Federal Reserve Bulletin, 2000-07

Volume 86 • Number 7 • July 2000 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 441 THE EFFECTS OF RECENT MORTGAGE 459 Stephen R. Malphrus, Staff Director for Man- REFINANCING agement, Board of Governors, discusses the socalled Love Bug computer virus and states that Rising home prices and generally falling interest the Federal Reserve had state-of-the art procerates in recent years, together with a desire to dures and controls in place for responding to convert the accumulated equity in their homes and managing cyber-related incidents, including into spendable funds, have prompted many computer viruses, and that the procedures were homeowners to refinance their mortgages. In the effective in managing this incident and limiting spring of 1999, the Federal Reserve surveyed the spread of this virus. He states further that the consumers to determine the extent of refinanc- Board is committed to participating in initiatives ing, the extent to which refinancing homeowners that promote information-system security and "cashed-out" some of their equity when they that assist in the rapid identification and analysis refinanced, how much equity they took out, and of new viruses and other forms of cyber attacks how they spent the funds. Survey results suggest (Testimony before the Subcommittee on Finanthat cash-out refinancings in 1998 and early cial Institutions of the Senate Committee on 1999 likely boosted consumption spending a bit, Banking, Housing, and Urban Affairs, May 18, may have had a larger effect on home improve- 2000). ment spending, and may have moderated the growth of consumer credit during that period. 462 Edward M. Gramlich, member, Board of Governors, focuses on predatory lending and states that most predatory lending seems to occur in 451 INDUSTRIAL PRODUCTION AND CAPACITY the subprime mortgage market, a market that UTILIZATION FOR MAY 2000 has grown recently; he testifies that because Industrial production increased 0.4 percent in consumers who obtain subprime mortgage loans May, to 144.2 percent of its 1992 average, after have fewer credit options than other borrowers, having risen 0.7 percent in both March and they may be more vulnerable to unscrupulous April. The rate of capacity utilization for total lenders or brokers. He states further that given industry held steady at 82.1 percent, a level the wide range of practices that are included in about even with the 1967-99 average. the notion of what is "predatory," a multifaceted approach, including strengthening the enforcement of laws that are being ignored and non- 454 STATEMENTS TO THE CONGRESS regulatory strategies, is likely to be most effec- Laurence H. Meyer, member, Board of Gover- tive (Testimony before the House Committee nors of the Federal Reserve System, comments on Banking and Financial Services, May 24, on issues related to H.R. 4209, the Bank 2000). Reserves Modernization Act of 2000, and states that the Board strongly supports the proposal in 466 ANNOUNCEMENTS the bill to allow the payment of interest on the Action by the Federal Open Market Committee balances that depository institutions maintain in and an increase in the discount rate. their accounts at the Federal Reserve Banks. He Call for nominations for appointments to the states further that because of the uncertainties Consumer Advisory Council and notice of a involved, it is best for the Federal Reserve to be meeting. able to pay interest on any balances that depositories hold at Reserve Banks, and at differential Proposed amendments to Regulation Z revising rates to be set by the Federal Reserve, as the bill the disclosure requirements for credit and charge would allow (Testimony before the House Com- card solicitations; request for additional committee on Banking and Financial Services, ment on deposit deadlines and pricing practices May 3, 2000). for automated clearinghouse transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Approval of final regulations for privacy of con- A1 FINANCIAL AND BUSINESS STATISTICS sumer financial information. These tables reflect data available as of Joint agency proposal for rule on disclosure and May 26, 2000. reporting of CRA-related agreements. A3 GUIDE TO TABULAR PRESENTATION Enforcement action. A4 Domestic Financial Statistics Publication of the Annual Report. A42 Domestic Nonfinancial Statistics A50 International Statistics 469 MINUTES OF THE MEETING OF THE FEDERAL OPEN MARKET COMMITTEE A63 GUIDE TO STATISTICAL RELEASES AND HELD ON MARCH 21, 2000 SPECIAL TABLES At this meeting, the Committee voted to tighten reserve conditions by a slight amount consistent A64 INDEX TO STATISTICAL TABLES with an increase in the federal funds rate to a level of 6 percent. The Committee also indicated A66 BOARD OF GOVERNORS AND STAFF that the economic risks remained weighted toward rising inflation. A68 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS 475 LEGAL DEVELOPMENTS A70 FEDERAL RESERVE BOARD PUBLICATIONS Various bank holding company, bank service corporation, and bank merger orders; and pend- A72 MAPS OF THE FEDERAL RESERVE SYSTEM ing cases. A74 FEDERAL RESERVE BANKS, BRANCHES, 511 DOMESTIC OPEN MARKET OPERATIONS AND OFFICES DURING 1999 Report adapted from one presented to the Federal Open Market Committee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Lynn S. Fox, Chair • Jennifer J. Johnson • Karen H. Johnson • Donald L. Kohn • Stephen R. Malphrus • J. Virgil Mattingly, Jr. • Dolores S. Smith • Richard Spillenkothen • Richard C. Stevens • David J. Stockton 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 Graphics 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

The Effects of Recent Mortgage Refinancing Peter J. Brady, Glenn B. Canner, and Dean M. Maki, Such surveys are an important source of information of the Board's Division of Research and Statistics, on both the characteristics of a homeowner's mortprepared this article. Marcin Stawarz provided gage and the homeowner's use of borrowed funds. research assistance. This article presents estimates, based on the survey findings, of changes in monthly payments resulting In recent years, rising home prices, generally falling from refinancings, the amount of funds homeowners interest rates, and a desire to convert accumulated raised in the process, and how homeowners used the home equity into spendable funds have combined to funds. Also presented are rough estimates of the provide millions of homeowners with the opportunity aggregate effects of refinancing on the U.S. economy, and motivation to refinance the mortgage on their including the effects on consumption spending. primary residence. In many cases, refinancing results in a lower interest rate and lower monthly mortgage payments, allowing homeowners to spend or save THE DECISION TO REFINANCE that portion of their incomes no longer dedicated to servicing mortgages. When they refinance, some Choosing whether and when to refinance a home homeowners liquefy the equity they have accumu- mortgage is an important and often difficult decision lated in their homes by borrowing more than they that involves a careful balancing of costs and beneneed to pay off their former mortgage and cover the fits. Some of the factors to be considered are known transaction costs of the refinancing. They use the with certainty and are readily quantifiable; others, funds raised in such "cash-out" refinancings to make such as the future course of interest rates, cannot be home improvements, to repay other debts, or to pur- known with certainty. chase goods and services or other assets. The Federal Reserve Board closely follows refi- Balancing Costs and Benefits nancing activity as well as home equity lending, another form of borrowing used to liquefy accumu- In general, the question of whether to refinance arises lated equity in homes. Both topics have been the whenever current interest rates on mortgages fall focus of Board-sponsored surveys of households and below the rate on the homeowner's existing loan. At of previous articles in the Federal Reserve Bulletin.1 such times, the homeowner must weigh the prospec- To learn more about the extent to which homeowntive after-tax savings from lower monthly payments ers have been using refinancings to liquefy the equity on a new, lower-rate loan against the after-tax costs in their homes and the way they have used the funds of the refinancing transaction itself, including any raised, the Federal Reserve sponsored questions conmortgage fees (points) and application and appraisal cerning mortgage refinancing on the March through fees. Because the savings from lower interest pay- May 1999 Surveys of Consumers, monthly surveys ments accumulate slowly over time as the loan is conducted by the Survey Research Center of the repaid, the amounts that would be saved in a refinanc- University of Michigan (for details see appendix A). ing must be discounted to their present value and compared with the costs of the transaction, often referred to as the closing costs.2 If the discounted 1. See Glenn B. Canner, James T. Fergus, and Charles A. Luckett, "Home Equity Lines of Credit," Federal Reserve Bulletin, vol. 74 (June 1988), pp. 361-73; Glenn B. Canner, Charles A. Luckett, and Thomas A. Durkin, "Home Equity Lending," Federal Reserve Bulle- 2. The comparison is not always straightforward, as the hometin, vol. 75 (May 1989), pp. 333^14; Glenn B. Canner, Charles A. owner in many instances has a choice of either paying the transaction Luckett, and Thomas A. Durkin, "Mortgage Refinancing," Federal costs as a lump sum at the time of the refinancing or adding the costs Reserve Bulletin, vol. 76 (August 1990), pp. 604-12; Glenn B. Canner, to the amount being refinanced. The cost-benefit comparison is rela- Charles A. Luckett, and Thomas A. Durkin, "Home Equity Lending: tively easy in the former case but more complicated in the latter. To Evidence from Recent Surveys," Federal Reserve Bulletin, vol. 80 facilitate the comparison, the after-tax present value of the financed (July 1994), pp. 571-83; and Glenn B. Canner, Thomas A. Durkin, transaction costs must be determined. If the interest rate on the new and Charles A. Luckett, "Recent Developments in Home Equity loan is used as the discount rate in the calculation, the pre-tax present Lending," Federal Reserve Bulletin, vol. 84 (April 1998), pp. 241-51. value of the financed transaction costs equals the lump sum payment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

442 Federal Reserve Bulletin • July 2000 present value of the stream of prospective after-tax they retire, for example).3 Other homeowners (those savings in interest payments exceeds the after-tax having difficulty making their mortgage payments or costs of the transaction, the homeowner stands to other payment obligations or anticipating a reduction gain from the transaction. The necessary calcula- or disruption in income) may replace their current tions rely on certain assumptions, however, includ- loan with a longer-term loan to reduce the size of ing assumptions about the course of future events, their monthly payments. and thus the decision to refinance is often complex. For many homeowners, a principal reason for One assumption is the length of time the home- refinancing is to raise funds by liquefying some of owner will own the property. If the property is sold the equity in their home. In many refinancings, the relatively soon after a refinancing—because of a job homeowner can both extract equity and lower the relocation, for example—the savings in interest pay- interest rate on the loan. However, some homeowners ments over time are unlikely to offset the costs of the refinance even when a lower rate is not available. transaction, unless interest rates had fallen rather Board-sponsored surveys over the years have found substantially. that although the number of refinancings declines Another assumption is the homeowner's expecta- sharply when interest rates are stable or rising, refitions about future interest rates. If the homeowner nancings continue to occur—and that a large proporexpects mortgage rates to decline, he may postpone tion of homeowners who refinance during these the decision to refinance even when the benefit from periods do so to liquefy the accumulated equity in refinancing exceeds its cost. The effects of uncer- their home. Also, for any given level of interest rates, tainty on refinancing may result in very different cash-out refinancings are more likely following decisions, depending on the type of mortgage being periods of rapid appreciation of home prices. refinanced. If the homeowner has a fixed-rate mort- The decision to borrow additional amounts through gage, expects mortgage rates to rise or fall with equal refinancing is influenced by such factors as the rates probability, and faces small potential savings, she and terms available through alternative means of may postpone refinancing because the certain gains financing, the level of interest rates on the existing are small, large gains are still possible if rates fall and prospective substitute loans, the amount of equity sharply, and no significant adverse effects will occur in the home, and the amount of extra funds sought. if rates rise sharply. If the homeowner has an Most homeowners who can qualify for a refinancing adjustable-rate mortgage, however, the decision may will also be able to obtain funds through a home be different. In that case, the prospect of higher future equity loan, a personal loan, or a credit card account. monthly payments should interest rates rise signifi- A first mortgage usually carries the lowest available cantly may prompt the homeowner to refinance into a interest rate, so refinancing is often the best choice fixed-rate loan, even if the current savings are small. for raising a large amount of new funds.4 However, if (Of course, a homeowner who keeps an adjustable- the existing mortgage carries a very low rate and is rate loan may reap the benefits of an interest rate large relative to the amount of new funds needed, the decline without incurring the costs of refinancing, as homeowner would probably not benefit by refinancthe loan rate will ordinarily fall with market rates.) ing and giving up the attractive current rate. Nonrate considerations also affect the choice among alternative sources of funds. For example, Other Considerations unlike a refinancing, in which the homeowner obtains the full amount of the extracted funds immediately Homeowners sometimes refinance for reasons other (and therefore incurs interest charges on the funds than to obtain a lower mortgage interest rate or to immediately), a home equity line of credit or a credit reduce uncertainty about future payments. Another card account provides flexibility for subsequent motivation is to change the time period over which borrowing and might be more appropriate for hanthe mortgage is to be repaid. Some homeowners replace their current mortgage with a shorter-term 3. Of course, a homeowner can in most cases repay a longer-term loan (so that their loan will be paid off by the time mortgage over a period shorter than the stated term by making larger payments than are required. In such a case, however, the homeowner would not benefit from the lower interest rates typically available on today. On an after-tax basis, however, the two amounts may differ. If shorter-term loans. the transaction costs on a refinancing are financed, the interest paid on 4. In addition to considering differences in interest rates, a homethose borrowed funds is fully tax-deductible. In contrast, if a lump owner must weigh differences in transaction costs among alternative sum payment of transaction costs is made, only the portion of those types of loans. For example, although a home equity loan often has costs that constitutes points (prepaid interest) is tax-deductible, and it an interest rate higher than that on a refinanced first mortgage, the must be amortized over the life of the loan. transaction costs for a home equity loan may be lower. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Effects of Recent Mortgage Refinancing 443 dling repetitive credit needs, such as periodic tuition 1. Mortgage status and refinancing activity of homeowners, expenses, even when rate comparisons seem to favor by region, 1999 refinancing. Percent Another nonrate consideration is taxes. For exam- All North Item West Northeast South ple, federal tax law favors mortgage borrowing, as regions Central the interest payments are generally tax-deductible. Mortgage status No mortgage 39 29 37 41 45 Interest payments on credit cards and most other forms of nonmortgage debt, in contrast, are not tax- Mortgage or land contract 61 71 63 59 55 deductible, and therefore the after-tax cost of borrow- Total 100 100 100 100 100 ing through a mortgage refinancing or a home equity loan is less than a comparable debt not secured by the Refinancing activity Mortgage debt borrower's home.5 holders who had refinanced first mortgage or land contract ... 47 52 52 55 37 SURVEY FINDINGS Mortgage debt holders who had refinanced first mortgage or Responses to the 1999 Surveys of Consumers make it land contract in possible to determine the incidence of mortgage refi- 1998 or early 1999 20 24 23 21 1133 nancing, the amount of funds raised in refinancings, NOTE . All survey data in this and the following tables are based on weighted and the uses of the funds by homeowners. observations. SOURCE. Here and in subsequent tables (except as noted), Surveys of Consumers, University of Michigan Survey Research Center, March, April, and May 1999. Home Ownership and the Incidence of Mortgage Debt Board-sponsored survey found that 45 percent of Home-ownership rates have been increasing in recent mortgage debt holders had refinanced their mortyears and reached a new high in 1999. Consistent gage.7 The prevalence of refinancing in recent years with estimates by the Bureau of the Census, findings can be traced to a number of factors, including lower from the 1999 survey indicate that in the first half interest rates; the widespread adoption of new techof 1999, 67 percent of all households owned their nologies that have reduced transaction costs; and home.6 The majority of those homeowners (about gains in home values and equity, which have 60 percent) had an outstanding mortgage on their increased opportunities to borrow additional amounts. primary residence (table 1). Such borrowing varied Refinancing activity tends to closely follow considerably across regions of the country, however. changes in interest rates (chart 1). Because interest rates have fluctuated over the past decade and have been low relative to the previous two decades, home- The Prevalence of Refinancing owners have had several attractive opportunities to refinance. The relatively low long-term interest rates Board-sponsored surveys indicate that mortgage refi- of the second half of 1998 and early 1999 stimulated nancing has not been rare in recent years. In 1999, a refinancing boom. The 1999 survey findings reflect 47 percent of all homeowners with mortgage debt the industry statistics shown in the chart: 42 perreported that they had refinanced the mortgage on cent of the homeowners who had refinanced their their current home at least once. Similarly, a 1994 mortgage obligations—an estimated 8.3 million homeowners—did so in 1998 or the first five months of 1999 (table 2). 5. See Dean M. Maki, "Household Debt and the Tax Reform Act of 1986," American Economic Review (forthcoming), for an analysis of the substitution of mortgage for consumer debt after the elimination of the tax-deductibility of consumer interest in the Tax Reform Act of 7. The incidence of refinancing was lower in Board-sponsored 1986. Another tax-related consideration involves the simultaneous household surveys in the 1970s and 1980s. For example, the 1977 holding of tax-favored mortgage debt and tax-favored pension assets; Survey of Consumer Finances found that only 8 percent of homeownsee Eric M. Engen, William G. Gale, and John Karl Scholz, "The ers had refinanced the mortgage on their current home, and a special Illusory Effects of Saving Incentives on Saving," Journal of Eco- survey of refinancing activity conducted in 1989 found that only nomic Perspectives, vol. 10 (Fall 1996), pp. 113-38. 20 percent of homeowners had refinanced. See Thomas A. Durkin and 6. U.S. Department of Housing and Urban Development, U.S. Gregory E. Elliehausen, 1977 Consumer Credit Survey (Board of Housing Market Conditions, table 29, "Homeownership Rates by Age Governors of the Federal Reserve System, 1978), p. 72; and Canner, of Householder: 1982-Present" (3rd quarter 1999). Luckett, and Durkin, "Mortgage Refinancing," p. 607. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

444 Federal Reserve Bulletin • July 2000 1. Refinancing activity and mortgage rates, 1993-2000 3. Number of mortgage loans extended, by purpose of loan, 1993-98 Percent Index (March 16, 1990 = 100) Millions of loans Thirty-year fixed rate Purpose of loan YYeeaarr Home purchase Refinancing 1993 3.2 6.1 1994 3.5 2.5 1995 3.5 1.6 1996 3.8 2.6 1997 4.0 2.8 1998 4.5 6.7 SOURCE. Home Mortgage Disclosure Act data, from Federal Financial Institutions Examination Council. NOTE. The data are weekly and extend through May 26, 2000. The refinanc- The HMDA data document the refinancing booms ing index is seasonally adjusted. in 1993 and 1998 (1999 data are not yet available) SOURCE. Federal Home Loan Mortgage Corporation; Mortgage Bankers Association. (table 3).10 In both years, the number of refinancings exceeded the number of home-purchase loans by a Another gauge of the extent of refinancing activity wide margin; in the interim years, home-purchase is data obtained pursuant to the Home Mortgage loans were more numerous than refinancings. Disclosure Act (HMDA). HMDA data include information on the number of home-purchase and refinancing loans extended each year.8 Since 1993, Refinancing and the HMDA's institutional coverage has been relatively Amount of Mortgage Debt complete (covering 75 percent to 80 percent of all mortgage lending), and thus the data are a useful Homeowners who have refinanced their mortgages measure of the prevalence of refinancing activity.9 tend to have more mortgage debt than those who have not. The 1999 survey found that 47 percent of 8. For additional information, see Glenn B. Canner and Dolores S. mortgage debt holders had refinanced their loan but Smith, "Expanded HMDA Data on Residential Lending: One that the refinancers accounted for 55 percent of out- Year Later," Federal Reserve Bulletin, vol. 78 (November 1992), pp. 801-24. standing mortgage debt. This imbalance has two 9. Legislative changes in the coverage of HMDA that became possible explanations. One is that many refinancing effective in 1993 required more mortgage companies to report under homeowners liquefied equity by adding debt. The the law. Before then, mortgage companies not affiliated with banking institutions did not have to report. other is that homeowners who have relatively large mortgage balances have a greater propensity to refi- 2. Year of most recent refinancing and prevailing nance because the potential interest savings are more home mortgage interest rate likely to exceed the transaction costs associated with refinancing. Year in which Percent of all Interest rate re o f c in cu an rr c e i d n g refi i n n a n su c r e v d e l y o 1 a ns (percent)2 Before 1990 3 Reasons for Refinancing 1990 1 9.68 1991 3 9.02 1992 4 7.98 As noted earlier, homeowners have various reasons 1993 6 7.03 for refinancing their mortgage, including to obtain 1994 4 7.26 a lower interest rate, to change the terms of their 1995 7 7.65 1996 13 7.56 loan (such as to convert from an adjustable-rate to a 1997 17 7.57 fixed-rate mortgage), and to liquefy equity. Survey 1998 30 6.95 19993 12 6.87 responses from homeowners who refinanced in 1998 Total 100 1. Refinancing activity in years preceding 1998 is not fully reflected in this 10. The 1993 refinancing boom is not apparent from the data in table. Some homeowners refinanced their mortgage more than once, but infor- table 2, for several reasons. Many homeowners refinanced their mortmation on only the most recent refinancing activity was collected in the survey. gage more than once, but because the 1999 survey collected informa- 2. Weighted-average contract rate on conventional mortgages for the purtion on only the most recent refinancing, only the date of that refinancchase of newly built homes, from the monthly Federal Housing Finance Board news release on mortgage markets. ing is known. Also, the survey asked only about the mortgage on a 3. Through May 1999. homeowner's current home, and some homeowners may have refi- . . . Not applicable. nanced the mortgage on a previous home. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Effects of Recent Mortgage Refinancing 445 4. Type of original and refinanced loans among 5. Extent of cash-out refinancing among 1998 and early 1998 and early 1999 refinancers 1999 refinancers and effect of refinancing on term to Percent maturity and size of monthly mortgage payment Percent Type of original loan TTyyppee ooff rreeffiinnaanncceedd llooaann Adjustable Fixed Total Item N liq o u e e q fi u e i d ty 1 liq E u q e u f i i t e y d 1 rate rate Mortgage holders with a Adjustable rate 8 2 10 refinanced loan 65 35 Fixed rate 21 69 90 Effect on maturity Total 29 71 100 Lengthened maturity 63 71 Shortened maturity 29 22 No change 8 7 Total 100 100 and early 1999 provide an opportunity to measure Effect on monthly payment the proportion of homeowners who changed their Higher monthly payment 26 37 Lower monthly payment 67 26 mortgage along each of these dimensions when they No change 7 37 refinanced. Total 100 100 As might be expected, most surveyed home- 1. Equity is liquefied when a homeowner refinances mortgage debt and borrows more than is necessary to repay the balance on the existing mortgage(s) owners who refinanced at the end of the decade— plus closing costs on the new loan. 92 percent—obtained a lower interest rate. The average interest rate declined 1.3 percentage points, from 8.4 percent to 7.1 percent. ings than they had in the early 1990s, and thus there A substantial number of refinancing homeowners was more equity for homeowners to tap. shifted from an adjustable-rate mortgage to a fixed- The fraction of refinancing homeowners reporting rate mortgage when they refinanced: Twenty-nine lower interest rates was similar for those who liquepercent had an adjustable-rate mortgage before refified equity and those who did not (more than 90 pernancing; roughly three-fourths of that group— cent of each group). Changes in maturity differed representing 21 percent of all homeowners who somewhat between the groups, however. Of homerefinanced—switched to a fixed-rate loan when they owners who did not liquefy equity, 63 percent lengthrefinanced (table 4). Almost all those who originally ened the maturity of their loan and 29 percent shorthad a fixed-rate loan stayed with a fixed-rate loan. ened it. Homeowners who liquefied equity were more The net result was that the proportion of this group likely than those who did not to lengthen the maturity that had a fixed-rate loan rose from 71 percent before of their loan: 71 percent lengthened it and 22 percent refinancing to 90 percent after refinancing. shortened it. (It should be kept in mind that a rela- The survey results also indicate that, on average, tively small number of the survey respondents refirefinancing homeowners lengthened the maturity of nanced and liquefied equity in 1998 and early 1999, their mortgage.11 About 67 percent had a longer and that estimates based on this small group are less maturity after they refinanced, and 25 percent had a precise than estimates based on the full sample of shorter maturity. refinancers.) A relatively large proportion of homeowners who As a result of the changes in interest rates, maturirefinanced in 1998 and early 1999—about 35 perties, and loan balances, 52 percent of homeowners cent—used the opportunity to liquefy some of their refinancing in 1998 and early 1999 had a lower home equity (table 5).12 By comparison, about monthly payment after obtaining the new loan and 25 percent of refinancing homeowners in a similar 30 percent had a higher payment (not shown in survey in 1994 liquefied equity (data not shown in table). Because they took on additional debt, only table). The difference in the proportion of cash-out 26 percent of homeowners who liquefied equity had refinancings in the two surveys may have been due to a lower monthly payment, compared with 67 percent differences in housing market conditions: Home of homeowners who did not liquefy equity. prices had generally appreciated much more rapidly in the years just before the current wave of refinanc- Uses of Borrowed Funds 11. A homeowner was considered to have lengthened the maturity Funds liquefied in refinancings are used in various if the term on the new mortgage exceeded the remaining term on the former mortgage. ways. For homeowners in the 1999 survey who refi- 12. A homeowner was considered to have liquefied home equity if nanced in 1998 and early 1999, the most common use she borrowed more than was necessary to repay the balance on the of funds was to repay other debts, reported by 45 perexisting mortgage(s) plus the closing costs on the new mortgage. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 Federal Reserve Bulletin • July 2000 cent of those who took out cash (table 6).13 Home 7. Amount of home equity liquefied in 1998 and early 1999 improvements were cited by 40 percent of those who refinancings took out cash, and consumer expenditures such as vehicle purchases, vacations, education, and medical A (c m ur o r u e n n t t l d i o q l u l e a f r i s e ) d 1 Percent2 expenses were cited by 39 percent. Stock market or 1-9,999 43 other financial investment was cited by 12 percent of 10,000-24,999 31 the group, and real estate or business, investment by 25,000 or more 26 10 percent. Total 100 Looking at the uses of funds in terms of dollars MEMO Mean (dollars) 18,240 rather than proportion of loans gives a somewhat Median (dollars) 10,000 different picture. Approximately one-third of the 1. Amount borrowed through refinancing that exceeded amount due on money was spent on home improvement, and just existing mortgage(s) plus closing costs. over one-fourth was used to pay off other debt 2. Includes only refinancers who liquefied equity. (table 6). Roughly one-fifth went for consumer expenditures, and a similar amount was used to invest in real estate or business. Less than 2 percent was number of surveyed homeowners liquefied equity spent on stock market investment, even though and because it is difficult to quantify the ultimate 12 percent of the loans were used for this purpose; effects of a refinancing on a homeowner's consumpmost homeowners who used the cash to make tion and investment activity. Nonetheless, to get a stock market investments invested relatively small sense of the aggregate effect that refinancings underamounts. taken in 1998 and early 1999 may have had on the The amounts borrowed through cash-out refinanc- U.S. economy, some rough calculations of the reducing in some cases were large. About 43 percent of tion in mortgage payments, the amount of funds homeowners who extracted equity in 1998 and early raised through cash-out refinancing, and the direct 1999 took out less than $10,000, but 26 percent uses of the funds were made. Details about these liquefied $25,000 or more (table 7). The mean calculations are given in appendix B. amount liquefied was more than $18,000, and the To estimate the reduction in mortgage payments, median amount was $10,000. we looked at three factors that most commonly lead to changes in mortgage payments: a change in interest rates, a change in maturity, and a change in Aggregate Estimates of Payment Savings outstanding balance. If only interest rates had and Uses of Funds changed, refinancing would have lowered aggregate annual mortgage payments nationwide an estimated Converting the survey information to aggregate esti- $9.2 billion, or about $1,100 for the average refinancmates is problematic, both because a relatively small ing homeowner. However, the average refinancing homeowner increased the remaining maturity of his mortgage about eleven months. Keeping outstanding 13. Because money is fungible, it is possible that the reported balances constant, such a lengthening of maturity percentage of homeowners using the cash to substitute for other debt would have led to an additional reduction in aggreis understated; in some cases, homeowners who reported using the cash to fund purchases may have otherwise funded the purchase with gate annual mortgage payments of $1.1 billion, or another type of debt. about $135 for the average refinancing homeowner. Counteracting the effects of lower interest rates and longer maturity, the average balance on refinanced 6. Uses of funds liquefied in 1998 and early 1999 loans increased approximately $6,600. Accounting refinancings for this larger balance, aggregate annual mortgage Percent Percent payments declined $5.6 billion, on net, or about Use of loans1 of dollars $680 for the average refinancing homeowner, as a Repayment of other debts 45 28 result of refinancings in 1998 and early 1999. Home improvements 40 33 Consumer expenditures2 39 18 For homeowners who itemize tax deductions, these Stock market or other financial calculations overestimate savings because lower investment 12 2 Real estate or business investment .. 10 19 interest payments reduce itemized deductions and result in a higher tax liability. For a homeowner 1. Percentages sum to more than 100 percent because multiple uses could be cited for a single loan. facing a 28 percent marginal federal income tax rate 2. Includes vehicle purchases, vacations, education or medical expenses, and a 5 percent marginal state income tax rate, for living expenses, and other. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Effects of Recent Mortgage Refinancing 447 example, about one-third of the interest savings is current income. The effect of the refinancing alternaoffset by higher tax payments. Rough calculations tive on consumption would be the difference between using 1997 tax data suggest that three-fourths of the amount of consumption associated with the cashhomeowners who have mortgage debt claim a mort- out refinancing and the amount that would have been gage interest deduction.14 chosen alternatively. In considering the effect of lower mortgage pay- A second view of the effect of cash-out refinancing ments on nonfinancial activity, such as consumption, on consumption suggests a larger effect on consumpit is important to recognize that a reduction in mort- tion. In this view, homeowners are assumed to ratiogage payments leads to a decline in the amount of nally examine all financing alternatives but to be interest income received by mortgage investors, a uncertain about the value of their home. The appraisal point often overlooked by analysts. Even so, the of the home that accompanies the refinancing may marginal propensity to consume of the typical refi- raise or make more certain the homeowner's own nancing borrower likely is higher than the marginal estimate of the home's value, and he may view propensity to consume of the typical mortgage inves- some or all of the liquefied equity as a windfall. In tor, and therefore refinancing, to the extent that it such a case, a greater proportion of the funds raised results in lower mortgage payments, likely raises may be used to fund new spending than would be consumption somewhat.15 implied by a simple calculation of the difference in Turning to the effect of cash-out refinancing, we interest rates between alternative sources of estimate that, in total, $55 billion of equity was financing. liquefied through cash-out refinancing in 1998 and In the third view of the effect of cash-out refinancearly 1999. This amount is similar in magnitude to ing on consumption, homeowners are assumed to be estimates of the growth of consumer credit and the either uninformed about or uninterested in the value growth of home equity debt over the same period and of their home and unwilling to spend significant represents about 12 percent of net new mortgage debt amounts to determine the value. In this view, a homeover the period. owner's spending may respond more to wealth that is Like the effect of lower mortgage payments on in liquid form than to wealth that is relatively illiquid, consumption, the effect of cash-out refinancing on such as the equity in a house. consumption is uncertain. Economic theory suggests Given the uncertainties surrounding how best to that refinancing might affect consumption in at least theoretically model a household's decisionmaking, it three ways. In one view, homeowners are assumed to is difficult to determine, either conceptually or rationally examine all financing alternatives and to empirically, the net effect of cash-out refinancing on have full information about future income and nonfinancial activity in the U.S. economy. A useful wealth. If a homeowner decides to purchase a good first step is to ask the homeowners who did liquefy or service and chooses cash-out refinancing as the equity how they used the funds. Survey findings means of financing, the effect of this means of raising suggest that about $10 billion of the $55 billion funds on consumption would be the increment of raised was used to fund activities that are classified in consumption induced by the lower after-tax interest the national income accounts as consumption expenrate available through refinancing compared with ditures, such as the purchase of vehicles or other alternative sources of funds. For example, suppose a durable consumer goods, vacations, and education homeowner's wealth has increased because of a rapid and medical expenses. Approximately $18 billion appreciation in house prices, and as a result the was used for home improvements, which are classihomeowner wishes to increase consumption. The fied in the national income accounts as residential homeowner may decide to fund this consumption investment. These figures can be viewed in context through a cash-out refinancing, a home equity loan, by comparing them with aggregate figures on spendor a consumer loan or simply by saving less out of ing for home improvements and consumption. Home improvement expenditures totaled an estimated $84 billion in 1998, about $4 billion higher than in 1997. Personal consumption expenditures 14. Tax data for the calculations came from David Campbell and amounted to $5.85 trillion in 1998, $325 billion more Michael Parisi, "Individual Income Tax Returns, 1997," Statistics of than in 1997; of this amount, durable goods expendi- Income Bulletin (Fall 1999), pp. 8-45. tures accounted for $698 billion in 1998, $56 billion 15. Investors in mortgages include both institutions and individumore than in 1997. These magnitudes suggest that als. Although institutions do not directly contribute to consumption expenditures, the income generated by mortgages held by these insti- cash-out refinancing in 1998 and early 1999 may tutions ultimately passes through to the household sector, through have been an important source of financing for home either increased dividend payments or an increased value of the firm. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 Federal Reserve Bulletin • July 2000 improvements but was probably not a substantial rowers; however, mortgage investors receive corredirect source of funding for consumption spending.16 spondingly lower interest income. As a consequence, The remaining funds raised through refinancings the magnitude of the effect of such transactions on were used by homeowners to reshuffle their invest- consumption spending is uncertain. ment portfolios; that is, they used the money to pay Federal Reserve-sponsored questions on a 1999 off other debts or to fund investments in financial, survey documented the extent of refinancing activity real estate, or business assets. About $15 billion was and asked homeowners whether they had liquefied used to pay off credit card debt or other consumer equity through their refinancing, how much equity debt; consumer credit outstanding increased $55 bil- they had liquefied, and how they had used the funds lion during 1998 and early 1999 from its level of raised. Nearly half of homeowners with a mortgage $1.26 trillion at the end of 1997, suggesting that reported that they had refinanced their home loan cash-out refinancing may have reduced the growth at least once, and about a fifth of homeowners of consumer credit approximately 20 percent, from with a mortgage (roughly 40 percent of refinancers) 8 percent to 6lA percent at an annual rate. Another reported having refinanced in 1998 or early 1999. $10 billion was invested in other real estate assets About 35 percent of those refinancing in 1998 or or in individual businesses. Less than $1 billion early 1999 borrowed against the accumulated equity was invested in the stock market or other financial in their homes. As in earlier surveys of refinancing investments. activity, the principal uses of borrowed funds were for home improvements and the repayment of other debts. Purchases of goods and services were cited as a use of borrowed funds by a fairly large proportion SUMMARY AND of refinancers, but the dollar amounts involved were CONCLUDING OBSERVATIONS typically not very large. Survey results suggest that recent cash-out refi- Over the course of the 1990s, and in the latter years nancing activity likely boosted consumption spendof the decade in particular, millions of homeowners ing, but only a small amount relative to aggretook advantage of lower mortgage interest rates and gate consumption spending.17 The effect on home higher home values and refinanced their mortgage improvement spending, which is treated as investloans. For many, the decision to refinance was motiment spending (rather than consumption spending) in vated by a desire to reduce their monthly mortgage national income accounting, was likely more substanpayments. A significant proportion of those who refitial. In addition, consumer credit likely grew more nanced also borrowed additional funds by taking out moderately as a consequence of cash-out refinancings a new mortgage that was larger than the outstanding during 1998 and early 1999. balance on their former mortgage plus closing costs. In addition, many homeowners used the refinancing opportunity to switch from an adjustable-rate to a APPENDIX A: fixed-rate mortgage. THE SURVEYS OF CONSUMERS At first glance it would seem that a boom in refinancing activity could substantially boost con- To obtain information on the prevalence of residensumption spending and have a large effect on the U.S. tial mortgage refinancings by homeowners, the extent economy. The issue is more complex, however. For to which refinancings are used to liquefy accumuexample, when interest rates fall, most refinancings lated equity, and the uses of the liquefied funds, the result in lower monthly mortgage payments for bor- Federal Reserve Board sponsored questions that were included in the Surveys of Consumers for March, April, and May 1999. The Survey Research Center at 16. A portion of the funds used for "home improvement" may in the University of Michigan conducted the nationwide fact have been spent on items that in the national income accounts are surveys. counted in consumption, such as carpeting, draperies, and paint. If (consistent with the text discussion) home improvement spending Interviews were conducted by telephone, with from funds raised in 1998 and early 1999 is not treated as consump- telephone numbers drawn from a cluster sample of tion spending, cash-out refinancing would have increased the growth in consumption expenditures less than 0.2 percentage point (for reference, nominal consumption expenditures rose at an annual rate of about 6.5 percent between the fourth quarter of 1997 and the first 17. As noted in the previous section, under some models of housequarter of 1999). If all reported home improvement spending is treated hold decisionmaking the actual increment to consumption from cashas consumption spending, the increment to consumption expenditures out refinancing would be less than that measured by the survey would still have been less than 0.5 percentage point. responses. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Effects of Recent Mortgage Refinancing 449 A. 1. Approximate sampling errors for survey results, effect of interest rate changes was considered; then by size of sample the effect of changes in loan maturities was added in; Percentage points finally the effect of changes in outstanding loan balances was accounted for. All estimates are based on Size of sample SSuurrvveeyy rreessuulltt relatively small samples, and some caution should be ((ppeerrcceenntt)) 100 300 1,000 1,500 exercised in their use. 50 11.2 6.5 3.5 2.9 30 or 70 10.3 5.9 3.2 2.6 20 or 80 9.0 5.2 2.8 2.3 10 or 90 6.7 3.9 2.1 1.7 Payment Change Due to 5 or 95 4.9 2.8 1.5 1.3 Interest Rate Changes NOTE. Ninety-five percent confidence level, 1.96 standard errors. To estimate the reduction in mortgage payments due to lower interest rates, we assumed that the interest residential numbers. The sample was chosen to be rate on the new loan differed from that on the old broadly representative of the four main regions of loan but that the average refinancing homeowner the country—Northeast, North Central, South, and changed neither the outstanding balance nor the West—in proportion to their populations. Alaska and remaining maturity of the mortgage. The average Hawaii were not included. For each telephone numoutstanding balance before refinancing for homeber drawn, an adult in the family was randomly owners in the sample who refinanced in 1998 and selected as the respondent. The survey defines a early 1999 was $111,024; the dollar-weighted averfamily as any group of persons living together who age remaining maturity before refinancing was are related by marriage, blood, or adoption or any twenty-three years ten months; and the dollarindividual living alone or with a person or persons to weighted interest rate changed from 8.36 percent whom the individual is not related. before refinancing to 7.08 percent after refinancing. Together, the three surveys sampled 1,500 fami- For the average refinancing homeowner, interest lies, 1,040 of whom were homeowners. Among the savings from refinancing lowered monthly payhomeowners, 653 had an outstanding mortgage or ments about $92, or about $1,103 annually. Multiplyland contract, and 311 of this group reported that ing this annual savings by 8,313,780 households their outstanding first mortgage was a refinanced (the weighted 8.03 percent of the sample estimated loan. Among the homeowners who had refinanced, to have refinanced multiplied by 103,534,000 house- 117 had refinanced in 1998 or early 1999. The survey holds in the United States) yields an aggregate annual data have been weighted to be representative of the decline in mortgage payments of $9.2 billion. population as a whole, thereby correcting for differences among families in the probability of their being selected as survey respondents. All survey data in the Payment Change Due to Interest Rate and tables are based on weighted observations. Maturity Changes Estimates of population characteristics derived from samples are subject to error, with the amount Monthly payments were also affected by changes in of the error dependent on the extent to which the maturities resulting from refinancings. On a dollarsample respondents differ from the general populaweighted average basis, homeowners involved in tion. Table A.l indicates the sampling errors for refinancings increased the remaining maturity on survey results derived from samples of different sizes. their mortgage eleven months, to twenty-four years nine months. Combined with the lower interest rate, the increase in maturity decreased the average refi- APPENDIX B: nancing homeowner's payment about $103 a month, CALCULATION OF AGGREGATE EFFECTS or about $1,239 annually. This figure implies an aggregate annual decline in mortgage payments of To estimate the aggregate reduction in mortgage pay- $10.3 billion. ments resulting from mortgage refinancing in 1998 and early 1999, the total amount of funds raised through cash-out refinancing, and the uses of these Payment Change Due to Interest Rate, funds, we estimated dollar amounts for an average Maturity, and Outstanding Balance Changes refinancing homeowner and then extrapolated those figures to arrive at national aggregates. In estimating Monthly payments were also affected by changes the reduction in mortgage payments, first only the in outstanding mortgage balances that were associ- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 Federal Reserve Bulletin • July 2000 ated with refinancings. For the average refinancing Aggregate Funds Raised Through homeowner, the outstanding balance on refinanced Cash-Out Refinancing, and the mortgages increased $6,558, from $111,024 to Uses of Funds $117,582; the higher balance raises monthly payments, offsetting some of the interest rate and matu- The average refinancing homeowner's outstanding rity effects.18 The combined effect of the lower inter- balance increased $6,558. This figure implies an est rate, the longer remaining maturity, and the higher aggregate estimate of funds raised through cash-out balance is to lower the average refinancing homeown- refinancing of about $54.5 billion. Using the data in er's mortgage payment about $56 a month, or about table 6, the aggregate dollar amount extracted through $677 annually. This figure implies an aggregate refinancing and used for various purposes can be annual decline in mortgage payments of $5.6 billion. estimated: Amount used Use of borrowed funds (billions of dollars) 18. Note that the average refinancing homeowner represents both homeowners who liquefied equity when they refinanced and those Repayment of other debts 15.4 Home improvements 18.1 who did not. Also, it is assumed that those who did not liquefy equity Consumer expenditures 9.6 did not change their outstanding balance. To the extent that some Stock market or other financial investment .9 individuals paid down their existing mortgage when refinancing—to Real estate or business investment 10.4 avoid paying private mortgage insurance, for example—this figure Total 5544..55 would be an overestimate of the increase in the average mortgage balance. NOTE. Components do not sum to total because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

451 Industrial Production and Capacity Utilization for May 2000 Released for publication June 15 cent higher than in May 1999. The rate of capacity utilization for total industry held steady at 82.1 per- Industrial production increased 0.4 percent in May cent, a level about even with the 1967-99 average. after having risen 0.7 percent in both March and April. The output of utilities increased 1.4 percent, MARKET GROUPS while output for both manufacturing and mining increased 0.3 percent. At 144.2 percent of its 1992 The output of consumer goods decreased 0.1 percent average, industrial production in May was 5.8 per- in May, pulled down by a 0.4 percent decline in the Industrial production and capacity utilization Ratio scale, 1992 = 100 Percent of capacity 150 140 85 130 120 110 80 100 1990 1992 1994 1996 1998 2000 1988 1990 1992 1994 1996 1998 2000 Industrial production, market groups Ratio scale, 1992 = 100 Ratio scale, 1992 = 100 Consumer goods 155 Intermediate products - 155 - /ir -J 145 - - 145 — Durable 135 - 135 _ — Vy — 125 175 Construction supplies — f — 115 — Vv — 115 - 105 - 105 yyf^J*^ Business supplies p/vV Nondurable 95 - 95 i V i i i i i 1 1 1 1 1 1 1 1 Ratio scale, 1992 = 100 Ratio scale, 1992 = 100 Materials Durable goods Nondurable goods and energy I I I I I I I I 1990 1992 1994 1996 1998 2000 1990 1992 1994 1996 1998 2000 All series are seasonally adjusted. Latest series, May. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

452 Federal Reserve Bulletin • July 2000 Industrial production and capacity utilization, May 2000 Industrial production, index, 1992=100 Percentage change Category 2000 20001 May 1999 to Feb/ Mar.r Apr.r MayP Feb/ Mar.r Apr.r MayP May 2000 Total 141.6 142.6 143.6 144.2 5.8 Previous estimate 141.4 142.4 143.7 Major market groups Products, total2 130.1 130.5 131.2 131.4 .3 .5 3.6 Consumer goods ... 118.7 118.5 119.1 119.0 -.1 .5 2.0 Business equipment 180.6 182.7 184.8 186.0 1.2 1.1 8.7 Construction supplies 137.5 138.6 138.7 137.9 .8 .0 3.7 Materials 161.2 163.2 164.9 166.0 1.3 1.0 9.5 Major industry groups Manufacturing 147.2 148.3 149.3 149.7 .4 .8 .6 .3 6.2 Durable 181.8 184.5 186.5 187.8 .4 1.5 1.1 .7 9.9 Nondurable 113.8 113.6 113.7 113.4 .3 -.2 .0 -.2 1.4 Mining 100.0 101.6 102.0 102.3 .3 1.6 .4 .3 5.0 Utilities 115.3 113.2 116.1 117.7 .7 -1.9 2.6 1.4 1.5 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1999 2000 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, MMMaaayyy 111999999999 11996677--9999 11998822 11998888--8899 tttooo May Feb/ J Mar/ Apr/ MayP MMMaaayyy 222000000000 Total 82.0 71.1 85.4 80.5 81.5 81.8 82.1 82.1 3.8 Previous estimate 81.3 81.7 82.1 Manufacturing 81.1 69.0 85.7 79.7 80.7 81.0 81.3 81.2 4.2 Advanced processing 80.5 70.4 84.2 78.7 79.7 80.2 80.4 80.5 5.3 Primary processing . 82.4 66.2 88.9 82.7 83.7 83.6 83.9 83.5 1.8 Mining 87.3 80.3 88.0 81.0 83.5 84.9 85.3 85.7 -.8 Utilities 87.5 75.9 92.6 91.1 89.7 87.9 90.1 91.3 1.3 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. production of durable consumer goods; the produc- The production of business equipment rose 0.7 pertion of nondurable consumer goods was unchanged. cent in May as another increase in the output of Among durable consumer goods, the production of information processing and related equipment was automotive products fell back 0.2 percent after hav- partly offset by declines in the production of other ing risen sharply in April. In recent months, the index types of equipment. The production of industrial for automotive products has, on balance, fluctuated in equipment edged down; the index has leveled off a range close to the high level reached in mid-1999. after having registered strong gains around the turn The output of other consumer durables fell 0.7 per- of the year. The output of transit equipment decreased cent in May after having increased an average of a bit again, pulled down by continued declines in the 0.8 percent per month for the previous two months; production of commercial aircraft and a fall in the declines in the production of appliances and tele- production of light trucks. The production of other vision sets and of carpeting and furniture more than equipment, which had risen an average of 3.7 percent offset a 2.7 percent increase in the output of comput- per month during the previous three months, fell back ers. Among nondurable consumer goods, a rise in the 2.9 percent in May; the recent swings in output in this production of energy products—fuels and residential sector largely reflect changes in the production of utilities—was offset by a small decline in the produc- farm machinery and equipment. The production of tion of other nondurables, such as foods and tobacco, defense and space equipment increased 1.1 percent, a clothing, and consumer chemicals. The production of gain helped in part by the end of a strike at a military nondurable non-energy consumer goods has, on bal- aircraft manufacturer. ance, been little changed since reaching its recent The production of construction supplies, which had peak in the fourth quarter of 1999. increased an average of 0.9 percent per month in the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production and Capacity Utilization 453 first quarter, was unchanged in April and decreased 0.2 percent in May, to a level 1.4 percent higher than 0.6 percent in May, with widespread declines in the in May 1999. Among nondurable manufacturing underlying industries. In contrast, the output of industries, the only noticeable output increases materials was up another 0.7 percent in May. The occurred in the printing and petroleum products output of durable goods materials rose 1.1 percent, industries. with another strong increase in equipment parts, par- The factory operating rate edged down to 81.2 perticularly semiconductors. The output of energy mate- cent and remained close to its 1967-99 average. rials rose 0.5 percent. The production of nondurable Utilization in primary-processing industries fell to goods materials fell 0.5 percent and has retreated 83.5 percent, while that for advanced-processing noticeably, on balance, after having peaked late last industries moved up to 80.5 percent. Output at utiliyear. ties, which had risen 2.6 percent in April, was up 1.4 percent in May; the operating rate at utilities rose to 91.3 percent. Production at mines increased INDUSTRY GROUPS 0.3 percent after having risen 0.4 percent in April. Manufacturing output rose 0.3 percent in May and The utilization rate at mines increased to 85.7 percent was led by gains in the production of durable goods; but remained noticeably below its long-term average. the production of nondurable goods, which had risen sharply in the fourth quarter, has been little changed NOTE. The capacity indexes have been revised in since the end of last year. Among durable goods, this release beginning with February 2000. Although continued increases in the production of high- the capacity growth rates for some industries were technology goods accounted for the overall gain. revised noticeably, the estimate of overall capacity Production in nondurable manufacturing edged down growth for 2000 was unchanged at 3.7 percent. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

454 Statements to the Congress Statement by Laurence H. Meyer, Member, Board of because banks hold vault cash mainly for other busi- Governors of the Federal Reserve System, before the ness purposes, not to meet reserve requirements. Committee on Banking and Financial Services, U.S. Also, questions of equity would arise because it House of Representatives, May 3, 2000 would be administratively impossible for the Federal Reserve to pay interest on the currency holdings of The Board of Governors appreciates this opportunity the general public. to comment on issues related to H.R. 4209, the Bank However, paying interest on required reserve bal- Reserves Modernization Act of 2000. The Board ances could eliminate some expenditures by the bankstrongly supports the proposal in the bill to allow the ing sector that are wasteful from the point of view payment of interest on the balances that depository of the overall economy. Depository institutions curinstitutions maintain in their accounts at Federal rently expend considerable resources to minimize Reserve Banks. We have commented favorably on their required reserve balances by developing and such proposals on a number of previous occasions operating various programs, such as business and over the years, and the reasons for that position still retail sweep programs, in order to minimize the balhold today. ances recorded in their transaction accounts. From Historically, the issue of permitting interest to be society's point of view, these expenditures produce paid on reserve balances has been linked to the repeal no net benefits, and paying interest on required of the prohibition against paying interest on demand reserve balances would reduce the incentives for deposits. The Board is pleased that the House of depository institutions to engage in these practices. Representatives has passed legislation that would Depository institutions have always attempted to ultimately permit the payment by financial institu- reduce to a minimum the non-interest-bearing baltions of interest on their customers' demand deposits. ances held at Federal Reserve Banks to meet reserve Assuming it becomes law, that legislation eventually requirements. For more than two decades, some comwill contribute considerably to the improved effi- mercial banks have done so in part by sweeping the ciency of our financial sector. Authorizing the Fed- reservable transaction deposits of businesses into eral Reserve to pay interest on reserve balances held nonreservable instruments. These business sweeps by depository institutions at Reserve Banks would not only have avoided reserve requirements but also also be important for increasing the economic effi- have allowed businesses to earn interest on instruciency of our banking sector. ments that are effectively equivalent to demand To help clarify this point, let me first give you deposits. In recent years, developments in informasome background information on reserve require- tion systems have allowed depository institutions to ments. The Federal Reserve currently requires that begin sweeping consumer transaction deposits into depository institutions maintain required reserves nonreservable accounts. These retail sweep programs equal to 10 percent of their transactions deposits use computerized systems to transfer consumer transabove certain minimum levels. Reserve requirements action deposits, which are subject to reserve requiremay be satisfied either with vault cash or with bal- ments, into personal savings accounts, which are not. ances held in accounts at Federal Reserve Banks. Largely because of such programs, required reserve Excess reserves are reserve balances that depositories balances have dropped from about $28 billion in late hold in Reserve Banks in excess of the balances 1993 to around $6 billion today, and the spread of needed to meet reserve requirements. Depository such programs has not yet fully run its course. institutions may also arrange with their Reserve The payment of interest on required reserve bal- Banks to hold additional balances, called required ances would remove the incentives to engage in such clearing balances, which I will explain later. Deposi- reserve avoidance practices. If the bill becomes law, tory institutions earn no interest on their vault cash, the Federal Reserve would likely pay an interest rate required reserve balances, or excess reserve balances. on required reserve balances close to the rate on other Paying interest on vault cash is not authorized risk-free money market instruments, such as repurin the proposed legislation, and it is not advisable chase agreements. This rate is usually a little less Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

455 than the interest rate on federal funds transactions, scope to adjust the daily balances they hold for this which are uncollateralized overnight loans of reserves purpose, and this process helps stabilize the federal in the interbank market. funds rate. For instance, if the funds rate were higher In light of the resources used by depository institu- than usual on a particular day, some depository institions to try to circumvent reserve requirements, some tutions could choose to hold lower reserve balances might question the reason for having such require- that day, and their reduced demand would help to ments. Indeed, reserve requirements have been elimi- damp the upward pressure on the funds rate. Later in nated in some other industrialized countries. Let me the two-week period, when the funds rate might be review the historical and current purposes served by lower, those institutions could choose to hold more reserve requirements. reserves and make up the shortfall in their average Although the word "reserves" might imply an holdings of reserve balances. This action would also emergency store of liquidity, required reserves cannot help smooth out the funds rate over the two-week actually be used for this purpose because they repre- period. sent a small and fixed fraction of a bank's transaction The Federal Reserve permits depository institudeposits. I should also note that reserve requirements tions to hold additional deposits in the form of are quite different from capital requirements. Capital required clearing balances, which are not included in is a buffer against losses, and capital requirements are total reserves. Under the Federal Reserve's required an important aspect of the prudential supervision and clearing balance program, depository institutions may regulation of banks. Reserve requirements, by con- hold credit-earning balances, not for meeting reserve trast, have no role in banking supervision and pruden- requirements but for assisting with clearing needs. tial regulation. The credits offset charges for Federal Reserve ser- Reserve requirements are a monetary policy tool. vices, like check-clearing, used by the depository. In the past, they have been employed to assist in This program helps to restrain volatility in the federal controlling the growth of the money stock. In the funds rate in a manner similar to reserve requireearly 1980s, for example, the Federal Reserve used a ments because the clearing balance requirement is on reserve quantity procedure to control the growth of a two-week average basis and because it is identified the monetary aggregate Ml. Indeed, the current struc- ahead of time. The volume of required clearing balture of reserve requirements, with relatively high ances is limited, however, because the credits accurequired reserve ratios on transaction deposits, which mulate only to the level of charges that a depository are included in Ml, and zero or relatively low ratios institution incurs for Federal Reserve services. Under on nontransaction deposits, which are not, was origi- H.R. 4209, explicit interest could be paid on such nally designed to aid the control of Ml. For the most balances. Thus, this constraint on the level of required part, however, the Federal Reserve has looked to the clearing balances would be eliminated, a result that price of reserves—the federal funds rate—rather than would potentially boost their benefit for the implethe quantity of reserves, as its key focus in imple- mentation of monetary policy. menting monetary policy. In addition to required reserve and required clear- While reserve requirements no longer serve the ing balances, depository institutions also hold excess purpose of monetary control, required reserves con- reserve balances in their accounts at Federal Reserve tinue to play a valuable role in the implementation Banks. Their motive in holding excess reserves is of monetary policy in the United States. They do so mainly as a precaution against the chance that unprebecause reserve requirements induce a predictable dictable payments out of their accounts late in the day demand for balances at Reserve Banks on a two- might cause shortages of reserves to satisfy reserve week average basis. As you know, depository institu- requirements or might cause overnight overdrafts on tions trade reserve balances among themselves every their accounts. The Federal Reserve strongly discourday at the interest rate called the federal funds rate. ages overnight overdrafts. The Federal Open Market Committee sets a target If required reserve and required clearing balances for the federal funds rate that the Open Market Desk dropped to very low levels, there would be increased attempts to maintain. The predictability of the overall risks of overnight overdrafts on the accounts of demand for reserves is important in helping the Desk depositories in Reserve Banks. The remaining baldetermine the amount of reserves to supply through ances of depositories at Reserve Banks would be open market operations in order to achieve a given largely excess reserves held as a precaution against federal funds rate target. Because required reserve such overdrafts. It would be especially difficult to balances must be maintained only on an average predict the level of balances depositories would need basis over a two-week period, depositories have some for this purpose from one day to the next. For exam- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

456 Federal Reserve Bulletin • July 2000 pie, on days when payment flows were particularly reserves, and improved procedures for estimating heavy and uncertain, or when the distribution of reserve demand. As a result of these steps taken by reserves around the banking system were substan- depository institutions and the Federal Reserve, the tially different than normal, depositories would need average level of volatility in the federal funds rate has a higher-than-usual level of precautionary balances to not moved up, despite much lower levels of required avoid the risk of overdrafts. The uncertainties would reserve balances than in the 1991 episode. However, make it harder for the Federal Reserve to determine the limited effects on volatility of the spread of retail the appropriate daily quantity of reserves to supply sweep programs to date may not preclude a more to the market. Thus, in such a scenario, the federal outsized reaction if reserve balances fall even lower. funds rate could become more volatile and often We expect required reserve balances to fall from their diverge markedly from its intended level. current level of around $6 billion to perhaps $4 bil- Moderate levels of volatility are not a concern for lion, thereby increasing the risk of heightened volatilmonetary policy, in part because the Federal Reserve ity in the funds rate. now announces the target federal funds rate, eliminat- As I previously mentioned, some industrial couning the possibility that fluctuations in the actual funds tries have managed to implement monetary policy rate in the market would give misleading signals successfully without reserve requirements. Those about monetary policy. A significant increase in vola- countries have avoided substantial volatility in overtility in the federal funds rate, however, would be of night interest rates by using alternative procedures concern because it would affect other overnight inter- for the implementation of monetary policy. One est rates, raising funding risks for most large banks, approach, for instance, establishes a ceiling and a securities dealers, and other money market partici- floor to contain movements of the overnight interest pants. Suppliers of funds to the overnight markets, rate. The ceiling is set by the central bank's lending including many small banks and thrift institutions, rate in what is called a Lombard facility; loans are would face greater uncertainty about the returns they provided freely to qualified banks but at an interest would earn, and market participants would incur rate above the expected level of overnight market additional costs in managing their funding to limit interest rates. Adopting a Lombard facility in the their exposure to the heightened risks. United States would involve changes in our discount An example of significantly heightened volatility window operations. For such a facility to function occurred in early 1991, just after the Federal Reserve effectively as a ceiling for overnight interest rates, reduced reserve requirements in order to ease fund- depository institutions would need to exhibit a greater ing costs to banks during the credit crunch period. willingness to make use of discount window loans Because of the cut in reserve requirements, many than they have in the past. In some countries, a floor depository institutions found that their required for overnight interest rates is established by the rate reserve balances fell below the level of balances they of interest a central bank pays on excess reserve needed to hold as a precaution against overdrafts balances; banks would not generally lend to other because of unpredictable payment flows; as a conse- banks at an interest rate below the rate they could quence, the federal funds rate became quite volatile earn on a risk-free deposit at the central bank. For the for a while, with daily trading ranges averaging Federal Reserve to be. able to set a similar interest around 8 percentage points, compared with about rate floor, it would need expanded legislative author- 1Vi percentage points in normal times. ity, for example, to pay interest on excess reserves. Since then, depository institutions have become Under H.R. 4209, interest on excess reserves would l much more adept at managing their reserve positions, be allowed. in part by making greater use of required clearing If interest were permitted to be paid on required balances, and as a result, their needs for day-to-day reserve balances, adjustments in the procedures for precautionary balances have declined considerably. implementing monetary policy and in the behavior of Several measures taken by the Federal Reserve also depository institutions might not be needed. Interest have helped to foster stability in the funds market, on required reserves would reduce banks' costs of including improvements in the timeliness of account offering transaction deposits and thus could boost information provided to depository institutions, more their levels substantially, as some sweep programs frequent open market operations, which are increas- were unwound. The unwinding would be larger if ingly geared to daily payment needs rather than two- interest could also be paid on demand deposits, as week-average requirements, a shift to lagged reserve eventually would be permitted by the legislation requirements, which gives depositories and the Fed- already passed by the House. The increased transeral Reserve advance information on the demand for action deposits likely would bring required reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 457 balances above the level of daily precautionary needs positive effect on the Treasury budget to the extent for many institutions, thus helping to stabilize the that the level of such balances increased with explicit federal funds rate, while also improving economic interest, and the Federal Reserve was able to earn a efficiency as previously noted. higher return on investing the additional funds than it The magnitude of the responses to these measures, paid out in interest. Regarding interest on excess however, is uncertain. Some corporations may not reserve balances, the Federal Reserve does not see an find the interest paid on demand deposits high enough immediate need to use this additional tool for moneto induce them to shift a substantial volume of funds tary policy. If it were used, Treasury revenues could out of other liquid instruments. Also, some banks be reduced, but probably only slightly, because of the may retain consumer sweep programs in order to small amount of excess reserve balances, which have seek higher investment returns than the Federal averaged a little more than $1 billion in recent years, Reserve would pay on riskless reserve balances. and the likelihood that the Federal Reserve would Because of the uncertainties involved, it is best for pay a rate well below the federal funds rate on them. the Federal Reserve to be able to pay interest on Also, if the demand for excess reserves increased, any balances that depositories hold at Reserve Banks, any "spread" that the Federal Reserve earned on the not just on required reserve balances, and at differen- higher excess reserves would be returned to the Treatial rates to be set by the Federal Reserve, as the sury, further limiting the budgetary cost. bill would allow. The ability to pay explicit interest The committee has requested the Board's view on on balances other than required reserve balances the possibility of transferring some of the capital would provide additional tools that could be helpful surplus of the Federal Reserve Banks to the Treafor monetary policy implementation if interest on sury in order to cover the budgetary costs of paying required reserve balances resulted in an insufficient interest on required reserve balances. Let me take a boost to the level of those balances. In any case, it is moment to explain the role of the surplus account of important that the Federal Reserve have a full mone- the Reserve Banks. tary toolkit, given the inventiveness of financial mar- The Federal Reserve System derives the bulk of its ket participants and the need for the Federal Reserve revenues from interest earnings on Treasury securito be prepared for potential developments that may ties that it has obtained through open market operanot be immediately visible. tions. The System returns a very high proportion of H.R. 4209 also includes a technical provision its earnings every year to the Treasury. In 1999, it related to pass-through reserves. This provision turned over $25 billion, or about 97 percent of its would extend to banks that are members of the Fed- earnings. In most years, the System retains a small eral Reserve System a privilege that was granted to percentage of those earnings in its surplus account. nonmember institutions at the time of the Depository The surplus account is a capital account on the Fed- Institutions Deregulation and Monetary Control Act eral Reserve Banks' balance sheets. Since 1964, the of 1980. It would allow member banks to count as Federal Reserve has followed the practice of allowreserves their deposits in affiliated or correspondent ing the surplus to rise to match increases in the banks that are in turn "passed through" by those paid-in capital of member banks. Each member bank banks to Federal Reserve Banks as required reserve is required by law to subscribe to the capital stock of balances. The provision would remove a constraint its Reserve Bank in an amount equal to 6 percent of on some banks' reserve management and would its own capital and surplus. The Board requires that cause no difficulties for the Federal Reserve in imple- half of that subscribed capital be paid in. menting monetary policy. The Board supports it. The Federal Reserve's surplus account is currently The payment of interest on required reserve bal- about $61/2 billion, while its total capital amounts to ances would reduce the revenues received by the $14 billion. As required by the omnibus appropria- Treasury from the Federal Reserve. The extent of the tions legislation that passed at the end of the last revenue loss, however, has fallen considerably on congressional session, the Federal Reserve will transbalance over the past ten to twenty years because of fer $3,752 billion from its surplus account to the reductions in the level of such balances as banks have Treasury; that transfer is scheduled for May 10. After increasingly implemented reserve avoidance tech- the transfer, the surplus will be $2.7 billion and total niques and because of the generally lower level of capital will be about $10.3 billion. Total assets of the interest rates as inflation has declined. Paying interest Federal Reserve are around $600 billion. on required clearing balances would merely involve a The surplus account has helped to provide extra switch to explicit interest from the implicit interest of backing for the issue of Federal Reserve notes. The earnings credits. It might, if anything, have a slight Federal Reserve is required by law to hold certain Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

458 Federal Reserve Bulletin • July 2000 specified assets, including Treasury securities, as col- reductions in outlays on other programs, the Treasury lateral against the issuance of currency. The Federal would need to issue $500 million of debt to the Reserve buys Treasury securities, its main asset, in public to fund the expenditure. The annual interest the open market as the counterpart to the surplus on cost on that debt, at a 6 percent interest rate, would be its books. The extra margin of collateral for currency $30 million a year. Now suppose that, instead, the made possible because of the surplus was important Congress decided to "finance" the spending program in the past because certain types of discount window by transferring $500 million from Federal Reserve loans could not be used as collateral. However, legis- surplus to the Treasury. To obtain the funds to translation signed into law last year expanded the assets fer to Treasury while maintaining the stance of moneof the Federal Reserve that could be used to back the tary policy, the Federal Reserve would need to sell issuance of currency to include all discount window $500 million of Treasury securities from its portfolio loans. As a result, the importance of the surplus in to the public. The public would wind up holding providing a margin of excess currency collateral has $500 million of additional Treasury debt, and the greatly diminished. government would increase its net interest cost by Traditionally, the Federal Reserve and virtually all $30 million a year—exactly the same outcome as if other central banks have maintained an appreciable the Treasury just sold the debt directly to the public. level of capital. For the Federal Reserve, some of that Thus, financing an additional $500 million outlay capital has been contributed by member commercial through a surplus transfer is exactly equivalent to banks and some from earnings retained in the surplus borrowing from the public. For reasons illustrated by account. Maintaining a surplus account may help this example, the Federal Reserve has consistently support the perception of the central bank as a stable stated that transfers of Federal Reserve surplus do not and independent institution by ensuring that its assets provide true budgetary revenues and indeed that remain comfortably in excess of its liabilities. How- mandating such transfers undermines the integrity of ever, the need for capital in this case is limited by the the federal budgetary process. The fact that budgetary modest variability of the Federal Reserve's profits, rules count transfers of Federal Reserve surplus as the safety of its primary asset, Treasury securities, revenues for the purpose of calculating the budget and the substantial regular flow of earnings from its deficit is an anomaly of federal budget accounting. portfolio of securities. Over the years, the Congress generally has con- Indeed, in the abstract, a central bank with the curred with this view, with a few exceptions. Connation's currency franchise does not need to hold gressional budget resolutions in 1996, 1997, and capital. In the private sector, a firm's capital helps to again this year noted that transfers of surplus have no protect creditors from credit losses. Creditors of cen- real budgetary or economic effects. The 1996 and tral banks, however, are at no risk of a loss because 1997 resolutions directed the Congressional Budget the central bank can always create additional cur- Office not to score any savings from legislation rency to meet any obligation denominated in that requiring transfers from the surplus account to the currency. Treasury. The most recent budget resolution contains Whatever the benefits of the surplus account, it a provision to ensure that transfers of Federal Reserve should be emphasized that its maintenance is costless surplus "shall not be used to offset increased onto the Treasury and to taxpayers. The Treasury has to budget spending when such transfers produce no real issue more debt because of the surplus, but an exactly budgetary or economic effects." The Manager's stateequivalent amount of Treasury debt is held by the ment explaining this provision states: "It has long Federal Reserve. The amount of Treasury debt held been the view of the Committee on the Budget that by the private sector is not affected by the existence transfers of Federal Reserve surpluses to the Treasury or the level of the surplus. The Treasury pays interest are not valid offsets for increased spending." on the portion of its debt held by the Federal Reserve, In summary, the Federal Reserve strongly supports but those interest payments are then returned to the legislation to authorize the payment of interest on Treasury by the Federal Reserve on a weekly basis. reserves. Such authorization, however, would have a For similar reasons, transfers of Federal Reserve budgetary cost. The transfer of Federal Reserve sursurplus to the Treasury provide no true budgetary plus would technically increase reported budget savings. Let me give you an example that illustrates receipts, because of a unified budget convention, but this principle. First, imagine that the Congress wished would not represent a true source of revenue to offset to enact some new spending program that would cost this cost. $500 million. In the absence of any new revenues or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 459 Statement by Stephen R. Malphrus, Staff Director for been implemented by the Federal Reserve and finan- Management, Board of Governors of the Federal cial institutions. Reserve System, before the Subcommittee on Financial Institutions, Committee on Banking, Housing, and Urban Affairs, U.S. Senate, May 18, 2000 MAY 4 LOVE BUG ATTACKS Because the virus started in the Far East, it was Chairman Bennett and members of the subcommitidentified before most U.S. public and private institutee, I am pleased to have this opportunity to particitions opened for business. The Federal Reserve pate in today's panel on our recent experience with became aware of the virus on the morning of Thursthe so-called "I love you," or "Love Bug," computer day, May 4, through reports from Microsoft. By virus. First, Mr. Chairman, I had the pleasure of approximately 8:30 a.m., major news wire services working with you when I served as Chair of the also contained fairly accurate details about how to Financial Sector Group of the President's Council on identify the virus, although the type of damage Year 2000 Conversion. I am grateful for the leaderinflicted on computer hardware and files and the ship and support you provided to the work of the manner in which the virus spread were still unclear. Financial Sector Group and the President's Council. Throughout the day, we also received reports from Clearly the public-private sector partnership you the FBI's National Infrastructure Protection Center helped forge was key to our nation's successful con- (NIPC),1 from InfraGard,2 and from antivirus softversion to the new century. ware vendors. As you know, the Love Bug virus was launched Financial institutions that have foreign offices, parfrom the Far East, and it attacked computers around ticularly those with operations in Asia, had the earlithe world running Microsoft Outlook for Windows. est warning and were able to take steps to inform To review what we know, the Love Bug virus, or employees worldwide and to shield their e-mail sysin the taxonomy of computer science, the "worm," tems, in many cases before opening for business. As entered computers through e-mail messages. Once a a precaution, many institutions shut down external, message was opened, the virus was able to reproduce and in some instances internal, e-mail systems. These itself by finding address lists stored by the computinstitutions also quickly alerted industry trade organier's owner and then sending itself to the addressees. zations and business partners about what they knew If an addressee opened the attachment, a similar of the virus. The global nature of commerce helped replication occurred, enabling the virus to spread many financial institutions learn about the virus rapidly. We understand that the virus was designed before many of the monitoring services issued an to steal Internet passwords. The virus was able to alert. modify operating system files as well as certain sound At the Federal Reserve, we immediately began to and picture files residing in the infected computers. implement our standard virus incident response pro- It had the effect of degrading network performance cedures. The fact that our employees were already by inundating e-mail server systems and some web trained to recognize and report suspicious e-mail pages. Variants of the virus in some cases had a messages, such as those that typically are virus carrimajor impact on the data and program files of some ers, was a tremendous asset in limiting the spread computer networks, although we did not experience of the virus internally—only a handful of messages that in the Federal Reserve. were opened. As a preventive measure, at about Like many organizations, the Federal Reserve 9:30 a.m., we shut down our e-mail systems to System received hundreds of Love Bug e-mail mesincoming mail from the Internet, and subsequently sages. However, the virus had no impact on our through our intranet, until we received and installed critical business functions or information systems. an antivirus patch, or antidote, from our software Indeed, the delivery of key financial and central bank vendors. (An antidote cannot be produced until the services by the Federal Reserve was unaffected. In the weeks after May 4, we contacted industry trade organizations as well as a number of the institutions we supervise, and they reported the virus did not 1. ANSIR (Awareness of National Security Issues and Response) is impair critical retail or wholesale banking services. the NIPC center that provides automated, unclassified advisory, alert, and warning information to private-sector security professionals con- Indeed with the help of various public- and privatecerning physical and cyber threats. sector information-sharing programs, the virus was 2. InfraGard is an FBI initiative to provide a private- and publicquickly detected, isolated, and immunized through a sector information-sharing mechanism in support of critical infrastructure protection. The FBI plans to open InfraGard chapters in all variety of standard operating procedures that have fifty-six FBI field districts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

460 Federal Reserve Bulletin • July 2000 particular virus is analyzed, and systems are at risk IMPACT OF LOVE BUG VIRUS until an antidote is installed.) ON THE FEDERAL RESERVE AND In accordance with Federal Reserve System policy, FINANCIAL INSTITUTIONS line management responsible for information security convened Systemwide conference calls to discuss the Other than impeding office communications and virus and to coordinate actions to contain it. During diminishing productivity because of the temporary the day, CERT3 and other virus-response centers pro- halt in receiving and sending e-mail messages, the vided information about how the virus spread and virus had minimal impact on the Federal Reserve's measures to contain the virus. We began installing business operations and no impact on our critical antivirus patches in the afternoon, and, as an exam- financial and central bank services. Our electronic ple, the Board of Governors re-opened its e-mail payment services are protected from e-mail viruses systems to outside mail by 5:00 p.m. Financial insti- because they do not operate on the automation systutions reported they were able to reopen e-mail tems that support our Internet and electronic mail systems at various times during the day, and most services. Our payment systems operate on proprietary e-mail systems were open by the beginning of busi- software systems and use a closed network rather ness the following morning. than the public Internet. Fedwire—our large-value funds transfer application—and our other key payment systems are accessible only through dedicated THE FEDERAL RESERVE'S PROCEDURES devices and require specific hardware, software, and communications facilities to process transactions. FOR RESPONDING TO VIRUSES AND OTHER Moreover, all of these communication systems are MALICIOUS ATTACKS ON OUR INFORMATION fully encrypted. If for some reason the Love Bug SYSTEMS virus was able to operate on a device linked to one of When the Love Bug struck, the Federal Reserve had our payment system applications, the device might, at state-of-the-art procedures and controls in place for worst, be temporarily disabled. An infected terminal, responding to and managing cyber-related incidents, however, could be recovered by using contingency including computer viruses. The procedures were procedures. effective in managing this incident and limiting the The Federal Reserve did experience some negative spread of the Love Bug virus. effects from the Love Bug attack. While our e-mail Besides training our employees in how to identify systems were disconnected, we used fax machines and deal with suspicious messages, the Federal and telephones to complete routine communications. Reserve has implemented several layers of security This proved to be inconvenient for some employees. protections. These include incident response teams In addition, our IT staff had to devote time to commuand virus-detection software that screens e-mail nicating with employees and business partners about messages and mailboxes for viruses; and, on some appropriate screening and containment measures and systems, we are operating "integrity checking tools" to perform work to apply software patches to immuthat detect changes in operating systems and soft- nize our e-mail systems and recover machines that ware. We have an ongoing communications program had been infected by the virus. In short, a virus of with senior executives regarding the operational risks this nature can be disruptive to an organization's associated with information systems. Effective lines electronic communications and knowledge-sharing of communication are also in place linking informa- activities. tion technology (IT) professionals across the Federal The financial institutions we supervise reported Reserve System to each other and with our vendors a similar experience. Word about the virus spread and organizations, such as the FBI and CERT. around the globe almost as quickly as the virus did, and companies were able to alert employees and to shield e-mail systems early in the business day. Even when e-mail systems became infected, the virus was not able to spread to critical banking systems. 3. The CERT (Computer Emergency Response Team) coordination Financial institutions conducted business as usual, center was chartered in 1988 by the U.S. Department of Defense to and ATMs and other retail and wholesale payment work with the Internet community to respond to computer security and settlement systems were unaffected. problems, raise awareness of computer security issues, and prevent security breaches. CERT/CC is part of the Networked Systems Although there were some minor disruptions in Survivability Program in the Software Engineering Institute, a federcommerce, we have not identified any measurable ally funded research and development center at Carnegie Mellon effect on the economy—in large part because com- University. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 461 mercial transactions are not generally conducted Our financial institutions report a renewed commitusing e-mail-based information systems. Various ment to training, particularly institutions in which news services have estimated the cost of the virus— virus-screening capabilities are somewhat limited in terms of lowered productivity and labor costs because of lesser reliance on e-mail systems. Moreto manage the virus and recover from damage—in over, to avoid having to shut down e-mail systems the range of $5 billion to $15 billion worldwide. At even briefly, some larger institutions plan to investithis time, however, we view those numbers as gate more robust filters that can be deployed in the "guesstimates."4 period after the spread of a virus and before their antivirus software vendors produce an antidote patch. As a result of the Love Bug virus, there is LESSONS LEARNED an increased awareness in the financial sector that today's most commonly used desktop products (web Although the Federal Reserve's detection and browsers, e-mail, and the like) are generally not response procedures were adequate and worked well, designed to resist future virus strains. Financial instiwe see the incident as an opportunity to identify tutions also believe that the software industry needs lessons learned so that we can continue to improve to take additional steps to ensure that their products our virus response processes. Our information- are appropriately secure. It is essential that desktop security program is based on a process of continuous products used to support critical business functions improvement and a post-incident review is standard are secure and engender confidence in their use. In practice in the Federal Reserve. We want to ensure the future, we anticipate that desktop products will that we operate in the most secure environment pos- increasingly be employed to deliver retail financial sible and that we are prepared to respond to cyber- services over the Internet. related incidents in a consistent, coordinated manner. With respect to the financial institutions we supervise, the Federal Reserve is integrating our informa- CONCLUSION tion technology examination program into safety and soundness assessments to ensure that the inherent Computer viruses and other malicious attacks by business risks created by technology are properly software hackers present an ongoing threat. Although managed. One benefit of Y2K is that senior execu- the Love Bug virus was limited in the damage that it tives and boards of directors of financial institutions caused, future viruses may be more difficult to conhave a better understanding of the linkage between tain. Because viruses put us into a defensive mode, operations risk and credit, market, liquidity, reputa- good information security processes and controls are tional, legal, and other forms of risk. This will serve critical—and those employed by the Federal Reserve the industry well in addressing new operational risks were effective in detecting and responding to the posed by rogue software, such as viruses. Love Bug virus. In addition, we are committed to participating in In my opinion, if electronic commerce is to flourinitiatives that promote information-system security ish, there must be a high degree of confidence by all and that assist in the rapid identification and analysis parties to transactions that the systems and networks of new viruses and other forms of cyber attacks. The are as secure as possible. There is a need to focus on Federal Reserve is an active participant in numerous measures that can be implemented to contain viruses public- and private-sector activities to protect the while antidotes are being developed. These include critical infrastructure. For example, we receive infor- measures to share information more effectively, to mation from the NIPC, and we will also be participat- analyze new viruses quickly, to distribute fixes more ing in the financial services information sharing and efficiently, and to recognize new, innovative viruses assessment center. We also plan to work more closely as they occur. Finally, public- and private-sector with our antivirus software vendors to convey the information-security initiatives, including early urgency of producing antidotes to new viruses in an warning, analysis, information, and containment, even more timely manner. should be supported and broadened. Up to this point, much of the focus on new threats to computer systems has focused on national security and criminal aspects of the problem. From my per- 4. See, for example, David Noack, " 'Love Bug' Damage Worldwide: $10 Billion," APBnews.com (May 8, 2000); Kathleen Ohlson, spective, the discussion should be expanded to Computer World, "Love Virus Costs Approaching $7 Billion" include the broader risks presented by the growth of (May 9, 2000); Jesse J. Holland, Associated Press writer, "Computer electronic commerce. One of the reasons our nation's Virus Hits Fed Agencies" (May 11, 2000). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

462 Federal Reserve Bulletin • July 2000 Year 2000 efforts were so successful was that leaders new forms of operations risk. Finally, in my view, in the public and private sectors recognized that the model implemented to address Y2K could be technology issues presented significant business risks, helpful in strengthening programs to address the and they worked together to meet the challenge. The risks to the public infrastructure on which the finanwork of the Department of the Treasury in supporting cial services industry relies: telecommunications, the goals of Presidential Decision Directive 63 is a power, water, transportation, and public safety. good step in helping the financial sector to address Statement by Edward M. Gramlich, Member, Board Yet, even without precise data, there are enough of Governors of the Federal Reserve System, before anecdotes to suggest that a problem exists. We also the Committee on Banking and Financial Services, know that attempts to deal with predatory lending are U.S. House of Representatives, May 24, 2000 hampered by two broad phenomena: Much recent attention has been focused on predatory • Predatory lending often involves the abuse lending, amid distressing reports of abusive practices of credit provisions that can be of value to many connected with home-secured loans. These practices borrowers. may involve, among other things, excessive fees and • Predatory lending seems to occur most cominterest rates, unnecessary insurance, and fraud. Bor- monly in the unregulated sector of the loan market rowers saddled with unaffordable payments can lose by lending institutions that are not forced to undergo their homes. Excessive up-front fees combined with periodic compliance exams. frequent refinancings (often referred to as "loan flipping") may also strip the equity from consumers' homes. These are matters of serious concern, and the THE TRUTH IN LENDING ACT committee should be commended for examining them. No law administered by the Board contains a statu- There is some debate about what constitutes abu- tory or regulatory definition of predatory lending. sive or predatory lending. A narrow definition of The Truth in Lending Act (TILA) is intended to predatory lending focuses on specific practices that promote the informed use of consumer credit, primatake advantage of consumers and that are unfair, rily through disclosure of the costs and terms of deceptive, or fraudulent. Other observers view preda- loans, although it also contains some substantive tory lending more broadly, focusing on high-cost restrictions. loans as such. Most predatory lending seems to occur TILA requires all creditors to calculate and disin the subprime mortgage market, a market that has close credit costs in a uniform manner. Lenders must grown recently. In this market, the premiums paid disclose information on payment schedules, prepayby borrowers typically range from about 1 percent- ment penalties, and the total cost of credit expressed age point to about 6 percentage points more than the as a dollar amount and as an annual percentage rate rate charged for prime mortgage loans, depending on (APR). TILA mandates additional disclosures for the credit risk involved. Some consumer advocates loans secured by a consumer's home and provides for have stated that many subprime loans are predatory a "cooling off period," during which consumers may because, in their view, subprime borrowers pay rates rescind certain transactions that involve their princiand fees that exceed the amounts necessary to pal dwelling. account for any additional credit risks. Thus, even though most consumer advocates applaud the growth of subprime lending—because it expands the avail- THE HOME OWNERSHIP AND ability of credit to those with less-than-perfect credit EQUITY PROTECTION ACT records—they are concerned about whether, in practice, some subprime lenders or their brokers are tak- In response to reports of abusive lending practices ing unfair advantage of many of these consumers. whereby unscrupulous lenders made unaffordable The information we have about predatory lending home-secured loans to "house-rich but cash-poor is essentially anecdotal. Even apart from the concep- borrowers," the Congress amended TILA by enacttual differences I mentioned, there is no ready method ing the Home Ownership and Equity Protection Act for measuring the amount of predatory lending or of 1994 (HOEPA). HOEPA identifies a class of highdetermining how prevalent a problem it represents. cost mortgage loans and protects borrowers from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 463 loan agreements that are likely to result in default and Because consumers who obtain subprime mortthe loss of their homes. The act does not prohibit gage loans have fewer credit options than other borcreditors from making such loans but defines a class rowers, or because they perceive that they have fewer of transactions through rate and fee triggers. The options, they may be more vulnerable to unscrupuparticular triggers of HOEPA are an APR 10 per- lous lenders or brokers. With the increase in the centage points above the yield on a Treasury security number of subprime loans and the fact that a large of comparable maturity or closing fees exceeding share of these loans are made by nondepository finan- 8 percent of the loan amount. For covered trans- cial institutions that are not facing periodic compliactions, additional disclosures are required and cer- ance examinations, consumer advocates have been tain loan terms are prohibited, such as balloon concerned for some time about the potential for a payments for short-term loans and non-amortizing corresponding increase in the number of predatory payment schedules. loans. But some industry representatives have noted The disclosures required by HOEPA include a that the trend toward securitizing subprime mortwarning that the lender has a mortgage on the bor- gages has served to standardize creditor practices and rower's home and that the borrower could lose the to limit the opportunity for widespread abuse. home through a default. The disclosures also must Although HOEPA's purpose is to regulate abusive provide cost information such as the APR and the lending practices, coverage by the act depends on monthly payment. These disclosures must be given to price triggers rather than on a definition or finding of consumers at least three days in advance of the loan "predatory lending." This means that HOEPA's price closing. When combined with TILA's three-day right triggers bring some subprime loans not associated of rescission after the closing, the disclosures ensure with unfair or abusive lending within the act's coverthat a consumer has a minimum of six days to con- age and that abusive practices may occur in transacsider the relevant information before finally deciding tions that fall below the HOEPA triggers. to enter into a transaction. If a creditor fails to provide material disclosures or includes prohibited terms in the loan agreement, the borrower may have up THE 1998 JOINT REPORT TO THE CONGRESS to three years to rescind the transaction. Violations of HOEPA may result in creditors' being liable for In July 1998, the Board and the Department of Housactual and statutory damages. Consumers may also ing and Urban Development submitted a report to recover all finance charges and fees paid on a loan. the Congress on the issue of how TILA and the Real HOEPA also includes special liability rules that Estate Settlement Procedures Act (RESPA), an act generally make the purchasers or assignees of these requiring certain disclosures and prohibitions, might loans subject to all claims and defenses that could be be reformed. Although improved disclosures would asserted against the original creditor. help many consumers shop for loans that best fit their needs, the two agencies found that these disclosures alone were unlikely to protect vulnerable or unknow- CHANGES IN HOME EQUITY LENDING ing consumers from unscrupulous creditors. Accord- Since HOEPA's enactment, the volume of home ingly, the 1998 report included a detailed analysis of equity lending has increased significantly. This over- the problem of abusive practices in mortgage lendall growth in home equity lending has featured a ing, with several recommendations for possible legissharp boost in the subprime mortgage market. The lation. A copy of the report is attached.1 Department of Housing and Urban Development As described in the 1998 report, abusive practices (HUD) reports that the number of subprime loans in home equity lending take many forms but princiused to purchase homes has increased from a mere pally fall within two categories. One category 16,000 in 1993 to more than 220,000 in 1998. The includes the use of blatantly fraudulent or deceptive number of subprime home equity loans has increased techniques that may also involve other unlawful from 80,000 in 1993 to 790,000 in 1998. acts, including violations of HOEPA. These practices The result of this growth has been a massive occur even though they are illegal. For example, loan increase in the availability of credit to borrowers applicants' incomes and ability to make scheduled having less-than-perfect credit histories and to other consumers who do not meet the underwriting standards of prime lenders. These are mainly lower- 1. The attachment is available on the Board's web site (www.federalreserve.gov/boarddocs/press/General/1998) and on income or minority borrowers, or those residing in request from Publications Services, Mail Stop 127, Board of Goverlower-income or minority neighborhoods. nors of the Federal Reserve System, Washington, DC 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

464 Federal Reserve Bulletin • July 2000 loan payments may be falsified, consumers' signa- Given the wide range of practices that are included tures may be forged or obtained on blank documents, in the notion of what is "predatory," a multifaceted or borrowers may be charged fees that are not tied to approach is likely to be the most effective. We should any service rendered. certainly look at ways to strengthen enforcement of The other category of abuses involves various tech- current laws that are being ignored. Nonregulatory niques used to manipulate borrowers, coupled with strategies should also be encouraged and implepractices that may ordinarily be acceptable but can be mented, including voluntary industry action, commuused or combined in abusive ways. Consumers may nity outreach efforts, and consumer education and be talked into accepting high-cost loans without counseling. knowing that they may qualify for lower-cost alter- The 1998 report identified two specific changes natives. A broker or creditor may pressure consumers to protect consumers who obtain HOEPA-covered to enter into transactions that they do not fully under- loans. One addresses balloon payments; the other stand or that are not beneficial. If there is sufficient addresses single-premium credit insurance. equity in the property, homeowners may be charged Currently, balloon payments are prohibited for excessive up-front fees, which are added to the loan HOEPA-covered loans having maturities of less than amount. Because of the equity built up, such loans five years. This prohibition is an important first step may be based on the collateral value alone, without to curb the "flipping" that occurred before HOEPA consideration of the borrowers' ability to repay. And was enacted. While most creditors believe low some loan terms that work well for some borrowers monthly payments with balloon payments can somein some circumstances may harm borrowers who are times be useful credit arrangements and should be not fully aware of the consequences. For example, a permitted, the current less-than-five-year rule can still consumer may not understand that a loan with afford- be criticized because it allows creditors to flip mortable monthly payments will not amortize the princi- gages with balloon loans that mature in five years. pal or that the consumer may have to refinance a For HOEPA-covered loans, consumers may be just as balloon payment at additional cost. unlikely to repay or refinance the loan at better rates after five years as they are after two or three years. Hence the Board and HUD proposed that balloon WHAT SHOULD BE DONE? notes covered by HOEPA might be further restricted, for example, either by applying stronger prohibitions The 1998 report suggested some new substantive to a subset of these loans or by prohibiting balloon protections to deal with predatory lending, some notes for these loans altogether. involving legislative action. The report noted that any The Board and HUD also recommended limiting regulatory scheme involves tradeoffs. Government- creditors' ability to collect certain credit insurance imposed rules dictating when and on what terms premiums on HOEPA-covered loans up-front. Conconsumers can obtain credit sometimes raise issues sumer advocates express concern about high-pressure of fairness and economic efficiency. Overly broad sales tactics sometimes used to sell high-priced credit rules could unnecessarily burden the entire home insurance that does not allow for a discount for equity credit industry in an effort to regulate a minor- advance payments. The insurance is sometimes sold ity of unethical or dishonest players. Any legislation with a single premium collected up-front. If for some should focus on abusive practices without interfering reason the mortgage loan is paid off early, it is often with legitimate credit transactions. difficult for consumers to obtain a refund of the The desirability of rules that narrow a consumer's unused portion of their premium. options depends on the circumstances or the perspec- Regulation of insurance, including the setting of tive of the particular consumer. We should try to allowable premium rates, has historically been a preserve consumers' ability to choose loan products matter for state law. Yet some abusive practices could that meet their particular needs. For example, mort- be eliminated by prohibiting the advance collection gages with a balloon payment feature often are attrac- of premiums on HOEPA-covered loans, so that contive to borrowers because they allow distressed bor- sumers would pay for insurance periodically—and rowers or young borrowers who have low cash only for the time the loan is actually outstanding. incomes to buy homes and match payments with their This means that termination of the loan would automatically cancel both the coverage and any liability rising income stream. But sometimes balloon payfor future payments. ments can ruin borrowers who do not have a rising stream of income and who are unduly influenced by The Board and HUD also recommended reforms the lower short-term cost of a balloon note. concerning the type of notice that should be provided Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 465 with consumer loans in general, both HOEPA and outside the normal compliance network. The aims of non-HOEPA, before foreclosure. Consumers victim- the group are to tighten enforcement of existing statized by abusive practices must be provided adequate utes and to establish a coordinated approach- to preopportunity to assert their rights to avoid unwar- datory practices. Even though insured depository ranted foreclosures. For the most part, the procedures institutions typically have not been associated with that a creditor must follow for foreclosure are gov- making predatory loans, concerns have been raised erned by state law, local practice, and the terms of the about financial institutions that invest in these loans. relevant contract documents. Some states require The Board is required to hold periodic hearings on creditors to provide actual notices of foreclosure pro- the effectiveness of HOEPA in curbing abusive lendceedings to consumers, but in other states notice by ing. The Board did so in 1997, slightly less than two publication is deemed sufficient. In some states a years after the act became effective. Those hearings judicial process is followed; the creditor must file a formed the basis of the 1998 analysis of abusive lawsuit and obtain a judgment to obtain permission lending contained in the Board-HUD joint report to sell the property. Other states allow a nonjudicial to the Congress. The Board plans to hold another process in which the creditor merely notifies the round of public hearings on HOEPA later this year, borrower that the home will be advertised and sold, with the Board's Consumer Advisory Council taking thereby placing the burden on the homeowner to take an active role in developing the specific questions for legal action to prevent the sale. In some cases con- discussion. sumers do not receive adequate information about the At those hearings, consideration will be given to foreclosure and the options that are available to them. broadening HOEPA's coverage by, for example, low- Requiring a minimum standard for the type of ering the HOEPA rate triggers or including additional notice creditors must provide to consumers before costs in the points and fee triggers. In addition, the foreclosure raises issues concerning preemption of Board will explore whether its regulatory authority state law. Nevertheless, to avoid unannounced fore- under HOEPA to prohibit practices that harm conclosures on consumers' homes, the Board and HUD sumers can, as a practical matter, curb predatory recommended that before any foreclosure sale, credi- loans. Frankly, the value of rules prohibiting such tors should be required to provide a written explana- practices is uncertain, given the nature of predatory tion of any rights the consumer may have to cure the practices. Some occur even though they are already delinquency or redeem the property. Consumers illegal, and others are harmful only in certain circumshould also be notified of the steps they must take to stances. The best solution in many cases may simply exercise their rights and the process that will be be stricter enforcement of current laws. followed in any foreclosure, and should be given Nonregulatory strategies are also being pursued. information about the availability of third-party credit Trade associations for subprime lenders and mortcounseling. gage brokers have been actively engaged in developing self-regulatory guidelines. Secondary market participants such as Fannie Mae and Freddie Mac are CURRENT EFFORTS developing their own strategies for ensuring that they do not finance predatory loans and are making efforts As I mentioned earlier, a multifaceted approach, to develop consumers' awareness of legitimate credit including both regulatory and nonregulatory strate- options. gies, is likely to be the most effective. Efforts on all There is one final, but important, factor. Whether or most of these fronts are under way. For example, the concern is high-cost loans generally or specific several bills taking different approaches to addressing predatory practices, credit markets operate more effipredatory lending have been introduced in the Con- ciently when consumers are well informed. Commugress. Several states have enacted or are considering nity outreach efforts, consumer education, and, when legislation. appropriate, counseling would increase consumers' Various federal task forces have been formed. The understanding of their credit options. Such efforts Board has convened a nine-agency working group, can, and should, be supported by both government including the five federal agencies that supervise and industry, working in conjunction with consumer depository institutions, two agencies that regulate and community organizations. For example, the Fedhousing (HUD and the Office of Federal Housing eral Reserve's community affairs program has been Enterprises Oversight), and two that regulate or pros- actively working with community organizations, ecute deceptive trade practices in general (the Depart- holding conferences and workshops, and publishing articles that identify specific abuses and strategies for ment of Justice and the Federal Trade Commission). avoiding them. • The latter four agencies cover lending institutions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

466 Announcements ACTION BY THE FEDERAL OPEN MARKET The seven new members will be appointed to serve COMMITTEE AND AN INCREASE IN THE three-year terms beginning in January 2001. DISCOUNT RATE Nominations should include the following: The Federal Open Market Committee voted on • Complete name, title, address, and telephone and May 16, 2000, to raise its target for the federal funds fax numbers rate by 50 basis points to 6V2 percent. In a related • Organization name, brief description of organiaction, the Board of Governors approved a 50 basis zation, address, and telephone number point increase in the discount rate to 6 percent. • Past and present positions Increases in demand have remained in excess of • Knowledge, interests, or experience related to even the rapid pace of productivity-driven gains community reinvestment, consumer protection reguin potential supply, exerting continued pressure on lations, consumer credit, or other consumer financial resources. The Committee is concerned that this dis- services parity in the growth of demand and potential supply • Positions held in community and banking assowill continue, which could foster inflationary imbal- ciations, councils, and boards. Nominations should ances that would undermine the economy's outstand- also include the complete name, organization name, ing performance. title, address, and telephone and fax numbers for Against the background of its long-term goals of the nominator. Letters of nomination with complete price stability and sustainable economic growth and information must be received by August 1, 2000, and of the information already available, the Committee should be mailed (not sent by facsimile) to Sandra F. believes the risks are weighted mainly toward condi- Braunstein, Assistant Director, Division of Consumer tions that may generate heightened inflation pressures and Community Affairs, Board of Governors, Federal in the foreseeable future. Reserve System, Washington, DC, 20551. In taking the discount rate action, the Federal Reserve Board approved requests submitted by the The Federal Reserve Board announced on May 17, boards of directors of the Federal Reserve Banks of 2000, that the Consumer Advisory Council would Boston, Cleveland, Richmond, and San Francisco. hold its next meeting on Thursday, June 22. The The Board subsequently approved similar requests by Council's function is to advise the Board on the the boards of directors of the Federal Reserve Banks exercise of its responsibilities under the Consumer Credit Protection Act and on other matters on which of Atlanta, Chicago, Dallas, and Kansas City, effecthe Board seeks its advice. The group meets in Washtive May 17; the Federal Reserve Banks of St. Louis, ington, D.C., three times a year. Philadelphia, and Minneapolis, effective May 18; and the Federal Reserve Bank of New York, effective May 19. The discount rate is the rate charged depository institutions when they borrow short-term adjust- PROPOSED ACTIONS ment credit from their District Federal Reserve Banks. The Federal Reserve Board on May 18, 2000, published proposed amendments to Regulation Z (Truth in Lending) revising the disclosure requirements for credit and charge card solicitations. Comments are CALL FOR NOMINATIONS FOR APPOINTMENTS requested by July 18, 2000. TO THE CONSUMER ADVISORY COUNCIL AND NOTICE OF MEETING The Federal Reserve Board on May 23, 2000, requested additional comments on deposit deadlines The Federal Reserve Board announced on May 24, and pricing practices for automated clearinghouse 2000, that it is seeking nominations for seven (ACH) transactions. Comments are requested by July appointments to the Consumer Advisory Council. 25, 2000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

467 Based upon comments received in response to its cover information sharing between financial instituearlier request for comments in May 1999, the Board tions and non-affiliated third parties. has concluded that the Federal Reserve Banks' The regulations are effective November 13, 2000, deposit deadlines and pricing practices for ACH but in order to provide sufficient time for financial transactions they exchange with private-sector ACH institutions to establish policies and procedures and operators should be modified and is now requesting to put in place systems to implement the requirecomments on specific modifications that it is consid- ments of the regulations, the deadline for full compliering. The Board believes that adopting these modifi- ance with the regulations is extended until July 1, cations would enhance competition in the provision 2001. of ACH operator services to depository institutions. The agencies expect the regulations to be published in the Federal Register. The published regulations may contain nonsubstantive changes not in the APPROVAL OF FINAL REGULATIONS FOR version approved by each agency on May 10. PRIVACY OF CONSUMER FINANCIAL INFORMATION JOINT AGENCY PROPOSAL FOR RULE ON The Board of Governors of the Federal Reserve DISCLOSURE AND REPORTING OF System, the Federal Deposit Insurance Corporation, CRA-RELATED AGREEMENTS the Office of the Comptroller of the Currency, and the Office of Thrift Supervision on May 10, 2000, The Board of Governors of the Federal Reserve approved the issuance of final regulations imple- System, the Federal Deposit Insurance Corporation, menting the provisions of the Gramm-Leach-Bliley the Office of the Comptroller of the Currency, and Act governing the privacy of consumer financial the Office of Thrift Supervision jointly announced information. on May 10, 2000, their request for comment on a The regulations resulted from an interagency effort. proposed rule implementing section 711, CRA Sun- They impose three main requirements established by shine Requirements, of the recently enacted Grammthe act: Leach-Bliley Act. Section 711 establishes annual reporting and pub- • Financial institutions must provide initial notices lic disclosure requirements for certain written agreeto customers about their privacy policies, describing ments between insured depository institutions or their the conditions under which they may disclose non- affiliates and nongovernmental entities or persons public personal information to non-affiliated third (including business entities) made pursuant to, or in parties and affiliates. These notices must be accurate, connection with, the fulfillment of the Community clear, and conspicuous. Reinvestment Act (CRA) of 1977. The proposed rule • Financial institutions must provide annual would implement the requirements of the statute. notices of their privacy policies to their current cus- Section 711 exempts from coverage all agreements tomers. These notices must be accurate, clear, and with nongovernmental entities or persons that have conspicuous. not had a contact concerning the CRA with the • Financial institutions must provide a reasonable relevant banking organization or a banking agency. method for consumers to "opt out" of disclosures to Certain types of loans and loan commitments also are non-affiliated third parties; that is, consumers must exempt from coverage. The proposed rule would be given a reasonable opportunity to "opt out" and a implement the exemptions in the statute. reasonable means to do so. Consumers may exercise Consistent with the statute, the proposed rule seeks their "opt out" option at any time. to implement the disclosure and reporting requirements of section 711 in a manner that limits poten- The regulations, which are identical in all substan- tial burden. For example, the proposed rule would tive reports, apply to financial institutions for which establish simple reporting procedures when posthe agencies have primary supervisory authority. The sible and would allow nongovernmental entities or regulations limit disclosure by financial institutions persons to use reports that they have prepared for of "nonpublic personal information" about individu- other purposes—such as tax returns and financial als who obtain financial products or services for statements—if these reports provide the information personal, family, or household purposes. Subject to required by the act. The agencies will accept comments on the proposed rule until July 21. certain exceptions allowed by law, the regulations Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

468 Federal Reserve Bulletin • July 2000 ENFORCEMENT ACTION PUBLICATION OF THE ANNUAL REPORT The Federal Reserve Board on May 18, 2000, The 86th Annual Report, 1999, of the Board of Govannounced the issuance of a consent order against the ernors of the Federal Reserve System, covering Korea Exchange Bank, Seoul, Korea; its Los Angeles operations for the calendar year 1999, is now availagency; and its Chicago, Broadway, New York, and able from Publication Services, Mail Stop 127, Board Seattle branches. The order was issued jointly of Governors of the Federal Reserve System, Washwith the Federal Deposit Insurance Corporation, the ington, DC 20551, or phone 202-452-3244 or 3245. California Department of Financial Institutions, The report is also available on the Federal Reserve the Illinois Office of Banks and Real Estate, the Board's web site (http://www.federalreserve.gov). • New York State Banking Department, and the Washington Department of Financial Institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

469 Minutes of the Meeting of the Federal Open Market Committee Held on March 21, 2000 A meeting of the Federal Open Market Committee Messrs. Struckmeyer and Whitesell, Assistant was held in the offices of the Board of Governors of Directors, Divisions of Research and Statistics and Monetary Affairs respectively, Board of the Federal Reserve System in Washington, D.C., on Governors Tuesday, March 21, 2000, at 9:00 a.m. Ms. Low, Open Market Secretariat Assistant, Present: Division of Monetary Affairs, Board of Mr. Greenspan, Chairman Governors Mr. McDonough, Vice Chairman Mr. Broaddus Ms. Browne, Messrs. Hakkio and Hunter, Mr. Ferguson Ms. Krieger, Messrs. Lang, Rasche, and Mr. Gramlich Rosenblum, Senior Vice Presidents, Federal Mr. Guynn Reserve Banks of Boston, Kansas City, Mr. Jordan Chicago, New York, Philadelphia, St. Louis, Mr. Kelley and Dallas respectively Mr. Meyer Mr. Parry Mr. Bryan, Assistant Vice President, Federal Reserve Bank of Cleveland Mr. Hoenig, Ms. Minehan, Messrs. Moskow, Poole, and Stewart, Alternate Members of the Mr. Weber, Senior Research Officer, Federal Federal Open Market Committee Reserve Bank of Minneapolis Mr. Rudebusch, Senior Research Officer, Federal Messrs. Boehne, McTeer, and Stern, Presidents Reserve Bank of San Francisco of the Federal Reserve Banks of Philadelphia, Dallas, and Minneapolis respectively By unanimous vote, the minutes of the meeting of the Federal Open Market Committee held on Febru- Mr. Kohn, Secretary and Economist ary 1-2, 2000, were approved. Mr. Bernard, Deputy Secretary Ms. Fox, Assistant Secretary The Manager of the System Open Market Account Mr. Gillum, Assistant Secretary reported on recent developments in foreign exchange Mr. Mattingly, General Counsel markets. There were no open market operations in Ms. Johnson, Economist foreign currencies for the System's account in the Mr. Prell, Economist period since the previous meeting, and thus no vote was required of the Committee. Ms. Cumming, Messrs. Eisenbeis, Goodfriend, The Manager also reported on developments in Howard, Lindsey, Reinhart, Simpson, and Stockton, Associate Economists domestic financial markets and on System open market transactions in government securities and fed- Mr. Fisher, Manager, System Open Market Account eral agency obligations during the period February 2, 2000, through March 20, 2000. By unanimous vote, Mr. Winn, Assistant to the Board, Office of the Committee ratified these transactions. Board Members, Board of Governors At its meeting in August 1999, the Committee had voted to expand the collateral that could be accepted Mr. Ettin, Deputy Director, Division of Research in System repurchase transactions and had authoand Statistics, Board of Governors rized the use of reverse repurchase agreements. These authorizations were scheduled to expire at the end of Messrs. Madigan and Slifman, Associate Directors, Divisions of Monetary Affairs and Research April 2000. At this meeting the Manager proposed and Statistics respectively, Board of Governors that the authority to use the broader range of collat- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

470 Federal Reserve Bulletin • July 2000 eral be extended until the first meeting in 2001 and nent reserve needs by purchasing coupon securities that the authority to engage in reverse repurchase in the secondary market. However, the amount that agreements be made permanent. could be added through outright purchases without The principal effect of the expanded collateral disturbing the Treasury market would have to be authorized last August, together with the use of tri- gauged over time relative to conditions in the market party repurchase agreements, was to allow pass- as Treasury issuance patterns evolved in response to through mortgage securities of GNMA, FNMA, and System purchases and Treasury buybacks of coupon FHLMC and "stripped" securities of the U.S. Trea- securities. sury and federal government agencies to be taken All the members endorsed the proposal for a study as collateral for repurchase transactions. Direct Trea- of the issues associated with the System's asset sury obligations remained the preferred means for allocation in light of declining Treasury debt. They meeting the System's needs, but anticipated pay- noted that the requested temporary expansion of downs of marketable federal debt associated with authority, pending the Committee's consideration of projected budget surpluses were likely to limit the the completed study, should not be read as indicating System's ability in the future to continue to add in any way how the Committee might ultimately substantially to holdings, even on a temporary basis, choose to allocate the portfolio, and any interim without generating undesirable market repercussions. operations in the broader range of collateral should In this setting, the Manager recommended that a be capable of being unwound without adverse market broad-gauge study be undertaken to consider alter- consequences. native asset classes and selection criteria that could At the conclusion of this discussion, the Commitbe appropriate for the System Open Market Account tee voted unanimously to extend the suspension of (SOMA), with particular attention to alternatives to several provisions of the "Guidelines for the Conduct the current reliance on net additions to outright hold- of System Operations in Federal Agency Issues" ings of Treasury securities as the sole means of until the first regularly scheduled meeting in 2001. effectuating the upward trend in the asset side of the The Committee also accepted a proposal by the System's balance sheet. Manager to make permanent the authority to use Pending the completion of that study and the Com- reverse repurchase agreements in the conduct of open mittee's consideration of alternative asset allocations, market operations. Such agreements are equivalent the Manager suggested that the Desk could rely on to matched sale-purchase transactions, which the temporary operations with relatively long maturities Manager has long been authorized to use, but reverse to meet the growth in underlying reserve needs that RPs have the advantage of much greater flexibility could not comfortably be met by further outright because they are the common practice in financial purchases of Treasury securities. In implementing markets. The Manager indicated that he did not these temporary operations, the Manager expressed expect to use reverse RPs on a regular basis until the a preference to distribute the System's demand for System's new trading system became operational, but collateral as broadly as possible in order to minimize in conjunction with existing tri-party arrangements the impact on spread relationships in the financing there might be occasions in the interim when the market. This preference motivated his recommenda- timing of open market operations would make it tion to extend temporarily the authority to operate in desirable to use them instead of matched salethe broader range of collateral. purchase transactions. The members voted unani- The required size of the longer-term temporary mously to adopt on a permanent basis, subject to the operations would depend on how much of the perma- annual review required for all the Committee's instrunent reserve need could be met by outright purchases ments, paragraph 1(c) of the Authorization for of Treasury securities. The Manager noted that the Domestic Open Market Operations in the form reprodesirability of maintaining a liquid bill portfolio duced below. suggested that System holdings of any bill issue should be limited to 35-40 percent of the outstand- 1. The Federal Open Market Committee authorizes and ing amount. With issue sizes declining, such limits directs the Federal Reserve Bank of New York, to the might mean that from time to time some portion of extent necessary to carry out the most recent domestic the System's maturing bill holdings would be policy directive adopted at a meeting of the Committee: redeemed rather than rolled over in Treasury auc- (c) To sell U.S. Government securities and securities that are direct obligations of, or fully guaranteed as to tions. The Manager also intended to roll over maturprincipal and interest by, any agency of the United States to ing holdings of Treasury coupon issues in auctions dealers for System Open Market Account under agreeand to add to the System's portfolio to meet perma- ments for the resale by dealers of such securities or obliga- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 471 tions in 90 calendar days or less, at rates that, unless Residential housing activity remained strong in the otherwise expressly authorized by the Committee, shall be first two months of the year. Total private housing determined by competitive bidding, after applying reasonstarts in January and February held at the high able limitations on the volume of agreements with indi- December level, as a surge in starts of multifamily vidual dealers. units offset a downturn in starts of single-family The Committee then turned to a discussion of the homes. The demand for housing, associated with economic and financial outlook and the implementa- continuing gains in jobs and incomes, had remained tion of monetary policy over the intermeeting period ebullient despite an appreciable increase in mortgage ahead. rates. Although sales of new single-family homes The information reviewed at this meeting sug- fell in January (latest data), the decline followed a gested that the expansion of economic activity December pace that was the highest monthly rate in remained rapid. Consumer spending and business more than twenty years. Sales of existing homes also fixed investment were still trending upward strongly, declined in January, continuing a trend that had begun and housing demand was holding at a high level. last July, but inventories of existing homes for sale Although the growth in domestic demand was being evidently were at very low levels. met partly through rising imports, industrial produc- Business spending on durable equipment and softtion and nonfarm payrolls were expanding briskly. ware and on nonresidential structures increased Labor markets continued to be very tight, but there sharply in January. Shipments of computing and comwere few signs of any acceleration in labor costs. munications equipment surged after the century roll- Price inflation was still moderate, except for the over, and shipments of other non-aircraft goods rose upturn in energy prices in recent months. moderately. Deliveries of aircraft continued to be Labor demand remained robust in January and held down by the labor strike at Boeing. The recent February, with the average increase in private non- strength in orders for many types of equipment farm payroll employment over the two months only pointed to further advances in spending in coming a little below the strong pace of 1999. Job growth in months. Expenditures for nonresidential structures manufacturing and construction was solid, while hir- turned up last autumn and rose rapidly in January. ing in the services sector slowed appreciably. The Office and other commercial construction activity civilian unemployment rate, at 4.1 percent in Febru- was robust, while industrial building was little ary, was just above its 1999 low, and initial claims changed. for unemployment insurance were at an extremely The pace of accumulation of manufacturing and low level in early March. trade inventories slowed somewhat in January from Industrial production was up sharply in the early the elevated rate in the fourth quarter; however, sales months of the year, reflecting large gains in the grew briskly and the aggregate inventory-sales ratio manufacturing and utilities sectors. Within manufac- edged down from an already very low level. In turing, output of high-tech equipment was notably manufacturing, stocks increased moderately further strong, but production of motor vehicles and parts in January; however, shipments grew more, and the also recorded a sizable advance on balance over the aggregate stock-shipments ratio for the sector January-February period. By contrast, output of air- declined to a new low. Both wholesale and retail craft and parts weakened again. The continuing inventories increased in line with sales, and strength in manufacturing lifted the factory operating inventory-sales ratios for these sectors stayed at the rate further, but capacity utilization stayed a little bottom of their respective ranges over the past twelve below its long-term average. months. Retail sales continued to increase rapidly in Janu- The U.S. trade deficit in goods and services ary and February against the backdrop of strong climbed to a new high in January, as the value of growth in disposable income and household wealth exports retreated from the peak reached in December and elevated consumer confidence. Sales of light and the value of imports rose sharply. The drop in vehicles surged over the January-February period. exports was concentrated in computers, semicon- Purchases of goods other than motor vehicles picked ductors, aircraft, chemicals, and consumer goods, up substantially further, with gains widespread across while the increase in imports was primarily in oil most major categories. Outlays for services rose and automotive products. The available information briskly in January (latest data); part of the gain suggested that economic expansion continued to be resulted from higher spending for heating as tempera- robust in most foreign industrial economies. The tures in many parts of the country dropped to more Japanese economy was still the notable exception, seasonable levels. though some favorable signs were evident. Economic Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

472 Federal Reserve Bulletin • July 2000 activity in the developing countries also picked up tinued low inflation and to greater volatility in equity further, with Asian countries registering the largest prices. On balance over the intermeeting period, gains. interest rates on private instruments registered small Price inflation had remained moderate in recent mixed changes while yields on longer-term Treasury months, with the exception of higher energy prices. securities declined significantly. Most major indexes Consumer prices jumped in February as energy prices of equity prices moved up appreciably on net over the surged. Abstracting from energy prices, however, intermeeting period. consumer price inflation was moderate in January In foreign exchange markets, the trade-weighted and February. Moreover, the increase in consumer value of the dollar changed little over the intermeetprices of items other than food and energy during the ing period against a basket of major currencies. The twelve months ended in February was the same as the dollar rose against the Australian dollar, British change during the previous twelve-month period. At pound, Canadian dollar, and the euro as investors the producer level, prices of finished goods other than apparently revised down their expectations of the food and energy changed little in January and Febru- extent of monetary tightening in those countries. By ary, and their rise during the twelve months ended in contrast, the dollar declined against the Japanese yen February was somewhat smaller than the advance and the currencies of a number of other important during the previous twelve-month period. At earlier trading partners, notably the Mexican peso and the stages of processing, however, producer prices regis- Brazilian real. tered somewhat larger increases than those for fin- The growth of M2 and M3 slowed in February, ished goods in both the January-February period and partly reflecting an unwinding of Y2K effects and the twelve months ended in February. With regard to rising opportunity costs of holding liquid balances. labor costs, average hourly earnings grew at a slightly In addition, the surging prices of technology-related faster rate in January and February than they had in equities might have spurred depositors to shift some the fourth quarter of last year. However, the advance of their M2 balances into equity mutual funds. The in this earnings measure in the twelve months ended growth of total domestic nonfinancial debt slowed in February was about the same as that in the pre- early in the year as large federal debt paydowns vious twelve-month period. resumed following the sharp buildup of Treasury At its meeting on February 1-2, 2000, the Commit- balances before year-end. tee adopted a directive that called for a slight tighten- The staff forecast prepared for this meeting suging of conditions in reserve markets consistent with gested that the economic expansion would moderate an increase of A percentage point in the federal funds gradually from its currently elevated pace to a rate rate to an average of about 53A percent. The members around, or perhaps a little below, the growth of the agreed that this action was needed to help bring the economy's estimated potential. The expansion of growth of aggregate demand into better alignment domestic final demand increasingly would be held with the expansion of potential aggregate supply back by the anticipated waning of positive wealth and thereby help avert rising inflationary pressures. effects associated with large earlier gains in equity The members also agreed that the risks remained prices and by higher interest rates. As a result, the weighted mainly in the direction of greater inflation growth of spending on consumer durables and houses pressures and that further tightening actions might be was expected to slow; in addition, business investnecessary to bring about financial conditions that ment in equipment and software was projected to were sufficiently firm to contain upward pressures on decelerate following a first-quarter surge that partly labor costs and prices. reflected information technology expenditures that Open market operations during the intermeeting had been postponed until after the century rollover. period were directed toward implementing the In addition, solid economic expansion abroad was desired slightly greater pressure on reserve posi- expected to boost the growth of U.S. exports for some tions, and the federal funds rate averaged very close period ahead. Core price inflation was projected to to the Committee's 53A percent target. The Commit- increase somewhat over the forecast horizon, partly tee's action and its announcement that the risks were as a result of rising import prices and some firming of weighted in the direction of rising inflation were gains in nominal labor compensation in persistently widely anticipated and had little immediate effect on tight labor markets that would not be fully offset by market yields. Subsequently, market rates moved up productivity growth. in response to the receipt of data that signaled persist- In the Committee's discussion of current and proing strength of the economy, but they turned back spective economic developments, members comdown in response to new information indicating con- mented, as they had at earlier meetings, that they saw Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 473 little evidence of any slowing in the rapid expansion repeated, and an absence of such gains would have of domestic economic activity, but they also saw few a restraining effect on consumer expenditures over signs to date of significant acceleration in inflation. time. Even so, further increases in household incomes The growth in aggregate demand continued to dis- along with the lagged wealth effects of the sharp play remarkable vigor, evidently driven by high earlier advances in stock market prices seemed likely levels of consumer and business confidence and to sustain relatively strong consumer spending for accommodative financial markets. Large increases in some period of time. imports were helping to satisfy the impressive growth After having moderated toward the end of 1999, in in demand. At the same time, aggregate supply also part because of caution ahead of the century date continued to record strong gains amid indications of change, business fixed investment again appeared to further acceleration in productivity. Looking ahead, be expanding at a vigorous pace. The advance however, members reiterated earlier concerns that included not only notable strength in the high-tech aggregate demand could continue to grow faster than sector but brisk spending in a number of other areas potential aggregate supply, even under optimistic as well. Factors underlying business optimism assumptions regarding future productivity gains. included robust growth in revenues and profits and Contributing to that continuing imbalance, the the ready availability of both debt and equity financstrengthening of most foreign industrial economies ing. The divergence, at least until recently, in the and the diminishing effects of the earlier appreciation stock market between the valuations of high-tech of the dollar were likely to boost further foreign firms and those of more traditional, established firms demand for U.S. output. The experience of recent was inducing a redirection of investment funds to years amply demonstrated, however, that the extent business activities that were perceived to be more to which prospective growth in demand might exceed productive. While the associated capital investments further expansion in the economy's potential and undoubtedly had contributed to the acceleration in the implications for inflation were subject to a wide productivity, some members expressed concern that range of uncertainty as to both degree and timing. the historically elevated valuations of many high-tech Nonetheless, given the persistence of rapid growth stocks were subject to a sizable market adjustment in aggregate demand beyond growth in aggregate at some point. That risk was underscored by the supply and very tight conditions in labor markets, increased volatility of the stock market. the members continued to be concerned about the In the housing sector, building activity generally risks of rising inflation. remained at a high level, though slipping a bit in In their comments about economic conditions some parts of the country, and there were only limacross the nation, members referred to anecdotal and ited indications that the rise in mortgage interest rates other evidence of widespread strength in business was holding down residential construction. On the activity, which in many areas appeared to be rising other hand, housing and other construction activity appreciably further from already high levels. Agricul- reportedly was being retarded by shortages of labor ture continued to be a notable exception, though and, in some areas, of materials as well. On balance, members also reported signs of softening in housing recent developments did not augur any significant and other construction activity in some areas. With changes in homebuilding. regard to developments in key sectors of the econ- The improved economic outlook for most of the omy, consumer spending had remained particularly nation's important trading partners, in association robust thus far this year according to reports from with the fading effects of the dollar's earlier apprecimost parts of the nation. Some moderation in such ation, pointed to faster expansion in exports, and spending to a pace more in line with the growth in recent anecdotal reports were broadly consistent with household incomes was cited as a reasonable expecta- such a development. Growth in imports was expected tion, given underlying factors such as the large to moderate over time, though imports currently were buildup of durable goods in consumer hands, the rise still rising rapidly. Even so, prospective developin consumer debt loads, and the effects of higher oil ments in the foreign trade sector were not likely to prices. Of key importance was the prospective per- provide much relief to demand pressures on the U.S. formance of the stock market, whose robust gains economy. in recent years had undoubtedly boosted consumer With regard to the outlook for inflation, members confidence and spending. The members noted that saw little evidence to date of any acceleration in core equity prices generally had posted further gains dur- inflation, and unit costs for nonfinancial corporations ing the intermeeting period, but in their view the were unchanged in the fourth quarter. Despite such large increases of recent years were not likely to be welcome developments, members expressed concern Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

474 Federal Reserve Bulletin • July 2000 about indications of a less benign inflation climate. tions would adjust sufficiently to bring aggregate The direct and indirect effects of higher fuel prices, demand into better balance with potential supply and the rise in other import prices, increasing medical thereby counter a possible escalation of pressures on costs, and some deterioration in surveys of inflation labor costs and prices. The members agreed that the expectations could begin to show through to higher press statement to be issued shortly after this meeting underlying inflation. More fundamentally, however, should continue to highlight their view that even after the members believed that current growth in aggre- today's tightening move the risks would remain tilted gate demand, should it persist, would continue to toward heightened inflation pressures. exceed the expansion of potential output and, by At the conclusion of this discussion, the Commitputting added pressure on already tight labor mar- tee voted to authorize and direct the Federal Reserve kets, would at some point foster inflationary imbal- Bank of New York, until it was instructed otherwise, ances that would undermine the economic expansion. to execute transactions in the System account in In the Committee's discussion of policy for the accordance with the following policy directive: intermeeting period ahead, all the members endorsed a proposal to tighten reserve conditions by a slight The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability amount consistent with an increase in the federal and promote sustainable growth in output. To further its funds rate to a level of 6 percent. Persisting strength long-run objectives, the Committee in the immediate future in aggregate domestic demand had been accommo- seeks conditions in reserve markets consistent with dated thus far without a pickup in underlying infla- increasing the federal funds rate to an average of around tion because of the remarkable acceleration in 6 percent. productivity and because of two safety valves—the economy's ability to draw on the pool of available The vote also encompassed approval of the senworkers and to finance the rapid growth in imports tence below for inclusion in the press statement to be relative to exports. However, a further acceleration released shortly after the meeting: in productivity was unlikely to boost the economy's growth potential sufficiently to satisfy the expansion Against the background of its long-run goals of price stability and sustainable economic growth and of the inforin aggregate demand without some slowing in the mation currently available, the Committee believes the latter. In addition, the two safety valves could not risks are weighted mainly toward conditions that may be counted on to work indefinitely. In these circum- generate heightened inflation pressures in the foreseeable stances, the members saw substantial risks of rising future. pressures on labor and other resources and of higher Votes for this action: Messrs. Greenspan, McDonough, inflation that called for some further firming of Broaddus, Ferguson, Gramlich, Guynn, Jordan, Kelley, monetary policy at this meeting. They agreed, Meyer, and Parry. Votes against this action: None. though, that because a significant acceleration in inflation did not appear to be imminent and because The meeting was recessed briefly after this vote, uncertainties continued to surround the economic and the members of the Board of Governors left the outlook, a gradual approach to policy adjustments room to vote on increases in the discount rate that was warranted. Some members commented that, were pending at several Federal Reserve Banks. On although a more forceful policy move of 50 basis the Board members' return, Chairman Greenspan points might be needed at some point, measured and announced that the Board had approved a LA percentpredictable policy tightening moves, such as the one age point increase in the discount rate to a level of contemplated today, still were desirable in current 5Vi percent. The Committee concluded its meeting circumstances, which included somewhat unsettled with a review of the press release announcing the financial markets. joint policy action. Looking ahead, the Committee would continue to It was agreed that the next meeting of the Commitassess the need for further tightening to contain infla- tee would be held on Tuesday, May 16, 2000. tion. Even after taking account of the lagged effects The meeting adjourned at 12:50 p.m. of the considerable tightening that already had been implemented since mid-1999, additional tightening Donald L. Kohn might well be needed to ensure that financial condi- Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

475 Legal Developments FINAL RULE — AMENDMENT TO REGULATION A cial institution's ability to disclose nonpublic personal information about consumers to nonaffiliated third parties. The Board of Governors is amending 12 C.F.R. Part 201, Pursuant to section 503 of the GLB Act, a financial instituits Regulation A (Extensions of Credit by Federal Reserve tion must provide its customers with a notice of its privacy Banks), to reflect its approval of an increase in the basic policies and practices. Section 502 prohibits a financial discount rate at each Federal Reserve Bank. The Board institution from disclosing nonpublic personal information acted on requests submitted by the Boards of Directors of about a consumer to nonaffiliated third parties unless the the twelve Federal Reserve Banks. institution satisfies various notice and opt-out requirements Effective May 16, 2000, 12 C.F.R. Part 201 is amended and the consumer has not elected to opt out of the discloas follows: sure. These final rules implement the requirements outlined above. Part 201—Extensions of Credit by Federal Reserve The text of the other Agencies' final rules can be found Banks (Regulation A) in 12 C.F.R. Parts 40, 332, and 573, and was published in the Federal Register on June 1, 2000 (65 Federal Register 1. The authority citation for 12 C.F.R. Part 201 continues 35161-35236). The Board adopted its privacy rule, Regulato read as follows: tion P, Privacy of Consumer Financial Information, 12 C.F.R. Part 216, on May 10, 2000. Authority. 12 U.S.C. 343 et seq., 347a, 347b, 347c, 347d, Effective November 13, 2000, 12 C.F.R. Part 216 is 348 et seq., 357, 374, 374a and 461. amended as follows: 2. Section 201.51 is revised to read as follows: Part 216—Privacy of Consumer Financial Information (Regulation P) Section 201.51—Adjustments credit for depository institutions. Section 216.1—Purpose and scope. The rates for adjustment credit provided to depository Section 216.2—Rule of construction. institutions under section 201.3(a) are: Section 216.3—Definitions. Federal Reserve Bank Rate Effective Boston 6.0 May 16, 2000 Subpart A—Privacy and Opt Out Notices New York 6.0 May 19, 2000 Philadelphia 6.0 May 18, 2000 Cleveland 6.0 May 16, 2000 Section 216.4—Initial privacy notice to consumers re- Richmond 6.0 May 16, 2000 quired. Atlanta 6.0 May 17, 2000 Chicago 6.0 May 17, 2000 Section 216.5—Annual privacy notice to customers re- St. Louis 6.0 May 18, 2000 Minneapolis 6.0 May 18, 2000 quired. Kansas City 6.0 May 17, 2000 Section 216.6—Information to be included in privacy no- Dallas 6.0 May 17, 2000 San Francisco 6.0 May 16, 2000 tices. Section 216.7—Form of opt out notice to consumers; opt out methods. JOINT FINAL RULE — AMENDMENT TO FINAL Section 216.8—Revised privacy notices. PRIVACY RULES Section 216.9—Delivering privacy and opt out notices. The Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Subpart B—Limits on Disclosures Insurance Corporation, and the Office of Thrift Supervision (collectively, the Agencies) are amending 12 C.F.R. Parts Section 216.10—Limitation on disclosure of nonpublic 40, 216, 332, and 573. The Agencies are publishing final personal information to nonaffiliated third parties. privacy rules pursuant to section 504 of the Gramm-Leach- Section 216.11—Limits on redisclosure and reuse of infor- Bliley Act (the GLB Act or Act). Section 504 authorizes mation. the Agencies to issue regulations as may be necessary to Section 216.12—Limits on sharing account number inforimplement notice requirements and restrictions on a finan- mation for marketing purposes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

476 Federal Reserve Bulletin • July 2000 Subpart C—Exceptions of Health and Human Services under the authority of sections 262 and 264 of the Health Insurance Section 216.13—Exception to opt out requirements for Portability and Accountability Act of 1996 service providers and joint marketing. (42 U.S.C. 1320d-1320d-8). Section 216.14—Exceptions to notice and opt out requirements for processing and servicing transactions. Section 216.15—Other exceptions to notice and opt out Section 216.2—Rule of construction. requirements. The examples in this part and the sample clauses in Appen- Subpart D—Relation to Other Laws; Effective Date dix A of this part are not exclusive. Compliance with an example or use of a sample clause, to the extent applicable, Section 216.16—Protection of Fair Credit Reporting Act. constitutes compliance with this part. Section 216.17—Relation to State laws. Section 216.18—Effective date; transition rule. Section 216.3—Definitions. Appendix A to Part 216—Sample Clauses As used in this part, unless the context requires otherwise: (a) Affiliate means any company that controls, is con- Authority. 15 U.S.C. 6801 et seq. trolled by, or is under common control with another company. Section 216.1—Purpose and scope. (b) (1) Clear and conspicuous means that a notice is reasonably understandable and designed to call (a) Purpose. This part governs the treatment of nonpublic attention to the nature and significance of the personal information about consumers by the financial information in the notice. institutions listed in paragraph (b) of this section. This (2) Examples—(i) Reasonably understandable. You part: make your notice reasonably understandable if (1) Requires a financial institution to provide notice to you: customers about its privacy policies and practices; (A) Present the information in the notice in (2) Describes the conditions under which a financial clear, concise sentences, paragraphs, and institution may disclose nonpublic personal inforsections; mation about consumers to nonaffiliated third par- (B) Use short explanatory sentences or bulties; and let lists whenever possible; (3) Provides a method for consumers to prevent a (C) Use definite, concrete, everyday words financial institution from disclosing that informaand active voice whenever possible; tion to most nonaffiliated third parties by ' 'opting (D) Avoid multiple negatives; out" of that disclosure, subject to the exceptions (E) Avoid legal and highly technical busiin sections 216.13, 216.14, and 216.15. ness terminology whenever possible; (b) Scope. and (1) This part applies only to nonpublic personal infor- (F) Avoid explanations that are imprecise mation about individuals who obtain financial and readily subject to diiferent interpreproducts or services primarily for personal, fam- tations. ily, or household purposes from the institutions (ii) Designed to call attention. You design your listed below. This part does not apply to informa- notice to call attention to the nature and sigtion about companies or about individuals who nificance of the information in it if you: obtain financial products or services for business, (A) Use a plain-language heading to call commercial, or agricultural purposes. This part attention to the notice; applies to the U.S. offices of entities for which the (B) Use a typeface and type size that are Board has primary supervisory authority. They are easy to read; referred to in this part as "you." These are: State (C) Provide wide margins and ample line member banks, bank holding companies and cer- spacing; tain of their nonbank subsidiaries or affiliates, (D) Use boldface or italics for key words; State uninsured branches and agencies of foreign and banks, commercial lending companies owned or (E) In a form that combines your notice controlled by foreign banks, and Edge and Agree- with other information, use distinctive ment corporations. type size, style, and graphic devices, (2) Nothing in this part modifies, limits, or supersedes such as shading or sidebars, when you the standards governing individually identifiable combine your notice with other informahealth information promulgated by the Secretary tion. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All (iii) Notices on web sites. If you provide a notice vicing rights is your consumer, even if you, on a web page, you design your notice to call or another institution with those rights, hire attention to the nature and significance of the an agent to collect on the loan. information in it if you use text or visual cues (v) An individual who is a consumer of another to encourage scrolling down the page if nec- financial institution is not your consumer essary to view the entire notice and ensure solely because you act as agent for, or prothat other elements on the web site (such as vide processing or other services to, that fitext, graphics, hyperlinks, or sound) do not nancial institution. distract attention from the notice, and you (vi) An individual is not your consumer solely either: because he or she has designated you as (A) Place the notice on a screen that con- trustee for a trust. sumers frequently access, such as a page (vii) An individual is not your consumer solely on which transactions are conducted; or because he or she is a beneficiary of a trust (B) Place a link on a screen that consumers for which you are a trustee. frequently access, such as a page on (viii)An individual is not your consumer solely which transactions are conducted, that because he or she is a participant or a beneficonnects directly to the notice and is ciary of an employee benefit plan that you labeled appropriately to convey the im- sponsor or for which you act as a trustee or portance, nature, and relevance of the fiduciary. notice. (f) Consumer reporting agency has the same meaning as (c) Collect means to obtain information that you organize in section 603(f) of the Fair Credit Reporting Act or can retrieve by the name of an individual or by (15 U.S.C. 1681a(f)). identifying number, symbol, or other identifying par- (g) Control of a company means: ticular assigned to the individual, irrespective of the (1) Ownership, control, or power to vote 25 percent or source of the underlying information. more of the outstanding shares of any class of (d) Company means any corporation, limited liability voting security of the company, directly or indicompany, business trust, general or limited partner- rectly, or acting through one or more other pership, association, or similar organization. sons; (e) (1) Consumer means an individual who obtains or has (2) Control in any manner over the election of a obtained a financial product or service from you majority of the directors, trustees, or general partthat is to be used primarily for personal, family, or ners (or individuals exercising similar functions) household purposes, or that individual's legal rep- of the company; or resentative. (3) The power to exercise, directly or indirectly, a (2) Examples—(i) An individual who applies to you controlling influence over the management or polfor credit for personal, family, or household icies of the company, as the Board determines. purposes is a consumer of a financial service, (h) Customer means a consumer who has a customer regardless of whether the credit is extended. relationship with you. (ii) An individual who provides nonpublic per- (i) (1) Customer relationship means a continuing relasonal information to you in order to obtain a tionship between a consumer and you under which determination about whether he or she may you provide one or more financial products or qualify for a loan to be used primarily for services to the consumer that are to be used pripersonal, family, or household purposes is a marily for personal, family, or household purconsumer of a financial service, regardless of poses. whether the loan is extended. (2) Examples—(i) Continuing relationship. A con- (iii) An individual who provides nonpublic per- sumer has a continuing relationship with you if sonal information to you in connection with the consumer: obtaining or seeking to obtain financial, in- (A) Has a deposit or investment account vestment, or economic advisory services is a with you; consumer regardless of whether you establish (B) Obtains a loan from you; a continuing advisory relationship. (C) Has a loan for which you own the ser- (iv) If you hold ownership or servicing rights to vicing rights; an individual's loan that is used primarily for (D) Purchases an insurance product from personal, family, or household purposes, the you; individual is your consumer, even if you hold (E) Holds an investment product through those rights in conjunction with one or more you, such as when you act as a custodian other institutions. (The individual is also a for securities or for assets in an Individconsumer with respect to the other financial ual Retirement Arrangement; institutions involved.) An individual who has (F) Enters into an agreement or understanda loan in which you have ownership or ser- ing with you whereby you undertake to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

478 Federal Reserve Bulletin • July 2000 arrange or broker a home mortgage loan nature or incidental to such a financial activity for the consumer; under section 4(k) of the Bank Holding Company (G) Enters into a lease of personal property Act of 1956 (12 U.S.C. 1843(k)). with you; or (2) Financial service includes your evaluation or bro- (H) Obtains financial, investment, or eco- kerage of information that you collect in connecnomic advisory services from you for a tion with a request or an application from a confee. sumer for a financial product or service. (ii) No continuing relationship. A consumer does (m) (1) Nonaffiliated third party means any person except: not, however, have a continuing relationship (i) Your affiliate; or with you if: (ii) A person employed jointly by you and any (A) The consumer obtains a financial prod- company that is not your affiliate (but nonafuct or service only in isolated transac- filiated third party includes the other comtions, such as using your ATM to with- pany that jointly employs the person). draw cash from an account at another (2) Nonaffiliated third party includes any company financial institution or purchasing a that is an affiliate solely by virtue of your or your cashier's check or money order; affiliate's direct or indirect ownership or control of (B) You sell the consumer's loan and do not the company in conducting merchant banking or retain the rights to service that loan; or investment banking activities of the type described (C) You sell the consumer airline tickets, in section 4(k)(4)(H) or insurance company investtravel insurance, or traveler's checks in ment activities of the type described in section isolated transactions. 4(k)(4)(I) of the Bank Holding Company Act of (j) Federal functional regulator means: 1956 (12 U.S.C. 1843(k)(4)(H) and (I)). (1) The Board of Governors of the Federal Reserve (n) (1) Nonpublic personal information means: System; (i) Personally identifiable financial information; (2) The Office of the Comptroller of the Currency; and (3) The Board of Directors of the Federal Deposit (ii) Any list, description, or other grouping of Insurance Corporation; consumers (and publicly available informa- (4) The Director of the Office of Thrift Supervision; tion pertaining to them) that is derived using (5) The National Credit Union Administration Board; any personally identifiable financial informaand tion that is not publicly available. (6) The Securities and Exchange Commission. (2) Nonpublic personal information does not include: (k) (1) Financial institution means any institution the (i) Publicly available information, except as inbusiness of which is engaging in activities that are cluded on a list described in paragraph financial in nature or incidental to such financial (n)(l)(ii) of this section; or activities as described in section 4(k) of the Bank (ii) Any list, description, or other grouping of Holding Company Act of 1956 (12 U.S.C. consumers (and publicly available informa- 1843(k». tion pertaining to them) that is derived with- (2) Financial institution does not include: out using any personally identifiable financial (i) Any person or entity with respect to any information that is not publicly available. financial activity that is subject to the juris- (3) Examples of lists—(i) Nonpublic personal infordiction of the Commodity Futures Trading mation includes any list of individuals' names Commission under the Commodity Exchange and street addresses that is derived in whole Act (7 U.S.C. 1 et seq.)-, or in part using personally identifiable finan- (ii) The Federal Agricultural Mortgage Corpora- cial information that is not publicly available, tion or any entity chartered and operating such as account numbers, under the Farm Credit Act of 1971 (ii) Nonpublic personal information does not in- (12 U.S.C. 2001 etseq.); or clude any list of individuals' names and addresses that contains only publicly available (iii) Institutions chartered by Congress specifiinformation, is not derived in whole or in part cally to engage in securitizations, secondary using personally identifiable financial informarket sales (including sales of servicing mation that is not publicly available, and is rights), or similar transactions related to a not disclosed in a manner that indicates that transaction of a consumer, as long as such any of the individuals on the list is a coninstitutions do not sell or transfer nonpublic sumer of a financial institution. personal information to a nonaffiliated third party. (o) (1) Personally identifiable financial information (1) (1) Financial product or service means any product or means any information: service that a financial holding company could (i) A consumer provides to you to obtain a fioffer by engaging in an activity that is financial in nancial product or service from you; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All (ii) About a consumer resulting from any trans- (3) Examples—(i) Government records. Publicly action involving a financial product or ser- available information in government records invice between you and a consumer; or cludes information in government real estate (iii) You otherwise obtain about a consumer in records and security interest filings. connection with providing a financial product (ii) Widely distributed media. Publicly available or service to that consumer. information from widely distributed media (2) Examples—(i) Information included. Personally includes information from a telephone book, identifiable financial information includes: a television or radio program, a newspaper, (A) Information a consumer provides to you or a web site that is available to the general on an application to obtain a loan, credit public on an unrestricted basis. A web site is card, or other financial product or ser- not restricted merely because an Internet service; vice provider or a site operator requires a fee (B) Account balance information, payment or a password, so long as access is available history, overdraft history, and credit or to the general public. debit card purchase information; (iii) Reasonable basis—(A) You have a reason- (C) The fact that an individual is or has been able basis to believe that mortgage inone of your customers or has obtained a formation is lawfully made available to financial product or service from you; the general public if you have deter- (D) Any information about your consumer if mined that the information is of the type it is disclosed in a manner that indicates included on the public record in the that the individual is or has been your jurisdiction where the mortgage would consumer; be recorded. (E) Any information that a consumer pro- (B) You have a reasonable basis to believe vides to you or that you or your agent that an individual's telephone number is otherwise obtain in connection with col- lawfully made available to the general lecting on a loan or servicing a loan; public if you have located the telephone (F) Any information you collect through an number in the telephone book or the Internet "cookie" (an information col- consumer has informed you that the telelecting device from a web server); and phone number is not unlisted. (G) Information from a consumer report, (ii) Information not included. Personally identifi- (q) You means: able financial information does not include: (1) A State member bank, as defined in 12 C.F.R. (A) A list of names and addresses of custom- 208.3(g); ers of an entity that is not a financial (2) A bank holding company, as defined in 12 C.F.R. institution; and 225.2(c); (B) Information that does not identify a con- (3) A subsidiary (as defined in 12 C.F.R. 225.2(o)) or sumer, such as aggregate information or affiliate of a bank holding company and a subsidblind data that does not contain personal iary of a State member bank, except for: identifiers such as account numbers, (i) A national bank or a State bank that is not a names, or addresses. member of the Federal Reserve System; (p) (1) Publicly available information means any infor- (ii) A broker or dealer that is registered under the mation that you have a reasonable basis to believe Securities Exchange Act of 1934 (15 U.S.C. is lawfully made available to the general public 78a et seq.); from: (iii) A registered investment adviser, properly (i) Federal, State, or local government records; registered by or on behalf of either the Secu- (ii) Widely distributed media; or rities Exchange Commission or any State, (iii) Disclosures to the general public that are with respect to its investment advisory activrequired to be made by Federal, State, or ities and its activities incidental to those inlocal law. vestment advisory activities; (2) Reasonable basis. You have a reasonable basis to (iv) An investment company that is registered believe that information is lawfully made avail- under the Investment Company Act of 1940 able to the general public if you have taken steps (15 U.S.C. 80a-1 etseq.y, or to determine: (v) An insurance company, with respect to its (i) That the information is of the type that is insurance activities and its activities incidenavailable to the general public; and tal to those insurance activities, that is sub- (ii) Whether an individual can direct that the ject to supervision by a State insurance reguinformation not be made available to the lator; general public and, if so, that your consumer (4) A State agency or State branch of a foreign bank, has not done so. as those terms are defined in 12 U.S.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

480 Federal Reserve Bulletin • July 2000 3101 (b)( 11) and (12), the deposits of which (C) Agrees to obtain financial, economic, or agency or branch are not insured by the Federal investment advisory services from you Deposit Insurance Corporation; for a fee; or (5) A commercial lending company, as defined in (D) Becomes your client for the purpose of 12 C.F.R. 211.21(f), that is owned or controlled by your providing credit counseling or tax a foreign bank, as defined in 12 C.F.R. 211.21(m); preparation services. or (ii) Examples of loan rule. You establish a cus- (6) A corporation organized under section 25A of the tomer relationship with a consumer who ob- Federal Reserve Act (12 U.S.C. 611-631) or a tains a loan for personal, family, or housecorporation having an agreement or undertaking hold purposes when you: with the Board under section 25 of the Federal (A) Originate the loan to the consumer; or Reserve Act (12 U.S.C. 601-604a). (B) Purchase the servicing rights to the consumer's loan. (d) Existing customers. When an existing customer ob- Subpart A—Privacy and Opt Out Notices tains a new financial product or service from you that is to be used primarily for personal, family, or house- Section 216.4 Initial privacy notice to consumers hold purposes, you satisfy the initial notice requirerequired. ments of paragraph (a) of this section as follows: (1) You may provide a revised privacy notice, under (a) Initial notice requirement. You must provide a clear section 216.8, that covers the customer's new fiand conspicuous notice that accurately reflects your nancial product or service; or privacy policies and practices to: (2) If the initial, revised, or annual notice that you (1) Customer. An individual who becomes your cus- most recently provided to that customer was accutomer, not later than when you establish a cus- rate with respect to the new financial product or tomer relationship, except as provided in para- service, you do not need to provide a new privacy graph (e) of this section; and notice under paragraph (a) of this section. (2) Consumer. A consumer, before you disclose any (e) Exceptions to allow subsequent delivery of notice. nonpublic personal information about the con- (1) You may provide the initial notice required by sumer to any nonaffiliated third party, if you make paragraph (a)(1) of this section within a reasonsuch a disclosure other than as authorized by sec- able time after you establish a customer relationtions 216.14 and 216.15. ship if: (i) Establishing the customer relationship is not (b) When initial notice to a consumer is not required. You at the customer's election; or are not required to provide an initial notice to a con- (ii) Providing notice not later than when you sumer under paragraph (a) of this section if: establish a customer relationship would sub- (1) You do not disclose any nonpublic personal inforstantially delay the customer's transaction mation about the consumer to any nonaffiliated and the customer agrees to receive the notice third party, other than as authorized by sections at a later time. 216.14 and 216.15; and (2) Examples of exceptions—(i) Not at customer's (2) You do not have a customer relationship with the election. Establishing a customer relationship consumer. is not at the customer's election if you ac- (c) When you establish a customer relationship— quire a customer's deposit liability or the (1) General rule. You establish a customer relation- servicing rights to a customer's loan from ship when you and the consumer enter into a another financial institution and the customer continuing relationship. does not have a choice about your acquisition, (2) Special rule for loans. You establish a customer (ii) Substantial delay of customer's transaction. relationship with a consumer when you originate a Providing notice not later than when you loan to the consumer for personal, family, or establish a customer relationship would subhousehold purposes. If you subsequently transfer stantially delay the customer's transaction the servicing rights to that loan to another financial when: institution, the customer relationship transfers with (A) You and the individual agree over the the servicing rights. telephone to enter into a customer rela- (3) (i) Examples of establishing customer relation- tionship involving prompt delivery of ship. You establish a customer relationship the financial product or service; or when the consumer: (B) You establish a customer relationship (A) Opens a credit card account with you; with an individual under a program au- (B) Executes the contract to open a deposit thorized by Title IV of the Higher Eduaccount with you, obtains credit from cation Act of 1965 (20 U.S.C. 1070 you, or purchases insurance from you; et seq.) or similar student loan programs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All where loan proceeds are disbursed annual privacy notices or promotional mateprompdy without prior communication rial. between you and the customer, (c) Special rule for loans. If you do not have a customer (iii) No substantial delay of customer's transac- relationship with a consumer under the special rule for tion. Providing notice not later than when loans in section 216.4(c)(2), then you need not provide you establish a customer relationship would an annual notice to that consumer under this section. not substantially delay the customer's trans- (d) Delivery. When you are required to deliver an annual action when the relationship is initiated in privacy notice by this section, you must deliver it person at your office or through other means according to section 216.9. by which the customer may view the notice, such as on a web site, Section 216.6—Information to be included in (f) Delivery. When you are required to deliver an initial privacy notices. privacy notice by this section, you must deliver it according to section 216.9. If you use a short-form (a) General rule. The initial, annual, and revised privacy initial notice for non- customers according to section notices that you provide under sections 216.4, 216.5, 216.6(d), you may deliver your privacy notice accord- and 216.8 must include each of the following items of ing to section 216.6(d)(3). information, in addition to any other information you wish to provide, that applies to you and to the consum- Section 216.5—Annual privacy notice to customers ers to whom you send your privacy notice: required. (1) The categories of nonpublic personal information that you collect; (a) (1) General rule. You must provide a clear and con- (2) The categories of nonpublic personal information spicuous notice to customers that accurately re- that you disclose; flects your privacy policies and practices not less (3) The categories of affiliates and nonaffiliated third than annually during the continuation of the cus- parties to whom you disclose nonpublic personal tomer relationship. Annually means at least once information, other than those parties to whom you in any period of 12 consecutive months during disclose information under sections 216.14 and which that relationship exists. You may define the 216.15; 12-consecutive-month period, but you must apply (4) The categories of nonpublic personal information it to the customer on a consistent basis. about your former customers that you disclose and (2) Example. You provide a notice annually if you the categories of affiliates and nonaffiliated third define the 12-consecutive-month period as a calen- parties to whom you disclose nonpublic personal dar year and provide the annual notice to the information about your former customers, other customer once in each calendar year following the than those parties to whom you disclose informacalendar year in which you provided the initial tion under sections 216.14 and 216.15; notice. For example, if a customer opens an ac- (5) If you disclose nonpublic personal information to count on any day of year 1, you must provide an a nonaffiliated third party under section 216.13 annual notice to that customer by December 31 of (and no other exception in section 216.14 or year 2. 216.15 applies to that disclosure), a separate state- (b) (1) Termination of customer relationship. You are not ment of the categories of information you disclose required to provide an annual notice to a former and the categories of third parties with whom you customer. have contracted; (2) Examples. Your customer becomes a former cus- (6) An explanation of the consumer's right under sectomer when: tion 216.10(a) to opt out of the disclosure of (i) In the case of a deposit account, the account nonpublic personal information to nonaffiliated is inactive under your policies; third parties, including the method(s) by which the (ii) In the case of a closed-end loan, the customer consumer may exercise that right at that time; pays the loan in full, you charge olf the loan, (7) Any disclosures that you make under section or you sell the loan without retaining servic- 603(d)(2)(A)(iii) of the Fair Credit Reporting Act ing rights; (15 U.S.C. 1681a(d)(2)(A)(iii)) (that is, notices (iii) In the case of a credit card relationship or regarding the ability to opt out of disclosures of other open-end credit relationship, you no information among affiliates); longer provide any statements or notices to (8) Your policies and practices with respect to protectthe customer concerning that relationship or ing the confidentiality and security of nonpublic you sell the credit card receivables without personal information; and retaining servicing rights; or (9) Any disclosure that you make under paragraph (b) (iv) You have not communicated with the cus- of this section. tomer about the relationship for a period of (b) Description of nonaffiliated third parties subject to 12 consecutive months, other than to provide exceptions. If you disclose nonpublic personal infor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

482 Federal Reserve Bulletin • July 2000 mation to third parties as authorized under sections behalf of you and another financial insti- 216.14 and 216.15, you are not required to list those tution; or exceptions in the initial or annual privacy notices (B) A financial institution with whom you required by sections 216.4 and 216.5. When describing have a joint marketing agreement. the categories with respect to those parties, you are (5) Simplified notices. If you do not disclose, and do required to state only that you make disclosures to not wish to reserve the right to disclose, nonpublic other nonaffiliated third parties as permitted by law. personal information about customers or former (c) Examples—(1) Categories of nonpublic personal in- customers to affiliates or nonaffiliated third parties formation that you collect. You satisfy the require- except as authorized under sections 216.14 and ment to categorize the nonpublic personal informa- 216.15, you may simply state that fact, in addition tion that you collect if you list the following to the information you must provide under paracategories, as applicable: graphs (a)(1), (a)(8), (a)(9), and (b) of this section. (i) Information from the consumer; (6) Confidentiality and security. You describe your (ii) Information about the consumer's transac- policies and practices with respect to protecting tions with you or your affiliates; the confidentiality and security of nonpublic per- (iii) Information about the consumer's transac- sonal information if you do both of the following: tions with nonaffiliated third parties; and (i) Describe in general terms who is authorized (iv) Information from a consumer reporting to have access to the information; and agency. (ii) State whether you have security practices and (2) Categories of nonpublic personal information you procedures in place to ensure the confidentidisclose— ality of the information in accordance with (i) You satisfy the requirement to categorize the your policy. You are not required to describe nonpublic personal information that you dis- technical information about the safeguards close if you list the categories described in you use. paragraph (c)(1) of this section, as applicable, and a few examples to illustrate the types (d) Short-form initial notice with opt out notice for nonof information in each category. customers— (ii) If you reserve the right to disclose all of the (1) You may satisfy the initial notice requirements in nonpublic personal information about con- sections 216.4(a)(2), 216.7(b), and 216.7(c) for a sumers that you collect, you may simply state consumer who is not a customer by providing a that fact without describing the categories or short-form initial notice at the same time as you examples of the nonpublic personal informa- deliver an opt out notice as required in section tion you disclose. 216.7. (3) Categories of affiliates and nonaffiliated third par- (2) A short-form initial notice must: ties to whom you disclose. You satisfy the require- (i) Be clear and conspicuous; ment to categorize the affiliates and nonaffiliated (ii) State that your privacy notice is available third parties to whom you disclose nonpublic per- upon request; and sonal information if you list the following catego- (iii) Explain a reasonable means by which the ries, as applicable, and a few examples to illustrate consumer may obtain that notice. the types of third parties in each category. (3) You must deliver your short-form initial notice (i) Financial service providers; according to section 216.9. You are not required to (ii) Non-financial companies; and deliver your privacy notice with your short-form (iii) Others. initial notice. You instead may simply provide the (4) Disclosures under exception for service providers consumer a reasonable means to obtain your priand joint marketers. If you disclose nonpublic vacy notice. If a consumer who receives your personal information under the exception in sec- short-form notice requests your privacy notice, tion 216.13 to a nonaffiliated third party to market you must deliver your privacy notice according to products or services that you offer alone or jointly section 216.9. with another financial institution, you satisfy the (4) Examples of obtaining privacy notice. You prodisclosure requirement of paragraph (a)(5) of this vide a reasonable means by which a consumer section if you: may obtain a copy of your privacy notice if you: (i) List the categories of nonpublic personal in- (i) Provide a toll-free telephone number that the formation you disclose, using the same cate- consumer may call to request the notice; or gories and examples you used to meet the (ii) For a consumer who conducts business in requirements of paragraph (a)(2) of this sec- person at your office, maintain copies of the tion, as applicable; and notice on hand that you provide to the con- (ii) State whether the third party is: sumer immediately upon request. (A) A service provider that performs marketing services on your behalf or on Future disclosures. Your notice may include: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All (1) Categories of nonpublic personal information that site, if the consumer agrees to the elecyou reserve the right to disclose in the future, but tronic delivery of information; or do not currently disclose; and (D) Provide a toll-free telephone number (2) Categories of affiliates or nonaffiliated third parties that consumers may call to opt out. to whom you reserve the right in the future to (iii) Unreasonable opt out means. You do not disclose, but to whom you do not currently dis- provide a reasonable means of opting out if: close, nonpublic personal information. (A) The only means of opting out is for the consumer to write his or her own letter (f) Sample clauses. Sample clauses illustrating some of to exercise that opt out right; or the notice content required by this section are included (B) The only means of opting out as dein Appendix A of this part. scribed in any notice subsequent to the initial notice is to use a check-off box Section 216.7—Form of opt out notice to that you provided with the initial notice consumers; opt out methods. but did not include with the subsequent notice. (iv) Specific opt out means. You may require (a) (1) Form of opt out notice. If you are required to each consumer to opt out through a specific provide an opt out notice under section 216.10(a), means, as long as that means is reasonable you must provide a clear and conspicuous notice for that consumer. to each of your consumers that accurately explains (b) Same form as initial notice permitted. You may prothe right to opt out under that section. The notice vide the opt out notice together with or on the same must state: written or electronic form as the initial notice you (i) That you disclose or reserve the right to provide in accordance with section 216.4. disclose nonpublic personal information (c) Initial notice required when opt out notice delivered about your consumer to a nonaffiliated third subsequent to initial notice. If you provide the opt out party; notice later than required for the initial notice in accor- (ii) That the consumer has the right to opt out of dance with section 216.4, you must also include a copy that disclosure; and of the initial notice with the opt out notice in writing (iii) A reasonable means by which the consumer or, if the consumer agrees, electronically. may exercise the opt out right. (d) Joint relationships—(1) If two or more consumers (2) Examples—(i) Adequate opt out notice. You pro- jointly obtain a financial product or service from vide adequate notice that the consumer can you, you may provide a single opt out notice. opt out of the disclosure of nonpublic per- Your opt out notice must explain how you will sonal information to a nonaffiliated third party treat an opt out direction by a joint consumer (as if you: explained in paragraph (d)(5) of this section). (A) Identify all of the categories of nonpub- (2) Any of the joint consumers may exercise the right lic personal information that you dis- to opt out. You may either: close or reserve the right to disclose, and (i) Treat an opt out direction by a joint conall of the categories of nonaffiliated third sumer as applying to all of the associated parties to which you disclose the infor- joint consumers; or mation, as described in section (ii) Permit each joint consumer to opt out sepa- 216.6(a)(2) and (3), and state that the rately. consumer can opt out of the disclosure (3) If you permit each joint consumer to opt out of that information; and separately, you must permit one of the joint con- (B) Identify the financial products or ser- sumers to opt out on behalf of all of the joint vices that the consumer obtains from consumers. you, either singly or jointly, to which (4) You may not require all joint consumers to opt out the opt out direction would apply. before you implement any opt out direction. (ii) Reasonable opt out means. You provide a (5) Example. If John and Mary have a joint checking reasonable means to exercise an opt out right account with you and arrange for you to send if you: statements to John's address, you may do any of (A) Designate check-off boxes in a promi- the following, but you must explain in your opt nent position on the relevant forms with out notice which opt out policy you will follow: the opt out notice; (i) Send a single opt out notice to John's ad- (B) Include a reply form together with the dress, but you must accept an opt out direcopt out notice; tion from either John or Mary. (C) Provide an electronic means to opt out, (ii) Treat an opt out direction by either John or such as a form that can be sent via Mary as applying to the entire account. If you electronic mail or a process at your web do so, and John opts out, you may not require Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

484 Federal Reserve Bulletin • July 2000 Mary to opt out as well before implementing (i) Disclose a new category of nonpublic per- John's opt out direction, sonal information to any nonaffiliated third (iii) Permit John and Mary to make different opt party; out directions. If you do so: (ii) Disclose nonpublic personal information to a (A) You must permit John and Mary to opt new category of nonaffiliated third party; or out for each other; (iii) Disclose nonpublic personal information (B) If both opt out, you must permit both to about a former customer to a nonaffiliated notify you in a single response (such as third party, if that former customer has not on a form or through a telephone call); had the opportunity to exercise an opt out and right regarding that disclosure. (C) If John opts out and Mary does not, you (2) A revised notice is not required if you disclose may only disclose nonpublic personal nonpublic personal information to a new nonaffiliinformation about Mary, but not about ated third party that you adequately described in John and not about John and Mary your prior notice, jointly. (c) Delivery. When you are required to deliver a revised privacy notice by this section, you must deliver it (e) Time to comply with opt out. You must comply with a according to section 216.9. consumer's opt out direction as soon as reasonably practicable after you receive it. Section 216.9—Delivering privacy and opt out (f) Continuing right to opt out. A consumer may exercise notices. the right to opt out at any time. (g) Duration of consumer's opt out direction— (1) A consumer's direction to opt out under this sec- (a) How to provide notices. You must provide any privacy tion is effective until the consumer revokes it in notices and opt out notices, including short-form initial writing or, if the consumer agrees, electronically. notices, that this part requires so that each consumer (2) When a customer relationship terminates, the cus- can reasonably be expected to receive actual notice in tomer' s opt out direction continues to apply to the writing or, if the consumer agrees, electronically. nonpublic personal information that you collected (b) (1) Examples of reasonable expectation of actual noduring or related to that relationship. If the individ- tice. You may reasonably expect that a consumer ual subsequently establishes a new customer rela- will receive actual notice if you: tionship with you, the opt out direction that ap- (i) Hand-deliver a printed copy of the notice to plied to the former relationship does not apply to the consumer; the new relationship. (ii) Mail a printed copy of the notice to the last (h) Delivery. When you are required to deliver an opt out known address of the consumer; notice by this section, you must deliver it according to (iii) For the consumer who conducts transactions section 216.9. electronically, post the notice on the electronic site and require the consumer to acknowledge receipt of the notice as a neces- Section 216.8—Revised privacy notices. sary step to obtaining a particular financial product or service; or (a) General rule. Except as otherwise authorized in this (iv) For an isolated transaction with the conpart, you must not, directly or through any affiliate, sumer, such as an ATM transaction, post the disclose any nonpublic personal information about a notice on the ATM screen and require the consumer to a nonaffiliated third party other than as consumer to acknowledge receipt of the nodescribed in the initial notice that you provided to that tice as a necessary step to obtaining the parconsumer under section 216.4, unless: ticular financial product or service. (1) You have provided to the consumer a clear and (2) Examples of unreasonable expectation of actual conspicuous revised notice that accurately denotice. You may not, however, reasonably expect scribes your policies and practices; that a consumer will receive actual notice of your (2) You have provided to the consumer a new opt out privacy policies and practices if you: notice; (i) Only post a sign in your branch or office or (3) You have given the consumer a reasonable oppor- generally publish advertisements of your pritunity, before you disclose the information to the vacy policies and practices; or nonaffiliated third party, to opt out of the disclo- (ii) Send the notice via electronic mail to a consure; and sumer who does not obtain a financial prod- (4) The consumer does not opt out. uct or service from you electronically. (b) Examples—(1) Except as otherwise permitted by sec- (c) Annual notices only. You may reasonably expect that a tions 216.13, 216.14, and 216.15, you must pro- customer will receive actual notice of your annual vide a revised notice before you: privacy notice if: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All (1) The customer uses your web site to access finan- (iii) You have given the consumer a reasonable cial products and services electronically and opportunity, before you disclose the informaagrees to receive notices at the web site, and you tion to the nonaffiliated third party, to opt out post your current privacy notice continuously in a of the disclosure; and clear and conspicuous manner on the web site; or (iv) The consumer does not opt out. (2) The customer has requested that you refrain from (2) Opt out definition. Opt out means a direction by sending any information regarding the customer the consumer that you not disclose nonpublic perrelationship, and your current privacy notice re- sonal information about that consumer to a nonafmains available to the customer upon request. filiated third party, other than as permitted by (d) Oral description of notice insufficient. You may not sections 216.13, 216.14, and 216.15. provide any notice required by this part solely by (3) Examples of reasonable opportunity to opt out. orally explaining the notice, either in person or over You provide a consumer with a reasonable opporthe telephone. tunity to opt out if: (i) By mail. You mail the notices required in (e) Retention or accessibility of notices for customers— paragraph (a)(1) of this section to the con- (1) For customers only, you must provide the initial sumer and allow the consumer to opt out by notice required by section 216.4(a)(1), the annual mailing a form, calling a toll-free telephone notice required by section 216.5(a), and the renumber, or any other reasonable means vised notice required by section 216.8 so that the within 30 days from the date you mailed the customer can retain them or obtain them later in notices. writing or, if the customer agrees, electronically. (ii) By electronic means. A customer opens an (2) Examples of retention or accessibility. You proon-line account with you and agrees to revide a privacy notice to the customer so that the ceive the notices required in paragraph (a)(1) customer can retain it or obtain it later if you: of this section electronically, and you allow (i) Hand-deliver a printed copy of the notice to the customer to opt out by any reasonable the customer; means within 30 days after the date that the (ii) Mail a printed copy of the notice to the last customer acknowledges receipt of the notices known address of the customer; or in conjunction with opening the account. (iii) Make your current privacy notice available (iii) Isolated transaction with consumer. For an on a web site (or a link to another web site) isolated transaction, such as the purchase of a for the customer who obtains a financial cashier's check by a consumer, you provide product or service electronically and agrees the consumer with a reasonable opportunity to receive the notice at the web site. to opt out if you provide the notices required (f) Joint notice with other financial institutions. You may in paragraph (a)(1) of this section at the time provide a joint notice from you and one or more of of the transaction and request that the conyour affiliates or other financial institutions, as identisumer decide, as a necessary part of the transfied in the notice, as long as the notice is accurate with action, whether to opt out before completing respect to you and the other institutions. the transaction. (g) Joint relationships. If two or more consumers jointly (b) Application of opt out to all consumers and all nonobtain a financial product or service from you, you public personal information— may satisfy the initial, annual, and revised notice re- (1) You must comply with this section, regardless of quirements of sections 216.4(a), 216.5(a), and whether you and the consumer have established a 216.8(a), respectively, by providing one notice to those customer relationship. consumers jointly. (2) Unless you comply with this section, you may not, directly or through any affiliate, disclose any non- Subpart B—Limits on Disclosures public personal information about a consumer that you have collected, regardless of whether you Section 216.10—Limits on disclosure of non-public collected it before or after receiving the direction personal information to nonaffiliated third parties. to opt out from the consumer. (c) Partial opt out. You may allow a consumer to select (a) (1) Conditions for disclosure. Except as otherwise certain nonpublic personal information or certain nonauthorized in this part, you may not, directly or affiliated third parties with respect to which the conthrough any affiliate, disclose any nonpublic per- sumer wishes to opt out. sonal information about a consumer to a nonaffiliated third party unless: Section 216.11—Limits on redisclosure and reuse of (i) You have provided to the consumer an initial information. notice as required under section 216.4; (ii) You have provided to the consumer an opt (a) (1) Information you receive under an exception. If out notice as required in section 216.7; you receive nonpublic personal information from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

486 Federal Reserve Bulletin • July 2000 a nonaffiliated financial institution under an excep- each consumer whose nonpublic personal intion in section 216.14 or 216.15 of this part, your formation you intend to disclose, and you disclosure and use of that information is limited as may disclose the list in accordance with an follows: exception in section 216.14 or 216.15, such (i) You may disclose the information to the affil- as to your attorneys or accountants. iates of the financial institution from which you received the information; (c) Information you disclose under an exception. If you (ii) You may disclose the information to your disclose nonpublic personal information to a nonaffiliaffiliates, but your affiliates may, in turn, dis- ated third party under an exception in section 216.14 close and use the information only to the or 216.15 of this part, the third party may disclose and extent that you may disclose and use the use that information only as follows: information; and (1) The third party may disclose the information to (iii) You may disclose and use the information your affiliates; pursuant to an exception in section 216.14 or (2) The third party may disclose the information to its 216.15 in the ordinary course of business to affiliates, but its affiliates may, in turn, disclose carry out the activity covered by the excep- and use the information only to the extent that the tion under which you received the informa- third party may disclose and use the information; tion. and (2) Example. If you receive a customer list from a (3) The third party may disclose and use the informanonaffiliated financial institution in order to pro- tion pursuant to an exception in section 216.14 or vide account processing services under the excep- 216.15 in the ordinary course of business to carry tion in section 216.14(a), you may disclose that out the activity covered by the exception under information under any exception in section 216.14 which it received the information. or 216.15 in the ordinary course of business in (d) Information you disclose outside of an exception. If order to provide those services. For example, you you disclose nonpublic personal information to a noncould disclose the information in response to a affiliated third party other than under an exception in properly authorized subpoena or to your attorneys, section 216.14 or 216.15 of this part, the third party accountants, and auditors. You could not disclose may disclose the information only: that information to a third party for marketing (1) To your affiliates; purposes or use that information for your own (2) To its affiliates, but its affiliates, in turn, may marketing purposes, disclose the information only to the extent the (b) (1) Information you receive outside of an exception. If third party can disclose the information; and you receive nonpublic personal information from (3) To any other person, if the disclosure would be a nonaffiliated financial institution other than unlawful if you made it directly to that person. der an exception in section 216.14 or 216.15 of this part, you may disclose the information only: Section 216.12—Limits on sharing account number (i) To the affiliates of the financial institution information for marketing purposes. from which you received the information; (ii) To your affiliates, but your affiliates may, in (a) General prohibition on disclosure of account numbers. turn, disclose the information only to the You must not, directly or through an affiliate, disclose, extent that you can disclose the information; other than to a consumer reporting agency, an account and number or similar form of access number or access (iii) To any other person, if the disclosure would code for a consumer's credit card account, deposit be lawful if made directly to that person by account, or transaction account to any nonaffiliated the financial institution from which you rethird party for use in telemarketing, direct mail marketceived the information. ing, or other marketing through electronic mail to the (2) Example. If you obtain a customer list from a consumer. nonaffiliated financial institution outside of the exceptions in section 216.14 and 216.15: (b) Exceptions. Paragraph (a) of this section does not (i) You may use that list for your own purposes; apply if you disclose an account number or similar and form of access number or access code: (ii) You may disclose that list to another nonaf- (1) To your agent or service provider solely in order filiated third party only if the financial institu- to perform marketing for your own products or tion from which you purchased the list could services, as long as the agent or service provider is have lawfully disclosed the list to that third not authorized to directly initiate charges to the party. That is,you may disclose the list in account; or accordance with the privacy policy of the (2) To a participant in a private label credit card financial institution from which you received program or an affinity or similar program where the list, as limited by the opt out direction of the participants in the program are identified to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All customer when the customer enters into the pro- Section 216.14—Exceptions to notice and opt out gram. requirements for processing and servicing transactions. (c) Examples— (1) Account number. An account number, or similar form of access number or access code, does not include a number or code in an encrypted (a) Exceptions for processing transactions at consumer's form, as long as you do not provide the recipient request. The requirements for initial notice in section with a means to decode the number or code. 216.4(a)(2), for the opt out in sections 216.7 and (2) Transaction account. A transaction account is an 216.10, and for service providers and joint marketing account other than a deposit account or a credit in section 216.13 do not apply if you disclose nonpubcard account. A transaction account does not in- lic personal information as necessary to effect, adminclude an account to which third parties cannot ister, or enforce a transaction that a consumer requests initiate charges. or authorizes, or in connection with: (1) Servicing or processing a financial product or service that a consumer requests or authorizes; Subpart C—Exceptions (2) Maintaining or servicing the consumer's account with you, or with another entity as part of a private Section 216.13—Exception to opt out requirements label credit card program or other extension of for service providers and joint marketing. credit on behalf of such entity; or (3) A proposed or actual securitization, secondary (a) General rule. (1) The opt out requirements in sections market sale (including sales of servicing rights), or 216.7 and 216.10 do not apply when you provide similar transaction related to a transaction of the nonpublic personal information to a nonaffiliated consumer. third party to perform services for you or functions on your behalf, if you: (b) Necessary to effect, administer, or enforce a transac- (i) Provide the initial notice in accordance with tion means that the disclosure is: section 216.4; and (1) Required, or is one of the lawful or appropriate (ii) Enter into a contractual agreement with the methods, to enforce your rights or the rights of third party that prohibits the third party from other persons engaged in carrying out the financial disclosing or using the information other than transaction or providing the product or service; or to carry out the purposes for which you dis- (2) Required, or is a usual, appropriate or acceptable closed the information, including use under method: an exception in section 216.14 or 216.15 in (i) To carry out the transaction or the product or the ordinary course of business to carry out service business of which the transaction is a those purposes. part, and record, service, or maintain the con- (2) Example. If you disclose nonpublic personal infor- sumer's account in the ordinary course of mation under this section to a financial institution providing the financial service or financial with which you perform joint marketing, your product; contractual agreement with that institution meets (ii) To administer or service benefits or claims the requirements of paragraph (a)(l)(ii) of this relating to the transaction or the product or section if it prohibits the institution from disclos- service business of which it is a part; ing or using the nonpublic personal information (iii) To provide a confirmation, statement, or except as necessary to carry out the joint market- other record of the transaction, or informaing or under an exception in section 216.14 or tion on the status or value of the financial 216.15 in the ordinary course of business to carry service or financial product to the consumer out that joint marketing. or the consumer's agent or broker; (iv) To accrue or recognize incentives or bonuses (b) Service may include joint marketing. The services a associated with the transaction that are prononaffiliated third party performs for you under paravided by you or any other party; graph (a) of this section may include marketing of (v) To underwrite insurance at the consumer's your own products or services or marketing of finanrequest or for reinsurance purposes, or for cial products or services offered pursuant to joint any of the following purposes as they relate agreements between you and one or more financial to a consumer's insurance: account adminisinstitutions. tration, reporting, investigating, or prevent- (c) Definition of joint agreement. For purposes of this ing fraud or material misrepresentation, prosection, joint agreement means a written contract pur- cessing premium payments, processing suant to which you and one or more financial institu- insurance claims, administering insurance tions jointly offer, endorse, or sponsor a financial prod- benefits (including utilization review activiuct or service. ties), participating in research projects, or as Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

488 Federal Reserve Bulletin • July 2000 otherwise required or specifically permitted (5) (i) To a consumer reporting agency in accorby Federal or State law; or dance with the Fair Credit Reporting Act (15 (vi) In connection with: U.S.C. 1681 etseq.), or (A) The authorization, settlement, billing, (ii) From a consumer report reported by a conprocessing, clearing, transferring, recon- sumer reporting agency; ciling or collection of amounts charged, (6) In connection with a proposed or actual sale, debited, or otherwise paid using a debit, merger, transfer, or exchange of all or a portion of credit, or other payment card, check, or a business or operating unit if the disclosure of account number, or by other payment nonpublic personal information concerns solely means; consumers of such business or unit; or (B) The transfer of receivables, accounts, or (7) (i) To comply with Federal, State, or local laws, interests therein; or rules and other applicable legal requirements; (C) The audit of debit, credit, or other pay- (ii) To comply with a properly authorized civil, ment information. criminal, or regulatory investigation, or subpoena or summons by Federal, State, or local authorities; or Section 216.15—Other exceptions to notice and opt (iii) To respond to judicial process or government out requirements. regulatory authorities having jurisdiction over you for examination, compliance, or (a) Exceptions to opt out requirements. The requirements other purposes as authorized by law. for initial notice in section 216.4(a)(2), for the opt out (b) Examples of consent and revocation of consent. in sections 216.7 and 216.10, and for service providers (1) A consumer may specifically consent to your disand joint marketing in section 216.13 do not apply closure to a nonaffiliated insurance company of the when you disclose nonpublic personal information: fact that the consumer has applied to you for a (1) With the consent or at the direction of the conmortgage so that the insurance company can offer sumer, provided that the consumer has not rehomeowner's insurance to the consumer. voked the consent or direction; (2) A consumer may revoke consent by subsequently (2) (i) To protect the confidentiality or security of exercising the right to opt out of future disclosures your records pertaining to the consumer, service, of nonpublic personal information as permitted product, or transaction; under section 216.7(f). (ii) To protect against or prevent actual or potential fraud, unauthorized transactions, claims, Subpart D—Relation to Other Laws; Effective Date or other liability; (iii) For required institutional risk control or for Section 216.16—Protection of Fair Credit resolving consumer disputes or inquiries; Reporting Act. (iv) To persons holding a legal or beneficial interest relating to the consumer; or Nothing in this part shall be construed to modify, limit, or (v) To persons acting in a fiduciary or represensupersede the operation of the Fair Credit Reporting Act tative capacity on behalf of the consumer; (15 U.S.C. 1681 et seq.), and no inference shall be drawn (3) To provide information to insurance rate advisory on the basis of the provisions of this part regarding whether organizations, guaranty funds or agencies, ageninformation is transaction or experience information under cies that are rating you, persons that are assessing section 603 of that Act. your compliance with industry standards, and your attorneys, accountants, and auditors; Section 216.17—Relation to State laws. (4) To the extent specifically permitted or required under other provisions of law and in accordance (a) In general. This part shall not be construed as superwith the Right to Financial Privacy Act of 1978 seding, altering, or affecting any statute, regulation, (12 U.S.C. 3401 et seq.), to law enforcement agencies (including a federal functional regulator, the order, or interpretation in effect in any State, except to Secretary of the Treasury, with respect to the extent that such State statute, regulation, order, or 31 U.S.C. Chapter 53, Subchapter II (Records and interpretation is inconsistent with the provisions of this Reports on Monetary Instruments and Transac- part, and then only to the extent of the inconsistency. tions) and 12 U.S.C. Chapter 21 (Financial (b) Greater protection under State law. For purposes of Recordkeeping), a State insurance authority, with this section, a State statute, regulation, order, or interrespect to any person domiciled in that insurance pretation is not inconsistent with the provisions of this authority's State that is engaged in providing in- part if the protection such statute, regulation, order, or surance, and the Federal Trade Commission), self- interpretation affords any consumer is greater than the regulatory organizations, or for an investigation on protection provided under this part, as determined by a matter related to public safety; the Federal Trade Commission, after consultation with Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All the Board, on the Federal Trade Commission's own • Information we receive from you on applications or motion, or upon the petition of any interested party. other forms; • Information about your transactions with us, our affili- Section 216.18—Effective date; transition rule. ates, or others; and • Information we receive from a consumer reporting agency. (a) Effective date. This part is effective November 13, 2000. In order to provide sufficient time for you to A-2 — Categories of information you disclose establish policies and systems to comply with the (institutions that disclose outside of the exceptions) requirements of this part, the Board has extended the time for compliance with this part until July 1, 2001. (b) (1) Notice requirement for consumers who are your You may use one of these clauses, as applicable, to meet customers on the compliance date. By July 1, the requirement of section 216.6(a)(2) to describe the cate- 2001, you must have provided an initial notice, as gories of nonpublic personal information you disclose. You required by section 216.4, to consumers who are may use these clauses if you disclose nonpublic personal your customers on July 1, 2001. information other than as permitted by the exceptions in (2) Example. You provide an initial notice to consumsections 216.13, 216.14, and 216.15. ers who are your customers on July 1, 2001, if, by that date, you have established a system for pro- Sample Clause A-2, Alternative 1: viding an initial notice to all new customers and have mailed the initial notice to all your existing We may disclose the following kinds of nonpublic personal customers. information about you: (c) Two-year grandfathering of service agreements. Until • Information we receive from you on applications or July 1, 2002, a contract that you have entered into with other forms, such as [provide illustrative examples, such as a nonaffiliated third party to perform services for you "your name, address, social security number, assets, and or functions on your behalf satisfies the provisions of income"]; section 216.13(a)(2) of this part, even if the contract • Information about your transactions with us, our affilidoes not include a requirement that the third party ates, or others, such as {provide illustrative examples, such maintain the confidentiality of nonpublic personal inas "your account balance, payment history, parties to formation, as long as you entered into the contract on transactions, and credit card usage"]; and or before July 1, 2000. • Information we receive from a consumer reporting agency, such as [provide illustrative examples, such as Appendix A to Part 216—Sample Clauses "your creditworthiness and credit history'''']. Sample Clause A-2, Alternative 2: Financial institutions, including a group of financial holding company affiliates that use a common privacy notice, We may disclose all of the information that we collect, as may use the following sample clauses, if the clause is described [describe location in the notice, such as "above" accurate for each institution that uses the notice. (Note that or "below"]. disclosure of certain information, such as assets, income, and information from a consumer reporting agency, may give rise to obligations under the Fair Credit Reporting A-3 — Categories of information you disclose and Act, such as a requirement to permit a consumer to opt out parties to whom you disclose (institutions that do of disclosures to affiliates or designation as a consumer not disclose outside of the exceptions) reporting agency if disclosures are made to nonaffiliated third parties.) You may use this clause, as applicable, to meet the require- A-1 — Categories of information you collect (all ments of sections 216.6(a)(2), (3), and (4) to describe the institutions) categories of nonpublic personal information about customers and former customers that you disclose and the categories of affiliates and nonaffiliated third parties to You may use this clause, as applicable, to meet the require- whom you disclose. You may use this clause if you do not ment of section 216.6(a)(1) to describe the categories of disclose nonpublic personal information to any party, other nonpublic personal information you collect. than as permitted by the exceptions in sections 216.14, and 216.15. Sample Clause A-1: Sample Clause A-3: We collect nonpublic personal information about you from the following sources: We do not disclose any nonpublic personal information Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

490 Federal Reserve Bulletin • July 2000 about our customers or former customers to anyone, except Sample Clause A-5, Alternative 2: as permitted by law. We may disclose all of the information we collect, as A-4 — Categories of parties to whom you disclose described [describe location in the notice, such as "above" (institutions that disclose outside of the exceptions) or "below"] to companies that perform marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. You may use this clause, as applicable, to meet the requirement of section 216.6(a)(3) to describe the categories of A-6 — Explanation of opt out right (institutions affiliates and nonaffiliated third parties to whom you dis- that disclose outside of the exceptions) close nonpublic personal information. You may use this clause if you disclose nonpublic personal information other You may use this clause, as applicable, to meet the requirethan as permitted by the exceptions in sections 216.13, ment of section 216.6(a)(6) to provide an explanation of 216.14, and 216.15, as well as when permitted by the the consumer's right to opt out of the disclosure of nonpubexceptions in sections 216.14, and 216.15. lic personal information to nonaffiliated third parties, including the method(s) by which the consumer may exer- Sample Clause A-4: cise that right. You may use this clause if you disclose nonpublic personal information other than as permitted by We may disclose nonpublic personal information about the exceptions in sections 216.13, 216.14, and 216.15. you to the following types of third parties: • Financial service providers, such as [provide illustra- Sample Clause A-6: tive examples, such as "mortgage bankers, securities broker-dealers, and insurance agents'"]', If you prefer that we not disclose nonpublic personal • Non-financial companies, such as [provide illustrative information about you to nonaffiliated third parties, you examples, such as "retailers, direct marketers, airlines, may opt out of those disclosures, that is, you may direct us and publishers"]', and not to make those disclosures (other than disclosures per- • Others, such as [provide illustrative examples, such as mitted by law). If you wish to opt out of disclosures to "non-profit organizations"]. nonaffiliated third parties, you may [describe a reasonable We may also disclose nonpublic personal information means of opting out, such as "call the following toll-free about you to nonaffiliated third parties as permitted by law. number: (insert number). A-5 — Service provider/joint marketing exception A-7 — Confidentiality and security (all institutions) You may use one of these clauses, as applicable, to meet You may use this clause, as applicable, to meet the requirethe requirements of section 216.6(a)(5) related to the ex- ment of section 216.6(a)(8) to describe your policies and ception for service providers and joint marketers in section practices with respect to protecting the confidentiality and 216.13. If you disclose nonpublic personal information security of nonpublic personal information. under this exception, you must describe the categories of nonpublic personal information you disclose and the cate- Sample Clause A-7: gories of third parties with whom you have contracted. We restrict access to nonpublic personal information about Sample Clause A-5, Alternative 1: you to [provide an appropriate description, such as "those employees who need to know that information to provide We may disclose the following information to companies products or services to you"]. We maintain physical, electhat perform marketing services on our behalf or to other tronic, and procedural safeguards that comply with federal financial institutions with whom we have joint marketing standards to guard your nonpublic personal information. agreements: • Information we receive from you on applications or other forms, such as [provide illustrative examples, such as "your name, address, social security number, assets, and FINAL RULE—AMENDMENT TO RULES REGARDING income"]; ACCESS TO PERSONAL INFORMATION UNDER THE • Information about your transactions with us, our affili- PRIVACY ACT ates, or others, such as [provide illustrative examples, such as "your account balance, payment history, parties to transactions, and credit card usage"]; and The Board of Governors is amending 12 C.F.R. Part 261a, • Information we receive from a consumer reporting its Rules Regarding Access to Personal Information Under agency, such as [provide illustrative examples, such as the Privacy Act, to include a new system of records, "your creditworthiness and credit history"]. entitled Multi-rater Feedback Records (BGFRS-25) to the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All list of system of records that is exempt from certain re- proposal and all comments received in light of the factors quired disclosures. set forth in section 3 of the BHC Act. Effective June 28, 2000, 12 C.F.R. Part 261a is amended BB&T, with total consolidated assets of $43.5 billion, as follows: operates depository institutions in North Carolina, Georgia, South Carolina, Maryland, Kentucky, Virginia, West Vir- Part 261a—Rules Regarding Access to Personal ginia, and the District of Columbia. BB&T operates the Information Under the Privacy Act of 1974 sixth largest commercial banking organization in Virginia, controlling deposits of $3.7 billion, representing approximately 4.8 percent of total deposits in insured depository 1. The authority citation for Part 261a is revised to read institutions in the state ("state deposits").3 BB&T operates as follows: the tenth largest depository institution in West Virginia, controlling deposits of $318.5 million, representing Authority. 5 U.S.C. 552a 1.6 percent of state deposits. One Valley is also the tenth largest commercial banking 2. In section 261a. 13, remove paragraph (b)(6), redesig- organization in Virginia, controlling total deposits of nate paragraphs (b)(7), (8), and (9) as paragraphs $1.1 billion, representing approximately 1.5 percent of (b)(6), (7), and (8), and add a new paragraph (b)(9) to state deposits. One Valley is the largest commercial bankread as follows: ing organization in West Virginia, controlling deposits of $3.4 billion, representing 17.1 percent of state deposits. On consummation of the proposal, and accounting for Section 26la. 13—Exemptions. the proposed divestitures, BB&T would remain the sixth largest depository institution in Virginia, controlling deposits of $4.8 billion, representing approximately 6.2 percent of state deposits. BB&T would become the largest depository institution in West Virginia, controlling deposits of (b) * * * approximately $3.8 billion, representing 18.7 percent of state deposits. (9) BGFRS-25 Multi-rater Feedback Records. Interstate Analysis ORDERS ISSUED UNDER BANK HOLDING COMPANY Section 3(d) of the BHC Act allows the Board to approve ACT an application by a bank holding company to acquire control of a bank located in a state other than the home Orders Issued Under Section 3 of the Bank Holding state of such bank holding company if certain conditions Company Act are met.4 For purposes of the BHC Act, the home state of BB&T is North Carolina, and One Valley's subsidiary BB&T Corporation banks are located in Virginia and West Virginia.5 All of the Winston-Salem, North Carolina conditions for an interstate acquisition enumerated in section 3(d) of the BHC Act are met in this case.6 In light of Order Approving the Acquisition of a Bank Holding Company 3. Deposit and ranking data are as of June 30, 1999, and reflect BB&T Corporation, Winston-Salem, North Carolina acquisitions as of April 20, 2000. Asset data are as of December 31, 1999. In this context, depository institutions include commercial ("BB&T"), a bank holding company within the meaning banks, savings banks, and savings associations. of the Bank Holding Company Act ("BHC Act"), has 4. See 12 U.S.C. § 1842(d). A bank holding company's home state requested the Board's approval under section 3 of the BHC is the state in which the total deposits of all banking subsidiaries of Act (12 U.S.C. § 1842) to acquire One Valley Bancorp, such company were the largest on July 1, 1966, or the date on which Inc., Charleston, West Virginia ("One Valley"),1 and its the company became a bank holding company, whichever is later. 12 U.S.C. § 1841(o)(4)(C). nine wholly owned subsidiary banks.2 5. For purposes of section 3(d) of the BHC Act, the Board considers Notice of the proposal, affording interested persons an a bank to be located in the states in which the bank is chartered, opportunity to submit comments, has been published headquartered, or operates a branch. See 12 U.S.C. §§ 1841(o)(4> (65 Federal Register 12,554 (2000)). The time for filing (7) and 1842(d)(1) and (2); NationsBank Corporation, 84 Federal Reserve Bulletin 858 (1998). comments has expired, and the Board has considered the 6. See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A). BB&T is adequately capitalized and adequately managed. On consummation of the proposal, BB&T would control less than 10 percent of 1. BB&T also has requested the prior approval of the Board to hold the total amount of deposits of insured depository institutions in the and exercise an option to acquire up to 19.9 percent of One Valley's United States and less than 30 percent of the total amount of deposits voting shares. The option would expire on consummation of the of insured depository institutions in each of Virginia and West Virproposal. ginia. All of One Valley's banks have been in existence and continu- 2. The subsidiary banks of One Valley are listed in Appendix A. ously operated for at least the minimum period required under Vir- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

492 Federal Reserve Bulletin • July 2000 all the facts of record, the Board is permitted to approve 50 points. In addition, numerous competitors would remain the proposal under section 3(d) of the BHC Act. in each of these banking markets.11 In the Emporia and Lynchburg banking markets, con- Competitive Considerations summation of the proposal would exceed the DOJ Guidelines. BB&T is the third largest depository institution in Section 3 of the BHC Act prohibits the Board from approv- the Emporia banking market, controlling deposits of ing a proposal that would result in a monopoly or would be $27.8 million, representing approximately 15.4 percent of in furtherance of an attempt to monopolize the business of market deposits. One Valley is the second largest deposibanking. Section 3 also prohibits the Board from approving tory institution in the market, controlling deposits of a proposal that would substantially lessen competition in $47.2 million, representing approximately 26.2 percent of any relevant banking market unless the anticompetitive market deposits. The HHI would increase 804 points to 3166. effects of the proposal in that banking market are clearly In order to mitigate the potential anticompetitive effects outweighed in the public interest by the probable effect of of the proposal in the Emporia banking market, BB&T has the proposal in meeting the convenience and needs of the committed to divest one branch that controls $17 million in community to be served.7 deposits to a commercial banking organization that does BB&T and One Valley compete directly in the following not currently compete in the market.12 On consummation five banking markets: Bluefield, West Virginia; Emporia, of the proposal, and accounting for the proposed divesti- Lynchburg, and Roanoke, all in Virginia; and Metropolitan ture, BB&T would become the second largest depository Washington, D.C. (Metropolitan D.C.).8 The Board has institution in the banking market, controlling deposits of reviewed carefully the competitive effects of the proposal $58 million, representing approximately 32.1 percent of in each of these banking markets in light of all the facts of market deposits, and the HHI in the Emporia banking record, including the number of competitors that would market would increase 200 points to 2562. At least six remain in the market, the share of total deposits in deposi- competitors would remain in the banking market, including tory institutions in the market ("market deposits") con- five competitors other than BB&T that each would control trolled by the companies involved in the proposal,9 the 8 percent or more of market deposits. concentration level of deposits in the market and the in- In the Lynchburg banking market, BB&T is the sixth crease in this level as measured by the Herfindahl- largest depository institution, controlling deposits of Hirschman Index ("HHI") under the Department of Justice $130.3 million, representing approximately 6.2 percent of Merger Guidelines ("DOJ Guidelines"), and other charac- market deposits. One Valley is the second largest depositeristics of the markets.10 tory institution in the market, controlling deposits of Consummation of the proposal without divestitures $446.7 million, representing approximately 21.3 percent of would be consistent with Board precedent and the DOJ market deposits. The HHI would increase 265 points to Guidelines in the Bluefield, Roanoke, and, Metropolitan 2329. D.C. banking markets. In each of these markets, the change In order to mitigate the potential anticompetitive effects in the HHI as a result of this proposal would be less than of the proposal in the Lynchburg banking market, BB&T has committed to divest two branches that control approximately $29.2 million in deposits to an in-market commercial banking organization. On consummation of the proginia and West Virginia law. See Va. Code Ann. § 6.1^44.20 (Michie posal and accounting for the proposed divestiture, BB&T 1999); W. Va. Code §§ lA-2-12a(c) and 31A-8A-5d (Michie 1996). would become the second largest depository institution in l.See 12 U.S.C. § 1842(c). 8. The banking markets are defined in Appendix B. the banking market, controlling deposits of $547.9 million, 9. Market share data for all banking markets are as of June 30, 1999. representing approximately 26.1 percent of market depos- These data are based on calculations that include the deposits of thrift its. The HHI in the Lynchburg banking market would institutions at 50 percent. The Board previously has indicated that increase by 210 points to 2274. Fourteen competitors thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See, e.g., Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Thus, the 11. The competitive analyses for the Bluefield, Emporia, Roanoke, Board has regularly included thrift deposits in the calculation of and Metropolitan D.C. banking markets are provided in Appendix C. market share on a 50-percent weighted basis. See, e.g., First Hawai- 12. BB&T has executed sales agreements for the proposed divestiian, Inc., 11 Federal Reserve Bulletin 52 (1991). tures discussed in this order with purchasers that are competitively 10. Under the DOJ Guidelines, 49 Federal Register 26,823 suitable, and has committed to complete the divestitures within (June 29,1984), a market is considered moderately concentrated when 180 days of consummation of the proposal. BB&T also has committed the post-merger HHI is between 1000 and 1800, and is considered that, if it is unsuccessful in completing the divestitures within the 180highly concentrated when the post-merger HHI is more than 1800. day period, it will transfer the unsold branches to an independent The Department of Justice has informed the Board that a bank merger trustee that is acceptable to the Board and will instruct the trustee to or acquisition generally will not be challenged (in the absence of other sell the branches promptly to an alternative purchaser acceptable to factors indicating anticompetitive effects) unless the post-merger HHI the Board. See BankAmerica Corporation, 78 Federal Reserve Bulleis at least 1800 and the merger increases the HHI by more than 200 tin 338 (1992); United New Mexico Financial Corporation, 11 Fedpoints. The Department of Justice has stated that the higher than eral Reserve Bulletin 484 (1991). BB&T also has committed to normal HHI thresholds for screening bank mergers for anticompeti- submit to the Board, within 180 days after consummation of the tive effects implicitly recognize the competitive effects of limited- proposal, executed trust agreements acceptable to the Board stating purpose lenders and other nondepository financial institutions. the terms of the proposed divestitures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All would remain in the banking market, including two com- and with the conditions discussed in this order, including petitors other than BB&T that each would control BB&T's divestiture commitments. For the purpose of this 10 percent or more of market deposits and three additional action, the commitments and conditions referred to above competitors that each would control at least approximately are deemed to be conditions imposed in writing by the 5 percent of market deposits. In addition, the Lynchburg Board in connection with its findings and decision and, as market appears to be attractive for new entry. Three bank- such, may be enforced in proceedings under applicable ing firms have entered the market de novo since June 1997, law. with two of those market entries occurring since June The proposed transaction shall not be consummated 1999. before the fifteenth calendar day following the effective The Board has considered the views of the Department date of this order, or later than three months after the of Justice and the other banking agencies on the competi- effective date of this order, unless such period is extended tive effects of the proposal in each relevant banking mar- for good cause by the Board or by the Federal Reserve ket. The Department of Justice has advised the Board that, Bank of Richmond, acting pursuant to delegated authority. in light of the proposed divestitures, consummation of the By order of the Board of Governors, effective May 30, proposal would not be likely to have a significantly adverse 2000. effect on competition in any relevant banking market. The Office of the Comptroller of the Currency and the Federal This action was taken pursuant to the Board's Rules Regarding Deposit Insurance Corporation have been afforded an op- Delegation of Authority (12 C.F.R. 265.4(b)(1)) by a committee of portunity to comment and have not objected to consumma- Board members. Voting for this action: Governors Kelley, Meyer, and Gramlich. Absent and not voting: Chairman Greenspan and Vice tion of the proposal. Chairman Ferguson. Based on all the facts of record, including the proposed divestitures in the Emporia and Lynchburg banking mar- ROBERT DEV. FRIERSON kets and the number and size of the competitors remaining Associate Secretary of the Board in the markets, the Board concludes that consummation of the proposal is not likely to have a significantly adverse effect on competition or on the concentration of banking Appendix A resources in the banking markets in which BB&T and One Valley directly compete or in any other relevant banking Subsidiary Banks of One Valley market. West Virginia Other Considerations One Valley Bank, Inc., Morgantown The BHC Act requires the Board, in acting on an applica- One Valley Bank of Huntington, Inc., Huntington tion, to consider the financial and managerial resources and One Valley Bank of Mercer County, Inc., Princeton future prospects of the companies and banks involved, the One Valley Bank-South, Inc., Summersville convenience and needs of the communities to be served, One Valley Bank-North, Inc., Moundsville and certain supervisory factors. The Board has reviewed One Valley Bank, National Association, Charleston these factors in light of the record, including supervisory One Valley Bank-East, National Association, Martinsburg reports of examination assessing the financial and manage- Virginia rial resources of the organizations and financial information provided by BB&T. Based on all the facts of record, One Valley Bank-Shenandoah, Raphine the Board concludes that the financial and managerial One Valley Bank-Central Virginia, National Association, resources and the future prospects of BB&T, One Valley, Lynchburg and their respective subsidiary banks are consistent with approval, as are the other supervisory factors the Board must consider under the BHC Act. In addition, consider- Appendix B ations related to the convenience and needs of the commu- Banking Markets in Which BB&T and One Valley nities to be served, including the records of performance of Directly Compete the institutions involved under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.), are consistent with Bluefield: Mercer County, West Virginia, and Tazewell approval of the proposal. County, Virginia. Emporia: Greenville County and the city of Emporia, all in Conclusion Virginia. Lynchburg: Lynchburg, Virginia, Rand McNally Market- Based on the foregoing, and in light of all the facts of ing Area ("RMA") and the non-RMA portions of the record, the Board has determined that the application counties of Amherst and Campbell, all in Virginia. should be, and hereby is, approved. The Board's approval Roanoke: Roanoke, Virginia, RMA, the non-RMA poris specifically conditioned on compliance by BB&T with tions of the counties of Botetourt and Roanoke, and the all the commitments made in connection with the proposal town of Boones Mill in Franklin County, all in Virginia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

494 Federal Reserve Bulletin • July 2000 Metropolitan D.C.: The DC-MD-VA RMA and the non- ("UST-NY").1 As part of its proposal to become a bank RMA portions of the counties of Fauquier and Loudoun, holding company, Schwab also has filed with the Board an Virginia, and Calvert, Charles, and St. Mary's, Maryland. election to become a financial holding company pursuant to sections 4(k) and (1) of the BHC Act (12 U.S.C. § 1843(k) and (1)) and section 225.82 of the Board's Appendix C Regulation Y (12 C.F.R. 225.82). Schwab also has requested the Board's approval under Summary of Pro Forma Market Structure section 4(c)(8) and 4(j) of the BHC Act (12 U.S.C. § 1843(c)(8) and (j)) and section 225.24 of the Board's Bluefield Regulation Y (12 C.F.R. 225.24) to acquire certain nonbanking subsidiaries of US Trust, including U.S. Trust BB&T is the tenth largest depository institution in the Company of Florida Savings Bank, Palm Beach, Florida Bluefield banking market, controlling deposits of ("UST-FL").2 In addition, Schwab proposes to acquire the $19.2 million, representing 1.4 percent of market deposits. Edge Act corporation of US Trust pursuant to section 25A One Valley is the second largest depository institution in of the Federal Reserve Act (12 U.S.C. § 611 et seq.) and the market, controlling deposits of $237 million, representthe Board's Regulation K (12 C.F.R. 211).3 ing 17 percent of market deposits. On consummation of the Notice of the proposal under sections 3 and 4, affording proposal, BB&T would become the second largest deposiinterested persons an opportunity to submit comments, has tory institution in the market, controlling deposits of apbeen published (65 Federal Register 13,765 (2000)). The proximately $256.2 million, representing approximately time for filing comments has expired, and the Board has 18.4 percent of market deposits. The HHI would increase considered the proposal and all comments received in light 47 points to 1724. of the factors set forth in sections 3 and 4 of the BHC Act. Roanoke BB&T is the eighth largest depository institution Schwab, with total consolidated assets of $29.3 billion, in the Roanoke banking market, controlling deposits of is a securities firm engaged principally in the business of $131.4 million, representing 2.8 percent of market deposproviding securities brokerage services to individuals and its. One Valley is the seventeenth largest depository instituinstitutions.4 Schwab also engages in a variety of other tion in the market, controlling deposits of $12.5 million, financial activities in the United States and overseas, inrepresenting less than 1 percent of market deposits. On cluding securities underwriting and dealing, investment consummation of the proposal, BB&T would remain the advisory activities, insurance agency activities, employee eighth largest depository institution in the market, controlbenefit plan consulting, and trust company functions. ling deposits of approximately $143.9 million, representing US Trust, with total consolidated assets of $5 billion, is approximately 3.1 percent of market deposits. The HHI the 12th largest commercial banking organization in New would increase 1 point to 2529. York, controlling deposits of approximately $2.6 billion in Metropolitan D.C. BB&T is the tenth largest depository the state.5 US Trust's subsidiary banks and savings associinstitution in the Metropolitan D.C. banking market, controlling deposits of $1.6 billion, representing 2.9 percent of market deposits. One Valley is the seventy-fifth largest 1. Schwab proposes to acquire US Trust by merging a wholly depository institution in the market, controlling deposits of owned acquisition subsidiary with and into US Trust, with US Trust $14.7 million, representing less than 1 percent of market as the surviving company. The subsidiary banks of US Trust that deposits. On consummation of the proposal, BB&T would Schwab proposes to acquire are UST-NY; U.S. Trust Company remain the tenth largest depository institution in the mar- National Association, Los Angeles, California ("UST-CA"); U.S. Trust Company of Texas, National Association, Dallas, Texas ("USTket, with no change in deposits or market share. The HHI TX"); U.S. Trust Company, Greenwich, Connecticut ("UST-CT"); would remain unchanged at 882. U.S. Trust Company of New Jersey, Princeton, New Jersey ("UST- NJ"); and U.S. Trust Company of North Carolina, Greensboro, North Carolina ("UST-NC"). Schwab has requested approval to acquire The Charles Schwab Corporation UST-NC, a nondepository trust company that Schwab intends to San Francisco, California convert to a commercial bank within six months of consummation of the proposal, under sections 3 and 4 of the BHC Act. Schwab also proposes to acquire U.S.T. L.P.O. Corp., New York, New York, a Order Approving Formation of a Bank Holding wholly owned subsidiary of US Trust that is an intermediate bank Company and Notice to Acquire Nonbanking Companies holding company over UST-TX; and NCT Holdings Inc., Greensboro, North Carolina, a wholly owned subsidiary of US Trust that would be an intermediate bank holding company over UST-NC. The Charles Schwab Corporation ("Schwab") has re- 2. US Trust's nonbanking subsidiaries and nonbanking activities for which Schwab has sought Board approval under section 4(c)(8) and quested the Board's approval under section 3 of the Bank 4(j) of the BHC Act are listed in the Appendix. Holding Company Act ("BHC Act") (12 U.S.C. § 1842) to 3. Schwab also has requested the Board's approval to hold and become a bank holding company by acquiring all the exercise an option to acquire up to 19.9 percent of the shares of voting shares of U.S. Trust Corporation, New York, New US Trust's common stock. The option would expire on consummation of the proposal. York ("US Trust"), and of US Trust's subsidiary banks, 4. Asset data are as of December 31, 1999. including its lead subsidiary bank, United States Trust 5. Ranking data are as of December 31, 1999. Deposit data are as of Company of New York, New York, New York June 30, 1999. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All ation conduct primarily trust activities, and are located in ing the financial and managerial factors, the Board has California, Connecticut, Florida, New Jersey, New York, reviewed confidential examination and other supervisory Oregon, Pennsylvania, and Texas. US Trust also engages information assessing the financial and managerial strength in trust company functions and provides investment and of Schwab and its subsidiaries and of US Trust and its financial advisory services in the United States. subsidiaries, including UST-NY in particular. In addition, the Board has reviewed public and confidential supervisory Factors Governing Board Review of Transaction reports and information regarding the activities and financial position of the regulated subsidiaries of Schwab. The BHC Act sets forth the factors that the Board must The Board consistently has considered capital adequacy consider when reviewing the formation of a bank holding to be an especially important aspect in analyzing financial company or the acquisition of banks. These factors are the factors.8 US Trust and all the subsidiaries of US Trust and competitive effects of the proposal in the relevant geo- Schwab that are subject to regulatory capital requirements graphic markets; the financial and managerial resources currently exceed the relevant requirements. In addition, US and future prospects of the companies and banks involved Trust and all its subsidiary depository institutions currently in the proposal; the convenience and needs of the commu- are well capitalized under applicable federal guidelines. nity to be served, including the records of performance Schwab also would be well capitalized on a pro forma under the Community Reinvestment Act (12 U.S.C. § 2901 basis on consummation of the proposal. Moreover, the et seq.) ("CRA") of the insured depository institutions proposed transaction is structured as a stock-for-stock cominvolved in the transaction; and the availability of informa- bination and would not increase the debt service requiretion needed to determine and enforce compliance with the ments of the combined company and is not expected to BHC Act and other applicable federal banking laws.6 have a significantly adverse effect on the financial resources of Schwab. Other financial factors are consistent Competitive Considerations with approval. The Board also has carefully considered the managerial Section 3 of the BHC Act prohibits the Board from approv- resources of Schwab and US Trust in light of all the facts ing a proposal that would result in a monopoly. The BHC of record, including confidential examination and other Act also prohibits the Board from approving a proposed supervisory information and information provided by bank acquisition that would substantially lessen competi- Schwab regarding its existing and proposed risktion in any relevant banking market unless the anticompeti- management policies and processes. Based on all the facts tive effects of the proposal are clearly outweighed in the of record, the Board concludes that considerations relating public interest by the probable effect of the proposal in to the financial and managerial resources and future prosmeeting the convenience and needs of the community to be pects of the organizations involved are consistent with served.7 approval. The proposal involves the acquisition of banks by In view of the fact that, on a pro forma basis, a large Schwab, which owns a nondeposit trust company and a majority of Schwab's activities are conducted in subsidiarvariety of nonbanking companies, but does not own a ies that are functionally regulated by the Securities and commercial bank or savings association. Based on all the Exchange Commission, the Board expects, in carrying out facts of record, the Board concludes that consummation of its responsibilities as umbrella supervisor, to rely heavily the proposal would not result in any significantly adverse on the Securities and Exchange Commission for examinaeffects on competition or on the concentration of banking tion and other supervisory information. resources in any relevant banking market. Accordingly, the Board has determined that competitive factors under sec- Convenience and Needs Factor tion 3 of the BHC Act are consistent with approval of the proposal. The competitive effects of the proposed nonbank- The Board also has carefully considered the effect of the ing activities are discussed below. proposal on the convenience and needs of the communities to be served in light of all the facts of record, including Financial and Managerial Considerations comments received on the effect the proposal would have on the communities to be served by the combined organiza- The Board has carefully considered the financial and man- tion. agerial resources and future prospects of the companies and banks involved in the proposal, the effect the proposed A. CRA Performance Examinations transaction would have on such resources, and other supervisory factors in light of all the facts of record. In evaluat- The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the CRA. As 6. In cases involving interstate bank acquisitions by bank holding companies, the Board also must consider the concentration of deposits in the nation and relevant individual states, as well as compliance with the other provisions of section 3(d) of the BHC Act. 8. See Chemical Banking Corporation, 82 Federal Reserve Bulletin 7. 12 U.S.C. § 1842(c)(1). 230 (1996). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

496 Federal Reserve Bulletin • July 2000 provided in the CRA, the Board evaluates the record of within an institution's assessment area(s) or a broader performance of an institution in light of examinations by statewide or regional area that includes the institution's the appropriate federal supervisors of the CRA perfor- assessment area(s).12 mance records of the relevant institutions. An institution's Inner City Press/Community on the Move ("Protesmost recent CRA performance evaluation is a particularly tant") questioned the appropriateness of the wholesale important consideration in the applications process because bank designations of the UST Banks. Protestant argued it represents a detailed, on-site evaluation of the institu- that the UST Banks are in the business of making mortgage tion's overall record of performance under the CRA by its and small business loans and, therefore, should not be able appropriate federal supervisor.9 to maintain their wholesale bank status. Protestant also Schwab currently does not control an institution subject suggested that at least UST-NY and UST-CT hold themto evaluation under the CRA. The Board has reviewed in selves out to the public as mortgage lenders. Although the detail, however, the CRA performance records of the in- UST Banks do originate some mortgage loans, the CRA sured depository institutions of US Trust (the "UST Q&A make clear that "wholesale institutions may engage Banks"). The UST Banks all received "satisfactory" rat- in some retail lending without losing their wholesale desigings at their most recent examinations for CRA perfor- nation if this activity is incidental and done on an accommance. In particular, UST-NY received a "satisfactory" modation basis."13 The CRA Q&A also set forth criteria CRA performance rating from the Federal Reserve Bank of that the federal banking agencies use to assess whether an New York at its most recent examination, as of May 26, institution's retail lending activities are inconsistent with a 1998 (the "1998 Examination"). In addition, the New wholesale bank designation under the CRA.14 An analysis York State Banking Department, as of May 26, 1998, rated of the retail lending of the UST Banks in light of these UST-NY's CRA performance "satisfactory" pursuant to factors indicates that such lending is not inconsistent with section 28-b of New York state banking law.10 their wholesale designations. The most recent CRA performance examinations of the institutions indicate that their B. Community Development Record of US Trust lending is provided as an incident to their other services and that the loans provided by the institutions are provided The UST Banks are wholesale banking institutions that as an accommodation to their wholesale customers or as a provide investment management, corporate trust, financial means of soliciting trust, asset management, and private and estate planning, fiduciary, and private banking services banking business from new customers.15 The record also for institutions and high net worth individuals. Each of the indicates that the number of retail loans originated by each UST Banks has been designated a "wholesale bank" and UST Bank represents less than 2 percent of the bank's has been evaluated as such under the CRA regulations of noninstitutional accounts, and that the UST Banks do not the federal banking agencies. Schwab proposes to continue hold themselves out as offering mortgage or other retail to operate the UST Banks as wholesale banks and to loans. The Board will continue to monitor the retail lending maintain their CRA policies. Designation as a wholesale activities of UST-NY, the only UST Bank for which the bank requires the appropriate federal banking agency to Board is the appropriate federal financial supervisory evaluate a bank's record of CRA performance under a agency, and retains sufficient authority to revoke the bank's separate "community development test."11 Community de- wholesale status if the facts and circumstances so warvelopment activities as a general matter must benefit areas rant.16 9. The Interagency Questions and Answers Regarding Community and moderate-income ("LMI") individuals, LMI areas, or small busi- Reinvestment ("CRA Q&A") provide that a CRA examination is an nesses or farms. See 12 C.F.R. 228.12(h). important and often controlling factor in the consideration of an 12. Community development activities outside an institution's asinstitution's CRA record. See 64 Federal Register 23,641 (1999). sessment area(s) may also be considered if the institution has ade- 10. UST-CT received a "satisfactory" rating from its appropriate quately addressed the needs of its assessment area(s). See 12 C.F.R. federal supervisor, the Office of the Comptroller of the Currency 228.25(e). ("OCC"), at its most recent examination for CRA performance, as of 13 .See CRA Q&A at,12(o). June 16, 1999. UST-TX received an overall rating of "satisfactory" 14. Id. from its appropriate federal supervisor, the OCC, at its most recent 15. Schwab has represented that the UST Banks continue to make evaluation for CRA performance, as of June 25, 1997. UST-CA retail loans only as an incident to the institutions' asset management received a "satisfactory" rating from the Federal Deposit Insurance business and that substantially all of the loans originated by the Corporation ("FDIC") at its most recent CRA examination, as of institutions in 1999 were made as accommodations to existing custom- October 12, 1999. UST-NJ received a "satisfactory" rating from the ers or to individuals conducting an active dialogue with the institu- FDIC at its most recent CRA examination, as of April 27, 1999. tions regarding the establishment of an asset management relation- Finally, UST-FL received a "satisfactory" rating from the Office of ship. Thrift Supervision at its most recent CRA examination, as of Novem- 16. 12 C.F.R. 228.25(b). Protestant contended that the proposal ber 12, 1997. represents an evasion of the CRA because the UST Banks are assessed 11 .See 12 C.F.R. 228.25(a). This test evaluates a wholesale bank on as wholesale banks while Schwab is primarily a retail operation. The its record of community development services, community develop- Board notes that the CRA applies only to insured depository institument investments, and community development lending. 12 C.F.R. tions and not to Schwab's brokerage and other subsidiaries that are not 228.25(c). The primary purpose of any service, investment, or loan insured depository institutions. Moreover, the CRA regulations and considered under the test must be "community development," which written guidance of the federal banking agencies specifically require is defined in terms of specific categories of activities that benefit low- wholesale bank determinations to be made on the basis of the activi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All Community Development Record of UST-NY. The 1998 $1 million line of credit for the working capital needs of Examination indicated that UST-NY's community develop- Henry Street Settlement, a nonprofit social agency serving ment loan commitments during the examination period the community development needs of LMI areas in lower (May 20, 1996, through May 26, 1998) totalled $5.6 mil- Manhattan; a $1.58 million line of credit issued for the lion and represented a 27-percent increase since the previ- benefit of the New York State Housing Finance Agency as ous examination. Consistent with UST-NY's wholesale security for debt payments on financing for an LMI housbank operations, a substantial portion of these loans were ing project in the Bronx; and a $500,000 loan to Nonprofit indirect, i.e., they were made to intermediaries supporting Finance Fund, a financial intermediary that provides adviaffordable housing and economic development and revital- sory services and loans to nonprofit organizations that offer ization within the bank's assessment area.17 Examiners community development services to LMI families and also indicated that UST-NY exhibited innovative lending areas in New York City. US Trust also indicated that it has practices and exhibited excellent responsiveness to the made $12.4 million in qualified community development credit needs in its assessment area. investments and $805,000 in CRA-eligible grants since the The 1998 Examination determined that UST-NY had an 1998 Examination. adequate level of community development investments. HMDA Data. Protestant maintained that Home Mort- Qualified investments totalled $2.7 million, including gage Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA") $580,000 in charitable grants and contributions. Examiners data demonstrate that the UST Banks make substantially noted, in particular, UST-NY's innovative tax credit invest- all of their loans to nonminority borrowers outside LMI ments of $880,000 made through the New York Equity census tracts. Protestant stated, in particular, that UST-NY Fund, an investment pool for corporate equity investments does not lend in Bronx County, the lowest income and supporting low-income housing development. most predominantly minority county in the New York City Examiners also found that UST-NY provided commu- Metropolitan Statistical Area.20 The Board has recognized nity development services in its assessment area— that HMDA data alone provide an incomplete measure of including technical assistance, investment advisory ser- an institution's lending in its community, and that these vices, and in-kind donations—and that the bank's services data have limitations that make them an inadequate basis, exhibited an excellent responsiveness to the needs of its absent other information, for concluding that an institution assessment area.18 Examiners noted that the bank provided has engaged in illegal lending discrimination. The limitafundraising, advisory, and trustee services for Brooklyn tions of HMDA data are even greater when, as here, the Legal Services, Children's House Inc., Big Brothers/Big relevant institutions are not engaged in the business of Sisters, Little Sisters of the Assumption Family Health mortgage lending. In light of the limitations of HMDA Services, Inc., and American Red Cross of Greater New data, particularly as applied to wholesale banks, the Board York. Examiners made special mention of the financial has carefully reviewed other information, particularly exexpertise provided by bank employees to various commu- amination reports that provide an on-site evaluation of nity development organizations, including Mercy Haven, compliance with the fair lending laws by the subsidiaries Inc., an organization that operates residences on Long of US Trust. Examiners found no evidence of prohibited Island for the mentally ill, formerly homeless, and AIDS discrimination or other illegal credit practices at UST-NY patients.19 or any other UST Bank and found no substantive violations According to information provided by US Trust, of fair lending laws. UST-NY had a total of $17.8 million of community development lending and investments as of February 2000, an C. Conclusion on Convenience and Needs increase of 114 percent over the levels credited to the bank in the 1998 Examination. The lending activities include a The Board has carefully considered all the facts of record, including the public comments received, responses to the comments, and reports of examinations of CRA performance of the institutions involved, in reviewing the proposties of the bank and do not restrict the affiliations of a wholesale bank. See, e.g., 12 C.F.R. 228.12(w) and 228.25(b). al's effect on the convenience and needs of the communi- 17. Protestant criticized US Trust for fulfilling a large proportion of its community development lending obligations by providing standby letters of credit rather than loans. The Board notes that the CRA does not require an institution to offer any specific credit products but 20. Protestant also contended that UST-NY failed to comply with allows an institution to help serve the credit needs of the institution's the requirements of HMDA to report the race of borrowers receiving community by providing credit of the types consistent with the institu- mortgage loans. Most of the mortgage applications received by USTtion's overall business strategy and expertise. NY are received by telephone. Under regulations implementing 18. Protestant complained that UST-NY does not have a branch in HMDA, an institution is specifically exempted from the requirement Bronx County or Brooklyn. As discussed above, UST-NY has been of recording the race of an applicant when a mortgage application is designated as a wholesale bank by its appropriate federal financial made entirely by telephone. See 12 C.F.R. 203, Appendix A, supervisory agency. Accordingly, federal regulators assess UST-NY's § V(D)(2), and Appendix B, § 1(B)(4). Furthermore, an institution is provision of community development services rather than its provi- not required to record race data under this exemption even if the sion of general banking services to its assessment area. telephone applicant has an existing banking relationship with the 19. Examiners also noted that the bank participated in cooperative institution. For these reasons, the Board concludes that the reporting work study programs and provided free investment advisory services practices with respect to the collection of race data used in mortgage for the Lower East Side People's Federal Credit Union. applications taken by UST-NY do not violate HMDA. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

498 Federal Reserve Bulletin • July 2000 ties to be served by the combined organization. The Board services organization and would provide the current and also has carefully considered the effect of the proposed future customers of Schwab and US Trust with improved acquisition of US Trust by Schwab on the future perfor- financial products and services and with a comprehensive mance of the UST Banks under the CRA. In connection and integrated asset management service. Schwab has with the proposal, Schwab has indicated that it intends to stated that its current and prospective clients would benefit continue US Trust's record of CRA performance. from referrals to US Trust's financial planning, tax and The Board expects that, after the proposed acquisition by estate planning, private banking, investment management, Schwab, UST-NY and the other UST Banks will demon- fiduciary, and equity research services. Schwab also has strate the same commitment to serving the community stated that US Trust's current and prospective customers development needs of their communities that they have would benefit from Schwab's marketing efficiency, multidemonstrated to date. Schwab is a large financial organiza- channel distribution capacity, and ability to develop and tion with a satisfactory record of legal and regulatory implement innovative technology. In addition, there are compliance, and has financial and managerial resources public benefits to be derived from permitting capital marthat are sufficient to ensure compliance by the UST Banks kets to operate so that bank holding companies can make with all relevant regulatory requirements, including the potentially profitable investments in nonbanking compa- CRA. Based on a review of the entire record, and for the nies and from permitting banking organizations to allocate reasons discussed above, the Board concludes that conve- their resources in the manner they consider to be most nience and needs considerations, including the CRA perfor- efficient when such investments and actions are consistent, mance records of the UST Banks, are consistent with as in this case, with the relevant considerations under the approval of the proposal. BHC Act. As part of its evaluation of the statutory factors, the Nonbanking Activities Board considers the financial and managerial resources of the notificant, its subsidiaries, and any company to be Schwab also has filed notice under section 4(c)(8) and 4(j) acquired; the effect the transaction would have on such of the BHC Act to acquire the nonbank subsidiaries of US resources; and the management expertise, internal control Trust, including UST-FL, and thereby engage in a number and risk management systems, and capital of the entity of nonbanking activities, including extending credit, oper- conducting the activity.25 For the reasons discussed above, ating a savings association, performing trust company and based on all the facts of record, the Board has confunctions, and providing investment and financial advisory cluded that financial and managerial considerations are services.21 The Board determined by regulation before consistent with approval of the notice. November 12, 1999, that the types of activities for which The Board has carefully considered the competitive efnotice has been provided are so closely related to banking fects of the proposed transaction under section 4 of the as to be a proper incident thereto for purposes of sec- BHC Act. To the extent that Schwab and US Trust offer tion 4(c)(8) of the BHC Act.22 Schwab has committed that different types of nonbanking products, the proposed acquiit will conduct these activities in accordance with the sition would result in no loss of competition. Certain Board's regulations and orders approving these activities nonbanking subsidiaries of Schwab and US Trust do comfor bank holding companies.23 pete, however, in securities brokerage, investment advi- In order to approve the notice, the Board also must sory, mutual funds, and asset management and fiduciary determine that the acquisition of the nonbank subsidiaries services. The markets for each of these nonbanking activiof US Trust and the performance of the proposed activities ties are regional or national in scope. The record in this by Schwab can reasonably be expected to produce benefits case indicates that there are numerous providers of these to the public that outweigh possible adverse effects, such as services and that the markets for these nonbanking services undue concentration of resources, decreased or unfair com- are unconcentrated. For these reasons, and based on all the petition, conflicts of interests, or unsound banking prac- facts of record, the Board concludes that consummation of tices.24 the proposal would have a de minimis effect on competi- Schwab has indicated that the proposed transaction tion. would create a stronger and more diversified financial The Board also believes that the conduct of the proposed nonbanking activities within the framework established in this order, prior orders, and Regulation Y is not likely to 21. Schwab has indicated that its current activities are permissible result in adverse effects, such as undue concentration of under section 4(k) of the BHC Act. resources, decreased or unfair competition, conflicts of 22. See 12 C.F.R. 225.28(b)(1), (4)(ii), (5), and (6). interests, or unsound banking practices, that would not be 23. In connection with its August 1999 acquisition of NCT Hold- outweighed by the public benefits of the proposal, such as ings, Inc., Greensboro, North Carolina ("NCT"), US Trust committed increased customer convenience and gains in efficiency. to conform the activities and investments of NCT and its subsidiaries to those permissible for bank holding companies under section 4 of Accordingly, based on all the facts of record, the Board has the BHC Act and Regulation Y within two years of acquiring NCT. determined that the balance of public interest factors that Schwab has committed to conform the activities and investments of NCT and its subsidiaries within two years of US Trust's acquisition of NCT. 24. See 12 U.S.C. § 1843(j)(2)(A). 25. See 12 C.F.R. 225.26. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All the Board must consider under the standard of section 4(j) of the nonbanking aspects of the proposal also is subject to of the BHC Act is favorable and consistent with approval. all the conditions set forth in Regulation Y, including those Schwab also has proposed to acquire US Trust's Edge in sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. Act corporation, and the Board has no objection to such 225.7 and 225.25(c)), and to the Board's authority to acquisition. Conclusion require such modification or termination of the activities of Based on the foregoing, the Board has determined that a bank holding company or any of its subsidiaries as the the application under section 3 of the BHC Act and the Board finds necessary to ensure compliance with, and to notice under section 4(c)(8) of the BHC Act should be, and prevent evasion of, the provisions of the BHC Act and the hereby are, approved.26 In reaching its conclusion, the Board's regulations and orders issued thereunder. These Board has considered all the facts of record in light of the commitments and conditions are deemed to be conditions factors that the Board is required to consider under the imposed in writing by the Board in connection with its BHC Act and other applicable statutes.27 The Board's findings and decision and, as such, may be enforced in approval is specifically conditioned on compliance by proceedings under applicable law. Schwab with all the commitments made in connection with The acquisition of US Trust's subsidiary banks may not the application and notice, including the commitments and be consummated before the fifteenth calendar day after the conditions discussed in this order.28 The Board's approval effective date of this order, and the proposal may not be consummated later than three months after the effective date of this order, unless such period is extended for good 26. Protestant requested that the Board hold a public meeting or cause by the Board or by the Federal Reserve Bank of San hearing on the proposal. Section 3(b) of the BHC Act does not require Francisco, acting pursuant to delegated authority. the Board to hold a public hearing on an application unless the appropriate supervisory authority for the bank to be acquired makes a Financial Holding Company Declaration timely written recommendation of denial of the application. The Board has not received such a recommendation from the appropriate supervisory authorities. Schwab also has filed with the Board an election to become Under its rules, the Board also may, in its discretion, hold a public a financial holding company pursuant to sections 4(k) and meeting or hearing on an application to acquire a bank if a meeting or (1) of the BHC Act and section 225.82 of Regulation Y. hearing is necessary or appropriate to clarify factual issues related to the application and to provide an opportunity for testimony. 12 C.F.R. Schwab has certified that all depository institutions con- 225.16(e). Section 4 of the BHC Act and the Board's rules thereunder trolled by US Trust are well capitalized and well managed, provide for a hearing on a notice to acquire nonbanking companies if and has provided all the information required under Reguthere are disputed issues of material fact that cannot be resolved in lation Y. some other manner. 12 U.S.C. § 1843(c)(8); 12 C.F.R. 225.25(a)(2). The Board has reviewed the examination ratings re- The Board has considered carefully Protestant's request in light of all the facts of record. In the Board's view, Protestant has had ample ceived by each insured depository institution controlled by opportunity to submit its views, and, in fact, submitted written com- US Trust under the CRA, and other relevant examinations ments that have been considered carefully by the Board in acting on and information. Based on all the facts of record, the Board the proposal. Protestant's request fails to demonstrate why its written has determined that this election to become a financial comments do not present its views adequately and fails to identify disputed issues of fact that are material to the Board's decision that holding company will become effective on consummation would be clarified by a public meeting or hearing. For these reasons, of the acquisition of US Trust by Schwab. and based on all the facts of record, the Board has determined that a By order of the Board of Governors, effective May 1, public meeting or hearing is not required or warranted in this case. 2000. Accordingly, the request for a public meeting on the proposal is denied. 27. Protestant requested that the Board consider Schwab's recent Voting for this action: Chairman Greenspan, Vice Chairman Ferguacquisition of CyBerCorp. Protestant provided no basis or reason for son, and Governors Kelley, Meyer, and Gramlich. the Board to deny the application because of this acquisition. Protestant also requested that the Board delay action and extend the ROBERT DEV. FRIERSON comment period on the proposal for a variety of reasons. The request Associate Secretary of the Board for delay does not warrant postponement of the Board's consideration of the proposal. The Board has accumulated a significant record in this case, including reports of examination, supervisory information, pub- Appendix lic reports and information, and public comment. In the Board's view, Nonbanking Subsidiaries of U.S. Trust Corporation for the reasons discussed above, Protestant has had ample opportunity to submit its views, and, in fact, has provided substantial written (1) Fernhill Holding, Inc., Larkspur, California, and submissions that have been considered carefully by the Board in acting on the proposal. Moreover, the BHC Act and Regulation Y thereby engage in extending credit, in accordance with require the Board to act on proposals submitted under those provisions within certain time periods. Based on a review of all the facts of record, the Board concludes that the record in this case is sufficient to claimed that Schwab may have received prior determinations:~&n warrant Board action at this time, and that further delay of consider- certain issues raised by the proposal in these discussions. The Board ation of the proposal, extension of the comment period, or denial of has carefully considered this contention and has found no factual basis the proposal is not warranted. for Protestant's claims that any aspect of the proposal was predeter- 28. Protestant also expressed concern about the fairness of the mined. Moreover, the Board finds that any prefiling meetings were Board's processing of the proposal because of discussions that oc- proper both as a matter of Board policy and as a matter of administracurred between Federal Reserve staff and representatives of Schwab tive law. See Action for Children's Television v. FCC, 564 F.2d 458, and US Trust before the application and notice were filed. Protestant 474 n.28, and All (D.C. Cir. 1977). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

500 Federal Reserve Bulletin • July 2000 section 225.28(b)(1) of Regulation Y (12 C.F.R. banks in 21 states, including Nebraska and Colorado.3 225.28(b)(1)); Wells Fargo is the fourth largest commercial banking orga- (2) U.S. Trust Company of Florida Savings Bank, Palm nization in Nebraska, controlling deposits of $1.8 billion, Beach, Florida, and thereby engage in operating a savings representing approximately 6.6 percent of total deposits in association, in accordance with section 225.28(b)(4)(ii) of depository institutions in the state ("state deposits").4 In Regulation Y (12 C.F.R. 225.28(b)(4)(ii)); Colorado, Wells Fargo is the largest commercial banking (3) U.S. Trust Company of North Carolina, Greensboro, organization, controlling deposits of $8.8 billion, represent- North Carolina, and thereby engage in performing trust ing approximately 19.2 percent of state deposits. First company functions, in accordance with section Commerce, with total consolidated assets of $3.9 billion, 225.28(b)(5) of Regulation Y (12 C.F.R. 225.28(b)(5)); also operates depository institutions in Nebraska and Colo- (4) U.S. Trust Company of Delaware, Wilmington, Dela- rado. It is the third largest commercial banking organizaware, and thereby engage in performing trust company tion in Nebraska, controlling deposits of $1.8 billion, reprefunctions, in accordance with section 225.28(b)(5) of Reg- senting approximately 6.6 percent of state deposits. In ulation Y (12 C.F.R. 225.28(b)(5)); Colorado, First Commerce is the 160th largest commercial (5) NCT Opportunities, Inc., Greensboro, North Carolina, banking organization, controlling deposits of $978,000, and thereby provide investment and financial advisory representing less than 1 percent of state deposits. On conservices, in accordance with section 225.28(b)(6) of Regu- summation of the proposal, and accounting for the prolation Y (12 C.F.R. 225.28(b)(6)); and posed divestitures discussed in this order, Wells Fargo (6) CTC Consulting, Inc., Portland, Oregon, and thereby would become the second largest commercial banking provide investment and financial advisory services, in ac- organization in Nebraska, controlling deposits of $3.4 bilcordance with section 225.28(b)(6) of Regulation Y lion, representing approximately 12.4 percent of state de- (12 C.F.R. 225.28(b)(6)). posits. Wells Fargo would remain the largest commercial banking organization in Colorado, controlling deposits of Wells Fargo & Company $8.8 billion. San Francisco, California Interstate Analysis Order Approving the Acquisition of a Bank Holding Company Section 3(d) of the BHC Act allows the Board to approve an application by a bank holding company to acquire Wells Fargo & Company ("Wells Fargo"), a bank holding control of a bank located in a state other than the home company within the meaning of the Bank Holding Com- state of the bank holding company if certain conditions are pany Act ("BHC Act"), has requested the Board's ap- met.5 For purposes of the BHC Act, the home state of proval under section 3 of the BHC Act (12 U.S.C. § 1842) Wells Fargo is California, and First Commerce's subsidto acquire First Commerce Bancshares, Inc., Lincoln, Ne- iary banks are located in Nebraska and Colorado.6 braska ("First Commerce"); First Commerce Bancshares All the conditions for an interstate acquisition enumerof Colorado, Inc., Colorado Springs, Colorado; and their ated in section 3(d) of the BHC Act are met in this case.7 In wholly owned subsidiary banks. Wells Fargo also has requested the Board's approval under sections 4(c)(8) and 4(j) of the BHC Act (12 U.S.C. §§ 1843(c)(8) and 18430) 3. Wells Fargo operates in Arizona, California, Colorado, Idaho, and section 225.24 of the Board's Regulation Y (12 C.F.R. Iowa, Illinois, Indiana, Minnesota, Montana, Nebraska, Nevada, New 225.24) to acquire First Commerce's nonbanking subsid- Mexico, North Dakota, Ohio, Oregon, South Dakota, Texas, Utah, iaries.1 Washington, Wisconsin, and Wyoming. 4. Deposit data are as of June 30, 1999. In this context, depository Notice of the proposal, affording interested persons an institutions include commercial banks, savings banks, and savings opportunity to submit comments, has been published associations. (65 Federal Register 18,996 (2000)). The time for filing 5. See 12 U.S.C. § 1842(d). A bank holding company's home state comments has expired, and the Board has considered the is the state in which the total deposits of all banking subsidiaries of the proposal and all comments received in light of the factors company were the largest on July 1, 1966, or on the date on which the company became a bank holding company, whichever is later. set forth in sections 3 and 4 of the BHC Act. 12 U.S.C. § 1841(o)(4)(C). Wells Fargo, with total consolidated assets of 6. For purposes of section 3(d) of the BHC Act, the Board considers $222.3 billion is the seventh largest commercial banking a bank to be located in the states in which the bank is chartered or organization in the United States, controlling 3.9 percent of headquartered or operates a branch. NationsBank Corporation, 84 total assets of insured commercial banks in the United Federal Reserve Bulletin 858 (1998). States.2 Wells Fargo operates a large network of subsidiary 7. See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). First Commerce's subsidiary banks have been in existence and continuously operated for the minimum period of time required under state law. See Neb. Rev. Stat. § 8-911 (five years); Colo. Rev. Stat. 11-6.4-103 (permits acquisition of a depository institution that has 1. The subsidiary banks and nonbanking subsidiaries of First Com- been in operation for less than five years when it is in conjunction merce are listed in the Appendix. with the acquisition of a Colorado bank holding company). In addi- 2. Asset data are as of December 31, 1999, and ranking data are as tion, on consummation of the proposal, Wells Fargo and its affiliates of December 31, 1999. would control less than 10 percent of the total amount of deposits of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All view of all the facts of record, the Board is permitted to Lincoln,13 all in Nebraska; and Colorado Springs, Coloapprove the proposal under section 3(d) of the BHC Act. rado.14 Consummation of the proposal without divestitures would be consistent with the DOJ Guidelines and Board Competitive Considerations precedent in the Colorado Springs and Hall County banking markets.15 The BHC Act prohibits the Board from approving an Wells Fargo's subsidiary bank, Norwest Bank Nebraska, application under section 3 of the BHC Act if the proposal N.A., Omaha, Nebraska ("Norwest Bank Nebraska"), is would result in a monopoly or would be in furtherance of the largest depository institution in the Adams County any attempt to monopolize the business of banking. The banking market and controls deposits of $165.3 million, BHC Act also prohibits the Board from approving a pro- representing 34.3 percent of market deposits. In order to posed combination that would substantially lessen compe- mitigate the potential anticompetitive effects of the protition or tend to create a monopoly in any relevant banking posal in this market, Wells Fargo has committed to divest market, unless the Board finds that the anticompetitive City National Bank and Trust Company, Hastings, effects of the proposal are clearly outweighed in the public Nebraska, which controls all of First Commerce's deposits interest by the probable effects of the proposal in meeting in the market ($135.4 million), to a purchaser that does not the convenience and needs of the community to be served.8 currently compete in the market. Accordingly, the HHI for The Board has carefully reviewed the competitive effects the market would remain unchanged at 2353, and consumof the proposal in the relevant banking markets in light of mation of the proposal would be consistent with Board all the facts of record, including the number of competitors precedent and the DOJ Guidelines. that would remain in the markets, the relative shares of In the Lincoln banking market, Wells Fargo has committotal deposits in depository institutions in the markets ted to sell one branch that controls $94.7 million in depos- ("market deposits") controlled by the companies involved its to a commercial bank that currently operates in the in this transaction,9 the concentration levels of market market.16 On consummation of the proposal, and accountdeposits and the increase in these levels as measured by the ing for the proposed divestiture, Norwest Bank Nebraska, Herfindahl-Hirschman Index ("HHI") under the Depart- would become the largest depository institution in the ment of Justice Merger Guidelines ("DOJ Guidelines"), market, controlling deposits of $1.1 billion, representing and other characteristics of the markets.10 approximately 39.5 percent of market deposits. The HHI Wells Fargo and First Commerce compete directly in would increase 234 points to 2282. four banking markets: Adams County,11 Hall County,12 and In reviewing the competitive effects of this proposal, the Board has considered that several factors appear to mitigate the likely effect of the proposal on competition in the Lincoln banking market, in particular, the number and size insured depository institutions in the United States, and would not of competing institutions in the banking market. Seventeen exceed applicable deposit limitations as calculated under state law. depository institutions besides Norwest Bank Nebraska See Neb. Rev. Stat. § 8-910 (14 percent); Colo. Rev. Stat. 11-6.4-103 (25 percent). Wells Fargo also meets the capital, managerial, and other requirements established under applicable law. In making this determination, the Board has relied on all the facts of record, including the 12. The Hall County banking market is defined as Hall County, views of the Colorado Division of Banking and the Nebraska Depart- Nebraska. ment of Banking and Finance concerning the permissibility of the 13. The Lincoln banking market is defined as Lancaster County, proposed transaction under applicable state laws. Nebraska. 8. 12 U.S.C. § 1842(c). 14. The Colorado Springs banking market is defined as El Paso and 9. Market share data are as of June 30, 1999, and are based on Teller Counties, Colorado. calculations that include the deposits of thrift institutions at 50 per- 15. On consummation of the proposal, Wells Fargo's subsidiary cent. The Board previously has indicated that thrift institutions have bank, Norwest Bank Colorado, N.A., Denver, Colorado, would remain become, or have the potential to become, significant competitors of the largest depository institution in the Colorado Springs banking commercial banks. See, e.g., Midwest Financial Group, 75 Federal market and control $700.3 million in deposits, representing Reserve Bulletin 386 (1989); National City Corporation, 70 Federal 22.7 percent of market deposits. The HHI would increase one point to Reserve Bulletin 743 (1984). Thus, the Board has regularly included 961. In the Hall County banking market, Wells Fargo's subsidiary thrift deposits in the calculation of market share on a 50-percent bank, Norwest Bank Nebraska, N.A., Omaha, Nebraska, would beweighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve come the largest depository institution in the market and control Bulletin 52 (1991). $223.1 million in deposits, representing 27.3 percent of market depos- 10. Under the DOJ Guidelines, 49 Federal Register 26,823 (1984), its. The HHI would increase 171 points to 1591. a market in which the post merger HHI is more than 1800 is consid- 16. In each market in which Wells Fargo has committed to divest ered highly concentrated. The Department of Justice has informed the offices to mitigate the anticompetitive effects of the proposal, Wells Board that a bank merger or acquisition generally will not be chal- Fargo has committed to execute sales agreements for the proposed lenged (in the absence of other factors indicating anticompetitive divestitures with a purchaser determined by the Board to be competieffects) unless the post merger HHI is at least 1800 and the merger tively suitable before consummation. Wells Fargo also has committed increases the HHI by more than 200 points. The Department of Justice that, if it is unsuccessful in completing any divestiture within 180 days has stated that the higher than normal HHI thresholds for screening of consummation, it will transfer the unsold offices to an independent bank mergers for anticompetitive effects implicitly recognize the trustee that is acceptable to the Board and will instruct the trustee to competitive effects of limited-purpose lenders and other nondeposi- sell the offices promptly to one or more alternative purchasers accepttory financial institutions. able to the Board. See BankAmerica Corporation, 78 Federal Reserve 11. The Adams County banking market is defined as Adams County, Bulletin 338 (1992); United New Mexico Financial Corporation, Nebraska. 77 Federal Reserve Bulletin 484 (1991). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

502 Federal Reserve Bulletin • July 2000 would remain in the market after the proposed acquisition. Nonbanking Activities Two of these organizations would each control more than 14 percent of market deposits. The market also appears to Wells Fargo has filed notice under sections 4(c)(8) and 4(j) be attractive for entry by out-of-market competitors. From of the BHC Act to acquire First Commerce's wholly owned 1990 to 1999, the population of the Lincoln banking mar- nonbanking subsidiaries and thereby engage in a number ket increased by 10.9 percent, compared with an increase of nonbanking activities. The Board has determined by of 9.1 percent in the population of Omaha, the other regulation that extending credit and servicing loans, prometropolitan area in Nebraska, and a 5.7 percent increase viding financial and investment advisory services, certain in population for the state as a whole. From 1999 to 2004, insurance agency and underwriting activities, and data Lincoln's population is expected to continue to increase at processing activities are closely related to banking for almost twice the state rate.17 purposes of the BHC Act.18 Moreover, the Federal Reserve The Department of Justice has conducted a detailed System previously has approved applications by First Comreview of the proposal and advised the Board that, condi- merce to engage in all the proposed activities. Wells Fargo tioned on completion of the proposed divestitures in the has committed to conduct these nonbanking activities in Adams County and Lincoln banking markets, consumma- accordance with the limitations set forth in Regulation Y tion of the proposal would not likely have a significantly and the Board's orders and interpretations. adverse effect on competition in any relevant banking In order to approve this notice, the Board is required by market. The Office of the Comptroller of the Currency and section 4(j)(2)(A) of the BHC Act to determine that the the Federal Deposit Insurance Corporation also have been acquisition of the nonbanking subsidiaries of First Comafforded an opportunity to comment and have not objected merce by Wells Fargo "can reasonably be expected to to consummation of the proposal. produce benefits to the public . .. that outweigh possible After carefully reviewing all the facts of record, and for adverse effects, such as undue concentration of resources, the reasons discussed in this order, the Board concludes decreased or unfair competition, conflicts of interests, or that consummation of the proposal would not likely result unsound banking practices."19 in a significantly adverse effect on competition or on the As part of its evaluation of these factors, the Board concentration of banking resources in any of the banking considers the financial and managerial resources of Wells markets in which Wells Fargo and First Commerce directly Fargo and its subsidiaries, including the companies to be compete or in any other relevant banking market. Accord- acquired, and the effect of the proposed transaction on ingly, based on all the facts of record, and subject to those resources. For the reasons noted above, and based on completion of the proposed divestitures and compliance all the facts of record, the Board has concluded that finanwith the related commitments, the Board has determined cial and managerial considerations are consistent with apthat competitive factors are consistent with approval of the proval of the notice. proposal. The Board also has considered the competitive effects of Wells Fargo's proposed acquisition of the nonbanking sub- Other Considerations sidiaries of First Commerce in light of all the facts of record. Most of the markets in which the nonbanking The BHC Act requires the Board, in acting on an applica- subsidiaries of First Commerce and Wells Fargo directly tion, to consider the financial and managerial resources and compete are national or regional in scope and are unconfuture prospects of the companies and banks involved, the centrated, and there are numerous providers of all of these convenience and needs of the communities to be served, services. One of First Commerce's nonbanking subsidiarand certain supervisory factors. The Board has reviewed ies originates mortgages in the Lincoln, Nebraska, market. these factors in light of the record, including supervisory There are numerous competitors in the market for mortreports of examination assessing the financial and manage- gage originations in Lincoln, and there are few barriers to rial resources of the organizations and financial informa- entry. As a result, the Board expects that consummation of tion provided by Wells Fargo. Based on all the facts of the proposal would have a de minimis effect on competition record, the Board concludes that the financial and manage- for all these services. Based on all the facts of record, the rial resources and the future prospects of Wells Fargo, First Board concludes that it is unlikely that significantly ad- Commerce, and their respective subsidiary banks are con- verse competitive effects would result from the nonbanking sistent with approval, as are the other supervisory factors acquisitions proposed in this transaction. the Board must consider under section 3 of the BHC Act. The Board also expects that the proposed transaction In addition, considerations related to the convenience and would give Wells Fargo an increased ability to serve the needs of the communities to be served, including the needs of its customers. In addition, there are public benefits records of performance of the institutions under the Com- to be derived from permitting capital markets to operate so munity Reinvestment Act (12 U.S.C. § 2901 et seq.), are that bank holding companies can make potentially profitconsistent with approval of the proposal. able investments in nonbanking companies and from per- 18. See 12 C.F.R. 225.28(b)(1), (6), (ll)(i), and (14). 17. Rand McNally Commercial Atlas & Marketing Guide (2000). 19. 12 U.S.C. § 1843(j)(2)(A). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All mitting banking organizations to allocate their resources in Appendix the manner they consider to be most efficient when such Subsidiary Banks of First Commerce investments are consistent, as in this case, with the relevant considerations under the BHC Act. City National Bank and Trust Company, Hastings, The Board also concludes that the conduct of the pro- Nebraska posed nonbanking activities within the framework of Reg- First Commerce Bank of Colorado, N.A., Colorado ulation Y and Board precedent is not likely to result in Springs, Colorado adverse effects, such as undue concentration of resources, First National Bank and Trust Company of Kearney, decreased or unfair competition, conflicts of interests, or Kearney, Nebraska unsound banking practices, that would outweigh the public National Bank of Commerce Trust and Savings benefits of the proposal, such as increased customer conve- Association, Lincoln, Nebraska nience and gains in efficiency. Accordingly, based on all The First National Bank of McCook, McCook, Nebraska the facts of record, the Board has determined that the The First National Bank of West Point, West Point, balance of public interest factors that the Board must Nebraska consider under section 4(j)(2)(A) of the BHC Act is favor- The Overland National Bank of Grand Island, Grand able and consistent with approval of this proposal. Island, Nebraska Western Nebraska National Bank, North Platte, Nebraska Conclusion Nonbanking Subsidiaries of First Commerce Based on the foregoing, and in light of all the facts of record, the Board has determined that the application and Cabella's Card, LLC; Community Mortgage Corp.; and notice should be, and hereby are, approved. Approval of First Commerce Mortgage, Inc., all in Lincoln, Nebraska, the application and notice is specifically conditioned on which extend credit and service loans in accordance with compliance by Wells Fargo with all the commitments made section 225.28(b)(1) of Regulation Y (12 C.F.R. in connection with the proposal and with the conditions 225.28(b)(1)). stated or referred to in this order, including Wells Fargo's divestiture commitments. The Board's determination on First Commerce Investors, Inc., Lincoln, Nebraska, which the nonbanking activities also is subject to all the terms and provides financial and investment advisory services in acconditions set forth in Regulation Y, including those in cordance with section 225.28(b)(6) of Regulation Y sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and (12 C.F.R. 225.28(b)(6)). 225.25(c)), and the Board's authority to require such modification or termination of the activities of a bank holding Commerce Affiliated Life Insurance Co., Lincoln, Necompany or any of its subsidiaries as the Board finds braska, which engages in credit related insurance agency necessary to ensure compliance with, and to prevent eva- and underwriting activities in accordance with section sion of, the provisions of the BHC Act and the Board's 228.28(b)(ll)(i) of Regulation Y (12 C.F.R. 225.28(b) regulations and orders thereunder. For purposes of this (H)(i)). transaction, the commitments and conditions referred to in First Commerce Technology, Inc., Lincoln, Nebraska, this order shall be deemed to be conditions imposed in which provides data processing services in accordance writing by the Board in connection with its findings and with section 225.28(b)(14) of Regulation Y (12 C.F.R. decision and, as such, may be enforced in proceedings 225.28(b)(14)). under applicable law. The acquisition of the subsidiary banks of First Commerce shall not be consummated before the fifteenth calendar day after the effective date of this order, and the ORDERS ISSUED UNDER INTERNATIONAL BANKING proposal shall not be consummated later than three months ACT after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Banca Sella S.p.A. Reserve Bank of San Francisco, acting pursuant to dele- Biella, Italy gated authority. By order of the Board of Governors, effective May 30, Order Approving Establishment of an Agency 2000. Banca Sella S.p.A. ("Bank"), Biella, Italy, a foreign bank This action was taken pursuant to the Board's Rules Regarding within the meaning of the International Banking Act Delegation of Authority (12 C.F.R. 265.4(b)(1)) by a committee of ("IBA"), has applied under section 7(d) of the IBA Board members. Voting for this action: Governors Kelley, Meyer, and Gramlich. Absent and not voting: Chairman Greenspan and Vice (12 U.S.C. § 3105(d)) to establish a state-licensed agency Chairman Ferguson. in Miami, Florida. The Foreign Bank Supervision Enhancement Act of 1991, which amended the IBA, provides that a ROBERT DEV. FRIERSON foreign bank must obtain the Board's approval to establish Associate Secretary of the Board an agency in the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

504 Federal Reserve Bulletin • July 2000 Notice of the application, affording interested persons an tion.4 The Board has made the following findings with opportunity to submit comments, has been published in a regard to the supervision of Bank. newspaper of general circulation in Miami, Florida (The The Board previously has determined, in connection Miami Herald, June 7, 1999). The time for filing comments with applications involving other banks in Italy, that those has expired, and the Board has considered all comments banks were subject to home country supervision on a received. consolidated basis.5 The Board has found that Bank is Bank, with total consolidated assets of approximately supervised by the Bank of Italy on substantially the same $5 billion, is the largest privately owned banking organiza- terms and conditions as those other banks.6 Based on all tion in Italy.1 Established in 1886 by members of the Sella the facts of record, the Board has determined that Bank is family, Bank continues to be controlled by the Sella family subject to comprehensive supervision on a consolidated through several non- operating holding companies. basis by its home country supervisor. Bank engages in retail and commercial banking and The Board also has taken into account the additional other financial activities, including insurance and asset standards set forth in the IBA and Regulation K.7 The Bank management, directly and through its bank and nonbank of Italy has no objection to establishment of the proposed subsidiaries. Outside Italy, Bank has operations in Switzer- agency. land, Luxembourg, Romania, India, and Venezuela. Bank Italy's risk-based capital standards conform to European does not engage directly or indirectly in any nonbanking Union capital standards, which are consistent with those activities in the United States. Bank would be a qualifying established by the Basle Capital Accord. Bank's capital is foreign banking organization within the meaning of Regu- in excess of the minimum levels that would be required by lation K (12 C.F.R. 211.23(b)). the Basle Capital Accord and is considered equivalent to Bank proposes to establish an agency primarily to pro- capital that would be required of a U.S. banking organizavide private banking services to Bank's customers in Latin tion. Managerial and other financial resources of Bank also America. The agency also would work with Bank's exist- are considered consistent with approval, and Bank appears ing and future representative offices in Latin America to to have the experience and capacity to support the propromote and develop new business opportunities. The posed office. In addition, Bank has established controls and agency would solicit deposits, and investment management procedures for the office to ensure compliance with U.S. accounts, provide limited custody services, offer fully se- law, as well as controls and procedures for its worldwide cured personal loans, and engage in limited foreign ex- operations generally. change activities. Finally, the Board has reviewed the restrictions on dis- In order to approve an application by a foreign bank to closure in relevant jurisdictions in which Bank operates establish an agency in the United States, the IBA and and has communicated with relevant government authori- Regulation K require the Board to determine that the ties about access to information. Bank and its parents have foreign bank applicant engages directly in the business of banking outside of the United States and that the applicant 4. See 12 C.F.R. 211.24(c)(1). In assessing this standard, the Board has furnished to the Board the information it needs to considers, among other factors, the extent to which the home country assess the application adequately. The Board generally also supervisors: must determine that the foreign bank and any of its foreign (i) Ensure that the bank has adequate procedures for monitoring bank parents are subject to comprehensive supervision or and controlling its activities worldwide; regulation on a consolidated basis by its home country (ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, audit supervisor.2 The Board also may take into account addireports, or otherwise; tional standards as set forth in the IBA and Regulation K.3 (iii) Obtain information on the dealings with and relationship be- As noted above, Bank engages directly in the business of tween the bank and its affiliates, both foreign and domestic; banking outside the United States. Bank also has provided (iv) Receive from the bank financial reports that are consolidated on a worldwide basis or comparable information that permits the Board with information necessary to assess the applicaanalysis of the bank's financial condition on a worldwide tion through submissions that address the relevant issues. consolidated basis; Regulation K provides that a foreign bank will be con- (v) Evaluate prudential standards, such as capital adequacy and sidered to be subject to consolidated supervision or regula- risk asset exposure, on a worldwide basis. These are indicia of tion on a consolidated basis if the Board determines that comprehensive, consolidated supervision; no single factor is essential, and other elements may inform the Board's determithe bank is supervised and regulated in such a manner that nation. its home country supervisor receives sufficient information 5. See Banca Intesa S.p.A., 86 Federal Reserve Bulletin 433 (2000); on the worldwide operations of the bank, including its Istituto Bancario San Paolo di Torino S.p.A., 82 Federal Reserve relationship to any affiliates, to assess the bank's overall Bulletin 1147 (1996); Banca de Roma S.p.A., 82 Federal Reserve Bulletin 1145 (1996). financial condition and its compliance with law and regula- 6. As noted, Bank is owned, directly and indirectly, by holding companies: Finanziaria Bansel S.p.A. ("Bansel"), Sofise S.p.A., Maurizio Sella s.a.a., and Finanziaria 1900 S.p.A. Bansel is registered as a bank holding company under Italian law and is regulated as such by the Bank of Italy. In addition, the Bank of Italy has the authority to 1. Unless otherwise indicated, data are as of June 30, 1999. obtain information from and to examine the remaining three compa- 2. See 12 U.S.C. § 3105(d)(2). nies. 3. See 12 U.S.C. § 3105(d)(3) & (4); 12 CFR 211.24(c). 7. See 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)-(3). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All committed to make available to the Board such informa- termination of any of Bank's direct or indirect activities in tion on Bank and any of its affiliates that the Board deems the United States. Approval of this application also is necessary to determine and enforce compliance with the specifically conditioned on Bank's compliance with the IB A, the Bank Holding Company Act, and other applicable commitments made in connection with this application and federal law. To the extent that the provision of such infor- with the conditions in this order.8 The commitments and mation may be prohibited or impeded by law or otherwise, conditions referred to above are conditions imposed in Bank and its parents have committed to cooperate with the writing by the Board in connection with its decision and Board to obtain any necessary consents or waivers that may be enforced in proceedings under applicable law might be required from third parties in connection with against Bank, its offices, and its affiliates. disclosure of certain information. In addition, subject to By order of the Board of Governors, effective May 30, certain conditions, the Bank of Italy may share information 2000. on Bank's operations with other supervisors, including the Board. In light of these commitments and other facts of This action was taken pursuant to the Board's Rules Regarding record, and subject to the condition described below, the Delegation of Authority (12 C.F.R. 265.4(b)(1)) by a committee of Board members. Voting for this action: Governors Kelley, Meyer, and Board concludes that Bank and its parents have provided Gramlich. Absent and not voting: Chairman Greenspan and Vice adequate assurances of access to any necessary information Chairman Ferguson. the Board may request. On the basis of all the facts of record, and subject to the ROBERT DEV. FRIERSON commitments made by Bank and its parents, as well as the Associate Secretary of the Board terms and conditions set forth in this order, the Board has determined that Bank's application to establish the state- 8. The Board's authority to approve the establishment of the prolicensed agency in Miami, Florida, should be, and hereby posed agency parallels the continuing authority of the Florida Departis, approved. Should any restrictions on access to informa- ment of Banking and Finance to license offices of a foreign bank. The tion on the operations or activities of Bank or any of its Board's approval of the application does not supplant the authority of affiliates subsequently interfere with the Board's ability to the State of Florida and its agent, the Florida Department of Banking and Finance, to license the proposed agency of Bank in accordance determine and enforce compliance by Bank or its affiliates with any terms or conditions that the Florida Department of Banking with applicable federal statutes, the Board may require and Finance may impose. INDEX OF ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (JANUARY 1, 2000-MARCH 31, 2000) Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page Centura Banks, Inc., Triangle Bancorp, Inc., January 27, 2000 86, 232 Rocky Mount, North Carolina Raleigh, North Carolina Centura Bank, Triangle Bank, Rocky Mount, North Carolina Raleigh, North Carolina Bank of Mecklenburg, Charlotte, North Carolina Dexia Project and Public Finance To establish a state-licensed branch in February 22, 2000 86, 289 International Bank, New York, New York Paris, France E. Sun Commercial Bank, Limited, To establish a state-licensed branch in January 24, 2000 86, 238 Taipei, Taiwan Los Angeles, California Kookmin Bank, To establish a state-licensed branch in February 11, 2000 86,291 Seoul, Korea New York, New York Old Kent Financial Corporation, Merchants Bancorp, Inc., January 27, 2000 86, 223 Grand Rapids, Michigan Aurora, Illinois Merchants National Bank of Aurora, Aurora, Illinois First National Corp. of Ardmore, Inc., Southern Lad Title Services, Inc., January 10, 2000 86, 225 Ardmore, Oklahoma Ardmore, Oklahoma National Bank of Egypt, To establish a state-licensed branch in March 20, 2000 86, 344 Cairo, Egypt New York, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

506 Federal Reserve Bulletin • July 2000 Index of Orders Issued or Actions Taken—Continued Bulletin Volume Applicant Merged or Acquired Bank or Activity Date of Approval and Page North Fork Bancorporation, Inc. JSB Financial, Inc., January 10, 2000 86, 226 Melville, New York Lynbrook, New York Jamaica Savings Bank FSB, Lynbrook, New York North Fork Bancorporation, Inc. Reliance Bancorp, Inc., January 10, 2000 86, 230 Melville, New York Garden City, New York Reliance Federal Savings Bank, Garden City, New York Wells Fargo & Company, Ragen MacKenzie Group Incorporated, March 13, 2000 86, 341 San Francisco, California Seattle, Washington Ragen MacKenzie Incorporated, Seattle, Washington Ragen MacKenzie Investment Services, Inc., Seattle, Washington APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Applicant(s) Bank(s) Reserve Bank Effective Date Benchmark Bancorp, Inc., Financial Institutions, Inc., Chicago May 17, 2000 Aurora, Illinois Port Washington, Wisconsin Valley Bank, Verona, Illinois BOE Financial Services of Virginia, Bank of Essex, Richmond May 3, 2000 Inc., Tappahannock, Virginia Tappahannock, Virginia Business Bancorporation, Inc., The Business Bank, Minneapolis May 4, 2000 Minnetonka, Minnesota Minnetonka, Minnesota Central Financial Corporation, Mid-America Bancorporp, Inc., Kansas City May 4, 2000 Hutchinson, Kansas Jewell, Kansas ColoEast Bankshares, Inc., Citizens Holding Corporation, Kansas City May 4, 2000 Lamar, Colorado Keenesburg, Colorado Corpus Christi Bancshares, Inc., The First State Bank, Dallas April 28, 2000 Corpus Christi, Texas Bishop, Texas Community Pride Bank Corporation, Community Pride Bank, Minneapolis May 5, 2000 Ham Lake, Minnesota Ham Lake, Minnesota FCB Bancorp, Inc., The First Capital Bank of Kentucky, St. Louis April 26, 2000 Louisville, Kentucky Louisville, Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date First Business Bancshares, Inc. First Business Banc Group, Ltd., Chicago May 4, 2000 Madison, Wisconsin Brookfield, Wisconsin First Business Bank-Milwaukee, Brookfield, Wisconsin First Security Group, Inc., First Security Bank of Deer Lodge, Minneapolis April 25, 2000 Deer Lodge, Montana Deer Lodge, Montana Lisco State Company, First Nebraska Bancs, Inc., Kansas City May 9, 2000 Lisco, Nebraska Sidney, Nebraska Kimball Bancorp, Inc., Kimball, Nebraska Florida Community Bankshares, Community Bank of Marion County, Atlanta May 4, 2000 Inc., Ocala, Florida Ocala, Florida Futurus Financial Services, Inc., Futurus Bank, N.A., Atlanta April 28, 2000 Alpharetta, Georgia Alpharetta, Georgia Hanmi Financial Corporation, Hanmi Bank, San Francisco April 25, 2000 Los Angeles, California Los Angeles, California Ida Grove Bancshares, Inc., American National Bank, Chicago May 12, 2000 Ida Grove, Iowa Sac City, Iowa American Bancshares, Inc., Holstein, Iowa Islands Bancorp, Islands Community Bank, N.A., Richmond May 11, 2000 Beaufort, South Carolina Beaufort, South Carolina Leackco Bank Holding Company, C & L Investment Company, Inc. Inc., Miller, South Dakota Wolsey, South Dakota Midland States Bancorp, Inc., CSB Financial Group, Inc., St. Louis May 1, 2000 Effingham, Illinois Centralia, Illinois Centralia Savings Bank, Centralia, Illinois Oswego Community Bank Oswego Bancshares, Inc., Chicago May 2, 2000 Employee Stock Ownership Plan, Oswego, Illinois Oswego, Illinois Regent Bancorp, Inc., Regent Bank, Atlanta April 28, 2000 Davie, Florida Davie, Florida Shamrock Bancshares, Inc., First Bank of Apache, Kansas City May 3, 2000 Coalgate, Oklahoma Apache, Oklahoma SouthernBank Holdings, Inc., SouthernBank, N.A., Atlanta May 10, 2000 Buford, Georgia Buford, Georgia The South Financial Group, Inc., Anchor Financial Corporation, Richmond May 22, 2000 Greenville, South Carolina Myrtle Beach, South Carolina State Bank of Slater Employee Slater Bancshares, Inc., Kansas City April 20, 2000 Stock Ownership Plan & Trust, Slater, Missouri Slater, Missouri Troy Financial Corporation, The Troy Commercial Bank, New York May 18, 2000 Troy, New York Troy, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

508 Federal Reserve Bulletin • July 2000 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date United Community Banks, Inc. North Point Bancshares, Inc., Atlanta May 15, 2000 Blairsville, Georgia Dawsonville, Georgia Independent Bancshares, Inc., Powder Springs, Georgia Dawson County Bank, Dawsonville, Georgia Independent Bank and Trust Company, Powder Springs, Georgia United Financial Holdings United Community Bank of Lisle, Chicago May 12, 2000 Corporation, Lisle, Illinois Lisle, Illinois Wachovia Corporation, Commerce National Corporation, Richmond May 17, 2000 Winston-Salem, North Carolina Winter Park, Florida National Bank of Commerce, Winter Park, Florida Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date The Bank of Kentucky Financial Fort Thomas Financial Corporation, Cleveland May 25, 2000 Corporation, Florence, Kentucky Florence, Kentucky Commercial Capital Corporation, Commercial Bank of DeKalb, Atlanta May 17, 2000 DeKalb, Mississippi DeKalb, Missouri Ellingson Corporation, Peterson Insurance Agency, Minneapolis May 25, 2000 Kenyon, Minnesota Kenyon, Minnesota Firstbank Corporation, Gladwin Land Company, Inc., Chicago April 28, 2000 Alma, Michigan Gladwin, Michigan Marquette Bancshares, Inc., Trowbridge Kieselhorst & Company, Minneapolis May 8, 2000 Minneapolis, Minnesota Inc., San Francisco, California Northland/Marquette Capital Group, Inc., Minneapolis, Minnesota National Commerce Bancorporation, Prime Financial Services, Inc., St. Louis May 9, 2000 Memphis, Tennessee Dresden, Tennessee TrustCo Bank Corp NY, Landmark Financial Corp., New York May 8, 2000 Schenectady, New York Canajoharie, New York Landmark Community Bank, Canajoharie, New York Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date First Merchants Corporation, Decatur Financial, Inc., Chicago May 4, 2000 Muncie, Indiana Decatur, Indiana Indiana Bankers Life Reinsurance Company of Indiana, Ltd., Indianapolis, Indiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments All APUCATIONS APPROVED UNDER BANK MERGER 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. Applicant(s) Bank(s) Effective Date HSBC Bank USA, Republic Bank California National May 25, 2000 Buffalo, New York Association, Beverly Hills, 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. Applicant(s) Bank(s) Reserve Bank Effective Date Bank of Colorado, Park National Bank, Kansas City May 18, 2000 Fort Lupton, Colorado Estes Park, Colorado The Community State Bank, First State Bank, Kansas City April 24, 2000 Poteau, Oklahoma Wister, Oklahoma Dacotah Bank, First National Bank, Minneapolis May 8, 2000 Aberdeen, South Dakota Hettinger, North Dakota Eastern Virginia Bankshares, Inc. Hanover Bank, Richmond April 27, 2000 Tappahannock, Virginia Mechanicsville, Virginia Southside Bank, Tapahannock, Virginia First Virginia Bank-Mountain Tri-City Bank and Trust Company, Richmond May 10, 2000 Empire, Blountville, Tennessee Abingdon, Virginia FNB Southeast, Black Diamond Savings Bank, F.S.B., Richmond May 2, 2000 Reidsville, North Carolina Norton, Virginia Harris Trust Bank of Montreal, Village Banc of Naples, Chicago May 1, 2000 West Palm Beach, Florida Naples, Florida People First Bank, People First Bank, Kansas City May 17, 2000 Hennessey, Oklahoma Elkhart, Kansas Pinnacle Bank, Pinnacle Bank, N.A., Kansas City May 8, 2000 Papillion, Nebraska Columbus, Nebraska Pinnacle Bank, Neligh, Nebraska Pinnacle Bank, N.A., Ogallala, Nebraska Pinnacle Bank, N.A., Osceola, Nebraska Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

510 Federal Reserve Bulletin • July 2000 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Folstad v. Board of Governors, No. 00-1056 (6th Cir., filed Federal Reserve Banks in which the Board of Governors is not January 14, 2000). Appeal of district court order granting named a party. summary judgment to the Board in a Freedom of Information Act case. Mann v. Greenspan, No. CIV-00-754-C (W.D. Okl., filed Fraternal Order of Police v. Board of Governors, No. April 18, 2000). Employment discrimination action by em- 1:98CV03116 (WBB)(D.D.C., filed December 22, 1998). ployee of Federal Reserve Bank. On May 10, 2000, the Declaratory judgment action challenging Board labor pracplaintiff voluntarily dismissed the Board as a party. tices. On February 26, 1999, the Board filed a motion to Bettersworth v. Board of Governors, 00-50262 (5th Cir., filed dismiss the action. April 14, 2000). Appeal of district court's dismissal of Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAK) Privacy Act claims. (S.D.N.Y., filed May 15, 1998). Action to freeze assets of Hunter v. Board of Governors, 00-CV-735 (ESH) (D.D.C., individual pending administrative adjudication of civil filed April 5, 2000). Action claiming retaliation for whistlemoney penalty assessment by the Board. On May 26, 1998, blowing activity. the court issued a preliminary injunction restraining the Albrecht v. Board of Governors, 00-CV-317 (CKK) (D.D.C., transfer or disposition of the individual's assets and appointfiled February 18, 2000). Action challenging the funding of ing the Federal Reserve Bank of New York as receiver for the retirement plan for certain Board employees. those assets. Following entry of the Board's order requiring Board of Governors v. Interfinancial Services, Ltd., No. 00-75 restitution, 85 Federal Reserve Bulletin 142 (1998), the (RCL) (D.D.C., filed February 9, 2000). Action to enforce court granted the Board's motion for judgment in the asset administrative subpoena issued by the Board. freeze action and authorized a judicial sale of the seized Toland v. Internal Revenue Service, Federal Reserve System, property. et al, No. CV-S-99-1769-JBR-RJJ (D. Nevada, filed December 29, 1999). Challenge to income taxation and Fed- Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed eral Reserve notes. On February 16, 2000, the government May 4, 1998). Appeal and cross-appeal of district court filed a motion to dismiss the action. order granting in part and denying in part the Board's Irontown Housing Corp. v. Board of Governors, No. 99-9549 motion for summary judgment seeking prejudgment interest (10th Cir., filed December 27, 1999). Petition for review of and a statutory surcharge in connection with a civil money Board order dated December 13, 1999, approving the penalty assessed by the Board. On February 24, 1999, the merger of Zions Bancorporation with First Security Corpo- court granted the Board's appeal and denied the crossration. appeal, and remanded the matter to the district court for Artis v. Greenspan, No. 1:99CV02073 (EGS) (D.D.C., filed determination of prejudgment interest due to the Board. August 3, 1999). Employment discrimination action. Sheriff Gerry Ali v. U.S. State Department, No. 99-7438 (C.D. Cal., filed July 21, 1999). Action relating to impounded FINAL ENFORCEMENT ORDERS ISSUED BY THE bank drafts. BOARD OF GOVERNORS Kerr v. Department of the Treasury, No. 99-16263 (9th Cir., filed April 28, 1999). Appeal of dismissal of action chal- Korea Exchange Bank lenging income taxation and Federal Reserve notes. Seoul, Korea Sedgwick v. Board of Governors, No. Civ. 99 0702 (D. Arizona, filed April 14, 1999). Action under Federal Tort The Federal Reserve Board announced on May 18, 2000, Claims Act alleging violation of bank supervision require- the issuance of a consent Order against the Korea Exments. The Board filed a motion to dismiss on June 15, change Bank, Seoul, Korea, its Los Angeles Agency, and 1999. its Chicago, Broadway, New York, and Seattle Branches. Hunter v. Board of Governors, No. 1:98CV02994 (ESH) The Order was issued jointly with the Federal Deposit (D.D.C., filed December 9, 1998). Action under the Free- Insurance Corporation, the California Department of Fidom of Information Act, the Privacy Act, and the first nancial Institutions, the Illinois Office of Banks and Real amendment. On April 26, 2000, the court granted the Estate, the New York State Banking Department, and the Board's motion to dismiss or for summary judgment. Washington Department of Financial Institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

511 Domestic Open Market Operations during 1999 This report was adapted from one presented to the Overview of Operating Procedures Federal Open Market Committee by Peter R. Fisher, and Practices Executive Vice President of the Federal Reserve Bank of New York and Manager of the System Open Mar- The Desk used open market operations to align the ket Account. Spence Hilton was primarily responsible supply of deposit balances held by depository institufor the preparation of this report, with the assistance tions at the Federal Reserve with the level of demand of many other members of the Markets Group at the believed consistent with maintaining the funds rate Federal Reserve Bank of New York. around its target level. Each morning the Desk considered whether open market operations were needed based on estimates of the supply of, and demand for, balances, and any operation designed to alter bal- IMPLEMENTATION OF MONETARY POLICY ances that same day was typically arranged shortly IN 1999 afterward. Estimated needs for balance adjustments in upcoming days and weeks, an assessment of pos- Directives of the Federal Open Market sible forecast errors, and current and anticipated Committee trading conditions in the federal funds markets were all considered when selecting the type and size of In 1999, the directives issued by the Federal Open operations. Market Committee (FOMC) instructed the Trading The ability of depository institutions to average Desk at the Federal Reserve Bank of New York to their holdings of balances at the Federal Reserve over foster conditions in reserve markets consistent with two-week maintenance periods to meet their reserve maintaining the federal funds rate at an average and clearing balance requirements gives them some around a specified rate, which is commonly referred flexibility in managing their accounts from day to to as the federal funds rate target. The FOMC raised day. This ability to average is an important source of the federal funds target three times during the year at elasticity in banks' daily demands for balances, limita scheduled meeting, each time by 25 basis points ing the volatility in rates that can develop when the (table 1). On the last two of these dates, the Board of Desk misestimates either the supply of or demand for Governors approved increases of equal size in the balances. Nonetheless, the funds rate will firm if the discount rate. The public announcement released after level of balances falls so low that some banks have the conclusion of the May FOMC meeting was the difficulty finding sufficient funds to cover late-day first to indicate the bias that the Committee had deficits in their Federal Reserve accounts. On the adopted in its directive. But the bias that the Commitother hand, the rate will soften if balances are so high tee adopts at any time has no direct implications for that some banks risk ending a period holding unusthe daily selection of open market operations. able excess reserve balances. The Desk weighs these possibilities every day when deciding what level of balances to leave in place. As depositories have found ways to avoid incurring reserve requirements, the 1. Changes in the federal funds rate specified in directives degree of elasticity across days has diminished, and of the Federal Open Market Committee the Desk has had to pay increasing attention to Percent daily fluctuations in the supply of and demand for Expected Associated balances. Date of change federal funds discount rate rate The effectiveness of the Desk's operating proce- November 17, 1998 4.75 4.50 dures for maintaining control over the federal funds rate rests on the existence of liquid short-term financ- June 30, 1999 5.00 4.50 ing markets. Trading in the overnight federal funds August 24, 1999 5.25 4.75 market is a critical mechanism through which the November 16, 1999 5.50 5.00 supply of balances at the Federal Reserve is distrib- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

512 Federal Reserve Bulletin • July 2000 uted among banks, while the Desk intervenes in the rate charged on loans from the special facility was set short-term market for repurchase agreements to make at 150 basis points above the FOMC's target federal most of its adjustments to the supply of these bal- funds rate. Collateral requirements were identical to ances. These two markets must be functioning effi- those on regular discount window loans, but there ciently for the current operating procedures to work were no restrictions on the use and duration of SLF effectively. loans over the life of the facility, and borrowers were In advance of the year-end, there was concern not required to seek funds elsewhere first. Subseabout whether levels of trading and intermediation in quently, the Federal Reserve Banks expanded the the financing markets around the century date change range of collateral accepted for discount window would be sufficient for the Desk's usual operating purposes. procedures to work effectively because some market At its August 24 meeting, the FOMC adopted four participants had expressed a reluctance to maintain proposals, listed below, whose purposes were to normal levels of activity in financing markets at that ensure the Desk's ability to counter potential liquidtime. The Desk also believed that the large projected ity strains in money and financing markets in the reserve deficiencies around the year-end could poten- period surrounding the century date change and to tially strain its ability to meet reserve demands with position the Desk to meet reserve shortages that its existing practices. How the Desk prepared for and potentially could far exceed the large seasonal deficarried out open market operations in the months ciencies that normally arise around each year-end. leading up to and in the days immediately surround- Several of these proposals required an amendment ing the rollover date is a major focus of this report. to the Desk's authorization for domestic open market operations, which is reprinted in appendix A. • The maximum maturity of repurchase agree- New Developments in 1999 ments (RPs) and matched sale-purchase transactions (MSPs) was permanently extended to ninety days, Several modifications were made to the practices and from the previous sixty-day limit. procedures used in the conduct of monetary opera- • A temporary expansion of the securities eligible tions. Most of these changes were designed at least in as collateral for the Desk's RPs was approved through part to maintain the Desk's ability to control effec- April 2000. To implement this decision, the FOMC tively the funds rate around the century date change. voted to suspend until April 30, 2000, several provi- On April 5, the Desk moved up its normal market sions of its "Guidelines for the Conduct of System entry time for arranging temporary operations by Operations in Federal Agency Issues," which impose about one hour. After that date, these operations were restrictions on transactions in federal agency transacusually arranged within an interval of approximately tions. The principal effect was the inclusion of pass- 10 minutes around 9:30 a.m., with the exact entry through mortgage securities of the Government time randomly chosen. The entry time was moved up National Mortgage Association, Freddie Mac, and after the compilation of data and preparation of fore- Fannie Mae, and of stripped securities of the U.S. casts for reserve factors were placed on an earlier Treasury and other government agencies. schedule. The earlier entry time allows the Desk to • The Desk was granted authority through arrange its operations at a time of day when financing April 30, 2000, to use reverse RPs in addition to markets are more active and liquid. The Desk has MSPs to absorb reserves on a temporary basis. always been prepared to depart from its normal entry • The FOMC authorized the Desk to provide a time when circumstances warranted. temporary Standby Financing Facility (SFF) through An important innovation that altered the insti- the auction of options on RPs, reverse RPs, and tutional framework within which open market opera- MSPs with the Desk for exercise no later than Janutions were conducted was made on July 20, when ary 2000. Under this authority, the Desk sold options the Federal Reserve Board voted to establish a on overnight RPs for the period December 23, 1999, Century Date Change Special Liquidity Facility through January 12, 2000. (SLF) for lending to depository institutions from October 1, 1999, through April 7, 2000. The facility The Desk established triparty settlement arrangewas designed to help ensure that depository institu- ments with two clearing banks for valuing and tions in sound financial condition would have ade- accepting delivery of collateral on its repurchase quate liquidity to meet any unusual demand in the agreements. The Desk has the discretion to use whatperiod around the century date change. The interest ever settlement procedure best meets its purposes. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 513 But as a practical matter, triparty agreements were 2. Factors affecting the supply of and demand for balances needed to facilitate the pricing and valuing of at the Federal Reserve mortgage-backed securities on RPs. Billions of dollars On October 8, the Desk expanded the information Effect of change it publicly disclosed immediately following each tem- Levels on the final day on the supply of or demand for of the year porary open market operation in order to make these IItteemm balances at the Federal Reserve operations more transparent. The Desk began to Dec. 31, Dec. 31, Dec. 31, release data on the total volume of propositions sub- 1998 1999 1997 1998 1999 mitted (in addition to the total volume of accepted FFFFaaaaccccttttoooorrrrssss aaaaffffffffeeeeccccttttiiiinnnngggg tttthhhheeee propositions, which was already being released), the ssssuuuuppppppppllllyyyy ooooffff bbbbaaaallllaaaannnncccceeeessss weighted-average rate on accepted propositions, the CCCCuuuurrrrrrrreeeennnnccccyyyy iiiinnnn cccciiiirrrrccccuuuullllaaaattttiiiioooonnnn 482.4 517.5 628.1 -35.1 -110.6 high and low rates submitted, and the stop-out rate. FFFFoooorrrreeeeiiiiggggnnnn ccccuuuurrrrrrrreeeennnnccccyyyy 16.6 17.5 14.4 .9 -3.0 SSSSDDDDRRRRssss 9.2 9.2 6.2 .0 -3.0 FFFFoooorrrreeeeiiiiggggnnnn RRRRPPPP ppppoooooooollll 17.0 20.9 39.2 -3.9 -18.3 FFFFllllooooaaaatttt aaaannnndddd FFFFRRRRSSSSAAAA .6 1.8 -.2 1.1 -2.0 TTTTrrrreeeeaaaassssuuuurrrryyyy bbbbaaaallllaaaannnncccceeee 5.4 6.1 28.4 -.6 -22.3 AAAAllllllll ooootttthhhheeeerrrr iiiitttteeeemmmmssss 4.4 1.0 FACTORS AFFECTING THE SUPPLY OF AND NNNNeeeetttt cccchhhhaaaannnnggggeeeessss iiiinnnn REQUIRED DEMANDS FOR FEDERAL RESERVE ffffaaaaccccttttoooorrrrssss aaaaffffffffeeeeccccttttiiiinnnngggg ssssuuuuppppppppllllyyyy -33.3 -158.9 BALANCES Averages for the maintenance period ending The specific open market operations selected by the Dec. 31, Dec. 30, Dec. 29, Desk are driven mostly by the behavior of factors that 1997 1998 1999 affect the supply of balances held by depository insti- FFFFaaaaccccttttoooorrrrssss aaaaffffffffeeeeccccttttiiiinnnngggg tttthhhheeee tutions at the Federal Reserve and by the levels ddddeeeemmmmaaaannnndddd ffffoooorrrr bbbbaaaallllaaaannnncccceeeessss RRRReeeeqqqquuuuiiiirrrreeeedddd rrrreeeesssseeeerrrrvvvveeeessss ................ 47.4 44.0 40.9 -3.4 -3.1 of these balances that depository institutions are RRRReeeeqqqquuuuiiiirrrreeeedddd cccclllleeeeaaaarrrriiiinnnngggg required to hold each two-week maintenance period. bbbbaaaallllaaaannnncccceeeessss 6.7 6.6 7.4 .0 .8 AAAApppppppplllliiiieeeedddd vvvvaaaauuuulllltttt ccccaaaasssshhhh ............ 37.7 36.7 37.3 .9 -.6 The difference between the supply of balances and MMMMEEEEMMMMOOOO:::: their demand is a prime determinant of the federal TTTToooottttaaaallll rrrreeeeqqqquuuuiiiirrrreeeedddd bbbbaaaallllaaaannnncccceeeessss 16.4 13.9 11.0 -2.5 -2.9 funds rate, and open market operations are actively used to maintain an appropriate supply of balances NOTE. Changes in factors affecting the supply of balances are expressed in terms of their effect on supply. Most as-of adjustments are treated as a supply relative to demand. Large permanent changes in the factor in the "all other items" category in this table, except float related as-ofs supply of or demand for balances at the Federal (FRSA). Changes in factors affecting the demand for balances are expressed in terms of their effect on demand. Reserve have typically been addressed with outright market transactions, which permanently affected the size of the System Open Market Account portfolio. Changes in Currency in Circulation during 1999 Shorter-term movements in the supply of or demand for balances are mostly addressed with temporary Over 1999, currency in circulation, which includes operations, with the expected duration and degree of both currency in the hands of the public and banks' uncertainty about these shorter-term movements be- vault cash holdings, expanded nearly $100 billion, ing important determinants of the maturity mix of measured by the change from the final maintenance temporary operations. period of 1998 to the final period in 1999, far surpassing any previous annual change (chart 1). By comparing the level of currency at each point in time in 1999 The Behavior of Factors Affecting the Supply to its level at the corresponding time in the preceding of Federal Reserve Balances year, seasonal effects normally experienced around each year-end largely disappear, and the portion of In 1999, the levels of several factors—currency, the currency growth in 1999 linked to the century date Treasury balance at the Federal Reserve, and the change versus other factors can be approximated foreign RP pool—were profoundly affected by tem- (chart 2). Through the first nine months of the year, porary demands associated with the century date currency in circulation rose steadily at a pace slightly change. These century date change (CDC) influences above that of one year earlier. The accelerated growth lifted the values of these factors at the year-end well in currency during this time appears to have occurred above their corresponding levels of one year earlier, too far ahead of the year-end to have been signifibut these effects were temporary. Apart from cur- cantly influenced by CDC-related concerns. Instead, rency, permanent movements in factors were rela- it seems to have reflected continued strong undertively modest in absolute terms (table 2). lying growth in demand. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

514 Federal Reserve Bulletin • July 2000 1. Currency in circulation: maintenance-period averages Billions of dollars 1999 2000 NOTE. Data points are identified by maintenance-period end dates in 1999. Observations from earlier years are from the corresponding maintenance periods in those years. Beginning in October, CDC-related demands not by as much as originally thought possible. The appear to have become pronounced, and currency increase in currency from September 30, 1999, in circulation began to rise more rapidly above the through its seasonal peak on December 30, 1999, was levels of one year earlier. Most of the acceleration in $60 billion greater than the change from Septem- October and November was in currency held in bank ber 30, 1998, to the seasonal peak (on December 29, vaults, and not in currency held by the public. Banks 1998) during the previous year. To facilitate forecastbegan a gradual buildup of their holdings in antici- ing of currency, starting in early December the Cash pation of a possible surge in the public's demand in Departments at the Federal Reserve Banks, which the final weeks of the year. The run-up in currency in closely monitor the daily inflows and outflows of circulation continued right up to the eve of the year- currency, began to provide the Desk with advance end, then quickly began to reverse. Holdings of cur- estimates of these flows for use in preparing currency rency by the public did surge very late in the year, but forecasts. 2. Total currency in circulation, total held by the public, and total vault cash: differences from one year earlier in computation-period averages Billions of dollars NOTE. Observations are averages over two-week computation periods that ended on the indicated date; amounts of vault cash and public holdings of currency are not available on a maintenance-period basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 515 3. Treasury's cash balances at the Federal Reserve and in TT&L deposits around the year-end, December 3, 1999-January 14, 2000 Daily levels, billions of dollars 12/3 12/7 12/9 12/13 12/15 12/17 12/21 12/23 12/27 12/29 12/31 1/4 1/6 1/10 1/12 1/14 1999 2000 Temporary Changes in the Treasury Balance sources. In the week leading up to the 1999 year-end, and the Foreign RP Pool around the Century cuts in available TT&L capacity amounted to nearly Date Change $25 billion (chart 3). These capacity cuts, combined with high levels of the Treasury's total cash holdings, While currency in circulation was on its final ascent helped push up the size of the Treasury's Federal in the days leading up to the year-end, the Treasury Reserve balance in the days leading up to the yearbalance at the Federal Reserve and the internal for- end, thereby draining reserves. eign RP investment pool also rose sharply, then The Desk anticipated these developments, although quickly receded in the days immediately after the there was always considerable uncertainty about the year-end. timing and magnitudes of the various cash flows that In August, the Treasury first announced its inten- could affect the size of the Treasury's balance at the tion to target, for precautionary purposes, an above- Federal Reserve on any given day. As a general rule, normal level of total cash balance holdings on the the size of the Treasury balance at the Federal year-end to meet potential fiscal obligations. The Reserve is more predictable when at least a modest initial year-end target balance was $80 billion (later portion of TT&L capacity remains unused. Unused pared to $70 billion), a level that is roughly twice the capacity is available to absorb some of the unanticinormal level of holdings on year-end dates. The pated portion of the Treasury's net cash inflows, Treasury built up its cash position over the final which would otherwise spill over into the Federal months of the year by issuing several cash manage- Reserve account and thereby unexpectedly drain ment bills and increasing the sizes of its regularly reserves. To maintain a greater degree of predictissued bills, and it ended the year with total cash ability in the daily levels of the Treasury's Federal holdings of $83 billion. Reserve account, in the week leading up to the year- Under normal circumstances, Treasury staff work end, the Desk worked closely with Treasury staff to with the Desk to target a daily cash balance of about target a level of balances in the Treasury's Federal $5 billion in its account at the Federal Reserve, with Reserve account that would preserve a protective that target increasing to about $7 billion on and cushion of unused TT&L capacity. Roughly $5 bilfollowing important tax dates. Remaining cash is lion of TT&L capacity remained unused during those kept on deposit in special collateralized Treasury days. In the absence of this approach, the actual Tax & Loan (TT&L) accounts at commercial banks. Treasury balance at the Federal Reserve might have However, many participants in the TT&L program been several billion dollars less on those days, but routinely cut their maximum TT&L capacity by with- more critical from the Desk's perspective, those levdrawing eligible collateral ahead of important finan- els would have been less predictable. The Treasury's cial statement dates and on occasions when they total cash holdings peaked on December 29 at a level anticipate receiving high levels of funding from other of $94 billion (higher than the year-end level), while Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

516 Federal Reserve Bulletin • July 2000 the highest balance reached in the Federal Reserve densed time frame, but one that unwound just as account was $28 billion on December 31.1 quickly. Between December 15 and December 31, The foreign RP pool, an overnight investment movements in these factors drained $70 billion from facility that the Federal Reserve Bank of New York the supply of balances (chart 4). This drain came on offers to foreign central banks and international insti- top of the huge reserve deficiencies that had already tutions, also increased sharply ahead of the year-end been created by seasonal and CDC-related moveas many participants placed above-normal cash bal- ments in currency over the preceding two months. ances temporarily with the Federal Reserve for pre- But by mid-January, most of these movements had cautionary purposes. The total size of the RP pool been reversed, and currency remained on a sharply fluctuated through most of the year in a range around downward path. $17 billion, but in the final days it rapidly rose to a record high of $39 billion on the year-end, draining reserves, before quickly receding. To Foreign Currency and Special Drawing Rights improve the predictability of the daily RP pool, the Federal Reserve Bank of New York made some tem- Declines in these two categories over the year comporary changes in the administration of this facility in bined to drain about $6 billion of balances. On anticipation of heightened participation around year- March 18, the Federal Reserve's holdings of foreign end. It tightened its requirements for advance notifi- currency fell a net $3.3 billion, reflecting the sale of cation of investments by foreign customers and left about $4.8 billion of euros to the Treasury's itself more scope to choose between investing unex- Exchange Stabilization Fund (ESF) in exchange for pected placements in the RP pool, which would drain yen and dollars. This re-balancing of foreign curreserves, or in alternative facilities that would be rency portfolios was designed to make the dollar reserve neutral. values of the euro and yen holdings of the Federal Over the last two weeks of the year, the climactic Reserve and the ESF approximately equal. Also durrun-up in currency, rise in the Treasury balance, and ing 1999, the ESF redeemed $3 billion of Special increase in the foreign RP pool combined to create an Drawing Rights certificates it had issued to the Fedunprecedented drain on reserve supplies in a con- eral Reserve. 1. Neither was a record. Higher cash positions had been reached during previous April tax seasons. Treasury's highest total cash posi- Volatility and Predictability of Key Factors tion was $100 billion reached in April 1998 (with a $42 billion balance at the Federal Reserve the same day), and the highest-ever Affecting Supply Federal Reserve balance was $54 billion reached in April 1997 (with a total balance of $89 billion the same day). The Treasury's maximum Excluding the final maintenance period of 1999 Federal Reserve balance over the April 1999 tax season was a fairly unremarkable $10 billion, with a peak general balance of $76 billion. (period ended December 29), the revisions to initial 4. Effect on reserve deficiencies of movements of key factors, December 15, 1999-January 12, 2000 Daily levels, billions of dollars Sum of three factors 12/15 12/16 12/17 12/20 12/21 12/22 12/23 12/24 12/27 12/28 12/29 12/30 12/31 1/3 1/4 1/5 1/6 1/7 1/10 1/11 1/12 1999 2000 NOTE. Data are benchmarked to their December 15 values: a positive value indicates that movements in a factor since December 15 drained reserve balances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 517 3. Maintenance-period revisions to initial estimates movements in most factors were much higher than at of key determinants of reserve balance supply, 1997-99 other times during 1999. The efforts to improve the Millions of dollars predictability of currency and the Treasury balance 1999 did not prevent some deterioration in the daily fore- Factors affecting supply 1997 1998 excluding 1999 cast misses for these factors, although the increase in of reserve balances Dec. 29 period the misses was proportionally much smaller than the Currency in circulation 361 500 619 793 rise in volatility for each of these factors around the Treasury balance 1,002 506 296 383 century date change. For currency, the uncertainty Foreign RP pool 500 381 506 608 Float 227 312 331 341 about its behavior in the days immediately after the Net factor revision1 1,413 885 1,073 1,463 year-end centered on the pace at which it would NOTE. Figures are average absolute revisions to initial estimates of be returned to the Federal Reserve, which generally maintenance-period-average values. Projection errors are based on estimates by the staff of the Federal Reserve Bank of New York. proved to be much faster than first anticipated. 1. Net revisions to all factors that affect the supply of reserves. Data before 1999 also include revisions to initial estimates of applied vault cash. Required Demands for Federal Reserve Balances period-average estimates of currency tended to be somewhat greater in absolute terms than in previous Total required balances is an accounting yardstick years, reflecting the large and uncertain movements that measures the two-week average level of balances in that factor related to the century date change depository institutions must hold at the Federal (table 3). Average revisions to other key factors for Reserve in a maintenance period to meet all of their most of the year were closer to levels experienced in requirements. Total required balances is the sum of previous years, and in the case of the Treasury balrequired reserve balances plus required clearing balance, smaller. But the revisions to the initial periodances; required reserve balances is defined as the average estimates of several key factors in the final portion of reserve requirements not met with applied maintenance period ahead of the year-end were very vault cash.2 Total required balances represents the large, which significantly raised the yearly average principal source of banks' demand for balances at the revisions for several factors. Federal Reserve. Total required balances also is used Daily volatility of currency was higher in 1999, to calculate excess reserves, which is measured as the again largely reflecting CDC-related developments, whereas daily movements in other factors were about the same on average or were lower than in the preceding year (table 4). Daily forecast misses, even for 2. As-of adjustments also affect the level of balances depository currency, were not remarkably different in 1999 from institutions must hold in their Federal Reserve account to meet the preceding year. However, over the two mainte- maintenance-period requirements, but their influence is usually relanance periods that surrounded the year-end, cover- tively small and is not reflected in this definition of total required balances. Instead, they are treated in this report in the conventional ing the days from December 16 through January 12, manner as a factor affecting the supply of reserves. 4. Daily changes and forecast misses in key determinants of reserve balance supply, 1997-January 12, 2000 Millions of dollars 1997 1998 1999 Dec. 16. 1999-Jan. 12. 2000 FFaaccttoorrss aaffffeeccttiinngg ssuuppppllyy of reserve balances Average Maximum Average Maximum Average | Maximum Average Maximum Daily change Currency in circulation 679 2,474 709 2,788 896 5,379 3,548 8,087 Treasury balance 1,484 17,393 1,413 22,571 887 7,446 4,226 11,323 Foreign RP pool 542 6,989 500 6,193 572 6,049 2,383 6,049 Float 548 4,605 791 5,449 693 6,217 619 1,600 Net value1 1,896 18,366 1,751 23,727 1,946 17,629 7,875 20,188 Daily forecast miss Currency in circulation 200 980 217 999 234 1,361 585 1,648 Treasury balance 726 5,969 620 3,407 608 3,284 1,127 2,439 Foreign RP pool 203 1,433 150 935 224 1,817 198 497 Float 312 3,433 383 2,386 393 4,274 336 700 Net value1 848 5,991 744 3,664 878 5,005 1,135 2,482 NOTE. Figures are averages or maximums of absolute values. Forecast misses 1. Reflects offsetting movements and forecast misses of the aggregate of the are based on estimates by the staff of the Federal Reserve Bank of New York. four factors listed. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

518 Federal Reserve Bulletin • July 2000 difference between the aggregate supply of balances Required Reserve Balances: Required Reserves at the Federal Reserve and total required balances.3 Less Applied Vault Cash In recent years, movements in the level of total required balances have been relatively modest in Required reserve balances have been on a declining absolute terms and so have not had much influence trend in recent years, as programs by depository on the size of the System Open Market Account institutions to "sweep" reservable liabilities into nonportfolio. Since the reversion to lagged reserve reservable liabilities have led to a significant decrease accounting in 1998, the possibility of revisions to in required reserves, while levels of applied vault reserve requirements and applied vault cash has also cash have remained fairly steady. In 1999, sweep ceased to be an important consideration in the selec- programs continued to expand, but at a less rapid tion of specific temporary open market operations. pace than in 1998.4 Most of the associated decline in However, declines in total required balances over required reserves was concentrated at banks whose recent years have accumulated to the point at which required reserve balance already was zero (that is. the typical end-of-day level of balances that the Desk "nonbound" institutions) or at some larger instituhas aimed to provide through its open market opera- tions that preserved a small positive required reserve tions has become a consideration in its deliberations. balance by taking steps to reduce their applied vault The implications of low levels of total required bal- cash level in a parallel fashion. As a result, through ances for excess reserve demands and for the behav- much of the year sweep activity had only a small net ior of the federal funds rate have been discussed effect on the absolute level of required reserve balin past reports, and new developments for 1999 are ances, although the decline represented a significant presented later in this report in the section "Reserve portion of the remaining total (chart 5). Management, Excess Reserves, and the Federal Late in the year, applied vault cash rose, reflecting Funds Rate." the buildup in total vault cash ahead of the century date change. In absolute terms, the rise in applied vault cash was small measured against the size of the buildup in total vault cash, because most of this buildup occurred at nonbound banks that had already 4. In the twelve months ending in December 1999, the additional 3. For the calculation of reserve measures, required clearing bal- amount of deposits initially swept by banks totaled $50 billion, which ances is scored negatively against nonborrowed reserves, while was mostly accounted for by banks expanding existing sweep proapplied vault cash is counted positively toward nonborrowed reserves. grams. The increase over the prior twelve-month period was $64 bil- Thus, excess reserves may also be (and usually is) calculated as the lion. Sweeps expanded $114 billion over the twelve months ending in total supply of reserves minus reserve requirements. December 1996, the largest change over any calendar year. 5. Required reserve balances: maintenance-period averages of required reserves less applied vault cash, January 14, 1998-January 12, 2000 Billions of dollars 1/14 2/11 3/11 4/8 5/6 6/3 7/1 7/29 8/26 9/23 10/21 11/18 12/16 1/13 2/10 3/10 4/7 5/5 6/2 6/30 7/28 8/25 9/22 10/20 11/17 12/15 1/12 1998 1999 2000 NOTE. Maintenance-period end dates from 1998 and 1999. The values for ments. Under lagged reserve accounting rules, these vault cash levels were held vault cash shown here and in chart 6 are average holdings for two-week about four weeks earlier than the date indicated, maintenance periods, which are eligible to be used to meet reserve require- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 519 6. Vault cash: maintenance-period averages of total, applied, and surplus, January 14, 1998-January 12, 2000 Billions of dollars Applied vault cash 1/14 2/11 3/11 5/6 6/3 7/1 7/29 8/26 9/23 10/21 11/18 12/16 1/13 2/10 3/10 4/7 5/5 6/2 6/30 7/28 8/25 9/22 10/20 11/17 12/15 1/12 1998 1999 2000 NOTE. Maintenance-period end dates from 1998 and 1999. See general note Institutions and the Monetary Base," which exclude holdings by institutions that to chart 5. The total and surplus vault cash values here correspond to data from had no reserve requirements. For these reasons, the vault cash data in charts 5 the Board's weekly H.3 statistical release, "Aggregate Reserves of Depository and 6 are not directly comparable with the vault cash values plotted in chart 2. met their reserve requirements with vault cash hold- balances have tracked changes in levels of required ings (chart 6). But again, the associated decline in reserve balances (chart 7). In recent months, the required reserve balances, while modest in absolute balances banks hold to meet clearing balance requireterms, represented a significant share of the total ments, which are not counted as reserves, roulevel. By late in the year, required reserve balances tinely surpassed the amounts held to meet reserve had fallen to historic lows of less than $4 billion, requirements. compared with levels of $7 billion late in 1998 and more than $10 billion in year-end periods just three SUMMARY OF OPEN MARKET OPERATIONS years ago. IN 1999 Required Clearing Balances and Desk Activity Affecting the System Open Total Required Balances Market Account Portfolio Required clearing balances have been relatively In 1999, the portfolio of domestic securities in the steady in recent years, so changes in total required System Open Market Account (SOMA) expanded by 7. Total required balances: maintenance-period averages of required reserve balances plus required clearing balances, January 14, 1998-January 12, 2000 Billions of dollars Total required balances J I I I I I I I L I I I I J I I I I L 1/14 2/11 3/11 5/6 6/3 7/1 7/29 9/23 10/21 11/18 12/16 1/13 2/10 3/10 4/7 5/5 6/2 6/30 7/28 8/25 9/22 10/20 11/17 12/15 1/12 1998 1999 2000 NOTE. Maintenance-period end dates from 1998 and 1999. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

520 Federal Reserve Bulletin • July 2000 System open market account portfolio of Treasury and federal agency securities, 1980-99 Billions of dollars Levels • Treasury bills 500 • Federal agencies • Treasury coupons 400 300 200 100 Changes I I L J L J I L 1980 1985 1990 1995 NOTE. Year-end values. a record $44 billion, surpassing the previous record that came late in the year (chart 9). Through the first of $41 billion set in 1997. At the end of the year, the half of the year, outright market purchases totaled SOMA stood at $517 billion (chart 8).5 All of the $30 billion, a record amount for any first half-year expansion was achieved through outright purchases period, while total purchases in the final quarter of of Treasury securities in the market; there were no the year were not remarkable by comparison with purchases made from foreign accounts. In total, the past years.6 Desk bought $45 billion (par value) of securities in The Desk continued to segment its market purthe market in 1999. The amount of redemption activ- chases of Treasury coupon issues into separate ity was small, and there were no sales of securities. tranches covering different portions of the yield As has been the case for several years, the expan- curve, with one operation restricted to all outstanding sion of the SOMA portfolio in 1999 was needed Treasury inflation-indexed securities (TIIS). Altolargely to offset the drain on the supply of balances in gether, fifty-one market operations were arranged in depositories' Federal Reserve accounts created by the 1999 (on forty-five days). For the second consecugrowth of currency over the year. The Desk's out- tive year, the Desk purchased no bills in the market right market purchases were timed to keep pace with because it believed that SOMA holdings already repthe rapid, permanent portion of the expansion of resented a significant share of the total supply of bills currency that was evident throughout the year. Out- outstanding. right activity was not heavily influenced by the tem- A portion of the original maturity seven-year notes porary buildup in currency linked to CDC demands held in the SOMA portfolio that matured in 1999 was redeemed. The Desk held $2.9 billion of such notes 5. All figures on SOMA holdings in this report are par values that matured during the year, all on dates when new unless otherwise stated and exclude any securities held on RPs out- TIIS settled. Maturing notes equal in value to 5 perstanding. Reported Treasury bill holdings include those sold to foreign accounts under MSPs. Reported changes and levels of Treasury coupon securities do not include the accrual of compensation for the effects of inflation on the principal of inflation-indexed issues. At the 6. The $8 billion of long-term RPs arranged in December 1998 that end of 1999, these accruals totaled $228 million, up from $79 million matured shortly after that year-end contributed to the need for outright at the end of 1998. activity early in 1999. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 521 9. Purchases and redemptions of Treasury coupons and bills, 1997-99 Billions of dollars • Coupons • Bills — 2 r i i i i i I i i i i i i i i i 1997 1998 1999 NOTE. Data are maintenance-period averages. Purchases (in the market and from foreign accounts) are positive values; redemptions are negative values. cent of TIIS issued were exchanged for TIIS, and the degree, this increased use reflected the extraordinary remainder of maturing notes, totaling $1.4 billion, reserve deficiencies the Desk faced that were linked was redeemed. With the exception of these maturing to the century date change and were expected to be seven-year notes, all maturing Treasury coupon secu- temporary in nature. The value of RPs outstanding in rities were exchanged for new notes issued on the the maintenance periods of 1999 averaged $15 bilcorresponding maturity date. On each such date when lion, compared with $6 billion in the previous year more than one Treasury auction settled, the maturity and $9 billion in 1997 (chart 10).7 But the huge levels distribution of newly acquired issues was propor- of outstanding RPs in the final months of the year tional to the total amounts issued. As it has done accounted for much of the increase in this average in since mid-1997, the Desk redeemed all maturing 1999; RPs outstanding through September averaged holdings of federal agency securities, $157 million $8 billion. The number of RPs arranged in 1999 altogether, which left $181 million of agency hold- totaled 244, also up from the previous year's total of ings in the SOMA at the end of the year. 208, then a record (chart 11). The Desk used MSPs The buildup in holdings of Treasury coupon securi- relatively infrequently. ties brought the average maturity of all Treasury The most commonly chosen maturity on all RPs issues in the SOMA portfolio up to fifty months by remained one business day (which includes RPs that the end of 1999, three months higher than one year also cover a weekend or holiday), of which 147 were earlier. The percentage of all outstanding Treasury arranged in 1999. This maturity is particularly useful coupon issues that were held in the SOMA portfolio for addressing marginal changes in reserve supply increased to 12 percent, from 10 percent one year and demand from day to day and for dealing with the earlier, reflecting the large expansion in the value of uncertainty inherent in the forecasts. The Desk has coupon issues in the SOMA portfolio and declining relied on these single-business-day RPs over the past net Treasury coupon issuance. The percentage of three years much more than it had previously.8 total outstanding Treasury bills held in the SOMA One significant innovation in 1999 was the Desk's portfolio at year-end slipped to 29 percent, from increased reliance on longer-term RPs. Although any 32 percent a year earlier. But this decline largely maturity division between long-term and short-term reflected the increased supply of bills issued by the RPs may be somewhat arbitrary, a convenient distinc- Treasury to build up temporarily its cash holdings for tion can be drawn at fifteen days, because the reserve the year-end. effect of RPs with this maturity or longer by defini- Temporary Open Market Operations 7. This average covers the twenty-six maintenance periods ending on December 29, 1999. The first part of the period ending January 13, Frequency of Temporary Open Market Operations 1999, includes some dates from 1998, and the average of RPs outstanding from the first few periods of 1999 reflects the reserve effect of some long-term RPs arranged in December 1998. In size and in frequency, the Desk greatly expanded 8. In recent years, the Desk has greatly curtailed its use of withits use of temporary operations in 1999. To a large drawable term RPs, and in 1999 none were arranged. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

522 Federal Reserve Bulletin • July 2000 10. Reserve effect of temporary operations, 1997-99 Levels, billions of dollars • Shorter-term RPs (less than 15 days) Period ended 1/12/00 • Longer-term RPs (15 days and longer) • MSPs 60 Average for periods Average for periods Average for periods ending 1/13/97-12/29/97 ending 1/12/98-12/30/98 ending 1/13/99-12/29/99 u = $9.3 milliion = $5.7 billion = $15.3 billion — 40 — 20 I I I I M I I I I II 1 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I 1997 1998 1999 2000 NOTE. Data are maintenance-period averages. tion must fall in more than one maintenance period. to await a complete set of reserve estimates before Operations that carry a maturity of fourteen days or executing these long-term RPs, because they usually less have almost always been used to address reserve were not used to meet all of the reserve shortage shortages within a single maintenance period. In expected for the day on which they were arranged. December 1998, three such long-term operations The Desk always remained prepared to adapt to cirwere arranged, to help address large seasonal reserve cumstances and depart from these standard practices deficiencies around that year-end period.9 In 1999, a as needed, which in particular it often did in the total of fifteen such long-term operations were ar- period around the year-end. On several occasions, ranged, twelve of them in the final quarter of the year shorter-term RPs were arranged earlier in the mornand maturing in January or February 2000. ing, while some long-term RPs were arranged at the The Desk's practice remained to arrange tempo- usual market entry time. rary operations at one preset time of day. In April, Six RPs with forward settlement dates were this normal market entry time up was moved up arranged in 1999. A three-day forward RP executed one hour to around 9:30 a.m. Longer-term RPs were in June to cover the June quarter-end was the first usually arranged at 8:30 a.m. There was no need forward operation arranged since December 1990. The remaining five operations were arranged in December 1999 and put reserves in place over the 9. Until November 1998, the FOMC authorized RPs only of fifteen year-end. Each of these operations covered a date days or less. At that time the maximum maturity was increased to when a very large reserve need was anticipated, but sixty days, and in August 1999, to ninety days. 11. Temporary operations, by type, 1996-99 Number One-business- Term RPs less Term RPs 15 days One-business-day Term MSPs day RPs than 15 days and longer MSPs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 523 one for which the Desk was not confident it would sizes. On triparty operations, dealers can substitute receive enough propositions if it waited until that day collateral on outstanding RPs on a daily basis (within to arrange operations to cover the entire estimated a given collateral class as described below), whereas reserve deficiency. Forward RPs were also used to rights of substitution are limited on the Desk's help establish a visible market presence ahead of delivery-versus-payment operations.10 Finally, propodays when rate pressures in financing markets might sitions on triparty RPs are valued in money amounts, be expected to be particularly intense, with the intent not par amounts as is the case on delivery-versusto reduce some of the market's uncertainty about the payment operations. This change effectively elimi- Desk's commitment to provide adequate liquidity. nated the reserve projection error associated with the Use of these operations, however, remained limited difference between the money and par amounts of by the uncertainty associated with advance reserve selected propositions. projections. Reflecting these advantages, the total coverage The Desk arranged two RPs that matured on Good ratio—the ratio of total propositions to accepted Friday (April 2), a day that financing markets are propositions—on triparty RPs averaged 6-to-l, comtraditionally closed, because of a large projected pared with an average ratio of 4-to-l on deliverydecline in reserve needs that day from the preceding versus-payment RPs arranged over the preceding day. Dealer participation was minimal, and the Desk year, even as the size of outstanding RPs grew signifiwas not able to arrange operations of the desired size. cantly over the fourth quarter.11 Over the past five Similarly, the Desk arranged an RP on December 24, years, there were only a handful of occasions when a date for which the Bond Market Association had the Desk wanted to add more reserves than it was recommended that financing markets be closed. able to because of insufficient propositions by deal- Dealer participation was again low, but because of ers, but the expanded collateral pool combined with the proximity of the date to the year-end and the the earlier entry time and the attractiveness of triparty Desk's advance indication of its possible desire to operations for dealers have minimized this risk. There arrange an operation on that day, propositions were were no occasions in 1999, apart from the RPs that sufficient to cover the desired size of the operation. matured on Good Friday, when total propositions on The Desk sold options on overnight RPs to dealers an RP fell short of the intended size of the operation. as part of its CDC reserve management strategy. As it Structurally, almost all RPs executed after Octoturned out, financing rates did not reach levels that ber 6 were arranged as three separate, simultaneous triggered the exercise of any of the options. Conse- operations, each distinguished by the class of collatquently, they had no effect on the number of RPs eral accepted. In one operation, only Treasury collatarranged during the year or on reserve supplies. The eral could be submitted, in a second operation straight detailed structure of the options and the role they agency debt could be pledged (in addition to Treaplayed in the Desk's reserve management strategy sury collateral), and in the third operation mortgagearound year-end are described later in the section backed collateral (in addition to the other two types) "Reserve Management around the Century Date could be submitted. But for purposes of this report, Change." these separate operations are counted as different tranches of a single RP. Only three exceptions were made to this practice in 1999: In late December, three Triparty RPs with the Expanded Pool of Eligible forward triparty RPs were arranged that included Collateral just one tranche on which all collateral types were eligible. On October 6, the Desk began arranging RPs that The multi-tranche approach gave the dealers the accepted the expanded pool of collateral under its opportunity to price separately their repo propositemporary authorization and that settled under tri- tions according to the type of collateral involved. In party arrangements established at two clearing banks. determining what mix of collateral among the three All RPs subsequently arranged in 1999 took this form. 10. The Desk offers no right of substitution on deli very-versus- Accepting a broader pool of collateral and settling payment RPs with terms of less than fifteen days; it offers one right of substitution on RPs with terms of fifteen to thirty days and two rights RPs under triparty arrangements had several benefits. of substitution on RPs of more than thirty days. Expanding the types of securities accepted as collat- 11. All RPs with terms that crossed the year-end date, including all eral on RPs, most importantly to include mortgage- forward and long-term RPs, were excluded from this calculation to backed pass-through securities, helped ensure that the eliminate any possible influence of year-end distortions on the level of propositions. Still, shifting reserve and financing conditions make this Desk could address reserve shortages of even larger comparison only suggestive. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

524 Federal Reserve Bulletin • July 2000 types to accept, the Desk used a relative cost method. 12. Distribution of collateral accepted on Desk RPs It used market quotes on current RP rates of the relevant term for each of the three different collateral | Treasury collateral types as benchmarks for assessing the relative value I | Federal agency collateral of the propositions it received. Thus, for each RP, the H Mortgage-backed securities allocation of accepted propositions among the three ^ € collateral categories was "market neutral" with 28% 72% 40% 60% respect to then-existing market rates. Previously, under the delivery-versus-payment settlement format, the Desk made no distinction between Treasury and federal agency debt in its > selection procedures. Given the modestly higher B RP rates at which agency securities are typically financed, these propositions had begun to crowd out 1998:Q1-1998:Q3 1998:04-1999:Q3 Treasury securities on RPs, placing those dealers who had been seeking to finance Treasury securities with the Desk at a comparative disadvantage. Technical limitations in existing processing systems make it impractical for the Desk to execute two 1999:Q4 1999:Q4 multi-tranche operations with different maturities Short-term RPs Long-term RPs simultaneously. As a result, when the Desk wanted to less than 15 days 15 days or more arrange two RPs with different maturities around the NOTE. Each graph shows the average of the distributions of accepted collatsame time, in the announcement sent to dealers solic- eral on all operations during the corresponding time period. Data from 1999:Q4 for short-term operations exclude forward RPs and operations that crossed the iting propositions on the first operation, the Desk also year-end. indicated its intention to arrange a second operation as soon as the selection process for the first operation was completed. long-term RPs, the proportion of Treasury securities The expansion of types of collateral accepted on pledged as collateral during the fourth quarter, most Desk operations and changes in selection methodol- of which spanned the year-end, was less than the ogy altered the distribution of collateral held under proportion accepted on short-term RPs. This disparity RPs (chart 12). For many years, dealers had delivered partly reflected dealers' caution about committing mostly Treasury securities on Desk RPs. In October Treasury collateral for terms over the year-end amid 1998, the rate at which federal agency securities expectations that Treasury collateral could become could be financed in the RP market rose far above the relatively scarce at that time and their desire to secure financing rate for Treasury collateral, reflecting rela- long-term financing first for their non-Treasury tive risk preferences in the market at the time. This holdings. gap made many dealers aware of the advantages of delivering agency collateral on Desk RPs because the Desk did not differentiate between collateral types RESERVE MANAGEMENT, EXCESS RESERVES, in its selection and pricing. As a result, the relative AND THE FEDERAL FUNDS RATE proportion of agency securities held by the Desk on outstanding RPs jumped in the final quarter of 1998, General Developments in 1999 and it remained high even after relative agency and Treasury financing rates returned to normal levels. In recent years, declines in the level of total required When the Desk started to accept mortgage-backed balances had been linked to somewhat greater volasecurities on its RPs in the fourth quarter of 1999, it tility in the federal funds rate and higher levels of also adopted its market neutral relative price method excess reserves. In 1999, the volatility of the federal for selecting propositions according to the type of funds rate was not appreciably greater, and there was collateral pledged. This change in selection proce- no sign of a need for increased period-average levels dure likely contributed to an increase in the propor- of excess reserves, despite the further declines in tion of Treasury collateral accepted on Desk RPs total required balances. relative to what it had been over the preceding year General patterns of daily volatility in the federal (but still below where it had been in earlier years), funds rate in 1999—measured by median and avereven with the wider pool of eligible collateral. On age values of daily absolute deviations of effective Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 525 5. Deviations of the daily effective federal funds rate from target and the daily standard deviation of the funds rate, 1997-January 12, 2000 Basis points 1998 CDC period, Item 1997 1998 1999 Dec. 16, 1999- Jan. 1- Sept. 29- Jan. 12, 2000 Sept. 28 Dec. 31 Median of standard deviations 12 22 17 Median of absolute deviations of the effective rate from target 16 11 Average of absolute deviations of the effective rate from target 22 28 rates from target and median values of intraday stan- first time, doing so on seventeen days.12 The lowest dard deviations in rates—were qualitatively similar balance was $9.9 billion recorded on January 8.13 To to those observed over the first three quarters in 1998 gauge the effect that operating at the lowest levels of and in other recent years (table 5). Data from the balances realized in recent years may have had on the fourth quarter of 1998 are excluded from these com- behavior of the federal funds rate, daily data from the parisons because of temporary developments at that past two years were ranked by the level of balances, time that were inflating reported measures of daily and the funds rate behavior on the lowest twenty-five rate volatility. There was, however, some indication that on days 12. These calculations exclude the balances created by adjustment when actual balances were at their lowest levels of and SLF borrowing at the discount window because these balances the year, the possibility that intraday volatility in were not available to banks during the trading day. Balances created rates and adjustment borrowing from the discount by seasonal borrowing were not removed from this measure because banks could better anticipate the balances that would be created by window might become more elevated was perhaps their borrowing under the seasonal lending program. marginally higher than on other days. In 1999, the 13. In early 2000, even lower balances were reached given the actual level of balances—excluding those balances levels to which total required balances had by then fallen and the Desk's efforts to work off the high excess positions accumulated created through adjustment or Special Liquidity around the year-end. These data are not included in the exercise Facility borrowing—fell below $11 billion for the described in this section. 13. Deviations of the daily effective federal funds rate from target and the daily standard deviations of the funds rate, 1998-99 Standard deviation, basis points — 50 — 40 30 25 lowest operating balance days 20 OO" O U U OQO 8 <p8i8§o ro " 8°°°Qo ao o„ !° °° 10 ° ooo ° toafe Other days B 50 40 30 20 10 -0+ 10 20 30 40 50 Effective rate minus target rate, basis points Low operating balance days Other days Median Average Median Average Standard deviation (basis points) 6 21 8 13 Effective rate minus target rate (basis points) -3 -3 -2 -2 Adjusted borrowing (millions of dollars) 32 167 10 51 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

526 Federal Reserve Bulletin • July 2000 14. Excess reserve holdings by bank category, 1996-99 Millions of dollars 1996 1997 1998 1999 2000 Average total excess = 1,120 Average total excess = 1,322 Average total excess = 1,561 Average total excess = 1,254 NOTE. Data are maintenance-period averages. For period ended Jan. 12, 1. Other institutions are small banks and thrifts, foreign-related institutions, 2000, total excess = $3.1 billion. and nonreporters. dates (all but two of which fell in 1999) was com- cantly elevated, suggesting that the probability that pared with its behavior on other days. To control for pronounced upward rate pressures and heightened the influence of other factors that often elevate rate borrowing will develop is marginally higher when volatility even in the presence of higher levels of operating balances are low.14 balances, days following the second weekend of each Maintenance-period-average levels of excess maintenance period, high payment flow days, and reserves showed a marked decline in 1999 from the dates from the final quarter of 1998 were excluded levels that prevailed over most of the previous year, from these calculations. suggesting that total required balances had not The distribution of observations in chart 13 does reached a critically low level that would trigger needs not point to a compelling, systematic link between for higher levels of excess reserves (chart 14). In fact, lower balances and higher daily rate volatility as excess reserve levels fell sharply early in the year measured here. The average values of the intraday from the higher levels provided in the fourth quarter standard deviation and of borrowing (see notes to of 1998, a time when the Desk was aggressively chart 13) were higher, although median values were not much different (or even slightly lower). These higher averages largely resulted from a few days 14. Bootstrap tests confirm that the differences for the averages when volatility and borrowing levels were signifi- reported here were statistically significant. 15. Maintenance-period average of the effective federal funds rate versus the target rate Basis points • Average of absolute differences between period effective rates and the target HMH • Average of differences between period ^^^H ^ effective rates and the target ^^^H H^^H • 1 I I I! — — 2 — — 4 I I I I I I 1 1998 Jan.-Sept. 1998 Oct.-Dec. 1998 1999 Jan.-Sept. 1999 Oct.-Dec. 1999 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 527 16. Average daily levels of excess reserves, by day in a maintenance period Millions of dollars Thurs. Fri. Mon. Tues. Wed. Thurs. Fri. Mon. Tues. Wed. Week One Week Two NOTE. Data exclude as-of adjustments and high payment flow dates. combating bouts of firmness in the federal funds banks' preference for holding lower excess levels rate. Over the balance of 1999, the Desk did not find it early in a maintenance period (chart 16). This stratnecessary to provide higher levels of excess reserves egy is designed to guard against inadvertently accuon any systematic basis even as the level of total mulating unusable excess reserve levels, even at the required balances slipped further. risk of paying high rates or borrowing at the discount Maintenance-period-average deviations of the window in the event of an unanticipated reserve effective funds rate from target through the first three shortfall on these days. In 1999, there was a slight quarters of 1999 were similar to average deviations in tendency toward providing even lower levels of prior years (chart 15). The Desk's reserve manage- excess reserves in the early days of a period, while ment efforts during the fourth quarter of the year, maintaining sufficiently high excess levels on the described in the next section, "Reserve Management final three days to allow banks to meet their periodaround the Century Date Change," contributed to average requirements. some persistent softness in that quarter, much like The federal funds rate also retained its usual intraduring the corresponding quarter of 1998. period characteristics of relatively low rates on Fri- Intraperiod patterns of excess reserve levels in days and high rates on Mondays (chart 17). Settle- 1999 conformed to historical benchmarks. The distri- ment days remained on the slightly soft side, a pattern bution of daily excess levels continued to reflect that emerged in the final quarter of 1998 and that has 17. Average daily effective federal funds rate less the target rate, by day in a maintenance period Basis points Thurs. Fri. Mon. Tues. Wed. Thurs. Fri. Mon. Tues. Wed. Week One Week Two NOTE. Data exclude high payment flow dates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

528 Federal Reserve Bulletin • July 2000 persisted, indicating that the somewhat lower period- might be needed to address reserve shortages and average excess levels banks were left with in 1999 from heightened investor demand for Treasury secuwere, if anything, slightly more than adequate for rities around the year-end because of their preferred meeting demands. risk characteristics. The concern about reduced liquidity in financing markets around the year-end translated into expec- Reserve Management around tations of elevated financing rates for that time. As the Century Date Change early as spring 1999, spreads between monthly December and January Eurodollar futures rates were Background well above levels normally associated with year-end levels in the past, and these concerns intensified over Events associated with the century date change domi- the summer months (chart 18).15 This CDC premium nated reserve-management efforts in the final quarter exceeded the level observed in other major currency of 1999. Besides the extensive testing necessary to zones, partially reflecting the more limited access ensure that all its technical systems would function as that broad categories of participants in U.S. financial required after the rollover date, the Desk faced two markets, including foreign-based institutions, have to broad challenges. First, early projections pointed to central bank financing facilities compared with the potentially unprecedented reserve shortages over the breadth of access characteristic of other countries. course of the final quarter of the year that would peak As outlined earlier, the Desk initiated several meaaround the year-end. The Desk wanted to be in a sures in late summer and early autumn to put itself position to meet the reserve deficiencies that were in a better position to manage reserve conditions projected to develop even under the most extreme through the fourth quarter and around the year-end assumptions about the behavior of currency, the Trea- itself. It extended the maximum maturity of repursury balance, and the foreign RP pool, and to do so chase agreements, expanded the pool of collateral without disrupting the markets in which it normally accepted on temporary operations, established trioperates. party relationships for settling temporary operations, Second, there was widespread concern that partici- and auctioned options on Desk RPs through the pants in financing markets would be less willing to Standby Financing Facility. To meet any possible maintain normal levels of trading and market intermediation around the century date change, which 15. The December 1999 Eurodollar futures contract covered the threatened to interfere with the efficient allocation of thirty-day period beginning December 13, while the January 2000 credit in the financing markets more generally. The contract covered the thirty-day period beginning January 17. This spread is examined in place of the oft-cited "butterfly" spread that possibility of a shortage of Treasury collateral was includes the November contract because the November contract also recognized, stemming from the large RPs that stopped trading well ahead of the year-end. 18. Spread between December and January LIBOR contracts Daily levels, basis points 100 60 40 Jan. 1999-Dec. 1998 spread 20 J I L 3/1 3/11 3/23 4/2 4/14 4/26 5/6 5/18 5/28 6/10 6/22 7/2 7/15 7/27 8/6 8/18 8/30 9/10 9/22 10/4 10/15 10/27 11/8 11/18 12/1 12/13 1999 NOTE. Observations correspond to 1999 calendar dates and comparable days one year earlier. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 529 reserve contingencies, procedures were also estab- customers, although the Desk's counterparty always lished for draining reserves late in the day, but this was the dealer. On exercised contracts, dealers could capability was not utilized. submit collateral of their choosing; it was presumed By extending the maximum maturity of repurchase that if options were exercised, those securities in the agreements to ninety days, the Desk was able to highest risk category—mortgage-backed securities— begin meeting the seasonal and CDC-related buildup most likely would be delivered. in year-end reserve needs starting in October, and it The purpose of these options was to provide tangradually layered in RPs of the needed magnitude. gible encouragement to primary dealers to continue Beyond their direct effect on reserves, these long- to make markets and to undertake their normal interterm RPs allowed the dealer community to prefund a mediation activities in securities markets, so as to significant share of their inventories through the year- sustain the liquidity of these markets around the end, thus reducing some of their anxieties at an century date change. The Desk in effect wrote a form earlier opportunity. of "flood insurance" to the dealer community against By expanding the types of securities it accepted as potential worst-case contingencies in the financing collateral on its RPs, most importantly to include a markets around the year-end, thus providing the huge pool of mortgage-backed pass-through securi- dealer community with the confidence to continue ties, the Desk went a long way toward ensuring that it making markets to their customers and to one another would be able to address even the deepest projected under the 150-basis-point umbrella that the options reserve shortages with RPs. And it would be able to would provide. do so without aggravating pressures in the financing In devising this program, the Desk considered the market for Treasury securities. Adopting triparty implications of these options for its management of settlement arrangements was an operational necessity reserves in the event that they should be exercised. for accepting the broader collateral pool on RPs, but Given that the options were intended to provide a the greater flexibility that triparty arrangements give source of financing to securities dealers and were not dealers in managing their inventories was expected to intended as a substitute means to meet projected be particularly beneficial in the environment leading reserve shortages, under many scenarios the Desk up to the year-end. envisioned having to offset the effect of reserves The final measure was the creation of the Standby created through the exercise of options. This reserve Financing Facility involving the sale of options on offset might be accomplished by cutting back on the overnight RPs with the Desk for the period surround- supply of reserves provided through ordinary RPs if ing the year-end. Daily options were sold for all dates the amount exercised was relatively small and known running from December 23, 1999, through Jan- before regular operations were arranged. Otherwise, uary 12, 2000.16 Holders of these options had the the Desk would have to enter the market to drain right to execute overnight RPs with the Federal reserves later in the day. If a widespread exercise of Reserve Bank of New York at a preset "strike price" options was triggered by strong upward rate pres- (financing rate) 150 basis points above the then- sures and broad-based financial market dislocations, prevailing target federal funds rate, but they were the Desk was prepared to abandon its normal reserve required to notify the Desk of their intention to management focus on fine-tuning the daily level of exercise by 10 a.m. The daily options were bundled reserve balances and to accept a superabundance of into three separate weekly "strips" of overnight reserves created by the options as useful for counteragreements, the first strip running from December 23 ing market stress. to December 29, the second from December 30 to January 5, and the third from January 6 to January 12. The daily options in the middle strip had the Reserve Management Developments from October additional feature that allowed the holder to exercise to Mid-December as late as 11:30 a.m. at a strike price 250 basis points above the federal funds target. A single-price auction In October, incipient reserve shortages began to format was adopted for the sale of these options. As deepen progressively as banks built up their vault in its ordinary RP operations, dealers could purchase cash holdings to meet anticipated CDC-related public options for their own account and on behalf of their demands. The Desk's strategy was to meet a large portion of these reserve shortages with temporary operations in RPs carrying extended maturities and 16. The final terms for competitive bidding for these contracts were to refrain from increasing the level of outright purposted on October 7 on the Federal Reserve Bank of New York's web chases because the shortages were expected to be site: www.ny.frb.org/pihome/news/announce/1999/an991007b.html. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

530 Federal Reserve Bulletin • July 2000 temporary. On October 8, it arranged a ninety-day ums fell back sharply shortly after the actual sale of RP, the first operation that was set to span the year- options had begun, and many market participants end. cited the program as an important factor contributing By December 15, $54 billion of reserves had been to increased market confidence about the year-end. created through ten RPs that spanned the year-end.17 Through mid-December, the Desk largely adhered By comparison, outright purchases over all of the to normal reserve-management practices in determinfourth quarter totaled $10 billion, a quantity in line ing levels of excess reserves to leave in place each with the amounts purchased in the same quarter in day. Some small conscious effort was made to propast years. Maturity dates on the RPs were staggered vide a level of reserves that would be a bit to the high across January into mid-February, roughly coinciding side of the range of estimated demand, in order to with the time when movements in factors, primarily prevent inadvertent reserve shortfalls from gencurrency, that were temporarily draining reserves erating firm rate conditions that might become were expected to unwind. However, the Desk entrenched ahead of the year-end, given existing marexpected that a good portion of the RPs maturing in ket anxieties. Partly as a result, daily effective funds January initially might have to be replaced with new rates during the fourth quarter were slightly biased to RPs. the soft side, particularly over the last few days of Also during this time, the Desk conducted seven several maintenance periods, although period-average weekly auctions of options on Desk RPs, each of the levels of excess reserves were not significantly higher three weekly strips being auctioned simultaneously than they had been earlier in the year. There were no once a week. The quantity of each strip that would be unusual movements in the spreads between overnight sold was announced ahead of each round of auctions. financing rates for different classes of collateral and Beginning with the second round, the amounts sold at the federal funds rate that could be attributed to the each auction were adjusted in response to the strength growing size of the Desk's holdings of collateral or to of demand seen the preceding week, with the ulti- market anxieties about the century date change. mate objective being to provide financing insurance to dealers at relatively low cost. Altogether, $114 bil- Developments in the Maintenance Periods Ending lion worth of options were sold on the strip covering December 29, 1999, and January 12, 2000 December 23 to December 29, $223 billion of options on the strip from December 30 through January 5, and $144 billion of options for January 6 through Reserve deficiencies deepened sharply further in January 12. The diminishing stop-out rates and quan- the days leading up to the year-end as the Treasury tities of propositions submitted in the final rounds balance and foreign RP pool began their steep ascent of these auctions suggested that demand ultimately while currency in circulation continued to grow. To was satisfied (table 6). Year-end forward rate premi- ensure that reserve shortages could be met when they were projected to be at their deepest and financing markets were potentially least capable of offering up 17. This total includes the twenty-one-day forward RP arranged on new collateral for additional RPs, the Desk arranged December 14 that settled on December 15. 6. Standby Financing Facility: summary of auction results for options on Desk RPs, October 20-December 1, 1999 Billions of dollars except as noted Auction dates, 1999 IItteemm Oct. 20 Oct. 27 Nov. 3 Nov. 10 Nov. 17 Nov. 23 Dec. 1 December 23-December 29 strip Total propositions 48 56 77 44 49 27 20 Accepted propositions 12 12 20 30 15 10 15 Stop-out rate (basis points) 1.5 2.5 11.0 1.0 1.0 1.5 .5 December 30-January 5 strip Total propositions 116 147 136 86 83 51 53 Accepted propositions 18 25 50 50 30 25 25 Stop-out rate (basis points) 10.0 15.0 16.0 8.0 8.0 4.0 2.0 January 6-January 12 strip Total propositions 67 86 108 66 64 36 44 Accepted propositions 12 12 25 40 20 20 15 Stop-out rate (basis points) 3.0 5.0 11.5 2.5 2.5 2.5 4.0 NOTE. The quantities refer to the value of options contracts available for each every $100 million worth of overnight RP option contracts. All accepted day in the week covered by the strip. Dealers' propositions were submitted in propositions were awarded at the stop-out rate, basis-point terms. Each basis point translated into a cost of about $28 per day for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 531 a series of forward RPs. From December 15 through maintenance period under way after the turn of the December 23, four forward RPs were executed that year (ended January 12), the Desk attempted to work settled between December 27 and December 31 and down the high excess positions banks accumulated that matured between January 3 and January 7. These on the first few days of that period. But low levels of operations put in place an additional $22 billion of operating balances limited the pace at which it could reserves on the year-end itself (chart 19).18 In addi- do so, and at the end of that period, banks were still tion, another $65 billion of regular RPs were put in holding an extraordinarily high period-average level place after December 15 that spanned the year-end of excess reserves. (and a small amount of additional outright purchases In the federal funds market, a soft bias emerged were made), making a total of $141 billion in RPs in the days leading up to the year-end, despite the outstanding on December 31, far surpassing the pre- absence of particularly high levels of excess reserves vious $52 billion peak reached in April 1997. After (chart 20). The accumulating level of outstanding the year-end, these quantities quickly began to sub- Desk RPs astounded many market participants, who side as currency, the Treasury balance, and the for- were largely unaware of the extent of the factor eign RP pool all began to taper off. Still, by January movements necessitating these operations. The size 12, the volume of RPs outstanding remained substan- of these operations, coming against the background tial at $63 billion (but with $10 billion of MSPs also of the Standby Financing Facility and other Desk outstanding). efforts to promote market liquidity around the year- The additions to reserve balances provided by these end, fueled perceptions that the risks had become open market operations were needed to offset the heavily skewed toward an overabundance of reserves effect of factors on the supply of reserves and were developing. As a result, trading conditions often had not designed to provide unusually high levels of a soft cast in financing markets. But with actual excess reserves. Only on the year-end date itself and excess levels still sometimes falling short of end-ofthe first business day of 2000 were excess levels day demands, rates occasionally backed up in latesignificantly elevated, although they were not particu- day trading, and intraday volatility was generally larly high by comparison with levels reached around high but not appreciably more than over other yearpast year-end dates.19 Over the remainder of the ends. Even on the year-end and first business day of 2000, the morning funds rate premiums were the lowest they had been on the corresponding days around the year-end in several years. 18. This count excludes the twenty-one-day forward RP arranged on December 14 that settled on December 15. This operation was The century date change itself did not cause any arranged in part to guard against the threat of a New York City transit technical problems for the Desk or for market particistrike that morning, which might have interfered with the Desk's operational plans. pants that affected trading conditions in the financing 19. The level of free reserves (excess less borrowings), reached on markets. But shortly after the rollover, a touch of December 31 was $12.1 billion, and the level reached $3.2 billion on firmness emerged and volatility remained elevated as the first business day of 2000. The respective levels on the correspondthe Desk began to work down the very high excess ing dates one year earlier were $12.7 billion and $5.2 billion. 19. Reserve effect of temporary operations surrounding the year-end, December 16, 1999-January 12, 2000 Daily levels, billions of dollars • Forward RPs that settled after December 15 — 140 H RPs that settled after December 15 (excluding forwards) • RPs that settled up to December 1 ^ — 120 • MSPs — 100 — 20 20 12/16 12/17 12/20 12/21 12/22 12/23 12/24 12/27 12/28 12/29 12/30 12/31 1/3 1/4 1/5 1/6 1/7 1/10 1/11 1/12 1999 2000 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

532 Federal Reserve Bulletin • July 2000 20. Federal funds rate behavior around the year-end: daily range, morning rate, and the daily effective rate High — 10 — 9 — 8 — 7 — 6 o % 0 C) « CD \ T O — 5 o Morning rate — 4 Daily effective rate / — 3 — 2 Low — 1 J L J_l 12/16 12/17 12/20 12/21 12/22 12/23 12/24 12/27 12/28 12/29 12/30 12/31 1/3 1/4 1/5 1/6 1/7 1/10 1/11 1/12 1999 2000 NOTE. Target federal funds rate was 5 Vi percent over the period shown. levels accumulated early in the January 12 mainte- after the year-end, SLF borrowing by large banks nance period, sometimes pushing daily excess and helped moderate late-day upward rate pressures balance levels to extremely low levels. that emerged. There had been two earlier episodes On two occasions during these maintenance between October 1 and December 15 when SLF borperiods around the century date change when reserves rowing by large banks had helped contain late-day were particularly deficient, once before and once rate pressures. 21. Treasury RP rates, mortgage-backed security RP rates, and federal funds rates around year-end, 1998 and 1999 1998 year-end 1999 year-end Morning federal funds rate MBS RP rate Treasury RP rate 12/16 12/17 12/20 12/21 12/22 12/23 12/27 12/28 12/29 12/30 12/31 1/3 1/4 1/5 1/6 1/7 1/10 1/11 1/12 1999 2000 NOTE. Data points are levels on 1999 dates and corresponding days around year-end 1998. Dec. 24, 1999, is omitted because of thin trading conditions on that day. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 533 In financing markets, the Desk's hefty intake of commitments) at the close of business on the day of a collateral likely contributed to downward pressure on meeting of the Committee at which action is taken with respect to a domestic policy directive shall not be increased RP rates for all collateral classes relative to the fedor decreased by more than $12.0 billion during the period eral funds rate in the mornings immediately surroundcommencing with the opening of business on the day ing the year-end (chart 21). On the year-end itself, following such meeting and ending with the close of busiwhen private-sector demands for, and Desk holdings ness on the day of the next such meeting; of, Treasury collateral were particularly heightened, (b) To buy U.S. Government securities, obligations that are direct obligations of, or fully guaranteed as to spreads on mortgage-backed and agency RP rates principal and interest by, any agency of the United States, over Treasury RP rates were wider than they had from dealers for the account of the Federal Reserve Bank been on previous year-ends. But apart from that day, of New York under agreements for repurchase of such no unusual spreads between financing rates for securities or obligations in 90 calendar days or less, at rates mortgage-backed, agency, and Treasury collateral that, unless otherwise expressly authorized by the Committee, shall be determined by competitive bidding, after ever developed in the period around the century date applying reasonable limitations on the volume of agreechange. In the absence of extremely firm financing ments with individual dealers; provided that in the event rate or funds rate pressures developing around year- Government securities or agency issues covered by any end, none of the options that the Desk sold were such agreement are not repurchased by the dealer pursuant exercised. to the agreement or a renewal thereof, they shall be sold in the market or transferred to the System Open Market Account. (c) To sell U.S. Government securities that are direct APPENDIX A: AUTHORIZATION FOR DOMESTIC obligations of, or fully guaranteed as to principal and interest by, any agency of the United States to dealers for OPEN MARKET OPERATIONS System Open Market Account under agreements for the resale by dealers of such securities or obligations in 90 cal- Open market operations during 1999 were conducted endar days or less, at rates that, unless otherwise expressly under the Authorization for Domestic Open Market authorized by the Committee, shall be determined by com- Operations. Several changes were made to the Autho- petitive bidding, after applying reasonable limitations on rization in August 1999, some of a temporary nature, the volume of agreements with individual dealers. 2. In order to ensure the effective conduct of open which are described in the section "New Developmarket operations, the Federal Open Market Committee ments in 1999" in the text. In February, the Commitauthorizes the Federal Reserve Bank of New York to lend tee amended the paragraph relating to the Treasury on an overnight basis U.S. Government securities held in securities lending program introducing the auction the System Open Market Account to dealers at rates that technique for awarding borrowed securities to dealer shall be determined by competitive bidding but that in no event shall be less than 1.0 percent per annum of the firms on a competitive basis. The Authorization for market value of the securities lent. The Federal Reserve Domestic Open Market Operations in effect at the Bank of New York shall apply reasonable limitations on end of 1999 is reprinted below. the total amount of a specific issue that may be auctioned and on the amount of securities that each dealer may borrow. The Federal Reserve Bank of New York may reject bids which could facilitate a dealer's ability to con- Authorization for Domestic Open Market trol a single issue as determined solely by the Federal Operations Reserve Bank of New York. 3. In order to ensure the effective conduct of open 1. The Federal Open Market Committee authorizes and market operations, while assisting in the provision of shortdirects the Federal Reserve Bank of New York, to the term investments for foreign and international accounts extent necessary to carry out the most recent domestic maintained at the Federal Reserve Bank of New York, the policy directive adopted at a meeting of the Committee: Federal Open Market Committee authorizes and directs the (a) To buy or sell U.S. Government securities, includ- Federal Reserve Bank of New York (a) for System Open ing securities of the Federal Financing Bank, and securities Market Account, to sell U.S. Government securities to such that are direct obligations of, or fully guaranteed as to foreign and international accounts on the bases set forth in principal and interest by, any agency of the United States paragraph 1(a) under agreements providing for the resale in the open market, from or to securities dealers and by such accounts of those securities within 90 calendar foreign and international accounts maintained at the Fed- days on terms comparable to those available on such eral Reserve Bank of New York, on a cash, regular, or transactions in the market; and (b) for New York Bank deferred delivery basis, for the System Open Market account, when appropriate, to undertake with dealers, sub- Account at market prices, and, for such Account, to ject to the conditions imposed on purchases and sales of exchange maturing U.S. Government and Federal agency securities in paragraph 1(b), repurchase agreements in U.S. securities with the Treasury or the individual agencies or to Government and agency securities, and to arrange correallow them to mature without replacement; provided that sponding sale and repurchase agreements between its own the aggregate amount of U.S. Government and Federal account and foreign and international accounts maintained agency securities held in such Account (including forward at the Bank. Transactions undertaken with such accounts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

534 Federal Reserve Bulletin • July 2000 under the provisions of this paragraph may provide for a the Federal Reserve Bank of New York to sell options on service fee when appropriate. repurchase agreements, reverse repurchase agreements, and 4. In order to help ensure the effective conduct of open matched sale purchase transactions for exercise no later market operations during the transition period surround- than January 2000. ing the century date change, the Committee authorizes APPENDIX B B.l. Operations in U.S. government securities and federal agency securities by the Federal Reserve Bank of New York for the year ended December 31, 1999 Thousands of dollars except as noted Type of issue Net Holdings, Holdings, Purchases Sales Redemptions Exchanges and maturity category change 12/31/99 12/31/98 SYSTEM OPEN MARKET ACCOUNT Government securities Treasury bills -464,217,776 Outright 0 0 0 464,217,776 0 215,699,444 215,699,444 Matched transactions 4,395,997,838 -4,414,252,771 0 0 -18,254,933 -39,182,043 -20,927,110 Total bills 4,395,997,838 -4,414,252,771 0 0 -18,254,933 176,517,401 194,772,334 Treasury notes and bonds Maturing: Within 1 year 11,895,300 0 -1,429,160 -53,314,799 -42,848,659 2 59,899,148 49,148,359 1 to 5 years 19,754,214' 0 0 42,603,799 62,358,0132 124,169,064 107,729,521 5 to 10 years 4,385,373 1 0 0 7,582,935 11,968,308 2 51,106,652 44,822,174 More than 10 years 9,460,3341 0 0 3,138,568 12,598,902 2 66,270,245 55,668,491 Total notes and bonds 45,495,221 0 -1,429,160 10,503 44,076,564 301,445,109 257,368,545 Total government securities Including matched transactions 4,441,493,059 -4,414,252,771 -1,429,160 10,503 25,821,631 477,962,510 452,140,879 Excluding matched transactions 45,495,221 0 -1,429,160 10,503 44,076,564 517,144,553 473,067,989 Federal agency issues Maturing: Within 1 year 0 0 -156,550 0 -156,5503 51,000 101,900 1 to 5 years 0 0 0 0 03 10,000 61,000 5 to 10 years 0 0 0 0 03 120,000 174,650 More than 10 years 0 0 0 0 03 0 0 Total agency issues 0 0 -156,550 0 -156,550 181,000 337,550 Total System Account Including matched transactions 4,441,493,059 -4,414,252,771 -1,585,710 10,503 25,665,081 478,143,510 452,478,429 Excluding matched transactions 45,495,221 0 -1,585,710 10,503 43,920,014 517,325,553 473,405,539 FEDERAL RESERVE BANK OF NEW YORK Repurchase agreements 946,657,000 -836,393,000 0 0 110,264,000 140,640,000 30,376,000 NOTE. Data are on a settlement-date basis. There were no customer related December 31, 1998, matched sale-purchase transactions were $39,182,043 and repurchase agreements passed through to the market for the year ended Decem- $20,927,110 respectively. Loans of Treasury securities by the Federal Reserve ber 31, 1999. Holdings of RPs on December 31, 1999, and December 31, 1998, to primary dealers for the years ended December 31, 1999, and December 31, are shown at cash value and par value respectively. December 31, 1999, and 1998, were as follows (thousands of dollars): Loans outstanding Securities loans Maturities Net change I ec. 31,1999 Dec. 31,1998 Loan agreements (thousands of dollars) 188,730,800 186,994,800 1,736,000 2,061,000 325,000 1. Holdings of RPs in 1999 and 1998 include appreciation to date of the inflation compensation on inflation indexed notes and bonds of $227,997 and $79,173 respectively. 2. For Treasury notes and bonds, figures do not include the following maturity shifts (thousands of dollars): Within 1 year 1 to 5 years 5 to 10 years More than 10 years Treasury notes and bonds 53,599,450 -45,918,470 -5,683,830 -1,997,140 3. For federal agency securities, figures do not include the following maturity shifts (thousands of dollars): Within 1 year 1 to 5 years 5 to 10 years More than 10 years Federal agency issues 105,650 -51,000 -54,650 0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 535 APPENDIX C: U.S. TREASURY AND FEDERAL AGENCY SECURITY HOLDINGS IN THE SYSTEM OPEN MARKET ACCOUNT, DECEMBER 31,1999 C. 1. U.S. Treasury bills in the System Open Market C.2. U.S. Treasury bonds in the System Open Market Account, December 31, 1999 Account, December 31, 1999 Thousands of dollars except as noted Thousands of dollars except as noted Percentage Issue outstanding Percentage Maturity date of Holdings, of total Holdings, of total issue outstanding 12/31/99 issue Maturity 12/31/99 issue outstanding Coupon date outstanding 1/06/20001 924,320 2.3 11.750 2/15/2001 165,803 11.0 1/13/2000' 3,001,860 4.7 13.125 5/15/2001 220,926 12.6 1/20/2000' 3,055,500 7.5 13.375 8/15/2001 256,092 14.6 1/27/2000' 3,047,815 11.8 15.750 11/15/2001 227,904 13.0 2/03/2000' 3,093,010 7.3 14.250 2/15/2002 199,800 11.4 2/10/2000' 7,102,442 26.4 11.625 11/15/2002 347,850 12.6 2/17/2000 8,231,564 32.2 10.750 2/15/2003 739,250 24.6 2/24/2000 7,998,180 32.6 10.750 5/15/2003 433,300 13.3 3/02/2000 13,184,955 32.6 11.125 8/15/2003 514,300 14.7 3/09/2000 8,186,780 32.5 11.875 11/15/2003 1,034,340 14.2 3/16/2000 7,609,310 31.6 12.375 5/15/2004 769,786 20.5 3/23/2000 7,144,235 29.7 13.750 8/15/2004 528,000 13.2 3/30/2000 12,532,430 31.5 11.625 11/15/2004 1,184,600 14.3 4/06/2000 3,530,000 14.4 8.250 5/15/2005 1,513,660 35.8 4/13/2000 3,960,000 33.1 12.000 5/15/2005 728,476 17.1 4/20/2000 3,565,000 29.2 10.750 8/15/2005 1,323,000 14.3 4/27/2000 7,935,000 30.4 9.375 2/15/2006 372,000 7.8 5/04/2000 3,960,000 30.3 7.625 2/15/2007 1,396,164 33.0 5/11/2000 3,635,000 31.2 7.875 11/15/2007 378,500 25.3 5/18/2000 3,800,000 31.8 8.375 8/15/2008 788,500 37.5 5/25/2000 8,780,000 32.6 8.750 11/15/2008 1,588,500 30.4 6/01/2000 3,870,000 31.3 9.125 5/15/2009 921,205 20.0 6/08/2000 3,850,000 32.5 10.375 11/15/2009 1,075,939 25.6 6/15/2000 3,690,000 31.5 11.750 2/15/2010 717,400 28.8 6/22/2000 7,735,000 29.7 10.000 5/15/2010 1,176,556 39.4 6/29/2000 3,670,000 31.4 12.750 11/15/2010 1,260,865 26.6 1 1 1 7 9 8 1 0 2 / / / / / / 2 1 1 0 1 0 0 4 7 9 2 7 / / / / / / 2 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 4 4 4 5 5 , , , , , , 5 9 8 9 0 1 4 5 1 4 1 7 0 0 5 0 0 0 , , , , , , 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 3 2 3 3 3 9 2 9 2 3 3 . . . . . . 4 1 6 5 3 3 1 1 1 1 1 1 3 0 2 3 2 4 . . . . . . 8 3 0 2 5 0 7 7 0 5 0 0 5 5 0 0 0 0 1 1 1 5 5 8 8 1 1 1 / / / / / / / 1 1 1 1 1 1 1 5 5 5 5 5 5 5 / / / / / / / 2 2 2 2 2 2 2 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 4 4 3 4 2 1 3 1 1 1 , , , , 9 0 9 8 6 1 0 0 4 7 6 1 9 7 5 0 5 9 1 5 3 , , , , , , , 7 0 7 7 4 0 5 7 9 2 4 0 5 4 2 1 0 1 0 0 2 2 2 1 1 1 1 0 3 7 4 7 9 . . . . . . 6 3 7 6 4 9 Total Treasury bills 176,517,401' 1 1 1 1 . . 2 7 5 5 0 0 2 8 / / 1 1 5 5 / / 2 2 0 0 1 1 5 5 1 1 , , 6 1 5 6 5 7 , , 7 4 3 0 3 0 1 13 9 . . 1 9 10.625 11/15/2015 941,500 16.3 NOTE. Data are on a statement-date basis. 9.875 2/15/2016 1,037,000 13.6 1. Holdings were reduced by $12,000,000 of January 6 Treasury bills, 9.250 5/15/2016 1,098,000 14.3 $5,700,000 of January 13 Treasury bills, $4,500,000 of January 20 Treasury 7.250 11/15/2016 1,378,000 5.8 bills, $4,800,000 of January 27 Treasury bills, $10,900,000 of February 3 7.500 5/15/2017 2,517,000 7.3 Treasury bills, and $1,282,043 of February 10 Treasury bills that were sold 8.750 8/15/2017 1,954,000 13.8 under matched sale-purchase agreements, which are generally overnight 8.875 5/15/2018 1,230,900 13.9 9.125 11/15/2018 539,000 14.1 arrangements. 9.000 2/15/2019 1,685,000 6.0 8.875 8/15/2019 1,840,900 8.8 8.125 2/15/2020 1,360,879 9.1 8.500 5/15/2020 1,393,600 13.3 8.750 8/15/2020 1,527,600 13.7 8.750 2/15/2021 840,500 13.9 7.875 5/15/2021 1,315,000 7.6 8.125 8/15/2021 1,560,000 11.0 8.125 11/15/2021 2,714,000 12.8 8.000 8/15/2022 846,000 8.3 7.250 11/15/2022 1,521,000 8.2 7.625 2/15/2023 2,292,000 14.2 7.125 8/15/2023 1,487,000 12.5 6.250 11/15/2024 1,346,000 6.5 7.500 2/15/2025 1,146,000 11.7 7.625 8/15/2025 1,697,000 9.8 6.875 2/15/2026 1,009,000 13.5 6.000 8/15/2026 1,425,000 7.8 6.750 11/15/2026 1,555,000 13.1 6.500 2/15/2027 610,000 13.6 6.625 8/15/2027 1,265,000 5.8 6.375 11/15/2027 2,770,000 11.8 6.125 8/15/2028 1,771,808 12.3 11/15/2028 945,000 5.500 15.0 2/15/2029 1,340,000 5.250 8/15/2029 1,075,000 8.6 5.250 11.8 6.125 9.6 Total Treasury Bonds 81,390,852 NOTE. Data are on a statement-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

536 Federal Reserve Bulletin • July 2000 C.3. U.S. Treasury notes in the System Open Market C.3.—Continued Account, December 31, 1999 Thousands of dollars except as noted Issue outstanding Issue outstanding HHoollddiinnggss,, PPeerrcceennttaaggee HHoollddiinnggss,, PPeerrcceennttaaggee ooff ttoottaall iissssuuee ooff ttoottaall iissssuuee Coupon Maturity 1122//3311//9999 oouuttssttaannddiinngg Coupon Maturity 1122//3311//9999 oouuttssttaannddiinngg date date 6.375 1 15/2000 705,545 7.0 6.375 . 9/30/2001 1,483,100 10.2 5.375 1 31/2000 2,281,230 13.1 5.875 . 10/31/2001 2,681,615 14.0 7.750 1 31/2000 1,763,440 14.6 6.250 . 10/31/2001 975,000 6.7 5.875 2 15/2000 2,165,796 10.6 7.500 . 11/15/2001 3,469,000 14.3 8.500 2 15/2000 1,304,000 12.2 5.875 . 11/30/2001 3,872,320 11.6 5.500 2 29/2000 1,555,320 8.8 6.125 . 12/31/2001 4,141,445 13.3 7.125 2 29/2000 1,663,290 13.4 6.250 . 1/31/2002 1,259,800 9.4 5.500 3 31/2000 2,098,220 12.2 6.250 . 2/28/2002 1,354,400 9.8 6.875 3 31/2000 1,416,510 10.8 6.625 . 3/31/2002 1,770,800 12.4 5.500 4 15/2000 568,000 5.4 6.625 . 4/30/2002 1,976,800 13.7 5.625 4 30/2000 2,149,000 13.8 7.500 . 5/15/2002 1,653,509 14.1 6.750 4 30/2000 1,720,250 13.9 6.500 . 5/31/2002 1,634,000 12.1 6.375 5 15/2000 2,927,000 14.1 6.250 . 6/30/2002 1,319,000 10.1 8.875 5 15/2000 486,000 4.6 6.000 . 7/31/2002 782,000 6.4 5.500 5 31/2000 2,224,000 13.5 6.375 . 8/15/2002 3,369,000 14.1 6.250 5 31/2000 1,613,560 12.7 6.250 . 8/31/2002 1,072,000 8.4 5.375 6 30/2000 1,538,000 10.3 5.875 . 9/30/2002 735,000 5.7 5.875 5 6. . 1 3 2 7 5 5 6 7 3 3 0 1 / / 2 2 0 0 0 0 0 0 2 1 , , 6 5 5 7 5 0 , , 7 90 5 0 0 1 1 2 4 . . 6 2 5 5 . . 7 7 5 5 0 0 . . 1 1 0 1 / / 3 3 1 0 / / 2 2 0 0 0 0 2 2 1, 8 3 4 3 0 5 , , 5 0 0 0 0 0 1 7 1 . . 2 0 7 31/2000 1,044,200 8.5 5.625 . 12/31/2002 928,000 7.7 6 8 . . 0 7 0 50 0 8 15/2000 2,524,245 14.0 5.500 . 1/31/2003 1,118,000 8.5 5.125 8 15/2000 1,538,400 13.9 6.250 . 2/15/2003 2,564,000 10.9 6.250 8 31/2000 2,994,300 15.0 5.500 . 2/28/2003 1,802,000 13.2 4.500 8 31/2000 1,226,000 10.3 5.500 . 3/31/2003 1,522,000 10.7 6.125 9 30/2000 2,241,500 11.6 5.750 . 4/30/2003 1,793,000 14.3 4.000 9 30/2000 1,033,500 8.6 5.500 . 5/31/2003 1,350,000 10.3 5.750 10 31/2000 2,939,900 14.3 5.375 . 6/30/2003 1,309,000 10.0 5 8 . . 7 5 5 0 0 0 1 10 1 3 1 1 5 / / 2 2 0 0 0 0 0 0 2, 9 1 3 82 5 , , 2 4 0 3 0 0 1 7 3 . . 8 6 5 5 . . 2 7 5 5 0 0 . . 8 8 / / 1 1 5 5 / / 2 2 0 0 0 0 3 3 2 3, , 8 8 2 3 0 4 , , 0 0 0 0 0 0 1 13 4 . . 6 3 4.625 11 15/2000 1,032,300 9.0 4.250 . 11/15/2003 1,518,385 8.2 5.625 11 30/2000 2,600,500 12.9 4.750 . 2/15/2004 2,012,740 11.3 4.625 11 30/2000 1,265,200 10.2 5.875 . 2/15/2004 650,000 5.0 5.500 12 31/2000 2,779,662 14.3 5.250 . 5/15/2004 2,561,624 13.5 4 5 . . 5 2 0 5 0 0 12 1 3 3 1 1 / / 2 2 0 0 0 0 1 0 2 1 , , 7 1 6 5 5 6 , , 0 0 0 0 0 0 1 9 4 . . 0 0 6 7 . . 0 2 0 5 0 0 . . 5 8 / / 1 1 5 5 / / 2 2 0 0 0 0 4 4 2 1 , , 0 6 4 1 5 6 , , 5 7 5 1 0 0 1 8 4 . . 9 2 5.375 1 31/2001 801,000 6.3 7.250 . 8/15/2004 875,000 6.6 7.750 2 15/2001 1,652,560 10.8 5.875 . 11/15/2004 2,189,968 11.9 5.000 2 15/2001 1,208,500 10.7 7.875 . 11/15/2004 2,028,040 14.2 5.625 2 28/2001 2,646,000 13.5 7.500 . 2/15/2005 1,476,600 10.7 4.875 2 28/2001 1,204,000 9.4 6.500 . 5/15/2005 2,000,000 13.6 6.375 3 31/2001 3,385,000 15.7 6.500 . 8/15/2005 2,015,000 13.4 5.000 3 31/2001 1,649,000 11.6 5.875 . 11/15/2005 1,960,000 12.9 6.250 4 30/2001 3,019,620 14.4 5.625 . 2/15/2006 1,918,000 12.4 5.625 4 30/2001 1,410,500 10.3 6.875 . 5/15/2006 2,075,000 13.0 8.000 5 15/2001 2,270,117 17.7 7.000 . 7/15/2006 3,241,752 14.3 5.250 5 15/2001 1,683,000 13.6 6.500 . 10/15/2006 3,055,800 13.6 6.500 5 31/2001 3,055,890 15.4 6.250 . 2/15/2007 1,051,000 8.0 5.750 5 31/2001 1,402,900 10.2 6.625 . 5/15/2007 1,953,000 14.0 6.625 6 30/2001 2,629,255 13.8 6.125 . 8/15/2007 3,654,000 14.3 5.500 6 30/2001 2,043,000 14.3 5.500 . 2/15/2008 1,420,000 10.5 6.625 7 31/2001 3,560,370 17.4 5.625 . 5/15/2008 4,084,000 15.0 7.875 7 31/2001 1,592,000 11.3 4.750 . 11/15/2008 2,475,000 9.9 5.500 8 15/2001 1,754,400 14.3 5.500 . 5/15/2009 2,045,000 13.8 6.500 8 31/2001 3,256,110 16.2 6.000 . 8/15/2009 33,,442255,,000000 12.5 5.625 8 31/2001 1,226,300 8.8 9 30/2001 2,125,132 11.3 Total Treasury notes 214,350,260 NOTE. Data are on a statement-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 1999 537 C.4. U.S. Treasury inflation index bonds and inflation index C.5. U.S. federal agency holdings in the System Open notes in the System Open Market Account, Market Account, December 31, 1999 December 31, 1999 Thousands of dollars except as noted Thousands of dollars except as noted Agency and issue outstanding PPeerrcceennttaaggee HHoollddiinnggss,, ooff ttoottaall Issue outstanding PPeerrcceennttaaggee Maturity H 1 H 122 oo // ll 33 ddii 11 nn // gg 99 ss 99 ,, oo ii ff ss ss ttoo uu tt ee aa ll Coupon Ma d t a u t r e i ty 1122//3311//9999 oouuttss iiss ttaa ss nn uuee dd iinngg Coupon date oouuttssttaannddiinngg Federal National Treasury inflation Mortgage Association index bonds (IIB) (FNMA) 3.625 4/15/2028 820,000 4.9 6.100 2/10/2000 25,000 5.0 3.875 4/15/2029 718,000 4.9 9.050 4/10/2000 10,000 1.3 9.200 9/11/2000 10,000 2.5 Total Treasury IIB 1,538,000' 5.800 12/10/2003 10,000 1.3 6.850 9/12/2005 20,000 5.0 Treasury inflation 6.700 11/10/2005 100,000 25.0 index notes (UN) 3.625 7/15/2002 900,000 5.4 Total, FNMA 175,000 3.375 1/15/2007 1,010,000 6.4 3.625 1/15/2008 1,260,000 7.5 Federal Home Loan 3.875 1/15/2009 768,000 4.8 Banks (FHLBanks) 8.600 1/25/2000 6,000 2.0 Total Treasury UN 3,938,000' Total, FHLBanks 6,000 Total Treasury bonds, notes, UN, and Total agency issues 181,000 IIB2 301,217,112 Total Treasury and agency issues 477,915,513' NOTE. Data are on a statement-date basis. 1. Amount does not reflect inflation compensation of $227,997. NOTE. Data are on a statement-date basis. 2. Figure includes totals of security holdings shown in tables C.2 and C.3. 1. Amount does not reflect inflation compensation of $227,997 and includes totals of security holdings shown in tables C.l, C.2, C.3, and C.4. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

538 Federal Reserve Bulletin • July 2000 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics A3 GUIDE TO TABULAR PRESENTATION Federal Finance—Continued All Gross public debt of U.S. Treasury— DOMESTIC FINANCIAL STATISTICS Types and ownership A28 U.S. government securities Money Stock and Bank Credit dealers—Transactions A4 Reserves, money stock, 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 A11 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 A3 6 Total outstanding Commercial Banking Institutions— A36 Terms Assets and Liabilities A15 All commercial banks in the United States Flow of Funds A16 Domestically chartered commercial banks A17 Large domestically chartered commercial banks A37 Funds raised in U.S. credit markets A19 Small domestically chartered commercial banks A39 Summary of financial transactions A20 Foreign-related institutions A40 Summary of credit market debt outstanding A41 Summary of financial assets and liabilities Financial Markets A22 Commercial paper and bankers dollar DOMESTIC NONFINANCIAL STATISTICS acceptances outstanding A22 Prime rate charged by banks on short-term Selected Measures business loans 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 • July 2000 INTERNATIONAL STATISTICS Reported by Nonbanking Business Enterprises in the United States Summary Statistics A58 Liabilities to unaffiliated foreigners A50 U.S. international transactions A59 Claims on unaffiliated foreigners A51 U.S. foreign trade A51 U.S. reserve assets Securities Holdings and Transactions A51 Foreign official assets held at Federal Reserve A60 Foreign transactions in securities Banks A61 Marketable U.S. Treasury bonds and A52 Selected US. liabilities to foreign official notes—Foreign transactions institutions Interest and Exchange Rates Reported by Banks in the United States A62 Foreign exchange rates A52 Liabilities to, and claims on, foreigners A53 Liabilities to foreigners A55 Banks' own claims on foreigners A63 GUIDE TO STATISTICAL RELEASES AND A56 Banks' own and domestic customers' claims on SPECIAL TABLES foreigners A56 Banks' own claims on unaffiliated foreigners A64 INDEX TO STATISTICAL TABLES A57 Claims on foreign countries—Combined domestic offices and foreign branches Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 NonfinancialS tatistics • July 2000 1.10 RESERVES, MONEY STOCK, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1999 2000 1999 2000 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q2 Q3 Q4 Qir Dec. Jan.r Feb.r Mar.r Apr. Reserves of depository institutions2 1 Total -6.6 -15.4 -7.9 4.2 9.4 47.0 -46.3 -33.0 17.7 2 Required -5.6 -15.0 -9.4 2.5 10.4 27.2 -22.0 -37.2 20.1 3 Nonborrowed -6.7 -17.1 -7.5 4.9 7.0 45.8 -39.2 -35.2 14.0 4 Monetary base- 9.6 9.2 20.0 3.8 44.2 1.3 -37.9 -5.0 7.0 Concepts of money and debt4 5 Ml 2.1 -1.8 4.9 .5 15.6 -2.9 -16.5 6.4 4.2 6 M2 6.0 5.2 5.0 5.7 7.3 6.1 2.4 9.0 10.0 7 M3 6.0 4.9 9.8 10.2 16.9 8.2 2.8 12.7 7.0 8 Debt 7.0 6.2r 6.3 6.1 6.9 6.3 5.0 7.2 n.a. Nontransaction components 9 In M25 7.3 7.5 5.0 7.4 4.6 8.9 8.3 9.8 11.8 10 In M3 only6 5.9 4.0 23.1 22.0 42.5 13.8 3.9 22.1 -.7 Time and savings deposits Commercial banks 11 Savings, including MMDAs 10.7 10.6 4.2 3.5 -3.1 2.3 12.7 6.2 14.8 12 Smalltime7 -2.0 2.1 6.8 8.6 8.2 7.6 9.6 9.5 17.0 13 Large time8'9 -.9 .2 36.9 20.7 47.8r 8.5 2.3 8.0 25.4 Thrift institutions 14 Savings, including MMDAs 14.5 13.3 -3.3 -1.2 -8.0 -3.7 7.0 7.5 -8.0 15 Small time7 -6.3 -3.2 5.0 5.7 6.4 8.2 1.5 2.6 -2.2 16 Large time8 -4.4 1.2 6.3 19.0 5.3 39.4 8.9 2.5 -6.3 Money market mutual funds 17 Retail 11.2 8.0 9.4 17.8 20.2 26.9 4.1 19.4 18.9 18 Institution-only 14.1 9.3 21.4 23.5 31.0 31.8 -11.5 45.1 -1.3 Repurchase agreements and Eurodollars 19 Repurchase agreements10 -1.2 9.1 12.8 17.5 49.3 -19.0 50.3 -12.9 -18.0 20 Eurodollars10 21.7 -9.7 12.1 31.7 71.2 18.7 -25.3 70.4 -52.0 Debt components4 21 Federal -2.3 -.3 -4.3 -4.4 .9 -4.4 -12.1 3.1 n.a. 22 Nonfederal 9.7 8.0 9.3 8.9 8.5 9.1 9.5 8.3 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 2000 2000 Feb. Mar. Apr. Mar. 15 Mar. 22 Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 556,692 555,397 560,803 555,115 556,442 553,988 558,881 557,333 559,654 563,987 U.S. government securities 2 Bought outright—System account 501,923 501,572 505,256 501,927 500,433 501,704 501,789 502,593 507,438 507,391 3 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright 158 150 143 150 150 150 150 146 140 140 5 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreements—triparty 19,991 20,177 19,920 20,104 21,833 17,906 22,121 19,142 16,624 20,477 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 40 94 181 30 236 63 146 472 55 81 9 Seasonal credit 44 70 117 63 71 82 88 105 103 133 10 Special Liquidity Facility credit 17 7 0 14 0 0 0 0 0 0 11 Extended credit 0 0 0 0 0 0 0 0 0 0 12 Float 679 91 303 -207 320 334 301 110 238 590 13 Other Federal Reserve assets 33,840 33,236 34,884 33,034 33,399 33,749 34,286 34,766 35,056 35,176 14 Gold stock 11,048 11,048 11,048 11,048 11,048 11,048 11,048 11,048 11,048 11,048 15 Special drawing rights certificate account 6,200 6,200 5,733 6,200 6,200 6,200 6,200 6,200 5,771 5,200 16 Treasury currency outstanding 28,445r 28,664r 28,800 28,638r 28,683r 28,728r 28,773 28,787 28,801 28,815 ABSORBING RESERVE FUNDS 17 Currency in circulation 565,554r 563,365r 564,290 563,646' 563,220r 562,761r 563,916 564,779 564,569 564,039 18 Reverse repurchase agreements—triparty4 . . . 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings 148 165 196 164 168 170 178 197 198 201 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 5,259 5,344 8,395 5,457 5,675 5,067 5,057 5,462 6,778 12,417 21 Foreign 92 96 106 85 102 117 102 125 91 90 22 Service-related balances and adjustments . . 7,413 6,866 6,836 6,975 6,722r 6,906r 7,066 6,785 6,775 6,802 23 Other 244 201 272 196 190 182 225 274 274 297 24 Other Federal Reserve liabilities and capital . 18,684 19,071 19,357 19,152 19,106 19,106 19,655 19,653 19,269 19,241 25 Reserve balances with Federal Reserve Banks' 4,989 6,200r 6,932 5,327 7,190r 5,656 8,704 6,094 7,321 5,964 End-of-month figures Wednesday figures Feb. Mar. Apr. Mar. 15 Mar. 22 Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 558,483 559,809 566,553 560,782 559,321 555,546 558,691 558,137 567,423 583,512 U.S. government securities2 2 Bought outright—System account3 500,771 501,708 506,695 502,215 500,492 502,762 501,298 504,139 508,029 507,776 3 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright 150 150 140 150 150 150 150 140 140 140 5 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreements—triparty 24,768 23,745 24,905 25,045 22,855 18,420 21,555 18,300 23,775 39,780 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 29 157 78 18 1,551 35 455 39 86 123 9 Seasonal credit 64 79 162 66 78 89 103 109 119 162 10 Special Liquidity Facility credit 16 0 0 14 0 0 0 0 0 0 11 Extended credit 0 0 0 0 0 0 0 0 0 0 12 Float 339 -213 -237 107 593 31 613 440 112 184 13 Other Federal Reserve assets 32,347 34,183 34,810 33,167 33,601 34,059 34,518 34,970 35,162 35,348 14 Gold stock 11,048 11,048 11,048 11,048 11,048 11,048 11,048 11,048 11,048 11,048 15 Special drawing rights certificate account 6,200 6,200 5,200 6,200 6,200 6,200 6,200 6,200 5,200 5,200 16 Treasury currency outstanding 28,533r 28,773r 28,829 28,638r 28,683r 28,728r 28,773 28,787 28,801 28,815 ABSORBING RESERVE FUNDS 17 Currency in circulation . . . . 564,789r 562,970r 563,307 564,517r 564,013r 563,999r 565,629 565,699 565,305 565,024 18 Reverse repurchase agreements—triparty . . . 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings 162 174 203 168 169 174 197 197 201 203 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 5,004 4,357 15,868 7,611 4,864 5,288 6,440 5,833 5,672 29,444 21 Foreign 129 125 142 71 84 80 96 146 137 79 22 Service-related balances and adjustments .. 6,916 7,066r 6,804 6,975 6,722r 6,906r 7,066 6,785 6,775 6,802 23 Other 243 188 251 196 184 181 275 277 276 276 24 Other Federal Reserve liabilities and capital . 18,785 19,752 18,558 18,836 18,817 18,820 19,409 18,958 18,961 18,906 25 Reserve balances with Federal Reserve Banks' 8,238 11,198 6,498 8,294 10,399r 6,075r 5,600 6,276 15,146 7,843 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 4. Cash value of agreements arranged through third-party custodial banks. These agree- 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged ments are collateralized by U.S. government and federal agency securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 5. Excludes required clearing balances and adjustments to compensate for float, under matched sale-purchase transactions. 3. Includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic NonfinancialS tatistics • July 2000 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1997 1998 1999 1999 2000 Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar.1" Apr. 1 Reserve balances with Reserve Banks2 10,664 9,021 5,260 6,768 6,285 5,260 5,207 5,073 6,526 7,089 2 Total vault cash3 44,742 44,293 60,499 47,030 50,754 60,499 73,899r 63,746r 48,929 46,444 3 Applied vault cash4 37,255 35,997 36,384 33,933 34,660 36,384 39,097 37,015 33,230 33,505 4 Surplus vault cash5 7,486 8,296 24,116 13,096 16,094 24,116 34,802 26,732r 15,699 12,940 5 Total reserves6 47,920 45,018 41,643 40,702 40,944 41,643 44,304 42,088 39,756 40,593 6 Required reserves 46,235 43,435 40,332 39,549 39,610 40,332 42,279 40,971 38,531 39,428 7 Excess reserve balances at Reserve Banks7 1,685 1,583 1,311 1,153 1,334 1,311 2,025 1,117 1,226 1,165 8 Total borrowing at Reserve Banks 324 117 320 281 236 320 374 108 179 304 9 Adjustment 245 101 179 52 157 179 296 45 101 184 10 Seasonal 79 15 67 221 71 67 31 44 71 120 11 Special Liquidity Facility8 74 8 7 74 46 19 7 0 12 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 2000 Dec. 29 Jan. 12 Jan. 26 Feb. 9 Feb. 23 Mar. 8 Mar. 22 Apr. 5r Apr. 19 May 3 1 Reserve balances with Reserve Banks2 4,888 6,308 4,644 4,145 5,172 6,234 6,267 7,188 6,715 7,520 2 Total vault cash3 63,663 68,851 75,759 80,805r 58,78 lr 49,746r 48,679r 48,594 47,133 44,591 3 Applied vault cash4 37,329 37,491 40,031 40,334 36,271 33,772 32,862 33,323 32,885 34,376 4 Surplus vault cash" 26,334 31,360 35,728 40,47 r 22,510r 15,974r 15,817r 15,271 14,248 10,215 5 Total reserves6 42,217 43,799 44,675 44,479 41,443 40,006 39,129 40,511 39,600 41,896 6 Required reserves 40,956 40,674 43,278 43,333 40,260 39,088 38,003 38,856 38,516 40,848 7 Excess reserve balances at Reserve Banks 1,261 3,125 1,396 1,146 1,183 918 1,125 1,654 1,083 1,047 8 Total borrowing at Reserve Banks 425 657 224 114 100 119 207 189 368 276 9 Adjustment 222 530 180 62 35 44 133 104 264 120 10 Seasonal 79 38 28 27 48 61 67 85 104 156 11 Special Liquidity Facility8 124 90 17 25 17 15 7 0 0 12 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. Borrowing at the discount window under the terms and conditions established for the those banks and thrift institutions that are not exempt from reserve requirements. Dates refer Century Date Change Special Liquidity Facility in effect from October 1, 1999 through to the maintenance periods in which the vault cash can be used to satisfy reserve require- April 7, 2000. ments. 9. Consists of borrowing at the discount window under the terms and conditions estab- 4. All vault cash held during the lagged computation period by "bound" institutions (that lished for the extended credit program to help depository institutions deal with sustained is, those whose required reserves exceed their vault cash) plus the amount of vault cash liquidity pressures. Because there is not the same need to repay such borrowing promptly as applied during the maintenance period by "nonbound" institutions (that is, those whose vault with traditional short-term adjustment credit, the money market effect of extended credit is cash exceeds their required reserves) to satisfy current reserve requirements. similar to that of nonborrowed reserves. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 6/ O 2/ n 0 0 Effective date Previous rate 6/ O 2/ n 0 0 Effective date Previous rate 6/ O 2/ n 0 0 Effective date Previous rate Boston 6.00 5/16/00 5.50 6.65 6/1/00 6.40 7.15 6/1/00 6.90 New York 5/19/00 Philadelphia 5/18/00 Cleveland 5/16/00 Richmond 5/16/00 Atlanta 5/17/00 Chicago 5/17/00 St. Louis 5/18/00 Minneapolis 5/18/00 Kansas City 5/17/00 Dallas 5/17/00 San Francisco .... 6.00 5/16/00 5.50 6.65 6/1/00 6.40 7.15 6/1/00 6.90 Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Ba Range (or Effective date level)—All of Effective date level)—All of Effective date level)—All F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks In effect Dec. 31, 1977 6 6 1982—Oct. 12 9.5-10 9.5 1994—May 17 3-3.5 3.5 13 9.5 9.5 18 3.5 3.5 1978—Jan. 9 6-6.5 6.5 Nov. 22 9-9.5 9 Aug. 16 ... . 3.5^1 4 20 6.5 6.5 26 9 9 18 4 4 May 11 6.5-7 7 Dec. 14 8.5-9 9 Nov. 15 .... 4-4.75 4.75 12 7 7 15 8.5-9 8.5 17 ... . 4.75 4.75 July 3 7-7.25 7.25 17 8.5 8.5 10 7.25 7.25 1995—Feb. 1 . . . . 4.75-5.25 5.25 Aug. 21 7.75 7.75 1984—Apr. 9 8.5-9 9 9 ... . 5.25 5.25 Sept. 22 8 8 13 9 9 Oct. 16 8-8.5 8.5 Nov. 21 8.5-9 8.5 1996—Jan. 31.... 5.00-5.25 5.00 20 8.5 8.5 26 8.5 8.5 Feb. 5 .... 5.00 5.00 Nov. 1 8.5-9.5 9.5 Dec. 24 8 8 3 9.5 9.5 1998—Oct. 15 ... . 4.75-5.00 4.75 1979—July 20 10 10 1985—May 2 2 4 0 7 7 .5 .5 -8 7 7 . . 5 5 Nov. 1 1 6 7 . . . . . .. . 4.5 4 0 . - 7 4 5 . 75 4 4. . 5 7 0 5 Aug. 17 10-10.5 10.5 19 .... 4.50 4.50 20 10.5 10.5 1986—Mar. 7 7-7.5 7 Sept. 19 10.5-11 11 10 7 7 1999—Aug. 24 .... 4.50^1.75 4.75 21 11 11 Apr. 21 6.5-7 6.5 26 .... 4.75 4.75 Oct. 8 11-12 12 23 6.5 6.5 Nov. 16 .... 4.75-5.00 4.75 10 12 12 July 11 6 6 18 5.00 5.00 Aug. 21 5.5-6 5.5 1980—-Feb. 15 12-13 13 22 5.5 5.5 2000—Feb. 2 .... 5.00-5.25 5.25 19 13 13 4 . . . . 5.25 5.25 May 29 12-13 13 1987—Sept. 4 5.5-6 6 Mar. 21 ... . 5.25-5.50 5.50 30 12 12 11 6 6 23 ... . 5.50 5.50 June 13 11-12 11 May 16 ... . 5.50-6.00 5.50 16 11 11 1988—Aug. 9 6-6.5 6.5 19 ... . 6.00 6.00 July 28 10-11 10 11 6.5 6.5 2 9 10 10 In effect June 2, 2000 6.00 6.00 Sept. 26 11 11 1989—Feb. 24 6.5-7 7 Nov. 17 12 12 27 7 7 Dec. 5 12-13 13 8 13 13 1990—Dec. 19 6.5 6.5 1981—May 5 13-14 14 1991—Feb. 1 6-6.5 6 8 14 14 4 6 6 Nov. 2 13-14 13 Apr. 30 5.5-6 5.5 6 13 13 May 2 5.5 5.5 Dec. 4 12 12 Sept. 13 5-5.5 5 17 5 5 1982—July 20 11.5-12 11.5 Nov. 6 4.5-5 4.5 23 11.5 11.5 7 4.5 4.5 Aug. 2 11-11.5 11 Dec. 20 3.5-4.5 3.5 3 11 11 24 3.5 3.5 16 10.5 10.5 27 10-10.5 10 1992—July 2 3-3.5 3 3 0 10 10 7 3 3 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on Nov. 17, 1981. charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • July 2000 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts 1 $0 million-$44.3 million3. 12/30/99 2 More than $44.3 million4 . 12/30/99 3 Nonpersonal time deposits5 12/27/90 4 Eurocurrency liabilities6.. . 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions maintenance period beginning December 30, 1999, for depository institutions that report include commercial banks, savings banks, savings and loan associations, credit unions, weekly, and with the period beginning January 20, 2000, for institutions that report quarterly, agencies and branches of foreign banks, and Edge Act corporations. the exemption was raised from $4.9 million to $5.0 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 11/2 years was reduced from 3 percent to 1 Vi 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 1l/2 years was reduced from 3 against which the 3 percent reserve requirement applies be modified annually by 80 percent of percent to zero on Jan. 17, 1991. the percentage change in transaction accounts held by all depository institutions, determined The reserve requirement on nonpersonal time deposits with an original maturity of 1 l/i as of June 30 of each year. Effective with the reserve maintenance period beginning years or more has been zero since Oct. 6, 1983. December 30, 1999, 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 20, 2000, 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 $46.5 million to $44.3 million. deposits with an original maturity of less than 1 '/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 1999 2000 TTyyppee ooff ttrraannssaaccttiioonn 11999977 11999988 11999999 aanndd mmaattuurriittyy Sept. Oct. Nov. Dec. Jan. Feb. Mar. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 9,147 3,550 0 0 0 0 00 0 00 00 7 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 435,907 450,835 464,218 42,643 35,844 36,882 42,468 37,029 38,607 48,459 4 For new bills 435,907 450,835 464,218 42,643 35,844 36,882 42,468 37,029 38,607 48,459 5 Redemptions 0 2,000 0 0 0 0 0 0 0 198 Others within one year 6 Gross purchases 5,549 6,297 11,895 960 0 964 1,450 0 0 00 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 41,716 46,062 50,590 3,468 3,831 6,675 3,936 3,566 6,877 5,034 9 Exchanges -27,499 -49,434 -53,315 -2,125 -368 -10,150 -2,175 -4,360 -6,688 -3,515 10 Redemptions 1,996 2,676 1,429 0 170 0 0 390 0 0 One to five years 11 Gross purchases 20,080 12,901 19,731 0 0 1,014 3,514 160 0 740 17 Gross sales 0 0 0 0 0 0 0 0 0 0 N Maturity shifts -37,987 -37,777 -44,032 -3,468 -3,831 -3,685 -3,936 -3,566 -5,210 -5,034 14 Exchanges 20,274 37,154 42,604 2,125 0 8,015 2,175 4,045 4,348 3,515 Five to ten years 15 Gross purchases 3,449 2,294 4,303 0 0 0 581 809 0 448899 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -1,954 -5,908 -5,841 0 0 -2,273 0 0 -949 0 18 Exchanges 5,215 7,439 7,583 0 0 2,135 0 316 1,170 0 More than ten years 19 Gross purchases 5,897 4,884 9,428 0 0 925 1,257 1,069 0 333300 70 Gross sales 0 0 0 0 0 0 0 0 0 0 71 Maturity shifts -1,775 -2,377 -717 0 0 -717 0 0 -717 0 22 Exchanges 2,360 4,842 3,139 0 374 0 0 0 1,170 0 All maturities 7.1 Gross purchases 44,122 29,926 45,357 960 0 2,903 6,802 2,038 0 1,559 74 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 1,996 4,676 1,429 0 170 0 0 390 0 198 Matched transactions 76 Gross purchases 3,577,954 4,395,430 4,395,998 348,014 332,708 317,537 488,845 492,277 340,127 401,404 27 Gross sales 3,580,274 4,399,330 4,414,253 350,151 330,856 318,294 510,605 471,663 339,585 401,841 Repurchase agreements 78 Gross purchases 810,485 512,671 281,599 29,369 100 0 00 00 00 00 29 Gross sales 809,268 514,186 301,273 24,337 7,707 0 0 0 0 0 30 Net change in U.S. Treasury securities 41,022 19,835 5,999 3,855 -5,924 2,146 -14,959 22,262 542 923 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 00 00 00 00 37 Gross sales 0 25 0 0 0 0 0 0 0 0 33 Redemptions 1,540 322 157 0 50 7 0 6 25 0 Repurchase agreements 34 Gross purchases 160,409 284,316 360,069 53,224 9,636 0 00 00 00 00 35 Gross sales 159,369 276,266 370,772 47,963 24,092 0 0 0 0 0 36 Net change in federal agency obligations -500 7,703 -10,859 5,261 -14,506 -7 0 -6 -25 0 Reverse repurchase agreements 37 Gross purchases 0 0 0 0 0 0 0 00 00 00 38 Gross sales 0 0 0 0 0 0 0 0 0 0 Repurchase agreements 39 Gross purchases 0 0 304,989 0 68,061 81,350 155,578 61,345 82,998 6611,,223300 40 Gross sales 0 0 164,349 0 45,501 54,470 64,378 178,880 81,335 62,253 41 Net change in triparty obligations 0 0 140,640 0 22,560 26,880 91,200 -117,535 1,663 -1,023 42 Total net change in System Open Market Account. .. 40,522 27,538 135,780 9,116 2,130 29,019 76,241 -95,279 2,180 -100 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market 2. Transactions exclude changes in compensation for the elfects of inflation on the principal Account; all other figures increase such holdings. of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • July 2000 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 2000 2000 Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 Feb. 29 Mar. 31 Apr. 30 Consolidated condition statement ASSETS 1 Gold certificate account 11,048 11,048 11,048 11,048 11,048 11,048 11,048 11,048 2 Special drawing rights certificate account 6,200 6,200 6,200 5,200 5,200 6,200 6,200 5,200 3 456 473 497 531 538 422 483 569 Loans 4 To depository institutions 124 558 148 205 285 109 236 240 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Triparty Obligations 7 Repurchase agreements—triparty2 18,420 21,555 18,300 23,775 39,780 24,768 23,745 24,905 Federal agency obligations3 8 Bought outright 150 150 140 140 140 150 150 140 y Held under repurchase agreements 0 0 0 0 0 0 0 0 10 Total U.S. Treasury securities3 502,762 501,298 504,139 508,029 507,776 500,771 501,708 506,695 n Bought outright4 502,762 501,298 504,139 508,029 507,776 500,771 501,708 506,695 i? Bills 198,093 196,622 197,742 201,252 200,991 197,674 197,038 199,905 13 Notes 219,082 219,086 220,699 221,017 221,023 217,843 219,082 221,027 14 Bonds 85,588 85,589 85,698 85,760 85,762 85,254 85,588 85,763 15 Held under repurchase agreements 0 0 0 0 0 0 0 0 16 Total loans and securities 521,456 523,560 522,727 532,149 547,981 525,798 525,839 531,981 17 Items in process of collection 6,234 8,807 8,992 9,083 7,878 9,642 4,904 5,935 18 Bank premises 1,384 1,388 1,389 1,390 1,388 1,380 1,381 1,393 Other assets 19 Denominated in foreign currencies5 15,253 15,806 15,811 15,815 15,819 15,234 15,803 15,075 20 All other6 17,423 17,319 17,725 17,935 18,286 15,633 16,988 18,526 21 Total assets 579,454 584,603 584,389 593,152 608,139 585,357 582,647 589,727 LIABILITIES 22 Federal Reserve notes 535,901 537,527 537,607 537,236 536,950 536,839 534,854 535,249 23 Reverse repurchase agreements—triparty2 0 0 0 0 0 0 0 0 24 Total deposits 18,319 19,463 19,416 28,348 44,844 20,548 22,866 29,741 25 Depository institutions 12,771 12,653 13,159 22,263 15,045 15,173 18,196 13,480 26 U.S. Treasury—General account 5,288 6,440 5,833 5,672 29,444 5,004 4,357 15,868 27 Foreign—Official accounts 80 96 146 137 79 129 125 142 28 Other 181 275 277 276 276 243 188 251 29 Deferred credit items 6,413 8,203 8,409 8,607 7,439 9,186 5,175 6,178 30 Other liabilities and accrued dividends7 4,833 4,855 4,856 4,853 4,826 4,683 5,016 4,931 31 Total liabilities 565,467 570,049 570,287 579,044 594,059 571,256 567,911 576,100 CAPITAL ACCOUNTS 3? Capital paid in 6,706 6,745 6,746 6,747 6,751 6,699 6,744 6,752 33 Surplus 6,431 6,431 6,431 6,431 6,431 6,404 6,431 6,259 34 Other capital accounts 849 1,378 925 929 898 999 1,561 617 35 Total liabilities and capital accounts 579,454 584,603 584,389 593,152 608,139 585,357 582,647 589,727 MEMO 36 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 37 Federal Reserve notes outstanding (issued to Banks) 789,660 787,866 786,222 784,953 783,981 799,674 788,805 783,126 38 LESS: Held by Federal Reserve Banks 253,759 250,339 248,615 247,718 247,031 262,835 253,951 247,877 39 Federal Reserve notes, net 535,901 537,527 537,607 537,236 536,950 536,839 534,854 535,249 Collateral held against notes, net 40 Gold certificate account 11,048 11,048 11,048 11,048 11,048 11,048 11,048 11,048 41 Special drawing rights certificate account 6,200 6,200 6,200 5,200 5,200 6,200 6,200 5,200 4? Other eligible assets 0 0 0 0 0 0 0 0 43 U.S. Treasury and agency securities 518,653 520,279 520,359 520,987 520,702 519,590 517,606 519,001 44 Total collateral 535,901 537,527 537,607 537,236 536,950 536,839 534,854 535,249 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical 5. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 6. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Cash value of agreements arranged through third-party custodial banks. bills maturing within ninety days. 3. Face value of the securities. 7. Includes exchange-translation account reflecting the monthly revaluation at market 4. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with exchange rates of foreign exchange commitments. Federal Reserve Banks—and includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. Excludes securities sold and scheduled to be 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 TTyyppee ooff hhoollddiinngg aanndd mmaattuurriittyy 2000 2000 Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 Feb. 29 Mar. 31 Apr. 30 1 Total loans 124 558 148 205 285 109 236 240 2 Within fifteen days1 107 478 71 184 262 81 203 178 3. Sixteen days to ninety days 17 79 77 21 23 28 33 63 4. 91 days to 1 year 0 0 0 0 0 0 0 0 5 Total U.S. Treasury securities2 502,762 501,297 504,139 507,776 507,776 500,771 501,708 506,693 6 Within fifteen days' 20,153 11,710 15,618 19,475 19,475 13,372 3,674 6,882 7 Sixteen days to ninety days 103,506 108,743 105,482 107,551 107,551 106,030 114,085 117,248 8 Ninety-one days to one year 134,851 138,106 138,578 135,334 135,334 138,688 141,215 137,144 9 One year to five years 124,688 123,170 124,885 124,897 124,897 123,947 123,170 124,898 10 Five years to ten years 51,437 51,441 51,446 52,385 52,385 50,941 51,438 52,387 11 More than ten years 68,126 68,128 68,130 68,135 68,135 67,793 68,127 68,135 12 Total federal agency obligations 150 150 140 140 140 150 150 140 13 Within fifteen days1 0 10 0 0 0 0 10 0 14 Sixteen days to ninety days 0 0 0 0 0 10 0 0 15 Ninety-one days to one year 10 10 10 10 10 10 10 10 16 One year to five years 10 10 10 10 10 10 10 10 17 Five years to ten years 120 120 120 120 120 120 120 120 18 More than ten years 0 0 0 0 0 10 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 • July 2000 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1999 2000 1996 1997 1998 1999 Dec. Dec. Dec. Dec. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 50.16 46.86 44.90 41.52 42.11 40.94 41.20 41.52 43.15 41.48 40.34 40.94 2 Nonborrowed reserves4 50.01 46.54 44.79 41.20 41.77 40.66 40.96 41.20 42.77 41.38 40.16 40.63 3 Nonborrowed reserves plus extended credit5 50.01 46.54 44.79 41.20 41.77 40.66 40.96 41.20 42.77 41.38 40.16 40.63 4 Required reserves 48.75 45.18 43.32 40.21 40.92 39.79 39.86 40.21 41.12 40.3/ 39.12 39.77 5 Monetary base6 451.61 479.16 512.59 590.65 550.22 557.75 569.66 590.65 591.30 572.63r 570.25r 573.56 Not seasonally adjusted 6 Total reserves7 51.45 48.01 45.12 41.72 41.85 40.77 41.02 41.72 44.29 42.10 39.78 40.62 7 Nonborrowed reserves 51.30 47.69 45.00 41.40 41.51 40.49 40.78 41.40 43.92 41.99 39.60 40.32 8 Nonborrowed reserves plus extended credit5 51.30 47.69 45.00 41.40 41.51 40.49 40.78 41.40 43.92 41.99 39.60 40.32 9 Required reserves8 50.04 46.33 43.54 40.41 40.65 39.62 39.68 40.41 42.27 40.98 38.55 39.45 10 Monetary base9 456.63 484.98 518.28 600.46 548.13 555.51 571.89 600.46 597.03 571.80r 570.05r 571.11 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves11 51.17 47.92 45.02 41.64 41.79 40.70 40.94 41.64 44.30 42.09 39.76 40.59 12 Nonborrowed reserves 51.02 47.60 44.90 41.32 41.45 40.42 40.71 41.32 43.93 41.98 39.58 40.29 13 Nonborrowed reserves plus extended credit5 51.02 47.60 44.90 41.32 41.45 40.42 40.71 41.32 43.93 41.98 39.58 40.29 14 Required reserves 49.76 46.24 43.44 40.33 40.59 39.55 39.61 40.33 42.28 40.97 38.53 39.43 15 Monetary base12 463.40 491.79 525.06 607.93 555.19 562.64 579.02 607.93 604.77r 579.14r 576.92r 577.92 16 Excess reserves13 1.42 1.69 1.58 1.31 1.20 1.15 1.33 1.31 2.03 1.12 1.23r 1.17 17 Borrowings from the Federal Reserve .16 .32 .12 .32 .34 .28 .24 .32 .37 .11 .18 .30 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 2000 1996 1997 1998 1999 IItteemm Dec. Dec. Dec. Dec. Jan.r Feb.r Mar.r Apr. Seasonally adjusted Measures2 1 Ml 1,081.1 1,073.9 1,097.4 1,123.8 1,121.1 1,105.7 1,111.6 1,115.5 2 M2 3,822.9 4,040.8 4,397.0 4,652.2 4,675.7 4,684.9 4,719.9 4,759.4 3 M3 4,952.4 5,402.2 5,996.9 6,469.3 6,513.7 6,528.8 6,597.7 6,636.1 4 Debt 14,446.5 15,207.5r 16,229.8r 17,314.2r 17,404.6 17,476.4 17,581.9 n.a. Ml components 5 Currency3 394.3 424.8 459.5 515.6 524.3 518.2 517.1 518.0 6 Travelers checks4 8.3 8.1 8.2 8.3 8.2 8.1 8.2 8.2 7 Demand deposits5 402.3 395.3 379.3 355.9 345.5 338.3 343.0 341.3 8 Other checkable deposits6 276.1 245.8 250.3 244.0 243.1 241.0 243.3 248.0 Nontransaction components 9 In M27 2,741.8 2,966.9 3,299.6 3,528.4 3,554.6 3,579.2 3,608.3 3,643.9 10 In M3 only8 1,129.5 1,361.3 1,599.9 1,817.1 1,838.0 1,843.9 1,877.8 1,876.7 Commercial banks 11 Savings deposits, including MMDAs 904.0 1,020.5 1,184.8 1,285.8 1,288.3 1,301.9 1,308.6 1,324.7 12 Small time deposits9 593.3 625.4 626.1 634.5 638.5 643.6 648.7 657.9 13 Large time deposits10, 11 413.9 488.3 539.3 610.5r 614.8 616.0 620.1 633.2 Thrift institutions 14 Savings deposits, including MMDAs 366.6 376.6 413.8 448.7 447.3 449.9 452.7 449.7 15 Small time deposits9 353.6 342.8 325.6 320.6 322.8 323.2 323.9 323.3 16 Large time deposits10 78.3 85.6 88.9 91.4 94.4 95.1 95.3 94.8 Money market mutual funds 17 Retail 524.4 601.7 749.4 838.9 857.7 860.6 874.5 888.3 18 Institution-only 312.0 380.8 518.4 607.4 623.5 617.5 640.7 640.0 Repurchase agreements and Eurodollars 19 Repurchase agreements12 210.7 256.0 300.8 334.7 329.4 343.2 339.5 334.4 20 Eurodollars12 114.6 150.7 152.6 173.1 175.8 172.1 182.2 174.3 Debt components 21 Federal debt 3,781.3 3,800.3 3,750.8 3,659.5 3,646.2 3,609.5 3,618.8 n.a. 22 Nonfederal debt 10,665.2 11,407. lr 12,479. lr 13,654.7r 13,758.4 13,867.0 13,963.1 n.a. Not seasonally adjusted Measures2 23 Ml 1,105.1 1,097.7 1,121.3 1,148.3 1,127.8 1,097.2 1,108.3 1,124.2 24 M2 3,845.1 4,063.9 4,422.2 4,680.5 4,686.2 4,683.0 4,740.7 4,804.9 25 M3 4,973.4 5,426.1 6,026.5 6,504.4 6,530.0 6,548.2 6,631.0 6,680.0 26 Debt 14,443.2r 15,204.5r 16,226.7r 17,312.6r 17,390.6 17,449.5 17,564.8 n.a. Ml components 27 Currency3 397.9 428.9 464.1 521.3 523.0 517.3 517.2 518.4 28 Travelers checks4 8.6 8.3 8.4 8.4 8.4 8.3 8.3 8.3 29 Demand deposits5 419.9 412.4 395.9 371.9 350.2 331.9 338.5 343.8 30 Other checkable deposits6 278.8 248.2 252.8 246.7 246.2 239.7 244.3 253.7 Nontransaction components 31 In M27 2,740.0 2,966.3 3,300.9 3,532.2 3,558.4 3,585.8 3,632.4 3,680.6 32 In M3 only8 1,128.2 1,362.2 1,604.3 1,823.9 1,843.8 1,865.3 1,890.3 1,875.1 Commercial banks 33 Savings deposits, including MMDAs 903.3 1,020.4 1,186.0 1,288.6 1,286.5 1,294.5 1,311.3 1,341.0 34 Small time deposits9 592.7 625.3 626.5 635.3 640.1 646.1 650.7 658.6 35 Large time deposits10, 11 413.2 487.2 537.8 608.6 605.9 611.7 620.3 632.9 Thrift institutions 36 Savings deposits, including MMDAs 366.3 376.5 414.2 449.7 446.7 447.3 453.6 455.2 37 Small time deposits9 353.2 342.8 325.8 321.0 323.6 324.5 324.9 323.6 38 Large time deposits10 78.1 85.4 88.6 91.1 93.0 94.4 95.3 94.8 Money market mutual funds 39 Retail 524.3 601.3 748.3 837.5 861.5 873.4 891.9 902.2 40 Institution-only 315.6 386.7 527.9 618.9 638.2 640.6 650.5 640.2 Repurchase agreements and Eurodollars 41 Repurchase agreements12 205.7 250.5 295.4 330.0 329.7 345.1 342.2 333.0 42 Eurodollars12 115.7 152.3 154.5 175.2 177.0 173.5 182.1 174.2 Debt components 43 Federal debt 3,787.9 3,805.8 3,754.9 3,663.1 3,639.0 3,605.4 3,633.6 n.a. 44 Nonfederal debt 10,655.2r 11,398.8r 12,471.8r 13,649.5r 13,751.6 13,844.1 13,931.1 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic NonfinancialS tatistics • July 2000 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 M1. 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 1999 1999r 2000 2000 Apr.r Oct. Nov. Dec. Jan.r Feb.r Mar.r Apr. Apr. 5 Apr. 12 Apr. 19 Apr. 26 Seasonally adjusted Assets 1 Bank credit 4,504.2 4,633.6 4,687.9 4,763.4 4,785.9 4,820.7 4,858.2 4,901.8 4,879.4 4,886.8 4,891.6 4,921.3 2 Securities in bank credit 1,192.0 1,249.7 1,242.9 1,263.3 1,265.2 1,267.6 1,275.4 1,281.4 1,281.2 1,275.8 1,273.8 1,286.1 3 U.S. government securities 802.5 813.2 7991 804.0 811.4 813.9 812.0 809.1 813.1 809.6 806.1 810.8 4 Other securities 389.5 436.5 443.9 459.3 453.9 453.8 463.4 472.2 468.1 466.1 467.7 475.3 Loans and leases in bank credit2 . . . 3,312.2 3,383.8 3,445.0 3,500.0 3,520.6 3,553.1 3,582.7 3,620.4 3,598.2 3,611.0 3,617.8 3,635.3 6 Commercial and industrial 959.4 982.4 998.0 1,003.4 1,012.7 1,021.8 1,030.7 1,039.1 1,030.6 1,033.2 1,041.4 1,042.4 7 Real estate 1,350.8 1,419.3 1,432.6 1,469.1 1,486.4 1,504.1 1,520.9 1,541.2 1,532.9 1,537.5 1,540.3 1,546.0 8 Revolving home equity 104.5 100.2 100.9 102.1 104.5 106.7 109.3 113.0 111.8 112.2 112.9 113.8 9 Other 1,246.3 1,319.1 1,331.7 1,367.0 1,381.9 1,397.4 1,411.6 1,428.2 1,421.1 1,425.3 1,427.4 1,432.2 10 Consumer 496.7 482.2 483.5 491.0 497.0 501.7 504.8 508.7 507.4 507.8 507.7 509.9 11 Security3 122.9 109.6 133.6 153.1 143.1 142.3 142.5 143.3 142.1 144.8 140.2 147.3 12 Other loans and leases 382.4 390.4 397.2 383.4 381.4 383.1 383.9 388.1 385.2 387.8 388.1 389.6 13 Interbank loans 216.3 225.8 224.9 229.4 225.2 236.0 237.7 238.1 225.1 232.6 234.3 254.5 14 Cash assets4 258.3 269.0 274.6 287.6 286.2 284.1 277.5 287.4 281.0 277.9 291.4 291.1 15 Other assets5 342.0 362.5 368.8 379.1 405.3 412.4 400.1 401.9 398.7 400.1 400.6 408.0 16 Total assets6 5,2623 5,431.8 5,497.0 5,599.7 5,643.4 5,694.4 5,714.4 5,769.6 5,724.8 5,738.0 5,758.4 5,815.4 Liabilities 17 Deposits 3,373.1 3,448.4 3,481.8 3,524.5 3,541.5 3,559.5 3,576.6 3,626.9 3,616.7 3,610.0 3,643.0 3,633.3 18 Transaction 654.7 630.8 624.9 630.2 626.6 624.8 625.8 625.5 613.8 609.2 635.0 651.4 19 Nontransaction 2,718.4 2,817.6 2,856.9 2,894.4 2,915.0 2,934.8 2,950.9 3,001.4 3,002.9 3,000.7 3,008.0 2,981.9 20 Large time 726.5 772.4 801.8 828.1 840.9 847.7 854.4 875.7 872.7 871.0 873.6 877.7 71 Other 1,991.9 2,045.2 2,055.1 2,066.2 2,074.0 2,087.1 2,096.5 2,125.8 2,130.2 2,129.7 2,134.3 2,104.2 22 Borrowings 986.3 1,050.2 1,059.8 1,116.6 1,134.1 1,130.4 1,151.2 1,183.1 1,166.7 1,188.1 1,160.7 1,203.4 ?3 From banks in the U.S 308.9 348.3 349.9 347.1 360.0 365.0 373.3 374.1 372.9 379.3 365.2 375.0 24 From others 677.4 702.0 709.9 769.6 774.1 765.3 778.0 809.0 793.8 808.8 795.6 828.4 25 Net due to related foreign offices 201.9 220.4 223.9 221.1 229.8 233.9 233.1 223.7 224.1 223.9 227.4 208.0 26 Other liabilities 272.4 291.3 297.7 302.2 289.0 295.5 289.4 289.3 286.1 282.9 285.8 292.4 27 Total liabilities 4,833.7 5,010.4 5,063.1 5,164.5 5,1943 5,2193 5,250.4 5,323.1 5,293.6 5,304.9 5,316.9 5,337.0 28 Residual (assets less liabilities)7 428.6 421.4 433.8 435.2 449.1 475.0 464.0 446.5 431.1 433.1 441.5 478.4 Not seasonally adjusted Assets 29 Bank credit 4,507.7 4,642.8 4,715.4 4,795.8 4,810.0 4,823.7 4,852.3 4,902.4 4,878.2 4,885.2 4,897.9 4,917.2 30 Securities in bank credit 1,196.7 1,252.6 1,256.8 1,273.5 1,273.7 1,271.8 1,276.8 1,283.3 1,287.8 1,280.1 1,275.2 1,283.9 31 U.S. government securities 811.4 808.3 801.9 806.1 813.1 817.8 819.0 817.7 824.1 819.7 814.4 816.8 3? Other securities 385.3 444.3 455.0 467.4 460.6 453.9 457.8 465.6 463.7 460.4 460.9 467.1 33 Loans and leases in bank credit2 .. . 3,311.1 3,390.2 3,458.5 3,522.3 3,536.3 3,552.0 3,575.5 3,619.1 3,590.3 3,605.1 3,622.7 3,633.3 34 Commercial and industrial 966.1 983.1 1,001.8 1,005.4 1,010.3 1,022.5 1,034.6 1,046.1 1,036.3 1,037.3 1,051.6 1,048.9 35 Real estate 1,347.2 1,424.0 1,439.0 1,473.9 1,490.4 1,501.0 1,516.1 1,536.7 1,528.7 1,533.7 1,535.3 1,540.8 36 Revolving home equity 103.7 100.6 101.3 102.5 104.8 106.4 108.2 112.1 110.3 110.9 112.2 113.4 37 Other 1,243.5 1,323.4 1,337.7 1,371.4 1,385.7 1,394.7 1,407.9 1,424.6 1,418.3 1,422.8 1,423.1 1,427.3 38 Consumer 495.4 479.7 482.2 496.5 504.2 503.8 503.2 507.6 504.4 505.6 506.9 510.3 39 Security3 123.6 112.1 135.8 157.8 147.1 143.8 141.5 143.8 137.6 144.9 143.6 148.4 40 Other loans and leases 378.8 391.3 399.8 388.7 384.3 380.8 380.1 384.8 383.4 383.6 385.3 384.9 41 Interbank loans 222.5 219.9 229.0 234.9 226.0 237.5 243.6 244.9 239.9 245.7 241.0 251.2 4? Cash assets4 256.1 270.2 283.6 307.5 300.4 284.7 269.1 284.4 274.2 275.3 292.8 284.9 43 Other assets5 345.1 356.0 365.7 379.0 403.9 414.9 403.8 405.9 406.5 403.4 402.6 409.1 44 Total assets6 5,273.1 5,429.8 5,534.1 5,6573 5,681.5 5,702.0 5,709.6 5,7783 5,739.6 5,750.5 5,775.2 5,8033 Liabilities 45 Deposits 3,390.9 3,440.9 3,509.6 3,566.9 3,554.8 3,558.4 3,580.5 3,644.9 3,655.1 3,650.7 3,665.0 3,617.0 46 Transaction 664.1 622.3 633.1 662.9 638.0 617.8 618.7 634.1 626.2 627.9 649.4 643.4 47 Nontransaction 2,726.8 2,818.5 2,876.5 2,903.9 2,916.8 2,940.6 2,961.8 3,010.8 3,028.9 3,022.8 3,015.6 2,973.5 48 Large time 725.9 770.7 811.9 843.2 852.0 860.4 862.9 875.2 873.9 870.8 872.7 876.6 49 Other 2,000.9 2,047.8 2,064.6 2,060.8 2,064.8 2,080.3 2,098.9 2,135.6 2,155.0 2,152.0 2,142.9 2,097.0 50 Borrowings 987.0 1,049.9 1,067.7 1,125.8 1,152.6 1,134.3 1,146.2 1,181.3 1,146.9 1,163.9 1,166.4 1,217.8 51 From banks in the U.S 310.2 345.3 353.3 352.0 363.8 366.6 373.1 375.4 370.7 374.4 369.1 379.9 52 From others 676.8 704.6 714.4 773.8 788.7 767.7 773.1 805.9 776.2 789.6 797.3 837.9 53 Net due to related foreign offices .... 192.4 221.5 227.9 227.4 233.4 248.3 236.7 213.1 200.0 197.8 209.0 230.1 54 Other liabilities 271.5 290.4 298.7 304.4 290.4 297.9 290.1 288.1 285.1 281.9 284.3 291.5 55 Total liabilities 4,841.8 5,002.6 5,103.9 5,224.5 5,231.1 5,238.8 5,253.5 5,327.4 5,287.0 5,294.5 5,324.7 5356.4 56 Residual (assets less liabilities)7 431.3 427.1 430.3 432.8 450.3 463.2 456.1 451.0 452.6 456.0 450.5 446.9 MEMO 57 Revaluation gains on off-balance-sheet items8 86.1 100.0 100.8 104.0 101.4 104.9 105.3 104.6 101.9 100.3 102.1 105.1 58 Revaluation losses on off-balancesheet items8 87.6 97.8 99.7 102.3 99.5 104.4 102.3 103.2 99.7 99.3 100.0 104.3 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • July 2000 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 1999 1999r 2000 2000 Apr.1 Oct. Nov. Dec. Jan.r Feb.r Mar.r Apr. Apr. 5 Apr. 12 Apr. 19 Apr. 26 Seasonally adjusted Assets 1 Bank credit 3,957.0 4,108.8 4,149.4 4,215.2 4,239.9 4,280.8 4,315.0 4,336.9 4,328.5 4,328.0 4,330.8 4,345.0 2 Securities in bank credit 993.6 1,057.8 1,050.6 1,061.1 1,065.9 1,076.4 1,081.4 1,083.2 1,085.3 1,083.5 1,078.7 1,082.7 3 U.S. government securities 714.3 730.8 720.6 723.3 731.1 738.6 734.7 731.1 735.0 733.7 730.0 728.5 4 Other securities 279.2 327.0 330.0 337.8 334.8 337.9 346.7 352.0 350.3 349.8 348.7 354.1 5 Loans and leases in bank credit2 2,963.4 3,050.9 3,098.7 3,154.1 3,174.0 3,204.4 3,233.6 3,253.7 3,243.1 3,244.6 3,252.1 3,262.3 6 Commercial and industrial 752.3 787.4 801.8 810.0 817.9 825.1 832.5 837.4 832.0 832.9 840.1 839.2 7 Real estate 1,330.8 1,401.7 1,415.2 1,452.1 1,469.0 1,486.4 1,502.8 1,522.7 1,514.4 1,518.9 1,522.0 1,527.6 8 Revolving home equity 104.5 100.2 100.9 102.1 104.5 106.7 109.3 113.0 111.8 112.2 112.9 113.8 9 Other 1,226.3 1,301.5 1,314.3 1,350.0 1,364.5 1,379.7 1,393.5 1,409.7 1,402.6 1,406.7 1,409.1 1,413.8 in Consumer 496.7 482.2 483.5 491.0 497.0 501.7 504.8 508.7 507.4 507.8 507.7 509.9 11 Security3 71.5 54.5 68.3 86.1 76.5 75.7 76.2 65.7 73.1 66.9 62.7 64.3 12 Other loans and leases 312.1 325.1 329.9 314.9 313.6 315.5 317.3 319.2 316.2 318.1 319.5 321.4 13 Interbank loans 191.2 200.2 199.7 199.9 196.3 203.5 209.4 208.8 202.2 204.9 205.6 221.4 14 Cash assets4 222.4 224.6 225.8 234.1 230.8 229.6 225.7 235.5 227.8 226.5 239.5 238.8 15 Other assets5 305.7 329.8 333.9 342.4 366.8 374.2 361.1 362.2 359.8 359.7 360.9 368.5 16 Total assets6 4,618.0 4,804.5 4,849.9 4,932.2 4,975.0 5,029.6 5,052.3 5,084.2 5,059.0 5,060.1 5,077.5 5,114.5 Liabilities 17 Deposits 3,058.5 3,112.9 3,126.5 3,150.4 3,160.7 3,178.9 3,193.5 3,233.4 3,225.7 3,220.9 3,250.1 3,238.1 18 Transaction 644.4 620.2 614.5 619.6 615.7 613.7 614.4 614.4 602.6 597.9 623.6 640.7 19 Nontransaction 2,414.2 2,492.8 2,511.9 2,530.8 2,545.0 2,565.2 2,579.1 2,619.0 2,623.1 2,623.1 2,626.5 2,597.4 20 Large time 424.8 450.3 459.5 467.8 473.6 480.1 485.5 496.2 495.8 496.4 495.4 495.8 21 Other 1,989.4 2,042.4 2,052.4 2,063.0 2,071.4 2,085.1 2,093.6 2,122.8 2,127.3 2,126.6 2,131.1 2,101.6 22 Borrowings 810.7 871.6 873.8 935.1 954.0 954.2 973.3 984.3 983.6 991.3 964.4 991.1 23 From banks in the U.S 287.4 326.1 323.8 322.6 340.3 346.7 353.7 353.5 351.8 358.3 345.1 353.2 24 From others 523.4 545.6 550.1 612.5 613.8 607.5 619.6 630.8 631.8 633.0 619.3 637.9 25 Net due to related foreign offices .... 118.0 165.4 178.9 182.0 194.2 207.1 213.2 208.9 202.5 205.0 • 210.0 202.3 26 Other liabilities 206.0 225.5 230.5 232.9 220.3 224.0 220.2 218.9 218.2 215.2 216.2 220.6 27 Total liabilities 4,193.2 4,375.4 4,409.7 4,500.4 4,529.2 4,564.2 4,600.3 4,645.4 4,629.9 4,632.4 4,640.7 4,652.2 28 Residual (assets less liabilities)7 424.8 429.0 440.1 431.8 445.8 465.3 452.1 438.9 429.1 427.8 436.8 462.3 Not seasonally adjusted Assets 29 Bank credit 3,965.6 4,110.9 4,164.3 4,237.5 4,256.3 4,279.6 4,310.5 4,343.7 4,330.6 4,333.3 4,342.5 4,349.1 30 Securities in bank credit 1,000.8 1,055.0 1,055.0 1,067.5 1,070.5 1,079.3 1,085.8 1,088.6 1,093.5 1,091.3 1,084.3 1,085.2 31 U.S. government securities 722.7 726.3 721.9 724.0 732.3 742.4 741.8 739.0 745.5 743.3 738.3 733.9 32 Other securities 278.1 328.7 333.1 343.5 338.2 336.9 343.9 349.6 348.1 348.0 346.0 351.3 3.3 Loans and leases in bank credit2 2,964.8 3,055.9 3,109.3 3,170.0 3,185.8 3,200.3 3,224.7 3,255.1 3,237.0 3,242.0 3,258.2 3,263.9 .34 Commercial and industrial 760.6 786.9 802.6 808.4 814.0 823.3 834.8 846.2 837.7 838.7 851.4 848.5 35 Real estate 1,327.5 1,406.1 1,421.6 1,457.0 1,472.8 1,483.0 1,497.9 1,518.4 1,510.3 1,515.3 1,517.1 1,522.5 .36 Revolving home equity 103.7 100.6 101.3 102.5 104.8 106.4 108.2 112.1 110.3 110.9 112.2 113.4 37 Other 1,223.7 1,305.5 1,320.3 1,354.5 1,368.1 1,376.7 1,389.6 1,406.3 1,400.0 1,404.4 1,404.9 1,409.1 38 Consumer 495.4 479.7 482.2 496.5 504.2 503.8 503.2 507.6 504.4 505.6 506.9 510.3 39 Security3 72.1 57.4 71.0 90.3 80.1 77.4 75.0 66.2 69.0 67.5 65.7 65.2 40 Other loans and leases 309.2 325.9 331.9 317.9 314.7 312.7 314.0 316.7 315.6 315.0 317.1 317.3 41 Interbank loans 197.3 194.3 203.8 205.4 197.1 205.0 215.3 215.7 217.0 218.0 212.2 218.2 47, Cash assets4 221.7 224.9 231.8 249.7 242.7 230.8 218.3 234.8 223.2 226.3 243.2 235.1 43 Other assets5 309.7 323.9 330.8 340.3 363.9 374.8 363.5 366.9 367.8 363.6 364.0 370.6 44 Total assets6 4,636.3 4,795.2 4,871.5 4,973.3 5,001.5 5,031.7 5,048.8 5,102.2 5,079.7 5,082.4 5,103.0 5,114.1 Liabilities 45 3,075.8 3,108.8 3,151.6 3,184.2 3,167.2 3,170.7 3,191.3 3,250.3 3,263.0 3,261.7 3,272.3 3,219.3 46 Transaction 654.1 611.6 622.6 651.8 627.1 606.8 607.6 623.4 615.3 617.0 638.5 633.2 47 Nontransaction 2,421.7 2,497.2 2,529.0 2,532.4 2,540.1 2,564.0 2,583.7 2,626.9 2,647.6 2,644.7 2,633.8 2,586.2 48 Large time 423.0 451.7 466.7 474.0 479.2 486.8 487.1 493.7 495.1 495.1 493.2 491.6 49 Other 1,998.7 2,045.5 2,062.3 2,058.5 2,060.9 2,077.2 2,096.5 2,133.2 2,152.6 2,149.6 2,140.5 2,094.6 50 Borrowings 811.5 871.2 881.7 944.3 972.5 958.1 968.3 982.4 963.8 967.1 970.1 1,005.6 51 From banks in the U.S 288.7 323.1 327.2 327.6 344.1 348.3 353.6 354.7 349.6 353.3 349.1 358.2 52. From others 522.8 548.2 554.5 616.7 628.4 609.9 614.7 627.7 614.2 613.8 621.0 647.4 53 Net due to related foreign offices .... 114.0 166.2 181.2 183.0 195.5 219.1 216.2 202.9 185.1 185.3 197.4 225.0 54 Other liabilities 206.6 225.2 230.5 233.1 220.0 224.4 220.6 219.5 218.7 216.1 216.7 221.3 55 Total liabilities 4,207.7 4,371.4 4,445.0 4,544.6 4,555.1 4,572.4 4,596.3 4,655.0 4,630.6 4,630.1 4,656.5 4,671.2 56 Residual (assets less liabilities)7 428.6 423.8 426.5 428.7 446.4 459.3 452.4 447.1 449.1 452.3 446.5 442.9 MEMO 57 Revaluation gains on off-balance-sheet items8 49.1 60.9 59.8 64.5 62.7 64.8 66.0 65.4 64.0 63.5 63.6 64.8 58 Revaluation losses on off-balancesheet items8 50.2 60.0 59.8 63.9 61.9 64.4 64.1 65.1 63.6 63.5 62.8 65.0 59 Mortgage-backed securities9 335.7 346.7 348.2 347.7 348.0 352.6 353.8 358.3 359.8 357.9 359.0 357.9 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A17 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 1999 1999r 2000 2000 Apr.r Oct. Nov. Dec. Jan.r Feb.1 Mar.r Apr. Apr. 5 Apr. 12 Apr. 19 Apr. 26 Seasonally adjusted Assets 1 Bank credit 2479.1 2,542.8 2,580.2 2,634.2 2,633.8 2,656.0 2,677.2 2,693.0 2,686.3 2,684.7 2,687.4 2,700.8 2 Securities in bank credit 560.8 604.2 602.5 614.2 613.0 619.3 626.2 629.3 630.2 628.8 625.2 629.8 3 U.S. government securities 392.6 395.3 390.8 396.0 397.0 400.0 398.5 396.9 399.9 398.5 395.6 395.6 4 Trading account 24.7 20.7 18.8 20.1 21.0 22.1 21.0 21.9 21.5 22.6 20.7 22.5 5 Investment account 367.9 374.6 372.0 375.9 376.0 377.8 377.5 375.1 378.4 375.9 374.9 373.1 6 Other securities 168.1 208.9 211.7 218.2 216.0 219.4 227.7 232.4 230.3 230.3 229.6 234.2 7 Trading account 67.0 81.7 82.4 87.1 81.8 86.2 91.5 93.3 92.4 91.1 89.8 95.0 8 Investment account 101.1 127.2 129.3 131.1 134.1 133.1 136.2 139.0 137.0 138.3 139.8 139.2 9 State and local government . 24.8 26.0 26.5 26.6 26.9 27.0 27.2 27.7 27.3 27.2 27.8 27.9 10 Other 76.3 101.1 102.8 104.6 107.3 106.1 109.0 111.3 110.4 111.8 112.0 111.3 11 Loans and leases in bank credit2 . .. 1,918.3 1,938.6 1,977.7 2,020.0 2,020.8 2,036.7 2,051.0 2,063.7 2,056.1 2,055.9 2,062.3 2,071.0 12 Commercial and industrial 561.2 579.0 590.6 597.1 600.1 604.3 607.8 610.9 606.1 607.3 613.7 612.0 13 Bankers acceptances 1.1 1.2 1.1 1.1 1.1 1.0 1.0 1.1 1.1 1.1 1.1 1.1 14 Other 560.1 577.9 589.5 596.0 599.1 603.3 606.8 609.8 605.0 606.2 612.6 610.9 15 Real estate 740.3 766.6 774.3 804.9 811.8 818.8 826.7 841.4 836.4 839.1 840.8 844.7 16 Revolving home equity 75.6 69.4 69.8 70.6 72.0 73.6 75.5 78.8 77.8 78.1 78.7 79.5 17 Other 664.7 697.2 704.4 734.3 739.7 745.2 751.2 762.7 758.5 761.0 762.1 765.2 18 Consumer 305.6 286.3 288.9 292.3 293.8 297.7 299.8 303.6 302.8 302.7 303.0 304.2 19 Security3 66.4 49.6 62.8 80.7 71.3 70.4 70.7 59.9 66.9 60.7 56.9 59.0 20 Federal funds sold to and repurchase agreements with broker-dealers 49.7 32.4 44.4 60.8 50.2 47.1 48.8 38.2 43.9 38.5 3366..22 3366..88 21 Other 16.6 17.2 18.4 19.9 21.1 23.3 22.0 21.7 23.0 22.3 20.6 22.2 22 State and local government 11.9 12.4 12.5 12.5 12.7 12.8 12.9 13.0 12.9 12.9 13.1 13.0 23 Agricultural 9.3 9.9 10.0 10.2 10.4 10.5 10.5 10.6 10.6 10.6 10.6 10.7 24 Federal funds sold to and repurchase agreements with others 12.1 10.1 12.4 11.9 11.3 11.4 11.4 11.7 11.5 1111..66 1111..44 1122..22 25 All other loans 93.7 97.1 96.2 79.2 78.2 79.4 79.8 79.8 76.5 78.7 80.3 81.7 26 Lease-financing receivables 117.9 127.6 130.0 131.2 131.3 131.3 131.3 132.8 132.3 132.2 132.5 133.5 27 Interbank loans 135.8 152.2 146.1 146.4 143.0 148.5 154.4 147.6 142.9 143.0 142.6 160.0 28 Federal funds sold to and repurchase agreements with commercial banks 84.8 92.9 76.5 74.2 68.2 75.5 79.2 76.1 71.2 72.1 7722..33 86.8 29 Other 51.1 59.3 69.5 72.2 74.8 73.0 75.2 71.5 71.7 70.9 70.3 73.2 30 Cash assets4 156.8 155.4 155.5 160.5 160.6 160.6 156.8 166.4 158.0 158.0 170.9 170.1 31 Other assets5 235.4 248.1 252.7 260.0 281.5 290.7 277.8 277.0 276.5 274.3 276.3 281.4 32 Total assets6 2,968.0 3,0593 3^095.2 3,161.7 3,1803 3,217.5 3,227.9 3,245.6 3,225J0 3,221.7 3,238.8 3,274.0 Liabilities 33 Deposits 1,744.1 1,737.6 1,741.6 1,754.0 1,748.0 1,754.9 1,760.4 1,786.5 1,781.2 1,775.3 1,799.7 1,792.2 34 Transaction 372.0 345.1 341.3 348.0 339.3 336.0 335.5 335.0 327.6 323.5 340.6 354.0 35 Nontransaction 1,372.1 1,392.4 1,400.3 1,406.0 1,408.7 1,418.8 1,424.9 1,451.5 1,453.6 1,451.8 1,459.2 1,438.2 36 Large time 233.2 248.3 253.6 259.7 262.5 265.0 267.0 275.7 275.1 274.8 275.5 276.3 37 Other 1,138.9 1,144.2 1,146.7 1,146.3 1,146.3 1,153.9 1,157.9 1,175.8 1,178.5 1,177.0 1,183.7 1,161.9 38 Borrowings 634.2 670.4 674.0 729.8 734.2 732.5 744.2 753.3 753.2 758.4 736.3 759.1 39 From banks in the U.S 206.9 239.1 238.1 238.3 251.3 257.1 260.4 264.2 263.2 269.1 257.9 261.9 40 From others 427.3 431.3 436.0 491.5 482.9 475.4 483.9 489.1 490.0 489.3 478.5 497.2 41 Net due to related foreign offices 113.1 161.1 174.4 177.5 189.1 201.9 207.8 203.5 197.3 199.7 204.8 196.9 42 Other liabilities 176.6 191.8 197.2 199.2 185.6 187.5 185.5 185.0 184.6 181.4 182.6 186.8 43 Total liabilities 2,667.9 2,760.9 2,787.2 2,860.4 2^57.0 2,876.7 2,898.0 2,928.4 2,916.3 2,914.8 2^23.5 2,934.9 44 Residual (assets less liabilities)7 300.1 298.5 308.0 301.3 323.3 340.8 329.9 317.2 308.6 306.9 315.4 339.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Financial Statistics • July 2000 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks—Continued Monthly averages Wednesday figures AAAccccccooouuunnnttt 1999 1999r 2000 2000 Apr.r Oct. Nov. Dec. Jan.r Feb/ Mar.r Apr. Apr. 5 Apr. 12 Apr. 19 Apr. 26 Not seasonally adjusted Assets 45 Bank credit 2,484.1 2,543.7 2,595.4 2,656.2 2,656.6 2,667.5 2,678.9 2,696.5 2,690.5 2,689.0 2,694.2 2,698.4 46 Securities in bank credit 563.4 603.8 608.6 621.1 619.3 625.4 629.5 630.3 635.3 632.3 626.0 627.2 47 U.S. government securities 397.5 393.2 393.8 397.3 399.7 406.3 404.4 401.6 408.1 405.1 400.4 397.1 48 Trading account 25.2 20.8 19.9 20.0 21.7 23.2 22.0 22.1 23.4 24.2 21.2 20.8 49 Investment account 372.2 372.3 373.9 377.3 378.0 383.1 382.4 379.5 384.7 380.9 379.1 376.3 50 Mortgage-backed securities . . 251.1 247.2 247.7 247.5 247.3 253.1 252.9 251.3 254.5 252.2 251.2 249.7 51 Other 121.1 125.1 126.3 129.8 130.7 130.0 129.5 128.1 130.1 128.7 127.9 126.6 52 One year or less 25.5 25.8 24.1 25.5 26.3 30.6 32.6 32.4 33.5 32.4 32.3 31.5 53 One to five years 55.6 60.5 61.3 62.2 61.9 58.8 56.8 55.6 55.8 56.2 55.5 55.3 54 More than five years . .. 40.1 38.7 40.8 42.1 42.4 40.5 40.1 40.1 40.9 40.1 40.1 39.9 55 Other securities 165.9 210.7 214.8 223.8 219.6 219.1 225.1 228.7 227.3 227.2 225.6 230.1 56 Trading account 67.0 81.7 82.4 87.1 81.8 86.2 91.5 93.3 92.4 91.1 89.8 95.0 57 Investment account 98.9 128.9 132.3 136.7 137.7 132.9 133.7 135.4 134.9 136.1 135.9 135.1 58 State and local government . . 24.9 26.1 26.8 26.8 27.1 27.2 27.3 27.7 27.5 27.5 27.8 27.9 59 Other 74.0 102.8 105.6 109.9 110.6 105.7 106.4 107.7 107.4 108.6 108.0 107.1 60 Loans and leases in bank credit2 . . 1,920.7 1,939.8 1,986.8 2,035.1 2,037.3 2,042.1 2,049.4 2,066.2 2,055.2 2,056.7 2,068.2 2,071.2 61 Commercial and industrial 567.4 578.9 592.5 595.9 597.1 603.6 610.0 617.5 610.9 611.5 622.2 618.5 62 Bankers acceptances 1.1 1.2 1.1 1.1 1.1 1.0 1.0 1.1 1.1 1.1 1.1 1.1 63 Other 566.4 577.7 591.4 594.8 596.0 602.6 609.0 616.4 609.8 610.5 621.1 617.4 64 Real estate 738.0 768.3 778.7 810.4 818.0 820.1 825.0 838.5 834.5 837.3 837.0 840.5 65 Revolving home equity 74.9 69.6 70.0 70.8 72.4 73.5 74.7 78.1 76.7 77.1 78.1 79.1 66 Other 401.7 421.9 428.2 454.5 456.7 456.6 459.2 466.3 465.4 466.9 464.3 466.0 67 Commercial 261.4 276.7 280.5 285.1 288.9 290.0 291.0 294.1 292.4 293.2 294.6 295.4 68 Consumer 305.3 284.0 287.1 295.4 300.4 300.8 300.0 303.5 301.9 302.4 302.9 304.5 69 Security3 67.0 52.4 65.5 84.9 75.0 72.1 69.5 60.4 62.9 61.3 59.8 59.9 70 Federal funds sold to and repurchase agreements with broker-dealers .... 50.0 35.3 47.6 64.7 54.6 49.7 47.2 38.2 40.9 39.0 37.8 36.7 71 Other 17.0 17.1 18.0 20.2 20.4 22.5 22.2 22.2 21.9 22.3 22.1 23.2 72 State and local government .... 11.7 12.6 12.6 12.6 12.6 12.7 12.8 12.9 12.8 12.8 13.0 12.9 73 Agricultural 9.1 10.1 10.1 10.2 10.4 10.3 10.3 10.4 10.3 10.4 10.4 10.5 74 Federal funds sold to and repurchase agreements with others 12.1 10.1 12.4 11.9 11.3 11.4 11.4 11.7 11.5 11.6 11.4 12.2 75 All other loans 91.5 97.1 99.1 82.9 79.2 77.7 77.5 77.8 76.6 76.1 78.5 78.4 76 Lease-financing receivables .... 118.5 126.5 128.7 130.9 133.5 133.3 132.8 133.5 133.6 133.3 133.0 133.7 77 Interbank loans 140.4 146.2 145.2 147.5 143.6 148.8 157.2 152.8 147.9 148.1 148.2 164.1 78 Federal funds sold to and repurchase agreements with commercial banks 87.7 89.6 77.6 75.7 69.7 75.1 81.2 78.8 74.3 75.0 75.6 87.5 79 Other 52.7 56.6 67.6 71.8 73.9 73.7 75.9 74.0 73.5 73.1 72.6 76.6 80 Cash assets4 156.8 155.9 158.6 171.8 171.2 162.2 151.5 166.3 153.9 157.8 175.2 168.3 81 Other assets5 238.8 242.3 248.3 258.4 280.7 292.2 280.3 280.9 281.8 277.5 279.6 283.7 82 Total assets6 2,981.1 3,049.0 3,108.1 3,1943 3,213.7 3,232.5 3,229.5 3,258.3 3,235.8 3,2343 3,259.0 3,276.5 Liabilities 83 Deposits 1,754.1 1,732.1 1,755.7 1,779.0 1,759.4 1,755.3 1,760.1 1,796.2 1,802.5 1,800.3 1,814.3 1,779.4 84 Transaction 379.7 338.8 345.8 369.3 349.0 332.6 330.9 342.1 334.7 336.2 352.6 352.4 85 Nontransaction 1,374.4 1,393.3 1,409.9 1,409.6 1,410.4 1,422.7 1,429.2 1,454.1 1,467.8 1,464.2 1,461.6 1,427.0 86 Large time 231.3 249.7 260.8 265.9 268.1 271.6 268.7 273.3 274.4 273.5 273.3 272.1 87 Other 1,143.1 1,143.7 1,149.1 1,143.7 1,142.3 1,151.1 1,160.5 1,180.8 1,193.4 1,190.7 1,188.3 1,154.9 88 Borrowings 637.9 668.2 680.6 736.4 754.3 740.6 745.2 755.1 741.7 744.3 745.0 770.8 89 From banks in the U.S 210.3 234.6 241.0 241.8 255.7 261.2 263.7 267.8 265.0 269.1 263.9 266.5 90 From nonbanks in the U.S 427.7 433.6 439.6 494.7 498.6 479.3 481.5 487.3 476.7 475.2 481.0 504.3 91 Net due to related foreign offices . . . 109.0 161.9 176.7 178.6 190.4 213.9 210.8 197.5 180.0 180.0 192.3 219.6 92 Other liabilities 176.6 191.8 197.2 199.2 185.6 187.5 185.5 185.0 184.6 181.4 182.6 186.8 93 Total liabilities 2,677.7 2,7540 2,810.2 2^93.1 2,889.7 2JM2 2,901.7 2,933.9 2,908.9 2,906.1 2,934.1 2,956.6 94 Residual (assets less liabilities)7 .... 303.4 295.0 297.9 301.2 324.0 335.3 327.8 324.4 326.9 328.2 324.9 319.9 MEMO 95 Revaluation gains on off-balancesheet items8 49.1 60.9 59.8 64.5 62.7 64.8 66.0 65.4 64.0 63.5 63.6 64.8 96 Revaluation losses on off-balancesheet items8 50.2 60.0 59.8 63.9 61.9 64.4 64.1 65.1 63.6 63.5 62.8 65.0 97 Mortgage-backed securities® 279.6 282.8 285.6 285.6 284.9 288.3 288.4 290.5 293.7 291.4 290.4 288.9 98 Pass-through securities 184.0 187.5 190.7 191.6 191.2 194.6 194.7 198.1 199.3 198.5 198.3 197.5 99 CMOs, REMICs, and other mortgage-backed securities .. 95.6 95.3 94.9 94.0 93.7 93.6 93.7 92.4 94.4 92.9 92.0 91.4 100 Net unrealized gains (losses) on available-for-sale securities10 . . . .9 -5.6 -5.8 -6.0 -7.4 -7.8 -7.3 -8.4 -8.1 -8.5 -8.2 -8.3 101 Offshore credit to U.S. residents11 . . . 37.9 26.7 24.8 24.0 23.2 23.6 24.1 24.4 24.6 24.2 24.4 24.4 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 Liabilities'—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1999 1999r 2000 2000 Apr/ Oct. Nov. Dec. Jan.r Feb.r Mar.r Apr. Apr. 5 Apr. 12 Apr. 19 Apr. 26 Seasonally adjusted Assets 1 Bank credit 1,477.9 1,566.0 1,569.2 1,581.0 1,606.2 1,624.8 1,637.7 1,643.9 1,642.2 1,643.3 1,643.4 1,644.1 7 Securities in bank credit 432.8 453.6 448.1 446.9 453.0 457.1 455.2 453.9 455.2 454.6 453.5 452.8 U.S. government securities 321.7 335.5 329.8 327.3 334.1 338.6 336.2 334.2 335.1 335.1 334.4 332.9 4 Other securities 111.1 118.1 118.3 119.5 118.8 118.5 119.0 119.7 120.0 119.5 119.1 119.9 Loans and leases in bank credit2 1,045.1 1,112.4 1,121.1 1,134.1 1,153.2 1,167.7 1,182.6 1,190.0 1,187.0 1,188.7 1,189.9 1,191.3 6 Commercial and industrial 191.1 208.4 211.2 212.8 217.8 220.8 224.7 226.5 225.9 225.6 226.5 227.2 7 Real estate 590.6 635.1 641.0 647.2 657.2 667.5 676.0 681.3 678.0 679.8 681.2 683.0 8 Revolving home equity 28.9 30.8 31.1 31.5 32.5 33.1 33.8 34.2 34.0 34.0 34.2 34.4 9 Other 561.6 604.4 609.9 615.7 624.8 634.4 642.3 647.1 644.1 645.7 647.0 648.6 in Consumer 191.1 195.9 194.6 198.8 203.2 204.0 205.0 205.1 204.6 205.1 204.7 205.7 ii Security3 5.1 5.0 5.5 5.4 5.2 5.3 5.5 5.8 6.2 6.2 5.9 5.3 i? Other loans and leases 67.2 68.0 68.8 69.9 69.8 70.0 71.3 71.3 72.3 72.0 71.6 70.2 n Interbank loans 55.4 48.0 53.7 53.5 53.3 55.0 55.0 61.2 59.3 61.9 63.0 61.4 14 Cash assets4 65.6 69.2 70.3 73.6 70.1 69.0 68.9 69.1 69.8 68.6 68.5 68.7 15 Other assets5 70.3 81.7 81.3 82.4 85.2 83.5 83.3 85.2 83.3 85.4 84.6 87.1 16 Total assets6 1,650.0 1,745.1 1,754.7 1,770.5 1,794.7 1,812.1 1,824.4 1,838.7 1,834.1 1,838.5 1,838.7 1,840.5 Liabilities 17 Deposits 1,314.4 1,375.4 1,384.9 1,396.4 1,412.7 1,424.0 1,433.1 1,446.9 1,444.5 1,445.6 1,450.4 1,446.0 18 Transaction 272.3 275.0 273.2 271.6 276.4 277.6 278.9 279.4 275.0 274.3 283.0 286.7 19 Nontransaction 1,042.1 1,100.3 1,111.7 1,124.8 1,136.3 1,146.4 1,154.2 1,167.5 1,169.5 1,171.3 1,167.4 1,159.3 ?0 Large time 191.6 202.1 205.9 208.1 211.2 215.2 218.5 220.5 220.7 221.6 220.0 219.5 ?1 Other 850.5 898.3 905.7 916.7 925.1 931.2 935.8 947.0 948.8 949.6 947.4 939.7 77 Borrowings 176.6 201.2 199.8 205.3 219.8 221.8 229.1 231.0 230.4 232.9 228.1 232.0 73 From banks in the U.S 80.5 87.0 85.7 84.3 89.0 89.6 93.4 89.2 88.6 89.2 87.3 91.3 74 From others 96.1 114.3 114.1 121.0 130.8 132.1 135.7 141.7 141.8 143.7 140.8 140.7 75 Net due to related foreign offices .... 4.9 4.3 4.5 4.5 5.1 5.3 5.4 5.3 5.1 5.2 5.2 5.4 26 Other liabilities 29.4 33.7 33.4 33.8 34.7 36.5 34.7 33.8 33.6 33.8 33.6 33.9 27 Total liabilities 1,525.4 1,614.6 1,622.6 1,639.9 1,672.2 1,687.5 1,7023 1,717.0 1,713.6 1,717.6 1,717.2 1,717.2 28 Residual (assets less liabilities)7 124.7 130.5 132.1 130.5 122.5 124.5 122.1 121.7 120.5 120.9 121.5 123.3 Not seasonally adjusted Assets 79 Bank credit 1,481.5 1,567.3 1,568.9 1,581.4 1,599.8 1,612.1 1,631.6 1,647.2 1,640.1 1,644.3 1,648.3 1,650.7 30 Securities in bank credit 437.4 451.1 446.4 446.4 451.2 453.9 456.2 458.3 458.2 459.0 458.3 458.0 31 U.S. government securities 325.2 333.1 328.1 326.7 332.6 336.1 337.5 337.4 337.4 338.1 337.9 336.8 37 Other securities 112.2 118.0 118.4 119.7 118.6 117.8 118.8 120.9 120.8 120.8 120.4 121.2 33 Loans and leases in bank credit2 1,044.1 1,116.1 1,122.5 1,135.0 1,148.5 1,158.3 1,175.4 1,188.9 1,181.9 1,185.4 1,190.0 1,192.7 34 Commercial and industrial 193.2 208.0 210.1 212.4 216.9 219.7 224.7 228.7 226.8 227.1 229.2 230.1 35 Real estate 589.4 637.8 642.9 646.6 654.9 662.9 672.8 679.9 675.8 678.0 680.1 682.0 36 Revolving home equity 28.8 31.0 31.3 31.7 32.4 32.9 33.5 34.1 33.7 33.8 34.1 34.3 37 Other 560.6 606.8 611.6 614.9 622.5 630.0 639.4 645.9 642.1 644.3 646.0 647.7 38 Consumer 190.1 195.7 195.1 201.1 203.8 203.0 203.2 204.1 202.4 203.2 204.0 205.8 39 Security3 5.1 5.0 5.5 5.4 5.2 5.3 5.5 5.8 6.2 6.2 5.9 5.3 40 Other loans and leases 66.2 69.6 69.0 69.5 67.8 67.3 69.1 70.4 70.7 70.8 70.8 69.5 41 Interbank loans 57.0 48.1 58.6 57.9 53.5 56.2 58.1 62.9 69.1 69.9 64.0 54.1 4? Cash assets4 64.9 69.0 73.2 77.9 71.5 68.6 66.9 68.5 69.3 68.5 68.0 66.7 43 Other assets5 70.9 81.5 82.5 81.9 83.2 82.6 83.2 86.0 86.0 86.1 84.4 86.9 44 Total assets6 1,655.2 1,7463 1,763.4 1,779.0 1,787.8 1,799.2 1,819.2 1,843.9 1,843.9 1,848.1 1,844.0 1,837.6 Liabilities 45 1,321.6 1,376.7 1,395.9 1,405.3 1,407.8 1,415.5 1,431.1 1,454.0 1,460.5 1,461.3 1,458.0 1,440.0 46 Transaction 274.4 272.8 276.8 282.4 278.0 274.2 276.7 281.3 280.6 280.8 285.9 280.8 47 Nontransaction 1,047.2 1,103.9 1,119.1 1,122.8 1,129.7 1,141.3 1,154.5 1,172.8 1,179.9 1,180.6 1,172.1 1,159.1 48 Large time 191.6 202.1 205.9 208.1 211.2 215.2 218.5 220.5 220.7 221.6 220.0 219.5 49 Other 855.6 901.8 913.1 914.7 918.5 926.1 936.0 952.3 959.2 958.9 952.2 939.6 5n Borrowings 173.5 203.1 201.1 207.9 218.2 217.6 223.0 227.4 222.0 222.7 225.1 234.7 51 From banks in the U.S 78.4 88.5 86.2 85.8 88.4 87.0 89.9 86.9 84.6 84.2 85.2 91.6 57 From others 95.1 114.6 114.9 122.0 129.8 130.5 133.1 140.4 137.5 138.6 139.9 143.1 53 Net due to related foreign offices .... 4.9 4.3 4.5 4.5 5.1 5.3 5.4 5.3 5.1 5.2 5.2 5.4 54 Other liabilities 30.0 33.4 33.3 33.9 34.4 36.9 35.1 34.5 34.1 34.7 34.1 34.6 55 Total liabilities 1,530.1 1,617.4 1,634.8 1,651.5 1*665.4 1,675.2 1,694.6 1,721.2 1,721.8 1,724.1 1,722.4 1,714.6 56 Residual (assets less liabilities)7 125.2 128.8 128.6 127.6 122.4 124.0 124.7 122.7 122.1 124.0 121.6 122.9 MEMO 57 Mortgage-backed securities' 56.1 63.9 62.6 62.1 63.1 64.3 65.4 67.9 66.1 66.5 68.6 69.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Financial Statistics • July 2000 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 1999 1999 2000 2000 Apr.r Oct. Nov. Dec. Jan. Feb. Mar. Apr. Apr. 5 Apr. 12 Apr. 19 Apr. 26 Seasonally adjusted Assets 1 Bank credit 547.2 524.8 538.5 548.2 545.9 539.9 543.2r 564.9 550.9 558.8 560.8 576.4 2 Securities in bank credit 198.4 191.9 192.3 202.3 199.3 191.2 mff 198.2 195.9 192.3 195.1 203.4 3 U.S. government securities 88.2 82.4 78.5 80.7 80.2 75.3 77.3 78.0 78.1 76.0 76.1 82.3 4 Other securities 110.3 109.5 113.9 121.6 119.1 115.9 116.7r 120.2 117.8 116.3 119.0 121.2 5 Loans and leases in bank credit2 .. . 348.8 332.9 346.2 345.9 346.6 348.7 349.2r 366.7 355.1 366.5 365.7 373.0 6 Commercial and industrial 207.2 194.9 196.2 193.4 194.8 196.7 198.2r 201.7 198.6 200.4 201.3 203.2 7 Real estate 19.9 17.6 17.3 17.0 17.4 17.7 18.1 18.4 18.5 18.6 18.4 18.4 8 Security3 51.4 55.1 65.4 67.1 66.6 66.6 66.3 77.6 69.0 77.9 77.5 83.1 9 Other loans and leases 70.3 65.3 67.3 68.5 67.8 67.7 66.6r 69.0 69.0 69.7 68.6 68.2 10 Interbank loans 25.1 25.6 25.2 29.5 28.9 32.6 28.3r 29.3 22.9 27.7 28.7 33.1 11 Cash assets4 35.9 44.4 48.8 53.5 55.4 54.5 51.8 51.8 53.2 51.3 51.9 52.3 12 Other assets5 36.3 32.8 34.8 36.6 38.5 38.2 39.1r 39.7 39.0 40.4 39.7 39.5 13 Total assets6 6443 6273 647.1 667.5 668.4 664.8 662.1 685.4 665.7 677.9 680.9 700.9 Liabilities 14 Deposits 314.6 335.5 355.3 374.2 380.8 380.6 383.1 393.5 390.9 389.1 392.8 395.2 15 Transaction 10.4 10.6 10.4 10.5 10.8 11.1 11.3 11.1 11.1 11.4 11.4 10.6 16 Nontransaction 304.2 324.9 345.0 363.6 370.0 369.5 371.8 382.4 379.8 377.7 381.4 384.5 17 Borrowings 175.5 178.6 186.0 181.5 180.0 176.2 177.9" 198.9 183.1 196.9 196.3 212.3 18 From banks in the U.S 21.6 22.2 26.1 24.4 19.7 18.3 19.5 20.7 21.1 21.1 20.0 21.8 19 From others 154.0 156.4 159.8 157.1 160.3 157.9 158.4 178.2 162.0 175.8 176.3 190.5 20 Net due to related foreign offices 83.9 55.0 45.0 39.1 35.6 26.8 19.9 14.9 21.6 18.9 17.4 5.7 21 Other liabilities 66.4 65.8 67.2 69.3 68.7 71.5 69.2 70.4 68.0 67.7 69.6 71.7 22 Total liabilities 640.5 634.9 653.4 664.1 665.2r 655.1 650.2 677.7 663.7 6715 676.2 684.9 23 Residual (assets less liabilities)7 3.8 -7.6 -6.3 3.4 3.3 9.7 11.9 7.7 2.0 5.3 4.7 16.1 Not seasonally adjusted Assets 24 Bank credit 542.2 531.8 551.1 558.2 553.7 544.1 541.8r 558.7 547.6 551.9 555.5 568.1 25 Securities in bank credit 195.9 197.6 201.8 206.0 203.2 192.5 191.1 194.7 194.3 188.9 190.9 198.7 26 U.S. government securities 88.7 82.0 80.0 82.1 80.8 75.4 11 £ 78.7 78.7 76.5 76.0 82.9 27 Trading account 21.2 14.2 8.5 6.7 7.6 7.4 9.4 10.9 10.3 9.3 8.3 14.9 28 Investment account 67.5 67.8 71.5 75.4 73.2 68.1 67.8 67.8 68.4 67.2 67.7 68.0 29 Other securities 107.2 115.6 121.8 123.9 122.4 117.0 113.9" 116.0 115.7 112.4 114.9 115.8 30 Trading account 64.8 75.3 80.3 80.7 77.1 74.3 71.7 73.4 73.0 69.7 72.1 73.1 31 Investment account 42.4 40.2 41.5 43.2 45.3 42.8 42.3 42.6 42.7 42.6 42.8 42.7 32 Loans and leases in bank credit2 .. . 346.3 334.3 349.3 352.2 350.5 351.6 350.7r 364.0 353.3 363.0 364.5 369.5 33 Commercial and industrial 205.5 196.2 199.2 197.0 196.3 199.2 199.8r 199.9 198.6 198.6 200.3 200.3 34 Real estate 19.7 17.9 17.4 16.9 17.6 18.0 18.3r 18.3 18.4 18.4 18.2 18.2 35 Security3 51.4 54.7 64.8 67.5 67.0 66.4 66.5 77.6 68.5 77.4 77.8 83.2 36 Other loans and leases 69.6 65.5 67.9 70.8 69.6 68.1 66. lr 68.1 67.8 68.6 68.2 67.7 37 Interbank loans 25.1 25.6 25.2 29.5 28.9 32.6 28.3r 29.3 22.9 27.7 28.7 33.1 38 Cash assets4 34.3 45.3 51.8 57.8 57.7 53^ 50.7 49.6 51.0 49.0 49.7 49.8 39 Other assets5 35.4 32.1 34.9 38.7 40.0 40.1 40.3 39.0 38.7 39.8 38.7 38.5 40 Total assets6 636.8 634.5 662.6 683.9 680.0 6703 660.9 676.2 659.9 668.0 672.2 689.2 Liabilities 41 Deposits 315.1 332.0 358.0 382.6 387.7 387.7 389.2r 394.6 392.1 389.0 392.7 397.6 42 Transaction 10.0 10.7 10.5 11.1 11.0 11.0 11.1 10.7 10.9 10.9 10.9 10.3 43 Nontransaction 305.1 321.3 347.5 371.5 376.7 376.7 378.2 383.9 381.2 378.1 381.8 387.4 44 Borrowings 175.5 178.6 186.0 181.5 180.0 176.2 Miff 198.9 183.1 196.9 196.3 212.3 45 From banks in the U.S 21.6 22.2 26.1 24.4 19.7 18.3 19.5 20.7 21.1 21.1 20.0 21.8 46 From others 154.0 156.4 159.8 157.1 160.3 157.9 158.4 178.2 162.0 175.8 176.3 190.5 47 Net due to related foreign offices .... 78.4 55.3 46.7 44.3 37.9 29.1 20.5 10.2 14.8 12.6 11.5 5.2 48 Other liabilities 64.9 65.2 68.2 71.4 70.4 73.5 69.5 68.6 66.3 65.8 67.6 70.2 49 Total liabilities 634.0 631.2 658.8 679.9 676.0 666.4 657.2 6723 656.4 6643 668.2 685.2 50 Residual (assets less liabilities)7 2.8 3.3 3.8 4.1 4.0 3.9 3.7 3.9 3.5 3.7 4.0 4.0 MEMO 51 Revaluation gains on off-balance-sheet items8 37.0 39.1 41.0 39.5 38.7 40.1 39.3 39.3 37.9 36.8 38.5 40.3 52 Revaluation losses on off-balancesheet items8 37.4 37.8 39.9 38.5 37.7 40.0 38.2 38.1 36.1 35.7 37.2 39.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

A22 Domestic NonfinancialS tatistics • July 2000 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING A. Commercial Paper Millions of dollars, seasonally adjusted, end of period Year ending December 1999 2000 IItteemm 1995 1996 1997 1998 1999 Oct. Nov. Dec. Jan. Feb. Mar. 1 All issuers 674,904 775,371 966,699 1,163,303 1,403,023 1,321,163 1,369,100 1,403,023 1,407,789 1,428,605 1,449,143 Financial companies1 2 Dealer-placed paper, total2 275,815 361,147 513,307 614,142 786,643 751,245 802,194 786,643 821,870 835,140 849,198 3 Directly placed paper, total3 210,829 229,662 252,536 322,030 337,240 296,998 299,777 337,240 299,599 298,603 302,885 4 Nonfinancial companies4 188,260 184,563 200,857 227,132 279,140 272,920 267,128 279,140 286,319 294,863 297,060 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 1996 1997 1998 1999 1 Total amount of reporting banks' acceptances in existence 25,832 25,774 14,363 10,094 2 Amount of other banks' eligible acceptances held by reporting banks 709 736 523 461 3 Amount of own eligible acceptances held by reporting banks (included in item 1) 7,770 6,862 4,884 4,261 4 Amount of eligible acceptances representing goods stored in, or shipped between, foreign countries (included in item 1) 9,361 10,467 5,413 3,498 1. Includes eligible, dollar-denominated bankers acceptances legally payable in the United 2. Data on bankers dollar acceptances are gathered from approximately 55 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 t a e g e Period Av r e a r t a e g e 1997 Jan 1 8.25 1997 8.44 1998—Jan 8.50 1999—Jan 7.75 Mar. 26 8.50 1998 8.35 Feb 8.50 Feb 7.75 1999 8.00 Mar. 8.50 Mar. 7.75 1998—Sept. 30 8.25 Apr. 8.50 Apr. 7.75 Oct. 16 8.00 1997—Jan 8.25 May 8.50 May 7.75 Nov. 18 7.75 Feb 8.25 June 8.50 June 7.75 Mar 8.30 July 8.50 July 8.00 1999—July 1 8.00 Apr. 8.50 Aug 8.50 Aug 8.06 Aug. 25 8.25 May 8.50 Sept 8.49 Sept 8.25 Nov. 17 8.50 June 8.50 Oct 8.12 Oct 8.25 July 8.50 Nov. 7.89 Nov. 8.37 2000—Feb. 3 8.75 8.50 Dec 77..7755 DDeecc 88..5500 Mar. 22 9.00 Sept 8.50 MMaayy 1177 9.50 Oct 8.50 2000—Jan 8.50 Nov 8.50 Feb 8.73 Dec 8.50 Mar 8.83 Apr. 9.00 May 9.24 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 2000 2000, week ending IItteemm 11999977 11999988 11999999 Jan. Feb. Mar. Apr. Mar. 31 Apr. 7 Apr. 14 Apr. 21 Apr. 28 MONEY MARKET INSTRUMENTS 1 Federal funds1'2'3 5.46 5.35 4.97 5.45 5.73 5.85 6.02 6.01 6.12 5.98 6.04 5.97 2 Discount window borrowing2'4 5.00 4.92 4.62 5.00 5.24 5.34 5.50 5.50 5.50 5.50 5.50 5.50 Commercial paper3,5,6 Nonfinancial 3 1-month 5.57 5.40 5.09 5.59 5.76 5.93 6.02 6.04 6.01 6.00 6.01 6.06 4 2-month 5.57 5.38 5.14 5.67 5.81 5.96 6.06 6.04 6.04 6.03 6.06 6.11 5 3-month 5.56 5.34 5.18 5.74 5.87 6.00 6.11 6.09 6.09 6.08 6.12 6.17 Financial 6 1-month 5.59 5.42 5.11 5.62 5.78 5.94 6.03 6.03 6.02 6.02 6.02 6.05 7 2-month 5.59 5.40 5.16 5.72 5.84 5.98 6.07 6.05 6.06 6.05 6.06 6.13 8 3-month 5.60 5.37 5.22 5.81 5.90 6.03 6.15 6.11 6.10 6.11 6.14 6.23 Commercial paper (historical)3'5'7 9 1-month 5.54 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 3-month 5.58 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11 6-month 5.62 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Finance paper, directly placed (historicalJ3'5,8 12 1-month 5.44 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 3-month 5.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 6-month 5.48 n.a. 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 5.54 5.39 5.24 5.88 5.94 6.06 6.19 6.14 6.16 6.18 6.19 6.23 16 6-month 5.57 5.30 5.30 5.99 6.11 6.22 6.32 6.30 6.30 6.29 6.33 6.37 Certificates of deposit, secondary marketi,]0 17 1-month 5.54 5.49 5.19 5.74 5.83 6.01 6.10 6.10 6.07 6.07 6.09 6.17 18 3-month 5.62 5.47 5.33 5.95 6.01 6.14 6.28 6.24 6.23 6.24 6.27 6.36 19 6-month 5.73 5.44 5.46 6.15 6.26 6.36 6.50 6.48 6.47 6.47 6.49 6.58 20 Eurodollar deposits, 3-month3'" 5.61 5.45 5.31 5.94 6.02 6.13 6.25 6.22 6.21 6.22 6.23 6.33 U.S. Treasury bills Secondary market3,5 71 3-month 5.06 4.78 4.64 5.32 5.55 5.69 5.66 5.71 5.70 5.67 5.65 5.62 2.2 6-month 5.18 4.83 4.75 5.50 5.72 5.85 5.81 5.90 5.85 5.82 5.76 5.79 23 1-year 5.32 4.80 4.81 5.75 5.84 5.86 5.80 5.93 5.83 5.80 5.75 5.82 Auction high3'5'12 24 3-month 5.07 4.81 4.66 5.34 5.57 5.72 5.67 5.72 5.71 5.68 5.65 5.62 25 6-month 5.18 4.85 4.76 5.52 5.75 5.85 5.82 5.91 5.90 5.86 5.77 5.75 26 1-year 5.36 4.85 4.78 5.65 5.91 5.84 n.a. n.a. n.a. n.a. n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities'3 77 1-year 5.63 5.05 5.08 6.12 6.22 6.22 6.15 6.30 6.17 6.14 6.09 6.19 78 2-year 5.99 5.13 5.43 6.44 6.61 6.53 6.40 6.57 6.38 6.35 6.34 6.53 79 3-year 6.10 5.14 5.49 6.49 6.65 6.53 6.36 6.53 6.33 6.29 6.30 6.49 30 5-year 6.22 5.15 5.55 6.58 6.68 6.50 6.26 6.42 6.20 6.18 6.24 6.42 31 7-year 6.33 5.28 5.79 6.70 6.72 6.51 6.27 6.40 6.18 6.20 6.29 6.41 37. 10-year 6.35 5.26 5.65 6.66 6.52 6.26 5.99 6.13 5.92 5.89 6.01 6.15 33 20-year 6.69 5.72 6.20 6.86 6.54 6.38 6.18 6.30 6.12 6.13 6.22 6.28 34 30-year 6.61 5.58 5.87 6.63 6.23 6.05 5.85 5.94 5.79 5.78 5.88 5.95 Composite 35 More than 10 years (long-term) 6.67 5.69 6.14 6.81 6.49 6.33 6.14 6.24 6.07 6.08 6.17 6.24 STATE AND LOCAL NOTES AND BONDS Moody's series14 36 Aaa 5.32 4.93 5.28 5.91 5.88 5.68 5.60 5.60 5.55 5.50 5.64 5.71 37 BBaaaa 5.50 5.14 5.70 6.38 6.35 6.19 6.18 6.15 6.08 6.07 6.24 6.32 38 BBoonndd BBuuyyeerr sseerriieess1155 5.52 5.09 5.43 6.08 6.00 5.83 5.75 5.74 5.69 5.72 5.76 5.82 CORPORATE BONDS 39 Seasoned issues, all industries16 7.54 6.87 7.45 8.06 7.96 7.99 7.98 7.95 7.90 7.94 8.03 8.07 Rating group 40 Aaa 7.27 6.53 7.05 7.78 7.68 7.68 7.64 7.63 7.58 7.62 7.68 7.70 41 Aa 7.48 6.80 7.36 7.96 7.82 7.83 7.82 7.79 7.73 7.77 7.86 7.91 47. A 7.54 6.93 7.53 8.15 8.02 8.07 8.07 8.02 7.99 8.03 8.10 8.16 43 Baa 7.87 7.22 7.88 8.33 8.29 8.37 8.40 8.34 8.30 8.35 8.45 8.51 MEMO Dividend-price ratio17 44 Common stocks 1.77 1.49 1.25 1.18 1.21 1.18 1.14 1.11 1.12 1.13 1.16 1.14 NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly and 9. Representative closing yields for acceptances of the highest-rated money center banks. G.13 (415) monthly statistical releases. For ordering address, see inside front cover. 10. An average of dealer offering rates on nationally traded certificates of deposit. 1. The daily effective federal funds rate is a weighted average of rates on trades through 11. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time. Data are for New York brokers. indication purposes only. 2. Weekly figures are averages of seven calendar days ending on Wednesday of the 12. Auction date for daily data; weekly and monthly averages computed on an issue-date current week; monthly figures include each calendar day in the month. basis. On or after October 28, 1998, data are stop yields from uniform-price auctions. Before 3. Annualized using a 360-day year or bank interest. that, they are weighted average yields from multiple-price auctions. 4. Rate for the Federal Reserve Bank of New York. 13. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Depart- 5. Quoted on a discount basis. ment of the Treasury. 6. Interest rates interpolated from data on certain commercial paper trades settled by the 14. General obligation bonds based on Thursday figures; Moody's Investors Service. Depository Trust Company. The trades represent sales of commercial paper by dealers or 15. State and local government general obligation bonds maturing in twenty years are used direct issuers to investors (that is, the offer side). See Board's Commercial Paper Web pages in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys' (http://www.federalreserve.gov/releases/cp) for more information. A1 rating. Based on Thursday figures. 7. An average of offering rates on commercial paper for firms whose bond rating is AA or 16. Daily figures from Moody's Investors Service. Based on yields to maturity on selected the equivalent. Series ended August 29, 1997. long-term bonds. 8. An average of offering rates on paper directly placed by finance companies. Series 17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in ended August 29, 1997. the price index. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • July 2000 1.36 STOCK MARKET Selected Statistics 1999 2000 IInnddiiccaattoorr 11999977 11999988 11999999 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 456.99 550.65 619.52 621.03 607.87 599.04 634.22 638.17 634.07 606.03 622.28 646.82 2 Industrial 574.97 684.35 775.29 778.82 769.47 753.94 791.41 808.28 814.73 767.08 790.35 822.76 3 Transportation 415.08 468.61 491.62 492.13 462.33 450.13 474.78 461.04 456.35 398.69 384.39 406.14 4 Utility 143.87 190.52 284.82 241.84 237.71 285.16 502.58 511.78 485.82 482.30 509.59 502.78. 5 Finance 424.84 516.65 530.97 521.59 493.37 490.92 539.20 510.99 495.23 471.65 491.29 524.05 6 Standard & Poor's Corporation (1941 —43 = 10)' 873.43 1,085.50 1,327.33 1,327.49 1,318.17 1,300.01 1,390.99 1,428.68 1,425.59 1,388.88 1,442.21 1,461.36 7 American Stock Exchange (Aug. 31, 1973 = 50)2 628.34 682.69 770.90 781.33 788.74 786.96 819.60 838.24 878.73 910.00 1,014.03 918.77 Volume of trading (thousands of shares) 8 New York Stock Exchange 523,254 666,534 799,554 709,569 772,627 882,422 866,281 884,141 1,058,021 1,032,791 1,124,097 1,047,960 9 American Stock Exchange 24,390 28,870 32,629 27,795 32,540 35,762 33,330 41,076 47,530 51,134 59,449 63,054 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers; 126,090 140,980 228,530 176,390 179,316 182,272 206,280 228,530 243,490 265,210 278,530 251,700 Free credit balances at brokers4 11 Margin accounts5 31,410 40,250 55,130 44,230 47,125 51,040 49,480 55,130 57,800 56,470 65,020 65,930 12 Cash accounts 52,160 62,450 79,070 62,600 62,810 61,085 68,200 79,070 75,760 79,700 85,530 76,190 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 lune 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. In July 1976 a financial group, composed of banks and insurance companies, was added 6. Margin requirements, stated in regulations adopted by the Board of Governors pursuant to the group of stocks on which the index is based. The index is now based on 400 industrial to the Securities Exchange Act of 1934, limit the amount of credit that can be used to stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and purchase and carry "margin securities" (as defined in the regulations) when such credit is 40 financial. collateralized by securities. Margin requirements on securities are the difference between the 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting market value (i00 percent) and the maximum loan value of collateral as prescribed by the previous readings in half. Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, 3. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. included credit extended against stocks, convertible bonds, stocks acquired through the On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the exercise of subscription rights, corporate bonds, and government securities. Separate report- initial margin required for writing options on securities, setting it at 30 percent of the current ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the April 1984. required initial margin, allowing it to be the same as the option maintenance margin required 4. Free credit balances are amounts in accounts with no unfulfilled commitments to by the appropriate exchange or self-regulatory organization; such maintenance margin rules brokers and are subject to withdrawal by customers on demand. must be approved by the Securities and Exchange Commission. 5. Series initiated in June 1984. 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 1999 2000 11999977 11999988 11999999 Nov. Dec. Jan. Feb. Mar. Apr. US. budget1 1 Receipts, total 1,579,292 1,721,798 1,827,454 121,375 201,196 189,478 108,675 135,582 295,148 2 On-budget 1,187,302 1,305,999 1,382,986 86,909 162,772 143,838 71,090 94,586 244,662 3 Off-budget 391,990 415,799 444,468 34,466 38,424 45,640 37,585 40,996 50,486 4 Outlays, total 1,601,235 1,652,552 1,702,940 148,407 168,114 127,326 150,409 170,962 135,651 5 On-budget 1,290,609 1,335,948 1,382,262 116,387 165,504 97,451 118,340 137,864 105,742 6 Off-budget 310,626 316,604 320,778 32,020 2,611 29,875 32,069 33,099 29,909 7 Surplus or deficit (-), total -21,943 69,246 124,414 —27,031 33,081 62,152 -41,734 -35,380 159,497 8 On-budget -103,307 -29,949 724 -29,478 -2,732 46,387 -47,250 -43,278 138,920 9 Off-budget 81,364 99,195 123,690 2,446 35,813 15,765 5,516 7,897 20,577 Source of financing (total) 10 Borrowing from the public 38,171 -51,211 -88,304 6,132 35,749 -83,985 17,131 39,746 -112,667 11 Operating cash (decrease, or increase (-)) 604 4,743 -17,580 41,488 -77,248 20,592 40,773 -22,808 -47,787 12 Other 2 -16,832 -22,778 -18,530 -20,589 8,418 1,241 -16,170 18,442 957 MEMO 13 Treasury operating balance (level, end of period) 43,621 38,878 56,458 6,079 83,327 62,735 21,962 44,770 92,557 14 Federal Reserve Banks 7,692 4,952 6,641 5,025 28,402 6,119 5,004 4,357 15,868 15 Tax and loan accounts 35,930 33,926 49,817 1,054 54,925 56,615 16,958 40,413 76,689 1. Since 1990, off-budget items have been the social security trust funds (federal old-age net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loansurvivors insurance and federal disability insurance) and the U.S. Postal Service. valuation adjustment; and profit on sale of gold. 2. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the SOURCE. Monthly totals; U.S. Department of the Treasury, Monthly Treasury Statement of International Monetary Fund (IMF); loans to the IMF; other cash and monetary assets; Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous and Budget, Budget of the U.S. Government. liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic NonfinancialS tatistics • July 2000 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1998 1999 ' 2000 11999988 11999999 HI H2 HI H2 Feb. Mar. Apr. RECEIPTS 1 All sources 1,721,798 1,827,454 922,630 825,057 966,045 892,266 108,675 135,582 295,148 2 Individual income taxes, net 828,586 879,480 447,514 392,332 481,744 425,451 45,731 44,789 184,237 3 Withheld 646,483 693,940 316,309 339,144 351,068 372,012 65,868 75,161 56,113 4 Nonwithheld 281,527 308,185 219,136 65,204 240,278 68,302 3,730 7,855 155,452 5 Refunds 99,476 122,706 87,989 12,032 109,467 14,841 23,875 38,239 2277,,334433 Corporation income taxes 6 Gross receipts 213,008 216,324 109,353 104,163 106,861 110,111 4,903 27,546 30,256 7 Refunds 24,593 31,645 14,220 14,250 17,092 13,996 3,126 3,273 2,562 8 Social insurance taxes and contributions, net . . . 571,831 611,833 312,713 268,466 324,831 292,551 50,514 53,329 68,022 9 Employment taxes and contributions2 540,014 580,880 293,520 256,142 306,235 280,059 47,859 52,565 65,095 10 Unemployment insurance 27,484 26,480 17,080 10,121 16,378 10,173 2,280 317 2,557 11 Other net receipts3 4,333 4,473 2,112 2,202 2,216 2,319 376 447 370 12 Excise taxes 57,673 70,414 29,922 33,366 31,015 34,262 5,076 5,722 5,934 13 Customs deposits 18,297 18,336 8,546 9,838 8,440 10,287 1,212 1,681 1,503 14 Estate and gift taxes 24,076 27,782 12,971 12,359 14,915 14,001 1,768 2,379 4,243 15 Miscellaneous receipts4 32,658 34,929 15,829 18,735 15,140 19,569 2,597 3,412 3,515 OUTLAYS 16 All types 1,652,552 1,702,940 815,884 877,414 817,227 882,795 150,409 170,962 135,651 17 National defense 268,456 274,873 129,351 140,196 134,414 149,820 22,136 29,266 21,308 18 International affairs 13,109 15,243 4,610 8,297 6,879 8,530 1,366 859 2,190 19 General science, space, and technology 18,219 18,125 9,426 10,142 9,319 10,089 1,569 1,725 1,530 20 Energy 1,270 912 957 699 797 -90 -238 -737 135 21 Natural resources and environment 22,396 23,970 10,051 12,671 10,351 12,100 1,779 1,872 1,711 22 Agriculture 12,206 23,011 2,387 16,757 9,803 20,887 1,896 1,588 1,196 23 Commerce and housing credit 1,014 2,649 -2,483 4,046 -1,629 7,353 -1,685 699 -1 24 Transportation 40,332 42,531 16,196 20,836 17,082 22,972 2,909 3,739 3,178 25 Community and regional development 9,720 11,870 4,863 6,972 5,368 7,135 -23 1,221 1,561 26 Education, training, employment, and social services 54,919 56,402 25,928 27,762 29,003 27,532 5,385 6,656 4,496 27 Health 131,440 141,079 65,053 67,838 69,320 74,490 11,567 14,333 12,421 28 Social security and Medicare 572,047 580,488 286,305 316,809 261,146 295,030 49,858 54,344 46,309 29 Income security 233,202 237,707 125,196 109,481 126,552 113,504 32,110 29,211 17,801 30 Veterans benefits and services 41,781 43,212 19,615 22,750 20,105 23,412 3,741 5,868 2,186 31 Administration of justice 22,832 25,924 11,287 12,041 13,149 13,459 2,147 2,647 2,066 32 General government 13,444 15,771 6,139 9,136 6,641 7,006 38 1,942 1,010 33 Net interest5 243,359 229,735 122,345 116,954 116,655 112,420 18,884 19,002 19,403 34 Undistributed offsetting receipts6 -47,194 -40,445 -21,340 -25,793 -17,724 -22,850 -3,030 -3,270 -2,849 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 2001; 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 A27 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1998 1999 2000 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 5,573 5,578 5,556 5,643 5,681 5,668 5,685 5,805 5,802 2 Public debt securities 5,542 5,548 5,526 5,614 5,652 5,639 5,656 5,776 5,773 3 Held by public 3,872 3,790 3,761 3,787 3,795 3,685 3,667 3,716 3,688 4 Held by agencies 1,670 1,758 1,766 1,827 1,857 1,954 1,989 2,061 2,085 5 Agency securities 31 30 29 29 29 29 29 29 28 6 Held by public 26 26 26 29 28 28 28 28 28 7 Held by agencies 5 4 4 1 1 1 1 1 0 8 Debt subject to statutory limit 5,457 5,460 5,440 5,530 5,566 5,552 5,568 5,687 5,687 9 Public debt securities 5,456 5,460 5,439 5,530 5,566 5,552 5,568 5,687 5,686 10 Other debt1 0 0 0 0 0 0 0 0 0 MEMO 11 Statutory debt limit 5,950 5,950 5,950 5,950 5,950 5,950 5,950 5,950 5,950 1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified SOURCE. U.S. Department of the Treasury, Monthly Statement of the Public Debt of the participation certificates, notes to international lending organizations, and District of Colum- United States and Treasury Bulletin. bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF US. TREASURY Types and Ownership Billions of dollars, end of period 1999 2000 TTyyppee aanndd hhoollddeerr 11999966 11999977 11999988 11999999 Q2 Q3 Q4 Q1 1 Total gross public debt 5,323.2 5,502.4 5,614.2 5,776.1 5,638.8 5,656.3 5,776.1 5,773.4 By type 2 Interest-bearing 5,317.2 5,494.9 5,605.4 5,766.1 5,629.5 5,647.2 5,766.1 5,763.8 3 Marketable 3,459.7 3,456.8 3,355.5 3,281.0 3,248.5 3,233.0 3,281.0 3,261.2 4 Bills 777.4 715.4 691.0 737.1 647.8 653.2 737.1 753.3 5 Notes 2,112.3 2,106.1 1,960.7 1,784.5 1,868.5 1,828.8 1,784.5 1,732.6 6 Bonds 555.0 587.3 621.2 643.7 632.5 643.7 643.7 653.0 7 Inflation-indexed notes and bonds' n.a. 33.0 50.6 68.2 59.9 67.6 68.2 74.7 8 Nonmarketable2 1,857.5 2,038.1 2,249.9 2,485.1 2,381.0 2,414.2 2,485.1 2,502.6 9 State and local government series 101.3 124.1 165.3 165.7 172.6 168.1 165.7 161.9 10 Foreign issues3 37.4 36.2 34.3 31.3 30.9 31.0 31.3 28.8 11 Government 47.4 36.2 34.3 31.3 30.9 31.0 31.3 28.8 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 182.4 181.2 180.3 179.4 180.0 180.0 179.4 178.6 14 Government account series4 1,505.9 1,666.7 1,840.0 2,078.7 1,967.5 2,005.2 2,078.7 2,103.3 15 Non-interest-bearing 6.0 7.5 8.8 10.0 9.3 9.0 10.0 By holder5 16 U.S. Treasury and other federal agencies and trust funds 1,497.2 1,655.7 1,826.8 2,060.6 1,953.6 1,989.1 2,060.6 17 Federal Reserve Banks 410.9 451.9 471.7 477.7 493.8 496.5 477.7 18 Private investors 3,431.2 3,414.6 3,334.0 3,233.9 3,199.3 3,175.6 3,233.9 19 Depository institutions 296.6 300.3 237.3 245.1 240.6 240.6 245.1 20 Mutual funds 315.8 321.5 343.2 350.9 335.4 332.6 350.9 21 Insurance companies 214.1 176.6 144.5 136.2 142.5 138.2 136.2 n.a. 22 State and local treasuries6 257.0 239.3 269.3 266.8 279.1 271.6 266.8 Individuals 23 Savings bonds 187.0 186.5 186.7 186.5 186.6 186.6 186.5 24 Pension funds 392.7 421.0 434.7 445.1 449.1 444.9 445.1 25 Private 189.2 204.1 218.1 232.8 226.6 228.3 232.8 26 State and Local 203.5 216.9 216.6 212.3 222.5 216.6 212.3 27 Foreign and international7 1,102.1 1,241.6 1,278.7 1,268.8 1,258.6 1,281.3 1,268.8 28 Other miscellaneous investors6-8 665.9 527.9 439.6 334.5 307.4 279.8 334.5 1. The U.S. Treasury first issued inflation-indexed securities during the first quarter of 1997. 7. Includes nonmarketable foreign series treasury securities and treasury deposit funds. 2. Includes (not shown separately) securities issued to the Rural Electrification Administra- Excludes treasury securities held under repurchase agreements in custody accounts at the tion, depository bonds, retirement plan bonds, and individual retirement bonds. Federal Reserve Bank of New York. 3. Nonmarketable series denominated in dollars, and series denominated in foreign cur- 8. Includes individuals, government-sponsored enterprises, brokers and dealers, bank rency held by foreigners. personal trusts and estates, corporate and noncorporate businesses, and other investors. 4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. SOURCE. U.S. Treasury Department, data by type of security, Monthly Statement of the 5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual Public Debt of the United States; data by holder, Treasury Bulletin. holdings; data for other groups are Treasury estimates. 6. In March 1996, in a redefinition of series, fully defeased debt backed by nonmarketable federal securities was removed from "Other miscellaneous investors" and added to "State and local treasuries." The data shown here have been revised accordingly. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic NonfinancialS tatistics • July 2000 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 2000 2000, week ending item Jan.r Feb.r Mar. Mar. 1 Mar. 8 Mar. 15 Mar. 22 Mar. 29 Apr. 5 Apr. 12 Apr. 19 Apr. 26 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 2277,,330077 3311,,006655 33,838 36,848 36,679 25,896 24,758 47,120 34,575 26,377 27,818 26,445 Coupon securities, by maturity 2 Five years or less 110055,,111199 111166,,661155 110022,,226655 116,838 95,661 96,707 86,272 115,093 133,292 110,349 118,971 91,814 3 More than five years 68,775 87,516 65,123 74,257 59,187 60,163 61,308 71,333 81,807 83,550 71,056 46,844 4 Inflation-indexed 1,560 937 1,022 716 948 1,040 982 978 1,527 833 1,331 1,043 Federal agency 5 Discount notes 47,215 53,679 56,650 55,312 53,940 52,829 62,413 58,405 54,853 49,733 58,531 65,757 Coupon securities, by maturity 6 One year or less 11,,448877 999 11,,331100 677 1,013 1,841 885 1,539 1,530 1,112 1,221 1,149 7 More than one year, but less than or equal to five years 8,434 8,722 7,906 8,010 7,880 6,399 7,708 8,423 10,884 10,409 8,343 8,950 8 More than five years 7,959 7,723 8,816 5,599 6,832 5,462 6,647 15,849 11,601 10,995 7,192 4,031 9 Mortgage-backed 65,811 67,758 59,390 45,916 63,522 86,330 47,833 42,007 60,795 119,830 55,177 42,864 By type of counterparty With interdealer broker 10 U.S. Treasury 104,088 122,906 101,083 116,981 98,221 89,293 86,410 117,463 125,501 118,917 113,062 81,173 11 Federal agency 6,345 7,958 8,127 7,510 6,517 6,593 8,145 10,362 10,661 10,176 9,524 6,385 12 Mortgage-backed 25,254 27,071 22,089 18,718 19,480 30,410 20,616 17,992 23,420 40,455 19,714 20,368 With other 13 U.S. Treasury 98,673 113,227 101,164 111,679 94,254 94,513 86,911 117,061 125,760 102,191 106,115 84,973 14 Federal agency 58,749 63,165 66,554 62,081 63,147 59,942 69,508 73,853 68,207 62,034 65,762 73,502 15 Mortgage-backed 40,557 40,687 37,301 27,199 44,041 55,920 27,217 24,016 37,375 79,375 35,463 22,495 FUTURES TRANSACTIONS3 By type of deliverable security 16 U.S. Treasury bills .' 0 0 0 n.a. n.a. n.a. 0 0 0 0 0 0 Coupon securities, by maturity 17 Five years or less 3,726 6,293 4,022 6,944 3,886 5,308 3,424 3,217 3,192 3,248 2,276 1,426 18 More than five years 18,071 21,702 15,073 22,108 13,731 15,460 14,574 14,253 17,244 18,521 15,026 11,143 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 n.a. n.a. n.a. 0 0 n.a. 0 23 More than five years 0 0 19 0 0 n.a. 21 31 39 43 79 n.a. 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 1,449 1,397 1,490 1,255 1,619 1,589 1,388 1,123 2,206 1,538 1,073 1,337 27 More than five years 5,616 5,601 3,565 4,137 4,023 2,171 3,754 3,795 4,571 4,195 3,835 4,275 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 620 776 856 1,015 754 297 702 1,527 1,141 731 511 386 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 reporteda t 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 2000, week ending Jan. Feb. Mar. Mar. 1 Mar. 8 Mar. 15 Mar. 22 Mar. 29 Apr. 5 Apr. 12 Apr. 19 Positions2 NET OUTRIGHT POSITIONS3 By type of security 1 U.S. Treasury bills 14,304 2,930 8,065 2,325 6,040 1,748 1,064 21,712 16,864 16,392 6,150 Coupon securities, by maturity 2 Five years or less -38,777 -37,515 -28,507 -34,043 -35,406 -31,091 -31,704 -17,211 -20,890 -27,548 -30,888 3 More than five years -32,995 -22,779 -20,433 -22,545 -22,166 -20,900 -20,618 -17,478 -21,368 -18,772 -17,765 4 Inflation-indexed 2,894 3,197 2,612 2,812 2,730 2,799 2,661 2,308 2,334 2,451 2,208 Federal agency 5 Discount notes 39,668 37,602 32,628 36,348 32,716 36,734 34,724 26,839 29,022 29,220 22,763 Coupon securities, by maturity 6 One year or less 7,101 9,710 12,553 10,367 11,063 13,339 12,860 12,668 14,631 15,933 15,774 7 More than one year, but less than or equal to five years 7,263 5,852 3,418 5,983 6,169 4,360 2,674 885 679 -583 972 8 More than five years 6,134 4,106 2,753 3,285 3,572 1,822 2,479 2,988 3,010 2,659 3,710 9 Mortgage-backed 21,183 15,723 20,966 13,505 18,519 22,813 25,750 16,446 25,867 26,812 26,682 NET FUTURES POSITIONS4 By type of deliverable security 10 U.S. Treasury bills n.a. n.a. 0 n.a. n.a. 0 0 0 0 0 0 Coupon securities, by maturity 11 Five years or less 11,986 14,668 13,382 14,550 14,513 13,145 14,086 12,072 11,796 12,895 13,071 12 More than five years 8,056 -2,067 -7,040 -5,645 -6,130 -9,896 -6,041 -6,704 -5,602 -1,525 -1,769 13 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 Federal agency 14 Discount notes 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 15 One year or less 0 0 0 0 0 0 0 0 0 0 0 16 More than one year, but less than or equal to five years 0 0 0 0 0 n.a. n.a. n.a. n.a. n.a. 0 17 More than five years 0 0 -11 0 0 0 -28 -13 -22 17 -105 18 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 NET OPTIONS POSITIONS By type of deliverable security 19 U.S. Treasury bills .' 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 20 Five years or less -3,840 -2,684 -101 -673 -1,176 -519 425 972 -184 311 -208 21 More than five years -1,465 2,770 5,265 3,869 4,326 4,981 5,422 5,960 7,261 6,161 6,728 22 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 Federal agency 23 Discount notes 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 24 One year or less 0 0 0 0 0 0 0 0 0 0 0 25 More than one year, but less than or equal to five years 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 26 More than five years n.a. n.a. 91 n.a. n.a. n.a. n.a. 88 102 88 29 27 Mortgage-backed 2,215 2,728 1,261 2,603 2,811 956 727 628 324 -769 -316 Financing5 Reverse repurchase agreements 28 Overnight and continuing 281,382 301,114 289,942 308,769 298,906 276,751 298,448 280,387 299,001 283,522 312,370 29 Term 729,307 711,031 818,513 682,715 750,898 834,477 850,467 883,154 729,113 775,840 796,484 Securities borrowed 30 Overnight and continuing 240,177 261,280 261,482 265,688 257,004 255,405 267,674 262,428 271,340 268,638 278,064 31 Term 112,088 98,511 103,451 92,914 97,532 102,930 103,430 110,786 105,653 111,331 111,587 Securities received as pledge 32 Overnight and continuing 1,677 1,632 2,008 n.a. n.a. n.a. 2,042 n.a. 1,890 n.a. n.a. 33 Term n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Repurchase agreements 34 Overnight and continuing 690,465 729,491 715,903 717,115 709,447 715,862 730,788 701,503 736,338 728,373 736,302 35 Term 619,703 580,824 695,275 564,294 623,256 704,778 726,614 768,432 613,835 660,868 693,987 Securities loaned 36 Overnight and continuing 9,344 10,660 8,550 10,556 9,236 9,124 7,914 7,923 7,554 7,456 8,093 37 Term 7,149 6,087 7,671 6,011 6,018 6,526 9,044 9,591 6,762 6,300 7,263 Securities pledged 38 Overnight and continuing 47,887 51,230 58,304 53,721 55,533 53,595 61,892 61,547 62,868 58,139 61,451 39 Term 10,985 7,232 6,848 6,097 6,005 7,009 7,340 7,011 7,317 7,269 7,019 Collateralized loans 40 Total 20,093 16,629 15,816 13,588 11,753 13,882 18,063 17,588 23,853 24,565 23,185 1. Data for positions and financing are obtained from reports submitted to the Federal securities are included when the time to delivery is more than five business days. Forward Reserve Bank of New York by the U.S. government securities dealers on its published list of contracts for mortgage-backed agency securities are included when the time to delivery is primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar more than thirty business days. days of the report week are assumed to be constant. Monthly averages are based on the 4. Futures positions reflect standardized agreements arranged on an exchange. All futures number of calendar days in the month. positions are included regardless of time to delivery. 2. Securities positions are reported at market value. 5. Overnight financing refers to agreements made on one business day that mature on the 3. Net outright positions include immediate and forward positions. Net immediate posi- next business day; continuing contracts are agreements that remain in effect for more than one tions include securities purchased or sold (other than mortgage-backed agency securities) that business day but have no specific maturity and can be terminated without advance notice by have been delivered or are scheduled to be delivered in five business days or less and either party; term agreements have a fixed maturity of more than one business day. Financing "when-issued" securities that settle on the issue date of offering. Net immediate positions for data are reported in terms of actual funds paid or received, including accrued interest. mortgage-backed agency securities include securities purchased or sold that have been NOTE, "n.a." indicates that data are not published because of insufficient activity. delivered or are scheduled to be delivered in thirty business days or less. Forward positions reflect agreements made in the over-the-counter market that specify delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • July 2000 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1999 2000 AAggeennccyy 11999966 11999977 11999988 11999999 Oct. Nov. Dec. Jan. Feb. 1 Federal and federally sponsored agencies 925,823 1,022,609 1,296,477 1,616,492 n.a. n.a. 1,616,492 1,620,814 1,635,828 2 Federal agencies 29,380 27,792 26,502 26,376 28,218 28,218 26,376 26,277 26,168 3 Defense Department1 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2,3 1,447 552 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Federal Housing Administration4 84 102 205 126 126 126 126 126 155 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. / Postal Service6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority 27,853 27,786 26,496 26,370 28,212 28,212 26,370 26,271 26,162 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 896,443 994,817 1,269,975 1,590,116 n.a. n.a. 1,590,116 1,594,537 1,609,660 11 Federal Home Loan Banks 263,404 313,919 382,131 529,005 489,401 502,842 529,005 522,692 527,835 12 Federal Home Loan Mortgage Corporation 156,980 169,200 287,396 360,711 352,487 357,317 360,711 372,586 380,660 13 Federal National Mortgage Association 331,270 369,774 460,291 547,619 527,403 540,364 547,619 544,360 547,100 14 Farm Credit Banks8 60,053 63,517 63,488 68,883 68,338 67,654 68,883 69,082 69,147 15 Student Loan Marketing Association9 44,763 37,717 35,399 41,988 44,224 44,402 41,988 43,762 42,723 16 Financing Corporation10 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation" 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation'2 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 58,172 49,090 44,129 42,152 42,843 42,843 42,152 40,753 40,182 Lending to federal and federally sponsored agencies + 20 Export-Import Bank3 1,431 552 F F F F F 21 Postal Service6 n.a. n.a. 1 1 1 1 1 1 1 22 Student Loan Marketing Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2 2 3 4 T U e n n it n e e d s s S ee ta t V es a l R le a y i l A w u ay th o A r s it s y o ciation6 n n . . a a . . n n . . a a . . * 1 iI I iI {I iI 1I Other lending14 25 Farmers Home Administration 18,325 13,530 9,500 6,665 6,775 6,775 6,665 6,565 6,515 76 Rural Electrification Administration 16,702 14,898 14,091 14,085 14,025 14,025 14,085 13,958 14,016 27 Other 21,714 20,110 20,538 21,402 22,043 22,043 21,402 20,230 19,651 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 1999 2000 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11999977 11999988 11999999 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 All issues, new and refunding1 214,694 262,342 215,427 18,433 17,497 17,428 14,751 8,969 10,905 16,780 14,233 By type of issue 2 General obligation 69,934 87,015 73,308 5,171 4,183 4,996 3,715 3,454 4,473 5,008 4,598 3 Revenue 134,989 175,327 142,120 13,262 13,314 12,433 11,035 5,516 6,433 11,773 9,635 By type of issuer 4 State 18,237 23,506 16,376 2,341 1,753 929 834 863 1,730 1,570 1,371 5 Special district or statutory authority2 134,919 178,421 152,418 13,449 12,186 12,613 10,640 5,784 7,414 11,098 10,229 6 Municipality, county, or township 70,558 60,173 46,634 2,642 3,557 3,886 3,277 2,322 1,761 4,112 2,633 7 Issues for new capital 135,519 160,568 161,065 14,973 14,908 14,084 11,475 8,009 9,382 13,508 12,029 By use of proceeds 8 Education 31,860 36,904 36,563 2,885 2,049 2,732 3,095 2,189 2,548 3,436 2,484 9 Transportation 13,951 19,926 17,394 1,886 1,674 892 1,201 1,064 723 2,723 768 10 Utilities and conservation 12,219 21,037 15,098 1,976 1,176 1,893 1,008 588 115 1,086 729 11 Social welfare 27,794 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Industrial aid 6,667 8,594 9,099 1,271 726 668 707 89 647 747 762 13 Other purposes 35,095 42,450 47,896 3,941 4,509 5,213 3,141 2,885 2,804 2,426 3,903 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 US. Corporations Millions of dollars 1999 2000 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999977 11999988 11999999 oorr iissssuueerr Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 All issues' 929,256 1,128,491 1,072,866 83,466 82,414 58,613 85,016 50,805 55,714 85,679r 112,138 2 Bonds2 811,376 1,001,736 941,298 75,708 75,807 47,103 61,033 42,477 44,220 63,391 96,148 By type of offering 3 Sold in the United States 708.188 923,771 818,683 63,383 65,679 37,721 53,908 36,488 30,784 56.727 87,603 4 Sold abroad 103,188 77,965 122,615 12,325 10,128 9,382 7,125 5,989 13,436 6,664 8,545 MEMO 5 Private placements, domestic 54,990 37,845 28,506 1,670 1,640 1,632 1,237 3,241 967 65 n.a. By industry group 6 Nonfinancial 222,603 307,935 293,963 22,704 20,655 13,990 24,283 14,614 14,599 26,598r 28,086 7 Financial 588,773 693,801 647,335 53,005 55,151 33,112 36,750 27,863 29,620 36,792 68,062 8 Stocks3 117,880 126,755 131,568 7,758 6,607 11,510 23,983 8,328 11,494 22,288r 16,845 By type of offering 9 Public 117,880 126,755 131,568 7,758 6,607 11,510 23,983 8,328 11,494 22,288r 16,845 10 Private placement4 55,450 78,850 86,300 7,192 7,192 7,192 7,192 7,192 n.a. n.a. n.a. By industry group 11 Nonfinancial 60,386 74,113 110,284 6,379 5,647 10,961 22,611 7,450 9,247 21,796r 15,579 12 Financial 57,494 52,642 21,284 1,379 960 549 1,372 878 2,247 492 1,266 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. Data are not available. end, intracorporate transactions, and Yankee bonds. Stock data include ownership securities SOURCE. Securities Data Company and the Board of Governors of the Federal Reserve issued by limited partnerships. System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A134 Domestic NonfinancialS tatistics • July 2000 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 1999 2000 IItteemm 11999988 11999999 Sept. Oct. Nov. Dec. Jan. Feb. Mar.r Apr. 1 Sales of own shares2 1,461,430 1,791,894 132,226 140,738 155,490 185,898 226,251 237,861 269,118 202,306 2 Redemptions of own shares 1,217,022 1,621,987 126,207 124,052 143,688 178,855 204,380 197,423 243,194 177,038 3 Net sales3 244,408 169,906 6,019 16,686 11,801 7,042 21,871 40,438 25,924 25,268 4 Assets4 4,173,531 5,233,191 4,498,964 4,705,746 4,874,733 5,233,191 5,114,482 5,375,874 5,606,254 5,391,087 5 Cash5 191,393 219,189 209,709 225,762 214,751 219,189 222,729 231,480 221,623 255,418 6 Other 3,982,138 5,014,002 4,289,255 4,479,985 4,659,982 5,014,002 4,891,753 5,144,394 5,384,630 5,135,669 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 1998 1999 2000 AAccccoouunntt 11999977 11999988 11999999 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ql 1 Profits with inventory valuation and capital consumption adjustment 838.5 848.4 892.7 849.4 846.8 839.0 886.9 880.5 884.1 919.4 n.a. 2 Profits before taxes 795.9 781.9 848.5 792.0 780.1 766.7 818.1 835.8 853.8 886.3 n.a. 3 Profits-tax liability 238.3 240.2 259.4 241.1 244.3 235.6 248.0 254.4 259.4 275.7 n.a. 4 Profits after taxes 557.6 541.7 589.1 550.9 535.8 531.0 570.1 581.4 594.3 610.6 n.a. 5 Dividends 333.7 348.6 364.7 347.3 348.4 352.2 356.4 361.5 367.3 373.5 380.0 6 Undistributed profits 223.9 193.1 224.4 203.6 187.4 178.8 213.7 219.9 227.0 237.1 n.a. 7 Inventory valuation 7.4 20.9 -13.0 13.6 19.8 20.8 13.3 -13.6 -26.7 -24.9 n.a. 8 Capital consumption adjustment 35.3 45.6 57.2 43.8 46.9 51.6 55.5 58.2 57.0 58.0 57.3 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 1998 1999 2000 AAccccoouunntt 11999977 11999988 11999999rr Q3 Q4 Ql Q2 Q3 Q4r Ql ASSETS 1 Accounts receivable, gross2 663.3 711.7 811.5 687.6 711.7 733.8 756.5 776.3 811.5 848.8r 2 Consumer 256.8 261.8 279.8 254.0 261.8 261.7 269.2 271.0 279.8 285.5r 3 Business 318.5 347.5 405.2 335.1 347.5 362.8 373.7 383.0 405.2 434.6r 4 Real estate 87.9 102.3 126.5 98.5 102.3 109.2 113.5 122.3 126.5 128.8r 5 LESS: Reserves for unearned income 52.7 56.3 53.5 52.4 56.3 52.9 53.4 54.0 53.5 53.9 6 Reserves for losses 13.0 13.8 13.5 13.2 13.8 13.4 13.4 13.6 13.5 14.0 7 Accounts receivable, net 597.6 641.6 744.6 622.0 641.6 667.6 689.7 708.6 744.6 780.9r 8 All other 312.4 337.9 406.3 313.7 337.9 363.3 373.2 368.5 406.3 412.5 9 Total assets 910.0 979.5 1,150.9 935.7 979.5 1,030.8 1,062.9 1,077.2 1,150.9 l,193.4r LIABILITIES AND CAPITAL 10 Bank loans 24.1 26.3 35.1 24.9 26.3 24.8 25.1 27.0 35.1 30.7 11 Commercial paper 201.5 231.5 227.9 226.9 231.5 222.9 231.0 205.3 227.9 229.7 Debt 12 Owed to parent 64.7 61.8 123.8 58.3 61.8 64.6 65.4 84.5 123.8 145.2 13 Not elsewhere classified 328.8 339.7 397.0 337.6 339.7 366.7 383.1 396.2 397.0 410.0 14 All other liabilities 189.6 203.2 222.7 185.4 203.2 220.3 226.1 216.0 222.7 241.6 15 Capital, surplus, and undivided profits 101.3 117.0 144.5 103.6 117.0 131.5 132.2 148.2 144.5 136.2 16 Total liabilities and capital 910.0 979.5 1,150.9 936.6 979.5 1,030.8 1,062.9 1,077.2 1,150.9 1,193.4 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses. Excludes pools of securitized assets, and banks. Data are amounts carried on the balance sheets of finance companies; securitized pools are not shown, as they are not on the books. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Market and Corporate Finance A33 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables1 Billions of dollars, amounts outstanding 1999 2000 TTyyppee ooff ccrreeddiitt 11999977 11999988 11999999 Oct. Nov. Dec. Jan. Feb/ Mar. Seasonally adjusted 1 Total 810.5 875.8 993.9 980.6 984.8 993.9 l,022.4r 1,032.2 1,054.2 2 Consumer 327.9 352.8 385.3 384.0 385.2 385.3 391.7 395.5 396.9 3 Real estate 121.1 131.4 154.7 149.3 152.7 154.7 159.1 162.3 167.9 4 Business 361.5 391.6 453.9 447.2 446.9 453.9 471.6r 474.4 489.4 Not seasonally adjusted 5 Total 818.1 884.0 1,003.2 978.8 986.3 1,003.2 l,022.4r 1,031.9 1,057.2 6 Consumer 330.9 356.1 388.8 384.5 386.5 388.8 391.1 392.3 393.0 7 Motor vehicles loans 87.0 103.1 114.7 110.2 111.6 114.7 117.6 121.3 121.1 8 Motor vehicle leases 96.8 93.3 98.3 98.4 99.1 98.3 99.3 100.7 101.7 9 Revolving2 38.6 32.3 33.8 31.5 30.5 33.8 34.4 32.9 31.5 10 Other3 34.4 33.1 33.1 32.4 33.2 33.1 33.0 32.7 31.2 Securitized assets4 11 Motor vehicle loans 44.3 54.8 71.1 74.1 74.6 71.1 69.6 67.8 71.2 12 Motor vehicle leases 10.8 12.7 9.7 10.3 10.0 9.7 9.5 9.2 8.8 13 Revolving .0 8.7 10.5 10.1 10.2 10.5 10.4 10.4 10.3 14 Other 19.0 18.1 17.7 17.6 17.4 17.7 17.4 17.3 17.1 15 Real estate 121.1 131.4 154.7 149.3 152.7 154.7 159.1 162.3 167.9 16 One- to four-family 59.0 75.7 88.3 87.7 89.4 88.3 91.1 91.7 90.4 17 Other 28.9 26.6 38.3 35.1 37.1 38.3 38.6 38.4 38.4 Securitized real estate assets4 18 One- to four-family 33.0 29.0 28.0 26.2 25.9 28.0 29.2 32.0 38.9 19 Other .2 .1 .2 .2 T .2 .2 .2 .2 20 Business 366.1 396.5 459.6 445.0 447.1 459.6 472.2r 477.4 496.3 21 Motor vehicles 63.5 79.6 87.8 84.3 85.4 87.8 87.9 89.6 90.2 22 Retail loans 25.6 28.1 33.2 34.9 33.7 33.2 33.3 33.7 32.3 23 Wholesale loans5 27.7 32.8 34.7 30.3 32.6 34.7 34.6 35.8 37.9 24 Leases 10.2 18.7 19.9 19.1 19.2 19.9 20.1 20.1 19.9 25 Equipment 203.9 198.0 221.9 212.8 211.2 221.9 222.3 225.1 238.0 26 Loans 51.5 50.4 52.2 51.5 49.1 52.2 51.9 52.8 54.9 27 Leases 152.3 147.6 169.7 161.3 162.1 169.7 170.4 172.3 183.1 28 Other business receivables6 51.1 69.9 95.5 97.1 98.2 95.5 99.6' 101.4 106.4 Securitized assets4 29 Motor vehicles 33.0 29.2 31.5 28.8 30.6 31.5 31.5 31.0 31.5 30 Retail loans 2.4 2.6 2.9 2.5 3.0 2.9 2.9 2.8 3.2 31 Wholesale loans 30.5 24.7 26.4 24.3 25.6 26.4 26.5 26.1 25.9 32 Leases .0 1.9 2.1 2.0 2.0 2.1 2.1 2.1 2.4 33 Equipment 10.7 13.0 14.6 14.3 14.0 14.6 22.8r 22.5 22.0 34 Loans 4.2 6.6 7.9 7.6 7.4 7.9 16.1r 15.9 15.4 35 Leases 6.5 6.4 6.7 6.8 6.6 6.7 6.7 6.6 6.5 36 Other business receivables6 4.0 6.8 8.4 7.7 7.7 8.4 8.1 7.7 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 NonfinancialS tatistics • July 2000 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1999 2000 IItteemm 11999977 11999988 11999999 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 180.1 195.2 210.7 214.4 220.8 216.3 223.7 216.9 226.0 224.2 2 Amount of loan (thousands of dollars) 140.3 151.1 161.7 165.1 167.0 167.2 169.9 165.6 170.7 170.2 3 Loan-to-price ratio (percent) 80.4 80.0 78.7 79.0 77.4 78.6 77.9 78.4 77.7 77.9 4 Maturity (years) 28.2 28.4 28.8 29.1 29.0 29.0 29.1 29.1 29.0 29.1 5 Fees and charges (percent of loan amount)2 1.02 .89 .77 .71 .73 .71 .75 .71 .68 .68 Yield (percent per year) 6 Contract rate1 7.57 6.95 6.94 7.06 7.13 7.18 7.34 7.43 7.49 7.52 7 Effective rate1,3 7.73 7.08 7.06 7.17 7.24 7.28 7.45 7.54 7.60 7.63 8 Contract rate (HUD series)4 7.76 7.00 7.45 7.77 7.79 7.95 8.21 8.20 8.19 8.29 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 7.89 7.04 7.74 8.02 8.06 8.55 8.56 8.53 8.35 8.33 10 GNMA securities6 7.26 6.43 7.03 7.52 7.37 7.58 7.84 7.96 7.79 7.64 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 316,678 414,515 523,941 509,990 518,337 523,941 527,977 535,096 538,751 539,181 12 FHA/VA insured 31,925 33,770 55,318 50,639 52,632 55,318 57,369 58,294 58,451 58,899 13 Conventional 284,753 380,745 468,623 459,351 465,705 468,623 470,608 476,802 480,300 480,282 14 Mortgage transactions purchased (during period) 70,465 188,448 195,210 10,057 14,683 11,416 9,035 11,484 8,801 6,257 Mortgage commitments (during period) 15 Issued7 69,965 193,795 187,948 10,480 12,050 9,931 9,130 9,811 10,051 12,524 16 To sell8 1,298 1,880 5,900 1,710 381 1,592 1,287 612 1,954 1,340 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)8 17 Total 164,421 255,010 324,443 318,682 323,027 324,443 325,914 328,598 336,338 339,207 18 FHA/VA insured 177 785 1,836 1,744 1,848 1,836 1,806 1,719 2,521 1,987 19 Conventional 164,244 254,225 322,607 316,938 321,179 322,607 324,108 326,879 333,817 337,220 Mortgage transactions (during period) 20 Purchases 117,401 267,402 239,793 13,323 11,869 9,335 12,942 6,747 9,323 8,393 21 114,258 250,565 233,031 12,671 11,129 8,589 12,764 6,424 8,569 8,077 22 Mortgage commitments contracted (during period)9 120,089 281,899 228.432 10,810 10,501 11,587 8,341 7,156 10,122 8,750 1. Weighted averages based on sample surveys of mortgages originated by major institu- 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. assuming prepayment at the end of ten years. 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mortgages; from U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Mortgage Corporation's mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured exclude swap activity. by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A3 5 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1999 2000 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999966 11999977 11999988 Q1 Q2 Q3 Q4 Qi 1 All holders 4,880,736 5,184,691 5,683,280 5,819,743 5,968,122 6,173,523 6,318,783 6,503,518 By type of property 2 One- to four-family residences 3,721,917 3,959,565 4,328,434 4,420,898 4,533,031 4,663,148 4,759,962 4,862,061 3 Multifamily residences 288,929 301,516 328,714 339,266 346,240 357,423 370,381 382,602 4 Nonfarm, nonresidential 782,755 833,311 929,626 962,175 989,206 1,051,551 1,085,896 1,154,354 5 Farm 87,134 90,299 96,506 97,404 99,644 101,403 102,544 104,500 By type of holder Major financial institutions 1,981,885 2,083,978 2,194,813 2,202,306 2,242,525 2,321,448 2,393,404 2,460,338 7 Commercial banks2 1,145,389 1,245,315 1,337,217 1,336,733 1,361,365 1,418,819 1,495,717 1,547,038 8 One- to four-family 677,603 745,510 797,195 782,135 790,043 826,936 879,299 904,710 9 Multifamily 45,451 49,670 52,871 56,731 59,151 62,477 66,010 72,431 10 Nonfarm, nonresidential 397,452 423,148 458,115 468,355 481,635 498,087 518,569 537,224 11 Farm 24,883 26,986 29,035 29,513 30,536 31,320 31,839 32,673 12 Savings institutions3 628,335 631,822 643,957 646,510 656,518 676,346 668,634 680,745 13 One- to four-family 513,712 520,672 533,792 534,772 544,832 560,483 548,926 560,046 14 Multifamily 61,570 59,543 56,825 56,763 55,020 57,286 59,143 57,759 15 Nonfarm, nonresidential 52,723 51,252 52,923 54,539 56,222 58,118 60,090 62,447 16 Farm 331 354 417 435 443 459 475 493 17 Life insurance companies 208,161 206,841 213,640 219,063 224,642 226,282 229,053 232,555 18 One- to four-family 6,977 7,187 6,590 6,956 7,295 7,435 7,278 6,137 19 Multifamily 30,750 30,402 31,522 31,528 31,813 32,011 32,460 32,983 20 Nonfarm, nonresidential 160,314 158,780 164,004 168,862 173,568 174,642 177,092 179,949 21 Farm 10,120 10,472 11,524 11,717 11,966 12,194 12,223 13,486 22 Federal and related agencies 295,192 286,167 292,636 288,176 288,038 322,098 321,717 318,240 23 Government National Mortgage Association 2 8 7 6 8 8 7 7 24 One- to four-family 2 8 7 6 8 8 7 7 25 Multifamily 0 0 0 0 0 0 0 0 26 Farmers Home Administration4 41,596 41,195 40,851 40,691 40,766 73,705 73,871 72,899 71 One- to four-family 17,303 17,253 16,895 16,777 16,653 16,583 16,506 16,456 28 Multifamily 11,685 11,720 11,739 11,731 11,735 11,745 11,741 11,732 29 Nonfarm, nonresidential 6,841 7,370 7,705 7,769 7,943 41,068 41,355 40,509 .30 Farm 5,768 4,852 4,513 4,413 4,435 4,308 4,268 4,202 31 Federal Housing and Veterans' Administrations 6,244 3,821 3,674 3,538 3,490 3,889 3,737 3,773 .32 One- to four-family 3,524 1,767 1,849 1,713 1,623 2,013 1,862 1,826 33 Multifamily 2,719 2,054 1,825 1,825 1,867 1,876 1,876 1,947 34 Resolution Trust Corporation 0 0 0 0 0 0 0 0 35 One- to four-family 0 0 0 0 0 0 0 0 36 Multifamily 0 0 0 0 0 0 0 0 37 Nonfarm, nonresidential 0 0 0 0 0 0 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 2,431 724 361 315 189 163 152 98 40 One- to four-family 365 109 54 47 28 24 23 15 41 Multifamily 413 123 61 54 32 28 26 17 42 Nonfarm, nonresidential 1,653 492 245 214 129 111 103 67 4.3 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 168,813 161,308 157,675 157,185 155,637 154,420 152,633 150,312 45 One- to four-family 155,008 149,831 147,594 147,063 145,033 142,982 141,195 139,986 46 Multifamily 13,805 11,477 10,081 10,122 10,604 11,438 11,438 10,326 47 Federal Land Banks 29,602 30,657 32,983 33,128 33,666 34,218 34,640 34,142 48 One- to four-family 1,742 1,804 1,941 1,949 1,981 2,013 2,038 2,009 49 Farm 27,860 28,853 31,042 31,179 31,685 32,205 32,602 0 50 Federal Home Loan Mortgage Corporation 46,504 48,454 57,085 53,313 54,282 55,695 56,676 57,009 51 One- to four-family 41,758 42,629 49,106 44,140 43,574 44,010 44,321 43,384 52 Multifamily 4,746 5,825 7,979 9,173 10,708 11,685 12,355 13,625 53 Mortgage pools or trusts5 2,044,049 2,240,928 2,587,942 2,715,181 2,810,119 2,891,145 2,954,654 3,000,462 54 Government National Mortgage Association 506,340 536,879 537,446 543,280 553,196 569,038 582,296 589,385 55 One- to four-family 494,158 523,225 522,498 527,886 537,287 552,670 565,222 571,699 56 Multifamily 12,182 13,654 14,948 15,395 15,909 16,368 17,074 17,686 57 Federal Home Loan Mortgage Corporation 554,260 579,385 646,459 687,179 718,085 738,581 749,081 757,106 58 One- to four-family 551,513 576,846 643,465 684,240 714,844 735,088 744,619 752,607 59 Multifamily 2,747 2,539 2,994 2,939 3,241 3,493 4,462 4,499 60 Federal National Mortgage Association 650,780 709,582 834,518 881,815 911,435 938,484 960,883 975,815 61 One- to four-family 633,210 687,981 804,205 849,513 877,863 903,531 924,941 938,898 62 Multifamily 17,570 21,601 30,313 32,302 33,572 34,953 35,942 36,917 63 Farmers Home Administration4 3 2 1 1 1 0 0 0 64 One- to four-family 0 0 0 0 0 0 0 0 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential 0 0 0 0 0 0 0 0 67 Farm 3 2 1 1 1 0 0 0 68 Private mortgage conduits 332,666 415,080 569,518 602,906 627,403 645,041 662,394 678,156 69 One- to four-family6 261,900 318,000 410,900 430,653 447,938 455,276 462,600 471,390 70 Multifamily 16,113 20,278 32,586 35,455 37,065 38,551 40,164 43,835 71 Nonfarm, nonresidential 54,654 76,802 126,033 136,798 142,400 151,215 159,630 162,930 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 559,609 573,619 607,888 614,081 627,440 638,833 649,008 724,478 74 One- to four-family 363,143 366,744 392,343 393,047 404,028 414,094 421,125 452,891 75 Multifamily 69,179 72,629 74,971 75,249 75,524 75,512 77,690 78,846 76 Nonfarm, nonresidential 109,119 115,467 120,600 125,638 127,310 128,311 129,057 171,228 77 Farm 18,169 18,779 19,974 20,147 20,578 20,917 21,137 21,513 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 Nonfinancial Statistics • July 2000 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 1999 2000 11999999 Oct. Nov. Dec. Jan. Feb.' Mar. Seasonally adjusted 1 Total l,234,461r 1,301,023' l,393,657r 1,371,617' 1,382,727' 1,393,657' 1,409,387' 1,418,756 1,429,431 2 Revolving 531,163r 560,504r 595,610r 585,238r 588,972r 595,610r 603,782r 608,523 615,510 3 Nonrevolving2 703,297r 740,519r 798,047r 786,379r 793,755r 798,047r 805,605' 810,233 813,921 Not seasonally adjusted 4 Total 1,264,103 1,331,742 1,426,151 1,375,474 1,389,747 1,426,151 1,419,258' 1,413,585 1,416,228 By major holder Commercial banks 512,563 508,932 499,758 474,042 480,763 499,758 498,589 499,148 497,120 6 Finance companies 160,022 168,491 181,573 174,081 175,296 181,573 184,887 186,896 183,705 / Credit unions 152,362 155,406 167,921 164,391 165,951 167,921 168,109 168,209 169,487 Savings institutions 47,172 51,611 61,527 60,544 61,035 61,527 60,674r 59,821 58,968 9 Nonfinancial business 78,927 74,877 80,311 67,962 70,286 80,311 76,048r 73,509 72,908 10 Pools of securitized assets3 313,057 372,425 435,061 434,454 436,416 435,061 430,951 426,002 434,040 By major type of credit4 11 Revolving 555,858 586,528 623,245 583,488 592,022 623,245 614,528r 609,387 609,086 12 Commercial banks 219,826 210,346 189,352 167,469 172,345 189,352 185,451 186,379 184,901 13 Finance companies 38,608 32,309 33,814 31,453 30,512 33,814 34,352 32,885 31,456 14 Credit unions 19,552 19,930 20,641 19,328 19,582 20,641 20,175 19,941 19,764 15 Savings institutions 11,441 12,450 15,838 14,254 15,046 15,838 15,55 lr 15,263 14,975 16 Nonfinancial business 44,966 39,166 42,783 34,534 36,002 42,783 39,746 37,918 37,430 17 Pools of securitized assets3 221,465 272,327 320,817 316,450 318,535 320,817 319,253 317,001 320,560 18 Nonrevolving 708,245 745,214 802,906 791.986 797,725 802,906 804,730' 804,198 807,142 19 Commercial banks 292,737 298,586 310,406 306,573 308,418 310,406 313,138 312,769 312,219 20 Finance companies 121,414 136,182 147,759 142,628 144,784 147,759 150,535 154,011 152,249 21 Credit unions 132,810 135,476 147,280 145,063 146,369 147,280 147,934 148,268 149,723 22 Savings institutions 35,731 39,161 45,689 46,290 45,989 45,689 45,123r 44,558 43,993 23 Nonfinancial business 33,961 35,711 37,528 33,428 34,284 37,528 36,302' 35,591 35,478 24 Pools of securitized assets3 91,592 100,098 114,244 118.004 117,881 114,244 111,698 109,001 113,480 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 3. Outstanding balances of pools upon which securities have been issued; these balances extended to individuals, excluding loans secured by real estate. Data in this table also appear are no longer carried on the balance sheets of the loan originator. in the Board's G.19 (421) monthly statistical release. For ordering address, see inside front 4. Totals include estimates for certain holders for which only consumer credit totals are cover. available. 2. Comprises motor vehicle loans, mobile home loans, and all other loans that are not included in revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT1 Percent per year except as noted 1999 2000 IItteemm 11999977 11999988 11999999 Sept. Oct. Nov. Dec. Jan. Feb. Mar. INTEREST RATES Commercial banks2 9.02 8.72 8.44 n.a. n.a. 8.66 n.a. n.a. 8.88 n.a. 1 48-month new car 13.90 13.74 13.39 n.a. n.a. 13.52 n.a. n.a. 13.76 n.a. 2 24-month personal Credit card plan 15.77 15.71 15.21 n.a. n.a. 15.13 n.a. n.a. 15.47 n.a. 3 All accounts 15.57 15.59 14.81 n.a. n.a. 14.77 n.a. n.a. 14.32 n.a. 4 Accounts assessed interest Auto finance companies 7.12 6.30 6.66 6.47 7.07 7.27 7.32 7.18 7.34 6.76 5 New car 13.27 12.64 12.60 13.13 13.28 13.27 13.28 12.95 13.27 13.45 6 Used car OTHER TERMS3 Maturity (months) 54.1 52.1 52.7 52.1 53.2 53.9 53.4 52.9 52.7 53.1 7 New car 51.0 53.5 55.9 55.9 55.8 55.8 55.6 57.0 57.1 57.1 8 Used car Loan-to-value ratio 92 92 92 92 92 91 91 91 92 93 9 New car 99 99 99 100 100 99 99 98 98 99 10 Used car Amount financed (dollars) 18,077 19,083 19,880 20,154 20,335 20,517 20,699 20,503 20,206 20,395 11 New car 12,281 12,691 13,642 13,449 13,613 13,787 1133,,997700 1133,,880099 1133,,669977 1133,,666666 12 Used car 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 1998 1999 2000 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999944 Q3 Q4 Ql Q2 Q3 Q4r Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors ... 568.0 712.0 732.5r 805.5r l,038.1r 909.0r l,087.1r l,287.7r 889. lr l,180.9r 1,123.7 956.6 By sector and instrument 7 Federal government 155.8 144.4 145.0 23.1 -52.6 -113.5 -54.1 -75.2 -112.2 -83.1 -14.3 -204.0 Treasury securities 155.7 142.9 146.6 23.2 -54.6 -113.1 -66.3 -73.7 -112.8 -83.2 -14.3 -201.9 4 Budget agency securities and mortgages .2 1.5 -1.6 -.1 2.0 -.4 12.2 -1.5 .6 .0 .0 -2.1 5 Nonfederal 412.2 567.6 587.5r 782.4r l,090.7r 1,022.5' l,141.3r l,363.0r l,001.3r l,264.(f 1,138.0 1,160.6 By instrument 6 Commercial paper 21.4 18.1 -.9 13.7 24.4 85.6 —43.0 58.3 -2.6 49.8 44.0 36.4 7 Municipal securities and loans -35.9 -48.2 2.6 71.4 96.8 82.9 89.6 100.7 48.0 77.0 47.0 19.3 8 Corporate bonds 23.3 91.1 116.3 150.5 218.7 108.0 193.2 274.0 287.6 202.8 155.2 189.0 9 Bank loans n.e.c 75.2 103.7 70.5 106.5 108.2 107.8 120.9 70.0 22.2 112.8 125.8 104.5 in 34.0 67.2 33.5 69.1 74.3 77.7 102.5 153.9r — 14.5r 79.0r 56.2 172.0 ii Mortgages 169.3 196.7 276.9r 318.7r 500.6r 480.9r 608. lr 575.4' 599.2r 666.4r 600.4 496.4 P 183.4 180.4 242.2r 251.9r 383.3r 389.8r 441.3r 413.9r 428. r 491.3r 398.0 338.0 n Multifamily residential -3.7r 5.9r 9.5r 8.4r 18.8r 11.lr 26.3r 35.3r 33.4r 45.9r 48.1 33.8 14 - 12.7r 8.9r 22.7r 55.2r 92.3r 74.6r 131.9r 122.6r 128.7r 122.lr 151.8 120.7 IS 2.2 1.6 2.6 3.2 6.2 5.5 8.6 3.6 9.0 1.0' 2.5 3.9 16 Consumer credit 124.9 138.9 88.8 52.5 67.6 79.6 69.9 130.51 61.41 76.2r 109.5 143.1 By borrowing sector 17 313.6r 348.5r 347.3r 332.9r 476.9r 477.7r 530.4r 554433..77rr 551111..66rr 660000..99rr 515.5 502.5 18 Nonfinancial business 144.8r 270.6r 247.0r 393.4r 533.5r 474.7r 535.8r 731.8r 454.0r 606.2r 591.5 643.5 19 137.2r 237. lr 158.4r 272.3r 416.0r 358.4r 413.4r 628.4r 355.2r 470.9r 463.6 518.8 70 Nonfarm noncorporate 3.3 30.6 83.8 ns.o1 109.8r 109.0r 114.8r 96.8r 99.8r 125.7r 122.0 111.0 71 Farm 4.4 2.9 4.8 6.2 7.7 7.3 7.5 6.6 -1.0 9.5r 5.9 13.8 22 State and local government -46.2 -51.5 -6.8 56.1 80.3 70.0 75.1 87.4 35.7 57.0 31.0 14.6 73 Foreign net borrowing in United States -13.9 71.1 77.2 57.6 33.6 -19.6 -38.9 17.0 -36.8 62.2 15.6 114.2 74 Commercial paper -26.1 13.5 11.3 3.7 7.8 6.2 -4.7 18.0 -27.5 41.1 33.6 56.8 75 Bonds 12.2 49.7 55.8 47.2 25.1 -27.2 -34.2 .9 -12.6 29.4 -17.2 39.1 76 Bank loans n.e.c 1.4 8.5 9.1 8.5 6.7 3.6 9.8 .9 5.6 -6.6 2.3 15.4 27 Other loans and advances -1.4 -.5 1.0 -1.8 -6.0 -2.2 -9.7 -2.8 -2.3 -1.6 -3.0 2.9 28 Total domestic plus foreign 554.1 783.1 809.7r 863.1r l,071.6r 889.4r l,048.3r l,304.7r 852.3r l,243.1r 1,139.3 1,070,8 Financial sectors 29 Total net borrowing by financial sectors 468.4 453.9 545.8r 653.7r l,073.9r l,067.9r l,296.9r l,199.2r 1,016.1 l,075.2r 1,061.2 596.0 By instrument 30 Federal government-related 287.5 204.1 231.5 212.8 470.9 555.8 673.3 592.2 578.9 653.0 543.9 253.8 31 Government-sponsored enterprise securities 176.9 105.9 90.4 98.4 278.3 294.0 510.5 193.0 304.7 407.1 367.9 106.9 32 Mortgage pool securities 115.4 98.2 141.1 114.5 192.6 261.7 162.8 399.2 274.3 245.9 176.0 146.9 33 Loans from U.S. government -4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 180.9 249.8 314.4r 440.9r 603,0r 512.1r 623,6r 607.0r 437.2 422.3r 517.3 342.3 35 Open market paper 40.5 42.7 92.2 166.7 161.0 141.0 130.7 78.3 57.8 89.8 478.9 130.2 36 Corporate bonds 121.8 195.9 173.8r 210.5r 296.9r 189.0r 280.lr 475.9r 263.2 182.1r -34.0 164.1 37 Bank loans n.e.c -13.7 2.5 12.6 13.2 30.1 60.2 12.4 -8.8 10.5 -6.2 -52.7 6.6 38 Other loans and advances 22.6 3.4 27.9 35.6 90.2 82.3 169.9 41.6 117.9 147.2 121.8 34.3 39 Mortgages 9.8 5.3 7.9 14.9 24.8 39.6 30.6 20.1 -12.3 9.4 3.2 7.0 By borrowing sector 40 Commercial banking 20.1 22.5 13.0 46.1 72.9 61.7 66.3 31.1 72.7 111.3 5533..88 5566..55 41 Savings institutions 12.8 2.6 25.5 19.7 52.2 63.7 103.2 58.0 58.6 55.2 20.2 25.9 47 Credit unions .2 -.1 .1 .1 .6 1.0 .4 1.5 1.4 2.8 3.3 -2.9 4.3 Life insurance companies .3 -.1 1.1 .2 .7 1.6 1.8 3.3 3.0 1.1 -4.4 -.7 44 Government-sponsored enterprises 172.1 105.9 90.4 98.4 278.3 294.0 510.5 193.0 304.7 407.1 367.9 106.9 45 Federally related mortgage pools 115.4 98.2 141.1 114.5 192.6 261.7 162.8 399.2 274.3 245.9 176.0 146.9 46 Issuers of asset-backed securities (ABSs) 76.5 142.4 150.8r 202.2r 321.4r 305.8r 333.9r 285.5r 309.2 224.6r 116.7 161.4 47 Finance companies 48.7 50.2 45.9 48.7 43.0 -12.0 17.8 71.2 88.4 -22.6 112.6 44.3 48 Mortgage companies -11.5 -2.2 4.1 -4.6 1.6 2.3 3.0 -4.6 5.1 --66..11 6.2 -3.0 49 Real estate investment trusts (REITs) 10.2 4.5 11.9 39.6 62.7 79.3 44.0 25.6 -19.7 77..99 11.3 11.5 50 Brokers and dealers .5 -5.0 -2.0 8.1 7.2 —2.6 12.4 -31.1 -17.4 16.9 -37.3 44.4 51 Funding corporations 23.1 34.9 64.1 80.7 40.7 11.2 40.9 166.5 -63.8 31.2 234.8 5.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic NonfinancialS tatistics • July 2000 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1—Continued 1998 1999 2000 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999944 11999955 11999966 11999977 11999988 Q3 Q4 Q1 Q2 Q3 Q4r Q1 All sectors 5522 TToottaall nneett bboorrrroowwiinngg,, aallll sseeccttoorrss 1,022.5 1,237.0 l,355.6r l,516.8r 2,145.5r l,957.2r 2,345.2r 2,503.9r l,868.5r 2,318.3r 2,200.5 1,666.9 5533 OOppeenn mmaarrkkeett ppaappeerr 35.7 74.3 102.6 184.1 193.1 232.7 83.0 154.6 27.7 180.6 556.5 223.4 5544 UU..SS.. ggoovveerrnnmmeenntt sseeccuurriittiieess 448.1 348.5 376.5 235.9 418.3 442.3 619.1 517.0 466.8 569.8 529.6 49.8 5555 MMuunniicciippaall sseeccuurriittiieess -35.9 -48.2 2.6 71.4 96.8 82.9 89.6 100.7 48.0 77.0 47.0 19.3 5566 CCoorrppoorraattee aanndd ffoorreeiiggnn bboonnddss 157.3 336.7 345.8r 408.2r 540.7r 269.8r 439. r 750.7r 538.2 414.3r 104.1 392.2 5577 BBaannkk llooaannss nn..ee..cc 62.9 114.7 92.1 128.2 145.0 171.6 143.0 62.1 38.3 100.0 75.3 126.5 5588 OOtthheerr llooaannss aanndd aaddvvaanncceess 50.4 70.1 62.5 102.8 158.5 157.8 262.7 192.7r 101.lr 224.6r 175.0 209.2 5599 MMoorrttggaaggeess 179.0 202.0 284.8r 333.6r 525.4r 520.5r 638.7r 595.5r 587.0r 675.8r 603.6 503.4 6600 CCoonnssuummeerr ccrreeddiitt 124.9 138.9 88.8 52.5 67.6 79.6 69.9 130.5r 61.4r 76.2r 109.5 143.1 Funds raised through mutual funds and corporate equities 61 Total net issues 113.4 131.5 209.1 165.6 76.5 -166.6 -3.5 153.3r 163.5r 102.9r 148.0 427.2 62 Corporate equities 12.8 -16.0 -28.5 -99.6 -198.1 -340.0 -228.3 -99.9r —47.3r —20.4r -26.5 106.3 63 Nonfinancial corporations -44.9 -58.3 -69.5 -114.4 -267.0 -308.4 -491.3 -52.r —338.4r -128.4r -55.0 62.8 64 Foreign shares purchased by U.S. residents 48.1 50.4 60.0 42.0 77.8 -32.8 317.4 -33.4 270.9 108.4r 45.2 63.0 65 Financial corporations 9.6 -8.1 -19.0 -27.1 -8.9 1.1 -54.5 - 14.5r 20.2r — .3r -16.7 -19.5 66 Mutual fund shares 100.6 147.4 237.6 265.1 274.6 173.4 224.8 253.3 210.9r 123.2r 174.5 320.9 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 7 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1998 1999 2000 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999944 11999955 11999966 11999977 11999988 Q3 Q4 Q1 Q2 Q3R Q4R Qi NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 1,022.5 1,237.0 l,355.6r l,516.8r 2,145.5r l,957.2r 2,345.2r 2,503.9r l,868.5r 2,318.3 2,200.5 1,666.9 ? Domestic nonfederal nonfinancial sectors 223.4 -98.4 12.(f -43.7R 74.7R 88.8R —261.5R 423.3R 397.8R 195.4 14.6 -120.5 Household 260.2 -3.0 60.3' —29.0R -73.8R —142.2R —439.7R 246.4R 288.3R 186.3 20.7 -170.9 4 Nonfinancial corporate business 17.7 -8.8 -10.2 — 12.7R 14.0R 15.2R 36.4R 42.0R 25.0R 52.2 -9.5 36.0 5 Nonfarm noncorporate business .6 4.7 -4.3 -2.1R ,lr .r ,lr 2.8R 1.2R .8 1.4 2.6 6 State and local governments -55.0 -91.4 -33.7 .1 134.5R 215.7R 141.7R 132.2R 83.3R -43.9 2.0 11.9 7 Federal government -27.4 -.2 -7.4 5.1 13.5 13.8 11.7 17.0 6.9 11.4 3.2 7.1 8 Rest of the world 132.3 273.9 414.4 310.7 249.3 60.8 390.7 253.3 37.4 382.2 141.3 338.9 9 Financial sectors 694.1 1,061.7 936.6R L,244.6R 1,808. lr L,793.8R 2,204.3R L,810.3R L,426.4R 1,729.4 2,041.4 1,441.4 10 Monetary authority 31.5 12.7 12.3 38.3 21.1 41.6 3.5 71.8 62.4 34.1 -65.7 112.2 11 Commercial banking 163.4 265.9 187.5 324.3 305.2 250.1 531.5 68.9 135.4 435.5 593.1 382.4 1? U.S.-chartered banks 148.1 186.5 119.6 274.9 312.0 309.2 540.2 134.1 231.5 410.7 494.2 417.6 13 Foreign banking offices in United States 11.2 75.4 63.3 40.2 -11.9 -68.1 -12.1 -54.9 -105.7 30.6 49.7 1.9 14 Bank holding companies .9 -.3 3.9 5.4 -.9 6.0 -7.4 -6.0 .4 -12.4 42.6 -42.5 15 Banks in U.S.-affiliated areas 3.3 4.2 .7 3.7 6.0 2.9 10.7 -4.4 9.2 6.6 6.6 5.4 16 Savings institutions 6.7 -7.6 19.9 -4.7 36.3 17.9 113.3 102.7 88.8 60.9 22.3 39.1 17 Credit unions 28.1 16.2 25.5 16.8 19.0 21.0 16.0 34.7 32.1 29.6 13.5 44.8 18 Bank personal trusts and estates 7.1 -8.3 -7.7 -25.0 -12.8 -16.0 -13.5 -7.6 -8.4 -8.6 -9.1 -9.5 IP Life insurance companies 72.0 100.0 69.6 104.8 76.9 65.6 86.0 72.lr 63.4R 38.4 22.5 75.9 70 Other insurance companies 24.9 21.5 22.5 25.2 20.4 -7.7 67.6 -19.7 26.7 -14.4 -7.7 ..11 21 Private pension funds 46.1 56.0 52.3 65.5 118.6R 95.5 174.4R 60.6 150. LR 45.4 131.0 6622..11 77 State and local government retirement funds 30.9 33.6 37.3 63.8 66.0 68.7 49.5 76.5 27.3 38.5 59.8 -13.2 73 Money market mutual funds 30.0 86.5 88.8 87.5 244.0 255.5 353.1 227.6 -92.6 232.1 360.8 222.1 74 Mutual funds -7.1 52.5 48.9 80.9 124.8 92.9 103.5 103.0 119.9R -18.8 -11.7 -70.6 75 Closed-end funds -3.7 10.5 4.7 -2.9 4.5 4.5 4.5 3.1R 3.1R 3.1 3.1 3.1 76 Government-sponsored enterprises 117.8 86.7 84.2 94.3 260.8 264.7 429.5 157.2 259.2 287.5 234.1 100.4 71 Federally related mortgage pools 115.4 98.2 141.1 114.5 192.6 261.7 162.8 399.2 274.3 245.9 176.0 146.9 78 Asset-backed securities issuers (ABSs) 69.4 120.6 120.5R 163.8R 281.7R 260.3R 310.9R 267.9R 292.4 216.1 86.9 140.8 79 Finance companies 48.3 49.9 18.4 21.9 51.9 79.5 75.3 92.2 79.6 94.7 113.1 141.3 30 Mortgage companies -24.0 -3.4 8.2 -9.1 3.2 4.5 6.0 -9.1 10.2 -12.1 12.3 -6.0 31 Real estate investment trusts (REITs) -.7 1.4 4.4 20.2 -5.1 -11.3 -40.8 1.7 -2.2 -2.7 -7.0 -16.3 3? Brokers and dealers -44.2 90.1 -15.7 14.9 6.8 146.0 -226.1 88.0 -193.7 16.3 -33.7 169.2 33 Funding corporations -17.8 -21.2 14.0 49.8R -1.9 - 101.5R —2.8R 19.5R 98.4R 8.0 347.6 -83.3 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 1,022.5 1,237.0 l,355.6r l,516.8r 2,145.5r l,957.2r 2,345.2r 2,503.9r l,868.5r 2,318.3 2,200.5 1,666.9 Other financial sources 35 Official foreign exchange -5.8 8.8 -6.3 .7 66..66 8.9 8.6 --1144..00 --55..44 -8.5 --77..00 ..88 36 Special drawing rights certificates .0 2.2 -.5 -.5 .0 .0 .0 -4.0 .0 -4.0 -4.0 ..00 37 Treasury currency .7 .6 .1 .0 .0 1.7 -2.3 .0 2.1 2.0 -4.1 2.2 38 Foreign deposits 52.9 35.3 85.9 106.8 -.2 84.9 -131.9 127.7 99.3 55.1 -12.9 52.0 30 Net interbank transactions 89.8 10.0 -51.6 -19.7 -32.3 44.7 -118.7R 49.9R 90.9R -35.9 -62.9 -100.6 40 Checkable deposits and currency -9.7 -12.7 15.8 41.5 47.6 -24.9 72.8 61.1 10.1 141.0 394.3 -224.2 41 Small time and savings deposits -39.9 96.6 97.2 97.1 152.4 144.7 281.2 -68.0 100.0 141.9 3.6 113.8 4? Large time deposits 19.6 65.6 114.0 122.5 92.1 81.8 104.4 -5.9 42.6 105.2 379.2 121.1 43 Money market fund shares 43.3 142.3 145.8 157.6 285.5 367.9 313.1 204.9 100.5 180.3 516.7 217.5 44 Security repurchase agreements 78.2 110.5 41.4 120.9 91.3 274.8 -181.8 253.3 -27.9 114.6 346.7 275.4 45 Corporate equities 12.8 -16.0 -28.5 -99.6 -198.1 -340.0 -228.3 -99.9R -413' -20.4 -26.5 106.3 46 Mutual fund shares 100.6 147.4 237.6 265.1 274.6 173.4 224.8 253.3 210.9' 123.2 174.5 320.9 47 Trade payables 120.0 128.9 114.8 130.5R 27.4R 58.8R -61.91 139.9R 241.2R 218.1 96.9 168.3 48 Security credit -.1 26.7 52.4 111.0 103.3 149.5 -25.7 -66.6 139.9 29.5 271.3 517.5 49 Life insurance reserves 35.5 45.8 44.5 59.3 53.3 51.7 59.0 40.8 75.6R 65.5 52.4 49.2 50 Pension fund reserves 254.4R 235.4R 247.6R 304.4R 303.9R 296.2R 349.6R 272.4R 293.4' 271.9 311.8 287.9 51 Taxes payable 2.6 6.2 16.0 15.6R 11.8R 21.ff 7.8R -1.6' 42.4' -3.1 24.4 .5 5? Investment in bank personal trusts 17.8 4.0 -8.6 — 56.3 -48.0 -51.2 -48.8 -32.0 -25.9 -34.3 -32.3 -40.4 53 Noncorporate proprietors' equity 43.0R 35.7R — 2.3R —44.4R —45.6R - 102.2R -Iff -Iff 8.9R -66.2 -15.8 -29.7 54 Miscellaneous 250.7R 451. lr 504.5R 481.6R 816.8R 854.2R 668.3R 184.6R L,189.7R 356.1 501.0 475.0 55 Total financial sources 2,088.9r 2,761.5r 2,975.5r 3,311.1r 4,087.9r 4,059.2r 3,627.4r 3,786.0r 4,409.3r 3,950.3 5,107.9 3,980.3 Liabilities not identified as assets (—) 56 Treasury currency -.2 -.5 -.9 -.6 -.7 1.1 -3.4 -1.5 ..66 ..22 --66..33 .6 57 Foreign deposits 43.0 25.1 59.6 105.6R -8.1 70.3R -157.4' 61.8R 86.2R 9.5 32.4 -8.5 58 Net interbank liabilities -2.7 -3.1 -3.3 -19.9 3.4 22.3 -52.8 58.7 -1.7 -1.0 -39.8 34.5 59 Security repurchase agreements 67.7 20.2 4.5 62.2R 54.1 153.8 -11.lr 209.3R 62.4R 48.0 -192.6 571.0 60 Taxes payable 16.6 21.1 22.8 26.8 18.0R 28.7R 19.6R - 14.8R 5.8R 1.6 -3.1 -16.5 61 Miscellaneous —146.4R —204.8R -IO.T —63.8R —47.4R -14.41 —4.9R —411.4r -430.5R -460.4 -131.6 -392.7 Floats not included in assets (—) 62 Federal government checkable deposits -4.8 -6.0 .5 -2.7 2.6 32.4 14.0 -1.8 -41.4 23.0 -9.5 28.8 63 Other checkable deposits -2.8 -3.8 -4.0 -3.9 -3.1 -3.6 -1.8 -1.9 -1.0 -.5 .1 .8 64 Trade credit 27.4 15.6 -21.2 —29.3R —42.0R —73.3R —44.3R 40.8R — 15.5R 93.8 60.3 .4 65 Total identified to sectors as assets 2,091.1r 2,897.9r 2,988.3r 3,236.7r 4,111.2r 3,841.8r 3,869.3r 3,846.8r 4,744.3r 4,236.0 5,398.0 3,761.8 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. 1 and F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • July 2000 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1998 1999 2000 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999966 11999977 Q3 Q4 Ql Q2 Q3 Q4' Ql Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 13,723.8 14,456.3r 15,260.3r 16,298.4' 15,967.4' 16,298.4' 16,613.9' 16,791.8' 17,113.5' 17,453.5 17,686.5 By sector and instrument 2 Federal government 3,636.7 3,781.8 3,804.9 3,752.2 3,720.2 3,752.2 3,759.7 3,651.7 3,632.7 3,681.0 3,653.5 Treasury securities 3,608.5 3,755.1 3,778.3 3,723.7 3,694.7 3,723.7 3,731.6 3,623.4 3,604.5 3,652.8 3,625.8 4 Budget agency securities and mortgages 28.2 26.6 26.5 28.5 25.5 28.5 28.1 28.3 28.3 28.3 27.8 5 Nonfederal 10,087.1 10,674.6r 1 l,455.5r 12,546.2' 12,247.2' 12,546.2' 12,854.2' 13,140.1' 13,480.7' 13,772.5 14,033.0 By instrument 6 Commercial paper 157.4 156.4 168.6 193.0 216.9 193.0 223.9 232.4 239.3 230.3 260.8 7 Municipal securities and loans 1,293.5 1,296.0 1,367.5 1,464.3 1,439.9 1,464.3 1,491.0 1,510.0 1,518.6 1,532.5 1,539.2 8 Corporate bonds 1,344.1 1,460.4 1,610.9 1,829.6 1,781.3 1,829.6 1,898.1 1,970.0 2,020.7 2,059.5 2,106.7 y Bank loans n.e.c 863.6 934.1 1,040.5 1,148.8 1,120.6 1,148.8 1,165.2 1,178.5 1,202.9 1,231.5 1,256.8 10 Other loans and advances 736.9 770.4 839.5 913.8 886.8 913.8 957.4' 953.5 967.1 982.8 1,030.4 n Mortgages 4,568.8 4,845.7r 5,164.4r 5,665.0' 5,515.2' 5,665.0' 5,799.4' 5,955.4' 6,162.0' 6,309.9 6,422.8 12 Home 3,510.4 3,718.8r 3,970.7r 4,354.0' 4,245.9' 4,354.0' 4,446.5' 4,559.7' 4,689.6' 4,786.8 4,860.2 13 Multifamily residential 265.5 278.7r 287.1' 305.9' 299.3' 305.9' 323.3' 334.8' 346.9 355.3 14 Commercial 708.4r 761.lr 816.4' 908.7r 875.7' 908.7' 940.5' 972.8' 1,036.2' 1,074.2 1,104.4 15 Farm 84.6 87.1 90.3 96.5 94.4 96.5 97.4 99.6 101.4 102.0 103.0 16 Consumer credit 1,122.8 1,211.6 1,264.1 1,331.7 1,286.6 1,331.7 1,319.3 1,340.4 1,370.1 1,426.2 1,416.2 By borrowing sector 17 Household 4,782.8 5,104.9r 5,441.9' 5,920.1' 5,761.5' 5,920.1' 6,000.0' 6,142.4' 6,308.8' 6,464.4 6,532.8 18 Nonfinancial business 4,234.1 4,506.2 4,894.1' 5,426.2' 5,306.9' 5,426.2' 5,631.0' 5,759.4' 5,929.5' 6,055.5 6,242.1 19 Corporate 2,936.6 3,120.2 3,386.8' 3,801.5' 3,712.2' 3,801.5' 3,983.3' 4,083.1' 4,220.0' 4,314.4 4,472.9 20 Nonfarm noncorporate 1,152.4 1,236.1 1,351.1' l,460.9r 1,431.6' 1,460.9' 1,485.2' 1,510.2' 1,540.9' 1,572.0 1,599.9 21 Farm 145.1 149.9 156.1 163.8 163.1 163.8 162.4 166.1 168.6' 169.1 169.4 22 State and local government 1,070.2 1,063.4 1,119.5 1,199.8 1,178.8 1,199.8 1,223.2 1,238.2 1,242.4 1,252.5 1,258.1 23 Foreign credit market debt held in United States 441.4 518.7 570.1 603.7 612.8 603.7 607.8 598.2 614.7 618.2 646.6 24 Commercial paper 56.2 67.5 65.1 72.9 74.0 72.9 77.2 70.1 81.8 89.2 101.6 25 Bonds 291.9 347.7 394.9 420.0 428.6 420.0 420.2 417.1 424.4 420.1 429.9 26 Bank loans n.e.c 34.6 43.7 52.1 58.9 56.4 58.9 59.1 60.5 58.8 59.4 63.3 27 Other loans and advances 58.8 59.8 58.0 52.0 53.8 52.0 51.3 50.5 49.7 49.5 51.8 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 14,165.3r 14,975.0r 15,830.5' 16,902.1' 16,580.2' 16,902.1' 17,221.7' 17,390.0' 17,728.2' 18,071.8 18,333.1 Financial sectors 29 Total credit market debt owed by financial sectors 4,278.8 4,824.6r 5,445.2' 6,519.1' 6,199.5' 6,519.1' 6,809.0 7,073.3 7,346.9' 7,607.0 7,745.5 By instrument 30 Federal government-related 2,376.8 2,608.3 2,821.1 3,292.0 3,121.7 3,292.0 3,434.1 3,580.7 3,745.9 3,884.0 3,940.8 31 Government-sponsored enterprise securities 806.5 896.9 995.3 1,273.6 1,146.0 1,273.6 1,321.8 1,398.0 1,499.8 1,591.7 1,618.5 32 Mortgage pool securities 1,570.3 1,711.4 1,825.8 2,018.4 1,975.7 2,018.4 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 33 Loansf rom U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,901.9 2,216.3r 2,624.1' 3,227.1' 3,077.8' 3,227.1' 3,374.9 3,492.6 3,601.1' 3,723.0 3,804.7 35 Open market paper 486.9 579.1 745.7 906.7 874.2 906.7 926.4 940.9 963.4 1,082.9 1,115.7 36 Corporate bonds 1,204.7 l,378.4r 1,555.9' 1,852.8' 1,790.2' 1,852.8' 1,968.6 2,042.8 2,091.2' 2,074.6 2,112.6 37 Bank loans n.e.c 51.4 64.0 77.2 107.2 103.2 107.2 104.1 106.8 105.2 92.9 93.6 38 Other loans and advances 135.0 162.9 198.5 288.7 246.2 288.7 299.1 328.6 365.4 395.8 404.4 39 Mortgages 24.1 31.9 46.8 71.6 64.0 71.6 76.6 73.6 75.9 76.7 78.5 By borrowing sector 40 Commercial banks 102.6 113.6 140.6 188.6 169.6 188.6 187.5 202.7 224.2 230.0 242.2 41 Bank holding companies 148.0 150.0 168.6 193.5 196.1 193.5 202.6 205.5 211.9 219.3 221.4 42 Savings institutions 115.0 140.5 160.3 212.4 186.6 212.4 226.9 241.6 255.4 260.4 266.9 43 Credit unions .4 .4 .6 1.1 1.0 1.1 1.5 1.8 2.5 3.4 2.6 44 Life insurance companies .5 1.6 1.8 2.5 2.0 2.5 3.3 4.0 4.3 3.2 3.0 45 Government-sponsored enterprises 806.5 896.9 995.3 1,273.6 1,146.0 1,273.6 1,321.8 1,398.0 1,499.8 1,591.7 1,618.5 46 Federally related mortgage pools 1.570.3 1,711.4 1,825.8 2,018.4 1,975.7 2,018.4 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 47 Issuers of asset-backed securities (ABSs) 712.5 863.3r 1,076.6' 1,398.0' 1,310.9' 1,398.0' 1,463.1 1,539.9 1,599.1' 1,632.0 1,665.8 48 Brokers and dealers 29.3 27.3 35.3 42.5 39.4 42.5 34.8 30.4 34.6 25.3 36.4 49 Finance companies 483.9 529.8 554.5 597.5 589.4 597.5 614.4 639.2 628.5 659.9 670.4 50 Mortgage companies 16.5 20.6 16.0 17.7 16.9 17.7 16.5 17.8 16.3 17.8 17.1 51 Real estate investment trusts (REITs) 44.6 56.5 96.1 158.8 147.8 158.8 165.2 160.3 162.2 165.1 167.9 52 Funding corporations 248.6 312.7 373.7 414.4 417.9 414.4 459.1 449.5 462.0 506.6 510.9 All sectors 53 Total credit market debt, domestic and foreign ... 18,444.0 19,799.6r 21,275.7' 23,421.2' 22,779.6' 23,421.2' 24,030.7' 24,463.3' 25,075.1' 25,678.8 26,078.6 54 Open market paper 700.4 803.0 979.4 1,172.6 1,165.1 1,172.6 1,227.6 1,243.3 1,284.5 1,402.4 1,478.1 55 U.S. government securities 6,013.6 6,390.0 6,626.0 7,044.3 6,841.9 7,044.3 7,193.8 7,232.4 7,378.6 7,565.0 7,594.3 56 Municipal securities 1,293.5 1,296.0 1,367.5 1,464.3 1,439.9 1,464.3 1,491.0 1,510.0 1,518.6 1,532.5 1,539.2 5/ Corporate and foreign bonds 2,840.7 3,186.5r 3,561.7' 4,102.4' 4,000.0' 4,102.4' 4,286.9 4,429.9 4,536.2' 4,554.2 4,649.2 58 Bank loans n.e.c 949.6 1,041.7 1,169.8 1,314.9 1,280.3 1,314.9 1,328.3 1,345.7 1,366.9 1,383.8 1,413.6 59 Other loans and advances 930.6 993.1 1,095.9 1,254.4 1,186.8 1,254.4 1,307.8 1,332.6 1,382.2 1,428.1 1,486.6 60 Mortgages 4,592.9 4,877.7r 5,211.2' 5,736.7' 5,579.2' 5,736.7' 5,876.0' 6,029.0' 6,237.9' 6,386.6 6,501.3 61 Consumer credit 1,122.8 1,211.6 1,264.1 1,331.7 1,286.6 1,331.7 1,319.3 1,340.4 1,370.1 1,426.2 1,416.2 1. Data in this table also appear in the Board's Z.l (780) quarterly statistica lrelease, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 7 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1998 1999 2000 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999955 11999966 11999977 11999988 Q3 Q4 Qi Q2 Q3 Q4' Ql CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 18,444.0 19,799.6r 21,275.7r 23,421.2r 22,779.6r 23,421.2r 24,030.7r 24,463.3r 25,075.1r 25,678.8 26,078.6 2 Domestic nonfederal nonfinancial sectors 2,846.3 2,903.6' 2,816.2r 2,862.6' 2,911.9' 2,862.6' 2,953.6' 3,006.2' 3,064.9' 3,118.0 3,072.7 Household 1,885.0 l,990.6r l,917.9r 1,815.8' 1,927.2' 1,815.8' 1,885.2' 1,907.8' 1,962.7' 1,998.8 1,963.6 4 Nonfinancial corporate business 280.4 270.2 257.5' 271.5' 245.2' 271.5' 259.8' 266.7' 283.2' 298.9 285.5 5 Nonfarm noncorporate business 42.3 38.0 35.9' 35.9' 35.9' 35.9' 36.6' 36.9' 37.1' 37.5 38.1 6 State and local governments 638.6 604.8 605.0 739.4' 703.6' 739.4' 772.1' 794.8' 781.9' 782.8 785.4 7 Federal government 202.7 195.3 200.4 213.9 210.9 213.9 218.1 219.8 255.6 256.4 259.7 8 Rest of the world 1,531.1 1,926.6 2,256.8 2,534.3 2,412.2 2,534.3 2,601.8 2,609.8 2,706.2' 2,737.9 2,826.5 9 Financial sectors 13,863.9 14,774.lr 16,002.3' 17,810.4' 17,244.6' 17,810.4' 18,257.1' 18,627.5' 19,048.5' 19,566.5 19,919.7 10 Monetary authority 380.8 393.1 431.4 452.5 446.5 452.5 466.0 485.1 489.3 478.1 501.9 11 Commercial banking 3,520.1 3,707.7 4,031.9 4,335.7 4,195.7 4,335.7 4,338.4 4,383.4 4,488.3 4,644.0 4,724.7 12 U.S.-chartered banks 3,056.1 3,175.8 3,450.7 3,761.2 3,616.2 3,761.2 3,782.9 3,847.6 3,944.3 4,078.9 4,171.2 13 Foreign banking offices in United States 412.6 475.8 516.1 504.2 510.1 504.2 487.8 465.7 475.3 484.1 481.9 14 Bank holding companies 18.0 22.0 27.4 26.5 28.3 26.5 25.0 25.1 22.0 32.7 22.0 15 Banks in U.S.-affiliated areas 33.4 34.1 37.8 43.8 41.1 43.8 42.7 45.0 46.7 48.3 49.7 16 Savings institutions 913.3 933.2 928.5 964.8 939.3 964.8 990.8 1,011.4 1,030.8 1,033.4 1,044.0 17 Credit unions 263.0 288.5 305.3 324.2 320.5 324.2 330.2 341.0 348.5' 351.7 360.1 18 Bank personal trusts and estates 239.7 232.0 207.0 194.1 197.5 194.1 192.2 190.1 188.0 185.7 183.3 19 Life insurance companies 1,587.5 1,657.0 1,751.1 1,828.0 1,810.6 1,828.0 1,853.5' 1,869.6' 1,880.4' 1,881.7 1,903.8 70 Other insurance companies 468.7 491.2 515.3 535.7 518.8 535.7 530.8 537.5 533.9 532.0 532.0 7.1 Private pension funds 716.9 769.2 834.7 953.4 909.8 953.4 968.5 1,006.0 1,017.4 1,050.1 1,065.7 72 State and local government retirement funds 531.0 568.2 632.0 698.0 685.7 698.0 717.2 724.0 733.6 748.6 745.3 Money market mutual funds 545.5 634.3 721.9 965.9 869.9 965.9 1,036.2 1,001.8 1,049.7 1,147.8 1,217.1 7.4 Mutual funds 771.3 820.2 901.1 1,025.9 1,005.9 1,025.9 1,050.8 1,083.8' 1,083.1' 1,074.0 1,055.0 95 Closed-end funds 96.4 101.1 98.3 102.8 101.7 102.8 103.6' 104.3' 105.1' 105.9 106.7 26 Government-sponsored enterprises 750.0 807.9 902.2 1,163.0 1,055.4 1,163.0 1,201.9 1,267.0 1,338.6 1,397.5 1,422.2 27 Federally related mortgage pools 1,570.3 1,711.4 1,825.8 2,018.4 1,975.7 2,018.4 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 78 Asset-backed securities issuers (ABSs) 653.4 773.9r 937.7' 1,219.4' 1,138.1' 1,219.4' 1,280.1 1,352.7 1,409.8' 1,435.3 1,463.9 29 Finance companies 526.2 544.5 566.4 618.4 592.7 618.4 639.9 660.9 678.2 713.3 747.0 30 Mortgage companies 33.0 41.2 32.1 35.3 33.8 35.3 33.0 35.6 32.5 35.6 34.1 31 Real estate investment trusts (REITs) 26.0 30.4 50.6 45.5 55.7 45.5 45.9 45.3 44.7 42.9 38.8 3? Brokers and dealers 183.4 167.7 182.6 189.4 245.9 189.4 211.4 162.9 167.0 158.6 200.9 33 Funding corporations 87.4 101.4 146.5' 140.0' 145.7' 140.0' 154.4' 182.2' 183.5' 258.1 250.9 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 18,444.0 19,799.6r 21,275.7' 23,421.2r 22,779.6r 23,421.2r 24,030.7r 24,463.3r 25,075.1r 25,678.8 26,078.6 Other liabilities 35 Official foreign exchange 63.7 53.7 48.9 60.1 54.5 60.1 53.6 50.9 52.1 50.1 49.4 36 Special drawing rights certificates 10.2 9.7 9.2 9.2 9.2 9.2 8.2 8.2 7.2 6.2 6.2 37 Treasury currency 18.2 18.3 18.3 18.3 18.8 18.3 18.3 18.8 19.3 18.3 18.8 38 Foreign deposits 418.8 516.1 618.8 639.9 651.7 639.9 671.8 696.6 710.4' 707.2 720.2 39 Net interbank liabilities 290.7 240.8 219.4 189.0' 198.9 189.0' 182.0' 203.5' 196.0' 197.4 152.7 40 Checkable deposits and currency 1,229.3 1,245.1 1,286.6 1,334.2 1,282.3 1,334.2 1,311.4 1,354.1 1,354.9 1,485.8 1,393.5 41 Small time and savings deposits 2,279.7 2,377.0 2,474.1 2,626.5 2,553.8 2,626.5 2,637.6 2,644.6 2,665.9' 2,670.9 2,728.5 42 Large time deposits 476.9 590.9 713.4 805.5 776.5 805.5 804.3 809.0 837.5 935.8 966.1 43 Money market fund shares 745.3 891.1 1,048.7 1,334.2 1,249.7 1,334.2 1,416.0 1,398.1 1,449.6 1,584.8 1,671.2 44 Security repurchase agreements 660.0 701.5 822.4 913.7 960.5 913.7 980.3 970.8 999.3 1,085.4 1,157.0 45 Mutual fund shares 1,852.8 2,342.4 2,989.4 3,610.5 3,137.3 3,610.5 3,758.4 4,049.1' 3,932.1' 4,552.4 4,751.9 46 Security credit 305.7 358.1 469.1 572.3 573.6 572.3 552.7 589.3 593.2 665.9 792.7 47 Life insurance reserves 566.2 610.6 665.0 718.3 703.5 718.3 730.9 749.8' 766.2' 779.3 791.6 48 Pension fund reserves 5,766.9r 6,642.6r 7,895.8' 9,097.6' 8,123.6' 9,097.6' 9,275.8' 9,731.4' 9,479.4' 10,386.8 10,395.6 49 Trade payables 1,698.0 1,812.8 1,943.3' 1,970.7' 1,958.4' 1,970.7' 1,972.9' 2,032.7' 2,092.8' 2,144.7 2,153.7 50 Taxes payable 107.6 123.6 139.2' 151.0' 153.3' 151.0' 157.9' 160.5' 163.6' 165.0 174.2 51 Investment in bank personal trusts 803.0 871.7 942.5 1,001.0 908.6 1,001.0 1,012.5 1,059.8 998.3 1,116.6 1,135.2 52 Miscellaneous 5,645.8 6,017.1r 6,333.6' 6,868.7' 6,806.7' 6,868.7' 6,843.5' 6,954.3' 6,965.4' 6,821.6 7,169.1 5533 4411,,338822..77rr 45,222.6r 4499,,991133..22rr 5555,,334411..88rr 5522,,990000..66rr 5555,,334411..88rr 5566,,441188..88rr 5577,,994444..88rr 5588,,335588..33rr 6611,,005533..11 6622,,330066..11 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 22.1 21.4 21.1 21.6 21.2 21.6 20.7 20.8 21.3 21.4 21.4 55 Corporate equities 8,495.7 10,255.8 13,181.4 15,413.4 13,121.2 15,413.4 15,893.6 17,018.0 16,008.3 18,876.7 19,557.9 56 Household equity in noncorporate business 3,672.2r 3,878.2r 4,149.8' 4,387.2' 4,322.3' 4,387.2' 4,442.5' 4,499.8' 4,557.5' 4,602.6 4,639.6 Liabilities not identified as assets (—) 57 Treasury currency -5.8 -6.7 -7.3 -8.0 -7.2 -8.0 -8.4 -8.2 -8.2 -9.7 -9.6 58 Foreign deposits 360.2 431.4 532.9r 545.9' 564.1' 545.9' 561.4' 582.9' 585.3' 593.4 591.3 59 Net interbank transactions -9.0 -10.6 -32.2 -27.0 -15.4 -27.0 -11.3 -10.6 -13.0 -25.0 -13.7 60 Security repurchase agreements 86.4 90.9 153.0' 207.2 216.7' 207.2 263.5' 275.4' 293.9' 238.9 386.0 61 Taxes payable 62.4 76.7 92.3' 101.5' 100.4' 101.5' 88.9' 110.2' 92.5' 93.1 82.8 62 Miscellaneous —1,241.8r — l,692.7r -2,075.3' -2,659.9' -2,338.1' -2,659.9' -2,882.3' -2,998.6' -3,375.9' -3,717.7 -3,554.4 Floats not included in assets (—) 63 Federal government checkable deposits 3.1 -1.6 -8.1 -3.9 -12.0 -3.9 -7.2 -12.4 -10.2 -9.9 -6.5 64 Other checkable deposits 34.2 30.1 26.2 23.1 15.7 23.1 18.9 22.1 14.5 22.3 18.7 65 Trade credit 198.2 176.7 137.0' 94.3' 31.3' 94.3' 48.7' 29.2' 49.7' 139.2 83.9 6666 5544,,008844..99rr 60,283.8r 6688,,444477..00rr 7766,,889900..66rr 7711,,880099..77rr 7766,,889900..66rr 7788,,770033..55rr 8811,,449933..22rr 8811,,331166..77rr 8877,,222299..11 8888,,994466..44 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. 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 • July 2000 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 1999 2000 MMeeaassuurree 11999977 11999988 11999999 Aug. Sept. Oct. Nov. Dec. Jan.' Feb.r Mar. Apr.? 1 Industrial production1 127.1 132.4 137.1 137.7 138.1 139.1 139.4 140.1 141.1 141.4 142.4 143.7 Market groupings 2 Products, total 119.6 123.7 126.5 127.6 127.6 128.5 128.0 128.5 129.7 129.9 130.4 131.3 .3 Final, total 121.1 125.4 128.0 129.5 129.1 130.2 129.8 130.3 131.6 131.8 132.4 133.4 4 Consumer goods 115.1 116.2 116.9 117.6 117.1 118.2 117.6 118.1 118.8 118.8 118.9 119.6 5 Equipment 132.1 142.7 148.9 150.5 150.2 151.2 151.4 151.8 154.2 154.7 156.5 158.1 6 Intermediate 115.3 118.8 122.1 121.7 122.6 123.2 122.4 123.1 123.7 124.1 124.2 124.8 7 Materials 139.0 146.5 154.8 154.6 155.7 156.8 158.8 159.7 160.5 160.7 162.8 164.8 Industry groupings 8 Manufacturing 130.1 136.4 142.3 142.5 142.9 144.2 145.0 145.6 146.7 147.0 148.3 149.5 9 Capacity utilization, manufacturing (percent)2. . 82.4 80.9 79.8 79.7 79.7 80.2 80.3 80.3 80.7 80.6 81.0 81.4 10 Construction contracts3 144.2r 161.2r 177.0r 167.0r 173.01 173.01 175.0r 174.0r 173.0 180.0 187.0 n.a. 11 Nonagricultural employment, total4 120.3 123.4 126.2 126.5 126.6 126.9 127.1 127.4 127.8 127.8 128.3 128.6 12 Goods-producing, total 101.2 102.7 102.3 101.9 102.1 102.1 102.4 102.5 103.0 102.9 103.2 103.1 13 Manufacturing, total 98.3 98.8 97.0 96.7 96.7 96.6 96.6 96.6 96.7 96.7 96.6 96.7 14 Manufacturing, production workers 99.6 99.8 97.8 97.4 97.4 97.3 97.4 97.4 97.5 97.4 97.3 97.4 15 Service-producing 126.5 130.0 133.8 134.3 134.4 134.7 135.0 135.4 135.7 135.8 136.3 136.8 16 Personal income, total 175.4 185.7 196.6 197.9 198.1 200.5 201.3 201.9 203.3 204.1 205.5 n.a. 17 Wages and salary disbursements 171.3 184.4 197.0 198.6 199.5 200.7 201.3 202.6 204.4 205.1 206.4 n.a. 18 Manufacturing 144.6 152.4 156.9 158.0 158.6 159.7 158.8 158.8 160.2 160.9 161.2 n.a. 19 Disposable personal income5 172.9 181.7 191.9 193.4 193.0 195.6 196.4 196.7 198.4 199.1 200.5 n.a. 20 Retail sales5 169.8r 177.4r 193.0r 195.8r 196.4r 197.2' 199.2r 202.6r 204.0 206.7 207.8 207.4 Prices6 21 Consumer (1982-84=100) 160.5 163.0 166.6 167.1 167.9 168.2 168.3 168.3 168.7 169.7 171.1 171.2 22 Producer finished goods (1982=100) 131.8 130.7 133.0r 133.7 134.7 135.1 134.9 134.9r 134.7 136.0 137.0 137.0 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 1999. 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 March 2000 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, U.S. Department of Commerce, and other sources. 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted 1999 2000 CCaatteeggoorryy 11999977 11999988 11999999 Sept. Oct. Nov. Dec. Jan. Feb/ Mar/ Apr. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 136,297 137,673 139,368 139,475 139,697 139,834 140,108 140,910 141,165 140,867 141,230 Employment 2 Nonagricultural industries3 126,159 128,085 130,207 130,471 130,702 130,788 131,141 131,850 131,954 131,801 132,351 3 Agriculture 3,399 3,378 3,281 3,179 3,238 3,310 3,279 3,371 3,408 3,359 3,355 Unemployment 4 Number 6,739 6,210 5,880 5,825 5,757 5,736 5,688 5,689 5,804 5,708 5,524 5 Rate (percent of civilian labor force) 4.9 4.5 4.2 4.2 4.1 4.1 4.1 4.0 4.1 4.1 3.9 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 122,690 125,826 128,616 129,048 129,332 129,589 129,898 130,292 130,319 130,777 131,117 7 Manufacturing 18,675 18,772 18,431 18,366 18,356 18,361 18,361 18,376 18,366 18,361 18,372 8 Mining 596 590 535 527 528 527 529 530 532 536 540 9 Contract construction 5,691 5,985 6,273 6,293 6,314 6,369 6,393 6,504 6,484 6,574 6,519 10 Transportation and public utilities 6,408 6,600 6,792 6,831 6,841 6,862 6,897 6,902 6,898 6,914 6,937 11 Trade 28,614 29,127 29,792 29,903 29,955 29,972 30,061 30,126 30,137 30,183 30,305 12 Finance 7,109 7,407 7,632 7,653 7,668 7,675 7,685 7,685 7,698 7,689 7,696 13 Service 36,040 37,526 39,000 39,257 39,433 39,554 39,657 39,804 39,822 39,980 40,101 14 Government 19,557 19,819 20,161 20,218 20,237 20,269 20,315 20,365 20,382 20,540 20,647 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 1999 2000 1999 2000 1999 2000 SSeerriieess Q2 Q3 Q4 Qlr Q2 Q3 Q4 Ql Q2 Q3 Q4 Qlr Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 136.1 137.7 139.5 141.6 169.2 170.7 172.3 173.8 80.5 80.7 81.0 81.5 2 Manufacturing 140.9 142.5 144.9 147.3 176.9 178.7 180.6 182.4 79.6 79.7 80.3 80.8 3 Primary processing3 122.5 123.4 125.4 126.1 148.2 149.0 149.8 150.5 82.7 82.8 83.7 83.8 4 Advanced processing4 150.5 152.5 155.2 158.5 191.4 193.7 196.1 198.6 78.6 78.7 79.1 79.8 5 Durable goods 170.8 174.4 177.4 182.2 214.2 217.6 221.0 224.7 79.8 80.2 80.3 81.1 6 Lumber and products 122.5 120.5 120.6 121.1 146.3 147.4 148.4 149.1 83.7 81.7 81.2 81.2 7 Primary metals 125.1 128.7 130.9 132.7 148.5 149.3 150.1 150.6 84.2 86.2 87.2 88.1 8 Iron and steel 121.4 126.6 129.1 131.2 150.0 151.3 152.5 153.3 80.9 83.7 84.6 85.6 9 Nonferrous 129.6 131.2 133.3 134.5 146.8 147.0 147.2 147.5 88.3 89.3 90.5 91.2 10 Industrial machinery and equipment 227.9 232.3 239.9 251.7 275.5 285.3 295.8 306.4 82.7 81.4 81.1 82.1 II Electrical machinery 374.6 400.9 419.0 456.6 482.0 498.5 514.6 535.7 77.7 80.4 81.4 85.2 12 Motor vehicles and parts 150.6 153.3 154.7 154.8 184.8 184.9 185.0 185.7 81.5 82.9 83.6 83.4 13 Aerospace and miscellaneous transportation equipment 95.9 93.8 89.9 87.7 126.6 126.2 125.8 125.2 75.7 74.3 71.5 70.0 14 Nondurable goods 111.6 111.5 113.4 113.7 139.5 139.9 140.3 140.5 80.0 79.7 80.9 80.9 15 Textile mill products 111.1 111.6 111.4 110.9 131.5 131.6 131.8 132.0 84.5 84.8 84.5 84.1 16 Paper and products 115.1 116.0 117.9 116.5 134.5 135.3 136.1 136.6 85.6 85.7 86.6 85.2 17 Chemicals and products 116.3 117.0 121.8 122.3 150.4 150.7 151.0 151.4 77.3 77.6 80.7 80.8 18 Plastics materials 123.5 124.2 132.3 131.9 137.2 138.4 139.6 140.8 90.0 89.7 94.8 93.7 19 Petroleum products 114.1 114.6 114.1 116.3 122.2 122.7 123.1 123.5 93.3 93.4 92.7 94.2 20 Mining 97.1 98.2 99.5 99.8 120.3 120.2 120.2 119.8 80.7 81.7 82.8 83.3 21 Utilities 116.6 118.4 113.2 114.1 127.3 127.8 128.2 128.6 91.6 92.7 88.3 88.8 22 Electric 118.9 120.8 116.5 115.9 125.2 125.6 126.1 126.6 95.0 96.2 92.4 91.5 1973 1975 Previous cycle5 Latest cycle6 1999 1999 2000 High Low High Low High Low Apr. Nov. Dec. Jan.r Feb.r Mar. Apr.p Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.1 85.4 78.1 80.4 80.9 81.1 81.4 81.3 81.7 82.1 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 79.5 80.3 80.3 80.7 80.6 81.0 81.4 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 82.6 83.8 83.9 83.9 83.5 84.0 84.3 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 78.5 79.2 79.2 79.7 79.6 80.1 80.4 5 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 79.6 80.3 80.3 81.0 80.8 81.4 81.8 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 83.2 80.7 81.6 82.0 81.0 80.7 80.8 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 83.6 87.4 88.3 88.2 87.0 89.0 89.9 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 79.9 85.7 86.1 85.4 84.2 87.1 88.3 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 88.2 89.4 91.0 91.7 90.5 91.3 91.9 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 83.4 81.1 80.7 81.8 82.3 82.4 82.6 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 77.0 81.3 82.0 84.0 84.7 86.9 87.2 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 80.3 84.2 82.5 84.5 82.4 83.3 85.1 1.3 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 76.2 71.2 71.4 70.6 70.0 69.4 68.5 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 80.0 81.0 81.0 80.8 80.9 81.0 81.3 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 84.8 84.5 83.5 84.5 83.4 84.3 84.3 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 85.7 86.7 86.3 85.7 84.7 85.3 85.8 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 76.9 81.3 81.3 80.4 80.9 81.0 81.3 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 90.1 95.4 94.9 91.9 94.2 94.9 95.0 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 93.9 91.7 93.3 91.8 93.4 97.3 95.2 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 80.4 83.0 82.8 83.1 82.9 83.8 84.2 21 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 91.4 86.5 88.4 89.2 89.4 87.7 90.1 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 94.9 91.8 92.6 91.8 91.8 91.1 93.5 1. Data in this table appear in the Board's G.17 (419) monthly statistica lrelease. 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 1999. The recent annual revision is described in an article in the 4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing March 2000 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 • July 2000 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1999 2000 GGrroouupp pro- 1999 por- avg. tion Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb.r Mar. Apr.p Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 137.1 135.5 136.2 136.6 137.4 137.7 138.1 139.1 139.4 140.1 141.1 141.4 142.4 143.7 2 Products 60.5 126.5 126.2 126.8 126.8 126.9 127.6 127.6 128.5 128.0 128.5 129.7 129.9 130.4 131.3 3 Final products 46.3 128.0 127.6 128.2 128.3 128.6 129.5 129.1 130.2 129.8 130.3 131.6 131.8 132.4 133.4 4 Consumer goods, total 29.1 116.9 116.5 116.8 117.0 116.8 117.6 117.1 118.2 117.6 118.1 118.8 118.8 118.9 119.6 5 Durable consumer goods 6.1 152.6 152.0 152.8 154.0 153.4 155.5 153.5 157.4 154.4 155.7 158.9 157.3 158.2 160.4 6 Automotive products 2.6 144.7 142.0 145.4 147.4 143.7 150.6 145.5 147.9 146.2 144.4 149.1 145.6 146.7 150.2 7 Autos and trucks 1.7 151.8 149.0 153.2 157.5 148.9 162.9 152.8 155.1 154.3 148.7 155.0 150.7 152.2 157.3 8 Autos, consumer .9 102.6 102.3 99.9 101.8 102.4 105.0 105.5 103.9 107.2 99.8 105.4 105.0 103.1 110.1 9 Trucks, consumer .7 202.4 197.3 207.4 214.2 197.2 221.6 201.9 207.8 203.6 199.0 206.3 198.3 203.0 206.7 10 Auto parts and allied goods .... .9 133.9 131.4 133.6 132.5 135.3 132.8 134.4 136.7 133.8 137.1 139.6 137.2 137.8 139.3 11 Other 3.5 158.6 160.0 158.3 158.8 161.1 158.7 159.7 165.0 160.7 164.9 166.6 166.8 167.6 168.6 12 Appliances, televisions, and air conditioners 1.0 324.3 325.8 311.1 319.0 329.9 319.0 326.3 363.1 348.4 357.6 361.6 372.1 376.9 379.3 13 Carpeting and furniture .8 121.7 120.2 121.0 121.0 124.1 122.1 124.1 124.8 117.4 123.0 126.9 123.0 124.8 125.8 14 Miscellaneous home goods 1.6 114.7 116.9 117.2 116.2 115.9 115.4 114.4 114.8 115.0 116.7 116.6 116.8 116.0 116.5 15 Nondurable consumer goods 23.0 108.7 108.3 108.4 108.4 108.3 108.9 108.7 109.3 109.1 109.5 109.7 110.0 109.9 110.3 16 Foods and tobacco 10.3 107.3 107.8 107.7 107.3 106.7 106.5 106.2 106.8 107.3 107.4 107.6 108.0 107.5 107.6 17 Clothing 2.4 90.6 91.8 90.2 90.2 89.2 90.1 89.9 89.4 90.6 89.1 89.3 89.1 89.0 89.3 18 Chemical products 4.5 121.8 118.7 120.5 120.2 119.4 122.7 120.9 123.1 126.0 126.5 125.8 125.8 126.9 126.7 19 Paper products 2.9 102.3 99.9 100.3 101.5 102.0 103.2 104.7 106.3 105.1 103.1 104.3 104.7 104.5 105.3 20 Energy 2.9 114.0 115.1 114.7 115.3 118.6 116.6 117.6 114.5 106.7 112.0 113.0 113.7 113.3 115.5 21 Fuels .8 111.3 111.5 110.9 109.9 111.1 110.0 112.0 112.4 110.1 111.7 108.4 111.5 115.8 112.9 22 Residential utilities 2.1 115.0 116.4 116.1 117.4 121.7 119.3 119.7 114.9 104.3 111.6 114.6 114.2 111.4 116.1 23 Equipment 17.2 148.9 147.0 148.4 148.3 149.3 150.5 150.2 151.2 151.4 151.8 154.2 154.7 156.5 158.1 24 Business equipment 13.2 171.6 169.4 171.2 171.2 172.6 173.9 173.7 174.8 175.0 175.5 179.4 180.2 182.4 184.9 25 Information processing and related 5.4 248.6 236.9 244.3 248.2 253.8 259.9 261.3 265.6 266.7 270.1 277.9 279.8 287.1 291.8 26 Computer and office equipment 1.1 840.1 773.0 805.8 830.2 851.9 892.8 926.9 950.5 970.0 985.6 1,015.3 1,043.6 1,072.9 1,100.7 27 Industrial 4.0 135.3 136.0 135.3 133.7 135.4 133.6 133.9 134.9 134.6 135.0 138.4 140.3 140.4 141.4 28 Transit 2.5 126.9 129.4 128.9 128.2 127.5 128.1 124.0 122.3 121.2 118.5 119.9 117.2 115.5 115.7 29 Autos and trucks 1.2 131.4 130.7 131.2 132.2 131.2 135.3 132.0 133.4 134.2 127.8 134.3 132.5 131.2 135.3 30 Other 1.3 131.4 135.7 134.0 130.2 123.8 123.2 126.4 125.1 127.5 128.1 126.8 128.9 133.2 138.4 31 Defense and space equipment 3.3 74.4 75.1 75.2 74.6 74.5 74.7 73.6 73.7 73.0 72.4 70.6 69.7 70.0 69.2 32 Oil and gas well drilling .6 106.8 97.2 99.8 100.1 102.0 107.1 111.3 115.7 121.3 124.3 125.5 129.9 130.6 131.2 33 Manufactured homes .2 155.2 164.7 161.3 158.9 151.5 151.3 144.4 142.6 139.3 138.3 135.4 129.6 129.3 127.9 34 Intermediate products, total 14.2 122.1 121.7 122.3 121.7 121.5 121.7 122.6 123.2 122.4 123.1 123.7 124.1 124.2 124.8 35 Construction supplies 5.3 133.4 131.3 132.9 132.6 133.2 132.9 134.1 135.4 134.3 134.9 136.4 137.1 137.6 137.5 36 Business supplies 8.9 115.3 116.1 116.1 115.3 114.6 115.1 115.8 115.9 115.2 116.0 116.1 116.4 116.3 117.2 37 Materials 39.5 154.8 150.8 151.7 153.1 155.0 154.6 155.7 156.8 158.8 159.7 160.5 160.7 162.8 164.8 38 Durable goods materials 20.8 198.9 193.1 194.3 197.2 200.3 199.9 202.3 203.4 206.7 208.8 211.7 212.5 216.3 219.1 39 Durable consumer parts 4.0 150.7 147.7 148.4 150.5 153.9 147.2 156.0 153.7 154.8 155.0 156.0 153.3 155.5 157.2 40 Equipment parts 7.6 360.9 340.5 345.0 355.2 364.6 369.0 371.4 377.5 386.8 394.9 404.9 414.6 429.1 437.4 41 Other 9.2 131.3 130.4 130.4 130.6 131.1 131.6 131.2 131.7 133.4 134.0 134.8 134.2 134.6 135.6 42 Basic metal materials 3.1 121.8 120.1 119.9 122.6 122.8 123.3 122.1 123.5 125.6 126.3 126.2 124.6 126.9 128.0 43 Nondurable goods materials 8.9 114.6 112.8 113.8 114.2 114.5 114.4 114.7 117.4 119.1 118.7 117.0 117.0 117.7 118.6 44 Textile materials 1.1 101.0 101.8 101.8 101.2 101.2 101.1 100.3 102.3 103.3 100.9 99.3 101.5 101.5 101.7 45 Paper materials 1.8 117.0 116.5 115.3 117.7 116.3 116.3 118.6 118.5 119.3 118.5 117.9 115.8 116.8 118.0 46 Chemical materials 3.9 117.3 114.2 116.0 116.9 117.7 117.4 117.7 122.0 125.1 124.2 122.1 123.7 124.0 125.3 47 Other 2.1 113.5 111.9 114.2 112.0 113.0 113.2 112.5 114.9 114.9 116.8 114.8 112.9 114.2 114.4 48 Energy materials 9.7 101.7 102.2 102.2 101.6 102.9 102.3 101.8 101.5 101.6 101.4 101.2 100.5 100.9 102.3 49 Primary energy 6.3 99.2 97.3 98.3 98.9 100.2 100.3 99.6 98.8 100.1 99.5 98.3 96.5 98.0 99.1 50 Converted fuel materials 3.3 107.0 111.7 109.9 106.8 108.0 106.1 106.1 106.5 104.1 104.8 106.8 108.4 106.5 108.6 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 137.0 135.4 136.1 136.4 137.3 137.4 138.0 138.9 139.3 140.2 141.0 141.4 142.5 143.6 52 Total excluding motor vehicles and parts 95.1 136.4 134.9 135.6 135.9 136.7 137.1 137.2 138.3 138.7 139.5 140.4 140.9 141.9 143.0 53 Total excluding computer and office equipment 98.2 131.1 129.7 130.2 130.6 131.2 131.4 131.5 132.4 132.7 133.2 134.1 134.2 135.1 136.2 54 Consumer goods excluding autos and trucks . 27.4 115.0 114.8 114.8 114.8 115.0 115.2 115.2 116.3 115.6 116.4 116.9 117.1 117.1 117.6 55 Consumer goods excluding energy 26.2 117.3 116.7 117.0 117.2 116.6 117.7 117.1 118.7 118.8 118.8 119.5 119.4 119.5 120.1 56 Business equipment excluding autos and trucks 12.0 176.2 173.8 175.7 175.7 177.4 178.3 178.5 179.5 179.7 181.1 184.5 185.7 188.4 190.6 57 Business equipment excluding computer and office equipment 12.1 143.8 143.4 144.2 143.6 144.4 144.6 143.6 144.0 143.7 143.8 146.8 146.9 148.3 149.9 58 Materials excluding energy 29.8 172.0 166.3 167.4 169.5 171.6 171.3 173.0 174.7 177.4 178.6 179.8 180.4 183.1 185.3 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 SIC pro- 1999 Group code por- avg. tion Apr. May June July Aug. Sept. Oct. Nov. Dec Jan.r Feb/ Mar. Apr. Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 137.1 135.5 136.2 136.6 137.4 137.7 138.1 139.1 139.4 140.1 141.1 141.4 142.4 143.7 60 Manufacturing 85.4 142.3 140.2 141.0 141.4 142.0 142.5 142.9 144.2 145.0 145.6 146.7 147.0 148.3 149.5 61 Primary processing 26.5 123.3 122.2 122.5 122.7 123.3 123.4 123.6 124.8 125.6 125.9 126.0 125.6 126.5 127.2 62 Advanced processing 58.9 151.8 149.6 150.7 151.2 151.8 152.6 153.1 154.5 155.2 155.9 157.5 158.2 159.8 161.2 63 Durable goods 45.0 172.8 169.4 170.8 172.2 173.8 174.4 175.0 176.5 177.4 178.4 181.0 181.5 184.0 186.1 64 Lumber and products 24 2.0 121.6 121.5 123.9 122.2 121.5 120.2 119.7 120.5 119.8 121.4 122.1 120.7 120.5 120.8 65 Furniture and fixtures 25 1.4 125.5 123.8 124.4 124.4 125.7 126.4 127.9 127.0 125.2 128.6 126.9 127.2 127.5 128.7 66 Stone, clay, and glass products 32 2.1 130.5 128.8 128.5 127.8 129.3 130.2 129.6 131.2 132.4 131.4 130.9 131.7 131.2 131.7 67 Primary metals 33 3.1 126.6 123.9 123.9 127.4 128.0 129.6 128.3 129.0 131.1 132.8 132.8 131.1 134.2 135.7 68 Iron and steel 331,2 1.7 123.2 119.4 120.1 124.5 126.2 127.6 125.9 124.9 130.7 131.7 130.8 129.1 133.7 135.6 69 Raw steel 331PT .1 113.3 109.3 111.4 110.7 111.1 115.9 112.4 121.8 124.0 124.2 123.1 118.7 121.1 124.6 70 Nonferrous 333—6,9 1.4 130.9 129.4 128.6 130.8 130.2 132.1 131.4 134.0 131.7 134.1 135.2 133.5 134.8 135.9 71 Fabricated metal products . . 34 5.0 128.7 128.0 127.2 128.3 128.6 128.5 128.4 128.8 129.7 129.0 130.8 130.4 130.7 131.8 72 Industrial machinery and equipment 35 8.0 230.1 227.0 228.4 228.2 230.0 231.4 235.5 238.3 239.7 241.8 247.7 252.1 255.4 259.1 73 Computer and office equipment 357 1.8 1,061.4 987.5 1,021.6 1,048.2 1,075.1 1,123.7 1,167.5 1,196.6 1,222.8 1,244.6 1,284.5 1,322.8 1,362.6 1,400.6 74 Electrical machinery 36 7.3 390.2 366.4 373.3 384.2 399.2 401.3 402.1 412.6 418.1 426.4 443.5 453.3 472.9 482.3 75 Transportation equipment. . . 37 9.5 122.4 122.1 122.8 123.5 122.9 122.9 123.1 122.3 121.8 120.4 121.7 119.5 119.9 121.0 76 Motor vehicles and parts . 371 4.9 151.0 148.4 150.6 152.9 152.2 152.2 155.6 155.7 155.8 152.7 156.6 152.9 154.9 158.6 77 Autos and light trucks . 371PT 2.6 137.8 135.7 138.3 142.0 135.8 146.8 139.4 140.7 141.0 135.0 141.0 137.7 138.4 143.9 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 94.9 96.5 96.0 95.2 94.7 94.7 92.2 90.6 89.5 89.7 88.6 87.7 86.8 85.5 79 Instruments 38 5.4 116.5 115.1 116.7 117.0 117.2 117.7 117.2 118.3 118.9 119.7 118.4 117.4 117.7 118.4 80 Miscellaneous 39 1.3 124.7 124.2 125.5 124.5 125.2 125.2 125.1 125.0 125.0 126.4 126.9 125.4 125.0 125.3 81 Nondurable goods 40.4 111.8 111.5 111.9 111.3 111.0 111.5 111.8 113.0 113.6 113.7 113.5 113.7 113.9 114.3 82 Foods "20 9.4 110.1 110.6 110.6 110.0 108.9 108.9 109.6 110.1 110.3 110.0 109.8 110.8 110.8 110.7 83 Tobacco products 21 1.6 94.3 94.1 95.4 94.5 96.0 94.8 90.9 91.9 93.1 94.7 96.7 94.5 91.6 93.0 84 Textile mill products 22 1.8 110.9 111.4 110.9 110.8 112.3 111.7 110.8 112.7 111.4 110.1 111.5 110.0 111.3 111.4 85 Apparel products 23 2.2 90.7 92.4 91.2 90.7 89.8 89.2 89.0 89.1 89.1 89.1 89.0 89.5 89.3 90.0 86 Paper and products 26 3.6 116.2 115.0 114.6 115.7 115.0 115.8 117.2 118.0 118.1 117.7 117.1 115.7 116.6 117.4 87 Printing and publishing .... 27 6.7 104.4 104.2 104.1 103.5 102.8 103.6 104.6 106.0 105.7 105.3 105.3 105.3 105.7 106.3 88 Chemicals and products .... 28 9.9 117.5 115.6 117.0 116.3 115.8 117.7 117.4 119.8 122.7 122.9 121.6 122.4 122.7 123.3 89 Petroleum products 29 1.4 114.7 114.6 114.2 113.4 115.1 114.1 114.6 114.5 112.8 114.9 113.2 115.3 120.3 117.9 90 Rubber and plastic products . 30 3.5 137.7 136.2 137.4 136.4 138.0 137.6 139.3 138.9 139.3 141.4 142.2 141.3 140.9 141.8 91 Leather and products 31 .3 69.8 70.6 70.9 71.3 69.1 70.2 69.5 68.2 67.7 65.4 68.1 66.7 64.7 65.1 92 Mining 6.9 98.0 96.7 97.4 97.1 97.8 98.5 98.3 99.2 99.7 99.5 99.7 99.3 100.3 100.7 93 Metal 10 .5 97.1 100.5 100.2 98.9 96.2 93.0 91.4 94.2 94.5 95.2 95.5 95.1 94.0 94.2 94 Coal 12 1.0 108.1 107.3 106.1 107.0 110.0 110.7 109.4 108.8 110.0 109.5 106.3 101.9 109.3 112.0 95 Oil and gas extraction 13 4.8 92.5 90.8 91.8 91.4 92.3 93.2 93.0 94.0 94.5 94.6 95.7 95.3 95.7 96.0 96 Stone and earth minerals 14 .6 124.4 121.8 123.9 123.3 120.5 123.0 125.5 126.3 125.0 122.4 120.8 125.2 123.0 121.4 97 Utilities 7.7 115.6 116.3 116.1 117.4 119.8 117.8 117.7 115.2 110.9 113.5 114.6 115.0 112.9 116.0 98 Electric 491.493PT 6.2 118.2 118.6 118.4 119.6 122.6 120.0 119.8 116.9 115.8 116.9 116.0 116.1 115.5 118.6 99 Gas 492,493PT 1.6 104.8 105.7 105.8 107.5 107.4 108.2 108.5 107.9 88.2 98.1 108.4 110.1 101.1 104.3 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 141.7 139.8 140.5 140.8 141.4 142.0 142.3 143.6 144.5 145.2 146.2 146.7 148.0 149.0 101 Manufacturing excluding computer and office equipment 83.6 135.3 133.4 134.1 134.3 134.8 135.1 135.3 136.5 137.1 137.6 138.5 138.6 139.7 140.7 102 Computers, communications equipment, and semiconductors 5.9 794.1 731.6 753.3 780.5 812.1 830.4 843.0 863.9 887.7 908.5 952.4 984.0 1,032.9 1,060.9 103 Manufacturing excluding computers and semiconductors 81.1 121.6 120.9 121.3 121.2 121.3 121.6 121.7 122.6 122.9 123.1 123.6 123.4 124.0 124.7 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.5 119.3 118.7 119.1 118.9 118.9 119.1 119.3 120.1 120.4 120.6 120.9 120.6 121.1 121.7 Gross value (billions of 1992 dollars, annual rates) Major Markets 105 Products, total 2,001.9 2,726.1 2,710.2 2,721.9 2,723.6 2,726.1 2,742.0 2,740.2 2,762.6 2,740.0 2,751.5 2,781.7 2,787.6 2,800.2 2,818.9 106 Final 1,552.1 2,101.6 2,087.2 2,095.3 2,100.3 2,102.8 2,118.5 2,112.5 2,132.5 2,115.8 2,122.4 2,147.5 2,151.5 2,162.4 2,178.6 107 Consumer goods 1,049.6 1,294.9 1,288.4 1,290.1 1,295.1 1,292.4 1,301.3 1,297.0 1,311.7 1,294.7 1,301.5 1,309.9 1,311.2 1,313.9 1,320.2 108 Equipment 502.5 808.3 800.1 806.7 806.7 812.3 819.0 817.5 822.5 823.4 822.9 840.3 843.1 851.7 861.9 109 Intermediate 449.9 623.3 621.7 625.2 622.1 622.0 622.4 626.4 628.9 623.0 627.9 633.0 634.9 636.6 639.1 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The 1997), pp. 67-92, and the references cited therein. For details about the construction of latest historical revision of the industrial production index and the capacity utilization rates individual industrial production series, see "Industrial Production: 1989 Developments and was released in November 1999. The recent annual revision is described in an article in the Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. March 2000 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 • July 2000 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1999 2000 IItteemm 11999977 11999988 11999999 June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb.r Mar. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,441 1,612 l,664r 1,696r l,673r l,658r l,553r l,636r l,678r l,683r 1,762 1,661 1,597 2 One-family 1,062 1,188 1,247r l,266r l,263r l,233r l,200r l,204r l,238r l,266r 1,317 1,223 1,238 3 Two-family or more 379 425 417r 430r 410r 425r 353r 432r 440r 417r 445 438 359 4 Started 1,474 1,617 1,667 1,562 1,704 1,657 1,628 1,636 1,663 1,769 1,744 1,822 1,618 5 One-family 1,134 1,271 1,335 1,269 1,348 1,285 1,290 1,343 1,344 1,441 1,361 1,324 1,325 6 Two-family or more 340 346 332 293 356 372 338 293 319 328 383 498 293 7 Under construction at end of period1 833 935 1,022 1,013 1,017 1,026 1,021 1,020 1,022 1,025 1,033 1,040 1,032 8 One-family 570 637 704 698 702 706 702 706 708 710 712 711 709 9 Two-family or more 264 297 318 315 315 320 319 314 314 315 321 329 323 10 Completed 1,404 1,473 1,636 1,657 1,619 1,581 1,642 1,608 1,653 1,675 1,599 1,739 1,738 11 One-family 1,120 1,158 1,308 1,336 1,262 1,251 1,307 1,274 1,345 1,340 1,296 1,383 1,379 12 Two-family or more 285 315 328 321 357 330 335 334 308 335 303 356 359 13 Mobile homes shipped 354 374 348 355 336 340 320 321 316 304 307 291 287 Merchant builder activity in one-family units 14 Number sold 804 886 907 948 936 914 848 906 895 916r 930 924 966 15 Number for sale at end of period1 287 300 326 305 306 307 311 314 317 320 322 310 322 Price of units sold (thousands of dollars)2 16 Median 146.0 152.5 160.0 158.3 157.9 154.9 162.0 160.0 172.9 165.0 160.0 160.0 165.0 17 Average 176.2 181.9 195.8r 193.4 188.8 193.3 194.4 200.3 212.4 203.0r 197.0 199.7 202.4 EXISTING UNITS (one-family) 18 Number sold 4,382 4,970 5,197 5,590 5,310 5,300 5,150 4,880 5,150 5,140 4,450 4,750 4,830 Price of units sold (thousands of dollars)2 19 Median 121.8 128.4 133.3 136.9 136.0 137.4 134.4 132.5 133.2 133.7 132.2 133.7 134.4 20 Average 150.5 159.1 168.3 174.2 171.9 174.3 170.2 167.2 168.9 168.8 168.9 168.1 171.0 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 617,877 664,451 706,431 698,852 701,961 698,439 698,168 703,447 717,585 731,771 746,204 754,835 765,222 22 Private 474,842 518,987 547,514 546,931 545,992 541,793 540,939 544,532 550,018 557,688 565,804 581,300 586,814 23 Residential 265,908 293,569 321,795 320,913 320,350 319,656 320,048 322,876 326,091 330,141 337,230 339,393 344,072 24 Nonresidential 208,933 225,418 225,720 226,018 225,642 222,137 220,891 221,656 223,927 227,547 228,574 241,907 242,742 25 Industrial buildings 31,355 32,308 26,698 25,465 26,246 25,703 25,566 25,387 26,136 26,771 25,954 28,907 29,431 26 Commercial buildings 86,190 95,252 103,111 104,457 103,355 102,407 102,728 102,746 104,208 104,172 104,207 111,624 113,739 27 Other buildings 37,198 39,438 38,774 38,592 38,412 37,791 37,727 38,478 37,820 38,735 39,752 42,356 41,975 28 Public utilities and other 54,190 58,421 57,136 57,504 57,629 56,236 54,870 55,045 55,763 57,869 58,661 59,020 57,597 29 Public 143,035 145,464 158,917 151,921 155,969 156,646 157,229 158,915 167,566 174,083 180,401 173,535 178,407 30 Military 2,559 2,588 2,133 2,137 2,275 1,682 1,947 2,090 1,961 2,362 1,775 2,844 2,318 31 Highway 44,295 45,067 50,495 45,518 47,822 48,182 49,031 47,058 53,487 56,887 63,677 53,366 58,116 32 Conservation and development 5,576 5,487 6,173 5,845 5,820 6,598 6,268 6,283 6,555 7,104 6,629 7,276 6,575 33 Other 90,605 92,322 100,117 98,421 100,052 100,184 99,983 103,484 105,563 107,730 108,320 110,049 111,398 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 1999 2000 1999 2000 AAAppprrr... 11999999 22000000 222000000000 AApprr.. AApprr.. June Sept. Dec.' Mar.1 Dec.' Jan.' Feb. Mar. Apr. CONSUMER PRICES2 (1982-84=100) 1 All items 2.3 3.0 2.7 3.9 2.4 5.8 .2 .2 .5 .7 .0 171.2 7 Food 2.3 2.0 1.5 2.5 2.2 1.7 .1 -.1 .4 .1 .1 166.6 Energy items 3.0 15.0 16.5 26.0 7.8 50.5 1.8 1.0 4.6 4.9 -1.9 120.7 4 All items less food and energy 2.2 2.2 2.1 2.5 1.8 3.2 .1 .2 .2 .4 .2 180.7 5 Commodities .8 .7 1.7 2.5 -.6 .3 -.1 -.2 .0 .3 .2 145.9 6 Services 2.8 2.9 2.3 2.5 3.1 4.1 .2 .3 .3 .5 .2 200.7 PRODUCER PRICES (1982=100) 7 Finished goods 1.2 3.9 2.5 6.8 .9 8.6 .1 .1 1.0 1.0 -.3 137.0 8 Consumer foods -.3 2.8 -.6 3.3 -2.0 3.3 .0 .2 .4 .1 1.0 137.1 9 Consumer energy 1.6 18.7 22.4 37.6 5.9 59.0 .7 .9 5.2 5.8 -4.1 90.1 10 Other consumer goods 2.6 1.7 .8 3.8 1.1 .8 .1 -.4 .5 .1 .1 153.7 11 Capital equipment .1 .7 .0 .3 1.2 .9 .1 .1 .0 .1 .2 138.7 Intermediate materials 12 Excluding foods and feeds -1.2 5.4 5.7 6.6 3.6 9.8 .4 .6 .8 1.0 -.2 128.9 13 Excluding energy -1.5 3.3 2.8 3.4 2.1 3.9 .1 .4 .2 .4 .4 136.5 Crude materials 14 Foods -9.8 8.5 -7.7 3.7 -3.6 21.0 -2.0 .6 .7 3.5 1.7 103.5 IS Energy -6.3 41.4 163.8 134.4 -27.9 91.5 -11.1 5.7 10.0 1.2 -6.9 96.3 16 Other -12.5 15.4 7.0 22.6 26.2 10.2 2.5 2.9 — .2 -.2 -1.2 149.0 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • July 2000 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1999 2000 AAccccoouunntt 11999977 11999988 11999999 Ql Q2 Q3 Q4 Ql GROSS DOMESTIC PRODUCT 1 Total 8,300.8 8,759.9 9,256.1 9,072.7 9,146.2 9,297.8 9,507.9 9,697.2 By source 2 Personal consumption expenditures 5,524.4 5,848.6 6,257.3 6,090.8 6,200.8 6,303.7 6,434.1 6,615.2 3 Durable goods 642.9 698.2 758.6 739.0 751.6 761.8 782.1 825.5 4 Nondurable goods 1,641.7 1,708.9 1,843.1 1,787.8 1,824.8 1,853.9 1,905.8 1,963.3 5 Services 3,239.8 3,441.5 3,655.6 3,564.0 3,624.3 3,688.0 3,746.2 3,826.5 6 Gross private domestic investment 1,383.7 1,531.2 1,622.7 1,594.3 1,585.4 1,635.0 1,675.8 1,709.9 7 Fixed investment 1,315.4 1,460.0 1,578.0 1,543.3 1,567.8 1,594.2 1,606.8 1,675.4 8 Nonresidential 986.1 1,091.3 1,166.7 1,139.9 1,155.4 1,181.6 1,190.0 1,248.6 9 Structures 254.1 272.8 273.4 274.7 272.5 272.1 274.1 285.4 10 Producers' durable equipment 732.1 818.5 893.4 865.2 882.9 909.5 916.0 963.2 11 Residential structures 329.2 368.7 411.3 403.4 412.4 412.7 416.7 426.8 12 Change in business inventories 68.3 71.2 44.6 51.0 17.6 40.8 69.1 34.4 13 Nonfarm 65.6 70.9 41.3 40.9 12.8 40.1 71.3 37.5 14 Net exports of goods and services -88.3 -149.6 -253.9 -201.6 -245.8 -278.2 -290.1 -335.0 15 Exports 968.0 966.3 998.3 966.9 978.2 1,008.5 1,039.5 1,043.7 16 Imports 1,056.3 1,115.9 1,252.2 1,168.5 1,224.0 1,286.6 1,329.6 1,378.7 17 Government consumption expenditures and gross investment 1,481.0 1,529.7 1,630.1 1,589.1 1,605.9 1,637.2 1,688.0 1,707.1 18 Federal 537.8 538.7 570.6 557.4 561.6 569.8 593.6 579.2 19 State and local 943.2 991.0 1,059.4 1,031.8 1,044.3 1,067.4 1,094.4 1,127.9 By major type of product 20 Final sales, total 8,232.4 8,688.7 9,211.5 9,021.6 9.128.6 9,257.0 9,438.8 9,662.8 21 Goods 3,074.1 3,239.1 3,437.5 3,365.6 3,406.6 3,453.2 3,524.6 3,637.1 22 Durable 1,424.8 1,528.9 1,618.7 1,584.3 1,601.7 1,631.1 1,657.8 1,725.9 23 Nondurable 1,649.3 1,710.3 1,818.8 1,781.3 1,804.9 1,822.2 1,866.9 1,911.2 24 Services 4,434.7 4,664.6 4,932.0 4,820.7 4,885.5 4,963.7 5,058.2 5,137.6 25 Structures 723.7 785.1 842.0 835.3 836.5 840.1 856.0 888.1 26 Change in business inventories 68.3 71.2 44.6 51.0 17.6 40.8 69.1 34.4 27 Durable goods 35.6 39.0 25.8 24.1 6.3 23.0 49.8 31.9 28 Nondurable goods 32.8 32.3 18.9 27.0 11.4 17.8 19.2 2.5 MEMO 29 Total GDP in chained 1996 dollars 8,144.8 8,495.7 8,848.2 8,717.6 8,758.3 8,879.8 9,037.2 9,156.6 NATIONAL INCOME 30 Total 6,635.5 7,038.8 7,496.3 7,339.4 7,428.1 7,527.0 7,690.9 n.a. 31 Compensation of employees 4,675.7 5,011.2 5,331.7 5,217.7 5,287.1 5,373.6 5,448.3 5,547.4 32 Wages and salaries 3,884.7 4,189.5 4,472.3 4,371.5 4,432.6 4,509.4 4,575.6 4,660.9 33 Government and government enterprises 664.4 692.8 726.5 715.8 721.3 730.3 738.5 754.4 34 Other 3,220.3 3,496.7 3,745.8 3,655.7 3,711.3 3,779.1 3,837.1 3,906.6 35 Supplement to wages and salaries 791.0 821.7 859.4 846.2 854.5 864.2 872.7 886.5 36 Employer contributions for social insurance 290.1 306.0 323.6 318.3 321.5 325.7 329.0 336.0 37 Other labor income 500.9 515.7 535.8 528.0 533.0 538.5 543.7 550.5 38 Proprietors' income1 578.6 606.1 658.5 639.9 655.3 654.0 685.0 685.6 39 Business and professional1 549.1 581.0 627.3 607.5 621.2 633.0 647.4 661.8 40 Farm1 29.5 25.1 31.3 32.5 34.1 21.0 37.6 23.8 41 Rental income of persons2 130.2 137.4 145.9 148.6 148.8 139.0 147.3 147.5 42 Corporate profits1 838.5 848.4 892.7 886.9 880.5 884.1 919.4 n.a. 43 Profits before tax3 795.9 781.9 848.5 818.1 835.8 853.8 886.3 n.a. 44 Inventory valuation adjustment 7.4 20.9 -13.0 13.3 -13.6 -26.7 -24.9 n.a. 45 Capital consumption adjustment 35.3 45.6 57.2 55.5 58.2 57.0 58.0 57.3 46 Net interest 412.5 435.7 467.5 446.3 456.4 476.3 491.0 n.a. 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. U.S. Department of Commerce, Survey of Current Business. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.17 PERSONAL INCOME AND SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1999 2000 AAccccoouunntt 11999977 11999988 11999999 Ql Q2 Q3 Q4 Ql PERSONAL INCOME AND SAVING 1 Total personal income 6,951.1 7,358.9 7,791.8 7,630.2 7,732.6 7,831.4 7,972.9 8,095.9 7 Wage and salary disbursements 3,888.9 4,186.0 4,472.3 4,371.5 4,432.6 4,509.4 4,575.6 4,660.9 .3 Commodity-producing industries 975.5 1,038.7 1,082.4 1,062.9 1,075.1 1,090.2 1,101.4 1,120.8 4 Manufacturing 718.8 757.5 779.7 767.0 774.8 786.4 790.7 799.0 5 Distributive industries 879.1 944.6 1,005.8 986.3 997.6 1,013.4 1,025.8 1,043.1 6 Service industries 1,369.8 1,509.9 1,657.6 1,606.6 1,638.5 1,675.5 1,709.9 1,742.7 7 Government and government enterprises 664.4 692.8 726.5 715.8 721.3 730.3 738.5 754.4 Other labor income 500.9 515.7 535.8 528.0 533.0 538.5 543.7 550.5 9 Proprietors' income1 578.6 606.1 658.5 639.9 655.3 654.0 685.0 685.6 in Business and professional1 549.1 581.0 627.3 607.5 621.2 633.0 647.4 661.8 11 Farm1 29.5 25.1 31.3 32.5 34.1 21.0 37.6 23.8 17 Rental income of persons2 130.2 137.4 145.9 148.6 148.8 139.0 147.3 147.5 n Dividends 333.4 348.3 364.3 356.1 361.2 367.0 373.1 379.6 14 Personal interest income 854.9 897.8 931.3 907.4 920.5 938.8 958.5 972.5 15 Transfer payments 962.4 983.6 1,018.2 1,007.8 1,013.6 1,021.3 1,030.2 1,046.9 16 Old-age survivors, disability, and health insurance benefits 565.8 578.1 596.4 588.9 593.0 599.0 604.7 617.9 17 LESS: Personal contributions for social insurance 298.1 315.9 334.6 328.9 332.3 336.7 340.4 347.7 18 EQUALS: Personal income 6,951.1 7,358.9 7,791.8 7,630.2 7,732.6 7,831.4 7,972.9 8,095.9 19 LESS: Personal tax and nontax payments 968.3 1,072.6 1,152.1 1,124.8 1,139.4 1,160.4 1,183.8 1,199.1 20 EQUALS: Disposable personal income 5,982.8 6,286.2 6,639.7 6,505.4 6,593.2 6,671.0 6,789.1 6,896.8 21 LESS: Personal outlays 5,711.7 6,056.6 6,483.3 6,310.3 6,425.2 6,531.5 6,666.3 6,851.9 22 EQUALS: Personal saving 271.1 229.7 156.3 195.1 168.0 139.5 122.8 45.0 MEMO Per capita (chained 1996 dollars) 73 Gross domestic product 30,391.0 31,395.8 32,387.3 3322,,003388..33rr 32,105.0r 3322,,446677..44rr 32,958.4 3333,,333333..33 24 Personal consumption expenditures 20,213.8 20,997.0 21,901.9 21,577.7 21,790.5r 21,995.2 22,257.1 22,661.8 25 Disposable personal income 21,887.0 22,569.0 23,244.0 23,043.0 23,172.0 23,275.0 23,485.0 23,625.0 26 Saving rate (percent) 4.5 3.7 2.4 3.0 2.5 2.1 1.8 .7 GROSS SAVING 27 Gross saving 1,521.3 1,646.0 1,727.1 1,727.8 1,709.5 1,735.6 1,735.8 n.a. 28 Gross private saving 1,362.0 1,371.2 1,364.7 1,389.4 1,359.3 1,355.7 1,354.3 n.a. 79 Personal saving 271.1 229.7 156.3 195.1 168.0 139.5 122.8 45.0 30 Undistributed corporate profits1 266.6 259.6 268.6 282.5 264.5 257.4 270.1 n.a. 31 Corporate inventory valuation adjustment 7.4 20.9 -13.0 13.3 -13.6 -26.7 -24.9 n.a. Capital consumption allowances 3? Corporate 578.8 616.9 661.1 640.9 652.2 667711..66 667799..77 669944..22 33 Noncorporate 249.8 261.5 278.6 271.0 274.6 287.2 281.6 285.7 34 Gross government saving 159.3 274.8 362.5 338.3 350.2 379.9 381.4 n.a. 35 Federal 37.7 134.3 206.3 187.2 208.3 225.1 204.6 n.a. 36 Consumption of fixed capital 86.6 87.4 90.9 89.6 90.2 91.2 92.4 93.5 37 Current surplus or deficit (-), national accounts -48.8 46.9 115.4 97.6 118.1 133.8 112.2 n.a. 38 State and local 121.5 140.5 156.2 151.1 141.9 154.8 176.9 n.a. 39 Consumption of fixed capital 94.0 98.8 105.2 102.4 104.3 106.0 108.1 109.9 40 Current surplus or deficit (—), national accounts 27.5 41.7 51.0 48.7 37.6 48.9 68.8 n.a. 41 Gross investment 1,518.1 1,598.4 1,602.0 1,628.4 1,574.0 1,594.4 1,611.3 n.a. 47 Gross private domestic investment 1,383.7 1,531.2 1,622.7 1,594.3 1,585.4 1,635.0 1,675.8 1,709.9 43 Gross government investment 258.1 268.7 297.9 289.8 292.2 295.7 313.7 322.4 44 Net foreign investment -123.7 -201.5 -318.5 -255.7 -303.7 -336.3 -378.2 n.a. 45 Statistical discrepancy -3.2 -47.6 -125.1 -99.4 -135.5 -141.2 -124.5 n.a. 1. With inventory valuation and capital consumption adjustments. SOURCE. U.S. Department of Commerce, Survey of Current Business. 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 International Statistics • July 2000 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1998 1999 IItteemm ccrreeddiittss oorr ddeebbiittss 11999977 11999988 11999999 Q4 Q1 Q2 Q3 Q4 1 Balance on current account -143,465 -220,562 -338,918 -61,669 -68,902 -81,157 -89,085 -99,779 7. Balance on goods and services -104,730 -164,282 -267,548 -43,262 -54,177 -65,290 -72,588 -75,496 3 Exports 938,543 933,907 960,088 236,904 231,567 234,174 243,254 251,092 4 Imports -1,043,273 -1,098,189 -1,227,636 -280,166 -285,744 -299,464 -315,842 -326,588 5 Income, net 3,231 -12,205 -24,789 -4,933 -4,419 -4,692 -5,289 -10,391 6 Investment, net 8,185 -6,956 -19,186 -3,571 -3,029 -3,308 -3,887 -8,964 7 Direct 69,220 59,405 58,433 14,558 14,757 13,913 16,543 13,218 8 Portfolio -61,035 -66,361 -77,619 -18,129 -17,786 -17,221 -20,430 -22,182 9 Compensation of employees -4,954 -5,249 -5,603 -1,362 -1,390 -1,384 -1,402 -1,427 10 Unilateral current transfers, net -41,966 -44,075 -46,581 -13,474 -10,306 -11,175 -11,208 -13,892 11 Change in U.S. government assets other than official reserve assets, net (increase, —) 68 -429 -365 -50 119 --339922 -686 559944 12 Change in U.S. official reserve assets (increase, -) -1,010 -6,784 8,749 -2,369 4,068 1,159 1,950 1,572 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -350 -149 12 -227 563 -190 -185 -176 15 Reserve position in International Monetary Fund -3,575 -5,118 5,485 -1,924 3 1,413 2,268 1,801 16 Foreign currencies 2,915 -1,517 3,252 -218 3,502 -64 -133 -53 17 Change in U.S. private assets abroad (increase, —) -464,354 -285,605 -380,951 -48,188 -19,581 -155,726 -114,652 -90,988 18 Bank reported claims3 -144,822 -24,918 -61,424 37,192 27,771 -42,519 -8,799 -37,877 19 Nonbank-reported claims -120,403 -25,041 -69,493 16,202 -13,853 -16,816 -24,066 -14,758 20 U.S. purchases of foreign securities, net -89,174 -102,817 -97,882 -70,809 8,132 -64,579 -34,431 -7,004 21 U.S. direct investments abroad, net -109,955 -132,829 -152,152 -30,773 -41,631 -31,812 -47,356 -31,349 22 Change in foreign official assets in United States (increase, +) 18,119 -21,684 44,570 24,352 4,708 -628 11,881 28,609 23 U.S. Treasury securities -6,690 -9,957 12,073 31,836 800 -6,708 12,963 5,018 24 Other U.S. government obligations 4,529 6,332 20,350 1,562 5,993 5,792 1,835 6,730 25 Other U.S. government liabilities3 -1,798 -3,113 -3,698 -1,054 -1,594 -647 -1,070 -387 26 Other U.S. liabilities reported by U.S. banks3 22,286 -11,469 14,937 -7,133 -589 1,437 -2,032 16,121 27 Other foreign official assets4 -208 -3,477 908 -859 98 -502 185 1,127 28 Change in foreign private assets in United States (increase, +) 733,542 524,321 706,195 125,453 84,260 275,007 195,854 151,077 29 U.S. bank-repotted liabilities2 149,026 40,731 67,713 -21,811 -14,184 34,938 22,629 24,330 30 U.S. nonbank-reported liabilities 107,779 9,412 29,411 -53,210 20,188 8,871 3,475 -3,123 31 Foreign private purchases of U.S. Treasury securities, net 146,433 46,155 -21,756 24,391 -8,781 -5,407 9,639 -17,207 32 U.S. currency flows 24,782 16,622 22,407 6,250 2,440 3,057 4,697 12,213 33 Foreign purchases of other U.S. securities, net 196,258 218,026 325,913 49,328 61,540 79,067 94,573 90,733 34 Foreign direct investments in United States, net 109,264 193,375 282,507 120,505 23,057 154,481 60,841 44,131 35 Capital account transactions, net5 292 617 -172 166 166 178 175 -691 36 Discrepancy -143,192 10,126 -39,108 -37,695 -4,838 -38,441 -5,437 9,606 37 Due to seasonal adjustment 4,144 5,650 662 -9,615 3,301 38 Before seasonal adjustment -143,192 10,126 -39,108 -41,839 -10,488 -39,103 4,178 6,305 MEMO Changes in official assets 39 U.S. official reserve assets (increase, —) -1,010 -6,784 8,749 -2,369 4,068 1,159 11,,995500 1,572 40 Foreign official assets in United States, excluding line 25 (increase, +) 19,917 -18,571 48,268 25,406 6,302 19 12,951 28,996 41 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 12,124 -11,499 968 22,,005577 2,058 11,,996666 --998833 --22,,007733 1. Seasonal factors are not calculated for lines 11-16, 18-20, 22-35, and 38—41. corporations and state and local governments. 2. Reporting banks included all types of depository institutions as well as some brokers 5. Consists of capital transfers (such as those of accompanying migrants entering or and dealers. leaving the country and debt forgiveness) and the acquisition and disposal of nonproduced 3. Associated primarily with military sales contracts and other transactions arranged with nonfinancial assets. or through foreign official agencies. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current 4. Consists of investments in U.S. corporate stocks and in debt securities of private 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 1999 2000 IItteemm 11999977 11999988 11999999rr Sept. Oct. Nov. Dec. Jan. Feb.r Mar.p 1 Goods and services, balance -104,731 -164,282 -267,575 -23,548 -24,935 -25,974 -24,610 -27,447 -28,715 -30,176 2 Merchandise -196,652 -246,932 -347,158 -30,271 -31,876 -32,869 -31,494 -34,154 -35,394 -37,049 3 Services 91,921 82,650 79,583 6,723 6,941 6,895 6,884 6,707 6,679 6,873 4 Goods and services, exports 938,543 933,907 960,288 82,266 82,711 83,021 85,562 84,342 84,836 87,263 5 Merchandise 679,715 670,246 683,221 58,839 58,832 59,184 61,942 60,714 60,818 62,669 6 Services 258,828 263,661 277,067 23,427 23,879 23,837 23,620 23,628 24,018 24,594 7 Goods and services, imports -1,043,273 -1,098,189 -1,227,863 -105,814 -107,646 -108,995 -110,172 -111,789 -113,551 -117,439 8 Merchandise -876,366 -917,178 -1,030,379 -89,110 -90,708 -92,053 -93,436 -94,868 -96,212 -99,718 9 Services -166,907 -181,011 -197,484 -16,704 -16,938 -16,942 -16,736 -16,921 -17,339 -17,721 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 1999 2000 AAsssseett 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayp 1 Total 75,090 69,954 81,755 73,230 72,318 71,516 69,898 69,309 70,789 66,587 67,160 2 Gold stock, including Exchange Stabilization Fund1 11,049 11,050 11,041 11,049 11,049 11,089 11,048 11,048 11,048 11,048 11,048 3 Special drawing rights2'3 10,312 10,027 10,603 10,232 10,326 10,336 10,199 10,277 10,335 10,122 10,310 4 Reserve position in International Monetary Fund2 15,435 18,071 24,111 19,571 18,707 17,950 17,710 17,578 17,871 15,403 15,373 5 Foreign currencies4 38,294 30,809 36,001 32,378 32,236 32,182 30,941 30,406 31,535 30,014 30,429 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 1999 2000 AAsssseett 11999966 11999977 11999988 Oct. Nov. Dec. Jan. Feb. Mar. Apr. MayP 1 Deposits 167 457 167 189 501 71 82 87 125 142 110 Held in custody 2 U.S. Treasury securities2 638,049 620,885 607,574 621,351 629,430 632,482 627,326 631,421 641,830 632,216 623,553 3 Earmarked gold3 11,197 10,763 10,343 10,114 10,015 9,933 9,866 9,771 9,711 9,711 9,711 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 • July 2000 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1999 2000 IItteemm 11999977 11999988 Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Total1 776,505 759,928 778,640 782,865 779,191 806,046 808,231 812,110 827,132 By type 2 Liabilities reported by banks in the United States 135,384 125,883 124,148 124,523 122,505 138,575 134,510 130,025 134,425 3 U.S. Treasury bills and certificates3 148,301 134,177 152,457 154,582 153,465 156,177 153,548 156,995 164,781 U.S. Treasury bonds and notes 4 Marketable 428,004 432,127 420,877 419,629 417,304 422,266 429,029 430,806 430,237 5 Nonmarketable4 5,994 6,074 6,098 6,139 6,177 6,111 6,152 6,191 5,734 6 U.S. securities other than U.S. Treasury securities5 58,822 61,667 75,060 77,992 79,740 82,917 84,992 88,093 91,955 By area 7 Europe1 252,289 256,026 241,233 243,412 242,587 244,805 246,022 248,792 249,527 8 36,177 36,715 39,337 39,682 39,081 38,666 39,439 39,358 39,846 9 Latin America and Caribbean 96,942 79,503 74,279 73,627 70,632 73,518 71,888 71,180 77,014 10 400,144 400,631 437,895 439,811 441,070 463,434 463,561 465,847 474,587 11 9,981 10,059 8,236 7,868 7,174 7,520 8,205 7,973 7,976 12 Other countries 7,058 3,080 3,746 4,551 4,733 4,189 5,202 5,046 4,268 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 1999 IItteemm 11999966 11999977 11999988 Mar. June Sept. Dec. 1 Banks' liabilities 103,383 117,524 101,125 101,360 97,820 111,221 97,223 2 Banks' claims 66,018 83,038 78,162 80,640 67,946 79,418 79,155 3 Deposits 22,467 28,661 45,985 40,957 39,801 45,099 46,232 4 Other claims 43,551 54,377 32,177 39,683 28,145 34,319 32,923 5 Claims of banks' domestic customers2 10,978 8,191 20,718 11,039 23,474 11,534 20,826 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1999 2000 IItteemm 11999977 11999988 11999999 Sept. Oct. Nov. Dec. Jan. Feb. Mar.P BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,283,027 1,347,837 1,413,074 1,382,451 1,377,112 1,422,378 1,413,074 l,413,612r 1,407,850 1,415,486 2 Banks' own liabilities 882,980 884,939 975,791 928,497 932,195 976,348 975,791 981,262r 971,301 969,503 3 Demand deposits 31,344 29,558 42,917 44,594 39,452 42,889 42,917 36,558' 39,676 40,918 4 Time deposits2 198,546 151,761 167,182 156,316 162,271 166,483 167,182 165,205r 170,871 170,252 5 Other3 168,011 140,752 162,485 161,867 155,705 162,708 162,485 174,797r 164,720 162,817 6 Own foreign offices4 485,079 562,868 603,207 565,720 574,767 604,268 603,207 604,702r 596,034 595,516 7 Banks' custodial liabilities5 400,047 462,898 437,283 453,954 444,917 446,030 437,283 432,350 436,549 445,983 8 U.S. Treasury bills and certificates6 193,239 183,494 185,797 189,030 188,486 184,675 185,797 181,879 184,604 195,050 9 Other negotiable and readily transferable instruments7 93,641 141,699 132,575 131,726 131,464 131,859 132,575 129,551 128,673 127,450 10 Other 113,167 137,705 118,911 133,198 124,967 129,496 118,911 120,920 123,272 123,483 11 Nonmonetary international and regional organizations8 . . 11,690 11,883 14,872 19,799 17,893 14,043 14,872 21.756r 20,336 18,281 12 Banks' own liabilities 11,486 10,850 13,953 18,879 17,052 13,156 13,953 20,900r 19,413 17,506 13 Demand deposits 16 172 98 21 187 70 98 202 148 71 14 Time deposits2 5,466 5,793 10,349 7,370 8,772 7,675 10,349 9,621 9,251 9,261 15 Other3 6,004 4,885 3,506 11,488 8,093 5,411 3,506 1 l,077r 10,014 8,174 16 Banks' custodial liabilities5 204 1,033 919 920 841 887 919 856 923 775 17 U.S. Treasury bills and certificates6 69 636 680 661 628 658 680 625 704 695 18 Other negotiable and readily transferable instruments7 133 397 233 259 213 229 233 225 213 71 19 Other 2 0 6 0 0 0 6 6 6 9 20 Official institutions9 283,685 260,060 294,752 276,605 279,105 275,970 294,752 288,058 287,020 299,206 21 Banks' own liabilities 102,028 80,256 97,373 76,780 79,376 80,029 97,373 82,435 79,409 85,372 22 Demand deposits 2,314 3,003 3,341 2,932 2,314 2,829 3,341 2,645 3,306 2,836 23 Time deposits2 41,396 29,506 28,700 25,271 29,152 27,009 28,700 25,666 27,447 29,873 24 Other3 58,318 47,747 65,332 48,577 47,910 50,191 65,332 54,124 48,656 52,663 25 Banks' custodial liabilities5 181,657 179,804 197,379 199,825 199,729 195,941 197,379 205,623 207,611 213,834 26 U.S. Treasury bills and certificates6 148,301 134,177 156,177 152,457 154,582 153,465 156,177 153,548 156,995 164,781 27 Other negotiable and readily transferable instruments7 33,151 44,953 41,152 46,633 44,804 42,331 41,152 51,522 50,298 48,689 28 Other 205 674 50 735 343 145 50 553 318 364 29 Banks10 815,247 885,336 901,425 880,533 877,167 923,780 901,425 901,621r 887,489 882,716 30 Banks' own liabilities 641,447 676,057 729,398 692,545 698,718 739,978 729,398 736,93 lr 725,314 718,809 31 Unaffiliated foreign banks 156,368 113,189 126,191 126,825 123,951 135,710 126,191 132,229 129,280 123,293 32 Demand deposits 16,767 14,071 17,583 14,084 17,111 14,402 17,583 12,964 12,424 13,933 33 Time deposits2 83,433 45,904 48,199 49,649 48,693 54,388 48,199 51,218 51,522 49,775 34 Other3 56,168 53,214 60,409 63,092 58,147 66,920 60,409 68,047 65,334 59,585 35 Own foreign offices4 485,079 562,868 603,207 565,720 574,767 604,268 603,207 604,702r 596,034 595,516 36 Banks' custodial liabilities5 173,800 209,279 172,027 187,988 178,449 183,802 172,027 164,690 162,175 163,907 37 U.S. Treasury bills and certificates6 31,915 35,359 16,936 24,749 22,203 19,512 16,936 17,582 14,635 15,770 38 Other negotiable and readily transferable instruments7 35,393 45,332 45,695 40,370 41.529 44,889 45,695 36,426 34,629 35,273 39 Other 106,492 128,588 109,396 122,869 114,717 119,401 109,396 110,682 112,911 112,864 40 Other foreigners 172,405 190,558 202,025 205,514 202,947 208,585 202,025 202,177r 213,005 215,283 41 Banks' own liabilities 128,019 117,776 135,067 140,293 137,049 143,185 135,067 140,996r 147,165 147,816 42 Demand deposits 12,247 12,312 21,895 27,557 19,840 25,588 21,895 20,747r 23,798 24,078 4.3 Time deposits2 68,251 70,558 79,934 74,026 75,654 77,411 79,934 78,700r 82,651 81,343 44 Other3 47,521 34,906 33,238 38,710 41,555 40,186 33,238 41,549 40,716 42,395 45 Banks' custodial liabilities5 44,386 72,782 66,958 65,221 65,898 65,400 66,958 61,181 65,840 67,467 46 U.S. Treasury bills and certificates6 12,954 13,322 12,004 11,163 11,073 11,040 12,004 10,124 12,270 13,804 47 Other negotiable and readily transferable instruments7 24,964 51,017 45,495 44,464 44,918 44,410 45495 41,378 43,533 43,417 48 Other 6,468 8,443 9,459 9,594 9,907 9,950 9,459 9,679 10,037 10,246 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 16,083 27,026 30,345 24,367 26,550 28,320 30,345 28,344 27,266 27,876 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 • July 2000 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued 1999 2000 IItteemm 11999977 11999988 11999999 Sept. Oct. Nov. Dec. Jan. Feb. Mar.p AREA 50 Total, all foreigners 1,283,027 1,347,837 1,413,074 1,382,451 1,377,112 1,422,378 1,413,074 l,413,612r 1,407,850 1,415,486 51 Foreign countries 1,271,337 1,335,954 1,398,202 1,362,652 1,359,219 1,408,335 1,398,202 l,391,856r 1,387,514 1,397,205 52 Europe 419,672 427,375 448,004 457,041 442,633 470,893 448,004 449,970R 451,718 461,282 53 Austria 2,717 3,178 2,789 3,205 3,299 2,842 2,789 2,648 2,997 2,570 54 Belgium and Luxembourg 41,007 42,818 44,692 37,130 38,750 41,331 44,692 42,433R 38,783 36,372 55 Denmark 1,514 1,437 2,196 1,903 2,658 3,197 2,196 2,510 2,533 3,235 5B Finland 2,246 1,862 1,658 1,222 1,269 1,894 1,658 1,290 1,479 2,015 57 France 46,607 44,616 49,790 45,809 45,763 50,261 49,790 48,530 49,839 43,665 58 Germany 23,737 21,357 24,748 24,485 25,472 26,530 24,748 24,097 24,201 25,176 59 Greece 1,552 2,066 3,748 3,358 3,322 3,365 3,748 3,145 4,000 3,216 60 Italy 11,378 7,103 6,775 6,231 6,305 5,264 6,775 6,261 5,405 5,278 61 Netherlands 7,385 10,793 8,310 11,626 13,874 12,775 8,310 7,271 7,797 7,617 62 Norway 317 710 1,327 1,225 951 1,364 1,327 834 1,169 1,336 63 Portugal 2,262 3,236 2,228 1,976 1,875 2,148 2,228 2,034 2,113 2,006 64 Russia 7,968 2,439 5,475 2,816 3,713 3,655 5,475 6,404 7,543 7,360 65 Spain 18,989 15,781 10,426 9,479 9,287 11,181 10,426 12,531 12,130 12,495 66 Sweden 1,628 3,027 4,652 4,571 5,381 5,518 4,652 4,673 4,792 5,425 67 Switzerland 39,023 50,654 65,985 68,971 65,966 67,025 65,985 64,282 61,335 81,934 68 Turkey 4,054 4,286 7,842 8,368 8,250 8,817 7,842 6,912 7,714 7,995 69 United Kingdom 181,904 181,554 176,168 196,710 177,992 195,453 176,168 184,457 188,043 180,715 70 Yugoslavia11 239 233 286 266 267 267 286 273 294 270 71 Other Europe and other former U.S.S.R.12 25,145 30,225 28,909 27,690 28,239 28,006 28,909 29,385 29,551 32,602 72 Canada 28,341 30,212 34,119 29,728 34,995 33,746 34,119 32,965 33,387 36,147 73 Latin America and Caribbean 536,393 554,866 577,599 572,664 576,142 594,400 577,599 599,486R 596,206 593,124 74 Argentina 20,199 19,014 18,633 15,547 17,547 15,042 18,633 15,333 16,327 17,898 75 Bahamas 112,217 118,085 134,407 139,101 134,111 139,179 134,407 149,727 155,720 141,181 76 Bermuda 6,911 6,846 7,877 8,747 10,902 8,859 7,877 9,910 9,106 10,108 77 Brazil 31,037 15,815 12,860 16,241 13,252 14,184 12,860 12,230 12,785 14,885 78 British West Indies 276,418 302,486 312,664 302,016 311,509 328,052 312,664 320,245 311,923 317,261 79 Chile 4,072 5,015 7,008 6,601 6,559 6,521 7,008 6,366 6,244 5,752 80 Colombia 3,652 4,624 5,656 4,711 5,011 4,783 5,656 4,438 4,304 4,311 81 Cuba 66 62 75 76 72 73 75 75 75 101 82 Ecuador 2,078 1,572 1,956 1,792 1,833 1,930 1,956 1,985 2,035 2,140 83 Guatemala 1,494 1,336 1,621 1,471 1,484 1,577 1,621 L,636R 1,617 1,706 84 Jamaica 450 577 520 550 549 546 520 540 571 671 85 Mexico 33,972 37,157 30,718 35,028 32,210 31,189 30,718 32,090 32,216 31,387 86 Netherlands Antilles 5,085 5,010 3,997 2,935 2,696 3,389 3,997 4,269 3,692 4,527 87 Panama 4,241 3,864 4,415 4,029 4,007 3,834 4,415 4,042 3,737 4,153 88 Peru 893 840 1,142 1,042 958 997 1,142 1,073 1,051 974 89 Uruguay 2,382 2,486 2,386 2,177 2,219 2,585 2,386 2,260 2,262 2,377 90 Venezuela 21,601 19,894 20,189 19,451 19,914 20,311 20,189 21,517 21,297 22,562 91 Other 9,625 10,183 11,475 11,149 11,309 11,349 11,475 LL,750R 11,244 11,130 92 269,379 307,960 319,361 228877,,334477 228877,,996633 229922,,007788 331199,,336611 229900,,443322RR 228877,,339944 228888,,229911 China 93 Mainland 18,252 13,441 12,325 11,914 10,460 13,981 12,325 11,570 11,661 8,096 94 Taiwan 11,840 12,708 13,595 12,514 12,023 14,791 13,595 1 L,677R 11,213 14,644 95 Hong Kong 17,722 20,900 27,697 23,368 24,299 22,276 27,697 25,951 24,038 23,322 96 India 4,567 5,250 7,367 5,625 5,659 5,610 7,367 5,491 5,405 6,246 97 Indonesia 3,554 8,282 6,567 6,468 6,037 6,486 6,567 6,853 7,495 7,837 98 Israel 6,281 7,749 7,488 5,688 5,175 5,071 7,488 6,581 7,680 8,337 99 Japan 143,401 168,563 159,075 149,698 151,632 152,095 159,075 149,033 145,314 145,074 100 Korea (South) 13,060 12,524 12,840 11,903 9,935 8,474 12,840 LL,573R 12,625 16,420 101 Philippines 3,250 3,324 3,253 2,414 2,134 2,639 3,253 1,938 2,541 2,278 102 Thailand 6,501 7,359 6,050 5,281 4,983 5,164 6,050 5,389r 5,134 4,370 103 Middle Eastern oil-exporting countries13 14,959 15,609 21,280 14,367 16,825 17,944 21,280 16,923 15,807 16,125 104 Other 25,992 32,251 41,824 38,107 38,801 37,547 41,824 37,453 38,481 35,542 105 10,347 8,905 9,469 8,045 8,037 7,799 9,469 8,106 8,271 8,614 106 Egypt 1,663 1,339 2,022 1,852 1,364 1,846 2,022 1,616 1,703 1,770 107 Morocco 138 97 179 118 174 166 179 176 262 115 108 South Africa 2,158 1,522 1,495 753 828 957 1,495 730 698 673 109 Zaire 10 5 14 13 14 13 14 7 13 13 110 Oil-exporting countries14 3,060 3,088 2,915 2,807 2,912 2,248 2,915 2,953 3,099 3,319 111 Other 3,318 2,854 2,844 2,502 2,745 2,569 2,844 2,624 2,496 2,724 112 Other 7,205 6,636 9,650 7,827 9,449 9,419 9,650 10,897 10,538 99,,774477 113 Australia 6,304 5,495 8,377 6,788 8,199 8,394 8,377 9,910 9,335 88,,666699 114 Other 901 1,141 1,273 1,039 1,250 1,025 1,273 987 1,203 1,078 115 Nonmonetary international and regional organizations . . 11,690 11,883 14,872 19,799 17,893 14,043 14,872 21,756r 20,336 18,281 116 International15 10,517 10,221 12,972 17,723 16,009 12,710 12,972 19,657r 17,761 16,226 117 Latin American regional16 424 594 650 662 960 345 650 1,128 1,558 1,244 118 Other regional17 749 1,068 1,250 1,414 924 988 1,250 971 1,017 811 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in US. Dollars Millions of dollars, end of period 1999 2000 AArreeaa oorr ccoouunnttrryy 11999977 11999988 11999999 Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Total, all foreigners 708,225 734,995 793,421 759,084 752,319 779,765 793,421 755,370r 749,158 811,938 2 Foreign countries 705,762 731,378 788,855 755,494 747,029 774,100 788,855 749,752r 744,491 807,629 3 Europe 199,880 233,321 313,955 316,617 293,618 313,288 313,955 306,304 312,709 359,496 4 Austria 1,354 1,043 2,643 2,335 2,752 2,407 2,643 3,020 2,471 2,525 5 Belgium and Luxembourg 6,641 7,187 10,193 7,239 9,624 9,332 10,193 8,898 9,777 8,009 6 Denmark 980 2,383 1,669 1,756 2,352 1,756 1,669 1,702 1,743 1,605 7 Finland 1,233 1,070 2,020 1,855 1,669 2,034 2,020 2,328 1,846 2,093 8 France 16,239 15,251 29,142 19,253 21,533 24,592 29,142 30,051 28,303 28,339 9 Germany 12,676 15,923 29,205 22,995 23,616 22,365 29,205 29,871 28,890 35,153 10 Greece 402 575 806 663 743 754 806 793 683 842 11 Italy 6,230 7,284 8,496 7,958 6,682 7,297 8,496 8,614 6,785 7,048 12 Netherlands 6,141 5,697 10,477 9,425 8,940 8,100 10,477 10,144 10,151 13,129 13 Norway 555 827 867 1,252 949 920 867 1,243 1,013 1,000 14 Portugal 777 669 1,571 1,342 1,691 1,430 1,571 1,307 1,155 1,043 15 Russia 1,248 789 713 814 871 711 713 701 743 709 16 Spain 2,942 5,735 3,796 5,104 4,073 4,641 3,796 4,581 4,339 3,182 17 Sweden 1,854 4,223 3,213 4,184 4,325 3,853 3,213 4,505 5,331 7,080 18 Switzerland 28,846 46,874 79,086 90,380 78,448 91,493 79,086 68,904 70,178 111,472 19 Turkey 1,558 1,982 2,617 2,385 2,403 2,491 2,617 2,969 3,031 3,044 20 United Kingdom 103,143 106,349 119,829 129,619 114,209 120,836 119,829 119,886 128,046 124,785 21 Yugoslavia2 52 53 50 50 51 50 50 50 50 50 22 Other Europe and other former U.S.S.R.3 7,009 9,407 7,562 8,008 8,687 8,226 7,562 6.737 8,174 8,38.8 23 Canada 27,189 47,037 37,196 37,197 35,903 37,060 37,196 36,474 38,541 42,686 74 Latin America and Caribbean 343,730 342,654 353,409 320,952 335,163 335,356 353,409 323,537r 314,839 323,873 25 Argentina 8,924 9,552 10,167 10,293 10,148 10,034 10,167 9,962 10,095 9,875 ?6 Bahamas 89,379 96,455 99,324 85,386 87,083 87,177 99,324 78,641 68,914 74,008 ?7 Bermuda 8,782 5,011 8,007 8,481 9,887 9,449 8,007 10,145 11,771 7,452 ?8 Brazil 21,696 16,184 15,706 13,983 14,218 14,973 15,706 15,031 15,382 15,058 ?9 British West Indies 145,471 153,749 167,182 142,500 159,171 158,937 167,182 157,469 156,776 166,186 30 Chile 7,913 8,250 6,607 6,810 6,846 6,591 6,607 6,672 6,224 6,510 31 Colombia 6,945 6,507 4.529 4,818 4,800 4,745 4,529 4,326r 4,176 3,965 32 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 1,311 1,400 760 844 792 761 760 692 730 688 34 Guatemala 886 1,127 1,133 1,064 1,084 1,090 1,133 1,067r 1,170 1,181 35 Jamaica 424 239 295 330 319 309 295 298 332 328 36 Mexico 19,428 21,212 17,899 18,255 17,792 17,924 17,899 17,848 17,489 16,995 37 Netherlands Antilles 17,838 6,779 5,982 13,298 7,497 8,078 5,982 6,194 6,341 6,385 38 Panama 4,364 3,584 3,387 2,941 2,917 3,050 3,387 3,067 2,972 2,913 39 Peru 3,491 3,275 2,529 2,533 2,442 2,507 2,529 2,462 2,414 2,242 40 Uruguay 629 1,126 801 945 778 775 801 709 777 761 41 Venezuela 2,129 3,089 3,494 3,325 4,103 3,587 3,494 3,571 3,524 3,581 42 Other 4,120 5,115 5,607 5,146 5,286 5,369 5,607 5,383r 5,752 5,745 43 125,092 98,607 74,922 72,448 73,099 78,454 74,922 73,327r 69,055 72,692 China 44 Mainland 1,579 1,261 2,090 2,032 1,998 2,082 2,090 2,221 2,726 3,161 45 Taiwan 922 1,041 1,390 790 816 1,495 1,390 1,462 1,501 925 46 Hong Kong 13,991 9,080 5,893 5,224 4,740 6,010 5,893 5,240 4,453 4,519 47 India 2,200 1,440 1.738 1,736 1,856 1,972 1,738 1,616 1,802 1,751 48 Indonesia 2,651 1,942 1,776 1,689 1,636 1,681 1,776 1,711 1,743 1,817 49 Israel 768 1,166 1,875 934 851 1,053 1,875 1,853 1,832 3,412 50 Japan 59,549 46,713 28.636 28,003 28,363 30,305 28,636 28,597 25,540 27,325 51 Korea (South) 18,162 8,289 9.267 11,085 12,441 13,262 9,267 ll,378r 12,066 11,448 57 Philippines 1,689 1,465 1,410 1,491 1,562 990 1,410 1,088 1,058 1,698 53 Thailand 2,259 1,807 1,518 1,432 1,411 1,433 1,518 l,155r 1,275 1,154 54 Middle Eastern oil-exporting countries4 10,790 16,130 14,252 11,379 10,667 11,631 14,252 10,774 10,947 11,613 55 Other 10,532 8,273 5,077 6,653 6,758 6,540 5,077 6,232 4,112 3,869 56 Africa 3,530 3,122 2,268 2,293 2,299 2,473 2,268 2,786 2,453 1,989 57 Egypt 247 257 258 225 251 233 258 222 207 241 58 Morocco 511 372 352 437 439 354 352 299 313 279 59 South Africa 805 643 622 506 589 873 622 943 889 427 60 Zaire 0 0 24 0 0 9 24 0 0 0 61 Oil-exporting countries5 1,212 936 276 323 253 275 276 494 228 199 62 Other 755 914 736 802 767 729 736 828 816 843 63 Other 6,341 6,637 7,105 5,987 6,947 7,469 7,105 7,324 6,894 6,893 64 Australia 5,300 6,173 6,824 5,770 6,696 7,272 6,824 7,113 6,682 6,641 65 Other 1,041 464 281 217 251 197 281 211 212 252 66 Nonmonetary international and regional organizations6. . . 2,463 3,617 4,566 3,590 5,290 5,665 4,566 5,618r 4,667 4,309 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 • July 2000 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 1999 2000 TTyyppee ooff ccllaaiimm 11999977 11999988 11999999 Sept. Oct. Nov. Dec. Jan.r Feb. Mar.p 1 Total 852,852 875,891 943,357 901,046 943,357 2 Banks' claims 708,225 734,995 793,421 759,084 752,319 779,765 793,421 755,370 749,158 811,938 3 Foreign public borrowers 20,581 23,542 35,213 35,002 40,948 39,910 35,213 42,344 36,644 36,130 4 Own foreign offices2 431,685 484,535 528,036 488,820 487,624 511,669 528,036 490,010 496,559 551,902 5 Unaffiliated foreign banks 109,230 106,206 101,230 102,012 97,262 99,497 101,230 93,524 87,666 96,027 6 Deposits 30,995 27,230 34,320 24,407 24,865 27,835 34,320 24,259 21,275 24,361 7 Other 78,235 78,976 66,910 77,605 72,397 71,662 66,910 69,265 66,391 71,666 8 All other foreigners 146,729 120,712 128,942 133,250 126,485 128,689 128,942 129,492 128,289 127,879 9 Claims of banks' domestic customers3 144,627 140,896 149,936 141,962 149,936 10 Deposits 73,110 79,363 86,293 87,222 86,293 11 Negotiable and readily transferable instruments4 53,967 47,914 51,011 40,604 51,011 12 Outstanding collections and other claims 17,550 13,619 12,632 14,136 12,632 MEMO 13 Customer liability on acceptances 9,624 4,520 4.672 4,620 4,672 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 33,816 39,978 31,125r 27,750 33,847 32,592r 31,125r 41,544 48,210 53,657 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 1999 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999966 11999977 11999988 Mar. June Sept. Dec. 1 Total 258,106 276,550 250,418 242,348 260,554 270,085 263,548 By borrower 2 Maturity of one year or less 211,859 205,781 186,526 175,391 186,818 196,816 187,396 3 Foreign public borrowers 15,411 12,081 13,671 20,902 24,661 22,603 22,527 4 All other foreigners 196,448 193,700 172,855 154,489 162,157 174,213 164,869 5 Maturity of more than one year 46,247 70,769 63,892 66,957 73,736 73,269 76,152 6 Foreign public borrowers 6,790 8,499 9,839 13,290 11,677 12,193 12,043 7 All other foreigners 39,457 62,270 54,053 53,667 62,059 61,076 64,109 By area Maturity of one year or less 8 Europe 55,690 58,294 68,679 66,875 84,723 82,567 80,967 9 Canada 8,339 9,917 10,968 7,832 6,705 8,545 7,860 10 Latin America and Caribbean 103,254 97,207 81,766 71,111 65,776 78,122 69,299 11 Asia 38,078 33,964 18,007 21,347 21,977 20,839 21,795 17 Africa 1,316 2,211 1,835 1,571 1,543 1,119 1,122 13 Allother3 5,182 4,188 5,271 6,655 6,094 5,624 6,353 Maturity of more than one year 14 Europe 6,965 13,240 14,923 16,949 18,863 18,618 20,896 15 Canada 2,645 2,525 3,140 2,766 3,261 3,192 3,112 16 Latin America and Caribbean 24,943 42,049 33,442 33,538 38,193 38,091 38,558 17 Asia 9,392 10,235 10,018 10,972 10,471 10,649 10,888 18 Africa 1,361 1,236 1,232 1,160 1,105 1,087 1,065 19 All other3 941 1,484 1,137 1,572 1,843 1,632 1,633 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity, dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A57 3.2 i CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1997 1998 1999 AArreeaa oorr ccoouunnttrryy 11999955 11999966 Dec. Mar. June Sept. Dec. Mar. June Sept. Dec. 1 Total 556.4 645.8 721.8 1029.8 1017.2 1071.9 1051.6 992.6r 938.5 936.8r 935.5r 2 G-10 countries and Switzerland 206.0 228.3 242.8 250.9 273.9 240.0 217.7 208.5 222.2 205.5 235.5r 3 Belgium and Luxembourg 13.6 11.7 11.0 12.0 14.0 11.7 10.7 15.6 16.1 15.7 14.3r 4 France 19.4 16.6 15.4 16.5 21.7 20.3 18.4 21.6 20.4 19.9 29.0 5 Germany 27.3 29.8 28.6 27.0 30.5 31.4 30.9 34.7 32.1 37.4 38.7 6 Italy 11.5 16.0 15.5 20.8 21.1 18.5 11.5 17.8 16.4 15.0 18.1 7 Netherlands 3.7 4.0 6.2 7.7 8.6 8.4 7.8 10.7 13.3 10.6 11.0r 8 Sweden 2.7 2.6 3.3 4.8 3.1 2.1 2.3 4.0 2.6 3.6 2.9 9 Switzerland 6.7 5.3 7.2 5.9 7.0 7.6 8.5 7.8 8.2 8.8 10.2r 10 United Kingdom 82.4 104.7 113.4 114.6 125.9 100.1 85.4 55.9 73.4 51.1 72.8r 11 Canada 10.3 14.0 13.7 14.2 16.7 15.9 16.8 15.9 17.1 17.8 16.3r 12 Japan 28.5 23.7 28.6 27.3 25.3 23.9 25.4 24.6 22.6 25.6 22.0 13 Other industrialized countries 51.9 66.1 65.5 78.2 78.7 78.5 69.0 80.1 79.7 71.7 68.2r 14 Austria .9 1.1 1.5 1.7 1.9 2.1 1.4 2.8 2.8 3.0 3.5 15 Denmark 2.6 1.5 2.4 2.1 2.2 3.0 2.2 3.4 2.9 2.1 2.6 16 Finland .8 .8 1.3 1.5 1.4 1.6 1.4 1.5 .9 .9 ,9r 17 Greece 5.7 6.7 5.1 6.1 5.8 5.8 5.9 6.5 5.9 6.6 6.0 18 Norway 3.2 8.0 3.6 4.0 3.4 3.2 3.2 3.1 3.0 3.8 3.2r 19 Portugal 1.3 .9 .9 .8 1.4 1.1 1.4 1.4 1.2 1.2 1.0 70 Spain 12.5 13.3 12.6 18.1 17.5 19.5 13.7 15.7 16.6 15.1 12.1 21 Turkey 1.9 2.7 4.5 4.9 6.5 5.2 4.8 5.2 4.9 4.7 4.8 72 Other Western Europe 4.8 4.9 8.3 10.2 9.9 10.4 10.4 10.2 10.2 9.2 6.8 73 South Africa 1.2 2.0 2.2 5.5 6.9 5.4 4.4 4.8 4.7 4.0 3.8 24 Australia 16.9 24.0 23.1 23.2 21.8 21.4 20.3 25.4 26.6 21.1 23.5 75 OPEC2 22.1 19.8 26.0 26.0 25.5 26.0 27.1 26.2 26.1 30.1 31.4 26 Ecuador .7 1.1 1.3 1.3 1.2 1.2 1.3 1.2 1.1 .9 .8 77 Venezuela 2.7 2.4 2.5 3.4 3.3 3.1 3.2 3.5 3.2 3.0 2.8 28 Indonesia 4.8 5.2 6.7 5.6 5.1 4.7 4.7 4.5 5.0 4.4 4.2 79 Middle East countries 13.3 10.7 14.4 14.4 15.6 16.1 17.0 16.7 16.5 21.4 23.0 30 African countries .6 .4 1.2 1.4 .3 .8 1.0 .4 .4 .5 .5 31 Non-OPEC developing countries 112.9 130.3 139.2 149.8 146.1 140.4 143.4 146.7 148.6 142.5 147.3r Latin America 37. Argentina 12.9 14.3 18.4 20.0 20.9 22.9 23.1 24.3 22.8 22.1 22.4 33 Brazil 13.7 20.7 28.6 33.4 30.3 24.0 24.7 24.2 25.1 22.1 26.4 34 Chile 6.8 7.0 8.7 9.0 9.1 8.5 8.3 8.6 8.2 7.7 7.4 35 Colombia 2.9 4.1 3.4 3.3 3.6 3.4 3.2 3.3 3.1 2.7 2.5 36 Mexico 17.3 16.2 17.4 17.8 18.1 18.7 18.9 19.7 18.5 19.4 18.7r 37 .8 1.6 2.0 2.1 2.2 2.2 2.2 2.2 2.1 1.8 1.7 38 Other 2.8 3.3 4.1 4.0 4.4 4.6 5.4 5.3 5.5 5.5 5.9 Asia China 39 Mainland 1.8 2.5 3.2 4.2 3.9 2.8 3.0 5.0 5.3 3.3 3.6 40 Taiwan 9.4 10.3 9.5 12.1 11.8 12.5 13.3 11.8 12.6 12.3 12.0 41 India 4.4 4.3 4.9 5.0 4.9 5.3 5.5 5.5 6.7 7.0 7.7 47 Israel .5 .5 .7 .7 .9 .9 1.1 1.1 2.0 1.0 1.8 43 Korea (South) 19.1 21.5 15.6 16.2 14.6 13.1 13.7 13.7 15.3 16.0 15.lr 44 Malaysia 4.4 6.0 5.1 4.5 4.7 5.0 5.6 5.9 6.0 6.1 6.1 45 Philippines 4.1 5.8 5.7 5.1 5.4 4.7 5.1 5.4 5.7 5.8 6.2 46 Thailand 5.2 5.7 5.4 5.5 5.0 5.3 4.7 4.5 4.2 4.0 4.1 47 Other Asia 4.5 4.1 4.3 4.2 3.7 3.1 2.9 3.0 2.8 2.8 2.9 Africa 48 Egypt .4 .7 .9 1.0 1.5 1.7 1.3 1.4 1.4 1.3 1.4 49 Morocco .7 .7 .6 .6 .6 .5 .5 .5 .5 .5 .4 50 Zaire .0 .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 .9 .9 .8 1.1 .8 1.1 1.0 1.2 1.0 1.0 1.0 52 Eastern Europe 4.2 6.9 9.1 12.3 11.3 6.3 5.5 7.1 5.8 5.4 5.2 53 Russia4 1.0 3.7 5.1 7.5 6.9 2.8 2.2 2.3 2.1 2.0 1.6 54 Other 3.2 3.2 4.0 4.7 4.4 3.5 3.3 4.8 3.7 3.4 3.6 55 Offshore banking centers 102.2 135.1 140.2 133.1 130.0 121.0 93.9 93.6 75.9 90.3 60. lr 56 Bahamas 12.9 20.5 24.2 32.6 28.6 30.7 35.4 32.6 20.4 29.4 13.9 57 Bermuda 6.3 4.5 9.8 9.1 9.4 10.4 4.6 3.9 5.7 8.2 8.0 58 Cayman Islands and other British West Indies 32.4 37.2 43.4 24.9 34.3 27.8 12.8 13.9 7.2 6.3 1.3 59 Netherlands Antilles 10.3 26.1 14.6 14.0 10.5 6.0 2.6 2.7 1.3 9.1 1.7 60 Panama5 1.4 2.0 3.1 3.2 3.3 4.0 3.9 3.9 3.9 3.9 3.9 61 Lebanon .1 .1 .1 .1 .1 .2 .1 .1 .1 .2 .1 62 Hong Kong, China 25.0 27.9 32.2 33.9 30.0 30.6 23.3 22.8 22.0 22.4 21.0 63 Singapore 13.7 16.7 12.7 15.0 13.6 11.1 11.1 13.5 15.2 10.6 10.T 64 Other" .1 .1 .1 .1 .2 .2 .2 .2 .1 .2 .1 65 Miscellaneous and unallocated7 57.6 59.6 99.1 379.7 351.7 459.9 495.1 430.4 380.2 391.2 387.9r 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 • July 2000 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1998 1999 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999966 11999977 11999988 Sept. Dec. Mar. June Sept. Dec. 1 Total 61,782 57,382 46,570 49,279 46,570 46,663 49,337 52,979 53,227 2 Payable in dollars 39,542 41,543 36,668 38,410 36,668 34,030 36,032 36,296 37,812 3 Payable in foreign currencies 22,240 15,839 9,902 10,869 9,902 12,633 13,305 16,683 15,415 By type 4 Financial liabilities 33,049 26,877 19,255 19,331 19,255 22,458 25,058 27,422 27,980 5 Payable in dollars 11,913 12,630 10,371 9,812 10,371 11,225 13,205 12,231 13,883 6 Payable in foreign currencies 21,136 14,247 8,884 9,519 8,884 11,233 11,853 15,191 14,097 7 Commercial liabilities 28,733 30,505 27,315 29,948 27,315 24,205 24,279 25,557 25,247 8 Trade payables 12,720 10,904 10,978 10,276 10,978 9,999 10,935 12,651 12,864 9 Advance receipts and other liabilities 16,013 19,601 16,337 19,672 16,337 14,206 13,344 12,906 12,383 10 Payable in dollars 27,629 28,913 26,297 28,598 26,297 22,805 22,827 24,065 23,929 11 Payable in foreign currencies 1,104 1,592 1,018 1,350 1,018 1,400 1,452 1,492 1,318 By area or country Financial liabilities 12 Europe 23,179 18,027 12,589 12,905 12,589 16,098 19,578 21,695 23,241 13 Belgium and Luxembourg 632 186 79 150 79 50 70 50 31 14 France 1,091 1,425 1,097 1,457 1,097 1,178 1,287 1,675 1,659 15 Germany 1,834 1,958 2,063 2,167 2,063 1,906 1,959 1,712 1,974 16 Netherlands 556 494 1,406 417 1,406 1,337 2,104 2,066 1,996 17 Switzerland 699 561 155 179 155 141 143 133 147 18 United Kingdom 17,161 11,667 5,980 6,610 5,980 9,729 13,097 15,096 16,521 19 Canada 1,401 2,374 693 389 693 781 320 344 284 20 Latin America and Caribbean 1,668 1,386 1,495 1,351 1,495 1,528 1,369 1,180 892 21 Bahamas 236 141 7 1 7 1 1 1 1 22 Bermuda 50 229 101 73 101 78 52 26 5 23 Brazil 78 143 152 154 152 137 131 122 126 24 British West Indies 1,030 604 957 834 957 1,064 944 786 492 25 Mexico 17 26 59 23 59 22 19 28 25 26 Venezuela 1 1 2 1 2 2 1 0 0 27 6,423 4,387 3,785 4,005 3,785 3,475 3,217 3,622 3,437 28 Japan 5,869 4,102 3,612 3,754 3,612 3,337 3,035 3,384 3,142 29 Middle Eastern oil-exporting countries1 25 27 0 0 0 1 2 3 3 30 Africa 38 60 28 31 28 31 29 31 28 31 Oil-exporting countries2 0 0 0 0 0 2 0 0 0 32 All other3 340 643 665 650 665 545 545 550 98 Commercial liabilities 33 Europe 9,767 10,228 10,030 11,010 10,030 8,580 8,718 9,265 9,432 34 Belgium and Luxembourg 479 666 278 623 278 229 189 128 140 35 France 680 764 920 740 920 654 656 620 665 36 Germany 1,002 1,274 1,392 1,408 1,392 1,088 1,143 1,201 1,124 37 Netherlands 766 439 429 440 429 361 432 535 506 38 Switzerland 624 375 499 507 499 535 497 593 626 39 United Kingdom 4,303 4,086 3,697 4,286 3,697 3,008 2,959 3,175 3,244 40 Canada 1,090 1,175 1,390 1,504 1,390 1,597 1,670 1,753 1,777 41 Latin America and Caribbean 2,574 2,176 1,618 1,840 1,618 1,612 1,674 1,957 2,323 42 Bahamas 63 16 14 48 14 11 19 24 16 43 Bermuda 297 203 198 168 198 225 180 178 152 44 Brazil 196 220 152 256 152 107 112 120 145 45 British West Indies 14 12 10 5 10 7 5 39 48 46 Mexico 665 565 347 511 347 437 490 704 904 47 Venezuela 328 261 202 230 202 155 149 182 305 48 Asia 13,422 14,966 12,342 13,539 12,342 10,428 10,039 10,428 9,886 49 Japan 4,614 4,500 3,827 3,779 3,827 2,715 2,753 2,689 2,609 50 Middle Eastern oil-exporting countries' 2,168 3,111 2,852 3,582 2,852 2,479 2,209 2,618 2,551 51 Africa 1,040 874 794 810 794 727 832 959 950 52 Oil-exporting countries2 532 408 393 372 393 377 392 584 499 53 Other3 840 1,086 1,141 1,245 1,141 1,261 1,346 1,195 879 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 1998 1999 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999966 11999977 11999988 Sept. Dec. Mar. June Sept. Dec. 1 Total 65,897 68,128 77,462 67,976 77,462 69,054 63,884 67,566 76,676 2 Payable in dollars 59,156 62,173 72,171 62,034 72,171 64,026 57,006 60,456 69,213 3 Payable in foreign currencies 6,741 5,955 5,291 5,942 5,291 5,028 6,878 7,110 7,463 By type 4 Financial claims 37,523 36,959 46,260 37,262 46,260 38,217 31,957 33,877 40,272 5 Deposits 21,624 22,909 30,199 15,406 30.199 18,686 13,350 15,192 18,607 6 Payable in dollars 20,852 21,060 28,549 13,374 28,549 17,101 11,636 13,240 16,423 7 Payable in foreign currencies 772 1,849 1,650 2,032 1,650 1,585 1,714 1,952 2,184 8 Other financial claims 15,899 14,050 16,061 21,856 16,061 19,531 18,607 18,685 21,665 9 Payable in dollars 12,374 11,806 14,049 19,867 14,049 17,457 14,800 15,718 18,593 10 Payable in foreign currencies 3,525 2,244 2,012 1,989 2,012 2,074 3,807 2,967 3,072 11 Commercial claims 28,374 31,169 31,202 30,714 31,202 30,837 31,927 33,689 36,404 12 Trade receivables 25,751 27,536 27,202 26,330 27,202 26,724 27,791 29,397 32,595 13 Advance payments and other claims 2,623 3,633 4,000 4,384 4,000 4,113 4,136 4,292 3,809 14 Payable in dollars 25,930 29,307 29,573 28,793 29,573 29,468 30,570 31,498 34,197 15 Payable in foreign currencies 2,444 1,862 1,629 1,921 1,629 1,369 1,357 2,191 2,207 By area or country Financial claims 16 Europe 11,085 14,999 12,294 14,473 12,294 12,881 13,978 13,878 13,016 17 Belgium and Luxembourg 185 406 661 496 661 469 457 574 529 18 France 694 1,015 864 1,140 864 913 1,368 1,212 967 19 Germany 276 427 304 359 304 302 367 549 504 20 Netherlands 493 677 875 867 875 993 997 1,067 1,229 21 Switzerland 474 434 414 409 414 530 504 559 643 22 United Kingdom 7,922 10,337 7,766 9,849 7,766 8,400 8,631 8,157 7,554 23 Canada 3,442 3,313 2,503 4,090 2,503 3,111 2,828 3,172 2,552 24 Latin America and Caribbean 20,032 15,543 27,714 15,758 27,714 18,825 11,486 12,749 18,256 25 Bahamas 1,553 2,308 403 2,105 403 666 467 755 1,598 26 Bermuda 140 108 39 63 39 41 39 524 11 77 Brazil 1,468 1,313 835 710 835 1,112 1,102 1,265 1,476 28 British West Indies 15,536 10,462 24,388 10,960 24,388 14,621 7,393 7,263 12,144 29 Mexico 457 537 1,245 1,122 1,245 1,583 1,702 1,791 1,798 30 Venezuela 31 36 55 50 55 72 71 47 48 31 2,221 2,133 3,027 2,121 3,027 2,648 2,801 3,205 5,457 32 Japan 1,035 823 1,194 928 1,194 942 949 1,250 3,262 33 Middle Eastern oil-exporting countries' 22 11 9 13 9 8 5 5 21 34 Africa 174 319 159 157 159 174 228 251 285 35 Oil-exporting countries2 14 15 16 16 16 26 5 12 15 36 All other3 569 652 563 663 563 578 636 622 706 Commercial claims 37 Europe 10,443 12,120 13,246 13,029 13,246 12,782 12,961 14,367 16,372 38 Belgium and Luxembourg 226 328 238 219 238 281 286 289 316 39 France 1,644 1,796 2,171 2,098 2,171 2,173 2,094 2,375 2,232 40 Germany 1,337 1,614 1,822 1,502 1,822 1,599 1,660 1,944 1,955 41 Netherlands 562 597 467 463 467 415 389 617 1,427 47 Switzerland 642 554 483 546 483 367 385 714 610 43 United Kingdom 2,946 3,660 4,769 4,681 4,769 4,529 4,615 4,789 5,822 44 Canada 2,165 2,660 2,617 2,291 2,617 2,983 2,855 2,638 2,741 45 Latin America and Caribbean 5,276 5,750 6,296 5,773 6,296 5,930 6,278 5,879 5,965 46 Bahamas 35 27 24 39 24 10 21 29 20 47 Bermuda 275 244 536 173 536 500 583 549 390 48 Brazil 1,303 1,162 1,024 1,062 1,024 936 887 763 909 49 British West Indies 190 109 104 91 104 117 127 157 184 50 Mexico 1,128 1,392 1,545 1,356 1,545 1,431 1,478 1,613 1,690 51 Venezuela 357 576 401 566 401 361 384 365 439 52 8,376 8,713 7,192 7,190 7,192 7,080 7,690 8,579 9,158 53 Japan 2,003 1,976 1,681 1,789 1,681 1,486 1,511 1,823 2,074 54 Middle Eastern oil-exporting countries' 971 1,107 1,135 967 1,135 1,286 1,465 1,479 1,625 55 Africa 746 680 711 740 711 685 738 682 631 56 Oil-exporting countries2 166 119 165 128 165 116 202 221 171 57 Other3 1,368 1,246 1,140 1,691 1,140 1,377 1,405 1,544 1,537 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 • July 2000 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 2000 1999 2000 Transaction, and area or country 1998 1999 J M an a . r - . Sept. Oct. Nov. Dec. Jan. Feb. Mar.p U.S. corporate securities STOCKS 1 Foreign purchases 1,574,192 2,340,659 960,271 175,193 218,983 240,329 256,414 263,947 293,110 403,214 2 Foreign sales 1,524,203 2,233,137 897,589 171,908 211,213 221,911 247,460 253,365 265,365 378,859 3 Net purchases, or sales (—) 49,989 107,522 62,682 3,285 7,770 18,418 8,954 10,582 27,745 24,355 4 Foreign countries 50,369 107,578 62,703 3,282 7,796 18,393 8,983 10,540 27,626 24,537 5 Europe 68,124 98,060 58,762 7,196 7,760 10,695 13,283 15,704 24,375 18,683 6 France 5,672 3,813 2,114 91 1,020 -369 66 -240 529 1,825 V Germany 9,195 13,410 15,607 114 1,719 2,467 1,587 5,633 5,425 4,549 8 Netherlands 8,249 8,083 505 -539 159 1,375 1,640 -281 516 270 9 Switzerland 5,001 5,650 6,875 1,194 -1,418 384 1,495 2,926 4,804 -855 10 United Kingdom 23,952 42,902 13,743 4,786 3,836 3,966 3,080 2,246 66,,668855 4,812 11 Canada -4,689 -335 1,876 -931 543 -958 -940 666 889900 320 12 Latin America and Caribbean 757 5,187 1,638 -4,693 -3,162 7,746 -4,735 -5,190 1,989 4,839 13 Middle East1 -1,449 -1,068 3,982 -25 -14 -1,197 465 677 1,182 2,123 14 Other Asia -12,351 4,447 -4,222 1,438 2,386 2,350 752 -1,645 -863 -1,714 15 Japan -1,171 5,723 -5,322 2,652 1,695 630 211 -1,603 -1,115 -2,604 16 Africa 639 372 353 61 -23 1 -18 151 -2 204 17 Other countries -662 915 314 236 306 -244 176 177 55 82 18 Nonmonetary international and regional organizations -380 -56 -21 3 -26 25 -29 42 119 -182 BONDS2 19 Foreign purchases 905,782 856,804r 285,505 76,263 81,301r 74,940 56,928 79,045r 99,605 106,855 20 Foreign sales 727,044 602,109 205,437 48,902 55,120 50,839 41,321 58,889 69,476 77,072 21 Net purchases, or sales (—) 178,738 254,695r 80,068 27,361 26,181r 24,101 15,607 20,156r 30,129 29,783 22 Foreign countries 179,081 255,097r 80,190 27,030 27,045r 24,172 15,626 20,161r 30,147 29,882 23 Europe 130,057 140,674r 46,775 13,719 14,751r 11,639 7,500 10,083r 17,063 19,629 24 France 3,386 1,870 1,632 24 52 53 269 -114 1,124 622 25 Germany 4,369 7,723 432 752 1,203 1,327 -228 -618 702 348 26 Netherlands 3,443 2,446 7 279 103 133 183 -23 -97 127 27 Switzerland 4,826 4,553 696 496 360 429 462 -47 526 217 28 United Kingdom 99,637 106,344r 39,340 9,761 ll,043r 9,241 6,040 10,324r 13,478 15,538 29 Canada 6,121 6,043 4,160 908 271 1,506 961 2,133 1,324 703 30 Latin America and Caribbean 23,938 60,861 18,258 5,488 6,396 6,652 4,094 4,658 9,659 3,941 31 Middle East1 4,997 1,979 407 257 178 -506 309 -86 -177 670 32 Other Asia 12,662 42,842 9,684 6,698 4,847 4,566 2,591 2,623r 2,545 4,516 33 Japan 8,384 17,541 4,296 4,375 2,081 2,297 1,437 1,113r 1,173 2,010 34 Africa 190 1,411 536 -189 343 146 257 677 -130 -11 35 Other countries 1,116 1,287 370 149 259 169 -86 73 -137 434 36 Nonmonetary international and regional organizations -343 -402 -122 331 -864 -71 -19 -5 -18 -99 Foreign securities 37 Stocks, net purchases, or sales (—) 6,227 15,643 -15,760 825 -8,206 3,816 -1,504 1,107 -8,883 -7,984 38 Foreign purchases 929,923 1,177,306 489,207 97,384 96,523 129,534 125,956 134,949 176,945 177,313 39 Foreign sales 923,696 1,161,663 504,967 96,559 104,729 125,718 127,460 133,842 185,828 185,297 40 Bonds, net purchases, or sales ( —) -17,350 -5,676 -9,774 1,132 -1,320 -512 3,872 -3,502 -1,986 -4,286 41 Foreign purchases 1,328,281 798,267 219,878 66,661 62,533 59,650 52,227 62,189 74,380 83,309 42 Foreign sales 1,345,631 803,943 229,652 65,529 63,853 60,162 48,355 65,691 76,366 87,595 43 Net purchases, or sales (-), of stocks and bonds .... -11,123 9,967 -25,534 1,957 -9,526 3,304 2,368 -2,395 -10,869 -12,270 44 Foreign countries -10,778 9,682 -25,822 2,027 -9,532 3,496 2,210 -2,555 -10,898 -12,369 45 Europe 12,632 59,247 -10,709 2,224 2,202 2,238 5,001 754 -4,969 -6,494 46 Canada -1,901 -999 -3,552 301 315 -1,671 1,342 -471 -1,865 -1,216 47 Latin America and Caribbean -13,798 -4,726 -10,090 581 -1,950 6,403 524 -4,868 -4,252 -970 48 Asia -3,992 -42,961 -2,856 -429 -9,603 -4,048 -4,945 1,951 -711 -4,096 49 Japan -1,742 -43,637 -1,470 -565 -10,006 -4,453 -3,596 866 -879 -1,457 50 Africa -1,225 713 666 -116 63 160 535 99 183 384 51 Other countries -2,494 -1,592 719 -534 -559 414 -247 -20 716 23 52 Nonmonetary international and regional organizations -345 285 288 -70 6 -192 158 160 29 99 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, 2. Includes state and local government securities and securities of U.S. government Saudi Arabia, and United Arab Emirates (Trucial States). agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions A61 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (—) during period 2000 1999 2000 AArreeaa oorr ccoouunnttrryy 11999988 11999999 J M an. a — r. Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Total estimated 49,039 -9,953 -1,771 90 -9,733 -3,615 4,642 9,543 5,563 -16,877 2 Foreign countries 46,570 -10,518 -1,750 -1 -9,904 -3,802 4,566 9,578 5,770 -17,098 .3 Europe 23,797 -38,228 -12,201 -9,265 -405 8,643 -5,533 214 -2,443 -9,972 4 Belgium and Luxembourg 3,805 -81 912 12 -351 -357 -798 731 65 116 5 Germany 144 2,285 -512 -963 78 510 607 1,706 -866 -1,352 6 Netherlands -5,533 2,122 3,820 -423 130 360 268 806 2,475 539 7 Sweden 1,486 1,699 662 -45 -6 369 317 499 -100 263 8 Switzerland 5,240 -1,761 -4,785 237 365 144 1,403 -3,407 -1,382 4 9 United Kingdom 14,384 -20,232 -6,861 -3,534 -1,854 5,837 -3,481 -450 -1,261 -5,150 10 Other Europe and former U.S.S.R 4,271 -22,260 -5,437 -4,549 1,233 1,780 -3,849 329 -1,374 -4,392 11 Canada 615 7,348 61 1,459 -656 -550 218 -582 8 635 12 Latin America and Caribbean -3,662 -7,523 -354 3,003 -9,911 -5,417 806 -2,409 6,844 -4,789 13 Venezuela 59 362 91 10 25 154 -33 54 13 24 14 Other Latin America and Caribbean 9,523 1,661 -2,951 2,982 -1,777 1,362 576 -3,837 2,482 -1,596 IS Netherlands Antilles -13,244 -9,546 2,506 11 -8,159 -6,933 263 1,374 4,349 -3,217 16 27,433 29,359 10,524 5,344 942 -6,630 9,718 12,403 1,064 -2,943 17 Japan 13,048 20,102 -83 5,259 344 -4,378 8,263 1,297 -1,874 494 18 Africa 751 -3,021 18 -302 -202 -680 -541 -43 80 -19 19 Other -2,364 1,547 202 -240 328 832 -102 -5 217 -10 20 Nonmonetary international and regional organizations 2,469 565 -21 91 171 187 76 -35 -207 221 71 International 1,502 190 -50 98 184 125 75 -7 -194 151 22 Latin American regional 199 666 70 -9 -1 -4 1 0 0 70 MEMO 23 Foreign countries 46,570 -10,518 -1,750 -1 -9,904 -3,802 4,566 9,578 5,770 -17,098 24 Official institutions 4,123 -9,861 7,971 -1,714 -1,248 -2,325 4,962 6,763 1,777 -569 25 Other foreign 42,447 -657 -9,721 1,713 -8,656 -1,477 -396 2,815 3,993 -16,529 Oil-exporting countries 7ft Middle East2 -16,554 2,207 3,366 401 201 -2,050 -3,556 2,913 170 283 27 2 0 0 0 0 0 -1 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 • July 2000 3.28 FOREIGN EXCHANGE RATES AND INDEXES OF THE FOREIGN EXCHANGE VALUE OF THE U.S. DOLLAR1 Currency units per U.S. dollar except as noted 1999 2000 IItteemm 11999977 11999988 11999999 Dec. Jan. Feb. Mar. Apr. May Exchange Rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 74.37 62.91 64.54 64.10 65.60 62.78 60.94 59.60 57.84 2 Austria/schilling 12.206 12.379 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 3 Belgium/franc 35.81 36.31 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 4 Brazil/real 1.0779 1.1605 1.8207 1.8442 1.8057 1.7765 1.7424 1.7696 1.8278 5 1.3849 1.4836 1.4858 1.4722 1.4486 1.4512 1.4608 1.4689 1.4957 6 China, P.R./yuan 8.3193 8.3008 8.2781 8.2794 8.2792 8.2781 8.2786 8.2793 8.2781 7 Denmark/krone 6.6092 6.7030 6.9900 7.3597 7.3492 7.5725 7.7228 7.8872 8.2329 8 European Monetary Union/euro3 n.a. n.a. 1.0653 1.0110 1.0131 0.9834 0.9643 0.9449 0.9059 9 Finland/markka 5.1956 5.3473 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 France/franc 5.8393 5.8995 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11 Germany/deutsche mark 1.7348 1.7597 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Greece/drachma 273.28 295.70 306.30 326.19 326.86 338.87 346.33 355.02 371.63 13 Hong Kong/dollar 7.7431 7.7467 7.7594 7.7728 7.7791 7.7816 7.7848 7.7880 7.7907 14 India/rupee 36.36 41.36 43.13 43.52 43.59 43.65 43.64 43.68 44.08 15 Ireland/pound2 151.63 142.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 Italy/lira 1,703.81 1,736.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 17 121.06 130.99 113.73 102.58 105.30 109.39 106.31 105.63 108.32 18 Malaysia/ringgit 2.8173 3.9254 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 19 Mexico/peso 7.918 9.152 9.553 9.427 9.494 9.427 9.289 9.394 9.506 20 Netherlands/guilder 1.9525 1.9837 n.a. n.a. n.a. n.a. n.a. n.a. n.a. ?1 New Zealand/dollar2 66.25 53.61 52.94 50.87 51.27 49.03 49.02 49.60 47.08 22 Norway/krone 7.0857 7.5521 7.8071 8.0113 8.0241 8.2374 8.4100 8.6272 9.0533 23 Portugal/escudo 175.44 180.25 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 74 Singapore/dollar 1.4857 1.6722 1.6951 1.6745 1.6757 1.7028 1.7153 1.7096 1.7286 ?5 South Africa/rand 4.6072 5.5417 6.1191 6.1503 6.1309 6.3209 6.4675 6.6480 7.0238 26 South Korea/won 947.65 1,400.40 1,189.84 1,136.80 1,130.99 1,129.75 1,116.39 1,110.32 1,119.49 77 Spain/peseta 146.53 149.41 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 78 Sri Lanka/rupee 59.026 65.006 70.868 72.018 73.140 73.552 73.810 74.123 74.867 79 Sweden/krona 7.6446 7.9522 8.2740 8.4910 8.4918 8.6480 8.6971 8.7486 9.0925 30 Switzerland/franc 1.4514 1.4506 1.5045 1.5841 1.5903 1.6348 1.6636 1.6657 1.7190 31 Taiwan/dollar 28.775 33.547 32.322 31.625 30.890 30.806 30.724 30.520 30.772 37 Thailand/baht 31.072 41.262 37.887 38.227 37.380 37.759 37.923 37.993 38.951 33 United Kingdom/pound2 163.76 165.73 161.72 161.32 164.04 160.00 157.99 158.23 150.90 34 Venezuela/bolivar 488.87 548.39 606.82 644.28 652.81 659.44 666.82 672.73 680.00 Indexes4 NOMINAL 35 Broad (January 1997 = 100)5 104.44 116.48 116.87 116.09 115.95 117.44 117.44 118.10 120.70 36 Major currencies (March 1973 = 100)6 91.24 95.79 94.07 93.23 93.14 95.31 95.64 96.31 99.31 37 Other important trading partners (January 1997= 100)7 104.67 126.03 129.94 129.34 129.14 129.11 128.54 129.05 130.43 REAL 38 Broad (March 1973= 100)5 91.33 99.36 98.76 98.14 98.05r 99.34r 100.08r 100.71r 102.62 39 Major currencies (March 1973 = 100)6 92.25 97.25 96.75 96.42 96.63r 99.18R 99.9 LR 100.63r 103.43 40 Other important trading partners (March 1973= 100)7 95.87 108.52 107.74 106.67 106.17r 105.81r 106.60r 107.16r 108.01 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 4. The December 1999 Bulletin contains revised index values resulting from the annual table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, revision to the trade weights. For more information on the indexes of the foreign exchange see inside front cover. value of the dollar, see Federal Reserve Bulletin, vol. 84 (October 1998), pp. 811-18. 2. U.S. cents per currency unit. 5. Weighted average of the foreign exchange value of the U.S. dollar against the currencies 3. As of January 1999, the euro is reported in place of the individual euro area currencies. of a broad group of U.S. trading partners. The weight for each currency is computed as an By convention, the rate is reported in U.S. dollars per euro. These currency rates can be average of U.S. bilateral import shares from and export shares to the issuing country and of a derived from the euro rate by using the fixed conversion rates (in currencies per euro) as measure of the importance to U.S. exporters of that country's trade in third country markets. shown below: 6. Weighted average of the foreign exchange value of the U.S. dollar against a subset of broad index currencies that circulate widely outside the country of issue. The weight for each Euro equals currency is its broad index weight scaled so that the weights of the subset of currencies in the 13.7603 Austrian schillings 1936.27 Italian lire index sum to one. 40.3399 Belgian francs 40.3399 Luxembourg francs 7. Weighted average of the foreign exchange value of the U.S. dollar against a subset of 5.94573 Finnish markkas 2.20371 Netherlands guilders broad index currencies that do not circulate widely outside the country of issue. The weight 6.55957 French francs 200.482 Portuguese escudos for each currency is its broad index weight scaled so that the weights of the subset of 1.95583 German marks 166.386 Spanish pesetas currencies in the index sum to one. .787564 Irish pounds 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 June 2000 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1999 August 1999 A64 June 30, 1999 November 1999 A64 September 30, 1999 February 2000 A64 December 31, 1999 May 2000 A64 Terms of lending at commercial banks May 1999 August 1999 A66 August 1999 November 1999 A66 November 1999 February 2000 A66 February 2000 May 2000 A66 Assets and liabilities of U.S. branches and agencies of foreign banks March 31, 1999 August 1999 A72 June 30, 1999 November 1999 A72 September 30, 1999 February 2000 A72 December 31, 1999 May 2000 A72 Pro forma balance sheet and income statements for priced service operations March 31, 1999 July 1999 A64 June 30, 1999 October 1999 A64 September 30, 1999 January 2000 A64 Residential lending reported under the Home Mortgage Disclosure Act 1997 September 1998 A64 1998 September 1999 A64 Disposition of applications for private mortgage insurance 1997 September 1998 All 1998 September 1999 A73 Small loans to businesses and farms 1997 September 1998 A76 1998 September 1999 A76 Community development lending reported under the Community Reinvestment Act 1997 September 1998 A79 1998 September 1999 A79 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

64 Federal Reserve Bulletin • July 2000 Index to Statistical Tables References are to pages A3-A62, although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Federal finance Assets and liabilities (See also Foreigners) Debt subject to statutory limitation, and types and ownership Commercial banks, 15-21 of gross debt, 27 Domestic finance companies, 32, 33 Receipts and outlays, 25, 26 Federal Reserve Banks, 10 Treasury financing of surplus, or deficit, 25 Foreign-related institutions, 20 Treasury operating balance, 25 Automobiles Federal Financing Bank, 30 Consumer credit, 36 Federal funds, 23, 25 Production, 44, 45 Federal Home Loan Banks, 30 Federal Home Loan Mortgage Corporation, 30, 34, 35 Federal Housing Administration, 30, 34, 35 BANKERS acceptances, 5, 10, 22, 23 Federal Land Banks, 35 Bankers balances, 15-21. (See also Foreigners) Federal National Mortgage Association, 30, 34, 35 Bonds (See also U.S. government securities) Federal Reserve Banks New issues, 31 Condition statement, 10 Rates, 23 Discount rates (See Interest rates) Business activity, nonfinancial, 42 U.S. government securities, 5, 10, 11, 27 Business loans (See Commercial and industrial loans) Federal Reserve credit, 5, 6, 10, 12 Federal Reserve notes, 10 CAPACITY utilization, 43 Federally sponsored credit agencies, 30 Capital accounts Finance companies Commercial banks, 15-21 Assets and liabilities, 32 Federal Reserve Banks, 10 Business credit, 33 Certificates of deposit, 23 Loans, 36 Commercial and industrial loans Paper, 22, 23 Commercial banks, 15-21 Float, 5 Weekly reporting banks, 17, 18 Flow of funds, 37-41 Commercial banks Foreign currency operations, 10 Assets and liabilities, 15-21 Foreign deposits in U.S. banks, 5 Commercial and industrial loans, 15-21 Foreign exchange rates, 62 Consumer loans held, by type and terms, 36 Foreign-related institutions, 20 Real estate mortgages held, by holder and property, 35 Foreign trade, 51 Time and savings deposits, 4 Foreigners Commercial paper, 22, 23, 32 Claims on, 52, 55-7, 59 Condition statements (See Assets and liabilities) Liabilities to, 51-3, 58, 60, 61 Construction, 42, 46 Consumer credit, 36 Consumer prices, 42 GOLD Consumption expenditures, 48, 49 Certificate account, 10 Corporations Stock, 5, 51 Government National Mortgage Association, 30, 34, 35 Profits and their distribution, 32 Gross domestic product, 48, 49 Security issues, 31, 61 Cost of living (See Consumer prices) Credit unions, 36 HOUSING, new and existing units, 46 Currency in circulation, 5, 13 Customer credit, stock market, 24 INCOME, personal and national, 42, 48, 49 Industrial production, 42, 44 DEBT (See specific types of debt or securities) Insurance companies, 27, 35 Demand deposits, 15—21 Interest rates Depository institutions Bonds, 23 Reserve requirements, 8 Consumer credit, 36 Reserves and related items, 4-6, 12 Federal Reserve Banks, 7 Deposits (See also specific types) Money and capital markets, 23 Commercial banks, 4, 15-21 Mortgages, 34 Federal Reserve Banks, 5, 10 Prime rate, 22 Discount rates at Reserve Banks and at foreign central banks and International capital transactions of United States, 50-61 foreign countries (See Interest rates) International organizations, 52, 53, 55, 58, 59 Discounts and advances by Reserve Banks (See Loans) Inventories, 48 Dividends, corporate, 32 Investment companies, issues and assets, 32 Investments (See also specific types) EMPLOYMENT, 42 Commercial banks, 4, 15-21 Euro, 62 Federal Reserve Banks, 10, 11 Financial institutions, 35 FARM mortgage loans, 35 Federal agency obligations, 5, 9-11, 28, 29 LABOR force, 42 Federal credit agencies, 30 Life insurance companies (See Insurance companies) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

66 Federal Reserve Bulletin • July 2000 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD W. KELLEY, JR. ROGER W. FERGUSON, JR., Vice Chairman LAURENCE H. MEYER OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE LYNN S. FOX, Assistant to the Board KAREN H. JOHNSON, Director DONALD J. WINN, Assistant to the Board DAVID H. HOWARD, Deputy Director WINTHROP P. HAMBLEY, Deputy Congressional Liaison VINCENT R. REINHART, Deputy Director BOB STAHLY MOORE, Special Assistant to the Board DALE W. HENDERSON, Associate Director ROSANNA PI AN ALTO-CAMERON, Special Assistant to the Board THOMAS A. CONNORS, Deputy Associate Director DIANE E. WERNEKE, Special Assistant to the Board DONALD B. ADAMS, Senior Adviser RICHARD T. FREEMAN, Assistant Director WILLIAM L. HELKIE, Assistant Director LEGAL DIVISION STEVEN B. KAMIN, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel RALPH W. TRYON, Assistant Director SCOTT G. ALVAREZ, Associate General Counsel RICHARD M. ASHTON, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS OLIVER IRELAND, Associate General Counsel DAVID J. STOCKTON, Director KATHLEEN M. O'DAY, Associate General Counsel EDWARD C. ETTIN, Deputy Director ANN E. MISBACK, Assistant General Counsel WILLIAM R. JONES, Associate Director SANDRA L. RICHARDSON, Assistant General Counsel MYRON L. KWAST, Associate Director STEPHEN L. SICILIANO, Assistant General Counsel PATRICK M. PARKINSON, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director MARTHA S. SCANLON, Deputy Associate Director OFFICE OF THE SECRETARY STEPHEN D. OLINER, Assistant Director JENNIFER J. JOHNSON, Secretary STEPHEN A. RHOADES, Assistant Director ROBERT DEV. FRIERSON, Associate Secretary JANICE SHACK-MARQUEZ, Assistant Director BARBARA R. LOWREY, Associate Secretary and Ombudsman CHARLES S. STRUCKMEYER, Assistant Director ALICE PATRICIA WHITE, Assistant Director JOYCE K. ZICKLER, Assistant Director DIVISION OF BANKING GLENN B. CANNER, Senior Adviser SUPERVISION AND REGULATION DAVID S. JONES, Senior Adviser RICHARD SPILLENKOTHEN, Director STEPHEN C. SCHEMERING, Deputy Director DIVISION OF MONETARY AFFAIRS HERBERT A. BIERN, Associate Director ROGER T. COLE, Associate Director DONALD L. KOHN, Director WILLIAM A. RYBACK, Associate Director DAVID E. LINDSEY, Deputy Director GERALD A. EDWARDS, JR., Deputy Associate Director BRIAN F. MADIGAN, Associate Director STEPHEN M. HOFFMAN, JR., Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director JAMES V. HOUPT, Deputy Associate Director WILLIAM C. WHITESELL, Assistant Director JACK P. JENNINGS, Deputy Associate Director NORMAND R.V. BERNARD, Special Assistant to the Board MICHAEL G. MARTINSON, Deputy Associate Director DIVISION OF CONSUMER SIDNEY M. SUSSAN, Deputy Associate Director MOLLY S. WASSOM, Deputy Associate Director AND COMMUNITY AFFAIRS HOWARD A. AMER, Assistant Director DOLORES S. SMITH, Director NORAH M. BARGER, Assistant Director GLENN E. LONEY, Deputy Director BETSY CROSS, Assistant Director SANDRA F. BRAUNSTEIN, Assistant Director RICHARD A. SMALL, Assistant Director MAUREEN P. ENGLISH, Assistant Director WILLIAM C. SCHNEIDER, JR., Project Director, ADRIENNE D. HURT, Assistant Director National Information Center IRENE SHAWN MCNULTY, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

67 EDWARD M. GRAMLICH OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS LOUISE L. ROSEMAN, Director STEPHEN R. MALPHRUS, Staff Director PAUL W. BETTGE, Assistant Director KENNETH D. BUCKLEY, Assistant Director MANAGEMENT DIVISION 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 EDGAR A. MARTINDALE, Assistant Director SHEILA CLARK, EEO Programs Director MARSHA REIDHILL, Assistant Director DIVISION OF SUPPORT SERVICES JEFF J. STEHM, Assistant Director ROBERT E. FRAZIER, Director OFFICE OF THE INSPECTOR GENERAL GEORGE M. LOPEZ, Assistant Director BARRY R. SNYDER, Inspector General DAVID L. WILLIAMS, Assistant Director DONALD L. ROBINSON, Deputy Inspector General DIVISION OF INFORMATION TECHNOLOGY RICHARD C. STEVENS, Director MARIANNE M. EMERSON, Deputy Director MAUREEN T. HANNAN, Associate Director TILLENA G. CLARK, Assistant Director GEARY L. CUNNINGHAM, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director SHARON L. MOWRY, Assistant Director DAY W. RADEBAUGH, JR., Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

68 Federal Reserve Bulletin • July 2000 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman J. ALFRED BROADDUS, JR. JACK GUYNN LAURENCE H. MEYER ROGER W. FERGUSON, JR. JERRY L. JORDAN ROBERT T. PARRY EDWARD M. GRAMLICH EDWARD W. KELLEY, JR. ALTERNATE MEMBERS THOMAS M. HOENIG MICHAEL H. MOSKOW JAMIE B. STEWART, JR. CATHY E. MINEHAN WILLIAM POOLE STAFF DONALD L. KOHN, Secretary and Economist ROBERT A. EISENBEIS, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary MARVIN S. GOODFRIEND, Associate Economist LYNN S. FOX, Assistant Secretary DAVID H. HOWARD, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel VINCENT R. REINHART, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel THOMAS D. SIMPSON, Associate Economist KAREN H. JOHNSON, Economist MARK S. SNIDERMAN, Associate Economist JACK H. BEEBE, Associate Economist DAVID J. STOCKTON, Associate Economist CHRISTINE M. CUMMING, Associate Economist PETER R. FISHER, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL DOUGLAS A. WARNER III, President NORMAN R. BOBINS, 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 R. SCOTT JONES, Ninth District DAVID A. DABERKO, Fourth District C. Q. CHANDLER, Tenth District L. M. BAKER, JR., Fifth District RICHARD W. EVANS, JR., Eleventh District WILLIAM G. SMITH, JR., Sixth District WALTER A. DODS, JR., Twelfth District JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

69 CONSUMER ADVISORY COUNCIL DWIGHT GOLANN, Boston, Massachusetts, Chairman LAUREN ANDERSON, New Orleans, Louisiana, Vice Chairman WALTER J. BOYER, Dallas, Texas GWENN S. KYZER, Allen, Texas DOROTHY BROADMAN, San Francisco, California JOHN C. LAMB, Sacramento, California TERESA A. BRYCE, St. Louis, Missouri ANNE S. LI, Trenton, New Jersey MALCOLM M. BUSH, Chicago, Illinois MARTHA W. MILLER, Greensboro, North Carolina ROBERT M. CHEADLE, Ada, Oklahoma DANIEL W. MORTON, Columbus, Ohio MARY ELLEN DOMEIER, New ULM, Minnesota JEREMY NOWAK, Philadelphia, Pennsylvania JEREMY D. EISLER, Biloxi, Mississippi MARTA RAMOS, San Juan, Puerto Rico ROBERT F. ELLIOTT, Prospect Heights, Illinois DAVID L. RAMP, St. Paul, Minnesota LESTER W. FIRSTENBERGER, Middletown, Connecticut RUSSELL W. SCHRADER, San Francisco, California JOHN C. GAMBOA, San Francisco, California ROBERT G. SCHWEMM, Lexington, Kentucky VINCENT J. GIBLIN, West Caldwell, New Jersey DAVID J. SHIRK, Tarrytown, New York KARLA S. IRVINE, Cincinnati, Ohio GARY S. WASHINGTON, Chicago, Illinois WILLIE M. JONES, Boston, Massachusetts ROBERT L. WYNN, II, Madison, Wisconsin M. DEAN KEYES, St. Louis, Missouri THRIFT INSTITUTIONS ADVISORY COUNCIL F. WELLER MEYER, Falls Church, Virginia, President THOMAS S. JOHNSON, New York, New York, Vice President JAMES C. BLAINE, Raleigh, North Carolina CORNELIUS D. MAHONEY, Westfield, Massachusetts LAWRENCE L. BOUDREAUX III, New Orleans, Louisiana KATHLEEN E. MARINANGEL, McHenry, Illinois TOM R. DORETY, Tampa, Florida ANTHONY J. POPP, Marietta, Ohio BABETTE E. HEIMBUCH, Santa Monica, California MARK H. WRIGHT, San Antonio, Texas WILLIAM A. LONGBRAKE, Seattle, Washington CLARENCE ZUGELTER, Kansas City, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Bulletin • July 2000 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, 1999. 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, $35.00 per year or $.80 each. Federal Reserve Bank Board of Directors Federal Reserve Banks REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL A Consumer's Guide to Mortgage Lock-Ins RESERVE SYSTEM. A Consumer's Guide to Mortgage Settlement Costs ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Refinancings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Home Mortgages: Understanding the Process and Your Right Vol. II (Irregular Transactions). 1969. 116 pp. Each volume to Fair Lending $5.00. How to File a Consumer Complaint about a Bank GUIDE TO THE FLOW OF FUNDS ACCOUNTS. January 2000. Making Sense of Savings 1,186 pp. $20.00 each. SHOP: The Card You Pick Can Save You Money FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated Welcome to the Federal Reserve monthly. (Requests must be prepaid.) When Your Home is on the Line: What You Should Know Consumer and Community Affairs Handbook. $75.00 per year. About Home Equity Lines of Credit Monetary Policy and Reserve Requirements Handbook. $75.00 Keys to Vehicle Leasing per year. Looking for the Best Mortgage Securities Credit Transactions Handbook. $75.00 per year. The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) $200.00 per year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

71 STAFF STUDIES: Only Summaries Printed in the 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by BULLETIN James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANKto be added to the mailing list for the series may be sent to ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Publications Services. PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, by Stephen A. Rhoades. July 1994. 37 pp. 170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU- Staff Studies 1-158, 161, 163, 165, 166, 168, and 169 are out of LATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH print. IN SAVINGS ACT, by Gregory Elliehausen and Barbara R. Lowrey, December 1997. 17 pp. 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- 171. THE COST OF BANK REGULATION: A REVIEW OF THE EVI- ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and DENCE, by Gregory Elliehausen, April 1998. 35 pp. Donald Savage. February 1990. 12 pp. 172. USING SUBORDINATED DEBT AS AN INSTRUMENT OF MAR- 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- KET DISCIPLINE, by Study Group on Subordinated Notes VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by and Debentures, Federal Reserve System, December 1999. Gregory E. Elliehausen and John D. Wolken. September 69 pp. 1990. 35 pp. 173. IMPROVING PUBLIC DISCLOSURE IN BANKING, by Study 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- Group on Disclosure, Federal Reserve System, March 2000. GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. 35 pp. Rhoades. February 1992. 11 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • July 2000 Maps of the Federal Reserve System MINNEAPOLIS • 2 • flyjggjMMW M B B M M i B — J Mw . . ^ B ^^ J1!®1 ^ _ _ O • NI:w YORK 12 CHICAGO® • CLEVELAND PHIIXDIMPHIA • SAN FRANCISCO ]Q 4 Q KANSAS CITY • J 1 ? R | N I) t l f f M l S HK JjHBMPHBBifls liar ' " ' * 6 b a ATLANTA •HwPBBfc SHHBHBhiHItHHHHflHHHP ALASKA LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city n 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

73 1-A 2-B 3-C 4 -D 5-E MH Pittsburgh Bavltimtorfe /M D / T NH f Cincinnati Buffalo NY MA ® / sc BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H KY MI WI IL ; IN r Detroit • Louisville MO - TN AR l^A Jackson\ ille • Memphis II. Now Orleans hi. IN Little ) J Rock < MwpS Miami ATLANTA CHICAGO ST. LOUIS 9-1 lillJl MI MN • Helena fiat ilSIPf ^ SD •wi 'ifti:iiiiiitiiigaiiiii|||5. MINNEAPOLIS 10-J 12-L I.HB CO Omaha* • KS ^ • M O Denver WA Seattle NM Oklahoma Cit\ • OK KANSAS CITY 11-K TX • - NM Salt l2ke City • 7 m EL Paso , A r-1 Y 1 loustoil • V* •Los Angeles San Antonio^ DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Bulletin • July 2000 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 Peter G. Peterson William J. McDonough Charles A. Heimbold, Jr. Jamie B. Stewart, Jr. Buffalo 14240 Bal Dixit Carl W. Turnipseed1 PHILADELPHIA 19105 Joan Carter Vacant Charisse R. Lillie William H. Stone, Jr. CLEVELAND* 44101 David H. Hoag Jerry L. Jordan To be announced Sandra Pianalto Cincinnati 45201 George C. Juilfs Barbara B.Henshaw Pittsburgh 15230 John T. Ryan, III Robert B. Schaub RICHMOND* 23219 Jeremiah J. Sheehan J. Alfred Broaddus, Jr. Wesley S. Williams, Jr. Walter A. Varvel Baltimore 21203 George L. Russell, Jr. 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 D. Bruce Carr Andre T. Anderson Jacksonville 32231 William E. Flaherty Robert J. Slack Miami 33152 Karen Johnson-Street James T. Curry III Nashville 37203 Frances F. Marcum Melvyn K. Purcell1 New Orleans 70161 Dwight H. Evans Robert J. Musso1 CHICAGO* 60690 Arthur C. Martinez Michael H. Moskow Robert J. Darnall William C. Conrad Detroit 48231 Timothy D. Leuliette 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 J. Stephen Barger Thomas A. Boone Memphis 38101 Mike P. Sturdivant, Jr. Martha Perine Beard MINNEAPOLIS 55480 James J. Howard Gary H. Stern Ronald N. Zwieg James M. Lyon Helena 59601 William P. Underriner 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. H. B. Zachry, Jr. Helen E. Holcomb El Paso 79999 Beauregard Brite White Sammie C. Clay Houston 77252 Edward O. Gaylord Robert Smith, III1 San Antonio 78295 Patty P. Mueller 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