 1994 1995 1996 1997 1998 Aug. Sept. Oct. Nov. Dec. Jan. 1 All issuers 595,382 674,904 775,371 966,699 1,163,303 1,119,816 1,152,337 1,150,213 1,159,027 1,163,303 1,178,168 Financial companies1 2 Dealer-placed paper2, total 223,038 275,815 361,147 513,307 614,142 606,355 639,571 627,170 621,246 614,142 629,569 3 Directly placed paper3, total 207,701 210,829 229,662 252,536 322,030 281,927 271,526 289,184 304,545 322,030 314,601 4 Nonfinancial companies4 164,643 188,260 184,563 200,857 227,132 231,534 241,239 233,859 233,236 227,132 233,998 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 3. As reported by financial companies that place their paper directly with investors. personal, and mortgage financing; factoring, finance leasing, and other business lending; 4. Includes public utilities and firms engaged primarily in such activities as communicainsurance underwriting; and other investment activities. tions, construction, manufacturing, mining, wholesale and retail trade, transportation, and 2. Includes all financial-company paper sold by dealers in the open market. services. B. Bankers Dollar Acceptances1 Millions of dollars, not seasonally adjusted, year ending September2 Item 1995 1996 1997 1998 1 Total amount of reporting banks' acceptances in existence 29,242 25,832 25,774 14,363 2 Amount of other banks' eligible acceptances held by reporting banks 1,249 709 736 523 3 Amount of own eligible acceptances held by reporting banks (included in item 1) 10,516 7,770 6,862 4,884 4 Amount of eligible acceptances representing goods stored in, or shipped between, foreign countries (included in item 1) 11,373 9,361 10,467 5,413 1. Includes eligible, dollar-denominated bankers acceptances legally payable in the United 2. Data on bankers dollar acceptances are gathered from approximately 65 institutions; States. Eligible acceptances are those that are eligible for discount by Federal Reserve Banks; includes U.S. chartered commerical banks (domestic and foreign offices), U.S. branches and that is, those acceptances that meet the criteria of Paragraph 7 of Section 13 of the Federal agencies of foreign banks, and Edge and agreement corporations. The reporting group is Reserve Act (12 U.S.C. §372). revised every year. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Average Average Date of change rate rate 1996—Jan. 1 8.50 1996 8.27 1997—Jan. . 1998—Jan. . Feb. 1 8.25 1997 8.44 Feb. Feb. 1998 8.35 Mar. Mar 1997—Mar. 26 Apr. Apr. 1996—Jan. . 8.50 May May 1998—Sept. 30 8.25 Feb. 8.25 June June Oct. 16 8.00 Mar. 8.25 July . July . Nov. 18 7.75 Apr. 8.25 Aug. Aug. May 8.25 Sept. Sept. June 8.25 Oct. . Oct. . July . 8.25 Nov. Nov. Aug. 8.25 Dec. Dec. Sept. 8.25 Oct. . 8.25 1999—Jan. . Nov. 8.25 Feb. Dec 8.25 Mar. 1. The prime rate is one of several base rates that banks use to price short-term business Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) loans. The table shows the date on which a new rate came to be the predominant one quoted monthly statistical releases. For ordering address, see inside front cover, by a majority of the twenty-five largest banks by asset size, based on the most recent Call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1998 1999 1999, week ending IItteemm 11999966 11999977 11999988 Nov. Dec. Jan. Feb. Jan. 29 Feb. 5 Feb. 12 Feb. 19 Feb. 26 MONEY MARKET INSTRUMENTS 1 Federal funds1'2'3 5.30 5.46 5.35 4.83 4.68 4.63 4.76 4.66 4.75 4.77 4.75 4.75 2 Discount window borrowing2,4 5.02 5.00 4.92 4.63 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 Commercial paper3,5,6 Nonfinancial 3 1-month n.a. 5.57 5.40 5.00 5.24 4.80 4.80 4.79 4.79 4.80 4.81 4.81 4 2-month n.a. 5.57 5.38 5.14 5.12 4.78 4.80 4.76 4.78 4.80 4.81 4.82 5 3-month n.a. 5.56 5.34 5.06 5.00 4.77 4.79 4.75 4.76 4.78 4.80 4.81 Financial 1-month n.a. 5.59 5.42 5.04 5.31 4.83 4.82 4.81 4.81 4.81 4.83 4.83 7 2-month n.a. 5.59 5.40 5.19 5.13 4.81 4.82 4.77 4.79 4.81 4.83 4.84 8 3-month n.a. 5.60 5.37 5.15 5.04 4.81 4.82 4.78 4.80 4.82 4.82 4.83 Commercial paper (historical)3'5,7 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. 11 6-month 5.42 5.62 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Finance paper, directly placed (historical)3,5,8 12 1-month 5.31 5.44 n.a. 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 acceptances3'5'9 15 3-month 5.31 5.54 5.39 5.15 5.08 4.80 4.79 4.78 4.78 4.79 4.78 44..8811 16 6-month 5.31 5.57 5.30 4.92 4.91 4.73 4.74 4.72 4.72 4.73 4.72 4.79 Certificates of deposit, secondary market,'10 17 1-month 5.35 5.54 5.49 5.16 5.47 4.89 4.86 4.86 4.86 44..8866 4.86 44..8877 18 3-month 5.39 5.62 5.47 5.24 5.14 4.89 4.90 4.86 4.88 4.90 4.91 4.92 19 6-month 5.47 5.73 5.44 5.07 5.01 4.90 4.95 4.87 4.91 4.93 4.96 4.99 20 Eurodollar deposits, 3-month3,11 5.38 5.61 5.45 5.21 5.13 4.88 4.86 4.83 4.83 4.88 4.88 4.88 U.S. Treasury bills Secondary market3'5 7,1 3-month 5.01 5.06 4.78 4.41 4.39 4.34 4.44 4.35 4.40 4.40 4.42 4.53 ?.?. 6-month 5.08 5.18 4.83 4.42 4.40 4.33 4.44 4.30 4.40 4.41 4.45 4.51 23 1-year 5.22 5.32 4.80 4.33 4.32 4.31 4.48 4.30 4.40 4.45 4.49 4.58 Auction high ' 74 3-month 5.02 5.07 4.81 4.44 4.42 4.34 4.45 4.31 4.40 4.42 4.44 4.53 ?.5 6-month 5.09 5.18 4.85 4.43 4.43 4.36 4.43 4.28 4.39 4.42 4.47 4.43 26 1-year 5.23 5.36 4.85 4.40 4.31 4.34 4.37 n.a. 4.37 n.a. n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities13 7,7 1-year 5.52 5.63 5.05 4.53 4.52 4.51 4.70 4.51 4.61 4.67 4.71 4.82 7.8 2-year 5.84 5.99 5.13 4.54 4.51 4.62 4.88 4.59 4.73 4.81 4.93 5.05 29 3-year 5.99 6.10 5.14 4.57 4.48 4.61 4.90 4.58 4.75 4.83 4.95 5.09 30 5-year 6.18 6.22 5.15 4.54 4.45 4.60 4.91 4.56 4.76 4.84 4.96 5.11 31 7-year 6.34 6.33 5.28 4.78 4.65 4.80 5.10 4.74 4.93 5.04 5.15 5.29 37, 10-year 6.44 6.35 5.26 4.83 4.65 4.72 5.00 4.67 4.84 4.95 5.03 5.18 33 20-year 6.83 6.69 5.72 5.48 5.36 5.45 5.66 5.39 5.53 5.62 5.69 5.80 34 30-year 6.71 6.61 5.58 5.25 5.06 5.16 5.37 5.12 5.26 5.35 5.36 5.49 Composite 35 More than 10 years (long-term) 6.80 6.67 5.69 5.43 5.29 5.39 5.60 5.32 5.48 5.57 5.63 5.74 STATE AND LOCAL NOTES AND BONDS Moody's series14 36 5.52 5.32 4.93 4.87 4.83 4.85 4.80 4.75 4.79 4.84 4.83 4.75 37 BBaaaa 5.79 5.50 5.14 5.15 5.17 5.21 5.21 5.19 5.21 5.22 5.23 5.19 38 BBoonndd BBuuyyeerr sseerriieess 5.76 5.52 5.09 5.03 4.98 5.01 5.03 4.96 5.02 5.00 5.01 5.08 CORPORATE BONDS 39 Seasoned issues, all industries16 7.66 7.54 6.87 6.87 6.72 6.76 6.89 6.71 6.82 6.87 6.87 6.99 Rating group 40 7.37 7.27 6.53 6.41 6.22 6.24 6.40 6.19 6.32 6.38 6.37 6.51 41 Aa 7.55 7.48 6.80 6.79 6.65 6.68 6.79 6.63 6.72 6.77 6.78 6.89 47. A 7.69 7.54 6.93 6.95 6.80 6.84 6.97 6.79 6.90 6.95 6.96 7.07 43 Baa 8.05 7.87 7.22 7.34 7.23 7.29 7.39 7.24 7.34 7.37 7.38 7.47 MEMO Dividend-price ratio17 44 Common stocks 2.19 1.77 1.49 1.43 1.37 1.30 1.32 1.31 1.29 1.34 1.36 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. A1 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. 9. Representative 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. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • May 1999 1.36 STOCK MARKET Selected Statistics 1998 1999 IInnddiiccaattoorr 11999966 11999977 11999988 June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Prices and trading volume (averages of daily figures)1 CCCCCCCooooooommmmmmmmmmmmmmooooooonnnnnnn ssssssstttttttoooooooccccccckkkkkkk ppppppprrrrrrriiiiiiiccccccceeeeeeesssssss (((((((iiiiiiinnnnnnndddddddeeeeeeexxxxxxxeeeeeeesssssss))))))) 1111111 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((DDDDDDDeeeeeeeccccccc....... 33333331111111,,,,,,, 1111111999999966666665555555 ======= 55555550000000))))))) 357.98 456.99 550.65 569.76 586.39 539.16 506.56 511.49 564.26 576.05 595.43 588.70 2222222 IIIIIIInnnnnnnddddddduuuuuuussssssstttttttrrrrrrriiiiiiiaaaaaaalllllll 453.57 574.97 684.35 731.01 718.54 665.66 629.51 636.62 704.46 717.14 741.43 736.20 3333333 TTTTTTTrrrrrrraaaaaaannnnnnnssssssspppppppooooooorrrrrrrtttttttaaaaaaatttttttiiiiiiiooooooonnnnnnn 327.30 415.08 468.61 492.98 503.89 441.36 408.75 396.61 442.95 456.70 479.72 477.47 4444444 UUUUUUUtttttttiiiiiiillllllliiiiiiitttttttyyyyyyy 126.36 143.87 190.52 188.26 189.95 186.24 186.17 195.09 206.29 215.57 224.75 218.24 5555555 FFFFFFFiiiiiiinnnnnnnaaaaaaannnnnnnccccccceeeeeee 303.94 424.84 516.65 548.57 579.67 511.22 454.28 448.12 501.45 510.31 523.38 514.75 6666666 SSSSSSStttttttaaaaaaannnnnnndddddddaaaaaaarrrrrrrddddddd &&&&&&& PPPPPPPoooooooooooooorrrrrrr'''''''sssssss CCCCCCCooooooorrrrrrrpppppppooooooorrrrrrraaaaaaatttttttiiiiiiiooooooonnnnnnn (((((((1111111999999944444441111111-------44444443333333 ======= 11111110000000)))))))2222222 670.49 873.43 1,085.50 1,108.39 1,156.58 1,074.62 1,020.64 1,032.47 1,144.43 1,190.05 1,248.77 1,246.58 7777777 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((AAAAAAAuuuuuuuggggggg....... 33333331111111,,,,,,, 1111111999999977777773333333 ======= 55555550000000)))))))3333333 570.86 628.34 682.69 704.59 724.83 655.67 621.48 607.16 667.60 660.76 704.22 699.15 VVVVVVVooooooollllllluuuuuuummmmmmmeeeeeee ooooooofffffff tttttttrrrrrrraaaaaaadddddddiiiiiiinnnnnnnggggggg (((((((ttttttthhhhhhhooooooouuuuuuusssssssaaaaaaannnnnnndddddddsssssss ooooooofffffff ssssssshhhhhhhaaaaaaarrrrrrreeeeeeesssssss))))))) 8888888 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 409,740 523,254 666,534 605,576 639,744 712,710 790,238 808,816 668,932 680,397 847,135 756,932 9999999 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 22,567 24,390 28,870 25,447 26,473 32,721 33,331 31,946 27,266 28,756 31,015 31,774 Customer financing (millions of dollars, end-of-period balances) 11111110000000 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrr-------dddddddeeeeeeeaaaaaaallllllleeeeeeerrrrrrrsssssss4444444 97,400 126,090 140,980 147,700 154,370 147,800 137,540 130,160 139,710 140,980 153,240 151,530 FFFFFFFrrrrrrreeeeeeeeeeeeee cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt bbbbbbbaaaaaaalllllllaaaaaaannnnnnnccccccceeeeeeesssssss aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrrsssssss5555555 11111111111111 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn aaaaaaaccccccccccccccooooooouuuuuuunnnnnnntttttttsssssss6666666 22,540 31,410 40,250 29,840 31,820 38,460 41,970 43,500 40,620 40,250 36,880 38,850 11111112222222 CCCCCCCaaaaaaassssssshhhhhhh aaaaaaaccccccccccccccooooooouuuuuuunnnnnnntttttttsssssss 40,430 52,160 62,450 51,205 53,780 53,850 54,240 54,610 56,170 62,450 59,600 57,910 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 11111113333333 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn ssssssstttttttoooooooccccccckkkkkkksssssss 70 80 65 55 65 50 11111114444444 CCCCCCCooooooonnnnnnnvvvvvvveeeeeeerrrrrrrtttttttiiiiiiibbbbbbbllllllleeeeeee bbbbbbbooooooonnnnnnndddddddsssssss 50 60 50 50 50 50 11111115555555 SSSSSSShhhhhhhooooooorrrrrrrttttttt sssssssaaaaaaallllllleeeeeeesssssss 70 80 65 55 65 50 1. Daily data on prices are available upon request to the Board of Governors. For ordering 6. Series initiated in June 1984. address, see inside front cover. 7. Margin requirements, stated in regulations adopted by the Board of Governors pursuant 2. In July 1976 a financial group, composed of banks and insurance companies, was added to the Securities Exchange Act of 1934, limit the amount of credit that can be used to to the group of stocks on which the index is based. The index is now based on 400 industrial purchase and carry "margin securities" (as defined in the regulations) when such credit is stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and collateralized by securities. Margin requirements on securities are the difference between the 40 financial. market value (i00 percent) and the maximum loan value of collateral as prescribed by the 3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, previous readings in half. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. 4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the included credit extended against stocks, convertible bonds, stocks acquired through the initial margin required for writing options on securities, setting it at 30 percent of the current exercise of subscription rights, corporate bonds, and government securities. Separate report- market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in required initial margin, allowing it to be the same as the option maintenance margin required April 1984. by the appropriate exchange or self-regulatory organization; such maintenance margin rules 5. Free credit balances are amounts in accounts with no unfulfilled commitments to must be approved by the Securities and Exchange Commission. brokers and are subject to withdrawal by customers on demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1998 1999 11999966 11999977 11999988rr Aug. Sept. Oct. Nov. Dec. Jan. U.S. budget1 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 (-), total -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 (total) 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 U.S. Government; fiscal year totals: U.S. Office of Management accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous and Budget, Budget of the U.S. Government. liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic NonfinancialS tatistics • May 1999 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1997 1998 1998 1999 11999977 11999988 HI H2 HI H2 Dec. Jan. Feb. RECEIPTS 1 AU sources 1,579,292 1,721,798 845,527 773,812 922,632 825,055r 178,646 171,722 99,414 2 Individual income taxes, net 737,466 828,586 400,436 354,072 447,514 392,332 75,988 99,857 42,792 3 Withheld 580,207 646,483 292,252 306,865 316,309 339,144 69,628 58,527 59,055 4 Nonwithheld 250,753 281,527 191,050 58,069 219,136 65,204 7,094 42,324 2,949 5 Refunds 93,560 99,476 82,926 10,869 87,989 12,032 734 994 19,219 Corporation income taxes 6 Gross receipts 204,493 213,249 106,451 104,659 109,353 104,163 45,123 7,185 3,641 7 Refunds 22,198 24,593 9,635 10,135 14,220 14,250 2,749 2,055 2,465 8 Social insurance taxes and contributions, net . .. 539,371 571,831 288,251 260,795 312,713 268,466 48,601 54,928 46,683 9 Employment taxes and contributions2 506,751 540,014 268,357 247,794 293,520 256,142 47,869 53,725 43,735 10 Unemployment insurance 28,202 27,484 17,709 10,724 17,080 10,121 315 867 2,594 11 Other net receipts3 4,418 4,333 2,184 2,280 2,112 2,202 417 337 353 12 Excise taxes 56,924 57,673 28,084 31,133 29,922 33,366 5,446 4,806 3,892 13 Customs deposits 17,928 18,297 8,619 9,679 8,546 9,838 1,472 1,286 1,403 14 Estate and gift taxes 19,845 24,076 10,477 10,262 12,971 12,359 2,239 2,206 1,600 15 Miscellaneous receipts4 25,465 32,658 12,866 13,348 15,829r 18,735 2,527 3,509 1,868 OUTLAYS 16 All types 1,601,235 1,652,552 797,418 824,370 815,886 877,026 184,056 101,386 142,281 17 National defense 270,473 268,456 132,698 140,873 129,351 140,196 27,178 19,270 20,909 18 International affairs 15,228 13,109 5,740 9,420 4,610 8,297r 822 1,179 1,372 19 General science, space, and technology 17,174 18,219 8,938 10,040 9,426 10,142 1,918 1,398 1,312 20 Energy 1,483 1,270 803 411 957 699 151 -107 -189 21 Natural resources and environment 21,369 22,396 9,628 11,106 10,051 12,671 2,545 1,458 1,919 22 Agriculture 9,032 12,206 1,465 10,590 2,387 16,757 3,238 3,939 1,074 23 Commerce and housing credit -14,624 1,014 -7,575 -3,526 -2,483 4,046 -1,821 745 -1,237 24 Transportation 40,767 40,332 16,847 20,414 16,196 20,834 3,400 2,558 2,259 25 Community and regional development 11,005 9,720 5,678 5,749 4,863 6,972 1,505 709 720 26 Education, training, employment, and social services 53,008 54,919 25,080 26,851 25,928 28,216' 5,465 5,136 5,429 27 Health 123,843 131,440 61,809 63,552 65,053 67,836 11,757 10,984 11,100 28 Social security and Medicare 555,273 572,047 278,863 283,109 286,305 316,809 79,633 15,248 46,727 29 Income security 230,886 233,202 124,034 106,353 125,196 109,481 21,945 17,349 29,856 30 Veterans benefits and services 39,313 41,781 17,697 22,077 19,615 22,750 5,305 1,828 3,574 31 Administration of justice 20,197 22,832 10,670 10,212 11,287 12,041 2,132 2,090 1,832 32 General government 12,768 13,444 6,623 7,302 6,139 9,136r 2,198 188 274 33 Net interest5 244,013 243,359 122,655 122,620 122,345 116,954 20,029 19,947 18,049 34 Undistributed offsetting receipts6 -49,973 -47,194 -24,235 -22,795 -21,340 -25,795 -3,343 -2,530 -2,700 1. Functional details do not sum to total outlays for calendar year data because revisions to 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for receipts and 5. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 6. Rents and royalties for the outer continental shelf, U.S. government contributions for been fully distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 2000; monthly and half-year totals: U.S. Department of the Treadisability fund. sury, Monthly Treasury Statement of Receipts and Outlays of the US. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance All 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1996 1997 1998 IItteemm 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 3,787 4 Held by agencies 1,497 1,507 1,572 1,599 1,656 1,670 1,758 1,766 1,827 5 Agency securities 34 34 34 33 34 31 30 29 29 6 Held by public 27 26 26 26 27 26 26 26 29 7 Held by agencies 8 8 7 7 7 5 4 4 1 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 MEMO 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 11999955 11999966 11999977 11999988 Q1 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 3 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 6 Bonds 521.2 555.0 587.3 621.2 598.7 598.7 610.4 621.2 7 Inflation-indexed notes and bonds1 n.a. n.a. 33.0 50.6 41.5 50.1 41.9 50.6 8 Nonmarketable2 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 series 104.5 101.3 124.1 165.3 139.1 155.0 164.4 165.3 10 Foreign issues3 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 14 Government account series4 1,299.6 1,505.9 1,666.7 1,840.0 1,681.5 1,769.1 1,777.3 1,840.0 15 Non-interest-bearing 24.3 6.0 7.5 8.8 7.2 7.7 7.5 8.8 By holder 5 16 U.S. Treasury and other federal agencies and trust funds 1,304.5 1,497.2 1,655.7 1,826.8 1,670.4 1,757.6 1,765.6 1,826.8 17 Federal Reserve Banks 391.0 410.9 451.9 471.7 400.0 458.4 458.1 471.7 18 Private investors 3,294.9 3,411.2 3,393.4 3,334.0 3,430.7 3,330.6 3,301.0 3,334.0 19 Commercial banks 278.7 261.8 269.8 215.0 278.4 263.6 219.8 215.0 20 Money market funds 71.5 91.6 88.9 105.8 84.8 82.7 84.2 105.8 21 Insurance companies 241.5 214.1 224.9 186.0 182.2 183.6 186.1 186.0 22 Other companies 228.8 258.5 265.0 267.9 268.1 267.2 271.4 267.9 23 State and local treasuries6'7 469.6 482.5 493.0 490.0 444.8 470.0 487.4 490.0 Individuals 24 Savings bonds 185.0 187.0 186.5 186.7 186.3 186.0 186.0 186.7 25 Other securities 162.7 169.6 168.4 164.9 165.8 165.0 166.4 164.9 26 Foreign and international8 835.2 1,102.1 1,241.6 1,276.3 1,250.5 1,256.0 1,221.8 1,276.3 27 Other miscellaneous investors7'9 825.9 678.9 552.0 441.4 569.7 456.5 477.9 441.4 1. The U.S. Treasury first issued inflation-indexed securities during the first quarter of 7. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable 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. Nonmarketable 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 state 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 Nonfinancial Statistics • May 1999 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1998, 1998 1999 week 1999, week ending Item ending Nov. Dec. Jan. Dec. 30 Jan. 6 Jan. 13 Jan. 20 Jan. 27 Feb. 3 Feb. 10 Feb. 17 Feb. 24 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 35,010 30,397 32,211 27,504 33,896 33,260 36,190 26,287 31,081 28,338 30,512 29,067 Coupon securities, by maturity 2 Five years or less 111,370 76,147 100,641 56,767 72,845 118,962 104,193 96,151 112,778 113,895 91,824 108,612 3 More than five years 73,238 47,464 68,441 25,372 •59,579 86,526 65,107 59,782 70,930 79,070 68,136 62,772 4 Inflation-indexed 602 415 1,552 157 3,681 1,200 814 1,188 934 471 991 776 Federal agency 5 Discount notes 43,274 38,998 43,028 36,404 50,075 41,964 44,280 38,565 39,619 41,477 43,823 3399,,449999 Coupon securities, by maturity 6 One year or less 856 716 1,098 254 1,443 1,252 993 866 867 1,579 2,715 11,,776644 7 More than one year, but less than or equal to five years 3,461 3,491 6,150 1,616 4,396 5,894 8,140 5,777 6,254 9,021 5,200 6,995 8 More than five years 3,894 2,413 4,079 1,377 5,965 4,790 2,150 3,425 4,984 3,639 3,118 3,459 9 Mortgage-backed 68,053 59,167 82,210 24,278 77,398 122,401 61,252 72,919 66,974 100,554 69,208 61,462 By type of counterparty With interdealer broker 10 U.S. Treasury 121,806 84,186 113,084 56,682 92,672 132,703 117,858 103,225 117,573 123,277 103,664 114,347 11 Federal agency 2,223 2,193 3,806 1,390 3,582 4,185 4,001 3,347 3,965 3,623 4,064 3,229 12 Mortgage-backed 22,926 20,854 24,932 8,562 24,238 36,511 17,826 2222,,554477 21,099 3311,,993355 22,694 2233,,996677 With other 13 U.S. Treasury 98,413 70,237 89,761 53,118 77,329 107,245 88,445 80,182 98,150 98,497 87,798 86,880 14 Federal agency 49,261 43,424 50,548 38,260 58,297 49,715 51,561 45,285 47,758 52,093 50,791 48,487 15 Mortgage-backed 45,127 38,314 57,278 15,716 53,160 85,891 43,425 50,372 45,875 68,620 46,515 37,495 FUTURES TRANSACTIONS3 By type of deliverable security 16 U.S. Treasury bills 50 108 0 0 n.a. 0 n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 17 Five years or less 3,281 2,731 2,225 1,820 1,901 2,933 2,153 1,844 2,234 2,587 1,618 2,457 18 More than five years 16,164 10,292 15,953 5,211 12,874 21,370 14,667 13,964 16,756 16,565 15,906 16,597 19 Inflation-indexed 0 0 0 0 0 0 0 00 0 00 00 00 Federal agency 20 Discount notes 0 0 0 0 0 0 0 0 0 0 0 00 Coupon securities, by maturity 21 One year or less 0 0 0 0 0 0 0 00 00 00 00 00 22 More than one year, but less than or equal to five years 0 0 0 0 0 0 0 0 0 0 0 0 23 More than five years 0 0 0 0 0 0 0 0 0 0 0 0 24 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 25 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 26 Five years or less 1,145 934 1,673 733 1,241 1,632 1,818 2,054 1,327 1,005 783 1,710 27 More than five years 5,621 3,004 4,712 0 4,366 5,064 4,433 4,867 4,838 6,564 5,688 5,854 28 Inflation-indexed 0 0 0 0 0 0 0 00 0 00 0 00 Federal agency 29 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 30 One year or less 0 0 0 0 0 0 0 00 00 00 00 00 31 More than one year, but less than or equal to five years 0 0 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 912 806 1,309 0 1,287 1,262 2,319 674 529 1,121 839 650 1. Transactions are market purchases and sales of securities as reported to the Federal Forward transactions are agreements made in the over-the-counter market that specify Reserve Bank of New York by the U.S. government securities dealers on its published list of delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more than five business days. Forward Transactions are assumed to be evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi- contracts on U.S. Treasury and federal agency securities. ties) for which delivery is scheduled in five business days or less and "when-issued" NOTE, "n.a." indicates that data are not published because of insufficient activity. securities that settle on the issue date of offering. Transactions for immediate delivery of 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 All 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1998 1999 19 e 9 n 8 d , i w ng e ek 1999, week ending Nov. Dec. Jan. Dec. 30 Jan. 6 Jan. 13 Jan. 20 Jan. 27 Feb. 3 Feb. 10 Feb. 17 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills -6,782 -4,551 1,346 -4,368 2,991 4,374 88 -1,780 1,248 1,023 4,804 Coupon securities, by maturity 2 Five years or less 558 -5,388 -8,148 -4,058 -7,257 -9,810 -9,523 -4,327 -10,856 -3,817 -15,331 3 More than five years 7,272 3,180 432 1,075 3,875 2,353 -1,570 -1,966 -391 2,950 5,354 4 Inflation-indexed 1,798 1,186 1,973 1,099 1,999 2,020 2,015 1,923 1,869 1,900 1,980 Federal agency 5 Discount notes 17,666 20,788 18,818 17,475 20,326 20,409 16,352 18,243 19,092 20,929 20,165 Coupon securities, by maturity 6 One year or less 2,188 2,075 2,858 2,000 2,780 2,726 2,832 3,158 2,727 3,899 3,340 7 More than one year, but less than or equal to five years 3,208 3,093 4,441 1,647 2,665 3,578 4,664 6,083 5,350 3,949 3,411 8 More than five years 5,584 3,499 4,545 1,839 4,621 3,873 4,622 5,771 3,325 2,847 2,918 9 Mortgage-backed 37,219 38,689 23,961 37,624 36,834 24,444 20,520 18,267 19,792 12,377 16,853 NET FUTURES POSITIONS4 By type of deliverable security 10 U.S. Treasury bills 271 507 n.a. n.a. 0 0 0 0 0 0 0 Coupon securities, by maturity 11 Five years or less -4,399 -4,012 -777 -2,852 -598 -490 -716 -1,803 144 23 161 12 More than five years -27,583 -24,757 -20,814 -22,324 -25,164 -20,011 -18,637 -21,546 -18,225 -12,831 -16,884 13 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 16 More than one year, but less than or equal to five years 0 0 0 0 0 0 0 0 0 0 0 17 More than five years 0 0 0 0 0 0 0 0 0 0 0 18 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 NET OPTIONS POSITIONS By 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 -2,128 -3,155 -1,090 -3,282 -1,935 -58 838 -1,959 -3,481 -2,858 -1,209 21 More than five years -1,602 -1,387 -1,004 -1,624 -3,135 -1,569 -323 62 122 -2,984 -1,024 22 Inflation-indexed n.a. 0 n.a. 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, by 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 to five years 0 0 0 0 0 0 0 0 0 0 0 26 More than five years n.a. n.a. n.a. 0 0 0 0 0 0 0 0 27 Mortgage-backed 2,380 1,213 3,410 1,286 2,032 3,064 3,736 4,361 3,850 4,936 5,607 Financing5 Reverse repurchase agreements 28 Overnight and continuing 240,639 242,653 239,627 228,433 232,698 231,128 249,350 239,434 248,218 249,836 276,427 29 Term 780,552 807,304 799,672 820,439 716,925 789,354 804,992 839,655 862,566 898,988 709,335 Securities borrowed 30 Overnight and continuing 210,066 205,654 222,768 204,256 216,303 221,630 226,469 222,556 228,350 227,431 228,684 31 Term 107,922 112,684 105,788 117,152 110,907 104,063 105,938 105,330 101,670 103,907 98,571 Securities received as pledge 32 Overnight and continuing 3,174 2,952 2,509 2,478 2,537 2,480 2,537 2,504 2,477 2,403 2,306 33 Term 63 67 n.a. 0 0 0 0 0 0 0 0 Repurchase agreements 34 Overnight and continuing 588,736 608,988 633,520 576,474 610,018 620,080 674,334 625,976 634,074 661,367 683,030 35 Term 709,894 713,037 695,303 738,282 622,805 668,796 702,050 748,755 745,088 782,905 589,106 Securities loaned 36 Overnight and continuing 8,943 9,369 10,040 9,987 10,325 9,871 10,455 9,793 9,616 10,997 12,722 37 Term 4,008 3,567 n.a. 0 0 0 0 0 0 0 0 Securities pledged 38 Overnight and continuing 46,851 47,565 48,487 48,920 48,513 47,819 48,445 48,025 50,497 49,509 49,112 39 Term 3,556 5,075 5,776 5,287 5,483 5,777 5,725 5,905 6,076 6,015 4,567 Collateralized loans 40 Total 23,528 21,850 17,735 18,012 17,205 17,062 16,285 18,604 20,727 19,414 18,259 1. Data for positions and financing are obtained from reports submitted to the Federal securities are included when the time to delivery is more than five business days. Forward Reserve Bank of New York by the U.S. government securities dealers on its published list of contracts for mortgage-backed agency securities are included when the time to delivery is primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar more than thirty business days. days of the report week are assumed to be constant. Monthly averages are based on the 4. Futures positions reflect standardized agreements arranged on an exchange. All futures number of calendar days in the month. positions are included regardless of time to delivery. 2. Securities positions are reported at market value. 5. Overnight financing refers to agreements made on one business day that mature on the 3. Net outright positions include immediate and forward positions. Net immediate posi- next business day; continuing contracts are agreements that remain in effect for more than one tions include securities purchased or sold (other than mortgage-backed agency securities) that business day but have no specific maturity and can be terminated without advance notice by have been delivered or are scheduled to be delivered in five business days or less and either party; term agreements have a fixed maturity of more than one business day. Financing "when-issued" securities that settle on the issue date of offering. Net immediate positions for data are reported in terms of actual funds paid or received, including accrued interest. mortgage-backed agency securities include securities purchased or sold that have been NOTE, "n.a." indicates that data are not published because of insufficient activity. delivered or are scheduled to be delivered in thirty business days or less. Forward positions reflect agreements made in the over-the-counter market that specify delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • May 1999 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1998 AAggeennccyy 11999955 11999966 11999977 11999988 Aug. Sept. Oct. Nov. Dec. 1 Federal and federally sponsored agencies 844,611 925,823 1,022,609 1,296,477 1,130,264 1,172,575 1,207,495 1,255,412 1,296,477 2 Federal agencies 37,347 29,380 27,792 26,502 26,668 26,691 26,350 26,315 26,502 3 Defense Department1 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2,3 2,050 1,447 552 n.a. n.a. n.a. n.a. n.a. n.a. 5 Federal Housing Administration4 97 84 102 205 155 174 188 205 205 6 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6 5,765 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority 29,429 27,853 27,786 26,496 26,507 26,685 26,344 26,309 26,496 9 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 Federally sponsored agencies7 807,264 896,443 994,817 1,269,975 1,103,596 1,145,884 1,181,145 1,229,097 1,269,975 11 Federal Home Loan Banks 243,194 263,404 313,919 382,131 334,494 343,188 367,274 373,755 382,131 12 Federal Home Loan Mortgage Corporation 119,961 156,980 169,200 287,396 213,800 232,994 246,708 267,890 287,396 13 Federal National Mortgage Association 299,174 331,270 369,774 460,291 423,188 430,582 431,300 446,377 460,291 14 Farm Credit Banks8 57,379 60,053 63,517 63,488 57,910 64,332 60,720 66,086 63,488 15 Student Loan Marketing Association9 47,529 44,763 37,717 35,399 33,350 33,760 33,981 33,928 35,399 16 Financing Corporation10 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation11 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt 78,681 58,172 49,090 44,129 42,396 45,955 44,952 44,824 44,129 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 2,044 1,431 552 A • • • • 21 Postal Service6 5,765 n.a. n.a. T T T T T T 22 Student Loan Marketing Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority 3,200 n.a. n.a. 1 1 1 I I 1 24 United States Railway Association6 n.a. n.a. n.a. 1 t t i t • Other lending14 25 Farmers Home Administration 21,015 18,325 13,530 9,500 9,756 9,500 9,500 9,500 9,500 26 Rural Electrification Administration 17,144 16,702 14,898 14,091 14,284 14,166 14,191 14,199 14,091 27 Other 29,513 21,714 20,110 20,538 18,356 22,289 21,261 21,125 20,538 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 1998 1999 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11999966 11999977 11999988 oorr uussee July Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 All issues, new and refunding' 171,222 214,694 262,342 22,599 20,344 17,526 19,528 19,325 24,288 16,926 16,233 By type of issue 2 General obligation 60,409 69,934 87,015 6,515 5,812 5,619 6,791 5,433 8,632 6,925 6,786 3 Revenue 110,813 134,989 175,327 16,084 14,532 11,907 12,737 13,892 15,656 10,001 9,446 By type of issuer 4 State 13,651 18,237 23,506 1,972 1,483 1,280 1,865 778 2,561 318 1,837 5 Special district or statutory authority2 113,228 134,919 178,421 16,244 14,233 12,490 12,924 13,473 15,937 12,929 11,145 6 Municipality, county, or township 44,343 70,558 60,173 5,673 4,628 3,756 4,739 5,073 5,790 3,679 3,251 7 Issues for new capital 112,298 135,519 160,568 15,895 11,258 9,106 12,736 12,452 14,517 11,917 10,674 By use of proceeds 8 Education 26,851 31,860 36,904 2,733 2,435 2,041 2,605 2,353 2,766 2,936 3,751 9 Transportation 12,324 13,951 19,926 3,677 1,982 918 1,598 806 1,800 1,706 628 10 Utilities and conservation 9,791 12,219 21,037 795 1,179 831 2,785 2,225 984 672 394 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 1,002 709 315 471 638 1,376 452 343 13 Other purposes 32,462 35,095 42,450 4,674 2,764 2,726 3,359 3,242 4,477 4,439 3,207 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment Dealer's 2. Includes school districts. Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1998 1999 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, oorr iissssuueerr 11999966 11999977 11999988 June July' Aug/ Sept/ Oct/ Nov/ Dec/ Jan. 1 All issues1 n.a. n.a. n.a. 86,757 102,860 71,696 61,626 89,567 71,070 103,950 72,089 2 Bonds2 n.a. n.a. n.a. 70,313 93,243 68,133 57,145 81,352 62,692 95,910 65,374 By type of offering 3 Public, domestic 465,489 537,880 n.a. 56,965 78,280 54,266 45,745 71,134 48,256 80,556 54,513 4 Private placement, domestic3 n.a. 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 n.a. 5,748 7,363 6,267 3,800 2,618 6,837 7,754 3,261 By industry group 6 Nonfinancial n.a. n.a. n.a. 20,456 24,444 24,821 20,399 16,562 16,632 31,911 21,397 7 Financial 429,157 510,953 n.a. 49,857 68,799 43,313 36,746 64,790 46,060 63,999 43,977 8 Stocks2 122,006 117,880 126,755r 17,111 9,772 3,725 4,640 8,655 8,902 8,670 6,742 By type of offering 9 Public 122,006 117,880 126,755r 17,111 9,772 3,725 4,640 8,655 8,902 8,670 6,742 10 Private placement3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 11 Nonfinancial 80,460 60,386 74,113r 10,248 6,390 2,560 2,266 5,879 6,145 7,559 3,321 12 Financial 41,546 57,494 52,642r 6,863 3,382 1,165 2,374 2,776 2,757 1,111 3,421 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 NonfinancialS tatistics • May 1999 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1998 1999 IItteemm 11999977 11999988 July Aug. Sept. Oct. Nov. Dec. Jan.r Feb. 1 Sales of own shares2 1,190,900 1,461,430 134,801 111,587 118,478 116,471 112,627 140,700 161,889 132,007 2 Redemptions of own shares 918,728 1,217,022 107,368 118,812 107,049 108,838 89,702 134,289 135,713 127,911 3 Net sales3 272,172 244,408 27,433 -7,225 11,429 7,633 22,925 6,412 26,176 4,097 4 Assets4 3,409,315 4,173,531 3,957,093 3,479,401 3,625,841 3,804,591 4,002,089 4,173,531 4,298,071 4,179,965 5 Cash5 174,154 191,393 195,966 194,435 211,253 210,026 207,422 191,393 203,470 198,267 6 Other 3,235,161 3,982,138 3,761,127 3,284,967 3,414,588 3,594,565 3,794,667 3,982,138 4,094,601 3,981,698 1. Data include stock, hybrid, and bond mutual funds and exclude money market mutual 4. Market value at end of period, less current liabilities. funds. 5. Includes all U.S. Treasury securities and other short-term debt securities. 2. Excludes reinvestment of net income dividends and capital gains distributions and share SOURCE. Investment Company Institute. Data based on reports of membership, which issue of conversions from one fund to another in the same group. comprises substantially all open-end investment companies registered with the Securities and 3. Excludes sales and redemptions resulting from transfers of shares into or out of money Exchange Commission. Data reflect underwritings of newly formed companies after their market mutual funds within the same fund family. initial offering of securities. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data at seasonally adjusted annual rates 1997 1998 AAccccoouunntt 11999966 11999977 11999988 Q1 Q2 Q3 Q4 QL Q2 Q3 Q4 1 Profits with inventory valuation and capital consumption adjustment 750.4 817.9 824.6 794.3 815.5 840.9 820.8 829.2 820.6 827.0 821.7 2 Profits before taxes 680.2 734.4 717.8 712.4 729.8 758.9 736.4 719.1 723.5 720.5 708.1 3 Profits-tax liability 226.1 246.1 240.1 238.8 241.9 254.2 249.3 239.9 241.6 243.2 235.6 4 Profits after taxes 454.1 488.3 477.7 473.6 487.8 504.7 487.1 479.2 481.8 477.3 472.5 5 Dividends 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 192.3 213.2 198.5 199.5 213.2 229.5 210.6 201.8 203.7 198.3 190.2 7 Inventory valuation -1.2 6.9 14.5 8.1 10.3 4.8 4.3 25.3 7.8 11.7 13.4 8 Capital consumption adjustment 71.4 76.6 92.3r 73.8 75.5 77.2 80.1 84.9 89.4 94.8 100.2r 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 AAccccoouunntt 11999966 11999977 11999988 Q2 Q3 Q4 Ql Q2 Q3r Q4 ASSETS 1 Accounts receivable, gross2 637.1 663.3 727.1 651.6 660.5 663.3 667.2 676.0 688.6 727.1 2 Consumer 244.9 256.8 265.4 255.1 254.5 256.8 251.7 251.3 254.9 265.4 3 Business 309.5 318.5 355.5 311.7 319.5 318.5 325.9 334.9 335.1 355.5 4 Real estate 82.7 87.9 106.2 84.8 86.4 87.9 89.6 89.9 98.5 106.2 5 LESS: Reserves for unearned income 55.6 52.7 53.6 57.2 54.6 52.7 52.1 53.2 52.4 53.6 6 Reserves for losses 13.1 13.0 13.3 13.3 12.7 13.0 13.1 13.2 13.2 13.3 7 Accounts receivable, net 568.3 597.6 660.3 581.2 593.1 597.6 601.9 609.6 622.9 660.3 8 All other 290.0 312.4 321.1 306.8 289.1 312.4 329.7 340.1 313.7 321.1 9 Total assets 858.3 910.0 981.4 887.9 882.3 910.0 931.6 949.7 936.6 981.4 LIABILITIES AND CAPITAL 10 Bank loans 19.7 24.1 25.0 18.8 20.4 24.1 22.0 22.3 24.9 25.0 11 Commercial paper 177.6 201.5 232.3 193.7 189.6 201.5 211.7 225.9 226.9 232.3 Debt 12 Owed to parent 60.3 64.7 64.6 60.0 61.6 64.7 64.6 60.0 58.3 64.6 13 Not elsewhere classified 332.5 328.8 358.4 345.3 322.8 328.8 338.2 348.7 337.6 358.4 14 All other liabilities 174.7 189.6 194.6 171.4 190.1 189.6 193.1 188.9 185.4 194.6 15 Capital, surplus, and undivided profits 93.5 101.3 106.6 98.7 97.9 101.3 102.1 103.9 103.6 106.6 16 Total liabilities and capital 858.3 910.0 981.4 887.9 882.3 910.0 931.6 949.7 936.6 981.4 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses, and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A33 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables1 Billions of dollars, amounts outstanding 1998 1999 TTyyppee ooff ccrreeddiitt 11999966 11999977 11999988rr Aug. Sept. Oct. Nov. Dec/ Jan. Seasonally adjusted 1 Total 761.9 809.8 874.9 845.8r 852.6r 865.9r 871.1r 874.9 884.0 2 Consumer 307.7 327.7 352.5 338.5r 343.0r 350.4r 352. lr 352.5 352.4 3 Real estate 111.9 121.1 131.4 128.1 128.8 132.3 134.3 131.4 135.7 4 Business 342.4 361.0 391.0 379.2 380.7 383.2 384.7 391.0 396.0 Not seasonally adjusted 5 Total 769.7 818.1 884.0 842.0r 849.0r 864.2r 872.8r 884.0 8843 6 Consumer 310.6 330.9 356.1 339.9r 344.0r sso.o1 352.2r 356.1 351.7 7 Motor vehicles loans 86.7 87.0 103.1 95.3 96.2 97.6 99.0 103.1 102.8 8 Motor vehicle leases 92.5 96.8 93.3 96.9 94.9 94.6 94.4 93.3 88.8 9 Revolving2 32.5 38.6 32.3 29.6r 28.4r 33.3r 33.lr 32.3 32.4 10 Other3 33.2 34.4 33.1 34.7 34.6 34.6 34.6 33.1 32.8 Securitized assets4 11 Motor vehicle loans 36.8 44.3 54.8 49.2 51.8 51.6 53.4 54.8 55.9 12 Motor vehicle leases 8.7 10.8 12.7 10.7 14.2 14.4 14.2 12.7 12.5 13 Revolving 0.0 0.0 8.7 5.3 5.3 5.3 5.3 8.7 8.6 14 Other 20.1 19.0 18.1 18.2 18.8 18.6 18.4 18.1 17.9 15 Real estate 111.9 121.1 131.4 128.1 128.8 132.3 134.3 131.4 135.7 16 One- to four-family 52.1 59.0 75.7 68.6 68.4 72.2 74.1 75.7 80.1 17 Other 30.5 28.9 26.6 28.7 30.1 30.2 30.7 26.6 26.9 Securitized real estate assets4 18 One- to four-family 28.9 33.0 29.0 30.7 30.2 29.8 29.4 29.0 28.6 19 Other 0.4 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 20 Business 347.2 366.1 396.5 374.0 376.2 382.0 386.3 396.5 396.9 21 Motor vehicles 67.1 63.5 79.6 62.5 65.5 68.5 70.9 79.6 79.1 22 Retail loans 25.1 25.6 28.1 29.6 30.0 30.4 29.4 28.1 28.4 23 Wholesale loans5 33.0 27.7 32.8 22.0 24.2 27.0 30.3 32.8 31.9 24 Leases 9.0 10.2 18.7 10.9 11.3 11.1 11.2 18.7 18.9 25 Equipment 194.8 203.9 198.0 212.0 210.8 211.5 212.0 198.0 197.6 26 Loans 59.9 51.5 50.4 51.8 47.9 47.2 47.8 50.4 49.7 27 Leases 134.9 152.3 147.6 160.2 162.9 164.3 164.2 147.6 147.8 28 Other business receivables6 47.6 51.1 69.9 57.0 58.9 59.6 60.4 69.9 72.5 Securitized assets4 29 Motor vehicles 24.0 33.0 29.2 25.9 24.5 25.0 25.8 29.2 28.2 30 Retail loans 2.7 2.4 2.6 2.1 2.0 1.9 2.4 2.6 2.5 31 Wholesale loans 21.3 30.5 24.7 23.8 22.5 23.2 23.4 24.7 23.8 32 Leases 0.0 0.0 1.9 0.0 0.0 0.0 0.0 1.9 1.9 33 Equipment 11.3 10.7 13.0 11.4 11.3 12.0 11.8 13.0 12.7 34 Loans 4.7 4.2 6.6 4.9 4.9 5.6 5.4 6.6 6.3 35 Leases 6.6 6.5 6.4 6.4 6.4 6.4 6.4 6.4 6.4 36 Other business receivables6 2.4 4.0 6.8 5.2 5.3 5.2 5.3 6.8 6.8 NOTE. This table has been revised to incorporate several changes resulting from the before deductions for unearned income and losses. Components may not sum to totals benchmarking of finance company receivables to the June 1996 Survey of Finance Compa- because of rounding. nies. In that benchmark survey, and in the monthly surveys that have followed, more detailed 2. Excludes revolving credit reported as held by depository institutions that are subsidiarbreakdowns have been obtained for some components. In addition, previously unavailable ies of finance companies. data on securitized real estate loans are now included in this table. The new information has 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of resulted in some reclassification of receivables among the three major categories (consumer, consumer goods such as appliances, apparel, boats, and recreation vehicles. real estate, and business) and in discontinuities in some component series between May and 4. Outstanding balances of pools upon which securities have been issued; these balances June 1996. are no longer carried on the balance sheets of the loan originator. Includes finance company subsidiaries of bank holding companies but not of retailers and 5. Credit arising from transactions between manufacturers and dealers, that is, floor plan banks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For financing. ordering address, see inside front cover. 6. Includes loans on commercial accounts receivable, factored commercial accounts, and 1. Owned receivables are those carried on the balance sheet of the institution. Managed receivable dealer capital; small loans used primarily for business or farm purposes; and receivables are outstanding balances of pools upon which securities have been issued; these wholesale and lease paper for mobile homes, campers, and travel trailers. balances are no longer carried on the balance sheets of the loan originator. Data are shown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • May 1999 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1998 1999 IItteemm 11999966 11999977 11999988 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 182.4 180.1 195.2 191.5 192.7 201.4 192.1 206.0 202.3 204.1 2 Amount of loan (thousands of dollars) 139.2 140.3 151.1 150.4 150.8 155.8 148.1 159.0 153.3 155.4 3 Loan-to-price ratio (percent) 78.2 80.4 80.0 81.3 80.9 79.8 79.5 79.4 78.0 78.2 4 Maturity (years) 27.2 28.2 28.4 28.6 28.7 28.6 28.3 28.7 28.4 28.7 5 Fees and charges (percent of loan amount)2 1.21 1.02 0.89 0.87 0.85 0.86 0.76 0.98 1.01 0.92 Yield (percent per year) 6 Contract rate' 7.56 7.57 6.95 6.95 6.85 6.72 6.68 6.80 6.81 6.78 7 Effective rate1'3 7.77 7.73 7.08 7.09 6.98 6.85 6.80 6.94 6.96 6.92 8 Contract rate (HUD series)4 8.03 7.76 7.00 6.86 6.64 6.86 6.84 6.83 6.80 7.02 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 8.19 7.89 7.04 7.03 6.53 7.07 7.02 7.06 7.08 7.10 10 GNMA securities6 7.48 7.26 6.43 6.42 6.05 6.10 6.25 6.18 6.18 6.42 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 287,052 316,678 414,515 366,890 375,665 386,452 399,804 414,515 418,323 431,836 12 FHA/VA insured 30,592 31,925 33,770 32,929 32,903 32,814 33,420 33,770 33,483 34,000 13 Conventional 256,460 284,753 380,745 333,961 342,762 353,638 366,384 380,745 384,840 397,836 14 Mortgage transactions purchased (during period) 68,618 70,465 188,448 14,316 15,681 18,967 23,557 26,222 14,005 22,029 Mortgage commitments (during period) 15 Issued7 65,859 69,965 193,795 17,016 16,282 30,551 17,994 16,803 20,754 26,509 16 To sell8 130 1,298 1,880 233 249 393 0 434 0 0 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 17 Total 137,755 164,421 255,010 206,856 216,521 231,458 242,270 255,010 257,062 262,921 18 FHA/VA insured 220 177 785 489 569 569 602 785 387r 400 19 Conventional 137,535 164,244 254,225 206,367 215,952 230,889 241,668 254,225 256,675r 262,521 Mortgage transactions (during period) 20 Purchases 125,103 117,401 267,402 21,507 25,366 20,629 23,986 34,299 27,672 25,225 21 Sales 119,702 114,258 250,565 20,634 24,294 19,472 22,660 28,024 31,431r 24,231 22 Mortgage commitments contracted (during period)9 128,995 120,089 281,899 24,694 23,375 25,025 28,903 29,703 23,900 24,829 1. Weighted averages based on sample surveys of mortgages originated by major institu- 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. assuming prepayment at the end of ten years. 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mortgages; from U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Mortgage Corporation's mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured exclude swap activity. by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A35 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1997 1998 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999955 11999966 11999977 Q4 Ql Q2 Q3 Q4P 1 All holders 4,610,350r 4,928,367r 5,257,422 5,257,422r 5,371,196r 5,487,535r 5,623,695 5,782,027 By type of property 2 One- to four-family residences 3,532,977' 3,755,719r 3,998,763 3,998,763r 4,082,959r 4,163,964r 4,268,149 4,375,730 3 Multifamily residences 286,375r 309,321r 329,733 329,733r 338,439r 347,449r 353,546 362,092 4 Nonfarm, nonresidential 705,937r 776,193r 838,627 838,627r 858,641r 883,476r 908,192 949,230 5 Farm 84,561 87,134 90,299 90,299r 91,157r 92,646r 93,808 94,974 By type of holder 6 Major financial institutions l,900,089r l,981,885r 2,083,978 2,083,978r 2,114,528r 2,121,939r 2,137,412 2,193,378 7 Commercial banks2 1,090,189 1,145,389 1,245,315 l,245,315r l,271,037r l,281,849r 1,295,768 1,337,664 8 One- to four-family 669,434 698,508 762,533 762,533r 779,941r 785,019r 784,987 810,680 9 Multifamily 43,837 46,675 50,651 50,65 lr 51,688r 52,077r 53,049 53,586 10 Nonfarm, nonresidential 353,088 375,322 405,144 405,144r 411,949r 416,434r 429,045 444,363 11 Farm 23,830 24,883 26,986 26,986r 27,458r 28,319r 28,688 29,034 12 Savings institutions3 596,763 628,335 631,822 631,822 637,012 632,359r 634,244 643,773 13 One- to four-family 482,353 513,712 520,672 520,672 527,036 522,088r 525,842 533,680 14 Multifamily 61,987 61,570 59,543 59,543 59.074 58,908r 56,706 56,806 15 Nonfarm, nonresidential 52,135 52,723 51,252 51,252 50,532 50,978r 51,297 52,871 16 Farm 288 331 354 354 369 386r 399 417 17 Life insurance companies 213,137r 208,161r 206,841 206,84 lr 206.480r 207,730r 207,399 211,940 18 One- to four-family 8,890r 6,977r 7,187 7,187r 7,174r 7,218r 7,206 7,364 19 Multifamily 28,714r 30,750r 30,402 30,402r 31,156r 31,849r 31,661 32,354 20 Nonfarm, nonresidential 165,876r 160,314r 158,780 158,780r 157,696r 158,146r 158,032 161,492 21 Farm 9,657r 10,120r 10,472 10,472r 10,454r 10,517r 10,500 10,730 22 Federal and related agencies 308,757r 295,192r 286,167 286,167r 286,877r 287.1611 287,125 291.858 23 Government National Mortgage Association 2 2 8 8 8 8 7 7 24 One- to four-family 2 2 8 8 8 8 7 7 25 Multifamily 0 0 0 0 0 0 0 0 26 Farmers Home Administration4 41,791 41,596 41,195 41,195 40,972 40,921 40.907 40,851 27 One- to four-family 17,705 17,303 17,253 17,253 17,160 17,059 17,025 16,895 28 Multifamily 11,617 11,685 11.720 11,720 11,714 11,722 11,736 11,739 29 Nonfarm, nonresidential 6,248 6,841 7,370 7,370 7,369 7,497 7,566 7,705 30 Farm 6,221 5,768 4,852 4,852 4,729 4,644 4,579 4,513 31 Federal Housing and Veterans' Administrations 9,809 6,244 3,821 3,821 3,694 3,631 3,405 3,405 32 One- to four-family 5,180 3,524 1,767 1,767 1,641 1,610 1,550 1,550 33 Multifamily 4,629 2,719 2,054 2,054 2,053 2,021 1,855 1,855 34 Resolution Trust Corporation 1,864 0 0 0 0 0 0 0 35 One- to four-family 691 0 0 0 0 0 0 0 36 Multifamily 647 0 0 0 0 0 0 0 37 Nonfarm, nonresidential 525 0 0 0 0 0 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 4,303 2,431 724 724 786 564 482 361 40 One- to four-family 492 365 109 109 118 85 72 54 41 Multifamily 428 413 123 123 134 96 82 61 42 Nonfarm, nonresidential 3,383 1,653 492 492 534 384 328 245 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 178,807r 168,813r 161,308 161,308r 160,048r 159,816r 159,104 157,675 45 One- to four-family 163,648r 155,008r 149,831 149,831r 149,254r 149,383r 149,069 147,594 46 Multifamily 15.159 13,805 11,477 11,477 10,794 10,433 10,035 10,081 47 Federal Land Banks 28,428 29,602 30,657 30,657 31,005 31,352 32,009 32,473 48 One- to four-family 1,673 1,742 1,804 1,804 1,824 1,845 1,883 1,911 49 Farm 26,755 27,860 28,853 28,853 29,181 29,507 30,126 30,562 50 Federal Home Loan Mortgage Corporation 43,753 46,504 48,454 48,454 50,364 50,869 51,211 57,085 51 One- to four-family 39,901 41,758 42,629 42,629 44,440 44,597 44,254 49,106 52 Multifamily 3,852 4,746 5,825 5,825 5,924 6,272 6,957 7,979 53 Mortgage pools or trusts5 1,863,210 2,064,882 2,272,999 2,272,999 2,330,674 2,442,603 2,548,050 2,631,790 54 Government National Mortgage Association 472,283 506,340 536,810 536,810 533,011 537,586 541,431 537,431 55 One- to four-family 461,438 494,158 523,156 523,156 519,152 523,243 526,934 522,483 56 Multifamily 10,845 12,182 13,654 13,654 13,859 14,343 14,497 14,948 57 Federal Home Loan Mortgage Corporation 515,051 554,260 579,385 579,385 583,144 609,791 635,726 646,459 58 One- to four-family 512,238 551,513 576,846 576,846 580,715 607,469 633,124 643.465 59 Multifamily 2,813 2,747 2,539 2,539 2,429 2,322 2,602 2,994 60 Federal National Mortgage Association 582,959 650,780 709,582 709,582 730,832 761,359 798,460 834,518 61 One- to four-family 569,724 633,210 687,981 687,981 708,125 737,631 770,979 804,205 62 Multifamily 13,235 17,570 21,601 21,601 22,707 23,728 27,481 30,313 63 Farmers Home Administration4 11 3 2 2 2 2 2 1 64 One- to four-family 2 0 0 0 0 0 0 0 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential 5 0 0 0 0 0 0 0 67 Farm 4 3 2 2 2 2 2 1 68 Private mortgage conduits 292,906 353,499 447,219 447,219 483,685 533,865 572,431 613,382 69 One- to four-family6 227,800 261,900 318,000 318,000 336,824 364,316 391,736 410,900 70 Multifamily 15,584 21,967 29,264 29,264 33,477 38,144 40,893 44,690 71 Nonfarm, nonresidential 49,522 69,633 99,955 99,955 113,384 131,405 139,802 157,792 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 538,295r 586,408r 614,279 614,279r 639,117r 635,833r 651,109 665,001 74 One- to four-family 371,806r 376,039r 388,988 388,988r 409,548r 402,395r 413,480 425,836 75 Multifamily 73,528r 82,492r 90,879 90,879r 93,430r 95,534r 95,992 94,686 76 Nonfarm, nonresidential 75,154r 109,707r 115,633 115,633r 117,176r 118,633r 122,123 124,762 77 Farm 17,806r 18,169r 18,779 18,779r 18,964r 19,271r 19,514 19,717 1. Multifamily debt refers to loans on structures of five or more units. 6. Includes securitized home equity loans. 2. Includes loans held by nondeposit trust companies but not loans held by bank trust 7. Other holders include mortgage companies, real estate investment trusts, state and local departnents. credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and 3. Includes savings banks and savings and loan associations. finance companies. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from SOURCE. Based on data from various institutional and government sources. Separation of FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting nonfarm mortgage debt by type of property, if not reported directly, and interpolations and changes by the Farmers Home Administration. extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by Line 69 from Inside Mortgage Securities and other sources. the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • May 1999 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1998r 1999 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999966 11999977 11999988rr Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted 1 Total 1,181,913 1,233,099 1,301,044 1,276,769 1,284,393 1,295,981 1,297,926 1,301,044 1,315,711 2 Automobile 392,321 413,369 445,733 432,240 434,964 436,966 441,342 445,733 452,218 3 Revolving.. 499,486 531,140 560,240 548,158 551,520 557,441 556,280 560,240 565,942 4 Other2 290,105 288,590 295,071 296,371 297,908 301,575 300,304 295,071 297,552 Not seasonally adjusted 5 Ibtal 1,211,590 1,264,103 1,333,584 1,276,971 1,287,413 1,298,623 1,305,793 1,333,584 1,324,509 By major holder 6 Commercial banks 526,769 512,563 508,932 498,178 497,870 502,076 498,838 508,932 506,313 7 Finance companies 152,391 160,022 168,491 159,565 159,141 165,573 166,622 168,491 168,039 8 Credit unions 144,148 152,362 157,209 154,146 155,167 156,043 156,521 157,209 157,583 9 Savings institutions 44,711 47,172 51,611 49,648 50,307 50,966 51,625 51,611 52,047 10 Nonfinancial business3 77,745 78,927 74,916 65,991 65,535 65,957 66,609 74,916 70,706 11 Pools of securitized assets4.. 265,826 313,057 372,425 349,443 359,393 358,008 365,578 372,425 369,821 By major type of credit? 12 Automobile 395,609 416,962 449,677 434,924 438,965 442,255 445,467 449,677 450,310 13 Commercial banks 157,047 155,254 158,072 155,508 156,287 156,788 157,126 158,072 159,886 14 Finance companies 86,690 87,015 103,094 95,257 96,183 97,637 98,954 103,094 102,814 15 Pools of securitized assets4 51,719 64,950 72,955 70,766 72,146 71,788 72,582 72,955 73,111 16 Revolving 522,860 555,858 586,240 544,978 548,849 555,803 558,955 586,240 574,915 17 Commercial banks 228,615 219,826 210,346 200,424 197,615 200,869 196,923 210,346 204,530 18 Finance companies 32,493 38,608 32,309 29,569 28,375 33,309 33,056 32,309 32,413 19 Nonfinancial business3 . .. 44,901 44,966 39,200 34,009 33,743 33,762 33,756 39,200 36,228 20 Pools of securitized assets4 188,712 221,465 272,327 251,165 259,348 258,139 265,311 272,327 269,902 21 Other 293,121 291,283 297,667 297,069 299,599 300,565 301,371 297,667 299,284 22 Commercial banks 141,107 137,483 140,514 142,246 143,968 144,419 144,789 140,514 141,897 23 Finance companies 33,208 34,399 33,088 34,739 34,583 34,627 34,612 33,088 32,812 24 Nonfinancial business3 ... 32,844 33,961 35,716 31,982 31,792 32,195 32,853 35,716 34,478 25 Pools of securitized assets4 25,395 26,642 27,143 27,512 27,899 28,081 27,685 27,143 26,808 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 1998 1999 IItteemm 11999966 11999977 11999988 July Aug. Sept. Oct. Nov. Dec. Jan. INTEREST RATES Commercial banks2 1 48-month new car 9.05 9.02 8.72 n.a. 8.71 n.a. n.a. 8.62 2 24-month personal 13.54 13.90 13.74 n.a. 13.45 n.a. n.a. 13.75 n.a. n.a. Credit card plan 3 All accounts 15.63 15.77 15.71 n.a. 15.83 n.a. n.a. 15.69 4 Accounts assessed interest 15.50 15.57 15.63 n.a. 15.85 n.a. n.a. 15.72 n.a. n.a. Auto finance companies 5 New car 9.84 7.12 6.30 6.23 6.00 5.92 6.33 6.79 6.43 6.22 6 Used car 13.53 13.27 12.64 12.51 12.68 12.65 12.58 12.41 12.31 11.81 OTHER TERMS3 Maturity (months) 7 New car 51.6 54.1 52.1 51.7 53.0 53.1 53.1 52.8 52.2 52.1 8 Used car 51.4 51.0 53.5 54.1 54.1 54.2 54.2 54.3 54.2 56.0 Loan-to-value ratio 9 New car , 91 92 92 92 93 93 92 91 91 92 10 Used car 100 99 99 100 101 101 100 100 100 99 Amount financed (dollars) 11 New car 16,987 18,077 19,083 19,084 19,068 19,028 19,199 19,590 19,734 19,628 12 Used car 12,182 12,281 12,691 12,733 12,407 12,731 12,914 13,112 13,202 13,497 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 2. Data are available for only the second month of each quarter, extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly 3. At auto finance companies, statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A37 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1997 1998 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr Q2 Q3 Q4 Ql Q2 Q3 Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors.... 587.1 577.1 703.4 720.3 736.9 612.0 826.5 858.3 904.7 925.4 855.5 1,118.3 By sector and instrument 2 Federal government 256.1 155.9 144.4 145.0 23.1 -43.5 30.3 40.8 -30.0 -70.9 -136.5 26.9 3 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 -.1 .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 -.9 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 2.6 71.4 59.6 88.9 103.2 116.7 100.1 83.6 87.0 8 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 9 Bank loans n.e.c 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 156.1 179.7 176.0 256.4 243.0 211.7 334.0 208.6 372.8 320.3 361.5 453.3 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 borrowing sector 17 Household 207.7 312.6 345.4 359.8 333.6 328.0 368.4 302.1 437.5 457.2 452.7 592.7 18 Nonfinancial business 57.2 155.0 265.0 222.3 324.1 285.1 355.2 423.1 402.9 460.1 466.6 423.3 19 Corporate 51.4 147.4 231.5 170.7 257.9 214.1 283.8 341.7 321.1 357.3 374.6 318.7 20 Nonfarm 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 State and local government 66.2 -46.2 -51.5 -6.8 56.1 42.5 72.6 92.3 94.3 78.9 72.6 75.4 23 Foreign net borrowing in United States 69.8 -14.0 71.1 76.9 56.9 61.7 92.5 42.3 67.8 85.9 -28.0 -38.0 24 Commercial paper -9.6 -26.1 13.5 11.3 3.7 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 38.7 100.3 32.4 14.3 107.5 -35.3 -32.9 26 Bank loans n.e.c .7 1.4 8.5 9.1 8.5 11.5 7.3 15.7 5.2 8.4 3.6 9.9 27 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 656.9 563.1 774.5 797.3 793.8 673.7 919.0 900.5 972.5 1,011.3 827.5 1,080.3 Financial sectors 29 Total net borrowing by financial sectors 294.4 468.4 456.2 552.1 652.8 667.9 601.9 993.2 936.4 994.9 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 80.6 176.9 105.9 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 U.S. government .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 129.1 180.9 252.1 320.7 440.0 381.7 440.9 695.0 709.1 581.5 499.9 685.7 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 36 Corporate bonds 123.1 121.8 196.7 175.5 208.2 228.1 202.3 337.8 340.5 376.9 178.3 337.2 37 Bank loans n.e.c -14.4 -13.7 4.8 20.0 13.4 -2.0 25.9 26.1 78.6 -21.1 62.0 -16.3 38 Other loans and advances 22.4 22.6 3.4 27.9 35.6 63.0 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 By borrowing sector 40 Commercial banking 13.4 20.1 22.5 13.0 46.1 76.4 32.5 61.0 83.5 80.0 6611..77 66.5 41 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 -.1 .1 .1 .2 .2 .3 .5 .2 1.0 .4 43 Life insurance companies .2 .3 -.1 1.1 .2 .1 .2 -.3 .0 -.6 1.6 1.8 44 Government-sponsored enterprises 80.6 172.1 105.9 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 88.1 114.6 140.3 84.8 247.0 267.5 171.2 46 Issuers of asset-backed securities (ABSs) 83.6 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 59.6 80.1 101.8 -14.0 76.8 48 Mortgage companies .0 -11.5 .4 12.4 -4.7 -12.2 11.4 -17.4 49.2 -48.0 2.0 2.0 49 Real estate investment trusts (REITs) 3.4 13.7 5.6 7.0 36.8 30.6 30.8 58.9 66.2 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 51 Funding corporations 6.3 23.1 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

A122 Domestic NonfinancialS tatistics • May 1999 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1—Continued 1997 1998 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999933 11999944 11999955 11999966 11999977 Q2 Q3 Q4 Q1 Q2 Q3 Q4 All sectors 52 Total net borrowing, all sectors 951.4 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 1,889.0 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 62.9 114.7 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 99.8 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 -.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.l (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 9 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1997 1998 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999933 11999944 11999955 11999966 11999977 Q2 Q3 Q4 Ql Q2 Q3 Q4 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 951.4 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 1,889.0 2,551.6 7. Domestic 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 Household -.2 274.4 -.1 -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 -8.8 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 800.0 689.0 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 ..88 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 555544..66 1? 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 States -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 U.S.-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 56.0 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 73 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 7.4 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 7,5 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 7.8 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 3? Brokers and dealers 14.8 -44.2 90.1 -15.7 14.9 -17.4 18.0 71.7 245.8 -183.1 77.0 -230.5 33 Funding corporations -35.1 -16.2 -23.8 24.0 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 951.4 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 1,889.0 2,551.6 Other financial sources 35 Official foreign exchange .8 -5.8 8.8 --66..33 ..77 ..44 22..44 1177..55 11..00 88..11 1111..44 88..66 36 Special drawing rights certificates .0 .0 2.2 -.5 -.5 .0 .0 .0 .0 ..00 .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 4? 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 48.7 136.1 151.9 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 -5.7 5?, 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 25.9 50.3 62.1 43.3 25.1 39.6 38.7 -26.8 20.2 -8.7 -43.1 15.8 54 Miscellaneous 340.9 248.3 459.0 448.8 568.9 523.0 554.3 404.1 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 3,515.4 3,255.0 3,726.3 3,868.4 4,737.4 3,347.3 3,896.7 4,221.6 Liabilities not identified as assets (—) 56 Treasury currency -.2 -.2 -.5 -.9 -.6 -.5 .7 -2.4 -.2 --..33 11..11 --33..00 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 15.8 16.6 21.1 20.4 17.2 29.3 15.2 5.0 6.8 5.0 25.8 -.8 61 Miscellaneous -169.5 -155.9 -198.5 -61.0 -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 2200..44 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 3,559.5 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.l and E5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • May 1999 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1997 1998 11999955 11999966 11999977 Q2 Q3 Q4 Qi Q2 Q3 Q4 Nonfinancial 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 3,804.9 3,760.6 3,771.2 3,804.9 3,830.8 3,749.0 3,720.2 3,752.2 J Treasury securities 3,465.6 3,608.5 3,755.1 3,778.3 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 instrument 6 Commercial paper 139.2 157.4 156.4 168.6 179.3 176.6 168.6 193.1 202.5 216.9 193.0 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 1,032.0 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 3,755.7 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 sector 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 3,112.6 3,366.4 3,235.6 3,289.1 3,366.4 3,468.3 3,565.3 3,639.7 3,709.3 20 Nonfarm 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 1,322.5 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 76.7 71.4 74.0 72.9 2b 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 n.e.c 26.1 34.6 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 nonfinancial sectors, domestic and foreign 13,389.4 14,163.8 14,961.1 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 from 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 Corporate 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 131.6 135.0 162.9 198.5 173.7 183.0 198.5 206.6 225.6 246.2 289.6 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 1.1 44 I .ife insurance, companies .6 .5 1.6 1.8 1.8 1.9 1.8 1.8 1.6 2.0 2.5 45 Government-sponsored enterprises 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 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 (ABSs) 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 26.8 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 Funding corporations 211.0 248.6 312.7 373.7 350.0 363.4 373.7 411.6 410.5 417.9 413.6 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 3,333.4 3,440.1 3,563.9 3,729.6 3,792.2 3,893.9 58 Bank loans n.e.c 834.9 949.6 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 61 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 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1997 1998 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999944 11999955 11999966 11999977 Q2 Q3 Q4 QL Q2 Q3 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 nonfederal 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 1,794.9 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 U.S.-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 U.S.-affiliated 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 70 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 71 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 72 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 73 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 74 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 75 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 663.3 750.0 807.9 902.2 848.6 862.5 902.2 942.9 978.5 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 78 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 79 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 3?, 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 20,690.5 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 47 Large time deposits 411.2 476.9 590.9 713.4 646.7 696.1 713.4 760.9 754.0 776.5 805.0 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 549.5 660.0 701.5 822.4 768.0 797.7 822.4 891.0 861.5 919.8 877.7 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 520.3 566.2 610.6 665.0 639.6 655.6 665.0 677.3 686.9 694.8 707.0 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 49,365.7 51,357.4 52,230.9 52,307.5 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 54,058.1 59,906.5 67,888.3 63,895.6 66,384.2 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.l (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. L.l and L.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • May 1999 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 1998 1999 MMeeaassuurree 11999966 11999977 11999988 June July Aug. Sept. Oct. Nov. Dec.r Jan. Feb. 1 Industrial production1 119.5 126.8 131.4 130.6 130.5 132.4 131.9 132.4 132.2r 132.4 132.4r 132.6 Market groupings 2 Products, total 114.4 119.6 123.5r 123.6 123.3 124.9 124.1 124.9 124.5 124.4 124.5r 124.5 3 Final, total 115.5 121.1 125.4r 125.5 124.7 126.8 126.0 126.7 126.1r 125.8 125.8r 125.9 4 Consumer goods 111.3 114.1 115.2 115.1 114.0 116.1 114.8 115.2 114.8r 115.0 115.lr 115.1 5 Equipment 122.7 133.9 144.1 144.1 143.9 146.0 146.2 147.5 146.5r 145.3 145. lr 145.4 6 Intermediate 110.9 115.2 118.0 118.0 119.1 119.1 118.3 119.0 119.3r 120.0 120.2r 120.2 7 Materials 127.8 138.2 144.0 141.8 141.9 144.4 144.4 144.5 144.6r 145.3 145.2r 145.7 Industry groupings 8 Manufacturing 121.4 129.7 135.1 133.7 133.6 135.7 135.2 136.1 136.4 136.6 136.7 136.9 9 Capacity utilization, manufacturing (percent)2. . 81.4 82.0 80.8 80.2 79.8 80.7 80.1 80.3 80.1 79.9 79.6 79.5 10 Construction contracts3 130.9 142.6 153,Or 153.0r 156.0r 155.0r 152.0r 151.0r 157.0r 159.0 151.0r 144.0 11 Nonagricultural employment, total4 117.3 120.3 123.4 123.3 123.5 123.8 123.9 124.1 124.4 124.7 124.9 125.2 12 Goods-producing, total 2.4 2.4 2.3 102.6 101.9 102.4 102.3 102.2 102.1 102.4 102.4 102.4 13 Manufacturing, total 97.4 98.2 98.5 98.9 97.9 98.4 98.4 98.1 97.8 97.7 97.6 97.3 14 Manufacturing, production workers 98.6 99.6 99.6 99.9 98.4 99.1 99.3 99.0 98.6 98.5 98.5 98.2 15 Service-producing 123.1 126.5 130.1 130.0 130.4 130.6 130.9 131.1 131.5 131.8 132.1 132.4 16 Personal income, total 165.2 174.5 183.2 182.7 183.4 184.2 184.8 185.5 187.lr 187.0 188.2 n.a. 17 Wages and salary disbursements 159.8 171.2 182.5r 181.8 182.8 184.1 184.6 185.5r 186.6 187.3 188.6 n.a. 18 Manufacturing 135.7 144.7 151.1 150.5 149.6 151.3 152.1 151.8r 151.5r 151.7 152.0 n.a. 19 Disposable personal income5 164.0 171.7 178.6 177.9 178.7 179.4 179.9 180.6r 182.3r 182.0 183.4 n.a. 20 Retail sales5 159.6 166.9 175.2r 176.0 174.8 174.9 175.6 177.7 178.9 180.9 182.8r 184.4 Prices6 21 Consumer (1982-84=100) 156.9 160.5 163.0 163.0 163.2 163.4 163.6 164.0 164.0 163.9 164.3 164.5 22 Producer finished goods (1982=100) 131.3 131.8 130.7 130.7 131.0 130.7 130.6 131.4 130.8 131.0 131.5 130.9 1. Data 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 also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The tial, and heavy engineering, from McGraw-Hill Information Systems Company, F.W. Dodge latest historical revision of the industrial production index and the capacity utilization rates Division. was released in November 1998. The recent annual revision is described in an article in the 4. Based on data from U.S. Department of Labor, Employment and Earnings. Series covers January 1999 issue of the Bulletin. For a description of the methods of estimating industrial employees only, excluding personnel in the armed forces. production and capacity utilization, see "Industrial Production and Capacity Utilization: 5. Based on data from U.S. Department of Commerce, Survey of Current Business. Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February 6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price 1997), pp. 67-92, and the references cited therein. For details about the construction of indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics, individual industrial production series, 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 CCaatteeggoorryy 11999966 11999977 11999988 July Aug. Sept. Oct. Nov. Dec/ Jan.1 Feb. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 133,943 136,297 137,673 137,407 137,481 113388,,008811 138,116 113388,,119933 113388,,554477 113399,,334477 113399,,227711 Employment 2 Nonagricultural industries3 123,264 126,159 128,085 127,753 127,772 128,348 128,300 128,765 129,304 130,097 129,817 3 Agriculture 3,443 3,399 3,378 3,423 3,492 3,470 3,558 3,348 3,222 3,299 3,328 Unemployment 4 Number 7,236 6,739 6,210 6,231 6,217 6,263 6,258 6,080 6,021 5,950 6,127 5 Rate (percent of civilian labor force) 5.4 4.9 4.5 4.5 4.5 4.5 4.5 4.4 4.3 4.3 4.4 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 119,608 122,690 125,833 125,869 126,191 126,363 126,527 126,804 127,118 127,335 127,610 7 Manufacturing 18,495 18,657 18,716 18,594 18,693 18,692 18,633 18,573 18,559 18,542 18,492 8 Mining 580 592 575 571 571 568 564 560 557 547 537 9 Contract construction 5,418 5,686 5,965 5,970 5,989 5,981 6,012 6,051 6,153 6,167 6,239 10 Transportation and public utilities 6,253 6,395 6,551 6,550 6,570 6,579 6,595 6,604 6,627 6,641 6,656 11 Trade 28,079 28,659 29,299 29,374 29,383 29,454 29,453 29,549 29,594 29,647 29,779 12 Finance 6,911 7,091 7,341 7,370 7,372 7,393 7,417 7,441 7,458 7,481 7,488 13 Service 34,454 36,040 37,525 37,614 37,691 37,768 37,905 38,040 38,148 38,249 38,336 14 Government 19,419 19,570 19,862 19,826 19,922 19,928 19,948 19,986 20,022 20,061 20,083 1. Beginning January 1994, reflects redesign of current population survey and population 4. Includes all full- and part-time employees who worked during, or received pay for, the controls from the 1990 census. pay period that includes the twelfth day of the month; excludes proprietors, self-employed 2. Persons sixteen years of age and older, including Resident Armed Forces. Monthly persons, household and unpaid family workers, and members of the armed forces. Data are figures are based on sample data collected during the calendar week that contains the twelfth adjusted to the March 1992 benchmark, and only seasonally adjusted data are available at this day; annual data are averages of monthly figures. By definition, seasonality does not exist in time. population figures. SOURCE. Based on data from U.S. Department of Labor, Employment and Earnings. 3. Includes self-employed, unpaid family, and domestic service workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A43 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1998 1998 1998 SSeerriieess Q1 Q2 Q3 Q4r Ql Q2 Q3 Q4r Ql Q2 Q3 Q4r Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 130.4 131.3 131.6 132.3 157.6 159.6 161.5 163.4 82.7 82.3 81.5 80.9 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 processing3 121.2 121.1 120.2 120.6 143.0 144.0 145.1 146.1 84.8 84.1 82.9 82.5 4 Advanced processing4 140.1 141.4 142.1 144.3 173.5 176.4 179.2 182.0 80.8 80.2 79.3 79.3 Durable goods 154.4 156.1 157.9 161.1 190.2 193.9 197.5 201.1 81.2 80.5 79.9 80.1 6 Lumber and products 115.6 116.4 117.7 119.2 142.0 143.0 143.9 144.9 81.4 81.4 81.8 82.2 7 Primary metals 128.2 125.3 122.4 119.4 140.8 142.0 143.2 144.4 91.0 88.3 85.5 82.7 8 Iron and steel 128.3 124.0 118.7 112.8 140.9 142.8 144.6 146.5 91.0 86.9 82.1 77.0 9 Nonferrous 128.0 127.0 126.8 127.2 140.4 140.8 141.3 141.7 91.2 90.1 89.7 89.7 10 Industrial machinery and equipment 194.1 203.0 207.9 211.5 226.5 234.7 242.9 251.6 85.7 86.5 85.6 84.1 11 Electrical machinery 278.2 282.8 292.7 304.5 351.2 366.6 381.6 396.6 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 102.7 106.1 106.6 105.7 127.0 127.5 128.0 128.5 80.8 83.2 83.3 82.2 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 113.6 113.2 112.1 110.2 134.8 134.9 135.1 135.2 84.3 83.9 83.0 81.5 16 Paper and products 115.5 115.0 115.0 114.3 130.6 131.6 132.5 133.4 88.5 87.4 86.8 85.7 17 Chemicals and products 116.8 116.9 114.4 114.0 147.1 148.0 148.9 149.7 79.4 79.0 76.8 76.2 18 Plastics materials 127.3 127.5 128.4 131.9 139.4 140.7 141.9 143.2 91.3 90.6 90.5 92.1 19 Petroleum products 111.6 112.0 112.7 111.9 116.2 116.5 116.8 117.1 96.1 96.1 96.5 95.6 70 Mining 107.0 105.3 103.6 101.0 119.7 119.9 120.1 120.6 89.4 87.8 86.2 83.8 71 Utilities 110.9 115.6 119.6 113.2 125.9 126.2 126.5 126.7 88.1 91.6 94.6 89.3 22 Electric 112.8 118.3 121.2 116.7 123.5 123.8 124.0 124.3 91.3 95.6 97.7 93.9 1973 1975 Previous cycle5 Latest cycle6 1998 1998 1999 High Low High Low High Low Feb. Sept. Oct. Nov/ Dec. Jan. Feb.p Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.1 85.4 78.1 82.6 81.3 81.3 80.8 80.7 80.4 80.3 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 81.8 80.1 80.3 80.1 79.9 79.6 79.5 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 84.7 82.1 82.4 82.4 82.8 83.0 82.6 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 80.7 79.5 79.6 79.4 78.9 78.5 78.4 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 81.0 80.3 80.6 80.0 79.7 79.4 79.4 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 81.9 81.1 81.6 81.6 83.5 84.1 83.2 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 91.0 83.7 83.7 82.2 82.1 82.6 82.4 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 91.0 78.1 78.4 74.9 77.7 78.3 78.1 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 91.2 90.6 90.4 91.3 87.6 88.0 87.9 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 84.9 84.5 84.9 83.9 83.4 82.7 8822..66 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 79.3 77.0 77.2 76.8 76.3 76.2 76.5 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 76.8 80.9 80.9 80.0 78.7 78.4 78.2 13 Aerospace and miscellaneous transportaUon equipment 78.4 67.6 81.9 66.6 87.3 79.2 80.8 82.6 83.3 82.3 81.1 79.9 79.4 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 83.1 80.2 80.3 80.7 80.6 80.3 80.1 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 84.0 82.3 83.2 80.5 80.9 82.0 81.3 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 88.8 85.7 86.7 84.2 86.1 86.2 85.3 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 79.3 75.9 75.7 76.6 76.2 75.7 76.1 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 91.0 87.1 89.1 94.1 93.1 91.2 90.5 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 95.2 94.7 94.4 96.3 96.0 98.0 97.1 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 89.9 85.2 84.7 83.8 82.9 80.3 80.5 71 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 86.6 95.0 92.0 87.3 88.7 90.4 89.8 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 90.0 98.8 96.9 92.2 92.6 93.5 93.4 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; latest historical revision of the industrial production index and the capacity utilization rates primary metals; and fabricated metals. was released in November 1998. The recent annual revision is described in an article in the 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing January 1999 issue of the Bulletin. For a description of the methods of estimating industrial and publishing; chemical 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 Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted index of industrial production to the corresponding index of capacity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • May 1999 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1998 1999 1998 GGrroouupp por- avg. tion Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov/ Dec.r Jan. FFeebb..PP Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 131.4 130.2 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.2 132.4 132.4 132.6 2 Products 60.5 123.5 122.5 123.2 124.0 124.5 123.6 123.3 124.9 124.1 124.9 124.5 124.4 124.5 124.5 3 Final products 46.3 125.4 124.2 125.3 126.2 126.6 125.5 124.7 126.8 126.0 126.7 126.1 125.8 125.8 125.9 4 Consumer goods, total 29.1 115.2 115.2 115.8 116.4 116.8 115.1 114.0 116.1 114.8 115.2 114.8 115.0 115.1 115.1 5 Durable consumer goods 6.1 135.7 134.5 135.9 136.9 138.3 130.7 124.6 140.1 137.4 140.5 138.9 139.8 140.5 141.7 6 Automotive products 2.6 132.9 131.5 132.7 134.6 136.8 121.7 107.3 141.7 136.4 141.1 139.6 139.8 141.1 140.9 7 Autos and trucks 1.7 137.8 138.6 138.9 141.3 143.5 118.2 92.8 151.4 143.4 150.6 149.1 147.7 149.4 149.3 8 Autos, consumer .9 109.2 104.8 106.5 107.4 108.4 93.8 75.8 124.4 128.3 119.9 113.7 115.5 111.7 107.0 9 Trucks, consumer .7 166.2 170.5 169.8 173.8 177.1 142.2 110.0 178.9 161.1 181.0 183.2 179.1 185.2 188.9 10 Auto parts and allied goods .9 125.0 120.3 122.7 123.7 126.0 125.4 125.6 127.6 125.9 127.4 125.9 128.2 128.9 128.7 11 Other 3.5 137.8 136.9 138.5 138.8 139.4 137.8 138.7 138.5 138.0 139.7 137.9 139.6 139.7 142.1 12 Appliances, televisions, and air conditioners 1.0 206.2 197.9 203.8 203.4 202.7 199.9 207.8 209.4 209.9 215.2 222.5 226.0 224.5 232.4 13 Carpeting and furniture .8 117.1 115.8 114.3 115.9 119.1 117.0 117.3 116.7 116.3 120.3 117.5 117.1 119.5 119.3 14 Miscellaneous home goods 1.6 114.8 116.8 118.3 118.2 117.9 117.1 115.9 115.3 114.5 113.6 109.5 111.5 111.0 112.7 IS Nondurable consumer goods 23.0 110.2 110.5 110.8 111.4 111.5 111.2 111.2 110.3 109.3 109.1 109.0 109.0 109.0 108.7 16 Foods and tobacco 10.3 109.0 110.1 109.1 110.2 110.8 108.5 108.5 107.5 106.9 108.0 109.6 109.5 110.1 109.6 17 Clothing 2.4 97.8 99.3 100.4 99.9 98.8 98.8 98.4 97.7 97.1 95.4 94.5 94.6 93.9 93.4 18 Chemical products 4.5 120.5 121.2 121.3 123.2 122.5 122.8 122.2 119.0 118.0 117.2 119.3 118.7 116.8 118.2 19 Paper products 2.9 105.8 107.7 106.3 106.2 105.7 105.3 106.3 106.6 105.9 105.2 104.1 103.6 102.1 100.8 20 Energy 2.9 112.4 106.5 113.2 111.5 112.5 118.2 118.4 120.1 116.8 115.0 106.5 108.4 111.4 110.2 21 Fuels .8 110.5 110.4 111.2 111.6 110.9 111.4 112.9 112.1 108.3 108.4 109.1 109.6 112.2 109.4 22 Residential utilities 2.1 112.6 104.0 113.7 111.0 112.9 121.2 120.7 123.7 120.7 117.8 104.5 107.1 110.5 110.0 23 Equipment 17.2 144.1 140.3 142.4 143.6 144.2 144.1 143.9 146.0 146.2 147.5 146.5 145.3 145.1 145.4 24 Business equipment 13.2 163.5 157.0 160.1 162.2 163.1 163.6 163.5 166.6 167.4 169.0 168.1 167.5 167.5 167.8 25 Information processing and related 5.4 209.9 199.2 202.3 206.0 209.2 210.3 211.8 213.1 217.3 219.0 219.7 220.5 222.4 223.9 26 Computer and office equipment 1.1 646.1 547.4 584.9 601.5 620.6 638.6 654.6 671.6 693.6 716.7 745.2 760.1 774.6 788.6 27 Industrial 4.0 140.0 136.6 139.4 139.4 138.1 142.9 144.2 142.3 139.5 141.6 139.9 140.9 139.7 138.9 28 Transit 2.5 133.7 126.8 130.3 133.6 135.5 128.2 121.9 141.6 140.1 141.6 140.5 138.9 138.2 135.6 29 Autos and trucks 1.2 124.6 120.9 121.6 123.4 125.1 108.6 91.7 136.9 135.6 136.1 136.4 136.4 135.8 132.8 30 Other 1.3 138.9 136.9 139.8 140.8 139.6 141.7 146.6 132.6 140.9 141.1 138.5 131.7 132.1 138.9 31 Defense and space equipment 3.3 75.7 76.3 75.9 75.9 76.0 75.8 76.1 76.5 75.5 76.4 75.7 74.6 74.3 75.2 32 Oil and gas well drilling .6 134.7 157.4 155.7 147.6 147.1 136.7 131.9 127.7 123.4 119.4 115.2 103.2 99.2 97.4 33 Manufactured homes .2 149.2 149.6 148.0 148.0 149.0 146.1 151.1 145.7 147.8 150.9 154.6 156.6 154.9 154.3 34 Intermediate products, total 14.2 118.0 117.1 116.9 117.3 118.2 118.0 119.1 119.1 118.3 119.0 119.3 120.0 120.2 120.2 35 Construction supplies 5.3 127.2 125.7 124.7 125.4 126.6 126.1 128.5 128.0 126.9 128.4 129.6 131.1 131.6 131.5 36 Business supplies 8.9 112.6 112.1 112.2 112.5 113.3 113.2 113.6 113.8 113.3 113.5 113.2 113.4 113.5 113.6 37 Materials 39.5 144.0 142.5 142.7 143.1 143.6 141.8 141.9 144.4 144.4 144.5 144.6 145.3 145.2 145.7 38 Durable goods materials 20.8 176.3 173.5 173.7 174.5 175.4 171.7 171.8 177.4 177.7 178.8 179.9 180.1 180.9 181.9 39 Durable consumer parts 4.0 144.0 144.2 143.7 144.4 147.9 131.9 129.7 149.6 147.7 146.2 145.6 144.5 142.2 143.0 40 Equipment parts 7.6 277.3 264.5 265.8 266.9 268.6 271.0 274.1 278.0 282.7 287.0 289.9 292.1 296.1 299.6 41 Other 9.2 129.0 129.7 129.7 130.3 129.6 128.3 128.1 128.3 127.7 128.4 129.3 129.3 129.8 129.9 42 Basic metal materials 3.1 121.2 125.9 123.7 123.5 123.0 120.1 120.2 121.9 118.2 118.3 117.3 116.6 117.8 117.6 43 Nondurable goods materials 8.9 113.5 114.9 114.2 114.4 114.1 113.9 114.1 113.1 112.0 111.7 112.2 112.5 112.6 112.2 44 Textile materials 1.1 108.7 111.1 110.6 110.5 111.0 110.2 110.1 107.7 107.6 108.8 103.0 102.5 101.9 102.1 45 Paper materials 1.8 116.0 117.0 116.3 116.3 115.5 117.3 117.3 116.4 115.0 115.8 112.7 114.5 114.0 113.4 46 Chemical materials 3.9 114.5 116.5 115.6 116.2 115.6 114.8 114.6 113.6 111.8 111.1 113.7 113.3 114.3 114.0 47 Other 2.1 111.4 111.4 111.0 110.9 111.2 110.6 111.7 111.6 111.5 110.4 113.2 114.1 113.0 112.4 48 Energy materials 9.7 103.6 102.8 103.7 103.8 104.3 104.8 104.8 104.4 105.2 103.7 101.5 103.3 101.5 101.7 49 Primary energy 6.3 101.3 101.4 101.0 101.3 101.0 101.8 102.9 101.2 102.3 102.6 99.8 101.4 98.1 99.0 50 Converted fuel materials 3.3 108.1 105.6 109.0 108.6 110.8 110.7 108.6 110.7 110.9 106.1 104.9 107.2 108.0 107.0 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 131.3 130.2 130.7 131.3 131.8 131.2 131.6 132.1 131.7 132.1 131.9 132.1 132.1 132.4 52 Total excluding motor vehicles and parts 95.1 130.8 129.7 130.3 130.9 131.3 131.2 131.7 131.3 131.0 131.5 131.4 131.7 131.7 132.0 53 Total excluding computer and office equipment 98.2 127.1 126.4 126.7 127.3 127.7 126.4 126.2 128.0 127.4 127.8 127.4 127.6 127.5 127.7 54 Consumer goods excluding autos and trucks . 27.4 114.0 113.9 114.5 115.1 115.3 114.8 114.9 114.3 113.2 113.4 113.0 113.3 113.3 113.3 55 Consumer goods excluding energy 26.2 115.5 116.2 116.1 117.0 117.3 114.7 113.5 115.7 114.6 115.3 115.8 115.8 115.5 115.6 56 Business equipment excluding autos and trucks 12.0 167.8 161.1 164.6 166.7 167.4 170.0 171.8 169.9 171.0 172.7 171.6 171.0 171.1 171.7 57 Business equipment excluding computer and office equipment 12.1 142.4 138.7 140.8 142.3 142.6 142.7 142.2 144.8 145.1 146.2 144.6 143.8 143.4 143.4 58 Materials excluding energy 29.8 156.7 155.0 154.9 155.5 156.0 153.4 153.6 156.9 156.7 157.3 158.2 158.4 158.9 159.5 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 1999 GGrroouupp c S o I d C e p p r o o r - - 1 a 9 v 9 g 8 . tion Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov.r Dec.r Jan. Feb.p Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 131.4 130.2 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.2 132.4 132.4 132.6 60 Manufacturing 85.4 135.1 133.7 134.1 134.9 135.4 133.7 133.6 135.7 135.2 136.1 136.4 136.6 136.7 136.9 61 Primary processing 26.5 120.6 121.1 121.0 121.5 121.4 120.2 120.7 120.6 119.3 120.1 120.3 121.3 121.7 121.4 62 Advanced processing 58.9 142.1 140.0 140.6 141.6 142.3 140.4 139.9 143.3 143.2 144.2 144.6 144.3 144.1 144.7 63 Durable goods 45.0 157.5 154.0 155.2 156.2 157.2 154.8 154.4 159.8 159.6 161.2 161.0 161.2 161.5 162.3 64 Lumber and products " ' 24 2.0 117.0 116.2 115.3 116.1 116.4 116.7 117.5 118.5 117.0 118.0 118.3 121.3 122.3 121.4 65 Furniture and fixtures 25 1.4 121.4 118.6 121.5 121.0 120.6 122.0 120.8 120.1 121.6 124.5 123.6 123.0 122.7 124.6 66 Stone, clay, and glass products 32 2.1 126.2 124.0 124.5 124.0 124.5 123.5 125.4 127.0 126.6 128.3 130.5 131.5 131.8 131.4 67 Primary metals 33 3.1 123.8 128.1 127.1 127.5 126.5 122.1 122.6 124.4 120.1 120.6 118.7 118.8 119.9 119.8 68 Iron and steel 331,2 1.7 121.1 128.2 127.7 126.7 125.5 119.8 120.2 122.5 113.4 114.4 109.7 114.3 115.6 115.5 69 Raw steel 331PT .1 115.7 123.3 120.0 122.4 121.9 116.0 118.3 120.3 112.6 109.7 100.2 102.0 106.6 106.7 70 Nonfeirous 333-6,9 1.4 127.1 128.0 126.4 128.4 127.6 124.9 125.4 126.7 128.1 128.0 129.3 124.2 125.0 125.0 71 Fabricated metal products... 34 5.0 127.3 126.6 127.2 127.8 128.7 128.0 127.8 126.3 126.2 126.9 127.7 128.6 127.8 127.6 72 Industrial machinery and equipment 35 8.0 203.6 192.3 198.4 200.6 202.5 205.8 209.0 207.0 207.7 211.2 211.1 212.3 212.7 214.6 73 Computer and office equipment 357 1.8 649.1 552.6 589.6 605.4 623.9 641.4 657.0 673.6 695.5 718.5 746.9 761.8 776.5 790.4 74 Electrical machinery 36 7.3 291.8 278.5 278.2 280.8 282.0 285.5 289.4 290.8 297.7 302.4 304.8 306.2 309.6 314.3 75 Transportation equipment. .. 37 9.5 123.0 121.5 122.3 123.3 125.2 114.2 108.2 130.3 127.6 128.4 127.1 125.3 124.3 123.9 76 Motor vehicles and parts . 371 4.9 141.1 140.4 140.0 140.8 144.1 121.1 107.6 154.2 149.9 150.2 148.8 146.7 146.3 146.0 77 Autos and light trucks . 371PT 2.6 128.5 128.2 128.8 130.9 132.7 110.1 86.9 142.0 136.5 140.4 138.1 137.3 137.9 136.9 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 104.9 102.6 104.5 105.7 106.3 106.3 107.1 106.9 105.8 106.9 105.7 104.3 102.9 102.3 79 Instruments 38 5.4 113.0 112.5 112.8 113.0 113.8 112.4 112.6 113.0 114.2 114.6 114.1 113.9 114.9 115.9 80 Miscellaneous 39 1.3 117.7 119.9 120.0 120.1 119.1 118.5 118.5 117.7 117.0 115.9 114.1 115.4 114.7 115.6 81 Nondurable goods 40.4 111.9 112.8 112.4 113.0 113.0 112.0 112.1 111.3 110.6 110.9 111.6 111.7 111.6 111.4 82 Foods 20 9.4 109.6 109.9 109.7 110.3 110.7 109.2 109.0 107.9 107.7 109.1 111.3 111.0 112.0 111.4 83 Tobacco products 21 1.6 106.0 112.7 105.3 109.8 111.5 104.7 106.0 107.0 104.2 101.9 99.8 100.0 96.9 97.2 84 Textile mill products 22 1.8 112.2 113.2 112.6 113.3 114.5 112.0 113.2 111.8 111.2 112.4 108.8 109.4 110.9 109.9 85 AAppppaarreell pprroodduuccttss 23 2.2 99.2 101.1 101.6 101.0 100.4 100.5 100.1 99.2 98.3 97.3 95.5 95.3 94.4 94.3 86 PPaappeerr aanndd pprroodduuccttss 26 3.6 115.0 115.9 115.0 115.2 115.0 114.9 115.9 115.3 113.9 115.4 112.3 115.1 115.4 114.5 87 Printing and publishing 27 6.7 105.1 106.4 105.4 105.5 105.6 105.5 105.4 104.9 104.6 104.2 105.4 105.0 103.8 103.1 88 Chemicals and products .... 28 9.9 115.5 116.7 116.6 117.7 116.9 116.2 115.7 114.3 113.3 113.1 114.7 114.3 113.7 114.4 89 Petroleum products 29 1.4 112.0 110.5 113.0 112.8 111.5 111.6 113.4 114.1 110.7 110.4 112.8 112.5 115.0 114.0 90 Rubber and plastic products . 30 3.5 132.6 131.1 131.4 133.2 133.1 132.4 132.7 132.2 132.6 133.4 135.0 135.7 135.6 136.6 91 Leather and products 31 .3 75.3 78.3 77.9 76.3 75.8 74.5 75.3 74.0 73.5 72.8 74.3 73.0 71.0 70.8 92 Mining 6.9 104.1 107.5 105.8 105.7 105.4 104.7 104.6 103.7 102.4 102.0 101.1 100.0 97.0 97.4 93 Metal 10 .5 110.0 123.2 109.3 106.9 108.5 108.0 105.7 109.0 106.4 113.6 110.7 108.3 110.4 110.1 94 Coal 12 1.0 109.7 104.3 103.4 107.2 106.0 110.4 112.8 109.7 115.8 110.8 108.6 114.5 102.0 108.6 95 Oil and gas extraction 13 4.8 99.7 104.6 104.0 102.9 102.4 100.4 100.0 99.2 96.8 96.8 94.2 92.4 90.6 90.0 96 Stone and earth minerals 14 .6 124.8 123.1 120.0 123.3 124.4 125.6 125.4 124.3 120.3 118.8 132.1 127.0 126.4 124.8 97 Utilities 7.7 114.1 109.0 114.0 112.8 115.2 118.7 118.3 120.2 120.3 116.5 110.6 112.5 114.6 114.0 98 Electric 491.493PT 6.2 117.2 111.2 115.7 115.2 118.9 121.0 119.8 121.2 122.6 120.3 114.6 115.2 116.3 116.3 99 Gas 492,493PT 1.6 102.5 99.3 106.3 102.0 98.3 108.4 111.7 115.7 109.7 98.7 92.0 100.2 107.0 103.3 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 134.7 133.4 133.8 134.6 134.9 134.5 135.1 134.6 134.4 135.3 135.7 136.0 113366..11 113366..44 101 Manufacturing excluding computer and office equipment 83.6 130.1 129.4 129.5 130.2 130.6 128.8 128.6 130.6 130.0 130.8 130.9 131.0 131.0 131.2 102 Computers, communications equipment, and semiconductors 5.9 515.4 467.6 473.4 482.7 490.7 502.9 511.8 522.5 538.3 552.1 562.8 569.6 580.4 590.9 103 Manufacturing excluding computers and semiconductors 81.1 120.1 120.1 120.2 120.9 121.1 119.2 118.9 120.6 119.9 120.4 120.4 120.4 120.2 120.2 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.5 118.5 118.5 118.7 119.3 119.5 117.5 117.2 119.0 118.1 118.7 118.8 118.8 118.6 118.6 Gross value (billions of 1992 dollars, annual rates) Major Markets 105 Products, total 2,001.9 2,480.7 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 2,511.6 2,515.1 2,525.0 2,520.8 106 Final 1,552.1 1,951.5 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 1,973.4 1,973.2 1,980.6 1,975.6 107 Consumer goods 1,049.6 1,209.4 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 1,212.6 1,216.7 1,224.5 1,219.4 108 Equipment 502.5 744.3 720.6 732.5 739.9 744.2 740.1 734.3 762.5 762.7 769.8 765.2 760.6 760.0 760.2 109 Intermediate 449.9 530.7 528.3 527.6 529.7 533.6 532.6 538.4 540.3 535.7 538.7 539.1 542.5 545.0 545.6 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The 1997), pp. 67-92, and the references cited therein. For details about the construction of latest historical revision of the industrial production index and the capacity utilization rates individual industrial production series, see "Industrial Production: 1989 Developments and was released in November 1998. The recent annual revision is described in an article in the Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. January 1999 issue of the Bulletin. For a description of the methods of estimating industrial 2. Standard industrial classification. production and capacity utilization, see "Industrial Production and Capacity Utilization: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • May 1999 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1998 1999 IItteemm 11999966 11999977 11999988rr Apr. May June July Aug. Sept. Oct. Nov/ Dec/ Jan. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,426 1,441 1,604 1,517 1,543 1,517 1,581 1,618 1,544 1,690 1,656 1,729 1,778 2 One-family 1,070 1,062 1,184 1,145 1,152 1,128 1,173 1,180 1,164 1,198 1,238 1,306 1,275 3 Two-family or more 356 379 421 372 391 389 408 438 380 492 418 423 503 4 Started 1,477 1,474 1,617 1,542 1,541 1,626 1,719 1,615 1,576 1,698 1,654 1,750 1,810 5 One-family 1,161 1,134 1,271 1,235 1,221 1,274 1,306 1,264 1,251 1,298 1,375 1,383 1,398 6 Two-family or more 316 340 346 307 320 352 413 351 325 400 279 367 412 7 Under construction at end of penod1 819r 834 935 911 916r 930 938r 939r 946r 968r 971 999 1,008 8 One-family 584 570 638 618r 626r 639 642r 644r 648r 659r 667 688 695 9 Two-family or more 235 264 297 293r 290 291 296r 295 298 309r 304 311 313 10 Completed l,406r l,406r 1,459 l,484r l,457r l,480r 1,549 l,517r l,459r l,455r 1,600 1,444 1,661 11 One-family 1,123 l,12(f 1,149 l,175r 1,114r l,169r l,230r l,183r l,184r l,164r 1,254 1,148 1,305 12 Two-family or more 283 285 311 309r 343r 311R 319r 334r 215' 291c 346 296 356 13 Mobile homes shipped 361 354 372 370 374 362 380 368 369 352 389 382 390 Merchant builder activity in one-family units 14 Number sold 757 804 886 880r 893r 909r 883r 836r 861r 903r 985 964 899 15 Number for sale at end of period1 326 287 300 287r 287 286r 283r 285 289r 293 292 295 297 Price of units sold (thousands of dollars)2 16 Median 140.0 146.0 152.2 148.0 153.2 148.0 149.9 154.9 155.0 154.5r 151.0 152.0 150.8 17 Average 166.4 176.2 181.9 176.7 183.5 175.9 179.8 186.5 182.7 182.8r 178.6 183.1 184.1 EXISTING UNITS (one-family) 18 Number sold 4,087 4,215 4,785 4,770 4,770r 4,780r 4,860"^ 4,740r 4,710r 4,800r 4,900 5,030 5,040 Price of units sold (thousands of dollars)2 19 Median 118.2 124.1 130.6 128.2 130.5 134.0 133.8 132.9 131.2 130.7 131.7 130.5 131.3 20 Average 145.5 154.2 162.9 159.7 162.3 169.2 168.4 165.9 162.9 161.8 163.9 163.0 161.8 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 581,813 618,051 654,859 645,974 635,396 650,341 658,673 663,300 670,133 670,218 671,366 681,103 692,343 22 Private 444,743 470,969 508,889 500,078 496,495 503,592 511,514 516,601 521,050 525,106 526,070 533,124 535,584 '23 Residential 255,570 265,536 295,409 289,666 288,003 291,907 299,300 300,612 304,993 306,090 305,973 310,861 314,974 24 Nonresidential 189,173 205,433 213,480 210,412 208,492 211,685 212,214 215,989 216,057 219,016 220,097 222,263 220,610 2b Industrial buildings 32,563 31,417 30,411 31,457 29,642 30,067 28,616 32,302 30,300 29,246 30,040 29,797 28,991 26 Commercial buildings 75,722 83,727 88,097 86,064 86,321 88,480 88,310 86,243 87,553 91,042 93,456 95,756 95,081 27 Other buildings 30,637 37,382 38,128 39,168 37,678 37,334 37,406 38,305 38,309 37,536 37,758 39,381 37,816 28 Public utilities and other 50,252 52,906 56,845 53,723 54,851 55,804 57,882 59,139 59,895 61,192 58,843 57,329 58,722 29 Public 137,070 147,082 145,970 145,896 138,901 146,749 147,159 146,699 149,083 145,112 145,296 147,979 156,759 30 Military 2,639 2,625 2,729 2,850 2,471 2,659 3,325 3,187 2,325 2,577 2,517 2,626 2,384 31 Highway 41,326 45,246 44,702 46,175 42,030 44,541 43,809 44,291 45,719 45,563 43,593 43,517 54,680 32 Conservation and development 5,926 5,628 5,531 4,985 5,146 5,989 5,475 5,442 5,904 5,143 5,641 5,570 5,582 33 Other 87,179 93,583 93,009 91,886 89,254 93,560 94,550 93,779 95,135 91,829 93,545 96,266 94,113 1. Not at annual rates. SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are 2. Not seasonally adjusted. private, domestic shipments as reported by the Manufactured Housing Institute and season- 3. Recent data on value of new construction may not be strictly comparable with data for ally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are previous periods because of changes by the Bureau of the Census in its estimating techniques. published by the National Association of Realtors. All back and current figures are available For a description of these changes, see Construction Reports (C-30-76-5), issued by the from the originating agency. Permit authorizations are those reported to the Census Bureau Census Bureau in July 1976. from 19,000 jurisdictions beginning in 1994. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A47 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data except as noted Change from 12 Change from 3 months earlier Change from 1 month earlier months earlier (annual rate) IIInnndddeeexxx llleeevvveeelll,,, IIIttteeemmm 1998 1998 1999 FFFeeebbb... 11999988 11999999 111999999999111 FFeebb.. FFeebb.. Mar. June Sept. Dec. Oct. Nov. Dec. Jan. Feb. CONSUMER PRICES2 (1982-84=100) 1 All items 1.4 1.6 .7 2.2 1.5 2.0 .2 .2 .1 .1 .1 164.5 ?. 1.9 2.4 1.3 2.3 2.5 2.8 .5 .1 .1 .5 .1 163.3 3 Energy items -8.8 -5.7 -17.2 -3.4 -9.0 -5.1 .1 -.3 -1.1 -.2 .0 97.3 4 All items less food and energy 2.3 2.1 2.4 2.6 2.3 2.5 .2 .1 .3 .1 .1 175.7 5 Commodities .4 .7 .0 1.7 1.1 2.5 .1 -.1 .6 .0 -.4 143.7 6 Services 3.1 2.8 3.5 2.8 3.0 2.5 .2 .3 .2 .2 .2 194.0 PRODUCER PRICES (1982=100) 7 Finished goods -1.5 .5 -2.7 -.3 .6 1.5 .3r -,3r .4 .5 -.4 130.9 8 Consumer foods -.1 .2 -.9 -.6 1.8 -.3 .4 -,5r .0 1.6 -1.4 133.9 9 Consumer energy -10.9 -7.0 -25.5 -3.1 -9.2 -10.4 .8r -1.2r -2.3 1.8 -1.0 70.6 10 Other consumer goods .6 3.8 4.2 1.4 3.0 8.0 ,2r -.R 1.8 -.1 -.1 151.5 11 Capital equipment -.7 .0 .0 -1.2 .9 .3 ,lr .0 -.1 .1 137.9 Intermediate materials 12 Excluding foods and feeds -1.7 -2.5 -4.1 -1.6 -2.2 -3.8 -.2 -.3 -.5 .1 -.4 121.0 13 Excluding energy .0 -1.7 -.9 -1.2 -1.8 -2.4 -,3r -.2 -.2 -.2 -.2 131.9 Crude materials 14 Foods -5.3 -6.0 -14.6 -3.3 -19.6 -6.2 3.2r -,6r -4.1 5.1 -2.8 98.8 15 Energy -26.8 -19.4 -53.5 -14.6 -25.3 -1.3 5.5r -,3r -5.2 .6 -7.4 57.8 16 Other -5.2 -13.3 -12.4 -5.8 -19.9 -24.6 -2.3r -1.6 .2 1.1 130.7 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • May 1999 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1997 1998 AAccccoouunntt 11999966 11999977 11999988rr Q4 Ql Q2 Q3 Q4r GROSS DOMESTIC PRODUCT 1 Total 7,661.6 8,110.9 8,510.7 8,254.5 8,384.2 8,440.6 8,537.9 8,680.0 By source 2 Personal consumption expenditures 5,215.7 5,493.7 5,805.6 5,593.2 5,676.5 5,773.7 5,846.7 5,925.7 3 Durable goods 643.3 673.0 722.9 682.2 705.1 720.1 718.9 747.7 4 Nondurable goods 1,539.2 1,600.6 1,662.3 1,613.2 1,633.1 1,655.2 1,670.0 1,690.7 b Services 3,033.2 3,220.1 3,420.4 3,297.8 3,338.2 3,398.4 3,457.7 3,487.3 6 Gross private domestic investment 1,131.9 1,256.0 1,368.7 1,292.0 1,366.6 1,345.0 1,364.4 1,398.8 7 Fixed investment 1,099.8 1,188.6 1,308.5 1,220.1 1,271.1 1,305.8 1,307.5 1,349.7 8 Nonresidential 787.9 860.7 938.8 882.8 921.3 941.9 931.6 960.5 9 Structures 216.9 240.2 247.1 246.4 245.0 245.4 246.2 251.7 10 Producers' durable equipment 571.0 620.5 691.8 636.4 676.3 696.6 685.4 708.9 11 Residential structures 311.8 327.9 369.7 337.4 349.8 363.8 375.8 389.1 12 Change in business inventories 32.1 67.4 60.2 71.9 95.5 39.2 57.0 49.1 13 Nonfarm 24.5 63.1 53.5 66.9 90.5 31.5 49.3 42.5 14 Net exports of goods and services -91.2 -93.4 -151.2 -98.8 -123.7 -159.3 -165.5 -156.3 15 Exports 873.8 965.4 959.3 988.6 973.3 949.6 936.2 978.0 16 Imports 965.0 1,058.8 1,110.5 1,087.4 1,097.1 1,108.9 1,101.7 1,134.3 17 Government consumption expenditures and gross investment 1,405.2 1,454.6 1,487.5 1,468.1 1,464.9 1,481.2 1,492.3 1,511.7 18 Federal 518.4 520.2 520.6 520.1 511.6 520.7 519.4 530.8 19 State and local 886.8 934.4 966.9 947.9 953.3 960.4 972.9 981.0 By major type of product 20 Final sales, total 7,629.5 8,043.5 8,450.5 8,182.6 8,288.7 8,401.3 8,480.9 8,630.9 21 Goods 2,780.3 2,911.2 3,043.2 2,948.7 3,005.8 3,025.3 3,029.0 3,112.8 22 Durable 1,228.8 1,310.1 1,389.7 1,334.3 1,376.9 1,380.8 1,373.0 1,428.2 23 Nondurable 1,551.6 1,601.0 1,653.4 1,614.4 1,628.8 1,644.4 1,655.9 1,684.6 24 Services 4,179.5 4,414.1 4,640.7 4,501.2 4,538.4 4,619.5 4,678.5 4,726.5 25 Structures 669.7 718.3 766.6 732.7 744.6 756.6 773.5 791.6 26 Change in business inventories 32.1 67.4 60.2 71.9 95.5 39.2 57.0 49.1 27 Durable goods 20.8 33.6 25.9 34.0 49.9 4.5 19.5 29.7 28 Nondurable goods 11.4 33.8 34.3 37.9 45.6 34.7 37.5 19.4 MEMO 29 Total GDP in chained 1992 dollars 6,994.8 7,269.8 7,552.1 7,364.6 7,464.7 7,498.6 7,566.5 7,678.5 NATIONAL INCOME 30 Total 6,256.0 6,646.5 n.a. 6,767.9 6,875.0 6,945.5 7,032.3 n.a. 31 Compensation of employees 4,409.0 4,687.2 4,979.8 4,798.0 4,882.8 4,945.2 5,011.6 5,079.6 32 Wages and salaries 3,640.4 3,893.6 4,152.7 3,993.6 4,065.9 4,121.6 4,181.1 4,242.1 33 Government and government enterprises 640.9 664.2 689.3 671.4 679.5 685.8 692.7 699.3 34 Other 2,999.5 3,229.4 3,463.4 3,322.2 3,386.4 3,435.8 3,488.4 3,542.8 3B Supplement to wages and salaries 768.6 793.7 827.1 804.4 816.8 823.5 830.5 837.5 36 Employer contributions for social insurance 381.7 400.7 420.1 407.4 414.1 417.9 422.1 426.5 37 Other labor income 387.0 392.9 406.9 397.0 402.8 405.7 408.4 411.0 38 Proprietors' income1 527.7 551.2 576.9 558.0 564.2 571.7 576.1 595.8 39 Business and professional1 488.8 515.8 548.5 526.6 536.8 544.0 550.9 562.1 40 Farm1 38.9 35.5 28.5 31.4 27.4 27.7 25.2 33.6 41 Rental income of persons2 150.2 158.2 162.8 158.8 158.3 161.0 163.6 168.3 42 Corporate profits1 750.4 817.9 n.a. 820.8 829.2 820.6 827.0 n.a. 43 Profits before tax3 680.2 734.4 n.a. 736.4 719.1 723.5 720.5 n.a. 44 Inventory valuation adjustment -1.2 6.9 n.a. 4.3 25.3 7.8 11.7 n.a. 4b Capital consumption adjustment 71.4 76.6 92.3 80.1 84.9 89.4 94.8 100.3 46 Net interest 418.6 432.0 n.a. 432.4 440.5 447.1 454.0 n.a. 1. With inventory valuation and capital consumption adjustments. 3. For after—tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1997 1998 AAccccoouunntt 11999966 11999977 11999988rr Q4 Ql Q2 Q3 Q4r PERSONAL INCOME AND SAVING 1 Total personal income 6,425.2 6,784.0 7,125.1 6,904.9 7,003.9 7,081.9 7,160.8 7,254.0 7 Wage and salary disbursements 3,631.1 3,889.8 4,148.7 3,989.9 4,061.9 4,117.6 4,177.1 4,238.1 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 4 Manufacturing 674.6 719.5 751.5 741.3 750.4 750.8 750.9 754.0 Distributive industries 823.3 879.8 938.4 904.5 918.9 932.2 945.8 956.9 6 Service industries 1,257.9 1,370.8 1,494.0 1,410.2 1,444.5 1,476.4 1,510.6 1,544.5 7 Government and government enterprises 640.9 664.2 689.3 671.4 679.5 685.8 692.7 699.3 8 Other labor income 387.0 392.9 406.9 397.0 402.8 405.7 408.4 411.0 9 Proprietors' income1 527.7 551.2 576.9 558.0 564.2 571.7 576.1 595.8 10 Business and professional1 488.8 515.8 548.5 526.6 536.8 544.0 550.9 562.1 11 38.9 35.5 28.5 31.4 27.4 27.7 25.2 33.6 1? Rental income of persons 150.2 158.2 162.8 158.8 158.3 161.0 163.6 168.3 n 248.2 260.3 263.1 261.3 261.6 262.1 263.0 265.7 14 Personal interest income 719.4 747.3 764.8 753.0 757.0 763.0 769.2 770.1 15 Transfer payments 1,068.0 1,110.4 1,149.2 1,120.5 1,139.0 1,145.8 1,152.9 1,159.2 16 Old age survivors, disability, and health insurance benefits 538.0 565.9 586.5 572.2 581.6 585.0 589.0 590.6 17 LESS: Personal contributions for social insurance 306.3 326.2 347.4 333.6 340.9 345.1 349.5 354.1 18 EQUALS: Personal income 6,425.2 6,784.0 7,125.1 6,904.9 7,003.9 7,081.9 7,160.8 7,254.0 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 1,124.4 20 EQUALS: Disposable personal income 5,534.7 5,795.1 6,027.0 5,879.4 5,937.1 5,988.9 6,052.4 6,129.6 21 LESS: Personal outlays 5,376.2 5,674.1 5,998.0 5,781.2 5,864.0 5,963.3 6,039.8 6,124.8 22 EQUALS: Personal saving 158.5 121.0 29.0 98.2 73.0 25.6 12.6 4.8 MEMO Per capita (chained 1992 dollars) 73 Gross domestic product 26,335.7r 27,136.2 27,939.6 27,398.2 27,718.8 2277,,778833..00 2277,,997722..11 2288,,330022..88 24 Personal consumption expenditures 17,893.1/ 18,340.9 19,059.0 18,530.5 18,771.1 19,007.8 19,156.3 19,312.6 25 Disposable personal income 18,989.0 19,349.0 19,789.0 19,478.0 19,632.0 19,719.0 19,829.0 19,975.0 26 Saving rate (percent) 2.9 2.1 .5 1.7 1.2 .4 .2 .1 GROSS SAVING 27 Gross saving 1,274.5 1,406.3 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. 79 Personal saving 158.5 121.0 29.0 98.2 73.0 25.6 12.6 4.8 30 Undistributed corporate profits' 262.4 296.7 n.a. 295.0 312.0 300.9 304.8 n.a. 31 Corporate inventory valuation adjustment -1.2 6.9 n.a. 4.3 25.3 7.8 11.7 n.a. Capital consumption allowances 37 452.0 477.3 500.6 487.7 492.5 449977..88 550033..11 550088..88 33 Noncorporate 232.3 242.8 252.7 247.0 248.6 250.7 254.2 257.3 34 Gross government saving 160.0 264.7 n.a. 296.4 352.4 369.4 395.7 n.a. 35 -39.6 49.5 n.a. 72.3 128.7 143.9 161.6 n.a. 36 Consumption of fixed capital 70.6 70.6 69.7 70.2 69.9 69.5 69.6 70.0 37 Current surplus or deficit (—), national accounts -110.3 -21.1 n.a. 2.2 58.8 74.4 92.0 n.a. 38 State and local 199.7 215.2 n.a. 224.1 223.7 225.6 234.2 n.a. 39 Consumption of fixed capital 77.1 81.1 84.9 82.7 83.5 84.3 85.4 86.6 40 Current surplus or deficit (-), national accounts 122.6 134.1 n.a. 141.4 140.2 141.3 148.7 n.a. 41 Gross investment 1,242.3 1,350.5 n.a. 1,360.7 1,428.4 1,362.7 1,372.5 n.a. 47 Gross private domestic investment 1,131.9 1,256.0 1,368.7 1,292.0 1,366.6 1,345.0 1,364.4 1,398.8 43 Gross government investment 229.7 235.4 237.4 236.5 237.4 232.5 239.7 239.8 44 Net foreign investment -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 n.a. 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 International Statistics • May 1999 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1997 1998 IItteemm ccrreeddiittss oorr ddeebbiittss 11999966 11999977 11999988 Q4 Ql Q2 Q3 Q4P 1 Balance on current account -134,915 -155,215 -233,448 -45,043 —47,018r - 56,97 lr -65,694 -63,765 2 Merchandise trade balance2 -191,337 -197,954 -247,985 -49,839 -56,033r —64,778r -64,899 -62,275 3 Merchandise exports 611,983 679,325 671,055 174,284 171,190r 164,543r 163,414 171,908 4 Merchandise imports -803,320 -877,279 -919,040 -224,123 -221,22V - 229,32 lr -228,313 -234,183 b Military transactions, net 4,684 6,781 4,072 1,103 1,527 1,043 829 673 6 Other service transactions, net 78,079 80,967 74,799 20,277 19,134r 19,500r 17,573 18,592 7 Investment income, net 14,236 -5,318 -22,479 -4,247 —2,218r —3,346r -9,165 -7,754 y8 U.S. government grants -15,023 -12,090 -12,492 -5,213 -2,266 -2,063 -2,663 -5,500 U.S. government pensions and other transfers -4,442 -4,193 -4,304 -1,069 — 1,073r — l,073r -1,080 -1,078 10 Private remittances and other transfers -21,112 -23,408 -25,059 -6,055 -6,089r -6,254r -6,289 -6,423 11 Change in U.S. government assets other than official reserve assets, net (increase, —) -708 174 -836 29 -388 -433 174 -189 12 Change in U.S. official reserve assets (increase, —) 6,668 -1,010 -6,784 -4,524 -444 -1,945 -2,026 -2,369 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 370 -350 -149 -150 -182 72 188 -227 lb Reserve position in International Monetary Fund -1,280 -3,575 -5,118 -4,221 -85 -1,031 -2,078 -1,924 16 Foreign currencies 7,578 2,915 -1,517 -153 -ill -986 -136 -218 17 Change in U.S. private assets abroad (increase, —) -374,761 -477,666 -297,765 -118,946 —45,193r — 107,786r -58,543 -86,240 18 Bank-reported claims3 -91,555 -147,439 -31,040 -27,539 3,074 -24.615 -31,996 2222,,449977 19 Nonbank-reported claims -86,333 -120,403 -45,440 -47,907 -6,596 -14,327 -20,320 20 U.S. purchases of foreign securities, net -115,801 -87,981 -89,352 -8,030 -6,973 -27,878 17,056 -71,557 21 U.S. direct investments abroad, net -81,072 -121,843 -131,933 -35,470 -34,698r —40,966r -23,283 -32,983 22 Change in foreign official assets in United States (increase, +) 127,344 15,817 -22,112 -26,979 11,324 -10,274 -46,347 23,185 23 U.S. Treasury securities 115,671 -7,270 -9,946 -24,578 11,336 -20,318 -32,811 31,847 24 Other U.S. government obligations 5,008 4,334 6,332 86 2,610 254 1,906 1,562 '2b Other U.S. government liabilities4 -362 -2,521 -2,506 -244 -1,059 -422 -264 -761 26 Other U.S. liabilities reported by U.S. banks3 5,704 21,928 -12,515 -3,250 -607 9,380 -12,684 -8,604 27 Other foreign official assets5 1,323 -654 -3,477 1,007 -956 832 -2,494 -859 28 Change in foreign private assets in United States (increase, +) 436,013 717,624 564,594 247,470 84,313r 175,241r 145,089 159,951 29 U.S. bank-reported liabilities3 16,478 148,059 42,568 89,643 -50,497 37,670 76,993 --2211,,559988 30 U.S. nonbank-reported liabilities 39,404 107,779 43,803 47,390 32,707 18,040 11,875 31 Foreign private purchases of U.S. Treasury securities, net 154,996 146,710 48,060 35,301 -1,701 26,916 -1,438 24,283 32 U.S. currency flows 17,362 24,782 16,622 9,900 746 2,349 7,277 6,250 33 Foreign purchases of other U.S. securities, net 130,151 196,845 217,312 36,783 77,019 71,017 20,041 49,235 34 Foreign direct investments in United States, net 77,622 93,449 196,229 28,453 26,039r 19,249r 30,341 120,600 35 Allocation of special drawing rights 0 0 0 0 0 0 0 0 36 Discrepancy -59,641 -99,724 -3,649 -52,007 —2,594r 2,168r 27,347 -30,573 37 Due to seasonal adjustment 3,528 6,769r 2,024r -10,195 1,399 38 Before seasonal adjustment -59,641 -99,724 -3,649 -55,535 -9,363 144 37,542 -31,972 MEMO Changes in official assets 39 U.S. official reserve assets (increase, —) 6,668 -1,010 -6,784 -4,524 -444 -1,945 --22,,002266 --22,,336699 40 Foreign official assets in United States, excluding line 25 (increase, +) 127,706 18,338 -19,606 -26,735 12,383 -9,852 -46,083 23,946 41 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 14,911 10,822 -1,282 -968 -494 -9,647 3,598 1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38^10. 4. Associated primarily with military sales contracts and other transactions arranged with 2. Data are on an international accounts basis. The data differ from the Census basis data, or through foreign official agencies. shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from 5. Consists of investments in U.S. corporate stocks and in debt securities of private merchandise trade data and are included in line 5. corporations and state and local governments. 3. Reporting banks include all types of depository institutions as well as some brokers and SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current dealers. Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A51 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data seasonally adjusted 1998r 1999 IItteemm 11999966 11999977 11999988rr July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Goods and services, balance -108,574 -110,207 -169,288 -15,172 -16,733 -14,595 -13,963 -15,165 -14,055 -16,991 2 Merchandise -191,337 -197,955 -248,159 -21,141 -22,847 -20,914 -20,280 -21,669 -20,499 -23,421 3 Services 82,763 87,748 78,871 5,969 6,114 6,319 6,317 6,504 6,444 6,430 4 Goods and services, exports 850,775 937,593 931,026 74,928 74,986 77,443 80,415 78,942 77,873 76,773 5 Merchandise 611,983 679,325 670,641 53,733 53,769 55,912 58,246 57,110 56,133 54,830 6 Services 238,792 258,268 260,385 21,195 21,217 21,531 22,169 21,832 21,740 21,943 7 Goods and services, imports -959,349 -1,047,799 -1,100,314 -90,100 -91,719 -92,038 -94,378 -94,107 -91,928 -93,764 8 Merchandise -803,320 -877,279 -918,800 -74,874 -76,616 -76,826 -78,526 -78,779 -76,632 -78,251 9 Services -156,029 -170,520 -181,514 -15,226 -15,103 -15,212 -15,852 -15,328 -15,296 -15,513 1. Data show monthly values consistent with quarterly figures in the U.S. balance of SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of payments accounts. Economic Analysis. 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 1998 1999 AAsssseett 11999955 11999966 11999977 July Aug. Sept. Oct. Nov. Dec. Jan. Feb.P 1 Total 85,832 75,090 69,954 72,264 73,544 75,66 79,183 77,683 81,755 80,675 75,322 2 Gold stock, including Exchange Stabilization Fund1 11,050 11,049 11,050 11,046 11,046 11,044 11,041 11,041 11,041 11,046 11,048 3 Special drawing rights2,3 11,037 10,312 10,027 9,586 9,891 10,106 10,379 10,393 10,603 10,465 9,474 4 Reserve position in International Monetary Fund2 14,649 15,435 18,071 20,780 21,161 21,644 22,278 22,049 24,111 24,129 24,283 5 Foreign currencies4 49,096 38,294 30,809 30,852 31,446 32,882 35,485 34,200 36,001 35,035 30,517 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 1974. stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4. Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1998 1999 AAsssseett 11999955 11999966 11999977 July Aug. Sept. Oct. Nov. Dec. Jan. Feb.p 1 Deposits 386 167 457 161 161 347 154 211 167 233 200 Held in custody 2 U.S. Treasury securities2 522,170 638,049 620,885 613,893 588,337 578,403 588,768 608,060 607,574 612,670 615,139 3 Earmarked gold3 11,702 11,197 10,763 10,586 10,510 10,457 10,403 10,355 10,343 10,343 10,347 1. Excludes deposits and U.S. Treasury securities held for international and regional 3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; not organizations. included in the gold stock of the United States. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury securities, in each case measured at face (not market) value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 International Statistics • May 1999 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period July Aug. Sept. Jan.p 1 Total1 758,624 778,596 775,372 760,864 735,121 747,243 753,573r 760,036 763,946 By type 2 Liabilities reported by banks in the United States 113,098 135,384 142,375 144,120 131,551 134,822 125,132r 123,915 121,401 3 U.S. Treasury bills and certificates3 198,921 148,301 131,089 130,398 128,146 128,598 133,702 134,152 136,907 U.S. Treasury bonds and notes 4 Marketable 379,497 423,456 428,685 411,765 401,461 410,462 422,305 427,579 430,038 6 5 U.S N . o s n e m cu a r r i k ti e e t s a b o l t e h 4 e r than U.S. Treasury securities!v 6 5 1 , , 9 1 6 4 8 0 65 5 , , 4 9 6 9 1 4 66 6 , , 9 2 5 6 4 9 6 6 8 , , 3 2 1 7 1 0 6 6 7 , , 3 6 5 1 0 3 6 5 7 , , 9 3 9 6 7 4 66 6 , , 3 0 9 3 9 5 68 6 , , 3 0 1 7 6 4 69 6 , , 4 1 8 1 7 3 By area 7 Europe1 257,915 263,221 270,355 266,600 258,234 270,630 271,960 266,958 269,457 8 Canada 21,295 18,749 19,963 16,387 16,170 17,216 19,457 19,287 20,043 9 Latin America and Caribbean 80,623 97,616 100,901 98,480 79,838 78,143 77,433 80,091 74,623 10 Asia 385,484 382,363 367,687 363,902 365,631 367,784 371,578 380,947 386,838 11 Africa 7,379 10,118 11,904 11,501 11,721 11,113 10,221 10,196 10,281 12 Other countries 5,926 6,527 4,560 3,992 3,525 2,355 2,922r 2,555 2,702 1. Includes the Bank for International Settlements. Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, 1993, 30-year maturity issue. negotiable time certificates of deposit, and borrowings under repurchase agreements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official U.S. corporate stocks and bonds. institutions of foreign countries. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of department by banks (including Federal Reserve Banks) and securities dealers in the United zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning States, and on the 1989 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States. 3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Reported by Banks in the United States1 Payable in Foreign Currencies Millions of dollars, end of period 1998 IItteemm 11999955 11999966 11999977 Mar. June Sept.r Dec. 1 Banks' liabilities 109,713 103,383 117,524 100,708r 87,889 92,934 101,125 2 Banks' claims 74,016 66,018 83,038 82,209 68,286 67,901 74,013 3 Deposits 22,696 22,467 28,661 28,127 27,387 27,293 41,846 4 Other claims 51,320 43,551 54,377 54,082 40,899 40,608 32,167 5 Claims of banks' domestic customers2 6,145 10,978 8,191 7,926 7,354 8,453 29,975 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1998 1999 IItteemm 11999966 11999977 11999988RR July Aug. Sept. Oct. Nov. Dec. Jan.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,162,148 1,283,787 1347347 1,306,155 1,341,295 1,350,292 1,371,998 1,346,154 1347,347 1336,255 2 Banks' own liabilities 758,998 883,740 885,468 896,972 928,182 917,008 911,258 880,616 885,468 870,360 3 Demand deposits 27,034 32,104 29,276 30,928 33,038 33,547 32,071 32,104 29,276 33,160 4 Time deposits2 186,910 198,546 151,591 188,056 183,556 174,173 158,664 149,746 151,591 147,389 5 Other3 143,510 168,011 140,779 192,536 190,542 165,205 153,269 143,341 140,779 143,640 6 Own foreign offices4 401,544 485,079 563,822 485,452 521,046 544,083 567,254 555,425 563,822 546,171 7 Banks' custodial liabilities5 403,150 400,047 461,879 409,183 413,113 433,284 460,740 465,538 461,879 465,895 8 U.S. Treasury bills and certificates6 236,874 193,239 183,386 164,274 162,235 160,598 168,764 182,917 183,386 190,254 9 Other negotiable and readily transferable instruments7 72,011 93,641 140,788 117,433 123,378 142,169 151,239 142,399 140,788 138,211 10 Other 94,265 113,167 137,705 127,476 127,500 130,517 140,737 140,222 137,705 137,430 11 Nonmonetary international and regional organizations8 .. 13,972 11,690 11,759 14,314 15,188 15,215 12,810 13,207 11,759 12,226 12 Banks' own liabilities 13,355 11,486 10,776 12,188 13,684 13,862 11,644 12,267 10,776 11,216 13 Demand deposits 29 16 72 19 59 408 97 234 72 62 14 Time deposits2 5,784 5,466 5,793 6,354 6,252 5,763 5,418 5,802 5,793 6,136 15 Other3 7,542 6,004 4,911 5,815 7,373 7,691 6,129 6,231 4,911 5,018 16 Banks' custodial liabilities5 617 204 983 2,126 1,504 1,353 1,166 940 983 1,010 17 U.S. Treasury bills and certificates6 352 69 636 349 490 435 509 570 636 623 18 Other negotiable and readily transferable instruments7 265 133 347 1,777 1,012 818 657 370 347 387 19 Other 0 2 0 0 2 100 0 0 0 0 20 Official institutions9 312,019 283,685 258,067 273,464 274,518 259,697 263,420 258,834R 258,067 258,308 21 Banks' own liabilities 79,406 102,028 79,149 102,275 101,608 85,310 84,826 79,450 79,149 75,943 22 Demand deposits 1,511 2,314 2,787 3,560 3,456 3,607 3,325 2,744 2,787 3,180 23 Time deposits2 33,336 41,396 28,947 36,333 35,578 28,076 26,148 25,659 28,947 24,341 24 Other3 44,559 58,318 47,415 62,382 62,574 53,627 55,353 51,047 47,415 48,422 25 Banks' custodial liabilities5 232,613 181,657 178,918 171,189 172,910 174,387 178,594 179,384R 178,918 182,365 26 U.S. Treasury bills and certificates6 198,921 148,301 134,152 131,089 130,398 128,146 128,598 133,702 134,152 136,907 27 Other negotiable and readily transferable instruments7 33,266 33,151 44,092 39,792 41,759 45,684 49,691 45,213R 44,092 44,870 28 Other 426 205 674 308 753 557 305 469 674 588 29 Banks10 694,835 816,007 886,375 824,652 852,890 876,463 898,909 885,767R 886,375 866,373 30 Banks' own liabilities 562,898 642,207 677,219 643,722 673,127 687,824 690,862 673,486 677,219 657,605 31 Unaffiliated foreign banks 161,354 157,128 113,397 158,270 152,081 143,741 123,608 118,061 113,397 111,434 32 Demand deposits 13,692 17,527 14,107 15,097 16,063 15,799 15,802 15,119 14,107 15,453 33 Time deposits2 89,765 83,433 46,273 78,252 74,201 71,259 56,193 51,352 46,273 46,539 34 Other3 57,897 56,168 53,017 64,921 61,817 56,683 51,613 51,590 53,017 49,442 35 Own foreign offices4 401,544 485,079 563,822 485,452 521,046 544,083 567,254 555,425 563,822 546,171 36 Banks' custodial liabilities5 131,937 173,800 209,156 180,930 179,763 188,639 208,047 212,281' 209,156 208,768 37 U.S. Treasury bills and certificates6 23,106 31,915 35,466 22,929 20,696 21,563 27,556 35,213 35,466 35,564 38 Other negotiable and readily transferable instruments7 17,027 35,393 45,102 39,203 40,180 44,807 48,240 45,132R 45,102 44,573 39 Other 91,804 106,492 128,588 118,798 118,887 122,269 132,251 131,936 128,588 128,631 40 Other foreigners 141,322 172,405 191,146 193,725 198,699 198,917 196,859 188,346 191,146 199,348 41 Banks' own liabilities 103,339 128,019 118,324 138,787 139,763 130,012 123,926 115,413 118,324 125,596 42 Demand deposits 11,802 12,247 12,310 12,252 13,460 13,733 12,847 14,007 12,310 14,465 43 Time deposits2 58,025 68,251 70,578 67,117 67,525 69,075 70,905 66,933 70,578 70,373 44 Other3 33,512 47,521 35,436 59,418 58,778 47,204 40,174 34,473 35,436 40,758 45 Banks' custodial liabilities5 37,983 44,386 72,822 54,938 58,936 68,905 72,933 72,933 72,822 73,752 46 U.S. Treasury bills and certificates6 14,495 12,954 13,132 9,907 10,651 10,454 12,101 13,432 13,132 17,160 47 Other negotiable and readily transferable instruments7 21,453 24,964 51,247 36,661 40,427 50,860 52,651 51,684 51,247 48,381 48 Other 2,035 6,468 8,443 8,370 7,858 7,591 8,181 7,817 8,443 8,211 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 14,573 16,083 26,971 22,847 25,867 27,391 29,933 28,793 26,971 25,777 1. Reporting banks include all types of depository institutions as well as some brokers and 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official dealers. Excludes bonds and notes of maturities longer than one year. institutions of foreign countries. 2. Excludes negotiable time certificates of deposit, which are included in "Other negotia- 7. Principally bankers acceptances, commercial paper, and negotiable time certificates of ble and readily transferable instruments." deposit. 3. Includes borrowing under repurchase agreements. 8. Principally the International Bank for Reconstruction and Development, the Inter- 4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiar- American Development Bank, and the Asian Development Bank. Excludes "holdings of ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory dollars" of the International Monetary Fund. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 9. Foreign central banks, foreign central governments, and the Bank for International principally of amounts owed to the head office or parent foreign bank, and to foreign Settlements. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. 10. Excludes central banks, which are included in "Official institutions." 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • May 1999 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1998 1999 IItteemm 11999966 11999977 11999988RR July Aug. Sept. Oct. Nov. Dec. Jan.P AREA 50 Total, all foreigners 1,162,148 1,283,787 1,347,347 1,306,155 1,341,295 1,350,292 1,371,998 1,346,154 1,347,347 1,336,255 51 Foreign countries 1,148,176 1,272,097 1,335,588 1,291,841 1,326,107 1,335,077 1,359,188 1,332,947 1,335,588 1,324,029 52 Europe 376,590 420,432 427,380 431,783 457,537 450,587 451,350 449,567 427,380 429,596 53 Austria 5,128 2,717 3,181 2,602 2,671 3,137 2,799 2,824 3,181 2,902 54 Belgium and Luxembourg 24,084 41,007 42,819 33,845 35,086 33,934 39,911 42,014 42,819 38,897 55 Denmark 2,565 1,514 1,438 2,013 2,128 1,578 1,813 1,675 1,438 1,200 56 Finland 1,958 2,246 1,862 1,211 1,350 1,181 1,193 1,706 1,862 1,989 57 France 35,078 46,607 44,630 47,140 48,328 50,405 47,348 48,169 44,630 44,453 58 Germany 24,660 23,737 21,357 23,730 28,751 25,811 22,024 22,606 21,357 20,315 59 Greece 1,835 1,552 2,066 2,784 2,941 2,544 2,901 2,444 2,066 2,199 60 Italy 10,946 11,378 7,103 11,114 10,625 9,183 7,124 6,378 7,103 6,155 61 Netherlands 11,110 7,385 10,795 7,097 9,239 8,066 7,251 9,298 10,795 10,585 62 Norway 1,288 317 710 1,179 1,469 688 1,149 797 710 1,068 63 Portugal 3,562 2,262 3,235 2,823 2,424 2,292 2,377 2,400 3,235 2,543 64 Russia 7,623 7,968 2,442 6,398 2,718 3,085 3,735 2,698 2,442 2,231 65 Spain 17,707 18,989 15,775 12,079 14,283 20,485 26,569 27,017 15,775 12,842 66 Sweden 1,623 1,628 3,027 2,198 1,769 3,285 3,257 3,857 3,027 3,135 67 Switzerland 44,538 39,023 50,654 44,676 39,362 48,393 47,332 50,167 50,654 59,870 68 Turkey 6,738 4,054 4,286 5,077 4,317 4,264 4,105 3,842 4,286 5,102 69 United Kingdom 153,420 181,904 181,541 196,859 219,197 204,915 202,536 195,099 181,541 177,179 70 Yugoslavia" 206 239 258 322 242 253 362 271 258 275 71 Other Europe and other former U.S.S.R.12 22,521 25,905 30,201 28,636 30,637 27,088 27,564 26,305 30,201 36,656 72 Canada 38,920 28,341 30,212 29,526 27,844 28,701 31,278 29,249 30,212 29,725 73 Latin America and Caribbean 467,529 536,393 555,707 564,055 556,699 561,502 575,837 545,251 555,707 540,682 74 Argentina 13,877 20,199 19,013 21,010 21,655 18,384 17,706 18,892 19,013 17,302 75 Bahamas 88,895 112,217 118,085 115,309 113,543 124,249 128,893 115,598 118,085 121,601 76 Bermuda 5,527 6,911 6,839 7,216 7,332 7,920 7,247 7,241 6,839 8,969 77 Brazil 27,701 31,037 15,800 34,292 27,824 18,453 17,308 13,370 15,800 12,284 78 British West Indies 251,465 276,418 303,443 290,009 291,098 298,697 310,058 298,260 303,443 287,236 79 Chile 2,915 4,072 5,010 4,987 4,726 5,725 5,598 4,778 5,010 5,318 80 Colombia 3,256 3,652 4,616 4,023 4,102 4,475 4,888 4,124 4,616 4,525 81 Cuba 21 66 62 63 62 62 57 63 62 64 82 Ecuador 1,767 2,078 1,573 1,772 1,608 1,540 1,679 1,510 1,573 1,508 83 Guatemala 1,282 1,494 1,334 1,273 1,237 1,241 1,232 1,204 1,334 1,209 84 Jamaica 628 450 539 519 550 541 578 524 539 563 85 Mexico 31,240 33,972 37,148 38,554 38,087 35,681 38,058 36,720 37,148 35,965 86 Netherlands Antilles 6,099 5,085 5,010 8,922 8,340 8,588 6,255 6,009 5,010 5,676 87 Panama 4,099 4,241 3,864 3,596 3,675 3,826 3,793 3,774 3,864 4,481 88 Peru 834 893 840 984 900 843 799 814 840 862 89 Uruguay 1,890 2,382 2,486 2,097 2,091 2,276 2,223 2,199 2,486 2,340 90 Venezuela 17,363 21,601 19,894 19,492 20,125 19,180 19,662 19,631 19,894 20,322 91 Other 8,670 9,625 10,151 9,937 9,744 9,821 9,803 10,540 10,151 10,457 92 249,083 269,379 306,745 247,952 266,480 275,745 284,441 229933,,558844 330066,,774455 330055,,557711 China 93 Mainland 30,438 18,252 13,041 18,919 18,506 18,523 15,814 13,784 13,041 13,496 94 Taiwan 15,995 11,840 12,708 11,333 11,290 12,080 12,802 12,361 12,708 10,973 95 Hong Kong 18,789 17,722 20,820 15,826 18,349 16,627 16,508 16,739 20,820 24,210 96 India 3,930 4,567 5,258 4,678 6,437 5,144 5,337 5,089 5,258 5,273 97 Indonesia 2,298 3,554 8,288 3,938 5,651 5,470 5,671 6,247 8,288 7,872 98 Israel 6,051 6,281 7,749 5,969 5,296 5,984 4,781 8,106 7,749 7,286 99 Japan 117,316 143,401 168,221 123,167 131,376 142,767 156,340 164,311 168,221 165,202 100 Korea (South) 5,949 13,060 12,454 12,713 12,493 12,971 12,505 12,396 12,454 12,443 101 Philippines 3,378 3,250 3,325 2,609 2,777 2,712 2,539 2,849 3,325 2,318 102 Thailand 10,912 6,501 7,360 6,780 7,869 6,664 7,134 6,788 7,360 7,299 103 Middle Eastern oil-exporting countries13 16,285 14,959 15,611 13,902 14,532 16,627 14,718 16,370 15,611 14,758 104 Other 17,742 25,992 31,910 28,118 31,904 30,176 30,292 28,544 31,910 34,441 105 8,116 10,347 8,907 10,788 10,562 11,098 9,749 8,889 8,907 9,110 106 Egypt 2,012 1,663 1,339 1,319 1,459 1,616 1,288 1,498 1,339 1,856 107 Morocco 112 138 97 74 76 88 78 75 97 98 108 South Africa 458 2,158 1,522 2,446 2,428 2,658 2,358 1,659 1,522 1,308 109 Zaire 10 10 5 7 35 6 7 12 5 6 110 Oil-exporting countries14 2,626 3,060 3,088 3,893 3,684 3,727 3,291 3,017 3,088 2,989 111 Other 2,898 3,318 2,856 3,049 2,880 3,003 2,727 2,628 2,856 2,853 112 Other 7,938 7,205 6,637 7,737 6,985 7,444 6,533 6,407 6,637 9,345 113 Australia 6,479 6,304 5,496 6,490 5,931 6,427 5,372 5,180 5,496 8,143 114 Other 1,459 901 1,141 1,247 1,054 1,017 1,161 1,227 1,141 1,202 115 Nonmonetary international and regional organizations .. 13,972 11,690 11,759 14,314 15,188 15,215 12,810 13,207 11,759 12,226 116 International 12,099 10,517 9,947 11,220 12,825 12,782 10,519 11,298 9,947 10,214 117 Latin American regional16 1,339 424 794 750 721 803 1,008 598 794 917 118 Other regional17 534 749 1,018 2,344 1,642 1,630 1,283 1,311 1,018 1,095 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1998 1999 AArreeaa oorr ccoouunnttrryy 11999966 11999977 11999988rr July Aug. Sept. Oct. Nov. Dec. Jan.P 1 Total, all foreigners 599,925 708,225 735,881 740,227 764,878 768,427 749,543 756,110' 735,881 715,457 2 Foreign countries 597,321 705,762 732,263 735,817 760,488 763,105 744,153 751,872' 732,263 711,872 3 Europe 165,769 199,880 234,468 229,928 227,688 234,967 224,661 228,924r 234,468 225,234 4 Austria 1,662 1,354 1,043 1,892 1,856 1,849 2,358 2,311 1,043 2,634 5 Belgium and Luxembourg 6,727 6,641 7,187 8,459 6,779 8,200 9,245 7,409 7,187 5,599 6 Denmark 492 980 2,584 933 1,374 1,059 1,768 2,524 2,584 1,816 7 Finland 971 1,233 1,070 1,032 1,161 1,073 1,149 1,050 1,070 963 8 France 15,246 16,239 15,251 14,421 17,314 17,077 16,307 18,881 15,251 18,575 9 Germany 8,472 12,676 15,922 11,327 12,029 15,375 15,121 17,997 15,922 15,115 10 Greece 568 402 575 450 530 373 415 510 575 533 11 Italy 6,457 6,230 7,283 6,345 8,617 6,510 7,153 6,544 7,283 6,168 17, Netherlands 7,117 6,141 5,734 5,642 4,321 4,803 5,230 5,686 5,734 5,828 13 Norway 808 555 827 553 1,110 640 662 385 827 645 14 Portugal 418 777 693 1,156 725 975 885 679 693 584 15 Russia 1,669 1,248 789 1,345 1,209 920 883 760 789 742 16 Spain 3,211 2,942 5,735 6,424 5,225 7,980 6,051 5,234 5,735 4,560 17 Sweden 1,739 1,854 4,223 4,553 4,456 4,319 4,508 5,087 4,223 4,338 18 Switzerland 19,798 28,846 46,942 49,359 49,258 55,798 43,337 45,858 46,942 46,122 19 Turkey 1,109 1,558 1,982 2,010 1,990 1,900 1,848 1,915 1,982 1,796 20 United Kingdom 85,234 103,143 106,728 104,397 99,174 97,436 98,746 97,072 106,728 98,301 21 Yugoslavia2 115 52 53 79 53 53 53 53 53 53 22 Other Europe and other former U.S.S.R.3 3,956 7,009 9,847 9,551 10,507 8,627 8,942 8,969r 9,847 10,862 23 Canada 26,436 27,189 47,212 36,007 41,402 41,165 37,316 44,830 47,212 42,925 74 Latin America and Caribbean 274,153 343,730 342,095 359,277 379,383 373,237 368,394 368,212 342,095 343,397 7,5 Argentina 7,400 8,924 9,553 8,421 8,724 8,777 9,087 9,225 9,553 10,616 7,6 Bahamas 71,871 89,379 96,455 78,770 77,875 86,867 88,923 91,171 96,455 92,521 7,7 Bermuda 4,129 8,782 4,969 10,622 9,629 10,610 6,585 5,702 4,969 5,547 7,8 Brazil 17,259 21,696 16,193 24,187 23,530 19,073 17,644 17,801 16,193 15,982 7,9 British West Indies 105,510 145,471 153,269 166,203 192,334 182,757 183,122 179,223 153,269 155,750 30 Chile 5,136 7,913 8,261 8,434 8,307 8,345 8,549 8,824 8,261 8,268 31 Colombia 6,247 6,945 6,523 6,914 6,905 6,813 6,764 6,639 6,523 6,454 37, Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 1,031 1,311 1,400 1,649 1,518 1,458 1,444 1,351 1,400 1,403 34 Guatemala 620 886 1,127 911 950 1,166 947 1,483 1,127 1,103 35 Jamaica 345 424 239 335 318 305 330 299 239 333 36 Mexico 18,425 19,428 21,143 20,062 20,078 20,677 22,039 22,483 21,143 21,666 37 Netherlands Antilles 25,209 17,838 6,779 16,278 12,939 10,294 7,323 7,696 6,779 7,403 38 Panama 2,786 4,364 3,598 4,308 4,157 4,226 4,011 3,864 3,598 3,549 39 Peru 2,720 3,491 3,260 4,009 4,061 3,829 3,706 3,618 3,260 3,369 40 Uruguay 589 629 1,126 1,154 1,055 955 958 1,040 1,126 999 41 Venezuela 1,702 2,129 3,089 2,436 2,649 2,638 2,689 2,788 3,089 3,313 42 Other 3,174 4,120 5,111 4,584 4,354 4,447 4,273 5,005 5,111 5,121 43 122,478 125,092 98,736 100,187 102,382 104,614 104,781 100,768' 98,736 90,909 China 44 Mainland 1,401 1,579 1,311 1,679 2,703 1,380 2,275 2,488 1,311 2,691 45 Taiwan 1,894 922 1,041 585 651 1,031 1,079 957 1,041 728 46 Hong Kong 12,802 13,991 9,074 11,045 13,821 10,548 8,244 8,238 9,074 8,332 47 India 1,946 2,200 1,463 1,822 1,878 1,823 1,582 1,533 1,463 1,483 48 Indonesia 1,762 2,651 1,951 2,010 2,031 2,108 2,044 2,069 1,951 1,948 49 Israel 633 768 1,166 1,116 898 941 1,504 916 1,166 833 50 Japan 59,967 59,549 46,712 45,566 44,822 52,213 52,904 48,406 46,712 41,817 51 Korea (South) 18,901 18,162 8,204 12,863 11,508 9,823 9,733 8,947 8,204 8,679 52 Philippines 1,697 1,689 1,467 1,244 1,259 1,280 1,128 1,619 1,467 1,310 53 Thailand 2,679 2,259 1,843 1,820 1,883 2,129 1,952 l,895r 1,843 1,826 54 Middle Eastern oil-exporting countries4 10,424 10,790 16,145 11,207 12,136 12,681 13,531 15,077' 16,145 14,329 55 Other 8,372 10,532 8,359 9,230 8,792 8,657 8,805 8,623 8,359 6,933 56 Africa 2,776 3,530 3,122 3,497 3,262 3,012 2,785 2,611 3,122 3,047 57 Egypt 247 247 257 294 279 272 322 259 257 302 58 Morocco 524 511 372 471 426 390 405 390 372 378 59 South Africa 584 805 643 630 653 694 665 704 643 802 60 Zaire 0 0 0 0 0 0 0 0 0 0 61 Oil-exporting countries5 420 1,212 936 1,331 1,046 787 533 454 936 664 62 Other 1,001 755 914 771 858 869 860 804 914 901 63 Other 5,709 6,341 6,630 6,921 6,371 6,110 6,216 6,527 6,630 6,360 64 Australia 4,577 5,300 6,167 6,067 5,999 5,783 5,809 6,008 6,167 5,866 65 Other 1,132 1,041 463 854 372 327 407 519 463 494 66 Nonmonetary international and regional organizations6... 2,604 2,463 3,618 4,410 4,390 5,322 5,390 4,238 3,618 3,585 1. Reporting banks include all types of depository institutions as well as some brokers and 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab dealers. Emirates (Trucial States). 2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Includes the Bank for International Settlements. Since December 1992, has included all 6. Excludes the Bank for International Settlements, which is included in "Other Europe." parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • May 1999 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1998 1999 TTyyppee ooff ccllaaiimm 11999966 11999977 11999988RR July Aug. Sept. Oct. Nov. Dec. Jan.? 1 Total 743,919 852,852 876,419 926,478 876,419 2 Banks' claims 599,925 708,225 735,881 740,227 764,878 768,427 749,543 756,1101 735,881 715,457 3 Foreign public borrowers 22,216 20,581 23,546 35,635 29,758 26,377 28,164 25,993 23,546 28,996 4 Own foreign offices2 341,574 431,685 485,445 446,536 466,019 486,452 476,973 487,64 lr 485,445 457,521 5 Unaffiliated foreign banks 113,682 109,230 105,727 101,956 106,034 108,972 109,140 117,919 105,727 106,540 6 Deposits 33,826 30,995 26,810 23,283 24,593 30,426 26,713 33,774R 26,810 30,326 7 Other 79,856 78,235 78,917 78,673 81,441 78,546 82,427 84,145R 78,917 76,214 8 All other foreigners 122,453 146,729 121,163 156,100 163,067 146,626 135,266 124,557 121,163 122,400 9 Claims of banks' domestic customers3 143,994 144,627 140,538 158,051 140,538 10 Deposits 77,657 73,110 78,167 89,602 78,167 11 Negotiable and readily transferable instruments4 51,207 53,967 48,848 53,512 48,848 12 Outstanding collections and other claims 15,130 17,550 13,523 14,937 13,523 MEMO 13 Customer liability on acceptances 10,388 9,624 4,519 6,068 4,519 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 39,661 33,816 39,978 31,927 28,436 25,082 34,265 32,888 39,978 38,941 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1998 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999955 11999966 11999977 Mar. June Sept. Dec.p 1 Total 224,932 258,106 276,550 285,590r 292,788r 281,136 250,366 By borrower 2 Maturity of one year or less 178,857 211,859 205,781 214,779 211,347 208,374 186,422 3 Foreign public borrowers 14,995 15,411 12,081 16,874r 16,997 14,613 13,675 4 All other foreigners 163,862 196,448 193,700 197,905r 194,350 193,761 172,747 5 Maturity of more than one year 46,075 46,247 70,769 70,81 lr 81,441r 72,762 63,944 6 Foreign public borrowers 7,522 6,790 8,499 ll,285r 10,688r 10,926 9,838 7 All other foreigners 38,553 39,457 62,270 59,526 70,753 61,836 54,106 By area Maturity of one year or less 8 Europe 55,622 55,690 58,294 69,150 73,787 68,996 68,708 9 Canada 6,751 8,339 9,917 9,297 8,766 8,953 11,125 10 Latin America and Caribbean 72,504 103,254 97,207 101,070 99,611 99,646 81,454 11 Asia 40,296 38,078 33,964 28,751 23,570 22,330 18,035 12 Africa 1,295 1,316 2,211 2,227 1,116 1,762 1,835 13 All other3 2,389 5,182 4,188 4,284 4,497 6,687 5,265 Maturity of more than one year 14 Europe 4,995 6,965 13,240 15,118 15,606 15,395 15,055 15 Canada 2,751 2,645 2,525 2,765 2,571 2,982 3,140 16 Latin America and Caribbean 27,681 24,943 42,049 39,363 47,969 39,138 33,340 17 Asia 7,941 9,392 10,235 10,806r 12,630r 12,173 10,039 18 Africa 1,421 1,361 1,236 1,254 1,259 1,170 1,233 19 All other3 1,286 941 1,484 1,505 1,406 1,904 1,137 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity, dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1996 1997 1998 AArreeaa oorr ccoouunnttrryy 11999944 11999955 Dec. Mar. June Sept. Dec. Mar. June Sept. Dec.p 1 Total 499.5 551.9 645.3 647.6 678.8 711.0 726.0 739.1 746.6 723.0 688.2 2 G-10 countries and Switzerland 191.2 206.0 228.3 231.4 250.0 247.8 242.8 249.0 275.0 258.5 247.0 3 Belgium and Luxembourg 7.2 13.6 11.7 14.1 9.4 11.4 11.0 11.2 13.1 10.9 13.1 4 France 19.1 19.4 16.6 19.7 17.9 20.2 15.4 15.5 20.5 19.9 18.0 5 Germany 24.7 27.3 29.8 32.1 34.1 34.7 28.6 25.5 28.7 28.9 30.7 6 Italy 11.8 11.5 16.0 14.4 20.2 19.3 15.5 19.7 19.5 17.9 11.3 7 Netherlands 3.6 3.7 4.0 4.5 6.4 7.2 6.2 7.3 8.3 8.1 7.7 8 Sweden 2.7 2.7 2.6 3.4 3.6 4.1 3.3 4.8 3.1 2.1 2.2 9 Switzerland 5.1 6.7 5.3 6.0 5.4 4.8 7.2 5.6 6.9 7.4 8.2 10 United Kingdom 85.8 82.4 104.7 99.2 110.6 108.3 113.4 120.1 134.8 125.1 114.9 11 Canada 10.0 10.3 14.0 16.3 15.7 15.1 13.7 13.5 16.5 15.5 16.7 12 Japan 21.1 28.5 23.7 21.7 26.8 22.6 28.6 25.8 23.7 22.7 24.1 13 Other industrialized countries 45.7 50.2 65.7 66.4 71.7 73.8 64.5 74.3 72.0 71.4 67.7 14 Austria 1.1 .9 1.1 1.9 1.5 1.7 1.5 1.7 1.9 2.1 1.4 15 Denmark 1.3 2.6 1.5 1.7 2.8 3.7 2.4 2.0 2.1 2.8 2.1 16 Finland .9 .8 .8 .7 1.4 1.9 1.3 1.5 1.4 1.6 1.4 17 Greece 4.5 5.7 6.7 6.3 6.1 6.2 5.1 6.1 5.8 5.7 5.9 18 Norway 2.0 3.2 8.0 5.3 4.7 4.6 3.6 4.0 3.4 3.3 3.2 19 Portugal 1.2 1.3 .9 1.0 1.1 1.4 .9 .7 1.3 1.0 1.3 20 Spain 13.6 11.6 13.2 14.4 15.4 13.9 11.7 16.5 15.1 17.5 13.5 21 Turkey 1.6 1.9 2.7 2.8 3.4 4.4 4.5 4.9 6.5 5.2 4.8 22 Other Western Europe 3.2 4.7 4.7 6.3 5.5 6.1 8.2 9.9 9.6 10.3 10.4 23 South Africa 1.0 1.2 2.0 1.9 1.9 1.9 2.2 3.7 5.0 3.7 3.5 24 Australia 15.4 16.4 24.0 24.4 27.8 28.0 23.1 23.2 20.0 18.2 20.3 25 OPEC2 24.1 22.1 19.7 21.8 22.3 22.9 26.0 25.7 25.3 25.8 26.9 26 Ecuador .5 .7 1.1 1.1 .9 1.2 1.3 1.3 1.2 1.2 1.2 27 Venezuela 3.7 2.7 2.4 1.9 2.1 2.2 2.5 3.3 3.2 3.1 3.2 28 Indonesia 3.8 4.8 5.2 4.9 5.6 6.5 6.7 5.5 5.1 4.7 4.7 29 Middle East countries 15.3 13.3 10.7 13.2 12.5 11.8 14.4 14.3 15.5 16.1 16.9 30 African countries .9 .6 .4 .7 1.2 1.1 1.2 1.4 .3 .8 1.0 31 Non-OPEC developing countries 96.0 112.6 130.3 128.1 140.6 137.0 138.7 147.4 144.4 138.2 141.5 Latin America 32 Argentina 11.2 12.9 14.3 14.3 16.4 17.1 18.4 19.3 20.2 22.3 22.3 33 Brazil 8.4 13.7 20.7 22.0 27.3 26.1 28.6 32.4 29.9 23.4 24.8 34 Chile 6.1 6.8 7.0 6.8 7.6 8.0 8.7 9.0 9.1 8.5 8.3 35 Colombia 2.6 2.9 4.1 3.7 3.3 3.4 3.4 3.3 3.6 3.4 3.2 36 Mexico 18.4 17.3 16.2 17.2 16.6 16.4 17.4 17.7 17.9 18.4 18.4 37 .5 .8 1.6 1.6 1.4 1.8 2.0 2.1 2.2 2.2 2.2 38 Other 2.7 2.8 3.3 3.4 3.4 3.6 4.1 4.0 4.4 4.6 5.4 Asia China 39 Mainland 1.1 1.8 2.5 2.7 3.6 4.3 3.2 4.2 3.9 2.8 3.0 40 Taiwan 9.2 9.4 10.3 10.5 10.6 9.7 9.0 11.7 11.3 12.1 12.8 41 4.2 4.4 4.3 4.9 5.3 4.9 4.9 5.0 4.9 5.3 5.3 42 .4 .5 .5 .6 .8 1.0 .7 .7 .9 .9 1.1 43 Korea (South) 16.2 19.1 21.5 14.6 16.3 16.2 15.6 16.2 14.5 12.9 13.6 44 Malaysia 3.1 4.4 6.0 6.5 6.4 5.6 5.1 4.5 4.7 5.0 5.6 45 Philippines 3.3 4.1 5.8 6.0 7.0 5.7 5.7 5.0 5.4 4.7 5.1 46 Thailand 2.1 4.9 5.7 6.8 7.3 6.2 5.4 5.5 4.9 5.3 4.6 47 Other Asia 4.7 4.5 4.1 4.3 4.7 4.5 4.3 4.2 3.7 3.1 2.9 Africa 48 Egypt .3 .4 .7 .9 1.1 .9 .9 1.0 1.5 1.7 1.3 49 Morocco .6 .7 .7 .6 .7 .7 .6 .6 .6 .5 .5 50 .0 .0 .1 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 .8 .9 .9 .9 .9 .9 .8 1.1 .8 1.1 1.0 52 Eastern Europe 2.7 4.2 6.9 8.9 7.1 9.8 9.1 12.0 10.9 6.0 5.2 53 Russia4 .8 1.0 3.7 3.5 4.2 5.1 5.1 7.5 6.8 2.8 2.2 54 Other 1.9 3.2 3.2 5.4 2.9 4.7 4.0 4.6 4.1 3.2 3.1 55 Offshore banking centers 72.9 99.2 134.7 131.3 129.6 138.9 145.7 129.3 123.5 118.6 90.4 56 Bahamas 10.2 11.0 20.3 20.9 16.1 19.8 29.9 29.2 22.7 28.9 32.6 57 Bermuda 8.4 6.3 4.5 6.7 7.9 9.8 9.8 9.0 9.3 10.4 4.5 58 Cayman Islands and other British West Indies 21.4 32.4 37.2 32.8 35.1 45.7 43.4 24.9 33.9 27.4 12.3 59 Netherlands Antilles 1.6 10.3 26.1 19.9 15.8 21.7 14.6 14.0 10.5 6.0 2.6 60 Panama5 1.3 1.4 2.0 2.0 2.6 2.1 3.1 3.2 3.3 4.0 3.8 61 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .2 .1 62 Hong Kong, China 20.0 25.0 27.9 30.8 35.2 27.2 32.2 33.8 30.0 30.6 23.2 63 Singapore 10.1 13.1 16.7 17.9 16.7 12.7 12.7 15.0 13.5 11.1 11.1 64 Other® .1 .1 .1 .1 .3 .1 .1 .1 .2 .2 .2 65 Miscellaneous and unallocated7 66.9 57.6 59.6 59.6 57.6 80.8 99.1 101.3 95.6 104.5 109.4 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. institutions as well as some types of brokers and dealers. To eliminate duplication, the data 4. As of December 1992, excludes other republics of the former Soviet Union. are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign 5. Includes Canal Zone. branch of the same banking institution. 6. Foreign branch claims only. These data are on a gross claims basis and do not necessarily reflect the ultimate country 7. Includes New Zealand, Liberia, and international and regional organizations. risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks are available in the quarterly Country Exposure Lending Survey published by the Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • May 1999 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1997 1998 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999944 11999955 11999966 June Sept. Dec. Mar. June Sept. 1 Total 54,309 46,448 61,782 56,445 55,891 60,037 58,040 51,433r 49,278r 2 Payable in dollars 38,298 33,903 39,542 38,651 39,746 41,956 42,258 40,026' 38,409r 3 Payable in foreign currencies 16,011 12,545 22,240 17,794 16,145 18,081 15,782 11,407 10,869 By type 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 11,913 11,442 11,487 13,043 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 29,11 r 29,947r 8 Trade payables 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 19,574r 19,671r 10 Payable in dollars 19,480 21,000 27,629 27,209 28,259 28,913 28,690 28,03 8r 28,597r 11 Payable in foreign currencies 1,875 1,207 1,104 1,029 1.171 1,592 1,300 1,073 1,350 By area 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 1,334 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 688 895 699 591 645 776 345 189 179 18 United Kingdom 15,543 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 1,045 539 389 20 Latin America and Caribbean 2,034 1,783 1,668 1,285 1,067 1,386 965 1,320 11,,335511 21 Bahamas 101 59 236 124 10 141 17 6 11 22 Bermuda 80 147 50 55 64 229 86 49 73 23 Brazil 207 57 78 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 8,403 5,988 6,423 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 countries1 35 27 25 39 23 32 23 0 0 30 Africa 135 150 38 29 33 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 6,773 7,700 9,767 8,683 9,343 10,228 9,951 9,987r ll,010r 34 Belgium and Luxembourg 241 331 479 736 703 666 565 557 623 3b France 728 481 680 708 782 764 840 612 740 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 3,743 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 345 205 297 397 180 203 174 209 168 44 Brazil 161 98 196 225 233 220 249 246 256 45 British West Indies 23 56 14 26 23 12 5 27 5 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 13,538 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 3,582 51 Africa 428 619 1,040 941 929 874 833 921 810 52 Oil-exporting countries2 256 254 532 423 504 408 376 354 372 53 Other3 519 687 840 1,103 1,156 1,086 1,136 1,101 1,245 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A59 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1997 1998 Type of claim, and area or country 11999944 11999955 11999966 June Sept. Dec. Mar. June Sept. 1 Total 57,888 52,509 65,897 68,264 70,506 68,128 71,004 63,202r 67,976r 2 Payable in dollars 53,805 48,711 59,156 62,080 64,144 62,173 65,359 57,601r 62,034r 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 36,959 40,301 32,355 37,262 5 Deposits 18,507 15,133 21,624 24,106 23,951 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 481 479 772 1,491 1,559 1,849 1,708 1,678 2,032 8 Other financial claims 15,390 12,265 15,899 16,609 17,854 14,050 19,438 17,593 21,856 9 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 11 Commercial claims 23,991 25,111 28,374 27,549 28,701 31,169 30,703 30,847r 30,714r 12 Trade receivables 21,158 22,998 25,751 24,858 25,110 27,536 26,888 26,764r 26,330r 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 21,473 23,081 25,930 26,113 26,957 29,307 29,223 29,599r 28,793r 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 or country 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 800 803 694 680 1,112 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 Switzerland 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 13,553 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 1,871 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 Eastern oil-exporting countries1 141 3 22 20 15 11 9 12 13 34 Africa 373 276 174 179 174 319 325 155 157 35 Oil-exporting countries2 0 5 14 15 16 15 16 15 16 36 All other3 600 583 569 553 553 652 720 732 663 Commercial claims 9,540 9,824 10,443 9,603 10,486 12,120 12,854 12,882r 13,029r 37 Europe 213 231 226 327 331 328 232 216 219 38 Belgium and Luxembourg 1,881 1,830 1,644 1,377 1,642 1,796 1,939 1,955 2,098 39 France 1,027 1,070 1,337 1,229 1,395 1,614 1,670 1,757 1,502 40 Germany 311 452 562 613 573 597 534 492 463 41 Netherlands 557 520 642 389 381 554 476 418 546 42 Switzerland 2,556 2,656 2,946 2,836 2,904 3,660 4,828 4,664 4,681 43 United Kingdom 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 4,364 5,276 5,241 5,028 5,750 5,481 6,082 5,773 46 Bahamas 9 30 35 29 22 27 13 12 39 47 Bermuda 234 272 275 197 128 244 238 359 173 48 Brazil 612 898 1,303 1,136 1,101 1,162 1,128 1,183 1,062 49 British West Indies 83 79 190 98 98 109 88 110 91 50 Mexico 1,243 993 1,128 1,140 1,219 1,392 1,302 1,462 1,356 51 Venezuela 348 285 357 451 418 576 441 585 566 52 Asia 6,982 7,312 8,376 8,460 8,576 8,713 7,638 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 countries2 67 87 166 81 207 119 122 116 128 57 Other3 910 1,006 1,368 1,163 1,198 1,246 1,235 1,080 1,691 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • May 1999 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1999 1998 1999 Transaction, and area or country 1997 1998 Jan.— Jan. July Aug. Sept. Oct. Nov. Dec. Jan.P U.S. corporate securities STOCKS 1 Foreign purchases 1,097,958 1,596,255r 155,810 152,833 141,566 137,418 145,588 126,571r 138,942 155,810 2 Foreign sales 1,028,361 l,542,099r 152,300 150,308 139,722 147,891 142,831 119,042r 134,306 152,300 3 Net purchases, or sales (—) 69,597 54,156r 3,510 2,525 1,844 -10,473 2,757 7,529r 4,636 3,510 4 Foreign countries 69,754 54,536r 3,496 2,739 1,843 -10,430 2,754 7,546r 4,634 3,496 5 Europe 62,688 72,349r 6,049 6,983 5,459 2,182 -249 4,406r 2,441 6,049 6 France 6,641 6,099 537 199 988 85 360 50 -614 537 7 Germany 9,059 10,609 1,035 1,503 1,326 1,281 68 372 -189 11,,003355 8 Netherlands 3,831 8,326 86 1,265 163 876 1,009 1,816 332 8866 9 Switzerland 7,848 6,269 -10 1,092 -277 -307 -1,974 -420 -314 -10 10 United Kingdom 22,478 24,336 3,897 1,154 1,740 700 632 1,902 3,154 3,897 11 Canada -1,406 —4,766r 727 -443 -276 -195 -507 —201r -976 727 12 Latin America and Caribbean 5,203 781 -1,284 -614 610 -11,766 2,058 3,691 3,088 -1,284 13 Middle East1 383 -1,082 152 -134 -157 148 -177 -334 -219 152 14 Other Asia 2,072 -12,554 -2,307 -2,905 -4,112 -678 1,823 -8 155 -2,307 15 Japan 4,787 -1,407 -616 -306 214 519 597 822 141 -616 16 Africa 472 624 22 -14 159 -98 -217 41 16 22 17 Other countries 342 -816r 137 -134 160 -23 23 —49r 129 137 18 Nonmonetary international and regional organizations -157 -380 14 -214 1 -43 3 —17 2 14 BONDS2 19 Foreign purchases 610,116 905,272r 65,978 74,951 67,529 100,186 108,678 81,943r 58,884 65,978 20 Foreign sales 475,958 727,866r 57,392 64,461 58,678 92,663 105,437 60,480 41,141 57,392 21 Net purchases, or sales (—) 134,158 177,406r 8,586 10,490 8,851 7,523 3,241 21,463r 17,743 8,586 22 Foreign countries 133,595 177,749r 8,585 10,567 8,813 7,473 3,230 22,433r 17,665 8,585 23 Europe 71,631 127,932r -1,432 8,650 5,813 12,323 12,062 16,717 9,099 -1,432 24 France 3,300 3,390 145 451 233 184 701 235 -170 145 25 Germany 2,742 4,381 398 806 139 268 -135 435 217 398 26 Netherlands 3,576 3,490 60 -859 32 275 704 64 996 60 27 Switzerland 187 4,856 96 234 100 1,003 -50 251 -36 96 28 United Kingdom 54,134 97,683r -3,276 5,665 3,924 9,760 10,182 13,777 6,863 -3,276 29 Canada 6,264 6,077 100 640 439 443 292 558 184 100 30 Latin America and Caribbean 34,733 24,73 lr 6,431 1,730 1,592 -2,927 -11,135 2,295r 2,688 6,431 31 Middle East1 2,155 4,994 1,436 171 -188 -58 2 835 2,472 1,436 32 Other Asia 16,996 12,679 2,032 -597 1,709 -1,847 1,185 1,904 3,152 2,032 33 Japan 9,357 8,381 562 -511 -10 -713 1,624 1,194 2,238 562 34 Africa 1,005 190 40 -48 -17 -61 55 24 16 40 35 Other countries 811 1,146 -22 21 -535 -400 769 100 54 -22 36 Nonmonetary international and regional organizations 563 -343 1 -77 38 50 11 -970 78 1 Foreign securities 37 Stocks, net purchases, or sales (-) -40,942 8,503r 3,164 -3,537 5,557 6,107 8,046 -2,729' 841 3,164 38 Foreign purchases 756,015 940,678R 76,208 82,247 74,376 89,496 90,407 70,402r 69,578 76,208 39 Foreign sales 796,957 932,175r 73,044 85,784 68,819 83,389 82,361 73,131r 68,737 73,044 40 Bonds, net purchases, or sales (—) -48,171 - 18,900r -872 3,076 1,049 3,384 15,980 -918 -4,627 -872 41 Foreign purchases 1,451,704 1,335,314r 57,584 118,922 139,393 152,881 102,202 55,573 56,845 57,584 42 Foreign sales 1,499,875 1,354,214r 58,456 115,846 138,344 149,497 86,222 56,491 61,472 58,456 43 Net purchases, or sales (—), of stocks and bonds .... -89,113 — 10,397r 2,292 -461 6,606 9,491 24,026 —3,647r -3,786 2,292 44 Foreign countries -88,921 — 10,068r 2,171 -390 6,623 9,492 24,119 —3,641r -3,626 2,171 45 Europe -29,874 1 l,139r 1,739 2,281 1,202 6,007 10,792 2,326r 3,072 1,739 46 Canada -3,085 -1,163 -311 2,201 2,667 -1,118 946 562 -4,828 -311 47 Latin America and Caribbean -25,258 -12,803r 2,310 -4,838 -1,196 1,214 4,585 -4,074r 38 2,310 48 -25,123 -3,326 -1,553 -59 4,227 3,550 6,699 -2,064 -1,489 -1,553 49 Japan -10,001 -1,663 141 -316 1,741 2,239 6,134 -2,390 -1,882 141 50 Africa -3,293 -1,411 17 -269 -122 -163 4 -56 5 17 51 Other countries -2,288 -2,504r -31 294 -155 2 1,093 —335r -424 -31 52 Nonmonetary international and regional organizations -192 -329 121 -71 -17 -1 -93 -6 -160 121 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 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 1999 1998 1999 AArreeaa oorr ccoouunnttrryy 11999977 11999988 Jan.- July Aug. Sept. Oct. Nov. Dec. Jan.? Jan. 1 Total estimated 184,171 46,677 -4,006 -4,454 -15,795 —5,270 -2,193 25,456 10,549 -4,006 2 Foreign countries 183,688 44,208 -3,948 -4,507 -15,795 -5,261 -2,855 25,556 9,426 -3,948 3 Europe 144,921 21,586 1,768 -6,465 -2,823 -2,771 -9,869 5,475 8,077 1,768 4 Belgium and Luxembourg 3,427 3,805 -229 215 667 113 -606 510 2,148 -229 5 Germany 22,471 148 -268 82 -1,799 894 1,171 307 -556 -268 6 Netherlands 1,746 -5,533 2,446 -675 -3,081 -579 1,543 -1,156 898 2,446 7 Sweden -465 1,486 163 239 -152 -330 193 586 581 163 8 Switzerland 6,028 5,240 -2,171 -827 -680 363 2,811 531 175 -2,171 9 United Kingdom 98,253 12,120 878 -5,921 8,000 2,217 -13,168 3,207 3,074 878 10 Other Europe and former U.S.S.R 13,461 4,320 949 422 -5,778 -5,449 -1,813 1,490 1,757 949 11 Canada -811 572 -1,735 -619 -2,088 -663 -1,188 3,694 614 -1,735 12 Latin America and Caribbean -2,554 -3,735 -5,666 685 -5,940 -1,233 -491 1,961 -3,817 -5,666 13 Venezuela 655 59 -17 308 -1,308 6 -35 327 108 -17 14 Other Latin America and Caribbean -549 9,450 -2,024 2,185 3,914 2,982 -1,288 -5,411 -165 -2,024 15 Netherlands Antilles -2,660 -13,244 -3,625 -1,808 -8,546 -4,221 832 7,045 -3,760 -3,625 16 Asia 39,567 27,383 2,271 1,326 -3,856 -207 7,756 13,632 4,347 2,271 17 Japan 20,360 13,048 -2,134 774 299 128 1,233 7,311 3,750 -2,134 18 Africa 1,524 751 17 -22 62 81 87 145 16 17 19 Other 1,041 -2,349 -603 588 -1,150 -468 850 649 189 -603 20 Nonmonetary international and regional organizations 483 2,469 -58 53 0 -9 662 -100 1,123 -58 21 International 621 1,502 -77 -135 -10 -288 645 -19 1,084 -77 22 Latin American regional 170 199 3 192 8 -5 0 -6 2 3 MEMO 23 Foreign countries 183,688 44,208 -3,948 -4,507 -15,795 -5,261 -2,855 25,556 9,426 -3,948 24 Official institutions 43,959 4,123 2,459 469 -16,920 -10,304 9,001 11,843 5,274 2,459 25 Other foreign 139,729 40,085 -6,407 -4,976 1,125 5,043 -11,856 13,713 4,152 -6,407 Oil-exporting countries 26 Middle East2 7,636 -16,554 4,065 -2,578 -4,160 -5,837 -276 233 -2,442 4,065 27 -12 2 0 0 1 0 0 0 0 0 1. Official and private transactions in marketable U.S. Treasury securities having an 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States). Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 3. Comprises Algeria, Gabon, Libya, and Nigeria. countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • May 1999 3.28 FOREIGN EXCHANGE RATES AND INDEXES OF THE FOREIGN EXCHANGE VALUE OF THE U.S. DOLLAR1 Currency units per dollar except as noted 1998 1999 IItteemm 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar/ Exchange Rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 78.28 74.37 62.91 61.79 63.49 61.82 63.20 63.99 63.08 2 Austria/schilling 10.589 12.206 12.379 11.524 11.840 11.746 n.a. n.a. n.a. 3 Belgium/franc 30.97 35.81 36.31 33.81 34.71 34.44 n.a. n.a. n.a. 4 Brazil/real 1.0051 1.0779 1.1605 1.1889 1.1932 1.2052 1.5120 1.9261 1.9057 5 Canada/dollar 1.3638 1.3849 1.4836 1.5452 1.5404 1.5433 1.5194 1.4977 1.5176 6 China, P.R./yuan 8.3389 8.3193 8.3008 8.2778 8.2778 8.2780 8.2789 8.2755 8.2792 7 Denmark/krone 5.8003 6.6092 6.7030 6.2294 6.3960 6.3531 6.4194 6.6379 6.8287 8 European Monetary Union/euro3 n.a. n.a. n.a. n.a. n.a. n.a. 1.1591 1.1203 1.0886 9 Finland/markka 4.5948 5.1956 5.3473 4.9845 5.1163 5.0769 n.a. n.a. n.a. 10 France/franc 5.1158 5.8393 5.8995 5.4925 5.6422 5.5981 n.a. n.a. n.a. 11 Germany/deutsche mark 1.5049 1.7348 1.7597 1.6381 1.6827 1.6698 n.a. n.a. n.a. 12 Greece/drachma 240.82 273.28 295.70 281.64 282.64 280.43 278.91 287.41 296.36 13 Hong Kong/dollar 7.7345 7.7431 7.7467 7.7483 7.7432 7.7471 7.7486 7.7490 7.7493 14 India/rupee 35.51 ^6.36 41.36 42.39 42.43 42.59 42.55 42.53 42.52 15 Ireland/pound2 159.95 151.63 142.48 152.21 147.77 148,76 n.a. n.a. n.a. 16 Italy/lira 1,542.76 1,703.81 1,736.85 1,620.96 1,664.91 1,653.23 n.a. n.a. n.a. 17 Japan/yen 108.78 121.06 130.99 121.05 120.29 117.07 113.29 116.67 119.47 18 Malaysia/ringgit 2.5154 2.8173 3.9254 3.8000 3.8000 3.8014 3.8000 3.8000 3.8000 19 Mexico/peso 7.600 7.918 9.152 10.159 9.969 9.907 10.128 10.006 9.732 20 Netherlands/guilder 1.6863 1.9525 1.9837 1.8479 1.8969 1.8816 n.a. n.a. n.a. 7,1 New Zealand/dollar2 68.77 66.25 53.61 52.13 53.40 52.23 53.88 54.35 53.45 22 Norway/krone 6.4594 7.0857 7.5521 7.4294 7.4562 7.6050 7.4532 7.7240 7.8151 23 Portugal/escudo 154.28 175.44 180.25 168.01 172.52 171.19 n.a. n.a. n.a. 24 Singapore/dollar 1.4100 1.4857 1.6722 1.6378 1.6378 1.6515 1.6791 1.7004 1.7292 7,5 South Africa/rand 4.3011 4.6072 5.5417 5.7991 5.6511 5.9030 5.9931 6.1146 6.2136 26 South Korea/won 805.00 950.77 1,400.40 1,344.14 1,294.01 1,213.22 1,175.11 1,188.84 1,229.72 27 Spain/peseta 126.68 146.53 149.41 139.23 143.05 142.08 n.a. n.a. n.a. 7.8 Sri Lanka/rupee 55.289 59.026 65.006 66.345 67.578 68.117 68.630 69.070 69.570 7.9 Sweden/krona 6.7082 7.6446 7.9522 7.8395 8.0140 8.0716 7.8188 7.9532 8.2144 30 Switzerland/franc 1.2361 1.4514 1.4506 1.3373 1.3852 1.3604 1.3856 1.4272 1.4660 31 Taiwan/dollar 27.468 28.775 33.547 33.121 32.603 32.337 32.300 32.564 33.165 37, Thailand/baht 25.359 31.072 41.262 38.118 36.527 36.276 36.622 37.137 37.557 33 United Kingdom/pound2 156.07 163.76 165.73 169.44 166.11 167.08 164.98 162.76 162.13 34 Venezuela/bolivar 417.19 488.39 548.39 570.68 569.66 565.89 569.80 577.32 580.06 Indexes3 NOMINAL 35 G-10 (March 1973= 100)4 87.34 96.38 98.85 93.69 95.46 94.61 n.a. n.a. n.a. 36 Broad (January 1997 = 100)5 97.43 104.47 116.25 115.46 115.34 114.56 114.68 116.37 117.80 37 Major currencies (March 1973= 100)6 85.23 91.85 96.52 93.46 94.23 93.40 92.37 93.76 95.69 38 Other important trading partners (January 1997=100)7 98.25 104.67 125.70 129.02 127.31 126.80 128.98 130.83 131.03 REAL 39 Broad (March 1973 = 100)5 85.95 90.56 98.43 97.10 96.67 95.89 95.96 96.94 98.41 40 Major currencies (March 1973 = 100)6 85.83 93.20 98.33 95.47 96.21 95.44 94.74 96.10 98.36 41 Other important trading partners (March 1973 = 100)7 92.52 93.62 105.83 106.62 104.45 103.59 104.75 105.26 105.70 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 5. Weighted average of the foreign exchange value of the U.S. dollar against the currencies table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, of the other G-10 countries. The weight for each of the ten countries is the 1972-76 average see inside front cover. world trade of that country divided by the average world trade of all ten countries combined. 2. Value in U.S. cents. Series revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), 3. As of January 1999, the euro is reported in place of the individual euro-area currencies. p. 700). These currency rates can be derived from the euro rate by using the fixed conversion rates (in 6. Weighted average of the foreign exchange value of the US. dollar against the currencies currencies per euro) as shown below: of a broad group of U.S. trading partners. The weight for each currency is computed as an average of U.S. bilateral import shares from and export shares to the issuing country and of a Euro equals measure of the importance to U.S. exporters of that country's trade in third country markets. 13.7603 Austrian schillings 1936.27 Italian lire 7. Weighted average of the foreign exchange value of the US. dollar against a subset of 40.3399 Belgian francs 40.3399 Luxembourg francs broad index currencies that circulate widely outside the country of issue. The weight for each 5.94573 Finnish markkas 2.20371 Netherlands guilders currency is its broad index weight scaled so that the weights of the subset of currencies in the 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 outside 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

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

A64 Special Tables • May 1999 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, December 31, 1998 Millions of dollars except as noted Banks with foreign offices1 Bank o s f f w ic i e t s h o d n o l m y2 e stic DDoommeessttiicc IItteemm TToottaall ttoottaall Total Domestic Over 100 Under 100 1 Total assets3 5,376,052 4,696,995 3,672,562 2,993,504 1,403,367 300,124 2 Cash and balances due from depository institutions 354,145 266,507 270,811 183,174 67,098 16,236 4 3 Ca C sh a s i h t e i m te s m i s n i p n r o p c r e o s c s e s o s f o c f o l c l o ec ll t e io ct n i , o n u n a p n o d s u te n d p o d s e t b e i d t s, d e a b n i d t s currency and coin < • 1 n 2 . 6 a , . 5 16 1 9 2 5 3 , , 0 75 9 5 5 3 2 5 3 , , 1 6 7 8 4 7 f 1 5 Currency and coin n.a. n.a. n.a. 28,660 11,488 n.a. 6 Balances due from depository institutions in the United States 41,889 32,098 21,130 1 7 Balances due from banks in foreign countries and foreign central banks 81,850 6,988 2,928 1 8 Balances due from Federal Reserve Banks 2200,,555566 20,333 7,865 1 MEMO 9 Non-interest-bearing balances due from commercial banks in the United States (included in balances due from depository institutions in the United States) 38,078 n.a. 16,400 15,397 6,280 10 Total securities, held-to maturity (amortized cost) and available-for-sale (fair value) 964,252 548,979 337,179 78,094 11 U.S. Treasury securities 112,721 57,479 42,833 12,409 12 U.S. government agency and corporation obligations (excludes mortgage-backed securities) 165,659 4488,,777733 8855,,440033 3311,,448833 13 Issued by U.S. government agencies 7,184 3,403 2,851 929 14 Issued by U.S. government-sponsored agencies 158,476 45,370 82,551 30,554 15 Securities issued by states and political subdivisions in the United States 8 3,637 25,591 46,445 14,601 16 General obligations 63,672 17,889 35,207 10,576 17 Revenue obligations 22,226 7,191 11,066 3,969 18 Industrial development and similar obligations 738 511 172 55 19 Mortgage-backed securities (MBS) 464,458 310,228 137,963 16,268 20 Pass-through securities 307,767 215,510 81,480 10,777 71 Guaranteed by GNMA 81,820 n.a. 52,127 n.a. 25,994 3,698 22 Issued by FNMA and FHLMC 224,343 162,380 54,918 7,045 23 Privately issued 1,604 1,003 567 34 24 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) 156,691 94,718 56,483 5,490 25 Issued or guaranteed by FNMA, FHLMC or GNMA 112,851 65,295 42,461 5,096 26 Collateralized by MBS issued or guaranteed by FNMA, FHLMC, or GNMA 3,505 2,069 1,284 153 27 All other mortgage-backed securities 40,334 27,354 12,738 242 28 Other debt securities 103,015 86,172 14,928 1,915 29 Other domestic debt securities n.a. 29,145 14,742 n.a. 30 Foreign debt securities n.a. 57,026 187 n.a. 31 Equity securities 31,762 20,736 9,607 1,419 32 Investments in mutual funds and other equity securities with readily determinable fair value 10,739 7,142 3,116 481 33 All other equity securities 21,023 13,594 6,490 938 34 Federal funds sold and securities purchased under agreements to resell 277,277 229,707 204,961 157,391 51,957 20,359 35 Total loans and lease-financing receivables, gross 3,201,521 2,901,748 2,135,719 1,835,946 889,528 176,273 36 LESS: Unearned income on loans 3,705 2,906 1,755 956 1,369 581 37 Total loans and leases (net of unearned income) 3,197,816 2,89 3,842 2,133,964 1,834,990 888,160 175,692 38 LESS: Allowance for loan and lease losses 55,710 n.a. 37,240 n.a. 15,876 2,594 39 LESS: Allocated transfer risk reserves 97 n.a. 97 n.a. 0 0 40 EQUALS: Total loans and leases, net 3,142,009 n.a. 2,096,628 n.a. 872,283 173,098 Total loans and leases, gross, by category 41 Loans secured by real estate .*• 1,334,591 1,303,977 757,195 726,581 477,743 9999,,665533 4 4 2 3 Construction and land development k 1 2 0 9 5 , , 0 59 3 2 4 fI 53 5 , , 1 0 2 6 3 7 4 1 4 2 , , 4 3 0 8 3 7 1 8 1 , , 0 5 6 8 6 0 44 One- to four-family residential properties 758,229 1 461,793 246,588 49,847 4 4 4 7 5 6 Mu R A lt e l i l v fa o o m l t v h i i e l n r y g l , ( o f a o iv n p e s e n o - r e m nd o r l e o ) a n re s, s i e d x e t n e t n ia d l e d p r u o n p d er e t r i e l s i nes of credit n. : a . 6 4 9 6 2 6 1 , , , 5 6 6 2 2 0 7 6 2 n. 1 1 a. 3 6 2 9 2 3 5 , , , 6 3 4 2 0 8 8 4 9 2 2 2 1 5 0 7 , , , 8 7 7 7 1 3 2 6 0 47 2 2 , , , 4 1 4 2 7 2 7 0 1 48 Nonfarm nonresidential properties 368,594 T 183,970 156,634 27,990 49 Loans to depository institutions 96,399 75,379 91,168 70,147 5,103 129 50 Commercial banks in the United States n.a. n.a. 46,499 45,906 4,771 n.a. 51 Other depository institutions in the United States n.a. n.a. 18,005 17,950 159 n.a. 52 Banks in foreign countries n.a. n.a. 26,664 6,291 173 n.a. 53 Loans to finance agricultural production and other loans to farmers 46,028 45,102 11,590 10,664 16,381 18,057 54 Commercial and industrial loans 892,855 722,817 708,650 538,612 153,722 30,483 55 U.S. addressees (domicile) n.a. n.a. 565,614 531,347 153,004 n.a. 56 Non-U.S. addressees (domicile) n.a. n.a. 143,036 7,265 718 n.a. 57 Acceptances of other banks 1,477 814 1,311 647 125 41 58 U.S. banks n.a. n.a. 403 402 n.a. n.a. 59 n.a. n.a. 908 245 n.a. n.a. 60 Loans to individuals for household, family, and other personal expenditures (includes 549,556 508,683 311,301 270,429 212,663 25,591 61 212,597 n.a. 111,054 n.a. 99,497 2,045 62 Other (includes single payment and installment) 336,959 n.a. 200,248 n.a. 113,166 23,546 63 Obligations (other than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 18,399 18,393 1111,,333388 11,332 6,223 839 64 138,024 106,337 128,308 96,622 8,828 887 65 Loans to foreign governments and official institutions n.a. n.a. 7,881 804 36 n.a. 66 n.a. n.a. 120,427 95,818 8,792 n.a. 67 Loans for purchasing and carrying securities n.a. n.a. n.a. 16,704 1,764 n.a. 68 All other loans (excludes consumer loans) n.a. n.a. n.a. 79,114 7,028 n.a. 69 124,192 120,246 114,858 110,912 8,741 593 70 Assets held in trading accounts 284,913 f 283,769 f1 1,110 1 71 Premises and fixed assets (including capitalized leases) 70,561 I 43,663 21,184 5,714 72 3,621 n.a. 2,079 n.a. 1,201 341 7 7 4 3 C In u v s e t s o t m m e e r n s t ' s l i i n a b u il n it c y o n o s n o l a id c a c t e e p d t a s n u c b e s s i d o i u a t r s i t e a s n a d n in d g associated companies 1 6 1 , , 1 6 3 6 1 9 1 \ 1 5 1 , , 7 4 6 6 1 4 t 1 3 1 1 9 3 9 58 6 75 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. 29,293 n.a. 29,293 n.a. n.a. 76 Intangible assets 76,271 n.a. 62,424 n a. 12,891 957 77 All other assets 185,204 n.a. 142,024 n .a. 37,952 5,228 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A65 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition, December 31, 1998 Millions of dollars except as noted Banks with foreign offices1 Bank o s f f w ic i e t s h o d n o l m y2 e stic DDoommeessttiicc IItteemm TToottaall ttoottaall Total Domestic Over 100 Under 100 78 Total liabilities, limited-life preferred stock, and equity capital 5,376,052 n.a. 3,672,562 n.a. 1,403,367 300,124 79 Total liabilities 4,923,412 4,244,354 3,382,892 2,703,834 1,272,594 267,926 80 Total deposits 3,654,780 3,082,935 2,352,320 1,780,475 1,045,794 256,666 81 Individuals, partnerships, and corporations 3,257,675 2,865,961 2,053,181 1,661,467 972,073 232,421 82 U.S. government n.a. 7,184 n a. 5,951 1,026 207 83 States and political subdivisions in the United States n a. 136,690 n.a. 61,582 55,471 19,637 84 Commercial banks in the United States 8 3,991 37,221 73,084 29,314 6,876 1,031 85 Other depository institutions in the United States n.a. 9,818 n.a. 4,843 3,463 1,512 86 Foreign banks, governments, and official institutions 135,946 8,839 135,514 8,407 416 16 87 Banks n.a. n.a. 97,289 6,897 393 n.a. 88 Governments and official institutions n.a. n.a. 38,225 1,510 23 n.a. 89 Certified and official checks 18,082 17,221 9,772 8,911 6,469 1,841 90 Total transaction accounts 746,853 424,719 246,318 75,816 91 Individuals, partnerships, and corporations 643,163 361,124 215,870 66,169 92 U.S. government 2,471 1,673 675 123 93 States and political subdivisions in the United States 43,738 19,398 17,097 7,243 94 Commercial banks in the United States 27,933 22,577 5,017 338 95 Other depository institutions in the United States 4,535 3,593 854 88 96 Foreign banks, governments, and official institutions 7,793 7,443 337 13 97 Banks n.a. 6,372 336 n.a. 98 Governments and official institutions n.a. 1,070 1 n.a. 99 Certified and official checks 17,221 8,911 6,469 1,841 100 Demand deposits (included in total transaction accounts) 582,727 377,309 165,533 39,885 101 Individuals, partnerships, and corporations 504,680 321,389 147,198 36,094 102 U.S. government 2,353 1,620 625 109 103 States and political subdivisions in the United States 18,318 11,786 5,127 1,405 104 Commercial banks in the United States n.a. 27,847 n.a. 22,576 4,933 338 105 Other depository institutions in the United States 4,522 3,591 845 85 106 Foreign banks, governments, and official institutions 7,785 7,436 337 12 107 Banks n.a. 6,368 336 n a. 108 Governments and official institutions n.a. 1,068 1 n.a. 109 Certified and official checks 17,221 8,911 6,469 1,841 110 Total nontransaction accounts 2,336,082 1,355,756 799,476 180,850 111 Individuals, partnerships, and corporations 2,222,799 1,300,343 756,204 166,252 112 U.S. government 4,713 4,278 351 84 113 States and political subdivisions in the United States 92,952 42,184 38,374 12,394 114 Commercial banks in the United States 9,289 6,737 1,859 693 115 Other depository institutions in the United States 5,283 1,250 2,609 1,424 116 Foreign banks, governments, and official institutions 1,046 965 79 2 117 Banks n.a. 525 57 n.a. 118 Governments and official institutions n.a. 439 22 n.a. 119 Federal funds purchased and securities sold under agreements to repurchase 430,046 406,565 349,583 326,102 77,676 2,787 120 Demand notes issued to the U.S. Treasury 10,690 10,690 9,111 9,111 1,520 59 121 Trading liabilities 209,396 n.a. 209,338 n.a. 58 0 122 Other borrowed money 386,517 346,743 263,515 223,740 117,407 5,595 123 Banks' liability on acceptances executed and outstanding 11,790 9,130 11,586 8,925 199 6 124 Notes and debentures subordinated to deposits 72,145 n.a. 67,549 n.a. 4,576 21 125 Net due to own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. 107,135 n.a. 107,135 n.a. n.a. 126 All other liabilities 148,048 n.a. 119,891 n.a. 25,365 2,792 127 Total equity capital 452,640 n.a. 289,670 n.a. 130,772 32,198 MEMO 128 Trading assets at large banks4 284,647 116,153 283,712 115,218 935 1 13 2 0 9 U U . . S S . . T go re v a e s r u n r m y e s n e t c a u g ri e t n ie c s y ( c d o o r m po es ra ti t c i o o n f f o ic b e li s g ) ations • 1 2 4 , , 3 6 4 0 3 0 1 2 4 , , 2 5 5 8 8 0 2 8 0 5 131 Securities issued by states and political subdivisions in the United States n a. 1,191 n.a. 1,093 98 n. a. 132 Mortgage-backed securities 8,386 7,752 633 133 Other debt securities 15,821 15,733 88 134 Other trading assets 8,018 8,015 3 135 Trading assets in foreign banks 168,495 0 168,495 0 0 136 Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts 65,793 65,793 65,787 65,787 6 n.a. 137 Total individual retirement (IRA) and Keogh plan accounts 151,405 80,996 57,153 13,256 138 Total brokered deposits 62,940 38,365 22,789 1,786 139 Fully insured brokered deposits 48,573 26,990 19,894 1,689 140 Issued in denominations of less than $100,000 10,433 5,122 4,122 1,190 141 Issued in denominations of $100,000, or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less n a. 38,139 n.a. 21,868 15,772 499 142 Money market deposit accounts (MMDAs) 795,835 559,351 208,671 27,813 143 Other savings deposits (excluding MMDAs) 381,798 214,350 142,866 24,582 144 Total time deposits of less than $100,000 745,086 341,395 309,335 94,355 145 Total time deposits of $100,000 or more 413,364 240,660 138,604 34,100 146 All negotiable order of withdrawal (NOW) accounts 161,245 46,669 79,445 35,132 147 Number of banks 5,752 8,752 163 n.a. 2,797 5,792 NOTE. Table 4.20 has been revised; it now includes data that was previously reported in 2. "Over 100" refers to banks whose assets, on June 30 of the preceding calendar year, table 4.22, which has been discontinued. were $100 million or more. (These banks file the FFIEC 032 or FFIEC 033 Call Report.) The notation "n.a." indicates the lesser detail available from banks that don't have foreign "Under 100" refers to banks whose assets, on June 30 of the preceding calendar year, were offices, the inapplicability of certain items to banks that have only domestic offices or the less than $100 million. (These banks file the FFIEC 034 Call Report.) absence of detail on a fully consolidated basis for banks that have foreign offices. 3. Because the domestic portion of allowances for loan and lease losses and allocated 1. All transactions between domestic and foreign offices of a bank are reported in "net due transfer risk reserves are not reported for banks with foreign offices, the components of total from" and "net due to" lines. All other lines represent transactions with parties other than the assets (domestic) do not sum to the actual total (domestic). domestic and foreign offices of each bank. Because these intraoffice transactions are nullified 4. Components of "Trading assets at large banks" are reported only by banks with either by consolidation, total assets and total liabilities for the entire bank may not equal the sum of total assets of $1 billion or more or with $2 billion or more in the par/notional amount of their assets and liabilities respectively of the domestic and foreign offices. off-balance-sheet derivative contracts. Foreign offices include branches in foreign countries, Puerto Rico, and U.S. territories and possessions; subsidiaries in foreign countries; all offices of Edge Act and agreement corporations wherever located; and IBFs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Special Tables • May 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 1-5, 1999 A. Commercial and industrial loans made by all commercial banks1 W ( l e p a o f e e v a f i r e e n g c r c h e a t r t n i g a e v t e t d ) e e 2 - A o ( f m m l d o o il o u a l l i n n l o s t a n r s o s ) f ( A th v o e d u r o a s s l i g l a z a e n e r d s l ) s o a o n f W m a e a v D i t e g u a r h r y a i t s g t e y e d 3 - S c e o c l u la re te d r a b l y A C m a o ll u a n b t l e o f loans p S re u ( p p p b e e a n j r e y a c c m l e t t y n e t t n o ) t c M o a m d m e i u tm nd e e n r t LOAN RISK3 1 All commercial and industrial loans 6.32 123,589 711 375 37.4 11.4 29.0 67.2 2 Minimal risk 5.84 5,348 844 365 23.4 9.2 28.3 85.6 3 Low risk 5.64 32,920 1,784 270 25.3 11.0 54.4 63.5 4 Moderate risk 6.39 37,306 537 468 36.0 11.8 16.4 74.9 5 Other 6.70 26,562 647 376 39.3 7.1 25.5 63.7 By maturity/repricing interval6 6 Zero interval 7.65 20,173 620 51.8 13.6 5.3 7 Minimal risk 7.20 517 365 612 23.3 20.3 11.4 96.9 8 Low risk 6.89 2,570 531 683 43.6 15.9 17.9 82.9 9 Moderate risk 7.62 7,342 219 646 58.1 16.8 5.5 90.0 10 Other 8.27 3,870 175 615 69.1 23.6 3.7 92.1 11 Daily 5.71 54,328 1,396 139 32.9 35.8 53.5 12 Minimal risk 5.31 2,089 6,238 272 8.9 7.1 37.2 83.2 13 Low risk 5.38 19,306 7,391 100 23.1 6.6 61.7 50.7 14 Moderate risk 5.79 11,698 870 185 24.9 16.7 8.9 51.7 15 Other 5.86 12,139 1,833 94 35.7 3.0 29.8 38.7 16 2 to 30 days 6.18 29,422 1,753 318 26.2 9.1 30.6 82.2 17 Minimal risk 6.12 1,659 1,886 137 25.4 12.3 27.7 84.3 18 Low risk 5.63 6,486 2,464 283 17.1 23.1 43.9 79.5 19 Moderate risk 6.01 12,200 1,932 370 23.1 5.3 24.4 89.4 20 Other 6.84 6,451 1,374 343 28.7 4.1 24.8 81.1 21 31 to 365 days 6.45 12,931 442 614 40.4 5.8 42.0 83.0 22 Minimal risk 5.83 784 263 495 62.3 2.6 18.3 85.3 23 Low risk 5.86 3,885 650 482 34.6 8.6 63.1 85.7 24 Moderate risk 6.44 4,000 433 583 43.7 4.7 40.2 84.4 25 Other 7.13 3,205 652 845 33.3 5.2 29.5 82.4 Months 26 More than 365 days 7.50 4,050 253 60.3 15.0 22.0 63.4 27 Minimal risk ... 5.62 293 423 10.2 2.7 11.6 91.8 28 Low risk 7.49 632 280 42.3 36.7 71.9 29 Moderate risk .. 7.52 1,812 320 11.7 6.5 41.5 30 Other 8.82 703 405 6.0 69.4 84.3 Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 8.85 2,977 3.2 85.5 29.6 3.6 74.8 32 100-999 7.93 11,506 3.2 191 72.1 20.0 10.4 83.2 33 1,000-9,999 6.66 35,150 3.0 79 40.5 10.4 27.3 77.5 34 10,000 or more 5.81 73,956 2.7 63 28.7 9.8 33.7 59.5 BASE RATE OF LOAN4 35 Prime7 | 8.19 23,865 3.2 131 67.8 20.9 3.6 79.1 36 Fed funds 5.57 35,926 3.0 22 24.4 6.5 36.8 30.4 37 Other domestic 5.53 13,925 2.5 96 15.6 23.7 35.2 62.2 38 Foreign 5.96 33,778 2.7 52 37.7 3.7 46.9 92.9 39 Other 6.67 16,096 2.8 215 39.7 13.6 5.1 82.2 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A67 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 1-5, 1999 B. Commercial and industrial loans made by all domestic banks1 Weighted- Amount of loans (percent) W e a f e v f i e e g r c h a t t i g e v e d e - Am l o o u an n s t of Avera si g z e e loan m a a v t e u r r a i g ty e 3 ( l p o e a r n c e r n a t t ) e 2 o ( f m d il o l l i l o a n r s s ) (tho d u o s ll a a n r d s) s of Days S c e o c l u la re te d r a b l y p S re u p p e b a n je y a c m l t t y e t n o t c M o a m d m e i u tm nd e e n r t LOAN RISK3 1 All commercial and industrial loans 6.63 69,324 421 566 39.2 15.1 12.4 74.3 2 Minimal risk 5.73 4,271 691 442 23.5 10.4 29.8 83.2 3 Low risk 5.91 12,859 764 514 22.4 21.5 26.8 81.5 4 Moderate risk 6.48 29,251 441 527 39.9 14.2 9.8 75.7 5 Other 7.52 10,757 281 731 54.8 13.8 8.5 79.4 By maturity/repricing interval6 6 Zero interval 7.64 18,511 271 615 52.3 12.2 3.3 67.3 7 Minimal risk 7.14 479 341 612 17.2 14.0 12.4 96.6 8 Low risk 6.98 2,092 446 744 50.5 17.7 3.9 90.2 9 Moderate risk 7.58 6,623 204 628 59.2 15.9 4.9 89.6 10 Other 8.19 3,462 161 602 68.2 19.6 4.0 91.2 11 Daily 6.08 22,694 613 327 30.3 20.7 15.3 69.0 12 Minimal risk 5.26 1,617 5,717 350 10.8 8.5 45.3 81.0 13 Low risk 5.56 4,735 2,075 373 11.9 26.7 34.6 73.3 14 Moderate risk 5.88 9,233 706 229 30.1 20.6 9.8 56.4 15 Other 6.68 3,101 504 287 33.2 11.1 5.4 60.0 16 2 to 30 days 6.07 17,086 1,256 432 26.0 12.0 15.2 17 Minimal risk 5.74 1,152 1,427 190 23.6 17.8 27.4 77.8 18 Low risk 5.53 4,108 2,005 337 15.8 21.9 28.0 88.3 19 Moderate risk 6.01 8,587 1,711 414 22.9 7.3 10.0 91.2 20 Other 7.31 2,360 632 718 49.5 9.7 10.3 85.9 21 31 to 365 days 6.70 7,003 253 812 48.4 6.5 22.7 81.3 22 Minimal risk 5.85 723 244 471 60.7 2.8 12.1 84.1 23 Low risk 6.20 1,466 262 565 22.1 9.5 38.3 83.0 24 Moderate risk 6.54 2,759 316 650 47.0 6.7 24.8 79.9 25 Other 7.70 1,250 287 1701 66.5 4.8 16.7 82.4 26 More than 365 days 7.32 3,507 223 69.2 17.3 9.3 57.7 27 Minimal risk . . . 5.62 293 423 10.2 2.7 11.6 91.8 28 Low risk 7.20 418 201 63.9 12.9 4.0 57.6 29 Moderate risk . . 7.53 1,794 317 84.6 11.8 6.5 40.9 30 Other 8.59 391 243 81.9 10.9 43.8 71.9 Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 8.87 2,928 3.2 189 86.0 29.5 3.1 74.6 32 100-999 8.06 10,067 3.2 200 75.6 20.6 5.6 82.4 33 1,000-9,999 6.89 23,224 2.9 96 45.7 12.0 14.9 79.6 34 10,000 or more 5.82 33,105 2.6 92 19.4 14.2 13.5 68.1 BASE RATE OF LOAN4 35 Prime7 8.15 20,973 3.1 100 69.4 16.6 2.5 76.4 36 Fed funds 5.48 6,236 2.9 29 23.9 25.4 2.3 38.3 37 Other domestic 5.52 12,922 2.5 103 14.5 25.5 30.3 67.0 38 Foreign 6.09 15,251 2.7 72 32.8 7.9 20.6 87.6 39 Other 6.47 13,942 2.8 226 30.7 6.3 5.6 79.6 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • May 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 1-5, 1999 C. Commercial and industrial loans made by large domestic banks1 Weighted- Amount of loans (percent) AAmmoouunntt ooff AAvveerraaggee llooaann MMoosstt IItteemm loans size maturity3 common ((ppeerrcceenntt))22 o ( f m d il o l l i l o a n r s s ) (tho d u o s ll a a n r d s s ) of S c e o c l u la re te d r a b l y Callable p S re u p b a je y c m t e t n o t ... , base r a p te ri 4 c ing DDaayyss LOAN RISK5 1 All commercial and industrial loans 6.40 58,549 824 479 32.1 14.8 13.5 74.9 Prime 2 Minimal risk 5.51 3,506 4,662 474 16.9 6.6 34.2 88.1 Foreign 3 Low risk 5.63 11,010 2,609 399 15.1 21.5 31.2 82.6 Domestic 4 Moderate risk 6.23 24,890 921 478 32.0 14.1 9.8 77.5 Foreign Other 7.31 8,860 407 553 47.1 13.0 8.6 81.0 Prime By maturity/repricing interval6 6 Zero interval 7.50 14,114 494 532 42.8 11.3 3.2 63.2 Prime 7 Minimal risk 7.62 340 1,414 735 14.4 3.6 14.7 98.6 Prime 8 Low risk 6.54 1,211 814 497 38.9 18.3 5.6 91.7 Prime 9 Moderate risk 7.40 4,796 400 646 47.7 15.8 5.7 97.0 Prime 10 Other 8.08 2,696 217 615 61.0 21.5 2.3 93.4 Prime 11 Daily 5.99 21,399 741 317 27.6 21.1 16.1 68.2 Domestic 12 Minimal risk 5.26 1,599 6,853 351 10.8 7.6 45.8 80.7 Other 13 Low risk 5.48 4,489 3,300 355 10.3 26.6 36.4 72.3 Domestic 14 Moderate risk 5.76 8,655 929 217 26.5 21.4 10.4 55.6 Domestic lb Other 6.57 2,918 622 282 29.5 11.5 5.7 57.8 Fed funds 16 2 to 30 days 5.95 15,318" 2,432 410 21.7 11.1 15.2 90.2 Foreign 17 Minimal risk 5.18 801 7,010 179 6.1 11.8 31.7 88.2 Fed funds 18 Low risk 5.47 3,934 5,557 336 14.3 22.1 29.2 88.4 Domestic 19 Moderate risk 5.96 7,967 2,671 426 19.6 7.1 8.8 91.2 Foreign 20 Other 7.15 1,971 1,055 480 44.0 5.8 9.9 90.7 Other 21 31 to 365 days 6.19 5,218 1,620 767 40.4 3.1 25.9 92.5 Foreign 22 Minimal risk 5.52 501 4,946 624 63.1 * 14.7 99.5 Foreign 23 Low risk 5.72 1,191 3,174 629 11.5 4.1 46.8 90.0 Foreign 24 Moderate risk 6.09 2,173 2,212 749 38.5 3.2 22.8 91.1 Foreign 2b Other 7.31 911 698 907 55.5 3.9 19.7 96.1 Foreign Months 26 More than 365 days 6.75 2,224 1,067 46 55.8 18.8 13.3 64.2 Prime 27 Minimal risk 5.30 263 6,258 50 1.8 .6 26.9 97.8 Other 28 Low risk 5.83 151 857 24 10.6 .0 11.1 98.1 Foreign 29 Moderate risk 7.04 1,157 1,438 45 78.8 10.8 7.1 37.8 Prime 30 Other 8.64 295 418 62 77.2 8.3 57.1 83.3 Other Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 8.53 1,252 3.5 48 82.8 38.8 4.5 91.0 Prime 32 100-999 7.90 6,499 3.3 64 69.3 21.0 6.3 89.2 Prime 33 1,000-9,999 6.76 19,211 3.0 67 40.0 11.9 16.2 80.4 Prime 34 10,000 or more 5.78 31,587 2.6 89 17.6 14.3 13.6 67.9 Domestic Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 8.02 15,453 3.2 88 62.9 15.8 2.3 77.9 280 36 Fed funds 5.42 5,851 2.9 11 20.1 26.2 2.2 37.3 6,535 3/ Other domestic 5.37 12,307 2.5 87 10.6 25.9 31.8 68.6 5,307 38 Foreign 6.08 13,785 2.7 55 30.7 7.3 20.1 87.4 2,847 39 Other 6.17 11,153 2.9 118 21.1 4.2 5.7 81.8 1,423 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A69 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 1-5, 1999 D. Commercial and industrial loans made by small domestic banks1 Weighted- Amount of loans (percent) Weighted- Amount of Average loan average average loans size maturity3 effective (millions (thousands of Subject to ( l p o e a r n c e r n a t t ) e 2 of dollars) dollars) Days S c e o c l u la re te d r a b l y pre p p e a n y a m lty e nt c M o a m d m e it u m nd e e n r t LOAN RISK5 1 All commercial and industrial loans 7.90 10,775 115 1038 78.0 16.6 6.6 71.2 2 Minimal risk 6.71 765 141 271 53.5 27.6 11.3 60.3 3 Low risk 7.60 1,849 147 1179 65.8 21.4 1.0 75.4 4 Moderate risk 7.87 4,361 111 811 84.7 14.7 10.0 65.9 5 Other 8.49 1,897 115 1595 90.6 17.3 8.5 72.0 By maturity/repricing interval6 6 Zero interval 8.06 4,397 111 82.8 15.2 3.5 80.5 7 Minimal risk 5.96 140 120 153 24.2 39.2 6.6 91.7 8 Low risk 7.59 880 275 1035 66.4 16.7 1.4 88.3 9 Moderate risk 8.08 1,827 579 89.3 16.2 2.9 70.3 10 Other 8.60 766 558 93.8 13.1 10.1 83.3 11 Daily 7.66 1,295 158 494 73.5 14.3 82.5 12 Minimal risk 5.50 18 371 146 12.1 88.7 100.0 13 Low risk 6.98 245 266 757 41.6 28.6 .5 91.0 14 Moderate risk 7.61 578 153 406 84.2 7.8 1.1 68.0 15 Other 8.56 183 126 360 91.5 4.5 .2 95.3 16 2 to 30 days 7.07 1,768 242 624 63.3 19.8 15.0 76.8 17 Minimal risk 7.01 352 507 218 63.5 31.4 17.5 54.1 18 Low risk 6.86 174 130 348 48.9 17.4 .1 85.8 19 Moderate risk 6.73 620 304 254 66.0 9.9 25.2 91.1 20 Other 8.10 389 209 1913 77.4 29.8 12.1 61.4 21 31 to 365 days 8.20 1,784 73 944 72.1 16.4 13.4 48.6 22 Minimal risk 6.58 221 78 125 55.2 9.3 6.1 49.3 23 Low risk 8.27 275 53 290 68.2 33.0 1.7 52.9 24 Moderate risk 8.20 586 75 276 78.3 19.5 31.8 38.0 25 Other 8.76 338 111 3812 96.0 7.2 45.8 26 More than 365 days 8.31 1,283 94 87 92.3 14.7 3.4 46.4 27 Minimal risk ... 8.34 31 47 72 82.3 20.5 6.2 40.6 28 Low risk 7.97 267 140 109 94.1 20.2 .2 34.7 29 Moderate risk .. 8.41 637 131 90 95.2 13.8 5.5 46.6 30 Other 8.43 96 106 62 96.3 18.9 6.6 36.8 Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 9.13 1,677 3.0 291 88.4 22.6 2.1 62.3 32 100-999 8.36 3,568 3.1 447 87.1 19.9 4.4 69.8 33 1,000-9,999 7.49 4,013 2.7 242 73.5 12.6 9.0 75.8 34 10,000 or more 6.52 1,518 2.8 158 57.2 12.9 10.4 72.1 BASE RATE OF LOAN4 35 Prime7 8.51 5,520 2.9 135 87.5 18.5 2.9 72.0 36 Fed funds 6.45 386 2.7 294 81.3 12.1 4.4 54.0 37 Other domestic 8.37 615 3.3 422 91.9 17.3 1.0 33.6 38 Foreign 6.22 1,466 2.9 226 52.3 13.5 25.6 89.3 39 Other 7.66 2,789 2.6 670 69.2 14.8 5.5 70.7 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • May 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 1-5, 1999 E. Commercial and industrial loans made by U.S. branches and agencies of foreign banks1 Weighted- Amount of loans (percent) AAmmoouunntt ooff AAvveerraaggee llooaann MMoosstt IItteemm loans size maturity3 common ((ppeerrcceenntt))"" o ( f m d il o l l i l o a n r s s ) (tho d u o s ll a a n r d s) s of S c e o c l u la re te d r a b l y Callable p S re u p b a je y c m t e t n o t ccoommmmiittmmeenntt base r a p te ri 4 c ing DDaayyss LOAN RISK5 1 All commercial and industrial loans 5.93 54,265 5,959 139 35.1 6.7 50.0 58.1 Fed funds 2 Minimal risk 6.28 1,078 6,692 56 23.2 4.6 22.8 95.4 Fed funds 3 Low risk 5.47 20,060 12,388 126 27.1 4.2 72.0 52.0 Fed funds 4 Moderate risk 6.05 8,055 2,564 262 22.2 3.0 40.0 71.8 Foreign Other 6.14 15,805 5,682 154 28.7 2.5 36.9 53.0 Fed funds By maturity/repricing interval6 6 Zero interval 7.77 1,662 904 699 46.9 29.4 27.8 83.1 Prime 7 Minimal risk * * * * * * * * * 8 Low risk 6.49 479 3,177 422 13.5 8.2 79.1 50.7 Fed funds 9 Moderate risk 7.94 718 728 901 48.3 24.7 11.3 93.8 Prime 10 Other 8.93 408 633 826 76.5 57.2 .5 99.7 Prime 11 Daily 5.45 31,634 16,928 24 34.8 .3 50.4 42.4 Fed funds 12 Minimal risk * * * * * * * * * 13 Low risk 5.32 14,572 44,052 23 26.7 .1 70.5 43.4 Fed funds 14 Moderate risk 5.47 2,465 6,976 39 5.3 2.1 5.5 34.3 Fed funds lb Other 5.58 9,038 18,909 35 36.6 .2 38.1 31.5 Fed funds 16 2 to 30 days 6.33 12,336 3,876 163 26.5 5.2 51.6 73.0 Foreign 17 Minimal risk 7.00 507 6,972 21 29.6 * 28.6 99.0 Foreign 18 Low risk 5.80 2,378 4,075 193 19.4 25.0 71.1 64.3 Foreign 19 Moderate risk 6.02 3,613 2,793 269 23.3 .3 58.0 85.2 Foreign 20 Other 6.57 4,092 4,249 129 16.8 .9 32.8 78.3 Foreign 21 31 to 365 days 6.16 5,929 3,750 374 31•.0 5.1 64.4 84.9 Foreign 22 Minimal risk * * * * * * * * 23 Low risk 5.65 2,419 6,319 431 42.2 8.0 78.2 87.4 Foreign 24 Moderate risk 6.23 1,241 2,470 435 36.3 .1 73.2 94.5 Foreign 2b Other 6.76 1,956 3,422 259 12.1 5.4 37.6 82.4 Foreign Months 26 More than 365 days 8.63 543 1,801 88 3.3 * 96.4 100.0 Prime 27 Minimal risk * * * * * * * * * 28 Low risk 8.08 213 1,243 78 * * 100.0 100.0 Prime 29 Moderate risk * * * * * * * * * 30 Other 9.10 312 2,500 96 * * 99.4 100.0 Prime Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 7.85 49 3.2 101 55.6 35.3 31.8 85.9 Prime 32 100-999 7.01 1,439 3.2 128 47.0 16.0 43.8 89.1 33 1,000-9,999 6.21 11,926 3.2 44 30.2 7.3 51.1 73.3 Foreign 34 10,000 or more 5.80 40,851 2.8 38 36.2 6.2 49.9 52.6 Fed funds Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 8.43 2,892 3.5 440 56.2 52.8 11.4 98.7 1,141 36 Fed funds 5.59 29,689 3.0 20 24.6 2.6 44.0 28.7 12,081 37 Other domestic 5.78 1,003 2.9 10 29.9 * 98.5 .1 4,289 38 Foreign 5.85 18,527 2.7 35 41.8 .3 68.5 97.2 5,070 39 Other 8.00 2,154 2.7 31 98.0 60.3 2.0 99.4 9,495 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 NOTE. The Survey of Terms of Business Lending collects data on gross loan extensions 5. A complete description of these risk categories is available from the Banking and made during the first full business week in the mid-month of each quarter. The authorized Money Market Statistics Section, Mail Stop 81, Board of Governors of the Federal Reserve panel size for the survey is 348 domestically chartered commercial banks and fifty U.S. System, Washington, DC 20551. The category "Moderate risk" includes the average loan, branches and agencies of foreign banks. The sample data are used to estimate the terms of under average economic conditions, at the typical lender. The category "Other" includes loans loans extended during that week at all domestic commercial banks and all U.S. branches and rated "acceptable" as well as special mention or classified loans. The weighted-average risk agencies of foreign banks. Note that the terms on loans extended during the survey week may ratings published for loans in rows 31-39 are calculated by assigning a value of "1" to differ from those extended during other weeks of the quarter. The estimates reported here are minimal risk loans; "2" to low risk loans; "3" to moderate risk loans, "4" to acceptable risk not intended to measure the average terms on all business loans in bank portfolios. loans; and "5" to special mention and classified loans. These values are weighted by loan 1. As of December 31, 1996, assets of most of the large banks were at least $7.0 billion. amount and exclude loans with no risk rating. Some of the loans in lines 1,6, 11, 16, 21, 26, Median total assets for all insured banks were roughly $62 million. Assets at all U.S. branches and 31-39 are not rated for risk. and agencies averaged 1.3 billion. 6. The maturity/repricing interval measures the period from the date the loan is made until it 2. Effective (compounded) annual interest rates are calculated from the stated rate and first may reprice or it matures. For floating-rate loans that are subject to repricing at any other terms of the loans and weighted by loan amount. The standard error of the loan rate for time—such as many prime-based loans—the maturity/repricing interval is zero. For floating-rate all commercial and industrial loans in the current survey (line 1, column 1) is 0.17 percentage loans that have a scheduled repricing interval, the maturity/repricing interval measures the number points. The chances are about two out of three that the average rate shown would differ by less of days between the date the loan is made and the date on which it is next scheduled to reprice. For than this amount from the average rate that would be found by a complete survey of the loans having rates that remain fixed until the loan matures (fixed-rate loans), the maturity/repricing universe of all banks. interval measures the number of days between the date the loan is made and the date on which it 3. Average maturities are weighted by loan amount and exclude loans with no stated matures. Loans that reprice daily mature or reprice on the business day after they are made. Owing maturities. to weekends and holidays, such loans may have maturity/repricing intervals in excess of one day; 4. The most common base pricing rate is that used to price the largest dollar volume of such loans are not included in the "2 to 30 day" category. loans. Base pricing rates include the prime rate (sometimes referred to as a bank's "base" or 7. For the current survey, the average reported prime rate, weighted by the amount of "reference" rate); the federal funds rate; domestic money market rates other than the prime loans priced relative to a prime base rate, was 7.78 percent for all banks; 7.75 percent for rate and the federal funds rate; foreign money market rates; and other base rates not included large domestic banks, 7.85 percent for small domestic banks; and 7.75 percent for U.S. in the foregoing classifications. branches and agencies of foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • May 1999 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1998'—Continued Millions of dollars except as noted All states'* New York California Illinois IItteemm in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s 1 Total assets4 901,366 169,470 713,077 140,220 42,319 6,509 61,506 7,004 2 Claims on nonrelated parties 756,666 98,029 585,548 81,937 39,022 3,143 60,384 4,195 3 Cash and balances due from depository institutions 79,278 44,978 76,196 43,822 789 166 812 360 4 Cash items in process of collection and unposted debits 2,186 0 2,087 0 8 0 1122 0 Currency and coin (US. and foreign) 16 n.a. 11 n.a. 1 11 6 Balances with depository institutions in United States 4433,,550044 1144,,221199 4411,,553399 1133,,666666 600 79 668811 225588 7 U.S. branches and agencies of other foreign banks (including IBFs) 36,174 13,323 34,921 12,821 314 79 460 208 8 Other depository institutions in United States (including IBFs).... 77,,332299 896 66,,661177 845 287 0 222222 5500 y Balances with banks in foreign countries and with foreign central banks 32,818 30,758 31,917 30,156 125 88 110 103 10 Foreign branches of U.S. banks 1,985 1,891 1,943 1,853 0 0 26 26 ii Banks in home country and home-country central banks 4,637 4,169 4,579 4,126 11 11 32 32 12 All other banks in foreign countries and foreign central banks .... 26,195 24,699 25,395 24,177 113 77 51 44 13 Balances with Federal Reserve Banks 755 n.a. 642 n.a. 56 n.a. 7 n.a. 14 Total securities and loans 474,265 45,450 341,553 31,149 36,713 2,723 44,838 3,698 15 Total securities, book value 117,395 5,568 108,221 4,776 1,353 529 6,931 223 16 U.S. Treasury 19,654 n.a. 18,475 n.a. 122 n.a. 925 n.a. 17 Obligations of U.S. government agencies and corporations 4455,,221122 n.a. 4422,,770099 n.a. 147 n.a. 22,,117788 n.a. 18 Other bonds, notes, debentures, and corporate stock (including state and local securities) 52,529 5,568 47,037 4,776 1,084 529 3,827 223 19 Securities of foreign governmental units 13,751 3,132 13,231 2,922 345 121 114 75 20 All Other 38,779 2,436 33,805 1,854 739 408 3,713 147 21 Federal funds sold and securities purchased under agreements to resell 79,111 5,138 70,678 4,737 767 202 5,613 100 22 U.S. branches and agencies of other foreign banks 8,047 2,239 7,232 1,997 559 202 50 0 23 Commercial banks in United States 14,930 565 14,195 556 208 0 197 0 24 Other 56,134 2,334 49,251 2,184 0 0 5,366 100 25 Total loans, gross 357,104 39,909 233,488 26,397 35,393 22,,119955 37,918 33,,447777 26 LESS: Unearned income on loans 234 27 155 23 33 11 10 11 27 EQUALS: Loans, net 356,870 39,882 233,333 26,374 35,360 2,194 37,908 3,476 Total loans, gross, by category 28 Real estate loans 19,730 179 12,130 110 4,343 62 722 0 29 Loans to depository institutions 32,713 21,409 18,288 11,429 1,772 1,463 3,698 3,276 30 Commercial banks in United States (including IBFs) 8,797 3,616 6,569 2,093 1,110 840 324 240 31 U.S. branches and agencies of other foreign banks 5,911 3,353 3,837 1,849 1,005 840 306 230 32 Other commercial banks in United States 2,886 263 2,731 243 105 0 18 10 33 Other depository institutions in United States (including IBFs) 47 5 25 0 0 0 0 0 34 Banks in foreign countries 23,869 17,788 11,695 9,337 662 623 3,374 3,037 35 Foreign branches of U.S. banks 734 634 604 516 3 3 100 100 3b Other banks in foreign countries 23,135 17,154 11,091 8,820 659 620 3,274 2,937 37 Loans to other financial institutions 52,834 802 39,449 661 1,747 0 6,431 5 38 Commercial and industrial loans 223,327 14,906 141,219 11,864 27,067 572 25,324 189 39 U.S. addressees (domicile) 183,341 32 113,865 32 24,823 0 22,533 0 40 Non-U.S. addressees (domicile) 39,986 14,874 27,355 11,832 2,245 572 2,791 189 41 Acceptances of other banks 296 13 138 13 14 0 128 0 42 U.S. banks 18 0 8 0 3 0 0 0 43 Foreign banks 278 13 130 13 11 0 128 0 44 Loans to foreign governments and official institutions (including foreign central banks) 4,454 2,475 3,462 2,215 299 98 81 6 45 Loans for purchasing or carrying securities (secured and unsecured) . . . 12,839 21 9,739 21 45 0 25 0 46 All other loans 10,250 103 8,773 83 106 0 1,135 0 47 Lease financing receivables (net of unearned income) 661 0 287 0 0 0 374 0 48 U.S. addressees (domicile) 661 0 287 0 0 0 374 0 49 Non-U.S. addressees (domicile) 0 0 0 0 0 0 0 0 50 Trading assets 87,689 922 65,732 922 71 0 7,054 0 51 All other assets 36,323 1,540 31,388 1,306 683 52 2,067 37 52 Customers' liabilities on acceptances outstanding 2,071 n.a. 1,603 n.a. 199 165 53 U.S. addressees (domicile) 1,115 n.a. 850 n.a. 187 49 54 Non-U.S. addressees (domicile) 956 n.a. 753 n.a. 12 n.a. 117 55 Other assets including other claims on nonrelated parties 34,252 1,540 29,785 1,306 484 52 1,902 37 56 Net due from related depository institutions5 144,699 71,441 127,529 58,282 3,297 3,366 1,122 2,809 57 Net due from head office and other related depository institutions5.. . 114444,,669999 n.a. 112277,,552299 n.a. 33,,229977 11,,112222 nn..aa.. 58 Net due from establishing entity, head office, and other related depository institutions5 n.a. 71,441 n.a. 58,282 n.a. 3,366 n.a. 2,809 59 Total liabilities4 901,366 169,470 713,077 140,220 42,319 6,509 61,506 7,004 60 Liabilities to nonrelated parties 700,632 148,229 580,872 122,750 16,316 6,087 41,267 6,574 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1998'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T IB l o u t F d a s i l ng I o B n F ly s exc T IB l o u t F d a s i l ng I o B n F ly s exc T IB l o u t F d a s i l ng I o B n F ly s 61 Total deposits and credit balances 302,605 101,331 252,509 86,234 6,156 1,014 15,107 3,399 62 Individuals, partnerships, and corporations 240,128 11,925 195,910 6,525 5,929 182 13, 888 96 63 U.S. addressees (domicile) 224,059 117 186,510 32 4,311 0 13,353 86 64 Non-U.S. addressees (domicile) 16,070 11,808 9,400 6,493 1,618 182 535 10 65 Commercial banks in United States (including IBFs) 30,976 13,147 27,042 12,727 181 43 709 266 66 U.S. branches and agencies of other foreign banks 17,345 11,624 14,220 11,286 0 28 208 215 67 Other commercial banks in United States 13,631 1,523 12,821 1,441 181 15 501 51 68 Banks in foreign countries 6,834 50,622 6,049 46,123 11 500 78 1,629 69 Foreign branches of U.S. banks 1,380 2,182 1,379 1,667 0 0 515 70 Other banks in foreign countries 5,454 48,440 4,670 44,455 11 50 78 1,114 71 Foreign governments and official institutions (including foreign central banks) 10,383 25,538 9,577 20,777 6 725 402 1,407 72 All other deposits and credit balances 14,078 99 13,755 83 23 14 28 2 73 Certified and official checks 205 177 8 2 74 Transaction accounts and credit balances (excluding IBFs) 8,357 6,450 88 338 75 Individuals, partnerships, and corporations 6,470 4,985 262 330 76 U.S. addressees (domicile) 4,518 3,887 151 327 77 Non-U.S. addressees (domicile) 1,953 1,098 111 4 78 Commercial banks in United States (including IBFs) 346 342 0 0 79 U.S. branches and agencies of other foreign banks 226 224 0 0 80 Other commercial banks in United States 120 118 0 0 81 Banks in foreign countries 728 418 11 3 82 Foreign branches of U.S. banks 3 2 0 0 83 Other banks in foreign countries 725 416 11 3 84 Foreign governments and official institutions (including foreign central banks) 473 409 1 2 85 AH other deposits and credit balances 135 119 6 0 86 Certified and official checks 205 177 8 2 87 Demand deposits (included in transaction accounts and credit balances) 7,853 6,220 220 335 88 Individuals, partnerships, and corporations 6,049 4,821 200 328 89 U.S. addressees (domicile) 4,385 3,787 131 324 90 Non-U.S. addressees (domicile) 1,663 1,034 69 4 91 Commercial banks in United States (including IBFs) 340 n.a. 336 n.a. 0 n.a. 0 n.a. 92 US. branches and agencies of other foreign banks 221 219 0 0 93 Other commercial banks in United States 119 117 0 0 94 Banks in foreign countries 706 400 11 3 95 Foreign branches of U.S. banks 2 1 0 0 96 Other banks in foreign countries 704 399 11 3 97 Foreign governments and official institutions (including foreign central banks) 461 402 1 2 98 All other deposits and credit balances 93 83 0 0 99 Certified and official checks 205 177 8 2 100 Nontransaction accounts (including MMDAs, excluding IBFs) 294,248 246,059 5,8 68 14,769 101 Individuals, partnerships, and corporations 233,658 190,924 5,667 13,558 102 U.S. addressees (domicile) 219,541 182,622 4,160 13,027 103 Non-U.S. addressees (domicile) 14,117 8,302 1,507 531 104 Commercial banks in United States (including IBFs) 30,631 26,700 180 708 105 U.S. branches and agencies of other foreign banks 17,119 13,996 0 208 106 Other commercial banks in United States 13,512 12,704 180 501 107 Banks in foreign countries 6,107 5,631 0 75 108 Foreign branches of U.S. banks 1,378 1,378 0 0 109 Other banks in foreign countries 4,729 4,254 0 75 110 Foreign governments and official institutions (including foreign central banks) 9,910 9,168 4 400 111 All other deposits and credit balances 13,943 13,636 17 28 112 IBF deposit liabilities 101,331 86,234 1,014 3,399 113 Individuals, partnerships, and corporations 11,925 6,525 182 96 114 U.S. addressees (domicile) 117 32 0 86 115 Non-U.S. addressees (domicile) 11,808 6,493 182 10 116 Commercial banks in United States (including IBFs) 13,147 12,727 43 266 117 U.S. branches and agencies of other foreign banks 11,624 11,286 28 215 118 Other commercial banks in United States n a. 1,523 n.a. 1,441 n a. 15 n.a. 51 119 Banks in foreign countries 50,622 46,123 50 1,629 120 Foreign branches of U.S. banks 2,182 1,667 0 515 121 Other banks in foreign countries 48,440 44,455 50 1,114 122 Foreign governments and official institutions (including foreign central banks) 25,538 20,777 725 1,407 123 All other deposits and credit balances 99 83 14 2 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • May 1999 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1998'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 124 Federal funds purchased and securities sold under agreements to repurchase 127,074 11,767 114,212 9,197 1,335 248 8,816 1,811 125 U.S. branches and agencies of other foreign banks 11,056 4,432 8,309 3,301 323 185 1,835 596 126 Other commercial banks in United States 8,569 356 5,945 138 797 43 1,312 175 127 Other 107,450 6,979 99,957 5,758 215 20 5,669 1,040 128 Other borrowed money 84,004 33,382 63,311 25,737 7,293 4,776 7,059 1,330 129 Owed to nonrelated commercial banks in United States (including IBFs) 13,415 5,580 10,530 4,305 1,252 658 772 240 130 Owed to U.S. offices of nonrelated U.S. banks 4,328 582 3,807 448 195 100 177 20 131 Owed to U.S. branches and agencies of nonrelated foreign banks 9,087 4,998 6,722 3,856 1,057 558 595 220 132 Owed to nonrelated banks in foreign countries 23,838 22,161 17,485 16,050 4,110 3,9 87 1,094 1,090 133 Owed to foreign branches of nonrelated U.S. banks 1,402 1,290 1,098 1,014 201 201 50 50 134 Owed to foreign offices of nonrelated foreign banks 22,437 20,871 16,387 15,036 3,909 3,786 1,044 1,040 135 Owed to others 46,751 5,641 35,296 5,382 1,931 131 5,193 0 136 All other liabilities 85,617 1,749 64,605 1,581 518 49 6,886 34 137 Branch or agency liability on acceptances executed and outstanding 2,262 n.a. 1,809 n.a. 200 n. a. 123 n.a. 138 Trading liabilities 57,021 63 40,449 63 67 0 5,157 0 139 Other liabilities to nonrelated parties 26,335 1,685 22,347 1,518 251 49 1,605 34 140 Net due to related depository institutions5 200,734 21,242 132,205 17,470 26,003 421 20,239 430 141 Net due to head office and other related depository institutions .... 200,734 n. a. 132,205 n.a. 26,003 n.a. 20,239 n.a. 142 Net due to establishing entity, head office, and other related depository institutions5 n.a. 21,242 n.a. 17,470 n.a. 421 n.a. 430 MEMO 143 Non-interest-bearing balances with commercial banks in United States 2,422 0 2,191 0 77 0 39 0 144 Holding of own acceptances included in commercial and industrial loans 3,381 • 2,139 •• 862 - • 272 145 Commercial and industrial loans with remaining maturity of one year or less (excluding those in nonaccrual status) 126,364 73,312 15,161 16,864 146 Predetermined interest rates 79,223 n.a. 44,543 n.a. 7,604 n a. 14,442 n.a. 147 Floating interest rates 4477,,114411 2288,,776699 7,557 2,422 148 Commercial and industrial loans with remaining maturity of more than one year (excluding those in nonaccrual status) 96,352 67,501 11,802 8,421 149 Predetermined interest rates 24,565 18,581 2,331 1,695 150 Floating interest rates 71,787 48,919 9,472 6,726 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A75 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1998'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s 111155551111 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ((((eeeexxxxcccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss)))) 294,341 n.a. 246,507 n.a. 5,670 n.a. 15,181 n.a. 111155552222 TTTTiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 287,157 n.a. 240,646 n.a. 5,623 n.a. 14,512 n.a. 111155553333 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 7,184 n.a. 5,861 n.a. 47 n.a. 669 n.a. All states2 New York California Illinois inc T l o u t d a i l n g IBFs inc T l o u t d a i l n g IBFs inc T l o u t d a i l n g IBFs inc T l o u t d a i l n g IBFs IBFs only IBFs only IBFs only IBFs only 111155554444 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 37,298 n.a. 29,708 n.a. 4,310 n.a. 2,691 n.a. 111155555555 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 427 0 214 0 88 0 35 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, "Report of either because the item is not an eligible IBF asset or liability or because that level of detail is Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first not reported for IBFs. From December 1981 through September 1985, IBF data were used for reporting data as of June 30, 1980, and was revised as of December 31, 1985. From included in all applicable items reported. November 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a 4. Total assets and total liabilities include net balances, if any, due from or owed to related monthly FR 886a report. Aggregate data from that report were available through the Federal banking institutions in the United States and in foreign countries (see note 5). On the former Reserve monthly statistical release G.l 1, last issued on July 10, 1980. Data in this table and in monthly branch and agency report, available through the G.ll monthly statistical release, the G. 11 tables are not strictly comparable because of differences in reporting panels and in gross balances were included in total assets and total liabilities. Therefore, total asset and total definitions of balance sheet items. liability figures in this table are not comparable to those in the G. 11 tables. 2. Includes the District of Columbia. 5. Related depository institutions includes the foreign head office and other U.S. and 3. Effective December 1981, the Federal Reserve Board amended Regulations D and Q to foreign branches and agencies of a bank, a bank's parent holding company, and majoritypermit banking offices located in the United States to operate international banking facilities owned banking subsidiaries of the bank and of its parent holding company (including (IBFs). Since December 31, 1985, data for IBFs have been reported in a separate column. subsidiaries owned both directly and indirectly). These data are either included in or excluded from the total columns as indicated in the 6. In some cases two or more offices of a foreign bank within the same metropolitan area headings. The notation "n.a." indicates that no IBF data have been reported for that item, file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Federal Reserve Bulletin • May 1999 Index to Statistical Tables References are to pages A3-A75 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) FARM mortgage loans, 35 Assets and liabilities (See also Foreigners) Federal agency obligations, 5, 9, 10, 11, 28, 29 Commercial banks, 15-21, 64, 65 Federal credit agencies, 30 Domestic finance companies, 32, 33 Federal finance Federal Reserve Banks, 10 Debt subject to statutory limitation, and types and ownership Foreign banks, U.S. branches and agencies, 72-75 of gross debt, 27 Foreign-related institutions, 20 Receipts and outlays, 25, 26 Automobiles Treasury financing of surplus, or deficit, 25 Consumer credit, 36 Treasury operating balance, 25 Production, 44, 45 Federal Financing Bank, 30 Federal funds, 23, 25 Federal Home Loan Banks, 30 BANKERS acceptances, 5, 10, 22, 23 Federal Home Loan Mortgage Corporation, 30, 34, 35 Bankers balances, 15-21, 72-75. (See also Foreigners) Federal Housing Administration, 30, 34, 35 Bonds (See also U.S. government securities) Federal Land Banks, 35 New issues, 31 Federal National Mortgage Association, 30, 34, 35 Rates, 23 Federal Reserve Banks Business activity, nonfinancial, 42 Condition statement, 10 Business loans (See Commercial and industrial loans) Discount rates (See Interest rates) U.S. government securities held, 5, 10, 11, 27 Federal Reserve credit, 5, 6, 10, 12 CAPACITY utilization, 43 Federal Reserve notes, 10 Capital accounts Federally sponsored credit agencies, 30 Commercial banks, 15-21, 64, 65 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, 64, 65, 66-71 Paper, 22, 23 Weekly reporting banks, 17, 18 Float, 5 Commercial banks Flow of funds, 37^1 Assets and liabilities, 15-21, 64, 65 Foreign banks, U.S. branches and agencies, 71, 72-75 Commercial and industrial loans, 15-21, 64, 65, 66-71 Foreign currency operations, 10 Consumer loans held, by type and terms, 36, 66-71 Foreign deposits in U.S. banks, 5 Number, by classes, 64, 65 Foreign exchange rates, 62 Real estate mortgages held, by holder and property, 35 Foreign-related institutions, 20 Terms of lending, 66-71 Foreign trade, 51 Time and savings deposits, 4 Foreigners Commercial paper, 22, 23, 32 Claims on, 52, 55, 56, 57, 59 Condition statements (See Assets and liabilities) Liabilities to, 51, 52, 53, 58, 60, 61 Construction, 42, 46 Consumer credit, 36 Consumer prices, 42 GOLD Consumption expenditures, 48, 49 Certificate account, 10 Corporations Stock, 5, 51 Profits and their distribution, 32 Government National Mortgage Association, 30, 34, 35 Security issues, 31, 61 Gross domestic product, 48, 49 Cost of living (See Consumer prices) Credit unions, 36 Currency in circulation, 5, 13 HOUSING, new and existing units, 46 Customer credit, stock market, 24 INCOME, personal and national, 42, 48, 49 DEBT (See specific types of debt or securities) Industrial production, 42, 44 Demand deposits, 15-21 Insurance companies, 27, 35 Depository institutions Interest rates Reserve requirements, 8 Bonds, 23 Reserves and related items, 4, 5, 6, 12, 64, 65 Commercial banks, 66-71 Deposits (See also specific types) Consumer credit, 36 Commercial banks, 4, 15-21, 64, 65 Federal Reserve Banks, 7 Federal Reserve Banks, 5, 10 Foreign banks, U.S. branches and agencies, 70 Discount rates at Reserve Banks and at foreign central banks and Money and capital markets, 23 foreign countries (See Interest rates) Mortgages, 34 Discounts and advances by Reserve Banks (See Loans) Prime rate, 22 Dividends, corporate, 32 International capital transactions of United States, 50-61 International organizations, 52, 53, 55, 58, 59 Inventories, 48 EMPLOYMENT, 42 Investment companies, issues and assets, 32 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

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

79 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 DIVISION OF SUPPORT SERVICES OFFICE OF THE INSPECTOR GENERAL ROBERT E. FRAZIER, Director BARRY R. SNYDER, Inspector General 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

80 Federal Reserve Bulletin • May 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 III, Second District KATIE S. WINCHESTER, Eighth District RONALD L. HANKEY, Third District RICHARD A. ZONA, Ninth District ROBERT W. GILLESPIE, Fourth District C. Q. CHANDLER, Tenth District KENNETH D. LEWIS, Fifth District RICHARD W. EVANS, JR., Eleventh District STEPHEN A. HANSEL, Sixth District WALTER A. DODS, JR., Twelfth District JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

81 CONSUMER ADVISORY COUNCIL YVONNE S. SPARKS STRAUTHER, St. Louis, Missouri, Chairman DWIGHT GOLANN, Boston, Massachusetts, Vice Chairman LAUREN ANDERSON, New Orleans, Louisiana JOHN C. LAMB, Sacramento, California WALTER 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. KOEHLER, Jacksonville, Florida GARY S. WASHINGTON, Chicago, Illinois GWENN S. KYZER, Allen, Texas ROBERT L. WYNN, II, Madison, Wisconsin THRIFT INSTITUTIONS ADVISORY COUNCIL WILLIAM A. FITZGERALD, Omaha, Nebraska, President F. WELLER MEYER, Falls Church, Virginia, Vice President GAROLD R. BASE, Piano, Texas BABETTE E. HEIMBUCH, Santa Monica, California JAMES C. BLAINE, Raleigh, North Carolina THOMAS S. JOHNSON, 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

82 Federal Reserve Bulletin • May 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 231 pp. $15.00 578 pp. $25.00 each. 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 1988 November 1989 256 pp. $25.00 EDUCATION PAMPHLETS 1980-89 March 1991 712 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1990 November 1991 185 pp. $25.00 available without charge. 1991 November 1992 215 pp. $25.00 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1994 December 1995 190 pp. $25.00 Consumer Handbook to Credit Protection Laws 1990-95 November 1996 404 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small Businesses Series on the Structure of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF The Board of Governors of the Federal Reserve System CHARTS. Weekly. $30.00 per year or $.70 each in the United 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

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

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

85 1-A 2-B 3-C 4-D 5-E Pittsburgh Bavltimtofre MD wr I OK YP A VAB 1/ -WV WV NC tsunaio NY •HKcinnati •Charloiu / BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H KY Birmingham. ». / IN / Rsville MO AR • Memphis MS ATLANTA CHICAGO ST. LOUIS 9-1 mi WI MINNEAPOLIS 10-J 12-L KANSAS CITY 11-K DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • May 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. Turnipseed1 PHILADELPHIA 19105 Joan Carter Edward G. Boehne Charisse R. Lillie William H. Stone, Jr. CLEVELAND* 44101 G. Watts Humphrey, Jr. Jerry L. Jordan David H. Hoag Sandra Pianalto Cincinnati 45201 George C. Juilfs Charles A. Cerino1 Pittsburgh 15230 John T. Ryan, III Robert B. Schaub RICHMOND* 23219 Claudine B. Malone J. Alfred Broaddus, Jr. Jeremiah J. Sheehan Walter A. Varvel Baltimore 21203 Daniel R. Baker William J. Tignanelli' Charlotte 28230 Joan H. Zimmerman Dan M. Bechter1 ATLANTA 30303 John F. Wieland Jack Guynn Paula Lovell Patrick K. Barron James M. Mckee Birmingham 35283 V. Larkin Martin Fred R. Herr1 Jacksonville 32231 Marsha G. Rydberg James D. Hawkins1 Miami 33152 Mark T. Sodders James T. Curry III Nashville 37203 N. Whitney Johns Melvyn K. Purcell1 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. Allardice1 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 Perine Beard MINNEAPOLIS 55480 David A. Koch Gary H. Stern James J. Howard Colleen K. Strand Helena 59601 Thomas O. Markle Samuel H. Gane KANSAS CITY 64198 Jo Marie Dancik Thomas M. Hoenig Terrence P. Dunn Richard K. Rasdall Denver 80217 Kathryn A. Paul Carl M. Gambs1 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, III1 San Antonio 78295 Bartell Zachry James L. Stull1 SAN FRANCISCO 94120 Gary G. Michael Robert T. Parry Nelson C. Rising John F. Moore Los Angeles 90051 Lonnie Kane Mark L. Mullinix1 Portland 97208 Nancy Wilgenbusch Raymond H. Laurence1 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

87 Publications of Interest FEDERAL RESERVE REGULATORY SERVICE To promote public understanding of its regulatory func- The Payment System Handbook deals with expedited tions, the Board publishes the Federal Reserve Regu- funds availability, check collection, wire transfers, and latory Service, a four-volume loose-leaf service con- risk-reduction policy. It includes Regulations CC, J, and taining all Board regulations as well as related statutes, EE, related statutes and commentaries, and policy interpretations, policy statements, rulings, and staff statements on risk reduction in the payment system. opinions. For those with a more specialized interest in For domestic subscribers, the annual rate is $200 for the Board's regulations, parts of this service are pub- the Federal Reserve Regulatory Service and $75 for lished separately as handbooks pertaining to monetary each handbook. For subscribers outside the United policy, securities credit, consumer affairs, and the pay- States, the price including additional air mail costs is ment system. $250 for the service and $90 for each handbook. These publications are designed to help those who The Federal Reserve Regulatory Service is also availmust frequently refer to the Board's regulatory materi- able on CD-ROM for use on personal computers. For a als. They are updated monthly, and each contains cita- standalone PC, the annual subscription fee is $300. For tion indexes and a subject index. network subscriptions, the annual fee is $300 for 1 con- The Monetary Policy and Reserve Requirements current user, $750 for a maximum of 10 concurrent Handbook contains Regulations A, D, and Q, plus users, $2,000 for a maximum of 50 concurrent users, related materials. and $3,000 for a maximum of 100 concurrent users. The Securities Credit Transactions Handbook con- Subscribers outside the United States should add $50 tains Regulations T, U, and X, dealing with exten- to cover additional airmail costs. For further informasions of credit for the purchase of securities, together tion, call (202) 452-3244. with related statutes, Board interpretations, rulings, All subscription requests must be accompanied by a and staff opinions. Also included is the Board's list of check or money order payable to the Board of Goverforeign margin stocks. nors of the Federal Reserve System. Orders should be The Consumer and Community Affairs Handbook addressed to Publications Services, mail stop 127, Board contains Regulations B, C, E, M, Z, AA, BB, and DD, of Governors of the Federal Reserve System, Washingand associated materials. ton, DC 20551. GUIDE TO THE FLOW OF FUNDS ACCOUNTS Guide to the Flow of Funds Accounts explains in detail dures as seasonal adjustment, extrapolation, and how the U.S. financial flow accounts are prepared. The interpolation. accounts, which are compiled by the Division of The balance of the Guide contains explanatory tables Research and Statistics, are published in the Board's corresponding to the tables of financial flows data that quarterly Z.l statistical release, "Flow of Funds appeared in the September 1992 Z.l release. These Accounts, Flows and Outstandings." The Guide updates tables give, for each data series, the source of the data or and replaces Introduction to Flow of Funds, published the methods of calculation, along with annual data for in 1980. 1991 that were published in the September 1992 release. The 670-page Guide begins with an explanation of Guide to the Flow of Funds Accounts is available for the organization and uses of the flow of funds accounts $8.50 per copy from Publications Services, Board of and their relationship to the national income and Governors of the Federal Reserve System, Washington, product accounts prepared by the U.S. Department of DC 20551. Orders must include a check or money order, Commerce. Also discussed are the individual data in U.S. dollars, made payable to the Board of Governors series that make up the accounts and such proce- of the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • May 1999 Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce's economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z. 1 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis