Federal Reserve Bulletin, 2000-11

Volume 86 • Number 11 • November 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 711 CRA SPECIAL LENDING PROGRAMS Securities and Exchange Commission (SEC) and focuses on the SEC's proposal to limit internal The Community Reinvestment Act (CRA) of audit outsourcing by external auditors. He states 1977 encourages federally insured banking instithat the SEC's proposal would generally exclude tutions to help meet the credit needs of their an auditor frQm performing both external and communities, including those of lower-income internal audits for the same client; from the areas, in a manner consistent with their safe and perspective of a banking supervisor, the Board sound operation. In responding to the CRA, supports the SEC's proposal to limit the external many banking institutions have sought to expand auditor's role in the internal audit function of lending to lower-income populations through its clients (Testimony before the SEC hearing "special lending programs" that seek out and held at Pace University, New York, New York, assist such borrowers in a variety of ways. These September 13, 2000). programs, many of which include third parties such as government agencies and nonprofit groups, are often an important element of an 737 Alan Greenspan, Chairman, Board of Goverinstitution's CRA-related lending. nors, discusses his views on improving mathematics and science education in U.S. elemen- Many institutions have conducted such protary and secondary schools and states that with grams, some for many years. Although the the conceptual demands on our workers continucharacteristics of these programs and their ing to rise, substantial further progress needs to implementation vary greatly across banking be made in raising the analytic competency of institutions, little systematic information about our graduating high-school seniors. He testifies them has been available. To further the underfurther that we must strive to increase math and standing of CRA special lending programs, this science achievement so that our students can article uses data from a recent Federal Reserve take advantage of the considerable opportunities Board survey to provide new information on the that will exist in tomorrow's labor market (Testinature of these programs, their characteristics, mony before the House Committee on Educaand how these characteristics relate to the pertion and the Workforce, September 21, 2000) formance (delinquency and default rates) and profitability of the loans extended through them. 740 ANNOUNCEMENTS 732 INDUSTRIAL PRODUCTION AND CAPACITY Federal Open Market Committee directive. UTILIZATION FOR SEPTEMBER 2000 Appointment of chairmen and deputy chairmen Industrial production rose 0.2 percent in Septemof the Federal Reserve Banks for 2001. ber. At 146.0 percent of its 1992 average, industrial production was 5.7 percent higher than in Amendment to Regulation Z to revise the September 1999. The rate of capacity utilization requirements for credit card disclosures. for total industry held steady at 82.2 percent in Joint agency proposal to revise capital rules for September, a level 0.2 percentage point above residual interests. its 1967-99 average. Issuance by the Basel Committee of guidance on managing risk in banking. 735 TESTIMONY OF FEDERAL RESERVE Proposal to remove barriers to electronic check OFFICIALS presentment. Laurence H. Meyer, member, Board of Gover- Meeting of the Consumer Advisory Council. nors, discusses the rules governing auditor independence that have been proposed by the Enforcement actions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Changes in Board staff. A3 GUIDE TO TABULAR PRESENTATION Errata: Federal Reserve Bulletin table. A4 Domestic Financial Statistics A42 Domestic Nonfinancial Statistics 745 MINUTES OF THE MEETING OF THE A50 International Statistics FEDERAL OPEN MARKET COMMITTEE HELD ON AUGUST 22, 2000 A63 GUIDE TO STATISTICAL RELEASES AND TABULAR PRESENTATION At this meeting, the Committee voted to maintain the existing stance of monetary policy, A78 INDEX TO STATISTICAL TABLES keeping its target for the federal funds rate at 6V2 percent. The Committee also indicated that A80 BOARD OF GOVERNORS AND STAFF the risks continue to be weighted mainly toward conditions that may generate heightened infla- A82 FEDERAL OPEN MARKET COMMITTEE AND tion pressures in the foreseeable future. STAFF; ADVISORY COUNCILS 751 LEGAL DEVELOPMENTS A84 FEDERAL RESERVE BOARD PUBLICATIONS Various bank holding company, bank service corporation, and bank merger orders; and pend- A86 MAPS OF THE FEDERAL RESERVE SYSTEM ing cases. A88 FEDERAL RESERVE BANKS, BRANCHES, A1 FINANCIAL AND BUSINESS STATISTICS AND OFFICES These tables reflect data available as of September 27, 2000. 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

CRA Special Lending Programs Robert B. Avery, Raphael W. Bostic, and Glenn B. BACKGROUND Canner, of the Board's Division of Research and Statistics, prepared this article. The CRA was enacted in response to concerns that banking institutions were, in some instances, failing Increasing the flow of credit to lower-income house- to adequately seek out and help meet the credit needs holds and communities has been the focus of many of viable lending prospects in all sections of their public-sector programs, such as those of the Federal communities. It directs the federal regulators of bank- Housing Administration and the Rural Housing Ser- ing institutions (the Board of Governors of the Fedvice. Government regulation of private-sector activi- eral Reserve System, the Federal Deposit Insurance ties is often used to bolster such lending. The most Corporation, the Office of the Comptroller of the prominent example of the latter approach is the Currency, and the Office of Thrift Supervision) to Community Reinvestment Act (CRA). The CRA was encourage the federally insured institutions they reguenacted in 1977 to encourage federally insured bank- late to help meet community credit needs in a manner ing institutions (commercial banks and savings asso- consistent with safe and sound operations. ciations) to help meet the credit needs of their com- The CRA is likely to influence the behavior of munities, including those of lower-income areas, in a banking institution primarily through two mechaa manner consistent with their safe and sound nisms: an examination and ratings system and the operation. formation of public opinion. Under the examinations In responding to the CRA, banking institutions and ratings system, regulators periodically visit the have sought to expand lending to lower-income popu- institution to assess the degree to which its lending lations in a variety of ways, but the approaches can is adequately serving its entire community. The be sorted into two broad types, both typically involv- CRA regulations guiding these examinations—jointly ing special marketing and outreach. In one approach, issued by the four federal banking agencies— lenders have sought CRA-related customers who emphasize an institution's record of serving the credit would qualify for market-priced loans under tradi- needs of low- and moderate-income populations tional standards (underwriting guidelines) for credit- within its CRA assessment area (see box "The CRA worthiness. In the second type of effort, lenders have Regulations"). Each examination is followed by the sought customers by modifying their underwriting assignment of a rating that is based on both quantitaguidelines or loan pricing. tive and qualitative measures of the institution's To expand lending to lower-income populations performance. through either approach, many banking institutions An important aspect of the examination and ratings have developed or joined "CRA special lending pro- system is the statutory provision that requires regulagrams," which seek out and assist such borrowers in tors to consider the record of a banking institution in a variety of ways. These programs vary greatly across meeting the goals of the act when deciding on applibanking institutions, differ widely in terms of their cations from that institution. In considering an applicharacteristics and how they are implemented, and cation from an institution with a performance probcan often be an important element of a banking lem under the CRA, the regulators can—depending institution's CRA-related lending activities. Although on the degree of the problem—potentially deny the many institutions have offered special lending pro- application or require the institution to meet certain grams, some for many years, little systematic infor- conditions in order to obtain approval. mation is available about them. To further the under- A second mechanism by which the CRA can influstanding of these CRA special lending programs, this ence the behavior of banking institutions is through article provides new information on the nature of the force of public opinion. In August 1989 the these programs, with particular emphasis placed on Congress amended the CRA to require each banking their characteristics and how these characteristics institution to allow public inspection of its examinarelate to the performance (delinquency and default tion ratings and supporting written evaluation. Such rates) and profitability of the loans extended through disclosure can influence the relationships that bankthem. ing institutions have with potential investors, deposi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Federal Reserve Bulletin • November 2000 tors, and borrowers. It may, for example, influence ments can play in applications, such as for mergers the nature and extent of public comments received on and acquisitions, those banking institutions that an application for a merger or acquisition. It may also anticipate making such applications are likely to be influence decisions made by potential depositors, who particularly sensitive to CRA considerations. may direct their funds to those institutions with the In spite of a wealth of experience by banking highest CRA performance ratings. institutions in undertaking CRA-related lending Banking institutions thus have incentives to activities, little systematic information has been pubrespond to the CRA. First, banking institutions have licly available about those activities. For example, an incentive to engage in CRA-related activities to while banking institutions are known to use third enhance their CRA performance rating. In addition, parties to help reach certain targeted populations, they have an interest in maintaining a good public little information is available on the nature and preimage, which may be supported by a good CRA valence of these relationships. performance rating or by other CRA-related activi- Also, there is reason to believe that the overall ties. Moreover, because of the potentially important performance and profitability of CRA-related loans role that CRA performance ratings and public com- may differ from those of loans extended to other The CRA Regulations The regulations that implement the CRA set forth three tests For the lending test, the regulations implementing the by which the performance of most large retail banking CRA require the federal banking regulatory agencies to institutions is evaluated: an investment test, a service test, evaluate the geographic distribution of a banking instituand a lending test. tion's lending in two ways: (1) the proportion of all the The investment test considers a banking institution's institution's loans that are extended within its assessment qualified investments that benefit the institution's assess- area and (2) for loans within the institution's assessment ment area or a broader statewide or regional area that area, their distribution across neighborhoods of differing includes its assessment area.1 A qualified investment is a incomes. In the latter measure, lending in low- and lawful investment, deposit, membership share, or grant that moderate-income neighborhoods is weighted heavily in has community development as its primary purpose. CRA performance evaluations.2 The service test considers the availability of an institu- The CRA regulations also require the banking agencies tion's system for delivering retail banking services and to evaluate the distribution of a banking institution's lendjudges the extent of its community development services ing within its assessment area across borrowers of different and their degree of innovativeness and responsiveness. economic standing. This provision was added as part of Among the assessment criteria for retail banking services revisions made to the CRA regulations in 1995. The exact are the geographic distribution of an institution's branches definition of economic standing varies with the loan product and the availability and effectiveness of alternative systems being examined. For residential mortgage lending products, for delivering retail banking services, such as automated CRA assessments consider the distribution of loans across teller machines, in low- and moderate-income areas and to low-, moderate-, middle-, and upper-income borrowers, low- and moderate-income persons. with a special focus on lending to low- and moderate- The lending test involves the measurement of lending income borrowers.3 For small business lending products, activity for a variety of loan types, including home mort- assessments consider the distribution of small loans (loans gage, small business, and small farm loans. Among the of $1 million or less) across businesses with differing levels assessment criteria are the geographic distribution of lend- of revenue, with a particular focus on loans to firms with ing, the distribution of lending across different types of annual revenues of $1 million or less. borrowers, the extent of community development lending, and the use of innovative or flexible lending practices to 2. The distribution of loans by neighborhood income is assessed for four address the credit needs of low- or moderate-income indi- income groups: low, moderate, middle, and upper. In a low-income area (typically a census tract), the median family income is less than 50 percent of viduals or areas. the median family income for the broader area (such as a metropolitan statistical area or the nonmetropolitan portion of a state) as measured in the most recent decennial census. In a moderate-income area, the median family income is at least 50 percent and less than 80 percent of that for the broader 1. For purposes of evaluating CRA performance, each institution must area. In a middle-income area, the percentage ranges from at least 80 percent delineate the geographic areas that constitute its CRA assessment area. For a to less than 120 percent. And in an upper-income area, the percentage is at retail-oriented banking institution, the institution's CRA assessment area least 120 percent. must include the areas in which the institution operates branches and deposit- 3. Borrower income categories follow the same groupings as those for taking automated teller machines and any surrounding areas in which it neighborhoods but rely on the borrower's income relative to that of the originated or purchased a substantial portion of its loans. For a more concurrently measured median family income of the broader area (metropolicomplete description of these issues, see 12 CFR 228.41. tan statistical area or nonmetropolitan portion of the state). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 713 customers. The costs and possibly lowered revenues Responses to part B of the survey provide the data resulting from special marketing and outreach and that form the basis of the analysis presented in this from modified underwriting or loan pricing may article. The analysis focuses primarily on CRA spemake CRA-related loans less profitable than other cial lending programs exclusively offering home purloans. chase and refinance loans, as survey responses indi- Moreover, the performance and profitability of cated that most special lending programs were of this CRA-related loans, whether or not they were origi- type. nated through extra efforts or nontraditional standards, may differ from those of non-CRA-related loans simply because the two loan groups have differ- SURVEY RESPONSES REGARDING CRA SPECIAL ing characteristics. CRA-related loans might, for LENDING PROGRAMS example, be smaller on average than other loans, which would make them relatively costly to originate The Federal Reserve Board survey is the first systemand administer, or they might be less likely than other atic collection of information on the characteristics, loans to be prepaid, a tendency that would also affect performance, and profitability of CRA special lendtheir profitability.1 Despite widespread interest in the ing programs from a broad base of institutions. As topic, little has been known about the performance such, it provides a unique opportunity to learn about and profitability of the loans that are made in con- the characteristics of CRA special lending programs formity with the CRA regulation. and relate these characteristics to the performance To learn more about CRA-related lending activi- and profitability of programs. ties, the Congress in November 1999 asked the Board of Governors of the Federal Reserve System to conduct a comprehensive study of the issue.2 To this end, the Board conducted a special survey of the largest Participation in the Survey retail banking institutions to collect information on their lending experiences (see box "Participation in the Survey").3 The survey was in two parts. Part A Participation by banking institutions in the Federal Reserve Board's Survey of the Performance and Profitfocused on an institution's total lending and its CRAability of CRA-Related Lending was voluntary. On Janurelated lending in four broad loan product categories: ary 21, 2000, each prospective respondent was mailed a one- to four-family home purchase and refinance copy of the questionnaire accompanied by a cover letter lending, one- to four-family home improvement lendfrom Federal Reserve Board Chairman Alan Greenspan ing, small business lending, and community develop- explaining the purpose of the survey and seeking volunment lending. tary cooperation in the study. The sample of institutions In part B, the survey gathered extensive informa- selected to participate in the survey consisted of roughly tion on CRA special lending programs, defined as the largest 500 retail banking institutions—400 commerprograms that banking institutions have established cial banks and 100 savings associations. The sample was limited to the largest banking institutions because they (or participate in) specifically to enhance their CRA account for the vast majority (estimated at more than performance, even if these programs may have been 70 percent) of CRA-related lending nationwide. Survey established for other reasons as well. Because these responses were received from 143 banking institutions— programs are often an important element of a banking 114 commercial banks and 29 savings associations. institution's overall efforts to comply with the CRA, Despite their relatively small number, the 143 survey the survey collected information on many of their respondents accounted for about one-half of the assets of characteristics, including the performance and profit- the more than 10,000 U.S. banking institutions in existability of the lending extended under the programs. ence as of December 31,1999. Response rates varied markedly by the asset size of the 1. Lower-income homeowners may have lower rates of mobility institution. More than 80 percent of the largest surveyed than other homeowners and consequently a reduced propensity to banking institutions (assets of $30 billion or more as of prepay their home purchase loans. The reduced propensity would December 31, 1999) returned a survey (27 out of increase the value of the loan to the lender during periods of falling 33 sampled institutions in this asset category). In coninterest rates but decrease it when interest rates are rising. 2. Section 713 of the Gramm-Leach-Bliley Act of 1999 trast, only about 19 percent (72 out of 363) of the (P.L. No. 106-95). smallest surveyed banking institutions (assets of between 3. A report summarizing the major findings of the survey was $0,950 billion and $4,999 billion) responded. Institutions submitted to the Congress and made available to the public on July 17, with assets of between $5 billion and $29,999 billion had 2000. The report and the survey questionnaire are available on a response rate of about 40 percent. the Federal Reserve Board's web site, at www.federalreserve.gov/ boarddocs/surveys/CRAloansurvey. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin • November 2000 In the survey, banking institutions were asked to Of these, 143 institutions responded (table l).6 provide detailed information on the 1999 activity of Respondents offered or participated in 622 CRA spetheir CRA special lending programs, defined as any cial lending programs in 1999. Seventy-three percent housing-related, small business, consumer, or other of the responding institutions offered at least 1 CRA type of lending program that the institution uses special lending program; on average the institutions specifically to enhance its CRA performance.4 For with programs offered about 6 programs. To limit the the survey, CRA special lending programs could burden of responding to the survey, the survey sought include special programs offered or developed in detailed information on only the 5 largest of a bankconjunction with third parties, such as lending con- ing institution's CRA special lending programs sortiums, nonprofit organizations, or government (measured by dollar volume of originations in 1999), agencies that offer special lending programs in which a restriction that produced detailed information for an institution participates.5 341 programs. These 341 programs are estimated The survey was sent to the 500 largest retail to account for 91 percent of the loan dollars that banking institutions in existence at the end of 1999— responding institutions extended under CRA special 400 commercial banks and 100 savings associations. lending programs in 1999. CRA special lending programs are often complex in design and can involve many features and a diverse 4. A program would meet this definition only if one of the program's documented purposes was to enhance the institution's CRA performance. 6. One of these institutions did not answer any questions in the 5. However, traditional government-backed lending programs, such special lending portion of the survey and is excluded from the tables. as those offered by the Federal Housing Administration, the Depart- Respondent institutions are grouped into three asset-size categories: ment of Veterans Affairs, and the Small Business Administration, $0,950 billion to $4,999 billion; $5 billion to $29,999 billion; and were not considered to be CRA special lending programs for the $30 billion or more. Institutions in the first two categories together purposes of the survey unless an institution provided a special (assets of $0,950 billion to $29,999 billion) will be referred to below enhancement, such as credit counseling, a homebuyer education pro- as "smaller" institutions, and those with assets of $30 billion or more gram, or a waiver or reduction of loan fees. will be referred to as "large." 1. Banking institutions and CRA special lending programs covered in survey, by size of institution, 1999 Size of banking institution (assets, in millions of dollars) AAllll rreeppoorrttiinngg IItteemm iinnssttiittuuttiioonnss 950-4,999 5,000-29,999 30,000 or more Institutions Number responding to survey1 142 72 43 27 Offering at least one program Number 103 48 31 24 Percent 73 67 72 89 Number of programs Among the five largest at each institution2 341 138 116 87 Smaller than the five largest at each institution 281 31 139 111 Total Number 622 169 255 198 Mean number per institution offering at least one program 6.0 3.5 8.2 8.3 Number of programs among the five largest at each institution, by type of loan offered One- to four-family home, purchase and refinance only3 247 98 8833 6666 Small business only 27 17 4 6 Other 67 23 29 15 One- to four-family home, home improvement only 17 7 6 4 Multifamily only 16 6 8 2 Consumer only 5 1 3 1 Commercial only 4 1 3 0 Other4 25 8 9 8 Programs among the five largest at each institution operated by a distinct unit or department of institution Percentage of institutions among those with programs 67 60 77 9922 Percentage of programs among the five largest 63 56 75 80 1. Excludes one institution (in the middle size category) that did not respond in subsequent tables involve only the 247 programs reported in this row to the special lending portion of the survey. For more information on the sample (referred to hereafter as CRA special mortgage programs). size, see text box "Participation in the Survey." 4. Programs identified as such by survey respondents and programs that offer 2. Institutions were asked for detailed information on only the five largest of more than one type of loan. their programs (measured by dollar volume of 1999 originations). 3. Programs reported in this row and the remaining rows of this table are from among the 341 reported by all institutions to be among their 5 largest. Data Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 715 group of market participants. As a consequence, the established these programs for a variety of reasons operation of some of these programs requires consid- that go beyond their efforts to enhance their CRA erable training and experience. To facilitate the effi- performance, the survey asked respondents to procient implementation of these programs, many bank- vide information on both the reasons for which they ing institutions establish distinct units or departments originally adopted these programs and the current within the institution to run their CRA special lend- benefits they receive from the programs. ing programs. Among the banking institutions that In table 1, data in the "all reporting institutions" offered at least one special lending program, 67 per- column were taken from the 142 institutions respondcent had at least one program operated by a distinct ing to part B of the survey. In the analysis that unit or department (table 1). Larger banking institu- follows (covering data reported in table 2 and subtions in the sample were more likely than smaller sequent tables), figures in the "all-institutions estiinstitutions to offer programs through a distinct mate" column are also based on the responses of unit or department. Overall, of the special programs the 142 institutions, but these responses have been that each institution reported to be among its five weighted so that the figures represent an estimate of largest, 63 percent were operated by a distinct unit or what the responses would have been if all 500 institudepartment. tions had responded to the survey and provided Before the survey was conducted, CRA special answers to all applicable questions (see box "Calculending programs had been known to involve a range lating the 'All Institutions Estimate' "). of credit products, but no information was available on the incidence of special lending programs across loan product categories. Results of the survey The Size and Age of Individual Programs revealed that 72 percent of the programs (and 89 percent of the program dollars originated in 1999) for Survey responses indicate that in 1999 the dollar which banking institutions provided detailed informa- amount of loans extended under all CRA special tion focused on one- to four-family home purchase lending programs made up a relatively small portion and refinance loans. The next largest category of of total CRA-related lending in that year for most CRA special lending programs, comprising 8 percent reporting institutions (see box "Survey Definition of of reported programs, focused on small business a CRA-Related Loan"). In the case of home purchase loans. The remaining programs cover a variety of and refinance loans, the proportion of CRA-related loan products, none of which individually accounted home purchase and refinance loan dollars that were for a substantial proportion of all programs. extended under CRA special mortgage programs was Because CRA special lending programs concen- only 4 percent for the median banking institution. trating on home purchase and refinance loans consti- Among the institutions that had CRA special morttute most of the CRA programs reported in the sur- gage programs, the proportion was 18 percent for the vey, the analysis in the remainder of this article median institution. For about one-sixth of all institu- (covering the data in table 2 and subsequent tables) tions in the survey, however, CRA special mortgage focuses exclusively on these programs. The relatively programs accounted for more than 40 percent of their small number of programs that were reported to focus CRA-related home purchase and refinance loan dolon small business and other lending products pre- lars (data not shown in tables).7 cludes a comprehensive analysis of them. For sim- In the aggregate, CRA special mortgage proplicity, we will hereafter usually refer to CRA special grams made up 21 percent of the total dollars of lending programs that focus on home purchase CRA-related home purchase and refinance loans and refinance loans as "CRA special mortgage originated by reporting institutions (and only 3 perprograms." cent of the total dollars of home purchase and refinance originations).8 Information reported also suggests that individual THE CHARACTERISTICS OF CRA SPECIAL CRA special mortgage programs are generally small. MORTGAGE PROGRAMS For 1999, an estimated 31 percent of the CRA special mortgage programs reported in the survey had total The survey was designed to collect information that would shed light on the diversity of characteristics, 7. The proportions of lending for home improvement and small both within and across banking institutions, among business that were conducted through CRA special lending programs were much lower than for home purchase or refinance. CRA special lending programs. In addition, because 8. Estimates are derived from responses to questions in part A of it was recognized that banking institutions may have the survey. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin • November 2000 originations of $500,000 or less, and about 28 per- Reasons for Establishing CRA Special cent had total originations of between $500,000 and Mortgage Programs and Current Benefits $2 million; only 18 percent had originations of more than $15 million (table 2). Banking institutions cite many reasons for originally The size of CRA special mortgage programs varied establishing or participating in CRA special mortwith the asset size of the banking institution, as gage programs (table 3). Responding to the credit programs tended to be larger for the largest banks in needs of the local community and promoting comthe survey (data not shown in tables). The median munity growth and stability are the two most fresize of CRA special mortgage programs for large quently cited reasons. The third most frequently cited banks (those with assets of $30 billion or more) was reason (for 76 percent of these programs) was to about $36 million; for the smallest banks in the obtain a "Satisfactory" or "Outstanding" CRA ratsample (those with assets of $0,950 billion to ing. However, only 1 percent of CRA special mort- $4,999 billion) the median size of CRA special mort- gage programs are reported to have been estabgage programs was about $680,000. lished only to obtain a satisfactory or outstanding Most of the CRA special mortgage programs that CRA rating. The fourth most frequently cited reason were reported in the survey were established rela- (also mentioned for more than half the programs) was tively recently. More than half (62 percent) were to improve the institution's public image. established after the CRA regulations were modified The pattern of reasons for establishing programs in 1995 (table 2); only 6 percent of the programs does not vary greatly by size of reporting institution were established before 1990. This pattern is consis- in most cases; but large banking institutions were tent with the small size of many programs, as newer more likely than smaller institutions to cite a desire to programs tended to be smaller. improve their public image, to maintain their market Calculating the "All-Institutions Estimate" The appropriateness of the "all-institutions estimate," An additional adjustment problem in calculating reported in table 2 and subsequent tables, relies upon the responses for the all-institutions estimate arises from the validity of the assumptions needed to construct it. Key fact that some questions were not answered by a significant assumptions are those related to the treatment of sample and proportion of respondents. For questions with a significant question nonresponse. The proportion of banking institu- number of nonresponses (tables 7-11), an additional adjusttions that responded to the survey varied significantly by ment factor, also based on asset size, was applied to correct asset-size group (see preceding box "Participation in the for the varying propensities within the asset-size classes to Survey"); as a consequence, unless behavior is the same for answer questions. institutions across different asset-size categories, simple The general procedure used to calculate questionaverages based on the answers provided by respondents will response adjustment factors was to assume that respondents distort the picture of what the survey responses would have within an asset-size category that did not provide an answer been if all 500 institutions had provided answers to all to a question would have the same response pattern as those applicable questions. that did. Thus, the number of respondents who answered To address this concern, the data in the "all-institutions each question was scaled up to represent those who did not estimate" column are calculated, in part, on the basis of answer. Respondents for whom a question was not applicaadjustment factors reflecting the relative response rates for ble were not used in calculating the all-institutions estirespondents in the three asset-size classes. The sample mates. For example, if 24 respondents were asked a quesresponse adjustment factor for respondents with assets of tion and 12 provided an answer, each of the 12 was $30 billion or more is 1.2 (or 33 + 27), that is, of the multiplied by 2 to represent a total of 24 institutions. 33 institutions in the category, 27 responded). Similarly, Question-response adjustment factors were calculated sepathe sample response adjustment factor for respondents rately for each asset-size category because the responses with assets of $5 billion to $29,999 billion is 2.4 (or varied by asset size. 104 -s- 44); and for respondents with assets of $0,950 billion Data in the all-institutions estimate column in tables 7-11 to $4,999 billion, the adjustment factor is 5.0 (or 363 - 72).1 are computed with the question-response adjustments in conjunction with the sample-response adjustments. For example, if the 12 respondents in the example above were large institutions, the total response adjustment for each of the 12 institutions that provided an answer would be 2 x (33 1. This procedure assumes that the respondents within an asset-size category are representative of all institutions in that category. + 27), or 2.44. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 11 2. CRA special mortgage programs, grouped by size of banking institution and distributed by size and age of program, 1999 Percentage of programs Size of banking institution (assets, in millions of dollars) AAllll--iinnssttiittuuttiioonnss IItteemm eessttiimmaattee11 950-4,999 5,000-29,999 30,000 or more Size of program (loan dollars originated in 1999) 500,000 or less 31 44 11 3 More than 500,000 to 2 million 28 32 25 8 More than 2 million to 15 million 24 21 29 24 More than 15 million 18 3 35 65 Total 100 100 100 100 Year program established Before 1990 6 5 7 10 1991-94 32 29 42 28 1995-97 43 43 41 47 1998-99 19 23 11 15 Total 100 100 100 100 NOTE. See table 1, note 3, for scope of data in this and subsequent tables. to the survey; for tables 7—11, adjusted value (not shown in tables) based on the Components may not sum to 100 because of rounding. rates of response to the survey and to the particular question (for more informa- 1. Average of values for the three asset-size categories after adjustment; for tion, see text box "Calculating the 'All-Institutions Estimate' "). tables 2-6, adjusted value (not shown in tables) based on the rates of response share of lending, and to minimize the likelihood of special mortgage programs. Obtaining either a satisadverse public comment on their CRA record. factory or outstanding CRA rating was, again, the That only about three-fourths of CRA special mort- third most frequently mentioned benefit (for 80 pergage programs were reportedly established to achieve cent of the programs), but also as before, this was a satisfactory or outstanding CRA rating may be cited as the only current benefit for just 1 percent of somewhat puzzling, given that the survey explicitly the programs. Responding to the credit needs of the asked institutions to report only on special lending local community, promoting community growth and programs that had as one of their documented pur- stability, and improving the public image of the instiposes enhancement of the institution's CRA perfor- tution are also frequently cited current benefits of mance. One possibility is that some of the programs these CRA special lending programs. that support the CRA-related lending activities of institutions are not considered by the institutions to be "needed" to obtain a particular CRA rating. A Features of CRA Special Mortgage Programs second possibility is that the support of CRA-related activities is a documented purpose of some programs, Almost all CRA special mortgage programs were but a relatively minor one. targeted to populations that are emphasized in the Banking institutions reported receiving a variety of CRA regulations: lower-income borrowers and borcurrent benefits from offering or participating in CRA rowers in lower-income neighborhoods. Most programs targeted both of these populations (table 4). When only one population was targeted, it was much Survey Definition of a CRA-Related Loan more likely to be lower-income borrowers than lower-income neighborhoods. In conducting the study of the performance and profit- Third parties played a role in about three-fourths of ability of loans made in conformity with the CRA, the CRA special mortgage programs (table 5). Third Board used the current CRA regulations as a guide in parties involved in the programs included public entiestablishing a definition of a "CRA-related loan." As ties at all levels of government and a range of fornoted, the regulations require the banking agencies to profit and nonprofit private-sector firms and organizaevaluate the geographic distribution of lending and the tions. Some programs (31 percent in the survey, not distribution of lending across borrowers of different ecoshown in tables) involved the active participation of nomic standing (see box "The CRA Regulations"). As a multiple third parties.9 result, for purchase and refinance lending on one- to four-family homes, a CRA-related loan was defined to mean any loan made within the banking institution's CRA assessment area to a low- or moderate-income borrower (regardless of neighborhood income) or in a 9. Programs at large banking institutions were more likely than low- or moderate-income neighborhood (regardless of those at smaller institutions to involve multiple third parties. Therefore the percentages shown in table 5 for each type of entity are larger borrower income). for large institutions than for smaller institutions even though the likelihood of participation by any third party is about the same. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • November 2000 3. Reasons for establishing CRA special mortgage programs and their current benefits to the banking institution, by size of institution, 1999 Percentage of programs Size of banking institution (assets, in millions of dollars) AAllll--iinnssttiittuuttiioonnss IItteemm eessttiimmaattee 950-4,999 5,000-29,999 30,000 or more Reasons for establishing program Help earn a CRA rating of "Satisfactory" or "Outstanding" Cited as only reason 1 1 0 Cited as one reason among others 76 74 86 For a rating of "Satisfactory" 37 40 35 21 For a rating of "Outstanding" 52 42 75 59 Respond to credit needs of local community 95 93 99 96 Promote community growth and stability 80 74 92 91 Improve institution's public image 51 40 76 65 Earn additional profits 46 39 65 42 Identify profitable new markets 44 41 53 41 Maintain market share in face of increased competition 42 31 61 64 Minimize likelihood of adverse public comment on CRA record 31 22 47 52 Other 3 3 4 3 Current benefits from program Helps earn a CRA rating of "Satisfactory" or "Outstanding" Cited as only reason 1 1 0 2 Cited as one reason among others 80 80 86 73 For a rating of "Satisfactory" 41 44 43 17 For a rating of "Outstanding" 53 45 71 66 Responds to credit needs of local community 94 92 99 94 Promotes community growth and stability 87 83 94 94 Improves institution's public image 54 47 67 66 Earns additional profits 42 38 54 35 Identifies profitable new markets 37 33 45 42 Maintains market share in face of increased competition 50 38 73 71 Minimizes likelihood of adverse public comment on CRA record 38 30 54 52 Other I 1 2 0 NOTE. See notes to table 2, except that here components do not sum to 100 because respondents could give more than one answer. Although their roles vary across programs, third ing and for grants to cover the loan down payment, parties conduct a wide range of activities that contrib- while smaller institutions were more likely to use ute to the implementation of CRA special lending third-party underwriting services, credit guarantees, programs, including activities that reduce the costs and subsidies to borrowers for fees they incur in and risks of default that banking institutions might obtaining mortgage credit. otherwise incur in extending credit to the populations Apart from the efforts of third parties, many served by the special programs. The most frequently features of CRA special mortgage programs directly cited activities were providing grants for down pay- involved the banking institutions themselves ments or other purposes, providing pre-loan educa- (table 6). The most frequently mentioned were more tion or counseling to loan applicants, and helping flexible underwriting criteria, a second review of loan lenders identify prospective borrowers. Large bank- applicants to determine qualifications, special outing institutions were more likely than smaller institu- reach and marketing activities, waived or reduced tions to use third-party services for applicant screen- fees, pre-loan education or counseling to applicants, 4. CRA special mortgage programs, grouped by size of banking institution and distributed by targeted market, 1999 Percentage of programs Size of banking institution (assets, in millions of dollars) AAllll--iinnssttiittuuttiioonnss TTaarrggeett eessttiimmaattee 950-4,999 5,000-29,999 30,000 or more Lower-income targets Neighborhoods 666 666 444 888 Borrowers 222222 222444 111888 111777 Neighborhoods and borrowers 666999 666666 777666 777666 Other 333 444 222 000 Total 111000000 111000000 111000000 111000000 NOTE. See notes to table 2. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 719 5. Third-party involvement in CRA special mortgage programs, by size of banking institution, 1999 Percentage of programs Size of banking institution (assets, in millions of dollars) AAllll--iinnssttiittuuttiioonnss TThhiirrdd--ppaarrttyy ttyyppeess aanndd aaccttiivviittiieess eessttiimmaattee 950-4,999 5,000-29,999 30,000 or more Any 76 72 87 73 Type of third party (percentage of programs with third-party participation) Nonprofit organization 47 46 40 71 Local government 35 30 43 46 State government 30 19 47 48 Fannie Mae, Freddie Mac 24 13 43 33 Federal Home Loan Bank 22 20 25 23 Financial institution consortium 21 21 19 25 Federal government 17 13 21 31 Other 2 3 0 2 Third-party activities (percentage of programs with third-party participation) Services 70 73 63 75 Pre-loan education or counseling for applicants 57 60 47 67 Identification of potential borrowers 49 47 49 63 Screening of potential applicants 33 34 26 40 Post-loan education or counseling for borrowers 28 27 S25. 38 Underwriting 16 23 6 Assistance in servicing account 15 17 10 15 Second review of loan applicants 3 4 0 6 Subsidies 71 70 69 81 Grants for down payment or other purposes 60 59 58 71 Subsidized interest rates 27 24 36 19 Subsidized fees 24 27 21 15 Tax relief (credits or exemptions) 3 1 3 17 Assumption of risk 49 49 42 65 Subordinate mortgages 36 33 35 60 Credit guarantees 16 20 8 8 Miscellaneous 13 6 29 17 Purchase of broker loans 12 4 28 17 Other 1 1 1 0 NOTE. See notes to table 2, except that here components do not sum to 100 because respondents could give more than one answer. and reduced interest rates. The proportion of CRA offset these apparent additional risks through steps special mortgage programs that offered any given they often take in conjunction with these underwritfeature varied somewhat across institution size ing variances, such as pre-loan education and counclasses, although the smallest institutions were less seling and enhanced monitoring of borrower payment likely to conduct the two major services-type patterns. activities—special outreach and marketing and preloan education or counseling—and less likely to conduct a second review of applicants. PERFORMANCE AND PROFITABILITY OF CRA The alteration of customary underwriting standards SPECIAL MORTGAGE PROGRAMS by banking institutions was a part of a large majority (83 percent) of special mortgage programs. The most Performance and profitability are important issues to frequently cited underwriting variances offered were consider in evaluating the long-term viability of CRA lower down payments; the acceptance of alternative special mortgage programs and the effect of these measures of credit quality, such as rent and utility programs on the financial condition of the banking payment histories, in lieu of more traditional mea- institutions that offer them. sures of credit risk; lower cash reserve requirements; and higher debt-to-income ratios. A large proportion of programs (58 percent) also allowed additional Performance flexibility when reviewing an applicant's employment history. The opportunity for borrowers to To assess the performance of CRA special mortgage qualify for credit using these additional underwriting programs, the survey focused on delinquency rates flexibilities suggests that loans made under CRA and net charge-off rates, which are closely related to special mortgage programs may have elevated rates default rates (see box "Measures of Performance"). of delinquency and default. Banking institutions may The survey used two measures of delinquency—the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin • November 2000 6. Program features and underwriting variances provided by institutions in their CRA special mortgage programs, by size of banking institution, 1999 Percentage of programs Size of banking institution (assets, in millions of dollars) AAllll--iinnssttiittuuttiioonnss FFeeaattuurree oorr uunnddeerrwwrriittiinngg vvaarriiaannccee eessttiimmaattee 950-4,999 5,000-29,999 30,000 or more Program feature1 Services 67 58 86 83 Special outreach and marketing activities 52 40 74 79 Pre-loan education or counseling for applicants 45 38 60 52 Post-loan education or counseling for borrowers 8 9 5 11 Other 3 4 1 5 Subsidies 72 74 65 80 Waived or reduced fees 51 56 40 46 Reduced interest rates 41 45 30 41 Waived PMI (private mortgage insurance) 30 33 21 39 Grants for down payment or other purposes 23 24 19 24 Special financial incentives to loan officers or brokers 21 15 28 46 Altered terms 88 89 84 88 More flexible underwriting criteria 76 80 65 80 Second review of loan applicants 55 48 68 70 Longer term of loan 10 12 10 0 Underwriting variances2 Yes 83 87 70 91 Variances (as a percentage of programs with any variances) Lower down payment 85 86 83 88 Alternative measures of credit quality (such as rent payments)... 79 76 88 82 Higher debt ratios 77 83 59 70 Lower cash reserve requirement 72 70 72 78 More flexible requirements for employment history 58 58 57 58 Lower standards for credit history 45 52 22 38 Provisions waived or reduced PMI or credit guarantee 40 43 26 45 Collateral 2 2 2 3 Compensating balances 8 7 9 12 Less documentation 14 16 5 20 Other 4 4 3 3 NOTE. See notes to table 2, except that here components do not sum to 100 2. Responses to part B, question 17, "Are your banking institution's custombecause respondents could give more than one answer. ary underwriting standards . . . altered under [the] program?" 1. Responses to part B, question 14, "What special features or services does your banking institution provide in connection with the program?" percentage of loan dollars 30-89 days past due and overall CRA-related home purchase and refinance the percentage of loan dollars 90 days or more past lending, and 0.78 percent for total home purchase and due or nonaccruing—that, like net charge-off rates, refinance lending. are commonly used in the industry and are regularly On the other hand, CRA special mortgage protracked and disclosed in regulatory reports filed by grams performed better than total home purchase and banking institutions.10 Both delinquency measures refinance lending when performance was assessed are calculated as of December 31, 1999, and the net using median values. For example, the median per charge-off rate is calculated over the calendar year program rate for loans that were delinquent 90 or 1999. more days or nonaccruing was 0.07 percent for CRA The relative performance of CRA special mortgage special mortgage programs and 0.53 percent for total programs varied with the measure of performance home purchase and refinance lending. considered. For delinquencies, survey responses indi- For net charge-offs, the zero rate for more than half cated that, on average, CRA special mortgage pro- of the CRA special mortgage programs could possigrams had lower rates than those for overall CRA- bly reflect the relative newness of many of the prorelated home purchase and refinance lending but grams as well as the influence of a number of other higher rates than those for an institution's total home factors, including more intensive screening of propurchase and refinance lending (table 7). For exam- spective borrowers, sometimes by third parties, ple, the mean rate for loans that were delinquent greater efforts to work with delinquent borrowers, 90 or more days or nonaccruing was 1.00 percent for and policies encouraging increased forbearance for CRA special mortgage programs, 1.42 percent for such programs. The performance of these programs appears to vary with the asset size of the banking institution 10. For commercial banks and some savings associations, it is the operating the program. On average, CRA special Report of Condition and Income (Call Report), and for the remaining savings associations, the Thrift Institution Financial Report. mortgage programs at large banking institutions had Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 721 7. Performance of CRA special mortgage programs, by size of banking institution, 1999 Percentage of loan dollars per program Size of banking institution (assets, in millions of dollars) MEMO: All-institutions estimate1 AAllll--iinnssttiittuuttiioonnss PPrrooggrraamm ppeerrffoorrmmaannccee mmeeaassuurree eessttiimmaattee All CRA-related All mortgage 950-4,999 5,000-29,999 30,000 or more mortgage loans2 loans3 Delinquencies4 30-89 days Mean 1.94 1.31 3.04 3.07 2.95 1.86 Median .50 .00 1.88 2.01 2.40 1.44 90 or more days or nonaccruing Mean 1.00 .59 1.72 1.70 1.42 .78 Median .07 .00 .91 1.06 .90 .53 Net charge-offs5 Mean .19 .09 .41 .36 .23 .14 Median .00 .00 .00 .05 .05 .02 NOTE. Results are for loans held in institution's portfolio. See also notes to 2. All of institution's CRA-related home purchase and refinance loans, table 2 and text box "Measures of Performance." whether or not part of a CRA special lending program. 1. Only institutions that reported performance of their CRA special mortgage 3. All of institution's home purchase and refinance loans, whether or not program loans as well as of all their CRA-related mortgage loans and of their CRA-related. total mortgage loans. The weights for calculating the all-institutions estimate 4. At year-end 1999. here are the number of CRA special mortgage programs offered by the 5. Total net charge-offs of program loan dollars during 1999 divided by respondents. average program loan dollars outstanding during 1999. higher delinquency and charge-off rates than pro- Profitability grams at smaller institutions. For example, at yearend 1999, the mean 30-89 day delinquency rate for The survey sought information on the profitability the CRA special mortgage programs of large banking of CRA special mortgage programs using return on institutions was 3.07 percent, while the mean for equity (ROE) as the preferred measure of profitability smaller institutions was 1.31 percent. (see box "Measuring Profitability"). Discussions 8. CRA special mortgage programs, grouped by size of banking institution and distributed by profitability category of program, 1999 Percentage of programs Size of banking institution (assets, in millions of dollars) MEMO: All-institutions estimate1 AAllll--iinnssttiittuuttiioonnss PPrrooggrraamm pprrooffiittaabbiilliittyy mmeeaassuurree eessttiimmaattee All CRA-related All mortgage 950-4,999 5,000-29,999 30,000 or more mortgage loans2 loans3 CRA special mortgage programs alone Profitable 29 34 19 20 37 61 Marginally profitable 35 38 35 20 40 33 Break-even 14 18 5 15 1 7 Marginally unprofitable 15 7 29 29 18 0 Unprofitable 7 4 12 16 4 0 Total 100 100 100 100 100 100 Relative to all CRA-related mortgage loans4 Lower 32 31 33 38 Same 50 55 43 42 Higher 17 15 24 20 Total 100 100 100 100 Relative to all mortgage loans5 Lower 59 49 77 78 Same 36 51 4 18 Higher 5 0 20 4 Total 100 100 100 100 NOTE. Results are for estimates of 1999 profitability. See also notes to table 2 4. Data derived from comparing the profitability category ("profitable" and text box "Measuring Profitability." through "unprofitable") in which respondents placed CRA special mortgage 1. Only institutions that reported profitability of CRA special mortgage program loans with the category in which they placed all of their CRA-related program loans as well as of all their CRA-related mortgage loans and of their home purchase and refinance loans. total mortgage loans. The weights for calculating the all-institutions estimate 5. Data derived from comparing the profitability category ("profitable" here are the number of CRA special mortgage programs offered by the respon- through "unprofitable") in which respondents placed CRA special mortgage dents. program loans with the category in which they placed all of their home purchase 2. All of institution's CRA-related home purchase and refinance loans, and refinance loans. whether or not part of a CRA special lending program. . . . Not applicable. 3. All of institution's home purchase and refinance loans, whether or not CRA-related. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • November 2000 with banking institutions in advance of the survey medium-sized institutions, small institutions (assets suggested that some of them might have difficulty of between $0,950 billion and $4,999 billion) calculating an ROE for individual loan programs. reported that a higher percentage of their CRA mort- Consequently, the survey also collected detailed gage programs were either profitable or marginally qualitative information on profitability as well: profitable and that a lower percentage were either Banking institutions were asked if each individual marginally unprofitable or unprofitable in 1999. For CRA special mortgage program was "profitable," example, small institutions reported that 72 percent "marginally profitable," "break even," "marginally of their CRA special lending programs were either unprofitable," or "unprofitable." The same question profitable or marginally profitable; large institutions was asked for overall CRA-related home purchase reported that only 40 percent of their programs were and refinance lending and total home purchase and either profitable or marginally profitable. refinance lending. Only the qualitative data are pro- This pattern—smaller institutions being more vided here because they were in fact far more fre- likely to report that their programs were quently reported than were the quantitative data. profitable—is consistent with the broader pattern According to respondents, the majority (64 per- observed for all CRA-related mortgage lending and cent) of CRA special mortgage programs were either could be the result of a number of factors. As one profitable or marginally profitable in 1999 (table 8). example, the pattern is consistent with the view that Twenty-two percent of the programs were considered smaller banking institutions have better knowledge of either marginally unprofitable or unprofitable. Experi- their local markets and more familiarity with local ence varies across reporting banking institutions borrowers, which could result in less risky loan portgrouped by asset size. Compared with large and folios derived from better assessments of the risks Measures of Performance Given a definition of performance in terms of delinquency • A lender forecloses on the property to gain title to the or default, one can measure performance in either of two asset securing the loan ways. One method is to consider performance at the loan • The borrower chooses to give the lender title to the level by calculating the percentage of loans that are delin- property securing the loan "in lieu of foreclosure" quent or in default. The second method is dollar-based: The • The borrower sells the property securing the loan oblidollars or costs (in dollars) associated with delinquent or gation and makes less than full payment on the obligation defaulted loans are summed and compared with the total • The lender renegotiates or modifies the terms of the dollars of loans outstanding. This article uses the dollar- loan and forgives some or all of the delinquent principal and based measure of performance. interest payments. Loan modifications may take many For the definition of loan performance, many people forms, including a change in the interest rate on the loan, an are familiar with the terms "delinquency" and "default." extension of the length of the loan, and an adjustment of the Delinquency occurs when a borrower fails to make a sched- principal balance due. uled payment on a loan in a timely manner and in full. Because loan payments are typically due monthly, the lend- Regardless of the definition of default used, a dollaring industry customarily categorizes delinquent loans as based measure of it could be computed, but the measure either 30, 60, 90, or 120 or more days late depending on the would not take into account the losses associated with length of time the oldest unpaid loan payment has been default, which may be more or less than the loan amount. overdue.1 The actual losses are the unpaid principal and interest plus Technically, default occurs at the same time as delin- ancillary out-of-pocket costs, such as those of collection, quency; that is, a loan is in default as soon as the borrower less any amounts recovered. misses a scheduled payment. However, the term "default" As a consequence, a related dollar-based measure of is not generally used this way in the mortgage market, default—net charge-offs—is often used instead. For a given where it has, instead, a variety of other definitions. Among loan, the net charge-off is the total dollars owed at default them are these four: (including the ancillary out-of-pocket costs) minus any subsequent recoveries. The institution-based net charge-off rate is calculated by summing its loan-level net charge-offs 1. For purposes of reporting on delinquency experience in the Report of over a period of time (a year, for example) and dividing this Condition and Income (for commercial banks) and the Thrift Institution Financial Report (for savings associations), institutions typically group delin- amount by the average outstanding loan balances (including quent loans into three broad categories: 30-89 days past due and still delinquent loans) over the period. In this article, the instituaccruing interest. 90 days or more delinquent and still accruing interest, and tional net charge-off rate is used as the measure of default. nonaccruing. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 723 associated with prospective borrowers. As a second gage lending and 94 percent of overall home purexample, the pattern is also consistent with the view chase and refinance lending programs were reported that smaller institutions are less likely to be involved to be at least marginally profitable (table 8, memo). in mergers and hence are less subject to some of the A second approach compares the 1999 profitability lending incentives associated with the CRA. In this of CRA special mortgage programs with that of other view, smaller institutions would be less inclined to loan groups within each institution. That is, survey provide services that adversely affect profitability. responses by an individual institution regarding the The accuracy of conjectures such as these is profitability of each loan group were compared and unknown. rank ordered. If the responses indicated that the prof- The profitability of CRA special mortgage pro- itability category (profitable, marginally profitable, grams can also be gauged using two types of com- break even, marginally unprofitable, unprofitable) of parisons with the profitability of two broader groups two groups was the same, their relative profitability of loans examined in the analysis of performance: all was considered to be equal. If an institution's CRA-related home purchase and refinance lending responses placed two loan groups in different profitand total home purchase and refinance lending. ability categories, then relative profitability was The first type of comparison looks at the profitabil- judged based on which group was placed in the ity distribution of CRA special mortgage programs higher profitability category. against the profitability distribution of each of the The results indicate that respondents placed 50 pertwo broader groups of loans. This comparison finds cent of their CRA special mortgage programs in the that while 64 percent of CRA special mortgage pro- same profitability category as their overall CRAgrams were reported to be at least marginally profit- related home purchase and refinance lending. Of the able (table 8), 77 percent of all CRA-related mort- comparisons revealing a difference between CRA special mortgage programs and overall CRA-related home purchase and refinance lending, roughly twice the percentage of CRA special mortgage programs Measuring Profitability were placed in a lower profitability category than were placed in a higher profitability category (32 per- Measuring the profitability of lending activities offers cent versus 17 percent). special challenges. First, the profit on a loan or program Differences are more prominent when comparisons can be calculated in various ways. For the survey, profit from a lending activity was measured using a comprehen- are made between the profitability of CRA special sive definition that included all "revenues and costs mortgage programs and total home purchase and associated with overhead, origination, and servicing refinance lending. Here, nearly 60 percent of CRA costs; pricing; delinquency, default and losses; prepay- special mortgage programs were placed in a lower ment; loan sales and purchases; and related customer profitability category. account business." Although overhead was not defined, it Performance and profitability are generally thought was intended to include the costs of permanent and to be positively correlated, and thus one would expect working capital (sometimes referred to as a hurdle rate). that rank orderings of groups of loans by the two Total dollars of profit may not be a meaningful meacriteria should be similar. But in the case of CRA sure of profitability, as programs may differ in size, for special mortgage programs, the similarities did not example. Therefore, profitability is typically expressed as hold. For profitability, CRA special mortgage proa rate, with return on equity (ROE) and return on assets grams tended to be less profitable than CRA-related (ROA) both commonly used. Calculating the ROE or the ROA for a program requires the allocation of equity or and total home purchase and refinance lending. Conassets, respectively, to it. The ROA is commonly used versely, for performance, CRA special mortgage probecause it can often be more easily calculated for a given grams performed better on average than overall CRApoint in time. However, the ROA cannot be used to related home purchase and refinance lending and compare programs among institutions that have varying only slightly worse than overall lending by most propensities for selling their loans. For example, a bank- measures of performance. This apparent inconsising institution that sells most of the loans it originates, tency may be a consequence of additional, perhaps and thus has few assets, may misleadingly appear to be costly, steps that institutions take as a part of their extraordinarily profitable when measured using the ROA. CRA special mortgage programs to identify and work Thus, comparing the ROA across programs in which with potential borrowers both before and after the loans are sold at different rates can be misleading. Conseloan is extended. These efforts, which can include quently, ROE was selected as the more appropriate meaenhanced marketing, counseling, and more intensive sure of profitability to be used in the survey. monitoring of loan payments, may result in better Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin • November 2000 9. Selected characteristics of CRA special mortgage programs, grouped by size of banking institution and size of program and distributed by profitability category of program, 1999 A. All banking institutions Percentage of programs All programs Small programs Large programs characteristic Profitable Break-even Unprofitable Profitable Break-even Unprofitable Profitable Break-even Unprofitable All programs 64 14 22 67 16 17 60 11 29 Reason for program establishment or benefit of program Help earn a CRA rating of "Satisfactory" or "Outstanding" 64 15 20 65 18 16 63 11 26 Respond to community credit needs or promote community growth and stability 63 14 23 66 17 17 59 11 30 Improve institution's public image ... 61 10 29 64 10 26 57 10 33 Earn additional profits or identify profitable new markets 74 7 19 86 3 10 64 10 25 Maintain market share in face of increased competition1 63 12 25 73 12 15 55 12 33 Minimize likelihood of adverse public comment on CRA record 60 10 30 65 6 29 55 14 32 Year program established Before 1990 38 22 40 • * * 44 10 46 1991-94 59 11 31 67 12 22 45 9 46 1995-97 63 17 20 57 21 22 69 12 18 1998-99 75 15 10 80 14 6 * * * Program features and underwriting variances provided by bank2 Services 65 12 23 72 14 14 58 10 32 Subsidies 61 16 23 62 17 21 59 15 25 Altered terms 66 13 21 72 14 15 60 12 28 Underwriting variances Changes in required down payment, debt ratios, and cash reserves 64 15 22 64 18 19 64 11 26 Altered standards for credit quality and employment history 66 12 22 67 11 21 65 12 24 Waivers or reductions in security requirements 58 17 25 61 18 21 52 15 33 Multiple variances 64 14 22 68 16 16 60 11 29 NOTE. Covers each institution's estimate of 1999 profitability of its five ginally unprofitable." See also notes to table 2; values for each set of three largest programs. For the small programs, 1999 loan originations were less than profitability categories may not sum to 100 because of rounding. $2 million; for the large programs, originations were at least $2 million. For 1. Also includes reasons reported under "other" in the survey. smaller banking institutions (tables 9.B and 9.C), year-end 1999 assets were 2. For detailed list, see table 6. less than $30 billion; for larger institutions, assets were at least $30 billion. * Data received on five or fewer programs. "Profitable" includes "marginally profitable"; "unprofitable" includes "marloan performance but may also lower the profitability sured by dollars of 1999 loan originations. Conseof the loans. quently, the following analysis of the relationship between program features and profitability categorizes programs by their size (large and small) and by RELATIONSHIP BETWEEN PROGRAM FEATURES the size of the banking institution that instituted the AND PROGRAM PROFITABILITY program.11 Too few small programs were reported on The features of CRA special mortgage programs, by large institutions to support analysis, so figures for how banking institutions deliver the services associ- this subcategory are not reported here; the small ated with them, and the characteristics of the banking number of such programs likely reflects the focus of institutions themselves all may influence the profit- the survey, which asked banking institutions to report ability of these programs. The previous analysis indi- detailed information on only their five largest cated that in 1999 the profitability of CRA special programs. mortgage programs varied significantly with the size of the banking institution that operated them. Further analysis (not shown) suggests that the profitability of 11. Large programs had loan originations in 1999 exceeding $2 million; small programs had 1999 originations of less than these programs also varied with program size, mea- $2 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 725 9.—Continued B. Smaller institutions Percentage of programs All programs Small programs Large programs CChhaarraacctteerriissttiicc Profitable Break-even Unprofitable Profitable Break-even Unprofitable Profitable Break-even Unprofitable All programs 67 14 20 67 17 17 66 10 24 Reason for program establishment or benefit of program Help earn a CRA rating of "Satisfactory" or "Outstanding" 68 15 17 65 18 16 72 9 19 Respond to community credit needs or promote community growth and stability 66 14 20 66 17 17 64 10 26 Improve institution's public image ... 64 9 27 64 10 26 64 7 29 Earn additional profits or identify profitable new markets 77 6 18 87 3 9 67 8 25 Maintain market share in face of increased competition 67 11 22 72 12 15 60 10 30 Minimize likelihood of adverse public comment on CRA record 65 9 27 65 6 29 64 12 24 Year program established Before 1990 46 16 38 * * * 55 0 45 1991-94 62 10 29 66 12 22 52 5 44 1995-97 64 18 19 57 22 21 72 13 15 1998-99 77 16 7 80 14 6 67 22 10 Program features and underwriting variances provided by bank Services 68 12 21 72 15 14 63 8 28 Subsidies 64 16 20 62 17 21 67 14 19 Altered terms 70 13 18 71 14 15 67 11 22 Underwriting variances Changes in required down payment, debt ratios, and cash reserves 67 15 19 63 18 19 73 9 18 Altered standards for credit quality and employment history 70 11 19 67 11 21 76 10 14 Waivers or reductions in security requirements 63 16 21 61 18 21 70 9 21 Multiple variances 67 14 20 68 16 16 65 10 25 NOTE. See notes to table 9.A. Once program size and banking institution size the proportion of programs established to be a proare taken into account, the profitability of CRA fit source that is reported to have been profitable special mortgage programs does not appear to was substantially higher than the proportion in the have varied significantly with the reason for which all-programs category. Another exception is small a program was established or the benefit afforded CRA special mortgage programs at smaller banking by a program (tables 9.A, B, and C). For almost institutions (table 9.B) that were established, at least every reason cited by banking institutions for creat- in part, to improve an institution's public image or to ing a program and for almost every benefit, the minimize the likelihood of adverse public comment proportion of programs reported to be profitable and on the institution's CRA record; these programs were unprofitable is quite similar to that of the "all pro- more likely to be unprofitable than the all-programs grams" category (first line of tables). The compari- category for smaller institutions. son holds even for programs that were specifically The profitability of CRA special mortgage proestablished to achieve a "Satisfactory" or "Outstand- grams appears to vary with the age of the program, ing" CRA rating. with newer programs generally being more profitable Programs established as a source of additional than older programs. profits or to identify profitable new markets are an As noted earlier, CRA special mortgage programs exception to the pattern. For each combination of carry a wide range of features and underwriting program size and institution size, except large pro- variances (table 6). For the most part, no close relagrams at smaller banking institutions (table 9.B), tionship appears to exist between the features or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Federal Reserve Bulletin • November 2000 9. Selected characteristics of CRA special mortgage programs, grouped by size of banking institution and size of program and distributed by profitability category of program, 1999—Continued C. Large institutions Percentage of programs All programs Large programs CChhaarraacctteerriissttiicc Profitable Break-even Unprofitable Profitable Break-even Unprofitable AH programs 40 15 45 38 15 46 Reason for program establishment or benefit of program Help earn a CRA rating of "Satisfactory" or "Outstanding" 35 16 49 32 17 51 Respond to community credit needs or promote community growth and stability 41 15 44 39 16 45 Improve institution's public image 38 18 45 38 18 45 Earn additional profits or identify profitable new markets 53 18 28 55 19 26 Maintain market share in face of increased competition 41 18 41 38 19 43 Minimize likelihood of adverse public comment on CRA record 31 17 52 31 17 52 Year program established Before 1990 0 50 50 0 50 50 1991-94 29 21 50 23 23 54 1995-97 58 8 33 59 9 32 1998-99 * * * * * * Program features and underwriting variances provided by bank Services 42 16 42 40 16 44 Subsidies 39 17 43 37 19 44 Altered terms 40 13 48 37 13 50 Underwriting variances Changes in required down payment, debt ratios, and cash reserves 42 15 44 39 15 46 Altered standards for credit quality and employment history 40 17 43 39 17 44 Waivers or reductions in security requirements .. 21 25 54 19 26 56 Multiple variances 42 15 43 40 16 44 NOTE. See notes to table 9. A. variances and program profitability (tables 9.A, B, when programs with third parties were conducted by and C). Even when a banking institution offered smaller banking institutions (table 10.A) and when some form of subsidy, such as a reduced interest rate third parties participated in small programs (table or a fee waiver or reduction, CRA special mortgage 10.B), although the frequency of ^profitability was programs generally were not reported to be more about the same for both groups. unprofitable than the all-programs category for the Programs that exclusively involved government same size category of program and institution. These entities as third parties generally appeared to be more service categories reflect, however, only the existence profitable than other programs. Overall, 75 percent of of a feature or subsidy and not necessarily its amount CRA special mortgage programs that involved only or extent. The survey collected no further information a government entity were reported to be profitable on these items. (table 10.A), compared with 64 percent of all CRA Responses indicated that the participation of third special mortgage programs. Although half of such parties in CRA special mortgage programs was some- programs at large banks were reported to be unprofittimes related to program profitability, depending on able, large banks reported only a small number of the type and number of third parties involved and third-party programs that exclusively involved a govthe nature of their role in the program (tables 10.A ernment entity (data not shown). and B). Overall, among programs with a third party, The results for other types of third-party involve- 67 percent were profitable compared with 54 percent ment are not consistent. For example, large programs of programs with no third party. But CRA special (table 10.B) that exclusively involved a governmentmortgage programs at large banking institutions sponsored entity (Fannie Mae, Freddie Mac, or the (table 10.A) were less likely to be profitable (more Federal Home Loan Banks) were less likely to be likely to be unprofitable) when a third party was reported as profitable than large programs considered involved in the program than when one was not. By as a group (22 percent versus 60 percent). Howcontrast, programs were more frequently profitable ever, large programs that involved a government- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 727 10. Third-party involvement in CRA special mortgage programs, grouped by size of banking institution and size of program and distributed by profitability category of program, 1999 A. By size of banking institution Percentage of programs All-institutions estimate Smaller Large Profitable Break-even Unprofitable Profitable Break-even Unprofitable Profitable Break-even Unprofitable All programs 64 14 22 67 14 20 40 15 45 Presence of third parties Yes 67 9 23 71 9 20 37 15 48 No 54 26 19 54 28 18 56 11 33 Type of third party when program has only one type of third party Any 67 5 28 71 5 24 21 11 68 Government 75 3 22 78 2 20 33 17 50 Government-sponsored 47 10 43 49 10 41 * * * Nonprofit 61 7 31 67 7 26 13 13 75 Other 91 0 9 * * * * * * Type of third party when program has multiple types of third parties Any 68 16 16 72 16 12 48 19 33 Government 70 14 16 75 13 12 50 21 29 Government-sponsored 73 13 14 74 13 13 71 12 18 Nonprofit 67 16 17 73 17 11 48 16 36 Other 80 16 4 82 15 3 67 22 11 Third-party activities1 Services 67 9 24 71 9 20 37 15 48 Subsidies 70 12 19 75 10 15 38 18 44 Assumption of risk 74 10 17 83 7 10 32 19 48 NOTE. See general note to table 9.A. * Data received on five or fewer programs. 1. For list, see table 5. sponsored entity as well as other third parties were CRA special mortgage program did not seem to bear more likely to be profitable than large programs con- a strong relationship to program profitability. sidered as a group (74 percent versus 60 percent). As noted, third parties conduct a wide range of Overall, the number of third parties involved in a activities in support of CRA special mortgage pro- 10.—Continued B. By size of program Percentage of programs All programs Small Large Profitable Break-even Unprofitable Profitable Break-even Unprofitable Profitable Break-even Unprofitable All programs 64 14 22 67 16 17 60 11 29 Presence of third parties Yes 67 9 23 74 9 17 59 9 32 No 54 26 19 48 36 16 62 15 23 Type of third party when program has only one type of third party Any 67 5 28 75 3 22 54 9 37 Government 75 3 22 76 0 24 74 6 20 Government-sponsored 47 10 43 64 0 36 22 24 54 Nonprofit 61 7 31 72 8 20 33 5 62 Other 91 0 9 * * * * * * Type of third party when program has multiple types of third parties Any 68 16 16 70 24 6 66 10 24 Government 70 14 16 73 20 7 67 10 23 Government-sponsored 73 13 14 72 22 7 74 8 18 Nonprofit 67 16 17 67 33 0 66 9 25 Other 80 16 4 71 24 5 91 6 3 Third-party activities Services 67 9 24 73 10 17 59 9 32 Subsidies 70 12 19 76 11 12 62 12 26 Assumption of risk 74 10 17 83 10 7 66 9 26 NOTE. See notes to table 10. A. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

728 Federal Reserve Bulletin • November 2000 11. Selected characteristics of institutions with CRA special mortgage programs, grouped by size of banking institution and size of program and distributed by profitability category of program, 1999 A. All banking institutions Percentage of programs All programs Small programs Large programs CChhaarraacctteerriissttiicc Profitable Break-even Unprofitable Profitable Break-even Unprofitable Profitable Break-even Unprofitable All programs 64 14 22 67 16 17 60 11 29 Profitability of banking institution1 Above median 71 27 55 40 80 18 Below median 62 21 69 12 51 34 Merger by banking institution in year program was established (for mergers since 1990)2 Yes 60 31 68 7 25 45 44 No 66 17 66 23 11 66 23 Structure of banking institution Multibank holding company ... 60 9 32 60 10 31 59 33 Other 69 20 11 74 23 3 61 15 24 CRA rating of banking institution "Satisfactory" 67 21 70 63 28 "Outstanding" 60 24 63 57 30 NOTE. See notes to table 9.A. 2. Includes acquisitions by an institution's holding company. 1. Return on equity in 1999 compared with 1999 return on equity of the 500 largest retail banking institutions. grams (table 5), and these activities appear to be ers or acquisitions were more likely to have been related to program profitability (tables 10.A and B). reported as unprofitable than programs established in Third-party assumption of risk was positively related years in which the banking institution did not merge. to program profitability. This relationship was stron- Whether or not the banking institution is part of a gest for programs at smaller banking institutions and multibank holding company appears to matter only for small programs. For example, 83 percent of the for small programs at smaller banking institutions programs at smaller banks that involve the assump- (table ll.B): Such programs at institutions that are tion of risk by a third party were reported to be part of multibank organizations tend to be less profitprofitable (table 10.A), compared with 67 percent for able (or more unprofitable) than programs at indepenall programs at such banks. Third-party provision of dent institutions. services and subsidies also appeared to contribute to Finally, with the exception of large programs at program profitability, although these relationships large banking institutions (table ll.C), a banking were not as strong as that for the assumption of risk. institution's CRA performance rating does not appear Survey results indicate that characteristics of a to be strongly related to program profitability. For banking institution besides its size are related to the large programs at large institutions, the percentage of profitability of CRA special mortgage programs programs reported as profitable for institutions with (tables 11.A, B, and C). Banking institutions with outstanding CRA ratings was the same as for instituoverall profitability above the median were more tions with satisfactory ratings. However, somewhat likely to have had large programs that were profitable surprisingly, the proportion reported to have been than were institutions with overall profitability below unprofitable is much higher for those with satisfacthe median (table ll.A).12 However, the reverse is tory ratings than for those with outstanding ratings. true for small programs at smaller banking institutions (table 11.B). Merger activity also appears to matter. In all com- LIMITATIONS OF THE ANALYSIS binations of program size and banking institution size, programs that were established in a year in which the banking institution was engaged in merg- The survey and resulting data provide new and systematic information about the characteristics and the role of CRA special mortgage programs in 12. The profitability of each institution was measured as 1999 the lending activities of banking institutions. In parreturn on equity and then compared with the median 1999 return ticular, the information provides opportunities to on equity of the original sample of the 500 largest retail banking institutions. determine the factors that influence the performance Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 729 11.—Continued B. Smaller banking institutions Percentage of programs All programs Small programs Large programs CChhaarraacctteerriissttiicc Profitable Break-even Unprofitable Profitable Break-even Unprofitable Profitable Break-even Unprofitable All programs 67 14 20 67 17 17 66 10 24 Profitability of banking institution Above median 73 26 57 39 84 16 Below median 65 18 69 13 57 28 Merger by banking institution in year program was established (for mergers since 1990) Yes 65 27 7 24 55 34 No 68 17 16 66 23 11 69 21 Structure of banking institution Multibank holding company 63 7 29 60 10 31 69 27 Other 70 21 10 74 23 3 63 21 CRA rating of banking institution "Satisfactory" 69 17 70 69 21 "Outstanding" 63 22 63 63 27 NOTE. See notes to table 1 l.A. and profitability of these programs and to better of smaller programs at these institutions or of prounderstand the role of specific program features grams at other banking institutions may have differed. and arrangements with third parties. However, the Second, the survey collected performance and survey data do not address all issues in this regard, profitability information for 1999 only. However, and the foregoing analysis has some important 1999 lending experiences may not be representative limitations. of those of other years. For example, program per- First, by design, the survey collected detailed infor- formance may have been better in 1999—a year of mation on only a subset of CRA special lending ongoing economic expansion—than might have been programs from a fairly narrow group of lenders and expected during a year of economic weakness. In programs. Only the five largest programs at each of addition, some of the programs are relatively new, the largest 500 retail banking institutions were cov- and their long-run performance and profitability may ered in the survey; the characteristics and profitability not be fully reflected in the survey data. 11.—Continued C. Large banking institutions Percentage of programs All programs Large programs CChhaarraacctteerriissttiicc Profitable Break-even Unprofitable Profitable Break-even Unprofitable AH programs 40 IS 45 38 15 46 Profitability of banking institution Above median 55 9 36 60 10 30 Below median 36 16 48 33 17 50 Merger by banking institution in year program was established (for mergers since 1990) Yes 33 10 57 30 11 59 No 48 20 32 48 20 32 Structure of banking institution Multibank holding company 39 16 45 37 17 46 Other 45 9 45 45 9 45 CRA rating of banking institution "Satisfactory" 44 4 52 39 4 57 "Outstanding" 37 23 40 38 24 38 NOTE. See notes to table ll.A. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

730 Federal Reserve Bulletin • November 2000 Third, the relatively small size of the samples to loans for the purchase or refinancing of one- to leaves statistics such as means imprecisely measured. four-family homes. The analysis in this article con- These statistics should be viewed with some caution. cerns these programs, referred to as CRA special Fourth, the measurement of profitability poses mortgage programs. some difficulties. Although the survey instructed For most institutions, CRA special mortgage prorespondents to measure program profitability in a grams are relatively small. However, for about onecomprehensive manner, there is no way of determin- sixth of the institutions that responded to the survey, ing the extent to which all banking institutions did so. lending under CRA special mortgage programs Some institutions may have included factors in their accounted for more than 40 percent of the instituassessment of profitability that other institutions did tion's overall CRA-related mortgage lending. not. Moreover, because many respondents could not Banking institutions cite many reasons for estabprovide quantitative answers regarding the profitabil- lishing or participating in CRA special mortgage ity of their programs, qualitative answers were high- programs. The two most frequently cited are respondlighted in this article. The quantitative distinctions ing to the credit needs of the local community and underlying these qualitative responses may differ promoting community growth and stability. The third from institution to institution. These issues raise con- most frequently cited, obtaining either a "Satisfaccerns regarding the degree to which responses across tory" or "Outstanding" CRA rating, is mentioned for banking institutions can be compared. about three-fourths of the programs, but it is cited as Fifth, no definition of a "CRA special mortgage the only reason for just 1 percent of the programs. program" is universally accepted. Banking institu- About three-fourths of the programs involve the tions may have used different criteria by which to activities of third parties. The main activities are distinguish programs or to identify those that were grants for down payments or other purposes and established to enhance CRA performance. For exam- other services and subsidies that reduce the costs of ple, one institution might have considered a program banking institutions in extending credit to the populathat operates in three geographic markets to be a tions served by the special programs. The programs single program, whereas another institution might also have a wide range of features involving the have reported that program as three separate pro- banking institutions themselves, including flexible grams distinguished by the markets in which the underwriting, special outreach and marketing activiprograms operate. ties, and subsidies of fees and loan rates. Finally, this article presents only a portion of the Regardless of the comparison made or the perforinformation that would be needed to assess the value mance measure used, CRA special mortgage proand importance of CRA special lending programs— grams appear to perform better (that is, the loans only those programs focused on home purchase and extended through them have lower delinquency and refinance lending are covered. Further, no informa- net charge-off rates) than overall CRA-related home tion is presented on the benefits of these lending purchase and refinance lending. Results are less conprograms to local communities and borrowers or on sistent when comparisons are made with an instituthe costs incurred by third parties in supporting such tion's total home purchase and refinance lending activities. Any comprehensive assessment of the full (both CRA-related and not CRA-related). Median costs and benefits of these programs would need to delinquency and charge-off rates are lower for loans consider these factors. in CRA special mortgage programs than for overall mortgage lending; however, average rates for these measures of performance are all higher. SUMMARY The performance of CRA special mortgage pro- This article presents new and systematic information grams appears to vary with the asset size of the on CRA special lending programs obtained from banking institution operating the program. On averresponses to a recent Federal Reserve survey on the age, CRA special mortgage programs at large bankperformance and profitability of CRA-related lend- ing institutions (assets of $30 billion or more) had ing. CRA special lending programs help an institu- higher delinquency and charge-off rates than protion seek out and assist borrowers, typically among grams at smaller institutions. lower-income populations, and thereby help the insti- According to respondents, the majority of CRA tution meet its obligations under the CRA. special mortgage programs (64 percent) are either The survey, which focused on the five largest pro- profitable or marginally profitable. About one-fourth grams at each of the surveyed institutions, found that of the programs are considered either marginally 72 percent of the programs were devoted exclusively unprofitable or unprofitable. However, respondents Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

CRA Special Lending Programs 731 placed three-fifths of the programs in a profitability As with performance, the profitability of CRA category lower than that in which they placed over- special mortgage programs also appears to vary with all mortgage lending. In addition, respondents placed an institution's size. Whether measured on an abso- 50 percent of the programs in the same profitabil- lute or relative basis, programs of large banking ity category in which they placed their overall institutions are more likely to be unprofitable (or to CRA-related mortgage lending; for the other half be ranked less profitable) than are programs of of the programs, twice as many were placed in a smaller institutions. • lower profitability category as were placed in a higher category. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

732 Industrial Production and Capacity Utilization for September 2000 Released for publication October 17 steady at 82.2 percent in September, a level 0.2 percentage point above its 1967-99 average. Industrial production rose 0.2 percent in September. At 146.0 percent of its 1992 average, industrial production was 5.7 percent higher than in Septem- MARKET GROUPS ber 1999. For the third quarter as a whole, the total index increased at an annual rate of 2.8 percent, the The output of consumer goods increased 0.8 percent slowest quarterly rate since the first quarter of 1999. in September after having edged up 0.1 percent in The rate of capacity utilization for total industry held August. After two months of declines, the production Industrial production and capacity utilization Ratio scale, 1992 = 100 Percent of capacity Industrial production Capacity utilization Manufacturing Total industry Total industry Manufacturing Industrial production, market groups Consumer goods Intermediate products Durable Construction supplies Business supplies Nondurable Ratio scale, 1992 = 100 Equipment Materials Business Durable goods Defense and space Nondurable goods and energy _l I I I I L All series are seasonally adjusted. Latest series, September. Capacity is an index of potential industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

733 Industrial production and capacity utilization, September 2000 Industrial production, index, 1992=100 Percentage change Category 2000 20001 Sept. 1999 to Juner July Aug.r Sept.P June1 Julyr Aug/ Sept.P Sept. 2000 Total 145.3 145.0 145.6 146.0 .4 -.2 .4 .2 5.7 Previous estimate 145.2 145.2 145.7 .3 .0 .3 Major market groups Products, total2 131.6 131.7 131.7 132.1 .4 .0 .0 .4 3.6 Consumer goods ... 119.4 119.0 119.1 120.1 .6 -.4 .1 .8 2.5 Business equipment 187.2 188.6 189.7 190.3 .8 .8 .6 .3 9.6 Construction supplies 136.8 136.9 135.5 135.9 -.4 .1 -1.1 .3 1.3 Materials 169.1 168.0 169.9 169.9 .6 -.6 1.1 .0 9.1 Major industry groups Manufacturing 151.0 151.0 151.3 151.8 .5 .0 .2 .3 6.2 Durable 190.8 190.7 191.9 192.5 .8 .0 .6 .3 10.0 Nondurable 113.2 113.3 112.9 113.2 .0 .1 -.3 .3 1.2 Mining 102.8 102.7 102.7 101.7 .6 -.1 .0 -1.0 3.4 Utilities 118.7 114.3 118.4 119.3 -.3 -3.7 3.6 .7 1.3 Capacity utilization, percent MMMEEEMMMOOO CCCaaapppaaaccciiitttyyy,,, pppeeerrr--ccceeennntttaaagggeee 1999 2000 ccchhhaaannngggeee,,, AAvveerraaggee,, LLooww,, HHiigghh,, SSSeeepppttt... 111999999999 11996677--9999 11998822 11998888--8899 Sept. June1 July' Aug/ Sept.P tttooo SSSeeepppttt... 222000000000 Total 82.0 71.1 85.4 80.6 82.5 82.1 82.2 82.2 3.7 Previous estimate 82.4 82.2 82.3 Manufacturing 81.1 69.0 85.7 79.7 81.6 81.3 81.3 81.2 4.2 Advanced processing 80.5 70.4 84.2 78.7 81.1 81.1 81.2 81.2 5.5 Primary processing . 82.4 66.2 88.9 82.8 83.2 82.4 81.9 81.9 1.3 Mining 87.3 80.3 88.0 81.8 86.3 86.3 86.4 85.7 -1.3 Utilities 87.5 75.9 92.6 92.0 91.9 88.4 91.5 92.1 1.2 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. of durable consumer goods increased 1.6 percent. energy products increased 0.7 percent in September, The production of autos and light trucks rose 1.1 per- mostly because of increases in the output of fuel oil cent in September, but for the third quarter as a and in residential sales of gas and electricity. whole, assemblies were noticeably below the second- The output of business equipment increased quarter rate. Auto parts and allied goods jumped 0.3 percent, a slower pace than in any previous month 2.1 percent in September, in large part because of this year. The production of industrial equipment, strong gains in the production of replacement tires. which had increased about 2.9 percent over the The output of other consumer durables moved up July-August period, fell 2.0 percent. The output of 1.6 percent after having fallen 2.2 percent in August. transit equipment declined an additional 1.1 percent For the third quarter, the production of other con- as a result of a slowing in the assembly of business sumer durables fell at an annual rate of 5.1 percent, trucks. In contrast, the production of other equipment as the output of appliances weakened. jumped 6.8 percent and was led by a sizable increase The production of nondurable consumer goods rose in the production of farm machinery and equipment. 0.6 percent in September, with the output of both The output of information processing equipment energy and non-energy products posting moderate advanced 1.1 percent, with another strong gain in gains. Within non-energy products, the output of office and computing equipment. The production of chemical products increased 1.4 percent, paper prod- defense and space equipment fell for a second conucts remained steady, and clothing moved down secutive month, partly because of a strike at a major 1.1 percent. For the third quarter, the output of non- producer. durable non-energy consumer goods rose at an annual The output of construction supplies increased rate of 4.1 percent. The production of consumer 0.3 percent in September but only partially reversed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

734 Federal Reserve Bulletin • November 2000 the previous month's decline; for the third quarter, tion methods. The revision will also include a refinethe index for construction supplies fell at an annual ment of the method used to aggregate the individual rate of 4.8 percent. The output of materials remained series in the production and capacity indexes. The flat after having posted a large increase in August. new source data are for recent years, primarily 1997 The production of durable goods materials edged up through 1999, and the modified methods will affect 0.1 percent, as another increase in the production of data from 1992 onward. equipment parts, particularly semiconductors and The G.17 statistical release will be redesigned with computer parts, was largely offset by a drop in the the publication of the revision. Special aggregates production of parts for consumer durables. The out- will be added, and some detailed industry data will put of nondurable goods materials was unchanged, no longer be listed in the regular release, but will be continuing the weakness that has been evident in this available on the Federal Reserve Board's public web sector over the past several months. The output of site. On November 15, a template of the redesigned energy materials ticked down 0.1 percent. tables will be made available on the Board's web site (w w w .federalreserve. go v/releases/g 17). The updating of source data for IP will include INDUSTRY GROUPS annual data from the following reports of the Bureau of the Census: the 1997 Census of Manufactures, the Manufacturing output advanced 0.3 percent in Sep- 1998 Annual Survey of Manufactures, and selected tember, with increases about even in both durable and editions of its 1998 and 1999 Current Industrial nondurable goods industries. Among durable goods, Reports. Annual data from the U.S. Geological Surthe gains were concentrated in lumber and products vey regarding metallic and nonmetallic minerals and in computers and semiconductors. The output of (except fuels) for 1998 and 1999 will also be introtransportation equipment dropped 2.2 percent, while duced. The updating will include revisions to the changes in the remaining durable goods industries monthly indicator for each industry (either physical were small. After several months of weak output, the product data, production-worker hours, or electric production of nondurables advanced 0.3 percent; the power usage) and revised seasonal factors. output of nondurable goods was only 1.2 percent Capacity and capacity utilization will be revised higher than a year earlier. The September gains were to incorporate preliminary data from the 1999 Survey largely the result of higher production of chemicals of Plant Capacity of the Bureau of the Census, which and textile mill products; in contrast, several induscovers manufacturing, along with other new data tries, including apparel, petroleum, and rubber and on capacity from the U.S. Geological Survey, the plastics, posted moderate declines. Department of Energy, and other organizations. The The factory operating rate declined to 81.2 percent statistics on the industrial use of electric power will in September, with the easing concentrated in durable incorporate additional information received from goods industries. The operating rate at electric utiliutilities for the past few years and will include some ties rose to 95.5 percent, 6 percentage points above data from the 1997 Census of Manufactures and 1998 its 1967-99 average; capacity utilization at gas utili- Annual Survey of Manufactures. ties also increased to 76.4 percent. The operating rate Aggregate industrial production indexes have been for mining fell to 85.7 percent, with a noticeable built as annually weighted chain-type indexes, begindecline in oil and gas well drilling. ning with data for 1977. Currently, the weights are changed at the middle of every year; with the coming REVISION OF INDUSTRIAL PRODUCTION AND revision, the weights will change every month, rather CAPACITY UTILIZATION than once a year, beginning with data for 1992. Once the revision is published, it will be made On December 5, the Federal Reserve Board will available on the Board's web site (www.federalpublish revisions to the index of industrial production reserve.gov/releases/gl7). The revised data will also (IP), to the related measures of capacity and capacity be available through the web site of the Department utilization, and to the index of industrial use of elec- of Commerce. Further information on these revisions tric power. The updated measures will reflect both the is available from the Board's Industrial Output Secincorporation of newly available, more comprehen- tion (telephone 202-452-3197). All series are seasonsive source data typical of annual revisions and, for ally adjusted. Latest series, September. Capacity is an some series, the introduction of improved compila- index of potential industrial production. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

735 Testimony of Federal Reserve Officials Testimony by Laurence H. Meyer, Member, Board of clients. Judgment by inference is particularly charac- Governors of the Federal Reserve System, before teristic of our era of global markets and widely the U.S. Securities and Exchange Commission Hear- dispersed ownership. ing Held at Pace University, New York, New York, As a result, the auditing profession has focused September 13, 2000 intently on appearance as a means of demonstrating independence. That is, the profession's own rules Thank you for the opportunity to speak at today's emphasize the tangible, measurable aspects of the hearing on the rules governing auditor independence auditor-client relationship to assure the public of its that have been proposed by the Securities and independence. Some indicia of independent appear- Exchange Commission (SEC). ance are clear-cut. For example, long-standing rules A principal concern of the Federal Reserve is prohibit direct ownership in a client by an audit the efficiency and stability of financial markets. By partner. These rules are obvious and require little extension, we take a keen interest in issues that explanation or interpretation. Other aspects of the underpin the functioning of these markets, such as auditor-client relationship are more difficult to reguthe reliability of the information that supports them. late, but no less important. For example, the auditing The auditor's opinion distinguishes financial report- profession prohibits its members from acting in a ing from other, potentially self-serving, information management capacity for a client. The line between circulating in the marketplace. The willingness of what may appear to be unacceptable "managerial" investors, creditors, and other stakeholders to trust actions and what may be acceptable "advisory" the public accountant's opinion is an important facet actions can be a fine one, subject to a great deal of of market efficiency. interpretation. The Board has long believed that high-quality For nearly as long as there have been public accounting standards and disclosure requirements are accountants, state and federal legislators have also essential for the efficient, rational allocation of capi- grappled with laws to protect auditor independence. tal. We also recognize that independence enhances It must be difficult to balance the public interest in both the setting of accounting standards and the maintaining independent, objective external audits enforcement of conformance with those standards. with the legitimate commercial aspirations of The SEC and the accounting profession have impor- accounting professionals. Nonetheless, all recognize tant roles in maintaining and promoting indepen- that significant erosion of the public's confidence dence. Steps they have taken over the years to foster regarding auditor independence could have severe independence and objectivity in the formulation of consequences for investors, creditors, and those seekaccounting standards have improved financial report- ing capital. ing. We note, however, that high-quality accounting standards potentially can be nullified by a perception that auditors lack independence and objectivity in EXTERNAL AUDITS their enforcement role. Accountants have recognized this possibility since As the regulator of state member banks, bank holdthe earliest years of their profession. The ethics rules ing companies, and (recently) financial holding comof their professional societies regulate commercial panies, the Federal Reserve is very interested in the dealings between external auditors and clients to external audits of institutions it supervises. Banks protect the integrity of financial reporting and to with total assets of $500 million or more are required promote investor confidence in the auditor's opinion. by statute to have an external audit. Recognizing the Achieving and maintaining independence is difficult value of external audits, the federal banking agencies because independence is an intangible quality, an also encourage smaller institutions to engage public attitude, a state of mind. An outsider can infer audi- accountants. External audits can give supervisors tors' attitudes only by their outward dealings with greater assurance of the integrity of the financial Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

736 Federal Reserve Bulletin • November 2000 information we receive. In addition, we believe that OUTSOURCING OF INTERNAL AUDIT banking organizations benefit from an outside opinion on the quality of their financial reports and inter- Now I would like to focus on the SEC's proposal to nal controls. limit internal audit outsourcing by external auditors. The benefit derived from an external audit, how- The Federal Reserve has a long-standing supervisory ever, is contingent upon the auditor's competence interest in banks' risk management, including interand independence. For institutions that we supervise, nal controls and their effect on safety and soundness. our examiners assess these two qualities. Of course, We have been wary of the outsourcing of internal banking supervisors have broad powers that allow us audit functions since the trend began. Our concerns to remove an audit firm if there is evidence of nonfea- are twofold: the potential for blurring the accountabilsance, misfeasance, or malfeasance. As I said earlier, ity of bank directors and managers for internal conhowever, independence is intangible. Therefore, it is trols and the diminished effectiveness of the internal difficult for outsiders, including examiners, to judge auditor's ability to monitor controls. the objectivity of external auditors toward their In 1997, the federal banking agencies issued an clients. Despite that difficulty, we must be watchful interagency policy statement that serves as a framebecause a lack of objectivity can compromise the work for banking organizations to structure and external audit as a useful tool for enhancing banking maintain the internal audit function and manage outsafety and soundness. sourcing arrangements. With respect to outsourcing, The large financial institutions we supervise are the policy seeks foremost to warn managers and required to furnish us not only with audited financial directors that outsourcing the review function of an statements but also with an external auditor's opinion internal auditor does not in any way transfer responof management's report on the effectiveness of inter- sibility for maintaining adequate internal controls. nal controls over financial reporting. These reports Institutions may delegate the technical work, but are an important source of information about these not the management oversight or accountability. The institutions. The auditor's attestation is key to our policy also makes the important recommendation reliance on these reports. When auditors lack objec- that banks promote and maintain independence in tivity, this process for informing supervisors about the design of their own management structures over the condition of banks' internal controls can break the internal audit function. The most effective interdown. nal audit function has the impartiality and standing Our ability to supervise institutions is improved by within an organization to report its findings and competent and objective external audits. If our exam- views candidly to directors and the highest levels of iners are comfortable with a particular audit, they management. may focus on how management is dealing with prob- The policy does not prohibit all outsourcing lems found by the external auditor. This situation is because we appreciate that efficiencies can be gained far more efficient than replicating the work and and specialized talent brought to bear. Care needs to second-guessing the conclusions drawn from the evi- be exercised, however, in structuring the arrangedence. According to their assessment of the external ments so as not to weaken overall the processes for audit, our examiners can reallocate supervisory identifying and fixing internal control deficiencies. resources to other areas of risk in the banking organi- The banking agencies considered prohibiting banks' zation. The Federal Reserve benefits by gaining a external auditors from acting as outsourcing vendors better picture of an institution's risk profile for a because of a concern about the effect of such arrangegiven level of supervisory resources. Financial insti- ments on external-auditor independence. tutions also gain from a reduction in overall examina- As we finalized our guidance, we decided we could tion burden. We hope that accounting professionals work for the time being within the existing auditor also benefit from the interaction between the external independence rules and that a prohibition by the auditor and the examiner. banking agencies was inappropriate for several rea- The Federal Reserve hopes to expand the private sons. First, the banking agencies were reluctant to set sector's role in regulating the risk and solvency of a standard different from that of other industries, banking organizations. The effectiveness of market which, of course, are exempt from our safety and discipline is highly dependent upon the quality of soundness policies. Second, we believed that the information available to market participants. Biased, issue was more properly regulated by the SEC, which unreliable information would distort the allocation of has broader jurisdiction over the auditor-client relacapital to banks and thereby frustrate the discipline tionship. Lastly, given the early stage of the outsourcwe seek to promote. ing trend, we decided to take a flexible approach to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Testimony of Federal Reserve Officials 737 outsourcing; the policy could be amended to address aspects of outsourcing risk-management activities,' safety and soundness concerns if they became appar- regardless of who is engaged to perform the task. ent. With regard to the last issue, the agencies decided Contracting a large part of the internal audit work to it was sufficient for examiners to monitor arrange- a third party can be cumbersome, and banks operate ments among supervised institutions and evaluate in a rapidly changing environment. Furthermore, auditor independence case by case. Nevertheless, our we see the internal audit function as a core part of examiners have been encouraging individual organi- banks' risk-management processes. As is true of other zations to consider using firms other than their exter- aspects of risk management, the internal audit funcnal auditor. tion is an inextricable part of the senior management We have been vigilant in monitoring these out- team's responsibilities. sourcing arrangements because we view the internal The SEC's proposal would not eliminate outsourcaudit function as an integral part of bank manage- ing or prohibit public accountants from selling interment. In arrangements in which much of the internal nal audit services. Instead, it would generally exclude audit is outsourced to the external auditor, the public an auditor from performing both external and internal accountant can be disturbingly close to being a part audits for the same client. Combining the internal and of the management teaiji. Questions, therefore, arise external audits may have some efficiencies because about his or her independence. One of the corollary the work can serve a dual purpose of inspecting the benefits we see to an external audit is that the auditor system of internal control and expressing an opinion can give an independent assessment of the quality of about the financial statements. These efficiencies, a bank's own processes for identifying and rectifying however, may come at the cost of the external audiinternal control deficiencies. We feel that this "check tor's appearance of independence. Our view is that and balance" is diminished when the external auditor auditor independence is more valuable than these acts largely as the bank's internal auditor. asserted efficiencies. We are pleased to see the SEC The SEC is looking at internal audit outsourcing address this issue on a cross-industry basis. From the through the lens of external auditor independence. perspective of a banking supervisor, we support the We share the SEC's concern. However, we also have SEC's proposal to limit the external auditor's role in a broader issue about the safety and soundness the internal audit function of its clients. Testimony by Alan Greenspan, Chairman, Board of advances in science and technology have to enhance Governors of the Federal Reserve System, before the living standards for a large majority of Americans. Committee on Education and the Workforce, U.S. The pressures we face today are not unlike those House of Representatives, September 21, 2000 of a century ago, when our education system successfully responded to the multiplying needs brought I am pleased to be here this morning to discuss about by a marked acceleration in technological innoimproving mathematics and science education in our vation. As those advances put new demands on workelementary and secondary schools. In this regard, I ers interacting with an increasingly more complex am conveying my own views, not necessarily those stock of productive capital, high-school education of the Federal Reserve. proliferated—enabling students to read manuals, We are in a period—especially in this country—of manipulate numbers, and understand formulae. Sturapid innovation that is yielding dramatic changes dents were thus accorded the skills necessary to staff in the way goods and services are produced and in the newly developing assembly lines in factories and the ways that they are delivered to final users. These the rapidly expanding transportation systems whose innovations are markedly elevating the skill levels mechanical and automotive jobs required a widening that will be needed if our increasingly sophisticated array of cognitive skills. For those who sought educacapital stock is to function effectively in the years tion beyond high school, land grant colleges sprang ahead. Such considerations are an important element up, as states reacted to the increased skills required in the ongoing dialogue that our nation's leaders in by industry and especially agriculture, the dominant business, labor, education, and public policy must occupation a century ago. have if we, together, are to be successful in meeting By today's standard, the required share of "intelthe rising demand for skilled workers. Success in this lectual workers" in our labor force was then still area will, in turn, allow us to realize the potential that small. But the technological innovations of the latter Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

738 Federal Reserve Bulletin • November 2000 part of the nineteenth century began to bring an At the same time that we have been witnessing increasing conceptualization of our gross domestic these substantial increases in the demand for human product—that is, a greater emphasis on value added input, we see little evidence that the general level stemming from new ideas and concepts as distinct of human intelligence has changed much—indeed, from material inputs and demanding physical labor. has changed at all—over the centuries. Fortunately, The proportion of our workforce that created value human beings exhibit a pronounced ability to stretch through intellectual endeavors, rather than predomi- their intellectual capabilities when called upon. nantly through manual labor, began a century-long Hence, while the intellectual output of humans may climb. In 1900, only one out of every ten workers appear to have an upper limit, that limit seems to be was in a professional, technical, or managerial occu- sufficiently flexible to assuage most concerns. Nonepation. By 1970, that proportion had doubled, and theless, in today's economy, it is becoming evident today those types of jobs account for nearly one-third that a significant upgrading or activation of underutiof our workforce. lized intellectual skills will be necessary to effec- Moreover, this simple statistic undoubtedly under- tively engage the newer technologies. states the ongoing increase in the analytic content Expanding the number of individuals prepared of work, because there also seems to have been a to use a greater proportion of their intellectual capacmarked increase in the need for conceptual skills in ity means, among other things, that our elementary jobs that a decade or so ago would have been easily and secondary students must broaden their skills characterized as fully manual labor. Indeed, the pro- in mathematics and related sciences. In my experiliferation of information technologies throughout the ence, competency in mathematics—both in numerieconomy in recent years has likely accelerated this cal manipulation and in understanding its conceptual shift in the skill requirements of many occupations foundations—enhances a person's ability to handle away from routine work and toward nonroutine inter- the more ambiguous and qualitative relationships active and analytical tasks. that dominate our day-to-day decisionmaking. The Another signal of the ongoing rise in demand for study of science, of course, also advances problemconceptual skills in recent years has been the increase solving skills. in relative wages for college-educated workers. Dur- Early success in problem solving clearly enhances ing the 1980s and much of the 1990s as demand for the self-esteem of young people and encourages them skilled workers outpaced the supply, the gap between to engage in ever more complex reasoning. We all the wages of the college educated and those with a tend to gravitate toward those activities that we do high-school diploma or less widened considerably. best. This is a self-reinforcing process in which early More recently, as labor markets tightened, that gap success promotes further effort in a self-perpetuating has leveled off. Real wage gains have picked up for direction. This is true of playing Little League baseworkers with less than a college education. But evi- ball or the piano, as well as doing math. dence of a high skills premium for workers with If we are to improve the scientific reasoning skills college degrees remains—not just for high-tech of our young people, we need to encourage a deeper workers but across a broad range of occupations. interaction with numbers and their manipulation to a Innovation boosts output per hour and the freed point at which students are confident and proud of pool of workers seek to exploit other opportunities. their level of skills—in many instances an outcome Their success is evidenced by the dramatic decline they may not have anticipated. One is led to wonder in the unemployment rate since 1992. The capital whether the early sharpening of intellectual rigor invested in any endeavor needs human interaction that occurs when young students struggle to negotiate in order to function. But the new jobs that have the complexities of doing multiplication and division been created by the surge in innovation require the old-fashioned way is not without enduring value. that the workers who fill them use more of their A superficial understanding that does not stretch a intellectual potential. This process of stretching child's intellectual capacity, in my experience, cannot toward our human intellectual capacity is not likely galvanize an enhanced reality-based sense of selfto end anytime soon. Indeed, the dramatic increase esteem. in the demand for on-the-job technical training In this regard, it is discouraging that so many and the major expansion of the role of our com- students who clearly demonstrate impressive verbal munity colleges in teaching the skills required to or other conceptual skills find mathematical proceaddress our newer technologies are persuasive evi- dures intimidating. According to a recent survey of dence that the pressures for increased learning are student attitudes toward math conducted by the ongoing. Department of Education, less than half of the high- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Testimony of Federal Reserve Officials 739 school seniors surveyed said that they like mathemat- of international comparisons are released later this ics, a proportion similar to the proportion who felt year. Nonetheless, with the conceptual demands on that they were good at it. Even more disturbing, these our workers continuing to rise, substantial further proportions were lower than those in the surveys progress needs to be made in raising the analytic conducted in 1990. Some research indicates that competency of our graduating high-school seniors. such "math anxiety" has a negative effect on math- Addressing this issue is crucial for the future of our ematics performance and that strategies for increas- nation. It is obviously just a matter of time before the ing students' confidence in their mathematical abili- bulk of our workforce will require a much higher ties are likely to have additional benefits in terms of level of problem-solving skills than is currently eviachievement.1 If we can enhance their self-esteem dent. And while we have been fortunate to attract so and provide them with a strong curriculum and effec- many skilled young people to our shores, we must tive teaching, students may well find themselves ris- nonetheless strive to increase math and science ing to a level of analytic capability beyond their achievement so that our students can take advantage previous vision. of the considerable opportunities that will exist in There is clearly work to be done, for, as you know, tomorrow's labor market. In that way, we can realize the international comparisons of student achievement the potential of technological change for bringing in mathematics and science that were conducted in substantial and lasting benefits to our economy. 1995 suggested that our fourth graders were among As a final point, I would stress that, even with the the highest rated around the world but that our eighth increasing intellectual specialization so necessary if and twelfth graders fell short of their peers in other we are to move to an ever-higher degree of specialcountries. These comparisons heightened the debate ization in our overall economy, we also need to about the quality of education that students are ensure that all students have a broad knowledge of exposed to between the fourth and twelfth grades the world at large. Major technological advances are and raised concerns about prospects for a continuing becoming increasingly interdisciplinary. Many acashortfall of American-educated skilled technicians. demics argue, I believe rightly, that significant expo- To be sure, substantial reforms in math and science sure to a liberal education—music, literature, and the education had been under way for some time prior to arts—broadens intellectual awareness, enhancing the the 1995 study and have continued since. It is encour- ability to reach across disciplines to forge new ideas. aging that the latest results on trends in academic Thus, while we must strengthen math and science progress from the National Assessment of Educa- education to address the requirements of the newer tional Progress show some improvement in both technologies we see on the horizon, we should not subjects. Perhaps that improvement will show up in lose sight of the advantages of a liberal education. a narrowing of the gap between our students and I do not doubt that many of our most innovative those abroad when the results of a follow-up survey and successful dot-com entrepreneurs are exceptionally, but narrowly, technically focused and educated. But if technology is to fit into a broader society of complex democratic institutions such as ours, it is 1. Hsui-Zu Ho and others, "The Affective and Cognitive Dimen- important that all participants have an adequate sions of Math Anxiety: A Cross-National Study," Journal for awareness of its structure and values. For it is the Research in Mathematics Education (May 2000). This article cites a latter that we as a people endeavor to achieve. Our long literature on "math anxiety" among U.S. students and reports that it also has an adverse effect on students in China and Taiwan. technologies are only a means to that end. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

740 Announcements FEDERAL OPEN MARKET COMMITTEE Boston William C. Brainard, Professor, Department of Economics, DIRECTIVE Yale University, New Haven, Conn., renamed Chairman. The Federal Open Market Committee at its meeting William O. Taylor, Chairman Emeritus, The Boston Globe, on October 3, 2000, decided to maintain the existing Boston, Mass., renamed Deputy Chairman. stance of monetary policy, keeping its target for the federal funds rate at 6V2 percent. New York Peter G. Peterson, Chairman, The Blackstone Group, Recent data have indicated that the expansion of New York, N.Y., renamed Chairman. aggregate demand has moderated to a pace closer to Charles A. Heimbold, Jr., Chairman and Chief Executive the enhanced rate of growth of the economy's poten- Officer, Bristol-Myers Squibb Co., New York, N.Y., tial to produce. The more rapid advances in produc- renamed Deputy Chairman. tivity also continue to help contain costs and hold Philadelphia down underlying price pressures. Charisse R. Lillie, Partner, Ballard Spahr Andrews & However, the utilization of the pool of avail- Ingersoll, LLP, Philadelphia, Pa., named Chairman. able workers remains at an unusually high level. Glenn A. Schaeffer, President, Pennsylvania Building and Moreover, the increase in energy prices, though Construction Trades Council, Harrisburg, Pa., named having limited effect on core measures of prices to Deputy Chairman. date, poses a risk of raising inflation expectations. Cleveland The subdued behavior of those expectations so David H. Hoag, former Chairman, The LTV Corporation, far has contributed importantly to maintaining Cleveland, Ohio, renamed Chairman. an environment conducive to maximum sustainable Robert W. Mahoney, former Chairman, Diebold, Inc., growth. North Canton, Ohio, renamed Deputy Chairman. Against the background of its long-term goals of Richmond price stability and sustainable economic growth and Jeremiah J. Sheehan, former Chairman and Chief of the information currently available, the Committee Executive Officer, Reynolds Metals Company, believes the risks continue to be weighted mainly Richmond, Va., renamed Chairman. toward conditions that may generate heightened infla- Wesley S. Williams, Jr., Partner, Covington & Burling, Washington, D.C., renamed Deputy Chairman. tion pressures in the future. Atlanta John F. Wieland, Chief Executive Officer and Chairman, APPOINTMENT OF CHAIRMEN AND John Wieland Homes and Neighborhoods, Inc., Atlanta, Ga., renamed Chairman. DEPUTY CHAIRMEN OF THE Paula Lovell, President, Lovell Communications, Inc., FEDERAL RESERVE BANKS FOR 2001 Nashville, Tenn., renamed Deputy Chairman. The Federal Reserve Board announced on Septem- Chicago ber 19, 2000, the appointment of the chairmen and Arthur C. Martinez, Chairman and Chief Executive Officer, Sears, Roebuck and Co., Hoffman Estates, 111., deputy chairmen of the twelve Federal Reserve Banks renamed Chairman. for 2001. Robert J. Darnall, Chairman and Chief Executive Officer, Each Reserve Bank has a board of directors of Prime Advantage Chicago, Chicago, 111., renamed nine members. The Board of Governors in Washing- Deputy Chairman. ton, D.C., appoints three of these directors and desig- St. Louis nates one of its appointees as chairman and a second Charles W. Mueller, Chairman, President, and Chief as deputy chairman. Following are the names of the Executive Officer, Ameren Corporation, St. Louis, chairmen and deputy chairmen appointed by the Mo., named Chairman. Board for 2001: Deputy Chairman—To be announced. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

741 Minneapolis The Board believes that the revisions to the disclo- James J. Howard, Chairman, Xcel Energy Inc., sure requirements should help promote increased Minneapolis, Minn., renamed Chairman. consumer awareness of the terms and rates of credit Ronald N. Zwieg, President, United Food & Commercial card financing. Workers, Local 653, Plymouth, Minn., renamed Deputy Chairman. Kansas City JOINT AGENCY PROPOSAL TO REVISE CAPITAL Terrence P. Dunn, President and Chief Executive Officer, RULES FOR RESIDUAL INTERESTS J.E. Dunn Construction Company, Kansas City, Mo., named Chairman. Jo Marie Dancik, Area Managing Partner, Ernst & The Office of the Comptroller of the Currency, the Young LLP, Denver, Colo., named Deputy Chairman. Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Dallas Office of Thrift Supervision on September 27, 2000, H.B. Zachry, Jr., Chairman and Chief Executive Officer, requested public comment on proposed revisions to H.B. Zachry Company, San Antonio, Tex., named their capital rules for residual interests in asset securi- Chairman. tizations or other transfers of financial assets. The Patricia Patterson, President, Patterson Investments, Inc., Dallas, Tex., named Deputy Chairman. proposal was published in the Federal Register (September 27, 2000). Comments are due December 26, San Francisco 2000. Nelson C. Rising, Chairman and Chief Executive Officer, The proposal by the agencies addresses concerns Catellus Development Corporation, San Francisco, with residual interests raised in the December 1999 Calif., named Chairman. Interagency Guidance on Asset Securitization. In that Deputy Chairman—To be announced. guidance, the agencies expressed concern with institutions that were holding inadequate capital against residual interests, were valuing the assets improperly, REGULATION Z: and were holding excessive amounts of these assets REVISION OF REQUIREMENTS FOR CREDIT in relation to capital. In the document, the agencies CARD DISCLOSURES indicated that they were considering limiting the amount of certain residual interests recognized in The Federal Reserve Board published on Septem- regulatory capital. ber 28, 2000, a final rule amending Regulation Z, The capital proposal is intended to apply to balance which implements the Truth in Lending Act, to revise sheet assets retained by a seller (or transferor) that are the disclosure requirements for credit and charge card structured, through subordination provisions or other solicitations and applications. credit enhancement techniques, to absorb more than a The act requires that direct mail and other applica- pro rata share of credit loss related to the transferred tions and solicitations to open card accounts must assets. disclose the annual percentage rate (APR) and other The agencies believe that these residual interests cost information, generally in tabular form. The expose institutions to concentrated credit risk and Regulation Z amendments are intended to make the may present valuation and liquidity concerns. Recent disclosures more noticeable and easier to understand. experience has shown that high concentrations of Under the final rule, disclosures must be in a such residual interests can threaten the safety and readily understandable form and readily noticeable to soundness of insured depository institutions. consumers. The APR for purchase transactions must The proposed treatment would amend the leverage be in eighteen-point type. Cash advance and balance and risk-based capital requirements by instituting the transfer APRs must be included in the table. Balance following: transfer fees must be disclosed either in or outside of the table. Additional guidance is provided on the 1. Requiring that "dollar-for-dollar" risk-based requirement that the table be prominently located and capital be held against residual interests from securion the level of detail about cost information required tization activities or other transfers of financial assets or permitted in the table. The revisions are effective that are retained on the balance sheet, even if the immediately; compliance is mandatory as of Octo- amount exceeds the full capital charge typically held ber 1, 2001. against the assets transferred. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

742 Federal Reserve Bulletin • November 2000 2. Restricting undue concentrations in such Federal Reserve and the private sector can take to residual interests by placing them within the tier 1 remove barriers to the development of electronic capital sublimit of 25 percent already established for check presentment in the United States. nonmortgage servicing assets and purchased credit The steps were identified at a workshop conducted card relationships. Any amounts above this limit will by the Payments System Development Committee on be deducted from tier 1 capital. June 29 at the Federal Reserve Bank of Boston. The actions, described in a short paper distributed in September to workshop participants, include the ISSUANCE BY THE BASEL COMMITTEE OF following: GUIDANCE ON MANAGING RISK IN BANKING • Further consideration of legal changes that would The Basel Committee on Banking Supervision has reduce legal barriers to the electronic collection or issued three papers providing guidance on managing return of check while protecting the rights of consumrisk in banking. The papers are part of the commiters or others who wish to receive paper checks tee's ongoing effort to strengthen procedures for risk • Further efforts to develop and implement technimanagement in banks. They can be obtained from the cal standards for exchanging electronic or paper subweb site of the Bank for International Settlements stitutes for checks (BIS): www.bis.org. • Follow-up discussions between the Federal Reserve and the banking industry on the business Principles for the Management of Credit Risk case for electronic check presentment encourages banking supervisors globally to promote • Discussions of new operational concepts involvsound practices for managing credit risk. It identifies ing electronic check presentment and check imaging sound practices that banks should use in managing and of potential ways to test the concepts the credit risk of all of their activities, both banking • Preparation of educational materials to inform and trading. depository institutions and the public about electronic Best Practices for Credit Risk Disclosure identifies check presentment. the credit risk information that market participants and supervisors need to meaningfully assess banking The co-chairs of the committee, Board Vice Chairorganizations. It encourages banks in all countries to man Roger W. Ferguson, Jr., and Federal Reserve provide that information to the public. Bank of Boston President Cathy E. Minehan, empha- Supervisory Guidance for Managing Settlement sized that the initiatives described in the paper were Risk in Foreign Exchange Transactions stresses that cooperative steps the Federal Reserve can take with banks should manage foreign exchange settlement the private sector. Some of the ideas will be refined risk, like other credit risks of a similar size and further as the initiatives proceed, they said. duration, through a formal process of measurement The formation of the committee was announced and control with active oversight by senior managein July 1999. The other members are Governor ment. This paper builds on the previous work of the Edward W. Kelley, Jr., of the Federal Reserve Board, BIS Committee on Payment and Settlement Systems; and First Vice President Jamie B. Stewart, Jr., of the all three papers are revisions of consultative papers Federal Reserve Bank of New York. First Vice Presiissued in July 1999. dent Patrick K. Barron, of the Federal Reserve Bank of Atlanta, is a liaison to the committee from the The Basel Committee was established in 1975 by System's Retail Payments Office. the central banks of the Group of Ten countries and operates under the auspices of the BIS in Basel, Switzerland. The committee consists of senior supervisors of the world's largest banking systems and MEETING OF THE CONSUMER ADVISORY works to strengthen supervisory and regulatory prac- COUNCIL tices worldwide. The Federal Reserve Board announced on Septem- PROPOSAL TO REMOVE BARRIERS TO ber 25, 2000, that the Consumer Advisory Council ELECTRONIC CHECK PRESENTMENT would hold its next meeting on Thursday, October 26. The council advises the Board on the exercise A Federal Reserve System committee outlined on of its responsibilities under the Consumer Credit September 7, 2000, a series of cooperative steps the Protection Act and on other matters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 743 ENFORCEMENT ACTIONS CHANGES IN BOARD STAFF The Board of Governors announced on October 2, The Federal Reserve Board announced on October 2, 2000, the promotion of Paul Bettge from assistant 2000, the execution of a written agreement by and director to associate director in the Division of among Independent Southern Bancshares, Inc. Reserve Bank Operations and Payment Systems. Employee Stock Ownership Trust, Brownsville, Mr. Bettge will oversee the division's Payments Sys- Tennessee; Independent Southern Bancshares, Inc., tem Risk, FR Bank Financial Accounting, FR Bank Brownsville, Tennessee; and the Federal Reserve Planning and Control, Oversight Coordination, and Bank of St. Louis. Audit Review Programs. The Board announced the retirement on Septem- The Federal Reserve Board announced on September 30, 2000, of Jack Dennis, Jr., assistant director of ber 27, 2000, the execution of a written agreement by the Division of Reserve Bank Operations and Payand among Olathe Bancorporation, Inc., Olathe Coloment Systems, after twenty-nine years of service with rado; the Olathe State Bank, Olathe, Colorado; the the Federal Reserve System. Federal Reserve Bank of Kansas City; and the Colorado Division of Banking. The Federal Reserve Board announced on Septem- ERRATA: FEDERAL RESERVE BULLETIN TABLE ber 22, 2000, the execution of a written agreement by and among the Consolidated Bank and Trust Com- In table 4.411 "Lender Share and Dollar Volume of pany, Richmond, Virginia; the Federal Reserve Bank Residential-Mortgage Originations, 1993-99," which of Richmond; and the Bureau of Financial Institu- appeared in the financial and business statistics sections of the Commonwealth of Virginia. tion in the September 2000 issue (vol. 86, p. A72), a production error caused the printing of incorrect numbers in several of the data cells. The corrected version of the table is shown on page 744. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

744 Federal Reserve Bulletin • November 2000 4.411 LENDER SHARE AND DOLLAR VOLUME OF RESIDENTIAL-MORTGAGE ORIGINATIONS, 1993-991 Mortgage companies YYeeaarr SSaavviinnggss iinnssttiittuuttiioonnss 22 CCoommmmeerrcciiaall bbaannkkss CCrreeddiitt uunniioonnss DDoollllaarr vvoolluummee or S u s b a s v i i d n i g a s r i i e n s s o t f i tu b t a i n o k n s s 3 Independently owned 4 ((bbiilllliioonnss ooff ddoollllaarrss)) Conventional one- to four-family 1 1993 23 19 19 35 4 871 2 1994 26 21 18 30 5 553 3 1995 26 20 25 26 3 452 4 1996 27 18 26 26 4 548 5 1997 26 15 27 29 3 610 6 1998 25 12 32 28 3 1,124 7 1999 23 14 31 28 4 892 FHA, VA, ami RHS one- to four-family 8 1993 9 8 25 57 1 156 9 1994 10 9 28 52 1 90 10 1995 10 8 33 48 1 76 11 1996 10 7 33 49 1 96 12 1997 9 5 37 49 1 100 13 1998 7 4 39 50 1 149 14 1999 6 4 42 47 1 131 Total, one- to four-family 15 1993 21 18 20 39 4 1,027 16 1994 24 19 20 33 5 643 17 1995 24 18 26 29 3 528 18 1996 24 16 27 30 3 644 19 1997 24 14 29 31 3 710 20 1998 23 11 32 31 3 1,273 21 1999 21 12 33 31 4 1,022 Total, multifamily 22 1993 52 33 5 7 3 16 23 1994 56 34 3 4 3 17 24 1995 53 35 4 4 4 13 25 1996 50 34 6 7 3 16 26 1997 48 32 6 12 3 19 27 1998 44 27 11 15 3 25 28 1999 37 26 9 26 3 31 Total, residential 29 1993 21 18 19 38 4 1,043 30 1994 25 19 19 32 5 660 31 1995 24 19 25 29 3 541 32 1996 25 17 26 29 3 660 33 1997 24 14 28 31 3 729 34 1998 23 12 32 31 3 1,297 25 1999 21 13 32 31 4 1,052 NOTE. Coverage of depository institutions declined in 1997 because of an increase in the 3. Includes mortgage company subsidiaries of a bank holding company or a service asset size threshold for exempt institutions from $10 million to $28 million. corporation. 1. Based on the dollar volume of originations reported under the Home Mortgage Disclo- 4. Coverage of independently owned mortgage companies expanded in 1993 when those sure Act. Originations insured or guaranteed by the Rural Housing Service (RHS) include the companies with less than $10 million in assets but with 100 or more home-purchase former Farmers Home Administration. originations were iincluded. 2. Includes savings and loan associations and savings banks. SOURCE. Home Mortgage Disclosure Act, 1990-98. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

745 Minutes of the Meeting of the Federal Open Market Committee Held on August 22, 2000 A meeting of the Federal Open Market Committee Ms. Low, Open Market Secretariat Assistant, Division of Monetary Affairs, Board of was held in the offices of the Board of Governors Governors of the Federal Reserve System in Washington, D.C., on Tuesday, August 22, 2000, at 9:00 a.m. Mr. Kumasaka, Assistant Economist, Division of Monetary Affairs, Board of Governors Present: Mr. Greenspan, Chairman Mr. Connolly, First Vice President, Federal Reserve Mr. McDonough, Vice Chairman Bank of Boston Mr. Broaddus Mr. Ferguson Mr. Gramlich Ms. Browne, Mr. Hakkio, Ms. Krieger, Mr. Guynn Messrs. Lang, Rasche, Rolnick, and Mr. Jordan Rosenblum, Senior Vice Presidents, Federal Mr. Kelley Reserve Banks of Boston, Kansas City, Mr. Meyer New York, Philadelphia, St. Louis, Mr. Parry Minneapolis, and Dallas respectively Mr. Hoenig, Ms. Minehan, Messrs. Moskow Mr. Sullivan, Vice President, Federal Reserve and Poole, Alternate Members of the Bank of Chicago Federal Open Market Committee Mr. Tallman, Assistant Vice President, Federal Messrs. McTeer, Santomero, and Stern, Reserve Bank of Atlanta Presidents of the Federal Reserve Banks of Dallas, Philadelphia, and Minneapolis By unanimous vote, the minutes of the meeting respectively of the Federal Open Market Committee held on Mr. Kohn, Secretary and Economist June 27-28, 2000, were approved. Mr. Bernard, Deputy Secretary The Manager of the System Open Market Account Ms. Fox, Assistant Secretary reported on recent developments in foreign exchange Mr. Mattingly, General Counsel markets. There were no open market transactions in Ms. Johnson, Economist foreign currencies for the System's account in the Mr. Stockton, Economist period since the previous meeting, and thus no vote was required of the Committee. Mr. Beebe, Ms. Cumming, Messrs. Goodfriend, Howard, Lindsey, Reinhart, Simpson, and The Manager also reported on developments in Sniderman, Associate Economists domestic financial markets and on System open market transactions in government securities and federal Mr. Fisher, Manager, System Open Market Account agency obligations during the period June 28, 2000, through August 21, 2000. By unanimous vote, the Messrs. Madigan and Slifman, Associate Directors, Committee ratified these transactions. Divisions of Monetary Affairs and Research The Committee then turned to a discussion of the and Statistics respectively, Board of Governors economic outlook and the implementation of monetary policy over the intermeeting period ahead. Mr. Whitesell, Assistant Director, Division of Monetary Affairs, Board of Governors The information reviewed at this meeting suggested that economic activity was expanding at a Mr. Reifschneider, Section Chief, Division of more moderate pace than earlier in the year. Growth Research and Statistics, Board of Governors in consumer spending had slowed from the outsized Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

746 Federal Reserve Bulletin • November 2000 gains seen earlier, and sales of new homes and motor also were weaker in June (latest data). By contrast, vehicles were down appreciably from their earlier sales of existing homes picked up somewhat in June. highs. However, business spending on equipment and Consumers' assessments of homebuying conditions software had continued to surge, and industrial pro- and builders' ratings of new home sales remained duction was still trending upward. Even though soft. expansion in employment had slowed considerably Growth of business fixed investment, while still in recent months, labor markets remained extremely robust, slowed considerably in the second quarter tight by historical standards, and some measures of after having surged in the first quarter. Business labor compensation had accelerated. With produc- spending on equipment and software continued to tivity also continuing to accelerate, unit labor costs expand at its very rapid first-quarter pace; investment had changed little and measures of core price infla- in high-tech equipment (notably computers and comtion had increased only mildly. munications equipment), software, and industrial Total nonfarm payroll employment dropped appre- machinery was particularly strong. By contrast, outciably in July after a small increase in June. Much lays for nonresidential structures weakened in the of the weakness over the two months reflected sub- second quarter after a first-quarter burst. stantial declines in the number of temporary Census The book value of manufacturing and trade invenworkers. In the private sector, payroll gains had tories jumped in the second quarter. Part of the pickup diminished somewhat on balance since the first quar- reflected large increases in stocks of motor vehicles ter. The slowdown was particularly large in the usu- at wholesalers and automotive dealerships that left ally robust services sector. Manufacturing employ- inventory-sales ratios in the motor vehicle sector at ment, by contrast, had risen on net since the early relatively high levels. Elsewhere, stockbuilding was spring after a lengthy decline. The civilian unemploy- only a bit stronger than sales, and inventory-sales ment rate remained at 4.0 percent in July. ratios generally remained within their relatively low Industrial production registered further gains in ranges for the preceding twelve months. June and July. Persisting strength in manufacturing The U.S. trade deficit in goods and services output was accompanied by brisk increases in mining changed little in June from its May level, but the activity and sizable declines in utilities services deficit for the second quarter as a whole was appreassociated with cooler-than-normal temperatures. In ciably larger than its average for the first quarter. manufacturing, production of high-tech equipment Both exports and imports grew rapidly last quarter, and most other types of business equipment remained though the dollar value of imports increased signifirobust, but the manufacture of motor vehicles and cantly more than the value of exports. The available parts dropped substantially in July after a small June information indicated that economic expansion was decline. The further step-up in overall manufacturing vigorous in both foreign industrial countries and activity lifted capacity utilization to a rate around its major developing countries in the second quarter, but long-term average. recent information pointed to some slowing of growth Growth of nominal retail sales picked up appre- in these countries. ciably in July after having slowed noticeably in the Recent data suggested that price inflation had second quarter. Sales rose sharply at general mer- picked up slightly. Consumer prices, as measured in chandisers, furniture and appliance stores, and outlets the CPI, jumped in June in response to a surge in for other durable goods. However, outlays at auto- energy prices but climbed only modestly further motive dealers declined substantially. Growth in in July, when energy prices changed little. Excluding household expenditures for services eased somewhat the food and energy components, consumer prices in the second quarter (latest available data), with a rose moderately in both months. For the twelve drop in spending for brokerage services more than months ended in July, core CPI prices increased accounting for the slowdown. The recent deceleration somewhat more than in the previous twelve-month in consumer spending occurred against the back- period. When measured by the PCE chain-price ground of moderate growth of real disposable income index, however, the acceleration in core consumer in recent quarters and little net change in stock mar- prices during the last four quarters was very small. ket valuations thus far this year. Nevertheless, con- Producer prices exhibited a pattern that was generally sumer sentiment continued to be very buoyant. similar to that of consumer prices. Prices of all finished goods jumped in June and were unchanged With mortgage rates at levels well above their in July, and core producer prices were unchanged average for last year, total private housing starts fell on balance in the June-July period. For the twelve further in June and July, reaching their lowest level months ended in July, core producer prices rose since late 1997. Sales of new single-family homes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 747 slightly more than in the previous twelve-month ners, paced by a substantial rise in the value of the period. With regard to labor compensation, recent Mexican peso in response to brightening political and data suggested an acceleration, on balance, over the economic prospects in Mexico. past year. Growth in hourly compensation for private The growth of domestic nonfinancial debt moderindustry workers slowed somewhat in the second ated slightly in the second quarter as a result of an quarter after having risen sharply in the first quarter. accelerated paydown in federal debt, while private Over the four quarters ended in June, however, the borrowing remained brisk. However, partial data for change in compensation rates was substantially larger the period since midyear suggested that the overall than the change over the previous four-quarter period. growth in household and business borrowing might By contrast, the advance of average hourly earnings also be slowing somewhat. The expansion of M2 had of production or nonsupervisory workers for the declined substantially since late spring, apparently in twelve months ended in July was about the same as part as a result of the widening opportunity costs of that for the previous twelve-month period. holding assets in M2 stemming from higher market At its meeting on June 27-28, 2000, the Commit- interest rates and possibly also from slackening tee adopted a directive that called for maintaining growth in household incomes. Sluggish currency conditions in reserve markets consistent with an flows were another contributing factor. At the same unchanged federal funds rate of about 6V2 percent. In time, M3 accelerated in July and partial data pointed reaching this decision, the members cited increasing to further robust growth in August. The advance in though still tentative indications of some slowing in this broader aggregate seemed to be driven by aggregate demand from an unsustainably elevated interest-sensitive inflows to M3's institutional money pace and the likelihood that the policy tightening fund component. actions implemented earlier had not yet exerted their The staff forecast prepared for this meeting sugfull retarding effects on spending. The members gested that the economic expansion, after slowing agreed, however, that the statement accompanying appreciably from its elevated pace of recent quarters, the announcement of their decision should continue would be sustained at a rate a little below that of the to underscore their view that the risks remained staff's upwardly revised estimate of the economy's weighted mainly in the direction of rising inflation. potential output. The forecast anticipated that the Open market operations were directed throughout expansion of domestic final demand would be held the intermeeting period toward maintaining the fed- back to some extent by the waning and eventual eral funds rate at the Committee's target level of disappearance of positive wealth effects associated 6V2 percent, and the rate averaged close to the with outsized earlier gains in equity prices and by intended level. Other interest rates generally moved higher interest rates. As a result, growth of spending lower over the period, extending declines that had on consumer durables was expected to stay well begun during the spring. Factors contributing to the below that in recent quarters and housing demand to most recent reductions included economic data stabilize at a level below recent highs. By contrast, releases that were viewed, on balance, as confirming the expansion of business fixed investment, notably earlier indications that demand growth was slowing in equipment and software, was projected to remain to a more sustainable pace and that price pressures robust, and further solid economic growth abroad would remain damped, thereby lessening or poten- was expected to boost the expansion of U.S. exports tially obviating further tightening of monetary policy. for some period ahead. Core consumer price inflation Most broad indexes of stock market prices rose some- was projected to rise somewhat over the forecast what over the period since the June meeting. horizon, in part as a result of higher import prices but In foreign exchange markets, the trade-weighted largely as a consequence of some further increases in value of the dollar increased on net against an index nominal labor compensation gains that would not be of major currencies, even though interest rate differ- fully offset by growth in productivity. entials moved against assets denominated in dollars In the Committee's discussion of current and prorelative to those of other industrial countries. At least spective economic conditions, the members agreed in part, the dollar's appreciation reflected heightened that the information available since midyear provided market perceptions that economic growth in the increased evidence that the growth of aggregate United States, though evidently moderating from its demand and that of aggregate supply were coming rapid pace in recent quarters, was likely to continue into closer balance. The statistical evidence reviewed to exceed that in most other industrial nations. The by the Committee, which was supported by wideforeign exchange value of the dollar dropped slightly spread anecdotal reports, pointed to a noticeable against the currencies of other important trading part- slowing in the expansion of demand and economic Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

748 Federal Reserve Bulletin • November 2000 activity. The slowdown was led by a moderation productivity gains had tended to boost aggregate in consumer spending and some decline in housing demand by even more than potential aggregate supexpenditures that were occurring even before the ply owing to the effects of stronger profits on investfull effects of earlier tightening in financial condi- ment spending and, through the rising stock market, tions had been felt. At the same time, an apparent on consumption as well. However, the leveling out in continued acceleration in underlying productivity stock prices this year suggested that recent increases was boosting the economy's potential output growth in productivity growth had been built into market and, in the context of the leveling out of the broadest expectations and prices some time ago and were not measures of equity prices this year, was doing so likely to provide the same impetus to demand going without the full feedback on demand of previous such forward as had past productivity acceleration. Memaccelerations. While prices were rising somewhat bers cautioned nonetheless that the possibility that more than a year ago, most of this pickup seemed to long-term interest rates and equity prices did not yet reflect the direct and indirect effects of higher energy adequately reflect ongoing productivity gains could prices, and the increase in productivity growth had not be ruled out, with attendant effects boosting kept unit labor costs well contained despite more demand. Finally, rising productivity clearly had been rapid gains in compensation. These developments a major force in containing inflation in a period of had much improved the prospects for a sustainable unusually low unemployment rates, and while some economic expansion at the prevailing stance of mone- of the interactions between productivity growth and tary policy. Even so, the members anticipated that wages and prices could be adduced, these interactions labor markets would remain exceptionally tight, and involved complex processes that were very difficult with labor compensation already accelerating and to assess given the paucity of prior experience. As a higher energy prices potentially raising inflation consequence, judgments about labor market presexpectations, they agreed that the risks remained sures, productivity, and inflation had to be viewed weighted toward rising inflation. with care on the basis of evolving developments. In the Committee's discussion of the outlook for In their review of the outlook for expenditures in the economy, members focused considerable atten- key sectors of the economy, members observed that tion on the growth rate of the economy's supply growth in consumer spending had moderated substanpotential—its ability to satisfy further growth in tially after a period of exceptional gains in late 1999 demand on a sustainable basis. The widespread appli- and early 2000. The clearest evidence of softening cation of technological advances and the associated consumer demand tended to be concentrated in sales surge in outlays for capital equipment had been fos- of motor vehicles and in housing-related durable tering an acceleration in labor productivity that goods. Available data on reduced growth in consumer seemed to be ongoing. Data on productivity and spending were supported by anecdotal reports of capital accumulation that had become available in some slippage in retail sales below expectations in recent months had tended to confirm these trends, several parts of the country. Factors underlying these and the statistical evidence was reinforced by com- developments included diminishing wealth effects ments from many business executives and by persis- after several months of limited changes in equity tent upward revisions to long-term profit forecasts, prices, the cumulative buildup in the stock of motor which had yet to suggest a leveling out of productiv- vehicles and other consumer durables owned by the ity growth. public, and the constraining effects of higher energy Quickening productivity had been the fundamental prices on incomes available to be spent on other factor behind the economy's remarkable performance goods and services. While these factors might well in recent years. Members noted, however, that histori- continue to damp the growth of consumer spending cal episodes involving major changes in productivity going forward, members noted that consumer contrends had been rare, and the past therefore provided fidence remained at a high level, consumer incomes a limited basis for evaluating the course of future were rising, and no anecdotal or other evidence productivity developments. Accordingly, consider- pointed to any marked deterioration in consumer able caution needed to be exercised in assessing the spending that would pose a potential threat to the outlook for productivity and in relying on projections sustainability of the economic expansion. of the economy and prices, which necessarily embod- The housing sector provided the clearest indicaied judgments about this outlook, in making mone- tion of a response of aggregate demand to firming tary policy. Another source of uncertainty related to interest rates, affecting industries producing constructhe interactions of rising productivity and aggregate tion materials and household furnishings. Anecdotal demand. Over the course of recent years, accelerating reports from much of the country tended to confirm Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 749 the statistical evidence of a downward trend in hous- In the Committee's discussion of the outlook for ing starts and home sales. Factors helping to explain inflation, members noted that overall measures of the softness in housing, which included the rise that price inflation had picked up to fairly high levels by had occurred in mortgage interest rates and reported the standards of recent years, largely as a result of overbuilding in some metropolitan areas, were higher energy costs. Moreover, supply factors in expected to continue to exert some downward pres- major energy markets—petroleum, gas, and electricsure on housing activity. However, reference also was ity generating capacity—did not point to significant made to indications that wealth effects were continu- relief for some considerable period of time. Still, core ing to boost housing demand and prices in parts of consumer price indexes remained relatively damped the country. and had risen only a little over the past year, espe- In sharp contrast to developments in the consumer cially when measured by the PCE chain-price index, and housing sectors, business outlays for capital and that suggested underlying price pressures equipment and software had continued to rise at remained largely contained. Nonetheless, a number exceptional rates, even after several years of rapid of members were concerned that unusually taut labor growth. The persistence of dramatic expansion evi- markets could begin at some point to show through dently reflected expectations that such capital invest- to increases in labor compensation in excess of proments would continue to earn very high rates of ductivity gains, pressuring unit costs and prices. Evireturn. Although the extraordinary rates of increase dence of this had yet to emerge, perhaps because in investment outlays currently displayed little or no productivity continued to accelerate, but a flattening sign of abating, historical patterns indicated that out of the rate of increase in productivity, even at a even dramatic surges or shifts in technology invari- high level, could well pose at some point a risk to ably lost momentum once the new technology was continued favorable inflation performance. To be widely adopted, and rates of return on further invest- sure, there were a number of positive factors in the ments tended to diminish. There was no reliable way outlook for inflation, including highly competitive to anticipate the timing of such a downturn and conditions in many markets, stable and relatively indeed little reason to expect a turnaround over the favorable expectations with regard to the longer-run nearer term in the current investment boom. Mem- inflation outlook, and signs that the remarkable accelbers noted, however, that the investment outlook for eration in productivity was continuing. On balance, the nonresidential construction sector presented a however, the members saw a mild upward trend much more mixed picture. While such business in key measures of inflation as a distinct possibilinvestment continued to exhibit considerable vigor in ity, albeit one that was subject to considerable many areas, it clearly had weakened in others and for uncertainty. the nation as a whole seemed poised for a relatively In the Committee's discussion of policy for the subdued advance in coming quarters. One factor intermeeting period ahead, all the members endorsed pointing in the latter direction was evidence of more a proposal to retain the current stance of policy, cautious attitudes on the part of many business execuconsistent with a federal funds rate continuing to tives and especially their lending institutions. average about 6Vz percent. In their assessment of The strengthening economies of many U.S. trad- factors leading to this decision, the members focused ing partners were fostering rising demand for U.S. on the further evidence that moderating demand exports, a trend that seemed likely to persist accord- and accelerating productivity were closing the gap ing to reports from many domestic business con- between the growth of aggregate demand and potentacts. Nonetheless, the nation's current account defi- tial supply, even before earlier Committee tightening cit apparently continued to increase, a development actions had exerted their full restraining effects. about which members expressed concern in view of While the recent rally in domestic financial markets the risks that it posed for the foreign exchange value could be viewed as having partially eroded the degree of the dollar and domestic inflation over time. Still, of monetary restraint implemented earlier, real interthe experience of the past few years clearly demon- est rates for private borrowers were still at relatively strated that the dollar was likely to remain strong as elevated levels, banking institutions were continuing long as foreign investors continued to see attractive to report further tightening of their standards and investment opportunities in the United States. Past terms for business loans, equity prices had risen only experience also suggested that international capital modestly, and the dollar had firmed over recent flows can quickly reverse themselves, but the timing months. In addition, the last few readings on core of a major turnaround in the dollar, if any, could not inflation had not suggested a further upward drift, be predicted with any degree of confidence. unit labor costs were not increasing, and longer-term Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

750 Federal Reserve Bulletin • November 2000 inflation expectations had been stable for some time. At the conclusion of this discussion, the Commit- Accordingly, the Committee incurred little risk in tee voted to authorize and direct the Federal Reserve leaving the stance of policy unchanged at this meet- Bank of New York, until it was instructed otherwise, ing and waiting to see how the various factors affect- to execute transactions in the System Account in ing both supply and demand in the economy unfolded accordance with the following domestic policy and influenced the prospects for economic activity directive: and prices. At the same time, many members emphasized that The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and the Committee needed to be prepared to act promptly promote sustainable growth in output. To further its longshould inflationary pressures appear to be intensifyrun objectives, the Committee in the immediate future ing, and in the Committee's discussion of the seeks conditions in reserve markets consistent with mainbalance-of-risks sentence to be included in the press taining the federal funds rate at an average of around statement that would be issued after this meeting, all 6V2 percent. the members agreed that the sentence should con- The vote also encompassed approval of the sentinue to indicate that the risks to the economy tence below for inclusion in the press statement to be remained weighted toward higher inflation in the released shortly after the meeting: foreseeable future. While the members did not expect underlying inflation to intensify materially, especially Against the background of its long-run goals of price over the nearer term, the statement was intended to stability and sustainable economic growth and of the inforexpress their views about the longer term, and over mation currently available, the Committee believes that the that horizon they agreed that the risks lay in the risks are weighted mainly toward conditions that may direction of price acceleration. The risks of higher generate heightened inflation pressures in the foreseeable future. inflation over time were seen importantly to stem from the unusually taut conditions in labor markets, Votes for this action: Messrs. Greenspan, McDonough, which could place upward pressures on unit costs and Broaddus, Ferguson, Gramlich, Guynn, Jordan, Kelley, prices, especially once productivity growth leveled Meyer, and Parry. Votes against this action: None. out in the future. But members also cited the potential for persistently higher energy prices to affect longer- It was agreed that the next meeting of the Commitrun inflation expectations, and the possibility that, tee would be held on Tuesday, October 3, 2000. taking into consideration recent declines in long-term The meeting adjourned at 12:50 p.m. interest rates, financial conditions might not yet be tight enough to balance aggregate demand and poten- Donald L. Kohn tial supply in the face of optimism about the growth Secretary of labor and capital income in association with accelerating productivity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

751 Legal Developments ORDERS ISSUED UNDER BANK HOLDING COMPANY substantial comments on the proposal from Dime and ACT Dime Savings (collectively "Dime") and Inner City Press/ Community on the Move ("ICP"). The Board has consid- Orders Issued Under Section 4 of the Bank Holding ered the application and notice, the comments submitted, Company Act and all the other facts of record in light of the factors set forth in sections 3 and 4 of the BHC Act. FleetBoston Financial Corporation Fleet, with total consolidated assets of $181.3 billion, Boston, Massachusetts operates depository institutions in Connecticut, Florida, Maine, Massachusetts, New Hampshire, New Jersey, New Order Approving the Acquisition of Shares of a Bank York, and Rhode Island. Fleet operates the fifth largest Holding Company commercial banking organization in New York, controlling deposits of $17.6 billion, representing approximately FleetBoston Financial Corporation ("Fleet"), a financial 4.2 percent of total deposits in insured depository instituholding company within the meaning of the Bank Holding tions in the state ("state deposits").2 Fleet operates Company Act ("BHC Act"), has requested the Board's the largest depository institution in Connecticut, controlapproval under the BHC Act (12 U.S.C. § 1841 et seq.) to ling deposits of $14.9 billion, representing 25.4 percent of acquire up to 9 percent of the voting shares of North Fork state deposits. In New Jersey, Fleet operates the fourth Bancorporation, Inc., Melville ("North Fork"), a regis- largest depository institution, controlling deposits of $8.8 tered bank holding company, and thereby acquire North billion, representing 6.3 percent of state deposits. Fork Bank, Mattituck ("NFB"), both in New York, and On consummation of its proposal to acquire Dime, North Superior Savings of New England, N.A., Branford, Con- Fork would become the fifth largest commercial banking necticut. North Fork has applied under sections 4(c)(8) and organization in New York, controlling total deposits of 4(j) of the BHC Act (12 U.S.C. §§ 1843(c)(8) and (j)) and approximately $19.5 billion, representing approximately section 225.24 of the Board's Regulation Y (12 C.F.R. 4.6 percent of state deposits. North Fork would remain the 225.24) to acquire at least 50.1 percent of the voting shares twenty-fourth largest commercial banking organization in of Dime Bancorp, Inc. ("Dime"), and thereby acquire Connecticut, controlling deposits of $363.3 million, repre- Dime's wholly owned subsidiary, The Dime Savings Bank senting less than 1 percent of state deposits. North Fork of New York, FSB, both in New York, New York ("Dime would be the fourteenth largest commercial banking orga- Savings"), a savings association.1 Accordingly, Fleet also nization in New Jersey, controlling deposits of $2.3 billion, has filed for approval under sections 4(c)(8) and 4(j) of the representing approximately 1.6 percent of state deposits. BHC Act (12 U.S.C. §§ 1843(c)(8) and (j)) and section As noted above, the Board has received comments from 225.24 of the Board's Regulation Y to acquire an owner- Dime objecting to the proposed acquisition. Dime asserts ship interest in a company that engages in the operation of that Fleet presently exercises a controlling influence over a savings association. The ownership, control, or operation North Fork and would continue to do so. Dime also argues of a savings association is a permissible activity for a bank that Fleet's investment would have an adverse effect on holding company, pursuant to section 225.28(b)(4) of Regcompetition in Suffolk County, New York, where Fleet and ulation Y. North Fork operate. In addition, Dime challenges Fleet's Notice of the proposal, affording interested persons an record under considerations relating to the convenience opportunity to submit comments, has been published (65 and needs of the communities it serves. Dime requests that Federal Register 16,919 and 49,574 (2000)), and the time the Board convene a public hearing on the proposal and the for filing comments has expired. The Board has received related North Fork/Dime notice, and Dime claims that Fleet has compromised the integrity of the regulatory process by withholding documents from the Board, providing 1. This proposal is discussed in detail in a Board order issued with false or misleading information to the Board, and making this order. See North Fork Bancorporation, Inc., 86 Federal Reserve improper confidentiality requests in connection with sub- Bulletin 767 (2000) ("North Fork Order"). North Fork plans to merge its wholly owned subsidiary bank, North Fork Bank, Mattituck, New York, with Dime Savings, and North Fork Bank would be the surviving institution. The merger would be subject to approval by the 2. Deposit and ranking data are as of June 30, 1999, and reflect Federal Deposit Insurance Corporation ("FDIC") under section 18(c) acquisitions as of April 20, 2000, for Connecticut and as of March 3, of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) ("Bank 2000, for New York. Asset data are as of December 31, 1999. In this Merger Act") and by the New York State Banking Department context, depository institutions include commercial banks, savings ("NYSBD"). banks, and savings associations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

752 Federal Reserve Bulletin • November 2000 missions to the Board. Dime contends that these issues company is not an ordinary acquisition for a bank holding reflect adversely on the managerial factors that the Board company.4 Nonetheless, the requirement in section 3(a)(3) must consider when reviewing proposals under sections 3 of the BHC Act that the Board's approval be obtained and 4 of the BHC Act. The Board has also received before a bank holding company acquires more than comments from ICP that oppose the proposal for similar 5 percent of the voting shares of a bank suggests that reasons, and that argue, in particular, that Fleet's and North Congress contemplated the acquisition by bank holding Fork's records of performance under the Community Rein- companies of between 5 and 25 percent of the voting vestment Act are inadequate. shares of a bank or a bank holding company.5 Nothing in The Board has considered these comments and the re- the BHC Act, moreover, requires denial of an application sponses submitted by Fleet carefully, and has reviewed the solely because a bank holding company proposes to acproposal in light of all the information presented and quire less than a controlling interest in a bank or a bank otherwise available to the Board. Based on this consider- holding company. On this basis, the Board has on numeration and subject to Fleet's commitments and the condi- ous occasions approved the acquisition by a bank holding tions established by the Board, as described below, the company of less than a controlling interest in a bank or Board has concluded that the proposal satisfies the criteria bank holding company.6 set out in the BHC Act. Accordingly, the Board has determined to approve the application and notice subject to Fleet's commitments and the conditions established herein Control of North Fork by the Board. Under section 2 of the BHC Act, a bank holding company controls a bank or company if: Board Policy on Evaluating Contested Proposals and (1) The bank holding company directly or indirectly or Minority Investments acting through one or more other persons owns, controls, or has power to vote 25 percent or more of Section 3(c) of the BHC Act requires the Board to review any class of voting shares of the bank or company; each application in light of the Act's competitive stan- (2) The company controls in any manner the election dards, the financial and managerial resources and future of a majority of the directors or trustees of the bank prospects of the companies and depository institutions or company; or concerned, and the convenience and needs of the communi- (3) The Board determines, after notice and opportunity ties to be served. Section 4 of the BHC Act requires the for hearing, that the company directly or indirectly Board to consider whether the nonbanking aspects of the exercises a controlling influence over the managetransaction can reasonably be expected to produce benefits ment or policies of the bank or company.7 to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible ad- Dime and ICP contend that a number of circumstances verse effects, such as undue concentration of resources, indicate that Fleet has already exercised control over North decreased or unfair competition, conflicts of interests, or Fork in connection with the proposed acquisition of Dime unsound banking practices. without the prior approval of the Board. Dime and ICP also Although Fleet's acquisition of the North Fork shares is argue that, after Fleet's proposed investment in North a negotiated transaction, its investment in North Fork is Fork, Fleet would control a merged North Fork/Dime for directly related to a proposal by North Fork to acquire purposes of the BHC Act. Dime, a transaction that Dime's management opposes. The Fleet has applied to acquire only 9 percent of North Fork Board has long held that, where the statutory criteria are shares, and would not have any representation of the board met, the Board would be acting outside its discretion under of directors of North Fork or the right to control in any the BHC Act to withhold approval based on other factors, such as whether the proposal is acceptable to the management of the organization to be acquired.3 Consequently, the Board has consistently applied the statutory criteria equally to cases supported by the management of the company to 4. See, e.g., North Fork Bancorporation, Inc., 81 Federal Reserve be acquired and to cases that are opposed by management Bulletin 734 (1995) ("North Fork Bancorporation"); State Street of an institution affected by the proposal. Boston Corporation, 67 Federal Reserve Bulletin 862, 863 (1981). This case involves a proposal to acquire approximately 9 5. 12 U.S.C. § 1842(a)(3); 12 C.F.R. 225.11(c). 6. See, e.g., North Fork Bancorporation (acquisition of up to percent of the voting shares of a bank holding company. 19.9 percent of the voting shares of a bank holding company); The Board previously has indicated that the acquisition of Mansura Bancshares, Inc., 79 Federal Reserve Bulletin 37 (1993) less than a controlling interest in a bank or bank holding ("Mansura") (acquisition of 9.7 percent of the voting shares of a bank holding company); SunTrust Banks, Inc., 76 Federal Reserve Bulletin 542 (1990) (acquisition of up to 24.9 percent of the voting shares of a bank) ("SunTrust"); and First State Corporation, 76 Federal Reserve Bulletin 376 (1990) (acquisition of 24.9 percent of the voting shares of 3. See, e.g., The Bank of New York Company, Inc., 74 Federal a bank). Reserve Bulletin 257, 259 (1988). 7. 12 U.S.C. § 1841(a)(2). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 753 manner the selection of the majority of the board of direc- and North Fork and the involvement of Fleet in the protors of North Fork.8 Fleet has stated that it does not intend posed acquisition of Dime. This record includes copies of to exercise a controlling influence over the management or all documents, correspondence, and records of conversapolicies of North Fork, Dime, or any of either organiza- tions between officials and representatives of Fleet and tion's subsidiaries, and Fleet has provided commitments North Fork that relate to Fleet's investment in North Fork designed to ensure that its proposed investment is noncon- or the acquisition of Dime by North Fork, and depositions trolling. If Fleet were found to control North Fork, then and other information provided by Dime from litigation North Fork would become a subsidiary of Fleet and would arising out of North Fork's proposal to acquire Dime. In be treated as part of the Fleet organization for supervisory addition, the Board has reviewed the terms of the agreepurposes. ments between Fleet and North Fork that provide for Fleet's proposed investment in North Fork, Fleet's pro- A. Pre-consummation Control Analysis posed acquisition of 17 Dime Savings branches, and the pricing of Fleet's proposed investment in North Fork. Dime and ICP have questioned whether several recent After review of the information in the record, the Board events, in particular various remarks by management of does not believe that Fleet exercised or attempted to exer- North Fork, indicate that Fleet has already exercised a cise a controlling influence over North Fork within the controlling influence over North Fork in connection with meaning of the BHC Act over North Fork before or in North Fork's bid to acquire Dime and would have a strong connection with the proposal by North Fork to acquire influence over a merged North Fork/Dime. Dime also Dime. Although the investment by Fleet in North Fork is contends that Fleet was selected to participate in this essential to North Fork's proposal to acquire Dime, neither transaction because North Fork allegedly lacks experience the available documents concerning the negotiations bein operating a large mortgage company, and Fleet intends tween Fleet and North Fork nor the record of previous to operate Dime's subsidiary mortgage company subsid- business relationships between Fleet and North Fork indiiary, the North American Mortgage Company, Santa Rosa, cate that Fleet has exercised a controlling influence over California ("NAMCO").9 the management or policies of North Fork. North Fork's Dime further asserts that the purchase price to be paid by proposal to acquire Dime was initiated by management for Fleet for the preferred shares and various rights to shares of North Fork before Fleet's proposed involvement. When it North Fork and for 17 Dime Savings branches reflects became apparent that North Fork would benefit from addibelow-market terms and indicates that Fleet exerts a con- tional capital in its effort to acquire Dime, North Fork trolling influence over North Fork. approached Fleet with a proposed sale of its shares. There The Board has compiled and carefully reviewed a signif- also is nothing in the record to indicate that North Fork icant record to understand the relationship between Fleet could not have acquired financing from another source. The terms of Fleet's investment in North Fork appear to be within the range of other proposals. The terms of the 8. Fleet would receive 250,000 shares of convertible, non cumulainvestment also might be viewed in light of the short time tive North Fork preferred stock, rights to acquire 7.5 million shares of North Fork common stock, and certain contingent additional rights to period available to North Fork to raise capital when North purchase North Fork common stock, in exchange for $250 million. Fork initially made its bid for Dime, and the fact that the Under the terms of the investment, Fleet may convert its preferred investment represents a private placement, which generally shares and exercise its rights at any time. North Fork also has agreed results in the buyer's ability to negotiate better-than-market to sell 17 Dime Savings branches to Fleet at an 8 percent premium to terms because of the seller's unwillingness or inablility to deposits if North Fork successfully acquires Dime. Fleet has stated that it proposes to acquire the shares of North Fork as a passive obtain numerous offers. In addition, Fleet proposes to investment, and that Fleet would not control North Fork or Dime after acquire a minority investment (less than 10 percent of the this investment. voting shares of North Fork) in a relatively large banking 9. Dime and ICP cite as evidence of Fleet's controlling influence organization—an investment that is somewhat unusual over Dime the fact that Fleet assisted North Fork in analyzing and planning for the future of NAMCO before North Fork made its tender because it is a significant investment without the attributes offer for Dime. The record indicates that Fleet provided general advice of control. The price to be paid for the 17 branches also to North Fork regarding NAMCO. However, North Fork also had reflects the fact that Fleet did not have an opportunity to other independent advisors for this transaction, and North Fork reperform "due diligence" on the branches before it negotitained and exercised full authority to make its own decisions on the transaction. There is no evidence in the record to demonstrate that ated the premium. discussions with Fleet resulted in Fleet's determining or controlling Fleet and North Fork currently do not have any signifi- North Fork's investment decisions and there is no evidence of a cant business arrangements with each other that would formal or informal agreement between the parties that involves Fleet indicate that the two institutions usually work together in in the operation of NAMCO. the normal course of business, or that Fleet has, through its Dime also alleges that North Fork would need Fleet's assistance to integrate Dime into the North Fork's operations because Dime is business relationships, pressured North Fork to take or significantly larger than North Fork. Dime Savings is a savings refrain from taking any action in connection with North association and its consumer-oriented operations are similar to North Fork's bid to acquire Dime. North Fork has a history of Fork's operations. The record indicates that North Fork has integrated making investments opposed by management, is an aggresother savings associations into its operations successfully. In addition, sive acquirer, and previously has demonstrated its ability to North Fork has developed a plan for ensuring the successful integration of Dime into North Fork's operations. successfully integrate other financial institutions into its Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

754 Federal Reserve Bulletin • November 2000 own operations.10 In light of North Fork's past perfor- Fleet has requested that it be permitted to engage in mance integrating institutions and its plans for the integra- certain business transactions with North Fork after the tion of Dime in this case, North Fork appears capable of acquisition of shares of North Fork by Fleet. The Board has integrating Dime without assistance from Fleet. For these monitored and at times limited business relationships bereasons, the Board concludes that Fleet has not exercised tween companies in the context of minority investments to or attempted to exercise a controlling influence over North mitigate the ability of one party to exercise a controlling Fork or Dime in connection with the proposal by North influence over another through business transactions and Fork to acquire Dime. relationships.14 As noted above, Fleet and North Fork have reported that the companies currently have limited transac- B. Post-consummation Control Analysis tions with each other. Fleet contends that because Fleet and North Fork are both large banking organizations with in- In order to avoid a determination that Fleet would have a creasing presences in the mortgage banking area, in particcontrolling influence over North Fork in the future, Fleet ular, the two companies would inevitably have business has made commitments similar to those made by other opportunities that are not influenced by Fleet's ownership companies with minority investments11 and commitments relationship and that can be documented to be on terms that have been accepted by the Board to mitigate the identical to transactions with third parties, such as large potential for a controlling influence.12 These commitments loan participations and purchases and sales in the secondprohibit Fleet from having any director, officer, or em- ary mortgage market. Fleet has committed that these limployee interlocks with North Fork; proposing directors in ited relationships would always be on market terms. opposition to North Fork's management; influencing the Permitting limited business relationships in this case dividends, policies or credit decisions of North Fork; or, in would not appear to allow Fleet to control North Fork for general, exercising or attempting to exercise a controlling purposes of the BHC Act.15 As proposed, Fleet's investinfluence over North Fork.13 ment in North Fork represents less than 10 percent of North Fork's voting shares, and the passivity commitments made by Fleet diminish Fleet's ability to exercise control over North Fork by reducing the means for Fleet to exer- 10. Since 1995, North Fork received Board approval to acquire seven institutions and received Board approval to make minority cise control. In addition, the amount of business transacinvestments. North Fork Bancorporation, 84 Federal Reserve Bulletin All (1998) (9.9 percent investment in Long Island Bancorp); North Fork Bancorporation (19.9 percent investment in Suffolk Bancorp); North Fork Bancorporation, 81 Federal Reserve Bulletin 509 (1995) contain any projections, forward-looking statements, or information (9.9 percent interest in Sunrise Bancorp). All of the minority invest- relating to prices or the business and strategic plans of North Fork or ments were opposed by the target institution. its subsidiaries. 11. The commitments are set forth in the Appendix. Dime has This additional passivity commitment and a clarification of the questioned whether Fleet's commitments can eliminate the impact of scope of the passivity commitments discussed above that were proa controlling influence that was previously exercised and believes that vided by Fleet at the request of the DOJ also are set forth in the Fleet should be limited to a 4.9 percent investment in North Fork. As Appendix. noted above, the Board does not find that Fleet has exercised a 14. See, e.g., National Bancshares; First Southern; FCFT. controlling influence over North Fork or that the proposal by Fleet, in 15. Dime contends that Fleet's status as the largest shareholder of a the context of the commitments and conditions discussed in this order, widely held company such as North Fork, along with the additional to acquire approximately 9 percent of the voting shares of North Fork rights, the branch sale and any other business transactions the parties would, by itself, result in Fleet controlling North Fork for purposes of might be permitted to enter in the future, support a finding that a the BHC Act. controlling influence would exist in this case. 12. See, e.g., National Bancshares Corporation of Texas, 82 Federal Dime cites the order in the Amboy Bancorporation application as Reserve Bulletin 565, 568 (1996) ("National Bancshares"); First support for its contention that a minority investment, even when Southern Bancorp, Inc., 82 Federal Reserve Bulletin 424, 426 (1996) subject to passivity commitments, can result in a control relationship ("First Southern"); FCFT, Inc., 80 Federal Reserve Bulletin 1000, if a significant business relationship between the parties would exist in 1002 (1994) ("FCFT'). the future. Amboy Bancorporation, 83 Federal Reserve Bulletin 507 13. Commenters allege that Fleet, by virtue of the terms of and (1997) ("Amboy"). In Amboy, however, Amboy Bancorporation, procontractual rights secured under the stock purchase agreement govern- posed to underwrite and originate real estate and construction loans in ing Fleet's investment in North Fork, has already violated the passiv- the community of the bank in which it was investing, The Community ity commitments provided to the Board in connection with this appli- Bank of New Jersey, Freehold, New Jersey ("CBNJ"). CBNJ, a cation or contractually has the right to do so in the future. Specifically, de novo bank with no record of independent operations, would have commenters note Fleet's right to inspect the books of and have access participated in these loans under the proposal. This proposed business to the management of a combined North Fork/Dime. relationship did not limit the amount of CBNJ's assets that would Fleet has made passivity commitments to the Board irrespective of represent loans originated or underwritten by Amboy Bancorporation, any contractual rights it may have under the stock purchase agreement and the amount of such participation could have represented most or and the order is conditioned on Fleet's compliance with the commit- all of the loan portfolio of CBNJ. ments made to or conditions imposed by the Board. Fleet has repre- In this case, nothing in the Fleet/North Fork proposal or record sented to the Board and the Department of Justice ("DOJ") that it will suggests that it is possible that North Fork would rely on Fleet for not, without prior Board approval, seek to obtain or review any most or all of its assets. Although Dime has inferred an intimate and competitively sensitive information about North Fork or any of its continuous working relationship between Fleet and North Fork based subsidiaries, other than information relating to Fleet's planned pur- on statements by the management of North Fork, these statements chase of 17 Dime Savings branches from North Fork and copies of cannot support the conclusion that the future business relationship North Fork's consolidated financial statements. Fleet may not seek or contemplated under this proposal is comparable to the relationship obtain copies of North Fork's consolidated financial statements if they proposed in Amboy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 755 tions proposed would not appear to be significant to either The question of whether the acquisition of a minority organization and would not be on terms that would allow interest in a competing bank or bank holding company one company to force changes in the management or would result in a substantial lessening of competition must policies of the other company. Moreover, Fleet may not be answered in light of the specific facts of record of each increase its ownership interest in North Fork without fur- case.18 The Board continues to believe that noncontrolling ther review and approval by the Board. interests in directly competing banks or bank holding com- Because of the unusual circumstances of this investment, panies under the BHC Act require careful review of the the Board concludes that it is appropriate to require Fleet to effects of the proposal on competition in the relevant provide the Board with advance notice of any joint ven- banking markets. The Board previously has noted that one tures or other investments it may undertake with North company need not acquire control of another company to Fork, and of any proposal by Fleet to purchase substan- substantially lessen competition between them.19 Based on tially all the assets of North Fork or any of its subsidiaries. a close review of the facts in this case, the Board has This requirement will allow the Board to monitor other concluded that, even if the Board were to determine that types of investments by Fleet in North Fork that might Fleet would control the merged North Fork/Dime on conindicate or involve a control relationship and, in particular, summation of the proposal, the elimination of competition will allow the Board to monitor the relationship between between Fleet and merged the North Fork/Dime would not Fleet and NAMCO. be so substantial as to warrant denial of the application. The Board has adequate supervisory authority to monitor and enforce Fleet's compliance with its commitments, in- A. Definition of the Relevant Geographic Banking cluding the authority to initiate control proceedings against Market Fleet if facts come to the Board's attention that indicate that Fleet controls North Fork or Dime for purposes of the The Board has considered carefully the comments and BHC Act. The Board believes that the commitments pro- information provided by the commenters in support of an vided by Fleet and the condition imposed by the Board analysis of the competitive effects of the proposal in New substantially mitigate the potential that consummation of York that considers Suffolk County as a separate geothe proposal would result in Fleet's ability to exercise a graphic banking market. They state that consummation of controlling influence over North Fork or Dime. Based on the proposal would substantially lessen competition for these commitments, conditions, and all other facts of banking services in Suffolk County. Dime contends that record, it is the Board's judgement that the record does not local customers have no reasonable alternatives for banksupport a finding that Fleet would acquire control of North ing services except depository institutions in Suffolk Fork, Dime, or any of North Fork's or Dime's subsidiaries, County, and that Fleet, assuming that it would control for purposes of the BHC Act through consummation of the North Fork, would be able to raise prices or reduce service proposal.16 in Suffolk County without concern about competition from outside this area. Competitive Considerations To determine the effect of a particular transaction on competition, it is necessary to designate the area of effec- Section 3 of the BHC Act prohibits the Board from approv- tive competition between the parties, which the courts have ing a proposal that would result in a monopoly or would be held is decided by reference to the relevant "line of comin furtherance of an attempt to monopolize the business of merce" or a product market and a geographic market. The banking in any part of the United States. Section 3 also Board and the courts consistently have recognized that the prohibits the Board from approving a proposal that would appropriate product market for analyzing the competitive substantially lessen competition in any relevant banking effects of bank mergers and acquisitions is the cluster of market unless the anticompetitive effects of the proposal in products (various kinds of credit) and services (such as that banking market are clearly outweighed in the public checking accounts and trust administration) offered by interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served.17 18. See, e.g., North Fork Order; Mansura; SunTrust. 19. It is possible, for example, that the acquisition of a substantial ownership interest in a competitor or a potential competitor of the 16. Because of the above control determination, the Board also finds acquiring firm may alter the market behavior of both firms in such a that Fleet is not required to obtain Board approval under section 3 of way as to weaken or eliminate independence of action between the the BHC Act to acquire North Fork as a subsidiary as a result of this organizations and increase the likelihood of cooperative operations. proposal. Dime has asserted that Fleet's proposal to purchase branches See The Summit Bancorporation, 75 Federal Reserve Bulletin 712 from North Fork must comply with sections 23A and 23B of the (1989); Mansura at 38. Dime contends that Fleet's proposal is an Federal Reserve Act because, in Dime's view, North Fork would be a example of one company (North Fork), paying off another company subsidiary of Fleet and the branch purchases would be covered trans- (Fleet), to prevent it from bidding on a third company (Dime), and, actions between two affiliated companies. 12 U.S.C. § 371c. For the therefore, presents the possibility of the cooperative operation of two reasons discussed above, the Board has not found that North Fork commercial banking organizations in the same market. Fleet has been would become an affiliate of Fleet for purposes of sections 23A and B able to bid on Dime since May 17, 2000, however, and the analysis of of the Federal Reserve Act on the acquisition of Dime by North Fork. the competitive effects discussed above reviewed Fleet's proposal as if 17. See 12 U.S.C. § 1842(c) (1) and (2). Fleet would control the merged North Fork/Dime. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

756 Federal Reserve Bulletin • November 2000 banking institutions.20 In defining the relevant geographic To confirm that Suffolk County has not become less market, the Board consistently has sought to identify the integrated with the rest of the market since 1990, the Board area in which the cluster of products and services is pro- has reviewed additional commuting data compiled by an vided by competing institutions and in which purchasers of outside consultant.26 This research suggests no substantial the products and services seek to obtain these products and change in commuting rates between Suffolk County and services.21 In applying these standards to bank acquisition the rest of the Metropolitan New York-New Jersey banking proposals, the Board and the courts repeatedly have held market ("New York banking market") from 1996 through that the geographic market for the cluster of banking 2000.27 For example, the average estimated commuting products and services is local in nature.22 In delineating the rate between Suffolk County and New York City over that relevant geographic market in which to assess the competi- five-year period was 12.4 percent, almost identical to the tive effects of a banking merger or acquisition, the Board 1990 Census data. The percentage of Suffolk County resireviews population density; worker commuting patterns; dents working elsewhere in the New York Metropolitan advertising patterns of financial institutions; the presence area also remained steady over the decade at an average of of shopping, employment, healthcare, and other necessi- 29.6 percent for the same period. The high level of comties; and other indicia of economic integration and the muting between Suffolk County and the rest of the New transmission of competitive forces among banks.23 In this York Metropolitan area indicates substantial economic incase, the Board has defined the retail banking market first tegration between the two areas, including access to alterby identifying a market core, and then by including within native providers of financial services.28 the retail banking market those cities or counties that Dime asserts that the distance between Manhattan and contain substantial patterns of commuting to the market Riverhead, the county seat of Suffolk County, is greater core and that contain other indicia of economic integration than the distances between other cities that the Board has with the market core. found to be in distinct markets. In particular, Dime cites the Suffolk County occupies the eastern third of Long Island Board's decision in First Security Corporation, in which and has a population of approximately 1.3 million. An the Board concluded that long distances separating cities extensive network of highways, roads, railways and buses and the lack of continuous economic development between connects Suffolk County to its neighboring county, Nassau cities were factors that indicated separate banking mar- County, as well as to Queens and New York City, provid- kets.29 In this case, however, the analysis of the market ing access to the rest of Long Island and New York City. indicates that, in addition to the commuting data discussed The 1990 Census data indicated extensive commuting be- above, there is continuous development from Manhattan tween Suffolk County and the rest of the New York Metro- along Long Island that helps to transmit competitive forces politan area.24 For example, 28.9 percent of the labor force from New York City to eastern Long Island. residing in Suffolk County commuted to work elsewhere in In addition to commuting data, the Board has reviewed the New York Metropolitan area, including 12.2 percent other data to confirm its determination that Suffolk County who commuted to New York City.25 is part of the New York banking market. For example, the deposit and loan rates in New York City and Long Island are almost identical, indicating the integration of the market and the ability of competitive forces to be transmitted 20. See Chemical Banking Corporation, 82 Federal Reserve Bulletin 239 (1996) ("Chemical"), and the cases and studies cited therein. The Supreme Court has emphasized that it is the cluster of products and services that, as a matter of trade reality, makes banking a distinct people commute from Suffolk County to New York City and an even line of commerce. See United States v. Philadelphia National Bank, greater numbers commute to the market areas outside the central city. 374 U.S. 321, 357 (1963) ("Philadelphia National")-, accord United 26. The relevant surveys and data compilation were conducted by States v. Connecticut National Bank, 418 U.S. 656 (1974); United Scarborough Research. States v. Phillipsburg National Bank, 399 U.S. 350 (1969) ("Phillips- 27. The New York banking market is defined as New York City; burg National"). Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan and Westchester 21. See, e.g., Sunwest Financial Services, Inc., 73 Federal Reserve Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middle- Bulletin 463 (1987); Pikeville National Corporation, 71 Federal Re- sex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, serve Bulletin 240 (1985); Wyoming Bancorporation, 68 Federal Warren, and a portion of Mercer Counties in New Jersey; Pike County Reserve Bulletin 313 (1982), aff'd 729 F.2d 687 (10th Cir. 1984). in Pennsylvania; and portions of Fairfield and Litchfield Counties in 22. See Philadelphia National; Phillipsburg National, First Union Connecticut. Corporation, 84 Federal Reserve Bulletin 489 (1998); Chemical; 28. Dime also argues that because the New York Ranally Metropol- St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673 (1982) itan Area ("RMA") does not include all of Suffolk County, neither ("St. Joseph"). should the New York banking market. An RMA generally consists of 23. See Crestar Bank, 81 Federal Reserve Bulletin 200, 201 n.5 a defined geographical area with a relatively high population density (1995) ("Crestar")1, Pennbancorp, 69 Federal Reserve Bulletin 548 that is demographically and commercially integrated by commuting, (1983); St. Joseph; Chemical. retail, and wholesale trade patterns. The Board has found an RMA 24. The Board has previously recognized that commuting patterns definition to be a useful guideline in defining a relevant geographic are a significant factor in the determination of a relevant geographic banking market, but not a proxy for the banking market definition. banking market. See Crestar; St. Joseph; U.S. Bancorp, 67 Federal The Board frequently defines a relevant geographic banking market Reserve Bulletin 60, 61 fn. 2 (1981). differently from a related RMA after considering where consumers 25. Dime argues that Suffolk County should not be included in the may practicably turn to obtain banking services. New York banking market because of the long commute to New York 29. See First Security Corporation, 86 Federal Reserve Bulletin City. Despite the length of the commute, a substantial number of 122, 125 (2000) (Ogden and Provo-Orem RMAs, both in Utah). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 757 throughout the region. A number of major New York City ("market deposits").33 The Herfindahl-Hirschman Index banks advertise in the telephone book and through newspa- ("HHI") would increase by 51 points to 837.34 pers, radio, and television that serve eastern Suffolk In the New Haven banking market, assuming the fullest County. The loan and deposit rates of many New York City effects on competition through a combination of Fleet and banks are published in the local Long Island newspaper.30 the merged North Fork/Dime, the combined organization After review of these data and other facts of record, would control deposits of $1.8 billion, representing including Dime's comments,31 the Board concludes the 29 percent of total deposits in depository institutions in the record indicates that customers in Suffolk County can market. The HHI would increase by 274 points to 1684.35 practicably turn to providers of banking services in the The DOJ has reviewed the record of Fleet's application broader New York area. Based on all the facts of record, and notice in its entirety and Fleet's initial passivity comincluding Dime's comments and studies conducted by the mitments to the Board. After requiring that Fleet provide New York Reserve Bank, the Board reaffirms that Suffolk an additional passivity commitment and clarify the scope County should be included in the New York banking of its initial passivity commitments, the DOJ has advised market for purposes of analyzing the competitive effects of the Board that consummation of the proposal is not likely this proposal. to have a significantly adverse effect on competition in any On consummation of the acquisition of Dime by North relevant banking market. The Office of the Comptroller of Fork, Fleet and North Fork would continue to compete the Currency ("OCC"), FDIC, the NYSBD, and the Condirectly in the New York and New Haven banking markets.32 In the New York banking market, assuming the fullest effects on competition through a combination of Fleet and the merged North Fork/Dime, the combined 33. Market share data for all banking markets are as of June 30, 1999. These data are based on calculations that include the deposits of organization would control deposits of $45.9 billion, reprethrift institutions at 50 percent. The Board previously has indicated senting 10.5 percent of total deposits in banking or thrift that thrift institutions have become, or have the potential to become, organizations ("depository institutions") in the market 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 Board has regularly included thrift deposits in the calculation of 30. Dime also argues that Suffolk is a self-sufficient county and its market share on a 50-percent weighted basis. See, e.g., First Hawairesidents do not need to travel for basic goods and services. Although ian, Inc., 11 Federal Reserve Bulletin 52 (1991). Because the deposits Suffolk County provides many basic services, the commuting data of Dime Savings would be acquired by a commercial banking organiindicate that a substantial number of residents, in fact, do travel zation under the proposal, those deposits are included at 100 percent outside the county for jobs and have easy access to the rest of the in the calculation of Fleet's pro forma market share. See Norwest market. Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, 31. Dime also identifies the following as indicia that Suffolk County Inc., 76 Federal Reserve Bulletin 669, 670 n.9 (1990). is a separate banking market from the New York banking market: 34. Under the DOJ Guidelines, 49 Federal Register 26,823 (1) The fact that only 6.5 percent of all commercial banks and (June 29, 1984), a market is considered unconcentrated when the thrifts with a presence in the non-Suffolk County portion of post-merger HHI is less than 1000 points, and moderately concenthe New York banking market also have a presence in Suffolk trated when the post-merger HHI is between 1000 and 1800. The DOJ County; has informed the Board that a bank merger or acquisition generally (2) The lack of penetration in Suffolk County by New York's will not be challenged (in the absence of other factors indicating three largest daily newspapers; and anticompetitive effects) unless the post-merger HHI is at least 1800 (3) The notion that Suffolk County is its own economic "hub." and the merger increases the HHI by more than 200 points. The DOJ Dime also cites other cases where the courts have found has stated that the higher than normal HHI thresholds for screening Suffolk County to be a distinct market. These cases, however, bank mergers for anticompetitive effects implicitly recognize the do not involve the geographic market for banking services. competitive effects of limited-purpose lenders and other nondeposi- See United States v. Long Island Jewish Med. Ctr., 983 F. tory financial institutions. Supp. 121, 141-42 (E.D.N.Y. 1997) (involving hospital ser- 35. Dime contends that deposits controlled by North Fork in the vices); Competitive Impact Statement, 64 Federal Register New Haven banking market decreased from $363 million, as of June 18214, 18222 (Department of Justice 1998) (in the United 30, 1999, to approximately $152 million, as of December 31, 1999. States v. Hicks, Muse, Tate & Furst Inc. litigation) (involving Dime believes it likely that Fleet acquired these deposits, but provides radio advertising time). no evidence to support this allegation. The Board has calculated the The Board also notes that 85 percent of the banks in Suffolk County existing and pro forma HHI levels in the affected banking markets also have branches in other parts of the New York banking market, based on the most recently available (June 30, 1999) summary of and that the circulation rates of The New York Times and The Sunday deposits data to allow accurate comparisons. Because the Board Times in Suffolk County are equal to or higher than their circulation analyzed deposit data as of June 30, the analysis of the New Haven rates in some of New York City's boroughs. In addition, Suffolk banking market evaluated the competitive effects of this proposal County is not a "Basic Trading Center" (a city which serves as a before the decrease in North Fork's market share. center for shopping goods purchases for the surrounding area and Dime also argues that Sovereign Bancorp, Inc. ("Sovereign") is not serves its surroundings with various specialized services, such as an effective competitor in this market, and, therefore, the HHI data do medical care, entertainment, higher education, and a daily newspa- not reflect competitive realities in New Haven. Sovereign recently per), a "Basic Trading Area" (an area surrounding at least one Basic entered the New Haven banking market by acquiring branches from Trading Center), or a "Principal Business Center" (a city of major Fleet. As previously discussed, thrift institutions have become or have economic importance, including, but not limited to Basic Trading the potential to become significant competitors of commercial banks Centers), as defined by Rand McNally. Rand McNally Commercial and their deposits are included in market share calculations on a Atlas, 1998. Suffolk County is considered a part of the New York 50-percent weighted basis. Nothing in the record suggests that its Basic Trading Area. activities are so limited as to justify weighting the deposits held by 32. The New Haven banking market includes the New Haven RMA. Sovereign's savings association at less than 50 percent. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

758 Federal Reserve Bulletin • November 2000 necticut Banking Commissioner have been afforded an pervisory factors in light of all the facts of record, includopportunity to comment and have not objected to consum- ing confidential reports of examination and other supervimation of the proposal.36 sory information received from the primary federal After carefully reviewing all the facts of record, the supervisors of the organizations. Board concludes that consummation of the proposal would Based on these and other facts of record, the Board not result in any significantly adverse effects on competi- concludes that considerations relating to the financial and tion or on the concentration of banking resources in the managerial resources and future prospects of Fleet, North banking markets in which Fleet, North Fork, and Dime Fork, and their respective subsidiaries are consistent with directly compete or in any other relevant banking market.37 approval of the proposal, as are the other supervisory factors that the Board must consider under section 3 of the Managerial and Financial Considerations and Future BHC Act.41 Prospects Record of Performance Under the Community In acting on an application, section 3(c) of the BHC Act38 Reinvestment Act requires the Board, in acting on an application, to consider the financial and managerial resources and future prospects Section 3 of the BHC Act also requires the Board, in every of the companies and depository institutions involved in a case involving the acquisition by a bank holding company proposal, and certain other supervisory factors. The Board of an interest in a bank or bank holding company, to has carefully considered the financial and managerial re- consider the effects of the proposal on the convenience and sources39 and future prospects40 of Fleet, North Fork, their needs of the communities to be served. The Board has long respective subsidiary depository institutions, and other su- held that this analysis includes a review of the performance under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires federal finan- 36. Dime contends that Fleet, in connection with this proposal, must cial supervisory agencies to encourage financial institufile applications with New York and Connecticut under applicable tions to help meet the credit needs of the local communities state banking law. Fleet maintains that its proposal does not require in which they operate consistent with the safe and sound the approval of the state banking regulator under the laws of New operation of such institutions. To accomplish this end, the York and Connecticut. See N.Y. BANKING § 143-b (2000); CONN. GEN. STAT. § 36a-411 (2000). Neither New York nor Connecticut CRA requires the appropriate supervisory authority to "ashas required an application, and approval of this proposal is condi- sess the institution's record of meeting the credit needs of tioned on Fleet receiving any required state regulatory approval. its entire community, including low- and moderate-income 37. In analyzing the competitive effects of this transaction, the neighborhoods, consistent with the safe and sound opera- Board has considered claims by commenters that Fleet has, on occations of such institution," and to take this record into sion, been able to increase fees in certain New England communities where it has few competitors with minimal or no corresponding loss account in its evaluation of bank holding company applicaof customers. tions.42 38. See 12 U.S.C. § 1842(c). The Board has reviewed the record of performance of 39. Dime has questioned North Fork's ability to integrate Dime's operations into its banking organization and North Fork's ability to Fleet's subsidiary banks and NFB in light of all the facts of operate a mortgage company in light of its lack of experience in this record, including comments received from Dime and ICR area. These matters are discussed in the North Fork Order. Dime and ICP criticize Fleet's record, based, in part, on Dime and ICP have also claimed that statements made or submitted their analyses of data filed under the Home Mortgage to various regulatory agencies by the management of Fleet and North Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA"). Fork are false or misleading and indicate that management of Fleet and North Fork are not credible. The record does not indicate that Dime and ICP are concerned about Fleet's record of sereither Fleet or North Fork has intentionally, willfully, or recklessly ving minorities and low- and moderate-income ("LMI") misled the Board. Subsequent submissions by both parties have clari- communities and LMI individuals. Specifically, the comfied or corrected the record on a number of matters that have been menters criticize Fleet for increasing its fees for products raised. used by, and reducing the basic banking services provided On several occasions, Dime and ICP have criticized Fleet's requests for confidential treatment of material submitted in connection with to, LMI individuals, especially former LMI customers of this application as vague, over-inclusive, and made in bad faith in a BankBoston Corporation, Boston, Massachusetts ("Bankmanner calculated to cause the public portion of the various submissions to be misleading, and they alleged that Fleet and North Fork have shared confidential information and thereby waived any right to confidential treatment of that information. These concerns are prop- terms or circumstances of the proposal to require a new application erly raised and resolved in the context of the Freedom of Information from Fleet. Act ("FOIA"), 5 U.S.C. § 552, and the Board's Rules Regarding 41. Dime claims that Fleet has not demonstrated the managerial Availability of Information, 12 C.F.R. 261. resources necessary to finance North Fork's bid to acquire Dime or to 40. Dime argues that Fleet should be required to discuss the possible make and monitor a minority investment. The Board has taken into effects of various contractual conditions on the proposals by Fleet and account all the facts of record in evaluating Fleet's managerial re- North Fork. Fleet would only make its investment in North Fork if sources in the context of this proposal, including examination reports, North Fork could acquire Dime, and North Fork has conditioned its the nature of the investment, Fleet's past experience in making and exchange offer for Dime on, among other things, the tender of at least monitoring minority investments, and the limited role that Fleet's a majority of Dime's shares and on North Fork's determination that management may permissibly play in the operation or policies of neither Delaware law nor Dime's shareholders' rights plan apply. The North Fork. Board reserves the right in the event of significant changes in the 42. 12 U.S.C. § 2903. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 759 Boston");43 the decline in customer service provided to that received an "outstanding" rating.47 In particular, Fleet customers of the branches Fleet divested in connection National Bank, Providence ("Fleet Bank"), which reprewith the BankBoston merger; Fleet's level of lending to sents approximately 79.2 percent of the assets controlled LMI and minority individuals and in predominantly minor- by Fleet, and Fleet Bank, N.A., Jersey City, New Jersey ity and LMI communities; and Fleet's small business lend- ("Fleet-NJ"), received "satisfactory" ratings from the ing record to minorities and LMI individuals. Commenters OCC, as of February 1998. North Fork's lead subsidiary note that the contested nature of North Fork's proposed bank, NFB, received an overall rating of "outstanding" acquisition of Dime could create confusion that might from its primary federal supervisor, the FDIC, at its most negatively affect the provision of banking services to the recent CRA performance evaluation, as of September 1999. relevant communities. Finally, Dime and ICP question whether it is in the public interest to allow Fleet to pur- B. Fleet's CRA Performance Record chase 17 Dime Savings branches at some later date without determining whether Fleet plans to close, consolidate, or Fleet-NJ.48 Fleet-NJ designated its assessment area as all sell the branches.45 of New Jersey, New York City, and Nassau, Suffolk, and Westchester Counties, all in New York. The New York A. CRA Performance Examinations portion of the service area and the 14 northernmost counties in New Jersey are part of the New York-New Jersey As provided in the CRA, the Board evaluates an institu- Consolidated Metropolitan Statistical Areas ("MSA") tion's record of performance in light of examinations of the ("New York City CMS A") and accounted for 91 percent CRA performance records of the institution conducted by of the bank's HMDA-reported and small business lending the appropriate federal supervisory agency. An institution's and 92 percent of the bank's consumer lending. most recent CRA performance evaluation is a particularly Examiners found that Fleet-NJ made loans throughout important consideration in the application process, because its assessment area, including LMI census tracts. During it represents a detailed on-site evaluation of the institu- the examination period, Fleet-NJ made 13 percent of the tion's overall record of performance under the CRA by its total number of home mortgage loans made by all lenders appropriate federal supervisor 46 in LMI census tracts in its assessment area, which repre- All Fleet's subsidiary banks examined pursuant to the sented more than twice the market share of any other CRA received "satisfactory" ratings at their most recent lender. The bank also had a commendable record of lendperformance examinations, with the exception of one bank ing to LMI borrowers and, despite competition from much larger financial institutions in the market, was among the five largest lenders to all borrowers in the New York City CMS A during 1996, and among the two largest home 43. Dime has requested that the Board suspend Fleet's ability to purchase mortgage lenders for LMI borrowers that year. increase fees charged to, or change the products used by, the custom- Examiners also noted the bank's success in making coners of the 17 Dime branches to be sold to Fleet under this proposal and sumer loans in LMI census tracts and to LMI borrowers. require Fleet to provide the Board with information concerning the fee increases and balance requirements imposed on BankBoston custom- Examiners reported that Fleet-NJ offered affordable ers, and updates on the progress of the divestitures required in connec- home mortgage loans under proprietary and governmenttion with Fleet's acquisition of BankBoston. supported loan programs. For example, the bank's Home The proposal by Fleet to acquire the Dime branches is subject to Mortgage Opportunity Loan program featured belowreview by the OCC under the Bank Merger Act. Fleet has stated that market interest rates, no points, a 5-percent downpayment all past fee increases were reviewed by senior management at Fleet to ensure that the changes were implemented fairly among all categories requirement, and required private mortgage insurance for of Fleet customers and were not related to the present proposal. applicants with up to 100 percent of the area's median Although the Board has recognized that banks help to serve the family income. In 1998, Fleet-NJ made 1,235 loans, totalbanking needs of communities by making basic services available free ing $86 million, under this program.49 Another program of charge or for a nominal fee, the CRA does not require an institution to provide any specific types of products or services or limit the fees it charges for them. In addition, the Board has received updates on the progress of Fleet's divestitures throughout the divestiture process. 45. As noted above, any proposal by Fleet to acquire branches of Dime would be subject to review by the appropriate federal banking agency under the Bank Merger Act. ICP also claims that Fleet is 47. BankBoston, N.A., Boston, Massachusetts, received an overall reducing its investments in New York. ICP contends that Fleet, under rating of "outstanding" from its primary federal supervisor, the OCC. the terms of the Community Investment Commitment ("CIC") it Fleet Bank (RI), National Association, Providence, Rhode Island, a made in connection with the BankBoston merger, would expend only credit card bank, has been examined for CRA performance since its 20 to 30 percent of the resources devoted to the CIC in New York, formation in November 1997. even though 32 percent of Fleet's branches are in New York. The CIC 48. For reviews of the records of Fleet's other depository institudoes not require a direct correlation between the percentage of overall tions under the CRA, which are based on the institutions' most recent CRA-related expenditures going to a particular area and the percent- performance examinations, see Fleet Financial Group, Inc., 85 Fedage of overall Fleet branches in that area. Also, Fleet's CIC was not a eral Reserve Bulletin 747 (1999) {"Fleet Order"). commitment made to the Board and is not enforceable by the Board. 49. In late 1998, Fleet-NJ modified this program to focus on 46. Interagency Questions and Answers Regarding Community low-income borrowers. Between September 1998 and February 1999, Reinvestment, 64 Federal Register 23,618 and 23,641 (1999) ("Inter- the bank made 438 loans, totaling more than $50 million, under the agency Questions and Answers"). modified program. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

760 Federal Reserve Bulletin • November 2000 featured a 5-percent downpayment requirement, of which bank's assessment area and to persons of all income levels. up to 2.5 percent could be provided by grants of gifts.50 Eighteen percent of the bank's branches were located in Examiners considered Fleet-NJ to be very responsive to LMI census tracts, compared with the percentage of LMI the credit needs of the communities it served in its small census tracts and LMI households (26 percent) in the business lending, notwithstanding a decline in lending vol- bank's service area. Workplace Banking, which offered ume between 1996 and 1997. During this period, the bank reduced costs on checking and savings accounts, direct made 12,975 small business loans, totaling $2 billion. payroll deposit, and reduced rates on loans and ATM-based Three percent of the bank's small business loans were in transactions, was used by 286 companies and approxilow-income census tracts, which corresponded to the per- mately 47,700 households throughout the assessment area. centage of small businesses in these areas and the percent- Fleet-NJ also offered basic checking and savings accounts age of small business loans by lenders in the aggregate.51 and offered to cash U.S. government benefit checks for Lending by Fleet-NJ to small businesses also was consis- customers and noncustomers. tent with lenders in the aggregate, with 43 percent of the Fleet Bank. Fleet Bank operates in Massachusetts, Conbank's small business loans made to firms with annual necticut, portions of upstate New York, and Rhode Isgross revenues of less than $1 million and in principal land.56 During 1996 and 1997, the bank made 53,305 amounts of less than $100,000.52 Through the Fleet HMDA-reported loans, totaling $4.4 billion, and 27,827 INCITY program, the bank offered small business loans loans to small businesses in amounts less than $1 million featuring reduced documentation, flexible underwriting cri- ("small business loans"), totaling $4.2 billion, in its assessteria, and no minimum loan amount.53 ment area. Examiners characterized Fleet-NJ as an active commu- Examiners considered Fleet Bank's lending performance nity development lender, noting that during the examina- to be particularly strong in home purchase lending. In tion period the bank made 30 qualified community devel- every state, and in most MSAs in its assessment area, the opment loans, totaling $129 million, which resulted in the percentage of the bank's loans made in LMI census tracts construction or rehabilitation of 2,300 affordable housing was higher than the percentage of owner-occupied housing units.54 Examiners also commended Fleet-NJ for its com- in these census tracts and higher than the percentage of munity development investments. During the examination such loans made by lenders in the aggregate. At the time of period, the bank made $41 million of qualified investments its most recent examination, the bank used several proand grants and made commitments to provide an additional grams to provide affordable home mortgage loans, includ- $74 million of qualified investments.55 ing: Examiners found Fleet-NJ's branch network and alterna- (1) Fleet's proprietary Affordable Housing program, tive delivery systems, including proprietary automated which featured reduced downpayment requireteller machines ("ATMs"), telephone banking, and Work- ments, flexible underwriting standards, and no Place Banking, to be reasonably accessible throughout the mortgage insurance requirement for borrowers unable to meet traditional secondary market credit standards; 50. In 1998, Fleet expanded its Down Payment Assistance Grant (2) Local partnership programs offered in cooperation program to provide grants up to $4,000 to homebuyers who qualify with organizations, such as the Association of Comfor a Veterans Administration ("VA") loan or a loan eligible for munity Organization for Reform Now, Neighborpurchase by the Federal National Mortgage Association ("Fannie hood Assistance Corporation of America, and Hart- Mae"). 51. The aggregate represents the cumulative lending for all institu- ford Areas Rally Together, which were similar to tions that have reported HMDA data in a given market. Fleet's proprietary programs, but offered more flex- 52. During 1998, in New Jersey, small business loans (loans of less ible underwriting standards and extensive financial than $1 million) by Fleet-NJ increased 16 percent and loans to small and homebuyer counseling; businesses (businesses with annual revenues of less than $1 million) (3) Federal-government-sponsored secondary market increased 39 percent. The percentage of these loans in low-income census tracts and moderate-income census tracts was comparable with programs, such as Federal Housing Administration the percentage made by lenders in the aggregate. and VA loans and the Fannie Mae Community 53. In 1998 and early 1999, Fleet-NJ made $2 million of loans in Home Buyers program, which featured reduced New York's Chinatown to small businesses that did not satisfy autodownpayment requirements, flexible underwriting mated lending guidelines. 54. Included among these projects were a $13.1 million construction loan to renovate 12 apartment buildings in East Harlem, creating 133 affordable rental housing units; a $9.7 million construction loan to 56. At the time of its most recent CRA performance examination, rehabilitate 29 vacant city-owned brownstone residences in New the bank owned several subsidiaries, and the most significant subsid- York; a $3 million construction loan to a nonprofit entity to build a iary for purposes of considering its CRA performance was Fleet 61-unit apartment complex for the elderly in northern New Jersey; and Mortgage Group, Inc., Columbia, South Carolina ("Fleet Mortgage"). a $3.5 million construction loan to build 128 units of affordable In addition, Fleet owned the Fleet Community Development Corporahousing for elderly or disabled LMI individuals in Burlington County tion, Providence ("Fleet CDC"), which engaged in community develin southern New Jersey. opment lending and investments. Home mortgage loans by Fleet 55. After the examination period, Fleet-NJ committed $50 million Mortgage and loans and investments by Fleet CDC and Fleet Bank's to fund the construction of affordable housing and $7.5 million for affiliated banks that were made in Fleet Bank's assessment area were small business loans in the Harlem/South Bronx Empowerment Zone included by Fleet Bank for CRA purposes, and thus were considered designated by the Department of Housing and Urban Development. by the OCC in its examination of Fleet Bank's CRA performance. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 761 standards, and flexible financing of closing costs; years to Local Initiatives Support Corporation to support and the participation of seven rural New England community (4) State- and local-government-supported programs, development corporations in Maine, Massachusetts, New such as the Jumpstart program in Massachusetts, Hampshire, and upstate New York in its programs. New York, and Rhode Island, which combined a According to examiners, Fleet Bank's branch network, first mortgage loan from a state housing finance ATMs, and its alternative delivery systems provided consisauthority with an unsecured loan from Fleet Bank tent service and reached consumers in all geographic areas, at the same rate to cover downpayment or closing and its products and services were designed to serve all costs.57 The distribution of consumer lending by consumers, including LMI individuals. For example, the Fleet Bank also generally corresponded to the dis- bank's Basic Checking program allowed up to eight transtribution of the population, including LMI borrow- actions per month for a minimal opening deposit and small ers, in the bank's service area. monthly fee. Approximately 600 companies participated in the bank's Workplace Banking program, which provided For small business lending, examiners reported that Fleet basic banking services at reduced cost to approximately Bank was particularly active in Massachusetts and Con- 53,000 households. The program was provided through necticut, where the percentage of the bank's small business branches, ATMs, and telephone banking system, thereby loans in LMI census tracts was generally 3 to 4 percent enhancing access to services for certain predominantly higher than the comparable percentage for lenders in the minority communities. The bank also offered seminars for aggregate. Through the Fleet INCITY Business and Entre- first-time LMI homebuyers and small business owners. preneurial Services Group, established to support businesses in LMI areas, Fleet Bank offered small business C. Fleet's HMDA Data loans featuring reduced documentation, flexible underwriting, and no minimum loan amount. Fleet CDC also sup- The Board has carefully considered the lending records of ported small businesses through low-interest loans, longer- Fleet and North Fork in light of comments on HMDA data term loans, and equity investments in financial reported by subsidiaries of the organizations. Comments intermediaries and nonprofit organizations that focused by Dime and ICP express concern about Fleet's HMDAtheir efforts on small businesses located in LMI areas. Fleet reportable loans to minorities and LMI individuals. In Bank was an active lender through Small Business Admin- addition, Dime alleges that Fleet's submission to the Board istration ("SBA") programs. Overall, Fleet was the largest misrepresented Fleet's lending record relative to Dime's SB A lender in New England in 1997 and the second largest record by comparing HMDA data for the two companies in 1998. In the first six months of 1999, Fleet made more throughout the New York banking market, instead of limitsmall business loans under a new Small Business Adminis- ing the comparison to the New York Metropolitan Area tration ("SBA") express approval program than it made in where Dime has a strong presence.58 all of 1998, according to Fleet. The Board has carefully considered the 1997, 1998, and Examiners also judged Fleet Bank's performance in 1999 HMDA data reported by Fleet. The data indicate that making community development investments to be partic- Fleet made a significant number and amount of housingularly strong. In 1996 and 1997, the bank made related loans in each of these years, including in LMI areas $253 million of qualified investments and grants and com- and to LMI individuals, and minorities. The data generally mitted to make an additional $269 million. The bank's two show that overall HMDA loan applications and lending largest investments consisted of the purchase of $220 mil- activities by Fleet increased from 1998 to 1999. Fleet's lion of bond anticipation notes to assist state and local HMDA lending increased in the New York, New York City governments in funding efforts to revitalize and stabilize MSA, and Nassau-Suffolk MSA assessment areas. Aleconomically depressed areas and the purchase of $60 though the data revealed an overall decline in HMDA million of low-income housing tax credits. In 1997, Fleet lending activity in the New Jersey assessment area in Bank entered into an agreement with Neighborhood Hous- certain categories, the decreases did not occur disproporing Services of America ("NHSA") to purchase up to $10 tionately across any particular racial or income-level catemillion of affordable first and second mortgages and home gories. improvement loans originated and underwritten by NH- The increase in the volume of Fleet's applications and SA's local affiliates in Fleet's assessment area. Fleet also originations benefited minorities and LMI areas and indicommitted to make grants of $1.4 million of working viduals, according to the 1999 HMDA data. African Amercapital over three years to NHSA's affiliated Neighbor icans, Hispanics, LMI areas and LMI individuals all shared Works Organizations to support neighborhood revitaliza- in Fleet's increased lending activity in the New York, New tion and affordable housing development. In addition, Fleet Bank made a grant of $200,000 in 1997, payable over three 58. Fleet's analysis considered HMDA data for all Fleet subsidiaries that operate in the New York and New Jersey banking markets. The Board's review of Fleet's HMDA data has excluded BankBoston's 57. Under the Jumpstart program, Fleet Bank made 2,173 loans HMDA data, because Fleet and BankBoston reported separately for in 1998, totaling $254.1 million; 1,950 loans in 1997, totaling 1999 and BankBoston does not serve the assessment areas under $202.7 million; and 3,338 loans in 1996, totaling $325.9 million. review. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

762 Federal Reserve Bulletin • November 2000 York City MSA, and Nassau-Suffolk MSA assessment The Board also considered the HMDA data in light of areas. The 1999 data also showed significant increases in the overall lending record of Fleet, including the lending Fleet's lending in predominantly minority census tracts in and other programs outlined above. As the discussion all four assessment areas reviewed in terms of number of illustrates, Fleet has implemented a variety of programs applications and originations and percentage of total appli- that help to meet the credit needs of the community in cations and originations in each assessment area.59 areas other than home mortgage lending, including, in The data, however, reflect certain disparities in the rates particular, small business loans and consumer credit. of loan applications, originations, and denials among members of different racial groups and persons at different D. Small Business Lending Data income levels, both generally and in certain states and local areas. The Board is concerned when an institution's record Fleet reported an increase in its number and percentage of indicates such disparities in lending, and believes that all total loans made to small businesses in each market rebanks are obligated to ensure that their lending practices viewed. Increases from 1998 to 1999 ranged from are based on criteria that ensure not only safe and sound 17 percent in the Nassau-Suffolk MSA assessment area to banking, but also equal access to credit by creditworthy 11 percent in the New Jersey assessment area. In the New applicants, regardless of their race or income level. York City MSA assessment area, Fleet increased its num- The Board recognizes, however, that HMDA data alone ber of loan origination to small businesses by 16 percent provide an incomplete measure of an institution's lending from 1998 to 1999. in its community because the data cover only a few catego- Fleet's volume of loans to small businesses in predomiries of housing-related lending.60 HMDA data, moreover, nantly minority census tracts in 1999 remained relatively provide only limited information about the covered loans. unchanged in all four markets. Specifically, slight increases HMDA data, therefore, have limitations that make the data were reported in three of the four markets reviewed, while an inadequate basis, absent other information, for conclud- a slight decrease was reported in the Nassau-Suffolk MSA ing that an institution has not adequately assisted in meet- assessment area. Similarly, its percentage of total originaing its communities' credit needs or has engaged in illegal tions in predominantly minority census tracts remained discrimination in making lending decisions. essentially unchanged from the 1998 levels. In 1998, the Because of the limitations of HMDA data, the Board has last year for which aggregate data are available, the volume carefully considered the data in light of other information, of lending in the Nassau-Suffolk MSA, New Jersey, and including examination reports that provide an on-site eval- New York City MSA assessment areas exceeded the aggreuation of compliance by the subsidiary banks of Fleet and gate percentage of lending to minority small businesses, North Fork with fair lending laws and the overall lending while the volume in the New York assessment area slightly and community development activities of the banks, as lagged the aggregate. well as fair lending examinations of Fleet Mortgage, which Fleet's volume of loans to small businesses in LMI is a subsidiary of Fleet Bank. Examiners found no evidence census tracts in 1999 increased significantly from 1997 of prohibited discrimination or illegal credit practices at levels in all four markets under review and has increased, the subsidiary banks of Fleet or at Fleet Mortgage. Fleet or remained at the higher 1998 levels, in three of the four Mortgage's fair lending policies, procedures, training pro- markets, with the Nassau-Suffolk MSA assessment area as grams, and internal monitoring programs were considered the exception. Volumes from 1997 to 1999 increased to be satisfactory.61 28 percent in the Nassau-Suffolk MSA assessment area, 55 percent in the New York assessment area, 75 percent in the New York City MSA assessment area, and 91 percent 59. In addition to playing a role in Fleet's increased lending in in the New Jersey assessment area. From 1998 to 1999, predominantly minority census tracts, in minority census tract lend- Fleet's percentage of total loans made to small businesses ing, Fleet's HMDA lending in the New Jersey assessment area also in LMI census tracts declined slightly in all four assessdemonstrated improvement in the following areas: number of originations to African Americans; number of applications from LMI areas; ment areas reviewed from 1998 to 1999, however, Fleet's and number of applications from LMI individuals. percentage either approximated or exceeded the aggregate 60. The data, for example, do not account for the possibility that an in all four assessment areas in 1998 and 1999. institution's outreach efforts may attract a larger proportion of margin- Fleet's overall volume of originations of small loans to ally qualified applicants than other institutions attract and do not businesses increased from 1997 through 1999. The New provide a basis for an independent assessment of whether an applicant who was denied credit was, in fact, creditworthy. Credit history York, New York City MSA, and Nassau-Suffolk MSA problems and excessive debt levels relative to income (reasons most frequently cited for a credit denial) are not available from HMDA data. 61. One commenter has alleged that Fleet made home purchase and Fleet Financial Group, Inc., 82 Federal Reserve Bulletin 50 (1995). home improvement loans to minority and LMI borrowers in the Fleet continues to deny any complicity with redevelopers in these Boston area for more than the fair market value of the property, which transactions and maintains that all loans were made on the basis of resulted in excessive debt service and an increased risk of loan default independent appraisals. The Board referred the commenter's comand foreclosure. The Board previously has considered these allega- plaints and evidence to the OCC. The OCC, the primary federal tions in connection with other applications by Fleet. See Fleet Order; supervisor of Fleet Bank and its mortgage company subsidiary, has Fleet Financial Group, Inc., 84 Federal Reserve Bulletin 227 (1998); sufficient supervisory authority to address violations of law by Fleet Fleet Financial Group, Inc., 82 Federal Reserve Bulletin 558 (1996); involving its home mortgage lending programs if violations are found. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 763 assessment areas experienced increases in volume each Because Fleet would not control North Fork as a result of year from 1997 to 1999, while the volume in the New this proposal, Fleet would not be able to influence the CRA Jersey assessment area experienced a significant increase policies of North Fork. from 1997 to 1998, before leveling off in 1999. Fleet's volume of originations of small loans to busi- F. Closure and/or Consolidation of the Dime nesses originated in predominantly minority census tracts Branches in 1999 remained relatively unchanged in all four markets. Specifically, slight increases were reported in three of the Commenters criticize Fleet for not indicating in its applicafour markets reviewed, while a slight decrease was re- tion or subsequent submissions whether it would consoliported in the New Jersey assessment area. Similarly, its date, close, or sell any of the 17 Dime Savings branches it percentage of total originations in predominantly minority intends to purchase as a future date under the proposal. census tracts remained essentially unchanged from the Fleet has indicated that, until Fleet or North Fork could 1998 levels, except for the New York City MSA assess- perform due diligence on the branches, it will be unable to ment area, where there was a slight decline. In 1998, the make a decision on such matters. volume of lending in the Nassau-Suffolk MSA, New Jer- The acquisition of the Dime branches by Fleet is subject sey, and New York City MSA assessment areas exceeded to review by the appropriate federal banking supervisor the aggregate percentage of lending to minority small under the Bank Merger Act. The Board also has considered businesses, while the volume in the New York assessment that federal banking law provides a specific mechanism for area slightly lagged the aggregate. addressing branch closings. Federal law requires an in- Fleet's volume and percentage of total small loans to sured depository institution to provide notice to the public businesses originated in LMI census tracts remained rela- and to the appropriate federal supervisory agency before tively unchanged from 1997 through 1999. Slight increases closing a branch.64 The law does not authorize federal in volume were reported in the New Jersey and New York regulators to prevent the closing of any branch. In addition, City MSA assessment areas, while slight declines were any branch closings resulting from this proposal would be reported in the New York and Nassau-Suffolk MSA assess- considered by the appropriate federal supervisor at the ment areas. An analysis of its percentage of total small relevant institution's next CRA examination. loans to businesses originated in LMI census tracts also demonstrates a relatively static pattern, with slight declines G. Conclusion on Convenience and Needs in the New York, Nassau-Suffolk MSA, and New York City MSA assessment areas, and a slight increase in the As discussed, the record demonstrates that Fleet and North New Jersey assessment area. Fleet's 1997 and 1998 levels Fork have established records of performance in helping to of small loans to businesses exceeded the aggregate level meet the convenience and needs of the communities they for originations in LMI census tracts, with the exception of serve. On balance, and based on a review of the entire the New Jersey assessment area, which slightly lagged record, the Board concludes that convenience and needs aggregate levels. considerations, including the records of CRA performance by both organizations' subsidiary depository institutions, E. North Fork's CRA Performance Record are consistent with approval of the proposal. Dime and ICP also have criticized the CRA performance Nonbanking Activities record of North Fork in connection with Fleet's application. The Board carefully analyzed North Fork's CRA Fleet also has filed a notice under section 4 of the BHC Act performance record and comments on its record in connec- (12 U.S.C. §§ 1843(c)(8) and (j)) and section 225.24 of the tion with North Fork's proposal to acquire Dime.62 Board's Regulation Y (12 C.F.R. 225.24) to acquire an NFB received an overall rating of "outstanding" from ownership interest65 in North Fork, a company that proits primary federal supervisor, the FDIC, at its most recent evaluation for CRA performance, as of September 1999. As of June 1999, the NYSBD rated North Fork Bank's 64. Section 42 of the Federal Deposit Insurance Act, 12 U.S.C. § 1831r-l, as implemented by the Joint Policy Statement Regarding performance "outstanding" in helping to meet the credit Branch Closings (64 Federal Register 34,844 (1999)), requires that a needs of its entire community pursuant to New York law.63 bank provide the public with at least a 30-day notice and the appropriate federal supervisory agency with at least a 90-day notice before the date of the proposed branch closing. The bank also is required to 62. See North Fork Order (for a detailed analysis of North Fork's provide reasons and other supporting data for the closure, consistent CRA and HMDA performance record performance record). with the institution's written policy for branch closings. 63. North Fork also owns Superior Savings of New England, 65. Dime claims that Fleet and North Fork are acting in concert to Branford, Connecticut, which received an overall rating of "satisfacto- acquire Dime and, consequently, that Fleet must provide the Board ry" from its primary federal supervisor, the FDIC, at its most recent with notice to control Dime. As discussed above, the Board has found evaluation for CRA performance, as of May 1996 (when it was known that Fleet has not exerted a controlling influence over North Fork or as Branford Savings Bank). On June 6, 2000, Superior Savings Dime, and that the passivity commitments provided by Fleet would received approval from the Office of the Comptroller of the Currency prevent Fleet from controlling North Fork or Dime in the future. to convert to a national bank charter under the name Superior Savings Accordingly, the notice filed by Fleet satisfies the requirements of of New England, National Association. section 4 with regard to Fleet's proposal to acquire 9 percent of North Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

764 Federal Reserve Bulletin • November 2000 poses to engage in the operation of a savings association, on all the facts of record, the Board concludes that this Dime Savings.66 Section 4(j) of the BHC Act requires that, proposal would not result in any significantly adverse in reviewing a proposal to acquire an interest in a savings effects on competition from the nonbanking acquisitions association, the Board must consider whether the acquisi- proposed in this transaction. tion "can reasonably be expected to produce benefits to the Fleet asserts that consummation of the proposal would public . . . that outweigh possible adverse effects, such as result in the public benefits to be derived from permitting undue concentration of resources, decreased or unfair com- capital markets to operate so that bank holding companies petition, conflicts of interests, or unsound banking prac- can make potentially profitable investments in financial tices."67 institutions and from permitting banking organizations to As part of its evaluation of these factors, the Board allocate their resources in the manner they consider to be considers the financial and managerial resources of the most efficient when such investments are consistent with notificant and its subsidiaries, including the companies to the relevant considerations under the BHC Act.69 The be acquired, and the effect of the proposed transaction on Board also has carefully considered Dime's contention that those resources. For the reasons noted above, and based on Fleet and North Fork have disrupted the operation of the all the facts of record, the Board has concluded that finan- capital markets and interfered with a proposal by Dime to cial and managerial factors are consistent with approval of acquire Hudson United Bancorp, Mahwah, New Jersey.70 the notice. As discussed above, the Board also has consid- Dime's contentions in this area are misplaced. The inforered the competitive effects of Fleet's proposal to acquire mation provided and offers made by Fleet and North Fork an interest in a company that proposes to engage in the can be and are being evaluated by the market. Although operation of a savings association in light of all the facts of there are certainly extra costs to the organizations associrecord, including the public comments received.68 Based ated with an offer to acquire an organization with management that has not consented to be acquired, broader public benefits result from allowing shareholders to make their Fork. Fleet may be required to file an additional notice to acquire own determination on the desirability of these transactions. added shares of, or control over, North Fork. In addition, the public benefits to be derived from the 66. Dime asserts that Fleet's notice under section 4 is inadequate for North Fork/Dime proposal would be facilitated by Fleet's several reasons, including the following: the notice is ambiguous financing of that proposal. because it does not clearly indicate under which subsection of Regulation Y it has been filed; the public notice provided by Fleet is Moreover, the record does not indicate that consummaambiguous and published in an untimely fashion; the notice does not tion of the proposal is likely to result in any significantly incorporate by reference the DOJ-requested letter by Fleet that clari- adverse effects, such as undue concentration of resources, fies the scope of Fleet's passivity commitments to the Board; the decreased or unfair competition, conflicts of interests, or notice fails to address any effects that Fleet's investment in North Fork would have on Dime Savings; the notice does not discuss the unsound banking practices that would not be outweighed likely effects that North Fork's efforts to acquire Dime has had on by its likely public benefits. Accordingly, the Board has Dime Saving's safety and soundness; and the notice does not address determined that the balance of public interest factors it the effect that North Fork's efforts to acquire control of Dime, through must consider under section 4(j)(2)(A) of the BHC Act is Dime's board of directors rather than through North Fork's tender favorable and consistent with approval of Fleet's notice to offer, would have on Fleet's role in the proposal or the effect that the March 31, 2000, bilateral discretionary termination date might have acquire an interest in the merged North Fork/Dime. on Fleet's investment in North Fork and North Fork's attempt to acquire Dime. Dime also raises the question of whether the updated financial statements provided in connection with Fleet's notice were sufficiently current and whether the financial statements reflect different assumptions or information of importance to the Board. Dime requests that Fleet's notice be withdrawn until its alleged inadequacies are addressed, or, in the alternative, that Fleet's request that its notice in companies other than a bank (as defined in the BHC Act) or a be processed as quickly as possible be denied. savings association pursuant to section 4(k) of the BHC Act without Fleet's public notice is sufficient to provide affected communities an prior Board approval. To the extent that Dime's subsidiaries may be opportunity to comment on Fleet's acquisition of an indirect interest engaged in activities that are impermissible for bank holding compain Dime Savings through North Fork's proposed acquisition of at least nies to conduct under the BHC Act, North Fork has committed to a majority of Dime's stock. In fact, the Board received comments conform all these activities to the limitations of section 4(c)(8) of the from Dime and others on aspects of Fleet's proposal related to Dime BHC Act within two years of North Fork's acquisition of Dime. See in response to the public notice. Fleet's notice meets the filing require- North Fork Order. ments established and described in section 4 of the BHC Act and the 69. See, e.g., North Fork Bancorporation, Inc., 84 Federal Reserve Board's Regulation Y, and Fleet has provided all information required Bulletin All, 480 (1998); Mercantile Bancorporation, Inc., 83 Fedor requested by the Board in connection with the notice. 12 C.F.R. eral Reserve Bulletin 683, 688 (1997); South Central Texas Banc- 225.24. Accordingly, the Board concludes that the record for Fleet's shares, Inc., 83 Federal Reserve Bulletin 47, 51 n. 20 (1997). notice is complete and provides the Board with all the information 70. Dime claims that the Fleet/North Fork proposal might result in necessary to approve Fleet's notice pursuant to section 4 of the BHC Fleet's earning profits at the expense of remaining shareholders. Act. However, Dime provides no evidence to substantiate its claim, this 67. 12 U.S.C. § 1843(j)(2)(A). assertion, and the record does not otherwise support the assertion. 68. Because the section 4 notice filed by Fleet relates only to the Dime also argues that there are numerous negative effects of the operation by North Fork of Dime Savings, Dime asserts that Fleet has contest for control of Dime. Dime states that its management has not adequately detailed how it may permissibly acquire interests in the spent a considerable amount of time and resources defending against various nonbanking subsidiaries of North Fork and Dime under the North Fork's efforts to acquire Dime to the detriment of the communi- BHC Act. Fleet, as a financial holding company, may acquire interests ties served by Dime Savings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 765 Other Issues proval is specifically conditioned on compliance by Fleet with all the commitments made in connection with this Dime has argued that the Board should deny the related application and notice and with the conditions in this order. applications by Fleet and North Fork in connection with In addition, the Board's approval is conditioned on Fleet's North Fork's attempt to acquire Dime on the basis that it is investment in North Fork not exceeding $250 million as unlikely that North Fork and, therefore, Fleet, would be proposed in the application and notice by Fleet. The able to consummate its proposal within the three-month Board's determination on the nonbanking activity also is period normally provided by the Board. subject to all the terms and conditions set forth in Regula- The BHC Act does not require that consummation of a tion Y, including those in sections 225.7 and 225.25(c) transaction occur within a specified period of time. Gener- (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authorally, the Board requires an applicant to consummate an ity to require such modification or termination of the approved transaction within three months from the date of activities of a bank holding company or any of its subsidthe Board's action to ensure that there are not substantial iaries as the Board finds necessary to ensure compliance changes in an applicant's condition that might require the with, and to prevent evasion of, the provisions of the BHC Board to reconsider its approval. Act and the Board's regulations and orders thereunder. For Although the Board has a policy against intervening in purposes of this action, the commitments and conditions contests for corporate control, it recognizes that when the relied on by the Board in reaching its decision are deemed ownership of an institution is in doubt over a prolonged to be conditions imposed in writing by the Board in conperiod of time, the personnel and financial resources of nection with its findings and decision and, as such, may be both the offeror and the target are subject to strain. The enforced in proceedings under applicable law. Board has considered the effects of the contest for control The acquisition shall not be consummated before the of Dime on the safety and soundness of all the institutions fifteenth calendar day after the effective date of this order, involved in the proposal, as well as on the other statutory and the proposal shall not be consummated later than three factors the Board is required to consider under the BHC months after the effective date of this order, unless such Act, and has determined that these considerations are con- period is extended for good cause by the Board. sistent with approval of Fleet's application and notice. If By order of the Board of Governors, effective Septem- Fleet requests an extension of the three-month period pro- ber 27, 2000. vided to consummate the proposal, the Board will examine carefully all relevant circumstances surrounding the pro- Voting for this action: Chairman Greenspan, Vice Chairman Ferguposal, and may require Fleet to provide supplemental infor- son, and Governors Meyer and Gramlich. Absent and not voting: mation necessary to allow the Board to evaluate the finan- Governor Kelley. cial and managerial resources of Fleet and North Fork at JENNIFER J. JOHNSON the time any extension is requested, as well as the impact Secretary of the Board of any extension on those financial and managerial resources and on the other statutory factors that the Board must consider under the BHC Act. The Board reserves the right in the event of significant changes in the terms or circumstances of the proposal to require a new application (1) To determine whether Fleet would control North Fork; and from Fleet.71 (2) To determine whether alleged credibility questions about the management of Fleet and North Fork preclude the approval of the application and notice on managerial grounds. Conclusion The Board has carefully considered Dime's request for a hearing in light of all the facts of record. The Board has accumulated a substan- Based on the foregoing and all the facts of record, the tial record in this case that includes examination information, supervisory information, public records, and information submitted by Fleet Board has determined that the application and notice and North Fork. Dime also has had ample opportunity to present its should be, and hereby are, approved.72 The Board's ap- views, and has submitted substantial written comments that have been carefully considered by the Board in acting on the proposal. Dime's request for a hearing or meeting fails to demonstrate why Dime's 71. See also the discussion on the consummation period in the numerous written presentations do not adequately present its evi- North Fork Order. dence, allegations, and views on this proposal. Moreover, the Board 72. Dime has requested a hearing on the proposal. The BHC Act does not believe that a public meeting or hearing would clarify or does not require that the Board hold a public hearing on applications enhance the record as it relates to the limited factors that the Board is or notices, although the Board may do so when appropriate. Section 4 required by statute to review in this case. For these reasons, and based of the BHC Act and the Board's rules thereunder provide for a hearing on all the facts of record, the Board has determined that a public on an application to acquire a savings association if there are disputed hearing or meeting is not required or warranted to clarify the factual issues of material fact that cannot be resolved in some other manner. record for the proposal, or otherwise warranted in this case. Accord- See 12 C.F.R. 225.25(a) (2). In addition, under its rules, the Board ingly, the request for a hearing or meeting on the proposal is hereby may, in its discretion, hold a public hearing or meeting on an applica- denied. tion or notice to clarify factual issues related to the application and In addition, Dime has alleged that the Board's ex parte communicanotice and to provide hearing or meeting on an application or notice to tion policies have not been complied with in this case. The Board clarify factual issues related to the application and notice and to conducted an internal investigation of this matter and has determined provide an opportunity for testimony, if appropriate. See 12 C.F.R. that Board and Reserve Bank staff have followed all applicable 262.3(e) and 262.25(d). Dime requests a hearing for two reasons: policies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

766 Federal Reserve Bulletin • November 2000 Appendix (11) Enter into any banking or nonbanking transactions with North Fork or any of its subsidiaries,2 except Fleet hereby commits that it will not, without the prior for the anticipated Branch Sale Transaction or approval of the Board or its staff, directly or indirectly: Ordinary Course Transactions. (1) Exercise or attempt to exercise a controlling influence over the management or policies of North Fleet provided an additional passivity commitment and Fork or any of its subsidiaries;1 clarified the scope of the above passivity commitments, at (2) Seek or accept representation on the board of directhe request of the DOJ as follows: tors of North Fork or any of its subsidiaries; (i) Fleet represents that it will not, without prior ap- (3) Have or seek to have any employee or representaproval of the Board, seek to obtain competitively tive serve as an officer, agent, or employee of North sensitive information from North Fork or its sub- Fork or any of its subsidiaries; sidiaries, other than information appropriate to en- (4) Take any action that would cause North Fork or gage in the process of acquiring the 17 retail any of its subsidiaries to become a subsidiary of branches of Dime that Fleet would acquire under Fleet, or any of its subsidiaries; this proposal and North Fork's consolidated finan- (5) Acquire or retain shares that would cause the comcial statements so long as the financial statements bined interests of Fleet and its subsidiaries, and do not contain projections or forward-looking their respective officers, directors, and affiliates, to statements, or information relating to prices or the equal or exceed 9.0% of the outstanding voting business and strategic plans of North Fork or its shares of North Fork Common Stock (it being subsidiaries;3 understood that, in making such calculation, Fleet (ii) Fleet will not, without prior approval of the Board, shall include: provide any competitively sensitive information to (a) Such shares of North Fork Common Stock as North Fork; and may be acquired by conversion of the North (iii) Fleet reaffirms, consistent with the commitments Fork Preferred or the exercise of the Rights, provided to the Board, that it will not, without regardless of whether such North Fork Preprior approval of the Board, directly or indirectly ferred or Rights are immediately convertible attempt to seek to affect or influence the board of into shares of North Fork Common Stock as an directors or the business, operations, affairs, finaneconomic matter, and cial matters or policies of North Fork or any of its (b) Such shares of North Fork Common Stock as subsidiaries; nominate, appoint or otherwise desigmay be held in a fiduciary capacity by Fleet nate the officers or directors of North Fork or any subsidiaries and are not exempt under 12 of its subsidiaries; or acquire or exercise veto C.F.R. § 225.12(a) due to the fact that they power or approval rights with respect to the busiare held with sole voting power); ness of North Fork or any of its subsidiaries, (6) Propose a director or slate of directors in opposibeyond those specified in Fleet's stock purchase tion to a nominee or slate of nominees proposed agreement with North Fork, including acquiring or by the management or the board of directors of exercising veto power or approval rights over: North Fork or any of its subsidiaries; (a) Changes in control of North Fork or any of its (7) Solicit or participate in soliciting proxies with subsidiaries; respect to any matter presented to the shareholders (b) Asset purchases or sales by North Fork; of North Fork or any of its subsidiaries; (c) Change in majority ownership of North Fork (8) Attempt to influence the dividend policies or pracor any of its subsidiaries; tices of North Fork or any of its subsidiaries (other (d) Mergers or acquisitions by North Fork or any than with respect to Fleet's right to obtain payof its subsidiaries; or ment of dividends under the terms of the North (e) Actions by North Fork or any of its subsidiar- Fork Preferred); ies to raise equity or capital, including actions (9) Attempt to influence the investment, loan or credit to authorize, create or increase the authorized decisions or policies, pricing of services, personamount of or issue any class or series of any nel decisions, operational activities (including the debt or equity securities of North Fork or any location of any offices or branches or their hours of its subsidiaries, or any warrants, options or of operation, etc.), or any similar activities or other rights convertible or exchangeable into decisions of North Fork or any of its subsidiaries; any class or series of any debt or equity securi- (10) Dispose or threaten to dispose of shares of North ties of North Fork or any of its subsidiaries. Fork or any of its subsidiaries as a condition of specific action or non- action by North Fork or any of its subsidiaries; or 2. This commitment does not preclude the branch sale transaction and additional rights offerings contemplated by the proposal. 3. Fleet, without prior consultation with North Fork, has waived any 1. For the purposes of the Appendix, "North Fork or any of its subsid- rights it may have under its stock purchase agreement with North Fork iaries" refers to North Fork, Dime, and the subsidiaries of either company. to obtain other competitively sensitive information. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 767 North Fork Bancorporation, Inc. time for filing comments has expired. The Board has Melville, New York considered the proposal and all comments received in light of the factors set forth in section 4 of the BHC Act. Dime Order Approving the Acquisition of a Savings has submitted extensive comments and information regard- Association ing the proposal. In addition, the Board received comments from several organizations, including Inner City Press/ North Fork Bancorporation, Inc. ("North Fork"), a bank Community on the Move ("ICP"), the Association for holding company within the meaning of the Bank Holding Neighborhood & Housing Development Inc. ("ANHD"), Company Act ("BHC Act"), has requested the Board's and the Northwest Bronx Community and Clergy Coalition approval under sections 4(c)(8) and 4(j) of the BHC Act ("NWBCCC"). (12 U.S.C. §§ 1843(c)(8) and 0')) and section 225.24 of the North Fork, with total consolidated assets of $14.7 bil- Board's Regulation Y (12 C.F.R. 225.24) to acquire at least lion, operates depository institutions in New York and 50.1 percent of the voting shares of and to exercise control Connecticut. North Fork is the 12th largest depository over Dime Bancorp, Inc. ("Dime"), and thereby acquire organization in New York, controlling deposits of Dime's wholly owned subsidiary, The Dime Savings Bank $9.1 billion, representing 2.2 percent of total deposits in of New York, FSB ("Dime Savings"), both of New York, depository institutions in the state ("state deposits").4 New York.1 North Fork also has requested the Board's North Fork also is the 24th largest depository organization approval to acquire all Dime's and Dime Savings' non- in Connecticut, controlling deposits of $363.3 million, banking subsidiaries.2 representing less than 1 percent of state deposits. Dime, In addition, FleetBoston Financial Corporation, Boston, with total consolidated assets of $25.3 billion, is the tenth Massachusetts ("Fleet") has entered into an agreement largest depository organization in New York, controlling with North Fork to purchase up to 9 percent of the voting total deposits of $11.5 billion, representing approximately shares of North Fork in the form of convertible preferred 2.8 percent of state deposits. Dime also is the 14th largest stock and rights to acquire North Fork common stock, if depository organization in New Jersey, controlling deposits certain conditions related to the North Fork/Dime proposal of $2.3 billion, representing approximately 1.6 percent of are met. The proceeds of the sale of stock and rights to state deposits. On consummation of the proposal, North Fleet would be used to fund the cash portion of North Fork would become the fifth largest depository organiza- Fork's acquisition of Dime. The Fleet proposal is discussed tion in New York, controlling deposits of approximately in a separate order issued today.3 $20.7 billion, representing approximately 4.9 percent of Notice of the North Fork proposal, affording interested state deposits. persons an opportunity to submit comments, has been The Board previously has determined by regulation that published (65 Federal Register 17,657 (2000)), and the the operation of a savings association by a bank holding company is closely related to banking for purposes of section 4(c)(8) of the BHC Act.5 The Board requires that savings associations acquired by bank holding companies conform their direct and indirect activities to those permissible for bank holding companies under section 4 of the 1. North Fork intends to merge its wholly owned subsidiary bank, BHC Act. Dime engages in mortgage lending and related North Fork Bank, Mattituck, New York, with Dime Savings, and activities, which the Board also has determined to be North Fork Bank would be the surviving institution. The merger closely related to banking. North Fork has committed to would be subject to approval by the Federal Deposit Insurance Corporation ("FDIC") under section 18(c) of the Federal Deposit Insurance conform all the activities of Dime Savings to those permis- Act (12 U.S.C. § 1828(c)) ("Bank Merger Act") and by the New sible under section 4(c)(8) of the BHC Act and Regula- York State Banking Department ("NYSBD"). tion Y. 2. Dime has filed comments with the Board objecting to this In reviewing the proposal, the Board is required by proposal. Among other contentions, Dime asserts that North Fork's previous solicitation of proxies from Dime's stockholders in opposi- section 4(j)(2)(A) of the BHC Act to determine that the tion to a proposed merger of Dime and Hudson United Bancorp and acquisition of Dime by North Fork "can reasonably be its concurrent tender offer for a majority of Dime's shares constituted expected to produce benefits to the public . . . that outan acquisition of control of Dime by North Fork without prior Board weigh possible adverse effects, such as undue concentraapproval in violation of section 4 of the BHC Act. Based on a review tion of resources, decreased or unfair competition, conflicts of the facts and circumstances, including the fact that the proxies solicited by North Fork were of limited duration and scope and that of interests, or unsound banking practices."6 As part of its North Fork owned a small percentage of Dime's shares at the time, the evaluation of a proposal under these public interest factors, Board has determined that North Fork's participation in the proxy the Board reviews the financial and managerial resources solicitation was not prohibited by the BHC Act. See 12 C.F.R. 225.2(c)(l)(iii). Dime also expresses concerns that North Fork might commence another proxy solicitation to elect five individuals selected by North Fork to Dime's board of directors, and contends that any such proxy 4. Asset data are as of June 30, 2000, and state deposit and ranking solicitation would require prior Board approval. Such approval is data are as of June 30, 1999. In this context, depository institutions included in this Board action. include commercial banks, savings banks, and savings associations. 3. See FleetBoston Financial Corporation, 86 Federal Reserve 5. 12 C.F.R. 225.28(b)(4). Bulletin 751 (2000) ("Fleet Order"). 6. 12 U.S.C. § 1843(j)(2)(A). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

768 Federal Reserve Bulletin • November 2000 of the companies involved as well as the effect of the Financial and Managerial Considerations proposal on competition in the relevant markets. The Board has previously stated that in evaluating acqui- In connection with its review of the public interest factors sition proposals, the Board must apply the criteria in the under section 4 of the BHC Act, the Board has carefully BHC Act to proposals that are opposed by the management reviewed the financial and managerial resources of North of the target institution in the same manner as proposals Fork and Dime and their respective subsidiaries and the that are supported by the target's management. The Board effect the transaction would have on such resources in light has long held that, where the statutory criteria are met, the of all the facts of record.8 The Board has considered, Board would be acting outside its discretion under the among other things, confidential reports of examination BHC Act to withhold approval based upon other factors, and other supervisory information received from the prisuch as whether the proposal is acceptable to the manage- mary federal supervisors of the organizations involved, and ment of the organization to be acquired.7 The Board also is the Federal Reserve System's confidential supervisory inmindful of the potential adverse effects that contested formation. The Board also has considered publicly availacquisitions may have on the financial and managerial able financial and other information on the organizations resources of the company to be acquired and the acquiring and their subsidiaries, and all the information submitted on organization. In addition, the Board takes into account the the financial and managerial aspects of the proposal by potential for adverse effects on safety and soundness if a North Fork and the commenters, including Dime. As part contested proposal is prolonged. of this review, the Board has considered concerns expressed by commenters about the financial and managerial As noted above, the Board has received comments from resources of North Fork. Dime, in particular, has expressed Dime objecting to the proposal. Dime has provided comconcerns about the integration of the organizations' operaments and information on, among other things, North tions, North Fork's estimates of the cost savings that might Fork's relationship with Fleet; the intended sale of 17 result from the proposed merger, North Fork's managerial Dime Savings branches by North Fork to Fleet; the comdepth and experience, and the credibility of North Fork's petitive impact of the proposal, including the impact of senior management.9 Fleet's proposed investment in North Fork; the accuracy of the financial projections provided by North Fork; the man- In evaluating financial factors in expansion proposals by agerial resources of North Fork; the ability of North Fork banking organizations, the Board consistently has considto consummate the proposed merger in light of Dime's ered capital adequacy to be especially important.10 The corporate defenses and opposition; and the effect of the Board expects banking organizations contemplating expanproposed acquisition on the convenience and needs of the sion to maintain strong capital levels substantially in excommunities served by Dime Savings. In addition to cess of the minimum levels specified in the Board's Capital Dime's comments, the Board also received comments from Adequacy Guidelines. Strong capital is particularly importhe three organizations previously noted regarding the im- tant in proposals that involve higher transaction costs or pact of the proposal on the convenience and needs of the risks, such as proposals that are opposed by the managecommunities served by Dime and North Fork, and on the ment of the target institution. North Fork proposes to performance records of North Fork Bank and Dime Sav- finance a portion of the transaction with $250 million in ings under the Community Reinvestment Act ("CRA") capital raised through the purchase of preferred shares by (12 U.S.C. § 2901 et seq.), and certain other matters. Fleet. North Fork has stated that it will not incur debt in The Board has considered these comments, and the connection with this proposal. North Fork and Dime and responses submitted by North Fork carefully, and has re- each of their subsidiary depository institutions are well viewed the notice in light of all the information presented capitalized, and North Fork has stated that these companies would continue to be well capitalized on consummation of and otherwise available to the Board. Based on this review the proposal. In the Board's view, North Fork's ability to and subject to North Fork's commitments and the condiraise capital to finance its proposed acquisition of Dime, tions set forth below, the Board has concluded that North through the issuance of preferred shares to Fleet or other- Fork's proposal satisfies the criteria in the BHC Act. Accordingly, the Board has determined to approve the notice subject to compliance with the commitments and conditions referenced or described in this order. The Board's 8. See 12 C.F.R. 225.26. review as expressed in this order is limited to applying the 9. Dime alleges that integrating the organizations would be espestatutory factors set out in the BHC Act to the proposal as cially difficult for North Fork. Dime also alleges that North Fork's currently constituted and presented to the Board and the cost savings estimates are unrealistically high, thereby making its Board expresses no view on any matter regarding this financial projections for the combined North Fork/Dime organization overly optimistic. In addition, Dime argues that the information protransaction other than those statutory factors. vided by North Fork to the Board and to the public is insufficient to allow adequate analysis of the financial and managerial aspects of the proposal. After receiving North Fork's initial notice, the Board requested additional information on all aspects of the proposal and received substantial information, including confidential and nonconfidential information that has been included in the record of this case. 1. See The Bank of New York Company, Inc., 74 Federal Reserve 10. See, e.g., Banc One Corporation, 84 Federal Reserve Bulletin Bulletin 257, 259 (1988) ("BONY Order"). 961 (1998). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 769 wise, is an essential element of the proposal. The Board's North Fork's chairman and chief executive officer action in this case is conditioned on North Fork's success- ("CEO") and documents filed by North Fork with the fully raising $250 million before consummation of the Securities and Exchange Commission ("SEC"), that reproposal.11 flect poorly on the quality of North Fork's management.13 In addition, the Board has given special consideration to The Board has carefully reviewed all available informathe financial projections submitted by North Fork, includ- tion on the management of North Fork, including confidening, in particular, the levels of capital projected by North tial reports of examination, information submitted by North Fork on consummation of the acquisition of Dime and on Fork and the commenters, and other publicly available the expected merger of Dime Savings with North Fork information. In particular, the Board has reviewed all the Bank and the completion of the branch sales in connection information submitted by North Fork regarding its plans with that merger. These projections indicate that North for integrating and managing the North Fork and Dime Fork and its depository institutions expect to maintain organizations, including confidential information. The capital levels that include a cushion above the minimum Board also has reviewed the public statements of North levels necessary to meet the regulatory definition of well Fork's management in light of all the information submitcapitalized. The ability to meet these projections is particu- ted by North Fork as part of the notice, including North larly important in light of the proposed acquisition of a Fork's relevant SEC filings. North Fork, Dime, and their larger organization by a smaller organization, the chal- subsidiary depository institutions currently are well manlenges that arise in connection with integrating the opera- aged, with appropriate risk management processes in place, tions of two different types of organizations, and the trans- and both organizations have management resources that actional risks and costs associated with consummation of have established records of positive earnings and operaan acquisition that is opposed by the management of the tions. As mentioned above, North Fork and its subsidiary target organization. Accordingly, the Board conditions its depository institutions currently are well capitalized, with a action in this case on North Fork's achieving at least the record of positive earnings.14 North Fork has maintained capital levels indicated in its commitments and its projec- this record over the last several years while growing subtions for the transaction without completion of the branch stantially through the acquisition of other depository orgasales based on pro forma capital information provided by nizations, including several thrift organizations.15 North North Fork, as of June 30, 2000. Fork's plan for integrating Dime and its subsidiaries into The Board also has considered the managerial resources North Fork appears adequate. The Board also has reviewed of the entities involved and of the proposed combined the evaluations of North Fork's management in examinaorganization. Dime argues that a number of matters reflect tions that cover an extended period, considered the expernegatively on the managerial resources of the combined tise and experience of North Fork's management, and organization. Dime alleges that, because Dime is substan- taken into account the context of the remarks by North tially larger than North Fork, the combination of Dime and Fork's management cited by Dime. Based on these and all North Fork would put severe strain on the management of the facts of record, the Board concludes that the financial North Fork, especially if North Fork does not retain the and managerial resources of the organizations involved in senior management of Dime.12 Dime also alleges that there the proposal are consistent with approval. are inconsistencies between certain public statements by Competitive Considerations As part of its consideration of the public interest factors 11. North Fork has requested that the preferred stock and associated rights that it proposes to sell to Fleet be treated as tier 1 capital. The under section 4 of the BHC Act, the Board has considered Board has determined that the preferred stock would qualify as tier 2 carefully the competitive effects of the proposal in light of capital under the Board's risk-based capital guidelines. The preferred stock qualifies for treatment as regulatory capital because it has no maturity date, cannot be redeemed at the option of the holder, and has no other provisions that would require future redemption. The pre- 13. In addition, Dime alleges that other public remarks critical of ferred stock does not qualify as tier 1 capital under the Board's Dime's management by North Fork's CEO were "intemperate" and guidelines and supervisory guidance for holding companies, however, justify denial of North Fork's notice on managerial grounds. Dime and because the instrument provides for the granting of additional stock ICP also criticize the credibility of North Fork's CEO based on his purchase rights after a designated period (i.e., three years) if the testimony in a 1997 lawsuit. instrument is not called by the issuer. The granting of additional rights 14. Dime requests that the Board examine the recent decline in the in this circumstance creates incentives for the instrument's early assets of North Fork's subsidiary, Superior Savings of New England, redemption that are economically similar to those that result from an National Association, Branford, Connecticut ("Superior Savings"), increase in an instrument's dividend rate if it is not redeemed. Instru- arguing that this decline reflects poorly on North Fork's management. ments that include incentives for early redemption are generally not The Board has considered the matter, taking into account that Superior accorded treatment as tier 1 capital, although they may, as in this case, Savings' business plan continues to change significantly, and has qualify for treatment as tier 2 capital. 12 C.F.R. 225 App. A concluded that the asset decline does not indicate improper manage- (II)(A)(l)(b) and (A)(2)(b); see also Bank Holding Company Supervi- ment by North Fork. Moreover, on June 6, 2000, Superior Savings sion Manual § 4060.3.2.1.1.2. received approval from the Office of the Comptroller of the Currency 12. In particular, Dime argues that North Fork does not have the to convert from a state to a national bank charter. managerial expertise or experience to operate a large mortgage com- 15. See, e.g., North Fork Bancorporation, Inc., 86 Federal Reserve pany like Dime Savings' subsidiary, the North American Mortgage Bulletin 226 (2000); North Fork Bancorporation, Inc., 86 Federal Company ("NAMCO"). Reserve Bulletin 230 (2000). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

770 Federal Reserve Bulletin • November 2000 all the facts of record.16 North Fork and Dime compete centration of banking resources in the New York banking directly in the Metropolitan New York/New Jersey banking market or any other relevant banking market.20 market ("New York banking market").17 On consummation of the proposal, North Fork would become the sixth Records of Performance Under the Community largest depository organization in the New York banking Reinvestment Act market, controlling deposits of $22.9 billion, representing approximately 5.3 percent of market deposits.18 The In acting on notices to acquire a savings association, the Herfindahl-Hirschman Index ("HHI") would not increase, Board reviews the records of performance of the relevant the market would remain unconcentrated, and numerous depository institutions under the CRA.21 The Board has competitors would remain in the market.19 Based on these reviewed the records of performance of North Fork Bank and all other facts of record, the Board concludes that and Dime Savings in light of all the facts of record, consummation of the proposal would not result in any including comments received from ICP, ANHD, significantly adverse effects on competition or on the con- NWBCCC, and Dime. ICP and ANHD criticize North Fork Bank's level of lending to minority and low- and moderate-income ("LMI") borrowers, and LMI census tracts and census tracts with predominantly minority populations ("minority 16. See First Hawaiian, Inc., 79 Federal Reserve Bulletin 966 (1993). Dime argues that North Fork's bid is anticompetitive because tracts"), based primarily on their analyses of data it eliminated a competitor by preventing the merger of Dime and filed under the Home Mortgage Disclosure Act (12 U.S.C. Hudson United Bancorp. Dime also contends that the involvement of § 2801 et seq.) ("HMDA"). They express concern that the Fleet and Salomon Smith Barney ("Salomon"), initially retained by contested nature of the proposal could create confusion North Fork as one of its investment bankers for the proposed transacthat might negatively affect the ability of the combined tion, has allowed North Fork to improperly eliminate Fleet and Salomon's affiliate, Citigroup Inc., as potential bidders for Dime. The North Fork/Dime organization to meet the needs of its Board has considered these allegations in light of the Williams Act, communities. ICP also contends that the number and volwhich explicitly contemplates that multiple persons may join together ume of small business loans made by North Fork Bank in to make a tender offer. See 12 U.S.C. § 78n(d)(2). Furthermore, the the Bronx are inadequate compared with North Fork involvement Fleet and Citigroup in North Fork's bid does not prevent either organization from bidding for Dime. North Fork released Fleet Bank's market share of deposits in the Bronx and North on May 17, 2000, from the restriction in the Fleet-North Fork stock Fork Bank's lending record in other parts of its assessment purchase agreement that prevented Fleet from acquiring Dime, and area. NWBCCC alleges that North Fork Bank is not as Salomon no longer acts as North Fork's investment banker for the diligent or responsive to community concerns as it could proposal. be in monitoring the physical condition of apartment build- 17. The New York banking market includes Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, ings in the Northwest Bronx on which North Fork Bank Rockland, Suffolk, Sullivan, Ulster, and Westchester Counties in New holds the mortgages. Dime contends generally that an York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, acquisition by North Fork would negatively affect the CRA Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, and a performance of Dime Savings, and views the proposal as portion of Mercer Counties in New Jersey; Pike County in Pennsylvaraising a policy issue of whether a smaller institution with nia; and portions of Fairfield and Litchfield Counties in Connecticut. In the Fleet Order issued today the Board has affirmed the definition of a "satisfactory" rating for CRA performance should be the New York banking market. See 86 Federal Reserve Bulletin 751, permitted to acquire a larger institution with a CRA rating 755 (2000) and the discussion of the New York banking market of "outstanding" without first submitting a plan for the therein. merged institution to achieve the higher rating. 18. Market share data are as of June 30, 1999, and are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions A. CRA Performance Examinations have become, or have the potential to become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin As provided in the CRA, the Board evaluates an institu- 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the Board has analyzed the competitive factors in tion's record of performance in light of examinations of the this case as if North Fork Bank and Dime Savings were a combined entity, the deposits of Dime Savings are included at 100 percent in the calculation of pro forma market share. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76 Federal 20. Dime has raised objections to the individuals proposed by North Reserve Bulletin 669 (1990). Fork as potential candidates for election to Dime's board of directors. 19. Under the revised Department of Justice Merger Guidelines, 49 Dime contends that service on Dime's board by some of the individu- Federal Register 26,823 (June 29, 1984), a market in which the als would be in violation of the Depository Institutions Management post-merger HHI is less than 1000 points is considered to be uncon- Interlocks Act (12 U.S.C. § 3201 et seq.) ("Interlocks Act") and the centrated. The Department of Justice has informed the Board that a Board's Regulation L (12 C.F.R. Part 212). The Board expects all bank merger or acquisition generally will not be challenged (in the directors or management officials of Dime and North Fork to be in absence of other factors indicating anticompetitive effects) unless the compliance with the Interlocks Act and Regulation L. In light of the post-merger HHI is at least 1800 and the merger increases the HHI by uncertainty about when or whether any of these individuals might more than 200 points. The DOJ has stated that the higher than normal serve on the Dime board, a determination under Regulation L regard- HHI thresholds for screening bank mergers for anticompetitive effects ing such service is premature. In addition, the appropriate federal implicitly recognize the competitive effects of limited-purpose lenders supervisor may grant an exemption for any prohibited interlock. and other nondepository financial institutions. The post-merger HHI 21. See, e.g., Banc One Corporation, 83 Federal Reserve Bulletin in this case would be 782. 602 (1997). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 111 CRA performance records of the institution conducted by number and 49 percent of the dollar amount of all lending the appropriate federal supervisory agency. An institution's by North Fork Bank in its assessment area. Although some most recent CRA performance evaluation is a particularly of this lending was reported under HMDA, much of it was important consideration in the application process, because not, in particular Modification, Extension, and Consolidait represents a detailed on-site evaluation of the institu- tion Agreements ("MECAs").26 From January 1998 tion's overall record of performance under the CRA by its through June 1999, North Fork Bank originated almost appropriate federal supervisor.22 $315 million in multifamily residential loan refinances that North Fork Bank received an overall rating of "outstand- were not reportable under HMDA. With regard to HMDAing" from its primary federal supervisor, the FDIC, at its reportable multifamily lending, examiners found that North most recent evaluation for CRA performance, as of Sep- Fork Bank exceeded the aggregate in 1997 and 1998 in tember 1999 ("1999 Examination"). As of June 1999, the both number and dollar amount of loans, and that the level NYSBD rated North Fork Bank's performance "outstand- of lending in 1999, if sustained, would exceed 1998 LMI ing" in helping to meet the credit needs of its entire penetration levels. North Fork Bank's 1998 MECA activity community pursuant to New York law ("State Examina- was found to be consistent with housing stock composition tion").23 Dime Savings also received an overall rating of and distribution, and year-to-date 1999 data indicated sub- "outstanding" from its primary federal supervisor, the stantial percentage increases in the number and dollar Office of Thrift Supervision, at its most recent evaluation amount of MECAs in LMI tracts. Examiners noted that for CRA performance, as of November 1999. 45 percent of the number and 50 percent of the dollar amount of North Fork Bank's LMI MECA activity was in Bronx County, which had the highest percentage of LMI B. North Fork Bank's CRA Performance Record tracts in the assessment area, and stated that this activity was indicative of North Fork Bank's responsiveness to the In the 1999 Examination, examiners found that North Fork credit needs of the LMI neighborhoods in its assessment Bank demonstrated an excellent responsiveness and willarea.27 ingness to meet the credit needs of its community, including its overall level of lending (North Fork Bank's net- The State Examination found that North Fork Bank loan-to-deposit ratio was 93.4 percent, as of June 30, 1999) made 3423 small business loans in 1998, totaling and a very strong record of lending in its assessment area. $368.3 million, which represented an increase over the In particular, examiners found that North Fork Bank dis- bank's 1997 totals of 2627 loans, totaling $291.7 million. played an excellent, and increasing, level of lending to The geographic distribution of North Fork Bank's small LMI geographies in its assessment area, and that it had a business loans was viewed as excellent, exceeding the good record of lending to LMI borrowers. North Fork aggregate in 1997 and 1998 in terms of the percentage of Bank's penetration levels in moderate-income tracts for small business loans and percentage of dollar amount of 1-4 family loans reported under HMDA significantly ex- such loans, extended in LMI areas. North Fork Bank's ceeded the market's performance in number of loans and market share of small business lending was found to be dollar amount, and surpassed the composition of the area's higher in LMI areas than in non-LMI areas. Data for the housing stock.24 In concluding that North Fork Bank had a first six months of 1999 continued to show good perforsatisfactory record of lending to borrowers of different mance, with North Fork Bank originating 446 small busiincome levels, the 1999 Examination found that the bank's ness loans, totaling $46.8 million, in LMI areas. This number of loans to LMI borrowers exceeded the aggregate, and that the dollar amount of such loans was comparable with the aggregate.25 26. A MECA is an agreement by a lender with a borrower that Examiners separately assessed North Fork Bank's multi- modifies the terms of an existing loan by, for example, extending the family lending, which accounted for 13 percent of the final repayment date. MECAs do not involve lending additional money and are not reported under HMDA, but are regarded as loans and may be considered in evaluating an institution's CRA performance. See Interagency Questions and Answers, 64 Federal Register 22. Interagency Questions and Answers Regarding Community at 23,634. Reinvestment, 64 Federal Register 23,618 and 23,641 (1999) ("Inter- 27. As mentioned above, NWBCCC's comments concern primarily agency Questions and Answers"). North Fork Bank's oversight of the physical condition of apartment 23. North Fork also owns Superior Savings, which received an buildings in the Bronx mortgaged to the bank. NWBCCC indicates overall rating of "satisfactory" from its primary federal supervisor, that North Fork Bank previously had been responsive to its concerns the FDIC, at its most recent evaluation for CRA performance, as of about particular buildings. NWBCCC has made specific recommenda- May 1996 (doing business as Branford Savings Bank). tions for ways that North Fork Bank might improve its oversight of all 24. For example, although only 9.5 percent of the owner-occupied buildings and has requested that the Board require North Fork to meet units in the assessment area were in moderate-income tracts, with NWBCCC to discuss these issues. The Board previously has 28.1 percent of North Fork Bank's 1-4 family HMDA-reportable noted that, although communications by depository institutions with loans, and 17.8 percent of the dollar amount of those loans, were on community groups provide a valuable method of assessing and deterproperties in moderate-income tracts. mining how an institution may best address the credit needs of the 25. The aggregate represents the cumulative lending for all institu- community, the CRA, the CRA regulations of the federal financial tions that have reported HMDA data in a particular market. North supervisory agencies, or the BHC Act do not require depository Fork Bank's assessment area consists of Bronx, Kings, Nassau, New institutions to have meetings or enter into agreements with any organi- York, Queens, Richmond, Rockland, Suffolk, and Westchester Coun- zation. See Fifth Third Bancorp, 80 Federal Reserve Bulletin 838 ties in New York. (1994). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

772 Federal Reserve Bulletin • November 2000 represented 21.7 percent of the bank's small business loans, relatively few LMI tracts. In addition, North Fork Bank and 23 percent of the dollar amount of its small business offered 24-hour telephone account access and branch openloans.28 ing hours (with extended weekday and weekend hours) The 1999 Examination found that North Fork Bank had that were found to be convenient and comparable with originated numerous community development loans during other local financial institutions.29 the examination period totaling $400 million, or approxi- Finally, examiners found no violations of the substantive mately 7 percent of outstanding loans. This lending in- provisions of the antidiscrimination laws and regulations. cluded $316 million for multifamily properties in LMI tracts in the bank's assessment area, and more than C. Dime Savings' CRA Performance Record $13 million for the construction of affordable housing for LMI senior citizens in eastern Suffolk County. North Fork The Board recently has reviewed the CRA performance of Bank also provided financial support to a not-for-profit Dime Savings in the context of Dime's application to organization supporting the development of affordable merge with Hudson United Bancorp.30 The Board noted housing in troubled neighborhoods in New York City, and that in the most recent CRA performance examination of renewed a $1.8 million letter of credit to help fund the Dime Savings (the "1999 Dime Examination"), examiners rehabilitation of more than 70 housing units in an LMI found that Dime Savings performed at a high level in neighborhood in Harlem. meeting the credit needs of its assessment area, including Examiners also found that North Fork Bank's financial substantial increases in lending in LMI areas and to LMI commitment to the community development organizations individuals. In particular, Dime Savings had increased the supporting its assessment area was strong, and that it had number and volume of its consumer loans in LMI areas demonstrated its awareness of and responsiveness to com- since its previous performance examination, and Dime munity development needs by investing more than Savings' small business lending was regarded as having $31 million in local and regional organizations. This had a positive impact on serving the credit needs of the amount included investments of more than $17 million in community. The geographic distribution of Dime Savings' two Fannie Mae mortgage-backed securities involving an lending, including housing, consumer, and small business affordable housing property in New York County, and a loans, was found to reflect a good penetration throughout purchase of over $12 million of the New York City Mort- the assessment area, including LMI areas. Dime Savings gage Loan Trust, a pool of second-lien mortgages to low- also offered a number of affordable loan programs for LMI income borrowers. North Fork Bank also made more than borrowers that featured lower interest rates, reduced clos- $280,000 in grants to community development organiza- ing costs, and more flexible debt-to-income ratios. tions during the examination period, including grants to Dime Savings was found to be active in community support affordable housing, social services for residents of development lending, particularly through its substantial LMI areas of the Bronx, and care and services for the multifamily housing lending. Examiners noted that 44 perdevelopmentally disabled in eastern Long Island. cent of the properties for which Dime Savings made multi- Examiners also noted that North Fork Bank made its family loans in 1998 were in LMI areas. retail banking services available to all segments of its Dime Savings was rated "outstanding" for its commuassessment area, including LMI geographies. Twenty per- nity development investment and grant activity, based on cent of the 110 branches and 18 percent of the 113 auto- the complexity of its qualified community development mated teller machines ("ATMs") North Fork Bank main- investments, and excellent levels of activity and respontained at the time of the 1999 Examination were in LMI siveness. In the period between the 1999 Dime Examinatracts. Examiners considered this distribution to be reason- tion and its previous CRA performance examination, Dime able, particularly in light of the fact that the counties in Savings made a total of $41.2 million of qualified investwhich North Fork Bank had the greatest presence also had ments, including $14.7 million in low-income-housing tax credits and $21.4 million invested with the Community Preservation Corporation, which finances the upgrading 28. ICP contends that North Fork Bank gathers deposits in less and construction of LMI housing in the New York City affluent and predominantly minority areas, such as the Bronx, and area. Dime made $1.6 million in grants and donations concentrates its loans and investments in more affluent and nonminorduring this period to organizations supporting community ity areas, such as Nassau and Suffolk Counties. In ICP's view, North development projects and programs. Examiners also com- Fork Bank's small business lending in the Bronx and similar areas should reflect more closely its level of deposits in those areas. The Board has reviewed North Fork Bank's record of lending to small businesses throughout its assessment area, including minority and LMI census tracts in all portions of its assessment area. Although North Fork Bank's lending to small businesses in specific segments of 29. The 1999 Examination found that North Fork Bank provided a its assessment area might not closely correspond to the bank's market range of community development services, including actively particishare of deposits in those segments at any particular time, deposits are pating in several financial literacy programs; providing information used to fund other lending activities. As noted above, the Board also and assistance to job seekers, such as help in completing applications has considered that North Fork Bank provides significant multifamily and interviewing; participating in homebuying counseling seminars; housing credit and other types of credit, including consumer loans and and working with local groups to share bank staff's expertise in small single family housing loans, throughout North Fork Bank's assess- business lending with local small businesses. ment area, includes minority and LMI areas. 30. Dime Bancorp, Inc., 86 Federal Reserve Bulletin 413 (2000). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 773 mended Dime Savings' efforts to ascertain the credit needs family loans, which constituted a substantial portion of its of its community through its outreach efforts. HMDA-reportable lending, were for properties in minority Examiners noted with approval Dime Savings' use of a tracts in its New York assessment area in 1998. wide range of delivery systems for its products and ser- The 1999 data indicate that North Fork Bank outpervices, its accessibility to all segments of the community, formed the aggregate in certain areas, such as the percentand its leadership in providing community development age of its HMDA- related loans in LMI tracts (19.9 percent services. Examiners found that the bank's services were for North Fork Bank, compared with 15 percent for the available in all portions of its assessment area and noted aggregate), although its denial disparity ratios for minorithat 16 percent of Dime Savings' 127 branches were in ties in its New York assessment area had increased. North LMI areas, as were 16 percent of its 227 ATMs. Fork Bank continued to engage in substantial multifamily Finally, examiners identified no violations of the sub- lending, representing 28.5 percent of the dollar volume of stantive provisions of the antidiscrimination laws and regu- its HMDA-reportable lending in 1999, and a significant lations and found that Dime Savings had implemented percentage of those loans were made in minority tracts extensive fair lending policies, procedures, training pro- (44.5 percent) and LMI tracts (52.7 percent), which repregrams, and internal assessment efforts. sented increases over 1998 data for minority and LMI tracts. In 1999, Dime Savings' percentage of loan originations in its New York assessment area to African Ameri- D. HMDA Data cans, Hispanics, LMI individuals, and in minority and LMI tracts, were all higher than in 1998. The Board has also carefully considered the lending records of North Fork and Dime in light of comments on The data, however, reflect certain other disparities in the their 1998 HMDA data.31 The Board has recently reviewed rates of loan applications, originations, and denials by North Fork Bank's 1998 HMDA data in the context of racial group and income level.35 The Board is concerned North Fork's applications to acquire JSB Financial, Inc. when an institution's record indicates such disparities in and Reliance Bancorp, Inc.,32 and reviewed Dime Savings' lending, and believes that all banks are obligated to ensure 1998 HMDA data in approving Dime's application to that their lending practices are based on criteria that assure merge with Hudson United Bancorp. In reviewing the 1998 not only safe and sound lending, but also equal access to data, the Board found that although North Fork Bank's credit by creditworthy applicants regardless of their race or denial disparity ratios for African Americans and Hispan- income level. The Board recognizes that HMDA data alone ics were lower than those reported by lenders in the aggre- provide an incomplete measure of an institution's lending gate in parts of North Fork Bank's New York assessment in its community because these data cover only a few area,33 including the New York City Metropolitan Statisti- categories of housing-related lending. HMDA data, morecal Area ("MSA") portion, these ratios were higher than over, provide only limited information about the covered the aggregate in other areas, such as the Nassau-Suffolk loans.36 HMDA data, therefore, have limitations that make MSA, and comparable with the aggregate for the entire them an inadequate basis, absent other information, for assessment area.34 Concerning Dime Savings, the Board concluding that an institution has not adequately assisted in meeting its community's credit needs or has engaged in found that its denial disparity ratio in 1998 for African illegal lending discrimination. Americans was more favorable than the aggregate in all its assessment areas. In addition, 43 percent of Dime's multi- Because of the limitations of HMDA data, the Board has considered these data carefully in light of other information, including periodic and examination reports that pro- 31. ICP was generally critical of North Fork Bank's record of vide an on-site evaluation of the compliance by the subsid- HMDA-related lending to minority and LMI borrowers. ANHD criti- iary banks of North Fork and Dime with fair lending laws cized the percentage of single-family mortgage loans that North Fork and the overall lending and community development activ- Bank and Dime Savings make to minorities or in predominantly ities of the banks. In particular, the Board notes that examminority or LMI census tracts. ANHD also was critical of the percentiners found no evidence of prohibited discriminatory pracage of such loans that Dime Savings makes to LMI borrowers and of the multifamily HMDA-related lending records of both institutions. tices or substantive violations of the fair lending laws at the 32. North Fork Bancorporation, Inc., 86 Federal Reserve Bulletin 226 (2000); North Fork Bancorporation, Inc., 86 Federal Reserve Bulletin 230 (2000). 33. The denial disparity ratio compares the denial rate for minority 35. For example, North Fork Bank's percentage of housing-related loan applicants with that for white applicants. North Fork's assess- loans to minorities and LMI individuals lagged the aggregate in its ment areas are the New York City MSA and the Nassau-Suffolk MSA; New York assessment area in 1999, and Dime Savings' percentage of Dime Savings' assessment areas include those MS As, as well as New loan originations to Hispanics and in minority and LMI tracts lagged York State and New Jersey. the aggregate in all its assessment areas in 1999. 34. The 1998 data also showed that North Fork Bank received a 36. The data, for example, do not account for the possibility that an significantly smaller percentage of HMDA-related loan applications institution's outreach efforts may attract a larger proportion of marginfrom minority and LMI individuals than did lenders in the aggregate, ally qualified applicants than other institutions attract and do not and made a correspondingly smaller percentage of its HMDA-related provide a basis for an independent assessment of whether an applicant loans to minority and LMI borrowers. The Board noted, however, that who was denied credit was, in fact, creditworthy. Credit history approximately one-half of the dollar volume of North Fork Bank's problems and excessive debt levels relative to income (reasons most HMDA-related lending was through multifamily loans, and that frequently cited for a credit denial) are not available from HMDA 43 percent of these loans were made in minority census tracts. data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

774 Federal Reserve Bulletin • November 2000 most recent examinations of the subsidiary depository insti- F. Conclusion on CRA Performance Records tutions of North Fork or Dime. The Board also has taken into account factors such as North Fork's focus on MECA The Board has carefully considered all the facts of record, lending, which is not reported under HMDA, in consider- including reports of examination of CRA performance of ing whether North Fork and Dime are meeting the credit the institutions involved, other information provided by needs of their communities. North Fork and Dime, and all comments received and responses to the comments. Based on a review of the entire E. Branch Closings record, and for the reasons discussed above, the Board concludes that the CRA performance records of the institu- Dime and ICP each express concern that consummation of tions involved are consistent with approval of the proposal. the proposal would result in branch closings.37 North Fork indicates that it has made no determination on which, if Provisions of Delaware Law and Dime's Shareholders' any, North Fork Bank or Dime Savings branches it might Rights Plan close or consolidate as a result of the proposed transaction. North Fork has, however, preliminarily identified eight Dime is a Delaware corporation and Delaware law pro- North Fork Bank branches that are within approximately vides some protection for Delaware corporations that are one-half mile of Dime Savings branches.38 the object of an unsolicited takeover offer41 In addition, The Board has carefully considered all the facts of Dime's bylaws provide certain rights to shareholders that record concerning branch closings, including the eight are intended to ward off bidders that are not approved by pairs of neighboring branches identified by North Fork, Dime's management. If the Dime rights plan is triggered, and North Fork's record in opening and closing branches. an acquisition of Dime by a bidder such as North Fork The Board notes that none of the eight branch pairs are in could become substantially more expensive. Dime argues LMI areas. Furthermore, the 1999 Examination found that that Delaware corporate law and Dime's shareholders' although North Fork Bank closed nine branches in 1997- rights plan (the "Dime rights plan") present insurmount- 1998, which included two branches in moderate-income able barriers to North Fork's contested acquisition of Dime. census tracts, but none in low-income tracts, it gained 35 Dime's board has significant discretion in determining branches through a merger and opened three additional whether the Dime rights plan will become effective in a branches, including one branch in a low-income tract. The particular case, and whether it will have its full effect of Board also has reviewed the branch closing policies of making an acquisition of Dime prohibitively expensive for North Fork Bank and Dime Savings.39 The policies are a potential acquirer. North Fork has conditioned its exconsistent with federal law, which requires an insured change offer for Dime on, among other things, the tender of depository institution to provide notice to the public and to at least a majority of Dime's shares and on North Fork's the appropriate federal supervisory agency before closing a determination that neither Delaware law nor the Dime branch.40 Any branch closings resulting from the proposal rights plan apply to North Fork's acquisition of Dime would be considered by the appropriate federal supervisor shares or to the proposed second-step merger of North at the relevant institution's next CRA examination. Fork and Dime. North Fork has stated that it will comply with Delaware law in connection with its acquisition of Dime. 37. As part of its arrangement with Fleet, North Fork has agreed to sell to Fleet 17 Dime branches with deposits of approximately $2 billion, if North Fork's bid for Dime is successful. 38. Dime has argued that North Fork's cost savings estimates assume more branch closings than North Fork has indicated may occur as a result of the proposal. Dime alleges that these closings may cause significant customer disruption and employee layoffs. The effect 41. Under Delaware law (Del. Code Ann. tit. 8, § 203 (1999)), a of a proposed transaction on employment in a community is not Delaware corporation may not engage in a "business combination" among the factors included in the BHC Act, and the convenience and (including a merger or consolidation) with an "interested stockholdneeds factor has been consistently interpreted by the federal banking er" (in general, the beneficial owner of 15 percent or more of the agencies, the courts, and Congress to relate to the effect of a proposal corporation's voting stock) for a period of three years after that person on the availability and quality of banking services in the community. becomes an interested stockholder. This prohibition does not apply if See Wells Fargo & Company, 82 Federal Reserve Bulletin 445, 457 either: (1996). (1) Before the time a person becomes an interested stockholder, 39. The Board reviewed Dime Savings' branch closing policy in the the corporation's board of directors approves either the busicontext of Dime's application to merge with Hudson United Bancorp. ness combination or the transaction that causes the interested See Dime Bancorp, Inc., 86 Federal Reserve Bulletin 413 (2000). stockholder to become an interested stockholder; 40. Section 42 of the Federal Deposit Insurance Act (12 U.S.C. (2) Following the transaction that causes the interested stock- § 1831r-l), as implemented by the Joint Policy Statement Regarding holder to become an interested stockholder, the interested Branch Closings (64 Federal Register 34,844 (1999)), requires that a stockholder owns at least 85 percent of the corporation's bank provide the public with at least a 30 day notice and the appropri- voting stock (excluding certain shares); or ate federal supervisory agency with at least a 90 day notice before the (3) At or after the time a person becomes an interested stockdate of the proposed branch closing. The bank also is required to holder, the business combination with the interested stockprovide reasons and other supporting data for the closure, consistent holder is approved by the corporation's board of directors and with the institution's written policy for branch closings. The law does by a two-thirds vote of the stockholders other than the internot authorize federal regulators to prevent the closing of any branch. ested stockholder. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 775 Other Considerations The BHC Act does not require that consummation of a transaction occur within a certain period of time. Gener- As a part of its evaluation of the public interest factors, the ally, the Board requires an applicant to consummate an Board also has carefully reviewed the other public benefits approved transaction within three months from the date of and possible adverse effects of the proposal. The record the Board's approval to ensure that there are not substantial indicates that consummation of the proposal would result changes in an applicant's condition that might require the in benefits to consumers and businesses.42 The proposal Board to reconsider its approval. When ownership of an would enable North Fork to provide customers of Dime institution is in doubt over a prolonged period of time, the Savings with access to a broader array of products and personnel and financial resources of both the offeror and services, including commercial bank products, in an ex- the target are subject to strain. In previous cases, the Board panded service area. Among the North Fork products that has stated that it was concerned that the extension of the would become available to customers of Dime Savings are post-approval consummation period over a prolonged pea range of products specifically intended for small- and riod of time in a contested situation might result in adverse medium-size businesses, commercial cash management effects on the financial and managerial resources of the and deposit products, and trust and asset management organizations in a variety of different areas. services. North Fork customers, in turn, would have access In this case, although prolonged delay may have a negato Dime Savings' residential mortgage products, and would tive impact on Dime and North Fork, a short delay should also be able to take advantage of an expanded branch not impact the financial or managerial resources of either network, particularly in New Jersey, where North Fork organization so severely as to warrant denial of the pro- Bank currently has no branches. Additionally, there are posal. Accordingly, the Board has followed its standard public benefits to be derived from permitting capital mar- practice and provided a three-month period for North Fork kets to operate so that bank holding companies may make to consummate the transaction. If North Fork requests an potentially profitable investments in nonbanking compa- extension of the consummation period, the Board will nies and from permitting banking organizations to allocate examine carefully all relevant circumstances surrounding their resources in the manner they believe is most efficient the proposal, and may require North Fork to provide supwhen, as in this case, those investments are consistent with plemental information necessary to allow the Board to the relevant considerations under the BHC Act.43 evaluate the managerial and financial resources of North Dime has argued that the Board should deny North Fork and Dime at the time any extension is requested, as Fork's application to acquire Dime because North Fork has well as the impact of any extension on those financial and managerial resources and on the other statutory factors that no realistic plan to consummate the acquisition within a the Board must consider under the BHC Act. In the event short period of time. Dime contends that prolonging the of any material change in the transaction, such as a matecontest is costly to Dime and North Fork and creates a rial change in the price, financing, or structure of the significant diversion of the time and resources of the mantransaction, North Fork must consult with the Board to agement of the institutions involved, thereby eroding any determine whether the change is consistent with the public benefits of the proposal. Board's action in this case or whether further Board action Dime is particularly concerned that North Fork has is necessary. The Board reserves the right in the event of publicly announced its intention to pursue the takeover significant changes in the terms or circumstances of the until the next Dime shareholders' meeting, which will not proposal to require a new application from North Fork. occur for another year. Dime contends that this strategy would increase costs for North Fork and Dime and cause Based on the foregoing and all the facts of record, the further diversion of resources. Dime also argues that, un- Board has determined that consummation of the proposal like other contested takeovers approved by the Board, can reasonably be expected to produce public benefits that North Fork does not have a short-term plan to address the would outweigh any likely adverse effects under the stancontinued objection of Dime's board.44 North Fork re- dard of review set forth in section 4(j)(2) of the BHC Act. sponds that if the Board limits the consummation period, Dime's management would be able to delay beyond the Conclusion Board-imposed limit and North Fork would not have been afforded a fair opportunity to acquire Dime. Based on the foregoing and all the facts of record, the Board has determined that the proposal should be, and hereby is, approved.45 The Board's approval of the pro- 42. Dime asserts that North Fork has not provided sufficient information in discussing the public benefits of the proposal, and disputes North Fork's description of those public benefits. The Board has, as discussed below and elsewhere in this order, fully evaluated the public 45. Dime and NWBCCC each requested that the Board hold a benefits of the proposal in light of all the facts of record, and has public meeting or hearing on the proposal. The BHC Act does not concluded that they outweigh any possible adverse effects such as require that the Board hold public hearings on applications or notices, decreased competition or undue concentration of resources. although the Board may do so when appropriate. The Board's rules 43. In evaluating the public benefits and potential adverse effects of allow for a hearing on a notice to acquire nonbanking companies if the proposal, the Board has taken into account the additional costs to there are disputed issues of material fact that cannot be resolved in all parties resulting from the contested nature of the proposal. some other manner. 12 C.F.R. 225.25(a)(2). The Board has considered 44. See the BONY Order. carefully these commenters' requests in light of all the facts of record. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

776 Federal Reserve Bulletin • November 2000 posal is specifically conditioned on compliance by North Industrial Bank of Japan, Ltd. ("IBJ"), all of Tokyo, Fork with the conditions imposed and commitments made Japan.1 Mizuho also has requested the Board's approval in connection with this notice and the conditions described under sections 4(c)(8) and 4(j) of the BHC Act (12 U.S.C. or referenced in this order. The Board's determination is § 1843(c)(8) and (j)) and section 225.24 of the Board's also subject to all the conditions in Regulation Y, including Regulation Y (12 C.F.R. 225.24) to acquire the U.S. nonthose in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and banking subsidiaries of DKB, Fuji, and IBJ and thereby 225.25(c)), and to the Board's authority to require such engage in certain permissible nonbanking activities.2 In modification or termination of the activities of a holding addition, Mizuho proposes to acquire Fuji Bank Internacompany or any of its subsidiaries as the Board finds tional, Inc., Los Angeles, California, an Edge corporation, necessary to ensure compliance with, or to prevent evasion pursuant to section 25A of the Federal Reserve Act of, the provisions and purposes of the BHC Act and the (12 U.S.C. § 611 et seq.) and the Board's Regulation K Board's regulations and orders issued thereunder. The com- (12 C.F.R. 211). mitments and conditions relied on by the Board in reaching Notice of the proposal, affording interested persons an this decision shall be deemed to be conditions imposed in opportunity to submit comments, has been published writing by the Board in connection with its findings and (65 Federal Register 19,766 (2000)). The time for filing decision and, as such, may be enforced in proceedings comments has expired, and the Board has considered the under applicable law. proposal and all comments received in light of the factors This transaction shall not be consummated later than set forth in sections 3 and 4 of the BHC Act. three months after the effective date of this order, unless Mizuho is a corporation that would be formed under the such period is extended by the Board. laws of Japan to acquire DKB, Fuji, and IBJ.3 On consum- By order of the Board of Governors, effective Septem- mation of the proposal, Mizuho would become the largest ber 27, 2000. banking organization in the world, with total consolidated assets of $1.4 trillion.4 Voting for this action: Chairman Greenspan, Vice Chairman Fergu- DKB, with total consolidated assets of $489.9 billion, is son, and Governors Meyer and Gramlich. Absent and not voting: the fourth largest bank in Japan.5 In the United States, Governor Kelley. DKB owns DKB California, and a controlling interest in DKF Trust Co. (USA). DKB also operates branches in JENNIFER J. JOHNSON Chicago, Illinois, and New York, New York, and an agency Secretary of the Board in Los Angeles, California. In addition, DKB's subsidiary bank, Chekiang First Bank, Ltd., Hong Kong Special Ad- Orders Issued Under Sections 3 and 4 of the Bank ministrative Region, People's Republic of China, operates Holding Company Act an agency in San Francisco, California. Fuji, with total consolidated assets of $548.7 billion, is Mizuho Holdings, Inc. (In Formation) the second largest bank in Japan. In the United States, Fuji Tokyo, Japan Order Approving Formation of a Bank Holding 1. The U.S. subsidiary banks are Dai-Ichi Kangyo Bank of Califor- Company and Acquisition of Nonbanking Companies nia, Los Angeles, California ("DKB California"), and The Fuji Bank and Trust Company ("Fuji Trust"), The Industrial Bank of Japan Mizuho Holdings, Inc. (In Formation) ("Mizuho") has Trust Company ("IBJ Trust"), and IBJ Whitehall Bank & Trust requested the Board's approval under section 3 of the Bank Company ("IBJ Whitehall"), all of New York, New York. Mizuho also has requested approval to acquire DKF Trust Co. (USA), New Holding Company Act (12 U.S.C. § 1842) ("BHC Act") York, New York ("DKF Trust"), currently authorized by the Board to to become a bank holding company by indirectly acquiring operate as a nondepository trust company. Mizuho proposes to operate the U.S. subsidiary banks of The Dai-Ichi Kangyo Bank, DKF Trust as a commercial bank. Ltd. ("DKB"); The Fuji Bank, Ltd. ("Fuji"); and The 2. The nonbanking activities of DKB, Fuji, and IBJ for which Mizuho has sought Board approval under section 4(c)(8) and 4(j) of the BHC Act are listed in the Appendix. Mizuho also seeks the Board's approval to own and operate a de novo industrial loan The Board has accumulated a substantial record in this case that corporation chartered in Utah, in accordance with section includes examination information, supervisory information, public 225.28(b)(4)(i) of Regulation Y (12 C.F.R. 225.28(b)(4)(i)). In addirecords, and information submitted by North Fork. Commenters also tion, Mizuho has requested the Board's approval to engage in financial have had ample opportunity to present their views, and have submit- and investment advisory activities through Nomura IBJ Global Investted written comments that have been considered carefully by the ment Advisors, Inc., New York, New York, in accordance with section Board in acting on the proposal. The commenters' requests for a 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6)). hearing or meeting fail to demonstrate why their written comments do 3. The transaction would be effected through an exchange of shares. not present their evidence, allegations, and views on this proposal. Mizuho's corporate existence would begin on its commercial registra- Moreover, the Board does not believe that a public meeting or hearing tion after consummation of the exchange of shares. See Japanese would clarify or enhance the record as it relates to the limited factors Commercial Code, art. 370. that the Board is required by statute to review in this case. For these 4. Asset and ranking data are as of March 31, 2000, and are based reasons, and based on all the facts of record, the Board has determined on the exchange rate then applicable. that a public meeting or hearing is not required or warranted in this 5. Asset data for DKB, Fuji, and IBJ are as of March 31, 2000, and case. Accordingly, the requests for a public meeting or hearing on the are based on the exchange rate then applicable. Ranking data for proposal are denied. Japanese banks are as of September 30, 1999. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 71 owns Fuji Trust, and a controlling interest in DKF Trust Interstate Analysis Co. (USA). Fuji also operates branches in New York, New York, and Chicago, Illinois; agencies in Los Angeles, Section 3(d) of the BHC Act allows the Board to approve California, and Houston, Texas; and a representative office an application by a bank holding company to acquire in New York, New York. control of a bank located in a state other than the home IB J, with total consolidated assets of $400.1 billion is state of the bank holding company if certain conditions are the seventh largest bank in Japan. In the United States, IBJ met. For purposes of the BHC Act, the home state of owns IBJ Trust and IBJ Whitehall. IBJ also operates Mizuho is New York,7 and Mizuho's subsidiary banks branches in New York, New York, and Chicago, Illinois; would be located in New York and California.8 All the an agency in Los Angeles, California; and representative conditions for an interstate acquisition enumerated in secoffices in Atlanta, Georgia; Houston, Texas; and San Fran- tion 3(d) are met in this case.9 In light of all the facts of cisco, California. record, the Board is permitted to approve the proposal In addition, DKB, Fuji, and IBJ engage in a broad range under section 3(d) of the BHC Act. of permissible nonbanking activities in the United States through subsidiaries. Competitive Considerations Factors Governing Board Review of Transaction Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly. The BHC The BHC Act sets forth the factors that the Board must Act also prohibits the Board from approving a proposed consider when reviewing the formation of a bank holding bank acquisition that would substantially lessen competicompany or the acquisition of banks. These factors are the tion in any relevant banking market unless the anticompeticompetitive effects of the proposal in the relevant geo- tive effects of the proposal are clearly outweighed in the graphic markets; the financial and managerial resources public interest by the probable effect of the proposal in and future prospects of the companies and banks involved meeting the convenience and needs of the community to be in the proposal; the convenience and needs of the commu- served.10 nity to be served, including the records of performance DKB, Fuji, and IBJ control banking operations that under the Community Reinvestment Act (12 U.S.C. compete directly in the New York/New Jersey Metropoli- § 2901 et seq.) ("CRA") of the insured depository institu- tan banking market ("New York banking market").11 Contions involved in the transaction; the availability of infor- summation of the proposal would result in an increase of mation needed to determine and enforce compliance with less than one point in the Herfindahl-Hirschman Index the BHC Act and other applicable federal banking law; ("HHI") in the New York banking market, and the bankand, in the case of applications involving foreign banks, ing market would remain unconcentrated with numerous whether the foreign banks involved are subject to compre- competitors operating in the market.12 Based on these and hensive supervision and regulation on a consolidated basis by their home country supervisor. In cases involving interstate bank acquisitions, the Board also must consider the 7. A bank holding company's home state is that state in which the concentration of deposits in the nation and relevant individ- total deposits of all banking subsidiaries of such company were the ual states, and compliance with other provisions of section largest on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 12 U.S.C. § 1841(o)(4)(C). 3(d) of the BHC Act. On consummation of the proposal, Mizuho would become a bank The Board has considered these factors in light of a holding company, and the state in which the total deposits of its U.S. record that includes information provided by Mizuho, banking subsidiaries would be the largest is New York. DKB, Fuji, and IBJ; confidential supervisory and examina- 8. For purposes of section 3(d), the Board considers a bank to be located in the states in which the bank is chartered, headquartered, or tion information; and publicly reported financial and other operates a branch. information. The Board also has considered information 9. Mizuho is adequately capitalized and adequately managed, as collected from the primary home country supervisor of defined by applicable law. 12 U.S.C. § 1842(d)(1)(A). On consum- DKB, Fuji, and IBJ, and from various federal and state mation of the proposal, Mizuho and its affiliates would control less agencies, including the New York State Banking Depart- than 10 percent of the total amount of deposits of insured depository institutions in the United States (12 U.S.C. § 1842(d)(2)), and would ment ("NYSBD") and other relevant agencies. In addition, not exceed applicable deposit limitations in any state as calculated the Board has considered comments submitted by the pub- under state and federal law. All other requirements of section 3(d) of lic on the proposal.6 the BHC Act would be met on consummation of the proposal. 10. 12 U.S.C. § 1842(c)(1). 11. The New York banking market includes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan, and Westchester Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, Warren, and a portion of Mercer Counties in New Jersey; Pike County in Pennsylvania; and portions of Fairfield and Litchfield Counties in Connecticut. 6. The Board received a comment from Inner City Press/Community 12. Market share data are as of June 30, 1999. The HHI for the New on the Move & Inner City Public Interest Law Center (collectively, York banking market would remain at 786 after consummation of the "ICP") in connection with the proposal. proposal. Under the revised Department of Justice Merger Guidelines, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

778 Federal Reserve Bulletin • November 2000 all other facts of record, the Board concludes that consum- A. CRA Performance Examinations mation of the proposal would not result in any significantly adverse effects on competition or on the concentration of The Board has long held that consideration of the convebanking resources in the New York banking market or in nience and needs factor includes a review of the records of any other relevant banking market. the relevant depository institutions under the CRA. As provided in the CRA, the Board evaluates the record of Financial and Managerial Considerations performance of an institution in light of examinations by the appropriate federal supervisors of the CRA perfor- The Board has carefully considered the financial and man- mance records. An institution's most recent CRA perforagerial resources and future prospects of Mizuho and the mance evaluation is a particularly important consideration banks involved in the proposal, the effect the proposed in the applications process because it represents a detailed, transaction would have on such resources, and other super- on-site evaluation of the institution's overall record of visory factors in light of all the facts of record, including performance under the CRA by its appropriate federal public comments.13 The Board notes that the proposal is supervisor.14 intended to enhance the overall financial strength and fu- This case involves the proposed formation of a new bank ture prospects of the combined organization. The transac- holding company. Accordingly, the Board has reviewed in tion would occur through an exchange of shares, and detail the CRA performance records of the U.S. subsidiary Mizuho, DKB, Fuji, and IB J would issue no debt as part of insured depository institutions of the institutions involved the transaction. Mizuho's stated capital levels exceed the in the transaction. Almost all the insured depository instituminimum levels that would be required under the Basle tions of DKB, Fuji, and IBJ received "outstanding" CRA Capital Accord, and its capital levels are considered equiv- performance ratings at their most recent examination under alent to the capital levels that would be required of a U.S. the CRA, and each of their other insured depository institubanking organization under similar circumstances. tions that had been examined received a "satisfactory" The Board also has reviewed supervisory information CRA performance rating. DKB California received a "satfrom the home country authorities responsible for supervis- isfactory" CRA performance rating from the Federal ing DKB, Fuji, and IB J concerning the proposal; confiden- Deposit Insurance Corporation ("FDIC") at its most recent tial financial information from DKB, Fuji, and IBJ; and examination, as of May 24, 1999 ("1999 DKB California reports of examination from the appropriate federal and Examination").15 Fuji Trust received an "outstanding" state supervisors assessing the financial and managerial CRA performance rating from the FDIC at its most recent resources of the organization. Based on all the facts of examination, as of June 15, 1999 ("1999 Fuji Trust Examrecord, the Board has concluded that the financial and ination"). In addition, the NYSBD, as of June 11, 1999, managerial resources and future prospects of the organiza- rated Fuji Trust's CRA performance "outstanding" pursution are consistent with approval. ant to section 28-b of New York state banking law. IBJ Trust received ratings of "outstanding" from the FDIC at Convenience and Needs Factor its most recent examination for CRA performance, as of March 8, 2000 ("2000 IBJ Trust Examination"), and from The Board also has carefully considered the effect of the the NYSBD, as of May 28, 1999. IBJ Whitehall received proposal on the convenience and needs of the communities an "outstanding" CRA performance rating from the Fedto be served in light of all the facts of record, including eral Reserve Bank of New York ("Reserve Bank") at its comments contending that the proposal would have an most recent examination, as of November 30, 1998 ("1998 adverse effect on the communities to be served. IBJ Whitehall Examination"), and from the NYSBD, as of July 31, 1998. Examiners found no evidence of prohibited discrimination or other illegal credit practices at any of the insured depository institutions involved in this proposal, and found no violations of fair lending laws.16 Examiners also re- 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is less than 1000 points is considered to be uncon- 14. The Interagency Questions and Answers Regarding Community centrated. The Department of Justice has informed the Board that a Reinvestment provide that a CRA examination is an important and bank merger or acquisition generally will not be challenged (in the often controlling factor in the consideration of an institution's CRA absence of other factors indicating anticompetitive effects) unless the record. See 64 Federal Register 23,641 (1999). post-merger HHI is at least 1800 and the merger increases the HHI by 15. DKF Trust has not been examined for CRA performance since more than 200 points. The Department of Justice has stated that the becoming a subsidiary of DKB and Fuji. Yasuda Bank and Trust higher than normal HHI thresholds for screening bank mergers for Company (U.S.A.), the predecessor institution to DKF Trust, received anticompetitive effects implicitly recognize the competitive effects of a "satisfactory" CRA performance rating from the FDIC at its examilimited-purpose lenders and other nondepository financial entities. nation, as of June 30, 1998. 13. ICP cites press reports declaring that Mizuho would be con- 16. ICP's comments include contentions that CIT Group, Inc., fronted by high levels of bad debts, inadequate spending on informa- Livingston, New Jersey ("CIT"), a subsidiary of DKB, engages in tion technology, and potential problems in reconciling different man- predatory lending by making subprime loans and imposing prepayagement styles. ment penalties more frequently than competitors, and engages in these Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 779 viewed the assessment areas delineated by these insured investment of $25,000 in the California Economic Develdepository institutions and found that the respective assess- opment Lending Initiative, a community development corment areas were reasonable and did not arbitrarily exclude poration that lends to community development organizalow- and moderate-income ("LMI") areas.17 tions and small businesses in California. In addition, examiners noted DKB California's investment of $50,000 B. DKB California in Clearinghouse Community Development Financial Institution, a consortium that seeks to increase the housing The 1999 DKB California Examination indicated that ap- stock for low- and very-low-income residents of Southern proximately 97 percent of DKB California's loans were for California by making direct loans to affordable housing business purposes. DKB California made 62.5 percent of projects and other community development initiatives. its small business loans in 1997 and 1998 in its assessment areas, which examiners found reflected satisfactory pene- Fuji Trust tration of its assessment areas. In its Los Angeles assessment area, DKB California made 56.8 percent of its small Fuji Trust engages primarily in syndicating and participatbusiness loans in LMI census tracts in 1997 and 1998, ing in loans to major corporations, commercial leasing, and although only 32 percent of all small businesses in the corporate trust services, and it has been designated as a assessment area were located in LMI census tracts. Ap- wholesale bank by the FDIC for purposes of assessing its proximately 68 percent of DKB California's small busi- CRA performance.18 The performance test for wholesale ness loans in its Los Angeles assessment area were for banks evaluates an institution's record of community deamounts of $100,000 or less. Examiners noted DKB Cali- velopment lending, investments, and services in its desigfornia's participation in three innovative government lend- nated assessment area.19 ing programs for small businesses, including the California The 1999 Fuji Trust Examination found Fuji Trust's Export Finance Office Program, which provides debt fi- community development activities during the examination nancing to certain small businesses not qualifying for tradi- period totaled $30.8 million. Examiners noted that the tional bank financing. level of Fuji Trust's community development activities The 1999 examination also found that DKB California increased despite a decrease in its total assets during the made $11.6 million in qualified community development preceding four years. Among Fuji Trust's lending activiinvestments since its previous CRA examination, including ties, examiners highlighted a $2 million revolving line of investments of $11.4 million in low-income mortgage credit to fund the purchase of approximately 30 buildings pools and mortgage-backed securities collateralized by real that provided rental housing in LMI portions of Fuji Trust's estate in the Los Angeles portion of DKB California's assessment area. assessment area. Examiners also noted DKB California's The 1999 examination found that Fuji Trust originated or renewed a total of $890,000 of qualified community development investments since the previous examination. Examiners noted that Fuji Trust renewed its $100,000 practices more often in certain metropolitan areas with respect to certificate of deposit in a community development bank African Americans than do its competitors. ICP also asserts that CIT has supported predatory lending by purchasing loans from Long that provides loan and deposit services to LMI communi- Beach Mortgage Company, Orange, California ("Long Beach"). CIT ties in New York City. Examiners also highlighted Fuji purchased no mortgage loans or had any other business relationships Trust's purchase of nonmember certificates of deposit in with Long Beach since 1998. The Board has forwarded copies of nine low-income credit unions in New York City, and ICP's comments on CIT to the Department of Housing and Urban noted Fuji Trust's grants of $418,000 during the examina- Development, the Department of Justice, and the Federal Trade Commission, which have responsibility for fair lending law compliance by tion period, primarily to organizations that served LMI nondepository companies like CIT and Long Beach. The Board also individuals. has consulted with these agencies. In addition, the Board has considered information submitted by Mizuho on CIT's consumer lending practices, including the processes by which CIT makes credit avail- D. IBJ Trust able to consumers, the compliance procedures established by CIT, the methodology employed by CIT in setting risk-based interest rates, and IBJ Trust also operates as a wholesale bank, providing the relationship of CIT with loan brokers and correspondents. investment management, lending, leasing, trust, cash man- 17. ICP questions the appropriateness of the delineated assessment agement, and other services to multinational corporations area of CIT Online Bank ("CITOB"), the de novo Utah industrial loan corporation that Mizuho proposes to operate. Mizuho states that and government agencies, and has been designated by the CITOB intends to make small purchase money consumer loans to individuals throughout the United States. As an initial matter, CITOB proposes to define its assessment area as Salt Lake County, Utah, which is the county in which CITOB would be located. CITOB will, 18. A "wholesale bank" is a bank that at the time it opens for business, be subject to the CRA. See 12 C.F.R. (i) Is not in the business of extending home mortgage, small 345.11(c). The Board has consulted with the FDIC on the adequacy of business, small farm, or consumer loans to retail customers CITOB's CRA plan. In acting on CITOB's application for federal and deposit insurance, the FDIC would consider CITOB's plans for meet- (ii) Has been designated as a wholesale bank by its appropriate ing CRA objectives. 12 C.F.R. 345.29(b). In addition, the adequacy Federal banking agency. 12 C.F.R. 345.12(w). In October of CITOB's assessment area can and will be reviewed by the FDIC in 1996, the FDIC designated Fuji Trust as a wholesale bank. the CRA examination process as CITOB develops its operations. 19. 12 C.F.R. 345.25(a), (e). 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780 Federal Reserve Bulletin • November 2000 FDIC as a wholesale bank.20 The 2000 IBJ Trust Examina- grants to community development corporations that suption found that IBJ Trust was involved in lending to several port housing and economic development initiatives. community development projects. Examiners noted that F. Conclusion on Convenience and Needs IBJ Trust extended its commitment to fund a $3.5 million of line of credit to a nonprofit mortgage lender that, as of In reviewing the proposal's effect on the convenience and the date of the Examination, had financed construction or needs of the communities to be served, the Board has rehabilitation of almost 50,000 housing units in New York carefully considered all the facts of record, including the City and surrounding counties. Examiners also noted a public comments received, responses to the comments, and $300,000 loan commitment by IBJ Trust to a nonprofit reports of examinations of CRA performance of the instituorganization to rehabilitate and resell 29 buildings in low- tions involved.23 The Board expects that, after consummaincome neighborhoods in Brooklyn and Queens. tion of the proposal, Mizuho's U.S. subsidiary banks would The 2000 examination cited several community develop- demonstrate the same commitment to serving the commument investments made by IBJ Trust, including its renewal nity development needs of their communities that they of a $100,000 certificate of deposit in Community Capital have demonstrated to date. DKB, Fuji, and IBJ are large Bank, a community development bank that finances com- banking organizations with satisfactory records of complimunity development in LMI neighborhoods in New York ance with U.S. banking regulations, and Mizuho has finan- City. Examiners also noted IBJ Trust deposits totaling cial and managerial resources that are sufficient to ensure $300,000 in six low-income credit unions in New York compliance by the U.S. subsidiary banks with all relevant City, and stated that $641,000 in grants were made since regulatory requirements, including the CRA. Based on a the previous examination to organizations serving LMI review of the entire record, and for the reasons discussed residents or engaging community development activities. above, the Board concludes that convenience and needs These grants included $30,000 to Asian Americans for considerations, including the CRA performance records of Equality to provide home mortgage education and counsel- the U.S. subsidiary banks involved, are consistent with ing to LMI individuals with disabilities, and $25,000 to approval of the proposal.24 Common Ground Job Training Corporation for its job training and placement program for residents of supportive housing. 23. ICP contends that DKB, Fuji, and IBJ have indirectly supported predatory lending by providing financing to Delta Funding Corpora- E. IBJ Whitehall tion, Woodbury, New York ("Delta"); Ameriquest Mortgage Company, Orange, California ("Ameriquest"); and PinnFund USA, Carlsbad, California ("PinnFund"). Mizuho represents that the business IBJ Whitehall provides commercial lending, private bankrelationships cited by ICP were limited to equipment leases to Delta ing, investment management, and other services to corpora- and Ameriquest by subsidiaries of DKB and Fuji, and that a credit tions, governments, and individuals with high net worth, facility arranged by IBJ for PinnFund expired without being funded. and has been designated by the Federal Reserve System as The Board has considered these assertions in evaluating the managea wholesale bank.21 The 1998 IBJ Whitehall Examination rial and convenience and needs factors in this case. 24. ICP contends that CIT has supported predatory lending by found that the bank had increased the amount of its quali- providing financing to United Companies Financial Corporation, Bafied investments by 122 percent to $13.3 million since the ton Rouge, Louisiana ("United") and Cityscape Financial Corporaprevious examination.22 tion, Elmsford, New York ("Cityscape"). The only business relationships that CIT had with Cityscape involved two credit facilities Examiners stated that IBJ Whitehall was engaged in a totaling $105 million. Mizuho represents that CIT did not control number of innovative or complex community development Cityscape's underwriting or lending practices, and that CIT was not activities. For example, examiners noted that IBJS Capital involved in Cityscape's credit review process. With regard to United, Corporation, a subsidiary small business investment corpo- CIT agreed to fund up to $75 million of a $150 million credit facility ration of IBJ Whitehall, provided long-term financing to for United. The average loan under the facility was $5.5 million. This facility was arranged for United by another lender and was CIT's only small businesses in IBJ Whitehall's assessment area. The business relationship with United. The facility was terminated earlier 1998 examination also mentioned IBJ Whitehall's partici- this year. Mizuho represents that CIT did not control United's underpation in programs operated by Neighborhood Housing writing or lending practices, and was not involved in United's credit Services to provide low-interest loans for the rehabilitation review process. of small multifamily and mixed use buildings and down ICP also contends that IBJ has indirectly supported predatory lending by securitizing high-loan-to-value mortgage loans. IBJ arranged payment and closing cost assistance to LMI homebuyers. three securitizations as short-term warehousing facilities for mortgage Examiners cited IBJ Whitehall's involvement in forming loans originated by three different lenders: PinnFund, Empire Funding the Neighborhood 2000 Fund, an organization making Corporation, Austin, Texas ("Empire"), and FirstPlus Financial, Inc., Dallas, Texas ("FirstPlus"). IBJ states that it had no involvement in the origination of the mortgage loans warehoused in these facilities. The PinnFund financing vehicle was never used. With respect to each 20. In September 1996, the FDIC designated IBJ Trust as a whole- of the securitizations, IBJ arranged for reviews of samples of the loan sale bank for purposes of assessing its CRA performance. documentation for compliance with the disclosure requirements of the 21. See 12 C.F.R. 228.25. In April 1997, the Federal Reserve consumer protection laws, and the lender involved made representa- System designated IBJ Whitehall as a wholesale bank for purposes of tions and warranties about its compliance with consumer protection evaluating its CRA performance. laws. The Department of Housing and Urban Development, the De- 22. At the time of the examination, IBJ Whitehall was named IBJ partment of Justice, and Federal Trade Commission have responsibil- Schroeder Bank and Trust Company. ity for reviewing the compliance with the fair lending laws of nonde- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 781 Other Supervisory Considerations the BHC Act and other applicable federal law. Mizuho also has committed to cooperate with the Board to obtain any Under section 3 of the BHC Act, the Board may not waivers or exemptions that may be necessary in order to approve an application involving a foreign bank unless the enable Mizuho to make any such information available to bank is "subject to comprehensive supervision or regula- the Board. In light of these commitments and other facts of tion on a consolidated basis by the appropriate authorities record, the Board has concluded that Mizuho has provided in the bank's home country."25 The Board previously has adequate assurances of access to any appropriate informadetermined, in applications under the BHC Act, that cer- tion the Board may request. For these reasons, and based tain Japanese commercial banks, including Fuji, were sub- on all the facts of record, the Board has concluded that the ject to comprehensive consolidated supervision by their supervisory factors it is required to consider under section home country supervisor.26 In this case, the Board has 3(c)(3) of the BHC Act are consistent with approval. determined that DKB and IBJ are supervised on substantially the same terms and conditions as the other Japanese Nonbanking Activities banks. In addition, Japan's Financial Services Agency ("FSA") has supervisory authority with respect to Mizuho Mizuho also has filed notices under sections 4(c)(8) and and its nonbanking subsidiaries. The FSA may conduct (4)(j) of the BHC Act to acquire the U.S. nonbank subsidinspections of Mizuho and its subsidiaries and require iaries of DKB, Fuji, and IBJ, and to engage in the United Mizuho to submit reports about its operations on a consoli- States in various permissible nonbanking activities. dated basis. The FSA also may review transactions be- Through these subsidiaries, Mizuho would engage in a tween Mizuho and its subsidiaries and has authority to number of nonbanking activities, including lending activirequire Mizuho to take measures necessary to ensure the ties, activities related to extending credit, leasing activities, safety and soundness of the Mizuho organization. Based on performing trust company functions, providing investment all the facts of record, the Board has concluded that DKB, and financial advisory services, providing securities broker- Fuji, and IBJ are subject to comprehensive supervision and age, private placement, riskless principal, futures commisregulation on a consolidated basis by their home country sion merchant, and other agency transactional services, supervisor.27 underwriting and dealing in bank-eligible securities, invest- The BHC Act also requires the Board to determine that ing and trading activities, management consulting activiforeign banks have provided adequate assurances that they ties, certain specific insurance agency activities,28 commuwill make available to the Board such information on their nity development activities, and data processing and operations and activities and those of their affiliates that the transmission activities. In addition, Mizuho seeks the Board deems appropriate to determine and enforce compli- Board's approval to own and operate a de novo industrial ance with the BHC Act. The Board has reviewed the loan company, and to engage in financial and investment restrictions on disclosure in jurisdictions where DKB, Fuji, advisory activities through Nomura IBJ Global Investment and IBJ have, and Mizuho would have, material operations Advisors, Inc. The Board determined by regulation before and has communicated with relevant government authori- November 12, 1999, that the types of activities for which ties concerning access to information. Mizuho has commit- notice has been provided are closely related to banking for ted that, to the extent not prohibited by applicable law, it purposes of section 4(c)(8) of the BHC Act.29 Mizuho has will make available to the Board such information on the committed that it will conduct these activities in accordance with operations of Mizuho and any of its affiliates that the Board the Board's regulations and in accordance with the orders deems necessary to determine and enforce compliance with approving these activities for bank holding companies.30 pository institutions like Cityscape, United, PinnFund, Empire, and 28. Specifically, Mizuho has requested the Board's authorization to FirstPlus, and the Board has forwarded copies ICP's assertions to the retain credit-related property and casualty insurance activities which agencies. DKB currently conducts through CIT pursuant to exemption D of the 25. 12 U.S.C. § 1842(c)(3)(B). As provided in Regulation Y, the Garn-St Germain Depository Institutions Act of 1982. Mizuho has Board determines whether a foreign bank is subject to consolidated committed to comply with the commitments regarding this activity as home country supervision under the standards set forth in Regula- outlined in the Board's order authorizing DKB's acquisition of CIT. tion K. 12 C.F.R. 225.13(a)(4). Regulation K provides that a foreign See The Dai-Ichi Kangyo Bank, Limited, 16 Federal Reserve Bulletin bank may be considered subject to consolidated supervision if the 75 (1990). CIT will remain a separate subsidiary of DKB, and these Board determines that the bank is supervised or regulated in such a insurance activities will not be conducted by any of Mizuho's other manner that its home country supervisor receives sufficient informa- subsidiaries. Pursuant to exemption D, CIT may sell insurance only in tion on the worldwide operations of the foreign bank, including the New York, states adjacent to New York, and states where Manufacturrelationships of the bank to its affiliates, to assess the foreign bank's ers Hanover Corporation conducted insurance agency activities on overall financial condition and compliance with law and regulation. May 1, 1982. 12 C.F.R. 211.24(c)(1)(h). 29. See 12 C.F.R. 225.28(b)(1), (2), (3), (4)(i), (5), (6), (7)(i)-(v), 26. See The Sanwa Bank, Limited, 86 Federal Reserve Bulletin 54 (8)(i) and (ii), (9), (ll)(iv), (12), and (14). (2000); The Fuji Bank, Limited, 85 Federal Reserve Bulletin 338 30. In connection with its July 1999 acquisition of HealthCare (1999); and The Mitsubishi Bank, Limited, 82 Federal Reserve Bulle- Financial Partners, Inc. ("HFP"), Fuji committed to conform the tin 436 (1996). activities and investments of HFP to those permissible for bank 27. In reaching this conclusion, the Board has considered ICP's holding companies under section 4 of the BHC Act and Regulation Y contention that home country supervision of Mizuho would be inade- within two years of acquiring HFP. See Fuji Bank, Ltd., 85 Federal quate. Reserve Bulletin 643, fn 2 (1999). In connection with its November Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

782 Federal Reserve Bulletin • November 2000 In order to approve the notice, the Board also must that the Board must consider under the standard of section determine that the acquisition of the U.S. nonbank subsid- 4(j) of the BHC Act is favorable and consistent with iaries of DKB, Fuji, and IBJ, and the performance of the approval. proposed activities by Mizuho can reasonably be expected Mizuho also has provided notice under section 25A of to produce benefits to the public that outweigh possible the Federal Reserve Act and section 211.4 of Regulation K adverse effects, such as undue concentration of resources, (12 C.F.R. 211.4) to acquire Fuji Bank International, Inc., a decreased or unfair competition, conflicts of interests, or company organized under section 25A of the Federal Reunsound banking practices.31 serve Act. The Board concludes that all the factors required Mizuho has indicated that the proposal would improve to be considered under the Federal Reserve Act and Reguthe financial position and future business prospects of the lation K are consistent with approval of the proposal. current banking and nonbanking subsidiaries of DKB, Fuji, and IBJ. In addition, there are public benefits to be derived Conclusion from permitting capital markets to operate so that bank holding companies can make potentially profitable invest- Based on the foregoing, the Board has determined that the ments in nonbanking companies and from permitting bank- transaction should be, and hereby is, approved.32 In reaching organizations to allocate their resources in the manner ing its conclusion, the Board has considered all the facts of they consider to be most efficient when such investments record in light of the factors that the Board is required to and actions are consistent, as in this case, with the relevant consider under the BHC Act and other applicable statutes. considerations under the BHC Act. The Board's approval is specifically conditioned on com- The Board has carefully considered the competitive ef- pliance by Mizuho with all the commitments made in fects of the proposed transaction under section 4 of the connection with this application and notice, including the BHC Act. To the extent that DKB, Fuji, and IBJ offer commitments discussed in the order, and the conditions set different types of nonbanking products, the proposed acqui- forth in the order and the above-noted Board regulations sition would result in no loss of competition. Certain and orders, and on the Board's receiving access to informanonbanking subsidiaries of DKB, Fuji, and IBJ compete, tion on the operations or activities of Mizuho and any of its however, in the markets for commercial lending, commer- affiliates that the Board determines to be appropriate to cial leasing, swaps and derivatives, securities brokerage determine and enforce compliance by Mizuho and its affiland dealing, corporate trust services, and financial invest- iates with applicable federal statutes. The Board's approval ment advisory markets. The markets for each of these of the nonbanking aspects of the proposal also is subject to nonbanking activities are regional or national. The record all the conditions set forth in Regulation Y, including those in this case indicates that there are numerous providers of in sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. these services and that the markets for these nonbanking 225.7 and 225.25(c)), and to the Board's authority to services are unconcentrated. For these reasons, and based require such modification or termination of the activities of on all the facts of record, the Board concludes that consum- a bank holding company or any of its subsidiaries as the mation of the proposal would have a de minimis effect on Board finds necessary to ensure compliance with, and to competition. prevent evasion of, the provisions of the BHC Act and the The Board also believes that the conduct of the proposed nonbanking activities within the framework established in 32. ICP requests that the Board hold a public meeting or hearing on this order, prior orders, and Regulation Y is not likely to the proposal. Section 3(b) of the BHC Act does not require the Board result in adverse effects, such as undue concentration of to hold a public hearing on an application unless the appropriate resources, decreased or unfair competition, conflicts of supervisory authority for a bank to be acquired makes a timely written interests, or unsound banking practices, that would not be recommendation of denial of the application. The Board has not outweighed by the public benefits of the proposal, such as received such a recommendation from any of the appropriate supervisory authorities. increased customer convenience and gains in efficiency. Under its rules, the Board also may, in its discretion, hold a public Accordingly, based on all the facts of record, the Board meeting or hearing on an application to acquire a bank if a meeting or has determined that the balance of public interest factors hearing is necessary or appropriate to clarify factual issues related to the application and to provide an opportunity for testimony. 12 C.F.R. 225.16(e). Section 4 of the BHC Act and the Board's rules thereunder provide for a hearing on a notice to acquire nonbanking companies if 1999 acquisition of Newcourt Credit Group, Inc. ("Newcourt"), DKB there are disputed issues of material fact that cannot be resolved in committed to conform the activities and investments of Newcourt to some other manner. 12 U.S.C. § 1843(c)(8); 12 C.F.R. 225.25(a)(2). those permissible for bank holding companies under section 4 of the The Board has considered carefully ICP's request in light of all the BHC Act and Regulation Y within two years of acquiring Newcourt. facts of record. ICP has had ample opportunity to submit its views, See Dai-Ichi Kangyo Bank, Ltd., 85 Federal Reserve Bulletin 736, and, in fact, submitted written comments that have been considered fn 3. (1999). Mizuho has committed to conform the activities and carefully by the Board in acting on the proposal. ICP's request fails to investments of HFP and Newcourt within the time frames specified in demonstrate why its written comments do not present its views the original commitments by Fuji and DKB. In addition, Mizuho has adequately and fails to identify disputed issues of fact that are material committed that it will conform all other nonconforming activities to to the Board's decision that would be clarified by a public meeting or the requirements of section 4 of the BHC Act within two years after hearing. For these reasons, and based on all the facts of record, the the consummation of the proposal, and that it will make no new Board has determined that a public meeting or hearing is not required nonconforming investments after consummation of this proposal. or warranted in this case. Accordingly, the request for a public 31. See 12 U.S.C. § 1843(j)(2)(A). meeting or hearing on the proposal is denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 783 Board's regulations and orders issued thereunder. These (10) Community development activities, in accordance commitments and conditions are deemed to be conditions with section 225.28(b)(12) of Regulation Y imposed in writing by the Board in connection with its (12 C.F.R. 225.28(b)(12)); and findings and decision and, as such, may be enforced in (11) Data processing and transmission activities, in proceedings under applicable law. accordance with section 225.28(b)(14) of Regula- The acquisition of the subsidiary banks of DKB, Fuji, tion Y (12 C.F.R. 225.28(b)(14)). and IBJ, may not be consummated before the fifteenth calendar day after the effective date of this order, and the proposal may not be consummated later than three months ORDERS ISSUED UNDER INTERNATIONAL BANKING after the effective date of this order, unless such period is ACT extended for good cause by the Board, or by the Reserve Bank acting pursuant to delegated authority. Banca Antoniana Popolare Veneta S.c.p.a.r.l. By order of the Board of Governors, effective Septem- Padua, Italy ber 5, 2000. Order Approving Establishment of a Branch Voting for this action: Chairman Greenspan, Vice Chairman Ferguson, and Governors Kelley, Meyer, and Gramlich. Banca Antoniana Popolare Veneta S.c.p.a.r.l. ("Bank"), ROBERT DEV. FRIERSON Padua, Italy, a foreign bank within the meaning of the Associate Secretary of the Board International Banking Act ("IBA"), has applied under section 7(d) of the IBA (12 U.S.C. § 3105(d)) to establish a Appendix state-licensed branch in New York, New York. The For- Nonbanking activities of DKB, Fuji, and IBJ in which eign Bank Supervision Enhancement Act of 1991, which Mizuho proposes to engage: amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a branch in the (1) Extending credit and servicing loans, in accor- United States. dance with section 225.28(b)(1) of the Board's Notice of the application, affording interested persons an Regulation Y (12 C.F.R. 225.28(b)(1)); opportunity to comment, has been published in a newspa- (2) Activities related to extending credit, in accor- per of general circulation in New York, New York (New dance with section 225.28(b)(2) of the Board's York Post, April 6, 2000). The time for filing comments has Regulation Y (12 C.F.R. 225.28(b)(2)); expired, and the Board has considered all comments (3) Providing leasing services, in accordance with received. section 225.28(b)(3) of Regulation Y (12 C.F.R. Bank, with total consolidated assets of approximately 225.28(b)(3)); $41.9 billion, is a commercial bank and the parent com- (4) Performing trust company functions, in accor- pany of a number of banks operating in Italy and San dance with section 225.28(b)(5) of Regulation Y Marino.1 Bank and its subsidiaries operate an extensive (12 C.F.R. 225.28(b)(5)); network of branches in Italy and offer a full range of (5) Providing investment and financial advisory ser- banking services to individual and corporate customers. vices, in accordance with section 225.28(b)(6) of Bank also operates a branch in Luxembourg. Bank's shares Regulation Y (12 C.F.R. 225.28(b)(6)); are widely held, and no shareholder controls more than (6) Providing securities brokerage, riskless principal, 1 percent of shares. private placement, futures commission merchant, The proposed branch is currently operated by Banca and other agency transactional services, in accor- Nazionale dell' Agricoltura, S.p.A. ("BNA"), a subsidiary dance with section 225.28(b)(7)(i)-(v) of Regula- of Bank, which will soon be merged into Bank.2 Bank has tion Y (12 C.F.R. 225.28(b)(7)(i)-(v)); requested authority to retain and continue the operations of (7) Underwriting and dealing in government obliga- the branch. tions and money market instruments in which In order to approve an application by a foreign bank to state member banks may underwrite and deal un- establish a branch in the United States, the IBA and Reguder 12 U.S.C. §§ 335 and 24(7), and investing lation K require the Board to determine that the foreign and trading activities, in accordance with section bank applicant engages directly in the business of banking 225.28(b)(8)(i) and (ii) of Regulation Y (12 C.F.R. outside of the United States, and has furnished to the Board 225.28(b)(8)(i) and (ii)); the information it needs to assess the application ade- (8) Providing management consulting services, in ac- quately. The Board also shall take into account whether the cordance with section 225.28(b)(9) of Regulation foreign bank and any foreign bank parent is subject to Y (12 C.F.R. 225.28(b)(9)); comprehensive supervision or regulation on a consoli- (9) Engaging in specific insurance agency activities dated basis by its home country supervisor (12 U.S.C. through a subsidiary that engaged in such activities on May 1, 1982, in accordance with section 1. All data are as of June 30, 2000. 225.28(b)(ll)(iv) of Regulation Y (12 C.F.R. 2. Bank acquired BNA in 1999. BNA's merger into Bank is ex- 225.28(b)(ll)(iv)); pected to be completed on or about October 1, 2000. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

784 Federal Reserve Bulletin • November 2000 § 3105(d)(2); 12 C.F.R. 211.24).3 The Board may also With respect to access to information about Bank's take into account additional standards as set forth in the operations, the Board has reviewed the restrictions on IBA and Regulation K (12 U.S.C. § 3105(d)(3)-(4); disclosure in relevant jurisdictions in which Bank operates 12 C.F.R. 211.24(c)(2)-(3)). and has communicated with relevant government authori- As noted above, Bank engages directly in the business of ties regarding access to information. Bank has committed banking outside the United States. Bank also has provided to make available to the Board such information on the the Board with information necessary to assess the applica- operations of Bank and any of its affiliates that the Board tion through submissions that address the relevant issues. deems necessary to determine and enforce compliance with With respect to supervision by home country authorities, the IBA, the Bank Holding Company Act and other applithe Board previously has determined, in connection with cable federal law. To the extent that the provision of such applications involving other banks in Italy, that those banks information to the Board may be prohibited by law or were subject to home country supervision on a consoli- otherwise, Bank has committed to cooperate with the dated basis.4 Bank is supervised by the Bank of Italy on Board to obtain any necessary consents or waivers that substantially the same terms and conditions as those other might be required from third parties for disclosure of such banks. Based on all the facts of record, the Board has information. In addition, subject to certain conditions, the determined that Bank is subject to comprehensive supervi- Bank of Italy may share information on Bank's operations sion on a consolidated basis by its home country supervi- with other supervisors, including the Board. In light of sor. these commitments and other facts of record, and subject to The Board has also taken into account the additional the condition described below, the Board concludes that standards set forth in section 7 of the IBA and Regula- Bank has provided adequate assurances of access to any tion K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. necessary information that the Board may request. 211.24(c)(2)-(3)). The Bank of Italy has no objection to the On the basis of all the facts of record, and subject to the establishment of the proposed branch. commitments made by Bank, as well as the terms and Italy's risk-based capital standards conform to the Euro- conditions set forth in this order, the Board has determined pean Union capital standards, which are consistent with that Bank's application to establish a branch should be, and those established by the Basle Capital Accord. Bank's hereby is, approved. Should any restrictions on access to capital is in excess of the minimum levels that would be information on the operations or activities of Bank and its required by the Basle Capital Accord and is considered affiliates subsequently interfere with the Board's ability to equivalent to capital that would be required of a U.S. obtain information to determine and enforce compliance by banking organization. Managerial and other financial re- Bank or its affiliates with applicable federal statutes, the sources of Bank also are considered consistent with ap- Board may require termination of any of Bank's direct or proval, and Bank appears to have the experience and indirect activities in the United States. Approval of this capacity to support the proposed branch. In addition, Bank application also is specifically conditioned on compliance has established controls and procedures for the proposed by Bank with the commitments made in connection with branch to ensure compliance with U.S. law, as well as this application and with the conditions in this order.5 The controls and procedures for its worldwide operations gener- commitments and conditions referred to above are condially. tions imposed in writing by the Board in connection with its decision and may be enforced in proceedings under 12 U.S.C. § 1818 against Bank and its affiliates. By order of the Board of Governors, effective Septem- 3. In assessing this standard, the Board considers, among other ber 25, 2000. factors, the extent to which the home country supervisors: (i) Ensure that the bank has adequate procedures for monitoring Voting for this action: Chairman Greenspan, Vice Chairman Ferguand controlling its activities worldwide; son, and Governors Meyer and Gramlich. Absent and not voting: (ii) Obtain information on the condition of the bank and its Governor Kelley. subsidiaries and offices through regular examination reports, audit reports, or otherwise; ROBERT DEV. FRIERSON (iii) Obtain information on the dealings with and relationship between the bank and its affiliates, both foreign and domestic; Associate Secretary of the Board (iv) Receive from the bank financial reports that are consolidated on a worldwide basis or comparable information that permits analysis of the bank's financial condition on a worldwide consolidated basis; (v) Evaluate prudential standards, such as capital adequacy and risk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's 5. The Board's authority to approve the establishment of the prodetermination. posed branch parallels the continuing authority of the State of New 4. See Banca Sella S.p.A., 86 Federal Reserve Bulletin 503 (2000); York to license offices of a foreign bank. The Board's approval of this Banca Intesa S.p.A., 86 Federal Reserve Bulletin 433 (2000); Istituto application does not supplant the authority of the New York State Bancario San Paolo di Torino S.p.A., 82 Federal Reserve Bulletin Banking Department ("Department") to license the proposed office of 1147 (1996); Banca di Roma S.p.A„ 82 Federal Reserve Bulletin 1145 Bank in accordance with any terms or conditions that the Department (1996). may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 785 Banco Venezolano de Credito S.A.C.A. count additional standards set forth in the IBA and Regula- Caracas, Venezuela tion K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). The Board has previously stated that the Order Approving Establishment of a Representative standards that apply to the establishment of a branch or Office agency need not in every case apply to the establishment of a representative office, because representative offices do Banco Venezolano de Credito S.A.C.A. ("Bank"), Cara- not engage in a banking business and cannot take deposits cas, Venezuela, a foreign bank within the meaning of the or make loans.3 With respect to home country supervision International Banking Act ("IBA"), has applied under sec- of Bank, the Board has considered the following information 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a tion. The Superintendency of Banks and Other Financial representative office in Miami, Florida. The Foreign Bank Institutions (the "Superintendency") is the regulatory and Supervision Enhancement Act of 1991, which amended the supervisory authority for banks and other financial institu- IBA, provides that a foreign bank must obtain the approval tions in Venezuela and, as such, is the home country of the Board to establish a representative office in the supervisor of Bank. A number of changes recently have United States. been made in the Superintendency's system of supervision, Notice of the application, affording interested persons an which are now in the process of being implemented. The opportunity to submit comments, has been published in a Superintendency obtains information on Bank's financial condition and compliance with law through annual on-site newspaper of general circulation in Miami, Florida {The examinations. Examiners assess the existence of adequate Miami Herald, January 26, 2000). The time for filing policies, procedures, and systems for supervising and concomments has expired, and the Board has considered the trolling the activities of Bank domestically and abroad. In application and all comments received. addition, special examinations of particular areas of Bank Bank, with total consolidated assets of approximately $494 million, is a full service commercial bank.1 Its shares may be conducted at the discretion of the Superintendency. are publicly traded and widely held. Bank operates 89 The Superintendency also receives periodic reports from branches in Venezuela and a branch in the Cayman Islands. Bank, including monthly reports on the financial opera- Bank currently does not have any operations in the United tions of Bank's domestic and foreign offices, and consoli- States. dated financial statements of Bank's financial group on a The proposed representative office would act as a liaison semiannual basis.4 The financial statements of bank and its between Bank and existing and prospective customers, foreign branch are audited semiannually by external audisolicit new business for Bank, provide information to cus- tors. tomers, collect credit information, receive applications for Bank has established a system of internal monitoring extensions of credit and other banking services on behalf and controls, which are applied on a daily basis to every of Bank, and perform other permissible activities. type of operation conducted by Bank. Bank's internal In acting on an application to establish a representative controls are evaluated by external auditors who report their office, the IBA and Regulation K provide that the Board findings to Bank's management, shareholders, and the Sushall take into account whether the foreign bank engages perintendency. The proposed representative office would directly in the business of banking outside the United be required to establish internal policies and procedures States, and has furnished to the Board the information it consistent with those established by Bank. The proposed needs to assess the application adequately. The Board also representative office would submit monthly reports to shall take into account whether the foreign bank and any Bank, which would be reviewed by Bank's internal audiforeign bank parent is subject to comprehensive supervi- tors; Bank's internal auditors would also audit the books sion or regulation on a consolidated basis by its home and records of the proposed office annually. country supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. Based on all the facts of record, the Board has deter- 211.24(d)(2)).2 In addition, the Board may take into ac- mined that factors relating to the supervision of Bank by its home country supervisor are consistent with approval of the proposed representative office, taking into account the 1. Data are as of December 31, 1999. nature of its activities. 2. In assessing this standard, the Board considers, among other The Board also has determined that for purposes of the factors, the extent to which the home country supervisors: IBA and Regulation K, Bank engages directly in the busi- (i) Ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; (ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, These are indicia of comprehensive, consolidated supervision. No audit reports, or otherwise; single factor is essential, and other elements may inform the Board's (iii) Obtain information on the dealings with and relationship determination. between the bank and its affiliates, both foreign and domestic; 3. See 58 Federal Register 6348, 6351 (1993). See also Citizens (iv) Receive from the bank financial reports that are consolidated National Bank, 79 Federal Reserve Bulletin 805 (1993); Agricultural on a worldwide basis or comparable information that permits Bank of China, 83 Federal Reserve Bulletin 617 (1997). analysis of the bank's financial condition on a worldwide 4. Venezuelan law defines a "financial group" as a group of banks, consolidated basis; financial institutions or other companies that comprise a single deci- (v) Evaluate prudential standards, such as capital adequacy and sionmaking or managerial unit. Such a group includes foreign and risk asset exposure, on a worldwide basis. domestic offices, affiliates, and subsidiaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

786 Federal Reserve Bulletin • November 2000 ness of banking outside the United States. Bank has pro- proceedings under 12 U.S.C. § 1818 against Bank and its vided the Board with information necessary to assess the affiliates. application through submissions that address the relevant By order of the Board of Governors, effective Septemissues. ber 27, 2000. The Board also has taken into account the additional standards set forth in section 7 of the IBA and Regula- Voting for this action: Chairman Greenspan, Vice Chairman Fergution K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. son, and Governors Meyer and Gramlich. Absent and not voting: 211.24(c)(2)). The Superintendency has no objection to the Governor Kelley. establishment of the proposed representative office. The ROBERT DEV. FRIERSON Board also has determined that financial and managerial Associate Secretary of the Board factors are consistent with approval of the proposed representative office. Bank appears to have the experience and Turkiye Is Bankasi, A.S. capacity to support the proposed office and has established Ankara, Turkey controls and procedures for the proposed representative office to ensure compliance with U.S. law. Order Approving Establishment of a Representative With respect to access to information on Bank's opera- Office tions, the Board has reviewed the restrictions on disclosure in Venezuela and has communicated with relevant govern- Turkiye Is Bankasi, A.S. ("Bank"), Ankara, Turkey, a ment authorities regarding access to information. Bank has foreign bank within the meaning of the International Bankcommitted to make available to the Board such informaing Act ("IBA"), has applied under section 10(a) of the tion on the operations of Bank and any of its affiliates that IBA (12 U.S.C. § 3107(a)) to establish a representative the Board deems necessary to determine and enforce comoffice in New York, New York. The Foreign Bank Supervipliance with the IBA, the Bank Holding Company Act of sion Enhancement Act of 1991, which amended the IBA, 1956, as amended, and other applicable federal law. To the provides that a foreign bank must obtain the approval of extent that the provision of such information to the Board the Board to establish a representative office in the United may be prohibited by law or otherwise, Bank has commit- States. ted to cooperate with the Board to obtain any necessary Notice of the application, affording interested persons an consents or waivers that might be required from third opportunity to submit comments, has been published in a parties for disclosure of such information. In light of these newspaper of general circulation in New York, New York commitments and other facts of record, and subject to the (The New York Times, January 20, 2000). The time for conditions described below, the Board concludes that Bank filing comments has expired, and the Board has considered has provided adequate assurances of access to any necesthe application and all comments received. sary information that the Board may request. Bank, with total consolidated assets of approximately On the basis of all the facts of record, and subject to the $14.3 billion,1 is the second largest private banking organicommitments made by Bank, and the terms and conditions zation in Turkey. Bank was established in 1924. Bank's set forth in this order, the Board has determined that two largest shareholders, its employee pension fund and a Bank's application to establish a representative office political party, respectively hold 45 percent and 28 percent should be, and hereby is, approved. If any restrictions on of Bank's shares. The remaining 27 percent of Bank's access to information on the operations or activities of shares are publicly traded and widely held, with no share- Bank or any of its affiliates subsequently interfere with the holder controlling more than 5 percent of shares. Board's ability to obtain information to determine and Bank engages in retail and commercial banking and enforce compliance by Bank or its affiliates with applicable other financial activities, including insurance and reinsurfederal statutes, the Board may require termination of any ance, investment banking, leasing, and factoring, directly of Bank's direct or indirect activities in the United States. and through its bank and nonbank subsidiaries. Outside of Approval of this application is also specifically conditioned Turkey, Bank has branches in the United Kingdom and on Bank's compliance with the commitments made in northern Cyprus, and a subsidiary bank in Germany (which connection with this application and with the conditions in has branches in The Netherlands and France). Bank presthis order.5 The commitments and conditions referred to ently has no direct or indirect operations in the United above are conditions imposed in writing by the Board in States. connection with its decision, and may be enforced in The proposed representative office would act as liaison with existing and prospective customers of Bank. Staff of the office would conduct market and industry research, 5. The Board's authority to approve the establishment of the pro- assemble credit information, and visit with representatives posed office parallels the continuing authority of the State of Florida of various government departments and agencies. to license offices of a foreign bank. The Board's approval of this In acting on an application to establish a representative application does not supplant the authority of the State of Florida and its agent, the Florida Department of Banking and Finance ("Depart- office, the IBA and Regulation K provide that the Board ment"), to license the proposed representative office of Bank in accordance with any terms or conditions that the Department may impose. 1. Data are as of fiscal year ending December 31, 1999. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 787 shall take into account whether the foreign bank engages however, a recently enacted banking law, described below, directly in the business of banking outside the United will result in changes to the supervisory structure. States, and has furnished to the Board the information it In addition to information previously considered by the needs to assess the application adequately. The Board also Board in connection with the prior application by a Turkish shall take into account whether the foreign bank and any bank, the Board has taken into account new information on foreign bank parent is subject to comprehensive supervi- the Turkish bank supervisory system. A banking law sion or regulation on a consolidated basis by its home passed in June 1999, still in the process of being implecountry supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. mented, is intended to address certain supervisory gaps and 211.24(d)(2)).2 In addition, the Board may take into ac- to provide a more comprehensive framework for the regucount additional standards set forth in the IBA and Regula- lation and supervision of Turkish banks. Under it, the bank tion K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. regulatory and supervisory functions of the Treasury and 211.24(c)(2)). The Board previously has stated that the the Central Bank are being transferred to a newly created standards that apply to the establishment of a branch or government entity, the Banking Regulation and Superviagency need not in every case apply to the establishment of sion Agency ("BRSA"). In addition, the law requires banks a representative office, because representative offices do to establish comprehensive internal audit, risk control, and not engage in a banking business and cannot take deposits management reporting systems, and to employ an adequate or make loans.3 number of internal auditors. The law also increases the With respect to home country supervision of Bank, the minimum capitalization required of banks and creates new Board has considered the following information. Bank is rules regarding large exposures of banks that parallel direcsupervised primarily by the Turkish Undersecretariat of tives of the European Union. Amendments to the banking Treasury and Foreign Trade (the "Treasury"), through its law, passed in December 1999, provide for increased trans- Banking Directorate and the Board of Sworn Auditors parency and independence of the BRSA, strengthen pru- ("Sworn Auditors"), as well as by the Central Bank of dential regulations, and provide tools to improve the reso- Turkey ("Central Bank"). The Treasury serves as Bank's lution of financially weak banks. During 2000, the BRSA primary home country supervisor. Both the Treasury and is expected to issue new accounting standards for financial the Central Bank have stated that they have no objection to disclosure, adopt capital adequacy standards addressing Bank's establishment of the proposed representative office. market risk, and establish improved internal risk manage- The Board previously approved an application involving ment requirements. another bank in Turkey,4 and Bank is currently supervised Based on all the facts of record, which include the by the Treasury and the Central Bank on substantially the information described above, the Board concludes that same terms and conditions as the other Turkish bank;5 factors relating to the supervision of Bank by its home country supervisors are consistent with approval of the proposed representative office. 2. In assessing this standard, the Board considers, among other The Board has also determined that for purposes of the factors, the extent to which the home country supervisors: IBA and Regulation K, Bank engages directly in the busi- (i) Ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; ness of banking outside of the United States. Bank has (ii) Obtain information on the condition of the bank and its provided the Board with information necessary to assess subsidiaries and offices through regular examination reports, the application through submissions that address the releaudit reports, or otherwise; vant issues. (iii) Obtain information on the dealings with and relationship The Board also has taken into account the additional between the bank and its affiliates, both foreign and domestic; (iv) Receive from the bank financial reports that are consolidated standards set forth in section 7 of the IBA and Regulaon a worldwide basis or comparable information that permits tion K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. analysis of the bank's financial condition on a worldwide 211.24(c)(2)). As noted above, the Treasury and the Cenconsolidated basis; tral Bank have no objection to Bank's establishment of the (v) Evaluate prudential standards, such as capital adequacy and proposed representative office. The Board also has deterrisk asset exposure, on a worldwide basis. These are indicia of comprehensive, consolidated supervision. No mined that financial and managerial factors are consistent single factor is essential, and other elements may inform the Board's with approval of the proposed representative office. Bank determination. appears to have the experience and capacity to support the 3. See 58 Federal Register 6348, 6351 (1993). See also Banco de la proposed office and has established controls and proce- Ciudad de Buenos Aires, 85 Federal Reserve Bulletin 647 (1999); Agricultural Bank of China, 83 Federal Reserve Bulletin 617 (1997); dures for the proposed representative office to ensure com- Citizens National Bank, 79 Federal Reserve Bulletin 805 (1993). pliance with U.S. law. 4. See Turkiye Vakiflar Bankasi, T.A.O., 81 Federal Reserve Bulletin With respect to access to information on Bank's opera- 313 (1995). tions, the Board has reviewed the restrictions on disclosure 5. In brief, Bank currently is required to submit periodic reports and financial statements to the Treasury or the Central Bank providing information on, among other things, capital adequacy, credit exposures, and affiliate transactions. Bank is also subject to examination of head office and branches by the Treasury, through Sworn Auditors. The Sworn Auditors review Bank's capital adequacy, asset quality, powers over Bank. In addition, Bank's annual internal audit reports managerial resources, and compliance with applicable banking regula- are forwarded to Turkish authorities, and external audits are contions. The Treasury and the Central Bank each have enforcement ducted of its financial reports. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

788 Federal Reserve Bulletin • November 2000 in Turkey and has communicated with relevant govern- and enforce compliance by Bank or its affiliates with ment authorities about access to information. Bank and its applicable federal statutes, the Board may require terminaparents have committed to make available to the Board tion of any of Bank's direct or indirect activities in the such information on Bank and any of its affiliates that the United States. Approval of this application is also specifi- Board deems necessary to determine and enforce compli- cally conditioned on compliance by Bank and its parents ance with the IBA, the Bank Holding Company Act, and with the commitments made in connection with this appliother applicable federal law. To the extent that the provi- cation and with the conditions in this order.6 The commitsion of such information to the Board may be prohibited by ments and conditions referred to above are conditions law or otherwise, Bank and its parents have committed to imposed in writing by the Board in connection with its cooperate with the Board to obtain any necessary consents decision, and may be enforced in proceedings under or waivers that might be required from third parties for 12 U.S.C. § 1818 against Bank and its affiliates. disclosure of such information. In addition, subject to By order of the Board of Governors, effective Septemcertain conditions, Bank's home country supervisors may ber 18, 2000. share information on Bank's operations with other supervi- Voting for this action: Chairman Greenspan, Vice Chairman Fergusors, including the Board. In light of these commitments son, and Governors Kelley and Gramlich. Absent and not voting: and other facts of record, and subject to the conditions Governor Meyer. described below, the Board concludes that Bank has provided adequate assurances of access to any necessary infor- ROBERT DEV. FRIERSON mation that the Board may request. Associate Secretary of the Board On the basis of all the facts of record, and subject to the commitments made by Bank and its parents and the terms 6. The Board's authority to approve the establishment of the proand conditions set forth in this order, the Board has deterposed representative office parallels the continuing authority of the mined that Bank's application to establish a representative State of New York to license offices of a foreign bank. The Board's office should be, and hereby is, approved. If any restric- approval of this application does not supplant the authority of the State of New York and its agent, the New York State Banking tions on access to information on the operations or activi- Department ("Department"), to license the proposed representative ties of Bank or any of its affiliates subsequently interfere office of Bank in accordance with any terms or conditions that the with the Board's ability to obtain information to determine Department may impose. APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 4 Applicant(s) Bank(s) Effective Date Bank One Corporation, BondNexus, Corp., September 1, 2000 Chicago, Illinois Seattle, Washington Sections 3 and 4 Applicant(s) Bank(s) Effective Date Niagara Bancorp, MHC, Iroquois Bancorp, Inc., September 29, 2000 Lockport, New York Auburn, New York First Niagara Financial Group, Inc., Cayuga Bank, Lockport, New York Auburn, New York Homestead Savings, FA, Utica, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 789 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 Advantage Bancorp, Inc.. Advantage Bank, Kansas City August 24, 2000 Woodbury, Minnesota Loveland, Colorado Anita Bancorporation, EWN Investments, Inc., Chicago August 22, 2000 Atlantic, Iowa Ute, Iowa Ute State Bank, Ute, Iowa Ardmore Merger Corporation, First National Corporation of Ardmore, Kansas City August 24, 2000 Ardmore, Oklahoma Inc., Ardmore, Oklahoma Caixa Geral de Depositos, S.A. Banco Comercial Portugues, New York August 30, 2000 Lisbon, Portugal Oporto, Portugal BPABank, National Association, Newark, New Jersey Central Texas Bankshare Holdings, Hill Bancshares Holdings, Inc., Dallas August 18, 2000 Inc., Weimar, Texas Columbus, Texas Hill Bank & Trust Company, Colorado County Investment Weimar, Texas Holdings, Inc., Wilmington, Delaware Central Valley Community Bancorp, Clovis Community Bank, San Francisco September 11, 2000 Clovis, California Clovis, California Community Bancshares Spring Community Bank Spring Green and Chicago August 25, 2000 Green and Plain, Inc., Plain, Spring Green, Wisconsin Spring Green, Wisconsin Cornerstone Bancorp, Inc., Cornerstone National Bank and Trust Chicago September 14, 2000 Palatine, Illinois Company, Palatine, Illinois The Dai-Ichi Kangyo Bank, Ltd., DKF Trust Company (USA), New York September 6, 2000 Tokyo, Japan New York, New York The Dai-Ichi Kangyo Fuji Trust and Banking Company, Ltd., Tokyo, Japan The Exchange Bankshares, Inc., The Exchange Bank, Richmond August 25, 2000 Estill, South Carolina Estill, South Carolina Farmers and Merchants Bancshares, Farmers and Merchants National Bank, St. Louis August 30, 2000 Inc., Nashville, Illinois Nashville, Illinois Farmers & Merchants Financial Minnesota Valley Financial Services, Services, Inc., Inc., Minneapolis September 13, 2000 St. Paul, Minnesota St. Paul, Minnesota Courtland State Bank, Courtland, Minnesota Farmers National Banc Corp., Security Financial Corporation, Canfield, Ohio Niles, Ohio Cleveland September 7, 2000 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

790 Federal Reserve Bulletin • November 2000 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Flathead Holding Company of Mountain Bank System, Minneapolis September 20, 2000 Bigfork, Bigfork, Montana Bigfork, Montana Vallley Bank of Belgrade, Belgrade, Montana FNB Bancorp, The First National Bank of Layton, San Francisco August 21, 2000 Layton, Utah Layton, Utah Frankston Bancorp, Inc., First State Bank, Dallas September 19, 2000 Frankston, Texas Frankston, Texas GrandSouth Bancorporation, GrandSouth Bank, Richmond August 21, 2000 Simpsonville, South Carolina Fountain Inn, South Carolina Greater Bay Bancorp, Bank of Petaluma, San Francisco September 7, 2000 Palo Alto, California Petaluma, California Heartland Bancshares, Inc., Union Bank of Arizona, Chicago August 17, 2000 Lenox, Iowa Gilbert, Arizona The Industrial Bank of Japan, Ltd., The Dai-Ichi Kangyo Fuji Trust and New York September 6, 2000 Tokyo,Japan Banking Company, Ltd., Tokyo,Japan DKF Trust Company (USA), New York, New York The Industrial Bank of Japan, Ltd., Nomura Securities Co., Ltd., New York September 6, 2000 Tokyo, Japan Tokyo,Japan Nomura IBJ Global Investment Advisors, Inc., New York, New York Inter-Mountain Bancorp., Inc., Westbanco, Minneapolis September 14, 2000 Bozeman, Montana West Yellowstone, Montana First Security Bank of West Yellowstone, West Yellowstone, Montana Lafayette Community Bancorp, Lafayette Community Bank, Chicago September 1, 2000 Lafayette, Indiana Lafayette, Indiana M&T Bank Corporation, Premier National Bancorp, Inc., New York September 8, 2000 Buffalo, New York Lagrangeville, New York Olympia Financial Corporation, Premier National Bank, N.A., Buffalo, New York Lagrangeville, New York Shorebank Corporation, Shorebank Advisory Services Mexico, Chicago September 14, 2000 Chicago, Illinois Leon, Mexico Shorebank Advisory Services, Inc., Chicago, Illinois Southern Michigan Bancorp, Inc., Sturgis Bank & Trust Company, Chicago September 1, 2000 Coldwater, Michigan Sturgis, Michigan Tradition Bancshares, Inc., First National Bank of Bellaire, Dallas September 20, 2000 Houston, Texas Houston, Texas Tradition Bancshares of Delaware, Inc., Wilmington, Delaware Wells Fargo & Company, Buffalo National Bancshares, Inc., San Francisco August 23, 2000 San Francisco, California Buffalo, Minnesota The Buffalo National Bank, Buffalo, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 791 Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Banco Bilbao Vizcaya Argentaria, Argentaria International Securities Inc. New York September 7, 2000 S.A., New York, New York Bilbao, Spain BBV Securities Inc., New York, New York Bank of America Corporation, SafeCheck Company, L.L.C., Richmond August 21, 2000 Charlotte, North Carolina New York, New York First Union Corporation, Charlotte, North Carolina BB&T Corporation, Winston-Salem, North Carolina Wachovia Corporation, Winston-Salem, North Carolina SunTrust Banks, Inc., Atlanta, Georgia Banc West Corporation, Honolulu, Hawaii Star Systems, Inc., Maitland, Florida Boston Private Financial Holdings, Sand Hill Advisors, Inc., Boston August 18, 2000 Inc., Menlo Park, California Boston, Massachusetts Citizens Community Bancorp, Inc., To engage de novo in brokering of Atlanta August 30, 2000 Marco Island, Florida loans The Dai-Ichi Kangyo Bank, CIT Group,Inc., San Francisco September 6, 2000 Limited, New York, New York Tokyo, Japan First Volunteer Corporation, Carter-Wilson-Hewgley Insurance, Inc., Atlanta August 23, 2000 Chattanooga, Tennessee South Pittsburg, Tennessee Franklin Bancorp, Inc. d/b/a Sunrise To engage de novo in employee benefits Minneapolis August 21, 2000 Community Banks, consulting and data processing St. Paul, Minnesota services Southern Michigan Bancorp, Inc., H.O.M.E. Limited Dividend Housing Chicago September 13, 2000 Coldwatejr, Michigan Association Limited Partnership, Sturgis, Michigan Sturgis Bank & Trust Company, Sturgis, Michigan First Michiana Development Corporation, Sturgis, Michigan Union Bankshares Company, Mid-Coast Bancorp, Inc., Boston August 18, 2000 Ellsworth, Maine Waldoboro, Maine The Waldoboro Bank, F.S.B., Waldoboro, Maine Westdeutsche Landesbank Phillips Capital Management LLC, New York September 11, 2000 Girozentrale, Chicago, Illinois Dusseldolf, Germany Patapsco Bancorp, Inc., Northfield Bancorp, Inc., Richmond August 28, 2000 Dundalk, Maryland Baltimore, Maryland Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

792 Federal Reserve Bulletin • November 2000 Sections 3 and 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Commerce Financial Corporation Commerce Financial Corporation, Kansas City August 23, 2000 Employee Stock Ownership Plan, Topeka, Kansas Topeka, Kansas Financial Institution Technologies, Topeka, Kansas APPLICATIONS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date Investors Fiduciary Trust Company, State Street Bank and Trust Company, Boston September 12, 2000 Kansas City, Missouri Boston, Massachusetts State Street Corporation, Boston, Massachusetts Manufacturers and Traders Trust Premier National Bank, N.A., New York September 8, 2000 Company, Lagrangeville, New York Buffalo, New York M&I Marshall & Ilsley Bank, M&I Lake view Bank, Chicago September 8, 2000 Milwaukee, Wisconsin Sheboygan, Wisconsin The Patapsco Bank, Northfield Federal Savings Bank, Richmond August 28, 2000 Dundalk, Maryland Baltimore, Maryland Pinnacle Bank, Pinnacle Bank, Kansas City August 30, 2000 Papillion, Nebraska Schuyler, Nebraska Pinnacle Bank, Aurora, Nebraska Pinnacle Bank, Lexington, Nebraska Union Trust Company, The Waldoboro Bank, F.S.B., Boston August 24, 2000 Ellsworth, Maine Waldoboro, Maine The State Bank, Commercial Federal Bank, Chicago August 23, 2000 Ute, Iowa Omaha, Nebraska PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the 2000). Action under Administrative Procedure Act chal- Federal Reserve Banks in which the Board of Governors is not lenging a portion of interagency rule regarding Privacy of named a party. Consumer Finance Information. Reed Elsevier Inc. v. Board of Governors, No. 00-1289 (D.C. Trans Union LLC v. Board of Governors, et al., No. 00-CV- Cir., filed June 30, 2000). Petition for review of interagency 2087(ESH) (D.D.C., filed August 30, 2000). Action under rule regarding Privacy of Consumer Financial Information. Administrative Procedure Act challenging a portion of interagency rule regarding Privacy of Consumer Financial Infor- Board of Governors v. Interfinancial Services, Ltd., No. 00mation. 5233 (D.C. Cir., filed June 27, 2000). Appeal of district Sedgwick v. Board of Governors, No. 00-16525 (9th Cir., filed court order enforcing administrative subpoena issued by the August 7, 2000). Appeal of district court dismissal of action Board. On June 30, 2000, the court of appeals denied the under Federal Tort Claims Act alleging violation of bank appellant's motion for a stay of the district court order. supervision requirements. Bettersworth v. Board of Governors, No. 00-50262 (5th Cir., Individual Reference Services Group, Inc., v. Board of Gover- filed April 14, 2000). Appeal of district court's dismissal of nors, et al., No. OO-CV-1828 (ESH) (D.D.C., filed July 28, Privacy Act claims. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 793 Hunter v. Board of Governors, No. 00-CV-735 (ESH) (D.D.C., appeal, and remanded the matter to the district court for filed April 5, 2000). Action claiming retaliation for whistle- determination of prejudgment interest due to the Board. blowing activity. Bennett v. Federal Bureau of Investigation, et al., No. H-00- 0707 (S.D. Texas, filed March 1, 2000). Action alleging Board interference with a private investment. On FINAL ENFORCEMENT DECISION ISSUED BY THE August 23, 2000, the government filed a motion to dismiss BOARD OF GOVERNORS the action. Albrecht v. Board of Governors, No. 00-CV-317 (CKK) In the Matter of (D.D.C., filed February 18, 2000). Action challenging the funding of the retirement plan for certain Board employees. Carolyn D. Nelson Folstad v. Board of Governors, No. 00-1056 (6th Cir., filed Former Assistant Vice President of January 14, 2000). Appeal of district court order granting Lone Star National Bank summary judgment to the Board in a Freedom of Informa- Pharr, Texas tion Act case. Toland v. Internal Revenue Service, Federal Reserve System, Docket No. OCC-AA-99-23 et al., No. CV-S-99-1769-JBR-RJJ (D. Nevada, filed December 29, 1999). Challenge to income taxation and Fed- Final Decision eral Reserve notes. On February 16, 2000, the government filed a motion to dismiss the action. This is an administrative proceeding pursuant to the Fed- Artis v. Greenspan, No. 1:99CV02073 (EGS) (D.D.C., filed eral Deposit Insurance Act ("FDI Act") in which the August 3, 1999). Employment discrimination action. Office of the Comptroller of the Currency of the United Sheriff Gerry Ali v. U.S. State Department, No. 99-7438 (C.D. States of America ("OCC") seeks to prohibit the Respon- Cal., filed July 21, 1999). Action relating to impounded dent, Carolyn D. Nelson ("Respondent"), from further bank drafts. participation in the affairs of any financial institution be- Kerr v. Department of the Treasury, No. 99-16263 (9th Cir., cause of her conduct as a vice president of Lone Star filed April 28, 1999). Appeal of dismissal of action chal- National Bank, Pharr, Texas (the "Bank"). Under the FDI lenging income taxation and Federal Reserve notes. Act, the OCC may initiate a prohibition proceeding against Fraternal Order of Police v. Board of Governors, No. a former employee of a national bank, but the Board must 1:98CV03116 (WBB)(D.D.C., filed December 22, 1998). make the final determination whether to issue an order of Declaratory judgment action challenging Board labor prac- prohibition. tices. On February 26, 1999, the Board filed a motion to Upon review of the administrative record, the Board dismiss the action. issues this Final Decision adopting the Recommended De- Hunter v. Board of Governors, No. 1:98CV02994 (ESH) cision ("RD") of Administrative Law Judge Arthur L. (D.D.C., filed December 9, 1998). Action under the Free- Shipe (the "ALJ"), and orders the issuance of the attached dom of Information Act, the Privacy Act, and the first Order of Prohibition. amendment. On April 26, 2000, the court granted the Board's motion to dismiss or for summary judgment. On /. Statement of the Case August 25, 2000, the court denied plaintiffs request for attorney's fees and costs. A. Statutory and Regulatory Framework Board of Governors v. Carrasco, No. 98 Civ. 3474 (LAK) (S.D.N.Y., filed May 15, 1998). Action to freeze assets of Under the FDI Act and the Board's regulations, the ALJ is individual pending administrative adjudication of civil responsible for conducting proceedings on a notice of money penalty assessment by the Board. On May 26, 1998, charges. 12 U.S.C. § 1818(e)(4). The ALJ issues a recomthe court issued a preliminary injunction restraining the mended decision that is referred to the deciding agency transfer or disposition of the individual's assets and appoint- together with any exceptions to those recommendations ing the Federal Reserve Bank of New York as receiver for filed by the parties. The Board makes the final findings of those assets. Following entry of the Board's order requiring fact, conclusions of law, and determination whether to restitution, 85 Federal Reserve Bulletin 142 (1998), the issue an order of prohibition in the case of prohibition court granted the Board's motion for judgment in the asset orders sought by the OCC. M; 12 C.F.R. § 263.40. freeze action and authorized a judicial sale of the seized The FDI Act sets forth the substantive basis upon which property. a federal banking agency may issue against a bank official Board of Governors v. Pharaon, No. 98-6101 (2d Cir., filed or employee an order of prohibition from further participa- May 4, 1998). Appeal and cross-appeal of district court tion in banking. In order to issue such an order, the Board order granting in part and denying in part the Board's must make each of three findings: motion for summary judgment seeking prejudgment interest (1) That the respondent engaged in identified misconand a statutory surcharge in connection with a civil money duct, including a violation of law or regulation, an penalty assessed by the Board. On February 24, 1999, the unsafe or unsound practice or a breach of fiduciary court granted the Board's appeal and denied the cross- duty; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

794 Federal Reserve Bulletin • November 2000 (2) That the conduct had a specified effect, including Following the issuance of the RD, counsel for Responfinancial loss to the institution or gain to the respon- dent contacted the Board by letter,2 requesting that the dent; and default be reconsidered. In his unsworn letter, counsel (3) That the respondent's conduct involved either per- stated that "[a] proper request for hearing was sent; howsonal dishonesty or a willful or continuing disre- ever, the hearing did not take place." Counsel also stated gard for the safety or soundness of the institution. that he personally appeared at the courthouse identified in 12 U.S.C. § 1818(e)(l)(A)-(C). the Notice of Charges, apparently on the day of the hearing as set forth in the Notice, and "was instructed that no such An enforcement proceeding is initiated by the filing of a hearing existed." Finally, counsel's letter informed the notice of charges which is served on the respondent. Under Board that Respondent intended to plead guilty to criminal the OCC's and the Board's regulations, the respondent charges stemming from the allegations set forth in the must file an answer within 20 days of service of the notice. Notice, and had made substantial restitution to the Bank. 12 C.F.R. §§ 19.19(a) and 263.19(a). Failure to file an answer constitutes a waiver of the respondent's right to II. Discussion contest the allegations in the notice, and a final order may be entered unless good cause is shown for failure to file a The OCC's Rules of Practice and Procedure set forth the timely answer. 12 C.F.R. §§ 19.19(c)(1) and 263.19(c)(1). consequences of a failure to file an answer to a Notice. Under the Rules, failure to file a timely answer "consti- B. Procedural History tutes a waiver of [a respondent's] right to appear and contest the allegations in the Notice." 12 C.F.R. On November 19, 1999, the OCC issued a Notice initiating § 19.19(c). If the ALJ finds that no good cause has been an enforcement action that sought, among other things, an shown for the failure to file, the judge "shall file ... a order of prohibition due to Respondent's unauthorized recommended decision containing the findings and the withdrawal of customers' funds for her own use. The relief sought in the notice." Id. An order based on a failure Notice alleged that over a two-year period, Respondent had to file a timely answer is deemed to be issued by consent. withdrawn over $40,000 in funds from the accounts of Id. three customers, all without the knowledge or approval of In this case, Respondent repeatedly failed to respond to the customers, and used the funds for her own benefit.1 this administrative proceeding. Despite service of the No- The record shows that Respondent was served with the tice on both her and her counsel, she failed to file an Notice by certified mail on November 27, 1999; the Notice answer within the 20 days provided in the OCC's Rules. was also served on her counsel. Under the OCC's regula- Both Respondent and her counsel were served with Entions, Respondent was required to file her answer to the forcement Counsel's Motion for entry of a default but filed Notice by December 14, 1999. When no answer was no opposition to it. The record reflects that each was served received, Enforcement Counsel filed and served on Re- with the ALJ's Order to show cause, giving Respondent spondent and her counsel a Motion for Entry of an Order of another opportunity to explain her failure to answer the Default on December 21, 1999. The ALJ issued an Order Notice, but no such explanation was provided prior to the requiring Respondent to show cause why he should not entry of the RD. grant the default. This Order was served by certified mail; Even after the issuance of the RD, Respondent failed to the record reflects that it was delivered to Respondent's explain adequately why she did not file a timely answer. counsel on January 18, 2000, but that the copy sent to Respondent's counsel asserted that "a request for a hearing Respondent herself was returned to the ALJ marked "un- was sent," but did not enclose a copy of such a request, and claimed". Accordingly, the ALJ ordered Enforcement no such request was made part of the record. Counsel also Counsel to serve the show cause order on Respondent stated in his unsworn letter that he had appeared at the time personally. Personal service of the Order was made on and place identified in the Notice for the hearing to occur, February 24, 2000, and Respondent had until March 15, in January 2000. But by that time Respondent had been in 2000, to respond and show good cause for her failure to file default for over a month and had not filed the required an answer in a timely fashion. request for a hearing. Moreover, if counsel had been aware When Respondent failed to respond to the Order to show of the time and place for the hearing in January 2000, his cause, the ALJ issued his Recommended Decision ("RD"). and his client's failure to file an answer to the Notice if The RD found that Respondent had waived her rights to difficult to excuse, and indeed neither Respondent nor her appear and contest the allegations in the Notice, and recom- counsel has ever explained it. mended that the relief requested in the Notice be imposed. In short, Respondent's default permits the Board to consider the allegations in the Notice as uncontested. Those 2. Counsel initially wrote to the administrative law judge immedi- 1. The Notice also sought civil money penalties and an order of ately after the issuance of the Recommended Decision. The adminisrestitution. On August 8, 2000, on the basis of the ALJ's recom- trative law judge correctly informed counsel that he no longer had mended decision, the OCC issued a decision finding Respondent in jurisdiction over the matter and that any requests with regard to the default and imposing the requested relief. recommended decision must be directed to the decisional agencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 795 allegations meet all the criteria for entry of an order of consent, or authorization with respect to any voting prohibition under 12 U.S.C. § 1818(e). Respondent's con- rights in any institution described in subsecduct in withdrawing funds from customers' accounts with- tion 8(e)(7)(A) of the Act (12 U.S.C. out authorization and converting those funds to her own § 1818(e)(7)(A)); use meets the "misconduct" prong of the prohibition stat- (c) From violating any voting agreement previously ute, 12 U.S.C. § 1818(e)(1)(A), being both a violation of approved by the appropriate Federal banking law, an unsafe or unsound practice, and a breach of Re- agency; or spondent's fiduciary duty to her customers. The action had (d) From voting for a director, or from serving or the necessary "effect" of gain to the Respondent under acting as an institution-affiliated § party as defined 12 U.S.C. § 1818(e)(1)(B). Finally, the conduct involved in section 3(u) of the Act, (12 U.S.C. § 1813(u)), the requisite culpability under 12 U.S.C. § 1818(e)(1)(C) such as an officer, director, or employee. in that it involved personal dishonesty. The requirements for an order of prohibition having been met, the Board has 2. This Order, and each provision hereof, is and shall determined that such an order will issue. remain fully effective and enforceable until expressly stayed, modified, terminated or suspended in writing by Conclusion the Board. For these reasons, the Board orders the issuance of the attached Order of Prohibition. This Order shall become effective at the expiration of thirty days after service is made. By Order of the Board of Governors, this 29th day of By Order of the Board of Governors, this 29th day of September, 2000. September, 2000. Board of Governors of the Federal Reserve System Board of Governors of the Federal Reserve System ROBERT DEV. FRIERSON Associate Secretary of the Board ROBERT DEV. FRIERSON Associate Secretary of the Board Order of Prohibition WHEREAS, pursuant to section 8(e) of the Federal Deposit Insurance Act, as amended, (the "Act") (12 U.S.C. WRITTEN AGREEMENTS APPROVED BY FEDERAL § 1818(e)), the Board of Governors of the Federal Reserve RESERVE BANKS System ("the Board") is of the opinion, for the reasons set forth in the accompanying Final Decision, that a final Consolidated Bank and Trust Company Order of Prohibition should issue against CAROLYN D. Richmond, Virginia NELSON ("NELSON"); NOW, THEREFORE, IT IS HEREBY ORDERED, pur- The Federal Reserve Board announced on September 22, suant to section 8(e) of the Federal Deposit Insurance Act, 2000, the execution of a Written Agreement by and among as amended, (12 U.S.C. § 1818(e)), that: the Consolidated Bank and Trust Company, Richmond, 1. In the absence of prior written approval by the Board, Virginia; the Federal Reserve Bank of Richmond; and the and by any other Federal financial institution regulatory Bureau of Financial Institutions of the Commonwealth of agency where necessary pursuant to section 8(e)(7)(B) Virginia. of the Act (12 U.S.C. § 1818(e)(7)(B)), Nelson is hereby prohibited: Olathe Bancorporation, Inc. (a) from participating in the conduct of the affairs of Olathe, Colorado any bank holding company, any insured depository institution or any other institution specified in sub- The Federal Reserve Board announced on September 27, section 8(e)(7)(A) of the Act (12 U.S.C. 2000, the execution of a Written Agreement by and among § 1818(e)(7)(A)); Olathe Bancorporation, Inc., Olathe, Colorado; the Olathe (b) From soliciting, procuring, transferring, attempting State Bank, Olathe, Colorado; the Federal Reserve Bank of to transfer, voting or attempting to vote any proxy, Kansas City; and the Colorado Division of Banking. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 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 A33 Domestic finance companies—Owned and managed A10 Condition and Federal Reserve note statements receivables All Maturity distribution of loan and security holding Real Estate Monetary and Credit Aggregates A34 Mortgage markets—New homes A12 Aggregate reserves of depository institutions A35 Mortgage debt outstanding and monetary base A13 Money stock and debt measures Consumer Credit A3 6 Total outstanding Commercial Banking Institutions— A3 6 Terms Assets and Liabilities A15 All commercial banks in the United States Flow of Funds A16 Domestically chartered commercial banks A17 Large domestically chartered commercial banks A37 Funds raised in U.S. credit markets A19 Small domestically chartered commercial banks A3 9 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 • November 2000 INTERNATIONAL STATISTICS Securities Holdings and Transactions A60 Foreign transactions in securities Summary Statistics A61 Marketable U.S. Treasury bonds and A50 U.S. international transactions notes—Foreign transactions A51 U.S. foreign trade A51 U.S. reserve assets Interest and Exchange Rates A51 Foreign official assets held at Federal Reserve A62 Foreign exchange rates Banks A52 Selected U.S. liabilities to foreign official A63 GUIDE TO STATISTICAL RELEASES AND institutions SPECIAL TABLES Reported by Banks in the United States SPECIAL TABLES A52 Liabilities to, and claims on, foreigners A53 Liabilities to foreigners A64 Assets and liabilities of commercial banks, A55 Banks' own claims on foreigners June 30, 2000 A56 Banks' own and domestic customers' claims on A66 Terms of lending at commercial banks, foreigners August 2000 A56 Banks' own claims on unaffiliated foreigners A72 Assets and liabilities of U.S. branches and A57 Claims on foreign countries—Combined agencies of foreign banks, June 30, 2000 domestic offices and foreign branches A76 Pro forma balance sheet and income statements for priced services, June 30, 2000 Reported by Nonbanking Business Enterprises in the United States A78 INDEX TO STATISTICAL TABLES A58 Liabilities to unaffiliated foreigners A59 Claims on unaffiliated foreigners Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected GDP Gross domestic product e Estimated GNMA Government National Mortgage Association 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 IOs Interest only, stripped, mortgage-back securities 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 OCDs Other checkable deposits 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 POs Principal only, stripped, mortgage-back securities CRA Community Reinvestment Act of 1977 REIT Real estate investment trust FFB Federal Financing Bank REMICs Real estate mortgage investment conduits 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 FSA Farm Service Agency SIC Standard Industrial Classification FSLIC Federal Savings and Loan Insurance Corporation VA Department of Veterans Affairs G-7 Group of Seven G-10 Group of Ten GENERAL INFORMATION In many of the tables, components do not sum to totals because of include not fully guaranteed issues) as well as direct obligarounding. tions of the Treasury. Minus signs are used to indicate (1) a decrease, (2) a negative "State and local government" also includes municipalities, figure, or (3) an outflow. special districts, and other political subdivisions. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • November 2000 1.10 RESERVES, MONEY STOCK, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1999 2000r 2000 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q3 Q4r Ql Q2 Apr/ Mayr Juner Julyr Aug. Reserves of depository institutions2 1 Total -16.1 -3.4 1.8 -9.5 13.8 12.5 -40.6 9.0 -8.3 2 Required -16.0 -4.5 .1 -5.9 16.1 19.0 -45.1 9.1 -8.0 3 Nonborrowed -17.9 -3.0 2.4 -11.1 10.2 10.9 -44.4 6.4 -8.7 4 Monetary base3 9.0 20.4 4.3 -3.2 3.4 2.5 2.8 3.7 .4 Concepts of money and debt4 5 Ml -1.8 4.8 .0 -1.2 5.1 -10.9 -1.7 1.3 -2.8 6 M2 5.4r 5.2 6.1 6.3 10.6 -.5 3.8 3.6 7.5 7 M3 5.1r 10.5 10.8 8.0 8.8 3.6 7.4 9.4 10.4 8 Debt 6.r 6.3 5.6 6.3 6.8 5.3 5.8 4.7 n.a. Nontransaction components 9 In M25 1.1' 5.3 8.0 8.6 12.2 2.7 5.4 4.3 10.6 10 In M3 only6 4.3r 25.2 23.2 12.2 4.4 14.1 16.5 23.5 17.5 Time and savings deposits Commercial banks 11 Savings, including MMDAs 10.6 4.2 3.6 8.1 14.8 -2.4 7.3 10.0 14.5 12 Small time7 2.1 7.0 9.3 13.7 16.8 10.9 17.5 8.2 9.2 13 Large time8'9 .2' 38.5 22.2 17.7 35.2 1.7 19.1 17.0 22.4 Thrift institutions 14 Savings, including MMDAs 13.3 -3.3 -1.7 1.9 -7.7 11.5 -1.9 -.5 7.4 15 Small time7 -3.2 5.1 7.2 3.7 -1.5 7.0 9.2 12.4 16.2 16 Large time8 1.6 6.0 17.9 -.7 -5.1 -12.7 24.4 26.4 28.3 Money market mutual funds 17 Retail 8.9r 10.8 19.3 10.9 20.3 -1.9 -3.9 -7.9 5.4 18 Institution-only 9.1r 22.0 23.8 13.7 -1.5 17.0 15.5 51.8 28.2 Repurchase agreements and eurodollars 19 Repurchase agreements10 10.9 19.5 22.4 10.8 -8.9 33.1 28.8 5.9 -16.9 20 Eurodollars10 -9.7 13.3 29.2 -3.3 -51.1 24.9 -17.6 -22.7 22.5 Debt components4 21 Federal .r -4.4 -4.8 -7.5 -5.4 -18.1 -8.4 -3.9 n.a. 22 Nonfederal 7.8r 9.3 8.4 9.9 10.0 11.3 9.3 6.8 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 June July Aug. July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 558,662 559,982 557,962 558,305 558,298 558,844 557,918 558,150 557,929 556,799 U.S. government securities2 2 Bought outright—System account3 507,018 506,116 509,923 507,047 506,293 506,448 508,712 510,753 509,767 511,147 3 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright 140 140 140 140 140 140 140 140 140 140 5 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreements—triparty4 16,905 17,642 12,059 14,873 15,237 14,755 12,039 10,822 13,281 10,761 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 87 64 24 31 12 38 16 9 14 54 9 Seasonal credit 389 513 559 505 549 569 540 539 565 586 10 Special Liquidity Facility credit 0 0 0 0 0 0 0 0 0 0 11 Extended credit 0 0 0 0 0 0 0 0 0 0 12 Float 788 469 896 589 482 1,330 917 899 959 492 13 Other Federal Reserve assets 33,334 35,038 34,362 35,119 35,585 35,565 35,555 34,988 33,204 33,619 14 Gold stock 11,047 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 15 Special drawing rights certificate account 4,667 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 16 Treasury currency outstanding 29,898 30,167r 30,317 30,184r 30,234r 30,283 30,297 30,311 30,325 30,339 ABSORBING RESERVE FUNDS 17 Currency in circulation 568,485 570,798r 569,405 570,520r 568,846r 568,896 569,646 569,951 568,921 568,619 18 Reverse repurchase agreements—triparty4 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings 87 85 146 69 102 119 128 140 157 161 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 6,232 5,172 5,047 5,333 4,633 5,106 4,791 5,226 4,824 5,245 21 Foreign 85 120 87 98 111 90 94 80 101 77 22 Service-related balances and adjustments .. 6,893 6,784 6,746 6,595 6,837 6,553 6,689 6,824 6,820 6,693 23 Other 234 233 239 249 217 235 256 255 234 205 24 Other Federal Reserve liabilities and capital . 15,627 15,652 15,269 15,339 15,792 15,449 15,353 15,246 15,234 15,301 25 Reserve balances with Federal Reserve Banks5 6,631 6,552r 6,588 5,532 7,239r 7,924 6,504 5,984 7,208 6,083 End-of-month figures Wednesday figures June July Aug. July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 566,538 560,828 562,883 557,890 561,822 556,896 564,423 557,033 563,303 559,930 U.S. government securities 2 Bought outright—System account3 504,950 506,103 510,182 507,093 507,830 507,522 510,520 513,023 510,664 513,095 3 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright 140 140 140 140 140 140 140 140 140 140 5 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreements—triparty4 26,930 17,490 18,525 14,010 16,955 11,990 16,850 10,020 18,330 11,935 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 54 45 30 101 12 34 15 12 7 20 9 Seasonal credit 458 584 567 536 556 572 543 545 580 586 10 Special Liquidity Facility credit 0 0 0 0 0 0 0 0 0 0 11 Extended credit 0 0 0 0 0 0 0 0 0 0 12 Float -12 1,348 198 719 533 1,393 582 280 143 319 13 Other Federal Reserve assets 34,019 35,119 33,240 35,292 35,796 35,246 35,773 33,012 33,440 33,835 14 Gold stock 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 15 Special drawing rights certificate account 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 16 Treasury currency outstanding 29,979 30,283r 30,353 30,184r 30,234r 30,283 30,297 30,311 30,325 30,339 ABSORBING RESERVE FUNDS 17 Currency in circulation 571,115 568,806r 571,234 570,425r 569,588r 570,320 570,855 570,668 569,442 570,777 18 Reverse repurchase agreements—triparty4 .. . 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings 76 118 166 99 118 127 137 156 161 161 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 6,208 5,392 5,961 5,922 5,134 4,714 4,907 3,943 5,150 5,948 21 Foreign 105 76 79 148 94 74 101 83 71 99 22 Service-related balances and adjustments .. 7,064 6,553 6,788 6,595 6,837 6,553 6,689 6,824 6,820 6,693 23 Other 203 228 214 225 221 263 254 259 203 202 24 Other Federal Reserve liabilities and capital . 15,719 15,331 15,180 14,966 15,436 14,853 15,379 14,908 14,947 14,915 25 Reserve balances with Federal Reserve Banks' 11,274 9,852r 8,859 4,941 9,873 5,521 11,644 5,748 12,079 6,720 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 Nonfinancial Statistics • November 2000 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1997 1998 1999 2000 Dec. Dec. Dec. Feb.r Mar.r Apr.r Mayr Juner July1" Aug. 1 Reserve balances with Reserve Banks2 10,664 9,026 5,263 5,074 6,515 7,081 7,661 6,460 6,582 6,909 2 Total vault cash3 44,742 44,294 60,630 63,770 48,952 46,456 44,643 44,560 45,475 45,322 3 Applied vault cash4 37,255 36,183 36,392 37,023 33,237 33,512 33,898 32,757 33,086 32,610 4 Surplus vault cash5 7,486 8,111 24,238 26,747 15,715 12,944 10,745 11,802 12,389 12,712 5 Total reserves6 47,919 45,209 41,655 42,097 39,752 40,593 41,558 39,217 39,668 39,519 6 Required reserves 46,235 43,695 40,348r 40,985 38,547 39,448 40,616 38,153 38,600 38,471 7 Excess reserve balances at Reserve Banks7 1,685 1,514 l,307r 1,112 1,205 1,145 943 1,064 1,068 1,048 8 Total borrowing at Reserve Banks 324 117 320 108 179 304 362 479 570 579 9 Adjustment 245 101 179 45 101 184 86 90 60 25 10 Seasonal 79 15 67 44 71 120 276 389 510 554 11 Special Liquidity Facility8 0 0 74 19 7 0 0 0 0 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 2000 May 3r May 17r May 31r June 14r June 28r July 12r July 26r Aug. 9r Aug. 23 Sept. 6 1 Reserve balances with Reserve Banks2 7,484 7,619 7,741 6,498 6,413 6,524 6,388 7,267 6,603 7,043 2 Total vault cash3 44,599 44,131 45,164 43,847 45,098 45,783 44,921 46,291 45,398 44,099 3 Applied vault cash4 34,383 33,233 34,458 32,184 33,333 32,742 33,184 33,638 32,195 32,182 4 Surplus vault cash5 10,216 10,898 10,706 11,663 11,765 13,041 11,737 12,654 13,204 11,917 5 Total reserves6 41,867 40,852 42,199 38,682 39,746 39,266 39,572 40,904 38,797 39,225 6 Required reserves 40,867 39,955 41,223 37,769 38,545 38,103 38,596 39,802 37,818 38,117 7 Excess reserve balances at Reserve Banks7 999 897 976 913 1,200 1,162 975 1,102 979 1,108 8 Total borrowing at Reserve Banks 276 303 440 472 471 589 549 581 564 604 9 Adjustment 120 65 100 134 43 117 22 27 12 45 10 Seasonal 156 238 340 339 428 472 527 555 552 559 11 Special Liquidity Facility8 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 credit Seasonal credit2 Extended credit Federal Reserve Bank 10 O /6 n /0 0 10 O /6 n /0 0 10 O /6 n /0 0 Effective date Previous rate Boston 5/16/00 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 5/16/00 Range of rates for adjustment credit in recent years Range (or F.R. Bank (or F.R. Bank Range (or 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. 1? 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. 10 9-9.5 9 Aug. 16 ... . 3.5-1 4 20 6.5 6.5 76 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 1985—May ?0 7.5-8 7.5 16 ... . 4.75 4.75 1979—July 20 10 10 n 7.5 7.5 Nov. 17 ... . 4.50—4.75 4.50 Aug. 1/ 10-10.5 10.5 19 ... . 4.50 4.50 20 10.5 10.5 1986—Mar. i 7-7.5 7 Sept. 19 10.5-11 11 10 7 7 1999—Aug. 24 4.50-4.75 4.75 21 11 11 Apr. 71 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 1 1 6 6 18 5.00 5.00 Aug. 7| 5.5-6 5.5 1980—Feb. 15 12-13 13 '!'} 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 1 1 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 1 1 6.5 6.5 29 10 10 In effect Oct. 6, 2000 6.00 6.00 Sept. 26 11 11 1989—Feb. 24 6.5-7 7 Nov. 1 / 12 12 77 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 13 13 May 2 5.5 5.5 Dec. 4 12 12 Sept. 1 < 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 3.5^1.5 3.5 3 11 11 74 3.5 3.5 16 10.5 10.5 27 10-10.5 10 11999922——JJuullyy 7 3-3.5 3 30 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 • November 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 deposits" 12/27/90 4 Eurocurrency liabilities6. . . 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks succeeding calendar year by 80 percent of the percentage increase in the total reservable or vault cash. Nonmember institutions may maintain reserve balances with a Federal liabilities of all depository institutions, measured on an annual basis as of June 30. No Reserve Bank indirectly, on a pass-through basis, with certain approved institutions. For corresponding adjustment is made in the event of a decrease. The exemption applies only to previous reserve requirements, see earlier editions of the Annual Report or the Federal accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions maintenance period beginning December 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 1VS years was reduced from 3 percent to 1 xfl percent for by check, draft, debit card, or similar order payable directly to third parties) are savings the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that deposits, not transaction accounts. began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts nonpersonal time deposits with an original maturity of less than 1 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 1V5 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 x/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 2000 TTyyppee ooff ttrraannssaaccttiioonn aanndd mmaattuurriittyy 11999977 11999988 11999999 Jan. Feb. Mar. Apr. May June July U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 9,147 3,550 0 0 0 0 2,294 00 00 11,,882255 ? Gross sales 0 0 0 0 0 0 0 0 0 0 Exchanges 435,907 450,835 464,218 37,029 38,607 48,459 37,141 36,386 44,008 33,718 4 435,907 450,835 464,218 37,029 38,607 48,459 37,141 36,386 44,008 33,718 5 Redemptions 0 2,000 0 0 0 198 779 2,297 4,188 4,902 Others within one year 6 Gross purchases 5,549 6,297 11,895 0 0 0 0 164 11,,887755 11,,228844 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 41,716 46,062 50,590 3,566 6,877 5,034 0 13,063 4,672 5,152 9 Exchanges -27,499 — 49,434 -53,315 -4,360 -6,688 -3,515 0 -12,633 -3,109 -3,333 10 Redemptions 1,996 2,676 1,429 390 0 0 568 0 0 367 One to five years 11 Gross purchases 20,080 12,901 19,731 160 0 740 1,723 889900 770066 22,,225599 1? Gross sales 0 0 0 0 0 0 0 00 0 0 N Maturity shifts -37,987 -37,777 -44,032 -3,566 -5,210 -5,034 0 -10,334 -4,672 -5,152 14 Exchanges 20,274 37,154 42,604 4,045 4,348 3,515 0 10,063 3,109 3,333 Five to ten years 15 Gross purchases 3,449 2,294 4,303 809 0 489 993300 00 00 00 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -1,954 -5,908 -5,841 0 -949 0 0 -1,552 0 0 18 Exchanges 5,215 7,439 7,583 316 1,170 0 0 2,570 0 0 More than ten years 19 Gross purchases 5,897 4,884 9,428 1,069 0 330 0 528 11,,115511 550000 ?.O Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -1,775 -2,377 -717 0 -717 0 0 -1,177 0 0 22 Exchanges 2,360 4,842 3,139 0 1,170 0 0 0 0 0 All maturities 23 Gross purchases 44,122 29,926 45,357 2,038 0 1,559 4,947 1,582 3,732 5,868 74 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 1,996 4,676 1,429 390 0 198 1,347 2,297 4,188 5,269 Matched transactions ?6 Gross purchases 3,591,210R 4,430,457R 4,413,430R 492,277 340,127 401,404 352,75 T 357,355 368,396 344,935 27 Gross sales 3,593,530R 4,434,358R 4,431,685R 471,663 339,585 401,841 351,399R 356,640 369,739 344,384 Repurchase agreements 28 Gross purchases 810,485 512,671 281,599 00 00 00 00 00 00 00 29 Gross sales 809,268 514,186 301,273 0 0 0 0 0 0 0 30 Net change in U.S. Treasury securities 41,022 19,835 5,999 22,262 542 923 4,952 -1 -1,800 1,150 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 00 00 00 00 00 32 Gross sales 0 25 0 0 0 0 0 0 0 0 33 Redemptions 1,540 322 157 6 25 0 10 0 0 0 Repurchase agreements 34 Gross purchases 160,409 284,316 360,069 00 00 00 00 00 00 00 35 Gross sales 159,369 276,266 370,772 0 0 0 0 0 0 0 36 Net change in federal agency obligations -500 7,703 -10,859 -6 -25 0 -10 0 0 0 Reverse repurchase agreements 37 Gross purchases 0 0 0 00 00 00 00 00 00 00 38 Gross sales 0 0 0 0 0 0 0 0 0 0 Repurchase agreements 39 0 0 304,989 61,345 82,998 61,230 79,585 107,375 7700,,885500 6666,,448855 40 Gross sales 0 0 164,349 178,880 81,335 62,253 78,425 105,885 70,315 75,925 41 Net change in triparty obligations 0 0 140,640 -117,535 1,663 -1,023 1,160 1,490 535 -9,440 42 Total net change in System Open Market Account.. . 40,522 27,538 135,780 -95,279 2,180 -100 6,102 1,489 -1,265 -8,290 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market 2. Transactions exclude changes in compensation for the effects of inflation on the principal Account; all other figures increase such holdings. of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • November 2000 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 2000 2000 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 June 30 July 31 Aug. 31 Consolidated condition statement ASSETS 1 Gold certificate account 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 2 Special drawing rights certificate account 4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200 3 Coin 745 751 755 779 760 699 754 760 Loans 4 To depository institutions 6060 5590 5570 5870 606 0 512 0 5970 5 Other 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements Triparty Obligations 7 Repurchase agreements—triparty2 11,990 10,020 18,330 26,930 18,525 Federal agency obligations3 8 Bought outright 1400 14 0 0 14 0 0 1400 140 0 1400 14 0 0 1400 9 Held under repurchase agreements 10 Total U.S. Treasury securities3 507,522 510,520 513,023 510,664 513,095 504,950 506,103 510,182 11 Bought outright4 507,522 510,520 513,023 510,664 513,095 504,950 506,103 510,182 12 Bills 190,911 190,954 191,328 188,209 189,260 192,792 190,265 187,232 13 Notes 228,724 231,203 231,764 232,317 233,656 226,138 228,503 232,770 14 Bonds 87,8870 88,3630 89,9310 90,1370 90,1790 86,0200 87,3350 90,1800 15 Held under repurchase agreements 16 Total loans and securities 520,257 528,068 523,741 529,720 525,776 532,532 524,361 529,444 17 Items in process of collection 9,468 8,223 8,159 6,977 7,111 5,545 3,414 5,391 18 Bank premises 1,418 1,420 1,421 1,421 1,412 1,409 1,418 1,421 Other assets 19 Denominated in foreign currencies5 15,089 15,094 15,104 15,109 15,115 15,550 15,092 15,088 20 All other6 18,718 19,251 16,479 16,900 17,339 17,056 18,600 16,755 21 Total assets 580,942 588,054 580,904 586,153 582,759 588,037 578,886 584,103 LIABILITIES 22 Federal Reserve notes 540,9090 541,446 0 541,2670 540,0580 541,3600 541,912 0 539,3960 541,8060 23 Reverse repurchase agreements—triparty2 17,132 23,929 17,524 24,423 19,761 25,028 22,006 21,855 24 Total deposits 12,081 18,668 13,238 18,999 13,511 18,513 16,309 15,601 25 Depository institutions 4,714 4,907 3,943 5,150 5,948 6,208 5,392 5,961 26 U.S. Treasury—General account 74 101 83 71 99 105 76 79 27 Foreign—Official accounts 263 254 259 203 202 203 228 214 28 Other 29 Deferred credit items 8,048 7,300 7,205 6,725 6,724 5,379 2,154 5,263 30 Other liabilities and accrued dividends7 4,786 4,866 4,344 4,329 4,374 4,781 4,839 4,585 570,874 577,541 570,341 575,534 572,219 577,099 568,394 573,508 31 Total liabilities CAPITAL ACCOUNTS 6,882 6,892 6,904 6,898 6,856 6,865 6,881 6,856 3323 CSuarppitlauls paid in 2,615 2,654 2,679 2,679 2,679 2,679 2,615 2,679 34 Other capital accounts 570 967 981 1,041 1,005 1,395 995 1,060 35 Total liabilities and capital accounts 580,942 588,054 580,904 586,153 582,759 588,037 578,886 584,103 MEMO 36 Marketable U.S. Treasury securities held in custody for foreign and international accounts Federal Reserve note statement 37 Federal Reserve notes outstanding (issued to Banks) . 769,594 768,797 768,196 767,540 767,117 773,550 769,994 766,982 38 LESS: Held by Federal Reserve Banks 228,685 227,351 226,928 227,482 225,757 231,639 230,598 225,175 39 Federal Reserve notes, net 540,909 541,446 541,267 540,058 541,360 541,912 539,396 541,806 Collateral held against notes, net 40 Gold certificate account 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 4 4 2 1 O Sp th e e c r ia e l li d g r i a b w le i n a g s s r e i t g s h ts certificate account 4 6 , , 2 0 0 1 0 1 4,200 0 4 2 , , 2 83 0 8 0 4,2000 4, 9 2 4 0 4 0 4,200 0 4, 4 2 1 0 7 0 4,200 0 43 U.S. Treasury and agency securities 519,652 523,183 525,170 523,733 526,200 524,812 526,665 526,560 44 Total collateral. 540,909 541,267 541,360 539,396 541,446 540,058 541,912 541,806 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 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 June 30 July 31 Aug. 31 1 Total loans 606 559 557 587 606 512 577 597 2 Within fifteen days1 143 150 244 525 538 307 371 398 3. Sixteen days to ninety days 463 409 313 62 68 206 206 200 4. 91 days to 1 year 0 0 0 0 0 0 0 0 5 Total U.S. Treasury securities2 507,522 510,520 513,023 510,664 513,095 504,949 506,103 510,182 6 Within fifteen days' 17,865 18,809 21,150 17,924 17,840 1,038 13,568 4,891 7 Sixteen days to ninety days 108,957 108,204 107,210 110,223 111,192 118,287 108,730 111,192 8 Ninety-one days to one year 132,226 133,476 130,458 127,552 129,090 138,867 136,104 140,813 9 One year to five years 125,108 126,191 131,290 131,289 131,290 124,668 125,108 129,601 10 Five years to ten years 54,042 54,047 52,397 53,065 53,071 53,438 53,440 53,072 11 More than ten years 69,323 69,794 70,519 70,611 70,613 68,652 69,153 70,613 12 Total federal agency obligations 140 140 140 140 140 140 140 140 13 Within fifteen days1 0 0 0 0 0 0 0 0 14 Sixteen days to ninety days 10 10 10 10 10 10 10 10 15 Ninety-one days to one year 0 0 0 0 0 0 0 0 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 0 0 0 1. Holdings under repurchase agreements are classified as maturing within fifteen days in 2. Includes compensation that adjusts for the effects of inflation on the principal of accordance with maximum maturity of the agreements. inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • November 2000 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 2000 IItteemm D 19 e 9 c 6 . D 19 e 9 c 7 . D 19 e 9 c 8 . D 19 e 9 c 9 . Jan. Feb. Mar.r Apr/ Mayr Juner July Aug. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 50.17 46.87 45.19 41.74 43.12R 41.64 40.46 40.93 41.36 39.96 40.26 39.98 2 Nonborrowed reserves4 50.02 46.54 45.07 41.42 42.74 41.53 40.28 40.63 41.00 39.48 39.69 39.40 3 Nonborrowed reserves plus extended credit5 50.02 46.54 45.07 41.42 42.74 41.53 40.28 40.63 41.00 39.48 39.69 39.40 4 Required reserves 48.76 45.18 43.68 40.44R 41.10R 40.53R 39.26 39.78 40.41 38.89 39.19R 38.93 5 Monetary base6 451.62 479.17 512.75 591.18R 592.00R 573.59R 571.44 573.08 574.29 575.63 577.41R 577.62 Not seasonally adjusted 6 Total reserves7 51.45 48.01 45.31 41.89 44.23 42.10 39.76 40.61 41.58 39.24 39.70 39.55 7 Nonborrowed reserves 51.30 47.69 45.19 41.57 43.86 42.00r 39.59 40.31 41.22 38.76 39.13 38.97 8 Nonborrowed reserves plus extended credit5 51.30 47.69 45.19 41.57 43.86 42.00r 39.59 40.31 41.22 38.76 39.13 38.97 9 Required reserves8 50.04 46.33 43.80 40.58 42.2 lr 40.99 38.56 39.47 40.64 38.18 38.63r 38.50 10 Monetary base9 456.63 484.98 518.27 600.63 596.90 571.86r 570.24 571.51 573.26 574.55 577.18r 576.52 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 51.17 47.92 45.21 41.66 44.24r 42.10 39.75 40.59 41.56 39.22 39.67 39.52 12 Nonborrowed reserves 51.02 47.60 45.09 41.33 43.86 41.99 39.57 40.29 41.20 38.74 39.10 38.94 13 Nonborrowed reserves plus extended credit5 51.02 47.60 45.09 41.33 43.86 41.99 39.57 40.29 41.20 38.74 39.10 38.94 14 Required reserves 49.76 46.24 43.70 40.35 42.22r 40.99r 38.55 39.45 40.62 38.15 38.60r 38.47 15 Monetary base12 463.40 491.79 525.06 607.94r 604.63 579.21r 577.13 578.33 580.09 581.44 583.981" 583.26 16 Excess reserves13 1.42 1.69 1.51 1.31 2.02r 1.11 1.21 1.15 .94 1.06 1.07r 1.05 17 Borrowings from the Federal Reserve .16 .32 .12 .32 .37 .11 .18 .30 .36 .48 .57 .58 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 1999r IItteemm Dec. Dec. Dec. Dec. Mayr Juner July1" Aug. Seasonally adjusted Measures2 1 Ml 1,081.1 1,073.9 1,097.4 1,122.9 1,105.0 1,103.4 1,104.6 1,102.0 2 M2 3,821.6r 4,040.2r 4,395,0r 4,656.2 4,768.8 4,783.8 4,798.2 4,828.1 3 M3 4,952.4 5,403.2 5,996.7 6,489.6 6,694.9 6,736.4 6,789.1 6,848.0 4 Debt 14,430.8r 15,223.lr 16,276.4r 17,377.2 17,799.8 17,885.4 17,955.0 n.a. Ml components 5 Currency3 394.3 424.8 459.5 515.5 518.5 520.8 552222..33 552233..11 6 Travelers checks4 8.3 8.1 8.2 8.3 8.3 8.8 9.3 9.2 7 Demand deposits5 402.3 395.3 379.3 355.2 335.3 331.9 332.8 328.5 8 Other checkable deposits6 276.1 245.8 250.3 244.0 242.9 241.9 240.2 241.2 Nontransaction components 9 In M27 2,740.5r 2,966.3r 33,,229977..66rr 3,533.3 3,663.9 3,680.4 3,693.5 3,726.1 10 In M3 only8 l,I30.8r 1,363.0' l,601.7r 1,833.4 1,926.1 1,952.6 1,990.9 2,019.9 Commercial banks 11 Savings deposits, including MMDAs 904.0 1,020.5 1,184.8 1,285.7 1,322.7 1,330.7 1,341.8 1,358.0 12 Small time deposits9 593.3 625.4 626.1 634.7 665.6 675.3 679.9 685.1 13 Large time deposits10, 11 413.9 488.3 539.3 614.1 645.7 656.0 665.3 677.7 Thrift institutions 14 Savings deposits, including MMDAs 366.6 376.6 413.8 448.7 453.2 452.5 452.3 455.1 15 Small time deposits9 353.6 342.8 325.6 320.6 327.3 329.8 333.2 337.7 16 Large time deposits10 78.3 85.6 88.9 91.5 93.6 95.5 97.6 99.9 Money market mutual funds 17 Retail 523.0r 601.lr 774477..44rr 843.7 895.1 892.2 888866..33 890.3 18 Institution-only 313.3r 382.4r 520. lr 610.1 651.8 660.2 688.7 704.9 Repurchase agreements and eurodollars 19 Repurchase agreements12 210.7 256.0 300.8 344.2 358.1 366.7 336688..55 336633..33 20 Eurodollars12 114.6 150.7 152.6 173.5 176.8 174.2 170.9 174.1 Debt components 21 Federal debt 3,781.3 3,800.6r 3,751.2r 3,660.2 3,546.0 3,521.2 33,,550099..77 n.a. 22 Nonfederal debt 10,649.5r ll,422.5r 12,525.2r 13,717.1 14,253.7 14,364.2 14,445.3 n.a. Not seasonally adjusted Measures2 23 Ml 1,105.1 1,097.7 1,121.3 1,147.4 1,098.8 1,101.0 1,103.4 1,095.7 24 M2 3,843.8r 4,063.4r 4,420.2r 4,684.5 4,740.7 4,764.4 4,782.4 4,814.8 25 M3 4,973.4 5,427.2 6,026.3 6,524.6 6,673.1 6,712.9 6,749.1 6,820.0 26 Debt 14,428.4r 15,218.5r 16,271.2r 17,372.6 17,733.8 17,815.9 17,885.2 n.a. Ml components 27 Currency3 397.9 428.9 464.1 521.2 518.1 520.3 552222..44 552211..77 28 Travelers checks4 8.6 8.3 8.4 8.4 8.4 8.7 8.9 8.9 29 Demand deposits5 419.9 412.4 395.9 371.2 330.1 330.0 333.6 326.5 30 Other checkable deposits 278.8 248.2 252.8 246.7 242.2 242.1 238.5 238.5 Nontransaction components 31 In M27 2,738.7r 2,965.7r 33,,229988..99rr 3,537.0 3,641.8 3,663.3 3,679.0 3,719.1 32 In M3 only8 l,129.6r l,363.8r l,606.1r 1,840.1 1,932.4 1,948.5 1,966.7 2,005.2 Commercial banks 33 Savings deposits, including MMDAs 903.3 1,020.4 1,186.0 1,288.5 1,317.9 1,331.6 1,343.7 1,355.6 34 Small time deposits9 592.7 625.3 626.5 635.5 663.3 671.1 677.6 683.1 35 Large time deposits10' 11 413.2 487.2 537.8 612.2 650.3 657.6 666.0 675.9 Thrift institutions 36 Savings deposits, including MMDAs 366.3 376.5 414.2 449.7 451.5 452.8 452.9 454.3 37 Small time deposits9 353.2 342.8 325.8 321.0 326.2 327.7 332.0 336.8 38 Large time deposits' 78.1 85.4 88.6 91.2 94.3 95.7 97.7 99.6 Money market mutual funds 39 Retail 523.0r 660000..77rr 774466..33rr 842.4 883.0 880.1 872.6 889.3 40 Institution-only 316.9r 388.4r 529.1' 621.7 647.1 652.9 668.5 693.6 Repurchase agreements and eurodollars 41 Repurchase agreements12 205.7 250.5 295.4 339.4 362.4 367.9 336655..77 363.0 42 Eurodollars12 115.7 152.3 154.5 175.6 178.3 174.5 168.9 173.1 Debt components 43 Federal debt 3,787.9 3,805.8 3,754.9 3,663.1 3,514.0 3,475.5 3,448.3 n.a. 44 Nonfederal debt 10,640.4r 1 l,412.7r 12,516.3r 13,709.5 14,219.8 14,340.4 14,436.9 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 DomesticN onfinancial Statistics • November 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 Ml. term) of U.S. addressees. M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) 9. Small time deposits—including retail RPs—are those issued in amounts of less than issued by all depository institutions, (2) balances in institutional money funds, (3) RP $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are liabilities (overnight and term) issued by all depository institutions, and (4) Eurodollars subtracted from small time deposits. (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those at all banking offices in the United Kingdom and Canada. Excludes amounts held by booked at international banking facilities. depository institutions, the U.S. government, money market funds, and foreign banks and 11. Large time deposits at commercial banks less those held by money market funds, official institutions. Seasonally adjusted M3 is calculated by summing large time deposits, depository institutions, the U.S. government, and foreign banks and official institutions. institutional money fund balances, RP liabilities, and Eurodollars, each seasonally adjusted 12. Includes both overnight and term. separately, and adding this result to seasonally adjusted M2. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial sectors—the federal sector (U.S. government, not including government-sponsored enter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Aug. Feb. Mar.1 Apr/ Mayr Juner Ju]yr Aug. Aug. 9 Aug. 16 Aug. 23 Aug. 30 Seasonally adjusted 1 Bank credit 4,593.3r 4,838.8r 4,889.4 4,934.9 5,000.5 5,031.7 5,067.6 5,108.1 5,101.1 5,098.1 5,109.5 5,121.0 2 Securities in bank credit 1,244.3 1,269.6 1,280.7 1,291.6 1,309.4 1.307.1 1,311.3 1,315.0 1,315.0 1,308.0 1,312.2 1,319.0 3 U.S. government securities 818.7 815.2 815.7 814.4 815.6 817.3 819.4 812.7 812.6 811.2 811.0 813.6 4 Other securities 425.6 454.4 465.0 477.2 493.8 489.8 492.0 502.3 502.4 496.8 501.2 505.4 5 Loans and leases in bank credit2 . . . 3,349.0 3,569.2r 3,608.8 3,643.3 3,691.1 3,724.7 3,756.2 3,793.1 3,786.0 3,790.1 3,797.3 3,802.0 6 Commercial and industrial 971.Of l,019.7r 1,028.2 1,037.9 1,057.9 1,066.5 1,072.8 1,081.8 1,080.7 1,080.9 1,084.2 1,082.2 7 Real estate 1,386.(f l,516.4r 1,538.7 1,555.6 1,578.6 1,593.7 1,608.3 1,617.2 1,614.8 1,614.6 1,616.9 1,621.8 8 Revolving home equity 100.2 106.6r 109.1 112.6 115.1 115.6 117.0 118.3 117.9 118.4 118.7 118.3 9 Other 1.285.91 1,409.8' 1,429.6 1,443.0 1,463.5 1,478.0 1,491.3 1,498.9 1,497.0 1,496.1 1,498.2 1,503.6 10 Consumer 481.6 500.5r 503.3 507.3 510.4 517.1 520.7 529.9 525.5 530.2 533.3 532.2 11 Security3 123.4 143.0 143.3 144.0 145.0 149.7 151.5 156.3 156.5 153.2 154.3 162.4 12 Other loans and leases 386.9 389.7r 395.3 398.5 399.3 397.8 402.9 407.9 408.5 411.3 408.7 403.3 13 Interbank loans 218.1 228. lr 223.6 221.8 227.0 227.7 241.0 246.4 240.3 245.7 254.9 249.7 14 Cash assets4 254.2 279.9 272.1 281.3 274.3 269.1 269.6 273.6 281.3 267.7 281.7 263.3 15 Other assets5 348.7 366.3 366.0 368.2 377.5 379.9 399.1 400.9 400.7 396.0 408.6 400.3 16 Total assets6 5,355.5 5,654.1r 5,691.8 5,7463 5319.1 5,847.9 5,915.5 5,966.2 5,960.8 5,944.8 5,991.9 5,971.6 Liabilities 17 Deposits 3,403.9 3,558.6 3,575.7 3,626.1 3,631.7 3,660.0 3,717.2 3,744.5 3,744.9 3,750.7 3,751.7 3,727.0 18 Transaction 636.1 625.4 626.3 626.1 629.7 617.3 612.7 618.7 605.8 611.1 638.0 627.5 19 Nontransaction 2,767.8 2,933.3 2,949.4 3,000.0 3,002.0 3,042.8 3,104.5 3,125.9 3,139.1 3,139.6 3,113.7 3,099.5 20 Large time 729.3 844.8 851.3 872.1 877.9 894.7 915.4 925.0 929.0 930.8 920.7 920.1 21 Other 2,038.5 2,088.5 2,098.1 2,127.9 2,124.1 2,148.1 2,189.0 2.200.9 2,210.1 2,208.7 2,193.0 2,179.4 22 Borrowings 1,028.6 1,136.0 1,157.7 1,186.8 1,200.8 1,201.0 1,218.7 1,225.1 1,232.7 1,220.2 1,226.2 1,226.5 23 From banks in the U.S 333.2 368.7 377.5 377.4 383.8 375.1 385.8 385.4 391.3 383.5 387.7 379.6 24 From others 695.4 767.3 780.2 809.4 816.9 825.9 833.0 839.8 841.4 836.7 838.5 846.9 25 Net due to related foreign offices 220.7 234.1 233.5 223.9 249.8 259.5 261.1 269.8 274.5 263.6 268.1 269.2 26 Other liabilities 280.2 298.4 294.0 296.4 320.0 311.7 301.9 318.2 310.5 314.1 320.3 328.6 27 Total liabilities 4,933.4 5,227.1 5,260.8 5,333.2 5,402.3 5,4323 5,499.0 5,557.6 5,562.7 5,548.6 5,5663 5,5513 28 Residual (assets less liabilities)7 422.1 427.0r 431.0 413.1 416.8 415.6 416.5 408.6 398.1 396.2 425.6 420.4 Not seasonally adjusted 29 Bank credit 4,566.3 4,841.6r 4,883.3 4,935.2 4,992.3 5,014.8 5,036.2 5,079.2 5,069.6 5,073.2 5,072.6 5,097.5 30 Securities in bank credit 1,232.3 1,273.7 1,282.1 1,293.4 1,306.9 1,296.6 1,294.1 1,302.5 1,299.7 1,295.0 1,298.9 1,310.3 31 U.S. government securities 809.5 819.2 822.7 823.0 820.9 816.6 810.9 803.8 803.5 802.4 801.5 805.1 32 Other securities 422.8 454.5 459.4 470.4 485.9 480.1 483.2 498.7 496.2 492.6 497.4 505.2 33 Loans and leases in bank credit2 ... 3,334.0 3,567.9r 3,601.2 3,641.8 3,685.4 3,718.1 3,742.1 3,776.8 3,769.9 3,778.2 3,773.7 3,787.2 34 Commercial and industrial 961.4r l,020.3r 1,032.1 1,045.0 1,060.8 1,065.9 1,068.0 1,071.4 1,070.8 1,071.5 1,071.6 1,071.3 35 Real estate l,386.3r l,513.2r 1,533.9 1,551.1 1,576.0 1,590.3 1,604.6 1,617.3 1,616.4 1,616.0 1,615.3 1,621.5 36 Revolving home equity 100.4 106.3r 108.0 111.8 114.7 115.7 117.1 118.4 117.9 118.6 118.8 118.7 37 Other 1,286Sf 1,407.*/ 1,425.8 1,439.4 1,461.3 1,474.6 1,487.5 1,498.8 1,498.5 1,497.4 1,496.5 1,502.8 38 Consumer 480.1 502.5r 501.7 506.2 510.0 515.2 517.1 528.8 522.4 528.6 533.1 533.0 39 Credit cards and related plans. . n.a. n.a n.a. n.a. n.a. n.a 195.8 203.8 199.6 203.9 206.8 206.6 40 Other n.a. n.a. n.a. n.a. n.a. n.a. 321.4 325.0 322.8 324.8 326.3 326.4 41 Security3 118.8 144.5 142.3 144.5 143.4 149.5 148.6 151.1 153.0 149.7 146.5 155.7 42 Other loans and leases 387.3 387.2r 391.1 395.0 395.1 397.3 403.8 408.3 407.3 412.5 407.2 405.6 43 Interbank loans 209.0 229.6 229.0 228.0 226.9 227.3 237.1 236.4 231.2 238.5 238.5 239.1 44 Cash assets4 242.8 280.5 263.7 278.5 272.1 265.2 260.4 261.2 260.3 258.8 258.0 261.5 45 Other assets5 347.7 368.5 369.4 371.6 380.6 381.4 398.4 399.1 399.6 394.9 400.4 401.2 46 Total assets6 5,306.9* 5,661.2r 5,686.0 5,753.9 5,811.6 5,828.1 5,870,4 5,913.2 5,898.1 5,902.6 5,906^ 5,936.5 Liabilities 47 Deposits 3,373.9 3,557.5 3,579.5 3,644.1 3,617.0 3,648.1 3,692.7 3,712.4 3,712.5 3,724.4 3,693.2 3,704.1 48 Transaction 619.6 618.4 619.2 634.7 620.4 616.2 606.3 603.0 584.6 602.7 601.7 621.8 49 Nontransaction 2,754.3 2,939.1 2,960.3 3,009.4 2,996.7 3,031.9 3,086.4 3,109.4 3,128.0 3,121.8 3,091.5 3,082.3 50 Large time 716.5 857.4 859.7 871.6 874.1 883.9 898.8 908.1 910.5 911.5 905.2 905.3 51 Other 2,037.9 2,081.7 2,100.6 2,137.8 2,122.6 2,148.1 2,187.6 2,201.2 2,217.4 2,210.3 2,186.3 2,177.0 52 Borrowings 1,002.7 1,140.2 1,153.3 1,185.9 1,210.2 1,203.9 1,205.6 1,197.6 1,196.5 1,197.0 1,196.5 1,203.2 53 From banks in the U.S 327.4 370.3 377.4 378.9 384.4 375.9 382.7 380.9 383.5 380.8 383.4 376.3 54 From others 675.3 769.9 775.9 806.9 825.7 828.0 822.9 816.7 813.0 816.1 813.1 826.9 55 Net due to related foreign offices .... 218.3 248.5 237.0 213.3 250.2 250.1 252.7 267.0 264.4 249.9 276.2 279.5 56 Other liabilities 279.9 300.8 294.7 295.1 318.5 309.9 299.5 317.8 309.7 313.8 319.9 328.7 57 Total liabilities 4,874.9 5,246.9 5,264.5 5,338.4 5395.9 5,412.0 5,450.4 5,494.7 5,483.1 5,485.1 5,485.7 5,515.5 58 Residual (assets less liabilities)7 432.0 414.3r 421.5 415.5 415.7 416.1 419.9 418.5 415.0 417.5 420.8 421.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • November 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 2000 2000 Aug. Feb. Mar. Apr. May' June' July' Aug. Aug. 9 Aug. 16 Aug. 23 Aug. 30 Seasonally adjusted Assets 1 Bank credit 4,064.7 4,298.5r 4,346.0r 4,365.3 4,417.4 4,455.9 4,491.6 4,529.9 4,515.9 4,524.7 4,536.5 4,542.2 2 Securities in bank credit 1,050.4 1,077.4 1,085.1 l,087.2r 1,098.9 1,101.7 1,106.2 1,109.1 1,109.7 1,106.0 1,107.8 1,110.0 3 U.S. government securities 734.2 739.3 737.6 734.7 735.9 738.4 739.7 732.8 733.6 733.0 732.6 730.9 4 Other securities 316.2 338.2 347.4 352.4 362.9 363.3 366.5 376.2 376.1 373.0 375.2 379.1 5 Loans and leases in bank credit2 3,014.3 3,221.0r 3,260.9' 3,278.1 3,318.5 3,354.3 3,385.4 3,420.8 3,406.2 3,418.7 3,428.7 3,432.2 6 Commercial and industrial 775.2r 824.0r 831.9r 838.7r 853.0 861.4 869.3 876.1 874.1 874.8 879.0 877.4 7 Real estate l,368.5r l,498.7r l,520.7r l,537.2r 1,559.9 1,574.6 1,589.5 1,598.4 1,596.2 1,595.9 1,598.2 1,602.9 8 Revolving home equity 100.2 106.6r 109.1r 112.6 115.1 115.6 117.0 118.3 117.9 118.4 118.7 118.3 9 Other l,268.3r 1,392. r 1,411.6r l,424.6r 1,444.8 1,459.0 1,472.5 1,480.2 1,478.3 1,477.4 1,479.5 1,484.7 10 Consumer 481.6 500.5r 503.3r 507.3r 510.4 517.1 520.7 529.9 525.5 530.2 533.3 532.2 11 Security3 68.4 76.2 76.8 66.0r 64.0 68.6 70.0 77.4 72.4 76.4 78.2 83.3 12 Other loans and leases 320.5 321.7r 328.2r 328.9r 331.2 332.6 336.0 338.9 338.0 341.4 340.0 336.3 13 Interbank loans 191.6 I95.4r 195.0r 192.4r 195.2 199.0 214.8 222.2 219.0 224.0 228.7 221.0 14 Cash assets4 214.4 229.2 224.4 233.9 230.3 224.5 224.4 225.1 233.0 220.4 232.2 214.9 15 Other assets5 318.7 328.0 326.8 328.1 336.4 336.4 356.1 358.9 358.9 354.1 366.8 357.9 16 Total assets6 4,730.8 4,992.3r 5,033.2r 5,060.2r 5,119.5 5,155.7 5,225.5 5,273.7 5,264.5 5,260.8 5,301.7 5,273.7 Liabilities 17 Deposits 3,089.1 3,181.5 3,197.7 3,238.6 3,249.6 3,277.5 3,330.4 3,353.0 3,350.7 3,355.2 3,362.3 3,338.9 18 Transaction 625.4 614.4 615.2 615.2 618.5 605.8 601.4 607.8 594.5 599.8 627.4 616.9 19 Nontransaction 2,463.7 2,567.1 2,582.5 2,623.4 2,631.1 2,671.7 2,729.1 2,745.2 2,756.1 2,755.3 2,734.8 2,722.0 20 Large time 427.8 480.2 487.3 498.5 509.6 524.6 542.5 547.1 548.7 549.3 544.3 545.4 21 Other 2,035.9 2,086.9 2,095.2 2,124.9 2,121.5 2,147.1 2,186.5 2,198.2 2,207.4 2,206.1 2,190.5 2,176.6 22 Borrowings 853.8 960.6 980.5 987.2r 996.3 995.8 1,013.2 1,023.3 1,028.7 1,024.0 1,024.5 1,021.4 23 From banks in the U.S 310.1 350.3 357.7 356.5 365.9 356.1 364.9 368.5 372.6 367.4 368.6 366.3 24 From others 543.7 610.3 622.8 630.6 630.4 639.7 648.3 654.9 656.1 656.6 656.0 655.1 25 Net due to related foreign offices .... 149.6 207.1 213.2 208.6 228.7 240.1 243.4 246.2 252.7 242.4 244.6 243.6 26 Other liabilities 218.7 225.7 222.6 220.8 237.9 236.6 229.5 246.3 239.1 243.7 250.0 254.2 27 Total liabilities 4,311.1 4,574.9 4,614.0 4,655.1 4,712.5 4,749.9 4,816.6 4,868.8 4,871.1 4,865.2 4,881.4 4,858.1 28 Residual (assets less liabilities)7 419.7 417.4' 419.1' 405. r 407.0 405.7 409.0 404.9 393.4 395.6 420.3 415.6 Not seasonally adjusted Assets 29 Bank credit 4,046.0 4,297.0r 4,341.2r 4,371.9r 4,417.6 4,448.6 4,470.8 4,510.7 4,496.9 4,508.5 4,510.0 4,526.0 30 Securities in bank credit 1,042.9 1,080.2 l,089.5r 1,092.6 1,099.5 1,097.3 1,095.7 1,102.1 1,101.6 1,098.5 1,100.4 1,105.0 31 U.S. government securities 726.5 743.1 744.8 742.7 740.3 737.6 732.2 725.6 725.9 725.1 724.7 724.6 32 Other securities 316.5 337.2 344.7r 350.0 359.2 359.6 363.5 376.6 375.7 373.4 375.7 380.4 33 Loans and leases in bank credit2 3,003.0 3,216.8r 3,251.7r 3,279.3 3,318.1 3,351.4 3,375.1 3,408.6 3,395.3 3,410.0 3,409.6 3,421.0 34 Commercial and industrial 768.1r 822.2r 834.2r 847.5r 860.1 864.0 867.0 868.4 867.4 867.6 869.2 869.2 35 Real estate l,368.9r l,495.3r l,515.7r l,532.8r 1,557.3 1,571.4 1,585.9 1,598.7 1,597.9 1,597.4 1,596.7 1,602.9 36 Revolving home equity 100.4 106.3r 108.0r 111.8 114.7 115.7 117.1 118.4 117.9 118.6 118.8 118.7 37 Other l,268.5r l,389.0r L,407.7R 1,421.1' 1,442.7 1,455.7 1,468.8 1,480.2 1,480.0 1,478.8 1,477.9 1,484.2 38 Consumer 480.1 502.5r 501.7r 506.2' 510.0 515.2 517.1 528.8 522.4 528.6 533.1 533.0 39 Credit cards and related plans. . n.a. n.a. n.a. n.a. n.a. n.a. 195.8 203.8 199.6 203.9 206.8 206.6 40 Other n.a. n.a. n.a. n.a. n.a. n.a. 321.4 325.0 322.8 324.8 326.3 326.4 41 Security3 63.7 77.9 75.5 66.6 62.6 68.2 67.4 72.0 69.1 72.3 70.4 76.4 42 Other loans and leases 322.2 318.8r 324.6r 326.1' 328.0 332.6 337.7 340.7 338.6 344.1 340.2 339.5 43 Interbank loans 182.4 I96.8r 200.5 198.7' 195.1 198.7 210.9 212.3 209.9 216.8 212.3 210.4 44 Cash assets4 204.2 230.4 217.1 233.2 229.3 221.4 216.8 214.4 214.0 212.9 210.2 214.6 45 Other assets5 318.1 328.3 328.9 332.3 340.0 340.1 357.4 357.8 358.7 353.9 359.2 359.1 46 Total assets6 4,692.0 4,993.9r 5,028.5r 5,076.9r 5,122.2 5,148.5 5,194.6 5,232.8 5,217.3 5,229.6 5,229.2 5,247.6 Liabilities 47 Deposits 3,068.1 3,173.3 3,195.4 3,255.6' 3,234.1 3,270.0 3,314.6 3,332.7 3,331.0 3,342.9 3,315.0 3,326.2 48 Transaction 609.0 607.5 608.3 624.3' 609.6 605.1 595.0 592.2 573.6 591.3 591.3 611.0 49 Nontransaction 2,459.1 2,565.8 2,587.0 2,631.3 2,624.5 2,664.8 2,719.6 2,740.5 2,757.4 2,751.6 2,723.7 2,715.2 50 Large time 423.5 486.8 488.9 496.0 504.3 519.2 534.4 541.7 542.4 543.7 539.8 540.6 51 Other 2,035.5 2,079.0 2,098.1 2,135.3 2,120.1 2,145.6 2,185.2 2,198.8 2,215.0 2,207.8 2,183.8 2,174.6 52 Borrowings 827.8 964.9 976.2 986.2 1,005.8 998.7 1,000.1 995.8 992.5 1,000.7 994.8 998.1 53 From banks in the U.S 304.3 351.9 357.7 358.0 366.5 357.0 361.9 364.0 364.8 364.7 364.3 363.0 54 From others 523.5 613.0 618.5 628.2 639.2 641.7 638.2 631.8 627.7 636.0 630.5 635.1 55 Net due to related foreign offices .... 147.5 219.1 216.2 202.5 233.3 232.0 235.9 243.6 244.0 228.5 252.7 251.8 56 Other liabilities 218.7 226.1 223.0 221.4 237.9 236.3 228.7 246.3 239.2 243.7 249.9 254.4 57 Total liabilities 4,262.1 4,583.4 4,610.8 4,665.7 4,711.0 4,737.0 4,779.2 4,818.3 4,806.6 4,815.9 4,812.4 4,830.5 58 Residual (assets less liabilities)7 429.9 410.5r 417.8r 411.2' 411.2 411.5 415.3 414.5 410.7 413.7 416.8 417.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities All 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 2000 2000 Aug.r Feb.r Mar.r Apr.r May' Juner Julyr Aug. Aug. 9 Aug. 16 Aug. 23 Aug. 30 Seasonally adjusted Assets 1 Bank credit 2,277.6 2,394.5 2,421.0 2,435.4 2,472.1 2,488.8 2,498.9 2,517.2 2,509.7 2,514.9 2,519.5 2,522.8 7. Securities in bank credit 541.1 556.2 564.0 566.9 577.3 579.0 576.2 574.3 577.3 571.7 571.8 573.2 U.S. government securities 361.3 357.2 356.8 355.4 357.2 360.1 360.8 356.6 358.8 357.2 356.3 353.1 4 Trading account 22.3 21.5 20.5 21.3 23.5 22.7 24.3 23.7 25.4 23.9 22.4 22.0 Investment account 339.0 335.7 336.4 334.1 333.7 337.4 336.5 332.9 333.4 333.3 333.9 331.1 6 Other securities 179.8 199.0 207.2 211.5 220.1 219.0 215.4 217.6 218.5 214.4 215.5 220.1 7 Trading account 77.1 85.9 91.1 92.9 101.2 100.4 97.2 102.5 101.3 99.4 101.0 107.1 8 Investment account 102.6 113.1 116.1 118.6 118.9 118.5 118.1 115.1 117.2 115.0 114.5 113.1 9 State and local government . 23.5 24.5 24.7 25.1 25.4 25.6 26.1 25.9 26.0 25.9 25.9 25.7 10 Other 79.1 88.6 91.4 93.5 93.5 92.9 92.0 89.2 91.3 89.1 88.6 87.3 11 Loans and leases in bank credit2 . . . 1,736.5 1,838.3 1,857.0 1,868.5 1,894.8 1,909.7 1,922.7 1,942.9 1,932.4 1,943.3 1,947.7 1,949.6 12 Commercial and industrial 533.5 559.9 562.8 567.2 578.5 582.7 583.9 587.7 586.6 587.1 589.8 588.1 13 Bankers acceptances 1.0 1.0 1.0 1.1 1.1 1.0 .9 .9 .9 .9 .9 1.0 14 Other 532.5 558.9 561.8 566.2 577.5 581.7 582.9 586.8 585.7 586.2 588.9 587.1 15 Real estate 685.6 752.7 760.8 775.4 788.5 793.9 801.8 806.7 805.4 805.4 805.9 809.5 16 Revolving home equity 64.6 67.8 69.4 72.2 74.0 74.3 75.2 76.1 75.7 76.3 76.5 76.0 17 Other 620.9 684.8 691.4 703.1 714.5 719.6 726.6 730.5 729.6 729.1 729.4 733.4 18 Consumer 218.6 221.7 223.4 226.3 227.0 228.2 229.6 232.2 230.0 233.3 233.9 232.2 19 Security3 62.4 69.6 70.2 59.3 57.8 62.1 63.2 70.2 65.2 69.0 71.0 76.1 20 Federal funds sold to and repurchase agreements with broker-dealers 45.9 47.0 48.9 38.2 38.9 43.9 44.6 51.5 45.2 49.5 53.6 5588..33 21 Other 16.6 22.6 21.4 21.1 18.9 18.2 18.6 18.7 20.0 19.5 17.4 17.8 22 State and local government 11.4 12.1 12.2 12.3 12.3 12.2 12.2 12.3 12.1 12.5 12.3 12.5 23 Agricultural 8.2 9.4 9.4 9.5 9.6 9.6 9.5 9.6 9.5 9.6 9.6 9.6 24 Federal funds sold to and repurchase agreements with others 7.8 13.3 14.5 13.5 13.2 13.5 12.8 13.2 12.4 13.7 13.4 13.5 2.5 All other loans 96.4 81.7 85.6 85.7 87.6 84.7 84.3 84.2 84.3 86.1 84.9 81.3 26 Lease-financing receivables 112.5 118.0 117.9 119.1 120.4 122.8 125.5 126.9 127.0 126.7 126.9 126.8 27 Interbank loans 126.8 131.6 132.4 124.3 129.6 132.1 139.4 137.5 140.4 137.9 139.8 133.1 28 Federal funds sold to and repurchase agreements with commercial banks 74.9 60.6 63.7 61.5 66.4 67.5 73.2 65.7 68.9 66.6 67.8 60.1 79 Other 51.9 71.0 68.7 62.8 63.2 64.6 66.2 71.8 71.5 71.4 72.0 73.1 30 Cash assets4 134.9 148.9 145.8 154.5 149.0 145.2 143.3 143.8 151.9 140.0 148.4 135.9 31 Other assets5 223.9 222.3 219.9 219.0 223.0 224.2 245.0 248.5 246.6 245.4 254.8 249.0 32 Total assets6 2,728.0 2,862.9 2,884.7 2,898.6 2,939.0 2,955.9 2.991.7 3,011.7 3,0133 3,003.0 3,0273 3,005.8 Liabilities 33 Deposits 1,580.7 1,600.0 1,605.0 1,627.7 1,633.5 1,627.0 1,627.5 1,623.0 1,628.0 1,626.4 1,625.1 1,607.2 34 Transaction 324.6 312.4 311.9 310.5 314.3 307.0 300.6 303.0 297.8 298.2 313.9 305.9 35 Nontransaction 1,256.1 1,287.7 1,293.1 1,317.2 1,319.2 1,320.0 1,326.8 1,319.9 1,330.3 1,328.2 1,311.2 1,301.2 36 Large time 205.0 231.9 235.2 243.7 251.3 258.0 265.9 2M.1 267.6 267.5 260.7 261.9 37 Other 1,051.1 1,055.8 1,057.9 1,073.5 1,067.9 1,061.9 1,061.0 1,055.3 1,062.7 1,060.6 1,050.5 1,039.3 38 Borrowings 572.1 629.2 638.9 648.0 649.4 654.2 676.7 686.9 692.9 688.4 687.5 684.2 39 From banks in the U.S 167.6 191.9 193.5 197.2 202.4 196.3 204.4 206.7 209.8 207.6 206.5 204.4 40 From others 404.5 437.4 445.4 450.8 447.0 458.0 472.2 480.1 483.0 480.8 481.0 479.8 41 Net due to related foreign offices 146.1 201.9 207.8 203.2 222.7 230.9 221.0 222.5 226.0 222.0 219.4 220.0 42 Other liabilities 163.0 165.7 164.5 163.4 177.2 178.6 180.1 196.2 190.7 193.8 198.9 202.9 43 Total liabilities 2,461.9 2596.9 2,616.2 2,642.4 2,682.8 2,690.8 2,7053 2,728.5 2,737.6 2,730.6 2,730.9 2,714.2 44 Residual (assets less liabilities)7 266.1 266.0 268.5 256.2 256.2 265.1 286.4 283.2 275.6 272.3 296.3 291.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • November 2000 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks—Continued Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 1999 2000 2000 Aug.r Feb.r Mar.r Apr.r Mayr Juner Julyr Aug. Aug. 9 Aug. 16 Aug. 23 Aug. 30 Not seasonally adjusted Assets 45 Bank credit 2,256.0 2,405.8 2,422.4 2,438.7 2,465.5 2,476.1 2,477.4 2,494.6 2,488.1 2,495.3 2,489.3 2,502.0 46 Securities in bank credit 534.0 562.3 567.4 568.0 574.1 572.7 566.6 567.8 569.1 565.1 564.7 568.6 47 U.S. government securities 354.2 363.5 362.7 360.1 358.2 357.0 353.6 350.0 351.1 350.5 348.9 347.5 48 Trading account 21.6 22.5 21.4 21.5 22.0 22.5 22.6 23.0 24.1 24.1 21.7 20.8 49 Investment account 332.6 341.0 341.3 338.5 336.2 334.5 331.0 327.0 327.0 326.4 327.2 326.7 50 Mortgage-backed securities .. 216.3 221.5 222.4 220.9 218.2 216.8 211.3 206.8 206.2 207.1 207.1 206.7 51 Other 116.3 119.5 118.9 117.7 118.0 117.7 119.7 120.2 120.8 119.3 120.1 119.9 57, One year or less 22.6 27.2 29.0 28.8 30.5 30.4 30.3 31.3 30.5 30.9 31.7 32.1 53 One to five years 56.0 54.5 52.6 51.5 51.6 52.4 53.2 52.3 52.1 52.3 52.3 52.1 54 More than five years . . . 37.7 37.8 37.4 37.4 35.8 35.0 36.1 36.6 38.1 36.1 36.2 35.7 55 Other securities 179.8 198.8 204.6 207.9 215.9 215.7 213.1 217.8 217.9 214.6 215.8 221.1 56 Trading account 77.1 85.9 91.1 92.9 101.2 100.4 97.2 102.5 101.3 99.4 101.0 107.1 57 Investment account 102.7 112.9 113.6 115.0 114.7 115.2 115.8 115.2 116.7 115.1 114.8 114.0 58 State and local government . . 23.2 24.7 24.8 25.1 25.3 25.5 25.6 25.6 25.6 25.5 25.6 25.6 59 Other 79.4 88.2 88.8 89.8 89.3 89.7 90.3 89.7 91.1 89.6 89.2 88.4 60 Loans and leases in bank credit2 .. 1,722.0 1,843.5 1,855.1 1,870.8 1,891.4 1,903.4 1,910.7 1,926.9 1,919.0 1,930.2 1,924.6 1,933.4 61 Commercial and industrial 527.9 559.2 565.1 573.9 583.0 583.3 581.5 582.0 581.4 581.6 582.3 582.3 62 Bankers acceptances 1.0 1.0 1.0 1.1 1.1 1.0 .9 .9 .9 .9 .9 1.0 63 Other 526.9 558.2 564.1 572.8 582.0 582.3 580.5 581.1 580.5 580.7 581.4 581.4 64 683.6 754.0 759.1 772.5 785.6 789.7 797.2 804.2 804.8 803.9 801.6 806.3 65 Revolving home equity 64.9 67.7 68.6 71.5 73.6 74.4 75.5 76.4 76.0 76.6 76.7 76.4 66 Other 375.7 417.1 419.0 425.3 433.7 436.4 443.2 446.9 448.8 445.6 443.4 449.3 67 Commercial 243.1 269.2 271.4 275.6 278.3 278.8 278.6 280.8 280.0 281.7 281.4 280.5 68 Consumer 216.7 224.7 223.6 226.2 226.5 226.7 227.1 230.3 227.1 231.2 232.4 231.3 69 Credit cards and related plans.. n.a. n.a. n.a. n.a n.a n.a. 72.2 73.4 71.5 74.0 74.6 73.7 70 Other n.a. n.a. n.a. n.a. n.a. n.a. 154.9 157.0 155.6 157.2 157.7 157.7 71 Security3 57.7 71.4 69.0 59.8 56.4 61.7 60.5 64.8 61.9 64.9 63.3 69.2 72 Federal funds sold to and repurchase agreements with broker-dealers .... 4411..55 4499..66 4477..33 3388..22 3366..88 4422..55 41.8 46.4 42.9 45.8 46.2 51.1 73 Other 16.2 21.8 21.7 21.6 19.6 19.1 18.7 18.3 19.0 19.1 17.1 18.0 74 State and local government .... 11.6 12.0 12.1 12.2 12.2 12.1 12.2 12.5 12.2 12.6 12.5 12.7 75 Agricultural 8.3 9.2 9.2 9.3 9.4 9.6 9.6 9.7 9.7 9.7 9.7 9.7 76 Federal funds sold to and repurchase agreements 7.8 13.3 14.5 13.5 13.2 13.5 12.8 13.2 12.4 13.7 13.4 13.5 77 All other loans 96.7 79.9 83.1 83.6 84.5 84.3 85.0 84.4 83.6 86.9 83.6 82.6 78 Lease-financing receivables .... 111.6 119.9 119.4 119.8 120.5 122.7 124.8 125.9 126.1 125.8 125.8 125.7 79 Interbank loans 120.6 131.9 135.0 129.1 133.1 135.0 139.5 131.6 132.2 134.3 131.3 128.3 80 Federal funds sold to and repurchase agreements with commercial banks 70.2 6600..33 6655..66 6644..00 6677..00 6688..00 72.5 6611..99 63.1 65.3 61.4 57.3 81 Other 50.5 71.7 69.4 65.0 66.1 67.0 67.0 69.7 69.2 69.0 69.9 71.0 82 Cash assets4 127.2 150.5 140.5 154.4 148.2 142.7 137.0 135.8 137.6 134.7 132.9 134.9 83 Other assets5 221.9 223.5 222.0 222.4 227.5 228.1 244.4 245.7 243.4 243.2 248.8 248.0 84 Total assets6 2,6903 2377.5 2^85.5 2?\02 2£39.5 2,947.4 2,963.5 2,972.4 2,965.9 ymi 2,966.9 2,978.0 Liabilities 85 Deposits 1,564.3 1,600.4 1,604.7 1,637.5 1,618.7 1,622.1 1,616.9 1,607.3 1,610.1 1,617.1 1,592.2 1,598.1 86 312.4 308.9 307.3 317.7 307.9 305.8 296.8 291.9 281.6 292.9 289.5 301.7 87 1,251.9 1,291.5 1,297.4 1,319.8 1,310.8 1,316.2 1,320.1 1,315.4 1,328.5 1,324.2 1,302.7 1,296.4 88 200.8 238.5 236.9 241.3 246.0 252.6 257.8 259.3 261.2 262.0 256.2 257.2 89 Other 1,051.1 1,053.0 1,060.5 1,078.5 1,064.8 1,063.7 1,062.3 1,056.1 1,067.2 1,062.2 1,046.5 1,039.2 544.2 637.8 640.9 650.7 657.5 655.3 661.1 656.2 655.8 660.6 654.4 656.2 91 From banks in the U.S 160.2 196.1 197.1 201.1 203.6 195.4 199.0 199.4 200.2 201.1 199.0 197.7 9?, From nonbanks in the U.S 384.1 441.7 443.7 449.6 453.9 459.8 462.1 456.8 455.5 459.5 455.3 458.5 93 Net due to related foreign offices . . . 144.0 213.9 210.8 197.2 227.3 222.9 213.5 219.9 217.4 208.2 227.4 228.2 94 Other liabilities 163.0 165.7 164.5 163.4 177.2 178.6 180.1 196.2 190.7 193.8 198.9 202.9 95 Total liabilities 2,415.6 2,617.8 2,620.9 2,648.9 2,680.7 2,678.9 2,671.7 2,679.5 2,673.9 2,679.7 2,672.9 2,685.5 96 Residual (assets less liabilities)7 274.8 259.6 264.6 261.3 258.8 268.5 291.8 292.8 292.0 292.5 294.0 292.6 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A19 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 1999 2000 2000 Aug/ Feb/ Mar/ Apr/ Mayr Juner Julyr Aug. Aug. 9 Aug. 16 Aug. 23 Aug. 30 Seasonally adjusted Assets 1 Bank credit 1,787.1 1,904.0 1,924.9 1,929.9 1,945.3 1,967.2 1,992.7 2,012.7 2,006.2 2,009.7 2,017.0 2,019.4 ?, Securities in bank credit 509.3 521.2 521.0 520.2 521.6 522.7 530.0 534.8 532.4 534.3 536.0 536.8 U.S. government securities 372.9 382.0 380.8 379.3 378.8 378.3 378.9 376.2 374.8 375.7 376.3 377.8 4 Other securities 136.4 139.2 140.3 140.9 142.8 144.3 151.2 158.6 157.6 158.6 159.7 159.0 Loans and leases in bank credit2 1,277.8 1,382.8 1,403.9 1,409.6 1,423.7 1,444.5 1,462.7 1,477.9 1,473.8 1,475.4 1,481.0 1,482.6 6 Commercial and industrial 241.7 264.1 269.1 271.5 274.5 278.7 285.4 288.4 287.5 287.7 289.2 289.2 7 Real estate 682.9 746.0 759.9 761.8 771.4 780.7 787.6 791.8 790.8 790.5 792.3 793.5 8 Revolving home equity 35.5 38.8 39.7 40.4 41.1 41.3 41.8 42.1 42.1 42.1 42.2 42.2 9 Other 647.4 707.3 720.2 721.4 730.3 739.4 745.8 749.6 748.7 748.3 750.1 751.3 10 Consumer 263.0 278.8 279.9 281.0 283.4 288.8 291.1 297.7 295.6 296.9 299.5 300.0 11 Security3 6.0 6.5 6.5 6.8 6.2 6.5 6.9 7.3 7.2 7.4 7.2 7.2 17 Other loans and leases 84.1 87.3 88.5 88.6 88.2 89.7 91.7 92.8 92.7 92.9 92.9 92.6 H Interbank loans 64.8 63.8 62.6 68.1 65.6 67.0 75.4 84.7 78.6 86.1 88.9 87.8 14 Cash assets4 79.5 80.3 78.6 79.4 81.3 79.2 81.2 81.3 81.1 80.4 83.8 79.1 15 Other assets5 94.8 105.7 106.9 109.1 113.4 112.1 111.1 110.4 112.2 108.7 112.0 108.9 16 Total assets6 2,002.8 2,129.4 2,148.5 2,161.6 2,180.5 2,199.7 2,233.8 2,262.1 2^51.2 2^57.8 2^74.4 2^67.9 Liabilities 17 Deposits 1,508.4 1,581.5 1,592.7 1,610.9 1,616.1 1,650.5 1,702.9 1,730.0 1,722.6 1,728.8 1,737.2 1,731.7 18 Transaction 300.8 302.1 303.3 304.7 304.2 298.8 300.7 304.7 296.8 301.6 313.5 311.0 19 Nontransaction 1,207.6 1,279.4 1,289.4 1,306.2 1,311.9 1,351.8 1,402.2 1,425.3 1,425.8 1,427.2 1,423.6 1,420.7 70 Large time 222.8 248.3 252.0 254.8 258.3 266.6 276.7 282.4 281.2 281.7 283.6 283.4 71 Other 984.8 1,031.1 1,037.3 1,051.5 1,053.5 1,085.1 1,125.6 1,142.9 1,144.7 1,145.4 1,140.0 1,137.3 77 Borrowings 281.7 331.4 341.6 339.2 347.0 341.5 336.6 336.5 335.8 335.6 337.0 337.2 73 From banks in the U.S 142.5 158.4 164.3 159.3 163.5 159.8 160.5 161.7 162.7 159.8 162.1 161.9 74 From others 139.2 173.0 177.4 179.8 183.4 181.7 176.1 174.8 173.0 175.8 174.9 175.3 75 Net due to related foreign offices .... 3.5 5.3 5.4 5.3 6.0 9.1 22.4 23.7 26.7 20.4 25.3 23.6 26 Other liabilities 55.7 60.0 58.2 57.3 60.7 57.9 49.4 50.1 48.4 49.9 51.0 51.3 27 Total liabilities 1,849.2 1,978.1 1,997.8 2,012.7 2,029.7 2,059.2 2,1113 2,1403 2,133.5 2,134.6 2,150.5 2,143.9 28 Residual (assets less liabilities)7 153.5 151.4 150.7 148.9 150.8 140.6 122.6 121.8 117.8 123.2 124.0 124.0 Not seasonally adjusted Assets 79 Bank credit 1,790.0 1,891.2 1,918.7 1,933.2 1,952.1 1,972.6 1,993.5 2,016.1 2,008.8 2,013.2 2,020.7 2,024.0 30 Securities in bank credit 509.0 517.9 522.1 524.7 525.4 524.6 529.1 534.4 532.5 533.5 535.7 536.5 31 U.S. government securities 372.3 379.5 382.1 382.6 382.1 380.6 378.7 375.6 374.8 374.6 375.8 377.2 37 Other securities 136.7 138.4 140.0 142.1 143.3 144.0 150.4 158.8 157.8 158.8 159.9 159.3 33 Loans and leases in bank credit2 1,281.0 1,373.3 1,396.6 1,408.5 1,426.8 1,448.0 1,464.4 1,481.7 1,476.3 1,479.7 1,485.0 1,487.5 34 Commercial and industrial 240.2 263.0 269.1 273.7 277.1 280.7 285.5 286.5 286.0 286.0 286.9 286.9 35 Real estate 685.3 741.3 756.6 760.4 771.7 781.8 788.7 794.5 793.1 793.5 795.2 796.6 36 Revolving home equity 35.5 38.6 39.4 40.2 41.1 41.3 41.6 42.1 41.9 42.0 42.1 42.2 37 Other 649.8 702.7 717.2 720.2 730.7 740.5 747.1 752.5 751.2 751.5 753.1 754.4 38 Consumer 263.4 277.8 278.1 280.0 283.5 288.5 290.1 298.4 295.2 297.5 300.7 301.7 39 Credit cards and related plans.. n.a. n.a. n.a. n.a. n.a. n.a. 123.6 130.4 128.1 129.9 132.1 132.9 40 Other n.a. n.a. n.a n.a. n.a. n.a. 166.5 168.0 167.2 167.6 168.6 168.7 41 Security3 6.0 6.5 6.5 6.8 6.2 6.5 6.9 7.3 7.2 7.4 7.2 7.2 47 Other loans and leases 86.2 84.6 86.3 87.7 88.2 90.5 93.3 95.1 94.7 95.3 95.1 95.1 43 Interbank loans 61.8 64.9 65.5 69.6 62.1 63.7 71.4 80.7 77.7 82.5 81.1 82.1 44 Cash assets4 77.0 79.8 76.6 78.8 81.1 78.6 79.8 78.6 76.4 78.2 77.3 79.6 45 Other assets5 96.2 104.8 106.8 110.0 112.6 112.0 113.0 112.1 115.3 110.6 110.5 111.1 46 Total assets6 2,001.7 2,116.4 2,143.0 2,166.8 2,182.7 2^01.1 2^31.1 2,260.4 2^51.4 2^57.4 2^623 2^69.6 Liabilities 47 Deposits 1,503.8 1,572.9 1,590.7 1,618.1 1,615.4 1,647.9 1,697.7 1,725.4 1,720.9 1,725.8 1,722.8 1,728.0 48 Transaction 296.6 298.6 301.1 306.5 301.7 299.3 298.1 300.3 292.0 298.5 301.8 309.3 49 Nontransaction 1,207.2 1,274.3 1,289.6 1,311.5 1,313.6 1,348.6 1,399.5 1,425.1 1,428.9 1,427.4 1,421.0 1,418.7 50 Large time 222.8 248.3 252.0 254.8 258.3 266.6 276.7 282.4 281.2 281.7 283.6 283.4 51 Other 984.4 1,026.0 1,037.6 1,056.8 1,055.3 1,082.0 1,122.9 1,142.7 1,147.7 1,145.6 1,137.3 1,135.3 57 Borrowings 283.6 327.1 335.3 335.5 348.3 343.4 339.0 339.6 336.7 340.1 340.5 341.9 53 From banks in the U.S 144.1 155.7 160.6 156.9 163.0 161.5 162.9 164.6 164.6 163.6 165.3 165.3 54 From others 139.5 171.3 174.7 178.6 185.4 181.9 176.1 175.0 172.1 176.6 175.2 176.6 55 Net due to related foreign offices .... 3.5 5.3 5.4 5.3 6.0 9.1 22.4 23.7 26.7 20.4 25.3 23.6 56 Other liabilities 55.7 60.3 58.5 58.0 60.7 57.7 48.6 50.1 48.4 49.9 51.0 51.4 57 Total liabilities 1,846.5 1,965.6 1,989.9 2,016.9 2,030-3 2,058.1 2,107.6 2,138.8 2,132.7 2,1363 2,139.5 2,145.0 58 Residual (assets less liabilities)7 155.2 150.8 153.2 149.9 152.4 143.0 123.5 121.6 118.7 121.2 122.8 124.6 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • November 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 2000 2000 Aug.r Feb. Mar. Apr. May June July Aug. Aug. 9 Aug. 16 Aug. 23 Aug. 30 Seasonally adjusted Assets 1 Bank credit 528.6 540.3 543.5r 569.6r 583. r 575.8r 575.91 578.2 585.2 573.4 573.0 578.8 2 Securities in bank credit 193.9 192.2 195.6r 204.4r 210.5r 205.4' 205.1' 205.9 205.3 202.0 204.4 209.0 J U.S. government securities 84.5 76.0 78.1 79.6 79.7 78.9 79.7 79.8 79.1 78.2 78.4 82.7 4 Other securities 109.4 116.2 117.5r 124.8r 130.8' 126.5' 125.4' 126.1 126.3 123.8 126.0 126.3 5 Loans and leases in bank credit2 . . . 334.7 348.2 347.9 365.2 372.6 370.4 370.8 372.2 379.8 371.4 368.6 369.8 6 Commercial and industrial 195.8 195.7 196.3 199.2 204.9r 205.1' 203.5' 205.6 206.6 206.1 205.2 204.8 / Real estate 17.6 17.7 18.0 18.4' 18.7r 19.01 18^ 18.8 18.7 18.7 18.7 18.9 8 Security3 55.0 66.8 66.5 11 ff 80^ 81.0 81.5 78.9 84.1 76.8 76.0 79.1 9 Other loans and leases 66.3 68.0 67.1 69.7 68.0 65.2' 66.9 68.9 70.5 69.9 68.6 67.0 10 Interbank loans 26.5 32.7 28.6 29.4 31.8 28.6 26.2 24.1 21.3 21.8 26.1 28.7 11 Cash assets4 39.9 50.7 47.6 47.4 43.9 44.6 45.2 48.4 48.3 47.3 49.5 48.4 12 Other assets' 30.0 38.4 39.2 40.0 41.1 43.5 43.0 42.0 41.9 41.9 41.8 42.4 13 Total assets6 624.7 661.8 658.6r 686.1r 699.6r 692.2' 690.0' 692.5 6963 684.0 690.1 698.0 Liabilities 14 Deposits 314.7 377.2 378.0 387.5 382.1 382.5 386.8 391.5 394.3 395.6 389.4 388.1 15 Transaction 10.7 11.0 11.1 10.9 11.2 11.4 11.4 10.9 11.3 11.3 10.5 10.6 16 Nontransaction 304.1 366.2 366.9 376.6 370.9 371.1 375.4 380.6 383.0 384.2 378.9 377.6 17 Borrowings 174.9 175.4 177.1 199.6 204.4 205.2 205.5 201.8 204.0 196.2 201.6 205.1 18 From banks in the U.S 23.1 18.4 19.7 20.9 17.9 18.9 20.8 16.9 18.7 16.1 19.1 13.3 19 From others 151.8 156.9 157.4 178.7 186.5 186.3 184.7 184.9 185.3 180.1 182.5 191.8 20 Net due to related foreign offices 71.2 27.0 20.3 15.4 21.1 19.5 17.7 23.6 21.8 21.2 23.4 25.6 21 Other liabilities 61.5 72.7 71.3r 75.6r 82.2r 75.1' 72.4' 71.9 71.4 70.4 70.3 74.3 22 Total liabilities 6223 652.2 646.8r 678.1r 689.8r 6823r 682-5' 688.8 691.6 683.4 684.8 693.2 23 Residual (assets less liabilities)7 2.4 9.6 11.8 8.(7 9.8r 9ff 7.6' 3.6 4.7 .7 5.3 4.8 Not seasonally adjusted Assets 24 Bank credit 520.3 544.6 542. lr 563.3r 574.7r 566.1' 565.3' 568.5 572.7 564.7 562.6 571.5 25 Securities in bank credit 189.4 193.4 192.7r 200.7r 207.4r 199.4' 198.3' 200.3 198.1 196.5 198.5 205.3 26 U.S. government securities 83.0 76.1 77.9 80.3 80.7 78.9 78.7 78.2 77.6 77.3 76.8 80.5 27 Trading account 16.6 7.3 9.3 11.8 12.3 11.8 11.8 13.7 12.3 12.0 13.1 17.0 28 Investment account 66.5 68.8 68.6 68.6 68.4 67.1 66.8 64.6 65.3 65.3 63.7 63.4 29 Other securities 106.3 117.3 114.7r 120.4r 126.7' 120.5' 119.7' 122.1 120.5 119.2 121.7 124.8 30 Trading account 64.9 74.0 71.5' 76.5r 83.(/ 77.5' 76.8' 78.6 76.8 75.4 78.5 81.3 31 Investment account 41.5 43.4 43.2 43.9 43.7 42.9 42.8' 43.5 43.8 43.8 43.2 43.5 32 Loans and leases in bank credit2 . . . 331.0 351.1 349.4 362.5 367.2 366.8' 367.0 368.2 374.6 368.3 364.1 366.2 33 Commercial and industrial 193.3 198.2 198.0 197.5 200.7r 201.8' 201.0' 203.0 203.4 203.9 202.4 202.1 34 Real estate 17.4 18.0 18.1 18.3r 18.7' 18.9* 18.71 18.6 18.5 18.5 18.6 18.7 35 Security3 55.1 66.6 66.8 78.0 80.8 81.3 81.3 79.1 84.0 77.4 76.1 79.3 36 Other loans and leases 65.1 68.4 66.6 68.8r 67.1 64.7 66.1 67.6 68.7 68.4 67.1 66.2 37 Interbank loans 26.5 32.7 28.6 29.4 31.8 28.6 26.2 24.1 21.3 21.8 26.1 28.7 38 Cash assets4 38.7 50.1 46.6 45.3 42.8 43.9 43.5r 46.8 46.3 45.8 47.8 46.9 39 Other assets5 29.6 40.2 40.5 39.3 40.5 41.3 41.0 41.3 40.9 41.0 41.1 42.1 40 Total assets6 614.8 6673 657Sr 676.9r 689.4r 679.6r 675.8r 680.4 680.8 673.0 6773 688.9 Liabilities 41 Deposits 305.9 384.1 384.1 388.6 382.9 378.2 378.1 379.7 381.5 381.5 378.2 377.9 42 Transaction 10.6 10.9 10.9 10.5 10.7 11.1 11.3 10.8 11.0 11.3 10.4 10.8 43 Nontransaction 295.2 373.3 373.2 378.1 372.2 367.1 366.8 368.9 370.6 370.2 367.8 367.2 44 Borrowings 174.9 175.4 177.1 199.6 204.4 205.2 205.5 201.8 204.0 196.2 201.6 205.1 45 From banks in the U.S 23.1 18.4 19.7 20.9 17.9 18.9 20.8 16.9 18.7 16.1 19.1 13.3 46 From others 151.8 156.9 157.4 178.7 186.5 186.3 184.7 184.9 185.3 180.1 182.5 191.8 47 Net due to related foreign offices .... 70.8 29.3 20.8 10.7 17.0 18.1 16.8 23.4 20.4 21.4 23.5 27.7 48 Other liabilities 61.3 74.7 71.7r 73.7r 80.6r 73.6' 70.8' 71.5 70.6 70.1 70.0 74.3 49 Total liabilities 612.8 663.5 653.7r 672-6r 684.9r 675.1r 67Ur 676.4 676.5 669.1 673.4 685.0 50 Residual (assets less liabilities)7 2.0 3.8 3.8 4.3r 4.5r 4.5' 4.6' 4.0 4.3 3.8 4.0 3.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A21 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions—Continued Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 1999 2000 2000 Aug. Feb. Mar. Apr. May June July Aug. Aug. 9 Aug. 16 Aug. 23 Aug. 30 Not seasonally adjusted MEMO Large domestically chartered banks, adjusted for mergers 51 Revaluation gains on off-balance-sheet items8 58.1 64.5 65.7 65.1 72.4 68.6r 63. lr 66.5 65.5 64.8 65.4 69.1 52 Revaluation losses on off-balancesheet items8 62.3 64.3r 64.0 65.0 72.9 68.8r 62.91 67.3 66.3 66.0 66.4 69.7 53 Mortage-backed securities9 246.7r 251.6r 252.9" 254.6r 251.8r 249.2r 241.4 237.0 237.0 237.3 236.8 236.5 54 Pass-through 171.or 174.6r 176. lr \19ff 177.4r 177.2r 172.5r 169.2 169.0 169.2 169.1 169.3 55 CMO, REMIC, and other 75.7 11 ff 76.7 75.6 74.4 72.0 69.<f 67.8 68.1 68.1 67.7 67.2 56 Net unrealized gains (losses) on available-for-sale securities10 .... -8.2 -10.8 -9.6 -16.3 -16.5 -15.0 -10.8 -11.2 -11.4 -11.3 -11.1 -11.1 57 Off-shore credit to U.S. residents11. . . . 32.2 23.6 24.1 24.4 23.5 22.4 22.2 22.1 22.1 22.0 22.2 22.1 58 Securitized consumers loans12 n.a n.a. n.a. n.a. n.a. n.a. 87.3 86.5 87.9 85.9 85.1 86.7 59 Credit cards and related plans n.a. n.a. n.a. n.a. n.a. n.a. 72.4 72.0 73.0 71.) 71.1 72.4 60 Other n.a. n.a. n.a. n.a. n.a. n.a. 15.0 14.6 14.9 14.8 14.0 14.4 61 Securitized business loans12 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a n.a. n.a. n.a. n.a. Small domestically chartered commercial banks, adjusted for mergers 62 Mortage-backed securities9 199.T 204.3r 206. lr 206.8r 206.3r 205. lr 204.5r 207.3 205.5 206.2 208.2 209.5 63 Securitized consumer loans'2 n.a. n.a. n.a. n.a. n.a. n.a. 220.9 221.4 220.2 220.7 221.4 222.9 64 Credit cards and related plans n.a. n.a n.a. n.a. n.a. n.a 211.2 211.9 211.5 211.0 211.6 213.2 65 Other n.a. n.a. n.a n.a. n.a. n.a. 9.7 9.5 8.7 9.8 9.8 9.7 Foreign-related institutions 66 Revaluation gains on off-balancesheet items8 37.9 40.1 39.3r 41.7r 41.1' 41.lr 38. lr 39.8 39.6 38.1 39.8 41.0 67 Revaluation losses on off-balancesheet items8 36.1 40.1 38.3 38.6 44.5 38.0 35.7 37.7 36.1 36.5 37.9 39.5 68 Securitized business loans12 n.a. n.a. n.a. n.a. n.a. n.a n.a. n.a. n.a. n.a. n.a n.a. NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8 acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table * ratio procedure is used to adjust past levels. 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer in the United States, all of which are included in "Interbank loans." being published in the Bulletin. Instead, abbreviated balance sheets for both large and small 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry domestically chartered banks have been included in table 1.26, parts C and D. Data are both securities. merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. 4. Includes vault cash, cash items in process of collection, balances due from depository branches and agencies of foreign banks have been replaced by balance sheet estimates of all institutions, and balances due from Federal Reserve Banks. foreign-related institutions and are included in table 1.26, part E. These data are break- 5. Excludes the due-from position with related foreign offices, which is included in "Net adjusted. due to related foreign offices." The not-seasonally-adjusted data for all tables now contain additional balance sheet items, 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for which were available as of October 2, 1996. transfer risk. Loans are reported gross of these items. 1. Covers the following types of institutions in the fifty states and the District of 7. This balancing item is not intended as a measure of equity capital for use in capital Columbia: domestically chartered commercial banks that submit a weekly report of condition adequacy analysis. On a seasonally adjusted basis this item reflects any differences in the (large domestic); other domestically chartered commercial banks (small domestic); branches seasonal patterns estimated for total assets and total liabilities. and agencies of foreign banks, and Edge Act and agreement corporations (foreign-related 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity and institutions). Excludes International Banking Facilities. Data are Wednesday values or pro equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. rata averages of Wednesday values. Large domestic banks constitute a universe; data for 9. Includes mortgage-backed securities issued by U.S. government agencies, U.S. small domestic banks and foreign-related institutions are estimates based on weekly samples government-sponsored enterprises, and private entities. and on quarter-end condition reports. Data are adjusted for breaks caused by reclassifications 10. Difference between fair value and historical cost for securities classified as availableof assets and liabilities. for-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown are The data for large and small domestic banks presented on pp. AI7-19 are adjusted to restated to include an estimate of these tax effects. remove the estimated effects of mergers between these two groups. The adjustment for 11. Mainly commercial and industrial loans but also includes an unknown amount of credit mergers changes past levels to make them comparable with current levels. Estimated extended to other than nonfinancial businesses. quantities of balance sheet items acquired in mergers are removed from past data for the bank 12. Total amount outstanding. group that contained the acquired bank and put into past data for the group containing the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • November 2000 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING A. Commercial Paper Millions of dollars, seasonally adjusted, end of period Year ending December 2000 IItteemm 1995 1996 1997 1998 1999 Feb. Mar. Apr. May June July 1 A11 issuers 674,904 775,371 966,699 1,163,303 1,403,023 1,428,605 1,449,143 1,465,697 1,497.712 1,516,205 1,551,668 Financial companies1 2 Dealer-placed paper, total2 275,815 361,147 513,307 614,142 786,643 835,140 849,198 860,843 884,299 884,578 900,651 3 Directly placed paper, total3 210,829 229,662 252,536 322,030 337,240 298,603 302,885 294,328 302,305 300,718 309,076 4 Nonfinancial companies4 188,260 184,563 200,857 227,132 279,140 294,863 297,060 310,526 311,109 330,909 341.941 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 hem 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 ge Period Av r e a r t a e ge Period Av r e a r t a e ge 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 Mav 8.50 Sept 8.49 Sept 8.25 Nov. 17 8.50 June 8.50 Oct 8.12 Oci 8.25 July 8.50 Nov. 7.89 Nov 8.37 2000—Feb. 3 8.75 Aug 8.50 Dec 7.75 Dec 8.50 Mar. 22 9.00 Sept 8.50 MMaayy 17 9.50 Oct 8.50 2000-—Jan 8.50 Nov 8.50 Feb 8.73 Dec 8.50 Mar. 8.83 Apr. 9.00 Ma\ 9.24 June 9.50 July 9.50 Aug 9.50 Sept 9.50 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 May June July Aug. July 28 Aug. 4 Aug. 11 Aug. 18 Aug. 25 MONEY MARKET INSTRUMENTS 1 Federal funds1'2,3 5.46 5.35 4.97 6.27 6.53 6.54 6.50 6.50 6.49 6.45 6.53 6.46 2 Discount window borrowing2,4 5.00 4.92 4.62 5.71 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Commercial paper3'5'6 Nonfinancial 3 1-month 5.57 5.40 5.09 6.40 6.53 6.49 6.47 6.47 6.49 6.47 6.47 6.47 4 2-month 5.57 5.38 5.14 6.47 6.55 6.50 6.48 6.48 6.50 6.48 6.47 6.47 5 3-month 5.56 5.34 5.18 6.54 6.57 6.52 6.49 6.51 6.51 6.49 6.48 6.48 Financial 6 1-month 5.59 5.42 5.11 6.41 6.53 6.50 6.49 6.49 6.50 6.48 6.49 6.48 7 2-month 5.59 5.40 5.16 6.50 6.56 6.51 6.49 6.50 6.50 6.48 6.49 6.48 8 3-month 5.60 5.37 5.22 6.57 6.59 6.54 6.49 6.53 6.52 6.48 6.49 6.49 Commercial paper (historical)^'1 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 (historical)3,5,8 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 6.60 66..6633 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 6-month 5.57 5.30 5.30 6.76 6.74 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Certificates of deposit, secondary market3,10 17 1-month 5.54 5.49 5.19 6.49 6.60 6.57 6.55 6.57 6.57 66..5555 66..5555 66..5555 18 3-month 5.62 5.47 5.33 6.71 6.73 6.67 6.61 6.66 6.66 6.61 6.61 6.60 19 6-month 5.73 5.44 5.46 6.94 6.91 6.86 6.76 6.83 6.83 6.75 6.75 6.74 20 Eurodollar deposits, 3-month3,11 5.61 5.45 5.31 6.70 6.73 6.67 6.61 6.66 6.65 6.60 6.60 6.60 U.S. Treasury bills Secondary market3,5 71 3-month 5.06 4.78 4.64 5.79 5.69 5.96 6.09 6.01 6.05 6.08 6.09 6.11 ?.?. 6-month 5.18 4.83 4.75 6.10 5.97 6.00 6.07 6.02 6.07 6.05 6.07 6.08 23 1-year 5.32 4.80 4.81 5.94 5.83 5.75 5.87 5.73 5.78 5.85 5.89 5.89 Auction high3,5,12 24 3-month 5.07 4.81 4.66 5.92 5.74 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 75 6-month 5.18 4.85 4.76 6.12 6.02 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 26 1-year 5.36 4.85 4.78 n.a. 6.00 n.a. n.a. n.a. n.a. n.a. n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities'3 27 1-year 5.63 5.05 5.08 6.33 6.17 6.08 6.18 6.06 6.09 6.17 6.21 6.20 28 2-year 5.99 5.13 5.43 6.81 6.48 6.34 6.23 6.31 6.23 6.19 6.28 6.23 79 3-year 6.10 5.14 5.49 6.77 6.43 6.28 6.17 6.25 6.18 6.15 6.24 6.17 30 5-year 6.22 5.15 5.55 6.69 6.30 6.18 6.06 6.16 6.09 6.04 6.11 6.04 31 7-year 6.33 5.28 5.79 6.69 6.33 6.22 6.05 6.19 6.11 6.04 6.07 6.01 3? 10-year 6.35 5.26 5.65 6.44 6.10 6.05 5.83 6.04 5.98 5.85 5.80 5.75 33 20-year 6.69 5.72 6.20 6.55 6.28 6.20 6.02 6.13 6.08 6.03 6.02 5.98 34 30-vear 6.61 5.58 5.87 6.15 5.93 5.85 5.72 5.80 5.75 5.72 5.71 5.69 Composite 35 More than 10 years (long-term) 6.67 55..6699 6.14 6.49 66..2233 n.a. n.a. n.a. n.a. n.a. n.a. n.a. STATE AND LOCAL NOTES AND BONDS Moody's series14 36 Aaa 5.32 4.93 5.28 5.87 5.69 5.53 5.43 5.50 5.47 5.45 5.44 5.39 37 Baa 5.50 5.14 5.70 6.53 6.24 6.09 6.01 6.03 6.01 6.01 6.02 6.00 38 Bond Buyer series15 5.52 5.09 5.43 6.00 5.80 5.63 5.51 5.58 5.55 5.51 5.51 5.49 CORPORATE BONDS 39 Seasoned issues, all industries16 7.54 6.87 7.45 8.41 8.05 7.98 7.88 7.93 7.89 7.87 7.88 7.88. Rating group 41) Aaa 7.27 6.53 7.05 7.99 7.67 7.65 7.55 7.60 7.57 7.54 7.54 7.54 41 Aa 7.48 6.80 7.36 8.24 7.87 7.81 7.70 7.75 7.72 7.69 7.70 7.69 4? A 7.54 6.93 7.53 8.49 8.18 8.11 8.02 8.05 8.01 8.00 8.02 8.02 43 Baa 7.87 7.22 7.88 8.90 8.48 8.35 8.26 8.29 8.27 8.24 8.25 8.25 MEMO Dividend-price ratio17 44 Common stocks 1.77 1.49 1.25 1.17 1.12 1.10 1.09 1.11 1.11 1.10 1.09 1.07 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. Al rating. Based on Thursday figures. 7. An average of offering rates on commercial paper for firms whose bond rating is AA or 16. Daily figures from Moody's Investors Service. Based on yields to maturity on selected the equivalent. Series ended August 29, 1997. long-term bonds. 8. An average of offering rates on paper directly placed by finance companies. Series 17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in ended August 29, 1997. the price index. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • November 2000 1.36 STOCK MARKET Selected Statistics 1999 2000 IInnddiiccaattoorr 11999977 11999988 11999999 Dec. Jan. Feb. Mar. Apr. May June July Aug. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 456.99 550.65 619.52 638.17 634.07 606.03 622.28 646.82 640.07 649.61 653.27 666.14 2 Industrial 574.97 684.35 775.29 808.28 814.73 767.08 790.35 822.76 814.75 819.54 825.28 837.23 3 Transportation 415.08 468.61 491.62 461.04 456.35 398.69 384.39 406.14 411.50 395.09 410.67 419.84 4 Utility 143.87 190.52 284.82 511.78 485.82 482.30 509.59 502.78 487.17 501.93 484.19 459.91 5 Finance 424.84 516.65 530.97 510.99 495.23 471.65 491.29 524.05 523.22 544.51 556.32 597.17 6 Standard & Poor's Corporation (1941-43 = I0r 873.43 1,085.50 1,327.33 1.428.68 1,425.59 1,388.88 1.442.21 1,461.36 1,418.48 1,461.96 1,473.00 1,485.46 7 American Stock Exchange (Aug. 31, 1973 = 50)2 628.34 682.69 770.90 838.24 878.73 910.00 1,014.03 918.77 917.76 934.90 930.66 920.54 Volume of trading (thousands of shares) 8 New York Stock Exchange 523,254 666,534 799,554 884,141 1,058,021 1,032,791 1,124,097 1,047,960 893,896 971,137 941,694 875,087 9 American Stock Exchange 24,390 28,870 32,629 41,076 47,530 51,134 59,449 63,054 44,146 42,490 36,486 35,695 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers 1,361,600 1,685,820 2,130,152 228,530 243,490 265,210 278,530 251,700 240,660 247,200 244,970 247,560 Free credit balances at brokers4 11 Margin accounts5 293,000 405,180 532,500 55,130 57,800 56,470 65,020 65,930 66,170 64,970 71,730 68,020 12 Cash accounts 517,030 633,725 757,345 79,070 75,760 79,700 85,530 76,190 73,500 74,140 74,970 72,640 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. 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, eifectively cutting market value (100 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 2000 11999977 11999988 11999999 Mar. Apr. May June July lUg. U.S. budget1 1 Receipts, total 1,579,292 1,721,798 1,827,454 135,582 295,148 146,002 214,875 134,074 1 J6,128 2 On-budget 1,187,302 1,305,999 1,382,986 94,586 244,662 107,469 168,319 97,681 101,429 3 Off-budget 391,990 415,799 444,468 40,996 50,486 38,533 46,556 36,393 36,699 4 Outlays, total 1,601,235 1,652,552 1,702,940 170,962 135,651 149,612 158,987 129,013 148.555 5 On-budget 1,290,609 1,335,948 1,382,262 137,864 105,742 114,829 152,308 99,404 115,539 6 Off-budget 310,626 316,604 320,778 33,099 29,909 34,783 6,679 29,609 33,016 7 Surplus or deficit (—), total -21,943 69,246 124,414 -35,380 159,497 -3,611 55,888 5,061 -10,427 8 On-budget -103,307 -29,949 724 -43,278 138,920 -7,360 16,011 -1,723 -14,110 9 Off-budget 81,364 99,195 123,690 7,897 20,577 3,750 39,877 6,784 3,683 Source of financing (total) 10 Borrowing from the public 38,171 -51,211 -88,674 39,746 -112,667 -53,755 -23,131 -31,307 9,995 11 Operating cash (decrease, or increase (-)) 604 4,743 -17,580 -22,808 -47,787 69,470 -34,350 23,384 20,873 12 Other2 -16,832 -22,778 -18,160 18,442 957 -12,104 1,593 2,862 -20,441 MEMO 13 Treasury operating balance (level, end of period) 43,621 38,878 56,458 44,770 92,557 23,087 57,437 34,053 13,180 14 Federal Reserve Banks 7,692 4,952 6,641 4,357 15,868 5,445 6,208 5,392 5,961 15 Tax and loan accounts 35,930 33,926 49,817 40,413 76,689 17,642 51,229 28,661 7,218 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 loan- Survivors, and 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 Nonfinancial Statistics • November 2000 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1998 1999 2000 2000 11999988 11999999 H2 HI H2 HI June July Aug. RECEIPTS 1 All sources 1,721,798 1,827,454 825,057 966,045 892,266 1,089,760 214,875 134,074 138,128 2 Individual income taxes, net 828,586 879,480 392,332 481,907 425,451 550,208 100,458 66,301 68,033 3 Withheld 646,483 693,940 339,144 351,068 372,012 388,526 59,516 64,474 62,057 4 Nonwithheld 281,527 308,185 65,204 240,278 68,302 281,103 44,161 4,066 7,850 5 Refunds 99,476 122,706 12,032 109,467 14,841 111199,,447777 33,,222288 22,,224411 11,,887744 Corporation income taxes 6 Gross receipts 213,008 216,324 104,163 106,861 110,111 119,166 41,899 6,605 6,577 7 Refunds 24,593 31,645 14,250 17,092 13,996 13,781 1,366 1,592 1,903 8 Social insurance taxes and contributions, net . . . 571,831 611,833 268,466 324,831 292,551 353,514 60,771 49,650 52,082 9 Employment taxes and contributions2 540,014 580,880 256,142 306,235 280,059 333,584 60,034 47,136 48,132 10 Unemployment insurance 27,484 26,480 10,121 16,378 10,173 17,562 311 2,145 3,584 11 Other net receipts3 4,333 4,473 2,202 2,216 2,319 2,368 426 369 366 12 Excise taxes 57,673 70,414 33,366 31,015 34,262 33,532 6,093 6,022 5,580 13 Customs deposits 18,297 18,336 9,838 8,440 10,287 9,218 1,767 1,781 2,071 14 Estate and gift taxes 24,076 27,782 12,359 14,915 14,001 15,073 2,087 1,872 2,304 15 Miscellaneous receipts4 32,658 34,929 18,735 15,140 19,569 22,831 3,165 3,435 3,383 OUTLAYS 16 All types 1,652,552 1,702,940 877,414 817,227 882,795 892,947 158,987 129,013r 148,555 17 National defense 268,456 274,873 140,196 134,414 149,820 143,476 29,637 19,542 24,767 18 International affairs 13,109 15,243 8,297 6,879 8,530 7,250 667 3,067 -667 19 Genera] science, space, and technology 18,219 18,125 10,142 9,319 10,089 9,601 1,862 1,524 1,829 20 Energy 1,270 912 699 797 -90 -893 20 42 -223 21 Natural resources and environment 22,396 23,970 12,671 10,351 12,100 10,814 2,123 1,783 2,267 22 Agriculture 12,206 23,011 16,757 9,803 20,887 11,164 1,656 496 1,449 23 Commerce and housing credit 1,014 2,649 4,046 -1,629 7,353 -2,497 -1,237 423 -1,295 24 Transportation 40,332 42,531 20,836 17,082 22,972 21,054 4,224 3,781 4,866 25 Community and regional development 9,720 11,870 6,972 5,368 7,135 5,050 974 814 11,,000077 26 Education, training, employment, and social services 54,919 56,402 27,762 29,003 27,532 31,234 4,766 3,874 5,576 27 Health 131,440 141,079 67,838 69,320 74,490 75,871 13,443 12,450 14,512 28 Social security and Medicare 572,047 580,488 316,809 261,146 295,030 306,966 58,378 47,415 52,206 29 Income security 233,202 237,707 109,481 126,552 113,504 133,915 18,886 15,343 18,521 30 Veterans benefits and services 41,781 43,212 22,750 20,105 23,412 23,174 5,268 1,910 3,700 31 Administration of justice 22,832 25,924 12,041 13,149 13,459 13,981 2,281 2,051 2,405 32 General government 13,444 15,771 9,136 6,641 7,006 6,198 1,517 960 906 33 Net interest5 243,359 229,735 116,954 116,655 112,420 115,545 17,503 17,660 20,004 34 Undistributed offsetting receipts6 -47,194 -40,445 -25,793 -17,724 -22,850 -19,346 -3,371 -3,818 -3,275 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 200J; 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 All 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1998 1999 2000 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding 5,578 5,556 5,643 5,681 5,668 5,685 5,805 5,802 5,714 2 Public debt securities 5,548 5,526 5,614 5,652 5,639 5,656 5,776 5,773 5,686 3 Held by public 3,790 3,761 3,787 3,795 3,685 3,667 3,716 3,688 n.a. 4 Held by agencies 1,758 1,766 1,827 1,857 1,954 1,989 2,061 2,085 n.a. 5 Agency securities 30 29 29 29 29 29 29 28 28 6 Held by public 26 26 29 28 28 28 28 28 n.a. 7 Held by agencies 4 4 1 1 1 1 1 0 n.a. 8 Debt subject to statutory limit 5,460 5,440 5,530 5,566 5,552 5,568 5,687 5,687 5,601 9 Public debt securities 5,460 5,439 5,530 5,566 5,552 5,568 5,687 5,686 5,601 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 U.S. TREASURY Types and Ownership Billions of dollars, end of period 1999 2000 TTyyppee aanndd hhoollddeerr 11999966 11999977 11999988 11999999 Q3 Q4 Ql Q2 1 Total gross public debt 5,323.2 5,502.4 5,614.2 5,776.1 5,656.3 5,776.1 5,773.4 5,685.9 By type 2 Interest-bearing 5,317.2 5,494.9 5,605.4 5,766.1 5,647.2 5,766.1 5,763.8 5,675.9 3 Marketable 3,459.7 3,456.8 3,355.5 3,281.0 3,233.0 3,281.0 3,261.2 3,070.7 4 Bills 777.4 715.4 691.0 737.1 653.2 737.1 753.3 629.9 5 Notes 2,112.3 2,106.1 1,960.7 1,784.5 1,828.8 1,784.5 1,732.6 1,679.1 6 Bonds 555.0 587.3 621.2 643.7 643.7 643.7 653.0 637.7 7 Inflation-indexed notes and bonds1 n.a. 33.0 67.6 100.7 92.4 100.7 107.4 109.0 8 Nonmarketable2 1,857.5 2,038.1 2,249.9 2,485.1 2,414.2 2,485.1 2,502.6 2,605.2 9 State and local government series 101.3 124.1 165.3 165.7 168.1 165.7 161.9 160.4 10 Foreign issues3 37.4 36.2 34.3 31.3 31.0 31.3 28.8 27.7 11 Government 47.4 36.2 34.3 31.3 31.0 31.3 28.8 27.7 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 182.4 181.2 180.3 179.4 180.0 179.4 178.6 177.7 14 Government account series4 1,505.9 1,666.7 1,840.0 2,078.7 2,005.2 2,078.7 2,103.3 2,209.4 15 Non-interest-bearing 6.0 7.5 8.8 10.0 9.0 10.0 9.6 10.1 By holder 5 16 U.S. Treasury and other federal agencies and trust funds 1,497.2 1,655.7 1,826.8 2,060.6 1,989.1 2,060.6 2,085.4 2,190.2 17 Federal Reserve Banks 410.9 451.9 471.7 477.7 496.5 477.7 501.7 505.0 18 Private investors 3,431.2 3,414.6 3,334.0 3,233.9 3,175.4 3,233.9 3,182.8 2,987.4 19 Depository institutions 296.6 300.3 237.3 246.3 239.9 246.3 234.9 n.a. 20 Mutual funds 315.8 321.5 343.2 349.5 338.1 349.5 343.7 n.a. 21 Insurance companies 214.1 176.6 144.5 140.0 141.6 140.0 138.7 n.a. 22 State and local treasuries6 257.0 239.3 269.3 266.8 271.6 266.8 257.2 n.a. Individuals 23 Savings bonds 187.0 186.5 186.7 186.5 186.3 186.5 185.3 184.7 24 Pension funds 392.7 421.0 434.7 445.5 444.8 445.5 432.3 n.a. 25 Private 189.2 204.1 218.1 234.5 228.3 234.5 230.8 n.a. 26 State and Local 203.5 216.9 216.6 211.0 216.5 211.0 201.5 n.a. 27 Foreign and international7 1,102.1 1,241.6 1,278.7 1,268.8 1,281.3 1,268.8 1,274.0 1,248.9 28 Other miscellaneous investors6,8 665.9 527.9 438.5 330.5 271.7 330.5 316.7 n.a. 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 Nonfinancial Statistics • November 2000 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions' Millions of dollars, daily averages 2000 2000, week ending IItteemm May June July July 5 July 12 July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Aug. 30 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 23,171 20,474 16,467 19,729 15,829 15,986 14,835 18,878 14,037 26,057 17,685 27,255 Coupon securities, by maturity 2 Five years or less 116,145 102,265 96,709 95,280 104,977 95,874 92,287 92,640 94,852 85,623 78,770 75,257 3 More than five years 58,444 64,492 57,055 53,472 55,910 56,204 57,284 62,388 76,071 72,768 49,068 53,359 4 Inflation-indexed 837 955 1,261 851 2,586 743 790 974 1,553 730 1,144 1,219 Federal agency 5 Discount notes 66,305 49,638 53,649 59,195 55,141 58,519 47,330 49,882 48,162 52,526 56,654 58,435 Coupon securities, by maturity 6 One year or less 1,046 864 1,299 637 1,910 1,099 1,368 939 1,086 1,290 1,397 1,710 7 More than one year, but less than or equal to five years 8,626 7,304 7,939 7,381 9,802 7,806 5,838 8,927 11,721 8,571 8,420 7,163 8 More than five years 6,923 9,031 9,286 10,544 11,132 7,477 6,853 12,443 7,651 5,969 6,852 5,534 9 Mortgage-backed 61,536 64,884 68,080 30,534 114,891 78,571 37,100 49,239 78,965 114,415 47,010 37,770 By type of counterparty With interdealer broker 10 U.S. Treasury 98,961 92,504 81,757 76,860 86,657 85,622 76,595 79,015 92,325 88,900 70,397 74,830 11 Federal agency 8,007 8,398 7,497 7,720 8,267 7,515 6,730 7,312 9,255 7,947 9,018 6,690 12 Mortgage-backed 24,010 24,768 22,785 14,738 32,479 23,708 17,862 18,662 28,771 39,793 20,486 16,444 With other 13 U.S. Treasury 99,635 95,682 89,735 92,472 92,646 83,186 88,601 95,865 94,187 96,279 76,270 82,260 14 Federal agency 74,892 58,438 64,677 70,037 69.718 67,387 54,661 64,879 59,364 60,409 64,305 66,152 15 Mortgage-backed 37,525 40,116 45,294 15,796 82,412 54,863 19,237 30,577 50,194 74,622 26,524 21,327 FUTURES TRANSACTIONS3 By type of deliverable security 16 U.S. Treasury bills 0 0 0 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 1177 Five years or less 4,870 3,549 2,571 2,939 2,695 2,818 2,268 2,212 2,387 2,930 3,715 5,025 18 More than five years 14,727 13,282 8,991 9,685 7,963 8,976 8,978 10,291 10,456 11,118 10,149 12,228 19 Inflation-indexed 0 0 0 0 0 0 0 0 0 00 0 0 Federal agency 20 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 21 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 22 More than one year, but less than or equal to five years 0 0 0 0 0 0 0 0 0 0 0 0 23 More than five years 98 245 51 161 53 43 27 29 130 83 118 150 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 2266 Five years or less 1,967 1,398 1,214 1,012 1,478 1,308 1,032 1,057 991 1,000 1,505 1,201 27 More than five years 4,460 3,185 2,634 2,077 2.606 3,068 2,455 2,627 3,389 2,656 2,981 2,313 28 Inflation-indexed 0 0 0 0 0 0 0 0 0 00 0 00 Federal agency 29 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 30 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 31 More than one year, but less than or equal to five years 0 0 12 0 0 0 0 52 0 0 0 61 32 More than five years 0 20 3 14 n.a. n.a. 0 0 n.a. n.a. 0 n.a. 33 Mortgage-backed 1,078 1,306 898 889 942 494 1,078 1,206 2,527 817 650 581 1. Transactions are market purchases and sales of securities as reported to the Federal Forward transactions are agreements made in the over-the-counter market that specify Reserve Bank of New York by the U.S. government securities dealers on its published list of delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt primary dealers. Monthly averages are based on the number of trading days in the month. securities are included when the time to delivery is more than five business days. Forward Transactions are assumed to be evenly distributed among the trading days of the report week. contracts for mortgage-backed agency securities are included when the time to delivery is Immediate, forward, and futures transactions are reported at principal value, which does not more than thirty business days. include accrued interest; options transactions are reported at the face value of the underlying 3. Futures transactions are standardized agreements arranged on an exchange. All futures securities. transactions are included regardless of time to delivery. Dealers report cumulative transactions for each week ending Wednesday. 4. Options transactions are purchases or sales of put and call options, whether arranged on 2. Outright transactions include immediate and forward transactions. Immediate delivery an organized exchange or in the over-the-counter market, and include options on futures refers to purchases or sales of securities (other than mortgage-backed federal agency securi- contracts on U.S. Treasury and federal agency securities. ties) for which delivery is scheduled in five business days or less and "when-issued" NOTE, "n.a." indicates that data are not published because of insufficient activity. securities that settle on the issue date of offering. Transactions for immediate delivery of mortgagebacked agency securities include purchases and sales for which delivery is scheduled in thirty business days or less. Stripped securities are reported at market value by maturity of coupon or corpus. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 2000 2000, week ending May June July July 5 July 12 July 19 July 26 Aug. 2 Aug. 9 Aug. 16 Aug. 23 Positions2 NET OUTRIGHT POSITIONS" By type of security 1 U.S. Treasury bills -5,764 3,514 3,951 3,215 6,900 5,288 3,304 —409 1,064 2,938 3,184 Coupon securities, by maturity 2 Five years or less -42,941 -38,615 -31,279 -31,591 -30,281 -33,718 -28,330 -33,081 -26,247 -33,122 -29,917 3 More than five years -23,820 -21,306 -21,335 -22,278 -19,462 -21,825 -20,700 -23,220 -22,566 -18,402 -16,430 4 Inflation-indexed 1,849 1,668 2,564 1,754 2,748 2,741 2,750 2,607 2,633 2,784 2,926 Federal agency 5 Discount notes 27,258 32,775 35,531 33,800 32,327 37,165 38,070 35,904 34,631 34,206 26,436 Coupon securities, by maturity 6 One year or less 12,658 10,016 12,896 9,393 12,198 13,907 14,244 14,075 13,084 13,948 14,028 7 More than one year, but less than or equal to five years 2,883 1,925 3,249 1,515 3,013 4,088 3,034 4,441 3,631 5,810 4,975 8 More than five years 2,084 899 1,268 -653 976 1,618 1,790 2,378 2,693 1,113 842 9 Mortgage-backed 21,502 23,442 20,713 25,149 20,088 17,784 21,582 20,035 20,354 21,329 17,537 NET FUTURES POSITIONS4 By type of deliverable security 10 U.S. Treasury bills 0 0 0 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 11 Five years or less 17,318 12,969 14,350 12,321 14,231 15,443 15,096 13,974 12,400 13,275 10,909 12 More than five years 1,770 -165 71 -277 -1,619 1,569 -411 1,362 54 538 -1,969 13 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 Federal agency 14 Discount notes 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 15 One year or less 0 0 0 0 0 0 0 0 0 0 0 16 More than one year, but less than or equal to five years 0 0 0 0 0 0 0 0 0 0 0 17 More than five years -105 -740 -261 -244 -205 -303 -255 -309 -713 -709 -523 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 180 376 1,143 1,247 1,896 697 775 1,127 1,688 1,484 1,868 21 More than five years 2,496 400 1,699 2,081 1,128 1,186 1,940 2,498 1,218 908 2,041 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 309 194 233 n.a. n.a. n.a. n.a. 233 237 223 273 26 More than five years 477 522 309 129 422 144 419 409 336 327 0 27 Mortgage-backed 769 929 2,236 670 1,403 2,410 2,833 3,886 4,008 4,634 5,429 Financing5 Reverse repurchase agreements 28 Overnight and continuing 308,541 294,802 282,999 294,428 281,044 271,301 283,640 289,789 282,395 303,063 278,813 29 Term 791,514 850,521 828,512 745,067 791,805 838,997 874,146 884,781 926,331 692,080 732,843 Securities borrowed 30 Overnight and continuing 304,544 292,038 299,289 301,201 303,871 301,536 294,787 294,119 289,814 285,773 287,751 31 Term 108,141 112,854 113,572 107,146 110,267 116,920 115,873 116,718 118,211 112,955 110,811 Securities received as pledge 32 Overnight and continuing 1,748 n.a. 2,454 n.a. 2,468 2,376 2,460 2,535 n.a. 2,374 2,561 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 731,269 744,475 750,138 739,951 748,300 750,714 759,375 749,157 751,407 786,525 735,461 35 Term 671,847 746,986 736,488 660,759 701,653 754,442 775,958 780,594 834,622 594,522 636,948 Securities loaned 36 Overnight and continuing 8,409 7,698 7,433 7,068 6,638 7,372 7,994 8,214 8,153 8,060 7,237 37 Term 9,076 6,567 5,295 6,712 6,563 6,269 3,396 3,400 3,415 3,734 3,725 Securities pledged 38 Overnight and continuing 61,585 61,667 63,077 65,123 62,578 63,841 62,936 60,855 59,469 60,006 61,715 39 Term 5,403 4,249 4,358 3,791 4,312 4,533 4,537 4,493 4,576 4,086 4,031 Collateralized loans 40 Total 15,835 16,826 20,706 13,702 19,192 21,991 20,802 27,895 25,145 20,826 26,452 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 • November 2000 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 2000 AAggeennccyy 11999966 11999977 11999988 11999999 Feb. Mar. Apr. May June 1 Federal and federally sponsored agencies 925,823 1,022,609 1,296,477 1,616,492 1,635,828 1,644,276 n.a. 193,776 194,673 2 Federal agencies 29,380 27,792 26,502 26,376 26,168 26,231 26,011 26,052 26,669 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 84 102 205 126 155 168 173 184 185 6 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6 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 26,162 26,225 26,005 26,046 26,663 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 1,609,660 1,618,045 164,298 167,726 168,004 11 Federal Home Loan Banks 263,404 313,919 382,131 529,005 527,835 535,284 541,673 557,506 568,438 12 Federal Home Loan Mortgage Corporation 156,980 169,200 287,396 360,711 380,660 378,006 388,261 392,555 384,286 13 Federal National Mortgage Association 331,270 369,774 460,291 547,619 547,100 557,543 561,700 571,800 578,500 14 Farm Credit Banks8 60,053 63,517 63,488 68,883 69,147 67,154 69,036 70,036 69,541 15 Student Loan Marketing Association9 44,763 37,717 35,399 41,988 42,723 38,089 40,119 43,144 37,263 16 Financing Corporation10 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8.170 8,170 17 Farm Credit Financial Assistance Corporation11 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 58,172 49,090 44,129 42,152 40,182 39,306 38,700 39,102 38,513 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 1,431 552 f f 21 Postal Service6 n.a. n.a. T T T T T T T 22 Student Loan Marketing Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority n.a. n.a. I I 1 1 1 1 1 24 United States Railway Association6 n.a. n.a. t 1 1 1 i 1 1 Other lending14 25 Farmers Home Administration 18,325 13,530 9,500 6,665 6,515 6,350 6,240 6,140 6,040 26 Rural Electrification Administration 16,702 14,898 14,091 14,085 14,016 13,152 13,167 13,221 13,121 27 Other 21,714 20,110 20,538 21,402 19,651 19,804 19,293 19,741 19,352 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 bonrowing 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 2000 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999977 11999988 11999999 Jan. Feb. Mar. Apr. May June July Aug. 1 All issues, new and refunding1 214,694 262,342 215,427 8,969 10,905 16,780 14,233 14,136 20,208 12,827 15,284 By type of issue 2 General obligation 69,934 87,015 73,308 3,454 4,473 5,008 4,598 6,051 8,581 4,256 5,194 3 Revenue 134,989 175,327 142,120 5,516 6,433 11,773 9,635 8,086 11,628 8,572 10,090 By type of issuer 4 State 18,237 23,506 16,376 863 1,730 1,570 1,371 1,102 2,907 783 1,011 5 Special district or statutory authority2 134,919 178,421 152,418 5,784 7,414 11,098 10,229 9,639 13,520 8,545 10,728 6 Municipality, county, or township 70,558 60,173 46,634 2,322 1,761 4,112 2,633 3,396 3,782 3,500 3,545 7 Issues for new capital 135,519 160,568 161,065 8,009 9,382 13,508 12,029 12,481 16,987 11,297 12,402 By use of proceeds 8 Education 31,860 36,904 36,563 2,189 2,548 3,436 2,484 3,662 4,465 3,185 3,630 9 Transportation 13,951 19,926 17,394 1,064 723 2,723 768 1,778 1,093 1,947 1,979 10 Utilities and conservation 12,219 21,037 15,098 588 115 1,086 729 537 1,141 353 1,409 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 89 647 747 762 585 1,150 632 281 13 Other purposes 35,095 42,450 47,896 2,885 2,804 2,426 3,903 3,557 5,776 2,543 3,564 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment Dealer's 2. Includes school districts. Digest before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 1999 2000 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999977 11999988 11999999 oorr iissssuueerr Dec. Jan. Feb. Mar. Apr. May June July 1 All issues' 929,256 1,128,491 1,072,866 50,805 55,714 85,679 113,093 61,963 62,939 100,615r 63,260 2 Bonds2 811,376 1,001,736 941,298 42,477 44,220 63,391 96,148 40,941 58,233 92,742 55,639 By type of offering 3 Sold in the United States 708,188 923,771 818,683 36,488 30,784 56,727 87,603 36,724 45,986 75,271 39,215 4 Sold abroad 103,188 77,965 122,615 5,989 13,436 6,664 8,545 4,217 12,247 17,471 16,424 MEMO 5 Private placements, domestic n.a. n.a. n.a. 3,241 967 65 0 228 2,694r 3,391 730 By industry group 6 Nonfinancial 222,603 307,935 293,963 14,614 14,599 26,598 28,086 8,060 20,832 29,412 15,915 7 Financial 588,773 693,801 647,335 27,863 29,620 36,792 68,062 32,881 37,401 63,331 39,724 8 Stocks3 173,330 205,605 217,868 15,520 11,494 22,288 16,945 21,022 4,706 7,873r 7,621 By type of offering 9 Public 117,880 126,755 131,568 8,328 11,494 22,288 16,945 21,022 4,706 7,873r 7,621 10 Private placement4 55,450 78,850 86,300 7,192 n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 1 1 Nonfinancial 60,386 74,113 110,284 7,450 9,247 21,796 15,679 16,763 4,522 6,521r 7,371 12 Financial 57,494 52,642 21,284 878 2,247 492 1,266 4,259 184 1,352 250 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

A32 Domestic Financial Statistics • November 2000 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 2000 IItteemm 11999988 11999999 Jan. Feb. Mar. Apr. May June Julyr Aug. 1 Sales of own shares2 1,461,430 1,791,894 226,251 237,861 269,118 202,248 172,718 181,866 166,815 181,027 2 Redemptions of own shares 1,217,022 1,621,987 204,380 197,423 243,194 176,671 162,984 161,462 151,717 160,876 3 Net sales3 244,408 169,906 21,871 40,438 25,924 25,577 9,735 20,404 15,098 20,152 4 Assets4 4,173,531 5,233,191 5,114,482 5,375,874 5,606,254 5,391,187 5,232,319 5,458,914 5,392,308 5,760,329 5 Cash5 191,393 219,189 222,729 231,480 221,623 254,819 260,426 259,241 258,472 262,781 6 Other 3,982,138 5,014,002 4,891,753 5,144,394 5,384,630 5,136,368 4,971,892 5,199,673 5,133,836 5,497,547 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 Q3 Q4 Q1 Q2 Q3 Q4 Qi Q2 1 Profits with inventory valuation and capital consumption adjustment 833.8 815.0 856.0 818.0 803.4 852.0 836.8 842.0 893.2 936.3 964.0 2 Profits before taxes 792.4 758.2 823.0 760.1 742.3 797.6 804.5 819.0 870.7 920.7 942.2 3 Profits-tax liability 237.2 244.6 255.9 249.0 239.4 247.8 250.8 254.2 270.8 286.3 292.9 4 Profits after taxes 555.2 513.6 567.1 511.1 502.9 549.9 553.7 564.8 599.9 634.4 649.3 5 Dividends 335.2 351.5 370.7 351.4 356.1 361.1 367.2 373.9 380.6 387.3 393.0 6 Undistributed profits 220.0 162.1 196.4 159.7 146.9 188.7 186.5 190.9 219.3 247.1 256.3 7 Inventory valuation 8.4 17.0 -9.1 17.7 19.9 11.4 -8.9 -19.7 -19.2 -25.0 -13.4 8 Capital consumption adjustment 32.9 39.9 42.1 40.2 41.2 42.9 41.2 42.7 41.6 40.6 35.2 SOURCE. U.S. Department of Commerce, Survey of Current Business. 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 1998 1999 2000 AAccccoouunntt 11999977 11999988 11999999 Q4 QL Q2 Q3 Q4 Qlr Q2r ASSETS 1 Accounts receivable, gross2 663.3 711.7 811.5 711.7 733.8 756.5 776.3 811.5 848.7 886.1 2 Consumer 256.8 261.8 279.8r 261.8 261.7 269.2 271.0 279.8 285.4 294.1 3 Business 318.5 347.5 405.2 347.5 362.8 373.7r 383.0 405.2 434.6 455.1 4 Real estate 87.9 102.3 126.5 102.3 109.2 113.5r 122.3 126.5 128.8 136.9 5 LESS: Reserves for unearned income 52.7 56.3 53.5 56.3 52.9 53.4 54.0 53.5 54.0 57.0 6 Reserves for losses 13.0 13.8 13.5 13.8 13.4 13.4 13.6 13.5 14.0 14.4 7 Accounts receivable, net 597.6 641.6 744.6 641.6 667.6 689.7 708.6 744.6 780.7 814.7 8 All other 312.4 337.9 406.3 337.9 363.3 373.2 368.5 406.3 412.7 419.4 9 Total assets 910.0 979.5 1,150.9 979.5 1,030.8 1,062.9 1,077.2 1,150.9 1,193.4 1,234.1 LIABILITIES AND CAPITAL 10 Bank loans 24.1 26.3 35.1 26.3 24.8 25.1 27.0 35.1 28.5 33.3 11 Commercial paper 201.5 231.5 227.9 231.5 222.9 231.0 205.3 227.9 230.2 234.2 Debt 12 Owed to parent 64.7 61.8 123.8 61.8 64.6 65.4 84.5 123.8 145.1 136.8 13 Not elsewhere classified 328.8 339.7 397.0 339.7 366.7 383.1 396.2 397.0 412.0 445.1 14 All other liabilities 189.6 203.2 222.7 203.2 220.3 226.1 216.0 222.7 247.6 249.6 15 Capital, surplus, and undivided profits 101.3 117.0 144.5 117.0 131.5 132.2 148.2 144.5 130.1 135.3 16 Total liabilities and capital 910.0 979.5 1,150.9 979.5 1,030.8 1,062.9 1,077.2 1,150.9 1,193.4 1,234.4 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 2000 TTyyppee ooff ccrreeddiitt 11999977 11999988 11999999 Feb. Mar. Apr. May June July Seasonally adjusted 1 Total 810.5 875.8 993.9 1,032.2 1,054.1 1,073.3 1,088.7 1,108.5 193.2 2 Consumer 327.9 352.8 385.3 395.5 396.7 398.0 400.7 401.4 193.2 3 Real estate 121.1 131.4 154.7 162.3 167.9 173.1 178.4 185.7 n.a. 4 Business . 361.5 391.6 453.9 474.4 489.4 502.2 509.5 521.4 n.a. Not seasonally adjusted 5 Total 818.1 884.0 1,003.2 1,031.9 1,057.0 1,073.6 1,088.5 1,114.0 194.4 6 Consumer 330.9 356.1 388.8 392.3 392.8 394.4 399.4 403.9 194.4 7 Motor vehicles loans 87.0 103.1 114.7 121.3 121.1 120.9 124.1 126.5 129.4 8 Motor vehicle leases 96.8 93.3 98.3 100.7 101.7 102.8 104.1 103.9 n.a. 9 Revolving2 38.6 32.3 33.8 32.9 31.5 31.9 31.6 33.1 33.6 10 Other3 34.4 33.1 33.1 32.7 31.1 31.2 31.9 30.7 31.4 Securitized assets4 11 Motor vehicle loans 44.3 54.8 71.1 67.8 71.2 72.1 71.9 74.1 12 Motor vehicle leases 10.8 12.7 9.7 9.2 8.8 8.5 8.2 7.9 13 Revolving .0 8.7 10.5 10.4 10.3 10.1 11.1 11.1 14 Other 19.0 18.1 17.7 17.3 17.1 16.8 16.5 16.6 15 Real estate 121.1 131.4 154.7 162.3 167.9 173.1 178.4 185.7 16 One- to four-family 59.0 75.7 88.3 91.7 90.4 93.6 97.3 97.2 17 Other 28.9 26.6 38.3 38.4 38.4 39.0 39.4 39.6 Securitized real estate assets4 18 One- to four-family 33.0 29.0 28.0 32.0 38.9 40.2 41.5 48.6 19 Other .2 .1 .2 .2 .2 .2 .2 .2 20 Business 366.1 396.5 459.6 477.4 496.3 506.1 510.7 524.5 21 Motor vehicles 63.5 79.6 87.8 89.6 90.2 93.6 94.8 94.5 22 Retail loans 25.6 28.1 33.2 33.7 32.3 32.7 33.3 33.8 23 Wholesale loans5 27.7 32.8 34.7 35.8 37.9 38.9 39.5 38.4 n.a. 24 Leases 10.2 18.7 19.9 20.1 19.9 22.0 22.0 22.3 25 Equipment 203.9 198.0 221.9 225.1 238.0 243.1 247.3 250.9 26 Loans 51.5 50.4 52.2 52.8 54.9 55.6 55.9 56.7 27 Leases 152.3 147.6 169.7 172.3 183.1 187.5 191.5 194.2 28 Other business receivables6 51.1 69.9 95.5 101.4 106.4 107.4 106.6 109.8 Securitized assets4 29 Motor vehicles 33.0 29.2 31.5 31.0 31.5 32.3 32.0 31.7 30 Retail loans 2.4 2.6 2.9 2.8 3.2 3.1 3.0 2.9 31 Wholesale loans 30.5 24.7 26.4 26.1 25.9 26.8 26.7 26.4 32 Leases .0 1.9 2.1 2.1 2.4 2.4 2.4 2.4 33 Equipment 10.7 13.0 14.6 22.5 22.0 21.7 21.5 31.1 34 Loans 4.2 6.6 7.9 15.9 15.4 15.2 15.0 15.8 35 Leases 6.5 6.4 6.7 6.6 6.5 6.5 6.5 15.2 36 Other business receivables6 4.0 6.8 8.4 7.7 8.3 8.0 8.4 6.6 NOTE. This table has been revised to incorporate several changes resulting from the before deductions for unearned income and losses. Components may not sum to totals benchmarking of finance company receivables to the June 1996 Survey of Finance Compa- because of rounding. nies. In that benchmark survey, and in the monthly surveys that have followed, more detailed 2. Excludes revolving credit reported as held by depository institutions that are subsidiarbreakdowns have been obtained for some components. In addition, previously unavailable ies of finance companies. data on securitized real estate loans are now included in this table. The new information has 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of resulted in some reclassification of receivables among the three major categories (consumer, consumer goods such as appliances, apparel, boats, and recreation vehicles. real estate, and business) and in discontinuities in some component series between May and 4. Outstanding balances of pools upon which securities have been issued; these balances June 1996. are no longer carried on the balance sheets of the loan originator. Includes finance company subsidiaries of bank holding companies but not of retailers and 5. Credit arising from transactions between manufacturers and dealers, that is, floor plan banks. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For financing. ordering address, see inside front cover. 6. Includes loans on commercial accounts receivable, factored commercial accounts, and 1. Owned receivables are those carried on the balance sheet of the institution. Managed receivable dealer capital; small loans used primarily for business or farm purposes; and receivables are outstanding balances of pools upon which securities have been issued; these wholesale and lease paper for mobile homes, campers, and travel trailers. balances are no longer carried on the balance sheets of the loan originator. Data are shown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • November 2000 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 2000 IItteemm 11999977 11999988 11999999 Feb. Mar. Apr. May June July Aug. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 180.1 195.2 210.7 216.9 226.0 224.2 232.2 238.6 235.8 237.0 2 Amount of loan (thousands of dollars) 140.3 151.1 161.7 165.6 170.7 170.2 176.3 178.3 178.3 179.7 3 Loan-to-price ratio (percent) 80.4 80.0 78.7 78.4 77.7 77.9 78.0 76.9 77.7 77.7 4 Maturity (years) 28.2 28.4 28.8 29.1 29.0 29.1 29.2 29.2 29.3 29.3 5 Fees and charges (percent of loan amount)2 1.02 .89 .77 .71 .68 .68 .71 .69 .66 .68 Yield (percent per year) 6 Contract rate1 7.57 6.95 6.94 7.43 7.49 7.52 7.44 7.40 7.41 7.44 7 Effective rate1,3 '7.73 7.08 7.06 7.54 7.60 7.63 7.55 7.50 7.51 7.54 8 Contract rate (HUD series)4 7.76 7.00 7.45 8.20 8.19 8.29 8.26 n.a. n.a. n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 7.89 7.04 7.74 8.53 8.35 8.33 8.58 n.a. n.a. n.a. 10 GNMA securities6 7.26 6.43 7.03 7.96 7.79 7.64 8.06 7.69 7.59 7.44 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 316,678 414,515 523,941 535,096 538,751 539,181 545,803 552,166 561,045 568,187 12 FHA/VA insured 31,925 33,770 55,318 58,294 58,451 58,899 59,140 59,703 60,397 60,150 13 Conventional 284,753 380,745 468,623 476,802 480,300 480,282 486,663 492,463 500,648 508,037 14 Mortgage transactions purchased (during period) 70,465 188,448 195,210 11,484 8,801 6,257 12,872 12,842 15,128 13,352 Mortgage commitments (during period) 15 Issued7 69,965 193,795 187,948 9,811 10,051 12,524 10,450 11,825 16,660 14,253 16 To sell8 1,298 1,880 5,900 612 1,954 1,340 1,594 1,254 436 236 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 164,421 255,010 324,443 328,598 336,338 339,207 347,370 350,836 354,020 357,002 18 FHA/VA insured 177 785 1,836 1,719 2,521 1,987 3,116 2,892 2,858 2,850 19 Conventional 164,244 254,225 322,607 326,879 333,817 337,220 344,254 347,944 351,162 354,152 Mortgage transactions (during period) 20 Purchases 117,401 267,402 239,793 6,747 9,323 8,393 15,741 12,271 10,912 16,056 21 Sales 114,258 250,565 233,031 6,424 8,569 8,077 15,261 11,806 10,539 15,558 22 Mortgage commitments contracted (during period)9 120,089 281,899 228,432 7,156 10,122 8,750 13,807 13,596 10,803 17,468 1. Weighted averages based on sample surveys of mortgages originated by major institu- 6. Average net yields to investors on fully modified pass-through securities backed by tional lender groups for purchase of newly built homes; compiled by the Federal Housing mortgages and guaranteed by the Government National Mortgage Association (GNMA), Finance Board in cooperation with the Federal Deposit Insurance Corporation. assuming prepayment in twelve years on pools of thirty-year mortgages insured by the 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. seller) to obtain a loan. 7. Does not include standby commitments issued, but includes standby commitments 3. Average effective interest rate on loans closed for purchase of newly built homes, converted. assuming prepayment at the end of ten years. 8. Includes participation loans as well as whole loans. 4. Average contract rate on new commitments for conventional first mortgages; from U.S. 9. Includes conventional and government-underwritten loans. The Federal Home Loan Department of Housing and Urban Development (HUD). Based on transactions on the first Mortgage Corporation's mortgage commitments and mortgage transactions include activity day of the subsequent month. under mortgage securities swap programs, whereas the corresponding data for FNMA 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured exclude swap activity. by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A35 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1999 2000 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999966 11999977 11999988 Q2 Q3 Q4 Q1 Q2 1 All holders 4,865,412r 5,197,838r 5,722,645r 6,015,365r 6,224,771r 6,375,447r 6,489,770r 6,659,097 By type of property 2 One- to four-family residences 3,716,055r 3,967,842r 4,353,048r 4,559,021r 4,690,310r 4,786,609r 4,862,747r 44,,998822,,885533 3 Multifamily residences 288,579r 301,838r 329,813r 348,658r 359,323r 373,189r 381,699r 392,919 4 Nonfarm, nonresidential 773,643r 837,859r 943,278r l,008,048r l,073,743r l,112,686r l,141,577r 1,175,641 5 87,134 90,299 96,506 99,638 101,395r 102,962r 103,748r 107,685 By type of holder 6 Major financial institutions 1,981,886 2,083,881r 2,194,813 2,242,431 2,321,356 2,394,923r 2,456,786r 2,551,751 7 Commercial banks 1,145,389 1,245,315 1,337,217 1,361,365 1,418,819 1,495,502r l,546,816r 1,614,307 8 One- to four-family 677,603 745,510 797,492 790,372 827,291 879,552r 904,58 lr 948,496 9 Multifamily 45,451 49,670 54,116 60,529 63,964 67,591 72,431 75,713 in Nonfarm, nonresidential 397,452 423,148 456,574 479,930r 496,246 516,520r 537,13 lr 556,382 11 Farm 24,883 26,986 29,035 30,536 31,320 31,839 32,673 33,717 12 Savings institutions 628,335 631,726r 643,957 656,518 676,346 668,634 680,745 701,992 13 One- to four-family 513,712 520,682r 533,918 544,962 560,622 549,072 560,046 578,641 14 Multifamily 61,570 59,540 56,821 55,016 57,282 59,138 57,759 59,142 15 Nonfarm, nonresidential 52,723 51,150 52,801 56,096 57,983 59,948 62,447 63,691 16 Farm 331 354 417 443 459 475 493 518 17 Life insurance companies 208,162 206,840 213,640 224,548 226,190 230,787r 229,225r 235,452 18 One- to four-family 6,977 7,187 6,590 7,292 7,432 5,934r 5,874r 4,826 19 Multifamily 30,750 30,402 31,522 31,800 31,998 32,818r 32,602r 33,669 70 Nonfarm, nonresidential 160,315 158,779 164,004 173,495 174,571 179,048r 177,870r 182,514 21 Farm 10,120 10,472 11,524 11,961 12,189 12,987r 12,879r 14,444 22 Federal and related agencies 295,192 286,194r 293,613r 289,519r 322,572r 322,352r 323,145r 334,715 23 Government National Mortgage Association 2 8 7 8 8 7 7 7 24 One- to four-family 2 8 7 8 8 7 7 7 25 Multifamily 0 0 0 0 0 0 0 0 26 Farmers Home Administration4 41,596 41,195 40,851 40,766 73,705 73,871 72,899 72,896 27 One- to four-family 17,303 17,253 16,895 16,653 16,583 16,506 16,456 16,435 28 Multifamily 11,685 11,720 11,739 11,735 11,745 11,741 11,732 11,729 29 Nonfarm, nonresidential 6,841 7,370 7,705 7,943 41,068 41,355 40,509 40,554 30 Farm 5,768 4,852 4,513 4,435 4,308 4,268 4,202 4,179 31 Federal Housing and Veterans' Administrations 6,244 3,81 lr 3,674 3,490 3,889 3,712 3,794r 3,845 32 One- to four-family 3,524 1,767 1,849 1,623 2,013 1,851 l,847r 1,832 33 Multifamily 2,719 2,044r 1,825 1,867 1,876 1,861 1,947 2,013 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 2,431 724 361 189 163 152 98 72 40 One- to four-familv 365 109 54 28 24 23 15 11 41 Multifamily 413 123 61 32 28 26 17 12 42 Nonfarm, nonresidential 1,653 492 245 129 111 103 67 49 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 168,813 161,308 157,675 155,637 153,172 151,500 150,312 155,364 45 One- to four-family 155,008 149,831 147,594 145,033 142,982 141,195 139,986 144,335 46 Multifamily 13,805 11,477 10,081 10,604 10,190 10,305 10,326 11,029 47 Federal Land Banks 29,602 30,657 32,983 33,666 34,217r 34,187 34,142 34,820 48 One- to four-family 1,742 1,804 1,941 1,981 2,013 2,012 2,009 2,039 49 Farm 0r 0r 0r 0r 0r 0r 0r 0 50 Federal Home Loan Mortgage Corporation 46,504 48,454 57,085 54,282 55,695 56,676 57,009 56,972 51 One- to four-family 41,758 42,629 49,106 43,574 44,010 44,321 43,384 42,892 52 Multifamily 4,746 5,825 7,979 10,708 11,685 12,355 13,625 14,080 53 Mortgage pools or trusts5 4,865,412r 5,197,838r 5,722,645r 6,015,365r 6,224,77 lr 6,375,447r 6,489,770r 6,659,097 54 Government National Mortgage Association 506,246 536,879 537,446 553,196 569,038 582,263r 589,203r 590,903 55 One- to four-family 494,064 523,225 522,498 537,287 552,670 565,189r 571,517r 572,856 56 Multifamily 12,182 13,654 14,948 15,909 16,368 17,074 17,686 18,047 57 Federal Home Loan Mortgage Corporation 554,260 579,385 646,459 718,085 738,581 749,081 757,106 768,641 58 One- to four-family 551,513 576,846 643,465 714,844 735,088 744,619 752,607 763,890 59 Multifamily 2,747 2,539 2,994 3,241 3,493 4,462 4,499 4,751 60 Federal National Mortgage Association 650,779r 709,582 834,517r 911,435 938,484 960,883 975,815 995,815 61 One to four-family 633,209r 687,981 804,204r 877,863 903,531 924,941 938,898 957,584 62 Multifamily 17,570 21,601 30,313 33,572 34,953 35,942 36,917 38,231 63 Farmers Home Administration4 3 2 1 1 0 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 0 0 0 0 68 Private mortgage conduits 329,559 413,502 571,340 627,402 645,084 662,565 678,156 686,037 69 One- to four-family 258,800 316,400 412,700 447,938 455,276 462,600 471,390 471,000 70 Multifamily 16,369 21,591 34,323 39,435 40,936 42,628 43,835 44,931 71 Nonfarm, nonresidential 54,390 75,511 124,317 140,029 148,873 157,337 162,930 170,106 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 547,486r 588,413r 644,456r 673,297r 689,656r 703,379r 709,560' 731,235 74 One- to four-family 360,476r 376,574r 413,770r 428,202r 439,219r 446,77 lr 449,496r 467,572 75 Multifamily 68,572r 71,651r 73,081r 74,090r 74,629r 77,016r 78,074r 79,272 76 Nonfarm, nonresidential 100,269r 121,409r 137,632r 150,428r 154,892r 158,375r 160,622r 162,345 77 Farm 18,169 18,779 19,974 20,577 20,916 21,217r 21,368r 22,046 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 • November 2000 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 2000 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999977 11999988 11999999 Feb. Mar. Apr.r Mayr June July? Seasonally adjusted 1 Total 1,234,461 1,301,023 1,393,657 1,418,756 1,429,431 1,435,806 1,447,667 1,462,386 1,471,823 2 Revolving 531,163 560,504 595,610 608,523 615,510 622,302 628,863 634,572 638,373 3 Nonrevolving2 703,297 740,519 798,047 810,233 813,921 813,504 818,804 827,814 833,450 Not seasonally adjusted 4 Total 1,264,103 1,331,742 1,426,151 1,413,585 1,416,228 1,423,617 1,434,547 1,453,601 1,464,348 By major holder 5 Commercial banks 512,563 508,932 499,758 499,148 497,120 499,696 502,030 506,245 506,472 6 Finance companies 160,022 168,491 181,573 186,896 183,705 184,050 187,610 190,268 194,384 7 Credit unions 152,362 155,406 167,921 168,209 169,487 171,257 173,764 176,279 178,409 8 Savings institutions 47,172 51,611 61,527 59,821 58,968 59,628 60,289 60,951 61,188 9 Nonfinancial business 78,927 74,877 80,311 73,509 72,908 72,975 73,526 72,817 71,800 10 Pools of securitized assets3, . 313,057 372,425 435,061 426,002 434,040 436,011 437,328 447,041 452,095 By major type of credit4 11 Revolving 555,858 586,528 623,245 609.387 609,086 615,432 621,224 627,830 630,601 12 Commercial banks 219,826 210,346 189,352 186,379 184,901 188,691 192,352 194,793 194,819 13 Finance companies 38,608 32,309 33,814 32,885 31,456 31,928 31,628 33,063 33,565 14 Credit unions 19,552 19,930 20,641 19,941 19,764 19,929 20,027 20,289 20,597 15 Savings institutions 11,441 12,450 15,838 15,263 14,975 15,135 15,295 15,455 15,419 16 Nonfinancial business .... 44,966 39,166 42,783 37,918 37,430 37,418 37,766 36,902 35,951 17 Pools of securitized assets3 221,465 272,327 320,817 317,001 320,560 322,331 324,156 327,328 330,250 18 Nonrevolving 708,245 745,214 802,906 804,198 807,142 808,185 813,323 825,771 833,747 19 Commercial banks 292,737 298,586 310,406 312,769 312,219 311,005 309,678 311,452 311,653 20 Finance companies 121,414 136,182 147,759 154,011 152,249 152,122 155,982 157,205 160,819 21 Credit unions 132,810 135,476 147,280 148,268 149,723 151,328 153,737 155,990 157,812 22 Savings institutions 35,731 39,161 45,689 44,558 43,993 44,493 44,994 45,496 45,769 23 Nonfinancial business .... 33,961 35,711 37,528 35.591 35,478 35,557 35,760 35,915 35,849 24 Pools of securitized assets3 91,592 100,098 114,244 109,001 113,480 113,680 113,172 119,713 121,845 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 2000 IItteemm 11999977 11999988 11999999 Jan. Feb. Mar. Apr. May June July INTEREST RATES Commercial banks2 1 48-month new car 9.02 8.72 8.44 n.a. 8.88 n.a. n.a. 9.21 n.a. 2 24-month personal 13.90 13.74 13.39 n.a. 13.76 n.a. n.a. 13.88 n.a. n.a. Credit card plan 3 All accounts 15.77 15.71 15.21 n.a. 15.47 n.a. n.a. 15.39 n.a. 4 Accounts assessed interest 15.57 15.59 14.81 n.a. 14.32 n.a. n.a. 14.74 n.a. n.a. Auto finance companies 5 New car 7.12 6.30 6.66 7.18 7.34 6.76 6.38 6.51 6.55 6.66 6 Used car 13.27 12.64 12.60 12.95 13.27 13.45 13.52 13.47 13.58 13.64 OTHER TERMS3 Maturity (months) 7 New car 54.1 52.1 52.7 52.9 52.7 53.1 53.8 53.5 53.4 53.5 8 Used car 51.0 53.5 55.9 57.0 57.1 57.1 57.1 57.1 57.3 57.2 Loan-to-value ratio 9 New car 92 92 92 91 92 93 93 93 93 92 10 Used car 99 99 99 98 98 99 98 99 99 100 Amount financed (dollars) 11 New car 18,077 19,083 19,880 20,503 20,206 20,395 20,542 20,621 20,494 20,533 12 Used car 12,281 12,691 13,642 13,809 13,697 13,666 13,871 14,132 14,244 14,268 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 2. Data are available for only the second month of each quarter, extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly 3. At auto finance companies, statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A37 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1998 1999 2000 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999944 11999966 Q4 Qi Q2 Q3 Q4 QI Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors ... 559.3 711.3 731.4 804.3 1,042.9 1,065.8 1,278.3 939.4 1,170.7 1,095.5 947.3 994.4 By sector and instrument 2 Federal government 155.9 144.4 145.0 23.1 -52.6 -65.2 -83.4 -98.5 -71.4 -31.5 -215.5 -414.0 3 Treasury securities 155.7 142.9 146.6 23.2 -54.6 -77.4 -81.9 -99.1 -71.5 -31.5 -213.5 -415.8 4 Budget agency securities and mortgages .2 1.5 -1.6 -.1 2.0 12.2 -1.5 .6 .0 .0 -2.1 1.8 5 Nonfederal 403.4 566.9 586.3 781.2 1,095.5 1,131.0 1,361.8 1,037.9 1,242.2 1,126.9 1,162.9 1,408.4 By instrument 6 Commercial paper 21.4 18.1 -.9 13.7 24.4 -43.0 58.3 -2.6 49.8 44.0 36.2 116.9 7 Municipal securities and loans -35.9 -48.2 2.6 71.4 96.8 92.8 92.1 56.8 71.3 52.5 8.9 34.0 8 Corporate bonds 23.3 91.1 116.3 150.5 218.7 193.2 274.0 287.6 202.8 155.2 186.2 153.8 9 Bank loans n.e.c 75.2 103.7 70.5 106.5 108.2 107.5 86.0 24.0 112.3 108.6 131.9 159.7 10 Other loans and advances 34.0 67.2 33.5 69.1 74.3 101.4 148.0 2.3 79.2 55.4 162.1 144.6 11 Mortgages 160.5 196.0 275.7 317.5 505.5 609.2 572.8 608.4 650.7 601.7 494.5 667.6 1? Home 183.2 180.7 242.5 252.3 386.9 444.1 411.8 440.8 480.0 398.9 346.2 500.6 13 Multifamily residential -3.6 5.8 9.4 8.3 20.3 26.9 35.5 33.1 44.2 47.9 31.5 36.6 14 Commercial -21.3 7.9 21.3 53.7 92.0 129.6 122.0 125.6 119.4 152.4 109.9 118.5 15 Farm 2.2 1.6 2.6 3.2 6.2 8.6 3.6 9.0 7.0 2.5 6.9 11.9 16 Consumer credit 124.9 138.9 88.8 52.5 67.6 69.9 130.5 61.4 76.2 109.5 143.1 131.8 By borrowing sector 17 Household 313.4 348.8 347.6 333.4 480.5 526.7 554.6 520.7 588.5 509.6 553311..44 663355..44 18 Nonfinancial business 136.3 269.5 245.5 391.8 534.7 527.4 727.4 473.5 601.3 583.7 627.7 747.9 19 Corporate 128.7 236.1 157.0 270.6 417.2 404.9 626.3 372.0 467.2 455.4 503.4 615.5 20 Nonfarm noncorporate 3.3 30,6 83.8 115.0 109.8 115.3 96.2 99.8 125.5 122.7 109.5 120.8 ?1 Farm 4.4 2.9 4.8 6.2 7.7 7.2 4.9 1.7 8.5 5.6 14.7 11.6 22 State and local government -46.2 -51.5 -6.8 56.1 80.3 76.9 79.8 43.6 52.5 33.6 3.8 25.0 23 Foreign net borrowing in United States -13.9 78.5 88.4 71.8 43.3 -25.6 30.7 -24.5 77.3 17.6 116.9 -10.5 74 Commercial paper -26.1 13.5 11.3 3.7 7.8 —4.7 18.0 -27.5 41.1 33.6 56.7 10.9 75 Bonds 12.2 57.1 67.0 61.4 34.8 -21.5 15.4 .2 44.0 -2.7 45.7 -29.6 76 Bank loans n.e.c 1.4 8.5 9.1 8.5 6.7 9.8 .9 5.6 -6.6 2.3 15.4 6.1 27 Other loans and advances -1.4 -.5 1.0 -1.8 -6.0 -9.1 -3.5 -2.8 -1.1 -15.5 -.9 2.0 28 Total domestic plus foreign 545.3 789.8 819.8 876.1 1,086.2 1,040.2 1,309.1 914.9 1,248.1 1,113.1 1,064.2 983.8 Financial sectors 29 Total net borrowing by financial sectors 468.4 453.9 545.8 653.7 1,073.9 1,295.7 1,228.8 995.3 1,064.2 1,063.4 618.3 842.9 By instrument 30 Federal government-related 287.5 204.1 231.5 212.8 470.9 677.6 589.5 576.6 651.6 550.3 249.2 356.4 31 Government-sponsored enterprise securities 176.9 105.9 90.4 98.4 278.3 510.5 193.0 304.7 407.1 367.9 104.9 234.8 32 Mortgage pool securities 115.4 98.2 141.1 114.5 192.6 167.1 396.6 271.9 244.5 182.4 144.3 121.6 33 Loans from U.S. government -4.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 180.9 249.8 314.4 440.9 603.0 618.1 639.2 418.8 412.6 513.0 369.2 486.5 35 Open market paper 40.5 42.7 92.2 166.7 161.0 130.9 78.7 57.3 89.9 479.0 130.9 77.4 36 Corporate bonds 121.8 195.9 173.8 210.5 296.9 292.6 473.8 254.8 179.5 -21.0 166.5 268.1 37 Bank loans n.e.c -13.7 2.5 12.6 13.2 30.1 9.9 -6.7 11.0 -5.9 -55.6 .3 8.8 38 Other loans and advances 22.6 3.4 27.9 35.6 90.2 154.2 73.3 107.9 139.8 107.5 64.4 122.3 39 Mortgages 9.8 5.3 7.9 14.9 24.8 30.6 20.1 -12.3 9.4 3.2 7.0 10.0 By borrowing sector 40 Commercial banking 20.1 22.5 13.0 46.1 72.9 65.3 46.1 61.5 107.0 54.1 7722..44 115.1 41 Savings institutions 12.8 2.6 25.5 19.7 52.2 88.6 75.2 59.2 51.9 5.8 40.6 56.3 4? Credit unions .2 -.1 .1 .1 .6 .4 1.5 1.4 2.8 3.3 -2.9 .9 43 Life insurance companies .3 -.1 1.1 .2 .7 1.8 3.3 3.0 1.1 -4.4 -.7 -1.1 44 Government sponsored enterprises 172.1 105.9 90.4 98.4 278.3 510.5 193.0 304.7 407.1 367.9 104.9 234.8 45 Federally related mortgage pools 115.4 98.2 141.1 114.5 192.6 167.1 396.6 271.9 244.5 182.4 144.3 121.6 46 Issuers of asset-backed securities (ABSs) 76.5 142.4 150.8 202.2 321.4 340.1 289.7 301.5 220.5 124.2 166.0 193.2 47 Finance companies 48.6 50.2 45.9 48.7 43.0 6.8 77.0 90.5 -17.2 99.2 52.3 157.6 48 Mortgage companies -11.5 -2.2 4.1 -4.6 1.6 3.0 -4.6 5.1 -6.1 6.2 -3.0 2.7 49 Real estate investment trusts (REITs) 10.2 4.5 11.9 39.6 62.7 44.0 25.6 -19.7 7.9 11.3 11.5 9.8 50 Brokers and dealers .5 -5.0 -2.0 8.1 7.2 12.4 -31.1 -17.4 16.9 -37.3 44.4 -.7 51 Funding corporations 23.1 34.9 64.1 80.7 40.7 55.7 156.5 -66.2 27.9 250.6 -11.4 -47.4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • November 2000 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued Billions of dollars; quarterly data at seasonally adjusted annual rates 1998 1999 2000 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999966 11999977 11999988 Q4 Qi Q2 Q3 Q4 Ql Q2 All sectors 52 Total net borrowing, all sectors 1,013.8 1,243.8 1,365.6 1,529.8 2,160.1 2,335.9 2,537.8 1,910.2 2,312.3 2,176.5 1,682.6 1,826.7 53 Open market paper 35.7 74.3 102.6 184.1 193.1 83.2 155.1 27.2 180.7 556.6 223.7 205.1 54 U.S. government securities 448.1 348.5 376.5 235.9 418.3 612.4 506.1 478.1 580.1 518.9 33.6 -57.6 55 Municipal securities -35.9 -48.2 2.6 71.4 96.8 92.8 92.1 56.8 71.3 52.5 8.9 34.0 56 Corporate and foreign bonds 157.3 344.1 357.0 422.4 550.4 464.3 763.1 542.6 426.3 131.5 398.4 392.3 57 Bank loans n.e.c 62.9 114.7 92.1 128.2 145.0 127.1 80.1 40.6 99.8 55.2 147.7 174.6 58 Other loans and advances 50.4 70.1 62.5 102.8 158.5 246.4 217.8 107.5 217.9 147.3 225.7 268.9 59 Mortgages 170.3 201.3 283.6 332.4 530.3 639.8 593.0 596.2 660.0 604.9 501.5 677.6 60 Consumer credit 124.9 138.9 88.8 52.5 67.6 69.9 130.5 61.4 76.2 109.5 143.1 131.8 Funds raised through mutual funds and corporate equities 61 Total net issues 113.4 131.5 231.9 181.2 100.0 9.9 154.2 178.5 120.4 172.8 414.3 125.4 62 Corporate equities 12.8 -16.0 -5.7 -83.9 -174.6 -215.6 -86.4 -33.9 -7.0 .0 105.2 -123.0 63 Nonfinancial corporations -44.9 -58.3 -69.5 -114.4 -267.0 -491.3 -52.1 -338.4 -128.4 -55.0 62.8 -248.0 64 Foreign shares purchased by U.S. residents 48.1 50.4 82.8 57.6 101.2 330.2 -19.8 284.4 121.7 71.3 63.3 135.0 65 Financial corporations 9.6 -8.1 -19.0 -27.1 -8.9 -54.5 -14.5 20.2 -.3 -16.3 -20.8 -10.0 66 Mutual fund shares 100.6 147.4 237.6 265.1 274.6 225.5 240.6 212.4 127.5 172.8 309.0 248.4 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables F.2 through F.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 9 1.58 SUMMARY OF FINANCIAL TRANSACTIONS' 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 Q4 Q1 Q2 Q3 Q4 Ql Q2 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 1,013.8 1,243.8 1,365.6 1,529.8 2,160.1 2,335.9 2,537.8 1,910.2 2,312.3 2,176.5 1,682.6 1,826.7 ? Domestic nonfederal nonfinancial sectors 210.0 -61.3 80.5 17.1 131.8 -188.6 507.8 380.4 268.7 29.3 -104.3 263.4 Household 246.8 34.1 128.7 31.8 -16.7 -375.6 305.5 280.3 265.1 38.5 -172.9 180.7 4 Nonfinancial corporate business 17.7 -8.8 -10.2 -12.7 14.0 44.5 67.0 17.8 45.2 -13.0 63.8 38.5 Nonfarm noncorporate business .6 4.7 -4.3 -2.1 .1 .1 2.8 1.2 .8 1.4 2.6 2.8 6 State and local governments -55.0 -91.4 -33.7 .1 134.5 142.4 132.5 81.0 -42.4 2.4 2.3 41.4 7 Federal government -27.4 -.2 - -7.4 5.1 13.5 11.8 17.0 6.7 11.2 -11.8 6.2 8.2 8 132.3 273.9 414.4 311.3 254.2 388.6 256.9 61.6 385.3 138.7 334.9 185.6 9 Financial sectors 698.8 1,031.4 878.1 1,196.3 1,760.6 2,124.1 1,756.2 1,461.5 1,647.0 2,020.3 1,445.7 1,369.5 10 Monetary authority 31.5 12.7 12.3 38.3 21.1 23.5 64.5 59.8 20.6 -42.2 103.4 -3.9 11 Commercial banking 163.4 265.9 187.5 324.3 305.2 493.3 68.1 166.6 449.4 548.7 377.1 484.7 1? U.S.-chartered banks 148.1 186.5 119.6 274.9 312.0 507.6 131.5 259.4 421.9 457.7 409.2 505.8 N Foreign banking offices in United States 11.2 75.4 63.3 40.2 -11.9 -17.6 -53.1 -102.5 33.2 42.0 4.8 -29.9 14 Bank holding companies .9 -.3 3.9 5.4 -.9 -7.4 -6.0 .4 -12.4 42.6 -42.2 3.5 15 Banks in U.S.-affiliated areas 3.3 4.2 .7 3.7 6.0 10.7 -4.4 9.2 6.6 6.3 5.4 5.4 16 Savings institutions 6.7 -7.6 19.9 -4.7 36.3 111.0 111.0 85.3 58.1 20.2 50.2 72.9 17 Credit unions 28.1 16.2 25.5 16.8 19.0 20.4 30.9 32.7 27.5 18.8 39.9 40.7 18 Bank personal trusts and estates 7.1 -8.3 -7.7 -25.0 -12.8 -13.5 -7.6 -8.4 -8.6 -9.1 -9.5 -9.9 IP Life insurance companies 72.0 100.0 69.6 104.8 76.9 79.0 78.4 68.2 36.8 30.7 57.2 54.1 70 Other insurance companies 24.9 21.5 22.5 25.2 20.4 67.6 -19.7 26.7 -14.4 -9.4 -14.0 -13.6 71 Private pension funds 45.0 20.2 -5.8 19.5 57.8 108.3 57.5 86.6 32.0 54.0 46.1 .2 ?.? State and local government retirement funds 30.9 33.6 37.3 63.8 71.5 51.4 76.0 25.1 40.0 58.2 55.3 17.1 ?3 Money market mutual funds 30.0 86.5 88.8 87.5 244.0 345.7 215.7 -67.0 224.8 354.5 208.8 -156.2 ?4 Mutual funds -7.1 52.5 48.9 80.9 124.8 106.3 97.4 117.2 -13.0 -12.7 -80.8 55.0 Closed-end funds -3.7 10.5 4.7 -2.9 4.5 4.5 3.1 3.1 3.1 3.1 3.1 3.1 76 Government-sponsored enterprises 117.8 86.7 84.2 94.3 261.7 415.2 189.1 251.5 280.7 221.0 138.2 215.1 27 Federally related mortgage pools 115.4 98.2 141.1 114.5 192.6 167.1 396.6 271.9 244.5 182.4 144.3 121.6 78 Asset-backed securities issuers (ABSs) 69.4 120.6 120.5 163.8 281.7 317.2 272.1 284.8 212.0 94.4 145.3 158.7 Finance companies 48.3 49.9 18.4 21.9 51.9 75.8 85.3 88.1 91.7 114.4 132.9 145.5 30 Mortgage companies -24.0 -3.4 8.2 -9.1 3.2 6.0 -9.1 10.2 -12.1 12.3 -6.0 5.5 31 Real estate investment trusts (REITs) -.7 1.4 4.4 20.2 -5.1 -40.8 1.7 -2.2 -2.7 -7.0 -16.3 -2.5 Brokers and dealers -44.2 90.1 -15.7 14.9 6.8 -210.3 34.6 -119.7 -22.2 -15.9 106.9 33.8 33 Funding corporations -12.1 -15.7 13.6 47.4 -1.0 -3.5 10.5 81.1 -1.1 403.8 -36.3 147.5 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 1,013.8 1,243.8 1,365.6 1,529.8 2,160.1 2,335.9 2,537.8 1,910.2 2,312.3 2,176.5 1,682.6 1,826.7 Other financial sources 35 Official foreign exchange -5.8 8.8 -6.3 .7 66..66 8.6 --1144..00 --55..44 --88..55 --77..00 11..55 -8.8 36 Special drawing rights certificates .0 2.2 -.5 -.5 .0 .0 -4.0 .0 -4.0 -4.0 .0 -8.0 37 Treasury currency .7 .6 .1 .0 .0 -2.3 .0 2.1 2.0 -4.1 2.2 -2.3 38 Foreign deposits 52.9 35.3 85.9 108.9 2.0 -127.6 113.7 110.1 69.4 52.7 258.5 -1.1 30 Net interbank transactions 89.8 10.0 -51.6 -19.7 -32.3 -115.2 48.3 93.4 -33.5 -43.3 -75.8 202.0 40 Checkable deposits and currency -9.7 -12.8 15.7 41.2 47.4 53.2 63.6 37.5 139.3 365.2 -219.1 -61.1 41 Small time and savings deposits -39.9 96.6 97.2 97.1 152.4 298.3 -74.8 106.6 119.1 28.0 109.1 132.2 4? Large time deposits 19.6 65.6 114.0 122.5 92.1 83.6 18.0 42.4 102.7 359.4 149.2 108.5 43 Money market fund shares 40.5 141.2 145.4 155.9 287.2 289.4 221.3 115.3 174.3 485.5 241.0 48.2 44 Security repurchase agreements 78.2 110.5 41.4 120.9 91.3 -207.7 258.0 -26.1 135.9 319.0 276.1 134.8 45 Corporate equities 12.8 -16.0 -5.7 -83.9 -174.6 -215.6 -86.4 -33.9 -7.0 .0 105.2 -123.0 46 Mutual fund shares 100.6 147.4 237.6 265.1 274.6 225.5 240.6 212.4 127.5 172.8 309.0 248.4 47 Trade payables 120.0 128.9 114.1 131.2 27.0 -35.7 121.7 253.3 216.9 137.0 213.7 213.2 48 Security credit -.1 26.7 52.4 111.0 103.3 -19.3 -62.2 139.7 18.9 277.8 566.3 -138.6 49 Life insurance reserves 35.5 45.8 44.5 59.3 48.0 68.9 55.4 42.1 48.1 57.6 38.0 44.3 50 Pension fund reserves 257.4 171.0 163.0 278.8 248.7 282.6 204.5 248.8 266.7 294.6 258.0 240.8 51 Taxes payable 2.6 6.2 16.0 15.6 11.8 8.0 -2.1 42.5 -1.1 22.5 24.8 24.7 57 Investment in bank personal trusts 17.8 4.0 -8.6 -56.3 -48.0 -48.8 -32.0 -25.9 -34.3 -32.3 -40.4 -41.0 53 Noncorporate proprietors' equity 43.1 34.6 -3.4 -43.7 -46.7 -16.3 -19.2 4.1 -71.2 -2.2 -27.4 -28.7 54 Miscellaneous 273.2 489.4 525.7 499.6 836.2 530.5 398.5 1,393.1 499.2 502.2 1,024.6 879.9 55 Total financial sources 2,102.9 2,739.7 2,942.6 3,333.6 4,086.9 3,395.8 3,986.7 4,662.0 4,072.6 5,157.9 4,897.2 3,691.2 Liabilities not identified as assets (—) 56 Treasury currency -.2 -.5 -.9 -.6 -.7 -3.4 -1.5 .6 .2 --66..33 -1.8 --66..22 57 Foreign deposits 43.0 25.1 59.6 107.4 -6.4 -142.5 49.3 96.1 26.4 93.9 179.0 -67.2 58 Net interbank liabilities -2.7 -3.1 -3.3 -19.9 3.4 -38.7 49.7 -4.8 -7.0 -23.7 24.4 -4.1 59 Security repurchase agreements 73.5 25.7 4.1 64.3 61.4 -18.1 213.5 54.3 77.8 -217.3 550.0 -11.5 60 Taxes payable 16.6 21.1 22.9 27.9 13.7 12.8 -9.1 20.1 1.5 -.7 10.0 -.3 61 Miscellaneous -119.2 -180.9 -88.1 -82.0 -54.3 54.1 -533.0 -289.9 -466.9 -71.3 -340.3 -250.2 Floats not included in assets (—) 62 Federal government checkable deposits -4.8 -6.0 .5 -2.7 2.6 17.1 -2.1 -27.0 8.6 -9.2 28.7 -2.6 63 Other checkable deposits -2.8 -3.8 -4.0 -3.9 -3.1 -1.8 -2.1 -.9 -.3 .0 .6 1.5 64 Trade credit 27.4 15.6 -21.2 -29.4 -42.1 -32.2 45.6 -18.1 60.4 111.4 2.7 10.8 65 Total identified to sectors as assets 2,072.1 2,846.6 2,973.1 3,272.5 4,112.5 3,548.5 4,176.3 4,831.5 4,371.9 5,281.1 4,443.9 4,021.1 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. F.l and F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • November 2000 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1998 1999 2000 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999966 11999977 11999988 Q4 Qi Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 13,712.9 14,444.2 15,247.0 16,289.9 16,289.9 16,605.6 16,785.1 17,105.5 17,445.6 17,680.1 17,865.1 By sector and instrument 2 Federal government 3,636.7 3,781.8 3,804.9 3,752.2 3,752.2 3,759.7 3,651.7 3,632.7 3,681.0 3,653.5 3,464.0 Treasury securities 3,608.5 3,755.1 3,778.3 3,723.7 3,723.7 3,731.6 3,623.4 3,604.5 3,652.8 3,625.8 3,435.7 4 Budget agency securities and mortgages 28.2 26.6 26.5 28.5 28.5 28.1 28.3 28.3 28.3 27.8 28.2 5 Nonfederal 10,076.1 10,662.5 11,442.1 12,537.7 12,537.7 12,845.9 13,133.4 13,472.8 13,764.5 14,026.6 14,401.2 By instrument 6 Commercial paper 157.4 156.4 168.6 193.0 193.0 223.9 232.4 239.3 230.3 260.8 296.8 1 Municipal securities and loans 1,293.5 1,296.0 1,367.5 1,464.3 1,464.3 1,491.0 1,510.0 1,518.6 1,532.5 1,539.2 1,551.6 8 Corporate bonds 1,344.1 1,460.4 1,610.9 1,829.6 1,829.6 1,898.1 1,970.0 2,020.7 2,059.5 2,106.0 2,144.5 y Bank loans n.e.c 863.6 934.1 1,040.5 1,148.8 1,148.8 1,165.2 1,178.5 1,202.9 1,231.5 1,259.1 1,306.4 10 Other loans and advances 736.9 770.4 839.5 913.8 913.8 957.4 956.0 969.8 985.3 1,032.4 1,066.2 n Mortgages 4,557.9 4,833.6 5,151.1 5,656.6 5,656.6 5,791.1 5,946.2 6,151.4 6,299.4 6,412.8 6,582.1 12 Home 3,510.5 3,719.2 3,971.5 4,358.4 4,358.4 4,451.2 4,564.4 4,694.1 4,791.3 4,867.7 4,995.2 13 Multifamily residential 265.5 278.6 286.9 307.3 307.3 316.4 324.6 335.7 347.7 355.5 364.7 14 Commercial 697.3 748.7 802.3 894.4 894.4 926.1 957.5 1,020.3 1,058.4 1,085.8 1,115.5 15 Farm 84.6 87.1 90.3 96.5 96.5 97.4 99.6 101.4 102.0 103.7 106.7 16 Consumer credit 1,122.8 1,211.6 1,264.1 1,331.7 1,331.7 1,319.3 1,340.4 1,370.1 1,426.2 1,416.2 1,453.6 By borrowing sector 1/ Household 4,782.9 5,105.3 5,442.8 5,924.6 5,924.6 6,004.8 6,147.2 6,313.3 6,469.1 6,541.9 6,710.9 18 Nonfinancial business 4,223.0 4,493.7 4,879.9 5,413.3 5,413.3 5,617.9 5,748.0 5,917.1 6,043.3 6,227.4 6,423.6 19 Corporate 2,925.5 3,107.7 3,372.7 3,788.5 3,788.5 3,970.3 4,071.6 4,207.6 4,302.2 4,457.6 4,617.5 20 Nonfarm noncorporate 1,152.4 1,236.1 1,351.1 1,460.9 1,460.9 1,485.2 1,510.2 1,540.9 1,572.0 1,599.7 1,629.9 21 Farm 145.1 149.9 156.1 163.8 163.8 162.4 166.1 168.6 169.0 170.1 176.1 22 State and local government 1,070.2 1,063.4 1,119.5 1,199.8 1,199.8 1,223.2 1,238.2 1,242.4 1,252.1 1,257.3 1,266.7 23 Foreign credit market debt held in United States 453.7 542.2 608.0 651.4 651.4 659.2 652.7 672.9 676.9 704.6 698.9 24 Commercial paper 56.2 67.5 65.1 72.9 72.9 77.2 70.1 81.8 89.2 101.6 101.2 25 Bonds 299.4 366.3 427.7 462.5 462.5 466.3 466.4 477.4 476.7 488.1 480.7 26 Bank loans n.e.c 34.6 43.7 52.1 58.9 58.9 59.1 60.5 58.8 59.4 63.3 64.8 27 Other loans and advances 63.6 64.7 63.0 57.2 57.2 56.5 55.8 55.0 51.7 51.7 52.1 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 14,166.5 14,986.4 15,855.0 16,941.3 16,941.3 17,264.7 17,437.8 17,778.5 18,122.5 18,384.7 18,564.0 Financial sectors 29 Total credit market debt owed by financial sectors 4,278.8 4,824.6 5,445.2 6,519.1 6,519.1 6,809.0 7,073.3 7,346.8 7,607.0 7,744.5 7,970.9 By instrument 30 Federal government-related 2,376.8 2,608.3 2,821.1 3,292.0 3,292.0 3,434.1 3,580.7 3,745.9 3,884.0 3,940.3 4,032.0 31 Government-sponsored enterprise securities 806.5 896.9 995.3 1,273.6 1,273.6 1,321.8 1,398.0 1,499.8 1,591.7 1,618.0 1,676.7 32 Mortgage pool securities 1,570.3 1,711.4 1,825.8 2,018.4 2,018.4 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 2,355.4 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 1,901.9 2,216.3 2,624.1 3,227.1 3,227.1 3,374.9 3,492.6 3,601.0 3,723.0 3,804.2 3,938.9 3b Open market paper 486.9 579.1 745.7 906.7 906.7 926.4 940.9 963.4 1,082.9 1,115.7 1,135.2 36 Corporate bonds 1,204.7 1,378.4 1,555.9 1,852.8 1,852.8 1,968.6 2,042.8 2,091.1 2,074.6 2,114.2 2,192.5 3/ Bank loans n.e.c 51.4 64.0 77.2 107.2 107.2 104.1 106.8 105.2 92.9 91.4 93.6 38 Other loans and advances 135.0 162.9 198.5 288.7 288.7 299.1 328.6 365.4 395.8 404.4 436.7 39 Mortgages 24.1 31.9 46.8 71.6 71.6 76.6 73.6 75.9 76.7 78.5 81.0 By borrowing sector 40 Commercial banks 102.6 113.6 140.6 188.6 188.6 187.5 202.7 224.2 230.0 242.2 265.9 41 Bank holding companies 148.0 150.0 168.6 193.5 193.5 202.6 205.5 211.8 219.3 221.4 229.3 42 Savings institutions 115.0 140.5 160.3 212.4 212.4 226.9 241.6 255.4 260.4 266.9 280.0 43 Credit unions .4 .4 .6 1.1 1.1 1.5 1.8 2.5 3.4 2.6 2.9 44 Life insurance companies .5 1.6 1.8 2.5 2.5 3.3 4.0 4.3 3.2 3.0 2.7 45 Government-sponsored enterprises 806.5 896.9 995.3 1,273.6 1,273.6 1,321.8 1,398.0 1,499.8 1,591.7 1,618.0 1,676.7 46 Federally related mortgage pools 1,570.3 1,711.4 1,825.8 2,018.4 2,018.4 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 2,355.4 47 Issuers of asset-backed securities (ABSs) 712.5 863.3 1,076.6 1,398.0 1,398.0 1,463.1 1,539.9 1,599.1 1,632.0 1,665.8 1,716.0 48 Brokers and dealers 29.3 27.3 35.3 42.5 42.5 34.8 30.4 34.6 25.3 36.4 36.2 49 Finance companies 483.9 529.8 554.5 597.5 597.5 614.4 639.2 628.5 659.9 670.7 712.7 50 Mortgage companies 16.5 20.6 16.0 17.7 17.7 16.5 17.8 16.3 17.8 17.1 17.8 51 Real estate investment trusts (REITs) 44.6 56.5 96.1 158.8 158.8 165.2 160.3 162.2 165.1 167.9 170.4 52 Funding corporations 248.6 312.7 373.7 414.4 414.4 459.1 449.5 462.0 506.6 510.1 505.1 All sectors 53 Total credit market debt, domestic and foreign .. . 18,445.3 19,811.0 21,300.2 23,460.4 23,460.4 24,073.7 24,511.1 25,125.3 25,729.5 26,129.2 26,534.9 54 Open market paper 700.4 803.0 979.4 1,172.6 1,172.6 1,227.6 1,243.3 1,284.5 1,402.4 1,478.1 1,533.3 55 U.S. government securities 6,013.6 6,390.0 6,626.0 7,044.3 7,044.3 7,193.8 7,232.4 7,378.6 7,565.0 7,593.8 7,496.0 56 Municipal securities 1,293.5 1,296.0 1,367.5 1,464.3 1,464.3 1,491.0 1,510.0 1,518.6 1,532.5 1,539.2 1,551.6 57 Corporate and foreign bonds 2,848.1 3,205.1 3,594.5 4,144.9 4,144.9 4,333.0 4,479.2 4,589.1 4,610.8 4,708.3 4,817.7 58 Bank loans n.e.c 949.6 1,041.7 1,169.8 1,314.9 1,314.9 1,328.3 1,345.7 1,366.9 1,383.8 1,413.7 1,464.7 59 Other loans and advances 935.4 998.0 1,101.0 1,259.6 1,259.6 1,313.0 1,340.3 1,390.1 1,432.7 1,488.5 1,555.0 60 Mortgages 4,581.9 4,865.5 5,197.9 5,728.2 5,728.2 5,867.7 6,019.8 6,227.3 6,376.1 6,491.3 6,663.1 61 Consumer credit 1,122.8 1,211.6 1,264.1 1,331.7 1,331.7 1,319.3 1,340.4 1,370.1 1,426.2 1,416.2 1,453.6 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1998 1999 2000 Transaction category or sector 1995 1996 1997 11999988 Q4 Q1 Q2 Q3 Q4 Qi Q2 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 18,445.3 19,811.0 21,300.2 23,460.4 23,460.4 24,073.7 24,511.1 25,125.3 25,729.5 26,129.2 26,534.9 2 Domestic nonfederal nonfinancial sectors 2,905.5 3,031.3 3,004.7 3,108.2 3,108.2 3,208.2 3,277.3 3,343.4 3,474.9 3,418.7 3,459.0 Household 1,944.3 2,118.3 2,106.4 2,061.4 2,061.4 2,133.5 2,172.2 2,235.9 2,353.9 2,304.6 2,319.1 4 Nonfinancial corporate business 280.4 270.2 257.5 271.5 271.5 266.1 273.3 288.4 300.7 293.0 305.2 5 Nonfarm noncorporate business 42.3 38.0 35.9 35.9 35.9 36.6 36.9 37.1 37.5 38.1 38.8 6 State and local governments 638.6 604.8 605.0 739.4 739.4 772.1 794.8 781.9 782.8 782.9 795.8 7 Federal government 207.5 200.2 205.5 219.1 219.1 223.3 225.0 260.7 258.0 259.6 261.6 8 Rest of the world 1,531.1 1,926.6 2,257.3 2,539.8 2,539.8 2,608.3 2,621.3 2,718.1 2,678.0 2,765.9 2,809.7 9 Financial sectors 13,801.1 14,652.9 15,832.7 17,593.3 17,593.3 18,033.8 18,387.5 18,803.0 19,318.6 19,685.1 20,004.6 10 Monetary authority 380.8 393.1 431.4 452.5 452.5 466.0 485.1 489.3 478.1 501.9 505.1 11 Commercial banking 3,520.1 3,707.7 4,031.9 4,335.7 4,335.7 4,338.4 4,383.4 4,488.3 4,643.9 4,725.0 4,847.4 12 U.S.-chartered banks 3,056.1 3,175.8 3,450.7 3,761.2 3,761.2 3,782.9 3,847.6 3,944.3 4,078.9 4,171.3 4,295.4 13 Foreign banking offices in United States 412.6 475.8 516.1 504.2 504.2 487.8 465.7 475.3 484.1 482.0 478.1 14 Bank holding companies 18.0 22.0 27.4 26.5 26.5 25.0 25.1 22.0 32.7 22.1 23.0 1") Banks in U.S.-affiliated areas 33.4 34.1 37.8 43.8 43.8 42.7 45.0 46.7 48.3 49.6 51.0 16 Savings institutions 913.3 933.2 928.5 964.8 964.8 990.8 1,011.4 1,030.8 1,033.4 1,044.5 1,061.7 17 Credit unions 263.0 288.5 305.3 324.2 324.2 330.2 341.0 348.5 351.7 360.0 372.9 18 Bank personal trusts and estates 239.7 232.0 207.0 194.1 194.1 192.2 190.1 188.0 185.7 183.3 180.8 19 Life insurance companies 1,587.5 1,657.0 1,751.1 1,828.0 1,828.0 1,853.5 1,869.6 1,880.4 1,886.0 1,901.5 1,913.9 20 Other insurance companies 468.7 491.2 515.3 535.7 535.7 530.8 537.5 533.9 531.6 528.0 524.6 21 Private pension funds 633.1 627.3 646.8 704.7 704.7 719.0 740.7 748.7 762.2 773.7 773.8 22 State and local government retirement funds 531.0 568.2 632.0 703.6 703.6 722.6 728.9 738.9 753.4 767.2 771.5 23 Money market mutual funds 545.5 634.3 721.9 965.9 965.9 1,036.2 1,001.8 1,049.7 1,147.8 1,217.1 1,159.4 24 Mutual funds 771.3 820.2 901.1 1,025.9 1,025.9 1,050.8 1,083.7 1,083.0 1,073.1 1,053.0 1,070.9 75 Closed-end funds 96.4 101.1 98.3 102.8 102.8 103.6 104.3 105.1 105.9 106.7 107.4 26 Government-sponsored enterprises 750.0 807.9 902.2 1,163.9 1,163.9 1,203.1 1,268.4 1,340.2 1,399.5 1,426.4 1,481.7 27 Federally related mortgage pools 1,570.3 1,711.4 1,825.8 2,018.4 2,018.4 2,112.3 2,182.7 2,246.1 2,292.3 2,322.3 2,355.4 78 Asset-backed securities issuers (ABSs) 653.4 773.9 937.7 1,219.4 1,219.4 1,280.1 1,352.7 1,409.8 1,435.3 1,463.9 1,505.4 29 Finance companies 526.2 544.5 566.4 618.4 618.4 639.9 660.9 678.2 713.3 747.0 782.2 30 Mortgage companies 33.0 41.2 32.1 35.3 35.3 33.0 35.6 32.5 35.6 34.1 35.5 31 Real estate investment trusts (REITs) 26.0 30.4 50.6 45.5 45.5 45.9 45.3 44.7 42.9 38.8 38.2 37 Brokers and dealers 183.4 167.7 182.6 189.4 189.4 211.4 162.9 167.0 158.6 201.1 188.2 33 Funding corporations 108.4 122.0 164.7 165.2 165.2 174.1 201.4 200.1 288.4 289.6 328.5 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 18,445.3 19,811.0 21,300.2 23,460.4 23,460.4 24,073.7 24,511.1 25,125.3 25,729.5 26,129.2 26,534.9 Other liabilities 35 Official foreign exchange 63.7 53.7 48.9 60.1 60.1 53.6 50.9 52.1 50.1 49.4 46.5 36 Special drawing rights certificates 10.2 9.7 9.2 9.2 9.2 8.2 8.2 7.2 6.2 6.2 4.2 37 Treasury currency 18.2 18.3 18.3 18.3 18.3 18.3 18.8 19.3 18.3 18.8 18.1 38 Foreign deposits 418.8 521.7 619.7 639.0 639.0 667.4 694.9 712.3 725.8 790.4 790.2 39 Net interbank liabilities 290.7 240.8 219.4 189.0 189.0 182.0 207.1 198.9 203.2 165.6 219.5 40 Checkable deposits and currency 1,229.1 1,244.8 1,286.1 1,333.4 1,333.4 1,310.5 1,353.1 1,353.8 1,484.8 1,392.9 1,410.7 41 Small time and savings deposits 2,279.7 2,377.0 2,474.1 2,626.5 2,626.5 2,637.6 2,644.6 2,665.9 2,671.2 2,729.2 2,740.5 42 Large time deposits 476.9 590.9 713.4 805.5 805.5 804.3 809.0 837.5 936.1 966.5 987.4 43 Money market fund shares 741.3 886.7 1,042.5 1,329.7 1,329.7 1,411.7 1,393.5 1,444.9 1,578.8 1,666.0 1,627.1 44 Security repurchase agreements 660.0 701.5 822.4 913.7 913.7 980.3 970.8 999.3 1,085.4 1,155.8 1,186.2 45 Mutual fund shares 1,852.8 2,342.4 2,989.4 3,610.5 3,610.5 3,758.1 4,049.1 3,931.5 4,553.4 4,864.5 4,740.7 46 Security credit 305.7 358.1 469.1 572.3 572.3 552.7 589.3 593.2 665.9 803.7 770.8 47 Life insurance reserves 566.2 610.6 665.0 718.3 718.3 735.9 749.8 756.2 783.9 796.9 802.8 48 Pension fund reserves 5,812.7 6,548.4 7,817.1 8,912.7 8,912.7 9,064.9 9,479.5 9,150.5 9,999.4 10,227.4 10,139.0 49 Trade payables 1,698.0 1,812.1 1,943.3 1,970.3 1,970.3 1,973.9 2,038.1 2,098.4 2,152.6 2,179.6 2,233.3 50 Taxes payable 107.6 123.6 139.2 151.0 151.0 158.2 160.6 165.3 166.4 180.3 178.0 51 Investment in bank personal trusts 803.0 871.7 942.5 1,001.0 1,001.0 1,012.5 1,059.8 998.3 1,116.6 1,135.2 1,085.0 52 Miscellaneous 5,838.0 6,231.3 6,571.9 7,133.9 7,133.9 7,131.6 7,310.8 7,318.7 7,638.2 7,851.6 8,059.6 53 Total liabilities 41,617.9 45,354.2 50,091.7 55,454.8 55,454.8 56,535.3 58,099.0 58,428.7 61,565.7 63,109.3 63,574.5 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 22.1 21.4 21.1 21.6 21.6 20.7 20.8 21.3 21.4 21.4 21.5 55 Corporate equities 8,495.7 10,255.8 13,201.3 15,427.8 15,427.8 15,919.1 17,060.4 16,214.9 19,576.3 20,231.8 19,298.5 56 Household equity in noncorporate business 3,671.6 3,876.6 4,151.1 4,400.8 4,400.8 4,460.5 4,523.0 4,582.8 4,643.5 4,695.1 4,764.9 Liabilities not identified as assets ( —) 57 Treasury currency -5.8 -6.7 -7.3 -8.0 -8.0 -8.4 -8.2 -8.2 -9.7 -10.2 -11.9 58 Foreign deposits 360.2 437.0 538.3 548.2 548.2 560.5 584.5 591.1 614.9 659.7 642.9 59 Net interbank transactions -9.0 -10.6 -32.2 -27.0 -27.0 -11.3 -10.6 -13.2 -25.5 -13.9 -11.5 60 Security repurchase agreements 107.4 111.5 175.8 237.2 237.2 296.7 308.2 327.7 269.3 413.4 408.8 61 Taxes payable 62.4 76.7 92.3 101.5 101.5 89.2 110.3 94.2 94.5 88.9 101.1 62 Miscellaneous -1,167.5 -1,630.7 -1,996.0 -2,539.2 -2,539.2 -2,755.0 -2,824.4 -3,133.2 -3,008.0 -3,149.6 -3,169.7 Floats not included in assets (—) 63 Federal government checkable deposits 3.1 -1.6 -8.1 -3.9 -3.9 -7.2 -12.4 -10.2 -9.9 -6.5 -5.2 64 Other checkable deposits 34.2 30.1 26.2 23.1 23.1 18.9 22.1 14.5 22.3 18.7 22.5 65 Trade credit 196.8 174.6 135.5 94.5 94.5 56.3 30.8 44.7 141.7 92.6 73.1 66 Total identified to sectors as assets 54,225.6 60,327.7 68,540.7 76,878.6 76,878.6 78,696.0 81,502.8 81,340.1 87,717.2 89,964.3 89,609.3 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. 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 • November 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 Dec. Jan. Feb. Mar. Apr. May June July Aug.P 1 Industrial production1 127.1 132.4 137.1 140.1 141.1 141.6 142.4 143.5 144.7r 145.2r 145.2 145.7 Market groupings 2 Products, total 119.6 123.7 126.5 128.5 129.7 130.1 130.3 131.0 131.2r 131.3r 131.5 131.8 3 Final, total 121.1 125.4 128.0 130.3 131.6 131.8 132.0 132.8 133.lr 133,6r 134.0 134.5 4 Consumer goods 115.1 116.2 116.9 118.1 118.8 118.7 118.0 118.6 118.8r 119.0' 118.6 119.2 5 Equipment 132.1 142.7 148.9 151.8 154.2 155.0 156.9 158.1 158.8r 159.8r 161.7 162.1 6 Intermediate 115.3 118.8 122.1 123.1 123.7 124.8 125.1 125.3 125. lr 124.2 123.9 123.3 7 Materials 139.0 146.5 154.8 159.7 160.5 161.2 163.1 165.0 168.1r 169.3r 168.9 169.9 Industry groupings 8 Manufacturing 130.1 136.4 142.3 145.6 146.7 147.2 148.4 149.3 150.3r 151.0r 151.2 151.3 9 Capacity utilization, manufacturing (percent)2. . 82.4 80.9 79.8 80.3 80.7 80.7 81.1 81.3 81.5'' 81.6r 81.4 81.2 10 Construction contracts3 144.2r 161.3r 177.6r 175.0 176.0r 179.0 192.0 186.0r 175.0r 184.0r 175.0 173.0 11 Nonagricultural employment, total4 120.3 123.4 126.2 127.5 127.9 128.0 128.5 128.9 129.1 129.1 129.1 129.0 12 Goods-producing, total 101.2 102.7 102.3 103.6 104.1 103.9 104.3 104.3 104.1 104.2 104.4 104.1 13 Manufacturing, total 98,3 98.8 97.0 97.3 97.4 97.2 97.3 97.3 97.3 97.3 97.6 97.2 14 Manufacturing, production workers 99.6 99.8 97.8 98.1 98.2 98.0 97.9 98.0 97.9 97.9 98.3 97.7 lb Service-producing 126.5 130.0 133.8 135.2 135.5 135.7 136.2 136.8 137.0 137.1 137.0 136.9 16 Personal income, total 175.1 186.5 196.6 201.7 203.3 204.4 206.0 207.1 207.7 208.6 209.1 n.a. 17 Wages and salary disbursements 171.3 184.6 196.9 202.7 204.3 205.2 206.4 208.1 208.1 209.4 210.5 n.a. 18 Manufacturing 144.6 152.3 157.4 159.8 161.1 161.6 162.0 163.5 162.6 163.8 164.7 n.a. 19 Disposable personal income5 172.5 182.7 191.9 196.1 197.4 198.3 199.8 200.7 201.2 201.8 202.4 n.a. 20 Retail sales5 169.8 178.4 194.6 204.0 205.5 208.3 209.3 208.3 208.5 209.3r 211.1 211.5 Prices6 21 Consumer (1982-84=100) 160.5 163.0 166.6 168.3 168.7 169.7 171.1 171.2 171.3 172.3 172.6 172.7 22 Producer finished goods (1982=100) 131.8 130.7 133.0 134.9 134.7 136.0 136.8 136.7r 137.5 138.4 138.3 138.1 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 2000 CCaatteeggoorryy 11999977 11999988 11999999 Jan. Feb. Mar. Apr. May June July Aug.? HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 136,297 137,673 139,368 140,910 141,165 140,867 141,230 140,489 140,762 140,399 140,742 Employment ? 126,159 128,085 130,207 131,850 131,954 131,801 132,351 131,417 131,858 131,450 131,569 3 Agriculture 3,399 3,378 3,281 3,371 3,408 3,359 3,355 3,298 3,321 3,299 3,344 Unemployment 4 6,739 66,,221100 55,,888800 5,689 5,804 5,708 5,524 5,774 5,583 5,650 5,829 5 Rate (percent of civilian labor force) 4.9 4.5 4.2 4.0 4.1 4.1 3.9 4.1 4.0 4.0 4.1 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 122,690 125,826 128,616 130,387 130,482 131,009 131,419 131,590 131,647r 131,596 131,491 7 Manufacturing 18,675 18,772 18,431 18,495 18,473 18,476 18,492 18,479 18,493r 18,544 18,465 8 Mining 596 590 535 530 533 536 539 539 539 539 539 9 Contract construction 5,691 5,985 6,273 6,652 6,618 6,726 6,694 6,666 6,668 6,673 6,673 10 Transportation and public utilities 6,408 6,600 6,792 6,925 6,937 6,953 6,970 6,962 6,985 7,008 6,944 11 Trade 28,614 29,127 29,792 29,978 29,989 30,060r 30,252 30,112 30,171r 30,244 30,219 12 Finance 7,109 7,407 7,632 7,612 7,624 7,621 7,610 7,600 7,588r 7,589 7,614 13 Service 36,040 37,526 39.000 39,844 39,914 40,090 40,195 40,220 40,40 LR 40,412 40,572 14 Government 19,557 19,819 20,161 20,351 20,394 20,547 20,667 21,012 20,802r 20,587 20,465 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 Q3 Q4 Q1 Q2r Q3 Q4 Ql Q2 Q3 Q4 Ql Q2r Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 137.7 139.5 141.7 144.5 170.7 172.3 173.8 175.5 80.7 81.0 81.5 82.3 2 Manufacturing 142.5 144.9 147.4 150.2 178.7 180.6 182.4 184.4 79.7 80.3 80.8 81.5 3 Primary processing3 123.4 125.4 126.0 125.9 149.0 149.8 150.4 150.9 82.8 83.7 83.8 83.4 4 Advanced processing4 152.5 155.2 158.7 163.1 193.7 196.1 198.7 201.6 78.7 79.1 79.9 80.9 Durable goods 174.4 177.4 182.5 188.9 217.6 221.0 224.8 229.1 80.2 80.3 81.2 82.5 6 Lumber and products 120.5 120.6 121.3 119.0 147.4 148.4 149.0 149.1 81.7 81.2 81.4 79.8 7 Primary metals 128.7 130.9 132.4 133.4 149.3 150.1 150.7 151.5 86.2 87.2 87.9 88.1 8 Iron and steel 126.6 129.1 130.9 132.4 151.3 152.5 153.5 154.4 83.7 84.6 85.3 85.7 9 Nonferrous 131.2 133.3 134.3 134.7 147.0 147.2 147.5 148.0 89.3 90.5 91.0 91.0 10 Industrial machinery and equipment 232.3 239.9 252.3 263.4 285.3 295.8 306.1 315.2 81.4 81.1 82.4 83.6 11 Electrical machinery 400.9 419.0 458.1 514.0 498.5 514.6 537.2 570.7 80.4 81.4 85.3 90.1 12 Motor vehicles and parts 153.3 154.7 155.2 158.0 184.9 185.0 185.7 186.7 82.9 83.6 83.6 84.6 13 Aerospace and miscellaneous transportation equipment . . 93.8 89.9 88.0 87.0 126.2 125.8 125.2 124.5 74.3 71.5 70.3 6699..99 14 Nondurable goods 111.5 113.4 113.7 113.3 139.9 140.3 140.5 140.6 79.7 80.9 80.9 80.6 15 Textile mill products 111.6 111.4 111.3 109.9 131.6 131.8 131.9 131.9 84.8 84.5 84.4 83.3 16 Paper and products 116.0 117.9 117.0 117.3 135.3 136.1 136.6 136.7 85.7 86.6 85.6 85.8 17 Chemicals and products 117.0 121.8 121.7 120.3 150.7 151.0 151.4 151.7 77.6 80.7 80.4 79.3 18 Plastics materials 124.2 132.3 134.0 131.3 138.4 139.6 140.8 141.9 89.7 94.8 95.2 92.5 19 Petroleum products 114.6 114.1 115.8 117.7 122.7 123.1 123.4 123.6 93.4 92.7 93.9 95.3 ?0 Mining 98.2 99.5 100.4 102.2 120.2 120.2 119.8 119.3 81.7 82.8 83.8 85.6 21 Utilities 118.4 113.2 113.6 116.5 127.8 128.2 128.6 129.0 92.7 88.3 88.3 90.4 22 Electric 120.8 116.5 115.5 119.5 125.6 126.1 126.6 127.1 96.2 92.4 91.2 94.0 1973 1975 Previous cycle3 Latest cycle6 1999 2000 High Low High Low High Low Aug. Mar. Apr. Mayr Juner July Aug." Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.1 85.4 78.1 80.7 81.7 82.0 82.4 82.4 82.2 82.3 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 79.7 81.1 81.3 81.5 81.6 81.4 81.2 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 82.8 83.7 83.8 83.3 83.3 82.7 82.2 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 78.8 80.2 80.5 81.0 81.1 81.1 81.1 5 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 80.2 81.6 82.1 82.6 82.7 82.3 82.0 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 81.6 80.8 81.0 80.1 78.4 78.6 77.9 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 86.8 88.5 88.5 87.8 87.9 85.3 84.0 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 84.4 86.4 86.1 85.5 85.5 81.0 79.9 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 89.9 91.1 91.5 90.7 90.8 90.6 89.2 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 81.1 83.0 83.4 83.6 83.7 83.8 83.0 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 80.5 86.9 88.7 90.5 91.0 92.0 92.1 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 82.3 83.6 83.9 85.4 84.7 77.8 79.6 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 75.0 70.4 69.8 69.2 70.7 71.7 70.8 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 79.7 80.9 80.8 80.5 80.5 80.6 80.6 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 84.8 84.6 84.4 82.4 83.1 82.5 81.8 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 85.6 85.9 86.2 84.5 86.7 83.6 83.9 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 78.1 80.0 79.3 79.3 79.2 79.4 79.5 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 87.8 91.3 93.4 92.3 91.8 91.7 90.3 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 93.0 96.1 94.8 95.8 95.2 95.5 95.8 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 81.9 84.7 84.7 85.7 86.5 87.6 87.8 21 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 92.2 86.1 89.2 92.3 89.6 87.7 91.2 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 95.5 90.3 92.9 95.9 93.1 90.6 94.4 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; latest historical revision of the industrial production index and the capacity utilization rates primary metals; and fabricated metals. was released in November 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 • November 2000 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 1999 2000 GGrroouupp pro- 1999 por- avg. tion Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayr Juner July Aug.P Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 137.1 137.7 138.1 139.1 139.4 140.1 141.1 141.6 142.4 143.5 144.7 145.2 145.2 145.7 2 Products 60.5 126.5 127.6 127.6 128.5 128.0 128.5 129.7 130.1 130.3 131.0 131.2 131.3 131.5 131.8 3 Final products 46.3 128.0 129.5 129.1 130.2 129.8 130.3 131.6 131.8 132.0 132.8 133.1 133.6 134.0 134.5 4 Consumer goods, total 29.1 116.9 117.6 117.1 118.2 117.6 118.1 118.8 118.7 118.0 118.6 118.8 119.0 118.6 119.2 5 Durable consumer goods 6.1 152.6 155.5 153.5 157.4 154.4 155.7 158.9 156.4 156.8 159.1 156.9 158.1 153.3 153.9 6 Automotive products 2.6 144.7 150.6 145.5 147.9 146.2 144.4 149.1 145.4 146.0 148.7 146.8 149.3 139.5 142.8 7 Autos and trucks 1.7 151.8 162.9 152.8 155.1 154.3 148.7 155.0 150.7 151.9 155.8 154.0 157.2 139.8 145.9 8 Autos, consumer .9 102.6 105.0 105.5 103.9 107.2 99.8 105.4 105.0 103.1 107.4 106.2 105.5 100.3 105.0 9 Trucks, consumer .7 202.4 221.6 201.9 207.8 203.6 199.0 206.3 198.3 202.3 206.2 203.8 210.5 181.9 189.7 10 Auto parts and allied goods .... .9 133.9 132.8 134.4 136.7 133.8 137.1 139.6 136.9 136.6 137.6 135.7 137.2 137.0 136.9 11 Other 3.5 158.6 158.7 159.7 165.0 160.7 164.9 166.6 165.4 165.5 167.5 165.1 165.1 165.0 163.0 12 Appliances, televisions, and air conditioners 1.0 324.3 319.0 326.3 363.1 348.4 357.6 361.6 362.8 367.3 373.3 367.1 369.8 357.1 356.7 13 Carpeting and furniture .8 121.7 122.1 124.1 124.8 117.4 123.0 126.9 122.6 122.6 125.0 122.4 123.9 127.5 125.4 14 Miscellaneous home goods 1.6 114.7 115.4 114.4 114.8 115.0 116.7 116.6 116.6 115.9 116.5 115.3 114.0 114.3 112.5 15 Nondurable consumer goods 23.0 108.7 108.9 108.7 109.3 109.1 109.5 109.7 110.0 109.1 109.4 110.0 110.0 110.4 111.0 16 Foods and tobacco 10.3 107.3 106.5 106.2 106.8 107.3 107.4 107.6 107.9 107.8 108.3 107.8 107.8 108.1 108.0 17 Clothing 2.4 90.6 90.1 89.9 89.4 90.6 89.1 89.3 89.6 89.2 89.5 89.3 87.2 87.7 86.5 18 Chemical products 4.5 121.8 122.7 120.9 123.1 126.0 126.5 125.8 125.1 125.8 124.2 124.6 125.2 126.1 126.5 19 Paper products 2.9 102.3 103.2 104.7 106.3 105.1 103.1 104.3 104.5 103.0 103.3 104.1 106.9 108.1 109.0 20 Energy 2.9 114.0 116.6 117.6 114.5 106.7 112.0 113.0 114.8 108.8 111.1 117.2 114.3 114.0 118.2 21 Fuels .8 111.3 110.0 112.0 112.4 110.1 111.7 108.4 111.5 114.8 112.3 113.3 113.4 114.2 115.2 22 Residential utilities 2.1 115.0 119.3 119.7 114.9 104.3 111.6 114.6 115.8 105.2 109.9 118.5 114.1 113.2 119.2 23 Equipment 17.2 148.9 150.5 150.2 151.2 151.4 151.8 154.2 155.0 156.9 158.1 158.8 159.8 161.7 162.1 24 Business equipment 13.2 171.6 173.9 173.7 174.8 175.0 175.5 179.4 180.6 183.0 185.0 185.7 186.8 188.6 189.2 25 Information processing and related 5.4 248.6 259.9 261.3 265.6 266.7 270.1 277.9 281.2 285.7 290.3 295.7 296.7 303.7 310.4 26 Computer and office equipment 1.1 840.1 892.8 926.9 950.5 970.0 985.6 1,015.3 1,059.5 1,093.5 1,126.1 1,162.3 1,194.1 1,224.1 1,255.8 27 Industrial 4.0 135.3 133.6 133.9 134.9 134.6 135.0 138.4 140.1 140.0 140.1 140.4 139.6 140.8 140.0 28 Transit 2.5 126.9 128.1 124.0 122.3 121.2 118.5 119.9 117.6 118.7 118.7 116.2 117.1 116.0 114.7 29 Autos and trucks 1.2 131.4 135.3 132.0 133.4 134.2 127.8 134.3 134.0 133.9 136.9 135.7 133.8 127.2 127.7 30 Other 1.3 131.4 123.2 126.4 125.1 127.5 128.1 126.8 128.6 136.4 140.9 137.7 144.9 142.2 135.4 31 Defense and space equipment 3.3 74.4 74.7 73.6 73.7 73.0 72.4 70.6 69.7 69.8 69.3 69.3 70.5 71.9 71.3 32 Oil and gas well drilling .6 106.8 107.1 111.3 115.7 121.3 124.3 125.5 129.9 130.6 129.0 135.0 134.0 140.9 143.4 33 Manufactured homes .2 155.2 151.3 144.4 142.6 139.3 138.3 135.4 129.6 129.3 123.4 118.2 118.5 117.5 116.0 34 Intermediate products, total 14.2 122.1 121.7 122.6 123.2 122.4 123.1 123.7 124.8 125.1 125.3 125.1 124.2 123.9 123.3 35 Construction supplies 5.3 133.4 132.9 134.1 135.4 134.3 134.9 136.4 137.5 139.0 139.2 137.4 136.9 137.1 135.5 36 Business supplies 8.9 115.3 115.1 115.8 115.9 115.2 116.0 116.1 117.2 116.9 117.1 117.7 116.6 116.0 116.0 37 Materials 39.5 154.8 154.6 155.7 156.8 158.8 159.7 160.5 161.2 163.1 165.0 168.1 169.3 168.9 169.9 38 Durable goods materials 20.8 198.9 199.9 202.3 203.4 206.7 208.8 211.7 213.1 217.5 220.6 227.0 229.6 229.9 230.9 39 Durable consumer parts 4.0 150.7 147.2 156.0 153.7 154.8 155.0 156.0 153.1 154.7 152.8 160.5 156.6 151.0 150.9 40 Equipment parts 7.6 360.9 369.0 371.4 377.5 386.8 394.9 404.9 418.0 435.4 453.2 472.6 490.6 502.8 511.9 41 Other 9.2 131.3 131.6 131.2 131.7 133.4 134.0 134.8 134.1 134.7 134.6 135.2 135.1 134.5 133.7 42 Basic metal materials 3.1 121.8 123.3 122.1 123.5 125.6 126.3 126.2 124.2 126.3 126.9 126.9 127.1 124.3 122.8 43 Nondurable goods materials 8.9 114.6 114.4 114.7 117.4 119.1 118.7 117.0 117.6 116.8 116.6 116.7 116.8 115.2 115.0 44 Textile materials 1.1 101.0 101.1 100.3 102.3 103.3 100.9 99.3 101.9 102.7 100.7 100.2 101.7 97.3 97.7 45 Paper materials 1.8 117.0 116.3 118.6 118.5 119.3 118.5 117.9 116.6 118.3 119.3 117.4 119.0 114.6 115.7 46 Chemical materials 3.9 117.3 117.4 117.7 122.0 125.1 124.2 122.1 124.5 121.5 121.5 122.8 121.7 121.3 121.1 47 Other 2.1 113.5 113.2 112.5 114.9 114.9 116.8 114.8 112.7 113.3 112.3 112.2 112.5 112.8 111.3 48 Energy materials 9.7 101.7 102.3 101.8 101.5 101.6 101.4 101.2 100.5 100.6 102.5 102.8 102.4 102.0 103.7 49 Primary energy 6.3 99.2 100.3 99.6 98.8 100.1 99.5 98.3 96.7 98.0 100.4 100.5 100.6 100.7 101.8 50 Converted fuel materials 3.3 107.0 106.1 106.1 106.5 104.1 104.8 106.8 108.2 105.5 106.6 107.1 105.5 104.1 107.3 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 137.0 137.4 138.0 138.9 139.3 140.2 141.0 141.6 142.4 143.5 144.7 145.2 145.6 146.0 52 Total excluding motor vehicles and parts 95.1 136.4 137.1 137.2 138.3 138.7 139.5 140.4 141.1 141.8 143.0 144.0 144.6 145.3 145.6 53 Total excluding computer and office equipment 98.2 131.1 131.4 131.5 132.4 132.7 133.2 134.1 134.4 135.0 136.0 137.0 137.3 137.2 137.5 54 Consumer goods excluding autos and trucks . 27.4 115.0 115.2 115.2 116.3 115.6 116.4 116.9 117.0 116.2 116.6 116.9 116.9 117.3 117.7 55 Consumer goods excluding energy 26.2 117.3 117.7 117.1 118.7 118.8 118.8 119.5 119.1 119.0 119.5 119.0 119.5 119.1 119.3 56 Business equipment excluding autos and trucks 12.0 176.2 178.3 178.5 179.5 179.7 181.1 184.5 186.0 188.7 190.5 191.5 192.9 195.9 196.4 57 Business equipment excluding computer and office equipment 12.1 143.8 144.6 143.6 144.0 143.7 143.8 146.8 146.9 148.4 149.4 149.2 149.5 150.6 150.4 58 Materials excluding energy 29.8 172.0 171.3 173.0 174.7 177.4 178.6 179.8 181.0 183.5 185.5 189.6 191.3 190.9 191.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued Monthly data seasonally adjusted 1992 Group c S o I d C e p p r o o r - - 1 a 9 v 9 g 9 . tion Aug. Sept. Apr. Mayr Juner July Aug. Index (1992 = 100) MAJOR INDUSTRIES 59 Total index 100.0 137.1 137.7 138.1 139.1 139.4 140.1 141.1 141.6 142.4 143.S 144.7 145.2 145.2 145.7 60 Manufacturing 85.4 142.3 142.5 142.9 144.2 145.0 145.6 146.7 147.2 148.4 149.3 150.3 151.0 151.2 151.3 61 Primary processing 26.5 123.3 123.4 123.6 124.8 125.6 125.9 126.0 125.9 126.1 126.3 125.6 125.7 125.0 124.2 62 Advanced processing 58.9 151.8 152.6 153.1 154.5 155.2 155.9 157.5 158.4 160.1 161.5 163.3 164.4 165.0 165.6 63 Durable goods 45.0 172.8 174.4 175.0 176.5 177.4 178.4 181.0 181.8 184.6 186.8 189.2 190.8 190.9 191.3 64 Lumber and products 24 2.0 121.6 120.2 119.7 120.5 119.8 121.4 122.1 121.2 120.5 120.8 119.4 116.9 117.1 116.1 65 Furniture and fixtures 25 1.4 125.5 126.4 127.9 127.0 125.2 128.6 126.9 126.8 126.3 126.4 128.1 127.9 128.2 127.9 66 Stone, clay, and glass products 32 2.1 130.5 130.2 129.6 131.2 132.4 131.4 130.9 131.7 132.7 131.9 132.2 132.2 132.4 132.0 67 Primary metals 33 3.1 126.6 129.6 128.3 129.0 131.1 132.8 132.8 130.9 133.6 133.8 133.0 133.3 129.6 127.9 68 Iron and steel 331,2 1.7 123.2 127.6 125.9 124.9 130.7 131.7 130.8 129.1 132.9 132.7 132.1 132.4 125.6 124.1 69 Raw steel 331PT .1 113.3 115.9 112.4 121.8 124.0 124.2 123.1 118.7 121.1 124.1 123.9 124.6 122.3 115.9 70 Nonferrous 333-6,9 1.4 130.9 132.1 131.4 134.0 131.7 134.1 135.2 133.2 134.5 135.3 134.2 134.6 134.5 132.5 71 Fabricated metal products . . 34 5.0 128.7 128.5 128.4 128.8 129.7 129.0 130.8 130.4 130.6 131.0 131.4 131.1 131.5 129.8 72 Industrial machinery and equipment 35 8.0 230.1 231.4 235.5 238.3 239.7 241.8 247.7 252.6 256.7 260.5 263.5 266.4 269.0 268.4 73 Computer and office equipment 357 1.8 1,061.4 1,123.7 1,167.5 1,196.6 1,222.8 1,244.6 1,284.5 1,342.2 1,389.6 1,428.4 1,467.7 1,505.3 1,544.1 1,584.6 74 Electrical machinery 36 7.3 390.2 401.3 402.1 412.6 418.1 426.4 443.5 455.6 475.2 494.8 516.3 531.0 547.4 559.0 75 Transportation equipment. . . 37 9.5 122.4 122.9 123.1 122.3 121.8 120.4 121.7 119.6 120.9 120.7 121.7 122.2 116.9 117.9 76 Motor vehicles and parts . 371 4.9 151.0 152.2 155.6 155.7 155.8 152.7 156.6 153.4 155.6 156.2 159.4 158.4 145.8 149.5 77 Autos and light trucks . 371PT 2.6 137.8 146.8 139.4 140.7 141.0 135.0 141.0 137.7 138.1 142.1 140.5 142.7 128.6 134.3 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 94.9 94.7 92.2 90.6 89.5 89.7 88.6 87.5 88.0 87.0 86.1 87.9 8899..00 87.7 79 Instruments 38 5.4 116.5 117.7 117.2 118.3 118.9 119.7 118.4 117.3 117.4 117.3 117.4 117.6 118.8 118.8 80 Miscellaneous 39 1.3 124.7 125.2 125.1 125.0 125.0 126.4 126.9 125.5 124.8 125.2 124.5 124.0 125.3 124.7 81 Nondurable goods 40.4 111.8 111.5 111.8 113.0 113.6 113.7 113.5 113.8 113.6 113.5 113.2 113.3 113.4 113.3 82 Foods 20 9.4 110.1 108.9 109.6 110.1 110.3 110.0 109.8 110.7 111.1 111.6 111.0 111.1 111.2 110.9 83 Tobacco products 21 1.6 94.3 94.8 90.9 91.9 93.1 94.7 96.7 94.5 91.4 92.7 92.4 90.9 92.9 93.5 84 Textile mill products 22 1.8 110.9 111.7 110.8 112.7 111.4 110.1 111.5 110.8 111.6 111.3 108.8 109.6 108.9 107.9 85 Apparel products 23 2.2 90.7 89.2 89.0 89.1 89.1 89.1 89.0 89.7 89.5 90.1 88.9 86.8 87.4 85.9 86 Paper and products 26 3.6 116.2 115.8 117.2 118.0 118.1 117.7 117.1 116.5 117.3 117.8 115.5 118.5 114.1 114.5 87 Printing and publishing .... 27 6.7 104.4 103.6 104.6 106.0 105.7 105.3 105.3 105.7 105.9 105.4 106.0 105.6 106.7 106.6 88 Chemicals and products .... 28 9.9 117.5 117.7 117.4 119.8 122.7 122.9 121.6 122.4 121.2 120.2 120.3 120.3 120.6 120.9 89 Petroleum products 29 1.4 114.7 114.1 114.6 114.5 112.8 114.9 113.2 115.6 118.7 117.1 118.4 117.7 118.1 118.6 90 Rubber and plastic products . 30 3.5 137.7 137.6 139.3 138.9 139.3 141.4 142.2 141.2 140.5 141.6 140.4 141.1 142.3 141.4 91 Leather and products 31 .3 69.8 70.2 69.5 68.2 67.7 65.4 68.1 66.2 64.6 63.7 64.9 64.3 64.0 63.3 92 Mining 6.9 98.0 98.5 98.3 99.2 99.7 99.5 99.7 100.0 101.3 101.2 102.3 103.1 104.3 104.3 93 Metal 10 .5 97.1 93.0 91.4 94.2 94.5 95.2 95.5 94.1 92.7 93.4 96.3 94.9 94.6 94.0 94 Coal 12 1.0 108.1 110.7 109.4 108.8 110.0 109.5 106.3 101.9 109.3 112.0 110.1 114.4 119.8 119.0 95 Oil and gas extraction 13 4.8 92.5 93.2 93.0 94.0 94.5 94.6 95.7 96.2 96.0 95.9 98.0 98.1 98.7 99.2 96 Stone and earth minerals 14 .6 124.4 123.0 125.5 126.3 125.0 122.4 120.8 127.5 133.0 128.8 124.5 127.4 128.1 126.2 97 Utilities 7.7 115.6 117.8 117.7 115.2 110.9 113.5 114.6 115.3 110.8 114.9 119.0 115.7 113.4 117.9 98 Electric 491.493PT 6.2 118.2 120.0 119.8 116.9 115.8 116.9 116.0 116.0 114.4 117.9 122.0 118.5 115.5 120.5 99 Gas 492,493PT 1.6 104.8 108.2 108.5 107.9 88.2 98.1 108.4 112.6 94.4 101.2 105.7 103.2 104.0 106.6 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 141.7 142.0 142.3 143.6 144.5 145.2 146.2 146.9 148.0 149.0 149.8 150.7 151.6 151.5 101 Manufacturing excluding computer and office equipment 83.6 135.3 135.1 135.3 136.5 137.1 137.6 138.5 138.7 139.7 140.5 141.2 141.8 141.8 141.8 102 Computers, communications equipment, and semiconductors 5.9 794.1 830.4 843.0 863.9 887.7 908.5 952.4 994.7 1,043.7 1,093.0 1,144.2 1,181.3 1,229.0 1,269.1 103 Manufacturing excluding computers and semiconductors 81.1 121.6 121.6 121.7 122.6 122.9 123.1 123.6 123.4 123.8 123.9 124.1 124.1 123.8 123.6 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.5 119.3 119.1 119.3 120.1 120.4 120.6 120.9 120.7 121.0 121.0 121.0 121.1 120.6 120.2 Gross value (billions of 1992 dollars, annual rates) Major Markets 105 Products, total 2,001.9 2,726.1 2,742.0 2,740.2 2,762.6 2,740.0 2,751.5 2,781.7 2,791.9 2,795.8 2,811.3 2,813.9 2,817.3 2,812.5 2,817.4 106 Final 1,552.1 2,101.6 2,118.5 2,112.5 2,132.5 2,115.8 2,122.4 2,147.5 2,152.5 2,155.2 2,168.6 2,172.3 2,181.2 2,178.6 2,187.0 107 Consumer goods 1,049.6 1,294.9 1,301.3 1,297.0 1,311.7 1,294.7 1,301.5 1,309.9 1,309.9 1,302.9 1,308.9 1,309.9 1,313.5 1,304.8 1,311.3 108 Equipment 502.5 808.3 819.0 817.5 822.5 823.4 822.9 840.3 845.6 856.0 863.5 866.4 871.9 878.9 880.6 109 Intermediate 449.9 623.3 622.4 626.4 628.9 623.0 627.9 633.0 638.1 639.3 641.5 640.3 635.1 632.9 629.6 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The 1997), pp. 67-92, and the references cited therein. For details about the construction of latest historical revision of the industrial production index and the capacity utilization rates individual industrial production series, see "Industrial Production: 1989 Developments and was released in November 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 • November 2000 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1999 2000 item 11999988 11999999 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayr Juner July Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,441 1,612 1,664 1,636 1,678 1,683 1,762 1,661 1,597 1,559 1,511 1,528 1,511 2 One-family 1,062 1,188 1,247 1,204 1,238 1,266 1,317 1,223 1,238 1,164 1,150 1,127 1,117 3 Two-family or more 379 425 417 432 440 417 445 438 359 395 361 401 394 4 Started 1,474 1,617 1,667 1,636 1,663 1,769 1,744 1,822 1,630 1,652 1,591 1,571 1,526 5 One-family 1,134 1,271 1,335 1,343 1,344 1,441 1,361 1,324 1,327 1,310 1,258 1,227 1,205 6 Two-family or more 340 346 332 293 319 328 383 498 303 342 333 344 321 7 Under construction at end of period1 847 971 993 1,020 1,022 1,025 1,033 1,041 1,031 1,029 1,023 1,021 11,,001177 8 One-family 555 659 679 706 708 710 712 712 706 703 697 694 668899 9 Two-family or more 292 312 314 314 314 315 321 329 325 326 326 327 328 10 Completed 1,400 1,474 1,636 1,608 1,653 1,675 1,599 1,732 1,728 1,660 1,705 1,555 1,537 11 One-family 1,116 1,160 1,307 1,274 1,345 1,340 1,296 1,382 1,375 1,354 1,377 1,229 1,222 12 Two-family or more 284 315 329 334 308 335 303 350 353 306 328 326 315 13 Mobile homes shipped 354 374 348 321 316 304 307 291 287 271 265 262 251 Merchant builder activity in one-family units 14 Number sold 804 886 907 906 895 916 927 905 947 865R 886 823 944 15 Number for sale at end of period1 287 300 326 314 317 320 321 309 321 305R 303 304 299 Price of units sold (thousands of dollars)2 16 Median 146.0 152.5 160.0 160.0 172.9 165.0 163.0 162.3 165.7 163.lr 163.6 160.0 166.1 17 Average 176.2 181.9 195.8 200.3 212.4 203.0 200.1 199.6 205.3 207.5R 198.6 195.8 196.7 EXISTING UNITS (one-family) 18 Number sold 4,382 4,970 5,197 4,880 5,150 5,140 4,450 4,760 5,200 4,880 5,090 5,310 4,820 Price of units sold (thousands of dollars)2 19 Median 121.8 128.4 133.3 132.5 133.2 133.7 132.2 133.7 134.7 136.1 137.6 140.2 143.3 20 Average 150.5 159.1 168.3 167.2 168.9 168.8 168.9 168.1 171.5 173.3 176.0 178.9 177.7 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 656,084 710,104 765,719 756,854 776,476 791,698 806,099 816,012 829,517 815,848 811,868 801,665 789,009 22 Private 501,426 550,983 592,037 584,860 596,942 605,802 614,584 629,590 637,743 629,097 630,751 628,245 621,698 23 Residential 289,101 314,058 348,584 349,968 353,854 358,223 365,149 368,745 372,118 368,734 368,781 364,313 355,355 24 Nonresidential 212,325 236,925 243,454 234,892 243,088 247,579 249,435 260,845 265,625 260,363 261,970 263,932 266,343 25 Industrial buildings 36,696 40,464 35,016 31,354 32,244 33,262 33,947 38,538 39,030 38,591 39,694 39,834 38,999 26 Commercial buildings 86,151 95,753 103,759 103,935 107,305 107,187 107,961 115,440 116,030 114,997 113,503 115,440 114,934 27 Other buildings 37,193 39,607 41,279 41,496 42,095 43,392 43,350 45,553 45,808 44,223 45,468 45,218 44,690 28 Public utilities and other 52,287 61,101 63,400 58,107 61,444 63,738 64,177 61,314 64,757 62,552 63,305 63,440 67,720 29 Public 154,657 159,121 173,682 171,994 179,534 185,895 191,515 186,422 191,774 186,750 181,118 173,420 167,311 30 Military 2,561 2,538 2,122 2,114 1,944 2,332 1,782 3,011 2,249 2,185 2,248 2,161 2,122 31 Highway 43,886 48,339 54,447 50,646 56,547 60,218 63,368 53,145 59,007 55,923 51,277 47,430 45,623 32 Conservation and development 5,708 5,421 6,002 5,941 6,585 7,001 6,223 6,975 6,494 5,878 5,350 5,845 4,472 33 Other 102,502 102,823 111,110 113,293 114,458 116,344 120,142 123,291 124,024 122,764 122,243 117,984 115,094 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 2000 AAAuuuggg... 11999999 22000000 222000000000 AAuugg.. AAuugg.. Sept. Dec. Mar. June Apr. May June July Aug. CONSUMER PRICES2 (1982-84=100) 1 All items 2.3 3.4 3.9 2.4 5.8 2.6 .0 .1 .6 .2 -.1 172.7 7 Food 2.0 2.7 2.5 2.2 1.7 2.7 .1 .5 .1 .5 .2 168.7 3 Energy items 7.2 13.1 26.0 7.8 50.5 6.6 -1.9 -1.9 5.6 .1 -2.9 125.9 4 All items less food and energy 1.9 2.5 2.5 1.8 3.2 2.0 .2 .2 .2 .2 .2 181.6 Commodities .2 .5 2.5 -.6 .3 .0 .2 .0 -.2 .0 -.1 143.7 6 Services 2.6 3.5 2.5 3.1 4.1 3.2 .2 .2 .3 .2 .3 203.3 PRODUCER PRICES (1982=100) 7 Finished goods 2.3 3.3 6.8 .9 7.9 1.8 -,4r ,2r .6 .0 -.2 138.1 8 Consumer foods .5 .7 3.3 -2.0 3.6 1.8 i.r -,4r -.3 .0 -.7 136.9 9 Consumer energy 10.7 15.3 37.6 5.9 51.8 5.7 -3.9r ,4r 5.1 -.7 -.2 96.3 10 Other consumer goods 2.2 1.8 3.8 1.1 .8 .8 -,lr ,4r -.1 .1 .1 153.4 11 Capital equipment .1 1.1 .3 1.2 .9 1.5 ,lr ,3r .0 .1 .0 138.4 Intermediate materials 12 Excluding foods and feeds 1.5 4.5 6.6 3.6 9.5 2.8 -.1 -.1 .9 .3 -.2 131.0 13 Excluding energy .2 2.5 3.4 2.1 4.2 2.7 ,4r ,0r .2 .2 -.1 137.0 Crude materials 14 Foods -3.1 -4.7 3.7 -3.6 21.5 -11.1 1.5r -i.r -2.6 -2.7 -4.5 95.4 15 Energy 35.3 42.3 134.4 -27.9 84.9 106.7 —4.5r 8.1r 16.2 .4 .6 124.2 16 Other -2.1 4.0 22.6 26.2 9.9 -10.5 -1.0r — .4' -1.3 -1.8 -1.3 142.3 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 • November 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 Q2 Q3 Q4 Ql Q2 GROSS DOMESTIC PRODUCT 1 Total 8,318.4 8,790.2 9,299.2 9,191.5 9,340.9 9,559.7 9,752.7 9,942.9 By source 2 Personal consumption expenditures 5,529.3 5,850.9 6,268.7 6,213.2 6,319.9 6,446.2 6,621.7 6,707.1 3 Durable goods 642.5 693.9 761.3 756.3 767.2 787.6 826.3 814.4 4 Nondurable goods 1,641.6 1,707.6 1,845.5 1,825.3 1,860.0 1,910.2 1,963.9 1,997.2 5 Services 3,245.2 3,449.3 3,661.9 3,631.5 3,692.7 3,748.5 3,831.6 3,895.6 6 Gross private domestic investment 1,390.5 1,549.9 1,650.1 1,607.9 1,659.1 1,723.7 1,755.7 1,852.8 / Fixed investment 1,327.7 1,472.9 1,606.8 1,593.4 1,622.4 1,651.0 1,725.8 1,779.9 8 Nonresidential 999.4 1,107.5 1,203.1 1,188.0 1,216.8 1,242.2 1,308.5 1,359.9 y Structures 255.8 283.2 285.6 283.7 281.2 290.4 308.9 315.4 10 Producers' durable equipment 743.6 824.3 917.4 904.3 935.6 951.8 999.6 1,044.5 n Residential structures 328.2 365.4 403.8 405.4 405.6 408.8 417.3 419.9 12 Change in business inventories 62.9 77.0 43.3 14.5 36.7 72.7 29.9 73.0 13 Nonfarm 60.0 76.4 43.6 13.4 42.0 71.8 32.4 73.1 14 Net exports of goods and services -89.3 -151.5 -254.0 -240.4 -280.5 -299.1 -335.2 -360.0 15 Exports 966.4 966.0 990.2 973.0 999.5 1,031.0 1,051.9 1,090.8 16 Imports 1,055.8 1,117.5 1,244.2 1,213.4 1,280.0 1,330.1 1,387.1 1,450.8 17 Government consumption expenditures and gross investment 1,487.9 1,540.9 1,634.4 1,610.9 1,642.4 1,688.8 1,710.4 1,742.9 18 Federal 538.2 540.6 568.6 558.3 570.4 591.6 580.1 604.5 19 State and local 949.7 1,000.3 1,065.8 1,052.6 1,072.1 1,097.3 1,130.4 1,138.5 By major type of product 20 Final sales, total 8,255.5 8,713.2 9,255.9 9,177.0 9,304.2 9,486.9 9,722.8 9,870.0 21 Goods 3,082.5 3,239.3 3,467.0 3,436.7 3,490.6 3,566.0 3,680.3 3,734.5 22 Durable 1,436.2 1,532.3 1,651.1 1,635.9 1,669.4 1,701.8 1,773.7 1,810.3 23 Nondurable 1,646.4 1,707.1 1,815.8 1,800.8 1,821.1 1,864.1 1,906.6 1,924.2 24 Services 4,442.1 4,673.0 4,934.6 4,891.2 4,965.2 5,050.3 5,135.2 5,227.8 25 Structures 730.9 800.9 854.3 849.1 848.5 870.7 907.4 907.7 26 Change in business inventories 62.9 77.0 43.3 14.5 36.7 72.7 29.9 73.0 27 Durable goods 33.1 45.8 27.2 5.0 27.6 47.5 20.7 48.3 28 Nondurable goods 29.8 31.2 16.1 9.5 9.1 25.2 9.2 24.7 MEMO 29 Total GDP in chained 1996 dollars 8,159.5 8,515.7 8,875.8 8,783.2 8,905.8 9,084.1 9,191.8 9,311.5 NATIONAL INCOME 30 Total 6,618.4 7,038.1 7,469.7 7,392.3 7,493.1 7,680.7 7,833.5 7,972.4 31 Compensation of employees 4,651.3 4,984.2 5,299.8 5,255.4 5,340.9 5,421.1 5,512.2 5,597.6 32 Wages and salaries 3,886.0 4,192.8 4,475.1 4,435.5 4,512.2 4,583.5 4,660.4 4,734.8 33 Government and government enterprises 664.3 692.7 724.4 720.3 727.5 734.5 749.9 760.1 34 Other 3,221.7 3,500.1 3,750.7 3,715.2 3,784.7 3,849.0 3,910.5 3,974.7 35 Supplement to wages and salaries 765.3 791.4 824.6 819.9 828.7 837.7 851.8 862.9 36 Employer contributions for social insurance 289.9 305.9 323.6 321.2 325.9 330.3 337.8 342.4 37 Other labor income 475.4 485.5 501.0 498.7 502.8 507.4 514.0 520.5 38 Proprietors' income1 581.2 620.7 663.5 660.4 659.7 689.6 693.9 708.5 39 Business and professional1 551.5 595.2 638.2 631.4 644.2 657.9 674.8 686.8 40 Farm1 29.7 25.4 25.3 29.0 15.5 31.7 19.1 21.7 41 Rental income of persons2 128.3 135.4 143.4 145.7 136.6 146.2 145.6 141.9 42 Corporate profits' 833.8 815.0 856.0 836.8 842.0 893.2 936.3 964.0 43 Profits before tax3 792.4 758.2 823.0 804.5 819.0 870.7 920.7 942.2 44 Inventory valuation adjustment 8.4 17.0 -9.1 -8.9 -19.7 -19.2 -25.0 -13.4 45 Capital consumption adjustment 32.9 39.9 42.1 41.2 42.7 41.6 40.6 35.2 46 Net interest 423.9 482.7 507.1 494.1 513.8 530.6 545.4 560.3 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 Q2 Q3 Q4 QL Q2 PERSONAL INCOME AND SAVING 1 Total personal income 6,937.0 7,391.0 7,789.6 7,729.7 7,828.5 7,972.3 8,105.8 8,233.6 7. Wage and salary disbursements 3,888.9 4,190.7 4,470.0 4,430.4 4,507.0 4,578.3 4,660.4 4,734.8 3 Commodity-producing industries 975.1 1,038.6 1,089.2 1,081.6 1,097.8 1,111.2 1,130.9 1,144.8 4 Manufacturing 718.4 756.6 782.4 777.4 789.0 795.1 802.8 811.5 Distributive industries 879.6 949.1 1,020.3 1,009.9 1,029.9 1,049.4 1,070.9 1,092.3 6 Service industries 1,369.9 1,510.3 1,636.0 1,618.6 1,651.8 1,683.2 1,708.6 1,737.5 7 Government and government enterprises 664.3 692.7 724.4 720.3 727.5 734.5 749.9 760.1 8 Other labor income 475.4 485.5 501.0 498.7 502.8 507.4 514.0 520.5 9 Proprietors' income1 581.2 620.7 663.5 660.4 659.7 689.6 693.9 708.5 10 Business and professional 551.5 595.2 638.2 631.4 644.2 657.9 674.8 686.8 11 29.7 25.4 25.3 29.0 15.5 31.7 19.1 21.7 17. Rental income of persons2 128.3 135.4 143.4 145.7 136.6 146.2 145.6 141.9 N Dividends 334.9 351.1 370.3 366.8 373.5 380.2 386.9 392.6 14 Personal interest income 864.0 940.8 963.7 951.3 969.4 989.0 1,011.6 1,027.7 IS Transfer payments 962.2 983.0 1,016.2 1,012.2 1,020.3 1,027.4 1,046.9 1,066.1 16 Old age survivors, disability, and health insurance benefits 565.8 578.0 588.0 586.1 589.7 592.8 607.9 624.3 17 LESS: Personal contributions for social insurance 297.9 316.2 338.5 335.8 341.0 345.9 353.4 358.5 18 EQUALS: Personal income 6,937.0 7,391.0 7,789.6 7,729.7 7,828.5 7,972.3 8,105.8 8,233.6 19 LESS: Personal tax and nontax payments 968.8 1,070.9 1,152.0 1,133.4 1,164.0 1,197.3 1,239.3 1,271.6 20 EQUALS: Disposable personal income 5,968.2 6,320.0 6,637.7 6,596.3 6,664.5 6,775.0 6,866.5 6,962.0 21 LESS: Personal outlays 5,715.3 6,054.7 6,490.1 6,432.8 6,543.3 6,674.1 6,855.6 6,945.7 22 EQUALS: Personal saving 252.9 265.4 147.6 163.6 121.1 101.0 11.0 16.4 MEMO Per capita (chained 1996 dollars) 73 Gross domestic product 30,434.4 31,469.5 32,511.9 32,220.0 32,586.0 33,153.5 3333,,448855..66 3333,,884477..77 7.4 Personal consumption expenditures 20,230.9 20,985.4 21,900.4 21,791.0 22,004.4 22,266.4 22,635.5 22,748.8 25 Disposable personal income 21,838.0 22,672.0 23,191.0 23,133.0 23,203.0 23,404.0 23,472.0 23,617.0 26 Saving rate (percent) 4.2 4.2 2.2 2.5 1.8 1.5 .2 .2 GROSS SAVING 27 Gross saving 1,502.3 1,654.4 1,717.6 1,691.7 1,716.8 1,746.3 1,777.0 1,830.5 28 Gross private saving 1,343.7 1,375.7 1,343.5 1,338.5 1,321.1 1,331.4 1,279.2 1,323.7 79 Personal saving 252.9 265.4 147.6 163.6 121.1 101.0 11.0 16.4 30 Undistributed corporate profits' 261.3 218.9 229.4 218.7 214.0 241.7 262.7 278.1 31 Corporate inventory valuation adjustment 8.4 17.0 -9.1 -8.9 -19.7 -19.2 -25.0 -13.4 Capital consumption allowances 37 Corporate 581.5 624.3 676.9 670.7 687.7 669944..88 771111..55 773300..66 33 Noncorporate 250.9 265.1 284.5 280.3 293.1 288.7 294.1 298.7 34 Gross government saving 158.6 278.7 374.1 353.3 395.7 414.9 497.7 506.8 ^5 Federal 33.4 137.4 217.3 209.5 240.6 238.4 333.0 336.9 36 Consumption of fixed capital 86.8 88.4 92.8 92.0 93.4 95.0 97.2 99.1 37 Current surplus or deficit (—), national accounts -53.3 49.0 124.4 117.5 147.3 143.3 235.8 237.8 38 State and local 125.2 141.3 156.8 143.7 155.1 176.6 164.7 169.9 39 Consumption of fixed capital 94.2 99.5 106.8 105.8 107.7 109.9 112.7 115.7 40 Current surplus or deficit (-), national accounts 31.0 41.7 50.0 38.0 47.4 66.6 52.0 54.2 41 Gross investment 1,532.1 1,629.6 1,645.6 1,614.9 1,627.3 1,678.5 1,699.3 1,766.1 47 Gross private domestic investment 1,390.5 1,549.9 1,650.1 1,607.9 1,659.1 1,723.7 1,755.7 1,852.8 43 Gross government investment 264.6 278.8 308.7 303.5 308.0 324.4 334.2 332.5 44 Net foreign investment -123.1 -199.1 -313.2 -296.5 -339.8 -369.6 -390.7 -419.3 45 Statistical discrepancy 29.7 -24.8 -71.9 -76.8 -89.5 -67.8 -77.7 -64.4 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 • November 2000 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 1999 2000 IItteemm ccrreeddiittss oorr ddeebbiittss 11999977 11999988 11999999 Q2 Q3 Q4 Qlr Q2P 1 Balance on current account -140,540 -217,138 -331,479 -78,982 -89,649 -96,223 -101,505 -106,138 ? Balance on goods and services -105,932 -166,898 -264,971 -63,300 -72,718 -76,280 -85,117 -89,259 3 Exports 936,937 932,977 956,242 234,297 241,969 249,653 255,977 265,133 4 Imports -1,042,869 -1,099,875 -1,221,213 -297,597 -314,687 -325,933 -341,094 -354,392 5 Income, net 6,186 -6,211 -18,483 -4,145 -5,535 -5,683 -4,364 -4,543 6 Investment, net 11,050 -1,036 -13,102 -2,813 -4,193 -4,319 -2,987 -3,145 7 Direct 71,935 67,728 62,704 14,698 15,701 16,275 17,068 18,421 8 Portfolio -60,885 -68,764 -75,806 -17,511 -19,894 -20,594 -20,055 -21,566 9 Compensation of employees -4,864 -5,175 -5,381 -1,332 -1,342 -1,364 -1,377 -1,398 10 Unilateral current transfers, net -40,794 -44,029 -48,025 -11,537 -11,396 -14,260 -12,024 -12,336 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 68 -422 2,751 -392 -686 3,711 --113311 --557722 12 Change in U.S. official reserve assets (increase, —) -1,010 -6,783 8,747 1,159 1,951 1,569 -554 2,020 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -350 -147 10 -190 -184 -178 -180 -180 15 Reserve position in International Monetary Fund -3,575 -5,119 5,484 1,413 2,268 1,800 -237 2,328 16 Foreign currencies 2,915 -1,517 3,253 -64 -133 -53 -137 -128 17 Change in U.S. private assets abroad (increase, —) -487,998 -328,231 -441,685 -171,609 -124,174 -120,162 -178,273 -75,096 18 Bank-reported claims3 -141,118 -35,572 -69,862 -41,786 -11,259 -45,304 -55,511 14,861 19 Nonbank-reported claims -122,888 -10,612 -92,328 -25,734 -27,943 -24,428 -52,563 -26,112 20 U.S. purchases of foreign securities, net -118,976 -135,995 -128,594 -71,131 -41,420 -17,150 -27,236 -26,350 21 U.S. direct investments abroad, net -105,016 -146,052 -150,901 -32,958 -43,552 -33,280 -42,963 -37,495 22 Change in foreign official assets in United States (increase, +) 18,876 -20,127 42,864 -1,096 12,191 27,495 22,015 5,905 23 U.S. Treasury securities -6,690 -9,921 12,177 -6,708 12,963 5,122 16,198 -4,000 24 Other U.S. government obligations 4,529 6,332 20,350 5,792 1,835 6,730 8,107 10,334 25 Other U.S. government liabilities3 -1,041 -3,550 -3,255 -1,099 -760 89 -644 -772 26 Other U.S. liabilities reported by U.S. banks3 22,286 -9,501 12,692 1,436 -2,032 14,427 -2,577 -561 27 Other foreign official assets4 -208 -3,487 900 -517 185 1,127 931 904 28 Change in foreign private assets in United States (increase, +) 738,086 502,362 710,700 273,104 182,019 157,072 214,520 216,831 29 U.S. bank-reported liabilities2 149,026 39,769 67,403 37,151 24,585 19,618 -8,824 48,660 30 U.S. nonbank-reported liabilities 113,921 -7,001 34,298 13,663 -8,085 792 58,061 21,597 31 Foreign private purchases of U.S. Treasury securities, net 146,433 48,581 -20,464 -5,407 9,639 -17,191 -9,248 -20,661 32 U.S. currency flows 24,782 16,622 22,407 3,057 4,697 12,213 -6,847 989 33 Foreign purchases of other U.S. securities, net 197,892 218,075 331,523 80,838 95,620 92,250 132,416 86,547 34 Foreign direct investments in United States, net 106,032 186,316 275,533 143,802 55,563 49,390 48,962 79,699 35 Capital account transactions, net5 350 637 -3,500 165 171 -3,993 166 163 36 Discrepancy -127,832 69,702 11,602 -22,349 18,177 30,531 43,762 -43,113 37 Due to seasonal adjustment -1,511 -9,739 5,738 5,724 -2,505 38 Before seasonal adjustment -127,832 69,702 11,602 -20,838 27,916 24,793 38,038 -40,608 MEMO Changes in official assets 39 U.S. official reserve assets (increase, —) -1,010 -6,783 8,747 1,159 1,951 1,569 --555544 22,,002200 40 Foreign official assets in United States, excluding line 25 (increase, +) 19,917 -16,577 46,119 3 12,951 27,406 22,659 6,677 41 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 12,124 -11,531 1,331 1,632 -783 -1,673 66,,110099 11,,992222 1. Seasonal factors are not calculated for lines 11-16, 18-20, 22-35, and 38^11. 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 2000 IItteemm 11999977 11999988 11999999 Jan.1 Feb.r Mar.r Apr/ Mayr Juner JulyP 1 Goods and services, balance -105,932 -166,898 -264,971 -27,266 -27,481 -30,370 -29,637 -29,794 -29,846 '-31,892 2 Merchandise -196,665 -246,854 -345,559 -34,049 -34,641 -37,148 -36,894 -36,475 -36,862 -38,695 3 Services 90,733 79,956 80,588 6,783 7,160 6,778 7,257 6,681 7,016 6,803 4 Goods and services, exports 936,937 932,977 956,242 83,691 85,312 86,975 87,268 86,846 90,991 89,670 5 Merchandise 679,702 670,324 684,358 60,321 60,894 62,513 62,566 62,749 66,468 64,979 6 Services 257,235 262,653 271,884 23,370 24,418 24,462 24,702 24,097 24,523 24,691 7 Goods and services, imports 1,042,869 1,099,875 1,221,213 -110,957 -112,793 -117,345 -116,905 -116,640 -120,837 -121,562 8 Merchandise 876,367 917,178 1,029,917 -94,370 -95,535 -99,661 -99,460 -99,224 -103,330 -103,674 9 Services 166,502 182,697 191,296 -16,587 -17,258 -17,684 -17,445 -17,416 -17,507 -17,888 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 2000 AAsssseett 11999977 11999988 11999999 Feb. Mar. Apr. May June July Aug. Sept.p 1 Total 69,954 81,755 71,516 69,309 70,789 66,587 67,160 67,957 66,516 65,333 66,256 2 Gold stock, including Exchange Stabilization Fund1 11,050 11,041 11,089 11,048 11,048 11,048 11,048 11,048 11,046 11,046 1111,,004466 3 Special drawing rights2,3 10,027 10,603 10,336 10,277 10,335 10,122 10,310 10,444 10,257 10,371 10,316 4 Reserve position in International Monetary Fund2 18,071 24,111 17,950 17,578 17,871 15,403 15,373 15,428 15,083 13,798 13,685 5 Foreign currencies4 30,809 36,001 32,182 30,406 31,535 30,014 30,429 31,037 30,130 30,118 31,209 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 2000 AAsssseett 11999977 11999988 11999999 Feb. Mar. Apr. May June July Aug. Sept.p 1 Deposits 457 167 71 87 125 142 110 104 76 78 139 Held in custody 2 U.S. Treasury securities2 620,885 607,574 632,482 631,421 641,830 632,216 623,553 627,081 624,177 628,001 611,641 3 Earmarked gold3 10,763 10,343 9,933 9,771 9,711 9,711 9,711 9,688 9,688 9,674 9,620 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 • November 2000 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 2000 IItteemm 11999988 11999999 Jan. Feb. Mar. Apr. May June Julyp 1 Total' 759,928 806,288 808,474 812,353 828,947 834,154 826,302 836,075r 848,298 By type 2 Liabilities reported by banks in the United States 125.883 138,817 134,753 130,268 136,240 137,724 135,802 136,129r 141,186 3 U.S. Treasury bills and certificates3 134,177 156,177 153,548 156,995 164,781 157,607 148,820 157,190 160,093 U.S. Treasury bonds and notes 4 Marketable 432,127 422,266 429,029 430,806 430,237 436,640 435,235 433.823 433,184 5 Nonmarketable4 6,074 6,111 6,152 6,191 5,734 5,770 5,808 5,740 5,180 6 U.S. securities other than U.S. Treasury securities5 61,667 82,917 84,992 88,093 91,955 96,413 100,637 103,193 108,655 By area 7 Europe1 256,026 244,805 246,022 248,792 251,571 249,685 250,306 253,416r 258,923 8 Canada 36,715 38,666 39,439 39,358 39,846 39,501 39,190 39,705 39,891 9 Latin America and Caribbean 79,503 73.518 71,888 71,180 77,014 72,407 69,508 71,220 73,616 10 400,631 463.673 463,801 466,087 474,355 486,133 482,134 485,424 487,491 11 Africa 10,059 7.523 8,208 7,976 7,979 8,024 7,709 7,849 8,656 12 Other countries 3,080 4,189 5,202 5,046 4,268 4,490 3,541 4,547 5,807 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 2000 IItteemm 11999966 11999977 11999988 Sept. Dec.r Mar.r June 1 Banks' liabilities 103,383 117,524 101,125 100,112 88,537 85,649 78,603 2 Banks' claims 66,018 83,038 78,162 67,032 67,365 63,492 62,631 3 Deposits 22,467 28,661 45,985 32,713 34,426 32,967 31,224 4 Other claims 43,551 54,377 32,177 34,319 32,939 30,525 31,407 5 Claims of banks' domestic customers2 10,978 8,191 20,718 11,534 20,826 21,753 18,802 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 2000 IItteemm 11999977 11999988 11999999 Jan. Feb. Mar. Apr. May June Julyp BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,283,027 1,347,837 1,413,683 1,413,811 1,407,301 1,406,476 1,406,149 457,629r 456,538 485,518 2 Banks' own liabilities 882,980 884,939 976,400 981,461 970,752 960,303 974,579 36,677r 17,537 55,667 3 Demand deposits 31,344 29,558 42,884 36,518 39,611 29,255 30,202 29,097 30,706 35,103 4 Time deposits2 198,546 151,761 163,620 162,147 165,682 167,031 182,683 176,927r 182,777 186,614 5 Other3 168,011 140,752 162,749 174,682 163,884 161,533 165,626 179,090 175,906 178,666 6 Own foreign offices4 485,079 562,868 607,147 608,114 601,575 602,484 596,068 651,563r 628,148 655,284 7 Banks' custodial liabilities5 400,047 462,898 437,283 432,350 436,549 446,173 431,570 420,952 439,001 429,851 8 U.S. Treasury bills and certificates6 193,239 183,494 185,797 181,879 184,604 195,050 184,160 174,310 180,951 182,699 9 Other negotiable and readily transferable instruments7 93,641 141,699 132,575 129,551 128,673 127,630 124,209 123,580 124,670 120,624 10 Other 113,167 137,705 118,911 120,920 123,272 123,493 123,201 123,062 133,380 126,528 11 Nonmonetary international and regional organizations8 . . 11,690 11,883 15,276 21,807 20,436 18,361 20,590 22,807 21,366 16,689 12 Banks' own liabilities 11,486 10,850 14,357 20,951 19,513 17,586 19,800 22,109 20,924 16,294 13 Demand deposits 16 172 98 202 148 71 58 36 34 30 14 Time deposits2 5,466 5,793 10,349 9,621 9,251 9,741 11,338 11,393 12,545 10,305 15 Other3 6,004 4,885 3,910 11,128 10,114 7,774 8,404 10,680 8,345 5,959 16 Banks' custodial liabilities5 204 1,033 919 856 923 775 790 698 442 395 17 U.S. Treasury bills and certificates6 69 636 680 625 704 695 623 582 432 371 18 Other negotiable and readily transferable instruments7 133 397 233 225 213 71 77 113 10 21 19 Other 2 0 6 6 6 9 90 3 0 3 20 Official institutions9 283,685 260,060 294,994 288,301 287,263 301,021 295,331 284,622 293,319 301,279 21 Banks' own liabilities 102,028 80,256 97,615 82,678 79,652 87,187 87,379 87,931 88,449 94,298 22 Demand deposits 2,314 3,003 3,341 2,645 3,306 2,381 2,620 2,781 2,887 4,274 23 Time deposits2 41,396 29,506 28,942 25,909 27,690 30,117 36,587 31,645 33,520 34,756 24 Other3 58,318 47,747 65,332 54,124 48,656 54,689 48,172 53,505 52,042 55,268 25 Banks' custodial liabilities5 181,657 179,804 197,379 205,623 207,611 213,834 207,952 196,691 204,870 206,981 26 U.S. Treasury bills and certificates6 148,301 134,177 156,177 153,548 156,995 164,781 157,607 148,820 157,190 160,093 27 Other negotiable and readily transferable instruments7 33,151 44,953 41,152 51,522 50,298 48,689 50,118 47,734 47,611 46,363 28 Other 205 674 50 553 318 364 227 137 69 525 79 Banks10 815,247 885,336 905,383 905,045 893,042 887,858 890,695 941,920r 930,649 958,205 30 Banks' own liabilities 641,447 676,057 733,356 740,355 730,867 723,761 730,194 781,795r 759,873 795,071 31 Unaffiliated foreign banks 156,368 113,189 126,209 132,241 129,292 121,277 134,126 130,232 131,725 139,787 32 Demand deposits 16,767 14,071 17,583 12,964 12,424 13,930 14,404 13,254 14,537 17,496 33 Time deposits2 83,433 45,904 48,140 51,171 51,510 49,716 57,240 55,167 58,086 60,703 34 Other3 56,168 53,214 60,486 68,106 65,358 57,631 62,482 61,811 59,102 61,588 35 Own foreign offices4 485,079 562,868 607,147 608,114 601,575 602,484 596,068 651,563r 628,148 655,284 36 Banks' custodial liabilities5 173,800 209,279 172,027 164,690 162,175 164,097 160,501 160,125 170,776 163,134 37 U.S. Treasury bills and certificates6 31,915 35,359 16,936 17,582 14,635 15,770 13,931 14,179 13,239 12,657 38 Other negotiable and readily transferable instruments7 35,393 45,332 45,695 36,426 34,629 35,453 33,790 33,667 34,657 34,018 39 Other 106,492 128,588 109,396 110,682 112,911 112,874 112,780 112,279 122,880 116,459 40 Other foreigners 172,405 190,558 198,030 198,658 206,560 199,236 199,533 208,280r 211,204 209,345 41 Banks' own liabilities 128,019 117,776 131,072 137,477 140,720 131,769 137,206 144,842r 148,291 150,004 42 Demand deposits 12,247 12,312 21,862 20,707 23,733 12,873 13,120 13,026 13,248 13,303 43 Time deposits2 68,251 70,558 76,189 75,446 77,231 77,457 77,518 78,722r 78,626 80,850 44 Other3 47,521 34,906 33,021 41,324 39,756 41,439 46,568 53,094 56,417 55,851 45 Banks' custodial liabilities5 44,386 72,782 66,958 61,181 65,840 67,467 62,327 63,438 62,913 59,341 46 U.S. Treasury bills and certificates6 12,954 13,322 12,004 10,124 12,270 13,804 11,999 10,729 10,090 9,578 47 Other negotiable and readily transferable instruments7 24,964 51,017 45,495 41,378 43,533 43,417 40,224 42,066 42,392 40,222 48 Other 6,468 8,443 9,459 9,679 10,037 10,246 10,104 10,643 10,431 9,541 MEMO 49 Negotiable time certificates of deposit in custody for foreigners 16,083 27,026 30,345 28,344 27,266 28,056 26,087 27,238 26,571 26,186 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 • November 2000 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued Payable in U.S. dollars Millions of dollars, end of period 2000 IItteemm 11999977 11999988 11999999 Jan. Feb. Mar. Apr. May June Julyp AREA 50 Total, all foreigners 1,283,027 1,347,837 1,413,683 1,413,811 1,407,301 1,406,476 1,406,149 457,629r 456,538 485,518 51 Foreign countries 1,271,337 1,335,954 1,398,407 1,392,004 1,386,865 1,388,115 1,385,559 434,822r 1,435,172 468,829 52 Europe 419,672 427,375 448,070 450,033 451,022 449,760 433,784 435,694 448,745 481,812 53 Austria 2,717 3,178 2,789 2,648 2,997 2,570 2,302 2,468 2,697 3,224 54 Belgium and Luxembourg 41,007 42,818 44,692 42,433 38,783 36,385 33,100 31,656 31,246 33,372 55 Denmark 1,514 1,437 2,196 2,510 2,533 3,235 2,601 3,629 3,444 3,522 56 Finland 2,246 1,862 1,658 1,290 1,479 2,015 1,744 1,529 1,380 1,745 57 France 46,607 44,616 49,790 48,530 49,839 43,666 45,324 43,577 42,105 42,384 58 Germany 23,737 21,357 24,748 24,097 23,916 25,176 23,710 24,875 28,943 26,323 59 Greece 1,552 2,066 3,748 3,145 4,000 3,216 3,188 3,030 2,765 2,920 60 Italy 11,378 7,103 6,775 6,261 5,405 5,278 4,789 7,142 6,676 5,702 61 Netherlands 7,385 10.793 8,310 7,271 7,797 7,617 7,277 6,823 8,728 12,339 62 Norway 317 710 1,327 834 1,169 1,336 1,197 963 2,189 2,374 63 Portugal 2,262 3,236 2,228 2,034 2,113 2,006 1,913 1,964 2,373 2,172 64 Russia 7,968 2,439 5,475 6,404 7,543 7,360 10,065 11,716 11,884 14,961 65 Spain 18,989 15,781 10,426 12,531 12,130 12,518 11,208 10,796 9,999 8,878 66 Sweden 1,628 3.027 4,652 4,673 4,792 5,425 5,165 4,390 5,434 5,091 67 Switzerland 39,023 50,654 65,985 64,282 61,335 81,934 69,208 63,700 59,561 78,197 68 Turkey 4,054 4,286 7,842 6,912 7,714 7,995 8,016 7,501 8,472 8,401 69 United Kingdom 181,904 181,554 176,234 184,520 187,347 169,156 169,222 176,824 187,806 197,238 /O Yugoslavia" 239 233 286 273 294 270 265 275 276 279 71 Other Europe and other former U.S.S.R.12 25,145 30,225 28,909 29,385 29,836 32,602 33,490 32,836 32,767 32,690 72 Canada 28,341 30,212 34,119 32,965 33,387 36,147 40,562 36,229 37,256 37,253 73 Latin America and Caribbean 536,393 554,866 577,737 599,593 596,273 596,211 604,685 663,827r 641,069 643,584 74 Argentina 20,199 19.014 18,633 15,333 16,548 17,906 18,487 16,496 16,540 19,392 /5 Bahamas 112,217 118,085 134,407 149,727 155,720 141,370 159,115 174,132 182,216 168,345 76 Bermuda 6,911 6,846 7,877 9,910 9,106 10,108 9,710 8,713 8,021 7,341 7/ Brazil 31,037 15,815 12,860 12,230 12,785 14,889 10,305 9,945 10,905 11,916 78 British West Indies 276,418 302,486 312,779 320,352 311,990 320,120 314,961 359,771r 324,994 341,441 79 Chile 4,072 5,015 7,008 6,366 6,244 5,752 5,933 6,095 6,192 5,439 80 Colombia 3,652 4,624 5,669 4,438 4,304 4,314 4,243 4,237 4,360 4,622 81 Cuba 66 62 75 75 75 100 77 77 85 122 82 Ecuador 2,078 1,572 1,956 1,985 2,035 2,141 2,193 2,274 2,272 2,179 83 Guatemala 1,494 1,336 1,626 1,636 1,617 1,706 1,628 1,669 1,649 1,718 84 Jamaica 450 577 520 540 571 671 670 706 674 710 85 Mexico 33,972 37,157 30,717 32,090 32,216 31,393 32,832 33,915 33,937 33,381 86 Netherlands Antilles 5,085 5,010 3,997 4,269 3,692 4,528 5,108 6,561 7,885 7,165 87 Panama 4,241 3,864 4,415 4,042 3,737 4,157 3,788 3,764 3,822 3,348 88 Peru 893 840 1,142 1,073 1,051 975 1,021 1,100 1,125 1,096 89 Uruguay 2,382 2,486 2,386 2,260 2,262 2,377 2,431 2,520 2,680 2,160 90 Venezuela 21,601 19,894 20,189 21,517 21,297 22,572 21,140 20,469 22,263 21,461 91 Other 9,625 10,183 11,481 11,750 11,023 11,132 11,043 11,383 11,449 11,748 92 269,379 307,960 319,363 290,411 287,375 287,636 228888,,774455 228822,,332255 229900,,001144 228855,,008866 China 93 Mainland 18,252 13,441 12,325 11,570 11,661 8,096 8,530 7,824 9,930 9,383 94 Taiwan 11,840 12,708 13,600 11,674 11,211 14,642 14,488 14,113 13,584 13,156 95 Hong Kong 17,722 20,900 27,697 25,951 24,038 22,672 22,873 23,951 23,952 25,693 96 India 4,567 5,250 7,367 5,491 5,405 6,258 5,586 5,703 5.558 5,689 97 Indonesia 3,554 8,282 6,567 6,853 7,495 7,837 7,275 7,064 7,400 7,472 98 Israel 6,281 7,749 7,488 6,581 7,680 8,338 7,058 5,541 6,123 5,793 99 Japan 143,401 168,563 159,075 149,033 145,314 145,074 147.409 148,668 153,662 147,554 100 Korea (South) 13,060 12,524 12,853 11,573 12,625 16,420 16,820 12,941 10,324 8,624 101 Philippines 3,250 3,324 3,253 1,937 2,540 2,277 2,290 1,750 1,999 1,649 102 Thailand 6,501 7,359 6,050 5,389 5,134 4,370 3,628 3,428 3,529 3,900 103 Middle Eastern oil-exporting countries13 14,959 15,609 21,284 16,927 15,811 16,132 19,005 18,647 18,538 22,127 104 Other 25,992 32,251 41,804 37,432 38,461 35,520 33,783 32,695 35,415 34,046 105 Africa 10,347 8,905 9,468 8,105 8,270 8,614 8,576 8,437 8,716 9,738 106 Egypt 1,663 1,339 2,022 1,616 1,703 1,770 1,663 1,722 1,962 11,,777788 107 Morocco 138 97 179 176 262 115 106 122 149 111188 108 South Africa 2,158 1,522 1,495 730 698 673 687 662 595 793 109 Zaire 10 5 14 7 13 13 7 13 6 5 110 Oil-exporting countries14 3,060 3,088 2,914 2,952 3,098 3,318 3,558 3,298 3,405 4,258 111 Other 3,318 2,854 2,844 2,624 2,496 2,725 2,555 2,620 2,599 2,786 112 Other 7,205 6,636 9,650 10,897 10,538 9,747 9,207 8,310 9,372 11,356 113 Australia 6,304 5,495 8,377 9,910 9,335 8,669 8,414 7,586 88,,556644 10,347 114 Other 901 1,141 1,273 987 1,203 1,078 793 724 880088 1,009 115 Nonmonetary international and regional organizations . . 11,690 11,883 15,276 21,807 20,436 18,361 20,590 22,807 21,366 16,689 116 International15 10,517 10,221 12,876 19,708 17,561 16,306 19,207 21,375 20,106 15,295 117 Latin American regional16 424 594 1,150 1,128 1.858 1,244 518 624 768 786 118 Other regional17 749 1,068 1,250 971 1,017 811 865 808 492 608 11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 15. Principally the International Bank for Reconstruction and Development. Excludes 12. Includes the Bank for International Settlements. Since December 1992, has "holdings of dollars" of the International Monetary Fund. included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia. 16. Principally the Inter-American Development Bank. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 17. Asian, African, Middle Eastern, and European regional organizations, except the Bank Emirates (Trucial States). for International Settlements, which is included in "Other Europe." 14. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 2000 AArreeaa oorr ccoouunnttrryy 11999977 11999988 11999999 Jan. Feb. Mar. Apr. May June Julyp 1 Total, all foreigners 708,225 734,995 795,377 757,214 750,972 813,890 815,083 820,782r 825,898 827,987 2 Foreign countries 705,762 731,378 790,814 751,596 746,305 809,581 810,081 816,439r 820,887 824,111 3 Europe 199,880 233,321 315,905 308,133 314,504 361,470 350,067 359,895 357,243 361,814 4 Austria 1,354 1,043 2,643 3,020 2,471 2,493 2,429 2,242 2,148 2,646 5 Belgium and Luxembourg 6,641 7,187 10,193 8,898 9,777 8,022 7,939 5,959 6,393 6,261 6 Denmark 980 2,383 1,669 1,702 1,743 1,625 1,940 2,001 3,440 3,349 7 Finland 1,233 1,070 2,020 2,328 1,846 2,093 2,087 2,414 2,650 2,946 8 France 16,239 15,251 29,142 30,051 28,303 28,127 30,958 35,217 28,633 25,848 9 Germany 12,676 15,923 29,205 29,871 28,890 35,371 33,991 31,521 33,585 30,454 in Greece 402 575 806 793 683 842 864 828 837 754 11 Italy 6,230 7,284 8,496 8,614 6,785 7,048 7,034 6,565 7,724 6,483 i? Netherlands 6,141 5,697 11,810 11,477 11,484 14,089 13,932 14,377 15,668 13,155 13 Norway 555 827 1,000 1,376 1,146 1,132 1,499 1,832 1,935 2,404 14 Portugal 777 669 1,571 1,307 1,155 1,043 1,085 1,268 1,424 1,454 15 Russia 1,248 789 713 701 743 709 709 715 744 718 16 Spain 2,942 5,735 3,796 4,581 4,339 3,187 3,217 3,126 3,844 4,768 17 Sweden 1,854 4,223 3,264 4,556 5,382 7,492 8,100 7,112 8,744 8,460 18 Switzerland 28,846 46,874 79,158 68,976 70,250 111,544 97,688 105,573 86,284 94,549 19 Turkey 1,558 1,982 2,617 2,969 3,031 3,053 3,148 3,269 3,189 2,736 70 United Kingdom 103,143 106,349 120,190 120,126 128,252 125,162 125,935 128,259 141,769 147,138 21 Yugoslavia2 52 53 50 50 50 50 51 49 49 69 22 Other Europe and other former U.S.S.R.3 7,009 9,407 7,562 6,737 8,174 8,388 7,461 7,568 8,183 7,622 23 Canada 27,189 47,037 37,206 36,474 38,541 42,686 43,300 45,481 42,591 40,383 24 Latin America and Caribbean 343,730 342,654 353,416 323,537 314,839 323,816 328,769 321,219 328,629 329,170 25 Argentina 8,924 9,552 10,167 9,962 10,095 9,845 9,732 9,507 9,386 9,428 76 Bahamas 89,379 96,455 99,324 78,641 68,914 74,018 72,312 71,459 80,393 73,275 77 Bermuda 8,782 5,011 8,007 10,145 11,771 7,441 5,685 6,478 6,285 6,906 78 Brazil 21,696 16,184 15,706 15,031 15,382 14,981 16,210 16,376 16,544 16,902 79 British West Indies 145,471 153,749 167,189 157,469 156,776 166,284 173,907 165,920 164,969 172,262 30 Chile 7,913 8,250 6,607 6,672 6,224 6,511 6,447 6,399 6.213 6,072 31 Colombia 6,945 6,507 4,524 4,326 4,176 3,937 3,907 4,032 3,796 3,907 37 Cuba 0 0 0 0 0 0 0 0 0 0 33 Ecuador 1,311 1,400 760 692 730 688 662 640 613 610 34 Guatemala 886 1,127 1,135 1,067 1,170 1,181 1,252 1,245 1,235 1,215 35 Jamaica 424 239 295 298 332 328 316 300 291 299 36 Mexico 19,428 21,212 17,899 17,848 17,489 16,998 16,944 16,771 17,066 16,432 37 Netherlands Antilles 17,838 6,779 5,982 6,194 6,341 6,385 6,388 6,579 6,502 6,652 38 Panama 4,364 3,584 3,387 3,067 2,972 2,912 2,844 2,984 3,063 2,981 39 Peru 3,491 3,275 2,529 2,462 2,414 2,223 2,356 2,515 2,458 2,488 40 Uruguay 629 1,126 801 709 777 761 714 708 620 649 41 Venezuela 2,129 3,089 3,494 3,571 3,524 3,580 3,474 3,595 3,471 3,357 42 Other 4,120 5,115 5,610 5,383 5,752 5,743 5,619 5,711 5,724 5,735 4.3 Asia 125,092 98,607 74,914 73,342 69,074 72,692 78,257 80,221r 82,415 83,137 China 44 Mainland 1,579 1,261 2,090 2,221 2,726 3,161 4,532 2,611 1,688 1,822 45 Taiwan 922 1,041 1,390 1,462 1,501 925 1,080 l,732r 1,339 926 46 Hong Kong 13,991 9,080 5,893 5,240 4,453 4,519 4,546 4,573 4,266 5,782 47 India 2,200 1,440 1,738 1,616 1,802 1,749 1,786 1,941 1,905 2,013 48 Indonesia 2,651 1,942 1,776 1,711 1,743 1,817 1,821 1,819 1,856 1,940 49 Israel 768 1,166 1,875 1,853 1,832 3,412 3,293 2,857 1,610 1,982 50 Japan 59,549 46,713 28,636 28,612 25,559 27,310 30,381 31,689 33,256 31,207 51 Korea (South) 18,162 8,289 9,262 11,378 12,066 11,466 12,209 14,018 15,866 18,924 57 Philippines 1,689 1,465 1,410 1,088 1,058 1,698 1,714 1,884 1,865 1,802 53 Thailand 2,259 1,807 1,515 1,155 1,275 1,154 1,081 1,137 1,255 1,051 54 Middle Eastern oil-exporting countries4 10,790 16,130 14,252 10,774 10,947 11,612 10,765 11,666 12,128 10,366 55 Other 10,532 8,273 5,077 6,232 4,112 3,869 5,049 4,294r 5,381 5,322 5ft 3,530 3,122 2,268 2,786 2,453 1,991 2,054 2,109 2,494 2,517 57 Egypt 247 257 258 222 207 243 206 218 230 217 58 Morocco 511 372 352 299 313 279 300 271 259 272 59 South Africa 805 643 622 943 889 428 360 341 772 423 60 Zaire 0 0 24 0 0 0 0 0 0 0 61 Oil-exporting countries5 1,212 936 276 494 228 198 394 508 430 751 62 Other 755 914 736 828 816 843 794 771 803 854 63 Other 6,341 6,637 7,105 7,324 6,894 6,926 7,634 7,514 7,515 7,090 64 Australia 5,300 6,173 6,824 7,113 6,682 6,674 7,225 7,139 7,240 6,890 65 Other 1,041 464 281 211 212 252 409 375 275 200 66 Nonmonetary international and regional organizations6. . . 2,463 3,617 4,563 5,618 4,667 4,309 5,002 4,343 5,011 3,876 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 • November 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 2000 TTyyppee ooff ccllaaiimm 11999977 11999988 11999999 Jan. Feb. Mar. Apr. Mayr June Julyp 1 Total 852,852 875,891 947,176r l,010,415r 1,010,005 2 Banks' claims 708,225 734,995 795,377 757,214 750,972 813,890 815,083 820,782 825,898 827,987 3 Foreign public borrowers 20,581 23,542 35,090 42,241 36,541 36,036 37,300 43,092 41,461 48,499 4 Own foreign offices2 431,685 484,535 528,397 490,280 496,771 552,218 557,339 549,165 553,262 553,133 5 Unaffiliated foreign banks 109,230 106,206 101,227 93,524 87,666 96,030 91,849 92,280 92,911 89,236 6 Deposits 30,995 27,230 34,360 24,259 21,275 24,361 22,399 24,769 22,373 21,861 7 Other 78,235 78,976 66,867 69,265 66,391 71,669 69,450 67,511 70,538 67,375 8 All other foreigners 146,729 120,712 130,663 131,169 129,994 129,606 128,595 136,245 138,264 137,119 9 Claims of banks' domestic customers3 144,627 140,896 151,799r 196,525r 184,107 10 Deposits 73,110 79,363 88,006r 128,490r 106,055 11 Negotiable and readily transferable instruments4 53,967 47,914 51,161 56,032 62,975 12 Outstanding collections and other claims 17,550 13,619 12,632 12,003 15,077 MEMO 13 Customer liability on acceptances 9,624 4,520 4,553r 4,464r 5,082 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 33,816 39,978 31,125 41,559 48,225 53,657 45,383 44,868 44,139 46,254 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 1999r 2000 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999966 11999977 11999988 Sept. Dec. Mar.r Junep 1 Total 258,106 276,550 250,418 270,098 266,309 261,056 273,022 By borrower 2 Maturity of one year or less 211,859 205,781 186,526 196,772 187,383 180,453 187,028 .3 Foreign public borrowers 15,411 12,081 13,671 22,526 22,811 23,436 25,289 4 All other foreigners 196,448 193.700 172,855 174,246 164,572 157,017 161,739 5 Maturity of more than one year 46,247 70,769 63,892 73,326 78,926 80,603 85,994 6 Foreign public borrowers 6,790 8,499 9,839 12,162 12,013 12,802 15,484 7 All other foreigners 39,457 62,270 54,053 61,164 66,913 67.801 70,510 By area Maturity of one year or less 8 Europe 55,690 58,294 68,679 82,566 80,842 79,639 76,366 9 Canada 8,339 9,917 10,968 8,544 7,859 8,408 7,353 10 Latin America and Caribbean 103,254 97,207 81,766 78,063 68,987 62,325 66,065 11 Asia 38,078 33,964 18,007 20,859 21,802 23,002 29,231 17 Africa 1,316 2,211 1,835 1,119 1,122 957 1,569 13 All other3 5,182 4,188 5,271 5,621 6,771 6,122 6,444 Maturity of more than one year 14 Europe 6,965 13,240 14,923 18,619 22,951 23,951 25,116 15 Canada 2,645 2,525 3,140 3,193 3,192 3,127 3,323 16 Latin America and Caribbean 24,943 42,049 33,442 38,154 38,789 39,194 41,758 17 Asia 9,392 10,235 10,018 10,641 11,257 11,612 12,446 18 Africa 1,361 1,236 1,232 1,087 1,065 965 924 19 All other3 941 1,484 1,137 1,632 1,672 1,754 2,427 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity. dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1998 1999 2000 AArreeaa oorr ccoouunnttrryy 11999966 11999977 June Sept. Dec. Mar. June Sept. Dec. Mar. Junep 1 Total 645.8 721.8 1017.2 1071.9 1051.6 992.8 939.4 937.4 936.7r 952.7 991.0 2 G-10 countries and Switzerland 228.3 242.8 273.9 240.0 217.7 208.7 223.1 206.1 236.5r 284.1 323.3 3 Belgium and Luxembourg 11.7 11.0 14.0 11.7 10.7 15.6 16.1 15.7 14.3 14.2 13.8 4 France 16.6 15.4 21.7 20.3 18.4 21.6 20.4 19.9 29.0 27.1 32.6 Germany 29.8 28.6 30.5 31.4 30.9 34.7 32.1 37.4 38.7 37.3 31.5 6 Italy 16.0 15.5 21.1 18.5 11.5 17.8 16.4 15.0 18.1 20.0 20.0 7 Netherlands 4.0 6.2 8.6 8.4 7.8 10.7 13.3 10.6 12.3 17.1 16.1 8 Sweden 2.6 3.3 3.1 2.1 2.3 4.0 2.6 3.6 3.0 3.9 3.5 9 Switzerland 5.3 7.2 7.0 7.6 8.5 7.8 8.2 8.8 10.3 10.1 13.8 in United Kingdom 104.7 113.4 125.9 100.1 85.4 56.1 74.3 51.7 72.4r 113.5 148.3 ii Canada 14.0 13.7 16.7 15.9 16.8 15.9 17.1 17.8 16.3 17.5 18.2 12 Japan 23.7 28.6 25.3 23.9 25.4 24.6 22.6 25.6 22.0 23.5 25.4 13 Other industrialized countries 66.1 65.5 78.7 78.5 69.0 80.1 79.7 71.7 68.4 62.8 76.2 14 Austria 1.1 1.5 1.9 2.1 1.4 2.8 2.8 3.0 3.5 2.6 2.8 15 Denmark 1.5 2.4 2.2 3.0 2.2 3.4 2.9 2.1 2.6 1.5 1.2 16 Finland .8 1.3 1.4 1.6 1.4 1.5 .9 .9 .9 .8 1.3 17 Greece 6.7 5.1 5.8 5.8 5.9 6.5 5.9 6.6 6.0 5.7 6.8 18 Norway 8.0 3.6 3.4 3.2 3.2 3.1 3.0 3.8 3.3 3.0 4.6 19 Portugal .9 .9 1.4 1.1 1.4 1.4 1.2 1.2 1.0 1.0 2.0 20 Spain 13.3 12.6 17.5 19.5 13.7 15.7 16.6 15.1 12.1 11.3 12.2 21 Turkey 2.7 4.5 6.5 5.2 4.8 5.2 4.9 4.7 4.8 5.1 5.6 22 Other Western Europe 4.9 8.3 9.9 10.4 10.4 10.2 10.2 9.2 6.8 8.3 8.8 73 South Africa 2.0 2.2 6.9 5.4 4.4 4.8 4.7 4.0 3.8 4.8 4.6 24 Australia 24.0 23.1 21.8 21.4 20.3 25.4 26.6 21.1 23.5 18.6 26.3 75 OPEC2 19.8 26.0 25.5 26.0 27.1 26.2 26.1 30.1 31.4 28.9 32.3 26 Ecuador 1.1 1.3 1.2 1.2 1.3 1.2 1.1 .9 .8 .7 .7 7.7 Venezuela 2.4 2.5 3.3 3.1 3.2 3.5 3.2 3.0 2.8 3.0 2.9 78 Indonesia 5.2 6.7 5.1 4.7 4.7 4.5 5.0 4.4 4.2 3.9 4.1 29 Middle East countries 10.7 14.4 15.6 16.1 17.0 16.7 16.5 21.4 23.0 21.1 24.0 30 African countries .4 1.2 .3 .8 1.0 .4 .4 .5 .5 .2 .7 31 Non-OPEC developing countries 130.3 139.2 146.1 140.4 143.4 146.7 148.6 142.5 147.3 152.5 155.6 Latin America 37 Argentina 14.3 18.4 20.9 22.9 23.1 24.3 22.8 22.1 22.4 21.3 20.3 33 Brazil 20.7 28.6 30.3 24.0 24.7 24.2 25.1 22.1 26.4 26.9 27.0 34 Chile 7.0 8.7 9.1 8.5 8.3 8.6 8.2 7.7 7.4 8.2 8.1 35 Colombia 4.1 3.4 3.6 3.4 3.2 3.3 3.1 2.7 2.5 2.5 2.4 36 Mexico 16.2 17.4 18.1 18.7 18.9 19.7 18.5 19.4 18.7 18.3 20.5 37 1.6 2.0 2.2 2.2 2.2 2.2 2.1 1.8 1.7 1.9 2.1 38 Other 3.3 4.1 4.4 4.6 5.4 5.3 5.5 5.5 5.9 6.5 6.7 Asia China 39 Mainland 2.5 3.2 3.9 2.8 3.0 5.0 5.3 3.3 3.6 4.6 3.8 40 Taiwan 10.3 9.5 11.8 12.5 13.3 11.8 12.6 12.3 12.0 12.6 12.6 41 India 4.3 4.9 4.9 5.3 5.5 5.5 6.7 7.0 7.7 7.9 8.2 47 Israel .5 .7 .9 .9 1.1 1.1 2.0 1.0 1.8 3.3 1.5 43 Korea (South) 21.5 15.6 14.6 13.1 13.7 13.7 15.3 16.0 15.1 17.4 21.2 44 Malaysia 6.0 5.1 4.7 5.0 5.6 5.9 6.0 6.1 6.1 6.5 6.8 45 Philippines 5.8 5.7 5.4 4.7 5.1 5.4 5.7 5.8 6.2 5.3 5.3 46 Thailand 5.7 5.4 5.0 5.3 4.7 4.5 4.2 4.0 4.1 4.3 4.0 47 Other Asia 4.1 4.3 3.7 3.1 2.9 3.0 2.8 2.8 2.9 2.6 2.5 Africa 48 Egypt .7 .9 1.5 1.7 1.3 1.4 1.4 1.3 1.4 1.4 11..33 49 Morocco .7 .6 .6 .5 .5 .5 .5 .5 .4 .3 .3 50 Zaire .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 .9 .8 .8 1.1 1.0 1.2 1.0 1.0 1.0 .9 .9 52 Eastern Europe 6.9 9.1 11.3 6.3 5.5 7.1 5.8 5.4 5.2 6.3 9.4 53 Russia4 3.7 5.1 6.9 2.8 2.2 2.3 2.1 2.0 1.6 1.7 1.5 54 Other 3.2 4.0 4.4 3.5 3.3 4.8 3.7 3.4 3.6 4.7 7.9 55 Offshore banking centers 135.1 140.2 130.0 121.0 93.9 93.6 75.9 90.3 60.1 42.0 52.4 56 Bahamas 20.5 24.2 28.6 30.7 35.4 32.6 20.4 29.4 13.9 2.4 .5 57 Bermuda 4.5 9.8 9.4 10.4 4.6 3.9 5.7 8.2 8.0 7.3 6.3 58 Cayman Islands and other British West Indies 37.2 43.4 34.3 27.8 12.8 13.9 7.2 6.3 1.3 .0 5.1 S9 Netherlands Antilles 26.1 14.6 10.5 6.0 2.6 2.7 1.3 9.1 1.7 2.5 2.6 60 Panama5 2.0 3.1 3.3 4.0 3.9 3.9 3.9 3.9 3.9 3.4 3.3 61 Lebanon .1 .1 .1 .2 .1 .1 .1 .2 .1 .1 .1 67 Hong Kong, China 27.9 32.2 30.0 30.6 23.3 22.8 22.0 22.4 21.0 22.2 20.7 63 Singapore 16.7 12.7 13.6 11.1 11.1 13.5 15.2 10.6 10.1 4.1 13.6 64 Other6 .1 .1 .2 .2 .2 .2 .1 .2 .1 .1 .1 65 Miscellaneous and unallocated7 59.6 99.1 351.7 459.9 495.1 430.4 380.2 391.2 387.9 376.1 341.9 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 • November 2000 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1998 1999 2000 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999966 11999977 11999988 Dec. Mar. June Sept. Dec. Mar. 1 Total 61,782 57,382 46,570 46,570 46,663 49,337 52,979 53,044 52,555 2 Payable in dollars 39,542 41,543 36,668 36,668 34,030 36,032 36,296 37,605 34,680 3 Payable in foreign currencies 22,240 15,839 9,902 9,902 12,633 13,305 16,683 15,415 17,875 By type 4 Financial liabilities 33,049 26,877 19,255 19,255 22,458 25,058 27,422 27,980 28,246 5 Payable in dollars 11,913 12,630 10,371 10,371 11,225 13,205 12,231 13,883 11,924 6 Payable in foreign currencies 21,136 14,247 8,884 8,884 11,233 11,853 15,191 14,097 16,322 7 Commercial liabilities 28,733 30,505 27,315 27,315 24,205 24,279 25,557 25,064 24,309 8 Trade payables 12,720 10,904 10,978 10,978 9,999 10,935 12,651 12,857 12,401 y Advance receipts and other liabilities 16,013 19,601 16,337 16,337 14,206 13,344 12,906 12,207 11,908 10 Payable in dollars 27,629 28,913 26,297 26,297 22,805 22,827 24,065 23,722 22,756 n Payable in foreign currencies 1,104 1,592 1,018 1,018 1,400 1,452 1,492 1,318 1,553 By area or country Financial liabilities 12 Europe 23,179 18,027 12,589 12,589 16,098 19,578 21,695 23,241 23,116 13 Belgium and Luxembourg 632 186 79 79 50 70 50 31 4 14 France 1,091 1,425 1,097 1,097 1,178 1,287 1,675 1,659 1,405 lb Germany 1,834 1,958 2,063 2,063 1,906 1,959 1,712 1,974 1,390 16 Netherlands 556 494 1,406 1,406 1,337 2,104 2,066 1,996 1,970 17 Switzerland 699 561 155 155 141 143 133 147 97 18 United Kingdom 17,161 11,667 5,980 5,980 9,729 13,097 15,096 16,521 16,579 19 Canada 1,401 2,374 693 693 781 320 344 284 313 20 Latin America and Caribbean 1,668 1,386 1,495 1,495 11,,552288 11,,336699 11,,118800 892 846 21 Bahamas 236 141 7 7 11 11 11 1 1 22 Bermuda 50 229 101 101 78 52 26 5 1 23 Brazil 78 143 152 152 137 131 122 126 128 24 British West Indies 1,030 604 957 957 1,064 944 786 492 489 25 Mexico 17 26 59 59 22 19 28 25 22 26 Venezuela 1 1 2 2 2 1 0 0 0 27 Asia 6,423 4,387 3,785 3,785 3,475 3,217 3,622 3,437 3,275 28 Japan 5,869 4,102 3,612 3,612 3,337 3,035 3,384 3,142 2,985 29 Middle Eastern oil-exporting countries' 25 27 0 0 1 2 3 3 4 30 Africa 38 60 28 28 31 29 31 28 28 31 Oil-exporting countries2 0 0 0 0 2 0 0 0 0 32 All other3 340 643 665 665 545 545 550 98 668 Commercial liabilities 33 Europe 9,767 10,228 10,030 10,030 8,580 8,718 9,265 9,262 8,646 34 Belgium and Luxembourg 479 666 278 278 229 189 128 140 78 35 France 680 764 920 920 654 656 620 672 539 36 Germany 1,002 1.274 1,392 1,392 1,088 1,143 1,201 1,131 914 37 Netherlands 766 439 429 429 361 432 535 507 648 38 Switzerland 624 375 499 499 535 497 593 626 536 39 United Kingdom 4,303 4,086 3,697 3,697 3,008 2,959 3,175 3,071 2,661 40 Canada 1,090 1,175 1,390 1,390 1,597 1,670 1,753 1,775 2,024 41 Latin America and Caribbean 2,574 2,176 1,618 1,618 1,612 1,674 1,957 2,310 2,286 42 Bahamas 63 16 14 14 11 19 24 22 9 43 Bermuda 297 203 198 198 225 180 178 152 287 44 Brazil 196 220 152 152 107 112 120 145 115 45 British West Indies 14 12 10 10 7 5 39 48 23 46 Mexico 665 565 347 347 437 490 704 887 805 47 Venezuela 328 261 202 202 155 149 182 305 193 48 Asia 13,422 14,966 12,342 12,342 10,428 10,039 10,428 9,886 9,681 49 Japan 4,614 4,500 3,827 3,827 2,715 2,753 2,689 2,609 2,274 50 Middle Eastern oil-exporting countries' 2,168 3,111 2,852 2,852 2,479 2,209 2,618 2,551 2,308 51 Africa 1,040 874 794 794 727 832 959 950 943 52 Oil-exporting countries2 532 408 393 393 377 392 584 499 536 53 Other3 840 1,086 1,141 1,141 1,261 1,346 1,195 881 729 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 2000 Type of claim, and area or country 11999966 11999977 11999988 Dec. Mar. June Sept. Dec. Mar.r 1 Total 65,897 68,128 77,462 77,462 69,054 63,884 67,566 76,669 84,266 2 Payable in dollars 59,156 62,173 72,171 72,171 64,026 57,006 60,456 69,170 74,331 3 Payable in foreign currencies 6,741 5,955 5,291 5,291 5,028 6,878 7,110 7,472 9,935 By type 4 Financial claims 37,523 36,959 46,260 46,260 38,217 31,957 33,877 40,231 47,798 5 Deposits 21,624 22,909 30,199 30,199 18,686 13,350 15,192 18,566 23,316 6 Payable in dollars 20,852 21,060 28,549 28,549 17,101 11,636 13,240 16,373 21,442 7 Payable in foreign currencies 772 1,849 1,650 1,650 1,585 1,714 1,952 2,193 1,874 8 Other financial claims 15,899 14,050 16,061 16,061 19,531 18,607 18,685 21,665 24,482 9 Payable in dollars 12,374 11,806 14,049 14,049 17,457 14,800 15,718 18,593 19,659 10 Payable in foreign currencies 3,525 2,244 2,012 2,012 2,074 3,807 2,967 3,072 4,823 11 Commercial claims 28,374 31,169 31,202 31,202 30,837 31,927 33,689 36,438 36,468 12 Trade receivables 25,751 27,536 27,202 27,202 26,724 27,791 29,397 32,629 31,443 13 Advance payments and other claims .... 2,623 3,633 4,000 4,000 4,113 4,136 4,292 3,809 5,025 14 Payable in dollars 25,930 29,307 29,573 29,573 29,468 30,570 31,498 34,204 33,230 15 Payable in foreign currencies 2,444 1,862 1,629 1,629 1,369 1,357 2,191 2,207 3,238 By area or country Financial claims 16 Europe 11,085 14,999 12,294 12,294 12,881 13,978 13,878 13,023 16,789 17 Belgium and Luxembourg 185 406 661 661 469 457 574 529 540 18 France 694 1,015 864 864 913 1,368 1,212 967 1,835 19 Germany 276 427 304 304 302 367 549 504 669 20 Netherlands 493 677 875 875 993 997 1,067 1,229 1,981 21 Switzerland 474 434 414 414 530 504 559 643 612 22 United Kingdom 7,922 10,337 7,766 7,766 8,400 8,631 8,157 7,561 9,044 23 Canada 3,442 3,313 2,503 2,503 3,111 2,828 3,172 2,553 3,175 24 Latin America and Caribbean 20,032 15,543 27,714 27,714 18,825 11,486 12,749 18,206 21,945 25 Bahamas 1,553 2,308 403 403 666 467 755 1,593 1,299 26 Bermuda 140 108 39 39 41 39 524 11 11 27 Brazil 1,468 1,313 835 835 1,112 1,102 1,265 1,476 1,646 28 British West Indies 15,536 10,462 24,388 24,388 14,621 7,393 7,263 12,099 15,814 29 Mexico 457 537 1,245 1,245 1,583 1,702 1,791 1,798 1,979 30 Venezuela 31 36 55 55 72 71 47 48 65 31 Asia 2,221 2,133 3,027 3,027 2,648 2,801 3,205 5,457 4,430 32 Japan 1,035 823 1,194 1,194 942 949 1,250 3,262 2,021 33 Middle Eastern oil-exporting countries 22 11 9 9 8 5 5 21 29 34 Africa 174 319 159 159 174 228 251 286 232 14 15 16 16 26 5 12 15 15 35 Oil-exporting countries2 569 652 563 563 578 636 622 706 1,227 36 All other3 Commercial claims 10,443 12,120 13,246 13,246 12,782 12,961 14,367 16,389 16,118 37 Europe 226 328 238 238 281 286 289 316 271 38 Belgium and Luxembourg 1,644 1,796 2,171 2,171 2,173 2,094 2,375 2,236 2,520 39 France 1,337 1,614 1,822 1,822 1,599 1,660 1,944 1,960 2,034 40 Germany 562 597 467 467 415 389 617 1,429 1,337 41 Netherlands 642 554 483 483 367 385 714 610 611 42 Switzerland 2,946 3,660 4,769 4,769 4,529 4,615 4,789 5,827 5,354 43 United Kingdom 44 Canada 2,165 2,660 2,617 2,617 2,983 2,855 2,638 2,757 3,088 45 Latin America and Caribbean 5,276 5,750 6,296 6,296 5,930 6,278 5,879 5,959 5,899 46 Bahamas 35 27 24 24 10 21 29 20 15 47 Bermuda 275 244 536 536 500 583 549 390 404 48 Brazil 1,303 1,162 1,024 1,024 936 887 763 905 849 49 British West Indies 190 109 104 104 117 127 157 181 95 50 Mexico 1,128 1,392 1,545 1,545 1,431 1,478 1,613 1,678 1,529 51 Venezuela 357 576 401 401 361 384 365 439 435 52 Asia 8,376 8,713 7,192 7,192 7,080 7,690 8,579 9,165 9,101 53 Japan 2,003 1,976 1,681 1,681 1,486 1,511 1,823 2,074 2,082 54 Middle Eastern oil-exporting countries 971 1,107 1,135 1,135 1,286 1,465 1,479 1,625 1,533 55 Africa 746 680 711 711 685 738 682 631 716 56 Oil-exporting countries2 166 119 165 165 116 202 221 171 82 57 Other3 1,368 1,246 1,140 1,140 1,377 1,405 1,544 1,5-37 1,546 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, 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 • November 2000 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 2000 2000 Transaction, and area or country 1998 1999 J J a u n ly .- Jan. Feb. Mar. Apr. May June Julyp U.S. corporate securities STOCKS 1 Foreign purchases 1,574,192 2,340,659 2,112,597 263,946 293,110 402,373 309,778 268,454 300,356 274,580 2 Foreign sales 1,524,203 2,233,137 2,003,563 253,365 265,365 378,141 306,474 262,142 282,563 255,513 3 Net purchases, or sales (-) 49,989 107,522 109,034 10,581 27,745 24,232 3,304 6,312 17,793 19,067 4 Foreign countries 50,369 107,578 108,993 10,539 27,626 24,414 3,243 6,291 17,823 19,057 5 Europe 68,124 98,060 110,060 15,704 24,375 18,594 12,289 7,496 14,853 16,749 6 France 5,672 3,813 3,513 -240 529 1,831 1,341 -588 -653 1,293 / Germany 9,195 13,410 25,239 5,633 5,425 4,532 3,431 3,355 22,,554444 319 8 Netherlands 8,249 8,083 1,642 -281 516 277 113 -113 558844 546 9 Switzerland 5,001 5,650 10,862 2,926 4,804 -913 1,689 585 67 1,704 10 United Kingdom 23,952 42,902 32,653 2,246 6,685 4,794 558 1,440 7,026 9,904 11 Canada -4,689 -335 2,494 666 890 286 9 834 -46 -145 12 Latin America and Caribbean 757 5,187 -9,168 -5,190 1,989 4,840 -11,441 -2,633 1,898 11,,336699 13 Middle East1 -1,449 -1,066 6,858 677 1,179 2,124 2,071 705 4 9988 14 Other Asia -12,351 4,445 -2,597 -1,645 -860 -1,716 52 -121 870 823 13 Japan -1,171 5,723 -5,877 -1,603 -1,115 -2,604 -446 -1,045 439 497 16 Africa 639 372 519 150 -2 205 228 -50 54 -66 17 Other countries -662 915 827 177 55 81 35 60 190 229 18 Nonmonetary international and regional organizations -380 -56 41 42 119 -182 61 21 -30 10 BONDS2 19 Foreign purchases 905,782 856,804 657,336 79,045 99,605 106,302 88,155 89,760r 107,281 87,188 20 Foreign sales 727,044 602,109 487,354 58,889 69,476 76,979 70,900 68,212r 75,117r 67,781 21 Net purchases, or sales (-) 178,738 254,695 169,982 20,156 30,129 29,323 17,255 21,548r 32,164r 19,407 22 Foreign countries 179,081 255,097 170,014 20,161 30,147 29,422 17,260 21,490r 32,215r 19,319 23 Europe 130,057 140,674 90,776 10,083 17,063 19,454 7,640 9,475 19,378 7,683 24 France 3,386 1,870 1,944 -114 1,124 620 -34 104 159 85 25 Germany 4,369 7,723 1,944 -618 702 348 288 175 897 152 26 Netherlands 3,443 2,446 -208 -23 -97 94 279 283 -169 -575 27 Switzerland 4,826 4,553 1,994 -47 526 202 -18 9 324 998 28 United Kingdom 99,637 106,344 69,894 10,324 13,478 15,479 4,274 6,237 16,218 3,884 29 Canada 6,121 6,043 8,021 2,133 1,324 689 764 1,076 1,092 943 30 Latin America and Caribbean 23,938 60,861 33,645 4,658 9,659 3,680 4,724 2,786r 4,390 3,748 31 Middle East1 4,997 1,979 1,070 -86 -177 670 347 -47 99 264 32 Other Asia 12,662 42,842 35,021 2,623 2,545 4,506 3,753 7,996r 7,059r 6,539 33 Japan 8,384 17,541 15,570 1,113 1,173 2,010 580 3,491 3,945r 3,258 34 Africa 190 1,411 693 677 -130 -11 35 40 72 10 35 Other countries 1,116 1,287 788 73 -137 434 -3 164 125 132 36 Nonmonetary international and regional organizations -343 -402 -32 -5 -18 -99 -5 58 -51 88 Foreign securities 37 Stocks, net purchases, or sales (—) 6,227 15,640 -23,584 1,107 -8,884 -8,173 723 8,535 —2,046r -14,846 38 Foreign purchases 929,923 1,177,303 1.073,083 134,949 176,940 177,090 154,322 145,408 152,149r 132,225 39 Foreign sales 923,696 1,161,663 1,096,667 133,842 185,824 185,263 153,599 136,873 154,195r 147,071 40 Bonds, net purchases, or sales (-) -17,350 -5,676 4,750 -3,498 -1,986 -3,431 798 4,263 5,770 2,834 41 Foreign purchases 1,328,281 798,267 514,956 62,186 74,380 83,838 63,916 79,534 82,951 68,151 42 Foreign sales 1,345,631 803,943 510,206 65,684 76,366 87,269 63,118 75,271 77,181 65,317 43 Net purchases, or sales (—), of stocks and bonds .... -11,123 9,964 -18,834 -2,391 -10,870 -11,604 1,521 12,798 3,724r -12,012 44 Foreign countries -10,778 9,679 -18,972 -2,551 -10,899 -11,703 1,356 12,722 3,874r -11,771 45 Europe 12,632 59,247 -15,269 754 -4,969 -5,923 1,628 10,113 — 1,434r -15,438 46 Canada -1,901 -999 -3,754 -471 -1,865 -1,400 -422 -1,234 1,399 239 47 Latin America and Caribbean -13,798 -4,726 -13,578 -4,868 -4,252 -701 -5,155 -845 1,981 262 48 Asia -3,992 -42,961 12,936 1,955 -713 -4,086 5,695 4,971 1,878 3,236 49 Japan -1,742 -43,637 16,423 866 -879 -1,458 4,688 5,978 3,243 3,985 50 Africa -1,225 710 971 99 184 384 -143 -51 -33 531 51 Other countries -2,494 -1,592 -278 -20 716 23 -247 -232 83 -601 52 Nonmonetary international and regional organizations -345 285 138 160 29 99 165 76 -150 -241 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 2000 AArreeaa oorr ccoouunnttrryy 11999988 11999999 Jan.- Jan. Feb. Mar. Apr. May June Julyp July 1 Total estimated 49,039 -9,953 -18,263 9,543 5,563 -16,871 14,520 -7,018 -17,932 -6,068 2 Foreign countries 46,570 -10,518 -17,430 9,578 5,770 -17,092 14,484 -6,820 -17,597 -5,753 3 Europe 23,797 -38,228 -31,651 214 -2,443 -9,971 -632 -2,526 -9,935 -6,358 4 Belgium and Luxembourg 3,805 -81 -215 731 65 116 -498 -743 252 -138 5 Germany 144 2,285 -3,704 1,706 -866 -1,352 -1,676 74 609 -2,199 6 Netherlands -5,533 2,122 2,388 806 2,475 539 700 -1,159 -389 -584 7 Sweden 1,486 1,699 706 499 -100 263 -289 266 -47 114 8 Switzerland 5,240 -1,761 -8,730 -3,407 -1,382 5 -288 -337 -1,928 -1,393 9 United Kingdom 14,384 -20,232 -20,843 -450 -1,261 -5,150 -533 178 -9,243 -4,384 10 Other Europe and former U.S.S.R 4,271 -22,260 -1,253 329 -1,374 -4,392 1,952 -805 811 2,226 11 Canada 615 7,348 558 -582 8 640 1,819 -681 226 -872 17, Latin America and Caribbean -3,662 -7,523 -3,391 -2,409 6,844 -4,789 2,509 -3,122 -3,839 1,415 13 Venezuela 59 362 226 54 13 24 26 4 16 89 14 Other Latin America and Caribbean 9,523 1,661 -6,728 -3,837 2,482 -1,596 258 -548 -4,748 1,261 15 Netherlands Antilles -13,244 -9,546 3,111 1,374 4,349 -3,217 2,225 -2,578 893 65 16 Asia 27,433 29,359 16,306 12,403 1,064 -2,943 11,166 -908 -3,988 -488 17 Japan 13,048 20,102 6,298 1,297 -1,874 494 10,855 -2,486 -2,660 672 18 Africa 751 -3,021 -218 -43 80 -19 4 -114 -130 4 19 Other -2,364 1,547 966 -5 217 -10 -382 531 69 546 20 Nonmonetary international and regional organizations 2,469 565 -833 -35 -207 221 36 -198 -335 -315 21 International 1,502 190 -797 -7 -194 151 30 -158 -286 -333 22 Latin American regional 199 666 52 0 0 70 6 -14 -9 -1 MEMO 23 Foreign countries 46,570 -10,518 -17,430 9,578 5,770 -17,092 14,484 -6,820 -17,597 -5,753 74 Official institutions 4,123 -9,861 10,918 6,763 1,777 -569 6,403 -1,405 -1,412 -639 25 Other foreign 42,447 -657 -28,348 2,815 3,993 -16,523 8,081 -5,415 -16,185 -5,114 Oil-exporting countries 76 Middle East2 -16,554 2,207 5,875 2,913 170 283 811 572 859 267 27 Africa3 2 0 0 0 0 0 0 0 0 0 1. Official and private transactions in marketable U.S. Treasury securities having an 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab original maturity of more than one year. Data are based on monthly transactions reports. Emirates (Trucial States). Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 3. Comprises Algeria, Gabon, Libya, and Nigeria, countries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • November 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 2000 Apr. May June July Aug. Sept. Exchange Rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 74.37 62.91 64.54 59.60 57.84 59.49 58.70 58.08 55.21 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 1.7696 1.8278 1.8099 1.7982 1.8091 1.8397 5 Canada/dollar 1.3849 1.4836 1.4858 1.4689 1.4957 1.4770 1.4778 1.4828 1.4864 6 China, PR./yuan 8.3193 8.3008 8.2781 8.2793 8.2781 8.2772 8.2794 8.2796 8.2785 7 Denmark/krone 6.6092 6.7030 6.9900 7.8872 8.2329 7.8501 7.9471 8.2459 8.5849 8 European Monetary Union/euro3 n.a. n.a. 1.0653 0.9449 0.9059 0.9505 0.9386 0.9045 0.8695 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 273.28 295.70 306.30 355.02 371.63 354.14 359.04 372.97 389.67 13 Hong Kong/dollar 7.7431 7.7467 7.7594 7.7880 7.7907 7.7934 7.7969 7.7995 7.7985 14 India/rupee 36.36 41.36 43.13 43.68 44.08 44.76 44.84 45.77 45.97 15 Ireland/pound2 151.63 142.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 Italyflira 1,703.81 1,736.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 17 Japan/yen 121.06 130.99 113.73 105.63 108.32 106.13 108.21 108.08 106.84 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 9.394 9.506 9.834 9.419 9.272 9.362 20 Netherlands/guilder 1.9525 1.9837 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 21 New Zealand/dollar2 66.25 53.61 52.94 49.60 47.08 47.05 45.97 44.52 41.71 22 Norway/krone 7.0857 7.5521 7.8071 8.6272 9.0533 8.6807 8.7185 8.9526 9.2331 23 Portugal/escudo 175.44 180.25 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 24 Singapore/dollar 1.4857 1.6722 1.6951 1.7096 1.7286 1.7277 1.7414 1.7206 1.7406 25 South Africa/rand 4.6072 5.5417 6.1191 6.6480 7.0238 6.9147 6.8971 6.9570 7.1805 26 South Korea/won 947.65 1,400.40 1,189.84 1,110.32 1,119.49 1,117.94 1,115.08 1,114.47 1,117.57 27 Spain/peseta 146.53 149.41 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 Sri Lanka/rupee 59.026 65.006 70.868 74.123 74.867 76.736 78.852 78.283 78.731 29 Sweden/krona 7.6446 7.9522 8.2740 8.7486 9.0925 8.7471 8.9640 9.2771 9.6853 30 Switzerland/franc 1.4514 1.4506 1.5045 1.6657 1.7190 1.6420 1.6519 1.7149 1.7586 31 Taiwan/dollar 28.775 33.547 32.322 30.520 30.772 30.831 30.984 31.106 31.198 32 Thailand/baht 31.072 41.262 37.887 37.993 38.951 39.087 40.318 40.889 41.992 33 United Kingdom/pound2 163.76 165.73 161.72 158.23 150.90 150.92 150.76 148.89 143.36 34 Venezuela/bolivar 488.87 548.39 606.82 672.73 680.00 680.96 685.86 689.17 690.39 Indexes4 NOMINAL 35 Broad (January 1997 = 100)5 104.44 116.48 116.87 118.10 120.70 119.43 119.86 120.65 122.08 36 Major currencies (March 1973 = 100)6 91.24 95.79 94.07 96.31 99.31 96.74 97.68 99.16 100.76 37 Other important trading partners (January 1997 = 100)7 104.67 126.03 129.94 129.05 130.43 131.62 131.08 130.51 131.39 REAL 38 Broad (March 1973 = 100)5 91.24r 99.25r 98.66r 100.67r 102.77r 102.03r 102.47r 103.01r 104.11 39 Major currencies (March 1973 = 100)6 92.26 97.25 96.75 100.70r 103.70r 101.32r 102.45r 104.08r 105.89 40 Other important trading partners (March 1973 = 100)7 95.58r 108.20r 107.44r 106.91r 107.95r 109.35r 108.88r 108.00r 108.26 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

A63 Guide to Statistical Releases and Special Tables STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases June 2000 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks September 30, 1999 February 2000 A64 December 31, 1999 May 2000 A64 March 31, 2000 August 2000 A64 June 30, 2000 November 2000 A64 Terms of lending at commercial banks November 1999 February 2000 A66 February 2000 May 2000 A66 May 2000 August 2000 A66 August 2000 November 2000 A66 Assets and liabilities of U.S. branches and agencies of foreign banks September 30, 1999 February 2000 A72 December 31, 1999 May 2000 A72 March 31, 2000 August 2000 A72 June 30, 2000 November 2000 A72 Pro forma balance sheet and income statements for priced service operations September 30, 1999 January 2000 A64 March 31, 2000 August 2000 A76 June 30, 2000 November 2000 A76 Residential lending reported under the Home Mortgage Disclosure Act 1998 September 1999 A64 1999 September 2000 A64 Disposition of applications for private mortgage insurance 1998 September 1999 A73 1999 September 2000 A73 Small loans to businesses and farms 1998 September 1999 A76 1999 September 2000 A76 Community development lending reported under the Community Reinvestment Act 1998 September 1999 A79 1999 September 2000 A79 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Special Tables • November 2000 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, June 30, 2000 Millions of dollars except as noted Banks with domestic DDoomm :stic Banks with foreign offices' offices only2 TToottaall ttoott al Total Domestic Over 100 Under 100 1 Total assets 5,912,147 5,208,477 4,124,884 3,421,213 1,525,580 261,683 2 Cash and balances due from depository institutions 337,766 244,286 265,180 171,700 60,303 12,284 3 Cash items in process of collection, unposted debits, and currency and coin 129,555 125,879 31,331 f 4 Cash items in process of collection and unposted debits T n.a. 100,929 20,742 T 5 Currency and coin n.a. n.a. n.a. 24,951 10,589 n.a. 6 Balances due from depository institutions in the United States 1 37,153 26,502 19,204 1 7 Balances due from banks in foreign countries and foreign central banks 1 86,485 7,441 1,287 I 8 Balances due from Federal Reserve Banks t < 11,987 11,877 8,481 i MEMO 9 Non-interest-bearing balances due from commercial banks in the United States (included in balances due from depository institutions in the United States) n.a. 33,535 n.a. 13,661 15,192 4,682 10 Total securities, held-to-maturity (amortized cost) and available-for-sale (fair value) 11 U.S. Treasury securities 1,028,435 599,856 361,228 67,352 12 U.S. government agency and corporation obligations (excludes mortgage-backed 100,045 68,373 25,965 5,708 securities) 13 Issued by U.S. government agencies 215,051 74,077 106,228 34,746 14 Issued by U.S. government-sponsored agencies 4,692 2,248 1,783 662 15 Securities issued by states and political subdivisions in the United States 210,359 71,829 104,446 34,084 16 General obligations 89,713 29,841 48,330 11,542 17 Revenue obligations 64,751 20,029 36,464 8,258 18 Industrial development and similar obligations 24,255 9,320 11,686 3,249 19 Mortgage-backed securities (MBS) 706 492 180 35 20 Pass-through securities 446,815 295,005 139,553 12,257 21 Guaranteed by GNMA 281,405 192,518 80,645 8,242 22 Issued by FNMA and FHLMC 71,891 n a. 41,975 n.a. 26,837 3,079 23 Privately issued 207,352 149,049 53,166 5,136 24 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) . . . 2,163 1,494 642 27 25 Issued or guaranteed by FNMA, FHLMC or GNMA 165,410 102,487 58,908 4,015 26 Collateralized by MBS issued or guaranteed by FNMA, FHLMC, or GNMA 114,032 70,940 39,399 3,694 27 All other mortgage-backed securities 3,910 3,035 762 113 28 Other debt securities 47,468 28,512 18,747 209 29 Other domestic debt securities 137,715 105,881 30,016 1,819 30 Foreign debt securities n.a. 50,252 29,646 n.a. 31 Equity securities n.a. 55,629 369 n.a. 32 Investments in mutual funds and other equity securities with readily determinable 39,096 26,680 11,136 1,280 fair value 33 All other equity securities 12,546 9,438 2,809 298 26,550 17,242 8,327 982 34 Federal funds sold and securities purchased under agreements to resell 242,698 18 3,477 194,523 140,302 39,458 8,717 35 Total loans and lease-financing receivables, gross 36 LESS: Unearned income on loans 3,662,692 3,371,731 2,500,150 2,209,189 998,070 164,472 37 Total loans and leases (net of unearned income) 3,075 2,495 1,577 997 1,215 283 38 LESS: Allowance for loan and lease losses 3,659,617 3,369,236 2,498,573 2,208,192 996,855 164,189 39 LESS: Allocated transfer risk reserves 60,616 n.a. 42,023 n.a. 16,3541 2,2401 40 EQUALS: Total loans and leases, net 133 n.a. 131 n.a. 3,598,867 n.a. 2,456,419 n.a. 980,500 161,949 Total loans and leases, gross, by category 41 Loans secured by real estate 11,,661122,,997766 1,580,960 955,585 923,568 562,068 95,324 42 Construction and land development 148,657 79,791 60,451 8,415 4 4 3 4 F O a n r e m - l t a o n d fo ur-family residential properties T 1 8 3 9 3 5 , , 7 3 1 6 7 9 T 1 582 6 , , 1 5 8 5 0 6 26 1 7 5 , , 6 75 1 1 2 4 1 5 1 , , 5 4 7 1 6 0 4 4 4 7 5 6 Mu A R lt l e l i v fa o o m t l h v i i e l n r y g l , ( o f a o iv n p e s e n o - r e n m d o r lo e) a n r s e , s i e d x e t n e t n ia d l e d p r u o n p d e e r r t ie l s in es of credit n. 1 a . 7 1 7 1 9 6 , , 2 1 6 0 3 6 n. 1 a . 49 8 7 4 , , 8 3 5 2 8 2 23 2 8 9 , , 2 3 4 6 7 6 43 2 , , 1 4 5 1 8 8 48 Nonfarm nonresidential properties 1 59,428 1 33,652 23,610 2,166 49 Loans to depository institutions 1 443,790 1 221,389 194,644 27,757 50 Commercial banks in the United States 107,653 8 9,590 98,517 8 3,453 9,057 80 51 Other depository institutions in the United States n.a. n.a. 63,406 62,881 8,762 n.a. 52 Banks in foreign countries n.a. n.a. 11,736 11,580 168 n.a. 53 Loans to finance agricultural production and other loans to farmers n.a. n.a. 23,376 5,992 127 n.a. 54 Commercial and industrial loans 46,747 45,921 12,170 11,344 18,341 16,237 55 U.S. addressees (domicile) 1,027,817 867,232 824,730 664,144 174,295 28,793 56 Non-U.S. addressees (domicile) n.a. n a. 676,750 654,050 173,514 n.a. 57 Acceptances of other banks n.a. n.a. 147,980 10,094 781 n.a. 58 U.S. banks 1,318 579 1,229 490 83 6 59 Foreign banks n.a. n.a. 310 254 n.a. n.a. 60 Loans to individuals for household, family, and other personal expenditures (includes n.a. n.a. 918 237 n.a. n.a. purchased paper) 61 Credit cards and related plans 548,296 506,177 316,838 274,720 209,609 21,848 62 Other (includes single payment and installment) 204,169 n.a. 115,029 n.a. 88,280 860 63 Obligations (other than securities) of states and political subdivisions in the United States 344,127 n.a. 201,810 n.a. 121,330 20,988 (includes nonrated industrial development obligations) 64 All other loans 20,030 20,023 13,148 13,141 6,127 754 65 Loans to foreign governments and official institutions 141,166 110,249 132,838 101,921 7,557 772 66 Other loans n.a. n.a. 7,687 1,652 17 n.a. 67 Loans for purchasing and carrying securities n.a. n.a. 125,151 100,269 7,540 n.a. 68 All other loans (excludes consumer loans) n.a. n a. n.a. 21,322 1,562 n.a. 69 Lease-financing receivables n.a. n.a. n.a. 78,947 5,978 n.a. 156,688 151,000 145,096 139,407 10,934 658 70 Assets held in trading accounts 71 Premises and fixed assets (including capitalized leases) 271,517 270,337 1,179 1 72 Other real estate owned 73,546 T 45,726 T 22,656 5,163 73 Investments in unconsolidated subsidiaries and associated companies 3,026 n.a. 1,620 n.a. 1,117 290 74 Customers' liability on acceptances outstanding 9,238 I 8,778 I 414 46 75 Net due from own foreign offices, Edge Act and agreement subsidiaries, and IBFs 9,992 1 9,772 i 218 3 76 Intangible assets n.a. 22,105 n.a. 22,105 n.a. n.a. 77 All other assets 99,184 n.a. 84,477 n.a. 13,827 880 237,877 n.a. 188,198 n.a. 44,681 4,998 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banks A65 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition, June 30, 2000 Millions of dollars except as noted Banks with domestic Banks with foreign offices' offices only2 IItteemm TToottaall DDoommeessttiicc ttoottaall Total Domestic Over 100 Under 100 78 Total liabilities, limited-life preferred stock, and equity capital 5,912,147 n.a. 4,124,884 n.a. 1,525,580 261,683 79 Total liabilities 5,418,226 4,714,556 3,795,187 3,091,516 1,389,0$ 233,995 80 Total deposits 3,944,353 3,259,182 2,619,887 1,934,717 1,104,328 220,138 81 Individuals, partnerships, and corporations 3,505,399 3,031,333 2.284,973 1,810,908 1,022,348 198,078 82 U.S. government n.a. 7,309 n.a. 6,194 958 158 83 States and political subdivisions in the United States n.a. 148,239 n.a. 67,163 63,094 17,982 84 Commercial banks in the United States 101,276 36,224 92,945 27,893 7,355 975 85 Other depository institutions in the United States n.a. 8,329 n.a. 3,241 3,730 1,358 86 Foreign banks, governments, and official institutions 146,887 10,667 146,657 10,438 223 7 87 Banks n.a. n.a. 102,753 9,194 217 n.a. 88 Governments and official institutions n.a. n.a. 43,904 1,243 6 n.a. 89 Certified and official checks 18,444 17,081 10,243 8,880 6,620 1,581 90 Total transaction accounts 658,716 377,525 219,544 61,646 91 Individuals, partnerships, and corporations 559,863 316,095 190,284 53,484 92 U.S. government 1,584 1,068 444 72 93 States and political subdivisions in the United States 44,829 21,317 17,341 6,172 94 Commercial banks in the United States 24,768 20,682 3,841 245 95 Other depository institutions in the United States 2,865 1,978 801 86 96 Foreign banks, governments, and official institutions 7,727 7,507 214 6 97 Banks n.a. 6,847 208 n.a. 98 Governments and official institutions n.a. 660 6 n a. 99 Certified and official checks 17,081 8,880 6,620 1,581 100 Demand deposits (included in total transaction accounts) 516,045 336,710 146,472 32,863 101 Individuals, partnerships, and corporations 442,829 283,722 129,370 29,737 102 U.S. government 1,374 927 386 60 103 States and political subdivisions in the United States 19,427 13,021 5,256 1,150 104 Commercial banks in the United States n.a. 24,762 n.a. 20,679 3,840 243 105 Other depository institutions in the United States 2,848 1,977 786 85 106 Foreign banks, governments, and official institutions 7,724 7,504 214 6 107 Banks n.a. 6,845 208 n.a. 108 Governments and official institutions n.a. 658 6 n.a. 109 Certified and official checks 17,081 8,880 6,620 1,581 110 Total nontransaction accounts 2,600,466 1,557,191 884,783 158,492 111 Individuals, partnerships, and corporations 2,471,470 1,494,812 832,064 144,594 112 U.S. government 5,726 5,126 514 86 113 States and political subdivisions in the United States 103,409 45,847 45,753 11,810 114 Commercial banks in the United States 11,456 7,212 3,514 730 115 Other depository institutions in the United States 5,465 1,263 2,929 1,272 116 Foreign banks, governments, and official institutions 2,941 2,931 9 1 1 17 Banks n.a. 2,348 9 n a. 118 Governments and official institutions n.a. 583 0 n.a. 119 Federal funds purchased and securities sold under agreements to repurchase 470,509 443,161 379,613 352,264 86,943 3,954 120 Demand notes issued to the U.S. Treasury 47,112 47,112 43,060 43,060 3,908 145 121 Trading liabilities 182,359 n.a. 182,277 n.a. 81 0 122 Other borrowed money 523,549 481,785 350,595 308,831 165,239 7,715 123 Banks' liability on acceptances executed and outstanding 10,060 7,245 9,839 7,024 218 3 124 Notes and debentures subordinated to deposits 8 ,568 n.a. 77,489 n.a. 4,060 18 125 Net due to own foreign offices. Edge Act and agreement subsidiaries, and IBFs n.a. 196,520 n.a. 196,520 n.a. n.a. 126 All other liabilities 158,717 n.a. 132,427 n.a. 24,268 2,022 127 Total equity capital 493,921 n.a. 329,697 n.a. 136,535 27,689 MEMO 128 Trading assets at large banks4 271,297 120,864 270,316 119,884 998800 1 1 3 2 0 9 U U . . S S . . g T o r v ea er su n r m y e s n e t cu a r g i e t n ie c s y ( c d o o i m po e r s a ti t c i o o n ff o i b ce li s g ) ations • 1 7 6 , , 5 3 0 0 4 3 1 7 6 , , 3 2 5 9 7 3 14 11 7 00 131 Securities issued by states and political subdivisions in the United States n. a. 1,308 n. a. 1,205 103 132 Mortgage-backed securities 8,452 8,008 444 n.a. 133 Other debt securities 17,618 17,605 13 134 Other trading assets 9,175 9,020 155 135 Trading assets in foreign banks 150,433 0 150,433 0 0 136 Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts 60,503 60,503 60,395 60,395 108 1.37 Total individual retirement (IRA) and Keogh plan accounts 149,034 80,621 57,348 11,066 138 Total brokered deposits 138,114 76,059 60,025 2,030 139 Fully insured brokered deposits 95,736 40,274 53,608 1,855 140 Issued in denominations of less than $100,000 16,313 4,658 10,595 1,060 141 Issued in denominations of $100,000, or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less n.a. 79,423 n. a. 35,615 43,013 795 142 Money market deposit accounts (MMDAs) 884,237 616,985 242,288 24,963 143 Other savings deposits (excluding MMDAs) 423,487 263,905 139,635 19,946 144 Total time deposits of less than $100,000 769,904 368,925 320,592 80,387 145 Total time deposits of $100,000 or more 522,838 307,376 182,266 33,196 146 All negotiable order of withdrawal (NOW) accounts 140,247 40,485 71,571 28,191 147 Number of banks ,450 8,450 156 n.a. 3,069 5,225 NOTE. The notation "n.a." indicates the lesser detail available from banks that don't have were $100 million or more. (These banks file the FFIEC 032 or FFIEC 033 Call Report.) foreign offices, the inapplicability of certain items to banks that have only domestic offices or "Under 100" refers to banks whose assets, on June 30 of the preceding calendar year, were the absence of detail on a fully consolidated basis for banks that have foreign offices. less than $100 million. (These banks file the FFIEC 034 Call Report.) 1. All transactions between domestic and foreign offices of a bank are reported in "net due 3. Because the domestic portion of allowances for loan and lease losses and allocated from" and "net due to" lines. All other lines represent transactions with parties other than the transfer risk reserves are not reported for banks with foreign offices, the components of total domestic and foreign offices of each bank. Because these intraoffice transactions are nullified assets (domestic) do not sum to the actual total (domestic). by consolidation, total assets and total liabilities for the entire bank may not equal the sum of 4. Components of "Trading assets at large banks" are reported only by banks with either assets and liabilities respectively of the domestic and foreign offices. total assets of $1 billion or more or with $2 billion or more in the par/notional amount of their Foreign offices include branches in foreign countries, Puerto Rico, and U.S. territories and off-balance-sheet derivative contracts. possessions; subsidiaries in foreign countries; all offices of Edge Act and agreement corporations wherever located; and IBFs. 2. "Over 100" refers to banks whose assets, on June 30 of the preceding calendar year, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Special Tables • November 2000 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 7-11, 2000 E. Commercial and industrial loans made by U.S. branches and agencies of foreign banks1 W a e v i e g r h a t g e e d - Amount of Average loan W a e v i e g r h a t g e e d - Amount of loans (percent) effective loans size maturity^ ( l p o e a r n c e r n a t t ) e * o ( f m d il o l l i l o a n r s s ) (tho d u o s ll a a n r d s s ) of Days S c e o c l u la r t e e d r a b l y p S r u p ep b en a je y a c m l t t y e t n o t c M om ad m e it u m nd e e n r t LOAN RISK5 1 All commercial and industrial loans 114,271 756 393 41.6 11.4 24.9 72.4 2 Minimal risk 7.42 7,454 1,055 439 49.7 11.6 52.4 88.5 3 Low risk 7.55 16,581 1,213 378 15.1 13.3 38.6 80.8 4 Moderate risk 8.41 37,122 652 36.7 9.9 30.9 79.6 5 Other 8.95 24,071 591 39.5 11.4 12.3 69.2 By maturity/repricing interval6 6 Zero interval 9.46 21,648 434 439 54.2 14.5 3.5 58.6 7 Minimal risk 8.49 598 293 508 35.7 30.1 7.1 97.1 8 Low risk 8.39 1,538 471 468 31.9 34.1 18.3 96.6 9 Moderate risk 9.39 7,244 365 381 53.5 12.0 4.8 79.9 10 Other 10.32 4,781 269 606 83.1 30.7 1.6 86.4 11 Daily 7.74 42,606 1,107 231 35.4 13.3 28.7 68.3 12 Minimal risk 7.18 3,347 7,083 228 66.8 8.8 88.7 94.5 13 Low risk 7.35 8,360 3,968 308 6.2 8.4 42.0 75.7 14 Moderate risk 7.95 11,554 907 294 21.1 13.7 28.9 67.4 15 Other 8.28 7,193 637 178 21.0 8.2 1.9 50.2 16 2 to 30 days 18,994 1,173 299 28.9 10.6 25.4 69.0 17 Minimal risk 7.07 1,212 1,763 231 13.5 14.5 13.6 85.7 18 Low risk 7.63 3,187 2,283 375 21.1 21.0 21.5 77.5 19 Moderate risk 8.23 6,005 845 403 27.6 12.6 32.4 87.1 20 Other 5,577 1,026 268 28.4 2.0 17.1 48.3 21 31 to 365 days 8.13 26,249 508 42.3 4.3 39.8 93.8 22 Minimal risk 7.56 2,109 793 45.6 6.9 34.7 79.8 23 Low risk 7.57 3,207 574 431 20.0 8.3 56.3 90.3 24 Moderate risk 8.20 10,288 976 540 38.0 1.7 56.5 96.5 25 Other 8.72 6,048 1,383 617 34.4 8.1 28.5 96.1 26 More than 365 days 3,467 245 85.8 4.7 6.0 58.0 27 Minimal risk .. . 9.23 179 157 66.7 34.3 .5 68.5 28 Low risk 7.81 253 212 67.1 5.9 46.9 73.7 29 Moderate risk . . 9.16 1,613 89.0 4.2 .6 25.8 30 Other 9.49 291 62.9 3.9 20.9 79.3 Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 10.36 2,474 3.3 169 83.4 29.0 2.9 76.2 32 100-999 9.67 10,471 3.3 95 74.0 20.7 6.6 84.1 33 1,000-9,999 8.56 36,737 3.2 52 46.9 11.0 20.2 77.6 34 10,000 or more 7.82 64,589 2.8 57 31.7 9.5 31.4 67.5 BASE RATE OF LOAN4 35 Prime7 10.12 21,915 3.3 111 71.9 23.9 1.0 69.7 36 Fed funds 7.43 31,455 2.8 5 35.3 9.1 13.6 54.0 37 Other domestic 7.54 14,579 2.4 10.8 19.6 71.5 65.9 38 Foreign 8.19 28,969 3.0 50 33.4 4.2 42.5 88.3 39 Other 8.29 17,354 3.1 159 54.2 5.2 7.1 88.5 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A67 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 7-11, 2000 B. Commercial and industrial loans made by all domestic banks1 Weighted- Weighted- Amount of loans (percent) Amount of Average loan average ( l e p o f e a f r e n c c e t l n i a v t t e e ) 2 o ( f m l d o il o a l l i n l o a s n r s s ) (tho d u o s s l i a l z a n e r d s s ) of ma D tu a r y i s t y3 S c e o c l u la r t e e d r a b l y Callable p S r u p ep b en a je y a c m l t t y e t n o t c M om ad m e it u m nd en er t LOAN RISK5 1 All commercial and industrial loans 8.60 74,661 522 564 45.4 16.0 25.5 76.2 2 Minimal risk 7.44 6,804 992 464 53.2 12.8 53.0 90.0 3 Low risk 7.65 10,723 837 521 20.0 20.0 45.4 88.2 4 Moderate risk 8.62 29,481 535 575 40.5 11.7 30.8 82.2 5 Other 9.77 13,006 343 722 67.7 18.5 10.6 89.1 By maturity/repricing interval6 6 Zero interval 9.46 21,209 431 437 54.2 14.8 3.3 58.4 7 Minimal risk 8.49 598 293 508 35.7 30.1 7.1 97.1 8 Low risk 8.44 1,480 458 484 33.0 35.4 15.6 96.6 9 Moderate risk 9.38 7,155 365 378 53.1 12.2 4.8 79.6 10 Other 10.32 4,488 259 604 85.1 32.7 1.5 88.7 11 Daily 7.95 23,606 647 410 40.3 22.5 39.9 77.9 12 Minimal risk 7.16 3,109 7,831 246 71.9 9.5 89.8 99.7 13 Low risk 7.36 5,002 2,655 458 10.3 13.8 64.8 85.6 14 Moderate risk 8.11 8,192 670 413 28.1 17.2 39.8 75.3 15 Other 9.25 2,714 252 344 51.4 15.2 4.6 74.4 16 2 to 30 days 8.49 10,886 738 506 39.5 18.5 20.1 91.1 17 Minimal risk 7.05 1,073 1,676 245 10.9 16.3 10.9 83.9 18 Low risk 7.70 2,286 1,887 475 29.0 29.2 20.3 91.7 19 Moderate risk 8.52 4,344 647 555 36.2 17.4 34.6 94.9 20 Other 10.14 2,275 462 602 67.7 5.0 4.8 98.2 21 31 to 365 days 8.38 15,713 601 774 38.1 5.5 42.3 91.6 22 Minimal risk 7.62 1,835 708 857 50.5 7.9 35.8 76.8 23 Low risk 7.68 1,768 341 655 22.6 11.9 52.1 86.5 24 Moderate risk 7,759 787 665 32.5 1.6 51.0 95.7 25 Other 3,089 1,004 1,132 54.8 10.9 34.0 96.5 26 More than 365 days 9.18 2,454 175 81.1 6.7 2.9 40.6 27 Minimal risk . . . 9.23 179 157 66.7 34.3 .5 68.5 28 Low risk 8.50 151 127 44.7 9.9 10.9 55.8 29 Moderate risk . . 9.16 1,613 89.0 4.2 .6 25.8 30 Other 9.84 258 68.3 4.4 10.8 76.6 Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN (thousands of dollars) 31 1-99 10.38 2,433 3.2 171 83.8 29.3 2.8 76.1 32 100-999 9.82 9,300 3.2 101 77.1 21.6 5.0 83.5 33 1,000-9,999 8.94 24,429 3.2 54 50.1 14.4 16.7 76.0 34 10,000 or more 7.98 38,499 2.6 64 32.4 14.8 37.4 74.5 BASE RATE OF LOAN* 35 Prime7 10.14 20,303 3.3 116 72.8 20.6 1.0 68.0 36 Fed funds 7.31 11,292 2.2 6 50.5 25.4 26.1 57.9 37 Other domestic 7.45 11,206 2.4 21 14.0 25.5 63.1 84.7 38 Foreign 8.46 19,638 3.0 43 37.3 5.8 38.7 84.1 39 Other 8.51 12,223 3.0 137 37.1 7.3 10.1 85.9 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • November 2000 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 7-11, 2000 E. Commercial and industrial loans made by U.S. branches and agencies of foreign banks1 Weighted- Weighted- Amount of loans (percent) e a f v f e e r c a ti g v e e Am l o o u an n s t of Avera si g z e e loan m a a v t e u r r a i g t e y 3 ( l p o e a r n c e r n a t t ) e 2 o ( f m d i o ll l i l o a n r s s ) (tho d u o s ll a a n r d s) s of S c e o c l u la r t e e d r a b l y p S r u ep b a je y c m t e t n o t c M om ad m e it u m nd en er t Days penalty LOAN RISK5 1 All commercial and industrial loans 8.43 64,598 945 559 41.3 12.5 28.6 76.0 2 Minimal risk 7.30 6,388 5,396 450 51.5 12.9 56.5 92.6 3 Low risk 7.44 2,580 501 12.0 13.2 54.0 88.6 4 Moderate risk 8.43 25,873 1,010 566 37.1 9.0 33.9 85.2 5 Other 9.67 10,215 443 731 60.6 8.6 11.8 88.5 By maturity/repricing interval6 6 Zero interval 9.28 16,190 775 447 51.0 5.7 2.5 52.9 7 Minimal risk 8.51 505 2,120 463 35.2 28.7 8.3 100.0 8 Low risk 8.44 731 818 527 30.7 3.3 25.9 99.6 9 Moderate risk 9.09 5,251 619 374 56.6 8.7 2.7 90.1 10 Other 10.04 2,841 337 79.3 10.5 1.3 86.9 11 Daily 7.89 22,694 736 399 39.2 22.6 41.5 77.6 12 Minimal risk 7.16 3,105 8,387 245 71.9 9.5 89.9 99.8 13 Low risk 7.28 4,681 3,803 432 8.3 14.5 69.2 85.7 14 Moderate risk 8.03 7,882 817 411 25.9 16.5 41.3 74.7 15 Other 9.14 2,525 283 317 48.1 15.2 4.9 74.1 16 2 to 30 days 8.36 9,258 1,115 519 31.5 11.9 22.5 90.4 17 Minimal risk 7.00 1,036 8,626 247 7.7 16.9 11.3 83.3 18 Low risk 7.39 1,859 2,853 429 13.5 15.5 24.9 91.4 19 Moderate risk 8.30 3,754 1.000 553 27.7 7.3 39.0 94.9 20 Other 10.45 1,892 585 674 61.9 4.4 2.1 98.6 21 31 to 365 days 8.27 13,928 3,020 802 33.6 2.8 46.8 94.4 22 Minimal risk 7.34 1,665 5,969 928 46.9 8.4 39.5 82.5 23 Low risk 7.45 1,484 3,104 695 11.3 9.7 60.1 90.2 24 Moderate risk 8.31 7,323 3,514 676 29.4 .9 53.4 25 Other 9.21 2,586 1,948 1,133 48.8 1.2 38.3 26 More than 365 days 9.00 1,758 1,111 75.7 4.7 2.2 38.0 27 Minimal risk . .. 8.23 67 502 11.2 87.1 1.2 97.6 28 Low risk 8.03 95 966 20.4 4.5 10.3 68.9 29 Moderate risk . . 9.10 1,249 1,991 .6 18.3 30 Other 9.83 195 476 7.9 86.4 Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN (thousands of dollars) 31 1-99 10.21 1,209 3.5 84.1 33.2 3.1 85.9 32 100-999 9.74 6,259 3.3 72.0 17.7 5.2 86.0 33 1,000-9,999 8.76 19,893 3.1 46.5 7.9 19.8 76.5 34 10,000 or more 7.97 37,238 2.6 32.0 13.4 38.0 73.8 BASE RATE OF LOAN4 35 Prime7 10.00 14,604 3.3 132 71.0 13.1 .9 67.3 36 Fed funds 7.23 10,346 2.2 5 50.0 19.0 28.4 54.2 37 Other domestic 7.42 10,988 2.4 16 12.4 25.9 64.3 85.1 38 Foreign 8.47 18,253 3.0 38 35.6 5.4 40.1 82.9 39 Other 8.41 10,407 3.0 95 31.6 3.4 9.8 88.3 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A69 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 7-11, 2000 D. Commercial and industrial loans made by small domestic banks1 Weighted- Amount of loans (percent) Weighted- Amount of Average loan average average loans size maturity3 ( l e p o f e a f r e n c c e t r i n a v t t e ) e 2 o ( f m d il o l l i l o a n r s s ) (tho d u o s l a la n r d s s ) of Days S c e o c l u la r t e e d r a b l y p S r u p e b p en j a e y a c m l t t y e t n o t c M om ad m e it u m nd en er t LOAN RISK 1 All commercial and industrial loans 9.69 10,063 135 599 71.9 38.6 5.6 77.0 2 Minimal risk 9.63 416 73 678 79.8 11.1 .1 50.0 3 Low risk 1,838 196 626 58.9 52.7 4.2 86.0 4 Moderate risk 9.98 3,608 122 657 65.0 31.3 8.1 60.6 5 Other 10.14 2,791 676 93.5 55.1 6.2 91.6 By maturity/repricing interval6 6 Zero interval 10.03 5,020 178 64.5 44.2 5.7 76.1 7 Minimal risk 8.43 94 52 38.5 38.2 .3 81.2 8 Low risk 8.43 748 320 430 35.3 66.8 5.5 93.6 9 Moderate risk 10.19 1,904 171 391 43.4 21.7 10.8 50.5 10 Other 10.79 1,648 185 398 95.1 71.0 1.9 92.0 11 Daily 9.58 912 161 660 19.6 86.4 12 Minimal risk 9.46 4 156 700 44.3 33.4 81.9 13 Low risk 8.45 321 492 836 39.4 3.8 85.2 14 Moderate risk 10.04 310 120 475 83.0 35.9 90.3 15 Other 10.75 190 102 95.2 15.8 1.0 78.2 16 2 to 30 days 9.17 1,628 252 409 84.7 55.5 6.7 95.3 17 Minimal risk 8.60 36 70 190 100.0 .9 100.0 18 Low risk 9.09 427 763 666 96.5 89.0 92.8 19 Moderate risk 9.88 590 199 602 90.6 81.8 6.5 95.5 20 Other 383 226 263 96.7 7.8 18.0 96.0 21 31 to 365 days 9.26 1,785 551 73.4 26.7 69.7 22 Minimal risk 10.39 170 73 154 85.9 3.2 20.6 23 Low risk 8.87 284 60 419 81.2 23.1 10.7 67.1 24 Moderate risk 9.65 436 56 487 85.6 14.6 10.9 44.0 25 Other 8.96 503 287 1,128 85.4 60.7 11.7 97.9 26 More than 365 days 9.62 697 56 94.7 11.7 47.1 27 Minimal risk . . . 9.83 112 111 99.9 2.7 51.2 28 Low risk 9.31 56 51 86.2 19.0 11.8 33.4 29 Moderate risk . . 9.35 364 73 96.5 15.5 .5 51.7 30 Other 9.86 63 100 92.0 2.9 19.8 46.6 Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN (thousands of dollars) 31 1-99 10.55 1,225 3.0 293 83.5 25.4 2.5 66.4 32 100-999 10.00 3,042 3.0 204 87.5 29.6 4.7 78.3 33 1,000-9,999 9.70 4,536 3.4 62 66.2 43.0 3.1 73.5 34 10,000 or more 8.03 1,261 2.3 70 43.2 56.9 20.0 97.0 BASE RATE OF LOAN 35 Prime7 10.50 5,699 3.3 76 77.6 39.9 1.2 36 Fed funds 8.20 945 2.2 23 56.1 95.4 .7 37 Other domestic 9.07 218 2.4 268 94.6 5.6 1.7 64.7 38 Foreign 8.26 1,385 3.4 115 59.8 10.3 20.3 99.7 39 Other 9.08 1,816 3.0 372 68.6 30.1 11.4 71.9 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Special Tables • November 2000 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, August 7-11, 2000 E. Commercial and industrial loans made by U.S. branches and agencies of foreign banks1 Weighted- Amount of loans (percent) W e a f e v f i e e g r c h a t t i g e v e d e - Am l o o u an n s t of Avera si g z e e loan m a a v t e u r r a i g t e y 3 ( l p o e a r n c e r n a t t ) e 2 o ( f m d il o l l i l o a n r s s ) (tho d u o s ll a a n r d s s ) of Days S c e o c l u la r t e e d r a b l y p S r u p ep b en a je y a c m l t t y e t n o t c M om ad m e it u m nd e e n r t LOAN RISK3 1 All commercial and industrial loans 7.69 39,610 4,838 100 34.4 23.8 65.4 Fed funds 2 Minimal risk 7.27 650 3.143 182 12.5 45.6 73.0 Foreign 3 Low risk 7.37 5,858 6,844 131 6.0 1.1 26.1 67.4 Fed funds 4 Moderate risk 7.59 7,642 4,122 74 22.1 2.9 31.3 69.4 Fed funds 5 Other 7.98 11,065 4,000 96 6.4 3.0 14.2 45.8 Fed funds By maturity/repricing interval6 6 Zero interval 66.7 Prime 7 Minimal risk * * 8 Low risk * * 9 Moderate risk 9.88 323 721 88.7 99.6 Prime 10 Other 10.34 292 694 624 52.3 3.1 50.5 Prime 11 Daily 7.49 19,000 9,461 14.8 56.3 Fed funds 12 Minimal risk 7.44 238 3,150 73.8 26.2 Fed funds 13 Low risk 7.33 3,358 15,075 8.1 60.9 Fed funds 14 Moderate risk 7.57 3,362 6,725 4.3 2.6 48.0 Fed funds 15 Other 7.70 4,479 8,427 2.6 .3 35.6 Fed funds 16 2 to 30 days 7.76 8,108 5,617 32.3 39.3 Fed funds 17 Minimal risk * * 18 Low risk 7.45 901 4,892 143 .9 24.5 41.5 Fed funds 19 Moderate risk 7.48 1,662 4,211 58 5.0 26.9 66.5 Foreign 20 Other 7.94 3,302 6,515 49 1.3 25.6 14.0 Fed funds 21 31 to 365 days 7.77 10,536 2,832 114 48.7 36.0 97.0 Foreign 22 Minimal risk 7.14 274 3,254 365 12.5 26.9 100.0 Foreign 23 Low risk 7.44 1,439 3,535 161 16.9 61.5 95.0 Foreign 24 Moderate risk 7.62 2,529 3,716 156 54.7 73.5 98.7 Foreign 25 Other 8.24 2,959 2,283 87 13.0 22.9 95.7 Foreign 26 More than 365 days 1,013 100.0 Other 27 Minimal risk .. . * * 28 Low risk * * 29 Moderate risk . . * * 30 Other Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 8.91 41 3.5 59.6 12.5 7.9 85.1 32 100-999 8.43 1,171 3.4 49.5 13.0 18.8 88.9 33 1,000-9,999 7.80 12,308 3.2 40.5 4.3 26.9 34 10,000 or more 7.60 26,090 3.1 30.7 1.7 22.6 BASE RATE OF LOAN4 35 Prime7 9.92 1,612 3.6 16 60.8 64.4 1.6 90.9 36 Fed funds 7.49 20,164 3.2 5 26.8 6.5 51.7 37 Other domestic 7.83 3,373 2.7 7 .0 99.7 3.3 38 Foreign 7.63 9,331 3.1 65 25.1 .9 50.6 97.0 39 Other 7.76 5,131 4.2 208 95.0 .0 94.7 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A71 NOTES TO TABLE 4.23 NOTE. The Survey of Terms of Business Lending collects data on gross loan extensions 5. A complete description of these risk categories is available from the Banking Analysis made during the first full business week in the mid-month of each quarter. The authorized Section, Mail Stop 81, Board of Governors of the Federal Reserve System, Washington, DC panel size for the survey is 348 domestically chartered commercial banks and 50 U.S. 20551. The category "Moderate risk" includes the average loan, under average economic branches and agencies of foreign banks. The sample data are used to estimate the terms of conditions, at the typical lender. The category "Other" includes loans rated "acceptable" as loans extended during that week at all domestic commercial banks and all U.S. branches and well as special mention or classified loans. The weighted-average risk ratings published for agencies of foreign banks. Note that the terms on loans extended during the survey week may loans in rows 31-39 are calculated by assigning a value of "1" to minimal risk loans; "2" to differ from those extended during other weeks of the quarter. The estimates reported here are low risk loans; "3" to moderate risk loans, "4" to acceptable risk loans; and "5" to special not intended to measure the average terms on all business loans in bank portfolios. mention and classified loans. These values are weighted by loan amount and exclude loans 1. As of December 31, 1996, assets of most of the large banks were at least $7.0 billion. with no risk rating. Some of the loans in lines 1,6, 11, 16, 21, 26, and 31-39 are not rated for Median total assets for all insured banks were roughly $62 million. Assets at all U.S. branches risk. and agencies averaged 1.3 billion. 6. The maturity/repricing interval measures the period from the date the loan is made until it 2. Effective (compounded) annual interest rates are calculated from the stated rate and first may reprice or it matures. For floating-rate loans that are subject to repricing at any other terms of the loans and weighted by loan amount. The standard error of the loan rate for time—such as many prime-based loans—the maturity/repricing interval is zero. For floating-rate all commercial and industrial loans in the current survey (line 1, column 1) is 0.17 percentage loans that have a scheduled repricing interval, the maturity/repricing interval measures the number point. The chances are about two out of three that the average rate shown would differ by less of days between the date the loan is made and the date on which it is next scheduled to reprice. For than this amount from the average rate that would be found by a complete survey of the loans having rates that remain fixed until the loan matures (fixed-rate loans), the maturity/repricing universe of all banks. interval measures the number of days between the date the loan is made and the date on which it 3. Average maturities are weighted by loan amount and exclude loans with no stated matures. Loans that reprice daily mature or reprice on the business day after they are made. Owing maturities. to weekends and holidays, such loans may have maturity/repricing intervals in excess of one day; 4. The most common base pricing rate is that used to price the largest dollar volume of such loans are not included in the "2 to 30 day" category. loans. Base pricing rates include the prime rate (sometimes referred to as a bank's "base" or 7. For the current survey, the average reported prime rate, weighted by the amount of "reference" rate); the federal funds rate; domestic money market rates other than the prime loans priced relative to a prime base rate, was 9.55 percent for all banks; 9.50 percent for rate and the federal funds rate; foreign money market rates; and other base rates not included large domestic banks, 9.68 percent for small domestic banks; and 9.50 percent for U.S. in the foregoing classifications. branches and agencies of foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • November 2000 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 20001—Continued Millions of dollars except as noted All states' New York California Illinois IItteemm in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 1 Total assets4 919,627 188,018 754,378 160,840 27,334 6,655 46,937 5,243 2 Claims on nonrelated parties 735,402 79,285 594,089 69,244 26,634 1,920 45,858 2,032 3 Cash and balances due from depository institutions 83,073 38,780 78,236 36,355 732 321 2,700 1,890 4 Cash items in process of collection and unposted debits 2,324 0 2,277 0 2 0 25 0 5 Currency and coin (U.S. and foreign) 16 n.a. 11 n.a. 1 n.a. 0 n.a. 6 Balances with depository institutions in United States 55,146 17,418 52,308 16,448 548 163 1,110 623 7 U.S. branches and agencies of other foreign banks (including IBFs) 48,438 16,578 46,027 15,633 345 163 1,076 623 8 Other depository institutions in United States (including IBFs) . . . 6,707 839 66,,228811 814 204 0 34 0 9 Balances with banks in foreign countries and with foreign central banks 25,105 21,362 23,266 19,907 161 158 1,552 1,267 10 Foreign branches of U.S. banks 730 633 717 630 0 0 0 0 11 Banks in home country and home-country central banks 7,524 6,715 7,393 6,603 106 106 0 0 12 All other banks in foreign countries and foreign central banks .... 16,851 14,015 15,156 12,674 55 52 1,552 1,267 13 Balances with Federal Reserve Banks 482 n.a. 374 n.a. 19 n.a. 13 n.a. 14 Total securities and loans 438,391 33,653 340,867 26,910 25,052 1,545 33,101 110 15 Total securities, book value 111,277 3,977 103,207 3,452 1,204 488 5,703 12 16 U.S. Treasury 16,552 n.a. 15,692 n.a. 53 n.a. 792 n.a. 17 Obligations of U.S. government agencies and corporations 47,756 n.a. 45,343 n.a. 179 n.a. 2,022 n.a. 18 Other bonds, notes, debentures, and corporate stock (including state and local securities) 46,968 3,977 42,172 3,452 971 488 2,888 12 19 Securities of foreign governmental units 9,698 1,972 9,449 1,844 218 115 12 12 20 All Other 37,270 2,005 32,724 1,609 753 373 2,876 0 21 Federal funds sold and securities purchased under agreements to resell 92,308 4,348 89,671 4,309 343 13 1,575 0 22 U.S. branches and agencies of other foreign banks 12,219 2,487 11,657 2,450 156 13 4 0 23 Commercial banks in United States 9,270 120 8,870 118 161 0 3 0 24 Other 70,819 1,741 69,144 1,741 27 0 1,568 0 25 Total loans, gross 327,471 29,717 237,919 23,495 23,888 1,058 27,418 98 26 LESS: Unearned income on loans 356 41 259 37 39 1 20 0 27 EQUALS: Loans, net 327,115 29,676 237,660 23,457 23,848 1,057 27,398 98 Total loans, gross, by category 28 Real estate loans 17,622 94 12,143 94 3,157 0 345 0 29 Loans to depository institutions 25,694 13,439 18,225 9,200 1,462 848 300 93 30 Commercial banks in United States (including IBFs) 8,914 2,350 7,051 1,680 1,138 553 20 5 31 U.S. branches and agencies of other foreign banks 5,957 2,156 4,511 1,492 1,039 547 20 5 32 Other commercial banks in United States 22,,995577 194 2,540 188 98 6 0 0 33 Other depository institutions in United States (including IBFs) 1188 0 3 0 0 0 0 0 34 Banks in foreign countries 16,762 11,089 11,171 7,520 324 295 281 88 35 Foreign branches of U.S. banks 1,126 550 1,102 528 0 0 2 0 36 Other banks in foreign countries 15,636 10,539 10,069 6,992 324 295 278 88 37 Loans to other financial institutions 50,325 1,838 38,468 1,589 1,141 0 3,976 0 38 Commercial and industrial loans 210,765 12,088 149,402 10,500 17,605 187 21,054 2 39 U.S. addressees (domicile) 173,411 31 122,304 30 16,119 0 19,216 0 40 Non-U.S. addressees (domicile) 37,355 12,057 27,098 10,469 1,485 187 1,838 2 41 Acceptances of other banks 780 9 145 9 14 0 619 0 42 U.S. banks 6 0 3 0 1 0 0 0 43 Foreign banks 774 9 142 9 13 0 619 0 44 Loans to foreign governments and official institutions (including foreign central banks) 3,535 2,123 3,077 2,006 143 23 171 3 45 Loans for purchasing or carrying securities (secured and unsecured) . . . 11,043 21 10,485 20 0 0 0 0 46 All other loans 6,758 105 5,732 76 366 0 247 0 47 Lease financing receivables (net of unearned income) 948 0 240 0 0 0 707 0 48 U.S. addressees (domicile) 948 0 240 0 0 0 707 0 49 Non-U.S. addressees (domicile) 0 0 0 0 0 0 0 0 50 Trading assets 87,191 650 55,365 650 57 0 6,569 0 51 All other assets 34,438 1,854 29,950 1,021 450 40 1,913 32 52 Customers' liabilities on acceptances outstanding 1,520 n.a. 1,048 n.a. 143 n.a. 292 n.a. 53 U.S. addressees (domicile) 725 n.a. 574 n.a. 140 n.a. 11 n.a. 54 Non-U.S. addressees (domicile) 795 n.a. 475 n.a. 3 n.a. 281 n.a. 55 Other assets including other claims on nonrelated parties 32,918 1,854 28,902 1,021 307 40 1,621 32 56 Net due from related depository institutions5 184,225 108,733 160,289 91,596 700 4,735 1,079 3,211 57 Net due from head office and other related depository institutions .. . 184,225 n.a. 116600,,228899 n.a. 700 n.a. 1,079 n.a. 58 Net due from establishing entity, head office, and other related depository institutions5 n.a. 108,733 n.a. 91,596 n.a. 4,735 n.a. 3,211 59 Total liabilities4 919,627 188,018 754,378 160,840 27,334 6,655 46,937 5,243 60 Liabilities to nonrelated parties 806,465 170,549 685,762 144,884 11,948 6,527 35,411 5,129 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A73 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 2000'—Continued Millions of dollars except as noted ex I c T B l o u F t d a s i l 3 n g o I n B l F y s 3 exc T I l B o u t F d a s i l ng I o B n F ly s exc T I l B o u t F d a s i l ng I o B n F ly s exc T I l B o u t F d a s i l n g I o B n F ly s 61 Total deposits and credit balances 369,024 127,424 308,461 111,976 3,280 1,236 14,410 4,120 62 Individuals, partnerships, and corporations 274,472 12,060 222,552 6,691 2,679 218 12,324 16 63 U.S. addressees (domicile) 257,070 0 211,851 0 1,059 0 12,194 0 64 Non-U.S. addressees (domicile) 17,402 12,059 10,701 6,691 1,621 218 130 16 65 Commercial banks in United States (including IBFs) 45,798 16,524 40,374 16,176 353 83 973 130 66 U.S. branches and agencies of other foreign banks 20,319 15,529 16,133 15,279 0 83 325 45 67 Other commercial banks in United States 25,479 994 24,241 897 353 0 648 85 68 Banks in foreign countries 8,469 68,664 8,108 65,494 7 164 150 1,198 69 Foreign branches of U.S. banks 1,222 4,914 1,222 4,708 0 0 0 206 70 Other banks in foreign countries 7,246 63,750 6,886 60,786 7 164 150 992 71 Foreign governments and official institutions (including foreign central banks) 19,975 30,176 18,620 23,615 9 771 961 2,776 72 All other deposits and credit balances 20,106 0 18,622 0 228 0 1 0 73 Certified and official checks 204 186 5 1 74 Transaction accounts and credit balances (excluding IBFs) . . . 9,191 7,268 254 443 75 Individuals, partnerships, and corporations 7,310 5,614 240 440 76 U.S. addressees (domicile) 5,105 4,268 132 436 77 Non-U.S. addressees (domicile) 2,205 1,346 107 3 78 Commercial banks in United States (including IBFs) 68 53 1 0 79 U.S. branches and agencies of other foreign banks 10 9 0 0 80 Other commercial banks in United States 58 44 1 0 81 Banks in foreign countries 1,029 886 7 0 82 Foreign branches of U.S. banks 1 1 0 0 83 Other banks in foreign countries 1,028 886 7 0 84 Foreign governments and official institutions (including foreign central banks) 405 365 1 2 85 All other deposits and credit balances 175 165 1 0 86 Certified and official checks 204 186 5 1 87 Demand deposits (included in transaction accounts and credit balances) 8,372 6,703 1 84 440 88 Individuals, partnerships, and corporations 6,664 5,221 170 436 89 U.S. addressees (domicile) 4,770 4,011 109 433 90 Non-U.S. addressees (domicile) 1,895 1,209 61 3 91 Commercial banks in United States (including IBFs) 65 n.a. 49 n.a. 1 n.a. 0 n.a. 92 U.S. branches and agencies of other foreign banks 10 9 0 0 93 Other commercial banks in United States 55 40 1 0 94 Banks in foreign countries 985 843 7 0 95 Foreign branches of U.S. banks 1 1 0 0 96 Other banks in foreign countries 983 842 7 0 97 Foreign governments and official institutions (including foreign central banks) 398 359 1 2 98 All other deposits and credit balances 56 46 0 0 99 Certified and official checks 204 186 5 1 100 Nontransaction accounts (including MMDAs, excluding IBFs) 359,833 301,193 3,026 13,967 101 Individuals, partnerships, and corporations 267,162 216,938 2.440 11, 384 102 U.S. addressees (domicile) 251,965 207,583 926 11,757 103 Non-U.S. addressees (domicile) 15,197 9,355 1,514 127 104 Commercial banks in United States (including IBFs) 45,730 40,321 352 973 105 U.S. branches and agencies of other foreign banks 20,310 16,124 0 325 106 Other commercial banks in United States 25,420 24,197 352 548 107 Banks in foreign countries 7,439 7,222 0 150 108 Foreign branches of U.S. banks 1,221 1,221 0 0 109 Other banks in foreign countries 6,218 6,001 0 150 110 Foreign governments and official institutions (including foreign central banks) 19,571 18,255 7 959 111 All other deposits and credit balances 19,930 18,457 227 1 112 IBF deposit liabilities 127,424 111,976 1,236 4,120 113 Individuals, partnerships, and corporations 12,060 6,691 218 16 114 U.S. addressees (domicile) 0 0 0 0 115 Non-U.S. addressees (domicile) 12,059 6,691 218 16 116 Commercial banks in United States (including IBFs) 16,524 16,176 83 130 117 U.S. branches and agencies of other foreign banks 15,529 15,279 83 45 118 Other commercial banks in United States n.a. 994 n.a. 897 n.a. 0 n.a. 85 119 Banks in foreign countries 68 664 65,494 164 1,198 120 Foreign branches of U.S. banks 4,914 4,708 0 206 121 Other banks in foreign countries 63,750 60,786 164 992 122 Foreign governments and official institutions (including foreign central banks) 30,176 23,615 771 2,776 123 All other deposits and credit balances 0 0 0 0 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • November 2000 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 20001—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm in I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 124 Federal funds purchased and securities sold under agreements to repurchase 140,033 16,159 130,716 12,455 1,094 366 4,519 534 125 U.S. branches and agencies of other foreign banks 12,338 2,814 10,233 2,365 418 164 1,323 70 126 Other commercial banks in United States 9,658 228 8,329 200 334 28 361 0 127 Other 118,037 13,117 112,154 9, 589 342 174 2,835 464 128 Other borrowed money 78,632 25,476 59,903 19,089 5,986 4,8 55 5,557 458 129 Owed to nonrelated commercial banks in United States (including IBFs) 13,154 5,126 11,022 4,149 1,070 821 522 75 130 Owed to U.S. offices of nonrelated U.S. banks 5,861 972 5,411 349 135 117 62 0 131 Owed to U.S. branches and agencies of nonrelated foreign banks 7,293 4,154 5,611 3,299 936 704 460 75 132 Owed to nonrelated banks in foreign countries 17,291 15,572 12,966 11,334 3,334 3,333 183 168 133 Owed to foreign branches of nonrelated U.S. banks 1,774 1,652 1,381 1,280 351 351 0 0 134 Owed to foreign offices of nonrelated foreign banks 15,517 13,920 11,584 10,054 2,984 2,982 183 168 135 Owed to others 48,187 4,779 35,915 3,606 1,582 731 4,852 214 136 All other liabilities 91,352 1,490 74,706 1,364 352 40 6,805 18 137 Branch or agency liability on acceptances executed and outstanding 1,840 n a. 1,217 n a. 143 n.a. 436 n.a. 138 Trading liabilities 62,682 41 50,413 41 44 0 5,304 0 139 Other liabilities to nonrelated parties 26,830 1,450 23,076 1,324 165 40 1,065 18 140 Net due to related depository institutions5 113,161 17,468 68,616 15,956 15,386 127 11,526 113 141 Net due to head office and other related depository institutions5 .... 113,161 n.a. 68,616 n.a. 15,386 n.a. 11,526 n a. 142 Net due to establishing entity, head office, and other related depository institutions5 n.a. 17,468 n.a. 15,956 n.a. 127 n.a. 113 MEMO 143 Non-interest-bearing balances with commercial banks in United States 2,225 0 2,092 0 43 0 23 0 144 Holding of own acceptances included in commercial and industrial loans 1,957 • > 1,483 -• 162 -• 216 • • 145 Commercial and industrial loans with remaining maturity of one year or less (excluding those in nonaccrual status) 103,704 64,130 8,958 16,544 146 Predetermined interest rates 60,184 n.a. 33,599 n a. 4,256 n.a. 13,830 n.a. 147 Floating interest rates 4433,,552200 3300,,553311 44,,770022 22,,771155 148 Commercial and industrial loans with remaining maturity of more than one year (excluding those in nonaccrual status) 104,699 83,382 8,570 4,429 149 Predetermined interest rates 22,103 18,557 1,010 594 150 Floating interest rates 82,596 64,825 7,559 3,835 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A75 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, June 30, 20001— Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T I l B o u t F d a s i l ng I o B n F ly s exc T I l B o u t F d a s i l ng I o B n F ly s exc T I l B o u t F d a s i l ng I o B n F ly s 111155551111 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ((((eeeexxxxcccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss)))) 361,218 n.a. 304,249 n.a. 2,868 n.a. 13,710 n.a. 111155552222 TTTTiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 354,969 n.a. 298,063 n.a. 2,830 n.a. 13,709 n.a. 111155553333 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 6,249 n.a. 6,186 n.a. 39 n.a. 1 n.a. All states2 New York California Illinois inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 111155554444 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 28,359 n.a. 23,995 n.a. 2,971 n.a. 835 n.a. 111155555555 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 349 0 182 0 70 0 29 0 1. Data are aggregates of categories reported on the quarterly form FF1EC 002, "Report of either because the item is not an eligible IBF asset or liability or because that level of detail is Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first not reported for IBFs. From December 1981 through September 1985, IBF data were used for reporting data as of June 30, 1980, and was revised as of December 31, 1985. From included in all applicable items reported. November 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a 4. Total assets and total liabilities include net balances, if any, due from or owed to related monthly FR 886a report. Aggregate data from that report were available through the Federal banking institutions in the United States and in foreign countries (see note 5). On the former Reserve monthly statistical release G.l 1, last issued on July 10, 1980. Data in this table and in monthly branch and agency report, available through the G.ll monthly statistical release, the G. 11 tables are not strictly comparable because of differences in reporting panels and in gross balances were included in total assets and total liabilities. Therefore, total asset and total definitions of balance sheet items. liability figures in this table are not comparable to those in the G. 11 tables. 2. Includes the District of Columbia. 5. Related depository institutions includes the foreign head office and other U.S. and 3. Effective December 1981, the Federal Reserve Board amended Regulations D and Q to foreign branches and agencies of a bank, a bank's parent holding company, and majoritypermit banking offices located in the United States to operate international banking facilities owned banking subsidiaries of the bank and of its parent holding company (including (IBFs). Since December 31, 1985, data for IBFs have been reported in a separate column. subsidiaries owned both directly and indirectly). These data are either included in or excluded from the total columns as indicated in the 6. In some cases two or more offices of a foreign bank within the same metropolitan area headings. The notation "n.a." indicates that no IBF data have been reported for that item, file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Special Tables • November 2000 4.31 PRO FORMA FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES A. Pro forma balance sheet Millions of dollars Item June 30, 2000 June 30, 1999 Short-term assets (Note 1) Imputed reserve requirement on clearing balances 610.7 665.3 Investment in marketable securities 5.496.2 5,987.7 Receivables 76.4 72.0 Materials and supplies 3.3 4.4 Prepaid expenses 28.5 29.3 Items in process of collection 3.234.3 4,560.5 Total short-tenn assets 9,449.4 11,319.1 Long-term assets (Note 2) Premises 450.6 411.6 Furniture and equipment 165.0 144.1 Leases and leasehold improvements 48.9 35.0 Prepaid pension costs 600.5 491.5 Total long-term assets 1,265.0 1,082.3 Total assets 10,714.4 12,401.4 Short-term liabilities Clearing balances and balances arising from early credit of uncollected items 5,893.3 7,242.6 Deferred-availability items 3,448.0 3,970.9 Short-term debt 108.2 105.6 Total short-term liabilities 9,449.4 11,319.1 Long-term liabilities Obligations under capital leases .0 .0 Long-term debt 405.4 219.8 Postretirement/postemployment benefits obligation 236.0 222.1 Total long-term liabilities 641.4 441.9 Total liabilities 10,090.8 11,761.1 Equity 623.6 640.4 Total liabilities and equity (Note 3) 10,714.4 12,401.4 NOTE. Components may not sum to totals because of rounding. The priced services (2) LONG-TERM ASSETS financial statements consist of these tables and the accompanying notes. Consists of long-term assets used solely in priced services, the priced-services portion of (1) SHORT-TERM ASSETS long-term assets shared with nonpriced services, and an estimate of the assets of the Board of Governors used in the development of priced services. Effective Jan. 1, 1987, the Reserve The imputed reserve requirement on clearing balances held at Reserve Banks by depository Banks implemented the Financial Accounting Standards Board's Statement of Financial institutions reflects a treatment comparable to that of compensating balances held at corre- Accounting Standards No. 87, Employers' Accounting for Pensions (SFAS 87). Accordingly, spondent banks by respondent institutions. The reserve requirement imposed on respondent the Federal Reserve Banks recognized credits to expenses of $54.2 million in the second balances must be held as vault cash or as nonearning balances maintained at a Reserve Bank; quarter of 1999, $21.9 million in the first quarter of 1999, $57.7 million in second quarter thus, a portion of priced services clearing balances held with the Federal Reserve is shown as 2000 and $28.9 million in first quarter 2000, and corresponding increases in this asset required reserves on the asset side of the balance sheet. The remainder of clearing balances is account. assumed to be invested in three-month Treasury bills, shown as investment in marketable securities. Receivables are (1) amounts due the Reserve Banks for priced services and (2) the share of (3) LIABILITIES AND EQUITY suspense-account and difference-account balances related to priced services. Under the matched-book capital structure for assets that are not "self-financing," short-term Materials and supplies are the inventory value of short-term assets. assets are financed with short-term debt. Long-term assets are financed with long-term debt Prepaid expenses include salary advances and travel advances for priced-service personnel. and equity in a proportion equal to the ratio of long-term debt to equity for the fifty largest Items in process of collection is gross Federal Reserve cash items in process of collection bank holding companies, which are used in the model for the private-sector adjustment factor (CIPC) stated on a basis comparable to that of a commercial bank. It reflects adjustments for (PSAF). The PSAF consists of the taxes that would have been paid and the return on capital intra-System items that would otherwise be double-counted on a consolidated Federal that would have been provided had priced services been furnished by a private-sector firm. Reserve balance sheet; adjustments for items associated with non-priced items, such as those Other short-term liabilities include clearing balances maintained at Reserve Banks and collected for government agencies; and adjustments for items associated with providing fixed deposit balances arising from float. Other long-term liabilities consist of obligations on capital availability or credit before items are received and processed. Among the costs to be leases. recovered under the Monetary Control Act is the cost of float, or net CIPC during the period (the difference between gross CIPC and deferred-availability items which is the portion of gross CIPC that involves a financing cost), valued at the federal funds rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank-Reported Data All 4.31 PRO FORMA FINANCIAL STATEMENTS FOR FEDERAL RESERVE PRICED SERVICES B. Pro forma income statement Millions of dollars Item Quarter ending June 30, 2000 Quarter ending June 30, 1999 Revenue from services provided to depository institutions (Note 4) 221.9 205.3 Operating expenses (Note 5) 173.6 164.5 Income from operations 48.3 40.7 Inputed costs (Note 6) Interest on float .4 .3 Interest on debt 7.9 4.6 Sales taxes 1.9 2.4 FDIC insurance 0.0 10.2 .8 8.3 Income from operations after imputed costs 38.1 32.4 Other income and expenses (Note 7) Investment income on clearing balances 98.9 77.3 Earnings credits 93.4 5.5 70.5 6.8 Income before income taxes 43.6 39.3 Inputed income taxes (Note 8) 13.7 12.5 Net income 29.9 26.7 MEMO Targeted return on equity (Note 9) 24.6 14.2 Six months ending June 30, 2000 Six months ending June 30, 1999 Revenue from services provided to depository institutions (Note 4) 433.4 408.4 Operating expenses (Note 5) 346.4 334.9 Income from operations 87.0 73.5 Imputed costs (Note 6) Interest on float 3.2 5.9 Interest on debt 15.8 9.2 Sales taxes 4.2 4.6 FDIC insurance 0.0 23.2 1.6 21.4 Income from operations after imputed costs 63.8 52.1 Other income and expenses (Note 7) Investment income on clearing balances 203.7 159.2 Earnings credits -181.8 22.0 141.0 18.3 Income before income taxes 85.7 70.4 Imputed income taxes (Note 8) 27.0 22.5 Net income 58.7 47.9 MEMO Targeted return on equity (Note 9) 49.2 31.5 NOTE. Components may not sum to totals because of rounding. The priced services Unrecovered float includes float generated by services to government agencies and by other financial statements consist of these tables and the accompanying notes. central bank services. Float recovered through income on clearing balances is the result of the increase in investable clearing balances; the increase is produced by a deduction for float for cash items in process of collection, which reduces imputed reserve requirements. The income (4) REVENUE on clearing balances reduces the float to be recovered through other means. As-of adjustments Revenue represents charges to depository institutions for priced services and is realized from are memorandum adjustments to an institution's reserve or clearing position to recover float each institution through one of two methods: direct charges to an institution's account or incurred by the institution. Direct charges are billed to the institution for float incurred when charges against its accumulated earnings credits. an institution chooses to close on a normal business day and for float incurred on interterritory check transportation. Float recovered through direct charges is valued at cost using the federal funds rate and charged directly to an institution's account. Float recovered through per-item (5) OPERATING EXPENSES fees is valued at the federal funds rate and has been added to the cost base subject to recovery Operating expenses consist of the direct, indirect, and other general administrative expenses in the second quarters of 2000 and 1999. of the Reserve Banks for priced services plus the expenses for staff members of the Board of Governors working directly on the development of priced services. The expenses for Board (7) OTHER INCOME AND EXPENSES staff members were $2.1 million in the first and second quarters of 2000 and $1.7 million in the first and second quarters of 1999. The credit to expenses under SFAS 87 (see note 2) is Consists of imputed investment income on clearing balances and the actual cost of earnings reflected in operating expenses. credits. Investment income on clearing balances represents the average coupon-equivalent yield on three-month Treasury bills applied to the total clearing balance maintained, adjusted for the effect of reserve requirements on clearing balances. Expenses for earnings credits (6) IMPUTED COSTS granted to depository institutions on their clearing balances are derived by applying the Imputed costs consist of interest on float, interest on debt, sales taxes, and the FDIC average federal funds rate to the required portion of the clearing balances, adjusted for the net assessment. Interest on float is derived from the value of float to be recovered, either effect of reserve requirements on clearing balances. explicitly or through per-item fees, during the period. Float costs include costs for checks, book-entry securities, noncash collection, ACH, and funds transfers. (8) INCOME TAXES Interest is imputed on the debt assumed necessary to finance priced-service assets. The sales taxes and FDIC assessment that the Federal Reserve would have paid had it been a Imputed income taxes are calculated at the effective tax rate derived from the PSAF model private-sector firm are among the components of the PSAF (see note 3). (see note 3). Float costs are based on the actual float incurred for each priced service, multiplied by the appropriate federal funds rate. Other imputed costs are allocated among priced services (9) RETURN ON EQUITY according to the ratio of operating expenses less shipping expenses for each service to the total expenses for all services less the total shipping expenses for all services. Represents the after-tax rate of return on equity that the Federal Reserve would have earned The following list shows the daily average recovery of float (before converting to float had it been a private business firm, as derived from the PSAF model (see note 3). This amount costs) by the Reserve Banks for the third quarter of 2000 and 1999 in millions of dollars: is adjusted to reflect the recovery of automation consolidation costs of $0.0 million for the first and second quarters of 2000, $3.5 million for the second quarter of 1999, and $3.3 2000 1999 million for the first quarter of 1999. The Reserve Banks recovered these amounts, along with a finance charge, by the end of 1999. Total float 466.4 394.7 Unrecovered float 8.0 (49.6) Float subject to recovery 458.4 444.2 Sources of float recovery Income on clearing balances 46.4 33.5 As-of adjustments 438.8 318.8 Direct charges 279.9 41.6 Per-item fees (306.8) 50.4 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • November 2000 Index to Statistical Tables References are to pages A3-A77, although the prefix " " is omitted in this index. ACCEPTANCES, bankers (See Bankers acceptances) Federal credit agencies, 30 Assets and liabilities (See also Foreigners) Federal finance Commercial banks, 15-21, 64-65 Debt subject to statutory limitation, and types and ownership of Domestic finance companies, 32, 33 gross debt, 27 Federal Reserve Banks, 10 Receipts and outlays, 25, 26 Foreign banks, U.S. branches and agencies, 72-5 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, 72-5. (See also Foreigners) Federal National Mortgage Association, 30, 34, 35 Bonds (See also U.S. government securities) Federal Reserve Banks New issues, 31 Balance sheet, priced services, 76 Rates, 23 Condition statement, 10, 77 Business activity, nonfinancial, 42 Discount rates (See Interest rates) Business loans (See Commercial and industrial loans) U.S. government securities, 5, 10, 11, 27 Federal Reserve credit, 5, 6, 10, 12 CAPACITY utilization, 43 Federal Reserve notes, 10 Capital accounts Federal Reserve System Commercial banks, 15-21, 64—65 Balanced sheet for priced services, 76, 77 Federal Reserve Banks, 10 Condition statement for priced services, 76, 77 Certificates of deposit, 23 Federally sponsored credit agencies, 30 Commercial and industrial loans Finance companies Commercial banks, 15-21, 64-71 Assets and liabilities, 32 Weekly reporting banks, 17, 18 Business credit, 33 Commercial banks Loans, 36 Assets and liabilities, 15-21, 64—65 Paper, 22, 23 Commercial and industrial loans, 15-21, 64-65, 66-71 Float, 5 Consumer loans held, by type and terms, 36, 66-71 Flow of funds, 37-41 Real estate mortgages held, by holder and property, 35 Foreign banks, U.S. branches and agencies, 71-5 Terms of lending, 64-65 Foreign currency operations, 10 Time and savings deposits, 4 Foreign deposits in U.S. banks, 5 Commercial paper, 22, 23, 32 Foreign exchange rates, 62 Condition statements (See Assets and liabilities) Foreign-related institutions, 20 Construction, 42, 46 Foreign trade, 51 Consumer credit, 36 Foreigners Consumer prices, 42 Claims on, 52, 55-7, 59 Consumption expenditures, 48, 49 Liabilities to, 51-3, 58, 60, 61 Corporations Profits and their distribution, 32 Security issues, 31, 61 GOLD Cost of living (See Consumer prices) Certificate account, 10 Credit unions, 36 Stock, 5, 51 Currency in circulation, 5, 13 Government National Mortgage Association, 30, 34, 35 Customer credit, stock market, 24 Gross domestic product, 48, 49 DEBT (See specific types of debt or securities) HOUSING, new and existing units, 46 Demand deposits, 15-21 Depository institutions Reserve requirements, 8 INCOME and expenses, Federal Reserve System, 76, 77 Reserves and related items, 4-6, 12, 64—65 Income, personal and national, 42, 48, 49 Deposits (See also specific types) Industrial production, 42, 44 Commercial banks, 4, 15-21, 64-65 Insurance companies, 27, 35 Federal Reserve Banks, 5, 10 Interest rates Discount rates at Reserve Banks and at foreign central banks and Bonds, 23 foreign countries (See Interest rates) Commercial banks, 66-71 Discounts and advances by Reserve Banks (See Loans) Consumer credit, 36 Dividends, corporate, 32 Federal Reserve Banks, 7 Money and capital markets, 23 Mortgages, 34 EMPLOYMENT, 42 Prime rate, 22, 66-71 Euro, 62 International capital transactions of United States, 50-61 International organizations, 52, 53, 55, 58, 59 FARM mortgage loans, 35 Inventories, 48 Federal agency obligations, 5, 9-11, 28, 29 Investment companies, issues and assets, 32 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 Investments (See also specific types) Residential mortgage loans, 34, 35 Commercial banks, 4, 15-21, 66-71 Retail credit and retail sales, 36, 42 Federal Reserve Banks, 10, 11 Financial institutions, 35 SAVING Flow of funds, 37-41 LABOR force, 42 National income accounts, 48 Life insurance companies (See Insurance companies) Savings deposits (See Time and savings deposits) Loans (See also specific types) Savings institutions, 35, 36, 37-41 Commercial banks, 15-21, 64-65, 66-71 Securities (See also specific types) Federal Reserve Banks, 5-7, 10, 11 Federal and federally sponsored credit agencies, 30 Federal Reserve System, 76, 77 Foreign transactions, 60 Financial institutions, 35 New issues, 31 Foreign banks, U.S. branches and agencies, 72 Prices, 24 Insured or guaranteed by United States, 34, 35 Special drawing rights, 5, 10, 50, 51 State and local governments Holdings of U.S. government securities, 27 MANUFACTURING New security issues, 31 Capacity utilization, 43 Rates on securities, 23 Production, 43, 45 Stock market, selected statistics, 24 Margin requirements, 24 Stocks (See also Securities) Member banks, reserve requirements, 8 New issues, 31 Mining production, 45 Prices, 24 Mobile homes shipped, 46 Monetary and credit aggregates, 4, 12 Money and capital market rates, 23 Student Loan Marketing Association, 30 Money stock measures and components, 4, 13 Mortgages (See Real estate loans) TAX receipts, federal, 26 Mutual funds, 13, 32 Thrift institutions, 4. (See also Credit unions and Savings Mutual savings banks (See Thrift institutions) institutions) Time and savings deposits, 4, 13, 15-21, 64-65 NATIONAL defense outlays, 26 Trade, foreign, 51 National income, 48 Treasury cash, Treasury currency, 5 Treasury deposits, 5, 10, 25 Treasury operating balance, 25 OPEN market transactions, 9 UNEMPLOYMENT, 42 U.S. government balances PERSONAL income, 49 Commercial bank holdings, 15-21 Priced services, Federal Reserve income statements, 76, 77 Treasury deposits at Reserve Banks, 5, 10, 25 Prices U.S. government securities Consumer and producer, 42, 47 Bank holdings, 15-21, 27 Stock market, 24 Dealer transactions, positions, and financing, 29 Prime rate, 22, 66-71 Federal Reserve Banks holdings, 5, 10, 11, 27 Producer prices, 42, 47 Foreign and international holdings and transactions, 10, 27, 61 Production, 42, 44 Open market transactions, 9 Profits, corporate, 32 Outstanding, by type and holder, 27, 28 Rates, 23 REAL estate loans U.S. international transactions, 50-62 Banks, 15-21, 35 Utilities, production, 45 Terms, yields and activity, 34 Type and holder and property mortgaged, 35 VETERANS Administration, 34, 35 Reserve requirements, 8 Reserves WEEKLY reporting banks, 17, 18 Commercial banks, 15-21 Wholesale (producer) prices, 42, 47 Depository institutions, 4—6, 12 Federal Reserve Banks, 10 U.S. reserve assets, 51 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • November 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 PIANALTO-CAMERON, Special Assistant to the Board THOMAS A. CONNORS, Deputy Associate Director DAVID W. SKIDMORE, Special Assistant to the Board DONALD B. ADAMS, Senior Adviser DIANE E. WERNEKE, Special Assistant to the Board RICHARD T. FREEMAN, Assistant Director WILLIAM L. HELKIE, Assistant Director STEVEN B. KAMIN, Assistant Director LEGAL DIVISION RALPH W. TRYON, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel SCOTT G. ALVAREZ, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS RICHARD M. ASHTON, Associate General Counsel DAVID J. STOCKTON, Director OLIVER IRELAND, Associate General Counsel EDWARD C. ETTIN, Deputy Director KATHLEEN M. O'DAY, Associate General Counsel WILLIAM R. JONES, Associate Director ANN E. MISBACK, Assistant General Counsel MYRON L. KWAST, Associate Director SANDRA L. RICHARDSON, Assistant General Counsel STEPHEN D. OLINER, Associate Director STEPHEN L. SICILIANO, Assistant General Counsel PATRICK M. PARKINSON, Associate Director KATHERINE H. WHEATLEY, Assistant General Counsel LAWRENCE SLIFMAN, Associate Director CHARLES S. STRUCKMEYER, Associate Director MARTHA S. SCANLON, Deputy Associate Director OFFICE OF THE SECRETARY JOYCE K. ZICKLER, Deputy Associate Director JENNIFER J. JOHNSON, Secretary WAYNE S. PASSMORE, Assistant Director ROBERT DEV. FRIERSON, Associate Secretary DAVID L. REIFSCHNEIDER, Assistant Director BARBARA R. LOWREY, Associate Secretary and Ombudsman JANICE SHACK-MARQUEZ, Assistant Director ALICE PATRICIA WHITE, Assistant Director DIVISION OF BANKING GLENN B. CANNER, Senior Adviser DAVID S. JONES, Senior Adviser SUPERVISION AND REGULATION THOMAS D. SIMPSON, Senior Adviser RICHARD SPILLENKOTHEN, Director STEPHEN C. SCHEMERING, Deputy Director DIVISION OF MONETARY AFFAIRS HERBERT A. BIERN, Associate Director DONALD L. KOHN, Director ROGER T. COLE, Associate Director DAVID E. LINDSEY, Deputy Director WILLIAM A. RYBACK, Associate Director BRIAN F. MADIGAN, Associate Director GERALD A. EDWARDS, JR., Deputy Associate Director RICHARD D. PORTER, Deputy Associate Director STEPHEN M. HOFFMAN, JR., Deputy Associate Director WILLIAM C. WHITESELL, Assistant Director JAMES V. HOUPT, Deputy Associate Director NORMAND R. V. BERNARD, Special Assistant to the Board JACK P. JENNINGS, Deputy Associate Director MICHAEL G. MARTINSON, Deputy Associate Director DIVISION OF CONSUMER SIDNEY M. SUSSAN, Deputy Associate Director AND COMMUNITY AFFAIRS MOLLY S. WASSOM, Deputy Associate Director 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

A81 EDWARD M. GRAMLICH OFFICE OF DIVISION OF RESERVE BANK OPERATIONS STAFF DIRECTOR FOR MANAGEMENT AND PAYMENT SYSTEMS STEPHEN R. MALPHRUS, Staff Director LOUISE L. ROSEMAN, Director PAUL W. BETTGE, Associate Director MANAGEMENT DIVISION KENNETH D. BUCKLEY, Assistant Director JOSEPH H. HAYES, JR., Assistant Director STEPHEN J. CLARK, Associate Director, Finance Function JEFFREY C. MARQUARDT, Assistant Director DARRELL R. PAULEY, Associate Director, Human Resources EDGAR A. MARTINDALE, Assistant Director Function SHEILA CLARK, EEO Programs Director MARSHA REIDHILL, Assistant Director JEFF J. STEHM, Assistant Director DIVISION OF SUPPORT SERVICES OFFICE OF THE INSPECTOR GENERAL ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director BARRY R- SNYDER, Inspector General DAVID L. WILLIAMS, Assistant Director DONALD L. ROBINSON, 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

82 Federal Reserve Bulletin • November 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 CHRISTINE M. CUMMING, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary ROBERT A. EISENBEIS, Associate Economist LYNN S. Fox, Assistant Secretary MARVIN S. GOODFRIEND, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID H. HOWARD, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel DAVID E. LINDSEY, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel VINCENT R. REINHART, Associate Economist KAREN H. JOHNSON, Economist THOMAS D. SIMPSON, Associate Economist DAVID J. STOCKTON, Economist MARK S. SNIDERMAN, Associate Economist JACK H. BEEBE, 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

A83 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, Jackson, Mississippi MARTA RAMOS, San Juan, Puerto Rico ROBERT F. ELLIOTT, Prospect Heights, Illinois DAVID L. RAMP, St. Paul, Minnesota LESTER W. FIRSTENBERGER, Hopkinton, Massachusetts 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

84 Federal Reserve Bulletin • November 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, 2000. THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $2.50 COUNTRY MODEL, May 1984. 590 pp. $14.50 each. each in the United States, its possessions, Canada, and INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. Mexico. Elsewhere, $35.00 per year or $3.00 each. 440 pp. $9.00 each. ANNUAL STATISTICAL DIGEST: period covered, release date, num- FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. ber of pages, and price. December 1986. 264 pp. $10.00 each. 1981 October 1982 239 pp. $ 6.50 FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- 1982 December 1983 266 pp. $ 7.50 SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. 1983 October 1984 264 pp. $11.50 RISK MEASUREMENT AND SYSTEMIC RISK: PROCEEDINGS OF A 1984 October 1985 254 pp. $12.50 JOINT CENTRAL BANK RESEARCH CONFERENCE. 1996. 1985 October 1986 231 pp. $15.00 578 pp. $25.00 each. 1986 November 1987 288 pp. $15.00 1987 October 1988 272 pp. $15.00 1988 November 1989 256 pp. $25.00 EDUCATION PAMPHLETS 1980-89 March 1991 712 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1990 November 1991 185 pp. $25.00 available without charge. 1991 November 1992 215 pp. $25.00 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1994 December 1995 190 pp. $25.00 Consumer Handbook to Credit Protection Laws 1990-95 November 1996 404 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small Businesses Series on the Structure of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF The Board of Governors of the Federal Reserve System CHARTS. Weekly. $30.00 per year or $.70 each in the United The Federal Open Market Committee States, its possessions, Canada, and Mexico. Elsewhere, Federal Reserve Bank Board of Directors $35.00 per year or $.80 each. Federal Reserve Banks REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL A Consumer's Guide to Mortgage Lock-Ins RESERVE SYSTEM. A Consumer's Guide to Mortgage Settlement Costs ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— A Consumer's Guide to Mortgage Refinancings Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Home Mortgages: Understanding the Process and Your Right Vol. II (Irregular Transactions). 1969. 116 pp. Each volume to Fair Lending $5.00. How to File a Consumer Complaint 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

A85 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 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANKgeneral interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series may be sent to 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 LATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH of print. Staff Studies 167-174 are available on line at IN SAVINGS ACT, by Gregory Elliehausen and Barbara R. www.federalreserve.gov/pubs/staffstudies. Lowrey. December 1997. 17 pp. 171. THE COST OF BANK REGULATION: A REVIEW OF THE EVI- 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- DENCE, by Gregory Elliehausen. April 1998. 35 pp. ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and 172. USING SUBORDINATED DEBT AS AN INSTRUMENT OF MAR- Donald Savage. February 1990. 12 pp. KET DISCIPLINE, by Study Group on Subordinated Notes 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- and Debentures, Federal Reserve System. December 1999. VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by 69 pp. Gregory E. Elliehausen and John D. Wolken. September 173. IMPROVING PUBLIC DISCLOSURE IN BANKING, by Study 1990. 35 pp. Group on Disclosure, Federal Reserve System. March 2000. 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- 35 pp. GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. 174. BANK MERGERS AND BANKING STRUCTURE IN THE UNITED Rhoades. February 1992. 11 pp. STATES, 1980-98, by Stephen Rhoades. August 2000. 33 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

86 Federal Reserve Bulletin • November 2000 Maps of the Federal Reserve System NOTE LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. 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

A87 1-A 2-B 3-C 4-D 5-E Pittsburgh Baltimore MD N'Y / VT 'f NC NH • Cincinnati Buffalo • Charlotte MA ' ^ NY NJ CT ^ RI sc BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H • Nashville KY / Birmingham H IL ) IN r Louisville MO C TN AR LA • Memphis New Orleans CHICAGO ST. LOUIS 9-1 Ml W1 MINNEAPOLIS 10-J 12-L W1, M^^^BM/gMBWillte^ Onulia* ' " ' ' MO • KS • Denver N.M / Oklahoma Cit\ KANSAS CITY 11-K LA 1:1 Paso ^llBBfck,* I Wmml DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

88 Federal Reserve Bulletin • November 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 Barbara L. Walter1 PHILADELPHIA 19105 Joan Carter Anthony M. Santomero Charisse R. Lillie William H. Stone, Jr. CLEVELAND* 44101 David H. Hoag Jerry L. Jordan Robert W. Mahoney 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 Vacancy 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. Mullinix2 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

A89 Publications of Interest FEDERAL RESERVE REGULATORY SERVICE To promote public understanding of its regulatory func- The Payment System Handbook deals with expedited tions, the Board publishes the Federal Reserve Regu- funds availability, check collection, wire transfers, and latory Service, a four-volume loose-leaf service con- risk-reduction policy. It includes Regulations CC, J, and taining all Board regulations as well as related statutes, EE, related statutes and commentaries, and policy interpretations, policy statements, rulings, and staff statements on risk reduction in the payment system. opinions. For those with a more specialized interest in For domestic subscribers, the annual rate is $200 for the Board's regulations, parts of this service are pub- the Federal Reserve Regulatory Service and $75 for lished separately as handbooks pertaining to monetary each handbook. For subscribers outside the United policy, securities credit, consumer affairs, and the pay- States, the price including additional air mail costs is ment system. $250 for the service and $90 for each handbook. These publications are designed to help those who The Federal Reserve Regulatory Service is also availmust frequently refer to the Board's regulatory materi- able on CD-ROM for use on personal computers. For a als. They are updated monthly, and each contains cita- standalone PC, the annual subscription fee is $300. For tion indexes and a subject index. network subscriptions, the annual fee is $300 for 1 con- The Monetary Policy and Reserve Requirements current user, $750 for a maximum of 10 concurrent Handbook contains Regulations A, D, and Q, plus users, $2,000 for a maximum of 50 concurrent users, related materials. and $3,000 for a maximum of 100 concurrent users. The Securities Credit Transactions Handbook con- Subscribers outside the United States should add $50 tains Regulations T, U, and X, dealing with exten- to cover additional airmail costs. For further informasions of credit for the purchase of securities, together tion, call (202) 452-3244. with related statutes, Board interpretations, rulings, All subscription requests must be accompanied by a and staff opinions. Also included is the Board's list of check or money order payable to the Board of Goverforeign margin stocks. nors of the Federal Reserve System. Orders should be The Consumer and Community Affairs Handbook addressed to Publications Services, mail stop 127, Board contains Regulations B, C, E, M, Z, AA, BB, and DD, of Governors of the Federal Reserve System, Washingand associated materials. ton, DC 20551. GUIDE TO THE FLOW OF FUNDS ACCOUNTS A new edition of Guide to the Flow of Funds Accounts and describes how the series is derived from source is now available from the Board of Governors. The new data. The Guide also explains the relationship between edition incorporates changes to the accounts since the the flow of funds accounts and the national income and initial edition was published in 1993. Like the earlier product accounts and discusses the analytical uses of publication, it explains the principles underlying the flow of funds data. The publication can be purchased, flow of funds accounts and describes how the accounts for $20.00, from Publications Services, Board of Goverare constructed. It lists each flow series in the Board's nors of the Federal Reserve System, Washington, DC flow of funds publication, "Flow of Funds Accounts of 20551. the United States" (the Z.l quarterly statistical release), Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

90 Federal Reserve Bulletin • November 2000 Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce's economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z. 1 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis