Federal Reserve Bulletin, 1999-06

Volume 85 • Number 6 • June 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 369 PROFITS AND BALANCE SHEET 401 INDUSTRIAL PRODUCTION AND CAPACITY DEVELOPMENTS AT U.S. COMMERCIAL UTILIZATION FOR APRIL 1999 BANKS IN 1998 Industrial production, which had been essen- The performance of the U.S. commercial bank- tially flat between October and February, acceling industry remained strong in 1998, but erated in March and April. At 134.0 percent of slipped a bit from the remarkable results of its 1992 average, industrial production in April recent years. Both the return on assets and the was 2.0 percent higher than in April 1998. return on equity edged down last year, although Capacity utilization in manufacturing, mining, they remained high by historical standards. and electric and gas utilities rose 0.2 percentage While supported by growth in fee income, prof- point in April, to 80.6 percent, down from itability was damped by a large decline in the 82.6 percent a year earlier. rates banks earned on their interest-bearing assets relative to the rates they paid on their 404 STATEMENTS TO THE CONGRESS liabilities, and also by higher noninterest costs, especially merger and restructuring expenses. Edward W. Kelley, Jr., member, Board of Gover- Profitability was uneven last year across bank nors, discusses the Board's extensive interest in, sizes: Whereas the largest and the smallest banks and efforts to address, Year 2000 issues and posted lower earnings, the profits of medium- testifies that he is increasingly optimistic that the sized banks—which account for almost two- operational transition will go well and has come thirds of industry assets—improved once again to believe that Year 2000 technical issues will in 1998. Nevertheless, though these figures at- not cause major problems in the financial martest to the profitability of most banks, the share kets of the United States. He further testifies that of bank assets at unprofitable institutions the Federal Reserve is committed to a rigorous increased 2 percentage points, to 2.6 percent, the program of industry testing and contingency highest since 1994. planning and, through our supervisory initiatives, to identifying those organizations that most need to apply additional attention to Year 2000 readiness programs. (Testimony 396 TREASURY AND FEDERAL RESERVE before the House Committee on Banking and FOREIGN EXCHANGE OPERATIONS Financial Services, April 13, 1999) During the first quarter of 1999, the dollar appre- 413 Kenneth D. Buckley, Assistant Director, Diviciated 8.4 percent against the euro and 5.3 per- sion of Reserve Bank Operations and Payment cent against the yen. The dollar's value was Systems, discusses the arrangements the Federal largely influenced by changes in market expecta- Reserve is making to ensure the timely delivery tions for economic growth in the United States, of veterans' benefit payments made by direct Europe, and Japan. Against the euro, the dollar deposit during the rollover to the Year 2000 strengthened as the differential between U.S. and and testifies that internal Federal Reserve sys- European interest rates moved increasingly in tems used to deliver veterans' benefit payments favor of the dollar. Against the yen, the dollar have been modified, tested, and placed into fell to a two-and-a-half-year low and then production. Further, he testifies that while the rebounded after the Bank of Japan reportedly Board expects that the industry may experience intervened to counter yen appreciation and some minor or localized problems during the subsequently guided overnight interest rates to rollover, it fully expects to conduct business as near zero. The U.S. monetary authorities did not usual through the year 2000 and veterans and intervene in the foreign exchange markets dur- their families should be confident that their ing the quarter. benefits will be paid as usual. (Testimony before Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

the Senate Committee on Veterans' Affairs, 426 MINUTES OF THE FEDERAL OPEN April 20, 1999) MARKET COMMITTEE MEETING HELD ON FEBRUARY 2-3, 1999 415 Richard A. Small, Assistant Director, Division of Banking Supervision and Regulation, dis- At its meeting on February 2-3, 1999, the Comcusses the Federal Reserve's role in the gov- mittee voted to approve without change the ernment's efforts to detect and deter money growth ranges for M2 and M3 in 1999 that had laundering and other financial crimes, with a been established on a provisional basis on particular emphasis on matters related to the July 1, 1998. Bank Secrecy Act and the reporting of suspi- For the intermeeting period ahead, the Comcious activity; he testifies that compliance with mittee adopted a directive that called for condithe Bank Secrecy Act and the suspicious-activity tions in reserve markets that were consistent reporting requirements by financial institutions with an unchanged federal funds rate of 43A perprovides timely and valuable information to law cent. The directive did not include a bias with enforcement and is the best indicator of the regard to any adjustments to policy during the existence of satisfactory anti-money-laundering intermeeting period. and anti-fraud policies and procedures. (Testimony before the Subcommittee on General 437 LEGAL DEVELOPMENTS Oversight and Investigations and the Subcom- Various bank holding company, bank service mittee on Financial Institutions and Consumer corporation, and bank merger orders; and pend- Credit of the House Committee on Banking and ing cases. Financial Services, April 20, 1999) 419 Alan Greenspan, Chairman, Board of Gover- A1 FINANCIAL AND BUSINESS STATISTICS nors, presents the views of the Federal Reserve These tables reflect data available as of on the current version of H.R. 10, the approach April 28, 1999. to financial modernization most recently approved by the House Banking Committee and A3 GUIDE TO TABULAR PRESENTATION testifies that the Federal Reserve strongly supports the new powers that would be authorized A4 Domestic Financial Statistics by H.R. 10. He testifies that the new activities A42 Domestic Nonfinancial Statistics should not be authorized for banks through oper- A50 International Statistics ating subsidiaries and that the holding company structure is the most appropriate and effective A63 GUIDE TO STATISTICAL RELEASES AND one for limiting transfer of the federal subsidy to SPECIAL TABLES new activities and fostering a level playing field both for financial firms affiliated with banks and A64 INDEX TO STATISTICAL TABLES for independent firms, while fostering the safety and soundness of our insured banking system, A66 BOARD OF GOVERNORS AND STAFF enhancing functional regulation, and achieving the benefits of financial modernization for the A68 FEDERAL OPEN MARKET COMMITTEE AND consumer and the financial services industry. STAFF; ADVISORY COUNCILS (Testimony before the Subcommittee on Finance and Hazardous Materials of the House Commit- A70 FEDERAL RESERVE BOARD PUBLICATIONS tee on Commerce, April 28, 1999) A72 SCHEDULE OF RELEASE DATES FOR 424 ANNOUNCEMENTS PERIODIC RELEASES Launch of a new design for the Federal Reserve A74 MAPS OF THE FEDERAL RESERVE SYSTEM Board's web site. Issuance by the Basle Committee of a paper on A76 FEDERAL RESERVE BANKS, BRANCHES, credit-risk modeling. AND OFFICES Enforcement actions. Changes in Board staff. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Lynn S. Fox, Chair • Karen H. Johnson • Donald L. Kohn • Stephen R. Malphrus • 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

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 Antulio N. Bomfim and William R. Nelson, of the 1. Measures of commercial bank profitability, 1970-98 Board's Division of Monetary Affairs, prepared Percent this article. Thomas C. Allard assisted in developing, and was responsible for maintaining, the data- Return on equity - -s 15 base used in this article. Douglas M. Conover and Adrian R. Sosa provided research assistance. — — 10 V ; — 5 The performance of the U.S. commercial banking Mil 1 i ! ! ! 1 industry remained strong in 1998, but slipped a bit from the remarkable results of recent years. Both the return on assets and the return on equity edged down — Return on assets / — 1.0 last year, although they remained high by historical standards (chart 1). While supported by growth in fee — 0.5 income, profitability was damped by a large decline Mil in the rates banks earned on their interest-bearing 1970 1975 1980 1985 1990 1995 assets relative to the rates they paid on their liabilities, and also by higher noninterest costs, especially merger and restructuring expenses. Profitability was Although, in the third quarter, trading income was uneven last year across bank sizes: Whereas the sharply curtailed and provisions for loan losses were largest and the smallest banks posted lower earnings, elevated at the largest banks, the turmoil in financial the profits of medium-sized banks—which account markets in the second half had little effect on profits for almost two-thirds of industry assets—improved last year for the banking industry as a whole. But once again in 1998. Nevertheless, though these fig- the late-summer currency devaluation and default in ures attest to the profitability of most banks, the share Russia left a discernible imprint on the balance sheets of bank assets at unprofitable institutions increased of U.S. commercial banks in 1998: Growth in bank 2 percentage points, to 2.6 percent, the highest since assets was boosted by the financial reintermediation 1994.1 process that characterized much of the second half of last year, with holdings of both loans and securities posting sizable gains. 1. Except where otherwise indicated, data in this article are from Bank stocks underperformed broader market the quarterly Reports of Condition and Income (Call Reports) for insured domestic commercial banks and nondeposit trust companies indexes in 1998, ending the year about where they (hereafter, banks). The data consolidate information from foreign and began. After having risen strongly in the first half, domestic offices and have been adjusted to take account of mergers. bank equity prices, particularly those of money cen- For additional information on the adjustments to the data, see the appendix in William B. English and William R. Nelson, "Profits and ter banks, fell sharply in the aftermath of the Russian Balance Sheet Developments at U.S. Commercial Banks in 1997," crisis, but later recovered as conditions abroad Federal Reserve Bulletin, vol. 84 (June 1997), p. 408. Size categories, calmed and the domestic economic expansion conbased on assets at the start of each quarter, are as follows: the 10 largest banks, large banks (those ranked 11 through 100 by size), tinued. Dividend payments made by banks, including medium-sized banks (those ranked 101 through 1,000 by size), and those made to parent holding companies, declined small banks (those not among the largest 1,000 banks). At the start of last year, helping bank capital to grow in line with the fourth quarter of 1998, the approximate asset size of the banks in those groups were as follows: the 10 largest banks, more than $71 bil- assets. Risk-based capital measures edged down lion; large banks, $6 billion to $71 billion; medium-sized banks, again, but remained high: Nearly 95 percent of bank $309 million to $6 billion; small banks, less than $309 million. Many of the data series reported here begin in 1985 because the Call Reports were significantly revised in 1984. Data from before 1985 are taken from Federal Deposit Insurance Corporation, Statistics on Banking (FDIC, 1997). The FDIC data are also available on the World Wide data published in earlier years because of revisions and corrections. In Web (http://www.fdic.gov/databank/sob/). Data shown may not match the tables, components may not sum to totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

370 Federal Reserve Bulletin • June 1999 2. Number of commercial banks and percentage of assets bank assets. A 9Vi percent expansion in managed at the largest 100 banks, 1970-98 liabilities, matched by a similar gain in equity capital, bridged the gap between growth in assets and in core Thousands deposits. Number Loans to Businesses Bank loans to commercial and industrial (C&I) enterprises expanded almost 13 percent last year, topping even 1997's considerable advance. Nowhere was the influence of last year's two driving forces for bank Percentage of assets at largest 100 credit—strong economic fundamentals and skittish financial markets—more evident than in this category of bank loans. For the year as a whole, capital expenditures by nonfinancial corporations expanded rapidly, particularly for below-investment-grade companies, while profits remained near their 1997 level. assets were held by institutions classified as "well As a result, the financing gap—the excess of capicapitalized" at year-end. tal expenditures over internally generated funds— Bank consolidation continued and included some widened substantially (chart 3). The borrowing needs particularly large mergers. As a result, the share of of nonfinancial corporations were further elevated industry assets at the largest 100 banks rose to 70 per- by a rapid pace of net equity retirement, which was 3 cent at year-end, up from 67/4 percent a year earlier fueled by corporate mergers and acquisitions and and around 50 percent in 1985. The number of com- stock buyback programs. mercial banks fell by 371, as the number of newly Banks played an especially important role in busicreated banks was more than offset by the 588 banks ness financing needs during the fall of last year, when that ceased to exist (almost entirely because of merg- the issuance of corporate securities was severely disers). At the end of 1998, there were 8,817 commer- rupted and spreads between yields on private debt cial banks in the United States, more than one-third instruments and on comparable Treasury securities fewer than the 14,393 banks that existed in 1985 widened appreciably. Indeed, with investors favor- (chart 2). Banking industry consolidation was also ing safe and liquid assets, yields on junk bonds evident in mergers between holding companies, rose even as Treasury yields were falling, and the whose numbers declined by 139 last year, to 5,971. The largest 50 holding companies continued to steadily increase their share of industry assets, from 3. Financing gap at nonfarm nonfinancial corporations, 74 percent at the end of 1997 to 76 percent at the end 1990-98 of last year. Billions of dollars BALANCE SHEET DEVELOPMENTS — 100 Bank assets expanded 81/4 percent last year, versus 9!/4 percent in 1997 (table 1). In addition to robust economic conditions throughout the year, turmoil in financial markets in the fall helped sustain the rapid growth of bank credit in 1998. Loans on banks' books benefited the most, increasing almost 9 percent last year after a 5Vi percent rise in 1997. Banks' securities holdings also advanced briskly, rising 8'/3 percent, although that was a bit less fast than the 1990 1992 1994 19% 1998 increase posted in 1997. On the liability side, core NOTE. The data are four-quarter moving averages. The financing gap is the deposits grew 7 percent, well above the AVi percent difference between capital expenditures and internally generated funds. increase in 1997 but still short of the rapid advance in SOURCE. Federal Reserve Board, Statistical Release Z.l, "Flow of Funds Accounts of the United States," table F. 102. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 371 1. Annual rates of growth of balance sheet items, 1989-98 Percent ——rrrrc MEMO: Dec. Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 (bi 1 l 9 li 9 o 8 ns of dollars) Assets 5.35 2.64 1.33 2.19 5.68 8.06 7.55 6.09 9.24 8.22 5,380 Interest-earning assets 5.61 2.23 1.98 2.53 6.56 5.77 7.69 5.67 8.88 8.18 4,631 Loans and leases (net) 6.24 2.37 -2.65 -1.04 6.05 9.83 10.53 8.12 8.38 8.91 3,142 Commercial and industrial 2.97 -.67 -9.10 -4.10 .52 9.33 12.26 7.24 12.02 12.97 893 Real estate 12.69 8.79 2.73 1.94 6.13 7.90 8.33 5.44 9.30 7.98 1,335 Booked in domestic offices 13.02 8.55 2.90 2.57 6.17 7.64 8.48 5.50 9.53 7.96 1,304 One- to four-family residential 16.13 14.00 7.76 7.53 11.08 10.09 10.06 4.65 9.67 6.34 758 Other 10.34 3.62 -1.93 -2.86 .22 4.35 6.25 6.75 9.33 10.28 546 Booked in foreign offices 2.99 16.64 -2.35 -17.80 4.67 18.35 2.81 3.18 .34 8.79 31 Consumer 6.18 .38 -2.55 -1.66 9.06 16.01 9.50 4.90 -2.18 1.03 550 Other loans and leases -.94 -5.68 -4.91 -4.24 9.97 5.29 14.23 22.28 13.73 14.04 425 Loan-loss reserves and unearned income 10.29 .35 -3.78 -4.85 -5.82 -2.22 .25 -.06 -.49 3.38 60 Securities 5.08 8.46 16.23 12.29 12.26 -2.61 .57 .84 8.86 8.34 1,090 Investment account 4.04 8.19 14.42 11.44 8.11 -1.73 -1.58 -1.12 8.68 12.04 965 U.S. Treasury -13.79 3.50 32.01 23.95 7.24 -8.46 -19.21 -14.30 -8.85 -25.17 113 U.S. government agency and corporation obligations 33.41 24.02 15.88 12.77 9.62 .87 6.43 3.61 14.20 16.98 585 Other -5.35 -6.70 -2.56 -5.20 6.09 2.49 4.20 1.82 11.21 26.93 267 Trading account 20.62 11.87 38.88 21.01 51.84 -9.43 18.51 14.44 9.97 -13.56 125 Other 2.49 11.70 2.82 1.57 -7.90 3.25 7.64 -.90 12.81 2.35 399 Non-interest-earning assets 3.50 5.51 -3.10 -.32 -.86 25.65 6.61 8.87 11.48 8.47 749 Liabilities 5.43 2.37 1.01 1.35 5.12 8.31 7.17 5.95 9.13 8.09 4,926 Core deposits 5.75 7.58 5.25 5.09 1.49 -.17 3.97 4.12 4.53 7.05 2,670 Transaction deposits .93 2.43 3.38 14.62 5.47 -.33 -3.09 -3.45 -4.54 -1.35 747 Savings and small time deposits 8.71 10.51 6.24 .18 -.85 -.08 8.37 8.34 9.04 10.71 1,923 Managed liabilities1 5.13 -6.15 -6.19 -6.07 12.30 17.57 10.44 9.65 13.84 9.60 1,885 Deposits booked in foreign offices -1.07 -5.88 3.81 -5.85 15.06 30.89 5.13 4.27 11.13 8.71 572 Large time 5.00 —5.68 -19.73 -26.20 -9.21 8.72 19.61 21.16 20.15 9.09 413 Subordinated notes and debentures 16.98 20.99 4.69 34.90 10.82 9.23 6.61 17.74 21.05 17.00 72 Other managed liabilities 9.86 -8.06 -1.39 6.94 22.18 12.91 11.24 8.21 12.23 9.87 827 Other 3.29 4.43 -4.18 -1.02 15.30 79.17 20.46 2.60 23.79 8.11 371 Equity capital 4.18 6.64 5.98 13.75 12.58 5.24 12.00 7.72 10.46 9.62 454 MEMO Commercial real estate loans 2 n.a. n.a. -2.58 -4.03 -.60 4.00 6.35 7.66 10.13 11.35 554 Mortgage-backed securities 41.00 34.39 19.27 10.37 9.66 -3.12 .67 2.03 14.18 22.11 464 NOTE. Data are from year-end to year-end. 2. Measured as the sum of construction and land development loans secured n.a. Not available. by real estate; real estate loans secured by nonfarm nonresidential properties; 1. Measured as the sum of deposits in foreign offices, large time deposits in real estate loans secured by multifamily residential properties; and loans to domestic offices, federal funds purchased and securities sold under agreements finance commercial real estate, construction, and land development activities to resell, demand notes issued to the U.S. Treasury, subordinated notes and not secured by real estate. debentures, and other borrowed money. spread between yields on those bonds and yields substitution from the commercial paper market. on comparable Treasuries roughly doubled between Partly as a result of these substitutions, banks posted midsummer and mid-fall. The spread between further gains in their share of total nonmortgage investment-grade corporate bonds and Treasuries also credit market debt owed by the nonfinancial business widened substantially during that period, as did that sector (chart 6). between yields on lower-tier commercial paper and The substitutions toward bank financing occurred higher-quality paper (charts 4 and 5). Consistent with even though banks, like other lenders, tightened the such inhospitable financial market conditions, respon- terms and standards on loans to businesses after the dents to the Federal Reserve's Senior Loan Officer turbulence that hit the financial markets in the second Opinion Survey on Bank Lending Practices (BLPS) half of the year. Judging from responses to the BLPS, in November pointed to shifts from other sources of the tightening was especially noticeable for large and credit as the primary cause for increased loan demand medium-sized borrowers and represented the first in the fall. In particular, about three-quarters of the time that large banks did not ease terms, on net, since largest domestic and the foreign respondents indi- 1993 (chart 7). Respondents to the September and cated that substitution from the bond market had November BLPSs cited a reduced tolerance for risk intensified loan demand; about half also mentioned and a less favorable economic environment as rea- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

372 Federal Reserve Bulletin • June 1999 4. Spreads between yields on corporate bonds C&I loans was strong for banks of all sizes, the and Treasury securities, 1998 widening of spreads was generally applied to larger loans—which are typically made by the bigger banks. Basis points These loans were probably taken out by businesses most affected by the financial market turmoil, either because they would normally have raised a significant share of their funds in the capital market, or because they were directly exposed to the Russian crisis and the subsequent deterioration in other emerging-market economies. Last fall's disruption in the private debt markets highlighted the important role played by loan com- 200 mitments as a buffer against sudden shifts in financing conditions. Indeed, according to the STBL, spreads on C&I loans not made under commitment 1998 widened much more sharply in late 1998 than did NOTE. The data are daily. The spread of high-yield bonds compares the yield those on other loans, indicating that businesses would on the Merrill Lynch Master II index with that on a seven-year Treasury; the other two spreads compare yields on the appropriate Merrill Lynch indexes with have been subject to considerably more financial that on a ten-year Treasury. strain in the absence of such commitments (chart 8, SOURCE. Merrill Lynch; Federal Reserve Board, Statistical Release H.15, "Selected Interest Rates." lower panels). As with total C&I loans, the tightening in conditions on bank loans not made under commitsons for the tightening in the latter part of the year.2 ment was most evident for larger loans; spreads on Data from the Federal Reserve's quarterly Survey of smaller loans widened only slightly last year. Terms of Business Lending (STBL) also showed a Of course, the existence of loan commitments widening of the average spread on business loans in implies that banks likely made some loans at spreads late 1998 (chart 8, upper panels).3 While growth in they considered too narrow under the circumstances that emerged during the second half of last year. Indeed, one-fourth of the banks reported 2. Ordinarily, the BLPS is conducted on a quarterly basis, but the in the January 1999 BLPS that they would tighten Federal Reserve used its authority to conduct up to six surveys a year to assess the impact of the ongoing financial turbulence on the bank terms on more than 20 percent of their outstanding loan market in a special BLPS in mid-September. revolving loan commitments if those commitments 3. Although spreads over the federal funds rate widened last fall, were maturing and being repriced at the time of the rates on loans generally declined, reflecting the effects on market rates of the three easing actions undertaken by the Federal Reserve between survey. September and November. 5. Spread between rates on lower-tier commercial paper 6. Bank loans as a share of total nonmortgage credit market and rates on high-quality paper, 1998 debt, nonfinancial businesses, 1970-98 Basis points Percent 1998 1970 1975 1980 1985 1990 1995 NOTE. The data are daily. The spread compares the rate on A2/P2-rated, NOTE. The data are quarterly. thirty-day commercial paper with that on AA-rated, thirty-day paper. SOURCE. Federal Reserve Board, Statistical Release Z.l. "Flow of Funds SOURCE. Federal Reserve Board. Statistical Release, "Commercial Paper." Accounts of the United States," table L. 101. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 373 7. C&I loan standards and terms, by size of borrower, 8. Spread between the C&I loan rate and the intended 1990-99: Q1 federal funds rate, by size of loan and commitment status, 1998-99:Q1 Percent Net percentage of selected large commercial banks Basis points that tightened standards All loans of more than $1,000,000 180 160 140 Small borrowers 120 Net percentage of selected large commercial banks that increased spreads over their cost of funds All loans of less than $1,000,000 60 400 40 380 20 + 360 0 340 20 40 Loans of more than $1,000,000 : not made under commitment 180 160 NOTE. The data are quarterly. Net percentage is the percentage of banks reporting a tightening of standards or an increase in spreads less the percentage 140 reporting an easing or decrease. The definition for firm size suggested for, and • generally used by, survey respondents is that medium firms are those with sales 120 of between $50 million and $250 million. SOURCE. Federal Reserve Board, Senior Loan Officer Opinion Survey on Hi Bank Lending Practices. Loans of less than $1,000,000 not made under commitment 400 Commercial real estate loans on banks' books accelerated to an 11 Vs percent rise in 1998, fueled by 380 continuing strong conditions in the property market, 360 especially in the office sector, where vacancy rates 340 fell further and prices continued to rise. In addition, BLPS responses suggest that the demand for bank financing of commercial real estate ventures was 1998 1999 enhanced at the end of last year by the turmoil in NOTE. The data are quarterly and weighted by loan volume. SOURCE. Federal Reserve Board, Statistical Release E.2, "Survey of Terms financial markets. Take, for example, the 35 percent of Business Lending." of the domestic survey respondents that reported an increase in demand for commercial real estate nomic outlook, and deepened concern about the relialoans over the previous three months on the January bility of take-out financing. 1999 BLPS; among them, the most important expla- The strong pace of commercial real estate lending nation for the stronger demand was a shift in cus- by banks in 1998 extended a five-year uptrend and tomer borrowing from lenders having difficulty secu- was most evident among those institutions not ritizing commercial mortgages. As with C&I loans, included among the top 100 banks. The share of total banks tightened terms and standards on commercial assets at such banks represented by nonfarm nonresireal estate loans in response to market turbulence. dential real estate loans has been rising steadily, According to responses to the November 1998 and roughly doubling between 1985 and 1998. In con- January 1999 surveys, the primary reasons for tight- trast, this same share has remained close to constant ening in the second half of the year were disrup- so far this decade among the largest 100 banks, tions in the market for commercial mortgage-backed where commercial real estate loans grew only securities, a less favorable, or more uncertain, eco- 6.9 percent last year. Larger banks tend to securitize Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

374 Federal Reserve Bulletin • June 1999 many of their originations as commercial mortgage- 10. Securitized share of outstanding consumer loans backed securities and so hold on their books a smaller originated by banks, 1988-98 share of the loans they make. Increases in securitiza- Percent tion in recent years may account for the slow growth of commercial real estate loans on the books of such banks. / — / /— 30 Loans to Households — — 20 Consumer loans on banks' books expanded 1 percent last year, following a 2VS percent decline in 1997. — 10 Two main factors helped restrain growth in this category of bank loans, even as consumer spending remained strong throughout the year and a lower 1 1 1 1 1 1 1 1 1 1 proportion of banks reported tightening standards for 1988 1990 1992 1994 1996 1998 credit card and other consumer loans than in 1997 NOTE. The data are quarterly and seasonally adjusted. SOURCE. Federal Reserve Board, Statistical Releases H.8, "Assets and Lia- (chart 9). On the demand side, households apparently bilities of Commercial Banks in the United States," and G.19, "Consumer substituted mortgage for consumer debt, as they did Credit." in 1997. On the supply side, 1998 was another strong year for consumer loan securitization, although 93/4 percent in 1998, significantly more than the stresses in the financial markets in the fall did cause a nearly 6 percent rise in 1997. temporary disruption to the market for asset-backed Substitutions by households from consumer loans securities—which include securities backed by credit at banks toward home equity loans, which had been card and auto loans. For the year as a whole, the particularly prevalent in recent years, were not much securitized share of bank consumer loans outstanding in evidence in 1998. Outstanding loans on banks' reached a new high of almost 35 percent at the end of books made under home equity lines of credit actu- 1998 (chart 10). Including these loans, outstanding ally fell 1V2 percent last year, and closed-end residenconsumer loans originated by banks expanded 6 pertial real estate loans secured by junior liens (second cent last year, compared with a 4 percent rise in 1997. mortgages) increased only 53/4 percent, less than half This acceleration reflected a pick-up in the growth the average pace of the previous three years. Instead, of credit card loans originated by banks, which rose households appear to have tapped into the accumulated equity in their homes directly in the form of cash-out refinancing and to have used some of the proceeds to pay down or substitute for other debt, 9. Net percentage of selected commercial banks that including home equity loans.4 Indeed, a by-product tightened standards for credit cards and other consumer loans, 1996-99:Q1 of the steep decline in yields on Treasury securities during last year's market turmoil was a signifi- Percent cant, though not so pronounced, fall in the rates on thirty-year fixed-rate mortgages, which substantially bolstered mortgage refinancing activity last year (chart 11). The high level of refinancing also acted to lengthen the average remaining maturity of the home mortgages held by banks at year-end, though that lengthening likely reflected, in part, a buildup of loans targeted for securitization by some banks during last year's financial market stress.5 Taken together, the 1996 1997 1998 4. According to available estimates, one-third to one-half of homeowners took some cash out when refinancing their mortgages last year. NOTE. The data are quarterly. Net percentage is the percentage of banks that reported a tightening of standards less the percentage that reported an easing. 5. Postponed securitizations probably also contributed to the SOURCE. Federal Reserve Board, Senior Loan Officer Opinion Survey on impressive 14 percent advance in residential real estate loans on Bank Lending Practices. banks' books in the fourth quarter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 375 11. Average rate on new, fixed-rate thirty-year mortgages rate as total assets. Coupled with the sizable growth and the mortgage refinancing index, 1990-99:Q1 in total loans on banks' books, the surge in securities suggests that banks stretched their capital positions Percent further in 1998. Asked about reasons for the rapid Mortgage rate ] ( buildup in securities during the first quarter of the year, respondents to the May 1998 BLPS cited a willingness to boost leverage to improve return on equity. With growth in bank security holdings strong ^ ^ ^ ^ ^^ i again late last year, the January 1999 BLPS included Index. I990.Q1 = 1 additional questions on the subject. Among large Refinancing index banks that reported increased securities holdings in the fourth quarter of 1998, the most important reason offered was that yields on some securities were attractive relative to the costs of funds. Indeed, heightened interest rate volatility and intense risk aversion in the financial markets around that time pushed the yields 1990 1992 1994 1996 1998 on mortgage-backed securities to high levels relative NOTE. The data are quarterly. to three-month wholesale CD rates (chart 12). Yield SOURCE. Mortgage rate, from the Federal Home Loan Mortgage Corporation; refinancing index, from the Mortgage Bankers Association. spreads on other securities also widened in the fourth quarter relative to funding costs, especially for commercial paper and other corporate securities. pickup in refinancing activity and the relative slow- Other reasons offered by banks for expanding their ing in mortgage securitization during the fall and securities holdings in the fourth quarter were, again, early winter fostered an expansion in the fraction of a willingness to use more leverage to improve the mortgages that have fixed rates on banks' books from return on equity and a desire to extend the duration of just over one-half, where it had persisted for several their securities portfolios. Banks' concerns about the years, to more than two-thirds by year-end. Similarly, duration of those portfolios were likely related to the the fraction of home mortgages that next reprice or market turmoil that dominated the latter part of mature further out than five years rose over the year the year: Unexpectedly low mortgage rates—and from about one-fourth to about two-fifths. the resulting higher prepayment risk—reportedly Despite last year's low mortgage rates, one- to led to unintended reductions in the duration of banks' four-family residential loans on banks' books inportfolios of mortgage-backed securities. creased only 6lA percent, well below the 9% per- The market turmoil may also have contributed to cent expansion in 1997. Several factors help account the fourth-quarter buildup in securities by making it for this downshift, even as the residential mortgage more difficult to place mortgage-backed securities in market heated up. First, despite the troubles associated with the financial market turmoil, banks continued to securitize a large share of the residential real estate loans they originated in 1998. Indeed, the shift 12. Spread between the yield on mortgage-backed securities and the rate on the three-month wholesale CD, 1998 toward fixed-rate mortgages, whose durations considerably exceed that of banks' liabilities, likely Basis points increased banks' incentive to securitize those loans. Second, in recent years, banks have faced stiffer competition from nonbank financial institutions in the market for fixed-rate mortgages and thus have 150 benefited relatively less from an increase in demand for these loans. Lastly, as noted above, the expansion in fixed-rate mortgages came partly at the expense of home equity loans. I 1 L_ 1 I I L i I 1 I I i Securities 1998 NOTE. The data are weekly. Banks' holdings of securities increased a strong SOURCE. For the CD rate. Federal Reserve Board, Statistical Release H.15, "Selected Interest Rates;" for the yield on mortgage-backed securities, 8!/3 percent last year, expanding at about the same Bloomberg L.R Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

376 Federal Reserve Bulletin • June 1999 the market. In particular, many banks apparently con- 13. Annual growth of assets and change in the ratio verted refinanced residential loans into mortgage- of managed liabilities to assets, 1986-98 backed securities because they have a lower capital Percent charge than loans do, but then waited for a more receptive market to sell them. In addition, banks added briskly to their holdings of "other" securities—which include commercial paper and corporate bonds—whose yields, as discussed above, rose relative to other market rates. Other securities also include the many types of instruments backed by loans—including bank-originated loans—other than residential mortgages. As in the mortgage-backed securities market, reluctance by some participants to invest in these securities in the fourth quarter may have contributed to the increase in holdings by banks. All of the growth in banks' securities portfolios 1986 1988 1990 1992 1994 1996 1998 last year occurred in investment accounts, whose NOTE. The data are from year-end to year-end. holdings advanced 12 percent in 1998, topping even the previous year's strong 8% percent expansion. Subordinated notes and debentures, which expanded Holdings of securities in trading accounts declined a 17 percent, posted the strongest growth among major sizable 131/2 percent last year, reflecting a pullback categories of managed liabilities. from trading activities in the wake of losses related to the Russian debt default. Over the final two quarters of last year, securities in banks' trading accounts Capital declined nearly $34 billion—more than 20 percent— with the runoff occurring entirely in trading assets Bank equity grew 9Vi percent last year, maintaining booked abroad. the share of assets funded with capital essentially at its 1997 level of 8V2 percent. Capital for regulatory purposes also increased about in line with assets, and Liabilities the leverage ratio moved sideways. About half of the growth in bank equity was attributable to the portion Core deposits at commercial banks grew 7 percent of income retained by banks. Indeed, as discussed last year, well above the 4!/2 percent advance in below, the dollar amount of dividends paid in 1998 1997.6 Some of the pickup resulted from a decrease declined for the first time since 1992, suggesting that in short-term interest rates spurred by the three mone- rapid growth in both loans and securities may have tary policy actions in the fall: As usual, rates on resulted in some capital pressures last year. Those deposits fell more slowly than market rates, trimming same pressures probably were related to the substanthe opportunity cost of holding deposits. However, an tial rise in new capital provided by parent holding important additional source of the expansion in core companies last year, as they evidently felt the need deposits in the latter part of 1998 was likely related to to bolster the capital positions of their banks. New investors' increased preference for safe and liquid capital accounted for about a quarter of the growth in assets in light of the turmoil that followed the Rus- bank equity, and the remainder was owed in large sian crisis. part to the excess of banks' issuance of equity related Banks continued to deepen their reliance on man- to acquisitions over the value of the shares of banks aged liabilities, which grew faster than total bank retired in mergers. assets for the sixth consecutive year (chart 13).7 Though the ratio of capital to assets was un- Though strong, last year's 9V2 percent expansion fell changed, risk-based capital measures (total and tier 1) short of the nearly 14 percent rise posted in 1997. edged down again in 1998, after several consecutive The slower growth in 1998 reflected the pickup in annual increases through 1996 (chart 14).8 Despite core deposits and the deceleration in asset growth. 8. The tier 1 ratio is the ratio of tier 1 capital to risk-weighted 6. Core deposits are transaction accounts, savings accounts (includ- assets, and the total ratio is the ratio of the sum of tier 1 and tier 2 ing MMDAs), and small time deposits. capital to risk-weighted assets. Tier 1 capital consists mainly of 7. Managed liabilities are defined in table 1. common equity (excluding intangible assets such as goodwill and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 377 14. Regulatory capital ratios and the share of industry TRENDS IN PROFITABILITY assets at well-capitalized banks, 1991-98 The net income of U.S. commercial banks increased Percent 4 percent to $611/2 billion in 1998. The industry's Regulatory capital ratios return on assets fell 5 basis points to 1.20 percent (table 2), and return on equity declined 3A percentage Total (tier 1 + tier 2) ratio — '4 point to 14 percent—below the elevated range it has occupied since 1993, although still high relative to longer-term historical norms. The prices of bank stocks, particularly those of money center banks, rose strongly in the first half of the year, as concerns ebbed that the troubles that had emerged in Asia in the preceding year would slow the U.S. economy or cause significant trading and loan losses at banks with Asian exposures (chart 15). In the summer, however, worries over prospects for emerging-market economies arose, and fresh turbulence in financial markets sparked by the Russian default resulted in sharply lower trading income and higher loan losses at some large banking companies. A sharp decline in bank stocks ensued. Toward year-end, as markets calmed and investors' concerns about trading exposures eased, bank stock prices recovered, ending the year about where they began, although down relative to most broad stock indexes. Though investor attention was focused on the trading and foreign-related losses of a few large banks in 1991 1992 1993 1994 1995 1996 1997 1998 the third quarter, industry profitability for the year as NOTE. The data on regulatory capital ratios are quarterly. For the definition of a whole was more seriously affected by a narrowing capital ratios, see text note 8. of the net interest margin and by a rise in noninterest expense, including merger and restructuring charges. their decline last year, regulatory capital ratios These influences were only partly offset by higher remained high, and nearly 95 percent of bank assets noninterest income, which reflected a continuation of were at well-capitalized banks at the end of 1998. a decade-long rise in fee-generating activities, includ- Nevertheless, the average margin by which these ing the funding by banks of assets through securitizabanks remained well capitalized shrank further last tion rather than on their balance sheets. year, a signal that banks may become more con- As a result of the decline in profitability, as well as cerned about their overall capital positions.9 the capital pressures discussed above, the dollar amount of dividends, which are paid primarily to parent holding companies, declined more than 3 percent last year (a decline of 10 basis points as a excluding net unrealized gains on investment account securities classipercentage of assets); this was the first annual reducfied as available for sale) and certain perpetual preferred stock. Tier 2 capital consists primarily of subordinated debt, preferred stock not tion in the dollar amount of dividends since 1992. included in tier 1, and loan-loss reserves. Risk-weighted assets are Nonetheless, the fifty largest bank holding companies calculated by multiplying the amount of assets and the creditincreased dividends paid to stockholders $2.6 billion, equivalent amount of off-balance-sheet items (an estimate of the potential credit exposure posed by the item) by the risk weight for to $19.6 billion, last year. However, those holding each category, where the risk weights rise from zero to 1 as the credit companies more than offset the rise in dividends risk of the assets increases. The leverage ratio is the ratio of tier 1 by reducing net stock repurchases $17.3 billion, to capital to average tangible assets. Tangible assets are equal to total assets less assets excluded from common equity in the calculation of tier 1 capital. 9. The average margin by which banks remained well capitalized was computed as follows. First, we looked at the leverage, tier 1, and ratio and the corresponding regulatory standard. The average margin total capital ratios of each well-capitalized bank and defined the among all well-capitalized banks—the measure we refer to in the institution's tightest capital ratio as that one closest to the regulatory text—is the weighted average of all the individual margins, in which standard for being "well capitalized." We then defined the bank's the weights are each bank's share of the total assets of well-capitalized margin as the percentage-point difference between its tightest capital banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

378 Federal Reserve Bulletin • June 1999 2. Selected income and expense items as a proportion of assets, 1992-98 Percent Item 1992 1993 1994 1995 1996 1997 1998 Net interest income 3.89 3.90 3.78 3.72 3.73 3.67 3.52 Noninterest income 1.95 2.13 2.00 2.02 2.18 2.23 2.40 Noninterest expense 3.86 3.94 3.75 3.64 3.71 3.61 3.77 Loss provisioning .78 .47 .28 .30 .37 .41 .41 Realized gains on investment account securities .11 .09 -.01 .01 .03 .04 .06 Income before taxes and extraordinary items 1.32 1.70 1.73 1.81 1.85 1.93 1.81 Taxes and extraordinary items .41 .50 .58 .63 .65 .67 .61 Net income (return on assets) .91 1.20 1.15 1.18 1.20 1.25 1.20 Dividends .41 .62 .73 .75 .90 .90 .80 Retained income .49 .58 .42 .43 .30 .35 .39 $8.9 billion. The sum of dividends and net stock operations, had another record year in 1998. Banks repurchases at the top fifty holding companies was in the top 100 but not in the top 10, and those in one-third lower in 1998 than in 1997. the top 1,000 but not in the top 100, generated Industry performance differed markedly by bank returns on equity of MVI percent and \5VI percent, size in 1998. The return on equity of the top 10 respectively—in both cases record highs. banks, which absorbed the bulk of the trading and foreign-related losses as well as the merger and restructuring charges, was the hardest hit, falling Interest Income and Expense 23/4 percentage points to 10 Vi percent, its lowest level since 1991. At the other end of the spectrum, earn- Net interest income as a percentage of average assets ings of the smallest banks—those not in the top declined 15 basis points last year, reflecting a similar 1,000—were also below recent norms last year. decline in banks' net interest margin (net interest Net interest income makes up the largest share of income as a percentage of average interest-earning revenue for these banks, and smaller net interest assets), which fell to a level not seen in seven years margins contributed to a decline of Vi percentage (chart 16). Three factors contributed to the decline in point in their return on equity to just over 12 percent. the net interest margin: A shift in bank assets away By contrast, medium-sized banks, for which noninterfrom relatively high-yielding assets, a shift in bank est income is a more significant share of revenue and sources of funds toward relatively expensive liabiliwhich generally do not have large trading or foreign ties, and, controlling for these shifts, a decline in rates earned on bank assets relative to rates paid on bank liabilities. About one-third of the narrowing of the net interest 15. Indexes of bank holding company stock prices and the S&P 500, January 7, 1998-March 31, 1999 margin resulted from the shift in the composition of bank assets last year away from consumer loans. Index, January 7, 1998 = 100 Consumer loan yields are higher, on average, than those on other bank assets, in part as compensation 140 for the higher expense of servicing these loans, and — S&P5<M)A/^ 130 also because of their higher loss rates. As noted earlier, some of the slow growth in consumer loans —- J 120 on banks' books last year resulted from the funding — 110 of these loans off bank balance sheets through securi- Regional V \ rj / \f y 100 tization, which shifted some of the associated net bank holding \\ revenue generated out of net interest income and into — companies U [ / Money center 90 noninterest income. In addition, a few basis points of ^ \ / bank holding the decline in the net interest margin stemmed from — v/ companies 8800 banks' increased reliance on managed liabilities, 1 I I i 11 I I I. i I i t i i ! which generally pay higher yields than core deposits. 1998 1999 The remaining two-thirds of the narrowing of the NOTE. The data are weekly. The holding company indexes are for seven money center companies and forty-two regional companies as defined by Dow net interest margin resulted from a decline in the Jones. yields on bank assets relative to bank liabilities after SOURCE. Dow Jones and Standard and Poor's. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 379 16. Net interest margin, investment-account securities appear only gradually over several quarters. A decline as a share of interest-earning assets, and consumer in the average yield on real estate loans, no doubt loans as a share of total loans, 1985-98 owing in part to the wave of refinancings last year, also contributed to the decline in the average yield on bank assets. Net interest margin1 Developments that placed upward pressure on interest expense also acted to narrow the net interest 4.4 margin. In the fall, the spread between rates on the managed liabilities of banks and risk-free rates widened sharply, as these institutions were seen by inves- — 4.2 tors as vulnerable to losses abroad and a slowing in the domestic economy.10 Furthermore, rates on core deposits, which tend to adjust gradually in any case, 4.0 were especially slow to match the decline in market rates in the fall, because banks needed to fund the rapid growth in assets at that time. The shrinkage in the net interest margin last year Investment-account securities as a share of interest-earning assets nearly completes the reversal of the sharp expansion in the margin in 1991 and 1992. That expansion was largely the result of two factors. First, it was a reaction to the compression of margins in the late 1980s by competition among banks for loans and funding sources as well as by the elevated rates that some troubled banks and thrift institutions were paying for funds. Second, a number of banks may not have had the capital levels they needed to meet risk-based capital rules phased in between 1990 and 1992. With bank equity prices depressed at that time, capital was expensive to raise, and so these banks were under pressure to limit balance sheet expansion and push up profits. Consequently, they bid for deposits and made loans less aggressively, causing a widening of spreads between loan and deposit rates. Moreover, competitive pressures on margins also may have eased as troubled institutions were recapitalized or closed. Since 1993, the banking industry has grown rapidly, and the forces that widened the margin have been unwound, largely because of banks' increasingly competitive stance in loan markets and greater reliance on managed liabilities. Several factors had 1986 1988 1990 1992 1994 1996 1998 limited the narrowing in the margin between 1994 NOTE. Data are annual averages. and 1996, including a shift in bank assets toward 1. Net interest margin is net interest income divided by interest-earning assets. loans, particularly consumer loans; relatively low rates paid on deposits compared with market rates; controlling for shifts in composition. Yields on bank and a greater reliance on capital, the returns on which assets shrank in part because for most of the year, are not included as an interest expense. However, for banks continued to compete vigorously for business the last two years these supporting forces have generloans, and as discussed above, the average spread on ally not been present, or have been reversed. As a these loans over the intended federal funds rate, result, the net interest margin has narrowed faster. measured by the Survey of Terms of Business Lending, remained quite narrow through the early part of the third quarter. It widened in the fourth quarter, but 10. In the fourth quarter, banks still found it advantageous to invest because the survey measures rates on newly extended in assets, particularly some types of securities, suggesting that expected returns on these assets rose by even more than the increase loans, most of any resulting gain in bank profits will in banks' marginal cost of funds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

380 Federal Reserve Bulletin • June 1999 Noninterest Income The rise in other fee income was particularly apparent at banks that specialize in credit card lending.11 Noninterest income as a percentage of assets rose These credit card banks, defined here as those banks 18 basis points last year, more than matching the among the largest 1,000 by assets for which credit decline in net interest income. Noninterest income card loans constitute more than half of assets, earned also increased as a share of revenue last year, contin- a return on equity of 29Vi percent in 1998; this was uing a decade-long trend (chart 17). The increase sharply more than the 173/4 percent in 1997, and only was concentrated in the "other fee income" compo- slightly below the returns on equity earned by these nent of noninterest income, which includes, among banks in 1993 and 1994, before the significant worsother items, credit card fees, mortgage servicing fees, ening of the performance of credit card loans in 1995. fees from the sale and servicing of mutual funds Credit card banks earn nearly half of their revenue and annuities, ATM surcharges, and fee income from as other fee income, compared with 14V2 percent securitized loans; it excludes deposit fees, which of revenue for other banks, and they account for a edged down 1 basis point as a percentage of assets quarter of the other fee income earned by all commerlast year. Although no finer detail is available on cial banks. Other fee income makes up such a large other fee income, the increase last year probably share of revenue at these banks because more than reflected, in part, the high level of mortgage refinanc- three-fourths of their on-balance-sheet assets are ing, for which banks collect processing fees, and credit card loans, and off-balance-sheet credit card the rapid growth in bank loans that are securitized, loans at these banks exceed their on-balance-sheet earnings on which are generally booked in this assets. component. The increase in noninterest income was due also to a rise in the nonfee component of "other noninterest income." Among the items in this component are income from professional services, including those provided for holding company affiliates; gains on the 17. Noninterest income and its components sale of assets other than securities, including loans as a share of total revenue, 1985-98 and bank branches; and income from venture capital activities. Industry consolidation may have contributed to the growth in this component, in part because of the resulting rise in the provision of specialized services within holding companies (fees on which do not increase the income of the holding company as a whole), and in part because of the sale of assets in the course of mergers and reorganizations. Some banks book gains on proprietary investments in equities resulting from the venture capital activities of their small business investment company subsidiaries in Selected components Deposit fees this component, so the rise in stock prices over recent years has probably contributed to its growth as well. The bull market for equities, and the high volume of financial transactions, has likely also benefited fiduciary income, which rose 2 basis points as a percentage of assets in 1998. Fiduciary income includes earnings on services rendered by banks' trust departments and by any consolidated subsidi- Other noninterest income aries acting in a fiduciary capacity. The trading income component of noninterest income declined 2 basis points last year as a percentage of assets. During the first half of the year, trading 11. For more information on credit card banks, see William R. 1986 1990 1994 1998 Nelson and Ann L. Owen, "Profits and Balance Sheet Developments NOTE. Components of "other noninterest income" were first included in the at U.S. Commercial Banks in 1996," Federal Reserve Bulletin, vol. 83 March 1991 Call Reports. (June 1997), pp. 476-77. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 381 3. Trading revenue at all U.S. banks, Noninterest Expense by type of exposure, 1995-98 Millions of dollars Bank profitability was damped last year by a sharp rise in noninterest expense, as a percentage of both Interest Foreign Equity and Year Total rate exchange other assets and revenue (chart 18). The rise was largest 1995 6,337 3,012 2,491 635 in the broad "other noninterest expense" cate- 1996 7,526 4,112 2,689 725 gory, which accounts for almost half of noninterest 1997 8,020 3,995 3,951 72 expense. Some of it was attributable to merger and 1998 7,678 2,469 4,715 493 restructuring charges and to an increase in data pro- Ql 2,652 1,068 1,320 264 cessing services, in part from efforts to prepare com- Q2 2,531 942 1,342 247 puter systems for the century date change.13 Q3 543 -101 875 -232 Q4 1,952 560 1,178 214 Noninterest expense was also elevated by a rise in wage and occupancy costs, both of which increased about 10 percent last year, in each case the most rapid growth in more than a decade. Labor costs rose so revenues, particularly those earned on exchange rate fast in part because employment, which had declined exposures, were robust (table 3). However, in the 4 percent between 1985 and 1995, advanced 4lA perthird quarter, following the pronounced widening of cent last year alone, following 2 percent growth in liquidity and risk spreads, trading income declined precipitously and several large banks posted trading 13. The five largest bank holding companies, which together losses. The losses, reportedly, were of three general account for one-third of commercial bank assets, reported aggregate kinds: First, the sharp decline in the value of certain costs of preparing for the century date change of approximately securities, including some foreign-related assets such $1.3 billion in 1998. By comparison, other noninterest expense of commercial banks rose $13.6 billion in 1998. However, not all of the as Brady bonds, caused losses at those banks holdpreparedness costs repeated by the these bank holding companies ing such securities in their trading accounts on an would be booked at their commercial bank subsidiaries. unhedged basis. Second, in some cases U.S. banks had hedged their holdings by taking two offsetting 18. Noninterest expense and its components positions. When some Russian counterparties as a percentage of total revenue, 1985-98 defaulted, the U.S. banks were left with substantial losses on the contracts that had been hedged by the contracts with those Russian counterparties.12 Lastly, in other cases, the deteriorating financial condition of counterparties in emerging-market economies, including Asia and Latin America, led some banks to write down the value of trading assets to reflect widening credit-risk spreads. Trading income subsequently recovered in the fourth quarter and, for the year as a whole, was only slightly below its level in 1997. Profits were supported somewhat last year by realized gains on investment account securities, which increased 40 percent to $3 billion. The realized gains were strongest in the fourth quarter and reflected, in part, sales of Treasury securities that had risen in value in the fall. 12. When bank counterparties in derivatives transactions default, the resulting obligation to the bank is either first recorded as a loan and then charged off, or is recorded as a trading loss. Since 1996, banks have reported credit losses on derivatives transactions on the Call Report, although they have not indicated whether the losses were booked as a charge-off or as a debit to trading revenue. These losses totaled $781 million last year, up from $120 million in 1997 and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

382 Federal Reserve Bulletin • June 1999 1997. Employment growth was particularly robust in 19. Loss provisioning and net charge-offs the fourth quarter, and was relatively faster at those as a percentage of loans, 1976-98 banks that posted more rapid growth in home mort- Percent gages, suggesting employment growth may have been lifted by the mortgage refinancing boom. Despite the Loss provisioning i rise in employment, revenue per employee increased — 2.0 4VI percent last year, although employment costs per employee rose 5 V2 percent. — f — 1.5 The rise in occupancy costs stemmed, in part, from a small increase in the number of bank offices, but more importantly from a 63A percent rise in real — 1.0 occupancy cost per office, which had fallen 3 percent w Net charge-offs between 1985 and 1997. The abundant supply of — .5 office space had resulted in a decline in the rents on, and prices of, office buildings nationwide in the early 1990s, helping to restrain banks' occupancy costs, 1978 1982 1986 1990 1994 1998 but office rents and prices rose sharply in 1997 and NOTE. Net charge-offs are charge-offs net of recoveries. 1998. charge-offs, both provisions and charge-offs remained very low in 1998 (chart 19). Loan Provisioning and Loan Performance The performance of specific types of loans also Bank profits continue to be supported by the good changed little last year. The delinquency rate on overall performance of loans. Although provisions commercial mortgages fell a bit further from the for loan and lease losses edged up last year as a already low levels posted in 1997, reflecting percentage of loans, tracking the slight rise in net the strong market for office and commercial space 20. Delinquency and charge-off rates, by type of loan, 1991-98 Percent Delinquency rates for loans to businesses Charge-off rates for loans to businesses Commercial real estate 12 Commercial real estate —^^ • 0 Delinquency rates for loans to households Charge-off rates for loans to households Residential real estate Other consumer Residential real estate 1992 1994 1996 1998 1992 1994 1996 1998 NOTE. The data are quarterly and seasonally adjusted. Delinquent loans are loans. The charge-off rate is the annualized amount of charge-offs over the loans that are not accruing interest and those that are accruing interest but are period, net of recoveries, divided by the average level of outstanding loans over more than thirty days past due. The delinquency rate is the end-of-period the period. level of delinquent loans divided by the end-of-period level of outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 383 21. Charge-off rates on C&I loans, by location of borrower, 22. Debt burden of businesses, 1985-98 Percent Percent — — 20 All loans — 15 — 10 — Loans to non-US. — addressees 1 ! 1 1 1 1 1 1 1985 1987 1989 1991 1993 1995 1997 NOTE. The data are quarterly. Debt burden is for nonfinancial corporations and is calculated as interest payments as a percentage of cash flow. SOURCE. National income and product accounts and the Federal Reserve System. (chart 20). The net charge-off rate on these loans remained near zero. Delinquency and charge-off rates on commercial and industrial loans rose a little, half of those charge-offs occurred during the turbuthough they too remained low. Most of the moderate lent third quarter, when some loans to hedge funds upward trend in charge-off rates on C&I loans for the were written off and when some banks' counterparpast two years reflects an increase in loss rates ties on derivatives transactions defaulted. on loans booked abroad, probably to some extent Of course, the strength of the economy was responbecause of difficulties in a number of emerging- sible for much of the continued good overall loan market economies (chart 21). The good performance performance last year. If the economy were to slow, of C&I loans was in line with the strong financial loan losses would probably rise, perhaps markedly if condition of the nonfinancial business sector: The the easing in bank lending standards during the curaggregated debt-service burden for nonfinancial cor- rent long expansion turns out to have been excessive. porations, measured as the ratio of net interest pay- At the end of last year, reserves for loan and lease ments to cash flow, remained near its low of 1997 losses remained high relative to delinquent loans and less than half its peak level earlier in the decade (chart 23). However, relative to net charge-offs, (chart 22), and business failures remained at the low reserves have fallen in recent years and are now near end of the range seen over the past decade. the middle of their historical range. Measures of household financial stress were also On the one hand, it seems sensible to compare relatively stable last year, although some were at high reserves to delinquencies, because it is for losses that levels. The annual increase in personal bankruptcy are probable at the time that banks should be setting filings has been about 3 percent for the past year and a half, sharply down from annual increases of roughly 23. Measures of reserves for loan and lease losses, 1985-98 25 percent between early 1995 and early 1997. Although household debt grew rapidly last year, Percent lower interest rates and longer loan maturities, which Reserves as a percentage resulted from the shift toward mortgage finance, — of delinquencies helped mitigate the effects of increased borrowing on household debt-service burdens. Reflecting these trends, the delinquency and charge-off rates on consumer loans varied little, although they tended to be on the high side of historical norms. By contrast, Ratio delinquency and charge-off rates on household mort- Ratio of reserves to charge-offs gages stayed low. The net charge-off rate on loans other than business, consumer, and real estate loans, which had been less than 0.1 percent per year in the preceding three years, ticked up to 0.4 percent in 1998. More than Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

384 Federal Reserve Bulletin • June 1999 aside reserves. On the other hand, one may want to 4. Share of U.S. bank assets booked at foreign offices and net compare reserves to net charge-offs, because different income attributable to foreign operations, 1993-98 loan types have different levels of losses for the same Percent level of delinquencies. As a result, changes in the Year Assets Net income distribution of banks' delinquent loans can affect the expected level of losses for a given level of delin- 1993 12.15 16.34 quencies. In particular, the average ratio of charge- 1994 13.21 11.94 1995 13.64 11.61 offs to delinquencies on consumer loans is well above 1996 14.76 12.02 the average for other loan types. Given the shift in the 1997 15.04 10.27 composition of delinquent loans toward consumer 1998 13.17 8.48 loans in recent years, the ratio to net charge-offs Q1 14.96 11.13 is probably a more reliable measure of the adequacy Q2 15.03 12.68 Q3 14.44 3.70 of loan-loss reserves, suggesting that banks, in the Q4 13.17 5.84 aggregate, do not appear particularly over- or underreserved.14 NOTE. Foreign offices include Edge Act and agreement subsidiaries and international banking facilities (IBFs). Edge Act and agreement subsidiaries are federally or state-chartered corporations, respectively, that are domiciled in the United States but engage in international banking activities. An IBF is a set of asset and liability accounts that cover selected international transactions of the International Operations of U.S. Banks U.S. offices of the bank. third quarter was concentrated in noninterest income, Lingering concerns over economic prospects in Asia perhaps owing to losses on trading account securities and growing worries over Latin America, Russia, and booked abroad, and was widespread among those Eastern Europe led many banks to scale back their banks with significant foreign operations.15 foreign operations last year. The share of U.S. bank The decline in foreign revenue also resulted from assets booked at foreign offices fell nearly 2 percentefforts by banks to lessen their exposure to troubled age points to about 13 percent in 1998, after having foreign economies. The exposure of U.S. commercial risen by nearly 3 percentage points since 1993 banks, as a fraction of capital, to troubled Asian, (table 4). The share of income attributable to foreign Eastern European, and Russian economies declined operations fell from 10V4 percent in the previous about one-fourth from year-end 1997 to year-end year to 8V2 percent—the lowest since 1989. Foreign 1998 (table 5). The exposure of money center and income had been relatively high in the first half of the other large banks to Russia declined from over 3 peryear, but declined sharply in the third quarter and cent of capital to less than V2 percent, as many of remained low in the fourth quarter. The drop in the these institutions wrote off a large fraction, of Russian obligations. The exposure to Latin American econo- 14. Indeed, if loan-loss reserves are compared with delinquencies weighted, for each loan component, by the average ratio of chargeoffs to delinquencies of that component in recent years, the adequacy 15. For additional details on the international operations of U.S. of loan-loss reserves appears to be about as it does when reserves are banks, see English and Nelson, "Profits and Balance Sheet Developcompared with net charge-offs. ments at U.S. Commercial Banks in 1997," p. 406. 5. Exposure of U.S. banking organizations to selected economies, relative to capital, year-end 1997 and 1998 Percent except as noted Money center MEMO: All reporting All other banks Total exposure, all banks and other large banks Region or country (billions of dollars) 1997 1998 1997 1998 1997 1998 1997 1998 Troubled Asia1 16.11 9.47 26.87 15.17 2.34 1.21 55.24 37.87 Eastern Europe and Russia All 3.47 2.13 6.12 3.54 .08 .09 11.91 8.53 Russia 1.80 .26 3.16 .43 .05 0.00 6.16 1.05 Latin America All 29.67 26.24 48.37 40.56 5.73 5.53 101.73 104.96 Brazil 9.74 6.89 16.13 10.76 1.56 0.00 33.40 27.55 Total 49.25 37.84 81.37 59.27 8.16 6.83 168.89 151.36 NOTE. Exposures include the institutions' lending and derivatives exposures 1. Indonesia, Korea, Malaysia, Philippines, and Thailand. for cross-border as well as local-office operations. Respondents may file infor- SOURCE. Federal Financial Institutions Examination Council, Country Expomation on one bank or on the bank holding company as a whole. Capital is sure Report. defined as equity, subordinated debt, and loan-loss reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 385 mies at these large banks fell nearly 8 percentage hefty gains in fee income, including fees from points to a bit over 40 percent of capital, with much consumer lending, mortgage banking, and investof the decline resulting from reduced exposures to ment banking. Trading revenue also contributed Brazil. to the gains, in part because credit-risk spreads on emerging-market securities narrowed. Assets at the domestic offices of U.S. commercial DEVELOPMENTS IN 1999 banks were about unchanged in the first quarter of 1999, with weakness in many of the components that Responding, in part, to earnings concerns, but also to had expanded in the wake of financial turmoil in the the devaluation and subsequent floating of the Brazil- fall. Business loans declined early in the quarter, ian real, indexes of bank stock prices fell in January. as borrowers that had turned to banks returned to However, as evidence accumulated that the U.S. the corporate bond and commercial paper markets. economy continued to enjoy strong growth and low Banks' holdings of mortgage-backed securities and inflation, and emerging-market economies appeared other non-Treasury issues, which had ballooned in to stabilize, bank equities recovered. The stock prices the fall, fell sharply. As mortgage refinancings ebbed, of money center bank holding companies were up banks caught up on securitizing the backlog of mortabout 10 percent for the year through April; those of gages that had been brought onto their books when regional banks were about 4 percent higher, half the refinanced, and real estate loans were about flat in the rise in the broader market. first quarter. Those loans may have been supported, Bank stock prices were lifted by first-quarter earn- in part, by further substitution for consumer loans, ings announcements, which generally exceeded which edged down somewhat despite strong conexpectations. Bank holding companies again reported sumer spending. • A.l. Report of income, all U.S. banks, 1989-98 Millions of dollars Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Gross interest income 317,046 320,404 290,692 256,415 244,742 257,064 302,376 313,115 338,230 359,250 Taxable equivalent 321,251 324,054 293,879 259,394 247,620 259,821 305,010 315,575 340,664 361,716 Loans 237,815 238,829 215,019 185,938 178,425 189,762 227.218 239,307 255,504 271,012 Securities 46,713 51,031 52,769 51,825 48,678 48,299 51,030 50,601 52,662 56.607 Gross federal funds sold and reverse repurchase agreements 13,059 12,571 9,149 5,913 4,796 6,415 9,744 9,265 13,658 15,001 Other 19,461 17,971 13,757 12,739 12,843 12,587 14,382 13,944 16,407 16,629 Gross interest expense 205,078 204,949 168,492 122,517 105,615 110,849 147,958 150,045 164,516 178,026 Deposits 157,466 161,483 139,431 98,809 79,503 79,106 105,329 107,465 117,351 125,229 Gross federal funds purchased and repurchase agreements 24,898 22,778 14,439 9,263 8,442 12,476 18,424 16,775 20,440 22,184 Other 22,713 20,687 14,623 14,441 17,669 19,269 24,204 25,806 26,724 30,612 Net interest income 111.968 115,455 122,200 133,898 139,127 146,215 154,418 163.070 173,714 181,224 Taxable equivalent 116,173 119,105 125,387 136,877 142,005 148,972 157,052 165,530 176,148 183,690 Loss provisioning1 31,297 32,282 34,871 26,813 16,841 10,993 12,631 16,206 19,173 21,217 Noninterest income 51,599 55,684 61,124 67,044 75,847 77,223 83,851 95,278 105,775 123,592 Service charges on deposits 10,270 11,446 12,884 14,126 14,898 15,281 16,057 17,042 18,558 19,773 Income from fiduciary activities 8,313 8,886 9,499 10,452 11,199 12,124 12,890 14,288 16,604 18,972 Trading income 4,051 4,854 5,954 6,273 9,238 6,249 6,337 7,526 8,020 7,678 Other 28,965 30,497 32,785 36,193 40,513 43,572 48,567 56,421 62,593 77,172 Noninterest expense 108,993 116,606 126,665 132,815 140,523 144,905 151,137 162,399 170,995 193,719 Salaries, wages, and employee benefits .. 49,412 52,111 53,810 55,484 58,507 60,904 64,013 67,775 72,347 79,521 Expenses of premises and fixed assets .. 16,697 17,547 17,984 18,152 18,578 18,978 19,760 20,883 22,082 24,161 Other 42,885 46,948 54,871 59,181 63,439 65,023 67,363 73,741 76,567 90,038 Net noninterest expense 57,394 60,922 65,541 65,771 64,676 67,682 67,286 67,121 65,220 70,127 Realized gains on investment account securities 800 474 2,897 3,957 3,054 -560 481 1,123 1,826 3,088 Income before taxes and extraordinary items 24,079 22,725 24,684 45,273 60,662 66,989 74,980 80,864 91,145 92,967 Taxes 9,547 7,749 8,292 14,450 19,861 22,430 26,222 28,430 31,988 31,941 Extraordinary items 312 650 1,198 401 2,085 -17 28 88 56 508 Net income 14,843 15,626 17,590 31,224 42,886 44,542 48,785 52,521 59,211 61,535 Cash dividends declared 14,127 13,965 15,562 14,226 22,068 28,164 31,105 39,391 42,726 41,3001 Retained income 716 1,661 2,028 16,997 20,816 16,377 17,681 13,131 16,485 20,233 1. Includes provisions for loan and lease losses and for allocated transfer risk. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

386 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 A. All banks 1 r Item 1989 1990 1991 1992 1993 1994 1995 ! 1996 i 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets 87.94 87.82 88.04 88.33 88.50 86.55 86.47 86.80 86.58 86.26 Loans and leases, net 60.64 60.53 59.55 57.30 56.25 56.07 58.37 59.89 58.69 58.32 Commercial and industrial 19.09 18.50 17.33 15.78 14.88 14.51 15.20 15.60 15.78 16.37 U.S. addressees 16.54 15.99 15.00 13.54 12.72 12.35 12.87 13.07 13.18 13.62 Foreign addressees 2.55 2.51 2.33 2.24 2.16 2.16 2.33 2.53 2.60 2.75 Consumer 11.89 11.77 11.45 11.00 11.00 11.43 12.08 12.21 11.44 10.36 Credit card 3.69 3.78 3.88 3.80 3.88 4.21 4.69 4.87 4.55 3.97 Installment and other 8.20 7.99 7.57 7.20 7.11 7.22 7.39 7.34 6.89 6.39 Real estate 22.50 23.86 24.87 24.87 24.80 24.43 25.01 25.06 25.02 24.86 In domestic offices 21.78 23.10 24.11 24.18 24.18 23.80 24.36 24.43 24.41 24.29 Construction and land development 4.16 4.00 3.41 2.64 1.99 1.65 1.59 1.63 1.73 1.86 Farmland .51 .51 .53 .56 .57 .56 .56 .56 .55 .55 One- to four-family residential 10.15 11.21 12.27 12.91 13.49 13.74 14.42 14.43 14.42 14.26 Home equity 1.42 1.67 1.95 2.09 2.07 1.91 1.88 1.85 1.94 1.89 Other 8.73 9.54 10.32 10.83 11.42 11.84 12.54 12.57 12.48 12.37 Multifamily residential .60 .62 .66 .75 .79 .79 .81 .85 .83 .82 Nonfarm nonresidential 6.36 6.76 7.23 7.32 7.33 7.07 6.97 6.96 6.88 6.81 In foreign offices .72 .76 .76 .69 .62 .63 .65 .63 .61 .57 Depository institutions 1.76 1.60 1.42 1.24 1.08 1.42 1.88 2.29 1.89 1.88 Foreign governments 1.03 .78 .75 .73 .67 .41 .30 .26 .18 .15 Agricultural production .96 .96 1.01 1.02 .99 1.00 .96 .92 .90 .89 Other loans 4.31 3.93 3.60 3.50 3.56 3.34 3.15 3.36 2.84 2.81 Lease-financing receivables 1.10 1.12 1.09 1.03 .99 1.03 1.19 1.51 1.87 2.14 LESS: Unearned income on loans -.48 -.42 -.36 -.28 -.21 -.16 -.14 -.12 -.09 -.07 LESS: Loss reserves' -1.52 -1.57 -1.62 -1.60 -1.51 -1.36 -1.26 -1.21 -1.13 -1.07 Securities 18.39 19.09 20.70 23.52 25.37 24.27 21.94 21.01 20.41 20.38 Investment account 17.14 17.63 18.93 21.18 22.50 21.60 19.39 18.20 17.25 17.48 Debt 16.84 17.37 18.62 20.82 22.12 21.21 18.98 17.75 16.75 16.94 U.S. Treasury 4.98 4.57 5.06 6.49 7.08 6.77 5.25 4.20 3.38 2.71 U.S. government agency and corporation obligations 6.04 7.56 8.75 9.86 10.73 10.24 9.81 9.75 9.74 10.28 Government-backed mortgage pools .. 3.27 4.08 4.51 4.52 4.74 4.67 4.47 4.80 4.94 5.17 Collateralized mortgage obligations ... n.a. 1.25 2.07 3.12 3.72 3.24 2.67 2.11 1.94 2.12 Other 2.77 2.22 2.16 2.21 2.27 2.33 2.68 2.83 2.86 2.99 State and local government 3.15 2.64 2.28 2.08 2.06 2.02 1.80 1.68 1.59 1.57 Private mortgage-backed securities n.a. n.a. .94 .82 .73 .64 .62 .61 .50 .67 Other 2.68 2.59 1.59 1.58 1.52 1.54 1.49 1.51 1.54 1.70 Equity .30 .27 .31 .37 .38 .39 .41 .45 .50 .55 Trading account 1.25 1.46 1.77 2.34 2.87 2.67 2.55 2.81 3.16 2.89 Gross federal funds sold and reverse RPs 4.33 4.46 4.58 4.54 4.27 3.82 3.93 3.82 5.18 5.37 Interest-bearing balances at depositories 4.58 3.75 3.21 2.97 2.62 2.40 2.23 2.08 2.29 2.19 Non-interest-earning assets 12.06 12.18 11.96 11.67 11.50 13.45 13J3 13.20 1342 13.74 Revaluation gains on off-balance-sheet items2 .. n.a. n.a. n.a. n.a. n.a. 2.61 2.90 2.25 2.59 2.95 Other 12.06 12.18 11.96 11.67 11.50 10.84 10.62 I0'95 10.83 10.79 Liabilities 93.64 93.60 93.33 92.82 92.15 92.12 91.99 91.73 91.57 91.51 Interest-bearing liabilities 76.02 76.53 76.58 75.32 73.92 71.86 71.86 71.62 71.36 71.35 Deposits 62.58 63.44 64.45 62.94 60.26 57.34 56.30 55.87 55.01 54.67 In foreign offices 9.68 9.26 8.55 8.37 8.32 9.39 10.28 10.01 10.02 10.15 In domestic offices 5? 90 54.18 55.90 54.56 51.94 47.96 46.03 45.86 44.99 44.53 Other checkable deposits 6.12 6.19 6.72 7.65 8.24 7.80 6.63 4.75 3.62 3.12 Savings (including MMDAs) 16.28 16.59 18.00 20.28 20.91 19.60 17.48 18.71 19.13 19.92 Small-denomination time deposits 18.38 19.96 21.30 19.21 16.98 15.33 16.14 15.97 15.17 14.16 Large-denomination time deposits 12.13 11.44 9.89 7.42 5.81 5.23 5.77 6.42 7.08 7.34 Gross federal funds purchased and RPs 8.22 8.03 7.09 7.02 7.47 7.60 7.71 7.18 8.13 7.99 Other 5.22 5.07 5.03 5.36 6.19 6.92 7.85 8.56 8.21 8.69 Non-interest-bearing liabilities 17.62 17.07 16.75 17.50 18.23 20.26 20.13 20.11 20.21 20.15 Demand deposits in domestic offices 13.49 12.79 12.59 13.24 13.86 13.49 12.68 12.82 12.16 11.00 Revaluation losses on off-balance-sheet items2 n.a. n.a. n.a. n.a. n.a. 2.32 2.88 2.14 2.64 2.97 Other 4.13 4.27 4.16 4.27 4.37 445 4.57 5.14 5.41 6.18 Capital account 6.36 6.40 6.67 7.18 7.85 7.88 8.01 8.27 8.43 8.49 MEMO Commercial real estate loans ... n.a. n.a. 12.02 11.34 10.63 9.94 9.83 9.92 9.99 10.12 Other real estate owned .39 .50 .75 .82 .63 .36 .19 .14 .11 .08 Managed liabilities 35.78 34.31 31.05 28.70 28.28 29.61 32.08 32.73 34.09 34.95 Average net consolidated assets (billions of dollars) 3,187 3,338 3,379 3.442 3.566 3.863 4,148 4,376 4,733 5,145 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 387 A.2.—Continued A. All banks Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Effective interest rate (percent)3 Rates earned Interest-earning assets 11.13 10.67 9.57 8.27 7.61 7.61 8.33 8.14 8.15 7.99 Taxable equivalent 11.29 10.80 9.69 8.37 7.71 7.70 8.41 8.21 8.22 8.06 Loans and leases, gross 12.02 11.49 10.40 9.20 8.69 8.62 9.25 8.99 9.01 8.85 Net of loss provisions 10.44 9.94 8.72 7.87 7.87 8.12 8.74 8.39 8.34 8.15 Securities 8.73 8.79 8.19 7.04 6.08 5.96 6.51 6.42 6.50 6.37 Taxable equivalent 9.25 9.21 8.56 7.34 6.36 6.20 6.73 6.66 6.73 6.63 Investment account 8.55 8.67 8.25 7.11 6.07 5.79 6.35 6.35 6.45 6.29 U.S. government and other debt 8.83 8.92 8.43 7.18 6.07 5.80 6.42 6.47 6.60 6.45 State and local 7.45 7.39 7.25 6.81 6.25 5.87 5.82 5.55 5.41 5.23 Equity 7.70 7.34 6.20 5.32 4.79 4.79 5.51 5.23 5.15 4.92 Trading account 11.11 10.15 7.54 6.40 6.16 7.41 7.73 6.86 6.75 6.85 Gross federal funds sold and reverse RPs 9.17 8.08 5.69 3.58 3.04 4.26 5.63 5.21 5.45 5.29 Interest-bearing balances at depositories 10.59 9.96 8.44 7.31 6.61 5.71 6.84 6.21 6.24 6.27 Rates paid Interest-bearing liabilities 8.53 8.04 6.55 4.75 4.01 4.01 4.99 4.82 4.92 4.88 Interest-bearing deposits 7.87 7.57 6.34 4.51 3.65 3.53 4.47 4.33 4.39 4.31 In foreign offices 10.87 10.71 8.54 7.32 6.82 5.59 6.12 5.54 5.44 5.66 In domestic offices 7.32 7.02 6.00 4.07 3.14 3.14 4.11 4.07 4.16 4.01 Other checkable deposits 4.83 4.79 4.34 2.70 1.99 1.85 2.06 2.03 2.25 2.29 Savings (including MMDAs) 6.18 5.99 5.11 3.25 2.50 2.58 3.19 2.99 2.93 2.79 Large-denomination time deposits4 8.66 8.03 6.69 4.90 4.00 4.09 5.47 5.39 5.45 5.22 Small-denomination time deposits4 8.29 7.97 6.93 5.15 4.19 4.17 5.44 5.40 5.54 5.47 Gross federal funds purchased and RPs 9.20 7.97 5.76 3.64 3.07 4.18 5.65 5.12 5.17 5.19 Other interest-bearing liabilities 13.76 12.26 8.65 7.87 8.02 7.25 7.47 6.93 6.95 6.88 Income and expense as a percentage of average net consolidated assets Gross interest income 9.95 9.60 8.60 7.45 6.86 6.65 7.29 7.16 7.15 6.98 Taxable equivalent 10.08 9.71 8.70 7.54 6.94 6.73 7.35 7.21 7.20 7.03 Loans 7.46 7.15 6.36 5.40 5.00 4.91 5.48 5.47 5.40 5.27 Securities 1.47 1.53 1.56 1.51 1.37 1.25 1.23 1.16 1.11 1.10 Gross federal funds sold and reverse RPs .41 .38 .27 .17 .13 .17 .23 .21 .29 .29 Other .61 .54 .41 .37 .36 .33 .35 .32 .35 .32 Gross interest expense 6.44 6.14 4.99 3.56 2.96 2.87 3.57 3.43 3.48 3.46 Deposits 4.94 4.84 4.13 2.87 2.23 2.05 2.54 2.46 2.48 2.43 Gross federal funds purchased and RPs .78 .68 .43 .27 .24 .32 .44 .38 .43 .43 Other .71 .62 .43 .42 .50 .50 .58 .59 .56 .60 Net interest income 3.51 3.46 3.62 3.89 3.90 3.78 3.72 3.73 3.67 3.52 Taxable equivalent 3.65 3.57 3.71 3.98 3.98 3.86 3.79 3.78 3.72 3.57 Loss provisioning5 .98 .97 1.03 .78 .47 .28 .30 .37 .41 .41 Noninterest income 1.62 1.67 1.81 1.95 2.13 2.00 2.02 2.18 2.23 2.40 Service charges on deposits .32 .34 .38 .41 .42 .40 .39 .39 .39 .38 Income from fiduciary activities .26 .27 .28 .30 .31 .31 .31 .33 .35 .37 Trading income .13 .15 .18 .18 .26 .16 .15 .17 .17 .15 Interest rate exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .09 .08 .05 Foreign exchange exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .06 .08 .09 Equity, commodity, and other exposures ... n.a. n.a. n.a. n.a. n.a. n.a. n.a. .02 • .01 Other .91 .91 .97 1.05 1.14 1.13 1.17 1.29 1.32 1.50 Noninterest expense 3.42 3.49 3.75 3.86 3.94 3.75 3.64 3.71 3.61 3.77 Salaries, wages, and employee benefits 1.55 1.56 1.59 1.61 1.64 1.58 1.54 1.55 1.53 1.55 Expenses of premises and fixed assets .52 .53 .53 .53 .52 .49 .48 .48 .47 .47 Other 1.35 1.41 1.62 1.72 1.78 1.68 1.62 1.69 1.62 1.75 Net noninterest expense 1.80 1.83 1.94 1.91 1.81 1.75 1.62 1.53 1.38 1.36 Realized gains on investment account securities . .03 .01 .09 .11 .09 -.01 .01 .03 .04 .06 Income before taxes and extraordinary items .76 .68 .73 1.32 1.70 1.73 1.81 1.85 1.93 1.81 Taxes .30 .23 .25 .42 .56 .58 .63 .65 .68 .62 Extraordinary items .01 .02 .04 .01 .06 * • * * .01 Net income (return on assets) .47 .47 .52 .91 1.20 1.15 1.18 1.20 1.25 1.20 Cash dividends declared .44 .42 .46 .41 .62 .73 .75 .90 .90 .80 Retained income .02 .05 .06 .49 .58 .42 .43 .30 .35 .39 MEMO: Return on equity 7.33 7.31 7.80 12.64 15.32 14.63 14.69 14.52 14.84 14.08 * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. MMDA Money market deposit account. RP Repurchase agreement. CD Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994, the netted value of off-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 4. Before 1997, data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

388 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 B. Ten largest banks by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets 85.16 84.85 85.41 85.16 84.79 76.97 77.02 79.94 81.62 81.07 Loans and leases, net 59.66 61.69 62.14 58.34 55.57 49.91 50.05 53.51 50.91 50.77 Commercial and industrial 22.61 22.91 22.42 20.32 18.65 16.43 16.16 17.17 16.90 18.07 U.S. addressees 13.18 13.39 13.44 12.00 10.75 9.16 8.66 9.59 10.24 11.76 Foreign addressees 9.43 9.53 8.97 8.32 7.90 7.27 7.50 7.59 6.66 6.31 Consumer 6.21 6.87 7.20 7.31 7.33 6.59 6.60 6.22 6.40 6.04 Credit card 1.99 2.20 2.53 2.61 2.50 2.28 1.96 1.23 1.34 1.30 Installment and other 4.22 4.67 4.67 4.70 4.83 4.31 4.65 4.99 5.06 4.74 Real estate 18.02 20.56 21.68 19.93 18.54 16.21 15.82 16.53 17.42 16.51 In domestic offices 15.05 17.36 18.37 17.07 15.99 13.80 13.48 14.44 15.69 15.08 Construction and land development 3.60 3.79 3.42 2.48 1.59 .84 .58 .51 .68 .77 Farmland .08 .08 .08 .07 .07 .06 .06 .06 .09 .09 One- to four-family residential 7.45 9.31 10.34 10.08 10.29 9.69 9.62 10.43 11.02 10.33 Home equity 1.04 1.31 1.63 1.63 1.60 1.40 1.40 1.53 1.70 1.72 Other 6.41 8.00 8.71 8.46 8.68 8.29 8.22 8.90 9.31 8.61 Multifamily residential .68 .68 .57 .58 .53 .41 .38 .38 .39 .38 Nonfarm nonresidential 3.23 3.51 3.95 3.86 3.51 2.79 2.83 3.05 3.52 3.51 In foreign offices 2.97 3.20 3.32 2.85 2.55 2.41 2.35 2.09 1.73 1.43 Depository institutions 4.56 3.64 3.05 2.56 2.35 3.37 4.95 6.06 4.14 4.00 Foreign governments 3.34 2.76 2.88 2.75 2.46 1.27 .90 .69 .45 ,35 Agricultural production .31 .31 .31 .28 .27 .25 .21 .23 .31 .28 Other loans 6.36 6.05 5.61 6.05 6.82 6.44 5.85 6.42 4.21 3.79 Lease-financing receivables 1.49 1.60 1.68 1.51 1.30 1.14 1.14 1.59 2.24 2.81 LESS: Unearned income on loans -.45 -.39 -.35 -.27 -.21 -.16 -.14 -.11 -.07 -.06 LESS: Loss reserves' -2.77 -2.63 -2.34 -2.08 -1.94 -1.63 -1.45 -1.30 -1.08 -1.01 Securities 13.13 14.03 15.58 19.13 22.74 20.43 19.53 19.83 20.00 19.72 Investment account 9.05 9.22 9.38 10.70 12.45 11.68 10.65 10.60 10.97 12.12 Debt 8.83 8.98 9.08 10.36 12.08 11.30 10.27 10.22 10.55 11.65 U.S. Treasury 1.29 1.09 1.35 2.30 2.39 2.17 2.03 1.93 1.56 1.70 U.S. government agency and corporation obligations 2.29 2.91 3.46 4.45 6.14 5.16 4.46 4.59 5.34 6.31 Government-backed mortgage pools ... 2.07 2.24 2.26 2.43 3.30 2.79 2.89 3.58 4.26 5.13 Collateralized mortgage obligations n.a. .54 1.12 1.97 2.76 2.31 1.50 .95 .93 .93 Other .22 .14 .08 .05 .08 .06 .08 .06 .15 .26 State and local government 1.58 1.08 .77 .66 .59 .60 .49 .39 .51 .47 Private mortgage-backed securities n.a. n.a. .48 .33 .38 .43 .32 .30 .32 .60 Other 3.68 3.90 3.01 2.62 2.59 2.94 2.97 3.01 2.81 2.57 Equity .22 .24 .30 .33 .36 .38 .38 .38 .42 .47 Trading account 4.08 4.81 6.19 8.43 10.30 8.74 8.88 9.23 9.03 7.60 Gross federal funds sold and reverse RPs 4.12 2.88 2.96 3.23 2.71 2.68 3.20 3.10 7.56 7.81 Interest-bearing balances at depositories 8.26 6.25 4.74 4.45 3.76 3.95 4.25 3.50 3.15 2.77 Non-interest-earning assets 14.84 15.15 14.59 14.84 15.21 23.03 22.98 20.06 18.38 18.93 Revaluation gains on off-balance-sheet items2 ... n.a. n.a. n.a. n.a. n.a. 9.89 10.77 7.63 7.36 7.61 Other 14.84 15.15 14.59 14.84 15.21 13.14 12.21 12.43 11.02 11.32 Liabilities 95.11 95.29 94.97 94.44 93.24 93.42 93.59 93.04 92.61 92.57 Interest-bearing liabilities 74.17 73.97 74.62 73.08 71.56 64.33 63.37 64.45 65.83 65.81 Deposits 57.56 57.95 57.67 55.73 52.91 48.20 47.49 47.87 47.36 47.65 In foreign offices 30.08 29.66 28.47 27.16 25.51 26.10 28.36 26.41 22.18 20.17 In domestic offices 27.49 28.28 29.19 28.56 27.41 22.10 19.12 21.46 25.18 27.48 Other checkable deposits 2.70 2.74 3.00 3.38 3.45 2.91 2.30 1.61 1.21 .99 Savings (including MMDAs) 11.32 12.05 13.50 14.91 15.33 12.70 10.56 12.31 14.26 15.84 Small-denomination time deposits 5.64 6.16 6.55 5.72 5.09 3.98 4.04 4.68 5.82 6.03 Large-denomination time deposits 7.82 7.33 6.14 4.56 3.53 2.51 2.23 2.86 3.89 4.62 Gross federal funds purchased and RPs 6.72 6.90 6.80 6.19 6.70 5.83 6.17 5.88 10.26 9.79 Other 9.89 . 9.13 10.15 11.16 11.94 10.29 9.71 10.69 8.20 8.37 Non-interest-bearing liabilities 20.94 21.32 20.35 21.36 21.68 29.09 30.22 28.59 26.78 26.76 Demand deposits in domestic offices 11.60 10.93 10.36 11.05 11.27 10.15 8.88 9.73 8.98 8.46 Revaluation losses on off-balance-sheet items2 . n.a. n.a. n.a. n.a. n.a. 8.75 10.68 7.27 7.53 7.66 Other 9.34 10.39 9.99 10.30 10.41 10.20 10.66 11.59 10.27 10.64 Capital account 4.89 4.71 5.03 5.56 6.76 6.58 6.41 6.96 7.39 7.43 MEMO Commercial real estate loans n.a. n.a. 9.05 8.01 6.46 4.65 4.40 4.65 5.45 5.61 Other real estate owned .23 .42 .78 1.13 1.02 .58 .27 .18 .13 .09 Managed liabilities 56.31 54.79 53.23 50.82 49.23 46.21 47.94 47.39 46.02 44.43 Average net consolidated assets (billions of dollars) 693 725 717 775 818 949 1,051 1,189 1,514 1,820 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 389 A.2.—Continued B. Ten largest banks by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Effective interest rate (percent)3 Rates earned Interest-earning assets 12.31 11.65 9.92 8.67 8.16 8.15 8.20 7.72 7.55 7.54 Taxable equivalent 12.31 11.70 9.95 8.72 8.20 8.18 8.22 7.74 7.60 7.57 Loans and leases, gross 13.19 12.29 10.46 9.36 9.07 8.89 8.84 8.32 8.25 8.21 Net of loss provisions 10.87 11.10 8.58 7.51 7.95 8.38 8.62 8.11 7.93 7.62 Securities 10.11 9.85 8.52 7.38 6.69 7.09 7.41 6.80 6.70 6.79 Taxable equivalent 10.08 10.00 8.63 7.54 6.77 7.19 7.47 6.85 6.85 6.89 Investment account 9.20 9.34 8.99 7.96 6.90 6.57 7.06 6.71 6.61 6.71 U.S. government and other debt 9.60 9.68 9.29 8.13 6.99 6.70 7.22 6.86 6.80 6.92 State and local 7.69 7.54 7.67 7.40 6.99 6.35 6.23 5.73 5.55 5.50 Equity 7.03 5.82 4.22 4.04 3.72 3.27 4.03 3.84 3.47 2.98 Trading account 12.13 10.75 7.84 6.69 6.45 7.79 7.83 6.90 6.81 6.92 Gross federal funds sold and reverse RPs 8.98 8.01 5.60 3.65 3.02 4.52 5.20 4.92 5.45 5.20 Interest-bearing balances at depositories 10.88 11.06 10.05 9.29 8.34 7.27 7.15 6.71 6.91 7.16 Rates paid Interest-bearing liabilities 10.74 10.18 7.71 6.17 5.60 5.43 5.88 5.44 5.41 5.29 Interest-bearing deposits 9.19 9.03 7.09 5.33 4.50 4.32 4.99 4.57 4.54 4.40 In foreign offices 10.96 11.11 8.76 7.55 6.87 6.04 6.07 5.62 5.52 5.83 In domestic offices 7.28 6.81 5.47 3.25 2.36 2.35 3.42 3.32 3.69 3.39 Other checkable deposits 4.40 4.35 3.93 1.97 1.28 1.10 1.29 1.32 1.97 1.67 Savings (including MMDAs) 6.49 6.21 5.09 2.95 2.14 2.35 3.11 2.76 2.68 2.45 Large-denomination time deposits4 8.87 7.96 6.50 4.66 3.55 3.12 3.73 4.62 5.17 4.53 Small-denomination time deposits4 8.26 7.76 6.09 3.81 3.01 2.80 5.08 4.58 5.45 5.21 Gross federal funds purchased and RPs 9.27 7.75 5.98 4.04 3.26 4.05 5.22 4.93 5.02 5.18 Other interest-bearing liabilities 19.31 17.27 11.20 10.40 11.16 10.87 9.80 8.86 9.13 8.85 Income and expense as a percentage of average net consolidated assets Gross interest income 10.82 10.37 8.77 7.69 7.22 6.37 6.42 6.26 6.31 6.21 Taxable equivalent 10.83 10.43 8.80 7.72 7.25 6.40 6.43 6.27 6.33 6.23 Loans 8.23 7.96 6.77 5.65 5.22 4.49 4.44 4.48 4.31 4.27 Securities .83 .86 .84 .85 .86 .77 .75 .71 .73 .81 Gross federal funds sold and reverse RPs .37 .25 .17 .14 .11 .15 .21 .18 .45 .42 Other 1.39 1.30 .98 1.05 1.04 .97 1.00 .88 .82 .70 Gross interest expense 8.01 7.65 5.81 4.54 4.06 3.52 3.74 3.52 3.55 3.48 11 Deposits 5.37 5.41 4.23 3.09 2.48 2.15 2.43 2.26 2.26 2.20 Gross federal funds purchased and RPs .72 .64 .43 .28 .24 .24 .35 .31 .54 .54 Other 1.92 1.60 1.15 1.17 1.35 1.13 .95 .95 .75 .74 I Net interest income 2.82 2.72 2.96 3.15 3.16 2.86 2.68 2.73 2.76 2.73 1 Taxable equivalent 2.82 2.77 2.99 3.18 3.19 2.88 2.70 2.75 2.79 2.75 I Loss provisioning5 1.45 .77 1.21 1.12 .64 .26 .11 .11 .16 .31 1 Noninterest income 2.19 2.27 2.40 2.59 2.99 2.33 2.16 2.34 2.12 2.15 I Service charges on deposits .22 .23 .26 .30 .30 .26 .25 .28 .32 .33 I Income from fiduciary activities .27 .31 .33 .37 .39 .36 .30 .31 .34 .32 1 Trading income .42 .52 .64 .66 .91 .53 .46 .52 .43 .33 1 Interest rate exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .30 .23 .10 Foreign exchange exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .17 .20 .20 1| Equity, commodity, and other exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .05 * .03 Other 1.29 1.21 1.16 1.27 1.38 1.18 1.15 1.23 1.04 1.17 J Noninterest expense 3.43 3.55 3.83 3.86 4.13 3.56 3.32 3.57 3.24 3.47 | Salaries, wages, and employee benefits 1.66 1.74 1.79 1.78 1.88 1.65 1.58 1.57 1.45 1.45 1 Expenses of premises and fixed assets .62 .65 .66 .65 .66 .55 .50 .50 .47 .47 I Other 1.15 1.16 1.38 1.43 1.59 1.36 1.24 1.50 1.33 1.54 Net noninterest expense 1.24 1.28 1.44 1.27 1.14 1.23 1.16 1.23 1.12 1.32 I 1 Realized gains on investment account securities . .03 .02 .04 .11 .13 .02 .03 .04 .08 .11 1 Income before taxes and extraordinary items .16 .69 .34 .87 1.50 1.39 1.44 1.44 1.56 1.22 Taxes .38 .27 .17 .26 .53 .48 .55 .52 .58 .44 I Extraordinary items .03 .06 .03 • .16 * * * * * Net income (return on assets) -.19 .48 .21 .61 1.13 .91 .88 .92 .98 .78 1 1 Cash dividends declared .37 .26 .21 .18 .28 .58 .57 .70 .82 .53 Retained income -.57 .21 * .43 .85 .33 .31 .21 .15 .25 I MEMO: Return on equity -3.92 10.13 4.23 10.91 16.75 13.86 13.78 13.21 13.22 10.53 * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. MMDA Money market deposit account. RP Repurchase agreement. CD Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994, the netted value of off-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 4. Before 1997, data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

390 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 C. Banks ranked 11th through 100th by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets 86.91 86.81 86.88 87.97 88.36 88.16 88.31 87.75 86.95 87.40 Loans and leases, net 62.61 61.22 60.08 58.30 57.33 58.56 62.68 64.24 63.89 64.40 Commercial and industrial 22.75 21.76 20.53 18.83 18.03 18.03 19.26 18.95 19.01 18.94 U.S. addressees 21.23 20.44 19.30 17.78 17.05 16.99 18.10 17.71 17.78 17.60 Foreign addressees 1.53 1.33 1.24 1.05 .98 1.04 1.16 1.24 1.22 1.33 Consumer 12.97 12.25 11.66 11.72 11.47 12.62 14.23 15.67 15.62 14.52 Credit card 5.82 5.48 5.04 5.16 5.23 5.99 7.34 8.26 8.50 7.67 Installment and other 7.16 6.76 6.62 6.56 6.24 6.63 6.89 7.40 7.12 6.85 Real estate 19.09 20.21 21.51 21.89 22.11 22.26 23.25 23.26 22.99 24.57 In domestic offices 18.85 20.04 21.37 21.78 22.01 22.17 23.10 23.10 22.85 24.39 Construction and land development 5.25 4.91 4.00 3.02 2.08 1.63 1.50 1.55 1.69 2.02 Farmland .12 .12 .12 .14 .13 .14 .13 .13 .14 .17 One- to four-family residential 7.54 8.53 10.17 11.36 12.30 12.98 14.16 14.15 13.88 14.84 Home equity 1.41 1.67 2.07 2.50 2.54 2.33 2.19 2.08 2.22 2.17 Other 6.13 6.86 8.10 8.85 9.76 10.65 11.97 12.07 11.65 12.67 Multifamily residential .45 .46 .54 .66 .71 .71 .77 .89 .93 1.00 Nonfarm nonresidential 5.49 6.01 6.53 6.61 6.79 6.72 6.54 6.37 6.21 6.35 In foreign offices .24 .18 .14 .11 .10 .09 .15 .16 .15 .18 Depository institutions 1.55 1.57 1.58 1.43 1.30 1.49 1.59 1.50 1.27 1.06 Foreign governments .88 .52 .39 .33 .30 .28 .20 .20 .09 .06 Agricultural production .29 .28 .31 .31 .29 .29 .26 .28 .29 .33 Other loans 5.17 4.82 4.55 4.28 4.05 3.47 3.32 3.30 3.21 3.38 Lease-financing receivables 1.73 1.67 1.53 1.49 1.47 1.60 1.96 2.41 2.70 2.75 LESS: Unearned income on loans -.34 -.26 -.22 -.17 -.11 -.07 -.07 -.06 -.05 -.04 LESS: Loss reserves' -1.48 -1.60 -1.76 -1.79 -1.60 -1.41 -1.32 -1.27 -1.24 -1.16 Securities 15.21 16.19 17.38 20.38 21.97 21.19 18.64 16.87 15.80 16.65 Investment account 14.38 15.32 16.25 19.24 20.60 19.82 17.88 16.06 15.07 16.12 Debt 14.15 15.14 16.02 18.99 20.34 19.50 17.51 15.62 14.58 15.57 U.S. Treasury 4.10 3.42 3.78 5.88 7.05 6.85 4.82 3.34 2.81 2.24 U.S. government agency and corporation obligations 5.01 7.42 8.43 9.26 9.55 9.28 9.40 9.12 8.98 9.93 Government-backed mortgage pools ... 4.03 5.32 5.38 5.22 5.21 5.30 5.06 5.42 5.17 4.98 Collateralized mortgage obligations n.a. 1.56 2.48 3.54 3.71 3.07 2.82 2.16 2.13 2.82 Other .98 .54 .57 .50 .63 .91 1.51 1.54 1.68 2.12 State and local government 2.70 2.03 1.63 1.46 1.31 1.21 1.11 .99 .88 .92 Private mortgage-backed securities n.a. n.a. 1.09 1.05 1.06 .93 1.02 .96 .73 .96 Other 2.34 2.27 1.10 1.34 1.37 1.22 1.16 1.21 1.18 1.53 Equity .23 .18 .22 .25 .26 .32 .37 .44 .49 .55 Trading account .83 .88 1.13 1.14 1.37 1.37 .76 .80 .73 .54 Gross federal funds sold and reverse RPs 3.71 4.41 4.90 4.78 4.98 5.11 4.52 4.26 4.38 3.58 Interest-bearing balances at depositories 5.38 4.98 4.51 4.52 4.08 3.30 2.47 2.38 2.88 2.77 Non-interest-earning assets 13.09 13.19 13.12 12.03 11.64 11.84 11.69 12.25 13.05 12.60 Revaluation gains on off-balance-sheet items2 n.a. n.a. n.a. n.a. n.a. .57 .50 .51 .69 .75 Other 13.09 13.19 13.12 12.03 11.64 11.28 11.18 11.75 12.36 11.85 Liabilities 94.45 94.35 93.93 93.13 92.56 92.47 92.23 92.02 91.85 91.63 Interest-bearing liabilities 76.23 77.02 76.07 74.66 73.38 72.86 74.05 73.14 72.62 73.46 Deposits 56.45 57.46 59.24 56.99 54.22 53.03 52.32 51.81 51.47 51.52 In foreign offices 8.63 7.84 6.69 6.20 6.78 8.05 8.12 7.52 7.85 8.16 In domestic offices 47.82 49.62 52.54 50.79 47.43 44.98 44.20 44.30 43.62 43.36 Other checkable deposits 4.67 4.75 5.36 6.26 7.21 6.91 5.62 3.06 1.95 1.75 Savings (including MMDAs) 14.58 15.50 17.62 20.21 20.60 20.13 18.78 20.76 21.09 21.42 Small-denomination time deposits 13.49 15.59 17.99 15.98 14.19 13.26 14.24 14.09 13.43 12.83 Large-denomination time deposits 15.08 13.78 11.56 8.34 5.44 4.68 5.55 6.39 7.15 7.36 Gross federal funds purchased and RPs 13.22 13.03 10.94 11.45 11.93 11.48 11.37 10.00 9.36 9.48 Other 6.57 6.53 5.89 6.22 7.23 8.34 10.36 11.32 11.79 12.46 Non-interest-bearing liabilities 18.22 17.33 17.87 18.47 19.18 19.62 18.18 18.89 19.22 18.17 Demand deposits in domestic offices 13.86 13.23 13.76 14.52 15.38 15.27 14.26 14.47 14.17 12.41 Revaluation losses on off-balance-sheet items2 . n.a. n.a. n.a. n.a. n.a. .53 .49 .49 .68 .76 Other 4.36 4.10 4.10 3.95 3.80 3.82 3.43 3.93 4.37 5.01 Capital account 5.55 5.65 6.07 6.87 7.44 7.53 7.77 7.98 8.15 8.37 MEMO Commercial real estate loans n.a. n.a. 11.83 11.09 10.29 9.69 9.42 9.38 9.44 10.09 Other real estate owned .30 .46 .76 .70 .47 .25 .13 .08 .06 .04 Managed liabilities 43.90 41.59 35.49 32.59 31.76 32.89 35.68 35.60 36.60 38.14 Average net consolidated assets (billions of dollars) 940 995 1,006 1,003 1,082 1,204 1,338 1,450 1,604 1,746 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 391 A.2.—Continued C. Banks ranked 11th through 100th by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Effective interest rate (percent)3 Rates earned Interest-earning assets 11.10 10.46 9.30 7.97 7.35 7.29 8.31 8.16 8.31 8.10 Taxable equivalent 11.27 10.55 9.39 8.07 7.45 7.37 8.37 8.23 8.36 8.16 Loans and leases, gross 11.74 11.09 9.96 8.75 8.25 8.22 9.10 8.87 9.03 8.82 Net of loss provisions 9.87 9.08 7.98 7.45 7.46 7.68 8.49 8.05 8.11 8.01 Securities 8.76 8.86 8.23 7.00 6.05 5.70 6.38 6.42 6.50 6.21 Taxable equivalent 9.36 9.18 8.57 7.30 6.32 5.92 6.56 6.66 6.70 6.46 Investment account 8.77 8.92 8.37 7.12 6.14 5.70 6.34 6.41 6.52 6.22 U.S. government and other debt 9.09 9.18 8.51 7.16 6.14 5.69 6.38 6.50 6.63 6.31 State and local 7.41 7.32 7.23 6.80 6.30 6.04 6.05 5.84 5.58 5.36 Equity 8.73 8.09 7.36 6.71 5.20 5.00 5.68 4.84 5.07 5.26 Trading account 8.66 8.01 6.46 4.73 4.74 5.75 7.27 6.53 6.05 5.86 Gross federal funds sold and reverse RPs 9.35 8.15 5.80 3.70 3.11 4.31 5.91 5.31 5.45 5.47 Interest-bearing balances at depositories 11.35 9.72 8.15 6.76 6.50 4.69 6.78 5.82 5.77 5.57 Rates paid Interest-bearing liabilities 8.66 7.96 6.41 4.43 3.76 3.72 4.94 4.70 4.79 4.76 Interest-bearing deposits 8.14 7.55 6.27 4.30 3.51 3.25 4.35 4.15 4.22 4.15 In foreign offices 11.08 10.08 8.39 7.26 7.37 4.60 6.30 5.29 5.23 5.22 In domestic offices 7.61 7.15 6.01 3.96 2.98 3.03 4.01 3.96 4.04 3.96 Other checkable deposits 4.57 4.67 4.21 2.43 1.70 1.62 1.89 1.78 2.01 2.41 Savings (including MMDAs) 6.42 6.07 5.04 3.07 2.33 2.46 3.10 2.91 2.84 2.77 Large-denomination time deposits4 8.75 8.11 6.77 5.10 4.30 4.21 5.70 5.50 5.47 5.32 Small-denomination time deposits4 8.72 8.09 6.96 5.07 4.06 4.18 5.35 5.26 5.43 5.33 Gross federal funds purchased and RPs 9.35 8.12 5.75 3.57 3.04 4.28 5.86 5.19 5.29 5.23 Other interest-bearing liabilities 10.23 9.27 6.55 5.77 5.97 5.24 6.43 5.95 5.85 5.80 Income and expense as percentage of average net consolidated assets Gross interest income 9.77 9.31 8.24 7.12 6.58 6.46 7.40 7.24 7.26 7.16 Taxable equivalent 9.91 9.39 8.31 7.19 6.64 6.51 7.45 7.28 7.30 7.20 Loans 7.51 7.01 6.15 5.23 4.84 4.91 5.79 5.80 5.87 5.79 Securities 1.26 1.37 1.36 1.37 1.26 1.13 1.13 1.03 .98 1.00 Gross federal funds sold and reverse RPs .36 .38 .28 .18 .15 .21 .27 .23 22 .19 Other .65 .56 .45 .34 .32 .21 .21 .18 .19 .18 Gross interest expense 6.50 6.08 4.80 3.26 2.74 2.67 3.62 3.39 3.41 3.45 Deposits 4.59 4.36 3.75 2.48 1.93 1.73 2.29 2.18 2.23 2.23 Gross federal funds purchased and RPs 1.24 1.12 .67 .43 .38 .51 .67 .55 .51 .51 Other .66 .60 .38 .35 ,43 .43 .66 .66 .68 .71 Net interest income 3.27 3.23 3.43 3.86 3.84 3.79 3.78 3.84 3.85 3.71 Taxable equivalent 3.41 3.31 3.51 3.93 3.91 3.85 3.84 3.89 3.89 3.74 Loss provisioning5 1.20 1.27 1.22 .78 .47 .32 .39 .54 .60 .53 Noninterest income 1.86 1.84 2.05 2.25 2.29 2.25 2.38 2.61 2.76 3.07 Service charges on deposits .31 .34 .41 .44 .46 .45 .44 .44 .44 .42 Income from fiduciary activities .35 .33 .36 .38 .38 .39 .40 .43 .44 .49 Trading income .08 .08 .10 .09 .14 .08 .09 .08 .08 .09 Interest rate exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .03 .02 .03 Foreian exchange exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .04 .05 .06 Equity, commodity, and other exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .01 * Other 1.12 1.09 1.19 1.33 1.32 1.33 1.45 1.67 1.79 2.07 Noninterest expense 3.34 3.44 3.77 3.98 3.95 3.86 3.79 3.85 3.85 4.03 Salaries, wages, and employee benefits 1.47 1.47 1.52 1.53 1.52 1.50 1.47 1.51 1.51 1.53 Expenses of premises and fixed assets .50 .50 .51 .49 .47 .47 .47 .48 .46 .46 Other 1.37 1.48 1.74 1.95 1.95 1.89 1.85 1.86 1.88 2.04 Net noninterest expense 1.47 1.60 1.73 1.73 1.65 1.61 1.41 1.24 1.10 .96 Realized gains on investment account securities . .04 .03 .14 .15 .09 -.01 .02 .02 .02 .03 Income before taxes and extraordinary items .... .65 .38 .62 1.50 1.81 1.85 2.01 2.09 2.18 2.24 Taxes .18 .15 .19 .48 .56 .63 .70 .75 .77 .79 Extraordinary items * .01 .03 .03 * * * * * * Net income (return on assets) .47 .24 .47 1.04 1.25 1.22 1.31 1.34 1.42 1.46 Cash dividends declared .40 .38 .47 .46 .76 .86 .85 1.07 .93 .96 Retained income .06 -.14 * .58 .49 .36 .46 .26 .48 .50 MEMO: Return on equity 8.41 4.18 7.71 15.16 16.86 16.27 16.84 16.78 17.36 17.42 * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. MMDA Money market deposit account. RP Repurchase agreement. CD Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994. the netted value of off-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 4. Before 1997. data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

392 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 D. Banks ranked 101st through 1,000th by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets 88.98 88.84 88.91 89.02 89.55 90.09 90.12 90.13 90.31 90.38 Loans and leases, net 63.62 63.09 61.03 58.49 57.94 59.75 62.18 62.63 62.21 61.12 Commercial and industrial 17.68 16.69 15.04 13.34 12.19 12.07 12.70 12.79 12.43 12.45 U.S. addressees 17.53 16.56 14.88 13.16 12.03 11.90 12.54 12.61 12.20 12.13 Foreign addressees .15 .13 .16 .18 .16 .16 .16 .18 .23 .32 Consumer 15.49 15.48 15.13 14.18 14.83 15.85 16.25 15.88 13.99 12.29 Credit card 4.83 5.22 5.74 5.37 5.63 6.06 6.30 6.66 5.48 4.48 Installment and other 10.66 10.26 9.39 8.80 9.20 9.79 9.95 9.22 8.51 7.81 Real estate 25.97 27.01 27.51 28.11 28.61 29.42 30.82 31.37 33.26 33.97 In domestic offices 25.95 26.99 27.47 28.07 28.59 29.39 30.80 31.35 33.23 33.95 Construction and land development 4.82 4.37 3.66 2.86 2.26 2.08 2.21 2.38 2.69 2.89 Farmland .27 .28 .28 .32 .34 .36 .40 .46 .53 .56 One- to four-family residential 11.56 12.49 13.22 14.26 15.17 16.24 17.49 17.34 18.16 18.21 Home equity 2.08 2.31 2.53 2.56 2.50 2.33 2.36 2.31 2.30 2.15 Other 9.48 10.18 10.69 11.69 12.67 13.91 15.13 15.04 15.85 16.06 Multifamily residential .70 .73 .80 .96 1.07 1.13 1.21 1.29 1.29 1.26 Nonfarm nonresidential 8.61 9.11 9.50 9.69 9.75 9.57 9.48 9.88 10.57 11.04 In foreign offices .01 .03 .05 .04 .02 .03 .02 .02 .02 .02 Depository institutions .92 1.05 .93 .80 .43 .40 .35 .48 .57 .50 Foreign governments .16 .09 .07 .05 .03 .02 .02 .02 .02 .02 Agricultural production .45 .47 .49 .54 .56 .62 .69 .71 .74 .80 Other loans 3.77 3.16 2.81 2.47 2.16 2.01 1.80 1.69 1.50 1.32 Lease-financing receivables .82 .83 .85 .79 .77 .83 .90 1.01 .99 .98 LESS: Unearned income on loans -.56 -.50 -.40 -.30 -.21 -.15 -.12 -.10 -.10 -.09 LESS: Loss reserves' -1.07 -1.20 -1.42 -1.49 -1.44 -1.30 -1.22 -1.22 -1.18 -1.13 Securities 18.75 19.34 21.28 24.13 25.92 25.71 23.09 22.67 23.47 24.28 Investment account 18.38 18.87 20.91 23.78 25.64 25.40 22.89 22.55 23.36 24.17 Debt 18.02 18.54 20.55 23.32 25.16 24.95 22.43 22.03 22.75 23.48 U.S. Treasury 5.91 5.44 6.16 7.75 8.64 8.26 6.49 5.61 4.95 3.93 U.S. government agency and corporation obligations 6.07 7.75 9.35 11.08 12.32 12.67 12.23 12.66 13.98 15.13 Government-backed mortgage pools ... 3.03 3.83 4.51 4.74 4.97 5.57 5.42 5.68 6.23 6.47 Collateralized mortgage obligations n.a. 1.72 2.73 3.95 4.82 4.39 3.56 3.12 3.02 3.23 Other 3.04 2.19 2.11 2.39 2.53 2.71 3.25 3.85 4.73 5.44 State and local government 3.50 3.11 2.65 2.27 2.26 2.29 2.13 2.24 2.45 2.71 Private mortgage-backed securities n.a. n.a. 1.16 1.01 .84 .75 .68 .76 .59 .65 Other 2.55 2.25 1.23 1.21 1.10 .99 .89 .77 .78 1.06 Equity .35 .32 .37 .46 .48 .44 .47 .52 .61 .69 Trading account .38 .48 .36 .35 .28 .31 .20 .12 .10 .11 Gross federal funds sold and reverse RPs 4.11 4.51 4.71 4.92 4.48 3.64 3.91 3.87 3.59 4.17 Interest-bearing balances at depositories 2.49 1.90 1.89 1.47 1.20 .98 .93 .96 1.03 .82 Non-interest-earning assets 11.02 11.16 11.09 10.98 10.45 9.91 9.88 9.87 9.69 9.62 Revaluation gains on off-balance-sheet items2 ... n.a. n.a. n.a. n.a. n.a. .02 .05 .02 * * Other 11.02 11.16 11.09 10.98 10.45 9.90 9.83 9.84 9.69 9.61 Liabilities 93.28 93.07 92.89 92.47 91.85 91.62 91.36 91.06 90.79 90.54 Interest-bearing liabilities 76.42 77.04 77.26 75.98 74.42 74.77 75.00 75.06 75.19 75.44 Deposits 63.74 65.05 66.35 65.65 63.05 60.38 59.69 59.99 61.51 62.45 In foreign offices 2.09 1.65 1.76 1.56 1.43 1.69 1.71 1.33 1.23 1.29 In domestic offices 61.65 63.40 64.59 64.09 61.62 58.69 57.97 58.66 60.28 61.16 Other checkable deposits 7.14 7.31 7.83 9.14 9.94 9.70 8.54 6.21 4.97 4.24 Savings (including MMDAs) 19.52 19.69 20.79 23.34 24.06 22.92 20.76 22.51 23.60 25.66 Small-denomination time deposits 22.08 24.09 25.22 23.56 20.77 19.29 21.12 21.61 22.05 21.25 Large-denomination time deposits 12.91 12.31 10.76 8.06 6.85 6.78 7.56 8.34 9.66 10.01 Gross federal funds purchased and RPs 9.21 8.43 7.46 7.17 7.43 8.45 8.31 8.19 7.08 6.16 Other 3.47 3.56 3.45 3.15 3.93 5.94 7.00 6.88 6.59 6.83 Non-interest-bearing liabilities 16.85 16.03 15.63 16.49 17.43 16.85 16.36 16.00 15.60 15.10 Demand deposits in domestic offices 14.86 14.07 13.56 14.39 15.07 14.58 14.07 13.84 13.16 11.89 Revaluation losses on off-balance-sheet items2 . n.a. n.a. n.a. n.a. n.a. .02 .05 .02 .01 .01 Other 1.99 1.96 2.07 2.10 2.36 2.25 2.24 2.14 2.44 3.20 Capital account 6.72 6.93 7.11 7.53 8.15 8.38 8.64 8.94 9.21 9.46 MEMO Commercial real estate loans n.a. n.a. 14.63 13.91 13.37 13.05 13.20 13.84 14.79 15.40 Other real estate owned .43 .52 .77 .80 .57 .28 .17 .13 .11 .09 Managed liabilities 27.73 26.00 23.48 20.00 19.69 22.89 24.61 24.78 24.63 24.42 Average net consolidated assets (billions of dollars) 892 937 962 968 977 1,032 1,092 1,076 967 935 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 393 A.2.—Continued D. Banks ranked 101st through 1,000th by assets Item 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Effective interest rate (percent)3 Rates earned Interest-earning assets 10.75 10.42 9.55 8.14 7.43 7.58 8.42 8.40 8.50 8.32 Taxable equivalent 10.96 10.57 9.70 8.25 7.55 7.68 8.51 8.49 8.59 8.44 Loans and leases, gross 11.61 11.21 10.43 9.11 8.57 8.64 9.43 9.38 9.48 9.37 Net of loss provisions 10.45 9.48 8.72 7.83 7.76 8.11 8.76 8.59 8.60 8.61 Securities 8.34 8.52 8.11 6.88 5.78 5.69 6.23 6.31 6.42 6.22 Taxable equivalent 8.97 9.00 8.54 7.19 6.10 5.93 6.49 6.59 6.69 6.57 Investment account 8.35 8.49 8.12 6.90 5.79 5.69 6.24 6.31 6.42 6.22 U.S. government and other debt 8.64 8.76 8.30 6.95 5.76 5.68 6.28 6.40 6.55 6.36 State and local 7.28 7.33 7.25 6.83 6.30 5.92 5.80 5.50 5.36 5.16 Equity 7.00 6.94 6.02 5.08 4.95 5.30 6.05 6.30 6.35 6.36 Trading account 7.61 9.92 7.19 5.61 4.74 5.29 5.55 5.94 6.37 6.48 Gross federal funds sold and reverse RPs 9.05 7.99 5.64 3.47 3.02 4.06 5.45 5.24 5.41 5.30 Interest-bearing balances at depositories 9.21 8.52 6.82 4.61 3.51 4.28 6.09 5.54 5.49 5.75 Rates paid Interest-bearing liabilities 7.72 7.26 6.11 4.19 3.33 3.57 4.64 4.57 4.66 4.59 Interest-bearing deposits 7.36 7.05 6.06 4.17 3.26 3.31 4.26 4.26 4.34 4.28 In foreign offices 8.98 8.12 6.38 4.25 3.35 4.31 5.94 5.43 5.42 5.54 In domestic offices 7.31 7.02 6.05 4.17 3.25 3.28 4.21 4.23 4.32 4.26 Other checkable deposits 4.88 4.75 4.28 2.67 2.02 1.87 2.02 1.96 2.17 2.16 Savings (including MMDAs) 6.13 5.98 5.14 3.33 2.58 2.64 3.24 3.11 3.08 2.97 Large-denomination time deposits4 8.70 8.04 6.64 4.76 3.90 4.23 5.62 5.47 5.56 5.50 Small-denomination time deposits4 8.31 8.03 7.08 5.35 4.40 4.40 5.53 5.57 5.57 5.64 Gross federal funds purchased and RPs 9.01 7.86 5.62 3.46 2.95 4.12 5.61 5.16 5.21 5.13 Other interest-bearing liabilities 9.08 8.28 6.78 5.28 4.44 4.92 6.27 5.89 6.12 6.00 Income and expense as percentage of average net consolidated assets Gross interest income 9.68 9.38 8.64 7.36 6.75 6.90 7.68 7.67 7.76 7.64 Taxable equivalent 9.86 9.51 8.76 7.46 6.84 6.99 7.76 7.75 7.84 7.72 Loans 7.52 7.21 6.52 5.46 5.07 5.26 5.98 5.99 6.01 5.86 Securities 1.54 1.60 1.70 1.64 1.49 1.45 1.43 1.42 1.50 1.50 Gross federal funds sold and reverse RPs .38 .36 .28 .17 .14 .14 .21 .20 .19 .22 Other .25 .20 .15 .08 .06 .06 .07 .06 .06 .05 Gross interest expense 5.84 5.54 4.68 3.16 2.46 2.65 3.46 3.40 3.47 3.45 Deposits 4.69 4.58 4.03 2.75 2.07 2.01 2.56 2.57 2.70 2.72 Gross federal funds purchased and RPs .83 .67 .42 .25 .22 .35 .46 .43 .37 .32 Other .31 .29 .23 .17 .17 .29 .44 .40 .40 .41 Net interest income 3.84 3.83 3.96 4.19 4.28 4.25 4.23 4.27 4.29 4.19 Taxable equivalent 4.02 3.97 4.08 4.30 4.38 4.34 4.31 4.35 4.37 4.28 Loss provisioning5 .75 1.12 1.07 .77 .47 .33 .43 .50 .56 .48 Noninterest income 1.38 1.50 1.65 1.69 1.84 1.86 1.84 1.88 2.08 2.25 Service charges on deposits .36 .37 .40 .44 .45 .42 .42 .42 .40 .39 Income from fiduciary activities .25 .26 .27 .28 .29 .28 .27 .28 .32 .34 Trading income .04 .02 .04 .02 .03 .02 .03 .02 .01 .01 Interest rate exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .01 .01 .01 Foreign exchange exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. .01 * * Equity, commodity, and other exposures ... n.a. n.a. n.a. n.a. n.a. n.a. n.a. * * * Other .74 .84 .95 .95 1.08 1.14 1.12 1.16 1.34 1.51 Noninterest expense 3.45 3.50 3.77 3.87 3.92 3.78 3.68 3.68 3.73 3.87 1 Salaries, wages, and employee benefits 1.48 1.47 1.48 1.51 1.51 1.49 1.44 1.44 1.51 1.57 1 Expenses of premises and fixed assets .49 .49 .49 .49 .48 .46 .45 .45 .46 .47 Other 1.49 1.55 1.80 1.87 1.93 1.83 1.79 1.80 1.76 1.83 1 Net noninterest expense 2.07 2.01 2.12 2.18 2.08 1.92 1.84 1.81 1.65 1.61 1 Realized gains on investment account securities . .01 .01 .09 .10 .06 -.05 -.01 .02 .02 .04 | Income before taxes and extraordinary items 1.02 .72 .86 1.35 1.78 1.96 1.96 1.98 2.10 2.14 1 Taxes .32 .21 .29 .44 .61 .67 .67 .69 .73 .73 1 Extraordinary items * * -.07 * .04 * * * * .06 | Net income (return on assets) .71 .51 .49 .91 1.22 1.29 1.28 1.29 1.37 1.47 j Cash dividends declared .48 .53 .33 .49 .79 .81 .87 1.04 1.10 1.02 1 Retained income .23 -.02 .16 .42 .43 .48 .41 .25 .28 .45 | MEMO: Return on equity 10.54 7.37 6.93 12.13 14.93 15.40 14.82 14.45 14.93 15.53 * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. MMDA Money market deposit account. RP Repurchase agreement. CD Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994, the netted value of off-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 3. Includes provisions for loan and lease losses and for allocated transfer risk. 4. Before 1997, data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

394 Federal Reserve Bulletin • June 1999 A.2. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1989-98 E. Banks not ranked among the 1.000 largest by assets Item 1989 1990 1991 1992 1993 1994 1 1995 1996 1997 1998 Balance sheet items as a percentage of average net consolidated assets Interest-earning assets 90.90 91.06 91.25 91.39 91.65 91.72 91.70 91.64 91.65 91.88 Loans and leases, net 54.84 54.74 54.05 53.03 52.94 54.64 56.62 57.37 58.77 59.13 Commercial and industrial 12.10 11.53 10.60 9.74 9.24 9.31 9.65 9.98 10.15 10.33 U.S. addressees 12.07 11.49 10.56 9.69 9.20 9.26 9.59 9.90 10.07 10.25 Foreign addressees .03 .04 .04 .04 .04 .05 .06 .07 .08 .08 Consumer 11.46 11.20 10.44 9.69 9.18 9.37 9.57 9.41 9.06 8.48 Credit card .93 1.00 1.02 1.00 .93 .96 1.04 1.03 .91 .71 Installment and other 10.53 10.20 9.42 8.69 8.25 8.41 8.53 8.38 8.15 7.77 Real estate 27.36 28.35 29.34 30.15 31.09 32.19 33.54 34.10 35.51 36.04 In domestic offices 27.36 28.35 29.33 30.15 31.08 32.19 33.54 34.09 35.50 36.04 Construction and land development 2.29 2.37 2.18 1.98 1.93 2.14 2.38 2.61 2.82 3.01 Farmland 1.82 1.86 1.93 2.06 2.20 2.34 2.48 2.55 2.68 2.83 One- to four-family residential 14.81 15.37 16.00 16.44 16.81 16.95 17.45 17.47 18.15 18.05 .94 1.16 1.29 1 34 1 V 1 "M 1 20 1 19 1 ">4 1 ">1 Other 13.86 14.21 14 71 15 10 15 54 15 73 16 16 ''S 16 91 16 84 Multifamily residential .62 .66 .71 .77 .84 .93 .95 .92 .95 .93 Nonfarm nonresidential 7.82 8.09 8.50 8.90 9.30 9.83 10.27 10.54 10.91 11.21 In foreign offices * * * * * * * * Depository institutions .26 .23 .20 .13 .12 .13 .16 .17 .17 .12 Foreign governments .01 .01 .01 .01 .02 .01 * * * Agricultural production 3.28 3.30 3.48 3.55 3.58 3.89 3.95 3.93 4.05 4.27 Other loans 1.67 1.41 1.24 .99 .87 .81 .76 .72 .70 .69 Lease-financing receivables .19 .18 .17 .17 .18 .20 22 .23 .25 .25 LESS: Unearned income on loans -.60 -.58 -.51 -.43 -.36 -.31 -.30 -.27 -.24 -.20 LESS: LOSS reserves' -.88 -.89 -.93 -.96 -.97 -.95 -.93 -.90 -.88 -.86 Securities 27.92 28.38 29.99 32.10 33.06 32.90 30.50 29.53 28.21 26.67 Investment account 27.85 28.28 29.94 32.04 33.00 32.86 30.46 29.50 28.18 26.65 Debt 27.45 27.92 29.56 31.60 32.55 32.42 30.01 29.01 27.65 26.11 U.S. Treasury 8.84 8.77 9.24 10.25 10.48 10.81 9.19 7.85 6.70 5.05 U.S. government agency and corporation obligations 11.37 12.43 13.82 15.04 15.80 15.35 15.12 15.67 15.55 15.42 Government-backed mortgage pools ... 3.76 4.58 5.59 5.52 5.38 4.81 4.19 4.21 4.00 3.90 Collateralized mortgage obligations n.a. .90 1.56 2.66 3.33 3.11 2.75 2.46 2.19 2.01 Other 7.61 6.93 6.68 6.85 7.09 7.43 8.18 9.00 9.37 9.51 State and local government 4.94 4.56 4.26 4.29 4.70 5.01 4.69 4.62 4.59 4.80 Private mortgage-backed securities n.a. n.a. .89 .77 .47 .27 .20 .18 .19 .16 Other 2.29 2.15 1.34 1.26 1.10 .98 .81 .68 .61 .68 Equity .40 .36 .38 .44 .45 .44 .45 .49 .52 .54 Trading account .07 .10 .06 .05 .07 .04 .03 .03 .03 .02 Gross federal funds sold and reverse RPs 5.74 6.13 5.64 5.10 4.69 3.42 3.92 4.05 3.96 5.12 Interest-bearing balances at depositories 2.40 1.81 1.57 1.16 .97 .77 .67 .69 .71 .96 Non-interest-earning assets 9.10 8.94 8.75 8.61 8.35 8.28 8.30 8.36 8.35 8.12 Revaluation gains on off-balance-sheet items2 ... n.a. n.a. n.a. n.a. n.a. * * * * * Other 9.10 8.94 8.75 •8.61 8.35 8.28 8.30 8.36 8.35 8.12 Liabilities 91.44 91.40 91.37 91.07 90.63 90.43 90.03 89.81 89.62 89.53 Interest-bearing liabilities 77.13 77.83 78.39 77.83 76.89 76.19 75.74 75.58 75.47 75.35 Deposits 75.00 75.79 76.40 75.75 74.53 73.14 72.68 72.47 71.99 71.76 In foreign offices .06 .07 .08 .07 .08 .09 .11 .10 .09 .07 74.93 75.72 76 33 75 68 74 45 73 05 7° 56 1"> 36 71 90 71 70 Other checkable deposits 10.38 10.45 10.99 12.33 13.15 13.31 12.37 11.75 11.37 11.17 19.S1 18.73 19 35 22 10 23 55 23 ">3 ">0 40 19 56 18 98 19 01 Small-denomination time deposits 33.66 35.37 35.88 32.85 30.10 28.83 30.91 31.28 31.05 30.42 Large-denomination time deposits 11.38 11.17 10.11 8.40 7.65 7.68 8.88 9.77 10.49 11.10 Gross federal funds purchased and RPs 1.35 1.36 1.31 1.36 1.44 1.89 1.78 1.70 1.68 1.50 Other .78 .67 .68 .72 .91 1.16 1.28 1.41 1.80 2.09 Non-interest-bearing liabilities 14.31 13.57 12.98 13.24 13.75 14.25 14.29 14.23 14.15 14.18 Demand deposits in domestic offices 13.09 12.37 11.84 12.23 12.82 13.34 13.22 13.13 13.09 13.08 Revaluation losses on off-balance-sheet items2 . n.a. n.a. n.a. n.a. n.a. * * * * Other 1.22 1.21 1.14 1.01 .93 .90 1.07 1.10 1.06 1.10 Capital account 8.56 8.60 8.63 8.93 9.37 9.57 9.97 10.19 10.38 10.47 MEMO Commercial real estate loans n.a. n.a. 11.74 11.84 12.22 13.02 13.71 14.18 14.78 15.26 Other real estate owned .63 .61 .66 .65 .52 .35 .25 .20 .16 .13 Managed liabilities 13.59 13.29 12.19 10.56 10.10 10.83 12.08 13.00 14.08 14.77 Average net consolidated assets (billions of dollars) 662 681 694 697 688 679 666 661 648 644 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998 395 A.2.—Continued E. Banks not ranked among the 1,000 largest by assets "T Item 1989 1990 1991 1992 1993 1994 J 1995 1996 1997 1998 Effective interest rate (percent)3 Rates earned Interest-earning assets 10.50 10.31 9.64 8.43 7.62 7.57 8.41 8.35 8.50 8.33 Taxable equivalent 10.72 10.52 9.82 8.59 7.78 7.72 8.56 8.49 8.63 8.50 Loans and leases, gross 11.76 11.60 11.02 9.83 9.14 9.00 9.85 9.74 9.81 9.70 Net of loss provisions 10.87 10.65 10.08 9.05 8.63 8.65 9.42 9.31 9.36 9.22 Securities 8.37 8.42 8.04 6.99 5.92 5.61 6.09 6.10 6.25 5.98 Taxable equivalent 9.01 8.99 8.53 7.40 6.33 5.99 6.49 6.52 6.65 6.47 Investment account 8.36 8.41 8.04 6.99 5.92 5.61 6.09 6.10 6.25 5.98 U.S. government and other debt 8.53 8.59 8.20 7.06 5.91 5.59 6.17 6.23 6.43 6.16 State and local 7.57 7.46 7.17 6.70 6.09 5.69 5.64 5.44 5.32 5.14 Equity 8.12 8.30 7.14 5.64 5.16 5.52 6.26 6.06 6.40 6.11 Trading account 14.84 12.13 8.41 7.14 4.83 6.03 6.12 6.48 6.60 6.45 Gross federal funds sold and reverse RPs 9.25 8.12 5.66 3.51 2.95 4.08 5.95 5.39 5.51 5.36 Interest-bearing balances at depositories 9.11 8.55 7.35 5.59 4.53 4.64 5.91 6.10 5.70 5.68 Rates paid Interest-bearing liabilities 7.16 7.02 6.17 4.44 3.54 3.49 4.47 4.49 4.61 4.61 Interest-bearing deposits 7.10 6.96 6.15 4.44 3.53 3.44 4.39 4.44 4.54 4.53 In foreign offices 9.35 7.57 5.95 3.97 2.91 3.92 5.73 11.43 4.77 5.08 In domestic offices 7.10 6.96 6.15 4.44 3.53 3.44 4.39 4.43 4.54 4.53 Other checkable deposits 5.09 5.02 4.61 3.14 2.42 2.29 2.50 2.41 2.46 2.45 Savings (including MMDAs) 5.82 5.73 5.18 3.62 2.91 2.83 3.32 3.24 3.37 3.39 Large-denomination time deposits4 8.35 7.92 6.72 4.90 3.96 4.12 5.55 5.49 5.53 5.54 Small-denomination time deposits4 8.03 7.88 6.98 5.36 4.39 4.28 5.51 5.59 5.67 5.64 Gross federal funds purchased and RPs 8.52 8.03 5.72 3.74 3.17 4.12 5.62 5.10 5.23 5.05 Other interest-bearing liabilities 8.31 7.84 7.06 5.01 4.64 4.98 6.87 5.84 6.15 6.44 Income and expense as a percentage of average net consolidated assets Gross interest income 9.65 9.51 8.91 7.79 7.05 7.01 7.80 7.75 7.89 7.74 Taxable equivalent 9.85 9.68 9.06 7.94 7.19 7.15 7.93 7.87 8.01 7.86 Loans 6.53 6.44 6.04 5.30 4.91 4.98 5.66 5.67 5.85 5.80 Securities 2.33 2.38 2.41 2.24 1.95 1.84 1.86 1.80 1.76 1.59 Gross federal funds sold and reverse RPs .57 .53 .34 .18 .14 .15 .25 .24 .24 .29 Other .23 .17 .12 .07 .05 .04 .04 .04 .04 .06 Gross interest expense 5.50 5.44 4.82 3.45 2.72 2.65 3.38 3.38 3.47 3.46 Deposits 5.32 5.28 4.70 3.36 2.63 2.52 3.19 3.22 3.28 3.25 Gross federal funds purchased and RPs .12 .11 .07 .05 .04 .07 .10 .08 .08 .07 Other .06 .05 .05 .04 .04 .06 .09 .08 .11 .13 Net interest income 4.15 4.07 4.09 4.34 4.33 4.36 4.42 4.37 4.41 4.28 Taxable equivalent 4.35 4.24 4.24 4.49 4.48 4.50 4.55 4.49 4.54 4.40 Loss provisioning5 .50 .53 .51 .42 .27 .19 .25 .25 .27 .29 Noninterest income 1.00 1.01 1.07 1.16 1.25 1.30 1.38 1.42 1.44 1.53 Service charges on deposits .41 .42 .44 .45 .45 .44 .44 .44 .44 .42 Income from fiduciary activities .14 .14 .14 .16 .16 .17 .22 .20 .20 .23 Trading income .01 .01 .01 .01 .01 * .01 * * * Interest rate exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. * * * Foreign exchange exposures n.a. n.a. n.a. n.a. n.a. n.a. n.a. * * * Equity, commodity, and other exposures ... n.a. n.a. n.a. n.a. n.a. n.a. n.a. * * * Other .44 .44 .49 .55 .64 .69 .71 .78 .79 .88 Noninterest expense 3.49 3.49 3.59 3.67 3.74 3.78 3.81 3.70 3.70 3.74 Salaries, wages, and employee benefits 1.65 1.64 1.64 1.69 1.72 1.75 1.80 1.77 1.80 1.82 Expenses of premises and fixed assets .51 .49 .49 .49 .48 .49 .50 .49 .49 .49 Other 1.33 1.36 1.46 1.49 1.53 1.55 1.51 1.44 1.41 1.43 Net noninterest expense 2.49 2.48 2.52 2.51 2.48 2.48 2.43 2.28 2.27 2.21 Realized gains on investment account securities . .01 * .06 .09 .07 -0.03 * .01 .01 .02 Income before taxes and extraordinary items — 1.17 1.06 1.11 1.50 1.64 1.66 1.75 1.85 1.89 1.80 Taxes .37 .34 .35 .47 .51 .51 .55 .59 .59 .54 Extraordinary items .02 .02 .19 .02 .05 * * * * * Net income (return on assets) .83 .74 .95 1.04 1.19 1.15 1.20 1.26 1.30 1.26 Cash dividends declared .52 .49 .89 .50 .56 .57 .62 .64 .73 .83 Retained income .30 .25 .06 .54 .63 .58 .58 .62 .57 .44 MEMO: Return on equity 9.66 8.61 11.05 11.64 12.65 12.05 12.05 12.33 12.54 12.07 * In absolute value, less than 0.005 percent. DEFINITIONS. n.a. Not available. MMDA Money market deposit account. RP Repurchase agreement. CD Certificate of deposit. 1. Includes the allowance for loan and lease losses and the allocated transfer risk reserve. 2. Before 1994, the netted value of olf-balance-sheet items appeared in "trading account securities" if a gain and "other non-interest-bearing liabilities" if a loss. 3. When possible, based on the average of quarterly balance sheet data reported on schedule RC-K of the quarterly Call Reports. 4. Before 1997, data for large time open accounts are included in small-denomination time deposits. 5. Includes provisions for loan and lease losses and for allocated transfer risk. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

396 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report describes U.S. Treasury and sovereign yield spreads over U.S. Treasuries rose System foreign exchange operations for the period sharply after the Brazilian currency devaluation but from January through March 1999. It was presented soon returned to early-January levels. Nonetheless, by Peter R. Fisher, Executive Vice President, Federal spreads generally remained well above pre-Russian Reserve Bank of New York, and Manager, System devaluation levels, and many emerging-market Open Market Account. Laura F. Ambroseno was pri- mutual funds continued to experience net outflows. marily responsible for preparation of the report. U.S. corporate high-yield spreads over U.S. Treasuries narrowed, reflecting the desire of investors to During the first quarter of 1999, the dollar appreci- increase risk exposure on a selective basis. ated 8.4 percent against the euro and 5.3 percent against the yen. The dollar's value was largely influenced by changes in market expectations for eco- RISE OF THE DOLLAR AGAINST THE EURO nomic growth in the United States, Europe, and Japan. Against the euro, the dollar strengthened as The dollar depreciated to $ 1.1832 against the euro on the differential between U.S. and European interest the first trading day of stage three of the Economic rates moved increasingly in favor of the dollar. and Monetary Union. However, the dollar then Against the yen, the dollar fell to a two-and-a-half- steadily appreciated to $1.0765 by quarter-end as year low, then rebounded after the Bank of Japan "europhoria" dissipated and market participants reportedly intervened to counter yen appreciation and focused on the apparent divergence in the outlooks subsequently guided overnight interest rates to near for growth between the U.S. and European econozero. The U.S. monetary authorities did not intervene mies. Over the quarter, the implied yield spread in the foreign exchange markets during the quarter. between September three-month Eurodollar and Euribor (European interbank offered rate for euro deposits) futures contracts widened 49 basis points, to 232 basis points, supported by market expectations of PARTIAL RECOVERY OF RISK APPETITE divergent monetary policy responses to growth trends At the outset of the new year, trading in the major by the Federal Open Market Committee (FOMC) and currencies was thin. Reduced activity was attributed the ECB Governing Council. Similarly, the spread in part to a decline in speculative trading and a between yields of ten-year U.S. Treasuries and Gertentative return of asset managers to higher-yielding man bonds widened 62 basis points from the start of markets. Euro trading volumes remained below his- the quarter, to a decade high of 146 basis points on torical German mark trading volumes over compa- February 25. rable time frames; uncertainty regarding the behavior The dollar was supported throughout most of the of the newly established European Central Bank quarter by expectations of a shift in U.S. monetary (ECB) contributed to the low volume. policy toward a tightening bias. The change in expec- Although new investment supported selected tations was prompted by stronger-than-expected ecoemerging markets and high-yield assets, lingering nomic growth, employment, consumer spending, and concern about overall risk exposure resulted in hourly earnings data, which raised concern that the heightened differentiation and relatively high risk US. economy might begin to show signs of inflationpremiums. The devaluation of the Brazilian real on ary pressures. Speculation of a near-term change in January 13 evoked some apprehension, but reaction U.S. monetary policy mounted after the Humphreywas fairly muted as a result of the position unwinding Hawkins testimony on February 23, during which that had already occurred after the Russian currency Chairman Greenspan stated that the FOMC would evaluate "whether the full extent of the policy easdevaluation and debt moratorium in August 1998. ings undertaken last fall to address the seizing-up of Reflective of market sentiment, emerging-market Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

397 1. Exchange rate of the euro against the dollar, 1999:Q1 3. Reconstructed trade-weighted exchange rate of the euro, 1990-April 1999 Dollars per euro Index, 1990 average = 100 — — 1.15 — A y\ — i.io 1 1 1 Jan. Feb. Mar. 1999 NOTE. The data are daily. NOTE. Before year-end 1998, the calculation is based on weighted averages SOURCE. Bloomberg L.P. of euro area countries' effective exchange rates; from January 1999, the calculation is based on weighted averages of bilateral euro exchange rates. Weights are based on 1990 manufacturing goods trade and capture third-market effects. SOURCE. European Central Bank; Bank for International Settlements. financial markets remains appropriate as those disturbances abate." The implied yield of the federal funds futures contract for September rose 44 basis points cut rates sooner than previously expected. Implied from the start of the quarter, to a high of 5.09 percent yield of the September three-month Euribor futures on March 1. U.S. Treasury yields rose in response to contract fell 27 basis points, to 2.79 percent by rising short-term yields, heavy corporate bond issu- quarter-end. ance, and reported sales by Japanese financial institu- Both the euro-dollar exchange rate and spreads tions before their fiscal year-end on March 31. between U.S. and European yields stabilized toward Meanwhile, the euro experienced downward pres- the end of the quarter, as expectations for a near-term sure from increasing expectations of a euro area rate shift in U.S. monetary policy receded after the release cut after several economic data releases indicated of U.S. wage data suggesting that inflationary presfurther downside risk to European growth and by sures remained quiescent. On a trade-weighted basis, official commentary that was interpreted as suggest- the euro depreciated 5.3 percent over the quarter, ing approval of current exchange rate levels. The approaching the lower end of its reconstructed tenresignation of German Finance Minister LaFontaine year trading range. on March 11, that was perceived as having reduced political pressure on the ECB, also contributed to STRENGTHENING OF THE DOLLAR speculation that the ECB Governing Council would AGAINST THE YEN The dollar began the new year at ¥112.80, but soon 2. Spread between implied yields of September three-month depreciated to a multiyear low of ¥108.22 on Janu- Eurodollar and Euribor futures, 1999:Q1 ary 11, as Japanese investors reallocated funds from Basis points U.S. assets to European and Japanese assets. International investors also expressed interest in Japanese — 240 assets, as evidenced by strong foreign demand for F \J\__S^\A J 230 Japanese bonds auctioned on January 7. In addition, — the perception that Japanese monetary conditions — — 220 tightened as funding pressures abated at the calendar . — — 210 year-end, along with renewed investor focus on the U.S. current account deficit, appeared to weigh on the — J — 200 dollar-yen exchange rate early in the period. — 190 On January 12, the dollar gained more than four J 1 1 1 yen from the day's low of ¥108.62 after the Bank Jan. Feb. Mar. of Japan reportedly intervened by selling yen in the 1999 foreign exchange market. Market participants inter- NOTE. The data are daily. preted the reported intervention as Japanese resis SOURCE. Bloomberg L.P. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

398 Federal Reserve Bulletin • June 1999 4. Exchange rate of the dollar against the Japanese yen, 6. Spread between ten-year U.S. Treasury and Japanese 1999:Q1 government bond yields, 1999:Q1 Yen per dollar Basis points — \ rv 120 — k/\ V 350 — — 115 J — 300 — 1 — 110 — 250 1 1 1 1 1 Jan. Feb. Mar. Jan. Feb. Mar. 1999 1999 NOTE. The data are daily. NOTE. The data are daily. SOURCE. Bloomberg L.P. SOURCE. Bloomberg L.P. tance to yen appreciation above ¥110. Options prices cials suggesting that "excessive yen strength" would indicated that market anxiety over the possibility of a elicit intervention and by expectations of continued rapid rise in the yen's value receded after the reported disparity between U.S. and Japanese economic intervention, with one-month implied volatility fallgrowth. However, several factors limited the dollar's ing from a high of more than 22 percent on January 5 upward momentum, including narrower long-term to about 17 percent by quarter-end. In addition, the U.S.-Japanese interest rate differentials, concern over premium for one-month yen call options over one- U.S. equity market valuation, and nervousness surmonth yen put options, as measured by risk reversal rounding the Brazilian currency devaluation. The prices, fell from a record high of nearly 4.5 percent yield on the Japanese government benchmark bond on January 6 to approximately 1.2 percent by quarter- (ten-year) rose 35 basis points from the start of the end, indicating less demand for protection against quarter, to a high of 2.36 percent on February 5, as further yen appreciation. Japanese investors reduced portfolio duration and In the weeks following the reported intervention, realized profits before their fiscal year-end and as the dollar traded in a range between ¥110 and ¥117, market participants became increasingly concerned supported both by commentary from Japanese offiabout the Japanese government's apparent acceptance of rising yields. The spread between yields of 5. One-month dollar-yen risk reversals, 1999:Q1 ten-year U.S. Treasuries and Japanese government bonds narrowed to a three-year low of 248 basis Percent points by February 3. 7. Ten-year Japanese government bond yield, 1999:Q1 Percent Jan. Feb. Mar. 1999 NOTE. The data are daily. A dollar-yen risk reversal is an option position consisting of a purchased dollar call-yen put and a written dollar put-yen call that mature on the same date and are equally out-of-the-money. The price of a risk reversal indicates whether the dollar call or the dollar put is more valuable. If the dollar call is at a premium, the market is willing to pay more to insure against the risk that the dollar will rise against the yen. If the dollar put is at a premium, the market is willing to pay more to insure against the risk that the dollar will fall against the yen. NOTE. The data are daily. SOURCE. Citibank, N.A. SOURCE. Bloomberg L.P. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 399 The dollar began to appreciate steadily against the of foreign government securities by U.S. monetary yen after the Bank of Japan reduced the target for the authorities totaled $7.3 billion. overnight call rate from 25 to 15 basis points on Japanese and German government securities held February 12 and subsequently guided the rate to as under repurchase agreement are arranged either low as 2 basis points. The dollar was further sup- through transactions executed directly in the market ported by growing expectations of a shift toward or through agreements with official institutions. Forquantitative monetary targeting in Japan, official eign government securities held under repurchase efforts to contain the rapid rise in Japanese bond agreement by the U.S. monetary authorities totaled yields, and signs of persistent strength in the U.S. $12.8 billion at the end of the quarter. Foreign cureconomy. On March 4, the dollar strengthened to a rency reserves are also invested in deposits at the period high of ¥123.75 and the spread between Bank for International Settlements and in facilities at ten-year U.S. and Japanese bond yields peaked at other official institutions. 381 basis points, up 133 basis points from its Febru- On February 3, 1999, the United States paid the ary 3 low. equivalent of a $14.8 billion increase in its Interna- Throughout March, movements in the dollar-yen tional Monetary Fund (IMF) quota, which had been exchange rate fluctuated in response to shifting previously approved by the Congress. The payment expectations for monetary policy objectives and Japa- was not an outlay of funds, but rather an exchange nese fiscal year-end dynamics. The dollar initially of monetary assets. In exchange for the payment, the moved lower in response to U.S. economic data United States received an increase in its IMF reserve releases suggesting that inflation remained subdued. position, which is an interest-bearing asset. In accor- Meanwhile, the yen was supported by commentary dance with agreed-upon IMF procedures, 25 percent from Japanese officials implying that a shift in mone- of the quota increase, equal to about $3.7 billion, was tary policy toward quantitative targets was unlikely transferred to the IMF in the form of foreign curin the near term and by substantial purchases of rency reserve assets, specifically euros held by the Japanese equities by international investors who were U.S. Treasury's Exchange Stabilization Fund (ESF). increasing the weight of Japanese assets in their Simultaneously, the U.S. Treasury's general account portfolios. At the end of the quarter, the dollar-yen reimbursed the ESF with dollars in an amount equivaexchange rate drifted back to ¥118.80, as purchases lent to the value of the euro reserve transfer. The of Japanese equities subsided and Japanese accounts remaining 75 percent of the quota increase, equal to reportedly satisfied fiscal year-end foreign exchange about $11.1 billion, was paid through an increase in requirements. the U.S. letter of credit to the IMF and did not involve a flow of funds. Separately, the U.S monetary authorities conducted TREASURY AND FEDERAL RESERVE FOREIGN an off-market currency transaction that was designed EXCHANGE RESERVES to redress imbalances in their respective foreign currency holdings. Imbalances had evolved over time The U.S. monetary authorities did not undertake any both in terms of the overall level and currency comintervention operations during the quarter. At the end position of the foreign exchange reserves held by the of the quarter, the current values of euro and Japanese Federal Reserve and the ESF. Effective March 18, the yen reserve holdings totaled $15.2 billion for the Federal Reserve exchanged approximately $4.8 bil- Federal Reserve System and $15.2 billion for the lion of euros for $1.4 billion of Japanese yen and Exchange Stabilization Fund. The U.S. monetary $3.4 billion of U.S. dollars from the ESF. The transacauthorities invest all of their foreign currency bal- tion was executed at prevailing market exchange ances in a variety of instruments that yield market- rates. As designed, this transaction distributed the related rates of return and that have a high degree of overall level of the U.S. monetary authorities' foreign liquidity and credit quality. A significant portion of reserve assets more evenly between the ESF and the these balances is invested in German and Japanese Federal Reserve and left the resulting balances of government securities held directly or under repur- euros and yen roughly equal for both accounts (see chase agreement. As of March 31, outright holdings table 1). • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

400 Federal Reserve Bulletin • June 1999 1. Foreign currency holdings of U.S. monetary authorities based on current exchange rates, 1999:Q1 Millions of dollars Quarterly changes in balances by source BBaallaannccee,, BBaallaannccee.. IItteemm DDeecc.. 3311,, 11999988 Net purchases Effect of Investment Currency Interest accrual MMaarr.. 3311,, 11999999 and sales' sales2 income ad v j a u l s u t a m ti e o n n t s3 (net) and other4 FEDERAL RESERVE SYSTEM OPEN MARKET ACCOUNT EMU euro 12,824.0 -4,780.5 -18.7 118.7 -915.9 0 7,227.6 Japanese yen 6,846.9 1,418.9 0 3.0 -318.7 0 7,950.1 Total 19,670.9 -3,361.6 -18.7 121.7 -1,234.6 0 15,177.7 Interest receivables5 82.8 -29.1 53.7 Other cash flow from investments6 ... 14.8 -.9 13.9 Total 19,768.5 -3361.6 -18.7 121.7 -1,234.6 -30.0 15,245.3 U.S. TREASURY EXCHANGE STABILIZATION FUND (ESF) EMU euro 6,494.4 1,081.1 -10.4 45.9 -374.4 0 7,236.6 Japanese yen 9,799.4 -1,407.0 11.9 4.2 -458.4 0 7,950.1 Total 16,293.8 -325.9 1.5 50.1 -832.8 0 15,186.7 Interest receivables5 44.3 -12.0 32.3 Other cash flow from investments6 ... 21.4 -3.0 18.4 Total 16,359.5 -325.9 1.5 50.1 -832.8 -15.0 15,237.4 NOTE. Figures may not sum to totals because of rounding. 3. Foreign currency balances are marked to market monthly at month-end 1. Purchases and sales reflect changes in the foreign currency holdings as a exchange rates. result of the rebalancing between the SOMA and ESF portfolios and a with- 4. Includes the ESF's payment to meet its IMF quota. drawal of funds from the ESF euro portfolio to meet an IMF quota. 5. Interest receivables for the ESF are as of February 28, 1999, and are 2. Calculated using marked-to-market exchange rates; represents the differ- revalued at February 28, 1999, month-end exchange rates. Interest receivables ence between the sale exchange rate and the most recent revaluation exchange for the SOMA are carried at cost and are not marked to market until interest is rate in addition to the gain or loss resulting from changes in the market values paid. SOMA interest receivables are net of unearned interest collected. of the investments sold. See table 2 for realized profits and losses on sales of 6. Cash flow differences from payment and collection of funds on Japanese foreign currencies computed as the difference between the historic cost-of- Gensaki investments. acquisition exchange rate and the sale exchange rate, and the gain or loss resulting from the changes in the market values of the investments sold. 2. Net profits or losses (-) on U.S. Treasury 3. Currency arrangements, March 31, 1999 and Federal Reserve foreign exchange operations, Millions of dollars based on historical cost-of-acquisition exchange rates, 1999:Q1 Institution Amount of Outstanding, facility Mar. 31, 1999 Millions of dollars Federal Reserve Federal U.S. Treasury reciprocal currency Reserve Exchange arrangements Period and item System Open Stabilization Market Account Fund BBaannkk ooff CCaannaaddaa 22,,000000 00 BBaannkk ooff MMeexxiiccoo 33,,000000 00 Valuation profits and losses on outstanding assets and liabilities, TToottaall 55,,000000 00 Dec. 31, 1998 EMU euro 998.5 96.6 U.S. Treasury 11,,222299..88 11,,776666..00 Exchange Stabilization Fund currency arrangements Total 2,228.3 1,862.6 BBBaaannnkkk ooofff MMMeeexxxiiicccooo 33..000000 00 Realized profits and losses from foreign currency sates, TTToootttaaalll 33,,000000 00 Jan. 1, 1999-Mar. 31, 1999> EMU euro 55.7 -71.0 Japanese yen 0 208.0 Total 55.7 137.0 Valuation profits and losses on outstanding assets and liabilities, Mar. 31, 1999 EMU euro -10.6 -227.5 Japanese yen 911.2 1,123.3 Total 900.6 895.8 1. See table 1 for an explanation of these gains. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

401 Industrial Production and Capacity Utilization for April 1999 Released for publication May 14 output also grew 0.6 percent in April, its third straight monthly gain of close to percent. Some of the acceleration came in high-technology industries, but Industrial production, which had been essentially flat many other industries showed improvement as well. between October and February, accelerated in March At 134.0 percent of its 1992 average, industrial proand April. The total index was revised upward to duction in April was 2.0 percent higher than in April show a gain of 0.5 percent in March and is estimated 1998. Capacity utilization in manufacturing, mining, to have risen 0.6 percent in April. Manufacturing and electric and gas utilities rose 0.2 percentage point Industrial production and capacity utilization Ratio scale, 1992= 100 Percent of capacity Industrial production, market groups Ratio scale, 1992 = 100 Ratio scale, 1992 = 100 Ratio scale, 1992= 100 Ratio scale, 1992= 100 175 Equipment 160 145 130 115 Nondurable goods and energy 100 Defense and space 85 I I I I I I L J L J I L 1990 1992 1994 1996 ll 1990 1992 1994 1996 1998 All series are seasonally adjusted. Latest series, April. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

402 Federal Reserve Bulletin • June 1999 Industrial production and capacity utilization, April 1999 Industrial production, index, 1992=100 Percentage change Category 1999 1999' Apr. 1998 to Jan. Feb. Mar.r Apr. i Jan. Feb/ Mar.1 Apr.1 Apr. 1999 Total 132.3 132.5 133.2 134.0 .0 .1 .5 .6 2.0 Previous estimate 132.3 132.6 132.8 -.1 .3 .1 Major market groups Products, total2 124.5 124.6 125.0 125.5 .1 .1 .3 .4 1.2 Consumer goods ... 115.2 115.5 115.3 116.0 .2 .3 -.1 .6 -.4 Business equipment 167.3 167.2 168.3 168.9 -.4 .0 .7 .3 4.1 Construction supplies 132.4 131.7 131.5 132.0 1.1 -.5 -.2 .4 5.3 Materials 144.9 145.3 146.5 147.9 -.2 .3 .8 .9 3.3 Major industry groups Manufacturing 136.4 136.9 137.5 138.4 -.2 .4 .4 .6 2.5 Durable 161.4 161.7 162.8 164.2 -.1 .2 .7 .8 5.1 Nondurable 111.3 112.0 112.0 112.4 -.4 .6 .1 .3 -.6 Mining 98.5 97.7 97.0 97.1 -.5 -.8 -.7 .1 -8.1 Utilities 114.7 112.3 115.5 116.2 2.7 -2.1 2.8 .7 3.0 Capacity utilization, percent 1998 1999 Average, Low, High, 1967-98 1982 1988-89 Apr. Jan. Feb. Mar.1 Apr. i Total 82.1 71.1 85.4 82.6 80.4 80.2 80.4 80.6 4.5 Previous estimate 80.3 80.3 80.1 Manufacturing 81.1 69.0 85.7 81.7 79.5 79.5 79.6 79.8 5.0 Advanced processing 80.5 70.4 84.2 80.7 78.2 78.4 78.5 78.8 6.0 Primary processing . 82.4 66.2 88.9 84.6 83.0 82.8 82.7 83.0 2.6 Mining 87.5 80.3 88.0 88.2 81.5 80.8 80.2 80.2 1.1 Utilities 87.4 75.9 92.6 89.5 90.5 88.5 90.9 91.5 .7 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. in April, to 80.6 percent, down from 82.6 percent a of 0.7 percent in March. Although the assembly of year earlier. business vehicles gained substantially, a further drop in the production of civil transport aircraft caused the measure for transit equipment to decline again. The MARKET GROUPS index for industrial equipment, which had fallen over The production of consumer goods, which had been the two preceding quarters, turned up, and the index little changed in March, advanced 0.6 percent in for information processing equipment rose substan- April. The output of durable consumer goods jumped tially further; the latter increased more than 3 percent 2.1 percent, more than reversing a decline in March; over March and April. In contrast, the production of output gains were sizable for automotive products, farm machinery and equipment fell back after some carpeting and furniture, and home electronics. The recovery in February and March. The production of production of nondurable consumer goods rose defense and space equipment fell 2.0 percent in April, 0.2 percent, even though the output of tobacco prod- partly because of a strike at a major shipyard. ucts declined and the production of gasoline was cut The production of construction supplies, which had by disruptions at refineries. The advance in the pro- eased in February and March from the high level in duction of non-energy nondurable consumer goods January, resumed its growth. Over the past twelve was led by a continued recovery in the output of months, it has increased 5.3 percent. The index for consumer chemical products and an uptick in apparel business supplies, which had been stagnant for about production. a year, has picked up recently. The output of materi- The output of business equipment increased als increased 0.9 percent in April after an upward- 0.3 percent in April after an upward-revised advance revised gain of 0.8 percent in March. The indexes for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 403 both durable goods materials and energy materials The output of nondurable manufactured goods rose more than 1 percent, with large increases in advanced 0.3 percent; production has been in a slow semiconductors and computer parts for a second recovery since last fall and has increased about 1 permonth and a rebound in coal production from a dip in cent over the past three months. The output of tex- March. tile mill products, apparel, and paper and products rebounded from declines in March, while the production of chemicals and products and rubber and plastics products advanced further. The operating rate in INDUSTRY GROUPS nondurable manufacturing rose 0.2 percentage point. Production in manufacturing increased 0.6 percent, But at 80.6 percent, utilization for these industries is compared with 0.4 percent in the two preceding more than 2 percentage points below its level of April months. The factory operating rate rose 0.2 percent- 1998 and is nearly 3 percentage points below its age point, to 79.8 percent, but was down from long-term average. 81.7 percent last April. Durable goods production Despite rebounds in coal and metal ores, mining rose 0.8 percent, a gain similar to that in March, and production edged up only 0.1 percent; it has dropped the advances were again widespread. The increase in 10 percent over the past fifteen months. Drilling for the output of electrical machinery, boosted by an 011 and gas wells fell back in April to a very low acceleration of production in the semiconductor and level. Primarily because of the low level of oil and communications industries, rose to 2.5 percent in gas extraction, the rate of capacity utilization in min- April. The production of motor vehicles and parts ing remained at 80.2 percent in April, down from rose 2.3 percent, and computer output increased 88.2 percent twelve months earlier. nearly 2 percent. Production declined at facilities for Output at utilities, which had rebounded 2.8 periron and steel, aircraft and parts, and shipbuilding. cent in March, advanced another 0.7 percent and With the solid gains in production, the rate of capac- is up 3.0 percent from the level of April 1998. The ity utilization in durable manufacturing rose 0.3 per- operating rate at electric utilities is near its 1988-89 centage point, to 79.6 percent, a level close to its high, while utilization at gas utilities is below its 1967-98 average. 1967-98 average. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

404 Statements to the Congress Statement by Edward W. Kelley, Jr., Member, Board to our economy than those caused by Year 2000 of Governors of the Federal Reserve System, before computer problems themselves. The public's percepthe Committee on Banking and Financial Services, tion of the Year 2000 challenge and response to that U.S. House of Representatives, April 13, 1999 perception relative to our banking system is of critical importance to us all. The banking agencies are I appreciate the opportunity to appear before this increasingly turning their attention to public educacommittee to update you on Year 2000 issues. I will tion, and, in that regard, I welcome the opportunity describe the Federal Reserve's continuing efforts with this hearing affords to explain the Federal Reserve's respect to our contingency and event management perspective on the century date change. plans as a central bank to ensure that adequate sources of currency and liquidity are available, and summarize the special attention being given to main- CONTINGENCY PLANNING AND taining public confidence in the banking system. I EVENT MANAGEMENT will also focus on the progress of the banking industry in preparing for the new millennium and our Having worked extensively to correct the Year 2000 supervisory initiatives, where considerable progress computer problems in our systems, we are confident has been made since I last testified in September. that we will be fully prepared for the new millen- Next, I will provide an overview of our efforts to nium. Nevertheless, as the nation's central bank, the support the President's Year 2000 Conversion Coun- Federal Reserve is actively engaged in contingency cil and the international financial regulators' Joint and event management planning for any operational Year 2000 Council, and close with our perspective on disruptions or systemic risks. The Federal Reserve's legislative proposals relating to Year 2000.1 will also CDC Council, a group of our most senior officials, discuss the Board's strong support for passage of is coordinating contingency and event management H.R. 1094, which would amend the Federal Reserve planning across the Federal Reserve System to ensure Act to broaden the range of discount window loans a cohesive approach to our preparations. In addition, that may be used as collateral for Federal Reserve we are completing plans for our supervision function notes. that provide for monitoring and responding to devel- That is a lot of material to cover, and it reflects our opments during the transition to the Year 2000, extensive interest in and efforts to address the litany including any disruptions that may occur at financial of Year 2000 issues. We are approaching the last institutions or in key financial markets for which we months before the century date change (CDC) with a have responsibilities. These plans are being coordikeener understanding of the magnitude of the task nated with other federal, state, and foreign regulators the banking industry, our country, and the rest of and with the Year 2000 Response Center of the the world have been confronting. We are continuing President's Council on Year 2000 Conversion. our efforts to ensure that our financial system is safe and sound and ready for the century rollover. I am increasingly optimistic that the operational transition Business Resumption will go well and have come to believe that Year 2000 technical issues will not cause major problems in the The Federal Reserve's plans for ensuring operational financial markets of the United States. One issue I am continuity build upon existing business resumption concerned about and have raised with the press is contingency plans. As part of our standard business how to ensure that the public has reliable, complete processes, the Federal Reserve has long maintained information about the readiness of the financial serand tested comprehensive business resumption plans, vices industry and the other industrial and infrastrucwhich have proved successful in providing for our ture sectors of the country. Actions taken by the continued operations during past crisis situations public based upon fear or bad information rather than and natural disasters. Last fall, each of the Federal upon fact-based rationality may pose a greater threat Reserve's business functions completed assessments Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

405 of the adequacy of existing contingency plans for with other federal and state regulators as well as the addressing Year 2000 risks. These plans are being President's Council on Year 2000 Conversion. This enhanced to address issues unique to the century date should result in further streamlining and enhancechange. ments. Our event management plans should be sub- For example, we are identifying problems external stantially completed during the second quarter 1999 to the Federal Reserve that may arise when the date and will be tested during the third quarter 1999— changes to 2000, such as those affecting telecommu- with September 9, 1999, scheduled as our first operanications providers, utility companies, and key mar- tional date. ket participants. Based on available information, we do not expect widespread problems in these areas, but we nevertheless believe it prudent to develop Cash and Liquidity Issues action plans to mitigate or work around them should they occur. Between now and the century date The Federal Reserve does not believe that the public change, we will test and continue to refine these plans needs to hold excess cash in anticipation of the as necessary to optimize operational effectiveness at century rollover. Although there may be isolated the century rollover. The goal of the contingency problems, we expect that the usual payment methods planning process is to minimize the chance for sur- of checks, debit cards, and credit cards will operate. prise disruptions and to minimize their impact should Nevertheless, we recognize that there likely will be they occur. some increased demand for cash during the period surrounding the century rollover. In developing cash and liquidity contingency plans, depository institu- Year 2000 Event Management Plan tions have been advised and are taking steps to forecast and prepare for potential spikes in year-end cash Over the years, the Federal Reserve has demonstrated demands of their customers. Such plans should the ability to manage a wide range of crisis situations. address how to distribute cash to locations where it is Nevertheless, we are augmenting our existing com- most needed and provide for close coordination with munication and control structures to enhance our armored carriers and cash suppliers (their Federal ability to collect information and react to issues as Reserve Bank or correspondent bank). Some of the they develop during the next six months and, particu- best practices we've seen include plans to increase larly, during the "rollover period," that is, the last cash inventories ahead of seasonal and any anticifew days or weeks of 1999 and the early days of pated Year 2000-related rise in demand. They also 2000, as well as the leap year at the end of February. include advance identification of prudent trigger The objectives of our event management plan are to points to replenish currency supplies based upon customer demand that take into account the availabil- • Monitor and report the status of internal systems, ity and frequency of transportation arrangements. financial institutions and markets, infrastructure, and Equally important, they provide for a customer comother pertinent areas munication program that explains the Year 2000 • Maintain a consistent flow of information within problem, how the bank is preparing for it, and any the Federal Reserve, to our business partners, and to plans to work around minor disruptions in services the public at large that could affect access to the bank. We have • Identify potential or actual problems and resolve reminded banks that, as part of their Year 2000 conthem promptly. tingency cash planning, they should review their insurance policies and blanket bond limits to ensure The CDC Council has established an Event Man- they have sufficient coverage. agement Planning Team that is formulating recom- As I have said in previous testimony, we instituted mendations to meet these objectives. As with any plans to increase our inventory of currency as a complex institution, this is challenging because it is precautionary measure, and not because we believe necessary to integrate the myriad needs and functions the public should hold more cash because of the of all areas of the Federal Reserve System into one Year 2000. Some observers have suggested that this coordinated and cohesive plan. represents a contradictory message to the public. Not The Event Management Planning Team presented so. Regardless of our view that consumers do not a number of recommendations to the CDC Council need to hold excess cash during this period, the Federal Reserve has been given the mission by the last week and will continue to refine them in coming Congress to provide currency to the public as months. As we finalize our plans, we will coordinate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

406 Federal Reserve Bulletin • June 1999 demanded, and we will be prepared to fulfill this ing the Year 2000 issue and the Federal Reserve's responsibility whatever the level of demand might Year 2000 program will soon be available. Many be. Federal Reserve officials as well as several Board Another related issue for the central bank is the members have been giving speeches on Year 2000. possibility that despite the best efforts of some Reserve Banks have scheduled press conferences and depository institutions, they may encounter problems briefing sessions for the media, and the media kit that resulting from or affecting relationships with counter- we provide is updated regularly to include current parties and customers. To the extent these problems information and new materials. reduce their liquidity, and other sources of funding There are a number of other communications promay no longer be reasonably available, the Federal grams under way, including joint programs with the Reserve is prepared to lend to provide liquidity with other bank regulatory agencies as well as with bankadequate collateral. ing industry trade groups. In this regard, the regu- Depository institutions are expected to address latory agencies are sponsoring consumer research, liquidity issues in their contingency plans and to take planning a consumer awareness video, developing a steps necessary to facilitate the process of borrowing consumer checklist for financial institution customfrom the Federal Reserve, for example, by complet- ers, and planning to hold joint press briefings. ing necessary documentation and prepositioning col- Many people would like to have an ironclad guarlateral now rather than waiting for the actual event antee that there will be no Year 2000 disruptions, but when there may be other organizations seeking addi- that guarantee cannot be made. We cannot know in tional funding at the same time. We have sent a letter advance exactly how the millennium rollover will go. to all depository institutions encouraging them to The truth is that no one can guarantee that everything consider including the Federal Reserve, as lender of will work perfectly even later this morning, but we last resort, in their funding contingency plans and, have every confidence that it will. In fact, banking if they do, to complete necessary documentation and systems and utilities experience brief disruptions collateral arrangements as soon as possible. in service from time to time that are transparent to consumers or present only minor inconveniences. Public confidence does not require that everyone believe that everything will work perfectly all the PUBLIC AFFAIRS PROGRAM time. Rather, the public needs to be confident that the Let me go back to an earlier comment I made regard- information it is receiving is complete, reliable, baling the public's perception of the Year 2000 issue. anced, and adequate to identify actions appropriate to We believe that the best way to engender a strong and their own circumstances. positive public attitude is through open and candid discussion. The public is getting information from a variety of sources. We believe that it is important to BANK SUPERVISION ensure that the public can look to the Federal Reserve System as a source of accurate information regarding Turning to our efforts with respect to the readiness of the readiness of the banking industry and the pay- individual banking organizations, let me emphasize ments mechanisms through the century rollover. Fed- today, as I have in the past, that while the bank eral Reserve communications activities have been supervisors have appropriately provided significant focused on providing accurate, consistent informa- guidance and meaningful incentives to the industry to tion to the public and keeping the media informed prepare for the Year 2000, we cannot be responsible about our Year 2000 activities. for ensuring the readiness of any banking organiza- The Federal Reserve has initiated a series of public tion. The boards of directors and senior management affairs activities related to the Year 2000 designed of banks are responsible for ensuring that their orgato provide the public with the information it needs. nizations are able to provide uninterrupted services In this regard, the staff is working actively with the and operate in a safe and sound manner after the communications team for the President's Council century date change. on Year 2000 Conversion to develop responses to With that said, over the past few months the Fedconsumer questions that come in on the Council's eral Reserve and the banking agencies have been Year 2000 "hotline." A Year 2000 consumer web active in responding to requests for additional guidpage is being designed to provide easy access to ance about the difficult tasks of testing and continthe information already available on the Federal gency planning and the importance of effective cus- Reserve's Year 2000 web site. A brochure describ- tomer communication programs. We also have been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 407 extremely active in banker outreach and education banks to establish customer communication programs programs across the country, and in participating and train staff so that they are able to respond to in domestic and international securities industry- customer inquiries about their readiness. payment systems work groups such as the Global 2000 Co-ordinating Group. Even more important, we have completed a second round of on-site Year 2000 Outreach to Banking Industry supervisory reviews of the banking organizations we supervise to assess their progress in testing remedi- We stress the importance of customer communicaated systems, evaluating customer and counterparty tions whenever we meet with bankers, and we do that risk, and in developing their business resumption often. We participated in 101 programs during the contingency plans. fourth quarter 1998 that were attended by 5,000 participants. We participated in a total of 497 programs during 1998 that were attended by more than Issuance of Supervisory Guidance 26,000 participants. So far in 1999, we have participated in more than 75 programs reaching more than Shortly after my testimony to you in September, on 6,600 participants. We think these programs have October 15, 1998, the Federal Financial Institutions been extremely useful to all parties because they Examination Council (FFIEC) agencies adopted provide attendees with an opportunity to hear about "Interagency Guidelines Establishing Year 2000 our expectations "up close and personal" and to ask Standards for Safety and Soundness," which apply questions. They also provide us with an opportunity to all insured depository institutions. The guidelines to hear about the concerns, problems, and accomincorporate important elements of previously issued plishments being experienced by participants and FFIEC guidance, including aggressive milestone their colleagues. dates for testing and implementation. The guidelines were issued under section 39 of the Federal Deposit Insurance Act, which authorizes the Federal Reserve Phase II Supervision Program and other banking agencies to direct an insured depository institution to prepare an acceptable correc- The Federal Reserve has just completed Phase II tive action plan and comply with such a plan, without of its Year 2000 supervision program, which ran having to initiate an administrative proceeding. The from July 1, 1998, through March 31, 1999. During guidelines, therefore, provide an expedited enforce- Phase II we performed a risk-focused Year 2000 ment tool to address serious Year 2000 deficiencies at assessment of approximately 1,500 supervised instiinsured depository institutions and may be useful in tutions, including state member banks, bank holding addressing any serious deficiencies over the next few companies with at least $1 billion in total assets or months, when time is of the essence. with significant information processing activities, and On December 11, 1998, the FFIEC issued "Ques- U.S. branches and agencies of certain foreign banking tions and Answers Regarding Year 2000 Contingency organizations. Our Phase II program called for an Planning" to answer frequently asked questions evaluation of a bank's overall Year 2000 program and received by the agencies. The statement underscores progress relative to FFIEC guidelines and milestone the importance of implementing an effective business dates. Based on our reviews, 95 percent of the bankresumption plan that establishes a course of action ing organizations we supervise are making satisfacto resume core business processes in the event of a tory progress in their Year 2000 programs and are system failure. in substantial compliance with the FFIEC milestone On February 17, 1999, the FFIEC issued additional dates. guidance to assist financial institutions with customer Any financial institution rated less than satisfactory communications on the Year 2000. The guidance is required to file an acceptable corrective action plan supplements the May 1998 FFIEC policy statement within thirty days of receiving a deficiency notificaon Year 2000 Customer Awareness Programs and tion letter from the Federal Reserve. These instituemphasizes that maintaining customer confidence tions are placed on an intensified monthly monitoring in the financial services industry needs to be a top plan, and depending on the severity of the deficienpriority of bank management. The guidance outlines cies identified, the use of an appropriate informal or key subject matters that could be incorporated into formal supervisory action is considered. This "watch bank customer communication statements. The two list" program for monitoring less-than-satisfactory papers together emphasize that it is essential for banks has proved extremely effective in bringing the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

408 Federal Reserve Bulletin • June 1999 issues to the attention of boards of directors and their own environments. Proxy testing has been purmanagement and obtaining an appropriate response. sued by many institutions that rely on a specific We find that most banks are able to intensify their vendor software product for its core banking systems programs and begin making satisfactory progress when their hardware-software platform and operatwithin a few months. ing environment are identical to the one that was used For the small minority of financial organizations to perform direct testing with the servicer. National found to be making less-than-satisfactory progress, and regional service providers have also implemented the deficiencies most frequently noted during Year 2000-ready services and are testing with their Phase II reviews have been relatively manageable customers. Overall, the service providers and softand include delays in completing evaluations of cus- ware vendors have made meaningful progress in tomer risk, weaknesses or delays in completing reme- meeting the testing and implementation needs of their diation or testing programs, and insufficient com- financial institution customers. The few service promunication between management and boards of viders that are not rated satisfactory are subject to directors. The progress of institutions that lagged intense oversight by the FFIEC agencies, and the behind the December 31, 1998, FFIEC milestone review reports detailing deficiencies or problems for completion of internal testing is being closely being experienced have been sent to their bank monitored. customers. With respect to the readiness of bank customers While I'm on the subject of testing with service and counterparties, it does appear that banks are providers, I would like to update you on the Federal formulating policies for managing credit risk and are Reserve's customer testing program. As I informed incorporating Year 2000 considerations into their you last September, beginning June 29, 1998, the underwriting and loan-review practices. We are just Federal Reserve is offering customers the opportunity beginning to see instances in which credit standards to test future-dated transactions for Fedwire funds and collateral requirements are being tightened when and securities transfer, Fed Automated Clearing a counterparty or customer is not able to provide House, the Integrated Accounting System, Treasury sufficient assurances of Year 2000 readiness. We Tax and Loan, Check, and other services with elecexpect to see an increase in the number of banks tronic data exchanges. To date, more than 8,000 acting to minimize credit risks over the next few institutions have tested with us, and the Financial months. Management Service of the U.S. Treasury has con- In addition to reviewing the status of banking ducted interface testing for social security payments. organizations, the Federal Reserve participates with We are continuing to offer testing opportunities the other FFIEC agencies in Year 2000 reviews of through the end of 1999. certain large national and regional data processing service providers and software vendors serving financial institutions. Sixteen national Multiregional Data Phase III Supervision Program Processing Servicers (MDPS), twelve national Shared Application Software Review (SASR) software In January, we distributed guidance on our Phase III vendors, and approximately 250 other independent program, including intensified monitoring procedures service providers and software vendors are in the for institutions that are rated less than satisfactory, review program. Because of their importance to the and established broad criteria under which it will be Year 2000 readiness of financial institutions, service presumed that the Federal Reserve will take an inforproviders and software vendors subject to review by mal or formal enforcement action against such an the FFIEC agencies were reviewed on site at least institution. These procedures provide guidelines for twice by December 31, 1998. Review reports for addressing problem institutions through the century service providers and software vendors are sent to date change. banks that are direct customers for their information. Looking forward to the critical months remaining These entities are also subject to quarterly reviews until the century date change, the Federal Reserve and were contacted during the first quarter of 1999 to has initiated a Phase III program for monitoring the assess the availability of testing programs for their Year 2000 readiness of banking organizations. Our bank customers. Phase III supervision program—which began April 1 Based on reviews completed and other available and runs through December 31, 1999—calls for riskinformation, nearly all vendor software products have based Year 2000 reviews of financial institutions been renovated and internally tested, and financial during the second and third quarters of 1999 to institutions are actively testing these products within confirm that all FFIEC milestone dates have been Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 409 met. Our examiners have been instructed to confirm While ratings provide an objective measure of our that every state member bank is in compliance with assessment of an organization's progress relative to FFIEC guidelines by the end of the third quarter the FFIEC's milestones, during Phase III the actual 1999. Year 2000 status of an organization through and into Financial institutions of special importance to key the Year 2000 will be the focus of our supervisory financial and payment systems in the United States activities. will be subject to at least monthly contacts after June Our Reserve Banks will be assessing each financial 1999, and the top fifty bank holding companies will institution reviewed under the program by the end be subject to at least quarterly contacts, to ensure that of the third quarter 1999. Obviously we want these implementation is completed and that appropriate assessments to reflect the Year 2000 progress and risk-management policies and contingency plans are status of each banking organization accurately, and up to date. Service providers and software vendors Reserve Banks to be consistent in assigning ratings that service large numbers of banking organizations to organizations within their Districts. In this regard, will continue to be subject to at least quarterly con- each Reserve Bank will have an internal review protacts to review the status of third-party testing and cess to ensure that organizations that are similarly contingency planning. situated relative to the extent of work remaining will By June 30, 1999, financial institutions are be comparably rated. Moreover, in our discussions expected to comply with critical FFIEC milestone with Reserve Banks, we have established certain dates for completing all Year 2000 internal and exter- parameters that limit somewhat the flexibility examnal testing, implementation of remediated mission- iners have when rating an organization. critical systems, and contingency planning. A major Our staff in Washington reviews all reports for emphasis of our supervision program through the organizations rated less than satisfactory as well as century date change will be the adequacy of con- a sampling of "satisfactory" reports to ensure that tingency plans, which should incorporate not only there is consistency across Districts. Implicit in all operational issues but liquidity, funding, customer- of this is the understanding that our examiners have counterparty risk, customer and community commu- a "hands on" understanding of each organization— nications, and other subject matters. Through the end including the scope of its Year 2000 project and of the year, financial institutions will be expected to status, the track record of management in responding continue to monitor customer and counterparty credit to challenges and meeting regulatory directives, and risk and to update contingency plans as necessary the adequacy of the organization's resources. These to respond to internal and external events or other factors provide the depth and intelligence necessary Year 2000-related developments that could affect to formulate realistic and fair appraisals of banking operations. organizations. I must emphasize that the FFIEC milestone dates are not hard and fast deadlines but rather important benchmarks for ensuring that a financial institution FFIEC Contingency Planning Working Group is managing its Year 2000 program in a prudent manner—one that provides a six-month cushion to tie There is one other supervisory initiative I would like up loose ends, continue testing activities, complete to mention. The FFIEC agencies have established a work on non-mission-critical systems, and observe Year 2000 Contingency Planning Working Group to renovated and newly installed systems in a produc- identify and coordinate contingency planning issues tion environment. During Phase III reviews, we will of common interest. The group has agreed upon apply our best judgment in assessing an institution's many areas of common interest and is considering progress in meeting FFIEC milestones, most impor- how contingency planning efforts in these areas can tant the June 30 date. Let me caution, however, that be coordinated among the agencies. The subjects this process is very complex, and it should not be for review include communications with the pubsurprising to see some testing activity prescribed by lic, monitoring of large institutions, internationalthe FFIEC policy statements extend past the mile- payment systems, liquidity, fraud, nonviable and stone dates. If during our Phase III reviews we find viable financial institutions, service providers and that it is taking an institution a little longer to com- software vendors, and resource sharing among agenplete its preparations, we will assess the risk pre- cies. The Conference of State Banking Supervisors sented and respond accordingly, either through also participates. When appropriate, the group is increased monitoring and supervision or through preparing guidance and planning how to coordinate intelligent use of enforcement actions and disclosure. responses to problems that may arise in these areas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

410 Federal Reserve Bulletin • June 1999 PRESIDENT'S COUNCIL ON YEAR 2000 ment Systems, the International Association of Insur- CONVERSION FINANCIAL SECTOR GROUP ance Supervisors, and the International Organization of Securities Commissions. My colleague Governor The Federal Reserve has been extremely active Roger Ferguson chairs the council. The council proin assisting the government's coordination of the vides a vital forum for communication among internation's Year 2000 preparations. The Federal Reserve national regulatory and supervisory authorities on represents the banking industry on the President's Year 2000 issues. It also serves as a point of contact Council on Year 2000 Conversion, and a senior Board with various national and international private sector official chairs the Financial Sector Group (FSG), initiatives. which is made up of twenty-seven U.S. government Among its initiatives, the council has developed agencies and corporations, government-sponsored a global supervisory contact list of more than 600 enterprises, and state regulatory associations that play financial regulators and initiated several mechanisms a role in the credit, equity, debt and exchange-traded for communicating with them. It is publishing a derivatives markets. The financial sector includes series of bulletins on different Year 2000 topics and depository institutions, credit unions, the securities has issued six guidance papers on key phases in the industry, stock markets, clearing and settlement firms, Year 2000 process, including papers on testing, inforand the insurance industry. The sector group also mation sharing, and contingency planning, which are includes more than fifty trade associations that repre- published on its web site. The council has conducted sent U.S. financial market participants. regional Year 2000 roundtables for regulators in The FSG is charged with increasing awareness of Europe, Asia-Pacific, North and South America and the importance of Year 2000 readiness in the finan- the Caribbean, the Middle East, and Africa. These cial services industry, as well as promoting communi- conferences provide an excellent means of bringing cations and cooperation with public and private orga- supervisors together to discuss common interests nizations within the sector. It serves as a forum for within specific geographic areas. Another round of addressing interagency issues and developing posi- regional meetings is being planned for this year, with tions on important matters before the President's a focus on the important issues of implementing Council. For example, the FSG recently took the lead remediated systems, information sharing, testing, and in developing a cross-sector paper examining the contingency planning. pros and cons of establishing a special Year 2000 The international arena remains an area that needs holiday and related proposals for the President's to be watched closely by all market participants and Council. The FSG is also assisting in the Council's supervisors. The Year 2000 readiness survey conevent management planning and will participate in its ducted by the Basle Committee on Banking Supervinational communication center during the last quarter sion late last year identified significant progress in the of 1999 and the first quarter of 2000. international financial community's efforts to prepare The FSG sponsored a trade association summit for the century date change and help prevent serious meeting in December 1998. The theme of the meet- problems. Of the 100 banking supervisors that ing was infrastructure readiness, and Senator Bennett responded to the survey, all indicated that they was our keynote speaker. More than 250 trade asso- had contacted their banks regarding the Year 2000 ciation representatives and members of the press issue, and the large majority—including all major attended this informative event, which significantly markets—had initiated supervisory programs to expanded the dialogue and opened the door for better ensure that banks allocate the necessary resources coordination of Year 2000 efforts between the finan- to identify any potential Year 2000 problems. Howcial services industry and the electric power and ever, much work remains to be done, particularly in telecommunications sectors. The FSG is sponsoring a smaller, less industrial and emerging countries. second summit on April 15, addressing the themes of While we do not know with certainty what the contingency planning and customer awareness. Con- outcome will be around the globe, the level of gressman Leach will be our keynote speaker. Year 2000 awareness of financial services regulators is now quite high. Moreover, the effect of applying the FFIEC policy statements to the U.S. operations of foreign banking organizations had a salutary effect in JOINT YEAR 2000 COUNCIL making their parent organizations abroad aware of The Joint Year 2000 Council was established in April the problem and the need to formulate Year 2000 1998 by the Basle Committee on Banking Super- programs. In light of the recent increase in informavision, the G-10 Committee on Payment and Settle- tion showing that the Year 2000 problem is receiving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 411 increased attention and resources, and that progress Year 2000 Holiday is being made abroad, it is increasingly likely that Year 2000 technical issues will not cause significant Various segments of the financial services industry, problems in the most active foreign global markets. particularly those operating abroad, have suggested However, to achieve that goal, it is critical that the that governments adopt an additional holiday around current momentum and level of resources be main- the century date change. There are a number of dates tained. It also is essential that countries coordinate proposed for a Year 2000 holiday—Friday, Decemwith each other across financial and other sectors to ber 31; Monday, January 3; and even Tuesday, Janshare information and develop contingency plans in uary 4—although there does not appear to be any areas of common interest. consensus on which date would be most desirable. Adding to the uncertainty is the question whether the holiday should be mandatory (requiring all businesses to close) or permissive (permitting but not LEGISLATIVE MATTERS requiring businesses to close). In the United States Federal Reserve Note Collateral most holidays are permissive, and December 31 will be such a federal holiday. The Federal Reserve The Board strongly supports adoption of H.R. 1094, announced last year that the Reserve Banks will be which would amend the Federal Reserve Act to open for business on that day and on Monday, Janubroaden the range of discount window loans that may ary 3, 2000, and we understand that most businesses be used as collateral for Federal Reserve notes. Sec- plan to be open on those days as well. tion 16 of the Federal Reserve Act requires that the We do not support the concept of a special Federal Reserve collateralize Federal Reserve notes Year 2000 holiday. Some have suggested that a when they are issued. In other words, we are required Year 2000 holiday facilitate the transition to the next to hold certain kinds of assets in an amount at least century. For example, a December 31, 1999, holiday equal to the amount of currency in the hands of the would provide additional time to complete end-ofpublic. The list of eligible collateral includes Trea- day (December 30) as well as at least some end-ofsury and federal agency securities, gold certificates, quarter and end-of-year processing before the rollspecial drawing right certificates, foreign currencies, over to January 1. A January 3, 2000, holiday—as and discount window loans made under sec- contemplated by H.J. Res. 14—would provide an tion 13 of the Federal Reserve Act. additional day for organizations to confirm that com- The reference to discount window loans made puter, telecommunications, and embedded systems under section 13 was in the original Federal Reserve are operating properly and to identify and resolve any Act. Subsequently, however, when the Federal Year 2000 disruptions that may occur, although, since Reserve Act, including section 13, was amended to the holiday would be permissive, the extent to which allow discount window loans to be made against a organizations would take advantage of it is unclear, wider array of collateral, section 16 was not similarly and it could engender even more confusion as to who amended. Thus, section 16 currently limits the types is open and who is not. The recently proposed Januof discount window loans the Federal Reserve can ary 4 holiday purportedly would provide time to use to collateralize the currency. For example, certain process and react to any problems that appear on the discount window loans under section 10B of the act first business day of the new millennium. secured by mortgages on one- to four-family resi- In our view, the drawbacks to a Year 2000 holiday dences cannot be used. The margin of available extra are significant and include additional operational burcurrency collateral has been shrinking because of dens, potential contractual and taxation issues, and the growth of retail sweep accounts, which reduces potential adverse public reaction. The adoption of reserve balances, causing a corresponding reduc- a mandatory Year 2000 holiday may require banks tion in Treasury securities held by Reserve Banks. In to initiate additional procedural and operational this context and in light of the potential for deposi- changes. Internal systems would have to be reprotory institutions to seek access to the discount win- grammed to include the new holiday and to treat it as dow because of events related to the Year 2000, we a nonbusiness day for purposes of completing transbelieve that it would be prudent to amend the Federal actions. Because these changes are date-related, sys- Reserve Act to expand the types of assets eligible to tems that already have been remediated would require collateralize the currency to include all types of dis- additional Year 2000 testing to ensure that the count window loans, thereby assuring flexibility in changes did not inadvertently create date-related protimes of high loan demand. cessing problems. Banks would have to revise their Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

412 Federal Reserve Bulletin • June 1999 test scripts, create different future-dated computing be considered as part of their contingency planning. environments to simulate the new sequence of busi- While this initially may seem to be a prudent ness days, generate new test data to reflect the holi- approach, the premise underlying the proposal must day, and then retest systems that were previously be that either the financial system will be unable to designated as Year 2000 ready. This would place deliver payments to recipients' bank accounts or that, significant additional burdens on firms and may once payments have been delivered, recipients will increase, rather than reduce, the risk of disruption. be unable to use those funds because of problems at Moreover, the task would divert already scarce their banks. With respect to the ability of the financial resources away from the primary task of completing system to deliver payments to banks, we have a high Year 2000 testing, implementation, and contingency degree of confidence that the Federal Reserve will planning. We should understand that all of this work continue to process payments during this period. Furwould have to occur long after the FFIEC milestone ther, our understanding of the readiness of privatedates for completion of testing and implementation of sector providers of payment services, gained through remediated systems. our supervisory efforts and the efforts of the other Declaring a new Year 2000 holiday would also financial supervisory agencies, gives us confidence further increase transaction volume on the last and that other wholesale providers of payments services first business days of the year, when volume is tradi- will also continue to process payments during this tionally higher than average. This may exacerbate period. workloads on adjacent days, complicating the transi- With respect to individuals' and businesses' ability tion and the resolution of any problems. A special to use their funds at their banks, we believe that it Year 2000 holiday would also affect contractual and is reasonable to assume, based on the Year 2000 other payment obligations, and there would be poten- progress being made by the banking industry, that tial tax implications attendant to any pre- or post- access to those funds will continue unabated. To Year 2000 payments made as a result of the new assume otherwise could engender problems more holiday. severe than the problems that people are seeking to Finally, and equally troubling, changes to existing avoid. For example, if a large number of individuals holiday laws would send a signal to the public that interpret an early payment to mean that they will be the government has serious concerns about the poten- unable to access their bank account, or make paytial for significant Year 2000 problems within the ments by other means, such as credit cards, for some financial services industry. We do not believe signifi- period, they may seek to withdraw large quantities of cant problems will occur, and we are opposed to cash. Moreover, cash is in many respects an ineffitaking actions that could unnecessarily erode public cient payment vehicle—the risk of loss or theft is confidence in the industry, where erosion of confi- great, and its delivery to remote payees can be diffidence can create significant destabilizing effects on cult and time-consuming. While there may be parour economy. ticular circumstances that warrant rescheduling pay- The Federal Reserve first discussed the holiday ments during the Year 2000 rollover period, we issue with the financial industry more than a year would caution against actions that may themselves ago. At that time, proponents of a Year 2000 holiday lead to problems as severe or even more severe than emphasized that the decision must be made no later the problems that they are designed to avoid. than the first quarter 1998 for organizations to derive the intended benefits without incurring undue costs and risks. They correctly believed that declaration of Credit Union Liquidity a Year 2000 holiday at a later time would impede an organization's ability to limit changes to remediated In an area related to issues of cash availability and systems during the period surrounding the century liquidity of financial institutions, the Federal Reserve date change. Indeed, many institutions such as the has been working with representatives of the credit Federal Reserve have adopted change management union industry and the National Credit Union Adminpolicies in order to limit the risks to information istration to address logistical problems that might systems posed by changes in the second half of 1999. arise because of any need for a large number of credit Changes in holidays or payment schedules at this late unions to obtain liquidity beyond the considerable date would run counter to the risk mitigation objec- amount they already have available. Although this tives of these policies. work is still in the preliminary stages, we are confi- Some agencies have asked whether rescheduling dent that a relatively cost-effective, efficient means payments from early January to late December should can be found to channel funds through the corporate Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 413 credit union system to natural person credit unions in a federal banking agency as defined in the Federal need of liquidity. Such a structure would seek to rely Deposit Insurance Act. to the extent possible on existing credit relationships Finally, with respect to the bona fide error proviand documentation. sions contained in many consumer laws, in our view, computer malfunctions and programming errors due to Year 2000 problems appear to be covered by Litigation Issues statutory provisions dealing with "bona fide errors." There has been a great deal of talk about litigation Accordingly, we do not see a need for additional that may arise because of Year 2000 problems. This clarifying legislation. has led to the introduction of a number of bills designed to limit litigation relating to Year 2000, including H.R. 775, the proposed "Year 2000 Readi- CONCLUSION ness and Responsibility Act," as well as concerns whether existing consumer laws limiting liability for In closing, I would like to thank the committee for bona fide errors should be clarified. We do not have a the opportunity to share this information with you. position as to whether H.R. 775 should be adopted. We appreciate your concern and assistance in identi- We do believe that no legislation should be construed fying the appropriate focus of our efforts during the to limit the financial supervisory agencies' ability last months before the Year 2000. Financial instituto bring enforcement actions based on Year 2000- tions are continuing their efforts and making signifirelated problems. To do so could interfere with the cant progress in renovating their systems to prepare agencies' ability to encourage supervised institutions for the century rollover. The Federal Reserve is comto address Year 2000 issues appropriately. Accord- mitted to a rigorous program of industry testing and ingly, we recommend that any legislation limiting contingency planning and, through our supervisory liability in civil actions should exclude actions initiatives, to identifying those organizations that brought by a federal, state, or other public entity, most need to apply additional attention to Year 2000 agency, or authority acting in a regulatory, supervi- readiness programs. We are committed to working sory, or enforcement capacity. A similar exclusion with national and international counterparts and was incorporated in the Year 2000 Information and other groups, including the President's Council on Readiness Disclosure Act. Year 2000 Conversion, the Joint Year 2000 Council, The issue of banking agency enforcement authority and industry trade associations to assist the industry may be of particular significance with respect to in preparing for the rollover to the Year 2000.1 section 605 of H.R. 775, "Suspension of Penalties for Certain Year 2000 Failures by Small Business Con- 1. Important Year 2000 web sites are the following: cerns." That section would provide that, as a general Federal Reserve Year 2000 web site— rule, no agency shall impose a civil penalty on a http://www.federalreserve.gov/y2k/ small business concern for a first-time error resulting Federal Reserve Century Date Change Project— from a Year 2000 failure. Some banking institutions http://www.frbsf.org/fiservices/cdc/ and their affiliates may come within the definition Federal Financial Institutions Examination Council— http://www.ffiec.gov/ of small business concerns to which this provision applies. Again, we are concerned that this provision President's Council on Year 2000 Conversion— http://www.y2k.gov/ could interfere with the financial supervisory agen- Bank for International Settlements and Joint Year 2000 Council-— cies' ability to encourage supervised institutions to http://www.bis.org/ address Year 2000 issues appropriately and urge that Global 2000 Co-ordinating Group— this limitation not apply to any penalty imposed by http://www.global2k.org/ Statement by Kenneth D. Buckley, Assistant Director, ing to ensure the timely delivery of veterans' benefit Division of Reserve Bank Operations and Payment payments made by direct deposit during the rollover Systems, Board of Governors of the Federal Reserve to the Year 2000. Veterans and their families depend System, before the Committee on Veterans' Affairs, on Federal Reserve systems to reliably deliver their U.S. Senate, April 20,1999 payments electronically to their banks. We believe that they should feel confident that their benefits will I am pleased to appear before the committee to be paid as usual during and after the rollover to the discuss the arrangements the Federal Reserve is mak- Year 2000. I will review the Federal Reserve's role Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

414 Federal Reserve Bulletin • June 1999 in processing these payments and address the Fed- The Federal Reserve's mission-critical systems eral Reserve's Year 2000 preparations. I will also be used to deliver veterans' benefit payments through pleased to answer any questions you may have. the ACH are Year 2000 ready and in production. The Federal Reserve Banks provide a variety of FMS has tested its interface to the Fed ACH system payment services to banks and U.S. government and has reported no problems. In fact, the General agencies.1 These services range from electronic pay- Accounting Office (GAO) recently reviewed critical ment mechanisms, such as Fed wire funds transfer Federal Reserve systems, including Fed ACH, and and automated clearing house (Fed ACH), to check determined that the Federal Reserve has effective collection. As fiscal agents of the United States, the management controls for its internal Year 2000 pro- Reserve Banks use these services to collect and dis- gram. The GAO's report, which was released earlier burse payments on behalf of government agencies. this month, noted no concerns about the Federal Government payments are typically originated by Reserve's Year 2000 readiness.3-4 federal agencies through the Treasury Department's Beginning in June 1998, the Federal Reserve Financial Management Service (FMS), which in turn offered to the Treasury, other government agencies, delivers payment instructions to the Federal Reserve banks, and processors the opportunity to test futurefor subsequent delivery to banks or processors. Most dated ACH transactions and related accounting funcgovernment payments are made electronically using tions. We are encouraging all banks, especially those the Fed ACH service. that originate a large volume of ACH payments, to For veterans' benefit payments, the Department of test with the Federal Reserve as soon as possible. As Veterans Affairs provides instructions to FMS about of last week, about 6,400 banks, representing 67 perthe payments to be made and the method to be used. cent of the Federal Reserve's ACH customers, had (Currently 75 percent of veterans' payments are made tested their automated interfaces with the Federal by ACH and 25 percent by check.2) FMS in turn Reserve by exchanging Fed ACH test files that concreates an ACH payments file that includes the pay- tain post-1999 dates. We will continue to offer testing ment amount, beneficiary identification, settlement opportunities through early 2000. date, receiving bank routing information, and total We realize that the success of our Year 2000 prodollar amount for all payments in the file. FMS sends gram will be measured by our ability, and the pubthe file electronically to the Federal Reserve three lic's confidence in our ability, to conduct business on to four days before the payment date. The Fed ACH and after January 3, 2000. Thus, the Federal Reserve software edits the data for accuracy, sorts the pay- will have contingency and business resumption plans ment information by receiving bank, sends a payment in place for ACH payments. We are coordinating file to each receiving bank, and initiates accounting these efforts with the Treasury and other government entries that will debit the Treasury's account and agencies. Backup arrangements being offered by the credit the receiving banks' accounts on the payment Reserve Banks include magnetic tape options and date. Receiving banks credit customers' accounts on paper listings from which banks could post accounts. the scheduled payment date. We believe, however, that if there are any disrup- Because of our intermediary role as a payments tions, they will be mild and short-lived. processor, the Federal Reserve's Year 2000 readiness Boards of directors and senior managers of banks preparations involve both our internal systems and are working to ensure the Year 2000 readiness of our external interfaces to other organizations, such as their systems. Bank regulators are providing guidbanks and FMS. Along with other federal banking ance, encouragement, and strong incentives to the regulators, we have advised banks to test, at a mini- banking industry to address the Year 2000 chalmum, all mission-critical systems by June 30, 1999, lenges, but management bears the responsibility for and we have provided the facility for banks to test their institutions' readiness. In 1997, the Federal their interfaces with us. We are also working with Reserve and the other Federal Financial Institutions US. government agencies to test their automated Examination Council agencies started a three-phase interfaces with the Federal Reserve by exchanging Year 2000 supervision program for the banks they ACH test files. oversee. This program is intended to elevate the 3. Year 2000 Computing Crisis: Federal Reserve Has Established Effective Year 2000 Management Controls for Internal Systems Con- 1. For purposes of this discussion, the term "bank" includes all version (GAO/AIMD-99-78, April 9, 1999). depository institutions, such as savings and loan associations and 4. In addition, major private-sector ACH operators—the American credit unions. Clearing House Association, the New York Automated Clearing 2. Federal Reserve Banks pay Treasury-issued checks as fiscal House, and Visa USA—have reported that their computer systems are agents of the Treasury. Year 2000 ready. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 415 awareness of Year 2000 issues, monitor the progress priorities. Internal Federal Reserve systems used to of banks' Year 2000 planning and readiness efforts, deliver veterans' benefit payments have been modiand require banks that are lagging in their Year 2000 fied, tested, and placed into production. As I have preparedness efforts to develop specific plans to rem- indicated, testing with banks and the Treasury is edy deficiencies. Based on the assessments of bank continuing. Extensive business resumption plans supervisors at the Federal Reserve and the other are being developed and reviewed. Every bank's banking agencies, we believe that the industry has Year 2000 preparedness efforts have been examined made great progress in Year 2000 preparedness. twice, and the Federal Reserve, like the other regula- The Federal Reserve actively participates in the tors, has found that the majority of institutions are President's Council on Year 2000 Conversion, and a making satisfactory progress in their Year 2000 readisenior Federal Reserve official chairs the Council's ness programs. Those institutions identified as lag- Financial Sector Group. This group comprises federal ging in their Year 2000 efforts have been targeted agencies with large payment volumes, including the for additional follow-up and, if necessary, formal Department of Veterans Affairs. We are also coordi- enforcement actions. While we expect that the indusnating closely with numerous other government and try may experience some minor or localized probindustry entities to ensure that payments flow nor- lems during the rollover, the Federal Reserve fully mally as the year rolls over. expects to conduct business as usual through the In conclusion, preparation for the Year 2000 will Year 2000. Veterans and their families should feel continue to be one of the Federal Reserve's highest confident that their benefits will be paid as usual. Statement by Richard A. Small, Assistant Director, to deter money laundering through financial institu- Division of Banking Supervision and Regulation, tions by, among other things, redesigning the Bank Board of Governors of the Federal Reserve System, Secrecy Act examination process, developing antibefore the Subcommittee on General Oversight and money-laundering guidance, regularly examining Investigations and the Subcommittee on Financial the institutions we supervise for compliance with Institutions and Consumer Credit of the Committee the Bank Secrecy Act and relevant regulations, conon Banking and Financial Services, U.S. House of ducting money-laundering investigations, providing Representatives, April 20,1999 expertise to the U.S. law enforcement community for investigation and training initiatives, and providing I am pleased to appear before the Subcommittee on training to various foreign central banks and govern- General Oversight and Investigations and the Sub- ment agencies. committee on Financial Institutions and Consumer Ten years ago the Federal Reserve started its anti- Credit to discuss the Federal Reserve's role in the money-laundering program and appointed a senior government's efforts to detect and deter money laun- official to coordinate the Federal Reserve's activities dering and other financial crimes with a particular in this area. In 1993, the Federal Reserve established emphasis on matters related to the Bank Secrecy Act a special investigations unit, with responsibility for, and suspicious activity reporting. among other things, the oversight of the Federal Reserve's anti-money-laundering program. In the same year, each of the Federal Reserve Banks desig- OVERVIEW nated a senior experienced examiner to be the Bank The Federal Reserve has a long-standing commit- Secrecy Act coordinator. ment to combating money laundering and ensuring We have long felt that banking organizations and compliance with the Bank Secrecy Act and related their employees are the first and strongest line of suspicious-activity reporting requirements by the defense against money laundering and other financial domestic and foreign banking organizations that it crimes. As a result, the Federal Reserve emphasizes supervises. Compliance with the Bank Secrecy Act the importance of financial institutions putting in and suspicious-activity reporting requirements by place controls to protect themselves and their customfinancial institutions provides timely and valuable ers from illicit activities. information to law enforcement and is the best indi- The Congress too has long recognized that a bankcator of the existence of satisfactory anti-money- ing organization's best protection against criminal laundering and anti-fraud policies and procedures. activities is its own policies and procedures designed Over the past several years, the Federal Reserve to identify and then reject potentially illegal or damhas been actively engaged in the government's efforts aging transactions. In 1986, the Congress passed a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

416 Federal Reserve Bulletin • June 1999 law (section 8(s) of the Federal Deposit Insurance SUSPICIOUS ACTIVITY REPORTING Act) mandating that the Federal Reserve and the other federal banking agencies issue regulations Before I describe how the Federal Reserve uses Susrequiring the domestic and foreign financial institu- picious Activity Reports and other Bank Secrecy Act tions that the agencies supervise establish and main- reports, some background information regarding the tain internal procedures designed to ensure and moni- new Suspicious Activity Reporting system would be tor compliance with the Bank Secrecy Act. useful. In 1985, the five federal financial institutions regulatory agencies—the Federal Reserve, the Fed- Determining Compliance through Examinations eral Deposit Insurance Corporation, the Office of To understand and properly evaluate the effectiveness the Comptroller of the Currency, the Office of of a banking organization's Bank Secrecy Act-related Thrift Supervision (then the Federal Home Loan controls and procedures and compliance with the Bank Board), and the National Credit Union Board's rules issued under section 8(s) of the Federal Administration—developed substantially similar, but Deposit Insurance Act, the Federal Reserve has not uniform, procedures and forms, then known as developed comprehensive examination procedures the criminal referral process, to be used by all finanand manuals. In November 1997, the Federal Reserve cial institutions operating in the United States to issued newly revised risk-focused Bank Secrecy Act report known or suspected criminal law violations. examination procedures. These enhanced examina- The introduction of the concept of criminal referral tion procedures specifically address anti-money- forms was the result of the efforts of the interagency laundering compliance. The examination procedures Bank Fraud Working Group, which has been addresstake a multistage "top down" approach. ing the problems of combating white collar financial During every examination of a state member bank institution crime since 1984.1 The use of the forms and U.S. branch or agency of a foreign bank super- and the attendant reporting procedures, which were vised by the Federal Reserve, specially trained exam- jointly developed by the banking and criminal justice iners review the institution's previous and current agencies participating in the Working Group, enabled compliance with the Bank Secrecy Act. Examiners financial institutions and the banking agencies to first determine whether the institution has included report all instances of suspected criminal activities to anti-money-laundering procedures in all of its opera- the appropriate law enforcement and supervisory tional areas, including retail operations, credit, pri- authorities. vate banking, and trust, and has adequate internal In addition to ensuring the timely provision of audit procedures to detect, deter, and report money- information about known or suspected criminal laundering activities, as well as other potential finan- activities to law enforcement authorities, the member cial crimes. This is done through a review of the agencies in the Working Group recognized the imporinstitution's written compliance program and doc- tance of sharing criminal referral information among umentation of self-testing and training, as well as themselves, particularly in the area of background through a review of the institution's system for cap- checks and the coordination of particular significant turing and reporting certain transactions pursuant to matters of mutual interest. The need for an effective the Bank Secrecy Act, including any suspicious or interagency database of criminal referral information unusual transactions possibly associated with money was made an objective of the Working Group, and laundering or other financial crimes. the agency representatives explored various ways to In those instances in which there are deficiencies develop such a system. in the written compliance program, failures to ade- Beginning in 1994, the Federal Reserve particiquately document self-testing or training, obvious pated in an interagency effort to completely redesign breakdowns in operating systems, or failures to the criminal referral process for banking organizaimplement adequate internal controls, the Federal Reserve's examination procedures require that examiners conduct a more intensified, second-stage exami- 1. The Working Group now consists of senior staff representatives nation that would include the review of source docu- from thirteen federal agencies, including the Federal Reserve, the ments and expanded transaction testing, among other other federal financial institutions regulators, the Federal Bureau of Investigation, the U.S. Secret Service, the Departments of Justice and steps. Enforcement actions, including the assessment the Treasury, including the Treasury's Financial Crimes Enforcement of civil money penalties, are used to address situa- Network, the Internal Revenue Service's Criminal Investigation Divitions in which deficiencies are not promptly and fully sion, and the Securities and Exchange Commission. The Working Group meets monthly, and its various subcommittees meet more corrected. frequently when necessary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 417 tions. The banking agencies worked with Treasury's the suspicious-activity reporting requirements assists Financial Crimes Enforcement Network (FinCEN) examiners in determining compliance with these as the manager of the new process because of that regulations. agency's experience in processing millions of cur- You asked whether information on the Bank rency transaction reports and its database manage- Secrecy Act and Suspicious Activity Report has been ment skills, and because the Congress had amended beneficial to the Federal Reserve's supervisory and the Bank Secrecy Act to require FinCEN to issue enforcement initiatives. The simple answer is that suspicious-activity reporting rules for financial insti- such information has been valuable and has led tutions, including banks, broker-dealers, and casinos. to numerous supervisory actions addressing wrong- The result of this effort is the existing Suspicious doing by banking organizations and persons associ- Activity Report. The new Suspicious Activity Report ated with them. Federal Reserve staff reviews Suspibecame effective on April 1, 1996, for all banking cious Activity Reports and Currency Transaction organizations operating in the United States and sub- Reports filed by banking organizations supervised ject to the jurisdiction of the five federal banking by the Federal Reserve. Our purpose in conducting agencies and FinCEN. Before the effective date of reviews of Suspicious Activity Reports is to identify the new Suspicious Activity Report, the Federal for further investigation potential problems that Reserve, each of the other federal banking agencies, would normally not be detected during the course and FinCEN issued new rules for the reporting of of an examination but that have been reported by a suspicious activity mandating the use of the inter- financial institution as being suspicious. Likewise, agency Suspicious Activity Report. we review Currency Transaction Reports before we Along with the enhanced reporting process, conduct Bank Secrecy Act examinations in order to another important improvement is the statutory pro- better focus the scope of the examinations and, when tection that the Congress provided for banking orga- necessary, to more precisely target problem areas. nizations reporting suspicious or criminal conduct. While the Federal Reserve's investigative initia- The statutory protection provides banking organiza- tives resulting from our review of these reports are tions and their employees with immunity from civil not public and cannot be discussed here, two recent liability for reporting known or suspected criminal events involving large banking organizations superoffenses or suspicious activities. The law also prohib- vised by the Federal Reserve involved public court ited financial institutions filing Suspicious Activ- proceedings or reported cases in which the organiity Reports from notifying anyone involved with zations' Suspicious Activity Reports were disclosed. reported transactions about the filings. These protec- For this reason, I am able to provide some details tions, long sought by the banking community and about how Federal Reserve staff used the information supported by the Federal Reserve, give comfort to filed by the banking organizations. banking organizations that they will not be held liable As the result of a Suspicious Activity Report filed for providing timely and useful information to law by Bankers Trust, the Federal Reserve conducted enforcement authorities or compelled to reveal infor- a targeted review of certain activities of the bank mation that has been reported to law enforcement involving escheatable funds. After our inquiry, the authorities to help their crime-fighting efforts. staff worked extensively with federal investigators and prosecutors, and the result was the recent guilty plea by Bankers Trust and the imposition of a $60 million fine. Similarly, a Suspicious Activity UTILITY OF BANK SECRECY ACT AND Report containing information of suspected criminal SUSPICIOUS ACTIVITY REPORT INFORMATION activity by a BankBoston official led to the discovery that the individual apparently defrauded BankBoston As more fully detailed by representatives from the out of more than $73 million. After having reviewed various law enforcement agencies, information col- the circumstances surrounding the official's actions, lected and reported pursuant to the requirements of the Federal Reserve sought and received federal court the Bank Secrecy Act and the suspicious activity- orders freezing all of the individual's U.S. assets. We reporting regulations provides necessary and essen- are continuing to work with law enforcement authoritial assistance to government investigators and pros- ties during the course of their criminal investigation ecutors. Similarly, as I explained earlier, during the of this matter. Additionally, on several occasions, the course of examinations conducted by the Federal Federal Reserve has commenced enforcement actions Reserve, a review of the information collected and against individuals as the result of information first reported pursuant to the Bank Secrecy Act and reported in a Suspicious Activity Report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

418 Federal Reserve Bulletin • June 1999 Currency transaction information provided to the Reserve staff has provided training in anti-moneygovernment pursuant to the Bank Secrecy Act has laundering procedures to foreign law enforcement also been a valuable asset for the Federal Reserve's officials and central bank supervisory personnel in enforcement function. A Federal Reserve investiga- such countries as Russia, Poland, Hungary, the Czech tion that in large part relied on information reported Republic, and a number of the emerging Baltic states, pursuant to the Bank Secrecy Act led to the convic- as well as Brazil, Ecuador, Argentina, and several tion of the Bangkok Metropolitan Bank for crim- other countries in the Middle East and Far East. inal activity related to money laundering and fraud. Over the years the Federal Reserve has taken the This foreign banking organization subsequently initiative to provide timely and useful information to was ordered by the Federal Reserve to cease all banking organizations with regard to ongoing crimoperations in the United States. Similarly, Bank inal conduct or potential schemes that may have an Secrecy Act information was used during the Fed- adverse impact on them. In the past few years, the eral Reserve's involvement with the recently com- Federal Reserve and the other federal banking superpleted Operation Casablanca investigation, in which visory agencies have issued alerts on such matters as Federal Reserve staff worked extensively with fed- "Prime Bank" frauds and credit card fraud schemes. eral law enforcement agencies during the course of Such notices to the banking industry are intended to their investigation of money-laundering activities advise banking organizations and the public about the by several foreign banking organizations and their potential dangers of such schemes and practices. employees. Also, from time to time, the Federal Reserve has developed and issued policy statements with regard to activities occurring in banking organizations that FEDERAL RESERVE ROLE we have determined could pose a threat to the integrity of a bank. One such example was the Federal In addition to the Federal Reserve's efforts to develop Reserve's development and issuance of a policy stateappropriate anti-money-laundering and anti-fraud- ment on "payable-through accounts." The purpose of related policies and procedures for the domestic and the policy statement was to ensure that banks that foreign financial institutions that we supervise and engage in payable-through activity, which basically our examination for compliance with those policies involves the use of a checking account at a bank in and procedures, staff of the Federal Reserve has, as I the United States by an individual who resides outjust discussed, taken an active role among federal side of this country, have appropriate procedures bank supervisors in the law enforcement communi- in place to ensure that no illicit activities are being ty's battle to deter money laundering by providing conducted through these accounts. The Federal expertise for law enforcement initiatives and training Reserve's 1997 issuance of a sound practices paper to various government agencies. on private banking is another example. The Federal Reserve routinely coordinates with federal law enforcement agencies with regard to potential criminal matters, including anti-money- CONCLUSION laundering and financial crime activities. The scope of this coordination ranges from our work on the As bank supervisors, the Federal Reserve believes development and implementation of the interagency that it is necessary to take reasonable and prudent Suspicious Activity Reporting system to the referral steps to ensure that banking organizations are not of illicit activities on a case-by-case basis to law victims of, and also do not knowingly participate in, enforcement agencies resulting from examinations of illicit activities such as money laundering or other banking organizations and a review of Suspicious financial crimes. For this reason, and to support our Activity Reports. The aforementioned situations law enforcement agencies in their efforts to combat involving Bankers Trust, BankBoston, and Operation money laundering and other financial offenses, the Casablanca are good examples of our efforts in this Federal Reserve's commitment to ensuring comarea. pliance with the Bank Secrecy Act and suspicious- Training provided by Federal Reserve staff to law activity reporting requirements continues to be a high enforcement agencies continues to include programs bank supervisory priority. The Federal Reserve has at the U.S. Department of the Treasury's Federal Law an important role in ensuring that criminal activity Enforcement Training Center and at the FBI Acad- does not pose a systemic threat and, as important, in emy, as well as training for the U.S. Secret Service improving the ability of individual banking organiand the U.S. Customs Service. Additionally, Federal zations in the United States and abroad to protect Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 419 themselves from illicit activities. Both the Bank Reserve and the government, as a whole, to combat Secrecy Act and suspicious activity reporting require- illicit activities through the financial system, ments are vital to the continued efforts of the Federal Statement by Alan Greenspan, Chairman, Board of the view that the long-term stability of U.S. financial Governors of the Federal Reserve System, before the markets and the interests of the American taxpayer Subcommittee on Finance and Hazardous Materials would be better served by no financial modernization of the Committee on Commerce, U.S. House of Repre- bill rather than one that allows the proposed new sentatives, April 28,1999 activities to be conducted by the bank, as proposed by H.R. 10. For reasons I shall discuss shortly, the I would like to thank the committee for the opportu- Board is not dissuaded from this view by provisions nity to present the views of the Federal Reserve on that have been incorporated in H.R. 10 to address our the current version of H.R. 10, the approach to finan- concerns. cial modernization most recently approved by the House Banking Committee. Last year, I testified at Subsidies length before this committee on many of the issues related to your deliberations on this legislation. Our Government guarantees of the banking system— views have not changed on the need to modernize our deposit insurance and direct access to the Fed's disbanking and financial system, on consolidated super- count window and payments system guarantees— vision, on the emphasis on reduced regulation, on the provide banks with a lower average cost of capital unitary thrift loophole, and especially on continuing than would otherwise be the case. This subsidized to prohibit banks from conducting through their sub- cost of capital is achieved through lower market risk sidiaries those activities that they are prohibited to do premiums on both insured and uninsured debt and themselves. In the interest of time, however, I thought through lower capital than would be required by the it might be best if I limit my formal comments only market if there were no government guarantees. The to the latter, that is, the setting of the underlying lower cost of funding gives banks a distinct competistructure of American banking in the twenty-first tive advantage over nonbank financial competitors century. The issue is whether the important new and permits them to take greater risks than they could powers being contemplated are exercised in a finan- otherwise. cial services holding company through a nonbank The safety net subsidy is reflected in lower equity affiliate or in a bank through its subsidiary. Such a capital ratios at banks that are consistently below decision would be of minor significance, and decid- those of a variety of nonbank financial institutions. edly not a concern of legislators and regulators, if Importantly, this is true even when we compare bank banks were not subsidized. and nonbank financial institutions with the same We at the Federal Reserve strongly support the credit ratings: Banks with the same credit ratings as new powers that would be authorized by H.R. 10. their nonbank competitors are allowed by the market We believe that these powers, however, should be to have lower capital ratios. While the differences in financed essentially in the competitive marketplace capital ratios could reflect differences in overall asset and not financed by the sovereign credit of the United quality, there is little to suggest that this factor States. This requires that the new activities be per- accounts for more than a small part of the difference. mitted through holding companies and prohibited Under H.R. 10, the subsidy that the government through banks. provides to banks as a byproduct of the safety net would be directly transferable to their operating subsidiaries to finance powers not currently permissible OPERATING SUBSIDIARIES to the bank or its subsidiaries. The funds a bank uses to invest in the equity of its subsidiaries are avail- The Board believes that any version of financial able to the bank at a lower cost than that of any modernization legislation that authorizes banks to other potential investor, save the U.S. government, conduct in their subsidiaries any activity as principal because of the subsidy. Thus, operating subsidithat is prohibited to the bank itself is potentially a aries under H.R. 10 could conduct new securities, step backward to greater federal subsidization and merchant banking, and other activities with a eventually to more regulation to contain the subsi- government-subsidized competitive advantage over independent firms that conduct the same activity. dies. I and my colleagues, accordingly, are firmly of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

420 Federal Reserve Bulletin • June 1999 That is to say, the use of the universal bank structure That bank dividends are not used to finance holdenvisioned in H.R. 10 means the transference of the ing company subsidiaries should not be surprising. subsidy to a wider range of financial businesses, It simply is not in the interest of the consolidated producing distortions in the competitive balance banking organization to increase bank dividend flows between those latter units that receive a subsidy and beyond parent company capital-servicing cash flow identical units that do not—whether those units are needs because the resultant decline in bank capital subs of holding companies or totally independent of would increase funding costs of the bank. Research banking. at the Federal Reserve indicates that, over the past H.R. 10 does not contain provisions that effectively quarter of a century, for the largest banks the cost of curtail the transfer of the subsidy to operating sub- uninsured bank funds has tended to rise as a bank's sidiaries or address this competitive imbalance. The capital ratio fell and vice versa. This is just what one provisions of H.R. 10 that would require the deduc- should expect: As the risk-absorbing equity cushion tion of such investments from the regulatory capital falls, the risk for uninsured creditors rises. The flow of the bank (after which the bank must still meet the of dividends from the bank to the parent holding regulatory definition of well capitalized) attempt, but company reduces bank capital. That reduction, in fail, to limit the amount of subsidized funds that an turn, reduces the risk buffer for uninsured creditors, individual bank can invest in its subsidiaries. What increasing the funding cost of the bank on all the matters is not regulatory capital but actual or eco- uninsured liabilities by more—the data show—than nomic capital. The vast majority of banks now hold the small subsidy transference of funding the addisignificantly more capital than regulatory definitions tional equity investment in the affiliate. of "well capitalized" require. This capital is not Thus, if a bank holding company were to finance "excess" in an economic sense that is somehow its nonbank affiliates from bank dividends—that is, to available for use outside the bank; it is the actual directly pass on the bank's subsidy to the holding amount required by the market for the bank to con- company's affiliates—the profitability of the consoliduct its own activities. The actual capital maintained dated organization would decline. If there were no by a bank is established in order to earn the perceived net costs to the bank from upstreaming dividends to maximum risk-adjusted rate of return on equity. its parent for affiliate funding, it would be the preva- Unless this optimum economic capital is equal to, or lent practice today. In short, the subsidy appears to less than, regulatory capital, deductions from regula- have been effectively bottled up in the bank. The tory capital would in no way inhibit the transfer of Federal Reserve Board believes that this genie would the subsidy from the bank to the subsidiary. be irreversibly let out of the bottle, however, should Some have argued that the subsidy transference to the Congress authorize wider financial activities in subsidiaries of banks is no different from the trans- operating subsidiaries. Subsidized equity investments fer of subsidized bank dividends through the hold- by banks can be made in their own subsidiaries ing company parent to holding company affiliates. without increasing funding costs on all of the bank's The direct upstreaming of dividends by a bank to its uninsured liabilities because the consolidated capital holding company parent that in turn invests the pro- of the bank would not change in the process. But ceeds in subsidiaries of the holding company, while since the activities authorized to banks' subsidiaries legally permissible, in fact does not occur—and for cannot differ from those available to the bank itself, good reasons, as I will explain below. In the 1990s, there is no additional profit to the overall banking dividend flows from banks to their parent holding organization in shifting bank powers to a subsidiary. companies have been less than the sum of hold- But H.R. 10 would permit activities not now pering company dividends, interest on holding company mitted in a bank. Those activities, when performed in debt, and the cost of holding company stock buy- bank subsidiaries and financed with bank equity capibacks, a substitute for dividends. Thus, the empirical tal, would increase the potential profit to the overall evidence indicates that, on net, at the largest organi- banking organization. It would also inevitably induce zations there has been no financing of a bank's hold- the gravitation to subsidiaries of banks, not only of ing company affiliates with subsidized equity of the the new powers authorized by H.R. 10 but all of associated banks. All of that part of the subsidy those powers currently financed in holding company reflected in earnings has flowed to investors. (There affiliates at higher costs of capital than those availare a few large individual institutions that have, in able to the bank. H.R. 10 thus effectively authorizes some years, upstreamed dividends in excess of inves- all holding company powers to be funded in the bank tor payments, but the cumulative amounts are very at funding costs significantly lower than the funding small and the conclusions are unchanged.) costs of its holding company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 421 For the thirty-five of the fifty largest bank holding nied by unusually high risk, but they could imply companies for which comparisons are available, rat- more risk. The Board believes these activities add the ings on debentures are always somewhat higher at potential for new profitable opportunities for banking the bank than at the holding company parent and, of organizations, but it is almost always the case that the course, higher ratings translate into lower interest more potentially profitable the activity, the riskier it rates. As might be expected, the data show that the is. Although, to be sure, diversification can reduce value of these differences in bond ratings is higher that risk, the losses that would accompany riskier during periods of market stress, when subsidies are activities from time to time would fall on the insured more valuable, because the market is more risk sensi- bank's capital if the new activities were authorized in tive. But even today, when losses in the financial bank subsidiaries. Such losses at holding company system are quite low, the cost of debt capital to banks affiliates would, of course, fall on the uninsured holdstill averages 10 basis points to 12 basis points below ing company. This is an important distinction for the that of the parent holding companies. That difference deposit insurance funds and potentially the taxpayer. in bond ratings today between banks and bank hold- This potential for loss and bank capital depletion is ing companies, let alone the larger difference between another reason for urging that the new activities be banks and other financial institutions, is a significant conducted in a holding company affiliate rather than part of the 20 basis point to 30 basis point gross in a banking subsidiary. margin on A-rated or better investment grade busi- H.R. 10 is supposed to virtually eliminate this ness loans—more than enough significantly to change concern. As I earlier noted, the bank's equity investlending behavior if it were not available. ment in the bank subsidiary under H.R. 10 would be Business loan markets are particularly competitive, deducted from the bank's regulatory capital, with the and hence there is little leeway for a competitor with requirement that the remaining regulatory capital still higher funding costs to pass on such costs to the meet the well-capitalized standard. At the same time, borrower. For example, the weakened credit standing the Office of the Comptroller of the Currency has of the Japanese banks has engendered a risk premium asserted that it would order an operating sub immedithat these entities have paid—and today would have ately to be sold or declared bankrupt and closed to pay—to fund their U.S. affiliates; this has required before its cumulative losses exceeded the bank's them to sharply reduce their business loan volume in equity investment in the failing sub. Combined with the United States. Japanese bank branches and agen- the provision of H.R. 10 adjusting regulatory capital cies in the United States have reduced their share of for investment in subs, this provision is intended to business loans from more than 16 percent of the cap the effect on the bank of subsidiary losses to the market in 1995 to less than 11 percent today. amount of the bank's original investment. Because In short, the subsidy is a critical competitive issue that amount would have already been deducted from in competitive markets. Allowing the bank to inject the bank's regulatory capital, the failure of the subfederal subsidies into the proposed new activities sidiary, it is maintained, could not affect the regulacould distort capital markets and the efficient alloca- tory capital of the bank. tion of both financial and real resources. New affilia- The Board is concerned that this regulatory tions, if allowed through banks, would accord them accounting approach, which does not address the an unfair competitive advantage over comparable actual capital of a bank, could provide a false sense nonbank firms. The holding company structure, on of security. We had extensive experience with the other hand, fosters a level playing field within the attempts to redefine reality by redefining regulatory financial services industry, contributing to a more capital in the thrift industry in the 1980s. This competitive environment. approach was widely viewed as a major mistake whose echoes we are still dealing with today. Regulatory capital at the time soon began to mean nothing to Safety and Soundness the market, and, as a consequence, the Congress in the Federal Deposit Insurance Corporation Improve- In addition to our concern about the extension of the ment Act of 1991 ordered the banking agencies to safety net that would accompany the widening of follow Generally Accepted Accounting Principles bank activities through operating subsidiaries, the (GAAP) whenever possible. In the current context, Federal Reserve Board is also sensitive to the impli- there is—as in the 1980s—no reason to believe the cations of operating subsidiaries for the safety and new regulatory definitions will change the reality of soundness of the parent bank. Most of the new activi- the market place. Economic, as opposed to regulaties contemplated by H.R. 10 would not be accompa- tory, capital of the bank would not, as I have noted, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

422 Federal Reserve Bulletin • June 1999 be changed by this special regulatory capital account- The Board has consequently supported merchant ing, and such deductions from equity capital would banking as an activity of a holding company subsidinot be reflected under GAAP. It is the economically ary, but believes it is potentially the most risky activmore relevant GAAP statements to which uninsured ity that would be authorized by H.R. 10 and would be creditors of banks look when deciding to deal with a especially risky if permitted to be conducted in bank bank, and they will continue to do so after financial subsidiaries. modernization. Bank creditors will, in any event, Existing law permits some limited exceptions to continue to view the investment in the bank subsidi- the otherwise prohibited outright ownership of equity ary as part of the capital protecting their position— by banks and their subsidiaries, but these are quite for the simple reason that it does. If they see the limited both in the aggregate and in the kinds of economic and GAAP capital at the bank declining as businesses in which equity can be purchased, as well operating subsidiary losses occur, they will react as as in the scale of each investment. True merchant any prudential creditor should—regardless of artifi- banking, as envisioned by H.R. 10, would place no cial regulatory accounting adjustments or regulatory such limits—either per firm or in total. The potential measures of capital adequacy. rewards for such equity investments are substantial, Perhaps more to the point, it seems to me particu- but such potential gains are the mirror image of the larly relevant to underline that losses in financial potential for substantial loss. In addition, poor equity markets—large losses—can occur so quickly that performance generally occurs during periods of weak regulators would be unable to close the failing operat- nationwide economic performance, the same intering subsidiary as contemplated by H.R. 10 before the vals over which bank loan portfolios are usually subsidiaries' capital ran out. Indeed, losses might under pressure, raising concerns about the comeven continue to build, producing negative net worth pounding of bank problems during such periods. in the subsidiary. At the time of closure of a subsidiary, there is nothing to prevent the total charges for losses against the parent bank's regulatory capital FUNCTIONAL REGULATION from exceeding the prior deduction required by H.R. 10.1 Our experience after the stock market crash The holding company structure—especially for the of 1987—when a subsidiary of a major bank not only new activities—also has the significant benefit of lost more than the bank's investment in its subsidiary promoting effective supervision and the functional but the bank was unable to dispose of the subsidiary regulation of different activities. The holding comfor several years—underscores the seriousness of pany structure, along with the so-called "Fed-lite" such concerns. provisions in H.R. 10, focuses on and enhances the H.R. 10 would exclude from permissible bank functional regulation of securities firms, insurance subsidiaries only insurance underwriting and real companies, insured depository institutions, and their estate development. One of the permissible activities affiliates by relying on the expertise and supervisory is merchant banking, which does not have a long or strengths of different functional regulators, reducing significant twentieth century history in this country. the potential burdensome overlap of regulation and Merchant banking currently means the negotiated providing for increased coordination and reduced private purchase of equity investments by financial potential for conflict among functional regulators. institutions, with the objective of selling these positions at the end of some interval, usually measured in years. Merchant banking has become so important an EXECUTIVE BRANCH PREROGATIVES element of full service investment banking in this country, so much so that to prohibit bank-related There is a final point I want to make because it investment banks from participating in these activi- appears to have driven the Treasury's recent opposities would put them at a competitive disadvantage. tion to financial modernization legislation that has not adopted the universal bank model. It is not necessary to adopt the universal bank model in order to 1. Moreover, should creditors of the subsidiary choose to attempt to recover their funds from the bank parent, the removal of the loss preserve the executive branch's supervisory authority charged against the bank's capital could occur only when a court has for national banks or federal savings associations; nor affirmed both the bankruptcy and the rejection of the claims on the is it necessary in order to preserve the share of this bank made by the subsidiary's creditors. This process could and would take some time, during which, even if the court eventually nation's banking assets controlled by national banks found for the bank and/or the regulator, further losses by the subsidi- and federal savings associations. In fact, the share of ary could continue to impinge on the bank's capital. And, again, the assets controlled by national banks is predominant point is that the bank would have been at risk during that interval. 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Statements to the Congress 423 and growing, in part the result of the enactment of has taken to ensure a proper balance in the regulation interstate branching authorities, an initiative the Fed- of this nation's dual banking system. eral Reserve fully supported. As shown in the tables in the appendix to my statement, national bank assets have increased in each of the past three years while SUMMING UP state bank assets have declined over the past two years.2 As of year-end 1998, 58.5 percent of all The Board is a strong advocate of financial modernbanking assets were under the supervision of the ization in order both to eliminate the inefficiencies of Comptroller of the Currency, up from a little more the current Great Depression regulatory structure and than 55 percent at the end of 1996. As the second to create a system more in keeping with the technoltable clearly suggests, the largest banks, especially ogy and markets of the twenty-first century. We those with large branching systems, tend to be strongly support the thrust of H.R. 10 to accomplish national banks, providing a distinct advantage to these objectives. Equally as strongly, however, we national banks in an environment of interstate also believe that the new activities should not be branching. authorized for banks through operating subsidiaries. Furthermore, the Congress for sound public policy We believe that the holding company structure is the reasons has purposefully apportioned responsibility most appropriate and effective one for limiting transfor this nation's financial institutions among the fer of the federal subsidy to new activities and fosterelected executive branch and independent regulatory ing a level playing field both for financial firms agencies. Action to alter these responsibilities would affiliated with banks and independent firms. It will be contrary to the deliberate steps that the Congress also, in our judgment, foster the protection of the safety and soundness of our insured banking system and the taxpayers, enhance functional regulation, 2. The attachment to this statement is available from Publications and achieve all of the benefits of financial moderni- Services, Mail Stop 127, Board of Governors of the Federal Reserve zation for the consumer and the financial services System, Washington, DC 20551, and on the Board's site on the World industry. • Wide Web at http://www.federalreserve.gov. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

424 Announcements LAUNCH OF A NEW DESIGN FOR THE FEDERAL ISSUANCE BY THE BASLE COMMITTEE RESERVE BOARD WEB SITE OF A PAPER ON CREDIT-RISK MODELING The Basle Committee on Banking Supervision (Basle The Federal Reserve Board on May 3, 1999, unveiled Committee) recently issued for comment a paper a new design for its web site on the Internet. entitled Credit Risk Modelling: Current Practices The new design is constructed to make Federal and Applications. Reserve information on the Internet easier to navigate through an improved format accompanied by an The paper describes the structure of various creditattractive presentation. risk models used by commercial banks worldwide and identifies related supervisory issues pertaining to New features include the following: the use of such models as a basis for regulatory capital standards. Comments are requested by Octo- • "Breaking News," with direct links to announceber 1, 1999. The paper is available on the BIS Interments, statements, and documents released in the past net site at http://www.bis.org day or two • "What's New," which lists the items carried The Committee was established by the central bank under Breaking News as well as information about governors of the Group of Ten countries in 1975 and statistical releases and other items posted over the operates under the auspices of the Bank for Internapast two weeks tional Settlements (BIS) in Basle, Switzerland. It consists of senior supervisory authorities represent- • "Publications Schedule," which shows what is ing the world's largest banking systems and works to expected to be posted on the web site during the next strengthen bank supervisory and regulatory practices two months, including speeches, congressional testiworldwide. mony, Federal Open Market Committee material, and statistical releases • "Site Map," featuring a complete list of the links found immediately under the main subject categories. ENFORCEMENT ACTIONS Some categories have also been consolidated. The The federal financial institution regulators (the Board "Monetary Policy" site now contains Federal Open of Governors of the Federal Reserve System, the Market Committee information, the Beige Books, Federal Deposit Insurance Corporation, the National and Humphrey-Hawkins reports and testimony. The Credit Union Administration, the Office of the Comp- "Banking" site combines the material listed under troller of the Currency, and the Office of Thrift Super- Regulation and Supervision and under Supervision vision) and First Data Corporation reached agree- Manuals. "Research and Data" contains articles from ment on March 30, 1999, that the provider of data the Federal Reserve Bulletin along with material processing services to banks, thrift institutions, and listed under Domestic and International Research. credit unions will complete Year 2000 testing of the The broad range of information available on the last of six merchant processing systems that serve Board's web site also includes Board actions, press banking and credit union clients by June 30, 1999, releases, consumer topics, reports to Congress, and and fully implement the system in a Y2K production connections to other banking regulators and to the mode by July 11, 1999. Federal Reserve Banks. The agreement covers a single credit card process- The web site was inaugurated in March 1996 and ing platform at the Nashville (Tennessee) Data Cennow contains more than 13,000 documents. The site ter of First Data Merchant Services, a subsidiary of averages 80,000 daily requests during the week and the corporation. Within fifteen days, First Data will 45,000 daily requests on weekends. The Internet submit to the agencies and its financial institution address is http://www.federalreserve.gov clients a written report of how it will fulfill the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

425 agreement and then update progress regularly. On Bank of Chicago, and the Illinois Office of Banks and this system, which is known as the Envoy processing Real Estate. system, First Data services more than 200 banks, thrift institutions, and credit unions. First Data committed to the federal agencies that it CHANGES IN BOARD STAFF will have ample time to make the necessary adjustments to the Envoy system and to carry out appropri- The Board of Governors announced the retirement ate testing. The agreement covers only the Envoy of Betsy Riggs, Assistant Director in the Division system, which, according to First Data, represents of Information Resources Management, effective approximately 2 percent of its entire Y2K remedia- May 31, 1999, after thirty-two years of service to the tion effort. An on-site examination by an interagency Board. team of examiners found that the Envoy system was On May 20, 1999, the Board of Governors lagging in meeting testing and implementation mile- announced the following official staff actions, also in stones, which are part of the interagency guidance. the Division of Information Resources Management: This is the second time regulators have taken action against a service provider. The agencies will continue The appointment of Richard C. Stevens to the posito monitor financial institutions and service providers tion of Director of the Division of Information for compliance with Year 2000 guidelines. Technology. Mr. Stevens joined the Board's staff in 1973. In July 1998, he was promoted to the The Federal Reserve Board on April 16, 1999, position of Deputy Director for the Division of announced the issuance of a combined order to cease Information Resources Management. and desist and order of assessment of a civil money The appointment of Marianne M. Emerson to the penalty against Paul P. Piper, Jr., a former institution- position of Deputy Director. Ms. Emerson was affiliated party of First National Summit Bankshares, appointed Assistant Director in 1990 and is end- Crested Butte, Colorado, a former registered bank ing a two-year assignment as technical adviser holding company, and the First National Summit to the Division of Banking Supervision and Bank, Gunnison, Colorado, a former national bank. Regulation. Mr. Piper, without admitting to any allegations, The appointment of Tillena G. Clark to the position consented to the issuance of the order in connection of Assistant Director. Ms. Clark joined the with his alleged involvement in the acquisition of Board's staff in 1994 and is currently serving control of more than 25 percent of the outstanding as manager in the division's Year 2000 Provoting shares of First National Summit Bankshares gram Office. She holds a B.A. from the Univerwithout prior approval from the Board of Governors. sity of Rochester and an M.A. from Catholic Mr. Piper paid a fine of $25,000. University. The Federal Reserve Board on April 22, 1999, Finally, the name of the division has been changed announced the execution of a written agreement by from Information Resources Management to Inforand among Foxdale Bancorp, Inc., the Foxdale Bank, mation Technology to more accurately reflect the both of South Elgin, Illinois, the Federal Reserve division's responsibilities. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

426 Minutes of the Federal Open Market Committee Meeting Held on February 2-3, 1999 A meeting of the Federal Open Market Committee Messrs. Madigan and Simpson, Associate Directors, was held in the offices of the Board of Governors of Divisions of Monetary Affairs and Research and Statistics respectively, Board of Governors the Federal Reserve System in Washington, D.C., on Tuesday, February 2, 1999, at 2:30 p.m. and contin- Mr. Reinhart, Deputy Associate Director, Division of ued on Wednesday, February 3, 1999, at 9:00 a.m. Monetary Affairs, Board of Governors Present: Mr. Dennis,2 Assistant Director, Division of Reserve Mr. Greenspan, Chairman Bank Operations and Payment Systems, Board Mr. McDonough, Vice Chairman of Governors Mr. Boehne Mr. Ferguson Messrs. Reifschneider3 and Small,3 Section Chiefs, Mr. Gramlich Divisions of Research and Statistics and Mr. Kelley Monetary Affairs respectively, Board of Mr. McTeer Governors Mr. Meyer Mr. Moskow Ms. Kole,4 Messrs. English4 and Rosine,4 Senior Ms. Rivlin Economists, Divisions of International Finance, Mr. Stern Monetary Affairs, and Research and Statistics respectively Messrs. Broaddus, Guynn, Jordan, and Parry, Alternate Members of the Federal Open Ms. Garrett, Economist, Division of Monetary Affairs, Market Committee Board of Governors Ms. Minehan, Messrs. Poole and Hoenig, Presidents Mr. Evans,2 Manager, Division of Reserve Bank of the Federal Banks of Boston, St. Louis, and Operations and Payment Systems, Board of Kansas City respectively Governors Mr. Kohn, Secretary and Economist Ms. Low, Open Market Secretariat Assistant, Division Mr. Bernard, Deputy Secretary of Monetary Affairs, Board of Governors Ms. Fox, Assistant Secretary Mr. Gillum, Assistant Secretary Mr. Conrad, First Vice President, Federal Reserve Mr. Mattingly, General Counsel Bank of Chicago Mr. Baxter, Deputy General Counsel Mr. Prell, Economist Messrs. Beebe, Eisenbeis, Goodfriend, Hakkio, and Rasche, Senior Vice Presidents, Federal Reserve Messrs. Alexander, Cecchetti, Hooper, Hunter, Lang, Banks of San Francisco, Atlanta, Richmond, Lindsey, Rolnick, Rosenblum, Slifman, and Kansas City, and St. Louis respectively Stockton, Associate Economists Messrs. Altig, Bentley, and Rosengren, Mr. Fisher, Manager, System Open Market Account Vice Presidents, Federal Reserve Banks of Cleveland, New York, and Boston respectively Mr. Ettin, Deputy Director, Division of Research and Statistics, Board of Governors 2. Attended portions of meeting relating to the examination of the Mr. Winn,1 Assistant to the Board, Office of System Open Market Account and changes to the domestic securities Board Members, Board of Governors lending program. 3. Attended portions of meeting relating to the discussion of the Committee's consideration of its monetary and debt ranges for 1999. 4. Attended portion of meeting relating to the Committee's review of the economic outlook and consideration of its monetary and debt 1. Attended Wednesday's session only. ranges for 1999. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

427 In the agenda for this meeting, it was reported that By unanimous vote, the Federal Reserve Bank of advices of the election of the following members and New York was selected to execute transactions for alternate members of the Federal Open Market Com- the System Open Market Account until the adjournmittee for the period commencing January 1, 1999, ment of the first meeting of the Committee after and ending December 31, 1999, had been received December 31, 1999. and that these individuals had executed their oaths of By unanimous vote, Peter R. Fisher was selected to office. serve at the pleasure of the Committee as Manager, The elected members and alternate members are as System Open Market Account, on the understanding follows: that his selection was subject to being satisfactory to the Federal Reserve Bank of New York. William J. McDonough, President of the Federal Reserve Bank of New York.5 Secretary's note: Advice subsequently was received that the selection of Mr. Fisher as Manager was satisfactory to Edward G. Boehne, President of the Federal Reserve the board of directors of the Federal Reserve Bank of Bank of Philadelphia, with J. Alfred Broaddus, Jr., New York. President of the Federal Reserve Bank of Richmond, as alternate. The Report of Examination of the System Open Michael H. Moskow, President of the Federal Reserve Market Account, conducted by the Board's Division Bank of Chicago, with Jerry L. Jordan, President of Reserve Bank Operations and Payment Systems as of the Federal Reserve Bank of Cleveland, as of the close of business on November 5, 1998, was alternate. accepted. Robert D. McTeer, Jr., President of the Federal Reserve On the recommendation of the Manager of the Bank of Dallas, with Jack Guynn, President of the System Open Market Account, the Committee Federal Reserve Bank of Atlanta, as alternate. amended paragraph 2 of the Authorization for Domestic Open Market Operations relating to the Gary H. Stern, President of the Federal Reserve Bank of Treasury securities lending program. The revised Minneapolis, with Robert T. Parry, President of the Federal Reserve Bank of San Francisco, as alternate. facility introduces the auction technique for awarding borrowed securities to dealer firms on a competitive By unanimous vote, the following officers of the basis. The new facility is designed to implement Federal Open Market Committee were elected to more effectively the objective of providing a shortserve until the election of their successors at the first term "last resort" source of Treasury securities to the meeting of the Committee after December 31, 1999, dealer market and thereby to facilitate the smooth with the understanding that in the event of the discon- clearing of Treasury securities and to ease liquidity tinuance of their official connection with the Board of strains in the market as they arise. The amended Governors or with a Federal Reserve Bank, they Authorization for Domestic Open Market Operations would cease to have any official connection with the was approved unanimously in the form shown below: Federal Open Market Committee: Alan Greenspan Chairman AUTHORIZATION FOR DOMESTIC William J. McDonough Vice Chairman OPEN MARKET OPERATIONS Donald L. Kohn Secretary and Economist Normand R.V. Bernard Deputy Secretary Amended February 2, 1999 Lynn S. Fox Assistant Secretary Gary P. Gillum Assistant Secretary J. Virgil Mattingly, Jr. General Counsel 1. The Federal Open Market Committee authorizes and Thomas C. Baxter, Jr. Deputy General Counsel directs the Federal Reserve Bank of New York, to the Michael J. Prell Economist extent necessary to carry out the most recent domestic Karen H. Johnson Economist policy directive adopted at a meeting of the Committee: (a) To buy or sell U.S. Government securities, includ- Lewis S. Alexander, Stephen G. Cecchetti, ing securities of the Federal Financing Bank, and securities Peter Hooper, III, William C. Hunter, that are direct obligations of, or fully guaranteed as to Richard W. Lang, David E. Lindsey, principal and interest by, any agency of the United States in Arthur J. Rolnick, Harvey Rosenblum, the open market, from or to securities dealers and foreign Larry Slifman, and David J. Stockton, and international accounts maintained at the Federal Associate Economists Reserve Bank of New York, on a cash, regular, or deferred delivery basis, for the System Open Market Account at market prices, and, for such Account, to exchange matur- 5. Mr. Jamie B. Stewart, Jr., incoming First Vice President of the ing U.S. Government and Federal agency securities with Federal Reserve Bank of New York, took his oath of office as alternate member for Mr. McDonough on February 18, 1999. the Treasury or the individual agencies or to allow them to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

428 Federal Reserve Bulletin • June 1999 mature without replacement; provided that the aggregate and the Foreign Currency Directive to reflect changes amount of U.S. Government and Federal agency securities triggered by the launch of the euro. Specifically, it held in such Account (including forward commitments) dropped from the Authorization those European curat the close of business on the day of a meeting of the rencies that now exist as denominations of the euro Committee at which action is taken with respect to a domestic policy directive shall not be increased or (Austrian schillings, Belgian francs, French francs, decreased by more than $12.0 billion during the period Italian lire, Netherlands guilders, and German marks). commencing with the opening of business on the day The amendments also removed the central banks of following such meeting and ending with the close of busi- Austria, Belgium, Denmark, England, France, Gerness on the day of the next such meeting; (b) To buy U.S. Government securities and obliga- many, Italy, Japan, Netherlands, Norway, Sweden, tions that are direct obligations of, or fully guaranteed as to and Switzerland, and the Bank for International principal and interest by, any agency of the United States, Settlements from the list of institutions with which from dealers for the account of the Federal Reserve Bank the Federal Reserve Bank of New York was authoof New York under agreements for repurchase of such rized to maintain reciprocal currency arrangements securities or obligations in 60 calendar days or less, at rates that, unless otherwise expressly authorized by the Commit- (swap facilities). In keeping with the Committee's tee, shall be determined by competitive bidding, after decision at the November 1998 meeting and after applying reasonable limitations on the volume of agreeconsultations with officials at the foreign institutions, ments with individual dealers; provided that in the event the reciprocal currency arrangements in question Government securities or agency issues covered by any such agreement are not repurchased by the dealer pursuant were not renewed after they matured on various dates to the agreement or a renewal thereof, they shall be sold in in December. the market or transferred to the System Open Market Accordingly, the amended Authorization for For- Account. eign Currency Operations and the Foreign Currency 2. In order to ensure the effective conduct of open Directive were unanimously approved in the forms market operations, the Federal Open Market Committee authorizes the Federal Reserve Bank of New York to lend shown below: on an overnight basis U.S. Government securities held in the System Open Market Account to dealers at rates that shall be determined by competitive bidding but that in no AUTHORIZATION FOR FOREIGN CURRENCY event shall be less than 1.0 percent per annum of the OPERATIONS market value of the securities lent. The Federal Reserve Bank of New York shall apply reasonable limitations on Amended February 2, 1999 the total amount of a specific issue that may be auctioned and on the amount of securities that each dealer may 1. The Federal Open Market Committee authorizes and borrow. The Federal Reserve Bank of New York may directs the Federal Reserve Bank of New York, for System reject bids which could facilitate a dealer's ability to con- Open Market Account, to the extent necessary to carry out trol a single issue as determined solely by the Federal the Committee's foreign currency directive and express Reserve Bank of New York. authorizations by the Committee pursuant thereto, and in 3. In order to ensure the effective conduct of open conformity with such procedural instructions as the Commarket operations, while assisting in the provision of shortmittee may issue from time to time: term investments for foreign and international accounts A. To purchase and sell the following foreign currenmaintained at the Federal Reserve Bank of New York, the cies in the form of cable transfers through spot or forward Federal Open Market Committee authorizes and directs the transactions on the open market at home and abroad, Federal Reserve Bank of New York (a) for System Open including transactions with the U.S. Treasury, with the U.S. Market Account, to sell U.S. Government securities to such Exchange Stabilization Fund established by Section 10 of foreign and international accounts on the bases set forth in the Gold Reserve Act of 1934, with foreign monetary paragraph 1(a) under agreements providing for the resale authorities, with the Bank for International Settlements, by such accounts of those securities within 60 calendar and with other international financial institutions: days on terms comparable to those available on such transactions in the market; and (b) for New York Bank Canadian dollars Mexican pesos account, when appropriate, to undertake with dealers, sub- Danish kroner Norwegian kroner ject to the conditions imposed on purchases and sales of Euro Swedish kronor securities in paragraph 1(b), repurchase agreements in U.S. Pounds sterling Swiss francs Government and agency securities, and to arrange corre- Japanese yen sponding sale and repurchase agreements between its own account and foreign and international accounts maintained at the Bank. Transactions undertaken with such accounts B. To hold balances of, and to have outstanding forunder the provisions of this paragraph may provide for a ward contracts to receive or to deliver, the foreign currenservice fee when appropriate. cies listed in paragraph A above. C. To draw foreign currencies and to permit foreign On the Manager's recommendation, the Commitbanks to draw dollars under the reciprocal currency tee also amended the Foreign Currency Authorization arrangements listed in paragraph 2 below, provided that Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 429 drawings by either party to any such arrangement shall be ties may be purchased from foreign central banks under fully liquidated within 12 months after any amount out- agreements for repurchase of such securities within 30 calstanding at that time was first drawn, unless the Commit- endar days. tee, because of exceptional circumstances, specifically 6. All operations undertaken pursuant to the preceding authorizes a delay. paragraphs shall be reported promptly to the Foreign Cur- D. To maintain an overall open position in all foreign rency Subcommittee and the Committee. The Foreign Curcurrencies not exceeding $25.0 billion. For this purpose, rency Subcommittee consists of the Chairman and Vice the overall open position in all foreign currencies is defined Chairman of the Committee, the Vice Chairman of the as the sum (disregarding signs) of net positions in indi- Board of Governors, and such other member of the Board vidual currencies. The net position in a single foreign as the Chairman may designate (or in the absence of currency is defined as holdings of balances in that cur- members of the Board serving on the Subcommittee, other rency, plus outstanding contracts for future receipt, minus Board members designated by the Chairman as alternates, outstanding contracts for future delivery of that currency, and in the absence of the Vice Chairman of the Committee, i.e., as the sum of these elements with due regard to sign. his alternate). Meetings of the Subcommittee shall be 2. The Federal Open Market Committee directs the Fed- called at the request of any member, or at the request of the eral Reserve Bank of New York to maintain reciprocal Manager, System Open Market Account ("Manager"), for currency arrangements ("swap" arrangements) for the Sys- the purposes of reviewing recent or contemplated operatem Open Market Account for periods up to a maximum of tions and of consulting with the Manager on other matters 12 months with the following foreign banks, which are relating to his responsibilities. At the request of any memamong those designated by the Board of Governors of the ber of the Subcommittee, questions arising from such Federal Reserve System under Section 214.5 of Regulation reviews and consultations shall be referred for determina- N, Relations with Foreign Banks and Bankers, and with the tion to the Federal Open Market Committee. approval of the Committee to renew such arrangements on 7. The Chairman is authorized: maturity: A. With the approval of the Committee, to enter into any needed agreement or understanding with the Secretary of the Treasury about the division of responsibility for Amount of arrangement foreign currency operations between the System and the Foreign bank (millions of dollars equivalent) Treasury; B. To keep the Secretary of the Treasury fully advised 222,,,000000000 concerning System foreign currency operations, and to 333,,,000000000 consult with the Secretary on policy matters relating to foreign currency operations; Any changes in the terms of existing swap arrange- C. From time to time, to transmit appropriate reports ments, and the proposed terms of any new arrangements and information to the National Advisory Council on Interthat may be authorized, shall be referred for review and national Monetary and Financial Policies. approval to the Committee. 8. Staff officers of the Committee are authorized to 3. All transactions in foreign currencies undertaken transmit pertinent information on System foreign curunder paragraph 1A. above shall, unless otherwise rency operations to appropriate officials of the Treasury expressly authorized by the Committee, be at prevailing Department. market rates. For the purpose of providing an investment 9. All Federal Reserve Banks shall participate in the return on System holdings of foreign currencies, or for the foreign currency operations for System Account in accorpurpose of adjusting interest rates paid or received in dance with paragraph 3 G(l) of the Board of Governors' connection with swap drawings, transactions with foreign Statement of Procedure with Respect to Foreign Relationcentral banks may be undertaken at non-market exchange ships of Federal Reserve Banks dated January 1, 1944. rates. 4. It shall be the normal practice to arrange with foreign central banks for the coordination of foreign currency transactions. In making operating arrangements with for- FOREIGN CURRENCY DIRECTIVE eign central banks on System holdings of foreign currencies, the Federal Reserve Bank of New York shall not Amended February 2, 1999 commit itself to maintain any specific balance, unless authorized by the Federal Open Market Committee. Any 1. System operations in foreign currencies shall generagreements or understandings concerning the admin- ally be directed at countering disorderly market conditions, istration of the accounts maintained by the Federal Reserve provided that market exchange rates for the U.S. dollar Bank of New York with the foreign banks designated reflect actions and behavior consistent with the IMF Artiby the Board of Governors under Section 214.5 of Regula- cle IV, Section 1. tion N shall be referred for review and approval to the 2. To achieve this end the System shall: Committee. A. Undertake spot and forward purchases and sales 5. Foreign currency holdings shall be invested to ensure of foreign exchange. that adequate liquidity is maintained to meet anticipated B. Maintain reciprocal currency ("swap") arrangeneeds and so that each currency portfolio shall generally ments with selected foreign central banks. have an average duration of no more than 18 months C. Cooperate in other respects with central banks (calculated as Macaulay duration). When appropriate in of other countries and with international monetary connection with arrangements to provide investment facili- institutions. ties for foreign currency holdings, U.S. Government securi- 3. Transactions may also be undertaken: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

430 Federal Reserve Bulletin • June 1999 A. To adjust System balances in light of probable System's overall open position in foreign currencies future needs for currencies. exceeding $1.5 billion since the most recent regular meet- B. To provide means for meeting System and Trea- ing of the Committee. sury commitments in particular currencies and to facilitate B. Any swap drawing proposed by a foreign bank operations of the Exchange Stabilization Fund. exceeding the larger of (i) $200 million or (ii) 15 percent of C. For such other purposes as may be expressly the size of the swap arrangement. authorized by the Committee. 3. The Manager shall also consult with the Subcommit- 4. System foreign currency operations shall be tee or the Chairman about proposed swap drawings by the conducted: System and about any operations that are not of a routine A. In close and continuous consultation and coopera- character. tion with the United States Treasury; B. In cooperation, as appropriate, with foreign mone- On January 27, 1999, the continuing rules, regulatary authorities; and tions, and other instructions of the Committee had C. In a manner consistent with the obligations of the been distributed with the advice that, in accordance United States in the International Monetary Fund regarding with procedures approved by the Committee, they exchange arrangements under the IMF Article IV. were being called to the Committee's attention before the February 2-3 meeting to give members an oppor- By unanimous vote, the Procedural Instructions tunity to raise any questions they might have conwith Respect to Foreign Currency Operations shown cerning them. Members were asked to indicate if they below were reaffirmed. wished to have any of the instruments in question placed on the agenda for consideration at this meet- PROCEDURAL INSTRUCTIONS WITH RESPECT TO ing, and no requests for consideration were received. FOREIGN CURRENCY OPERATIONS Accordingly, all of these instruments remained in effect in their existing form. Reaffirmed February 2, 1999 The Committee discussed proposed changes to the In conducting operations pursuant to the authorization and Program for Security of FOMC Information to update direction of the Federal Open Market Committee as set the document with regard to certain security classififorth in the Authorization for Foreign Currency Operations cations and access to confidential FOMC informaand the Foreign Currency Directive, the Federal Reserve tion. The Committee decided to continue its discus- Bank of New York, through the Manager, System Open Market Account ("Manager"), shall be guided by the sion at a later meeting. following procedural understandings with respect to con- By unanimous vote, the minutes of the meeting of sultations and clearances with the Committee, the Foreign the Federal Open Market Committee held on Decem- Currency Subcommittee, and the Chairman of the Commitber 22, 1998, were approved. tee. All operations undertaken pursuant to such clearances The Manager of the System Open Market Account shall be reported promptly to the Committee. 1. The Manager shall clear with the Subcommittee (or reported on recent developments in foreign exchange with the Chairman, if the Chairman believes that consulta- markets. There were no open market operations in tion with the Subcommittee is not feasible in the time foreign currencies for the System's account in the available): period since the previous meeting, and thus no vote A. Any operation that would result in a change in was required of the Committee. the System's overall open position in foreign currencies exceeding $300 million on any day or $600 million since The Manager also reported on developments in the most recent regular meeting of the Committee. domestic financial markets and on System open mar- B. Any operation that would result in a change on ket transactions in government securities and federal any day in the System's net position in a single foreign agency obligations during the period December 22, currency exceeding $150 million, or $300 million when the 1998, through February 2, 1999. By unanimous vote, operation is associated with repayment of swap drawings. the Committee ratified these transactions. C. Any operation that might generate a substantial volume of trading in a particular currency by the System, The Committee then turned to a discussion of the even though the change in the System's net position in that economic and financial outlook and the implementacurrency might be less than the limits specified in l.B. tion of monetary policy over the intermeeting period D. Any swap drawing proposed by a foreign bank not ahead. A summary of the economic and financial exceeding the larger of (i) $200 million or (ii) 15 percent of information available at the time of the meeting and the size of the swap arrangement. 2. The Manager shall clear with the Committee (or with of the Committee's discussion is provided below, the Subcommittee, if the Subcommittee believes that con- followed by the domestic policy directive that was sultation with the full Committee is not feasible in the time approved by the Committee and issued to the Federal available, or with the Chairman, if the Chairman believes Reserve Bank of New York. that consultation with the Subcommittee is not feasible in the time available): The information reviewed at this meeting sug- A. Any operation that would result in a change in the gested that the economy expanded rapidly in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 431 closing months of 1998. Widespread strength in partially reversed a November decline; rents have domestic final demand and a diminished drag from continued to rise in real terms over the last several net exports underpinned further solid gains in produc- years, but vacancy rates have changed little. tion, employment, and income. Inflation remained Business fixed investment picked up markedly in subdued despite very tight labor markets. the fourth quarter after the small decline of the pre- Nonfarm payroll employment recorded robust vious quarter. Much of the surge in spending on increases in November and December. Although producers' durable equipment was attributable to a manufacturing experienced further sizable job losses pickup in purchases of motor vehicles and aircraft. over the two months, strong employment gains were Elsewhere, investment in high-tech equipment achieved in construction, retail trade, and the services expanded rapidly further, while spending for other industries. The civilian unemployment rate fell to types of durable equipment decelerated somewhat. 4.3 percent in December, and other measures of labor Nonresidential construction activity apparently rose conditions also indicated that labor markets remained moderately in the fourth quarter. Office construction quite tight through year-end. picked up further in an environment of falling Industrial production rebounded in December from vacancy rates and rising rental costs, but other builda small November decline. Industrial output strength- ing activity remained sluggish. ened for the fourth quarter as a whole, largely reflect- The pace of business inventory investment in Octoing a surge in the production of motor vehicles and ber and November was slightly above that of the third parts that more than offset sizable reductions in min- quarter, but in comparison with strong sales invening and utility output. The manufacture of high-tech tory positions were relatively lean in most industries. equipment surged further and the production of con- In manufacturing, stocks increased moderately in the struction supplies stayed on a brisk upward trend, October-November period, and the aggregate stockwhile activity in other manufacturing categories shipments ratio was in the middle of its narrow range remained weak. On balance, output in manufacturing for the past year. Inventory investment in the wholeexpanded at about the same pace as capacity, leaving sale sector slowed considerably, but much of the the factory operating rate unchanged at a relatively swing reflected the unusually early harvest of farm low level. products. The inventory-sales ratio for this sector Consumer spending, supported by further sizable was still at the top of its range for the last year, and gains in income and net worth, remained robust inventory overhangs persisted in metals and minerals, through year-end. Retail sales rose sharply in the machinery, and chemicals. Retailers stepped up their fourth quarter. Expenditures for durable goods, par- inventory accumulation in the October-November ticularly motor vehicles, were very strong. Outlays period. However, sales were robust and the for nondurable goods were brisk despite sluggish inventory-sales ratio for this sector continued to trend growth in spending for apparel. Unseasonably mild downward. weather held down spending for energy services in The average deficit on U.S. trade in goods and November and December, but purchases of other services for October and November was a little types of services recorded moderate increases. Sur- smaller than the rate for the third quarter. The value veys in early 1999 indicated buoyant consumer senti- of exports for the two-month period rose considerment, reflecting optimism about personal finances ably, with the largest gains occurring in automotive and the employment outlook. products shipped to Canada, aircraft, machinery, agri- Residential housing activity continued to display cultural products, and services. The value of imports substantial strength in the fourth quarter. Single- also moved up, but by less than the value of exports. family housing starts remained at a very high level While the increases in imports were widespread in December, and sales of new homes in that month across trade categories, particularly large advances were only slightly below the record established were recorded for automotive products from Canada in November. Sales of existing homes hit a record and Mexico and for computers. The available data high in December. Unseasonably favorable weather suggested a weaker economic performance in most of extended the construction season in some areas of the the major foreign industrial countries in the fourth country, but low mortgage rates, rapid employment quarter; economic activity likely fell further in Japan, growth, rising net worth, and special financing pro- and economic growth apparently slowed in most grams designed to broaden opportunities for home- countries of the euro bloc. Activity in most Asian ownership were important factors in the strength developing countries remained depressed, though of home sales. Multifamily housing starts edged some seemed to be approaching a trough and Korea lower in the fourth quarter as a December increase appeared to be in the early stages of a recovery. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

432 Federal Reserve Bulletin • June 1999 Moreover, economic conditions worsened in most data confirming a slowdown of economic growth in Latin American economies. much of the euro area and the absence of inflationary Inflation remained low in 1998. Consumer prices pressures, and it rose against the British pound after changed little in December, reflecting a sizable drop the Bank of England unexpectedly cut its repo rate. in energy prices that offset the large increase in Moreover, the economic crisis in Brazil apparently tobacco prices put in place after a settlement was contributed to an increase in the dollar relative to reached between the states and the tobacco makers. some emerging market currencies. Against the yen, For 1998 as a whole, CPI inflation was slightly lower however, the dollar fell in early January to its lowest than in 1997; a substantial decline in energy prices level in more than two years, evidently in response to more than offset a sizable pickup in food inflation sharp increases in yields on Japanese bonds, but the and a small increase in core inflation. At the producer decline was partially reversed subsequently. level, prices of finished goods edged down in 1998 M2 and M3 continued to expand rapidly in Decemfollowing an appreciable decline in 1997. While fin- ber, with their liquid components, especially money ished energy prices fell by more in 1998, finished market funds, registering particularly large increases. food prices were down only slightly and prices of The effects of recent monetary policy easings in core finished goods turned up after having been reducing the opportunity costs of these components, unchanged in 1997. Growth of hourly compensation strong growth in GDP, and perhaps continued heightof private industry workers slowed considerably in ened demands for liquid and safe assets seemed to the fourth quarter of 1998, and the increase in hourly have contributed to this performance. Available data compensation for the year was little changed from for January pointed to appreciable moderation in the that of 1997. growth of both aggregates. From the fourth quarter of At its meeting on December 22,1998, the Commit- 1997 to the fourth quarter of 1998, M2 and M3 rose tee adopted a directive that called for maintaining at rates well above their annual ranges, while total conditions in reserve markets that were consistent domestic nonfinancial debt expanded at a pace somewith an unchanged federal funds rate of about what above the middle of its range. 43A percent and that did not contain any bias with The staff forecast prepared for this meeting pointed regard to the direction of possible adjustments to to a substantial moderation in the expansion to a rate policy during the intermeeting period. In the Commit- commensurate with the growth of the economy's tee's view, the stance of policy appeared to be consis- potential. Growth of private final demand would be tent with its objectives of fostering sustained low damped by the anticipated waning of positive wealth inflation and high employment, and the risks to this effects stemming from earlier large increases in outlook were reasonably well balanced over the near equity prices and by slow growth of spending on term. consumer durables, housing units, and business capi- Open market operations during the intermeeting tal goods after the earlier buildup in the stocks of period were directed toward maintaining the federal these items. Subdued expansion of foreign economic funds rate at the Committee's desired level. In the activity and the lagged effects of the earlier rise in the event, however, the rate averaged a little below its foreign exchange value of the dollar were expected to intended level, largely reflecting the efforts of the place continuing, though diminishing, restraint on the Trading Desk to keep reserve pressures around year- demand for U.S. exports for some period ahead and end to a minimum. Other short-term market rates to lead to further substitution of imports for domestic declined somewhat on balance, partly owing to the products. Pressures on labor resources were likely to disappearance of year-end pressures. Most long-term remain near current levels and inflation was projected interest rates changed little over the intermeeting to rise somewhat over the projection horizon, largely period, but Treasury bond yields moved up slightly as a result of an expected upturn in energy prices. on balance, apparently in response to incoming data In the Committee's discussion of current and prosuggesting stronger-than-expected economic growth. spective economic conditions, members referred to In foreign exchange markets, the trade-weighted continuing indications of an exceptional economic value of the dollar appreciated slightly on balance performance that was characterized by the persisover the period. A small decline in the dollar relative tence of quite low inflation despite very high and to other major currencies was more than offset by the rapidly rising levels of overall output and employdollar's appreciation in terms of the currencies of a ment. The members currently saw few signs that the broader group of countries that also are important economic expansion had moderated to a more sustrading partners of the United States. The dollar tainable rate, but most continued to anticipate subappreciated against the euro following the release of stantial slowing over the year ahead to a pace close to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 433 or somewhat above that of the economy's long-run and other commodity prices in world markets. Forpotential. While many agreed that such an outlook eign developments were seen as a continuing element was subject to greater upside risk than they had of weakness for the U.S. economy and also as a major anticipated a few months ago—given the abatement source of uncertainty in the outlook for the year of market turmoil and positive business and con- ahead. In this regard many members referred in parsumer sentiment—such factors as the waning effects ticular to the problems facing Brazil and the risk that of the earlier increases in stock market wealth on further financial and economic instability in that consumer spending and some slowing in the extraor- nation would spread to other Latin American coundinary growth in business expenditures for equip- tries, with repercussions on the U.S. economy. Marment were likely to exert a moderating effect on the kets in the major trading nations around the world expansion. Moreover, potentially greater weakness were likely to remain on the soft side, with Japan in foreign economies and possible disruption to for- struggling to recover from its ongoing recession and eign financial markets remained a downside risk to economic growth in Europe showing signs of becomthe outlook. Against this background, the mem- ing more sluggish. bers generally anticipated some pickup in inflation, Robust domestic demand clearly had offset weakthough to a still relatively low rate, primarily as last ness in net exports by a large margin in 1998, and year's declines in oil and other import prices were while the growth in such demand was projected to not repeated. A number referred, however, to the slow this year it was expected to remain sufficient to experience of recent years, which suggested that the support appreciable further expansion in overall ecoinflation process was not well understood and that nomic activity. Consumer spending had exhibited inflation forecasts were subject to a wide range of considerable vigor during the recent holiday season, uncertainty. and anecdotal reports from several regions suggested In keeping with the practice at meetings just before that the momentum in such spending had carried into the Federal Reserve's semiannual monetary policy the opening weeks of this year. Further, though proreport to the Congress and the Chairman's associated spectively moderating, growth in jobs and incomes, testimony, the members of the Committee and the supportive credit conditions, and upbeat consumer Federal Reserve Bank presidents not currently serv- sentiment suggested that consumer expenditures were ing as members had provided individual projections likely to be well maintained over coming quarters. of the growth in real and nominal GDP, the rate of Even so, members anticipated at least some moderaunemployment, and the rate of inflation for the year tion in the growth of consumption after an extended 1999. Their forecasts of the rate of expansion in real period of sizable accumulation of consumer durable GDP in 1999 had a central tendency of 2Vi to 3 per- goods. Among other factors, the positive effects on cent and a full range of 2 to VA percent. Such growth consumer spending of the large accumulation of stock was expected to be associated with a civilian unem- market wealth in recent years were likely to abate ployment rate in a range centering on AVA to AVI per- over time in the absence of a further and unanticicent in the fourth quarter of this year, implying little pated surge in stock market prices. or no change from the current level. With regard to Growth in business capital spending also was nominal GDP growth in 1999, the forecasts were expected to moderate as the year progressed to a pace mainly in a range of 4 to ALH percent, with an overall well below that experienced in recent years. Memrange of 33A to 5 percent. Projections of the rate of bers commented in this regard that slowing growth in inflation, as measured by the consumer price index, overall spending normally fostered reduced capital had a central tendency of 2 to 2Vi percent, somewhat investment, and indeed developments in the second above the outcome for 1998 when the rise in the half of 1998 suggested that such investment might index was held down by a marked decline in energy already be on a less strong uptrend. Moreover, the prices and reduced prices of non-oil imports. prospects of reduced growth in profits and a less In their review of developments across the nation, ebullient stock market could also be expected to members reported a mix of high overall levels of damp business fixed investment. Nonetheless, growth economic activity in every region but softness in a in such investment likely would continue to exceed number of specific business activities, notably those that of overall spending, reflecting ongoing efforts affected by foreign competition. In particular, many to improve efficiency and hold down labor costs in manufacturing firms along with businesses engaged highly competitive markets and more generally to in agriculture, mining, and energy were being take advantage of the declining costs of business adversely affected by weak demand in foreign mar- equipment and the rapid pace of technological innokets, strong import competition, and depressed oil vation. Members also cited reports from contacts in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

434 Federal Reserve Bulletin • June 1999 various sectors of the economy and areas of the many markets and greater cost reducing efforts of country that business plans continued to call for businesses would be sufficient to continue to hold substantial outlays for business equipment. Nonresi- price increases in check at the current degree of dential building activity remained robust in several tautness in labor markets. Members generally agreed regions, but given already ample capacity in many that if labor markets continued to tighten, cost and sectors, the prospects for such construction were rela- price pressures would begin to pick up. Some memtively weak. bers also expressed concern that rapid money growth, Housing activity had continued to display impres- should it persist, would suggest that monetary policy sive strength in many parts of the country, evidently was too accommodative to contain inflation presreflecting rapid growth in employment and incomes, sures. On balance, while a somewhat less favorable rising household net worth, and low mortgage inter- inflation performance was viewed as likely over the est rates. With the affordability of new homes year ahead, the members did not anticipate any subexpected to remain unusually attractive, the members stantial deterioration in the inflation climate if growth anticipated that housing activity would be sustained in economic activity approximated the central tenat a high level. Some moderation in housing starts dency of their forecasts. from recent peak levels appeared likely, however, in In keeping with the requirements of the Full the context of the slowing in job and income gains Employment and Balanced Growth Act of 1978 (the associated with the members' overall forecasts. Humphrey-Hawkins Act), the Committee reviewed With regard to the outlook for inflation, the mem- the ranges for growth of the monetary and debt bers saw no evidence of accelerating price inflation aggregates in 1999 that it had established on a tentadespite high levels of business activity and very tight tive basis in early July 1998. Those ranges included labor markets across most of the nation. Indeed, the expansion of 1 to 5 percent for M2 and 2 to 6 percent conjuncture over an extended period of strong eco- for M3, measured from the fourth quarter of 1998 to nomic growth, very low rates of unemployment, and the fourth quarter of 1999. The associated range for the absence of any buildup of inflation could not be growth of total domestic nonfinancial sector debt was explained in terms of normal historical relationships. provisionally set at 3 to 7 percent for 1999. The While temporary factors, such as declining oil prices, tentative ranges for 1999 were unchanged from the had played a role in depressing inflation, the persis- ranges that had been adopted for the past several tence of very low inflation under these conditions years. most likely also resulted from more lasting changes All the members endorsed a proposal to adopt the in economic relationships. These were perhaps best growth ranges for M2 and M3 in 1999 that had been evidenced by the widespread inability of business established on a provisional basis in July of last year. firms to raise prices because of strong competitive According to a staff analysis, growth of these aggrepressures in domestic and global markets and the gates would moderate considerably this year but was related efforts to hold down costs, including labor likely to remain above the tentative ranges, especially costs. Contributing importantly to the success of in the case of M3. The rapid growth of M2 and M3 those cost-saving efforts were the continued rapid in 1998 was associated with outsized declines in their growth of increasingly efficient business capital. The velocities that appeared to have resulted in part from accumulation of such capital evidently had greatly the turbulent behavior of financial markets and enhanced productivity in a broad range of economic related efforts by the public to move funds to relaactivities. In this regard, available indicators sug- tively safe and liquid assets and to turn to banks gested that productivity gains had essentially matched for credit. Other factors appear to have included increases in labor costs for nonfinancial corporations some rechanneling of financial flows into moneyover the past year. Members also cited widespread type balances after an extended period of surging expectations of low inflation as an important under- stock market prices and the drop in the opportunity lying factor in moderating wage and price increases. cost of holding money as market interest rates fell Looking ahead, an abatement or reversal of some over the latter part of the year. The expansion of M3 of the temporary factors reducing prices was likely to was further stimulated by the ongoing strength in raise measured inflation. The course of underlying institution-only money market funds whose popularinflation pressures was more difficult to gauge, how- ity as a cash management tool continued to grow. ever. If growth slowed to trend, as many expected, The calming of financial markets and forecasts of uncertainty about evolving relationships among eco- moderating nominal GDP growth pointed to reduced nomic activity, productivity growth, and wages made growth in the broad monetary aggregates this year. it unclear whether the enhanced competitiveness in However, it was clear that substantial uncertainty still Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 435 surrounded any projection of monetary expansion least in part, to restore what they regarded as a policy and the linkage between particular rates of money stance that seemed most likely to prove consistent growth over a year and the basic objectives of mone- with desirable economic trends. Still, the persistence tary policy. In these circumstances, the members did of subdued inflation and the absence of current evinot see any firm basis for deviating from the practice dence of accelerating inflation were seen as arguing in recent years of setting ranges that, assuming veloc- against a policy tightening move at this point. Moreity behavior consistent with average historical pat- over, it was clear that the outlook for economic terns, would serve as benchmarks for monetary activity was subject to considerable uncertainty and expansion consistent with longer-run price stability that some shortfall from current forecasts, perhaps in and a sustainable rate of real economic growth. conjunction with unexpectedly adverse trade and Domestic nonfinancial debt, which had grown at a financial influences stemming from developments rate in the upper part of its 3 to 7 percent range in abroad, might materialize and damp inflationary 1998, was thought likely to remain within that range demand pressures. Even in the absence of greaterthis year, indeed near the midpoint of the range than-anticipated slowing in the economic expansion, according to a staff analysis. Outstanding federal debt the experience of recent years had amply demonwas expected to contract by a larger amount this year strated that the relationship between demand presand, given current economic forecasts, the debt of the sures on resources and inflation was not following major nonfinancial sectors of the economy seemed historical patterns, and developments exerting a more likely to grow a bit more slowly. Thus, the members lasting moderating effect on inflation, such as more saw no reason to depart from the tentative range for productive capital investment and effective access to nonfinancial debt, which was expected to readily spare capacity overseas, could help to contain inflaencompass the likely rate of growth in this aggregate. tion for some time. Against this background, the At the conclusion of this review, the Committee members agreed on the need to continue to monitor voted to approve without change the ranges for 1999 the economy with care for signs either of a potential that it had established on a tentative basis on July 1, upturn in inflation or greater softness in the expan- 1998. Accordingly, the following statement of longer- sion than they were currently forecasting and to be run policy and growth ranges for 1999 was approved prepared to respond promptly in either direction. for inclusion in the domestic policy directive: In light of the uncertainties and diversity of risks surrounding the economic outlook, most members The Federal Open Market Committee seeks monetary were in favor of retaining the existing symmetry of and financial conditions that will foster price stability and the directive. In one view, however, the risks of rising promote sustainable growth in output. In furtherance of inflation were strong enough to warrant consideration these objectives, the Committee at this meeting established ranges for growth of M2 and M3 of 1 to 5 percent and 2 to of an asymmetrical directive that was tilted toward 6 percent respectively, measured from the fourth quarter of restraint. Nonetheless, since inflation was difficult to 1998 to the fourth quarter of 1999. The range for growth of predict and any needed adjustment to policy in the total domestic nonfinancial debt was set at 3 to 7 percent period ahead could readily be implemented even with for the year. The behavior of the monetary aggregates will a symmetrical directive, all the members indicated continue to be evaluated in the light of progress toward price level stability, movements in their velocities, and that they could accept such a directive. developments in the economy and financial markets. At the conclusion of this discussion, the Committee voted to authorize and direct the Federal Reserve Votes for this action: Messrs. Greenspan, McDonough, Bank of New York, until it was instructed otherwise, Boehne, Ferguson, Gramlich, Kelley, McTeer, Meyer, to execute transactions in the System Account in Moskow, Ms. Rivlin, and Mr. Stern. Votes against this action: None. accordance with the following domestic policy directive: In the Committee's discussion of policy for the The information reviewed at this meeting suggests that intermeeting period ahead, all the members favored the economy expanded rapidly in the closing months of an unchanged policy stance. Many were concerned 1998. Nonfarm payroll employment posted strong gains in that the odds were tilted toward rising inflation over November and December, and the civilian unemployment time, especially if the expansion did not slow to a rate fell to 4.3 percent in December. Total industrial promore sustainable rate. Members commented that the duction strengthened in the fourth quarter, owing in large measure to a surge in the production of motor vehicles and market unsettlement that had in large measure parts. Total retail sales rose sharply in the fourth quarter, prompted the Committee's easing actions during the and home sales and housing starts increased appreciably. fall had now lessened appreciably. In the view of Available indicators suggest that business capital spending some, those actions might need to be reversed, at picked up markedly in the fourth quarter after a lull in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

436 Federal Reserve Bulletin • June 1999 third. In November, the nominal deficit on U.S. trade in SUNSET LEGISLATION RELATING TO goods and services was somewhat larger than in October, HUMPHREY-HAWKINS REPORTS but the combined October-November deficit was slightly smaller than its third-quarter average. Inflation has The Committee discussed the Federal Reports Elimiremained subdued despite very tight labor markets. Most short-term interest rates have declined somewhat nation and Sunset Act of 1995, which provides for on balance since the meeting on December 22, while the termination of the legal requirements for semilonger-term rates have changed little. Share prices in equity annual Humphrey-Hawkins reports to the Congress markets have posted further sizable gains on balance over after 1999. At this meeting, the members agreed that the intermeeting period. In foreign exchange markets, the the semiannual reports and associated congressional trade-weighted value of the dollar has depreciated slightly over the period in relation to other major currencies but it hearings had been quite useful and should be continhas appreciated somewhat in terms of the currencies of a ued. They had given the Committee an effective broader group that also includes other important trading means to explain its policies and communicate its partners of the United States. views on a variety of issues and had enhanced its M2 and M3 continued to record very large increases in accountability to the public and the Congress. late 1998, but available data pointed to some moderation in January. From the fourth quarter of 1997 to the fourth quarter of 1998, both aggregates rose at rates well above the Committee's annual ranges. Total domestic nonfinan- SALE OF EURO RESERVES cial debt expanded at a pace somewhat above the middle of its range in 1998. In a notation vote completed on March 22, 1999, The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and the Committee unanimously approved an off-market promote sustainable growth in output. In furtherance of sale of approximately $4.8 billion equivalent of the these objectives, the Committee at this meeting established System's euro reserves to the Exchange Stabiliranges for growth of M2 and M3 of 1 to 5 percent and 2 to zation Fund (ESF). In return, the System received 6 percent respectively, measured from the fourth quarter of $3.4 billion in dollars and $1.4 billion equivalent of 1998 to the fourth quarter of 1999. The range for growth of total domestic nonfinancial debt was set at 3 to 7 percent Japanese yen from the ESF. The transaction reduced for the year. The behavior of the monetary aggregates will the System's overall holdings of foreign currencies continue to be evaluated in the light of progress toward to the level of those held by the ESF and left the price level stability, movements in their velocities, and resulting balances of euro and yen equal in both the developments in the economy and financial markets. System and ESF accounts. To promote the Committee's long-run objectives of price stability and sustainable economic growth, the Committee It was agreed that the next meeting of the Commitin the immediate future seeks conditions in reserve markets consistent with maintaining the federal funds rate at an tee would be held on Tuesday, March 30, 1999. average of around 43A percent. In view of the evidence The meeting adjourned at 11:40 a.m. on Februcurrently available, the Committee believes that prospec- ary 3, 1999. tive developments are equally likely to warrant an increase or a decrease in the federal funds rate operating objective Donald L. Kohn during the intermeeting period. Secretary Votes for this action: Messrs. Greenspan, McDonough, Boehne, Ferguson, Gramlich, Kelley, McTeer, Meyer, Moskow, Ms. Rivlin, and Mr. Stern. Votes against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

437 Legal Developments JOINT FINAL RULE—AMENDMENT TO RISK-BASED Appendix E to Part 208—Capital Adequacy CAPITAL STANDARDS FOR MARKET RISK Guidelines for State Member Banks; Market Risk Measure The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation 3. In Appendix E to Part 208, section 2., paragraph (b)(2) (FDIC) (collectively, the agencies) are adopting as a final is revised to read as follows: rule an interim rule amending their respective risk-based capital standards for market risk applicable to certain banks and bank holding companies with significant trading activities. The interim rule implemented a revision to the Basle Section 2.—Definitions Accord adopted in 1997. Prior to the revision, an institution that measured specific risk with an internal model that (b) * * * adequately measured such risk was subject to a minimum capital charge. An institution's capital charge for specific (2) Specific risk means changes in the market value of risk had to be at least as large as 50 percent of a specific specific positions due to factors other than broad marrisk charge calculated using the standardized approach. ket movements and includes event and default risk as The rule will finalize the interim rule, which reduced well as idiosyncratic variations. regulatory burden for institutions with qualifying internal models because they no longer must calculate a standardized specific risk capital charge. Effective July 1, 1999, 12 C.F.R. Parts 3, 208, 225, and 4. In Appendix E to Part 208, section 5., paragraphs (a), 325 are amended as follows. (b), and the introductory text of paragraph (c) are revised to read as follows: Part 3—Risk-Based Capital Standards: Market Risk For the reasons set out in the joint preamble, the OCC's portion of the joint interim rule with request for comment Section 5.—Specific Risk amending 12 C.F.R. parts titled Risk-Based Capital Standards: Market Risk, published on December 30, 1997, at (a) Modeled specific risk. A bank may use its internal 62 Federal Register 68,067 is adopted as final without model to measure specific risk. If the bank has demonchange. strated to the Federal Reserve that its internal model measures the specific risk, including event and default risk as Part 208—Membership of State Banking well as idiosyncratic variation, of covered debt and equity Institutions in the Federal Reserve System positions and includes the specific risk measures in the (Regulation H) VAR-based capital charge in section 3(a)(2)(i) of this appendix, then the bank has no specific risk add-on for purposes of section 3(a)(2)(ii) of this appendix. The model 1. The authority citation for Part 208 continues to read as should explain the historical price variation in the trading follows: portfolio and capture concentration, both magnitude and changes in composition. The model should also be robust Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321- to an adverse environment and have been validated through 338a, 371d, 461, 481-486, 601, 611, 1814, 1816, 1818, backtesting which assesses whether specific risk is being 1823(j), 1828(o), 1831o, 1831p-l, 1831r-l, 1835a, 1882, accurately captured. 2901-2907, 3105, 3310, 3331-3351, and 3906-3909; (b) Partially modeled specific risk. 15 U.S.C. 78b, 781(b), 781(g), 781(i), 78o-4(c)(5), 78q, (1) A bank that incorporates specific risk in its internal 78q-l, and 78w; 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104a, model but fails to demonstrate to the Federal Re- 4104b, 4106, and 4128. serve that its internal model adequately measures all aspects of specific risk for covered debt and 2. In Appendix E to Part 208, the appendix heading is equity positions, including event and default risk, revised to read as follows: as provided by section 5(a) of the appendix, must Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

438 Federal Reserve Bulletin • June 1999 calculate its specific risk add-on in accordance movements and includes event and default risk as well as with one of the following methods: idiosyncratic variations. (i) If the model is susceptible to valid separation of the VAR measure into a specific risk portion and a general market risk portion, then the specific risk add-on is equal to the previous 4. In Appendix E to Part 225, section 5., paragraphs (a), day's specific risk portion. (b), and the introductory text of paragraph (c) are revised to (ii) If the model does not separate the VAR mea- read as follows: sure into a specific risk portion and a general market risk portion, then the specific risk add-on is the sum of the previous day's VAR measures for subportfolios of covered debt and Section 5.—Specific Risk equity positions that contain specific risk. (2) If a bank models the specific risk of covered debt (a) Modeled specific risk. A bank holding company may positions but not covered equity positions (or vice use its internal model to measure specific risk. If the versa), then the bank may determine its specific organization has demonstrated to the Federal Reserve that risk charge for the included positions under section its internal model measures the specific risk, including 5(a) or 5(b)(1) of this appendix, as appropriate. event and default risk as well as idiosyncratic variation, of The specific risk charge for the positions not in- covered debt and equity positions and includes the specific cluded equals the standard specific risk capital risk measures in the VAR-based capital charge in section charge under paragraph (c) of this section. 3(a)(2)(i) of this appendix, then the organization has no specific risk add-on for purposes of section 3(a)(2)(ii) of (c) Specific risk not modeled. If a bank does not model this appendix. The model should explain the historical specific risk in accordance with section 5(a) or 5(b) of this price variation in the trading portfolio and capture concenappendix, then the bank's specific risk capital charge shall tration, both magnitude and changes in composition. The equal the standard specific risk capital charge, calculated as model should also be robust to an adverse environment and follows: have been validated through backtesting which assesses whether specific risk is being accurately captured. (b) Partially modeled specific risk. Part 225—Bank Holding Companies and Change in (1) A bank holding company that incorporates specific Bank Control (Regulation Y) risk in its internal model but fails to demonstrate to the Federal Reserve that its internal model adequately measures all aspects of specific risk for 1. The authority citation for Part 225 continues to read as covered debt and equity positions, including event follows: and default risk, as provided by section 5(a) of this appendix, must calculate its specific risk add-on in Authority. 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, accordance with one of the following methods: 1831p-l, 1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, (i) If the model is susceptible to valid separation 3331-3351, 3907, and 3909. of the VAR measure into a specific risk portion and a general market risk portion, then the 2. In Appendix E to part 225, the appendix heading is specific risk add-on is equal to the previous revised to read as follows: day's specific risk portion. (ii) If the model does not separate the VAR mea- Appendix E to Part 225—Capital Adequacy sure into a specific risk portion and a general Guidelines for Bank Holding Companies: Market market risk portion, then the specific risk Risk Measure add-on is the sum of the previous day's VAR measures for subportfolios of covered debt and equity positions that contain specific risk. 3. In Appendix E to Part 225, section 2., paragraph (b)(2) is (2) If a bank holding company models the specific risk revised to read as follows: of covered debt positions but not covered equity positions (or vice versa), then the bank holding company may determine its specific risk charge for Section 2.—Definitions the included positions under section 5(a) or 5(b)(1) of this appendix, as appropriate. The specific risk charge for the positions not included equals the standard specific risk capital charge under para- (b) * * * graph (c) of this section. (2) Specific risk means changes in the market value of (c) Specific risk not modeled. If a bank holding company specific positions due to factors other than broad market does not model specific risk in accordance with section Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 439 5(a) or 5(b) of this appendix, then the organization's spe- explain the historical price variation in the trading portfolio cific risk capital charge shall equal the standard specific and capture concentration, both magnitude and changes in risk capital charge, calculated as follows: composition. The model should also be robust to an adverse environment and have been validated through backtesting which assesses whether specific risk is being accurately captured. Part 325—Capital Maintenance (b) Add-on charge for modeled specific risk. A bank that incorporates specific risk in its internal model but fails to demonstrate to the FDIC that its internal model adequately 1. The authority citation for Part 325 continues to read as measures all aspects of specific risk for covered debt and follows: equity positions, including event and default risk, as provided by section 5(a) of this appendix, must calculate Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), the bank's specific risk add-on for purposes of sec- 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), tion 3(a)(2)(ii) of this appendix as follows: 1828(i), 1828(n), 1828(o), 1831o, 1835, 3907, 3909, 4808; (1) If the model is capable of valid separation of the Pub. L. 102-233, 105 Stat. 1761, 1789, 1790 (12 U.S.C. VAR measure into a specific risk portion and a 183In note); Pub. L. 102- 242, 105 Stat. 2236, 2355, 2386 general market risk portion, then the specific risk (12 U.S.C. 1828 note). add-on is equal to the previous day's specific risk portion. 2. In Appendix C to Part 325, the appendix heading is (2) If the model does not separate the VAR measure revised to read as follows: into a specific risk portion and a general market risk portion, then the specific risk add-on is the Appendix C to Part 325—Risk-Based Capital For sum of the previous day's VAR measures for sub- State Non-Member Banks: Market Risk portfolios of covered debt and equity positions. (c) Add-on charge if specific risk is not modeled. If a bank does not model specific risk in accordance with paragraph (a) or (b) of this section, the bank's specific risk add-on 3. In Appendix C to Part 325, section 2., paragraph (b)(2) charge for purposes of section 3(a)(2)(h) of this appendix is revised to read as follows: equals the sum of the components for covered debt and equity positions. If a bank models, in accordance with paragraph (a) or (b) of this section, the specific risk of Section 2.—Definitions. covered debt positions but not covered equity positions (or vice versa), then the bank's specific risk add-on charge for the positions not modeled is the component for covered (b) * * * debt or equity positions as appropriate: (2) Specific risk means changes in the market value of specific positions due to factors other than broad market movements and includes event and default ORDERS ISSUED UNDER BANK HOLDING COMPANY risk as well as idiosyncratic variations. ACT Orders Issued Under Section 3 of the Bank Holding 4. In Appendix C to Part 325, section 5., paragraphs (a), Company Act (b), and (c) introductory text are revised to read as follows: ANB Corporation Muncie, Indiana Section 5.—Specific Risk. Order Approving the Acquisition of a Bank Holding (a) Modeled specific risk. A bank may use its internal Company model to measure specific risk. If the bank has demonstrated to the FDIC that its internal model measures the ANB Corporation ("ANB"), a bank holding company specific risk, including event and default risk as well as within the meaning of the Bank Holding Company Act idiosyncratic variation, of covered debt and equity posi- ("BHC Act"), has requested the Board's approval under tions and includes the specific risk measure in the VAR- section 3 of the BHC Act (12 U.S.C. § 1842) to acquire based capital charge in section 3(a)(2)(i) of this appendix, Farmers State Bancorp ("Bancorp") and thereby to acquire then the bank has no specific risk add-on for purposes of The Farmers State Bank of Union City ("Bank"), both in section 3(a)(2)(ii) of this appendix. The model should Union City, Ohio. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

440 Federal Reserve Bulletin • June 1999 Notice of proposal, affording interested persons an op- posed combination that would substantially lessen compeportunity to submit comments, has been published (64 tition or tend to create a monopoly in any relevant banking Federal Register 6361 (1999)). The time for filing com- market, unless the Board finds that the anticompetitive ments has expired, and the Board has considered the pro- effects of the proposal are clearly outweighed in the public posal and all comments received in light of the factors set interest by the probable effect of the proposal in meeting forth in section 3 of the BHC Act. the convenience and needs of the community to be served. ANB is the 33rd largest depository institution in Indiana, ANB and Bank compete in the Muncie, Indiana, banking controlling deposits of approximately $417.5 million, rep- market ("Muncie banking market").5 The Board has careresenting less than 1 percent of total deposits in depository fully reviewed the competitive effects of the proposal in the institutions in Indiana ("state deposits").1 Bank is the Muncie banking market in light of all of the facts of record, 179th largest depository institution in Ohio, controlling including the characteristics of the market and the prodeposits of $63.3 million, representing less than 1 percent jected increase in the concentration of total deposits in of state deposits. Bank also is the 112th largest depository insured depository institutions in this market ("market institution in Indiana, controlling approximately $18.2 mil- deposits") as measured by the Herfindahl-Hirschman Inlion in deposits, representing less than 1 percent of state dex ("HHI") under the Department of Justice Merger deposits.2 On consummation of the proposal, ANB would Guidelines ("DOJ Guidelines"). The Board also has carebecome the 32nd largest depository institution in Indiana, fully considered the number of competitors that would controlling $435.7 million, representing less than 1 percent remain in the market after consummation of the proposal. of state deposits. ANB is the second largest depository institution in the Muncie banking market, controlling $355.5 million in de- Interstate Analysis posits, representing 23 percent of market deposits.6 Bank is the seventh largest depository institution in the market, Section 3(d) of the BHC Act allows the Board to approve controlling $81.5 million in deposits, representing 5.3 peran application by a bank holding company to acquire cent of market deposits. On consummation of the proposal, control of a bank located in a state other than the home ANB would remain the second largest depository institustate3 of such bank holding company, provided that certain tion in the market, controlling deposits of $437 million, conditions are met. For purposes of the BHC Act, the home representing 28.3 percent of market deposits. The HHI state of ANB is Indiana, and ANB proposes to acquire a would increase by 243 points to 2450.7 bank in Ohio. The proposed transaction meets all of the The Board believes that several characteristics of the conditions for an interstate acquisition that are enumerated Muncie banking market mitigate the proposal's potential in section 3(d).4 In view of all the facts of record, the Board anticompetitive effects. First, a significant number of other is permitted to approve the proposal under section 3(d) of depository institutions would have the market share and the BHC Act. resources to compete effectively in the banking market. Eight bank and thrift institutions, including ANB, would Competitive Considerations remain in the market after consummation of the proposal, including several multistate banking organizations. Four of The BHC Act prohibits the Board from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly or would be in furtherance of 5. The Muncie banking market is defined as Delaware County excluding Salem township; Randolph County excluding Washington any attempt to monopolize the business of banking. The and Greensfork townships; Licking and Johnson townships in Black- BHC Act also prohibits the Board from approving a pro- ford County, all in Indiana; and Jackson township in Darke County, Ohio. 6. Market share data are reported as of June 30, 1998. Market share data are based on calculations that include the deposits of thrift 1. Deposit data are as of June 30, 1998. In this context, depository institutions at 50 percent. The Board previously has indicated that institutions include commercial banks, savings banks, and savings thrift institutions have become, or have the potential to become, associations. significant competitors of commercial banks. See, e.g., Midwest 2. Bank controls total deposits of $81.5 million, $18.2 million of Financial Group, 75 Federal Reserve Bulletin 386 (1989); National which are booked in its branch office in Indiana. The balance of the City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the bank's deposits are booked in its main office in Ohio. Board has regularly included thrift deposits in the calculation of 3. 12U.S.C. § 1842(d). A bank holding company's home state is market share on a 50-percent weighted basis. See, e.g., First Hawaithat state in which the total deposits of all banking subsidiaries of such ian, Inc., 77 Federal Reserve Bulletin 52 (1991). company were the largest on July 1, 1966, or on the date on which the 7. Under the revised DOJ Guidelines, 49 Federal Register 26,823 company became a bank holding company, whichever is later. (June 29, 1984), a market in which the post-merger HHI exceeds 1800 12 U.S.C. 1841(o)(4)(C). is considered highly concentrated. The Department of Justice has 4. See 12 U.S.C. §§ 1842(d)(1)(A) & (B) and 1842(d)(2)(A) & (B). informed the Board that a bank merger or acquisition generally will ANB is adequately capitalized and adequately managed, as defined by not be challenged (in the absence of other factors indicating anticomapplicable law. Bank has been in existence and operated continuously petitive effects) unless the post-merger HHI is at least 1800 and the during the five-year minimum statutory period. On consummation of merger increases the HHI by more than 200 points. The Department the proposal, ANB would control less than 10 percent of the total of Justice has stated that the higher than normal HHI thresholds for amount of deposits of insured depository institutions in the United screening bank mergers for anticompetitive effects implicitly recog- States. All other requirements of section 3(d) of the BHC Act would nize the competitive effect of limited-purpose lenders and other nonbe met on consummation of the proposal. depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 441 these institutions, including ANB, would each control mar- with all the commitments made in connection with the ket shares of 9 percent or more of market deposits and application. For the purposes of this order, the commitseveral large regional bank holding companies would con- ments and conditions relied on by the Board in reaching its tinue to operate in the market. decision are deemed to be conditions imposed in writing The Muncie banking market also is attractive for entry. by the Board in connection with its findings and decision Data for the year ending June 30, 1998 show that the and, as such, may be enforced in proceedings under appli- Muncie Metropolitan Statistical Area ("MSA"), which en- cable law. compasses most of the population of the Muncie banking The transaction shall not be consummated before the market, has had a larger increase in total deposits and per fifteenth calendar day after the effective date of this order, capita income than the increase on average in these statis- or later than three months after the effective date of this tics for other MSAs in Indiana. The market also has order, unless such period is extended for good cause by the recently experienced de novo entry and entry by acquisi- Board or by the Federal Reserve Bank of Chicago, acting tion, including two entries by acquisition in 1998. Indiana, pursuant to delegated authority. moreover, permits unrestricted intrastate branching.8 By order of the Board of Governors, effective April 1, The Department of Justice reviewed the proposal and 1999. advised the Board that consummation of the proposal would not likely have any significantly adverse competi- Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and tive effects in the Muncie banking market or any other Governors Kelley, Meyer, Ferguson, and Gramlich. relevant banking market. The Federal Deposit Insurance Corporation has been consulted and has not objected to the JENNIFER J. JOHNSON Secretary of the Board proposal. Based on all the facts of record, and for the reasons Banco Santander, S.A. discussed above, the Board concludes that consummation Madrid, Spain of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of Order Approving Acquisition of a Bank Holding banking resources in the Muncie banking market or any Company other relevant banking market, and that competitive factors are consistent with approval of the proposal. Banco Santander, S.A. ("Santander"), a bank holding company within the meaning of the Bank Holding Company Other Considerations Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to The BHC Act also requires the Board, in acting on an acquire BCH-USA, New York, New York ("Bank"), a application, to consider the financial and managerial rewholly owned subsidiary bank of Banco Central Hispanosources and future prospects of the companies and banks americano, S.A., Madrid, Spain ("BCH").1 involved, the convenience and needs of the communities to Notice of the proposal, affording interested persons an be served, and certain supervisory factors. The Board has opportunity to submit comments, has been published reviewed these factors in light of all the facts of record, (64 Federal Register 9995 (1999)). The time for filing including supervisory reports of examination assessing the comments has expired, and the Board has considered the financial and managerial resources of the organizations. application and all comments received in light of the Based on all the facts of record, the Board concludes that factors set forth in section 3 of the BHC Act. the financial and managerial resources and future prospects Santander, with total consolidated assets of approxiof ANB, its subsidiary banks, and Bank are consistent with mately $181 billion, is the largest banking organization in approval, as are the other supervisory factors the Board Spain.2 In the United States, Santander operates a branch in must consider under section 3 of the BHC Act. Consider- New York, New York; and an agency and an Edge corporaations related to the convenience and needs of communition in Miami, Florida. Santander also controls Banco ties to be served, including the records of performance of Santander Puerto Rico, San Juan, Puerto Rico ("Santanderthe institutions involved under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.), also are consistent with approval of the proposal. 1. Santander and BCH are two large foreign banks headquartered in Conclusion Spain, each with modest operations in the United States. This application involves a review of the proposed combination of the U.S. operations of these banks as part of a merger of BCH with and into Based on the foregoing, and in light of all the facts of Santander, in which Santander would be the surviving corporation. On record, the Board has determined that the application consummation, Santander would change its corporate name to "Banshould be, and hereby is, approved. Approval of the appli- co Santander Central Hispano, S.A." Santander also has applied under cation is specifically conditioned on compliance by ANB the International Banking Act, 12 U.S.C. § 3101 et seq., to retain BCH's direct U.S. branches and other offices. That application will be considered separately. 2. Asset data are as of December 31, 1998, using exchange rates 8. Ind. Code Ann. §§ 28-2-13-19 & 28-2-16-15 (West 1998). then in effect. Ranking data are as of December 31, 1997. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

442 Federal Reserve Bulletin • June 1999 PR"), a subsidiary bank that also maintains a branch in would result in an increase of less than one point in the New York, New York. Santander also has an indirect Herfindahl-Hirschman Index ("HHI") for the Metropoliinterest in Citizens Financial Group, Inc., Providence, tan New York-New Jersey banking market. The banking Rhode Island, a registered bank holding company.3 In market would remain unconcentrated with numerous comaddition, Santander engages directly and through subsidiar- petitors operating in the market.8 Based on all the facts of ies in a number of permissible nonbanking activities in the record, the Board concludes that consummation of the United States. proposal would not have a significantly adverse effect on BCH, with total consolidated assets of approximately competition or on the concentration of banking resources $95 billion, is the third largest banking organization in in the Metropolitan New York-New Jersey banking market Spain. In addition to Bank, BCH's U.S. banking operations or any other relevant banking market. consist of branches in New York, New York, and Miami, Florida. Financial and Managerial Considerations Interstate Analysis The BHC Act also requires the Board to consider the financial and managerial resources and future prospects of Section 3(d) of the BHC Act allows the Board to approve the companies and banks involved in the proposal. Sanan application by a bank holding company to acquire tander's capital ratios exceed the minimum levels that control of a bank located in a state other than the home would be required under the Basle Capital Accord, and are state of such bank holding company if certain conditions considered equivalent to the capital that would be required are met.4 For purposes of the BHC Act, the home state of of a U.S. banking organization. Bank's capital ratios ex- Santander is Rhode Island and Santander proposes to ac- ceed the "well capitalized" thresholds and would be unquire control of a bank in New York.5 All the conditions changed by this transaction. Based on these and all the for an interstate acquisition under section 3(d) are met in other facts of record, including confidential examination this case.6 In light of all the facts of record, the Board is and other supervisory information concerning the foreign permitted to approve the proposal under section 3(d) of the banks involved in the proposal and their existing U.S. BHC Act. operations and the commitments provided in this case, the Board concludes that financial and managerial factors are Competitive Considerations consistent with approval.9 As noted above, Santander and BCH operate various banking entities that compete in the Metropolitan New York- County in New Jersey; Pike County in Pennsylvania; and portions of New Jersey banking market.7 Each of these banking enti- Fairfield and Litchfield Counties in Connecticut. ties is relatively small and consummation of the proposal 8. Market share data used to analyze the competitive effects of the proposal are as of June 30, 1997, and are based on calculations in which the deposits of thrift institutions are included at 50 percent. The HHI for the Metropolitan New York-New Jersey banking market 3. Santander owns its indirect minority interest in Citizens Financial would remain at 761 after consummation of the proposal. Under the Group, Inc. ("Citizens") through The Royal Bank of Scotland Group revised Department of Justice Merger Guidelines, 49 Federal Register pic and its subsidiary, The Royal Bank of Scotland pic, both of 26,823 (1984), a market in which the post-merger HHI is less than Edinburgh, Scotland. See Banco de Santander, S.A. de Credito, 78 1000 is considered to be unconcentrated. The Department of Justice Federal Reserve Bulletin 60 (1992). has informed the Board that a bank merger or acquisition generally 4. 12 U.S.C. § 1842(d). A bank holding company's home state is will not be challenged (in the absence of other factors indicating that state in which the total deposits of all banking subsidiaries of such anticompetitive effects) unless the post-merger HHI is at least 1800 company were the largest on July 1, 1966, or the date on which the and the merger increases the HHI by more than 200 points. The company became a bank holding company, whichever is later. Department of Justice has stated that the higher than normal HHI 12 U.S.C. § 1841(o)(4)(C). thresholds for screening bank mergers and acquisitions for anticom- 5. For purposes of section 3(d) of the BHC Act, the home state of petitive effects implicitly recognize the competitive effects of limited- Santander is Rhode Island by virtue of Santander's indirect ownership purpose lenders and other nondepository financial entities. interest in Citizens, a bank holding company in Providence, Rhode 9. On May 18, 1998, the Board issued a temporary cease and desist Island. See The Royal Bank of Scotland Group pic, 82 Federal order (the "Order") pursuant to section 8(c) of the Federal Deposit Reserve Bulletin 428 (1996). Insurance Act (12 U.S.C. § 1818(c)) against Santander to address defi- 6. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). ciencies in its anti-money laundering programs. See Issuance of En- Santander meets the capital and managerial requirements established forcement Actions, 84 Federal Reserve Bulletin 539 (1998). The Order by applicable law. On consummation of the proposal, Santander and arose out of an investigation into the improper activities of two its affiliates would control less than 10 percent of the total amount of employees of Santander's subsidiary bank in Mexico, Banco Sandeposits of insured depository institutions in the United States, and tander Mexicano, S.A. In response to the Order, Santander completed less than 30 percent of the total amount of deposits in New York. See an internal investigation of the subject accounts and transactions and N.Y. Banking Law § 142-a (McKinney 1999). All other requirements reported its findings to the appropriate U.S. and Mexican authorities. of section 3(d) of the BHC Act also would be met on consummation In addition, Santander, with the assistance of outside counsel and of the proposal. independent auditors, conducted a review of its anti-money laundering 7. The Metropolitan New York-New Jersey banking market in- policies and on June 30, 1998, submitted a confidential report to the cludes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, Board on the adequacy of its procedures and a plan designed to ensure Sullivan, and Westchester Counties in New York; Bergen, Essex, that the conduct described in the Order would not occur in the future. Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, The Board received a comment from Inner City Press/Community on Somerset, Sussex, Union, Warren Counties, and a portion of Mercer the Move ("Protestant") stating that the issues raised by the Order Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 443 Convenience and Needs Considerations Business Administration ("SBA") loans totaling more than $26 million. Examiners noted that Santander-PR had been The Board also has carefully considered the effect of the designated a "Preferred Lender" and "Certified Lender" proposal on the convenience and needs of the communities by the SBA. Examiners also commended the bank on the to be served in light of all the facts of record. The Board distribution of its loans to businesses of different sizes. Of has long held that consideration of the convenience and the small business loans made by Santander-PR since its needs factor includes a review of the records of the rele- last CRA evaluation, 22 percent were to businesses with vant depository institutions under the Community Rein- gross annual revenues of less than $50,000, and 74 percent vestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). An insti- were to businesses with gross annual revenues of less than tution's most recent CRA performance evaluation is a $250,000. particularly important consideration in the applications pro- Examiners also noted that Santander-PR had made cess because it represents a detailed on-site evaluation of $81 million in qualified community development loans the institution's overall record of performance under the since its October 1995 CRA evaluation, including a loan to CRA by the appropriate federal financial supervisory a consortium of small poultry processors under the Rural agency. Housing and Community Development Service guarantee CRA Performance Examinations. Santander-PR, the only program to construct a poultry processing facility in a Santander banking operation that is subject to the CRA, low-income census tract in Salinas, Puerto Rico; a loan to a received an "outstanding" rating at its most recent CRA builder under the affordable housing guidelines set by the performance evaluation from its primary federal financial Government Development Bank of Puerto Rico to consupervisory agency, the Federal Deposit Insurance Corpo- struct 49 single-family homes in a moderate-income census ration ("FDIC"), as of October 14, 1997.10 Bank received tract in Barceloneta, Puerto Rico; and a loan to construct a a "satisfactory" rating from the FDIC at its most recent condominium project in a moderate-income census tract in CRA performance evaluation, as of December 31, 1998.11 Rio Piedras, Puerto Rico, with one-third of the units desig- Santander's CRA Performance Record. According to nated for affordable housing. examiners, Santander-PR's lending activities reflected re- Bank's CRA Performance Record. On May 21, 1998, the sponsiveness to credit needs in the bank's assessment FDIC granted Bank's request for designation as a "wholearea.12 From January 1 through September 30, 1997, sale institution" for purposes of evaluation under the CRA, Santander-PR originated more than 3,200 small business and Bank's CRA activities have been focused on lending loans, totaling more than $247 million, and more than 100 to community development intermediaries operating in its small farm loans, totaling more than $9 million. Of these assessment area.13 At Bank's December 31, 1998 examinaloans, Santander originated more than 400 of the small tion, examiners noted that Bank's CRA performance had business loans, totaling more than $36 million, and 16 of improved since its previous CRA performance evaluation the small farm loans, totaling more than $700,000 in low- because the bank had improved its ascertainment and finanand moderate-income ("LMI") census tracts. cial support of local community development initiatives Examiners stated that from October 1, 1996, through consistent with its resources and capabilities. September 30, 1997, Santander-PR originated 180 Small Examiners noted that Bank's community development lending (including new originations from January 1997 through December 1998 and prior loans funded with outstanding balances) totaled more than $1 million. Examinwere grounds on which the application should be denied. In light of ers stated that, since its last CRA examination, Bank has Santander's compliance with the Order to date, and its other efforts, the Board concludes that these matters do not warrant denial of the increased its community development lending by providproposal. ing six commitments totaling $900,000, representing a 10. Santander-PR also received an "outstanding" rating at its CRA 600 percent increase in funding.14 Examiners also stated performance evaluation by the FDIC, as of September 18, 1995. that Bank's levels of qualified investments and community Examiners noted in the October 14, 1997, CRA performance evaluadevelopment service since its prior CRA evaluation were tion that Santander-PR's branch in New York, New York, does not generally engage in domestic retail deposit or lending activities. The adequate. examiners found that the branch had performed in a satisfactory manner under the CRA when the branch was compared to similar institutions in the assessment area. 11. Bank received "needs to improve" ratings from the FDIC in two prior CRA performance evaluations, as of July 15, 1996, and 13. See 12 C.F.R. 345.25 (community development test for whole- May 31, 1995. Protestant argues that these earlier CRA ratings sup- sale institutions). port a denial of the proposal. Bank's current CRA performance 14. These commitments included a $150,000 three-year term loan to evaluation was recently completed by the FDIC, and its rating of a nonprofit community development financial institution to assist with "satisfactory" was announced by the bank after the date of Protes- the construction of affordable housing; a three-year, low-interest tant's comment letter. $200,000 loan to a nonprofit community development support organi- 12. Examiners noted that Santander-PR did not engage in residential zation that acts as an intermediary by channeling grants, loans, and mortgage lending, but that Bank's affiliate, Santander Mortgage Cor- equity investments to underserved communities; and a two-year, lowporation ("SMC"), offered affordable and first-time buyer programs interest $150,000 loan to the capitalization program of a nonprofit sponsored by the Government National Mortgage Association. In association that assists community development credit unions serving addition, examiners stated that SMC offered Federal Housing Admin- low-income communities and community groups seeking to form istration and Veterans Administration mortgage products. credit unions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

444 Federal Reserve Bulletin • June 1999 Conclusion on Convenience and Needs Considerations. Board. In light of these commitments and other facts of The Board has carefully considered all the facts of record, record, the Board has concluded that Santander has proincluding the comments received and the public CRA vided adequate assurances of access to any appropriate performance records of the institutions involved. In partic- information that the Board may request. For these reasons, ular, the Board has considered the efforts by Bank to and based on all the facts of record, the Board has conimprove its CRA performance, as verified by the FDIC in a cluded that the supervisory factors it is required to consider recently concluded CRA performance examination, and under section 3(c) of the BHC Act are consistent with the fact that this proposal represents an acquisition by an approval.17 applicant that has maintained a consistently outstanding CRA performance record. Based on a review of the entire Conclusion record, including the relevant reports of examination, the Board concludes that considerations relating to the conve- Based on the foregoing and all other facts of record, the nience and needs of the communities to be served are Board has determined that the application should be, and consistent with approval. hereby is, approved. The Board's approval of the proposal is expressly conditioned on Santander's compliance with Other Supervisory Considerations all the commitments made in connection with the application. The commitments and conditions relied on by the Under section 3 of the BHC Act, the Board may not Board in reaching this decision are deemed to be condiapprove an application involving a foreign bank unless the tions imposed in writing by the Board in connection with bank is "subject to comprehensive supervision or regula- its findings and decision and, as such, may be enforced in tion on a consolidated basis by the appropriate authorities proceedings under applicable law. in the bank's home country."15 The Board previously deter- The proposal shall not be consummated before the fifmined that Santander was subject to such supervision and teenth calendar day after the effective date of this order, or regulation,16 and based on all the facts of record, the Board later than three months after the effective date of this order, has concluded that Santander continues to be subject to unless such period is extended for good cause by the Board comprehensive supervision and regulation on a consoli- or by the Federal Reserve Bank of New York, acting dated basis by its home country supervisor. pursuant to delegated authority. The BHC Act also requires the Board to determine that By order of the Board of Governors, effective April 1, the foreign bank has provided adequate assurances that it 1999. will make available to the Board such information on its operations and activities and those of its affiliates that the Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Board deems appropriate to determine and enforce compli- Governors Kelley, Meyer, Ferguson, and Gramlich. ance with the BHC Act and the International Banking Act ("IBA") (12 U.S.C. § 3101 et seq.). The Board has re- JENNIFER J. JOHNSON Secretary of the Board viewed restrictions on disclosure in jurisdictions where Santander has material operations and has communicated Community Capital Bancshares, Inc. with relevant banking authorities concerning access to Albany, Georgia information. Santander has committed that, to the extent not prohibited by applicable law, it will make available to Order Approving Formation of a Bank Holding the Board such information on the operations of Santander Company and any of its affiliates that the Board deems necessary to determine and enforce compliance with the BHC Act, the Community Capital Bancshares, Inc. ("CCB") has re- IBA, and other applicable federal law. Santander also has quested the Board's approval under section 3(a)(1) of the committed to cooperate with the Board to obtain any Bank Holding Company Act ("BHC Act") waivers or exemptions that may be necessary to enable (12 U.S.C. § 1842(a)(1)) to become a bank holding com- Santander to make any such information available to the pany by acquiring all the voting shares of Albany Bank & Trust, N.A., Albany, Georgia ("Bank"), a de novo bank. Notice of the proposal, affording interested persons an 15. 12 U.S.C. § 1842(c)(3)(B). As provided in Regulation Y, the opportunity to submit comments, has been published Board determines whether a foreign bank is subject to consolidated (64 Federal Register 9155 (1999)). The time for filing home country supervision under the standards set forth in Regulation K. See 12 C.F.R. 225.13(a)(4). Regulation K provides that a foreign bank may be considered subject to consolidated supervision if the Board determines that the bank is supervised or regulated in such a 17. Protestant argues that the Board should deny Santander's applimanner that its home country supervisor receives sufficient informa- cation because the matters described by the Order referred to in tion on the worldwide operations of the foreign bank, including the footnote 9 raise questions about whether Santander is subject to relationship of the bank and its affiliates, to assess the foreign bank's comprehensive consolidated supervision by its home country supervioverall financial condition and compliance with law and regulation. sor under section 3 of the BHC Act. As noted above, in light of See 12 C.F.R. 211.24(c)(l)(ii). Santander's compliance with the Order to date, and its other efforts, 16. See, e.g., Banco Santander, S.A., 82 Federal Reserve Bulletin the Board does not believe that these matters warrant denial of the 833 (1996). subject proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 445 comments has expired, and the Board has considered the able consumer loans and student loans to assist in meeting proposal and all comments received in light of the factors the credit needs of its local community, and to offer workset forth in section 3 of the BHC Act. shops in LMI neighborhoods on basic money management CCB is a corporation formed for the purpose of acquir- skills and the fundamentals of maintaining a bank account. ing control of Bank.1 The Board previously has noted that Bank also would offer several types of deposit accounts, establishment of a de novo bank enhances competition in including a checking account with a $100 minimum balthe relevant banking market and is a positive consideration ance, no monthly maintenance fees, and unlimited checkin an application under section 3 of the BHC Act.2 Accord- writing privileges.4 ingly, the Board concludes that consummation of the pro- Bank's CRA plan provides that Bank will actively marposal would not have a significantly adverse effect on ket its products and services throughout its community, competition or on the concentration of banking resources including LMI neighborhoods, in several ways, including in any relevant banking market and that competitive con- direct mail and telemarketing programs and the sponsorsiderations are consistent with approval. Based on all the ship of community programs. Bank also has held three facts of record, the Board also concludes that the financial public forums in the Albany area to inform members of the and managerial resources and future prospects of CCB and local community about Bank's proposed products and ser- Bank are consistent with approval of the proposal, as are vices,5 and Bank plans to hold an additional three public the other supervisory factors the Board must consider forums in the Albany area before commencing operations. under section 3 of the BHC Act. The Board notes, moreover, that Bank's President and The Board also has considered carefully the effect of the Chief Executive Officer and Bank's Executive Vice Presiproposal on the convenience and needs of the communities dent and Senior Loan Officer recently served in manageto be served in light of all the facts of record, including a ment positions at insured depository institutions that recomment submitted on behalf of Business Research and ceived "outstanding" ratings at their most recent CRA Development, Albany, Georgia ("Commenter"). Com- performance evaluation by their appropriate federal supermenter contends that Bank will not adequately serve the visory agency. credit and banking needs of minorities nor of low- and As noted above, the OCC recently approved Bank's moderate-income ("LMI") individuals and neighborhoods application for a national bank charter after considering in the Albany area. Commenter also contends that Bank Bank's proposed assessment area and plans to meet the has not sufficiently marketed its proposed products and credit needs of the local community, including LMI areas, services to African Americans in Albany.3 in light of substantially similar comments filed by Com- Bank is a de novo insured depository institution and, menter. Consistent with the CRA, Bank has delineated a accordingly, has no record of performance under the Com- local assessment area within which the OCC, Bank's apmunity Reinvestment Act (12 U.S.C. § 2901 et seq.) propriate federal supervisory agency, will evaluate the per- ("CRA"). Bank, however, has established a comprehen- formance of Bank under the CRA in future examinations. 6 sive CRA plan that details the products and services that Bank's delineated assessment area includes all of Dough- Bank intends to offer to assist in meeting the credit, service erty County and the southern half of Lee County, both in and investment needs of Bank's entire community, includ- Georgia. Bank's assessment area includes all of Albany ing LMI neighborhoods. For example, Bank plans to offer and does not arbitrarily exclude LMI areas. a variety of housing-related loans, including first- and Based on all the facts of record, and for reasons dissecond-mortgages, home equity, and home improvement cussed above, the Board concludes that considerations loans. Bank also plans to originate small business loans relating to the convenience and needs factor are consistent guaranteed by the Small Business Administration and lines with approval of the application. The Board notes that the of credit to help agricultural borrowers meet seasonal de- OCC will evaluate Bank's actual record of meeting the mand for credit. In addition, Bank intends to make avail- credit needs of the Albany community, including LMI neighborhoods, in future CRA performance examinations of Bank, and the Board will carefully consider that record 1. The Office of the Comptroller of the Currency ("OCC") recently in acting on future applications by CCB to acquire an approved Bank's application for a national bank charter, subject to the insured depository institution. Board's approval of this application. See Letter from John O. Stein, II, Based on the foregoing, and in light of all the facts of Corporate Manager, Southeastern District Office, to Robert E. Lee, record, the Board has determined that the application dated February 9, 1999. 2. See CFBanc Holdings, Inc., 85 Federal Reserve Bulletin 52 (1999); Wilson Bank Holding Co., 82 Federal Reserve Bulletin 568 (1996). 3. Commenter also contends that African Americans are not fairly 4. Bank also plans to establish an additional branch in downtown represented in the management of CCB and Bank. The racial compo- Albany during its third year of operation. This branch would further sition of an applicant's management is not a factor the Board is increase Bank's ability to serve the banking and credit needs of its permitted to consider in acting on an application under section 3 of the community, including African-American and LMI residents of Al- BHC Act. The Board notes that the Equal Employment Opportunity bany. Commission has jurisdiction to determine whether banking organiza- 5. Before holding these public forums, Bank advertised the date, tions such as CCB and Bank are in compliance with Federal equal location, and purpose of the forums in a newspaper of general circulaemployment opportunity statutes under the regulations of the Depart- tion in the Albany area. ment of Labor. See 41 C.F.R. 60-1.7(a), 60-1.40. 6. See 12 C.F.R. 25.41(a). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 Federal Reserve Bulletin • June 1999 should be, and hereby is, approved.7 The Board's approval ORDERS ISSUED UNDER INTERNATIONAL BANKING is specifically conditioned on compliance by CCB with all ACT the commitments made in connection with the application. For the purpose of this action, the commitments and condi- Banco de Credito e Inversiones S.A. tions relied on by the Board in reaching its decision are Santiago, Chile deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, Order Approving Establishment of an Agency may be enforced in proceedings under applicable law.8 The acquisition of Bank shall not be consummated be- Banco de Credito e Inversiones S.A. ("Bank"), Santiago, fore the fifteenth calendar day after the effective date of Chile, a foreign bank within the meaning of the Internathis order, or later than three months after the effective date tional Banking Act ("IBA"), has applied under section 7(d) of this order, and Bank shall be open for business within of the IBA (12 U.S.C. § 3105(d)) to establish an agency in six months following the effective date of this order, unless Miami, Florida. The Foreign Bank Supervision Enhancesuch periods are extended for good cause by the Board or ment Act of 1991 ("FBSEA"), which amended the IBA, the Federal Reserve Bank of Atlanta, acting pursuant to provides that a foreign bank must obtain the approval of delegated authority. the Board to establish an agency in the United States. By order of the Board of Governors, effective April 12, Notice of the application, affording interested persons an 1999. opportunity to submit comments, has been published in a newspaper of general circulation in Miami, Florida (The Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Miami Herald, April 23, 1998). The time for filing com- Governors Kelley, Meyer, Ferguson, and Gramlich. ments has expired, and the Board has considered the application and all comments received. ROBERT DEV. FRIERSON Bank, with total consolidated assets of approximately Associate Secretary of the Board $5.9 billion,1 is the sixth largest bank in Chile. Approximately 70 percent of the shares of Bank are held by related parties.2 Mr. Yarur directly owns less than 1 percent of Bank's shares, and persons related to Mr. Yarur directly and indirectly own another 15 percent of Bank's shares. The remaining shares of Bank are widely held, with no single shareholder owning more than 5 percent of shares.3 Bank engages in a full range of wholesale, retail, and investment banking activities, including deposit-taking, private-sector lending, foreign exchange trading, and traderelated financing. Bank operates 139 branches or offices in 7. Commenter has requested that the Board hold public meetings or Chile. In addition, Bank operates six subsidiaries in Chile, hearings on the proposal. Section 3(b) of the BHC Act does not which engage in stock brokerage, mutual fund administrarequire the Board to hold a public hearing on an application unless the appropriate supervisory authority for the bank to be acquired makes a tion, financial consulting, collections, insurance brokerage, timely written recommendation of denial. The Board has not received and marketing activities, and owns a one-third equity intersuch a recommendation from the OCC. est in an unincorporated association that engages in elec- Under its rules, the Board also may, in its discretion, hold a public tronic funds clearing activities. At present, Bank does not meeting or hearing on an application to acquire a bank if a meeting or operate any foreign branches, agencies, or subsidiaries. hearing is necessary or appropriate to clarify factual issues related to the application and to provide an opportunity for testimony, if appro- Bank's primary purposes for establishing the proposed priate. 12 C.F.R. 225.16(e). The Board has carefully considered Com- agency in Florida are to enhance its ability to serve existing menter's request in light of all the facts of record. In the Board's view, customers and to expand its international customer base. Commenter has had ample opportunity to submit its views, and did submit written comments that have been carefully considered by the Board in acting on the proposal. Commenter's request fails to demonstrate why its written comments do not adequately present its evidence 1. Asset data are as of June 30, 1998. and fails to identify disputed issues of fact that are material to the 2. Empresas Juan Yarur S.A.C., Santiago, Chile ("Empresas"), Board's decision that would be clarified by a public meeting or which owns 54.7 percent of Bank's shares, is the only shareholder that hearing. For these reasons, and based on all the facts of record, the directly owns more than 5 percent of Bank's shares. Mr. Luis Enrique Board has determined that a public meeting or hearing is not required Yarur Rey, chairman of Bank's board, controls Empresas through two or warranted in this case. holding companies: Inversiones Petro S.A., Santiago, Chile ("Petro"), 8. Commenter also has requested that the Board delay action on the which directly owns 55.2 percent of Empresas; and Inversiones proposal for at least 90 days. The Board is required under applicable Baquio S.A., Santiago, Chile ("Baquio"), which directly owns law and its processing procedures to act on applications submitted 5.7 percent of Empresas's shares and directly owns 53 percent of under the BHC Act within a specified time. The Board has reviewed Petro. Together, Mr. Yarur and his wife own all of the shares of Commenter's request in light of these requirements and the record Baquio. compiled in this case. As noted above, Commenter was afforded 3. Approximately 12 percent of Bank's shares are held in custodial ample opportunity to comment and its comments were carefully accounts by Deposito Central de Valores ("DCV"), the clearinghouse considered. Based on a review of all the facts of record, the Board for the Santiago stock exchange. DCV acts only as a clearinghouse concludes that the record in this case is sufficient to warrant Board and custodian of securities and does not exercise any voting authority action on the proposal at this time, and further delay is not warranted. over shares in its custody. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 447 The agency would provide correspondent banking, corpo- Board previously determined that another Chilean credit rate banking, private banking, and investment advisory and institution was subject to comprehensive supervision on a fund management services. Bank does not engage directly consolidated basis by the SBIF.5 The Board has determined or indirectly in any nonbanking activities in the United that Bank is supervised on substantially the same terms and States. Bank would be a qualifying foreign banking organi- conditions as that other institution. Moreover, there have zation within the meaning of Regulation K (12 C.F.R. been recent enhancements to Chilean supervision in a 211.23(b)). number of areas, including increasing risk-based capital The Superintendencia de Bancos e Instituciones Finan- requirements and promoting information exchanges with cieras ("SBIF"), Bank's primary home country supervisor, foreign supervisory authorities. Based on all the facts of has indicated that it has no objection to establishment of record, the Board concludes that Bank is subject to comprethe proposed agency. hensive supervision and regulation on a consolidated basis In order to approve an application by a foreign bank to by its home country supervisor. establish an agency in the United States, the IBA and The Board also has taken into account the additional Regulation K require the Board to determine that the standards set forth in section 7 of the IBA (see foreign bank applicant engages directly in the business of 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). As banking outside of the United States and has furnished to noted above, the SBIF has indicated no objection to estabthe Board the information it needs to assess the application lishment of the proposed agency. adequately. The Board generally also must determine that Chile's risk-based capital standards conform to those the foreign bank is subject to comprehensive supervi- established by the Basle Capital Accord ("Accord"). sion or regulation on a consolidated basis by its home Bank's capital is in excess of the minimum levels that country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R. would be required by the Accord and is considered equiva- 211.24). The Board also may take into account addi- lent to capital that would be required of a U.S. banking tional standards as set forth in the IBA and Regulation K organization. Managerial and other financial resources of (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)). Bank also are considered consistent with approval of the As noted above, Bank engages directly in the business of proposed agency. Bank does not currently have operations banking outside of the United States. Bank also has pro- outside Chile. Nevertheless, in view of the experience of vided the Board with information necessary to assess the the proposed agency manager, and given the fact that Bank application through submissions that address the relevant has had extensive experience conducting the types of activissues. ities in which the proposed agency would be engaged, Regulation K provides that a foreign bank will be con- Bank appears to have the experience and capacity to supsidered to be subject to comprehensive supervision or port the activities to be conducted by the proposed agency. regulation on a consolidated basis if the Board determines Bank has established controls and procedures for the prothat the bank is supervised and regulated in such a manner posed agency to ensure compliance with U.S. law and for that its home country supervisor receives sufficient infor- its operations in general. mation on the foreign bank's worldwide operations, includ- Finally, the Board has reviewed the restrictions on dising the relationship of the foreign bank to any affiliate, to closure in relevant jurisdictions in which Bank operates assess the overall financial condition of the foreign bank and has communicated with relevant government authoriand its compliance with law and regulation (12 C.F.R. ties about access to information. Bank and Baquio have 211.24(c)(1)).4 committed to make available to the Board such informa- With respect to the issue of supervision by home country tion on the operations of Bank and any affiliate of Bank authorities, the Board has considered the following infor- that the Board deems necessary to determine and enforce mation. Bank is supervised and regulated by the SBIF. The compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable Federal law. To the extent that the provision of such information is prohib- 4. In determining whether this standard is met, the Board considers, ited or impeded by law, Bank and Baquio have committed among other factors, the extent to which the home country supervisor: to cooperate with the Board to obtain any necessary con- (a) Ensures that the bank has adequate procedures for monitoring sents or waivers that might be required from third parties in and controlling its activities worldwide; connection with disclosure of such information. In addi- (b) Obtains information on the condition of the bank and its subsidtion, subject to certain conditions, the SBIF may share iaries and offices through regular examination reports, audit reports, or otherwise; information on Bank's operations with other supervisors, (c) Obtains information on the dealings with and relationship be- including the Board. In light of these commitments and tween the bank and its affiliates, both foreign and domestic; other facts of record, and subject to the condition described (d) Receives from the bank financial reports that are consolidated on below, the Board concludes that Bank and Baquio have a worldwide basis, or comparable information that permits analprovided adequate assurances of access to any necessary ysis of the bank's financial condition on a worldwide consolidated basis; information the Board may request. (e) Evaluates 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 determination. 5. See Banco de Chile, 80 Federal Reserve Bulletin 179 (1994). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 Federal Reserve Bulletin • June 1999 On the basis of all the facts of record, and subject to the Bank, with assets of $298.5 billion,1 is the third largest commitments made by Bank and Baquio and the terms and bank in The Netherlands. Bank has 380 offices in The conditions set forth in this order, the Board has determined Netherlands, and approximately 125 offices in more than that Bank's application to establish a state-licensed agency 50 countries. should be, and hereby is, approved. Should any restrictions Bank's parent company, ING Groep, N.V. ("ING on access to information on the operations or activities of Group"),2 Amsterdam, The Netherlands, with total assets Bank or its affiliates subsequently interfere with the of $460.6 billion,3 is one of the world's largest financial Board's ability to obtain information to determine and services providers, offering life and non-life insurance, enforce compliance by Bank or its affiliates with applicable commercial and investment banking, asset management federal statutes, the Board may require termination of any and related products and services. ING Group has operaof Bank's direct or indirect activities in the United States. tions in Europe, North America, South America, Africa, Approval of this application is also specifically conditioned Asia, and Australia. on Bank's compliance with the commitments made in The proposed representative office's activities would connection with this application, and with the conditions in include marketing the products of Bank, maintaining relathis order.6 The commitments and conditions referred to tionships with U.S. corporate clients, and supporting above are conditions imposed in writing by the Board in Bank's Latin American offices on such matters as product connection with its decision, and may be enforced in development and marketing. proceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 In acting on an application to establish a representative against Bank, its offices, and its affiliates. office, the IBA and Regulation K provide that the Board By order of the Board of Governors, effective April 12, shall take into account whether the foreign bank engages 1999. directly in the business of banking outside of the United States, and has furnished to the Board the information it Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and needs to assess the application adequately. The Board also Governors Kelley, Meyer, Ferguson, and Gramlich. shall take into account whether the foreign bank and any foreign bank parent is subject to comprehensive supervi- ROBERT DEV. FRIERSON sion or regulation on a consolidated basis by its home Associate Secretary of the Board country supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)(2)).4 In addition, the Board also may take into ING Bank, N.V. account additional standards as set forth in the IBA and Amsterdam, The Netherlands Regulation K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). Order Approving Establishment of a Representative As noted above, Bank engages directly in the business of Office banking outside the United States. Bank also has provided the Board with information necessary to assess the applica- ING Bank, N.V. ("Bank"), Amsterdam, The Netherlands, tion through submissions that address the relevant issues. a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a representative 1. Unless otherwise indicated, data are as of January 5, 1998. office in New York, New York. The Foreign Bank Supervi- 2. Ninety-nine percent of the outstanding voting shares of ING sion Enhancement Act of 1991, which amended the IBA, Group are owned by a Dutch trust, Stichting Administratiekantoor provides that a foreign bank must obtain the approval of ING Groep (the "Trust"). The Trust engages in no activity other than holding shares of ING Group. Interests in the Trust are evidenced by the Board to establish a representative office in the United bearer receipts which carry no voting rights. Other than the Trust, no States. person owns more than 10 percent of the voting shares or bearer Notice of the application, affording interested persons an receipts. opportunity to submit comments, has been published in a 3. Data as of December 31, 1998. 4. 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, September 14, 1998). The time for filing (i) Ensure that the bank has adequate procedures for monitoring comments has expired, and the Board has considered the and controlling its activities worldwide; application and all comments received. (ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; (iv) Receive from the bank financial reports that are consolidated 6. The Board's authority to approve the establishment of the pro- on a worldwide basis or comparable information that permits posed agency parallels the continuing authority of the Florida Depart- analysis of the bank's financial condition on a worldwide ment of Banking and Finance to license offices of a foreign bank. The consolidated basis; Board's approval of the application does not supplant the authority of (v) Evaluate prudential standards, such as capital adequacy and the State of Florida and its agent, the Florida Department of Banking risk asset exposure, on a worldwide basis. These are indicia of and Finance, to license the proposed agency of Bank in accordance comprehensive, consolidated supervision. No single factor is with any terms or conditions that the Florida Department of Banking essential, and other elements may inform the Board's determiand Finance may impose. nation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 449 With respect to supervision by home country authorities, determined that Bank's application to establish the reprethe Board previously has determined, in connection with sentative office should be, and hereby is, approved. Should applications involving other banks in The Netherlands, that any restrictions on access to information on the operations those banks were subject to home country supervision on a or activities of Bank and its affiliates subsequently interfere consolidated basis.5 Bank is supervised by De Nederland- with the Board's ability to obtain information to determine sche Bank (the "Central Bank") on substantially the same and enforce compliance by Bank or its affiliates with terms and conditions as those other banks.6 Based on all applicable federal statutes, the Board may require terminathe facts of record, the Board has determined that Bank is tion of any of Bank's activities in the United States. subject to comprehensive supervision and regulation on a Approval of this application also is specifically conditioned consolidated basis by its home country supervisor. on compliance by Bank and its parents with the commit- The Board also has taken into account the additional ments made in connection with this application and with standards set forth in section 7 of the IBA and Regulation K the conditions in this order.7 The commitments and condi- (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). The tions referred to above are conditions imposed in writing Central Bank has no objection to the establishment of the by the Board in connection with its decision and may be proposed representative office. enforced in proceedings under 12 U.S.C. § 1818 against With respect to the financial and managerial resources of Bank and its affiliates. Bank, taking into consideration Bank's record of opera- By order of the Board of Governors, effective April 19, tions in its home country, its overall financial resources, 1999. and its standing with its home country supervisors, the Board has also determined that financial and managerial Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and factors are consistent with approval of the proposed repre- Governors Kelley, Meyer, Ferguson, and Gramlich. sentative office. Bank appears to have the experience and capacity to support the proposed representative office and ROBERT DEV. FRIERSON Associate Secretary of the Board has established controls and procedures for the proposed representative office to ensure compliance with U.S. law. Paribas With respect to access to information about Bank's Paris, France operations, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates Order Approving Establishment of a Representative and has communicated with relevant government authori- Office ties, regarding access to information. Bank and its parents have committed to make available to the Board such infor- Paribas, Paris, France, a foreign bank within the meaning mation on the operations of Bank and any of its affiliates of the International Banking Act ("IBA"), has applied that the Board deems necessary to determine and enforce under section 10(a) of the IBA (12 U.S.C. § 3107(a)) to compliance with the IBA, the Bank Holding Company Act establish a representative office in Atlanta, Georgia. The of 1956, as amended, and other applicable federal law. To Foreign Bank Supervision Enhancement Act of 1991, the extent that the provision of such information to the which amended the IBA, provides that a foreign bank must Board may be prohibited by law, Bank and its parents have obtain the approval of the Board to establish a representacommitted to cooperate with the Board to obtain any tive office in the United States. necessary consents or waivers that might be required from Notice of the application, affording interested persons an third parties for disclosure of such information. In addition, opportunity to submit comments, has been published in a subject to certain conditions, the Central Bank may share newspaper of general circulation in Atlanta, Georgia information on Bank's operations with other supervisors, (Atlanta Journal and Constitution, October 23, 1998). The including the Board. In light of these commitments and time for filing comments has expired, and the Board has other facts of record, and subject to the condition described considered the application and all comments received. below, the Board concludes that Bank has provided ade- Paribas, with total consolidated assets of approximately quate assurances of access to any necessary information $309 billion,1 is the surviving entity resulting from the that the Board may request. merger into Banque Paribas of its parent company, Com- On the basis of all the facts of record, and subject to the pagnie Financie re de Paribas, and certain other subsidiarcommitments made by Bank and its parents, as well as the ies and affiliated companies in May 1998. terms and conditions set forth in this order, the Board has 7. The Board's authority to approve the establishment of the pro- 5. See MeesPierson, N.V., 80 Federal Reserve Bulletin 662 (1994); posed representative office parallels the continuing authority of the Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank State of New York to license offices of a foreign bank. The Board's Nederland, 80 Federal Reserve Bulletin 947 (1994). approval of this application does not supplant the authority of the 6. The Central Bank also receives information on ING Group with State of New York and the New York State Banking Department regard to its nonbanking operations. The Central Bank and the Insur- ("Department") to license the proposed office of Bank in accordance ance Supervisory Board have entered into a protocol for the purpose with any terms or conditions that the Department may impose. of jointly regulating groups with interests in both banks and insurance companies. 1. Data are as of December 31, 1998. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 Federal Reserve Bulletin • June 1999 Paribas, which primarily engages in investment banking, also has taken into account the additional standards set asset management, and retail financial services, is the fifth forth in section 7 of the IBA and Regulation K (see largest banking group in France and has offices in more 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). The than 60 countries. In the United States, Paribas operates Commission Bancaire has no objection to the establishbranches in New York, New York, and Chicago, Illinois; ment of the proposed representative office. agencies in Houston, Texas, and Los Angeles, California; With respect to the financial and managerial resources of and representative offices in Dallas, Texas, and San Fran- Paribas, taking into consideration Paribas's record of opercisco, California. Paribas also owns several U.S. subsidiaries ations in its home country, its overall financial resources, that engage in nonbanking activities. The proposed represen- and its standing with its home country supervisors, the tative office would market Paribas's products and services. Board has also determined that financial and managerial In acting on an application to establish a representative factors are consistent with approval of the proposed repreoffice, the IBA and Regulation K provide that the Board sentative office. Paribas appears to have the experience and shall take into account whether the foreign bank engages capacity to support the proposed representative office and directly in the business of banking outside the United has established controls and procedures for the proposed States, and has furnished to the Board the information it representative office to ensure compliance with U.S. law. needs to assess the application adequately. The Board also With respect to access to information about Paribas's shall take into account whether the foreign bank and any operations, the Board has reviewed the restrictions on foreign bank parent is subject to comprehensive supervi- disclosure in relevant jurisdictions in which Paribas opersion or regulation on a consolidated basis by its home ates and has communicated with relevant government aucountry supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. thorities regarding access to information. Paribas has com- 211.24(d)(2)).2 In addition, the Board may take into account mitted to make available to the Board such information on additional standards set forth in the IBA and Regulation K the operations of Paribas and any of its affiliates that the (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). Board deems necessary to determine and enforce compli- As noted above, Paribas engages directly in the business ance with the IBA, the Bank Holding Company Act of of banking outside the United States. Paribas also has 1956, as amended, and other applicable federal law. To the provided the Board with information necessary to assess extent that the provision of such information to the Board the application through submissions that address the rele- may be prohibited by law, Paribas has committed to coopvant issues. With respect to supervision by home country erate with the Board to obtain any necessary consents or authorities, the Board previously has determined, in con- waivers that might be required from third parties for disclonection with applications involving other banks in France, sure of such information. In addition, subject to certain that those banks were subject to home country supervision conditions, the Commission Bancaire may share informaon a consolidated basis.3 Paribas is supervised by the tion on Paribas's operations with other supervisors, includ- French regulators on substantially the same terms and ing the Board. In light of these commitments and other conditions as those other banks. Based on all the facts of facts of record, and subject to the conditions described record, the Board has determined that Paribas is subject to below, the Board concludes that Paribas has provided comprehensive supervision and regulation on a consoli- adequate assurances of access to any necessary information dated basis by its home country supervisors.4 The Board that the Board may request. On the basis of all the facts of record, and subject to the commitments made by Paribas, as well as the terms and conditions set forth in this order, the Board has determined 2. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: that Paribas's application to establish a representative of- (i) Ensure that the bank has adequate procedures for monitoring fice should be, and hereby is, approved. Should any restricand controlling its activities worldwide; tions on access to information on the operations or activi- (ii) Obtain information on the condition of the bank and its subsidties of Paribas and its affiliates subsequently interfere with iaries and offices through regular examination reports, audit reports, or otherwise; the Board's ability to obtain information to determine and (iii) Obtain information on the dealings with and relationship be- enforce compliance by Paribas or its affiliates with applicatween the bank and its affiliates, both foreign and domestic; ble federal statutes, the Board may require termination of (iv) Receive from the bank financial reports that are consolidated any of Paribas's direct or indirect activities in the United on a worldwide basis or comparable information that permits States. Approval of this application is also specifically analysis of the bank's financial condition on a worldwide consolidated basis; conditioned on Paribas's compliance with the commit- (v) Evaluate prudential standards, such as capital adequacy and ments made in connection with this application and with risk asset exposure, on a worldwide basis. These are indicia of the conditions in this order.5 The commitments and condicomprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determination. 3. See Banque Nationale de Paris, 81 Federal Reserve Bulletin 515 of Paribas. The Board previously determined that the home country (1995); Caisse Nationale de Credit Agricole, 81 Federal Reserve supervision of SoGen was consistent with the approval of a represen- Bulletin 1055 (1995); Credit Agricole Indosuez, 83 Federal Reserve tative office. See Societe Generale, 80 Federal Reserve Bulletin 665 Bulletin 1025 (1997). (1994). 4. On February 1, 1999, Societe Generale ("SoGen") announced its 5. The Board's authority to approve the establishment of the prointention to make a stock-for-stock exchange offer for all of the shares posed office parallels the continuing authority of the State of Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 451 tions referred to above are conditions imposed in writing enforced in proceedings under 12 U.S.C. § 1818 against by the Board in connection with its decision and may be Paribas and its affiliates. By order of the Board of Governors, effective April 1, 1999. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and to license offices of a foreign bank. The Board's approval of this Governors Kelley, Meyer, Ferguson, and Gramlich. application does not supplant the authority of the State of Georgia and the State of Georgia Department of Banking and Finance ("Department") to license the proposed office of Paribas in accordance with JENNIFER J. JOHNSON any terms of conditions that the Department may impose. Secretary of the Board ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (JANUARY I, 1999-MARCH 31,1999) Bulletin Merged or Acquired Bank Volume Applicant or Activity Date of Approval and Page Arizona Bank, To acquire 15 branches in Arizona March 3, 1999 85, 343 Tucson, Arizona The Banc Corporation, Emerald Coast Bancshares, Inc., February 1, 1999 85, 269 Birmingham, Alabama Panama City Beach, Florida Emerald Coast Bank, Panama City Beach, Florida BankAmerica Corporation, Honor Technologies, Inc., February 1, 1999 85, 271 Charlotte, North Carolina Maitland, Florida BancWest Corporation, Star Systems, Inc., Honolulu, Hawaii San Diego, California BB&T Corporation, Winston-Salem, North Carolina First Union Corporation, Charlotte, North Carolina SunTrust Banks, Inc., Atlanta, Georgia Wachovia Corporation, Winston-Salem, North Carolina Zions Bancorporation, Salt Lake City, Utah Bay Port Financial Corporation, Bay Port State Bank, March 22, 1999 85, 333 Bay Port, Michigan Bay Port, Michigan C-B-G, Inc., Peoples National Corporation, March 29, 1999 85, 335 Wilton, Iowa Columbus Junction, Iowa Community Bank, Muscatine, Iowa Commerzbank AG, Korea Exchange Bank, March 15, 1999 85, 336 Frankfurt am Main, Germany Seoul, Korea California Korea Bank, Los Angeles, California First Banks, Inc., Redwood Bancorp, February 12, 1999 85, 268 Creve Coeur, Missouri San Francisco, California First Banks America, Inc., Redwood Bank, Clayton, Missouri San Francisco, California First Security Corporation, Van Kasper & Company, January 25, 1999 85, 207 Salt Lake City, Utah San Francisco, California Redwood Securities Group, Inc., San Francisco, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

452 Federal Reserve Bulletin • June 1999 Index of Orders—Continued Bulletin Merged or Acquired Bank Volume Applicant or Activity Date of Approval and Page The Fuji Bank, Limited, The Yasuda Trust and Banking Co., Ltd. March 15, 1999 85, 338 Tokyo,Japan Tokyo,Japan Yasuda Bank and Trust Company, New York, New York Istituto Bancario San Paolo Mabon Securities Corp., February 1, 1999 85, 275 di Torino-Istituto Mobiliare New York, New York Italiano S.p.A., Cedar Street Securities Corp., Turin, Italy New York, New York Union Planters Corporation, Memphis, Tennessee Union Planters Holding Corporation, First Mutual Bancorp, Inc., January 11, 1999 85, 205 Memphis, Tennessee Decatur, Illinois First Mutual Bank, S.B., Decatur, Illinois Wachovia Corporation, Interstate/Johnson Lane, Inc., March 17, 1999 85, 340 Winston-Salem, North Carolina Charlotte, North Carolina Interstate/Johnson Lane Corporation, Charlotte, North Carolina Westdeutsche Immobilienbank, To establish a representative office in March 1, 1999 85, 346 Mainz, Germany New York, New York APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) Effective Date BancTenn Corporation, Paragon Commercial Bank, April 22, 1999 Kingsport, Tennessee Raleigh, North Carolina Capital City Group, Inc. Grady Holding Company, April 7, 1999 Tallahassee, Florida Cairo, Georgia First National Bank of Grady County, Cairo, Georgia Cullen/Frost Bankers, Inc. Commerce Financial Corporation, April 23, 1999 San Antonio, Texas Fort Worth, Texas Bank of Commerce, Fort Worth, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 453 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 1st Constitution Bancorp, 1st Constitution Bank, New York March 26, 1999 Cranbury, New Jersey Cranbury, New Jersey 1st State Bancorp, Inc., 1st State Bank, Richmond April 8, 1999 Burlington, North Carolina Burlington, North Carolina 1st State Bank Foundation, Inc. 1st State Bancorp, Inc., Richmond April 8, 1999 Burlington, North Carolina Burlington, North Carolina 1st State Bank, Burlington, North Carolina Ameriwest Corporation, Otoe County Bancorporation, Inc., Kansas City April 5, 1999 Omaha, Nebraska Nebraska City, Nebraska Bank of DeSoto, N.A., Employee D Bancorp, Inc., Dallas April 15, 1999 Stock Ownership Trust, DeSoto, Texas DeSoto, Texas Bank of DeSoto, N.A., DeSoto, Texas Banterra Corp., Heartland Bancshares, Inc., St. Louis April 5, 1999 Eldorado, Illinois Herrin, Illinois Heartland National Bank, Herrin, Illinois Barret Bancorp, Inc., Somerville Bank and Trust Company, St. Louis April 14, 1999 Barretville, Tennessee Somerville, Tennessee Belvedere Capital Partners LLC, The California Community Financial San Francisco April 15, 1999 San Francisco, California Institutions Fund Limited Partnership, San Francisco, California California Financial Bancorp, Newport Beach, California Security First Bank, Fullerton, California The Bank of Orange County, Fountain Valley, California Downey National Bank, Downey, California National Business Bank, Torrance, California Citizens Corporation, Walthall Capital Group, Ltd., Atlanta March 26, 1999 Columbia, Mississippi Tylertown, Mississippi Walthall Citizens Bank, Tylertown, Mississippi Commerce Bancshares, Inc., Chelsea Bancshares, Inc., Kansas City April 13, 1999 Adair, Oklahoma Chelsea, Oklahoma Community Commercial Community Commercial Bank, St. Louis April 16, 1999 Bancshares, Inc., Germantown, Tennessee Germantown, Tennessee Community First Bancshares, Inc., Community First Bank, Atlanta April 14, 1999 New Iberia, Louisiana New Iberia, Louisiana Community State Bancshares, Inc.. Community Bank of Wichita, Inc., Kansas City March 31, 1999 Wichita, Kansas Wichita, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

454 Federal Reserve Bulletin • June 1999 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date First Capital Bank Holding First National Bank of Nassau County, Atlanta March 26, 1999 Corporation, Fernandina Beach, Florida Fernandina Beach, Florida First Financial Bancorp, Hebron Bancorp, Inc., Cleveland April 15, 1999 Hamilton, Ohio Hebron, Kentucky Goodenow Bancorporation, Southwest State Bank, Chicago April 9, 1999 Okoboji, Iowa Windom, Minnesota Greater Community Bancorp, Rock Community Bank, New York April 8, 1999 Totowa, New Jersey Glen Rock, New Jersey Habersham Bancorp, CB Financial Corp., Atlanta April 2, 1999 Cornelia, Georgia Warrenton, Georgia Horizon Financial Corp., Bellingham Bancorporation, San Francisco April 15, 1999 Bellingham, Washington Bellingham, Washington Bank of Bellingham, Bellingham, Washington Independence Bancorp, Crawford Financial Corporation, St. Louis April 2, 1999 New Albany, Indiana Indianapolis, Indiana Marengo State Bank, Marengo, Indiana Iowa Community Bancorp, Inc., Union-Adams Bancorp., Chicago April 21, 1999 Creston, Iowa Creston, Iowa Iowa State Savings Bank, Creston, Iowa Letchworth Independent Bancshares The Mahopac National Bank, New York April 6, 1999 Corporation, Mahopac, New York Castile, New York Mercantile Bancorp, Inc., First Mercantile Bank, N.A., Dallas April 13, 1999 Dallas, Texas Dallas, Texas Mercantile Delaware Bancorp, Inc., Dover, Delaware Midwest Bancorporation, Inc., Southwest State Bank, Chicago April 9, 1999 Okoboji, Iowa Windom, Minnesota M.R. Melton Limited Partnership, Morgantown Deposit Bancorp, Inc., St. Louis April 7, 1999 Mt. Sterling, Kentucky Morgantown, Kentucky Northfield Bancshares, Inc., RCB Holding Company, Minneapolis March 30, 1999 Northfield, Minnesota Roseville, Minnesota Roseville Community Bank, N.A., Roseville, Minnesota Piesco, Inc., Norwood Bancshares, Inc., Minneapolis April 8, 1999 Springfield, Minnesota Norwood Young America, Minnesota Citizens State Bank of Norwood, Norwood Young America, Minnesota Springfield Investment Company, Springfield, Minnesota Farmers and Merchants State Bank of Springfield, Springfield, Minnesota Reliance Bancshares, Inc., Reliance Bank, St. Louis April 1, 1999 Des Peres, Missouri Des Peres, Missouri SJN Banc Co., St. John National Bank, Kansas City April 15, 1999 St. John, Kansas St. John, Kansas Southeast Bancshares, Inc., Southeast Security Bank, Chicago April 15, 1999 Mediapolis, Iowa Mediapolis, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 455 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Stearns Financial Services, Inc. Stearns Financial Services, Inc. Minneapolis April 7, 1999 Employee Stock Ownership Plan St. Cloud, Minnesota and Trust, St. Cloud, Minnesota Suncoast Bancorp, Inc., Suncoast National Bank, Atlanta April 8, 1999 Sarasota, Florida Sarasota, Florida Swedish-American Bancshares, Inc., Swedish-American State Bank, Kansas City April 21, 1999 Courtland, Kansas Courtland, Kansas Violeta Investments, Ltd., Hebbronville State Bank, Dallas April 15, 1999 Hebbronville, Texas Hebbronville, Texas Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Centennial Bank Holdings, Inc., Centennial Bankers Mortgage, LLC, Kansas City March 24, 1999 Eaton, Colorado Eaton, Colorado Citigroup, Inc., Associates Corporation of North New York March 31, 1999 New York, New York America, Irving, Texas Commercial Credit Corporation, Baltimore, Maryland Consolidated Equity Corporation, Heart of Oklahoma Community Kansas City March 30, 1999 Purcell, Oklahoma Development Corporation, Purcell, Oklahoma Lubbock National Bancshares, Inc. Commerce Southwest Mortgage, L.L.C. Dallas March 31, 1999 Lubbock, Texas Lubbock, Texas McClain County Bancorporation, Heart of Oklahoma Community Kansas City March 30, 1999 Purcell, Oklahoma Development Corporation, Purcell, Oklahoma National Australia Bank Limited, Melbourne, Australia Homeside Lending, Inc., First Chicago NBD Mortgage Company, Chicago April 16, 1999 Jacksonville, Florida Troy, Michigan Standard Chartered PLC, UBS AG, New York April 1, 1999 London, England Basle, Switzerland Standard Chartered Bank, London, England Stockgrowers Banc Corporation, Howell Insurance Agency of Ashland, Kansas City March 29, 1999 Ashland, Kansas Ashland, Kansas UBS AG, Warburg Dillon Read, LLC, New York April 19, 1999 Basle, Switzerland New York, New York Wells Fargo & Company, San Francisco, California Norwest Financial Services, Inc., TCF National Bank Minnesota San Francisco April 15. 1999 Des Moines, Iowa Minneapolis, Minnesota Norwest Financial, Inc., TCF Consumer Financial Services, Inc. Des Moines, Iowa Minneapolis, Minnesota TCF Financial Services, Inc., Minneapolis, Minnesota Wells Fargo & Company, ATI Title Agency of Ohio, Inc., San Francisco March 30, 1999 San Francisco, California Cleveland, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

456 Federal Reserve Bulletin • June 1999 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Norwest Insurance, Inc., West Des Moines, Iowa Wells Fargo & Company, PaymentNet, Inc., San Francisco March 29, 1999 San Francisco, California Pleasanton, California Norwest Services, Inc., Minneapolis, Minnesota 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 Farmers Bank of Maryland, First Virginia Bank-Maryland, Richmond April 6, 1999 Annapolis, Maryland Upper Marlboro, Maryland First Interstate Bank, First National Bank of Montana, Minneapolis April 15, 1999 Billings, Montana Libby, Montana The Northwestern Bank, M&I Community State Bank, Minneapolis March 30, 1999 Chippewa Falls, Wisconsin Eau Claire, Wisconsin Premier Bank, Bank of Craig, Kansas City March 30, 1999 Lenexa, Kansas Craig, Missouri WestStar Bank, World Savings Bank, FSB, Kansas City April 12, 1999 Vail, Colorado Oakland, California PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Inner City Press/Community on the Move v. Board of Gover- Federal Reserve Banks in which the Board of Governors is not nors, No.98-9604 (2d Cir., filed December 3, 1998). Apnamed a party. peal of district court order dated October 6, 1998, granting summary judgment for the Board in a Freedom of Informa- Sedgwick v. Board of Governors, No. Civ 99 0702 (D. Arition Act case. zona, filed April 14, 1999). Action under Federal Tort Independent Bankers Association of America v. Board of Gov- Claims Act alleging violation of bank supervision requireernors, No. 98-1482 (D.C. Cir., filed October 21, 1998). ments. Petition for review of a Board order dated September 23, Hunter v. Board of Governors, No. 1:98CV02994 (TFH) 1998, conditionally approving the applications of Travelers (D.D.C., filed December 9, 1998). Action under the Free- Group, Inc., New York, New York, to become a bank dom of Information Act and the Privacy Act. holding company by acquiring Citicorp, New York, Folstad v. Board of Governors, No. 1:99 CV 124 (W.D. Mich., New York, and its bank and nonbank subsidiaries. filed February 17, 1999). Freedom of Information Act complaint. On March 23, 1999, the Board filed a motion to Clarkson v. Greenspan, No.98-5349 (D.C. Cir., filed July 29, dismiss or for summary judgment. 1998). Appeal of district court order granting Board's mo- Nelson v. Greenspan, No. 1:99CV00215 (EGS) (D.D.C., filed tion for summary judgment in a Freedom of Information January 28, 1999). Employment discrimination complaint. Act case. On March 2, 1999, the Court granted the Board's On March 29, 1999, the Board filed a motion to dismiss the motion for summary affirmance of the district court disaction. missal. Fraternal Order of Police v. Board of Governors, No. Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAK) 1:98CV03116 (D. D.C., filed December 22, 1998). Declara- (S.D.N.Y., filed May 15, 1998). Action to freeze assets of tory judgment action challenging Board labor practices. On individual pending administrative adjudication of civil February 26, 1999, the Board filed a motion to dismiss the money penalty assessment by the Board. On May 26, 1998, action. the court issued a preliminary injunction restraining the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 457 transfer or disposition of the individual's assets and appoint- FINAL ENFORCEMENT ORDERS ISSUED BY THE ing the Federal Reserve Bank of New York as receiver for BOARD OF GOVERNORS those assets. Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed Paul P. Piper May 4, 1998). Appeal and cross-appeal of district court Crested Butte, Colorado order granting in part and denying in part the Board's motion for summary judgment seeking prejudgment interest and a statutory surcharge in connection with a civil money The Federal Reserve Board announced on April 16, 1999, penalty assessed by the Board. On February 24, 1999, the the issuance of a Combined Order to Cease and Desist and court granted the Board's appeal and denied the cross- Order of Assessment of a Civil Money Penalty against appeal, and remanded the matter to the district court for Paul P. Piper, Jr., a former institution- affiliated party of determination of prejudgment interest due to the Board. first National Summit Bankshares, Crested Butte, Colo- Fenili u Davidson, No. C-98-01568-CW (N.D. California, rado, a former registered bank holding company, and the filed April 17, 1998). Tort and constitutional claim arising First National Summit Bank, Gunnison, Colorado, a former out of return of a check. On June 5, 1998, the Board filed its national bank. motion to dismiss. Logan v. Greenspan, No. 1:98CV00049 (D.D.C., filed January 9, 1998). Employment discrimination complaint. Goldman v. Department of the Treasury, No. 98-9451 (11th WRITTEN AGREEMENTS APPROVED BY FEDERAL Circuit, filed November 10, 1998). Appeal from a District RESERVE BANKS Court order dismissing an action challenging Federal Reserve notes as lawful money. Foxdale Bancorp, Inc. Kerr v. Department of the Treasury, No. CV-S-97-01877- South Elgin, Illinois DWH (D. Nev., filed December 22, 1997). Challenge to income taxation and Federal Reserve notes. On September 3, 1998, a motion to dismiss was filed on behalf of all The Federal Reserve Board announced on April 22, 1999, federal defendants. The court dismissed the action on the execution of a Written Agreement by and among March 31, 1999. Foxdale Bancorp, Inc., the Foxdale Bank, both of South Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. Elgin, Illinois, the Federal Reserve Bank of Chicago, and Tex., filed August 21, 1997). Privacy Act case. the Illinois Office of Banks and Real Estate. 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 A35 Mortgage debt outstanding and monetary base A13 Money stock, liquid assets, and debt measures Consumer Credit Commercial Banking Institutions— A3 6 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 A22 Commercial paper and bankers dollar DOMESTIC NONFINANCIAL STATISTICS acceptances outstanding A22 Prime rate charged by banks on short-term Selected Measures business loans A42 Nonfinancial business activity A23 Interest rates—Money and capital markets A42 Labor force, employment, and unemployment A24 Stock market—Selected statistics A43 Output, capacity, and capacity utilization A44 Industrial production—Indexes and gross value Federal Finance A46 Housing and construction A25 Federal fiscal and financing operations A47 Consumer and producer prices A26 U.S. budget receipts and outlays A48 Gross domestic product and income 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

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

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 (1) a decrease, (2) a negative "State and local government" also includes municipalities, figure, or (3) an outflow. special districts, and other political subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • June 1999 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1998 1999 1998 1999 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q2 Q3 04 Q1 Nov. Dec. Jan. Feb.r Mar. Reserves of depository institutions1 1 Total -3.8 -7.4 -1.6 -2.3 5.0 9.0 -.5 -14.4 -13.1 2 Required -2.5 -9.0 -2.3 -.1 3.8 10.5 .8 -6.0 -16.1 3 Nonborrowed -4.3 -8.4 -.4 -2.3 7.5 8.1 -2.9 -12.0 -11.8 4 Monetary base3 5.3 6.8 8.9 8.9 8.9 8.3 8.4 9.5 9.8 Concepts of money, liquid assets, and debt4 5 Ml 1.0 -2.0 5.0 2.5 9.6 4.7 -3.0r 1.4 9.8 6 M2 7.5 6.9 11.0 7.2 10.6 10.1 6.5 5.6 2.8 7 M3 10.1 8.6 12.9 7.1 13.4 12.0 3.9r 8.8 -3.0 8 Debt 6.0 6.ff 6.4r n.a. 7.4r 6.r 5.r 4.8 n.a. Nontransaction components 9 In M25 9.8 9.9 13.0 8.7 11.0 11.8 9.6 7.1 .4 10 In M3 only6 17.8 13.5 18.4 6.9 21.2 17.3 —3.2r 17.6 -18.8 Time and savings deposits Commercial banks 11 Savings, including MMDAs 13.4 15.8 17.6 11.4 16.4 19.2 12.3 5.1 .0 12 Small time7 .1 .1 .4 -5.4 1.5 -4.2 -7.9 -7.5 -3.5 13 Large time8'9 16.4 3.5 3.9 -3.6 8.1 8.0 10.6 -27.0 -34.2 Thrift institutions 14 Savings, including MMDAs 10.8 9.0 10.1 12.7 10.9 10.8 14.7r 14.6 7.3 15 Small time7 -4.4 -7.3 -6.7 -6.4 -10.5 —5.9r -5.2 -5.9 -8.2 16 Large time8 -4.5 .5 10.4 7.4 2.7 16.4 25.6 -14.5 -16.0 Money market mutual funds 17 Retail 20.9 19.0 28.4 21.0 20.5 22.3 23.2 23.7 4.0 18 Institution-only 34.7 26.6 41.8 17.9 42.2 29.5 -2.8 34.7 -1.8 Repurchase agreements and Eurodollars 19 Repurchase agreements10 14.5 11.7 16.4 11.2 25.4 34.0 -25.0 68.7 -50.2 20 Eurodollars10 -3.3 21.7 7.6 -.4 1.5 -20.0 -28.1r 42.4 36.3 Debt components4 21 Federal -1.4 -1.5 -2.0 n.a. -.5 -.4 -2.1 -7.3 n.a. 22 Nonfederal 8.4r 8.4r 9.1r n.a. 9.9r 8.1r 7.3r 8.4 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 Average of Average of daily figures for week ending on date indicated daily figures 1999 Feb. 17 Feb. 24 Mar. 3 Mar. 10 Mar. 17 Mar. 24 Mar. 31 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 504,486 501,636r 507,920 501,302 507,119 507,613 508,369 U.S. government securities2 2 Bought outright—System account3 453,333 458,706 464,000 458,088 459,973 461,317 462,738 464,197 464,809 3 Held under repurchase agreements 7,056 3,310 6,499 2,292 4,829 4,805 5,832 4,497 8,006 Federal agency obligations 4 Bought outright 337 336 318 336 336 336 332 311 311 5 6 Ac H ce e p ld ta n u c n e d s e r repurchase agreements 4,670 0 3,2220 3,4080 3,3590 3,5420 3,4780 2,7390 3,6900 3,9440 Loans to depository institutions 7 Adjustment credit 201 118 32 107 12 5 4 87 8 Seasonal credit 60 1 0 0 107 0 100 104 104 106 200 9 Extended credit 10 Float 2,313 446r 210 1,229 375 -320 1,134 62 -453 11 Other Federal Reserve assets 36,570 35,488r 33,436 35,891 34,536 34,218 34,326 34,837 31,646 12 Gold stock 11,046 11,049 11,048 11,049 11,049 11,047 11,047 11,049 11,048 13 Special drawing rights certificate account 9,200 9,200 8,329 9,200 9,200 9,200 8,343 8,200 8,200 14 Treasury currency outstanding 26,329 26,454r 26,540 26,453r 26,480r 26,508 26,522 26,536 26,550 ABSORBING RESERVE FUNDS 15 Currency in circulation 510,137 510,631' 514,694 511,75 lr 512,217r 512,507 513,872 514,742 515,057 16 Treasury cash holdings 87 114 132 125 117 121 131 132 134 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 6,597 4,800 5,463 4,223 4,998 4,974 5,087 6,313 5,309 18 Foreign 186 202 177 204 186 188 190 180 166 19 Service-related balances and adjustments . . 7,618 7,129r 6,981 6,865 6,944' 7,030 6,958 6,896 7,232 20 Other 443 270 247 288 279 254 251 261 236 21 Other Federal Reserve liabilities and capital . 16,711 16,686 17,002 16,838 16,942 16,520 16,855 17,117 17,184 22 Reserve balances with Federal Reserve Banks4 9,281 8,507r 9,141 7,710 8,755' 9,019 9,688 7,758 8,851 End-of-month figures Wednesday figures Mar. 3 Mar. 10 Mar. 17 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 498,740 503,077' 514,187 505,212 514,527 516,531 U.S. government securities2 2 Bought outright—System account3 454,439 461,036 465,686 456,987 461,106 461,998 463,621 464,506 464,744 3 Held under repurchase agreements 4,485 3,558 12,730 4,101 9,870 5,562 9,498 4,495 17,013 Federal agency obligations 4 Bought outright 336 311 336 336 336 311 311 311 6 5 Ac H ce e p ld ta n u c n e d s e r repurchase agreements 2,5350 0 5,6006 3,3140 7,2230 2,0470 5,4020 3,8400 4,5330 Loans to depository institutions 7 Adjustment credit 55 4 223 433 1 4 1 2 9 8 E Se x a te s n on d a e l d c c r r e e d d i i t t 50 102 220 0 102 106 102 200 107 10 Float 164 39r -882 3,552 -68 1,372 935 163 -305 11 Other Federal Reserve assets 36,721 34,208r 32,690 34,176 35,275 33,881 34,745 34,893 30,217 12 Gold stock 11,048 11,047 11,049 11,049 11,048 11,047 11,047 11,049 11,047 13 Special drawing rights certificate account 9,200 9,200 8,200 9,200 9,200 9,200 8,200 8,200 8,200 14 Treasury currency outstanding 26,397 26,508' 26,564 26,453' 26,480' 26,508 26,522 26,536 26,550 ABSORBING RESERVE FUNDS 15 Currency in circulation 505,528 511,709' 517,716 513,043' 512,884' 514,036 515,272 515,737 516,122 16 Treasury cash holdings 120 135 117 120 131 131 134 134 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 7,623 4,538 5,374 4,893 4,753 5,050 4,722 6,318 5,199 18 Foreign 234 200 166 185 218 185 165 173 169 19 Service-related balances and adjustments . . 7,828 7,030' 6,817 6,865 6,944' 7,030 6,958 6,896 7,229 20 Other 246 225 235 291 271 265 250 247 220 21 Other Federal Reserve liabilities and capital . 16,269 16,460 16,805 16,695 16,858 16,257 16,982 16,906 17,089 22 Reserve balances with Federal Reserve Banks' 7,558 9,551' 14,952 7,145 18,867' 9,013 15,816 7,602 16,166 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 3. Includes compensation that adjusts for the effects of inflation on the principal of 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged inflation-indexed securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 4. Excludes required clearing balances and adjustments to compensate for float. under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics • June 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. Sept. Oct. Nov. Dec. Jan. Feb.r Mar. 1 Reserve balances with Reserve Banks2 13,395 10,673 9,022 9,284 9,026 8,855 9,022 9,659 8,578 8,854 2 Total vault cash3 44,525 44,740 44,305 42,524 43,268 43,104 44,305 45,499 46,468 42,898 3 Applied vault cash4 37,848 37,206 35,997 34,909 35,090 35,297 35,997 36,687 36,660 34,271 4 Surplus vault cash5 6,678 7,534 8,308 7,614 8,178 7,807 8,308 8,812r 9,809 8,627 5 Total reserves6 51,242 47,880 45,019 44,193 44,115 44,152 45,019 46,346 45,237 43,125 6 Required reserves 49,819 46,196 43,435 42,509 42,544 42,527 43,435 44,811 44,022 41,817 7 Excess reserve balances at Reserve Banks7 1,423 1,683 1,584 1,684 1,572 1,624 1,584 1,535 1,215 1,308 8 Total borrowings at Reserve Banks8 155 324 117 251 174 84 117 206 116 65 9 Seasonal borrowings 68 79 15 178 107 37 15 7 9 18 10 Extended credit9 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two week periods ending on dates indicated 1998 1999 Dec. 2 Dec. 16 Dec. 30 Jan. 13 Jan. 27 Feb. 10 Feb. 24 Mar. 10r Mar. 24 Apr. 7 1 Reserve balances with Reserve Banks 9,028 8,949 9,057 9,551 10,019 8,750 8,233 9,356 8,309 9,229 2 Total vault cash3 43,313 43,230 45,470 45,023 44,837r 49,363r 45,597r 42,284 43,524 42,525 3 Applied vault cash4 35,853 35,273 36,748 35,911 36,847 38,649 35,997 34,007 34,521 34,149 4 Surplus vault cash5 7,460 7,957 8,722 9,113 7,990r 10,714r 9,60a1 8,277 9,004 8,376 5 Total reserves6 44,880 44,222 45,805 45,462 46,866 47,399 44,230 43,362 42,830 43,377 6 Required reserves 43,221 42,917 43,999 43,240 45,878 46,181 43,040 42,062 41,613 41,874 7 Excess reserve balances at Reserve Banks7 1,659 1,304 1,806 2,221 988 1,217 1,189 1,300 1,217 1,503 8 Total borrowings at Reserve Banks8 79 26 195 370 68 158 112 22 63 130 9 Seasonal borrowings 20 13 18 9 5 8 9 14 18 24 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 credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 5/ O 7/ n 9 9 Effective date Previous rate 5/ O 7/ n 9 9 Effective date Previous rate 5/ O 7/ n 9 9 Effective date Previous rate Boston 4.50 11/18/98 4.75 4.85 5/6/99 4.75 5.35 5/6/99 5.25 New York 11/17/98 Philadelphia 11/17/98 Cleveland 11/19/98 Richmond 11/18/98 Atlanta 11/18/98 Chicago 11/19/98 St. Louis 11/19/98 Minneapolis 11/19/98 Kansas City 11/18/98 Dallas 11/17/98 San Francisco .... 4.50 11/17/98 4.75 4.85 5/6/99 4.75 5.35 5/6/99 5.25 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank level)—All of level)—All of Effective date level)—All of F.R. Banks N.Y, F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1977 1982—July 20 11.5-12 11.5 1990—Dec. 19 6.5 6.5 23 11.5 11.5 1978—Jan. 9 6-6.5 6.5 Aug. 2 11-11.5 11 1991—Feb. 1 6-6.5 6 May 2 1 0 1 6 6 .5 .5 -7 6 7 .5 136 1 1 0 1 .5 1 1 0 1 . 5 Apr. 30 4 5.5 6 - 6 6 5 .5 12 7 7 27 10-10.5 10 May 2 5.5 5.5 July 3 7-7.25 7.25 30 10 10 Sept. 13 5-5.5 5 10 7.25 7.25 Oct. 12 9.5-10 9.5 17 5 5 Aug. 21 7.75 7.75 13 9.5 9.5 Nov. 6 4.5-5 4.5 Sept. 22 8 8 Nov. 22 9-9.5 9 7 4.5 4.5 Oct. 16 8-8.5 8.5 26 9 9 Dec. 20 3.5^1.5 3.5 20 8.5 8.5 Dec. 14 8.5-9 9 24 3.5 3.5 Nov. 1 8.5-9.5 9.5 15 8.5-9 8.5 3 9.5 9.5 17 8.5 8.5 1992—July 2 3-3.5 3 7 3 3 1979—July 20 10 10 1984—Apr. 9 8.5-9 9 Aug. 17 10-10.5 10.5 13 9 9 1994—May 17 3-3.5 3.5 20 10.5 10.5 Nov. 21 8.5-9 8.5 18 3.5 3.5 Sept. 19 10.5-11 11 26 8.5 8.5 Aug. 16 3.5^1 4 21 11 11 Dec. 24 8 8 18 4 4 Oct. 8 11-12 12 Nov. 15 4-4.75 4.75 10 12 12 1985—May 20 7.5-8 7.5 17 4.75 4.75 24 7.5 7.5 1980—Feb. 15 12-13 13 1995—Feb. 1 4.75-5.25 5.25 19 13 13 1986—Mar. 7 7-7.5 7 9 5.25 5.25 May 29 12-13 13 10 7 7 30 12 12 Apr. 21 6.5-7 6.5 1996—Jan. 31 5.00-5.25 5.00 June 13 11-12 11 23 6.5 6.5 Feb. 5 5.00 5.00 July 2 1 8 6 101-11 1 1 1 1 0 J A u u ly g . 2 1 1 1 5.5 6 - 6 6 5 .5 1998—Oct. 15 4.75-5.00 4.75 29 10 10 22 5.5 5.5 Oct. 16 4.75 4.75 Sept. 26 11 11 Nov. 17 12 12 1987—Sept. 4 5.5-6 6 1998—Nov. 17 4.50-4.75 4.50 Dec. 5 12-13 13 11 6 6 Nov. 19 4.50 4.50 8 13 13 1981—May 5 13-14 14 1988—Aug. 9 6-6.5 6.5 IInn eeffffeecctt MMaayy 77,, 11999999 4.50 4.50 8 14 14 11 6.5 6.5 Nov. 2 13-14 13 6 13 13 1989—Feb. 24 6.5-7 7 Dec. 4 12 12 27 7 7 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 • June 1999 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts2 1 $0 million-$46.5 million3. 12/31/98 2 More than $46.5 million4 . 12/31/98 3 Nonpersonal time deposits; 12/27/90 4 Eurocurrency liabilities6. . . 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions maintenance period beginning 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 1Vz 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 l/l 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 l'/i as of June 30 of each year. Effective with the reserve maintenance period beginning years or more has been zero since Oct. 6, 1983. December 31, 1998, for depository institutions that report weekly, and with the period 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero beginning January 14, 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 1V6 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 TTyyppee ooff ttrraannssaaccttiioonn 11999966 11999977 11999988 aanndd mmaattuurriittyy Aug. Sept. Oct. Nov. Dec. Jan. Feb. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 9,901 9,147 3,550 0 0 0 0 0 00 00 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 426,928 436,257 450,835 34,607 33,140 40,712 34,957 41,393 35,069 36,862 4 For new bills 426,928 435,907 450,835 34,607 33,140 40,712 34,957 41,393 35,069 36,862 5 Redemptions 0 0 2,000 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 524 5,549 6,297 986 1,038 741 662 0 0 2,103 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 30,512 41,716 46,062 6,367 2,301 2,423 5,444 2,539 2,865 5,578 9 Exchanges -41,394 -27,499 -49,434 -8,964 -2,242 -400 -8,093 -2,555 -400 -7,458 10 Redemptions 2,015 1,996 2,676 0 0 602 0 0 492 0 One to five years 11 Gross purchases 3,898 19,680 12,901 535 3,989 725 2,397 0 0 2,752 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -25,022 -37,987 -37,777 -2,168 -2,301 -2,423 -4,574 -2,539 -2,865 -4,928 14 Exchanges 31,459 20,274 37,154 5,828 2,242 0 6,013 2,555 0 4,778 Five to ten years 15 Gross purchases 1,116 3,849 2,294 303 351 0 862 0 0 335 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -5,469 -1,954 -5,908 -3,411 0 0 718 0 0 -650 18 Exchanges 6,666 5,215 7,439 1,364 0 400 1,135 0 400 1,340 More than ten years 19 Gross purchases 1,655 5,897 4,884 1,769 0 1,674 698 0 615 0 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -20 -1,775 -2,377 -789 0 0 -1,589 0 0 0 22 Exchanges 3,270 2,360 4,842 1,772 0 0 945 0 0 1,340 All maturities 23 Gross purchases 17,094 44,122 29,926 3,593 5,377 3,140 4,619 0 615 5,190 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 2,015 1,996 4,676 0 0 602 0 0 492 0 Matched transactions 26 Gross purchases 3,092,399 3,577,954 4,395,430 346,245 380,594 402,581 358,438 418,538 365,779 324,078 27 Gross sales 3,094,769 3,580,274 4,399,330 348,318 382,063 400,995 359,256 420,397 363,604 322,669 Repurchase agreements 28 Gross purchases 457,568 810,485 512,671 39,078 63,924 40,823 23,884 49,296 21,968 26,098 29 Gross sales 450,359 809,268 514,186 38,402 59,731 48,672 19,200 38,592 37,157 27,025 30 Net change in U.S. Treasury securities 19,919 41,022 19,835 2,196 8,101 -3,725 8,484 8,845 -12,891 5,672 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 0 0 32. Gross sales 0 0 25 25 0 0 0 0 0 0 33 Redemptions 409 1,540 322 50 48 15 20 30 2 0 Repurchase agreements 34 Gross purchases 75,354 160,409 284,316 33,431 18,486 51,471 51,419 48,815 23,577 3377,,441166 35 Gross sales 74,842 159,369 276,266 30,625 19,953 50,032 48,785 44,285 31,744 36,067 36 Net change in federal agency obligations 103 -500 7,703 2,731 -1,515 1,424 2,614 4,500 -8,169 1,349 37 Total net change in System Open Market Account. . . 20,021 40,522 27,538 4,927 6,586 -2,301 11,098 13,345 -21,060 7,021 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 NonfinancialS tatistics • June 1999 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1999 1999 Mar. 3 Mar. 10 Mar. 17 Mar. 24 Mar. 31 Jan. 31 Feb. 28 Mar. 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,047 11,047 11,049 11,047 11,049 11,048 11,047 11,049 2 Special drawing rights certificate account 9,200 8,200 8,200 8,200 8,200 9,200 9,200 8,200 3 Coin 435 441 450 446 428 459 464 428 Loans 4 To depository institutions 17 16 21 18 246 60 16 246 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 1 Bought outright 336 311 311 311 331111 333366 333366 331111 8 Held under repurchase agreements 2,047 5,402 3,840 4,533 5,606 2,535 3,884 5,606 9 Total U.S. Treasury securities 467,560 473,119 469,001 481,757 478,416 458,924 464,594 478,416 10 Bought outright2 461,998 463,621 464,506 464,744 465,686 454,439 461,036 465,686 11 Bills 199,319 199,366 199,231 197,733 196,759 196,948 198,357 196,759 12 Notes 191,126 191,474 192,493 193,554 194,968 187,403 191,126 194,968 13 Bonds 71,553 72,781 72,781 73,457 73,959 70,089 71,553 73,959 14 Held under repurchase agreements 5,562 9,498 4,495 17,013 12,730 4,485 3,558 12,730 15 Total loans and securities 469,960 478,847 473,172 486,619 484,578 461,855 468,830 484,578 16 Items in process of collection 10,059 8,235 7,350 6,555 7,097 5,325 5,176 7,097 17 Bank premises 1,302 1,302 1,303 1,304 1,303 1,299 1,302 1,303 Other assets 18 Denominated in foreign currencies3 18,707 18,715 18,722 15,360 15,171 19,235 18,702 15,171 19 All other4 14,117 14,844 14,889 16,393 16,126 16,165 14,313 16,126 20 Total assets 534,826 541,630 535,135 545,923 543,952 524,586 529,034 543,952 LIABILITIES 21 Federal Reserve notes 488,094 489,322 489,785 490,152 491,715 479,689 485,784 491,715 22 Total deposits 22,023 27,994 20,877 31,955 28,316 23,682 21,798 28,316 23 Depository institutions 16,524 22,857 14,138 26,366 22,541 15,577 16,835 22,541 24 U.S. Treasury—General account 5,050 4,722 6,318 5,199 5,374 7,623 4,538 5,374 25 Foreign—Official accounts 185 165 173 169 166 234 200 166 26 Other 265 250 247 220 235 246 225 235 27 Deferred credit items 8,452 7,332 7,568 6,727 7,117 4,948 4,992 7,117 28 Other liabilities and accrued dividends 4,087 4,403 4,277 4,449 4,328 4,183 4,205 4,328 29 Total liabilities 522,656 529,051 522,507 533,284 531,475 512,501 516,779 531,475 CAPITAL ACCOUNTS 30 Capital paid in 6,076 6,074 6,077 6,090 6,122 5,955 6,063 6,122 31 Surplus 5,894 5,937 5,952 5,952 5,944 5,943 5,872 5,944 32 Other capital accounts 200 568 600 598 411 188 320 411 33 Total liabilities and capital accounts 534,826 541,630 535,135 545,923 543,952 524,586 529,034 543,952 MEMO 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts n.a. n.a. n.a. n.a. n.a. 660000,,444433 n.a. n.a. Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 643,700 648,379 654,316 660,570 665,942 625,230 641,086 665,942 36 LESS: Held by Federal Reserve Banks 155,606 159,057 164,531 170,418 174,228 145,541 155,302 174,228 37 Federal Reserve notes, net 488,094 489,322 489,785 490,152 491,715 479,689 485,784 491,715 Collateral held against notes, net 38 Gold certificate account 11,047 11,047 11,049 11,047 11,049 11,048 11,047 11,049 39 Special drawing rights certificate account 9,200 8,200 8,200 8,200 8,200 9,200 9,200 8,200 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 467,847 470,075 470,536 470,905 472,466 459,441 465,537 472,466 42 Total collateral 488,094 489,322 489,785 490,152 491,715 479,689 485,784 491,715 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical 3. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with bills maturing within ninety days. Federal Reserve Banks—and includes compensation that adjusts for the effects of inflation on 5. Includes exchange-translation account reflecting the monthly revaluation at market the principal of inflation-indexed securities. Excludes securities sold and scheduled to be exchange rates of foreign exchange commitments. bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 1999 1999 Mar. 3 Mar. 10 Mar. 17 Mar. 24 Mar. 31 Jan. 29 Feb. 26 Mar. 31 1 Total loans 17 16 21 18 246 143 445 65 2 Within fifteen days1 2 4 18 18 243 143 445 64 3. Sixteen days to ninety days 14 12 3 — 3 0 0 1 4 Total U.S. Treasury securities2 467,560 473,119 469,001 481,757 478,416 458,924 470,976 478,416 5 Within fifteen days' 19,073 17,348 18,333 29,788 26,785 10,051 24,996 26,785 6 Sixteen days to ninety days 104,811 105,319 99,462 99,537 98,303 110,149 98,522 98,303 7 Ninety-one days to one year 129,960 135,160 134,895 135,444 134,439 130,178 133,298 134,439 8 One year to five years 109,847 109,848 110,865 110,866 112,263 107,040 110,291 112,263 9 Five years to ten years 46,246 46,594 46,595 46,596 46,598 45,222 46,246 46,598 10 More than ten years 57,623 58,851 58,851 59,527 60,029 56,284 57,623 60,029 11 Total federal agency obligations 2,383 5,713 4,151 4,844 5,917 2,871 7,559 5,917 12 Within fifteen days' 2,072 5,402 3,840 4,533 5,606 2,535 7,248 5,606 13 Sixteen days to ninety days — — 23 23 27 25 0 27 14 Ninety-one days to one year 106 106 83 83 79 81 106 79 15 One year to five years 30 30 30 30 30 55 30 30 16 Five years to ten years 175 175 175 175 175 175 175 175 17 More than ten years — — — — — 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 • June 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 . Aug. Sept. Oct. Nov. Dec. Jan. Feb.r Mar. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 56.40 50.08 46.67 44.91 45.00 44.59 44.39 44.57 44.91 44.89 44.35 43.86 2 Nonborrowed reserves4 56.14 49.93 46.35 44.79 44.73 44.33 44.21 44.49 44.79 44.68 44.23 43.80 3 Nonborrowed reserves plus extended credit5 56.14 49.93 46.35 44.79 44.73 44.33 44.21 44.49 44.79 44.68 44.23 43.80 4 Required reserves 55.12 48.66 44.99 43.32 43.48 42.90 42.81 42.95 43.32 43.35 43.13 42.56 5 Monetary base6 434.03 451.60 479.39 513.04 498.17 502.24 505.77 509.50 513.04 516.64 520.73 524.96 Not seasonally adjusted 6 Total reserves7 58.02 51.52 47.97 45.17 44.81 44.31 44.24 44.29 45.17 46.34 45.25 43.14 7 Nonborrowed reserves 57.76 51.37 47.65 45.06 44.54 44.06 44.07 44.21 45.06 46.13 45.13 43.08 8 Nonborrowed reserves plus extended credit5 57.76 51.37 47.65 45.06 44.54 44.06 44.07 44.21 45.06 46.13 45.13 43.08 9 Required reserves8 56.74 50.10 46.29 43.59 43.30 42.63 42.67 42.67 43.59 44.81 44.03 41.83 10 Monetary base9 439.02 456.71 485.05 518.33 497.49 500.99 504.51 510.19 518.33 520.01 519.70 523.32 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS'0 11 Total reserves" 57.90 51.24 47.88 45.02 44.71 44.19 44.12 44.15 45.02 46.35 45.24 43.13 12 Nonborrowed reserves 57.64 51.09 47.56 44.90 44.44 43.94 43.94 44.07 44.90 46.14 45.12 43.06 13 Nonborrowed reserves plus extended credit5 57.64 51.09 47.56 44.90 44.44 43.94 43.94 44.07 44.90 46.14 45.12 43.06 14 Required reserves 56.62 49.82 46.20 43.44 43.19 42.51 42.54 42.53 43.44 44.81 44.02 41.82 15 Monetary base12 444.44 463.48 491.86 525.06 504.39 507.80 511.36 516.96 525.06 527.59 526.85 530.27 16 Excess reserves'3 1.28 1.42 1.68 1.58 1.51 1.68 1.57 1.62 1.58 1.54 1.22 1.31 17 Borrowings from the Federal Reserve .26 .16 .32 .12 .27 .25 .17 .08 .12 .21 .12 .07 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly 8. To adjust required reserves for discontinuities that are due to regulatory changes in statistical release. Historical data starting in 1959 and estimates of the effect on required reserve requirements, a multiplicative procedure is used to estimate what required reserves reserves of changes in reserve requirements are available from the Money and Reserves would have been in past periods had current reserve requirements been in effect. Break- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve adjusted required reserves include required reserves against transactions deposits and nonper- System, Washington, DC 20551. sonal time and savings deposits (but not reservable nondeposit liabilities). 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus changes in reserve requirements. (See also table 1.10.) (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break- reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all adjusted required reserves (line 4) plus excess reserves (line 16). those weekly reporters whose vault cash exceeds their required reserves) the break-adjusted 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, difference between current vault cash and the amount applied to satisfy current reserve break-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 1995 1996 1997 1998 IItteemm Dec. Dec. Dec. Dec. Dec. Jan. Feb. Mar. Seasonally adjusted Measures2 1 Ml 1,126.7 1,081.3 1,074.9 1,093.3 1,093.3 l,090.6r l,091.9r 1,100.8 2 M2 3,649.1 3,823.9 4,046.6 4,401.9r 4,401.9r 4,425.6r 4,446.4r 4,456.6 3 M3 4,618.5 4,955.6 5,404.7 5,999.6 5,999.6 6,019.0" 6,063.3r 6,048.1 4 Debt 13,703.2 14,425.3r 15,141.3r 16,087.3r 16,087.3r 16,155.4r 16,219.8 n.a. Ml components 5 Currency3 372.3 394.1 424.5 459.2 459.2 462.7 446677..77rr 472.0 6 Travelers checks4 8.3 8.0 7.7 7.8 7.8 7.8 7.7 7.8 7 Demand deposits5 389.4 403.0 396.5 377.5 377.5 371.0r 371.6r 373.8 8 Other checkable deposits6 356.7 276.2 246.2 248.7 248.7 249.2 244.9 247.1 Nontransaction components 9 In M27 2,522.4 2,742.6 2,971.8 3,308.6 3,308.6 3,335.0 3,354.6 3,355.8 10 In M3 only8 969.4 1,131.7 1,358.0 1,597.7 1,597.7 l,593.4r 1,616.8r 1,591.5 Commercial banks 11 Savings deposits, including MMDAs 775.3 905.2 1,022.9 1,189.8 1,189.8 1,202.0 1,207.1 1,207.1 12 Small time deposits9 575.0 593.7 626.1 626.1 626.1 622.0 618.1r 616.3 13 Large time deposits'0, 11 346.6 414.8 490.2 541.1 541.1 545.9 533.6r 518.4 Thrift institutions 14 Savings deposits, including MMDAs 359.8 367.1 377.3 415.2 415.2 420.3r 425.4 428.0 15 Small time deposits9 356.7 353.8 343.2 325.9r 325.9r 324.5r 322.9 320.7 16 Large time deposits10 74.5 78.4 85.9 89.1 89.1 91.0 89.9r 88.7 Money market mutual funds 17 Retail 455.5 522.8 602.3 751.6 751.6 766.1 781.2 783.8 18 Institution-only 255.9 313.3 379.9 516.2 516.2 515.0 529.9 529.1 Repurchase agreements and Eurodollars 19 Repurchase agreements12 198.7 211.3 252.8 297.7 297.7 291.5 308.2 229955..33 20 Eurodollars12 93.7 113.9 149.2 153.6 153.6 150.0r 155.3r 160.0 Debt components 21 Federal debt 3,638.9 3,780.6 3,798.4 3,747.4 3,747.4 3,740.9 3,718.2 n.a. 22 Nonfederal debt 10,064.2 10,644.7 ll,342.9r 12,339.9r 12,339.9r 12,414.5r 12,501.6 n.a. Not seasonally adjusted Measures2 23 Ml 1,152.4 1,104.9 1,097.4 1,115.3 1,115.3 1,098.0 l,082.6r 1,096.0 24 M2 3,671.7 3,843.7 4,064.8 4,418.7r 4,418.7r 4,429.0" 4,440.8r 4,480.1 25 M3 4,638.0 4,972.5 5,420.8 6,015.7r 6,015.7r 6,027.2r 6,072.1r 6,087.1 26 Debt 13,704.6 14,425.3r 15,140.9r 16,087.7r 16,087.7r 16,138.9r 16,191.1 n.a. Ml components 27 Currency3 376.2 397.9 428.9 464.2 464.2 462.5 466.6r 471.3 28 Travelers checks4 8.5 8.3 7.9 8.0 8.0 7.9 7.9 7.9 29 Demand deposits5 407.2 419.9 412.3 392.4 392.4 375.7 364.6r 368.6 30 Other checkable deposits6 360.5 278.8 248.3 250.7 250.7 251.9 243.6 248.1 Nontransaction components 31 In M27 2,519.3 2,738.9 2,967.4 3,303.5 3,303.5 3,331.1 3,358.1 3,384.1 32 In M3 only8 966.4 1,128.8 1,356.0 1,597.0 1,597.0 l,598.2r l,631.3r 1,607.0 Commercial banks 33 Savings deposits, including MMDAs 774.1 903.3 1,020.4 1,186.7 1,186.7 1,197.0 1,203.2 1,216.7 34 Small time deposits9 573.8 592.7 625.3 625.4 625.4 622.7 619.4 617.1 35 Large time deposits10, 11 345.8 413.3 487.7 537.5 537.5 532.2 529.0" 522.8 Thrift institutions 36 Savings deposits, including MMDAs 359.2 366.3 376.4 414.1 414.1 418.6 424.0 431.5 37 Small time deposits9 355.9 353.2 342.8 325.6 325.6 324.9 323.6 321.1 38 Large time deposits10 74.3 78.1 85.4 88.5 88.5 88.7r 89.1 89.5 Money market mutual funds 39 Retail 456.1 523.2 602.5 751.6 751.6 767.8 787.9 797.7 40 Institution-only 257.7 316.0 384.5 523.3 523.3 529.3 547.3 537.9 Repurchase agreements and Eurodollars 41 Repurchase agreements12 193.8 205.7 246.1 290.3 290.3 229922..99 330077..77 229977..99 42 Eurodollars12 94.9 115.7 152.3 157.4 157.4 155.1r 158.1r 159.0 Debt components 43 Federal debt 3,645.9 3,787.9 3,805.8 3,754.9 3,754.9 3,736.6 3,721.8 n.a. 44 Nonfederal debt 10,058.7 10,637.3r 11,335. lr 12,332.8r 12,332.8r 12,402.2r 12,469.3 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic NonfinancialS tatistics • June 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 1998r 1999 1999 Mar.r Sept. Oct. Nov. Dec. Jan.r Feb.r Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 Seasonally adjusted Assets 1 Bank credit 4,215.8 4,387.5 4,486.5 4,526.7 4,545.8 4,529.5 4,515.5 4,482.9 4,488.2 4,472.7 4,479.0 4,484.0 7 Securities in bank credit 1,125.1 1,172.4 1,214.8 1,218.8 1,222.8 1,214.5 1,204.2 1,185.2 1,186.5 1,175.4 1,185.2 1,187.6 U.S. government securities 777.1 771.0 776.4 789.6 791.4 792.4 789.6 797.2 791.8 790.0 801.7 806.9 4 Other securities 348.0 401.5 438.4 429.2 431.4 422.2 414.7 388.0 394.7 385.4 383.5 380.8 Loans and leases in bank credit2 ... 3,090.7 3,215.0 3,271.7 3,307.9 3,323.0 3,315.0 3,311.3 3,297.7 3,301.8 3,297.3 3,293.9 3,296.3 6 Commercial and industrial 871.1 915.3 938.2 948.8 946.7 943.7 943.9 947.5 943.5 949.4 953.1 944.6 7 Real estate 1,265.3 1,284.2 1,292.1 1,315.2 1,329.8 1,333.4 1,335.6 1,335.9 1,340.6 1,338.3 1,331.6 1,334.1 8 Revolving home equity 98.0 97.7 96.7 96.9 96.7 96.6 96.2 96.3 96.1 96.2 96.3 96.5 9 Other 1,167.3 1,186.5 1,195.4 1,218.2 1,233.1 1,236.8 1,239.4 1,239.7 1,244.5 1,242.0 1,235.3 1,237.6 in Consumer 500.2 496.0 498.0 501.1 503.0 504.7 504.2 503.1 502.4 503.4 502.9 503.5 u Security3 115.9 142.9 157.6 150.9 151.3 146.8 139.1 119.2 124.5 116.0 112.7 120.4 i? Other loans and leases 338.1 376.7 385.8 391.8 392.2 386.3 388.5 392.0 390.8 390.1 393.6 393.7 n Interbank loans 215.0 217.0 218.8 217.6 217.3 222.4 225.7 219.1 220.0 216.2 232.9 207.8 14 Cash assets4 272.1 253.4 247.7 255.0 257.6 264.5 262.3 262.6 265.3 251.1 265.1 269.9 15 Other assets5 299.5 326.2 326.9 334.9 336.1 348.7 354.2 353.7 356.5 359.7 350.9 347.6 16 Total assets6 4,945.5 5,126.6 5,221.9 5,276.2 5,298.9 5307.1 5,299.6 5059.9 5,271.7 5,241.5 5,269.6 5,250.4 Liabilities 17 Deposits 3,197.4 3,264.2 3,289.7 3,324.9 3,341.0 3,363.9 3,372.4 3,360.6 3,362.4 3,358.3 3,342.3 3,364.7 18 Transaction 689.8 675.2 673.4 670.7 672.3 667.2 662.0 668.7 651.1 658.1 674.9 694.3 19 Nontransaction 2,507.6 2,589.1 2,616.3 2,654.2 2,668.7 2,696.7 2,710.5 2,691.9 2,711.3 2,700.2 2,667.4 2,670.4 70 Large time 687.0 702.0 716.4 727.8 719.4 724.9 728.2 718.1 724.4 722.3 710.7 710.5 ?1 Other 11,,882200..66 1,887.1 1,899.9 1,926.4 1,949.4 1,971.7 1,982.3 1,973.8 1,986.9 1,977.9 1,956.6 1,959.9 77 Borrowings 888899..99 945.0 983.7 1,017.5 1,023.1 1,004.1 990.0 983.7 1,000.9 974.1 983.6 973.9 73 From banks in the U.S 306.3 304.9 315.0 323.9 323.2 318.0 315.9 318.0 324.6 312.5 324.9 312.9 ?4 From others 583.5 640.1 668.6 693.6 699.8 686.2 674.1 665.7 676.3 661.6 658.8 661.0 75 Net due to related foreign offices 205.4 206.4 220.9 214.4 213.9 213.5 217.4 217.1 217.8 215.2 225.8 218.3 26 Other liabilities 258.5 296.5 310.9 297.8 301.0 300.7 294.8 271.3 269.9 266.8 270.2 272.5 27 Total liabilities 4,551.2 4,7122 4,805.2 4,854.7 4,878.9 4,882.1 4,874.7 4,832.7 4,851.1 4,814.4 4,821.9 4,8293 28 Residual (assets less liabilities)7 394.3 414.4 416.7 421.6 419.9 424.9 425.0 427.3 420.6 427.1 447.7 421.1 Not seasonally adjusted Assets 79 Bank credit 4,213.7 4,379.6 4,491.6 4,540.2 4,561.4 4,538.7 4,513.2 4,481.2 4,485.5 4,472.3 4,469.4 4,486.9 Securities in bank credit 1,131.7 1,163.1 1,212.7 1,225.0 1,224.5 1,217.1 1,209.7 1,191.9 1,195.1 1,182.4 1,188.2 1,195.0 31 U.S. government securities 783.4 762.3 771.7 792.0 792.2 792.7 793.8 803.6 799.0 796.2 806.3 814.5 37 Other securities 348.3 400.8 441.0 433.0 432.3 424.5 416.0 388.3 396.1 386.2 381.9 380.5 33 Loans and leases in bank credit2 ... 3,082.0 3,216.5 3,278.9 3,315.2 3,336.9 3,321.6 3,303.5 3,289.3 3,290.4 3,290.0 3,281.2 3,291.9 34 Commercial and industrial 873.9 912.1 937.9 948.3 946.7 942.6 945.3 951.0 944.0 953.3 956.5 950.5 35 Real estate 1,259.3 1,287.6 1,295.6 1,319.1 1,331.7 1,332.5 1,329.9 1,329.4 1,335.3 1,331.6 1,323.5 1,328.3 36 Revolving home equity 97.2 98.4 97.5 97.7 97.1 96.7 95.9 95.4 95.4 95.4 95.3 95.5 37 Other 1,162.1 1,189.2 1,198.1 1,221.4 1,234.7 1,235.8 1,234.1 1,234.0 1,239.9 1,236.1 1,228.2 1,232.8 38 Consumer 495.3 498.9 498.5 501.5 508.3 511.0 504.0 498.3 497.7 498.8 497.9 497.8 39 Security3 119.3 139.0 159.2 153.4 153.5 146.9 138.8 122.5 127.8 120.9 115.9 122.2 40 Other loans and leases 334.2 378.8 387.8 392.9 396.7 388.7 385.3 388.1 385.6 385.4 387.4 393.2 41 Interbank loans 218.0 213.1 216.7 227.0 225.5 225.3 225.4 222.2 225.5 219.8 228.5 214.1 47 Cash assets4 263.8 250.9 248.1 261.8 273.1 277.8 263.4 255.0 256.2 247.4 246.8 268.6 43 Other assets5 295.7 328.4 324.7 333.3 336.9 341.4 351.0 349.1 350.5 352.0 343.6 348.3 44 Total assets6 4,9343 5,1143 5,2233 53043 5339.0 5325.6 534.9 5,249.2 5,2593 5,2333 5,230.0 5,2593 Liabilities 45 Deposits 3,192.0 3,261.9 3,289.2 3,350.7 3,374.8 3,363.2 3,349.5 3,355.2 3,357.7 3,352.1 3,317.7 3,379.7 46 Transaction 682.7 668.8 663.3 681.0 706.5 682.0 657.1 662.2 645.0 653.9 647.9 702.5 47 Nontransaction 2,509.3 2,593.1 2,625.9 2,669.7 2,668.4 2,681.2 2,692.4 2,693.0 2,712.7 2,698.2 2,669.8 2,677.2 48 688.7 703.7 718.0 732.7 723.9 723.1 728.9 720.1 726.9 724.2 713.0 711.4 49 Other 1,820.6 1,889.4 1,907.9 1,937.0 1,944.4 1,958.1 1,963.5 1,972.9 1,985.8 1,974.0 1,956.8 1,965.8 50 Borrowings 885.3 940.8 985.9 1,023.1 1,025.7 1,020.4 993.1 978.0 986.6 974.2 982.9 964.8 51 From banks in the U.S 306.4 301.7 313.1 327.6 329.2 323.0 316.4 317.9 321.4 313.1 326.2 313.8 57 From others 578.9 639.1 672.7 695.5 696.4 697.4 676.6 660.2 665.1 661.1 656.7 651.1 53 Net due to related foreign offices .... 203.8 203.1 223.4 216.3 219.1 216.4 227.1 215.1 212.6 210.0 230.5 215.1 54 Other liabilities 259.2 295.5 309.4 298.2 301.8 301.6 297.2 272.0 271.5 267.5 270.3 272.1 55 Total liabilities 4,540.2 4,7013 4,807.9 4,888.2 4,9213 4,901.6 4,866.8 4,8203 4,8283 4,803.8 4,801.4 4,831.8 56 Residual (assets less liabilities)7 394.0 413.0 415.3 416.1 417.7 424.1 428.1 428.8 431.0 429.4 428.6 427.5 MEMO 57 Revaluation gains on off-balance-sheet items8 88.1 109.4 130.7 111.2 113.2 111.9 108.1 86.5 91.4 83.5 82.1 82.9 58 Revaluation losses on off-balancesheet items8 89.7 109.3 128.0 110.1 111.4 108.1 106.6 85.2 89.6 81.5 82.4 80.7 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • June 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 1998R 1999 1999 Mar.r Sept. Oct. Nov. Dec. Jan.r Feb/ Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 Seasonally adjusted Assets 1 Bank credit 3,651.9 3,789.4 3,866.8 3,916.1 3,948.0 3,946.4 3,946.7 3,928.5 3,930.4 3,920.5 3,927.6 3,928.1 2 Securities in bank credit 927.6 960.6 996.2 1,003.6 1,009.9 1,003.6 1,000.1 986.9 985.6 979.1 987.1 990.0 3 U.S. government securities 688.6 687.7 695.6 708.2 709.8 709.0 707.1 713.4 708.6 708.2 717.5 719.9 4 Other securities 239.1 272.9 300.5 295.4 300.2 294.5 293.1 273.5 277.1 270.9 269.6 270.1 5 Loans and leases in bank credit2 2,724.2 2,828.8 2,870.6 2,912.5 2,938.1 2,942.9 2,946.5 2,941.7 2,944.7 2,941.4 2,940.6 2,938.1 6 Commercial and industrial 651.7 698.5 714.7 724.8 728.5 730.0 731.5 736.7 734.5 735.9 740.4 737.1 7 Real estate 1,239.5 1,260.6 1,268.6 1,292.5 1,308.1 1,311.6 1,314.0 1,314.2 1,319.1 1,316.6 1,309.7 1,312.1 8 Revolving home equity 98.0 97.7 96.7 96.9 96.7 96.6 96.2 96.3 96.1 96.2 96.3 96.5 9 Other 1,141.4 1,162.9 1,171.9 1,195.6 1,211.4 1,215.0 1,217.7 1,218.0 1,223.0 1,220.4 1,213.5 1,215.6 10 Consumer 500.2 496.0 498.0 501.1 503.0 504.7 504.2 503.1 502.4 503.4 502.9 503.5 11 Security3 65.8 76.2 87.8 86.1 85.6 84.3 80.6 69.3 73.3 69.6 66.1 65.3 12 Other loans and leases 267.0 297.6 301.5 308.0 312.9 312.3 316.3 318.3 315.4 315.8 321.5 320.1 13 Interbank loans 191.9 189.7 193.1 190.4 189.3 192.9 193.8 192.8 195.6 189.7 207.5 179.9 14 Cash assets4 237.7 219.1 212.0 220.1 221.8 228.1 226.1 225.4 226.0 213.9 227.1 235.1 15 Other assets5 263.5 288.8 288.4 298.0 297.7 310.2 316.6 315.9 318.7 321.0 313.8 310.3 16 Total assets6 4,288.4 4,429.8 4,502.7 4,566.8 4,599.1 4,619.9 4,625.1 4,604.5 4,612.6 4,587.2 4,617.9 4,594.8 Liabilities 17 Deposits 2,907.7 2,948.9 2,971.9 3,009.4 3,032.4 3,045.6 3,051.5 3,049.3 3,044.5 3,044.2 3,037.4 3,060.7 18 Transaction 678.1 659.8 658.0 657.9 660.7 654.3 648.0 655.6 637.8 644.4 662.5 681.5 19 Nontransaction 2,229.6 2,289.1 2,313.9 2,351.6 2,371.7 2,391.3 2,403.4 2,393.7 2,406.7 2,399.9 2,374.8 2,379.2 20 Large time 410.3 404.6 415.9 426.9 423.0 420.7 422.3 421.0 420.8 422.6 418.4 421.4 21 Other 1,819.3 1,884.4 1,898.1 1,924.6 1,948.7 1,970.7 1,981.1 1,972.7 1,985.9 1,977.3 1,956.4 1,957.8 22 Borrowings 718.0 739.7 768.4 802.9 819.3 810.5 809.3 809.5 824.0 801.3 814.2 797.0 23 From banks in the U.S 279.3 276.5 284.5 291.8 296.0 296.5 298.0 293.6 300.7 287.8 300.4 286.9 24 From others 438.7 463.3 484.0 511.2 523.3 514.0 511.4 515.9 523.2 513.6 513.8 510.1 25 Net due to related foreign offices .... 81.7 108.4 115.3 115.2 112.4 111.7 117.3 117.7 118.5 115.5 126.8 116.0 26 Other liabilities 188.2 220.6 231.8 221.7 224.3 226.4 224.4 203.2 201.2 198.5 203.1 204.5 27 Total liabilities 3,895.6 4,017.6 4,087.4 4,149.3 4,188.5 4,194.2 4,202.6 4,179.7 4,188.2 4,159.5 4,181.4 4,178.3 28 Residual (assets less liabilities)7 392.8 412.2 415.3 417.5 410.7 425.6 422.6 424.7 424.4 427.7 436.5 416.5 Not seasonally adjusted Assets 29 Bank credit 3,647.3 3,782.3 3,867.7 3,926.4 3,960.9 3,952.2 3,940.5 3,925.2 3,926.0 3,917.6 3,918.6 3,929.9 30 Securities in bank credit 932.8 951.8 991.0 1,006.6 1,013.1 1,005.9 1,003.9 992.4 991.9 983.6 991.0 997.4 31 U.S. government securities 693.9 679.8 690.9 710.1 710.4 709.7 710.9 718.9 714.9 712.9 721.4 727.0 32 Other securities 238.9 272.0 300.0 296.4 302.6 296.3 293.0 273.5 277.0 270.7 269.6 270.4 33 Loans and leases in hank credit2 2,714.5 2,830.5 2,876.7 2,919.8 2,947.8 2,946.2 2,936.5 2,932.9 2,934.1 2,934.0 2,927.6 2,932.5 34 Commercial and industrial 654.1 695.8 713.5 723.0 725.7 727.0 731.1 739.9 735.4 739.4 743.7 742.2 35 Real estate 1,233.4 1,264.0 1,271.8 1,296.3 1,310.0 1,310.4 1,307.9 1,307.7 1,313.6 1,309.8 1,301.7 1,306.6 36 Revolving home equity 97.2 98.4 97.5 97.7 97.1 96.7 95.9 95.4 95.4 95.4 95.3 95.5 37 Other 1,136.2 1,165.6 1,174.3 1,198.6 1,212.9 1,213.8 1,212.1 1,212.2 1,218.1 1,214.3 1,206.4 1,211.1 38 Consumer 495.3 498.9 498.5 501.5 508.3 511.0 504.0 498.3 497.7 498.8 497.9 497.8 39 Security3 68.1 72.1 89.6 89.1 87.3 84.4 80.6 72.1 76.4 73.9 68.5 66.2 40 Other loans and leases 263.6 299.7 303.3 309.9 316.5 313.4 312.9 314.9 311.0 312.1 315.8 319.7 41 Interbank loans 194.9 185.8 191.0 199.8 197.5 195.8 193.5 195.8 201.1 193.3 203.1 186.2 42 Cash assets4 230.4 216.9 212.0 226.3 235.8 241.0 227.9 219.0 218.4 211.5 209.9 234.2 43 Other assets5 259.2 290.6 286.5 296.2 297.1 302.6 312.2 310.7 310.7 312.5 306.7 311.7 44 Total assets6 4,275.3 4,418.1 4,499.5 4,590.9 4,633.5 4,634.2 4,616.2 4,592.6 4,598.2 4,576.8 4,580.2 4,603.7 Liabilities 45 Deposits 2,899.6 2,946.8 2,971.0 3,035.6 3,062.6 3,047.5 3,029.8 3,040.7 3,038.6 3,034.9 3,007.3 3,071.7 46 Transaction 670.8 652.8 647.9 668.2 694.5 669.0 643.4 649.0 631.8 640.2 635.3 689.3 47 Nontransaction 2,228.8 2,294.0 2,323.1 2,367.4 2,368.1 2,378.5 2,386.4 2,391.8 2,406.8 2,394.7 2,372.0 2,382.4 48 Large time 410.1 404.1 417.6 432.4 425.5 422.3 424.8 420.8 422.9 422.7 417.1 418.5 49 Other 1,818.6 1,889.9 1,905.4 1,935.0 1,942.6 1,956.2 1,961.6 1,971.0 1,983.9 1,972.0 1,954.9 1,963.9 50 Borrowings 713.4 735.5 770.6 808.5 821.9 826.8 812.4 803.9 809.6 801.4 813.5 787.9 51 From banks in the U.S 279.3 273.3 282.6 295.4 302.0 301.6 298.5 293.5 297.6 288.3 301.7 287.8 52 From others 434.1 462.3 488.1 513.0 519.9 525.2 513.9 510.4 512.1 513.1 511.7 500.2 53 Net due to related foreign offices .... 82.1 106.8 115.5 113.7 111.4 112.0 123.4 117.6 119.4 113.8 129.3 113.7 54 Other liabilities 188.7 220.0 231.0 221.1 223.7 227.0 225.2 203.8 202.1 199.0 203.5 204.9 55 Total liabiUties 3,883.8 4,009.1 4,088.2 4,178.9 4,219.6 4,213.3 4,190.7 4,165.9 4,169.7 4,149.2 4,153.5 4,178.3 56 Residual (assets less liabilities)7 391.4 409.0 411.4 412.0 413.9 420.9 425.5 426.7 428.4 427.6 426.8 425.4 MEMO 57 Revaluation gains on off-balance-sheet items8 47.2 61.7 78.7 62.7 65.2 66.0 64.5 46.3 49.0 44.1 43.0 43.6 58 Revaluation losses on off-balancesheet items8 49.6 65.1 80.5 65.1 66.8 65.8 65.3 46.0 48.4 43.5 44.3 42.3 59 Mortgage-backed securities9 299.8 313.2 335.8 346.0 345.4 341.3 339.3 333.3 332.8 332.0 332.3 334.9 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A17 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 1998 1998' 1999 1999 Mar.r Sept. Oct. Nov. Dec. Jan.r Feb/ Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 Seasonally adjusted Assets 1 Bank credit 2,259.1 2,337.5 2,395.4 2,416.5 2,428.0 2,420.7 2,414.4 2,387.2 2,391.2 2,379.5 2,385.8 2,383.5 2 Securities in bank credit 530.1 545.6 573.6 572.0 571.1 562.6 556.5 540.0 539.6 532.9 539.9 541.6 3 U.S. government securities 377.8 369.8 373.2 379.1 376.7 375.1 372.4 376.1 372.0 371.3 380.1 381.1 4 Trading account 25.1 22.2 21.0 22.3 23.0 25.1 17.5 22.2 19.5 18.9 26.0 25.5 5 Investment account 352.7 347.6 352.2 356.9 353.7 350.1 354.9 353.8 352.4 352.4 354.1 355.6 6 Other securities 152.3 175.8 200.5 192.9 194.4 187.5 184.1 163.9 167.6 161.6 159.8 160.5 7 Trading account 73.1 86.4 108.8 96.8 97.4 90.9 87.5 66.4 70.2 64.3 62.7 61.6 8 Investment account 79.1 89.4 91.7 96.1 97.0 96.6 96.7 97.5 97.4 97.3 97.1 98.9 9 State and local government . 22.6 23.4 23.9 24.5 24.8 24.6 24.7 24.9 24.8 24.9 24.9 24.9 10 Other 56.5 66.0 67.8 71.7 72.2 71.9 72.0 72.7 72.6 72.3 72.2 74.1 11 Loans and leases in bank credit2 . . . 1,729.0 1,791.9 1,821.7 1,844.5 1,856.8 1,858.0 1,857.8 1,847.2 1,851.6 1,846.6 1,845.8 1,841.9 12 Commercial and industrial 472.6 507.9 521.4 528.5 529.3 529.3 530.5 534.7 532.6 534.0 538.6 534.6 13 Bankers acceptances 1.2 1.3 1.3 1.3 1.3 1.3 1.2 1.1 1.1 1.1 1.1 1.2 14 Other 471.3 506.6 520.1 527.2 528.0 528.1 529.3 533.6 531.5 532.9 537.5 533.4 15 Real estate 698.1 689.3 689.2 700.4 705.9 704.3 703.5 700.1 705.5 702.7 695.4 696.2 16 Revolving home equity 69.7 68.9 68.0 67.8 67.6 67.6 67.5 67.4 67.4 67.5 67.4 67.5 17 Other 628.4 620.4 621.2 632.6 638.3 636.8 636.1 632.7 638.2 635.3 628.0 628.7 18 Consumer 300.2 298.8 300.7 302.0 302.4 305.3 304.3 301.9 302.8 301.9 301.0 301.3 19 Security3 59.8 69.9 81.3 79.3 79.2 78.1 74.5 63.2 67.0 63.5 60.1 59.4 20 Federal funds sold to and repurchase agreements with broker-dealers 42.0 51.5 63.3 61.8 62.5 61.4 57.6 46.1 50.0 46.1 43.3 42.4 21 Other 17.8 18.5 17.9 17.5 16.7 16.7 16.9 17.1 17.0 17.4 16.8 17.0 22 State and local government 11.6 11.6 11.6 11.9 11.6 11.6 11.5 11.5 11.5 11.5 11.5 11.6 23 Agricultural 10.0 10.0 10.0 10.1 10.2 10.2 10.2 10.2 10.1 10.1 10.1 10.2 24 Federal funds sold to and repurchase agreements with others 7.4 12.4 12.9 12.4 16.2 12.6 12.0 12.0 10.3 11.7 12.9 13.1 25 All other loans 81.3 92.0 92.9 96.1 95.7 97.7 97.8 97.8 96.9 95.4 99.7 98.3 26 Lease-financing receivables 88.0 99.9 101.7 103.8 106.4 108.8 113.4 115.9 114.8 115.6 116.4 117.2 27 Interbank loans 131.6 118.7 120.3 120.6 123.1 125.2 126.7 128.9 131.6 125.5 142.7 119.0 28 Federal funds sold to and repurchase agreements with commercial banks 82.1 65.4 74.3 74.6 73.9 78.5 78.6 81.6 84.2 79.9 93.6 72.5 29 Other 49.5 53.3 46.0 46.0 49.2 46.7 48.0 47.2 47.5 45.5 49.0 46.5 30 Cash assets4 174.5 151.0 144.1 149.8 151.2 157.1 155.0 153.5 155.6 145.0 154.1 159.5 31 Other assets5 205.9 223.9 220.8 225.8 223.3 232.4 239.0 238.9 241.6 243.1 236.6 233.9 32 Total assets6 2,733.4 2,793.5 2,842.5 2^74.7 2^87.6 2,8973 2^70.1 2381.7 2£54£ 2^80.8 2357.1 Liabilities 33 Deposits 1,652.6 1,640.5 1,651.0 1,667.0 1,671.6 1,672.6 1,668.1 1,666.5 1,664.3 1,663.4 1,656.3 1,674.6 34 Transaction 394.7 373.7 371.9 369.4 369.4 364.3 357.9 362.0 353.7 356.4 364.1 375.7 35 Nontransaction 1,257.9 1,266.8 1,279.1 1,297.7 1,302.1 1,308.3 1,310.2 1,304.5 1,310.6 1,307.0 1,292.2 1,298.9 36 Large time 229.5 213.8 223.1 229.9 228.2 227.5 226.8 224.2 225.2 226.2 221.0 223.1 37 Other 1,028.4 1.053.0 1,056.0 1,067.8 1,074.0 1,080.7 1,083.4 1,080.3 1,085.4 1,080.8 1,071.3 1,075.8 38 Borrowings 567.0 574.0 596.2 622.4 633.6 627.8 622.9 619.0 632.5 609.0 621.4 610.9 39 From banks in the U.S 209.1 199.2 203.5 207.1 209.0 213.3 213.5 208.2 214.7 201.4 213.4 204.8 40 From others 357.9 374.8 392.7 415.3 424.6 414.5 409.4 410.8 417.8 407.6 408.1 406.1 41 Net due to related foreign offices 77.6 104.6 110.6 111.6 108.8 108.7 114.1 113.2 114.6 111.7 121.6 110.2 42 Other liabilities 160.7 191.1 201.5 190.7 193.0 195.4 193.9 172.6 170.6 168.1 172.5 173.5 43 Total liabilities 2,457.9 2,510.2 2,5593 2^91.8 2,606.9 2,604.5 2^98.9 2^71.4 2382.1 2£522 2^71.9 2^69.2 44 Residual (assets less liabilities)7 275.4 283.3 283.2 282.9 280.7 292.8 297.8 298.8 299.6 302.6 308.8 288.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • June 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.' Sept. Oct. Nov. Dec. Jan.r Feb.r Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 Not seasonally adjusted Assets 45 Bank credit 2,260.4 2,327.0 2,397.1 2,429.6 2,442.5 2,432.9 2,418.9 2,389.6 2,395.7 2,383.2 2,380.6 2,386.7 46 Securities in bank credit 533.9 538.7 571.3 577.3 574.6 565.7 562.6 544.0 545.9 536.3 541.0 545.4 47 U.S. government securities 381.7 363.4 371.2 383.4 377.4 376.4 377.8 380.1 378.1 374.7 381.4 385.2 48 Trading account 26.6 22.0 21.9 24.6 23.7 25.2 18.2 23.2 21.9 20.4 25.8 25.1 49 Investment account 355.2 341.4 349.3 358.9 353.7 351.2 359.6 356.9 356.2 354.3 355.5 360.1 50 Mortgage-backed securities . . 232.9 236.4 255.3 258.2 253.5 250.1 247.9 241.4 241.5 239.5 240.1 242.6 51 Other 122.3 105.0 94.0 100.7 100.2 101.1 111.7 115.5 114.7 114.8 115.4 117.5 52 One year or less 31.8 27.7 26.1 27.2 26.6 27.5 25.6 23.8 23.5 23.7 24.2 23.8 53 One to five years 54.7 44.3 37.2 38.2 38.4 37.6 46.8 52.1 51.6 51.9 51.3 54.0 54 More than five years . . . 35.8 33.0 30.6 35.2 35.2 36.0 39.3 39.6 39.5 39.2 39.9 39.8 55 Other securities 152.2 175.3 200.1 193.9 197.2 189.3 184.7 163.9 167.8 161.6 159.6 160.2 56 Trading account 73.1 86.4 108.8 96.8 97.4 90.9 87.5 66.4 70.2 64.3 62.7 61.6 57 Investment account 79.0 88.9 91.3 97.1 99.8 98.4 97.3 97.5 97.6 97.2 96.9 98.7 58 State and local government . . 22.7 23.2 24.0 24.6 25.0 24.8 24.8 24.9 24.9 24.9 24.9 24.9 59 Other 56.3 65.6 67.4 72.5 74.8 73.6 72.5 72.6 72.7 72.3 72.0 73.8 60 Loans and leases in bank credit2 . . 1,726.5 1,788.3 1,825.9 1,852.3 1,867.9 1,867.2 1,856.3 1,845.7 1,849.8 1,847.0 1,839.7 1,841.3 61 Commercial and industrial 474.4 506.3 521.5 528.1 527.4 527.1 530.4 537.3 533.5 536.8 540.8 538.8 62 Bankers acceptances 1.2 1.3 1.3 1.3 1.3 1.3 1.2 1.1 1.1 1.1 1.1 1.2 63 Other 473.2 505.0 520.2 526.8 526.1 525.8 529.3 536.2 532.4 535.7 539.7 537.7 64 Real estate 695.4 689.6 691.0 703.7 709.5 707.1 702.2 697.1 704.2 700.0 690.9 692.8 65 Revolving home equity 69.0 69.3 68.6 68.3 67.8 67.6 67.2 66.8 66.8 66.8 66.6 66.8 66 Other 386.4 381.0 382.9 394.1 398.6 394.1 386.7 381.1 389.3 383.7 374.3 376.0 67 Commercial 240.0 239.2 239.5 241.3 243.0 245.4 248.4 249.3 248.1 249.5 250.0 250.0 68 Consumer 297.5 300.8 300.6 301.6 305.7 310.7 304.7 299.2 300.3 299.4 298.3 297.8 69 Security3 62.0 65.9 83.1 82.3 80.9 78.2 74.5 66.0 70.1 67.8 62.5 60.4 70 Federal funds sold to and repurchase agreements with broker-Sealers .... 44.1 47.6 65.2 65.0 63.7 62.0 58.1 48.7 53.4 50.3 45.3 42.8 71 Other 17.9 18.3 17.9 17.3 17.1 16.2 16.4 17.3 16.7 17.5 17.2 17.5 72 State and local government .... 11.6 11.7 11.7 12.0 11.7 11.6 11.5 11.5 11.5 11.5 11.5 11.5 73 Agricultural 9.6 10.3 10.1 10.1 10.1 10.1 9.9 9.8 9.8 9.8 9.8 9.9 74 Federal funds sold to and repurchase agreements with others 7.4 12.4 12.9 12.4 16.2 12.6 12.0 12.0 10.3 11.7 12.9 13.1 75 All other loans 79.8 92.5 93.8 99.2 100.4 99.3 96.3 96.0 94.2 93.5 95.8 99.1 76 Lease-financing receivables .... 88.7 98.9 101.0 102.8 106.0 110.5 114.7 116.8 115.9 116.4 117.2 118.0 77 Interbank loans 131.5 116.8 116.7 122.0 126.3 128.1 126.5 129.0 130.9 126.3 138.6 122.7 78 Federal funds sold to and repurchase agreements with commercial banks 81.9 63.9 71.3 77.3 77.7 82.1 79.2 81.4 83.4 79.6 89.3 75.7 79 Other 49.6 52.9 45.4 44.7 48.5 46.0 47.3 47.6 47.5 46.6 49.3 47.0 80 Cash assets4 168.7 150.0 144.8 153.9 161.7 166.8 155.8 148.6 148.9 142.9 142.3 159.2 81 Other assets5 202.7 225.2 218.7 222.7 222.8 227.9 235.9 235.1 235.2 238.5 231.3 233.7 82 Total assets6 2,725.6 2,781.1 2^393 2390.1 2^)15.4 2^)17.9 2398.9 2,863.9 2,8723 2352.6 2354.6 2364.0 Liabilities 83 Deposits 1,650.2 1,636.0 1,647.4 1,681.0 1,695.7 1,681.8 1,663.8 1,664.9 1,664.7 1,663.5 1,638.2 1,683.9 84 Transaction 389.0 369.7 364.9 376.1 392.4 374.6 354.9 356.7 346.4 352.8 346.0 381.4 85 Nontransaction 1,261.2 1,266.3 1,282.6 1,304.9 1,303.3 1,307.2 1,308.9 1,308.2 1,318.3 1,310.7 1,292.2 1,302.5 86 Large time 229.3 213.3 224.8 235.4 230.7 229.2 229.3 224.0 227.3 226.3 219.6 220.2 87 Other 1,031.9 1,053.0 1,057.7 1,069.6 1,072.6 1,078.1 1,079.6 1,084.2 1,091.0 1,084.4 1,072.5 1,082.3 88 Borrowings 566.9 567.7 596.0 625.8 634.2 643.6 628.5 618.9 626.5 615.0 624.8 605.8 89 From banks in the U.S 211.0 195.6 199.9 209.0 213.0 217.7 215.2 210.5 215.2 204.5 216.3 207.3 90 From nonbanks in the U.S 355.8 372.1 396.2 416.8 421.2 425.9 413.3 408.4 411.3 410.6 408.5 398.5 91 Net due to related foreign offices . . . 78.0 103.0 110.9 110.1 107.8 109.0 120.2 113.0 115.6 110.0 124.1 107.8 92 Other liabilities 160.7 191.1 201.5 190.7 193.0 195.4 193.9 172.6 170.6 168.1 172.5 173.5 93 Total liabilities 2,455.8 2,497.8 2^553 2,607.7 2,630.8 2,629.8 2,606/4 2,569.5 2377.4 2,556.6 2,559.7 2^71.1 94 Residual (assets less liabilities)7 .... 269.8 283.3 283.5 282.4 284.7 288.1 292.5 294.4 294.9 295.9 294.9 292.9 MEMO 95 Revaluation gains on off-balancesheet items8 47.2 61.7 78.7 62.7 65.2 66.0 64.5 46.3 49.0 44.1 43.0 43.6 96 Revaluation losses on off-balancesheet items8 49.6 65.1 80.5 65.1 66.8 65.8 65.3 46.0 48.4 43.5 44.3 42.3 97 Mortgage-backed securities9 253.9 260.5 280.7 287.0 284.0 279.6 276.7 269.8 269.4 268.9 268.6 270.8 98 Pass-through securities 171.0 167.3 189.5 196.6 194.7 191.9 187.3 180.3 179.6 179.5 179.7 180.9 99 CMOs, REMICs, and other mortgage-backed securities .. 82.9 93.2 91.2 90.4 89.3 87.7 89.4 89.5 89.7 89.3 88.9 90.0 100 Net unrealized gains (losses) on available-for-sale securities10 .. . 2.9 3.7 4.4 3.1 3.0 3.0 2.4 1.5 1.5 1.6 1.5 1.6 101 Offshore credit to U.S. residents11 .. . 35.2 36.8 38.5 39.1 38.5 38.9 38.9 39.0 39.1 40.0 39.5 37.6 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities 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 Mar.r Sept. Oct. Nov. Dec. Jan.r Feb/ Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 Seasonally adjusted Assets 1 Bank credit 1,392.7 1,451.8 1,471.4 1,499.6 1,520.0 1,525.8 1,532.3 1,541.3 1,539.2 1,541.0 1,541.9 1,544.6 2 Securities in bank credit 397.5 414.9 422.5 431.6 438.8 441.0 443.6 446.9 446.1 446.2 447.1 448.4 3 U.S. government securities 310.7 317.9 322.5 329.0 333.0 333.9 334.7 337.3 336.6 336.8 337.4 338.8 4 Other securities 86.8 97.0 100.1 102.6 105.8 107.1 108.9 109.5 109.5 109.3 109.8 109.6 5 Loans and leases in bank credit2 995.3 1,036.9 1,048.9 1,068.0 1,081.2 1,084.8 1,088.7 1,094.5 1,093.1 1,094.9 1,094.7 1,096.2 6 Commercial and industrial 179.1 190.6 193.3 196.3 199.2 200.7 201.1 202.0 201.9 201.9 201.8 202.5 7 Real estate 541.3 571.3 579.4 592.1 602.2 607.3 610.4 614.1 613.5 613.9 614.4 615.9 8 Revolving home equity 28.3 28.8 28.7 29.1 29.1 29.0 28.8 28.8 28.7 28.8 28.9 29.0 9 Other 513.0 542.5 550.7 563.0 573.1 578.2 581.7 585.3 584.8 585.1 585.5 587.0 10 Consumer 200.1 197.2 197.3 199.1 200.6 199.4 199.9 201.2 199.7 201.5 201.9 202.2 11 Security3 6.0 6.2 6.5 6.8 6.4 6.2 6.1 6.1 6.3 6.1 6.0 5.8 12 Other loans and leases 68.7 71.6 72.4 73.7 72.8 71.4 71.3 71.0 71.8 71.4 70.8 69.7 13 Interbank loans 60.4 71.0 72.8 69.8 66.2 67.7 67.1 63.9 64.0 64.3 64.9 60.9 14 Cash assets4 63.2 68.1 67.9 70.3 70.7 71.0 71.1 71.9 70.4 68.9 73.0 75.5 15 Other assets5 57.6 64.9 67.6 72.2 74.3 77.8 77.6 77.0 77.1 77.9 77.2 76.4 16 Total assets6 1,555.0 1,636-3 1,660.2 1,692.1 1,7113 1,722.6 1,728.4 1,7343 1,730.9 1,7323 1,737.1 1,737.6 Liabilities 17 Deposits 1,255.0 1,308.4 1,320.9 1,342.4 1,360.9 1,373.0 1,383.4 1,382.8 1,380.2 1,380.8 1,381.0 1,386.1 18 Transaction 283.3 286.1 286.1 288.5 291.3 289.9 290.2 293.6 284.1 288.0 298.5 305.8 19 Nontransaction 971.7 1,022.3 1,034.9 1,053.9 1,069.5 1,083.1 1,093.2 1,089.2 1,096.1 1,092.8 1,082.6 1,080.3 20 Large time 180.8 190.8 192.8 197.0 194.8 193.2 195.5 196.8 195.6 196.4 197.4 198.3 21 Other 790.9 831.5 842.1 856.9 874.7 889.9 897.7 892.4 900.5 896.5 885.1 882.0 22 Borrowings 151.0 165.7 172.2 180.5 185.7 182.7 186.4 190.5 191.5 192.3 192.8 186.1 23 From banks in the U.S 70.2 77.2 81.0 84.7 87.0 83.2 84.4 85.3 86.0 86.4 87.0 82.1 24 From others 80.8 88.5 91.2 95.8 98.8 99.5 102.0 105.1 105.4 106.0 105.7 104.0 25 Net due to related foreign offices .... 4.1 3.7 4.7 3.6 3.6 3.0 3.2 4.5 3.9 3.8 5.1 5.9 26 Other liabilities 27.5 29.5 30.3 30.9 31.3 31.0 30.6 30.6 30.6 30.3 30.5 31.0 27 Total liabilities 1,437.6 1307.4 1328.1 13573 13813 1389.8 1,603.6 1,608.4 1,606.1 1,6073 1,6093 1,609.1 28 Residual (assets less liabilities)7 117.4 128.9 132.0 134.6 130.0 132.8 124.8 126.0 124.8 125.0 127.6 128.5 Not seasonally adjusted Assets 29 Bank credit 1,386.9 1,455.3 1,470.5 1,496.8 1,518.3 1,519.3 1,521.6 1,535.6 1,530.3 1,534.3 1,537.9 1,543.2 30 Securities in bank credit 398.9 413.1 419.7 429.3 438.4 440.2 441.4 448.4 446.0 447.3 450.0 452.0 31 U.S. government securities 312.1 316.4 319.7 326.7 333.0 333.3 333.1 338.9 336.8 338.2 340.1 341.9 32 Other securities 86.8 96.7 99.9 102.6 105.5 106.9 108.3 109.6 109.2 109.1 110.0 110.1 33 Loans and leases in bank credit2 988.0 1,042.2 1,050.8 1,067.5 1,079.9 1,079.0 1,080.2 1,087.2 1,084.3 1,087.0 1,087.9 1,091.2 34 Commercial and industrial 179.7 189.5 191.9 194.9 198.3 199.9 200.7 202.6 201.9 202.6 202.8 203.4 35 Real estate 538.0 574.4 580.8 592.6 600.5 603.4 605.7 610.5 609.4 609.7 610.8 613.8 36 Revolving home equity 28.2 29.1 28.9 29.3 29.3 29.0 28.7 28.7 28.6 28.6 28.7 28.7 37 Other 509.8 545.4 551.9 563.2 571.2 574.3 577.0 581.9 580.7 581.1 582.1 585.1 38 Consumer 197.8 198.1 197.9 199.9 202.6 200.3 199.3 199.1 197.4 199.4 199.7 199.9 39 Security3 6.0 6.2 6.5 6.8 6.4 6.2 6.1 6.1 6.3 6.1 6.0 5.8 40 Other loans and leases 66.5 73.9 73.7 73.4 72.0 69.3 68.5 68.9 69.3 69.1 68.6 68.2 41 Interbank loans 63.4 69.0 74.3 77.8 71.2 67.7 67.0 66.9 70.3 67.1 64.4 63.5 42 Cash assets4 61.7 66.9 67.2 72.4 74.1 74.2 72.1 70.4 69.5 68.6 67.6 74.9 43 Other assets5 56.6 65.3 67.8 73.5 74.2 74.7 76.3 75.6 75.4 74.0 75.4 78.0 44 Total assets6 1349.7 1,637.0 1,660.2 1,700.8 1,718.1 1,716.2 1,7173 1,728.7 1,725.9 1,7243 1,725.6 1,739.7 Liabilities 45 Deposits 1,249.4 1,310.8 1,323.6 1,354.6 1,366.9 1,365.7 1,366.0 1,375.8 1,373.9 1,371.4 1,369.1 1,387.7 46 Transaction 281.8 283.2 283.1 292.2 302.1 294.4 288.4 292.3 285.4 287.4 289.3 307.9 47 Nontransaction 967.5 1,027.6 1,040.5 1,062.5 1,064.8 1,071.3 1,077.5 1,083.5 1,088.5 1,084.1 1,079.8 1,079.9 48 Large time 180.8 190.8 192.8 197.0 194.8 193.2 195.5 196.8 195.6 196.4 197.4 198.3 49 Other 786.7 836.8 847.7 865.4 870.0 878.1 882.0 886.7 892.9 887.7 882.4 881.6 50 Borrowings 146.6 167.8 174.6 182.6 187.7 183.1 183.8 184.9 183.1 186.4 188.6 182.1 51 From banks in the U.S 68.3 77.6 82.7 86.4 89.0 83.9 83.3 83.0 82.4 83.9 85.4 80.4 52 From others 78.3 90.2 91.9 96.2 98.7 99.2 100.6 101.9 100.7 102.5 103.3 101.7 53 Net due to related foreign offices .... 4.1 3.7 4.7 3.6 3.6 3.0 3.2 4.5 3.9 3.8 5.1 5.9 54 Other liabilities 28.0 28.9 29.6 30.3 30.7 31.7 31.4 31.1 31.5 30.9 31.0 31.4 55 Total liabilities 1,428.1 1,511.3 1332.4 1,571.2 1388.9 13833 1384.4 13963 1392.4 1392.6 13933 1,607.1 56 Residual (assets less liabilities)7 121.6 125.7 127.8 129.6 129.2 132.7 133.0 132.3 133.5 131.7 131.9 132.6 MEMO 57 Mortgage-backed securities® 45.9 52.7 55.2 59.0 61.4 61.7 62.6 63.5 63.4 63.1 63.6 64.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • June 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 1998r 1999 1999 Mar/ Sept. Oct. Nov. Dec. Jan/ Feb/ Mar. Mar. 10 Mar. 17 Mar. 24 Mar. 31 Seasonally adjusted Assets 1 Bank credit 564.0 598.1 619.7 610.6 597.7 583.1 568.9 554.4 557.9 552.2 551.4 555.8 2 Securities in bank credit 197.5 211.9 218.6 215.2 212.8 211.0 204.1 198.4 200.8 196.3 198.1 197.6 3 U.S. government securities 88.6 83.3 80.8 81.4 81.6 83.3 82.5 83.8 83.2 81.8 84.2 87.0 4 Other securities 109.0 128.6 137.8 133.8 131.2 127.6 121.6 114.5 117.6 114.5 113.9 110.6 5 Loans and leases in bank credit2 .. . 366.4 386.2 401.1 395.4 384.9 372.1 364.8 356.0 357.1 355.9 353.3 358.2 6 Commercial and industrial 219.4 216.8 223.5 224.1 218.2 213.7 212.4 210.8 209.0 213.5 212.7 207.5 7 Real estate 25.9 23.6 23.5 22.6 21.7 21.8 21.6 21.7 21.5 21.6 21.8 21.9 8 Security3 50.1 66.7 69.8 64.9 65.7 62.6 58.5 49.9 51.2 46.4 46.6 55.1 9 Other loans and leases 71.1 79.1 84.3 83.8 79.4 74.0 72.3 73.7 75.4 74.3 72.1 73.6 10 Interbank loans 23.1 27.3 25.7 27.2 28.0 29.5 31.9 26.4 24.4 26.5 25.4 27.9 11 Cash assets4 34.4 34.3 35.7 34.9 35.8 36.4 36.2 37.2 39.3 37.2 38.1 34.9 12 Other assets5 36.0 37.3 38.5 36.9 38.4 38.5 37.7 37.8 37.8 38.7 37.1 37.3 13 Total assets6 657.1 696.7 7193 709.4 699.7 687.2 674.5 655.5 659.1 6543 651.7 655.6 Liabilities 14 Deposits 289.7 315.3 317.8 315.4 308.6 318.3 321.0 311.2 317.9 314.0 305.0 304.0 15 Transaction 11.8 15.3 15.4 12.8 11.5 12.9 13.9 13.1 13.3 13.7 12.4 12.7 16 Nontransaction 278.0 300.0 302.4 302.6 297.1 305.3 307.0 298.1 304.6 300.3 292.6 291.2 17 Borrowings 171.9 205.3 215.3 214.6 203.7 193.6 180.7 174.2 177.0 172.8 169.4 176.9 18 From banks in the U.S 27.1 28.4 30.6 32.1 27.2 21.5 18.0 24.4 23.9 24.7 24.5 26.0 19 From others 144.8 176.8 184.7 182.5 176.5 172.2 162.7 149.8 153.1 148.0 145.0 150.9 20 Net due to related foreign offices 123.7 98.1 105.6 99.2 101.5 101.7 100.1 99.4 99.3 99.7 99.0 102.2 21 Other liabilities 70.3 75.9 79.1 76.2 76.7 74.3 70.4 68.1 68.7 68.4 67.1 67.9 22 Total liabilities 655.6 694.6 717.8 705.4 690.5 687.9 672.1 652.9 662.9 654.9 640.5 651.0 23 Residual (assets less liabilities)7 1.4 2.1 1.5 4.0 9.2 -.7 2.4 2.5 -3.8 -.6 11.2 4.6 Not seasonally adjusted Assets 24 Bank credit 566.4 597.3 623.9 613.8 600.6 586.5 572.7 556.0 559.5 554.8 550.8 557.0 25 Securities in bank credit 198.9 211.3 221.7 218.4 211.4 211.2 205.8 199.5 203.1 198.8 197.2 197.6 26 U.S. government securities 89.5 82.5 80.7 81.8 81.8 83.0 82.9 84.7 84.0 83.3 84.9 87.5 27 Trading account 17.5 20.7 16.6 14.1 15.2 17.5 18.5 19.9 19.7 19.1 19.9 21.5 28 Investment account 72.1 61.8 64.2 67.7 66.6 65.5 64.4 64.8 64.3 64.2 65.0 66.0 29 Other securities 109.3 128.8 141.0 136.6 129.6 128.2 122.9 114.8 119.1 115.5 112.3 110.2 30 Trading account 66.0 84.2 91.6 84.8 78.9 79.1 75.4 71.8 74.3 72.0 69.9 70.1 31 Investment account 43.3 44.6 49.3 51.8 50.8 49.1 47.5 43.1 44.8 43.5 42.4 40.0 32 Loans and leases in bank credit2 . . . 367.5 386.0 402.2 395.4 389.1 375.3 366.9 356.5 356.3 356.0 353.6 359.4 33 Commercial and industrial 219.8 216.3 224.4 225.3 221.0 215.5 214.2 211.1 208.6 213.9 212.9 208.3 34 Real estate 25.9 23.6 23.7 22.9 21.8 22.0 22.0 21.8 21.8 21.8 21.8 21.7 35 Security3 51.2 66.8 69.6 64.3 66.2 62.5 58.2 50.5 51.4 47.0 47.4 56.0 36 Other loans and leases 70.6 79.2 84.5 83.0 80.3 75.3 72.5 73.1 74.6 73.3 71.5 73.5 37 Interbank loans 23.1 27.3 25.7 27.2 28.0 29.5 31.9 26.4 24.4 26.5 25.4 27.9 38 Cash assets4 33.4 34.1 36.1 35.5 37.3 36.9 35.5 36.1 37.8 35.9 36.9 34.4 39 Other assets5 36.4 37.8 38.3 37.1 39.9 38.8 38.8 38.4 39.8 39.5 36.9 36.6 40 Total assets6 659.0 6962 723.7 713.4 7055 691.4 678.7 656.5 661.2 656.4 649.7 655.6 Liabilities 41 Deposits 292.4 315.1 318.2 315.0 312.2 315.7 319.7 314.5 319.1 317.2 310.5 308.0 42 Transaction 11.9 16.0 15.4 12.7 11.9 13.0 13.7 13.2 13.2 13.7 12.6 13.3 43 Nontransaction 280.5 299.1 302.8 302.3 300.3 302.7 306.0 301.3 306.0 303.5 297.9 294.8 44 Borrowings 171.9 205.3 215.3 214.6 203.7 193.6 180.7 174.2 177.0 172.8 169.4 176.9 45 From banks in the U.S 27.1 28.4 30.6 32.1 27.2 21.5 18.0 24.4 23.9 24.7 24.5 26.0 46 From others 144.8 176.8 184.7 182.5 176.5 172.2 162.7 149.8 153.1 148.0 145.0 150.9 47 Net due to related foreign offices .... 121.7 96.3 107.8 102.6 107.7 104.4 103.7 97.6 93.2 96.2 101.3 101.4 48 Other liabilities 70.4 75.5 78.4 77.1 78.1 74.5 71.9 68.2 69.3 68.5 66.8 67.2 49 Total liabilities 656.4 692.2 719.7 709.4 701.7 688.2 676.0 654.4 658.6 654.6 648.0 653.6 50 Residual (assets less liabilities)7 2.6 4.0 4.0 4.0 3.8 3.2 2.6 2.1 2.6 1.8 1.8 2.1 MEMO 51 Revaluation gains on off-balance-sheet items8 40.9 47.7 52.0 48.6 48.1 45.9 43.6 40.3 42.4 39.4 39.1 39.3 52 Revaluation losses on off-balancesheet items8 40.2 44.2 47.5 44.9 44.5 42.2 41.3 39.1 41.2 38.0 38.2 38.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities 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 Nonfinancial Statistics • June 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 Sept. Oct. Nov. Dec. Jan. Feb. 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 companies' 2 Dealer-placed paper, total2 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 paper, total3 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 Date of change Rate Period Av r e a r t a e g e Av r e a r t a e ge 1996—Jan. 1 8.50 1996 1997—Jan. . 1998—Jan. . Feb. 1 8.25 1997 Feb. Feb. 1998 Mar. Mar 1997—Mar. 26 8.50 Apr. Apr. 1996—Jan. . May May 1998—Sept. 30 8.25 Feb. June June Oct. 16 8.00 Mar. July . July . Nov. 18 7.75 Apr. Aug. Aug. May Sept. Sept. June Oct. . Oct. . July . Nov. Nov. Aug. Dec. Dec. Sept. Oct. . 1999—Jan Nov. Feb. Dec. 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 Dec. Jan. Feb. Mar. Feb. 26 Mar. 5 Mar. 12 Mar. 19 Mar. 26 MONEY MARKET INSTRUMENTS 1 Federal funds1,2'3 5.30 5.46 5.35 4.68 4.63 4.76 4.81 4.75 4.85 4.80 4.79 4.79 2 Discount window borrowing2'4 5.02 5.00 4.92 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 Commercial paper!'5'6 Nonfinancial 3 1-month n.a. 5.57 5.40 5.24 4.80 4.80 4.82 4.81 4.83 4.82 4.81 4.82 4 2-month n.a. 5.57 5.38 5.12 4.78 4.80 4.82 4.82 4.83 4.82 4.82 4.80 5 3-month n.a. 5.56 5.34 5.00 4.77 4.79 4.81 4.81 4.83 4.81 4.81 4.81 Financial 6 1-month n.a. 5.59 5.42 5.31 4.83 4.82 4.84 4.83 4.84 4.84 4.83 4.83 7 2-month n.a. 5.59 5.40 5.13 4.81 4.82 4.83 4.84 4.85 4.84 4.83 4.83 8 3-month n.a. 5.60 5.37 5.04 4.81 4.82 4.84 4.83 4.86 4.84 4.83 4.82 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 (historicalJ3,5'8 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 5.08 4.80 4.79 4.82 4.81 4.82 4.82 4.82 4.82 16 6-month 5.31 5.57 5.30 4.91 4.73 4.74 4.82 4.79 4.80 4.82 4.81 4.82 Certificates of deposit, secondary market 17 1-month 5.35 5.54 5.49 5.47 4.89 4.86 4.88 4.87 4.89 4.88 4.86 4.87 18 3-month 5.39 5.62 5.47 5.14 4.89 4.90 4.91 4.92 4.93 4.90 4.89 4.90 19 6-month 5.47 5.73 5.44 5.01 4.90 4.95 4.98 4.99 5.03 4.98 4.96 4.97 20 Eurodollar deposits, 3-month3'11 5.38 5.61 5.45 5.13 4.88 4.86 4.88 4.88 4.88 4.88 4.88 4.88 U.S. Treasury bills Secondary market3,5 ?1 3-month 5.01 5.06 4.78 4.39 4.34 4.44 4.44 4.53 4.52 4.48 4.42 44..3399 ?? 6-month 5.08 5.18 4.83 4.40 4.33 4.44 4.47 4.51 4.56 4.51 4.48 4.38 23 1-year 5.22 5.32 4.80 4.32 4.31 4.48 4.53 4.58 4.63 4.53 4.50 4.50 Auction high3,5,12 24 3-month 5.02 5.07 4.81 4.42 4.34 4.45 4.48 4.53 4.57 4.51 4.47 4.38 25 6-month 5.09 5.18 4.85 4.43 4.36 4.43 4.52 4.43 4.59 4.54 4.53 4.42 26 1-year 5.23 5.36 4.85 4.31 4.34 4.37 4.67 n.a. 4.67 n.a. n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities13 27 1-year 5.52 5.63 5.05 4.52 4.51 4.70 4.78 4.82 4.89 4.77 4.74 4.75 28 2-year 5.84 5.99 5.13 4.51 4.62 4.88 5.05 5.05 5.18 5.05 5.00 5.02 29 3-year 5.99 6.10 5.14 4.48 4.61 4.90 5.11 5.09 5.25 5.10 5.03 5.07 30 5-year 6.18 6.22 5.15 4.45 4.60 4.91 5.14 5.11 5.29 5.13 5.05 5.11 31 7-year 6.34 6.33 5.28 4.65 4.80 5.10 5.36 5.29 5.47 5.35 5.27 5.34 32 10-year 6.44 6.35 5.26 4.65 4.72 5.00 5.23 5.18 5.38 5.21 5.14 5.20 33 20-year 6.83 6.69 5.72 5.36 5.45 5.66 5.87 5.80 5.93 5.86 5.78 5.87 34 30-year 6.71 6.61 5.58 5.06 5.16 5.37 5.58 5.49 5.65 5.56 5.50 5.58 Composite 35 More than 10 years (long-term) 6.80 6.67 5.69 5.29 5.39 5.60 5.81 5.74 5.88 5.80 5.73 55..8811 STATE AND LOCAL NOTES AND BONDS Moody's series14 36 5.52 5.32 4.93 4.83 4.85 4.80 4.96 4.75 5.00 4.97 4.92 4.95 37 BBaaaa 5.79 5.50 5.14 5.17 5.21 5.21 5.32 5.19 5.35 5.32 5.29 5.31 38 BBoonndd BBuuyyeerr sseerriieess 5.76 5.52 5.09 4.98 5.01 5.03 5.10 5.08 5.14 5.11 5.07 5.08 CORPORATE BONDS 39 Seasoned issues, all industries16 7.66 7.54 6.87 6.72 6.76 6.89 7.07 6.99 7.14 7.05 7.01 7.06 Rating group 40 7.37 7.27 6.53 6.22 6.24 6.40 66..6622 6.51 6.69 6.60 6.55 66..6622 41 Aa 7.55 7.48 6.80 6.65 6.68 6.79 6.98 6.89 7.03 6.96 6.92 6.97 47 A 7.69 7.54 6.93 6.80 6.84 6.97 7.14 7.07 7.22 7.13 7.08 7.12 43 Baa 8.05 7.87 7.22 7.23 7.29 7.39 7.53 7.47 7.61 7.52 7.47 7.53 MEMO Dividend-price ratio 44 Common stocks 2.19 1.77 1.49 1.37 1.30 1.32 1.30 1.31 1.34 1.28 1.28 1.30 1. The daily eifective 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 NonfinancialS tatistics • June 1999 1.36 STOCK MARKET Selected Statistics 1998 1999 IInnddiiccaattoorr 11999966 11999977 11999988 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Prices and trading volume (averages of daily figures)1 Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 357.98 456.99 550.65 586.39 539.16 506.56 511.49 564.26 576.05 595.43 588.70 603.69 2 Industrial 453.57 574.97 684.35 718.54 665.66 629.51 636.62 704.46 717.14 741.43 736.20 751.93 3 Transportation 327.30 415.08 468.61 503.89 441.36 408.75 396.61 442.95 456.70 479.72 477.47 491.25 4 Utility 126.36 143.87 190.52 189.95 186.24 186.17 195.09 206.29 215.57 224.75 218.24 218.11 5 Finance 303.94 424.84 516.65 579.67 511.22 454.28 448.12 501.45 510.31 523.38 514.75 544.08 6 Standard & Poor's Corporation (1941-43 = 10)2 670.49 873.43 1,085.50 1,156.58 1,074.62 1,020.64 1,032.47 1,144.43 1,190.05 1,248.77 1,246.58 1,281.66 7 American Stock Exchange (Aug. 31, 1973 = 50)3 570.86 628.34 682.69 724.83 655.67 621.48 607.16 667.60 660.76 704.22 699.15 711.08 Volume of trading (thousands of shares) 8 New York Stock Exchange 409,740 523,254 666,534 639,744 712,710 790,238 808,816 668,932 680,397 847,135 756,932 776,538 9 American Stock Exchange 22,567 24,390 28,870 26,473 32,721 33,331 31,946 27,266 28,756 31,015 31,774 29,563 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers' 97,400 126,090 140,980 154,370 147,800 137,540 130,160 139,710 140,980 153,240 151,530 156,440 Free credit balances at brokers5 11 Margin accounts6 22,540 31,410 40,250 31,820 38,460 41,970 43,500 40,620 40,250 36,880 38,850 40,120 12 Cash accounts 40,430 52,160 62,450 53,780 53,850 54,240 54,610 56,170 62,450 59,600 57,910 59,435 Margin requirements (percent of market value and effective date)7 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Daily data on prices are available upon request to the Board of Governors. For ordering 6. Series initiated in June 1984. address, see inside front cover. 7. Margin requirements, stated in regulations adopted by the Board of Governors pursuant 2. In July 1976 a financial group, composed of banks and insurance companies, was added to the Securities Exchange Act of 1934, limit the amount of credit that can be used to to the group of stocks on which the index is based. The index is now based on 400 industrial purchase and carry "margin securities" (as defined in the regulations) when such credit is stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and collateralized by securities. Margin requirements on securities are the difference between the 40 financial. market value (100 percent) and the maximum loan value of collateral as prescribed by the 3. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, previous readings in half. 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. 4. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the included credit extended against stocks, convertible bonds, stocks acquired through the initial margin required for writing options on securities, setting it at 30 percent of the current exercise of subscription rights, corporate bonds, and government securities. Separate report- market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in required initial margin, allowing it to be the same as the option maintenance margin required April 1984. by the appropriate exchange or self-regulatory organization; such maintenance margin rules 5. Free credit balances are amounts in accounts with no unfulfilled commitments to must be approved by the Securities and Exchange Commission. brokers and are subject to withdrawal by customers on demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn 1998 1999 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. U.S. budget1 1 Receipts, total 1,453,062 1,579,292 1,721,798 119,974 113,978 178,646 171,722 99,414 130,292 2 On-budget 1,085,570 1,187,302 1,305,999 90,064 81,836 143,337 129,921 65,058 92,425 3 Off-budget 367,492 391,990 415,799 29,910 32,142 35,309 41,801 34,356 37,867 4 Outlays, total 1,560,512 1,601,235 1,652,552 152,436 131,095 184,056 101,386 142,281 152,707 5 On-budget 1,259,608 1,290,609 1,335,948 123,687 100,078 149,401 102,489 111,007 122,005 6 Off-budget 300,904 310,626 316,604 28,749 31,017 34,655 -1,103 31,274 30,702 7 Surplus or deficit (-), total -107,450 -21,943 69,246 -32,462 -17,117 -5,410 70,336 -42,867 -22,415 8 On-budget -174,038 -103,307 -29,949 -33,623 -18,242 -6,064 27,432 -45,949 -29,580 9 Off-budget 66,588 81,364 99,195 1,161 1,125 654 42,904 3,082 7,165 Source of financing (total) 10 Borrowing from the public 129,712 38,171 -51,049 15,330 22,364 -5,390 -31,249 1,688 37,013 11 Operating cash (decrease, or increase (-)) -6,276 604 4,743 2,661 20,335 -1,621 -39,567 52,432 -16,988 12 Other2 -15,986 -16,832 -22,940 14,471 -25,582 12,421 480 -11,253 2,390 MEMO 13 Treasury operating balance (level, end of period) 44,225 43,621 38,878 36,217 15,882 17,503 57,070 4,638 21,626 14 Federal Reserve Banks 7,700 7,692 4,952 4,440 5,219 6,086 7,623 4,538 5,374 15 Tax and loan accounts 36,525 35,930 33,926 31,776 10,663 11,417 49,446 100 16,252 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 • June 1999 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1997 1998 1999 11999977 11999988 HI H2 HI H2 Jan. Feb. Mar. RECEIPTS 1 All sources 1,579,292 1,721,798 845,527 773,812 922,632 825,055 171,722 99,414 130,292 2 Individual income taxes, net 737,466 828,586 400,436 354,072 447,514 392,332 99,857 42,792 50,468 3 Withheld 580,207 646,483 292,252 306,865 316,309 339,144 58,527 59,055 69,559 4 Nonwithheld 250,753 281,527 191,050 58,069 219,136 65,204 42,324 2,949 7,245 5 Refunds 93,560 99,476 82,926 10,869 87,989 12,032 994 1199,,221199 2266,,335511 Corporation income taxes 61 Gross receipts 204,493 213,249 106,451 104,659 109,353 104,163 7,185 3,641 23,131 Refunds 22,198 24,593 9,635 10,135 14,220 14,250 2,055 2,465 4,578 8 Social insurance taxes and contributions, net .. . 539,371 571,831 288,251 260,795 312,713 268,466 54,928 46,683 49,216 9 Employment taxes and contributions2 506,751 540,014 268,357 247,794 293,520 256,142 53,725 43,735 48,592 10 Unemployment insurance 28,202 27,484 17,709 10,724 17,080 10,121 867 2,594 269 11 Other net receipts3 4,418 4,333 2,184 2,280 2,112 2,202 337 353 355 12 Excise taxes 56,924 57,673 28,084 31,133 29,922 33,366 4,806 3,892 5,880 13 Customs deposits 17,928 18,297 8,619 9,679 8,546 9,838 1,286 1,403 1,546 14 Estate and gift taxes 19,845 24,076 10,477 10,262 12,971 12,359 2,206 1,600 2,172 15 Miscellaneous receipts4 25,465 32,658 12,866 13,348 15,829 18,735 3,509 1,868 2,457 OUTLAYS 16 All types 1,601,235 1,652,552 797,418 824,370 815,886 877,026 101,386 142,281 152,707 17 National defense 270,473 268,456 132,698 140,873 129,351 140,196 19,270 20,909 25,469 18 International affairs 15,228 13,109 5,740 9,420 4,610 8,297 1,179 1,372 949 19 General science, space, and technology 17,174 18,219 8,938 10,040 9,426 10,142 1,398 1,312 1,663 20 Energy 1,483 1,270 803 411 957 699 -107 -189 588 21 Natural resources and environment 21,369 22,396 9,628 11,106 10,051 12,671 1,458 1,919 1,862 22 Agriculture 9,032 12,206 1,465 10,590 2,387 16,757 3,939 1,074 1,046 23 Commerce and housing credit -14,624 1,014 -7,575 -3,526 -2,483 4,046 745 -1,237 -1,474 24 Transportation 40,767 40,332 16,847 20,414 16,196 20,834 2,558 2,259 2,636 25 Community and regional development 11,005 9,720 5,678 5,749 4,863 6,972 709 720 11,,114488 26 Education, training, employment, and social services 53,008 54,919 25,080 26,851 25,928 28,216 5,136 5,429 6,641 27 Health 123,843 131,440 61,809 63,552 65,053 67,836 10,984 11,100 11,988 28 Social security and Medicare 555,273 572,047 278,863 283,109 286,305 316,809 15,248 46,727 49,846 29 Income security 230,886 233,202 124,034 106,353 125,196 109,481 17,349 29,856 26,749 30 Veterans benefits and services 39,313 41,781 17,697 22,077 19,615 22,750 1,828 3,574 3,693 31 Administration of justice 20,197 22,832 10,670 10,212 11,287 12,041 2,090 1,832 2,180 32 General government 12,768 13,444 6,623 7,302 6,139 9,136 188 274 1,130 33 Net interest5 244,013 243,359 122,655 122,620 122,345 116,954 19,947 18,049 19,970 34 Undistributed offsetting receipts6 -49,973 -47,194 -24,235 -22,795 -21,340 -25,795 -2,530 -2,700 -3,376 1. Functional details do not sum to total outlays for calendar year data because revisions to 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for receipts and 5. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 6. Rents and royalties for the outer continental shelf, U.S. government contributions for been fully distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the US. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 2000; monthly and half-year totals: U.S. Department of the Treadisability fund. sury, Monthly Treasury Statement of Receipts and Outlays of the V.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A27 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1997 1997 1998 1999 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 5,415 5,410 5,446 5,536 5,573 5,578 5,556 5,643 5,726 2 Public debt securities 5,381 5,376 5,413 5,502 5,542 5,548 5,526 5,614 5,652 3 Held by public 3,874 3,805 3,815 3,847 3,872 3,790 3,761 3,787 n.a. 4 Held by agencies 1,507 1,572 1,599 1,656 1,670 1,758 1,766 1,827 n.a. 5 Agency securities 34 34 33 34 31 30 29 29 74 6 Held by public 26 26 26 27 26 26 26 29 n.a. 7 Held by agencies 8 7 7 7 5 4 4 1 n.a. 8 Debt subject to statutory limit 5,294 5,290 5,328 5,417 5,457 5,460 5,440 5,530 5,566 9 Public debt securities 5,294 5,290 5,328 5,416 5,456 5,460 5,439 5,530 5,566 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 5,500 5,500 5,950 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 US. TREASURY Types and Ownership Billions of dollars, end of period 1998 1999 TTyyppee aanndd hhoollddeerr 11999955 11999966 11999977 11999988 Q2 Q3 Q4 Q1 1 Total gross public debt 4,988.7 5,323.2 5,502.4 5,614.2 5,547.9 5,526.2 5,614.2 5,651.6 By type 2 Interest-bearing 4,964.4 5,317.2 5,494.9 5,605.4 5,540.2 5,518.7 5,605.4 5,643.1 3 Marketable 3,307.2 3,459.7 3,456.8 3,355.5 3,369.5 3,331.0 3,355.5 3,361.3 4 Bills 760.7 777.4 715.4 691.0 641.1 637.7 691.0 725.5 5 Notes 2,010.3 2,112.3 2,106.1 1,960.7 2,064.6 2,009.1 1,960.7 1,912.0 6 Bonds 521.2 555.0 587.3 621.2 598.7 610.4 621.2 632.5 7 Inflation-indexed notes and bonds1 n.a. n.a. 33.0 50.6 50.1 41.9 50.6 59.2 8 Nonmarketable2 1,657.2 1,857.5 2,038.1 2,249.9 2,170.7 2,187.7 2,249.9 2,281.8 9 State and local government series 104.5 101.3 124.1 165.3 155.0 164.4 165.3 167.5 10 Foreign issues3 40.8 37.4 36.2 34.3 36.0 35.1 34.3 33.5 11 Government 40.8 47.4 36.2 34.3 36.0 35.1 34.3 33.5 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 181.9 182.4 181.2 180.3 180.7 180.8 180.3 180.6 14 Government account series4 1,299.6 1,505.9 1,666.7 1,840.0 1,769.1 1,777.3 1,840.0 1,870.2 15 Non-interest-bearing 24.3 6.0 7.5 8.8 7.7 7.5 8.8 8.5 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 1,757.6 1,765.6 1,826.8 17 Federal Reserve Banks 391.0 410.9 451.9 471.7 458.4 458.1 471.7 18 Private investors 3,294.9 3,411.2 3,393.4 3,334.0 3,330.6 3,301.0 3,334.0 19 Commercial banks 278.7 261.8 269.8 215.0 263.6 219.8 215.0 20 Money market funds 71.5 91.6 88.9 105.8 82.7 84.2 105.8 21 Insurance companies 241.5 214.1 224.9 186.0 183.6 186.1 186.0 22 Other companies 228.8 258.5 265.0 267.9 267.2 271.4 267.9 n a. 23 State and local treasuries6'7 469.6 482.5 493.0 490.0 470.0 487.4 490.0 Individuals 24 Savings bonds 185.0 187.0 186.5 186.7 186.0 186.0 186.7 25 Other securities 162.7 169.6 168.4 164.9 165.0 166.4 164.9 26 Foreign and international8 835.2 1,102.1 1,241.6 1,276.3 1,256.0 1,221.8 1,276.3 27 Other miscellaneous investors7'9 825.9 678.9 552.0 441.4 456.5 477.9 441.4 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 • June 1999 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1998 1999 1999, week ending IItteemm Dec. Jan. Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Mar. 3 Mar. 10 Mar. 17 Mar. 24 Mar. 31 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 30,397 32,211 31,811 31,081 28,338 30,512 29,067 51,699 28,431 26,936 25,567 46,405 Coupon securities, by maturity 2 Five years or less 7766,,114477 110000,,664411 107,777 112,778 113,895 91,824 108,612 122,778 99,358 79,570 97,269 92,383 3 More than five years 47,464 68,441 71,489 70,930 79,070 68,136 62,772 83,554 73,684 51,433 54,205 55,781 4 Inflation-indexed 415 1,552 772 934 471 991 776 727 548 276 264 323 Federal agency 5 Discount notes 3388,,999988 43,028 41,355 39,619 41,477 43,823 39,499 42,125 40,996 41,217 37,095 39,828 Coupon securities, by maturity 6 One year or less 771166 11,,009988 1,796 867 1,579 2,715 1,764 1,515 1,009 1,176 1,281 672 7 More than one year, but less than or equal to five years 3,491 6,150 7,446 6,254 9,021 5,200 6,995 12,035 4,829 8,518 8,832 5,743 8 More than five years 2,413 4,079 3,633 4,984 3,639 3,118 3,459 3,312 5,367 3,068 1,974 2,052 9 Mortgage-backed 59,167 82,210 75,923 66,974 100,554 69,208 61,462 80,707 94,031 68,385 50,182 58,892 By type of counterparty With interdealer broker 10 U.S. Treasury 84,186 113,084 117,230 117,573 123,277 103,664 114,347 142,719 112,829 87,756 98,164 106,251 11 Federal agency 2,193 3,806 3,791 3,965 3,623 4,064 3,229 4,677 3,908 5,290 3,853 3,099 12 Mortgage-backed 20,854 24,932 25,301 21,099 31,935 22,694 23,967 24,875 31,902 24,202 16,254 21,281 With other 13 U.S. Treasury 70,237 89,761 94,620 98,150 98,497 87,798 86,880 116,038 89,192 70,459 79,140 88,640 14 Federal agency 43,424 50,548 50,438 47,758 52,093 50,791 48,487 54,311 48,293 48,689 45,329 45,195 15 Mortgage-backed 38,314 57,278 50,622 45,875 68,620 46,515 37,495 55,832 62,129 44,183 33,928 37,611 FUTURES TRANSACTIONS3 By type of deliverable security 16 U.S. Treasury bills 108 0 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 17 Five years or less 2,731 2,225 2,512 2,234 2,587 1,618 2,457 5,110 3,180 2,399 2,048 1,492 18 More than five years 10,292 15,953 17,132 16,756 16,565 15,906 16,597 23,513 19,329 12,912 13,793 13,116 19 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 00 00 Federal agency 20 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 21 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 22 More than one year, but less than or equal to five years 0 0 0 0 0 0 0 0 0 0 0 0 23 More than five years 0 0 0 0 0 0 0 0 0 0 0 0 24 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 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 934 1,673 1,153 1,327 1,005 783 1,710 797 1,442 1,929 1,105 1,972 27 More than five years 3,004 4,712 5,798 4,838 6,564 5,688 5,854 5,483 5,276 5,257 4,763 4,662 28 Inflation-indexed 0 0 0 0 0 0 0 0 00 0 00 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 0 0 0 0 0 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 806 1,309 844 529 1,121 839 650 1,123 650 832 1,184 431 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 A29 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 1998 1999 1999, week ending Dec. Jan. Feb. Feb. 3 Feb. 10 Feb. 17 Feb. 24 Mar. 3 Mar. 10 Mar. 17 Mar. 24 Positions2 NET OUTRIGHT POSITIONS By type of security 1 U.S. Treasury bills -4,551 1,346 4,509 1,248 1,023 4,804 -2,884 25,480 25,042 20,081 17,666 Coupon securities, by maturity 2 Five years or less -5,388 -8,148 -12,028 -10,856 -3,817 -15,331 -12,089 -21,390 -21,756 -19,183 -13,623 3 More than five years 3,180 432 1,465 -391 2,950 5,354 121 -4,195 -5,998 -5,538 -6,597 4 Inflation-indexed 1,186 1,973 1,931 1,869 1,900 1,980 1,811 2,157 2,160 1,849 1,754 Federal agency 5 Discount notes 20,788 18,818 18,671 19,092 20,929 20,165 16,897 14,894 20,544 17,653 19,310 Coupon securities, by maturity 6 One year or less 2,075 2,858 3,450 2,727 3,899 3,340 3,429 3,439 2,744 3,060 2,361 7 More than one year, but less than or equal to five years 3,093 4,441 5,044 5,350 3,949 3,411 5,772 8,311 6,820 3,150 5,669 8 More than five years 3,499 4,545 3,146 3,325 2,847 2,918 3,941 2,544 4,670 5,455 3,710 9 Mortgage-backed 38,689 23,961 17,432 19,792 12,377 16,853 19,918 21,168 17,990 15,397 18,817 NET FUTURES POSITIONS4 By type of deliverable security 10 U.S. Treasury bills 507 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 11 Five years or less -4,012 -777 459 144 23 161 1,776 -328 -576 -1,329 -791 12 More than five years -24,757 -20,814 -14,876 -18,225 -12,831 -16,884 -15,464 -11,398 -11,713 -12,930 -15,466 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 -3,155 -1,090 -1,960 -3,481 -2,858 -1,209 -1,284 -1,743 -1,893 -854 -970 21 More than five years -1,387 -1,004 -1,487 122 -2,984 -1,024 -1,299 -1,215 -982 380 826 22 Inflation-indexed 0 0 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 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. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 27 Mortgage-backed 1,213 3,410 5,873 3,850 4,936 5,607 6,204 8,918 6,829 6,304 6,720 Financing5 Reverse repurchase agreements 28 Overnight and continuing 242,653 239,627 261,190 248,218 249,836 276,427 253,860 276,948 258,279 250,927 247,536 29 Term 807,304 799,672 788,073 862,566 898,988 709,335 738,485 762,673 783,478 800,575 829,709 Securities borrowed 30 Overnight and continuing 205,654 222,768 225,926 228,350 227,431 228,684 219,436 228,006 232,396 236,084 223,042 31 Term 112,684 105,788 100,463 101,670 103,907 98,571 101,781 94,536 92,844 93,192 97,864 Securities received as pledge 32 Overnight and continuing 2,952 2,509 2,380 2,477 2,403 2,306 2,389 n.a. n.a. n.a. 2,555 33 Term 67 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Repurchase agreements 34 Overnight and continuing 608,988 633,520 666,536 634,074 661,367 683,030 661,472 679,928 659,715 677,844 654,994 35 Term 713,037 695,303 674,687 745,088 782,905 589,106 635,295 651,208 668,923 686,985 719,778 Securities loaned 36 Overnight and continuing 9,369 10,040 11,753 9,616 10,997 12,722 12,265 12,090 11,998 12,304 11,226 37 Term 3,567 n.a. 5,776 0 n.a. n.a. n.a. 5,776 6,242 6,142 6,129 Securities pledged 38 Overnight and continuing 47,565 48,487 48,945 50,497 49,509 49,112 47,693 48,696 47,985 49,625 49,795 39 Term 5,075 5,776 5,896 6,076 6,015 4,567 6,747 6,388 6,843 6,890 8,249 Collateralized loans 40 Total 21,850 17,735 18,388 20,727 19,414 18,259 16,775 17,885 19,168 19,349 17,296 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 • June 1999 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1998 1999 AAggeennccyy 11999955 11999966 11999977 11999988 Sept. Oct. Nov. Dec. Jan. 1 Federal and federally sponsored agencies 844,611 925,823 1,022,609 1,296,477 1,172,575 1,207,495 1,255,412 1,296,477 n.a. 2 Federal agencies 37,347 29,380 27,792 26,502 26,691 26,350 26,315 26,502 26,355 3 Defense Department' 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 84 102 205 174 188 205 205 70 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 26,685 26,344 26,309 26,496 26,349 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 1,145,884 1,181,145 1,229,097 1,269,975 n.a. 11 Federal Home Loan Banks 243,194 263,404 313,919 382,131 343,188 367,274 373,755 382,131 383,572 12 Federal Home Loan Mortgage Corporation 119,961 156,980 169,200 287,396 232,994 246,708 267,890 287,396 300,927 13 Federal National Mortgage Association 299,174 331,270 369,774 460,291 430,582 431,300 446,377 460,291 461,157 14 Farm Credit Banks8 57,379 60,053 63,517 63,488 64,332 60,720 66,086 63,488 61,292 15 Student Loan Marketing Association9 47,529 44,763 37,717 35,399 33,760 33,981 33,928 35,399 n.a. 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 Corporation" 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 78,681 58,172 49,090 44,129 45,955 44,952 44,824 44,129 43,803 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 2,044 1,431 552 F F F F 21 Postal Service6 5,765 n.a. n.a. 1 1 1 1 1 1 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. I 1 I 1 I 1 24 United States Railway Association6 n.a. n.a. n.a. 1 i • 1 1 1 Other lending14 25 Farmers Home Administration 21,015 18,325 13,530 9,500 9,500 9,500 9,500 9,500 9,500 26 Rural Electrification Administration 17,144 16,702 14,898 14,091 14,166 14,191 14,199 14,091 14,101 27 Other 29,513 21,714 20,110 20,538 22,289 21,261 21,125 20,538 20,202 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 ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999966 11999977 11999988 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 All issues, new and refunding1 171,222 214,694 262,342 20,344 17,526 19,528 19,325 24,288 16,926 16,233 24,323 By type of issue 2 General obligation 60,409 69,934 87,015 5,812 5,619 6,791 5,433 8,632 6,925 6,786 8,323 3 Revenue 110,813 134,989 175,327 14,532 11,907 12,737 13,892 15,656 10,001 9,446 16,000 By type of issuer 4 State 13,651 18,237 23,506 1,483 1,280 1,865 778 2,561 318 1,837 1,895 5 Special district or statutory authority2 113,228 134,919 178,421 14,233 12,490 12,924 13,473 15,937 12,929 11,145 14,604 6 Municipality, county, or township 44,343 70,558 60,173 4,628 3,756 4,739 5,073 5,790 3,679 3,251 7,825 7 Issues for new capital 112,298 135,519 160,568 11,258 9,106 12,736 12,452 14,517 11,917 10,674 16,201 By use of proceeds 8 Education 26,851 31,860 36,904 2,435 2,041 2,605 2,353 2,766 2,936 3,751 3,537 9 Transportation 12,324 13,951 19,926 1,982 918 1,598 806 1,800 1,706 628 1,640 10 Utilities and conservation 9,791 12,219 21,037 1,179 831 2,785 2,225 984 672 394 2,839 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 8,594 709 315 471 638 1,376 452 343 1,084 13 Other purposes 32,462 35,095 42,450 2,764 2,726 3,359 3,242 4,477 4,439 3,207 3,918 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 1998r 1999 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, oorr iissssuueerr 11999966 11999977 11999988 July Aug. Sept. Oct. Nov. Dec. Jan.r Feb. 1 All issues1 n.a. n.a. 77,750 60,708 85,833 70,907 104,288 73,414 89,632 n.a. 2 Bonds2 n.a. n.a. 68,133 57,145 81,352 62,692 95,910 65,374 82,523 n.a. By type of offering 3 Public, domestic 465,489 537,880 n.a. 54,266 45,745 71,134 48,256 80,556 54,513 64,905 67,528 4 Private placement, domestic3 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 6,267 3,800 2,618 6,837 7,754 3,261 10,018 8,376 By industry group 6 Nonfinancial n.a. n.a. 24,821 20,399 16,562 16,632 31,911 21,397 19,853 n.a. 7 Financial 429,157 510,953 43,313 36,746 64,790 46,060 63,999 43,977 62,670 63,049 8 Stocks2 122,006 117,880 126,755 9,772 3,725 4,640 8,655 8,902 8,670 7,136 10,066 By type of offering 9 Public 122,006 117,880 126,755 9,772 3,725 4,640 8,655 8,902 8,670 7,136 10,066 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 74,113 6,390 2,560 2,266 5,879 6,145 7,559 3,701 8,911 12 Financial 41,546 57,494 52,642 3,382 1,165 2,374 2,776 2,757 1,111 3,435 1,155 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 • June 1999 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1998 1999 IItteemm 11999977 11999988 Aug. Sept. Oct. Nov. Dec. Jan. Feb.r Mar. 1 Sales of own shares2 1,190,900 1,461,430 111,587 118,478 116,471 112,627 140,700 161,889 132,199 164,681 2 Redemptions of own shares 918,728 1,217,022 118,812 107,049 108,838 89,702 134,289 135,713 128,125 146,567 3 Net sales3 272,172 244,408 -7,225 11,429 7,633 22,925 6,412 26,176 4,074 18,114 4 Assets4 3,409,315 4,173,531 3,479,401 3,625,841 3,804,591 4,002,089 4,173,531 4,298,071 4,180,115 4,330,269 5 Cash5 174,154 191,393 194,435 211,253 210,026 207,422 191,393 203,470 198,134 199,742 6 Other 3,235,161 3,982,138 3,284,967 3,414,588 3,594,565 3,794,667 3,982,138 4,094,601 3,981,982 4,130,526 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 Ql 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 92.3 73.8 75.5 77.2 80.1 84.9 89.4 94.8 100.2 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 Q3 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 A3 3 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables1 Billions of dollars, amounts outstanding 1998 1999 TTyyppee ooff ccrreeddiitt 11999966 11999977 11999988 Sept. Oct. Nov. Dec. Jan. Feb. Seasonally adjusted 1 Total 761.9 809.8 874.9 852.6 865.9 871.1 874.9 888.5r 899.1 2 Consumer 307.7 327.7 352.5 343.0 350.4 352.1 352.5 356.8r 361.3 3 Real estate 111.9 121.1 131.4 128.8 132.3 134.3 131.4 135.7 135.7 4 Business 342.4 361.0 391.0 380.7 383.2 384.7 391.0 396.0 402.0 Not seasonally adjusted 5 Total 769.7 818.1 884.0 849.0 864.2 872.8 884.0 888.7r 898.4 6 Consumer 310.6 330.9 356.1 344.0 350.0 352.2 356.1 356.1r 358.1 7 Motor vehicles loans 86.7 87.0 103.1 96.2 97.6 99.0 103.1 102.8r 105.0 8 Motor vehicle leases 92.5 96.8 93.3 94.9 94.6 94.4 93.3 93.9r 94.5 9 Revolving2 32.5 38.6 32.3 28.4 33.3 33.1 32.3 32.4r 32.2 10 Other3 33.2 34.4 33.1 34.6 34.6 34.6 33.1 32.1r 32.5 Securitized assets4 11 Motor vehicle loans 36.8 44.3 54.8 51.8 51.6 53.4 54.8 56.0r 54.9 12 Motor vehicle leases 8.7 10.8 12.7 14.2 14.4 14.2 12.7 12.5 12.3 13 Revolving 0.0 0.0 8.7 5.3 5.3 5.3 8.7 8.6 8.7 14 Other 20.1 19.0 18.1 18.8 18.6 18.4 18.1 17.9 18.1 15 Real estate 111.9 121.1 131.4 128.8 132.3 134.3 131.4 135.7 135.7 16 One- to four-family 52.1 59.0 75.7 68.4 72.2 74.1 75.7 80.1 80.3 17 Other 30.5 28.9 26.6 30.1 30.2 30.7 26.6 26.9 27.1 Securitized real estate assets4 18 One- to four-family 28.9 33.0 29.0 30.2 29.8 29.4 29.0 28.6 28.3 19 Other .4 .2 .1 .1 .1 .1 .1 .1 .1 20 Business 347.2 366.1 396.5 376.2 382.0 386.3 396.5 396.9 404.6 21 Motor vehicles 67.1 63.5 79.6 65.5 68.5 70.9 79.6 79.1 82.1 22 Retail loans 25.1 25.6 28.1 30.0 30.4 29.4 28.1 28.4 28.9 23 Wholesale loans5 33.0 27.7 32.8 24.2 27.0 30.3 32.8 31.9 34.3 24 Leases 9.0 10.2 18.7 11.3 11.1 11.2 18.7 18.9 18.9 25 Equipment 194.8 203.9 198.0 210.8 211.5 212.0 198.0 197.6 200.7 26 Loans 59.9 51.5 50.4 47.9 47.2 47.8 50.4 49.7 51.0 27 Leases 134.9 152.3 147.6 162.9 164.3 164.2 147.6 147.8 149.8 28 Other business receivables6 47.6 51.1 69.9 58.9 59.6 60.4 69.9 72.5 73.3 Securitized assets4 29 Motor vehicles 24.0 33.0 29.2 24.5 25.0 25.8 29.2 28.2 28.8 30 Retail loans 2.7 2.4 2.6 2.0 1.9 2.4 2.6 2.5 2.4 31 Wholesale loans 21.3 30.5 24.7 22.5 23.2 23.4 24.7 23.8 24.6 32 Leases .0 .0 1.9 .0 .0 .0 1.9 1.9 1.9 33 Equipment 11.3 10.7 13.0 11.3 12.0 11.8 13.0 12.7 12.9 34 Loans 4.7 4.2 6.6 4.9 5.6 5.4 6.6 6.3 6.2 35 Leases 6.6 6.5 6.4 6.4 6.4 6.4 6.4 6.4 6.7 36 Other business receivables6 2.4 4.0 6.8 5.3 5.2 5.3 6.8 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 • June 1999 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1998 1999 IItteemm 11999966 11999977 11999988 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 182.4 180.1 195.2 192.7 201.4 192.1 206.0 202.3 204.1 211.0 2 Amount of loan (thousands of dollars) 139.2 140.3 151.1 150.8 155.8 148.1 159.0 153.3 155.4 162.9 3 Loan-to-price ratio (percent) 78.2 80.4 80.0 80.9 79.8 79.5 79.4 78.0 78.2 79.4 4 Maturity (years) 27.2 28.2 28.4 28.7 28.6 28.3 28.7 28.4 28.7 28.8 5 Fees and charges (percent of loan amount)2 1.21 1.02 .89 .85 .86 .76 .98 1.01 .92 .82 Yield (percent per year) 6 Contract rate1 7.56 7.57 6.95 6.85 6.72 6.68 6.80 6.81 6.78 6.74 7 Effective rate1,3 7.77 7.73 7.08 6.98 6.85 6.80 6.94 6.96 6.92 6.86 8 Contract rate (HUD series)4 8.03 7.76 7.00 6.64 6.86 6.84 6.83 6.80 7.02 7.03 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 8.19 7.89 7.04 6.53 7.07 7.02 7.06 7.08 7.10 7.07 10 GNMA securities6 7.48 7.26 6.43 6.05 6.10 6.25 6.18 6.18 6.42 6.58 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 287,052 316,678 414,515 375,665 386,452 399,804 414,515 418,323 431,836 440,139 12 FHA/VA insured 30,592 31,925 33,770 32,903 32,814 33,420 33,770 33,483 34,000 34,870 13 Conventional 256,460 284,753 380,745 342,762 353,638 366,384 380,745 384,840' 397,836 405,269 14 Mortgage transactions purchased (during period) 68,618 70,465 188,448 15,681 18,967 23,557 26,222 14,005 22,029 16,923 Mortgage commitments (during period) 15 Issued7 65,859 69,965 193,795 16,282 30,551 17,994 16,803 20,754 26,509 16,891 16 To sell8 130 1,298 1,880 249 393 0 434 0 0 266 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 17 Total 137,755 164,421 255,010 216,521 231,458 242,270 255,010 257,062 262,921 277,624 18 FHA/VA insured 220 177 785 569 569 602 785 387 755r 750 19 Conventional 137,535 164,244 254,225 215,952 230,889 241,668 254,225 256,675 262,166r 276,874 Mortgage transactions (during period) 20 Purchases 125,103 117,401 267,402 25,366 20,629 23,986 34,299 27,672 25,225 29,921 21 Sales 119,702 114,258 250,565 24,294 19,472 22,660 28,024 31,431 24,232r 28,740 22 Mortgage commitments contracted (during period)9 128,995 120,089 281,899 23,375 25,025 28,903 29,703 23,900 24,829 32,546 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 A3 5 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1997 1998 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999955 11999966 11999977 Q4 Q1 Q2 Q3 Q4P 1 All holders 4,610,350 4,928,367 5,257,422 5,257,422 5,371,196 5,487,535 5,623,695 5,782,027 By type of property 2 One- to four-family residences 3,532,977 3,755,719 3,998,763 3,998,763 4,082,959 4,163,964 4,268,149 4,375,730 3 Multifamily residences 286,875 309,321 329,733 329,733 338,439 347,449 353,546 362,092 4 Nonfarm, nonresidential 705,937 776,193 838,627 838,627 858,641 883,476 908,192 949,230 5 Farm 84,561 87,134 90,299 90,299 91,157 92,646 93,808 94,974 By type of holder 6 Major financial institutions 1,900,089 1,981,885 2,083,978 2,083,978 2,114,528 2,121,939 2,137,412 2,193,378 7 Commercial banks2 1,090,189 1,145,389 1,245,315 1,245,315 1,271,037 1,281,849 1,295,768 1,337,664 8 One- to four-family 669,434 698,508 762,533 762,533 779,941 785,019 784,987 810,680 9 Multifamily 43,837 46,675 50,651 50,651 51,688 52,077 53,049 53,586 10 Nonfarm, nonresidential 353,088 375,322 405,144 405,144 411,949 416,434 429,045 444,363 11 Farm 23,830 24,883 26,986 26,986 27,458 28,319 28,688 29,034 12 Savings institutions3 596,763 628,335 631,822 631,822 637,012 632,359 634,244 643,773 13 One- to four-family 482,353 513,712 520,672 520,672 527,036 522,088 525,842 533,680 14 Multifamily 61,987 61,570 59,543 59,543 59,074 58,908 56,706 56,806 15 Nonfarm, nonresidential 52,135 52,723 51,252 51,252 50,532 50,978 51,297 52,871 16 Farm 288 331 354 354 369 386 399 417 17 Life insurance companies 213,137 208,161 206,841 206,841 206,480 207,730 207,399 211,940 18 One- to four-family 8,890 6,977 7,187 7,187 7,174 7,218 7,206 7,364 19 Multifamily 28,714 30,750 30,402 30,402 31,156 31,849 31,661 32,354 20 Nonfarm, nonresidential 165,876 160,314 158,780 158,780 157,696 158,146 158,032 161,492 21 Farm 9,657 10,120 10,472 10,472 10,454 10,517 10,500 10,730 22 Federal and related agencies 308,757 295,192 286,167 286,167 286,877 287,161 287,125 291,858 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 178,807 168,813 161,308 161,308 160,048 159,816 159,104 157,675 45 One- to four-family 163,648 155,008 149,831 149,831 149,254 149,383 149,069 147,594 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 538,295 586,408 614,279 614,279 639,117 635,833 651,109 665,001 74 One- to four-family 371,806 376,039 388,988 388,988 409,548 402,395 413,480 425,836 75 Multifamily 73,528 82,492 90,879 90,879 93,430 95,534 95,992 94,686 76 Nonfarm, nonresidential 75,154 109,707 115,633 115,633 117,176 118,633 122,123 124,762 77 Farm 17,806 18,169 18,779 18,779 18,964 19,271 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 departments. credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and 3. Includes savings banks and savings and loan associations. finance companies. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from SOURCE. Based on data from various institutional and government sources. Separation of FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting nonfarm mortgage debt by type of property, if not reported directly, and interpolations and changes by the Farmers Home Administration. extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by Line 69 from Inside Mortgage Securities and other sources. the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic NonfinancialS tatistics • June 1999 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1998 1999 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999966 11999977 11999988 Sept. Oct. Nov. Dec. Jan.' Feb. Seasonally adjusted 1 Total 1,181,913 1,233,099 1,299,207"' 1,283,573' l,294,917r 1,296,630r 1,299,207r 1,314,471 1,323,166 2 Automobile 392,321 413,369 447,013r 435,592r 437,820' 442,430' 447,013' 454,096 459,265 3 Revolving 499,486 531,140 560,515r 551,673r 557,644' 556,535' 560,515' 566,690 568,979 4 Other2 290,105 288,590 291,680r 296,308r 299,453' 297,665' 291,680' 293,684 294,922 Not seasonally adjusted 5 Total 1,211,590 1,264,103 1,331,742r l,286,589r l,297,576r 1,304,499r 1,331,742"" 1,323,250 1,316,336 By major holder 6 Commercial banks 526,769 512,563 508,932 497,870 502,076 498,838 508,932 507,264 497,701 7 Finance companies 152,391 160,022 168,491 159,141 165,573 166,622 168,491 167,305 169,664 8 Credit unions 144,148 152,362 155,406' 154,339r 154,991' 155,221' 155,406' 155,726 155,141 9 Savings institutions 44,711 47,172 51,611 50,307 50,966 51,625 51,611 52,047 52,482 10 Nonfinancial business3 77,745 78,927 74,877r 65,539r 65,962' 66,615' 74,877' 70,950 67,915 11 Pools of securitized assets4 265,826 313,057 372,425 359,393 358,008 365,578 372,425 369,958 373,433 By major type of credit 12 Automobile 395,609 416,962 450,968r 439,598' 443,120' 446,566' 450,968' 452,181 454,136 13 Commercial banks 157,047 155,254 158,072 156,287 156,788 157,126 158,072 160,273 159,922 14 Finance companies 86,690 87,015 103,094 96,183 97,637 98,954 103,094 102,822 104,987 IS Pools of securitized assets4 51,719 64,950 72,955 72,146 71,788 72,582 72,955 73,232 73,232 16 Revolving 522,860 555,858 586,528' 549,001' 556,006' 559,211' 586,528' 575,675 568,991 17 Commercial banks 228,615 219,826 210,346 197,615 200,869 196,923 210,346 204,774 197,571 18 Finance companies 32,493 38,608 32,309 28,375 33,309 33,056 32,309 32,414 32,195 19 Nonfinancial business3 44,901 44,966 39,166' 33,743 33,762 33,756 39,166' 36,389 34,295 20 Pools of securitized assets4 188,712 221,465 272,327 259,348 258,139 265,311 272,327 269,918 272,551 21 Other 293,121 291,283 294,246r 297,990' 298,450' 298,722' 294,246' 295,394 293,209 22 Commercial banks 141,107 137,483 140,514 143,968 144,419 144,789 140,514 142,217 140,208 23 Finance companies 33,208 34,399 33,088 34,583 34,627 34,612 33,088 32,069 32,482 24 Nonfinancial business3 32,844 33,961 35,71 r 31,796' 32,200' 32,859' 35,711' 34,561 33,620 25 Pools of securitized assets4 25,395 26,642 27,143 27,899 28,081 27,685 27,143 26,808 27,650 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. INTEREST RATES Commercial banks2 99..0055 99..0022 88..7722 88..7711 n.a. n.a. 88..6622 n.a. n.a. 8.34 1133..5544 1133..9900 1133..7744 1133..4455 n.a. 1133..7755 n.a. n.a. 13.41 Credit card plan 1155..6633 1155..7777 1155..7711 1155..8833 n.a. n.a. 1155..6699 n.a. n.a. 15.41 1155..5500 1155..5577 1155..5599'' 1155..8855 n.a. 1155..5544'' n.a. n.a. 14.73 Auto finance companies 99..8844 77..1122 66..3300 66..0000 55..9922 66..3333 66..7799 66..4433 66..2222 66..4433 1133..5533 1133..2277 1122..6644 1122..6688 1122..6655 1122..5588 1122..4411 1122..3311 1111..8811 1122..0088 OTHER TERMS3 Maturity (months) 5511..66 5544..11 5522..11 5533..00 5533..11 5533..11 5522..88 5522..22 5522..11 5533..44 5511..44 5511..00 5533..55 5544..11 5544..22 5544..22 5544..33 5544..22 5566..00 5555..99 Loan-to-value ratio 9911 9922 9922 9933 9933 9922 9911 9911 92 92 110000 9999 9999 110011 110011 110000 110000 110000 99 99 Amount financed (dollars) 1166,,998877 1188,,007777 1199,,008833 1199,,006688 1199,,002288 1199,,119999 1199,,559900 1199,,773344 1199,,662288 1199,,330044 1122,,118822 1122,,228811 1122,,669911 1122,,440077 1122,,773311 1122,,991144 1133,,111122 1133,,220022 1133,,449977 1133,,660044 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 A3 7 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 11999933 11999944 Q2 Q3 Q4 Q1 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 in 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 ii 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 1? 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 445577..22 445522..77 559922..77 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 9988..88 ?1 Farm 2.6 4.4 2.9 4.8 6.2 6.4 4.7 9.2 7.3 7.2 6.1 55..88 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 75 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 7.6 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 34 129.1 180.9 252.1 320.7 440.0 381.7 440.9 695.0 709.1 581.5 499.9 685.7 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 8800..00 6611..77 6666..55 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 47 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

A38 Domestic Nonfinancial Statistics • June 1999 1.57 FUNDS RAISED IN US. CREDIT MARKETS1—Continued 1997 1998 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999933 11999944 11999955 11999966 11999977 Q2 Q3 Q4 Q1 Q2 Q3 Q4 All sectors 5522 TToottaall nneett bboorrrroowwiinngg,, aallll sseeccttoorrss 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 5533 OOppeenn mmaarrkkeett ppaappeerr -5.1 35.7 74.3 102.6 184.1 107.7 171.7 257.7 343.8 113.1 232.7 83.0 5544 UU..SS.. ggoovveerrnnmmeenntt sseeccuurriittiieess 421.4 448.1 348.5 376.5 235.9 242.6 191.3 338.9 197.3 342.5 425.1 812.5 5555 MMuunniicciippaall sseeccuurriittiieess 74.8 -35.9 -48.2 2.6 71.4 59.6 88.9 103.2 116.7 100.1 83.6 87.0 5566 CCoorrppoorraattee aanndd ffoorreeiiggnn bboonnddss 281.2 157.3 319.6 303.8 345.7 352.9 425.5 444.6 512.0 645.3 230.1 428.1 5577 BBaannkk llooaannss nn..ee..cc -7.2 62.9 114.7 92.1 128.2 123.6 62.2 180.5 81.0 172.7 191.4 137.5 5588 OOtthheerr llooaannss aanndd aaddvvaanncceess -.8 50.3 70.2 65.1 99.8 85.0 112.1 197.5 110.0 106.1 153.4 280.5 5599 MMoorrttggaaggeess 126.5 188.2 212.7 318.0 329.1 310.7 419.0 333.6 491.1 461.6 489.4 656.3 6600 CCoonnssuummeerr ccrreeddiitt 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 7 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 .8 11 Commercial banking 142.2 163.4 265.9 187.5 324.3 290.0 226.2 464.9 292.9 136.1 242.6 554.6 17 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 N 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 IS 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 70 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 71 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 77 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 74 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 75 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 8844..88 247.0 267.5 171.2 78 Asset-backed securities issuers (ABSs) 81.0 65.8 119.3 123.4 166.0 105.9 163.7 332.2 222233..00 337.0 248.0 292.9 79 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 37 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 -6.3 .7 ..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 47 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 57 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 --..22 -.3 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 Taxes payable 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 2244..11 20.4 63 Other checkable deposits -1.3 -2.8 -3.8 -4.0 -3.9 -4.3 -3.0 -5.0 -4.0 -3.0 -3.2 -2.1 64 Trade credit -4.0 1.5 -11.7 -26.7 21.5 -58.7 72.6 81.9 10.4 -110.7 -58.0 -30.8 65 Total identified to sectors as assets 2,442.0 2,129.3 2,927.7 2,957.6 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 F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Financial Statistics • June 1999 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1997 19 98 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999955 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 3 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 25 Bonds 242.3 291.9 347.7 394.4 361.2 386.3 394.4 398.0 424.9 416.0 407.8 26 Bank loans 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 3B 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 Life 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 19,794J 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 5/ 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. 1 (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 A3 7 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 Q1 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 20 Other insurance companies 446.4 468.7 491.2 515.3 498.6 506.6 515.3 521.1 520.8 518.9 519.6 21 Private pension funds 660.9 716.9 769.2 834.7 798.7 814.8 834.7 853.4 885.9 909.8 953.4 22 State and local government retirement funds 455.8 483.3 529.2 565.8 542.7 562.0 565.8 582.5 600.2 613.1 632.9 23 Money market mutual funds 459.0 545.5 634.3 721.9 656.5 678.7 721.9 775.0 815.9 869.9 965.9 24 Mutual funds 718.8 771.3 820.2 901.1 861.3 890.4 901.1 939.3 977.6 1,003.4 1,023.2 25 Closed-end funds 86.0 96.4 101.1 97.7 99.4 98.5 97.7 97.1 96.5 95.9 95.4 26 Government-sponsored enterprises 663.3 750.0 807.9 902.2 848.6 862.5 902.2 942.9 978.5 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 28 Asset-backed securities issuers (ABSs) 541.7 661.0 784.4 950.4 818.9 863.3 950.4 1,000.4 1,082.4 1,148.3 1,225.6 29 Finance companies 476.2 526.2 544.5 566.4 553.1 564.4 566.4 572.0 579.0 592.7 630.2 30 Mortgage companies 36.5 33.0 41.2 32.1 34.8 55.5 32.1 46.8 32.7 33.8 35.3 31 Real estate investment trusts (REITs) 13.3 15.5 19.3 28.1 21.9 23.7 28.1 31.5 33.8 33.2 30.7 32 Brokers and dealers 93.3 183.4 167.7 182.6 160.2 164.7 182.6 244.0 198.3 217.5 159.9 33 Funding corporations 107.5 86.3 110.3 164.0 130.0 133.4 164.0 199.5 196.2 189.0 194.6 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 17,211.6 18,444.9 19,794.3 21,200.2 20,346.8 20,690.5 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 42 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 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 • June 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 July Aug. Sept. Oct. Nov. Dec.r Jan.r Feb.r Mar. 1 Industrial production1 119.5 126.8 131.3r 130.5 132.4 131.9 132.4 132.2 132.3 132.3 132.6 132.8 Market groupings 2 Products, total 114.4 119.6 123.5 123.3 124.9 124.1 124.9 124.5 124.4 124.5 124.6 124.6 3 Final, total 115.5 121.1 125.4 124.7 126.8 126.0 126.7 126.1 125.9 125.7 125.8 125.9 4 Consumer goods 111.3 114.1 115.2 114.0 116.1 114.8 115.2 114.8 114.9 115.1 115.2 115.2 5 Equipment 122.7 133.9 144.2r 143.9 146.0 146.2 147.5 146.5 145.6 144.8 144.8 145.1 6 Intermediate 110.9 115.2 118.0 119.1 119.1 118.3 119.0 119.3 119.8 120.5 120.8 120.5 7 Materials 127.8 138.2 144.0 141.9 144.4 144.4 144.5 144.6 145.2 144.9 145.6 146.1 Industry groupings 8 Manufacturing 121.4 129.7 135.1 133.6 135.7 135.2 136.1 136.4 136.7 136.5 137.0 137.0 9 Capacity utilization, manufacturing (percent)2.. 81.4 82.0 80.8 79.8 80.7 80.1 80.3 80.1 80.0 79.6 79.5 79.3 10 Construction contracts3 130.9 142.7r 153.7r 156.0 155.0 ISS.O1 152.0r 158.01 161.0 159.0 148.0 145.0 11 Nonagricultural employment, total4 117.3 120.3 123.4 123.5 123.8 123.9 124.1 124.4 124.7 124.9 125.2 125.2 12 Goods-producing, total 2.4 2.4 2.3 101.9 102.4 102.3 102.2 102.1 102.4 102.3 102.4 102.1 13 Manufacturing, total 97.4 98.2 98.5 97.9 98.4 98.4 98.1 97.8 97.7 97.6 97.3 97.1 14 Manufacturing, production workers 98.6 99.6 99.6 98.4 99.1 99.3 99.0 98.6 98.5 98.4 98.1 97.9 15 Service-producing 123.1 126.5 130.1 130.4 130.6 130.9 131.1 131.5 131.8 132.1 132.5 132.6 16 Personal income, total 165.2 174.5 183.3r 183.4 184.2 184.8 185.6r 187.2r 187.1 188.3 189.3 n.a. 17 Wages and salary disbursements 159.8 171.2 182.6r 182.8 184.1 184.6 185.7' 186.7r 187.6 189.0 190.2 n.a. 18 Manufacturing 135.7 144.7 151.1 149.6 151.3 152.1 151.8 151.6r 151.7 152.1 152.1 n.a. 19 Disposable personal income5 164.0 171.7 178.6 178.7 179.4 179.9 180.7r 182.4r 182.1 183.5 184.5 n.a. 20 Retail sales5 159.6 166.9 175.2 174.8 174.9 175.6 177.7 178.9 180.9 183.3 186.4 186.9 Prices6 21 Consumer (1982-84= 100) 156.9 160.5 163.0 163.2 163.4 163.6 164.0 164.0 163.9 164.3 164.5 165.0 22 Producer finished goods (1982= 100) 131.3 131.8 130.7 131.0 130.7 130.6 131.4 130.9r 131.0 131.5 130.9 131.2 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 Aug. Sept. Oct. Nov. Dec. Jan.' Feb.1 Mar. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 133,943 136,297 137,673 137,481 138,081 138,116 138,193 113388,,554477 139,347 113399,,227711 113388,,881166 Employment 2 Nonagricultural industries3 123,264 126,159 128,085 127,772 128,348 128,300 128,765 129,304 130,097 129,817 129,752 3 Agriculture 3,443 3,399 3,378 3,492 3,470 3,558 3,348 3,222 3,299 33,,332288 3,281 Unemployment 4 Number 7,236 6,739 6,210 6,217 6,263 6,258 6,080 6,021 5,950 6,127 5,783 5 Rate (percent of civilian labor force) 5.4 4.9 4.5 4.5 4.5 4.5 4.4 4.3 4.3 4.4 4.2 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 119,608 122,690 125,833 126,191 126,363 126,527 126,804 127,118 127,335 127,632 127,678 7 Manufacturing 18,495 18,657 18,716 18,693 18,692 18,633 18,573 18,559 18,534 18,483 18,448 8 Mining 580 592 575 571 568 564 560 557 547 539 532 9 Contract construction 5,418 5,686 5,965 5,989 5,981 6,012 6,051 6,153 6,170 6,249 6,202 10 Transportation and public utilities 6,253 6,395 6,551 6,570 6,579 6,595 6,604 6,627 6,644 6,657 6,665 11 Trade 28,079 28,659 29,299 29,383 29,454 29,453 29,549 29,594 29,662 29,746 29,744 12 Finance 6,911 7,091 7,341 7,372 7,393 7,417 7,441 7,458 7,488 7,491 7,505 13 Service 34,454 36,040 37,525 37,691 37,768 37,905 38,040 38,148 38,245 38,369 38,464 14 Government 19,419 19,570 19,862 19,922 19,928 19,948 19,986 20,022 20,045 20,098 20,118 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 1999 1999 1999 SSeerriieess Q2 Q3 Q4r Ql Q2 Q3 Q4 Ql Q2 Q3 Q4r Ql Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 131.3 131.6 132.3 132.5 159.6 161.5 163.5r 165.1 82.3 81.5 80.9 80.3 2 Manufacturing 134.7 134.8 136.4 136.8 165.8 168.1 170.3 172.2 81.2 80.2 80.1 79.5 3 Primary processing3 121.1 120.2 120.6 121.7 144.0 145.1 146.1 146.9 84.1 82.9 82.5 82.8 4 Advanced processing4 141.4 142.1 144.4 144.4 176.4 179.2 182.0 184.5 80.2 79.3 79.3 78.3 5 Durable goods 156.1 157.9 161.2 161.8 193.9 197.5 201.2r 204.4 80.5 79.9 80.1 79.2 6 Lumber and products 116.4 117.7 119.2 121.4 143.0 143.9 144.9 145.8 81.4 81.8 82.3 83.3 7 Primary metals 125.3 122.4 119.3 118.9 142.0 143.2 144.4 145.4 88.3 85.5 82.6 81.8 8 Iron and steel 124.0 118.7 112.9 114.1 142.8 144.6 146.5 147.9 86.9 82.1 77.0 77.2 9 Nonferrous 127.0 126.8 126.9 124.6 140.8 141.3 141.7 142.1 90.1 89.7 89.6 87.6 10 Industrial machinery and equipment 203.0 207.9 211.7 213.6 234.7 242.9 251.6 259.6 86.5 85.6 84.1 82.3 11 Electrical machinery 282.8 292.7 304.8 312.2 366.6 381.6 396.6 411.0 77.1 76.7 76.9 76.0 12 Motor vehicles and parts 135.3 137.2 148.5 146.7 183.9 184.9 186.0 186.7 73.6 74.2 79.8 78.6 13 Aerospace and miscellaneous transportation equipment . . . 106.1 106.6 105.8 102.7 127.5 128.0 128.5 128.8 83.2 83.3 82.4 79.8 14 Nondurable goods 112.7 111.3 111.4 111.7 136.6 137.5 138.4 139.1 82.5 80.9 80.5 80.3 15 Textile mill products 113.2 112.1 110.2 109.8 134.9 135.1 135.2 135.2 83.9 83.0 81.5 81.2 16 Paper and products 115.0 115.0 114.3 116.9 131.6 132.5 133.4 134.2 87.4 86.8 85.7 87.1 17 Chemicals and products 116.9 114.4 114.0 113.7 148.0 148.9 149.7 150.3 79.0 76.8 76.1 75.6 18 Plastics materials 127.5 128.4 131.9 128.0 140.7 141.9 143.2 144.4 90.6 90.5 92.1 88.7 19 Petroleum products 112.0 112.7 111.9 115.0 116.5 116.8 117.1 117.4 96.1 96.5 95.6 98.0 20 Mining 105.3 103.6 100.7 97.5 119.9 120.1 120.6 120.9 87.8 86.2 83.5 80.7 71 Utilities 115.6 119.6 112.9 114.2 126.2 126.5 126.7 126.9 91.6 94.6 89.2 90.0 22 Electric 118.3 121.2 116.7 116.9 123.8 124.0 124.3 124.5 95.6 97.7 93.9 93.9 1973 1975 Previous cycle5 Latest cycle6 1998 1998 1999 High Low High Low High Low Mar. Oct. Nov. Dec/ Jan/ Feb/ Mar.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 80.8 80.7 80.3 80.3 80.1 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 81.6 80.3 80.1 80.0 79.6 79.5 79.3 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 84.4 82.4 82.4 82.9 83.1 82.8 82.6 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 80.6 79.6 79.4 79.0 78.3 78.4 78.2 5 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 81.1 80.6 80.0 79.8 79.4 79.2 78.9 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 81.0 81.6 81.6 83.6 83.7 83.6 82.5 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 90.0 83.7 82.2 81.9 82.8 81.2 81.3 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 90.2 78.4 74.9 77.9 78.9 76.2 76.4 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 89.9 90.4 91.3 87.0 87.7 87.6 87.6 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 86.6 84.9 83.9 83.6 82.6 82.6 81.7 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 78.1 77.2 76.8 76.5 76.2 75.9 75.7 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 76.4 80.9 80.0 78.7 77.9 79.1 78.7 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 82.2 83.3 82.3 81.5 80.0 79.8 79.6 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 82.6 80.3 80.7 80.6 80.2 80.4 80.3 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 83.5 83.2 80.5 80.9 81.1 82.0 80.6 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 87.9 86.7 84.2 86.2 86.7 87.3 87.3 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 79.1 75.7 76.6 76.1 75.2 75.8 76.0 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 89.5 89.1 94.1 93.1 88.2 88.8 88.9 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 97.2 94.4 96.3 96.0 99.8 97.4 96.7 7.0 Mining 94.3 88.2 96.0 80.3 88.0 87.0 88.4 84.7 83.8 82.0 80.6 81.0 80.4 71 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 90.5 92.0 87.3 88.2 89.9 89.2 90.9 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 93.6 96.9 92.2 92.6 93.5 93.4 95.0 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 • June 1999 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1998 1999 GGrroouupp 1998 por- avg. tion Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.' Jan.' Feb.' Mar.p Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 131.3 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.2 132.3 132.3 132.6 132.8 2 Products 60.5 123.5 123.2 124.0 124.5 123.6 123.3 124.9 124.1 124.9 124.5 124.4 124.5 124.6 124.6 3 Final products 46.3 125.4 125.3 126.2 126.6 125.5 124.7 126.8 126.0 126.7 126.1 125.9 125.7 125.8 125.9 4 Consumer goods, total 29.1 115.2 115.8 116.4 116.8 115.1 114.0 116.1 114.8 115.2 114.8 114.9 115.1 115.2 115.2 5 Durable consumer goods 6.1 135.7 135.9 136.9 138.3 130.7 124.6 140.1 137.4 140.5 138.9 139.8 141.4 142.5 141.8 6 Automotive products 2.6 132.9 132.7 134.6 136.8 121.7 107.3 141.7 136.4 141.1 139.6 139.8 141.7 141.1 139.6 7 Autos and trucks 1.7 137.8 138.9 141.3 143.5 118.2 92.8 151.4 143.4 150.6 149.1 147.7 149.4 149.4 147.1 8 Autos, consumer .9 109.2 106.5 107.4 108.4 93.8 75.8 124.4 128.3 119.9 113.7 115.5 111.7 107.0 109.7 9 Trucks, consumer .7 166.2 169.8 173.8 177.1 142.2 110.0 178.9 161.1 181.0 183.2 179.1 185.2 188.9 182.7 10 Auto parts and allied goods .... .9 125.0 122.7 123.7 126.0 125.4 125.6 127.6 125.9 127.4 125.9 128.2 130.4 129.2 128.6 11 Other 3.5 137.8 138.5 138.8 139.4 137.8 138.7 138.5 138.0 139.7 137.9 139.5 140.9 143.3 143.2 12 Appliances, televisions, and air conditioners 1.0 206.2 203.8 203.4 202.7 199.9 207.8 209.4 209.9 215.2 222.5 226.0 229.5 233.9 231.2 13 Carpeting and furniture .8 117.1 114.3 115.9 119.1 117.0 117.3 116.7 116.3 120.3 117.5 116.8 120.3 122.6 121.5 14 Miscellaneous home goods 1.6 114.7 118.3 118.2 117.9 117.1 115.9 115.3 114.5 113.6 109.5 111.4 110.9 112.6 114.0 15 Nondurable consumer goods 23.0 110.1 110.8 111.4 111.5 111.2 111.2 110.3 109.3 109.1 109.0 108.9 108.8 108.6 108.8 16 Foods and tobacco 10.3 109.0 109.1 110.2 110.8 108.5 108.5 107.5 106.9 108.0 109.6 109.6 110.0 109.9 109.5 17 Clothing 2.4 97.8 100.4 99.9 98.8 98.8 98.4 97.7 97.1 95.4 94.5 94.6 93.6 93.9 92.8 18 Chemical products 4.5 120.5 121.3 123.2 122.5 122.8 122.2 119.0 118.0 117.2 119.3 118.7 116.3 117.4 118.2 19 Paper products 2.9 105.8 106.3 106.2 105.7 105.3 106.3 106.6 105.9 105.2 104.1 103.6 102.0 101.2 101.1 20 Energy 2.9 112.2 113.2 111.5 112.5 118.2 118.4 120.1 116.8 115.0 106.5 107.1 110.9 109.3 111.6 21 Fuels .8 110.5 111.2 111.6 110.9 111.4 112.9 112.1 108.3 108.4 109.1 109.6 112.2 109.4 108.8 22 Residential utilities 2.1 112.3 113.7 111.0 112.9 121.2 120.7 123.7 120.7 117.8 104.5 105.2 109.7 108.8 112.5 23 Equipment 17.2 144.2 142.4 143.6 144.2 144.1 143.9 146.0 146.2 147.5 146.5 145.6 144.8 144.8 145.1 24 Business equipment 13.2 163.5 160.1 162.2 163.1 163.6 163.5 166.6 167.4 169.0 168.1 167.9 167.1 167.2 166.9 25 Information processing and related 5.4 209.9 202.3 206.0 209.2 210.3 211.8 213.1 217.3 219.0 219.7 220.8 221.5 222.0 223.3 26 Computer and office equipment 1.1 646.0 584.9 601.5 620.6 638.6 654.6 671.6 693.6 716.7 745.2 759.9 776.8 789.6 800.5 27 Industrial 4.0 140.0 139.4 139.4 138.1 142.9 144.2 142.3 139.5 141.6 139.9 141.3 139.8 138.4 137.9 28 Transit 2.5 133.7 130.3 133.6 135.5 128.2 121.9 141.6 140.1 141.6 140.5 139.6 137.4 135.5 135.3 29 Autos and trucks 1.2 124.6 121.6 123.4 125.1 108.6 91.7 136.9 135.6 136.1 136.4 136.0 134.8 133.1 131.6 30 Other 1.3 138.9 139.8 140.8 139.6 141.7 146.6 132.6 140.9 141.1 138.5 131.7 131.8 140.0 136.6 31 Defense and space equipment 3.3 75.7 75.9 75.9 76.0 75.8 76.1 76.5 75.5 76.4 75.7 74.6 74.5 74.8 75.4 32 Oil and gas well drilling .6 134.7 155.7 147.6 147.1 136.7 131.9 127.7 123.4 119.4 115.2 103.2 99.2 97.4 104.2 33 Manufactured homes .2 149.2 148.0 148.0 149.0 146.1 151.1 145.7 147.8 150.9 154.6 156.6 159.1 154.1 153.9 34 Intermediate products, total 14.2 118.0 116.9 117.3 118.2 118.0 119.1 119.1 118.3 119.0 119.3 119.8 120.5 120.8 120.5 35 Construction supplies 5.3 127.2 124.7 125.4 126.6 126.1 128.5 128.0 126.9 128.4 129.6 131.0 132.5 131.8 131.0 36 Business supplies 8.9 112.6 112.2 112.5 113.3 113.2 113.6 113.8 113.3 113.5 113.2 113.3 113.4 114.2 114.2 37 Materials 39.5 144.0 142.7 143.1 143.6 141.8 141.9 144.4 144.4 144.5 144.6 145.2 144.9 145.6 146.1 38 Durable goods materials 20.8 176.4 173.7 174.5 175.4 171.7 171.8 177.4 177.7 178.8 179.9 180.4 180.3 181.1 182.2 39 Durable consumer parts 4.0 144.0 143.7 144.4 147.9 131.9 129.7 149.6 147.7 146.2 145.6 144.8 141.9 146.0 146.5 40 Equipment parts 7.6 277.4 265.8 266.9 268.6 271.0 274.1 278.0 282.7 287.0 289.9 292.6 294.7 295.9 298.7 41 Other 9.2 129.0 129.7 130.3 129.6 128.3 128.1 128.3 127.7 128.4 129.3 129.3 129.5 128.7 129.3 42 Basic metal materials 3.1 121.2 123.7 123.5 123.0 120.1 120.2 121.9 118.2 118.3 117.3 116.3 117.8 116.6 116.8 43 Nondurable goods materials 8.9 113.5 114.2 114.4 114.1 113.9 114.1 113.1 112.0 111.7 112.2 112.5 112.4 113.2 113.1 44 Textile materials 1.1 108.7 110.6 110.5 111.0 110.2 110.1 107.7 107.6 108.8 103.0 102.5 99.2 99.6 98.8 45 Paper materials 1.8 116.0 116.3 116.3 115.5 117.3 117.3 116.4 115.0 115.8 112.7 114.7 116.5 116.9 117.4 46 Chemical materials 3.9 114.5 115.6 116.2 115.6 114.8 114.6 113.6 111.8 111.1 113.7 113.0 113.0 113.6 113.6 47 Other 2.1 111.5 111.0 110.9 111.2 110.6 111.7 111.6 111.5 110.4 113.2 114.4 113.6 115.6 115.2 48 Energy materials 9.7 103.5 103.7 103.8 104.3 104.8 104.8 104.4 105.2 103.7 101.5 102.6 101.5 102.2 101.7 49 Primary energy 6.3 101.2 101.0 101.3 101.0 101.8 102.9 101.2 102.3 102.6 99.8 100.3 98.3 99.8 98.1 50 Converted fuel materials 3.3 108.1 109.0 108.6 110.8 110.7 108.6 110.7 110.9 106.1 104.9 107.2 107.7 106.8 108.8 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 131.3 130.7 131.3 131.8 131.2 131.6 132.1 131.7 132.1 131.9 132.1 132.0 132.4 132.6 52 Total excluding motor vehicles and parts 95.1 130.8 130.3 130.9 131.3 131.2 131.7 131.3 131.0 131.5 131.4 131.7 131.6 131.9 132.1 53 Total excluding computer and office equipment 98.2 127.1 126.7 127.3 127.7 126.4 126.2 128.0 127.4 127.8 127.4 127.5 127.4 127.7 127.8 54 Consumer goods excluding autos and trucks . 27.4 113.9 114.5 115.1 115.3 114.8 114.9 114.3 113.2 113.4 113.0 113.2 113.3 113.4 113.5 55 Consumer goods excluding energy 26.2 115.5 116.1 117.0 117.3 114.7 113.5 115.7 114.6 115.3 115.8 115.8 115.6 115.9 115.6 56 Business equipment excluding autos and trucks 12.0 167.9 164.6 166.7 167.4 170.0 171.8 169.9 171.0 172.7 171.6 171.5 170.7 171.0 170.9 57 Business equipment excluding computer and office equipment 12.1 142.4 140.8 142.3 142.6 142.7 142.2 144.8 145.1 146.2 144.6 144.1 143.0 142.8 142.3 58 Materials excluding energy 29.8 156.7 154.9 155.5 156.0 153.4 153.6 156.9 156.7 157.3 158.2 158.6 158.5 159.3 160.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 1998 1999 SIC pro- 11999988 GGrroouupp code por- aavvgg.. tion Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.r Jan.r Feb.r Mar? Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 131.3 130.7 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.2 132.3 132.3 132.6 132.8 60 Manufacturing 85.4 135.1 134.1 134.9 135.4 133.7 133.6 135.7 135.2 136.1 136.4 136.7 136.5 137.0 137.0 61 Primary processing 26.5 120.7 121.0 121.5 121.4 120.2 120.7 120.6 119.3 120.1 120.3 121.3 121.9 121.6 121.5 62 Advanced processing 58.8r 142.1 140.6 141.6 142.3 140.4 139.9 143.3 143.2 144.2 144.6 144.4 143.9 144.7 144.8 63 Durable goods 45.0 157.5 155.2 156.2 157.2 154.8 154.4 159.8 159.6 161.2 161.0 161.5 161.5 161.9 162.0 64 Lumber and products " ' 24 2.0 117.0 115.3 116.1 116.4 116.7 117.5 118.5 117.0 118.0 118.3 121.4 121.9 121.9 120.6 65 Furniture and fixtures 25 1.4 121.4 121.5 121.0 120.6 122.0 120.8 120.1 121.6 124.5 123.6 122.9 122.5 124.1 125.4 66 Stone, clay, and glass products 32 2.1 126.2 124.5 124.0 124.5 123.5 125.4 127.0 126.6 128.3 130.5 131.6 133.6 132.1 131.0 67 Primary metals 33 3.1 123.8 127.1 127.5 126.5 122.1 122.6 124.4 120.1 120.6 118.7 118.6 120.1 118.1 118.4 68 Iron and steel 331,2 1.7 121.1 127.7 126.7 125.5 119.8 120.2 122.5 113.4 114.4 109.7 114.6 116.4 112.7 113.2 69 Raw steel 331PT .1 115.7 120.0 122.4 121.9 116.0 118.3 120.3 112.6 109.7 100.2 102.0 106.6 106.6 107.2 70 Nonferrous 333-6,9 1.4 127.0 126.4 128.4 127.6 124.9 125.4 126.7 128.1 128.0 129.3 123.4 124.6 124.5 124.6 71 Fabricated metal products . . 34 5.0 127.3 127.2 127.8 128.7 128.0 127.8 126.3 126.2 126.9 127.7 128.7 127.9 127.2 127.5 72 Industrial machinery and equipment 35 8.0 203.7 198.4 200.6 202.5 205.8 209.0 207.0 207.7 211.2 211.1 212.7 212.3 214.4 214.0 73 Computer and office equipment 357 1.8 649.1 589.6 605.4 623.9 641.4 657.0 673.6 695.5 718.5 746.9 761.6 778.7 791.7 802.8 74 Electrical machinery 36 7.3 291.9 278.2 280.8 282.0 285.5 289.4 290.8 297.7 302.4 304.8 307.3 309.8 312.1 314.6 75 Transportation equipment.. . 37 9.5 123.0 122.3 123.3 125.2 114.2 108.2 130.3 127.6 128.4 127.1 125.6 124.0 125.0 124.5 76 Motor vehicles and parts . 371 4.9 141.1 140.0 140.8 144.1 121.1 107.6 154.2 149.9 150.2 148.8 146.6 145.3 147.7 147.0 77 Autos and light trucks . 371PT 2.6 128.5 128.8 130.9 132.7 110.1 86.9 142.0 136.5 140.4 138.1 137.3 137.9 137.0 135.8 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 104.9 104.5 105.7 106.3 106.3 107.1 106.9 105.8 106.9 105.7 104.8 103.0 102.7 102.5 79 Instruments 38 5.4 113.0 112.8 113.0 113.8 112.4 112.6 113.0 114.2 114.6 114.1 113.9 114.4 113.7 114.4 80 Miscellaneous 39 1.3 117.7 120.0 120.1 119.1 118.5 118.5 117.7 117.0 115.9 114.1 115.4 114.8 116.0 117.0 81 Nondurable goods 40.4 111.9 112.4 113.0 113.0 112.0 112.1 111.3 110.6 110.9 111.6 111.7 111.4 111.9 111.8 82 Foods "20 9.4 109.6 109.7 110.3 110.7 109.2 109.0 107.9 107.7 109.1 111.3 111.1 111.9 112.2 111.5 83 Tobacco products 21 1.6 106.0 105.3 109.8 111.5 104.7 106.0 107.0 104.2 101.9 99.8 100.0 96.9 97.1 97.8 84 Textile mill products 22 1.8 112.2 112.6 113.3 114.5 112.0 113.2 111.8 111.2 112.4 108.8 109.4 109.6 110.9 109.0 85 Apparel products 23 2.2 99.2 101.6 101.0 100.4 100.5 100.1 99.2 98.3 97.3 95.5 95.3 94.2 93.9 93.0 86 Paper and products 26 3.6 115.0 115.0 115.2 115.0 114.9 115.9 115.3 113.9 115.4 112.3 115.3 116.2 117.1 117.4 87 Printing and publishing .... 27 6.7 105.1 105.4 105.5 105.6 105.5 105.4 104.9 104.6 104.2 105.4 105.1 103.6 103.9 103.7 88 Chemicals and products .... 28 9.9 115.5 116.6 117.7 116.9 116.2 115.7 114.3 113.3 113.1 114.7 114.0 112.8 113.9 114.3 89 Petroleum products 29 1.4 112.0 113.0 112.8 111.5 111.6 113.4 114.1 110.7 110.4 112.8 112.5 117.1 114.3 113.7 90 Rubber and plastic products . 30 3.5 132.6 131.4 133.2 133.1 132.4 132.7 132.2 132.6 133.4 135.0 136.0 135.4 136.3 137.6 91 Leather and products 31 .3 75.3 77.9 76.3 75.8 74.5 75.3 74.0 73.5 72.8 74.3 73.0 71.1 71.1 70.1 92 Mining 6.9 104.0 105.8 105.7 105.4 104.7 104.6 103.7 102.4 102.0 101.1 99.0 97.4 98.0 97.3 93 Metal 10 .5 110.0 109.3 106.9 108.5 108.0 105.7 109.0 106.4 113.6 U0.7 108.3 110.1 U0.9 U0.9 94 Coal 12 1.0 109.7 103.4 107.2 106.0 110.4 112.8 109.7 115.8 110.8 108.6 114.5 102.0 108.6 101.1 95 Oil and gas extraction 13 4.8 99.6 104.0 102.9 102.4 100.4 100.0 99.2 96.8 96.8 94.2 91.0 90.9 90.9 91.6 96 Stone and earth minerals 14 .6 124.7 120.0 123.3 124.4 125.6 125.4 124.3 120.3 118.8 132.1 125.6 128.1 123.9 123.8 97 Utilities 1.1 113.9 114.0 112.8 115.2 118.7 118.3 120.2 120.3 116.5 110.6 111.8 114.0 113.2 115.4 98 Electric 491.493PT 6.2 117.2 115.7 115.2 118.9 121.0 119.8 121.2 122.6 120.3 114.6 115.2 116.3 116.3 118.3 99 Gas 492.493PT 1.6 101.9 106.3 102.0 98.3 108.4 111.7 115.7 109.7 98.7 92.0 96.0 103.6 99.1 102.4 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 134.7 133.8 134.6 134.9 134.5 135.1 134.6 134.4 135.3 135.7 136.2 136.1 113366..44 113366..55 101 Manufacturing excluding computer and office equipment 83.6 130.2 129.5 130.2 130.6 128.8 128.6 130.6 130.0 130.8 130.9 131.1 130.9 131.2 113311..22 102 Computers, communications equipment, and semiconductors 5.9 515.6 473.4 482.7 490.7 502.9 511.8 522.5 538.3 552.1 562.8 557711..22 578.1 558866..11 559944..33 103 Manufacturing excluding computers and semiconductors 81.1 120.1 120.2 120.9 121.1 119.2 118.9 120.6 119.9 120.4 120.4 112200..55 120.2 112200..44 112200..33 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.5 118.5 118.7 119.3 119.5 117.5 117.2 119.0 118.1 118.7 118.8 111188..99 118.6 118.8 111188..66 Gross value (billions of 1992 dollars, annual rates) Major Markets 105 Products, total 2,001.9 2,489.8r 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 2,513.9 2,525.8 2,522.6 2,519.6 106 Final 1,552.1 l,958.0r 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 1,972.7 1,979.9 1,975.4 1,974.4 107 Consumer goods 1,049.6 l,212.3r 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 1,215.0 1,225.5 1,221.5 1,220.2 108 Equipment 502.5 746.9r 732.5 739.9 744.2 740.1 734.3 762.5 762.7 769.8 765.2 762.0 758.2 757.8 758.1 109 Intermediate 449.9 533.6r 527.6 529.7 533.6 532.6 538.4 540.3 535.7 538.7 539.1 541.9 546.3 547.4 545.6 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 • June 1999 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1998 1999 11999966 11999977 11999988 May June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,426 1,441 1,604 1,543 1,517 1,581 1,618 1,544 1,690 1,656 1,729 1,778 1,741 2 One-family 1,070 1,062 1,184 1,152 1,128 1,173 1,180 1,164 1,198 1,238 1,306 1,275 1,303 3 Two-family or more 356 379 421 391 389 408 438 380 492 418 423 503 438 4 Started 1,477 1,474 1,617 1,541 1,626 1,719 1,615 1,576 1,698 1,654 1,750 1,820 1,790 5 One-family 1,161 1,134 1,271 1,221 1,274 1,306 1,264 1,251 1,298 1,375 1,383 1,393 1,402 6 Two-family or more 316 340 346 320 352 413 351 325 400 279 367 427 388 7 Under construction at end of period1 819 834 935 916 930 938 939 946 968 971 999 1,011 1,033 8 One-family 584 570 638 626 639 642 644 648 659 667 688 697 713 9 Two-family or more 235 264 297 290 291 296 295 298 309 304 311 314 320 10 Completed 1,406 1,406 L,473R 1,457 1,480 1,549 1,517 1,459 1,455 1,600 L,440R 1,645 1,546 11 One-family 1,123 1,120 L,158R 1,114 1,169 1,230 1,183 1,184 1,164 1,254 1,150R 1,287 1,265 12 Two-family or more 283 285 315R 343 311 319 334 275 291 346 290R 358 281 13 Mobile homes shipped 361 354 372 374 362 380 368 369 352 389 382 390 381 Merchant builder activity in one-family units 14 Number sold 757 804 886 893 909 883 836 861 903 985 964 899 881 15 Number for sale at end of period1 326 287 300 287 286 283 285 289 293 292 295 297 301 Price of units sold (thousands of dollars)2 16 Median 140.0 146.0 152.2 153.2 148.0 149.9 154.9 155.0 154.5 151.0 152.0 150.8 158.0 17 Average 166.4 176.2 181.9 183.5 175.9 179.8 186.5 182.7 182.8 178.6 183.1 184.1 187.2 EXISTING UNITS (one-family) 18 Number sold 4,087 4,215 4,785 4,770 4,780 4,860 4,740 4,710 4,800 4,900 5,030 5,040 5,020 Price of units sold (thousands of dollars)2 19 Median 118.2 124.1 130.6 130.5 134.0 133.8 132.9 131.2 130.7 131.7 130.5 131.3 129.5 20 Average 145.5 154.2 162.9 162.3 169.2 168.4 165.9 162.9 161.8 163.9 163.0 161.8 162.6 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 581,813 618,051 654,528r 635,396 650,341 658,673 663,300 670,133 668,287r 670,996r 679,428r 691,022 706,511 22 Private 444,743 470,969 508,539R 496,495 503,592 511,514 516,601 521,050 523,642R 525,453R 531,004R 536,493 544,849 23 Residential 255,570 265,536 295,586R 288,003 291,907 299,300 300,612 304,993 306,264R 307,259R 311,529R 317,372 319,930 24 Nonresidential 189,173 205,433 212,953R 208,492 211,685 212,214 215,989 216,057 217,378R 218,194R 219,475R 219,121 224,919 25 Industrial buildings 32,563 31,417 30,340R 29,642 30,067 28,616 32,302 30,300 29,246 30,011R 28,971R 28,721 30,985 26 Commercial buildings 75,722 83,727 88,131R 86,321 88,480 88,310 86,243 87,553 90,986R 93,644R 96,033R 93,886 97,819 2/ Other buildings 30,637 37,382 38,lllr 37,678 37,334 37,406 38,305 38,309 37,538R 37,793R 39,149R 37,900 38,586 28 Public utilities and other 50,252 52,906 56,37 LR 54,851 55,804 57,882 59,139 59,895 59,608R 56,746R 55,322R 58,614 57,529 29 Public 137,070 147,082 145,989R 138,901 146,749 147,159 146,699 149,083 144,644R 145,544R 148,425R 154,530 161,662 30 Military 2,639 2,625 2,725r 2,471 2,659 3,325 3,187 2,325 2,568r 2,502r 2,608r 2,058 2,781 31 Highway 41,326 45,246 44,742r 42,030 44,541 43,809 44,291 45,719 45,166r 43,721r 44,269r 52,096 57,505 32 Conservation and development 5,926 5,628 5,529r 5,146 5,989 5,475 5,442 5,904 5,146r 5,643r 5,539r 5,584 6,011 33 Other 87,179 93,583 92,993r 89,254 93,560 94,550 93,779 95,135 91,764r 93,678r 96,009r 94,792 95,365 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 1999 1998 1999 MMMaaarrr... 11999988 11999999 111999999999 111 MMaarr.. MMaarr.. June Sept. Dec. Mar. Nov. Dec. Jan. Feb. Mar. CONSUMER PRICES2 (1982-84=100) 1 All items 1.4 1.7 2.2 1.5 2.0 1.5 .2 .1 .1 .1 .2 165.0 7 Food 2.0 2.3 2.3 2.5 2.8 1.7 .1 .1 .5 .1 -.2 163.3 3 Energy items -8.6 -3.1 -3.4 -9.0 -5.1 5.8 -.3 -1.1 -.2 .0 1.6 98.4 4 All items less food and energy 2.1 2.1 2.6 2.3 2.5 .9 .1 .3 .1 .1 .1 176.2 5 Commodities .1 .6 1.7 1.1 2.5 -3.0 -.1 .6 .0 -.4 -.3 143.9 6 Services 3.0 2.8 2.8 3.0 2.5 2.7 .3 .2 .2 .2 .3 194.7 PRODUCER PRICES (1982=100) 7 Finished goods -1.5 .8 -.3 .6 1.5 1.5 -,2r .3r .5 -.4 .2 131.2 8 Consumer foods -1.3 .9 -.6 1.8 -.3 2.7 — .4r -,lr 1.6 -1.4 .4 134.6 9 Consumer energy -10.6 -3.8 -3.1 -9.2 -10.4 8.6 -1.3r —2.2r 1.8 -1.0 1.2 71.4 10 Other consumer goods 1.2 2.9 1.4 3.0 8.0 -.3 ,0r 1.7r -.1 -.1 .1 151.4 11 Capital equipment -.6 -.1 -1.2 .9 .3 -.3 ,lr -.r -.1 .1 .0 137.8 Intermediate materials 12 Excluding foods and feeds -1.5 -1.9 -1.6 -2.2 -3.8 .0 -.3 -.5 .1 -.4 .3 121.3 13 Excluding energy -.1 -1.6 -1.2 -1.8 -2.4 -1.2 -.2 -,lr -.2 -.2 .1 132.0 Crude materials 14 Foods -6.8 -7.0 -3.3 -19.6 -6.2 3.3 -.6 -4.1 5.1 -2.8 -1.3 98.9 15 Energy -9.7 -11.9 -14.6 -25.3 -1.3 -4.4 2.0r —7.3r .6 -7.4 6.1 61.3 16 Other -6.5 -12.9 -5.8 -19.9 -24.6 1.6 —2.2r -1.8r .2 1.1 -.8 130.0 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • June 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 8,511.0 8,254.5 8,384.2 8,440.6 8,537.9 8,681.2 By source 2 Personal consumption expenditures 5,215.7 5,493.7 5,807.9 5,593.2 5,676.5 5,773.7 5,846.7 5,934.8 3 Durable goods 643.3 673.0 724.7 682.2 705.1 720.1 718.9 754.5 4 Nondurable goods 1,539.2 1,600.6 1,662.4 1,613.2 1,633.1 1,655.2 1,670.0 1,691.3 5 Services 3,033.2 3,220.1 3,420.8 3,297.8 3,338.2 3,398.4 3,457.7 3,488.9 6 Gross private domestic investment 1,131.9 1,256.0 1,367.1 1,292.0 1,366.6 1,345.0 1,364.4 1,392.4 7 Fixed investment 1,099.8 1,188.6 1,307.8 1,220.1 1,271.1 1,305.8 1,307.5 1,346.7 8 Nonresidential 787.9 860.7 938.2 882.8 921.3 941.9 931.6 957.9 9 Structures 216.9 240.2 246.9 246.4 245.0 245.4 246.2 250.9 10 Producers' durable equipment 571.0 620.5 691.3 636.4 676.3 696.6 685.4 706.9 11 Residential structures 311.8 327.9 369.6 337.4 349.8 363.8 375.8 388.9 12 Change in business inventories 32.1 67.4 59.3 71.9 95.5 39.2 57.0 45.7 13 Nonfarm 24.5 63.1 52.7 66.9 90.5 31.5 49.3 39.3 14 Net exports of goods and services -91.2 -93.4 -151.2 -98.8 -123.7 -159.3 -165.5 -156.2 15 Exports 873.8 965.4 959.0 988.6 973.3 949.6 936.2 976.8 16 Imports 965.0 1,058.8 1,110.2 1,087.4 1,097.1 1,108.9 1,101.7 1,133.0 17 Government consumption expenditures and gross investment 1,405.2 1,454.6 1,487.1 1,468.1 1,464.9 1,481.2 1,492.3 1,510.2 18 Federal 518.4 520.2 520.6 520.1 511.6 520.7 519.4 530.7 19 State and local 886.8 934.4 966.5 947.9 953.3 960.4 972.9 979.5 By major type of product 20 Final sales, total 7,629.5 8,043.5 8,451.6 8,182.6 8,288.7 8,401.3 8,480.9 8,635.5 21 Goods 2,780.3 2,911.2 3,044.7 2,948.7 3,005.8 3,025.3 3,029.0 3,118.8 22 Durable 1,228.8 1,310.1 1,391.0 1,334.3 1,376.9 1,380.8 1,373.0 1,433.1 23 Nondurable 1,551.6 1,601.0 1,653.7 1,614.4 1,628.8 1,644.4 1,655.9 1,685.7 24 Services 4,179.5 4,414.1 4,641.0 4,501.2 4,538.4 4,619.5 4,678.5 4,727.7 25 Structures 669.7 718.3 765.9 732.7 744.6 756.6 773.5 789.0 26 Change in business inventories 32.1 67.4 59.3 71.9 95.5 39.2 57.0 45.7 27 Durable goods 20.8 33.6 25.2 34.0 49.9 4.5 19.5 27.0 28 Nondurable goods 11.4 33.8 34.1 37.9 45.6 34.7 37.5 18.7 MEMO 29 Total GDP in chained 1992 dollars 6,994.8 7,269.8 7,551.9 7,364.6 7,464.7 7,498.6 7,566.5 7,677.7 NATIONAL INCOME 30 Total 6,256.0 6,646.5 6,994.7 6,767.9 6,875.0 6,945.5 7,032.3 7,126.0 31 Compensation of employees 4,409.0 4,687.2 4,981.0 4,798.0 4,882.8 4,945.2 5,011.6 5,084.3 32 Wages and salaries 3,640.4 3,893.6 4,153.9 3,993.6 4,065.9 4,121.6 4,181.1 4,246.8 33 Government and government enterprises 640.9 664.2 689.3 671.4 679.5 685.8 692.7 699.2 34 Other 2,999.5 3,229.4 3,464.6 3,322.2 3,386.4 3,435.8 3,488.4 3,547.6 35 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' income' 527.7 551.2 577.2 558.0 564.2 571.7 576.1 596.9 39 Business and professional' 488.8 515.8 548.5 526.6 536.8 544.0 550.9 562.2 40 Farm1 38.9 35.5 28.7 31.4 27.4 27.7 25.2 34.7 41 Rental income of persons2 150.2 158.2 162.6 158.8 158.3 161.0 163.6 167.5 42 Corporate profits' 750.4 817.9 824.6 820.8 829.2 820.6 827.0 821.7 43 Profits before tax3 680.2 734.4 717.8 736.4 719.1 723.5 720.5 708.1 44 Inventory valuation adjustment -1.2 6.9 14.5 4.3 25.3 7.8 11.7 13.4 45 Capital consumption adjustment 71.4 76.6 92.3 80.1 84.9 89.4 94.8 100.2 46 Net interest 418.6 432.0 449.3 432.4 440.5 447.1 454.0 455.6 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 11999988 Q4 QI Q2 Q3 Q4r PERSONAL INCOME AND SAVING 1 Total personal income 6,425.2 6,784.0 7,126.1r 6,904.9 7,003.9 7,081.9 7,160.8 7,257.9 2 Wage and salary disbursements 3,631.1 3,889.8 4,149.9r 3,989.9 4,061.9 4,117.6 4,177.1 4,242.8 3 Commodity-producing industries 909.0 975.0 1,026.9 1,003.7 1,019.0 1,023.2 1,028.0 1,037.4 4 Manufacturing 674.6 719.5 751.5 741.3 750.4 750.8 750.9 754.1 Distributive industries 823.3 879.8 939.6r 904.5 918.9 932.2 945.8 961.5 6 Service industries 1,257.9 1,370.8 1,494.0 1,410.2 1,444.5 1,476.4 1,510.6 1,544.6 7 Government and government enterprises 640.9 664.2 689.3 671.4 679.5 685.8 692.7 699.2 8 Other labor income 387.0 392.9 406.9 397.0 402.8 405.7 408.4 411.0 9 Proprietors' income1 527.7 551.2 511.2' 558.0 564.2 571.7 576.1 596.9 10 Business and professional1 488.8 515.8 548.5 526.6 536.8 544.0 550.9 562.2 11 Farm1 38.9 35.5 28.7r 31.4 27.4 27.7 25.2 34.7 12 Rental income of persons2 150.2 158.2 162.6r 158.8 158.3 161.0 163.6 167.5 13 Dividends 248.2 260.3 263.1 261.3 261.6 262.1 263.0 265.7 14 Personal interest income 719.4 747.3 764.8 753.0 757.0 763.0 769.2 769.9 IS Transfer payments 1,068.0 1,110.4 l,149.0r 1,120.5 1,139.0 1,145.8 1,152.9 1,158.3 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 7,126.1r 6,904.9 7,003.9 7,081.9 7,160.8 7,257.9 19 LESS: Personal tax and nontax payments 890.5 989.0 l,098.3r 1,025.5 1,066.8 1,092.9 1,108.4 1,124.9 20 EQUALS: Disposable personal income 5,534.7 5,795.1 6,027.9r 5,879.4 5,937.1 5,988.9 6,052.4 6,133.1 21 LESS: Personal outlays 5,376.2 5,674.1 6,000.2r 5,781.2 5,864.0 5,963.3 6,039.8 6,133.6 22 EQUALS: Personal saving 158.5 121.0 21.1' 98.2 73.0 25.6 12.6 -.6 MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 26,335.7 27,136.2 27,938.9r 27,398.2 27,718.8 27,783.0 2277,,997722..11 2288,,229999..88 24 Personal consumption expenditures 17,893.0 18,340.9 19,065.0r 18,530.5 18,771.1 19,007.8 19,156.3 19,336.4 25 Disposable personal income 18,989.0 19,349.0 19,790.0r 19,478.0 19,632.0 19,719.0 19,829.0 19,980.0 26 Saving rate (percent) 2.9 2.1 .5 1.7 1.2 .4 .2 .0 GROSS SAVING 27 Gross saving 1,274.5 1,406.3 1,468.0 1,428.0 1,482.5 1,448.5 1,474.5 1,466.6 28 Gross private saving 1,114.5 1,141.6 1,090.4 1,131.6 1,130.1 1,079.0 1,078.7 1,073.7 29 Personal saving 158.5 121.0 21.1' 98.2 73.0 25.6 12.6 -.6 30 Undistributed corporate profits1 262.4 296.7 305.4 295.0 312.0 300.9 304.8 303.9 31 Corporate inventory valuation adjustment -1.2 6.9 14.5 4.3 25.3 7.8 11.7 13.4 Capital consumption allowances 3? Coiporate 452.0 477.3 500.6 487.7 492.5 497.8 550033..11 550088..99 33 Noncorporate 232.3 242.8 252.7 247.0 248.6 250.7 254.2 257.5 34 Gross government saving 160.0 264.7 377.6 296.4 352.4 369.4 395.7 392.9 35 Federal -39.6 49.5 142.5 72.3 128.7 143.9 161.6 135.8 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 72.8 2.2 58.8 74.4 92.0 65.8 38 State and local 199.7 215.2 235.2 224.1 223.7 225.6 234.2 257.1 39 Consumption of fixed capital 77.1 81.1 85.0r 82.7 83.5 84.3 85.4 86.6 40 Current surplus or deficit (-), national accounts 122.6 134.1 150.2 141.4 140.2 141.3 148.7 170.5 41 Gross investment 1,242.3 1,350.5 1,391.5 1,360.7 1,428.4 1,362.7 1,372.5 1,402.4 42 Gross private domestic investment 1,131.9 1,256.0 l,367.1r 1,292.0 1,366.6 1,345.0 1,364.4 1,392.4 43 Gross government investment 229.7 235.4 231.& 236.5 237.4 232.5 239.7 238.3 44 Net foreign investment -119.2 -140.9 -212.6 -167.8 -175.6 -214.8 -231.6 -228.3 45 Statistical discrepancy -32.2 -55.8 -76.5 -67.3 -54.1 -85.7 -102.0 -64.2 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 International Statistics • June 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 -47,018 -56,971 -65,694 -63,765 2 Merchandise trade balance2 -191,337 -197,954 -247,985 -49,839 -56,033 -64,778 -64,899 -62,275 3 Merchandise exports 611,983 679,325 671,055 174,284 171,190 164,543 163,414 171,908 4 Merchandise imports -803,320 -877,279 -919,040 -224,123 -227,223 -229,321 -228,313 -234,183 5 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 19,134 19,500 17,573 18,592 7 Investment income, net 14,236 -5,318 -22,479 -4,247 -2,218 -3,346 -9,165 -7,754 8 U.S. government grants -15,023 -12,090 -12,492 -5,213 -2,266 -2,063 -2,663 -5,500 y U.S. government pensions and other transfers -4,442 -4,193 -4,304 -1,069 -1,073 -1,073 -1,080 -1,078 10 Private remittances and other transfers -21,112 -23,408 -25,059 -6,055 -6,089 -6,254 -6,289 -6,423 ii 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 -177 -986 -136 -218 17 Change in U.S. private assets abroad (increase, —) -374,761 -477,666 -297,765 -118,946 -45,193 -107,786 -58,543 -86,240 18 Bank-reported claims3 -91,555 -147,439 -31,040 -27,539 3,074 -24,615 -31,996 22,497 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 -34,698 -40,966 -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 84,313 175,241 145,089 159,951 29 U.S. bank-reported liabilities3 16,478 148,059 42,568 89,643 -50,497 37,670 76,993 -21,598 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 26,039 19,249 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 -2,594 2,168 27,347 -30,573 37 Due to seasonal adjustment 3,528 6,769 2,024 -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 --11,,994455 --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 t. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38^-0. 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 TRADE' Millions of dollars; monthly data seasonally adjusted 1998 1999 IItteemm 11999966 11999977 11999988 Aug. Sept. Oct. Nov. Dec. Jan.1 Feb.p 1 Goods and services, balance -108,574 -110,207 -169,288 -16,733 -14,595 -13,963 -15,165 -14,055 -16,808 -19,438 2 Merchandise -191,337 -197,955 -248,159 -22,847 -20,914 -20,280 -21,669 -20,499 -23,259 -26,150 3 Services 82,763 87,748 78,871 6,114 6,319 6,317 6,504 6,444 6,451 6,712 4 Goods and services, exports 850,775 937,593 931,026 74,986 77,443 80,415 78,942 77,873 77,082 76,597 5 Merchandise 611,983 679,325 670,641 53,769 55,912 58,246 57,110 56,133 55,168 54,339 6 Services 238,792 258,268 260,385 21,217 21,531 22,169 21,832 21,740 21,914 22,258 7 Goods and services, imports -959,349 -1,047,799 -1,100,314 -91,719 -92,038 -94,378 -94,107 -91,928 -93,890 -96,035 8 Merchandise -803,320 -877,279 -918,800 -76,616 -76,826 -78,526 -78,779 -76,632 -78,427 -80,489 9 Services -156,029 -170,520 -181,514 -15,103 -15,212 -15,852 -15,328 -15,296 -15,463 -15,546 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Total 85,832 75,090 69,954 73,544 75,66 79,183 77,683 81,755 80,675 75,322 74,359 2 Gold stock, including Exchange Stabilization Fund' 11,050 11,049 11,050 11,046 11,044 11,041 11,041 11,041 11,046 11,048 11,049 3 Special drawing rights2 ' 11,037 10,312 10,027 9,891 10,106 10,379 10,393 10,603 10,465 9,474 9,682 4 Reserve position in International Monetary Fund2 14,649 15,435 18,071 21,161 21,644 22,278 22,049 24,111 24,129 24,283 23,231 5 Foreign currencies4 49,096 38,294 30,809 31,446 32,882 35,485 34,200 36,001 35,035 30,517 30,397 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 1974. stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4. Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS' Millions of dollars, end of period 1998 1999 AAsssseett 11999955 11999966 11999977 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Deposits 386 167 457 161 347 154 211 167 233 200 166 Held in custody 2 US. Treasury securities2 522,170 638,049 620,885 588,337 578,403 588,768 608,060 607,574 612,670 615,139 610,649 3 Earmarked gold" 11,702 11,197 10,763 10,510 10,457 10,403 10,355 10,343 10,343 10,347 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 • June 1999 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1998r 1999 IItteemm 11999966rr 11999977rr Aug. Sept. Oct. Nov. Dec. Jan.r Feb.p 1 Total1 756,533 776,505 758,773 733,030 745,152 751,482 757,934 762,236 761,013 By type 2 Liabilities reported by banks in the United States* 113,098 135,384 144,120 131,551 134,822 125,132 123.915 121,834 125,275 3 U.S. Treasury bills and certificates3 198,921 148,301 130,398 128,146 128,598 133,702 134,141 136,840 135,471 U.S. Treasury bonds and notes 4 Marketable 384,045 428,004 416,313 406,009 415,010 426,853 432,127 434,601 430,902 5 Nonmarketable4 5,968 5,994 6,311 6,350 5,997 6,035 6,074 6,113 6,151 6 U.S. securities other than U.S. Treasury securities5 54,501 58,822 61,631 60,974 60,725 59,760 61,677 62,848 63,214 By area 7 Europe1 246,983 252,289 255,668 247,302 259,698 261,028 256,026 258,298 256,164 8 Canada 38,723 36,177 33,815 33,598 34,644 36,885 36,715 37,471 38,462 9 Latin America and Caribbean 79,949 96,942 97,806 79,164 77,469 76,759 79,417 73,986 75,986 10 Asia 403,265 400,144 381,683 383,412 385,565 389,359 398,717 405,425 404,111 11 Africa 7,242 9,981 11.364 11,584 10,976 10,084 10,059 10.144 9,838 12 Other countries 6,457 7,058 4.523 4,056 2,886 3,453 3,086 2.998 2,538 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 1994 benchmark survey of foreign portfolio investment in the United March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue; States. 3.16 LIABILITIES TO, AND CLAIMS ON, FOREIGNERS Reported by Banks in the United States' Payable in Foreign Currencies Millions of dollars, end of period 1998 IItteemm 11999955 11999966 11999977 Mar. June Sept. Dec. 1 Banks' liabilities 109,713 103,383 117,524 100,708 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 customers" 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 States' Payable in U.S. dollars Millions of dollars, end of period 1998 1999 IItteemm 11999966 11999977 11999988rr Aug. Sept. Oct. Nov. Dec.1" Jan.r Feb.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,162,148 1,283,787 1,346,654 1,341,295 1,350,292 1,371,998 1,346,154 1,346,654 1,332,241 1,339,175 ?, Banks' own liabilities 758,998 883,740 884,356 928,182 917,008 911,258 880,616 884,356 872,123 879,415 3 Demand deposits 27,034 32,104 29,341 33,038 33,547 32,071 32,104 29,341 33,039 31,681 4 Time deposits2 186,910 198,546 151,589 183,556 174,173 158,664 149,746 151,589 147,456 153,247 5 Other3 143,510 168,011 140,753 190,542 165,205 153,269 143,341 140,753 145,309 161,556 6 Own foreign offices4 401,544 485,079 562,673 521,046 544,083 567,254 555,425 562,673 546,319 532,931 7 Banks' custodial liabilities5 403,150 400,047 462,298 413,113 433,284 460,740 465,538 462,298 460,118 459,760 8 U.S. Treasury bills and certificates6 236,874 193,239 183,490 162,235 160,598 168,764 182,917 183,490 185,231 184,851 9 Other negotiable and readily transferable instruments7 72,011 93,641 141,103 123,378 142,169 151,239 142,399 141,103 137,428 134,109 10 Other 94,265 113,167 137,705 127,500 130,517 140,737 140,222 137,705 137,459 140,800 11 Nonmonetary international and regional organizations8 . . 13,972 11,690 11,833 15,188 15,215 12,810 13,207 11,833 13,839 19,187 17. Banks' own liabilities 13,355 11,486 10,850 13,684 13,862 11,644 12,267 10,850 12,829 18,430 13 Demand deposits 29 16 172 59 408 97 234 172 62 187 14 Time deposits* 5,784 5,466 5,793 6,252 5,763 5,418 5,802 5,793 6,161 7,315 15 Other3 7,542 6,004 4,885 7,373 7,691 6,129 6,231 4,885 6,606 10,928 16 Banks' custodial liabilities5 617 204 983 1,504 1,353 1,166 940 983 1,010 757 17 U.S. Treasury bills and certificates6 352 69 636 490 435 509 570 636 623 549 18 Other negotiable and readily transferable instruments7 265 133 347 1,012 818 657 370 347 387 207 19 Other 0 2 0 2 100 0 0 0 0 1 70 Official institutions9 312,019 283,685 258,056 274,518 259,697 263,420 . 258,834 258,056 258,674 260,746 71 Banks' own liabilities 79,406 102,028 79,149 101,608 85,310 84,826 79,450 79,149 76.044 77,262 7.2 Demand deposits 1,511 2,314 2,787 3,456 3,607 3,325 2,744 2,787 3,666 2,850 23 Time deposits2 33,336 41,396 28,947 35,578 28,076 26,148 25,659 28,947 24,176 25,988 24 Other3 44,559 58,318 47,415 62,574 53,627 55,353 51,047 47,415 48,202 48,424 75 Banks' custodial liabilities5 232,613 181,657 178,907 172,910 174,387 178,594 179,384 178,907 182.630 183,484 26 U.S. Treasury bills and certificates6 198,921 148,301 134,141 130,398 128.146 128,598 133,702 134,141 136,840 135,471 27 Other negotiable and readily transferable instruments7 33,266 33,151 44,092 41,759 45,684 49,691 45,213 44,092 45,202 47,213 28 Other 426 205 674 753 557 305 469 674 588 800 79 Banks10 694,835 816,007 885,269 852,890 876,463 898,909 885,767 885,269 866,002 854,319 30 Banks' own liabilities . . 562,898 642,207 676,035 673,127 687,824 690,862 673,486 676,035 657,930 647,945 31 Unaffiliated foreign banks 161,354 157,128 113,362 152,081 143,741 123,608 118,061 113,362 111,611 115,014 32 Demand deposits 13,692 17,527 14,072 16,063 15,799 15,802 15,119 14,072 15,327 15,335 33 Time deposits2 89,765 83,433 46,273 74,201 71,259 56,193 51,352 46,273 46,745 46,728 34 Other3 57,897 56,168 53,017 61,817 56,683 51,613 51,590 53,017 49,539 52,951 35 Own foreign offices4 401,544 485,079 562,673 521,046 544,083 567,254 555,425 562,673 546,319 532,931 36 Banks' custodial liabilities5 131,937 173,800 209,234 179,763 188,639 208,047 212,281 209,234 208,072 206,374 37 U.S. Treasury bills and certificates6 23,106 31,915 35,544 20,696 21,563 27,556 35,213 35,544 35,325 34,472 38 Other negotiable and readily transferable instruments7 17,027 35,393 45,102 40,180 44,807 48,240 45,132 45,102 44,087 40,108 39 Other 91,804 106,492 128,588 118,887 122,269 132,251 131,936 128,588 128,660 131,794 40 Other foreigners 141,322 172,405 191,496 198,699 198,917 196,859 188,346 191,496 193,726 204,923 41 Banks' own liabilities 103,339 128,019 118,322 139,763 130,012 123,926 115,413 118,322 125,320 135,778 47 Demand deposits 11,802 12,247 12,310 13,460 13,733 12,847 14,007 12,310 13,984 13,309 43 Time deposits2 58,025 68,251 70,576 67,525 69,075 70,905 66,933 70,576 70,374 73,216 44 Other3 33,512 47,521 35,436 58,778 47,204 40,174 34,473 35,436 40,962 49,253 45 Banks' custodial liabilities5 37,983 44,386 73,174 58,936 68,905 72,933 72,933 73,174 68,406 69,145 46 U.S. Treasury bills and certificates6 14,495 12,954 13,169 10,651 10,454 12,101 13,432 13,169 12,443 14,359 47 Other negotiable and readily transferable instruments7 21,453 24,964 51,562 40,427 50,860 52,651 51,684 51,562 47,752 46,581 48 Other 2,035 6,468 8,443 7,858 7,591 8,181 7,817 8,443 8,211 8,205 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 14,573 16,083 27,026 25,867 27,391 29,933 28,793 27,026 25,858 23,341 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 • June 1999 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1998 1999 IItteemm 11999966 11999977 11999988 Aug. Sept. Oct. Nov. Dec. Jan.r Feb.p AREA 50 Total, all foreigners 1,162,148 1,283,787 l,346,654r 1,341,295 1350,292 1371,998 1,346,154 1346,654r 1,332,241 1,339,175 51 Foreign countries 1,148,176 1,272,097 1,334,82lr 1,326,107 1,335,077 1,359,188 1,332,947 l,334,821r 1,318,402 1,319,988 52 Europe 376,590 420,432 427,367r 457,537 450,587 451,350 449,567 427,367r 429,636 436,331 53 Austria 5,128 2,717 3,178r 2,671 3,137 2,799 2,824 3,178r 2,902 3,070 54 Belgium and Luxembourg 24,084 41,007 42,818r 35,086 33,934 39,911 42,014 42,818r 38,897 41,594 55 Denmark 2,565 1,514 l,437r 2,128 1,578 1,813 1,675 l,437r 1,200 1,826 56 Finland 1,958 2,246 1,862 1,350 1,181 1,193 1,706 1,862 1,989 1,643 57 France 35,078 46,607 44,616r 48,328 50,405 47,348 48,169 44,616r 44,444 47,620 58 Germany 24,660 23,737 21,357 28,751 25,811 22,024 22,606 21,357 20,315 23,111 59 Greece 1,835 1,552 2,066 2,941 2,544 2,901 2,444 2,066 2,195 2,509 60 Italy 10,946 11,378 7,103 10,625 9,183 7,124 6,378 7,103 6,155 6,684 61 Netherlands 11,110 7,385 10,793r 9,239 8,066 7,251 9,298 10,793r 10,580 14,792 62 Norway 1,288 317 710 1,469 688 1,149 797 710 1,065 1,102 63 Portugal 3,562 2,262 3,235 2,424 2,292 2,377 2,400 3,235 2,543 2,225 64 Russia 7,623 7,968 2,439r 2,718 3,085 3,735 2,698 2,439r 2,231 2,438 65 Spain 17,707 18,989 15,775 14,283 20,485 26,569 27,017 15,775 12,843 13,457 66 Sweden 1,623 1,628 3,027 1,769 3,285 3,257 3,857 3,027 3,132 2,918 67 Switzerland 44,538 39,023 50,654 39,362 48,393 47,332 50,167 50,654 59,871 60,345 68 Turkey 6,738 4,054 4,286 4,317 4,264 4,105 3,842 4,286 5,105 5,045 69 United Kingdom 153,420 181,904 181,554r 219,197 204,915 202,536 195,099 181,554r 177,240 173,543 70 Yugoslavia1' 206 239 258 242 253 362 271 258 275 287 71 Other Europe and other former U.S.S.R.1" 22,521 25,905 30,199r 30,637 27,088 27,564 26,305 30,199r 36,654 32,122 72 Canada 38,920 28,341 30,212 27,844 28,701 31,278 29,249 30,212 29,725 28,019 73 Latin America and Caribbean 467,529 536,393 554,561r 556,699 561,502 575,837 545,251 554,56 lr 540,480 537,394 74 Argentina 13,877 20,199 19,013 21,655 18,384 17,706 18,892 19,013 17,175 18,228 /5 Bahamas 88,895 112,217 118,085 113,543 124,249 128,893 115,598 118,085 121,606 118,727 76 Bermuda 5,527 6,911 6,839 7,332 7,920 7,247 7,241 6,839 8,969 8,370 77 Brazil 27,701 31,037 15,800 27,824 18,453 17,308 13,370 15,800 12,268 12,913 78 British West Indies 251,465 276,418 302,299r 291,098 298,697 310,058 298,260 302,299r 287,124 284,639 79 Chile 2,915 4,072 5,010 4,726 5,725 5,598 4,778 5,010 5,188 5,189 80 Colombia 3,256 3,652 4,616 4,102 4,475 4,888 4.124 4,616 4,535 4,462 81 Cuba 21 66 62 62 62 57 63 62 64 56 82 Ecuador 1,767 2.078 1,573 1,608 1,540 1,679 1,510 1,573 1,525 1,513 83 Guatemala 1,282 1,494 1,332r 1,237 1,241 1,232 1,204 l,332r 1,224 1,337 84 Jamaica 628 450 539 550 541 578 524 539 565 542 85 Mexico 31,240 33.972 37,148 38,087 35,681 38,058 36,720 37,148 3355,,996655 3355,,889911 86 Netherlands Antilles 6.099 5,085 5,010 8,340 8,588 6,255 6,009 55,,001100 55,,668811 88,,440066 87 Panama 4,099 4,241 3,864 3,675 3,826 3,793 3,774 33,,886644 4,499 44,,440011 88 Peru 834 893 840 900 843 799 814 840 864 882288 89 Uruguay 1,890 2,382 2,486 2,091 2,276 2,223 2,199 2,486 2,380 2,274 90 Venezuela 17,363 21,601 19,894 20,125 19,180 19,662 19,631 19,894 20,250 19,354 91 Other 8,670 9,625 10,151 9,744 9,821 9,803 10,540 10,151 10,598 10,264 92 Asia 249,083 269,379 307,140r 266,480 275,745 284,441 293,584 307,140r 301,454 330022,,551144 China 93 Mainland 30,438 18.252 13,041 18,506 18,523 15,814 13,784 13,041 14,854 15,345 94 Taiwan 15,995 11,840 12,708 11,290 12,080 12,802 12,361 12,708 10,980 12,211 95 Hong Kong 18,789 17,722 20,898r 18,349 16,627 16,508 16,739 20,898r 22,844 25,509 96 India 3,930 4.567 5,250r 6,437 5,144 5,337 5,089 5,250r 5,279 5,241 97 Indonesia 2,298 3.554 8,282r 5,651 5,470 5,671 6,247 8,282r 7,909 6,172 98 Israel 6,051 6,281 7,749 5,296 5,984 4,781 8,106 7,749 7,287 7,598 99 Japan 117,316 143,401 168,236r 131,376 142,767 156,340 164,311 168.2361" 161,207 161,073 100 Korea (South) 5,949 13,060 12,454 12,493 12,971 12,505 12,396 12,454 12,446 9,990 101 Philippines 3,378 3,250 3,324r 2,777 2,712 2,539 2,849 3,324r 2,318 2,482 102 Thailand 10,912 6,501 7,359r 7,869 6,664 7,134 6,788 7,359r 7,300 6,590 103 Middle Eastern oil-exporting countries" 16,285 14,959 15,609r 14,532 16,627 14,718 16,370 15,609r 14,655 16,152 104 Other 17,742 25,992 32,230r 31,904 30,176 30,292 28,544 32,230r 34,375 34,151 105 Africa 8,116 10,347 8,905r 10,562 11,098 9,749 8,889 8,905r 9,110 8,658 106 Egypt 2,012 1,663 1,339 1,459 1,616 1,288 1,498 1,339 11,,885566 1,902 107 Morocco 112 138 97 76 88 78 75 97 9988 73 108 South Africa 458 2,158 1,522 2,428 2,658 2,358 1,659 1,522 1,308 1,343 109 Zaire 10 10 5 35 6 7 12 5 6 13 110 Oil-exporting countries14 2,626 3,060 3,088 3,684 3,727 3,291 3,017 3,088 2,989 2,737 111 Other 2,898 3.318 2,854r 2,880 3,003 2,727 2,628 2,854r 2,853 2,590 112 Other 7,938 7,205 6,636r 6,985 7,444 6,533 6,407 6,636r 7,997 7,072 113 Australia 6,479 6,304 5,495r 5,931 6,427 5,372 5,180 5,495r 6,854 5,550 114 Other 1,459 901 1,141 1,054 1,017 1,161 1,227 1,141 1,143 1,522 115 Nonmonetary international and regional organizations . . 13,972 11,690 1 l,833r 15,188 15,215 12,810 13,207 1 l,833r 13,839 19,187 lib International15 12,099 10,517 10,221r 12,825 12,782 10,519 11,298 10,221r 11,787 16,560 117 Latin American regional16 1,339 424 594r 721 803 1,008 598 594r 917 1,411 118 Other regional17 534 749 1,018 1,642 1,630 1,283 1,311 1,018 1,135 1,216 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 States' Payable in U.S. Dollars Millions of dollars, end of period 1998 1999 AArreeaa oorr ccoouunnttrryy 11999966 11999977 11999988 Aug. Sept. Oct. Nov. Dec. Jan.r Feb.p 1 Total, all foreigners 599,925 708,225 734,794r 764,878 768,427 749,543 756,110 734,794r 716,521 710,070 2 Foreign countries 597,321 705,762 731,176r 760,488 763,105 744,153 751,872 731,176r 712,936 706,055 3 Europe 165,769 199,880 233,480r 227,688 234,967 224,661 228,924 233,480r 225,892 229,661 4 Austria 1,662 1,354 1,043 1,856 1,849 2,358 2,311 1,043 2,634 1,809 5 Belgium and Luxembourg 6,727 6,641 7,187 6,779 8,200 9,245 7,409 7,187 5,599 6,933 6 Denmark 492 980 2,383r 1,374 1,059 1,768 2,524 2,383r 1,816 1,616 7 Finland 971 1,233 1,070 1,161 1,073 1,149 1,050 1,070 963 1,233 8 France 15,246 16,239 15,251 17,314 17,077 16,307 18,881 15,251 18,575 18,418 9 Germany 8,472 12,676 15,922 12,029 15,375 15,121 17,997 15,922 15,115 16,362 10 Greece 568 402 575 530 373 415 510 575 533 624 11 Italy 6,457 6,230 7,283 8,617 6,510 7,153 6,544 7,283 6,168 5,714 12 Netherlands 7,117 6,141 5,734 4,321 4,803 5,230 5,686 5,734 5,828 5,866 13 Norway 808 555 827 1,110 640 662 385 827 645 561 14 Portugal 418 777 669r 725 975 885 679 669r 584 888 15 Russia 1,669 1,248 789 1,209 920 883 760 789 742 724 16 Spain 3,211 2,942 5,735 5,225 7,980 6,051 5,234 5,735 4,560 4,260 17 Sweden 1,739 1,854 4,223 4,456 4,319 4,508 5,087 4,223 4,338 4,589 18 Switzerland 19,798 28,846 46,880r 49,258 55,798 43,337 45,858 46,880r 46,122 50,797 19 Turkey 1,109 1,558 1,982 1,990 1,900 1,848 1,915 1,982 1,796 1,857 20 United Kingdom 85,234 103,143 106,358r 99,174 97,436 98,746 97,072 106,358r 98,959 97,424 21 Yugoslavia2 115 52 53 53 53 53 53 53 53 57 22 Other Europe and other former U.S.S.R.3 3,956 7,009 9,516r 10,507 8,627 8,942 8,969 9,516r 10,862 9,929 23 Canada 26,436 27,189 47,212 41,402 41,165 37,316 44,830 47,212 42,925 40,743 24 Latin America and Caribbean 274,153 343,730 342,08 lr 379,383 373,237 368,394 368,212 342,081' 344,020 340,291 25 Argentina 7,400 8,924 9,553 8,724 8,777 9,087 9,225 9,553 9,713 10,184 26 Bahamas 71,871 89,379 96,455 77,875 86,867 88,923 91,171 96,455 93,000 91,102 27 Bermuda 4,129 8,782 4,969 9,629 10,610 6,585 5,702 4,969 5,547 6,028 28 Brazil 17,259 21,696 16,193 23,530 19,073 17,644 17,801 16,193 15,616 15,357 29 British West Indies 105,510 145,471 153,269 192,334 182,757 183,122 179,223 153,269 157,683 154,982 30 Chile 5,136 7,913 8,261 8,307 8,345 8,549 8,824 8,261 8,232 8,085 31 Colombia 6,247 6,945 6,523 6,905 6,813 6,764 6.639 6,523 6,433 6,462 3? Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 1,031 1,311 1,400 1,518 1,458 1,444 1,351 1,400 1,403 1,341 34 Guatemala 620 886 1,127 950 1,166 947 1,483 1,127 1,107 1,269 35 Jamaica 345 424 239 318 305 330 299 239 333 588 36 Mexico 18,425 19,428 21,143 20,078 20,677 22,039 22,483 21,143 21,128 21,534 37 Netherlands Antilles 25,209 17,838 6,779 12,939 10,294 7,323 7,696 6,779 7,403 6,571 38 Panama 2,786 4,364 3,584r 4,157 4,226 4,011 3,864 3,584r 3,549 3,384 39 Peru 2,720 3,491 3,260 4,061 3,829 3,706 3,618 3,260 3,364 3,353 40 Uruguay 589 629 1,126 1,055 955 958 1,040 1,126 997 934 41 Venezuela 1,702 2,129 3,089 2,649 2,638 2,689 2,788 3,089 3,312 3,684 42 Other 3,174 4,120 5,111 4,354 4,447 4,273 5,005 5,111 5,200 5,433 43 Asia 122,478 125,092 98,650r 102,382 104,614 104,781 100,768 98,650r 90,840 86,388 China 44 Mainland 1,401 1,579 1,311 2,703 1,380 2,275 2,488 1,311 2,691 2,400 45 Taiwan 1,894 922 1,041 651 1,031 1,079 957 1,041 728 778 46 Hong Kong 12,802 13,991 9,082r 13,821 10,548 8,244 8,238 9,082r 8,332 6,736 47 India 1,946 2,200 1,440r 1,878 1,823 1,582 1,533 1,440r 1,483 1,529 48 Indonesia 1,762 2,651 1,954r 2,031 2,108 2,044 2,069 l,954r 1,948 2,110 49 Israel 633 768 1,166 898 941 1,504 916 1,166 833 774 50 Japan 59,967 59,549 46,712 44,822 52,213 52,904 48,406 46,712 41,817 39,064 51 Korea (South) 18,901 18,162 8,238r 11,508 9,823 9,733 8,947 8,238r 8,679 8,461 57 Philippines 1,697 1,689 l,465r 1,259 1,280 1,128 1,619 1,465r 1,310 1,589 53 Thailand 2,679 2,259 l,806r 1,883 2,129 1.952 1,895 l,806r 1,759 1,708 54 Middle Eastern oil-exporting countries4 10,424 10,790 16,145 12,136 12,681 13,531 15,077 16,145 14,328 12,861 55 Other 8,372 10,532 8,290r 8,792 8,657 8,805 8,623 8,290r 6,932 8,378 56 Africa 2,776 3,530 3,122 3,262 3,012 2,785 2,611 3,122 2,899 3,027 57 Egypt 247 247 257 279 272 322 259 257 302 264 58 Morocco 524 511 372 426 390 405 390 372 378 361 59 South Africa 584 805 643 653 694 665 704 643 802 876 60 Zaire 0 0 0 0 0 0 0 0 0 0 61 Oil-exporting countries5 420 1,212 936 1,046 787 533 454 936 516 625 62 Other 1,001 755 914 858 869 860 804 914 901 901 63 Other 5,709 6,341 6,63 r 6,371 6,110 6,216 6,527 6,63 lr 6,360 5,945 64 Australia 4,577 5,300 6,167 5,999 5,783 5,809 6,008 6,167 5,866 5,275 65 Other 1,132 1,041 464r 372 327 407 519 464r 494 670 66 Nonmonetary international and regional organizations6 , . . 2,604 2,463 3,618 4,390 5,322 5,390 4,238 3,618 3,585 4,015 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 • June 1999 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1998 1999 TTyyppee ooff ccllaaiimm 11999966 11999977 11999988RR Aug. Sept. Oct. Nov. Dec.r Jan.r Feb.p 1 Total 743,919 852,852 875,332 926,478 875,332 2 Banks' claims 599,925 708,225 734,794 764,878 768,427 749,543 756,110 734,794 716,521 710,070 3 Foreign public borrowers 22,216 20,581 23,540 29,758 26,377 28,164 25,993 23,540 28,848 29,688 4 Own foreign offices* 341,574 431,685 484,356 466.019 486,452 476,973 487,641 484,356 459,017 461,685 Unaffiliated foreign banks 113,682 109,230 105,732 106,034 108,972 109,140 117,919 105,732 106,230 102,235 6 Deposits 33,826 30,995 26,808 24,593 30,426 26,713 33,774 26,808 30,231 29,291 7 Other 79,856 78,235 78,924 81.441 78,546 82,427 84,145 78,924 75,999 72,944 8 All other foreigners 122,453 146,729 121,166 163,067 146,626 135,266 124,557 121,166 122,426 116,462 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 28,436 25,082 34,265 32,888 39,978 38,941 n.a. 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States' Payable in U.S. Dollars Millions of dollars, end of period 1998 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa"" 11999955 11999966 11999977 Mar. June Sept. Dec.p 1 Total 224,932 258,106 276,550 285,590 292,788 281,136 250,366 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 16,874 16,997 14,613 13,675 4 All other foreigners 163,862 196,448 193,700 197,905 194,350 193,761 172,747 5 Maturity of more than one year 46,075 46,247 70,769 70,811 81.441 72,762 63,944 6 Foreign public borrowers 7,522 6,790 8,499 11.285 10,688 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 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 7,941 9,392 10,235 10,806 12,630 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

Nonbank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks' Billions of dollars, end of period 1996 1997 1998 Area or country 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 Peru .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 India 4.2 4.4 4.3 4.9 5.3 4.9 4.9 5.0 4.9 5.3 5.3 42 Israel .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 Zaire .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 5 5 5 6 Off B s a h h o a re m b as a nking centers 7 1 2 0 . . 9 2 9 1 9 1 . . 2 0 1 2 3 0 4 . . 3 7 1 2 3 0 1 . . 9 3 12 1 9 6 . . 6 1 13 1 8 9 . . 9 8 1 2 4 9 5 . . 9 7 1 2 2 9 9 . . 2 3 1 2 2 2 3 . . 7 5 1 2 1 8 8 . . 9 6 9 3 0 2 . . 4 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 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 • June 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 11999955 11999966 11999977 Sept. Dec. Mar. June Sept. Dec/ 1 Total 46,448 61,782 60,037 55,891 60,037 58,040 51,433 49,278 46,553 2 Payable in dollars 33,903 39,542 41,956 39,746 41,956 42,258 40,026 38,409 36,651 3 Payable in foreign currencies 12,545 22,240 18,081 16,145 18,081 15,782 11,407 10,869 9,902 By type 4 Financial liabilities 24,241 33,049 29,532 26,461 29,532 28,050 22,322 19,331 19,255 Payable in dollars 12,903 11,913 13,043 11,487 13,043 13,568 11,988 9,812 1100,,337711 6 Payable in foreign currencies 11,338 21,136 16,489 14,974 16,489 14,482 10,334 9,519 88,,888844 7 Commercial liabilities 22,207 28,733 30,505 29,430 30,505 29,990 29,111 29,947 27,298 8 Trade payables 11.013 12,720 10,904 10,885 10,904 10,107 9,537 10,276 10,961 y Advance receipts and other liabilities 11,194 16,013 19,601 18,545 19,601 19,883 19,574 19,671 16,337 10 Payable in dollars 21,000 27,629 28,913 28,259 28,913 28,690 28,038 28,597 26,280 n Payable in foreign currencies 1,207 1.104 1,592 1,171 1,592 1,300 1,073 1,350 1,018 By area or country Financial liabilities 12 Europe 15,622 23,179 19,657 18,019 19,657 20,307 15,468 12,905 12,589 13 Belgium and Luxembourg 369 632 186 89 186 127 75 150 79 14 France 999 1,091 1,684 1,334 1,684 1,795 1,699 1,457 1,097 15 Germany 1.974 1,834 2,018 1,730 2,018 2,578 2,441 2,167 2,063 16 Netherlands 466 556 494 507 494 472 484 417 1,406 17 Switzerland 895 699 776 645 776 345 189 179 155 18 United Kingdom 10,138 17,161 12,737 12,165 12,737 13,145 8,765 6,610 5,980 iy Canada 632 1,401 2,392 651 2,392 1,045 539 389 693 20 Latin America and Caribbean 1,783 1,668 1,386 1,067 1,386 965 1,320 11,,335511 1,495 21 Bahamas 59 236 141 10 141 17 6 11 7 22 Bermuda 147 50 229 64 229 86 49 73 101 23 Brazil 57 78 143 52 143 91 76 154 152 24 British West Indies 866 1,030 604 669 604 517 845 834 957 25 Mexico 12 17 26 76 26 21 51 23 59 26 Venezuela 2 1 1 1 1 1 1 1 2 27 5,988 6.423 5,394 6,239 5,394 5,024 4,315 4,005 3,785 28 Japan 5,436 5,869 5,085 5,725 5,085 4,767 3,869 3,754 3,612 2y Middle Eastern oil-exporting countries' 27 25 32 23 32 23 0 0 0 30 Africa 150 38 60 33 60 33 29 31 28 31 Oil-exporting countries2 122 0 0 0 0 0 0 0 0 32 All other3 66 340 643 452 643 676 651 650 665 Commercial liabilities 33 Europe 7,700 9,767 10,228 9,343 10,228 9,951 9,987 11,010 10,032 34 Belgium and Luxembourg 331 479 666 703 666 565 557 623 278 35 France 481 680 764 782 764 840 612 740 920 36 Germany 767 1,002 1,274 945 1,274 1,068 1,219 1,408 1,394 37 Netherlands 500 766 439 452 439 443 485 440 429 38 Switzerland 413 624 375 400 375 407 349 507 499 39 United Kingdom 3,568 4.303 4,086 3,829 4,086 4,041 3,743 4,286 3,697 40 Canada 1,040 1.090 1,175 1.150 1,175 1,347 1,206 1,504 1,390 41 Latin America and Caribbean 1,740 2,574 2,176 2,224 2,176 2,051 2,285 11,,884400 1,619 42 Bahamas 1 63 16 38 16 27 14 4488 14 43 Bermuda 205 297 203 180 203 174 209 168 198 44 Brazil 98 196 220 233 220 249 246 256 152 45 British West Indies 56 14 12 23 12 5 27 5 10 46 Mexico 416 665 565 562 565 520 557 511 347 47 Venezuela 221 328 261 322 261 219 196 230 202 48 Asia 10,421 13,422 14,966 14,628 14,966 14,672 13,611 13,538 12,322 4y Japan 3,315 4,614 4,500 4,553 4,500 4,372 3,995 3,779 3,808 50 Middle Eastern oil-exporting countries' 1,912 2.168 3,111 2.984 3,111 3,138 3,194 3,582 2,851 51 Africa 619 1,040 874 929 874 833 921 810 794 52 Oil-exporting countries" 254 532 408 504 408 376 354 372 393 53 Other3 687 840 1,086 1,156 1,086 1,136 1,101 1,245 1,141 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 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999955 11999966 11999977 Sept. Dec. Mar. June Sept. Dec.p 1 Total 52,509 65,897 68,128 70,506 68,128 71,004 63,202 67,976 77,543 7 Payable in dollars 48,711 59,156 62,173 64,144 62,173 65,359 57,601 62,034 72,263 3 Payable in foreign currencies 3,798 6,741 5,955 6,362 5,955 5,645 5,601 5,942 5,280 By type 4 Financial claims 27,398 37,523 36,959 41,805 36,959 40,301 32,355 37,262 46,324 Deposits 15,133 21,624 22,909 23,951 22,909 20,863 14,762 15,406 30,192 6 Payable in dollars 14,654 20,852 21,060 22,392 21,060 19,155 13,084 13,374 28,549 7 Payable in foreign currencies 479 772 1,849 1,559 1,849 1,708 1,678 2,032 1,643 8 Other financial claims 12,265 15,899 14,050 17,854 14,050 19,438 17,593 21,856 16,132 <3 Payable in dollars 10,976 12,374 11,806 14,795 11,806 16,981 14,918 19,867 14,124 10 Payable in foreign currencies 1,289 3,525 2,244 3,059 2,244 2,457 2,675 1,989 2,008 11 Commercial claims 25,111 28,374 31,169 28,701 31,169 30,703 30,847 30,714 31,219 17 Trade receivables 22,998 25,751 27,536 25,110 27,536 26,888 26,764 26,330 27,211 13 Advance payments and other claims 2,113 2,623 3,633 3,591 3,633 3,815 4,083 4,384 4,008 14 Payable in dollars 23,081 25,930 29,307 26,957 29,307 29,223 29,599 28,793 29,590 15 Payable in foreign currencies 2,030 2,444 1,862 1,744 1,862 1,480 1,248 1,921 1,629 By area or country Financial claims 16 Europe 7,609 11,085 14,999 15,608 14,999 14,187 14,105 14,473 12,362 17 Belgium and Luxembourg 193 185 406 360 406 378 518 496 661 18 France 803 694 1,015 1,112 1,015 902 810 1,140 863 19 Germany 436 276 427 352 427 393 290 359 379 70 Netherlands 517 493 677 764 677 911 975 867 875 71 Switzerland 498 474 434 448 434 401 403 409 414 22 United Kingdom 4,303 7,922 10,337 11,000 10,337 9,289 9,639 9,849 7,765 23 Canada 2,851 3,442 3,313 4,279 3,313 4,688 3,020 4,090 2,502 74 Latin America and Caribbean 14,500 20,032 15,543 19,176 15,543 18,207 11,967 15,758 27,714 75 Bahamas 1,965 1,553 2,308 2,442 2,308 1,316 1,306 2,105 403 76 Bermuda 81 140 108 190 108 66 48 63 39 77 Brazil 830 1,468 1,313 1,501 1,313 1,408 1,394 710 835 78 British West Indies 10,393 15,536 10,462 12,957 10,462 13,551 7,349 10,960 24,388 79 Mexico 554 457 537 508 537 967 1,089 1,122 1,245 30 Venezuela 32 31 36 15 36 47 57 50 55 31 1,579 2,221 2,133 2,015 2,133 2,174 2,376 2,121 3,026 32 Japan 871 1,035 823 999 823 791 886 928 1,194 33 Middle Eastern oil-exporting countries' 3 22 11 15 11 9 12 13 9 34 Africa 276 174 319 174 319 325 155 157 160 35 Oil-exporting countries2 5 14 15 16 15 16 15 16 16 36 All other3 583 569 652 553 652 720 732 663 560 Commercial claims 37 Europe 9,824 10,443 12,120 10,486 12,120 12,854 12,882 13,029 13,249 38 Belgium and Luxembourg 231 226 328 331 328 232 216 219 238 39 France 1,830 1,644 1,796 1,642 1,796 1,939 1,955 2,098 2,172 40 Germany 1,070 1,337 1,614 1,395 1,614 1,670 1,757 1,502 1,822 41 Netherlands 452 562 597 573 597 534 492 463 467 47 Switzerland 520 642 554 381 554 476 418 546 484 43 United Kingdom 2,656 2,946 3,660 2,904 3,660 4,828 4,664 4,681 4,769 44 Canada 1,951 2,165 2,660 2,649 2,660 2,882 2,779 2,291 2,595 45 Latin America and Caribbean 4,364 5,276 5,750 5,028 5,750 5,481 6,082 5,773 6,328 46 Bahamas 30 35 27 22 27 13 12 39 24 47 Bermuda 272 275 244 128 244 238 359 173 536 48 Brazil 898 1,303 1,162 1,101 1,162 1,128 1,183 1,062 992 49 British West Indies 79 190 109 98 109 88 110 91 137 50 Mexico 993 1,128 1,392 1,219 1,392 1,302 1,462 1,356 1,574 51 Venezuela 285 357 576 418 576 441 585 566 401 57 7,312 8,376 8,713 8,576 8,713 7,638 7,367 7,190 7,194 53 Japan 1,870 2,003 1,976 2,048 1,976 1,713 1,757 1,789 1,681 54 Middle Eastern oil-exporting countries 974 971 1,107 987 1,107 987 1,127 967 1,131 55 Africa 654 746 680 764 680 613 657 740 712 56 Oil-exporting countries2 87 166 119 207 119 122 116 128 165 57 Other3 1,006 1,368 1,246 1,198 1,246 1,235 1,080 1,691 1,141 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 • June 1999 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1999 1998 1999 Transaction, and area or country 1997 1998 Ja F n e . b — . Aug. Sept. Oct. Nov. Dec. Jan.r Feb.p U.S. corporate securities STOCKS 1 Foreign purchases 1,097,958 1,596,255 315,351 141.566 137,418 145,588 126,571 138,942 155,819 159,532 2 Foreign sales 1,028,361 1,542,099 307,271 139.722 147,891 142,831 119,042 134,306 152,303 154,968 3 Net purchases, or sales ( —) 69,597 54,156 8,080 1,844 -10,473 2,757 7,529 4,636 3,516 4,564 4 Foreign countries 69,754 54,536 8,066 1,843 -10,430 2,754 7,546 4,634 3,502 4,564 5 Europe 62,688 72,349 12,413 5,459 2,182 -249 4,406 2,441 6,048 6,365 6 France 6,641 6,099 362 988 85 360 50 -614 537 -175 / Germany 9,059 10,609 1,907 1,326 1,281 68 372 -189 11,,003355 872 8 Netherlands 3,831 8,326 1,042 163 876 1,009 1,816 332 8866 956 9 Switzerland 7,848 6,269 572 -277 -307 -1,974 -420 -314 -10 582 10 United Kingdom 22,478 24,336 6,688 1.740 700 632 1,902 3,154 3,893 2,795 11 Canada -1,406 -4,766 976 -276 -195 -507 -201 -976 728 248 12 Latin America and Caribbean 5,203 781 -2,558 610 -11,766 2,058 3,691 3.088 -1,279 -1,279 13 Middle East1 383 -1,082 -88 -157 148 -177 -334 -219 152 -240 14 Other Asia 2,072 -12,554 -2,936 -4,112 -678 1,823 -8 155 -2,306 -630 15 Japan 4,787 -1,407 -960 214 519 597 822 141 -616 -344 16 Africa 472 624 33 159 -98 -217 41 16 22 11 1/ Other countries 342 -816 226 160 -23 23 -49 129 137 89 18 Nonmonetary international and regional organizations -157 -380 14 1 -43 3 -17 2 14 0 BONDS2 19 Foreign purchases 610,116 905,272 141,009 67.529 100,186 108,678 81,943 58,884 66,585 74,424 20 Foreign sales 475,958 727,866 109,705 58,678 92,663 105,437 60,480 41,141 53,759 55,946 21 Net purchases, or sales (—) 134,158 177,406 31,304 8,851 7,523 3,241 21,463 17,743 12,826 18,478 22 Foreign countries 133,595 177,749 31,262 8,813 7,473 3,230 22,433 17,665 12,825 18,437 23 Europe 71,631 127,932 16,755 5,813 12,323 12,062 16,717 9,099 2,857 13,898 24 France 3,300 3,390 269 233 184 701 235 -170 145 124 25 Germany 2,742 4,381 1,666 139 268 -135 435 217 398 1,268 26 Netherlands 3,576 3,490 389 32 275 704 64 996 60 329 2/ Switzerland 187 4,856 938 100 1,003 -50 251 -36 403 535 28 United Kingdom 54,134 97,683 11,002 3,924 9,760 10,182 13,777 6,863 703 10,299 29 Canada 6,264 6,077 575 439 443 292 558 184 100 475 30 Latin America and Caribbean 34.733 24,731 8,439 1,592 -2,927 -11,135 2,295 2,688 6,382 2,057 31 Middle East1 2,155 4,994 1.750 -188 -58 2 835 2,472 1,436 314 32 Other Asia 16,996 12,679 3,471 1.709 -1,847 1,185 1,904 3,152 2,032 1,439 33 Japan 9,357 8,381 726 -10 -713 1,624 1,194 2,238 561 165 34 Africa 1,005 190 306 -17 -61 55 24 16 40 266 35 Other countries 811 1,146 -34 -535 -400 769 100 54 -22 -12 36 Nonmonetary international and regional organizations 563 -343 42 38 50 11 -970 78 1 41 Foreign securities 37 Stocks, net purchases, or sales ( —) -40,942 8,503 6,966 5,557 6,107 8,046 -2,729 841 3,305 3,661 38 Foreign purchases 756,015 940,678 151,863 74,376 89,496 90,407 70,402 69,578 77,922 73,941 39 Foreign sales 796,957 932,175 144,897 68,819 83,389 82,361 73,131 68,737 74,617 70,280 40 Bonds, net purchases, or sales (-) -48,171 — 18,957R -2,274 1,049 3,384 15,980 -918 -4,684R -2,304 30 41 Foreign purchases 1,451,704 1,335,314 122,214 139,393 152,881 102,202 55,573 56,845 56,072 66,142 42 Foreign sales 1,499,875 1,354,27 lr 124,488 138,344 149,497 86,222 56,491 61,529R 58,376 66,112 43 Net purchases, or sales (—), of stocks and bonds .... -89,113 — 10,454r 4,692 6,606 9,491 24,026 -3,647 —3,843r 1,001 3,691 44 Foreign countries -88,921 — 10,125r 4,295 6,623 9,492 24,119 -3,641 —3,683r 880 3,415 45 Europe -29,874 11,139 7,354 1,202 6.007 10,792 2,326 3,072 403 6,951 46 Canada -3,085 -1,163 -861 2,667 -1,118 946 562 -4,828 -310 -551 4/ Latin America and Caribbean -25,258 - 12,860R 3,187 -1,196 1,214 4,585 -4,074 - 19R 2,355 832 48 -25,123 -3,326 -4,902 4,227 3,550 6,699 -2,064 -1,489 -1,558 -3,344 49 Japan -10,001 -1,663 -3,249 1,741 2,239 6,134 -2,390 -1,882 141 -3,390 50 Africa -3,293 -1,411 -3 -122 -163 4 -56 5 22 -25 51 Other countries -2,288 -2,504 -480 -155 2 1,093 -335 -424 -32 -448 52 Nonmonetary international and regional organizations -192 -329 397 -17 -1 -93 -6 -160 121 276 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 Transactions' Millions of dollars; net purchases, or sales (—) during period 1999 1998 1999 AArreeaa oorr ccoouunnttrryy 11999977 11999988 Jan.— Aug. Sept. Oct. Nov. Dec. Jan.r Feb.p Feb. 1 Total estimated 184,171 46,677 -18,788 -15,795 -5,270 -2,193 25,456 10,549 -4,165 -14,623 2 Foreign countries 183,688 44,208 -18,289 -15,795 -5,261 -2,855 25,556 9,426 -4,107 -14,182 3 Europe 144,921 21,586 -5.835 -2,823 -2,771 -9,869 5,475 8,077 1,519 -7,354 4 Belgium and Luxembourg 3,427 3,805 -25 667 113 -606 510 2,148 -229 204 Germany 22,471 148 -51 -1,799 894 1,171 307 -556 -268 217 6 Netherlands 1,746 -5,533 1.763 -3,081 -579 1,543 -1,156 898 2,347 -584 7 Sweden -465 1,486 -65 -152 -330 193 586 581 163 -228 8 Switzerland 6,028 5,240 -2,124 -680 363 2,811 531 175 -2,171 47 9 United Kingdom 98,253 12,120 -5.003 8,000 2,217 -13,168 3,207 3,074 718 -5,721 in Other Europe and former U.S.S.R 13,461 4,320 -330 -5,778 -5,449 -1,813 1,490 1,757 959 -1,289 ii Canada -811 572 -602 -2,088 -663 -1,188 3,694 614 -1,729 1,127 i? Latin America and Caribbean -2,554 -3,735 -11,658 -5,940 -1,233 -491 1,961 -3,817 -5,621 -6,037 13 Venezuela 655 59 446 -1,308 6 -35 327 108 -17 463 14 Other Latin America and Caribbean -549 9,450 -4,003 3,914 2,982 -1,288 -5.411 -165 -1,979 -2,024 IS Netherlands Antilles -2.660 -13,244 -8,101 -8,546 -4,221 832 7,045 -3,760 -3,625 -4,476 16 39,567 27,383 94 -3,856 -207 7,756 13,632 4,347 2,310 -2,216 17 Japan 20,360 13,048 -3,258 299 128 1,233 7,311 3,750 -2,134 -1,124 18 Africa 1,524 751 11 62 81 87 145 16 17 -6 19 Other 1,041 -2,349 -299 -1,150 -468 850 649 189 -603 304 20 Nonmonetary international and regional organizations 483 2,469 -499 0 -9 662 -100 1,123 -58 -441 21 International 621 1,502 -448 -10 -288 645 -19 1,084 -77 -371 22 Latin American regional 170 199 4 8 -5 0 -6 2 3 1 MEMO 73 Foreign countries 183,688 44,208 -18,289 -15,795 -5,261 -2,855 25,556 9,426 -4,107 -14,182 74 Official institutions 43,959 4,123 -1,225 -16,920 -10,304 9,001 11,843 5,274 2,474 -3,699 25 Other foreign 139,729 40,085 -17,064 1,125 5,043 -11,856 13,713 4,152 -6,581 -10,483 Oil-exporting countries 76 Middle East2 7,636 -16,554 3,462 -4,160 -5,837 -276 233 -2,442 4,080 --661188 27 -12 2 0 1 0 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 • June 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 Nov. Dec. Jan. Feb. Mar. Apr. Exchange Rates COUNTRY/CURRENCY UNIT 1 Australia/dollar 78.28 74.37 62.91 63.49 61.82 63.20 63.99 63.08 64.20 2 Austria/schilling 10.589 12.206 12.379 11.840 11.746 n.a. n.a. n.a. n.a. 3 Belgium/franc 30.97 35.81 36.31 34.71 34.44 n.a. n.a. n.a. n.a. 4 Brazil/real 1.0051 1.0779 1.1605 1.1932 1.2052 1.5120 1.9261 1.9057 1.7025 5 Canada/dollar 1.3638 1.3849 1.4836 1.5404 1.5433 1.5194 1.4977 1.5176 1.4881 6 China, P.R./yuan 8.3389 8.3193 8.3008 8.2778 8.2780 8.2789 8.2755 8.2792 8.2792 7 Denmark/krone 5.8003 6.6092 6.7030 6.3960 6.3531 6.4194 6.6379 6.8287 6.9475 8 European Monetary Union/euro3 . . n.a. n.a. n.a. n.a. n.a. 1.1591 1.1203 1.0886 1.0701 9 Finland/markka 4.5948 5.1956 5.3473 5.1163 5.0769 n.a. n.a. n.a. n.a. 10 France/franc 5.1158 5.8393 5.8995 5.6422 5.5981 n.a. n.a. n.a. n.a. 11 Germany/deutsche mark 1.5049 1.7348 1.7597 1.6827 1.6698 n.a. n.a. n.a. n.a. 12 Greece/drachma 240.82 273.28 . 295.70 282.64 280.43 278.91 287.41 296.36 304.26 13 Hong Kong/dollar 7.7345 7.7431 7.7467 7.7432 7.7471 7.7486 7.7490 7.7493 7.7495 14 India/rupee 35.51 36.36 41.36 42.43 42.59 42.55 42.53 42.52 42.80 15 Ireland/pound* 159.95 151.63 142.48 147.77 148.76 n.a. n.a. n.a. n.a. 16 Italy/lira 1,542.76 1,703.81 1,736.85 1,664.91 1,653.23 n.a. n.a. n.a. n.a. 17 Japan/yen 108.78 121.06 130.99 120.29 117.07 113.29 116.67 119.47 119.77 18 Malaysia/ringgit 2.5154 2.8173 3.9254 3.8000 3.8014 3.8000 3.8000 3.8000 3.8000 19 Mexico/peso 7.600 7.918 9.152 9.969 9.907 10.128 10.006 9.732 9.430 20 Netherlands/guilder 1.6863 1.9525 1.9837 1.8969 1.8816 n.a. n.a. n.a. n.a. 21 New Zealand/dollar' 68.77 66.25 53.61 53.40 52.23 53.88 54.35 53.45 54.27 22 Norway/krone 6.4594 7.0857 7.5521 7.4562 7.6050 7.4532 7.7240 7.8151 7.7750 23 Portugal/escudo 154.28 175.44 180.25 172.52 171.19 n.a. n.a. n.a. n.a. 24 Singapore/dollar 1.4100 1.4857 1.6722 1.6378 1.6515 1.6791 1.7004 1.7292 1.7134 25 South Africa/rand 4.3011 4.6072 5.5417 5.6511 5.9030 5.9931 6.1146 6.2136 6.1186 26 South Korea/won 805.00 947.65r 1,400.40 1,294.01 1,213.22 1,175.11 1,188.84 1,229.72 1,209.96 27 Spain/peseta 126.68 146.53 149.41 143.05 142.08 n.a. n.a. n.a. n.a. 28 Sri Lanka/rupee 55.289 59.026 65.006 67.578 68.117 68.630 69.070 69.570 69.588 29 Sweden/krona 6.7082 7.6446 7.9522 8.0140 8.0716 7.8188 7.9532 8.2144 8.3293 30 Switzerland/franc 1.2361 1.4514 1.4506 1.3852 1.3604 1.3856 1.4272 1.4660 1.4971 31 Taiwan/dollar 27.468 28.775 33.547 32.603 32.337 32.300 32.564 33.165 32.965 32 Thailand/baht 25.359 31.072 41.262 36.527 36.276 36.622 37.137 37.557 37.631 33 United Kingdom/pound2 156.07 163.76 165.73 166.11 167.08 164.98 162.76 162.13 160.89 34 Venezuela/bolivar 417.19 488.39 548.39 569.66 565.89 569.80 577.32 580.06 587.79 Indexes3 NOMINAL 35 G-10 (March 1973= 100)4 87.34 96.38 98.85 95.46 94.61 n.a. n.a. n.a. n.a. 36 Broad (January 1997= 100)5 97.43 104.47 116.25 115.34 114.56 114.68 116.37 117.80 117.15 37 Major currencies (March 1973= 100)6 .. 85.23 91.85 96.52 94.23 93.40 92.37 93.76 95.69 95.76 38 Other important trading partners (January 1997= 100)7 98.25 104.67 125.70 127.31 126.80 128.98 130.83 131.03 129.24 REAL 39 Broad (March 1973=100)' 85.99r 90.59r 98.46r 96.7 r 95.93r 96.041" 97.10r 98.34r 97.77 40 Major currencies (March 1973= 100)6 . . 85.88r 93.24r 98.361" 96.24r 95.47r 94.88r 96.35r 98.17r 98.30 41 Other important trading partners (March 1973= 100)7 92.52 93.61r 105.83r !04.47r 103.61r 104.75r 105.30r 105.79r 104.18 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 Resen'e 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 U.S. 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 U.S. 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

157 Federal Reserve Bulletin • June 1999 Index to Statistical Tables References are to pages A3-A62 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Federal finance Assets and liabilities (See also Foreigners) Debt subject to statutory limitation, and types and ownership Commercial banks, 15-21 of gross debt, 27 Domestic finance companies, 32, 33 Receipts and outlays, 25, 26 Federal Reserve Banks, 10 Treasury financing of surplus, or deficit, 25 Foreign-related institutions, 20 Treasury operating balance, 25 Automobiles Federal Financing Bank, 30 Consumer credit, 36 Federal funds, 23, 25 Production, 44, 45 Federal Home Loan Banks, 30 Federal Home Loan Mortgage Corporation, 30, 34, 35 BANKERS acceptances, 5, 10, 22, 23 Federal Housing Administration, 30, 34, 35 Bankers balances, 15-21. (See also Foreigners) Federal Land Banks, 35 Bonds (See also U.S. government securities) Federal National Mortgage Association, 30, 34, 35 New issues, 31 Federal Reserve Banks Rates, 23 Condition statement, 10 Business activity, nonfinancial, 42 Discount rates (See Interest rates) Business loans (See Commercial and industrial loans) U.S. government securities held, 5, 10, 11, 27 Federal Reserve credit, 5, 6, 10, 12 CAPACITY utilization, 43 Federal Reserve notes, 10 Capital accounts Federally sponsored credit agencies, 30 Commercial banks, 15-21 Finance companies Federal Reserve Banks, 10 Assets and liabilities, 32 Certificates of deposit, 23 Business credit, 33 Commercial and industrial loans Loans, 36 Commercial banks, 15-21 Paper, 22, 23 Weekly reporting banks, 17, 18 Float, 5 Commercial banks Flow of funds, 37-41 Assets and liabilities, 15-21 Foreign currency operations, 10 Commercial and industrial loans, 15-21 Foreign deposits in U.S. banks, 5 Consumer loans held, by type and terms, 36 Foreign exchange rates, 62 Real estate mortgages held, by holder and property, 35 Foreign-related institutions, 20 Time and savings deposits, 4 Foreign trade, 51 Commercial paper, 22, 23, 32 Foreigners Condition statements (See Assets and liabilities) Claims on, 52, 55, 56, 57, 59 Construction, 42, 46 Liabilities to, 51, 52, 53, 58, 60, 61 Consumer credit, 36 Consumer prices, 42 GOLD Consumption expenditures, 48, 49 Certificate account, 10 Corporations Stock, 5, 51 Profits and their distribution, 32 Government National Mortgage Association, 30, 34, 35 Security issues, 31, 61 Gross domestic product, 48, 49 Cost of living (See Consumer prices) Credit unions, 36 HOUSING, new and existing units, 46 Currency in circulation, 5, 13 Customer credit, stock market, 24 INCOME, personal and national, 42, 48, 49 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 Consumer credit, 36 Deposits (See also specific types) Federal Reserve Banks, 7 Commercial banks, 4, 15-21 Money and capital markets, 23 Federal Reserve Banks, 5, 10 Mortgages, 34 Interest rates, 14 Prime rate, 22 Discount rates at Reserve Banks and at foreign central banks and International capital transactions of United States, 50-61 foreign countries (See Interest rates) International organizations, 52, 53, 55, 58, 59 Discounts and advances by Reserve Banks (See Loans) Inventories, 48 Dividends, corporate, 32 Investment companies, issues and assets, 32 Investments (See also specific types) EMPLOYMENT, 42 Commercial banks, 4, 15-21 Euro, 62 Federal Reserve Banks, 10, 11 Financial institutions, 35 FARM mortgage loans, 35 Federal agency obligations, 5, 9, 10, 11, 28, 29 LABOR force, 42 Federal credit agencies, 30 Life insurance companies (See Insurance companies) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

159 Federal Reserve Bulletin • June 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 PATRICK M. PARKINSON, Associate Director OFFICE OF THE SECRETARY 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 JANICE SHACK-MARQUEZ, Assistant Director DIVISION OF BANKING CHARLES S. STRUCKMEYER, Assistant Director SUPERVISION AND REGULATION ALICE PATRICIA WHITE, Assistant Director RICHARD SPILLENKOTHEN, Director JOYCE K. ZICKLER, Assistant Director STEPHEN C. SCHEMERING, Deputy Director GLENN B. CANNER, Senior Adviser HERBERT A. BIERN, Associate Director 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 JACK P. JENNINGS, Deputy Associate Director DAVID E. LINDSEY, Deputy Director MICHAEL G. MARTINSON, Deputy Associate Director BRIAN F. MADIGAN, Associate Director SIDNEY M. SUSSAN, Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director MOLLY S. WASSOM, Deputy Associate Director VINCENT R. REINHART, 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

67 ROGER W. FERGUSON, JR. EDWARD M. GRAMLICH OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS STEPHEN R. MALPHRUS, 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 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 SHEILA CLARK, EEO Programs Director JEFF STEHM, Assistant Director DIVISION OF SUPPORT SERVICES OFFICE OF THE INSPECTOR GENERAL ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director BARRY R- SNYDER, Inspector General DAVID L. WILLIAMS, Assistant Director DONALD L. ROBINSON, Assistant Inspector General DIVISION OF INFORMATION TECHNOLOGY RICHARD C. STEVENS, Director MARIANNE M. EMERSON, Deputy Director TILLENA G. CLARK, 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

161 Federal Reserve Bulletin • June 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

69 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

163 Federal Reserve Bulletin • June 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, 1999. 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 States, its possessions, Canada, and Mexico. Elsewhere, The Federal Open Market Committee $35.00 per year or $.80 each. Federal Reserve Bank Board of Directors 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

71 STAFF STUDIES: Only Summaries Printed in the 163. CLEARANCE AND SETTLEMENT IN U.S. SECURITIES MAR- KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, BULLETIN 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 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by to be added to the mailing list for the series may be sent to 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. 111 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

165 Federal Reserve Bulletin • June 1999 ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (PAYMENT MUST ACCOMPANY REQUESTS) Annual Annual Approximate Corresponding Period or date to Release number and title USPS fax release Bulletin which data refer rate rate days' table numbers2 Weekly Releases H.2. Actions of the Board: $55.00 n.a. Friday Week ended Applications and Reports previous Received Saturday H.3. Aggregate Reserves of $20.00 n.a. Thursday Week ended 1.20 Depository Institutions and previous the Monetary Base3 Wednesday H.4.1. Factors Affecting Reserve Balances $20.00 n.a. Thursday Week ended 1.11, 1.18 of Depository Institutions and previous Condition Statement of Wednesday Federal Reserve Banks3 H.6. Money Stock, Liquid Assets, $35.00 n.a. Thursday Week ended 1.21 and Debt Measures3 Monday of previous week H.8. Assets and Liabilities of $30.00 n.a. Friday Week ended 1.26A-E Commercial Banks in the previous United States3 Wednesday H.10. Foreign Exchange Rates3 $20.00 $20.00 Monday Week ended 3.28 previous Friday H.15. Selected Interest Rates3 $20.00 $20.00 Monday Week ended 1.35 previous Friday Monthly Releases G.5. Foreign Exchange Rates3 $ 5.00 $ 5.00 First of month Previous month 3.28 G.13. Selected Interest Rates $ 5.00 $ 5.00 First Tuesday of Previous month 1.35 month G.15. Research Library—Recent No charge n.a. First of month Previous month Acquisitions G.17. Industrial Production and $15.00 n.a. Midmonth Previous month 2.12, 2.13 Capacity Utilization3 G.19. Consumer Credit3 $ 5.00 $ 5.00 Fifth working day Second month 1.55, 1.56 of month previous G.20. Finance Companies $ 5.00 n.a. End of month Second month 1.51, 1.52 previous Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

73 Annual Annual Approximate Corresponding Release number and title USPS fax release Period or date to Bulletin which data refer rate rate days' table numbers2 Quarterly Releases E.2. Survey of Terms of Lending $ 5.00 $5.00 Midmonth of February, May, 4.23 March, June, August, and September, and November December E.7. List of Foreign Margin Stocks No charge n.a. March and March and September September E. 11. Geographical Distribution of $ 5.00 n.a. 15th of March, Previous quarter Assets and Liabilities of % June, Major Foreign Branches of September, and U.S. Banks December E.15. Agricultural Finance Databook $ 5.00 n.a. End of March, January, April, June, July, and September, and October December E.16. Country Exposure Lending $ 5.00 n.a. January, April, Previous quarter Survey July, and October Z. 1. Flow of Funds Accounts $25.00 n.a. Second week of Previous quarter 1.57, 1.58, of the United States: March, June, 1.59, 1.60 Flows and Outstandings3 September, and December Annual Release C.2. Aggregate Summaries of Annual $ 5.00 n.a. February End of previous Surveys of Securities Credit June Extension 1. Please note that for some releases there is normally a certain variability in the release date because of reporting or processing procedures. Moreover, for all series unusual circumstances may, from time to time, result in a release date being later than anticipated. 2. The data in some releases are also reported in the Bulletin statistical appendix. 3. These releases are also available on the Board's World Wide Web site (http://www.federalreserve.gov) under Domestic and International Research, Statistical releases. n.a. Not available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

167 Federal Reserve Bulletin • June 1999 Maps of the Federal Reserve System tetew*^" HSHifJii ADELPHIA H 0 9L YORK • B i & ki v* JW ALASKA HAWAII # LEGEND fiof/i 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

75 1-A 2-B 3-C 4-D 5-E ME Pittsburgh Baltimore MD X VT » cinnati NH Buffalo 4*f NY CT BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H Nashville T N —9P Tv • Birmingham. • si -I 1 sville " # \ llllliPck. 7alSMkville > New Drrll eans Miami ATLANTA CHICAGO ST. LOUIS 9-1 MINNEAPOLIS 10-J 12-L wy m tm I* oktafaoiBaCiv^ * ' KANSAS CITY 11-K DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

169 Federal Reserve Bulletin • June 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. Tignanelli1 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. Gambs 1 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

All 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

171 Federal Reserve Bulletin • June 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.l Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis