Federal Reserve Bulletin, 1999-08

Volume 85 • Number 8 • August 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 529 MONETARY POLICY REPORT TO THE defining characteristic of the current wave of CONGRESS technology is the role of information; the recent years' remarkable surge in the availability of The U.S. economy has continued to perform real-time information has armed firms with well in 1999. The ongoing economic expansion detailed data to fine-tune product specifications has moved into a near-record ninth year, with to most individual customer needs. He further real output expanding vigorously, the unemploystates that as we contemplate the appropriate ment rate hovering around lows last seen in public policies for an economy experiencing 1970, and the underlying trends in inflation rapid technology advancement, we should strive remaining subdued. Productivity-enhancing to maintain the flexibility of our labor and capiinvestments by businesses, spurred by the availtal markets that has spurred the continuous ability of new technologies at increasingly replacement of capital facilities embodying attractive prices, have held down the rise in older technologies with facilities reflecting the costs and prices and have boosted living stannewest innovations (Testimony before the Joint dards. Two of the major threats faced by the Economic Committee of the U.S. Congress, economy in late 1998—economic downturns in June 14, 1999). many foreign nations and turmoil in financial markets around the world—receded over the 558 Laurence H. Meyer, member, Board of Goverfirst half of this year. The Federal Open Market nors, discusses the Federal Reserve's views on Committee was concerned that as economic recent developments relating to the allowance activity abroad strengthened, the firming of for loan losses and testifies that the adequacy of commodity and other prices might foster a less the allowance for loan losses is a critical issue favorable inflation environment. To gain some both for the safety and soundness of banks and greater assurance that the good inflation per- for the transparency of financial statements. He formance of the economy would continue, the testifies further that given the differing missions Committee decided at its June meeting to and perspectives of bank and securities regulareverse a portion of the easing undertaken last tors, the Federal Reserve and the other banking fall, when global financial markets were dis- agencies have agreed to work closely with the rupted, by raising its target for the overnight SEC to provide clear and consistent guidance federal funds rate from 43/4 percent to 5 percent. on this important issue (Testimony before the Subcommittee on Financial Institutions and Consumer Credit of the House Committee on 553 INDUSTRIAL PRODUCTION AND CAPACITY Banking and Financial Services, June 16, 1999). UTILIZATION FOR JUNE 1999 561 Chairman Greenspan testifies that the way Industrial production rose 0.2 percent in June, to America does business, including the interaction 134.2 percent of its 1992 average, after gains of among the various economic players in our 0.2 percent in May and 0.3 percent in April. At economy, is in the midst of a significant transfor- 80.3 percent in June, capacity utilization for mation, though the pace of change is unclear; total industry was little changed from the begin- and as a consequence, many of the empirical ning of the year but was down 1.2 percentage regularities depicting the complex of economic points from June 1998. relationships on which policymakers rely have been markedly altered. Further, he testifies that monetary policy is best primarily focused on 556 STATEMENTS TO THE CONGRESS stability of the general level of prices of goods Alan Greenspan, Chairman, Board of Gover- and services as the most credible means to nors, testifies that the remarkable run of growth achieve sustainable economic growth (Testiof the U.S. economy appears to have its roots mony before the Joint Economic Committee of in ongoing advances in technology and that the the U.S. Congress, June 17, 1999). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

565 ANNOUNCEMENTS 597 MEMBERSHIP OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE Resignation of Alice M. Rivlin as Vice Chair of SYSTEM, 1913-99 the Board of Governors. List of appointive and ex officio members. Action by the Federal Open Market Committee at its June 30, 1999, meeting. AI FINANCIAL AND BUSINESS STATISTICS Request for nominations for appointments to the These tables reflect data available as of Consumer Advisory Council. June 28, 1999. Issuance of guidance on overseeing large and complex banking organizations. A3 GUIDE TO TABULAR PRESENTATION Publication by the Basel Committee of a con- A4 Domestic Financial Statistics sultative paper on a new capital adequacy A42 Domestic Nonfinancial Statistics framework. A50 International Statistics Public meeting on the proposed merger of A63 GUIDE TO STATISTICAL RELEASES AND Fleet Financial Group, Inc. with BankBoston SPECIAL TABLES Corporation. Enforcement actions. A76 INDEX TO STATISTICAL TABLES Publication of the June 1999 update to the Bank A78 BOARD OF GOVERNORS AND STAFF Holding Company Supervision Manual. Changes in Board staff. A80 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS 570 MINUTES OF THE FEDERAL OPEN MARKET COMMITTEE MEETING HELD ON A82 FEDERAL RESERVE BOARD PUBLICATIONS MAY 18, 1999 At its meeting on May 18, 1999, the Committee A84 MAPS OF THE FEDERAL RESERVE SYSTEM adopted a directive that called for maintaining conditions in reserve markets that would be A86 FEDERAL RESERVE BANKS, BRANCHES, consistent with an unchanged federal funds rate AND OFFICES of 43/ percent and that was tilted toward the 4 possibility of a firming in the stance of monetary policy. 577 LEGAL DEVELOPMENTS Various bank holding company, bank service corporation, and bank merger orders; and pending cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Lynn S. Fox, 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

Monetary Policy Report to the Congress Report submitted to the Congress on July 22, 1999, imports fell less rapidly, raising overall inflation rates. pursuant to the Full Employment and Balanced Despite improvements in technology and business Growth Act of 1978 processes that have yielded striking gains in efficiency, the robust growth of aggregate demand, fueled by rising equity wealth and readily available credit, produced even tighter labor markets in the first MONETARY POLICY AND THE ECONOMIC half of 1999 than in the second half of 1998. If this OUTLOOK trend were to continue, labor compensation would The U.S. economy has continued to perform well in begin climbing increasingly faster than warranted by 1999. The ongoing economic expansion has moved productivity growth and put upward pressure on into a near-record ninth year, with real output expand- prices. Moreover, the Federal Open Market Commiting vigorously, the unemployment rate hovering tee (FOMC) was concerned that as economic activity around lows last seen in 1970, and underlying trends abroad strengthened, the firming of commodity and in inflation remaining subdued. Responding to the other prices might also foster a less favorable inflaavailability of new technologies at increasingly tion environment. To gain some greater assurance attractive prices, firms have been investing heavily in that the good inflation performance of the economy new capital equipment; this investment has boosted would continue, the Committee decided at its June productivity and living standards while holding down meeting to reverse a portion of the easing undertaken the rise in costs and prices. last fall when global financial markets were dis- Two of the major threats faced by the economy in rupted; the Committee's target for the overnight fedlate 1998—economic downturns in many foreign eral funds rate, a key indicator of money market nations and turmoil in financial markets around the conditions, was raised from 43A percent to 5 percent. world—receded over the first half of this year. Economic conditions overseas improved on a broad front. In Asia, activity picked up in the emerging-market Monetary Policy, Financial Markets, and the economies that had been battered by the financial Economy over the First Half of 1999 crises of 1997. The Brazilian economy—Latin America's largest—exhibited a great deal of resil- The FOMC met in February and March against the ience with support from the international community, backdrop of continued rapid expansion of the U.S. in the wake of the devaluation and subsequent float- economy. Demand was strong, employment growth ing of the real in January. These developments, along was brisk, and labor markets were tight. Nonetheless, with the considerable easing of monetary policy in price inflation was still low, held in check by a sublate 1998 and early 1999 in a number of regions, stantial gain in productivity, ample manufacturing including Europe, Japan, and the United States, fos- capacity, and low inflation expectations. tered a markedly better tone in the world's financial Activity was supported by a further settling down markets. On balance, U.S. equity prices rose substan- of financial markets in the first quarter after a period tially, and in credit markets, risk spreads receded of considerable turmoil in the late summer and fall of toward more typical levels. Issuance of private debt 1998. In that earlier period, which followed Russia's securities ballooned in late 1998 and early 1999, in moratorium on a substantial portion of its debt paypart making up for borrowing that was postponed ments in mid-August, the normal functioning of U.S. when markets were disrupted. financial markets had been impaired as investors cut As these potentially contractionary forces dissi- back sharply their credit risk exposures and market pated, the risk of higher inflation in the United States liquidity dried up. The Federal Reserve responded resurfaced as the greatest concern for monetary pol- to these developments by trimming its target for the icy. Although underlying inflation trends generally overnight federal funds rate by 75 basis points in remained quiescent, oil prices rose sharply, other three steps. In early 1999, the devaluation and subsecommodity prices trended up, and prices of non-oil quent floating of the Brazilian real in mid-January Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

530 Federal Reserve Bulletin • August 1999 Selected interest rates 2/5 3/25 5/20 7/2 8/19 9/30 11/12 12/16 2/4 3/31 5/19 7/1 8/18 9/2910/15 11/17 12/22 2/3 3/30 5/18 6/30 1997 1998 1999 NOTE. The data are daily. Vertical lines indicate the days on which the tal axis are those on which either the FOMC held a scheduled meeting or a Federal Reserve announced a monetary policy action. The dates on the horizon- policy action was announced. Last observations are for July 19, 1999. heightened concerns for a while, but market condi- apart from a big jump in energy prices—were tions overall improved considerably. reported to have registered a sizable rise in April. At its February and March meetings, the FOMC At its May meeting, the FOMC believed that these left the stance of monetary policy unchanged. The developments tilted the risks toward further robust Committee expected that the growth of output might growth that would exert additional pressure on well slow sufficiently to bring production into close already taut labor markets and ultimately show enough alignment with the economy's enhanced through to inflation. Moreover, a turnaround in oil potential to forestall the emergence of a trend of ris- and other commodity markets meant that prices of ing inflation. Although domestic demand was still these goods would no longer be holding down inflaincreasing rapidly, it was anticipated to moderate tion, as they had over the past year. Yet, the economy over time in response to the buildup of large stocks to date had shown a remarkable ability to accommoof business equipment, housing units, and durable date increases in demand without generating greater goods and more restrained expansion in wealth in the underlying inflation trends, as the continued growth absence of appreciable further increases in equity of labor productivity had helped to contain cost presprices. Furthermore, the FOMC, after taking account sures. The uncertainty about the prospects for prices, of the near-term effects of the rise in crude oil prices, demand pressures, and productivity was large, and saw few signs that cost and price inflation was in the the Committee decided to defer any policy action. process of picking up. The unusual combination of However, in light of its increased concern about very high labor resource utilization and sustained low the outlook for inflation, the Committee adopted inflation suggested considerable uncertainty about the an asymmetric directive tilted toward a possible firmrelationship between output and prices. In this envi- ing of policy. The Committee also wanted to inform ronment, the Committee concluded that it could wait the public of this significant revision in its view, and for additional information about the balance of risks it announced a change in the directive immediately to the economic expansion. after the meeting. The announcement was the first By the time of the May FOMC meeting, demand under the Committee's policy of announcing changes was still showing considerable forward momentum, in the tilt of the domestic directive when it wants to and growth in economic activity still appeared to communicate a major shift in its view about the be running in excess of the rate of increase of the balance of risks to the economy or the likely direction economy's long-run capacity to expand output. Bor- of its future actions. rowers' heavy demands for credit were being met on In the time leading up to the FOMC's June meetrelatively favorable terms, and wealth was further ing, economic activity in the United States continued boosted by rapidly rising equity prices. Also, the to move forward at a brisk pace, and prospects in a economic and financial outlook for many emerging- number of foreign economies showed additional market countries was brighter. Trends in inflation improvement. Labor markets tightened slightly furwere still subdued, although consumer prices—even ther. The federal funds rate, however, remained at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 531 the lower level established in November 1998, when between the fourth quarters of 1998 and 1999. For the Committee took its last of three steps to counter 2000, the forecasts of real GDP are mainly in severe financial market strains. With those strains the 2Vi percent to 3 percent range. With this pace largely gone, the Committee believed that the time of expansion, the civilian unemployment rate is had come to reverse some of that accommodation, expected to remain close to the recent 4 lA percent and it raised the targeted overnight federal funds rate level over the next six quarters. 25 basis points, to 5 percent. Looking ahead, the The increases in income and wealth that have Committee expected demand to remain strong, but bolstered consumer demand over the first half of this it also noted the possibility that a further pickup in year and the desire to invest in new high-technology productivity could allow the economy to accommo- equipment that has boosted business demand during date this demand for some time without added infla- the same period should continue to stimulate spendtionary pressure. In light of these conflicting forces ing over the quarters ahead. However, several factors in the economy, the FOMC returned to a symmetric are expected to exert some restraint on the economy's directive. Nonetheless, with labor markets already momentum by next year. With purchases of durable tight, the Committee recognized that it needed to stay goods by both consumers and businesses having especially alert to signs that inflationary forces were risen still further and running at high levels, the emerging that could prove inimical to the economic stocks of such goods probably are rising more rapidly expansion. than is likely to be desired in the longer run, and the growth of spending should moderate. The increase in market interest rates should help to damp Economic Projections for 1999 and 2000 spending as well. And unless the extraordinary gains in equity prices of the past few years are extended, The members of the Board of Governors and the the impetus to spending from increases in wealth will Federal Reserve Bank presidents see good prospects diminish. for sustained, solid economic expansion through next Federal Reserve policymakers believe that this year. For this year, the central tendency of their year's rise in the consumer price index (CPI) will be forecasts of growth of real gross domestic product is larger than that in 1998, largely because of the 3Vz percent to 33A percent, measured as the change rebound in retail energy prices that has already occurred. Crude oil prices have moved up sharply, reversing the decline posted in 1998 and leading to a 1. Economic projections for 1999 and 2000 jump in the CPI this spring. For next year, the FOMC Percent participants expect the increase in the CPI to remain Federal Reserve governors around this year's pace, with a central tendency of and Reserve Bank presidents IInnddiiccaattoorr AAddmmiinniissttrraattiioonn11 2 percent to 2x/z percent. Futures market quotes sugo „ Central RanSe tendency gest that the prevailing expectation is that the rebound in oil prices has run its course now, and ample 1999 industrial capacity and productivity gains may help CChhaannggee,, ffoouurrtthh qquuaarrtteerr limit inflationary pressures in coming months as well. ttoo ffoouurrtthh qquuaarrtteerr 22 NNoommiinnaall GGDDPP 44443333////4444----5555''''////2222 5555----5555''''////2222 4444....8888 With labor utilization very high, though, and demand Real GDP 3333''''////4444----4444 VVVVhhhh----VVVVAAAA 3333....2222 Consumer price index 3 .. VVVVAAAA----VVVVAAAA 2222VVVV****----2222VVVViiii 2222....4444 still strong, significant risks remain even after the recent policy firming that economic and financial Average level, fourth quarter conditions may turn out to be inconsistent with keep- Civilian unemployment 4444^^^^IIII////2222 4444----4444''''AAAA 4444....3333 ing costs and prices from escalating. Although interest rates currently are a bit higher 2000 than anticipated in the economic assumptions under- CCChhhaaannngggeee,,, fffooouuurrrttthhh qqquuuaaarrrttteeerrr lying the budget projections in the Administration's tttooo fffooouuurrrttthhh qqquuuaaarrrttteeerrr 222 NNNooommmiiinnnaaalll GGGDDDPPP 444---555'''AAA 444---555 444...222 Mid-Session Review, there is no apparent tension Real GDP 222---333 VVViii 222'''///222———333 222...111 Consumer price index3 .. lll'''///222---222333///444 222---222'''///222 222...444 between the Administration's plans and the Federal Reserve policymakers' views. In fact, Federal Average level, fourth quarter Reserve officials project somewhat faster growth in Civilian unemployment 444---444'''///222 444'''AAA---444<<<AAA 444...777 real GDP and slightly lower unemployment rates into 2000 than the Administration does, while the Admin- 1. From the Mid-Session Review of the budget. 2. Change from average for fourth quarter of previous year to average for istration's projections for inflation are within the fourth quarter of year indicated. Federal Reserve's central tendencies. 3. All urban consumers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Federal Reserve Bulletin • August 1999 2. Ranges for growth of monetary and debt aggregates mittee's projections of nominal GDP growth. This Percent relatively rapid expansion in nominal income reflects faster expected growth in productivity than when the Provisional for Aggregate 1998 1999 2000 price-stability ranges were established in the mid- 1990s and inflation that is still in excess of price M2 1-5 1-5 1-5 M3 2-6 2-6 2-6 stability. The more rapid increase in productivity, if it Debt 3-7 3-7 3-7 persists for a while and is sufficiently large, might in NOTE. Change from average for fourth quarter of preceding year to average the future suggest an upward adjustment to the money for fourth quarter of year indicated. ranges consistent with price stability. However, considerable uncertainty attends the trend in productiv- Money and Debt Ranges for 1999 and 2000 ity, and the Committee chose not to adjust the ranges at its most recent meeting. At its meeting in late June, the FOMC reaffirmed the Debt of the nonfinancial sectors has expanded at ranges for 1999 growth of money and debt that it had roughly the same pace as nominal income this year— established in February: 1 percent to 5 percent for its typical pattern. Given the stability of this relation- M2, 2 percent to 6 percent for M3, and 3 percent to ship, the Committee selected a growth range for the 7 percent for debt of the domestic nonfinancial sec- debt aggregate that encompasses its expectations for tors. The FOMC set the same ranges for 2000 on a debt growth in both years. The Committee expects provisional basis. growth in nominal income to slow in 2000, and with As has been the case since the mid-1990s, the it, debt growth. Nonetheless, growth of this aggregate FOMC views the ranges for money growth as bench- is projected to remain within the range of 3 percent to marks for growth under conditions of price stability 7 percent. and the historically typical relationship between money and nominal income. The disruption of the historically typical pattern of the velocities of M2 ECONOMIC AND FINANCIAL DEVELOPMENTS and M3 (the ratio of nominal GDP to the aggregates) IN 1999 during the 1990s implies that the Committee cannot establish, with any confidence, specific target ranges The economy has continued to grow rapidly so far for expected money growth for a given year that will this year. Real gross domestic product rose more than be consistent with the economic performance that 4 percent at an annual rate in the first quarter of 1999, it desires. However, persistently fast or slow money and available data point to another significant gain growth can accompany, or even precede, deviations in the second quarter.1 The rise in activity has been from desirable economic outcomes. Thus, the behavior of the monetary aggregates, evaluated in the con- 1. All figures from the national income and product accounts cited text of other financial and nonfinancial indicators, here are subject to change in the quinquennial benchmark revisions will continue to be of interest to Committee members slated for this fall. in their policy deliberations. The velocities of M2 and M3 declined again in the Change in real GDP first half of this year, albeit more slowly than in 1998. Percent, annual rate The Committee's easing of monetary policy in the fall of 1998 contributed to the decline, but only to a modest extent. It is not clear what other factors led to the drop, although the considerable increase in wealth relative to income resulting from the substantial gains in equity prices over the past few years may have played a role. Investors could be rebalancing their portfolios, which have become skewed toward equities, by reallocating some wealth to other assets, including those in M2. Even if the velocities of M2 and M3 were to return to their historically typical patterns over the balance of 1999 and in 2000, M2 and M3 likely would be 1994 1995 1996 1997 1998 1999 at the upper bounds of, or above, their longer-term NOTE. In this chart and in subsequent charts that show the components of real GDP, changes are measured from the final quarter of the previous period to price-stability ranges in both years, given the Comthe final quarter of the period indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 533 brisk enough to produce further substantial growth of as measured, for example, by the University of employment and a reduction in the unemployment Michigan Survey Research Center (SRC) and Conrate to 4lA percent. Growth in output has been driven ference Board surveys—has remained quite upbeat in by strong domestic demand, which in turn has been this environment. supported by further increases in equity prices, by the Growth of consumer spending in the first quarter continuing salutary effects of government saving and was strong in all expenditure categories. Outlays inflows of foreign investment on the cost of capital, for durable goods rose sharply, reflecting sizable and by more smoothly functioning financial markets increases in spending on electronic equipment (espeas the turbulence that marked the latter part of 1998 cially computers) and on a wide range of other goods, subsided. Against the background of the easing of including household furnishings. Purchases of cars monetary policy last fall and continuing robust and light trucks remained at a high level, supported economic activity, investors became more willing to by declining relative prices as well as by the fundaadvance funds to businesses; risk spreads have mentals that have buoyed consumer spending more receded and corporate debt issuance has been brisk. generally. Outlays for nondurable goods were also Inflation developments were mixed over the first robust, reflecting in part a sharp increase in expendihalf of the year. The consumer price index increased tures for apparel. Finally, spending on services more rapidly owing to a sharp rebound in energy climbed steeply as well early this year, paced by prices. Nevertheless, price inflation outside of the sizable increases in spending on recreation and broenergy area generally remained subdued despite the kerage services. In the second quarter, consumers slight further tightening of labor markets, as sizable apparently boosted their purchases of motor vehicles gains in labor productivity and ample industrial further. In all, real personal consumption expendicapacity held down price increases. tures rose at more than a 4 percent annual rate in April and May, an increase that is below the firstquarter pace but is still quite rapid by historical The Household Sector standards. Consumer Spending Wealth and saving Ratio Percent Real personal consumption expenditures surged 63/4 percent at an annual rate in the first quarter, and 12 more recent data point to a sizable further advance in the second quarter. The underlying fundamentals for 6 Wealth-to-income ratio nf 10 /V Ql the household sector have remained extremely favor- — 8 able. Real incomes have continued to rise briskly with strong growth of employment and real wages, 5 — — 6 and consumers have benefited from substantial gains — 4 in wealth. Not surprisingly, consumer confidence— 4 — L 2 Personal saving rate A y -Q l o+ Change in real income and consumption i 1 1 1 f 1 1 I 1 1 1 1 1 1 1 1 1 1 1 1 i i I 1978 1982 1986 1990 1994 1998 Percent, annual rate NOTE. The wealth-to-income ratio is the ratio of net worth of households to Q Disposable personal income disposable personal income. HI Personal consumption expenditures Ql Real disposable income increased at an annual rate of 3!/2 percent in the first quarter, with the strong labor market generating marked increases in wages — 4 and salaries. Even so, income grew less rapidly than expenditures, and the personal saving rate declined further; indeed, by May the saving rate had moved below negative 1 percent. Much of the decline in the saving rate in recent years can be explained by the sharp rise in household net worth relative to dispos- J L 1994 1995 1996 1997 1998 1999 able income that is associated with the appreciation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Federal Reserve Bulletin • August 1999 Private housing starts cent over the preceding four-quarter period. The repeat sales index of existing home prices also rose Millions of units, annual rate about 5 percent between the first quarter of 1998 and Q2 the first quarter of 1999, but this series posted even larger increases in the year-earlier period. On the cost .. SSiinnggllee--ffaammiillyy —— 11..22 side, tight supplies have led to rising prices for some building materials; prices of plywood, lumber, gypsum wallboard, and insulation have all moved up — .8 sharply over the past twelve months. In addition, hourly compensation costs have been rising relatively Multifamily Q2 rapidly in the construction sector. \ A Starts of multifamily units surged to 384,000 at an annual rate in the first quarter and ran at a pace a bit under 300,000 units in the second quarter. As in the 1 1 f 1 1 1 1 1 1 1 1 1 1 1988 1990 1992 1994 1996 1998 single-family sector, demand has been supported by strong fundamentals, builders have been faced with tight supplies of some materials, and prices have of households' stock market assets since 1995. This been rising briskly: Indeed, apartment property values rise in wealth has given households the wherewithal have been increasing at around a 10 percent annual to spend at levels beyond what current incomes rate for three years now. would otherwise allow. As share values moved up further in the first half of this year, the wealth-toincome ratio continued to edge higher despite the Household Finance absence of saving out of disposable income. In addition to rising wealth and rapid income growth, Residential Investment the strong expenditures of households on housing and consumer goods over the first half of 1999 were Housing activity remained robust in the first half of encouraged by the decline in interest rates in the this year. In the single-family sector, positive funda- latter part of 1998. Households borrowed heavily to mentals and unseasonably good weather helped boost finance spending. Their debt expanded at a 9'A perstarts to a pace of 1.39 million units in the first cent annual rate in the first quarter, up from the quarter—the highest level of activity in twenty years. 83/ percent pace over 1998, and preliminary data for 4 This extremely strong level of building activity the second quarter indicate continued robust growth. strained the availability of labor and some materials; Mortgage borrowing, fueled by the vigorous housing as a result, builders had trouble achieving the usual market and favorable mortgage interest rates, was seasonal increase in the second quarter, and starts particularly brisk in the first quarter, with mortgage edged off to a still-high pace of 1.31 million units. debt rising at an annual rate of 10 percent. In the Home sales moderated in the spring: Sales of both second quarter, mortgage rates moved up considernew and existing homes were off some in May from ably, but preliminary data indicate that borrowing their earlier peaks, and consumers' perceptions of was still substantial. homebuying conditions as measured by the Michigan Consumer credit growth accelerated in the first half SRC survey have declined from the very high marks of 1999. It expanded at about an 8 percent annual rate recorded in late 1998 and early this year. Nonethe- compared with 5'A percent for all of 1998. The less, demand has remained quite robust, even in the growth of nonrevolving credit picked up, reflecting face of a backup in mortgage interest rates: Builders' brisk sales and attractive financing rates for automoevaluations of new home sales remained very high at biles and other consumer durable goods. The expanmidyear, and mortgage applications for home pur- sion of revolving credit, which includes credit card chases showed strength into July. loans, slowed a bit from its pace in 1998. With strong demand pushing up against limited Households apparently have not encountered added capacity, home prices have risen substantially, difficulties meeting the payments associated with although evidence is mixed as to whether the rate of their greater indebtedness, as measures of household increase is picking up. The quality-adjusted price of financial stress improved a bit on balance in the first new homes rose 5 percent over the four quarters quarter. Personal bankruptcies dropped off considended in the first quarter of 1999, up from 3'A per- erably, although part of the decline may reflect Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 535 Delinquency rates on household loans 1999. Investment spending continued to be driven by buoyant expectations of sales prospects as well as by rapidly declining prices of computers and other high-tech equipment. In recent quarters, spending also may have been boosted by the desire to upgrade computer equipment in advance of the rollover to the year 2000. Real investment has been rising rapidly for several years now; indeed, the average increase of 10 percent annually over the past five years represents the most rapid sustained expansion of investment in more than thirty years. Although a growing portion of this investment has gone to cover depreciation on purchases of shortlived equipment, the investment boom has led to a I I I 1 i I 1988 1990 1992 1994 1996 1998 notable upgrading and expansion of the capital stock NOTE. The data are quarterly. and in many cases has embodied new technologies. SOURCE. Data on credit card delinquencies are from bank Call Reports; data These factors likely have been important in the naon auto loan delinquencies are from the Big Three automakers; data on mortgage delinquencies are from the Mortgage Bankers Association. tion's improved productivity performance over the past few years. the aftermath of a surge in filings in late 1998 that Real outlays for producers' durable equipment occurred in response to pending legislation that increased at an annual rate of 9'/2 percent in the first would limit the ability of certain debtors to obtain quarter of the year, after having surged nearly 17 perforgiveness of their obligations. Delinquency rates on cent last year, and may well have re-accelerated several types of household loans edged lower. Delin- in the second quarter. Outlays on communications quency and charge-off rates on credit card debt equipment were especially robust in the first quarter, moved down from their 1997 peaks but remained at driven by the ongoing effort by telecommunications historically high rates. A number of banks continued companies to upgrade their networks to provide a to tighten credit card lending standards this year, as full range of voice and data transmission services. indicated by banks' responses to Federal Reserve Purchases of computers and other information prosurveys. cessing equipment were also up notably in the first quarter, albeit below last year's phenomenal spending pace, and shipments of computers surged again in The Business Sector April and May. Shipments of aircraft to domestic carriers apparently soared in the second quarter, and Fixed Investment business spending on motor vehicles, including medium and heavy trucks as well as light vehicles, Real business fixed investment appears to have has remained extremely strong as well. posted another huge increase over the first half of Real business spending for nonresidential structures has been much less robust than for equipment, Change in real business fixed investment and spending trends have varied greatly across sectors of the market. Real spending on office buildings Percent, annual rate and lodging facilities has been increasing impres- • Structures sively, while spending on institutional and industrial ® Producers' durable equipment structures has been declining—the last reflecting 20 ample capacity in the manufacturing sector. In the first quarter of this year, overall spending on structures was reported in the national income and product 10 accounts to have moved up at a solid 53A percent annual rate, reflecting a further sharp increase in spending on office buildings and lodging facilities. However, revised source data indicate a somewhat smaller first-quarter increase in nonresidential construction and also point to a slowing in activity in I I 1994 1995 1996 1997 1998 1999 April and May from the first-quarter pace. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Federal Reserve Bulletin • August 1999 Change in nonfarm business inventories Before-tax profits of nonfinancial corporations as a share of GDP Percent, annual rate Percent * ~ 14 A / \ — 12 /A V \ J — 10 V V — 6 J L M i ll 1994 1995 1996 1997 1998 1999 1 1 1 1 1 1 1 1 i i i 1 1 1977 1980 1983 1986 1989 1992 1995 1998 NOTE. Profits from domestic operations, with inventory valuation and capital Inventory Investment consumption adjustments, divided by the gross domestic product of the nonfinancial corporate sector. Inventory-sales ratios in many industries dropped considerably early this year, as the pace of stock- est level in twenty years. With no noticeable signs of building by nonfarm businesses, which had slowed a slowing in demand, producers have scheduled thirdnotably over 1998, remained well below the surge of quarter output to remain at the lofty heights of the consumer and business spending in the first quarter. second quarter. Although production picked up some in the spring, final demand remained quite strong, and available monthly data suggest that businesses accumulated Corporate Profits and Business Finance inventories in April and May at a rate not much different from the modest first-quarter pace. The economic profits of nonfinancial U.S. corpora- In the motor vehicle sector, makers geared up tions rose considerably in the first quarter, even after production in the latter part of 1998 to boost inven- allowing for the depressing effect in the fourth tories from their low levels after last summer's quarter of payments associated with the settlement strikes. Nevertheless, as with the business sector between the tobacco companies and the states. overall, motor vehicle inventories remained on the Despite the growth of profits, capital expenditures by lean side by historical standards in the early part of nonfinancial businesses continued to outstrip internal this year as a result of surprisingly strong vehicle cash flow. Moreover, borrowing requirements were sales. As a consequence, manufacturers boosted the enlarged by the net reduction in equity outstanding, pace of assemblies in the second quarter to the high- as the substantial volume of retirements from merger Gross corporate bond issuance Billions of dollars 40 35 30 25 20 15 10 J F M A MJ J A S O N DJ F M A MJ 1998 1999 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 537 Spreads of corporate bond yields ably in the latter part of 1998, also retreated. But in over Treasury security yields mid-July, these spreads were still well above the thin levels prevailing before the period of financial tur- Percentage points moil but in line with their historical averages. In contrast to securities market participants, banks' attitudes toward business lending apparently became somewhat more cautious over the first half of the year, according to Federal Reserve surveys. The average spread of bank lending rates over the FOMC's target federal funds rate remained elevated. On net, banks continued to tighten lending terms and standards this year, although the percentage that reported tightening was much smaller than in the fall. The overall financial condition of nonfinancial J F M A MJ J A S O N DJ F M A MJ J businesses was strong over the first half of the year, 1998 1999 although a few indicators suggested a slight deterio- NOTE. The data are daily. The spread for below-investment-grade bonds ration. In the first quarter, the ratio of net interest compares the yield on the Merrill Lynch Master II high-yield bond index composite with the yield from the seven-year Treasury constant-maturity series; payments to corporate cash flow remained close to the other two spreads compare yields on the appropriate Merrill Lynch indexes the modest levels of 1998, as low interest rates conwith that on a ten-year Treasury security. Last observations are for July 19, 1999. tinued to hold down interest payments. Delinquency rates for commercial and industrial loans from banks activity and share repurchase programs exceeded the ticked up, but they were still modest by historical considerable volume of gross issuance of both initial standards. Similarly, over the first half of the year, and seasoned public equities. As a result, businesses business failures—measured as the ratio of liabilities continued to borrow at a brisk pace: Aggregate debt of failed businesses to total liabilities—stepped up of the nonfinancial business sector expanded at a from the record low in 1998. The default rate on 9'/ percent annual rate in the first quarter. As finan- below-investment-grade bonds rose to its highest 2 cial market conditions improved after the turmoil of level in several years, an increase stemming in part the fall, businesses returned to the corporate bond from defaults by companies whose earnings were and commercial paper markets for funding, and cor- impaired by the drop in oil and other commodity porate bond issuance reached a record high in March. prices last year. The total volume of business debt Some of the proceeds were used to pay off bank that was downgraded exceeded slightly the volume of loans, which had soared in the fall, and these repay- debt that was upgraded. ments curbed the expansion of business loans at banks. Partial data for the second quarter indicate that borrowing by nonfinancial businesses slowed The Government Sector somewhat. Risk spreads have receded on balance this year Federal Government from their elevated levels in the latter part of 1998. From the end of December 1998 through mid-July, The incoming news on the federal budget continues investment-grade corporate bond yields moved up to be quite favorable. Over the first eight months of from historically low levels, but by less than yields fiscal year 1999—the period from October through on comparable Treasury securities, and the spread May—the unified budget registered a surplus of about between these yields narrowed to a level somewhat $41 billion, compared with $16 billion during the above that prevailing before the Russian crisis. The comparable period of fiscal 1998. If the latest projecrise in investment-grade corporate bond yields was tions from the Office of Management and Budget and restrained by investors' apparently increased willing- the Congressional Budget Office are realized, the ness to hold such debt, as growing optimism about unified budget for fiscal 1999 as a whole will show a the economy and favorable earnings reports gave surplus of around $100 billion to $120 billion, or investors more confidence about the prospective more than 1 percent of GDP—a striking turnaround financial health of private borrowers. Yield spreads from the outsized budget deficits of previous years, on below-investment-grade corporate debt over com- which approached 5 percent of GDP in the early parable Treasury securities, which had risen consider- 1990s. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Federal Reserve Bulletin • August 1999 Federal receipts and expenditures as a share of nominal GDP However, individual income tax payments are up appreciably, reflecting the solid gains in household Percent incomes and perhaps also a rise in capital gains realizations large enough to offset last year's reduction in capital gains tax rates. At the same time, — — 24 federal outlays increased only 2Vi percent in nominal Total expenditures terms and barely at all in real terms during the first — 22 eight months of the fiscal year, relative to the comparable year-earlier period. Spending growth has been — 20 restrained in major portions of both the discretionary (notably, defense) and nondiscretionary (notably, net Total receipts interest, social security, and Medicare) categories— — 18 although this year's emergency supplemental spending bill, at about $14 billion, was somewhat larger 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1982 1986 1990 1994 1998 than similar bills in recent years. NOTE. Data on receipts and expenditures are from the unified budget. Values As for the part of federal spending that is counted for 1999 are estimates from the CBO's July 1 economic and budget update. in GDP, real federal outlays for consumption and gross investment, which had changed little over the As a result of this turnaround, the federal governpast few years, declined at a 2 percent annual rate ment is now contributing positively to the pool of in the first quarter of 1999. A drop in real defense national saving. In fact, despite the recent drop in the outlays more than offset a rise in nondefense expenpersonal saving rate, gross saving by households, ditures in the first quarter. And despite the military businesses, and governments has remained above action in the Balkans and the recent emergency 17 percent of GDP in recent quarters—up from the spending bill, defense spending appears to have 14 percent range that prevailed in the early 1990s. declined in the second quarter as well. This well-maintained pool of national savings, together with the continued willingness of foreigners to finance our current account deficits, has helped Federal debt held by private investors as a share hold down the cost of capital, thus contributing to our of nominal GDP nation's investment boom. Percent This year's increase in the federal surplus has reflected continued rapid growth of receipts in com- — 50 bination with a modest increase in outlays. Federal receipts were 5 percent higher in the first eight — ^ — 45 months of fiscal 1999 than in the year-earlier period. — N. — 40 With profits leveling off from last year, receipts of corporate taxes have stagnated so far this fiscal year. — — 35 — — 30 National saving as a share of nominal GDP — — 25 Percent — 20 1 1 1 1 1 1 1 1 1 1 1 1 I 1 1 1 1 t 1 1 1 1 1 1978 1983 1988 1993 1998 NOTE. Federal debt held by private investors is gross federal debt less debt — 20 held by federal government accounts and the Federal Reserve System. The Excluding federal saving value for 1999 is an estimate based on the CBO's July 1 economic and budget update. - Ql \ — 16 The budget surpluses of the past two years have led to a notable decline in the stock of federal debt Total \/—' Ql held by private investors as a share of GDP. Since its peak in March 1997, the total volume of Treasury 1 1 1 1 I 1 1 1 1 1 I ! 1 1 1 I 1 1 1 debt held by private investors has fallen by nearly 1982 1986 1990 1994 1998 $130 billion. The Treasury has reduced its issuance NOTE. National saving comprises the gross saving of households, businesses, of interest-bearing marketable debt in fiscal 1999. and governments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 539 The decrease has been concentrated in nominal cou- U.S. current account pon issues; in 1998, by contrast, the Treasury retired Billions of dollars, annual rate both bill and coupon issues in roughly equal measure. Offerings of inflation-indexed securities have remained an important part of the Treasury's overall borrowing program: Since the beginning of fiscal 1999, the Treasury has sold nearly $31 billion of such securities. State and Local Governments The fiscal condition of state and local governments has remained quite positive as well. Revenues have Q' 300 been boosted by increases in tax collections due to strong growth of private-sector incomes and 1994 1995 1996 1997 1998 1999 expenditures—increases that were enough to offset an ongoing trend of tax cuts. Meanwhile, outlays and 2Vi percent of GDP for 1998. A widening of the have continued to be restrained. In all, at the state deficit on trade in goods and services, to $215 billion level, fiscal 1999 looks to have been the seventh at an annual rate in the first quarter from $173 billion consecutive year of improving fiscal positions; of the in the fourth quarter of 1998, accounted for the forty-six states whose fiscal years ended on June 30, deterioration in the current account balance. Data for all appear to have run surpluses in their general April and May indicate that the trade deficit increased funds. further in the second quarter. Real expenditures for consumption and gross The quantity of imports of goods and services investment by states and localities, which had been again grew vigorously in the first quarter. The annual rising only moderately through most of 1998, jumped rate of growth of imports, at 13'/2 percent, continued at a 73A percent annual rate in the first quarter of this the rapid pace seen over 1998 and reflected the year. This increase was driven by a surge in construc- strength of U.S. domestic demand and the effects of tion expenditures that was helped along by unseason- past dollar appreciation. Imports of consumer goods, ably favorable weather, and spending data for April automotive products, computers, and semiconductors and May suggest that much of this rise in construc- were particularly robust. Preliminary data for April tion spending was offset in the second quarter. As for and May suggest that real import growth remained employment, state and local governments added jobs strong, as nominal imports rose steadily and non-oil over the first half of the year at about the same pace import prices posted a moderate decline. as they did last year. The volume of exports of goods and services Debt of state and local governments expanded at a declined at an annual rate of 5 percent in the first 5Vi percent rate in the first quarter. The low interest quarter. The decline partially reversed the strong rate environment and strong economy encouraged the increase in the fourth quarter of last year. The weakfinancing of new projects and the refunding of outstanding higher-rate debt. Borrowing slowed to a Change in real imports and exports of goods and services more modest pace in the second quarter, as yields on Percent, annual rate long-dated municipal bonds moved up, but by less than those on comparable Treasury securities. The O Imports credit quality of municipal securities improved fur- — • Exports — 20 ther over the first half of the year, with more issues being upgraded than downgraded. H Q> — 15 — 10 External Sector o Trade and the Current Account — 5 The current account deficit reached $274 billion at an annual rate in the first quarter of 1999, a bit more than 3 percent of GDP, compared with $221 billion 1994 1995 1996 1997 1998 1999 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

540 Federal Reserve Bulletin • August 1999 ness of economic activity in a number of U.S. trading Measures of labor utilization partners and the strength of the dollar damped Percent demand for U.S. exports. Declines were registered in aircraft, machinery, industrial supplies, and agriculi Augmented unemployment rate tural products. Exports to Asia generally turned down — 15 in the first quarter from the elevated levels recorded vMN in the fourth quarter, when they were boosted by w — 12 J record deliveries of aircraft to the region. Preliminary data for April and May suggest that real exports K — 9 J advanced slightly. June Civilian unemployment rate Capital Account — 3 Foreign direct investment in the United States and 1 1 1 1 I I I I1 1 1 II II II 1 II 1 1 II 1 II 1 J_U 1970 1975 1980 1985 1990 1995 2000 U.S. direct investment abroad remained robust in the NOTE. The augmented unemployment rate is the number of unemployed plus first quarter, reflecting brisk cross-border merger and those who are not in the labor force and want a job, divided by the civilian labor acquisition activity. On balance, net capital flows force plus those who are not in the labor force and want a job. The break in data at January 1994 marks the introduction of a redesigned survey; data from that through direct investment registered a modest outpoint on are not directly comparable with those of earlier periods. flow in the first quarter compared with a huge net inflow in the fourth quarter. Fourth-quarter inflows 200,000 per month on average, which, although less were swollen by several large mergers. Net foreign rapid than the 244,000 pace registered over 1998, is purchases of U.S. securities also continued to be quite faster than the growth of the working-age population. sizable but again were well below the extraordinary With the labor force participation rate remaining pace of the fourth quarter. Most of the slowdown in about flat at just over 67 percent, the unemployment the first quarter is attributable to a reduced demand rate edged down further from an average of AVi perfor Treasury securities on the part of private investors cent in 1998 to 4^4 percent in the first half of this abroad. But capital inflows from foreign official year—the lowest unemployment rate seen in the sources also slowed in the first quarter. U.S. residents United States in almost thirty years. Furthermore, the on net sold foreign securities in the first quarter, but pool of potential workers, including not just the at a slower rate than in the previous quarter. unemployed but also individuals who are out of the labor force but report that they want a job, declined The Labor Market late last year to the lowest share of the labor force since collection of these data began in 1970—and it Employment and Labor Supply has remained near that low this year. Not surprisingly, businesses in many parts of the country have Labor demand remained very strong during the first perceived workers to be in very short supply, as half of 1999. Payroll employment increased about evidenced by high levels of help-wanted advertising and surveys showing substantial difficulties in filling Change in total nonfarm payroll employment job openings. Employment gains in the private service-producing Thousands of jobs, monthly average sector remained sizable in the first six months of the year and more than accounted for the rise in nonfarm payrolls over this period. Payrolls continued to rise 400 briskly in the services industry, with firms providing •llillli : business services (such as help supply services and computer services) adding jobs especially rapidly. Job gains were quite sizable in retail trade as well. Within the service-producing sector, only the finance, insurance, and real estate industry has slowed the pace of net hiring from last year's rate, reflecting, in part, a slower rate of job gains in the mortgage banking industry as the refinancing wave has ebbed. 1991 1993 1995 1997 1999 Within the goods-producing sector, the boom in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 541 construction activity pushed payrolls in that industry component, whose twelve-month change slowed higher in the first six months of this year. But in % percentage point from a year earlier. More manufacturing, where employment began declining recently, data on average hourly earnings of producmore than a year ago in the wake of a drop in export tion or nonsupervisory workers may point to a leveldemand, payrolls continued to fall in the first half of ing off, but no further slowing, of wage growth: This 1999; in all, nearly half a million factory jobs have series was up at about a 4 percent annual rate over the been shed since March 1998. Despite these job losses, first six months of this year, about the same as the manufacturing output continued to rise in the first increase over 1998. Growth in the benefits compohalf of this year, reflecting large gains in labor nent of the ECI slowed somewhat as well in the year productivity. ended in March, to a 2lA percent increase. However, employers' costs for health insurance are one component of benefits that has been rising more rapidly of Labor Costs and Productivity late. After showing essentially no change from 1994 through 1996, the ECI for health insurance acceler- Growth in hourly compensation, which had been on ated to a 33/4 percent pace over the twelve months an upward trend since 1995, appears to have leveled ended in March. off and, by some measures, has slowed in the past A second measure of hourly compensation—the year. According to the employment cost index (ECI), Bureau of Labor Statistics' measure of compensation hourly compensation costs increased 3 percent over per hour in the nonfarm business sector, which is the twelve months ended in March, down from derived from compensation information from the 3!/2 percent over the preceding twelve-month period. national accounts—has been rising more rapidly than Part of both the earlier acceleration and more recent the ECI in the past few years and has also decelerated deceleration in the ECI apparently reflected swings in less so far this year. Nonfarm compensation per hour commissions, bonuses, and other types of "variable" increased 4 percent over the four quarters ended in compensation, especially in the finance, insurance, the first quarter of 1999, 1 percentage point more and real estate industry. But in addition, part of the than the rise in the ECI over this period. One reason recent deceleration probably reflects the influence of these two compensation measures may diverge is that restrained price inflation in tempering nominal wage the ECI does not capture certain forms of compensaincreases. Although down from earlier increases, the tion, such as stock options and hiring, retention, and 3 percent rise in the ECI over the twelve months referral bonuses, whereas nonfarm compensation per ended in March was well above the rise in prices over hour does measure these payments.2 Although the this period and therefore was enough to generate two compensation measures differ in numerous other solid gains in workers' real pay. respects as well, the series' divergence may lend The deceleration in the ECI through March has support to anecdotal evidence that these alternative been most pronounced in the wages and salaries forms of compensation have been increasing especially rapidly in recent years. However, because nonfarm compensation per hour can be revised substan- Measures of the change in hourly compensation tially, one must be cautious in putting much weight on the most recent quarterly figures from this series. Percent. Q4 to Q4 Rapid productivity growth has made it possible O Employment cost index to sustain these increases in workers' compensation ® Nonfarm compensation per hour without placing great pressure on businesses' costs. Labor productivity in the nonfarm business sector • Q1 4 posted another sizable gain in the first quarter of 1999, and the increase over the four quarters ended in the first quarter of 1999 was 2Vi percent. Indeed, productivity has increased at a 2 percent pace since — 2 1995—well above the trend of roughly 1 percent per 1993 1994 1995 1996 1997 1998 1999 2. However, nonfarm compensation per hour captures the gains NOTE. The ECI is for private industry excluding farm and household work- from the actual exercise of stock options, whereas for analyzing ers. Nonfarm compensation per hour is for the nonfarm business sector. Values compensation trends, one might prefer to measure the value of the for 1999:Q1 are percent changes from 1998:Q1 to 1999:Q1. options at the time they are granted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

542 Federal Reserve Bulletin • August 1999 Change in output per hour Change in unit labor costs Percent, Q4 to Q4 Percent, Q4 to Q4 3.0 2.5 2.0 1.5 1.0 1991 1992 1993 1994 1995 1996 1997 1998 1999 NOTE. Nonfarm business sector. The value for 1999:Q1 is the percent change NOTE. Nonfarm business sector. The value for 1999:Q1 is the percent change from 1998:Q1 to 1999:Q1. from 1998:Q1 to 1999:Q1. growth would reduce firms' capacity to absorb furyear that had prevailed over the preceding two decades.3 This recent productivity performance is all ther wage gains without putting upward pressure on prices. the more impressive given that businesses are reported to have had to divert considerable resources toward avoiding computer problems associated with Prices the century date change, and given as well that businesses may have had to hire less-skilled workers than Price inflation moved up in early 1999 from a level were available earlier in the expansion when the pool in 1998 that was depressed by a transitory drop in of potential workers was not so shallow. Part of the energy and other commodity prices. After increasing strength in productivity growth over the past few only about IV2 percent over 1998, the consumer price years may have been a cyclical response to the rapid index rose at a 2'/4 percent annual rate over the first growth of output over this period. But productivity six months of this year, driven by a sharp turnaround may also be reaping a more persistent payoff from the in prices of gasoline and heating oil. However, the boom in business investment and the accompanying so-called "core" CPI, which excludes food and introduction of newer technologies that have ocenergy items, rose at an annual rate of only 1.6 percurred over the past several years. cent over this period—a somewhat smaller increase Even these impressive gains in labor productivity than that registered over 1998 once adjustment is may not have kept up fully with increases in firms' real compensation costs of late. Over the past two Change in consumer prices years, real compensation, measured by the ECI relative to the price of nonfarm business output, has Percent, Dec. to Dec. increased the same hefty Vh percent per year as labor • Published productivity; however, measured instead using non- D Research series using current methods farm compensation per hour, real compensation .has — — 4 increased somewhat more than productivity over this period, implying a rising share of compensation in total national income. A persistent period of real compensation increases in excess of productivity 3. About '/4 percentage point of the improvement in productivity growth since 1995 can be attributed to changes in price measurement. The measure of real output underlying the productivity figures since 1995 is deflated using CPI components that have been constructed using a geometric-means formula; these components tend to rise less 1992 1993 1994 1995 1996 1997 1998 1999 rapidly than the CPI components that had been used in the output and NOTE. Consumer price index for all urban consumers. The research series productivity data before 1995. These smaller CPI increases translate has been extended into 1999 using the published CPI. Values for 1999:H1 are into more rapid growth of output and productivity in the later period. percent changes from December 1998 to June 1999 at an annual rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 543 Change in consumer prices excluding food and energy price declines have not been repeated more recently. This year's rise in energy prices is the clearest exam- Percent, Dec. to Dec. ple, but commodity prices more generally have been • Published turning up of late. The Journal of Commerce indus- • Research series using current methods trial price index has moved up about 6 percent so far this year after having declined about 10 percent last year, with especially large increases posted for prices of lumber, plywood, and steel. These price movements are starting to be seen at later stages of prollll III cessing as well: The producer price index for intermediate materials excluding food and energy, which gradually declined about 2 percent over the fifteen months through February 1999, retraced about half of that decrease by June. Furthermore, non-oil import 1992 1993 1994 1995 1996 1997 1998 1999 prices, although continuing to fall this year, have moved down at a slower rate than that of the past NOTE. Consumer price index for all urban consumers. The research series has been extended into 1999 using the published CPI. Values for 1999:H1 are couple of years when the dollar was rising sharply in percent changes from December 1998 to June 1999 at an annual rate. foreign exchange markets. Non-oil import prices declined at a 1 lA percent annual rate over the first made for the effects of changes in CPI methodology: half of 1999, after having fallen at a 3 percent rate, on According to a new research series from the Bureau average, over 1997 and 1998. of Labor Statistics (BLS), the core CPI would have Some other broad measures of prices also showed increased 2.2 percent over 1998 had 1999 methods evidence of acceleration early this year. The chainbeen in place in that year.4 type price index for GDP—which covers prices of all The moderation of the core CPI in recent years has goods and services produced in the United States— reflected a variety of factors that have helped hold rose at about a Wi percent annual rate in the first inflation in check despite what has been by all quarter, up from an increase of about 1 percent last accounts a very tight labor market. Price increases year. A portion of this acceleration reflected movehave been damped by substantial growth in manufacments in the chain-type price index for personal turing capacity, which has held plant utilization rates consumption expenditures (PCE) that differed from in most industries at moderate (and in some cases movements in the CPI. subpar) levels, thereby reinforcing competitive pressures in product markets. Furthermore, rapid productivity growth helped hold increases in unit labor costs 3. Alternative measures of price change to low levels even as compensation growth was pick- Percent, annual rate ing up last year. The rise in compensation itself has been constrained by moderate expectations of infla- 1996:Q4 1997:Q4 1998:Q4 Price measure to to to tion, which have been relatively stable. According 1997:Q4 1998:Q4 1999:Q1 to the Michigan SRC survey, the median of one- Fixed-weight year-ahead inflation expectations, which was about Consumer price index 1.9 1.5 1.5 2Vi percent late last year, averaged 23A percent in the Excluding food and energy 2.2 2.4 1.6 first half of this year. Chain-type Gross domestic product 1.7 .9 1.6 The quiescence of inflation expectations, at least Gross domestic purchases 1.3 .4 1.2 Personal consumption expenditures ... 1.5 .7 1.2 through the early part of this year, in turn may have Excluding food and energy 1.6 1.2 1.3 come in part from the downward movement in over- NOTE. A fixed-weight index uses quantity weights from the base year to all inflation last year resulting from declines in prices aggregate prices from each distinct item category. A chain-type index is the geometric average of two fixed-weight indexes and allows the weights to change of imports and of oil and other commodities. These each year. Changes are based on quarterly averages. 4. The most important change this year was the introduction of the Although the components of the CPI are key inputs geometric-means formula to aggregate price quotes within most of the into the PCE price index, the two price measures detailed item categories. (The Laspeyres formula continues to be used in constructing higher-level aggregates.) Although these geometric- differ in a variety of respects: They use different means CPIs were introduced into the official CPI only in January of aggregation formulas; the weights are derived from this year, the BLS generated the series on an experimental basis going different sources; the PCE measure does not utilize back several years, allowing them to be built into the national income and product accounts back to 1995. all components of the CPI; and the PCE measure is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

544 Federal Reserve Bulletin • August 1999 broader in scope, including not just the out-of-pocket Domestic nonfinancial debt: Annual range and actual level expenditures by households that are captured by the Trillions of dollars CPI, but also the portion of expenditures on items such as medical care and education that are paid by 16.6 insurers or governments, consumption of items such as banks' checking services that are provided without explicit charge, and expenditures made by nonprofit institutions. Although PCE prices typically rise a bit less rapidly than the CPI, the PCE price measure was unusually restrained relative to the CPI in the few years through 1998, reflecting a combination of the above factors. Last year's sharp drop in retail energy prices and the subsequent rebound this spring reflected movements in the price of crude oil. The spot price of West Texas intermediate (WTI) crude oil, which had stood 1998 1999 at about $20 per barrel through most of 1997, dropped sharply over 1998 and reached $11 per barrel by the end of the year, reflecting in part a weakening in demand for oil from the distressed Asian of shelter have slowed thus far in 1999, rising at a nations and increases in supply from Iraq and other 2'/a percent annual rate versus a VA percent rise last countries. But oil prices jumped this year as the year. However, airfares and prices of medical ser- OPEC nations agreed on production restraints aimed vices have been rising more rapidly so far this year. at firming prices, and the WTI spot price reached $18 per barrel in April and has moved still higher more recently. As a result, gasoline prices, which dropped Debt and the Monetary Aggregates 15 percent over 1998, reversed almost all of that decline over the first six months of this year. Prices of Debt and Depository Intermediation heating fuel also rebounded after dropping in 1998. In all, the CPI for energy rose at a 10 percent annual The total debt of the U.S. household, government, rate over the December-to-June period. and nonfinancial business sectors increased at about a Consumer food prices increased moderately over 6 percent annual rate from the fourth quarter of 1998 the first six months of the year, rising at a 13A percent through May, a little above the midpoint of its growth annual rate. Despite the upturn in commodity prices range of 3 percent to 7 percent. Nonfederal debt generally, farm prices have remained quite low and expanded briskly at about a 9 percent annual pace, in have helped to hold down food price increases. Spot association with continued strong private domestic prices of wheat, soybeans, and sugar have moved spending on consumer durable goods, housing, and down further this year from already depressed levels business investment. By contrast, federal debt conat the end of 1998, and prices of corn and coffee have tracted at a 3 percent annual rate, as budget surpluses remained low as well. reined in federal government financing needs. The CPI for goods other than food and energy Credit extended by depository institutions slumped declined at about a Vi percent annual rate over the over the first half of 1999, after having expanded first six months of 1999, after having risen \XA per- quite briskly in 1998. A fair-sized portion of the cent over 1998. The 1998 increase reflected a sharp expansion in 1998 came in the fourth quarter and rise in tobacco prices in December associated with stemmed from the turmoil in financial markets. In the settlement of litigation between the tobacco com- that turbulent environment, depository institutions panies and the states; excluding tobacco, the CPI for postponed securitization of mortgages, and busicore goods was about flat last year. The decline in the nesses shifted their funding demand from securities first half of this year was concentrated in durable markets to depository institutions, where borrowing goods, where prices softened for a wide range of costs in some cases were governed by pre-existing items, including motor vehicles. The CPI for non- lending commitments. Depository institutions also energy services increased about 2Vi percent at an acquired mortgage-backed securities and other priannual rate in the first half, down a little from the vate debt instruments in volume, as their yields eviincrease over 1998. Increases in the CPI for rent dently rose relative to depository funding costs. As Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 545 M3: Annual range and actual level deposits. Growth of institutional money market mutual funds also moderated from its rapid pace in Trillions of dollars 1998. Rates on money market funds tend to lag the June movements in market rates because the average rate of return on the portfolio of securities held by the fund changes more slowly than market rates. In the fall, rates on institutional money market funds did not decline as fast as market rates after the Federal Reserve eased monetary policy, and the growth of these funds soared. As rates on these funds moved back into alignment with market rates this year, growth of these funds ebbed. M2 advanced at a 6VA percent annual rate from the fourth quarter of 1998 through June. M2 growth had been elevated in late 1998 by unsettled financial O N D J F M A MJ J conditions, which raised the demand for liquid money 1998 1999 balances, and by the easing of monetary policy, which reduced the opportunity costs of holding the assets financial stresses unwound, securitization resumed, included in the monetary aggregates. M2 growth business borrowers returned to securities markets, moderated over the first half of 1999, as the heightand net purchases of securities slowed. From the ened demand for money waned; in June this aggrefourth quarter of 1998 through June, bank credit rose gate was above its 1 percent to 5 percent priceat a 3 percent annualized pace, after adjusting for the stability growth range. The growth in M2 over the estimated effects of mark-to-market accounting rules. first half of the year again outpaced that of nominal income, although the decline in M2 velocity—the ratio of nominal income to M2—was at a slower rate Monetary Aggregates than in 1998. The decline this year reflected in part a continuing lagged response to the policy easing in The growth of M3, the broadest monetary aggregate, the fall; however, the drop in M2 velocity was again slowed appreciably over the first half of 1999. M3 larger than predicted on the basis of the historical expanded at a 6 percent annual pace from the fourth relationship between the velocity of M2 and the quarter of 1998 through June of this year, placing this opportunity costs of holding M2—measured as the aggregate at the top of the 2 percent to 6 percent difference between the rate on three-month Treasury price-stability growth range set by the FOMC at its bills and the average return on M2 assets. The rea- February meeting. With depository credit growing sons for the decline of M2 velocity this year are not modestly, depository institutions trimmed the managed liabilities included in M3, such as large time M2 velocity and the opportunity cost of holding M2 Ratio scale Percentage points, ratio scale M2: Annual range and actual level Trillions of dollars June 1978 1983 HJ88 1993 1998 NOTE. The data are quarterly. The velocity of M2 is the ratio of nominal O N D J F M A MJ J gross domestic product to the stock of M2. The opportunity cost of M2 is a two-quarter moving average of the difference between the three-month Treasury 1998 1999 bill rate and the weighted-average return on assets included in M2. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

546 Federal Reserve Bulletin • August 1999 4. Growth of money and debt Percent Domestic Period Ml M2 M3 nonfinancial debt Annual1 1989 .6 5.2 4.1 7.5 1990 4.2 4.2 1.9 6.7 1991 8.0 3.1 1.2 4.5 1992 14.3 1.8 .6 4.5 1993 10.6 1.3 1.0 4.9 1994 2.5 .6 1.7 4.9 1995 -1.6 3.9 6.1 5.4 1996 -4.5 4.6 6.8 5.1 1997 -1.2 5.8 8.8 4.8 1998 1.8 8.5 10.9 6.1 Quarterly (annual rate)2 1999:1 2.8 7.2 7.3 5.9 2 3.4 5.7 5.0 Year-to-date 3 1999 2.0 6.2 6.0 6.1 NOTE. Ml consists of currency, travelers checks, demand deposits, and other ments, households and nonprofit organizations, nonfinancial businesses, and checkable deposits. M2 consists of M1 plus savings deposits (including money farms. market deposit accounts), small-denomination time deposits, and balances in 1. From average for fourth quarter of preceding year to average for fourth retail money market funds. M3 consists of M2 plus large-denomination time quarter of year indicated. deposits, balances in institutional money market funds, RP liabilities (overnight 2. From average for preceding quarter to average for quarter indicated. and term), and Eurodollars (overnight and term). Debt consists of the out- 3. From average for fourth quarter of 1998 to average for June (May in the standing credit market debt of the U.S. government, state and local govern- case of domestic nonfinancial debt). clear; the drop extends a trend in velocity evident years because most of the depository institutions that since mid-1997 and may in part owe to households' would benefit from such programs had already impleefforts to allocate some wealth to the assets included mented them. in M2, such as deposits and money market mutual As a consequence of retail sweep programs, the fund shares, after several years of substantial gains in balances that depository institutions are required to equity prices that greatly raised the share of wealth hold at the Federal Reserve have fallen about 60 perheld in equities. cent since 1994. This development has the potential Ml increased at a 2 percent annualized pace from to complicate reserve management by the Federal the fourth quarter of 1998 through June, in line with Reserve and depository institutions and thus raise the its advance in 1998. The currency component of Ml volatility of the federal funds rate. It would do so expanded quite rapidly. The strength appeared to by making the demand for balances at the Federal stem from domestic, rather than foreign, demand, Reserve more variable and less predictable. Before perhaps reflecting vigorous consumer spending, the introduction of sweeps, the demand for balances although currency growth was more robust than was high and stable because reserve balance requiremight be expected for the rise in spending. The ments were large, and the requirements were satisdeposits in Ml—demand deposits and other check- fied by the average of daily balances held over a able deposits—contracted further, as retail sweep pro- maintenance period. With sweep programs reducing grams continued to be introduced. These programs, required balances to low levels, depository instituwhich first began in 1994, shift funds from a deposi- tions have found that they target balances in excess of tor's checking account, which is subject to reserve their required balances in order to gain sufficient requirements, to a special-purpose money market protection against unanticipated debits that could deposit account, which is not. Funds are then shifted leave their accounts overdrawn at the end of the day. back to the checking account when the depositor's This payment-related demand for balances varies account balance falls below a given level. The more from day to day than the requirement-related depository institution benefits from a retail sweep demand. Thus far, the greater variation in the demand program because the program cuts its reserve require- for balances has not made the federal funds rate ment and thus the amount of non-interest-bearing appreciably more volatile, in part reflecting the sucreserve balances that it must hold at its Federal cessful efforts of depository institutions and the Fed- Reserve Bank. New sweep programs depressed the eral Reserve to adapt to lower balances. For its part, growth of Ml by about 5V4 percentage points over the Federal Reserve has conducted more open market the first half of 1999, somewhat less than in previous operations that mature the next business day to bet- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 547 ter align daily supply with demand. Nonetheless, Implied volatilities required balances at the Federal Reserve could drop Percent Percent to levels at which the volatility of the funds rate becomes pronounced. One way to address the problem of declining required balances would be to per- 13 — S&P500 40 — mit the Federal Reserve to pay interest on the reserve 12 — — 35 balances that depository institutions hold. Paying interest on reserve balances would reduce consider- 11 — — 30 ably the incentives of depository institutions to de- 10 . — 25 velop reserve-avoidance practices that may complicate the implementation of monetary policy. 9 Hi— 20 8 — Long-term J- 15 Treasury bond — U.S. Financial Markets 1 i i i i i i t i t t i i i i i , 1 J F M A M J J A S 0 N D J F M A M J J 1998 1999 Yields on Treasury securities have risen this year in NOTE. The data are daily. Implied volatilities are calculated from options response to the ebbing of the financial market strains prices. Last observations are for July 19, 1999. of late 1998, surprisingly strong economic activity, concerns about the potential for increasing inflation, not so acute, and yields on these securities were in and the consequent anticipation of tighter monetary somewhat closer alignment with yields on issues that policy. In January, yields on Treasury securities had been outstanding longer. Dealers were more willmoved in a narrow range, as lingering safe-haven ing to put capital at risk to make markets, and biddemands for dollar-denominated assets, owing in part asked spreads in Treasury securities narrowed someto the devaluation and subsequent floating of the what, though, in June they were still a bit wider than Brazilian real, about offset the effect on yields of had been typical. Market expectations of asset price stronger-than-expected economic data. Over subse- volatility, as reflected in prices on Treasury bond quent months, however, yields on Treasury securities, options contracts, receded on balance. The implied especially at intermediate and long maturities, moved volatility of bond prices dropped off until April and up substantially. The demand for the safest and most then turned back up, as uncertainty about the timing liquid assets, which had pulled down Treasury yields and extent of a possible tightening of monetary polin the fall, abated as the strength in economic activity icy increased. and favorable earnings reports engendered optimism Yields on inflation-indexed Treasury securities about the financial condition of private borrowers and have only edged up this year, and the spreads between encouraged investors to buy private securities. In yields on nominal Treasury securities and those on addition, rising commodity prices, tight labor mar- comparable inflation-indexed securities have widkets, and robust economic activity led market partici- ened considerably. Yields on inflation-indexed securipants to conclude that monetary policy would need to ties did not decline in late 1998 like those of their be tightened, perhaps in a series of steps. This view, nominal counterparts, in part because these securities accentuated by the FOMC's announcement after its were not perceived as being as liquid as nominal May meeting that it had adopted a directive tilted Treasury securities. Thus, as the safe-haven demand toward tightening policy, also boosted yields. for nominal Treasury securities unwound and nomi- Between the end of 1998 and mid-July, Treasury nal yields rose, yields on inflation-indexed securities yields added about 80 basis points to 110 basis points, did not move up concomitantly. Moreover, these on balance, with the larger increases in the intermedi- yields were held down by some improvement in ate maturities. The rise in Treasury bill rates, the liquidity of the market for inflation-indexed anchored by the modest upward move in the FOMC's securities, as suggested by reports of narrower bidtarget federal funds rate, was much less, about asked spreads, which provided additional impetus 10 basis points to 40 basis points. for investors to acquire these securities. Because of The recovery in fixed-income markets over the first such considerations, the value of the yield spread half of the year was evident in a number of indicators between nominal and inflation-indexed Treasury of market conditions. Market liquidity was generally securities as an indicator of inflation expectations is better, and volatility was lower. The relative demand limited. Nonetheless, the widening of the spread for the most liquid Treasury securities—the most this year may have reflected some rise in inflation recently auctioned security at each maturity—was expectations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

548 Federal Reserve Bulletin • August 1999 Major stock price indexes to prices, as measured by the S&P 500 index, was near the record low established in May. Meanwhile, real interest rates, measured as the difference between the yield on the nominal ten-year Treasury note and a survey-based measure of inflation expectations, moved up. Consequently, the risk premium for holding equities remained quite small by historical — if vn — 150 standards. — JJJUFFF — 130 jtfrii/m tr s&p500 — y4 jffiSj i^/f — 110 Year 2000 Preparedness ^^ \ — 90 The Federal Reserve and the banking system have / F \ (f w\f Russell 2(XK) largely completed preparing technical systems to 1 i i i i I i ii li i I i I J FMAMJ JASONDJ FMAMJ JASONDJ FMAMJ J ensure that they will function at the century date 1997 1998 1999 change and are taking steps to deal with potential NOTE. The data are daily. Last observations are for July 19, 1999. contingencies. The Federal Reserve successfully completed testing all of its mission-critical computer Equity prices have climbed this year. Major equity systems for year 2000 compliance, including its secuprice indexes posted gains of 10 percent to 31 per- rities and funds transfer systems. As a precaution to cent, on balance, between the end of 1998 and assure the public that sufficient cash will be available July 16, when most of them established record highs. in the event that demand for U.S. currency rises The lift to prices from stronger-than-anticipated eco- in advance of the century date change, the Federal nomic activity and corporate profits apparently has Reserve will increase considerably its inventory of offset the damping effect of rising bond yields. Prices currency by late 1999. In addition, the Federal of technology issues, especially Internet stocks, have Reserve established a Century Date Change Special risen considerably on net, despite some wide swings Liquidity Facility to supply collateralized credit in sentiment. Share prices of firms producing primary freely to depository institutions at a modest penalty to commodities, which tumbled in the fall, rebounded to market interest rates in the months surrounding the post large price gains, perhaps because of the firming rollover. This funding should help financially sound of commodity prices amid perceptions that Asian depository institutions commit more confidently to economies were improving. Consensus estimates of supplying loans to other financial institutions and earnings over the coming twelve months have businesses in the closing months of 1999 and early strengthened, but in June the ratio of these estimates months of 2000. All depository institutions have been subject to special year 2000 examinations by their banking Equity valuation and the ten-year real interest rate supervisors to ensure their readiness. Banks, in turn, Percent have worked with their customers to encourage year 2000 preparedness by including a review of a customer's year 2000 preparedness in their underwriting or loan-review standards and documentation. According to the Federal Reserve's May 1999 Senior Loan Officer Opinion Survey, a substantial majority of the respondent banks have largely completed year 2000 preparedness reviews of their material customers. Most banks reported that only a small portion of their customers have not made satisfactory progress. Banks in the Federal Reserve's survey reported little demand from their clients for special contingency lines of credit related to the century date NOTE. The data are monthly. The earnings-price ratio is based on the I/B/E/S change, although many expect demand for such lines International, Inc., consensus estimate of earnings over the coming twelve months. The real interest rate is the yield on the ten-year Treasury note less the to increase somewhat as the year progresses. Almost measure of ten-year inflation expectations from the Federal Reserve Bank of all domestic respondents reported that they are will- Philadelphia Survey of Professional Forecasters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 549 ing to extend such credit lines, although in some been cut, in steps, from its March high. The overnight cases with tighter standards or terms. rate was reduced further, to 21 percent by the end of June, but the real fell back only modestly and stood at about 1.80 per dollar in mid-July. Brazil's stock International Developments market also rose sharply and was up by about 65 percent in the year to date. Global economic prospects look considerably Several favorable developments have worked to brighter than they did only a few months ago. To support the real and equity prices over the past few an important degree, this improvement owes to the months. Inflation has been lower than expected, with rebound in the Brazilian economy from the turmoil consumer price inflation at an annual rate of around experienced in January and February and to the fact 8 percent for the first half of the year. Greater-thanthat the fallout from Brazil on other countries was expected real GDP growth in the first quarter, though much less than it might have been. The fear was that attributable in part to temporary factors, provided the collapse of the Brazilian real last January would some evidence of a bottoming out, and possible unleash a spiral of inflation and further devaluation recovery, in economic activity over the first part of and lead to a default on government domestic debt, this year. And in the fiscal arena, the government destabilizing financial markets and triggering an posted a primary surplus of more than 4 percent of intensified flight of capital from Brazil. In light of GDP in the first quarter—well above the goal in the events following the Russian debt moratorium and International Monetary Fund program. The positive collapse of the ruble last year, concern existed that a turn of events has facilitated a return of the Brazilian collapse of the real could also have negative reper- government and private-sector borrowers to internacussions in Latin America more broadly, and possi- tional bond markets, albeit on more restrictive terms bly even in global financial markets. than those of a year ago. Developments in Brazil turned out better than Since the middle of May, however, the road to expected over the weeks after the floating of the real recovery in Brazil has become bumpier. The central in January. Between mid-January and early March, government posted a fiscal deficit in May that was the real lost 45 percent of its value against the dollar, bigger than had been expected. In addition, court reaching a low of 2.2 per dollar, but then started to challenges have called into question fiscal reforms recover after the Brazilian central bank raised the enacted earlier this year that were expected to overnight interest rate from 39 percent to 45 percent improve the government's fiscal balance by about and made clear that it gave a high priority to fighting 1 percent of GDP. In May, the rise in U.S. interest inflation. By mid-May, the real had strengthened rates associated with the anticipated tightening in the to 1.65 per dollar, even while the overnight rate had stance of U.S. monetary policy helped push Brady bond yield spreads up more than 200 basis points. Although they narrowed some in June, they widened recently on concerns about Argentina's economic Brazilian financial indicators situation. Index, January 1997 = 100 Percent The Brazilian crisis did trigger renewed financial Exchange rate index stress throughout Latin America, as domestic interest rates and Brady bond yield spreads increased sharply Stock index in January from levels that had already been elevated 160 by the Russian crisis. Nonetheless, these increases were generally smaller than those that had followed 140 the Russian crisis, and as developments in Brazil 120 proved more positive than expected, financial conditions in the rest of the region stabilized rapidly. Even so, the combination of elevated risk premiums and diminished access to international credit markets, 80 Overnight interest rate as well as sharp declines in the prices of commodi i i i i i i i i i i 1 i i i i i i i i i i i I i i i i i i I ity exports, had significant consequences for GDP J FMAMJ J ASONDJ FMAMJ J ASONDJ FMAMJ J growth, which began to slow or turn negative 1997 1998 1999 throughout the region in late 1998 and early 1999. NOTE. The stock index is the Bovespa index from the Sao Paolo Exchange, last trading day of the month. The overnight interest rate is the average monthly Mexico appears to have experienced the least dimi- SELIC rate. The exchange rate index is the average monthly bilateral exchange nution in economic growth, likely because of its rate with the U.S. dollar. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

550 Federal Reserve Bulletin • August 1999 strong trade links with the United States, where Stock prices in developing Asian countries growth has been robust. A flattening in Mexican Index. January 1997= 100 GDP in the final quarter of 1998 has given way to renewed, but moderate, growth more recently, and the Mexican peso has appreciated by about 5V2 percent relative to the dollar since the start of the year. By contrast, economic activity in Argentina declined sharply in the first quarter, in part because of the devaluation and relatively weak economic activity in Brazil, Argentina's major trading partner. More recently the earlier recovery in Argentina's financial markets appears to have backtracked as concern has increased about the medium- to long-run viability of the currency peg to the dollar. Several countries in the region, including Venezuela, Chile, and Colombia, also experienced sharp declines in output in the 1997 1998 1999 first quarter, stemming in part from earlier declines in NOTE. The data are for the last trading day of the month. The July observaoil and other commodity prices. tions are for July 19. Indexes are capitalization-weighted averages of all stocks traded on a country's stock exchange. In emerging Asia, signs of recovery in financial markets and in real activity are visible in most of the ing slower progress in addressing structural weakcountries that experienced financial crises in late nesses in the financial and corporate sectors. How- 1997. However, the pace and extent of recovery is ever, activity appears to have bottomed out and has uneven across countries. The strongest recovery has recently shown signs of starting to move up in these been in Korea. In 1998, the Korean won reversed countries. nearly half of its sharp depreciation of late 1997. Financial markets in China and Hong Kong experi- It has been little changed on balance this year, as enced some turbulence at the start of the year when Korean monetary authorities have intervened to mod- Chinese authorities put the Guangdong International erate its further appreciation. Korean stock prices Trust and Investment Corporation (GITIC) into bankhave also staged an impressive recovery—moving up ruptcy, leading to rating downgrades for some Chiabout 75 percent so far in 1999. In the wake of its nese financial institutions, including the major state financial crisis, output in Korea fell sharply, with commercial banks. The GITIC bankruptcy also raised industrial production down about 15 percent by the concerns about Hong Kong financial institutions, middle of last year. Since then, however, production which are heavy creditors to Chinese entities. These has bounced back. With the pace of the recovery concerns contributed to a substantial increase in yield accelerating this year, all of the post-crisis drop spreads between Hong Kong government debt and in production has been reversed. This turnaround U.S. Treasury securities and to a fall in the Hong reflects both the improvement in Korea's external Kong stock market of about 15 percent. Spreads have position, as the trade balance has swung into sub- narrowed since, falling from about 330 basis points stantial surplus, and the government's progress in on one-year debt in late January to about 80 basis addressing the structural problems in the financial points by mid-May, and have remained relatively and corporate sectors that contributed to the crisis. stable since then. Equity prices also rebounded Financial markets in the Southeast Asian countries sharply, rising nearly 50 percent between midthat experienced crises in 1997 (Thailand, Singapore, February and early May. Despite sizable volatility in Malaysia, Indonesia, and the Philippines) apparently May and June, they are now roughly unchanged from were little affected by spillover from Brazil's troubles early May levels. earlier this year and have recovered on balance over In Japan, a few indicators suggest that recovery the past year, with exchange rates stabilizing and from a prolonged recession may be occurring. Princistock prices moving higher. Financial conditions have pally, first-quarter GDP growth at an annual rate of been weakest in Indonesia, in large part a result of 7.9 percent was recorded—the first positive growth political uncertainty; but even so, domestic interest in six quarters. This improvement reflects in part a rates have dropped sharply, and the stock market has shift toward more stimulative fiscal and monetary staged an impressive rebound since April. The recov- policies. On the fiscal front, the government ery of economic activity in these countries has been announced a set of measures at the end of last year slower and less robust than in Korea, possibly reflect- that were slated for implementation during 1999 and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 551 included permanent cuts in personal and corporate In the other major industrial countries, the pace income taxes, various investment incentives, and of economic growth this year has been mixed. Ecoincreases in public expenditures. The large-scale fis- nomic developments in Canada have been quite cal expansion and concern about increases in the favorable. GDP rose 4lA percent at an annual rate in supply of government bonds caused bond yields to the first quarter after a fourth-quarter gain of 43A permore than double late last year and early this year, to cent, with production fueled by strong demand for a level of about 2 percent on the ten-year bond. Canadian products from the United States. Core infla- In mid-February, primarily because of concern tion remains low, near the lower end of the Bank about the prolonged weakness in economic activity of Canada's target range of 1 percent to 3 percent, and pronounced deflationary pressures but also in although overall inflation rose some in April and response to the rising bond yields, the Bank of Japan May. Oil prices and other commodity prices have announced a reduction in the target for the overnight risen, and the current account deficit has narrowed call-money rate and subsequently guided the rate to considerably. These factors have helped the Canadian its present level of 3 basis points by early March. dollar appreciate relative to the U.S. dollar by about This easing of monetary policy had a stimulative 4 percent this year and have facilitated a cut in effect on Japanese financial markets, with the yield short-term interest rates of 50 basis points by the on the ten-year government bond falling more than Bank of Canada. Along with rising long-term interest 75 basis points, to 1.25 percent by mid-May. More rates elsewhere, long rates have increased in Canada recently, the yield has risen to about 1.8 percent, by about 30 basis points over the course of this year. partially in response to the release of unexpectedly Even so, equity prices have risen about 12 percent strong first-quarter GDP growth. Supportive mone- since the start of the year, although the rise in longtary conditions, coupled with restructuring announce- term rates has undercut some of the momentum in the ments from a number of large Japanese firms and stock market. growing optimism about the economic outlook, have In the United Kingdom, output was flat in the first fueled a rise in the Nikkei from around 14,400 over quarter, coming off a year in which GDP growth had the first two months of the year to over 18,500 in already slowed markedly. However, the effects of mid-July. aggressive interest rate reductions undertaken by the The improved economic performance in Japan also Bank of England in late 1998 and earlier this year reflects some progress on addressing persistent prob- appear to have emerged in the second quarter, with lems in the financial sector. In March the authorities gains in industrial production, retail sales volume, injected IV2 trillion yen of public funds into large and business confidence. Inflationary pressures have financial institutions and began to require increased been well contained, benefiting in part from the conprovisioning against bad loans as well as improved tinued strength in sterling; the Bank of England cut financial disclosure. Although much remains to be interest rates, most recently in June, to reduce the done, these actions appear to have stabilized condi- likelihood of inflation undershooting its target of tions, at least temporarily, in the banking system, and 2Vi percent. Consistent with expectations of an the premium on borrowing rates paid by leading upturn in growth, equity prices have risen more than Japanese banks declined to zero by March. 15 percent, and long-term bond yields have climbed The yen strengthened in early January, supported nearly 80 basis points since the end of last year. by the runup in long-term Japanese interest rates, First-quarter growth in the European countries that reaching about 110 per dollar—its highest level in have adopted a common currency (euro area) more than two years. However, amid apparent inter- regained some momentum from its slow pace in late vention by the Japanese authorities, the yen retreated 1998 but was nevertheless below potential, as proto a level above 116 per dollar, and it remained near duction continued to react to the decline in export that level until the mid-February easing of monetary orders registered over the course of 1998 and in early policy and the subsequent decline of interest rates 1999. Still, the drag on overall production from weak when it depreciated to about 120 per dollar. In mid- export demand from Asia and eastern Europe appears June, the Japanese authorities intervened in the for- to have lifted a bit in the past few months, although eign exchange market in an effort to limit apprecia- the signs of a pickup in growth were both tentative tion of the yen after the surprisingly strong first- and uneven across the euro area. In Germany, indusquarter GDP release increased market enthusiasm for trial production was higher in April and May than in that currency. The authorities noted that a premature the preceding two months, and export orders were strengthening of the yen was undesirable and would markedly higher in those months than they had been weigh adversely on economic recovery. at any time since the spring of 1998. But in France, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

552 Federal Reserve Bulletin • August 1999 which had been the strongest of the three largest Nominal dollar exchange rate indexes euro-area economies in 1998, GDP growth was a Index, January 1997 = 100 meager VA percent at an annual rate in the first quarter, and industrial production slipped in April. On average in the euro area, inflation has remained quite tame, even as rising oil prices, a declining euro, and, at least in Germany, an acceleration in wage rates have raised inflationary pressures this year. The low average rate of inflation as well as the still sluggish pace of real activity in some of the euro-area countries led the European Central Bank to lower the overnight policy rate by 50 basis points in April, on top of cuts in short-term policy rates made by the national central banks late last year that, on average, were worth about 60 basis points. Notwithstanding the easing of the policy stance, 1997 1998 1999 long-term government bond yields have risen sub- NOTE. The data are monthly averages. The euro-area exchange rate uses the stantially from their January lows in the largest restated German mark before January 1999. The major currency index is the trade-weighted average of the exchange value of the dollar against major economies of the euro area. Ten-year rates spiked in currencies. early March along with U.S. rates, fell back some through mid-May, and then resumed an upward euro and the currencies of the eleven countries adoptcourse around the time the FOMC adopted a tighten- ing the euro were set on December 31; based on these ing bias in mid-May. Since the middle of June, a rates, the value of the euro at the moment of its relatively sharp increase in yields has pushed them to creation was $1.16675. Trading in the euro opened about 100 basis points above their values at the start on January 4, and after jumping on the first trading of the year and has narrowed what had been a grow- day, its value has declined relative to the dollar ing interest rate differential between U.S. and Euro- almost steadily and is now about 13 percent below its pean bonds. In addition to the pressure provided by initial value. The course of the euro-dollar exchange the increase in U.S. rates, the runup in European rate likely has reflected in part the growing diveryields likely reflects the belief that short-term rates gence in both the cyclical positions and, until have troughed, as the incipient recovery in Asia not recently, long-term bond yields of the euro-area only reduces the drag on European exports but also economies and the United States. Concerns about attenuates deflationary pressures on European import fiscal discipline in Italy—the government raised prices. Concern about the fall in the exchange value its 1999 deficit-to-GDP target from 2.0 percent of the euro may also have contributed to an assess- to 2.4 percent—and about progress on structural ment that the next move in short-term rates would be reforms in Germany and France have also been cited up. Gains in equity prices so far this year—averaging as contributing to weakness in the euro, with the about 121/2 percent—are also suggestive of the belief European Central Bank recently characterizing that economic activity may be picking up, although national governments' fiscal policy plans as the range in share price movements is fairly broad, "unambitious." even considering only the largest economies: French On balance the dollar has appreciated more than equity prices have risen about 20 percent, German 4'/ percent against an index of the major currencies 2 prices are up 13 percent, and Italian prices are up since the end of last year, owing mainly to its only 5 percent. strengthening relative to the euro. Nevertheless, it The new European currency, the euro, came into remains below its recent peak in August of last year operation at the start of the year, marking the begin- when the Russian debt moratorium and subsequent ning of Stage Three of European Economic and financial market turmoil sent the dollar on a two- Monetary Union. The rates of exchange between the month downward slide. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

553 Industrial Production and Capacity Utilization for June 1999 Released for publication July 16 from a first-quarter pace of 1.3 percent. At 80.3 percent in June, capacity utilization for total industry Industrial production rose 0.2 percent in June after was little changed from the beginning of the year but gains of 0.2 percent in May and 0.3 percent in April. was down 1.2 percentage points from June 1998. At 134.2 percent of its 1992 average, industrial production in June was 2.7 percent higher than in June MARKET GROUPS 1998. For the second quarter as a whole, the total index increased at an annual rate of 3.9 percent, up The output of consumer goods was unchanged for a Industrial production and capacity utilization Ratio scale, 1992 = 100 Percent of capacity IInndduussttrriiaall pprroodduuccttiioonn Capacity utilization 113300 — Manufacturing , Total industry — 120 A/^ Total industry 85 - 110 / Manufacturing — 80 100 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1990 1992 1994 1996 1998 1988 1990 1992 1994 1996 1998 Industrial production, market groups Ratio scale, 1992 = 100 Ratio scale, 1992= 100 / - — Consumer goods 145 135 A^A/NT ]j — Durable ~ 125 115 105 Nondurable 95 Ii V i i i i 1 1 1 1 Ratio scale, 1992= 100 Equipment - 175 160 145 — Business 130 115 100 _ Defense and space 85 1 1 1 1 1 1 1 1 1 1 1990 1992 1994 1996 1998 1990 1992 1994 1996 1998 All series are seasonally adjusted. Latest series, June. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

554 Federal Reserve Bulletin • August 1999 Industrial production and capacity utilization, June 1999 Industrial production, index, 1992= 100 Percentage change Category 1999 19991 June 1998 to Mar.' Apr.r Mav' Junep Mar. Apr.' May' Junef June 1999 Total 133.3 133.7 134.0 134.2 .7 .3 .2 .2 2.7 Previous estimate 133.3 133.8 134.1 .7 .4 .2 Major market groups Products, total2 125.2 125.6 125.8 125.6 .5 .4 .1 -.1 1.6 Consumer goods ... 115.3 115.6 115.6 115.6 .0 .3 .0 .0 .4 Business equipment 169.3 170.7 171.7 171.9 1.0 .8 .6 .1 5.1 Construction supplies 131.7 132.2 132.1 131.3 -.8 .4 -.1 -.6 4.1 Materials 146.7 146.9 147.4 148.2 1.0 .2 .3 .5 4.5 Major industry groups Manufacturing 137.5 138.0 138.4 138.6 .4 .4 .3 .1 3.6 Durable 163.1 164.2 165.2 165.9 .9 .6 .6 .4 7.1 Nondurable 111.7 111.8 111.6 111.3 -.2 .1 -.2 -.2 -.7 Mining 98.9 98.3 98.7 99.1 .1 -.6 .4 .4 -5.4 Utilities 116.7 116.3 114.3 114.7 4.9 -.4 -1.7 .4 -3.4 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1998 1999 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, JJJuuunnneee 111999999888 11996677--9988 11998822 11998888--8899 June Mar.r | Apr.r Mayr June? tttooo JJJuuunnneee 111999999999 Total 82.1 71.1 85.4 81.5 80.5 80.5 80.4 80.3 4.3 Previous estimate 80.5 80.5 80.5 Manufacturing 81.1 69.0 85.7 80.2 79.5 79.6 79.6 79.4 4.7 Advanced processing 80.5 70.4 84.2 79.2 78.4 78.6 78.6 78.5 5.6 Primary processing . 82.4 66.2 88.9 83.3 82.7 82.5 82.4 82.2 2.4 Mining 87.5 80.3 88.0 87.3 81.8 81.2 81.4 81.7 1.1 Utilities 87.4 75.9 92.6 94.0 91.9 91.5 89.9 90.2 .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. second month. The production of durable consumer 0.8 percent from March to May. Further gains in the goods decelerated to a 0.5 percent rate. The output of production of information processing equipment and automotive products rose 1.8 percent while the pro- in the assembly of business vehicles were counterbalduction of other durable goods fell 0.5 percent, with anced by declines in the output of farm machinery declines in kitchen appliances, carpets, and other and equipment, civilian aircraft, and industrial equipgoods exceeding gains in home computing equip- ment, particularly construction and mining machinment and room air conditioners. For the second quar- ery. The output of defense and space equipment ter, the output of durable consumer goods increased declined 0.6 percent, to a level 2 percent below that at an annual rate of 12.3 percent as assemblies of of June 1998. light vehicles rose to a seasonally adjusted annual The production of both construction and business rate of 12.7 million units, up from 12.3 million units supplies eased for a second month. For the second in the first quarter. The production of nondurable quarter, the index for construction supplies fell at consumer goods eased 0.2 percent in June; a small an annual rate of 1.2 percent after an increase of decrease in the production of non-energy goods was 8.3 percent in the first quarter, when mild weather accompanied by a further decline in the production of contributed to strength m construction activity. The energy goods as the output of fuels fell back. Over output of materials increased 0.5 percent. The output the past twelve months, the output of consumer non- of durable goods materials, which, in terms of value durable goods fell 2.9 percent, with weakness in most added, accounts for more than half of industrial major categories. materials, increased 0.7 percent in June, as it had in A 0.1 percent gain in the output of business equip- May. The output of semiconductors and computer ment followed monthly advances that averaged parts continued to rise appreciably. The production of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 555 nondurable goods materials and energy materials ued the weakness of recent months; output edged turned up a bit after declines in May; both of these down 0.3 percent at an annual rate in the second indexes were more than 1 percent below their levels quarter after having increased only slightly during of June 1998. the previous two quarters. The output of petroleum products and of leather and products fell about 2 percent in June; the production of tobacco, textiles, and INDUSTRY GROUPS apparel fell about 1 percent; and the output of chemicals and products fell about xh percent. However, Output in manufacturing edged up 0.1 percent as an increases in food and in paper and products restrained increase of 0.4 percent for durable goods was partly the overall drop in nondurables. offset by a decrease of 0.2 percent for nondurables. The factory operating rate fell 0.2 percentage point, The June rise in durables was the smallest since to 79.4 percent, with decreases in both advanced- and February; output over the second quarter rose at an primary-processing industries. Capacity utilization annual rate of 7.7 percent. The gain in June, as well in primary-processing industries, at 82.2 percent, as for the second quarter, principally reflected signifi- dipped noticeably below its 1967-98 average for cant gains at makers of high-technology goods, such only the second month since mid-1992; utilization for as computers and semiconductors, and increases in advanced-processing industries has been below its the output of motor vehicles and parts. The output of long-run average since June 1998. stone, clay, and glass products also picked up in June. The output indexes for both utilities and mining Production decreased notably in lumber and in mis- rose 0.4 percent in June. The operating rate at electric cellaneous manufacturing; output has also fallen in utilities, 93.6 percent, was about 4 percentage points aerospace and miscellaneous transportation equip- above its long-run average. The operating rate for ment because commercial aircraft production has mining, 81.7 percent, was well below its long-run been declining from the record levels of last year. average; weakness in the oil fields accounted for The decrease in the production of nondurables contin- much of the slack. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

556 Statements to the Congress Statement by Alan Greenspan, Chairman, Board of dancies and has armed firms with detailed data to Governors of the Federal Reserve System, before the fine-tune product specifications to most individual Joint Economic Committee, U. S. Congress, June 14, customer needs. 1999 Moreover, information access in real time— resulting, for example, from such processes as bar Something special has happened to the American code scanning at checkout counters and satellite locaeconomy in recent years. tion of trucks—has fostered marked reductions in An economy that twenty years ago seemed to have delivery lead-times on all sorts of goods, from books seen its better days is displaying a remarkable run of to capital equipment. This, in turn, has reduced the economic growth that appears to have its roots in relative size of the overall capital structure required ongoing advances in technology. to turn out our goods and services. I have hypothesized on a number of occasions Intermediate production and distribution processes, that the synergies that have developed, especially so essential when information and quality control among the microprocessor, the laser, fiber optics, were poor, are being bypassed and eventually elimiand satellite technologies, have dramatically raised nated. The increasing ubiquitousness of Internet web the potential rates of return on all types of equip- sites is promising to significantly alter the way large ment that embody or utilize these newer technolo- parts of our distribution system are managed. gies. But beyond that, innovations in information The process of innovation goes beyond the factechnology—so-called IT—have begun to alter the tory floor or distribution channels. Design times manner in which we do business and create value, have fallen dramatically as computer modeling has often in ways that were not readily foreseeable even eliminated the need, for example, of the large staff five years ago. of architectural specification drafters previously As this century comes to an end, the defining required for building projects. Medical diagnoses characteristic of the current wave of technology is the are more thorough, accurate, and far faster, with role of information. Before this IT revolution most access to heretofore unavailable information. Treatof twentieth century business decisionmaking had ment is accordingly hastened, and hours of procebeen hampered by limited information. Owing to the dures eliminated. In addition, the dramatic advances paucity of timely knowledge of customers' needs and in biotechnology are significantly increasing a broad of the location of inventories and materials flows range of productivity-expanding efforts in areas from throughout complex production systems, businesses agriculture to medicine. required substantial programmed redundancies to Economists endeavor to describe the influence of function effectively. technological change on activity by matching eco- Doubling up on materials and people was essential nomic output against measurable economic inputs: as backup to the inevitable misjudgments of the real- quality-adjusted labor and all forms of capital. They time state of play in a company. Decisions were made attribute the fact that economic growth has persisfrom information that was hours, days, or even weeks tently outpaced the contributions to growth from old. Accordingly, production planning required costly labor and capital inputs to such things as technologiinventory safety stocks and backup teams of people cal innovation and increased efficiencies of organizato maintain quality control and to respond to the tions that are made possible through newer technolounanticipated and the misjudged. gies. For example, since 1995 output per labor Large remnants of information void, of course, workhour in the nonfarm business sector—our stanstill persist, and forecasts of future events on which dard measure of productivity—has grown at an all business decisions ultimately depend are still annual rate of about 2 percent. Approximately oneunavoidably uncertain. But the recent years' remark- third of that expansion appears to be attributable to able surge in the availability of real-time information output growth in excess of the combined growth of has enabled business management to remove large inputs. swaths of inventory safety stocks and worker redun- Of course, it often takes time before a specific Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

557 innovation manifests itself as an increase in measured saving of resources that, in the aggregate, is reflected productivity. Although some new technologies can be in higher levels of productivity. implemented quickly and have an immediate payoff, The newer technologies and foreshortened leadothers may take years or even decades before achiev- times have, thus, apparently made capital investment ing their full influence on productivity as new capital distinctly more profitable, enabling firms to substitute is put in place that can take advantage of these capital for labor and other inputs far more produccreations and their spillovers. Hence, the productivity tively than they could have a decade or two ago. growth seen in recent years likely represents the Capital, as economists like to say, has deepened benefits of the ongoing diffusion and implementation significantly since 1995. of a succession of technological advances; likewise, The surge in investment not only has restrained the innovative breakthroughs of today will continue costs, it has also increased industrial capacity faster to bear fruit in the future. than the rise in factory output. The resulting slack in The evident acceleration of the process of "cre- product markets has put greater competitive pressure ative destruction," which has accompanied these on businesses to hold down prices. expanding innovations and which has been reflected Technology is also damping upward price presin the shifting of capital from failing technologies sures through its effect on international trade, where into those technologies at the cutting edge, has been technological developments and a move to a less remarkable. Owing to advancing information capa- constrained world trading order have progressively bilities and the resulting emergence of more accurate broken down barriers to cross-border trade. All else price signals and less costly price discovery, market equal, the enhanced competition in tradable goods participants have been able to detect and to respond enables excess capacity previously bottled up in to finely calibrated nuances in consumer demand. one country to augment worldwide supply and exert The process of capital reallocation has been assisted restraint on prices in all countries' markets. through a significant unbundling of risks made pos- Because neither business firms nor their competisible by the development of innovative financial tors can currently count any longer on a general products, not previously available. Every new inno- inflationary tendency to validate decisions to raise vation has suggested further possibilities to profitably their own prices, each company feels compelled to meet increasingly sophisticated consumer demands. concentrate on efforts to hold down costs. The avail- Many ventures fail. But the few that prosper enhance ability of new technology to each company and its consumer choice. rivals affords both the opportunity and the competi- The newer technologies, as I indicated earlier, have tive necessity of taking steps to boost productivity. facilitated a dramatic foreshortening of the lead-times This contrasts with our experiences through the 1970s on the delivery of capital equipment over the past and 1980s, when firms apparently found it easier and decade. When lead-times for capital equipment are more profitable to seek relief from rising nominal long, firms must undertake capital spending that is labor costs through price increases than through costadequate to deal with the plausible range of business reducing capital investments. needs likely to occur after these goods are delivered The rate of growth of productivity cannot increase and installed. In essence, those capital investments indefinitely. While there appears to be considerable must be sufficient to provide insurance against uncer- expectation in the business community, and possibly tain future demands. As lead-times have declined, a Wall Street, that the productivity acceleration has not consequence of newer technologies, firms' forecasts yet peaked, experience advises caution. of future requirements have become somewhat less As I have noted in previous testimony, history is clouded, and the desired amount of lead-time insur- strewn with projections of technology that have fallen ance in the form of a reserve stock of capital has been wide of the mark. With the innumerable potential reduced. permutations and combinations of various synergies, In addition to shortening lead-times, technology forecasting technology has been a daunting exercise. has increased the flexibility of capital goods and There is little reason to believe that we are going production processes to meet changes in the demand to be any better at this in the future than in the past. for product characteristics and the composition of Hence, despite the remarkable progress witnessed to output. This flexibility allows firms to deal more date, we have to be quite modest about our ability to effectively with evolving market conditions with less project the future of technology and its implications physical capital than had been necessary in the past. for productivity growth and for the broader economy. Taken together, reductions in the amount of spare A key question that we need to answer in order to capital and increases in capital flexibility result in a appropriately evaluate the connection between tech- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

558 Federal Reserve Bulletin • August 1999 nological innovations and productivity growth is why Japan to take full advantage of the efficiencies offered have not the same available technologies allowed by the latest advances in information technology and productivity in Europe and Japan to catch up to U.S. other innovations. levels. While productivity in some foreign industrial Further investigation will be necessary to evaluate countries appears to have accelerated in recent years, the importance of these possible influences. But at a significant gap between U.S. productivity and that this stage, one lesson seems reasonably clear. As we abroad persists. contemplate the appropriate public policies for an One hypothesis is that a necessary condition for economy experiencing rapid technology advanceinformation technology to increase output per hour ment, we should strive to maintain the flexibility of is a willingness to discharge or retrain workers that our labor and capital markets that has spurred the the newer technologies have rendered redundant. continuous replacement of capital facilities embody- Countries with less flexible labor markets than the ing older technologies with facilities reflecting the United States enjoys may have been inhibited in this newest innovations. Further reducing regulatory regard. impediments to competition will, of course, add to Another hypothesis is that regulations, systems of this process. The newer technologies have widened corporate governance, trade restrictions, and govern- the potential for economic well-being. Governments ment subsidies have prevented competition from should seek to foster that potential. being sufficiently keen to induce firms in Europe and Statement by Laurence H. Meyer, Member, Board of reinforce supervisory efforts to promote sound risk Governors of the Federal Reserve System, before the management and contribute to a safe and sound finan- Subcommittee on Financial Institutions and Con- cial system. sumer Credit of the Committee on Banking and Indeed, banking organizations have long been Financial Services, U.S. House of Representatives, expected to follow generally accepted accounting June 16,1999 principles (GAAP) in their published financial statements and in regulatory financial statements filed I welcome this opportunity to discuss the Federal with the banking agencies—an approach supported Reserve's views on recent developments relating to by Congress in the Federal Deposit Insurance Corpothe allowance for loan losses. ration (FDIC) Improvement Act of 1991. As a supervisor of banking organizations, the primary focus of the Federal Reserve is on promoting a safe and sound financial system. Conservative allow- BACKGROUND AND EFFORTS TO WORK ance levels contribute to safety and soundness by TOGETHER WITH THE OTHER FEDERAL ensuring that insured depository institutions maintain BANKING AGENCIES AND THE SEC strong balance sheets and capital levels that reflect the collectibility of the loan portfolio. Accordingly, In the fall of 1998, the SEC announced an initiative the Federal Reserve and the other banking agencies to address earnings manipulation by registrants in a have long encouraged institutions to maintain strong number of industries. After the announcement of this loan-loss allowances. As a reminder of the impor- initiative, the SEC raised concerns regarding the tance of conservative allowance levels, we need look loan-loss reserve practices of some banking organizaonly to recent experiences in certain foreign countries tions, requiring one banking organization to reduce and to the problems in the banking and thrift indus- its reserves by $100 million. The federal banking tries in the past decade. agencies were concerned about these actions from In its role as a securities regulator, the Securities a safety and soundness standpoint. The agencies' and Exchange Commission (SEC) focuses primarily involvement led to the issuance of a November 1998 on the transparency of financial statements and interagency statement, which set forth a framework reported earnings to investors. The Federal Reserve for the banking agencies and SEC to begin working also recognizes the importance of transparent finan- together on loan-loss allowance issues. cial statements and has been working to enhance Subsequent to the issuance of the November statetransparency domestically and abroad. Improved ment, further questions arose regarding bank loantransparency can enhance market discipline and thus loss reserves, including concerns about the possibil- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 559 ity that the SEC would take further actions against The federal banking agencies and the SEC are also some banks that were perceived as having excessive participating as observers in the work of the Amerireserve levels. In addition, around this time, the SEC can Institute of Certified Public Accountants (AICPA) issued letters to a number of banking organizations to improve guidance with respect to loan-loss allowregarding their loan-loss allowance disclosure prac- ances. The AICPA, through its Allowance for Loan tices. Taken together, these developments generated Losses Task Force, is aiming to develop guidance additional uncertainty in the banking industry and over the next two years that improves the application may have created a perception that loan-loss allow- of current accounting guidance regarding the allowances would have to be reduced. ance. Important areas that the task force intends to In order to address any misunderstandings, the address include the following: (1) how to distinguish federal banking agencies and the SEC issued another between inherent losses, which are included in the joint letter on March 10, 1999, reiterating the agen- allowance under existing GAAP pronouncements, cies' agreement to work together and announcing a from future losses, (2) guidance clarifying certain number of joint efforts. The joint letter announced provisions of the Financial Accounting Standards new initiatives of the agencies and the accounting Board (FASB) Statement No. 114, including which profession to develop enhanced guidance on loan- loans should have an allowance measured under that loss allowances over a one- to two-year period. In statement, (3) measurement issues in estimating the addition, the agencies stated that they would support allowance, including the use of loss factors and credit and encourage the processes of the accounting stan- risk models, and (4) disclosure and documentation dards setters as they seek to clarify key loan-loss issues with respect to the allowance. allowance accounting issues. Most important, the let- I might note that the March 10 joint agency letter ter indicated that the agencies will meet together was widely supported by the banking industry. Speperiodically to discuss important matters that affect cifically, financial institutions and their auditors bank transparency and will focus on enhancing allow- applauded the fact that the banking agencies and the ance practices going forward. The spirit of the SEC were committing to work together and that the March 10 joint letter was to put into place a process agencies' focus would be on enhancing allowance for resolving issues related to loan-loss allowances practices going forward. going forward, and permit the agencies to work In April 1999, after a limited comment process that together in this process to resolve allowance matters the banking agencies participated in, the FASB issued and avoid significant changes in methodology that clarifying guidance, through an article in its "Viewwould encourage a decline in allowances before this points" publication, to banking organizations and process had run its course. other creditors on certain issues that arise in establish- The Federal Reserve Board has been pleased to ing loan-loss allowances in accordance with GAAP. host a number of the meetings announced in the In particular, the article addresses the application of March 10 letter between the banking agencies and the FASB Statements No. 5 and 114 to a loan portfolio SEC to discuss important loan-loss reserve issues, and how these standards interrelate. The article also and the other agencies have been active in supporting provides a general overview of existing accounting these discussions as well. The banking agencies and principles that pertain to the allowance. the SEC formed a new Joint Working Group, com- In response to questions received from accounting posed of senior accounting policy representatives of firms and creditors, the SEC announced on May 20 each of the agencies, to review sound practices used that registrants should follow the FASB guidance by institutions for documenting and supporting their in developing their loan-loss allowance estimates. loan-loss allowances. The agencies intend to issue Furthermore, registrants that would be materially parallel guidance in this important area in the next affected by the FASB issuance were provided transiyear. tion guidance by the SEC that should be implemented The Joint Working Group is also developing in the second quarter of 1999. At the same time, the enhanced disclosures related to the allowance for SEC indicated that it had no view, one way or the loan losses and the credit quality of institutions' other, with respect to the need for transition by instiportfolios. This effort is intended to improve the tutions. This announcement was made at a public transparency of loan-loss allowance amounts and meeting of the FASB's Emerging Issues Task improve market discipline. A key aspect of these Force—an important group that issues accounting efforts will be obtaining input from the banking guidance on how GAAP should be applied. industry and the accounting profession on allowance We understand that, as they became aware of the issues. planned announcement, many banks and auditors Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

560 Federal Reserve Bulletin • August 1999 were confused as to its meaning, in view of the joint mation to assist institutions and their auditors in initiatives discussed by the agencies in the March 10 understanding the SEC announcement and FASB interagency letter and the expectation that those ini- article in the broader context of other accounting tiatives would result in guidance being developed in initiatives under way. It also highlighted emerging the next two years. Moreover, some banks felt that points of agreement between the SEC and the Federal the implied message of this announcement was that Reserve on allowance accounting matters. In this banks should reduce their allowance levels in the regard, the letter encouraged the banking industry to second quarter. The Federal Reserve was concerned maintain conservative reserving practices consistent that this uncertainty might result in an overreaction with management's best estimates. Furthermore, the by the banking industry that could have reduced guidance is intended to convey our understanding loan-loss allowance levels in the second quarter, con- that the agreement reached on March 10 maintains trary to our safety and soundness objectives. existing acceptable allowance practices during the period in which we are working to resolve allowance policy issues with the SEC and the accounting profession and develop enhanced guidance. Given the clari- RECENT GUIDANCE ON LOAN-LOSS RESERVES fying guidance in the supervisory letter and the work Given the possibility of an overreaction, the Federal under way on important issues, we expect that Reserve issued a supervisory letter (SR 99-13) on changes in allowance levels, if any, as a result of the May 21 interpreting these developments in the FASB guidance will be substantially limited. Bankbroader context of the initiatives announced on ing organizations supervised by the Federal Reserve March 10. We worked closely with the other federal are expected to comply with the supervisory letter banking agencies and the SEC in developing this when establishing their allowances for credit losses guidance. in regulatory financial reports filed by banks and bank holding companies with the Federal Reserve. The guidance provides information on certain understandings among the Federal Reserve, SEC, and The guidance included in the letter is consistent FASB staffs on important allowance accounting mat- with GAAR In this regard, the SEC staff has inditers that had not yet been published. For example, the cated that it very much supports the fundamental policy letter clarified that concepts in our letter, and the FASB and the SEC have included this Federal Reserve letter with the • The allowance involves a high degree of man- official GAAP guidance on loan-loss allowances. agement judgment and results in a range of estimated Accordingly, based on assurances from the SEC staff, losses. bank holding companies can follow this balanced • Institutions should continue to maintain conser- guidance when reporting allowances in their pubvative allowance levels within a reasonable range of lished financial statements filed with the SEC. This estimated credit losses, and banks can reserve at the should help reduce bankers' uncertainty and provide high end of the range if it is management's best a calming message that reduces the possibility of estimate. In this regard, it is acceptable for allowance an overreaction by the banking industry and its audiestimates to reflect a margin for imprecision that can tors to the SEC announcement and FASB article. be appropriately supported. • Banks may have unallocated allowances, provided they reflect an estimate of inherent credit losses LOOKING FORWARD determined in accordance with GAAP. • While the FASB article addresses certain techni- Looking forward, we believe that it is very important cal issues, it is not intended to be complete. Guidance that the agencies strengthen their commitment to the on more important issues affecting allowance prac- letter and spirit of the March 10 joint agreement, tices is under development and will be published including the process for resolving issues related to within two years by the agencies and the accounting allowance practices and the need to let this process profession. run its course before significant changes, if any, are Moreover, our letter explains certain concepts made to allowance levels. Likewise, it is important mentioned in the FASB article in a way that is for the banking agencies to work together in issuing intended to help institutions to better understand guidance to banking organizations. It is also imporhow their reserve estimates can be enhanced and, in tant that SEC actions at all levels remain consistent certain cases, increased. with the March 10 agreement. This guidance provided helpful background infor- We intend to continue to work together with the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 561 SEC and the other federal banking agencies in order Under existing GAAP pronouncements, the allowto improve guidance on the allowance for loan losses. ance for loan losses includes probable losses that are Given the important missions of the banking agencies inherent in the loan portfolio but not future losses. As and the SEC, any guidance must ensure that allow- we look to the future of accounting standards for ances are calculated in a conservative manner and loan-loss allowances, we believe that an expected that financial statements and reported earnings are loss approach, taking a more prospective notion for transparent. the allowance, may enhance the quality of reserve We believe that it is imperative that the banking estimates when compared with the inherent loss agencies and the SEC develop this guidance in a approach now promulgated in GAAP. This is more collaborative manner and reach agreement about how consistent with evolving credit-risk management the guidance is to be applied in practice. A collabora- techniques used by financial institutions. Going fortive approach is particularly important at both the ward, the Federal Reserve will work with the other principal and staff levels because it will contribute to banking agencies and the accounting standards setstability in banking industry practices. In contrast, ters to explore the appropriate basis for establishing when communication breaks down regarding policy loan-loss allowances, including consideration of the goals and implementing measures, either within an expected loss approach, in a manner consistent with agency or between the agencies, misunderstandings important safety and soundness and transparency can abound. For example, the industry may become objectives. confused if it is perceived that any participant in an interagency discussion is communicating with banks and auditors in a manner that is not consistent with CONCLUSION the spirit of the March 10 joint letter. We also believe it is very important that any new guidance devel- The adequacy of the allowance for loan losses is a oped by the SEC and banking agencies be well critical issue for both the safety and soundness of understood by field staff, including agency staff mem- banks and the transparency of financial statements. bers that have responsibility for assessing whether Given the differing missions and perspectives of bank the allowance estimates of individual institutions are and securities regulators, the Federal Reserve and the appropriate. other banking agencies have agreed to work closely Recent discussions between the principals and with the SEC to provide clear and consistent guidsenior staff of the SEC and the Federal Reserve ance on this important issue. We continue to look Board and the other banking agencies have been forward to working together. seeking to continue and enhance this collegial We hope these efforts will lead to enhanced poliapproach going forward. In this regard, I was pleased cies and practices for loan-loss allowances under that Chairman Levitt stated in a recent speech and GAAP that will be consistent with the objectives of in his letter to me dated May 24, "Some have inter- both safety and soundness and transparency of finanpreted our efforts on bank reserves to suggest that the cial information. SEC thinks reserves are too high and should be Thank you for your interest in this important lowered. That couldn't be further from the truth ... I matter. Attached for your additional information want to emphasize—it is not our policy that institu- are answers to the specific questions on loan-loss tions artificially lower reserves or ever have inade- allowance policies that were directed to us by the quate reserves."1 subcommittee.2 2. The attachment to this statement is available from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve 1. Remarks of Arthur Levitt, SEC Chairman, to the Committee for System, Washington, DC 20551, and on the Board's site on the World Economic Development, New York, New York, May 19, 1999. Wide Web (http://federalreserve.gov). Statement by Alan Greenspan, Chairman, Board of proliferation of new technologies is inducing major Governors of the Federal Reserve System, before the shifts in the underlying structure of the American Joint Economic Committee, June 17,1999 economy. These fundamental changes appear to be far from complete. The way America does business, As emphasized by the important hearings this com- including the interaction among the various ecomittee has held in the past few days, an impressive nomic players in our economy, is in the midst of a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

562 Federal Reserve Bulletin • August 1999 significant transformation, though the pace of change Market strains receded—whether as a consequence is unclear. of our actions or of other forces—and yield spreads As a consequence, many of the empirical regulari- have since fallen, but not all the way back, to their ties depicting the complex of economic relationships unduly thin levels of last summer. on which policymakers rely have been markedly The American economy has retained its momenaltered. The Federal Reserve has thus been pressed to tum, and emerging economies in Asia and Latin continuously update our understanding of how the America are clearly on firmer footing, though in newer forces are developing in order for us to address some cases their turnarounds appear fragile. The appropriately our underlying monetary policy objec- recovery of financial markets, viewed in isolation, tive: maximum sustainable economic growth. would have suggested that at least part of the emer- The failure of economic models based on history to gency injection of liquidity, and the associated anticipate the acceleration in productivity contributed decline of 75 basis points in the funds rate, ceased to to the recent persistent underprediction of economic be necessary. But with wage growth and price inflagrowth and overprediction of inflation. Guiding pol- tion declining by a number of measures earlier this icy by those models doubtless would have unduly year and productivity evidently still accelerating— inhibited what has been a remarkable run of eco- thereby keeping inflation in check—we chose to nomic prosperity. maintain the lower level of the funds rate. And yet, while we have been adjusting the implicit While this stellar noninflationary economic expanmodels of the underlying economic forces on which sion still appears remarkably stress free on the surwe base our decisions, certain verities remain. face, there are developing imbalances that give us Importantly, the evidence has become increasingly pause and raise the question: Do these imbalances persuasive that relatively stable prices—neither per- place our economic expansion at risk? sistently rising nor falling—are more predictable, For the period immediately ahead, inflationary hence result in a lower risk premium for investment. pressures still seem well contained. To be sure, oil Because the nation's level of investment, to a large prices have nearly doubled and some other commodextent, determines our prosperity over time, stability ity prices have firmed, but large productivity gains in the general level of prices for goods and services have held unit cost increases to negligible levels. is clearly a necessary condition for maximum sustain- Pricing power is still generally reported to be virtuable growth. ally nonexistent. Moreover, the re-emergence of ris- However, product price stability does not guaran- ing profit margins, after severe problems last fall, tee either the maintenance of financial market stabil- indicates cost pressures on prices remain small. ity or maximum sustainable growth. Nonetheless, the persistence of certain imbalances As recent experience attests, a prolonged period of pose a risk to the longer-run outlook. Strong demand price stability does help to foster economic prosper- for labor has continued to reduce the pool of availity. But, as we have also observed over recent years, able workers. Data showing the percentage of the as have others in times past, such a benign economic relevant population who are not at work, but would environment can induce investors to take on more like a job, are around the low for this series, which risk and drive asset prices to unsustainable levels. started in 1970. This can occur when investors implicitly project ris- Despite its extraordinary acceleration, labor proing prosperity further into the future than can reason- ductivity has not grown fast enough to accommodate ably be supported. By 1997, for example, measures the increased demand for labor induced by the excepof risk had fallen to historic lows as business people, tional strength in demand for goods and services. having experienced years of continuous good times, Overall economic growth during the past three assumed, not unreasonably, that the most likely fore- years has averaged 4 percent annually, of which cast was more of the same. roughly 2 percentage points reflected increased pro- The Asian crisis, and especially the Russian ductivity and about 1 point the growth in our devaluation and debt moratorium of August 1998, working-age population. The remainder was drawn brought the inevitable rude awakening. In the ensu- from the ever-decreasing pool of available job seeking weeks, financial markets in the United States ers without work. virtually seized up, risk premiums soared, and for That last development represents an unsustainable a period sellers of even investment grade bonds trend that has been produced by an inclination of had difficulty finding buyers. The Federal Reserve households and firms to increase their spending on responded with a three-step reduction in the federal goods and services beyond the gains in their income funds rate totaling 75 basis points. from production. That propensity to spend, in turn, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 563 has been spurred by the rise in equity and home is difficult to assess. A large number of analysts have prices, which our analysis suggests can account for judged the level of equity prices to be excessive, even at least 1 percentage point of gross domestic product taking into account the rise in "fair value" resulting growth over the past three years. from the acceleration of productivity and the associ- Even if this period of rapid expansion of capital ated long-term corporate earnings outlook. gains comes to an end shortly, there remains a sub- But bubbles generally are perceptible only after the stantial amount in the pipeline to support outsized fact. To spot a bubble in advance requires a judgment increases in consumption for many months into the that hundreds of thousands of informed investors future. Of course, a dramatic contraction in equity have it all wrong. Betting against markets is usually market prices would greatly reduce this backlog of precarious at best. extra spending. While bubbles that burst are scarcely benign, To be sure, labor market tightness has not, as yet, the consequences need not be catastrophic for the put the current expansion at risk. Despite the ever- economy. shrinking pool of available labor, recent readings on The bursting of the Japanese bubble a decade ago year-over-year increases in labor compensation have did not lead immediately to sharp contractions in outheld steady or, by some measures, even eased. This put or a significant rise in unemployment. Arguably, seems to have resulted in part from falling inflation, it was the subsequent failure to address the damage which has implied that relatively modest nominal to the financial system in a timely manner that caused wage gains have provided healthy increases in pur- Japan's current economic problems. Likewise, while chasing power. Also, a residual fear of job skill the stock market crash of 1929 was destabilizing, obsolescence, which has induced a preference for most analysts attribute the Great Depression to ensujob security over wage gains, probably is still holding ing failures of policy. And certainly the crash of down wage levels. October 1987 left little lasting imprint on the Ameri- But should labor markets continue to tighten, sig- can economy. nificant increases in wages, in excess of productivity This all leads to the conclusion that monetary growth, will inevitably emerge, absent the unlikely policy is best primarily focused on stability of the repeal of the law of supply and demand. Because general level of prices of goods and services as the monetary policy operates with a significant lag, we most credible means to achieve sustainable economic have to make judgments, not only about the current growth. Should volatile asset prices cause problems, degree of balance in the economy but about how the policy is probably best positioned to address the economy is likely to fare a year or more in the future consequences when the economy is working from a under the current policy stance. base of stable product prices. The return of financial markets to greater stability For monetary policy to foster maximum sustainand our growing concerns about emerging imbal- able economic growth, it is useful to preempt forces ances led the Federal Open Market Committee of imbalance before they threaten economic stability. (FOMC) to adopt a policy position at our May meet- But this may not always be possible—the future ing that contemplated a possible need for an upward at times can be too opaque to penetrate. When we adjustment of the federal funds rate in the months can be preemptive we should be, because modest ahead. The issue is what policy setting has the capac- preemptive actions can obviate the need of more ity to sustain our remarkable economic expansion, drastic actions at a later date that could destabilize the now in its ninth year. This is the question the FOMC economy. will be addressing at its meeting at the end of the The economic expansion has generated many benemonth. fits. It has been a major factor in rebalancing our One of the important issues for the FOMC as it has federal budget. But more important, a broad majority made such judgments in recent years has been the of our people have moved to a higher standard of weight to place on asset prices. As I have already living, and we have managed to bring into the pronoted, history suggests that owing to the growing ductive workforce those who have too long been optimism that may develop with extended periods at its periphery. This has enabled large segments of of economic expansion, asset price values can climb our society to gain skills on the job and the selfto unsustainable levels even if product prices are esteem associated with work. Our responsibility, at relatively stable. the Federal Reserve and in the Congress, is to create The 1990s have witnessed one of the great bull the conditions most likely to preserve and extend the stock markets in American history. Whether that expansion. means an unstable bubble has developed in its wake Should the economic expansion continue to grow Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

564 Federal Reserve Bulletin • August 1999 into February of next year, it will have become the is nothing in our economic data series to suggest longest in America's economic annals. Someday, of that this propensity has changed. It is the job of course, the expansion will end; human nature has economic policymakers to mitigate the fallout when exhibited a tendency to excess through the genera- it occurs and, hopefully, ease the transition to the next tions with the inevitable economic hangover. There expansion. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

565 Announcements ALICE M. RIVLIN: RESIGNATION AS VICE CHAIR until it goes out of business, and spend more time with my husband and my grandchildren. OF THE BOARD OF GOVERNORS Thank you, Mr. President, for the exciting opportunity to serve at the Fed and at OMB and for the continuing chance Alice M. Rivlin on June 3, 1999, submitted her to serve the Nation's Capital. resignation as Vice Chair and as a member of the With warm personal regards, Board of Governors, effective July 16, 1999. Vice Chair Rivlin, who has been a member of the (Signed Alice) Board since June 24, 1996, submitted her letter of Alice M. Rivlin resignation to President Clinton on June 3, 1999. In view of her impending departure from the Board, On June 3, 1999, Federal Reserve Board Chairman Vice Chair Rivlin did not attend the June 29-30 Alan Greenspan issued the following statement: meeting of the Federal Open Market Committee. I am extraordinarily grateful to Alice Rivlin for her many Before becoming a member of the Board, Vice contributions to the Federal Reserve and very much regret Chair Rivlin served as Director of the White House her departure. Dr. Rivlin used her skills and experience to Office of Management and Budget and was Hirst make this institution stronger. Her wisdom influenced all of Professor of Public Policy at George Mason Univer- our deliberations. sity. Dr. Rivlin was also the founding Director of the As Administrative Governor, she revised the Federal Reserve Board's budgeting process, introducing a biennial Congressional Budget Office. She will be joining the budget and directing more resources toward long-term Brookings Institution. A copy of her letter of resignaplanning. She chaired the Committee on the Federal tion follows: Reserve in the Payments Mechanism (now called the Rivlin Committee) to help define the Federal Reserve's future June 3, 1999 role in the payments system, and inspired a new focus on the role of the central bank in fostering electronic pay- The Honorable William J. Clinton ments. In the exercise of her many international responsi- President bilities as Vice Chair, her steady common sense served us The White House well during a particularly difficult period. I speak for the Washington, D.C. 20500 entire Board in saying that we will miss her, and wish her success in her next endeavors. Dear Mr. President: I write to submit my resignation from the Federal Reserve Board of Governors (and from my position as ACTION BY THE FEDERAL OPEN MARKET Vice Chair) effective July 16, 1999. I have had a wonderful time at the Federal Reserve. COMMITTEE AT ITS JUNE 30, 1999, MEETING It has been a privilege to serve with Alan Greenspan and my fellow members on the Board for the last three years. The Federal Open Market Committee on June 30, The Fed is a strong bulwark of U.S. economic policy, and 1999, voted to raise its target for the federal funds I believe we have contributed to keeping the American rate 25 basis points to 5 percent. Last fall the Comeconomy growing and reducing strains in the international financial system. Thank you for giving me this opportunity. mittee reduced interest rates to counter a significant It was also an enormous privilege to be part of the seizing-up of financial markets in the United States. Clinton economic team and help put together the policies Since then much of the financial strain has eased, that turned that huge budget deficit into a surplus. We did foreign economies have firmed, and economic activthe right thing and it worked! I am proud to have been ity in the United States has moved forward at a brisk there with you. Please note that I am definitely not resigning as Chair of pace. Accordingly, the full degree of adjustment is the D.C. Financial Assistance Authority. Indeed, I hope to judged no longer necessary. spend more time and to be more effectively involved in the Labor markets have continued to tighten over city than I have been able to be at the Fed. I will be recent quarters, but strengthening productivity growth returning to the Brookings Institution, with a joint appointhas contained inflationary pressures. ment in the Economic Studies Program and the Urban Policy Center. That should allow me to do more research Owing to the uncertain resolution of the balance of and writing of my own, manage the Financial Authority conflicting forces in the economy going forward, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

566 Federal Reserve Bulletin • August 1999 FOMC has chosen to adopt a directive that includes each institution and establishing a dedicated supervino predilection about near-term policy action. The sory team with specialized skills and experience Committee, nonetheless, recognizes that in the cur- suited to each institution. rent dynamic environment it must be especially alert The approach recognizes that a small number to the emergence, or potential emergence, of infla- of large and highly complex institutions account tionary forces that could undermine economic for a growing share of total banking assets. These growth. institutions have moved into nontraditional activities, including securities underwriting and dealing, derivatives trading, and loan securitization. They NOMINATIONS SOUGHT FOR APPOINTMENTS TO are expanding their activities across both state and THE CONSUMER ADVISORY COUNCIL international borders. And ongoing advances in infor- The Federal Reserve Board on June 16, 1999, mation technology have increased the speed, comannounced that it is seeking nominations for seven plexity, and volume of financial transactions and thus appointments to its Consumer Advisory Council. have heightened the potential for swift changes in the The council, which consists of thirty members, risks confronting these institutions. advises the Board on the exercise of its responsibili- Under the approach outlined in the letter, the superties under the Consumer Credit Protection Act and on visory team will update its supervisory plan at least other matters on which the Board seeks advice. The quarterly by reviewing a steady flow of relevant group meets in Washington, D.C., three times a year. information, including internal management reports, The seven new members will be appointed to serve internal and external audits, and publicly available three-year terms beginning in January 2000. Nomina- information. In some cases, supervisors may have tions should include the following information about direct on-line access to management information. nominees: These streamlined techniques, emphasizing oversight of an institution's internal procedures for identi- • Past and present positions held fying and managing risk in contrast with traditional • Knowledge, interests, or experience related to point-in-time examinations, should reduce the cost community reinvestment, consumer credit, or other and burden of regulation. This approach also considconsumer financial services ers an institution's performance and risk-management • Complete address with telephone and fax procedures in relation to the performance and procenumbers. dures of its peers. To minimize duplicative regulatory effort, the Letters of nomination must be received by approach requires close consultation with other August 16, 1999, and should be mailed (not sent by domestic banking agencies, state insurance commisfacsimile) to Sandra F. Braunstein, Assistant Direc- sioners, securities regulators, and foreign bank supertor, Division of Consumer and Community Affairs, visors. The Federal Reserve is developing an infor- Board of Governors of the Federal Reserve System, mation system, the Banking Organization National Washington, D.C. 20551. Desktop, to be introduced next year, to provide supervisors a user-friendly way of sharing information. ISSUANCE OF GUIDANCE ON OVERSEEING LARGE AND COMPLEX BANKING ORGANIZATIONS PUBLICATION BY THE BASEL COMMITTEE OF A CONSULTATIVE PAPER ON A NEW CAPITAL The Federal Reserve has issued guidance to super- ADEQUACY FRAMEWORK visory staff and bankers on overseeing large, complex banking organizations during a time of dra- The Basel Committee on Banking Supervision has matic change in the financial system. The guidance, issued a consultative paper on a new capital adequacy issued in a supervisory letter dated June 23, 1999, framework for large internationally active banking emphasizes the importance of assessing key risk- organizations. management processes and ongoing monitoring of an The proposed new framework would revise the institution's risk profile, as well as tailoring the super- committee's current capital adequacy framework, vision program to an institution's principal business which was issued in 1988 and is commonly referred lines and risks. to as the Basel Capital Accord. Key elements of the program include designating a Comments to the Basel Committee on the consultasenior supervisor as the central point of contact for tive paper are requested by March 31, 2000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 567 The proposed new capital framework consists of 1999, in Boston on the proposal by Fleet Financial the following: Group, Inc., Boston, Massachusetts, to merge with BankBoston Corporation, Boston, Massachusetts. • A strong, risk-sensitive regulatory capital The purpose of the meeting was to collect informastandard tion relating to factors the Board is required to con- • An active supervisory program sider under the Bank Holding Company Act. These • Improved bank disclosures that allow the market- factors are the effects of the proposal on the finanplace to evaluate an institution's risk posture and to cial and managerial resources and future prospects of reward or discipline it appropriately. the companies and banks involved in the proposal, competition in the relevant markets, and the conve- Development of a more comprehensive and nience and needs of the communities to be served. sensitive treatment of credit risk is the objective With respect to competition, the proposal involves of the proposed minimum capital standard. Three the merger of the two largest banking organizations approaches are outlined in the consultative paper: in New England and will involve sizable divestitures a modified version of the existing approach and, throughout the region. Convenience and needs congoing forward, the use of banks' internal ratings siderations include consideration of the records of and models of portfolio credit risk. performance of Fleet Financial and BankBoston Revisions proposed to the existing approach under the Community Reinvestment Act. The meetinclude incorporating external ratings to varying ing was held at the Federal Reserve Bank of Boston. degrees into the capital treatment of claims on sover- Persons who wished to testify at the meeting subeigns, public-sector entities, banks, and highly rated mitted a written request. Persons interested only in corporates. An approach to addressing asset securitiattending the meeting did not need to submit a writzation is also proposed. ten request to attend. Additionally, the committee is soliciting industry On the basis of the requests to testify, the Presiding comment on the capital treatment of certain credit Officer of the public meeting established a schedule risk mitigation techniques and ways to expand covof appearances and prescribed all necessary proceerage of the accord to incorporate interest rate and dures to ensure that the meeting proceeded in a fair operational risk. and orderly manner. An agenda for the meeting, The committee is further proposing to expand the which included the scheduled time for each person's scope of the Basel Accord, which currently applies to testimony, was provided to participants. internationally active banks. Under this proposal, the The Federal Reserve Board also announced that accord would also be applied on a consolidated basis the period for public comment on the proposal had to holding companies that are parents of internationbeen extended through the close of business on ally active banking groups. Wednesday, July 7, 1999. In this regard, the Federal Reserve notes that the committee's consultative paper does not make any proposals regarding the definition of capital. ENFORCEMENT ACTIONS The committee was established by the central bank Governors of the Group of Ten countries in 1975 and The Federal Reserve Board on June 7, 1999, operates under the auspices of the Bank for Internaannounced the issuance of a cease and desist order tional Settlements (BIS) in Basel, Switzerland. It against Banco Atlantico, S.A., Barcelona, Spain, and consists of senior supervisory authorities representits New York Agency. ing the world's largest banking systems and works to The order was issued jointly with the Acting strengthen bank supervisory and regulatory practices Superintendent of Banks of the State of New York. worldwide. The complete consultative paper may be obtained The Federal Reserve Board on June 11, 1999, from the BIS Internet site (http://www.bis.org). announced the execution of a written agreement by and between Community Capital Corporation, Greenwood, South Carolina, and the Federal Reserve Bank PUBLIC MEETING ON THE PROPOSED MERGER of Richmond. The written agreement includes provi- OF FLEET FINANCIAL GROUP, INC. WITH sions addressing Year 2000 readiness. BANKBOSTON CORPORATION The Federal Reserve Board on June 21, 1999, The Federal Reserve Board on June 21, 1999, announced a public meeting for Wednesday, July 7, announced the issuance of an order of assessment of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

568 Federal Reserve Bulletin • August 1999 a civil money penalty against Banco Popular de ing the applicability of the quantitative limits to loans Puerto Rico, San Juan, Puerto Rico, a state member by a bank to an unaffiliated third party. bank. • Supervisory guidance regarding the investment Banco Popular, without admitting to any allega- of fiduciary assets in mutual funds and potential tions, consented to the issuance of the order in con- conflicts of interest. The March 26, 1999, guidance nection with its alleged violations of the Board's focuses on potential conflicts of interest that may regulations implementing the National Flood Insur- arise from various forms of compensation institutions ance Act. The order requires Banco Popular to pay may receive in connection with mutual fund investa civil money penalty of $10,000. ments and indicates that institutions are to perform and document an appropriate level of due diligence. This includes obtaining a reasoned legal opinion, The Federal Reserve Board on June 23, 1999, the establishment of written policies and procedures, announced that a public administrative hearing and the analysis and documentation of investment would commence on June 29, 1999, in connection decisions. with an enforcement action against Guillaume Henri Fonkenell, a former Vice President of Bankers Trust • An interagency statement on tax allocation asso- Company, New York, New York, a state member ciated with a bank holding company's filing of conbank. solidated tax returns. Effective November 23, 1998, The hearing would be held before an Administra- when consolidated group income tax returns are filed, tive Law Judge to determine whether a cease and appropriately tailored formal written tax-sharing desist order and an order to pay a civil money penalty agreements should exist. These agreements are to should be issued against Mr. Fonkenell. ensure that the amount of tax payments, reimbursements, expenses, and benefits are accounted for on The Board's Notice alleges that in 1993 and 1994 a consistent, timely, and equitable basis, as though Mr. Fonkenell knowingly and recklessly breached his the subsidiary institution were filing as a separate fiduciary duties and engaged in violations of law and tax-paying entity. unsafe and unsound banking practices in connection with the marketing and sale of leveraged derivatives • An amendment to the appraisal regulations transactions and entries that Mr. Fonkenell caused to for bank holding companies. The amendment to the be made in Bankers Trust's books and records. appraisal rule, effective December 28, 1998, permits bank holding company subsidiaries that underwrite and deal in mortgage-backed securities to do so The Federal Reserve Board on June 25, 1999, without having to demonstrate that loans underlying announced the execution of a written agreement by the securities have appraisals that meet the Board's and between Banco Popular del Ecuador, S.A., Quito, appraisal requirements. Ecuador, Banco Popular del Ecuador's Miami • Supervisory guidance on retail credit classiagency, the Federal Reserve Bank of Atlanta, and the fication. A supervisory policy statement by the Fed- State of Florida Department of Banking and Finance. eral Financial Institutions Examination Council on February 10, 1999, applicable to depository institutions, is provided for the classification (substandard, PUBLICATION OF THE JUNE 1999 UPDATE TO doubtful, or loss) or charge-off of retail installment THE BANK HOLDING COMPANY SUPERVISION credits according to specified criteria. Classification MANUAL or charge-off guidance is provided for residential and home equity loans, fraudulent accounts, accounts The June 1999 update to the Bank Holding Company of deceased persons and borrowers in bankruptcy, Supervision Manual, Supplement No. 16, has been re-aging of open-end credit, or extensions, deferrals, published and is now available. The Manual com- renewals, or rewrites of closed-end credit. prises the Federal Reserve System's bank holding • New or revised sections involving nonbanking company supervisory and inspection guidance. The activities. The sections include activities such as asset new supplement includes the following: management, asset servicing and collection involving third-party contracts, acquisition of debt in default, • A revised staff opinion pertaining to the quantita- employee benefits consulting, career counseling sertive limits of section 23A of the Federal Reserve Act. vices, private limited partnerships, development of The January 21, 1999, opinion indicates that when broader marketing plans and advertising and sales affiliate shares and other nonaffiliate collateral secure literature for mutual funds, and providing governa loan, the fair market value may be used in determin- ment services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 569 • Revisions to the risk-based capital guidelines for ernors of the Federal Reserve System, Washington, risk weighting investments in mutual funds and estab- D.C. 20551 (or charge by facsimile: 202-728-5886). lishing qualifications for prudently underwritten The Manual is also available on the Board's public loans to residential builders. Effective April 1, 1999, web site (http://www.federalreserve.gov/boarddocs/ these capital guidelines were revised for applying supmanual/). risk weights to mutual fund investments based on the risk categories of the fund's assets. The revised capital guidelines also require sufficient documentation CHANGES IN BOARD STAFF for prudently underwritten loans to residential builders, evidencing legally binding written sales contracts The Federal Reserve Board announced the retirement and permanent financing commitments. of John J. Mingo, Senior Adviser in the Division of Research and Statistics, effective June 30, 1999. A more detailed summary of changes is included The Federal Reserve Board also announced that with the update package. The Manual and updates, John R. Weis, Adviser in the Office of Staff Director including pricing information, are available from for Management, retired on July 2, 1999, after more Publications Services, Mail Stop 127, Board of Gov- than twenty-seven years of service. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

570 Minutes of the Federal Open Market Committee Meeting Held on May 18,1999 A meeting of the Federal Open Market Committee Mr. Connolly, First Vice President, Federal Reserve was held in the offices of the Board of Governors of Bank of Boston the Federal Reserve System in Washington, D.C., on Ms. Browne, Messrs. Goodfriend, Hakkio, Tuesday, May 18, 1999, at 9:00 a.m. Ms. Krieger, and Mr. Sniderman, Senior Vice Presidents, Federal Reserve Banks of Boston, Present: Richmond, Kansas City, New York, and Mr. Greenspan, Chairman Cleveland respectively Mr. McDonough, Vice Chairman Mr. Boehne Messrs. Cunningham and Gavin, Vice Presidents, Mr. Ferguson Federal Reserve Bank of Atlanta and St. Louis Mr. Gramlich respectively Mr. Kelley Mr. McTeer Mr. Meyer Mr. Trehan, Research Officer, Federal Reserve Bank Mr. Moskow of San Francisco Ms. Rivlin Mr. Stern By unanimous vote, the minutes of the meeting of the Federal Open Market Committee held on Messrs. Broaddus, Guynn, Jordan, and Parry, March 30, 1999, were approved. Alternate Members of the Federal Open Market Committee The Manager of the System Open Market Account reported on recent developments in foreign exchange Mr. Hoenig, Ms. Minehan, and Mr. Poole, markets. There were no open market operations in Presidents of the Federal Reserve Banks of foreign currencies for the System's account in the Kansas City, Boston, and St. Louis respectively period since the previous meeting, and thus no vote Mr. Kohn, Secretary and Economist was required of the Committee. Mr. Bernard, Deputy Secretary The Manager also reported on developments in Ms. Fox, Assistant Secretary domestic financial markets and on System open mar- Mr. Gillum, Assistant Secretary ket transactions in government securities and federal Mr. Mattingly, General Counsel agency obligations during the period March 30, 1999, Mr. Baxter, Deputy General Counsel Mr. Prell, Economist through May 17, 1999. By unanimous vote, the Com- Ms. Johnson, Economist mittee ratified these transactions. The Committee voted unanimously to extend for Messrs. Alexander, Cecchetti, Hooper, Hunter, Lang, one year beginning in mid-December 1999 the recip- Lindsey, Rolnick, Rosenblum, Slifman, and rocal currency ("swap") arrangements with the Bank Stockton, Associate Economists of Canada and the Bank of Mexico. The arrangement Mr. Fisher, Manager, System Open Market Account with the Bank of Canada is in the amount of $2 billion equivalent and that with the Bank of Mexico in Messrs. Madigan and Simpson, Associate Directors, the amount of $3 billion equivalent. Both arrange- Divisions of Monetary Affairs and Research and ments are associated with the Federal Reserve's par- Statistics respectively, Board of Governors ticipation in the North American Framework Agree- Mr. Reinhart, Deputy Associate Director, Division of ment, which was established in 1994. The vote to Monetary Affairs, Board of Governors renew was taken at this meeting rather than later in the year to give the Committee members a timely Ms. Low, Open Market Secretariat Assistant, opportunity to discuss whether or not they wanted Division of Monetary Affairs, Board of to extend the maturity of the agreements; the terms Governors Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

571 of the agreements require that any decision not to recorded large gains earlier in the year. Sales of renew be communicated to swap line partners at least motor vehicles in April again were exceptionally six months in advance of the swap maturities. high, and outlays for non-auto goods remained ro- The Committee then turned to a discussion of the bust. In addition, spending on services grew briskly economic and financial outlook and the implementa- in the first quarter (latest data available), paced by tion of monetary policy over the intermeeting period sharply increased outlays for energy, bank and broahead. A summary of the economic and financial kerage services, and recreation. information available at the time of the meeting and Total housing starts fell in April after several of the Committee's discussion is provided below. months of unusually favorable weather conditions The domestic policy directive that was approved by that had allowed builders to maintain a relatively the Committee and issued to the Federal Reserve high level of construction activity. Part of the decline Bank of New York follows the summary. in starts apparently reflected shortages of labor and The information reviewed at this meeting sug- some types of building materials. However, sales of gested that economic activity had continued to new homes had fallen somewhat on balance thus far expand vigorously. Consumer spending had main- this year, and applications for mortgages to finance tained its strong forward momentum, and housing purchases of homes remained below their 1998 peak activity generally had remained at a high level. despite a recent turn upward. Growth of business capital spending had slowed Business capital spending decelerated in the first appreciably but was still quite rapid. The expansion quarter, though to a still relatively rapid pace. Growth in industrial production had quickened recently, while of spending on durable equipment was boosted by a gains in employment had moderated somewhat. Infla- surge in outlays for communications equipment, brisk tion had remained low, although consumer prices expenditures for motor vehicles, and continuing registered a sizable rise in April; labor costs were still though lessened strength in purchases of computers. quiescent despite very tight labor markets. Nonresidential building activity advanced moderately Growth in nonfarm payroll employment slowed in the first quarter, reflecting significant further on balance over March and April, but hiring was increases in the construction of office buildings and still relatively rapid. Employment gains were con- lodging facilities. Building activity in other nonresicentrated in the services, retail trade, and finance, dential categories changed little. insurance, and real estate categories. By contrast, Total business inventories rose considerably in manufacturing experienced further job losses, and March, mostly reflecting a huge run-up in inventories construction employment fell on balance over the at automotive dealerships. For the first quarter as a March-April period after having expanded briskly whole, inventory accumulation exclusive of motor since last fall. The civilian unemployment rate vehicles was near the subdued pace of late 1998, and in April, at 4.3 percent, matched its first-quarter stocks generally appeared to be at fairly low levels average. relative to sales. In the manufacturing sector, inven- Industrial production increased substantially in tories fell further in the first quarter, largely reflecting March and April after a period of sluggish growth. In reductions of stocks of aircraft and parts, and the manufacturing, the production of durable goods rose aggregate inventory-sales ratio for the sector in rapidly in both months, paced by sharp increases in March was somewhat below the bottom of its range the output of semiconductors and motor vehicles and over the previous twelve months. The first-quarter parts. The production of office automation equipment rise in non-auto wholesale inventories was nearly the picked up from an already rapid pace in the March- same as the fourth-quarter increase. With sales up April period, and the manufacture of communications appreciably, however, the inventory-sales ratio for equipment surged in April. Although growth in the the sector dropped sharply and was near the bottom output of nondurable goods had increased somewhat of its range for the past year. Non-auto retail invenin recent months, the level of production was still tories increased considerably in the first quarter, below its year-earlier level. The step-up in industrial but sales grew even more and the aggregate production in recent months had lifted the rate of inventory-sales ratio was near the bottom of its range utilization of manufacturing capacity, but it remained over the last year. below its long-term average. The U.S. trade deficit in goods and services wid- Consumer spending has been very strong this year, ened substantially in January and February from its supported by rapid income growth, soaring house- fourth-quarter average, with exports falling sharply hold net worth, and buoyant consumer sentiment. and imports rising strongly. The drop in exports in Retail sales edged still higher in April after having the January-February period nearly reversed the large Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

572 Federal Reserve Bulletin • August 1999 fourth-quarter increase, with substantial declines cated reserve management. Yields on Treasury secuoccurring in aircraft, machinery, industrial supplies, rities rose appreciably on balance, with the largest and agricultural products. The jump in imports was increases occurring in intermediate- and longer-term concentrated in consumer goods, automotive prod- maturities. The climb in rates reflected not only the ucts, computers, and semiconductors. Economic strength of incoming data on the U.S. economy but growth continued to be sluggish in many of the major also improved economic prospects in many forforeign industrial countries, according to the limited eign countries and higher world commodity prices. information available for the first quarter. Growth Increasing optimism about economic conditions in was weak on balance in the euro zone and the United the United States and abroad apparently eased con- Kingdom, and there were few signs of economic cerns about the creditworthiness of business borrowrecovery in Japan. However, the expansion in Canada ers, especially firms of relatively low credit standing, appeared to have remained strong. Elsewhere, the and rates on private obligations registered mixed Korean economy grew vigorously in the first quarter, changes over the period. Most key measures of share and there were indications that the slowdown in prices in equity markets recorded sizable gains over economic activity in Southeast Asia and Latin the intermeeting period. America might have bottomed out, with some coun- The trade-weighted value of the dollar in foreign tries beginning to recover. exchange markets depreciated somewhat over the Consumer prices rose substantially in April. intermeeting period in relation to the currencies of a Energy prices increased sharply, food prices edged broad group of important U.S. trading partners. The up, and the prices of consumer items other than food dollar's decline partly reflected improvements in the and energy rose appreciably. For the twelve months economic and financial outlook for many emerging ended in April, core consumer inflation was slightly market economies. The dollar also depreciated sighigher than for the year-earlier period. Producer nificantly against the Canadian and Australian currenprices of finished goods also increased in April but by cies as the prices of metals, oil, and lumber moved less than consumer prices. Finished energy prices higher. By contrast, the dollar was up on balance in were up sharply, but prices of finished foods declined terms of the euro and the Japanese yen. A reduction appreciably, and prices of core producer goods in the European Central Bank's refinance rate and the advanced only slightly. For the twelve months ended diminished prospects for a near-term resolution of in April, core producer inflation was up noticeably hostilities in the Balkans weighed on the euro. The over that for the year-earlier period, reflecting impor- dollar's rise against the yen evidently was partly a tantly the sharp increase in prices of tobacco prod- response to a decline in the yield on ten-year Japaucts. In contrast to price inflation, labor costs nese government bonds while dollar yields moved appeared to have remained quiescent. The increase in higher. average hourly earnings was the same in April as in M2 and M3 recorded sizable increases in April, March, and the rise for the twelve months ended apparently arising from a buildup of liquid accounts in April was significantly smaller than that for the by households to make larger-than-usual final tax year-earlier period. payments. For the year through April, M2 and M3 At its meeting on March 30, 1999, the Committee had grown less rapidly than in 1998; even so, M2 was adopted a directive that called for maintaining condi- estimated to have grown this year at a rate somewhat tions in reserve markets that would be consistent with above the Committee's annual range, and M3 at a an unchanged federal funds rate of about 43A percent rate slightly above its range. Total domestic nonfinanand that did not contain any bias relating to the cial debt continued to expand at a pace somewhat direction of possible adjustments to policy during the above the middle of its range. intermeeting period. The Committee judged this pol- The staff forecast prepared for this meeting sugicy stance to be consistent with its objectives of gested that the expansion would gradually moderate fostering high employment and sustained low infla- to a rate commensurate with the rise in the econotion, with the risks of different outcomes being rea- my's estimated potential. Growth of private final sonably well balanced, at least for the near term. demand would be damped by the anticipated waning Open market operations throughout the intermeet- of positive wealth effects stemming from large ing period were directed toward maintaining the fed- increases in equity prices and by slower growth of eral funds rate at around 43A percent. The average spending on consumer durables, houses, and business rate for the period was in line with the Committee's equipment after the earlier buildup in the stocks of target level; however, substantial fluctuations in the these items. The lagged effects of the rise that had rate associated with tax-season uncertainties compli- occurred in the foreign exchange value of the dollar Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 573 were expected to place continuing, though diminish- these key sectors of the economy was the marked ing, restraint on the demand for U.S. exports for some improvement in overall financial market conditions period ahead. Labor markets were anticipated to since the fall of last year, including the ample availremain tight, and inflation was projected to increase ability of financing on relatively favorable terms for somewhat on balance over the projection period, many borrowers and the sharp rise in stock market partly as a result of some firming of import prices prices. Indicators of possible slowing in these sectors that, in turn, would give domestic firms somewhat of the economy were limited, especially outside of more leeway to raise their prices. housing. In the Committee's discussion of current and pro- Consumer expenditures were expected to be well spective economic developments, members com- maintained in conjunction with projections of appremented that they saw few signs of any moderation ciable further growth in jobs and incomes and a ready in the expansion of economic activity from the rapid availability of financing. A major uncertainty in the pace that had prevailed in recent quarters—a pace outlook for the consumer sector was the largely greater than the growth in the economy's potential, unpredictable behavior of the stock market. The very even though the growth of potential was rising as a large equity price increases in recent years evidently result of accelerating productivity. For a number of had contributed to high levels of consumer confireasons, they still viewed some slowing in the expan- dence and robust consumer spending, and the further sion to a growth rate more in line with that of gains in those prices thus far this year would continue potential as a reasonable expectation. However, the to bolster spending for a while. A leveling trend in timing and extent of the moderation remained subject stock market prices, should one materialize, likely to substantial uncertainty. And in light of the persis- would have a significant restraining effect on content strength in domestic demand, the reduced risks sumer confidence and the growth of spending over of economic weakness abroad, and the recovery in time. In addition, the substantial accumulation of U.S. financial markets, most members believed that durable goods by consumers in recent years was seen for the year ahead the odds around their forecasts as a constraining influence on spending for such were tilted toward further robust growth that would goods going forward. add to pressures on already tight labor markets. The Expenditures by business firms for durable equiplatest statistical and anecdotal information on wages ment were expected to post further sizable gains this and prices, while somewhat more mixed than earlier, year and next, though probably at rates somewhat continued on balance to present a picture of benign below those recorded in recent years. Technical inflation. However, the firming of oil and other com- advances and ongoing competitive pressures were modity prices, the more frequent anecdotal reports likely to remain relatively stimulative factors, but a of increases in some costs and prices, and the most number of developments also were anticipated to recent CPI statistics could be read as suggesting at exert a tempering influence. These included the large least that the trend toward lower inflation was coming buildup in equipment over the course of recent years, to an end and perhaps also as harbingers of a less some moderation in the growth of demand for capital favorable inflation performance going forward, espe- associated with slower expansion of overall spendcially if growth in demand did not slow to a more ing, and in these circumstances more sluggish growth sustainable pace. A key uncertainty in the outlook for of business profits. The behavior of stock market inflation related to the prospects for productivity, prices also would play a role in the cost of business whose continued acceleration over the past several finance and the level of business confidence, but one quarters clearly had helped to contain cost pressures that could not readily be predicted. According to despite widespread indications of persistently tight anecdotal reports, commercial and other nonresidenlabor markets. On balance, while an upward trend in tial construction activity was at high levels in several underlying inflation had not materialized thus far, the regions, though constrained in a number of areas by members were concerned that if recent developments shortages of skilled labor and some construction continued—especially if demand did not slow to a materials. Concerns about overbuilding were reported more sustainable pace—inflation was more likely to in a few parts of the country. Residential construction rise over time. activity also was at a high level, and backlogs had The impressive strength in private domestic spend- developed in some regions because of shortages of ing during the first several months of the year fea- labor and some building materials. While these backtured notable gains in consumer and business expen- logs and continued affordability of home purchases ditures and appreciable growth in outlays for were expected to help sustain residential construction residential construction. Underlying the strength in activity near current levels for some period of time, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

574 Federal Reserve Bulletin • August 1999 statistical and survey indicators pointed to some loss some point further gains in productivity would not of momentum in housing sales and new construction, be able to offset rising wage increases. Moreover, the perhaps partly in response to the rise in long-term effect on prices would tend to be exacerbated by the interest rates. ebbing or reversal of temporary factors that had Foreign trade on net was damping demand pres- served to damp inflation; notable among those factors sures on U.S. production capacity, but its negative were the upturn in energy prices and the current or impact was thought likely to diminish over time. prospective firming of commodity and other import Factors underlying this outlook included indications prices as economic activity strengthened abroad. of stabilizing or improving financial and economic With both the extent of prospective pressures in labor conditions in several East Asian and Latin American markets and the outlook for productivity subject to countries and expectations of some strengthening considerable uncertainty, a firmer assessment of the in European economies. The resulting impetus to future course of inflation needed to await further exports was projected to be accompanied by a lower developments. rate of growth in imports as the expansion of the U.S. Against this background, all the members supeconomy slowed. Anecdotal reports of rising exports, ported a proposal to maintain an unchanged policy notably to Asian markets, lent some support to this stance and to adopt and announce an asymmetric outlook. Members commented, however, that finan- directive that was tilted toward tightening. Although cial and economic prospects remained worrisome in their concerns about the outlook for inflation had several parts of the world and that the outlook for net increased significantly since the previous meeting, exports continued to be subject to downside risks, the members felt that there was still a reasonable albeit to a lesser extent than in late 1998 and early chance that the current stance of policy would remain 1999. consistent with containing price pressures for some Members expressed concern about what they now period of time. Signs of an actual change in inflation saw as a greater risk of rising inflation even though were still quite tentative and anecdotal, and they did current indicators continued on the whole to point to not warrant an adjustment to policy at this meeting. quiescent wage and price behavior. The recent perfor- Moreover, as the experience of recent years had mance of the CPI and industrial commodity prices amply demonstrated, improvements in productivity and the more numerous anecdotal reports of price and growth might permit the economy to continue to cost increases were reasons for added caution about accommodate strong demand for some time without the outlook for inflation, though these developments generating higher inflation, especially if the growth still constituted only very tentative evidence of a of demand were to moderate somewhat in the months possible change in inflation trends. Several members ahead. In that regard, the prospective strength of commented in particular that substantial weight demand pressures and related outlook for productivshould not be attached to the one-month jump in the ity were subject to a wide range of uncertainty, and just-released CPI data. Unexpectedly large gains in there were reasons to believe that economic growth productivity had both contributed to demand and could well slow without any adjustment to policy. helped output to keep pace with the strong growth The members recognized that the recovery in credit in demand, but an important portion of that demand markets, the rise in equity prices, and the turnaround also had been met by drawing down the pool of in some foreign economies could imply that the lower available workers and by rapid increases in imports. federal funds rate established last fall was no longer Inflation expectations, while perhaps deteriorating a entirely appropriate. However, they concluded that bit recently, were still subdued and undoubtedly con- given the prevailing uncertainties in the economic tinued to help account for restrained pricing behavior outlook it was preferable to defer any policy action and for relatively moderate wage demands despite and to monitor the economy closely for further signs the tightness in labor markets. that inflationary pressures were likely to rise. Partly because the economy continued to demon- The members nonetheless agreed that their strate a marked ability to absorb large increases in increased concerns about the outlook for inflation demand without generating significant cost and price called for the adoption of an asymmetric directive pressures, the members did not see a sizable upturn in that was tilted toward tightening and, in keeping underlying inflation as a likely prospect over the next with the Committee's recently reaffirmed policy, to few quarters. The longer-run outlook was more wor- announce that change after this meeting. The Comrisome and would depend importantly on the extent mittee had said that it would not necessarily publish to which the expansion put pressure on labor every change in the symmetry of its directive, but this resources. In particular, if that pressure intensified, at shift to asymmetry represented a significant change Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 575 in the Committee's assessment of the risks of higher changes over the period. Most key measures of share prices inflation, and its announcement would alert the finan- in equity markets have registered sizable gains over the intermeeting period. In foreign exchange markets, the cial markets and the public more generally to this trade-weighted value of the dollar has depreciated somedevelopment. That, in turn, should encourage stabiwhat over the period in relation to the currencies of a broad lizing reactions in financial markets and perhaps group of important U.S. trading partners. reduce the odds of an outsized response if evolving M2 and M3 recorded sizable increases in April, apparcircumstances in the near term were to require an ently owing to a tax-related buildup in liquid accounts. For the year through April, M2 is estimated to have increased adjustment to policy that had not previously been at a rate somewhat above the Committee's annual range anticipated. It was important that the public, includand M3 at a rate slightly above its range. Total domestic ing those who participated in financial markets, nonfinancial debt has continued to expand at a pace someunderstood the Committee's resolve to keep inflation what above the middle of its range. at a low level. A number of members emphasized, The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and however, that the adoption and announcement of an promote sustainable growth in output. In furtherance of asymmetrical directive should not be viewed as necthese objectives, the Committee at its meeting in Febessarily implying a near-term policy change or indeed ruary established ranges for growth of M2 and M3 of 1 to any change over time unless circumstances war- 5 percent and 2 to 6 percent respectively, measured from ranted. For now, an asymmetric directive represented the fourth quarter of 1998 to the fourth quarter of 1999. The range for growth of total domestic nonfinancial debt the right balance in terms of positioning the Commitwas set at 3 to 7 percent for the year. The behavior of the tee for possible tightening at some point. monetary aggregates will continue to be evaluated in the At the conclusion of this discussion, the Commit- light of progress toward price level stability, movements tee voted to authorize and direct the Federal Reserve in their velocities, and developments in the economy and financial markets. Bank of New York, until it was instructed other- To promote the Committee's long-run objectives of price wise, to execute transactions in the System Account stability and sustainable economic growth, the Committee in accordance with the following domestic policy in the immediate future seeks conditions in reserve markets directive: consistent with maintaining the federal funds rate at an average of around 4% percent. In view of the evidence The information reviewed at this meeting suggests con- currently available, the Committee believes that prospectinued vigorous expansion in economic activity. Nonfarm tive developments are more likely to warrant an increase payroll employment moderated on balance over March and than a decrease in the federal funds rate operating objective April, and the civilian unemployment rate in April matched during the intermeeting period. its first-quarter average. Total industrial production increased substantially in March and April. Total retail Votes for this action: Messrs. Greenspan, McDonough, sales edged up in April after recording large gains earlier Boehne, Ferguson, Gramlich, Kelley, McTeer, Meyer, in the year. Housing starts fell in April. Available indica- Moskow, Ms. Rivlin, and Mr. Stern. Votes against this tors suggest that growth of business capital spending has action: None remained relatively rapid. The nominal deficit on U.S. trade in goods and services widened substantially in January and It was agreed that the next meeting of the Commit- February from its fourth-quarter average. Consumer prices tee would be held on Tuesday-Wednesday, June 29rose substantially in April, boosted by a sharp increase in energy prices; labor costs have remained quiescent thus far 30, 1999. this year despite very tight labor markets. The meeting adjourned at 12:45 p.m. Interest rates on Treasury securities have risen appreciably since the meeting on March 30, 1999, with the largest increases concentrated in intermediate- and long-term Donald L. Kohn maturities; rates on private obligations show mixed Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

577 Legal Developments ORDERS ISSUED UNDER BANK HOLDING COMPANY and that competitive considerations are consistent with ACT approval. Orders Issued Under Section 3 of the Bank Holding Financial, Managerial, and Supervisory Considerations Company Act The BHC Act requires the Board to consider the financial Ideal Bancshares, Inc. and managerial resources and future prospects of the com- West Fargo, North Dakota panies and banks involved in the proposal and certain supervisory factors. The Board has reviewed these factors Order Approving Formation of a Bank Holding in light of all the facts of record, including supervisory Company reports of examination and other confidential supervisory information assessing the financial and managerial re- Ideal Bancshares, Inc. ("Applicant") has requested the sources of Bank. Based on all the facts of record, the Board Board's approval under section 3(a)(1) of the Bank Hold- concludes that the financial and managerial resources and ing Company Act ("BHC Act") (12 U.S.C. § 1842(a)(1)) future prospects of Applicant and Bank are consistent with to become a bank holding company by acquiring all the approval, as are the other supervisory factors the Board voting shares of First State Bank of Goodrich, Goodrich, must consider under section 3 of the BHC Act. North Dakota ("Bank"). Notice of the proposal, affording interested persons an Convenience and Needs Considerations opportunity to submit comments, has been published (64 Federal Register 13,799 (1999)). The time for filing The Board also has carefully considered the effect of the comments has expired, and the Board has considered the proposal on the convenience and needs of the communities proposal and all comments received in light of the factors to be served in light of all the facts of record, including set forth in section 3 of the BHC Act. comments received from several individuals ("Comment- Applicant is a newly organized corporation formed for ers") concerning the potential effect of this transaction on the purpose of acquiring control of Bank. Bank currently the availability of banking services in Hurdsfield, North has its main office in Goodrich, North Dakota, and main- Dakota. As part of this review, the Board has carefully tains a paying and receiving facility in Hurdsfield, North considered Bank's record of performance under the Com- Dakota.1 Bank is the 94th largest depository institution in munity Reinvestment Act (12 U.S.C. § 2901 et seq.) North Dakota and controls deposits of $15.6 million, repre- ("CRA"). senting less than 1 percent of total deposits in depository An institution's most recent CRA performance evaluainstitutions in the state.2 tion is a particularly important consideration in the applica- As noted above, Applicant is a de novo corporation and tions process because it represents a detailed on-site evaludoes not control another depository institution. Accord- ation of the institution's overall record of performance ingly, based on all the facts of record, the Board concludes under the CRA by its appropriate federal supervisor.3 Bank that consummation of the proposal would not have a signif- received a "satisfactory" rating from its appropriate fedicantly adverse effect on competition or on the concentra- eral supervisor, the Federal Deposit Insurance Corporation, tion of banking resources in any relevant banking market, at Bank's most recent examination for CRA performance, as of April 1999 ("1999 Examination"). Examiners at the 1999 Examination found that Bank's lending record evidenced a strong commitment to lending 1. Applicant has applied to the North Dakota Department of Bank- in Bank's community assessment area. Examiners noted ing and Financial Institutions ("Banking Department") to acquire that Bank's assessment area, which includes Hurdsfield, control of Bank. Bank also has applied to the Federal Deposit Insur- consisted entirely of moderate-income geographies and ance Corporation ("FDIC"), under section 18(d) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(d)), and to the Banking Department to relocate the head office of Bank from Goodrich to West Fargo, North Dakota, and to convert Bank's current head office in 3. The Interagency Questions and Answers Regarding Community Goodrich to a branch. The Banking Department and FDIC recently Reinvestment provide that a CRA examination is an important and approved the applications filed by Applicant and Bank. often controlling factor in the consideration of an institution's CRA 2. In this context, depository institutions include commercial banks, record and that reports of these examinations will be given great savings banks, and savings associations. Asset and ranking data are as weight in the applications process. See 64 Federal Register 23,618, of June 30, 1998. 23,641 (1999). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

578 Federal Reserve Bulletin • August 1999 was heavily dependent on agriculture. Examiners reviewed Otto Bremer Foundation 31 agricultural loans, totaling approximately $1.4 million St. Paul, Minnesota that were made by Bank in 1998 and 1999, and noted that 80 percent of these loans were extended to farm operations Bremer Financial Corporation with annual gross revenues of less than $250,000. Examin- St. Paul, Minnesota ers further concluded that the geographic distribution of Bank's loans in its assessment area was reasonable, and did Order Approving the Acquisition of a Bank Holding not find any substantive violations of fair lending laws and Company regulations. Commenters expressed concern that Applicant might Otto Bremer Foundation ("Foundation") and its wholly close Bank's paying and receiving facility in Hurdsfield owned subsidiary, Bremer Financial Corporation ("BFC"), and that such closure would negatively affect the local bank holding companies within the meaning of the Bank community. Applicant has stated that it presently intends to Holding Company Act ("BHC Act"), have requested the retain the Hurdsfield facility following consummation of Board's approval under section 3 of the BHC Act the proposal.4 (12 U.S.C. § 1842) to acquire all the outstanding voting Based on all the facts of record, including the 1999 stock of Dean Financial Services, Inc., St. Paul, Minnesota Examination, the public comments received, and the infor- ("Dean"), and thereby to acquire its subsidiary banks, mation provided by Applicant to address these comments, First National Bank of Aitkin, Aitkin; State Bank of Edgerthe Board concludes that convenience and needs consider- ton, Edgerton; First State Bank of Eden Prairie, Eden ations, including the CRA performance record of Bank, are Prairie; and Princeton Bank, St. Paul, all in Minnesota. consistent with approval of the proposal. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published Conclusion (64 Federal Register 4873 (1999)). The time for filing comments has expired, and the Board has considered the Based on the foregoing, and in light of all the facts of application and all comments received in light of the record, the Board has determined that the application factors set forth in section 3 of the BHC Act. should be, and hereby is, approved. The Board's approval BFC is the fifth largest depository institution in Minneis specifically conditioned on compliance by Applicant sota, controlling deposits of approximately $1.5 billion, with all the commitments made in connection with the representing 2.5 percent of total deposits in depository application. For the purpose of this action, the commit- institutions in the state ("state deposits").1 Dean controls ments relied on by the Board in reaching its decision are total deposits of $264.6 million, representing less than deemed to be conditions imposed in writing by the Board 1 percent of state deposits. On consummation of the proin connection with its findings and decision and, as such, posal, BFC would remain the fifth largest depository instimay be enforced in proceedings under applicable law. tution in Minnesota, controlling deposits of $1.8 billion, The acquisition of Bank shall not be consummated be- representing approximately 2.9 percent of state deposits. fore the fifteenth calendar day after the effective date of this order, or later than three months after the effective date Competitive Considerations of this order, unless such period is extended to good cause by the Board or by the Federal Reserve Bank of Minneap- The BHC Act prohibits the Board from approving an olis, acting pursuant to delegated authority. application under section 3 the BHC Act if the proposal By order of the Board of Governors, effective June would result in a monopoly or would be in furtherance of 14, 1999. any attempt to monopolize the business of banking. The BHC Act also prohibits the Board from approving a pro- Voting for this action: Vice Chair Rivlin and Governors Kelley, posed combination that would substantially lessen compe- Ferguson, and Gramlich. Absent and not voting: Chairman Greenspan tition or tend to create a monopoly in any relevant banking and Governor Meyer. market, unless the Board finds that the anticompetitive effects of the proposal are clearly outweighed in the public ROBERT DEV. FRIERSON interest by the probable effect of the proposal in meeting Associate Secretary of the Board the convenience and needs of the community to be served.2 BFC and Dean compete in the Minneapolis-St. Paul, Minnesota, banking market ("Minneapolis banking mar- 4. The Board notes, moreover, that federal banking law provides a ket").3 BFC is the 14th largest depository institution in the specific mechanism for addressing branch closings. Federal law requires an insured depository institution to provide notice to the public and to the appropriate federal regulatory agency before closing a branch. See 12 U.S.C. § 1831r-l, as implemented by the Joint Policy 1. Deposit data are as of June 30, 1998. In this context, depository Statement Regarding Branch Closings, 58 Federal Register 49,083 institutions include commercial banks, savings banks, and savings (1993) ("Policy Statement"). Since Bank's Hurdsfield paying and associations. receiving facility receives deposits, the facility is considered a 2. 12 U.S.C. § 1842(c)(1). "branch" for purposes of the Policy Statement. Section 183 lr-1 does 3. The Minneapolis banking market is approximated by Anoka, not authorize federal supervisors to prevent the closing of a branch. Hennepin, Ramsey, Washington, Carver, Scott, and Dakota Counties Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 579 Minneapolis banking market, controlling $268 million in of Foundation, BFC, Dean, and their subsidiary banks are deposits, representing less than 1 percent of market depos- consistent with approval, as are the other supervisory facits.4 Dean is the 32nd largest depository institution in the tors the Board must consider under section 3 of the BHC market, controlling $104 million in deposits, representing Act. Considerations related to the convenience and needs less than 1 percent of market deposits. On consummation of communities to be served, including the records of of the proposal, BFC would become the 12th largest depos- performance of the institutions involved under the Commuitory institution in the market, controlling deposits of nity Reinvestment Act (12 U.S.C. § 2901 et seq.), also are $372 million, representing approximately 1 percent of mar- consistent with approval of the proposal. ket deposits. The change in market concentration, as measured by the Herfindahl-Hirschman Index ("HHI"), would Conclusion not exceed the threshold level set in the Department of Justice Merger Guidelines ("DOJ Guidelines").5 Based on the foregoing, and in light of all the facts of record, the Board has determined that the application Based on all the facts of record, and for the reasons should be, and hereby is, approved. Approval of the applidiscussed above, the Board concludes that consummation cation is specifically conditioned on compliance by Founof the proposal is not likely to result in any significantly dation and BFC with all the commitments made in connecadverse effects on competition or on the concentration of tion with the application. For the purposes of this order, the banking resources in the Minneapolis banking market or any other relevant banking market, and that competitive commitments and conditions relied on by the Board in factors are consistent with approval of the proposal. reaching its decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings Other Considerations under applicable law. The transaction shall not be consummated before the The BHC Act also requires the Board, in acting on an fifteenth calendar day after the effective date of this order, application, to consider the financial and managerial reor later than three months after the effective date of this sources and future prospects of the companies and banks order, unless such period is extended for good cause by the involved, the convenience and needs of the communities to Board or by the Federal Reserve Bank of Minneapolis, be served, and certain other supervisory factors. The Board acting pursuant to delegated authority. has reviewed these factors in light of all the facts of record, By order of the Board of Governors, effective June 16, including supervisory reports of examination assessing the 1999. financial and managerial resources of the organizations. Based on all the facts of record, the Board concludes that the financial and managerial resources and future prospects Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Ferguson and Gramlich. Absent and not voting: Governors Kelley and Meyer. in Minnesota; Lent, Chisago Lake, Shafer, Wyoming and Franconia ROBERT DEV. FRIERSON Townships in Chisago County, Minnesota; Blue Hill, Baldwin, Associate Secretary of the Board Orrock, Livonia, and Big Lake Townships and the City of Elk River in Sherburne County, Minnesota; Monticello, Otsego, Buffalo, Frankfort, Rockford, and Franklin Townships in Wright County, Minnesota; Piraeus Bank S.A. Lanesburgh Township in Le Sueur County, Minnesota; and the Town of Hudson in St. Croix County, Wisconsin. Athens, Greece 4. Market share data are those compiled as of June 30, 1998. Market share data are based on calculations that include the deposits of thrift institutions at 50 percent. The Board previously has indicated that Order Approving the Acquisition of a Bank Holding thrift institutions have become, or have the potential to become, Company significant competitors of commercial banks. See e.g., Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the Piraeus Bank S.A. ("Piraeus"), a foreign bank, has applied Board has regularly included thrift deposits in the calculation of under section 3 of the Bank Holding Company Act (the market share on a 50-percent weighted basis. See, e.g., First Hawai- "BHC Act") (12 U.S.C. § 1842) to become a bank holding ian, Inc., 77 Federal Reserve Bulletin 52 (1991). company within the meaning of the BHC Act by acquiring 5. After consummation of the proposal, the HHI for the Minneapolis banking market would remain unchanged at 1888. Under the revised 56 percent of the voting shares in Marathon Banking DOJ Guidelines, 49 Federal Register 26,823 (June 29, 1984), a Corporation ("MBC"), and thereby acquiring Marathon market in which the post-merger HHI exceeds 1800 is considered National Bank of New York ("Bank"), both in Astoria, highly concentrated. The Department of Justice has informed the New York. Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive Notice of the proposal, affording interested persons an effects) unless the post-merger HHI is at least 1800 and the merger opportunity to submit comments, has been published increases the HHI by more than 200 points. The Department of Justice (63 Federal Register 37,116 (1998)). The time for filing has stated that the higher than normal HHI thresholds for screening comments has expired, and the Board has considered the bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other nondepository application and all comments received in light of the financial entities. factors set forth in section 3 of the BHC Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

580 Federal Reserve Bulletin • August 1999 Piraeus, with consolidated assets equivalent to approxi- on-site examinations of Piraeus that cover areas such as mately $4.6 billion, is a commercial bank organized under asset quality, compliance, and internal controls. During the laws of Greece.1 Piraeus engages in the business of these examinations, the examiners commonly review the banking in Greece through branches and subsidiary banks.2 bank's internal audit reports. In addition, the Bank of Piraeus also engages through subsidiaries in several non- Greece conducts more frequent targeted examinations that banking activities in Greece. Piraeus does not currently focus on specific areas, such as foreign exchange, reconcilhave any banking or nonbanking operations in the United iation of accounts, and anti-money laundering procedures. States. Bank is the 100th largest commercial banking orga- Piraeus also is required to have an audit conducted annunization in New York, controlling deposits of $89 million, ally by qualified external auditors. The external auditors representing less than 1 percent of all deposits in commer- focus on Piraeus's internal controls, and their comments cial banking organizations in the state.3 and findings are provided to the Bank of Greece as part of the bank's required assessment of its internal controls. Comprehensive Consolidated Supervision and Access to Piraeus is required to submit a number of financial Information reports to the Bank of Greece, including semiannual reports concerning, among other things, profit and loss, capi- In order to approve an application by a foreign bank to tal adequacy, liquidity, asset quality, large exposures, curacquire a U.S. bank or bank holding company, the BHC rency positions, loans and guarantees to affiliates and Act and Regulation Y require the Board to determine that insiders, investments in other financial and nonfinancial the foreign bank is subject to comprehensive supervision institutions, and 10-percent shareholders. Piraeus also must or regulation on a consolidated basis by its home country submit semiannual bank-only and consolidated financial supervisors.4 The Board also must determine that the for- statements. In addition, Piraeus is required to publish aneign bank has provided adequate assurances that it will nual audited financial statements, including balance sheets make available to the Board such information on its opera- and income statements. Piraeus also must submit daily tions and activities and those of its affiliates that the Board reports on its foreign exchange transactions and foreign deems appropriate to determine and enforce compliance currency positions. with applicable law.5 The Bank of Greece also has promulgated regulations The Board considers a foreign bank to be subject to for credit institutions on loans to one borrower, a limit on comprehensive supervision or regulation on a consolidated aggregate "large exposures" (amounts equal to 10 percent basis if the Board determines that its home country supervi- of regulatory capital), and reserves. In addition, the Bank sor receives sufficient information on the foreign bank's of Greece has imposed capital-based limits on the amounts worldwide operations, including the bank's relationship to that a credit institution may invest in nonfinancial compaany affiliate, to assess the bank's overall financial condition nies.7 and compliance with law and regulation.6 With respect to affiliate transactions, the Bank of Greece Supervision of Greek credit institutions, such as Piraeus, requires credit institutions, such as Piraeus, to report the is the responsibility of the Supervision Department of the value of each credit exposure to a subsidiary or affiliate that Bank of Greece. The Bank of Greece conducts general exceeds 10 percent of the credit institution's regulatory capital. The Bank of Greece also requires a credit institution to report on a semiannual basis loans and guarantees 1. Asset data are as of December 31, 1998. by the credit institution to its affiliates or between the credit 2. Piraeus controls Macedonia Thrace Bank, Thessaloniki, Greece, institution's affiliates. In addition, a credit institution's Piraeus Prime Bank, Piraeus, Greece, and Xios Bank, Athens, Greece. Piraeus also controls Tirana Bank S.A., Tirana, Albania. exposure to a subsidiary or affiliate may not exceed 3. State deposit and ranking data are as of June 30, 1998. 30 percent of the credit institution's regulatory capital. It is 4. See 12 U.S.C. § 1842(C)(3)(b); 12 C.F.R. 225.13(b)(5). anticipated that the exposure limit will be reduced to 5. See 12 U.S.C. § 1842(c)(3)(A); 12 C.F.R. 225.13(b)(4). 20 percent in 1999. 6. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisor: The Bank of Greece has statutory authority to terminate (i) Ensures that the foreign bank has adequate procedures for the operating license of a credit institution for, among other monitoring and controlling its activities worldwide; things, maintaining insufficient capital, impeding supervi- (ii) Obtains information on the condition of the foreign bank and sion by any means, or violating legal provisions, decisions, its subsidiaries and offices outside the home country through or regulations set out by the banking supervisory authoriregular reports of examination, audit reports, or otherwise; (iii) Obtains information on the dealings and relationships be- ties. In addition, the Bank of Greece also may restrict the tween the foreign bank and its affiliates, both foreign and business activities of a credit institution for violations of domestic; law and for liquidity or solvency problems. The Bank of (iv) Receives from the foreign bank financial reports that are Greece also may impose fines and other sanctions on credit consolidated on a worldwide basis, or comparable information that permits analysis of the foreign bank's financial condition on a worldwide, consolidated basis; (v) 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 7. The prior approval of the Bank of Greece is required for a credit is essential, and other elements may inform the Board's institution to invest in other companies in amounts that exceed the determination. 12 C.F.R. 211.24(c)(1). lower of GRD 700 million or 2 percent of capital. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 581 institutions and their legal representatives and managers visory information concerning MBC and Bank assessing for violations of banking statutes and regulations. the financial and managerial resources of the organizations. Piraeus also is subject to supervision by other Greek Based on all the facts of record, the Board has concluded government entities. Piraeus's insurance agent subsidiaries that the financial and managerial resources and future are subject to the supervision of the Ministry of Develop- prospects of the organizations are consistent with approval, ment, the Greek insurance supervisory authority. In addi- as are the other supervisory factors that the Board must tion, Piraeus and certain of its subsidiaries are monitored consider under section 3 of the BHC Act. In addition, by the Capital Markets Commission because their stock is based on all the facts of record, including the fact that listed on the Athens Stock Exchange. The prior approval of Piraeus does not currently have any banking operations in the Monopolies and Mergers Commission also is required the United States, the Board has concluded that consummafor a merger or acquisition involving a Greek bank. There tion of the proposal would not have a significantly adverse is a high degree of cooperation between the Bank of effect on competition or on the concentration of banking Greece and the other supervisory authorities. resources in any relevant banking market, and that compet- Based on all the facts of record, the Board concludes that itive considerations are consistent with approval. Consider- Piraeus is subject to comprehensive supervision on a con- ations related to the convenience and needs of the commusolidated basis by its home country supervisor. nities to be served, including the performance record of The BHC Act also requires the Board to determine that Bank under the Community Reinvestment Act (12 U.S.C. the foreign bank has provided adequate assurances that it § 2901 et seq.), also are consistent with approval of the will make available to the Board such information on its proposal.8 operations and activities and those of its affiliates that the Board deems appropriate to determine and enforce compli- Conclusion ance with the BHC Act and the International Banking Act ("IBA") (12 U.S.C. § 3101 et seq.). The Board has re- Based on the foregoing and all other facts of record, the viewed restrictions on disclosure in jurisdictions where Board has determined that the application should be, and Piraeus has material operations and has communicated hereby is, approved. Should any restrictions on access to with relevant banking authorities concerning access to information on the operations or activities of Piraeus and information. Piraeus has committed that, to the extent not any of its affiliates subsequently interfere with the Board's prohibited by law, it will make available to the Board such ability to determine the safety and soundness of Piraeus's information on the operations of Piraeus and any of its U.S. operations or the compliance by Piraeus or its affiliates affiliates that the Board deems necessary to determine and with applicable federal statutes, the Board may require enforce compliance with the BHC Act, the IBA, and other termination of any of Piraeus's direct or indirect activities applicable federal law. Piraeus also has committed to coop- in the United States. The Board's approval of the proposal erate with the Board to obtain any waivers or exemptions is expressly conditioned on Piraeus's compliance with all that may be necessary to enable Piraeus to make any such the commitments made in connection with the application. information available to the Board. In light of these com- The commitments and conditions relied on by the Board in mitments and other facts of record, the Board has con- reaching this decision are deemed to be conditions imcluded that Piraeus has provided adequate assurances of posed in writing by the Board in connection with its access to any appropriate information that the Board may findings and decision and, as such, may be enforced in request. proceedings under applicable law. For these reasons, and based on all the facts of record, The proposal may not be consummated before the fifthe Board has concluded that the supervisory factors it is teenth calendar day after the effective date of this order, or required to consider under section 3(c) of the BHC Act are later than three months after the effective date of this order, consistent with approval. unless such period is extended for good cause by the Board or by the Federal Reserve Bank of New York, acting Financial, Managerial, Competitive, and Convenience pursuant to delegated authority. and Needs Considerations By order of the Board of Governors, effective June 14, 1999. The Board also has carefully considered the financial and managerial resources and future prospects of the banks and Voting for this action: Vice Chair Rivlin and Governors Kelley, companies involved, the convenience and needs of the Ferguson, and Gramlich. Absent and not voting: Chairman Greenspan and Governor Meyer. communities to be served, and certain supervisory factors. Piraeus's capital levels exceed the levels required under ROBERT DEV. FRIERSON Greek capital guidelines and under the Basle Capital Ac- Associate Secretary of the Board cord, and are considered equivalent to the capital levels that would be required of a U.S. banking organization under similar circumstances. The Board also has reviewed supervisory information concerning Piraeus's condition 8. Bank was rated "satisfactory" in its most recent CRA perforand the proposal from Piraeus's home country authority, mance evaluation conducted by the Office of the Comptroller of the confidential financial information from Piraeus, and super- Currency, as of April 27, 1998. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

582 Federal Reserve Bulletin • August 1999 Orders Issued Under Section 4 of the Bank Holding of Regulation Y (12 C.F.R. 225.28(b)(14)).1 In addition, Company Act Notificants, through NYCE, would engage in providing check verification services, in accordance with section 225.28(b)(2) of Regulation Y (12 C.F.R. 225.28(b)(2)). BankBoston Corporation NYCE operates an electronic funds transfer ("EFT") Boston, Massachusetts network under the NYCE service name, and Magic Line operates the Magic Line EFT network. Both NYCE and The Bank of New York Company, Inc. Magic Line provide data processing and transmission ser- New York, New York vices to financial institutions and merchants that are members of their respective branded automated teller machine The Chase Manhattan Corporation ("ATM") and point of sale ("POS") networks.2 NYCE New York, New York would engage directly and through Magic Line in certain nonbanking activities related to the operation of ATM and Citizens Financial Group, Inc. POS networks, including various data processing and trans- Providence, Rhode Island mission services. Notice of the proposal, affording interested persons an Comerica Incorporated opportunity to submit comments, has been published (64 Detroit, Michigan Federal Register 13,799 (1999)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set forth First Union Corporation in section 4(c)(8) of the BHC Act. Charlotte, North Carolina Notificants are commercial banking organizations with headquarters in Massachusetts, Michigan, New Jersey, Fleet Financial Group, Inc. New York, North Carolina, and Rhode Island, and foreign Boston, Massachusetts banking organizations with subsidiary commercial banking organizations in the United States. Each Notificant engages HSBC Holdings PLC directly and through subsidiaries in a broad range of bank- London, England ing and permissible nonbanking activities in the United States and abroad.3 HSBC Holdings BV Section 4(c)(8) of the BHC Act provides that a bank Amsterdam, The Netherlands holding company may, with Board approval, engage in any activity that the Board determines to be "so closely related HSBC Americas, Inc. to banking or managing or controlling banks as to be a Buffalo, New York proper incident thereto."4 The Board previously has determined that providing check verification services and EFT- The Royal Bank of Scotland Group PLC related data processing and transmission services is closely Edinburgh, Scotland related to banking within the meaning of section 4(c)(8) of The Royal Bank of Scotland PLC Edinburgh, Scotland 1. Notificants, with the exception of Comerica Incorporated ("Com- Summit Bancorp erica"), are shareholders of NYCE and would each retain 5 percent or Princeton, New Jersey more of the voting shares of NYCE. Comerica is a principal shareholder of Magic Line and would acquire more than 5 percent of the voting shares of NYCE as a result of the proposed transaction. This Order Approving Notice to Conduct Certain Data notice also includes Comerica's request for the Board's approval to Processing Activities and Other Nonbanking Activities acquire, through NYCE, an interest in Card Alert Services, Inc., Arlington, Virginia, and thereby engage in providing debit card fraud detection services. BankBoston Corporation, a bank holding company within 2. In general, an ATM network is an arrangement whereby more the meaning of the Bank Holding Company Act ("BHC than one ATM and more than one depository institution (or the Act"), and the other bank holding companies listed in the depository records of such institutions) are connected by electronic or Appendix to this order (collectively, "Notificants"), have telecommunications means to one or more computers, processors, or switches for the purpose of providing automated teller services to requested the Board's approval under section 4(c)(8) of the retail customers of the depository institutions. POS terminals accept BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of ATM or similar cards from retail customers and, using an ATM the Board's Regulation Y (12 C.F.R. 225.24) to acquire network or a parallel POS-only network, provide access to a retail Magic Line, Inc., Dearborn, Michigan ("Magic Line"), customer's account to transfer funds to a merchant's account. POS terminals are generally located in merchant establishments. through NYCE Corporation, Woodcliff Lake, New Jersey 3. Asset and deposit data for each Notificant are set forth in the ("NYCE"), and thereby engage in providing data pro- Appendix. cessing services in accordance with section 225.28(b)(14) 4. 12 U.S.C. § 1843(c)(8). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 583 the BHC Act.5 Notificants would conduct the proposed The Board previously has identified three distinct prodactivities in accordance with Regulation Y and previous ucts that are typically offered by EFT networks: Board decisions.6 Network access (access to an EFT network identified by In determining whether activities proposed to be con- a common trademark or logo displayed on ATMs, POS ducted in a specific proposal are a "proper incident" to terminals, and access cards); banking or managing or controlling banks, the Board must Network services (operation of a "network switch" to determine whether the performance of the proposed activi- receive and route electronic messages between ATMs, POS ties by Notificants through Magic Line "can reasonably be terminals, and data processing facilities used by depository expected to produce benefits to the public, such as greater institutions to authorize EFT transactions and the provision convenience, increased competition, or gains in efficiency, of "gateway" access to other EFT networks); and that outweigh possible adverse effects, such as undue con- ATM/POS processing (data processing and transmission centration of resources, decreased or unfair competition, services used to drive ATMs and POS terminals, monitor conflicts of interests, or unsound banking practices."7 The their activity, authorize EFT transactions, and reconcile Board has received comments opposing the proposal from accounts).8 two EFT networks ("Protestants") that generally allege Both NYCE and Magic Line provide all three services to that consummation of the proposal would result in signifi- their network members and these three activities define the cant anti-competitive effects in the market for EFT services areas in which NYCE and Magic Line compete. Accordin Michigan, Indiana, and Illinois outside the Chicago ingly, the relevant product markets in which to examine the Metropolitan Statistical Area ("Upper Midwest"). In par- competitive effects of the proposal are the markets for ticular, Protestants argue that a requirement under the network access, network services, and ATM/POS proproposal that certain Magic Line shareholders use NYCE cessing. as their exclusive regional network in the Upper Midwest The Board previously has determined that the geofor three years after consummation of the proposal is graphic market for network access is an area significantly intended primarily to prevent Protestants and other EFT larger than local banking markets and consists of a region networks from competing with NYCE in this area. comprising several states.9 Based on all the facts of record, The Board has carefully considered these comments in the Board believes that NYCE has a significant competitive light of all the facts of record, including written submis- presence in the New England and northeastern states (Consions by Notificants and Protestants. As in similar cases, necticut, Delaware, Maine, Massachusetts, New Hampthe Board also sought comments from the Department of shire, New Jersey, New York, Pennsylvania, Rhode Island, Justice on the competitive effects of the proposal. The and Vermont). Magic Line's primary service area is in the Department of Justice indicated that it had no objection to central United States (Indiana, Illinois, Kentucky, Michiconsummation of the proposal. gan, and Ohio). Thus, the primary service areas for network access services of NYCE and Magic Line do not Competitive Considerations overlap. NYCE and Magic Line compete in providing network In order to determine whether a particular transaction is access services to a limited extent in several states. There likely to decrease competition, the Board has considered are a number of considerations, however, that mitigate any the area of effective competition between parties. The area decrease in existing or potential competition resulting from of effective competition has been defined by reference to the proposal. Changes in concentration in the market for the line of commerce, or product market, and a geographic network access services in these states would not be signifmarket. The Board has carefully considered the relevant icant.10 Moreover, in each state, a number of other netproduct and geographic markets in which to analyze the works, including other large regional networks, and third competitive effects of the proposal in light of all the facts party processors would continue to operate and to provide of record, including information provided by Notificants both direct and potential competition for NYCE. Smaller and Protestants and the geographic scope of and services networks and third party processors also would continue to provided by existing EFT networks and other providers of operate EFT networks within the central United States and EFT services. to provide both direct and potential competition for the 5. See 12 C.F.R. 225.28(b)(2) and (14); Burnett Banks of Florida, 8. See EPS Order at 493-94. Inc., 65 Federal Reserve Bulletin 263 (1979) (check verification 9. See EPS Order at 494. services); Compagnie Financiere de Paribas, 82 Federal Reserve 10. NYCE and Magic Line both operate branded ATMs in 15 states. Bulletin 348 (1996) (fraud detection services); Bank of New York In 13 of these states, the smaller of the two networks provides branded Company, Inc., 80 Federal Reserve Bulletin 1107 (1994) {"InfiNet access to less than 2 percent of the estimated total number of ATMs in Order") (ATM network services); Banc One Corporation, 81 Federal the state. In Illinois, where NYCE is the smaller network, it provides Reserve Bulletin 492 (1995) ("EPS Order") (ATM network services). branded access to less than 3 percent of the estimated total number of 6. The Board notes that ATM activities must be conducted in ATMs in the state. In Kentucky, NYCE provides branded access to accordance with applicable federal and state laws, including applica- less than 5 percent of the estimated total number of ATMs, and its ble branching laws. brand would appear on approximately 16 percent of such ATMs after 7. See 12 U.S.C. § 1843(c)(8). consummation of the proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

584 Federal Reserve Bulletin • August 1999 Magic Line network.11 Finally, national networks increas- The Board has reviewed the Shareholder Agreement in ingly offer an alternative to regional networks for some light of all the facts of record in this case. In the Michigan financial institutions in the central United States.12 portion of the Upper Midwest, where Magic Line is a The Board considers the appropriate geographic market dominant EFT network, the Shareholder Agreement would area for evaluating the provision of network services and apply to three Magic Line shareholders.15 These sharehold- ATM/POS processing services to be national in scope. The ers operate approximately 17 percent of the estimated total Board notes that physical proximity to ATMs and POS number of ATMs in the state and account for approxiterminals is not required to provide these services and that mately 27 percent of the estimated total number of ATM these services may be provided on an unbranded or subcon- transactions in the state. Accordingly, approximately threetract basis. In addition, large scale economies can be fourths of all ATM transactions in Michigan would be achieved in these product markets, and several firms offer unencumbered by the Shareholder Agreement and would ATM/POS processing services on a national basis. Many be immediately available to competing networks. smaller firms also offer these services. Based on all the Two of the three Magic Line shareholders in Michigan facts of record, the Board finds that the proposal would not that would be subject to the Shareholder Agreement have have a significantly adverse effect on competition in the experienced substantial growth in their EFT transaction provision of these services in the central United States or volume and data processing fees.16 This growth, if susany other relevant portion of the country. tained, would enable these shareholders to shift a substan- Protestants claim, however, that a proposed agreement tial portion of their EFT activities to a regional network ("Shareholder Agreement") between NYCE and certain other than NYCE with limited concern that they would be Magic Line shareholders would constitute a form of unfair financially penalized by the minimum annual payment competition or would decrease competition to the extent requirement of the Shareholder Agreement for doing so. that the Shareholder Agreement prevents these sharehold- Moreover, these provisions of the Shareholder Agreeers from joining Protestants or other regional networks in ment are limited in duration. The exclusivity provision is the Upper Midwest.13 applicable to each of these shareholders for three years.17 Protestants contend that the focus of the Shareholder The Board is concerned that exclusivity provisions, such Agreement on certain geographic areas and certain EFT- as those in the Shareholder Agreement, are inherently related services demonstrates that the purpose of the Share- anti-competitive because they restrict the ability of some holder Agreement is to harm Protestants rather than to participating financial institutions to choose ATM network facilitate the transfer of the Magic Line franchise. Protes- access and ATM service providers that may be less costly tants further assert that the terms of the Shareholder Agree- and more suitable for customers of these financial institument are contrary to the terms of EFT operating rules that tions. In this case, the Board believes that the potential the Board has specifically relied on in previous cases to adverse effects of the Shareholder Agreement are real, but support its determination in those cases that the combination of two EFT networks would not have a significantly adverse effect on competition.14 15. In the other two states in the Upper Midwest, Illinois and Indiana, Magic Line shareholders are estimated to operate only 5 percent and 2 percent, respectively, of the total number of ATMs in the state. Accordingly, the Shareholder Agreement would not appear to 11. The Board also notes the rapid growth in recent years in the have a significant effect on competition among EFT networks and volume of POS transactions, which serve as an alternative for certain third party processors in these areas. ATM transactions, and the presence of a number of competitors that 16. These two shareholders control more than 90 percent of all the provide POS network services across regional boundaries. ATMs controlled by the three shareholders in the aggregate in Michi- 12. See HONOR/Most Order at 133 n.20. For example, in October gan. 1998, Visa began operations of its Visa II card, a debit card for POS 17. The Board also has considered the Shareholder Agreement in transactions. comparison to covenants not to compete. The Board and the courts 13. Under the Shareholder Agreement, any Magic Line shareholder have previously determined that such covenants are permissible when that receives cash or EFT transaction processing credits as any portion they are reasonable in duration, scope, and geographic area. See of the consideration for its Magic Line shares must use NYCE as its Orbanco, Inc., 59 Federal Reserve Bulletin 367 (1973); United Jersey exclusive regional EFT network in the Upper Midwest for three years Banks, 69 Federal Reserve Bulletin 565, 567 n.12 (1983); Business after consummation of the proposal, and must make specific minimum Records Corporation v. Lueth, 981 F.2d 957 (9th Cir. 1992) annual payments to NYCE for data processing and related services ("Lueth"). Such covenants have been upheld by the courts when they during these three years based on a percentage of the shareholder's are made in connection with the sale of a business because such ATM transaction volume prior to the proposal. In addition, a party to covenants facilitate the transferability of property, in the form of the the Shareholder Agreement must purchase from NYCE for the term of goodwill of a business. See Lueth at 960; Ticor Title Insurance the agreement any data processing services that are of the kind it Company v. Cohen, 173 F.2d 63 (2d Cir. 1999). Accordingly, in sale of obtained from Magic Line at the time that NYCE and Magic Line business cases, the duration of a covenant not to compete has been agreed to merge. A Magic Line shareholder may elect at any time upheld when it is reasonably related to the time required to vest the during the term of the Shareholder Agreement to terminate its exclu- goodwill of a business in its new owner. See Lueth at 961; Restatesive network routing requirement, but as a consequence the term of ment (Second) of Contracts § 188, comments (d) and (f) (American the agreement for purchasing data processing services would be Law Institute 1981). This period of time must be determined in light extended to five years and the shareholder's minimum annual pay- of all the relevant circumstances. See Laidlaw, Inc. v. Student Transment obligation would be increased. portation of America, Inc., 20 F. Supp.2d 727 (D.N.J. 1998). The 14. See BankAmerica Corporation, 85 Federal Reserve Bulletin 271 Board believes that the exclusivity provisions of the Shareholder (1999); HONOR/Most Order at 133; EPS Order at 496; InfiNet Order Agreement are consistent with the court decisions regarding coveat 1109. nants not to compete. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 585 recognizes that the anti-competitive effects of the Share- network cardholders and provide broader and more conveholder Agreement are limited in geographic area, scope, nient access to customer accounts. Smaller financial instituand duration. tions that compete with larger, multistate organizations for deposit funds would be able to expand their depositors' Other Considerations access to their accounts without making substantial investments in branch systems or proprietary ATM networks. In considering the proper incident test, the Board also must Consummation of the proposal also would result in other determine whether the likely public benefits of a proposal public benefits. The proposal is expected to produce econcould reasonably be expected to outweigh potential ad- omies of scale, for example, and to reduce average costs verse effects. Notificants assert that the proposal would for the combined networks. Members of each network also result in significant public benefits. would benefit from the technical expertise and the ex- As part of the proposal, NYCE has committed to adopt panded research and development programs of the comunified operating rules for NYCE and Magic Line that, in bined network. Notificants anticipate that the increased several important respects, would facilitate competition capital base of NYCE would enable it to develop and and increase access to the network for all depository insti- market new products and services more rapidly, thereby tutions. The NYCE unified operating rules would allow all increasing competition among EFT networks and third depository institutions in the combined networks to join party processors. other regional and national networks. The operating rules As part of this review under section 4(c)(8) of the BHC also would allow all depository institutions to designate Act, the Board also considers the financial and managerial networks other than NYCE as the priority routing for resources of Notificants and their subsidiaries and any transactions performed by the depository institution's cus- company to be acquired, and the effect of the proposal on tomers (subject to the other networks granting reciprocal those resources.19 Based on all the facts of record, includrights to their participants to use NYCE). In addition, ing reports of examination and other supervisory informaparticipants would be able to co-brand access cards and tion, the Board concludes that financial and managerial ATMs and to use third party processors and branded sub- considerations are consistent with approval of the proposal. switching of transactions.18 Moreover, depository institu- In addition, there is no evidence in the record that the tions of all sizes would be able to participate in NYCE on a proposal would result in conflicts of interests or unsound nondiscriminatory basis. By contrast, the current Magic banking practices. Line operating rules contain several provisions concerning As explained above, aspects of this proposal are likely to transaction routing, co-branding of access cards, and ATM result in some decrease in competition while other aspects processing services that tend to restrict competition with of the proposal promote competition and have other public other regional EFT networks and with third party pro- benefits. The Board is particularly concerned about the cessors. serious potential anti-competitive effects that may arise Consummation of the proposal, therefore, would facili- from the exclusivity provisions of the Shareholder Agreetate competition throughout the Magic Line service area in ment used by Notificants. As a general matter, the Board the provision of network access, network services, and believes that the likely effect on competition from exclusiv- ATM/POS processing. The unified NYCE operating rules ity provisions of the type contained in the Shareholder would promote competition among NYCE and alternative Agreement would outweigh the typical public benefits providers of EFT-related services, including other regional associated with the increased convenience and economies networks, national networks, and third party processors, of scale associated with a merger of ATM networks. In this that is currently limited or foreclosed under the Magic Line case, however, the Board believes that the potential adoperating rules. The proposal also would ensure access to verse effect on competition is somewhat mitigated by the the network by all depository institutions and competition limited application, duration, and scope of the Shareholder among them in providing network access to their custom- Agreement. Importantly, the Board also believes that sigers. nificant public benefits in the form of increased and more The combination of NYCE and Magic Line upon con- open competition are likely to result from the commitment summation of the proposal also would benefit consumers by NYCE to change the Magic Line operating rules to by providing greater account availability and convenience allow all depository institutions in the network to join other to customers of each network. In particular, an ATM net- regional and national networks, to facilitate increased use work that has a large number of financial institution mem- of third party processors, to route transactions more freely bers and that provides network access at more locations through other networks, and to co-brand access cards and over a broad geographical area would have greater value to ATMs. Absent the unique facts in this case concerning the actual operation of the Shareholder Agreement, and the commitment of NYCE to adopt unified operating rules as 18. "Subswitching" refers to the routing of transactions between described above, the expected public benefits in this case members of the same regional network without accessing that net- would likely not be sufficient to outweigh the possible work, and, therefore, without paying the network's switch fee. Typically, this is accomplished by routing the transaction through a third party processor that provided ATM processing services for both network members. 19. See 12 C.F.R. 225.26. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

586 Federal Reserve Bulletin • August 1999 adverse effects. On this basis and after careful consider- commercial banking organization in the United States, ation of all the facts of record, the Board has determined controlling $27.5 billion in deposits. The Bank of New that consummation of the proposal can reasonably be ex- York Company, Inc., operates subsidiary banks in six pected to produce public benefits that would outweigh any states. possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. The Chase Manhattan Corporation, with approximately $246.9 billion in total consolidated assets, is the second Conclusion largest commercial banking organization in the United States, controlling $133.5 billion in deposits. The Chase Based on all the facts of record, the Board has determined Manhattan Corporation operates subsidiary banks in seven that the notice should be, and hereby is, approved. The states, the Commonwealth of Puerto Rico, and the U.S. Board's approval is specifically conditioned on Notifi- Virgin Islands. cants' compliance with the commitments made in connection with this notice and the conditions referred to in this HSBC Holdings PLC and HSBC Holdings BV, with aporder. The Board's determination also is subject to all the proximately $471 billion in total consolidated assets, are terms and conditions set forth in Regulation Y, including the fifth largest commercial banking organization in the those in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and world, controlling $333 billion in deposits. Through their 225.25(c)), and to the Board's authority to require modifisubsidiary, HSBC Americas, Inc., with approximately cation or termination of the activities of a bank holding $31.8 billion in total consolidated assets, they are the 28th company or any of its subsidiaries that the Board finds largest commercial banking organization in the United necessary to ensure compliance with, or to prevent evasion States, controlling $21.6 billion in deposits. HSBC Ameriof, the provisions and purposes of the BHC Act and the cas, Inc., operates a subsidiary bank in one state. Board's regulations and orders issued thereunder. For purposes of this action, the commitments and conditions shall Comerica Incorporated, with approximately $36.6 billion be deemed to be conditions imposed in writing by the in total consolidated assets, is the 23d largest commercial Board in connection with its findings and decision and, as banking organization in the United States, controlling such, may be enforced in proceedings under applicable $23.3 billion in deposits. Comerica Incorporated operates law. subsidiary banks in four states. This proposal shall not be consummated later than three months after the effective date of this order, unless such First Union Corporation, with approximately $212.1 bilperiod is extended for good cause by the Board, or the lion in total consolidated assets, is the fourth largest com- Federal Reserve Banks of Boston, Chicago, New York, or mercial banking organization in the United States, control- Richmond, acting pursuant to delegated authority. ling $138.2 billion in deposits. First Union Corporation By order of the Board of Governors, effective June 30, operates subsidiary banks in 12 states and the District of 1999. Columbia. Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Meyer, Ferguson, and Gramlich. Fleet Financial Group, Inc., with approximately $114.8 billion in total consolidated assets, is the seventh ROBERT DEV. FRIERSON largest commercial banking organization in the United Associate Secretary of the Board States, controlling $69.3 billion in deposits. Fleet Financial Group, Inc., operates subsidiary banks in eight states. APPENDIX Royal Bank of Scotland Group PLC and Royal Bank of Asset and Deposit Data for Notificants1 Scotland, with approximately $117 billion in total consolidated assets, are the 67th largest commercial banking orga- BankBoston Corporation, with approximately $52.6 billion nization in the world, controlling $85 billion in deposits. in total consolidated assets, is the 15th largest commercial Through their subsidiary, Citizens Financial Group, Inc., banking organization in the United States, controlling with approximately $6 billion in total consolidated assets, $35 billion in deposits. BankBoston Corporation operates they are the 81st largest commercial banking organization subsidiary banks in six states. in the United States, controlling $4.9 billion in deposits. Citizens Financial Group, Inc., operates subsidiary banks The Bank of New York Company, Inc., with approximately in two states. $46.7 billion in total consolidated assets, is the 17th largest Summit Bancorp, with approximately $32.4 billion in total consolidated assets, is the 27th largest commercial banking organization in the United States, controlling $22.7 billion 1. U.S. asset data are as of December 31, 1998, and U.S. deposit data in deposits. Summit Bancorp operates a subsidiary bank in are as of June 30, 1998. Worldwide asset and deposit data are as of December 31, 1997. two states. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 587 ORDERS ISSUED UNDER INTERNATIONAL BANKING in the IBA and Regulation K (12 U.S.C. § 3105(d)(3)-(4); ACT 12 C.F.R. 211.24(c)(2)). As noted above, Bank engages directly in the business of Anglo Irish Bank Corporation pic banking outside the United States. Bank also has provided Dublin, Ireland the Board with information necessary to assess the application through submissions that address the relevant issues. Order Approving Establishment of a Representative Office With respect to home country authorities, the Board previ- Anglo Irish Bank Corporation pic ("Bank"), Dublin, Ire- ously has determined, in connection with applications inland, a foreign bank within the meaning of the Interna- volving other banks in Ireland, that those banks were tional Banking Act ("IBA"), has applied under section subject to comprehensive home country supervision on a 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a consolidated basis.3 Bank is supervised by the Central representative office in Boston, Massachusetts. The For- Bank of Ireland on substantially the same terms and condieign Bank Supervision Enhancement Act of 1991, which tions as those banks. Based on all the facts of record, the amended the IBA, provides that a foreign bank must obtain Board has determined that Bank is subject to comprehenthe approval of the Board to establish a representative sive supervision and regulation on a consolidated basis by office in the United States. its home country supervisor. Notice of the application, affording interested persons an The Board also has taken into account the additional opportunity to submit comments, has been published in a standards set forth in section 7 of the IBA and Regulation newspaper of general circulation in Boston, Massachusetts K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). CThe Boston Globe, March 29, 1999). The time for filing In this regard, the Central Bank of Ireland has no objection comments has expired, and the Board has considered the to establishment of the proposed representative office. application and all comments received. With respect to the financial and managerial resources of Bank, with assets of approximately $6.5 billion,1 was Bank, taking into consideration Bank's record of operation incorporated in 1964, and became a publicly traded com- in its home country, its overall financial resources, and its pany in 1971. Bank's two largest shareholders, M&G standing with its home country supervisor, the Board also Investments and Scottish Provident International, both in- has determined that financial and managerial factors are stitutional investors, own, respectively, 7.7 and 6.7 percent consistent with approval of the proposed representative of Bank's shares. The remaining shares of Bank are widely office. Bank appears to have the experience and capacity to held, with no single shareholder owning more than support the proposed representative office and has estab- 5 percent of the shares. lished controls and procedures for the proposed representa- Bank engages in traditional banking activities, serving tive office to ensure compliance with U.S. law. personal, institutional, and corporate clients. Bank has five With respect to access to information about Bank's offices in Ireland, three offices in the United Kingdom, and operations, the Board has reviewed the restrictions on one bank subsidiary in each of the Isle of Man and Austria. disclosure in relevant jurisdictions in which Bank operates Operating through a number of subsidiaries, both foreign and has communicated with certain relevant government and domestic, Bank also offers financing, fund manage- authorities regarding access to information. Bank has comment, and trust services. mitted to make available to the Board such information on The proposed representative office would act as a liaison the operations of Bank and any of its affiliates that the with existing and potential customers of Bank. It would Board deems necessary to determine and enforce complimarket Bank's products to small and medium-sized corpo- ance with the IBA, the Bank Holding Company Act of rations. It also would conduct due diligence, assemble 1956, as amended, and other applicable federal law. To the credit information, make property inspections and apprais- extent that the provision of such information may be proals, and negotiate terms. All transactions would be approved and booked at Bank's head office. In acting on an application to establish a representative (i) ensure that the bank has adequate procedures for monitoring office, the IBA and Regulation K provide that the Board and controlling its activities worldwide; shall take into account whether the foreign bank engages (ii) obtain information on the condition of the bank and its directly in the business of banking outside the United subsidiaries and offices through regular examination reports, audit reports, or otherwise; States and has furnished to the Board the information it (iii) obtain information on the dealings with and relationship needs to assess the application adequately. The Board also between the bank and its affiliates, both foreign and domestic; shall take into account whether the foreign bank is subject (iv) receive from the bank financial reports that are consolidated to comprehensive supervision or regulation on a consoli- on a worldwide basis, or comparable information that permits analysis of the bank's financial condition on a worldwide dated basis by its home country supervisor (12 U.S.C. consolidated basis; § 3107(a)(2); 12 C.F.R. 211.24(d)(2)).2 In addition, the (v) evaluate prudential standards, such as capital adequacy and Board may take into account additional standards set forth risk asset exposure, on a worldwide basis. These are indicia of comprehensive consolidated supervision. No single factor is essential and other elements may inform the Board's 1. Data are as of December 31, 1998. determination. 2. In assessing this standard, the Board considers, among other 3. See Allied Irish Banks, pic, 83 Federal Reserve Bulletin 607 factors, the extent to which the home country supervisors: (1997); Bank of Ireland, 81 Federal Reserve Bulletin 511 (1995). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

588 Federal Reserve Bulletin • August 1999 hibited by law, Bank has committed to cooperate with the Bank Supervision Enhancement Act of 1991, which Board to obtain any necessary consents or waivers that amended the IBA, provides that a foreign bank must obtain might be required from third parties for disclosure of such the approval of the Board to establish a representative information. In addition, subject to certain conditions, the office in the United States. Central Bank of Ireland may share information on Bank's Notice of the application, affording interested persons an operations with other supervisors, including the Board. In opportunity to submit comments, has been published in a light of these commitments and other facts of record, and newspaper of general circulation in New York, New York subject to the conditions described below, the Board con- CThe Daily News, October 12, 1998). The time for filing cludes that Bank has provided adequate assurances of comments has expired, and the Board has considered the access to any necessary information the Board may re- application and all comments received. quest. Bank, with assets of $7.3 billion,1 was established in On the basis of all the facts of record, and subject to the 1923. Bank's largest shareholder, Deutsche Genossencommitments made by Bank as well as the terms and schaftsbank ("DG Bank"), a bank that serves the cooperaconditions set forth in this order, the Board has determined tive banking system and promotes the not-for-profit housthat Bank's application to establish the representative of- ing industry in Germany, owns 64 percent of Bank's fice should be, and hereby is, approved. Should any restric- shares.2 Verband der Sparda-Banken e.V. ("Sparda tions on access to information on the operations or activi- Banks"), an association of 17 German savings banks, owns ties of Bank subsequently interfere with the Board's ability 14 percent of Bank's shares. The remaining shares of Bank to obtain information to determine and enforce compliance are widely held, with no single shareholder owning more by Bank or its affiliates with applicable federal statutes, the than 10 percent of the shares. Board may require termination of any of Bank's or its Bank serves as a specialized bank for transportation affiliates' direct or indirect activities in the United States. sector customers in DG Bank's cooperative financial net- Approval of this application also is specifically conditioned work. Bank provides planning, investment, financing, and on compliance by Bank with the commitments made in currency exchange services for transportation-industryconnection with this application, and with the conditions in related projects, and engages in the financing and collecthis order.4 The commitments and conditions referred to tion of transportation receivables in the freight traffic busiabove are conditions imposed in writing by the Board in ness. It also engages in foreign exchange, securities, and connection with its decision, and may be enforced in derivatives trading activities. In addition, Bank functions proceedings under 12 U.S.C. § 1818 against Bank and its as a central bank to the Sparda Banks by providing payaffiliates. ment system, advisory, and certain clearing services. Bank By order of the Board of Governors, effective June 28, has several branches in Germany; a branch in London, 1999. England; and a representative office in Switzerland. Bank has six German subsidiaries that engage in leasing, money Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and transmission/exchange, real estate development, and Governors Kelley, Meyer, Ferguson, and Gramlich. transportation-related activities. The proposed representative office would act as a liaison ROBERT DEV. FRIERSON with existing and potential customers of Bank. It would Associate Secretary of the Board solicit new business, conduct research, assemble credit information, make property inspections and appraisals, se- Deutsche VerkehrsBank AG cure title information, prepare applications for loans, and Frankfurt am Main, Germany solicit investors to purchase such loans. In acting on an application to establish a representative Order Approving Establishment of a Representative office, the IBA and Regulation K provide that the Board Office shall take into account whether the foreign bank engages directly in the business of banking outside the United Deutsche VerkehrsBank AG ("Bank"), Frankfurt am Main, Germany, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 1. Data are as of December 31, 1998. 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a 2. DG Bank maintains two offices in the United States, a branch in New York and an agency in Atlanta. DG Bank is owned by four representative office in New York, New York. The Foreign shareholders, two of which hold more than 25 percent of DG Bank's shares. Norddeutsche Genossen-schaftliche Beteiligungs- Aktiengesellschaft ("Norddeutsche") and Degeno Erste Beteiligungs- 4. The Board's authority to approve the establishment of the pro- Gesellschaft ("Degeno") each own approximately 30 percent of posed representative office parallels the continuing authority of the Bank's shares. Norddeutsche, a former regional central bank in Ger- State of Massachusetts to license or otherwise permit the establish- many's cooperative banking system that transferred its business to DG ment of offices of a foreign bank. The Board's approval of this Bank, is widely held, with no single shareholder owning more than application does not supplant the authority of the State of Massachu- 2 percent of shares. Degeno, a holding company, has three shareholdsetts and the Massachusetts Division of Banks ("Division") to license ers, each of which serves as a regional central bank. Two of these or otherwise permit the establishment of the proposed office of Bank shareholders, Siidwestdeutsche Genossenschafts-Zentralbank AG, and in accordance with any terms or conditions that the Division may Westdeutsche Genosenschafts-Zentralbank AG, each owns more than impose. 25 percent of Degeno's shares. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 589 States, and whether the foreign bank has furnished to the lished controls and procedures for the proposed representa- Board the information it needs to assess the application tive office to ensure compliance with U.S. law. adequately. The Board also shall take into account whether With respect to access to information about Bank's the foreign bank is subject to comprehensive supervision operations, the Board has reviewed the restrictions on or regulation on a consolidated basis by its home coun- disclosure in relevant jurisdictions in which Bank operates try supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)(2)).3 and has communicated with relevant government authori- The Board also may take into account additional standards ties regarding access to information. Bank and its parents as set forth in the IBA and Regulation K (12 U.S.C. § have committed to make available to the Board such infor- 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). mation on the operations of Bank and any of its affiliates As noted above, DG Bank and Bank engage directly in that the Board deems necessary to determine and enforce the business of banking outside the United States. Bank compliance with the IBA, the Bank Holding Company Act also has provided the Board with information necessary to of 1956, as amended, and other applicable federal law. To assess the application through submissions that address the the extent that the provision of such information may be relevant issues. With respect to supervision by home coun- prohibited by law, Bank and its parents have committed to try authorities, the Board previously has determined, in cooperate with the Board to obtain any necessary consents connection with applications involving other banks in Ger- or waivers that might be required from third parties for many, that those banks were subject to home country disclosure of such information. In addition, subject to supervision on a consolidated basis.4 DG Bank and Bank certain conditions, the German supervisors may share information on Bank's operations with other supervisors, are supervised by the German regulators on substantially including the Board. In light of these commitments and the same terms and conditions as those banks. Based on all other facts of record, and subject to the condition described the facts of record, the Board has determined that DG Bank below, the Board concludes that Bank has provided adeand Bank are subject to comprehensive supervision and quate assurances of access to any necessary information regulation on a consolidated basis by their home country the Board may request. supervisors. The Board also has taken into account the additional On the basis of all the facts of record, and subject to the standards set forth in section 7 of the IBA and Regulation commitments made by Bank and its parents and the terms K {see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). and conditions set forth in this order, the Board has deter- In this regard, the German Federal Banking Supervisory mined that Bank's application to establish the representa- Office has no objection to the establishment of the pro- tive office should be, and hereby is, approved. Should any posed representative office. restrictions on access to information on the operations or With respect to the financial and managerial resources of activities of Bank and its affiliates subsequently interfere Bank, taking into consideration Bank's record of operation with the Board's ability to obtain information to determine in its home country, its overall financial resources, and its and enforce compliance by Bank or its affiliates with standing with its home country supervisors, the Board also applicable federal statutes, the Board may require terminahas determined that financial and managerial factors are tion of any of Bank's or its affiliates' direct or indirect consistent with approval of the proposed representative activities in the United States. Approval of this application office. Bank appears to have the experience and capacity to also is specifically conditioned on compliance by Bank and support the proposed representative office and has estab- its parents with the commitments made in connection with this application, and with the conditions in this order.5 The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with 3. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: its decision, and may be enforced in proceedings under (i) Ensure that the bank has adequate procedures for monitoring 12 U.S.C. § 1818 against Bank and its affiliates. and controlling its activities worldwide; By order of the Board of Governors, effective June 28, (ii) Obtain information on the condition of the bank and its 1999. subsidiaries and offices through regular examination reports, audit reports, or otherwise; (iii) Obtain information on the dealings with and relationship Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and between the bank and its affiliates, both foreign and domestic; Governors Kelley, Meyer, Ferguson, and Gramlich. (iv) Receive from the bank financial reports that are consolidated on a worldwide basis or comparable information that permits ROBERT DEV. FRIERSON analysis of the bank's financial condition on a worldwide Associate Secretary of the Board consolidated basis; (v) Evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's 5. The Board's authority to approve the establishment of the prodetermination. posed representative office parallels the continuing authority of the 4. See Deutsche Bank AG, 85 Federal Reserve Bulletin 509 (1999); State of New York to license offices of a foreign bank. The Board's Westdeutsche ImmobilienBank, 85 Federal Reserve Bulletin 346 approval of this application does not supplant the authority of the (1999); Siidwestdeutsche Landesbank Girozentrale, 83 Federal Re- State of New York and the New York State Banking Department serve Bulletin 937 (1997). There has been no material change in the ("Department") to license the proposed office of Bank in accordance manner of supervision of German banks since those determinations. with any terms or conditions that the Department may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

590 Federal Reserve Bulletin • August 1999 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) Effective Date BancTenn Corporation, Independence Bank, June 9, 1999 Kingsport, Tennessee Kernersville, North Carolina Pacific Community Banking Group, Bank of Hemet, June 25, 1999 Laguna Hills, California Riverside, California Valley Bank, Moreno Valley, California 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 A.B. Bancshares, Inc., American Bank, Dallas May 22, 1999 Houston, Texas Houston, Texas A.B. Bancshares of Delaware, Inc. Wilmington, Delaware The Banc Corporation, C&L Banking Corporation, Atlanta June 7, 1999 Birmingham, Alabama Bristol, Florida C&L Bank of Bristol, Bristol, Florida C&L Bank of Blountstown, Blountstown, Florida Bank Capital Corporation, Citizens Holding Corporation, Kansas City June 3, 1999 Strasburg, Colorado Keenesburg, Colorado Citizens State Bank, Keenesburg, Colorado Banking Corporation of Florida, First Florida Bank, Atlanta June 16, 1999 Naples, Florida Naples, Florida Bank United Corp., Texas Central Bancshares, Inc., Dallas June 3, 1999 Houston, Texas Dallas, Texas BNKU Holdings, Inc., Texas Central Bancshares Delaware, Wilmington, Delaware Inc., Wilmington, Delaware Texas Central Bank, N.A., Dallas, Texas Bank United, Houston, Texas Baxter Bancshares, Inc., Nine Tribes Bancshares, Inc., Kansas City June 17, 1999 Baxter Springs, Kansas Quapaw, Oklahoma Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 591 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Belvedere Capital Partners, Inc., Cerritos Valley Bancorp, San Francisco May 24, 1999 San Francisco, California Norwalk, California California Community Financial Cerritos Valley Bank, Institutions Fund Limited Norwalk, California Partnership, San Francisco, California BOK Financial Corporation, Swiss Avenue State Bank, Kansas City May 26, 1999 Tulsa, Oklahoma Dallas, Texas Park Cities Bancshares, Inc., Tulsa, Oklahoma Central Bancompany, Inc., Mid-Continent Bancshares, Inc., St. Louis June 3, 1999 Jefferson City, Missouri Blue Springs, Missouri Bank of Jacomo, Blue Springs, Missouri Cherokee Banking Company, Cherokee Bank, N.A., Atlanta June 10, 1999 Canton, Georgia Canton, Georgia Citizens Bancorp Investment, Inc., Liberty State Bank, Atlanta June 17, 1999 Lafayette, Tennessee Liberty, Tennessee City Holding Company, Frontier Bancorp, Richmond June 1, 1999 Cross Lanes, West Virginia Redondo Beach, California Commercial Bancshares, Inc., First Commercial Bank, Minneapolis June 21, 1999 Minnetonka, Minnesota Bloomington, Minnesota Consolidated Equity Corporation, Dewey County Bancorporation, Kansas City June 18, 1999 Purcell, Oklahoma Taloga, Oklahoma Delta Bancshares of Louisiana, Inc., West Carroll Community Bank, St. Louis June 9, 1999 Oak Grove, Louisiana Oak Grove, Louisiana Delta Bancshares, Inc., Eudora, Arkansas The Eudora Bank, Eudora, Arkansas East Alabama Financial Group, Inc., Small Town Bank, Atlanta June 9, 1999 Wedowee, Alabama Wedowee, Alabama Fifth Third Bancorp, Michigan Community Bancorp Limited, Cleveland May 19, 1999 Cincinnati, Ohio Sterling Heights, Michigan First Interstate BancSystem, Inc., Security State Bank Shares, Minneapolis May 27, 1999 Billings, Montana Poison, Montana Security State Bank and Trust Company, Poison, Montana First Leesport Bancorp, Inc., Merchants of Shenandoah Ban-corp, Philadelphia June 8, 1999 Leesport, Pennsylvania Shenandoah, Pennsylvania Merchants Bank of Pennsylvania, Shenandoah, Pennsylvania First Louisiana Bancshares, Inc., First Louisiana Bank, Dallas June 7, 1999 Shreveport, Louisiana Shreveport, Louisiana First Premier Financial Corporation, Premier Bancshares, Inc., St. Louis June 11, 1999 St. Louis, Missouri Jefferson City, Missouri Premier Bank, Jefferson City, Missouri First State Bancorp, First State Bank, Kansas City June 23, 1999 Randolph, Nebraska Randolph, Nebraska FLAG Financial Corporation, First Flag Bank, Atlanta May 25, 1999 LaGrange, Georgia LaGrange, Georgia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

592 Federal Reserve Bulletin • August 1999 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Frontier Financial Corporation, AEA Bancshares, Inc. Washington, San Francisco May 28, 1999 Everett, Washington Seattle, Washington Asia-Europe-Americas Bank, Seattle, Washington FWBI Acquisition Corp., First Western Bancorp, Cleveland June 17, 1999 Bowling Green, Ohio New Castle, Pennsylvania Sky Financial Group, Inc., Bowling Green, Ohio Heartland Bancshares, Inc., Heartland National Bank, Atlanta June 18, 1999 Lake Placid, Florida Lake Placid, Florida Independent Bank Corporation, New MSB Bank, Chicago May 28, 1999 Ionia, Michigan Bay City, Michigan Mutual Savings Bank, f.s.b., Bay City, Michigan Ipswich Bancshares, Inc., Ipswich Savings Bank, Boston May 28, 1999 Ipswich, Massachusetts Ipswich, Massachusetts Kircher Bank Shares, Inc., The Citizens State Bank of Olivia, Minneapolis June 10, 1999 Olivia, Minnesota Olivia, Minnesota M&F Bancorp, Inc., Mechanics and Fanners Bank, Richmond June 17, 1999 Durham, North Carolina Durham, North Carolina Manufacturers Bancshares, Inc., Manufacturers Bank, Atlanta June 8, 1999 Tampa, Florida Tampa, Florida Oswego County, MHC, Oswego County Savings Bank, New York May 20, 1999 Oswego, New York Oswego, New York Oswego County Bancorp, Inc., Oswego, New York The PB Financial Services The Peachtree Bank, Atlanta June 17, 1999 Corporation, Duluth, Georgia Duluth, Georgia Republic Bancorp, Inc., D&N Bank, Chicago June 9, 1999 Ann Arbor, Michigan Hancock, Michigan Scripps Financial Corporation, Scripps Bank, San Francisco June 17, 1999 La Jolla, California La Jolla, California South Alabama Bancorporation, Sweet Water State Bancshares, Inc. Atlanta June 3, 1999 Inc., Sweet Water, Alabama Mobile, Alabama Sweet Water State Bank, Sweet Water, Alabama State Financial Services First Waukegan Corporation, Chicago May 24, 1999 Corporation, Waukegan, Illinois Hales Corners, Wisconsin Bank of Northern Illinois, N.A., Waukegan, Illinois Strategic Capital Bancorp, Inc., Strategic Capital Bank, Chicago June 10, 1999 Champaign, Illinois Champaign, Illinois Wells Fargo & Company, Eastern Heights Bank, San Francisco June 14, 1999 San Francisco, California Maplewood, Minnesota Wells Fargo & Company, Mustang Financial Corporation, San Francisco May 26, 1999 San Francisco, California Rio Vista, Texas First State Bank, Rio Vista, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 593 Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date BankFirst Corporation, BankFirst Trust Company, Atlanta June 18, 1999 Knoxville, Tennessee Knoxville, Tennessee Bay View Capital Corporation, Franchise Mortgage Acceptance San Francisco June 17, 1999 San Mateo, California Company, Los Angeles, California Columbiana Bancshares, Inc., First Shelby Credit, Inc., Atlanta May 20, 1999 Columbiana, Alabama Columbiana, Alabama Commonwealth Bancshares, Inc., First Security Trust Bank, F.S.B., St. Louis June 8, 1999 Shelbyville, Kentucky Florence, Kentucky Community Financial Group, Inc.. Machinery Leasing Company of North Atlanta June 8, 1999 Nashville, Tennessee America, Inc., The Bank of Nashville, Nashville, Tennessee Nashville, Tennessee Fifth Third Bancorp, Emerald Financial Corp., Cleveland June 2, 1999 Cincinnati, Ohio Strongsville, Ohio Strongsville Savings Bank, Strongsville, Ohio First Western Bancorp, Inc., Asheim & Associates, Minneapolis June 3, 1999 Huron, South Dakota Pierre, South Dakota GLB Bancorp, Inc., Maple Leaf Financial, Inc., Cleveland June 1, 1999 Mentor, Ohio Newbury, Ohio Geauga Savings Bank, Newbury, Ohio Home Valley Bancorp, Valley Mortgage Funding Corporation, San Francisco June 3, 1999 Grants Pass, Oregon Grants Pass, Oregon James Monroe Bancorp, Inc., James Monroe Bank, Richmond June 1, 1999 Arlington, Virginia Arlington, Virginia J. Carl H. Bancorporation, Earling Insurance Agency, Chicago May 18, 1999 Earling, Iowa Earling, Iowa Farmers Trust and Savings Bank, Earling, Iowa J.P. Morgan & Co. Incorporated, PeopleFirst.com Inc., New York June 11, 1999 New York, New York San Diego, California J.P. Morgan Capital Corporation, New York, New York KeyCorp, NTH Holdings, Inc., Cleveland May 21, 1999 Cleveland, Ohio Raleigh, North Carolina McDonald Investments, Inc., Trident Securities, Inc., Cleveland, Ohio Raleigh, North Carolina Trident Financial Corporation, Raleigh, North Carolina Pennsylvania Commerce Bancorp, Commerce Bank/Harrisburg, N.A., Philadelphia May 28, 1999 Inc., Camp Hill, New Jersey Harrisburg, Pennsylvania Sky Financial Group, Inc., Wood Bancorp, Inc., Cleveland June 17, 1999 Bowling Green, Ohio Bowling Green, Ohio TriCounty Investment Company, S alley Insurance Agency, Minneapolis June 16, 1999 Inc., Pine Island, Minnesota Pine Island, Minnesota Union National Bancorp, Inc., Barnes-Bollinger Insurance Services, Richmond June 16, 1999 Westminster, Maryland Inc., Westminster, Maryland Wells Fargo & Company, Greater Midwest Leasing Corporation, San Francisco May 27, 1999 San Francisco, California Minneapolis, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

594 Federal Reserve Bulletin • August 1999 Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Wells Fargo & Company, Norwest Pinnacle Mortgage, LLC, San Francisco June 1, 1999 San Francisco, California Des Moines, Iowa Norwest Mortgage, Inc., Dickson Realty, Inc., Des Moines, Iowa Reno, Nevada Norwest Ventures, LLC, Des Moines, Iowa Wells Fargo & Company, RWF Mortgage Company, San Francisco June 11, 1999 San Francisco, California Riverside, California Norwest Mortgage, Inc., RAS Financial Company, Des Moines, Iowa Riverside, California Norwest Ventures, LLC, Des Moines, Iowa Wells Fargo & Company, South County Mortgage, San Francisco June 14, 1999 San Francisco, California Mission Viego, California Norwest Mortgage, Inc., Des Moines, Iowa Norwest Ventures, LLC, Des Moines, Iowa Wells Fargo & Company, Vintage Capital, San Francisco June 14, 1999 San Francisco, California San Jose, California Norwest Mortgage, Inc., Des Moines, Iowa Norwest Ventures, LLC, Des Moines, Iowa Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date BB&T Corporation, Mason-Dixon Bancshares, Inc., Richmond June 4, 1999 Winston-Salem, North Carolina Westminster, Maryland BT Financial Corporation, First Philson Financial Corporation, Philadelphia June 10, 1999 Johnstown, Pennsylvania Berlin, Pennsylvania Community Bancorp of New Jersey, Community Bank of New Jersey, New York May 27, 1999 Freehold, New Jersey Freehold, New Jersey 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 Chemical Bank Bay Area, National City Bank Michigan/Illinois, Chicago June 9, 1999 Bay City, Michigan Bannockburn, Illinois Community First Bank & Trust, Union Trust Bank, Cleveland May 21, 1999 Celina, Ohio Union City, Indiana F&M Bank-Iowa Central, F&M Bank-Iowa Story County, Chicago June 14, 1999 Marshalltown, Iowa Story City, Iowa F&M Bank-Iowa South Central, Grinnell, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 595 Applications Approved Under Bank Merger Act—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Fifth Third Bank, Fifth Third Bank of Central Kentucky, Cleveland June 17, 1999 Kentucky, Inc., Inc., Louisville, Kentucky Cynthiana, Kentucky First American Bank and Trust Dewey County State Bank, Kansas City June 18, 1999 Company, Taloga, Oklahoma Purcell, Oklahoma First Virginia Bank of Tidewater, First Virginia Bank-Commonwealth, Richmond June 16, 1999 Norfolk, Virginia Newport News, Virginia Iowa State Bank, Security State Bank, Chicago June 16, 1999 Calmar, Iowa Calmar, Iowa Ossian State Bank, Ossian, Iowa Laurel Bank, First Philson Bank, N.A., Philadelphia June 10, 1999 Johnstown, Pennsylvania Berlin, Pennsylvania Lemay Bank and Trust Company, LBT Interim Bank, St. Louis May 25, 1999 St. Louis, Missouri St. Louis, Missouri Pullman Bank and Trust Company, Regency Savings Bank, FSB, Chicago May 21, 1999 Chicago, Illinois Naperville, Illinois Republic Security Bank, First National Bank of Central Florida, Atlanta May 26, 1999 West Palm Beach, Florida Longwood, Florida PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the tion Act case. The court heard oral argument on June 2, Federal Reserve Banks in which the Board of Governors is not 1999, and affirmed the district court's order on June 23, named a party. 1999. Independent Community Bankers of America v. Board of Gov- Sedgwick v. Board of Governors, No. Civ. 99 0702 (D. Ari- ernors, No. 98-1482 (D.C. Cir., filed October 21, 1998). zona, filed April 14, 1999). Action under Federal Tort Petition for review of a Board order dated September 23, Claims Act alleging violation of bank supervision require- 1998, conditionally approving the applications of Travelers ments. The Board filed a motion to dismiss on June 15, Group, Inc., New York, New York, to become a bank 1999. holding company by acquiring Citicorp, New York, New Hunter v. Board of Governors, No. 1:98CV02994 (TFH) York, and its bank and nonbank subsidiaries. Oral argument (D.D.C., filed December 9, 1998). Action under the Free- is scheduled for October 1, 1999. dom of Information Act and the Privacy Act. Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAK) Folstadv. Board of Governors, No. 1:99 CV 124 (W.D. Mich., (S.D.N.Y„ filed May 15, 1998). Action to freeze assets of filed February 17, 1999). Freedom of Information Act comindividual pending administrative adjudication of civil plaint. On March 23, 1999, the Board filed a motion to money penalty assessment by the Board. On May 26, 1998, dismiss or for summary judgment. the court issued a preliminary injunction restraining the Nelson v. Greenspan, No. 1:99CV00215 (EGS) (D.D.C., filed transfer or disposition of the individual's assets and appoint- January 28, 1999). Employment discrimination complaint. ing the Federal Reserve Bank of New York as receiver for On March 29, 1999, the Board filed a motion to dismiss the those assets. action. Fraternal Order of Police v. Board of Governors, No. Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed 1:98CV03116 (D.D.C., filed December 22, 1998). Declara- May 4, 1998). Appeal and cross-appeal of district court tory judgment action challenging Board labor practices. On order granting in part and denying in part the Board's February 26, 1999, the Board filed a motion to dismiss the motion for summary judgment seeking prejudgment interest action. and a statutory surcharge in connection with a civil money Inner City Press/Community on the Move v. Board of Gover- penalty assessed by the Board. On February 24, 1999, the nors, No. 98-9604 (2d Cir., filed December 3, 1998). Ap- court granted the Board's appeal and denied the crosspeal of district court order dated October 6, 1998, granting appeal, and remanded the matter to the district court for summary judgment for the Board in a Freedom of Informa- determination of prejudgment interest due to the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

596 Federal Reserve Bulletin • August 1999 Fenili v. Davidson, No. C-98-01568-CW (N.D. California, Banco Popular de Puerto Rico filed April 17, 1998). Tort and constitutional claim arising San Juan, Puerto Rico out of return of a check. On June 5, 1998, the Board filed its motion to dismiss. The Federal Reserve Board announced on June 21, 1999, Logan v. Greenspan, No. 1:98CV00049 (D.D.C., filed Januthe issuance of an Order of Assessment of a Civil Money ary 9, 1998). Employment discrimination complaint. Penalty against Banco Popular de Puerto Rico, San Juan, Goldman v. Department of the Treasury, No. 98-9451 (11th Puerto Rico, a state member bank. Circuit, filed November 10, 1998). Appeal from a District Court order dismissing an action challenging Federal Reserve notes as lawful money. Kerr v. Department of the Treasury, No. CV-S-97-01877- DWH (D. Nev., filed December 22, 1997). Challenge to WRITTEN AGREEMENTS APPROVED BY FEDERAL income taxation and Federal Reserve notes. On Septem- RESERVE BANKS ber 3, 1998, a motion to dismiss was filed on behalf of all federal defendants. The court dismissed the action on Banco Popular del Ecuador, S.A. March 31, 1999, and on April 28, 1999, the plaintiff filed a Quito, Ecuador notice of appeal. Bettersworth v. Board of Governors, No. 97-CA-624 (W.D. The Federal Reserve Board announced on June 25, 1999, Tex., filed August 21, 1997). Privacy Act case. On June 1, the execution of a Written Agreement by and between 1999, the Board filed a motion for summary judgment. Banco Popular del Ecuador, S.A., Quito, Ecuador, Banco Popular del Ecuador's Miami agency, the Federal Reserve Bank of Atlanta, and the State of Florida Department of FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD Banking and Finance. OF GOVERNORS Banco Atlantico, S.A. Community Capital Corporation Barcelona, Spain Greenwood, South Carolina The Federal Reserve Board announced on June 7, 1999, the issuance of a Cease and Desist Order against Banco The Federal Reserve Board announced on June 11, 1999, Atlantico, S.A., Barcelona, Spain, and its New York the execution of a Written Agreement by and between Agency. The Order was issued jointly with the Acting Community Capital Corporation, Greenwood, South Caro- Superintendent of Banks of the State of New York. lina, and the Federal Reserve Bank of Richmond. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

597 Membership of the Board of Governors of the Federal Reserve System, 1913-99 APPOINTIVE MEMBERS 1 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 Charles S. Hamlin Boston Aug. 10, 1914 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg .. .New York .... .Aug. 10, 1914 Term expired Aug. 9, 1918. Frederic A. Delano .Chicago .Aug. 10, 1914 Resigned July 21, 1918. W.P.G. Harding .Atlanta .Aug. 10, 1914 Term expired Aug. 9, 1922. Adolph C. Miller ... .San Francisco .Aug. 10, 1914 Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss .New York .Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah . .Chicago .Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Piatt .New York .... June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills .Cleveland .Sept. 29, 1920 Term expired Mar. 4, 1921. John R. Mitchell .Minneapolis .. .May 12, 1921 Resigned May 12, 1923. Milo D. Campbell .Chicago .Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger .Cleveland .May 1, 1923 Resigned Sept. 15, 1927. George R. James .St. Louis .May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.4 Edward H. Cunningham .Chicago .May 14, 1923 Died Nov. 28, 1930. Roy A. Young .Minneapolis .. .Oct. 4, 1927 Resigned Aug. 31, 1930. Eugene Meyer .New York .Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee .Kansas City .. .May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black .Atlanta .May 19, 1933 Resigned Aug. 15, 1934. M.S. Szymczak .Chicago June 14, 1933 Reappointed in 1936 and 1948. Resigned May 31, 1961. J.J. Thomas .Kansas City .. June 14, 1933 Served until Feb. 10, 1936.3 Marriner S. Eccles .San Francisco .Nov. 15, 1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick ... .New York .... ..Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee .Cleveland ..Feb. 3, 1936 Served until Apr. 4, 1946.3 Ronald Ransom .Atlanta ..Feb. 3, 1936 Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison .... .Dallas ..Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis .Richmond .... ..June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper . .New York ..Mar. 30, 1938 Served until Sept. 1, 1950.3 Rudolph M. Evans .Richmond .... ..Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. .St. Louis ..Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton .Boston ..Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe ... .Philadelphia .. ..Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton .Atlanta ..Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell .Minneapolis .. ..Sept. 1, 1950 Resigned June 30, 1952. Wm. McC. Martin, Jr. .New York ..April 2, 1951 Reappointed in 1956. Term expired Jan. 31, 1970. A.L. Mills, Jr .San Francisco , .Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J.L. Robertson .Kansas City .. .Feb. 18, 1952 Reappointed in 1964. Resigned Apr. 30, 1973. C. Canby Balderston .., .Philadelphia .. .Aug. 12, 1954 Served through Feb. 28, 1966. Paul E. Miller .Minneapolis .. .Aug. 13, 1954 Died Oct. 21, 1954. Chas. N. Shepardson ... .Dallas .Mar. 17, 1955 Retired Apr. 30, 1967. G.H. King, Jr .Atlanta .Mar. 25, 1959 Reappointed in 1960. Resigned Sept. 18, 1963. George W. Mitchell .Chicago .Aug. 31, 1961 Reappointed in 1962. Served until Feb. 13, 1976.3 J. Dewey Daane .Richmond .... .Nov. 29, 1963 Served until Mar. 8, 1974.3 Sherman J. Maisel .San Francisco .Apr. 30, 1965 Served through May 31, 1972. Andrew F. Brimmer .Philadelphia .. .Mar. 9, 1966 Resigned Aug. 31, 1974. William W. Sherrill .Dallas .May 1, 1967 Reappointed in 1968. Resigned Nov. 15, 1971. Arthur F. Burns .New York Jan. 31, 1970 Term began Feb. 1, 1970. Resigned Mar. 31, 1978. John E. Sheehan .St. Louis Jan. 4, 1972 Resigned June 1, 1975. Jeffrey M. Bucher .San Francisco June 5, 1972 Resigned Jan. 2, 1976. Robert C. Holland .Kansas City .. June 11, 1973 Resigned May 15, 1976. Henry C. Wallich .Boston .Mar. 8, 1974 Resigned Dec. 15, 1986. Philip E. Coldwell .Dallas .Oct. 29, 1974 Served through Feb. 29, 1980. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

598 Federal Reserve Bulletin • August 1999 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership 2 Philip C. Jackson, Jr. . Atlanta July 14, 1975 Resigned Nov. 17, 1978. J. Charles Partee Richmond Jan. 5, 1976 Served until Feb. 7, 1986.3 Stephen S. Gardner Philadelphia Feb. 13, 1976 Died Nov. 19, 1978. David M. Lilly Minneapolis June 1, 1976 Resigned Feb. 24, 1978. G. William Miller San Francisco Mar. 8, 1978 Resigned Aug. 6, 1979. Nancy H. Teeters Chicago Sept. 18, 1978 Served through June 27, 1984. Emmett J. Rice New York June 20, 1979 Resigned Dec. 31, 1986. Frederick H. Schultz . Atlanta July 27, 1979 Served through Feb. 11, 1982. Paul A. Volcker Philadelphia Aug. 6, 1979 Resigned August 11, 1987. Lyle E. Gramley Kansas City May 28, 1980 Resigned Sept. 1, 1985. Preston Martin San Francisco Mar. 31, 1982 Resigned April 30, 1986. Martha R. Seger Chicago July 2, 1984 Resigned March 11, 1991. Wayne D. Angell Kansas City Feb. 7, 1986 Served through Feb. 9, 1994. Manuel H. Johnson .. Richmond Feb. 7, 1986 Resigned August 3, 1990. H. Robert Heller San Francisco Aug. 19, 1986 Resigned July 31, 1989. Edward W. Kelley, Jr. Dallas May 26, 1987 Reappointed in 1990. Alan Greenspan New York Aug. 11, 1987 Reappointed in 1992. John P. LaWare Boston Aug. 15, 1988 Resigned April 30, 1995. Resigned Feb. 14, 1994. David W. Mullins, Jr. St. Louis May 21, 1990 Resigned Feb. 5, 1997. Lawrence B. Lindsey Richmond Nov. 26, 1991 Served through June 30, 1998. Susan M. Phillips Chicago Dec. 2, 1991 Term expired Jan. 31, 1996. Alan S. Blinder .Philadelphia June 27, 1994 Resigned Feb. 17, 1997. Janet L. Yellen San Francisco Aug. 12, 1994 Laurence H. Meyer .. St. Louis June 24, 1996 Alice M. Rivlin Philadelphia June 25, 1996 Resigned July 16, 1999. Roger W. Ferguson, Jr. .Boston Nov. 5, 1997 Edward M. Gramlich .Richmond Nov. 5, 1997 Chairmen 4 Vice Chairmen4 Charles S. Hamlin Aug. 10, 1914-Aug. 9, 1916 Frederic A. Delano Aug. 10, 1914^-Aug. 9, 1916 W.P.G. Harding Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg Aug. 10, 1916-Aug. 9, 1918 Daniel R. Crissinger May 1, 1923-Sept. 15, 1927 Albert Strauss Oct. 26, 1918-Mar. 15, 1920 Roy A. Young Oct. 4, 1927-Aug. 31, 1930 Edmund Piatt July 23, 1920-Sept. 14, 1930 Eugene Meyer Sept. 16, 1930-May 10, 1933 J.J. Thomas Aug. 21, 1934-Feb. 10, 1936 Eugene R. Black May 19, 1933-Aug. 15, 1934 Ronald Ransom Aug. 6, 1936-Dec. 2, 1947 Marriner S. Eccles Nov. 15, 1934-Jan. 31, 19485 C. Canby Balderston Mar. 11, 1955-Feb. 28, 1966 Thomas B. McCabe Apr. 15, 1948-Mar. 31, 1951 J.L. Robertson Mar. 1, 1966-Apr. 30, 1973 Wm. McC. Martin, Jr. Apr. 2, 1951-Jan. 31, 1970 George W. Mitchell May 1, 1973-Feb. 13, 1976 Arthur F. Burns Feb. 1, 1970-Jan. 31, 1978 Stephen S. Gardner Feb. 13, 1976-Nov. 19, 1978 G. William Miller Mar. 8, 1978-Aug. 6, 1979 Frederick H. Schultz July 27, 1979-Feb. 11, 1982 Paul A. Volcker Aug. 6, 1979-Aug. 11, 1987 Preston Martin Mar. 31, 1982-Apr. 30, 1986 Alan Greenspan Aug. 11, 1987—6 Manuel H. Johnson Aug. 4, 1986-Aug. 3, 1990 David W. Mullins, Jr. July 24, 1991-Feb. 14, 1994 Alan S. Blinder June 27, 1994-Jan. 31, 1996 Alice M. Rivlin June 25, 1996-July 16, 1999 EX-OFFICIO MEMBERS 1 Secretaries of the Treasury Comptrollers of the Currency W.G. McAdoo Dec. 23, 1913-Dec. 15, 1918 John Skelton Williams Feb. 2, 1914-Mar. 2, 1921 Carter Glass Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger Mar. 17, 1921-Apr. 30, 1923 David F. Houston Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes May 1, 1923-Dec. 17, 1924 Andrew W. Mellon Mar. 4, 1921-Feb. 12, 1932 Joseph W. Mcintosh Dec. 20, 1924-Nov. 20, 1928 Ogden L. Mills Feb. 12, 1932-Mar. 4, 1933 J.W. Pole Nov. 21, 1928-Sept. 20, 1932 William H. Woodin Mar. 4, 1933-Dec. 31, 1933 J.F.T. O'Connor May 11, 1933-Feb. 1, 1936 Henry Morgenthau Jr Jan. 1, 1934-Feb. 1, 1936 1. Under the provisions of the original Federal Reserve Act, the Federal ive members in office on the date of that act should continue to serve until Feb. 1, Reserve Board was composed of seven members, including five appointive 1936, or until their successors were appointed and had qualified; and that members, the Secretary of the Treasury, who was ex-officio chairman of the thereafter the terms of members should be fourteen years and that the Board, and the Comptroller of the Currency. The original term of office was ten designation of Chairman and Vice Chairman of the Board should be for a term of years, and the five original appointive members had terms of two, four, six, four years. eight, and ten years respectively. In 1922 the number of appointive members was 2. Date after words "Resigned" and "Retired" denotes final day of service. increased to six, and in 1933 the term of office was increased to twelve years. 3. Successor took office on this date. The Banking Act of 1935, approved Aug. 23, 1935, changed the name of the 4. Chairman and Vice Chairman were designated Governor and Vice Federal Reserve Board to the Board of Governors of the Federal Reserve System Governor before Aug. 23, 1935. and provided that the Board should be composed of seven appointive members; 5. Served as Chairman Pro Tempore from February 3, 1948, to April 15, that the Secretary of the Treasury and the Comptroller of the Currency should 1948. continue to serve as members until Feb. 1, 1936; that the appoint- 6. Served as Chairman Pro Tempore from March 3, 1996, to June 20, 1996. 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 A27 Gross public debt of U.S. Treasury— DOMESTIC FINANCIAL STATISTICS Types and ownership A28 U.S. government securities Money Stock and Bank Credit dealers—Transactions A4 Reserves, money stock, and debt measures A29 U.S. government securities dealers— A5 Reserves of depository institutions and Reserve Bank Positions and financing credit A30 Federal and federally sponsored credit A6 Reserves and borrowings—Depository agencies—Debt outstanding institutions Securities Markets and Corporate Finance Policy Instruments A31 New security issues—Tax-exempt state and local A7 Federal Reserve Bank interest rates governments and corporations A8 Reserve requirements of depository institutions A32 Open-end investment companies—Net sales A9 Federal Reserve open market transactions and assets A32 Corporate profits and their distribution Federal Reserve Banks A32 Domestic finance companies—Assets and liabilities A3 3 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 and debt measures Consumer Credit A36 Total outstanding Commercial Banking Institutions— 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 A23 Interest rates—Money and capital markets A42 Nonfinancial business activity A24 Stock market—Selected statistics A42 Labor force, employment, and unemployment A43 Output, capacity, and capacity utilization A44 Industrial production—Indexes and gross value Federal Finance A46 Housing and construction A25 Federal fiscal and financing operations A47 Consumer and producer prices A26 U.S. budget receipts and outlays A48 Gross domestic product and income A27 Federal debt subject to statutory limitation A49 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected GNMA Government National Mortgage Association e Estimated GDP Gross domestic product n.a. Not available HUD Department of Housing and Urban p Preliminary Development r Revised (Notation appears on column heading IMF International Monetary Fund when about half of the figures in that column IO Interest only are changed.) IPCs Individuals, partnerships, and corporations * Amounts insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is millions) MSA Metropolitan statistical area 0 Calculated to be zero NOW Negotiable order of withdrawal ... Cell not applicable OCD Other checkable deposit ATS Automatic transfer service OPEC Organization of Petroleum Exporting Countries BIF Bank insurance fund OTS Office of Thrift Supervision CD Certificate of deposit PMI Private mortgage insurance CMO Collateralized mortgage obligation PO Principal only CRA Community Reinvestment Act of 1977 REIT Real estate investment trust FFB Federal Financing Bank REMIC Real estate mortgage investment conduit FHA Federal Housing Administration RHS Rural Housing Service 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 G-10 Group of Ten 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 • August 1999 1.10 RESERVES, MONEY STOCK, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1998 1999 1999 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q2 Q3 Q4 Ql Jan. Feb.r Mar. Apr. May Reserves of depository institutions2 1 Total -3.6 -7.7 -1.8 -1.2 6.0 -15.3 -22.5 7.2 10.5 2 Required -2.5 -8.9 -2.5 1.0 7.5 -7.0 -25.6 11.5 8.0 3 Nonborrowed -4.1 -8.6 -.6 -1.3 3.6 -13.0 -21.1 4.4r 11.6 4 Monetary base3 5.4 6.9 8.7 9.1 10.5 9.4 7.8 10.3 13.8 Concepts of money and debt4 5 Ml 1.0 -2.0 5.0 2.8r -2.6 1.8 10.3r 6.9 -4.0 6 M2 7.5 6.9 11.0 7.2 6.6 5.6 2.8 8.8 4.5 7 M3 10.1 8.6 12.8r 7.3r 4.0 9.0 — 1.6r 8.1r 4.3 8 Debt 6.0r 5.8r 6.3r 5.9r 5.4r 5.0 7.0r 6.8 n.a. Nontransaction components 9 In M25 9.8 9.9 13.0 8.7 9.6 6.9 .3 9.4 7.4 10 In M3 only6 17.8 13.5 17.91 7.4r -3.0" 18.2 -13.7r 6.2r 3.7 Time and savings deposits Commercial banks 11 Savings, including MMDAs 13.4 15.8 17.6 11.6 12.6 5.4 .2 17.5 7.8 12 Small time7 .1 .1 ,3r -5.4 -7.7 -7.7 -3.5 —3.7r -2.3 13 Large time8,9 16.4 3.5 3.8r -,lr i3.r -22.4 -18.6r 12.7r -10.3 Thrift institutions 14 Savings, including MMDAs 10.8 9.0 10.1 12.7 15.0 14.3 7.3 9.5 27.3 15 Small time7 -4.4 -7.3 -6.7 -6.3r -4.8 -6.3 —8.2r -4.1 -7.1 16 Large time8 -4.5 .5 10.4 7.6r 25.6 -14.5 — 14.7' 4.1 -14.8 Money market mutual funds 17 Retail 20.9 19.0 28.4 20.5 22.7 22.6 3.1 12.6 9.1 18 Institution-only 34.7 26.6 41.8 17.9 -2.8 34.7 -1.8 21.1 13.8 Repurchase agreements and Eurodollars 19 Repurchase agreements10 14.5 11.7 16.5r 11.7r -25.0 69.5 —48.2r -37.31 16.3 20 Eurodollars10 -3.3 21.7 3.2r — 8.9r -ss.o1' 30.3 32.8r 18.7r 3.1 Debt components4 21 Federal -1.4 -1.5 -2.0 -2.6 -2.1 -7.3 -1.1 -2.4 n.a. 22 Nonfederal 8.4 8.2r 8.9r 8.5r 1.1' 8.7 9.5r 9.5 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 Apr. May Apr. 14 Apr. 21 Apr. 28 May 5 May 12 May 19 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 507,920 512,869 513,556 513,033 520,486 514,458 518,944 U.S. government securities2 2 Bought outright—System account3 464,000 469,926 477,296 469,667 470,563 471,697 473,571 474,404 476,179 3 Held under repurchase agreements 6,499 6,691 3,974 6,496 6,685 3,904 9,155 1,962 4,079 Federal agency obligations 4 Bought outright 311 311 311 311 311 311 311 311 5 Held under repurchase agreements 2,110 3,492 1,660 2,022 2,371 2,900 3,466 5,160 6 Acceptances 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 32 167 14 32 199 316 10 3 33 8 Seasonal credit 17 38 91 30 36 51 67 82 87 9 Extended credit 0 0 0 0 0 0 0 0 0 10 Float 210 297 512 264 103 905 481 921 301 11 Other Federal Reserve assets 33,436 33,330 32,700 33,433 33,638 33,478 33,991 33,310 32,794 12 Gold stock 11,048 11,050 11,049 11,050 11,049 11,049 11,050 11,049 11,049 13 Special drawing rights certificate account 8,329 8,200 8,200 8,200 8,200 8,200 8,200 8,200 8,200 14 Treasury currency outstanding 26,581 26,702r 26,785 26,686r 26,710r 26,733r 26,757 26,771 26,785 ABSORBING RESERVE FUNDS 15 Currency in circulation 514,736 519,381r 523,487 519,983r 519,662r 519,328r 520,647 522,400 523,093 16 Treasury cash holdings 132 144 148 141 145 148 164 147 147 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,463 6,379 5,421 4,853 6,790 7,182 7,888 5,307 5,157 18 Foreign 177 208 200 188 215 182 210 181 195 19 Service-related balances and adjustments . . . 6,979 6,715r 6,891 6,672 6,717 6,815r 6,786 7,014 6,779 20 Other 247 283 273 305 283 241 271 289 293 21 Other Federal Reserve liabilities and capital . . 17,002 17,275 17,361 17,322 17,269 17,304 17,253 17,207 17,471 22 Reserve balances with Federal Reserve Banks4 9,143 8,435 10,642 8,365 8,435 7,815r 13,275 7,933 11,843 End-of-month figures Wednesday figures Apr. May Apr. 14 Apr. 21 Apr. 28 May 5 May 12 May 19 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 516,387 519,959 526,186 514,232 521,8 520,114 U.S. government securities2 2 Bought outright—System account3 465,686 473,573 482,531 471,409 470,506 473,627 473,474 475,914 477,335 3 Held under repurchase agreements 12,730 8,930 6,004 5,880 5,880 6,730 9,705 1,463 4,785 Federal agency obligations 4 Bought outright 311 311 311 311 311 311 311 5 Held under repurchase agreements 5,606 3,292 4,497 1,334 1,334 3,015 3,136 6 Acceptances 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 223 2 14 74 1,367 6 14 2 6 8 Seasonal credit 22 65 107 32 41 60 75 79 95 9 Extended credit 0 0 0 0 0 0 0 0 0 10 Float — 882 36 373 -319 1,050 736 1,780 699 677 11 Other Federal Reserve assets 32,690 33,749 32,350 33,695 33,744 34,172 34,052 33,665 31,258 12 Gold stock 11,049 11,050 11,048 11,048 11,049 11,048 11,049 11,049 11,048 13 Special drawing rights certificate account 8,200 8,200 8,200 8,200 8,200 8,200 8,200 8,200 8,200 14 Treasury currency outstanding 26,638 26,757r 26,813 26,686r 26,710r 26,733r 26,757 26,771 26,785 ABSORBING RESERVE FUNDS 15 Currency in circulation 517,790 519,751r 527,981 520,930r 520,400r 520,757r 522,527 524,102 16 Treasury cash holdings 135 167 145 145 145 167 147 141 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 5,374 10,040 5,056 4,157 6,690 8,545 4,999 4,095 4,783 18 Foreign 166 260 157 191 193 168 167 178 188 19 Service-related balances and adjustments . . 6,815 6,786r 6,888 6,672 6,717 6,815r 6,786 7,014 6,779 20 Other 235 263 223 306 240 237 283 282 305 21 Other Federal Reserve liabilities and capital . 16,805 17,214 17,575 17,040 17,007 17,055 17,004 17,204 17,244 22 Reserve balances with Federal Reserve Banks4 14,954 1 l,486r 14,221 8,909 10,894r 15,992 12,604 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 NonfinancialS tatistics • August 1999 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1996 1997 1998 1998 1999 Dec. Dec. Dec. Nov. Dec. Jan. Feb. Mar. Apr/ May 1 Reserve balances with Reserve Banks2 13,330 10,664 9,021 8,855 9,021 9,658 8,578 8,851 9,238 10,070 2 Total vault cash-5 44,525 44,740 44,305 43,104 44,305 45,499 46,468 42,898 42,162 42,456 3 Applied vault cash 37,844 37,255 35,997 35,297 35,997 36,687 36,660 34,270 34,407 34,808 4 Surplus vault cash5 6,681 7,485 8,308 7,807 8,308 8,812 9,809 8,628 7,756 7,647 5 Total reserves6 51,174 47,920 45,018 44,152 45,018 46,345 45,237 43,121 43,645 44,879 6 Required reserves 49,758 46,235 43,435 42,528 43,435 44,811 44,022 41,816 42,486 43,620 7 Excess reserve balances at Reserve Banks7 1,416 1,685 1,583 1,624 1,583 1,534 1,215 1,305 1,159 1,259 8 Total borrowings at Reserve Banks8 155 324 117 83 117 206 116 65 166 127 9 Seasonal borrowings 68 79 15 37 15 7 9 18 39 89 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 1999 Jan. 27 Feb. 10 Feb. 24 Mar. 10 Mar. 24 Apr. 7 Apr. 21 May 5r May 19 June 2 1 Reserve balances with Reserve Banks2 10,019 8,750 8,233 9.356 8,309 9,213 8,409 10,547 9,878 10,097 2 Total vault cash3 44,837 49,363 45,597 42,284 43,524 42,525 42,348 41,592 42,560 42,694 3 Applied vault cash4 36,847 38,649 35,997 34,007 34,521 34,147 34,422 34,586 34,749 34,971 4 Surplus vault cash5 7,990 10,714 9,600 8,277 9,004 8,378 7,926 7,007 7,811 7,724 5 Total reserves6 46,866 47,399 44,230 43,362 42,830 43,360 42,831 45,133 44,626 45,068 6 Required reserves 45,878 46,181 43,041 42,062 41,613 41,872 41,915 43,852 43,533 43,625 7 Excess reserve balances at Reserve Banks7 988 1,217 1,189 1.300 1,217 1,487 916 1,281 1,093 1,442 8 Total borrowings at Reserve Banks8 68 158 112 22 63 130 149 223 103 117 9 Seasonal borrowings 5 8 9 14 18 24 33 59 85 106 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 credit Seasonal credit2 Extended credir Federal Reserve Bank On On On 7/9/99 Effective date 7/9/99 7/9/99 Previous rate Boston 11/18/98 New York .. 11/17/98 Philadelphia 11/17/98 Cleveland . . 11/19/98 Richmond . . 11/18/98 Atlanta 11/18/98 Chicago .... 11/19/98 St. Louis 11/19/98 Minneapolis . 11/19/98 Kansas City .. 11/18/98 Dallas 11/17/98 San Francisco 11/17/98 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank Effective date level)—All of Effectix level)—All of Effective date level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1977 6 6 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 20 6.5 6.5 3 11 11 4 6 6 May 11 6.5-7 7 16 10.5 10.5 Apr. 30 5.5-6 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 3.5-4.5 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 3.5-4 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 16 11 11 July 11 . 6 6 July 28 10-11 10 Aug. 21 . 5.5-6 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 4.50^1.75 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 JJuullyy 99,, 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 NonfinancialS tatistics • August 1999 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirement TTyyppee ooff ddeeppoossiitt Percentage of deposits Effective date Net transaction accounts2 1 $0 million $46.5 million3 33333 1111122222/////3333311111/////9999988888 2 More than $46.5 million4 1111100000 1111122222/////3333311111/////9999988888 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Eifective 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 Vl years was reduced from 3 percent to 1 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 1V5 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 as of June 30 of each year. Effective with the reserve maintenance period beginning years or more has been zero since Oct. 6, 1983. December 31, 1998, for depository institutions that report weekly, and with the period 6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero beginning January 14. 1999, for institutions that report quarterly, the amount was decreased in the same manner and on the same dates as the reserve requirement on nonpersonal time from $47.8 million to $46.5 million. deposits with an original maturity of less than 1 l/i years (see note 5). Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the amount of reservable liabilities subject to a zero percent reserve requirement each year for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1998 1999 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. Apr. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 9,901 9,147 3,550 0 0 0 00 00 00 00 2 Gross sales 0 0 0 0 0 0 0 0 0 0 Exchanges 426,928 436,257 450,835 40,712 34,957 41,393 35,069 36,862 35,065 48,142 4 For new bills 426,928 435,907 450,835 40,712 34,957 41,393 35,069 36,862 35,065 48,142 5 Redemptions 0 0 2,000 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 524 5,549 6,297 741 662 0 0 2,103 11,,006600 11,,667777 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 30,512 41,716 46,062 2,423 5,444 2,539 2,865 5,578 3,015 3,768 9 Exchanges -41,394 -27,499 -49,434 -400 -8,093 -2,555 -400 -7,458 -5,956 -3,370 10 Redemptions 2,015 1,996 2,676 602 0 0 492 0 0 726 One to five years 11 Gross purchases 3,898 19,680 12,901 725 2,397 0 0 2,752 2,428 33,,336622 17 Gross sales 0 0 0 0 0 0 0 0 0 0 N Maturity shifts -25,022 -37,987 -37,777 -2,423 -4,574 -2,539 -2,865 -4,928 -3,015 —3,768 14 Exchanges 31,459 20,274 37,154 0 6,013 2,555 0 4,778 5,956 3,020 Five to ten years 15 Gross purchases 1,116 3,849 2,294 0 862 0 0 335 346 945 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -5,469 -1,954 -5,908 0 718 0 0 -650 0 0 18 Exchanges 6,666 5,215 7,439 400 1,135 0 400 1,340 0 0 More than ten years 19 Gross purchases 1,655 5,897 4,884 1,674 698 0 615 0 2,404 262 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -20 -1,775 -2,377 0 -1,589 0 0 0 0 0 22 Exchanges 3,270 2,360 4,842 0 945 0 0 1,340 0 350 All maturities 23 Gross purchases 17,094 44,122 29,926 3,140 4,619 0 615 5,190 6,238 6,246 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 2,015 1,996 4,676 602 0 0 492 0 0 726 Matched transactions 76 Gross purchases 3,092,399 3,577,954 4,395,430 402,581 358,438 418,538 365,779 324,078 393,267 366,838 27 Gross sales 3,094,769 3,580,274 4,399,330 400,995 359,256 420,397 363,604 322,669 394,865 364,476 Repurchase agreements 28 Gross purchases 457,568 810,485 512,671 40,823 23,884 49,296 21,968 2266,,009988 6622,,887788 4455,,006677 29 Gross sales 450,359 809,268 514,186 48,672 19,200 38,592 37,157 27,025 53,706 48,867 30 Net change in U.S. Treasury securities 19,919 41,022 19,835 -3,725 8,484 8,845 -12,891 5,672 13,812 4,082 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 00 00 32 Gross sales 0 0 25 0 0 0 0 0 0 0 33 Redemptions 409 1,540 322 15 20 30 2 0 25 0 Repurchase agreements 34 Gross purchases 75,354 160,409 284,316 51,471 51,419 48,815 23,577 37,416 3355,,773311 2200,,662233 35 Gross sales 74,842 159,369 276,266 50,032 48,785 44,285 31,744 36,067 34,009 22,937 36 Net change in federal agency obligations 103 -500 7,703 1,424 2,614 4,500 -8,169 1,349 1,697 -2,314 37 Total net change in System Open Market Account... 20,021 40,522 27,538 -2,301 11,098 13,345 -21,060 7,021 15,509 1,768 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 • August 1999 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1999 1999 Apr. 28 May 5 May 12 May 19 May 26 Mar. 31 Apr. 30 May 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,048 11,049 11,049 11,048 11,048 11,049 11,050 11,048 2 Special drawing rights certificate account 8,200 8,200 8,200 8,200 8,200 8,200 8,200 8,200 3 Coin 416 411 407 406 381 428 430 372 Loans 4 To depository institutions 66 90 81 101 119 246 68 121 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 311 311 311 311 311 311 311 311 8 Held under repurchase agreements 3,015 2,488 3,136 5,648 3,522 5,606 3,292 4,497 9 Total U.S. Treasury securities 480,357 483,179 477,377 482,120 483,194 478,416 482,503 488,535 10 Bought outright2 473,627 473,474 475,914 477,335 480,718 465,686 473,573 482,531 11 Bills 199,175 199,020 198,629 196,641 197,059 196,759 199,121 197,719 12 Notes 199,721 199,723 202,094 203,965 206,125 194,968 199,721 207,108 13 Bonds 74,730 74,731 75,192 76,729 77,533 73,959 74,731 77,704 14 Held under repurchase agreements 6,730 9,705 1,463 4,785 2,476 12,730 8,930 6,004 15 Total loans and securities 483,748 486,067 480,905 488,179 487,145 484,578 486,174 493,463 16 Items in process of collection 8,254 10,747 8,332 8,041 7,099 7,097 5,248 5,658 17 Bank premises 1,311 1,311 1,311 1,315 1,316 1,303 1,310 1,315 Other assets 18 Denominated in foreign currencies3 15,263 15,037 15,041 15,044 15,050 15,171 15,034 14,860 19 All other4 17,496 17,634 17,266 14,886 15,465 16,126 17,336 16,164 20 Total assets 545,736 550,456 542,511 547,118 545,704 543,952 544,782 551,080 LIABILITIES 21 Federal Reserve notes 494,606 496,328 497,666 497,864 500,129 491,715 493,590 501,685 22 Total deposits 26,392 28,381 20,271 24,605 21,528 28,316 28,623 26,577 23 Depository institutions 17,442 22,932 15,715 19,329 15,982 22,541 18,061 21,140 24 U.S. Treasury—General account 8,545 4,999 4,095 4,783 5,101 5,374 10,040 5,056 25 Foreign—Official accounts 168 167 178 188 211 166 260 157 26 Other 237 283 282 305 235 235 263 223 27 Deferred credit items 7,682 8,743 7,371 7,405 6,927 7,117 5,354 5,243 28 Other liabilities and accrued dividends5 4,230 4,411 4,327 4,318 4,185 4,328 4,493 4,474 29 Total liabilities 532,911 537,863 529,634 534,191 532,769 531,475 532,062 537,979 CAPITAL ACCOUNTS 30 Capital paid in 6,180 6,187 6,204 6,213 6,238 6,122 6,182 6,239 31 Surplus 5,952 5,952 5,952 5,952 5,952 5,944 5,952 5,952 32 Other capital accounts 693 454 721 762 745 411 586 911 33 Total liabilities and capital accounts 545,736 550,456 542,511 547,118 545,704 543,952 544,782 551,080 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. n.a. n.a. n.a. Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Banks) 685,435 690,922 697,001 703,827 709,370 665,942 687,900 710,687 36 LESS: Held by Federal Reserve Banks 190,828 194,594 199,335 205,963 209,241 174,228 194,309 209,002 37 Federal Reserve notes, net 494,606 496,328 497,666 497,864 500,129 491,715 493,590 501,685 Collateral held against notes, net 38 Gold certificate account 11,048 11,049 11,049 11,048 11,048 11,049 11,050 11,048 39 Special drawing rights certificate account 8,200 8,200 8,200 8,200 8,200 8,200 8,200 8,200 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 475,358 477,079 478,417 478,616 480,881 472,466 474,340 482,437 42 Total collateral 494,606 496,328 497,666 497,864 500,129 491,715 493,590 501,685 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 Apr. 28 May 5 May 12 May 19 May 26 Mar. 31 Apr. 30 May 31 1 Total loans 66 89 81 101 119 65 68 121 2 Within fifteen days' 52 29 26 89 107 64 40 75 3. Sixteen days to ninety days 14 60 55 12 12 1 28 47 4 Total U.S. Treasury securities2 480,357 483,179 477,377 482,120 483,194 478,416 482,503 488,535 5 Within fifteen days' 22,035 23,146 17,697 17,737 18,577 26,785 13,804 9,131 6 Sixteen days to ninety days 100,866 97,850 97,741 95,143 97,933 98,303 103,293 106,365 7 Ninety-one days to one year 134,011 138,846 139,255 138,833 134,250 134,439 142,071 139,450 8 One year to five years 115,258 115,148 116,365 120,213 121,435 112,263 115,147 121,571 9 Five years to ten years 47,545 47,547 48,271 48,528 48,530 46,598 47,546 49,403 10 More than ten years 60,642 60,643 61,049 61,664 62,469 60,029 60,642 62,615 11 Total federal agency obligations 3,326 2,799 3,447 5,969 3,833 5,917 3,603 4,808 12 Within fifteen days' 3,015 2,488 3,136 5,648 3,570 5,606 3,292 4,545 13 Sixteen days to ninety days 37 37 62 62 14 27 37 25 14 Ninety-one days to one year 79 79 79 79 79 79 79 68 15 One year to five years 20 20 20 20 20 30 20 20 16 Five years to ten years 175 175 150 150 150 175 175 150 17 More than ten years 0 0 0 0 0 0 0 0 1. Holdings under repurchase agreements are classified as maturing within fifteen days in 2. Includes compensation that adjusts for the effects of inflation on the principal of accordance with maximum maturity of the agreements. inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • August 1999 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1998 1999 1995 1996 1997 1998 IItteemm Dec. Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 56.45 50.16 46.86 44.90 44.41 44.50 44.90 45.13 44.55 43.72 43.98 44.36 2 Nonborrowed reserves4 56.20 50.01 46.54 44.79 44.23 44.41 44.79 44.92 44.44 43.65 43.81r 44.24 3 Nonborrowed reserves plus extended credit5 56.20 50.01 46.54 44.79 44.23 44.41 44.79 44.92 44.44 43.65 43.81r 44.24 4 Required reserves 55.16 48.75 45.18 43.32 42.83 42.87 43.32 43.59 43.34 42.41 42.82 43.11 5 Monetary base6 434.10 451.37 478.88 512.32 505.84 509.14 512.32 516.81 520.84 524.23 528.74r 534.83 Not seasonally adjusted 6 Total reserves7 58.02 51.45 48.01 45.12 44.20 44.24 45.12 46.34 45.25 43.14 43.67 44.91 7 Nonborrowed reserves 57.76 51.30 47.69 45.00 44.03 44.16 45.00 46.14 45.13 43.08 43.50r 44.79 8 Nonborrowed reserves plus extended credit5 57.76 51.30 47.69 45.00 44.03 44.16 45.00 46.14 45.13 43.08 43.50r 44.79 9 Required reserves8 56.73 50.04 46.33 43.54 42.63 42.62 43.54 44.81 44.03 41.84 42.51 43.65 10 Monetary base9 439.03 456.63 484.98 518.28 504.47 510.14 518.28 520.01 519.70 523.35 526.77r 533.09 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 57.90 51.17 47.92 45.02 44.12 44.15 45.02 46.35 45.24 43.12 43.65 44.88 12 Nonborrowed reserves 57.64 51.02 47.60 44.90 43.94 44.07 44.90 46.14 45.12 43.06 43.48 44.75 13 Nonborrowed reserves plus extended credit5 57.64 51.02 47.60 44.90 43.94 44.07 44.90 46.14 45.12 43.06 43.48 44.75 14 Required reserves 56.61 49.76 46.24 43.44 42.54 42.53 43.44 44.81 44.02 41.82 42.49r 43.62 15 Monetary base12 444.45 463.40 491.79 525.06 511.36 516.96 525.06 527.59 526.85 530.30 533.49r 539.96 16 Excess reserves13 1.29 1.42 1.69 1.58 1.57 1.62 1.58 1.53 1.22 1.31 1.16 1.26 17 Borrowings from the Federal Reserve .26 .16 .32 .12 .17 .08 .12 .21 .12 .07 .17 .13 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 AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1999 1995 1996 1997 1998 IItteemm Dec. Dec. Dec. Dec. Feb.' Mar.' Apr.' May Seasonally adjusted Measures2 1 Ml 1,126.7 1,081.3 1,074.9 1,093.4 1,092.6 1,102.0 1,108.3 1,104.6 2 M2 3,649.1 3,823.9 4,046.6 4,402.0r 4,446.9 4,457.1 4,489.7 4,506.7 3 M3 4,618.5 4,955.6 5,404.7 5,997.0' 6,062.0 6,053.7 6,094.6 6,116.6 4 Debt 13,697.7r 14,392.7r 15,094.7r 16,026.1' 16,165.1 16,259.8 16,351.9 n.a. Ml components 5 Currency3 372.3 394.1 424.5 459.2 467.6 472.0 476.5 480.9 6 Travelers checks4 8.3 8.0 7.7 7.8 7.7 7.8 7.8 7.8 7 Demand deposits5 389.4 403.0 396.5 377.5 371.8 374.1 373.9 369.1 8 Other checkable deposits6 356.7 276.2 246.2 248.8 245.5 248.0 250.2 246.7 Nontransaction components 9 In M27 2,522.4 2,742.6 2,971.8 3,308.7 3,354.3 3,355.1 3,381.4 3,402.2 10 In M3 only8 969.4 1,131.7 1,358.0 1,595.0' 1,615.1 1,596.7 1,604.9 1,609.8 Commercial banks 11 Savings deposits, including MMDAs 775.3 905.2 1,022.9 1,189.8 1,207.7 1,207.9 1,225.5 1,233.5 12 Small time deposits9 575.0 593.7 626.1 626.0' 618.0 616.2 614.3 613.1 13 Large time deposits10' 11 346.6 414.8 490.2 541.01 536.7 528.4 534.0 529.4 Thrift institutions 14 Savings deposits, including MMDAs 359.8 367.1 377.3 415.2 425.4 428.0 431.4 441.2 15 Small time deposits9 356.7 353.8 343.2 325.9 322.9 320.7 319.6 317.7 16 Large time deposits'0 74.5 78.4 85.9 89.1 89.9 88.8 89.1 88.0 Money market mutual funds 17 Retail 455.5 522.8 602.3 751.7 780.3 782.3 790.5 796.5 18 Institution-only 255.9 313.3 379.9 516.2 529.9 529.1 538.4 544.6 Repurchase agreements and Eurodollars 19 Repurchase agreements'2 198.7 211.3 252.8 297.9' 308.6 296.2 287.0 290.9 20 Eurodollars12 93.7 113.9 149.2 150.7' 150.0 154.1 156.5 156.9 Debt components 21 Federal debt 3,638.9 3,780.6 3,798.4 3,747.4 3,718.2 3,714.7 33,,770077..22 n.a. 22 Nonfederal debt 10,058.8' 10,612.2' ll,296.3r 12,278.7' 12,446.9 12,545.2 12,644.6 n.a. Not seasonally adjusted Measures2 23 Ml 1,152.4 1,104.9 1,097.4 1,115.3 1,083.4 1,097.2 1,113.7 1,096.5 24 M2 3,671.7 3,843.7 4,064.8 4,418.8' 4,441.2 4,480.6 4,527.2 4,486.1 25 M3 4,638.0 4,972.5 5,420.8 6,013.1' 6,070.7 6,092.8 6,131.7 6,101.6 26 Debt 13,699.2r 14,392.7r 15,094.3r 16,026.6' 16,137.2 16,252.4 16,337.6 n.a. Ml components 27 Currency3 376.2 397.9 428.9 464.2 466.5 471.3 476.0 479.9 28 Travelers checks4 8.5 8.3 7.9 8.0 7.9 7.9 7.9 7.9 29 Demand deposits5 407.2 419.9 412.3 392.4 364.7 368.9 374.0 363.3 30 Other checkable deposits6 360.5 278.8 248.3 250.7 244.2 249.0 255.8 245.5 Nontransaction components 31 In M2 2,519.3 2,738.9 2,967.4 3,303.6 3,357.9 3,383.4 33,,441133..66 3,389.5 32 In M3 only8 966.4 1,128.8 1,356.0 1,594.3' 1,629.5 1,612.2 1,604.5 1,615.5 Commercial banks 33 Savings deposits, including MMDAs 774.1 903.3 1,020.4 1,186.8 1,203.8 1,217.6 1,241.3 1,234.8 34 Small time deposits9 573.8 592.7 625.3 625.4 619.4 617.0 614.5 611.9 35 Large time deposits10' " 345.8 413.3 487.7 537.4' 532.1 532.9 534.7 535.2 Thrift institutions 36 Savings deposits, including MMDAs 359.2 366.3 376.4 414.1 424.0 431.5 437.0 441.7 37 Small time deposits9 355.9 353.2 342.8 325.6 323.6 321.2 319.7 317.1 38 Large time deposits10 74.3 78.1 85.4 88.5 89.1 89.5 89.2 89.0 Money market mutual funds 39 Retail 456.1 523.2 602.5 751.7 787.0 796.2 801.1 784.0 40 Institution-only 257.7 316.0 384.5 523.3 547.3 537.9 536.7 538.3 Repurchase agreements and Eurodollars 41 Repurchase agreements12 193.8 205.7 246.1 290.6' 308.1 298.8 289.7 297.2 42 Eurodollars12 94.9 115.7 152.3 154.5' 152.7 153.1 154.3 155.8 Debt components 43 Federal debt 3,645.9 3,787.9 3,805.8 3,754.9 3,721.8 3,741.2 33,,771177..11 n.a. 44 Nonfederal debt 10,053.3r 10,604.8r 1 l,288.5r 12,271.6' 12,415.4 12,511.2 12,620.5 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 1998 1998 1999" 1999 May Nov. Dec. Jan. Feb. Mar. Apr. May May 5 May 12 May 19 May 26 Seasonally adjusted Assets 1 Bank credit 4,240.8r 4,527.9" 4,547.1 4,532.2 4,519.1 4,485.8 4,492.5 4,5023 4,492.3 4,495.8 4,494.5 44,,550077..33 2 Securities in bank credit l,125.7r l,221.4r 1,225.5" 1,216.6 1,206.7 1,187.9 1,188.6 1,188.8 1,186.2 1,183.8 1,185.7 1,193.0 3 U.S. government securities 769.0r 790.0" 791.9" 793.5 791.0 798.5 798.8 797.6 793.9 794.9 796.4 801.4 4 Other securities 356.7r 431.4" 433.6" 423.1 415.6 389.4 389.8 391.2 392.3 388.8 389.3 391.6 5 Loans and leases in bank credit2 . . . 3,115.2r 3,306.5" 3,321.7" 3,315.7 3,312.4 3,298.0 3,303.9 3,313.4 3,306.1 3,312.0 3,308.8 3,314.3 6 Commercial and industrial 884.9r 952.6" 950.4" 946.7 946.6 950.2 953.6 948.6 949.5 948.4 946.0 948.5 7 Real estate 1,268.9" 1,316.4" 1,331.1" 1,335.1 1,338.1 1,337.9 1,339.7 1,346.6 1,343.3 1,349.7 1,348.5 1,343.0 8 Revolving home equity 100.3 99.3 99.1 98.8 98.4 98.5 99.4 100.4 99.8 100.1 100.5 100.6 9 Other l,168.6r 1,217.0" 1,232.0" 1,236.3 1,239.7 1,239.4 1,240.3 1,246.2 1,243.5 1,249.6 1,248.1 1,242.4 500.5r 498.3" 500.1" 501.6 501.0 499.7 500.2 496.2 497.9 496.4 496.8 496.4 11 Security3 121.4 151.2 151.6 147.1 139.8 119.9 122.8 127.3 124.9 125.5 120.9 131.9 12 Other loans and leases 339.4 388.0 388.5" 385.2 387.0 390.2 387.6 394.8 390.5 392.1 396.6 394.5 13 Interbank loans 204.0 217.6 217.3" 223.0 227.5 220.8 214.7 221.4 217.6 218.0 226.1 223.0 14 Cash assets4 249.2 255.0 257.5" 261.4 258.4 259.8 262.3 264.3 268.8 263.0 265.5 253.8 15 Other assets5 313.5 337.8 339.0 351.5 356.7 356.2 345.5 346.2 340.9 350.4 353.2 347.6 16 Total assets6 4,950.1" 5,280.4" 5,303.1" 5310.2 5303.4 5,2643 5,256.7 5,275.6 5,261.0 5,268.7 5,280.7 5,273.0 Liabilities 17 Deposits 3,204.9 3,324.9 3,341.1 3,362.8 3,372.6 3,360.7 3,370.9 3,365.5 3,375.8 3,365.9 3,356.1 33,,335555..99 18 Transaction 683.7 670.7 672.3 667.3 662.0 668.6 664.8 657.2 654.9 654.5 652.1 667.4 2,521.2 2,654.2 2,668.8 2,695.5 2,710.6 2,692.0 2,706.1 2,708.3 2,720.9 2,711.3 2,704.0 2,688.5 20 Large time 690.7 727.8 719.3 723.7 728.2 718.1 724.8 720.6 724.1 719.8 721.0 719.1 21 Other 1,830.5 1,926.4 1,949.5 1,971.9 1,982.4 1,973.9 1,981.3 1,987.7 1,996.7 1,991.5 1,983.0 1,969.4 22 Borrowings 898.2 1,017.5 1,023.0 1,003.5 990.8 984.9 980.7 995.4 977.3 985.9 1,005.0 1,006.0 23 From banks in the U.S 283.4 323.9 323.3 318.2 316.3 318.3 311.0 322.7 309.9 314.1 328.5 325.7 24 From others 614.8 693.6 699.8 685.2 674.5 666.5 669.7 672.7 667.4 671.7 676.5 680.3 25 Net due to related foreign offices 175.5 214.4 213.9 213.5 217.4 217.3 210.2 204.4 215.5 195.1 203.5 192.1 26 Other liabilities 265.8r 302.4" 305.6" 305.1 297.5 274.5 275.7 273.0 270.3 277.5 272.2 270.3 27 Total liabilities 4,544.5 4,859.2" 4,883.7 4,884.8 4,878.4 4,8373 4,8373 4,8383 4,838.8 4,8243 4,836.7 4,824.2 28 Residual (assets less liabilities)7 405.6 421.2" 419.5 425.3 425.1 427.0 419.2 437.3 422.3 444.4 443.9 448.8 Not seasonally adjusted Assets 29 Bank credit 4,244.2r 4,541.3" 4,562.6" 4,541.3 4,516.7 4,484.3 4,500.5 4,504.4 4,506.9 4,498.7 4,494.8 44,,449977..88 30 Securities in bank credit l,131.2r 1,227.6" 1,227.2" 1,219.2 1,212.2 1,194.6 1,197.2 1,194.1 1,194.5 1,190.6 1,189.9 1,194.7 31 U.S. government securities 116.%' 792.4" 792.7" 793.8 795.2 804.9 808.7 805.8 805.2 804.2 804.3 806.7 32 Other securities 354.4" 435.1" 434.4" 425.4 416.9 389.7 388.5 388.4 389.3 386.5 385.6 388.0 33 Loans and leases in bank credit2 . . . 3,113.0" 3,313.7" 3,335.4" 3,322.2 3,304.5 3,289.7 3,303.3 3,310.3 3,312.4 3,308.0 3,304.9 3,303.1 34 Commercial and industrial 889.2r 952.0" 950.3" 945.5 948.0 953.7 960.3 953.0 959.2 953.0 951.0 949.5 35 Real estate l,268.3r 1,320.4" 1,333.0" 1,334.2 1,332.4 1,331.4 1,336.4 1,346.0 1,342.0 1,349.8 1,347.4 1,342.0 36 Revolving home equity 100.0 100.1 99.5 98.9 98.0 97.7 98.7 100.0 99.6 99.8 100.1 100.2 37 Other l,168.3r 1,220.2" 1,233.5" 1,235.3 1,234.4 1,233.7 1,237.6 1,246.0 1,242.4 1,250.0 1,247.3 1,241.8 498. lr 498.7" 505.4" 507.8 500.8 495.0 496.7 493.7 495.6 493.8 494.2 493.8 39 Security3 121.3 153.6 153.7 147.2 139.4 123.4 124.7 127.1 127.4 125.3 121.5 130.0 40 Other loans and leases 336.0 389.0" 392.9" 387.5 383.8 386.3 385.3 390.5 388.2 386.2 390.8 387.8 199.3 227.0 225.6 225.9 227.2 223.9 219.7 217.4 218.2 212.3 220.8 213.9 42 Cash assets4 246.6 261.8 273.0" 274.6 259.4 252.3 260.0 262.0 266.2 254.1 253.6 250.5 43 Other assets5 314.7 336.2 339.9 344.1 353.4 351.6 348.5 347.7 348.0 352.7 349.4 344.6 44 Total assets6 4,947.4 5,308.3" 5343.0" 5328.4 5,298.7 5,253.8 5,270.5 5,27Z9 5,280.6 5,259.2 5,259.9 5,248.2 Liabilities 45 Deposits 3,196.2 3,350.7 3,375.0" 3,362.1 3,349.7 3,355.4 3,381.7 3,355.9 3,375.6 3,348.7 3,337.2 33,,332299..99 673.0 681.0 706.5 682.1 657.1 662.1 672.5 648.0 656.0 637.9 636.7 644.1 47 Nontransaction 2,523.2 2,669.7 2,668.4 2,680.1 2,692.6 2,693.2 2,709.2 2,708.0 2,719.6 2,710.8 2,700.5 2,685.7 48 Large time 692.1 732.7 723.9 721.8 728.9 720.2 721.7 721.8 724.6 720.7 721.6 721.5 49 Other 1,831.0 1,937.0 1,944.5 1,958.3 1,963.7 1,973.1 1,987.5 1,986.2 1,995.0 1,990.1 1,978.9 1,964.3 50 Borrowings 905.6 1,023.1 1,025.6 1,019.8 993.9 979.2 981.1 1,003.3 994.9 995.6 1,012.2 1,009.2 51 From banks in the U.S 284.6 327.6 329.2 323.3 316.8 318.2 311.8 323.5 314.7 315.1 328.8 325.2 52 From others 621.0 695.5 696.4 696.4 677.0 661.1 669.3 679.8 680.2 680.6 683.5 684.0 53 Net due to related foreign offices .... 183.0 216.3 219.1 216.4 227.1 215.4 203.4 210.4 211.4 204.3 208.4 207.4 54 Other liabilities 265.5 302.8 306.4 306.0 299.9 275.1 275.3 272.6 270.1 277.7 271.5 269.8 55 Total liabilities 4,5503 4,892.8 4,926.1 4,9043 4,870.5 4,825.1 4,841.5 4^423 4,852.0 4,826.4 43293 43163 56 Residual (assets less liabilities)7 391)3 415.5" 417.0" 424.1 428.1 428.7 429.0 430.5 428.6 432.9 430.6 431.9 MEMO 57 Revaluation gains on off-balance-sheet items8 85.9 112.8 114.8 112.4 108.5 87.0 87.1 87.4 86.9 84.6 85.8 87.9 58 Revaluation losses on off-balancesheet items8 85.8 111.6 112.9 109.5 106.7 85.7 87.8 88.4 88.2 85.9 86.0 89.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • August 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued B. Domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1998 1998 1999 1999 May Nov. Dec. Jan. Feb. Mar. Apr. May May 5 May 12 May 19 May 26 Seasonally adjusted Assets 1 Bank credit 3,670.9 3,917.4 3,949.5 3,949.5 3,950.2 3,931.3 3,940.6r 3,959.4r 3,942.5r 3,952.3r 3,956.5r 3,963.5 2 Securities in bank credit 923.2 1,006.3 1,012.7 1,005.7 1,002.5 989.2 987.8r 991.4r 986. lr 987.8r 990.1' 994.6 3 U.S. government securities 679.8 708.2 709.8 709.6 708.0 714.2 710.9r 712.0r 707.lr 709.8r 712.8r 714.9 4 Other securities 243.4 298.1 302.9 296.1 294.5 275.1 276.8 279.4 279.0 277.9 277.9 279.6 5 Loans and leases in bank credit2 2,747.7 2,911.2 2,936.8 2,943.8 2,947.7 2,942.0 2,952.8 2,967.9r 2,956.4 2,964.5r 2,965.8r 2,968.9 6 Commercial and industrial 672.4 729.3r 733.0r 734.1r 735.5r 740.8r 747.0r 749.2r 746.5r 747.3r 746.9r 751.6 7 Real estate l,244.4r l,293.8r 1,309.4r l,313.3r l,316.5r l,316.3r l,317.8r l,324.8r l,321.6r l,327.9r l,326.8r 1,321.2 Revolving home equity 100.3 99.3 99.1 98.8 98.4 98.5 99.4 100.4 99.8 100.1 100.5 100.6 y Other 1,144.0 l,194.4r l,210.3r l,214.5r l,218.r l,217.7r l,218.4r l,224.5r l,221.8r l,227.9r l,226.3r 1,220.6 10 Consumer 500.5 498.3 500.1 501.6 501.0 499.7 500.2 496.2r 497.9 496.4 496.8 496.4 11 Security3 61.8 86.1 85.6 84.3 80.6 69.3 71.5 74.8 71.5 71.8 71.3 77.5 12 Other loans and leases 268.7 303.7 308.7 310.6r 314.2 316.0 316.4r 323.0 318.9 321.1 324.1 322.2 13 Interbank loans 182.1 190.4 189.3 193.5 195.6 194.5 188.6 193.8 193.7 189.6 197.5 196.2 14 Cash assets4 214.5 220.1 221.7 225.0 222.2 222.7 224.6 225.3 229.2 224.3r 226.4 215.2 15 Other assets5 278.4 300.9 300.6 312.9 318.8 318.5 307.9r 310.8r 304.9r 313.9r 317.9r 311.4 16 Total assets6 4,288.8 4,571.1 4,603.5 4,623.2 4,628.8 4,608.8 4,603.6 4,630.9r 4,612.1r 4,621.8r 4,639.8r 4,627.8 Liabilities 17 Deposits 2,908.5 3,009.4 3,032.5 3,044.5 3,051.4 3,049.1 3,055.2 3,051.7r 3,061.0 3,052.2r 3,038.1 3,043.7 18 Transaction 672.0 657.9 660.8 654.3 648.1 655.5 652.0 644.1 642.6 641.0r 638.5r 655.1 iy Nontransaction 2,236.5 2,351.6 2,371.7 2,390.2 2,403.3 2,393.7 2,403.2 2,407.6 2,418.4 2,41 l.lr 2,399.6r 2,388.6 20 Large time 407.3 426.9 422.9 419.4 422.1 420.8 423.3 421.6 423.5 421.6 418.6r 420.4 21 Other 1,829.2 1,924.6 1,948.8 1,970.8 1,981.2 1,972.9 1,979.9 1,986.0 1,994.9 l,989.5r l,981.1r 1,968.2 22 Borrowings 716.0 802.9 819.3 809.8 809.9 810.7 806.5 820.5r 801.6 813.1 833.lr 826.8 23 From banks in the U.S 261.4 291.8 296.0 296.8 298.3 294.0 289.5 301.6r 288.8 294.4 309.0 301.6 24 From others 454.6 511.2 523.3 513.1 511.6 516.7 517.0 518.9 512.8 518.8 524.1 525.2 25 Net due to related foreign offices .... 71.7 115.2 112.4 111.7 117.4 117.8 115.3 118.7 123.8 104.3 123.2 114.2 26 Other liabilities 197.4 226.3 228.9 230.9 227.3 206.5 208.2 212.0 207.7 217.3 212.2r 209.6 27 Total liabilities 3,893.7 4,153.8 4,193.2 4,197.0 4,205.9 4,184.1 4,185.2 4,203.0 4,194.1r 4,186.9r 4,206.6r 4,194.2 28 Residual (assets less liabilities)7 395.2 417.2 410.4 426.2 422.9 424.7 418.4 427.9 418.0 434.9 433.2r 433.6 Not seasonally adjusted Assets 29 Bank credit 3,679.5 3,927.6 3,962.1 3,955.1 3,944.0 3,928.1 3,951.5r 3,966.9r 3,960.3r 3,960.5 3,963.9r 3,961.6 30 Securities in bank credit 930.2 1,009.2 1,015.8 1,008.0 1,006.3 994.8 998.0r 998.6r 995.4r 996.5r 998.lr 998.7 31 U.S. government securities 686.9 710.1 710.4 710.2 711.9 719.7 721.2r 719.4r 716.5r 718.5r 720.4r 719.7 32 Other securities 243.3 299.1 305.4 297.8 294.4 275. lr 276.8 279.2 278.9 278.0 277.7 279.0 33 Loans and leases in bank credit2 2,749.3 2,918.4 2,946.3 2,947.1 2,937.7 2,933.3 2,953.6 2,968.3r 2,964.9r 2,964.0r 2,965.7 2,962.9 34 Commercial and industrial 679.2 727.6r 730.3r 731.r 735. lr 744.0r 755. r 756.2r 758.2r 754.6r 754.3r 756.2 35 Real estate 1,244. lr l,297.5r 1,311.3r 1,312.2r l,310.4r l,309.7r l,314.7r l,324.5r l,320.5r l,328.3r l,325.9r 1,320.5 36 Revolving home equity 100.0 100.1 99.5 98.9 98.0 97.7 98.7 100.0 99.6 99.8 100.1 100.2 37 Other 1,144. lr l,197.4r 1,211.7r l,213.3r l,212.4r l,212.0r l,216.0r l,224.5r l,220.9r l,228.5r l,225.8r 1,220.3 38 Consumer 498.1 498.7 505.4 507.8 500.8 495.0 496.7 493.7r 495.6 493.8 494.2 493.8 39 Security3 62.1 89.1 87.3 84.4 80.6 72.1 73.5 74.9 73.9 72.0 72.3 75.9 40 Other loans and leases 265.9 305.5 312.1 311.7 310.8r 312.6 313.6r 319.1 316.7 315.3r 319.0 316.4 41 Interbank loans 177.4 199.8 197.5 196.5 195.3 197.6 193.6 189.8 194.3 183.9 192.1r 187.1 42 Cash assets4 212.2 226.3 235.7 237.7 223.9 216.3 223.4 223.4r 227.4 216.2 215.1 212.3 43 Other assets5 280.2 299.1 300.0 305.2 314.4 313.3 312.7r 313.0r 312.9r 316.5r 314.8r 309.5 44 Total assets6 4,292.2 4,595.0 4,637.7 4,637.2 4,619.9 4,597.1 4,623.4 4,634.6 4,636.6r 4,618.8r 4,627.6r 4,612.1 Liabilities 45 Deposits 2,897.5 3,035.6 3,062.7 3,046.4 3,029.7 3,040.5 3,066.6 3,039.9 3,059.2 3,033.6r 3,018.2 3,013.3 46 Transaction 661.6 668.2 694.6 669.1 643.4 648.9 659.9 635.2 643.8 624.8r 623.5r 632.0 47 Nontransaction 2,235.9 2,367.4 2,368.1 2,377.4 2,386.3 2,391.7 2,406.7 2,404.7 2,415.4 2,408.8 2,394.7r 2,381.3 48 Large time 406.6 432.4 425.4 421.0 424.6 420.6 421.2 420.5 422.3 420.6 417.7 419.0 49 Other 1,829.3 1,935.0 1,942.7 1,956.3 1,961.7 1,971.1 1,985.5 1,984.2 1,993.1 1,988.2 1,976.9 1,962.3 50 Borrowings 723.4 808.5 821.9 826.1 813.0 805.1 806.9 828.4 819.2 822.9 840.4 830.0 51 From banks in the U.S 262.6 295.4 302.0 301.9 298.8 293.9 290.3 302.4r 293.6 295.3 309.3 301.0 52 From others 460.8 513.0 519.9 524.3 514.2 511.2 516.7 526.1 525.6 527.6 531.1 529.0 53 Net due to related foreign offices .... 80.9 113.7 111.4 112.0 123.4 117.7 114.0 126.6 123.6 114.8 129.4 130.7 54 Other liabilities 197.6 225.7 228.3 231.6 228.1 207.1 208.9 212.2 208.2 217.7 212.2r 209.6 55 Total liabilities 3,899.5 4,183.4 4,224.3 4,216.1 4,194.2 4,170.4 4,196.4 4,207.1 4,210.3 4,189.0r 4,200.2r 4,183.6 56 Residual (assets less liabilities)7 392.7 411.6 413.3 421.1 425.7 426.8 427.0 427.5 426.3 429.8 427.4r 428.5 MEMO 57 Revaluation gains on off-balance-sheet items8 45.6 64.3 66.7 66.5 64.9 46.8 48.3 50.6 49.1 48.2 49.6 51.0 58 Revaluation losses on off-balancesheet items8 47.1 66.6 68.3 67.2 65.4 46.6 49.0 52.5 51.2 50.5 50.7 53.1 59 Mortgage-backed securities9 297.2 346.0 345.4 341.6 339.6 333.7 331.6 330.7r 334.7 334.0 328.4r 328.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities 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 May Nov. Dec. Jan. Feb. Mar. Apr. May May 5 May 12 May 19 May 26 Seasonally adjusted Assets 1 Bank credit 2,278.5r 2,430.8 2,442.3 2,436.3 2,429.5 2,402.2 2,406.0r 2,416.0r 2,404.0 2,411.4 2,413.6 2,417.5 2 Securities in bank credit 526.1 577.2 576.2 566.5 560.4 544.0 541.1 540.8r 537.6r 537.6 539.9r 543.1 3 U.S. government securities 372.5 382.7r 380.2 378.6 376.2 379.7 375.8 374.0r 370.8 372.4r 374.8r 376.5 4 Trading account 24.0 22.3 23.0 25.1 17.9 22.5 25.9 22.3 20.8 21.6 24.0 23.2 5 Investment account 348.5 360.4 357.2 353.5 358.3 357.3 349.9 351.6 350.0 350.7 350.8 353.3 6 Other securities 153.6 194.5 196.0 188.0 184.2 164.3 165.2 166.8 166.7 165.3 165.1 166.6 7 Trading account 72.0 98.4 98.9 91.4 87.5 66.7 66.1 68.3 67.7 66.6 67.2 67.8 8 Investment account 81.5 96.1 97.0 96.6 96.7 97.5 99.1 98.6 99.0 98.7 97.9 98.8 9 State and local government . 22.7 24.5 24.8 24.6 24.7 24.9 24.6 24.8 24.6 24.7 24.6 24.7 10 Other 58.9 71.7 72.2 71.9 72.0 72.7 74.5 73.8 74.4 74.0 73.3 74.1 11 Loans and leases in bank credit2 . . . 1,752.4r 1,853.6 l,866.2r 1,869.8 l,869.2r 1,858.2 1,864.9 1,875.2 l,866.5r 1,873.8r 1,873.7 1,874.4 12 Commercial and industrial 492.1 535.2 536.0 536.1 537.2 541.6 546.3 546.6 545.0 545.3 544.5 548.4 13 Bankers acceptances 1.2 1.3 1.3 1.3 1.2 1.1 1.1 1.0 1.0 1.1 1.1 1.0 14 Other 490.9r 533.9 534.7 534.8 536.1 540.5r 545.2 545.6 543.9 544.3r 543.4 547.4 15 Real estate 701.6r 706.5 712.1r 710.5 709.7 706.1 705.2 708.2 706.6 712.0" 710.5 704.2 16 Revolving home equity 72.4 70.7 70.5 70.2 70.1 70.2 70.8 71.2 70.8 71.1 71.4 71.4 17 Other 629.2 635.8 641.6r 640.2 639.6 636.0 634.4 emf 635.8 639.1 632.8 18 Consumer 303.3 302.2 302.6 305.6r 304.5 302.1 300.4 296.2 298.0 297.0 296.9 295.7 19 Security3 56.0 79.4 79.3 78.2 74.6 63.3 65.7 69.5 66.1 66.6 66.1 72.3 20 Federal funds sold to and repurchase agreements with broker-dealers 37.8 61.9 62.5 61.4 57.6 46.1 47.7 51.3 46.9 48.3 4499..00 5533..55 21 Other 18.3 17.5 16.7 16.8 17.0 17.1 18.0 18.2 19.2 18.3 17.0 18.8 22 State and local government 11.6 11.9 11.7 11.7 11.6 11.6 11.9 11.8 11.8 11.9 11.8 11.7 23 Agricultural 10.1 10.2 10.3 10.3 10.4 10.3 10.3 10.0 10.1 10.1 10.1 9.9 24 Federal funds sold to and repurchase agreements with others 5.8 12.4 16.2 12.7 12.1 12.0 11.4 14.1 9.5 10.1 99..77 99..11 25 All other loans 78.8 92.2 91.8 96.2 96.0 95.6 95.9 99.6 100.5 101.5 105.0 103.8 26 Lease-financing receivables 93.1 103.6 106.2 108.6 113.1 115.6 117.8 119.2 118.8 119.3 119.3 119.3 27 Interbank loans 118.6 121.1 123.6 126.2 128.9 131.1 127.1 136.6' 135.3 133.5 140.4 137.2 28 Federal funds sold to and repurchase agreements with commercial banks 68.3 75.1 74.5 79.1 79.2 82.2 78.4 86.2 84.6 82.7 9900..77 8877..22 29 Other 50.3 46.1 49.1 47.2 49.7 48.9 48.7 50.4 50.7 50.8 49.6 50.0 30 Cash assets4 148.7 150.2 151.6r 154.5 151.6 151.3 154.0 151.9 156.2 151.6 152.8 143.6 31 Other assets5 221.4 229.6 227.1 236.3 243.2 243.0 232.3 233. lr 231.0 234.8 238.3 233.6 32 Total assets6 2,729.0 2,893.7r 2,906.6r 2,915.2r 2,914.8 2,889.0 2,881.2 2,899Jr 2,888.2r 2,893.0 2,906.7 2,893.6 Liabilities 33 Deposits 1,654.3 l,678.2r 1,682.8 1,683.8r l,679.2r 1,677.5 1,684.4r 1,679.2r 1,689.2 1,681,4r 1,667.7' 1,670.7 34 Transaction 389.4 371.0 371.2 366.0 359.4 363.5 365.7 356.8 359.4 355.2 351.5r 360.7 35 Nontransaction 1,264.9 l,307.2r 1,311.6 1,317.8 1,319.7 1,314.0 1,318.6 1,322.4 1,329.9r 1,326.1 1,316.2 1,310.0 36 Large time 222.5 232.3 230.6 229.9 229.2 226.5 227.4 223.4 226.5 224.0 219.6 221.6 37 Other 1,042.3 1,074.8 1,081.1 1,087.9 1,090.5 1,087.5 1,091.3 1,099.0 l,103.4r 1,102.1 1,096.6r 1,088.4 38 Borrowings 560.5 624.4 635.6 629.1 625.4 621.9 619.4 627.1 613.4 622.1 638.6 629.9 39 From banks in the U.S 190.8 207.7 209.7 214.0 214.2 208.9 206.0 214.4r 204.8 208.8 220.8 212.4 40 From others 369.6 416.7 425.9 415.1 411.1 413.1 413.3 412.7 408.6 413.2 417.8 417.5 41 Net due to related foreign offices 67.9 111.6 108.8 108.7 114.1 113.3 110.4 113.7 119.0 99.5 118.4 108.5 42 Other liabilities 170.1 195.6 197.9 200.0 196.9 176.2 177.3 180.6 177.0 185.9 180.6 178.0 43 Total liabilities 2,452.8 2,609.8 2,625.0 2,621.5 2,615.6r 2,589.0r 2,591.5' 2,600.7r 2,598.6 2,588.8 2,605.2 2387.1 44 Residual (assets less liabilities)7 276.2 283.9 281.6 293.6 299.2 300.1 289.7 298.6 289.6r 304.2 301.5 306.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • August 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 1998 1999 1999 May Nov. Dec. Jan. Feb. Mar. Apr. May May 5 May 12 May 19 May 26 Not seasonally adjusted Assets 45 Bank credit 2,277.6r 2,443.8r 2,456.7r 2,448.5 2,434.1 2,404.7 2,411.8 2,413.5r 2,412.6 2,408.4r 2,410.5 2,405.3 46 Securities in bank credit 528.0 582.4 579.6 569.6 566.4 548.0 546.4 542.6r 541.2 539.7 542.0 542.0 47 U.S. government securities 375.3 386.9 380.9 379.8 381.7r 383.8 381.9 376.8r 375.3 375.4r 377.9 376.9 48 Trading account 22.6 24.6 23.7 25.2 18.6 23.4 25.2 20.8 19.1 19.4 23.0 20.7 49 Investment account 352.7 362.4 357.2 354.6 363.1 360.3 356.6 356.0 356.2 356.0 354.9 356.2 50 Mortgage-backed securities .. 228.6 260.9 256.1 252.7 250.5 243.9 241.0 238.0r 241.6 240.2 236.3 236.0 51 Other 124.1 101.5 101.0 101.9 112.6 116.4 115.7 118.1 114.6 115.8r 118.6 120.1 52 One year or less 31.8 27.5 26.8 27.7 25.8 24.0 24.5 23.8 23.9 24.0 23.7 23.2 53 One to five years 52.9 38.5 38.7 37.9 47.1 52.5 53.3 54.9 52.6 54.0 55.0" 56.1 54 More than five years . . . 39.4 35.5 35.5 36.3 39.6 39.9 37.9 39.3 38.1 37.7 40.0 40.8 55 Other securities 152.7 195.5 198.7 189.8 184.8 164.2 164.5 165.8 165.9 164.3 164.1 165.1 56 Trading account 72.0 98.4 98.9 91.4 87.5 66.7 66.1 68.3 67.7 66.6 67.2 67.8 57 Investment account 80.6 97.1 99.8 98.4 97.3 97.5 98.4 97.5 98.2 97.7 96.9 97.3 58 State and local government . . 22.7 24.6 25.0 24.8 24.8 24.9 24.7 24.9 24.8 24.8 24.7 24.8 59 Other 57.9 72.5 74.8 73.6 72.5 72.6 73.7 72.6 73.4 72.9 72.1 72.5 60 Loans and leases in bank credit2 . . l,749.6r 1,861.3 1,877.0 l,878.9r l,867.7r 1,856.7 l,865.5r 1,870.9 1,871.4 1,868.7 l,868.6r 1,863.2 61 Commercial and industrial 496.4 534.8 534.1 533.8 537.2 544.2 552.4r 551.1 553.9 549.9 549.3 550.6 62 Bankers acceptances 1.2 1.3 1.3 1.3 1.2 1.1 1.1 1.0 1.0 1.1 1.1 1.0 63 Other 495.2 533.5 532.8 532.5 536.0 543.1 551.2 550.1 552.9 548.8 548.2 549.6 64 Real estate 699.1 709.91 715.6 713.2 708.4 703.1 702.4r 705.5 704.4 710.2 707.1r 700.3 65 Revolving home equity 72.1 71.2 70.7 70.3 69.8 69.5 70.2 70.9 70.6 70.8 71.0 71.1 66 Other 384.7r 394.8 399.4r 395.0 387.7r 381.8 379.0 380.7 380.4 385.3 381.8r 375.3 67 Commercial 242.3 243.8 245.6 247.9 250.9 251.9 253.1 253.9r 253.4 254. lr 254.3 254.0 68 Consumer 301.1 301.8 305.9 310.9 305.0 299.4 298.0 293.9 295.9 294.5 294.4 293.6 69 Security3 56.3 82.4 80.9 78.3 74.6 66.0 67.7 69.6 68.4 66.8 67.1 70.7 70 Federal funds sold to and repurchase agreements with broker-dealers .... 37.7 65.0 63.8 62.0 58.1 48.7 49.7 51.0 49.2 48.5 49.4 51.2 71 Other 18.6 17.4 17.2 16.3 16.4 17.3 18.0 18.6 19.3 18.3 17.7 19.5 72 State and local government .... 11.5 12.1 11.8 11.7 11.6 11.6 11.7 11.7 11.7 11.8 11.7 11.6 73 Agricultural 10.1 10.2 10.3 10.2 10.0 9.9 10.1 10.0 10.0 10.0 10.0 9.9 74 Federal funds sold to and repurchase agreements with others 5.8 12.4 16.2 12.7 12.1 12.0 11.4 14.1 9.5 10.1 9.7 9.1 75 All other loans 76.2r 95.1 96.4 97.8 94.5 93.9 93.9 95.8 98.7 96.5 100.2 98.1 76 Lease-financing receivables .... 93.0 102.6 105.8 110.3 114.4 116.5 118.1 119.1 118.9 119.0 119.0 119.3 77 Interbank loans 118.8 122.5 126.8 129.1 128.7 131.2 131.2 136.6 138.4 131.4 139.8 135.1 78 Federal funds sold to and repurchase agreements with commercial banks 67.8 77.8 78.3 82.7 79.8 81.9 81.1 85.3 87.3 80.3 89.2 83.8 79 Other 51.0 44.7 48.5 46.4 49.0 49.3 50.1 51.3 51.1 51.1 50.7 51.3 80 Cash assets4 146.9 154.4 162.1 164.1 152.3 146.4 153.0 150.4 154.1 145.9 144.4 141.7 81 Other assets5 223.3 226.4 226.6 231.6 240.0 239.2 236.7 235.4r 236.8 237.7 238.1 232.8 82 Total assets6 2,728.4r 2,908.9 2,934.1 2#35.5r 2^16.9 2,882.9 2^94.6 2£97.6r 2,903.6' 2,885.1 2,894.5 2,876.6 Liabilities 83 Deposits 1,639.7 1,692.2 i jcnff 1,693.0 1,674.9 1,675^ l,690.6r l,664.8r 1,682.8 1,661.3 1,648.6 1,643.1 84 Transaction 381.6 377.8r 394.2 376.3 356.5 358.2r 369.9 350.3r 358.6 343.0 342.0 345.2 85 Nontransaction l,258.1r 1,314.4 1,312.8 l,316.8r 1,318.4 1,317.7 1,320.7 1,314.5 l,324.3r 1,318.3 1,306.6 1,297.9 86 Large time 221.8 237.8 233.1 231.5 231.7r 226.3 225.3 222.3 225.3 223.0 218.8 220.2 87 Other 1,036.2 1,076.6 1,079.7 1,085.2 1,086.7 1,091.4 1,095.4 1,092.2 1,098.9 l,095.4r 1,087.8 1,077.6 88 Borrowings 567.6 627.9 636.2 644.9 631.0 621.9 622.4 634.7r 629.9 630.7 645.0 633.2 89 From banks in the U.S 192.1 209.7 213.7 218.4 215.9 211.1 208.6 215.4r 209.7 209.8 220.8 212.1 90 From nonbanks in the U.S 375.5 418.2 422.5 426.5 415.1 410.8 413.9 419.3 420.2 420.9 424.2 421.1 91 Net due to related foreign offices .. . 77.1 110.1 107.8 109.0 120.2 113.1 109.1 121.6 118.8 110.0 124.6 125.0 92 Other liabilities 170.1 195.6 197.9 200.0 196.9 176.2 177.3 180.6 177.0 185.9 180.6 178.0 93 Total liabilities 2,454.5 2,625.7 2,648.9" 2,646.9r 2,623.1r 2,587.1 2,599.4r 2,601.7r 2,608.6 2,587.8 2,598.8 2,5793 94 Residual (assets less liabilities)7 .... 273.9 283.2 285.3 288.6 293.9 295.8 295.2 295.9 294.9 297.3 295.7 297.3 MEMO 95 Revaluation gains on off-balancesheet items8 45.6 64.3 66.7 66.5 64.9 46.8 48.3 50.6 49.1 48.2 49.6 51.0 96 Revaluation losses on off-balancesheet items8 47.1 66.6 68.3 67.2 65.4 46.6 49.0 52.5 51.2 50.5 50.7 53.1 97 Mortgage-backed securities9 250.5 289.6 286.6 282.2 279.2 272.3r 269.4 265,6r 269.9 268.8r 263.6 263.0 98 Pass-through securities 167.9 199.1 197.2 194.3 189.6 182.5 179.5 176.9r 179.4 178.2 175.9 175.9 99 CMOs, REMICs, and other mortgage-backed securities . . 82.6 90.6 89.5 87.9 89.6 89.7 89.9 88.7 90.5 90.5 87.7 87.1 100 Net unrealized gains (losses) on available-for-sale securities10 . . . 2.8 3.1 3.0 3.0 2.3 .6 .9 .5 .8 .7 .7 .7 101 Offshore credit to U.S. residents11 . . . 36.0 39.1 38.5 38.9 38.9 39.0 37.9 37.7 38.8 38.6 37.8 36.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities 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 1998 1999 1999 May Nov. Dec. Jan. Feb. Mar. Apr. May May 5 May 12 May 19 May 26 Seasonally adjusted Assets 1 Bank credit 1,392.5 1,486.6" 1,507.2 1,513.1" 1,520.6" 1,529.1 1,534.6" 1,543.3" 1,538.5" 1,540.9 11,,554422..99"" 1,546.0 2 Securities in bank credit 397.2 429.1 436.6 439.1 442.1 445.2" 446.7" 450.6" 448.5" 450.1" 450.8" 451.5 3 U.S. government securities 307.3 325.5 329.6 331.0 331.8 334.4 335.1" 338.0" 336.3" 337.5" 338.1" 338.4 4 Other securities 89.8 103.6 107.0 108.1 110.3 110.8 111.6 112.6 112.3 112.7 112.8 113.0 5 Loans and leases in bank credit2 995.3r 1,057.5" 1,070.6" 1,074.0" 1,078.6 1,083.8" 1,087.9" 1,092.7" 1,090.0" 1,090.8" 1,092.0 1,094.5 180.3r 194.1" 197.0" 198.0" 198.2" 199.2" 200.7" 202.5" 201.6" 202.0" 202.4" 203.3 7 Real estate 542.8 587.2" 597.3" 602.8" 606.8" 610.1" 612.6" 616.6" 615.0" 616.0" 616.3" 617.0 8 Revolving home equity 28.0 28.6 28.6 28.6 28.3 28.4 28.6 29.1 29.0 29.0 29.1 29.2 9 Other 514.9" 558.6" 568.7" 574.3" 578.5" 581.7" 584.0" 587.5" 586.0" 587.0" 587.2" 587.8 10 Consumer 197.2 196.1" 197.5 196.0 196.4 197.7 199.8 200.0 199.8 199.5 199.8 200.7 11 Security3 5.8 6.7 6.4 6.1 6.0 6.0 5.8 5.3 5.4 5.2 5.2 5.2 12 Other loans and leases 69.3 73.4 72.5 71.1" 71.1 70.8" 69.2" 68.3 68.1" 68.1" 68.3 68.4 13 Interbank loans 63.6 69.2 65.7 67.3 66.7 63.4 61.5 57.3 58.5 56.0" 57.1 59.0 14 Cash assets4 65.7 69.8 70.2 70.4 70.6 71.4 70.5 73.4 73.0" 72.8 73.6 71.6 15 Other assets5 57.0 71.3 73.5 76.7 75.6 75.5 75.6" 77.6" 73.9" 79.1" 79.6" 77.8 16 Total assets6 1,559.8 l,677.4r 1,697.0 1,708.0" l,714.0r l,719.8r l,722.4r l,731.6r 1,723.9 l,728.8r l,733.1r 1,7343 Liabilities 17 Deposits 1,254.2 1,331.2" 1,349.7" 1,360.7" 1,372.3 1,371.6" 1,370.8" 1,372.5" 1,371.8 1,370.8" 1,370.4" 1,373.0 18 Transaction 282.6 286.8 289.6" 288.3 288.6" 292.0 286.3 287.3 283.2 285.8" 287.0" 294.4 19 Nontransaction 971.6 1,044.4 1,060.1 1,072.4 1,083.6" 1,079.6" 1,084.5" 1,085.2" 1,088.5" 1,085.0" 1,083.4 1,078.6 20 Large time 184.8 194.6 192.3 189.5 192.9 194.3 195.9 198.2 197.0 197.7 198.9 198.8 21 Other 786.8' 849.8 867.8 882.9 890.7 885.4 888.7 887.0 891.5 887.4 884.5" 879.8 22 Borrowings 155.6 178.5 183.7 180.7 184.6 188.8 187.1 193.4 188.2 191.1 194.6 196.9 23 From banks in the U.S 70.6 84.0 86.3 82.8 84.1 85.1 83.4 87.1" 84.0 85.5 88.3 89.1 24 From others 85.0 94.5 97.4 98.0 100.5 103.6 103.7 106.2 104.2 105.5 106.3 107.7 25 Net due to related foreign offices .... 3.8 3.6 3.6 3.0 3.2 4.5 4.9 5.0 4.8 4.8 4.8 5.6 26 Other liabilities 27.3 30.7 31.1 31.0 30.3 30.2 30.9 31.4 30.7 31.4 31.6" 31.6 27 Total liabilities l,440.8r 1,544.0" l,568.1r 1,575.5 1,590.4 1,595.2 1,593.7" 1,6023" l,595.4r 1,598.1" l,601.4r 1,607.1 28 Residual (assets less liabilities)7 119.0 133.4 128.8 132.6 123.6 124.6 128.7 129.3 128.4 130.7 131.7" 127.2 Not seasonally adjusted Assets 29 Bank credit 1,401.9" 1,483.8" 1,505.5 1,506.6" 1,509.9" 1,523.4 1,539.7" 1,553.4" 1,547.7" 1,552.1 11,,555533..33"" 1,556.3 30 Securities in bank credit 402.2 426.8 436.2 438.4 439.9 446.8 451.6" 456.0" 454.2" 456.8" 456.1" 456.7 31 U.S. government securities 311.6 323.2 329.5 330.4 330.2 335.9" 339.3" 342.6" 341.2" 343.1" 342.5" 342.8 32 Other securities 90.6 103.6 106.7 108.0 109.7 110.8 112.3 113.4 113.0 113.6 113.6 113.9 33 Loans and leases in bank credit2 999.8 1,057.0" 1,069.3 1,068.2" 1,070.1 1,076.6 1,088.1 1,097.4" 1,093.4 1,095.4" 1,097.2 1,099.6 34 Commercial and industrial 182.7" 192.7" 196.1" 197.3" 197.9" 199.8" 202.7" 205.1" 204.3" 204.7" 205.1" 205.7 35 Real estate 545.0" 587.6" 595.7" 598.9" 602.0" 606.5" 612.4" 619.0" 616.1" 618.1" 618.8" 620.2 36 Revolving home equity 27.9 28.9 28.8 28.6 28.3 28.2 28.5 29.1 28.9 29.0 29.1 29.1 37 Other 517.1" 558.7" 566.8" 570.4" 573.8" 578.3" 583.9" 589.9" 587.2" 589.1" 589.8" 591.0 38 Consumer 197.0 196.9 199.5 196.9 195.9 195.5" 198.7 199.7 199.6 199.4 199.8 200.2 39 Security3 5.8 6.7 6.4 6.1 6.0 6.0 5.8 5.3 5.4 5.2 5.2 5.2 40 Other loans and leases 69.3 73.1 71.6" 69.0" 68.2" 68.7 68.5" 68.3" 68.0 68.0 68.3" 68.4 41 Interbank loans 58.6 77.2 70.7 67.4 66.6 66.4 62.4 53.2 55.9 52.4 52.3 52.0 42 Cash assets4 65.3 71.9 73.6 73.6 71.6 69.9 70.5 73.0 73.3 70.3 70.7 70.6 43 Other assets5 57.0 72.7 73.4 73.6 74.4 74.2 76.0" 77.6" 76.1" 78.8" 76.8" 76.7 44 Total assets6 1,563.8 1,686.1 1,703.5" l,701.7r 1,703.0 l,714.2r l,728.7r l,737.1r 1,733.0 l,733.7r l,733.0r 1,735.5 Liabilities 45 Deposits 1,257.8" 1,343.4" l,355.7r 1,353.4 1,354.8" 1,364.7 1,376.0" 1,375.1" 1,376.4 1,372.3" 1,369.5" 1,370.2 46 Transaction 280.0 290.5 300.4 292.8 286.9 290.7 290.0 284.9" 285.2 281.9 281.5" 286.7 47 Nontransaction 977.8" 1,053.0 1,055.3" 1,060.6 1,067.9 1,074.0 1,086.0 1,090.2 1,091.2 1,090.5 1,088.0 1,083.5 48 Large time 184.8 194.6 192.3 189.5 192.9 194.3 195.9 198.2 197.0 197.7 198.9 198.8 49 Other 793.1 858.4 863.0 871.1 875.0 879.7 890.1 892.0 894.2 892.8" 889.1 884.7 50 Borrowings 155.8 180.6 185.7 181.2 182.0 183.2 184.5 193.7" 189.2 192.2 195.4 196.8 51 From banks in the U.S 70.5 85.7 88.3 83.5 82.9 82.8 81.7 87.0 83.9 85.5 88.5 89.0 52 From others 85.4 94.9 97.4 97.7 99.1 100.5" 102.8 106.8 105.4 106.7 106.9 107.9 53 Net due to related foreign offices .... 3.8 3.6 3.6 3.0 3.2 4.5 4.9 5.0 4.8 4.8 4.8 5.6 54 Other liabilities 27.5 30.1 30.5 31.6 31.1 30.8 31.6 31.6 31.2 31.8 31.6" 31.7 55 Total liabilities 1,445.0 1,557.7" 1,575.5 l,569.2r l,571.1r l,583.2r 1,597.0" l,605.4r l,601.6r l,601.2r l,6013r 1,6043 56 Residual (assets less liabilities)7 118.8 128.4 128.1 132.5 131.8 131.0 131.7 131.6 131.4 132.5 131.7" 131.2 MEMO 57 Mortgage-backed securities9 46.7 56.3 58.7 59.4 60.4 61.4 62.2 65.2" 64.9" 65.3" 64.8" 65.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • August 1999 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1998 1998 1999 1999 May Nov. Dec. Jan. Feb.r Mar.r Apr.r May May 5 May 12 May 19 May 26 Seasonally adjusted Assets 1 Bank credit 569.9 610.5r 597.6r 582.8r 568.9 554.6 551.9 542.9 549.8 543.5 538.1 543.9 2 Securities in bank credit 202.4 215.lr 212.7r 210^ 204.2 198.7 200.8 197.4 200.1 196.0 195.0 198.5 3 U.S. government securities 89.2r 81.^ 82.1r 83.9 83.0 84.4 87.9 85.6 86.8 85.1 83.6 86.5 4 Other securities 113.3r 133.3r 130.6r 127 ff 121.2 114.3 112.9 111.8 113.3 110.9 111.5 112.0 5 Loans and leases in bank credit2 . . . 367.4 395.4 384.8 31i.f 364.7 355.9 351.0 345.5 349.7 347.5 343.0 345.4 6 Commercial and industrial 212.5 223.3 217.3 212.6r 211.1 209.4 206.6 199.4 203.0 201.1 199.2 196.9 7 Real estate 24.6 22.6 21.7 21.8 21.6 21.7 21.9 21.7 21.7 21.7 21.8 21.8 8 Security3 59.6 65.2 65.9 62.9 59.2 50.6 51.3 52.5 53.4 53.7 49.6 54.4 9 Other loans and leases 70.7 84.3 79.9 74.5 72.8 74.3 71.2 71.8 71.6 71.0 72.5 72.3 10 Interbank loans 21.8 27.2 28.0 29.5 31.9 26.3 26.1 27.6 23.9 28.5 28.7 26.9 11 Cash assets4 34.7 34.9 35.8 36.4 36.2 37.1 37.8 39.0 39.7 38.7 39.1 38.6 12 Other assets5 35.1 36.9 38.4 38.5 37.8 37.7 37.5 35.4 36.0 36.5 35.3 36.2 13 Total assets6 661.2 7093r 699.6r 687.0" 674.6 6553 653.0 644.7 649.0 646.9 640.9 645.2 Liabilities 14 Deposits 296.4 315.4 308.6 318.3 321.2 311.5 315.7 313.8 314.8 313.7 318.0 312.2 15 Transaction 11.7 12.8 11.5 12.9 13.9 13.1 12.7 13.1 12.3 13.5 13.6 12.3 16 Nontransaction 284.8 302.6 297.1 305.3 307.3 298.4 302.9 300.7 302.5 300.2 304.4 299.9 17 Borrowings 182.2 214.6 203.7 193.6 180.9 174.2 174.2 174.9 175.7 172.8 171.9 179.2 18 From banks in the U.S 22.0 32.1 27.2 21.5 18.0 24.3 21.5 21.2 21.1 19.8 19.5 24.1 19 From others 160.2 182.5 176.5 172.2 162.9 149.8 152.7 153.7 154.6 153.0 152.4 155.0 20 Net due to related foreign offices 103.8 99.2 101.5 101.7 100.1 99.5 95.0 85.7 91.7 90.8 80.3 77.9 21 Other liabilities 68.4 76.2 76.7 74.2r 70.3 68.0 67.5 60.9 62.5 60.2 60.0 60.7 22 Total liabilities 65(1.8 705.4 6903 687.8r 672.4 653.2 6523 6353 644.7 637.4 630.1 630.0 23 Residual (assets less liabilities)7 10.4 3<? 9.1r —,9r 2.2 2.3 .7 9.4 4.3 9.5 10.7 15.2 Not seasonally adjusted Assets 24 Bank credit 564.7 613.7r 600.4r 586.2r 572.7 556.2 549.0 537.5 546.6 538.2 530.9 536.2 25 Securities in bank credit 201.0 218.4 211.4 211.2 205.9 199.8 199.2 195.6 199.1 194.2 191.8 196.0 26 U.S. government securities 89.9" 82.3r 82.3r 83.6r 83.4 85.2 87.6 86.4 88.7 85.7 83.8 86.9 27 Trading account 20.9 14.1 15.2 17.5 18.5 19.9 21.3 18.3 20.0 17.7 16.2 19.1 28 Investment account 69.0" 68. lr 67. lr 66.0" 64.9 65.3 66.3 68.0 68.8 68.0 67.7 67.8 29 Other securities ni.r 136.1r I29.(f 127.6r 122.5 114.6 111.7 109.2 110.4 108.5 107.9 109.0 30 Trading account 66.7 84.8 78.9 79.1 75.4 71.4 69.8 69.0 70.0 68.3 67.9 69.4 31 Investment account 44.4r 51.3r 50.2r 48.5r 47.1 43.2 41.9 40.2 40.4 40.2 40.0 39.7 32 Loans and leases in bank credit2 . . . 363.7 395.4 389.(/ 375. lr 366.8 356.4 349.8 342.0 347.5 344.0 339.1 340.2 33 Commercial and industrial 210.0 224.5 220.1 214.4r 212.9 209.7 205.2 196.8 200.9 198.4 196.7 193.3 34 Real estate 24.3 22.9 21.8 22.0 22.0 21.7 21.6 21.5 21.5 21.5 21.5 21.5 35 Security3 59.2 64.5 66.4 62.8 58.8 51.3 51.3 52.2 53.6 53.3 49.1 54.1 36 Other loans and leases 70.2 83.5 80.8 75.8 73.0 73.7 71.7 71.5 71.5 70.8 71.9 71.4 37 Interbank loans 21.8 27.2 28.0 29.5 31.9 26.3 26.1 27.6 23.9 28.5 28.7 26.9 38 Cash assets4 34.4 35.5 37.3 36.9 35.5 36.0 36.5 38.6 38.8 37.9 38.5 38.2 39 Other assets5 34.5 37.1 39.9 38.8 38.9 38.3 35.8 34.7 35.1 36.1 34.5 35.1 40 Total assets6 655.2 7133 705.4 691.2r 6785 656.6 647.1 638.2 644.0 640.4 632.4 636.1 Liabilities 41 Deposits 298.7 315.0 312.2 315.7 320.0 314.8 315.1 316.1 316.4 315.1 319.0 316.6 42 Transaction 11.4 12.7 11.9 13.0 13.7 13.3 12.5 12.8 12.2 13.0 13.2 12.2 43 Nontransaction 287.3 302.3 300.3 302.7 306.3 301.5 302.5 303.3 304.2 302.0 305.8 304.4 44 Borrowings 182.2 214.6 203.7 193.6 180.9 174.2 174.2 174.9 175.7 172.8 171.9 179.2 45 From banks in the U.S 22.0 32.1 27.2 21.5 18.0 24.3 21.5 21.2 21.1 19.8 19.5 24.1 46 From others 160.2 182.5 176.5 172.2 162.9 149.8 152.7 153.7 154.6 153.0 152.4 155.0 47 Net due to related foreign offices .... 102.1 102.6 107.7 104.4 103.7 97.7 89.4 83.8 87.8 89.5 79.0 76.8 48 Other liabilities 67.9 77.1 78.1 74.4r 71.8 68.0 66.4 60.4 61.9 60.0 59.3 60.1 49 Total liabilities 650.8 709.4 701.7 688.2 676.4 654.7 645.1 635.2 641.7 637.4 629.2 632.7 50 Residual (assets less liabilities)7 4.4 3.9 3.7 2.4 1.9 2.1 3.0 2.3 3.1 3.2 3.4 MEMO 51 Revaluation gains on off-balance-sheet items8 40.3 48.6 48.1 45.9 43.5 40.2 38.8 36.8 37.7 36.4 36.2 36.9 52 Revaluation losses on off-balancesheet items8 38.7 44.9 44.5 42.2 41.3 39.1 38.8 35.9 37.0 35.4 35.3 35.9 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

A22 Domestic NonfinancialS tatistics • August 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 Nov. Dec. Jan. Feb. Mar. Apr. 1 All issuers 595,382 674,904 775,371 966,699 1,163,303 1,159,027 1,163,303 1,178,168 1,178,303 1,204,627 1,219,789 Financial companies1 2 Dealer-placed paper, total2 223,038 275,815 361,147 513,307 614,142 621,246 614,142 629,569 615,053 684,616 697,030 3 Directly placed paper, total3 207,701 210,829 229,662 252,536 322,030 304,545 322,030 314,601 320,468 276,424 276,721 4 Nonfinancial companies4 164,643 188,260 184,563 200,857 227,132 233,236 227,132 233,998 242,782 243,587 246,038 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 Period Av r e a r te a ge Period Av r e a r te a ge 1996—Jan. 1 8.50 1996 8.27 1997—Jan 8.25 1998 Jan 8.50 Feb. 1 8.25 1997 8.44 Feb 8.25 Feb 8.50 1998 8.35 Mar. 8.30 Mar 8.50 1997—Mar. 26 8.50 Apr 8.50 Apr 8.50 1996—Jan 8.50 May 8.50 May 8.50 1998—Sept. 30 8.25 Feb 8.25 June 8.50 June 8.50 Oct. 16 8.00 Mar 8.25 July 8.50 July 8.50 Nov. 18 7.75 Apr. 8.25 Aug 8.50 Aug 8.50 May 8.25 Sept 8.50 Sept 8.49 June 8.25 Oct 8.50 Oci 8.12 July 8.25 Nov 8.50 Nov 7.89 8.25 Dec 88..5500 Dec 77..7755 Sept 8.25 Oct 8.25 1999—Jan 7.75 Nov 8.25 Feb 7.75 Dec 88..2255 7.75 Apr. 7.75 May 7.75 June 7.75 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 1999 1999, week ending IItteemm 11999966 11999977 11999988 Feb. Mar. Apr. May Apr. 30 May 7 May 14 May 21 May 28 MONEY MARKET INSTRUMENTS 1 Federal funds1,2'3 5.30 5.46 5.35 4.76 4.81 4.74 4.74 4.79 4.90 4.70 4.76 4.73 2 Discount window borrowing ' 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 paper3,5,6 Nonfinancial 3 1-month n.a. 5.57 5.40 4.80 4.82 4.79 4.79 4.77 4.79 4.78 4.80 4.81 4 2-month n.a. 5.57 5.38 4.80 4.82 4.78 4.80 4.77 4.78 4.78 4.83 4.82 5 3-month n.a. 5.56 5.34 4.79 4.81 4.79 4.81 4.77 4.79 4.79 4.83 4.84 Financial 6 1-month n.a. 5.59 5.42 4.82 4.84 4.80 4.80 4.79 4.80 4.79 4.81 4.81 7 2-month n.a. 5.59 5.40 4.82 4.83 4.80 4.82 4.78 4.80 4.80 4.83 4.85 8 3-month n.a. 5.60 5.37 4.82 4.84 4.80 4.83 4.79 4.80 4.81 4.84 4.86 Commercial paper (historical)*,5'7 9 1-month 5.43 5.54 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 3-month 5.41 5.58 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11 6-month 5.42 5.62 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Finance paper, directly placed (historical)3,5,8 12 1-month 5.31 5.44 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 3-month 5.29 5.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 6-month 5.21 5.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Bankers acceptances3'5'9 15 3-month 5.31 5.54 5.39 4.79 4.82 4.80 4.86 4.80 4.82 4.84 4.89 4.87 16 6-month 5.31 5.57 5.30 4.74 4.82 4.80 4.89 4.80 4.84 4.86 4.94 4.91 Certificates of deposit, secondary market*'10 17 1-month 5.35 5.54 5.49 4.86 4.88 4.84 4.84 4.83 4.83 4.83 4.86 4.86 18 3-month 5.39 5.62 5.47 4.90 4.91 4.88 4.92 4.87 4.88 4.89 4.94 4.96 19 6-month 5.47 5.73 5.44 4.95 4.98 4.94 5.03 4.94 4.96 4.97 5.07 5.10 20 Eurodollar deposits, 3-month3'" 5.38 5.61 5.45 4.86 4.88 4.87 4.90 4.87 4.87 4.87 4.91 4.94 U.S. Treasury bills Secondary market3'5 21 3-month 5.01 5.06 4.78 4.44 4.44 4.29 4.50 4.39 4.49 4.48 4.51 4.52 72 6-month 5.08 5.18 4.83 4.44 4.47 4.37 4.56 4.43 4.50 4.52 4.60 4.62 23 1-year 5.22 5.32 4.80 4.48 4.53 4.45 4.60 4.49 4.54 4.55 4.63 4.66 Auction high3,5'12 24 3-month 5.02 5.07 4.81 4.45 4.48 4.28 4.51 4.34 4.48 4.48 4.57 4.50 25 6-month 5.09 5.18 4.85 4.43 4.52 4.36 4.55 4.41 4.50 4.51 4.63 4.57 26 1-year 5.23 5.36 4.85 4.37 4.67 4.50 4.63 4.49 n.a. n.a. n.a. 4.63 U.S. TREASURY NOTES AND BONDS Constant maturities'3 27 1-year 5.52 5.63 5.05 4.70 4.78 4.69 4.85 4.73 4.78 4.79 4.89 4.93 28 2-year 5.84 5.99 5.13 4.88 5.05 4.98 5.25 5.03 5.13 5.19 5.34 5.35 29 3-year 5.99 6.10 5.14 4.90 5.11 5.03 5.33 5.10 5.21 5.27 5.42 5.43 30 5-year 6.18 6.22 5.15 4.91 5.14 5.08 5.44 5.15 5.32 5.39 5.53 5.51 31 7-year 6.34 6.33 5.28 5.10 5.36 5.28 5.64 5.32 5.51 5.60 5.73 5.73 32 10-year 6.44 6.35 5.26 5.00 5.23 5.18 5.54 5.26 5.45 5.53 5.61 5.56 33 20-year 6.83 6.69 5.72 5.66 5.87 5.82 6.08 5.85 6.01 6.09 6.12 6.11 34 30-year 6.71 6.61 5.58 5.37 5.58 5.55 5.81 5.58 5.74 5.83 5.85 5.80 Composite 35 More than 10 years (long-term) 6.80 6.67 5.69 5.60 5.81 5.77 6.04 5.80 5.97 6.04 6.07 6.06 STATE AND LOCAL NOTES AND BONDS Moody's series14 36 Aaa 5.52 5.32 4.93 4.80 4.96 4.89 n.a. 4.86 5.00 n.a. n.a. n.a. 37 BBaaaa 5.79 5.50 5.14 5.21 5.32 5.27 n.a. 5.27 5.39 n.a. n.a. n.a. 38 BBoonndd BBuuyyeerr sseerriieess1155 5.76 5.52 5.09 5.03 5.10 5.08 5.18 5.07 5.15 5.14 5.21 5.23 CORPORATE BONDS 39 Seasoned issues, all industries16 7.66 7.54 6.87 6.89 7.07 7.05 7.32 7.09 7.24 7.29 7.37 7.39 Rating group 40 Aaa 7.37 7.27 6.53 6.40 6.62 6.64 6.93 6.68 6.85 6.91 6.99 6.99 41 Aa 7.55 7.48 6.80 6.79 6.98 6.96 7.23 7.00 7.14 7.21 7.28 7.30 42 A 7.69 7.54 6.93 6.97 7.14 7.13 7.40 7.17 7.31 7.37 7.46 7.47 43 Baa 8.05 7.87 7.22 7.39 7.53 7.48 7.72 7.50 7.64 7.69 7.77 7.79 MEMO Dividend-price ratio17 44 Common stocks 2.19 1.77 1.49 1.32 1.30 1.24 1.24 1.23 1.23 1.22 1.24 1.28 1. The daily effective federal funds rate is a weighted average of rates on trades through 11. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. Data are for New York brokers. indication purposes only. 2. Weekly figures are averages of seven calendar days ending on Wednesday of the 12. Auction date for daily data; weekly and monthly averages computed on an issue-date current week; monthly figures include each calendar day in the month. basis. On or after October 28, 1998, data arc stop yields from uniform-price auctions. Before 3. Annualized using a 360-day year or bank interest. that, they are weighted average yields from multiple-price auctions. 4. Rate for the Federal Reserve Bank of New York. 13. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Depart- 5. Quoted on a discount basis. ment of the Treasury. 6. Interest rates interpolated from data on certain commercial paper trades settled by the 14. General obligation bonds based on Thursday figures; Moody's Investors Service. Depository Trust Company. The trades represent sales of commercial paper by dealers or 15. State and local government general obligation bonds maturing in twenty years are used direct issuers to investors (that is, the offer side). See Board's Commercial Paper Web pages in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys' (http://www.federalreserve.gov/releases/cp) for more information. A1 rating. Based on Thursday figures. 7. An average of offering rates on commercial paper for firms whose bond rating is AA or 16. Daily figures from Moody's Investors Service. Based on yields to maturity on selected the equivalent. Series ended August 29, 1997. long-term bonds. 8. An average of offering rates on paper directly placed by finance companies. Series 17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in ended August 29, 1997. the price index. 9. Representative closing yields for acceptances of the highest-rated money center banks. NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and 10. An average of dealer offering rates on nationally traded certificates of deposit. G.13 (415) monthly statistical releases. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • August 1999 1.36 STOCK MARKET Selected Statistics 1998 1999 IInnddiiccaattoorr 11999966 11999977 11999988 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Prices and trading volume (averages of daily figures)1 Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 357.98 456.99 550.65 506.56 511.49 564.26 576.05 595.43 588.70 603.69 627.75 635.62 2 Industrial 453.57 574.97 684.35 629.51 636.62 704.46 717.14 741.43 736.20 751.93 780.84 791.72 3 Transportation 327.30 415.08 468.61 408.75 396.61 442.95 456.70 479.72 477.47 491.25 523.08 537.88 4 Utility 126.36 143.87 190.52 186.17 195.09 206.29 215.57 224.75 218.24 218.11 228.48 242.98 5 Finance 303.94 424.84 516.65 454.28 448.12 501.45 510.31 523.38 514.75 544.08 564.99 562.66 6 Standard & Poor's Corporation (1941-43 = 10)2 670.49 873.43 1,085.50 1,020.64 1,032.47 1,144.43 1,190.05 1,248.77 1,246.58 1,281.66 1,334.76 1,332.07 7 American Stock Exchange (Aug. 31, 1973 = 50)3 570.86 628.34 682.69 621.48 607.16 667.60 660.76 704.22 699.15 711.08 748.29 787.02 Volume of trading (thousands of shares) 8 New York Stock Exchange 409,740 523,254 666,534 790,238 808,816 668,932 680,397 847,135 756,932 776,538 874,818 785,778 9 American Stock Exchange 22,567 24,390 28,870 33,331 31,946 27,266 28,756 31,015 31,774 29,563 38,895 35,241 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers 97,400 126,090 140,980 137,540 130,160 139,710 140,980 153,240 151,530 156,440 172,880 177,984 Free credit balances at brokers5 11 Margin accounts6 22,540 31,410 40,250 41,970 43,500 40,620 40,250 36,880 38,850 40,120 41,200 41,250 12 Cash accounts 40,430 52,160 62,450 54,240 54,610 56,170 62,450 59,600 57,910 59,435 60,870 61,665 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 Dec. Jan. Feb. Mar. Apr. May US. budget* 1 Receipts, total 1,453,062 1,579,292 1,721,798 178,646 171,722 99,414 130,292 266,142 98,587 2 On-budget 1,085,570 1,187,302 1,305,999 143,337 129,921 65,058 92,425 219,403 62,646 3 Off-budget 367,492 391,990 415,799 35,309 41,801 34,356 37,867 46,739 35,941 4 Outlays, total 1,560,512 1,601,235 1,652,552 183,802 101,217 141,760 152,701 152,683 122,556 5 On-budget 1,259,608 1,290,609 1,335,948 149,138 102,320 110,486 121,999 123,376 91,358 6 Off-budget 300,904 310,626 316,604 34,655 -1,103 31,274 30,702 29,307 31,197 7 Surplus or deficit (-), total -107,450 -21,943 69,246 -5,156 70,505 -42,345 -22,409 113,459 -23,969 8 On-budget -174,038 -103,307 -29,949 -5,801 27,601 -45,428 -29,574 96,027 -28,712 9 Off-budget 66,588 81,364 99,195 654 42,904 3,082 7,165 17,432 4,744 Source of financing (total) 10 Borrowing from the public 129,712 38,171 -51,049 -5,390 -31,249 1,688 37,013 -85,208 -551 11 Operating cash (decrease, or increase (-)) -6,276 604 4,743 -1,621 -39,567 52,432 -16,988 -36,512 32,495 12 Other2 -15,986 -16,832 -22,940 12,167 311 -11,775 2,384 8,261 -7,975 MEMO 13 Treasury operating balance (level, end of period) 44,225 43,621 38,878 17,503 57,070 4,638 21,626 58,138 25,643 14 Federal Reserve Banks 7,700 7,692 4,952 6,086 7,623 4,538 5,374 10,040 5,506 15 Tax and loan accounts 36,525 35,930 33,926 11,417 49,446 100 16,252 48,098 20,586 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 Financial Statistics • August 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 Mar. Apr. May RECEIPTS 1 All sources 1,579,292 1,721,798 845,527 773,810 922,630 825,057 130,292 266,142 98,587 2 Individual income taxes, net 737,466 828,586 400,436 354,072 447,514 392,332 50,468 164,832 30,585 3 Withheld 580,207 646,483 292,252 306,865 316,309 339,144 69,559 55,484 50,727 4 Nonwithheld 250,753 281,527 191,050 58,069 219,136 65,204 7,245 145,935 4,119 5 Refunds 93,560 99,476 82,926 10,869 8877,,998899 1122,,003322 2266,,335511 3366,,660000 2244,,227733 Corporation income taxes 6 Gross receipts 204,493 213,249 106,451 104,659 109,353 104,163 23,131 27,118 5,176 7 Refunds 22,198 24,593 9,635 10,135 14,220 14,250 4,578 5,419 1,229 8 Social insurance taxes and contributions, net . . . 539,371 571,831 288,251 260,795 312,713 268,466 49,216 65,162 53,698 9 Employment taxes and contributions2 506,751 540,014 268,357 247,794 293,520 256,142 48,592 60,186 45,617 10 Unemployment insurance 28,202 27,484 17,709 10,724 17,080 10,121 269 4,547 7,731 11 Other net receipts3 4,418 4,333 2,184 2,280 2,112 2,202 355 428 350 12 Excise taxes 56,924 57,673 28,084 31,133 29,922 33,366 5,880 5,579 4,978 13 Customs deposits 17,928 18,297 8,619 9,679 8,546 9,838 1,546 1,350 1,256 14 Estate and gift taxes 19,845 24,076 10,477 10,262 12,971 12,359 2,172 5,138 1,942 15 Miscellaneous receipts4 25,465 32,658 12,866 13,348 15,829 18,735 2,457 2,383 2,181 OUTLAYS 16 All types 1,601,235 1,652,552 797,418 824,368 815,884 877,412 152,701 152,683 122,556 17 National defense 270,473 268,456 132,698 140,873 129,351 140,196 25,469 25,433 19,211 18 International affairs 15,228 13,109 5,740 9,420 4,610 8,297 949 1,686 640 19 General science, space, and technology 17,174 18,219 8,938 10,040 9,426 10,142 11,,666633 1,565 1,581 20 Energy 1,483 1,270 803 411 957 699 558888 -156 104 21 Natural resources and environment 21,369 22,396 9,628 11,106 10,051 12,671 1,862 1,611 1,595 22 Agriculture 9,032 12,206 1,465 10,590 2,387 16,757 1,046 666 487 23 Commerce and housing credit -14,624 1,014 -7,575 -3,526 -2,483 4,046 -1,474 -536 989 24 Transportation 40,767 40,332 16,847 20,414 16,196 20,834 2,636 2,737 3,010 25 Community and regional development 11,005 9,720 5,678 5,749 4,863 6,972 11,,114488 684 906 2b Education, training, employment, and social services 53,008 54,919 25,080 26,851 25,928 27,760 6,319 4,202 4,464 27 Health 123,843 131,440 61,809 63,552 65,053 67,836 11,988 12,284 10,657 28 Social security and Medicare 555,273 572,047 278,863 283,109 286,305 316,809 49,846 51,816 44,519 29 Income security 230,886 233,202 124,034 106,353 125,196 109,481 27,065 24,420 12,880 30 Veterans benefits and services 39,313 41,781 17,697 22,077 19,615 22,750 3,693 5,498 1,893 31 Administration of justice 20,197 22,832 10,670 10,212 11,287 12,041 2,180 2,625 1,886 32 General government 12,768 13,444 6,623 7,302 6,139 9,136 1,130 929 621 33 Net interest5 244,013 243,359 122,655 122,620 122,345 116,954 19,970 20,195 19,976 34 Undistributed offsetting receipts6 -49,973 -47,194 -24,235 -22,795 -21,340 -25,795 -3,376 -2,976 -2,864 1. Functional details do not sum to total outlays for calendar year data because revisions to 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. monthly totals have not been distributed among functions. Fiscal year total for receipts and 5. Includes interest received by trust funds. outlays do not correspond to calendar year data because revisions from the Budget have not 6. Rents and royalties for the outer continental shelf, U.S. government contributions for been fully distributed across months. employee retirement, and certain asset sales. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S. 3. Federal employee retirement contributions and civil service retirement and Government, Fiscal Year 2000; monthly and half-year totals: U.S. Department of the Treadisability fund. sury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance Nil 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 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 debt' 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 U.S. TREASURY Types and Ownership Billions of dollars, end of period 1998 1999 TTyyppee aanndd hhoollddeerr 11999955 11999966 11999977 11999988 Q2 Q3 Q4 Ql 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 holder5 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 3,307.7r 3,431.2r 3,414.6r 3,334.0 3,349.3r 3,313.2r 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 21 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 NonfinancialS tatistics • August 1999 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 1999 1999, week ending IItteemm Feb. Mar. Apr. Mar. 31 Apr. 7 Apr. 14 Apr. 21 Apr. 28 May 5 May 12 May 19 May 26 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 31,811 34,426 28,670 46,405 24,386 28,340 27,047 35,341 27,588 22,250 30,178 33,860 Coupon securities, by maturity 2 Five years or less 107,777 9966,,114411 87,799 92,383 64,393 89,544 97,475 95,249 99,140 111,305 119,095 107,406 3 More than five years 71,489 62,008 53,786 55,781 40,696 64,236 51,897 54,133 64,242 80,606 89,051 74,641 4 Inflation-indexed 772 402 1,415 323 2,435 1,418 1,393 530 1,122 1,200 1,213 912 Federal agency 5 Discount notes 4411,,335555 4400,,008899 37,345 39,828 34,125 40,893 39,211 34,272 39,540 38,485 46,343 42,548 Coupon securities, by maturity 6 One year or less 11,,779966 11,,009977 1,222 672 363 1,050 1,691 1,734 1,342 1,088 1,411 962 7 More than one year, but less than or equal to five years 7,446 7,640 6,875 5,743 4,709 8,882 8,307 5,580 6,925 8,027 5,562 4,926 8 More than five years 3,633 3,141 4,625 2,052 1,532 5,697 3,396 7,323 6,005 5,494 2,417 4,876 9 Mortgage-backed 75,923 69,547 69,382 58,892 68,305 106,601 59,442 44,570 65,902 96,920 78,245 62,490 By type of counterparty With interdealer broker 10 U.S. Treasury 117,230 106,659 93,341 106,251 71,992 99,834 95,890 100,968 105,038 120,682 126,287 118,279 11 Federal agency 3,791 4,121 3,904 3,099 2,533 4,685 3,836 4,529 3,983 5,334 3,824 4,451 12 Mortgage-backed 25,301 23,601 23,682 21,281 20,165 35,318 23,725 15,829 22,906 30,665 30,181 25,026 With other 13 U.S. Treasury 94,620 86,316 78,330 88,640 59,919 83,704 81,921 84,285 87,054 94,680 113,249 98,540 14 Federal agency 50,438 47,846 46,162 45,195 38,197 51,838 48,768 44,380 49,829 47,760 51,909 48,861 15 Mortgage-backed 50,622 45,946 45,700 37,611 48,140 71,282 35,718 28,741 42,996 66,255 48,065 37,464 FUTURES TRANSACTIONS3 By type of deliverable security 16 U.S. Treasury bills n.a. 0 0 0 n.a. n.a. 0 n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 17 Five years or less 2,512 2,649 1,947 1,492 1,656 1,645 1,847 2,127 3,233 2,836 2,810 3,774 18 More than five years 17,132 15,926 11,950 13,116 10,251 13,785 11,103 11,002 16,092 18,445 18,446 17,309 19 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 0 Federal agency 20 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 21 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 22 More than one year, but less than or equal to five years 0 0 0 0 0 0 0 0 0 0 0 0 23 More than five years 0 0 0 0 0 0 0 0 0 0 0 0 24 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 25 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 26 Five years or less 1,153 1,506 985 1,972 1,398 1,198 505 797 1,095 1,647 1,326 1,304 27 More than five years 5,798 5,050 4,657 0 4,380 4,326 4,471 4,745 6,417 8,312 6,498 5,645 28 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 0 Federal agency 29 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 30 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 31 More than one year, but less than or equal to five years 0 0 0 0 0 0 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 844 825 783 0 1,010 1,170 392 537 844 886 1,025 688 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 1999 1999, week ending IItteemm Feb. Mar. Apr. Mar. 31 Apr. 7 Apr. 14 Apr. 21 Apr. 28 May 5 May 12 May 19 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 4,509 24,510 24,563 34,834 33,128 33,463 21,008 14,921 99,,662244 66,,887766 33,,557777 Coupon securities, by maturity 2 Five years or less -12,028 -18,124 -14,332 -16,536 -14,410 -9,854 -14,757 -13,916 -29,701 -33,182 -40,279 3 More than five years 1,465 -6,408 -5,060 -8,447 -6,437 -4,872 -5,400 -3,023 -6,844 -8,983 -16,296 4 Inflation-indexed 1,931 1,846 2,618 1,487 2,527 2,473 2,763 2,774 2,387 2,328 2,831 Federal agency 5 Discount notes 18,671 18,189 24,321 16,659 22,169 29,505 25,230 21,266 21,224 2222,,996622 1166,,990000 Coupon securities, by maturity 6 One year or less 3,450 2,683 2,538 2,243 2,007 3,072 2,545 2,537 2,499 2,205 2,710 7 More than one year, but less than or equal to five years 5,044 5,222 3,991 3,925 1,622 4,589 4,917 4,233 6,094 6,971 6,352 8 More than five years 3,146 4,110 6,131 3,275 3,518 6,643 5,864 7,954 8,035 6,619 6,651 9 Mortgage-backed 17,432 16,774 12,875 13,010 11,138 14,753 11,968 12,971 15,220 16,619 18,292 NET FUTURES POSITIONS4 By type of deliverable security 10 U.S. Treasury bills n.a. 00 n.a. 00 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 11 Five years or less 459 -910 93 -873 -1,380 -1,732 754 1,305 5,086 7,304 88,,116677 12 More than five years -14,876 -12,929 -17,408 -12,639 -17,065 -19,412 -17,518 -17,761 -9,980 -6,700 -3,142 13 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 Federal agency 14 Discount notes 0 0 00 00 00 00 00 00 00 00 00 Coupon securities, by maturity 15 One year or less 00 00 00 00 00 00 00 00 00 00 00 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 00 00 00 00 00 00 00 00 00 00 00 Coupon securities, by maturity 20 Five years or less -1,960 -1,268 -1,180 -1,153 -652 -564 -1,427 -1,799 -2,154 76 290 21 More than five years -1,487 -448 -396 -1,687 -275 895 494 -1,979 -2,916 -3,188 -1,342 22 Inflation-indexed n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Federal agency 23 Discount notes 0 00 00 00 00 00 00 00 00 00 00 Coupon securities, by maturity 24 One year or less 00 00 00 00 00 00 00 00 00 00 00 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 5,873 6,928 5,579 7,006 5,929 5,544 5,353 5,340 6,111 7,523 9,901 Financing5 Reverse repurchase agreements 28 Overnight and continuing 261,190 256,331 251,605 259,744 247,637 251,660 272,375 231,231 263,907 248,483 288,115 29 Term 788,073 781,168 818,297 718,837 761,966 793,952 828,632 872,872 873,473 921,739 721,626 Securities borrowed 30 Overnight and continuing 225,926 226,297 212,240 212,933 215,288 211,883 211,372 209,490 215,477 215,997 231,322 31 Term 100,463 93,810 102,437 91,031 92,377 99,873 106,626 109,011 108,953 107,395 91,045 Securities received as pledge 32 Overnight and continuing 2,380 2,555 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2,901 33 Term n.a. 0 0 n.a. n.a. n.a. 0 0 0 0 0 Repurchase agreements 34 Overnight and continuing 666,536 655,676 677,260 619,756 651,616 689,099 705,273 665,561 668,484 663,131 676,072 35 Term 674,687 673,650 711,067 628,532 653,537 686,115 724,626 765,896 760,392 790,734 614,627 Securities loaned 36 Overnight and continuing 11,753 12,875 10,235 16,310 10,950 10,208 10,040 9,660 10,528 10,874 10,736 37 Term 5,776 6,122 5,942 n.a. 6,283 5,609 5,593 6,205 6,218 6,628 6,680 Securities pledged 38 Overnight and continuing 48,945 48,533 45,650 46,655 46,507 45,624 45,781 44,223 47,273 46,479 48,287 39 Term 5,896 7,712 10,700 9,434 9,340 10,223 11,720 11,336 11,337 10,700 7,603 Collateralized loans 40 Total 18,388 18,177 17,891 17,018 17,043 20,633 20,663 13,709 16,191 16,256 12,988 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 eifect 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 NonfinancialS tatistics • August 1999 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1998 1999 AAggeennccyy 11999955 11999966 11999977 11999988 Nov. Dec. Jan. Feb. Mar. 1 Federal and federally sponsored agencies 844,611 925,823 1,022,609 1,296,477 1,255,412 1,296,477 n.a. n.a. n.a. 2 Federal agencies 37,347 29,380 27,792 26,502 26,315 26,502 26,355 26,180 26,243 3 Defense Department1 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2,3 2,050 1,447 552 n.a. n.a. n.a. n.a. n.a. n.a. 5 Federal Housing Administration4 97 84 102 205 205 205 70 69 80 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. V 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 26,309 26,496 26,349 26,174 26,237 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 1,229,097 1,269,975 n.a. n.a. n.a. 11 Federal Home Loan Banks 243,194 263,404 313,919 382,131 373,755 382,131 383,572 383,769 402,364 12 Federal Home Loan Mortgage Corporation 119,961 156,980 169,200 287,396 267,890 287,396 300,927 299,171 299,196 13 Federal National Mortgage Association 299,174 331,270 369,774 460,291 446,377 460,291 461,157 471,300 475,418 14 Farm Credit Banks8 57,379 60,053 63,517 63,488 66,086 63,488 61,292 66,622 66,529 15 Student Loan Marketing Association9 47,529 44,763 37,717 35,399 33,928 35,399 36,385 36,464 36,762 16 Financing Corporation10 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 IV 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 44,824 44,129 43,803 43,151 41,454 Lending to federal and federally sponsored agencies 2 2 0 1 E Po x s p t o a r l t- S Im er p v o ic r e t 6 Bank3 2 5, , 7 0 6 4 5 4 n 1 . , a 4 . 3 1 n.a. 5 52 T T T A T F T * T 22 Student Loan Marketing Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2 2 3 4 T U e n n it n e e d s s S e t e a t V es a l R le a y i lw A a u y th o A r s it s y o ciation6 n 3 . , a 2 . 0 0 n n . . a a . . n n . . a a . . 1 I 1 I 1 1 1 1 1 1 1 1 Other lending14 25 Farmers Home Administration 21,015 18,325 13,530 9,500 9,500 9,500 9,500 9,090 8,715 26 Rural Electrification Administration 17,144 16,702 14,898 14,091 14,199 14,091 14,101 14,100 13,980 2/ Other 29,513 21,714 20,110 20,538 21,125 20,538 20,202 19,961 18,759 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 oo iiss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 All issues, new and refunding1 171,222 214,694 262,342 19,528 19,325 24,288 16,926 16,233 24,323 15,758 16,234 By type of issue 2 General obligation 60,409 69,934 87,015 6,791 5,433 8,632 6,925 6,786 8,323 6,443 5,294 3 Revenue 110,813 134,989 175,327 12,737 13,892 15,656 10,001 9,446 16,000 9,315 10,941 By type of issuer 4 State 13,651 18,237 23,506 1,865 778 2,561 318 1,837 1,895 907 1,220 5 Special district or statutory authority2 113,228 134,919 178,421 12,924 13,473 15,937 12,929 11,145 14,604 10,010 11,279 6 Municipality, county, or township 44,343 70,558 60,173 4,739 5,073 5,790 3,679 3,251 7,825 4,841 3,735 7 Issues for new capital 112,298 135,519 160,568 12,736 12,452 14,517 11,917 10,674 16,201 10,474 12,149 By use of proceeds 8 Education 26,851 31,860 36,904 2,605 2,353 2,766 2,936 3,751 3,537 2,734 2,795 9 Transportation 12,324 13,951 19,926 1,598 806 1,800 1,706 628 1,640 1,107 1,791 10 Utilities and conservation 9,791 12,219 21,037 2,785 2,225 984 672 394 2,839 1,372 603 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 8,594 471 638 1,376 452 343 1,084 618 1,058 13 Other purposes 32,462 35,095 42,450 3,359 3,242 4,477 4,439 3,207 3,918 2,592 3,760 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment Dealer's 2. Includes school districts. Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1998 1999 TTyyppee ooff oo rr ii ssss iiss uu ss ee uu ,, ee oo rr ffffeerriinngg,, 11999966 11999977 11999988 Sept. Oct. Nov. Dec. Jan. Feb. Mar.' Apr. 1 All issues1 773,110 929,256 1,127,721 88,764 70,287 111,762 81,326 93,665 103,175 126,161 84,398 2 Bonds2 651,104 811,376 1,000,966 84,124 61,632 102,860 72,656 86,529 92,885 116,440 75,409 By type of offering 3 Sold in the United States 567,671 708,188 923,001 81,507 54,795 95,106 69,395 76,511 82,871 101,024 63,575 4 Sold abroad 83,433 103,188 77,965 2,618 6,837 7,754 3,261 10,018 10,014 15,416 10,834 MEMO 5 Private placements, domestic 43,688 54,990 37,845 4,122 2,428 2,878 3,874 684 648 1,224 n.a. By industry group 6 Nonfinancial 167,904 222,603 308,157 10,738 14,426 32,124 25,008 21,193 23,131 39,818 30,676 7 Financial 483,200 588,773 692,809 73,386 47,206 70,736 47,648 65,336 69,754 76,623 44,733 8 Stocks3 122,006 117,880 126,755 4,640 8,655 8,902 8,670 7,136 10,290 9,721 8,989 By type of offering 9 Public 122,006 117,880 126,755 4,640 8,655 8,902 8,670 7,136 10,290 9,721 8,989 10 Private placement4 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 2,266 5,879 6,145 7,559 3,701 8,911 8,534 7.494 12 Financial 41,546 57,494 52,642 2,374 2,776 2,757 1,111 3,435 1,379 1,187 1,495 1. Figures represent gross proceeds of issues maturing in more than one year; they are the 2. Monthly data include 144(a) offerings. principal amount or number of units calculated by multiplying by the offering price. Figures 3. Monthly data cover only public offerings. exclude secondary offerings, employee stock plans, investment companies other than closed- 4. Monthly data are not available. end, intracorporate transactions, and Yankee bonds. Stock data include ownership securities SOURCE. Beginning July 1993, Securities Data Company and the Board of Governors of issued by limited partnerships. the Federal Reserve System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic NonfinancialS tatistics • August 1999 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1998 1999 IItteemm 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. Apr.r May 1 Sales of own shares2 1,190,900 1,461,430 116,471 112,627 140,700 161,889 132,199 164,290 166,324 140,519 2 Redemptions of own shares 918,728 1,217,022 108,838 89,702 134,289 135,713 128,125 146,479 139,035 126,339 3 Net sales3 272,172 244,408 7,633 22,925 6,412 26,176 4,074 17,811 27,288 14,180 4 Assets4 3,409,315 4,173,531 3,804,591 4,002,089 4,173,531 4,298,071 4,180,115 4,328,150 4,505,237 4,442,861 5 Cash5 174,154 191,393 210,026 207,422 191,393 203,470 198,134 198,741 211,243 210,937 6 Other 3,235,161 3,982,138 3,594,565 3,794,667 3,982,138 4,094,601 3,981,982 4,129,409 4,293,994 4,231,924 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 1999 AAccccoouunntt 11999966 11999977 11999988 Q2 Q3 Q4 Ql Q2 Q3 Q4 Qlr 1 Profits with inventory valuation and capital consumption adjustment 750.4 817.9 824.6 815.5 840.9 820.8 829.2 820.6 827.0 821.7 868.8 2 Profits before taxes 680.2 734.4 717.8 729.8 758.9 736.4 719.1 723.5 720.5 708.1 752.6 3 Profits-tax liability 226.1 246.1 240.1 241.9 254.2 249.3 239.9 241.6 243.2 235.6 250.7 4 Profits after taxes 454.1 488.3 477.7 487.8 504.7 487.1 479.2 481.8 477.3 472.5 501.9 5 Dividends 261.9 275.1 279.2 274.7 275.1 276.4 277.3 278.1 279.0 282.3 285.6 6 Undistributed profits 192.3 213.2 198.5 213.2 229.5 210.6 201.8 203.7 198.3 190.2 216.4 7 Inventory valuation -1.2 6.9 14.5 10.3 4.8 4.3 25.3 7.8 11.7 13.4 11.6 8 Capital consumption adjustment 71.4 76.6 92.3 75.5 77.2 80.1 84.9 89.4 94.8 100.2 104.6 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 1999 AAccccoouunntt 11999966 11999977 11999988rr Q3 Q4 Ql Q2 Q3 Q4r Qir ASSETS 1 Accounts receivable, gross2 637.1 663.3 711.7 660.5 663.3 667.2 676.0 687.6 711.7 732.4 2 Consumer 244.9 256.8 261.8 254.5 256.8 251.7 251.3 254.0 261.8 261.7 3 Business 309.5 318.5 347.5 319.5 318.5 325.9 334.9 335.1 347.5 361.7 4 Real estate 82.7 87.9 102.3 86.4 87.9 89.6 89.9 98.5 102.3 109.0 5 LESS: Reserves for unearned income 55.6 52.7 56.3 54.6 52.7 52.1 53.2 52.4 56.3 52.8 6 Reserves for losses 13.1 13.0 13.8 12.7 13.0 13.1 13.2 13.2 13.8 13.3 7 Accounts receivable, net 568.3 597.6 641.6 593.1 597.6 601.9 609.6 622.0 641.6 666.2 8 All other 290.0 312.4 337.9 289.1 312.4 329.7 340.1 313.7 337.9 363.9 9 Total assets 858.3 910.0 979.5 882.3 910.0 931.6 949.7 935.7 979.5 1,030.1 LIABILITIES AND CAPITAL 10 Bank loans 19.7 24.1 26.3 20.4 24.1 22.0 22.3 24.9 26.3 24.8 11 Commercial paper 177.6 201.5 231.5 189.6 201.5 211.7 225.9 226.9 231.5 222.9 Debt 12 Owed to parent 60.3 64.7 61.8 61.6 64.7 64.6 60.0 58.3 61.8 64.6 13 Not elsewhere classified 332.5 328.8 339.7 322.8 328.8 338.2 348.7 337.6 339.7 366.4 14 All other liabilities 174.7 189.6 203.2 190.1 189.6 193.1 188.9 185.4 203.2 220.1 15 Capital, surplus, and undivided profits 93.5 101.3 117.0 97.9 101.3 102.1 103.9 103.6 117.0 131.4 16 Total liabilities and capital 858.3 910.0 979.5 882.3 910.0 931.6 949.7 936.6 979.5 1,030.1 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 Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted 1 Total 761.9 809.8 874.9 871.1 874.9 888.2r 898.4r 911.3r 918.5 2 Consumer 307.7 327.7 352.5 352.1 352.5 356.5r 360.7r 363.4r 363.3 3 Real estate 111.9 121.1 131.4 134.3 131.4 135.7 135.7 137.5r 141.2 4 Business 342.4 361.0 391.0 384.7 391.0 396.0 402.0 410.4r 414.1 Not seasonally adjusted 5 Total 769.7 818.1 884.0 872.8 884.0 888.4r 897.8r 911.9r 918.5 6 Consumer 310.6 330.9 356.1 352.2 356.1 355.8r 357.4r 359.7r 361.0 7 Motor vehicles loans 86.7 87.0 103.1 99.0 103.1 102.8 105.0 104.7 106.8 8 Motor vehicle leases 92.5 96.8 93.3 94.4 93.3 93.9 94.5 93.9 94.8 9 Revolving2 32.5 38.6 32.3 33.1 32.3 32.1r 31.5r 31.2r 31.5 10 Other3 33.2 34.4 33.1 34.6 33.1 32.1 32.5 32.0 32.0 Securitized assets4 11 Motor vehicle loans 36.8 44.3 54.8 53.4 54.8 56.0 54.9 59.0 57.8 12 Motor vehicle leases 8.7 10.8 12.7 14.2 12.7 12.5 12.3 12.0 11.8 13 Revolving .0 .0 8.7 5.3 8.7 8.6 8.7 9.1r 8.8 14 Other 20.1 19.0 18.1 18.4 18.1 17.9 18.1 17.8 17.6 15 Real estate 111.9 121.1 131.4 134.3 131.4 135.7 135.7 137.5r 141.2 16 One- to four-family 52.1 59.0 75.7 74.1 75.7 80.1 80.3 77.7 81.7 17 Other 30.5 28.9 26.6 30.7 26.6 26.9 27.1 31.6r 31.6 Securitized real estate assets4 18 One- to four-family 28.9 33.0 29.0 29.4 29.0 28.6 28.3 28.0 27.6 19 Other .4 .2 .1 .1 .1 .1 .1 .3 .3 20 Business 347.2 366.1 396.5 386.3 396.5 396.9 404.6 414.8r 416.3 21 Motor vehicles 67.1 63.5 79.6 70.9 79.6 79.1 82.1 84.8r 86.2 22 Retail loans 25.1 25.6 28.1 29.4 28.1 28.4 28.9 30.0 30.7 23 Wholesale loans5 33.0 27.7 32.8 30.3 32.8 31.9 34.3 36.0 36.5 24 Leases 9.0 10.2 18.7 11.2 18.7 18.9 18.9 18.8r 18.9 25 Equipment 194.8 203.9 198.0 212.0 198.0 197.6 200.7 202.3r 203.1 26 Loans 59.9 51.5 50.4 47.8 50.4 49.7 51.0 51.6 52.0 27 Leases 134.9 152.3 147.6 164.2 147.6 147.8 149.8 150.7r 151.0 28 Other business receivables6 47.6 51.1 69.9 60.4 69.9 72.5 73.3 75.7r 75.8 Securitized assets4 29 Motor vehicles 24.0 33.0 29.2 25.8 29.2 28.2 28.8 31.0 30.5 30 Retail loans 2.7 2.4 2.6 2.4 2.6 2.5 2.4 2.4 2.4 31 Wholesale loans 21.3 30.5 24.7 23.4 24.7 23.8 24.6 26.6 26.2 32 Leases .0 .0 1.9 .0 1.9 1.9 1.9 1.9 1.9 33 Equipment 11.3 10.7 13.0 11.8 13.0 12.7 12.9 12.8 12.5 34 Loans 4.7 4.2 6.6 5.4 6.6 6.3 6.2 6.1 5.8 35 Leases 6.6 6.5 6.4 6.4 6.4 6.4 6.7 6.7 6.6 36 Other business receivables6 2.4 4.0 6.8 5.3 6.8 6.8 6.8 8.2 8.3 NOTE. This table has been revised to incorporate several changes resulting from the before deductions for unearned income and losses. Components may not sum to totals benchmarking of finance company receivables to the June 1996 Survey of Finance Compa- because of rounding. nies. In that benchmark survey, and in the monthly surveys 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 • August 1999 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1998 1999 11999966 11999977 11999988 Nov. Dec. Jan. Feb. Mar. Apr. May Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 182.4 180.1 195.2 192.1 206.0 202.3 204.1 211.0 209.4 207.5 2 Amount of loan (thousands of dollars) 139.2 140.3 151.1 148.1 159.0 153.3 155.4 162.9 162.4 161.6 3 Loan-to-price ratio (percent) 78.2 80.4 80.0 79.5 79.4 78.0 78.2 79.4 79.5 79.8 4 Maturity (years) 27.2 28.2 28.4 28.3 28.7 28.4 28.7 28.8 28.9 28.7 5 Fees and charges (percent of loan amount)2 1.21 1.02 .89 .76 .98 1.01 .92 .82 .77 .69 Yield (percent per year) 6 Contract rate1 7.56 7.57 6.95 6.68 6.80 6.81 6.78 6.74 6.74 6.78 7 Effective rate1'3 7.77 7.73 7.08 6.80 6.94 6.96 6.92 6.86 6.85 6.89 8 Contract rate (HUD series)4 8.03 7.76 7.00 6.84 6.83 6.80 7.02 7.03 6.93 7.17 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 8.19 7.89 7.04 7.02 7.06 7.08 7.10 7.07 7.08 7.58 10 GNMA securities6 7.48 7.26 6.43 6.25 6.18 6.18 6.42 6.58 6.50 6.79 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 287,052 316,678 414,515 399,804 414,515 418,323 431,836 440,139 446,025 464,530 12 FHA/VA insured 30,592 31,925 33,770 33,420 33,770 33,483 34,000 34,870 36,158 38,938 13 Conventional 256,460 284,753 380,745 366,384 380,745 384,840 397,836 405,269 409,867 425,592 14 Mortgage transactions purchased (during period) 68,618 70,465 188,448 23,557 26,222 14,005 22,029 16,923 14,225 25,640 Mortgage commitments (during period) 15 Issued7 65,859 69,965 193,795 17,994 16,803 20,754 26,509 16,891 20,192 12,517 16 To sell8 130 1,298 1,880 0 434 0 0 266 75 178 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 137,755 164,421 255,010 242,270 255,010 257,062 262,921 277,624 284,006 285,881 18 FHA/VA insured 220 177 785 602 785 387 755 754r 750 1,610 19 Conventional 137,535 164,244 254,225 241,668 254,225 256,675 262,166 276,870r 282,393 284,271 Mortgage transactions (during period) 20 Purchases 125,103 117.401 267,402 23,986 34,299 27,680 25,225 29,921 26,473 22,503 21 Sales 119,702 114,258 250,565 22,660 28,024 31,430 24,231 28,740 25,464 21,972 22 Mortgage commitments contracted (during period)9 128,995 120,089 281,899 28,903 29,703 23,900 24,829 32,546 24,050 20,052 1. Weighted averages based on sample surveys of mortgages originated by major institu- 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. assuming prepayment at the end of ten years. 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mortgages; from U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Mortgage Corporation's mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured exclude swap activity. by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A35 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1998 1999 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999955 11999966 11999977 Ql Q2 Q3 Q4 Qlp 1 All holders 4,604,408r 4,898,791r 5,212,899r 5,323,116r 5,434,606r 5,568,971r 5,723,504r 5,860,041 By type of property 2 One- to four-family residences 3,510,749' 3,726,748r 3,969,525' 4,055,368' 4,135,647' 4,238,430' 4,343,358' 4,441,804 3 Multifamily residences 277,00 lr 294,396r 308,794' 314,636' 321,223' 327,661' 337,736' 347,448 4 Nonfarm, nonresidential 732,097r 790,513r 844,281' 861,819' 884,814' 908,635' 946,096' 973,710 5 84,561 87,134 90,299 91,291' 92,923' 94,244' 96,315' 97,080 By type of holder 6 Major financial institutions 1,900,089 1,981,885 2,083,978 2,114,077' 2,121,531' 2,136,776' 2,194,959' 22,,119988,,664411 7 Commercial banks2 1,090,189 1,145,389 1,245,315 1,270,586' 1,281,440' 1,295,173' 1,337,545' 1,337,140 8 One- to four-family 646,545r 677,603r 745,510' 764,656' 770,438' 770,489' 797,746' 783,291 9 Multifamily 42,521r 45,45 lr 49,670' 51,007' 51,449' 52,443' 53,123' 56,430 10 Nonfarm, nonresidential 377,293r 397,452' 423,148' 427,465' 431,234' 443,553' 457,642' 467,907 11 Farm 23,830 24,883 26,986 27,458 28,319 28,688 29,034 29,512 12 Savings institutions3 596,763 628,335 631,822 637,012 632,359 634,244 643,773 646,202 1.3 One- to four-family 482,353 513,712 520,672 527,036 522,088 525,842 533,680 534,490 14 Multifamily 61,987 61,570 59,543 59,074 58,908 56,706 56,806 56,761 15 Nonfarm, nonresidential 52,135 52,723 51,252 50,532 50,978 51,297 52,871 54,516 16 Farm 288 331 354 369 386 399 417 435 17 Life insurance companies 213,137 208,161 206,841 206,479' 207,732' 207,359' 213,640' 215,299 18 One- to four-family 8,890 6,977 7,187 6,979' 6,814' 6,594' 6,590' 6,631 19 Multifamily 28,714 30,750 30,402 30.394' 30,618' 30,565' 31,522' 31,004 20 Nonfarm, nonresidential 165,876 160,314 158,780 158,493' 159,456' 159,189' 164,004' 166,060 21 Farm 9,657 10,120 10,472 10,613' 10,844' 11,011' 11,524' 11,604 22 Federal and related agencies 308,757 295.192 286,167 286,877 287,161 287,125 292,636' 288,312 23 Government National Mortgage Association 2 2 8 8 8 7 7 7 24 One- to four-family 2 2 8 8 8 7 7 7 25 Multifamily 0 0 0 0 0 0 0 0 26 Farmers Home Administration4 41,791 41,596 41,195 40,972 40,921 40,907 40,851 40,691 27 One- to four-family 17,705 17,303 17,253 17,160 17,059 17,025 16,895 16,777 28 Multifamily 11,617 11,685 11,720 11,714 11,722 11,736 11,739 11,731 29 Nonfarm, nonresidential 6,248 6,841 7,370 7,369 7,497 7,566 7,705 7,769 30 Farm 6,221 5,768 4,852 4,729 4,644 4,579 4,513 4,413 31 Federal Housing and Veterans' Administrations 9,809 6,244 3,821 3,694 3,631 3,405 3,674' 3,675 32 One- to four-family 5,180 3,524 1,767 1,641 1,610 1,550 1,849' 1,850 33 Multifamily 4,629 2,719 2,054 2,053 2,021 1,855 1,825' 1,825 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 2,431 724 786 564 482 361 315 40 One- to four-family 492 365 109 118 85 72 54 47 41 Multifamily 428 413 123 134 96 82 61 54 42 Nonfarm, nonresidential 3,383 1,653 492 534 384 328 245 214 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 178,807 168,813 161,308 160,048 159,816 159,104 157,675 157,185 45 One- to four-family 163,648 155,008 149,831 149,254 149,383 149,069 147,594 147,063 46 Multifamily 15,159 13,805 11,477 10,794 10,433 10,035 10,081 10,122 47 Federal Land Banks 28,428 29,602 30,657 31,005 31,352 32,009 32,983' 33,128 48 One- to four-family 1,673 1,742 1,804 1,824 1,845 1,883 1,941' 1,949 49 Farm 26,755 27,860 28,853 29,181 29,507 30,126 31,042' 31,179 50 Federal Home Loan Mortgage Corporation 43,753 46,504 48,454 50,364 50,869 51,211 57,085 53,312 51 One- to four-family 39,901 41,758 42,629 44,440 44,597 44,254 49,106 44,139 52 Multifamily 3,852 4,746 5,825 5,924 6,272 6,957 7,979 9,173 53 Mortgage pools or trusts5 1,863,210 2,064,882 2,272,953' 2,330,799' 2,442,558' 2,548,192' 2,632,893' 2,761,941 54 Government National Mortgage Association 472,283 506,340 536,810 533,011 537,586 541,431 537,431 542,409 55 One- to four-family 461,438 494,158 523,156 519,152 523,243 526,934 522,483 527,461 56 Multifamily 10,845 12,182 13,654 13,859 14,343 14,497 14,948 14,948 57 Federal Home Loan Mortgage Corporation 515,051 554,260 579,385 583,144 609,791 635,726 646,459 687,179 58 One- to four-family 512,238 551,513 576,846 580,715 607,469 633,124 643,465 684,240 59 Multifamily 2,813 2,747 2,539 2,429 2,322 2,602 2,994 2,939 60 Federal National Mortgage Association 582,959 650,780 709,582 730,832 761,359 798,460 834,518 881,815 61 One- to four-family 569,724 633,210 687,981 708,125 737,631 770,979 804,205 849,513 62 Multifamily 13,235 17,570 21,601 22,707 23,728 27,481 30,313 32,302 63 Farmers Home Administration4 11 3 2 2 2 2 1 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 1 1 68 Private mortgage conduits 292,906 353,499 447,173' 483,810' 533,820' 572,573' 614,484' 650,537 69 One- to four-family6 227,800 261,900 318,000 336,824 364,316 391,736 410,900 430,653 70 Multifamily 15,584 21,967 29,218' 33,432' 38,098' 40,895' 44,654' 48,403 71 Nonfarm, nonresidential 49,522 69,633 99,955 113,554r 131,406' 139,942' 158,930' 171,482 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 532,353r 556,832' 569,802' 591,363' 583,357' 596,877' 603,017' 611,147 74 One- to four-family 372,468r 367,973' 376,773' 397,437' 389,063' 398,871' 406,843' 413,692 75 Multifamily 64,969r 68,791' 70,966' 71,116' 71,213' 71,806' 71,691' 71,756 76 Nonfarm, nonresidential 77,109r 101,898' 103,284' 103,871' 103,860' 106,761' 104,699' 105,763 77 Farm 17,806 18,169 18,779 18,939' 19,221' 19,440' 19,784' 19,937 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 • August 1999 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1998 1999 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999966 11999977 11999988 Nov. Dec. Jan.r Feb.r Mar.r Apr. Seasonally adjusted 1 Total 1,181,913 1,233,099 1,299,207 1,296,630 1,299,207 1,315,755 1,325,731 1,330,768 1,334,509 2 Automobile 392,321 413,369 447,013 442,430 447,013 454,723 460,340 465,670 467,924 3 Revolving 499,486 531,140 560,515 556,535 560,515 565,928 567,537 567,056 570,289 4 Other2 290,105 288,590 291,680 297,665 291,680 295,104 297,854 298,043 296,296 Not seasonally adjusted 5 Total 1,211,590 1,264,103 1,331,742 1,304,499 1,331,742 1,324,528 1318,872 1,318,611 1,323,067 By major holder 6 Commercial banks 526,769 512,563 508,932 498,838 508,932 508,635 500,429 494,039 495,556 7 Finance companies 152,391 160,022 168,491 166,622 168,491 166,979 169,013 167,815 170,275 8 Credit unions 144,148 152,362 155,406 155,221 155,406 155,726 155,203 155,110 157,485 9 Savings institutions 44,711 47,172 51,611 51,625 51,611 52,283 52,953 53,623 54,294 10 Nonfinancial business3 77,745 78,927 74,877 66,615 74,877 70,947 67,948 67,138 67,113 11 Pools of securitized assets4 265,826 313,057 372,425 365,578 372,425 369,958 373,326 380,886 378,344 By major type of credit5 12 Automobile 395,609 416,962 450,968 446,566 450,968 452,805 455,199 460,889 462,063 13 Commercial banks 157,047 155,254 158,072 157,126 158,072 160,273 159,922 160,231 160,768 14 Finance companies 86,690 87,015 103,094 98,954 103,094 102,822 104,987 104,652 106,836 lb Pools of securitized assets4 51,719 64,950 72,955 72,582 72,955 73,232 73,232 77,829 74,989 16 Revolving 522,860 555,858 586,528 559,211 586,528 574,901 567,549 561,542 563,775 1/ Commercial banks 228,615 219,826 210,346 196,923 210,346 204,774 197,623 190,028 191,179 18 Finance companies 32,493 38,608 32,309 33,056 32,309 32,088 31,544 31,197 31,457 19 Nonfinancial business3 44,901 44,966 39,166 33,756 39,166 36,401 34,337 33,754 33,726 20 Pools of securitized assets4 188,712 221,465 272,327 265,311 272,327 269,918 272,444 275,296 276,044 21 Other 293,121 291,283 294,246 298,722 294,246 296,822 296,124 296,180 297,229 22 Commercial banks 141,107 137,483 140,514 144,789 140,514 143,588 142,884 143,780 143,609 23 Finance companies 33,208 34,399 33,088 34,612 33,088 32,069 32,482 31,966 31,982 24 Nonfinancial business3 32,844 33,961 35,711 32,859 35,711 34,546 33,611 33,384 33,387 25 Pools of securitized assets4 25,395 26,642 27,143 27,685 27,143 26,808 27,650 27,761 27,311 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. INTEREST RATES Commercial banks2 1 48-month new car 9.05 9.02 8.72 n.a. 8.62 n.a. 8.34 2 24-month personal 13.54 13.90 13.74 n.a. 13.75 n.a. n.a. 13.41 n.a. n.a. Credit card plan 3 All accounts 15.63 15.77 15.71 n.a. 15.69 n.a. 15.41 4 Accounts assessed interest 15.50 15.57 15.59 n.a. 15.54 n.a. n.a. 14.73 n.a. n.a. Auto finance companies 5 New car 9.84 7.12 6.30 6.33 6.79 6.43 6.22 6.43 6.31 6.52 6 Used car 13.53 13.27 12.64 12.58 12.41 12.31 11.81 12.08 12.09 12.17 OTHER TERMS3 Maturity (months) 1 New car 51.6 54.1 52.1 53.1 52.8 52.2 52.1 53.4 53.0 52.8 8 Used car 51.4 51.0 53.5 54.2 54.3 54.2 56.0 55.9 56.0 56.0 Loan-to-value ratio 9 New car 91 92 92 92 91 91 92 92 91 92 10 Used car 100 99 99 100 100 100 99 99 99 99 Amount financed (dollars) 11 New car 16,987 18,077 19,083 19,199 19,590 19,734 19,628 19,304 19,339 19,435 12 Used car 12,182 12,281 12,691 12,914 13,112 13,202 13,497 13,604 13,653 13,647 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 1999 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr Q3 Q4 Ql Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. . 586.6 575.7 700.0 693.1 722.6 812.7 839.9 906.1 909.6 843.6 1,089.0 1,002.0 By sector and instrument 2 Federal government 256.1 155.9 144.4 145.0 23.1 30.3 40.8 -30.0 -70.9 -136.5 26.9 -119.2 Treasury securities 248.3 155.7 142.9 146.6 23.2 31.2 39.0 -27.6 -69.4 -136.1 14.7 -117.7 4 Budget agency securities and mortgages 7.8 .2 1.5 -1.6 -.1 -.9 1.7 -2.4 -1.4 -.4 12.2 -1.5 5 Nonfederal 330.5 419.9 555.6 548.1 699.5 782.4 799.2 936.1 980.5 980.1 1,062.1 1,121.2 By instrument 6 Commercial paper 10.0 21.4 18.1 -.9 13.7 14.5 12.8 51.1 3.8 85.6 -43.0 64.4 7 Municipal securities and loans 74.8 -35.9 -48.2 2.6 71.4 88.9 103.2 116.7 100.1 83.6 87.0 67.9 8 Corporate bonds 75.2 23.3 73.3 72.5 90.7 122.9 74.4 157.2 160.8 87.1 123.8 155.0 9 Bank loans n.e.c 6.4 75.2 101.1 62.1 106.7 29.5 139.7 1.5 194.2 127.5 114.4 38.1 in Other loans and advances -18.9 34.0 67.2 36.4 66.2 78.1 142.3 84.3 34.6 73.6 106.7 118.6 ii Mortgages 122.3 177.0 205.1 286.7 298.2 398.2 289.0 466.9 420.7 441.1 609.1 550.9 12 Home 160.0 183.3 179.7 243.0 235.8 325.6 199.3 371.4 310.4 345.2 444.1 420.4 13 Multifamily residential -5.1 -2.1 7.6 11.5 10.8 11.0 18.5 22.5 21.1 16.1 30.7 32.6 14 Commercial -33.6 -6.5 16.2 29.6 48.4 58.0 68.3 69.7 83.4 75.2 127.2 94.8 15 Farm 1.0 2.2 1.6 2.6 3.2 3.5 2.9 3.3 5.9 4.5 7.2 3.1 16 Consumer credit 60.7 124.9 138.9 88.8 52.5 50.3 37.8 58.5 66.3 81.7 64.1 126.2 By borrowing sector 17 Household 211.6 316.1 349.0 346.0 326.6 360.3 293.4 440.6 453.1 436.0 556611..22 555566..33 18 Nonfinancial business 52.7 150.0 258.1 208.9 316.8 349.5 413.5 401.2 448.5 471.4 425.5 498.1 19 Corporate 46.9 142.4 224.6 120.4 233.2 256.0 317.7 296.8 345.6 368.1 315.9 390.9 20 Nonfarm noncorporate 3.2 3.3 30.6 83.8 77.4 88.8 86.5 97.2 95.9 97.3 103.1 101.7 71 Farm 2.6 4.4 2.9 4.8 6.2 4.7 9.2 7.2 7.1 6.0 6.6 5.5 22 State and local government 66.2 -46.2 -51.5 -6.8 56.1 72.6 92.3 94.3 78.9 72.6 75.4 66.8 23 Foreign net borrowing in United States 69.8 -14.0 71.1 76.9 56.9 92.5 42.3 67.8 85.9 -28.0 -38.1 20.7 24 Commercial paper -9.6 -26.1 13.5 11.3 3.7 -11.6 .7 55.3 -25.5 6.2 -4.7 18.3 75 Bonds 82.9 12.2 49.7 55.8 46.7 100.3 32.4 14.3 107.5 -35.3 -32.9 2.0 26 Bank loans n.e.c .7 1.4 8.5 9.1 8.5 7.3 15.7 5.2 8.4 3.6 9.8 1.1 27 Other loans and advances -4.2 -1.5 -.5 .8 -2.0 -3.5 -6.5 -7.0 -4.4 -2.4 -10.3 -.7 28 Total domestic plus foreign 656.4 561.7 771.1 770.0 779.5 905.2 882.2 973.9 995.6 815.6 1,050.9 1,022.7 Financial sectors 29 Total net borrowing by financial sectors 294.4 468.4 456.5 557.3 652.0 603.1 988.3 933.0 987.5 1,055.5 1,298.2 1,202.2 By instrument 30 Federal government-related 165.3 287.5 204.1 231.5 212.8 161.0 298.1 227.3 413.4 561.6 681.6 564.9 31 Government-sponsored enterprise securities 80.6 176.9 105.9 90.4 98.4 46.4 157.9 142.5 166.4 294.0 510.5 193.0 32 Mortgage pool securities 84.7 115.4 98.2 141.1 114.4 114.6 140.3 84.8 247.0 267.5 171.2 372.0 33 Loans from U.S. government .0 -4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 129.1 180.9 252.4 325.8 439.2 442.1 690.2 705.7 574.2 493.9 616.6 637.2 35 Open market paper -5.5 40.5 42.7 92.2 166.7 168.8 244.2 237.4 134.8 141.0 130.7 79.2 36 Corporate bonds 123.1 121.8 195.9 176.9 209.0 203.8 339.0 350.3 373.5 169.8 273.7 488.7 37 Bank loans n.e.c -14.4 -13.7 5.1 20.9 13.1 25.3 25.0 76.1 -30.0 61.2 11.7 7.0 38 Other loans and advances 22.4 22.6 3.4 27.9 35.6 37.5 61.7 32.7 76.0 82.3 169.9 42.2 39 Mortgages 3.6 9.8 5.3 7.9 14.9 6.7 20.1 9.1 19.9 39.6 30.6 20.1 By borrowing sector 40 Commercial banking 13.4 20.1 22.5 13.0 46.1 32.5 61.0 83.5 80.0 61.7 66.3 3322..66 41 Savings institutions 11.3 12.8 2.6 25.5 19.7 22.3 41.7 10.6 31.2 63.7 103.2 58.0 47 Credit unions .2 .2 -.1 .1 .1 .2 .3 .5 .2 1.0 .4 1.5 4.3 Life insurance companies .2 .3 -.1 1.1 .2 .2 -.3 .0 -.6 1.6 1.8 3.3 44 Government-sponsored enterprises 80.6 172.1 105.9 90.4 98.4 46.4 157.9 142.5 166.4 294.0 510.5 193.0 45 Federally related mortgage pools 84.7 115.4 98.2 141.1 114.4 114.6 140.3 84.8 247.0 267.5 171.2 372.0 46 Issuers of asset-backed securities (ABSs) 85.4 76.5 142.4 153.9 200.7 225.0 373.1 281.8 358.4 291.0 334.1 302.2 47 Finance companies -1.4 48.7 50.2 45.9 48.7 8.9 59.6 80.1 101.8 -14.0 4.3 76.0 48 Mortgage companies .0 -11.5 .4 12.4 -4.7 11.4 -17.4 49.2 -48.0 2.0 2.0 3.1 49 Real estate investment trusts (REITs) 1.7 10.2 4.5 11.9 39.6 33.3 66.0 63.1 64.4 79.3 44.0 26.4 50 Brokers and dealers 12.0 .5 -5.0 -2.0 8.1 -6.9 7.0 -1.0 20.0 -2.6 12.4 -31.2 51 Funding corporations 6.3 23.1 34.9 64.1 80.7 115.3 99.2 137.9 -33.3 10.1 48.1 165.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • August 1999 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1—Continued 1997 1998 1999 11999977 Q3 Q4 Ql Q2 Q3 Q4 Ql All sectors 52 Total net borrowing, all sectors 950.8 1,030.2 1,227.6 1,327.3 1,431.5 1,508.4 1,870.5 1,906.9 1,983.1 1,871.1 2,349.1 2,224.9 53 Open market paper -5.1 35.7 74.3 102.6 184.1 171.7 257.7 343.8 113.1 232.7 83.0 161.9 54 U.S. government securities 421.4 448.1 348.5 376.5 235.9 191.3 338.9 197.3 342.5 425.1 708.5 445.7 55 Municipal securities 74.8 -35.9 -48.2 2.6 71.4 88.9 103.2 116.7 100.1 83.6 87.0 67.9 56 Corporate and foreign bonds 281.2 157.3 318.9 305.2 346.5 427.1 445.8 521.9 641.9 221.6 364.6 645.7 57 Bank loans n.e.c -7.2 62.9 114.7 92.1 128.2 62.2 180.5 82.8 172.5 192.3 135.9 46.2 58 Other loans and advances -.8 50.3 70.2 65.1 99.8 112.1 197.5 110.0 106.1 153.4 266.3 160.1 59 Mortgages 125.9 186.7 210.4 294.6 313.1 404.8 309.1 476.0 440.5 480.7 639.7 571.1 60 Consumer credit 60.7 124.9 138.9 88.8 52.5 50.3 37.8 58.5 66.3 81.7 64.1 126.2 Funds raised through mutual funds and corporate equities 61 Total net issues 429.7 125.2 144.3 228.9 186.4 239.4 157.7 217.7 276.8 -166.5 46.8 124.9 62 Corporate equities 137.7 24.6 -3.1 -8.7 -78.8 -60.5 -103.3 -107.5 -115.9 -319.0 -196.7 -96.1 63 Nonfinancial corporations 21.3 -44.9 -58.3 -69.5 -114.4 -124.0 -143.3 -139.2 -129.1 -308.4 -491.3 -46.1 64 Foreign shares purchased by U.S. residents 63.4 48.1 50.4 60.0 41.3 64.3 -.3 13.6 4.0 -32.9 319.1 -33.0 65 Financial corporations 53.0 21.4 4.8 .8 -5.6 -.8 40.3 18.2 9.2 22.2 -24.6 -17.1 66 Mutual fund shares 292.0 100.6 147.4 237.6 265.1 299.9 261.0 325.2 392.7 152.5 243.5 221.1 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 A39 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1997 1998 1999 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999933 11999944 11999955 11999966 11999977 Q3 Q4 QL Q2 Q3 Q4 QL NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 950.8 1,030.2 1,227.6 1,327.3 1,431.5 1,508.4 1,870.5 1,906.9 1,983.1 1,871.1 2,349.1 2,224.9 ? Domestic nonfederal nonfinancial sectors 38.3 238.1 -99.1 -30.0 -125.9 -175.5 10.5 -236.3 394.3 15.4 -326.7 190.5 Household -2.3 274.9 -3.7 3.8 -128.2 -152.9 -18.0 -253.2 295.2 -138.0 -426.0 123.0 4 Nonfinancial corporate business 9.1 17.7 -8.8 4.2 2.7 18.6 -12.8 4.2 -61.0 17.4 10.3 31.2 5 Nonfarm noncorporate business -1.1 .6 4.7 -4.3 -.6 -.6 -.6 .0 .0 .0 .0 .0 6 State and local governments 32.6 -55.0 -91.4 -33.7 .1 -40.7 42.0 12.8 160.1 136.0 89.0 36.2 7 Federal government -18.4 -27.5 -.2 -7.7 4.9 3.3 9.0 15.5 12.8 13.9 11.8 18.2 8 Rest of the world 129.3 132.3 273.9 417.3 310.1 402.9 208.7 238.6 314.2 58.6 391.8 194.4 9 Financial sectors 801.6 687.1 1,053.0 947.8 1,242.4 1,277.6 1,642.4 1,889.1 1,261.8 1,783.3 2,272.2 1,821.8 10 Monetary authority 36.2 31.5 12.7 12.3 38.3 22.9 52.9 27.4 7.7 48.3 .8 71.3 11 Commercial banking 142.2 163.4 265.9 187.5 324.3 226.2 464.9 292.9 136.1 242.7 554.9 52.1 1? U.S.-chartered banks 149.6 148.1 186.5 119.6 274.9 220.7 386.2 260.5 130.5 286.8 570.1 124.5 N Foreign banking offices in United States -9.8 11.2 75.4 63.3 40.2 4.6 58.2 11.6 18.1 -53.1 -24.2 -61.9 14 Bank holding companies .0 .9 -.3 3.9 5.4 -5.0 19.4 15.3 -17.6 6.0 -7.4 -6.0 15 Banks in U.S.-affiliated areas 2.4 3.3 4.2 .7 3.7 5.8 1.1 5.5 5.1 2.9 16.4 -4.5 16 Savings institutions -23.3 6.7 -7.6 19.9 -4.7 -35.3 -2.0 10.8 -1.8 34.0 102.1 104.2 17 Credit unions 21.7 28.1 16.2 25.5 16.8 13.6 7.7 16.5 22.7 19.3 17.4 37.0 18 Bank personal trusts and estates 9.5 7.1 -8.3 -7.7 7.6 7.3 8.8 2.4 3.1 2.0 3.9 3.1 19 Life insurance companies 100.4 72.0 100.0 69.6 94.3 92.9 34.1 88.4 62.6 70.9 86.6 105.9 20 Other insurance companies 27.7 24.9 21.5 22.5 25.2 32.0 34.7 23.4 -1.5 -7.7 67.5 20.7 ?1 Private pension funds 50.2 46.1 56.0 52.3 65.5 64.6 79.5 74.5 130.1 95.6 174.4 60.7 n State and local government retirement funds 22.7 22.3 27.5 45.9 36.6 79.1 9.5 80.7 61.6 50.9 48.0 52.1 23 Money market mutual funds 20.4 30.0 86.5 88.8 87.5 121.5 144.2 172.0 200.1 247.5 356.4 239.7 74 Mutual funds 159.5 -7.1 52.5 48.9 80.9 108.0 61.8 146.3 155.7 97.7 102.7 84.3 ?5 Closed-end funds 20.0 -3.7 10.5 4.7 -3.4 -3.4 -3.4 -2.4 -2.4 -2.4 -2.0 -2.0 26 Government-sponsored enterprises 87.8 117.8 86.7 84.2 94.3 55.6 158.5 198.9 150.2 264.0 430.0 158.4 2.7 Federally related mortgage pools 84.7 115.4 98.2 141.1 114.4 114.6 140.3 84.8 247.0 267.5 171.2 372.0 28 Asset backed securities issuers (ABSs) 82.8 69.4 120.6 123.6 162.3 162.4 320.3 222.7 327.4 245.5 311.1 284.7 29 Finance companies -20.9 48.3 49.9 18.4 21.9 68.3 -21.3 28.7 27.1 79.7 72.1 73.3 30 Mortgage companies .0 -24.0 -3.4 8.2 -9.1 82.9 -93.6 58.8 -56.4 4.5 6.0 10.0 31 Real estate investment trusts (REITs) .6 4.7 .8 -.3 9.1 6.6 15.6 11.3 13.1 2.8 -13.7 -1.4 3? Brokers and dealers 14.8 -44.2 90.1 -15.7 14.9 18.0 71.7 245.8 -183.1 77.0 -209.1 86.1 33 Funding corporations -35.1 -16.2 -23.8 13.5 54.8 30.2 134.8 90.6 -30.4 -42.4 19.1 4.3 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 950.8 1,030.2 1,227.6 1,327.3 1,431.5 1,508.4 1,870.5 1,906.9 1,983.1 1,871.1 2,349.1 2,224.9 Other financial sources 35 Official foreign exchange .8 -5.8 8.8 -6.3 .7 2.4 17.5 11..00 88..11 1111..44 88..66 --1177..44 36 Special drawing rights certificates .0 .0 2.2 -.5 -.5 .0 .0 .0 ..00 .0 .0 -4.0 37 Treasury currency .4 .7 .6 .1 .0 1.3 -1.9 .3 .2 1.7 -2.3 .0 38 Foreign deposits -18.5 52.9 35.3 85.9 107.4 116.1 103.0 -45.3 89.0 87.3 36.8 72.2 39 Net interbank transactions 50.5 89.8 9.9 -51.6 -19.7 -25.0 79.8 -124.8 30.0 49.8 -89.7 125.8 40 Checkable deposits and currency 117.3 -9.7 -12.7 15.8 41.5 -38.4 71.9 65.6 109.3 -61.7 80.7 79.8 41 Small time and savings deposits -70.3 -39.9 96.6 97.2 97.1 47.0 155.9 154.9 36.2 111.6 309.0 -1.2 42 Large time deposits -23.5 19.6 65.6 114.0 122.5 188.4 70.7 186.2 -16.5 81.5 119.2 -14.2 43 Money market fund shares 20.2 43.3 142.3 145.8 157.6 226.2 147.8 248.0 186.4 400.7 306.6 248.1 44 Security repurchase agreements 71.3 78.2 110.5 41.4 120.9 115.5 117.9 259.5 -113.6 228.6 -164.3 255.3 45 Corporate equities 137.7 24.6 -3.1 -8.7 -78.8 -60.5 -103.3 -107.5 -115.9 -319.0 -196.7 -96.1 46 Mutual fund shares 292.0 100.6 147.4 237.6 265.1 299.9 261.0 325.2 392.7 152.5 243.5 221.1 47 Trade payables 52.2 94.0 101.5 83.4 100.4 137.9 146.9 63.8 -58.0 56.7 -97.1 73.0 48 Security credit 61.4 -.1 26.7 52.4 111.0 91.1 116.8 165.3 128.3 179.6 -39.6 -89.6 49 Life insurance reserves 37.1 35.5 45.8 44.5 54.3 63.9 37.4 49.3 53.3 51.7 59.0 54.7 50 Pension fund reserves 267.4 259.6 229.2 244.3 307.6 338.1 301.1 262.2 265.8 278.8 318.7 280.2 51 Taxes payable 11.4 2.6 6.2 16.0 16.8 30.7 -.6 8.5 -1.0 36.0 8.2 12.2 52 Investment in bank personal trusts .9 17.8 4.0 -8.6 75.0 80.8 78.4 50.3 57.5 47.8 67.1 64.1 53 Noncorporate proprietors' equity 24.1 53.6 60.3 .1 6.7 15.0 -43.7 -6.3 -5.4 -59.9 15.8 19.0 54 Miscellaneous 345.3 241.3 455.6 521.5 590.1 722.7 386.1 1,164.0 294.2 661.9 975.1 192.5 55 Total financial sources 2,328.5 2,088.8 2,760.3 2,951.9 3,507.3 3,861.5 3,813.3 4,627.1 3,323.7 3,868.2 4,307.7 3,700.2 Liabilities not identified as assets (—) 56 Treasury currency -.2 -.2 -.5 -.9 -.6 .7 -2.4 -.2 -.3 1.1 --33..44 --11..22 57 Foreign deposits -5.7 43.0 25.1 59.6 107.4 93.7 147.9 -94.5 144.3 73.7 26.5 25.0 58 Net interbank liabilities 4.2 -2.7 -3.1 -3.3 -19.9 -50.0 -33.0 30.7 11.4 19.4 -49.0 54.3 59 Security repurchase agreements 46.4 69.4 17.5 .5 65.3 23.9 190.8 148.7 -170.5 106.0 -3.0 198.9 60 Taxes payable 15.8 16.6 21.1 20.4 18.8 15.2 11.6 4.4 5.3 26.4 17.3 3.4 61 Miscellaneous -163.5 -192.8 -229.6 -50.2 -235.3 -54.9 -566.5 -62.0 -203.6 -91.8 -72.7 -503.9 Floats not included in assets ( —) 62 Federal government checkable deposits -1.5 -4.8 -6.0 .5 -2.7 10.0 -7.9 7.5 -41.7 24.1 20.4 -3.2 63 Other checkable deposits -1.3 -2.8 -3.8 -4.0 -3.9 -3.0 -5.0 -4.0 -3.0 -3.2 -2.1 -2.0 64 Trade credit -4.0 1.5 -11.7 -52.6 8.5 66.9 46.4 6.6 -148.8 -76.4 -49.6 -48.4 65 Total identified to sectors as assets 2,438.1 2,161.7 2,951.3 2,981.8 3,569.7 3,758.8 4,031.5 4,589.9 3,730.6 3,788.8 4,423.2 3,977.3 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. 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 Nonfinancial Statistics • August 1999 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1997 1998 1999 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999944 11999955 11999966 11999977 Q3 Q4 Ql Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 13,016.0 13,716.0 14,409.2 15,130.2 14,881.7 15,130.2 15,358.2 15,547.0 15,754.7 16,067.3 16,325.9 By sector and instrument 2 Federal government 3,492.3 3,636.7 3,781.8 3,804.9 3,771.2 3,804.9 3,830.8 3,749.0 3,720.2 3,752.2 3,759.7 Treasury securities 3,465.6 3,608.5 3,755.1 3,778.3 3,745.1 3,778.3 3,804.8 3,723.4 3,694.7 3,723.7 3,731.6 4 Budget agency securities and mortgages 26.7 28.2 26.6 26.5 26.1 26.5 25.9 25.6 25.5 28.5 28.1 5 Nonfederal 9,523.7 10,079.3 10,627.4 11,325.4 11,110.5 11,325.4 11,527.4 11,798.1 12,034.6 12,315.1 12,566.2 By instrument 6 Commercial paper 139.2 157.4 156.4 168.6 176.6 168.6 193.1 202.5 216.9 193.0 223.9 7 Municipal securities and loans 1,341.7 1,293.5 1,296.0 1,367.5 1,340.2 1,367.5 1,397.1 1,429.3 1,439.9 1,464.3 1,481.6 8 Corporate bonds 1,253.0 1,326.3 1,398.8 1,489.5 1,470.9 1,489.5 1,528.8 1,569.0 1,590.8 1,621.8 1,660.5 y Bank loans n.e.c 759.9 861.0 923.1 1,029.8 994.0 1,029.8 1,032.2 1,086.8 1,109.9 1,139.2 1,151.5 10 Other loans and advances 669.6 736.9 773.2 839.5 802.9 839.5 866.1 873.5 886.1 914.2 949.7 11 Mortgages 4,376.4 4,581.4 4,868.2 5.166.4 5,099.0 5,166.4 5,274.2 5,380.3 5,504.4 5,650.9 5,780.5 12 Home 3,332.1 3,511.8 3,721.2 3,957.0 3,912.1 3,957.0 4,040.9 4,119.4 4,219.5 4,324.8 4,421.7 13 Multifamily residential 261.5 269.1 284.3 295.1 290.4 295.1 300.7 306.0 310.0 317.7 325.8 14 Commercial 699.8 716.0 775.6 824.1 807.0 824.1 841.5 862.3 881.1 912.9 936.6 15 Farm 83.0 84.6 87.1 90.3 89.6 90.3 91.1 92.6 93.7 95.5 96.3 16 Consumer credit 983.9 1,122.8 1,211.6 1,264.1 1,226.7 1,264.1 1,236.0 1,256.8 1,286.6 1,331.7 1,318.6 By borrowing sector 17 Household 4,429.1 4,783.0 5,100.2 5,429.5 5,333.0 5,429.5 5,487.5 5,608.2 5,738.5 5,902.3 5,987.8 18 Nonfinancial business 3,972.9 4,226.1 4,463.8 4,776.4 4,682.0 4,776.4 4,895.6 5,019.0 5,117.3 5,213.0 5,360.8 IS) Corporate 2,708.9 2,928.6 3,077.7 3,306.7 3,235.5 3,306.7 3,402.6 3,496.7 3,569.4 3,638.2 3,762.0 20 Nonfarm noncorporate 1,121.8 1,152.4 1,236.1 1,313.6 1.291.3 1,313.6 1,337.9 1,361.8 1,385.5 1,411.9 1,437.4 21 Farm 142.2 145.1 149.9 156.1 155.2 156.1 155.1 160.6 162.5 162.9 161.3 22 State and local government 1,121.7 1,070.2 1,063.4 1,119.5 1,095.5 1,119.5 1,144.3 1,170.8 1,178.8 1,199.8 1,217.6 23 Foreign credit market debt held in United States 370.8 441.9 518.8 569.6 557.7 569.6 584.1 606.6 600.2 591.6 596.2 24 Commercial paper 42.7 56.2 67.5 65.1 64.3 65.1 76.7 71.4 74.0 72.9 77.2 25 Bonds 242.3 291.9 347.7 394.4 386.3 394.4 398.0 424.9 416.0 407.8 408.3 26 Bank loans n.e.c 26.1 34.6 43.7 52.1 48.2 52.1 53.4 55.5 56.4 58.9 59.1 27 Other loans and advances 59.8 59.3 60.0 58.0 58.9 58.0 55.9 54.8 53.8 52.0 51.5 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 13,386.9 14,158.0 14,928.0 15,699.9 15,439.4 15,699.9 15,942.3 16,153.6 16,355.0 16,658.9 16,922.1 Financial sectors 29 Total credit market debt owed by financial sectors 3,822.2 4,281.3 4,838.6 5,457.5 5,214.2 5,457.5 5,685.7 5,937.4 6,206.2 6,526.1 6,821.6 By instrument 30 Federal government-related 2,172.7 2,376.8 2,608.3 2,821.0 2,746.5 2,821.0 2,877.9 2,981.2 3,121.6 3,292.0 3,433.2 31 Government-sponsored enterprise securities 700.6 806.5 896.9 995.3 955.8 995.3 1,030.9 1,072.5 1,146.0 1,273.6 1,321.8 32 Mortgage pool securities 1,472.1 1,570.3 1,711.4 1,825.8 1,790.7 1,825.8 1,847.0 1,908.7 1,975.6 2,018.4 2,111.4 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,649.5 1,904.5 2,230.4 2,636.5 2,467.7 2,636.5 2,807.9 2,956.2 3,084.6 3,234.1 3,388.3 35 Open market paper 441.6 486.9 579.1 745.7 684.7 745.7 804.9 838.9 874.2 906.7 926.4 36 Corporate bonds 1,008.8 1,204.7 1,381.5 1,557.5 1,477.3 1,557.5 1,640.9 1,738.7 1,786.2 1,849.4 1,967.2 37 Bank loans n.e.c 48.9 54.0 74.9 88.0 80.9 88.0 106.3 99.0 113.9 117.7 118.8 38 Other loans and advances 131.6 135.0 162.9 198.5 183.0 198.5 206.6 225.6 246.2 288.7 299.3 39 Mortgages 18.7 24.1 31.9 46.8 41.8 46.8 49.1 54.1 64.0 71.6 76.6 By borrowing sector 40 Commercial banks 94.5 102.6 113.6 140.6 130.0 140.6 148.7 159.6 169.6 188.6 187.6 41 Bank holding companies 133.6 148.0 150.0 168.6 164.0 168.6 181.2 190.5 196.1 193.5 202.6 42 Savings institutions 112.4 115.0 140.5 160.3 149.8 160.3 162.9 170.7 186.6 212.4 226.9 43 Credit unions .5 .4 .4 .6 .5 .6 .7 .8 1.0 1.1 1.5 44 Life insurance companies .6 .5 1.6 1.8 1.9 1.8 1.8 1.6 2.0 2.5 3.3 45 Government-sponsored enterprises 700.6 806.5 896.9 995.3 955.8 995.3 1,030.9 1,072.5 1,146.0 1,273.6 1,321.8 46 Federally related mortgage pools 1,472.1 1.570.3 1,711.4 1,825.8 1.790.7 1,825.8 1,847.0 1,908.7 1,975.6 2,018.4 2,111.4 4/ Issuers of asset-backed securities (ABSs) 570.1 712.5 866.4 1,078.2 981.0 1,078.2 1,143.0 1,230.4 1,307.0 1,394.6 1,464.2 48 Brokers and dealers 34.3 29.3 27.3 35.3 33.6 35.3 35.1 40.1 39.4 42.5 34.7 49 Finance companies 433.7 483.9 529.8 554.5 532.7 554.5 571.9 596.9 589.4 597.5 614.1 50 Mortgage companies 18.7 19.1 31.5 26.8 31.2 26.8 39.1 27.1 27.6 28.1 28.9 51 Real estate investment trusts (REITs) 40.0 44.6 56.5 96.1 79.6 96.1 111.9 128.0 147.8 158.8 165.4 52 Funding corporations 211.0 248.6 312.7 373.7 363.4 373.7 411.6 410.5 417.9 414.4 459.1 All sectors 53 Total credit market debt, domestic and foreign ... 17,209.1 18,439.3 19,766.6 21,157.4 20,653.6 21,157.4 21,628.0 22,091.0 22,561.1 23,184.9 23,743.7 54 Open market paper 623.5 700.4 803.0 979.4 925.7 979.4 1,074.8 1,112.7 1,165.1 1,172.6 1,227.6 55 U.S. government securities 5,665.0 6,013.6 6,390.0 6,625.9 6,517.7 6,625.9 6,708.6 6,730.2 6,841.8 7,044.2 7,192.9 56 Municipal securities 1,341.7 1,293.5 1,296.0 1,367.5 1,340.2 1,367.5 1,397.1 1,429.3 1,439.9 1,464.3 1,481.6 57 Coiporate and foreign bonds 2,504.0 2,822.9 3,128.1 3,441.5 3,334.5 3,441.5 3,567.7 3,732.6 3,793.1 3,879.0 4,036.1 58 Bank loans n.e.c 834.9 949.6 1,041.7 1.169.8 1,123.1 1,169.8 1,191.9 1,241.3 1,280.3 1,315.7 1,329.4 59 Other loans and advances 860.9 931.1 996.2 1,095.9 1,044.9 1,095.9 1,128.7 1,153.9 1,186.1 1,254.9 1,300.4 60 Mortgages 4.395.1 4,605.5 4,900.1 5.213.2 5,140.8 5,213.2 5,323.2 5,434.3 5,568.3 5,722.5 5,857.1 61 Consumer credit 983.9 1,122.8 1,211.6 1,264.1 1,226.7 1,264.1 1,236.0 1,256.8 1,286.6 1,331.7 1,318.6 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1997 1998 1999 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999944 11999955 11999966 11999977 Q3 Q4 Ql Q2 Q3 Q4 Ql CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 17,209.1 18,439.3 19,766.6 21,157.4 20,653.6 21,157.4 21,628.0 22,091.0 22,561.1 23,184.9 23,743.7 ? Domestic nonfederal nonfinancial sectors 3,031.0 2,890.6 2,900.7 2,724.8 2,710.6 2,724.8 2,662.1 2,718.7 2,739.1 2,686.4 2,733.4 Household 1,974.3 1,929.3 1,982.7 1,804.4 1,814.5 1,804.4 1,759.6 1,786.8 1,769.5 1,673.9 1,727.6 4 Nonfinancial corporate business 289.2 280.4 275.2 278.0 265.1 278.0 259.1 245.4 251.2 270.7 257.2 Nonfarm noncorporate business 37.6 42.3 38.0 37.4 37.5 37.4 37.4 37.4 37.4 37.4 37.4 6 State and local governments 729.9 638.6 604.8 605.0 593.5 605.0 606.0 649.1 681.1 704.4 711.2 7 203.4 203.2 195.5 200.4 198.2 200.4 204.3 207.5 210.9 213.9 218.5 8 Rest of the world 1,216.0 1,530.3 1,933.8 2,259.0 2,196.4 2,259.0 2,324.0 2,401.2 2,416.4 2,509.8 2,563.6 9 12,758.7 13,815.2 14,736.6 15,973.2 15,548.4 15,973.2 16,437.6 16,763.6 17,194.7 17,774.8 18,228.1 10 Monetary authority 368.2 380.8 393.1 431.4 412.7 431.4 433.8 440.3 446.5 452.5 466.0 11 Commercial banking 3,254.3 3,520.1 3,707.7 4,031.9 3,912.9 4,031.9 4,093.3 4,136.4 4,195.7 4,337.1 4,340.2 1? U.S.-chartered banks 2,869.6 3,056.1 3,175.8 3,450.7 3,351.9 3,450.7 3,505.0 3,543.6 3,616.2 3,761.3 3,782.9 N Foreign banking offices in United States 337.1 412.6 475.8 516.1 501.0 516.1 517.9 525.6 510.1 504.2 488.1 14 Bank holding companies 18.4 18.0 22.0 27.4 22.5 27.4 31.2 26.8 28.3 26.5 25.0 N Banks in U.S.-affiliated areas 29.2 33.4 34.1 37.8 37.5 37.8 39.2 40.4 41.1 45.2 44.1 16 Savings institutions 920.8 913.3 933.2 928.5 929.0 928.5 931.2 930.8 939.3 964.8 990.8 17 Credit unions 246.8 263.0 288.5 305.3 303.9 305.3 306.7 315.1 320.5 324.2 330.7 18 Bank personal trusts and estates 248.0 239.7 232.0 239.5 237.3 239.5 240.1 240.9 241.4 242.4 243.1 19 Life insurance companies 1,487.5 1,587.5 1,657.0 1,751.3 1,746.7 1,751.3 1,777.3 1,793.2 1,810.6 1,828.4 1,858.9 70 Other insurance companies 446.4 468.7 491.2 515.3 506.6 515.3 521.1 520.8 518.9 535.7 540.9 ?L 660.9 716.9 769.2 834.7 814.8 834.7 853.4 885.9 909.8 953.4 968.6 ?? State and local government retirement funds 455.8 483.3 529.2 565.8 562.0 565.8 582.2 600.2 613.1 626.1 635.1 73 Money market mutual funds 459.0 545.5 634.3 721.9 678.7 721.9 775.0 815.9 869.9 965.9 1,036.2 74 718.8 771.3 820.2 901.1 890.4 901.1 940.0 979.1 1,005.9 1,026.7 1,049.9 75 86.0 96.4 101.1 97.7 98.5 97.7 97.1 96.5 95.9 95.4 94.9 76 Government-sponsored enterprises 663.3 750.0 807.9 902.2 862.5 902.2 951.4 989.4 1,055.4 1,163.0 1,202.0 ?7 Federally related mortgage pools 1,472.1 1,570.3 1,711.4 1,825.8 1,790.7 1,825.8 1,847.0 1,908.7 1,975.6 2,018.4 2,111.4 ?8 Asset backed securities issuers (ABSs) 532.8 653.4 777.0 939.3 855.3 939.3 989.3 1,068.9 1,134.2 1,216.0 1,281.2 79 Finance companies 476.2 526.2 544.5 566.4 564.4 566.4 572.0 579.0 592.7 618.4 635.4 30 Mortgage companies 36.5 33.0 41.2 32.1 55.5 32.1 46.8 32.7 33.8 35.3 37.8 31 Real estate investment trusts (REITs) 13.3 14.1 13.8 22.9 19.0 22.9 25.7 29.0 29.7 26.3 25.9 3? Brokers and dealers 93.3 183.4 167.7 182.6 164.7 182.6 244.0 198.3 217.5 165.2 186.8 33 Funding corporations 107.5 86.3 99.8 149.9 120.9 149.9 179.0 173.2 162.4 160.5 171.9 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 17,209.1 18,439.3 19,766.6 21,157.4 20,653.6 21,157.4 21,628.0 22,091.0 22,561.1 23,184.9 23,743.7 Other liabilities 35 Official foreign exchange 53.2 63.7 53.7 48.9 46.1 48.9 48.2 50.1 54.5 6600..11 5533..66 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 8.2 37 Treasury currency 17.6 18.2 18.3 18.3 18.7 18.3 18.4 18.4 18.8 18.3 18.3 38 373.9 418.8 516.1 619.4 597.8 619.4 608.1 630.4 652.2 661.4 679.4 39 280.1 290.7 240.8 219.4 189.0 219.4 177.9 189.2 196.5 187.6 206.5 40 Checkable deposits and currency 1,242.0 1,229.3 1,245.1 1,286.6 1,234.2 1,286.6 1,259.4 1,321.0 1,282.7 1,335.1 1,313.3 41 Small time and savings deposits 2,183.2 2,279.7 2,377.0 2,474.1 2,438.8 2,474.1 2,525.2 2,530.8 2,553.5 2,627.0 2,639.3 4? Large time deposits 411.2 476.9 590.9 713.4 696.1 713.4 760.9 754.0 776.5 806.0 803.4 43 Money market fund shares 602.9 745.3 891.1 1,048.7 1,005.1 1,048.7 1,130.7 1,153.7 1,249.7 1,334.2 1,416.0 44 Security repurchase agreements 549.5 660.0 701.5 822.4 797.7 822.4 891.0 861.5 919.8 875.0 941.2 4455 1,477.3 1,852.8 2,342.4 2,989.4 2,973.6 2,989.4 3,339.3 3,438.4 3,137.3 3,610.0 3,763.3 4466 279.0 305.7 358.1 469.1 431.8 469.1 505.3 540.6 579.0 577.5 550.2 47 Life insurance reserves 520.3 566.2 610.6 665.0 655.6 665.0 677.3 690.6 703.5 718.3 731.9 48 Pension fund reserves 5,057.5 5,821.1 6,567.8 7,680.9 7,556.4 7,680.9 8,246.8 8,344.4 7,805.4 8,724.2 8,873.0 49 Trade payables 1,140.6 1,242.2 1,325.6 1,426.0 1,362.5 1,426.0 1,409.3 1,400.5 1,414.4 1,417.3 1,402.5 50 101.4 107.6 123.6 140.4 143.4 140.4 151.2 143.5 154.3 153.3 165.5 51 Investment in bank personal trusts 699.4 803.0 871.7 1,082.8 1,058.9 1,082.8 1,179.5 1,204.9 1,118.9 1,274.2 1,317.0 52 Miscellaneous 5,292.2 5,656.0 6,144.2 6,800.8 6,787.7 6,800.8 7,039.7 7,094.8 7,370.9 7,287.2 7,350.5 53 Total liabilities 37,498.7 40,986.5 44,754.6 49,672.1 48,656.2 49,672.1 51,605.3 52,466.9 52,558.3 54,860.6 55,976.5 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 21.1 22.1 21.4 21.1 21.0 21.1 21.2 21.0 21.2 2211..66 2200..77 55 6,237.9 8,331.3 10,062.4 12,776.0 12,649.4 12,776.0 14,397.6 14,556.1 12,758.4 15,437.7 15,970.3 56 Household equity in noncorporate business 3,410.5 3,658.3 3,865.2 4,214.9 4,142.3 4,214.9 4,231.1 4,268.5 4,291.6 4,315.1 4,314.3 Liabilities not identified as assets (—) 57 Treasury currency -5.4 -5.8 -6.7 -7.3 -6.7 -7.3 -7.4 -7.4 --77..22 --88..00 --88..33 58 Foreign deposits 325.4 360.2 431.4 534.6 501.8 534.6 511.0 547.1 565.5 572.2 578.4 59 Net interbank transactions -6.5 -9.0 -10.6 -32.2 -22.1 -32.2 -21.2 -17.1 -15.4 -27.2 -11.2 60 Security repurchase agreements 67.8 85.3 85.9 151.2 113.0 151.2 191.8 144.0 180.8 171.5 224.0 61 48.8 62.4 76.7 93.5 88.2 93.5 89.1 94.7 101.5 103.8 96.5 62 Miscellaneous -1,106.4 -1,460.3 -1,706.6 -1,913.0 -1,461.4 -1,913.0 -1,895.2 -1,916.3 -1,921.8 -2,201.6 -2,340.3 Floats not included in assets ( —) 63 Federal government checkable deposits 3.4 3.1 -1.6 -8.1 -7.8 -8.1 -10.4 -16.1 -12.0 --33..99 --77..22 64 Other checkable deposits 38.0 34.2 30.1 26.2 19.5 26.2 21.4 24.2 15.7 23.1 18.9 65 Trade credit -245.9 -257.6 -310.1 -312.7 -396.2 -312.7 -364.0 -413.2 -438.8 -379.7 -445.4 66 Total identified to sectors as assets 48,048.8 54,185.8 60,115.1 68,151.9 66,640.6 68,151.9 71,740.0 72,872.7 71,161.2 76,384.8 78,176.5 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. L.l and L.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • August 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 Sept. Oct. Nov. Dec. Jan. Feb.r Mar.r Apr/ May 1 Industrial production1 119.5 126.8 131.3 131.9 132.4 132.2 132.3 132.3 132.5 133.3 133.8 134.1 Market groupings 2 Products, total 114.4 119.6 123.5 124.1 124.9 124.5 124.4 124.5 124.6 125.3 125.7 125.8 3 Final, total 115.5 121.1 125.4 126.0 126.7 126.1 125.9 125.8 125.9 126.5 126.9 127.1 4 Consumer goods 111.3 114.1 115.2 114.8 115.2 114.8 114.9 115.2 115.3 115.6 115.9 116.1 5 Equipment 122.7 133.9 144.2 146.2 147.5 146.5 145.6 145.0 145.1 146.1 146.7 146.9 6 Intermediate 110.9 115.2 118.0 118.3 119.0 119.3 119.8 120.3 120.4 121.4 121.8 121.5 7 Materials 127.8 138.2 144.0 144.4 144.5 144.6 145.2 144.9 145.3 146.5 147.1 147.8 Industry groupings 8 Manufacturing 121.4 129.7 135.1 135.2 136.1 136.4 136.7 136.4 136.9 137.5 138.1 138.6 9 Capacity utilization, manufacturing (percent)2. . 81.4 82.0 80.8 80.1 80.3 80.1 80.0 79.5 79.5 79.5 79.6 79.7 10 Construction contracts3 130.8r 142.8 155.r 154.0r 155.0r 161.01 163.0r 165.0r 157.0 153.0 153.0 151.0 11 Nonagricultural employment, total4 117.3 120.3 123.4 123.9 124.1 124.4 124.8r 124.9 125.3 125.4 125.7 125.7 12 Goods-producing, total 2.4 2.4 2.3 102.7r 102.6r 102.5r 102.8r 102.6r 102.7 102.5 102.5 102.1 13 Manufacturing, total 97.4 98.2 98.5 98.6r 98.4r 98.lr 98.0r 97.8r 97.6 97.4 97.2 97.0 14 Manufacturing, production workers 98.6 99.6 99.6 99.5r 99.2r 98.9r 98.8r 98.6r 98.3 98.2 98.0 97.7 15 Service-producing 123.1 126.5 130.1 130.7r ni.o1 131,4r 131.8 132.1 132.5 132.7 133.1 133.2 16 Personal income, total 165.2 174.5 183.3 184.8 185.6 187.2 187.1 188.2r 189.1 189.6 190.7 191.4 17 Wages and salary disbursements 159.8 171.2 182.6 184.6 185.7 186.7 187.6 189.0 190.2 190.6 191.8 192.8 18 Manufacturing 135.7 144.7 151.1 152.1 151.8 151.6 151.7 152.4 152.8 152.9 153.5 154.4 19 Disposable personal income5 164.0 171.7 178.6 179.9 180.7 182.4 182.1 183.2r 183.9 184.6 185.5 186.1 20 Retail sales5 159.6 166.9 175.1 175.6 177.7 178.9 180.9 183.3 186.4 186.4 187.1 188.9 Prices6 21 Consumer (1982-84=100) 156.9 160.5 163.0 163.6 164.0 164.0 163.9 164.3 164.5 165.0 166.2 166.2 22 Producer finished goods (1982=100) 131.3 131.8 130.7 130.6 131.4 130.9 131.1 131.4r 130.9 131.2 131.8 132.4 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 the U.S. Department of Labor, Employment and Earnings. Series January 1999 issue of the Bulletin. For a description of the methods of estimating industrial covers 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 1998r 1999r CCaatteeggoorryy 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 133,943 136,297 137,673 138,116 138,193 138,547 139,347 139,271 138,816 139,091 139,019 Employment 2 Nonagricultural industries3 123,264 126,159 128,085 128,300 128,765 129,304 130,097 129,817 129,752 129,685 129,929 3 Agriculture 3,443 3,399 3,378 3,558 3,348 3,222 3,299 3,328 3,281 3,384 3,295 Unemployment 4 Number 7,236 6,739 6,210 6,258 6,080 6,021 5,950 6,127 5,783 6,022 5,795 5 Rate (percent of civilian labor force) 5.4 4.9 4.5 4.5 4.4 4.3 4.3 4.4 4.2 4.3 4.2 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 119,608 122,690 125,833 126,567 126,841 127,186 127,378 127,730 127,813 128,156 128,167 7 Manufacturing 18,495 18,657 18,716 18,686 18,639 18,611 18,585 18,538 18,503 18,475 18,430 8 Mining 580 592 575 578 574 570 560 553 550 538 531 9 Contract construction 5,418 5,686 5,965 6,042 6,085 6,173 6,170 6,238 6,232 6,276 6,236 10 Transportation and public utilities 6,253 6,395 6,551 6,657 6,671 6,684 6,708 6,723 6,732 6,752 6,765 11 Trade 28,079 28,659 29,299 29,268 29,334 29,426 29,480 29,585 29,558 29,703 29,717 12 Finance 6,911 7,091 7,341 7,494 7,520 7,542 7,570 7,581 7,595 7,614 7,626 13 Service 34,454 36,040 37,525 37,929 38,070 38,207 38,313 38,458 38,556 38,699 38,770 14 Government 19,419 19,570 19,862 19,913 19,948 19,973 19,992 20,054 20,087 20,099 20,092 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 1998 1999 1998 1999 SSeerriieess Q2 Q3 Q4 Qlr Q2 Q3 Q4r Qlr Q2 Q3 Q4r Qlr Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 131.3 131.6 132.3 132.7 159.6 161.5 163.5 165.2 82.3 81.5 80.9 80.3 2 Manufacturing 134.7 134.8 136.4 137.0 165.8 168.1 170.3 172.3 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 141.4 142.1 144.4 144.6 176.4 179.2 182.0 184.5 80.2 79.3 79.3 78.4 5 Durable goods 156.1 157.9 161.2 162.0 193.9 197.5 201.2 204.4 80.5 79.9 80.1 79.2 6 Lumber and products 116.4 117.7 119.2 121.7 143.0 143.9 144.9 146.0 81.4 81.8 82.3 83.3 7 Primary metals 125.3 122.4 119.3 120.5 142.0 143.2 144.4 145.4 88.3 85.5 82.6 82.9 8 Iron and steel 124.0 118.7 112.9 115.6 142.8 144.6 146.5 147.9 86.9 82.1 77.0 78.1 9 Nonferrous 127.0 126.8 126.9 126.3 140.8 141.3 141.7 142.1 90.1 89.7 89.6 88.9 10 Industrial machinery and equipment 203.0 207.9 211.7 214.0 234.7 242.9 251.6 259.8 86.5 85.6 84.1 82.4 11 Electrical machinery 282.8 292.7 304.8 310.5 366.6 381.6 396.6 411.0 77.1 76.7 76.9 75.5 12 Motor vehicles and parts 135.3 137.2 148.5 147.3 183.9 184.9 186.0 186.7 73.6 74.2 79.8 78.9 13 Aerospace and miscellaneous transportation equipment . . 106.1 106.6 105.8 103.0 127.5 128.0 128.5 128.8 83.2 83.3 82.4 80.0 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 113.2 112.1 110.2 109.2 134.9 135.1 135.2 135.0 83.9 83.0 81.5 80.9 16 Paper and products 115.0 115.0 114.3 116.3 131.6 132.5 133.4 134.2 87.4 86.8 85.7 86.7 17 Chemicals and products 116.9 114.4 114.0 114.1 148.0 148.9 149.7 150.3 79.0 76.8 76.1 75.9 18 Plastics materials 127.5 128.4 131.9 129.6 140.7 141.9 143.2 144.4 90.6 90.5 92.1 89.8 19 Petroleum products 112.0 112.7 111.9 115.7 116.5 116.8 117.1 117.4 96.1 96.5 95.6 98.5 70 Mining 105.3 103.6 100.7 98.5 119.9 120.1 120.6 120.9 87.8 86.2 83.5 81.5 71 Utilities 115.6 119.6 112.9 114.3 126.2 126.5 126.7 126.9 91.6 94.6 89.2 90.0 22 Electric 118.3 121.2 116.7 116.4 123.8 124.0 124.3 124.5 95.6 97.7 93.9 93.5 1973 1975 Previous cycle5 Latest cycle6 1998 1998 1999 High Low High Low High Low May Dec. Jan. Feb.' Mar.r Apr.1" Mayp Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.1 85.4 78.1 82.6 80.7 80.3r 80.2 80.5 80.5 80.5 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 81.6 80.0 79.5 79.5 79.5 79.6 79.7 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 84.3 82.9 83.0 82.7 82.7 82.7 82.7 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 80.7 79.0 78.2 78.4 78.5 78.6 78.7 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 81.1 79.8 79.3 79.1 79.3 79.5 79.5 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 81.4 83.6 83.8 83.6 82.6 82.5 82.8 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 89.1 81.9 83.2 81.5 83.9 83.2 83.4 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 87.9 77.9 79.1 76.1 79.2 78.5 79.1 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 90.6 87.0 88.3 88.4 89.9 89.0 88.8 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 86.3 83.6 82.5 82.3 82.3 82.3 81.3 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 76.9 76.5 76.0 75.2 75.4 76.7 77.2 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 78.3 78.7 77.9 79.2 79.6 79.5 81.2 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 83.4 81.5 80.1 80.6 79.3 78.3 77.8 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 82.7 80.6 80.1 80.4 80.4 80.3 80.4 11 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 84.8 80.9 80.9 81.9 79.8 81.7 80.9 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 87.4 86.2 86.7 86.7 86.6 84.6 84.8 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 79.0 76.1 74.9 76.1 76.7 76.8 76.8 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 90.5 93.1 88.2 91.7 89.4 89.2 88.1 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 95.7 96.0 99.5 99.1 97.0 97.5 98.5 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 87.9 82.0 81.5 81.8 81.2 80.7 80.7 71 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 91.3 88.2 90.5 87.7 92.0 92.2 90.1 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 96.0 92.6 93.4 91.6 95.4 95.7 93.6 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 • August 1999 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1998 1999 pro- 1998 GGrroouupp por- avg. tion May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb/ Mar.r Apr/ Mayp Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.2 132.3 132.3 132.5 133.3 133.8 134.1 2 Products 60.5 123.5 124.5 123.6 123.3 124.9 124.1 124.9 124.5 124.4 124.5 124.6 125.3 125.7 125.8 3 Final products 46.3 125.4 126.6 125.5 124.7 126.8 126.0 126.7 126.1 125.9 125.8 125.9 126.5 126.9 127.1 4 Consumer goods, total 29.1 115.2 116.8 115.1 114.0 116.1 114.8 115.2 114.8 114.9 115.2 115.3 115.6 115.9 116.1 5 Durable consumer goods 6.1 135.7 138.3 130.7 124.6 140.1 137.4 140.5 138.9 139.8 141.5 143.3 142.2 144.7 145.9 6 Automotive products 2.6 132.9 136.8 121.7 107.3 141.7 136.4 141.1 139.6 139.8 141.7 140.4 139.2 141.2 144.2 7 Autos and trucks 1.7 137.8 143.5 118.2 92.8 151.4 143.4 150.6 149.1 147.7 149.4 149.3 147.9 150.4 155.0 8 Autos, consumer .9 109.2 108.4 93.8 75.8 124.4 128.3 119.9 113.7 115.5 111.7 109.0 110.8 112.8 108.8 9 Trucks, consumer .7 166.2 177.1 142.2 110.0 178.9 161.1 181.0 183.2 179.1 185.2 187.2 183.3 186.3 197.9 10 Auto parts and allied goods .... .9 125.0 126.0 125.4 125.6 127.6 125.9 127.4 125.9 128.2 130.5 127.5 126.6 127.9 128.8 11 Other 3.5 137.8 139.4 137.8 138.7 138.5 138.0 139.7 137.9 139.5 141.0 145.4 144.3 147.3 147.0 12 Appliances, televisions, and air conditioners 1.0 206.2 202.7 199.9 207.8 209.4 209.9 215.2 222.5 226.0 229.6 241.4 238.6 247.5 243.0 13 Carpeting and furniture .8 117.1 119.1 117.0 117.3 116.7 116.3 120.3 117.5 116.8 120.7 123.1 118.3 119.9 120.5 14 Miscellaneous home goods 1.6 114.7 117.9 117.1 115.9 115.3 114.5 113.6 109.5 111.4 110.9 113.5 115.1 116.5 117.2 15 Nondurable consumer goods 23.0 110.1 111.5 111.2 111.2 110.3 109.3 109.1 109.0 108.9 108.9 108.6 109.1 109.0 109.0 16 Foods and tobacco 10.3 109.0 110.8 108.5 108.5 107.5 106.9 108.0 109.6 109.6 110.0 110.2 109.8 109.3 109.7 17 Clothing 2.4 97.8 98.8 98.8 98.4 97.7 97.1 95.4 94.5 94.6 93.4 92.6 91.5 92.5 91.2 18 Chemical products 4.5 120.5 122.5 122.8 122.2 119.0 118.0 117.2 119.3 118.7 115.3 117.4 118.9 118.9 119.4 19 Paper products 2.9 105.8 105.7 105.3 106.3 106.6 105.9 105.2 104.1 103.6 102.0 101.0 99.5 100.5 100.7 20 Energv 2.9 112.2 112.5 118.2 118.4 120.1 116.8 115.0 106.5 107.1 113.3 108.9 115.1 114.2 111.9 21 Fuels .8 110.5 110.9 111.4 112.9 112.1 108.3 108.4 109.1 109.6 112.2 113.3 110.5 109.7 112.0 22 Residential utilities 2.1 112.3 112.9 121.2 120.7 123.7 120.7 117.8 104.5 105.2 113.3 106.0 117.0 115.9 111.3 23 Equipment 17.2 144.2 144.2 144.1 143.9 146.0 146.2 147.5 146.5 145.6 145.0 145.1 146.1 146.7 146.9 24 Business equipment 13.2 163.5 163.1 163.6 163.5 166.6 167.4 169.0 168.1 167.9 167.3 167.6 168.5 169.9 170.1 25 Information processing and related 5.4 209.9 209.2 210.3 211.8 213.1 217.3 219.0 219.7 220.8 222.0 222.1 226.1 231.4 235.5 26 Computer and office equipment 1.1 646.0 620.6 638.6 654.6 671.6 693.6 716.7 745.2 759.9 777.0 787.2 811.4 832.7 851.4 27 Industrial 4.0 140.0 138.1 142.9 144.2 142.3 139.5 141.6 139.9 141.3 139.9 137.9 137.8 139.3 136.9 28 Transit 2.5 133.7 135.5 128.2 121.9 141.6 140.1 141.6 140.5 139.6 137.6 137.7 136.0 135.8 135.1 29 Autos and trucks 1.2 124.6 125.1 108.6 91.7 136.9 135.6 136.1 136.4 136.0 134.8 133.2 133.1 134.9 135.9 30 Other 1.3 138.9 139.6 141.7 146.6 132.6 140.9 141.1 138.5 131.7 131.5 140.2 142.2 136.4 136.3 31 Defense and space equipment 3.3 75.7 76.0 75.8 76.1 76.5 75.5 76.4 75.7 74.6 74.4 74.8 74.9 74.3 74.3 32 Oil and gas well drilling .6 134.7 147.1 136.7 131.9 127.7 123.4 119.4 115.2 103.2 99.2 97.4 104.2 97.2 99.8 33 Manufactured homes .2 149.2 149.0 146.1 151.1 145.7 147.8 150.9 154.6 156.6 159.1 154.1 152.8 151.1 149.9 34 Intermediate products, total 14.2 118.0 118.2 118.0 119.1 119.1 118.3 119.0 119.3 119.8 120.3 120.4 121.4 121.8 121.5 35 Construction supplies 5.3 127.2 126.6 126.1 128.5 128.0 126.9 128.4 129.6 131.0 132.4 132.7 132.1 132.5 132.2 36 Business supplies 8.9 112.6 113.3 113.2 113.6 113.8 113.3 113.5 113.2 113.3 113.1 113.1 115.0 115.4 115.1 37 Materials 39.5 144.0 143.6 141.8 141.9 144.4 144.4 144.5 144.6 145.2 144.9 145.3 146.5 147.1 147.8 38 Durable goods materials 20.8 176.4 175.4 171.7 171.8 177.4 177.7 178.8 179.9 180.4 180.1 180.0 182.5 183.5 185.2 39 Durable consumer parts 4.0 144.0 147.9 131.9 129.7 149.6 147.7 146.2 145.6 144.8 141.9 145.4 147.9 146.8 148.6 40 Equipment parts 7.6 277.4 268.6 271.0 274.1 278.0 282.7 287.0 289.9 292.6 293.2 292.5 296.5 301.4 305.6 41 Other 9.2 129.0 129.6 128.3 128.1 128.3 127.7 128.4 129.3 129.3 129.8 128.6 130.2 130.3 130.8 42 Basic metal materials 3.1 121.2 123.0 120.1 120.2 121.9 118.2 118.3 117.3 116.3 118.4 116.1 118.6 118.4 119.1 43 Nondurable goods materials 8.9 113.5 114.1 113.9 114.1 113.1 112.0 111.7 112.2 112.5 112.0 113.2 113.0 112.5 112.7 44 Textile materials 1.1 108.7 111.0 110.2 110.1 107.7 107.6 108.8 103.0 102.5 99.0 101.1 101.8 102.4 101.7 45 Paper materials 1.8 116.0 115.5 117.3 117.3 116.4 115.0 115.8 112.7 114.7 116.5 116.0 116.9 115.2 116.7 46 Chemical materials 3.9 114.5 115.6 114.8 114.6 113.6 111.8 111.1 113.7 113.0 112.8 114.0 113.7 113.9 114.1 47 Other 2.1 111.5 111.2 110.6 111.7 111.6 111.5 110.4 113.2 114.4 112.5 114.8 113.2 112.0 111.6 48 Energy materials 9.7 103.5 104.3 104.8 104.8 104.4 105.2 103.7 101.5 102.6 102.6 102.6 103.0 104.0 103.1 49 Primary energy 6.3 101.2 101.0 101.8 102.9 101.2 102.3 102.6 99.8 100.3 100.4 101.2 99.8 100.6 100.0 50 Converted fuel materials 3.3 108.1 110.8 110.7 108.6 110.7 110.9 106.1 104.9 107.2 107.1 105.6 109.4 110.5 109.0 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 131.3 131.8 131.2 131.6 132.1 131.7 132.1 131.9 132.1 132.0 132.3 133.2 133.6 133.8 52 Total excluding motor vehicles and parts 95.1 130.8 131.3 131.2 131.7 131.3 131.0 131.5 131.4 131.7 131.7 131.7 132.6 133.1 133.3 53 Total excluding computer and office equipment 98.2 127.1 127.7 126.4 126.2 128.0 127.4 127.8 127.4 127.5 127.4 127.6 128.3 128.7 128.9 54 Consumer goods excluding autos and trucks . 27.4 113.9 115.3 114.8 114.9 114.3 113.2 113.4 113.0 113.2 113.4 113.5 113.8 114.1 114.0 55 Consumer goods excluding energy 26.2 115.5 117.3 114.7 113.5 115.7 114.6 115.3 115.8 115.8 115.4 116.0 115.6 116.2 116.6 56 Business equipment excluding autos and trucks 12.0 167.9 167.4 170.0 171.8 169.9 171.0 172.7 171.6 171.5 170.9 171.5 172.5 173.9 173.9 57 Business equipment excluding computer and office equipment 12.1 142.4 142.6 142.7 142.2 144.8 145.1 146.2 144.6 144.1 143.1 143.2 143.6 144.5 144.3 58 Materials excluding energy 29.8 156.7 156.0 153.4 153.6 156.9 156.7 157.3 158.2 158.6 158.2 158.6 160.2 160.6 161.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1992 Group SIC pro- 1998 code por- avg. May July Aug. Sept. Mar.r Apr/ Mayp Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 131.3 131.9 130.6 130.5 132.4 131.9 132.4 132.2 132.3 132.3 132.5 133.3 133.8 134.1 60 Manufacturing 85.4 135.1 135.4 133.7 133.6 135.7 135.2 136.1 136.4 136.7 136.4 136.9 137.5 138.1 138.6 61 Primary processing 26.5 120.7 121.4 120.2 120.7 120.6 119.3 120.1 120.3 121.3 121.8 121.6 121.8 121.9 122.1 62 Advanced processing 58.9 142.1 142.3 140.4 139.9 143.3 143.2 144.2 144.6 144.4 143.8 144.6 145.4 146.3 146.9 63 Durable goods 45.0 157.5 157.2 154.8 154.4 159.8 159.6 161.2 161.0 161.5 161.4 161.7 162.9 164.0 164.9 64 Lumber and products " ' 24 2.0 117.0 116.4 116.7 117.5 118.5 117.0 118.0 118.3 121.4 122.0 122.1 120.9 121.1 121.8 65 Furniture and fixtures 25 1.4 121.4 120.6 122.0 120.8 120.1 121.6 124.5 123.6 122.9 122.5 124.5 125.8 124.9 125.6 66 Stone, clay, and glass products 32 2.1 126.2 124.5 123.5 125.4 127.0 126.6 128.3 130.5 131.6 133.5 132.2 130.9 130.7 132.0 67 Primary metals 33 3.1 123.8 126.5 122.1 122.6 124.4 120.1 120.6 118.7 118.6 120.7 118.5 122.2 121.2 121.7 68 Iron and steel 331,2 1.7 121.1 125.5 119.8 120.2 122.5 113.4 114.4 109.7 114.6 116.7 112.6 117.4 116.7 117.8 69 Raw steel 331PT .1 115.7 121.9 116.0 118.3 120.3 112.6 109.7 100.2 102.0 106.6 106.6 109.1 110.5 112.1 70 Nonferrous 333-6,9 1.4 127.0 127.6 124.9 125.4 126.7 128.1 128.0 129.3 123.4 125.4 125.6 127.8 126.7 126.4 71 Fabricated metal products . . 34 5.0 127.3 128.7 128.0 127.8 126.3 126.2 126.9 127.7 128.7 127.6 126.7 127.7 128.8 128.2 72 Industrial machinery and equipment 35 8.0 203.7 202.5 205.8 209.0 207.0 207.7 211.2 211.1 212.7 212.3 213.9 215.9 217.8 217.1 73 Computer and office equipment 357 1.8 649.1 623.9 641.4 657.0 673.6 695.5 718.5 746.9 761.6 778.9 789.3 813.9 835.7 854.5 74 Electrical machinery 36 7.3 291.9 282.0 285.5 289.4 290.8 297.7 302.4 304.8 307.3 308.7 309.2 313.5 322.4 328.0 75 Transportation equipment. . . 37 9.5 123.0 125.2 114.2 108.2 130.3 127.6 128.4 127.1 125.6 124.0 125.6 125.2 124.4 125.6 76 Motor vehicles and parts . 371 4.9 141.1 144.1 121.1 107.6 154.2 149.9 150.2 148.8 146.6 145.3 147.9 148.9 148.7 151.9 77 Autos and light trucks . 371PT 2.6 128.5 132.7 110.1 86.9 142.0 136.5 140.4 138.1 137.3 137.9 137.3 136.6 138.9 141.7 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 104.9 106.3 106.3 107.1 106.9 105.8 106.9 105.7 104.8 103.2 103.7 102.1 100.8 110000..22 79 Instruments 38 5.4 113.0 113.8 112.4 112.6 113.0 114.2 114.6 114.1 113.9 114.3 113.8 114.9 115.9 116.2 80 Miscellaneous 39 1.3 117.7 119.1 118.5 118.5 117.7 117.0 115.9 114.1 115.4 114.8 115.8 116.7 118.3 119.4 81 Nondurable goods 40.4 111.9 113.0 112.0 112.1 111.3 110.6 110.9 111.6 111.7 111.3 111.9 112.0 112.0 112.2 82 Foods 20 9.4 109.6 110.7 109.2 109.0 107.9 107.7 109.1 111.3 111.1 112.0 112.3 111.7 111.4 111.7 83 Tobacco products 21 1.6 106.0 111.5 104.7 106.0 107.0 104.2 101.9 99.8 100.0 96.9 97.4 97.3 96.2 97.2 84 Textile mill products 22 1.8 112.2 114.5 112.0 113.2 111.8 111.2 112.4 108.8 109.4 109.3 110.6 107.7 110.1 109.0 85 Apparel products 23 2.2 99.2 100.4 100.5 100.1 99.2 98.3 97.3 95.5 95.3 94.1 93.6 93.5 94.4 93.5 86 Paper and products 26 3.6 115.0 115.0 114.9 115.9 115.3 113.9 115.4 112.3 115.3 116.2 116.4 116.5 114.0 114.5 87 Printing and publishing .... 27 6.7 105.1 105.6 105.5 105.4 104.9 104.6 104.2 105.4 105.1 103.6 103.8 104.5 104.8 105.0 88 Chemicals and products .... 28 9.9 115.5 116.9 116.2 115.7 114.3 113.3 113.1 114.7 114.0 112.5 114.4 115.5 115.7 115.8 89 Petroleum products 29 1.4 112.0 111.5 111.6 113.4 114.1 110.7 110.4 112.8 112.5 116.7 116.4 113.9 114.7 116.0 90 Rubber and plastic products . 30 3.5 132.6 133.1 132.4 132.7 132.2 132.6 133.4 135.0 136.0 135.4 135.2 135.7 136.8 137.0 91 Leather and products 31 .3 75.3 75.8 74.5 75.3 74.0 73.5 72.8 74.3 73.0 70.9 70.5 70.3 70.7 69.8 92 Mining 6.9 104.0 105.4 104.7 104.6 103.7 102.4 102.0 101.1 99.0 98.5 98.9 98.3 97.7 97.8 93 Metal 10 .5 110.0 108.5 108.0 105.7 109.0 106.4 113.6 110.7 108.3 110.1 108.4 104.5 106.2 107.1 94 Coal 12 1.0 109.7 106.0 110.4 112.8 109.7 115.8 110.8 108.6 114.5 107.7 109.1 103.4 107.0 106.5 95 Oil and gas extraction 13 4.8 99.6 102.4 100.4 100.0 99.2 96.8 96.8 94.2 91.0 91.5 91.7 92.5 91.5 91.8 96 Stone and earth minerals 14 .6 124.7 124.4 125.6 125.4 124.3 120.3 118.8 132.1 125.6 126.9 127.7 127.8 122.5 121.9 97 Utilities 7.7 113.9 115.2 118.7 118.3 120.2 120.3 116.5 110.6 111.8 114.7 111.3 116.8 117.2 114.6 98 Electric 491,493PT 6.2 117.2 118.9 121.0 119.8 121.2 122.6 120.3 114.6 115.2 116.2 114.1 118.9 119.2 116.7 99 Gas 492.493PT 1.6 101.9 98.3 108.4 111.7 115.7 109.7 98.7 92.0 96.0 108.4 98.6 107.2 107.7 104.8 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 134.7 134.9 134.5 135.1 134.6 134.4 135.3 135.7 136.2 136.0 136.3 136.9 137.5 113377..99 101 Manufacturing excluding computer and office equipment 83.6 130.2 130.6 128.8 128.6 130.6 130.0 130.8 130.9 131.1 130.8 131.2 131.6 132.1 132.5 102 Computers, communications equipment, and semiconductors 5.9 515.6 490.7 502.9 511.8 522.5 538.3 552.1 562.8 571.2 576.6 580.0 593.3 612.7 628.3 103 Manufacturing excluding computers and semiconductors 81.1 120.1 121.1 119.2 118.9 120.6 119.9 120.4 120.4 120.5 120.1 120.5 120.8 121.1 112211..33 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.5 118.5 119.5 117.5 117.2 119.0 118.1 118.7 118.8 118.9 118.5 118.9 119.1 119.3 119.4 Gross value (billions of 1992 dollars, annual rates) Major Markets 105 Products, total 2,001.9 2,480.6 2,498.5 2,470.3 2,454.6 2,525.1 2,501.0 2,519.7 2,511.6 2,513.9 2,527.3 2,527.2 2,535.6 2,546.5 2,548.1 106 Final 1,552.1 1,951.5 1,966.1 1,938.2 1,915.6 1,985.9 1,966.4 1,982.3 1,973.4 1,972.7 1,982.5 1,982.7 1,987.3 1,995.4 1,999.0 107 Consumer goods 1,049.6 1,209.3 1,225.2 1,201.8 1,185.0 1,227.4 1,208.2 1,217.1 1,212.6 1,215.0 1,227.4 1,227.0 1,227.8 1,231.9 1,234.6 108 Equipment 502.5 744.4 744.2 740.1 734.3 762.5 762.7 769.8 765.2 762.0 758.8 759.5 763.5 767.6 768.4 109 Intermediate 449.9 530.6 533.6 532.6 538.4 540.3 535.7 538.7 539.1 541.9 545.4 545.1 548.6 551.4 549.7 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 • August 1999 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1998 1999 item 11999988 July Aug. Sept. Oct. Nov. Dec. Jan. Feb.r Mar.r Apr. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,426 1,441 1,604 1,626 1,670 1,569 1,726 1,688 1,708 1,778 1,738 1,654 1,572 2 One-family 1,070 1,062 1,184 1,191 1,202 1,171 1,210 1,254 1,296 l,275r 1,306 1,242 1,214 3 Two-family or more 356 379 421 435 468 398 516 434 412 503r 432 412 358 4 Started 1,477 1,474 1,617 1,719 1,615 1,576 1,698 1,654 1,750 1,820 1,752 1,746 1,576 5 One-family 1,161 1,134 1,271 1,306 1,264 1,251 1,298 1,375 1,383 1,393 1,380 1,394 1,249 6 Two-family or more 316 340 346 413 351 325 400 279 367 427 372 352 327 7 Under construction at end of period1 819 834 935 938 939 946 968 971 999 1,011 1,032 1,035 1,027 8 One-family 584 570 638 642 644 648 659 667 688 697 712 715 707 9 Two-family or more 235 264 297 296 295 298 309 304 311 314 320 320 320 10 Completed 1,406 1,406 1,473 1,549 1,517 1,459 1,455 1,600 1,440 1,648 1,528 1,699 1,647 11 One-family 1,123 1,120 1,158 1,230 1,183 1,184 1,164 1,254 1,150 1,292 1,246 1,362 1,339 12 Two-family or more 283 285 315 319 334 275 291 346 290 356 282 337 308 13 Mobile homes shipped 361 354 372 380 368 369 352 389 382 390 381 383 368 Merchant builder activity in one-family units 14 Number sold 757 804 886 883 836 861 903 985 958 908 909 880 936 15 Number for sale at end of period1 326 287 300 283 285 289 293 292 295 295r 297 301 301 Price of units sold (thousands of dollars)2 16 Median 140.0 146.0 152.5 149.9 154.9 155.0 154.5 151.0 152.5 152.5 159.9 154.8 159.0 17 Average 166.4 176.2 181.9 179.8 186.5 182.7 182.8 178.6 183.3 182.8r 191.4 187.9 189.1 EXISTING UNITS (one-family) 18 Number sold 4,196 4,381 4,970 5,170 4,810 4,960 4,940 5,020 5,340 5,060 5,140 5,420 5,250 Price of units sold (thousands of dollars)2 19 Median 115.8 121.8 128.4 131.9 130.8 129.4 128.1 129.4 128.5 130.3 128.1 129.6 130.7 20 Average 141.8 150.5 159.1 164.9 162.0 158.9 157.7 159.9 159.6 162.8 159.6 162.3 163.8 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 581,813 618,051 654,528 658,673 663,300 670,133 668,287 670,996 679,428 691,050 705,563 714,789 697,359 22 Private 444,743 470,969 508,539 511,514 516,601 521,050 523,642 525,453 531,004 537,969 545,968 556,346 545,692 23 Residential 255,570 265,536 295,586 299,300 300,612 304,993 306,264 307,259 311,529 317,630 319,741 327,888 324,664 24 Nonresidential 189,173 205,433 212,953 212,214 215,989 216,057 217,378 218,194 219,475 220,339 226,227 228,458 221,028 25 Industrial buildings 32,563 31,417 30,340 28,616 32,302 30,300 29,246 30,011 28,971 28,659 28,803 28,752 26,675 26 Commercial buildings 75,722 83,727 88,131 88,310 86,243 87,553 90,986 93,644 96,033 94,365 98,734 99,001 96,422 2/ Other buildings 30,637 37,382 38,111 37,406 38,305 38,309 37,538 37,793 39,149 38,380 40,193 39,545 38,960 28 Public utilities and other 50,252 52,906 56,371 57,882 59,139 59,895 59,608 56,746 55,322 58,935 58,497 61,160 58,971 29 Public 137,070 147,082 145,989 147,159 146,699 149,083 144,644 145,544 148,425 153,080 159,595 158,443 151,667 30 Military 2,639 2,625 2,725 3,325 3,187 2,325 2,568 2,502 2,608 2,060 2,764 2,278 2,747 31 Highway 41,326 45,246 44,742 43,809 44,291 45,719 45,166 43,721 44,269 50,434 53,053 52,947 47,716 32 Conservation and development 5,926 5,628 5,529 5,475 5,442 5,904 5,146 5,643 5,539 5,859 6,398 6,134 5,994 33 Other 87,179 93,583 92,993 94,550 93,779 95,135 91,764 93,678 96,009 94,727 97,380 97,084 95,210 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 1999 MMMaaayyy 11999988 11999999 111999999999 111 MMaayy MMaayy June Sept. Dec. Mar. Jan. Feb. Mar. Apr. May CONSUMER PRICES2 (1982-84=100) 1 All items 1.7 2.1 2.2 1.5 2.0 1.5 .1 .1 .2 .7 .0 166.2 ?. Food 2.4 2.1 2.3 2.5 2.8 1.7 .5 .1 -.2 .1 .4 163.7 Energy items -5.6 1.7 -3.4 -9.0 -5.1 5.8 . -.2 .0 1.6 6.1 -1.3 105.6 4 All items less food and energy 2.2 2.0 2.6 2.3 2.5 .9 .1 .1 .1 .4 .1 176.6 5 Commodities .2 .6 1.7 1.1 2.5 -3.0 .0 -.4 -.3 .6 -.1 144.5 6 Services 3.1 2.7 2.8 3.0 2.5 2.7 .2 .2 .3 .4 .2 195.0 PRODUCER PRICES (1982=100) 7 Finished goods -.8 1.4 -.3 .6 2.2 .9 ,3r -,3r .2 .5 .2 132.4 8 Consumer foods -1.2 .6 -.6 1.8 .3 2.1 1.5 -1.4 .4 -.9 .5 134.4 9 Consumer energy -7.2 1.3 -3.1 -9.2 -8.9 6.8 ,8r -,4r 1.2 5.1 .0 77.3 in Other consumer goods 1.7 2.6 1.4 3.0 8.3 -.5 -,3r ,lr .1 .0 .0 151.1 u Capital equipment -.6 .4 -1.2 .9 .3 -.3 -.1 ,0r .0 .0 .2 137.8 Intermediate materials 12 Excluding foods and feeds -1.1 -.9 -1.6 -2.2 -4.5 .7 -,lr -.r .3 .7 .2 112222..88 13 Excluding energy -.2 -1.2 -1.2 -1.8 -2.7 -.9 — .2' -.r .1 .2 .2 132.3 Crude materials 14 Foods -9.5 -6.1 -3.3 -19.6 -7.0 4.1 4.9r -2.4r -1.3 -2.5 2.2 99.7 1*5 Energy -10.0 2.3 -14.6 -25.3 13.5 -16.9 —5.0r — 5.2r 6.1 8.5 11.9 74.4 16 Other -6.7 -10.7 -5.8 -19.9 -24.3 1.2 .2' 1.0r -.8 -1.1 2.3 131.4 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • August 1999 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1998 1999 AAccccoouunntt 11999966 11999977 11999988 Ql Q2 Q3 Q4 Qlr GROSS DOMESTIC PRODUCT 1 Total 7,661.6 8,110.9 8,511.0 8,384.2 8,440.6 8,537.9 8,681.2 8,808.7 By source 2 Personal consumption expenditures 5,215.7 5,493.7 5,807.9 5,676.5 5,773.7 5,846.7 5,934.8 6,050.6 3 Durable goods 643.3 673.0 724.7 705.1 720.1 718.9 754.5 771.2 4 Nondurable goods 1,539.2 1,600.6 1,662.4 1,633.1 1,655.2 1,670.0 1,691.3 1,736.0 5 Services 3,033.2 3,220.1 3,420.8 3,338.2 3,398.4 3,457.7 3,488.9 3,543.4 6 Gross private domestic investment 1,131.9 1,256.0 1,367.1 1,366.6 1,345.0 1,364.4 1,392.4 1,417.4 7 Fixed investment 1,099.8 1,188.6 1,307.8 1,271.1 1,305.8 1,307.5 1,346.7 1,377.9 8 Nonresidential 787.9 860.7 938.2 921.3 941.9 931.6 957.9 972.6 y Structures 216.9 240.2 246.9 245.0 245.4 246.2 250.9 255.0 10 Producers' durable equipment 571.0 620.5 691.3 676.3 696.6 685.4 706.9 717.6 ii Residential structures 311.8 327.9 369.6 349.8 363.8 375.8 388.9 405.3 12 Change in business inventories 32.1 67.4 59.3 95.5 39.2 57.0 45.7 39.5 13 Nonfarm 24.5 63.1 52.7 90.5 31.5 49.3 39.3 36.4 14 Net exports of goods and services -91.2 -93.4 -151.2 -123.7 -159.3 -165.5 -156.2 -196.9 J5 Exports 873.8 965.4 959.0 973.3 949.6 936.2 976.8 962.7 16 Imports 965.0 1,058.8 1,110.2 1,097.1 1,108.9 1,101.7 1,133.0 1,159.6 17 Government consumption expenditures and gross investment 1,405.2 1,454.6 1,487.1 1,464.9 1,481.2 1,492.3 1,510.2 1,537.5 18 Federal 518.4 520.2 520.6 511.6 520.7 519.4 530.7 536.6 19 State and local 886.8 934.4 966.5 953.3 960.4 972.9 979.5 1,000.9 By major type of product 20 Final sales, total 7,629.5 8,043.5 8,451.6 8,288.7 8,401.3 8,480.9 8,635.5 8,769.1 21 Goods 2,780.3 2,911.2 3,044.7 3,005.8 3,025.3 3,029.0 3,118.8 3,154.1 22 Durable 1,228.8 1,310.1 1,391.0 1,376.9 1,380.8 1,373.0 1,433.1 1,436.1 23 Nondurable 1,551.6 1,601.0 1,653.7 1,628.8 1,644.4 1,655.9 1,685.7 1,718.1 24 Services 4,179.5 4,414.1 4,641.0 4,538.4 4,619.5 4,678.5 4,727.7 4,793.7 23 Structures 669.7 718.3 765.9 744.6 756.6 773.5 789.0 821.3 26 Change in business inventories 32.1 67.4 59.3 95.5 39.2 57.0 45.7 39.5 27 Durable goods 20.8 33.6 25.2 49.9 4.5 19.5 27.0 16.5 28 Nondurable goods 11.4 33.8 34.1 45.6 34.7 37.5 18.7 23.1 MEMO 29 Total GDP in chained 1992 dollars 6,994.8 7,269.8 7,551.9 7,464.7 7,498.6 7,566.5 7,677.7 7,759.6 NATIONAL INCOME 30 Total 6,256.0 6,646.5 6,994.7 6,875.0 6,945.5 7,032.3 7,126.0 7,265.2 31 Compensation of employees 4,409.0 4,687.2 4,981.0 4,882.8 4,945.2 5,011.6 5,084.3 5,166.5 32 Wages and salaries 3,640.4 3,893.6 4,153.9 4,065.9 4,121.6 4,181.1 4,246.8 4,317.0 33 Government and government enterprises 640.9 664.2 689.3 679.5 685.8 692.7 699.2 711.2 34 Other 2,999.5 3,229.4 3,464.6 3,386.4 3,435.8 3,488.4 3,547.6 3,605.7 35 Supplement to wages and salaries 768.6 793.7 827.1 816.8 823.5 830.5 837.5 849.6 36 Employer contributions for social insurance 381.7 400.7 420.1 414.1 417.9 422.1 426.5 434.9 37 Other labor income 387.0 392.9 406.9 402.8 405.7 408.4 411.0 414.7 38 Proprietors' income1 527.7 551.2 577.2 564.2 571.7 576.1 596.9 598.3 39 Business and professional1 488.8 515.8 548.5 536.8 544.0 550.9 562.2 575.8 40 Farm1 38.9 35.5 28.7 27.4 27.7 25.2 34.7 22.5 41 Rental income of persons2 150.2 158.2 162.6 158.3 161.0 163.6 167.5 167.7 42 Coiporate profits1 750.4 817.9 824.6 829.2 820.6 827.0 821.7 868.8 43 Profits before tax3 680.2 734.4 717.8 719.1 723.5 720.5 708.1 752.6 44 Inventory valuation adjustment -1.2 6.9 14.5 25.3 7.8 11.7 13.4 11.6 45 Capital consumption adjustment 71.4 76.6 92.3 84.9 89.4 94.8 100.2 104.6 46 Net interest 418.6 432.0 449.3 440.5 447.1 454.0 455.6 463.9 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1998 1999 AAccccoouunntt 11999966 11999977 11999988 Ql Q2 Q3 Q4 Qlr PERSONAL INCOME AND SAVING 1 Total personal income 6,425.2 6,784.0 7,126.1 7,003.9 7,081.9 7,160.8 7,257.9 7,349.3 ?. Wage and salary disbursements 3,631.1 3,889.8 4,149.9 4,061.9 4,117.6 4,177.1 4,242.8 4,317.0 Commodity-producing industries 909.0 975.0 1,026.9 1,019.0 1,023.2 1,028.0 1,037.4 1,048.1 4 Manufacturing 674.6 719.5 751.5 750.4 750.8 750.9 754.1 759.2 Distributive industries 823.3 879.8 939.6 918.9 932.2 945.8 961.5 971.4 6 Service industries 1,257.9 1,370.8 1,494.0 1,444.5 1,476.4 1,510.6 1,544.6 1,586.2 7 Government and government enterprises 640.9 664.2 689.3 679.5 685.8 692.7 699.2 711.2 8 Other labor income 387.0 392.9 406.9 402.8 405.7 408.4 411.0 414.7 9 Proprietors' income1 527.7 551.2 577.2 564.2 571.7 576.1 596.9 598.3 10 Business and professional1 488.8 515.8 548.5 536.8 544.0 550.9 562.2 575.8 11 Farm 38.9 35.5 28.7 27.4 27.7 25.2 34.7 22.5 12 Rental income of persons2 150.2 158.2 162.6 158.3 161.0 163.6 167.5 167.7 N Dividends 248.2 260.3 263.1 261.6 262.1 263.0 265.7 268.8 14 Personal interest income 719.4 747.3 764.8 757.0 763.0 769.2 769.9 771.0 15 Transfer payments 1,068.0 1,110.4 1,149.0 1,139.0 1,145.8 1,152.9 1,158.3 1,175.2 16 Old-age survivors, disability, and health insurance benefits 538.0 565.9 586.5 581.6 585.0 589.0 590.6 597.9 17 LESS: Personal contributions for social insurance 306.3 326.2 347.4 340.9 345.1 349.5 354.1 363.4 18 EQUALS: Personal income 6,425.2 6,784.0 7,126.1 7,003.9 7,081.9 7,160.8 7,257.9 7,349.3 19 LESS: Personal tax and nontax payments 890.5 989.0 1,098.3 1,066.8 1,092.9 1,108.4 1,124.9 1,144.1 20 EQUALS: Disposable personal income 5,534.7 5,795.1 6,027.9 5,937.1 5,988.9 6,052.4 6,133.1 6,205.2 21 LESS: Personal outlays 5,376.2 5,674.1 6,000.2 5,864.0 5,963.3 6,039.8 6,133.6 6,250.7 22 EQUALS: Personal saving 158.5 121.0 27.7 73.0 25.6 12.6 -.6 -45.5 MEMO Per capita (chained 1992 dollars) ?3 Gross domestic product 26,335.7 27,136.2 27,938.9 27,718.8 27,783.0 2277,,997722..11 2288,,229999..88 2288,,552277..99 74 Personal consumption expenditures 17,893.0 18,340.9 19,065.0 18,771.1 19,007.8 19,156.3 19,336.4 19,602.7 25 Disposable personal income 18,989.0 19,349.0 19,790.0 19,632.0 19,719.0 19,829.0 19,980.0 20,101.0 26 Saving rate (percent) 2.9 2.1 .5 1.2 .4 .2 .0 -.7 GROSS SAVING 27 Gross saving 1,274.5 1,406.3 1,468.0 1,482.5 1,448.5 1,474.5 1,466.6 1,511.4 28 Gross private saving 1,114.5 1,141.6 1,090.4 1,130.1 1,079.0 1,078.7 1,073.7 1,061.9 29 Personal saving 158.5 121.0 27.7 73.0 25.6 12.6 -.6 -45.5 30 Undistributed corporate profits' 262.4 296.7 305.4 312.0 300.9 304.8 303.9 332.5 31 Corporate inventory valuation adjustment -1.2 6.9 14.5 25.3 7.8 11.7 13.4 11.6 Capital consumption allowances 3? Corporate 452.0 477.3 500.6 492.5 497.8 550033..11 508.9 551144..99 33 Noncorporate 232.3 242.8 252.7 248.6 250.7 254.2 257.5 260.0 34 Gross government saving 160.0 264.7 377.6 352.4 369.4 395.7 392.9 449.4 35 Federal -39.6 49.5 142.5 128.7 143.9 161.6 135.8 192.3 36 Consumption of fixed capital 70.6 70.6 69.7 69.9 69.5 69.6 70.0 69.5 37 Current surplus or deficit (-), national accounts -110.3 -21.1 72.8 58.8 74.4 92.0 65.8 122.7 38 State and local 199.7 215.2 235.2 223.7 225.6 234.2 257.1 257.2 .39 Consumption of fixed capital 77.1 81.1 85.0 83.5 84.3 85.4 86.6 87.5 40 Current surplus or deficit (-), national accounts 122.6 134.1 150.2 140.2 141.3 148.7 170.5 169.7 41 Gross investment 1,242.3 1,350.5 1,391.5 1,428.4 1,362.7 1,372.5 1,402.4 1,418.3 47 Gross private domestic investment 1,131.9 1,256.0 1,367.1 1,366.6 1,345.0 1,364.4 1,392.4 1,417.4 43 Gross government investment 229.7 235.4 237.0 237.4 232.5 239.7 238.3 255.6 44 Net foreign investment -119.2 -140.9 -212.6 -175.6 -214.8 -231.6 -228.3 -254.7 45 Statistical discrepancy -32.2 -55.8 -76.5 -54.1 -85.7 -102.0 -64.2 -93.1 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 • August 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 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 / 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 11 Change in U.S. government assets other than official reserve assets, net (increase, —) -708 174 -836 29 -388 -433 174 -189 12 Change in U.S. official reserve assets (increase, —) 6,668 -1,010 -6,784 -4,524 -444 -1,945 - 2,026 -2,369 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 370 -350 -149 -150 -182 72 188 -227 13 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 2222,,449977 19 Nonbank-reported claims -86,333 -120,403 -45,440 -47,907 -6,596 -14,327 -20,320 20 U.S. purchases of foreign securities, net -115,801 -87,981 -89,352 -8,030 -6,973 -27,878 17,056 -71,557 21 U.S. direct investments abroad, net -81,072 -121,843 -131,933 -35,470 -34,698 -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 23 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 2/ 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 --2211,,559988 30 U.S. nonbank-reported liabilities 39,404 107,779 43,803 47,390 32,707 18,040 11,875 31 Foreign private purchases of U.S. Treasury securities, net 154,996 146,710 48,060 35,301 -1,701 26,916 -1,438 24,283 32 U.S. currency flows 17,362 24,782 16,622 9,900 746 2,349 7,277 6,250 33 Foreign purchases of other U.S. securities, net 130,151 196,845 217,312 36,783 77,019 71,017 20,041 49,235 34 Foreign direct investments in United States, net 77,622 93,449 196,229 28,453 26,039 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 3y 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 1. 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 TRADE1 Millions of dollars; monthly data seasonally adjusted 1998r 1999 IItteemm 11999966rr 11999977rr 11999988rr Oct. Nov. Dec. Jan.r Feb.r Mar.r Apr.p 1 Goods and services, balance -104,318 -104,731 -164,282 -14,358 -14,663 -14,241 -16,269 -18,543 -18,947 -18,940 2 Merchandise -191,270 -196,652 -246,932 -20,990 -21,538 -21,059 -23,349 -25,172 -25,680 -25,545 3 Services 86,952 91,921 82,650 6,632 6,875 6,818 7,080 6,629 6,733 6,605 4 Goods and services, exports 849,806 938,543 933,907 79,617 79,126 78,161 77,903 77,139 77,054 78,012 5 Merchandise 612,057 679,715 670,246 57,193 56,926 56,005 55,263 54,704 54,326 55,140 6 Services 237,749 258,828 263,661 22,424 22,200 22,156 22,640 22,435 22,728 22,872 7 Goods and services, imports -954,124 -1,043,273 -1,098,189 -93,975 -93,789 -92,402 -94,172 -95,682 -96,001 -96,952 8 Merchandise -803,327 -876,366 -917,178 -78,183 -78,464 -77,064 -78,612 -79,876 -80,006 -80,685 9 Services -150,797 -166,907 -181,011 -15,792 -15,325 -15,338 -15,560 -15,806 -15,995 -16,267 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayp 1 Total 85,832 75,090 69,954 79,183 77,683 81,755 80,675 75,322 74,359 73,694 72,121 2 Gold stock, including Exchange Stabilization Fund1 11,050 11,049 11,050 11,041 11,041 11,041 11,046 11,048 11,049 11,049 11,049 3 Special drawing rights2'3 11,037 10,312 10,027 10,379 10,393 10,603 10,465 9,474 9,682 9,634 9,784 4 Reserve position in International Monetary Fund2 14,649 15,435 18,071 22,278 22,049 24,111 24,129 24,283 23,231 23,054 21,689 5 Foreign currencies4 49,096 38,294 30,809 35,485 34,200 36,001 35,035 30,517 30,397 29,957 29,599 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international SDR holdings and reserve positions in the IMF also have been valued on this basis since July accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold 1974. stock is valued at $42.22 per fine troy ounce. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year 2. Special drawing rights (SDRs) are valued according to a technique adopted by the indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of $1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net transactions in SDRs. exchange rates for the currencies of member countries. From July 1974 through December 4. Valued at current market exchange rates. 1980, sixteen currencies were used; since January 1981, five currencies have been used. U.S. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1998 1999 AAsssseett 11999955 11999966 11999977 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayp 1 Deposits 386 167 457 154 211 167 233 200 166 260 157 Held in custody 2 U.S. Treasury securities2 522,170 638,049 620,885 588,768 608,060 607,574 612,670 615,139 610,649 606,662 606,579 3 Earmarked gold3 11,702 11,197 10,763 10,403 10,355 10,343 10,343 10,347 10,347 10,340 10,340 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 • August 1999 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1998 1999 IItteemm 11999966 11999977 Oct. Nov. Dec. Jan. Feb. Mar. Apr.p 1 Total1 756,533 776,505 744,974 751,523 757,934 761,225r 760,002r 765,947r 766,458 By type 2 Liabilities reported by banks in the United States 113,098 135,384 134,644 125,173 123,915 121,834 125,275 124,581 135,260 3 U.S. Treasury bills and certificates3 198,921 148,301 128,598 133,702 134,141 136,840 135,471 141,941 135,765 U.S. Treasury bonds and notes 4 Marketable 384,045 428,004 415,010 426,853 432,127 433,590r 429,891r 425,466r 418,770 5 Nonmarketable4 5,968 5,994 5,997 6,035 6,074 6,113 6,151 6,191 6,231 6 U.S. securities other than U.S. Treasury securities5 54,501 58,822 60,725 59,760 61,677 62,848 63,214 67,768 70,432 By area 7 Europe1 246,983 252,289 259,698 261,028 256,026 258,298 256,164 253,808 245,285 8 Canada 38,723 36,177 34,644 36,885 36,715 37,471 38,462 39,611 38,563 9 Latin America and Caribbean 79,949 96,942 77,469 76,800 79,417 73,986 75,986 72,828 80,955 10 403,265 400,144 385,523 389,359 398,717 404,414r 403,100r 412,773r 414,579 11 Africa 7,242 9,981 10,976 10,084 10,059 10,144 9,838 9,906 9,656 12 Other countries 6,457 7,058 2,750 3,453 3,086 2,998 2,538 3,107 3,506 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 States1 Payable in Foreign Currencies Millions of dollars, end of period 1998 1999 IItteemm 11999955 11999966 11999977 June Sept. Dec.r Mar. 1 Banks' liabilities 109,713 103,383 117,524 87,889 92,934 101,125 101,359 2 Banks' claims 74,016 66,018 83,038 68,286 67,901 78,152 80,642 3 Deposits 22,696 22,467 28,661 27,387 27,293 45,985 42,147 4 Other claims 51,320 43,551 54,377 40,899 40,608 32,167 38,495 5 Claims of banks' domestic customers2 6,145 10,978 8,191 7,354 8,453 20,718 11,039 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1998 1999 IItteemm 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. Apr.p BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,162,148 1,283,027 1,346,827 1,372,288 1,346,457 1,346,827 1,332,425 1,340,770 l,337,674r 1,333,166 2 Banks' own liabilities 758,998 882,980 884,529 911,548 880,919 884,529 872,307 880,160 872,762r 878,655 3 Demand deposits 27,034 31,344 29,341 32,071 32,104 29,341 33,039 31,905 30,913r 31,201 4 Time deposits2 186,910 198,546 151,589 158,664 149,787 151,589 147,456 153,182 152,134r 156,511 5 Other3 143,510 168,011 140,753 153,388 143,441 140,753 145,309 161,955 157,104 160,500 6 Own foreign offices4 401,544 485,079 562,846 567,425 555,587 562,846 546,503 533,118 532,61 LR 530,443 7 Banks' custodial liabilities5 403,150 400,047 462,298 460,740 465,538 462,298 460,118 460,610 464,912 454,511 8 U.S. Treasury bills and certificates6 236,874 193,239 183,490 168,764 182,917 183,490 185,231 184,851 192,799 178,407 9 Other negotiable and readily transferable instruments7 72,011 93,641 141,103 151,239 142,399 141,103 137,428 134,109 133,352 129,051 10 Other 94,265 113,167 137,705 140,737 140,222 137,705 137,459 141,650 138,761 147,053 11 Nonmonetary international and regional organizations8 . . 13,972 11,690 11,833 12,929 13,307 11,833 13,839 19,706 15,337r 14,888 12 Banks' own liabilities 13,355 11,486 10,850 11,763 12,367 10,850 12,829 18,949 14,621r 14,151 13 Demand deposits 29 16 172 97 234 172 62 407 194 13 14 Time deposits2 5,784 5,466 5,793 5,418 5,802 5,793 6,161 7,215 6,856r 5,874 15 Other3 7,542 6,004 4,885 6,248 6,331 4,885 6,606 11,327 7,571 8,264 16 Banks' custodial liabilities5 617 204 983 1,166 940 983 1,010 757 716 737 17 U.S. Treasury bills and certificates6 352 69 636 509 570 636 623 549 548 555 18 Other negotiable and readily transferable instruments7 265 133 347 657 370 347 387 207 168 182 19 Other 0 2 0 0 0 0 0 1 0 0 20 Official institutions9 312,019 283,685 258,056 263,242 258,875 258,056 258,674 260,746 266,522 271,025 21 Banks' own liabilities 79,406 102,028 79,149 84,784 79,491 79,149 76,044 77,262 76,834 85,422 22 Demand deposits 1,511 2,314 2,787 3,325 2,744 2,787 3,666 2,850 3,393 3,617 23 Time deposits2 33,336 41,396 28,947 26,148 25,700 28,947 24,176 25,988 23,840 28,295 24 Other3 44,559 58,318 47,415 55,311 51,047 47,415 48,202 48,424 49,601 53,510 25 Banks' custodial liabilities5 232,613 181,657 178,907 178,458 179,384 178,907 182,630 183,484 189,688 185,603 26 U.S. Treasury bills and certificates6 198,921 148,301 134,141 128,598 133,702 134,141 136,840 135,471 141,941 135,765 27 Other negotiable and readily transferable instruments7 33,266 33,151 44,092 49,555 45,213 44,092 45,202 47,213 47,174 49,443 28 Other 426 205 674 305 469 674 588 800 573 395 29 Banks10 694,835 815,247 885,442 899,258 885,929 885,442 866,186 854,523 851,596r 848,080 30 Banks' own liabilities 562,898 641,447 676,208 691,075 673,648 676,208 658,114 648,149 648,605r 646,477 31 Unaffiliated foreign banks 161,354 156,368 113,362 123,650 118,061 113,362 111,611 115,031 115,994 116,034 32 Demand deposits 13,692 16,767 14,072 15,802 15,119 14,072 15,327 15,335 13,985 13,345 33 Time deposits2 89,765 83,433 46,273 56,193 51,352 46,273 46,745 46,745 49,149 50,351 34 Other3 57,897 56,168 53,017 51,655 51,590 53,017 49,539 52,951 52,860 52,338 35 Own foreign offices4 401,544 485,079 562,846 567,425 555,587 562,846 546,503 533,118 532,61 lr 530,443 36 Banks' custodial liabilities5 131,937 173,800 209,234 208,183 212,281 209,234 208,072 206,374 202,991 201,603 37 U.S. Treasury bills and certificates6 23,106 31,915 35,544 27,556 35,213 35,544 35,325 34,472 36,737 29,528 38 Other negotiable and readily transferable instruments7 17,027 35,393 45,102 48,376 45,132 45,102 44,087 40,108 37,304 34,959 39 Other 91,804 106,492 128,588 132,251 131,936 128,588 128,660 131,794 128,950 137,116 40 Other foreigners 141,322 172,405 191,496 196,859 188,346 191,496 193,726 205,795 204,219r 199,173 41 Banks' own liabilities 103,339 128,019 118,322 123,926 115,413 118,322 125,320 135,800 132,702r 132,605 42 Demand deposits 11,802 12,247 12,310 12,847 14,007 12,310 13,984 13,313 13,341r 14,226 4.3 Time deposits2 58,025 68,251 70,576 70,905 66,933 70,576 70,374 73,234 72,289r 71,991 44 Other3 33,512 47,521 35,436 40,174 34,473 35,436 40,962 49,253 47,072 46,388 45 Banks' custodial liabilities5 37,983 44,386 73,174 72,933 72,933 73,174 68,406 69,995 71,517 66,568 46 U.S. Treasury bills and certificates6 14,495 12,954 13,169 12,101 13,432 13,169 12,443 14,359 13,573 12,559 47 Other negotiable and readily transferable instruments7 21,453 24,964 51,562 52,651 51,684 51,562 47,752 46,581 48,706 44,467 48 Other 2,035 6,468 8,443 8,181 7,817 8,443 8,211 9,055 9,238 9,542 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 14,573 16,083 27,026 29,996 28,858 27,026 25,858 23,341 23,035 21,718 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 • August 1999 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1998 1999 IItteemm 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. Apr.p AREA 50 Total, all foreigners 1,162,148 1,283,027 1,346,827 1,372,288 1,346,457 1,346,827 1,332,425 1,340,770 l,337,674r 1,333,166 51 Foreign countries 1,148,176 1,271,337 1,334,994 1,359,359 1,333,150 1,334,994 1,318,586 1,321,064 l,322,337r 1,318,278 52 Europe 376,590 419,672 427,367 451,350 449,567 427,367 429,636 436,330 418,282R 409,513 53 Austria 5,128 2,717 3,178 2,799 2,824 3,178 2,902 3,070 3,274 2,428 54 Belgium and Luxembourg 24,084 41,007 42,818 39,911 42,014 42,818 38,897 41,594 41,468 37,991 55 Denmark 2,565 1,514 1,437 1,813 1,675 1,437 1,200 1,826 1,992 1,300 56 Finland 1,958 2,246 1,862 1,193 1,706 1,862 1,989 1,643 1,800 1,655 57 France 35,078 46,607 44,616 47,348 48,155 44,616 44,444 47,617 47,935R 49,095 58 Germany 24,660 23,737 21,357 22,024 22,606 21,357 20,315 23,111 23,746 18,574 59 Greece 1,835 1,552 2,066 2,901 2,444 2,066 2,195 2,509 2,447 2,237 60 Italy 10,946 11,378 7,103 7,124 6,378 7,103 6,155 6,684 5,743 5,909 61 Netherlands 11,110 7,385 10,793 7,251 9,298 10,793 10,580 14,792 12,273 11,012 62 Norway 1,288 317 710 1,149 797 710 1,065 1,102 1,022 1,206 63 Portugal 3,562 2,262 3,235 2,377 2,400 3,235 2,543 2,225 2,237 2,277 64 Russia 7,623 7,968 2,439 3,735 2,698 2,439 2,231 2,438 2,500 2,693 65 Spain 17,707 18,989 15,775 26,569 27,017 15,775 12,843 13,457 9,315 11,058 66 Sweden 1,623 1,628 3,027 3,257 3,857 3,027 3,132 2,918 2,193 1,974 67 Switzerland 44,538 39,023 50,654 47,332 50,167 50,654 59,871 60,348 47,874 54,547 68 Turkey 6,738 4,054 4,286 4,105 3,842 4,286 5,105 5,045 5,639 5,788 69 United Kingdom 153,420 181,904 181,554 202,536 195,113 181,554 177,240 173,542 175,152R 169,794 70 Yugoslavia1' 206 239 258 362 271 258 275 247R 237 221 71 Other Europe and other former U.S.S.R.12 22,521 25,145 30,199 27,564 26,305 30,199 36,654 32,162R 31,435 29,754 72 Canada 38,920 28,341 30,212 31,278 29,249 30,212 29,725 28,019 31,788 28,361 73 Latin America and Caribbean 467,529 536,393 554,734 576,008 545,454 554,734 540,664 538,465 551,708 577,845 74 Argentina 13,877 20,199 19,013 17,706 18,892 19,013 17,175 18,245 16,891 18,351 75 Bahamas 88,895 112,217 118,085 128,893 115,598 118,085 121,606 118,727 119,209 118,648 76 Bermuda 5,527 6,911 6,839 7,247 7,241 6,839 8,969 8,370 7,514 6,957 77 Brazil 27,701 31,037 15,800 17,308 13,370 15,800 12,268 12,913 13,841 17,128 78 British West Indies 251,465 276,418 302,472 310,229 298,422 302,472 287,308 285,676 300,104R 322,022 79 Chile 2,915 4,072 5,010 5,598 4,778 5,010 5,188 5,189 5,057R 6,805 80 Colombia 3,256 3,652 4,616 4,888 4,124 4,616 4,535 4,462 4,636 4,599 81 Cuba 21 66 62 57 63 62 64 62 63 175 82 Ecuador 1,767 2,078 1,573 1,679 1,510 1,573 1,525 1,513 1,606 1,688 83 Guatemala 1,282 1,494 1,332 1,232 1,204 1,332 1,224 1,338 1,392 1,386 84 Jamaica 628 450 539 578 524 539 565 542 551 534 85 Mexico 31,240 33,972 37,148 38,058 36,720 37,148 35,965 35,891 36,622 36,003 86 Netherlands Antilles 6,099 5,085 5,010 6,255 6,009 5,010 5,681 8,406 7,256 5,633 87 Panama 4,099 4,241 3,864 3,793 3,774 3,864 4,499 4,401 4,196 3,974 88 Peru 834 893 840 799 814 840 864 828 810 819 89 Uruguay 1,890 2,382 2,486 2,223 2,240 2,486 2,380 2,274 2,378 2,309 90 Venezuela 17,363 21,601 19,894 19,662 19,631 19,894 20,250 19,354 19,149 20,229 91 Other 8,670 9,625 10,151 9,803 10,540 10,151 10,598 10,274 10,433 10,585 92 249,083 269,379 307,140 284,441 293,584 330077,,114400 330011,,445544 330022,,552200 330055,,448833RR 228877,,554433 China 93 Mainland 30,438 18,252 13,041 15,814 13,784 13,041 14,854 15,345 13,996 16,350 94 Taiwan 15,995 11,840 12,708 12,802 12,361 12,708 10,980 12,211 13,183 12,642 95 Hong Kong 18,789 17,722 20,898 16,508 16,739 20,898 22,844 25,509 27,589 26,313 96 India 3,930 4,567 5,250 5,337 5,089 5,250 5,279 5,241 6,189 5,979 97 Indonesia 2,298 3,554 8,282 5,671 6,247 8,282 7,909 6,172 6,675 7,434 98 Israel 6,051 6,281 7,749 4,781 8,106 7,749 7,287 7,598 8,246 7,037 99 Japan 117,316 143,401 168,236 156,340 164,311 168,236 161,207 161,073 161,887 142,324 100 Korea (South) 5,949 13,060 12,454 12,505 12,396 12,454 12,446 9,990 ll,141r 9,849 101 Philippines 3,378 3,250 3,324 2,539 2,849 3,324 2,318 2,482 2,362 2,440 102 Thailand 10,912 6,501 7,359 7,134 6,788 7,359 7,300 6,590 6,588 6,296 103 Middle Eastern oil-exporting countries13 16,285 14,959 15,609 14,718 16,370 15,609 14,655 16,157 15,433' 14,495 104 Other 17,742 25,992 32,230 30,292 28,544 32,230 34,375 34,152 32,194r 36,384 105 Africa 8,116 10,347 8,905 9,749 8,889 8,905 9,110 8,658 8,463r 7,874 106 Egypt 2,012 1,663 1,339 1,288 1,498 1,339 1,856 1,902 1,758 1,599 107 Morocco 112 138 97 78 75 97 98 73 85 90 108 South Africa 458 2,158 1,522 2,358 1,659 1,522 1,308 1,343 1,258 1,165 109 Zaire 10 10 5 7 12 5 6 13 9 4 110 Oil-exporting countries14 2,626 3,060 3,088 3,291 3,017 3,088 2,989 2,737 2,772 2,534 111 Other 2,898 3,318 2,854 2,727 2,628 2,854 2,853 2,590 2,581r 2,482 112 Other 7,938 7,205 6,636 6,533 6,407 6,636 7,997 7,072 6,613 7,142 113 Australia 6,479 6,304 5,495 5,372 5,180 5,495 6,854 5,550 5,582 5,987 114 Other 1,459 901 1,141 1,161 1,227 1,141 1,143 1,522 1,031 1,155 115 Nonmonetary international and regional organizations . . 13,972 11,690 11,833 12,929 13,307 11,833 13,839 19,706 15,337r 14,888 116 International" 12,099 10,517 10,221 10,638 11,398 10,221 11,787 17,079 12,845r 12,461 117 Latin American regional16 1,339 424 594 1,008 598 594 917 1,411 1,394 1,304 118 Other regional17 534 749 1,018 1,283 1,311 1,018 1,135 1,216 1,098 1,123 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1998 1999 AArreeaa oorr ccoouunnttrryy 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar.r Apr.p 1 Total, all foreigners 599,925 708,225 734,794 749,546 757,183 734,794 718,269 712,979r 694,612 720,891 2 Foreign countries 597,321 705,762 731,176 744,156 751,875 731,176 713,263 707,553r 689,992 716,723 3 Europe 165,769 199,880 233,480 224,661 228,924 233,480 225,892 230,424 226,501 236,420 4 Austria 1,662 1,354 1,043 2,358 2,311 1,043 2,634 1,824 2,759 2,389 5 Belgium and Luxembourg 6,727 6,641 7,187 9,245 7,409 7,187 5,599 7,073 5,451 7,533 6 Denmark 492 980 2,383 1,768 2,524 2,383 1,816 1,656 1,619 2,297 7 Finland 971 1,233 1,070 1,149 1,050 1,070 963 1,233 1,351 1,349 8 France 15,246 16,239 15,251 16,307 18,881 15.251 18,575 18,583 15,187 15,942 9 Germany 8,472 12,676 15,922 15,121 17,997 15,922 15,115 16,362 16,849 17,158 in Greece 568 402 575 415 510 575 533 637 554 651 n Italy 6,457 6,230 7,283 7,153 6,544 7,283 6,168 5,714 6,035 6,727 i? Netherlands 7,117 6,141 5,734 5,230 5,686 5,734 5,828 6,048 6,690 7,251 13 Norway 808 555 827 662 385 827 645 561 596 970 14 Portugal 418 777 669 885 679 669 584 888 1,205 1,060 15 Russia 1,669 1,248 789 883 760 789 742 724 972 788 16 Spain 3,211 2,942 5,735 6,051 5,234 5,735 4,560 4,260 3,041 2,949 17 Sweden 1,739 1,854 4,223 4,508 5,087 4,223 4,338 4,664 4,439 4,141 18 Switzerland 19,798 28,846 46,880 43,337 45,858 46,880 46,122 50,905 51,673 48,477 19 Turkey 1,109 1,558 1,982 1,848 1,915 1,982 1,796 1,870 2,077 1,942 20 United Kingdom 85,234 103,143 106,358 98,746 97,072 106,358 98,959 97,431 97,229 105,255 7.1 Yugoslavia2 115 52 53 53 53 53 53 54 54 55 22 Other Europe and other former U.S.S.R.3 3,956 7,009 9,516 8,942 8,969 9,516 10,862 9,937 8,720 9,486 23 Canada 26,436 27,189 47,212 37,316 44,830 47,212 42,925 40,801 41,264 40,756 74 Latin America and Caribbean 274,153 343,730 342,081 368,394 368,212 342,081 344,347 340,678r 325,162 351,056 75 Argentina 7,400 8,924 9,553 9,087 9,225 9,553 9,713 10,184 10,398 10,075 76 Bahamas 71,871 89,379 96,455 88,923 91,171 96,455 93,000 91,104 88,641 84,013 77 Bermuda 4,129 8,782 4,969 6,585 5,702 4,969 5,547 6,033r 4,096 4,436 78 Brazil 17,259 21,696 16,193 17,614 17,771 16,193 15,616 15,357 15,143 14,788 ?9 British West Indies 105,510 145,471 153,269 183,152 179,253 153,269 158,010 155,326 146,593 179,242 30 Chile 5,136 7,913 8,261 8,549 8,824 8,261 8,232 8,085 8,082 7,810 31 Colombia 6,247 6,945 6,523 6,764 6,639 6,523 6,433 6,462 6,223 6,105 37 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 1,031 1,311 1,400 1,444 1,351 1,400 1,403 1,341 1,219 1,135 34 Guatemala 620 886 1,127 947 1,483 1,127 1,107 1,255 1,052 1,062 35 Jamaica 345 424 239 330 299 239 333 602 318 326 36 Mexico 18,425 19,428 21,143 22,039 22,483 21,143 21,128 21,564 20,532 19,434 37 Netherlands Antilles 25,209 17,838 6,779 7,323 7,696 6,779 7,403 6,571 6,661 5,711 38 Panama 2,786 4,364 3,584 4,011 3,864 3,584 3,549 3,390 3,320 4,329 39 Peru 2,720 3,491 3,260 3,706 3,618 3,260 3,364 3,353 3,232 3,111 40 Uruguay 589 629 1,126 958 1,040 1,126 997 934 838 772 41 Venezuela 1,702 2,129 3,089 2,689 2,788 3,089 3,312 3,684 3,506 3,138 42 Other 3,174 4,120 5,111 4,273 5,005 5,111 5,200 5,433 5,308 5,569 43 122,478 125,092 98,650 104,784 100,771 98,650 90,840 86,526r 88,082 79,259 China 44 Mainland 1,401 1,579 1,311 2,275 2,488 1,311 2,691 2,400 3,398 3,481 45 Taiwan 1,894 922 1,041 1,079 957 1,041 728 778 1,331 846 46 Hong Kong 12,802 13,991 9,082 8,244 8,238 9,082 8,332 6,809r 8,017 6,312 47 India 1,946 2,200 1,440 1,582 1,533 1,440 1,483 1,529 1,701 1,703 48 Indonesia 1,762 2,651 1,954 2,047 2,072 1,954 1,948 2,110 1,897 1,911 49 Israel 633 768 1,166 1,504 916 1,166 833 774 1,082 803 50 Japan 59,967 59,549 46,712 52,904 48,406 46,712 41,817 39,141 39,971 32,631 51 Korea (South) 18,901 18,162 8,238 9,733 8,947 8,238 8,679 8,479 9,119 11,119 57 Philippines 1,697 1,689 1,465 1,128 1,619 1,465 1,310 1,589 1,540 1,546 53 Thailand 2,679 2,259 1,806 1,952 1,895 1,806 1,759 1,708 1,720 1,732 54 Middle Eastern oil-exporting countries4 10,424 10,790 16,145 13,531 15,077 16,145 14,328 12,831 12,167 11,686 55 Other 8,372 10,532 8,290 8,805 8,623 8,290 6,932 8,378 6,139 5,489 56 Africa 2,776 3,530 3,122 2,785 2,611 3,122 2,899 3,087 2,938 2,688 57 Egypt 247 247 257 322 259 257 302 264 260 228 58 Morocco 524 511 372 405 390 372 378 361 422 463 59 South Africa 584 805 643 665 704 643 802 933 798 567 60 Zaire 0 0 0 0 0 0 0 0 0 0 61 Oil-exporting countries5 420 1,212 936 533 454 936 516 625 325 257 62 Other 1,001 755 914 860 804 914 901 904 1,133 1,173 63 Other 5,709 6,341 6,631 6,216 6,527 6,631 6,360 6,037 6,045 6,544 64 Australia 4,577 5,300 6,167 5,809 6,008 6,167 5,866 5,367 5,638 6,060 65 Other 1,132 1,041 464 407 519 464 494 670 407 484 66 Nonmonetary international and regional organizations6.. . 2,604 2,463 3,618 5,390 5,308 3,618 5,006 5,426 4,620 4,168 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 • August 1999 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1998 1999 TTyyppee ooff ccllaaiimm 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar.r Apr." 1 Total 743,919 852,852 875,332 875,332 845,901 2 Banks' claims 599,925 708,225 734,794 749,546 757,183 734,794 718,269 712,979r 694,612 720,891 3 Foreign public borrowers 22,216 20,581 23,540 28,164 27,063 23,540 30,269 31,514 34,772 34,384 4 Own foreign offices2 341,574 431,685 484,356 476,973 487,641 484,356 459,017 461,705r 451,684 471,283 5 Unaffiliated foreign banks 113,682 109,230 105,732 108,524 117,919 105,732 106,557 102,588r 93,778 93,618 6 Deposits 33,826 30,995 26,808 25,988 33,774 26,808 30,558 29,400 25,044 23,973 7 Other 79,856 78,235 78,924 82,536 84,145 78,924 75,999 73,188r 68,734 69,645 8 All other foreigners 122,453 146,729 121,166 135,885 124,560 121,166 122,426 117,172r 114,378 121,606 9 Claims of banks' domestic customers3 143,994 144,627 140,538 140,538 151,289 10 Deposits 77,657 73,110 78,167 78,167 94,438 11 Negotiable and readily transferable instruments4 51,207 53,967 48,848 48,848 47,713 12 Outstanding collections and other claims 15,130 17,550 13,523 13,523 9,138 MEMO 13 Customer liability on acceptances 10,388 9,624 4,519 4,519 4,485 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 39,661 33,816 39,978 34,265 32,888 39,978 38,941 39,055 33,038 32,883 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- paper. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1998 1999 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999955 11999966 11999977 June Sept.r Dec.r Mar.p 1 Total 224,932 258,106 276,550 293,060r 281,505 250,743 242,398 By borrower 2 Maturity of one year or less 178,857 211,859 205,781 211,599r 208,716 186,717 175,504 3 Foreign public borrowers 14,995 15,411 12,081 16,997 14,613 13,668 20,921 4 All other foreigners 163,862 196,448 193,700 194,602r 194,103 173,049 154,583 5 Maturity of more than one year 46,075 46,247 70,769 81,461r 72,789 64,026 66,894 6 Foreign public borrowers 7,522 6,790 8,499 10,688 10,926 9,839 13,291 7 All other foreigners 38,553 39,457 62,270 70,773r 61,863 54,187 53,603 By area Maturity of one year or less 8 Europe 55,622 55,690 58,294 73,786r 68,995 68,706 66,886 9 Canada 6,751 8,339 9,917 8.766 8,953 11,124 7,836 10 Latin America and Caribbean 72,504 103,254 97,207 99,864r 99,989 81,756 71,234 11 40,296 38,078 33,964 23,570 22,330 18,031 21,346 12. Africa 1,295 1,316 2,211 1,116 1,762 1,835 1,547 13 All other3 2,389 5,182 4,188 4,497 6,687 5,265 6,655 Maturity of more than one year 14 Europe 4,995 6,965 13,240 15,607r 15,396 15,056 16,980 15 Canada 2,751 2,645 2,525 2,571 2,982 3,140 2,781 16 Latin America and Caribbean 27,681 24,943 42,049 47,988r 39,165 33,423 33,441 17 7,941 9,392 10,235 12,630 12,172 10,037 10,936 18 Africa 1,421 1,361 1,236 1,259 1,170 1,233 1,184 19 All other3 1,286 941 1,484 1,406 1,904 1,137 1,572 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity, dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by US. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1997 1998 1999 AArreeaa oorr ccoouunnttrryy 11999955 11999966 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar.p 1 Total 551.9 645.3 647.6 678.8 711.0 719.3 739.1 749.0 724.3 687.5 675.0 2 G-10 countries and Switzerland 206.0 228.3 231.4 250.0 247.8 242.8 249.0 275.2 258.3 247.0 241.3 3 Belgium and Luxembourg 13.6 11.7 14.1 9.4 11.4 11.0 11.2 13.1 10.9 13.1 14.0 4 France 19.4 16.6 19.7 17.9 20.2 15.4 15.5 20.5 19.9 18.0 19.5 5 Germany 27.3 29.8 32.1 34.1 34.7 28.6 25.5 28.8 28.9 30.7 31.4 6 11.5 16.0 14.4 20.2 19.3 15.5 19.7 19.5 17.9 11.3 13.2 7 Netherlands 3.7 4.0 4.5 6.4 7.2 6.2 7.3 8.3 8.1 7.7 8.9 8 Sweden 2.7 2.6 3.4 3.6 4.1 3.3 4.8 3.1 2.1 2.2 3.6 9 Switzerland 6.7 5.3 6.0 5.4 4.8 7.2 5.6 6.9 7.4 8.2 7.3 in United Kingdom 82.4 104.7 99.2 110.6 108.3 113.4 120.1 134.9 124.9 114.9 106.4 li Canada 10.3 14.0 16.3 15.7 15.1 13.7 13.5 16.5 15.5 16.7 15.7 12 Japan 28.5 23.7 21.7 26.8 22.6 28.6 25.8 23.7 22.7 24.1 21.3 13 Other industrialized countries 50.2 65.7 66.4 71.7 73.8 64.5 74.3 72.1 71.3 67.7 76.1 14 Austria .9 1.1 1.9 1.5 1.7 1.5 1.7 1.9 2.1 1.4 2.5 15 Denmark 2.6 1.5 1.7 2.8 3.7 2.4 2.0 2.1 2.8 2.1 3.2 16 Finland .8 .8 .7 1.4 1.9 1.3 1.5 1.4 1.6 1.4 1.4 17 Greece 5.7 6.7 6.3 6.1 6.2 5.1 6.1 5.8 5.7 5.9 6.2 18 Norway 3.2 8.0 5.3 4.7 4.6 3.6 4.0 3.4 3.2 3.2 3.3 19 Portugal 1.3 .9 1.0 1.1 1.4 .9 .7 1.3 1.0 1.3 1.3 70 Spain 11.6 13.2 14.4 15.4 13.9 11.7 16.5 15.2 17.5 13.5 14.3 ?i Turkey 1.9 2.7 2.8 3.4 4.4 4.5 4.9 6.5 5.2 4.8 5.0 7,2 Other Western Europe 4.7 4.7 6.3 5.5 6.1 8.2 9.9 9.6 10.3 10.4 10.1 73 South Africa 1.2 2.0 1.9 1.9 1.9 2.2 3.7 5.0 3.7 3.5 3.4 24 Australia 16.4 24.0 24.4 27.8 28.0 23.1 23.2 20.0 18.2 20.3 25.2 75 OPEC2 22.1 19.7 21.8 22.3 22.9 26.0 25.7 25.3 25.8 26.9 25.9 76 Ecuador .7 1.1 1.1 .9 1.2 1.3 1.3 1.2 1.2 1.2 1.1 77 Venezuela 2.7 2.4 1.9 2.1 2.2 2.5 3.3 3.2 3.1 3.2 3.4 78 Indonesia 4.8 5.2 4.9 5.6 6.5 6.7 5.5 5.1 4.7 4.7 4.4 79 Middle East countries 13.3 10.7 13.2 12.5 11.8 14.4 14.3 15.5 16.1 16.9 16.6 30 African countries .6 .4 .7 1.2 1.1 1.2 1.4 .3 .8 1.0 .4 31 Non-OPEC developing countries 112.6 130.3 128.1 140.6 137.0 138.7 147.4 144.4 139.7 140.9 143.8 Latin America 3? Argentina 12.9 14.3 14.3 16.4 17.1 18.4 19.3 20.2 22.3 22.3 23.5 33 Brazil 13.7 20.7 22.0 27.3 26.1 28.6 32.4 29.9 24.9 24.2 23.6 34 Chile 6.8 7.0 6.8 7.6 8.0 8.7 9.0 9.1 8.5 8.3 8.5 35 Colombia 2.9 4.1 3.7 3.3 3.4 3.4 3.3 3.6 3.4 3.2 3.2 36 Mexico 17.3 16.2 17.2 16.6 16.4 17.4 17.7 17.9 18.4 18.4 18.9 37 .8 1.6 1.6 1.4 1.8 2.0 2.1 2.2 2.2 2.2 2.2 38 Other 2.8 3.3 3.4 3.4 3.6 4.1 4.0 4.4 4.6 5.4 5.4 Asia China 39 Mainland 1.8 2.5 2.7 3.6 4.3 3.2 4.2 3.9 2.8 3.0 5.1 40 Taiwan 9.4 10.3 10.5 10.6 9.7 9.0 11.7 11.3 12.1 12.8 11.6 41 India 4.4 4.3 4.9 5.3 4.9 4.9 5.0 4.9 5.3 5.3 5.6 47 Israel .5 .5 .6 .8 1.0 .7 .7 .9 .9 1.1 1.1 43 Korea (South) 19.1 21.5 14.6 16.3 16.2 15.6 16.2 14.5 12.9 13.6 13.3 44 Malaysia 4.4 6.0 6.5 6.4 5.6 5.1 4.5 4.7 5.0 5.6 5.9 45 Philippines 4.1 5.8 6.0 7.0 5.7 5.7 5.0 5.4 4.7 5.1 5.3 46 Thailand 4.9 5.7 6.8 7.3 6.2 5.4 5.5 4.9 5.3 4.6 4.5 47 Other Asia 4.5 4.1 4.3 4.7 4.5 4.3 4.2 3.7 3.1 2.9 3.0 Africa 48 Egypt .4 .7 .9 1.1 .9 .9 1.0 1.5 1.7 11..33 11..44 49 Morocco .7 .7 .6 .7 .7 .6 .6 .6 .5 .5 .5 50 Zaire .0 .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 .9 .9 .9 .9 .9 .8 1.1 .8 1.1 1.0 1.2 52 Eastern Europe 4.2 6.9 8.9 7.1 9.8 9.1 12.0 10.9 6.0 5.2 6.0 5^ Russia4 1.0 3.7 3.5 4.2 5.1 5.1 7.5 6.8 2.8 2.2 2.1 54 Other 3.2 3.2 5.4 2.9 4.7 4.0 4.6 4.1 3.2 3.1 3.9 55 Offshore banking centers 99.2 134.7 131.3 129.6 138.9 139.0 129.3 125.5 118.6 90.8 83.7 56 Bahamas 11.0 20.3 20.9 16.1 19.8 23.3 29.2 24.7 28.9 33.0 30.2 57 Bermuda 6.3 4.5 6.7 7.9 9.8 9.8 9.0 9.3 10.4 4.5 3.8 58 Cayman Islands and other British West Indies 32.4 37.2 32.8 35.1 45.7 43.4 24.9 33.9 27.4 12.3 7.0 59 Netherlands Antilles 10.3 26.1 19.9 15.8 21.7 14.6 14.0 10.5 6.0 2.6 2.7 60 Panama5 1.4 2.0 2.0 2.6 2.1 3.1 3.2 3.3 4.0 3.8 3.9 61 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .2 .1 .1 67 Hong Kong, China 25.0 27.9 30.8 35.2 27.2 32.2 33.8 30.0 30.6 23.2 22.6 63 Singapore 13.1 16.7 17.9 16.7 12.7 12.7 15.0 13.5 11.1 11.1 13.1 64 Other" .1 .1 .1 .3 .1 .1 .1 .2 .2 .2 .2 65 Miscellaneous and unallocated7 57.6 59.6 59.6 57.6 80.8 99.1 101.3 95.7 104.5 109.0 98.2 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 • August 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 iiyy9955 11999966 11999977 Sept. Dec. Mar. June Sept. Dec.p 1 Total 46,448 61,782 60,037 55,891 60,037 58,040 51,433 49,279r 46,553 2 Payable in dollars 33,903 39,542 41,956 39,746 41,956 42,258 40,026 38,410' 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 5 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 29,948r 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 19,672r 16,337 10 Payable in dollars 21,000 27,629 28,913 28,259 28,913 28,690 28,038 28,598r 26,280 11 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 19 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 29 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 3/ Netherlands 500 766 439 452 439 443 485 440 429 38 Switzerland 413 624 375 400 375 407 349 507 499 3y 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 1,840 1,619 42 Bahamas 1 63 16 38 16 27 14 48 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 13,539r 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 countries2 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. 1 Total 52,509 65,897 68,128 70,506 68,128 71,004 63,202 67,976 77,468r 2 Payable in dollars 48,711 59,156 62,173 64,144 62,173 65,359 57,601 62,034 72,188r 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 46,249r 5 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 1 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 16,057r 9 Payable in dollars 10,976 12,374 11,806 14,795 11,806 16,981 14,918 19,867 14,049r 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 12 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 12,287r 17 Belgium and Luxembourg 193 185 406 360 406 378 518 496 661 IX France 803 694 1,015 1,112 1,015 902 810 1,140 863 19 Germany 436 276 427 352 427 393 290 359 304r 20 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 25 Bahamas 1,965 1,553 2,308 2,442 2,308 1,316 1,306 2,105 403 26 Bermuda 81 140 108 190 108 66 48 63 39 27 Brazil 830 1,468 1,313 1,501 1,313 1,408 1,394 710 835 28 British West Indies 10,393 15,536 10,462 12,957 10,462 13,551 7,349 10,960 24,388 29 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 Asia 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 159r 35 Oil-exporting countries 5 14 15 16 15 16 15 16 16 36 All other3 583 569 652 553 652 720 732 663 56 lr 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 42. 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 2,625r 45 Latin America and Caribbean 4,364 5,276 5,750 5,028 5,750 5,481 6,082 5,773 6,298r 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 l,025r 49 British West Indies 79 190 109 98 109 88 110 91 104r 50 Mexico 993 1,128 1,392 1,219 1,392 1,302 1,462 1,356 l,545r 51 Venezuela 285 357 576 418 576 441 585 566 401 57. Asia 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 countries1 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 • August 1999 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1999 1998 1999 Transaction, and area or country 1997 1998r J A an pr .- . Oct. Nov. Dec.r Jan.r Feb/ Mar/ Apr? U.S. corporate securities STOCKS 1 Foreign purchases 1,097,958 1,573,733 717,824 145,591r 126,571 138,942 155,819 159,570 179,894 222,541 2 Foreign sales 1,028,361 1,523,204 689,289 142,835r 119,042 134,306 152,303 154,968 177,007 205,011 3 Net purchases, or sales (—) 69,597 50,529 28,535 2,756r 7,529 4,636 3,516 4,602 2,887 17,530 4 Foreign countries 69,754 50,909 28,505 2,753r 7,546 4,634 3,502 4,602 2,887 17,514 5 Europe 62,688 68,124 30,507 -249 4,406 2,441 6,048 6,403 6,563 11,493 6 France 6,641 5,672 2,095 360 50 -614 537 -175 11,,119999 534 7 Germany 9,059 9,195 4,201 68 372 -189 1,035 872 448800 1,814 8 Netherlands 3,831 8,249 2,562 1,009 1,816 332 86 956 1,103 417 9 Switzerland 7,848 5,001 4,057 -1,974 -420 -314 -10 582 1,551 1,934 10 United Kingdom 22,478 23,952 11,059 632 1,902 3,154 3,893 2,833 575 3,758 11 Canada -1,406 -4,689 1,569 -507 -201 -976 728 248 723 -130 12 Latin America and Caribbean 5,203 760 1,543 2,058 3,691 3,088 -1,279 -1,279 -1,415 5,516 13 Middle East1 383 -916 -126 -177 -334 -219 152 -240 298 -336 14 Other Asia 2,072 -12,347 -5,289 1,823 -8 155 -2,306 -630 -3,257 904 15 Japan 4,787 -1,171 -1,428 597 822 141 -616 -344 -1,925 1,457 16 Africa 472 639 157 -217 41 16 22 11 87 37 1! Other countries 342 -662 144 22r -49 129 137 89 -112 30 18 Nonmonetary international and regional organizations -157 -380 30 3 -17 2 14 0 0 16 BONDS2 19 Foreign purchases 610,116 904,813 286,521 108,652r 81,893r 58,837 66,571 74,054 76,952 68,944 20 Foreign sales 475,958 725,980 209,186 105,384r 60,470r 41,141 53,744 55,878 52,209 47,355 21 Net purchases, or sales (—) 134,158 178,833 77,335 3,268r 21,423r 17,696 12,827 18,176 24,743 21,589 22 Foreign countries 133,595 179,176 77,437 3,257r 22,393r 17,618 12,826 18,135 24,947 21,529 23 Europe 71,631 130,152 38,877 12,089r 16,677r 9,052 2,858 13,596 12,805 9,618 24 France 3,300 3,386 255 701 235 -170 145 124 22 -36 25 Germany 2,742 4,369 1,813 -135 435 217 398 1,268 190 -43 26 Netherlands 3,576 3,443 913 704 64 996 60 329 418 106 27 Switzerland 187 4,826 1,677 -50 251 -36 403 535 272 467 28 United Kingdom 54,134 99,732 27,650 10,209r 13,737r 6,816 704 9,997 9,241 7,708 29 Canada 6,264 6,121 1,534 292 558 184 100 475 640 319 30 Latin America and Caribbean 34,733 23,938 19,609 -11,135 2,295 2,688 6,382 2,057 5,203 5,967 31 Middle East1 2,155 4,997 2,973 2 835 2,472 1,436 314 859 364 32 Other Asia 16,996 12,662 13,477 1,185 1,904 3,152 2,032 1,439 5,132 4,874 33 Japan 9,357 8,384 2,500 1,624 1,194 2,238 561 165 589 1,185 34 Africa 1,005 190 898 55 24 16 40 266 261 331 35 Other countries 811 1,116 69 769 100 54 -22 -12 47 56 36 Nonmonetary international and regional organizations 563 -343 -102 11 -970 78 1 41 -204 60 Foreign securities 37 Stocks, net purchases, or sales (—) -40,942 6,367 13,914 8,054r -2,729 841 3,308 3,083 1,845 5,678 38 Foreign purchases 756,015 929,914 346,824 90,508r 70,402 69,578 77,931 73,941 95,216 99,736 39 Foreign sales 796,957 923,547 332,910 82,454' 73,131 68,737 74,623 70,858 93,371 94,058 40 Bonds, net purchases, or sales (—) -48,171 -17,360 -3,428 15,980 -918 -4,684 -2,304 -255 1,710 -2,579 41 Foreign purchases 1,451,704 1,328,282 271,536 102,202 55,573 56,845 56,072 66,198 76,097 73,169 42 Foreign sales 1,499,875 1,345,642 274,964 86,222 56,491 61,529 58,376 66,453 74,387 75,748 43 Net purchases, or sales (—), of stocks and bonds .... -89,113 -10,993 10,486 24,034r -3,647 -3,843 1,004 2,828 3,555 3,099 44 Foreign countries -88,921 -10,657 10,247 24,127r -3,641 -3,683 883 2,552 3,595 3,217 45 Europe -29,874 12,927 30,317 io,8or 2,326 3,072 406 6,429 14,014 9,468 46 Canada -3,085 -1,896 -1,494 946 562 -4,828 -310 -551 -131 -502 47 Latin America and Caribbean -25,258 -13,931 -2,365 4,585 -4,074 -19 2,355 491 -3,586 -1,625 48 -25,123 -3,890 -15,773 6,699 -2,064 -1,489 -1,558 -3,344 -7,155 -3,716 49 Japan -10,001 -1,739 -13,882 6,134 -2,390 -1,882 141 -3,390 -7,250 -3,383 50 Africa -3,293 -1,373 1 4 -56 5 22 -25 -16 20 51 Other countries -2,288 -2,494 -439 1,092r -335 -424 -32 -448 469 -428 52 Nonmonetary international and regional organizations -192 -336 239 -93 -6 -160 121 276 -40 -118 1. Comprises oil-exponing countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, 2. Includes state and local government securities and securities of U.S. government Saudi Arabia, and United Arab Emirates (Trucial States). agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 1999 1998 1999 AArreeaa oorr ccoouunnttrryy 11999977 11999988 Jan.— Oct. Nov. Dec. Jan. Feb. Mar. Apr.p Apr. 1 Total estimated 184,171 49,039r -20,527 -2,193 25,456 10,549 -4,165 -14,623 1,532 -3,271 2 Foreign countries 183,688 46,570r -19,784 -2,855 25,556 9,426 -4,107 -14,182 1,762 -3,257 3 Europe 144,921 23,797r -18,876 -9,869 5,475 8,077 2,530r -7,354 l,342r -15,394 4 Belgium and Luxembourg 3,427 3,805 397 -606 510 2,148 -229 204 -54 476 Germany 22,471 144r -276 1,171 307 -556 -268 217 428 -653 6 Netherlands 1,746 -5,533 1,704 1,543 -1,156 898 2,347 -584 197 -256 7 Sweden -465 1,486 -141 193 586 581 163 -228 386 -462 8 Switzerland 6,028 5,240 -3,883 2,811 531 175 -2,171 47 -1,457 -302 9 United Kingdom 98,253 14,384r -9,535 -13,168 3,207 3,074 l,729r -5,721 l,129r -6,672 in Other Europe and former U.S.S.R 13,461 4,27 lr -7,142 -1,813 1,490 1,757 959 -1,289 713 -7,525 11 Canada -811 615r 816 -1,188 3,694 614 -1,729 1,127 213 1,205 i? Latin America and Caribbean -2,554 -3,662r -5,358 -491 1,961 -3,817 -5,621 -6,037 1,100 5,200 13 Venezuela 655 59 3 -35 327 108 -17 463 -445 2 14 Other Latin America and Caribbean -549 9,523r -2,919 -1,288 -5,411 -165 -1,979 -2,024 -2,570 3,654 15 Netherlands Antilles -2,660 -13,244 -2,442 832 7,045 -3,760 -3,625 -4,476 4,115 1,544 16 39,567 27,433r 3,342 7,756 13,632 4,347 l,299r -2,216 — l,714r 5,973 17 Japan 20,360 13,048 1,906 1,233 7,311 3,750 -2,134 -1,124 -1,311 6,475 18 Africa 1,524 751 -52 87 145 16 17 -6 -52 -11 19 Other 1,041 -2,364r 344 850 649 189 -603 304 873 -230 20 Nonmonetary international and regional organizations 483 2,469 -743 662 -100 1,123 -58 -441 -230 -14 21 International 621 1,502 -639 645 -19 1,084 -77 -371 -206 15 22 Latin American regional 170 199 -1 0 -6 2 3 1 -5 0 MEMO 23 Foreign countries 183,688 46,570r -19,784 -2,855 25,556 9,426 -4,107 -14,182 1,762 -3,257 ?4 Official institutions 43,959 4,123 -13,357 9,001 11,843 5,274 l,463r -3,699 —4,425r -6,696 25 Other foreign 139,729 42,447r -6,427 -11,856 13,713 4,152 -5,570r -10,483 6,187r 3,439 Oil-exporting countries 26 Middle East2 7,636 -16,554 3,994 -276 233 -2,442 3,069r -618 1,478r 6655 27 -12 2 0 0 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 • August 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 1999 IItteemm 11999966 11999977 11999988 Jan. Feb. Mar. Apr. Mayr June Exchange Rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 78.28 74.37 62.91 63.20 63.99 63.08 64.20 66.28 65.63 2 Austria/schilling 10.589 12.206 12.379 n.a. n.a. n.a. n.a. n.a. n.a. 3 Belgium/franc 30.97 35.81 36.31 n.a. n.a. n.a. n.a. n.a. n.a. 4 Brazil/real 1.0051 1.0779 1.1605 1.5120 1.9261 1.9057 1.7025 1.6853 1.7669 5 Canada/dollar 1.3638 1.3849 1.4836 1.5194 1.4977 1.5176 1.4881 1.4611 1.4695 6 China, P.R./yuan 8.3389 8.3193 8.3008 8.2789 8.2755 8.2792 8.2792 8.2785 8.2780 7 Denmark/krone 5.8003 6.6092 6.7030 6.4194 6.6379 6.8287 6.9475 6.9925 7.1643 8 European Monetary Union/euro3 n.a. n.a. n.a. 1.1591 1.1203 1.0886 1.0701 1.0630 1.0377 9 Finland/markka 4.5948 5.1956 5.3473 n.a. n.a. n.a. n.a. n.a. n.a. 10 France/franc 5.1158 5.8393 5.8995 n.a. n.a. n.a. n.a. n.a. n.a. 11 Germany/deutsche mark 1.5049 1.7348 1.7597 n.a. n.a. n.a. n.a. n.a. n.a. 12 Greece/drachma 240.82 273.28 295.70 278.91 287.41 296.36 304.26 305.96 312.49 13 Hong Kong/dollar 7.7345 7.7431 7.7467 7.7486 7.7490 7.7493 7.7495 7.7531 7.7575 14 India/rupee 35.51 36.36 41.36 42.55 42.53 42.52 42.80 42.86 43.21 15 Ireland/pound2 159.95 151.63 142.48 n.a. n.a. n.a. n.a. n.a. n.a. 16 Italy/lira 1,542.76 1,703.81 1,736.85 n.a. n.a. n.a. n.a. n.a. n.a. 17 Japan/yen 108.78 121.06 130.99 113.29 116.67 119.47 119.77 122.00 120.72 18 Malaysia/ringgit 2.5154 2.8173 3.9254 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 19 Mexico/peso 7.600 7.918 9.152 10.128 10.006 9.732 9.430 9.396 9.515 20 Netherlands/guilder 1.6863 1.9525 1.9837 n.a. n.a. n.a. n.a. n.a. n.a. 21 New Zealand/dollar2 68.77 66.25 53.61 53.88 54.35 53.45 54.27 55.30 53.25 22 Norway/krone 6.4594 7.0857 7.5521 7.4532 7.7240 7.8151 7.7750 7.7496 7.8749 23 Portugal/escudo 154.28 175.44 180.25 n.a. n.a. n.a. n.a. n.a. n.a. 24 Singapore/dollar 1.4100 1.4857 1.6722 1.6791 1.7004 1.7292 1.7134 1.7122 1.7107 25 South Africa/rand 4.3011 4.6072 5.5417 5.9931 6.1146 6.2136 6.1186 6.1809 6.0880 26 South Korea/won 805.00 947.65 1,400.40 1,175.11 1,188.84 1,229.72 1,209.96 1,197.92 1,168.91 27 Spain/peseta 126.68 146.53 149.41 n.a. n.a. n.a. n.a. n.a. n.a. 28 Sri Lanka/rupee 55.289 59.026 65.006 68.630 69.070 69.570 69.588 70.581 71.211 29 Sweden/krona 6.7082 7.6446 7.9522 7.8188 7.9532 8.2144 8.3293 8.4432 8.5065 30 Switzerland/franc 1.2361 1.4514 1.4506 1.3856 1.4272 1.4660 1.4971 1.5078 1.5374 31 Taiwan/dollar 27.468 28.775 33.547 32.300 32.564 33.165 32.965 32.791 32.525 32 Thailand/baht 25.359 31.072 41.262 36.622 37.137 37.557 37.631 37.051 36.925 33 United Kingdom/pound2 156.07 163.76 165.73 164.98 162.76 162.13 160.89 161.54 159.50 34 Venezuela/bolivar 417.19 488.39 548.39 569.80 577.32 580.06 587.79 596.48 603.29 Indexes3 NOMINAL 35 G-10 (March 1973 = 100)4 87.34 96.38 98.85 n.a. n.a. n.a. n.a. n.a. n.a. 36 Broad (January 1997= 100)5 97.43 104.47 116.25 114.68 116.37 117.80 117.15 116.91 117.45 37 Major currencies (March 1973 = 100)6 85.23 91.85 96.52 92.37 93.76 95.69 95.76 95.79 96.56 38 Other important trading partners (January 1997 = 100)7 98.25 104.67 125.70 128.98 130.83 131.03 129.24 128.55 128.56 REAL 39 Broad (March 1973 = 100)5 86.041" 90.64r 98.51r 96. llr 97.20r 98.59r 98.48r 98.04 98.54 40 Major currencies (March 1973= 100)6 85.88r 93.24 98.36 94.92r 96.40r 98.40r 98.71r 98.47 99.31 41 Other important trading partners (March 1973= 100)7 92.68r 93.77r 106.01r 104.94r 105.52r 106.14r 105.42r 104.67 104.74 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 5. Weighted average of the foreign exchange value of the U.S. dollar against the currencies table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, of the other G-10 countries. The weight for each of the ten countries is the 1972-76 average see inside front cover. world trade of that country divided by the average world trade of all ten countries combined. 2. Value in U.S. cents. Series revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), 3. As of January 1999, the euro is reported in place of the individual euro area currencies. p. 700). These currency rates can be derived from the euro rate by using the fixed conversion rates (in 6. Weighted average of the foreign exchange value of the 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 June 30, 1998 November 1998 A64 September 30, 1998 February 1999 A64 December 31, 1998 May 1999 A64 March 31, 1999 August 1999 A64 Terms of lending at commercial banks August 1998 November 1998 A66 November 1998 February 1999 A66 February 1999 May 1999 A66 May 1999 August 1999 A66 Assets and liabilities of U.S. branches and agencies of foreign banks June 30, 1998 November 1998 A72 September 30, 1998 February 1999 All December 31, 1998 May 1999 A72 March 31, 1999 August 1999 A72 Pro forma balance sheet and income statements for priced service operations June 30, 1998 October 1998 A64 September 30, 1998 January 1999 A64 March 31, 1999 July 1999 A64 Residential lending reported under the Home Mortgage Disclosure Act 1995 September 1996 A68 1996 September 1997 A68 1997 September 1998 A68 Disposition of applications for private mortgage insurance 1996 September 1997 A76 1997 September 1998 A72 Small loans to businesses and farms 1997 September 1998 A76 Community development lending reported under the Community Reinvestment Act 1997 September 1998 A79 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Special Tables • August 1999 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, March 31, 1999 Millions of dollars except as noted Banks with foreign offices1 Bank o s f f w ic i e t s h o d n o l m y2 e stic DDoomm ;stic IItteemm TToottaall ttoott al Total Domestic Over 100 Under 100 1 Total assets3 5352,209 4,637,563 3,683,075 2,968,429 1,403,211 265,923 2 Cash and balances due from depository institutions 311,510 229,397 240,123 158,010 58,593 12,795 3 Cash items in process of collection, unposted debits, and currency and coin 113,242 109,525 29,713 f 4 Cash items in process of collection and unposted debits n.a. 83,894 18,172 1 5 Currency and coin n.a. n.a. 25,632 11,541 n.a. A Balances due from depository institutions in the United States 32,226 24,493 18,812 1 7 Balances due from banks in foreign countries and foreign central banks n.a. 76,888 6,324 2,924 1 8 Balances due from Federal Reserve Banks 17,766 17,667 7,144 1 VlEMO 9 Non-interest-bearing balances due from commercial banks in the United States (included in balances due from depository institutions in the United States) 31,322 n.a. 13,447 13,328 4,547 10 Total securities, held-to-maturity (amortized cost) and available-for-sale (fair value) 98 5,509 562,663 345,138 72,709 11 U.S. Treasury securities 126,274 74,216 41,696 10,362 12 U.S. government agency and corporation obligations (excludes mortgage-backed 181,856 58,901 91,914 31,042 13 Issued by U.S. government agencies 6,474 3,210 2,436 829 14 Issued by U.S. government-sponsored agencies 175,381 55,691 89,477 30,213 IS Securities issued by states and political subdivisions in the United States 87,945 26,305 48,479 13,161 16 General obligations 65,104 18,547 37,040 9,516 17 Revenue obligations 22,113 7,256 11,256 3,601 18 Industrial development and similar obligations 729 501 183 45 19 Mortgage-backed securities (MBS) 450,700 296,380 139,362 14,957 70 28 5,549 197,603 80,958 9,988 ?1 74,683 n a. 45,791 n.a. 25,450 3,441 77 Issued by FNMA and FHLMC 212,500 150,978 55,012 6,509 73 Privately issued 1,367 834 495 37 24 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) 162,151 98,777 58,405 4,969 2.5 Issued or guaranteed by FNMA, FHLMC or GNMA 117,293 70,409 42,323 4,562 76 Collateralized by MBS issued or guaranteed by FNMA, FHLMC, or GNMA 2,293 1,209 902 183 77 All other mortgage-backed securities 42,565 27,160 15,181 225 28 Other debt securities 101,688 85,902 13,890 1,896 29 Other domestic debt securities n.a. 31,065 13,711 n.a. 30 Foreign debt securities n.a. 54,837 180 n.a. 31 Equity securities 32,046 20,959 9,797 1,291 37 Investments in mutual funds and other equity securities with readily determinable fair value 10,253 6,946 2,870 436 33 All other equity securities 21,794 14,013 6,926 855 34 Federal funds sold and securities purchased under agreements to resell 264,427 200,783 199,723 136,079 47,656 17,048 35 Total loans and lease-financing receivables, gross 3,220,130 2,917,943 2,170,946 1,86 3,758 893,966 155,218 36 LESS: Unearned income on loans 3,365 2,617 1,595 848 1,300 469 37 Total loans and leases (net of unearned income) 3,216,766 2,915,325 2,169,351 1,867,910 892,666 154,749 38 LESS: Allowance for loan and lease losses 56,484 n.a. 38,427 n.a. 15,799 2,257 39 LESS: Allocated transfer risk reserves 139 n.a. 139 n.a. 0 0 40 EQUALS: Total loans and leases, net 3,160,143 n.a. 2,130,785 n.a. 876,866 152,492 Total loans and leases, gross, by category' 41 Loans secured by real estate 1,335,849 1,305,685 755,420 725,255 492,357 88,072 4 4 2 3 Construction and land development f T 1 1 2 1 9 0 , , 5 7 1 5 2 8 fT 1 57 5 , , 0 0 0 8 8 3 4 1 6 3 , , 9 5 8 1 7 7 1 6 0 , , 7 9 6 1 2 2 44 One- to four family residential properties 742,257 450,978 247,521 43,757 45 Revolving, open-end loans, extended under lines of credit n.a. 95,556 n.a. 6 8,366 25,167 2,023 46 All other loans I 646,701 1 382,613 222,354 41,734 47 Multifamily (five or more) residential properties I 45,354 1 23,996 19,507 1,851 48 Nonfarm nonresidential properties • 377,804 • 18 8,190 164,826 24,788 49 Loans to depository institutions 103,077 82,315 98,761 77,999 4,233 83 50 Commercial banks in the United States n.a. n.a. 49,644 49,031 3,913 n.a. 51 Other depository institutions in the United States n.a. n.a. 23,837 23,790 106 n.a. 52 Banks in foreign countries n.a. n.a. 25,280 5,178 215 n.a. 53 Loans to finance agricultural production and other loans to farmers 43,742 42,553 11,103 9,913 16,595 16,045 54 Commercial and industrial loans 916,403 744,810 729,856 558,263 159,803 26,744 55 U.S. addressees (domicile) n.a. n.a. 584,102 551,089 159,101 n.a. 56 Non-U.S. addressees (domicile) n.a. n.a. 145,754 7,173 701 n.a. 57 Acceptances of other banks 1,291 688 1,161 558 103 27 58 U.S. banks n.a. n.a. 394 393 n.a. n.a. 59 Foreign banks n.a. n.a. 767 165 n.a. n.a. 60 Loans to individuals for household, family, and other personal expenditures (includes 532,771 491,936 313,220 272,385 197,360 22,190 61 Credit cards and related plans 196,976 n a. 111,248 n.a. 84,359 1,368 62 Other (includes single payment and installment) 335,795 n.a. 201,971 n.a. 113,001 20,822 63 Obligations (other than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 18,586 18 ,577 11,709 11,700 6,114 763 64 136,356 103.593 127,283 94,520 8,305 769 65 Loans to foreign governments and official institutions n.a. n.a. 8,849 1,168 27 n.a. 66 Other loans n.a. n.a. 118,433 93,351 8,278 n.a. 67 Loans for purchasing and carrying securities n.a. n.a. n.a. 18,162 1,726 n.a. 68 All other loans (excludes consumer loans) n.a. n.a. n.a. 75,190 6,552 n.a. 69 Lease-financing receivables 132,055 127,786 122,433 118,164 9,097 525 70 Assets held in trading accounts 268,281 267,345 f 914 1 71 Premises and fixed assets (including capitalized leases) 70,988 T 44,139 T 21,755 5,094 72 Other real estate owned 3,622 n.a. 2,060 n.a. 1,257 305 73 Investments in unconsolidated subsidiaries and associated companies 6,857 1 6,488 1 314 55 74 Customers' liability on acceptances outstanding 10,652 1 10,421 1 226 5 75 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. 28,211 n.a. 28,211 n.a. n.a. 76 Intangible assets 79,825 n.a. 65,700 n.a. 13,344 782 17 All other assets 195,393 n.a. 153,629 n.a. 37,148 4,616 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A65 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition, March 31, 1999 Millions of dollars except as noted Banks with domestic Banks with foreign offices' offices only2 IItteemm TToottaall DDoo tt mm oott ee aa ss ll ttiicc Total Domestic Over 100 Under 100 78 Total liabilities, limited-life preferred stock, and equity capital 5,352,209 n.a. 3,683,075 n.a. 1,403,211 265,923 79 Total liabilities 4,891,242 4,176,595 3,384,911 2,670,264 1,269,140 237,191 80 Total deposits 3,612,346 3,037,796 2,338,318 1,763,768 1,046,673 227,355 81 Individuals, partnerships, and corporations 3,226,807 2,828,899 2,049,603 1,651,695 971,532 205,672 82 U.S. government n.a. 5,430 n.a. 4,542 746 141 83 States and political subdivisions in the United States n.a. 135,071 n.a. 59,310 57,899 17,862 84 Commercial banks in the United States 72,797 33,466 65,413 26,081 6,503 882 85 Other depository institutions in the United States n.a. 9,557 n.a. 4,690 3.534 1,334 86 Foreign banks, governments, and official institutions 136,714 9,027 136,344 8,657 365 5 87 Banks n.a. n.a. 99,713 6,662 341 n.a. 88 Governments and official institutions n.a. n.a. 36,632 1,996 23 n.a. 89 Certified and official checks 17,424 16,346 9,870 8,792 6,094 1,460 90 Total transaction accounts 686,661 390,534 231,972 64,155 91 Individuals, partnerships, and corporations 592,959 333,824 203,160 55,975 92 U.S. government 1,571 1,127 380 64 93 States and political subdivisions in the United States 40,387 17,391 16,707 6,289 94 Commercial banks in the United States 24,276 19,427 4,561 289 95 Other depository institutions in the United States 3,949 3,129 744 75 96 Foreign banks, governments, and official institutions 7,173 6,844 325 4 97 Banks n.a. 6,070 323 n.a. 98 Governments and official institutions n.a. 774 1 n a. 99 Certified and official checks 16,346 8,792 6,094 1,460 100 Demand deposits (included in total transaction accounts) 529,726 344,891 152,043 32,792 101 Individuals, partnerships, and corporations 460,366 295,502 135,100 29,764 102 U.S. government 1,451 1,071 331 49 10.3 States and political subdivisions in the United States 16,191 10,130 4,906 1,155 104 Commercial banks in the United States n.a. 24,266 n a. 19,425 4,553 288 105 Other depository institutions in the United States 3,935 3,129 735 72 106 Foreign banks, governments, and official institutions 7,171 6,842 325 4 107 Banks n.a. 6,070 323 n.a. 108 Governments and official institutions n.a. 772 1 n.a. 109 Certified and official checks 16,346 8,792 6,094 1,460 110 Total nontransaction accounts 2,351,135 1,373,234 814,702 163,199 111 Individuals, partnerships, and corporations 2,235,940 1,317,871 768,372 149,697 112 U.S. government 3,858 3,415 366 77 113 States and political subdivisions in the United States 94,684 41,920 41,192 11,573 114 Commercial banks in the United States 9,189 6,654 1,942 593 115 Other depository institutions in the United States 5,608 1,560 2,789 1,259 116 Foreign banks, governments, and official institutions 1,854 1,813 40 0 117 Banks n.a. 591 18 n.a. 118 Governments and official institutions n.a. 1,222 22 n.a. 119 Federal funds purchased and securities sold under agreements to repurchase 440,349 401,003 359.314 319,968 78,675 2,360 120 Demand notes issued to the U.S. Treasury 14,846 14,846 13,405 13,405 1,391 50 121 Trading liabilities 191,731 n.a. 191,638 n.a. 92 0 122 Other borrowed money 406,160 362,644 28 i,080 244,564 113,067 5,013 123 Banks' liability on acceptances executed and outstanding 10,729 8,262 10,498 8,031 226 5 124 Notes and debentures subordinated to deposits 72,730 n.a. 6ii ,133 n.a. 4,585 12 125 Net due to own foreign offices, Edge Act and agreement subsidiaries, and IBFs n a. 102,263 n.a. 102,263 n.a. n.a. 126 All other liabilities 142,351 n.a. 115,523 n.a. 24,432 2,396 127 Total equity capital 460,967 n.a. 298,164 n.a. 134,071 28,732 MEMO 128 Trading assets at large banks4 267,988 99,370 267,311 98,693 677 1 1 3 2 0 9 U U . . S S . . g T o re v a e s r u n r m y e s n e t c a u g ri e t n ie c s y ( c d o o r m po e r s a ti t c io o n f f o ic b e li s g ) ations • 1 2 2 , , 8 6 2 9 4 7 • 1 2 2 , , 6 6 7 6 3 2 1 3 5 6 1 131 Securities issued by states and political subdivisions in the United States n a. 1,061 n.a. 976 85 132 Mortgage-backed securities 16,383 16,125 258 n.a. 133 Other debt securities 7,214 7,115 100 134 Other trading assets 6,054 6,022 32 135 Trading assets in foreign banks 168,618 0 168,618 0 0 136 Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts 53,136 53,136 53,121 53,121 14 137 Total individual retirement (IRA) and Keogh plan accounts 151,611 81,297 58,384 11,930 138 Total brokered deposits 64,496 40,351 22,418 1,727 139 Fully insured brokered deposits 48,964 27,000 20,329 1,634 140 Issued in denominations of less than $100,000 1100,,559944 55,,447700 44,,111199 1.005 141 Issued in denominations of $100,000, or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less n.a. 38,370 n.a. 21,530 16,210 629 142 Money market deposit accounts (MMDAs) 807,433 568,357 213,561 25,516 143 Other savings deposits (excluding MMDAs) 391,792 225,113 144,280 22,399 144 Total time deposits of less than $100,000 737,370 340,111 312,767 84,492 145 Total time deposits of $100,000 or more 414,539 239,653 144,094 30,792 146 All negotiable order of withdrawal (NOW) accounts 154,205 45,067 78,532 30,606 147 Number of banks ,701 8,701 166 n.a. 3,048 5,487 NOTE. Table 4.20 has been revised; it now includes data that was previously reported in 2. "Over 100" refers to banks whose assets, on June 30 of the preceding calendar year, table 4.22, which has been discontinued. were $100 million or more. (These banks file the FFIEC 032 or FFIEC 033 Call Report.) The notation "n.a." indicates the lesser detail available from banks that don't have foreign "Under 100" refers to banks whose assets, on June 30 of the preceding calendar year, were offices, the inapplicability of certain items to banks that have only domestic offices or the less than $100 million. (These banks file the FFIEC 034 Call Report.) absence of detail on a fully consolidated basis for banks that have foreign offices. 3. Because the domestic portion of allowances for loan and lease losses and allocated 1. All transactions between domestic and foreign offices of a bank are reported in "net due transfer risk reserves are not reported for banks with foreign offices, the components of total from" and "net due to" lines. All other lines represent transactions with parties other than the assets (domestic) do not sum to the actual total (domestic). domestic and foreign offices of each bank. Because these intraoffice transactions are nullified 4. Components of "Trading assets at large banks" are reported only by banks with either by consolidation, total assets and total liabilities for the entire bank may not equal the sum of total assets of $1 billion or more or with $2 billion or more in the par/notional amount of their assets and liabilities respectively of the domestic and foreign offices. olf-balance-sheet derivative contracts. Foreign offices include branches in foreign countries, Puerto Rico, and U.S. territories and possessions; subsidiaries in foreign countries; all offices of Edge Act and agreement corporations wherever located; and IBFs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Special Tables • August 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 3-7, 1999 E. Commercial and industrial loans made by U.S. branches and agencies of foreign banks1 Weighted- Weighted- Amount of loans (percent) e a f v f e e r c a t g iv e e Am lo o a u n n s t of Avera si g z e e loan m a a v t e u r r a i g ty e 3 ( l p o e a r n c e r n a t t ) e 2 o ( f m d il o l l i l o a n r s s ) (tho d u o s ll a a n r d s) s of Days S c e o c l u la re te d r a b l y p S re u p p b e a n je y a c m l t t y e t n o t c M o a m d m e i u tm nd e e n r t LOAN RISK5 1 All commercial and industrial loans 6.52 115,487 42.5 11.0 28.3 72.7 2 Minimal risk 5.59 11,073 1,555 546 31.2 5.2 63.8 88.7 3 Low risk 5.70 26,907 1,353 267 35.5 10.8 42.7 76.4 4 Moderate risk 6.74 31,536 499 674 52.4 16.1 22.7 76.8 5 Other 7.13 27,738 646 556 29.5 5.4 20.1 67.0 By maturity/repricing interval6 6 Zero interval 7.64 22,810 315 587 55.8 11.7 1.8 67.6 7 Minimal risk 6.42 1,061 540 435 17.7 22.2 .1 52.0 8 Low risk 6.98 2,670 372 389 46.6 15.7 4.9 90.1 9 Moderate risk 7.71 8,589 288 725 69.1 12.5 1.9 91.5 10 Other 8.23 4,252 178 751 77.2 17.2 2.8 89.4 11 Daily 5.87 45,518 1,121 195 42.2 12.7 33.8 64.8 12 Minimal risk 5.28 5,153 8,014 271 44.8 .9 73.6 94.2 13 Low risk 5.46 13,415 6,277 173 40.5 12.5 43.5 66.0 14 Moderate risk 6.13 8,146 618 355 42.9 33.8 18.6 55.5 15 Other 6.01 11,360 1,697 15.2 2.0 30.6 41.7 16 2 to 30 days 6.01 17,768 1,418 331 32.1 6.1 37.0 81.6 17 Minimal risk 5.26 1,680 1,905 255 32.2 5.4 58.5 85.5 18 Low risk 5.52 5,657 2,380 178 32.5 4.5 49.7 86.4 19 Moderate risk 6.18 5,570 1,383 408 33.3 7.7 31.3 85.1 20 Other 6.90 3,443 963 537 24.5 2.0 17.7 72.5 21 31 to 365 days 6.82 23,013 839 820 27.8 5.3 41.4 88.5 22 Minimal risk 5.91 2,522 1,133 1,105 7.1 .6 84.9 93.8 23 Low risk 5.71 4,738 879 472 16.0 8.2 55.4 86.2 24 Moderate risk 6.41 6,457 727 723 46.5 7.4 49.8 92.1 25 Other 8.13 8,132 1,452 1.061 22.8 3.1 15.4 87.5 26 More than 365 days 7.44 4,016 242 72.2 9.0 18.4 51.2 27 Minimal risk . . . 6.33 617 454 33.8 29.2 .0 96.1 28 Low risk 7.56 293 119 55.8 15.4 29.8 68.0 29 Moderate risk . . 7.46 2,272 403 80.3 3.3 22.8 36.5 30 Other 8.47 315 151 81.5 4.0 26.4 62.1 Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN (thousands of dollars) 31 1-99 8.81 2,934 3.2 173 32.3 3.4 77.3 32 100-999 8.01 12,528 3.2 131 76.3 20.0 8.6 79.3 33 1,000-9,999 6.75 33,141 2.9 65 44.0 8.9 27.6 75.3 34 10,000 or more 6.03 2.7 63 33.5 9.5 33.4 70.1 BASE RATE OF LOAN4 35 Prime7 8.30 23,618 3.1 105 76.4 21.1 2.4 77.6 36 Fed funds 5.63 30,306 3.1 11 27.0 9.0 23.9 44.4 37 Other domestic 6.21 8,893 2.5 48 33.6 27.6 36.2 64.0 38 Foreign 6.22 38,653 2.6 59 37.6 4.0 53.2 92.0 39 Other 6.51 14,018 2.7 222 38.3 7.1 6.1 78.3 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A67 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 3-7, 1999 B. Commercial and industrial loans made by all domestic banks1 Weighted- Amount of loans (percent) Weighted- Amount of Average loan average ( l e p a o f e v a f r e n e c r c e a t r n i g a v t t e ) e e 2 o ( f m l d o il o a l l i n l o s a n r s s ) (tho d u o s s l i a l z a n e r d s s ) of ma D tu a r y i s t y3 S c e o c l u la re te d r a b l y p S re p u p e b a n je y a c m l t t y e t n o t c M om ad m e it u m nd e e n r t LOAN RISK3 1 All commercial and industrial loans 6.80 69,356 420 753 45.0 16.0 16.6 2 Minimal risk 5.66 7,715 1,127 769 15.3 7.4 57.8 3 Low risk 5.90 13,343 714 440 28.5 21.5 26.7 75.6 4 Moderate risk 6.87 24,038 399 785 57.4 20.0 10.2 75.4 5 Other 7.77 12,045 301 1,265 53.9 9.1 8.7 77.1 By maturity/repricing interval6 6 Zero interval 7.59 21,778 308 583 55.5 10.9 1.3 66.1 7 Minima] risk 6.32 1,003 513 450 18.7 23.5 .1 49.2 8 Low risk 6.95 2,597 367 400 46.5 14.7 3.7 89.9 9 Moderate risk 7.68 8,141 281 711 69.6 12.4 1.8 91.0 10 Other 8.13 3,800 165 769 77.8 14.1 88.2 11 Daily 6.30 20,194 517 439 43.9 28.7 20.5 70.3 12 Minimal risk 5.42 2,412 4,724 579 10.1 2.0 66.9 96.7 13 Low risk 5.61 4,624 2,460 340 31.7 36.1 28.1 57.8 14 Moderate risk 6.19 6,793 528 453 51.4 40.5 13.9 59.4 15 Other 6.89 2,797 443 313 35.5 8.2 9.7 62.5 16 2 to 30 days 5.95 9,936 943 556 29.8 10.3 22.2 86.6 17 Minimal risk 4.79 1,243 1,520 328 31.0 7.3 54.0 92.6 18 Low risk 5.32 2,612 1,309 360 13.8 9.8 28.2 87.0 19 Moderate risk 6.18 3,341 1,017 604 37.6 11.2 16.3 86.3 20 Other 7.30 1,802 619 995 40.5 3.6 11.7 81.8 21 31 to 365 days 6.62 12,899 520 1,276 29.0 6.7 35.8 83.5 22 Minima] risk 5.91 2,399 1,112 1,120 5.2 .6 84.9 93.8 23 Low risk 5.74 3,082 625 543 16.5 12.5 43.4 80.2 24 Moderate risk 6.40 3,403 431 998 38.2 10.0 20.5 89.1 25 Other 8.28 3,132 681 2,593 42.8 1.1 15.4 74.3 26 More than 365 days 7.61 3,564 217 77.8 10.2 7.1 45.0 27 Minimal risk . . . 6.33 617 454 33.8 29.2 .0 96.1 28 Low risk 7.56 293 119 55.8 15.4 29.8 68.0 29 Moderate risk . . 7.79 1,858 333 91.4 4.0 5.0 22.4 30 Other 8.58 277 139 92.0 4.5 16.1 56.9 Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN (thousands of dollars) 31 1-99 8.82 2,889 3.2 174 87.2 32.4 3.0 77.2 32 100-999 8.14 11,169 3.2 138 79.5 21.0 3.6 78.3 33 1,000-9,999 6.97 22,088 2.8 83 50.9 10.6 15.8 77.1 34 10,000 or more 6.06 33,210 2.5 25.8 16.5 22.8 67.4 BASE RATE OF LOAN4 35 Prime7 8.28 21,426 3.1 110 77.5 17.3 1.4 75.4 36 Fed funds 5.47 9,365 2.6 25 37.7 29.2 17.9 41.5 37 Other domestic 6.22 8,318 2.5 50 33.7 29.5 31.9 68.3 38 Foreign 6.23 17,074 2.6 51 21.5 8.1 35.4 84.5 39 Other 6.43 13,174 2.7 226 35.0 6.2 5.8 77.4 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • August 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 3-7, 1999 E. Commercial and industrial loans made by U.S. branche asnd agencies of foreign banks1 Weighted- Amount of loans (percent) AAmmoouunntt ooff AAvveerraaggee llooaann MMoosstt Item loans size maturity3 common ((ppeerrcceenntt))22 o ( f m d il o l l i l o a n r s s ) (tho d u o s l a la n r d s s ) of S c e o c l u la re te d r a b l y Callable p S re u p b a je y c m t e t n o t Made under base r a p te ri 4 c ing DDaayyss penalty LOAN RISK5 1 All commercial and industrial loans 6.57 58,197 795 598 38.7 15.6 19.2 73.5 Prime 2 Minimal risk 5.58 6,860 6,702 781 9.9 5.9 63.6 91.5 Foreign 3 Low risk 5.60 11,428 2,634 382 21.0 21.4 30.6 73.9 Foreign 4 Moderate risk 6.67 19,867 748 690 53.2 20.5 11.5 76.7 Prime 5 Other 7.45 9,607 457 642 43.8 8.1 10.7 84.3 Foreign By maturity/repricing interval6 6 Zero interval 7.45 17,274 584 515 49.0 8.6 1.5 63.5 Prime 7 Minimal risk 6.23 847 2,898 492 14.7 25.2 .1 41.4 Other 8 Low risk 6.55 1,694 1,066 338 30.1 10.5 4.8 89.5 Other 9 Moderate risk 7.59 6,234 482 624 65.4 10.5 2.2 98.4 Prime 10 Other 7.90 2,940 240 593 73.6 14.3 .9 93.1 Prime 11 Daily 6.19 18,970 603 406 42.0 29.6 21.7 69.2 Fed funds 12 Minimal risk 5.40 2,358 7,837 585 9.9 .3 68.4 96.6 Fed funds 13 Low risk 5.47 4,356 3,325 244 29.4 38.3 29.8 55.4 Domestic 14 Moderate risk 6.08 6,331 681 425 50.4 42.9 14.6 57.6 Fed funds 15 Other 6.77 2,624 559 309 31.5 8.5 10.3 61.5 Fed funds 16 2 to 30 days 5.81 8,692 2,023 447 25.8 9.4 23.6 88.1 Foreign 17 Minimal risk 4.62 966 8,822 288 23.8 .0 60.6 100.0 Other 18 Low risk 5.17 2,416 4,107 376 10.3 8.6 30.4 86.2 Foreign 19 Moderate risk 6.11 2,981 1,806 646 36.7 11.2 16.5 85.0 Foreign 20 Other 6.99 1,535 1,175 294 31.9 2.1 12.8 90.7 Foreign 21 31 to 365 days 6.31 10,780 2,699 928 19.8 6.1 42.0 91.3 Foreign 22 Minimal risk 5.91 2,239 11,494 1,176 1.3 .4 89.8 99.6 Foreign 23 Low risk 5.54 2,795 4,856 552 12.0 12.6 46.4 81.4 Foreign 24 Moderate risk 6.10 2,805 2,374 893 31.5 7.6 24.1 92.6 Foreign 25 Other 7.90 2,324 1,638 1,217 24.1 .8 20.7 95.1 Foreign Months 26 More than 365 days 7.20 2,122 1,172 49 68.4 9.5 10.6 42.7 Prime 27 Minimal risk 5.66 424 4,196 48 9.2 40.9 .0 99.8 Other 28 Low risk 6.33 121 875 31 3.9 * 63.5 99.0 Other 29 Moderate risk 7.63 1,365 2,218 50 90.2 1.4 5.2 15.6 Prime 30 Other 8.24 104 206 61 81.7 6.6 41.8 70.5 Other Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN (thousands of dollars) 31 1-99 8.53 1,309 3.4 46 87.2 39.6 4.3 88.5 Prime 32 100-999 7.92 6,709 3.3 50 75.3 21.6 5.1 88.5 Prime 33 1,000-9,999 6.84 18,219 2.9 47 46.4 9.9 18.6 78.5 Prime 34 10,000 or more 6.05 31,961 2.5 88 24.6 16.6 23.2 66.9 Foreign Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 8.20 16,073 3.2 115 75.4 15.5 1.6 75.2 271 36 Fed funds 5.43 8,982 2.6 10 37.4 29.9 18.5 39.6 7,476 37 Other domestic 5.57 6,561 2.2 14 16.6 36.7 40.1 80.5 6,215 38 Foreign 6.25 15,997 2.6 50 20.5 7.7 36.2 84.6 3,315 39 Other 6.17 10,585 2.7 118 25.3 2.6 6.7 78.8 1,529 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A69 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 3-7, 1999 D. Commercial and industrial loans made by small domestic banks1 Weighted- Amount of loans (percent) Weighted- Amount of Average loan average average loans size maturity3 effective (millions (thousands of Subject to ( l p o e a r n c e r n a t t ) e 2 of dollars) dollars) Days S c e o c l u la re te d r a b l y pre p p e a n y a m lty e nt c M o a m d m e i u tm nd e e n r t LOAN RISK5 1 All commercial and industrial li 7.99 11,158 122 1,564 78.0 18.1 3.4 67.8 2 Minimal risk 6.37 856 147 671 58.2 19.5 13.2 67.3 3 Low risk 7.71 1,915 133 769 73.6 21.6 3.6 85.3 4 Moderate risk 7.82 4,172 124 1,244 77.8 17.7 3.7 69.0 5 Other 9.03 2,437 129 3,835 93.9 12.9 1.3 48.6 By maturity/repricing interval6 6 Zero interval 8.16 4,504 109 851 80.5 19.8 76.0 7 Minimal risk 6.84 156 94 203 40.5 14.2 92.0 8 Low risk 7.69 903 165 506 77.1 22.5 1.7 90.7 9 Moderate risk 8.00 1,907 119 1,002 83.1 18.5 .3 66.8 10 Other 8.91 1,351 91.9 13.7 .5 71.2 11 Daily 8.02 1,224 161 859 73.1 15.5 87.6 12 Minimal risk 6.04 54 258 294 20.2 75.6 99.9 13 Low risk 7.93 269 471 1,559 68.3 1.7 97.7 14 Moderate risk 7.72 462 130 750 65.2 7.9 83.4 15 Other 8.81 174 107 369 95.5 4.0 77.6 16 2 to 30 days 6.93 1,245 199 1,322 57.6 17.0 12.7 76.1 17 Minimal risk 5.38 277 391 485 56.4 32.6 31.2 66.8 18 Low risk 7.13 196 139 150 58.0 25.1 1.4 96.5 19 Moderate risk 6.70 360 220 259 44.8 11.1 14.8 96.9 20 Other 9.09 268 167 5,112 89.7 11.9 6.0 30.4 21 31 to 365 days 8.19 2,119 102 3,032 75.7 9.8 4.4 44.3 22 Minimal risk 5.90 160 82 349 60.1 3.1 16.4 13.2 23 Low risk 7.62 287 66 454 60.5 11.9 14.2 68.3 24 Moderate risk 7.83 598 1,487 69.7 20.9 3.5 72.4 25 Other 9.36 6,539 96.4 1.9 .6 14.5 26 More than 365 days 8.21 1,442 91.6 11.1 48.3 27 Minimal risk . . . 7.82 193 154 87.7 3.4 87.9 28 Low risk 8.42 172 74 92.3 26.2 6.1 46.2 29 Moderate risk . . 8.21 494 99 97 94.8 11.3 4.6 41.1 30 Other 8.78 173 117 110 98.2 3.3 1.4 Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 9.06 1,580 3.0 277 87.3 26.4 2.0 67.8 32 100-999 8.47 4,460 3.1 274 85.7 20.1 1.4 63.0 33 1,000-9,999 7.54 3,869 2.7 264 72.2 13.9 3.2 70.0 34 10,000 or more 6.33 1,249 2.7 97 57.0 13.8 12.5 78.4 BASE RATE OF LOAN4 35 Prime7 8.53 5,353 2.9 93 83.8 22.9 76.3 36 Fed funds 6.44 383 2.3 369 45.0 13.7 3.5 86.1 37 Other domestic 8.65 1,756 3.4 182 97.6 2.6 1.1 23.0 38 Foreign 5.95 1,077 2.7 62 36.7 14.1 22.6 83.0 39 Other 7.50 2,589 2.5 706 74.8 21.1 2.1 71.9 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • August 1999 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 3-7, 1999 E. Commercial and industrial loans made by U.S. branches and agencies of foreign banks1 Weighted- Amount of loans (percent) W e a f e v f i e e g r c h a t t i g e v e d e - Am l o o u an n s t of Aver s a i g z e e loan m a a v t e u r r a i g ty e ( l p o e a r n c e r n a t t ) e 2 o ( f m d il o l l i l o a n r s s ) (tho d u o s ll a a n r d s s ) of Days S c e o c l u la re te d r a b l y p S re p u p e b a n je y a c m l t t y e t n o t c M om ad m e i u tm nd e e n r t LOAN RISK5 1 All commercial and industrial loans 6.11 46,132 5,545 117 38.8 3.5 45.6 72.9 2 Minimal risk 5.43 3,358 12,197 40 67.7 .0 77.3 88.7 3 Low risk 5.50 13,565 11,288 116 42.3 .3 58.4 77.2 4 Moderate risk 6.33 7,498 2,555 360 36.1 3.5 62.2 81.6 5 Other 6.64 15,693 5,338 51 10.8 2.6 28.6 59.2 By maturity/repricing interval6 6 Zero interval 7 Minimal risk 8 Low risk 7.97 73 726 51.8 51.8 46.8 97.5 9 Moderate risk 8.22 448 549 1,045 61.5 14.2 4.1 99.8 10 Other 9.11 452 562 579 72.8 42.9 19.4 11 Daily 5.53 25,324 16,727 40 40.9 44.3 60.4 12 Minimal risk 5.17 2,741 20,708 1 75.3 79.5 91.9 13 Low risk 5.38 8,790 34,121 105 45.2 51.6 70.3 14 Moderate risk 5.79 1,353 4,259 2 41.8 35.7 15 Other 5.72 8,563 22,999 37.4 34.9 16 2 to 30 days 6.08 7,832 3,938 58 35.0 54.8 75.2 17 Minimal risk 6.61 436 6,867 51 35.6 71.4 65.2 18 Low risk 5.70 3,045 7,990 27 48.6 68.0 85.9 19 Moderate risk 6.20 2,230 3,002 123 26.8 2.6 51.6 83.2 20 Other 6.46 1,640 2,472 44 .2 23.8 62.4 21 31 to 365 days 7.08 10,114 3,860 236 26.2 48.5 94.8 22 Minimal risk 5.90 122 1.778 796 43.3 84.1 93.5 23 Low risk 5.66 1,656 3,582 340 15.2 .2 77.5 97.4 24 Moderate risk 6.42 3,054 3,068 417 55.8 4.6 82.4 95.5 25 Other 8.04 4,999 5,005 10.4 4.3 15.5 95.7 26 More than 365 days 27 Minimal risk . . . 28 Low risk 29 Moderate risk . . 5.99 413 6,509 30.1 100.0 100.0 30 Other 7.73 38 381 5.6 100.0 100.0 Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN (thousands of dollars) 31 1-99 8.33 46 3.4 57.9 27.4 28.3 85.3 32 100-999 6.99 1,359 3.3 50.3 11.4 49.7 87.6 33 1.000-9,999 6.31 11,053 3.1 30.1 5.4 50.8 71.8 34 10,000 or more 6.01 33,674 2.9 41.1 2.6 43.7 72.7 BASE RATE OF LOAN4 35 Prime7 8.45 2,192 3.5 66.1 11.7 98.9 36 Fed funds 5.70 20,941 3.3 22.2 26.6 45.7 37 Other domestic 6.01 575 2.7 31.6 98.5 1.0 38 Foreign 6.21 21,579 2.6 50.3 67.4 97.9 39 Other 7.75 2.9 89.3 10.7 92.0 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All NOTE. The Survey of Terms of Business Lending collects data on gross loan extensions 5. A complete description of these risk categories is available from the Banking and made during the first full business week in the mid-month of each quarter. The authorized Money Market Statistics Section, Mail Stop 81, Board of Governors of the Federal Reserve panel size for the survey is 348 domestically chartered commercial banks and fifty U.S. System, Washington, DC 20551. The category "Moderate risk" includes the average loan, branches and agencies of foreign banks. The sample data are used to estimate the terms of under average economic conditions, at the typical lender. The category "Other" includes loans loans extended during that week at all domestic commercial banks and all U.S. branches and rated "acceptable" as well as special mention or classified loans. The weighted-average risk agencies of foreign banks. Note that the terms on loans extended during the survey week may ratings published for loans in rows 31-39 are calculated by assigning a value of "1" to differ from those extended during other weeks of the quarter. The estimates reported here are minimal risk loans; "2" to low risk loans; "3" to moderate risk loans, "4" to acceptable risk not intended to measure the average terms on all business loans in bank portfolios. loans; and "5" to special mention and classified loans. These values are weighted by loan 1. As of December 31, 1996, assets of most of the large banks were at least $7.0 billion. amount and exclude loans with no risk rating. Some of the loans in lines 1,6, 11, 16, 21, 26, Median total assets for all insured banks were roughly $62 million. Assets at all U.S. branches and 31-39 are not rated for risk. and agencies averaged 1.3 billion. 6. The maturity/repricing interval measures the period from the date the loan is made until it 2. Effective (compounded) annual interest rates are calculated from the stated rate and first may reprice or it matures. For floating-rate loans that are subject to repricing at any other terms of the loans and weighted by loan amount. The standard error of the loan rate for time—such as many prime-based loans—the maturity/repricing interval is zero. For floating-rate all commercial and industrial loans in the current survey (line 1, column 1) is 0.18 percentage loans that have a scheduled repricing interval, the maturity/repricing interval measures the number point. The chances are about two out of three that the average rate shown would differ by less of days between the date the loan is made and the date on which it is next scheduled to reprice. For than this amount from the average rate that would be found by a complete survey of the loans having rates that remain fixed until the loan matures (fixed-rate loans), the maturity/repricing universe of all banks. interval measures the number of days between the date the loan is made and the date on which it 3. Average maturities are weighted by loan amount and exclude loans with no stated matures. Loans that reprice daily mature or reprice on the business day after they are made. Owing maturities. to weekends and holidays, such loans may have maturity/repricing intervals in excess of one day; 4. The most common base pricing rate is that used to price the largest dollar volume of such loans are not included in the "2 to 30 day" category. loans. Base pricing rates include the prime rate (sometimes referred to as a bank's "base" or 7. For the current survey, the average reported prime rate, weighted by the amount of "reference" rate); the federal funds rate; domestic money market rates other than the prime loans priced relative to a prime base rate, was 7.77 percent for all banks; 7.75 percent for rate and the federal funds rate; foreign money market rates; and other base rates not included large domestic banks, 7.83 percent for small domestic banks; and 7.75 percent for U.S. in the foregoing classifications. branches and agencies of foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • August 1999 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 19991—Continued Millions of dollars except as noted All states" New York California Illinois IItteemm in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s 1 Total assets4 872,356 171,243 690,293 141,790 37,775 6,024 56,630 6,192 2 Claims on nonrelated parties 725,347 91,678 564,942 76,567 35,707 3,049 56,498 4,572 3 Cash and balances due from depository institutions 70,037 38,246 65,946 36,000 810 237 2,360 1,772 4 Cash items in process of collection and unposted debits 2,464 0 2,394 0 4 0 23 0 3 Currency and coin (U.S. and foreign) 17 n.a. 13 n.a. 1 n.a. 0 n.a. 6 Balances with depository institutions in United States 4411,,884466 1155,,002266 3399,,556633 1144,,220022 670 154 11,,005566 503 / U.S. branches and agencies of other foreign banks (including IBFs) 35,907 14.193 34,193 13,380 409 154 975 503 Other depository institutions in United States (including IBFs) . . . 55,,993399 833 55,,337700 822 262 0 80 0 y Balances with banks in foreign countries and with foreign central banks 25,276 23,220 23,614 21,798 118 83 1,275 1,269 10 Foreign branches of U.S. banks 993 938 989 938 0 0 0 0 n Banks in home country and home-country central banks 5,114 4,464 5,008 4,403 11 11 50 50 12 All other banks in foreign countries and foreign central banks .... 19,168 17,817 17,616 16,457 107 72 1,224 1,219 13 Balances with Federal Reserve Banks 434 n.a. 363 n.a. 17 n.a. 6 n.a. 14 Total securities and loans 455,378 42,870 334,797 30,441 33,845 2,609 40,996 2,731 15 Total securities, book value 115,660 5,032 105,923 4,325 1,295 531 7,282 136 16 U.S. Treasury 20,598 n.a. 19,524 n.a. 62 n.a. 940 n.a. 1/ Obligations of U.S. government agencies and corporations 4477,,554455 n.a. 4444,,882244 n.a. 206 n.a. 22,,003322 n.a. 18 Other bonds, notes, debentures, and corporate stock (including state and local securities) 47,517 5,032 41,574 4,325 1,027 531 4,309 136 19 Securities of foreign governmental units 12,903 2,807 12,454 2,626 337 121 47 47 20 All Other 34,614 2,225 29,120 1,699 690 410 4,263 90 21 Federal funds sold and securities purchased under agreements to resell 78,841 8,179 73,341 7,953 444 156 3,136 40 22 U.S. branches and agencies of other foreign banks 13,412 4,589 12,636 4,482 221 98 213 0 23 Commercial banks in United States 12,196 309 11,679 306 119 3 79 0 24 Other 53,233 3,281 49,026 3,165 104 55 2,844 40 25 Total loans, gross 339,967 37,861 229,046 26,137 32,584 22,,007799 33,728 2,595 26 LESS: Unearned income on loans 250 23 171 20 34 11 13 0 21 EQUALS: Loans, net 339,717 37,838 228,875 26,116 32,550 2,078 33,715 2,595 Total loans, gross, by category 28 Real estate loans 18,284 147 11,329 94 3,718 51 680 0 29 Loans to depository institutions 32,020 19,744 18,920 11,356 2,240 1,433 2,845 2,500 30 Commercial banks in United States (including IBFs) 8,686 3,179 6,287 1,939 1,573 790 312 282 31 U.S. branches and agencies of other foreign banks 6,179 2,911 4,003 1,723 1,378 751 292 272 32 Other commercial banks in United States 2,507 268 2,284 216 195 39 20 10 33 Other depository institutions in United States (including IBFs) 40 5 17 0 0 0 3 0 34 Banks in foreign countries 23,293 16,560 12,617 9,417 667 642 2,530 2,218 35 Foreign branches of U.S. banks 1,688 974 1,665 963 1 1 0 0 36 Other banks in foreign countries 21,604 15,586 10,952 8,455 666 641 2,530 2,218 3/ Loans to other financial institutions 48,009 1,119 36,653 979 1,677 0 4,717 5 38 Commercial and industrial loans 218,654 14,175 143,331 11,321 24,560 498 23,754 84 39 U.S. addressees (domicile) 178,277 65 114,924 44 22,576 21 21,353 0 40 Non-U.S. addressees (domicile) 40,376 14,110 28,407 11,277 1,984 477 2,401 84 41 Acceptances of other banks 253 6 87 5 9 0 144 0 42 U.S. banks 16 0 4 0 3 0 0 0 43 Foreign banks 237 6 83 5 6 0 144 0 44 Loans to foreign governments and official institutions (including foreign central banks) 4,242 2,544 3,296 2,272 240 98 68 5 45 Loans for purchasing or carrying securities (secured and unsecured) ... 9,249 20 8,208 20 44 0 1 0 46 All other loans 8,597 105 7,030 89 97 0 1,050 0 47 Lease financing receivables (net of unearned income) 659 0 190 0 0 0 469 0 48 U.S. addressees (domicile) 659 0 190 0 0 0 469 0 49 Non-U.S. addressees (domicile) 0 0 0 0 0 0 0 0 50 Trading assets 86,890 1,070 62,338 1,070 70 0 6,811 0 51 All other assets 34,200 1,313 28,519 1,102 538 47 3,195 28 52 Customers' liabilities on acceptances outstanding 1,849 n.a. 1,421 n.a. 113 n.a. 237 n.a. 53 U.S. addressees (domicile) 941 n.a. 726 n.a. 112 n.a. 83 n.a. 54 Non-U.S. addressees (domicile) 908 n.a. 695 n.a. 2 n.a. 155 n.a. 55 Other assets including other claims on nonrelated parties 32,351 1,313 27,098 1,102 425 47 2,957 28 56 Net due from related depository institutions5 147,009 79,565 125,351 65,223 2,068 2,975 132 1,620 57 Net due from head office and other related depository institutions5. . . 114477,,000099 n.a. 112255,,335511 n.a. 22,,006688 n.a. 132 58 Net due from establishing entity, head office, and other related depository institutions5 n.a. 79,565 n.a. 65,223 n.a. 2,975 n.a. 1,620 59 Total liabilities4 872,356 171,243 690,293 141,790 37,775 6,024 56,630 6,192 60 Liabilities to nonrelated parties 695,338 149,459 576,144 123,205 13,813 5,487 37,965 6,102 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 1999'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s 61 Total deposits and credit balances 305,919 100,194 254,442 84,659 5,941 1,415 13,582 3,962 62 Individuals, partnerships, and corporations 233,848 11,322 190,650 5,950 2,621 132 12,467 /8 63 U.S. addressees (domicile) 216,591 39 180,253 10 1,015 1 12,275 28 64 Non-U.S. addressees (domicile) 17,257 11,283 10,397 5,941 1,607 131 192 50 65 Commercial banks in United States (including IBFs) 35,996 14,880 31,966 14,408 382 98 962 226 66 U.S. branches and agencies of other foreign banks 16,380 12,547 14,476 12,183 0 38 282 186 67 Other commercial banks in United States 19,616 2,332 17,490 2,225 382 60 680 40 68 Banks in foreign countries 8,051 50,541 7,588 46,034 9 296 76 1,767 69 Foreign branches of U.S. banks 1,309 1,389 1,309 1,054 0 25 0 305 70 Other banks in foreign countries 6,742 49,152 6,279 44, 980 9 271 76 1,462 71 Foreign governments and official institutions (including foreign central banks) 10,827 23,343 10,360 18,173 7 875 52 1,890 72 All other deposits and credit balances 17,018 108 13,722 94 2,915 13 23 2 73 Certified and official checks 178 156 6 1 74 Transaction accounts and credit balances (excluding IBFs) 8,817 6,594 330 499 75 Individuals, partnerships, and corporations 6,937 5,064 308 494 76 U.S. addressees (domicile) 4,779 3,878 158 489 77 Non-U.S. addressees (domicile) 2,159 1,186 150 5 78 Commercial banks in United States (including IBFs) 37 32 1 0 79 U.S. branches and agencies of other foreign banks 16 13 0 0 80 Other commercial banks in United States 22 19 1 0 81 Banks in foreign countries 915 664 9 1 82 Foreign branches of U.S. banks 1 1 0 0 83 Other banks in foreign countries 913 663 9 1 84 Foreign governments and official institutions (including foreign central banks) 504 444 2 2 85 All other deposits and credit balances 245 234 4 0 86 Certified and official checks 178 156 6 1 87 Demand deposits (included in transaction accounts and credit balances) 8,126 6 179 234 497 88 Individuals, partnerships, and corporations 6,568 4,953 216 492 89 U.S. addressees (domicile) 4,706 3,833 140 487 90 Non-U.S. addressees (domicile) 1,862 1,120 76 5 91 Commercial banks in United States (including IBFs) 33 n a. 28 n.a. 1 n a. 0 n a. 92 U.S. branches and agencies of other foreign banks 12 10 0 0 93 Other commercial banks in United States 21 19 1 0 94 Banks in foreign countries 765 521 9 1 95 Foreign branches of U.S. banks 1 1 0 0 96 Other banks in foreign countries 763 519 9 1 97 Foreign governments and official institutions (including foreign central banks) 492 439 2 2 98 All other deposits and credit balances 90 82 0 0 99 Certified and official checks 178 156 6 1 100 Nontransaction accounts (including MMDAs, excluding IBFs) 297,102 247,848 5,611 13,083 101 Individuals, partnerships, and corporations 226,910 185,586 2,314 11,973 102 U.S. addressees (domicile) 211,812 176,375 857 11,786 103 Non-U.S. addressees (domicile) 15,098 9,211 1,457 187 104 Commercial banks in United States (including IBFs) 35,959 31,934 382 962 105 U.S. branches and agencies of other foreign banks 16,365 14,463 0 282 106 Other commercial banks in United States 19,595 17,471 382 680 107 Banks in foreign countries 7,137 6,924 0 75 108 Foreign branches of U.S. banks 1,308 1,308 0 0 109 Other banks in foreign countries 5,829 5,616 0 75 110 Foreign governments and official institutions (including foreign central banks) 10,322 9,916 5 50 111 All other deposits and credit balances 16,773 13,488 2,911 23 112 IBF deposit liabilities 100,194 84,659 1,415 3,962 113 Individuals, partnerships, and corporations 11,322 5,950 132 78 114 U.S. addressees (domicile) 39 10 1 78 115 Non-U.S. addressees (domicile) 11,283 5,941 131 50 116 Commercial banks in United States (including IBFs) 14,880 14,408 98 226 117 U.S. branches and agencies of other foreign banks 12,547 12,183 38 186 118 Other commercial banks in United States n.a. 2,332 n.a. 2,225 n a. 60 n.a. 40 119 Banks in foreign countries 50,541 46,034 296 1,767 120 Foreign branches of U.S. banks 1,389 1,054 25 305 121 Other banks in foreign countries 49.152 44.980 271 1,462 122 Foreign governments and official institutions (including foreign central banks) 23.343 18.173 875 11,,88 90 123 All other deposits and credit balances 108 94 13 2 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • August 1999 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 19991—Continued Millions of dollars except as noted All states' New York California Illinois IItteemm in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s 124 Federal funds purchased and securities sold under agreements to repurchase 135,865 19,615 122,277 14,760 822 246 6,218 1,304 125 U.S. branches and agencies of other foreign banks 14,771 4,629 10,534 3,398 373 193 1,962 630 126 Other commercial banks in United States 8,465 335 7,443 141 355 54 320 20 127 Other 112,629 14,651 104,300 11,221 94 0 3,937 655 128 Other borrowed money 75,830 28,172 58,360 22,434 5,223 3,793 6,265 8 09 129 Owed to nonrelated commercial banks in United States (including IBFs) 12,713 6,100 9,873 4,615 842 583 1,109 508 130 Owed to U.S. offices of nonrelated U.S. banks 4,354 658 3,860 551 117 76 112 0 131 Owed to U.S. branches and agencies of nonrelated foreign banks 8,358 5,443 6,013 4,064 725 507 997 508 132 Owed to nonrelated banks in foreign countries 20,174 17,645 16,061 13,720 3,092 2,992 239 237 133 Owed to foreign branches of nonrelated U.S. banks 877 781 626 545 237 237 0 0 134 Owed to foreign offices of nonrelated foreign banks 19,298 16,864 15,435 13,176 2,855 2,755 239 237 135 Owed to others 42,942 4,427 32,427 4, )98 1,289 218 4,918 65 136 All other liabilities 77,530 1,478 56,405 1,351 412 33 7,938 26 137 Branch or agency liability on acceptances executed and outstanding 2,016 n.a. 1,554 n.a. 114 n. a. 249 n.a. 138 Trading liabilities 51,035 77 33,928 77 79 0 6,354 0 139 Other liabilities to nonrelated parties 24,478 1,401 20,923 1,274 219 33 1,335 26 140 Net due to related depository institutions5 177,018 21,784 114,148 18,585 23,962 536 18,666 90 141 Net due to head office and other related depository institutions5 .... 177,018 n.a. 114,148 n.a. 23,962 n.a. 18,666 n.a. 142 Net due to establishing entity, head office, and other related depository institutions5 n.a. 21,784 n.a. 18,585 n.a. 536 n.a. 90 MEMO 143 Non-interest-bearing balances with commercial banks in United States 1,782 0 1,580 0 63 0 19 0 144 Holding of own acceptances included in commercial and industrial loans 2,563 1,940 386 139 145 Commercial and industrial loans with remaining maturity of one year T or less (excluding those in nonaccrual status) 123,258 73,053 13,216 17,144 146 Predetermined interest rates 77,055 1 44,102 5,938 15,047 147 Floating interest rates 46,202 n.a. 28,951 n.a. 7,278 n.a. 2,097 n.a. 148 Commercial and industrial loans with remaining maturity of more than one year (excluding those in nonaccrual status) 94,624 1 69,774 11,264 6,550 149 Predetermined interest rates 23,568 1 19,051 2,176 1,120 150 Floating interest rates 71,056 1 50,723 9,088 5,430 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A75 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 1999'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s exc T IB l o u F t d a s i l n g I o B n F ly s 111155551111 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ((((eeeexxxxcccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss)))) 298,136 n.a. 249,883 n.a. 5,389 n.a. 13,391 n.a. 111155552222 TTTTiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 290,514 n.a. 243,351 n.a. 5,341 n.a. 12,935 n.a. 111155553333 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 7,621 n.a. 6,532 n.a. 48 n.a. 457 n.a. All states2 New York California Illinois inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s inc T I l B o u F t d a s i l n g I o B n F ly s 111155554444 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 29,533 n.a. 25,163 n.a. 2,406 n.a. 1,459 n.a. 111155555555 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 400 0 207 0 81 0 32 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, "Report of either because the item is not an eligible IBF asset or liability or because that level of detail is Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first not reported for IBFs. From December 1981 through September 1985, IBF data were used for reporting data as of June 30, 1980, and was revised as of December 31, 1985. From included in all applicable items reported. November 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a 4. Total assets and total liabilities include net balances, if any, due from or owed to related monthly FR 886a report. Aggregate data from that report were available through the Federal banking institutions in the United States and in foreign countries (see note 5). On the former Reserve monthly statistical release G.l 1, last issued on July 10, 1980. Data in this table and in monthly branch and agency report, available through the G.ll monthly statistical release, the G. 11 tables are not strictly comparable because of differences in reporting panels and in gross balances were included in total assets and total liabilities. Therefore, total asset and total definitions of balance sheet items. liability figures in this table are not comparable to those in the G.l 1 tables. 2. Includes the District of Columbia. 5. Related depository institutions includes the foreign head office and other U.S. and 3. Effective December 1981, the Federal Reserve Board amended Regulations D and Q to foreign branches and agencies of a bank, a bank's parent holding company, and majoritypermit banking offices located in the United States to operate international banking facilities owned banking subsidiaries of the bank and of its parent holding company (including (IBFs). Since December 31, 1985, data for IBFs have been reported in a separate column. subsidiaries owned both directly and indirectly). These data are either included in or excluded from the total columns as indicated in the 6. In some cases two or more offices of a foreign bank within the same metropolitan area headings. The notation "n.a." indicates that no IBF data have been reported for that item, file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Federal Reserve Bulletin • August 1999 Index to Statistical Tables References are to pages A3-A75 although the prefix 'A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Federal credit agencies, 30 Assets and liabilities (See also Foreigners) Federal finance Commercial banks, 15-21, 64—65 Debt subject to statutory limitation, and types and ownership Domestic finance companies, 32, 33 of gross debt, 27 Federal Reserve Banks, 10 Receipts and outlays, 25, 26 Foreign banks, U.S. branches and agencies, 72-75 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, 72-75. (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, 64-65 Finance companies Federal Reserve Banks, 10 Assets and liabilities, 32 Certificates of deposit, 23 Business credit, 33 Commercial and industrial loans Loans, 36 Commercial banks, 15-21, 64-65, 66-71 Paper, 22, 23 Weekly reporting banks, 17, 18 Float, 5 Commercial banks Flow of funds, 37-41 Assets and liabilities, 15-21, 64-65 Foreign branches, U.S. banks and agencies, 71, 72-75 Commercial and industrial loans, 15-21, 64—65 , 66-71 Foreign currency operations, 10 Consumer loans held, by type and terms, 36, 66-71 Foreign deposits in U.S. banks, 5 Real estate mortgages held, by holder and property, 35 Foreign exchange rates, 62 Terms of lending, 64—65 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 Currency in circulation, 5, 13 HOUSING, new and existing units, 46 Customer credit, stock market, 24 INCOME, personal and national, 42, 48, 49 DEBT (See specific types of debt or securities) Industrial production, 42, 44 Demand deposits, 15-21 Insurance companies, 27, 35 Depository institutions Interest rates Reserve requirements, 8 Bonds, 23 Reserves and related items, 4, 5, 6, 12, 64—65 Commercial banks, 66-71 Deposits (See also specific types) Consumer credit, 36 Commercial banks, 4, 15-21, 64—65 Federal Reserve Banks, 7 Federal Reserve Banks, 5, 10 Money and capital markets, 23 Discount rates at Reserve Banks and at foreign central banks and Mortgages, 34 foreign countries (See Interest rates) Prime rate, 22, 66-71 Discounts and advances by Reserve Banks (See Loans) International capital transactions of United States, 50-61 Dividends, corporate, 32 International organizations, 52, 53, 55, 58, 59 Inventories, 48 EMPLOYMENT, 42 Investment companies, issues and assets, 32 Euro, 62 Investments (See also specific types) Commercial banks, 4, 15-21, 66-71 FARM mortgage loans, 35 Federal Reserve Banks, 10, 11 Federal agency obligations, 5, 9, 10, 11, 28, 29 Financial institutions, 35 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

All LABOR force, 42 Savings institutions, 35, 36, 37-41 Life insurance companies (See Insurance companies) Savings deposits (See Time and savings deposits) Loans (See also specific types) Securities (See also specific types) Commercial banks, 15-21, 64-65, 66-71 Federal and federally sponsored credit agencies, 30 Federal Reserve Banks, 5, 6, 7, 10, 11 Foreign transactions, 60 Financial institutions, 35 New issues, 31 Foreign banks, U.S. branches and agencies, 72 Prices, 24 Insured or guaranteed by United States, 34, 35 Special drawing rights, 5, 10, 50, 51 State and local governments MANUFACTURING Holdings of U.S. government securities, 27 Capacity utilization, 43 New security issues, 31 Production, 43, 45 Rates on securities, 23 Margin requirements, 24 Stock market, selected statistics, 24 Member banks, reserve requirements, 8 Stocks (See also Securities) Mining production, 45 New issues, 31 Mobile homes shipped, 46 Prices, 24 Monetary and credit aggregates, 4, 12 Student Loan Marketing Association, 30 Money and capital market rates, 23 Money stock measures and components, 4, 13 Mortgages (See Real estate loans) TAX receipts, federal, 26 Mutual funds, 13, 32 Thrift institutions, 4. (See also Credit unions and Savings Mutual savings banks (See Thrift institutions) institutions) Time and savings deposits, 4, 13, 15-21, 64—65 NATIONAL defense outlays, 26 Trade, foreign, 51 National income, 48 Treasury cash, Treasury currency, 5 Treasury deposits, 5, 10, 25 OPEN market transactions, 9 Treasury operating balance, 25 PERSONAL income, 49 Prices UNEMPLOYMENT, 42 Consumer and producer, 42, 47 U.S. government balances Stock market, 24 Commercial bank holdings, 15-21 Prime rate, 22, 66-71 Treasury deposits at Reserve Banks, 5, 10, 25 U.S. government securities Producer prices, 42, 47 Bank holdings, 15-21, 27 Production, 42, 44 Dealer transactions, positions, and financing, 29 Profits, corporate, 32 Federal Reserve Bank holdings, 5, 10, 11, 27 Foreign and international holdings and REAL estate loans Banks, 15-21, 35 transactions, 10, 27, 61 Terms, yields, and activity, 34 Open market transactions, 9 Type of holder and property mortgaged, 35 Outstanding, by type and holder, 27, 28 Reserve requirements, 8 Rates, 23 Reserves U.S. international transactions, 50-62 Commercial banks, 15-21 Utilities, production, 45 Depository institutions, 4, 5, 6, 12 Federal Reserve Banks, 10 VETERANS Administration, 34, 35 U.S. reserve assets, 51 Residential mortgage loans, 34, 35 Retail credit and retail sales, 36, 42 WEEKLY reporting banks, 17, 18 Wholesale (producer) prices, 42, 47 SAVING Flow of funds, 37-41 National income accounts, 48 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • August 1999 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman LAURENCE H. MEYER EDWARD W. KELLEY, JR. ROGER W. FERGUSON, JR. 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 WILLIAM A. RYBACK, Associate Director DIVISION OF MONETARY AFFAIRS GERALD A. EDWARDS, JR., Deputy Associate Director DONALD L. KOHN, Director STEPHEN M. HOFFMAN, JR., Deputy Associate Director DAVID E. LINDSEY, Deputy Director JAMES V. HOUPT, Deputy Associate Director BRIAN F. MADIGAN, Associate Director JACK P. JENNINGS, Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director MICHAEL G. MARTINSON, Deputy Associate Director VINCENT R. REINHART, Deputy Associate Director SIDNEY M. SUSSAN, Deputy Associate Director WILLIAM C. WHITESELL, Assistant Director MOLLY S. WASSOM, Deputy Associate Director NORMAND R.V. BERNARD, Special Assistant to the Board HOWARD A. AMER, Assistant Director NORAH M. BARGER, Assistant Director DIVISION OF CONSUMER BETSY CROSS, Assistant Director AND COMMUNITY AFFAIRS RICHARD A. SMALL, Assistant Director WILLIAM C. SCHNEIDER, JR., Project Director, DOLORES S. SMITH, Director National Information Center 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

EDWARD M. GRAMLICH OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS STEPHEN R. MALPHRUS, Staff Director LOUISE L. ROSEMAN, 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

80 Federal Reserve Bulletin • August 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. 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 PETER HOOPER III, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary WILLIAM C. HUNTER, Associate Economist LYNN S. Fox, Assistant Secretary RICHARD W. LANG, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel ARTHUR J. ROLNICK, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel HARVEY ROSENBLUM, Associate Economist MICHAEL J. PRELL, Economist LAWRENCE SLIFMAN, Associate Economist KAREN H. JOHNSON, Economist DAVID J. STOCKTON, Associate Economist LEWIS S. ALEXANDER, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL ROBERT W. GILLESPIE, President KENNETH D. LEWIS,Vice President LAWRENCE K. FISH, First District NORMAN R. BOBINS, Seventh District DOUGLAS A. WARNER III, Second District KATIE S. WINCHESTER, Eighth District RONALD L. HANKEY, Third District RICHARD A. ZONA, Ninth District ROBERT W. GILLESPIE, Fourth District C. Q. CHANDLER, Tenth District KENNETH D. LEWIS, Fifth District RICHARD W. EVANS, JR., Eleventh District STEPHEN A. HANSEL, Sixth District WALTER A. DODS, JR., Twelfth District JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

81 CONSUMER ADVISORY COUNCIL YVONNE S. SPARKS STRAUTHER, St. Louis, Missouri, Chairman DWIGHT GOLANN, Boston, Massachusetts, Vice Chairman LAUREN ANDERSON, New Orleans, Louisiana JOHN C. LAMB, Sacramento, California WALTER J. BOYER, Garland, Texas ANNE S. LI, Trenton, New Jersey WAYNE-KENT A. BRADSHAW, LOS Angeles, California MARTHA W. MILLER, Greensboro, North Carolina MALCOLM M. BUSH, Chicago, Illinois DANIEL W. MORTON, Columbus, Ohio MARY ELLEN DOMEIER, New Ulm, Minnesota CAROL J. PARRY, New York, New York JEREMY D. EISLER, Biloxi, Mississippi PHILIP PRICE, JR., Philadelphia, Pennsylvania ROBERT F. ELLIOT, Prospect Heights, Illinois MARTA RAMOS, San Juan, Puerto Rico JOHN C. GAMBOA, San Francisco, California DAVID L. RAMP, St. Paul, Minnesota ROSE M. GARCIA, Las Cruzes, New Mexico 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, Ponte Vedra, Florida GARY S. WASHINGTON, Chicago, Illinois GWENN S. KYZER, Allen, Texas ROBERT L. WYNN, II, Madison, Wisconsin THRIFT INSTITUTIONS ADVISORY COUNCIL WILLIAM A. FITZGERALD, Omaha, Nebraska, President F. WELLER MEYER, Falls Church, Virginia, Vice President GAROLD R. BASE, Piano, Texas BABETTE E. HEIMBUCH, Santa Monica, California JAMES C. BLAINE, Raleigh, North Carolina THOMAS S. JOHNSON, New York, New York DAVID A. BOCHNOWSKI, Munster, Indiana WILLIAM A. LONGBRAKE, Seattle, Washington LAWRENCE L. BOUDREAUX III, New Orleans, Louisiana KATHLEEN E. MARINANGEL, McHenry, Illinois RICHARD P. COUGHLIN, Stoneham, Massachusetts ANTHONY J. POPP, Marietta, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • August 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, 1998. 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 The Federal Open Market Committee States, its possessions, Canada, and Mexico. Elsewhere, Federal Reserve Bank Board of Directors $35.00 per year or $.80 each. Federal Reserve Banks REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL A Consumer's Guide to Mortgage Lock-Ins RESERVE SYSTEM. A Consumer's Guide to Mortgage Settlement Costs ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Refinancings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Home Mortgages: Understanding the Process and Your Right Vol. II (Irregular Transactions). 1969. 116 pp. Each volume to Fair Lending $5.00. How to File a Consumer Complaint GUIDE TO THE FLOW OF FUNDS ACCOUNTS. 672 pp. $8.50 each. Making Sense of Savings FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated SHOP: The Card You Pick Can Save You Money monthly. (Requests must be prepaid.) Welcome to the Federal Reserve Consumer and Community Affairs Handbook. $75.00 per year. When Your Home is on the Line: What You Should Know Monetary Policy and Reserve Requirements Handbook. $75.00 About Home Equity Lines of Credit per year. Keys to Vehicle Leasing Securities Credit Transactions Handbook. $75.00 per year. Looking for the Best Mortgage The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) $200.00 per year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

83 STAFF STUDIES: Only Summaries Printed in the 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- BULLETIN GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. Studies and papers on economic and financial subjects that are of 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, BY general interest. Requests to obtain single copies of the full text or JAMES T. FERGUS AND JOHN L. GOODMAN, JR. JULY 1993. to be added to the mailing list for the series may be sent to 20 PP. Publications Services. 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Staff Studies 1-158, 161, 163, 165, 166, and 168-169 are out of PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, print. by Stephen A. Rhoades. July 1994. 37 pp. 170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU- 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- LATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and IN SAVINGS ACT, by Gregory Elliehausen and Barbara R. Donald Savage. February 1990. 12 pp. Lowrey, December 1997. 17 pp. 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- 171. THE COST OF BANK REGULATION: A REVIEW OF THE EVI- VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by DENCE, by Gregory Elliehausen, April 1998. 35 pp. Gregory E. Elliehausen and John D. Wolken. September 1990. 35 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

85 1-A 2-B 3-C 4-D 5-E Ml- Pittsburgh Baltimore MD KY • mr JHHHFBC /C T NH cinnati •Charlotte Bullalo MA" Cf ^-RI sc BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H • Nashville KY Birmingham IN / sville MO TJ **—™ AR Li A\ Tacksonvi • Memphis New 'Orleans Miami ATLANTA CHICAGO ST. LOUIS 9-1 MINNEAPOLIS 10-J 12-L oMahomaCitx OK KANSAS CITY 11-K NM F.l Paso DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • August 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 Barbara B.Henshaw 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. Gambs1 Oklahoma City 73125 Larry W. Brummett Kelly J. Dubbert Omaha 68102 Gladys Styles Johnston Steven D. Evans DALLAS 75201 Roger R. Hemminghaus Robert D. McTeer, Jr. James A. Martin Helen E. Holcomb El Paso 79999 Patricia Z. Holland-Branch Sammie C. Clay Houston 77252 Edward O. Gaylord Robert Smith, III1 San Antonio 78295 Vacancy 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