Federal Reserve Bulletin, 2001-07

Volume 87 • Number 7 • July 2001 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 431 THE U.S. FLOW OF FUNDS ACCOUNTS AND comments favor the proposal, the vast majority THEIR USES have been submitted by individual real estate agents opposed to the proposal. He states further The U.S. flow of funds accounts compiled by the that the Board believes that a debate on these Board of Governors provide a broadly consismatters, which involve difficult issues, is the tent set of time-series data for tracking funds as best way to identify and sort through the issues they move from economic sectors that serve as and is the type of debate envisioned by the GLB sources of capital to sectors that use the capital Act (Testimony before the Subcommittee on to acquire physical and financial assets. They Financial Institutions and Consumer Credit of present a wide range of data organized by finanthe House Committee on Financial Services, cial instrument and by sector. With statistics May 2, 2001). extending back more than a half a century, the accounts document financial developments, pro- 448 Roger W. Ferguson, Jr., Vice Chairman, Board vide means for studying macroeconomic behav- of Governors of the Federal Reserve System, ior, and are used for policy purposes. This article discusses the availability of credit to small busibriefly describes the accounts and shows how nesses and highlights a few of the preliminary the data can be used to interpret major financial findings from the Board's third Survey of Small trends among households and nonfinancial cor- Business Finances, which was completed last porate businesses. year. He states that reports from small businesses are relatively upbeat with regard to the availability of credit; although risky borrowers 442 INDUSTRIAL PRODUCTION AND CAPACITY face close scrutiny, banks have continued to UTILIZATION FOR MAY 2001 accommodate the needs of their creditworthy business customers, while bank lending rates, on Industrial production contracted 0.8 percent in average, have moved lower (Testimony before May, to 143.1 percent of its 1992 average. After the House Small Business Committee, May 17, eight consecutive months of decline, industrial 2001). production in May was nearly 3 percent below its level in May 2000. The rate of capacity utilization for total industry fell 3A percentage 452 ANNOUNCEMENTS point, to 77.4 percent, more than 4!/2 percentage points below its 1967-2000 average. Directive by the Federal Open Market Committee and a decrease in the discount rate. 445 TESTIMONY OF FEDERAL RESERVE Governor Edward W. Kelley, Jr., announces his OFFICIALS intention to resign from the Board of Governors. Laurence H. Meyer, Member, Board of Gover- Statement by Chairman Alan Greenspan on nors of the Federal Reserve System, testifies on Governor Kelley's announcement. the joint proposal by the Board and the Secre- 2001 Survey of Consumer Finances to commence. tary of the Treasury inviting public comment on whether the Board and the Treasury should find Consumer Advisory Council meeting and call that real estate brokerage and real estate man- for nominations. agement are activities that are financial in nature Request for comment on payments system risk or incidental or complementary to a financial policy and rescission of interaffiliate transfer activity and hence permissible for financial holdpolicy. ing companies and financial subsidiaries of national banks under the Gramm-Leach-Bliley Interagency task force video on identity theft (GLB) Act; he states that although some of the protection. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publication of the May 2001 update to the Com- A1 FINANCIAL AND BUSINESS STATISTICS mercial Bank Examination Manual. These tables reflect data available as of Publication of the June 2001 update to the Bank May 29, 2001. Holding Company Supervision Manual. A3 GUIDE TO TABULAR PRESENTATION Enforcement action. A4 Domestic Financial Statistics 458 MINUTES OF THE FEDERAL OPEN MARKET A42 Domestic Nonfinancial Statistics COMMITTEE HELD ON MARCH 20, 2001 A50 International Statistics At this meeting, the Committee voted to lower A63 GUIDE TO STATISTICAL RELEASES AND its target for the federal funds rate by 50 basis SPECIAL TABLES points to 5 percent. Subsequently, on April 18, 2001, the Committee met via telephone confer- A64 INDEX TO STATISTICAL TABLES ence to lower its target for the funds rate another 50 basis points, to 4l/i percent. In taking both A66 BOARD OF GOVERNORS AND STAFF these actions, the Committee agreed that the risks were weighted mainly toward conditions that could generate economic weakness in the A68 FEDERAL OPEN MARKET COMMITTEE AND foreseeable future. STAFF; ADVISORY COUNCILS A70 FEDERAL RESERVE BOARD PUBLICATIONS 465 LEGAL DEVELOPMENTS Various bank holding company, bank service A72 MAPS OF THE FEDERAL RESERVE SYSTEM corporation, and bank merger orders; and pending cases. A74 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES 482 DOMESTIC OPEN MARKET OPERATIONS DURING 2000 Report adapted from one presented to the Federal Open Market Committee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Lynn S. Fox, Chair • Jennifer J. Johnson • Karen H. Johnson • Donald L. Kohn • Stephen R. Malphrus • J. Virgil Mattingly, Jr. • Dolores S. Smith • Richard Spillenkothen • Richard C. Stevens • David J. Stockton The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Christine S. Griffith, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The U.S. Flow of Funds Accounts and Their Uses Albert M. Teplin, of the Board's Division of Research increases in the value of equity shares. In related and Statistics, prepared this article. Andrew M. Tyler analyses, the accounts have been used to study perassisted with the data. sonal saving. They show how saving is allocated across broad classes of financial and tangible assets Each day, a wealth of data on household, corporate, and provide alternative measures of personal saving and government finances becomes available. The that can be analyzed in conjunction with the measure greatest challenge posed by these data is in interpret- commonly reported in the national income and proding the information they contain—that is, in evaluat- uct accounts compiled by the Department of Coming the information's import in a historical context merce. The accounts have also been used in analyses and determining its usefulness and appropriate weight of business investment and of the implications of in forecasting the direction of the U.S. economy. By business sector leverage for the macroeconomy. assembling much of this information into a compre- The accounts are used for monetary policy purhensive, coherent data set, the U.S. flow of funds poses. An economic forecast that integrates the accounts produced at the Federal Reserve Board pro- flow of funds accounts with other macroeconomic vide a framework in which incoming economic and accounts provides an opportunity to quantify the financial data can be viewed. effects of likely changes in credit conditions on the In simple terms, the flow of funds accounts mea- growth of real activity. A flow of funds forecast also sure financial flows across sectors of the economy, adds a check on the consistency of other elements of tracking funds as they move from those sectors that an economic forecast, because balance sheet condiserve as sources of capital, through intermediaries tions and access to credit and other external funds (such as banks, mutual funds, and pension funds), to can be factors underlying the spending and prosectors that use the capital to acquire physical and duction decisions of households, businesses, and financial assets. With data extending back more than governments. half a century, the accounts provide a broadly consis- The comprehensive framework of the flow of funds tent set of time-series data for measuring financial accounts is useful for interpreting current economic flows in the economy. data.1 As fragments of information on financial flows The accounts are useful in documenting central become available, they can be evaluated in light economic trends. They show, for example, the growth of the expectations embedded in the broader flow of of debt for each sector; changes in the sources of funds forecast. Such evaluations may be especially credit to households, businesses, and governments; helpful in interpreting the implications of higher freand the development of new financial instruments quency data on segments of the financial markets, for providing credit. They document the growth of such as particular types of financial intermediaries or important economic institutions, such as mutual funds financial instruments. and defined contribution pension plans, and show This article gives a brief overview of the flow how these institutions have become woven into the of funds accounts and their uses. The next section financial fabric of the economy. describes the accounts, offering new users a brief tour Data in the accounts are critical for understanding of their organization and manner of publication. The macroeconomic behavior. They have, for example, two subsequent sections illustrate the uses of the data been used in recent studies of the wealth effect— in the accounts in interpreting the behavior of housethe effect of changes in households' net worth on holds and nonfinancial corporate businesses; each their decisions about saving and consumption. The accounts provide the commonly used time-series 1. A description of such use is given in Susan Hume Mcintosh, measure of overall household wealth, give detail on Jennifer M. Scherschel, and Albert M. Teplin, "Use of the Flow of the composition of that wealth, and shed light on the Funds Accounts for Policymaking at the Federal Reserve," paper presented at the Seminar on Central Bank Uses of Financial Accounts, factors underlying changes in composition, such as Frankfurt, Germany, November 22, 1999. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

432 Federal Reserve Bulletin • July 2001 section begins with a review of the growth of debt insurance companies, pension funds, and other kinds within the sector and then moves to a discussion of of intermediaries). the determinants of that growth and its implications Although the basic structure of the flow of funds for economic behavior. accounts has remained stable over the half-century they have been prepared, the details have been modified somewhat as sources, procedures, and terminol- OVERVIEW OF THE ACCOUNTS ogy have changed over time. The accounts also have been modified to increase their accuracy and their The flow of funds accounts record the acquisition usefulness for policymaking and research. of tangible and financial assets (and the incurrence of liabilities) throughout the U.S. economy and document the sources of funds used to acquire those Construction assets. They also measure the value of assets and liabilities at the end of each quarter.2 The principle underlying the flow of funds accounts is that total sources of funds must equal total uses of funds. That is, all funds supplied by sectors in the Organization economy become uses of funds by sectors. Equality between sources and uses holds within each sector as The accounts trace transactions in more than forty well as across the entire economy. types of financial instruments, such as time and sav- Sources of funds are both internal (funds saved ings deposits, mortgages, corporate bonds, equity from current production) and external (funds raised shares, mutual fund shares, and bank loans. By outside the sector). For the household sector, for recording the net volume of transactions in these example, internal funds are saving from personal instruments, the accounts make it possible to analyze disposable income and external funds are funds the development of the instruments over time as obtained through borrowing from financial instialternative or complementary vehicles for financing tutions (table 1). Nonfinancial businesses generate economic activity. They also provide a means of internal funds from profits—technically, after-tax tracking the role of financial intermediaries, such as profits not distributed to shareholders—and also have banks and pension funds, in transferring funds from available allowances for depreciation of tangible sectors that have positive saving to those that borrow assets; their external funds include debt and equity funds. raised in credit markets and loans from commercial Financial transactions are recorded within thirty banks, finance companies, and other sources. The economic sectors—nonfinancial sectors (households internal funds of commercial banks (and of most and nonprofit organizations, unincorporated and other financial intermediaries) are similar to those of incorporated businesses, the federal government, nonfinancial businesses, but their external funds are state and local governments, and the rest of the typically quite different: Those sources are predomiworld) and financial sectors (commercial banks, nantly deposits, such as checkable accounts and small time deposits, and also include managed liabilities, such as large time deposits. Sectors use funds to purchase tangible and finan- 2. A complete description of the accounts is available in Board of cial assets. Households, for example, purchase such Governors of the Federal Reserve System, Guide to the Flow of Funds tangible assets as homes and automobiles and such Accounts (Board of Governors, 2000). 1. Sources of funds, selected sectors Sector Internal funds External funds • PPPeeerrrsssooonnnaaalll sssaaavvviiinnnggg (((dddiiissspppooosssaaabbbllleee pppeeerrrsssooonnnaaalll iiinnncccooommmeee LLLoooaaannnsss fffrrrooommm bbbaaannnkkksss aaannnddd ooottthhheeerrr fffiiinnnaaannnccciiiaaalll iiinnnttteeerrrmmmeeedddiiiaaarrriiieeesss llleeessssss cccooonnnsssuuummmppptttiiiooonnn))) Nonfinancial businesses UUUnnndddiiissstttrrriiibbbuuuttteeeddd ppprrrooofffiiitttsss (((tttoootttaaalll ppprrrooofffiiitttsss llleeessssss dddiiivvviiidddeeennndddsss aaannnddd tttaaaxxxeeesss)));;; NNNeeettt iiissssssuuuaaannnccceee ooofff eeeqqquuuiiitttyyy;;; llloooaaannnsss fffrrrooommm iiinnnttteeerrrmmmeeedddiiiaaarrriiieeesss aaannnddd dddeeebbbttt dddeeeppprrreeeccciiiaaatttiiiooonnn aaallllllooowwwaaannnccceeesss rrraaaiiissseeeddd iiinnn cccaaapppiiitttaaalll mmmaaarrrkkkeeetttsss;;; dddiiirrreeecccttt iiinnnvvveeessstttmmmeeennnttt bbbyyy fffooorrreeeiiigggnnneeerrrsss ((("""rrreeesssttt ooofff ttthhheee wwwooorrrlllddd""" ssseeeccctttooorrr))) UUUnnndddiiissstttrrriiibbbuuuttteeeddd ppprrrooofffiiitttsss (((tttoootttaaalll ppprrrooofffiiitttsss llleeessssss dddiiivvviiidddeeennndddsss aaannnddd tttaaaxxxeeesss)));;; NNNeeettt iiissssssuuuaaannnccceee ooofff eeeqqquuuiiitttyyy;;; ccchhheeeccckkkaaabbbllleee dddeeepppooosssiiitttsss;;; tttiiimmmeee aaannnddd dddeeeppprrreeeccciiiaaatttiiiooonnn aaallllllooowwwaaannnccceeesss sssaaavvviiinnngggsss dddeeepppooosssiiitttsss;;; lllaaarrrgggeee tttiiimmmeee dddeeepppooosssiiitttsss Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The U.S. Flow of Funds Accounts and Their Uses 433 financial assets as deposits at financial intermediaries, going on for some time, the historical record for government securities, equity shares, mutual fund many series is lengthy. Published annual data extend shares, and pension fund reserves (table 2). Non- back to 1945, quarterly data to 1952, and monthly financial businesses and banks invest in similar types data for the primary components of domestic nonfiof tangible assets—real estate, equipment, and nancial debt (the debt of governments, households, software—but in different types of financial assets: and nonfinancial businesses) to 1955. Nonfinancial businesses invest in short-term cash- Data in the accounts come from many sources; equivalent assets, such as deposits and money market little information is collected specifically for inclufunds, and in foreign businesses (foreign direct sion in the accounts. Among the sources are regulainvestment); banks also invest abroad, but domesti- tory reports (such as those submitted by banks and cally they invest mostly in securities and in the loans security brokers to supervisory agencies); aggregated and mortgages they originate. data from tax filings (notably, for information on The flow of funds accounts trace the sources and businesses and pension funds); surveys conducted by uses of funds for each sector and by each instrument, the Federal Reserve System (for information on the with particular attention to external sources of funds assets and liabilities of households and finance comand financial uses of funds. Transactions are recorded panies); other federal agencies, such as the Departas net purchases (or net sales) at the current market ment of the Treasury (for information on federal (transaction) price. Therefore, exchanges within a finances and international capital flows), the Departsector—for example, the sale of equities by one ment of Commerce (for foreign direct investment household and the corresponding purchase by another statistics, national income and product account data, household—cancel each other out and do not show and other business and government data), and the up in the accounts. Transactions between sectors, Department of Agriculture (for information on the on the other hand—such as the sale of equities by farm sector); and nongovernmental entities (such a household to a mutual fund—are recorded as a as trade associations, rating agencies, and news negative value for the sector selling the instrument services).3 and a positive value for the sector purchasing the Dependence on outside providers means that data instrument. are not always in the form or detail needed for the The accounts also record the level (or "value accounts. Moreover, information on some sectors and outstanding") of financial assets held, and liabilities some types of transactions is available only annually owed, by sector. The level is generally the sum of or with a long lag. In both cases, the value of missing net purchases over time. However, for some items is estimated. Data revisions are incorporated instruments—particularly equities and other instru- in the accounts as they become available from ments whose value largely reflects equities—the providers. value outstanding is affected by change in the prices Maintaining data series over time also presents a of assets. For these instruments, the level at the end challenge. Over the years, much source material has of a period for a sector is the accumulation of been discontinued, necessitating the development of net purchases plus any appreciation or depreciation new sources and adjustment for breaks in definition resulting from the change in prices. or coverage. Also, changes in the financial system have required the incorporation of new financial instruments and institutions in the accounts. And the Data 3. Detailed information on sources is available in Guide to the The data in the flow funds accounts are maintained as Flow of Funds Accounts and in Susan Hume Mcintosh, "Financial Accounts in the United States," mimeo prepared for the Group of time series. Because work on the accounts has been Financial Statisticians Financial Accounts Seminar, Paris, May 1995. 2. Uses of funds, selected sectors 1 — — — — — — — — —• Sector Tangible assets Financial assets Households Owner-occupied homes and other real estate; automobiles Deposits; federal government securities; equity shares; mutual fund shares; pension fund reserves Nonfinancial businesses Real estate; equipment; software Deposits; money market mutual funds; direct investment in foreign businesses Banks Real estate; equipment; software Treasury and federal agency securities; loans to households and businesses; mortgage loans for all types of property Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

434 Federal Reserve Bulletin • July 2001 needs of policy analysis and research have resulted analysts to compare key economic measures across in the inclusion of greater detail and supplementary countries and to study the relationship between ecoinformation. nomic structure and performance.6 Publication HOUSEHOLD SECTOR FINANCES The flow of funds accounts are published quarterly, The recent rapid rise in household sector debt has as a set of tables, in the Federal Reserve's Z.l statisreceived considerable attention.7 Some observers tical release, "Flow of Funds Accounts of the United have expressed concern that the accumulation of debt States." 4 Data for a new quarter and revisions to data may result in widespread financial distress for both for previous quarters are published about ten weeks borrowers and lenders. However, debt is only one after the end of a quarter. dimension of household finances; the increase in The Z.l release contains a separate table for each household sector debt is most appropriately viewed sector and instrument, in both flow and level forms, within the context of changes in overall household as well as summary tables for borrowing, debt outsector wealth. standing, and debt growth, by sector; credit market borrowing and lending, by instrument; and the relation of total liabilities to total financial assets. It also Debt contains balance sheets and level-flow reconciliation tables for the household and nonprofit organizations The flow of funds accounts document the substantial sector and the domestic nonfarm nonfinancial corporise in household sector debt. By the end of the first rate business sector. Finally, the Z. 1 release contains quarter of 2001, households had accumulated a table that consolidates information for federal, state, $7.2 trillion in debt, about double the amount they and local governments; supplementary tables giving owed at the beginning of the economic expansion in detail on the financial activity of nonprofit organizaearly 1991. Despite a slowing of economic growth tions, private defined benefit and defined contribution this year, household debt has continued to increase pension funds, and individual retirement accounts; rapidly, rising at an annual rate of 73/4 percent in the and matrices showing flows and levels for sectors and first quarter, only slightly slower than the average instruments for the latest complete year. rate for the past three years. The rise has been apparent for both major types Relationship to Other Systems of Accounts of household debt. Home mortgage debt (debt on owner-occupied homes, including home equity The flow of funds accounts complement—and are loans)—by far the largest component of household linked to—other broad statistical descriptions of the sector liabilities, accounting for 70 percent of U.S. economy, such as the national income and prod- household debt at the end of 2000—rose 98 peruct accounts and the balance of payments accounts cent from early 1991 through the first quarter of produced by the Department of Commerce. Indeed, 2001. The other major component, consumer credit— the three sets of accounts make up an integrated set comprising revolving credit (largely credit card debt) of macroeconomic accounts that describe the U.S. economy for policymakers, analysts, and others who desire a comprehensive but compact set of informa- 6. A survey of international practices indicates that twenty-three of tion on the economy's performance. Internationally, the twenty-nine countries that are members of the Organisation for Economic Co-operation and Development compile national financial countries have been working to harmonize the defiaccounts or a subset of the financial accounts. All the compiling nitions and accounting conventions used in their countries have implemented or are in the process of implementing national accounts.5 Such harmonization will enable SNA93 (or its European counterpart, ESA95) in their national statistics. Ayse Bertrand, "Main Features of Financial Accounts in OECD Countries," Financial Market Trends, no. 76 (June 2000), pp. 149-76. 7. In the flow of funds accounts, the household sector includes 4. The Z.l statistical release is available in printed form and on the nonprofit organizations as well as individuals and families. Separate Board's public web site at http://www.federalreserve.gov/releases/ estimates, also published in the accounts, indicate that nonprofit Z1 /. organizations have in recent years accounted for 5 percent to 7 percent 5. The System of National Accounts, published in 1993 (SNA93), of the assets and liabilities of the combined sector. Because figures for is an internationally agreed upon set of definitions and standards for nonprofit organizations are available only annually, and with a conpreparing macroeconomic accounts. The flow of funds accounts pro- siderable lag, and because they lack the necessary detail, analysis vide the information for the financial accounts within this set of is generally carried out for the combined sector. For simplicity, the accounts and serve as a basis for sector balance statements. sector is referred to here as the household sector. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The U.S. Flow of Funds Accounts and Their Uses 435 and nonrevolving credit (auto loans, for example)— 1. Household sector debt relative to disposable personal also about doubled. income, 1952-2001 :Q1 No doubt some households have become overburdened with debt. However, the flow of funds accounts indicate that household sector debt has been rising over most of the postwar period. Although the rate of growth has waxed and waned with the business cycle, the amount of debt outstanding has marched upward. Even when household debt is scaled by disposable personal income (after-tax income) to account for population increase, price changes, and the substantial increase in the volume of economic activity over the period, the historical rise in household sector debt has been impressive. Households now owe a little more than one dollar for each dollar of disposable income (chart 1). Ten years ago, they owed about NOTE. Debt is debt outstanding at end of period, from the flow of funds eighty cents for each dollar, and in the early 1950s accounts. Disposable personal income is after-tax income, from the national about thirty-five cents. Thus, the recent growth of income and product accounts (Bureau of Economic Analysis, U.S. Department of Commerce). debt could be viewed as a continuation of a long-term trend. Research provides scant evidence of a simple or increased from 63.9 percent of families in early 1991 direct link between higher levels of debt relative to to 67.5 percent in early 2001. income and changes in consumer spending. The lack The increased use of credit cards for transaction of a direct relationship may reflect in part the fact that purposes appears to be an important factor underthe sustained rise in debt has not necessarily been lying the growth of household sector debt over the associated with an increase in the burden of carrying current expansion. Credit card issuers indicate that in debt, that the use of debt instruments for conducting 1999, each $1 of debt was associated with just over transactions has been increasing, and that households $2.60 in purchases, compared with about $1.90 in have been using debt to access the pent-up value of purchases in 1990. Greater transaction use raises the their tangible and financial assets. average debt level in any given period, even if credit For some types of debt, longer loan maturities have card balances are fully paid when due. made it possible to hold higher outstanding amounts Also contributing to the sustained rise in debt has without increasing the servicing burden. Although been the willingness of households to access the longer maturities increase total interest expense increased value of their assets through home mortover time, they also lower periodic payments for a gage loans. The rise in mortgage debt during the given amount of debt. Auto loan maturities at finance current economic expansion has been due in part to companies now average fifty-five months at orig- increased borrowing via loans for which accumulated ination, compared with forty-five months in the home equity is used as collateral—home equity loans early 1980s and thirty-five months in the early or refinancings accompanied by the conversion of 1970s. Home mortgage originations show a simi- some equity to cash. lar, albeit less pronounced, increase in average loan Home equity borrowing was spurred initially by maturity. 1986 tax law changes and subsequently by promotion Other loan terms that have lowered households' of home equity loan products. At first, the growth of costs of carrying mortgage debt include variable home equity borrowing appeared mainly to change interest rate provisions and flexible down-payment the composition of household sector debt: Mortgage requirements. Although such "nonstandard" terms debt, for which the interest continued to be taxchange the repayment risks for lenders, they also deductible, was substituted for consumer credit, for likely broaden the pool of eligible borrowers and which, with the tax law changes, the interest was no enable borrowers who would qualify for a loan under longer tax-deductible. Over time, home equity borstandard terms to carry larger outstanding balances. rowing became a more general means of obtaining In fact, home mortgage debt may have risen in part funds. Such borrowing, which barely registered in the simply because such terms allow a greater proportion flow of funds accounts in the early 1990s, accounted of the population to own rather than rent their homes. for nearly one-fourth of home mortgage borrowing in Census Bureau data indicate that home ownership 2000. The value of home equity loans outstanding at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

436 Federal Reserve Bulletin • July 2001 2. Value of home equity loans outstanding, 3. Scheduled principal and interest payments on household 1990:Q4-2001 :Q 1 sector debt as a proportion of disposable personal income, 1980-2001:Q1 Billions of dollars 600 500 400 300 200 1990 1992 1994 1996 1998 2000 NOTE. Value of loans outstanding at end of period. Unless otherwise noted, data in this and subsequent charts are from the flow of funds accounts. NOTE. Disposable personal income from national income and product accounts. the end of the first quarter of 2001 was more than Assets $619 billion, up 142 percent since 1991 (chart 2). Home mortgage refinancing has been spurred by At the same time household sector debt and the successive declines in mortgage interest rates and burden of carrying that debt are elevated, the values also likely by declining costs to borrowers for the of household sector assets are also unusually high. processing of such loans. Refinancing waves in The flow of funds accounts contain considerable 1992-93 and again in early and late 1998 were parinformation on the size and composition of those ticularly pronounced. Because the flow of funds assets, both tangible and financial.9 accounts record only net borrowing, they do not Household sector assets totaled $47.1 trillion at the provide the detail necessary to estimate how much of end of the first quarter of 2001. That is, households recent mortgage borrowing can be attributed to cashhad more than six and one-half dollars in tangible and out refinancing. Nonetheless, statistics on the number financial assets for each dollar of disposable income of refinanced loans and other data suggest that such (chart 4), considerably more than the one dollar of activity has been significant in recent years. debt for each dollar of disposable income noted in the Ultimately, whether the elevated level of housepreceding section. Moreover, the ratio of assets to hold sector debt will lead to substantial financial income has increased markedly over the past ten distress will depend in large measure on whether years and, despite the recent decline in the value of employment and income conditions unfold in line some equity assets, is higher now than it was in the with expectations and on the size and composition of early 1990s or in any earlier period. household sector assets. The near-term burden of The composition of household assets has changed household debt is typically measured as scheduled considerably over the past decade. The most dramatic principal and interest payments as a proportion of disposable personal income. Data in the accounts are combined with other available information to construct that measure.8 In early 2001, the level of debt 9. Tangible assets include owner-occupied homes and durable goods, such as automobiles. Financial assets include holdings of burden was close to the high reached in mid-1987 different types of deposit accounts, fixed income assets (such as (chart 3), suggesting that strains could become evi- government securities and corporate bonds), equity and mutual fund dent if employment and income conditions deterio- shares, and household pension reserves. Information on household assets and liabilities is also available rate more than contemplated by borrowers and lendfrom the Federal Reserve Board's Survey of Consumer Finances. The ers when the loans were made. two sources differ in several important respects. For example, the SCF data are based on a sample of households and are available only approximately every third year, whereas the household sector data in the flow of funds accounts are based on numerous macroeconomic sources and are published each quarter. Nonetheless, the two data sets 8. The data and explanation of their construction are available on are complementary in that they can be used together to examine the Board's public web site at http://www.federalreserve.gov/releases/ household balance sheet changes and household sector behavior in housedebt/. considerable detail. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The U.S. Flow of Funds Accounts and Their Uses 437 4. Household sector assets relative to disposable personal 3. Household sector holdings of equity in pension plans income, 1952-2001 :Q1 as a proportion of total equity holdings, year-end 1991 and 2000 Ratio Percent Item 1991 2000 Total 29.9 32.5 Private defined benefit plans 10.6 7.5 Private defined contribution plans 8.7 10.5 State and local government employee J'' ''"'-|jj retirement funds 8.7 9.2 Tangible Life insurance annuities 1.9 5.3 iMmi! Memo: Total including equity in IRAs 35.5 40.5 Financial NOTE. Figures for defined benefit plans, defined contribution plans, and government employee retirement funds are derived from table B.lOO.e in the Z.l statistical release; figures for life insurance annuities and IRAs are based on data in tables L.119 and L.225.i. NOTE. Assets at end of period. Disposable personal income from the national in IRAs to the value of equities in pension plans income and product accounts. suggests that the retirement equity proportion of total equity was on the order of 41 percent in 2000, change has been an increase in the proportion of compared with 36 percent in 1991.10 assets in corporate equities, a development that has At the same time households' equity holdings have raised some concerns about households' exposure to been increasing, their holdings of deposits and money equity price changes and the sustainability of the market mutual fund shares as a proportion of their aggregate value of household assets. As recorded in assets have been declining. Although the value of the flow of funds accounts, at the beginning of the holdings in the latter categories increased from economic expansion, households held about 15 per- $3.3 trillion at year-end 1991 to $4.7 trillion in early cent of their assets in equity; more recently, the 2001, the value of such assets as a share of total proportion has been about 27 percent. At its peak, in household assets fell from 121/2 percent to about early 2000, the proportion was nearly 36 percent. 10 percent. Households continued to favor money Not only do corporate equities now account for a market mutual funds over insured checkable deposits larger share of household assets, but the distribution at banks and other depositories. The proportion of of those equities across instrument types has changed. assets in credit market instruments—largely direct Households retain equity either directly, in broker- holdings of government securities and corporate age accounts, or indirectly, in mutual funds, life bonds—declined from 6lA percent to less than insurance annuities, bank personal trusts, and defined 4Vi percent over the same period. benefit and defined contribution pension plans. About The aggregate balance sheet for the household 52 percent of the household sector's equity holdings sector has also recorded a substantial rise in the value were held indirectly at the end of 2000, compared of owner-occupied homes. Over the past ten years, with 44 percent at the beginning of the economic the value of those homes has risen $4.6 trillion, with expansion and less than 7 percent in the 1960s. the greatest part of the rise occurring in recent years. The distribution of their equity holdings across At the end of the first quarter of 2001, the market types of instruments may affect the way households value of owner-occupied homes totaled more than view risk and the influence that changes in asset $11.3 trillion, compared with a market value of values have on their short-term saving and consump- directly and indirectly held equities of $12.8 trillion. tion. For instance, households may view their equity Because households have used their homes as collatholdings in retirement instruments differently than eral for increasing their mortgage debt, the remaining their other equity holdings. The proportion of equity equity in those homes has grown more gradually than in retirement assets has risen of late. At the end of has the total value. Home equity is currently around 2000, the value of equity in pension plans was close 55 percent of the value of owner-occupied real estate, to 33 percent of the total value of equity held by households, up from just under 30 percent in 1991 (table 3). In addition, the assets of individual retirement accounts (IRAs) also include equity shares. 10. A recent addition to the accounts has been tables separately Adding a rough estimate of the value of equities held identifying flows into, and amounts outstanding of, individual retirement accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

438 Federal Reserve Bulletin • July 2001 compared with 60 percent in the early 1990s and as 5. Corporate debt relative to the sector's output, high as 70 percent in 1982. 1952-2001 :Q1 Altogether, the broad perspective provided by the Ratio flow of funds accounts enables analyses of the buildup of household debt to take into account the growth of household assets, the development of loan products that reduce the cost of obtaining and carrying debt, and the change in the ways households are using debt. Specifically, the statistics in the accounts are used in econometric analyses of consumption, including analyses based on the FRB/US model developed at the Board.11 The data are also used to examine the process by which wealth and the composition of wealth affect household sector behavior.12 Thus, the flow of funds accounts are an essential tool for studying the effect of combined changes in assets and debt on economic growth. NOTE. Debt is debt outstanding at end of period. Sector output is gross business nonfarm product less housing, from the national income and product accounts. The corporate sector comprises domestic nonfarm nonfinancial corporations. CORPORATE SECTOR FINANCES subdued, these businesses began to expand their debt The flow of funds accounts are important in moni- rapidly. From 1995 through early 2001, corporate toring aggregate business borrowing trends and debt rose at an average annual rate of 9 percent, in studying the connection between corporations' outstripping the 6V4 percent average annual rise in financial condition and their nonfinancial economic the nominal value of the sector's gross domestic activity, such as investment spending. The accounts product (GDP). record data for three domestic nonfinancial business Corporate debt as a proportion of sector GDP has sectors—unincorporated businesses, farms, and non- increased over the postwar period, though by much farm corporations. The latter group has historically less than household debt as a proportion of disposcarried out the bulk of business economic activity able personal income. And the ratio for corporate and has generally accounted for more than two-thirds debt has varied considerably more over the period of business borrowing. The remainder of this section (chart 5). It jumped from just over 40 percent in the describes these nonfarm nonfinancial businesses, early 1980s to nearly 60 percent in 1991, in part which, for simplicity, are referred to here as corpora- because borrowing was necessary to complete mergtions or the corporate sector. ers and acquisitions and other types of corporate Borrowing by corporations has been substantial in restructurings. The ratio subsequently dropped to recent years.13 Following a period early in the eco- 50 percent, but by early 2001 it had moved up again, nomic expansion during which their borrowing was to 61 percent. Since 1995, corporations have relied most heavily on the bond markets for external funds. At the end of 11. For an example of such use, see Flint Bray ton, Eileen the first quarter of this year, bond debt was about Mauskopf, David Reifschneider, Peter Tinsley, and John Williams, "The Role of Expectations in the FRB/US Macroeconomic Model," $2Vi trillion, up from less than %\Vi trillion at the Federal Reserve Bulletin, vol. 83 (April 1997), pp. 227-45. beginning of 1995 (chart 6). Both investment-grade 12. A summary of work on the wealth effect is provided in and below-investment-grade (junk bond) firms raised Morris A. Davis and Michael G. Palumbo, "A Primer on the Economics and Time Series Econometrics of Wealth Effects," Finance and large sums over the period. Economics Discussion Series 2001-9 (Federal Reserve Board, 2001). Borrowing from other sources has also been sub- Recent work combining data from the flow of funds accounts and the stantial, though less than borrowing via bonds. For Survey of Consumer Finances to examine the wealth effect is reported in Dean M. Maki and Michael G. Palumbo, "Disentangling the example, over the period 1995 through the first Wealth Effect: A Cohort Analysis of Household Saving in the 1990s," quarter of 2001, borrowing from banks, saving insti- Finance and Economics Discussion Series 2001-21 (Federal Reserve tutions, and finance companies was only half as Board, 2001). 13. Borrowed funds are by far the largest type of external funds much as borrowing via bonds. Commercial paper available to corporations. An important additional source is foreign debt climbed over most of the period, about doubling direct investment by foreign firms, which is discussed in Joseph E. by mid-2000; more recently, such debt has contracted Gagnon, "U.S. International Transactions in 2000," Federal Reserve Bulletin, vol. 87 (May 2001), pp. 283-94. a bit because concerns about credit quality have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The U.S. Flow of Funds Accounts and Their Uses 439 6. Credit market debt owed by the corporate sector, 7. Selected borrowing by the corporate sector, 1995:Q1 and 2001:Q1 1998 and 1999 NOTE. Loans include both bank loans and "other loans" as defined in the NOTE. Debt outstanding at end of quarter. Bonds include tax-exempt indusnote to chart 6. Quarterly data at seasonally adjusted annual rates. trial revenue bonds. "Other loans" are (1) loans from savings institutions, finance companies, the federal government, the rest of the world (that is, foreign sources), and issuers of asset-backed securities and (2) acceptance liabilities to banks. Propelling the elevated volume of external funding by corporations have been an increase in capital expenditures, a high rate of equity retirements, and an made investors wary of all but the most highly rated accumulation of financial assets. Internal funds for borrowers. Mortgage debt of corporations has financing these activities, although moving substanincreased significantly, although in percentage terms tially higher over the current expansion, have increasby less than in the 1980s, when overbuilding in the ingly fallen short of spending needs. commercial and office building sectors became a In nominal terms, annual capital expenditures rose serious problem for both lenders and investors. 70 percent between 1995 and the end of 2000; the Although borrowing from every source increased increase was particularly large because interest rates over the period 1995 through early 2001, there was stayed low and the demand for productivityconsiderable substitution among sources at times. increasing new technologies was intense. Over the One notable occasion began in 1998 and ran through period, the so-called financing gap—the difference late 1999—a time of significant turmoil in world between corporations' capital spending and their capital markets associated with foreign currency internal funds—nearly tripled, to $300 billion.14 As a crises, Russia's debt default, and losses by Longproportion of sector output, the corporate financing Term Capital Management, a major U.S. hedge fund. gap in 2000 was at its highest point in two decades In early 1998, net corporate bond issuance was par- (chart 8). ticularly strong as firms took advantage of dips in Corporations retired an extraordinary volume long-term interest rates. Then, at the height of the of equity over 1995-2000—on net, a whopping uncertainty, net issuance plummeted, from an annual $819 billion. Although many firms issued equity to rate of $295 billion to an annual rate of less than finance capital investment and meet other corporate $110 billion in the third quarter of 1998 (chart 7). needs, for the sector as a whole, the value of shares Investors quickly turned away from the bond market, issued was far surpassed by the value of shares especially the more risky, lower-rated securities, and retired in cash-financed mergers and through firms' spreads between interest rates on riskier debt and own share repurchase programs. Between 1995 and investment-grade instruments soared. Firms that year-end 2000, equity retirement associated with cash needed cash turned to prearranged credit lines at takeovers by domestic firms totaled $663 billion— banks and other loan arrangements, and borrowing and share repurchases totaled even more, $692 bilfrom banks and other short-term lenders rose. Subsequently, investor confidence in private securities returned, and corporate bond issuance again rose sharply. Loans, in contrast, fell off in mid-1999, in 14. For forecasting, looking at the financing gap in light of prospecpart reflecting paydowns of debt incurred during the tive credit developments is a way of assessing consistency between projected elements of nonfinancial activity and anticipated financial earlier turmoil. market conditions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

440 Federal Reserve Bulletin • July 2001 8. Corporate financing gap as a proportion of the sector's 10. Net interest payments by corporations as a output, 1985-2001 :Q1 proportion of the corporate sector's cash flow, 1952-2001 :Q1 Percent 1985 1990 1995 2000 1952 1960 1968 1976 1984 1992 2000 NOTE. The financing gap is the difference between the sector's capital expenditures and its internal funds (that is, its after-tax profits plus depreciation NOTE. Cash flow is undistributed profits plus depreciation allowances plus allowances). net interest. SOURCE. National income and product accounts. lion. (For a broader discussion of accounting for net accounts. Debt relative to net worth declined sharply retirements of equity shares, see the box.) early in the 1990s (chart 9). Since late 1997, the Firms in the aggregate have used the favorable leverage ratio has retraced some of that decline, and economic conditions since the mid-1990s to build at the end of the first quarter of 2001, it was about their financial asset positions. Historically, corporaone-quarter of the way to its most recent peak in tions' net investment in financial assets has been 1990. Debt measured against the market value of small relative to their other uses of funds. They do, corporations (that is, against the value of corporate however, accumulate liquid assets for working capital equity outstanding) has turned up only recently, a and for transactions—and those assets have increasdevelopment reflecting the sharp run-up and subseingly been moved into money market funds. quent decline in stock prices. Although the value of corporations' deposits in banks Some analysts have been wary of the buildup is still about double the value of their assets in money of corporate debt and the rise in leverage ratios. market funds, the latter has grown about twice as fast However, the implications of these changes for future in recent years. economic developments are by no means clear. At Borrowing by corporations has left a mark on the same time businesses were adding to their debt, corporate leverage as measured in the flow of funds they were refunding their older, higher cost obligations with lower cost bonds and loans and were reducing their debt burden in much the same way 9. Corporate sector debt as a proportion of the sector's net worth, 1952-2001:Q1 households refinanced their debt. Net interest payments by firms relative to their cash flow dropped sharply, from more than 20 percent before the 1990-91 recession to around 10 percent in 1995. Even with the additional debt taken on since then, the ratio has inched up to only about 12 percent (chart 10). Despite the large volume of debt issued, the composition of corporations' liabilities is not much different now than it was in 1995. Firms have not markedly increased their reliance on short- and intermediateterm debt, for which interest rates could change rapidly. Statistics in the flow of funds accounts show that bond debt at the end of the first quarter of 2001 was about 49 percent of total corporate debt outstanding, 1952 1960 1968 1976 1984 1992 2000 and bank loans 20 percent; the remaining debt was NOTE. Tangible assets are valued at historical cost. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The U.S. Flow of Funds Accounts and Their Uses 441 Accounting for Net Retirements of Equity Shares The large volume of net retirements of equity shares Which sectors sold shares to corporations on net? Not over 1995-2000 is a source of frequent misunderstanding mutual funds, which have been significant net purchasers of because of the way equity transactions are treated in the equity in recent years; over 1995-2000, their purchases flow of funds accounts. The accounts show only net equity exceeded their sales by more than $918 billion. And not issuance—the difference between gross equity issuance, a foreigners and insurance companies, which were also large positive source of funds to the corporate sectors, and equity net purchasers over the period. It was pension funds and retirements, a negative source of funds to the corporate households that were net sellers of shares to corporations sectors. over 1995-2000. Households, which in terms of value For domestic firms, both nonfinancial and financial, outstanding hold about 45 percent of equity, were the largequity retirements over 1995-2000 exceeded gross issu- est net sellers of equity, selling $1.6 trillion on net over the ance; for foreign firms (the "rest of the world" sector), period. gross issuance of equity in the United States exceeded Figures showing that households were net sellers of retirements, partly offsetting net retirements by domestic (directly held) equities may be unexpected, as the value of firms (table). Overall, net issuance of equity in the United the household sector's holdings of equity assets has States over the period was negative; that is, share retire- increased in most recent years. The explanation is that the ments for the economy as a whole exceeded share capital gains on the shares that households continued to issuance. hold exceeded net sales by households. The following By definition, net purchases of equity (a use of funds for example shows how either positive or negative net purall except the corporate sectors) must equal net issuance of chases can be associated with increases in the value of equity. Because total net issuance by corporations was assets. Suppose that over a twelve-month period, net purnegative over the period, total net purchases for the remain- chases by the household sector were zero because houseing sectors was negative holds traded only among themselves, making the total value of sales equal to the total value of purchases. If over that Net issuance and net purchases of equity shares, 1995-2000 period the price of equities for the economy as a whole, as Billions of dollars measured by a broad stock market index, had risen, the total value of holdings would show an increase over the period Activity/Sector Amount even though net purchases were zero. Similarly, if the stock market index had declined, the total value of holdings by Net issuance -421.7 Domestic nonfinancial corporate businesses -819.3 households would show a decrease. The value outstanding Financial sectors -107.6 is the sum of net purchases and the change in price of equity Rest of the world 505.2 (capital gain or loss). The price changes for equity have Net purchases -421.7 Households -1,591.2 typically been the main determinant of the change in the Rest of the world 408.3 value of holdings over a period, despite large negative net Insurance companies 469.2 Pension funds -555.0 purchases by the household sector. Mutual funds 918.1 All other purchasers -71.1 mainly loans from other sources, commercial paper, tions. The accounts encompass other important secand mortgages. The proportion that was bond debt tors of the economy, however, including financial was only a little higher than in 1995 or, even further intermediaries and governments, and contain considback, in 1991 at the start of the current expansion. erably more sectoral detail than can be summarized in a limited space. Ongoing analysis using the accounts will help expand our knowledge of macro- CONCLUSION economic and financial relationships and the determinants of household and business behavior. A key The flow of funds accounts have been useful in challenge will be ensuring that the accounts continue observing key economic trends and studying the rela- to capture the structure of the financial system and tionships between real and financial developments. provide the level of detail useful for policy and This article has summarized recent trends for house- behavioral analyses. • holds and domestic nonfarm nonfinancial corpora- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

442 Industrial Production and Capacity Utilization for May 2001 Released for publication June 15 2000. Manufacturing output declined 0.7 percent. Excluding motor vehicles and parts production, Industrial production contracted 0.8 percent in May, manufacturing dropped 0.9 percent; the sector has to 143.1 percent of its 1992 average. After eight con- declined more than \XU percent since November secutive months of decline, industrial production in 2000. Output at utilities fell 1.8 percent, and produc- May was nearly 3 percent below its level in May tion in mining weakened 0.4 percent after a smaller 145 125 105 85 Capacity utilization Percent of capacity 85 80 75 70 1977 1979 1981 1983 1985 1987 1991 1993 1995 1997 1999 2001 12-month percent change Percent of capacity High-tech industries are defined as semiconductors and related electronic Shaded areas are periods of business recession as defined by the NBER. components (SIC 3672-9), computers (SIC 357), and communications equipment (SIC 366). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

443 Industrial production and capacity utilization, May 2001 Industrial production, index, 1992= 100 Percent change Category 2001 20011 May 2000 to Feb.' Mar.r Apr/ May? Feb.r Mar.r Apr/ MayP May 2001 Total 145.4 145.1 144.2 143.1 -.4 -.2 -.6 -2.8 Previous estimate 145.5 145.3 144.9 -.4 -.1 -.3 Major market groups Products, total2 134.6 134.7 133.7 132.7 -.3 .0 -.7 -.7 -2.0 Consumer goods 122.3 122.5 121.7 120.8 .5 .1 -.6 -.8 -2.2 Business equipment 195.3 195.9 193.1 191.7 -1.0 .3 -1.4 -.8 .0 Construction supplies 139.9 140.7 139.2 138.8 -.5 .5 -1.0 -.3 -3.0 Materials 165.0 163.9 163.2 161.8 -.5 -.6 -.4 -.9 -3.9 Major industry groups Manufacturing 150.7 150.1 149.1 148.1 -.4 -.5 -.6 -.7 -3.3 Durable 191.1 191.4 189.7 188.8 -.7 .2 -.9 -.5 -2.2 Nondurable 114.0 112.6 112.3 111.2 .0 -1.2 -.3 -1.0 -4.7 Mining 101.4 102.9 102.7 102.3 .4 1.4 -.2 -.4 2.7 Utilities 121.8 123.0 121.7 119.6 -1.8 1.0 -1.0 -1.8 -1.7 Capacity utilization, percent MEMO Capacity, ppeerrcceenntt 2000 2001 cchhaannggee,, Average, Low, High, MMaayy 22000000 1967-00 1982 1988-89 ttoo May Feb/ Mar/ Apr/ May? MMaayy 22000011 Total 82.1 71.1 85.4 82.7 79.2 78.8 78.2 77.4 3.8 Manufacturing 81.1 69.0 85.7 81.9 77.9 77.4 76.7 76.0 4.2 Advanced processing 80.6 71.0 84.2 79.9 78.1 77.9 77.1 76.5 2.2 Primary processing . 82.2 65.7 88.3 86.4 78.6 77.5 77.0 76.3 7.6 Mining 87.4 80.3 88.0 85.4 87.9 89.3 89.3 89.0 -1.4 Utilities 87.6 75.9 92.6 91.9 89.8 90.3 89.1 87.3 3.6 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. decline in April. The rate of capacity utilization for one-third of its April jump. Production of nondurable total industry fell 3A percentage point, to 11A per- consumer goods excluding energy, which has been cent, more than 41/2 percentage points below its sluggish over the past year, fell back 1.2 percent in 1967-2000 average. May; losses were shared among producers of food, clothing, consumer chemicals, and paper products. A decline of 0.8 percent in the output of business MARKET GROUPS equipment put the level of production nearly AVi percent below the recent November peak. Output in Despite an upturn in the output of automotive prod- many of the sector's industries fell, but transit equipucts, the output of consumer goods dropped 0.8 per- ment production rose 1.1 percent because of the cent in May, after a slightly smaller decline in April. increased production of light trucks and cars for The recovery from the automotive downturn that business use. The output of industrial and other began in October of last year has been uneven, and equipment fell 1.2 percent, and the losses were wideproduction in May was still almost 6 percent below spread. The output of information processing equipthe level posted a year earlier. The output of con- ment dropped 1.0 percent further, as the production sumer durables excluding automotive products con- of communications equipment and computers contintracted 0.5 percent, the fifth consecutive month of ued their downward slide. decline in that sector; declines occurred in indus- The production of intermediate products fell tries producing appliances, office and computing 0.6 percent in May; although the bulk of the decline equipment, and furniture. The production of con- can be attributed to scaled-back output of general sumer energy products dropped 1.7 percent. Residen- business supplies, the production of construction suptial electricity use decreased and, to a lesser extent, so plies also remained weak. The production of materidid automotive gasoline production, which reversed als fell back 0.9 percent in May, with similar-sized Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

444 Federal Reserve Bulletin • July 2001 losses in durable, nondurable, and energy materials. cles and parts increased production in May; nonethe- The_ output of durable materials was notably held less, output indexes for both of these industries are back by continued weakness in two industries: basic still well below their levels in May of last year. The metals, in which output has contracted more than production of nondurable goods, which has been 14 percent since its September peak, and semicon- weak since the second half of 2000, declined 1.0 perductors and related electronic components, which cent in May, to a level 43A percent below its May has contracted more than 8 percent since its recent 2000 level. Losses were widespread and particularly December peak. The output of nondurable goods significant in paper and paper products, printing and materials fell 1.2 percent in May, with broad-based publishing, and chemicals. The production of petrodecreases. The production of chemical materials was leum products reversed nearly all of the April reduced further, textile output fell significantly after increase. having been little changed for several months, and The factory operating rate edged down in May, the production of paper materials reversed some of its to 76.0 percent. The utilization rate for primary- April increase. The 0.9 percent decline in the output processing industries declined to 76.3 percent, while of energy materials partly reflects a decline in utilities the rate for advanced-processing industries moved production. down to 76.5 percent. With the exception of the stone, clay, and glass industry and the petroleum products industry, most factory operating rates remain INDUSTRY GROUPS below their long-run averages. Capacity utilization Manufacturing output fell 0.7 percent in May; after in high-technology industries (computers, communieight consecutive months of contraction, production cations equipment, and semiconductors) dropped in in May was more than AVI percent below its level May for the tenth successive month, to 70.3 percent, in September 2000. Production of durable goods the lowest utilization rate posted for the high-tech declined 0.5 percent, with notable losses in the furni- sector in twenty-five years. The operating rate at ture, primary metals, and high-technology industries. utilities declined to 87.3 percent. The operating rate Of the major industries, only lumber and motor vehi- for mining edged down to 89.0 percent. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

445 Testimony of Federal Reserve Officials Statement of Laurence H. Meyer, Member, Board of "complementary" to a financial activity and would Governors of the Federal Reserve System, before the not pose a substantial risk to the safety and soundness Subcommittee on Financial Institutions and Con- of depository institutions or the financial system sumer Credit, Committee on Financial Services, U.S. generally. Complementary activities are nonfinancial House of Representatives, May 2, 2001 activities that are related to or complement financial activities. The Congress considered, but did not Mr. Chairman and members of the subcommittee, enact, a provision that would have allowed the more thank you for the opportunity to testify on behalf of general mixing of banking and commerce. the Federal Reserve Board with respect to the joint The real estate brokerage and management proproposal by the Board and the Secretary of the Trea- posal is one of several initial proposals by the Board sury relating to real estate brokerage and manage- and the Treasury relating to the definition of activities ment. The proposal is an invitation for public com- that are financial in nature or incidental or complement on whether the Board and the Treasury should mentary to financial activities under the GLB Act. find that real estate brokerage and real estate man- The first of these proposals (which the Board recently agement are activities that are financial in nature or finalized) related to acting as a so-called "finder." incidental to a financial activity and hence permis- Finder activities, which generally are permissible for sible for financial holding companies and financial banks to conduct directly, involve putting buyers and subsidiaries of national banks. The agencies pub- sellers together in transactions negotiated by the lished the request for comment on January 3, 2001. buyers and sellers themselves. The second of these Because of the significant public interest in the proposals involved defining three types of activities proposal, we extended the public comment period that the Congress determined as a general matter to through May 1, 2001. be financial but required the Board to define more To help understand why the agencies requested specifically—including safeguarding and transferring comment on this proposal, I think it would be helpful financial assets and facilitating financial transactions to outline the legal framework established by the for third parties. The third proposal requested comrecently enacted Gramm-Leach-Bliley Act (GLB ment on whether the Board should determine that Act) and the basis for the proposal. The GLB Act certain types of expanded data processing activities amended the Bank Holding Company Act to allow a are complementary to financial activities. bank holding company or foreign bank that qualifies With each of these proposals, the Board and, for as a financial holding company to engage in, and the financial activity determinations, the Secretary of affiliate with companies engaged in, a broad range of the Treasury are exploring a new standard for definfinancial activities. The activities specifically autho- ing permissible activities. The GLB Act establishes rized by statute include lending; insurance underwrit- certain factors that the Board and the Treasury must ing and agency; providing financial advice; securities consider, but it otherwise leaves the agencies with brokerage, underwriting, and dealing; and merchant significant discretion and very little guidance regardbanking activities. ing what is and what is not a financial activity. In addition, the GLB Act permits financial holding The factors that the agencies must consider are companies to engage in other activities that the Board very broad. For example, in determining whether an determines, in consultation with the Secretary of the activity is financial in nature or incidental to a finan- Treasury, to be "financial in nature or incidental to a cial activity, the agencies must consider whether the financial activity." The GLB Act includes this flex- proposed activity is necessary or appropriate to allow ibility because the Congress recognized the practical a financial holding company to compete effectively difficulties of comprehensively defining in legislation with any company seeking to provide financial sera complex concept like financial activities for a finan- vices in the United States, efficiently deliver financial cial marketplace that is continually evolving. Further, information and services through the use of technothe act allows financial holding companies to engage logical means, or offer customers any available or in other activities that the Board determines are emerging technological means for using financial ser- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

446 Federal Reserve Bulletin • July 2001 vices. In addition, the agencies must consider changes Clearing House Association—asked the Board and or reasonably expected changes in the marketplace in the Treasury to determine that real estate brokerage which financial holding companies compete, as well activities are financial in nature. The American Bankas changes or reasonably expected changes in the ers Association also asked the agencies to define real technology for delivering financial services. Finally, estate management activities as financial in nature. the statute requires that the Board consider the The Board and the Treasury responded to these unspecified but wide-ranging purposes of the Bank requests by seeking public comment on the proposal. Holding Company Act and the GLB Act, which We have found the public comment process to be a opens up consideration of other matters beyond those useful means of gathering information from experts, on the statutory list. These statutory factors do not practitioners, and analysts with an understanding of provide the Board with a facile decisionmaking for- the relevant issues and activities. We recognize that, mula for determining whether an activity is financial hard as we regulators try to foresee and address in nature or incidental to a financial activity. potential issues raised by our regulatory actions, we One thing that is clear is that the Congress can benefit from the information and thinking of intended the "financial in nature" test to be broader others. Our final rules often include significant modithan the previous test for authorizing new activities fications as a result of the comments we received on for bank holding companies under the Bank Hold- the proposed rules. ing Company Act. Before passage of the GLB Act, In this spirit, we sought public comment on the real bank holding companies were permitted to engage estate proposal. During the comment period, the pubonly in activities that the Board determined were lic had an opportunity to present views on the merits "closely related to banking." The "closely-related-to- of determining whether real estate brokerage and banking" test was tied to the activities of banks. In management activities should be deemed to be financonsidering whether an activity was closely related cial in nature or incidental to a financial activity. to banking, the courts focused on three factors: As I indicated earlier, the comment period on the (1) whether banks conduct the proposed activity, proposal closed only yesterday. I can, nevertheless, (2) whether banks provide services that are operation- give you a flavor of the arguments made by ally or functionally similar to the proposed services, commenters. and (3) whether banks provide services that are so Commenters in favor of the proposal, most notably integrally related to the proposed services as to bank and financial services trade associations at this require their provision in a specialized form. The text point, have presented a variety of arguments in and legislative history of the GLB Act indicate that support of finding that real estate brokerage is a the Congress intended the new "financial or inciden- financial activity. First, these commenters argue that tal" standard to represent a significant expansion of real estate brokerage activities are financial in nature the old "closely-related-to-banking" standard. because some depository institutions, including thrifts The GLB Act neither specifically authorizes nor (through service corporations) and some state banks, specifically forbids financial holding companies or already engage in real estate brokerage. Second, these financial subsidiaries of national banks to engage in commenters argue that banks have expertise in these real estate brokerage and management activities. activities because national and state banks have long While the GLB Act and its legislative history do not been involved in brokering real estate assets that are contain any direct evidence of congressional intent acquired through the foreclosure process or that are with respect to real estate brokerage and management part of trust estates. Third, commenters in support activities, the statute's prohibition on financial sub- of the proposal argue that bank holding companies sidiaries engaging in real estate investment and devel- and their subsidiaries engage in virtually every other opment is indirect evidence of legislative intent. The aspect of real estate transactions, including mortgage existence of this limited real estate provision in the lending, holding bank premises, making community GLB Act suggests that the Congress thought about development real estate investments, performing real real estate activities in connection with the act and estate appraisals, providing real estate settlement and determined to leave unresolved the question of escrow services, providing real estate investment whether financial holding companies or financial sub- advice, and providing title insurance, private mortsidiaries should be permitted to act as real estate gage insurance, and homeowner's insurance. This brokers or managers. indicates, in the view of these commenters, that real estate transactions are financial transactions and, con- Soon after passage of the GLB Act, three trade sequently, that brokerage of real estate is a financial associations—the American Bankers Association, the activity. Moreover, these commenters contend that Financial Services Roundtable, and the New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Testimony of Federal Reserve Officials 447 real estate brokerage is simply a specialized form brokerage activities would inevitably lead to authoof another permissible financial activity—acting as rizing financial holding companies to negotiate and a finder—and a more general form of a permissible broker the sale of any type of asset. These commentbanking activity—assisting third parties in obtaining ers contend that authorizing financial holding compacommercial real estate equity financing. nies to engage in the activities would violate the spirit As I noted earlier, in determining whether an activ- of the GLB Act, which maintained a separation ity is financial in nature or incidental to a financial between banking and commerce. These commenters activity, the GLB Act specifically instructs the Board also argue that real estate brokerage activities are to consider whether the activity is necessary or appro- different from the finder activities permitted for bankpriate to allow a financial holding company to com- ing organizations because an integral part of real pete effectively with any other financial services pro- estate brokerage activities is the negotiation of a vider operating in the United States. In this regard, contract between the buyer and seller—a level of commenters have provided evidence that a number of involvement in the transaction that has not been diversified financial firms provide real estate broker- permitted to banking organizations acting as a finder. age services in addition to more traditional banking, In addition, some commenters draw attention to securities, and insurance services. These commenters various forms of conflicts of interest that may result also asserted that buyers and sellers of real estate are from allowing banking organizations to engage in increasingly looking to a single company to provide real estate brokerage or management. In particular, all of their real estate-related needs. these commenters express concern that financial Some commenters also argue that real estate is holding companies acting as buyers' brokers may a financial asset and that, therefore, brokering real pressure or require buyers to use the financial holding estate is a financial transaction. These commenters company's mortgage product (to the exclusion of assert that real estate brokerage is permissible as part loans from other lenders) or may fail to refer buyers of the statutorily listed financial activities permissible to other lenders who might have more competitive for financial holding companies. The GLB Act autho- mortgage products. A financial holding company actrizes financial holding companies to engage in ing as a seller's broker also may favor the buyer over exchanging, transferring, or safeguarding financial the seller because the company also is providing a assets and arranging, effecting, or facilitating finan- mortgage loan to the buyer or is attempting to sell cial transactions for others. another financial product to the buyer. Some of the same considerations that support a Other commenters question the ability of banking finding that real estate brokerage activities are finan- organizations to broker real estate with the same level cial in nature also were presented by commenters as of competence, alacrity, and personal service as indesupport for a similar determination on real estate pendent real estate agents. Many commenters warn management. Thrift service corporations are autho- that allowing banking organizations to act as real rized to engage in general real estate management, estate brokers would lead to bank domination of the and banks have acquired some experience in manag- field, in part because banking organizations providing ing real estate in their trust departments and with real estate brokerage services would have an unfair respect to assets acquired through foreclosure. In competitive advantage over independent real estate addition, many aspects of real estate management are agents due to the ability of banks to raise low-cost similar in nature to existing banking activities. For FDIC-insured deposits. Under this line of argument, example, collecting rental payments; maintaining the proposal would result in an increased concentrasecurity deposits; making principal, interest, tax, and tion of power in the financial services industry, a insurance payments; and providing periodic account- decrease in the competitiveness of the market for real ings are functionally similar to collecting loan or estate brokerage services, and job losses for a large lease payments, disbursing escrow payments, and number of independent real estate agents. Finally, performing related accountings. commenters argue that allowing banking organiza- Although some of the comments favor the pro- tions to enter into the real estate brokerage and manposal, the vast majority of the comments have been agement businesses would pose risks to the safety submitted by individual real estate agents opposed to and soundness of the nation's depository institutions. the proposal. Many of the commenters opposed to the proposal Commenters have raised the following principal focus on whether real estate brokerage is a financial objections to the proposal. First, some commenters activity. If one accepts their contention that brokering claim that real estate brokerage and management are real estate is really a commercial activity, the quescommercial activities and that authorizing real estate tion can then be raised whether real estate brokerage Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

448 Federal Reserve Bulletin • July 2001 should be permitted as an activity that is "comple- institutions or the financial system and would result mentary to a financial activity." As I noted earlier, in net public benefits. Because the agencies received this complementary category was included in the requests to define real estate brokerage and man- GLB Act to allow financial holding companies to agement activities as "financial in nature," that is the engage in activities that are themselves commercial proposal on which the agencies have sought public activities but that also are related to or complement comment. financial activities. These are difficult issues, and both sides feel very Many of the points raised by commenters opposed strongly about their position. Although we do not to the proposal certainly would be relevant to an relish being in the middle, we believe that a debate on analysis under this "complementary" standard, these matters is the best way to identify and sort which requires the Board to find both a connection to through the issues and to reach an informed decision a financial activity and that the complementary activ- and is precisely the type of debate envisioned in the ity would not pose a substantial risk to depository GLB Act. Testimony of Roger W. Ferguson, Jr., Vice Chairman, from small businesses, obviously our economic well- Board of Governors of the Federal Reserve System, being depends greatly on this sector. But small busibefore the Small Business Committee, U.S. House of nesses do more for us than can be captured in these Representatives, May 17, 2001 statistics. Small businesses are a source of new ideas and products. The list of innovations developed by I am pleased to appear before this committee to these enterprises in fields such as software, computer discuss the availability of credit to small businesses. technology, aerospace, and pharmaceuticals is quite Before turning to the latest information on credit impressive. The possibility that an idea or new prodmarket conditions, however, I think it is important uct will eventually transform a small business into a to highlight the special characteristics of small busi- large corporation is a great motivator of change and nesses that make them such an important part of our risk-taking. Beyond that, small enterprises make a economy and at the same time create a heterogeneous huge contribution in the form of the support and set of financial needs and credit demands. Much of synergies they provide, operating side by side with the information that we have on small business large businesses. They provide services and inputs to financing comes from surveys, including the Federal the production process, train workers, and are a pri- Reserve's Survey of Small Business Finances, the mary means of marketing and distributing retail prodlatest of which was completed last year. ucts and services. An essential feature of a thriving small business sector is the ability of firms to start up, to grow, and IMPORTANCE OF SMALL BUSINESSES to change ownership. Just as essential to the dynamism of our economy is the ability of these firms to No doubt I am preaching to the choir when I tell this downsize when that improves profitability or to exit group how important small businesses are in our the markets when their resources are more highly nation's economy. The statistics collected by the Cen- valued elsewhere. There is a tremendous amount of sus and Small Business Administration are indeed turnover of small firms. In 1999, approximately half remarkable. These data reveal that there were more a million firms (excluding self-employed, for which than 24 million nonfarm business tax returns filed in numbers are not available) closed for one reason or the United States in 1999. More than 99 percent of another—perhaps they merged or were acquired by a these returns were for small businesses, that is, firms larger firm, perhaps they failed, or the owner found with fewer than 500 employees. Roughly half of other reasons to move on. At the same time, more these were self-employed persons, and about a third than half a million new businesses were created. were part-time. Based on SBA estimates, small busi- The continuous entry and exit of firms is a nesses employ more than half of the private work clear sign that resources are responding to shifting force and are responsible for around 50 percent of all demands of consumers and businesses and to changes sales and private gross domestic product, a share of in the costs of production. The flow of labor and output that has remained fairly stable over time. With capital from less productive to more productive uses half of our nation's private nonfarm output coming is the cornerstone of a dynamic and healthy economy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Testimony of Federal Reserve Officials 449 A downside of this churning is the greater uncer- sectors that have quite different financing needs. tainty that attaches to the earnings and risk profile of Some of these firms have established operating histoeach individual small business. ries and marketable assets that make them good can- This has significant implications for the financing didates for credit from conventional financial instituof small businesses. Indeed, while a number of fac- tions. A few are small corporations that have access tors need to be in place for a small business sector to to bond market financing, though their bonds are thrive, including a mobile labor force and a sound likely to be rated below investment grade. The vast infrastructure of laws and regulations, perhaps the majority are small enterprises with few assets to most important ingredient is access to capital and pledge as collateral and with only limited operating credit. experience from which investors can assess operating performance and future earnings streams. Recognizing the importance of small businesses, THE FINANCING OF SMALL BUSINESSES we endeavor to understand the sources and uses of credit by different sizes of firms. To this end, the The financing needs of small businesses are as varied Federal Reserve has undertaken three national suras the population itself. The life cycle of a small veys of small businesses, the first in 1987, the second business can take many forms, with very different in 1993, and the third completed last year. A detailed implications for the types of risks and returns that description of the latest survey, along with prelimilenders and investors can expect. For new ventures nary results, was published in the April 2001 Federal that have high risk profiles and high expected Reserve Bulletin. This morning I will highlight a few returns—as do many start-up firms in the tech preliminary findings and note that the data have just sector—the initial stages require commitments of become available for what promises to be interesting equity capital, sometimes from family and friends analytic work. and sometimes in the form of venture or private equity capital. Further injections of equity are required in the early stages of growth, and ultimately THE SURVEY OF SMALL BUSINESS FINANCES some form of "take-out" financing is arranged, such as an initial public offering or a buyout by another The survey sampled 3,600 small businesses that were firm, that allows the venture capitalist to extract his representative of more than 5 million nonfarm, nonor her investment. financial enterprises that operate for profit. It gath- The past decade has been impressive for the large ered information on a large number of items, includamount of equity capital that flowed to venture and ing each firm's use of credit; characteristics such as high-tech enterprises in this country. The National the number of employees, industry, and age of the Venture Capital Association estimates that invest- firm; and its income and balance sheet data as of ments in emerging enterprises totaled $214 billion year-end 1998. We expect these data to be used by over the past five years and exceeded $100 billion researchers at the Board and elsewhere to address a last year alone. The number of companies funded last wide range of issues. The earlier surveys have been year was a record 5,300. About 270 companies that used, for example, to shed light on the relationship originally were backed by venture capital were pur- between a business and its bank or primary lender chased by other companies last year. Another 250 and to study how financing choice varies with locawere able to go public through initial public offerings tion, age, size, or other characteristics of firms. The (IPOs) of stock, even as the market for publicly latest survey can be used to update these studies and traded equity was in the initial stages of its recent to assess how small businesses may have altered their decline. The average age of firms going public was use of credit and financial services in response to about seven years, but many were older, which is technological and competitive changes in the finanindicative of the potentially long term commitment cial environment. The preliminary survey results we that investors in venture enterprises must be prepared have glimpsed so far are interesting as much for their to make. It is safe to say that the United States has consistency with previous surveys as for the changes been a role model for countries in Europe and Asia they reveal. For example, despite the large amount of seeking to develop markets for equity financing for structural change and consolidation in the financial small businesses. service sector and the improving accessibility of capital markets to many smaller firms, commercial banks But for every new, high-growth firm seeking vencontinued to be the dominant provider of financial ture capital, there are hundreds of small businesses services to small businesses in 1998. Of the 55 perin the manufacturing, construction, trade, and service Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

450 Federal Reserve Bulletin • July 2001 cent of small businesses that obtained credit from became less certain about the returns they should market sources or institutions, nearly three-fourths expect on investments. had some sort of credit arrangement, such as a line of By late last year, equity markets looked considercredit, a loan, or a lease, with a commercial bank. ably less attractive as a source of financing, espe- Finance companies served about 13 percent of small cially to firms hoping to go public for the first time. business borrowers, and leasing companies served The volume of IPOs dropped dramatically in the about 7 percent. The survey results also confirmed fourth quarter and remained sparse in the early the growing use of business credit cards by small months of this year, though it has not dried up businesses. About one-third of all small businesses— entirely. As prospects for take-out financing through and more than 50 percent of firms with twenty or an IPO became problematic, private equity investors more employees—had business credit cards in 1998. became more cautious about committing capital to We included questions on the survey about the earlier stages of financing. While venture capital problems small businesses considered to be most investments exceeded $100 billion last year, the pace pressing. Small businesses in 1998 expressed con- of investment has slowed in recent quarters and there cern about the quality, cost, and availability of labor are reports that some young firms are finding it hard and about increased competition from larger, interna- to get second- and third-stage financing for venture tional, and Internet firms. Of note, financing was not capital projects. high on their list of concerns. In the capital markets, the default rate on high- It is not surprising that small firms were feeling the yield bonds climbed markedly last year to its highest pressures of tight labor markets and increased com- level since 1991, boosting lender concerns about the petition: 1998 marked the seventh year of a robust ability of weaker firms to service their debt in this expansion. Bolstered by a technology-led accelera- environment. Yields on junk bonds rose appreciably tion in productivity, real GDP growth averaged relative to those on better-rated debt. In consequence, 4'/4 percent in the latter half of the 1990s, and the the issuance of junk bonds dropped sharply in the unemployment rate had dropped to 4 percent by the fourth quarter. Although the capital markets continue end of the decade. Aggregate indicators of credit this year to exhibit considerable selectivity, the flow availability were quite positive in the mid- to late of credit through bond markets has been strong over- 1990s: Banks were generally easing credit terms, and all. Gross bond offerings by nonfinancial firms totaled business loans grew robustly at both large and small nearly $160 billion in the first four months of this banks. The surge in equity markets provided a wel- year. And although they are paying higher risk premicome environment for firms going public for the first ums, non-investment-grade companies still are able time, and firms carrying below-investment-grade to raise funds: Junk bond offerings have accounted bond ratings were able to issue bonds at historically for about 25 percent of the gross issuance this year. narrow spreads over Treasuries. While disruptions in As you are aware, the Federal Reserve conducts global markets in 1998 raised risk premiums on junk surveys of senior lending officers at large banks bonds and bank loans and threatened a seizing-up in around the country. These surveys ask about banks' financial markets, ultimately they did not derail the credit terms and standards, about loan demand, and flow of credit, especially to smaller businesses. other issues that may be topical. During the market turmoil in late 1998, banks began taking a harder look at the loans that they make to large and middle- RECENT TRENDS market businesses. While financial markets settled IN SMALL BUSINESS FINANCING down subsequent to 1998, banks appear to have maintained a more vigilant posture. Last year, in an Since the 1998 survey, the economic and financial environment of rising delinquency rates on loans and environment has again changed, and this time in indications of declining credit quality, the net percentways that are less conducive to risk taking and lever- age of banks that reported some firming in their age. It became increasingly apparent over the course lending standards for large and medium borrowers of last year that the pace of economic growth was rose steadily in each of our surveys. Anecdotal slowing. Credit markets firmed, including bank lend- reports suggest that banks were particularly coning, partly in response to concerns that a slowing cerned about concentrations of risk in sectors such economy would result in some deterioration in the as telecommunications, where returns have dropped financial well-being of businesses and their creditors. sharply, and in manufacturing and other sectors As corporate profits fell and businesses revised down highly dependent on energy and petroleum-based their outlook for sales and earnings growth, investors inputs. Banks also reported firming standards and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Testimony of Federal Reserve Officials 451 terms on loans to small businesses, but to a lesser prime lending rate has fallen 2 percentage points degree than for large firms. Normally, we expect since the end of last year, and the average interest rate small businesses to bear the first pulse of credit paid by respondents on the April NFIB survey was tightening. But the downgradings and unexpected down almost 1 percentage point over the same period, shocks affecting large, investment-grade corporations to its lowest level in nearly a year. have led creditors to rethink the relative risks of While we may take comfort from the lack of angst lending to large and small firms. expressed by small borrowers in the NFIB surveys, Banks have continued to tighten standards and I expect that many risky small businesses have found terms on loans and credit lines this year. In our May credit a bit harder or more expensive to obtain. On survey, just over one-half of domestic banks reported the other hand, there are few signs of the types of tightening their standards on commercial and indus- financial headwinds that prevailed in 1990 and played trial loans to large and middle-market firms over the havoc with the ability of many creditworthy small past three months, and 36 percent tightened standards and medium firms to renew credit lines and roll over to small firms over the same period. Most of the loans. In contrast to that period, our financial institubanks that had tightened continued to cite a more tions have had a long stretch of solid earnings growth uncertain economic environment, a worsening of during which to build capital and liquidity positions. industry-specific problems, and a reduced tolerance In addition, although loan portfolios have recently for risk. begun to deteriorate, delinquency rates of business In their latest reports, bank loan officers also indi- and real estate loans remain well below those of the cated that the demand for business credit has waned earlier period. Commercial real estate markets, in of late, largely owing to reductions in planned invest- particular, have not gone through the boom-and-bust ments and diminished financing for mergers. Just as excesses of the late 1980s and early 1990s. lenders are treading more cautiously as the economy slows, so too are borrowers. Caution is apparent even SUMMARY among small businesses. Importantly, the small business surveys conducted by the National Federation In sum, we have seen greater caution being exercised of Independent Business (NFIB) in the first quarter by both borrowers and lenders in credit markets revealed that only 13 percent of their surveyed mem- recently. Such tightening might be expected in an bers thought the current period was a good time to economy that has slowed after several years of rapid expand, roughly half the percentage of a year earlier. expansion and debt growth. Much of the firming to The small businesses that thought it was a bad time date has been selective and directed toward compato expand cited unfavorable economic prospects and nies perceived to face an uncertain future in the new a poor outlook for sales. Of note, very few—only economic environment and to leveraged companies 3 percent in the April NFIB survey—mentioned that are vulnerable to a period of slowing sales and financing costs as a reason that the current period was profits. Overall, however, credit flows have been well not a good time to expand. Indeed, the recent NFIB maintained, and lending institutions are in much betsurveys suggest that most of the respondents have not ter financial health than a decade or so ago. Imporfound financing conditions to be particularly onerous tantly, reports from small businesses are relatively to date, despite the more cautious posture of financial upbeat with regard to the availability of credit. institutions and higher risk spreads. For creditworthy Although risky borrowers face close scrutiny, banks businesses, large and small, the cost of borrowing has apparently have continued to accommodate the needs declined with the easing in monetary policy and the of their creditworthy business customers, while bank associated decline in lending rates since the fall. The lending rates, on average, have moved lower. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

452 Announcements FEDERAL OPEN MARKET COMMITTEE the boards of directors of the Federal Reserve Banks DIRECTIVE AND A DECREASE IN of Philadelphia, Cleveland, and Minneapolis. THE DISCOUNT RATE GOVERNOR KELLEY ANNOUNCES INTENTION The Federal Open Market Committee at its meeting TO RESIGN on May 15, 2001, decided to lower its target for the federal funds rate by 50 basis points to 4 percent. In The Federal Reserve Board released on June 4, 2001, a related action, the Board of Governors approved the following statement from Governor Edward W. a 50 basis point reduction in the discount rate to Kelley, Jr., announcing his plans to resign from the 3 '/2 percent. Board after at least one of the current vacancies is A significant reduction in excess inventories seems filled: well advanced. Consumption and housing expenditures have held up reasonably well, though activity After fourteen highly rewarding years of service on the in these areas has flattened recently. Investment in Board of Governors of the Federal Reserve System, I want capital equipment, however, has continued to decline. to focus on family and other interests. I intend to resign, but I will remain at the Board for as long as necessary to The erosion in current and prospective profitability, accommodate the need for a minimum of five active memin combination with considerable uncertainty about bers. I am announcing my plans now to provide substantial the business outlook, seems likely to hold down notice to my colleagues and the Administration and to capital spending going forward. This potential facilitate scheduling the work of the Board over the period restraint, together with the possible effects of earlier ahead. It has been a great privilege to be a part of the Federal reductions in equity wealth on consumption and the Reserve System, an institution for which I have the most risk of slower growth abroad, continues to weigh on profound respect. I look forward to working in the coming the economy. months with my friends on the Board and the staff, and in With pressures on labor and product markets the Reserve Banks, to accomplish the continuing work of easing, inflation is expected to remain contained. the organization and ensure a smooth transition. Although measured productivity growth stalled in Kelley said he will submit a formal letter of resigthe first quarter, the impressive underlying rate of nation to the President when an additional Governor increase that developed in recent years appears to be has been nominated and confirmed and is at work at largely intact, supporting longer-term prospects. the Board. The Committee continues to believe that against Kelley, 69, was first appointed to the Board by the background of its long-run goals of price stability President Reagan, taking office on May 26, 1987. and sustainable economic growth and of the informa- President Bush reappointed him in 1990 to a term tion currently available, the risks are weighted mainly that expires on January 31, 2004. The Board of toward conditions that may generate economic weak- Governors consists of seven members, but it has been ness in the foreseeable future. operating with two vacancies since July 1999. In taking the discount rate action, the Federal Reserve Board approved requests submitted by the boards of directors of the Federal Reserve Banks of STATEMENT BY CHAIRMAN GREENSPAN ON New York, Richmond, Chicago, and San Francisco, GOVERNOR KELLEY'S ANNOUNCEMENT effective immediately, and of the Bank of St. Louis, effective May 16, 2001. Federal Reserve Board Chairman Alan Greenspan In addition, the Board approved on May 16, 2001, released the following statement on June 4, 2001: similar requests by the boards of directors of the Governor Kelley is a man of the highest principle. I will Federal Reserve Banks of Boston, Atlanta, Kansas miss his wise counsel. In his fourteen years on the Board, City, and Dallas, effective immediately. On May 17, he has given more than sound judgment and hard work; he 2001, the Board approved the requests submitted by has given us the gift of his friendship. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

453 2001 SURVEY OF CONSUMER FINANCES CONSUMER ADVISORY COUNCIL MEETING AND TO BEGIN CALL FOR NOMINATIONS The Federal Reserve Board announced on May 16, The Federal Reserve Board announced on May 29, 2001, that it will begin a statistical study of house- 2001, that the Consumer Advisory Council would hold finances that will provide policymakers with hold its next meeting on Thursday, June 28, 2001. important insight into the economic condition of a The Council's function is to advise the Board broad segment of American families. The Survey of on the exercise of its responsibilities under the Con- Consumer Finances, undertaken every three years sumer Credit Protection Act and on other matters on since 1983, is being conducted for the Board by the which the Board seeks its advice. National Opinion Research Center (NORC) at the The Board also announced that it is seeking nomi- University of Chicago through November of this year. nations for appointments to its Consumer Advisory The data collected will provide a representative Council. The new members will be appointed to picture of what Americans own—from houses and serve three-year terms beginning in January 2002. cars to stocks and bonds—how and how much they Nominations should include a resume and the folborrow and how they bank. Past study results have lowing information about nominees: been important in policy discussions regarding pension and social security reform, tax policy, deposit • Complete name, title, address, telephone and fax insurance reform, and a broad range of other areas. numbers "Although good overall information on the state of • Organization name, brief description of organithe major sectors of the economy is available regu- zation, address, and telephone number larly, our knowledge about the financial circum- • Past and present positions stances faced by different types of households is • Knowledge, interests, or experience related to much more limited," Alan Greenspan, Chairman of community reinvestment, consumer protection reguthe Board of Governors of the Federal Reserve Sys- lations, consumer credit, or other consumer financial tem, said in a letter to prospective survey partici- services pants. "Our survey is intended to fill a key part of • Positions held in community and banking assothis gap," he said. ciations, councils, and boards. The 2001 survey will contain a new question Nominations should also include the complete regarding the degree to which saving decisions are name, organization name, title, address, and teleaffected by the availability of informal financing phone and fax numbers for the nominator. options, such as borrowing from a friend or relative. Letters of nomination with complete information Responses to this question will help to identify the must be received by August 13, 2001, and should be contribution that "precautionary savings" make to mailed (not sent by facsimile) to Sandra F. Brauntotal savings. stein, Assistant Director, Division of Consumer and Participants in the study are chosen at random by Community Affairs, Board of Governors of the Fedusing a scientific sampling procedure in 100 areas eral Reserve System, Washington, DC 20551. across the United States. A representative of NORC contacts each potential participant personally to explain the project and request time for an interview. REQUEST FOR COMMENT ON PROPOSED Names and addresses of each participant are confi- CHANGES TO PAYMENTS SYSTEM RISK POLICY dential. Extraordinary steps are taken to uncouple the AND RESCISSION OF INTERAFFILIATE identities of the respondents from the information TRANSFER POLICY they provide. "Our data collection systems are designed with The Federal Reserve Board announced on May 30, extensive safeguards to protect the anonymity of the 2001, that it is requesting comment on a proposed survey participants," Mr. Greenspan said. "Indeed, interim policy statement and a package of short- and neither I nor anyone else at the Federal Reserve long-term proposals pertaining to its Payments Sysis allowed to know the names of the survey tem Risk (PSR) policy. In addition, the Board is participants." rescinding the interaffiliate transfer policy. Summary results for 2001 will be published in The proposed actions take into account the signifiearly 2003 after all data have been assessed and cant changes that have occurred in the banking, payanalyzed. ments, and regulatory environment in recent years Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

454 Federal Reserve Bulletin • July 2001 and reflect ongoing efforts by the Board to balance The Board is currently reviewing pertinent regulathe costs, risks, and benefits associated with the pro- tions to assess their suitability for transactions that vision of Federal Reserve intraday credit. are conducted through the Internet. The Board plans More specifically, the Board is issuing and request- to consult with other federal banking agencies regarding comment on an interim policy that allows deposi- ing the report. tory institutions with self-assessed net debit caps to The public comment provided will help the Board pledge collateral voluntarily to the Federal Reserve assess whether any existing regulations should be Banks to gain access to daylight credit in excess amended to facilitate on-line banking and how parof their net debit caps. The interim policy should ticular statutory provisions affect the on-line delivery provide flexibility to depository institutions in meet- of financial products and services. ing any increased intraday liquidity needs brought The Board recently requested comment on five about by payment system initiatives. The interim interim rules to establish uniform standards for the policy is effective immediately, with comments due electronic delivery of notices to consumers, namely: by August 6, 2001. Regulations B (Equal Credit Opportunity), E (Elec- The Board is also requesting comment on other tronic Fund Transfers), M (Consumer Leasing), potential changes to its PSR policy. In particular, the Z (Truth in Lending), and DD (Truth in Savings). Board proposes to increase the percentage of capital Any comments submitted in connection with the used in the net debit cap calculation for most U.S. review of these regulations will also be considered branches and agencies of foreign banks, to modify for the study and report required by section 729 of the posting time of electronic check presentments to the Gramm-Leach-Bliley Act. depository institutions' Federal Reserve accounts for measuring daylight overdrafts, and to retain the current book-entry securities transfer limit. Comment is INTERAGENCY TASK FORCE VIDEO ON requested by August 6, 2001. PROTECTION AGAINST IDENTITY THEFT In addition, the Board is requesting comment on the benefits and drawbacks to several potential The Federal Reserve Board announced on May 14, longer-term changes to its PSR policy, including 2001, the availability of a new video "Identity Theft: lowering self-assessed net debit caps, eliminating Protect Yourself." The fifteen-minute video explains the two-week average caps, implementing differen- how easily someone can obtain your personal finantial pricing for collateralized and uncollateralized cial information and unlawfully use that information daylight overdrafts, and rejecting payments with to obtain credit or other financial information under settlement-day finality that would cause an institution your name. Included in the video are interviews with to exceed its daylight overdraft capacity level. Com- identity theft victims, law enforcement officers, and ment is requested by October 1, 2001. industry representatives. Valuable information on Finally, the Board is rescinding its interaffiliate what to do if you become a victim is also provided. transfer policy, effective January 1, 2002. The Board The video was produced by the Federal Reserve believes that the risks associated with the inter- Bank of Boston and was developed in conjunction affiliate transfer policy are appropriately addressed with an interagency identity fraud task force. It is through the existing supervisory process. VHS format and available for $7.50. Orders should be sent to the following: REQUEST FOR COMMENT ON REGULATIONS Public and Community Affairs Department FOR ON-LINE BANKING Federal Reserve Bank of Boston Attention: Identity Theft Video The Federal Reserve Board requested on May 16, P.O. Box 2076 2001, public comment on how the Board's regula- Boston, MA 02106-2076. tions may be adapted to on-line banking and lending. Comments are due by August 20, 2001. Checks or money orders should be made payable Section 729 of the Gramm-Leach-Bliley Act of to the Federal Reserve Bank of Boston and must be 1999 requires federal banking regulators to conduct a sent with the order. For more information, contact the study of regulations pertaining to the on-line delivery Public and Community Affairs Department of the of financial services and to submit a report about Federal Reserve Bank of Boston at 1-800-409-1333. adapting existing legislative or regulatory require- The Board recently announced the issuance of ments to on-line banking and lending. supervisory guidance addressing how banking orga- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 455 nizations should protect customer information against 4. FFIEC Interagency Policy Statement on the Risk identity theft. This release is available on the Board's Management of Outsourced Technology Services. The web site at http://www.federalreserve.gov/boarddocs/ guidance focuses on the risk-management process of identifying, measuring, monitoring, and controlling the risks press/general/2001/20010430/default.htm. associated with outsourcing technology services. It includes four key supervisory elements to address those risks: risk assessment, service-provider selection, contract PUBLICATION OF THE MAY 2001 UPDATE provisions and review, and ongoing service-provider moni- TO THE COMMERCIAL BANK EXAMINATION toring. The policy statement includes an appendix that provides examples of considerations that may be relevant MANUAL when performing due diligence in selecting a service provider, contracting with service providers, and conducting The May 2001 update to the Commercial Bank ongoing service-provider monitoring. See SR Letter 00-17 Examination Manual, Supplement No. 14, has been (SPE). published and is now available. The Manual comprises the Federal Reserve System's state member A more detailed summary of changes is included bank supervisory and examination guidance. The new with the update package. The Manual and updates, supplement includes the following: including pricing information, are available from Publications Services, Mail Stop 127, Board of Gov- 1. Supervisory Guidance on Limited Investing in Equi- ernors of the Federal Reserve System, Washington, ties and Equity Interests in Nonpublic Companies and DC 20551 (or charge by facsimile: 202-728-5886). Lending to Private-Equity-Financed Companies. The statu- The Manual is also available on the Board's public tory and regulatory authority for these types of limited investments is discussed, along with safety-and-soundness web site at www.federalreserve.gov/boarddocs/ issues on the management of those investments. Sound supmanual/. investment and risk-management practices are identified. Supervisory guidance is provided on implementing and maintaining adequate internal controls and disclosure practices—information that is particularly important for an PUBLICATION OF THE JUNE 2001 UPDATE institution's board of directors, management, and super- TO THE BANK HOLDING COMPANY visors. See Supervision and Regulation (SR) Letter 00-9 SUPERVISION MANUAL (SUP). (SR letters are the Federal Reserve's primary means of communicating key policy directives to its The June 2001 update to the Bank Holding Company examiners, supervisory staff, and the banking industry. SR letters can be viewed on the Board's web site: Supervision Manual, Supplement No. 20, has been w w w .federalreserve. gov/boarddoc s/srletters.) published and is now available. The Manual comprises the Federal Reserve System's bank holding 2. Supervisory Guidance on "Complex Wholesale Bor- company supervisory and inspection guidance. The rowings." The guidance supplements and expands the gensupplement includes new or revised supervisory eral existing supervisory guidance on bank funding and information and examiner guidance on the following: borrowing. Funding instruments for complex wholesale borrowing can have embedded options that may significantly increase over time a bank's sensitivity to market and 1. A Substantially Revised Foreword. A broad overview liquidity risks. Maturity mismatches or the embedded is provided on the Federal Reserve's risk-focused inspecoptions themselves can, in some circumstances, adversely tion program for bank holding companies (BHCs) and affect a depository institution's financial condition. This financial holding companies (FHCs). Risk-focused inspecguidance collectively calls for an analysis of the purpose, tions focus on the various types of high risk, the riskeffectiveness, concentration exposure, funding stability, management processes, and the necessary involvement of and bank management's understanding of the liquidity and management and directors in the organization's riskinterest rate risks associated with borrowing and funding management oversight. strategies. Examination objectives and procedures are provided. See SR Letter 01-8 (SUP). 2. An Updated Introduction to Nonbanking Activities. The introduction to nonbanking activities has been revised 3. Gramm-Leach-Bliley Act Changes That Pertain to to discuss FHCs (authorized by the Gramm-Leach-Bliley Bank-Related Organizations. The changes include regula- Act). A general overview is also provided of permissible tory and supervisory guidance with regard to the owner- financial and nonfinancial activities that are available to ship and control of financial subsidiaries, financial hold- BHCs that qualify as FHCs. ing companies (FHCs), and operating subsidiaries of state member banks. The approval requirements and permissible 3. The December 2000 Final and Other Interim or activities are discussed, as applicable, as well as any limita- Final Regulation Y Changes for Foreign Banks and BHCs tions on transactions with affiliates (sections 23A and 23B that Qualify as FHCs. The changes apply to the following: of the Federal Reserve Act). The Federal Reserve's supervisory role as the umbrella supervisor for FHCs is also a. U.S. Bank Holding Companies Operating as FHCs. discussed. This revised section includes changes involving the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

456 Federal Reserve Bulletin • July 2001 (1) "well-managed" criteria that apply to all depository 4. Equity Investment and Merchant Banking Investment institutions that are controlled by a company that desires Activities. The new section discusses the following: to qualify as an FHC; (2) timing of FHC declarations that are informationally complete; (3) simultaneous fil- a. The Authority and Requirements for Merchant ing of an application to become a BHC and (upon Banking Investments. The joint final rule of the Board consummation) to also become an FHC; (4) Federal and the Secretary of the Treasury, effective February 15, Reserve's responses to complete FHC declarations; and 2001, is discussed governing merchant banking invest- (5) the requirements for an FHC to acquire more than ments made by FHCs. Under section 4(k) of the BHC 5 percent of the voting shares or control of a company Act, FHCs may make investments as part of a bona fide that is "substantially engaged" (as defined) in activities securities underwriting or merchant or investment bankthat are financial in nature, incidental to financial activi- ing activity. The investments may be made in any type ties, or otherwise permissible under section 4(c) of the of ownership interest, in any type of nonfinancial entity BHC Act. (portfolio company), and they may represent any amount b. Foreign Banks Qualifying as FHCs. The revised of the equity of a portfolio company. The section dissection includes changes for (1) the factors used to cusses: (1) permissible investments; (2) prohibitions on determine the comparability of capital and management routinely managing or operating a portfolio company; of a foreign bank; (2) the requirements for assigning a (3) portfolio company holding periods; (4) private equity "combined ROCA rating" derived from the examina- funds, including restrictions on their management and tion of a foreign banking organization's (FBO's) U.S. operation; (5) automatic sunset provisions for aggregate branch, agency, and commercial lending operations (this investment thresholds in portfolio companies; (6) risk rating is factored into the FBO's overall combined U.S. management, reporting, and recordkeeping policies; operations [banking and nonbanking] composite rating); (7) cross-marketing restrictions; and (8) presumptions and (3) the required assurances of the home-country of control under sections 23A and 23B of the Federal supervisor that the foreign bank's capital and manage- Reserve Act and the safe harbors to the rebuttable ment are considered satisfactory (using a comprehen- presumption. sive, consolidated supervision framework and preclearance process) before the Board will consent to b. Federal Reserve Supervisory Guidance for Equity an expansion of the foreign bank's U.S. operations as Investment and Merchant Banking Activities. Basic an FHC. See Supervision and Regulation (SR) Letter safety-and-soundness issues are discussed concerning 00-14. (SR Letters are the Federal Reserve's primary the management of such investments. The section promeans of communicating key policy directives to its vides useful management infrastructure and control examiners, supervisory staff, and the banking industry. benchmarks for organizations engaged in such activities. SR Letters can be viewed on the Board's web site at The guidance identifies sound investment and riskw w w .federalreserve. go v/boarddocs/srletters.) management practices that merit the attention of both c. Permissible Activities for Qualifying FHCs. The management and supervisors. Examples are provided of revised section lists and discusses the activities found to the scope of appropriate public disclosures that banking be financial in nature, as listed in sections 4(k)(4) of the organizations are encouraged to make of their equity BHC Act. A January 2001 interim rule revision to Regu- investment activities. Sound practices in providing tradilation Y is also discussed that pertains to section 4(k)(5) tional lending-based banking services to portfolio comof the BHC Act. A mechanism is provided for FHCs to panies, to portfolio company management, and to genrequest the Board or the Secretary of the Treasury to eral partners of equity investment ventures and funds are determine whether a particular activity falls into one of also discussed. The potential risks and returns of equity three specific categories of permissible activities under investment and merchant banking activities exceed those section 4(k)(5). The detailed informational requirements of more traditional banking activities. Banking organizafor such a request are included. Also provided are the tions and FHCs engaged in such activities are required interim rule's procedures to request a determination as to have strong capital positions that are well above to whether an activity is financial in nature or incidental current minimum regulatory requirements, along with to a financial activity. The amended section also gives robust internal methods for allocating capital that are guidance on how to obtain approval to engage in an commensurate with the inherent risks of those activities. activity that is complementary to an identified financial See SR Letter 00-9. activity. d. An FHC Acting as a Finder. A new section dis- A more detailed summary of changes is included cusses the Board's decision, in consultation with the Secretary of the Treasury, that authorizes FHCs to act with the update package. The Manual and updates, as a finder, a limited activity that is considered inci- including pricing information, are available from dental to a financial activity. A finder brings together Publications Services, Mail Stop 127, Board of Govbuyers and sellers of products and services for transernors of the Federal Reserve System, Washington, actions that buyers and sellers themselves negotiate and consummate. DC 20551 (or charge by facsimile: 202-728-5886). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 457 The Manual is also available on the Board's public ees, proposed by Incus and Hank Rhon and approved web site at www.federalreserve.gov/boarddocs/ by the Board, will vote the shares. supmanual/. 3. Hank Rhon will resign as chairman of the board and as director of Laredo National Bancshares and will not be otherwise involved in its management or ENFORCEMENT ACTION operation. He has also agreed not to serve in those capacities or as a controlling shareholder with other The Federal Reserve Board announced on May 31, banking organizations in the United States without 2001, the settlement of its administrative enforce- the Board's prior approval. ment proceeding against Incus Co., Ltd., and Carlos Hank Rhon of Mexico City, Mexico, Incus's regis- The settlement is enforceable under the Board's tered owner. cease-and-desist and civil money penalty authority. Incus, a bank holding company chartered in the The Board's Notice of Charges, issued in Decem- British Virgin Islands, owns a majority of Laredo ber 1998, alleged that Incus and Hank Rhon had National Bancshares, the parent of Laredo National committed various violations of the Bank Holding Bank and South Texas National Bank, all of which Company Act, the Change in Bank Control Act, and are in Laredo, Texas. other laws involving the ownership of Incus and Incus and Hank Rhon have agreed to the following: Laredo National Bancshares, as well as lending transactions at Laredo National Bank. Incus and Hank 1. They will pay to the U.S. Treasury $10.75 mil- Rhon have denied that they committed the violations lion now and an additional $29.25 million within the alleged in the Notice of Charges. next seven years. The settlement does not relate in any manner to the 2. Incus's shares of Laredo National Bancshares condition of Laredo National Bank or South Texas will be placed into a voting trust. Independent trust- National Bank. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

458 Minutes of the Meeting of the Federal Open Market Committee Held on March 20, 2001 A meeting of the Federal Open Market Committee Messrs. Madigan, Oliner, and Struckmeyer, Associate was held in the offices of the Board of Governors of Directors, Divisions of Monetary Affairs, Research and Statistics, and Research and the Federal Reserve System in Washington, D.C., Statistics, Board of Governors beginning at 9:00 a.m. on Tuesday, March 20, 2001. Mr. Whitesell, Assistant Director, Division Present: of Monetary Affairs, Board of Governors Mr. Greenspan, Chairman Mr. McDonough, Vice Chairman Ms. Low, Open Market Secretariat Assistant, Mr. Ferguson Division of Monetary Affairs, Board of Mr. Gramlich Governors Mr. Hoenig Mr. Kelley Mr. Barron, First Vice President, Federal Reserve Mr. Meyer Bank of Atlanta Ms. Minehan Mr. Moskow Mr. Poole Messrs. Eisenbeis and Goodfriend, Mses. Krieger and Mester, and Mr. Rolnick, Senior Vice Presidents, Federal Reserve Banks of Atlanta, Richmond, Messrs. Jordan, McTeer, Santomero, Stern, and New York, Philadelphia, and Minneapolis Stewart, Alternate Members of the Federal Open respectively Market Committee Ms. Orrenius, Economist, Federal Reserve Bank Messrs. Broaddus, Guynn, and Parry, Presidents of of Dallas the Federal Reserve Banks of Richmond, Atlanta, and San Francisco respectively Mr. Trehan, Research Advisor, Federal Reserve Bank of San Francisco Mr. Kohn, Secretary and Economist Mr. Bernard, Deputy Secretary Mr. Haubrich, Consultant, Federal Reserve Bank Mr. Gillum, Assistant Secretary of Cleveland Ms. Fox, Assistant Secretary Mr. Baxter, Deputy General Counsel Ms. Johnson, Economist By unanimous vote, the minutes of the meeting of Mr. Stockton, Economist the Federal Open Market Committee held on January 30-31, 2001, were approved. Ms. Cumming, Messrs. Fuhrer, Hakkio, Howard, By unanimous vote, David Wilcox was elected to Hunter, Lindsey, Rasche, Reinhart, Slifman, serve as an Associate Economist for the period until and Wilcox, Associate Economists the first regularly scheduled meeting of the Committee after December 31, 2001. Mr. Kos, Manager, System Open Market Account The Manager of the System Open Market Account reported on developments in foreign exchange mar- Ms. Smith and Mr. Winn, Assistants to the Board, kets. There had been no operations in foreign curren- Office of Board Members, Board of Governors cies for the System's account since the previous meeting. Mr. Ettin, Deputy Director, Division of Research The Manager also reported on developments in and Statistics, Board of Governors domestic financial markets and on System open market transactions in U.S. government securities Mr. Simpson, Senior Adviser, Division of Research and Statistics, Board of Governors and federal agency obligations during the period Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

459 January 31, 2001, through March 19, 2001. By unani- increased marketing incentives put in place by mous vote, the Committee ratified these transactions. Chrysler and General Motors, and retail sales of The Committee then turned to a discussion of the items other than motor vehicles climbed moderately. economic and financial outlook and the implementa- Spending on services was held down in January tion of monetary policy over the intermeeting period (latest data) by reduced expenditures for heating serahead. A summary of the economic and financial vices as winter temperatures returned to more seainformation available at the time of the meeting and sonal levels following unusually cold weather late of the Committee's discussion is provided below, last year; excluding heating, however, spending on followed by the domestic policy directive that was other services rose slowly. approved by the Committee and issued to the Federal The decline in mortgage rates that began around Reserve Bank of New York. the middle of last year continued to provide support The information reviewed at this meeting sug- to residential building activity. Total housing starts gested that economic activity continued to expand rose somewhat further in January and February, very slowly in the first quarter. Growth of final spend- reflecting net increases in both single-family and, ing apparently picked up slightly, with consumer especially, multifamily units. Sales of new homes expenditures recording another moderate gain, busi- dropped sharply in January (latest data), after having ness purchases of equipment and software increasing surged in December, but remained quite robust sluggishly after a fourth-quarter decline, and home- by historical standards. Sales of existing homes building remaining relatively firm. However, inven- rebounded in January after having fallen considertory overhangs were still apparent in some industries, ably in December and were up slightly on balance and manufacturing production was cut sharply fur- over the two months. ther. Overall employment gains were relatively well The limited available information suggested that maintained, and labor markets were still tight though business fixed investment was firming early this year showing signs of softening. Price inflation had picked after a decline in the fourth quarter of last year. up a little but, abstracting from energy, had remained Nominal shipments of nondefense capital goods other relatively subdued. than aircraft and parts changed little on balance in After a sluggish fourth quarter, private nonfarm December and January, while prices of high-tech payroll employment rose at a slightly higher rate on equipment continued to fall. Moreover, orders for average in January and February, though still consid- nondefense capital goods turned up briskly in Januerably below the pace of the first three quarters of ary after a sharp fourth-quarter drop. Nonresidential 2000. Manufacturing and related industries, notably construction activity continued its robust rise early help-supply and wholesale trade, experienced further in the year. Strength in building activity was widelarge declines in payrolls in the January-February spread across the sector, most notably in new office period. However, hiring elsewhere held up relatively construction. well, especially in construction, which recorded a Business inventories on a book-value basis surge in employment in January. While the labor increased in January at about the rapid fourth-quarter market remained tight on balance, the unemployment pace; inventory positions appeared to be especially rate increased to 4.2 percent in February, and other large for construction materials, metals, electrical indicators such as initial claims for unemployment equipment, paper, chemicals, and textiles. In the insurance suggested that pressures in labor markets manufacturing sector, overall stocks jumped in had begun to abate. January while shipments fell, and the aggregate The contraction in industrial production that began inventory-shipments ratio rose to its highest level in October accelerated and broadened in the first two in two years. In the wholesale trade sector, aggremonths of the year. In manufacturing, output fell gate stocks fell again in January and the sector's further in the motor vehicle sector, and production inventory-sales ratio edged down to the middle of its continued to decelerate in high-tech industries. The very narrow range for the past year. Retail stocks rate of capacity utilization in manufacturing dropped continued to climb in January, but sales rose by more; noticeably in January and February to a level further the sector's inventory-sales ratio also edged lower, below its long-run average. but it remained near the top of its range for the past Against a background of slowing income gains and twelve months. a sizable pullback in consumer sentiment since last The U.S. trade deficit in goods and services autumn, consumer spending evidently grew only changed little in December but posted a new record moderately on balance in January and February. Pur- high for the fourth quarter. The value of exports chases of motor vehicles picked up in response to dropped substantially in that quarter, with notable Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

460 Federal Reserve Bulletin • July 2001 declines occurring in agricultural products, aircraft, port to a rebound in growth later in the year. In the automotive products, computers and semiconductors, existing circumstances, the members agreed that the consumer goods, and telecommunications equipment. balance of risks remained weighted toward condi- The value of imports remained at the high level tions that could generate economic weakness in the recorded in the third quarter. Lower imports of auto- foreseeable future. Though rapid advances in undermotive products, chemicals, computers and semicon- lying productivity were expected to continue, the ductors, and steel were offset by higher imports of adjustments to stocks of capital, consumer goods, and consumer goods and telecommunications equipment inventories to more sustainable levels were only and smaller increases in other categories of trade. partly completed, and financial markets remained Economic growth in the foreign industrial countries unsettled. was at a moderate rate on average in the fourth Open market operations were directed throughout quarter. Expansion in the euro area picked up, while the intermeeting period toward maintaining the fedgrowth in Canada and the United Kingdom slowed eral funds rate at the Committee's reduced target significantly. The Japanese economy rebounded in level of 5V2 percent, and the funds rate stayed close the fourth quarter but was little changed on balance to that target. However, incoming economic data, a over the second half of the year, and recent indicators steady flow of disappointing corporate earnings suggested a sharply weaker performance in the early reports, related sharp declines in stock prices, and part of this year. In addition, growth in the major a notable drop in consumer confidence led market developing countries slowed markedly in the fourth participants to conclude that more monetary easing quarter, with the slowdown in most of those countries would be required. Yields on Treasury securities, reflecting weaker demand for their exports. both short- and long-term, moved appreciably lower. Price inflation had picked up a bit recently. The However, rates on high-yield private debt obligations consumer price index (CPI) jumped in January (latest fell only a little, and banks further tightened standata), reflecting a surge in energy prices; moreover, dards and terms on business loans, given the weakenthe index increased considerably more during the ing outlook for profits. Broad indexes of U.S. stock twelve months ending in January than it did during market prices moved sharply lower, with the techthe previous twelve months. The core component of heavy Nasdaq experiencing an especially large drop. the CPI also accelerated in January and on a year- Nonetheless, the trade-weighted value of the dollar over-year basis, but by lesser amounts than did the rose somewhat over the intermeeting interval in terms total index. The increase in the core personal con- of many of the major foreign currencies. The dollar sumption expenditure (PCE) chain-type price index strengthened most against the currencies of countries in January matched that of the core CPI; on a year- that were seen to have the greatest potential for over-year basis, however, the pickup in core PCE economic weakening, notably Japan. The dollar also inflation was a little smaller than that for the core posted a small gain against an index of the currencies CPI. At the producer level, core finished goods of other important trading partners. retraced in February only part of the sizable step-up The broad monetary aggregates continued to grow in prices recorded in January, and core producer price rapidly in February, though at slightly lower rates inflation was up somewhat on a year-over-year basis. than in January. The strength in M2 was concentrated With regard to labor costs, recent data also pointed to in its liquid components, apparently in response to some acceleration. Compensation per hour in the the further narrowing of opportunity costs, the yield nonfarm business sector advanced appreciably more advantage of money funds relative to longer-term rapidly in the fourth quarter of 2000 and for the year investments, and the appeal of a safe haven from as a whole. That trend also showed through to the volatile equity markets. M3 grew somewhat less average hourly earnings of production or nonsuper- rapidly than M2; a pullback in the issuance of bankvisory workers through February, which exhibited a managed liabilities, particularly large time deposits, roughly similar acceleration. was associated with slower expansion of bank credit. At its meeting on January 30-31, 2001, the Com- Growth of domestic nonfinancial debt decelerated mittee adopted a directive that called for maintaining noticeably in January (latest data), reflecting reduced conditions in reserve markets consistent with a expansion of debt in the nonfederal sectors coupled decrease of 50 basis points in the intended level with a larger contraction in the amount of federal of the federal funds rate, to about 5V2 percent. This debt outstanding. move, in conjunction with the easing on January 3, The staff forecast prepared for this meeting sugwas intended to help guard against cumulative weak- gested that, after a period of slow growth associated ness in economic activity and to provide some sup- in part with an inventory correction, the economic Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 461 expansion would gradually regain strength over the might also hold down the expansion of economic next two years and move toward a rate near the activity. With regard to the outlook for inflation, staff's current estimate of the growth of the econo- some recent measures of increases in core prices had my's potential output. The period of subpar expan- fluctuated on the high side of earlier expectations, but sion was expected to foster an appreciable easing of apart from energy prices and medical costs, inflation pressures on resources and some moderation in core was still relatively quiescent. With the growth in price inflation. The forecast anticipated that the output likely to remain below the expansion of the expansion of domestic final demand would be held economy's potential for a while, members anticipated back to an extent by the decline in household net that inflation would remain subdued. worth associated with the downturn that had occurred Mirroring the statistics for the nation as a whole, in equity prices, the lingering effects of last year's business conditions in different parts of the country relatively high interest rates, and the continuation displayed mixed industry patterns, but members of relatively stringent terms and conditions on some reported that overall business activity currently types of loans by financial institutions. As a result, appeared to be growing at a sluggish pace in most growth of spending on consumer durables was regions, and business contacts were exhibiting a expected to be appreciably below the rapid pace in heightened sense of caution, or even concern, in the first half of last year, and housing demand would some industries. In their review of developments in increase only a little from its recent level. Business key sectors of the economy, members indicated that fixed investment, notably outlays for equipment and they saw favorable prospects for continued moderate software, was projected to resume relatively robust growth in consumer expenditures, though considergrowth after a period of adjustment of capital stocks able uncertainty surrounded this outlook. Downside to more desirable levels; growth abroad was seen as risks cited by the members included the substantial supporting the expansion of U.S. exports; and fiscal declines that had already occurred in measures of policy was assumed to become more expansionary. consumer confidence and equity wealth, and the In the Committee's discussion of current and pro- possibility that consumer sentiment might be underspective economic developments, members com- mined even further by continued volatility and addimented that the recent statistical and anecdotal infor- tional declines in the stock market and by rising mation had been mixed, but they viewed evolving concerns about job losses amid persistent announcebusiness conditions as consistent on the whole with ments of layoffs. Members also referred to the retarda continued softness in economic activity. Members ing effects on consumer expenditures of elevated noted that consumer spending had strengthened early levels of household debt and high energy costs. in the year and housing activity had remained at a Against this background, consumers might well relatively high level. These positive developments endeavor to boost their savings, and even a fairly needed to be weighed against an appreciable weaken- small increase in what currently was a quite low ing in business investment spending and the near- saving rate would have large damping effects on term restraining effects of a drawdown in inventories. aggregate demand that could weaken, if not abort, Looking ahead, while sales and production data sug- the expansion. To date, however, overall consumer gested that excess inventories were being worked off, spending had remained relatively strong and seemthe adjustment did not appear to have been com- ingly at odds with measures of consumer confidence pleted. Beyond the inventory correction, the mem- and reduced equity wealth. How this divergence bers continued to anticipate an acceleration of the might eventually be resolved was a significant source expansion over time, though likely on a more delayed of uncertainty and downside risk. On balance, while basis and at a more gradual pace than they had there were reasons to be concerned about the outlook forecast earlier. They noted a number of favorable for consumer spending, members believed that recent underlying factors that would tend to support a spending trends and the outlook for further growth in rebound, including solid productivity growth, stable employment and incomes pointed to continued low inflation, generally sound financial institutions, expansion in this key sector of the economy, though lower interest rates, and relatively robust expansion likely at a relatively sluggish pace. in many measures of money. However, the members Another major source of downside risk to the saw clear downside risks in the outlook for consumer expansion was business fixed investment. Spending and investment spending in the context of the marked for equipment and software declined in the fourth decline that had occurred in equity prices and con- quarter, and the available statistical and anecdotal sumer confidence, and in expected business profit- reports pointed to weakness during the first half of ability, and they were concerned that weaker exports this year, largely reflecting developments in high-tech Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

462 Federal Reserve Bulletin • July 2001 industries. Substantial downward adjustments to ruled out given current consumer and business conexpected near-term business earnings had persisted, fidence, production would need to pick up at some suggesting that firms saw investment as much less point to accommodate ongoing final demand. Some profitable than they had before and that cash flows members observed that the adjustment in inventories would be constrained. Many businesses also were might require more time than they had anticipated inhibited in their investment activities by less accom- earlier. In any event, completion of the process modative financial conditions associated with weaker clearly would foster an upturn in manufacturing equity markets and tighter credit terms and condi- activity. tions imposed by banking institutions. As a conse- Members commented on the downside risks to U.S. quence, a substantial volume of planned investment exports and the U.S. expansion from what appeared was being postponed, if not canceled. The capital to be softening economic conditions in a number of stock had grown at an unsustainable pace for a time, important foreign economies. In some countries, the so some downshifting in investment was inevitable. risks were exacerbated by the apparent inability or Moreover, those earlier very substantial investment unwillingness of government officials to address outlays seemed to have created excess capacity in a underlying structural problems in their economies number of industries, and how large an adjustment and financial systems. Members noted anecdotal in spending for business equipment might now be reports of weakening business conditions in a number under way was still unclear, especially with regard to of Asian and South American nations. The potential high-tech industries. At the same time, the informa- impact on exports of less vigor in the global economy tion available for the first quarter indicated consider- would be augmented, of course, by the strength of the able strength in nonresidential construction activity, dollar in foreign exchange markets. including large outlays on public-sector infrastruc- Although labor markets in general remained tight ture projects in some areas. On balance, business throughout the nation, anecdotal reports of less scarce spending for plant and equipment was likely to pick labor resources were becoming more frequent in up only gradually this year. Over the longer term, some areas or occupations. Some price increases however, a return to more robust business investment had been noted; however, apart from the energy and seemed likely, and indeed business earnings fore- health care sectors, price inflation had remained relacasts beyond the nearer term had not declined very tively subdued, evidently reflecting the combination much, reflecting continuing expectations of substan- of diminished growth in overall demand and strong tial profit opportunities related to persisting strong competitive pressures in most markets. With regard gains in productivity. to the outlook for wages and prices, members com- Housing activity was generally holding up well mented that the prospects for an extended period of across the country, as the effects of appreciably growth in demand at a pace below the economy's reduced mortgage interest rates apparently compen- potential should ease pressures on labor and other sated for the negative effects of declining financial resources and help to contain inflation. wealth on the demand for housing. While housing In the Committee's discussion of policy for the construction was generally described as elevated, intermeeting period ahead, most of the members some members referred to overbuilding or weakness preferred and all could support a further easing of in some local housing markets. It was noted that reserve conditions consistent with a 50 basis point homebuilders were generally optimistic about the reduction in the federal funds rate, to 5 percent. The prospects for the year ahead, given their current back- members agreed that a strengthening in the economic logs and expectations of further growth in employ- expansion over coming quarters was a reasonable ment and incomes. expectation, but absent further easing in monetary The ongoing adjustments in business inventories policy that pickup was unlikely to bring growth to an had played a significant role in curbing the growth of acceptable pace in the foreseeable future. Business economic activity in recent months, but such adjust- investment would be held back by lower earnings ments seemed likely gradually to become a more expectations and a capital overhang of unknown neutral factor over the balance of this year. In the dimensions; consumption was subject to downside motor vehicle industry, inventory liquidation had risks from previous decreases in equity wealth and been especially pronounced and the process now declining confidence; and the strong dollar and seemed largely completed. However, the inventory- weaker foreign growth would constrain exports. correction process in high-tech industries apparently Inflation was likely to be damped by ebbing pressures was not as far along. In the absence of renewed on labor and product markets. While many of the weakness in overall final demand, which could not be members generally believed that additional policy Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Minutes of the Federal Open Market Committee 463 easing might well prove to be necessary at some The Federal Open Market Committee seeks monetary time, the easing favored by most members incor- and financial conditions that will foster price stability and promote sustainable growth in output. To further its porated what they viewed as an adequate degree long-run objectives, the Committee in the immediate of stimulus under current economic conditions and future seeks conditions in reserve markets consistent with represented an appropriately calibrated step given reducing the federal funds rate to an average of around the uncertainties in the economic outlook. It was 5 percent. noted in this regard that in combination with the two The vote encompassed approval of the sentence easing actions earlier this year, the Committee would below for inclusion in the press statement to be have implemented in a relatively short period a conreleased shortly after the meeting: siderable amount of monetary easing whose economic effects would be felt over time. However, Against the background of its long-run goals of price some commented that the amount of financial stimustability and sustainable economic growth and of the inforlus was much smaller than might otherwise be mation currently available, the Committee believes that the expected from policy easing of this cumulative risks are weighted mainly toward conditions that may amount because it had been accompanied by fur- generate economic weakness in the foreseeable future. ther declines in stock market prices, more stringent Votes for this action: Messrs. Greenspan, McDonough, financing terms for many business borrowers, and a Ferguson, Gramlich, Hoenig, Kelley, Meyer, Ms. Minestronger dollar, all of which would be holding down han, Messrs. Moskow and Poole. Votes against this domestic spending and production. Indeed, financial action: None. markets had come to place some odds on a larger The Chairman called for a recess after this vote move of 75 basis points in recent days, importantly and convened a meeting of the Board of Governors to reflecting the possibility of a presumed policy consider reductions of one-half percentage point in response to the sizable declines in equity prices that the discount rate that had been proposed by all the had occurred as earnings prospects proved disap- Federal Reserve Banks. After the recess, the Chairpointing. Most members agreed, however, that in the man informed the Committee that the pending reduccontext of their focus on the economy, smaller, possitions had been approved. bly more frequent, policy adjustments were appropriate to afford them the opportunity to recalibrate It was agreed that the next meeting of the Commitpolicy in rapidly changing and highly uncertain tee would be held on Tuesday, May 15, 2001. The circumstances. meeting adjourned at 1:15 p.m. A few members expressed a preference for a 75 basis point reduction in the federal funds rate. In TELEPHONE CONFERENCES their view, a more forceful action was justified by current and prospective economic conditions. On April 11, 2001, the Committee reviewed eco- The members agreed that even with a further nomic and financial developments since its last meet- 50 basis point reduction in the federal funds rate, the ing and discussed the possible need for some further risks to the economy would remain decidedly to the easing of monetary policy. The data and anecdotal downside. This conclusion would be reflected in the information were mixed: They did not indicate that press statement to be released after today's meeting. the economy had been weakening further, but they The statement also would emphasize the need for raised questions about the potential strength of a close monitoring of rapidly evolving economic condi- rebound in growth over coming quarters. In particutions. The members anticipated that in the relatively lar, heightened business concerns about future sales long interval before the next regularly scheduled and further downward revisions to expected earnings meeting on May 15, 2001, economic developments threatened to restrain capital spending for some time. might suggest the desirability of a Committee confer- In the circumstances, the members could see the need ence call to assess business conditions across the for a further easing of policy at some point, though nation and to consider the possible need for a further some had a strong preference for taking such actions policy adjustment. at regularly scheduled meetings. They all agreed At the conclusion of this discussion, the Commit- that an easing on this date would not be advisable, tee voted to authorize and direct the Federal Reserve inasmuch as the attendant surprise to most outside Bank of New York, until it was instructed other- observers risked unpredictable reactions in financial wise, to execute transactions in the System Account markets that had been especially volatile in recent in accordance with the following domestic policy days, and additional important data would become directive: available over the near term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

464 Federal Reserve Bulletin • July 2001 A week later, on April 18, 2001, the Committee promote sustainable growth in output. To further its longheld a telephone conference meeting for the purpose run objectives, the Committee in the immediate future of considering a policy easing action. The members seeks conditions in reserve markets consistent with reducing the federal funds rate to an average of around noted that the statistical and anecdotal information 4Vi percent. received since the last conference call had supported their view that an easing of policy would be appropri- The vote encompassed approval of the sentence ate. In addition to the continuing concerns about below for inclusion in the press statement to be business plans for capital investment, consumer released shortly after the meeting: spending had leveled out and confidence had fallen further. In these circumstances, lower interest rates Against the background of its long-run goals of price were likely to be necessary to foster more satisfactory stability and sustainable economic growth and of the inforeconomic expansion. With financial markets more mation currently available, the Committee believes that the risks are weighted mainly toward conditions that may settled, and with nearly a month until the Commitgenerate economic weakness in the foreseeable future. tee's May meeting, an easing move was called for at this time. Votes for this action: Messrs. Greenspan, McDonough, Although a few preferred to wait until the next Ferguson, Gramlich, Hoenig, Kelley, Meyer, Ms. Minehan, Messrs. Moskow and Poole. Votes against this scheduled meeting, all the members supported or action: None. could accept a proposal for an easing of reserve conditions consistent with a reduction of 50 basis Chairman Greenspan indicated that shortly after points in the federal funds rate to a level of 4l/z perthis meeting the Board of Governors would consider cent. The Committee voted to authorize and direct pending requests of eight Federal Reserve Banks to the Federal Reserve Bank of New York, until it was reduce the discount rate by 50 basis points. instructed otherwise, to execute transactions in the System Account in accordance with the following Donald L. Kohn domestic policy directive: Secretary The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

465 Legal Developments FINAL RULE—AMENDMENT TO REGULATION A Order Approving the Formation of a Bank Holding Company The Board of Governors is amending 12 C.F.R. Part 201, its Regulation A (Extensions of Credit by Federal Reserve CB&T Bancshares, Inc. ("CB&T") has requested the Banks; Change in Discount Rate), to reflect its approval of Board's approval under section 3 of the Bank Holding a decrease in the basic discount rate at each Federal Re- Company Act ("BHC Act") (12 U.S.C. § 1842) to become serve Bank. The Board acted on requests submitted by the a bank holding company by acquiring all the shares of Boards of Directors of the twelve Federal Reserve Banks. Citizens Bank & Trust Company, also in Vivian ("Citi- Effective May 15, 2001, 12 C.F.R. Part 201 is amended zens"). as follows: Notice of the proposal, affording interested persons an opportunity to submit comments, has been published Part 201—Extensions of Credit by Federal Reserve (66 Federal Register 17,711 (2001)), and the time for filing Banks (Regulation A) comments has expired. The Board has considered the application and all comments received in light of the factors set forth in section 3 of the BHC Act. 1. The authority citation for 12 C.F.R. Part 201 continues CB&T is a newly organized corporation formed for the to read as follows: purpose of acquiring control of Citizens. Citizens is the 116th largest commercial banking organization in Louisiana, controlling approximately $45 million in deposits, Authority. 12 U.S.C. 343 et seq., 347a, 374b, 347c, 347d, representing less than 1 percent of total deposits in com- 348 et seq., 357, 374, 374a and 461. mercial banking organizations in the state.1 The proposal involves the acquisition of a commercial Section 201.51 is revised to read as follows: bank by CB&T, which does not currently control any commercial bank. Based on all the facts of record, the Section 201.51—Adjustment credit for depository Board concludes that the proposal would not have any institutions significantly adverse effects on competition or on the concentration of banking resources in any relevant banking The rates for adjustment credit provided to depository market. Accordingly, the Board has determined that cominstitutions under section 201.3(a) are: petitive factors under section 3 of the BHC Act are consistent with approval. Section 3 of the BHC Act also requires the Board to Federal Reserve Bank Rate Effective consider the financial and managerial resources and future Boston 3.5 May 16, 2001 prospects of the companies and banks involved in a pro- New York 3.5 May 15, 2001 Philadelphia 3.5 May 17, 2001 posal, the convenience and needs of the communities to be Cleveland 3.5 May 17, 2001 served, and certain other supervisory factors. The Board Richmond 3.5 May 15, 2001 Atlanta 3.5 May 16, 2001 has carefully considered these factors in light of all the Chicago 3.5 May 15, 2001 facts of record. The Board has carefully reviewed all St. Louis 3.5 May 16, 2001 Minneapolis 3.5 May 17, 2001 the financial information provided by CB&T regarding the Kansas City 3.5 May 16,2001 Dallas 3.5 May 16, 2001 proposal, including the assessment of the financial re- San Francisco 3.5 May 15, 2001 sources of Citizens made in confidential examination reports by its primary federal regulator.2 Citizens is currently ORDERS ISSUED UNDER BANK HOLDING COMPANY 1. State deposit data are as of December 31, 2000. 2. As part of the proposal, minority shareholders holding less than ACT 1,000 shares of Citizens will only have the option of receiving fair cash value in exchange for their shares. Protestants contend that they Orders Issued Under Section 3 of the Bank Holding do not want to sell their shares and that the amount of cash that Company Act Citizens will pay to each shareholder per share is inadequate. The federal courts have indicated that the Board must analyze all the proposals under the BHC Act in light of the factors enumerated in the BHC Act CB&T Bancshares, Inc. and may consider issues of shareholders' rights only to the extent Vivian, Louisiana those matters relate to the factors enumerated in the BHC Act. See Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

466 Federal Reserve Bulletin • July 2001 well-capitalized and would continue to be well-capitalized Juniper Financial Corporation upon consummation of the proposal. The proposal is con- Wilmington, Delaware sistent with the Board's guidelines, including the Board's Policy Statement on the Formation of Small Bank Holding Order Approving Formation of a Bank Holding Companies, which applies to CB&T because it will have Company assets of less than $150 million.3 The Board has also carefully reviewed the management Juniper Financial Corporation ("Juniper") has requested resources of CB&T in light of reports of current and past the Board's approval under section 3(a)(1) of the Bank examination and other supervisory information.4 Based on Holding Company Act ("BHC Act") (12 U.S.C. all the facts of record, the Board concludes that the mana- § 1842(a)(1)) to become a bank holding company by acgerial resources and future prospects of the institutions quiring First Bank CBC, Maryville, Missouri ("First involved, and other supervisory factors, are consistent with Bank").1 approval. In addition, considerations relating to the conve- Notice of the proposal, affording interested persons an nience and needs of the communities to be served, includ- opportunity to submit comments, has been published ing the record of performance of the institution involved (66 Federal Register 371 (2001)). The time for filing under the Community Reinvestment Act (12 U.S.C. § 2901 comments has expired, and the Board has considered the et seq.), are consistent with approval.5 proposal and all comments received in light of the factors Based on the foregoing and all the facts of record, the set forth in section 3 of the BHC Act. Board has determined that the application should be, and Juniper currently operates the internet-based credit card hereby is, approved. The Board's approval is expressly division of Columbus Bank & Trust, Columbus, Georgia conditioned on the compliance by CB&T with all the ("Columbus Bank"). First Bank, with total assets of commitments and representations made in connection with $106.3 million, is the 128th largest depository institution in this application and the conditions referenced in this order. Missouri, controlling $87.8 million in deposits, represent- For purposes of this action, the commitments and condi- ing less than one percent of total deposits in depository tions relied on by the Board in reaching its decision are institutions in the state.2 deemed to be conditions imposed in writing by the Board Section 3 of the BHC Act prohibits the Board from in connection with its findings and decision, and, as such, approving an application to acquire a bank if the proposal may be enforced in proceedings under applicable law. would result in a monopoly or would be in furtherance of The transaction shall not be consummated before the any attempt to monopolize the business of banking. Secfifteenth calendar day after the effective date of this order tion 3 of the BHC Act also prohibits the Board from or later than three months after the effective date of this approving a proposed combination that substantially would order, unless such period is extended for good cause by the lessen competition or tend to create a monopoly in any Board or the Federal Reserve Bank of Dallas, acting pursu- relevant banking market, unless the Board finds that the ant to delegated authority. anticompetitive effects of the proposal clearly are out- By order of the Board of Governors, effective May 21, weighed in the public interest by the probable effects of the 2001. proposal in meeting the convenience and needs of the community to be served.3 Voting for this action: Chairman Greenspan, Vice Chairman Fergu- Consummation of the proposed transaction would result son, and Governors Meyer and Gramlich. Absent and not voting: in the establishment of a de novo bank in the Wilmington Governor Kelley. banking market, and thereby would increase the number of alternative sources of banking products and services avail- ROBERT DEV. FRIERSON able to customers. The Board previously has noted that the Associate Secretary of the Board establishment of a de novo bank enhances competition in affected banking markets and reflects positively on competitive considerations in an application under section 3 of the Western Bancshares, Inc. v. Board of Governors, 480 F.2d 749 (10th Cir. 1973). The Board considered the expected total expense of redeeming minority shares as part of its evaluation of the financial resources in this case. Disputes between shareholders and manage- 1. Juniper intends, immediately on acquisition of First Bank, to ment regarding redemptions related to reorganization, the fairness of merge First Bank with and into Juniper Bank, Wilmington, Delaware, the valuation of shares, and related shareholder issues raised by a de novo bank that is not yet open for business. Juniper then would Protestants are otherwise matters of state and federal securities law cause substantially all the assets and liabilities of Juniper Bank to be and state corporate law and are not related to statutory factors that the sold to Citizens Bank and Trust Co., Chillicothe, Missouri, a subsid- Board is charged with reviewing under the BHC Act. iary of Citizens Bancshares Co., the current owner of First Bank. 3. See 12 C.F.R. 225, App. C. Juniper Bank would then purchase the assets and assume the liabilities 4. The Board also considered a comment received regarding the of the credit card division of Columbus Bank. All these transactions current management of Citizens. are subject to regulatory approval. 5. Citizens received an "outstanding" rating from its primary fed- 2. Asset, deposit, and ranking data are as of June 30, 2000. In this eral supervisor, the Federal Deposit Insurance Corporation ("FDIC"), context, depository institutions include commercial banks, savings at its most recent evaluation for CRA performance, as of October 1, banks, and savings associations. 1998. 3. 12 U.S.C. § 1842(c). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 467 BHC Act.4 There is no evidence that the proposed transac- by the Board or by the Federal Reserve Bank of Philadeltion would create or further a monopoly or lessen competi- phia acting pursuant to delegated authority. tion in any relevant banking market. Accordingly, the By order of the Board of Governors, effective May 9, Board concludes that consummation of the proposal would 2001. not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant This action was taken pursuant to the Board's Rules Regarding banking market, and that competitive considerations are Delegation of Authority (12 C.F.R. 265.4(b)(1)) by a committee of consistent with approval.5 Board members. Voting for this action: Chairman Greenspan, Vice Chairman Ferguson, and Governor Meyer. Absent and not voting: Section 3 of the BHC Act requires the Board, in acting Governors Kelley and Gramlich. on an application, to consider the financial and managerial resources and future prospects of the companies and banks JENNIFER J. JOHNSON involved and certain supervisory factors. The Board has Secretary of the Board reviewed these factors in light of the record, including reports of examination and other confidential supervisory Orders Issued Under Sections 3 and 4 of the Bank information assessing the financial and managerial re- Holding Company Act sources of the organizations, financial information provided by Juniper, and supervisory and other information Royal Bank of Canada regarding the banking experience and financial resources Montreal, Canada of the proposed management of Juniper. In addition, the Board has considered Juniper's capital and ownership Rock Merger Subsidiary, Inc. structure, the shareholder rights and preferences of Juni- Raleigh, North Carolina per's shareholders, and certain commitments made with respect to Juniper's capital structure. Based on all the facts Order Approving Formation of Bank Holding Companies of record, the Board concludes that the financial and mana- and Acquisition of a Bank and Nonbanking Companies gerial resources and future prospects of Juniper and Juniper Bank are consistent with approval, as are the other Royal Bank of Canada ("Royal Bank"), a foreign banking supervisory factors the Board must consider under sec- organization that is subject to the provisions of the Bank tion 3 of the BHC Act. Holding Company Act ("BHC Act"), and Rock Merger Section 3 of the BHC Act also requires the Board to Subsidiary, Inc. (collectively, "Applicants") have requested consider the convenience and needs of the communities to the Board's approval under section 3 of the BHC Act be served. The Board has reviewed information presented (12 U.S.C. § 1842) to become bank holding companies by by Juniper related to the convenience and needs factor and acquiring Centura Banks, Inc. ("Centura") and thereby the records of performance of the relevant depository insti- indirectly acquiring Centura Bank ("Bank"), both in tutions under the Community Reinvestment Act. Based on Rocky Mount, North Carolina.1 Applicants also have reall the facts of record, the Board concludes that consider- quested the Board's approval under sections 4(c)(8) and ations relating to the convenience and needs of the commu- 4(j) of the BHC Act (12 U.S.C. §§ 1843(c)(8) and 1843(j)) nities to be served are consistent with approval. and section 225.24 of the Board's Regulation Y (12 C.F.R. Based on the foregoing and all the facts of record, the 225.24) to acquire the nonbanking subsidiaries of Centura Board has determined that the application should be, and and thereby engage in extending credit and servicing hereby is, approved. The Board's approval is conditioned loans.2 specifically on compliance by Juniper and its shareholders Notice of the proposal, affording interested persons an with all the commitments made in connection with the opportunity to comment, has been published (66 Federal proposal and with the conditions referred to in this order. Register 15,480 (2001)). The time for filing comments has For the purpose of this action, the commitments and condi- expired, and the Board has considered the proposal and all tions relied on by the Board in reaching its decision are comments received in light of the factors set forth in deemed to be conditions imposed in writing by the Board sections 3 and 4 of the BHC Act. in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law. The acquisition of First Bank shall not be consummated before the fifteenth calendar day after the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause 1. Applicants would effect the acquisition by merging Centura with and into Rock Merger Subsidiary, Inc., with Centura surviving. At the time of the merger, all shares of Centura would convert to the right to 4. See Canadian Imperial Bank of Commerce, 85 Federal Reserve receive shares of Royal Bank. Bulletin 733 (1999); see also Wilson Bank Holding Company, 2. Royal Bank also has requested the Board's approval to exercise 82 Federal Reserve Bulletin 568 (1996). an option to purchase up to 19.9 percent of Centura's common stock if 5. On consummation of the proposal, Delaware will be Juniper's certain events occur. This option would expire on consummation of home state for purposes of the BHC Act. See 12 U.S.C. § 1841(o)(4). the proposed merger. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

468 Federal Reserve Bulletin • July 2001 Royal Bank, with consolidated assets of $192 billion,3 is priate federal supervisory agency to take into account an the largest banking organization in Canada.4 Royal Bank institution's record of meeting the credit needs of its entire operates internationally through numerous branches and community, including low- and moderate-income ("LMI") agencies, including licensed branches in New York, neighborhoods, in evaluating bank expansion proposals. New York; Portland, Oregon; and Guanica, Puerto Rico. The Board has carefully considered the convenience and Royal Bank also controls a savings association, Security needs factor and the CRA performance records of the First Network Bank, Atlanta, Georgia ("Security First"). subsidiary depository institutions of Royal Bank and Cen- In addition, through its subsidiaries and affiliates, Royal tura in light of all the facts of record, including public Bank engages in a variety of other nonbanking activities, comments contending that the proposal would have an including asset management, investment banking, and adverse effect on the communities to be served. mortgage lending. As provided in the CRA, the Board evaluates the record of performance of a depository institution in light of the Factors Governing Board Review of Bank Acquisition CRA examinations conducted by the appropriate federal supervisory agency for that institution. An institution's The BHC Act sets forth the factors that the Board must most recent CRA performance evaluation is a particularly consider when reviewing the formation of bank holding important consideration in the Board's review of the convecompanies or the acquisition of banks. These factors are nience and needs factor because the evaluation is based on the competitive effects of the proposal in the relevant a detailed, on-site evaluation by the appropriate federal geographic markets; the financial and managerial resources agency of the institution's overall record of performance and future prospects of the companies and banks involved under the CRA.7 in the proposal; the convenience and needs of the commu- Royal Bank controls one insured depository institution nity to be served, including the records of performance of in the United States, Security First, which is an Internetthe insured depository institutions involved in the transac- based savings association with branches in the Atlanta and tion under the Community Reinvestment Act (12 U.S.C. Tampa-St. Petersburg-Clearwater ("Tampa") Metropolitan § 2901 et 5eg.)("CRA"); the availability of information Statistical Areas ("MSAs"). Security First received an needed to determine and enforce compliance with the BHC overall "outstanding" CRA performance rating, as well as Act and other applicable federal banking laws; and, in the an "outstanding" component rating for its performance in case of applications involving foreign banks, whether those both Georgia and Florida, at its most recent examination by banks are subject to comprehensive supervision and regula- the Office of Thrift Supervision ("OTS"), its primary tion on a consolidated basis by their home country supervi- federal supervisor, as of September 20, 1999. Examiners sor.5 concluded that Security First's record of lending to borrow- The Board has considered these factors in light of a ers of different income levels and in LMI census tracts record that includes information provided by Royal Bank exceeded the criteria for satisfactory performance in the and Centura, confidential supervisory and examination in- Atlanta8 and Tampa MSAs.9 Examiners found no evidence formation, and publicly reported financial and other infor- of prohibited discrimination or other illegal credit practices mation. The Board also has considered information col- at Security First or violations of fair lending laws. lected from the primary home country supervisor of Royal Bank, which is Centura's only insured depository institu- Bank and from various federal agencies. In addition, the tion subsidiary, received a "satisfactory" CRA perfor- Board has considered public comments submitted on the mance rating at its most recent examination by the Federal proposal.6 Reserve Bank of Richmond ("Reserve Bank"), as of Feb- Convenience and Needs Considerations 7. The Interagency Questions and Answers Regarding Community Reinvestment provide that a CRA examination is an important and The Board has long held that consideration of the conveoften controlling factor in the consideration of an institution's CRA nience and needs factor includes a review of the records of record. See 65 Federal Register 25,088 (2000). the relevant depository institutions under the CRA. The 8. Although examiners noted that Security First had a low level of CRA requires the federal financial supervisory agencies to mortgage lending in the Atlanta MSA, they stated that Security First's efforts to penetrate the low-income segment of the market had been encourage financial institutions to help meet the credit impeded because approximately 8 percent of the low-income families needs of local communities in which they operate, consis- in the MSA were below the poverty level. Since its most recent CRA tent with safe and sound operation, and requires the appro- performance examination, Security First received a special merit award from the Federal Home Loan Bank of Atlanta in December 2000 in its Partnership Excellence Award Competition. 3. Asset and ranking data are as of December 31, 1999, adjusted to 9. These two MSAs also constitute Security First's CRA assessment reflect transactions consummated by Royal Bank after that date and areas. Commenter contended that Security First has an inappropriately exchange rates then in effect. narrow assessment area because its Internet focus allows it to conduct 4. Royal Bank is treated as a financial holding company ("FHC") in business nationwide. The OTS reviewed Security First's assessment accordance with sections 225.90 and 225.91 of Regulation Y areas as part of the institution's most recent CRA examination and (12 C.F.R. 225.90 and 225.91). determined that the delineated assessment areas complied with regula- 5. See 12 U.S.C. § 1842(c). tory requirements. Moreover, the OTS will continue to review the 6. The Board received comments from a community-based organi- assessment areas of Security First as part of the CRA examination zation ("Commenter") on the proposal. process. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 469 ruary 28, 2000. Examiners rated Bank "high satisfactory" Financial, Managerial, and Supervisory Considerations on the investment and service components of the overall examination rating. Examiners considered the Bank's lend- The BHC Act requires the Board to consider the financial ing to be adequate, noting that Bank was involved in a and managerial resources and future prospects of the comnumber of specialized lending programs, offered subsi- panies and banks involved in a bank acquisition proposal.14 dized loans, and provided an affordable housing program In assessing the financial and managerial strength of Royal for borrowers who did not meet Bank's standard underwrit- Bank and its affiliates, the Board has reviewed public ing criteria.10 Examiners concluded that Bank's flexible comments, information provided by Applicants, confidenapproach demonstrated its commitment to lending in local tial supervisory and examination information, and publicly communities. No credit practices were identified as incon- reported and other financial information.15 In addition, the sistent with the substantive provisions of fair housing and Board consulted with relevant supervisory authorities in fair lending laws and regulations, and examiners deter- Canada. The capital ratios of Royal Bank exceed the minimined that Bank had adequate policies, procedures, and mum levels that would be required under the Basle Capital training programs to support nondiscriminatory lending Accord and are considered equivalent to the capital ratios practices.11 that would be required of a U.S. banking organization. In reviewing the effect of the proposal on the conve- Bank is, and on consummation of the proposal would nience and needs of the communities to be served, the remain, well capitalized and well managed. In light of Board has carefully considered all the facts of record, these and all the facts of record, the Board concludes that including the public comments received,12 Applicants' re- the financial and managerial resources and future prospects sponses to the comments,13 and evaluations of the perfor- of Applicants and Bank are consistent with approval. mance of each of Royal Bank and Centura's insured sub- Section 3 of the BHC Act also provides that the Board sidiary depository institutions under the CRA. Based on a may not approve an application involving a foreign bank review of the entire record and for the reasons discussed unless the bank is "subject to comprehensive supervision above, the Board concludes that convenience and needs or regulation on a consolidated basis by the appropriate considerations are consistent with approval of the proposal. authorities in the bank's home country."16 The home country supervisor of Royal Bank is Canada's Office of the Superintendent of Financial Institutions ("OSFI"), which is responsible for the prudential supervision and regulation of federally regulated Canadian financial institutions. In approving applications under the BHC Act and the International Banking Act (12 U.S.C. § 3101 etseq.) ("IBA"), the 10. Commenter asserted that Bank disproportionately denied home Board previously has determined that Canadian banks, purchase and home improvement loan applications of minority indi- including Royal Bank, are subject to comprehensive conviduals, and that Bank had insufficient fair lending and consumer compliance procedures. In Bank's most recent compliance examination, as of February 28, 2000, the Reserve Bank found no evidence that Bank had violated substantive provisions of fair housing and fair lending laws and determined that Bank had adequate policies and procedures to support fair lending practices. 11. Commenter alleged that two nonbank mortgage subsidiaries of 14. 12 U.S.C. § 1842(c)(2). Centura and one nonbank mortgage subsidiary of Royal Bank did not 15. Commenter submitted portions of a newspaper article that have sufficient fair lending and consumer compliance procedures. alleged that a Royal Bank subsidiary manipulated stock prices in 2000 Commenter also alleged, without providing relevant supporting data, in connection with its management of a pension fund. Commenter that the three mortgage lenders engaged in predatory lending by also referenced newspaper articles reporting that Royal Bank had disproportionately targeting low-income and minority individuals for discovered and reported to Canadian authorities in 2001 a pattern of high interest loans. Royal Bank has provided detailed information trading at another subsidiary that suggested traders were using inside about the fair lending policies and procedures of each of the subsidiar- information. These articles also described the steps Royal Bank had ies identified by Commenter. The Board forwarded Commenter's taken to address the events at each of the subsidiaries, including letters to the Department of Housing and Urban Development, the removing the individuals responsible for the suspicious activities, Department of Justice, and the Federal Trade Commission, which hiring new management officials, and instituting policies and procehave responsibility for enforcing fair lending laws for nondepository dures designed to ensure that repeat violations would not occur. The lending companies. appropriate Canadian authorities have informed the Board's staff that 12. Commenter submitted a newspaper article in which a couple they are satisfied with Royal Bank's response to each incident. asserted that Royal Bank's nonbank mortgage subsidiary, Prism Fi- 16. 12 U.S.C. § 1842(c)(3)(B). Under Regulation Y, the Board uses nancial Corporation ("Prism"), sold their loan without properly noti- the standards enumerated in Regulation K to determine whether a fying them. Royal Bank has provided documentation stating that the foreign bank that has applied under section 3 of the BHC Act is loan was sold before Royal Bank's acquisition of Prism and disclosing subject to consolidated home country supervision. See 12 C.F.R. the content and timing of the disclosures and notices Prism provided § 225.13(a)(4). Regulation K provides that a foreign bank will be to the borrowers concerning the sale of their loan. considered to be subject to comprehensive supervision or regulation 13. Commenter alleged that Prism did not accurately report mort- on a consolidated basis if the Board determines that the bank is gage lending data under the Home Mortgage Disclosure Act supervised and regulated in such a manner that its home country (12 U.S.C. § 2801 etseq.) ("HMDA"). Royal Bank has stated that the supervisor receives sufficient information on the worldwide operations HMD A reporting irregularity took place before Royal Bank acquired of the bank, including its relationship to any affiliates, to assess the Prism and has provided information about the policies and procedures bank's overall financial condition and its compliance with law and it implemented to ensure accurate HMDA reporting. regulation. See 12 C.F.R. 211.24(c)(1). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

470 Federal Reserve Bulletin • July 2001 solidated supervision by the OSFI.17 In this case, the Board and that competitive considerations are consistent with finds that the OSFI continues to supervise Royal Bank in approval.20 substantially the same manner as it supervised Canadian banks at the time of those previous determinations. Based Nonbanking Activities on this finding and all the facts of record, the Board concludes that Royal Bank continues to be subject to Applicants also have filed notices under section 4(c)(8) of comprehensive supervision on a consolidated basis by its the BHC Act to acquire Centura's nonbanking subsidiaries home country supervisor. and thereby engage in extending credit and servicing loans. In addition, section 3 of the BHC Act requires the Board The Board has determined by regulation that extending to determine that a foreign bank has provided adequate credit and servicing loans is closely related to banking for assurances that it will make available to the Board such purposes of the BHC Act. Applicants have committed to information on its operations and activities and those of its conduct this activity in accordance with the Board's regulaaffiliates that the Board deems appropriate to determine tions and orders. and enforce compliance with the BHC Act.18 The Board In order to approve the notices filed by Applicants to has reviewed the restrictions on disclosure in relevant acquire certain nonbanking subsidiaries of Centura, the jurisdictions in which Royal Bank operates and has com- Board is required by section 4(j)(2)(A) of the BHC Act to municated with relevant government authorities concern- determine that the acquisition of these subsidiaries "can ing access to information. In addition, Royal Bank previ- reasonably be expected to produce benefits to the public.. . ously has committed to make available to the Board such that outweigh possible adverse effects, such as undue coninformation on the operations of Royal Bank and its affili- centration of resources, decreased or unfair competition, ates that the Board deems necessary to determine and conflicts of interests, or unsound banking practices."21 enforce compliance with the BHC Act, the IBA, and other As part of its evaluation of these factors, the Board applicable federal law. Royal Bank also previously has considers the financial condition and managerial resources committed to cooperate with the Board to obtain any of the notificant, its subsidiaries, and the companies to be waivers or exemptions that may be necessary to enable acquired and the effect of the proposed transaction on those Royal Bank to make such information available to the resources. For the reasons discussed above and based on all Board. In light of these commitments, the Board concludes the facts of record, the Board has concluded that financial that Royal Bank has provided adequate assurances of ac- and managerial considerations are consistent with approval cess to any appropriate information that the Board may of the notice. request. Based on these and all the facts of record, the The Board also has considered the competitive effects of Board concludes that the supervisory factors it is required the proposed acquisition by Applicants of the nonbanking to consider are consistent with approval. subsidiaries of Centura. Although the nonbanking subsidiaries of Royal Bank and Centura compete in eight markets Competitive Considerations in Virginia and North Carolina, numerous entities in each of those markets extend credit and service loans and the Section 3 of the BHC Act prohibits the Board from approv- market for these services is unconcentrated. As a result, the ing a bank acquisition proposal that would result in a Board expects that consummation of the proposal would monopoly. The BHC Act also prohibits the Board from have a de minimis effect on competition for the nonbanking approving a proposed acquisition that would substantially services Applicants would acquire from Centura. Based on lessen competition or tend to create a monopoly in any all the facts of record, the Board concludes that it is relevant banking market, unless the anticompetitive effects unlikely that significantly adverse competitive effects of the proposal clearly are outweighed in the public interest would result from the nonbanking acquisitions proposed in by the probable effect of the proposal in meeting the this transaction. convenience and needs of the community to be served.19 Applicants have indicated that consummation of the The subsidiary depository institutions of Royal Bank and proposal would improve the financial position and future Centura do not compete in any banking market, and the business prospects of Centura and allow it to offer products number of competitors in the relevant banking markets and services it currently does not offer and would give would remain unchanged after the acquisition. Accord- Royal Bank the opportunity to create a retail banking ingly, based on all the facts of record the Board concludes presence in the United States. In addition, there are public that consummation of the proposal would not have a signif- benefits to be derived from permitting capital markets to icantly adverse effect on competition or on the concentration of banking resources in any relevant banking market 20. On consummation of the proposal, North Carolina would be the home state of Applicants and Bank for purposes of the BHC Act, including the interstate banking provisions of section 3(d) of the act. 17. See Royal Bank of Canada, 83 Federal Reserve Bulletin 442 The Board has determined that the proposed transaction is not barred (1997); see also National Bank of Canada, 82 Federal Reserve by section 3(d) of the BHC Act. See 12 U.S.C. §§ 1841(o)(4), 1842(d). Bulletin 769 (1996). New York is and will remain Royal Bank's home state for purposes of 18. See 12 U.S.C. § 1842(c)(3)(A). the IBA and the Board's Regulation K. See 12 C.F.R. §211 et seq. 19. 12 U.S.C. § 1842(c)(1). 21. 12 U.S.C. § 1843(j)(2)(A). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 471 operate so that bank holding companies can make poten- and on the Board's receiving access to information on the tially profitable investments in nonbanking companies and operations or activities of Royal Bank and any of its from permitting banking organizations to allocate their affiliates that the Board deems to be appropriate to deterresources in the manner they consider most efficient when mine and enforce compliance Royal Bank and its affiliates the investments and actions are consistent, as in this case, with applicable federal statutes. If any restrictions on acwith the relevant considerations under the BHC Act. cess to information on the operations or activities of Royal The Board also has concluded that the conduct of the Bank and its affiliates subsequently interfere with the proposed activities within the framework of Regulation Y Board's ability to obtain information to determine and and Board precedent is not likely to result in any signifi- enforce compliance by Royal Bank or its affiliates with cantly adverse effects, such as undue concentration of applicable federal statutes, the Board may require terminaresources, decreased or unfair competition, conflicts of tion of any of Royal Bank's direct or indirect activities in interests, or unsound banking practices, that would out- the United States. The Board's approval of the nonbanking weigh the public benefits of the proposal, such as increased aspects of the proposal also is subject to all the conditions customer convenience and gains in efficiency. Accordingly, set forth in Regulation Y, including those in sections 225.7 based on all the facts of record, the Board has determined and 225.25(c) of Regulation Y (12 C.F.R. 225.7 and that the balance of public benefits that the Board must 225.25(c)), and to the Board's authority to require such consider under section 4(j) of the BHC Act is favorable modification or termination of the activities of a bank and consistent with approval of the notice. holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent Conclusion evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. All the commit- Based on the foregoing and in light of all the facts of ments and conditions on which the Board relied in granting record, the Board has determined that the applications and its approval, including the commitments and conditions notices should be, and hereby are, approved.22 In reaching specifically described above, are deemed to be conditions its conclusion, the Board has considered all the facts of imposed in writing by the Board in connection with its record in light of the factors that it is required to consider findings and decision and, as such, may be enforced in under the BHC Act and other applicable statutes. proceedings under applicable law. The Board's approval specifically is conditioned on com- The acquisition of the subsidiary bank of Centura may pliance by Applicants with all the commitments made in not be consummated before the fifteenth calendar day after connection with the applications and notices, including the the effective date of this order, and the proposal may not be commitments discussed in this order, and the conditions set consummated later than three months after the effective forth in the order and the Board orders and regulations date of this order, unless the Board or the Federal Reserve noted above. The Board's approval also specifically is Bank of New York, acting pursuant to delegated authority, conditioned on Royal Bank's compliance with the commit- extends such period for good cause. ments it previously made regarding access to information, By order of the Board of Governors, effective May 21, 2001. 22. Commenter requested that the Board hold a public meeting or Voting for this action: Chairman Greenspan, Vice Chairman Ferguhearing on the proposal. Section 3(b) of the BHC Act does not require son, and Governors Meyer and Gramlich. Absent and not voting: the Board to hold a public hearing on an application unless the Governor Kelley. appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial of the application. The ROBERT DEV. FRIERSON Board has not received such a recommendation from the appropriate supervisory authorities. Associate Secretary of the Board Under its rules, the Board also may, in its discretion, hold a public meeting or hearing on an application to acquire a bank if a meeting or hearing is necessary or appropriate to clarify factual issues related to the application and to provide an opportunity for testimony. 12 C.F.R. ORDERS ISSUED UNDER BANK MERGER ACT 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 Old Kent Bank, National Association there are disputed issues of material fact that cannot be resolved in Jonesville, Michigan some other manner. 12 U.S.C. § 1843(c)(8); 12 C.F.R. 225.25(a)(2). The Board has considered carefully Commenter's request in light of all the facts of record. In the Board's view, interested persons have Old Kent Bank had ample opportunity to submit their views, and Commenter submit- Grand Rapids, Michigan ted written comments that have been considered carefully by the Board in acting on the proposal. Commenter's request fails to demonstrate why its written comments do not present its evidence adequately Order Approving Membership in the Federal Reserve and fails to identify disputed issues of fact that are material to the System and Merger of Banks Board's decision that would be clarified by a public meeting or hearing. For these reasons, and based on all the facts of record, the This proposal represents an internal reorganization by Fifth Board has determined that a public meeting or hearing is not required or warranted in this case. Accordingly, Commenter's request for a Third Bancorp, Cincinnati, Ohio ("Fifth Third"), after its public meeting or hearing on the proposal is denied. acquisition of Old Kent Financial Corporation, Grand Rap- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

472 Federal Reserve Bulletin • July 2001 ids, Michigan ("Old Kent").1 The reorganization would prohibiting merger transactions involving out-of-state realign geographically the branches of three subsidiary banks.5 The Riegle-Neal Act also authorizes the acquiring banks. Old Kent Bank, National Association, Jonesville, bank to retain and operate, as a main office or branch, any Michigan ("OKB-NA"), would convert to an Indiana bank- bank offices of the acquired bank.6 ing charter, become a member of the Federal Reserve All the states involved in the proposal (Illinois, Indiana, System, merge with another subsidiary bank of Fifth Third, Kentucky, and Michigan) enacted legislation before June 1, and acquire certain branches in Indiana from Old Kent 1997, allowing interstate mergers between banks located in Bank, Grand Rapids, Michigan ("OKB").2 OKB would their states and out-of-state banks pursuant to the proviacquire certain branches in Illinois, Indiana, and Michigan sions of the Riegle-Neal Act.7 In light of the foregoing, the from OKB-NA.3 Accordingly, OKB-NA has applied under Board is authorized to approve the proposal under the section 9 of the Federal Reserve Act (12 U.S.C. § 321) to Riegle-Neal Act.8 become a member of the Federal Reserve System on consummation of its conversion to an Indiana banking Financial, Managerial, and Other Supervisory charter. OKB-NA also has applied under section 18(c) of Considerations the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) ("Bank Merger Act") for approval, after its conversion As noted above, this case involves a reorganization of and relocation, to merge with Fifth Third Bank, Indiana, affiliated banks. The Board has concluded that consumma- St. Joseph, Michigan ("FTBI"), and to acquire certain tion of the proposal would not have any significantly branches from OKB. In addition, OKB has applied under adverse effects on competition or on the concentration of the Bank Merger Act to acquire certain branches from banking resources in any relevant banking market.9 In its OKB-NA. review of the proposal under the Bank Merger Act, the Notice of the applications, affording interested persons Board also has considered the financial and managerial an opportunity to submit comments, has been given in resources and future prospects of the financial institutions accordance with the Bank Merger Act and the Board's involved. The Board has reviewed these factors in light of Rules of Procedure (12C.F.R. 262.3(b)). As required by the facts of record, including public comments, supervisory the Bank Merger Act, reports on the competitive effects of reports of examination assessing the financial and managethe merger were requested from the United States Attorney rial resources of OKB-NA, OKB, and FTBI, and other General and the other federal banking agencies. The time information provided by Fifth Third. Based on all the facts for filing comments has expired, and the Board has consid- of record, including the fact that the proposal represents the ered the applications and all the facts of record in light of reorganization of banking operations already under comthe factors set forth in the Bank Merger Act and Federal mon control, the Board concludes that the financial and Reserve Act. managerial resources and future prospects of OKB-NA, Fifth Third, with total consolidated assets of approxi- OKB, and FTBI are consistent with approval of the promately $70.8 billion, is the 21st largest commercial bank- posal. ing organization in the United States.4 Fifth Third operates subsidiary depository institutions in Arizona, Florida, Ken- Convenience and Needs Considerations tucky, Illinois, Indiana, Michigan, and Ohio. As noted, the proposal would reorganize three of Fifth Third's subsidiary In acting on a proposal under the Bank Merger Act, the banks. Board is required to consider the effects of the proposal on the convenience and needs of the communities to be served Riegle-Neal Analysis and take into account the records of the relevant insured Section 102 of the Riegle-Neal Interstate Banking and 5. 12 U.S.C. § 1831u(a)(l). Branching Efficiency Act of 1994 (Pub. L. No. 103-328, 6. 12 U.S.C. § 1831u(d)(l). 108 Stat. 2338 (1994)) ("Riegle-Neal Act") authorizes 7. See 205 111. Comp. Stat. Ann. 10/3.071(i)(l) (West 2000); Ind. banks to conduct an interstate merger with another bank Code Ann. § 28-2-16-17 (Michie 2000); Ky. Rev. Stat. Ann. § 287.920 unless, before June 1, 1997, the home state of one of the (Michie 2000); and Mich. Comp. Laws § 23.710(11104) (8) (2000). 8. All the conditions for an interstate merger enumerated in the banks involved in the transaction adopted a law expressly Riegle-Neal Act are met in this case. The Indiana banking supervisor has determined that OKB-NA, on its conversion, would satisfy the minimum charter age requirement of Indiana law. See Ind. Code Ann. 1. See Fifth Third Bancorp, 87 Federal Reserve Bulletin 330 (2001) § 28-2-16-17-20.1 (d)(3). No other state relevant to the proposal has {"Fifth Third Order"). a minimum charter age requirement. Both OKB-NA and OKB are 2. OKB-NA would change its name to Fifth Third Bank, Indiana, adequately capitalized and would continue to be adequately capitaland relocate its headquarters to Indianapolis, Indiana. OKB-NA would ized and adequately managed on consummation of the proposal. operate branches in most of Indiana and portions of southern Illinois Concentration limits on nationwide or statewide deposits would not and northern Kentucky. apply in this case because it is an internal reorganization. 12 U.S.C. 3. OKB, under the name Fifth Third Bank, Michigan, would operate §1831u(b)(2)(E). Fifth Third has notified the appropriate state banking branches in Michigan, northwestern Indiana, and the Chicago, Illinois, agencies of the proposed reorganization and has provided a copy of its metropolitan area. The branches to be acquired by OKB-NA and OKB applications to all the relevant state agencies. are listed in Appendices A and B, respectively. 9. See Fifth Third Order for a discussion of the competitive efiFects 4. Asset and ranking data are as of June 30, 2000. of the acquisition of Old Kent by Fifth Third. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 473 depository institutions under the Community Reinvestment B. OKB's Lending and Community Investment Act ("CRA").10 The CRA requires the federal financial Record supervisory agencies to encourage financial institutions to help meet the credit needs of local communities in which The Board has received a comment criticizing OKB's they operate, consistent with safe and sound operation, and record of residential and commercial lending to African requires the appropriate federal supervisory agency to take Americans in Chicago. The commenter alleged that OKB into account an institution's record of meeting the credit and its subsidiary, Old Kent Mortgage Company, Grand needs of its entire community, including low- and Rapids, Michigan ("OKMC"), subjected Africanmoderate-income ("LMI") neighborhoods, in evaluating American loan applicants in Chicago to more rigorous bank expansion proposals. The Board has considered care- processing procedures and higher down payment requirefully the convenience and needs factor and the CRA perfor- ments than were applied to nonminority loan applicants, mance records of the relevant insured depository institu- and that OKB did not provide its branch managers and loan tions in light of all the facts of record, including a public officers in African-American neighborhoods in Chicago comment received concerning the record of OKB in meet- with sufficient lending authority to serve their communiing the credit needs of African Americans in Chicago. ties. As a result, according to the commenter, loan applications by African Americans and African-American-owned A. CRA Performance Examinations businesses were more frequently reviewed outside the applicant's community.14 The commenter also claimed that As provided in the CRA, the Board has evaluated the OKB denied a majority of the commercial loan applicaconvenience and needs factor in light of examinations by tions it received from African-American-owned businesses the appropriate federal supervisors of the CRA perfor- in Chicago and that OKB's investment in governmentmance records of the relevant institutions. An institution's sponsored housing for minorities in low-income areas in most recent CRA performance evaluation is a particularly Chicago was insufficient. important consideration in the applications process because In addition to the most recent CRA performance examiit represents a detailed, on-site evaluation of the institu- nation and overall CRA performance record of OKB, the tion' s overall record of performance under the CRA by its Board has considered OKB's residential and commercial appropriate federal supervisor.11 lending record and community investment record in its OKB, OKB-NA, and FTBI each received a "satisfacto- Chicago assessment area in 1998, 1999, and 2000; the ry" rating at the most recent examination of their CRA policies and procedures in place at OKB to ensure compliperformance.12 Examiners found no evidence of prohibited ance with fair lending laws; and OKB's procedures for discrimination or other illegal credit practices at any of the originating and underwriting residential, multifamily, and insured depository institutions involved in the proposal; small business loans.15 found no violations of substantive provisions of fair lend- OKB and OKMC offer numerous proprietary, governing laws; and, in general, commended these institutions for mental, and conventional mortgage products to provide their distribution of loans to borrowers at all income levels. LMI borrowers with affordable home ownership. From Examiners also reviewed the assessment areas delineated 1998 through 2000, OKMC participated in a number of by OKB, OKB-NA, and FTBI and did not conclude that government-sponsored affordable mortgage programs that any of their assessment areas were unreasonable or arbi- generally feature low down payments and flexible debt trarily excluded LMI areas.13 ratios for qualified buyers.16 During this three-year period, through affordable mortgage programs, OKMC originated 1,247 loans, totaling approximately $149 million, in LMI 14. The commenter also criticized OKB's record of hiring, promoting, and compensating African Americans, and alleged that African 10. 12 U.S.C. § 2901 etseq. Americans were underrepresented at OKB among lending officials, 11. See Interagency Questions and Answers Regarding Community loan underwriters, and senior officers. The Board has noted previously Reinvestment, 65 Federal Register 25,088 and 25,107 (2000). that the racial composition of a company's workforce and a compa- 12. OKB received a "satisfactory" rating from the Federal Reserve ny's compensation of members of racial groups are not among the Bank of Chicago, as of August 1999. OKB-NA received a "satisfacto- factors that the Board is authorized to consider among convenience ry" rating from the Office of the Comptroller of the Currency, as of and needs factors. See Deutsche Bank AG, 85 Federal Reserve Bulle- April 1999. FTBI, which was named Civitas Bank, Evansville, Indi- tin 509 (1999). ana, at the time of its most recent CRA performance examination, 15. This review included an examination of the fair lending policy received a "satisfactory" rating from the Federal Reserve Bank of statement adopted by the board of directors of Old Kent and OKB in Chicago, as of August 1999. June 2000; OKB's fair lending plans that govern its consumer and 13. The Board in the Fifth Third Order recently considered in detail business lending operations; OKB's consumer compliance guide and the CRA performance records of all the subsidiary banks of Fifth training materials; OKB's consumer loan guidelines; and various Third and Old Kent, including OKB, OKB-NA, and FTBI. For the underwriting standards and training materials. reasons stated therein, the Board found that the CRA performance 16. OKMC participated in programs sponsored by the Federal records of OKB, OKB-NA, and FTBI supported the acquisition of Old National Mortgage Association, Federal Home Loan Mortgage Corpo- Kent under the convenience and needs factor of the Bank Holding ration, Federal Housing Administration, U.S. Department of Housing Company Act, which is identical to the convenience and needs factor and Urban Development ("HUD"), Veterans Administration, the State of the Bank Merger Act. of Illinois, and the City of Chicago. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

474 Federal Reserve Bulletin • July 2001 census tracts and 3,637 loans, totaling approximately an organization dedicated to rebuilding LMI neighbor- $361 million, to LMI individuals in OKB's Chicago assess- hoods in Chicago. In addition, examiners stated that OKB ment area.17 OKMC was the largest participant in 2000 in invested approximately $9.6 million in four partnerships Chicago's City Mortgage Program, which encourages first- established to build or rehabilitate affordable housing in time homebuyers in designated LMI areas by offering fixed LMI neighborhoods in the Chicago MSA. below-market interest rates and down payment assistance. The record indicates that Old Kent has policies, proce- From 1997 to 1999, OKB and OKMC increased their loan dures, and training programs in place to ensure that the applications from minorities in the Chicago MSA almost same processing procedures and underwriting standards 137 percent, compared with a 6-percent increase in loan are applied to all home mortgage loan applications. In applications from nonminority applicants. Chicago, all purchase mortgage loans and all home equity Small business lending data for OKB in the Chicago loans made in connection with purchase mortgage loans Metropolitan Statistical Area ("MSA") for 1998 through are originated by OKMC, and these applications are under- 2000 also compare favorably with the data for lenders in written at a central office in OKB's Chicago assessment the aggregate.18 In 1998, OKB originated a higher percent- area. All such applications that are not approved in their age of its small business loans in minority census tracts in initial review receive a second review at the OKMC office the Chicago MSA than did lenders in the aggregate, and in where the application was received.21 In addition, OKMC 1998 and 1999, OKB loaned a higher percentage of the uses software to analyze underwriting patterns, including total dollar volume of its small business loans in minority matched pair analysis, to ensure that similarly situated census tracts than did lenders in the aggregate.19 Similarly, applicants receive the same treatment. OKB made a higher percentage of its loans to small busi- Old Kent also requires all employees involved in any nesses in minority census tracts in the Chicago MSA, as aspect of the loan application process to receive annual measured by both the percentage of total loans to small training designed to achieve familiarity with the requirebusinesses and the percentage of the total dollar volume of ments of federal and state fair lending laws and regulaloans to small businesses, for 1998 and 1999.20 Lending tions. Included among the training materials are detailed volumes for OKB in 2000 were comparable to its lending analyses of applicable laws and regulations and internal volumes in 1998 and 1999. In 2000, OKB was the fourth rules concerning loan application evaluation, notice to largest lender in Illinois under programs sponsored by the applicants regarding bank action on an application, and the Small Business Administration ("SBA"). OKB also partic- collection and maintenance of regulatory data under state ipates in the Capital Access Program to provide loans to and federal fair lending laws. The fair lending plan also business owners who do not qualify for SBA loans. The provides for a compensation structure that does not disprogram offers loan portfolio insurance to participating courage loan officers from working with lower-income lenders, thereby allowing them to consider loans outside applicants, are unfamiliar with the lending process, or their conventional risk parameters. request smaller loans. At the most recent examination of OKB's CRA perfor- OKB also employs commercial lending procedures that mance, examiners cited several programs in which OKB are intended to provide consistent documentation requiresupported the development of affordable housing for LMI ments, underwriting, and portfolio management. Although households. Examiners noted that OKB, since its previous branch personnel and business banking specialists rely on examination, made a $5.9 million loan under the HUD OKB's business banking center in Grand Rapids to under- Section 220 program that assisted in providing 224 units of write loan requests up to $200,000, these officers may affordable housing in a low-income census tract in Chi- appeal any adverse decision to designated managers in the cago. OKB advanced $484,000 to the Community Invest- Chicago assessment area, who have ultimate approval aument Corporation under commitments totaling $8.7 million thority for all such loans. Businesses with credit needs of for the rehabilitation of multifamily residential housing $200,000 to $5 million are served by relationship managers projects in Chicago, and funded $162,000 of a $300,000 with loan approval authority up to specified lending limits. commitment to Neighborhood Services of Chicago, Inc., Relationship managers assigned to business banking centers that serve LMI census tracts appear to have lending authority comparable to that of other specialists. All appli- 17. The commenter alleged that OKB staff has directed African cations from businesses in the Chicago assessment area for Americans away from the Historic Chicago Bungalow Initiative loans of $200,000 to $5 million are underwritten, ap- ("Bungalow Initiative"), a city-sponsored program that encourages the restoration of bungalow-style homes in Chicago and provides proved, and closed in the assessment area. special opportunities and incentives to LMI families. Fifth Third noted that OKMC began to participate in the Bungalow Initiative in late 2000, and that data on borrowers are not available. 21. All other home equity loan applications are originated by OKB 18. The aggregate represents the cumulative lending to borrowers through its branches and by telephone at its Direct Banking Center in for all institutions that have reported small business lending data in Grand Rapids, Michigan. These applications, unlike those received by counties that are included, in whole or in part, in OKB's Chicago OKMC, are sent electronically to OKB's central underwriting departassessment area. Aggregate data for 2000 is not yet available. ment in Grand Rapids for underwriting. The central underwriting 19. In this context, "small business loans" means loans in amounts department also performs a second review when requested by the of less than $1 million. originating OKB branch. Senior officers in the bank's Chicago assess- 20. In this context, "loans to small businesses" means loans to ment area may approve home equity loan applications that are not businesses with gross annual revenues of $1 million or less. approved by underwriters in Grand Rapids. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 475 Loan applications for multifamily housing are originated NA, and OKB with all commitments made in connection by OKB branches as residential loans for structures with with the applications, including the commitments disone to four housing units and as commercial loans for cussed in this order. These commitments are deemed to be larger structures. If loan applications for larger multifamily conditions imposed in writing by the Board in connection housing cannot be approved as commercial loans, OKB with its findings and decision and, as such, may be enseeks interested third parties to fund them. forced in proceedings under applicable law. The bank merger proposal and branch purchase and C. Conclusion on Convenience and Needs assumption proposals involving OKB-NA, OKB, and FTBI may not be consummated before the fifteenth calendar day In reviewing the effects of the proposal on the convenience after the effective date of this order, and the proposal may and needs of the communities to be served, the Board has not be consummated later than three months after the carefully considered the entire record, including the infor- effective date of this order, unless such period is extended mation provided by the commenter; Home Mortgage Dis- for good cause by the Board or the Federal Reserve Bank closure Act (12 U.S.C. § 2801 et seq.) data and other data of Cleveland, acting pursuant to delegated authority. concerning the overall lending record of OKB, OKMC, By order of the Board of Governors, effective May 14, and other institutions in OKB's Chicago assessment area; 2001. evaluations of the CRA performance of OKB, OKB-NA, and FTBI; additional information provided by Fifth Third; Voting for this action: Chairman Greenspan, Vice Chairman Ferguand confidential supervisory information. Based on all the son, and Governors Kelley, Meyer, and Gramlich. facts of record and for the reasons discussed above, the Board concludes that considerations relating to the conve- ROBERT DEV. FRIERSON nience and needs factor, including the CRA performance Associate Secretary of the Board records of the relevant depository institutions, are consistent with approval of the proposal. Appendix A Conclusion Old Kent Bank, National Association Based on the foregoing and in light of all the facts of record, the Board has determined that the Bank Merger Act 1. Branches to Be Acquired from Fifth Third Bank, Indiapplications should be, and hereby are, approved.22 The ana: Board also has considered the factors it is required to consider when reviewing an application pursuant to section 26 East Elm, Albion, IL 9 of the Federal Reserve Act and finds those factors to be 1310 West Main Street, P.O. Box 610, Carmi, IL consistent with approval. The Board's approvals are specif- 124 West Main, P.O. Box 448, DuQuoin, IL ically conditioned on compliance by Fifth Third, OKB- 200 North 3rd Street, P.O. Box 507, Effingham, IL 2 North Vine, Harrisburg, IL 10 Seright Drive, Harrisburg, IL 22. The commenter requested that the Board hold a public meeting 1133 North Carbon, Marion, IL or hearing on the proposal. The Bank Merger Act does not require the 312 North Main Street, Marion, IL Board to hold a public meeting or hearing on an application. Under its rules, the Board may, in its discretion, hold a public meeting or 601 Market Street, P.O. Box 10, Mt. Carmel, IL hearing on an application to acquire a bank if a meeting or hearing is 117 North 10th Street, Mt. Vernon, IL necessary or appropriate to clarify factual issues related to the applica- 4201 Broadway, Mt. Vernon, IL tion and to provide an opportunity for testimony. 12 C.F.R. 262.25(d). 1420 North 8th Street, P.O. Box 380, Vandalia, IL The Board has considered carefully commenter's requests in light of 3 North Baldwin, Bargersville, IN all the facts of record. In the Board's view, commenter has had ample opportunity to submit his views, and his submitted written comments 1 Village Square, Batesville, IN have been considered carefully by the Board in acting on the proposal. 3415 West 3rd Street, Bloomington, IN The commenter's request fails to demonstrate why his written com- 3200 East 3rd Street, Bloomington, IN ments do not present his evidence adequately and fails to identify 530 East Kirkwood, Suite 103, Bloomington, IN disputed issues of fact that are material to the Board's decision that 200 South Washington, Bloomington, IN would be clarified by a public meeting or hearing. For these reasons, and based on all the facts of record, the Board has determined that a 637 East National, Brazil, IN public meeting or hearing is not required or warranted in this case. 905 North Green Street, Brownsburg, IN Accordingly, the request for a public meeting or hearing on the 411 Washington Street, Cannelton, IN proposal is denied. 99 East Carmel Road, Carmel, IN The commenter also requested that the Board postpone consideration of this case and conduct an investigation of OKB's lending 1217 Rangeline Road, Carmel, IN policies to African Americans from 1998 to the present. For the 3rd and Vine, P.O. Box 436, Clinton, IN reasons discussed above, the Board believes that the record in this 2117 25th Street, Columbus, IN case concerning the lending practices of OKB, including OKMC, 435 Washington Street, Columbus, IN OKB-NA, and FTBI, is sufficient to support Board consideration of the proposal at this time and that postponement of the Board's 531 Central Avenue, Connersville, IN consideration is not warranted. 206 West 30th Street, Connersville, IN Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

476 Federal Reserve Bulletin • July 2001 11201 East Upper Mt. Vernon Road, Evansville, IN 210 North 3rd Street, P.O. Box 1663, Lafayette, IN 7312 Eagles Crest Blvd., Evansville, IN 373 West Eads Parkway, Lawrenceburg, IN 3150 East Lynch Road, Evansville, IN 112 Franklin Street, Milan, IN 4550 1st Avenue, Evansville, IN 530 South Indiana Street, Mooresville, IN 415 Lincoln Avenue, Evansville, IN 112 East 3rd Street, P.O. Box 787, Mt. Vernon, IN 201 North Fulton, Evansville, IN 100 Commercial, Nashville, IN 1250 North Green River Road, Evansville, IN 8422 Bell Oaks Drive, Newburgh, IN 115 North Weinbach Avenue, Evansville, IN 502 Main, New Harmony, IN 20 Northwest 3rd Street, Evansville, IN 42 East Main Street, New Palestine, IN 661 South Green River Road, Evansville, IN 215 US 31 North, New Whiteland, IN 2300 Stringtown Road, Evansville, IN 7459 South Nineveh Road, Nineveh, IN 4700 University Drive, Evansville, IN 117 North Main Street, P.O. Box 97, Oakland City, IN 8600 University Drive, Evansville, IN 200 South Maple, Orleans, IN 4209 Washington Avenue, Evansville, IN 103 South Main Street, P.O. Box 68, Owensville, IN 2350 Washington Avenue, Evansville, IN 2101 Stanley Road, Plainfield, IN 7272 Fishers Crossing Drive, Fishers, IN 19 West Main Street, Poseyville, IN 811 East Mulberry, Ft. Branch, IN 101 North Hart Street, P.O. Box 321, Princeton, IN 307 South Grant Street, Fowler, IN 4000 Tulip Tree Drive, Princeton, IN 1160 North Main Street, Franklin, IN 2820 West Broadway, Princeton, IN 1-70 & State Route 9, Greenfield, IN US 41 North at Howard, Rockville, IN 1801 Greensburg Crossing, Greensburg, IN 25 West Christmas Blvd., P.O. Box 228, Santa Claus, IN 314 West Main Street, Greensburg, IN 110 North Harrison Street, Shelby ville, IN 1168 North Bluff Road, Greenwood, IN 201 West Washington, Sullivan, IN 106 North St. Road 135, Greenwood, IN 43 Highway 66 East, Tell City, IN 295 Village Lane, Greenwood, IN 601 Main Street, Tell City, IN 801 West Smith Valley Road, Greenwood, IN 1510 9th Street, Tell City, IN Highway 68 & 6th Avenue, P.O. Box 218, Haubstadt, IN 1451 Fort Harrison Road, Terre Haute, IN 5718 Crawfordsville Road, Indianapolis, IN 2511 Poplar Street, Terre Haute, IN 3805 East 82nd Street, Indianapolis, IN 350 Wabash Avenue, Terre Haute, IN 6071 East 82ndStreet, Indianapolis, IN 55 West Honey Creek Drive, Terre Haute, IN 2411 East 71st Street, Indianapolis, IN 2400 Hart Street, P.O. Box 397, Vincennes, IN 1036 East 62nd Street, Indianapolis, IN 103 South 6th Street, Vincennes, IN 6909 East 38thStreet, Indianapolis, IN 7260 Main Street, P.O. Box 165, Wadesville, IN 2020 East County Line Road, Indianapolis, IN 4900 Aubrey Lane, Wadesville, IN 4040 East Southport Road, Indianapolis, IN 500 Sagamore Pkwy, West IE, West Lafayette, IN 5325 East Thompson Road, Indianapolis, IN 201 South Main Street, Dawson Springs, KY 10450 East Washington Square, Indianapolis, IN 102 East Main Street, Earlington, KY 9365 East Washington Street, Indianapolis, IN 418 Newman Circle, Eddy ville, KY 9835 Fall Creek Road, Indianapolis, IN 300 2nd Street, Henderson, KY 7921 South US 31, Indianapolis, IN 2555 North US 41, Henderson, KY 5692 Georgetown Road, Indianapolis. IN 1555 South Green Street, Henderson, KY 8707 Hardigan Drive, Indianapolis, IN 2600 Zion Road, Henderson, KY 2802 Lafayette Road #27, Indianapolis, IN 540 Island Ford Road, Madisonville, KY 4940 Madison Avenue, Indianapolis, IN 182 Madison Square Avenue, Madisonville, KY 8301 Michigan Road, Indianapolis, IN 1080 North Main Street, Madisonville, KY 120 Monument Circle, Indianapolis, IN 149 South Main Street, P.O. Box K, Madisonville, KY 8549 North College Avenue, Indianapolis, IN 250 North Morgan, P.O. Box 349, Morganfield, KY 251 North Illinois, Indianapolis, IN 229 South Hopkinsville Road, Nortonville, KY 8120 Oaklandon Road, Indianapolis, IN 8150 Rockville Road, Indianapolis, IN 2. Branches to Be Acquired from Old Kent Bank: 4202 South East Street, Indianapolis, IN 4810 South Emerson, Indianapolis, IN 334 North 2nd Street, Decatur, IN 851 West 86th Street, Indianapolis, IN 101 North 2nd Street, Decatur, IN 5025 West 71st Street, Indianapolis, IN 132 East Berry Street, Ft. Wayne, IN 7365 West 10th Street, Indianapolis, IN 5611 Saint Joe Road, Ft. Wayne, IN 5615 West 38th Street, Indianapolis, IN 6128 Covington Road, Ft. Wayne, IN 305 Highway 231 South, Jasper, IN 720 East Dupont Road, Ft. Wayne, IN 3650 North Newton, Jasper, IN 6411 East State Road, Ft. Wayne, IN 5 Executive, Suite A, Lafayette, IN 1110 East Tillman Road, Ft. Wayne, IN Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 51 926 West State Blvd., Ft. Wayne, IN 301 North Van Rensselaer, Rensselaer, IN 1230 East Lincoln Highway, New Haven, IN 12912 Three Oaks, Sawyer, MI 1904 US 41, Schererville, IN 56 South Washington, Valparasio, IN Appendix B 808 Vale Park Road, Valparasio, IN 101 West Monroe Street, Bangor, MI Old Kent Bank 1295 East Napier Avenue, Benton Harbor, MI 9047 US 31 South, Berrien Springs, MI 2384 84th Street SW, Byron Center, MI 1. Branches to Be Acquired from Old Kent Bank, National 6553 Paw Paw Avenue, Coloma, MI Association 6720 Red Arrow Highway, Coloma, MI 675 68th Street SW, Grand Rapids, MI A. Original Branches of Old Kent Bank, National Associa- 3320 Alpine NW, Grand Rapids, MI tion: 2609 Breton Avenue, Grand Rapids, MI 6750 Cascade Road, Grand Rapids, MI 10 South Broad Street, Hillsdale, MI 190 Monroe Avenue NW, Grand Rapids, MI 851 Old Street, Jonesville, MI 4495 Wilson Avenue, Grandville, MI 4672 Pine Street, Hamilton, MI B. Original Branches of Fifth Third Bank, Indiana: 424 State Street, Hart, MI 392 136th Avenue, Holland, MI 1701 West Gulf Road, Rolling Meadows, IL 245 Central Avenue, Holland, MI 302 Broadway, Chesterton, IN 10 East 9th Street, Holland, MI 310 East Joliet Street, Crown Point, IN 1000 South Washington Avenue, Holland, MI 101 Main Street, Culver, IN 2855 Port Sheldon Street, Hudsonville, MI 128 Halleck Street, Demotte, IN 600 Baldwin Drive, Jenison, MI 37 Joliet, Dyer, IN 5300 Kalamazoo Avenue, Kentwood, MI 518 South Lake Street, Gary, IN 621 Dykstra Road, Muskegon, MI 4511 West 5th Street, Gary, IN 880 1st Street, Muskegon, MI 12455 Adams Road, Granger, IN 3145 Henry Street, Muskegon, MI 2203 45th Street, Highland, IN 877 Terrace Street, Muskegon, MI 5100 Broadway, Highland, IN 1 West Buffalo Street, New Buffalo, MI 701 West Old Ridge Road, Hobart, IN 1002 East Main Street, Niles, MI 1402 South Heaton Street, Knox, IN 155 Marcell Drive, N.E., Rockford, MI 3400 Central Avenue, Lake Station, IN 830 Pleasant Street, St. Joseph, MI 801 Monroe Street, Laporte, IN 2915 South State Street, St. Joseph, MI 6760 Broadway, Merrillville, IN 5639 Cleveland Avenue, Stevensville, MI 8590 Broadway, Merrillville, IN 1788 West John Beers, Stevensville, MI 126 East 4th Street, Michigan City, IN 6810 West US 12, Three Oaks, MI 3710 South Franklin Street, Michigan City, IN 332 North Main Street, Watervliet, MI 310 Lane Street, North Judson, IN 211 South Mears Avenue, Whitehall, MI 6031 Central Avenue, Portage, IN 146 East Main Street, Zeeland, MI 6050 US Highway 6, Portage, IN 523 West Main Street, Zeeland, MI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

478 Federal Reserve Bulletin • July 2001 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Applicant(s) Bank(s) Effective Date First Financial Bankshares, Inc. City Bancshares, Inc., May 25, 2001 Abilene, Texas Mineral Wells, Texas City Delaware Financial Corporation, Dover, Delaware City National Bank of Mineral Wells, Mineral Wells, Texas Fulton Financial Corporation, Drovers Bancshares Corporation, May 16, 2001 Lancaster, Pennsylvania York, Pennsylvania Section 4 Applicant(s) Nonbanking Activity/Company Effective Date The Northern Trust Corporation, Hub Co., LLC, May 15,2001 Chicago, Illinois New York, New York 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 Ambanc Holding Company, Inc., American Bank & Trust Company, Inc., St. Louis April 26, 2001 Bowling Green, Kentucky Bowling Green, Kentucky Ameriana Bancorp, Ameriana Bank and Trust of Indiana, Chicago May 21, 2001 New Castle, Indiana New Castle, Indiana American National Bank of Beaver Ambanc Financial Services, Inc., Chicago May 2, 2001 Dam Employee Stock Ownership Beaver Dam, Wisconsin Trust, American National Bank of Beaver Beaver Dam, Wisconsin Dam, Beaver Dam, Wisconsin Bank of Helenville, Helenville, Wisconsin AmericaUnited Bancorp, Inc. National Bancorp, Inc., Chicago May 4, 2001 Schaumburg, Illinois Sycamore, Illinois American National Bank of DeKalb County, Sycamore, Illinois BNCCorp, Inc., BNC National Bank of Arizona, Minneapolis May 10, 2001 Bismarck, North Dakota Tempe, Arizona Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 479 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Capital Bancorp, Inc., Capital Bank & Trust Company, Atlanta May 23, 2001 Nashville, Tennessee Nashville, Tennessee C.C. Bancorp, Inc., Cattaraugus County Bank, New York May 7, 2001 Little Valley, New York Little Valley, New York Centennial Bank Holdings, Inc. Berthoud Bancorp, Inc., Kansas City May 3, 2001 Eaton, Colorado Berthoud, Colorado Berthoud National Bank, Berthoud, Colorado Central Ohio Bancorp, First National Bank, Cleveland May 8, 2001 Waverly, Ohio Waverly, Ohio Farmers Financial Corporation, Farmers Bank of Milton, St. Louis May 9, 2001 Milton, Kentucky Milton, Kentucky First Muskogee Financial First National Bank of Muskogee, Kansas City May 23, 2001 Corporation, Muskogee, Oklahoma Muskogee, Oklahoma First National Bank Holding First State Bancorp of the Rockies, Kansas City May 22, 2001 Company, Fort Collins, Colorado Longmont, Colorado Foresight Financial Group, Inc., Lena Bancorp, Inc., Chicago May 17, 2001 Rockford, Illinois Lena, Illinois Lena State Bank, Lena, Illinois Georgia Bancshares, Inc., The Bank of Georgia, Atlanta May 18, 2001 Fayetteville, Georgia Fayetteville, Georgia Gideon Management L.L.C. General Partner of Gideon Enterprises Kansas City May 18, 2001 Topeka, Kansas L.P, Topeka, Kansas Heartland Bancorp, Inc., Chenoa Corporation, Chicago May 8, 2001 Bloomington, Illinois Chenoa, Illinois Bank of Chenoa, Chenoa, Illinois Henderson Citizens Bancshares, Rusk County Bancshares, Inc., Dallas May 21, 2001 Inc., Henderson, Texas Henderson, Texas Rusk Delaware Financial Corporation, Henderson Citizens Delaware Dover, Delaware Bancshares, Inc., Peoples State Bank, Dover, Delaware Henderson, Texas Industry Bancshares, Inc., Coupland Bancshares, Inc., Dallas May 17, 2001 Industry, Texas Coupland, Texas Industry Holdings, Inc., Wilmington, Delaware JBS, Inc., Edgeley Bancorporation, Inc., Minneapolis May 2, 2001 Kulm, North Dakota Edgeley, North Dakota LSB Corporation, Lawrence Savings Bank, Boston May 18, 2001 North Andover, Massachusetts North Andover, Massachusetts Mahaska Investment Company Mahaska Investment Company, Chicago May 16, 2001 ESOP, Oskaloosa, Iowa Oskaloosa, Iowa Marshall & Ilsley Corporation, M&I Bank of Mayville, Chicago May 2, 2001 Milwaukee, Wisconsin Mayville, Wisconsin Milstar Financial, Inc., First Western Bank, Atlanta May 22, 2001 Miami Beach, Florida Cooper City, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

480 Federal Reserve Bulletin • July 2001 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date North Cascades Bancshares, Inc. bankcda, San Francisco May 2, 2001 Chelan, Washington Coeur d'Alene, Idaho Persons Banking Company, The Farmers Bank, Atlanta May 11, 2001 Lithonia, Georgia Forsyth, Georgia Quinlan Bancshares, Inc., Lone Oak Financial Corporation, Dallas May 24, 2001 Quinlan, Texas Lone Oak, Texas Lone Oak State Bank, Lone Oak, Texas Rockhold Bancorp, La Plata Bancshares, Inc., St. Louis May 7, 2001 Kirksville, Missouri La Plata, Missouri TFC Holding Company, InterBusiness Bank, N.A., San Francisco April 30, 2001 Los Angeles, California Los Angeles, California United Security Bancshares, United Security Bank, San Francisco May 4, 2001 Fresno, California Fresno, California Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Community Financial Services, Inc. CRE Valuation Group, Inc., Atlanta May 10, 2001 Atlanta, Georgia Atlanta, Georgia National Bancshares, Inc., FirstCity Mortgage Corp., Chicago May 4, 2001 Bettendorf, Iowa Bettendorf, Iowa 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 1st Source Bank, Old Kent Bank, Chicago May 18, 2001 South Bend, Indiana Grand Rapids, Michigan Citizens First State Bank of Walnut, Peoples National Bank of Kewanee, Chicago May 8, 2001 Walnut, Illinois Kewanee, Illinois AMCORE Bank, N.A., Rockford, Illinois M&I Marshall & Ilsley Bank, Harris Trust Bank of Arizona, Chicago May 3, 2001 Milwaukee, Wisconsin Scottsdale, Arizona North Valley Bank, Malta National Bank, Cleveland May 1, 2001 Zanesville, Ohio Malta, Ohio Pioneer Bank, Citizens State Bank of St. James, Minneapolis May 3, 2001 Mapleton, Minnesota St. James, Minnesota Security State Bank of Edgeley, Kulm State Bank, Minneapolis May 2, 2001 Edgeley, North Dakota Kulm, North Dakota Valley Bank of Helena, Western Security Bank, Minneapolis May 4, 2001 Helena, Montana Missoula, Montana Valley Independent Bank, Bank of Stockdale, F.S.B., San Francisco May 9, 2001 El Centro, California Bakersfield, California Valley Independent Bank, King Rivers State Bank, San Francisco May 9, 2001 El Centro, California Reedley, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 481 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the agencies' motion for summary judgment and dismissed the Federal Reserve Banks in which the Board of Governors is not action. named a party. Sedgwick v. Board of Governors, No. 00-16525 (9th Cir., filed August 7, 2000). Appeal of district court dismissal of action Artis v. Greenspan, No. 01-CV-0400(ESG) (D.D.C., complaint under Federal Tort Claims Act alleging violation of bank filed February 22, 2001. Employment discrimination action. supervision requirements. On May 31, 2001, the court af- Dime Bancorp, Inc. v. Board of Governors, No. 00-4249 firmed the district court's dismissal. (2d Cir., filed December 11, 2000). Petition for review of a Individual Reference Services Group, Inc., v. Board of Gover- Board order dated September 27, 2000, approving the appli- nors, et al, No. 01-5175 (D.C. Cir., filed May 25, 2001). cations of North Fork Corporation, Inc., Melville, Appeal of district court order entered April 30, 2001, up- New York, to acquire control of Dime Bancorp, Inc. and to holding an interagency rule regarding Privacy of Consumer thereby acquire its wholly owned subsidiary, The Dime Finance Information. Savings Bank of New York, FSB, both of New York, Reed Elsevier Inc. v. Board of Governors, No. 00-1289 (D.C. New York. Cir., filed June 30, 2000). Petition for review of interagency Nelson v. Greenspan, No. 99-215(EGS) (D.D.C., amended rule regarding Privacy of Consumer Financial Information. complaint filed December 8, 2000). Employment discrimi- Bettersworth v. Board of Governors, No. 00-50262 (5th Cir., nation action. filed April 14, 2000). Appeal of district court's dismissal of Howe v. Bank for International Settlements, No. 00CV12485 Privacy Act claims. On April 12, 2001, the court denied the RCL (D. Mass., filed December 7, 2000). Action seeking petition for review. damages in connection with gold market activities and the Albrecht v. Board of Governors, No. 00-CV-317 (CKK) repurchase of privately-owned shares of the Bank for Inter- (D.D.C., filed February 18, 2000). Action challenging the national Settlements. method of funding of the retirement plan for certain Board Barnes v. Reno, No. 1:00CV02900 (D.D.C., filed December 4, employees. On March 30, 2001, the district court granted in 2000). Civil rights action. part and denied in part the Board's motion to dismiss. El Bey v. United States, No. 00-5293 (D.C. Cir., filed Guerrero v. United States, No. CV-F-99-6771(OWW) (E.D. August 31, 2000). Appeal from district court order Cal., filed November 29, 1999). Prisoner suit. dismissing pro se action as lacking arguable basis in law. Artis v. Greenspan, No. 1:99CV02073 (EGS) (D.D.C., filed On January 11, 2001, the court dismissed the appeal. August 3, 1999). Employment discrimination action. Trans Union LLC v. Board of Governors, et al, No. 00-CV- Fraternal Order of Police v. Board of Governors, 2087(ESH) (D.D.C., filed August 30, 2000). Action under No. 1:98CV03116 (WBB)(D.D.C„ filed December 22, Administrative Procedure Act challenging a portion of inter- 1998). Declaratory judgment action challenging Board laagency rule regarding Privacy of Consumer Financial Infor- bor practices. On February 26, 1999, the Board filed a mation. On April 30, 2001, the court granted the defendant motion to dismiss the action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

482 Domestic Open Market Operations during 2000 This report was adapted from one presented to the new procedures included the adoption of new lan- Federal Open Market Committee by Peter R. Fisher, guage to describe the Committee's judgment about Executive Vice President of the Federal Reserve Bank the economic outlook and were designed to enhance of New York. Spence Hilton was primarily respon- communication to the public, but they had no implisible for the preparation of this report, with the cations for the conduct of monetary operations assistance of many others in the Markets Group at between meetings. the Federal Reserve Bank of New York. Overview of Operating Procedures and IMPLEMENTATION OF MONETARY POLICY Practices to Influence the Federal Funds Rate IN 2000 The Desk uses open market operations to align the Directives of the Federal Open Market supply of balances held by depository institutions Committee at the Federal Reserve—or Fed balances—with the demand for holding balances. The average level of In 2000, the directives issued by the Federal Open balances that banks demand over two-week reserve Market Committee (FOMC) instructed the Trading maintenance periods is in large measure determined Desk at the Federal Reserve Bank of New York to by their requirements for reserve balances and clearfoster conditions in the market for reserves consistent ing balances, with only a relatively small level of with maintaining the federal funds rate at an average additional, or excess, balances typically demanded.2 around a specified rate. This indicated rate is com- The ability of depository institutions to average their monly referred to as the federal funds rate target. The holdings of balances at the Federal Reserve over FOMC raised the federal funds target 1 percentage two-week periods to meet their requirements gives point in three steps over the year, to a level of them flexibility in managing their accounts from day 6V2 percent (table 1). Each rate change was decided to day, which helps limit the volatility in rates that at a scheduled meeting. On each of these three occa- can develop when the Desk misestimates either the sions, the Board of Governors approved an equal- supply of or demand for balances. Nonetheless, the sized increase in the discount rate. funds rate will firm if the level of balances falls so The FOMC implemented modifications to its dis- low that some banks have difficulty finding sufficient closure procedures at its February meeting.1 These funds to cover late-day deficits in their Federal Reserve accounts, and the rate will soften if balances are so high that some banks risk ending a period 1. A description of the changes in disclosure procedures can holding unusable excess reserve balances. be found at www.federalreserve.gov/boarddocs/press/General/2000/ Each morning, the Desk considers whether open 20000119. The FOMC adopted these modifications at its December market operations are needed based on estimates of 1999 meeting. the supply of and demand for balances and taking into account possible forecast errors and minimal 1. Changes in the federal funds rate specified in directives levels of aggregate Fed balances that in practice are of the Federal Open Market Committee needed to facilitate settlement of wholesale financial Percent payments by banks. Any operation designed to alter Expected balances that same day is typically arranged shortly Date of change federal funds Discount rate rate November 16, 1999 5Vi 5 February 2, 2000 53/4 51/4 2. Levels of excess balances demanded do not appear to be very sensitive to the level of total requirements, which change from period March 21, 2000 6 5'/z to period. For this reason, Desk operations are usually formulated to May 16, 2000 6'/2 6 attain certain objectives for the level of excess balances rather than for a particular level of total balances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

483 afterward. When the funds rate is near target, the were likely to limit the System's ability in the future Desk aims to supply a level of Fed balances that to continue to add substantially to holdings, even on a equilibrates the expected cost that banks associate temporary basis, without generating undesirable marwith borrowing at the discount window to avoid ket repercussions. To implement this decision, the ending a day overdrawn in their Fed account (or FOMC voted to extend temporarily its suspension of finishing a period short of their requirements) with several provisions of its "Guidelines for the Conduct the expected cost of holding unusable excess bal- of System Operations in Federal Agency Issues," ances. When the funds rate deviates from the target, which impose restrictions on transactions in federal the Desk adjusts the level of Fed balances it aims to agency securities (for the text of the guidelines, supply in the appropriate direction. see appendix B). At the same meeting, the FOMC endorsed a proposal to undertake a broad-gauge study to consider alternative asset classes and selection New Developments in 2000 criteria that could be appropriate for the System Open Market Account (SOMA), with particular attention to Two institutional initiatives adopted in 1999 to facili- alternatives to the historical reliance on net additions tate the conduct of monetary operations around the to outright holdings of Treasury securities as the sole century date change (CDC) were allowed to lapse, means of effectuating the upward trend in the asset and the FOMC extended two provisions that it had side of the System's balance sheet. originally scheduled to expire on April 30, 2000. The FOMC's Authorization for Domestic Open Market On July 5, the Desk announced several changes to Operations that was in place at the end of the year the way it manages the System's portfolio of Treaembodies some of these changes. (See appendix A sury securities.3 The changes are intended to help it for the text of the authorization.) achieve its objectives for a relatively short and liquid portfolio without distorting the yield curve or impair- • The Century Date Change Special Liquidity ing the liquidity of the market amid recent and antici- Facility (SLF) established by the Federal Reserve pated changes in the quantity and composition of Board for lending to depository institutions from marketable Treasury securities. The Desk had already October 1, 1999, through April 7, 2000, ended its begun to cap System holdings of Treasury bills at operations as scheduled. There were no instances of 35 percent of any given issue, both in terms of what SLF borrowing by large institutions after January 6, would be rolled over at each auction and in terms of although small institutions continued to use the acquisitions in the secondary market. It announced facility. that it would also cap SOMA holdings of Treasury • The FOMC's temporary authority for the Desk coupon issues in a similar manner on a graduated to sell options on repurchase agreements (RPs), scale from 25 percent for two-year notes down to reverse repurchase agreements, and matched sale- 15 percent for securities with maturities of ten years purchase transactions (MSPs) for exercise no later or more. It also affirmed its policy of limiting SOMA than January 2000 expired. holdings of newly issued securities, as it has no • At its March meeting, the Committee made per- particular portfolio need for some of the liquidmanent the Desk's authority to use reverse RPs in ity characteristics that can add to the value of these addition to MSPs to absorb reserves on a temporary issues in the market. These procedures are expected basis. The Desk has not yet arranged any reverse to remain in place while the Federal Reserve under- RPs, and their regular use is not expected until the takes its review of alternatives for open market opera- Desk's new trading system becomes operational. tions. The public announcement of these changes was • At that same meeting, the FOMC also extended intended to help market participants anticipate Desk temporarily through its first regularly scheduled operations in the face of changes in the quantity and meeting in 2001 its authorization for an expanded composition of outstanding Treasury debt. These pool of collateral to be accepted on the Desk's Sys- changes in the management of the SOMA had protem RPs. The principal effect was to continue the found implications for the structure of monetary inclusion of pass-through mortgage securities of the Government National Mortgage Association, Freddie Mac, and Fannie Mae, and of stripped securities of government agencies. This extension was made in 3. A detailed description of these changes and their motivation light of anticipated paydowns of marketable federal can be found at www.ny.frb.org/pihome/news/announce/2000/ an000705.html. These changes were developed with the approval of debt associated with projected budget surpluses that the FOMC and in consultation with the Department of the Treasury. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

484 Federal Reserve Bulletin • July 2001 operations in 2000—redemptions at auctions, out- cash plus required clearing balances. As-of accountright purchases in the secondary market and from ing adjustments also affect the level of balances that foreign accounts, and indirectly even temporary banks must hold to meet their requirements, so the operations—which are described in the section Desk subtracts their value when calculating the true "Summary of Open Market Operations in 2000." In level of Fed balances that banks are required to hold a related step, each Thursday afternoon the Federal in a maintenance period.5 Excess reserve balances Reserve Bank of New York (FRBNY) began to pub- can be measured as the difference between the aggrelish on its web site the complete details of the gate supply of balances at the Federal Reserve and SOMA'S holdings as of the close of business each total required balances.6 Wednesday.4 Early in 2000, total required balances rebounded from the depressed levels around the CDC and then were fairly steady over the year after having been on FACTORS AFFECTING REQUIRED DEMANDS a declining trend through much of the second half of the 1990s (chart 1). Movements in total required FOR AND THE SUPPLY OF balances in recent years have largely paralleled FEDERAL RESERVE BALANCES changes in the level of required reserve balances— Total Required Demands for Federal Reserve required reserves less applied vault cash—as required Balances clearing balances and average levels of as-of adjustments have not shown any trend. The need for the Desk to create or extinguish reserve balances through use of open market operations is heavily influenced by the levels of Fed balances that 5. Required clearing balances and, under lagged reserve accounting depository institutions are required to hold each two- rules in effect since August 1998, the levels of required reserves and applied vault cash are determined before the start of each maintenance week maintenance period relative to the supply of period, which facilitates estimation of the demand for Fed balances. balances forthcoming from autonomous factors out- But as-of adjustments are not all known when a period starts. When side the Desk's control. Total required balances are large as-of adjustments are applied or reported to the Desk only very late in a period, it affords the Desk little or no opportunity to adjust its the Fed balances that banks are required by the operations. Federal Reserve to hold, on average, within a two- 6. In this report, required clearing balances, applied vault cash, and week maintenance period. Total required balances are as-of adjustments are presented as factors that affect banks' demands for Fed balances. In published reserves data, applied vault cash and calculated as required reserves minus applied vault as-of adjustments are treated as sources of supply of nonborrowed reserves, and required clearing balances are treated as a negative source of nonborrowed reserves. See Federal Reserve weekly statistical release H.3 "Aggregate Reserves of Depository Insti- 4. This information may be found at www.ny.frb.org/pihome/ tutions and the Monetary Base" for these data (available at statistics/soma, shtml. www.federalreserve.gov/releases/H3/). 1. Contribution of required reserve balances, required clearing balances, and as-of adjustments to total required balances Billions of dollars NOTE. The data are maintenance-period averages through January 10, 2001. 1. Period-average values; negative adjustments increase total required balances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 2000 485 2. Vault cash: Total, applied, and surplus Billions of dollars 1998 1999 2000 NOTE. The data are maintenance-period averages through January 10, 2001. The huge buildup in the level of total vault cash related effects on the levels of vault cash and required ahead of the CDC caused many banks to become reserve balances had largely unwound. "nonbound," that is, to meet their reserve require- Declines in required reserve balances over the past ments entirely with vault cash, and much of the vault five years have been largely the result of programs by cash held during this time was at nonbound institu- depository institutions to "sweep" reservable liabilitions (chart 2).7 Still, a portion of the CDC-related ties into nonreservable liabilities, which resulted in a increase in total vault cash was used for meeting significant decrease in required reserves. Sweep proreserve requirements, which both temporarily grams during 2000 expanded about as much as they increased the level of applied vault cash by a modest did the preceding year, but by much less than in the amount and briefly caused required reserve balances middle of the 1990s, when their growth was fastest.8 to dip. By the end of February 2000, these CDC- Much of the decline in the level of required reserves 7. The values for total vault cash in chart 2 are those associated 8. In the twelve months ending in December 2000, the estimated with the level of applied vault cash in the indicated maintenance amount of deposits initially swept by banks expanded $44 billion; the period. Thus, these vault cash levels are the lagged quantities held in increase over the preceding twelve-month period was $50 billion. vaults of all depository institutions in the computation period thirty Sweeps expanded $116 billion over the twelve months ending Decemdays preceding the indicated maintenance period. ber 1996—the largest change over any calendar year. 3. Required reserve balances: Required reserves less applied vault cash Billions of dollars 1998 1999 2000 NOTE. The data are maintenance-period averages through January 10, 2001. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

486 Federal Reserve Bulletin • July 2001 4. Effect of all autonomous factors and currency in circulation on Fed balances Billions of dollars NOTE. The data are maintenance-period averages through January 10, 2001. that took place in 2000 apparently occurred at non- Apart from any CDC effects, the public's demand bound institutions because it was matched by a simi- for currency appears to have risen at a much slower lar decline in applied vault cash, leaving the level of pace in 2000 than in recent years. Beginning in April, required reserve balances fairly flat over the year after most CDC effects appeared to have worn off, once the CDC period had passed (chart 3). As the the (seasonally adjusted) currency component of Ml, number of banks that are nonbound has grown, move- which excludes vault cash, rose at a pace of about ments in required reserves and applied vault cash 3 percent—consistent with an annual increase of from one period to the next have become increasingly about $15 billion in the level of currency (chart 5). correlated. This pace was well below the average rate of growth of 7V2 percent for Ml currency over the five-year period preceding 1999. Although the level of currency at the end of 2000 was consistent with pre- Autonomous Factors Affecting the Supply of CDC growth trajectories extrapolated from the end of Fed Balances 1998, there was no indication that the rate of growth was returning to its previous higher level. The levels of three factors—currency in circulation, the Treasury's balance at the Federal Reserve, and the foreign RP pool—had increased dramatically in advance of the CDC and had reduced supplies of Fed Changes in Other Factors balances. These factors quickly reversed themselves early in 2000 (chart 4); thereafter, factor movements The Treasury balance and foreign RP pool quickly over the year had a relatively small net effect on reversed their CDC-related increases in early January balances until late in the year. Year-end levels of and added substantially to supply at that time. But factors, total SOMA holdings, and outstanding RPs movements in these factors thereafter had little net are shown in table 2. effect on balances over the year. The ongoing demonetization of Special Drawing Rights (SDR) certificates, discussed in last year's report, drained $4 bil- Changes in Currency in Circulation lion from the supply of Fed balances.9 At the same time, holdings of foreign currency rose about $1 billion, largely as a consequence of a September 22 After reaching its peak level on a period-average currency market intervention that added slightly to basis in early January, currency in circulation balances. On May 10, the transfer of $3.7 billion of declined abruptly by $46 billion over the following two maintenance periods. Most of the CDC run-off appears to have been completed by mid-February, although currency continued to fall slightly for a few 9. See Spence Hilton, "Domestic Open Market Operations during more periods. 1999," Federal Reserve Bulletin, vol. 86 (July 2000), pp. 511-37. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 2000 487 2. Contributions of autonomous factors, System Open Market Account (SOMA) holdings, and repurchase agreements (RPs) to Federal Reserve balances Billions of dollars; sign reflects effect on supply of Fed balances Daily levels Average levels for periods ending IItteemm Dec. 30, Dec. 29, Dec. 27, Year-end 1999 Year-end 2000 1998 1999 2000 Key factors adding to balances Float .4 .8 2.5 .7 2.0 SDRs 6.2 2.2 9.2 6.2 2.3 Foreign currency 14.4 15.4 17.4 14.4 15.4 Key factors draining balances Currency in circulation -628.4 -593.3 -514.1 -610.9 -586.1 Treasury balance -28.4 -5.1 -6.3 -9.2 -6.2 Foreign RP pool -39.2 -21.1 -19.4 -24.2 -17.0 Net effect of all factors -634.2 -557.4 -472.9 -582.8 -546.9 Total SOMA holdings 517.3 532.9 473.4 516.3 532.3 Treasury bills 215.7 199.8 Coupon securities Less than 2 years 121.1 142.8 2-5 years 69.7 72.2 5-10 years 53.1 51.2 More than 10 years 51.9 59.3 Treasury Inflation Indexed Securities (TIIS) 5.7 7.4 Federal agency securities .2 .1 Long-term RPs (more than 14 days) 72.4 23.0 11.1 54.4 22.2 Short-term RPs less matched sale-purchase transactions (MSPs) 68.3 20.4 4.1 24.4 6.2 Discount window loans .2 .1 .2 .4 .3 Net effect of all Federal Reserve operations 658.2 576.4 488.8 595.5 560.9 Fed balances 24.0 19.0 15.9 12.7 14.0 MEMO: Total required balances 11.7 12.9 14.2 11.4 12.5 Excess balances 12.3 6.2 1.7 1.3 1.3 NOTE. SOMA includes bills sold under MSPs to foreign accounts and in the ... Not applicable, market. Amounts for SOMA holdings are par values; differences from monetary amounts are captured in other autonomous factors. TIIS amounts include the inflation compensation component. the Federal Reserve surplus to the Treasury increased Volatility and Predictability of Key Factors balances by an equivalent amount. The surplus was Affecting Supply largely restored in several steps over the fourth quarter of the year, however; thus the original effect on The volatility of currency, as measured by the aver- Fed balances was reversed. age size of absolute daily changes in levels, was 5. Currency component of Ml (excluding vault cash), seasonally adjusted Billions of dollars NOTE. The data are monthly averages through December 2000. 1. Based on five-year average growth rate of IVi percent from 1994 to 1998. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

488 Federal Reserve Bulletin • July 2001 3. Daily changes and forecast misses in key determinants of reserve balance supply: Average and maximum of absolute values, 1998-2000 Millions of dollars 1998 1999 2000 Feb.-Dec. 2000 FFaaccttoorrss aaffffeeccttiinngg ssuuppppllyy of reserve balances Average Maximum Average Maximum Average Maximum Average Maximum Daily change Currency in circulation 709 2,788 893 5,379 931 8,087 760 2,628 Treasury balance 1,413 22,571 887 7,446 1,404 23,434 1,272 23,434 Foreign RP pool 500 6,193 572 6,049 467 4,015 418 3,255 Float 791 5,449 693 6,217 839 9,677 790 5,824 Net value1 1,751 23,727 1,925 17,628 2,006 23,896 1,671 23,896 Daily forecast miss Currency in circulation 217 999 234 1,361 229 1,648 222 1,277 Treasury balance 620 3,407 608 3,284 617 6,866 602 6,866 Foreign RP pool 150 935 224 1,817 131 976 128 976 Float 383 2,386 393 4,274 382 2,742 368 1,854 Net value1 744 3,664 818 5,443 787 7,218 760 7,218 NOTE. Forecast misses are based on estimates by the staff of the Federal 1. Reflects offsetting movements and forecast misses of the aggregate of the Reserve Bank of New York. four factors listed. generally close to (and even a bit higher than) the effect on the structure of open market operations in elevated level of 1999 (table 3). But excluding Janu- 2000, although they did not influence the levels of ary, the average daily changes were much lower and Fed balances that the Desk aimed to supply on any about the same as in 1998. In general, the volatility of particular day. These changes significantly influenced key factors from February through December was on the mix of redemptions, outright purchases, longa par with 1998, before any CDC influences. Average term RPs, and short-term temporary operations daily forecast misses for most key factors have been employed by the Desk. fairly steady for the past two years and did not appear to have been significantly higher around the CDC period, although projections of the foreign RP pool Permanent Activity Affecting the System Open have shown some improvement. Market Account SUMMARY OF OPEN MARKET OPERATIONS Net Expansion of the SOMA IN 2000 In 2000, the portfolio of domestic securities in the The changes in the management of the System Open SOMA expanded $15.6 billion, the smallest increase Market Account announced in July had a profound since 1996, to end the year at $532.9 billion 6. Permanent SOMA portfolio and effect of factors on need for balances Billions of dollars 1998 1999 2000 NOTE. The data are maintenance-period averages through January 10, 2001. 1. Positive numbers indicate a drain on balances (values match the absolute values from chart 4). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 2000 489 (chart 6).10 As in past years, the Desk sought to meet announced in July.11 Earlier in the year, the Desk long-run reserve needs to the extent possible through began limiting its auction participation in bills.12 net growth of the SOMA. However, over the past Previously, the FRBNY routinely rolled over all three years, the net drain to Fed balances arising from maturing holdings into new issues. At auctions of changes in autonomous factors has slightly outpaced Treasury Inflation Indexed Securities (TIIS), the Desk the growth in the SOMA, as the Desk has come to continued to adhere to its practice of tendering for no use long-term RPs to meet a portion of permanent more than 5 percent of new issues, though by midneeds. The expansion of the SOMA in 2000 was not year there were no maturing issues to exchange for constrained by the decline in outstanding Treasury TIIS. On dates when more than one Treasury coupon debt or by the changes in the management of the auction settled, maturing issues were exchanged for SOMA adopted in July. The timing of the net expan- newly auctioned issues, so as to equalize the remainsion of the SOMA in 2000 coincided less than in ing percentages of the total outstanding amounts that many earlier years with the periods of peak seasonal were purchasable under the new portfolio guidelines. currency growth in early summer and ahead of the Previously, the Desk allocated maturing holdings in year-end. A greater portion of the growing reserve proportion to the total amounts outstanding of the deficiencies during these times was met with tempo- auctioned issues. rary operations. Remaining within the per-issue percentage caps while Treasury cut back on auction sizes forced redemptions of $28.4 billion of maturing SOMA Auction Participation and Redemptions holdings in 2000 (chart 7). Given the existing concentration of SOMA holdings in bills and the size of Under its new management procedures, the FRBNY began to place at coupon auctions add-on bids for the SOMA that were equal to the lesser of (1) the matur- 11. Foreign add-ons, which are not known at the time the Desk ing holdings of the issue date of a new security or determines its level of participation at auctions, were assumed to be (2) the amount that would bring SOMA holdings as a zero in this calculation. percentage of the issue to the percentage guidelines 12. At the beginning of 2000, SOMA holdings of bills were capped at 40 percent of any one issue both in terms of what was rolled into holdings at each auction and in terms of acquisitions in the secondary market. This percentage was reduced to 37.5 percent in May and to 10. Unless otherwise indicated, changes and levels of the SOMA 35 percent in early June, ahead of the July 5 announcement. The Desk include the inflation compensation component of inflation-indexed maintained its long-standing practice of allocating new bill holdings securities, which at the end of the year totaled about $500 million, and acquired at the weekly auctions in proportion to their outstanding federal agency security holdings. All figures are par values. amounts. 7. Cumulative redemptions, purchases, and net change in SOMA holdings of Treasury issues in 2000 Billions of dollars NOTE. The data are daily levels. Net change in SOMA excludes agency redemptions and TIIS inflation compensation adjustments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

490 Federal Reserve Bulletin • July 2001 cutbacks in issuance in recent years, redemptions ties of less than two years than it did of securities were concentrated in that sector despite the higher with remaining maturities between ten and thirty per-issue caps (chart 8). As it has done since mid- years. In doing so, it applied the portfolio guideline 1997, the Desk redeemed maturing holdings of fed- percentages announced in July to determine the eral agency securities, $51 million altogether, which amounts that the SOMA was ultimately prepared to left $130 million of agency holdings in the SOMA at hold of off-the-run securities in different maturity the end of the year. ranges. Holdings of short-term coupon securities increased the most over the year (table 2). The Desk included Treasury bills in its open mar- Outright Purchases and Operational Techniques ket purchases for the first time in two years, in response to its revised portfolio guidelines and to In total, the Desk bought $43.6 billion (par value) of staunch some of the decline caused by heavy redempsecurities in 2000, only slightly below the previous tions in this sector. Three operations totaling $6.2 bilyear's record purchases, although the resulting net lion were restricted to purchases of Treasury bills. In increase in the SOMA was much smaller because of August, the Desk also began to purchase directly the redemption activity. Purchases were timed in part from foreign accounts, putting in place procedures to prevent redemption activity from significantly allowing it to purchase up to $250 million for samereducing supplies of Fed balances. There were no day settlement on any given day if orders were availsales of securities. able and consistent with reserve needs. Altogether, In recent years, the Desk sought to spread its it bought $2.5 billion in Treasury bills from foreign purchases evenly across the entire range of outstand- central banks for the SOMA. Still, gross purchases ing marketable coupon securities, while seeking to were heavily concentrated in the coupon sector, and avoid recently issued securities by purchasing only bill holdings contracted over the year, in line with the those securities for which at least two subsequent Treasury's general issuance pattern. auctions of new issues with similar original maturi- The Desk continued to segment its market purties had occurred. The average maturity of the chases of nominal Treasury coupon issues into sepa- SOMA's overall holdings tended to increase as the rate tranches across different portions of the yield Desk refrained from expanding its holdings of bills curve, and it assessed conditions in the market for because of reductions in bill issuance. In 2000, to Treasury securities in timing specific operations. prevent redemptions in bill holdings from increasing Altogether, it arranged thirty-nine such operations the average maturity of the SOMA's overall holdings during the year. The average purchase amount on even further—counter to the FOMC's objectives— those operations was about $900 million, very close the Desk tended to purchase a greater proportion of to the previous year's average size. Two additional off-the-run coupon securities with remaining maturi- operations totaling $1.1 billion were restricted to all outstanding TIIS. 8. Treasury bills and coupons: Purchases (positive values) Characteristics of Domestic Permanent SOMA and redemptions (negative values) Holdings at Year-end Billions of dollars The portfolio management changes succeeded in ending the recent upward trend in the average maturity of all Treasury issues in the SOMA portfolio. The average maturity of the entire SOMA fell one month, ending the year at about fifty-three months. The average portfolio maturity had lengthened by five months in each of the preceding two years. The percentage of all outstanding Treasury coupon issues (including TIIS) that were held in the SOMA portfolio increased to 14 percent from 12 percent one year earlier, primarily because of the concentration of the net expansion of the SOMA in that sector. The percentage of total outstanding Treasury bills held in 1997 1998 1999 2000 the SOMA portfolio at year-end also rose, to 31 per- NOTE. The data are par values in billions of dollars. Coupons include TIIS. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 2000 491 9. Maturity distribution of SOMA holdings and amounts purchasable of Treasury bills and nominal coupons under caps Millions of dollars Coupons Coupons Coupons Coupons Coupons Bills under 1 year 1-2 years 2-5 years 5-10 years above 10 years — 16,000 — 14,000 — 12,000 — 10,000 — 8,000 — 6,000 — 4,000 Ullilllll — 2,000 Remaining maturity NOTE. Holdings are in light grey and are as of December 31, 2000; remaining purchasable amounts under caps are in dark grey and total about $250 billion. cent, from 29 percent a year earlier, because of even an indefinite period or as a temporary expedient until steeper relative declines in total outstanding amounts. permanent adjustments to the SOMA could be made. At the end of the year, approximately $250 billion Adjusting the total size of outstanding long-term RPs of marketable Treasury securities remained purchas- was also found to be a convenient way to meet large able under the Desk's guidelines for percentage hold- seasonal reserve swings, and most of the buildup and ings (chart 9). In volume, the greatest concentration drawdown in currency around year-end 2000 was of purchasable securities was in the short-term addressed in this fashion. Maintenance-period aversector—those with remaining maturities of less than age levels of long-term RPs in 2000—after the operatwo years. tions put in place for the CDC had run off—mostly ranged between $10 billion and $15 billion, rising to $23 billion in the period that straddled year-end 2000 Temporary Open Market Operations (chart 10). The Desk found that it could achieve the desired Use of Temporary Open Market Operations level of flexibility in the total size of long-term RPs outstanding by arranging an overlapping series of The extraordinarily large levels of RPs built up late in RPs of moderate duration and size. In March, the 1999 ahead of the CDC were quickly unwound in Desk first began a practice of arranging long-term January, to coincide with the rapid runoff in Federal RPs with twenty-eight-day maturities on the Monday Reserve note liabilities (much of this currency never and/or Thursday of each week.14 After assessing curhaving left banks' vaults) and the return of other rent and future period needs, the Desk would decide autonomous factors to normal levels. whether to adjust the size of a maturing operation, First used on a large scale in 1999 to meet CDC whether to let a maturing operation roll off without needs, use of long-term RPs, defined here as opera- replacement, or whether to arrange a new RP on a tions carrying an original maturity of at least fifteen day when none matured. In practice, operations days, became fairly routine in 2000.13 The Desk ranged in size between $2 billion and $3 billion. found long-term RPs to be a useful supplementary Through this approach, the Desk managed to meet tool for meeting underlying reserve needs previously virtually all of the seasonal reserve swing by making addressed solely through outright activity, either for marginal adjustments in outstanding long-term RPs. Short-term temporary operations were used extensively to offset volatility in factors affecting the sup- 13. While any maturity division between long-term and short-term ply of Fed balances, to accommodate variability in RPs is somewhat arbitrary, a convenient distinction can be drawn at demands for excess balances within a maintenance fifteen days because the reserve effect of RPs with this maturity or longer by definition must fall in more than one maintenance period. Operations that carry a maturity of fourteen days or less are almost always used to address reserve shortages within a single maintenance 14. Holidays sometimes necessitated a one-day adjustment to the period. maturity and day of the week an operation was arranged. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

492 Federal Reserve Bulletin • July 2001 10. Reserve effect of temporary operations Billions of dollars NOTE. The data are maintenance-period averages through January 10, 2001. period, and to temporarily fill gaps in underlying In practice, the Desk often structured its outright reserve needs until adjustments could be made to operations and long-term RPs so that the lowest the permanent SOMA or to long-term RPs. Period- amount of short-term temporary operations outstandaverage levels of outstanding short-term temporary ing on any day within a maintenance period would be operations (RPs less MSPs) ranged from less than close to zero.17 $1 billion to more than $11 billion during the year.15 The most commonly chosen maturity on all RPs Daily levels ranged from -$4 billion to $25 billion.16 remained one business day (which includes RPs that also cover a weekend or holiday), of which 137 were 15. The data in this paragraph are taken from periods starting with arranged in 2000 (chart 11). This maturity is particuthe period ended February 23, after operations had adjusted to the larly useful for addressing marginal changes in suprunoff of long-term RPs arranged around the CDC. The average level of outstanding short-term operations was highest in the period covering the year-end, ending January 10, 2001. 17. On average, the lowest daily net reserve effect of all outstand- 16. The highest level occurred on April 26. The highest level of ing short-term temporary operations within the maintenance periods total temporary operations outstanding, long-term plus short-term, of 2000 was less than $1 billion. The average value of the highest was $44 billion, on December 27. daily net reserve effect was $10 billion across all maintenance periods. 11. Number of temporary operations, by type Term RPs 15 days One-business-day Term MSPs and longer MSPs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 2000 493 ply and demand for Fed balances from day to day and collateral temporarily granted by the FOMC. Strucfor dealing with the uncertainty inherent in the fore- turally, all RPs were arranged as three separate, casts. The number of MSPs arranged during the year simultaneous operations, each distinguished by the was again relatively low. Six RPs with forward settle- class of collateral accepted. On one operation, only ment dates were arranged in 2000, each on the eve of Treasury collateral could be offered, on a second its settlement date. The Desk arranged a small opera- operation straight agency debt could be pledged tion on Good Friday, a day dealer staffing is typically (in addition to Treasury collateral), and on the third quite thin, and found itself somewhat constrained by operation mortgage-backed collateral (in addition to propositions. the other two types) could be submitted. But for purposes of this report, these separate operations are counted as different tranches of a single RP. All RPs Execution Practices arranged in 2000 settled under the triparty arrangements established with two clearing banks in 1999. The Desk's usual practice was to arrange temporary The multitranche approach gave the dealers the operations at preset times of the day. Longer-term opportunity to price separately their propositions for RPs were usually arranged at 8:20 a.m. and short- RPs according to the type of collateral involved. In term operations, around 9:30 a.m. The Desk always determining what mix of collateral among the three remained prepared to adapt to circumstances and types to accept, the Desk continued to use the relative depart from its standard practices as needed. Because rate method adopted last year (and described in last of technical limitations associated with the multi- year's annual report). It used market quotes on curtranche method of executing operations (described rent RP rates of the relevant term for each of the three in the following section), short-term operations with collateral types as benchmarks for assessing the reladifferent maturities arranged on the same day were tive value of the propositions it received. Thus, for arranged sequentially rather than simultaneously. The each RP, the allocation of accepted propositions Desk would inform the market ahead of time of its among the three collateral categories was "market intention to arrange a second operation as soon as the neutral" with respect to then-existing market rates. selection process for the first operation was complete. In general, the proportions of the different collateral types accepted on RPs were very volatile from one operation to the next. But an examination of data Triparty RPs with the Expanded Pool taken from the first year over which the expanded of Eligible Collateral collateral pool was used found that the distribution of collateral on accepted propositions was highly corre- The Desk solicited propositions on all RPs arranged lated with the distribution on total propositions. At in 2000 for the entire expanded pool of eligible the same time, the distribution of total propositions 12. Distribution of long-term RPs, by collateral type, January 26, 2000-December 27, 2000 Share of total 1/26/00 • Treasury • Agency • Mortgage-backed securities 12/27/00 NOTE. The data are maintenance-period averages. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

494 Federal Reserve Bulletin • July 2001 13. Excess reserves Millions of dollars — Period ended 1/12/001 All institutions Period ended 1/10/01 — V i iW 1,500 t v V ^A Large banks ViMWV^ "V-^JwJ M / k M; LVVLMAV \— V V w V Y y Y * y r 1II111111111111111111111111 Mill 1 II 1 II 1 1 1 II 1 1in ii 11111 I 1996 1997 1998 1999 2000 Average total excess = 1,097 Average total excess = 1,294 Average total excess = 1,548 Average total excess = 1,211 Average total excess = 1,140 NOTE. The data are maintenance-period averages through January 10, 2001. 1. Total excess equals $3.1 billion. Annual averages exclude periods containing year-end dates. was correlated with the relative amounts that dealers age excess levels held by large banks in 2000, small had yet to finance that morning, taken from the in absolute terms but significant as a proportion of the Desk's daily survey of dealer financing needs.18 total, which might partly reflect bank consolidation These observations suggest that dealers' participation and improved information processes for managing in Desk operations, including the rates they submit- positions. Volatility in excess levels held by large ted on their propositions, reflected current market banks from one period to the next showed a marked conditions. decline, which can be partly explained by a loss of The period-average share of Treasury collateral carryover capacity as more of these institutions have held against outstanding long-term RPs ranged from become nonbound. A high absolute level of carryabout 25 percent to 60 percent (chart 12). This share over resulting from a sizable excess position in one tended to be somewhat greater on average for short- period will lead to a large absolute level of excess term operations, a reflection of dealers' preference demand in the opposite direction in the following for financing more of their non-Treasury collateral period.20 using longer-term operations. Daily intraperiod holdings of excess balances in 2000 again reflected banks' strong preference for concentrating their accumulation of Fed balances for EXCESS RESERVE BALANCES AND THE purposes of satisfying period requirements late in FEDERAL FUNDS RATE a maintenance period (chart 14). This pattern of demand is designed to reduce the likelihood of inad- Excess Reserve Balances in 2000 vertently accumulating unusable excess balances by the end of a maintenance period, even at the height- Period-average levels of excess reserve balances in ened risk of incurring end-of-day overdrafts earlier in 2000 were similar to levels prevailing in the previous the period. year and in other recent years, indicating that the lower levels to which total required balances have settled have not had a measurable effect on excess Federal Funds Rate Behavior in 2000 needs (chart 13).19 There was some decline in aver- Volatility in the federal funds rate, by several mea- 18. Only data from RPs with maturities of no longer than three sures, was significantly lower in 2000 than in previdays were examined because the Desk collects data only on the ous years (table 4). Median values of daily intraday volume of dealers' overnight financing needs. standard deviations of the funds rate, and median and 19. The only departure from this observation was in late 1997 and 1998, discussed in the 1998 annual report, when excess levels were higher than in surrounding years. See Spence Hilton, "Highlights of Domestic Open Market Operations during 1998," Federal Reserve 20. Average absolute carryover levels at large institutions in 2000 Bulletin, vol. 85 (April 1999), pp. 217-35. were down from previous years. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 2000 495 14. Average daily levels of excess balances, by day in a maintenance period Millions of dollars • 1997 II 1998 • 1999 • 2000 M 1 J r—TTkJ! m — — 1,000 Thurs. Fri. Mon. Tues. Wed. Thurs. Fri. Mon. Tues. Wed. Week one Week two NOTE. The data exclude as-of adjustments and high payment flow dates. average values of the absolute deviations of daily 3. The move to lagged reserve accounting, which effective rates from target were the lowest since has been in place since August 1998, has improved 1995, when the decline in total required balances the ability of banks and the Desk to anticipate associated with sweep accounts was just getting demands for Fed balances. under way. The average of the deviations of the daily 4. Also facilitating the Desk's ability to estimate effective funds rate from target was even lower in demand for excess reserves was the continued growth 2000 than in 1995, reflecting a general absence of of the sample of large banks from which reserve days with huge outliers in effective rates. information is collected daily. The level of total Conversations with market participants and other required balances from the sampled banks accounted anecdotal evidence point to several possible explana- for nearly 75 percent of the total requirements at all tions for the moderation in rate volatility in 2000. large (and foreign) banks at the end of 2000. 5. Brokered trading in the federal funds market at 1. Better internal information systems for tracking rates that are quoted in thirty-seconds of a percentand anticipating payment flows within commercial age point has increased dramatically over the past banking institutions have reduced the uncertainty year. This development can contribute to a decline of about settlement flows—often the source of rate vola- 2 basis points or so in the calculation of the intraday tility, particularly late in the day. Improvement of standard deviation compared with trading that is systems and processes for tracking and anticipating restricted to rates that are quoted in sixteenths of a payment flows has been ongoing, but it received percentage point. While the effect is small on days a permanent boost as banks prepared for CDC when trading occurs over a wide range of rates, it is contingencies. noticeable on days when trading is concentrated over 2. Bank consolidation may also have reduced a narrow range. overall uncertainty about payment flows, although 6. There have been some signs that large banks are available data do not substantiate any decline in less willing to bid up the funds rate on days when Fed absolute volumes of wholesale payment flows or balance shortfalls have forced them to borrow adjustfederal funds market activity. ment credit at the discount window. The distribution 4. Deviations of the daily effective federal funds rate from target and the daily standard deviation of the funds rate, 1995-2000 Basis points Item 1995 1996 1997 1998 1999 2000 Median of intraday standard deviations 5 10 9 12 9 6 Median of absolute deviations of the effective rate from target 5 8 6 8 7 4 Average of absolute deviations of the effective rate from target 10 15 11 13 11 7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

496 Federal Reserve Bulletin • July 2001 15. Distribution of the peak funds rate less the target funds rate on days when large bank adjustment borrowing was above $50 million • 1994-98 average 0% or less up to 1% up to 2% up to up to 4% up to 5% more than 5% NOTE. The horizontal axis marks the difference between the peak funds rate and the target funds rate in percentage points. in 2000 of peak funds rates on days when adjustment effective rates indicate that rates tended to fall off borrowing by large banks was at least $50 million more substantially later in the day than in the past shifted somewhat to lower rate levels (chart 15). (chart 16).21 Yet, at the same time, intraday standard Such a shift in behavior would dampen measured rate deviations were also down. This combination of volatility, although informal conversations with bank changes in rate behavior suggests that trading condireserve managers do not substantiate a widespread tions were generally more orderly over the course of change in attitudes about borrowing from the dis- the day, with rates settling back at levels closer to count window. target for a greater volume of trading than before, Reduced rate volatility was evident on high pay- perhaps reflecting improved internal information ment flow days in 2000, as well as on other days. about settlement flows at banks. While morning premiums on these days in 2000 were Although rate volatility was down overall, it was in line with premiums in the previous year, the lower still higher on days when total Fed balances—before any adjustment borrowing at the discount window— were at their lowest. In 2000, the level of nonbor- 16. Medians of morning rate less target, daily effective funds rowed Fed balances fell below $10 billion on nine rate less target, and daily standard deviations of the days; on three of these occasions it even dropped funds rate on high payment flow days below $9 billion. Days with the lowest balances were heavily concentrated early in the year, when the Desk Basis points was working off the extremely high excess posi- • Median of morning rate less the target rate tions accumulated around the CDC and while total • Median of daily effective rate less the target rate • Median of daily intraday standard deviations 30 required balances were also relatively low. There of the funds rate were nineteen other days on which these balances were under $11 billion. By comparison, in 1999 Fed balances fell below $10 billion only once, and they were below $11 billion on sixteen other days, while in 1998 there were no days with balances below $11 billion (and only two days when balances were below $12 billion). Rate volatility on days when total nonborrowed balances were under $10 billion in 2000 tended to be higher than on other days, as measured by median 21. Quarter-ends, including year-ends, are excluded from the data 1997 1998 1999 2000 in the chart because they tend to display some rate patterns that are NOTE. The data exclude quarter ends. distinct from other high payment flow days. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 2000 497 5. Behavior of the federal funds rate and the level of fed also have reflected some enhanced ability of the Desk balances before adjustment borrowing in 1999 and 2000 to estimate final-period excess demands. Effective Basis points except as indicated rates on Fridays in 2000 were also closer to the target than before, although still slightly soft on average. Balances IItteemm This shift may reflect the somewhat lower levels of Less than $10 billion- More than $10 billion Si 1 billion $11 billion excess balances the Desk provided on these days—in reaction to the past pattern of soft rates on these Number of business days 10 36 459 days—and the even lower levels of Fed balances Median values (basis points) Effective rate minus target rate . 2 -3 1 implied by the decline in total required balances. High rate minus target rate 200 25 25 Intraday standard deviation 18 6 7 APPENDIX A: AUTHORIZATION FOR DOMESTIC OPEN MARKET OPERATIONS values for intraday standard deviations and peak rates Open market operations during 2000 were conducted (table 5). When nonborrowed balances were under under the Authorization for Domestic Open Market $11 billion in both 1999 and 2000 (but above $10 bil- Operations. The modifications to several of its prolion), evidence is weak that rate volatility was any higher than on other days with higher balances.22 visions during the year are discussed in the section "New Developments in 2000" of the text. In Febru- The average effective federal funds rate on settleary the Committee also approved the addition to the ment days was very close to target, ending a two-year authorization (paragraph 4) regarding adjustments to period over which rates on these days tended to be the stance of monetary policy during an intermeeting soft (chart 17).23 Rates on these days were closer to period. The authorization in effect at the end of 2000 the target as some of the factors that inclined the is reprinted below. Desk to err on the side of over-estimating demands for Fed balances on settlement days in the preceding two years were absent in 2000.24 But this change may Authorization for Domestic Open Market Operations 22. These measures of volatility on days with balances above $11 billion are probably elevated by the inclusion of high payment 1. The Federal Open Market Committee authorizes flow days in the sample, all of which in 1999 and 2000 had a level of and directs the Federal Reserve Bank of New York, to the Fed balances above $ 11 billion. extent necessary to carry out the most recent domestic 23. In years before 1998, rates on settlement days tended to be policy directive adopted at a meeting of the Committee: relatively firm. (a) To buy or sell U.S. Government securities, includ- 24. Amid the pressures in financing markets in the fourth quarter of 1998 in particular, the Desk often provided added levels of liquidity, ing securities of the Federal Financing Bank, and securities which on some occasions contributed to very soft rate conditions on that are direct obligations of, or fully guaranteed as to maintenance-period settlement days. principal and interest by, any agency of the United States in 17. Average daily effective federal funds rate less target rate, by day in a maintenance period Basis points • 1997 • 1999 • 1998 • 2000 10 r Thurs. Fri. Mon. Tues. Wed. Thurs. Fri. Mon. Tues. Wed. Week one Week two NOTE. The data exclude high payment flow dates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

498 Federal Reserve Bulletin • July 2001 the open market, from or to securities dealers and foreign foreign and international accounts on the bases set forth in and international accounts maintained at the Federal paragraph 1(a) under agreements providing for the resale Reserve Bank of New York, on a cash, regular, or deferred by such accounts of those securities within 90 calendar delivery basis, for the System Open Market Account at days on terms comparable to those available on such market prices, and, for such Account, to exchange matur- transactions in the market; and (b) for New York Bank ing U.S. Government and Federal agency securities with account, when appropriate, to undertake with dealers, subthe Treasury or the individual agencies or to allow them to ject to the conditions imposed on purchases and sales of mature without replacement; provided that the aggregate securities in paragraph 1(b), repurchase agreements in U.S. amount of U.S. Government and Federal agency securities Government and agency securities, and to arrange correheld in such Account (including forward commitments) at sponding sale and repurchase agreements between its own the close of business on the day of a meeting of the account and foreign and international accounts maintained Committee at which action is taken with respect to a at the Bank. Transactions undertaken with such accounts domestic policy directive shall not be increased or under the provisions of this paragraph may provide for a decreased by more than $12.0 billion during the period service fee when appropriate. commencing with the opening of business on the day 4. In the execution of the Committee's decision regardfollowing such meeting and ending with the close of busi- ing policy during any intermeeting period, the Committee ness on the day of the next such meeting; authorizes and directs the Federal Reserve Bank of New (b) To buy U.S. Government securities, obligations York, upon the instruction of the Chairman of the Committhat are direct obligations of, or fully guaranteed as to tee, to adjust somewhat in exceptional circumstances the principal and interest by, any agency of the United States, degree of pressure on reserve positions and hence the from dealers for the account of the Federal Reserve Bank intended federal funds rate. Any such adjustment shall be of New York under agreements for repurchase of such made in the context of the Committee's discussion and securities or obligations in 90 calendar days or less, at rates decision at its most recent meeting and the Committee's that, unless otherwise expressly authorized by the Com- long-run objectives for price stability and sustainable ecomittee, shall be determined by competitive bidding, after nomic growth, and shall be based on economic, financial, applying reasonable limitations on the volume of agree- and monetary developments during the intermeeting ments with individual dealers; provided that in the event period. Consistent with Committee practice, the Chairman, Government securities or agency issues covered by any if feasible, will consult with the Committee before making such agreement are not repurchased by the dealer pursuant any adjustment. to the agreement or a renewal thereof, they shall be sold in the market or transferred to the System Open Market Account. APPENDIX B: GUIDELINES FOR THE CONDUCT (c) To sell U.S. Government securities and securities OF SYSTEM OPERATIONS IN FEDERAL AGENCY that are direct obligations of, or fully guaranteed as to ISSUES principal and interest by, any agency of the United States to dealers for System Open Market Account under agree- The FOMC has established specific guidelines for ments for the resale by dealers of such securities or obligations in 90 calendar days or less, at rates that, unless operations in agency securities to ensure that Federal otherwise expressly authorized by the Committee, shall be Reserve operations do not have undue market effects determined by competitive bidding, after applying reason- and do not serve to support individual issuers. Proable limitations on the volume of agreements with indivisions 3-6 of the guidelines were temporarily susvidual dealers. pended in August 1999, in order to expand the types 2. In order to ensure the effective conduct of open market operations, the Federal Open Market Committee of agency securities the Desk could accept on its authorizes the Federal Reserve Bank of New York to lend operations around the CDC period, and in March on an overnight basis U.S. Government securities held in 2000 this suspension was extended until the FOMC's the System Open Market Account to dealers at rates that first meeting in 2001. shall be determined by competitive bidding but that in no event shall be less than 1.0 percent per annum of the market value of the securities lent. The Federal Reserve Guidelines for the Conduct of System Bank of New York shall apply reasonable limitations on the total amount of a specific issue that may be auctioned Operations in Federal Agency Issues and on the amount of securities that each dealer may borrow. The Federal Reserve Bank of New York may 1. System open market operations in Federal agency reject bids which could facilitate a dealer's ability to con- issues are an integral part of total System open market trol a single issue as determined solely by the Federal operations designed to influence bank reserves, money Reserve Bank of New York. market conditions, and monetary aggregates. 3. In order to ensure the effective conduct of open 2. System open market operations in Federal agency market operations, while assisting in the provision of short- issues are not designed to support individual sectors of term investments for foreign and international accounts the market or to channel funds into issues of particular maintained at the Federal Reserve Bank of New York, the agencies. Federal Open Market Committee authorizes and directs the 3. System holdings of agency issues shall be modest Federal Reserve Bank of New York (a) for System Open relative to holdings of U.S. Government securities, and the Market Account, to sell U.S. Government securities to such amount and timing of System transactions in agency issues Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Domestic Open Market Operations during 2000 499 shall be determined with due regard for the desirability of cases where the securities have a maturity of more than avoiding undue market effects. five years at the time of issuance. 4. Purchases will be limited to fully taxable issues, not 5. System holdings of any one issue at any one time will eligible for purchase by the Federal Financing Bank, for not exceed 30 percent of the amount of the issue outstandwhich there is an active secondary market. Purchases will ing. Aggregate holdings of the issues of any one agency also be limited to issues outstanding in amounts of will not exceed 15 percent of the amount of outstanding $300 million or over in cases where the obligations have issues of that agency. maturity of five years or less at the time of issuance, and to 6. All outright purchases, sales and holdings of agency issues outstanding in amounts of $200 million or over in issues will be for the System Open Market Account. APPENDIX C C.l. Operations in U.S. government securities and federal agency securities by the Federal Reserve Bank of New York, December 31, 1999-December 29, 2000 Thousands of dollars except as noted Type of issue Net Holdings, Holdings, Purchases Sales Redemptions Exchanges and maturity category change Dec. 29, 2000 Dec. 31, 1999 SYSTEM OPEN MARKET ACCOUNT Government securities1 Treasury bills -477,904,116 Outright 8,676,086 0 -24,521,854 477,904,116 -15,845,768 199,853,676 215,699,444 Matched transactions 4,399,257,371 -4,381,187,595 0 0 18,069,776 -21,112,267 -39,182,043 Total bills 4,407,933,457 -4,381,187,595 -24,521,854 0 2,224,008 178,741,409 176,517,401 Treasury notes and bonds Maturing: Within 1 year 8,808,600 0 -3,778,704 -54,655,642 -49,625,7463 73,811,576 59,899,148 1 to 5 years 14,514,0922 0 0 46,177,176 60,691,268' 132,791,992 124,169,064 5 to 10 years 6,084,7512 0 0 6,584,785 12,669,5363 55,461,173 51,106,652 More than 10 years 5,887,0502 0 0 1,893,700 7,780,7503 70,896,176 66,270,245 Total notes and bonds 35,294,493 0 -3,778,704 19 31,515,808 332,960,917 301,445,109 Total government securities Including matched transactions 4,443,227,950 -4,381,187,595 -28,300,558 19 33,739,816 511,702,326 477,962,510 Excluding matched transactions 43,970,579 0 -28,300,558 19 15,670,040 532,814,593 517,144,553 Federal agency issues Maturing: Within 1 year 0 0 -51,000 0 -51,000 4 0 51,000 1 to 5 years 0 0 0 0 04 130,000 10,000 5 to 10 years 0 0 0 0 04 0 120,000 More than 10 years 0 0 0 0 04 0 0 Total agency issues 0 0 -51,000 0 -51,000 130,000 181,000 Total System Account Including matched transactions 4,443,227,950 -4,381,187,595 -28,351,558 19 33,688,816 511,832,326 478,143,510 Excluding matched transactions .... 43,970,579 0 -28,351,558 19 15,619,040 532,944,593 517,325,553 FEDERAL RESERVE BANK OF NEW YORK Repurchase agreements 890,236,000 -987,501,000 0 0 -97,265,000 43,375,000 140,640,000 NOTE. Data are on a settlement-date basis. There were no customer-related RPs passed through to the market for the period from December 31, 1999, to December 31, 2000. 1. Loans of Treasury securities by the Federal Reserve Bank of New York to primary dealers for the period from December 31, 1999, to December 29, 2000, were as follows: Loans outstanding Securities loans Maturities Net change Dec. 29, 2000 Dec. 31, 1999 Loan agreements (thousands of dollars) 294,057,000 294,032,000 25,000 2,086,000 2,061,000 2. Includes appreciation of the inflation indexed notes and bonds of $301,011,498. 3. For Treasury notes and bonds, figures do not include the following maturity shifts (thousands of dollars): Within 1 year 1 to 5 years 5 to 10 years More than 10 years Treasury notes and bonds 63,538,175 -52,068,340 -8,315,015 -3,154,820 4. For federal agency securities, figures do not include the following maturity shifts (thousands of dollars): Within 1 year 1 to 5 years 5 to 10 years More than 10 years Federal agency issues 0 120,000 -120,000 0 The December 31, 1999, and December 29, 2000 matched sale-purchase transaction was $39,182,043,000 and $21,112,267,000 respectively. 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 A3 2 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 A3 5 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 A39 Summary of financial transactions A20 Foreign-related institutions A40 Summary of credit market debt outstanding A41 Summary of financial assets and liabilities Financial Markets A22 Commercial paper and bankers dollar DOMESTIC NONFINANCIAL STATISTICS acceptances outstanding A22 Prime rate charged by banks on short-term Selected Measures business loans A23 Interest rates—Money and capital markets A42 Nonfinancial business activity A24 Stock market—Selected statistics A42 Labor force, employment, and unemployment A43 Output, capacity, and capacity utilization A44 Industrial production—Indexes and gross value Federal Finance A46 Housing and construction A25 Federal fiscal and financing operations A47 Consumer and producer prices A26 U.S. budget receipts and outlays A48 Gross domestic product and income A27 Federal debt subject to statutory limitation A49 Personal income and saving Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • July 2001 INTERNATIONAL STATISTICS Reported by Nonbanking Business Enterprises in the United States Summary Statistics A58 Liabilities to unaffiliated foreigners A50 U.S. international transactions A59 Claims on unaffiliated foreigners A51 U.S. foreign trade A51 U.S. reserve assets Securities Holdings and Transactions A51 Foreign official assets held at Federal Reserve A60 Foreign transactions in securities Banks A61 Marketable U.S. Treasury bonds and A52 Selected U.S. liabilities to foreign official notes—Foreign transactions institutions Interest and Exchange Rates Reported by Banks in the United States A62 Foreign exchange rates A52 Liabilities to, and claims on, foreigners A53 Liabilities to foreigners A55 Banks' own claims on foreigners A63 GUIDE TO STATISTICAL RELEASES AND A56 Banks' own and domestic customers' claims on SPECIAL TABLES foreigners A56 Banks' own claims on unaffiliated foreigners A64 INDEX TO STATISTICAL TABLES A57 Claims on foreign countries—Combined domestic offices and foreign branches Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c Corrected G-7 Group of Seven e Estimated G-10 Group of Ten n.a. Not available GDP Gross domestic product n.e.c. Not elsewhere classified GNMA Government National Mortgage Association P Preliminary HUD Department of Housing and Urban r Revised (Notation appears on column heading Development when about half of the figures in that column IMF International Monetary Fund are changed.) IOs Interest only, stripped, mortgage-back securities * Amounts insignificant in terms of the last decimal IPCs Individuals, partnerships, and corporations place shown in the table (for example, less than IRA Individual retirement account 500,000 when the smallest unit given is millions) MMDA Money market deposit account 0 Calculated to be zero MSA Metropolitan statistical area Cell not applicable NOW Negotiable order of withdrawal ABS Asset-backed security 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 FAMC Federal Agriculture Mortgage Corporation REMICs Real estate mortgage investment conduits FFB Federal Financing Bank RHS Rural Housing Service FHA Federal Housing Administration RP Repurchase agreement FHLBB Federal Home Loan Bank Board RTC Resolution Trust Corporation FHLMC Federal Home Loan Mortgage Corporation SCO Securitized credit obligation FmHA Farmers Home Administration SDR Special drawing right FNMA Federal National Mortgage Association SIC Standard Industrial Classification FSA Farm Service Agency VA Department of Veterans Affairs FSLIC Federal Savings and Loan Insurance Corporation 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 • July 2001 1.10 RESERVES, MONEY STOCK, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 2000 2001 2000 2001 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q2 Q3 Q4 Qir Dec. Jan.r Feb.r Mar.r Apr. Reserves of depository institutions2 1 Total -10.9 -8.3 -8.7 -2.1 -15.9 10.0 1.2 -18.8 16.7 2 Required -7.7 -8.6 -10.4 -3.5 -20.3 12.7 -4.5 -18.0 20.8 3 Nonborrowed —12.5 -9.9 -6.4 .5 -13.7 14.3 1.9 -19.0 17.0 4 Monetary base3 -3.6 2.5 2.8 6.4 5.3 11.2 3.5 2.6 7.1 Concepts of money and debt4 5 Ml -1.8 -3.6 -3.0 4.8 2.0 12.1 .3 10.8 5.0 6 M2 6.4 5.7 6.4 10.9 9.6 12.4 10.9 14.6 10.2 7 M3 9.0 8.8 7.1 13.0 14.2 16.6 11.0 11.2 18.3 8 Debt 6.1 4.8 4.6 5.5 5.9 4.0 6.4 7.2 n.a. Nontransaction components 9 In M25 9.0 8.5 9.2 12.6 11.8 12.4 13.8 15.6 11.7 10 In M3 only6 15.3r 16.4r 8.6r 18.0 25.0 26.3 11.3 3.6 36.7 Time and savings deposits Commercial banks 11 Savings, including MMDAs 7.8 11.8 11.9 17.1 16.4 13.2 23.8 21.3 20.4 12 Small time7 13.2 10.5 6.1 2.6 9.5 5.0 -5.6 -6.3 -9.1 13 Large time8'9 17.1 11.5 3.5 -1.3 39.2 22.3 -56.6 -44.9 34.5 Thrift institutions 14 Savings, including MMDAs 1.6 3.3 .0 7.3 -9.2 2.1 28.1 24.6 10.4 15 Small time7 3.3 10.8 9.7 9.1 5.6 14.9 7.5 1.4 2.7 16 Large time8 .6 23.0 14.0 12.6 -6.9 34.9 7.9 2.2 21.3 Money market mutual funds 17 Retail 13.4 3.7 11.8 17.1 19.3 20.9 8.7 23.9 17.1 18 Institution-only 18.0 29.2 18.6 50.4 24.9 52.5 86.9 40.5 42.6 Repurchase agreements and eurodollars 19 Repurchase agreements10 11.0r 8.2r -3.6r -13.7 12.1r -14.0 -33.7 -24.3 71.5 20 Eurodollars10 15.0 .6 10.3 24.7 13.5 8.5 41.1 63.7 -27.8 Debt components4 21 Federal -7.5 -7.3 -8.0 -5.4 -6.6 -7.1 -3.0 1.2 n.a. 22 Nonfederal 9.7 7.8 7.6 8.0 8.7 6.6 8.5 8.6 n.a. 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- depository institutions, and (4) eurodollars (overnight and term) held by U.S. residents at ing during preceding month or quarter. foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with and Canada. Excludes amounts held by depository institutions, the U.S. government, money regulatory changes in reserve requirements. (See also table 1.20.) market funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculated 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally by summing large time deposits, institutional money fund balances, RP liabilities, adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency and eurodollars, each seasonally adjusted separately, and adding this result to seasonally component of the money stock, plus (3) (for all quarterly reporters on the "Report of adjusted M2. Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference sectors—the federal sector (U.S. government, not including government-sponsored enterbetween current vault cash and the amount applied to satisfy current reserve requirements. prises or federally related mortgage pools) and the nonfederal sectors (state and local 4. Composition of the money stock measures and debt is as follows: governments, households and nonprofit organizations, nonfinancial corporate and nonfarm Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, commercial banks other than those owed to depository institutions, the U.S. government, and which are derived from the Federal Reserve Board's flow of funds accounts, are breakforeign banks and official institutions, less cash items in the process of collection and Federal adjusted (that is, discontinuities in the data have been smoothed into the series) and Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of month-averaged (that is, the data have been derived by averaging adjacent month-end levels). withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail credit union share draft accounts, and demand deposits at thrift institutions. Seasonally money fund balances, each seasonally adjusted separately. adjusted Ml is computed by summing currency, travelers checks, demand deposits, and 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities OCDs, each seasonally adjusted separately. (overnight and term) issued by depository institutions, and (4) eurodollars (overnight and M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time term) of U.S. addressees, each seasonally adjusted separately. deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail 7. Small time deposits—including retail RPs—are those issued in amounts of less than money market mutual funds. Excludes individual retirement accounts (IRAs) and Keogh $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions balances at depository institutions and money market funds. Seasonally adjusted M2 is are subtracted from small time deposits. calculated by summing savings deposits, small-denomination time deposits, and retail money 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those fund balances, each seasonally adjusted separately, and adding this result to seasonally booked at international banking facilities. adjusted Ml. 9. Large time deposits at commercial banks less those held by money market funds, M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) depository institutions, the U.S. government, and foreign banks and official institutions. balances in institutional money funds, (3) RP liabilities (overnight and term) issued by all 10. Includes both overnight and term. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars d A ai v ly e ra f g i e g u o re f s Average of daily figures for week ending on date indicated 2001 2001 Feb. Mar. Apr. Mar. 14 Mar. 21 Mar. 28 Apr. 4 Apr. 11 Apr. 18 Apr. 25 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 574,233 577,856 580,694 575,106 581,252 576,086 580,821 578,385 581,623 579,189 U.S. government securities2 2 Bought outright—System account3 517,974 522,787 523,962 522,805 522,353 523,930 523,327 522,228 522,374 525,432 3 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright 81 10 10 10 10 10 10 10 10 10 5 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreements—triparty4 19,085 19,105 20,009 16,713 22,824 15,926 21,484 19,247 22,220 17,183 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 29 27 29 14 20 3 81 5 4 29 9 Seasonal credit 19 19 35 20 22 18 18 35 40 36 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 1,231 406 251 345 299 28 159 1,061 613 -402 13 Other Federal Reserve assets 35,815 35,502 36,398 35,199 35,724 36,171 35,743 35,800 36,362 36,900 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 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 16 Treasury currency outstanding 32,026r 32,191r 32,299 32,165r 32,200r 32,235r 32,271 32,285 32,299 32,313 ABSORBING RESERVE FUNDS 17 Currency in circulation 582,524r 585,180r 588,037 585,070r 585,342r 585,422r 586,790 588,029 588,815 587,931 18 Reverse repurchase agreements—triparty4 .. . 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings 485 496 500 504 495 489 479 486 503 512 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 4,894 5,390 5,903 4,893 6,709 4,621 5,671 5,010 5,491 6,894 21 Foreign 94 85 92 79 83 98 92 75 79 119 22 Service-related balances and adjustments . . 6,533 6,859 6,940 7,109 6,936 6,708r 6,757 6,894 6,785 7,032 23 Other 302 260 352 263 237 296 303 372 342 347 24 Other Federal Reserve liabilities and capital . 18,168 18,232 17,806 18,343 18,318 18,325 17,554 17,590 17,953 17,971 25 Reserve balances with Federal Reserve Banks' 6,502 6,789r 6,609 4,256 8,578 5,607r 8,691 5,458 7,199 3,941 End-of-month figures Wednesday figures Feb. Mar. Apr. Mar. 14 Mar. 21 Mar. 28 Apr. 4 Apr. 11 Apr. 18 Apr. 25 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 578,124 581,870 587,708 575,911 597,298 575,715 581,095 582,327 590,736 580,474 U.S. government securities2 2 Bought outright—System account3 519,618 523,862 525,911 523,407 523,302 524,946 523,925 523,899 525,195 527,300 3 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright 10 10 10 10 10 10 10 10 10 10 5 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreements—triparty4 23,665 21,995 25,007 17,495 38,550 15,500 21,500 18,750 29,264 16,507 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 2 8 44 95 2 0 152 4 11 32 9 Seasonal credit 15 14 36 17 25 15 25 35 37 34 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 1,016 180 -370 -688 -534 -1,234 —15 3,434 -274 -596 13 Other Federal Reserve assets 33,798 35,801 37,069 35,576 35,943 36,477 35,497 36,195 36,494 37,188 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 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 16 Treasury currency outstanding 32,087r 32,271r 32,327 32,165r 32,200r 32,235r 32,271 32,285 32,299 32,313 ABSORBING RESERVE FUNDS 17 Currency in circulation 585,129r 585,853r 588,100 586,274r 586,480r 586,682r 588,612 589,519 589,745 588,761 18 Reverse repurchase agreements—triparty4 .. . 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings 505 478 516 496 491 478 484 501 512 516 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 4,956 5,657 7,894 4,564 4,662 4,764 5,141 5,128 6,753 7,483 21 Foreign 196 70 102 73 74 145 150 73 107 121 22 Service-related balances and adjustments .. 6,623 6,757r 7,241 7,109 6,936 6,708r 6,757 6,894 6,785 7,032 23 Other 377 248 403 247 241 251 376 346 335 330 24 Other Federal Reserve liabilities and capital . 17,842 17,441 18,232 18,076 18,036 18,020 17,241 17,712 17,677 17,660 25 Reserve balances with Federal Reserve Banks' 7,830 10,882r 10,792 4,482 25,823 4,147r 7,850 7,684 14,367 4,130 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 4. Cash value of agreements arranged through third-party custodial banks. These agree- 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged ments are collateralized by U.S. government and federal agency securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 5. Excludes required clearing balances and adjustments to compensate for float, under matched sale-purchase transactions. 3. Includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic NonfinancialS tatistics • July 2001 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1998 1999 2000 2000 2001 Dec. Dec. Dec. Oct. Nov. Dec. Jan. Feb. Mar.r Apr. 1 Reserve balances with Reserve Banks2 9,026 5,262 7,159 6,778 7,156 7,159 7,190 6,615 6,737 6,866 2 Total vault cash3 44,294 60,619 45,120 45,178 44,546 45,120 47,506 48,397r 44,020 43,646 3 Applied vault cash4 36,183 36,392 31,381 31,998 31,629 31,381 32,601 32,734 30,978 31,729 4 Surplus vault cash5 8,111 24,227 13,739 13,180 12,917 13,739 14,905 15,663r 13,043 11,917 5 Total reserves6 45,209 41,654 38,540 38,776 38,786 38,540 39,791 39,349 37,715 38,595 6 Required reserves 43,695 40,357 37,216 37,629 37,584 37,216 38,538 37,917 36,329 37,315 7 Excess reserve balances at Reserve Banks7 1,514 1,297 1,325 1,147 1,201 1,325 1,253 1,432 1,385 1,280 8 Total borrowing at Reserve Banks 117 320 210 418 283 210 73 51 58 51 9 Adjustment 101 179 99 119 124 99 39 30 38 15 10 Seasonal 15 67 111 299 159 111 34 21 20 35 11 Special Liquidity Facility8 0 74 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 2001 Dec. 27 Jan. 10 Jan. 24 Feb. 7 Feb. 21 Mar. 7 Mar. 21 Apr. 4r Apr. 18 May 2 1 Reserve balances with Reserve Banks2 7,208 7,085 7,656 6,410 6,608 6,836 6,296 7,287 6,328 7,354 2 Total vault cash3 46,220 46,696 45,558 52,561r 48,505r 44,017r 43,785r 44,352 43,409 43,688 3 Applied vault cash4 32,370 31,579 32,316 34,631 32,380 31,547 30,304 31,523 31,201 32,413 4 Surplus vault cash5 13,850 15,117 13,243r 17,930r 16,125r 12,470r 13,481r 12,830 12,207 11,274 5 Total reserves6 39,578 38,664 39,972 41,041 38,988 38,382 36,600 38,809 37,529 39,767 6 Required reserves 38,124 37,165 38,866 39,844 37,361 37,103 35,419 37,062 36,330 38,549 7 Excess reserve balances at Reserve Banks7 1,453 1,499 1,106 1,196 1,627 1,279 1,180 1,747 1,199 1,218 8 Total borrowing at Reserve Banks 285 110 66 34 38 95 38 60 42 59 9 Adjustment 169 56 42 9 18 76 17 42 4 20 10 Seasonal 117 55 25 25 20 19 21 18 38 39 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 credit Extended credit3 6/ O 8/ n 0 1 Effective date 6/ O 8/ n 0 1 6/ O 8/ n 0 1 Effective date 5/16/01 5/15/01 5/17/01 5/17/01 5/15/01 5/16/01 5/15/01 5/16/01 5/17/01 5/16/01 5/16/01 5/15/01 Range of rates for adjustment credit in recent years (or F.R. Bank Range (or F.R. Bank Range (or Effective date level)—All of level)—All of level)—All F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks In effect Dec. 31, 1977 1982—Oct. 12 9.5-10 9.5 1994—May 17 3-3.5 3.5 13 9.5 9.5 18 .... 3.5 3.5 1978—Jan. 9 6-6.5 6.5 Nov. 22 9-9.5 9 Aug. 16 3.5-4 4 20 6.5 6.5 26 9 9 18 ... . 4 4 May 11 6.5-7 7 Dec. 14 8.5-9 9 Nov. 15 4^1.75 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 .... 5.25 5.25 Sept. 22 8 8 13 9 Oct. 16 8-8.5 8.5 Nov. 21 8.5-9 1996—Jan. 31 5.00-5.25 5.00 20 8.5 8.5 26 8.5 Feb. 5 ... . 5.00 5.00 Nov. 1 8.5-9.5 9.5 Dec. 24 3 9.5 9.5 1998—Oct. 15 4.75-5.00 4.75 1985—May 20 7.5-8 7.5 16 ... . 4.75 4.75 1979—July 20 10 10 24 7.5 7.5 Nov. 17 ... . 4.50-4.75 4.50 Aug. 17 10-10.5 10.5 19 ... . 4.50 4.50 20 10.5 10.5 1986—Mar. 7 7-7.5 7 Sept. 19 10.5-11 11 10 7 7 1999—Aug. 24 4.50-4.75 4.75 Oct. 2 8 1 11 1 - 1 1 2 1112 Apr. 2 21 3 . 6 6 .5 .5 - 7 6 6 . . 5 5 Nov. 1 2 6 6 4.7 4 5 . - 7 5 5 . 00 4 4 . . 7 7 5 5 10 12 12 July 11 6 6 18 5.00 5.00 Aug. 21 5.5-6 5.5 1980—Feb. 15 12-13 13 22 5.5 5.5 2000—Feb. 2 .... 5.00-5.25 5.25 19 13 13 4 ... . 5.25 5.25 May 29 12-13 13 1987—Sept. 4 5.5-6 6 Mar. 21 ... . 5.25-5.50 5.50 30 12 12 11 6 6 23 ... . 5.50 5.50 June 13 11-12 11 May 16 ... . 5.50-6.00 5.50 July 2 1 8 6 101-11 1 1 10 1 1988—Aug. 1 9 1 6 6 . . 5 5 19 ... . 6.00 6.00 2 9 10 10 2001—Jan. 3 . . . . 5.75-6.00 5.75 Sept. 26 11 11 1989—Feb. 24 6.5-7 7 4.... 5.50-5.75 5.50 Nov. 17 12 12 27 7 7 5 .... 5.50 5.50 Dec. 5 12-13 13 31... . 5.00-5.50 5.00 8 13 13 1990—Dec. 19 6.5 Feb. 1 . . . . 5.00 5.00 Mar. 20 4.50-5.00 4.50 1981—May 5 13-14 14 1991—Feb. 1 6-6.5 6 21 4.50 4.50 8 14 14 4 6 6 Apr. 18 ... . 4.00-4.50 4.00 Nov. 2 13-14 13 Apr. 30 5.5-6 5.5 20 ... . 4.00 4.00 6 13 13 May 2 5.5 5.5 May 15 ... . 3.50-4.00 3.50 Dec. 4 12 12 Sept. 13 5-5.5 5 17 ... . 3.50 3.50 17 5 5 1982—July 20 11.5-12 11.5 Nov. 6 4.5-5 4.5 In effect June 8, 2001 3.50 3.50 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 24 3.5 3.5 16 10.5 10.5 27 10-10.5 10 1992—July 2 3-3.5 3 3 0 10 10 7 3 3 1. Available on a short-term basis to help depository institutions meet temporary needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that cannot be met through reasonable alternative sources. The highest rate established flexible rate somewhat above rates charged on market sources of funds is charged. The rate for loans to depository institutions may be charged on adjustment credit loans of unusual size ordinarily is reestablished on the first business day of each two-week reserve maintenance that result from a major operating problem at the borrower's facility. period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis 2. Available to help relatively small depository institutions meet regular seasonal needs for points. funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 4. For earlier data, see the following publications of the Board of Governors: Banking and that cannot be met through special industry lenders. The discount rate on seasonal credit takes Monetary Statistics, 1914-1941, and 1941-1970\ and the Annual Statistical Digest, 1970into account rates charged by market sources of funds and ordinarily is reestablished on the 1979. first business day of each two-week reserve maintenance period; however, it is never less than In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit the discount rate applicable to adjustment credit. borrowings by institutions with deposits of $500 million or more that had borrowed in 3. May be made available to depository institutions when similar assistance is not successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was reasonably available from other sources, including special industry lenders. Such credit may in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed be provided when exceptional circumstances (including sustained deposit drains, impaired on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to access to money market funds, or sudden deterioration in loan repayment performance) or 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, practices involve only a particular institution, or to meet the needs of institutions experiencing and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the difficulties adjusting to changing market conditions over a longer period (particularly at times surcharge was changed from a calendar quarter to a moving thirteen-week period. The of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is surcharge was eliminated on Nov. 17, 1981. charged on extended-credit loans outstanding less than thirty days; however, at the discretion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 DomesticN onfinancial Statistics • July 2001 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Type of deposit Net transaction accounts 1 $0 million-$42.8 million3. 12/28/00 2 More than $42.8 million4 . 12/28/00 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 28, 2000, for depository institutions that report include commercial banks, savings banks, savings and loan associations, credit unions, weekly, and with the period beginning January 18, 2001, for institutions that report quarterly, agencies and branches of foreign banks, and Edge Act corporations. the exemption was raised from $5.0 million to $5.5 million. 2. Transaction accounts include all deposits against which the account holder is permitted 4. The reserve requirement was reduced from 12 percent to 10 percent on to make withdrawals by negotiable or transferable instruments, payment orders of with- Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that drawal, or telephone or preauthorized transfers for the purpose of making payments to third report quarterly. persons or others. However, accounts subject to the rules that permit no more than six 5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits preauthorized, automatic, or other transfers per month (of which no more than three may be with an original maturity of less than 1.5 years was reduced from 3 percent to 1.5 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 1.5 years was reduced from 3 against which the 3 percent reserve requirement applies be modified annually by 80 percent of percent to zero on Jan. 17, 1991. the percentage change in transaction accounts held by all depository institutions, determined The reserve requirement on nonpersonal time deposits with an original maturity of 1.5 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 28, 2000, 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 18, 2001, 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 $44.3 million to $42.8 million. deposits with an original maturity of less than 1.5 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 2001 TTyyppee ooff ttrraannssaaccttiioonn 11999988 11999999 22000000 aanndd mmaattuurriittyy Sept. Oct. Nov. Dec. Jan. Feb. Mar. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 3,550 0 8,676 231 779 2,507 509 520 2,683 579 ? Gross sales 0 0 0 0 0 0 0 0 0 0 Exchanges 450,835 464,218 477,904 37,006 38,142 45,182 39,428 40,769 42,767 46,712 4 For new bills 450,835 464,218 477,904 37,006 38,142 45,182 39,428 40,769 42,767 46,712 5 Redemptions 2,000 0 24,522 3,898 2,656 1,021 1,145 228 638 211 Others within one year 6 Gross purchases 6,297 11,895 8,809 716 0 580 1,420 0 1,605 67 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 46,062 50,590 62,025 0 8,663 7,957 0 5,405 10,619 0 9 Exchanges —49,434 -53,315 -54,656 0 -6,608 -7,012 0 -6,667 -6,799 0 10 Redemptions 2.676 1,429 3,779 0 787 780 0 2,422 1,529 0 One to five years 11 Gross purchases 12,901 19,731 14.482 2,385 734 1,332 1,045 925 2,983 1,883 1? Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -37,777 -44,032 -52,068 0 -8,663 -5,997 0 -5,405 -7,794 0 14 Exchanges 37,154 42,604 46,177 0 6,608 5,737 0 6,667 4,945 0 Five to ten years 15 Gross purchases 2,294 4,303 5,871 448 0 510 771 1,283 0 0 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -5,908 -5,841 -6,801 0 0 -699 0 0 -2,825 0 18 Exchanges 7,439 7,583 6,585 0 0 1,275 0 0 971 0 More than ten years 19 Gross purchases 4,884 9,428 5,833 547 982 0 0 296 495 1,000 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -2,377 -717 -3,155 0 0 -1,261 0 0 0 0 22 Exchanges 4,842 3,139 1,894 0 0 0 0 0 883 0 All maturities 23 Gross purchases 29,926 45,357 43,670 4,326 2,495 4,929 3,745 3,024 7,766 3,529 74 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 4,676 1,429 28,301 3,898 3,443 1,802 1,145 2,650 2,166 211 Matched transactions 26 Gross purchases 4,430,457 4,413,430 4,399,257 335,321 344,920 351,391 345,680 356,250 320,060 396,029 27 Gross sales 4,434,358 4,431,685 4,381,188 334,530 346,428 351,232 348,917 352,336 322,056 395,151 Repurchase agreements 28 Gross purchases 512,671 281,599 0 0 0 0 0 0 0 0 29 Gross sales 514,186 301,273 0 0 0 0 0 0 0 0 30 Net change in U.S. Treasury securities 19,835 5,999 33,439 1,219 -2,457 3,286 -637 4,289 3,604 4,196 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 0 0 32 Gross sales 25 0 0 0 0 0 0 0 0 0 33 Redemptions 322 157 51 10 0 0 0 0 120 0 Repurchase agreements 34 Gross purchases 284,316 360,069 0 0 0 0 0 0 0 0 35 Gross sales 276,266 370,772 0 0 0 0 0 0 0 0 36 Net change in federal agency obligations 7,703 -10,859 -51 -10 0 0 0 0 -120 0 Reverse repurchase agreements 37 Gross purchases 0 0 0 0 0 0 0 0 00 0 38 Gross sales 0 0 0 0 0 0 0 0 0 0 Repurchase agreements 39 Gross purchases 0 304,989 890,236 66,080 64,428 87,125 95,470 104,930 67,655 86,472 40 Gross sales 0 164,349 987,501 67,285 62,308 79,295 79,365 129,385 62,910 88,142 41 Net change in triparty obligations 0 140,640 -97,265 -1,205 2,120 7.830 16,105 -24,455 4,745 -1,670 42 Total net change in System Open Market Account. . . 27,538 135,780 -63,877 4 -337 11,116 15,468 -20,166 8,229 2,526 I. Sales, redemptions, and negative figures reduce holdings of the System Open Market 2. Transactions exclude changes in compensation for the effects of inflation on the principal Account; all other figures increase such holdings. of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic NonfinancialS tatistics • July 2001 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 2001 2001 Mar. 28 Apr. 4 Apr. 11 Apr. 18 Apr. 25 Feb. 28 Mar. 31 Apr. 30 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 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 3 1,147 1,154 1,148 1,137 1,121 1,115 1,179 1,129 Loans 4 To depository institutions 16 178 39 48 66 18 22 80 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Triparty Obligations 7 Repurchase agreements—triparty2 15,500 21,500 18,750 29,264 16,507 23,665 21,995 25,007 Federal agency obligations3 8 Bought outright 10 10 10 10 10 10 10 10 9 Held under repurchase agreements 0 0 0 0 0 0 0 0 10 Total U.S. Treasury securities3 524,946 523,925 523,899 525,195 527,300 519,618 523,862 525,911 11 Bought outright4 524,946 523,925 523,899 525,195 527,300 519,618 523,862 525,911 1? Bills 185,333 184,182 182,400 182,037 181,923 182,998 184,244 180,787 13 Notes 243,658 243,785 244,597 246,204 248,286 241,792 243,661 247,965 14 Bonds 95,956 95,958 96,901 96,953 97,091 94,827 95,957 97,159 15 Held under repurchase agreements 0 0 0 0 0 0 0 0 16 Total loans and securities 540,472 545,612 542,698 554,517 543,882 543,311 545,889 551,008 17 Items in process of collection 6,681 9,270 11,270 9,264 8,018 9,019 6,292 2,569 18 Bank premises 1,479 1,488 1,490 1,490 1,491 1,476 1,487 1,497 Other assets 19 Denominated in foreign currencies5 15,427 14,559 14,565 14,571 14,578 15,386 14,554 14,766 20 All other6 19,558 19,443 20,068 20,361 20,914 17,534 19,748 20,602 21 Total assets 598,010 604,772 604,484 614,587 603,250 601,086 602,394 604,818 LIABILITIES 22 Federal Reserve notes 556,072 557,979 558,884 559,095 558,086 554,662 555,239 557,418 23 Reverse repurchase agreements—triparty 0 0 0 0 0 0 0 0 24 Total deposits 16,389 20,630 19,505 28,951 19,066 20,667 23,803 26,571 25 Depository institutions 11,230 14,963 13,958 21,756 11,132 15,139 17,828 18,172 26 U.S. Treasury—General account 4,764 5,141 5,128 6,753 7,483 4,956 5,657 7,894 27 Foreign—Official accounts 145 150 73 107 121 196 70 102 28 Other 251 376 346 335 330 377 248 403 7.9 Deferred credit items 7,529 8,921 8,383 8,864 8,438 7,915 5,911 2,596 30 Other liabilities and accrued dividends7 3,817 3,748 3,674 3,583 3,524 3,931 3,858 3,520 31 Total liabilities 583,808 591,279 590,446 600,492 589,115 587,175 588,811 590,105 CAPITAL ACCOUNTS 32 Capital paid in 7,029 7,031 7,043 7,046 7,050 7,023 7,029 7,043 33 Surplus 6,489 6,263 6,303 6,332 6,375 6,355 6,217 6,371 34 Other capital accounts 685 199 692 716 711 534 336 1,299 35 Total liabilities and capital accounts 598,010 604,772 604,484 614,587 603,250 601,086 602,394 604,818 MEMO 36 Marketable U.S. Treasury securities held in custody for foreign and international accounts n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Federal Reserve note statement 37 Federal Reserve notes outstanding (issued to Banks) 741,569 741,072 740,532 740,208 740,132 744,972 741,342 739,839 38 LESS: Held by Federal Reserve Banks 185,497 183,093 181,648 181,113 182,046 190,310 186,103 182,421 39 Federal Reserve notes, net 556,072 557,979 558,884 559,095 558,086 554,662 555,239 557,418 Collateral held against notes, net 40 Gold certificate account 11,046 11,046 11,046 11,046 11,046 11,046 11,046 1111,,004466 41 Special drawing rights certificate account 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 4? Other eligible assets 2,370 0 2,979 0 1,023 0 0 0 43 U.S. Treasury and agency securities 540,456 544,733 542,659 545,850 543,817 541,417 541,993 544,172 44 Total collateral 556,072 557,979 558,884 559,095 558,086 554,662 555,239 557,418 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 TTTyyypppeee ooofff hhhooollldddiiinnnggg aaannnddd mmmaaatttuuurrriiitttyyy 2001 2001 Mar. 28 Apr. 4 Apr. 11 Apr. 18 Apr. 25 Feb. 28 Mar. 31 Apr. 30 1 Total loans 16 178 39 48 66 18 22 80 2 Within fifteen days' 16 156 10 47 63 16 22 72 3 Sixteen days to ninety days 0 21 29 1 3 2 0 8 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Total U.S. Treasury securities2 524,946 523,925 523,899 525,195 527,300 519,618 523,861 525,912 6 Within fifteen days' 20,700 16,330 15,132 21,132 30,649 12,450 9,959 18,127 7 Sixteen days to ninety days 116,999 121,145 121,899 116,128 107,022 116,644 126,988 113,525 8 Ninety-one days to one year 122,571 123,351 122,013 121,421 122,317 128,775 122,234 127,821 9 One year to five years 136,156 134,009 134,752 136,354 136,449 134,268 136,157 135,551 10 Five years to ten years 54,921 55,488 55,558 55,612 56,313 54,893 54,923 56,337 11 More than ten years 73,599 73,602 74,545 74,547 74,550 72,589 73,600 74,551 12 Total federal agency obligations 10 10 10 10 10 10 10 10 13 Within fifteen days' 0 0 0 0 0 0 0 0 14 Sixteen days to ninety days 0 0 0 0 0 0 0 0 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 0 0 0 0 0 0 0 0 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 DomesticN onfinancialS tatistics • July 2001 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 2000 2001 IItteemm 1997 1998 1999 2000 Dec. Dec. Dec. Dec. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS* 1 Total reserves3 46.85 45.18 41.78 38.51 39.39 39.02 39.02 38.51 38.83 38.87 38.26 38.79 2 Nonborrowed reserves4 46.52 45.07 41.46 38.30 38.91 38.60 38.74 38.30 38.75 38.82 38.20 38.74 3 Nonborrowed reserves plus extended credit5 46.52 45.07 41.46 38.30 38.91 38.60 38.74 38.30 38.75 38.82 38.20 38.74 4 Required reserves 45.16 43.67 40.48 37.18 38.27 37.87 37.82 37.18 37.57 37.43 36.87r 37.51 5 Monetary base6 479.47 513.49 593.09 583.97 578.34 579.70 581.40 583.97 589.40 591.13r 592.43r 595.93 Not seasonally adjusted 6 Total reserves7 48.01 45.31 41.89 38.60 39.22 38.84 38.85 38.60 39.78 39.38 31.16' 38.66 7 Nonborrowed reserves 47.69 45.19 41.57 38.39 38.75 38.42 38.56 38.39 39.70 39.33 37.71 38.61 8 Nonborrowed reserves plus extended credit5 47.69 45.19 41.57 38.39 38.75 38.42 38.56 38.39 39.70 39.33 37.71 38.61 9 Required reserves8 46.33 43.80 40.59 37.27 38.11 37.69 37.65 37.27 38.52 37.95 36.38 37.38 10 Monetary base9 484.98 518.27 600.72 590.20 576.84 578.29 582.36 590.20 591.50r 589.04r 591.36r 594.88 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 47.92 45.21 41.65 38.54 39.17 38.78 38.79 38.54 39.79 39.35 37.72 38.60 12 Nonborrowed reserves 47.60 45.09 41.33 38.33 38.69 38.36 38.50 38.33 39.72 39.30 37.66 38.54 13 Nonborrowed reserves plus extended credit5 47.60 45.09 41.33 38.33 38.69 38.36 38.50 38.33 39.72 39.30 37.66 38.54 14 Required reserves 46.24 43.70 40.36 37.22 38.05 37.63 37.58 37.22 38.54 37.92 36.33 37.32 15 Monetary base'" 491.79 525.06 608.02 597.12 583.52 585.01 589.12 597.12 598.38r 595.59r 598.20r 601.79 16 Excess reserves'3 1.69 1.51 1.30 1.33 1.12 1.15 1.20 1.33 1.25 1.43 1.39r 1.28 17 Borrowings from the Federal Reserve .32 .12 .32 .21 .48 .42 .28 .21 .07 .05 .06 .05 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 2001 1997 1998 1999 2000 IItteemm Dec. Dec. Dec. Dec. Jan.r Feb.r Mar.r Apr. Seasonally adjusted Measures2 1 Ml 1,073.4 1,097.0 1,124.3 1,090.3 1,101.3 1,101.6 1,111.5 1,116.1 2 M2 4,030.4 4,383.4 4,650.0 4,943.4 4,994.3 5,039.5 5,100.7 5,144.2 3 M3 5,427.8 6,027.3 6,526.4r 7,098.lr 7,196.3 7,262.1 7,330.1 7,441.7 4 Debt 15,223.1 16,277.9 17,379.4 18,303.3 18,364.8 18,462.5 18,573.4 n.a. Ml components 5 Currency3 424.3 459.2 516.7 530.1 534.5 537.4 539.2 554411..99 6 Travelers checks4 8.1 8.2 8.2 8.0 8.1 8.0 7.9 7.8 7 Demand deposits5 395.4 379.4 355.6 313.2 317.1 315.0 315.7 311.9 8 Other checkable deposits6 245.7 250.1 243.7 239.0 241.7 241.3 248.7 254.6 Nontransaction components 9 In M27 2,957.0 3,286.4 3,525.7 3,853.1 3,893.0 3,937.9 3,989.2 4,028.1 10 In M3 only8 1,397.4 1,643.9 l,876.5r 2,154.7r 2,201.9 2,222.6 2,229.3 2,297.4 Commercial banks 11 Savings deposits, including MMDAs 1,021.1 1,185.8 1,287.0 1,420.4 1,436.0 1,464.5 1,490.5 1,515.8 12 Small time deposits9 625.5 626.4 635.2 699.9 702.8 699.5 695.8 690.5 13 Large time deposits10' 11 517.6 575.4 648.6 726.9 740.4 705.5 679.1 698.6 Thrift institutions 14 Savings deposits, including MMDAs 376.8 414.1 449.3 451.7 452.5 463.1 472.6 476.7 15 Small time deposits9 342.9 325.8 320.9 346.3 350.6 352.8 353.2 354.0 16 Large time deposits10 85.5 88.7 91.3 103.1 106.1 106.8 107.0 108.9 Money market mutual funds 17 Retail 590.6 734.3 833.4 934.8 951.1 958.0 977.1 991.0 18 Institution-only 390.0 530.4 622.4 767.4 801.0 859.0 888.0 919.5 Repurchase agreements and eurodollars 19 Repurchase agreements'2 254.3 297.5 340.8r 336600..22rr 356.0 346.0 339.0 359.2 20 Eurodollars12 150.0 151.8 173.3 197.1 198.5 205.3 216.2 211.2 Debt components 21 Federal debt 3,800.6 3,751.2 3,660.3 3,400.5 3,380.4 3,372.0 3,375.4 n.a. 22 Nonfederal debt 11,422.5 12,526.6 13,719.1 14,902.9r 14,984.4 15,090.5 15,198.1 n.a. Not seasonally adjusted Measures1 23 Ml 1,096.9 1,120.4 1,147.8 1,114.6 1,101.5 1,089.0 1,106.2 1,121.3 24 M2 4,051.8 4,405.7 4,674.0 4,972.1 5,003.7 5,038.2 5,135.2 5,208.1 25 M3 5,453.1 6,059.4 6,563.9r 7,143.2r 7,226.5 7,297.0 7,392.3 7,504.4 26 Debt 15,218.8 16,273.1 17,374.8 18,295.4r 18,362.0 18,457.5 18,571.9 n.a. Ml components 27 Currency3 428.1 463.3 521.5 535.4 532.3 535.9 539.2 542.3 28 Travelers checks4 8.3 8.4 8.4 8.1 8.2 8.2 8.0 7.9 29 Demand deposits5 412.4 395.9 371.2 328.6 317.1 305.9 310.6 312.0 30 Other checkable deposits6 248.2 252.8 246.6 242.5 244.0 239.0 248.4 259.1 Nontransaction components 31 In M27 2,954.9 3,285.3 3,526.3 3,857.5 3,902.2 3,949.2 4,029.0 4,086.8 32 In M3 only8 1,401.3 1,653.7 l,889.9r 2,171.r 2,222.8 2,258.8 2,257.0 2,296.3 Commercial banks 33 Savings deposits, including MMDAs 1,020.4 1,186.0 1,288.5 1,425.1 1,433.7 1,456.3 1,497.4 1,540.9 34 Small time deposits9 625.3 626.5 635.4 700.1 704.1 701.9 697.6 691.0 35 Large time deposits10' " 517.0 574.8 648.0 726.3r 734.0 705.9 684.6 703.4 Thrift institutions 36 Savings deposits, including MMDAs 376.5 414.2 449.8 453.2 451.8 460.4 474.8 484.6 37 Small time deposits9 342.8 325.8 321.0 346.5 351.2 354.0 354.1 354.3 38 Large time deposits10 85.4 88.6 91.2 103.0 105.2 106.9 107.9 109.7 Money market mutual funds 39 Retail 589.9 732.7 831.5 932.6 961.4 976.7 1,005.1 1,016.0 40 Institution-only 397.0 542.4 637.3 785.3 827.8 889.0 905.7 915.4 Repurchase agreements and eurodollars 41 Repurchase agreements'2 249.5 293.4 333377..44rr 357.lr 355.4 350.5 341.7 355.9 42 Eurodollars'2 152.3 154.5 176.0 199.5 200.3 206.5 217.2 211.8 Debt components 43 Federal debt 3,805.8 3,754.9 3,663.2 3,403.5 3,373.1 3,368.7 3,392.5 n.a. 44 Nonfederal debt 11,413.0 12,518.2 13,711.6 14,892.0 14,988.9 15,088.9 15,179.4 n.a. Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • July 2001 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly prises or federally related mortgage pools) and the nonfederal sectors (state and local statistical release. Historical data starting in 1959 are available from the Money and Reserves governments, households and nonprofit organizations, nonfinancial corporate and nonfarm Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and System, Washington, DC 20551. corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data, 2. Composition of the money stock measures and debt is as follows: which are derived from the Federal Reserve Board's flow of funds accounts, are break- Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of adjusted (that is, discontinuities in the data have been smoothed into the series) and depository institutions; (2) travelers checks of nonbank issuers; (3) demand deposits at all month-averaged (that is, the data have been derived by averaging adjacent month-end levels). commercial banks other than those owed to depository institutions, the U.S. government, and 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository foreign banks and official institutions, less cash items in the process of collection and Federal institutions. Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, Travelers checks issued by depository institutions are included in demand deposits. credit union share draft accounts, and demand deposits at thrift institutions. Seasonally 5. Demand deposits at commercial banks and foreign-related institutions other than those adjusted Ml is computed by summing currency, travelers checks, demand deposits, and owed to depository institutions, the U.S. government, and foreign banks and official institu- OCDs, each seasonally adjusted separately. tions, less cash items in the process of collection and Federal Reserve float. M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time 6. Consists of NOW and ATS account balances at all depository institutions, credit union deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) share draft account balances, and demand deposits at thrift institutions. balances in retail money market mutual funds. Excludes individual retirement accounts 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail (IRAs) and Keogh balances at depository institutions and money market funds. Seasonally money fund balances. adjusted M2 is calculated by summing savings deposits, small-denomination time deposits, 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities and retail money fund balances, each seasonally adjusted separately, and adding this result to (overnight and term) issued by depository institutions, and (4) eurodollars (overnight and seasonally adjusted M1. term) of U.S. addressees. M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) 9. Small time deposits—including retail RPs—are those issued in amounts of less than issued by all depository institutions, (2) balances in institutional money funds, (3) RP $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are liabilities (overnight and term) issued by all depository institutions, and (4) eurodollars subtracted from small time deposits. (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those at all banking offices in the United Kingdom and Canada. Excludes amounts held by booked at international banking facilities. depository institutions, the U.S. government, money market funds, and foreign banks and 11. Large time deposits at commercial banks less those held by money market funds, official institutions. Seasonally adjusted M3 is calculated by summing large time deposits, depository institutions, the U.S. government, and foreign banks and official institutions. institutional money fund balances, RP liabilities, and eurodollars, each seasonally adjusted 12. Includes both overnight and term. separately, and adding this result to seasonally adjusted M2. Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial sectors—the federal sector (U.S. government, not including government-sponsored enter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A15 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1 A. All commercial banks Billions of dollars Monthly averages Wednesday figures Account 2000 2000r 2001 2001 Apr.r Oct. Nov. Dec. Jan. Feb/ Mar.r Apr. Apr. 4 Apr. 11 Apr. 18 Apr. 25 Seasonally adjusted Assets 1 Bank credit 4,941.6 5,147.5 5,166.4 5,216.3 5,267. ff 5,281.0 5,289.1 5,310.2 5,304.5 5,321.0 5,303.6 5,311.0 2 Securities in bank credit 1,294.0 1,316.8 1,311.4 1,335.4 l,357.0r 1,351.8 1,345.1 1,361.1 1,367.7 1,361.9 1,354.9 1,363.6 3 U.S. government securities 816.7 794.3 785.9 788.8 787. lr 777.8 758.5 766.7 767.8 768.8 756.6 772.8 4 Other securities 477.3 522.5 525.4 546.6 569.8r 574.0 586.7 594.3 599.9 593.2 598.3 590.8 5 Loans and leases in bank credit2 . . . 3,647.6 3,830.7 3,855.1 3,880.9 3,910.0 3,929.2 3,943.9 3,949.1 3,936.8 3,959.1 3,948.7 3,947.4 6 Commercial and industrial 1,040.4 1,082.8 1,087.0 1,094.4 1,109^ 1,118.5 1,117.9 1,114.2 1,109.6 1,114.2 1,115.4 1,115.7 7 Real estate 1,555.1 1,638.4 1,651.3 1,658.0 1,661.1 1,671.4 1,679.0 1,685.3 1,680.0 1,689.6 1,684.9 1,680.6 8 Revolving home equity 112.5 125.0 127.1 129.4 131.2 132.3 133.8 134.8 134.0 134.2 134.7 135.0 9 Other 1,442.6 1,513.4 1,524.2 1,528.6 1,529.9 1,539.1 1,545.2 1,550.6 1,546.0 1,555.3 1,550.2 1,545.6 10 Consumer 507.9 530.1 533.9 537.0 540.8 540.3 538.3 541.8 539.5 540.0 543.6 542.7 11 Security3 147.4 164.1 165.1 168.8 170.3 169.1 173.9 174.7 180.0 185.1 174.2 168.5 12 Other loans and leases 396.9 415.4 417.8 422.8 427.9 429.9 434.9 433.1 427.8 430.2 430.7 439.8 13 Interbank loans 223.8 246.5 245.9 252.2 270.2 266.7 275.0 292.0 281.9 282.2 293.7 307.9 14 Cash assets4 281.2 267.1 256.1 267.2 273. r 265.2 268.0 271.0 266.1 269.0 278.0 265.3 15 Other assets5 370.5 413.6 402.7 397.1 412. lr 414.2 430.2 429.6 431.6 423.0 423.2 440.4 16 Total assets6 5,757.6 6,012.5 6,008.4 6,068.9 6,157.7 6,162.1 6,197.4 6,237.6 6,219.0 6,230.1 6,233.2 6,259.3 Liabilities 17 Deposits 3,626.3 3,784.4 3,778.7 3,845.9 3,891.3r 3,889.1 3,923.4 3,984.4 3,982.1 3,974.3 3,997.5 3,986.8 18 Transaction 627.3 611.1 601.2 602.0 608.7r 607.6 607.0 611.6 587.6 596.1 613.8 648.4 19 Nontransaction 2,999.0 3,173.3 3,177.5 3,243.9 3,282.7r 3,281.5 3,316.4 3,372.8 3,394.5 3,378.1 3,383.7 3,338.4 20 Large time 870.6 917.6 917.4 935.3 946.8 941.5 933.5 945.5 954.7 947.0 946.8 946.4 21 Other 2,128.4 2,255.7 2,260.1 2,308.6 2,335.9r 2,340.0 2,382.9 2,427.4 2,439.9 2,431.1 2,436.9 2,392.1 22 Borrowings 1,184.7 1,208.7 1,202.9 1,242.2 1,262.3 1,258.0 1,243.8 1,278.1 1,270.5 1,283.2 1,278.4 1,284.1 23 From banks in the U.S 375.6 374.0 368.7 396.7 397.2r 396.0 395.6 405.8 408.5 412.5 406.0 411.8 24 From others 809.2 834.8 834.2 845.5 865. r 861.9 848.2 872.3 862.0 870.7 872.4 872.3 25 Net due to related foreign offices 222.9 252.6 244.3 225.7 221.2 219.3 233.6 193.2 167.0 182.4 186.1 210.4 26 Other liabilities 297.9 347.9 347.2 345.1 362.7 343.5 355.5 351.3 359.6 355.7 357.1 344.4 27 Total liabilities 5,331.8 5,593.7 5,573.0 5,658.9 5,737.5r 5,709.9 5,7563 5,807.1 5,7793 5,795.4 5,819.0 5,825.7 28 Residual (assets less liabilities)7 425.7 418.8 435.4 410.0 420.2 452.2 441.1 430.4 439.7 434.7 414.2 433.7 Not seasonally adjusted Assets 29 Bank credit 4,939.0 5,154.9 5,185.6 5,252.7 5,281.8r 5,276.0 5,276.4 5,302.7 5,288.3 5,303.6 5,308.6 5,300.6 30 Securities in bank credit 1,296.8 1,313.7 1,315.4 1,341.0 l,362.2r 1,353.6 1,349.2 1,362.7 1,372.2 1,366.0 1,357.6 1,361.5 31 U.S. government securities 822.3 789.2 787.0 788.6 789.3r 779.5 764.3 771.6 776.3 776.7 762.4 774.4 32 Other securities 474.5 524.4 528.3 552.4 572.8r 574.0 584.9 591.1 595.9 589.3 595.3 587.1 33 Loans and leases in bank credit2 . . . 3,642.2 3,841.3 3,870.2 3,911.7 3,919.6 3,922.4 3,927.2 3,940.0 3,916.2 3,937.7 3,951.0 3,939.2 34 Commercial and industrial 1,045.5 1,082.3 1,088.1 1,096.6 1,107.1 1,117.9 1,119.4 1,118.9 1,114.2 1,115.1 1,122.6 1,120.1 35 Real estate 1,551.3 1,641.7 1,656.9 1,662.6 1,660.2 1,664.9 1,671.6 1,681.0 1,673.6 1,684.7 1,680.4 1,676.7 36 Revolving home equity 111.6 126.0 127.7 129.5 130.4 131.2 132.2 133.8 132.2 132.6 133.7 134.7 37 Other 1,439.6 1.515.7 1,529.1 1,533.2 1,529.8 1,533.7 1,539.4 1,547.2 1,541.3 1,552.1 1,546.7 1,542.0 38 Consumer 506.1 529.9 534.3 542.8 545.1 540.9 534.5 538.7 534.1 535.2 540.3 541.5 39 Credit cards and related plans.. n.a. 206.7 209.9 218.7 218.8 213.8 209.6 214.7 210.9 211.2 215.2 217.7 40 Other n.a. 323.2 324.4 324.1 326.3 327.1 324.9 324.0 323.2 324.0 325.1 323.8 41 Security3 144.5 171.2 171.1 181.0 178.1 171.9 170.0 170.4 165.2 174.4 177.7 166.4 42 Other loans and leases 394.9 416.1 419.9 428.7 429.1 426.8 431.7 431.0 429.0 428.3 430.0 434.5 43 Interbank loans 228.1 242.0 252.6 261.0 272.2 268.5 282.3 298.1 300.9 299.0 305.4 296.5 44 Cash assets4 277.5 267.9 263.2 286.5 289.2r 266.3 258.1 266.8 261.7 259.1 280.2 255.8 45 Other assets5 370.4 410.0 402.4 403.3 414.0r 413.4 429.5 429.4 435.5 423.2 423.0 436.3 46 Total assets6 5,755.7 6,012.9 6,041.0 6,139.5 6,192.7 6,159.1 6,181.5 6,232.0 6,221.6 6,220.1 6,2523 6,224.4 Liabilities 47 Deposits 3,645.0 3,773.0 3,800.7 3,892.4 3,906. lr 3,906.0 3,933.8 4,003.7 4,022.9 4,013.4 4,031.5 3,969.6 48 Transaction 634.8 605.1 607.4 631.2 620.4r 599.4 601.0 617.8 601.5 605.0 632.8 636.4 49 Nontransaction 3,010.2 3,167.9 3,193.3 3,261.2 3,285.7r 3,306.6 3,332.7 3,385.8 3,421.4 3,408.4 3,398.8 3,333.2 50 Large time 872.0 912.6 924.8 949.3 959.9 953.3 936.6 946.8 954.9 947.3 947.7 948.5 51 Other 2,138.2 2,255.3 2,268.5 2,311.9 2,325.8r 2,353.3 2,396.1 2.439.1 2,466.5 2,461.1 2,451.0 2,384.7 52 Borrowings 1,186.4 1,206.9 1,211.3 1,245.0 1,279.6 1,261.6 1,242.1 1,278.9 1,261.7 1,268.3 1,279.9 1,293.9 53 From banks in the U.S 379.3 369.3 369.5 398.6 403.4r 400.4 399.2 409.0 410.8 411.8 409.7 416.5 54 From others 807.1 837.6 841.8 846.5 876.2r 861.1 842.9 869.8 851.0 856.5 870.2 877.4 55 Net due to related foreign offices .... 216.2 253.0 246.6 230.6 225.4 225.5 232.5 186.1 163.1 173.9 176.2 201.3 56 Other liabilities 293.7 348.1 349.1 347.5 365.1 347.4 354.3 346.4 356.0 347.7 348.9 340.9 57 Total liabilities 53413 5,581.0 5,607.7 5,715.6 5,776.2 5,740.5 5,762.7 5,815.0 5,803.8 5,8033 5,836.5 5,805.7 58 Residual (assets less liabilities)1 414.3 431.9 433.3 423.9 416.5 418.6 418.8 416.9 417.9 416.7 415.8 418.6 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • July 2001 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 2000 2000r 2001 2001 Apr.r Oct. Nov. Dec. Jan. Feb.r Mar.r Apr. Apr. 4 Apr. 11 Apr. 18 Apr. 25 Seasonally adjusted Assets 1 4,372.2 4,560.2 4,578.3 4,616.9 44,,665522..22rr 4,670.6 4,668.7 4,693.4 4,678.7 4,690.1 4,692.0 4,696.5 1,089.3 1,115.0 1,115.8 1,130.3 l,148.1r 1,151.9 1,139.7 1,146.4 1,152.9 1,146.6 1,142.6 1,145.4 U.S. government securities 736.4 724.3 717.9 719.5 719.8r 713.2 690.6 691.7 693.4 694.2 683.9 692.4 4 352.8 390.7 398.0 410.8 428.3r 438.7 449.1 454.7 459.5 452.4 458.7 452.9 Loans and leases in bank credit2 3,282.9 3,445.1 3,462.5 3,486.5 3,504.1 3,518.7 3,529.0 3,547.0 3,525.8 3,543.5 3,549.4 3,551.1 6 Commercial and industrial 840.1 879.1 881.0 885.4 895.3 900.3 897.7 893.5 890.7 892.4 894.8 894.2 7 1,537.8 1,620.3 1,632.8 1,639.4 1,642.2 1,652.7 1,660.5 1,667.3 1,662.0 1,671.2 1,666.7 1,662.7 8 Revolving home equity 112.5 125.0 127.1 129.4 131.2 132.3 133.8 134.8 134.0 134.2 134.7 135.0 9 Other 1,425.3 1,495.3 1,505.7 1,510.0 1,510.9 1,520.4 1,526.7 1,532.5 1,528.0 1,537.0 1,532.0 1,527.7 in 507.9 530.1 533.9 537.0 540.8 540.3 538.3 541.8 539.5 540.0 543.6 542.7 11 Security3 68.8 67.4 64.7 68.7 65.1 63.3 67.4 79.3 73.7 78.2 81.3 79.4 i? Other loans and leases 328.2 348.2 350.1 356.0 360.7 362.0 365.1 365.1 359.9 361.7 363.1 372.0 n 194.9 219.4 219.1 225.2 240.9 238.1 244.4 262.6 253.8 253.9 263.0 277.9 14 235.0 225.0 217.5 227.3 231.5 223.3 227.3 231.7 224.2 229.1 239.0 226.3 15 Other assets5 331.0 372.3 362.7 360.9 375.0r 377.6 391.9 388.7 389.3 382.2 379.9 400.0 16 Total assets6 5,073.9 5315.1 5,315.4 5,366.8 5,435.4 5,445.0 5,467.9 5,511.5 5,481.2 5,490.5 5,509.0 5,535.8 Liabilities 17 3,240.0 3,405.5 3,401.5 3,467.6 3,505.4 3,510.0 3,546.0 3,591.9 3,588.8 3,583.2 3,601.8 3,588.7 18 616.3 600.4 590.4 591.3 598.0r 597.4 597.6 601.1 577.7 585.2 603.6 637.7 19 Nontransaction 2,623.7 2,805.1 2,811.1 2,876.3 2,907.4r 2,912.6 2,948.5 2,990.8 3,011.0 2,998.1 2,998.2 2,951.0 70 497.8 545.6 547.2 563.9 567.5 568.8 567.7 565.7 573.4 569.2 563.6 561.1 ?1 Other 2,126.0 2,259.5 2,263.9 2,312.5 2,339.9r 2,343.9 2,380.7 2,425.1 2,437.7 2,428.8 2,434.6 2,389.9 77 Borrowings 985.5 987.7 979.9 1,002.8 1,020.7 1,020.8 1,010.2 1,042.1 1,031.8 1,039.1 1,033.9 1,052.7 73 354.6 355.0 350.1 374.5 372.T 373.7 371.4 382.3 383.0 391.0 379.6 386.7 74 630.9 632.7 629.8 628.3 648.6r 647.1 638.9 659.9 648.8 648.1 654.3 666.0 75 Net due to related foreign offices .... 207.3 236.1 237.1 227.6 217.7 214.6 211.8 189.0 167.8 179.2 187.7 201.8 26 Other liabilities 220.6 268.2 271.8 272.8 285.2 266.1 272.6 263.1 271.9 268.5 269.6 252.7 27 Total liabilities 4,653.4 4,897.5 4,890.2 4,970.8 5,029.0 5,011.4 5,040.7 5,086.2 5,060.2 5,070.0 5,093.0 5,096.0 28 Residual (assets less liabilities)7 420.4 417.5 425.2 395.9 406.5 433.5 427.2 425.4 421.0 420.5 416.0 439.8 Not seasonally adjusted Assets 29 Bank credit 4,371.4 4,563.5 4,594.8 4,642.5 4,658.9r 4,662.3 4,660.9 4,688.7 4,673.7 4,682.5 4,692.9 4,685.9 30 Securities in bank credit 1,092.0 1,111.9 1,119.8 1,135.9 l,153.3r 1,153.7 1,143.8 1,148.0 1,157.4 1,150.6 1,145.3 1,143.3 31 U.S. government securities 742.1 719.2 718.9 719.3 722.0r 715.0 696.5 696.6 701.9 702.1 689.7 694.1 32 Other securities 350.0 392.7 400.9 416.6 431.3r 438.7 447.3 451.4 455.5 448.4 455.6 449.2 33 Loans and leases in bank credit2 3,279.4 3,451.6 3,475.0 3,506.6 3,505.7r 3,508.6 3,517.1 3,540.8 3,516.3 3,532.0 3,547.6 3,542.6 34 Commercial and industrial 846.8 878.4 881.4 885.2 890.9 897.5 898.1 900.0 895.1 895.5 903.0 901.2 35 Real estate 1,534.0 1,623.6 1,638.3 1,644.1 1,641.2 1,646.2 1,653.2 1,662.9 1,655.6 1,666.3 1,662.2 1,658.8 36 Revolving home equity 111.6 126.0 127.7 129.5 130.4 131.2 132.2 133.8 132.2 132.6 133.7 134.7 37 Other 1,422.3 1,497.6 1,510.6 1,514.6 1,510.8 1,515.0 1,520.9 1,529.1 1,523.3 1,533.8 1,528.5 1,524.1 38 Consumer 506.1 529.9 534.3 542.8 545.1 540.9 534.5 538.7 534.1 535.2 540.3 541.5 39 Credit cards and related plans. . n.a. 206.7 209.9 218.7 218.8 213.8 209.6 214.7 210.9 211.2 215.2 217.7 40 Other n.a. 323.2 324.4 324.1 326.3 327.1 324.9 324.0 323.2 324.0 325.1 323.8 41 Security3 66.6 70.3 69.2 74.7 67.6 65.1 69.4 76.4 70.4 75.1 80.4 74.9 42 Other loans and leases 326.1 349.4 351.7 359.7 360.8 358.9 361.9 362.9 361.1 359.9 361.7 366.2 43 Interbank loans 199.1 215.0 225.8 233.9 242.9 239.9 251.7 268.7 272.8 270.7 274.7 266.5 44 Cash assets4 233.2 225.0 222.5 243.8 245.0r 224.2 218.8 229.0 221.4 221.2 242.7 218.6 45 Other assets5 331.8 369.3 362.4 365.4 375.6r 375.8 390.6 389.4 393.6 383.2 380.9 397.0 46 Total assets6 5,076.6 5,311.2 5,343.1 5,422.1 5,458.5 5,437.7 5,457.5 5,511.3 5,497.2 5,493.1 5,526.5 5,503.3 Liabilities 47 Deposits 3,255.9 3,400.3 3,420.8 3,503.5 3,510.3 3,518.8 3,551.9 3,608.3 3,626.8 3,621.5 3,633.9 3,567.4 48 Transaction 624.3 594.3 596.4 619.8 609.6r 589.4 591.8 607.9 591.9 594.7 623.1 626.5 49 Nontransaction 2,631.5 2,806.0 2,824.4 2,883.7 2,900.7r 2,929.3 2,960.1 3,000.4 3,034.9 3,026.8 3,010.8 2,940.9 50 Large time 495.7 546.9 552.1 567.7 570.8 572.1 566.2 563.6 570.6 567.9 562.1 558.5 51 Other 2,135.8 2,259.0 2,272.3 2,315.9 2,329.9r 2,357.3 2,393.9 2,436.8 2,464.2 2,458.9 2,448.8 2,382.4 52 Borrowings 987.2 985.9 988.3 1,005.7 1,038.0 1,024.4 1,008.6 1,042.8 1,023.0 1,024.2 1,035.5 1,062.6 53 From banks in the U.S 358.4 350.3 350.9 376.4 378.3r 378.1 375.0 385.5 385.3 390.3 383.4 391.4 54 From others 628.8 635.5 637.4 629.3 659.7r 646.3 633.6 657.3 637.7 633.9 652.1 671.1 55 Net due to related foreign offices .... 205.0 236.3 239.0 227.7 218.6 217.4 210.6 186.5 164.7 173.0 181.8 203.6 56 Other liabilities 218.3 268.3 273.5 273.2 286.2 268.6 271.3 260.3 268.6 261.5 263.3 254.2 57 Total liabilities 4,666.4 4,890.7 4,921.6 5,010.0 5,053.0r 5,029.2 5,042.4 5,098.0 5,083.1 5,080.2 5,114.6 5,087.8 58 Residual (assets less liabilities)7 410.2 420.5 421.5 412.1 405.4 408.5 415.1 413.3 414.1 412.9 411.9 415.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A17 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 2000 2000r 2001 2001 Apr/ Oct. Nov. Dec. Jan. Feb. Mar. Apr. Apr. 4 Apr. 11 Apr. 18 Apr. 25 Seasonally adjusted Assets 1 Bank credit 2,471.5 2,537.3 2,535.8 2,553.5 2,571.3 2,582.7 2,590.1 2,610.3 2,601.5 2,610.0 2,606.3 2,613.7 2 Securities in bank credit 574.1 577.9 573.6 580.8 592.2 595.3 591.1 597.5 606.0 598.1 592.7 596.8 3 U.S. government securities 363.4 355.4 348.6 352.1 353.3 349.4 338.8 341.7 344.0 344.0 333.1 342.9 4 Trading account 21.4 21.2 21.6 28.8 34.2 37.5 35.4 33.7 41.1 41.7 32.5 26.8 5 Investment account 341.9 334.2 327.0 323.2 319.1 311.9 303.3 308.0 302.9 302.3 300.6 316.1 6 Other securities 210.8 222.5 225.0 228.7 238.9 245.9 252.3 255.8 262.0 254.1 259.5 253.9 7 Trading account 94.1 111.7 114.5 119.0 126.0 129.3 132.5 135.9 141.5 133.8 140.2 134.9 8 Investment account 116.7 110.7 110.6 109.8 112.9 116.6 119.9 119.9 120.5 120.2 119.3 119.0 9 State and local government . 25.5 25.9 26.3 26.3 27.1 27.6 28.1 28.4 28.4 28.4 28.5 28.5 10 Other 91.2 84.8 84.3 83.5 85.8 89.0 91.8 91.5 92.1 91.9 90.8 90.5 11 Loans and leases in bank credit2 . . . 1,897.4 1,959.4 1,962.2 1,972.7 1,979.1 1,987.4 1,999.0 2,012.8 1,995.4 2,012.0 2,013.7 2,016.9 12 Commercial and industrial 573.9 591.5 590.8 594.6 599.9 602.9 599.5 596.1 592.5 594.7 596.6 598.2 13 Bankers acceptances 1.1 .8 .9 .9 .8 .8 .8 .8 .8 .8 .8 .8 14 Other 572.8 590.7 590.0 593.8 599.1 602.1 598.8 595.3 591.7 594.0 595.8 597.4 15 Real estate 791.1 817.8 821.1 820.9 821.7 827.7 835.7 842.2 838.5 846.1 841.8 838.4 16 Revolving home equity 73.3 79.5 81.0 82.4 83.6 84.3 85.8 86.4 85.9 86.1 86.3 86.8 17 Other 717.8 738.4 740.1 738.5 738.1 743.4 749.9 755.8 752.6 760.0 755.5 751.6 18 Consumer 229.2 235.0 236.4 236.3 236.8 238.8 239.7 240.5 239.7 239.9 241.4 241.0 19 Security3 62.5 60.5 58.1 61.6 57.9 55.7 59.3 70.8 65.4 70.0 72.7 70.4 20 Federal funds sold to and repurchase agreements with broker-dealers 39.8 42.8 41.7 46.2 41.7 39.4 43.6 53.8 48.9 53.4 5577..22 5522..66 21 Other 22.7 17.7 16.4 15.3 16.2 16.2 15.7 17.0 16.5 16.5 15.5 17.8 22 State and local government 12.5 12.8 12.7 12.5 12.6 12.6 12.7 12.6 12.6 12.6 12.6 12.6 23 Agricultural 9.5 9.5 9.6 9.7 9.8 10.0 10.1 10.2 10.1 10.1 10.0 10.2 24 Federal funds sold to and repurchase agreements with others 13.7 17.0 19.0 21.0 25.7 26.1 26.0 22.8 21.9 24.8 2222..00 2211..11 25 All other loans 85.0 87.5 86.4 87.7 86.2 84.8 85.6 86.6 84.1 83.0 85.4 93.6 26 Lease-financing receivables 119.9 127.8 128.1 128.4 128.4 128.8 130.3 131.1 130.6 130.8 131.2 131.4 27 Interbank loans 129.0 137.0 138.6 137.7 153.6 140.6 136.6 144.4 141.7 144.4 146.1 149.3 28 Federal funds sold to and repurchase agreements with commercial banks 64.7 59.1 62.1 63.8 78.9 70.3 70.3 81.7 79.8 79.9 82.7 8888..00 29 Other 64.3 77.8 76.6 73.9 74.8 70.3 66.2 62.6 62.0 615 63.5 61.3 30 Cash assets4 156.0 143.8 139.0 144.1 146.0 137.3 141.6 145.1 137.5 143.6 153.8 139.2 31 Other assets5 223.0 259.8 254.1 248.5 260.2 262.5 271.4 264.9 263.4 258.5 258.1 275.8 32 Total assets6 2,944.6 3,0423 3,031.8 3,047.1 3,093.8 3,085.4 3,102.1 3,126.9 3,1063 3,118.7 3,126.7 3,140.2 Liabilities 33 Deposits 1,655.0 1,652.9 1,642.2 1,672.1 1,679.9 1,673.3 1,699.5 1,721.1 1,724.6 1,719.5 1,728.9 1,713.7 34 Transaction 314.4 304.5 296.2 297.0 300.1 298.0 301.4 302.2 290.1 294.6 302.9 320.8 35 Nontransaction 1,340.6 1,348.4 1,346.0 1,375.1 1,379.8 1,375.3 1,398.0 1,418.9 1,434.5 1,425.0 1,426.0 1,392.9 36 Large time 245.8 256.2 254.4 265.1 267.0 262.5 264.6 262.5 269.4 265.3 261.8 257.7 37 Other 1,094.8 1,092.2 1,091.6 1,110.0 1,112.7 1,112.8 1,133.4 1,156.4 1,165.1 1,159.7 1,164.2 1,135.2 38 Borrowings 653.7 657.8 652.6 666.2 676.8 679.5 676.8 705.3 698.6 708.4 696.3 713.3 39 From banks in the U.S 198.8 198.1 196.0 214.0 213.9 215.6 219.6 229.8 233.8 242.5 225.5 231.2 40 From others 454.9 459.7 456.7 452.3 462.9 463.9 457.2 475.5 464.7 465.9 470.8 482.2 41 Net due to related foreign offices 202.0 212.7 213.4 206.7 200.9 197.9 196.4 176.2 157.8 166.7 177.1 186.0 42 Other liabilities 163.4 216.1 217.9 218.7 231.8 212.2 216.6 206.8 215.2 212.1 213.3 196.4 43 Total liabilities 2,674.1 2,739.5 2,726.1 2,763.7 2,789.4 2,763.0 2,7893 2,809.5 2,1962 2,806.7 2^15.6 2,809.4 44 Residual (assets less liabilities)7 270.5 302.8 305.7 283.5 304.4 322.4 312.8 317.4 310.1 312.0 311.1 330.8 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • July 2001 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 2000 2000r 2001 2001 Apr.r Oct. Nov. Dec. Jan. Feb. Mar. Apr. Apr. 4 Apr. 11 Apr. 18 Apr. 25 Not seasonally adjusted Assets 45 Bank credit 2,469.7 2,539.3 2,551.6 2,574.6 2,582.3 2,585.5 2,586.6 2,605.9 2,597.9 2,603.1 2.606.6 2,603.1 46 Securities in bank credit 574.2 577.2 579.4 587.2 598.0 599.0 593.0 596.4 607.3 599.1 592.7 592.0 47 U.S. government securities 366.3 352.8 351.4 352.7 356.1 353.1 342.4 343.9 349.3 348.9 336.2 341.9 48 Trading account 21.6 21.1 21.8 28.9 34.5 37.9 35.8 34.0 41.7 42.3 32.8 26.7 49 Investment account 344.6 331.8 329.6 323.8 321.6 315.2 306.6 309.9 307.6 306.6 303.4 315.2 50 Mortgage-backed securities . . 222.6 211.1 211.4 213.4 219.7 215.6 214.0 221.4 215.7 215.4 214.1 229.8 51 Other 122.0 120.7 118.2 110.4 101.9 99.6 92.5 88.6 91.9 91.2 89.3 85.3 52 One year or less 29.9 32.0 32.7 31.3 31.4 33.6 33.3 31.7 34.0 32.8 31.2 29.8 53 One to five years 53.4 51.6 49.9 45.0 38.4 37.0 34.1 31.2 33.3 33.9 32.1 29.2 54 More than five years .. . 38.8 37.0 35.6 34.1 32.0 29.0 25.2 25.7 24.7 24.5 26.0 26.3 55 Other securities 207.9 224.4 228.0 234.5 241.9 246.0 250.5 252.5 258.0 250.2 256.5 250.1 56 Trading account 92.9 112.7 116.0 122.0 127.6 129.3 131.5 134.2 139.3 131.8 138.6 132.9 57 Investment account 115.0 111.7 112.0 112.5 114.3 116.6 119.0 118.4 118.7 118.4 117.9 117.3 58 State and local government . . 25.1 26.1 26.6 26.9 27.5 27.6 27.9 28.0 28.0 27.9 28.1 28.1 59 Other 89.8 85.6 85.4 85.6 86.8 89.0 91.1 90.3 90.7 90.5 89.8 89.1 60 Loans and leases in bank credit2 .. 1,895.5 1,962.1 1,972.2 1,987.4 1,984.3 1,986.4 1,993.7 2,009.5 1,990.6 2,004.0 2,013.9 2,011.1 61 Commercial and industrial 578.8 591.3 592.0 593.7 596.4 601.7 600.3 600.4 596.6 596.7 602.3 602.1 62 Bankers acceptances 1.1 .8 .9 .9 .8 .8 .8 .8 .8 .8 .8 .8 63 Other 577.7 590.4 591.1 592.8 595.6 601.0 599.5 599.7 595.8 595.9 601.5 601.3 64 Real estate 787.4 820.2 826.3 825.5 822.4 824.5 829.9 838.2 832.9 841.8 837.6 834.5 65 Revolving home equity 72.4 80.3 81.4 82.3 82.8 83.3 84.4 85.5 84.4 84.6 85.5 86.3 66 Other 432.9 454.3 457.5 455.9 454.5 454.6 459.0 465.6 462.5 471.0 465.1 460.3 67 Commercial 282.1 285.6 287.4 287.3 285.1 286.5 286.6 287.1 286.0 286.2 287.1 287.9 68 Consumer 229.8 232.8 234.9 238.3 240.3 240.9 239.4 241.1 239.1 239.8 242.1 242.3 69 Credit cards and related plans. . n.a. 76.5 78.0 82.3 83.3 83.0 82.5 84.5 82.9 83.4 84.9 85.5 70 Other n.a. 156.3 156.9 156.1 157.0 157.9 156.9 156.6 156.2 156.4 157.2 156.8 71 Security3 60.1 63.3 62.2 67.4 60.5 57.5 61.1 67.7 61.4 66.2 71.6 66.5 72 Federal funds sold to and repurchase agreements with broker-dealers .... 38.3 44.8 44.6 50.6 43.6 40.7 44.9 51.4 45.9 50.5 56.3 49.6 73 Other 21.9 18.5 17.6 16.8 16.9 16.8 16.1 16.2 15.5 15.7 15.3 16.8 74 State and local government .... 12.5 12.8 12.7 12.5 12.6 12.6 12.7 12.6 12.6 12.6 12.6 12.6 75 Agricultural 9.4 9.6 9.6 9.7 9.8 9.8 9.9 10.0 9.9 9.9 9.9 10.1 76 Federal funds sold to and repurchase agreements with others 13.7 17.0 19.0 21.0 25.7 26.1 26.0 22.8 21.9 24.8 22.0 21.1 77 All other loans 83.9 87.6 87.7 90.6 86.2 83.1 83.7 85.4 85.2 81.2 84.6 90.8 78 Lease-financing receivables .... 120.0 127.5 127.8 128.7 130.4 130.2 130.8 131.2 131.1 131.1 131.2 131.1 79 Interbank loans 131.2 131.4 139.5 141.5 155.1 139.5 137.7 146.5 145.3 144.4 150.0 148.8 80 Federal funds sold to and repurchase agreements with commercial banks 65.8 56.8 62.5 65.6 79.6 69.8 70.9 82.9 81.8 79.9 84.8 87.7 81 Other 65.3 74.6 77.0 76.0 75.6 69.7 66.8 63.6 63.5 64.5 65.1 61.1 82 Cash assets4 156.2 143.3 140.1 155.4 156.9 139.1 136.8 145.3 136.3 138.9 159.5 137.1 83 Other assets5 223.8 256.8 253.7 253.0 260.8 260.7 270.1 265.6 267.8 259.6 259.1 272.9 84 Total assets6 2,946.2 3,035.4 3,049.0 3,087.9 3,118.0 3,087.1 3,093.5 3,125.8 3,109.8 3,108.4 3,137.6 3,124.4 Liabilities 85 Deposits 1,665.0 1,646.8 1,649.4 1,689.9 1,686.1 1,681.1 1,697.9 1,730.3 1,741.9 1,737.3 1,749.8 1,702.6 86 Transaction 322.4 299.0 298.5 314.8 309.1 294.9 297.7 309.5 299.4 300.9 319.1 319.1 87 Nontransaction 1,342.6 1,347.8 1,350.8 1,375.1 1,377.0 1,386.2 1,400.2 1,420.7 1,442.5 1,436.5 1,430.7 1,383.5 88 Large time 243.8 257.6 259.2 269.0 270.4 265.8 263.1 260.4 266.7 263.9 260.2 255.1 89 Other 1,098.8 1,090.1 1,091.6 1,106.1 1,106.7 1,120.4 1,137.1 1,160.3 1,175.8 1,172.5 1,170.4 1,128.4 90 Borrowings 655.4 656.0 661.1 669.1 694.0 683.1 675.2 706.0 689.8 693.5 697.9 723.2 91 From banks in the U.S 202.6 193.4 196.8 215.8 220.1 220.0 223.2 233.1 236.1 241.8 229.3 235.9 92 From nonbanks in the U.S 452.8 462.6 464.3 453.3 473.9 463.1 452.0 473.0 453.7 451.7 468.6 487.3 93 Net due to related foreign offices ... 199.6 212.8 215.4 206.8 201.8 200.8 195.2 173.8 154.7 160.5 171.2 187.8 94 Other liabilities 161.2 216.1 219.7 219.0 232.8 214.8 215.3 203.9 212.0 205.1 207.0 197.8 95 Total liabilities 2,681.1 2,731.7 2,745.4 2,784.8 2^14.8 2,779.8 2,783.6 2,814.0 2,798.4 2,796.5 2,825.9 2^11.4 96 Residual (assets less liabilities)7 265.1 303.7 303.6 303.1 303.2 307.4 309.9 311.8 311.4 311.8 311.7 313.0 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A19 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities'—Continued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 2000 2000r 2001 2001 Apr.r Oct. Nov. Dec. Jan. Feb.r Mar.r Apr. Apr. 4 Apr. 11 Apr. 18 Apr. 25 Seasonally adjusted Assets 1 Bank credit 1,900.7 2,022.8 2,042.5 2,063.4 2,081.0r 2,087.9 2,078.7 2,083.1 2,077.2 2,080.0 2,085.7 2,082.8 2 Securities in bank credit 515.1 537.1 542.2 549.6 555$ 556.6 548.6 548.8 546.9 548.5 549.9 548.6 3 U.S. government securities 373.1 368.9 369.3 367.5 366.5r 363.9 351.8 350.0 349.4 350.2 350.8 349.5 4 Other securities 142.1 168.3 172.9 182.1 189.4r 192.8 196.8 198.9 197.5 198.3 199.2 199.1 5 Loans and leases in bank credit2 1,385.5 1,485.7 1,500.3 1,513.8 1,525.1 1,531.3 1,530.1 1,534.3 1,530.3 1,531.5 1,535.8 1,534.2 6 Commercial and industrial 266.3 287.6 290.1 290.8 295.4 297.4 298.2 297.4 298.1 297.7 298.2 296.0 7 Real estate 746.7 802.4 811.7 818.5 820.4 825.0 824.9 825.1 823.6 825.1 824.9 824.4 8 Revolving home equity 39.3 45.5 46.1 47.0 47.6 48.0 48.0 48.3 48.1 48.2 48.3 48.2 9 Other 707.5 757.0 765.6 771.5 772.8 777.0 776.9 776.7 775.4 776.9 776.5 776.1 10 Consumer 278.7 295.1 297.5 300.7 304.0 301.6 298.6 301.3 299.8 300.1 302.2 301.7 11 Security3 6.4 6.9 6.7 7.1 7.2 7.6 8.1 8.6 8.3 8.2 8.6 9.0 12 Other loans and leases 87.5 93.7 94.3 96.8 98.0 99.6 100.3 101.9 100.6 100.4 101.9 103.1 13 Interbank loans 65.9 82.5 80.4 87.5 87.3 97.5 107.8 118.3 112.1 109.5 116.8 128.6 14 Cash assets4 79.1 81.2 78.6 83.2 85.5r 86.1 85.7 86.6 86.7 85.5 85.1 87.2 15 Other assets5 108.0 112.5 108.7 112.4 114.8r 115.0 120.4 123.8 125.8 123.7 121.7 124.2 16 Total assets6 2,1293 2,272.8 2,283.6 2319.6 2341.7 2359.6 2365.8 2384.7 2374.9 2371.8 23823 2395.6 Liabilities 17 Deposits 1,585.0 1,752.6 1,759.3 1,795.6 1,825.5 1,836.7 1,846.6 1,870.8 1,864.1 1,863.7 1,872.9 1,875.0 18 Transaction 301.9 295.9 294.2 294.3 297.9r 299.3 296.1 298.9 287.6 290.6 300.7 316.9 19 Nontransaction 1,283.1 1,456.7 1,465.1 1,501.2 1,527.6 1,537.3 1,550.4 1,571.9 1,576.5 1,573.1 1,572.2 1,558.1 20 Large time 252.0 289.3 292.8 298.7 300.5 306.3 303.1 303.2 303.9 303.9 301.8 303.4 21 Other 1,031.1 1,167.3 1,172.3 1,202.5 1,227.1 1,231.1 1,247.3 1,268.7 1,272.6 1,269.2 1,270.4 1,254.7 22 Borrowings 331.8 329.9 327.3 336.6 343.9 341.3 333.4 336.8 333.2 330.7 337.6 339.4 23 From banks in the U.S 155.8 156.9 154.1 160.5 158.2r 158.1 151.8 152.4 149.2 148.5 154.1 155.5 24 From others 176.0 173.0 173.2 176.0 185.8r 183.2 181.6 184.4 184.1 182.2 183.5 183.9 25 Net due to related foreign offices .... 5.3 23.4 23.7 20.9 16.8 16.7 15.4 12.8 9.9 12.5 10.6 15.8 26 Other liabilities 57.2 52.1 53.9 54.1 53.4 53.8 56.0 56.3 56.6 56.4 56.3 56.4 27 Total liabilities 1,979.4 2,158.0 2,164.1 2,207.2 2,239.6 2,248.5 2^51.4 2,276.7 2,264.0 2,2633 2,277.5 2,286.6 28 Residual (assets less liabilities)7 149.9 114.8 119.5 112.5 102.1 111.1 114.4 108.0 110.9 108.6 104.8 109.0 Not seasonally adjusted Assets 29 Bank credit 1,901.7 2,024.2 2,043.2 2,067.9 2,076.7r 2,076.8 2,074.3 2,082.8 2,075.8 2,079.5 2,086.3 2,082.7 30 Securities in bank credit 517.9 534.7 540.4 548.7 5553' 554.7 550.9 551.5 550.1 551.5 552.6 551.3 31 U.S. government securities 375.8 366.4 367.5 366.7 365.9r 361.9 354.1 352.7 352.6 353.2 353.5 352.2 32 Other securities 142.1 168.3 172.9 182.1 189.4r 192.8 196.8 198.9 197.5 198.3 199.2 199.1 33 Loans and leases in bank credit2 1,383.8 1,489.5 1,502.8 1,519.1 1,521.4 1,522.2 1,523.5 1,531.3 1,525.7 1,528.0 1,533.7 1,531.5 34 Commercial and industrial 267.9 287.2 289.4 291.6 294.5 295.7 297.8 299.5 298.5 298.8 300.7 299.1 35 Real estate 746.6 803.3 812.1 818.5 818.9 821.7 823.3 824.7 822.7 824.5 824.6 824.3 36 Revolving home equity 39.2 45.7 46.4 47.1 47.6 47.8 47.9 48.3 47.9 48.0 48.3 48.4 37 Other 707.3 757.6 765.7 771.4 771.3 773.9 775.4 776.4 774.8 776.6 776.4 775.9 38 Consumer 276.3 297.1 299.5 304.5 304.8 300.0 295.1 297.6 295.0 295.3 298.2 299.2 39 Credit cards and related plans. . n.a. 130.2 131.9 136.4 135.5 130.9 127.1 130.2 128.0 127.8 130.3 132.2 40 Other n.a. 166.9 167.6 168.0 169.3 169.2 168.0 167.4 167.0 167.6 167.9 167.0 41 Security3 6.4 7.0 7.0 7.3 7.1 7.6 8.4 8.7 9.0 8.9 8.8 8.4 42 Other loans and leases 86.6 94.9 94.8 97.2 96.1 97.0 98.9 100.8 100.5 100.4 101.3 100.4 43 Interbank loans 68.0 83.6 86.3 92.4 87.8 100.4 114.0 122.2 127.5 126.3 124.7 117.7 44 Cash assets4 77.0 81.7 82.4 88.4 88. lr 85.1 82.1 83.7 85.1 82.2 83.2 81.5 45 Other assets5 108.0 112.5 108.7 112.4 114.8r 115.0 120.4 123.8 125.8 123.7 121.7 124.2 46 Total assets6 2,1303 2,275.8 2,294.1 2334.1 2340.5 2350.5 2364.0 2,385.5 23873 2384.8 2388.8 2379.0 Liabilities 47 Deposits 1,590.9 1,753.5 1,771.4 1,813.6 1,824.2 1,837.6 1,854.0 1,878.0 1,884.9 1,884.1 1,884.1 1,864.9 48 Transaction 301.9 295.3 297.9 305.1 300.5r 294.5 294.1 298.4 292.5 293.8 304.0 307.4 49 Nontransaction 1,289.0 1,458.2 1,473.5 1,508.6 l,523.7r 1,543.2 1,559.9 1,579.7 1,592.4 1,590.3 1,580.2 1,557.5 50 Large time 252.0 289.3 292.8 298.7 300.5 306.3 303.1 303.2 303.9 303.9 301.8 303.4 51 Other 1,037.0 1,168.9 1,180.7 1,209.8 l,223.2r 1,236.9 1,256.8 1,276.5 1,288.5 1,286.3 1,278.3 1,254.1 52 Borrowings 331.8 329.9 327.3 336.6 343.9 341.3 333.4 336.8 333.2 330.7 337.6 339.4 53 From banks in the U.S 155.8 156.9 154.1 160.5 158.2r 158.1 151.8 152.4 149.2 148.5 154.1 155.5 54 From others 176.0 173.0 173.2 176.0 185.8r 183.2 181.6 184.4 184.1 182.2 183.5 183.9 55 Net due to related foreign offices .... 5.3 23.4 23.7 20.9 16.8 16.7 15.4 12.8 9.9 12.5 10.6 15.8 56 Other liabilities 57.2 52.1 53.9 54.1 53.4 53.8 56.0 56.3 56.6 56.4 56.3 56.4 57 Total liabilities 1,985.2 2,159.0 2,176^ 2,225.2 2,2383 2,249.4 2,258.8 2,284.0 2,284.7 2,283.7 2,288.7 2,276.5 58 Residual (assets less liabilities)7 145.1 116.8 117.9 108.9 102.2 101.1 105.2 101.5 102.7 101.1 100.1 102.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic NonfinancialS tatistics • July 2001 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 2000 2000r 2001 2001 Apr/ Oct. Nov. Dec. Jan. Feb. Mar. Apr. Apr. 4 Apr. 11 Apr. 18 Apr. 25 Seasonally adjusted Assets 1 Bank credit 569.5 587.4 588.1 599.5 614.8 610.4 620.3 616.8 625.8 631.0 611.6 614.5 2 Securities in bank credit 204.7 201.8 195.5 205.1 208.9 199.9 205.4 214.7 214.8 215.4 212.3 218.2 3 U.S. government securities 80.2 70.0 68.1 69.3 67.3 64.5 67.8 75.0 74.4 74.6 72.7 80.3 4 Other securities 124.5 131.8 127.5 135.8 141.6 135.3 137.6 139.7 140.4 140.8 139.6 137.9 5 Loans and leases in bank credit2 . . . 364.7 385.6 392.6 394.4 405.9 410.5 414.9 402.1 411.0 415.6 399.3 396.3 6 Commercial and industrial 200.2 203.7 206.1 209.0 214.5 218.2 220.2 220.7 218.9 221.8 220.6 221.5 7 Real estate 17.3 18.1 18.5 18.6 18.9 18.7 18.4 18.1 18.0 18.4 18.2 17.9 8 Security3 78.5 96.7 100.3 100.1 105.2 105.8 106.4 95.4 106.2 107.0 92.9 89.1 9 Other loans and leases 68.6 67.1 67.7 66.7 67.2 67.8 69.8 67.9 67.9 68.5 67.6 67.8 10 Interbank loans 28.9 27.0 26.8 27.0 29.2 28.5 30.6 29.4 28.1 28.3 30.7 30.0 11 Cash assets4 46.1 42.1 38.5 39.9 41.6 41.9 40.7 39.3 42.0 39.9 39.0 38.9 12 Other assets5 39.5 41.3 40.0 36.1 37.1 36.6 38.3 40.9 42.4 40.8 43.3 40.5 13 Total assets6 683.7 697.4 693.1 702-2 1223 717.1 129.6' 726.0 737.8 739.6 7242 723.5 Liabilities 14 Deposits 386.3 378.9 377.2 378.3 385.9 379.1 311.4 392.5 393.4 391.0 395.7 398.1 15 Transaction 11.0 10.7 10.8 10.7 10.7 10.3 9.4 10.5 9.9 11.0 10.2 10.6 16 Nontransaction 375.3 368.2 366.4 367.6 375.3 368.9 368.0 382.0 383.5 380.0 385.4 387.5 17 Borrowings 199.2 221.0 223.0 239.4 241.6 237.2 233.5r 236.0 238.7 244.1 244.5 231.3 18 From banks in the U.S 21.0 19.0 18.6 22.2 25.1 22.3 24.2r 23.5 25.5 21.5 26.4 25.1 19 From others 178.3 202.1 204.4 217.2 216.5 214.8 209.3r 212.5 213.3 222.6 218.1 206.3 20 Net due to related foreign offices 15.6 16.5 7.3 -1.9 3.5 4.7 21.8r 4.2 -.7 3.1 -1.6 8.6 21 Other liabilities 77.3 79.7 75.4 72.3 77.5 77.4 82.9 88.2 87.7 87.2 87.5 91.6 22 Total liabilities 678.4 696.1 682.8 688.1 708.6 698.4 715.6 720.9 719.1 725.4 726.0 729.7 23 Residual (assets less liabilities)7 5.3 1.3 10.2 14.1 13.7 18.7 14.tf 5.1 18.7 14.2 -1.8 -6.2 Not seasonally adjusted Assets 24 Bank credit 567.6 591.4 590.8 610.2 622.9 613.6 615.5 613.9 614.7 621.1 615.7 614.8 25 Securities in bank credit 204.7 201.8 195.5 205.1 208.9 199.9 205.4 214.7 214.8 215.4 212.3 218.2 26 U.S. government securities 80.2 70.0 68.1 69.3 67.3 64.5 67.8 75.0 74.4 74.6 72.7 80.3 27 Trading account 11.8 11.8 10.9 11.8 11.2 10.5 9.5r 14.2 12.6 13.2 12.4 19.1 28 Investment account 68.4 58.2 57.2 57.5 56.1 54.1 58.3r 60.8 61.8 61.4 60.3 61.2 29 Other securities 124.5 131.8 127.5 135.8 141.6 135.3 137.6 139.7 140.4 140.8 139.6 137.9 30 Trading account 80.5 90.5 88.0 90.6 95.8 91.2 94.4 96.6 97.6 97.8 96.3 94.9 31 Investment account 44.0 41.3 39.4 45.2 45.8 44.1 43.2 43.1 42.8 43.1 43.4 43.0 32 Loans and leases in bank credit2 ... 362.8 389.7 395.3 405.1 414.0 413.8 410. lr 399.2 399.9 405.7 403.4 396.6 33 Commercial and industrial 198.7 203.9 206.7 211.3 216.2 220.4 221.3 219.0 219.1 219.6 219.7 218.9 34 Real estate 17.3 18.1 18.5 18.6 18.9 18.7 18.4 18.1 18.0 18.4 18.2 17.9 35 Security3 77.9 100.9 101.8 106.2 110.5 106.8 100.5 94.0 94.9 99.3 97.3 91.5 36 Other loans and leases 68.9 66.7 68.2 69.0 68.3 67.9 69.8 68.2 67.9 68.4 68.3 68.3 37 Interbank loans 28.9 27.0 26.8 27.0 29.2 28.5 30.6 29.4 28.1 28.3 30.7 30.0 38 Cash assets4 44.3 42.9 40.6 42.7 44.2 42.0 39.3 37.7 40.3 37.9 37.5 37.3 39 Other assets5 38.6 40.7 40.0 37.9 38.3 37.6 38.9 40.0 41.9 40.0 42.2 39.3 40 Total assets6 679.1 701.7 697.9 717.5 734.2 721.5r 724.0r 720.7 724.5 726.9 725.8 721.0 Liabilities 41 Deposits 389.1 372.7 379.9 388.9 395.8 387.3 381.9 395.4 396.2 391.9 397.6 402.2 42 Transaction 10.5 10.8 11.0 11.4 10.9 10.0 9.2 10.0 9.6 10.3 9.6 10.0 43 Nontransaction 378.7 361.9 368.9 377.6 385.0 377.2 372.7 385.4 386.5 381.6 387.9 392.2 44 Borrowings 199.2 221.0 223.0 239.4 241.6 237.2 233.5r 236.0 238.7 244.1 244.5 231.3 45 From banks in the U.S 21.0 19.0 18.6 22.2 25.1 22.3 24.2r 23.5 25.5 21.5 26.4 25.1 46 From others 178.3 202.1 204.4 217.2 216.5 214.8 209.3r 212.5 213.3 222.6 218.1 206.3 47 Net due to related foreign offices .... 11.3 16.7 7.6 2.9 6.8 8.0 22.0r -.4 -1.5 .9 -5.7 -2.3 48 Other liabilities 75.4 79.8 75.6 74.4 78.9 78.8 82.9 86.1 87.3 86.2 85.6 86.7 49 Total liabilities 675.0 690.3 686.0 705.6 1232r 711.3 7203 717.1 720.7 723.1 721.9 717.9 50 Residual (assets less liabilities)7 4.1 11.4 11.8 11.8 11.1 10.1 3.7 3.6 3.8 3.8 3.9 3.1 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 F. Memo items Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 2000 2000 2001 2001 Apr.r Oct. Nov. Dec. Jan. Feb. Mar. Apr. Apr. 4 Apr. 11 Apr. 18 Apr. 25 Not seasonally adjusted MEMO Large domestically chartered banks. adjusted for mergers 1 Revaluation gains on off-balance-sheet items8 65.1 70.9 68.0 77.8 79.5 77.6 80.6 79.6 87.7 76.9 84.3 76.2 2 Revaluation losses on off-balancesheet items8 65.0 72.8 72.6 83.1 82.5 81.0 79.8 74.9 87.6 75.8 77.4 68.9 3 Mortgage-backed securities9 256.5 240.5 240.6 242.6 248.0 244.5 244.8 252.2 246.6 246.1 244.7 260.5 4 Pass-through 180.2 173.9 174.3 177.5 182.8 179.5 181.5 190.3 186.3 185.1 184.1 198.0 5 CMO, REMIC, and other 76.3 66.6 66.4 65.0 65.2 65.0 63.3 61.8 60.3 61.0 60.6 62.4 6 Net unrealized gains (losses) on available-for-sale securities10 .... -16.3 -4.2 -1.2 1.4 -2.5 -.6 -.3 -.3 .0 .0 .0 -.3 7 Off-shore credit to U.S. residents'1. . . . 24.4 22.3 23.1 23.4 23.0 22.7 22.6 21.7 21.6 21.8 21.5 21.9 8 Securitized consumer loans'2 n.a. 80.8 80.5 82.2 82.4 80.8 80.2 79.0 79.5 79.5 78.6 78.4 9 Credit cards and related plans n.a. 67.2 67.3 68.6 68.5 67.3 67.3 66.6 67.0 66.9 66.1 66.0 10 Other n.a. 13.6 13.2 13.6 13.9 13.4 12.9 12.4 12.6 12.5 12.4 12.4 11 Securitized business loans'" n.a. 15.2 17.8 18.6 18.4 18.6 18.7 18.8 18.7 18.6 18.6 18.6 Small domestically chartered commercial banks, adjusted for mergers 12 Mortgage-backed securities9 205.3 211.6 213.0 214.5 218.0 222.3 228.7r 237.3 235.0 236.7 236.9 237.6 13 Securitized consumer loans12 n.a. 224.5 225.6 231.1 231.4 235.6 238.5 239.9 240.0 241.2 240.4 238.7 14 Credit cards and related plans n.a. 215.2 216.1 221.9 222.4 226.8 229.9 232.6 231.6 232.7 231.9 233.2 15 Other n.a. 9.3 9.5 9.1 9.0 8.8 8.5 7.3 8.4 8.5 8.5 5.5 Foreign-related institutions 16 Revaluation gains on off-balancesheet items8 44.5 47.3 44.6 45.5 50.8 49.6 52.4 54.1 54.5 54.1 54.3 53.3 17 Revaluation losses on off-balancesheet items8 40.8 44.7 40.8 41.3 46.9 47.4 49.9 50.9 51.7 51.0 51.2 50.2 18 Securitized business loans'2 n.a. 23.0 22.8 23.1 23.2 22.4 21.5 19.8 20.6 20.3 20.2 19.4 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 made 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. A17-19 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 NonfinancialS tatistics • July 2001 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING A. Commercial Paper Millions of dollars, seasonally adjusted, end of period Year ending December 2000 2001 IItteemm 1996 1997 1998 1999 2000 Oct. Nov. Dec. Jan. Feb. Mar. 1 All issuers 775,371 966,699 1,163303 1,403,023 1,615,341 1,587,591 1,624,421 1,615341 1,566,104 1,544,572 1,511,354 Financial companies' 2 Dealer-placed paper, total2 361,147 513,307 614,142 786,643 973,060 912,739 960,701 973,060 976,735 977,791 978,225 3 Directly placed paper, total3 229,662 252,536 322,030 337,240 298,848 328,049 312,438 298,848 270,922 263,554 249,420 4 Nonfinancial companies4 184,563 200,857 227,132 279,140 343,433 346,803 351,282 343,433 318,447 303,227 283,711 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 1997 1998 1999 2000 1 Total amount of reporting banks' acceptances in existence 25,774 14363 10,094 9,881 2 Amount of other banks' eligible acceptances held by reporting banks 736 523 461 462 3 Amount of own eligible acceptances held by reporting banks (included in item 1) 6,862 4,884 4,261 3,789 4 Amount of eligible acceptances representing goods stored in, or shipped between, foreign countries (included in item 1) 10,467 5,413 3,498 3,689 1. Includes eligible, dollar-denominated bankers acceptances legally payable in the United 2. Data on bankers dollar acceptances are gathered from approximately 40 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 te a ge Period Av r e a r te a ge Period Av r e a r te a ge 1998—jan. i .... 8.50 1998 8.35 1999—Jan 7.75 2000—Jan 8.50 Sept. 30 8.25 1999 8.00 Feb 7.75 Feb 8.73 Oct. 16 8.00 2000 .... 9.23 Mar. 7.75 Mar. 8.83 Nov. 18 7.75 Apr. 7.75 Apr. 9.00 1998—Jan 8.50 May 7.75 May 9.24 1999—July 1 8.00 Feb 8.50 June 7.75 June 9.50 Aug. 25 8.25 Mar. 8.50 July 8.00 July 9.50 Nov. 17 8.50 Apr. 8.50 Aug 8.06 Aug 9.50 May 8.50 Sept 8.25 Sept 9.50 2000—Feb. 3 8.75 June 8.50 Oct 8.25 Oct 9.50 Mar. 22 9.00 July 8.50 Nov 8.37 Nov 9.50 MMaayy 1177 9.50 Aug 8.50 Dec 8.50 Dec 9.50 Sept 8.49 2001—Jan. 4 9.00 Oct 8.12 2001—Jan 9.05 Feb. 1 8.50 Nov 7.89 Feb 8.50 Mar. 21 8.00 Dec 7.75 Mar. 8.32 Apr. 19 7.50 Apt 7.80 May 16 7.00 May 7.24 1. The prime rate is one of several base rates that banks use to price short-term business Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) loans. The table shows the date on which a new rate came to be the predominant one quoted monthly statistical releases. For ordering address, see inside front cover. by a majority of the twenty-five largest banks by asset size, based on the most recent Call Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.35 INTEREST RATES Money and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 2001 2001, week ending IItteemm 11999988 11999999 22000000 Jan. Feb. Mar. Apr. Mar. 30 Apr. 6 Apr. 13 Apr. 20 Apr. 27 MONEY MARKET INSTRUMENTS 1 Federal funds1'2'3 5.35 4.97 6.24 5.98 5.49 5.31 4.80 5.00 5.21 4.96 4.98 4.42 2 Discount window borrowing2'4 4.92 4.62 5.73 5.52 5.00 4.81 4.28 4.50 4.50 4.50 4.43 4.00 Commercial papei-3'5'6 Nonfinancial 3 1-month 5.40 5.09 6.27 5.74 5.39 5.02 4.71 4.94 4.93 4.92 4.74 4.36 4 2-month 5.38 5.14 6.29 5.59 5.25 4.87 4.54 4.77 4.77 4.68 4.55 4.25 5 3-month 5.34 5.18 6.31 5.49 5.14 4.78 4.44 4.69 4.64 4.55 4.46 4.19 Financial 6 1-month 5.42 5.11 6.28 5.75 5.41 5.06 4.74 4.99 4.95 4.93 4.77 4.41 7 2-month 5.40 5.16 6.30 5.62 5.29 4.93 4.57 4.86 4.81 4.71 4.58 4.28 8 3-month 5.37 5.22 6.33 5.51 5.19 4.81 4.47 4.70 4.68 4.60 4.49 4.21 Commercial paper (historicalj3'5'7 9 1-month n.a. 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 n.a. 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 n.a. 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 n.a. 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 n.a. 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 n.a. 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 5.39 5.24 6.23 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 6-month 5.30 5.30 6.37 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Certificates of deposit, secondary market3'10 17 1-month 5.49 5.19 6.35 5.83 5.47 5.09 4.77 5.03 5.02 4.99 4.70 4.42 18 3-month 5.47 5.33 6.46 5.62 5.26 4.89 4.53 4.80 4.74 4.69 4.50 4.26 19 6-month 5.44 5.46 6.59 5.45 5.12 4.74 4.41 4.63 4.55 4.53 4.41 4.20 20 Eurodollar deposits, 3-month3'" 5.45 5.31 6.45 5.62 5.26 4.89 4.55 4.80 4.73 4.69 4.56 4.26 US. Treasury bills Secondary market3'5 21 3-month 4.78 4.64 5.82 5.15 4.88 4.42 3.87 4.22 4.01 3.90 3.87 3.72 22 6-month 4.83 4.75 5.90 4.95 4.71 4.28 3.85 4.04 3.93 3.91 3.89 3.71 23 1-year 4.80 4.81 5.78 4.63 4.51 4.11 3.80 4.01 3.83 3.89 3.87 3.65 Auction high 24 3-month 4.81 4.66 5.66 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 25 6-month 4.85 4.76 5.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 26 1-year 4.85 4.78 5.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. U.S. TREASURY NOTES AND BONDS Constant maturities13 27 1-year 5.05 5.08 6.11 4.81 4.68 4.30 3.98 4.19 4.00 4.07 4.04 3.82 28 2-year 5.13 5.43 6.26 4.76 4.66 4.34 4.23 4.29 4.15 4.25 4.34 4.19 29 3-year 5.14 5.49 6.22 4.77 4.71 4.43 4.42 4.41 4.30 4.41 4.53 4.43 30 5-year 5.15 5.55 6.16 4.86 4.89 4.64 4.76 4.65 4.60 4.71 4.86 4.83 31 7-year 5.28 5.79 6.20 5.13 5.10 4.88 5.03 4.90 4.87 4.98 5.13 5.11 32 10-year 5.26 5.65 6.03 5.16 5.10 4.89 5.14 4.95 4.95 5.08 5.24 5.25 33 20-year 5.72 6.20 6.23 5.65 5.62 5.49 5.78 5.59 5.62 5.72 5.86 5.88 34 30-year 5.58 5.87 5.94 5.54 5.45 5.34 5.65 5.44 5.49 5.59 5.71 5.76 Composite 35 More than 10 years (long-term) 5.69 6.14 6.41 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. STATE AND LOCAL NOTES AND BONDS Moody's series14 36 4.93 5.28 5.58 4.99 5.09 5.00 5.14 4.99 5.05 5.14 5.22 5.16 37 Baa 5.14 5.70 6.19 5.76 5.86 5.80 5.96 5.85 5.88 5.92 6.02 6.01 38 Bond Buyer series15 5.09 5.43 5.71 5.10 5.18 5.13 5.27 5.14 5.18 5.24 5.33 5.34 CORPORATE BONDS 39 Seasoned issues, all industries16 6.87 7.45 7.98 7.55 7.50 7.41 7.63 7.50 7.52 7.61 7.71 7.68 Rating group 40 6.53 7.05 7.62 7.15 7.10 6.98 7.20 7.06 7.08 7.18 7.27 7.26 41 Aa 6.80 7.36 7.83 7.38 7.32 7.22 7.43 7.29 7.31 7.41 7.50 7.49 42 A 6.93 7.53 8.11 7.75 7.69 7.61 7.82 7.67 7.69 7.79 7.90 7.88 43 Baa 7.22 7.88 8.36 7.93 7.87 7.84 8.07 7.97 7.98 8.06 8.15 8.09 MEMO Dividend-price ratio17 44 Common stocks 1.49 1.25 1.15 1.16 1.22 1.33 1.32 1.35 1.41 1.33 1.26 1.27 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 the Board's Commercial Paper web in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys' pages (http://www.federalreserve.gov/releases/cp) for more information. A1 rating. Based on Thursday figures. 7. An average of offering rates on commercial paper for firms whose bond rating is AA or 16. Daily figures from Moody's Investors Service. Based on yields to maturity on selected the equivalent. Series ended August 29, 1997. long-term bonds. 8. An average of offering rates on paper directly placed by finance companies. Series 17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in ended August 29, 1997. the price index. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • July 2001 1.36 STOCK MARKET Selected Statistics 2000 2001 IInnddiiccaattoorr 11999999 22000000 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 550.65 619.52 643.71 666.14 667.05 646.53 646.64 645.44 650.55 648.05 603.44 607.06 2 Industrial 684.35 775.29 809.40 837.23 829.99 797.00 800.88 792.66 796.74 799.38 744.21 747.48 3 Transportation 468.61 491.62 414.73 419.84 404.23 403.20 434.92 457.53 471.21 482.26 452.36 455.22 4 Utility 190.52 284.82 478.99 459.91 463.76 469.16 455.66 444.16 440.36 424.53 395.34 400.49 5 Finance 516.65 530.97 552.48 597.17 616.89 587.76 600.45 621.62 634.17 626.41 583.38 587.88 6 Standard & Poor's Corporation (1941-43 = 10)' 1,085.50 1,327.33 1,427.22 1,485.46 1,468.06 1,390.14 1,375.04 1,330.93 1,335.63 1,305.75 1,185.85 1,189.84 7 American Stock Exchange (Aug. 31, 1973 = 50)2 682.69 770.90 922.22 920.54 952.74 913.64 892.60 870.16 898.18 923.99 891.22 891.18 Volume of trading (thousands of shares) 8 New York Stock Exchange 666,534 799,554 1,026,867 875,087 1,026,597 1,167,025 1,015,606 1,183,149 1,299,986 1,117,977 1,251,569 1,247,382 9 American Stock Exchange 28,870 32,629 51,437 35,695 47,047 57,915 58,541 73,759 72,312 70,648 81,666 77,612 Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers 140,980 228,530 198,790 247,560 250,780 233,380 219,110 198,790 197,110 186,810 165,350 166,940 Free credit balances at brokers4 11 Margin accounts5 40,250 55,130 100,680 68,020 70,960 82,990 96,730 100,680 90,380 99,390 106,300 97,470 12 Cash accounts 62,450 79,070 84,400 72,640 74,766 73,410 74,050 84,400 81,380 78,660 77,520 77,460 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, effectively 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 2001 11999988 11999999 22000000 Nov. Dec. Jan. Feb. Mar. Apr. U.S. budget1 1 Receipts, total 1,721,798 1,827,302 2,025,218 125,666 200,489 219,215 110,481 130,074 331,796 2 On-budget 1,305,999 1,382,986 1,544,634 89,216 161,737 171,001 70,555 84,123 278,611 3 Off-budget 415,799 444,468 480,584 36,450 38,752 48,214 39,926 45,951 53,185 4 Outlays, total 1,652,619 1,702,875 1,788,826 149,356 167,823 142,836 158,649 180,736 141,999 5 On-budget 1,336,015 1,382,097 1,458,061 116,737 132,747 144,448 123,573 145,186 109,938 6 Off-budget 316,604 320,778 330,765 32,619 35,075 -1,613 35,076 35,550 32,062 7 Surplus or deficit (—), total 69,179 124,579 236,392 -23,690 32,666 76,379 -48,168 -50,662 189,796 8 On-budget -30,016 889 86,573 -27,521 28,990 26,553 -53,018 -61,062 168,673 9 Off-budget 99,195 123,690 149,819 3,831 3,677 49,827 4,850 10,401 21,123 Source of financing (total) 10 Borrowing from the public -51,211 -88,674 -222,672 41,325 -36,689 -23,990 15,100 32,557 -135,572 11 Operating cash (decrease, or increase [-]) 4,743 -17,580 3,799 -1,431 -9,632 -45,761 45,717 -7,171 -36,846 12 Other 2 -22,711 -18,325 -17,519 -16,204 13,655 -6,628 -12,649 25,276 -17,378 MEMO 13 Treasury operating balance (level, end of period) 38,878 56,458 52,659 11,437 21,069 66,830 21,113 28,284 65,130 14 Federal Reserve Banks 4,952 6,641 8,459 4,382 5,149 5,256 4,956 5,657 7,894 15 Tax and loan accounts 33,926 49,817 44,199 7,055 15,920 61,574 16,158 22,627 57,236 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 when available. liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic NonfinancialS tatistics • July 2001 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Fiscal year Calendar year SSSooouuurrrccceee ooorrr tttyyypppeee 1999 2000 2001 11999999 22000000 HI H2 HI H2 Feb. Mar. Apr. RECEIPTS 1 All sources 1,827,302 2,025,218 966,045 892,266 1,089,763 952,942 110,481 130,071 331,796 2 Individual income taxes, net 879,480 1,004,462 481,907 425,451 550,208 458,679 48,030 33,591 220,015 3 Withheld 693,940 780,397 351,068 372,012 388,526 395,572 70,179 67,068 64,489 4 Nonwithheld 308,185 358,049 240,278 68,302 281,103 77,732 3,454 7,662 187,032 5 Refunds 122,706 134,046 109,467 14,841 119,477 14,628 25,610 41,153 3311,,551188 Corporation income taxes 6 Gross receipts 216,324 235,655 106,861 110,111 119,166 123,962 3,474 26,986 26,693 7 Refunds 31,645 28,367 17,092 13,996 13,781 15,776 4,973 4,849 2,948 8 Social insurance taxes and contributions, net . . . 611,833 652,852 324,831 292,551 353,514 310,122 53,473 60,135 73,887 y Employment taxes and contributions2 580,880 620,451 306,235 280,059 333,584 297,665 50,868 59,499 68,773 10 Unemployment insurance 26,480 27,640 16,378 10,173 17,562 10,097 2,147 209 4,760 n Other net receipts3 4,473 4,761 2,216 2,319 2,368 2,360 457 427 354 12 Excise taxes 70,414 68,865 31,015 34,262 33,532 35,501 4,074 7,064 5,690 13 Customs deposits 18,336 19,914 8,440 10,287 9,218 10,676 1,474 1,653 1,477 14 Estate and gift taxes 27,782 29,010 14,915 14,001 15,073 13,216 1,879 2,215 4,471 15 Miscellaneous receipts4 34,929 42,826 15,140 19,569 22,831 16,556 3,050 3,276 2,510 OUTLAYS 16 All types 1,702,875 1,788,826 817,227 882,465 892,947 894,905 158,649 180,733 141,999 17 National defense 274,873 294,494 134,414 149,573 143,476 147,651 22,555 31,144 22,253 18 International affairs 15,243 17,216 6,879 8,530 7,250 11,902 1,153 1,980 1,272 19 General science, space, and technology 18,125 18,637 9,319 10,089 9,601 10,389 1,619 1,811 1,547 20 Energy 912 -1,060 797 -90 -893 -595 -174 187 -390 21 Natural resources and environment 23,970 25,031 10,351 12,100 10,814 12,907 1,737 1,822 1,741 22 Agriculture 23,011 36,641 9,803 20,887 11,164 20,977 2,003 2,083 1,272 23 Commerce and housing credit 2,649 3,211 -1,629 7,353 -2,497 4,408 -487 1,025 -260 24 Transportation 42,531 46,854 17,082 23,199 21,054 25,841 3,502 3,899 3,593 25 Community and regional development 11,870 10,629 5,368 6,806 5,050 5,962 939 616 855 26 Education, training, employment, and social services 56,402 59,201 29,003 27,532 31,234 29,263 5,957 6,874 4,798 27 Health 141,079 154,534 69,320 74,490 75,871 81,413 13,011 14,763 14,844 28 Social security and Medicare 580,488 606,549 261,146 295,030 306,966 307,473 52,154 57,468 50,826 29 Income security 237,707 247,895 126,552 113,504 133,915 113,212 33,203 31,652 19.913 30 Veterans benefits and services 43,212 47,083 20,105 23,412 23,174 22,615 4,089 6,333 2,164 31 Administration of justice 25,924 27,820 13,149 13,459 13,981 14,635 2,201 2,559 2,562 32 General government 15,771 13,454 6,641 7,010 6,198 6,461 2,400 1,100 1,162 33 Net interest5 229,735 223,218 116,655 112,420 115,545 104,685 17,590 18,568 17,816 34 Undistributed offsetting receipts6 -40,445 -42,581 -17,724 -22,850 -19,346 -24,070 -4,802 -3,150 -3,970 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 2002\ 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 A25 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1999 2000 2001 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 5,681 5,668 5,685 5,805 5,802 5,714 5,702 5,690 5,801 2 Public debt securities 5,652 5,639 5,656 5,776 5,773 5,686 5,674 5,662 5,774 3 Held by public 3,795 3,685 3,667 3,716 3,688 3,496 3,439 3,414 3,434 4 Held by agencies 1,857 1,954 1,989 2,061 2,085 2,190 2,236 2,249 2,339 5 Agency securities 29 29 29 29 28 28 28 27 27 6 Held by public 28 28 28 28 28 28 28 27 27 7 Held by agencies 1 1 1 1 0 0 0 0 0 8 Debt subject to statutory limit 5,566 5,552 5,568 5,687 5,687 5,601 5,592 5,581 5,693 9 Public debt securities 5,566 5,552 5,568 5,687 5,686 5,601 5,591 5,580 5,692 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 Monthly Treasury Statement. bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 2000 2001 TTyyppee aanndd hhoollddeerr 11999977 11999988 11999999 22000000 Q2 Q3 Q4 Q1 1 Total gross public debt 5,502.4 5,614.2 5,776.1 5,662.2 5,685.9 5,674.2 5,662.2 5,773.7 By type 2 Interest-bearing 5,494.9 5,605.4 5,766.1 5,618.1 5,675.9 5,622.1 5,618.1 5,752.0 3 Marketable 3,456.8 3,355.5 3,281.0 2,966.9 3,070.7 2,992.8 2,966.9 2,981.9 4 Bills 715.4 691.0 737.1 646.9 629.9 616.2 646.9 712.0 5 Notes 2,106.1 1,960.7 1,784.5 1,557.3 1,679.1 1,611.3 1,557.3 1,499.0 6 Bonds 587.3 621.2 643.7 626.5 637.7 635.3 626.5 627.9 7 Inflation-indexed notes and bonds' 33.0 67.6 100.7 121.2 109.0 115.0 121.2 128.0 8 Nonmarketable2 2,038.1 2,249.9 2,485.1 2,651.2 2,605.2 2,629.3 2,651.2 2,770.0 9 State and local government series 124.1 165.3 165.7 151.0 160.4 153.3 151.0 152.9 10 Foreign issues3 36.2 34.3 31.3 27.2 27.7 25.4 27.2 24.7 11 Government 36.2 34.3 31.3 27.2 27.7 25.4 27.2 24.7 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 181.2 180.3 179.4 176.9 177.7 177.7 176.9 177.4 14 Government account series4 1,666.7 1,840.0 2,078.7 2,266.1 2,209.4 2,242.9 2,266.1 2,360.3 15 Non-interest-bearing 7.5 8.8 10.0 44.2 10.1 52.1 44.2 46.5 By holder 5 16 U.S. Treasury and other federal agencies and trust funds 1,657.1 1,828.1 2,064.2 2,270.2 2,193.6 2,226.5 2,270.2 2,357.0 17 Federal Reserve Banks6 430.7 452.1 478.0 511.7 504.9 511.4 511.7 523.9 18 Private investors 3,414.6 3,334.0 3,233.9 2,880.4 2,987.4 2,936.2 2,880.4 2,892.9 19 Depository institutions 300.3 237.3 266. lr 197.7r 219.3r 218.3 197.7r 188.1 20 Mutual funds 321.5 343.2 348.6 338.9r 322.9r 324.3r 338.9r 348.2 21 Insurance companies 176.6 144.5 125.3 116.6r 122.0r 119.3r 116.6r 112.8 22 State and local treasuries7 239.3 269.3 266.8 246.2 256.4 241.9r 246.2 234.1 Individuals 23 Savings bonds 186.5 186.6 186.2r 184.8 184.6 184.3 184.8 184.8 24 Pension funds 360.5 375.3 380.9 375.8 384.1 383.lr 375.8 384.9 25 Private 143.5 157.6 167.7 181.6r 173.6 179.2 181.6r 181.3 26 State and Local 216.9 217.7 213.2 206. lr 210.5 203,9r 206. r 203.6 27 Foreign and international8 1,241.6 1,278.7 l,268.7r l,201.4r 1,248.8 1,225.2 l,201.4r 1,196.2 28 Other miscellaneous investors7,9 589.5 499.0r 410.8r 218.1 250.4r 237.9r 218.1 n.a. 1. The U.S. Treasury first issued inflation-indexed securities during the first quarter of 1997. 8. 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- 9. 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. SOURCES. Data by type of security, U.S. Treasury Department, 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, Federal Reserve Board of Governors, Flow holdings; data for other groups are Treasury estimates. of Funds Accounts of the United States and U.S. Treasury Department, Treasury Bulletin, 6. U.S. Treasury securities bought outright by Federal Reserve Banks, see Bulletin unless otherwise noted. table 1.18. 7. 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 • July 2001 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 2001 2001, week ending Item Jan. Feb. Mar. Feb. 28 Mar. 7 Mar. 14 Mar. 21 Mar. 28 Apr. 4 Apr. 11 Apr. 18 Apr. 25 OUTRIGHT TRANSACTIONS2 By type of security 1 U.S. Treasury bills 30,524 30,944 32,042 48,699 33,360 27,243 27,234 38,628 36,299 31,998 44,646 27,625 Coupon securities, by maturity 2 Five years or less 185,208 177,385 170,530 209,177 163,884 160,131 173,259 182,779 175,696 159,026 190,179 196,537 3 More than five years 92,568 97,333 87,263 106,598 92,217 88,386 84,222 85,166 84,918 85,880 78,227 82,033 4 Inflation-indexed 2,801 1,673 1,575 2,209 1,267 1,716 1,881 1,349 1,794 1,676 1,771 11,,999955 Federal agency 5 Discount notes 62,160 66,280 62,429 70,415 62,925 62,472 63,276 63,071 57,355 56,817 61,195 6666,,449977 Coupon securities, by maturity 6 One year or less 1,451 1,405 998 1,005 675 1,356 748 1,228 965 647 1,517 11,,550022 7 More than one year, but less than or equal to five years 15,202 19,340 16,460 32,471 17,155 16,709 16,135 17,606 12,047 17,969 18,396 23,675 8 More than five years 12,991 9,935 13,911 10,665 10,762 19,876 11,826 15,514 8,079 6,378 5,274 8,070 9 Mortgage-backed 100,680 108,394 105,381 78,285 124,025 110,680 111,387 84,348 83,096 144,118 126,096 88,470 By type of counterparty With interdealer broker 10 U.S. Treasury 145,363 142,567 129,797 165,470 128,123 126,213 132,779 130,887 132,765 123,142 139,093 134,568 11 Federal agency 13,683 12,617 13,272 15,803 11,965 14,719 14,785 13,079 9,624 9,901 10,294 13,466 12 Mortgage-backed 31,191 32,659 34,045 27,846 35,155 35,768 38,320 29,291 28,157 43,120 39,724 29,240 With other 13 U.S. Treasury 165,738 164,767 161,613 201,213 162,604 151,263 153,817 177,035 165,941 155,439 175,729 173,623 14 Federal agency 78,120 84,344 80,526 98,753 79,553 85,694 77,200 84,340 68,821 71,910 76,088 86,278 15 Mortgage-backed 69,489 75,735 71,337 50,439 88,870 74,911 73,067 55,057 54,940 100,998 86,373 59,231 FUTURES TRANSACTIONS3 By type of deliverable security 16 U.S. Treasury bills n.a. 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 17 Five years or less 3,821 4,230 4,208 6,171 5,550 3,385 4,812 3,373 3,488 3,919 3,766 3,007 18 More than five years 15,474 17,291 16,989 22,167 16,672 18,107 18,218 15,196 16,395 18,265 16,792 17,124 19 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 0 Federal agency 20 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 21 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 22 More than one year, but less than or equal to five years 0 0 0 0 0 n.a. n.a. n.a. 0 0 0 0 23 More than five years 63 66 55 139 55 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 24 Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 OPTIONS TRANSACTIONS4 By type of underlying security 25 U.S. Treasury bills 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 26 Five years or less 1,116 971 1,167 743 1,173 1,067 1,010 1,191 1,739 502 1,908 598 27 More than five years 4,423 4,166 4,188 3,778 4,406 5,113 2,901 4,083 4,805 4,563 4,848 3,615 28 Inflation-indexed 0 0 0 0 0 0 0 0 0 0 0 0 Federal agency 29 Discount notes 0 0 0 0 0 0 0 0 0 0 0 0 Coupon securities, by maturity 30 One year or less 0 0 0 0 0 0 0 0 0 0 0 0 31 More than one year, but less than or equal to five years 20 29 85 80 n.a. n.a. n.a. n.a. 85 n.a. 63 n.a. 32 More than five years 105 119 133 278 27 269 92 168 75 172 29 n.a. 33 Mortgage-backed 1,269 1,444 1,863 1,104 2,564 1,543 2,160 1,608 802 1,251 1,753 404 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 A25 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 2001 2001, week ending Jan. Feb. Mar. Feb. 28 Mar. 7 Mar. 14 Mar. 21 Mar. 28 Apr. 4 Apr. 11 Apr. 18 Positions2 NET OUTRIGHT POSITIONS- By type of security 1 U.S. Treasury bills 10,534 9,779 20,272 27,862 15,125 13,380 12,098 30,249 44,155 40,934 57,291 Coupon securities, by maturity 2 Five years or less -12,508 -17,917 -14,721 -21,623 -16,189 -14,725 -13,003 -14,925 -14,819 -16,003 -18,297 3 More than five years -10,547 -3,985 -6,315 -3,992 -5,695 -6,897 -5,836 -6,645 -6,752 -7,782 -7,227 4 Inflation-indexed 3,571 3,907 4,146 4,568 4,186 4,171 3,663 4,548 4,188 4,377 4,508 Federal agency 5 Discount notes 30,005 32,994 36,096 31,168 34,956 40,015 33,643 33,222 42,037 49,299 54,292 Coupon securities, by maturity 6 One year or less 17,285 18,229 16,162 18,036 17,018 15,975 15,852 15,651 16,519 16,307 15,823 7 More than one year, but less than or equal to five years 6,450 6,215 5,802 6,424 6,268 6,633 5,420 5,540 4,274 4,776 7,117 8 More than five years 6,360 5,480 8,578 5,416 6,501 7,333 9,997 10,198 9,240 9,926 8,534 9 Mortgage-backed 15,656 10,110 9,611 7,830 10,254 9,305 6,710 10,687 13,082 9,749 9,762 NET FUTURES POSITIONS4 Bv type of deliverable security 10 U.S. Treasury bills n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Coupon securities, by maturity 11 Five years or less 1,131 2,344 -1,421 950 -1,764 -2,153 -1,904 108 -1,353 -1,646 -424 12 More than five years -6,366 -11,744 -10,207 -11,200 -10,632 -9,606 -11,711 -9,652 -8,406 -6,516 -6,782 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 n.a. 0 n.a. n.a. 0 n.a. 0 0 0 0 17 More than five years -91 -300 -341 -339 -309 -299 n.a. -395 -385 -380 -364 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 767 604 295 -109 989 -149 -55 784 -612 -1,472 -719 21 More than five years 1,054 -815 730 -1,211 524 1,163 640 423 1,131 377 1,163 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 -529 -578 355 -348 232 312 489 315 519 216 236 26 More than five years 603 558 593 1,079 1,226 967 587 -164 20 82 24 27 Mortgage-backed 894 2,002 2,485 3,438 1,276 2,293 3,851 2,634 2,220 823 1,121 Financing5 Reverse repurchase agreements 28 Overnight and continuing 348,805 350,827 376,076 389,259 390,153 378,049 385,554 353,528 369,121 360,179 361,327 29 Term 803,216 845,692 881,202 799,665 850,292 902,950 869,504 918,959 841,773 902,139 919,879 Securities borrowed 30 Overnight and continuing 270,561 278,815 278,034 269,630 286,322 275,096 285,120 268,650 270,908 268,931 279,432 31 Term 129,862 120,113 123,908 126,965 121,085 123,020 123,331 128,376 123,493 128,356 124,767 Securities received as pledge 32 Overnight and continuing 3,382 3,002 3,391 3,180 3,395 4,033 3,245 3,073 2,963 3,127 3,299 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 794,087 803,148 836,852 835,851 835,369 847,662 833,359 820,374 861,690 864,697 867,654 35 Term 764,792 801,371 842,163 762,927 818,097 857,600 840,322 881,095 775,748 833,753 860,415 Securities loaned 36 Overnight and continuing 9,914 9,648 9,463 9,709 9,209 9,234 9,657 9,786 9,386 10,065 9,561 37 Term 4,185 4,194 4,429 n.a. 4,067 n.a. 4,543 4,678 n.a. n.a. 4,469 Securities pledged 38 Overnight and continuing 54,311 51,166 50,758 49,833 51,954 49,957 51,553 50,052 49,627 53,160 52,868 39 Term 4,032 5,029 5,938 5,601 5,639 6,000 5,944 6,068 6,174 6,500 6,362 Collateralized loans 40 Total 24,507 21,373 23,731 18,895 21,116 28,881 24,727 18,640 27,366 22,520 24,447 1. Data for positions and financing are obtained from reports submitted to the Federal securities are included when the time to delivery is more than five business days. Forward Reserve Bank of New York by the U.S. government securities dealers on its published list of contracts for mortgage-backed agency securities are included when the time to delivery is primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar more than thirty business days. days of the report week are assumed to be constant. Monthly averages are based on the 4. Futures positions reflect standardized agreements arranged on an exchange. All futures number of calendar days in the month. positions are included regardless of time to delivery. 2. Securities positions are reported at market value. 5. Overnight financing refers to agreements made on one business day that mature on the 3. Net outright positions include immediate and forward positions. Net immediate posi- next business day; continuing contracts are agreements that remain in effect for more than one tions include securities purchased or sold (other than mortgage-backed agency securities) that business day but have no specific maturity and can be terminated without advance notice by have been delivered or are scheduled to be delivered in five business days or less and either party; term agreements have a fixed maturity of more than one business day. Financing "when-issued" securities that settle on the issue date of offering. Net immediate positions for data are reported in terms of actual funds paid or received, including accrued interest. mortgage-backed agency securities include securities purchased or sold that have been NOTE, "n.a." indicates that data are not published because of insufficient activity. delivered or are scheduled to be delivered in thirty business days or less. Forward positions reflect agreements made in the over-the-counter market that specify delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • July 2001 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 2000 2001 AAggeennccyy 11999977 11999988 11999999 22000000 Oct. Nov. Dec. Jan. Feb. 1 Federal and federally sponsored agencies 1,022,609 1,296,477 1,616,492 1,851,632 n.a. 1,833,155 1,851,632 n.a. 1,917,503 2 Federal agencies 27,792 26,502 26,376 25,666 25,523 25,555 25,666 25,426 25,141 3 Defense Department1 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2-3 552 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Federal Housing Administration4 102 205 126 255 237 239 255 275 291 6 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. / Postal Service6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority 27,786 26,496 26,370 25,660 25,517 25,549 25,660 25,420 25,135 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 994,817 1,269,975 1,590,116 1,825,966 1,777,824 1,807,600 1,825,966 1,873,199 1,892,362 11 Federal Home Loan Banks 313,919 382,131 529,005 594,404 576,689 580,957 594,404 604,904 598,586 12 Federal Home Loan Mortgage Corporation 169,200 287,396 360,711 426,899 422,960 429,617 426,899 446,997 455,623 13 Federal National Mortgage Association 369,774 460,291 547,619 642,700 615,463 633,100 642,700 654,200 668,200 14 Farm Credit Banks8 63,517 63,488 68,883 74,181 71,345 71,667 74,181 73,925 73,647 15 Student Loan Marketing Association9 37,717 35,399 41,988 45,375 48,988 50,016 45,375 50,669 53,886 16 Financing Corporation10 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation" 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 18 Resolution Funding Corporation12 29,996 29,996 29.996 29,996 29,996 29,996 29,996 29,996 29,996 MEMO 19 Federal Financing Bank debt13 49,090 44,129 42,152 40,575 41,280 40,170 40,575 39,348 38,924 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 552 f f f f f f 21 Postal Service6 n.a. 1 1 T 1 1 1 1 1 22 Student Loan Marketing Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2 2 3 4 T U e n n it n e e d s s S ee ta t V es a l R le a y i l A w u ay th o A r s it s y o ciation6 n n . . a a . . t I t I t I t I i I I I t I • I Other lending14 25 Farmers Home Administration 13,530 9,500 6,665 5,275 5,540 5,320 5,275 5,155 5,155 26 Rural Electrification Administration 14,898 14,091 14,085 13,126 12,891 13,023 13,126 13,197 13,281 21 Other 20,110 20,538 21,402 22,174 22,849 21,827 22,174 20,996 20,488 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 10. The Financing Corporation, established in August 1987 to recapitalize the Federal under family housing and homeowners assistance programs. Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 11. The Farm Credit Financial Assistance Corporation, established in January 1988 to 3. On-budget since Sept. 30, 1976. provide assistance to the Farm Credit System, undertook its first borrowing in July 1988. 4. Consists of debentures issued in payment of Federal Housing Administration insurance 12. The Resolution Funding Corporation, established by the Financial Institutions Reform, claims. Once issued, these securities may be sold privately on the securities market. Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989. 5. Certificates of participation issued before fiscal year 1969 by the Government National 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations Mortgage Association acting as trustee for the Farmers Home Administration; the Department issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the of Health, Education, and Welfare; the Department of Housing and Urban Development; the purpose of lending to other agencies, its debt is not included in the main portion of the table to Small Business Administration; and the Veterans Administration. avoid double counting. 6. Off-budget. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally Federal Agricultural Mortgage Corporation; therefore, details do not sum to total. Some data being small. The Farmers Home Administration entry consists exclusively of agency assets, are estimated. whereas the Rural Electrification Administration entry consists of both agency assets and 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is guaranteed loans. shown on line 17. 9. Before late 1982, the association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Markets and Corporate Finance A31 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 2000 2001 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11999988 11999999 22000000 oorr uussee Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 All issues, new and refunding1 262,342 215,427 180,403 15,598 18,035 18,079 15,348 11,255 19,829 24,495 16,985 By type of issue 2 General obligation 87,015 73,308 64,475 6,888 5,871 5,044 5,060 6,256 9,389 7,668 6,890 3 Revenue 175,327 142,120 115,928 8,710 12,163 13,036 10,288 4,999 10,441 16,827 10,094 By type of issuer 4 State 23,506 16,376 19,944 2,022 3,005 1,942 1,640 1,738 3,268 1,893 1,900 5 Special district or statutory authority2 178,421 152,418 111,695 10,152 11,224 12,311 1,053 7,061 11,011 17,280 113,344 6 Municipality, county, or township 60,173 46,634 39,273 3,424 3,806 3,827 3,165 2,456 5,550 5,323 3,740 7 Issues for new capital 160,568 161,065 154,257 13,968 16,387 14,520 13,286 8,758 13,384 15,387 12,264 By use of proceeds 8 Education 36,904 36,563 38,665 3,210 3,492 3,446 2,919 2,786 3,102 5,343 3,731 9 Transportation 19,926 17,394 19,730 1,574 2,575 2,124 1,381 780 2,411 1,219 1,381 10 Utilities and conservation 21,037 15,098 11,917 1,408 1,272 1,973 1,307 678 1,335 1,677 1,447 11 Social welfare n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Industrial aid 8,594 9,099 7,122 387 730 500 615 63 281 396 436 13 Other purposes 42,450 47,896 47,309 5,243 6,558 3,787 4,264 3,013 4,742 4,368 3,010 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 2000 2001 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, 11999988 11999999 22000000 oorr iissssuueerr Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. 1 All issues' 1,128,491 1,072,866 942,198 82,752 94,492 62,466 95,595 61,378 125,894 96,206r 138,655 2 Bonds2 1,001,736 941,298 807,281 69,875 88,102 53,345 84,094 58,713 118,372 88,806 127,956 By type of offering 3 Sold in the United States 923,771 818,683 684,484 56,133 73,516 47,415 76,383 57,189 115,583 86,146 118,779 4 Sold abroad 77,965 122,615 122,798 13,742 14,586 5,930 7,712 1,525 2,789 2,660 9,177 MEMO 5 Private placements, domestic n.a. n.a. n.a. 241 376 127 5,534 3,709 26 1,897 652 By industry group 6 Nonfinancial 307,711 293,963 242,452 17,947 24,483 12,547 25,784 18,219 44,443 34,604 44,385 7 Financial 694,025 647,335 564,829 51,928 63,619 40,799 58,310 40,495 73,928 54,201 83,571 8 Stocks3 182,055 223,968 283,717 25,277 18,790 21,521 23,901 15,065 7,522 7,400 11,308 By type of offering 9 Public 126,755 131,568 134,917 12,877 6,390 9,121 11,501 2,665 7,522 7,400 11,308 10 Private placement4 55,300 92,400 148,800 12,400 12,400 12,400 12,400 12,400 n.a. n.a. n.a. By industry group 11 Nonfinancial 74,113 110,284 118,369 8,645 6,205 8,278 10,794 2,146 4,356 4,463 7,718 12 Financial 52,642 21,284 16,548 4,232 185 843 707 519 3,166 2,937 3,590 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 NonfinancialS tatistics • July 2001 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 2000 2001 IItteemm 11999999 22000000 Sept. Oct. Nov. Dec. Jan. Feb. Mar.' Apr. 1 Sales of own shares2 1,791,894 2,279,315 159,809 169,071 143,412 170,255 206,765 148,362 162,548 152,491 2 Redemptions of own shares 1,621,987 2,057,277 147,644 153,067 138,791 160,918 171,819 141,663 175,633 130,560 3 Net sales3 169,906 222,038 12,166 16,004 4,621 9,337 34,946 6,699 —13,085 21,931 4 Assets4 5,233,191 5,123,747 5,550,176 5,442,937 4,993,008 5,123,747 5,280,222 4,879,229 4,594,182 4,913,571 5 Cash5 219,189 277,386 280,192 302,682 300,133 277,386 280,472 274,077 241,518 250,218 6 Other 5,014,002 4,846,361 5,269,984 5,140,255 4,692,875 4,846,361 4,999,750 4,605,152 4,352,664 4,663,353 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 1999 2000 2001 AAccccoouunntt 11999988 11999999 22000000 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Profits with inventory valuation and capital consumption adjustment 815.0 856.0 946.2 836.8 842.0 893.2 936.3 963.6 970.3 914.7 893.4 2 Profits before taxes 758.2 823.0 925.6 804.5 819.0 870.7 920.7 942.5 945.1 894.1 866.2 3 Profits-tax liability 244.6 255.9 284.2 250.8 254.2 270.8 286.3 292.0 290.6 267.7 259.0 4 Profits after taxes 513.6 567.1 641.4 553.7 564.8 599.9 634.4 650.4 654.4 626.4 607.2 5 Dividends 351.5 370.7 397.0 367.2 373.9 380.6 387.3 393.0 400.1 407.6 414.7 6 Undistributed profits 162.1 196.4 244.4 186.5 190.9 219.3 247.1 257.4 254.4 218.8 192.6 7 Inventory valuation 17.0 -9.1 -12.9 -8.9 —19.7 -19.2 -25.0 -13.6 -4.5 -8.5 — 3.5 8 Capital consumption adjustment 39.9 42.1 33.5 41.2 42.7 41.6 40.6 34.7 29.7 29.1 30.7 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 1999 2000 2001 AAccccoouunntt 11999988 11999999 22000000rr Q3 Q4 Ql Q2 Q3 Q4r Ql ASSETS 1 Accounts receivable, gross2 711.7 811.5 915.6 776.3 811.5 848.7 884.4 900.1 915.6 916.6 2 Consumer 261.8 279.8 296.1 271.0 279.8 285.4 294.1 301.9 296.1 292.9 3 Business 347.5 405.2 471.1 383.0 405.2 434.6 454.1 455.7 471.1 472.1 4 Real estate 102.3 126.5 148.3 122.3 126.5 128.8 136.2 142.4 148.3 151.6 5 LESS: Reserves for unearned income 56.3 53.5 60.0 54.0 53.5 54.0 57.1 58.8 60.0 60.3 6 Reserves for losses 13.8 13.5 15.1 13.6 13.5 14.0 14.4 14.2 15.1 15.6 7 Accounts receivable, net 641.6 744.6 840.5 708.6 744.6 780.7 813.0 827.1 840.5 840.7 8 All other 337.9 406.3 461.8 368.5 406.3 412.7 418.3 441.4 461.8 474.8 9 Total assets 979.5 1,150.9 1,302.4 1,077.2 1,150.9 1,193.4 1,231.3 1,268.4 1,302.4 1,315.5 LIABILITIES AND CAPITAL 10 Bank loans 26.3 35.1 35.6 27.0 35.1 28.5 32.5 35.4 35.6 41.2 11 Commercial paper 231.5 227.9 235.2 205.3 227.9 230.2 221.3 215.6 235.2 178.3 Debt 12 Owed to parent 61.8 123.8 146.5 84.5 123.8 145.1 137.1 144.3 146.5 138.5 13 Not elsewhere classified 339.7 397.0 463.8 396.2 397.0 412.0 445.4 465.5 463.8 501.9 14 All other liabilities 203.2 222.7 279.7 216.0 222.7 247.6 259.3 269.2 279.7 299.7 15 Capital, surplus, and undivided profits 117.0 144.5 141.6 148.2 144.5 130.1 135.6 138.3 141.6 151.0 16 Total liabilities and capital 979.5 1,150.9 1,302.4 1,077.2 1,150.9 1,193.4 1,231.3 1,268.4 1,302.4 1,310.6 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 2001 TTyyppee ooff ccrreeddiitt 11999988 11999999 22000000 Oct. Nov. Dec. Jan. Feb. Mar. Seasonally adjusted 1 Total 875.8 993.9 1,145.2 1,134.9 1,136.2 1,145.2 l,156.7r l,159.7r 1,159.5 2 Consumer 352.8 385.3 439.3 437.3 439.8 439.3 443.8r 447. r 450.8 3 Real estate 131.4 154.7 174.9 174.4 176.6 174.9 177.7 179.0r 177.5 4 Business . 391.6 453.9 531.0 523.2 519.7 531.0 535.2 533.6r 531.3 Not seasonally adjusted 5 Total 884.0 1,003.2 1,156.0 1,132.9 1,137.9 1,156.0 1,156.7 l,159.7r 1,164.0 6 Consumer 356.1 388.8 443.4 437.9 441.4 443.4 443.9r 445.lr 446.7 7 Motor vehicles loans 103.1 114.7 122.5 131.8 127.8 122.5 117.5 118.5 118.9 8 Motor vehicle leases 93.3 98.3 102.9 104.3 104.0 102.9 103.3' 102.4r 102.3 9 Revolving" 32.3 33.8 38.3 37.1 38.0 38.3 37.lr 36.9r 35.6 10 Other3 33.1 33.1 32.4 31.9 32.0 32.4 32.4 32.0 31.3 Securitized assets4 11 Motor vehicle loans 54.8 71.1 97.1 84.3 91.5 97.1 103.9 105.2 108.1 12 Motor vehicle leases 12.7 9.7 6.6 7.0 6.8 6.6 6.3 6.9 6.6 13 Revolving 8.7 10.5 27.5 25.8 25.8 27.5 27.6 27.6 27.6 14 Other 18.1 17.7 16.0 15.7 15.5 16.0 15.8 15.5r 16.2 15 Real estate 131.4 154.7 174.9 174.4 176.6 174.9 177.7 179.0r 177.5 16 One- to four-family 75.7 88.3 105.4 104.6 107.0 105.4 108.2 109.5 108.1 17 Other 26.6 38.3 42.9 42.1 42.7 42.9 43.2 43.4r 43.5 Securitized real estate assets4 18 One- to four-family 29.0 28.0 24.7 25.7 25.0 24.7 24.4 24.2 23.9 19 Other .1 .2 1.9 1.9 1.9 1.9 1.9 1.9 1.9 20 Business 396.5 459.6 537.7 520.6 519.9 537.7 535.1 535.6r 539.8 21 Motor vehicles 79.6 87.8 95.2 95.9 93.3 95.2 93.6 93.6 90.9 22 Retail loans 28.1 33.2 31.0 34.7 32.3 31.0 30.8 30.7 30.5 73 Wholesale loans5 32.8 34.7 39.6 37.5 37.3 39.6 38.2 37.6 35.8 ?4 Leases 18.7 19.9 24.6 23.7 23.8 24.6 24.6 25.3r 24.6 25 Equipment 198.0 221.9 267.3 259.4 259.3 267.3 265.6 262.5r 264.7 26 Loans 50.4 52.2 56.2 56.1 54.7 56.2 56.3 55.6 57.1 27 Leases 147.6 169.7 211.1 203.3 204.6 211.1 209.3 206.9 207.7 28 Other business receivables6 69.9 95.5 108.6 103.7 103.2 108.6 110.4 114.5 116.2 Securitized assets4 29 Motor vehicles 29.2 31.5 37.8 34.2 37.0 37.8 37.3 37.2 40.0 30 Retail loans 2.6 2.9 3.2 2.3 3.1 3.2 3.1 2.9 2.8 31 Wholesale loans 24.7 26.4 32.5 29.5 31.5 32.5 32.1 31.7 34.5 32 Leases 1.9 2.1 2.2 2.4 2.4 2.2 2.2 2.6 2.6 33 Equipment 13.0 14.6 23.1 21.7 21.3 23.1 22.5 22.2 22.5 34 Loans 6.6 7.9 15.5 14.9 14.6 15.5 14.7 14.5 14.6 35 Leases 6.4 6.7 7.6 6.7 6.7 7.6 7.8 7.8 7.9 36 Other business receivables6 6.8 8.4 5.6 5.8 5.8 5.6 5.6 5.6 5.6 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 NonfinancialS tatistics • July 2001 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 2000 2001 IItteemm 11999988 11999999 22000000 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms' 1 Purchase price (thousands of dollars) 195.2 210.7 234.5 240.2 247.2 250.0 238.7 245.0 244.5 240.8 2 Amount of loan (thousands of dollars) 151.1 161.7 177.0 180.4 184.2 187.3 181.6 185.4 182.9 181.5 3 Loan-to-price ratio (percent) 80.0 78.7 77.4 77.2 76.2 76.5 78.2 77.9 77.2 77.6 4 Maturity (years) 28.4 28.8 29.2 29.2 29.2 29.1 29.4 29.0 28.8 28.5 5 Fees and charges (percent of loan amount)" .89 .77 .70 .69 .69 .73 .71 .70 .66 .71 Yield (percent per year) 6 Contract rate1 6.95 6.94 7.41 7.43 7.36 7.29 7.09 6.99 6.94 6.96 7 Effective rate1,3 7.08 7.06 7.52 7.53 7.47 7.40 7.20 7.10 7.04 7.07 8 Contract rate (HUD series)4 7.00 7.45 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (Section 203)5 7.04 7.74 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 GNMA securities6 6.43 7.03 7.57 7.30 7.22 6.83 6.57 6.61 6.41 6.53 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 414,515 523,941 610,122 586,756 598,951 610,122 623,950 632,850 n.a. n.a. 12 FHA/VA insured 33,770 55,318 61,539 60,329 60,694 61,539 62,970 63,337 n.a. n.a. 13 Conventional 380,745 468,623 548,583 526,427 538,257 548,583 560,980 569,513 n.a. n.a. 14 Mortgage transactions purchased (during period) 188,448 195,210 154,231 18,444 17,322 17,193 20,598 17,230 20,899 24,015 Mortgage commitments (during period) 15 Issued7 193,795 187,948 163,689 17,435 15,287 20,120 27,325 25,471 n.a. n.a. 16 To sell8 1,880 5,900 11,786 268 676 1,436 766 835 n.a. n.a. FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 255,010 324,443 385,693 365,198 372,819 385,693 391,679 407,086 421,655 430,960 18 FHA/VA insured 785 1,836 3,332 3,530 3,321 3,332 3,307 3,319 3,329 2,878 19 Conventional 254,225 322,607 382,361 361,668 369,498 382,361 388,372 403,767 418,326 428,082 Mortgage transactions (during period) 20 Purchases 267,402 239,793 174,043 16,195 19,402 24,313 15,658 16,536 24,648 n.a. 21 250,565 233,031 166,901 15,614 18,823 22,277 15,364 15,549 23,367 31,219 22 Mortgage commitments contracted (during period)9 281,899 228,432 169,231 17,915 20,012 21,780 18,685 17,664 26,682 32,758 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 the Federal 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured National Mortgage Association 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 2000 2001 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999966 11999977 11999988 Ql Q2 Q3 Q4 Ql 1 All holders 4,868,298 5,204,119 5,737,161 6,426,515 6,592,329 6,744,667 6,889,962 7,016,475 By type of property 2 One- to four-family residences 3,718,683 3,973,692 4,362,699 4,832,886 4,962,031 5,087,538 5,193,000 5,284,886 3 Multifamily residences 288,837 302,291 332,121 387,188 390,753 399,232 409,216 418,762 4 Nonfarm, nonresidential 773,643 837,837 945,836 1,102,565 1,133,107 1,149,940 1,178,909 1,202,752 5 Farm 87,134 90,299 96,506 103,875 106,437 107,957 108,836 110,075 By type of holder 6 Major financial institutions 1,981,886 2,083,981 2,194,813 2,458,194 2,550,201 2,606,592 2,621,076 2,667,125 7 Commercial banks2 1,145,389 1,245,315 1,337,217 1,548,224 1,615,794 1,650,294 1,661,600 1,688,869 8 One- to four-family 677,603 745,510 797,492 905,270 949,223 968,831 966,609 978,227 9 Multifamily 45,451 49,670 54,116 72,509 75,795 77,031 77,821 79,890 in Nonfarm, nonresidential 397,452 423,148 456,574 537,772 557,059 570,513 583,153 596,518 n Farm 24,883 26,986 29,035 32,673 33,717 33,919 34,016 34,234 17 Savings institutions3 628,335 631,826 643,957 680,745 701,992 721,563 723,534 741,114 13 One- to four-family 513,712 520,782 533,918 560,018 578,612 595,518 595,053 608,289 14 Multifamily 61,570 59,540 56,821 57,790 59,174 60,077 61,094 62,666 15 Nonfarm, nonresidential 52,723 51,150 52,801 62,444 63,688 65,437 66,852 69,589 16 Farm 331 354 417 493 518 513 535 569 17 Life insurance companies 208,162 206,840 213,640 229,225 232,415 234,735 235,942 237,142 18 One- to four-family 6,977 7,187 6,590 5,567 5,237 4,907 4,904 4,800 19 Multifamily 30,750 30,402 31,522 32,634 33,121 33,478 33,681 33,867 7.n Nonfarm, nonresidential 160,315 158,779 164,004 178,043 180,701 182,646 183,757 184,774 21 Farm 10,120 10,472 11,524 12,981 13,356 13,704 13,600 13,701 22 Federal and related agencies 295,192 286,194 293,613 322,917 332,642 336,682 343,962 346,276 23 Government National Mortgage Association 2 8 7 7 7 6 6 6 24 One- to four-family 2 8 7 7 7 6 6 6 25 Multifamily 0 0 0 0 0 0 0 0 76 Farmers Home Administration4 41,596 41,195 40,851 72,899 72,896 73,009 73,323 73,361 27 One- to four-family 17,303 17,253 16,895 16,456 16,435 16,444 16,372 16,297 78 Multifamily 11,685 11,720 11,739 11,732 11,729 11,734 11,733 11,725 79 Nonfarm, nonresidential 6,841 7,370 7,705 40,509 40,554 40,665 41,070 41,247 3n Farm 5,768 4,852 4,513 4,202 4,179 4,167 4,148 4,093 31 Federal Housing and Veterans' Administrations 6,244 3,811 3,674 3,794 3,845 3,395 3,507 2,873 32 One- to four-family 3,524 1,767 1,849 1,847 1,832 1,327 1,308 1,276 33 Multifamily 2,719 2,044 1,825 1,947 2,013 2,068 2,199 1,597 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 98 72 82 45 50 40 One- to four-family 365 117 58 16 12 13 7 8 41 Multifamily 413 140 70 19 14 16 9 10 42 Nonfarm, nonresidential 1,653 467 233 63 46 53 29 32 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 168,813 161,308 157,675 150,312 153,507 152,815 155,363 156,294 45 One- to four-family 155,008 149,831 147,594 139,986 142,478 141,786 144,150 145,014 46 Multifamily 13,805 11,477 10,081 10,326 11,029 11,029 11,213 11,280 47 Federal Land Banks 29,602 30,657 32,983 34,142 34,830 35,549 36,326 37,072 48 One- to four-family 1,742 1,804 1,941 2,009 2,049 2,092 2,137 2,181 49 Farm 0 0 0 0 0 0 0 0 50 Federal Home Loan Mortgage Corporation 46,504 48,454 57,085 4,656 10,513 14,780 16,152 16,510 51 One- to four-family 41,758 42,629 49,106 4,406 10,213 14,450 15,931 16,292 52 Multifamily 4,746 5,825 7,979 250 300 330 221 218 53 Mortgage pools or trusts5 2,040,847 2,239,350 2,589,800 2,983,365 3,034,691 3,115,138 3,231,195 3,305,311 54 Government National Mortgage Association 506,246 536,879 537,446 589,192 590,708 602,628 611,629 601,540 55 One- to four-family 494,064 523,225 522,498 571,506 572,661 584,152 592,700 581,760 56 Multifamily 12,182 13,654 14,948 17,686 18,047 18,476 18,929 19,780 57 Federal Home Loan Mortgage Corporation 554,260 579,385 646,459 757,106 768,641 790,891 822,310 833,616 58 One- to four-family 551,513 576,846 643,465 752,607 763,890 786,007 816,602 827,769 59 Multifamily 2,747 2,539 2,994 4,499 4,751 4,884 5,708 5,847 60 Federal National Mortgage Association 650,779 709,582 834,517 975,815 995,815 1,020,828 1,057,750 1,099,049 61 One- to four-family 633,209 687,981 804,204 932,178 957,584 981,206 1,016,398 1,055,412 62 Multifamily 17,570 21,601 30,313 43,637 38,231 39,622 41,352 43,637 63 Farmers Home Administration4 3 2 1 0 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 0 0 0 0 0 68 Private mortgage conduits 329,559 413,502 571,378 661,252 679,527 700,791 739,506 771,106 69 One- to four-family6 258,800 316,400 412,700 455,623 464,593 477,899 499,834 523,300 70 Multifamily 16,369 21,591 34,329 43,069 44,290 45,991 49,322 50,639 71 Nonfarm, nonresidential 54,390 75,511 124,348 162,560 170,644 176,901 190,350 197,167 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 550,372 594,594 658,935 662,039 674,794 686,254 693,729 697,763 74 One- to four-family 363,104 382,315 423,416 442,006 454,314 470,762 478,118 481,485 75 Multifamily 68,830 72,088 75,374 77,466 78,179 79,587 79,566 80,268 76 Nonfarm, nonresidential 100,269 121,412 140,171 121,174 120,415 113,725 113,697 113,424 77 Farm 18,169 18,779 19,974 21,393 21,886 22,179 22,348 22,586 1. Multifamily debt refers to loans on structures of five or more units. 6. Includes securitized home equity loans. 2. Includes loans held by nondeposit trust companies but not loans held by bank trust 7. Other holders include mortgage companies, real estate investment trusts, state and local departments. credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and 3. Includes savings banks and savings and loan associations. finance companies. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from SOURCE. Based on data from various institutional and government sources. Separation of FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting nonfarm mortgage debt by type of property, if not reported directly, and interpolations and changes by the Farmers Home Administration. extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by Line 69 from Inside Mortgage Securities and other sources. the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic NonfinancialS tatistics • July 2001 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 2000 2001 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999988 11999999 22000000rr Oct.r Nov.r Dec. Jan.r Feb.r Mar. Seasonally adjusted 1 Total 1^01,023 1,393,657 1,533,153 1,510,004 1,526,196 l,533,153r 1,548,166 1,560,534 1,565,295 2 Revolving 560,504 595,610 663,827 654,948 660,990 663,827r 666699,,229988 679,280 684,886 3 Nonrevolving2 740,519 798,047 869,326 855,056 865,206 869,326r 887788,,886688 881,253 880,409 Not seasonally adjusted 4 Total 1,331,742 1,426,151 1,568,151 1,514,144 1,533,965 1,568, i51r 1,560,028 1,555,682 1,552,942 By major holder 5 Commercial banks 508,932 499,758 543,711 522,515 531,405 543,711 539,988 533,251 530,601 6 Finance companies 168,491 181,573 193,189 200,846 197,759 193,189 187,029 187,493 185,863 1 Credit unions 155,406 167,921 184,434 182,806 183,772 184,434r 184,120 183,548 182,477 8 Savings institutions 51,611 61,527 64,009 63,018 63,514 64,009 64,030 64,051 64,072 9 Nonfinancial business 74,877 80,311 82,662 70,799 73,786 82,662r 77,698 73,021 71,669 10 Pools of securitized assets' 372,425 435,061 500,147 474,159 483,729 500,147 507,163 514,318 518,260 By major type of credit4 11 Revolving 586,528 623,245 693,641 652,965 664,460 693,641r 681,321 680,037 677,893 12 Commercial banks 210,346 189,352 218,063 200,517 206,121 218,063 210,441 205,934 205,522 13 Finance companies 32,309 33,814 38,251 37,147 37,956 38,251 37,098 36,938 35,626 14 Credit unions 19,930 20,641 22,226 21,101 21,656 22,226r 21,714 21,415 20,829 15 Savings institutions 12,450 15,838 16,556 16,403 16,480 16,556 16,775 16,994 17,212 16 Nonfinancial business 39,166 42,783 42,430 34,484 36,430 42,430 38,935 35,290 34,150 17 Pools of securitized assets3 272,327 320,817 356,114 343,313 345,817 356,114 356,359 363,466 364,554 18 Nonrevolving 745,214 802,906 874,510 861,179 869,505 874,510r 878,707 875,646 875,049 19 Commercial banks 298,586 310,406 325,648 321,998 325,284 325,648 329,546 327,317 325,079 20 Finance companies 136,182 147,759 154,938 163,700 159,803 154,938 149,931 150,555 150,238 21 Credit unions 135,476 147,280 162,208 161,705 162,116 162,208r 162,406 162,133 161,648 22 Savings institutions 39,161 45,689 47,452 46,615 47,034 47,452 47,255 47,057 46,860 23 Nonfinancial business 35,711 37,528 40,231 36,315 37,356 40,23 r 38,764 37,731 37,519 24 Pools of securitized assets3 100,098 114,244 144,032 130,847 137,912 144,032 150,804 150,852 153,706 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 2001 IItteemm 11999988 11999999 22000000 Sept. Oct. Nov. Dec. Jan. Feb/ Mar. INTEREST RATES Commercial banks2 1 48-month new car 8.72 8.44 9.34 n.a. n.a. 9.63 n.a. n.a. 9.17 n.a. 2 24-month personal 13.74 13.39 13.90 n.a. n.a. 14.12 n.a. n.a. 13.71 n.a. Credit card plan 3 All accounts 15.71 15.21 15.71 n.a. n.a. 15.99 n.a. n.a. 15.66 n.a. 4 Accounts assessed interest 15.59 14.81 14.91 n.a. n.a. 15.23 n.a. n.a. 14.61 n.a. Auto finance companies 5 New car 6.30 6.66 6.61 7.16 4.74 5.41 7.45 7.29 7.19 6.80 6 Used car 12.64 12.60 13.55 13.91 13.87 13.66 13.58 13.11 13.34 13.19 OTHER TERMS3 Maturity (months) 7 New car 52.1 52.7 54.9 55.9 57.6 57.3 55.2 54.3 55.5 55.6 8 Used car 53.5 55.9 57.0 57.0 57.0 56.8 56.6 57.8 58.0 58.0 Loan-to-value ratio 9 New car 92 92 92 91 93 93 91 90 91 91 10 Used car 99 99 99 100 100 100 100 98 99 100 Amount financed (dollars) 11 New car 19,083 19,880 20,923 21,010 22,069 22,443 21,867 21,315 21,993 22,131 12 Used car 12,691 13,642 14,058 13,950 13,978 14,325 14,591 14,155 14,095 14,214 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 2. Data are available for only the second month of each quarter, extended to individuals. Data in this table also appear in the Board's G.19 (421) monthly 3. At auto finance companies, statistical release. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 7 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1999 2000 2001 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999955 11999966 11999977 Q3 Q4 Ql Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors . . . 711.1 731.3 804.6 1,011.4r l,088.8r l,150.9r l,051.9r 917.1r 952.3r 752.2 829.1 965.5 By sector and instrument ? Federal government 144.4 145.0 23.1 -52.6 -71.2 -68.9 -34.0 -215.5 -414.0 -219.5 -334.5 -10.8 Treasury securities 142.9 146.6 23.2 -54.6 -71.0 -68.9 -34.0 -213.5 -415.8 -217.1 -333.3 -8.6 4 Budget agency securities and mortgages 1.5 -1.6 -.1 2.0 -.2 .0 .0 -2.1 1.8 -2.4 -1.2 -2.2 5 Nonfederal 566.7 586.3 781.5 l,064.0r 1,160.0r l,219.8r l,085.9r l,132.6r l,366.2r 971.8 1,163.5 976.3 By instrument Commercial paper 18.1 -.9 13.7 24.4 37.4 49.8 44.0 29.8 110.4 56.1 -4.0 -207.2 7 Municipal securities and loans -48.2 2.6 71.4 96.8 68.2 71.3 52.5 8.9 34.0 29.8 68.6 94.3 8 Corporate bonds 91.1 116.3 150.5 218.7 229.9 202.8 155.2 186.2 153.8 184.4 175.6 400.0 9 Bank loans n.e.c 103.7 70.5 106.5 108.2 82.7 112.3 108.6 131.9 163.1 31.7 86.5 -11.3 in Other loans and advances 67.2 33.5 69.1 74.3 60.6r 74.0r 39.7r 155.6r 126.6r -10.1 145.1 -8.9 ii Mortgages 195.8 275.7 317.7 474.0r 586.9r 633.4r 576.3r 475.0r 640.4r 557.4 568.1 553.8 i? Home 181.0 242.1 252.3 379.7r 426. lr 473.6r 391.3r 336.5r 482.4r 428.4 413.5 406.3 n Multifamily residential 6.1 9.0 8.2 19.9r 39.6r 40.6r 51.0r 28.8r 43.9r 29.5 40.3 40.8 14 Commercial 7.1 22.0 54.1 68.2r 115.6r 112.2r 131.6r 102.3r 104.3r 93.2 110.6 101.5 15 Farm 1.6 2.6 3.2 6.2 5.5 7.0 2.5 7.3r 9.1' 6.2 3.7 5.1 16 Consumer credit 138.9 88.8 52.5 67.6 94.4 76.2 109.5 145.3r 137.9r 122.5 123.7 155.6 By borrowing sector 17 Household 363.5 357.8 337.1 472. lr 532.4r 574.8r 492.2r 516.2r 632.7r 550.5 565.2 555599..99 18 Nonfinancial business 254.7 235.3 388.2 511.7r 575.3r 592.6r 560. lr 612.7r 712.7r 397.6 537.9 326.5 19 Corporate 227.5 149.1 266.5 392.0r 454.7r 452.5r 421,9r 480.8r 578.5r 282.3 407.5 231.8 70 Nonfarm noncorporate 24.3 81.4 115.6 112.0 115.3 131.6 132.7 116.5 125.1 109.3 116.5 85.7 ?1 Farm 2.9 4.8 6.2 7.7 5.2 8.5 5.6 15.4r 9.1r 6.0 13.9 9.1 22 State and local government -51.5 -6.8 56.1 80.3 52.3 52.5 33.6 3.8 20.8 23.6 60.4 89.9 ?,3 Foreign net borrowing in United States 78.5 88.4 71.8 43.3 25.3 77.3 17.6 118.0 -7.6 89.3 66.3 -27.0 74 Commercial paper 13.5 11.3 3.7 7.8 16.3 41.1 33.6 57.8 12.0 7.0 50.1 -25.4 ?5 Bonds 57.1 67.0 61.4 34.8 14.2 44.0 -2.7 45.7 -27.4 71.8 9.2 -1.4 ?6 Bank loans n.e.c 8.5 9.1 8.5 6.7 .5 -6.6 2.3 15.4 5.7 11.9 12.2 10.3 27 Other loans and advances -.5 1.0 -1.8 -6.0 -5.7 -1.1 -15.5 -.9 2.0 -1.5 -5.2 -10.5 28 Total domestic plus foreign 789.6 819.7 876.3 l,054.7r l,114.1r l,228.2r l,069.5r l,035.1r 944.6r 841.5 895.4 938.4 Financial sectors 29 Total net borrowing by financial sectors 454.0 545.7 653.8 1,073.9 l,077.2r l,059.1r l,047.6r 586.4r 819.3r 725.5 1,075.9 893.6 By instrument 30 Federal government-related 204.2 231.4 212.9 470.9 592.0 651.6 550.1 248.6 370.4r 503.4 612.1 461.1 31 Government-sponsored enterprise securities 105.9 90.4 98.4 278.3 318.2 407.1 367.9 104.9 248.9 278.1 304.8 264.1 32 Mortgage pool securities 98.3 141.0 114.6 192.6 273.8 244.5 182.2 143.7 121.6r 225.3 307.3 197.0 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 249.8 314.4 440.9 603.0 485.3r 407.5r 497.4r 337.8r 448.9r 222.1 463.8 432.5 35 Open market paper 42.7 92.2 166.7 161.0 176.2 89.9 479.0 130.9 77.4 65.2 237.5 -119.5 36 Corporate bonds 195.9 173.8 210.5 296.9 211.lr 174.4r -36.6r 135.r 233.01" 188.3 211.6 456.8 37 Bank loans n.e.c 2.5 12.6 13.2 30.1 -14.3 -5.9 -55.6 .3 5.4 -.7 -6.2 23.6 38 Other loans and advances 3.4 27.9 35.6 90.2 107.1 139.8 107.5 64.4 123.1 -36.7 19.1 79.2 39 Mortgages 5.3 7.9 14.9 24.8 5.1 9.4 3.2 7.0 10.0 6.0 1.8 -7.5 By borrowing sector 40 Commercial banking 22.5 13.0 46.1 72.9 67.2 107.0 54.1 72.4 113.2 23.5 30.8 138.4 41 Savings institutions 2.6 25.5 19.7 52.2 48.0 51.9 5.8 40.6 59.1 -23.4 32.7 40.8 42 Credit unions -.1 .1 .1 .6 2.2 2.8 3.3 -2.9 .9 1.1 1.0 -.2 43 Life insurance companies -.1 1.1 .2 .7 .7 1.1 -4.4 -.7 -1.1 -.3 -.7 -2.4 44 Government-sponsored enterprises 105.9 90.4 98.4 278.3 318.2 407.1 367.9 104.9 248.9 278.1 304.8 264.1 45 Federally related mortgage pools 98.3 141.0 114.6 192.6 273.8 244.5 182.2 143.7 121.6r 225.3 307.3 197.0 46 Issuers of asset-backed securities (ABSs) 142.4 150.8 202.2 321.4 223.4r 215.4r 108.6r 134.6r I57.1r 148.0 311.3 277.0 47 Finance companies 50.2 45.9 48.7 43.0 62.4 -17.2 99.2 52.3 103.9 96.9 45.6 -43.8 48 Mortgage companies -2.2 4.1 -4.6 1.6 .2 -6.1 6.2 -3.0 2.7 -.3 1.0 .7 49 Real estate investment trusts (REITs) 4.5 11.9 39.6 62.7 6.3 7.9 11.3 11.5 9.8 -2.4 -8.1 -6.1 50 Brokers and dealers -5.0 -2.0 8.1 7.2 -17.2 17.8 -37.3 44.4 -.7 25.4 -6.6 -23.9 51 Funding corporations 34.9 64.1 80.7 40.7 92.2 27.0 250.6 -11.4 4.0 -46.4 56.8 51.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A111 Domestic Nonfinancial Statistics • July 2001 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued Billions of dollars; quarterly data at seasonally adjusted annual rates 1999 2000 2001 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999955 11999966 11999977 11999988 11999999 Q3 Q4 Q1 Q2 Q3 Q4 Q1 All sectors 55552222 TTTToooottttaaaallll nnnneeeetttt bbbboooorrrrrrrroooowwwwiiiinnnngggg,,,, aaaallllllll sssseeeeccccttttoooorrrrssss 1,243.7 1,365.4 1,530.1 2,128.6r 2,191.3r 2,287.4r 2,117.1r l,621.5r l,763.9r 1,567.0 1,971.3 1,832.1 55553333 OOOOppppeeeennnn mmmmaaaarrrrkkkkeeeetttt ppppaaaappppeeeerrrr 74.3 102.6 184.1 193.1 229.9 180.7 556.6 218.4 199.8 128.4 283.6 -352.1 55554444 UUUU....SSSS.... ggggoooovvvveeeerrrrnnnnmmmmeeeennnntttt sssseeeeccccuuuurrrriiiittttiiiieeeessss 348.6 376.4 236.0 418.3 520.7 582.7 516.1 33.0 -43.5r 283.8 277.6 450.3 55555555 MMMMuuuunnnniiiicccciiiippppaaaallll sssseeeeccccuuuurrrriiiittttiiiieeeessss -48.2 2.6 71.4 96.8 68.2 71.3 52.5 8.9 34.0 29.8 68.6 94.3 55556666 CCCCoooorrrrppppoooorrrraaaatttteeee aaaannnndddd ffffoooorrrreeeeiiiiggggnnnn bbbboooonnnnddddssss 344.1 357.0 422.4 550.4 455.2r 421.2r 115.9*" 367.0r 359.5r 444.6 396.4 855.4 55557777 BBBBaaaannnnkkkk llllooooaaaannnnssss nnnn....eeee....cccc 114.7 92.1 128.2 145.0 68.9 99.8 55.2 147.7 174.2 42.9 92.5 22.6 55558888 OOOOtttthhhheeeerrrr llllooooaaaannnnssss aaaannnndddd aaaaddddvvvvaaaannnncccceeeessss 70.1 62.5 102.8 158.5 162.0r 212.8r 131.7r 219.2r 251.7' -48.3 159.0 59.7 55559999 MMMMoooorrrrttttggggaaaaggggeeeessss 201.1 283.5 332.6 498.8r 592.0r 642.7r 579.5r 482.0r 650.4r 563.4 569.9 546.3 66660000 CCCCoooonnnnssssuuuummmmeeeerrrr ccccrrrreeeeddddiiiitttt 138.9 88.8 52.5 67.6 94.4 76.2 109.5 145.3r 137.9r 122.5 123.7 155.6 Funds raised through mutual funds and corporate equities 66661111 TTTToooottttaaaallll nnnneeeetttt iiiissssssssuuuueeeessss 131.7r 231.7r 181.2 101.6r 161.6r 129.6r 178.1r 366.3r 142.4r 170.9 -170.9 127.4 -ma 66662222 CCCCoooorrrrppppoooorrrraaaatttteeee eeeeqqqquuuuiiiittttiiiieeeessss - 15.7r -5.9r -83.9 -26.7r 2.2r 5.2r 60.2r -95.2r -88.9 -342.0 22.7 66663333 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooorrrrppppoooorrrraaaattttiiiioooonnnnssss —58.3 -69.5 -114.4 -267.0 -143.5 -128.4 -55.0 61.2r -245.2r -87.7 -394.8 -33.9 66664444 FFFFoooorrrreeeeiiiiggggnnnn sssshhhhaaaarrrreeeessss ppppuuuurrrrcccchhhhaaaasssseeeedddd bbbbyyyy UUUU....SSSS.... rrrreeeessssiiiiddddeeeennnnttttssss 50.4 82.8 57.6 101.2 114.4 121.7 71.3 63.3 180.1 61.1 90.5 79.8 66665555 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooorrrrppppoooorrrraaaattttiiiioooonnnnssss -7.8r - 19.2r -27.1 -7.3r 2.4r 8.8r -11.lr -64.2r -30.2r -62.3 -37.8 -23.2 66666666 MMMMuuuuttttuuuuaaaallll ffffuuuunnnndddd sssshhhhaaaarrrreeeessss 147.4 237.6 265.1 274.6 188.3 127.5 172.8 306.1 237.6 259.8 171.1 104.7 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 39 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1999 2000 2001 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999955 11999966 11999977 11999988 11999999 Q3 Q4 QI Q2 Q3 Q4 QL NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 1,243.7 1,365.4 1,530.1 2,128.6R 2,191JR 2,287.4R 2,117.1R L,621.5R L,763.9R 1,567.0 1,971.3 1,832.1 7 Domestic nonfederal nonfinancial sectors -65.1' 81^ -17.3R 106.3R 231.5R 202.1' -41.2R -148.2R 120.8R -236.9 -212.5 -261.2 Household 29.7R 129.3R -2.6R -12.2R 189.4R 238.4R 2.1' -224.5R 61.8R -218.5 -233.3 -279.3 4 Nonfinancial corporate business -8.8 -10.2 -12.7 -2.8R 5.8R -47.6' 71.5R 14.9R -3.2 -35.5 10.3 5 Nonfarm noncorporate business 4.7 -4.3 -2.1 .1 1.5 .8 1.4 2.6 2.8 3.8 4.3 4.4 6 State and local governments -91.4 -33.7 .1 134.5 43.4 -42.4 2.4 2.3 41.4 -19.0 52.1 3.4 7 Federal government -.5 -7.2 5.1 13.5 5.8 11.2 -11.7 6.5 7.7 4.5 10.2 6.1 8 Rest of the world 273.9 414.4 311.3 254.2 210.6 385.3 138.7 325.9 207.1 205.6 381.1 112.4 9 Financial sectors 877. LR L,231.0R L,754.5R L,743.4R L,688.2R 2,031.3R L,437.2R L,428.4R 1,593.8 1,792.4 1,974.7 10 Monetary authority 12.7 12.3 38.3 21.1 25.7 20.6 -42.2 103.4 -3.9 27.3 7.9 55.0 11 Commercial banking 265.9 187.5 324.3 305.2 308.2 449.4 548.7 377.1 484.6 369.3 203.8 108.4 1? U.S.-chartered banks 186.5 119.6 274.9 312.0 317.6 421.9 457.7 409.2 505.6 332.8 111.6 63.9 13 Foreign banking offices in United States 75.4 63.3 40.2 -11.9 -20.1 33.2 42.0 4.8 -29.9 30.9 90.4 40.7 14 Bank holding companies -.3 3.9 5.4 -.9 6.2 -12.4 42.6 -42.2 3.5 -6.7 -3.2 7.3 15 Banks in U.S.-affiliated areas 4.2 .7 3.7 6.0 4.4 6.6 6.3 5.4 5.4 12.3 5.1 -3.6 16 Savings institutions -7.6 19.9 -4.7 36. LR 68.6R 58.1 20.2 56.3R 71.2R 58.2 40.1 50.5 17 Credit unions 16.2 25.5 16.8 19.0 27.5 27.5 18.8 35.6 36.6 28.5 25.0 39.0 18 Bank personal trusts and estates -8.3 -7.7 -25.0 -12.8 27.8 27.8 27.8 18.9 13.8 17.6 18.1 10.7 19 Life insurance companies 100.0 69.6 104.8 76.9 53.5 36.8 30.7 51.3R 50.9R 81.5 73.1 71.9 20 Other insurance companies 21.5 22.5 25.2 20.4 -4.2 -14.4 -9.4 -14.0 -18.1 6.0 -4.0 16.3 71 Private pension funds 19.9 -4.1 47.6 56.4 45.0 5.9 49.8 46.8 24.7 68.9 28.7 35.7 7.2 State and local government retirement funds 38.3R 35.8R 67. Ir 72. R 46.9R 40.0 46.2R 63.3R 31.5R 1.1 80.6 58.8 73 Money market mutual funds 86.5 88.8 87.5 244.0 182.0 224.8 354.5 208.8 -156.2 244.9 297.9 357.7 74 Mutual funds 52.5 48.9 80.9 124.8 47.2 -13.0 -12.7 -77.8 63.7 46.3 74.4 56.4 75 Closed-end funds 10.5 4.7 -2.6R 5.5R 6.9R 6.9R 6.9R —8.8R -8.8R -8.8 -8.8 -8.8 26 Government-sponsored enterprises 86.7 84.2 94.3 261.7 235.5 275.9 225.3 138.2R 222.3R 158.9 302.8 289.9 27 Federally related mortgage pools 98.3 141.0 114.6 192.6 273.8 244.5 182.2 143.7 121.6R 225.3 307.3 197.0 78 Asset-backed securities issuers (ABSs) 120.6 120.5 163.8 281.7 205.2R 206.9R 78.8R 114.0R 122.6R 112.8 282.4 257.0 79 Finance companies 49.9 18.4 21.9 51.9 94.9 91.7 114.4 132.9 138.9 81.4 44.3 -16.7 30 Mortgage companies -3.4 8.2 -9.1 3.2 .3 -12.1 12.3 -6.0 5.5 -.5 2.0 1.4 31 Real estate investment trusts (REITs) 1.4 4.4 20.2 -5.1 -2.6 -2.7 -7.0 -16.3 -2.5 -3.6 -2.8 4.0 37 Brokers and dealers 90.1 -15.7 14.9 6.8 -34.7 -6.7 -30.5 96.6R 58.6R 181.4 -61.0 284.1 33 Funding corporations -15.7 12.6 50.4 -6.9R 135.9R 20.3R 416.5R -26.6R 171.6R -102.9 80.5 106.1 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 1,243.7 1,365.4 1,530.1 2,128.6' 2,191JR 2,287.4R 2,117.1R L,621.5R L,763.9R 1,567.0 1,971.3 1,832.1 Other financial sources 35 Official foreign exchange 8.8 -6.3 .7 6.6 -8.7 -8.5 -7.0 11..55 -8.8 ..77 44..99 --1100..55 36 Special drawing rights certificates 2.2 -.5 -.5 .0 -3.0 -4.0 -4.0 .0 -8.0 -4.0 -4.0 .0 37 Treasury currency .7 .5 .5 .6 1.0 2.0 .0 2.2 3.2 4.2 .0 -1.1 38 Foreign deposits 35.3 85.9 108.9 2.0 86.5 69.4 52.7 258.5 8.5 -16.0 192.7 40.0 39 Net interbank transactions 10.0 -51.6 -19.7 -32.3 17.6 -30.8 -40.7 -64.7R 150.3R -148.6 -17.2 -168.8 40 Checkable deposits and currency -12.8 15.7 41.2 47.4 151.4 139.3 365.2 -219.1 -65.0 49.2 -50.2 83.8 41 Small time and savings deposits 96.6 97.2 97.1 152.4 44.7 119.1 28.0 104.3 130.3 238.5 290.8 287.6 47 Large time deposits 65.6 114.0 122.5 92.1 130.6 102.7 359.4 149.2 108.4 141.5 75.3 125.7 43 Money market fund shares 141.2 145.4 155.9 287.2 249.1 174.3 485.5 241.0 48.2 241.9 402.2 623.0 44 Security repurchase agreements 110.5 41.4 120.9 91.3 169.7 191.4 310.5 257.4R 156.8R 238.6 -209.3 -44.4 45 Corporate equities -15.7' -5.9R -83.9 — 173.0R -26.1' 2.2R 5.2R 60.2R —95.2R -88.9 -342.0 22.7 46 Mutual fund shares 147.4 237.6 265.1 274.6 188.3 127.5 172.8 306.1 237.6 259.8 171.1 104.7 47 Trade payables 127.5 113.5 132.1 96.0R 207.3R 257.9R 219.1' 211.8R 122.6R 135.1 87.1 88.8 48 Security credit 26.7 52.4 111.0 103.3 104.3 29.7 321.3 489.9R — 86.2R 102.2 57.9 -118.8 49 Life insurance reserves 45.8 44.5 59.3 48.0 50.8 48.1 57.6 54.9R 45.6R 35.9 65.4 40.5 50 Pension fund reserves 158.8R 148.3R 201.4R 202. lr 184.5R 191.7R 164.0R 212.7R 262.1' 197.4 188.7 273.0 51 Taxes payable 6.2 16.2 15.7 12.0 16.1R .4 18.3R 22.1' 29.9' -10.7 27.1 24.5 52 Investment in bank personal trusts 6.4 -5.3 -49.9 -42.5 -7.1 -7.2 -6.9 -5.9 -10.6 -6.6 -5.5 -14.1 53 Noncorporate proprietors' equity 36.5R -11.9' -50.2R -SOTF -10.8' -59.6R Iff -20.1' -3.6R 31.6 -2.6 -5.4 54 Miscellaneous 505.4 532.1 487.5 936.5R 654.6R 499.0R 518.4R 962.3R L,194.5R 1,210.2 673.5 590.5 55 Total financial sources 2,746.6R 2,928.8R 3,245.7R 4,182.8R 4,391.3R 4,131.7R 5,143.8R 4,645.7R 3,985.3R 4,178.9 3,577.4 3,773.5 Liabilities not identified as assets (—) 56 Treasury currency -.3 -.4 -.2 -.1 -.7 .2 -2.2 -1.8 -.7 .9 -3.3 -2.5 57 Foreign deposits 25.1 59.6 107.4 - 13.0R 71.3R 26.4R 114.4R 211.5R -77.R -75.0 160.0 17.3 58 Net interbank liabilities -3.1 -3.3 -19.9 3.4 3.5 -7.0 -23.7 24.4 -4.3 -18.3 68.6 16.4 59 Security repurchase agreements 25.7 2.4 63.2 60.4R 29.9R 131. R -225.4R 560.1' 56.8' 104.9 -286.4 -87.3 60 Taxes payable 21.1 23.1 28.0 13.9 3.6R 3.0 -4.9R 7.9R 5.7' -20.1 32.3 17.4 61 Miscellaneous —208.4R -137.2R - 148.6R -201.T -436.0R —540.7R -319.1' -437.9R -323.0' -49.2 -189.1 160.3 Floats not included in assets (—) 62 Federal government checkable deposits -6.0 .5 -2.7 2.6 -7.4 8.6 -9.2 28.7 -2.6 -2.0 11.9 -10.7 63 Other checkable deposits -3.8 -4.0 -3.9 -3.1 -.8 -.3 .0 .6 1.5 1.9 2.7 3.3 64 Trade credit 14.1 -21.9 -28.5 —44.6R 51.5' 19.3' 185.5R - 19.9R -47.8R -41.0 41.6 -1.9 65 Total identified to sectors as assets 2,882.3R 3,oio.r 3,250.9' 4,371.1' 4,670.4R 4,431.1R 5,428.4R 4,271.7' 4,377.0' 4,276.9 3,739.1 3,661.2 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. F. 1 and F.5. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • July 2001 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 1999 2000 2001 11999999 Q3 Q4 Ql Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 14,443.7 15,246.8 16,258.2r 17,381.6r 17,052.5r 17,381.6r 17,609.4r 17,784.7r 17,984.2r 18,263.4 18,506.5 By sector and instrument 2 Federal government 3,781.8 3,804.9 3,752.2 3,681.0 3,633.4 3,681.0 3,653.5 3,464.0 3,410.2 3,385.2 3,408.8 3 Treasury securities 3,755.1 3,778.3 3,723.7 3,652.8 3,605.1 3,652.8 3,625.8 3,435.7 3,382.6 3,357.8 3,382.1 4 Budget agency securities and mortgages 26.6 26.5 28.5 28.3 28.3 28.3 27.8 28.2 27.6 27.3 26.8 5 Nonfederal 10,662.0 11,441.9 12,505.9r 13,700.6r 13,419.1r 13,700.6r 13,955.9r 14,320.7r 14,574.0r 14,878.2 15,097.6 By instrument 6 Commercial paper 156.4 168.6 193.0 230.3 239.3 230.3 260.8 296.8 307.0 278.4 253.2 7 Municipal securities and loans 1,296.0 1,367.5 1,464.3 1,532.5 1,518.6 1,532.5 1,539.2 1,551.6 1,550.3 1,567.8 1,596.6 8 Corporate bonds 1,460.4 1,610.9 1,829.6 2,059.5 2,020.7 2,059.5 2,106.0 2,144.5 2,190.6 2,234.5 2,334.5 y Bank loans n.e.c 934.1 1,040.5 1,148.8 1,231.5 1,202.9 1,231.5 1,259.1 1,307.2 1,311.6 1,334.8 1,326.2 10 Other loans and advances 770.4 839.5 913.8 974.6' 963. r 974.6r l,020.1r 1,049.5r l,052.2r 1,090.0 1,094.6 n Mortgages 4,833.1 5,150.8 5,624.8r 6,246. lr 6,104.5r 6,246. lr 6,354.7r 6,517.lr 6,667. lr 6,806.3 6,934.7 12 Home 3,719.0 3,971.3 4,351.0r 4,777.lr 4,681.8r 4,777. lr 4,851.1r 4,974. T 5,091.8r 5,192.4 5,283.9 13 Multifamily residential 278.4 286.6 306.5r 346.4r 333.6r 346.4r 353.6r 364.6r 371.9' 382.0 392.2 14 Commercial 748.6 802.6 870.8r l,020.5r 987.6r l,020.5r 1,046. r l,072.2r 1,095.5' 1,123.1 1,148.5 15 Farm 87.1 90.3 96.5 102.0 101.4 102.0 103.9r 106.3r 107.8' 108.8 110.0 16 Consumer credit 1,211.6 1,264.1 1,331.7 1,426.2 1,370.1 1,426.2 1,416.0 1,454.0 l,495.3r 1,566.5 1,558.0 By borrowing sector 17 Household 5,222.5 5,559.9 6,032.0r 6,564.6r 6,413.2r 6,564.6r 6,632.7r 6,800.2r 6,968.6' 7,149.9 7,227.6 18 Nonfinancial business 4,376.1 4,762.5 5,274.2r 5,883.9r 5,763.5r 5,883.9r 6,065.9r 6,254.8r 6,342.3' 6,449.1 6,563.5 19 Corporate 3,095.3 3,359.9 3,751.9r 4,241.0' 4,154.7r 4,241.0r 4,392.5r 4,544.7' 4,603.7' 4,678.3 4,771.4 20 Nonfarm noncorporate 1,130.9 1,246.5 1,358.4 1,473.8 1,440.2 1,473.8 1,503.2 1,534.5 1,561.1 1,590.6 1,612.3 21 Farm 149.9 156.1 163.8 169.0 168.6 169.0 170.3r 175.7r 177.5' 180.2 179.8 22 State and local government 1,063.4 1,119.5 1,199.8 1,252.1 1,242.4 1,252.1 1,257.3 1,265.7 1,263.1 1,279.3 1,306.5 23 Foreign credit market debt held in United States 542.2 608.0 651.4 676.9 672.9 676.9 704.6 699.3 727.8 743.4 736.6 24 Commercial paper 67.5 65.1 72.9 89.2 81.8 89.2 101.6 101.2 109.8 120.9 112.8 25 Bonds 366.3 427.7 462.5 476.7 477.4 476.7 488.1 481.3 499.2 501.5 501.2 26 Bank loans n.e.c 43.7 52.1 58.9 59.4 58.8 59.4 63.3 64.7 67.7 70.7 73.3 27 Other loans and advances 64.7 63.0 57.2 51.7 55.0 51.7 51.7 52.1 51.2 50.3 49.4 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 14,985.9 15,854.7 16,909.6r 18,058.6r 17,725.4r 18,058.6r 18,314.0r 18,484.0r 18,712.0r 19,006.8 19,243.1 Financial sectors 29 Total credit market debt owed by financial sectors 4,824.5 5,445.2 6,519.1 7,596.3r 7,340.1r 7,596.3r 7,725.8r 7,946.3r 8,140.2r 8,410.0 8,616.4 By instrument 30 Federal government-related 2,608.2 2,821.1 3,292.0 3,884.0 3,745.9 3,884.0 3,940.1 4,035.3r 4,164.0' 4,317.6 4,426.1 31 Government-sponsored enterprise securities 896.9 995.3 1,273.6 1,591.7 1,499.8 1,591.7 1,618.0 1,680.2 1,749.7 1,825.9 1,891.9 32 Mortgage pool securities 1,711.3 1,825.8 2,018.4 2,292.2 2,246.1 2,292.2 2,322.1 2,355.2r 2,414.3' 2,491.7 2,534.2 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 2,216.3 2,624.1 3,227.1 3,712.4r 3,594.2r 3,712.4r 3,785.7r 3,911.0r 3,976.1' 4,092.5 4,190.2 35 Open market paper 579.1 745.7 906.7 1,082.9 963.4 1,082.9 1,115.7 1,135.2 1,151.6 1,210.7 1,180.8 36 Corporate bonds 1,378.4 1,555.9 1,852.8 2,064.0r 2,084.3r 2,064.0r 2,095.7r 2,165.2r 2,219.4' 2,267.9 2,380.6 37 Bank loans n.e.c 64.0 77.2 107.2 92.9 105.2 92.9 91.4 92.7 92.5 92.6 96.8 38 Other loans and advances 162.9 198.5 288.7 395.8 365.4 395.8 404.4 436.9 430.2 438.3 450.9 39 Mortgages 31.9 46.8 71.6 76.7 75.9 76.7 78.5 81.0 82.5 82.9 81.1 By borrowing sector 40 Commercial banks 113.6 140.6 188.6 230.0 224.2 230.0 242.2 265.4 265.2 266.7 273.9 41 Bank holding companies 150.0 168.6 193.5 219.3 211.8 219.3 221.4 229.3 236.9 242.5 266.0 42 Savings institutions 140.5 160.3 212.4 260.4 255.4 260.4 266.9 280.7 276.0 287.7 294.8 43 Credit unions .4 .6 1.1 3.4 2.5 3.4 2.6 2.9 3.1 3.4 3.3 44 Life insurance companies 1.6 1.8 2.5 3.2 4.3 3.2 3.0 2.7 2.7 2.5 1.9 45 Government-sponsored enterprises 896.9 995.3 1,273.6 1,591.7 1,499.8 1,591.7 1,618.0 1,680.2 1,749.7 1,825.9 1,891.9 46 Federally related mortgage pools 1,711.3 1,825.8 2,018.4 2,292.2 2,246.1 2,292.2 2,322.1 2,355.2r 2,414.3' 2,491.7 2,534.2 47 Issuers of asset-backed securities (ABSs) 863.3 1,076.6 1,398.0 l,621.4r l,592.4r l,621.4r l,647.3r l,688.5r 1,733.8' 1,821.1 1,882.4 48 Brokers and dealers 27.3 35.3 42.5 25.3 34.6 25.3 36.4 36.2 42.6 40.9 35.0 49 Finance companies 529.8 554.5 597.5 659.9 628.5 659.9 670.7 699.2 716.5 734.6 721.4 50 Mortgage companies 20.6 16.0 17.7 17.8 16.3 17.8 17.1 17.8 17.7 17.9 18.1 51 Real estate investment trusts (REITs) 56.5 96.1 158.8 165.1 162.2 165.1 167.9 170.4 169.8 167.8 166.2 52 Funding corporations 312.7 373.7 414.4 506.6 462.0 506.6 510.1 517.9 511.9 507.3 527.2 All sectors 53 Total credit market debt, domestic and foreign ... 19,810.4 21,300.0 23,428.7r 25,654.9r 25,065.5r 25,654.9r 26,039.8r 26,430.3r 26,852.2r 27,416.8 27,859.5 54 Open maricet paper 803.0 979.4 1,172.6 1,402.4 1,284.5 1,402.4 1,478.1 1,533.3 1,568.3 1,610.0 1,546.8 55 U.S. government securities 6,389.9 6,626.0 7,044.3 7,565.0 7,379.2 7,565.0 7,593.6 7,499.3r 7,574.2' 7,702.7 7,834.9 56 Municipal securities 1,296.0 1,367.5 1,464.3 1,532.5 1,518.6 1,532.5 1,539.2 1,551.6 1,550.3 1,567.8 1,596.6 57 Corporate and foreign bonds 3,205.1 3,594.5 4,144.9 4,600. r 4,582.4r 4,600. lr 4,689.8r 4,791.0r 4,909.2' 5,003.9 5,216.2 58 Bank loans n.e.c 1,041.7 1,169.8 1,314.9 1,383.8 1,366.9 1,383.8 1,413.7 1,464.6 1,471.7 1,498.1 1,496.3 59 Other loans and advances 998.0 1,101.0 1,259.6 1,422. lr l,383.4r 1,422. lr 1,476.2r l,538.5r 1,533.6' 1,578.6 1,594.9 60 Mortgages 4,865.1 5,197.7 5,696.4r 6,322.8r 6,180.4r 6,322.8r 6,433.2r 6,598. lr 6,749.5' 6,889.2 7,015.7 61 Consumer credit 1,211.6 1,264.1 1,331.7 1,426.2 1,370.1 1,426.2 1,416.0 1,454.0 1,495.3' 1,566.5 1,558.0 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 A3 41 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 1999 2000 2001 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999966 11999977 11999988 11999999 Q3 Q4 QL Q2 Q3 Q4 QL CREDIT MARKET DEBT OUTSTANDING2 19,810.4 21300.0 23,428.7r 25,654.9' 25,065.5' 25,654.9' 26,039.8' 26,430.3' 26,852.2 27,416.8 27,859.5 7 Domestic nonfederal nonfinancial sectors 3,035.0R 2,974.0R 3,052.0' 3,353.6' 3,239.7' 3,353.6' 3,285.6' 3,289.4' 3,236.4 3,246.4 3,146.6 Household 2,122.0R 2,075.7R 2,035.1' 2,294.6' 2,185.6' 2,294.6' 2,232.4' 2,217.2' 2,167.2 2,152.9 2,075.2 4 Nonfinancial corporate business 270.2 257.5 241.5' 238.7' 235.1' 238.7' 232.1' 237.6' 240.7 250.6 226.9 Nonfarm noncorporate business 38.0 35.9 35.9 37.5 37.1 37.5 38.1 38.8 39.8 40.8 41.9 6 State and local governments 604.8 605.0 739.4 782.8 781.9 782.8 782.9 795.8 788.7 802.0 802.5 7 Federal government 200.2 205.4 219.1 258.0 260.7 258.0 259.6 261.6 262.7 265.2 268.3 8 Rest of the world 1,926.6 2,257.3 2,539.8 2,678.0 2,718.1 2,678.0 2,763.6 2,812.8 2,864.7 2,957.9 2,990.0 9 Financial sectors 14,648.6R 15,863.2R 17,617.7' 19,365.3' 18,846.9' 19,365.3' 19,731.0' 20,066.5' 20,488.4 20,947.3 21,454.6 10 Monetary authority 393.1 431.4 452.5 478.1 489.3 478.1 501.9 505.1 511.5 511.8 523.9 11 Commercial banking 3,707.7 4,031.9 4,335.7 4,643.9 4,488.3 4,643.9 4,725.0 4,847.4 4,931.0 5,002.6 5,016.7 1? U.S.-chartered banks 3,175.8 3,450.7 3,761.2 4,078.9 3,944.3 4,078.9 4,171.3 4,295.4 4,368.2 4,418.7 4,425.1 N Foreign banking offices in United States 475.8 516.1 504.2 484.1 475.3 484.1 482.0 478.1 487.5 508.1 514.9 14 Bank holding companies 22.0 27.4 26.5 32.7 22.0 32.7 22.1 23.0 21.3 20.5 22.3 IS Banks in U.S.-affiliated areas 34.1 37.8 43.8 48.3 46.7 48.3 49.6 51.0 54.0 55.3 54.4 16 Savings institutions 933.2 928.5 964.6' 1,033.2' 1,030.5' 1,033.2' 1,045.8' 1,062.5' 1,082.2 1,089.7 1,101.0 17 Credit unions 288.5 305.3 324.2 351.7 348.5 351.7 359.0 370.8 378.6 383.1 391.3 18 Bank personal trusts and estates 232.0 207.0 194.1 222.0 215.0 222.0 226.7 230.2 234.6 239.1 241.8 19 Life insurance companies 1,657.0 1,751.1 1,828.0 1,886.0 1,880.4 1,886.0 1,900.1' 1,911.6' 1,933.7 1,950.2 1,969.2 ?0 Other insurance companies 491.2 515.3 535.7 531.6 533.9 531.6 528.0 523.5 525.0 524.0 528.1 21 Private pension funds 627.0 674.6 731.0 775.9 763.5 775.9 787.6 793.8 811.0 818.2 827.1 77 State and local government retirement funds 565.4R 632.5R 704.6' 751.4' 739.9' 751.4' 767.2 775.1' 775.4 795.5 810.2 73 Money market mutual funds 634.3 721.9 965.9 1,147.8 1,049.7 1,147.8 1,217.1 1,159.4 1,212.5 1,296.7 1,403.8 ?4 Mutual funds 820.2 901.1 1,025.9 1,073.1 1,083.0 1,073.1 1,053.7 1,073.9 1,088.1 1,099.7 1,113.5 75 Closed-end funds 101.1 98.5R 104.0' 110.9' 109.2' 110.9' 108.7' 106.5' 104.4 102.2 100.0 76 Government-sponsored enterprises 807.9 902.2 1,163.9 1,399.5 1,339.1 1,399.5 1,426.4' 1,483.5' 1,532.5 1,612.1 1,677.3 77 Federally related mortgage pools 1,711.3 1,825.8 2,018.4 2,292.2 2,246.1 2,292.2 2,322.1 2,355.2' 2,414.3 2,491.7 2,534.2 78 Asset-backed securities issuers (ABSs) 773.9 937.7 1,219.4 1,424.6' 1,403.1' 1,424.6' 1,445.4' 1,477.9' 1,514.5 1,594.5 1,650.9 79 Finance companies 544.5 566.4 618.4 713.3 678.2 713.3 747.0 780.6 795.5 812.6 809.3 30 Mortgage companies 41.2 32.1 35.3 35.6 32.5 35.6 34.1 35.5 35.4 35.9 36.2 31 Real estate investment trusts (REITs) 30.4 50.6 45.5 42.9 44.7 42.9 38.8 38.2 37.3 36.6 37.6 37 Brokers and dealers 167.7 182.6 189.4 154.7 166.8 154.7 194.6' 187.9' 243.3 223.6 312.3 33 Funding corporations 121.0 166.7 161.3' 296.8' 205.3' 296.8' 301.8' 348.0' 327.7 327.5 370.1 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 19,810.4 21,300.0 23,428.7' 25,654.9' 25,065.5' 25,654.9' 26,039.8' 26,430.3' 26,852.2 27,416.8 27,859.5 Other liabilities 35 Official foreign exchange 53.7 48.9 60.1 50.1 52.1 50.1 49.4 46.5 44.9 45.3 42.2 36 Special drawing rights certificates 9.7 9.2 9.2 6.2 7.2 6.2 6.2 4.2 3.2 2.2 2.2 37 Treasury currency 18.9 19.3 19.9 20.9 20.9 20.9 21.4 22.1 23.2 23.2 22.9 38 Foreign deposits 521.7 619.7 639.0 725.8 712.3 725.8 790.4 792.6 788.6 836.7 846.7 39 Net interbank liabilities 240.8 219.4 189.0 204.5 199.6 204.5 169.7' 210.6' 173.2 188.2 121.8 40 Checkable deposits and currency 1,244.8 1,286.1 1,333.4 1,484.8 1,353.8 1,484.8 1,392.9 1,409.7 1,385.7 1,413.5 1,384.1 41 Small time and savings deposits 2,377.0 2,474.1 2,626.5 2,671.2 2,665.9 2,671.2 2,728.0 2,738.8 2,790.9 2,862.2 2,965.4 47 Large time deposits 590.9 713.4 805.5 936.1 837.5 936.1 966.5 987.4 1,025.9 1,054.7 1,078.3 43 Money market fund shares 886.7 1,042.5 1,329.7 1,578.8 1,444.9 1,578.8 1,666.0 1,627.1 1,697.8 1,812.1 1,994.7 44 Security repurchase agreements 701.5 822.4 913.7 1,083.4 999.4 1,083.4 1,149.2' 1,185.0' 1,238.7 1,194.3 1,197.5 45 Mutual fund shares 2,342.4 2,989.4 3,610.5 4,553.4 3,931.5 4,553.4 4,863.3 4,759.6 4,815.0 4,456.3 4,030.6 46 Security credit 358.1 469.1 572.3 676.6 593.1 676.6 795.4' 775.5' 800.4 817.6 784.5 47 Life insurance reserves 610.6 665.0 718.3 783.9 756.2 783.9 801.0' 806.5' 815.5 819.4 817.0 48 Pension fund reserves 6,325. lr 7,323.4R 8,193.7' 9,041.7' 8,363.7' 9,041.7' 9,237.9' 9,166.7' 9,308.4 9,054.1 8,590.3 49 Trade payables 1,809.3 1,941.4 2,037.4' 2,244.6' 2,169.9' 2,244.6' 2,271.1' 2,302.3' 2,342.9 2,383.8 2,379.5 50 Taxes payable 123.8 139.5 151.5 167.6' 167.5 167.6' 181.0' 180.0 182.9 184.8 198.6 51 Investment in bank personal trusts 871.3 942.5 1,001.0 1,130.4 1,019.0 1,130.4 1,163.0 1,124.1 1,122.3 1,039.0 949.2 52 Miscellaneous 6,349.1 6,670.6 7,332.7' 7,788.5' 7,465.5' 7,788.5' 7,981.8' 8,254.0' 8,701.5 8,905.8 8,963.0 53 Total liabilities 45,245.6' 49,695.6' 54,972.1' 60,803.4' 57,825.5' 60,803.4' 62,274.0' 62,823.2' 64,113.0 64,510.0 64,228.1 Financial assets not included in liabilities ( + ) 54 Gold and special drawing rights 21.4 21.1 21.6 21.4 21.3 21.4 21.4 21.5 21.4 21.6 21.4 55 Corporate equities 10,255.8 13,201.3 15,492.5' 19,494.5' 16,106.8' 19,494.5' 20,147.2' 19,179.6' 18,990.4 17,026.1 14,878.4 56 Household equity in noncorporate business 3,889.2 4,162.6R 4,428.4' 4,736.4' 4,647.8' 4,736.4' 4,763.1' 4,809.4' 4,865.0 4,944.9 5,056.0 Liabilities not identified as assets ( — ) 57 Treasury currency -6.1 -6.3 -6.4 -7.1 -6.6 -7.1 -7.6 -7.9 -7.6 -8.5 -9.1 58 Foreign deposits 437.0 538.3 541.6' 613.3' 584.3' 613.3' 666.1' 646.9' 628.1 668.1 682.1 59 Net interbank transactions -10.6 -32.2 -27.0 -25.5 -13.2 -25.5 -13.9 -11.6 -17.6 -4.1 1.3 60 Security repurchase agreements 109.8 172.9 233.4' 263.3' 323.7' 263.3' 410.1' 422.6' 447.7 372.2 370.8 61 Taxes payable 76.9 92.6 102.0 95.6' 96.5 95.6' 89.6' 103.0 92.5 96.9 87.2 62 Miscellaneous — L,448.9R -1,785.7R -2,468.4' -3,079.3' -3,143.7' -3,079.3' -3,250.3' -3,319.2' -3,099.3 -3,282.3 -3,530.1 Floats not included in assets ( —) 63 Federal government checkable deposits -1.6 -8.1 -3.9 -9.9 -10.2 -9.9 -6.5 -5.2 -7.8 -3.0 -22.3 64 Other checkable deposits 30.1 26.2 23.1 22.3 14.5 22.3 18.7 22.5 15.5 24.0 21.1 65 Trade credit 171.8 133.5 90.0' 148.9' 29.3' 148.9' 89.2' 54.3' 43.4 128.1 76.3 66 Total identified to sectors as assets 60,053.7' 67,949.4' 76,430.1' 87,034.2' 80,726.8' 87,034.2' 89,210.1' 88,928.3' 89,894.8 88,511.2 86,506.7 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 • July 2001 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1992=100, except as noted 2000 2001 MMeeaassuurree 11999988 11999999 22000000 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr.p 1 Industrial production' 134.0 139.6 147.5 148.6 149.0 148.7 148.2 147.3 146.0r 145.5r 145.3 144.9 Market groups 2 Products, total 127.2 131.2 136.2 136.6 136.7 136.3 136.3 136.0 135.0r 134.7r 134.8 134.3 3 Final, total 129.3 133.3 138.8 139.2 139.3 138.8 138.8 139.0 137.8r 137.7 138.1 137.6 4 Consumer goods 118.4 120.8 123.0 123.8 123.8 122.7 122.4 123.1 121.8r 122.3r 122.4 122.2 5 Equipment 147.1 153.8 166.1 167.9 168.3 169.1 169.9 168.9 168.0r 166.4r 167.4 166.2 6 Intermediate 121.0 125.1 128.7 128.8 128.6 128.7 128.5 126.8 126.7r 126.0r 125.0 124.5 7 Materials 145.7 154.5 167.8 170.5 171.3 171.1 169.9 167.8 165.9r 164.8r 164.3 163.9 Industry groups 8 Manufacturing 138.2 144.8 153.6 154.6 155.1 154.9 154.1 152.6 151.3r 150.7r 150.3 149.8 9 Capacity utilization, manufacturing (percent)2. . 81.3 80.5 81.3 81.7 81.7 81.2 80.5 79.3 78.4r 11.9' 77.5 77.1 10 Construction contracts3 122.6r 135.0r 142.3r 138.0 143.0 151,0r 143.0 143.0 152.0r 147.0 139.0 144.0 11 Nonagricultural employment, total4 123.5 126.3 128.9 129.0 129.2 129.3 129.3 129.4 129.6 129.8 129.7 129.5 12 Goods-producing, total 103.0 103.3 104.0 103.9 103.9 104.0 103.9 103.6 103.9 103.6 103.4 102.7 13 Manufacturing, total 99.0 97.6 97.0 97.0 96.7 96.7 96.6 96.4 95.9 95.4 95.0 94.4 14 Manufacturing, production workers 100.0 98.4 97.6 97.5 97.2 97.1 97.0 96.6 96.1 95.5 95.0 94.4 15 Service-producing 130.0 133.7 136.8 137.0 137.3 137.3 137.4 137.6 137.8 138.1 138.1 138.1 16 Personal income, total 186.5 196.6 209.0 210.1 212.5 212.1 212.5 213.5 214.8 215.8 216.8 n.a. 17 Wages and salary disbursements 184.6 196.9 210.1 211.3 212.7 214.0 214.6 215.2 216.8 218.1 219.1 n.a. 18 Manufacturing 152.3 157.4 164.2 164.9 165.1 166.6 166.9 165.5 165.8 165.5 165.6 n.a. 19 Disposable personal income5 182.7 191.9 202.0 202.9 205.2 204.4 204.6 205.5 206.5 207.5 208.5 n.a. 20 Retail sales5 178.4 194.7 210.0 211.0 212.7 212.5 211.3 211.6 214.4 213.9r 213.2 214.9 Prices6 21 Consumer (1982-84=100) 163.0 166.6 172.2 172.8 173.7 174.0 174.1 174.0 175.1 175.8 176.2 176.9 22 Producer finished goods (1982=100) 130.7 133.0 138.0 138.2 139.4 140.1 140.0 139.7 141.2 141.5 141.0 141.7 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 December 2000. 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 2001 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 2001 CCaatteeggoorryy 11999988 11999999 22000000 Sept. Oct. Nov. Dec. Jan. Feb.r Mar.r Apr. HOUSEHOLD SURVEY DATA1 1 Civilian labor force2 137,673 139,368 140,863 140,847 141,000 141,136 141,489 141,955 141,751 141,868 141,757 Employment 7 Nonagricultural industries3 128,085 130,207 131,903 131,954 132,223 132,302 132,562 132,819 132,680 132,618 132,162 3 Agriculture 3,378 3,281 3,305 3,356 3,241 3,176 3,274 3,179 3,135 3,161 3,192 Unemployment 4 66,,221100 55,,888800 55,,665555 5,537 55,,553366 5,658 5,653 5.956 5,936 6,088 6,402 5 Rate (percent of civilian labor force) 4.5 4.2 4.0 3.9 3.9 4.0 4.0 4.2 4.2 4.3 4.5 ESTABLISHMENT SURVEY DATA 6 Nonagricultural payroll employment4 125,865 128,786 131,417 131,723 131,789 131,842 131,878 132,167 132,303 132,250 132,027 7 Manufacturing 18,805 18,543 18,437 18,380 18,378 18,360 18,312 18,220 18,124 18,043 17,939 8 Mining 590 535 538 539 542 541 540 547 551 553 557 9 Contract construction 6,020 6,404 6,687 6,720 6,745 6,734 6,717 6,874 6,888 6,904 6,840 10 Transportation and public utilities 6,611 6,826 6,993 7,037 7,046 7,060 7,086 7,077 7,096 7,098 7,096 11 Trade 29,095 29,712 30,191 30,249 30,280 30,331 30,330 30,346 30,427 30,379 30,397 17 Finance 7,389 7,569 7,618 7,622 7,638 7,647 7,661 7,676 7,690 7,708 7,716 13 Service 37,533 39,027 40,384 40,685 40,696 40,764 40,797 40,917 40,938 40,965 40,844 14 Government 19,823 20,170 20,570 20,491 20,464 20,405 20,435 20,510 20,589 20,600 20,638 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 2000 2001 2000 2001 2000 2001 SSeerriieess Q2 Q3 Q4 Qir Q2 Q3 Q4 Qir Q2 Q3 Q4 Qlr Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 147.1 148.4 148.1 145.6 178.1 180.1 182.1 183.7 82.6 82.4 81.3 79.3 2 Manufacturing 153.0 154.4 153.8 150.8 186.9 189.2 191.5 193.5 81.9 81.7 80.3 77.9 3 Primary processing3 178.6 180.3 178.7 172.6 206.9 211.2 216.0 220.0 86.4 85.4 82.7 78.5 4 Advanced processing4 139.0 140.3 140.2 138.6 174.1 175.2 176.2 177.2 79.8 80.1 79.5 78.3 Durable goods 192.9 196.7 196.5 191.8 233.3 238.3 243.6 248.1 82.7 82.5 80.7 77.3 6 Lumber and products 120.3 117.0 113.2 109.2 147.5 147.9 148.4 148.7 81.6 79.1 76.3 73.4 7 Primary metals 137.0 133.4 127.5 122.1 153.3 153.4 153.5 153.5 89.4 87.0 83.1 79.5 8 Iron and steel 136.1 130.5 121.5 115.1 153.1 153.4 153.6 153.6 88.9 85.1 79.1 74.9 9 Nonferrous 138.2 137.0 134.7 130.4 153.4 153.4 153.4 153.5 90.1 89.3 87.8 84.9 10 Industrial machinery and equipment 249.4 257.3 261.9 256.6 304.5 311.1 317.3 322.5 81.9 82.7 82.5 79.6 11 Electrical machinery 535.1 581.1 604.0 597.6 591.7 639.1 694.1 741.7 90.4 90.9 87.1 80.6 12 Motor vehicles and parts 175.9 170.8 159.7 146.6 208.2 209.2 210.1 210.9 84.5 81.7 76.0 69.5 13 Aerospace and miscellaneous transportation equipment 92.9 93.5 94.8 93.7 130.7 130.4 130.2 130.0 71.1 71.7 72.8 72.0 14 Nondurable goods 116.7 116.2 115.3 113.6 144.1 144.4 144.6 144.7 80.9 80.5 79.7 78.5 15 Textile mill products 103.3 99.8 94.7 93.0 123.9 123.3 122.8 122.0 83.4 80.9 77.1 76.3 16 Paper and products 117.9 114.0 114.9 110.5 137.2 137.5 137.9 138.3 85.9 82.9 83.3 79.9 17 Chemicals and products 125.8 125.4 124.5 122.0 163.0 164.1 164.8 165.0 77.2 76.4 75.5 73.9 18 Plastics materials 140.9 137.6 131.0 131.2 151.6 151.9 152.3 152.7 93.0 90.5 86.0 85.9 19 Petroleum products 118.3 117.3 116.0 115.9 123.2 123.2 123.1 123.1 96.0 95.3 94.3 94.2 20 Mining 100.0 100.6 100.3 101.6 116.5 116.3 115.8 115.3 85.8 86.6 86.6 88.1 71 Utilities 120.7 121.0 123.7 123.6 132.3 133.4 134.5 135.7 91.2 90.7 92.0 91.1 22 Electric 124.3 123.9 127.5 125.4 130.9 132.3 133.8 135.3 94.9 93.7 95.3 92.7 1973 1975 Previous cycle5 Latest cycle6 2000 2001 High Low High Low High Low Apr. Nov. Dec. Jan.r Feb/ Mar. Apr.P Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.1 85.4 78.1 82.5 81.4 80.6 79.7 79.2 78.9 78.5 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 81.8 80.5 79.3 78.4 77.9 77.5 77.1 3 Primary processing3 91.2 68.2 88.1 66.2 88.9 77.7 86.2 82.8 80.9 79.2 78.6 77.6 77.1 4 Advanced processing4 87.2 71.8 86.7 70.4 84.2 76.1 79.8 79.7 79.0 78.6 78.1 78.1 77.7 5 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 82.4 80.8 79.5 77.9 77.0 77.0 76.2 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 82.6 76.3 75.0 72.9 73.5 73.8 73.6 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 90.0 82.9 82.2 80.7 79.5 78.3 77.5 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 89.4 79.4 77.2 75.5 75.0 74.3 73.2 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 90.7 87.1 88.2 86.9 84.9 83.0 82.6 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 81.9 82.5 82.1 80.5 79.1 79.2 77.5 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 89.5 87.1 85.5 82.9 80.5 78.4 76.6 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 83.8 76.2 72.1 65.8 68.9 73.8 73.7 13 Aerospace and miscellaneous transportation equipment 78.4 67.6 81.9 66.6 87.3 79.2 70.9 73.3 73.3 72.5 71.5 72.1 72.5 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 81.0 79.9 78.9 78.8 78.8 78.0 78.0 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 84.1 75.6 77.1 76.0 76.2 76.6 74.8 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 86.4 83.2 81.7 81.0 81.3 77.5 78.0 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 77.0 75.7 74.5 73.8 74.2 73.7 73.8 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 91.5 87.7 79.8 83.9 87.1 86.8 86.5 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 95.1 94.9 93.2 93.5 94.6 94.4 96.4 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 85.7 87.3 86.1 87.5 87.8 88.9 89.6 71 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 90.0 90.7 95.7 91.7 90.7 90.8 89.6 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 94.2 95.1 97.7 94.0 91.6 92.4 92.0 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; latest historical revision of the industrial production index and the capacity utilization rates primary metals; and fabricated metals. was released in December 2000. The recent annual revision is described in an article in the 4. Advanced processing includes foods, tobacco, apparel, furniture and fixtures, printing March 2001 issue of the Bulletin. For a description of the methods of estimating industrial and publishing, chemical products such as drugs and toiletries, agricultural chemicals, leather production and capacity utilization, see "Industrial Production and Capacity Utilization: and products, machinery, transportation equipment, instruments, and miscellaneous manufac- Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February tures. 1997), pp. 67-92, and the references cited therein. For details about the construction of 5. Monthly highs, 1978-80; monthly lows, 1982. individual industrial production series, see "Industrial Production: 1989 Developments and 6. Monthly highs, 1988-89; monthly lows, 1990-91. Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. 2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted index of industrial production to the corresponding index of capacity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • July 2001 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 2000 2001 2000 GGrroouupp por- avg. tion Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb.r Mar. Apr.p Index (1992 = 100) MAJOR MARKETS 1 Total index 100.0 147.5 146.3 147.2 147.9 147.6 148.6 149.0 148.7 148.2 147.3 146.0 145.5 145.3 144.9 2 Products 60.5 136.2 135.3 135.5 136.0 135.8 136.6 136.7 136.3 136.3 136.0 135.0 134.7 134.8 134.3 Final products 46.3 138.8 137.2 137.5 138.3 138.1 139.2 139.3 138.8 138.8 139.0 137.8 137.7 138.1 137.6 4 Consumer goods, total 29.1 123.0 123.2 123.5 124.2 122.9 123.8 123.8 122.7 122.4 123.1 121.8 122.3 122.4 122.2 5 Durable consumer goods 6.1 160.8 164.7 I6.-.8 164.4 158.7 160.0 162.8 157.3 154.3 153.4 148.9 150.3 154.5 154.0 6 Automotive products 2.6 153.2 157.6 157.9 157.8 149.4 153.8 156.7 148.0 143.6 140.7 133.8 136.5 144.9 145.8 7 Autos and trucks 1.7 166.9 173.7 175.7 174.8 160.5 169.8 172.7 159.1 153.0 144.1 136.2 141.0 154.5 156.2 8 Autos, consumer .9 114.0 118.5 119.7 118.1 113.6 120.3 120.5 107.8 103.0 94.3 99.4 98.7 104.1 102.4 9 Trucks, consumer .7 221.6 230.7 233.7 233.2 209.8 221.8 227.1 212.0 204.3 194.7 175.5 185.2 206.3 210.8 10 Auto parts and allied goods .... .9 131.7 132.7 130.6 131.6 131.6 129.1 132.1 130.2 128.2 133.8 128.4 128.2 129.2 129.0 11 Other 3.5 167.1 170.6 168.5 169.8 166.7 165.2 167.7 165.4 163.7 164.7 162.7 162.8 162.9 160.9 12 Appliances, televisions, and air conditioners 1.0 332.6 341.1 33^.6 348.2 322.3 325.0 340.5 332.5 332.7 341.7 332.0 329.5 336.4 336.1 13 Carpeting and furniture .8 129.7 131.8 130.8 130.1 131.5 128.6 131.9 129.8 125.4 127.4 123.9 128.2 126.8 125.0 14 Miscellaneous home goods 1.6 120.4 122.7 121.6 120.5 121.3 119.7 118.1 117.5 117.1 115.5 116.5 114.8 114.2 112.0 15 Nondurable consumer goods 23.0 114.2 113.6 114.1 114.8 114.5 115.2 114.7 114.5 114.6 115.7 114.9 115.3 114.7 114.6 16 Foods and tobacco 10.3 110.7 110.9 110.3 110.8 111.0 111.4 110.5 110.4 110.7 110.1 110.3 110.6 109.9 109.9 17 Clothing 2.4 85.0 87.5 86.8 85.1 85.6 84.2 83.1 82.7 83.2 82.4 82.6 80.3 80.3 79.2 18 Chemical products 4.5 137.0 136.5 138.5 139.3 137.4 139.4 138.4 139.0 138.5 139.0 139.1 141.6 141.8 142.1 19 Paper products 2.9 111.1 108.2 109.0 111.6 112.4 112.4 112.4 113.8 112.5 112.2 113.7 111.2 109.6 109.6 20 Energy 2.9 116.3 113.6 116.0 117.0 114.9 117.1 118.4 115.5 117.3 126.1 119.0 120.5 120.0 119.2 21 Fuels .8 113.0 112.1 113.1 113.4 112.6 113.1 115.8 113.0 115.5 112.3 112.0 114.7 114.1 116.4 22 Residential utilities 2.1 117.9 113.8 1 I'M 118.5 115.6 119.0 119.1 116.2 117.6 134.5 122.8 123.5 123.1 120.2 23 Equipment 17.2 166.1 162.8 163.1 164.3 166.3 167.9 168.3 169.1 169.9 168.9 168.0 166.4 167.4 166.2 24 Business equipment 13.2 194.2 191.1 19 .6 192.8 195.0 197.8 199.5 200.0 200.6 199.2 197.4 195.1 196.1 193.8 25 Information processing and related 5.4 312.2 298.8 302.5 307.0 313.9 322.1 327.2 332.3 336.7 335.9 337.4 331.8 329.9 328.5 26 Computer and office equipment 1.1 1,157.6 1,062.0 1,08''. 8 1,130.8 1,182.8 1,229.0 1,264.1 1,286.4 1,305.0 1,318.3 1,310.6 1,298.2 1,301.3 1,300.1 27 Industrial 4.0 144.6 142.9 143.4 143.8 144.4 147.7 146.5 146.9 147.4 145.8 145.7 141.5 142.3 139.8 28 Transit 2.5 127.7 131.3 129.0 130.1 127.6 126.8 127.7 121.6 121.8 117.4 111.7 112.4 116.7 115.3 29 Autos and trucks 1.2 145.6 156.5 153.9 152.9 141.5 142.8 144.2 131.4 130.4 122.0 115.6 119.3 128.8 124.6 30 Other 1.3 145.7 146.7 145.8 142.8 148.1 144.8 149.3 154.2 148.6 153.5 149.3 153.8 153.3 149.9 31 Defense and space equipment 3.3 76.2 75.5 75.5 76.3 77.9 76.1 73.7 75.3 77.0 77.5 78.5 77.9 78.8 79.8 32 Oil and gas well drilling .6 131.8 126.7 130.3 130.8 136.2 137.1 132.8 136.5 138.9 139.1 146.7 147.9 150.7 155.3 33 Manufactured homes .2 116.2 127.2 122.9 121.9 116.8 115.5 109.3 98.8 90.9 83.5 73.5 81.0 79.6 78.9 34 Intermediate products, total 14.2 128.7 129.3 129.4 129.0 128.7 128.8 128.6 128.7 128.5 126.8 126.7 126.0 125.0 124.5 35 Construction supplies 5.3 143.2 144.4 143.1 143.4 143.8 142.7 143.1 142.3 141.6 140.6 140.7 139.7 139.2 138.4 36 Business supplies 8.9 120.1 120.4 121.3 120.5 119.8 120.6 120.0 120.7 120.7 118.5 118.4 117.9 116.7 116.3 37 Materials 39.5 167.8 166.1 168.4 169.4 169.0 170.5 171.3 171.1 169.9 167.8 165.9 164.8 164.3 163.9 38 Durable goods materials 20.8 227.6 222.7 227.6 230.3 230.5 233.8 235.7 235.0 232.9 230.3 226.6 224.9 224.3 223.1 39 Durable consumer parts 4.0 165.3 162.2 169.9 165.7 158.3 168.3 169.0 168.5 161.8 157.6 146.1 149.4 153.3 153.7 40 Equipment parts 7.6 478.3 451.9 466.8 486.2 499.9 505.7 512.1 515.9 521.4 522.3 517.5 513.7 510.3 506.5 41 Other 9.2 134.6 135.7 135.9 135.9 135.3 134.7 135.5 133.7 131.8 129.6 130.1 127.4 126.0 125.0 42 Basic metal materials 3.1 128.7 131.9 130.8 130.7 128.5 127.5 129.2 125.9 124.4 123.6 121.2 118.8 116.7 115.7 43 Nondurable goods materials 8.9 113.8 115.2 115.7 115.2 113.9 112.8 112.7 113.4 110.7 108.6 107.5 106.8 104.7 104.9 44 Textile materials 1.1 97.9 101.1 100.9 101.7 97.9 99.3 95.9 94.0 89.5 90.3 91.0 88.0 87.9 86.2 45 Paper materials 1.8 115.8 118.7 117.5 118.1 114.9 112.8 113.8 117.2 113.4 109.4 110.3 112.1 105.3 105.8 46 Chemical materials 3.9 117.0 118.1 119.8 118.4 117.0 116.8 116.3 115.9 113.7 109.8 108.5 107.7 106.5 106.9 47 Other 2.1 113.0 112.6 112.4 112.3 113.7 110.2 112.0 114.0 111.9 113.9 111.0 109.7 108.5 108.6 48 Energy materials 9.7 103.4 103.5 105.3 103.1 102.9 104.2 104.3 103.9 105.4 104.5 104.4 104.2 105.1 105.4 49 Primary energy 6.3 98.1 98.8 98.3 98.4 98.7 98.9 98.5 97.8 99.3 98.6 100.3 99.4 101.0 101.4 50 Converted fuel materials 3.3 114.3 113.0 113.7 112.4 110.8 115.1 116.6 117.2 118.7 117.3 111.8 113.7 112.4 112.5 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.1 147.2 145.7 146.7 147.5 147.5 148.4 148.7 148.8 148.4 147.8 146.6 146.0 145.5 145.0 52 Total excluding motor vehicles and parts 95.1 146.3 144.9 145.8 146.5 146.9 147.4 147.7 147.8 147.7 147.2 146.5 145.6 144.9 144.4 53 Total excluding computer and office equipment 98.2 140.4 139.6 140.4 141.0 140.5 141.4 141.6 141.2 140.8 139.9 138.6 138.1 138.0 137.5 54 Consumer goods excluding autos and trucks . 27.4 120.6 120.5 120.7 121.5 120.9 121.3 121.2 120.7 120.6 121.9 120.8 121.1 120.7 120.4 55 Consumer goods excluding energy 26.2 123.9 124.4 124.4 125.0 123.9 124.5 124.4 123.6 122.9 122.5 122.0 122.3 122.6 122.5 56 Business equipment excluding autos and trucks 12.0 200.1 195.2 196.1 197.6 201.5 204.5 206.3 208.5 209.4 208.9 207.7 204.6 204.4 202.5 57 Business equipment excluding computer and office equipment 12.1 158.4 157.4 157.3 157.6 158.6 160.3 161.2 161.2 161.5 159.9 158.4 156.5 157.4 155.3 58 Materials excluding energy 29.8 188.5 186.0 189.3 190.7 190.3 191.8 193.0 192.8 190.4 187.8 185.1 183.8 182.5 181.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A45 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued Monthly data seasonally adjusted 1992 Group S co I d C e / p p r o o r - - 2 a 0 v 0 g 0 . tion Apr. May June July Aug. Sept. Oct. Nov. Jan.' Feb.1" Apr.P Index (1992=100) MAJOR INDUSTRIES 59 Total index 100.0 147.5 146.3 147.2 147.9 147.6 148.6 149.0 148.7 148.2 147.3 146.0 145.5 145.3 144.9 60 Manufacturing 85.4 153.6 152.2 153.1 153.8 153.7 154.6 155.1 154.9 154.1 152.6 151.3 150.7 150.3 149.8 61 Primary processing 26.5 178.0 177.1 178.7 180.1 179.4 180.3 181.2 181.1 178.8 176.1 173.5 172.9 171.5 170.9 62 Advanced processing 58.9 139.3 138.5 139.1 139.4 139.5 140.5 140.8 140.5 140.5 139.6 139.0 138.4 138.5 138.0 63 Durable goods 45.0 193.4 191.0 193.0 194.6 194.7 196.9 198.4 197.6 196.7 195.1 192.3 191.0 191.9 190.7 64 Lumber and products 24 2.0 118.3 121.6 120.5 118.7 118.6 115.5 116.8 114.8 113.2 111.5 108.3 109.3 109.9 109.6 65 Furniture and fixtures 25 1.4 142.9 140.7 143.0 141.9 142.6 143.8 146.6 147.2 145.0 145.3 144.1 143.6 142.1 142.5 66 Stone, clay, and glass products 32 2.1 134.7 132.9 134.2 134.6 136.3 136.1 136.5 137.3 134.6 132.4 135.2 134.3 133.5 132.7 67 Primary metals 33 3.1 133.7 137.8 136.7 136.4 133.9 132.4 133.9 129.0 127.3 126.3 124.0 122.1 120.2 119.0 68 Iron and steel 331,2 1.7 131.1 136.8 135.9 135.5 129.9 129.7 131.9 123.7 122.0 118.7 116.0 115.2 114.1 112.3 69 Raw steel 331PT .1 120.9 127.3 127.1 128.2 126.4 123.9 117.7 115.6 106.3 104.6 108.3 109.1 109.2 106.3 70 Nonferrous 333-6,9 1.4 136.8 139.1 137.9 137.6 138.8 135.7 136.5 135.3 133.6 135.2 133.4 130.3 127.4 127.0 71 Fabricated metal products . . 34 5.0 135.6 135.9 136.2 135.7 136.1 136.3 136.0 136.0 134.7 132.9 133.5 130.6 129.8 128.3 72 Industrial machinery and equipment 35 8.0 252.8 247.2 249.9 250.9 253.9 257.9 260.0 261.5 261.9 262.3 258.4 255.0 256.4 252.0 73 Computer and office equipment 357 1.8 1,343.6 1,245.1 1,272.3 1,316.2 1,370.4 1,421.6 1,464.2 1,487.4 1,502.8 1,508.3 1,497.4 1,484.6 1,485.2 1,482.6 74 Electrical machinery 36 7.3 549.7 516.5 533.8 555.0 571.2 580.0 592.2 597.4 604.4 610.2 604.3 597.3 591.1 585.6 75 Transportation equipment. . . 37 9.5 131.0 132.1 133.6 133.5 128.0 132.4 132.4 129.2 126.8 122.8 116.0 118.5 124.0 124.2 76 Motor vehicles and parts . 371 4.9 170.5 174.1 177.6 176.1 163.1 173.9 175.5 167.2 160.1 151.8 138.6 145.3 155.9 155.8 77 Autos and light trucks . 371PT 2.6 153.0 159.2 161.1 160.1 147.8 156.4 158.8 145.8 140.1 131.5 125.9 129.7 141.5 142.6 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.6 93.8 92.7 92.3 93.6 94.9 93.5 92.1 93.6 95.4 95.3 94.3 93.0 9933..77 9944..22 79 Instruments 38 5.4 122.2 121.5 121.3 122.2 122.6 123.3 123.7 123.5 124.6 123.1 125.0 123.0 122.7 123.8 80 Miscellaneous 39 1.3 130.8 130.9 130.7 130.5 132.1 130.8 130.9 131.1 130.2 129.4 130.4 128.2 126.6 125.2 81 Nondurable goods 40.4 116.9 116.7 116.7 116.7 116.3 116.3 116.0 116.3 115.5 114.1 114.0 114.0 112.8 112.8 82 Foods 20 9.4 114.7 114.7 114.2 114.9 115.0 115.1 114.6 114.8 115.0 114.2 114.1 114.9 114.4 114.4 83 Tobacco products 21 1.6 95.3 95.6 95.3 93.8 95.8 96.6 94.5 93.7 93.1 94.2 95.2 93.7 91.7 92.3 84 Textile mill products 22 1.8 100.1 104.4 102.6 103.1 101.4 99.4 98.4 96.7 92.8 94.5 93.0 92.9 93.1 90.7 85 Apparel products 23 2.2 91.7 94.6 93.0 91.2 92.0 90.7 89.5 89.2 89.2 88.2 88.9 86.5 86.9 85.6 86 Paper and products 26 3.6 116.1 118.4 116.5 118.8 114.9 113.3 113.7 117.1 114.7 112.7 111.8 112.5 107.3 108.0 87 Printing and publishing .... 27 6.7 109.9 109.1 109.9 109.1 110.0 110.4 110.9 111.6 111.2 109.2 109.6 108.5 107.1 106.7 88 Chemicals and products .... 28 9.9 128.3 125.2 126.3 125.9 124.8 125.9 125.4 125.8 124.8 122.9 121.8 122.4 121.7 121.8 89 Petroleum products 29 1.4 117.1 117.2 118.9 118.8 117.0 117.6 117.4 116.5 116.9 114.7 115.1 116.5 116.2 118.7 90 Rubber and plastic products . 30 3.5 142.3 143.5 142.6 143.5 144.4 142.1 141.9 141.3 139.1 137.3 138.5 136.9 135.3 134.5 91 Leather and products 31 .3 69.8 70.0 70.5 69.3 70.0 68.8 69.8 68.6 68.9 66.9 67.1 65.0 63.3 63.3 92 Mining 6.9 100.0 99.9 99.6 100.4 100.5 101.0 100.4 100.1 101.1 99.6 101.0 101.3 102.4 103.1 93 Metal " 10 .5 97.4 98.8 95.7 97.5 92.9 95.8 99.3 96.3 93.7 99.5 94.6 92.6 91.1 92.0 94 Coal 12 1.0 108.9 112.6 112.2 113.6 110.3 109.3 107.0 110.2 108.6 106.1 115.2 110.7 116.6 116.8 95 Oil and gas extraction 13 4.8 95.0 94.0 94.3 94.8 95.7 96.3 95.7 95.1 96.6 95.2 96.1 96.9 97.6 98.3 96 Stone and earth minerals 14 .6 126.4 130.4 123.9 127.7 124.4 125.0 123.7 124.6 123.2 119.3 121.7 121.8 123.3 123.4 97 Utilities 7.7 120.4 118.7 121.6 121.7 119.1 122.1 121.7 120.0 121.9 129.1 124.0 123.1 123.6 122.3 98 Electric 49L3PT 6.2 123.9 122.8 125.2 124.8 121.1 126.1 124.7 124.2 127.3 131.2 126.7 123.9 125.5 125.3 99 Gas 492,3PT 1.6 109.3 104.4 108.7 110.5 111.0 108.4 110.5 105.8 104.5 120.2 113.7 117.6 115.5 111.3 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.5 152.6 151.0 151.7 152.6 153.2 153.5 153.9 154.3 153.8 152.7 152.2 151.2 150.1 114499..66 101 Manufacturing excluding computer and office equipment 83.6 145.4 144.4 145.2 145.8 145.4 146.2 146.5 146.2 145.4 143.9 142.7 142.2 141.8 141.3 102 Computers, communications equipment, and semiconductors 5.9 1,195.2 1,097.8 1,140.2 1,193.1 1,248.0 1,281.6 1,310.3 1,334.8 1,358.1 1,368.9 1,351.7 1,338.6 1,326.7 1,314.0 103 Manufacturing excluding computers and semiconductors 81.1 128.3 128.0 128.4 128.4 127.7 128.2 128.4 128.0 127.1 125.6 124.7 124.3 124.0 123.6 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.5 125.1 125.1 125.4 125.3 124.5 124.9 125.0 124.6 123.6 122.1 121.1 120.7 120.5 120.2 Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 105 Products, total 2,001.9 2,860.5 2,868.9 2,872.7 2,883.5 2,865.7 2,882.9 2,889.1 2,867.4 2,863.2 2,850.2 2,818.1 2,820.1 2,833.5 2,823.6 106 Final 1,552.1 2,203.4 2,202.8 2,205.6 2,218.6 2,202.8 2,220.5 2,228.1 2,205.4 2,203.7 2,198.2 2,167.1 2,172.9 2,190.3 2,182.5 107 Consumer goods 1,049.6 1,340.0 1,347.2 1,349.8 1,357.8 1,338.7 1,348.7 1,353.7 1,334.7 1,331.2 1,332.8 1,312.2 1,321.7 1,330.1 1,330.0 108 Equipment 502.5 865.7 862.2 862.2 867.3 872.8 880.8 883.3 880.9 883.3 874.9 864.8 859.3 869.0 859.9 109 Intermediate 449.9 656.7 665.0 666.0 663.9 661.8 661.5 660.2 661.0 658.6 651.2 649.9 646.4 642.6 640.6 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 December 2000. The recent annual revision is described in an article in the Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. March 2001 issue of the Bulletin. For a description of the methods of estimating industrial 2. Standard industrial classification. production and capacity utilization, see "Industrial Production and Capacity Utilization: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • July 2001 2.14 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 2000r 2001 IItteemm 11999988 11999999 22000000 June July Aug. Sept. Oct. Nov. Dec. Jan.r Feb.r Mar. Private residential real estate activity (thousands of units except as noted) NEW UNITS 1 Permits authorized 1,612 1,664 1,592 1,566 1,534 1,544 1,549 1,562 1,614 1,553 1,724 1,663 1,627 2 One-family 1,188 1,247 1,198 1,155 1,149 1,169 1,173 1,212 1,203 1,187 1,283 1,228 1,209 3 Two-family or more 425 417 394 411 385 375 376 350 411 366 441 435 418 4 Started 1,617 1,641 1,569 1,560 1,477 1,531 1,508 1,527 1,559 1,532 1,666 1,623 1,586 5 One-family 1,271 1,302 1,231 1,199 1,148 1,228 1,196 1,218 1,209 1,236 1,336 1,288 1,207 6 Two-family or more 346 339 338 361 329 303 312 309 350 296 330 335 379 7 Under constmction at end of period1 971 953 934 983 980 975 971 971 969 965 985 989 991 8 One-family 659 648 623 664 658 659 658 659 655 652 669 675 672 9 Two-family or more 312 305 310 319 322 316 313 312 314 313 316 314 319 10 Completed 1,474 1,605 1,574 1,532 1,489 1,583 1,526 1,509 1,548 1,527 1,424 1,531 1,464 11 One-family 1,160 1,270 1,242 1,190 1,181 1,235 1,181 1,172 1,236 1,228 1,090 1,201 1,189 12 Two-family or more 315 335 332 342 308 348 345 337 312 299 334 330 275 13 Mobile homes shipped 374 348 250 262 251 249 231 213 196 176 164 177 179 Merchant builder activity, in one-family units 14 Number sold 886 907 903 793 881 839 902 922 882 1,001 938 966 988 15 Number for sale at end of period1 300 315 301 307 304 304 301 301 304 297 295 293 283 Price of units sold (thousands of dollars)2 16 Median 152.5 160.0 169.0 160.1 169.0 166.6 171.5 176.3 174.7 162.0 171.3 167.3 163.6 17 Average 181.9 195.8 206.4 197.7 202.2 200.2 208.3 215.1 210.7 208.1 209.0 210.4 206.6 EXISTING UNITS (one-family) 18 Number sold 4,970 5,205 5,113 5,180 4,820 5,240 5,160 5,070 5,300 4,940 5,200 5,190 5,430 Price of units sold (thousands of dollars)2 19 Median 128.4 133.3 139.0 140.2 143.3 143.2 141.6 138.6 139.5 139.7 137.1 138.6 143.4 20 Average 159.1 168.3 176.2 178.9 177.7 183.0 178.6 176.9 176.5 178.5 175.8 174.6 179.5 Value of new construction (millions of dollars)3 CONSTRUCTION 21 Total put in place 710,104 765,719 809,258 798,860 793,036 801,748 813,477 803,893 808,948 811,535 835,772 843,063 854,361 22 Private 550,983 592,037 624,613 624,383 619,046 616,918 625,317 618,738 624,580 625,141 643,319 651,575 660,138 23 Residential 314,058 348,584 359,315 363,756 355,196 350,783 351,682 348,076 348,998 350,679 359,890 368,762 370,027 24 Nonresidential 236,925 243,454 265,297 260,627 263,850 266,135 273,635 270,662 275,582 274,462 283,429 282,813 290,111 25 Industrial buildings 40,464 35,016 40,406 39,951 42,081 41,552 40,872 42,811 46,894 40,716 46,549 46,437 47,888 26 Commercial buildings 95,753 103,759 114,898 112,834 112,114 115,279 118,445 117,039 116,224 118,987 122,614 122,454 127,486 27 Other buildings 39,607 41,279 45,486 44,559 45,689 46,779 46,689 46,690 46,060 44,974 47,094 47,154 48,377 28 Public utilities and other 61,101 63,400 64,507 63,283 63,966 62,525 67,629 64,122 66,404 69,785 67,172 66,768 66,360 29 Public 159,121 173,682 184,645 174,477 173,990 184,830 188,160 185,155 184,368 186,393 192,452 191,488 194,223 30 Military 2,538 2,122 2,255 2,157 2,100 2,331 2,418 1,880 2,612 2,097 2,264 2,204 2,130 31 Highway 48,339 54,447 52,461 48,148 49,262 52,694 53,183 47,932 46,825 48,073 50,746 52,120 53,910 32 Conservation and development 5,421 6,002 6,026 5,832 4,875 5,629 6,158 6,989 5,603 6,330 7,385 7,665 7,242 33 Other 102,823 111,110 123,904 118,340 117,753 124,176 126,401 128,354 129,328 129,893 132,057 129,499 130,941 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,OCX) 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) Index level, Item 2000 2001 2000 2001 Apr. 2000 2001 20011 Apr. Apr. June Sept. Dec. Mar. Dec. Jan. Feb. Mar. Apr. CONSUMER PRICES2 (1982-84=100) 1 3.1 3.3 2.4 3.3 2.3 4.0 .2 .6 .3 .1 .3 176.9 2.0 3.2 1.9 4.1 2.1 4.1 .5 .3 .5 .2 .1 171.9 15.0 10.3 5.6 7.9 3.8 6.0 .3 3.9 -.2 -2.1 1.8 133.1 4 2.3 2.6 2.2 2.9 2.0 3.5 .1 .3 .3 .2 .2 185.6 .7 .5 -.6 1.7 .0 1.4 -.1 .1 .3 -.1 .0 146.6 33..00 33..55 33..44 3.2 3.2 4.2 .2 .4 .3 .3 .3 208.0 PRODUCER PRICES (1982=100) 7 3.6 3.7 2.3 2.0 2.9 4.9 .1 1.1 .1 -.1 .3 141.7 8 2.9 3.1 3.3 -1.2 2.1' 10.2r -,3r .1' .6 1.1 .6 141.6 q 17.5 13.5 6.5 6.4 12.0r 12.6r ,8r 4.2r 1.4 -2.6 .1 101.2 10 1.5 11..99 1.3 2.4 1.0r 2.1r ,lr ,6r -.4 .3 .2 156.4 llii ..55 11..11 11..55 11..77 .3 ..00 .1 .3 -.3 .0 .3 140.0 Intermediate materials V 5.4 2.1 3.1 3.1 1.2 1.8 .2 .8 -.1 -.2 -.3 131.6 1133 33..44 .6 22..77 ..33 -.3 11..55rr ,0r .R .1 .1 -.1 137.4 Crude materials 14 8.4 5.5 -7.3 -8.2 36.5r 14.8r 3.6r 2.R -1.6 3.0 -.5 109.1 43.8 48.3 163.6 20.0 102.6r -44. r 15.8r 18.6r -23.3 -4.9 3.0 145.2 1166 Other 1155..66 --1122..33 --1111..99 -8.8 --99..22rr --1133..44rr ,4r .2' -2.5 -1.3 -2.6 130.8 1. Not seasonally adjusted. SOURCE. U.S. Department of Labor, Bureau of Labor Statistics. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • July 2001 2.16 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 2000 2001 AAccccoouunntt 11999988 11999999 22000000 Ql Q2 Q3 Q4 Ql GROSS DOMESTIC PRODUCT 1 Total 8,790.2 9,299.2 9,963.1 9,752.7 9,945.7 10,039.4 10,114.4 10,229.4 By source 2 Personal consumption expenditures 5,850.9 6,268.7 6,757.3 6,621.7 6,706.3 6,810.8 6,890.2 6,994.1 3 Durable goods 693.9 761.3 820.3 826.3 814.3 824.7 815.8 838.4 4 Nondurable goods 1,707.6 1,845.5 2,010.0 1,963.9 1,997.6 2,031.5 2,046.9 2,064.0 Services 3,449.3 3,661.9 3,927.0 3,831.6 3,894.4 3,954.6 4,027.5 4,091.7 6 Gross private domestic investment 1,549.9 1,650.1 1,832.7 1,755.7 1,852.6 1,869.3 1,853.3 1,789.2 7 Fixed investment 1,472.9 1,606.8 1,778.2 1,725.8 1,780.5 1,803.0 1,803.5 1,815.0 8 Nonresidential 1,107.5 1,203.1 1,362.2 1,308.5 1,359.2 1,390.6 1,390.4 1,393.2 9 Structures 283.2 285.6 324.2 308.9 315.1 330.1 342.8 362.5 10 Producers' durable equipment 824.3 917.4 1,038.0 999.6 1,044.1 1,060.5 1,047.6 1,030.6 11 Residential structures 365.4 403.8 416.0 417.3 421.3 412.4 413.1 421.8 12 Change in business inventories 77.0 43.3 54.5 29.9 72.0 66.4 49.8 -25.8 13 Nonfarm 76.4 43.6 55.8 32.4 72.2 67.5 51.0 -25.3 14 Net exports of goods and services -151.5 -254.0 -370.7 -335.2 -355.4 -389.5 -402.7 -365.4 15 Exports 966.0 990.2 1,097.3 1,051.9 1,092.9 1,130.8 1,113.7 1,105.2 16 Imports 1,117.5 1,244.2 1,468.0 1,387.1 1,448.3 1,520.3 1,516.4 1,470.6 17 Government consumption expenditures and gross investment 1,540.9 1,634.4 1,743.7 1,710.4 1,742.2 1,748.8 1,773.6 1,811.5 18 Federal 540.6 568.6 595.2 580.1 604.5 594.2 602.0 617.1 19 State and local 1,000.3 1,065.8 1,148.6 1,130.4 1,137.7 1,154.6 1,171.6 1,194.4 By major type of product 20 Final sales, total 8,713.2 9,255.9 9,908.5 9,722.8 9,873.7 9,973.1 10,064.6 10,255.1 21 Goods 3,239.3 3,467.0 3,739.0 3,680.3 3,734.1 3,776.5 3,764.9 3,823.9 22 Durable 1,532.3 1,651.1 1,806.7 1,773.7 1,809.6 1,830.6 1,812.7 1,843.9 23 Nondurable 1,707.1 1,815.8 1,932.3 1,906.6 1,924.5 1,945.9 1,952.2 1,980.0 24 Services 4,673.0 4,934.6 5,254.1 5,135.2 5,231.4 5,281.6 5,368.0 5,463.8 25 Structures 800.9 854.3 915.6 907.4 908.2 915.0 931.7 967.4 26 Change in business inventories 77.0 43.3 54.5 29.9 72.0 66.4 49.8 -25.8 27 Durable goods 45.8 27.2 37.2 20.7 48.3 39.2 40.7 -33.0 28 Nondurable goods 31.2 16.1 17.3 9.2 23.7 27.2 9.0 7.2 MEMO 29 Total GDP in chained 1996 dollars 8,515.7 8,875.8 9,318.5 9,191.8 9,318.9 9,369.5 9,393.7 9,424.5 NATIONAL INCOME 30 Total 7,038.1 7,469.7 8,002.0 7,833.5 7,983.2 8,088.5 8,102.8 8,189.8 31 Compensation of employees 4,984.2 5,299.8 5,638.2 5,512.2 5,603.5 5,679.6 5,757.5 5,851.3 32 Wages and salaries 4,192.8 4,475.1 4,769.4 4,660.4 4,740.1 4,804.9 4,872.0 4,951.1 33 Government and government enterprises 692.7 724.4 760.9 749.9 760.2 765.4 768.2 783.3 34 Other 3,500.1 3,750.7 4,008.5 3,910.5 3,980.0 4,039.5 4,103.9 4,167.8 35 Supplement to wages and salaries 791.4 824.6 868.8 851.8 863.3 874.7 885.5 900.2 36 Employer contributions for social insurance 305.9 323.6 344.8 337.8 342.9 347.1 351.5 359.0 37 Other labor income 485.5 501.0 524.0 514.0 520.5 527.6 534.0 541.2 38 Proprietors' income1 620.7 663.5 710.4 693.9 709.5 724.8 713.2 724.8 39 Business and professional' 595.2 638.2 687.8 674.8 688.1 693.1 695.2 703.8 40 Farm' 25.4 25.3 22.6 19.1 21.5 31.7 18.0 21.0 41 Rental income of persons2 135.4 143.4 140.0 145.6 140.8 138.1 135.4 138.5 42 Corporate profits' 815.0 856.0 946.2 936.3 963.6 970.3 914.7 893.4 43 Profits before tax3 758.2 823.0 925.6 920.7 942.5 945.1 894.1 866.2 44 Inventory valuation adjustment 17.0 -9.1 -12.9 -25.0 -13.6 -4.5 -8.5 -3.5 45 Capital consumption adjustment 39.9 42.1 33.5 40.6 34.7 29.7 29.1 30.7 46 Net interest 482.7 507.1 567.2 545.4 565.9 575.7 582.0 581.8 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 2000 2001 AAccccoouunntt 11999988 11999999 22000000 Ql Q2 Q3 Q4 Ql PERSONAL INCOME AND SAVING 1 Total personal income 7391.0 7,789.6 8,281.7 8,105.8 8,242.1 8,349.0 8,429.7 8,554.9 7 Wage and salary disbursements 4,190.7 4,470.0 4,769.4 4,660.4 4,740.1 4,804.9 4,872.0 4,951.1 Commodity-producing industries 1,038.6 1,089.2 1,153.2 1,130.9 1,147.1 1,161.4 1,173.3 1,184.2 4 Manufacturing 756.6 782.4 815.9 802.8 813.1 821.4 826.4 823.3 Distributive industries 949.1 1,020.3 1,107.3 1,070.9 1,095.7 1,118.1 1,144.4 1,166.6 6 Service industries 1,510.3 1,636.0 1,748.0 1,708.6 1,737.2 1,760.1 1,786.2 1.816.9 7 Government and government enterprises 692.7 724.4 760.9 749.9 760.2 765.4 768.2 783.3 8 Other labor income 485.5 501.0 524.0 514.0 520.5 527.6 534.0 541.2 9 Proprietors' income1 620.7 663.5 710.4 693.9 709.5 724.8 713.2 724.8 10 Business and professional' 595.2 638.2 687.8 674.8 688.1 693.1 695.2 703.8 11 Farm 25.4 25.3 22.6 19.1 21.5 31.7 18.0 21.0 1? Rental income of persons2 135.4 143.4 140.0 145.6 140.8 138.1 135.4 138.5 N Dividends 351.1 370.3 396.6 386.9 392.6 399.7 407.2 414.2 14 Personal interest income 940.8 963.7 1,034.3 1,011.6 1,031.3 1,042.9 1,051.5 1,047.0 15 Transfer payments 983.0 1,016.2 1,067.8 1,046.9 1,066.1 1,074.2 1,084.0 1,115.2 16 Old age survivors, disability, and health insurance benefits 578.0 588.0 622.4 607.9 624.3 627.2 630.4 653.3 17 LESS: Personal contributions for social insurance 316.2 338.5 360.7 353.4 358.8 363.1 367.6 377.1 18 EQUALS: Personal income 7,391.0 7,789.6 8,281.7 8,105.8 8,242.1 8,349.0 8,429.7 8,554.9 19 LESS: Personal tax and nontax payments 1,070.9 1,152.0 1,291.9 1,239.3 1,277.2 1,308.1 1.342.7 1,371.8 20 EQUALS: Disposable personal income 6,320.0 6,637.7 6,989.8 6,866.5 6,964.9 7,040.9 7,087.0 7,183.1 21 LESS: Personal outlays 6,054.7 6,490.1 6,998.3 6,855.6 6,944.3 7,054.7 7,138.6 7,247.5 22 EQUALS: Personal saving 265.4 147.6 -8.5 11.0 20.6 -13.8 -51.6 -64.4 MEMO Per capita (chained 1996 dollars) Gross domestic product 31,474.2 32,511.9 33,836.1 33,485.6 33,874.7 3333,,998844..33 3333..998855..99 3344,,002233..44 74 Personal consumption expenditures 20,988.5 21,900.4 22,855.1 22,635.5 22,757.7 22,959.1 23,058.3 23,172.6 25 Disposable personal income 22,672.0 23,191.0 23,640.0 23,472.0 23,639.0 23,732.0 23,718.0 23.798.0 26 Saving rate (percent) 4.2 2.2 -.1 .2 .3 -.2 -.7 -.9 GROSS SAVING 27 Gross saving 1,654.4 1,717.6 1,825.1 1,777.0 1,844.5 1,854.7 1,824.2 1,793.7 28 Gross private saving 1,375.7 1,343.5 1,297.1 1,279.2 1,328.8 1,319.2 1,261.2 1,247.2 79 Personal saving 265.4 147.6 -8.5 11.0 20.6 -13.8 -51.6 -64.4 30 Undistributed corporate profits' 218.9 229.4 265.0 262.7 278.5 279.6 239.4 219.8 31 Corporate inventory valuation adjustment 17.0 -9.1 -12.9 -25.0 -13.6 -4.5 -8.5 -3.5 Capital consumption allowances 37 Corporate 624.3 676.9 739.4 711.5 731.1 775500..00 776655..22 777788..55 33 Noncorporate 265.1 284.5 301.1 294.1 298.7 303.3 308.2 313.4 34 Gross government saving 278.7 374.1 528.0 497.7 515.7 535.5 563.0 546.5 35 Federal 137.4 217.3 351.6 333.0 339.9 354.1 379.3 383.0 36 Consumption of fixed capital 88.4 92.8 99.8 97.2 98.9 100.8 102.3 103.6 37 Current surplus or deficit (-), national accounts 49.0 124.4 251.8 235.8 240.9 253.3 277.0 279.4 38 State and local 141.3 156.8 176.4 164.7 175.8 181.4 183.7 163.4 39 Consumption of fixed capital 99.5 106.8 116.8 112.7 115.6 118.2 120.6 123.2 40 Current surplus or deficit (-), national accounts 41.7 50.0 59.6 52.0 60.1 63.2 63.1 40.3 41 Gross investment 1,629.6 1,645.6 1,741.3 1,699.3 1,771.9 1,752.8 1,741.3 1,740.3 47 Gross private domestic investment 1,549.9 1,650.1 1,832.7 1,755.7 1,852.6 1,869.3 1,853.3 1,789.2 43 Gross government investment 278.8 308.7 336.6 334.2 331.9 333.6 346.5 349.3 44 Net foreign investment -199.1 -313.2 -427.9 -390.7 -412.5 -450.1 -458.5 -398.2 45 Statistical discrepancy -24.8 -71.9 -83.7 -77.7 -72.5 -101.8 -82.9 -53.4 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 • July 2001 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted' 1999 2000 IItteemm ccrreeddiittss oorr ddeebbiittss 11999988 11999999 22000000 Q4 Q1 Q2 Q3 Q4 1 Balance on current account -217,138 -331,479 -435,377 -96,223 -101,768 -105,239 -113,110 -115,266 2 Balance on goods and services -166,898 -264,971 -368,480 -76,280 -85,260 -88,745 -95,630 -98,853 3 Exports 932,977 956,242 1,069,531 249,653 255,936 265,925 275,411 272,256 4 Imports -1,099,875 -1,221,213 -1,438,011 -325,933 -341,196 -354,670 -371,041 -371,109 5 Income, net -6,211 -18,483 -13,656 -5,683 -4,421 -4,160 -4,531 -541 6 Investment, net -1,036 -13,102 -8,142 -4,319 -3,050 -2,769 -3,184 864 7 Direct 67,728 62,704 83,776 16,275 17,026 18,973 21,537 26,241 8 Portfolio -68,764 -75,806 -91,918 -20,594 -20,076 -21,742 -24,721 -25,377 9 Compensation of employees -5,175 -5,381 -5,514 -1,364 -1,371 -1,391 -1,347 -1,405 10 Unilateral current transfers, net -44,029 -48,025 -53,241 -14,260 -12,087 -12,334 -12,949 -15,872 11 Change in U.S. government assets other than official reserve assets, net (increase, —) -422 2,751 -715 3,711 -131 -574 114 -124 12 Change in U.S. official reserve assets (increase, -) -6,783 8,747 -290 1,569 -554 2,020 -346 -1,410 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -147 10 -722 -178 -180 -180 -182 -180 15 Reserve position in International Monetary Fund -5,119 5,484 2,308 1,800 -237 2,328 1,300 -1,083 16 Foreign currencies -1,517 3,253 -1,876 -53 -137 -128 -1,464 -147 17 Change in U.S. private assets abroad (increase, —) -328,231 -441,685 -552,344 -120,162 -178,262 -93,859 -93,188 -187,032 18 Bank-reported claims2 -35,572 -69,862 -110,173 -45,304 -55,511 18,320 -5,964 -67,018 19 Nonbank-reported claims -10,612 -92,328 -156,988 -24,428 -52,563 -36,507 -17,807 -50,111 20 U.S. purchases of foreign securities, net -135,995 -128,594 -123,606 -17,150 -27,236 -38,196 -33,242 -24,932 21 U.S. direct investments abroad, net -146,052 -150,901 -161,577 -33,280 -42,952 -37,476 -36,175 -44,971 22 Change in foreign official assets in United States (increase, +) -20,127 42,864 35,909 27,495 22,015 6,346 11,901 -4,353 23 U.S. Treasury securities -9,921 12,177 -11,377 5,122 16,198 -4,000 -9,001 -14,574 24 Other U.S. government obligations 6,332 20,350 40,909 6,730 8,107 10,334 14,272 8,196 25 Other U.S. government liabilities2 -3,550 -3,255 -2,540 89 -644 -781 -620 -495 26 Other U.S. liabilities reported by U.S. banks2 -9,501 12,692 5,790 14,427 -2,577 -111 6,938 11,,554400 27 Other foreign official assets3 -3,487 900 3,127 1,127 931 904 312 998800 28 Change in foreign private assets in United States (increase, +) 502,362 710,700 916,521 157,072 214,623 238,906 183,424 279,564 29 U.S. bank-reported liabilities4 39,769 67,403 79,485 19,618 -8,824 46,943 -1,394 42,760 30 U.S. nonbank-reported liabilities -7,001 34,298 105,728 792 58,061 24,038 1,506 22,123 31 Foreign private purchases of U.S. Treasury securities, net 48,581 -20,464 -52,206 -17,191 -9,248 -20,597 -12,513 -9,848 32 U.S. currency flows 16,622 22,407 1,129 12,213 -6,847 989 757 6,230 33 Foreign purchases of other U.S. securities, net 218,075 331,523 465,858 92,250 132,416 87,107 122,387 123,948 34 Foreign direct investments in United States, net 186,316 275,533 316,527 49,390 49,065 100,426 72,681 94,351 35 Capital account transactions, net5 637 -3,500 680 -3,993 166 170 167 177 36 Discrepancy 69,702 11,602 35,616 30,531 43,911 -47,770 11,038 28,444 37 Due to seasonal adjustment 5,738 5,873 -2,361 -9,215 5,710 38 Before seasonal adjustment 69,702 11,602 35,616 24,793 38,038 -45,409 20,253 22,734 MEMO Changes in official assets 39 U.S. official reserve assets (increase, —) -6,783 8,747 -290 1,569 -554 2,020 -346 -1,410 40 Foreign official assets in United States, excluding line 25 (increase, +) -16.577 46,119 38,449 27,406 22,659 7,127 12,521 -3,858 41 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) -11,531 1,331 11,989 -1,673 6,109 1,913 3,803 164 1. Seasonal factors are not calculated for lines 11-16, 18-20, 22-35, and 38—41. and dealers. 2. Associated primarily with military sales contracts and other transactions arranged with 5. Consists of capital transfers (such as those of accompanying migrants entering or or through foreign official agencies. leaving the country and debt forgiveness) and the acquisition and disposal of nonproduced 3. Consists of investments in U.S. corporate stocks and in debt securities of private nonfinancial assets. corporations and state and local governments. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current 4. Reporting banks included all types of depository institutions as well as some brokers 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 2001 IItteemm 11999988 11999999 22000000 Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Goods and services, balance -166,897 -264,971 -368,865 -33,546 -33,168 -32,875 -33,199 -33,251 -26,855 -31,175 2 Merchandise -246,853 -345,559 -449,853 -39,395 -39,954 -39,124 -39,569 -39,490 -33,223 -37,645 3 Services 79,956 80,588 80,988 5,849 6,786 6,249 6,370 6,239 6,368 6,470 4 Goods and services, exports 932,977 956,242 1,068,741 92,793 91,425 90,825 89,201 89,580 90,392 89,464 5 Merchandise 670,324 684,358 772,514 67,815 66,325 65,850 64,114 64,578 65,193 64,096 6 Services 262,653 271,884 296,227 24,978 25,100 24,975 25,087 25,002 25,199 25,368 7 Goods and services, imports -1,099,875 -1,221,213 -1,437,606 -126,339 -124,593 -123,700 -122,400 -122,831 -117,247 -120,639 8 Merchandise -917,178 -1,029,917 -1,222,367 -107,210 -106,279 -104,974 -103,683 -104,068 . -98,416 -101,741 9 Services -182,697 -191,296 -215,239 -19,129 -18,314 -18,726 -18,717 -18,763 -18,831 -18,898 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 2001 AAsssseett 11999977 11999988 11999999 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayp 1 Total 69,954 81,761 71,516 65,257 65,523 67,647 67,542 66,486 64,222 64,731 65,256 2 Gold stock1 11,047 11,046 11,048 11,046 11,046 11,046 11,046 11,046 11,046 11,046 11,046 3 Special drawing rights2,3 10,027 10,603 10,336 10,169 10,369 10,539 10,497 10,641 10,379 10,420 10,481 4 Reserve position in International Monetary Fund2 18,071 24,111 17,950 13,528 13,491 14,824 15,079 14,107 13,777 13,816 14,283 5 Foreign currencies4 30,809 36,001 32,182 30,514 30,617 31,238 30,920 30,692 29,020 29,449 29,446 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 2001 AAsssseett 11999977 11999988 11999999 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayp 1 Deposits 457 167 71 115 104 215 199 196 70 101 86 Held in custody 2 U.S. Treasury securities2 620,885 607,574 632,482 595,591 591,071 594,094 594,694 603,906 609,440 585,710 583,655 3 Earmarked gold3 10,763 10,343 9,933 9,565 9,505 9,451 9,397 9,343 9,289 9,235 9,154 1. Excludes deposits and U.S. Treasury securities held for international and regional 3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce; not organizations. included in the gold stock of the United States. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury securities, in each case measured at face (not market) value. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 International Statistics • July 2001 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 2000 2001 IItteemm 11999988 11999999 Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Total1 759,928 806,318 849,206 850,116 849,049 845,926 866,861r 866,700 864,657 By type 2 Liabilities reported by banks in the United States 125,883 138,847 143,670 146,452 147,631 144,650 155,271r 157,270 153,832 3 U.S. Treasury bills and certificates3 134,177 156,177 155,498 155,101 155,061 153,010 158,967 155,667 155,204 U.S. Treasury bonds and notes 4 Marketable 432,127 422,266 427,013 419,863 414,896 415,964 418,190 418,857 419,106 5 Nonmarketable4 6,074 6,111 5,247 5,280 5,313 5,348 4,923r 4,953 4,984 6 U.S. securities other than U.S. Treasury securities5 61,667 82,917 117,778 123,420 126,148 126,954 129,510 129,953 131,531 By area 7 Europe1 256,026 244,805 258,138 264,131 262,099 253,592 259,829 257,955 250,420 8 10,552 12,503 12,821 12,632 11,744 12,394 11,220 10,794 10,296 9 Latin America and Caribbean 79,503 73,518 77,568 77,526 78,742 76,812 80,117r 80,745 78,521 10 400,631 463,703 486,890 481,344 481,094 488,168 499,90 lr 501,462 510,978 11 10,059 7,523 8,466 8,323 8,012 9,165 8,965 9,586 9,102 12 Other countries 3,157 4,266 5,323 6,160 7,358 5,795 6,829 6,158 5,340 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 2000 IItteemm 11999977 11999988 11999999 Mar. June Sept. Dec. 1 Banks' liabilities 117,524 101,125 88,537 85,649 85,842 78,852 76,120 2 Banks' claims 83,038 78,162 67,365 63,492 67,862 60,355 56,867 3 Deposits 28,661 45,985 34,426 32,967 31,224 25,847 22,907 4 Other claims 54,377 32,177 32,939 30,525 36,638 34,508 33,960 5 Claims of banks' domestic customers2 8,191 20,718 20,826 21,753 18,802 19,123 29,782 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 2. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A53 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 2000 2001 IItteemm 11999988 11999999 22000000 Sept. Oct. Nov. Dec. Jan.r Feb. Mar.P BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,347,837 1,408,740 1,523,669 1,453,643 1,511,173 1,525,179 1,523,669 1,569,000 1,549,410 1,493,890 7 Banks' own liabilities 884,939 971,536 1,049,070 1,027,138 1,074,575 1,073,536 1,049,070 1,086,260 1,065,577 1,033,319 3 Demand deposits 29,558 42,884 33,553 31,964 29,500 31,701 33,553 30,855 35,757 33,861 4 Time deposits2 151,761 163,620 191,791 184,823 185,454 192,422 191,791 187,365 192,518 181,566 5 Other3 140,752 155,853 173,233 174,473 194,659 187,066 173,233 203,269 200,649 199,897 6 Own foreign offices4 562,868 609,179 650,493 635,878 664,962 662,347 650,493 664,771 636,653 617,995 7 Banks' custodial liabilities5 462,898 437,204 474,599 426,505 436,598 451,643 474,599 482,740 483,833 460,571 8 US. Treasury bills and certificates6 183,494 185,676 177,742 174,604 173,984 173,896 177,742 182,276 179,277 171,755 9 Short-term agency securities7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 66,188 73,670 71,064 10 Other negotiable and readily transferable instruments8 141,699 132,617 144,858 120,296 129,753 132,453 144,858 77,110 73,101 63,565 11 Other 137,705 118,911 151,999 131,605 132,861 145,294 151,999 157,166 157,785 154,187 12 Nonmonetary international and regional organizations9 . . 11,883 15,276 12,560 15,658 17,104 17,074 12,560 10,938 11,596 11,645 13 Banks' own liabilities 10,850 14,357 12,158 15,404 16,751 16,676 12,158 10,595 11,220 11,101 14 Demand deposits 172 98 41 19 48 30 41 27 19 23 15 Time deposits2 5,793 10,349 6,264 7,627 5,918 6,542 6,264 5,641 4,984 5,252 16 Other3 4,885 3,910 5,853 7,758 10,785 10,104 5,853 4,927 6,217 5,826 17 Banks' custodial liabilities5 1,033 919 402 254 353 398 402 343 376 544 18 U.S. Treasury bills and certificates6 636 680 252 223 215 249 252 294 248 229 19 Short-term agency securities7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 26 108 137 20 Other negotiable and readily transferable instruments8 397 233 149 26 138 147 149 23 15 177 21 Other 0 6 1 5 0 2 1 0 5 1 7.7. Official institutions10 260,060 295,024 297,660 299,168 301,553 302,692 297,660 314,238 312,937 309,036 73 Banks' own liabilities 80,256 97,615 97,052 95,709 102,654 102,110 97,052 103,423 101,709 96,259 24 Demand deposits 3,003 3,341 3,950 5,213 4,361 4,702 3,950 3,195 4,438 3,502 25 Time deposits2 29,506 28,942 35,638 36,699 34,035 35,335 35,638 33,008 30,210 27,199 26 Other3 47,747 65,332 57,464 53,797 64,258 62,073 57,464 67,220 67,061 65,558 77 Banks' custodial liabilities5 179,804 197,409 200,608 203,459 198,899 200,582 200,608 210,815 211,228 212,777 28 U.S. Treasury bills and certificates6 134,177 156,177 153,010 155,498 155,101 155,061 153,010 158,967 155,667 155,204 29 Short-term agency securities7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 45,384 49,594 53,295 30 Other negotiable and readily transferable instruments8 44,953 41,182 47,360 47,660 43,753 44,828 47,360 5,337 5,325 4,064 31 Other 674 50 238 301 45 693 238 1,127 642 214 3? Banks" 885,336 900,379 981,552 926,474 963,643 973,539 981,552 1,008,771 989,430 949,740 33 Banks' own liabilities 676,057 728,492 789,052 761,767 797,391 794,924 789,052 810,402 792,733 770,951 34 Unaffiliated foreign banks 113,189 119,313 138,559 125,889 132,429 132,577 138,559 145,631 156,080 152,956 35 Demand deposits 14,071 17,583 15,532 12,918 12,160 12,834 15,532 14,297 12,600 16,433 36 Time deposits2 45,904 48,140 67,498 59,958 64,301 68,828 67,498 70,896 79,211 73,007 37 Other3 53,214 53,590 55,529 53,013 55,968 50,915 55,529 60,438 64,269 63,516 38 Own foreign offices4 562,868 609,179 650,493 635,878 664,962 662,347 650,493 664,771 636,653 617,995 39 Banks' custodial liabilities5 209,279 171,887 192,500 164,707 166,252 178,615 192,500 198,369 196,697 178,789 40 U.S. Treasury bills and certificates6 35,359 16,796 15,919 10,667 9,972 10,285 15,919 14,484 13,909 7,922 41 Short-term agency securities7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7,439 7,783 2,086 42 Other negotiable and readily transferable instruments8 45,332 45,695 35,104 32,679 34,261 34,643 35,104 30,757 29,325 26,260 43 Other 128,588 109,396 141,477 121,361 122,019 133,687 141,477 145,689 145,680 142,521 44 Other foreigners 190,558 198,061 231,897 212,343 228,873 231,874 231,897 235,053 235,447 223,469 45 Banks' own liabilities 117,776 131,072 150,808 154,258 157,779 159,826 150,808 161,840 159,915 155,008 46 Demand deposits 12,312 21,862 14,030 13,814 12,931 14,135 14,030 13,336 18,700 13,903 47 Time deposits2 70,558 76,189 82,391 80,539 81,200 81,717 82,391 77,820 78,113 76,108 48 Other3 34,906 33,021 54,387 59,905 63,648 63,974 54,387 70,684 63,102 64,997 49 Banks' custodial liabilities5 72,782 66,989 81,089 58,085 71,094 72,048 81,089 73,213 75,532 68,461 50 U.S. Treasury bills and certificates6 13,322 12,023 8,561 8,216 8,696 8,301 8,561 8,531 9,453 8,400 51 Short-term agency securities7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13,339 16,185 15,546 52 Other negotiable and readily transferable instruments8 51,017 45,507 62,245 39,931 51,601 52,835 62,245 40,993 38,436 33,064 53 Other 8,443 9,459 10,283 9,938 10,797 10,912 10,283 10,350 11,458 11,451 MEMO 54 Negotiable time certificates of deposit in custody for foreigners 27,026 30,345 34,088 25,991 27,164 25,854 34,088 31,389 30,277 24,518 55 Repurchase agreements7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 124,561 119,804 129,468 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. Data available beginning January 2001. ble and readily transferable instruments." 8. Principally bankers acceptances, commercial paper, and negotiable time certificates of 3. Includes borrowing under repurchase agreements. deposit. 4. For US. banks, includes amounts owed to own foreign branches and foreign subsidiar- 9. Principally the International Bank for Reconstruction and Development, the Interies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory American Development Bank, and the Asian Development Bank. Excludes "holdings of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists dollars" of the International Monetary Fund. principally of amounts owed to the head office or parent foreign bank, and to foreign 10. Foreign central banks, foreign central governments, and the Bank for International branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Settlements. 5. Financial claims on residents of the United States, other than long-term securities, held 11. Excludes central banks, which are included in "Official institutions." by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 International Statistics • July 2001 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 2001 IItteemm 11999988 11999999 22000000 Sept. Oct. Nov. Dec. Jan. Feb. Mar.p AREA 56 Total, all foreigners 1,347,837 1,408,740 1,523,669 1,453,643 1,511,173 1,525,179 1,523,669 1,569,000r l,549,410r 1,493,890 57 Foreign countries 1,335,954 1,393,464 1,511,108 1,437,985 1,494,069 1,508,105 1,511,108 1,558,061r 1,537,813r 1,482,244 58 Europe 427,375 441,810 449,152 463,391 483,826 471,979 449,152 477,162R 462,709R 429,228 59 Austria 3,178 2,789 2,724 2,541 2,037 2,671 2,724 2,366 2,124 2,178 60 Belgium12 42,818 44,692 33,401 29,828 29,648 32,389 33,401 7,357R 5,707 5,432 61 Denmark 1,437 2,196 3,001 3,429 3,001 3,531 3,001 3,391 4,182 2,919 62 Finland 1,862 1,658 1,412 1,512 1,418 1,874 1,412 1,155 1,667 1,286 63 France 44,616 49,790 37,840 39,693 41,736 43,534 37,840 49,045R 45,535R 42,760 64 Germany 21,357 24,753 35,535 26,212 28,633 27,084 35,535 30,250 30,173 30,662 65 Greece 2,066 3,748 2,013 3,331 3,445 3,344 2,013 1,888 1,963 1,496 66 Italy ,, 7,103 6,775 5,079 5,959 5,594 5,521 5,079 4,997 5,070 5,770 67 Luxembourg n.a. n.a. n.a. n.a. n.a. n.a. n.a. 27,095R 24,123 12,585 68 Netherlands 10,793 8,143 7,485 10,311 14,450 13,283 7,485 8,504 8,413 7,265 69 Norway 710 1,327 2,305 3,501 4,102 5,159 2,305 4,762 6,331 8,361 70 Portugal 3,236 2,228 2,404 2,244 2,262 2,379 2,404 2,571 2,625 1,731 n Russia 2,439 5,475 19,020 15,970 17,260 20,022 19,020 17,233 19,029 18,625 72 Spain 15,781 10,426 7,801 8,421 9,270 6,900 7,801 8,129 8,240 9,500 li Sweden 3,027 4,652 6,498 6,209 6,247 7,362 6,498 5,648 5,959 6,738 14 Switzerland 50,654 63,485 74,732 88,276 97,151 86,154 74,732 83,096 84,019 54,028 75 Turkey 4,286 7,842 7,548 8,173 8,492 4,525 7,548 7,783 5,391 5,635 76 United Kingdom 181,554 172,687 169,484 175,663 173,254 172,281 169,484 117799,,444433RR 117700,,776677RR 182,284 77 Channel Islands & Isle of Man13 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 440066 449988 649 78 Yugoslavia14 233 286 276 275 270 279 276 287 294 294 79 Other Europe and other former U.S.S.R." 30,225 28,858 30,594 31,843 35,556 33,687 30,594 31,756 30,599 29,030 80 Canada 30,212 34,214 31,059 33,869 34,367 31,252 31,059 23,927 23,945R 23,318 81 Latin America 121,327 117,495 121,719 120,099 121,417 121,353 121,719 118,928R 121,287R 113,823 82 Argentina 19,014 18,633 19,493 18,560 18,746 17,886 19,493 18,936 18,417 12,875 83 Brazil 15,815 12,865 10,953 11,537 10,204 11,663 10,953 10,542 11,473 10,577 84 Chile 5,015 7,008 5,895 5,346 5,105 5,327 5,895 5,647 5,955 5,175 85 Colombia 4,624 5,669 4,555 4,658 4,945 4,560 4,555 4,552 4,445 4,344 86 Ecuador 1,572 1,956 2,119 2,074 2,084 2,059 2,119 2,157 2,254 2,179 87 Guatemala 1,336 1,626 1,637 1,671 1,667 1,678 1,637 1,581 1,535 1,509 88 Mexico 37,157 30,717 33,157 33,878 36,054 33,856 33,157 33,721R 35,368R 33,994 89 Panama 3,864 4,415 4,292 3,661 3,788 3,980 4,292 3,615 3,885 4,014 90 Peru 840 1,142 1,435 1,091 1,153 1,194 1.435 1,355 1,459 1,788 91 Uruguay 2,486 2,386 3,006 2,567 2,512 2,944 3,006 2,798 2,844 3,365 9 2 Venezuela 19,894 20,192 24,779 23,997 24,288 25,963 24,779 26,996 26,475 26,814 93 Other Latin America16 9,710 10,886 10,398 11,059 10,871 10,243 10,398 7,028 7,177 7,189 94 Caribbean 433,539 461,200 580,562 513,720 533,961 560,281 580,562 601,777R 590,720 574,522 95 Bahamas 118,085 135,811 189,454 167,671 178,113 176,823 189,454 186,180 185,562 174,174 96 Bermuda 6,846 7,874 9,695 8,100 8,730 8,404 9,695 9,488R 8,278 8,401 97 British West Indies17 302,486 312,278 374,107 331,097 340,926 368,175 374,107 0 0 n.a. 98 Caymen Islands'7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 384,435R 376,300R 372,492 99 Cuba 62 75 90 89 94 88 90 130 84 85 100 Jamaica 577 520 815 830 680 722 815 792 945 1,238 101 Netherlands Antilles 5,010 4,047 5,496 5,159 4,614 5,318 5,496 6,565 55,,553377 4,504 102 Trinidad and Tobago 473 595 905 774 804 751 905 797 888866 1,048 103 Other Caribbean16 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13,390R 13,128R 12,580 104 307,960 319,489 306,412 286,551 299,164 301,595 330066,,441122 315,101R 331177,,117755RR 320,138 China 105 Mainland 13,441 12,325 16,538 11,830 13,719 15,835 16,538 27,451 31,654 39,899 106 Taiwan 12,708 13,603 17,690 15,140 18,289 17,630 17,690 19,828R 18,592R 17,891 107 Hong Kong 20,900 27,701 26,768 26,583 25,784 25,924 26,768 27,013 27,674 29,085 108 India 5,250 7,367 4,532 5,838 5,548 5,173 4,532 4,197 4,058 4,547 109 Indonesia 8,282 6,567 8,524 7,310 7,589 8,375 8,524 8,536 9,027 8,605 110 Israel 7,749 7,488 8,055 7,132 6,668 6,538 8,055 7,666 7,262 8,803 111 Japan 168,563 159,075 150,434 142,782 150,196 149,679 150,434 148,730R 150,539R 146,441 112 Korea (South) 12,524 12,988 7,967 9,043 6,684 6,689 7,967 7,155 6,273 5,686 113 Philippines 3,324 3,268 2,430 1,822 1,676 2,334 2,430 1,769 1,422 1,428 114 Thailand 7,359 6,050 3,129 3,330 3,178 3,477 3,129 3,157 3,405 3,252 115 Middle Eastern oil-exporting countries'8 15,609 21,314 23,760 21,851 23,856 23,732 23,760 22,425 21,613 22,067 116 Other 32,251 41,743 36,585 33,890 35,977 36,209 36,585 37,174R 35,656R 32,434 117 8,905 9,468 10,836 9,821 9,663 9,515 10,836 10,552 10,984 10,564 118 Egypt 1,339 2,022 2,622 1,544 1,546 1,655 2,622 2,552 2,336 2,282 119 Morocco 97 179 139 112 121 100 139 157 139 133 120 South Africa 1,522 1,495 1,011 842 767 853 1,011 843 914 651 121 Congo (formerly Zaire) 5 14 4 5 4 4 4 10 10 8 122 Oil-exporting countries'9 3,088 2,914 4,052 4,499 4,405 4,027 4,052 4,317 4,750 4,593 123 Other 2,854 2,844 3,008 2,819 2,820 2,876 3,008 2,673 2,835 2,897 124 Other Countries 6,636 9,788 11,368 10,534 11,671 12,130 11,368 10,614 10,993 10,651 125 Australia 5,495 8,377 10,090 9,507 10,562 10,961 10,090 8,854 9,519 9,448 126 New Zealand20 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1,032 328 424 127 All other 1,141 1,411 1,278 1,027 1,109 1,169 1,278 728 1,146 779 128 Nonmonetary international and regional organizations .. 11,883 15,276 12,561 15,658 17,104 17,074 12,561 10,939 11,597 11,646 129 International2' 10,221 12,876 11,288 14,387 16,133 16,068 11,288 9,024 10,811 10,734 130 Latin American regional22 594 1,150 740 888 582 523 740 1,493 223 272 131 Other regional23 1,068 1,250 533 383 389 483 533 422 534 640 12. Before January 2001, combined data reported for Belgium-Luxembourg. 18. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 13. Before January 2001, data included in United Kingdom. Emirates (Trucial States). 14. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 19. Comprises Algeria, Gabon, Libya, and Nigeria. 15. Includes the Bank for International Settlements and European Central Bank. Since 20. Before January 2001, included in "All other." December 1992, has included all parts of the former U.S.S.R. (except Russia) and Bosnia, 21. Principally the International Bank for Reconstruction and Development. Excludes Croatia, and Slovenia. "holdings of dollars" of the International Monetary Fund. 16. Before January 2001, "Other Latin America" and "Other Caribbean" were repotted as 22. Principally the Inter-American Development Bank. combined "Other Latin America and Caribbean." 23. Asian, African, Middle Eastern, and European regional organizations, except the Bank 17. Beginning January 2001, Cayman Islands replaced British West Indies in the data for International Settlements, which is included in "Other Europe." series. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A55 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States' Payable in U.S. dollars Millions of dollars, end of period 2000 2001 AArreeaa oorr ccoouunnttrryy 11999988 11999999 22000000 Sept. Oct. Nov. Dec. Jan. Feb. Mar.p 1 Total, all foreigners 734,995 793,139 911,879 856,474 879,626 882,419 911,879 962,479 919,222 984,305 2 Foreign countries 731,378 788,576 907,193 851,609 874,403 878,579 907,193 959,252 915,905 981,529 3 Europe 233,321 311,686 383,876 359,889 365,709 371,894 383,876 422,183 407,006 443,375 4 Austria 1,043 2,643 2,941 2,584 2,809 2,681 2,941 3,664 2,927 3,101 5 Belgium2 7,187 10,193 5,540 6,368 6,044 5,060 5,540 4,635 5,321 4,852 6 Denmark 2,383 1,669 3,312 3,403 3,093 3,462 3,312 3,402 3,499 3,242 7 Finland 1,070 2,020 7,402 3,561 4,927 6,517 7,402 6,772 7,122 7,185 8 France 15,251 29,142 40,303 27,062 34,217 34,547 40,303 43,290 44,104 45,570 9 Germany 15,923 29,205 36,973 33,229 33,017 32,160 36,973 39,744 39,375 45,749 10 Greece 575 806 658 516 628 876 658 526 466 278 11 Italy 7,284 8,496 7,629 6,215 6,482 6,738 7,629 6,310 6,315 6,976 12 Luxembourg n.a. n.a. n.a. n.a. n.a. n.a. n.a. 2,825 2,659 2,569 13 Netherlands 5,697 11,810 17,294 15,507 16,165 15,975 17,294 18,864 21,680 22,629 14 Norway 827 1,000 5,012 4,474 4,655 6,159 5,012 2,971 5,339 8,228 15 Portugal 669 1,571 1,382 1,480 1,574 1,249 1,382 1,109 1,312 1,426 16 Russia 789 713 517 643 647 663 517 518 561 1,008 17 Spain 5,735 3,796 2,848 3,208 3,360 2,593 2,848 3,808 4,199 4,722 18 Sweden 4,223 3,264 9,301 8,501 8,504 8,815 9,301 10,353 10,131 10,286 19 Switzerland 46,874 79,158 82,383 100,345 103,818 107,986 82,383 102,545 97,186 96,487 20 Turkey 1,982 2,617 3,175 2,821 2,831 3,260 3,175 3,300 3,104 2,698 21 United Kingdom 106,349 115,971 148,875 132,503 122,829 125,223 148,875 156,809 143,380 168,760 22 Channel Islands & Isle of Man3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 670 832 855 23 Yugoslavia4 53 50 50 49 49 49 50 50 49 49 24 Other Europe and other former U.S.S.R.5 9,407 7,562 8,281 7,420 10,060 7,881 8,281 9,966 7,203 6,369 25 Canada 47,037 37,206 40,068 37,618 38,648 39,291 40,068 41,655 42,487 44,544 26 Latin America 79,976 74,040 76,614 72,664 73,692 74,399 76,614 74,460 74,220 73,887 27 Argentina 9,552 10,894 11,546 10,840 11,166 11,468 11,546 11,317 11,612 11,241 28 Brazil 16,184 16,987 20,567 19,038 20,202 19,840 20,567 20,372 20,008 20,274 29 Chile 8,250 6,607 5,816 5,953 5,756 5,772 5,816 6,223 5,961 5,934 30 Colombia 6,507 4,524 4,370 3,851 3,846 3,938 4,370 3,816 3,941 4,023 31 Ecuador 1,400 760 635 623 639 629 635 563 584 533 32 Guatemala 1,127 1,135 1,246 1,226 1,245 1,247 1,246 1,364 1,176 1,174 33 Mexico 21,212 17,899 17,430 16,808 16,723 16,945 17,430 17,598 17,918 17,752 34 Panama 3,584 3,387 2,935 2,781 2,668 2,839 2,935 2,775 2,908 3,009 35 Peru 3,275 2,529 2,808 2,697 2,653 2,713 2,808 2,689 2,673 2,809 36 Uruguay 1,126 801 675 728 663 677 675 641 455 366 37 Venezuela 3,089 3,494 3,520 3,390 3,321 3,451 3,520 3,306 3,264 3,237 38 Other Latin America6 4,670 5,023 5,066 4,729 4,810 4,880 5,066 3,796 3,720 3,535 39 Caribbean 262,678 281,128 319,512 290,974 300,805 301,544 319,512 320,998 299,682 321,099 40 Bahamas 96,455 99,066 114,090 99,278 100,445 96,718 114,090 109,275 101,266 105,048 41 Bermuda 5,011 8,007 9,343 6,265 8,426 8,324 9,343 8,673 7,138 8,186 42 British West Indies7 153,749 167,189 189,315 178,744 184,812 188,994 189,315 n.a. n.a. n.a. 43 Caymen Islands7 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 188,377 177,854 195,309 44 Cuba 0 0 0 0 0 0 0 0 0 0 45 Jamaica 239 295 355 337 379 355 355 357 331 347 46 Netherlands Antilles 6,779 5,982 5,801 5,770 6,158 6,554 5,801 9,077 7,156 6,947 47 Trinidad and Tobago 445 589 608 580 585 599 608 658 663 709 48 Other Caribbean6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 4,581 5,274 4,553 49 Asia 98,607 75,143 78,762 81,584 87,682 83,359 78,762 90,332 81,896 87,623 China 50 Mainland 1,261 2,110 1,606 1,519 1,912 1,644 1,606 1,562 1,530 1,338 51 Taiwan 1,041 1,390 2,247 2,475 3,691 2,483 2,247 1,037 1,365 1,846 52 Hong Kong 9,080 5,903 6,715 6,019 6,540 6,454 6,715 7,458 8,506 11,066 53 India 1,440 1,738 2,178 2,006 1,787 1,736 2,178 1,886 1,700 1,826 54 Indonesia 1,942 1,776 1,914 1,982 2,009 1,958 1,914 2,075 1,987 2,001 55 Israel 1,166 1,875 2,729 1,116 1,551 1,911 2,729 2,343 3,249 2,339 56 Japan 46,713 28,641 35,109 35,240 35,773 36,467 35,109 38,901 34,780 39,312 57 Korea (South) 8,289 9,426 7,784 14,375 18,589 16,189 7,784 18,736 14,147 12,188 58 Philippines 1,465 1,410 1,784 1,495 1,473 1,758 1,784 1,217 1,172 1,195 59 Thailand 1,807 1,515 1,381 1,071 1,046 1,221 1,381 1,170 1,244 1,258 60 Middle Eastern oil-exporting countries8 16,130 14,267 10,091 9,961 9,867 8,487 10,091 10,549 8,748 9,118 61 Other 8,273 5,092 5,224 4,325 3,444 3,051 5,224 3,398 3,468 4,136 62 3,122 2,268 2,151 2,597 2,291 1,977 2,151 2,157 1,899 2,111 63 Egypt 257 258 201 176 201 184 201 170 271 343 64 Morocco 372 352 204 254 252 235 204 182 185 189 65 South Africa 643 622 366 372 322 341 366 492 544 586 66 Congo (formerly Zaire) 0 24 0 0 0 0 0 0 0 0 67 Oil-exporting countries9 936 276 471 913 656 342 471 582 153 217 68 Other 914 736 909 882 860 875 909 731 746 776 69 Other countries 6,637 7,105 6,210 6,283 5,576 6,115 6,210 7,331 8,715 8,890 70 Australia 6,173 6,824 5,961 6,036 5,238 5,937 5,961 6,906 8,377 8,556 71 New Zealand10 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 283 207 208 72 All other 464 281 249 247 338 178 249 142 131 126 73 Nonmonetary international and regional organizations11 . . 3,617 4,563 4,686 4,865 5,223 3,840 4,686 3,363 3,317 2,776 1. Reporting banks include all types of depository institutions as well as some brokers and 6. Before January 2001, "Other Latin America" and "Other Caribbean" were reported as dealers. combined "Other Latin America and Caribbean." 2. Before January 2001, combined data reported for Belgium-Luxembourg. 7. Beginning 2001, Cayman Islands replaced British West Indies in the data series. 3. Before January 2001, data included in United Kingdom. 8. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 4. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. Emirates (Trucial States). 5. Includes the Bank for International Settlements and European Central Bank. Since 9. Comprises Algeria, Gabon, Libya, and Nigeria. December 1992, has included all parts of the former U.S.S.R. (except Russia), and Bosnia, 10. Before January 2001, included in "All other." Croatia, and Slovenia. 11. Excludes the Bank for International Settlements, which is included in "Other Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • July 2001 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 2001 11999988 22000000 Sept. Oct. Nov. Dec. Jan.r Feb. Mar.p 1 Total 875,891 944,937 1,102,595 1,025,751 1,102,595 2 Banks' claims 734,995 793,139 911,879 856,474 879,626 882,419 911,879 962,479 919,222 984,305 3 Foreign public borrowers 23,542 35,090 38,327 40,437 49,693 49,373 38,327 52,989 54,217 49,097 4 Own foreign offices2 484,535 529,682 630,105 592,647 603,873 610,839 630,105 647,918 610,823 667,358 5 Unaffiliated foreign banks 106,206 97,186 99,622 87,144 83,035 82,962 99,622 102,415 99,024 108,623 6 Deposits 27,230 34,538 23,886 23,765 23,598 23,756 23,886 23,851 26,657 23,575 7 Other 78,976 62,648 75,736 63,379 59,437 59,206 75,736 78,564 72,367 85,048 8 All other foreigners 120,712 131,181 143,825 136,246 143,025 139,245 143,825 159,157 155,158 159,227 9 Claims of banks' domestic customers3 140,896 151,798 190,716 169,277 190,716 10 Deposits 79,363 88,006 99,846 87,108 9999,,884466 11 Negotiable and readily transferable instruments4 47,914 51,161 78,147 70,334 7788,,114477 12 Outstanding collections and other claims 13,619 12,631 12,723 11,835 12,723 MEMO 13 Customer liability on acceptances 4,520 4,553 4,258 4,701 4,258 14 Banks' loans under resale agreements5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 117,222 117,148 132,110 15 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States6 39,978 31,125 53,153 57,784 53,848 55,899 53,153 59,893 70,964 67,204 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. for quarter ending with month indicated. 3. Assets held by reporting banks in the accounts of their domestic customers. Reporting banks include all types of depository institution as well as some brokers and 4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial dealers. paper. 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiar- 5. Data available beginning January 2001. ies consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 6. 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. principally of amounts due from the head office or parent foreign bank, and from foreign 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 2000 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999977 11999988 11999999 Mar. June Sept. Dec. 1 Total 276,550 250,418 267,082 256,536 268,904 263,383 281,208 By borrower 2 Maturity of one year or less 205,781 186,526 187,894 175,413 181,814 174,650 187,815 3 Foreign public borrowers 12,081 13,671 22,811 23,438 24,849 23,646 21,399 4 All other foreigners 193,700 172,855 165,083 151,975 156,965 151,004 166,416 5 Maturity of more than one year 70,769 63,892 79,188 81,123 87,090 88,733 93,393 6 Foreign public borrowers 8,499 9,839 12,013 12,850 15,900 16,238 16,258 7 All other foreigners 62,270 54,053 67,175 68,273 71,190 72,495 77,135 By area Maturity of one year or less 8 Europe 58,294 68,679 80,842 74,011 71,492 69,447 72,754 9 Canada 9,917 10,968 7,859 8,408 7,344 8,225 7,995 10 Latin America and Caribbean 97,207 81,766 69,498 62,912 66,096 65,881 77,282 11 Asia 33,964 18,007 21,802 23,003 29,091 23,791 22,755 12 Africa 2,211 1,835 1,122 957 1,520 1,594 1,168 13 Allother3 4,188 5,271 6,771 6,122 6,271 55,,771122 5,861 Maturity of more than one year 14 Europe 13,240 14,923 22,951 23,952 25,417 27,589 33,681 15 Canada 2,525 3,140 3,192 3,126 3,323 3,261 3,712 16 Latin America and Caribbean 42,049 33,442 39,051 39,714 42,291 41,168 41,870 17 Asia 10,235 10,018 11,257 11,612 12,550 13,132 10,154 18 Africa 1,236 1,232 1,065 965 924 895 891 19 All other3 1,484 1,137 1,672 1,754 2,585 2,688 3,085 1. Reporting banks include all types of depository institutions as well as some brokers and 2. Maturity is time remaining until maturity, dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A57 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 1999r 2000r 2001 AArreeaa oorr ccoouunnttrryy 11999977rr 11999988 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar.P 1 Total 721.8 1051.6 993.4 941.2 941.6 945.5 943.7 983.4 955.5 1034.9 1148.3 2 G-10 countries and Switzerland 242.8 217.7 220.4 234.7 219.4 243.4 272.7 313.7 280.9 306.4 337.1 3 Belgium and Luxembourg 11.0 10.7 15.6 16.2 15.7 14.3 14.2 13.8 13.0 14.3 15.3 4 France 15.4 18.4 21.6 20.7 20.0 29.0 27.3 32.6 29.1 29.9 30.1 Germany 28.6 30.9 34.7 32.1 37.4 38.7 37.3 31.5 37.7 45.2 45.2 6 15.5 11.5 17.8 16.4 15.0 18.1 20.0 20.5 18.6 21.3 20.3 7 Netherlands 6.2 7.8 10.7 13.3 11.7 12.3 17.1 16.1 17.6 18.7 18.9 8 Sweden 3.3 2.3 4.0 2.6 3.6 3.0 3.9 3.5 4.3 3.7 4.7 9 Switzerland 7.2 8.5 7.8 8.3 8.8 10.3 10.1 13.8 10.9 13.5 13.9 10 United Kingdom 113.4 85.4 67.7 85.5 63.5 79.3 101.9 138.2 112.9 119.8 145.4 11 Canada 13.7 16.8 15.9 17.1 17.9 16.3 17.5 18.3 18.7 16.9 15.4 12 Japan 28.6 25.4 24.6 22.6 25.7 22.1 23.5 25.4 18.1 23.1 28.0 13 Other industrialized countries 65.5 69.0 80.1 79.7 71.7 68.4 62.8 75.2 73.8 75.3 78.6 14 Austria 1.5 1.4 2.8 2.8 3.0 3.5 2.6 2.8 3.5 4.1 3.8 15 Denmark 2.4 2.2 3.4 2.9 2.1 2.6 1.5 1.2 1.8 1.9 3.1 16 Finland 1.3 1.4 1.5 .9 .9 .9 .8 1.2 2.8 1.5 1.4 17 Greece 5.1 5.9 6.5 5.9 6.6 6.0 5.7 6.8 6.4 8.3 4.1 18 Norway 3.6 3.2r 3.1 3.0 3.8 3.3 3.0 4.6 8.5 8.3 10.2 19 Portugal .9 1.4r 1.4 1.2 1.2 1.0 1.0 2.0 1.5 2.0 1.9 70 Spain 12.6 13.7r 15.7 16.6 15.1 12.1 11.3 12.2 10.5 10.6 12.6 21 Turkey 4.5 4.8r 5.2 4.9 4.7 4.8 5.1 5.6 5.6 6.0 5.2 22 Other Western Europe 8.3 10.41 10.2 10.3 9.2 6.8 8.4 8.0 8.4 6.7 7.4 73 South Africa 2.2 4.4r 4.8 4.7 4.0 3.8 4.9 4.6 4.2 3.7 4.1 24 Australia 23.1 20.3r 25.4 26.6 21.1 23.5 18.6 26.3 20.5 22.2 24.7 25 OPEC2 26.0 27.1r 26.2 26.2 30.1 31.4 28.9 32.3 31.8 29.6 28.2 7.6 Ecuador 1.3 1.3r 1.2 1.1 .9 .8 .7 .7 .6 .6 .6 77 Venezuela 2.5 3.2r 3.5 3.2 3.0 2.8 3.0 2.9 2.9 2.5 2.7 78 Indonesia 6.7 4.7r 4.5 5.0 4.4 4.2 3.9 4.1 4.4 4.6 4.4 79 Middle East countries 14.4 17.0r 16.7 16.5 21.4 23.1 21.1 24.0 22.7 21.1 20.1 30 African countries 1.2 1.0r .4 .5 .5 .5 .2 .7 1.2 .8 .5 31 Non-OPEC developing countries 139.2 143.4r 146.4 148.6 144.6 149.4 154.9 158.3 149.6 145.7 144.3 Latin America 3? Argentina 18.4 23.lr 24.4 22.8 22.8 23.2 22.4 21.6 21.4 21.4 20.8 33 Brazil 28.6 24.7r 24.2 25.2 23.5 27.7 28.1 28.3 28.6 28.8 29.4 34 Chile 8.7 8.3r 8.6 8.2 7.7 7.4 8.2 8.1 7.3 7.6 7.4 35 Colombia 3.4 3.2r 3.3 3.1 2.7 2.5 2.5 2.4 2.4 2.4 2.4 36 Mexico 17.4 18.9r 19.7 18.5 19.4 18.7 18.3 20.4 17.5 15.7 16.7 37 2.0 2.2r 2.2 2.1 1.8 1.7 1.9 2.1 2.1 2.0 2.0 38 Other 4.1 5.4r 5.3 5.5 5.5 5.9 6.6 6.9 6.4 6.5 8.6 Asia China 39 Mainland 3.2 3.0r 5.0 5.3 3.3 3.6 4.6 3.8 3.4 2.9 3.4 40 Taiwan 9.5 13.3r 11.8 12.6 12.3 12.0 12.6 12.6 12.8 10.8 11.1 41 India 4.9 5.5r 5.5 6.7 7.0 7.7 7.9 8.2 5.8 9.1 6.5 42 Israel .7 l.lr 1.1 2.0 1.0 1.8 3.3 1.5 1.1 2.7 2.2 43 Korea (South) 15.6 13.7r 13.7 15.3 16.0 15.2 17.3 21.1 20.8 15.1 19.0 44 Malaysia 5.1 5.6r 5.9 6.0 6.1 6.1 6.5 6.8 6.9 7.1 6.5 45 Philippines 5.7 5.1r 5.4 5.7 5.8 6.2 5.3 5.3 4.7 5.1 5.2 46 Thailand 5.4 4.7r 4.5 4.2 4.0 4.1 4.3 4.0 3.9 4.0 4.2 47 Other Asia 4.3 2.9r 3.0 2.8 2.9 2.9 2.6 2.5 2.3 2.4 2.2 Africa 48 Egypt .9 1.3r 1.4 1.4 1.3 1.4 1.4 1.3 1.1 1.1 1.2 49 Morocco .6 ,5r .5 .5 .5 .4 .3 .3 .4 .3 .3 50 Zaire .0 ,0r .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 .8 1.0r .9 1.0 1.0 1.0 .9 .9 .8 .7 .7 52 Eastern Europe 9.1 5.5r 6.8 5.7 5.4 5.2 6.3 9.4 9.0 10.1 9.5 53 Russia4 5.1 2.2r 2.0 2.1 2.0 1.6 1.7 1.5 1.4 1.0 1.5 54 Other 4.0 3.3r 4.8 3.7 3.4 3.6 4.7 7.9 7.6 9.1 8.0 55 Offshore banking centers 155.1 134.4r 114.4 107.5 122.5 114.5 42.0 47.2 53.4 61.8 57.9 56 Bahamas 24.2 35.4r 22.0 10.4 18.2 13.7 2.4 .5 9.3 13.5 7.0 57 Bermuda 9.8 4.6r 3.9 5.7 8.2 8.0 7.3 6.3 6.3 9.0 7.9 58 Cayman Islands and other British West Indies 43.4 12.8r 13.9 7.2 6.3 1.3 .0 5.1 5.9 14.6 14.3 59 Netherlands Antilles 14.6 2.6r 2.7 1.3 9.1 1.7 2.5 2.6 1.9 1.9 2.9 60 Panama5 3.1 3.9r 3.9 3.9 3.9 3.9 3.4 3.3 2.5 3.2 3.7 61 Lebanon .1 .r .1 .1 .2 .1 .1 .1 .1 .1 .1 62 Hong Kong, China 32.2 23.3r 22.8 22.0 22.4 21.0 22.2 20.7 20.6 18.8 21.7 63 Singapore 12.7 li.r 13.5 15.2 10.6 10.1 4.1 13.6 12.6 15.2 14.5 64 Other6 .1 ,2r .2 .1 .2 .1 .1 .1 .1 .2 .1 65 Miscellaneous and unallocated7 99.1 495.1 430.4 380.2 391.2 387.9 376.1 342.1 351.1 391.2 472.7 1. The banking offices covered by these data include U.S. offices and foreign branches of 2. Organization of Petroleum Exporting Countries, shown individually; other members of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include Arab Emirates); and Bahrain and Oman (not formally members of OPEC). large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 3. Excludes Liberia. Beginning March 1994 includes Namibia. institutions as well as some types of brokers and dealers. To eliminate duplication, the data 4. As of December 1992, excludes other republics of the former Soviet Union. are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign 5. Includes Canal Zone. branch of the same banking institution. 6. Foreign branch claims only. These data are on a gross claims basis and do not necessarily reflect the ultimate country 7. Includes New Zealand, Liberia, and international and regional organizations. risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks are available in the quarterly Country Exposure Lending Survey published by the Federal Financial Institutions Examination Council. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • July 2001 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1999 2000 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999977 11999988 11999999 Sept. Dec. Mar. June Sept. Dec. 1 Total 57,382 46,570 53,044 52,979 53,044 53,489 70,534 76,644 74,107 2 Payable in dollars 41,543 36,668 37,605 36,296 37,605 35,614 47,864 51,451 49,424 3 Payable in foreign currencies 15,839 9,902 15,415 16,683 15,415 17,875 22,670 25,193 24,683 By type 4 Financial liabilities 26,877 19,255 27,980 27,422 27,980 29,180 44,068 49,895 47,419 5 Payable in dollars 12,630 10,371 13,883 12,231 13,883 12,858 22,803 26,159 25,246 6 Payable in foreign currencies 14,247 8,884 14,097 15,191 14,097 16,322 21,265 23,736 22,173 7 Commercial liabilities 30,505 27,315 25,064 25,557 25,064 24,309 26,466 26,749 26,688 8 Trade payables 10,904 10,978 12,857 12,651 12,857 12,401 13,764 13,918 14,305 9 Advance receipts and other liabilities 19,601 16,337 12,207 12,906 12,207 11,908 12,702 12,831 12,383 10 Payable in dollars 28,913 26,297 23,722 24,065 23,722 22,756 25,061 25,292 24,178 11 Payable in foreign currencies 1,592 1,018 1,318 1,492 1,318 1,553 1,405 1,457 2,510 By area or country Financial liabilities 12 Europe 18,027 12,589 23,241 21,695 23,241 24,050 30,332 36,175 34,172 13 Belgium and Luxembourg 186 79 31 50 31 4 163 169 147 14 France 1,425 1,097 1,659 1,675 1,659 1,849 1,702 1,299 1,480 15 Germany 1,958 2,063 1,974 1,712 1,974 1,880 1,671 2,132 2,168 16 Netherlands 494 1,406 1,996 2,066 1,996 1,970 2,035 2,040 2,016 17 Switzerland 561 155 147 133 147 97 137 178 104 18 United Kingdom 11,667 5,980 16,521 15,096 16,521 16,579 21,463 28,601 26,362 19 Canada 2,374 693 284 344 284 313 714 249 411 20 Latin America and Caribbean 1,386 1,495 892 1,180 892 846 2,874 3,447 4,125 21 Bahamas 141 7 1 1 1 1 78 105 6 22 Bermuda 229 101 5 26 5 1 1,016 1,182 1,739 23 Brazil 143 152 126 122 126 128 146 132 148 24 British West Indies 604 957 492 786 492 489 463 501 406 25 Mexico 26 59 25 28 25 22 26 35 26 26 Venezuela 1 2 0 0 0 0 0 0 2 27 4,387 3,785 3,437 3,622 3,437 3,275 9,453 9,320 7,965 28 Japan 4,102 3,612 3,142 3,384 3,142 2,985 6,024 4,782 6,216 29 Middle Eastern oil-exporting countries' 27 0 4 3 4 4 5 7 11 30 Africa 60 28 28 31 28 28 33 48 52 31 Oil-exporting countries2 0 0 0 0 0 0 0 0 0 32 Allother3 643 665 98 550 98 668 662 656 694 Commercial liabilities 33 Europe 10,228 10,030 9,262 9,265 9,262 8,646 9,293 9,411 9,625 34 Belgium and Luxembourg 666 278 140 128 140 78 178 201 293 35 France 764 920 672 620 672 539 711 716 979 36 Germany 1,274 1,392 1,131 1,201 1,131 914 948 1,023 1,046 37 Netherlands 439 429 507 535 507 648 562 424 299 38 Switzerland 375 499 626 593 626 536 565 647 502 39 United Kingdom 4,086 3,697 3,071 3,175 3,071 2,661 2,982 2,951 2,845 40 Canada 1,175 1,390 1,775 1,753 1,775 2,024 2,053 1,889 1,932 41 Latin America and Caribbean 2,176 1,618 2,310 1,957 2,310 2,286 2,607 2,443 2,381 42 Bahamas 16 14 22 24 22 9 10 15 31 43 Bermuda 203 198 152 178 152 287 300 377 281 44 Brazil 220 152 145 120 145 115 119 167 114 45 British West Indies 12 10 48 39 48 23 22 19 76 46 Mexico 565 347 887 704 887 805 1,073 1,079 841 47 Venezuela 261 202 305 182 305 193 239 124 284 48 14,966 12,342 9,886 10,428 9,886 9,681 10,965 . 11,133 10,974 49 Japan 4,500 3,827 2,609 2,689 2,609 2,274 2,200 1,998 2,752 50 Middle Eastern oil-exporting countries' 3,111 2,852 2,551 2,618 2,551 2,308 3,489 3,706 2,831 51 Africa 874 794 950 959 950 943 950 1.220 940 52 Oil-exporting countries2 408 393 499 584 499 536 575 663 475 53 Other3 1,086 1,141 881 1,195 881 729 598 653 836 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 1999 2000 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999977 11999988 11999999 Sept. Dec. Mar. June Sept. Dec. 1 Total 68,128 77,462 76,669 67,566 76,669 84,266 80,725 94,803 90,951 2 Payable in dollars 62,173 72,171 69,170 60,456 69,170 74,331 72,294 82,872 81,176 3 Payable in foreign currencies 5,955 5,291 7,472 7,110 7,472 9,935 8,431 11,931 9,775 By type 4 Financial claims 36,959 46,260 40,231 33,877 40,231 47,798 44,303 58,303 53,031 5 Deposits 22,909 30,199 18,566 15,192 18,566 23,316 17,462 30,928 23,374 6 Payable in dollars 21,060 28,549 16,373 13,240 16,373 21,442 15,361 27,974 21,015 7 Payable in foreign currencies 1,849 1,650 2,193 1,952 2,193 1,874 2,101 2,954 2,359 8 Other financial claims 14,050 16,061 21,665 18,685 21,665 24,482 26,841 27,375 29,657 9 Payable in dollars 11,806 14,049 18,593 15,718 18,593 19,659 22,384 20,541 25,142 10 Payable in foreign currencies 2,244 2,012 3,072 2,967 3,072 4,823 4,457 6,834 4,515 11 Commercial claims 31,169 31,202 36,438 33,689 36,438 36,468 36,422 36,500 37,920 12 Trade receivables 27,536 27,202 32,629 29,397 32,629 31,443 31,277 31,530 33,458 13 Advance payments and other claims 3,633 4,000 3,809 4,292 3,809 5,025 5,145 4,970 4,462 14 Payable in dollars 29,307 29,573 34,204 31,498 34,204 33,230 34,549 34,357 35,019 15 Payable in foreign currencies 1,862 1,629 2,207 2,191 2,207 3,238 1,873 2,143 2,901 By area or country Financial claims 16 Europe 14,999 12,294 13,023 13,878 13,023 16,789 18,254 23,706 23,136 17 Belgium and Luxembourg 406 661 529 574 529 540 317 304 296 18 France 1,015 864 967 1,212 967 1,835 1,292 1,477 1,206 19 Germany 427 304 504 549 504 669 576 696 848 20 Netherlands 677 875 1,229 1,067 1,229 1,981 1,984 2,486 1,396 21 Switzerland 434 414 643 559 643 612 624 626 699 22 United Kingdom 10,337 7,766 7,561 8,157 7,561 9,044 11,668 16,191 15,900 23 Canada 3,313 2,503 2,553 3,172 2,553 3,175 5,799 7,517 4,576 24 Latin America and Caribbean 15,543 27,714 18,206 12,749 18,206 21,945 14,874 21,691 19,317 25 Bahamas 2,308 403 1,593 755 1,593 1,299 655 1,358 1,353 26 Bermuda 108 39 11 524 11 11 34 22 19 27 Brazil 1,313 835 1,476 1,265 1,476 1,646 1,666 1,568 1,827 28 British West Indies 10,462 24,388 12,099 7,263 12,099 15,814 7,751 15,722 12,596 29 Mexico 537 1,245 1,798 1,791 1,798 1,979 2,048 2,280 2,448 30 Venezuela 36 55 48 47 48 65 78 101 87 31 Asia 2,133 3,027 5,457 3,205 5,457 4,430 3,923 4,002 4,697 32 Japan 823 1,194 3,262 1,250 3,262 2,021 1,410 1,726 1,631 33 Middle Eastern oil-exporting countries' 11 9 23 5 23 29 42 85 80 34 Africa 319 159 286 251 286 232 320 284 411 35 Oil-exporting countries2 15 16 15 12 15 15 39 3 57 36 All other3 652 563 706 622 706 1,227 1,133 1,103 894 Commercial claims 37 Europe 12,120 13,246 16,389 14,367 16,389 16,118 15,928 16,486 15,938 38 Belgium and Luxembourg 328 238 316 289 316 271 425 393 452 39 France 1,796 2,171 2,236 2,375 2,236 2,520 2,692 2,921 3,095 40 Germany 1,614 1,822 1,960 1,944 1,960 2,034 1,906 2,159 1,982 41 Netherlands 597 467 1,429 617 1,429 1,337 1,242 1,310 1,729 42 Switzerland 554 483 610 714 610 611 563 684 763 43 United Kingdom 3,660 4,769 5,827 4,789 5,827 5,354 4,929 5,193 4,502 44 Canada 2,660 2,617 2,757 2,638 2,757 3,088 3,250 2,953 3,505 45 Latin America and Caribbean 5,750 6,296 5,959 5,879 5,959 5,899 5,792 5,788 5,842 46 Bahamas 27 24 20 29 20 15 48 75 37 47 Bermuda 244 536 390 549 390 404 381 387 376 48 Brazil 1,162 1,024 905 763 905 849 894 981 956 49 British West Indies 109 104 181 157 181 95 51 55 137 50 Mexico 1,392 1,545 1,678 1,613 1,678 1,529 1,565 1,612 1,507 51 Venezuela 576 401 439 365 439 435 466 379 326 52 8,713 7,192 9,165 8,579 9,165 9,101 9,173 8,986 9,636 53 Japan 1,976 1,681 2,074 1,823 2,074 2,082 1,882 2,074 2,791 54 Middle Eastern oil-exporting countries' 1,107 1,135 1,625 1,479 1,625 1,533 1,241 1,199 1,024 55 Africa 680 711 631 682 631 716 766 895 671 56 Oil-exporting countries" 119 165 171 221 171 82 160 392 179 57 Other3 1,246 1,140 1,537 1,544 1,537 1,546 1,513 1,392 2,328 1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 2. Comprises Algeria, Gabon, Libya, and Nigeria. Emirates (Trucial States). 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • July 2001 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 2001 2000 2001 Transaction, and area or country 1999 2000 J M a a n r . . - Sept. Oct. Nov. Dec. Jan. Feb. Mar.p U.S. corporate securities STOCKS 1 Foreign purchases 2,340,659 3,605,196 846,279 297,677 339,995 284,909 286,161 301,650 259,101 285,528 2 Foreign sales 2,233,137 3,430,306 804,602 289,118 323,659 275,855 275,034 277,706 249,423 277,473 3 Net purchases, or sales (—) 107,522 174,890 41,677 8,559 16,336 9,054 11,127 23,944 9,678 8,055 4 Foreign countries 107,578 174,903 41,542 8,603 16,338 9,068 11,145 23,906 9,707 7,929 5 Europe 98,060 164,656 34,025 10,014 14,040 7,485 10,779 12,329 13,713 7,983 6 France 3,813 5,727 3,153 -565 1,757 408 40 243 1,869 1,041 7 Germany 13,410 31,752 3,771 643 1,383 988 777 2,380 1,217 174 8 Netherlands 8,083 4,915 4,375 792 -135 323 1,691 2,206 1,379 790 9 Switzerland 5,650 11,960 2,082 780 488 -598 -684 70 775 1,237 10 United Kingdom 42,902 58,736 11,464 5,163 6,283 3,210 7,773 3,064 5,120 3,280 11 Channel Islands & Isle of Man1 n.a. n.a. -155 n.a. n.a. n.a. n.a. -13 -32 -110 12 Canada -335 5,956 4,422 -924 194 1,477 1,468 1,490 468 2,464 13 Latin America and Caribbean 5,187 -17,812 -2,998 -3,406 -4,400 -2,979 -2,759 5,445 -4,927 -3,516 14 Middle East2 -1,066 9,189 152 52 754 340 277 -554 264 442 15 Other Asia 4,445 12,494 6,604 2,707 5,840 3,310 1,451 5,565 355 684 16 Japan 5,723 2,070 842 2,467 2,640 662 1,615 1,002 -672 512 17 Africa 372 415 -217 -56 -27 80 -45 -362 52 93 18 Other countries 915 5 -446 216 -63 -645 -26 -7 -218 -221 19 Nonmonetary international and regional organizations -56 -11 135 -42 -2 -14 -18 38 -29 126 BONDS3 20 Foreign purchases 854,692 1,206,662 454,552 106,384 103,028 114,686 117,904 138,294 146,670 169,588 21 Foreign sales 602,100 871,418 344,014 76,225 71,686 77,596 90,143 111,327 108,792 123,895 22 Net purchases, or sales (—) 252,592 335,244 110,538 30,159 31,342 37,090 27,761 26,967 37,878 45,693 23 Foreign countries 252,994 335,348 110,377 30,161 31,356 37,224 27,759 27,065 37,837 45,475 24 Europe 140,674 179,706 64,192 17,058 16,965 16,522 16,560 17,397 20,882 25,913 25 France 1,870 2,216 2,327 -819 347 272 138 405 660 1,262 26 Germany 7,723 4,067 4,713 44 433 537 -78 2,450 1,352 911 27 Netherlands 2,446 1,130 1,252 -818 848 183 275 664 496 92 28 Switzerland 4,553 3,833 2,670 333 350 483 -89 321 782 1,567 29 United Kingdom 106,344 140,152 47,799 15,950 12,503 12,952 12,825 11,251 16,711 19,837 30 Channel Islands & Isle of Man1 n.a. n.a. 326 n.a. n.a. n.a. n.a. 107 118 101 31 Canada 6,043 13,287 1,718 811 897 1,179 414 376 1,031 311 32 Latin America and Caribbean 58,783 59,443 19,629 6,338 5,018 6,600 4,126 4,969 8,009 6,651 33 Middle East1 1,979 2,076 1,793 -702 -54 437 1,077 726 443 624 34 Other Asia 42,817 78,280 22,367 6,777 8,215 11,839 5,535 3,514 7,162 11,691 35 Japan 17,541 38,842 7,394 3,573 3,690 7,435 2,932 910 914 5,570 36 Africa 1,411 938 118 49 58 25 76 29 46 43 37 Other countries 1,287 1,618 560 -170 257 622 -29 54 264 242 38 Nonmonetary international and regional organizations -402 -70 162 -2 -14 -134 2 -97 41 218 Foreign securities 39 Stocks, net purchases, or sales ( —) 15,640 -9,297 -19,954 10,217 3,011 5,563 -3,195 -2,940 -2,491 -14,523 40 Foreign purchases 1,177,303 1,802,452 413,215 148,664 152,872 141,600 135,417 148,111 130,972 134,132 41 Foreign sales 1,161,663 1,811,749 433,169 138,447 149,861 136,037 138,612 151,051 133,463 148,655 42 Bonds, net purchases, or sales (-) -5,676 -3,878 350 265 -3,443 8,434 -1,175 -1,360 3,160 -1,450 43 Foreign purchases 798,267 959,408 342,930 92,179 98,519 94,938 83,721 120,666 104,820 117,444 44 Foreign sales 803,943 963,286 342,580 91,914 101,962 86,504 84,896 122,026 101,660 118,894 45 Net purchases, or sales (-), of stocks and bonds .... 9,964 -13,175 -19,604 10,482 -432 13,997 —4,370 —4,300 669 -15,973 46 Foreign countries 9,679 -13,311 -19,049 10,307 -599 13,758 -3,951 -4,011 630 -15,668 47 Europe 59,247 -23,609 -19,767 6,353 -3,879 7,373 -4,452 -4,878 -1,419 -13,470 48 Canada -999 -3,856 3,231 -1,122 1,813 574 -1,357 767 1,588 876 49 Latin America and Caribbean -4,726 -15,116 2,872 585 1,010 -521 -205 863 1,975 34 50 -42,961 25,975 -5,374 3,842 -73 5,742 1,872 -1,005 -1,148 -3,221 51 Japan -43,637 21,886 -5,665 2,063 -1,262 2,067 1,824 164 -1,963 -3,866 52 Africa 710 947 -60 48 14 -28 -4 -70 -15 25 53 Other countries -1,592 2,348 49 601 516 618 195 312 -351 88 54 Nonmonetary international and regional organizations 285 150 -555 179 167 239 -419 -289 39 -305 1. Before January 2001, these data were included in United Kingdom. 3. Includes state and local government securities and securities of U.S. government 2. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. Saudi Arabia, and United Arab Emirates (Trucial States). 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 2001 2000 2001 AArreeaa oorr ccoouunnttrryy 11999999 22000000 Jan.- Sept. Oct. Nov. Dec. Jan. Feb. Mar.p Mar. 1 Total estimated -9,953 -53,790 2,804 —8,516 -3,037 -14,106 -9,789 -9,064 7,011 4,857 2 Foreign countries -10,518 -53,329 3,300 -8,741 -3,222 -13,959 -9,904 -8,531 6,972 4,859 3 Europe -38,228 -50,704 15 -1,284 -3,707 -10,991 -6,850 -5,000 -337 5,352 4 Belgium2 -81 73 -517 -127 320 53 -96 164 -529 -152 Germany 2,285 -7,304 -2,817 -1,738 1,424 -2,185 -1,065 -873 -3,180 1,236 6 Luxembourg2 0 0 19 0 0 0 0 411 9 -401 7 Netherlands 2,122 2,140 -1,689 836 183 264 -1,622 -793 2,808 -3,704 8 Sweden 1,699 1,082 -1,814 214 -118 -104 328 218 -1,039 -993 9 Switzerland -1,761 -10,326 796 -959 -57 -301 64 755 161 -120 10 United Kingdom -20,232 -33,669 8,069 -1,865 -3,793 -6,035 -4,199 -2,695 937 9,827 11 Channel Islands and Isle of Man3 n.a. n.a. 56 n.a. n.a. n.a. n.a. -98 -68 222 1? Other Europe and former U.S.S.R -22,260 -2,700 -2,088 2,355 -1,666 -2,683 -260 -2,089 564 -563 13 Canada 7,348 -308 -2,793 1,417 160 -1,173 -1,492 -2,067 -554 -172 14 Latin America and Caribbean -7,523 -4,914 6,750 -4,979 3,963 -507 -245 2,407 3,620 723 15 Venezuela 362 1,288 377 314 152 251 300 227 292 -142 16 Other Latin America and Caribbean 1,661 -11,581 10,445 -4,936 3,030 -1,262 -1,746 3,261 4,279 2,905 17 Netherlands Antilles -9,546 5,379 -4,072 -357 781 504 1,201 -1,081 -951 -2,040 18 29,359 1,639 -295 -3,319 -4,688 -1,289 -458 -4,641 4,387 -41 19 Japan 20,102 10,580 -4,219 1,717 1,608 4,445 -3,855 -4,261 1,468 -1,426 20 Africa -3,021 -414 -115 -139 -6 -16 -44 -91 36 -60 21 Other 1,547 1,372 -262 -437 1,056 17 -815 861 -180 -943 22 Nonmonetary international and regional organizations 565 -461 -496 225 185 -147 115 -533 39 -2 23 International 190 -483 -480 391 39 -146 24 -275 -194 -11 24 Latin American Caribbean regional 666 76 7 1 28 -1 6 1 -4 10 MEMO 25 Foreign countries -10,518 -53,329 3,300 -8,741 -3,222 -13,959 -9,904 -8,531 6,972 4,859 76 Official institutions -9,861 -6,302 3,142 -6,626 -7,150 -4,967 1,068 2,226 667 249 27 Other foreign -657 -47,027 158 -2,115 3,928 -8,992 -10,972 -10,757 6,305 4,610 Oil-exporting countries 78 Middle East4 2,207 3,483 -2,135 -1,030 -724 -888 48 -176 -719 --11,,224400 29 0 0 -4 0 0 0 0 -6 0 2 1. Official and private transactions in marketable U.S. Treasury securities having an 3. Before January 2001, these data were included in United Kingdom. original maturity of more than one year. Data are based on monthly transactions reports. 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign Emirates (Trucial States). countries. 5. Comprises Algeria, Gabon, Libya, and Nigeria. 2. Before January 2001, combined data reported for Belgium and Luxembourg. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • July 2001 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 2001 IItteemm 11999988 11999999 22000000 Dec. Jan. Feb. Mar. Apr. May Exchange rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 62.91 64.54 58.15 54.66 55.52 53.38 50.31 50.16 51.99 2 Austria/schilling 12.379 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 3 Belgium/franc 36.31 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 4 1.1605 1.8207 1.8301 1.9632 1.9561 2.0060 2.0955 2.1934 2.2926 5 Canada/dollar 1.4836 1.4858 1.4855 1.5219 1.5032 1.5216 1.5587 1.5578 1.5411 6 China, P.R./yuan 8.3008 8.2783 8.2784 8.2771 8.2776 8.2771 8.2775 8.2771 8.2770 7 Denmark/krone 6.7030 6.9900 8.0953 8.3059 7.9629 8.1103 8.2229 8.3657 8.5256 8 European Monetary Union/euro3 n.a. 1.0653 0.9232 0.8983 0.9376 0.9205 0.9083 0.8925 0.8753 9 Finland/markka 5.3473 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 France/franc 5.8995 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11 Germany/deutsche mark 1.7597 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Greece/drachma 295.70 306.30 365.92 379.58 n.a. n.a. n.a. n.a. n.a. 13 Hong Kong/dollar 7.7467 7.7594 7.7924 7.7991 7.7998 7.7999 7.7999 7.7993 7.7999 14 India/rupee 41.36 43.13 45.00 46.78 46.61 46.56 46.65 46.79 46.95 15 Ireland/pound" 142.48 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 16 Italy/lira 1,736.85 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 17 Japan/yen 130.99 113.73 107.80 112.21 116.67 116.23 121.51 123.77 121.77 18 3.9254 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 19 Mexico/peso 9.152 9.553 9.459 9.467 9.769 9.711 9.599 9.328 9.148 20 Netherlands/guilder 1.9837 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. ?1 New Zealand/dollar2 53.61 52.94 45.68 42.97 44.42 43.45 41.82 40.69 42.18 22 Norway/krone 7.5521 7.8071 8.8131 9.0616 8.7817 8.9180 8.9859 9.0920 9.1380 23 Portugal/escudo 180.25 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. ?4 Singapore/dollar 1.6722 1.6951 1.7250 1.7361 1.7380 1.7435 1.7732 1.8118 1.8141 ?5 5.5417 6.1191 6.9468 7.6439 7.7786 7.8214 7.8980 8.0783 7.9789 206 1S outh Korea/won 1,400.40 1,189.84 1,130.90 1,216.94 1,272.63 1,252.85 1,291.41 1,327.76 1,298.90 149.41 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 65.006 70.868 76.964 82.030 85.833 87.136 85.730 88.205 90.848 ?9 Sweden/krona 7.9522 8.2740 9.1735 9.6604 9.4910 9.7518 10.0516 10.2035 10.3513 30 Switzerland/franc 1.4506 1.5045 1.6904 1.6855 1.6305 1.6686 1.6908 1.7131 1.7528 31 Taiwan/dollar 33.547 32.322 31.260 33.123 32.673 32.330 32.622 32.941 33.203 3? 41.262 37.887 40.210 43.246 43.149 42.665 43.988 45.494 45.525 33 United Kingdom/pound 165,73 161.72 151.56 146.29 147.75 145.25 144.45 143.48 142.65 34 Venezuela/bolivar 548.39 606.82 680.52 698.85 700.02 703.36 706.06 710.39 714.86 Indexes4 NOMINAL 35 Broad (January 1997= 100)5 116.48 116.87 119.93 123.28 123.14 123.77 125.91 126.97 126.77 36 Major currencies (March 1973= 100)6 95.79 94.07 98.34 101.26 100.24 101.44 103.98 105.09 105.03 37 Other important trading partners (January 1997= 100)7 126.03 129.94 130.26 133.61 135.01 134.52 135.56 136.30 113355..9922 REAL 38 Broad (March 1973= 100)5 99.2 LR 98.53r 102.19r 104.84 105.25r 105.97 107.82 108.68r 108.44 39 Major currencies (March 1973=100)6 97.23 96.66 102.85 106.13 105.89 107.29 109.90r 110.96r 110.71 40 Other important trading partners (March 1973 = 100)7 108.12r 107.25' 107.70r 109.66r 110.95r 110.83 111.80 111122..447711 111122..2211 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 4. Starting with the February 2001 Bulletin, revised index values resulting from the annual table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, revision of data that underlie the calculated trade weights are reported. For more information see inside front cover. on the indexes of foreign exchange value of the dollar, see Federal Reserve Bulletin, vol. 84 2. U.S. cents per currency unit. (October 1998), pp. 811-818. 3. The euro is reported in place of the individual euro area currencies. By convention, the 5. Weighted average of the foreign exchange value of the U.S. dollar against the currencies rate is reported in U.S. dollars per euro. The bilateral currency rates can be derived from the of a broad group of U.S. trading partners. The weight for each currency is computed as an euro rate by using the fixed conversion rates (in currencies per euro) as shown below: average of U.S. bilateral import shares from and export shares to the issuing country and of a measure of the importance to U.S. exporters of that country's trade in third country markets. 6. Weighted average of the foreign exchange value of the U.S. dollar against a subset of Euro equals broad index currencies that circulate widely outside the country of issue. The weight for each 13.7603 Austrian schillings 1936.27 Italian lire currency is its broad index weight scaled so that the weights of the subset of currencies in the 40.3399 Belgian francs 40.3399 Luxembourg francs index sum to one. 5.94573 Finnish markkas 2.20371 Netherlands guilders 7. Weighted average of the foreign exchange value of the U.S. dollar against a subset of 6.55957 French francs 200.482 Portuguese escudos broad index currencies that do not circulate widely outside the country of issue. The weight 1.95583 German marks 166.386 Spanish pesetas for each currency is its broad index weight scaled so that the weights of the subset of .787564 Irish pounds 340.750 Greek drachmas currencies in the index sum to one. 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 2001 A72 SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 2000 August 2000 A64 June 30, 2000 November 2000 A64 September 30, 2000 February 2001 A64 December 31, 2000 May 2001 A64 Terms of lending at commercial banks May 2000 August 2000 A66 August 2000 November 2000 A66 November 2000 February 2001 A66 February 2001 May 2001 A66 Assets and liabilities of U.S. branches and agencies of foreign banks March 31, 2000 August 2000 A72 June 30, 2000 November 2000 All September 30, 2000 February 2001 A72 December 31,2000 May 2001 A72 Pro forma balance sheet and income statements for priced service operations March 31, 2000 August 2000 A76 June 30, 2000 November 2000 A76 September 30, 2000 February 2001 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

64 Federal Reserve Bulletin • July 2001 Index to Statistical Tables References are to pages A3-A62, although the prefix "A" is omitted in this index. ACCEPTANCES, bankers (See Bankers acceptances) Federal finance Assets and liabilities (See also Foreigners) Debt subject to statutory limitation, and types and ownership Commercial banks, 15-21 of gross debt, 27 Domestic finance companies, 32, 33 Receipts and outlays, 25, 26 Federal Reserve Banks, 10 Treasury financing of surplus, or deficit, 25 Foreign-related institutions, 20 Treasury operating balance, 25 Automobiles Federal Financing Bank, 30 Consumer credit, 36 Federal funds, 23, 25 Production, 44, 45 Federal Home Loan Banks, 30 Federal Home Loan Mortgage Corporation, 30, 34, 35 Federal Housing Administration, 30, 34, 35 BANKERS acceptances, 5, 10, 22, 23 Federal Land Banks, 35 Bankers balances, 15-21. (See also Foreigners) Federal National Mortgage Association, 30, 34, 35 Bonds (See also U.S. government securities) Federal Reserve Banks New issues, 31 Condition statement, 10 Rates, 23 Discount rates (See Interest rates) Business activity, nonfinancial, 42 U.S. government securities held, 5, 10, 11, 27 Business loans (See Commercial and industrial loans) Federal Reserve credit, 5, 6, 10, 12 Federal Reserve notes, 10 Federally sponsored credit agencies, 30 CAPACITY utilization, 43 Finance companies Capital accounts Assets and liabilities, 32 Commercial banks, 15-21 Business credit, 33 Federal Reserve Banks, 10 Loans, 36 Certificates of deposit, 23 Paper, 22, 23 Commercial and industrial loans Float, 5 Commercial banks, 15-21 Flow of funds, 37-41 Weekly reporting banks, 17, 18 Foreign currency operations, 10 Commercial banks Foreign deposits in U.S. banks, 5 Assets and liabilities, 15-21 Foreign exchange rates, 62 Commercial and industrial loans, 15-21 Foreign-related institutions, 20 Consumer loans held, by type and terms, 36 Foreign trade, 51 Real estate mortgages held, by holder and property, 35 Foreigners Time and savings deposits, 4 Claims on, 52, 55-7, 59 Commercial paper, 22, 23, 32 Liabilities to, 51-4, 58, 60, 61 Condition statements (See Assets and liabilities) Construction, 42, 46 Consumer credit, 36 GOLD Consumer prices, 42 Certificate account, 10 Consumption expenditures, 48, 49 Stock, 5, 51 Corporations Government National Mortgage Association, 30, 34, 35 Profits and their distribution, 32 Gross domestic product, 48, 49 Security issues, 31, 61 Cost of living (See Consumer prices) Credit unions, 36 HOUSING, new and existing units, 46 Currency in circulation, 5, 13 Customer credit, stock market, 24 INCOME, personal and national, 42, 48, 49 Industrial production, 42, 44 DEBT (See specific types of debt or securities) Insurance companies, 27, 35 Demand deposits, 15-21 Interest rates Depository institutions Bonds, 23 Reserve requirements, 8 Reserves and related items, 4-6, 12 Consumer credit, 36 Deposits (See also specific types) Federal Reserve Banks, 7 Commercial banks, 4, 15-21 Money and capital markets, 23 Federal Reserve Banks, 5, 10 Mortgages, 34 Discount rates at Reserve Banks and at foreign central banks and Prime rate, 22 International capital transactions of United States, 50-61 foreign countries (See Interest rates) International organizations, 52, 53, 55, 58, 59 Discounts and advances by Reserve Banks (See Loans) Inventories, 48 Dividends, corporate, 32 Investment companies, issues and assets, 32 Investments (See also specific types) EMPLOYMENT, 42 Commercial banks, 4, 15-21 Euro, 62 Federal Reserve Banks, 10, 11 Financial institutions, 35 FARM mortgage loans, 35 Federal agency obligations, 5, 9-11, 28, 29 LABOR force, 42 Federal credit agencies, 30 Life insurance companies (See Insurance companies) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A65 Loans (See also specific types) Savings deposits (See Time and savings deposits) Commercial banks, 15-21 Savings institutions, 35, 36, 37—41 Federal Reserve Banks, 5-7, 10, 11 Securities (See also specific types) Financial institutions, 35 Federal and federally sponsored credit agencies, 30 Insured or guaranteed by United States, 34, 35 Foreign transactions, 60 New issues, 31 MANUFACTURING Prices, 24 Capacity utilization, 43 Special drawing rights, 5, 10, 50, 51 Production, 43, 45 State and local governments Margin requirements, 24 Holdings of U.S. government securities, 27 Member banks, reserve requirements, 8 New security issues, 31 Mining production, 45 Rates on securities, 23 Mobile homes shipped, 46 Stock market, selected statistics, 24 Monetary and credit aggregates, 4, 12 Stocks (See also Securities) Money and capital market rates, 23 New issues, 31 Money stock measures and components, 4, 13 Prices, 24 Mortgages (See Real estate loans) Mutual funds, 13, 32 Student Loan Marketing Association, 30 Mutual savings banks (See Thrift institutions) TAX receipts, federal, 26 NATIONAL defense outlays, 26 National income, 48 Thrift institutions, 4. (See also Credit unions and Savings institutions) OPEN market transactions, 9 Time and savings deposits, 4, 13, 15-21 Trade, foreign, 51 PERSONAL income, 49 Treasury cash, Treasury currency, 5 Prices Treasury deposits, 5, 10, 25 Treasury operating balance, 25 Consumer and producer, 42, 47 Stock market, 24 UNEMPLOYMENT, 42 Prime rate, 22 U.S. government balances Producer prices, 42, 47 Commercial bank holdings, 15-21 Production, 42, 44 Treasury deposits at Reserve Banks, 5, 10, 25 Profits, corporate, 32 U.S. government securities Bank holdings, 15-21, 27 REAL estate loans Dealer transactions, positions, and financing, 29 Banks, 15-21, 35 Federal Reserve Bank holdings, 5, 10, 11, 27 Terms, yields, and activity, 34 Foreign and international holdings and transactions, 10, 27, 61 Type and holder and property mortgaged, 35 Open market transactions, 9 Reserve requirements, 8 Outstanding, by type and holder, 27, 28 Reserves Rates, 23 Commercial banks, 15-21 U.S. international transactions, 50-62 Depository institutions, 4-6, 12 Utilities, production, 45 Federal Reserve Banks, 10 U.S. reserve assets, 51 VETERANS Administration, 34, 35 Residential mortgage loans, 34, 35 Retail credit and retail sales, 36, 42 WEEKLY reporting banks, 17, 18 Wholesale (producer) prices, 42, 47 SAVING Flow of funds, 37^11 National income accounts, 48 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

66 Federal Reserve Bulletin • July 2001 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 BANKING SUPERVISION AND REGULATION—Continued LYNN S. FOX, Assistant to the Board MICHELLE A. SMITH, Assistant to the Board SIDNEY M. SUSSAN, Adviser DONALD J. WINN, Assistant to the Board WILLIAM C. SCHNEIDER, JR., Project Director, DONALD L. KOHN, Adviser National Information Center WINTHROP P. HAMBLEY, Deputy Congressional Liaison JOHN LOPEZ, Special Assistant to the Board DIVISION OF INTERNATIONAL FINANCE BOB STAHLY MOORE, Special Assistant to the Board KAREN H. JOHNSON, Director ROSANNA PIANALTO-CAMERON, Special Assistant to the Board DAVID H. HOWARD, Deputy Director DAVID W. SKIDMORE, Special Assistant to the Board THOMAS A. CONNORS, Associate Director DIANE E. WERNEKE, Special Assistant to the Board DALE W. HENDERSON, Associate Director RICHARD T. FREEMAN, Assistant Director LEGAL DIVISION WILLIAM L. HELKIE, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel STEVEN B. KAMIN, Assistant Director SCOTT G. ALVAREZ, Associate General Counsel RALPH W. TRYON, Assistant Director RICHARD M. ASHTON, Associate General Counsel KATHLEEN M. O'DAY, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS STEPHANIE MARTIN, Assistant General Counsel ANN E. MISBACK, Assistant General Counsel DAVID J. STOCKTON, Director SANDRA L. RICHARDSON, Assistant General Counsel EDWARD C. ETTIN, Deputy Director STEPHEN L. SICILIANO, Assistant General Counsel DAVID WILCOX, Deputy Director KATHERINE H. WHEATLEY, Assistant General Counsel WILLIAM R. JONES, Associate Director CARY K. WILLIAMS, Assistant General Counsel MYRON L. KWAST, Associate Director STEPHEN D. OLINER, Associate Director OFFICE OF THE SECRETARY PATRICK M. PARKINSON, Associate Director LAWRENCE SLIFMAN, Associate Director JENNIFER J. JOHNSON, Secretary CHARLES S. STRUCKMEYER, Associate Director ROBERT DEV. FRIERSON, Associate Secretary MARTHA S. SCANLON, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary and Ombudsman JOYCE K. ZICKLER, Deputy Associate Director WAYNE S. PASSMORE, Assistant Director DIVISION OF BANKING SUPERVISION DAVID L. REIFSCHNEIDER, Assistant Director AND REGULATION JANICE SHACK-MARQUEZ, Assistant Director RICHARD SPILLENKOTHEN, Director ALICE PATRICIA WHITE, Assistant Director STEPHEN C. SCHEMERING, Deputy Director GLENN B. CANNER, Senior Adviser HERBERT A. BIERN, Senior Associate Director DAVID S. JONES, Senior Adviser ROGER T. COLE, Senior Associate Director THOMAS D. SIMPSON, Senior Adviser WILLIAM A. RYBACK, Senior Associate Director GERALD A. EDWARDS, JR., Associate Director DIVISION OF MONETARY AFFAIRS STEPHEN M. HOFFMAN, JR., Associate Director JAMES V. HOUPT, Associate Director VINCENT R. REINHART, Director JACK P. JENNINGS, Associate Director DAVID E. LINDSEY, Deputy Director MICHAEL G. MARTINSON, Associate Director BRIAN F. MADIGAN, Deputy Director MOLLY S. WASSOM, Associate Director RICHARD D. PORTER, Deputy Associate Director HOWARD A. AMER, Deputy Associate Director WILLIAM C. WHITESELL, Assistant Director NORAH M. BARGER, Deputy Associate Director NORMAND R. V. BERNARD, Special Assistant to the Board BETSY CROSS, Deputy Associate Director RICHARD A. SMALL, Deputy Associate Director DIVISION OF CONSUMER DEBORAH P. BAILEY, Assistant Director AND COMMUNITY AFFAIRS BARBARA J. BOUCHARD, Assistant Director DOLORES S. SMITH, Director ANGELA DESMOND, Assistant Director GLENN E. LONEY, Deputy Director JAMES A. EMBERSIT, Assistant Director SANDRA F. BRAUNSTEIN, Assistant Director CHARLES H. HOLM, Assistant Director MAUREEN P. ENGLISH, Assistant Director HEIDI WILLMANN RICHARDS, Assistant Director ADRIENNE D. HURT, Assistant Director WILLIAM G. SPANIEL, Assistant Director IRENE SHAWN MCNULTY, Assistant Director DAVID M. WRIGHT, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A67 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 TILLENA G. CLARK, Assistant Director STEPHEN J. CLARK, Associate Director, Finance Function JOSEPH H. HAYES, JR., Assistant Director DARRELL R. PAULEY, Associate Director, Human Resources JEFFREY C. MARQUARDT, Assistant Director Function EDGAR A. MARTINDALE, Assistant Director CHRISTINE M. FIELDS, Assistant Director, Human Resources MARSHA W. REIDHILL, Assistant Director Function JEFF J. STEHM, Assistant Director SHEILA CLARK, EEO Programs Director DIVISION OF SUPPORT SERVICES OFFICE OF THE INSPECTOR GENERAL BARRY R. SNYDER, Inspector General ROBERT E. FRAZIER, Director DAVID L. WILLIAMS, Associate Director DONALD L. ROBINSON, Deputy Inspector General GEORGE M. LOPEZ, Assistant Director DIVISION OF INFORMATION TECHNOLOGY RICHARD C. STEVENS, Director MARIANNE M. EMERSON, Deputy Director MAUREEN T. HANNAN, Associate Director RAYMOND H. MASSEY, Associate Director GEARY L. CUNNINGHAM, Assistant Director WAYNE A. EDMONDSON, Assistant Director Po KYUNG KIM, Assistant Director SUSAN F. MARYCZ, Assistant Director SHARON L. MOWRY, Assistant Director DAY W. RADEBAUGH, JR., Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

68 Federal Reserve Bulletin • July 2001 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman ROGER W. FERGUSON, JR. EDWARD W. KELLEY, JR. MICHAEL H. MOSKOW EDWARD M. GRAMLICH LAURENCE H. MEYER WILLIAM POOLE THOMAS M. HOENIG CATHY E. MINEHAN ALTERNATE MEMBERS JERRY L. JORDAN ANTHONY M. SANTOMERO JAMIE B. STEWART, JR. ROBERT D. MCTEER, JR. GARY H. STERN STAFF DONALD L. KOHN, Secretary and Economist JEFFREY C. FUHRER, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary CRAIG S. HAKKIO, Associate Economist LYNN S. FOX, Assistant Secretary DAVID H. HOWARD, Associate Economist GARY P. GILLUM, Assistant Secretary WILLIAM C. HUNTER, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel DAVID E. LINDSEY, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel ROBERT H. RASCHE, Associate Economist KAREN H. JOHNSON, Economist VINCENT R. REINHART, Associate Economist DAVID J. STOCKTON, Economist LAWRENCE SLIFMAN, Associate Economist CHRISTINE M. CUMMING, Associate Economist DAVID WILCOX, Associate Economist DINO KOS, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL DOUGLAS A. WARNER, III, President LAWRENCE K. FISH, Vice President LAWRENCE K. FISH, First District ALAN G. MCNALLY, 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 CAMDEN R. FINE, Tenth District L. M. BAKER, JR., Fifth District RICHARD W. EVANS, JR., Eleventh District L. PHILLIP HUMANN, Sixth District STEVEN L. SCHEID, Twelfth District JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 CONSUMER ADVISORY COUNCIL LAUREN ANDERSON, New Orleans, Louisiana, Chairman DOROTHY BROADMAN, San Francisco, California, Vice Chairman ANTHONY S. ABBATE, Saddlebrook, New Jersey ANNE S. LI, Trenton, New Jersey TERESA A. BRYCE, St. Louis, Missouri J. PATRICK LIDDY, Cincinnati, Ohio MALCOLM BUSH, Chicago, Illinois OSCAR MARQUIS, Park Ridge, Illinois MANUEL CASANOVA, JR., Brownsville, Texas JEREMY NOWAK, Philadelphia, Pennsylvania CONSTANCE K. CHAMBERLIN, Richmond, Virginia NANCY PIERCE, Kansas City, Missouri ROBERT M. CHEADLE, Oklahoma City, Oklahoma MARTA RAMOS, San Juan, Puerto Rico MARY ELLEN DOMEIER, New Ulm, Minnesota RONALD A. REITER, San Francisco, California LESTER W. FIRSTENBERGER, Evansville, Indiana ELIZABETH RENUART, Boston, Massachusetts JOHN C. GAMBOA, San Francisco, California RUSSELL W. SCHRADER, San Francisco, California EARL JAROLIMEK, Fargo, North Dakota FRANK TORRES, JR., Washington, District of Columbia WILLIE M. JONES, Boston, Massachusetts GARY S. WASHINGTON, Chicago, Illinois M. DEAN KEYES, Tucson, Arizona ROBERT L. WYNN II, Madison, Wisconsin THRIFT INSTITUTIONS ADVISORY COUNCIL THOMAS S. JOHNSON, New York, New York, President MARK H. WRIGHT, San Antonio, Texas, Vice President TOM R. DORETY, Tampa, Florida JAMES F. MCKENNA, Brookfield, Wisconsin RONALD S. ELIASON, Provo, Utah CHARLES C. PEARSON, JR., Harrisburg, Pennsylvania D. R. GRIMES, Alpharetta, Georgia HERBERT M. SANDLER, Oakland, California CORNELIUS D. MAHONEY, Westfield, Massachusetts EVERETT STILES, Franklin, North Carolina KAREN L. MCCORMICK, Port Angeles, Washington CLARENCE ZUGELTER, Kansas City, Missouri Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

70 Federal Reserve Bulletin • July 2001 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, 2001. 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. Welcome to the Federal Reserve FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated When Your Home is on the Line: What You Should Know monthly. (Requests must be prepaid.) About Home Equity Lines of Credit Consumer and Community Affairs Handbook. $75.00 per year. Keys to Vehicle Leasing (also available in Spanish) Monetary Policy and Reserve Requirements Handbook. $75.00 Looking for the Best Mortgage (also available in Spanish) per year. 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

A71 STAFF STUDIES: Only Summaries Printed in the 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- BULLETIN ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Studies and papers on economic and financial subjects that are of PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, by Stephen A. Rhoades. July 1994. 37 pp. general interest. Staff Studies 1-158, 161, 163, 165, 166, 168, and 169 are out of print, but photocopies of them are available. Staff 170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU- Studies 165-174 are available on line at www.federalreserve.gov/ LATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH IN SAVINGS ACT, by Gregory Elliehausen and Barbara R. pubs/staffstudies. Requests to obtain single copies of any paper or Lowrey. December 1997. 17 pp. to be added to the mailing list for the series may be sent to 171. THE COST OF BANK REGULATION: A REVIEW OF THE EVI- Publications Services. DENCE, by Gregory Elliehausen. April 1998. 35 pp. 172. USING SUBORDINATED DEBT AS AN INSTRUMENT OF MAR- 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- KET DISCIPLINE, by Study Group on Subordinated Notes ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and and Debentures, Federal Reserve System. December 1999. Donald Savage. February 1990. 12 pp. 69 pp. 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- 173. IMPROVING PUBLIC DISCLOSURE IN BANKING, by Study VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Group on Disclosure, Federal Reserve System. March 2000. Gregory E. Elliehausen and John D. Wolken. September 35 pp. 1990. 35 pp. 174. BANK MERGERS AND BANKING STRUCTURE IN THE UNITED 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- STATES, 1980-98, by Stephen Rhoades. August 2000. 33 pp. GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • July 2001 Maps of the Federal Reserve System EWYORK ADELPHIA LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts by num- of Puerto Rico and the U.S. Virgin Islands; the San Franber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Comletter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in February 1996. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 1-A 2-B 3-C 4-D 5-E Pittsburgh Baltimore MD N¥ • Cincinnati HlllLil.i NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H • N a s b ^e KY Birmingha w fcsville ^lemphis fcSfc/ ATLANTA CHICAGO ST. LOUIS 9-1 MET.: ' 1 \ MINNEAPOLIS 10-J 12-L ..- •• -*•' I'* Omsbaf m " s"at' Ok 4 I KANSAS CITY 11-K ;M $ B T K L ML M I ^ W I & MM Fity m San Anteftio MMM* DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Bulletin • July 2001 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 Charisse R. Lillie Anthony M. Santomero Glenn A. Schaeffer 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 Charles E. Bunch 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 James F. Goodmon Dan M. Bechter1 ATLANTA 30303 John F. Wieland Jack Guynn Paula Lovell Patrick K. Barron James M. McKee Birmingham 35283 Catherine Sloss Crenshaw Andre T. Anderson Jacksonville 32231 Julie K. Hilton Robert J. Slack Miami 33152 Mark T. Sodders James T. Curry III Nashville 37203 Whitney Johns Martin Melvyn K. Purcell1 New Orleans 70161 Ben Tom Roberts Robert J. Musso1 CHICAGO* 60690 Arthur C. Martinez Michael H. Moskow Robert J. Darnall Gordon R. G. Werkema Detroit 48231 Timothy D. Leuliette David R. Allardice1 ST. LOUIS 63166 Charles W. Mueller William Poole Walter L. Metcalfe, Jr. W. LeGrande Rives Little Rock 72203 Vick M. Crawley Robert A. Hopkins Louisville 40232 Roger Reynolds Thomas A. Boone Memphis 38101 Gregory M. Duckett Martha Perine Beard MINNEAPOLIS 55480 James J. Howard Gary H. Stern Ronald N. Zwieg James M. Lyon Helena 59601 Thomas O. Markle Samuel H. Gane KANSAS CITY 64198 Terrence P. Dunn Thomas M. Hoenig Jo Marie Dancik Richard K. Rasdall Denver 80217 Kathryn A. Paul Carl M. Gambs1 Oklahoma City 73125 Patricia B. Fennell Kelly J. Dubbert Omaha 68102 Gladys Styles Johnston Steven D. Evans DALLAS 75201 H. B. Zachry, Jr. Robert D. McTeer, Jr. Patricia M. Patterson 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 Nelson C. Rising Robert T. Parry George M. Scalise John F. Moore Los Angeles 90051 William D. Jones Mark L. Mullinix2 Portland 97208 Nancy Wilgenbusch Raymond H. Laurence1 Salt Lake City 84125 H. Roger Boyer Andrea P. Wolcott Seattle 98124 Richard R. Sonstelie David K.Webb1 * 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

A75 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, G, M, P, Z, AA, BB, and of Governors of the Federal Reserve System, Washing- DD, and 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

76 Federal Reserve Bulletin • July 2001 Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce's economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z.l Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis