Federal Reserve Bulletin, 2003-03

Volume 89 • Number 3 • March 2003 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

PUBLICATIONS COMMITTEE Lynn S. Fox, Chair • Jennifer J. Johnson • Karen H. Johnson • Stephen R. Malphrus • J. Virgil Mattingly, Jr. • Vincent R. Reinhart • Dolores S. Smith • Richard Spillenkothen • 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 Publications Department under the direction of Lucretia M. Boyer. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 93 MONETARY POLICY REPORT TO THE Interagency guidance on identifying informa- CONGRESS tion security risks. The economy of the United States has suffered a Testing reveals no anthrax on Board mail series of blows in the past few years, including sample. the fall in equity market values that began in Release of minutes of discount rate meetings. 2000, cutbacks in capital spending in 2001, the horrific terrorist attacks of September 11, the Enforcement actions. emergence of disturbing evidence of corporate Board staff changes. malfeasance, and an escalation of geopolitical risks. Despite these adversities, the nation's New booklet available on identity theft. economy emerged from its downturn in 2001 to Publication of the December 2002 update to the post moderate economic growth last year. The Bank Holding Company Supervision Manual. recovery was supported by accommodative monetary and fiscal policies and undergirded by Discontinuance of statistical table 3.21. unusually rapid productivity growth that boosted Revision to the money stock data. household incomes and held down business costs. The productivity performance was also associated with a rapid expansion of the econo- 136 LEGAL DEVELOPMENTS my's potential, and economic slack increased Various bank holding company, bank service over the year despite the growth in aggregate corporation, and bank merger orders; and penddemand. ing cases. On net, the economy remained sluggish at the end of 2002 and early this year. Mindful of the A1 FINANCIAL AND BUSINESS STATISTICS especially high degree of uncertainty attending These tables reflect data available as of the economic outlook in the current geopolitical January 29, 2003. environment, the members of the FOMC believe the most likely outcome to be that fundamentals will support a strengthening of economic A3 GUIDE TO TABLES growth, and inflation pressures are anticipated to A4 Domestic Financial Statistics remain well contained. A42 Domestic Nonfinancial Statistics A44 International Statistics 125 ANNOUNCEMENTS A57 GUIDE TO SPECIAL TABLES AND Federal Open Market Committee directive. STATISTICAL RELEASES Statement by Chairman Greenspan on the retirement of William J. McDonough, president of the A58 INDEX TO STATISTICAL TABLES Federal Reserve Bank of New York. Adoption of final rule implementing Sarbanes- A60 BOARD OF GOVERNORS AND STAFF Oxley Act. A62 FEDERAL OPEN MARKET COMMITTEE AND Revision and interpretation of Regulation K. STAFF; ADVISORY COUNCILS Reauthorization of the National Flood Insurance Program. A64 FEDERAL RESERVE BOARD PUBLICATIONS Changes to increase efficiency in Federal A66 MAPS OF THE FEDERAL RESERVE SYSTEM Reserve Bank check services. Interagency guidance on credit card account A68 FEDERAL RESERVE BANKS, BRANCHES, management and loss allowance practices. AND OFFICES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on February 11, shifted from an assessment that the risks over the 2003, pursuant to section 2B of the Federal Reserve foreseeable future to its goals of maximum sustain- Act able growth and price stability were tilted toward economic weakness to an assessment that the risks were balanced. MONETARY POLICY AND THE Around midyear, the economy began to struggle ECONOMIC OUTLOOK again. Concerns about corporate governance came to weigh heavily on investors' confidence, and geo- The economy of the United States has suffered a political tensions, especially the situation in Iraq, series of blows in the past few years, including the elevated uncertainties about the future economic clifall in equity market values that began in 2000, mate. Equity prices fell during the summer, liquidity cutbacks in capital spending in 2001, the horrific eroded in corporate debt markets, and risk spreads terrorist attacks of September 11, the emergence of widened. Businesses once again became hesitant disturbing evidence of corporate malfeasance, and an to spend and to hire, and both manufacturing output escalation of geopolitical risks. Despite these adversi- and private payrolls began to decline. State and local ties, the nation's economy emerged from its down- governments struggled to cope with deteriorating turn in 2001 to post moderate economic growth last fiscal positions, and the economies of some of our year. The recovery was supported by accommodative major trading partners remained weak. Although the monetary and fiscal policies and undergirded by already accommodative stance of monetary policy unusually rapid productivity growth that boosted and strong upward trend of productivity were providhousehold incomes and held down business costs. ing important support to spending, the Committee The productivity performance was also associated perceived a risk that the near-term weakening could with a rapid expansion of the economy's potential, become entrenched. In August, the FOMC adjusted and economic slack increased over the year despite its weighting of risks toward economic weakness, the growth in aggregate demand. and in November, it reduced the targeted federal funds rate 50 basis points, to 1 lA percent. The policy After turning up in late 2001, activity began to easing allowed the Committee to return to an assessstrengthen more noticeably early last year. Sharp ment that the risks to its goals were balanced. With inventory cutbacks in 2001 had brought stocks into inflation expectations well contained, this additional better alignment with gradually rising final sales, and monetary stimulus seemed to offer worthwhile insurfirms began to increase production in the first quarter ance against the threat of persistent economic weakof 2002 to curtail further inventory runoffs. Moreness and substantial declines in inflation from already over, businesses slowed their contraction of investlow levels. ment spending and began to increase outlays for some types of capital equipment. Household spend- On net, the economy remained sluggish at the end ing on both personal consumption items and housing of 2002 and early this year. The household sector remained solid and was supported by another install- continued to be a solid source of demand. Motor ment of tax reductions, widespread price discounting, vehicle sales surged at year-end on the tide of another and low mortgage interest rates. By midyear, the cut- round of aggressive discounting by the manufacturbacks in employment came to an end, and private ers, other consumer outlays trended higher, and activpayrolls started to edge higher. ity in housing markets remained exceptionally strong. Although economic performance appeared to be Concerns about corporate governance appeared to gradually improving, the tentative nature of this recede somewhat late last year, in part because no improvement warranted the continuation of a highly new revelations of major wrongdoing had emerged. accommodative stance of monetary policy. Accord- However, the ongoing situation in Iraq, civil strife in ingly, the Federal Open Market Committee (FOMC) Venezuela that has curtailed oil production, and tenheld the federal funds rate at PA percent through the sions on the Korean peninsula have sustained invesfirst part of the year. In March, however, the FOMC tors' uncertainty about economic prospects and have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

94 Federal Reserve Bulletin • March 2003 pushed prices higher on world oil markets. Faced for the federal funds rate at 13A percent. A sharply with this uncertainty, businesses have been cautious reduced pace of inventory liquidation accounted for a in spending and changed payrolls little, on net, over significant portion of the step-up in real GDP growth, December and January. but other indicators also suggested that the economy Mindful of the especially high degree of uncer- was gaining momentum. Reductions in business outtainty attending the economic outlook in the current lays on equipment and software had moderated siggeopolitical environment, the members of the FOMC nificantly after dropping precipitously in 2001, and believe the most likely outcome to be that fundamen- consumer spending was well maintained by sizable tals will support a strengthening of economic growth. gains in real disposable personal income. Residential Business caution is anticipated to give way over the construction activity was spurred by low home mortcourse of the year to clearer signs of improving sales. gage interest rates. The improvement in economic Inventories are lean relative to sales at present, and conditions sparked a rally in equity markets late in restocking is likely to provide an additional impetus the first quarter and pushed up yields on longer-term to production in the period ahead. The rapid expan- Treasury instruments and investment-grade corporate sion of productivity, the waning effects of earlier bonds; yields on speculative-grade bonds declined declines in household wealth, and the highly accom- in reaction to brighter economic prospects and the modative stance of monetary policy should also con- perceived reduction in credit risk. Meanwhile, surgtinue to boost activity. Although state and local gov- ing energy prices exerted upward pressure on overall ernments face budgetary problems, their restraint is inflation, but still-appreciable slack in resource utililikely to offset only a part of the stimulus from past zation and a strong upward trend in private-sector and prospective fiscal policy actions at the federal productivity were holding down core price inflation. level. In addition, the strengthening economies of our At both its March and May meetings, the FOMC major trading partners along with the improving com- noted that the apparent vigor of the economy was petitiveness of U.S. products ought to support demand importantly attributable to a slowdown in the pace of for our exports. Taken together, these factors are inventory liquidation and that considerable uncerexpected to lead to a faster pace of economic expan- tainty surrounded the outlook for final sales over the sion, while inflation pressures are anticipated to next several quarters. The Committee was especially remain well contained. concerned about prospects for a rebound in business fixed investment, which it viewed as key to ensuring sustainable economic expansion. Although Monetary Policy, Financial Markets, and the decline in investment spending during the first the Economy over 2002 and Early 2003 quarter of 2002 was the smallest in a year, gloomy business sentiment and large margins of excess As economic growth picked up during the early capacity in numerous industries were likely to hammonths of 2002, the FOMC maintained its target per capital expenditures. According to anecdotal Selected interest rates Percent 2001 2002 2003 NOTE. The data are daily and extend through February 5, 2003. The dates the main credit program offered at the discount window by terminating the on the horizontal axis are those of scheduled FOMC meetings and of any adjustment credit program and beginning the primary credit program, intermeeting policy actions. On January 9, 2003, the Federal Reserve changed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 95 reports, many firms were unwilling to expand capac- the recovery was gaining traction and the possibility ity until they saw more conclusive evidence of grow- that more news of corporate misdeeds would suring sales and profits. At the same time, however, the face in the run-up to the Securities and Exchange FOMC noted that, with the federal funds rate unusu- Commission's August 14 deadline for the certificaally low on an inflation-adjusted basis and consider- tion of financial statements by corporate executives. able fiscal stimulus in train, macroeconomic policies Although the cumulative losses in financial wealth would provide strong support to further economic since 2000 were restraining expenditures by houseexpansion. Against this backdrop, the Committee at holds, very low mortgage interest rates were helping the March 19 meeting judged the accommodative to sustain robust demand for housing. Moreover, the stance of monetary policy to be appropriate and financial resources made available by a rapid pace announced that it considered the risks to achieving its of mortgage refinancing activity, in combination with long-run objectives as being balanced over the fore- attractive incentives offered by auto manufacturers, seeable future, judgments it retained at its meeting in supported other consumer spending. The Committee early May. continued to judge the prevailing degree of mone- The information reviewed at the June 25-26 tary accommodation as appropriate to foster a solid FOMC meeting confirmed that the economy was expansion that would bring the economy to fuller expanding but at a slower pace than earlier in the resource utilization. At the same time, the Commityear. As expected, the degree of impetus to economic tee recognized the considerable risks to that outlook activity from decelerating inventory liquidation had and the potential adverse consequences for economic moderated. Residential investment and consumer prospects from possible additional deterioration of spending also had slowed appreciably after surging financial conditions. The members noted, however, earlier in the year. The most recent data on orders that a further easing of monetary policy, if it came to and shipments suggested a small upturn in business be viewed as appropriate, could be accomplished in spending on equipment and software, but the a timely manner. In light of these considerations, the improvement in capital spending appeared to be lim- FOMC opted to retain a target rate of l3A percent for ited, unevenly distributed across industries, and not the federal funds rate, but it viewed the risks to the yet firmly indicative of sustained advance. Industrial economy as having shifted from balanced to being production continued to increase, and the unemploy- tilted toward economic weakness. ment rate declined somewhat. When the FOMC met on September 24, data indi- In financial markets, investors and lenders had cated that economic growth had picked up in the third apparently become more risk averse in reaction to the quarter, on average, buoyed in part by a surge in mixed tone of economic data releases, growing geo- motor vehicle production. The uneventful passing of political tensions, further warnings about terrorist the mid-August deadline for recertification of corpoattacks, and additional revelations of dubious corpo- rate financial statements briefly alleviated investors' rate accounting practices. In concert, these develop- skittishness in debt and equity markets. However, the ments pushed down yields on longer-term Treasury most timely information suggested that some softensecurities, while interest rates on lower-quality corpo- ing in economic activity had occurred late in the rate bonds rose notably, and equity prices dropped summer. Those economic reports, along with a darker sharply. Although the economy continued to expand outlook for corporate profits and escalating fears of a and the prospects for accelerating aggregate demand possible war against Iraq, led market participants to remained favorable, downbeat business sentiment and revise down their expectations for the economy. skittish financial markets rendered the timing and Equity prices and yields on both longer-term Treaextent of the expected strengthening of the expan- sury and private securities moved sharply lower in sion subject to considerable uncertainty. In these cir- early autumn. In the Committee's view, heightened cumstances, the FOMC left the federal funds rate geopolitical tensions constituted a significant addiunchanged to keep monetary policy very accommo- tional source of uncertainty clouding the economic dative and once again assessed the risks to the out- outlook. Still, fundamentals suggested reasonable look as being balanced. prospects for continued expansion. Accordingly, the FOMC left the federal funds rate unchanged at the By the time of the August 13 FOMC meeting, it close of the September meeting but also reiterated its had become apparent that economic activity had lost view that the risks to the outlook were weighted some of its earlier momentum. Turbulence in finantoward economic weakness. cial markets appeared to be holding back the pace of the economic expansion. Market participants focused The information reviewed at the November 6 meettheir attention on the lack of convincing evidence that ing indicated a more persistent spell of below-par Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

96 Federal Reserve Bulletin • March 2003 economic performance than the FOMC had antici- had grown only slowly in the fourth quarter of last pated earlier. With home mortgage rates at very low year, but little evidence of cumulating weakness levels, residential construction activity remained appeared in the most recent data, and final demand high. But consumer spending had decelerated notice- had held up reasonably well. The escalation of global ably since midsummer under the combined weight tensions weighed heavily on business and investor of stagnant employment and declining household sentiment. Firms apparently were remaining very wealth resulting from further decreases in equity cautious in their hiring and capital spending, and prices. Worries about the potential for war against equity prices had declined on balance since the Iraq, as well as persistent concerns about the course December meeting. But yield spreads on corporate of economic activity and corporate earnings, were debt—especially for riskier credits—narrowed further, apparently engendering a high degree of risk aversion and longer-term Treasury yields declined slightly. among business executives that was constraining Although the fundamentals still pointed to favorable capital spending and hiring. Despite a weakening in prospects for economic growth beyond the near term, the exchange value of the dollar, sluggish economic geopolitical developments were making it especially growth among major trading partners spelled difficul- difficult to gauge the underlying strength of the econties for U.S. exports, and a rebound in foreign output omy, and uncertainties about the economic outlook remained substantial. Against this background, the seemed more likely to follow than to lead a rebound Committee decided to leave the federal funds rate at home. Moreover, economic slack that was larger unchanged and stated that it continued to judge the and more persistent than previously anticipated ran risks to the outlook as balanced. the risk of reducing core inflation appreciably further from already low levels. Given these considerations, the Committee lowered its target for the federal funds rate Vi percentage point, to VA percent. The rela- Economic Projections for 2003 tively aggressive adjustment in the stance of monetary policy was deemed to offset the potential for An unusual degree of uncertainty attends the ecogreater economic weakness, and the Committee nomic outlook at present, in large measure, but not accordingly announced that it judged risks to the exclusively, because of potential geopolitical develoutlook as balanced with respect to its long-run goals opments. But Federal Reserve policymakers believe of price stability and sustainable economic growth. the most probable outcome for this year to be a When the FOMC met on December 10, overall pickup in the pace of economic expansion. The cenconditions in financial markets had calmed consider- tral tendency of the real GDP forecasts made by the ably. Indicators of production and spending, however, members of the Board of Governors and the Federal remained mixed. The manufacturing sector registered Reserve Bank presidents is 3 lA percent to 3!/2 perlarge job losses in the autumn, and industrial pro- cent, measured as the change between the final quarduction continued its slide, which had begun around ter of 2002 and the final quarter of this year. The full midyear. A more vigorous rebound in business fixed range of these forecasts is 3 percent to 33A percent. investment was not evident, and indeed the recent Of course, neither the central tendency nor the range is intended to convey the uncertainties surrounding data on orders and shipments and anecdotal reports from business contacts generally signaled continued softness in capital spending. Very low home mort- Economic projections for 2003 gage interest rates were supporting residential con- Percent struction activity, but consumption expenditures were sluggish. On balance, the Committee's view was Federal Reserve Governors and that in the absence of major shocks to consumer and MMeemmoo:: Reserve Bank presidents Indicator 22000022 aaccttuuaall business confidence, a gradual strengthening of the Central Range economic expansion was likely over the coming quar- tendency ters, especially given the very accommodative stance t,nange, jounn quarter of monetary policy and probable further fiscal stimu- to fourth quarter1 Nominal GDP 4.1 41/2-5'/2 43/4-5 lus. The FOMC left the federal funds rate unchanged R PC ea E l c G h D ai P n -type price index 2 1 . . 8 9 V 3 A -3 - % P A V 3 A '/ -4V -3 A '/2 and indicated that it continued to view the risks to the Average level, fourth quarter outlook as balanced over the foreseeable future. Civilian unemployment rate . 5.9 53/4-6 53/4-6 By the time of the FOMC meeting on January 28- 1. Change from average for fourth quarter of previous year to average for 29, 2003, it had become apparent that the economy fourth quarter of year indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 97 the individual forecasts of the members. The civilian ECONOMIC AND FINANCIAL DEVELOPMENTS unemployment rate is expected to end the year in the IN 2002 AND EARLY 2003 53A percent to 6 percent range. Apart from the geopolitical and other uncertain- In 2002, the United States economy extended the ties, the forces affecting demand this year appear, upturn in activity that began in late 2001. Real GDP on balance, conducive to a strengthening of the eco- increased 23A percent over the four quarters of last nomic expansion. Monetary policy remains highly year, according to the advance estimate from the accommodative, and federal fiscal policy is and likely Commerce Department. However, the pace of activwill be stimulative. However, spending by many state ity was uneven over the course of the year, as conand local governments will continue to be restrained cerns about emerging economic and political develby considerable budget difficulties. Activity abroad is opments at times weighed heavily on an economy expected to improve this year, even if at a less robust already adjusting to a succession of shocks from pace than in the United States; such growth together previous years. with the improving competitiveness of U.S. products Economic conditions improved through the first should generate stronger demand for our exports. part of the year. Household spending on both per- Furthermore, robust gains in productivity, though sonal consumption items and housing remained solid, unlikely to be as large as in 2002, ought to continue businesses curtailed their inventory liquidation and to promote both household and business spending. began to increase their outlays for some types of Household purchasing power should be supported as capital equipment, and private employment started to well by a retreat in the price of imported energy edge higher. But the forward momentum diminished products that is suggested by the oil futures market. noticeably later in the year when concerns about And the adverse effects on household spending from corporate governance put a damper on financial marpast declines in equity wealth probably will begin to kets and geopolitical developments boosted oil prices wane. and added to the uncertainty already faced by busi- A reduction of businesses' hesitancy to expand nesses about the economic outlook. In the summer, investment and hiring is critical to the durability of equity prices fell, risk spreads widened, and liquidity the expansion, and such a reduction should occur eroded in corporate debt markets. Businesses' caugradually if geopolitical risks ease and profitability tion was reflected in their reluctance to substantially improves. Inventories are relatively lean, and some boost investment, restock inventories, or add to payrestocking ought to help boost production this year, rolls. Responding to these developments, as well as albeit to a much smaller extent than did last year's some weakening in demand from abroad, manufaccessation of sharp inventory liquidations. In addition, turers trimmed production during the fall. Employthe continued growth of final sales, the tax law provi- ment at private businesses declined again, and the sion for partial expensing of equipment purchases, unemployment rate rose to 6 percent in December. replacement demand, and a more hospitable financial environment should induce many firms to increase their capital spending. The growth of investment Change in real GDP likely will be tempered, however, by the persistence of excess capital in some areas, notably the telecom- Percent, annual rate munications sector, and reductions in business spending on many types of new structures may continue this year. Federal Reserve policymakers believe that con- 4 sumer prices will increase less this year than in 2002, especially if energy prices partly reverse last year's sharp rise. In addition, resource utilization likely will remain sufficiently slack to exert further downward -^j pressure on underlying inflation. The central ten- 0 dency of FOMC members' projections for increases in the chain-type price index for personal consump- I L I I I I I I I 1 tion expenditures (PCE) is 1 lA percent to 1xh percent 1996 1998 2000 2002 this year, lower than the actual increase of about NOTE. Here and in subsequent charts, except as noted, annual changes are 2 percent in 2002. measured from Q4 to Q4, and change for a half-year is measured between its final quarter and the final quarter of the preceding period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

98 Federal Reserve Bulletin • March 2003 Change in PCE chain-type price index Change in real income and consumption Percent, annual rate Percent, annual rate • Total Q Disposable personal income | Excluding food and energy | Personal consumption expenditures 10 ilk: i i i i 1996 1998 2000 2002 1996 1998 2000 2002 NOTE. The data are for personal consumption expenditures (PCE). near the 23/4 percent increase in 2001 and down from However, despite the modest pace of last year's over- the more than 4 percent average growth over the all recovery, output per hour in the nonfarm business preceding several years. Sales of new motor vehicles sector grew 33A percent over the year—an extraor- fell only a little from the extremely high levels of late dinary increase even by the standards of the past half 2001; outlays were especially strong during the sumdecade or so. mer and late in the year, when manufacturers were Signals on the trajectory of the economy as we offering aggressive price and financing incentives. enter 2003 remain mixed. Some of the factors that Growth of spending on other durable goods was well had noticeably restrained the growth of real GDP maintained last year as well, although the gains were in the fourth quarter of last year—most especially a smaller than is often seen early in an economic sharp decline in motor vehicle production—are not recovery; in contrast to the situation in many previon track to be repeated. Moreover, employment lev- ous cycles, spending on durable goods did not decline eled off on average in December and January, and sharply during the recession and so had less cause to readings on industrial production have had a some- rebound as the recovery got under way. Apart from what firmer tone of late. Nevertheless, the few data in outlays on durable goods, spending for most catehand suggest that the economy has not yet broken out gories of consumer goods and services increased at a of the pattern of subpar performance experienced moderate rate last year. over the past year. That moderate rate of aggregate consumption Consumer price inflation moved up a bit last year, growth was the product of various crosscurrents. On reflecting sharply higher energy prices. Excluding the positive side, real disposable personal income the prices of food and energy items, the price index rose nearly 6 percent last year, the fastest increase in for personal consumption expenditures increased many years. Strong productivity growth partially offl3/4 percent, about lA percentage point less than in set the effects of stagnant employment in restricting 2001; this deceleration most likely resulted from the growth of household income, and the phase-in of continued slack in labor and product markets, robust additional tax reductions from the Economic Growth gains in productivity, and somewhat lower expecta- and Tax Relief Reconciliation Act of 2001 boosted tions of future inflation. household purchasing power appreciably. In addition, high levels of mortgage refinancing allowed homeowners to reduce their monthly payments, pay down more costly consumer credit, and, in many cases, The Household Sector extract equity that could be used to support other spending. On the negative side, household wealth Consumer Spending again moved lower last year, as continued reductions in equity values outweighed further appreciation of Consumer spending grew at a moderate pace last year house prices. By the end of the third quarter, accordand, on the whole, continued to be an important ing to the Federal Reserve's flow-of-funds accounts, source of support for overall demand. Personal conthe ratio of household net worth to disposable income sumption expenditures rose 2Vi percent in real terms, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 99 Consumer sentiment ing to both the Michigan Survey Research Center (SRC) and Conference Board surveys. However, con- 1966= 100 fidence retreated over the summer along with the drop in equity prices, and by early this year, consumer confidence again stood close to the levels of late 2001. These levels of consumer confidence, though at the bottom of readings of the past several years, are nevertheless above levels normally associated with recession. The personal saving rate, which has trended notably lower since the early 1980s, moved above 4 percent by late last year after having averaged 2 lA percent in 2001. The saving rate has been buffeted during the past two years by surges in income 1982 1986 1990 1994 1998 2002 induced by tax cuts and by spikes in spending associ- SOURCE. University of Michigan Survey Research Center. ated with variations in motor vehicle incentives. But, on balance, the extent of the increase in the saving rate has been roughly consistent with a gradual had reversed nearly all of its run-up since the midresponse of consumption to the reduction in the ratio 1990s. of household wealth to disposable income. Consumer confidence, which had declined during most of 2001 and especially after the September 11 attacks, picked up in the first half of last year, accord- Residential Investment Wealth and saving Real expenditures on residential investment increased 6 percent in 2002—the largest gain in several years. Ratio Demand for housing was influenced by the same Wealth-to-income ratio factors affecting household spending more generally, but it was especially supported by low interest rates on mortgages. Rates on thirty-year fixed-rate mortgages, which stood at around 7 percent in the first months of the year, fell to around 6 percent by the autumn and dipped below that level early this year— the lowest in thirty-five years. Not surprisingly, atti- — 4 Mortgage rates I III I I I I I I I I I I I I Percent Percent Personal saving rate Fixed rate 0 1982 1986 1990 1994 1998 2002 NOTE. The data are quarterly. The wealth-to-income ratio is the ratio of NOTE. The data, which are monthly and extend through January 2003, are household net worth to disposable personal income and extends through contract rates on thirty-year mortgages. 2002:Q3; the personal saving rate extends through 2002:Q4. SOURCE. Federal Home Loan Mortgage Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

100 Federal Reserve Bulletin • March 2003 Private housing starts together increased home mortgage debt 11 Vi percent. Refinancing activity was especially elevated in the Millions of units, annual rate fourth quarter, when fixed mortgage interest rates dipped to around 6 percent. Torrid refinancing activity helps explain last year's slowdown of consumer credit, which is household borrowing not secured by real estate: A significant number of households reportedly extracted some of the equity from their homes at the time of refinancing and used the proceeds to repay other debt as well as to finance home improvements and other expenditures. According to banks that participated in the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lend- I I i I I I I I I I I I I I ing Practices in October, the frequency and size 1990 1992 1994 1996 1998 2000 2002 of cash-out refinancings were substantially greater than had been reported in the January 2002 sur- NOTE. The data are quarterly. vey. Although automakers' financing incentives and attractive cash rebates stimulated a substantial tudes toward homebuying, as measured by the Michi- amount of consumer borrowing, the growth rate of gan SRC, remained quite favorable. consumer credit in 2002, at 4lA percent, was more than 2!/2 percentage points below the pace in 2001. Starts of new single-family homes were at 1.36 million units last year, 7 percent above the Even though households took on a large amount of already solid pace for 2001. Sales of both new and mortgage debt last year, extraordinarily low mortgage existing homes were brisk as well. Home prices rates kept the servicing requirement for that debt continued to rise but at a slower rate than in 2001, at (measured as a share of homeowners' disposable least according to some measures. The repeat-sales income) well below its previous peak levels. Moreprice index for existing homes rose 5!/2 percent over over, reflecting large gains in residential real estate the four quarters ended in 2002:Q3, a slowing from values, equity in homes has continued to increase the 83/4 percent increase over the comparable year- despite sizable debt-financed extractions. The comearlier period. The constant-quality price index for bined influence of low interest rates and the sizable new homes rose 4V2 percent last year, but this gain in disposable personal income also kept the total increase was close to the average pace over the past servicing costs faced by households—which in addifew years. At the same time, measures of house tion to home mortgage payments include costs of prices that do not control for the mix of homes sold other financial obligations such as rental payments rose considerably more last year than in 2001, a of tenants, consumer installment credit, and auto difference indicating that a larger share of transactions were in relatively expensive homes. Delinquency rates on selected types of household loans In the multifamily sector, starts averaged a solid 345,000 units last year, an amount in line with that Percent of the preceding several years. However, the pace of building slowed a little in the fall. Apartment vacancy rates moved notably higher last year and rent and property values declined; these changes suggest that the strong demand for single-family homes may be eroding demand for apartment space. Household Finance Households continued to borrow at a rapid pace last year; the 9lA percent increase in their debt outstanding was the largest since 1989. Low mortgage 1992 1994 1996 1998 2000 2002 interest rates helped spur both very strong home NOTE. The data are quarterly and extend through 2002:Q3. SOURCE. For mortgages, the Mortgage Bankers Association; for auto loans, purchases and refinancing of existing loans, which the Big Three automakers; for credit cards, Moody's Investors Service. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 101 leases—relative to their incomes below previous Change in real business fixed investment peaks. Against this backdrop, broad measures of household credit quality deteriorated very little last Percent, annual rate year, and signs of financial stress were confined • Structures | Equipment and software mainly to the subprime segment of the market. Delin- 20 quency rates on home mortgages inched up, while those on auto loans at finance companies were flat. 10 1 fl rl J fh Delinquency rates on credit cards bundled into securitized asset pools remained close to those of recent i experience. 10 20 The Business Sector J_J Overall business fixed investment moved lower last year, although the decline was not nearly so precipi- Q High-tech equipment and software tous as in 2001. Outlays for equipment and software — • Other equipment 40 edged up, but spending on structures fell sharply. 30 Financing conditions worsened over the summer, with equity prices declining, initial public offerings 20 (IPOs) drying up, credit market spreads widening, 10 and banks tightening up somewhat on credit stan- Ki r dards in the wake of increased reports of corporate F malfeasance. In addition, geopolitical concerns increased firms' already heightened uncertainty about 10 the economic outlook. These factors contributed to an apparent deterioration in business confidence, and 1996 1997 1998 1999 2000 2001 2002 businesses still have not felt any great urgency to NOTE. High-tech equipment consists of computers and peripheral equipboost investment appreciably. For similar reasons, ment and communications equipment. although firms slowed their rate of inventory liquidation last year, they have yet to undertake a sustained the very long lags involved in producing planes, restocking. shipments of planes slowed greatly thereafter. Meanwhile, business outlays on motor vehicles edged up last year. Demand for autos and light trucks by rental Fixed Investment companies weakened sharply along with the drop in air traffic that occurred after September 11 but recov- After dropping sharply in 2001, real spending on ered gradually over the course of last year. Purchases equipment and software rose 3 percent last year. of medium and heavy trucks fell off overall, despite Spending on high-technology equipment, one of the the fact that demand for heavy (class 8) trucks was hardest-hit sectors in 2001, showed signs of uneven boosted by spending in advance of the implementaimprovement. The clearest rebound was in comput- tion of more-stringent environmental regulations. ing equipment, for which spending rose 25 percent in Investment in equipment other than high-tech real terms; this gain fell short of the increases posted and transportation goods moved modestly higher in the late 1990s but far more than reversed the through most of last year, as real outlays for indusprevious year's decline. Software investment also trial machinery and a wide range of other equipturned positive, rising 6 percent after declining about ment gradually strengthened through the summer. 3 percent in 2001. By contrast, real outlays for com- Although spending edged lower again in the fourth munications equipment were reported to be up only quarter, investment in non-high-tech, nontransportaslightly in 2002 after plummeting 30 percent in 2001. tion equipment increased 3lA percent for the year as a Business spending on aircraft fell sharply last year. whole. Airlines were hit especially hard by the economic Spending on equipment and software was supdownturn and by the reduction in air travel after the ported last year by low interest rates, which helped September 11 attacks; although expenditures for new hold down the cost of capital, as did the tax provision aircraft held up through the end of 2001 because of enacted in March 2002 that allows partial expensing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

102 Federal Reserve Bulletin • March 2003 of new equipment and software purchased before Change in real business inventories September 11, 2004. Moreover, modest increases in final sales together with replacement demand no Billions of chained 1996 dollars, annual rate doubt spurred many firms to make new capital out- — 75 lays. Nevertheless, some sectors, most notably telecommunications, probably still had excess holdings — 50 of some forms of capital. Concerns about corporate — 25 malfeasance, which had become more intense over ^ H ° the spring and summer, weighed heavily on finan- 1 cial markets and raised the cost of capital through — 25 reduced share prices and higher yields on the bonds of lower-rated firms. In addition, uncertainty about — 50 the geopolitical situation, including the possible con- — 75 sequences for oil prices of an outbreak of war with J I_J Iraq, likely made many firms reluctant to commit 1996 1998 2000 2002 themselves to new expenditures. In all, businesses have been, and appear to remain, quite cautious about undertaking new capital spending projects. prospects for the strength of the recovery having Real business spending for nonresidential struc- diminished in the second half of the year, businesses tures declined sharply for a second year in 2002. quickly cut production, and inventories only edged Outlays for the construction of office buildings and up in the fourth quarter, according to incomplete and industrial buildings were especially weak. Vacancy preliminary data. In all, total inventories were about rates for such buildings increased throughout the unchanged last year compared with a liquidation of year, and property values and rents moved lower. more than $60 billion in 2001, and this turnaround Construction of new hotels and motels also fell con- contributed 1 percentage point to the growth of real siderably, reflecting the weakness in the travel indus- GDP over the year. At year-end, inventory-to-sales try. By contrast, spending on other commercial ratios in most sectors stood near the low end of their buildings, such as those for retail, wholesale, and recent ranges. warehouse space, moved only a little lower last year. In the motor vehicle industry, last year's very A number of factors likely account for investment strong sales were matched by high levels of producin structures having been much weaker than invest- tion, and the stock of inventories, especially for light ment in equipment. Structures depreciate very slowly, trucks, appeared at times to be higher than the indusso businesses can defer new outlays without incur- try's desired levels. Nevertheless, the surge in sales ring much additional deterioration of their capital late in the year helped to pare stocks, and dealers stock. And unlike investment in equipment, spending ended the year with inventories of light vehicles at a on structures is not eligible for partial expensing. comfortable level. According to some analysts, concerns about additional acts of terrorism (and, until late in the year, the lack of insurance to cover such events) may also have Corporate Profits and Business Finance had a damping effect on some types of construction, particularly large "trophy" projects. The profitability of the U.S. nonfinancial corporate sector improved from its lows of 2001 but relative to sector output remained at the low end of the range Inventory Investment experienced over the past thirty years. Economic profits of nonfinancial corporations—that is, book The sharp inventory runoffs that characterized the profits adjusted for inventory valuations and capital economic downturn, together with gradually rising consumption allowances—rebounded in late 2001 final sales, implied that, by early last year, stocks and were little changed through the third quarter were in much better alignment with sales than had of last year. The sluggish expansion of aggregate been the case during 2001. Accordingly, businesses demand and the lack of pricing power associated with lessened the pace of inventory liquidation early in the intense competitive pressures were the main factors year and by summer had turned to some modest that held down profits in 2002. Also playing a role, restocking. However, firms appeared to have exerted especially in the manufacturing sector, were costs tight control over production and inventories; with arising from underfunded defined-benefit pension Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 103 Before-tax profits of nonfinancial corporations Financing gap and net equity retirement as a percent of sector GDP at nonfarm nonfinancial corporations Billions of dollars 12 10 1 I I I I Ml I 1 1 I II I 1977 1982 1987 1992 1997 2002 1990 1992 1994 1996 1998 2000 2002 NOTE. The data are quarterly and extend through 2002:Q3. Profits are from NOTE. The data are annual; 2002 is based on partially estimated data. The domestic operations of nonfinancial corporations, with inventory valuation financing gap is the difference between capital expenditures and internally and capital consumption adjustments. generated funds. Net equity retirement is the difference between equity retired through share repurchases, domestic cash-financed mergers, or foreign takeovers of U.S. firms and equity issued in public or private markets, including funds invested by venture capital partnerships. plans. Reflecting the pause in economic growth, earnings reports for the fourth quarter indicate that profits may have dropped some late in the year. corporate debt on the part of investors, combined A dearth of expenditures on fixed capital and mori- with the desire of firms to lock in low interest rates, bund merger and acquisition activity were the chief prompted investment-grade corporations to issue a culprits behind the sluggish pace of nonfinancial cor- large volume of bonds during the first half of 2002. porate borrowing last year. Also important was the With funding needs limited, investment-grade issuers propensity of some firms to draw on liquid assets— continued to use the proceeds to strengthen their which began the year at high levels—rather than to balance sheets by refinancing higher-coupon bonds seek external financing. Consequently, debt of the and by paying down short-term obligations such as nonfinancial corporate sector expanded only 1V2 per- bank loans and commercial paper. Buoyed by declincent, a rate slower than the already subdued pace in ing yields, gross issuance of below-investment-grade 2001. The composition of business borrowing was bonds for the most part also held up well during the dominated last year, as it was in 2001, by longer-term first half, although this segment of the market was sources of funds. Robust demand for higher-quality hit hard after revelations of corporate malfeasance, as investors shunned some of the riskiest issues; issuance was especially weak in the beleaguered telecom Major components of net business financing and energy sectors, which continue to be saddled with overcapacity and excessive leverage. Despite Billions of dollars falling share prices, seasoned equity offerings were O Commercial paper also well maintained over the first half of the year, • Bonds 600 • Bank loans in part because of the decision of some firms— Sum of major components especially in the telecom and energy sectors—to 400 reduce leverage. IPOs, by contrast, were sparse. The evaporation of cash-financed mergers and acquisi- 200 tions and desire by firms to conserve cash kept equity retirements at their slowest pace since 1994. Over the summer, investors grew more reluctant 200 to buy corporate bonds because of concerns about the reliability of financial statements, deteriorating credit quality, and historically low recovery rates on 2000 2001 2002 defaulted speculative-grade debt. Macroeconomic NOTE. Seasonally adjusted annual rate for nonfarm nonfinancial corporate data suggesting that the economic recovery was business. The data for the sum of major components are quarterly. The data for 2002:Q4 are estimated. losing momentum and widespread company warn- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

104 Federal Reserve Bulletin • March 2003 Spreads of corporate bond yields over in the corporate bond market deteriorated during this the ten-year Treasury yield period, as bid-asked spreads reportedly widened in all sectors. With share prices dropping and stock Percentage points market volatility increasing, issuance of seasoned equity nearly stalled in the summer and early autumn. 10 IPOs were virtually nonexistent amid widely publicized investigations into the IPO allocation process at High yield large investment banks. A smattering of more upbeat news about the economy in mid-autumn and the absence of major revelations of corporate wrongdoing sparked a rally in BBB equity prices and rekindled investors' appetite for AA corporate debt. Over the remainder of the year and during early 2003, risk spreads narrowed considerably on investment-grade corporate bonds— 2001 2002 2003 especially for the lowest rated of these issues—and NOTE. The data are daily and extend through February 5, 2003. The even more on speculative-grade bonds, although they spreads compare the yields on the Merrill Lynch AA, BBB, and 175 indexes remained high by historical standards. In the meanwith the yield on the ten-year off-the-run Treasury note. time, liquidity in the corporate bond market generally improved. A brightening of investor sentiment caused ings about near-term profits pushed yields on a rebound in gross bond issuance, with firms continuspeculative-grade debt sharply higher. Risk spreads ing to use bond proceeds to refinance long-term debt on investment-grade bonds also widened appreciably and to pay down short-term debt. Rising stock prices in the third quarter, as yields in that segment of the and reduced volatility also allowed seasoned equity corporate bond market declined less than those on issuance to regain some ground in the fourth quarter. Treasury securities of comparable maturity. Inves- The improved tone in corporate debt markets carried tors' aversion to risk was also heightened by mount- over into early 2003. Gross corporate bond issuance ing tensions with Iraq; by early autumn, risk spreads continued at a moderate pace, and despite the drop in on junk-rated bonds reached their highest levels in stock prices in the latter half of January, seasoned more than a decade. Gross bond issuance both by equity issuance has been reasonably well maintained. investment-grade and below-investment-grade firms IPO activity and venture capital financing, however, fell off markedly, and the amount of redemptions was remained depressed. large. By the third quarter, net issuance of bonds by The heavy pace of bond issuance, sagging capital nonfinancial corporations had turned negative for the expenditures, and diminished merger and acquisition first time since the early 1950s. Trading conditions activity allowed firms to pay down large amounts of Spread of low-tier CP rates over high-tier CP rates Net interest payments of nonfinancial corporations relative to cash flow Basis points I I I I 1 I I I 1 I I 1997 1998 1999 2000 2001 2002 2003 1 I 1 I 1 I I I I I 11 I I I I I I I I I I NOTE. The data are daily and extend through February 5, 2003. The series 1978 1981 1984 1987 1990 1993 1996 1999 2002 shown is the difference between the rate on A2/P2 nonfinancial commercial paper and the A A rate. NOTE. The data are quarterly and extend through 2002:Q3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 105 both business loans at banks and commercial paper Ratings changes of nonfinancial corporations last year. The runoff in business loans that started in early 2001 intensified in the first half of 2002. At the Percent same time, commercial paper issuers that were per- Upgrades ceived as having questionable accounting practices encountered significant investor resistance, and most of these issuers discontinued their programs. Bond rating agencies stepped up the pressure on firms to substitute longer-term debt for shorter-term debt and thereby reduce rollover risk. In addition, banks raised the total cost of issuing commercial paper by tightening underwriting standards and boosting fees and spreads on the associated backup lines of credit— especially for lower-rated issuers. In doing so, respondents to the April Senior Loan Officer Opinion 1995 1996 1997 1998 1999 2000 2001 2002 Survey on Bank Lending Practices cited heightened NOTE. Data are at an annual rate. Debt upgrades (downgrades) are concerns about the deterioration of issuers' credit expressed as a percentage of par value of all bonds outstanding. SOURCE. Moody's Investors Service. quality and a higher probability of lines being drawn. Many commercial paper issuers either turned to longer-term financing or dropped out of the credit turned temporarily to the commercial paper market to markets altogether, and the volume of nonfinancial obtain financing, and the volume of outstanding paper commercial paper outstanding shrank about one- rose in July after a lengthy period of declines. Over fourth during the first six months of the year after the remainder of the year, business loans at banks and having dropped one-third in 2001. commercial paper outstanding contracted rapidly, as The volatility that gripped equity and bond markets inventory investment remained negligible, and firms around midyear, however, did not spill over to the continued to take advantage of relatively low longercommercial paper market. Quality spreads in the term interest rates by issuing bonds. commercial paper market were largely unaffected, in A decline in market interest rates and improved part because many of the riskiest issuers had already profitability helped reduce the ratio of net interest exited the market, while others had strengthened their payments to cash flow in the nonfinancial corporate cash positions and significantly reduced rollover risk sector last year. Even so, many firms struggled to earlier in the year. Indeed, because of difficulties in service their debt, and corporate credit quality detethe corporate bond market, some nonfinancial firms riorated markedly. The trailing average default rate on corporate bonds, looking back over the preceding twelve months, was already elevated and climbing when WorldCom's $26 billion default in July pro- Default rate on outstanding bonds pelled the average rate to a record level. The amount Percent of nonfinancial corporate debt downgraded by Moody's Investors Service last year was more than 3J r fourteen times the amount upgraded. At less than 25 percent, the average recovery rate in 2002 on all — A — 3.0 defaulted bonds—as measured by the price of bonds at default—was at the low end of recovery rates over / — 2.5 the past decade. Delinquency rates on business loans I — 2.0 at commercial banks rose noticeably before stabiliz- — 1.5 ing in the second half of the year, and charge-off rates remained quite high throughout 2002. — 1.0 After expanding rapidly in 2001, commercial mort- — .5 gage debt grew much more slowly during the first 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 quarter of last year, as business spending on nonresi- 1992 1994 1996 1998 2000 2002 dential structures fell. Despite the continued contrac- NOTE. The default rate is monthly and extends through December 2002. tion in outlays on nonresidential structures, commer- The rate for a given month is the face value of bonds that defaulted in the twelve months ending in that month divided by the face value of all bonds cial mortgage debt accelerated over the remainder of outstanding at the end of the calendar quarter immediately preceding the the year, apparently because of refinancing to extract twelve-month period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

106 Federal Reserve Bulletin • March 2003 a significant portion of equity from existing proper- Change in real government expenditures on consumption and investment ties. The issuance of commercial-mortgage-backed securities (CMBS), a key source of commercial real Percent estate financing in recent years, was well maintained in 2002. Even as office vacancy rates rose, the quality • Federal • State and local of commercial real estate credit remained stable last year. Commercial banks firmed standards on commercial real estate loans in 2002, on net, and delinquency rates on commercial real estate loans at banks J stayed at historically low levels. Delinquency rates 1 1 J 1 on CMBS leveled off after increasing appreciably in i late 2001, and forward-looking indicators also do not LT suggest elevated concerns about prospective defaults: Yield spreads on CMBS over swap rates remained in the fairly narrow range that has prevailed over the I I 1 1 I i i i t 1 past several years. 1996 1998 2000 2002 realizations and to lower tax rates that were enacted The Government Sector in the 2001 tax bill. Meanwhile, federal outlays increased nearly 8 per- Federal Government cent in fiscal 2002 and 11 percent excluding a decline in net interest expenses. Spending increased notably Despite modest economic growth, the federal budget in many categories, including defense, homeland position deteriorated sharply in 2002. After running a security, Medicaid, and income security (which unified budget surplus of $127 billion in fiscal 2001, includes the temporary extended unemployment comthe federal government posted a deficit of $158 bilpensation program). Federal government consumplion in fiscal 2002—and that deficit would have been tion and investment—the part of spending that is $23 billion larger if not for the shifting of some counted in GDP—rose more than 7 percent in real corporate tax payments from fiscal 2001 to fiscal terms in 2002. (Government spending on items such 2002. After adjustment for that tax shifting, receipts as interest payments and transfers are not counted in declined 9 percent in fiscal 2002: A $50 billion drop GDP because they do not constitute a direct purchase in corporate payments stemmed largely from tax of final production.) provisions enacted in the 2002 stimulus bill (espe- The turn to deficit in the unified budget means that cially the partial-expensing provision on investment), the federal government, which had been contributand a decline in individual tax payments of $136 biling to national saving since 1997, began to reduce lion was largely attributable to a drop in capital gains national saving last year. The reversal more than Federal receipts and expenditures National saving Percent of nominal GDP Percent of nominal GDP — 24 — 22 Expenditures » / \ Excluding federal saving — 22 Receipts — 20 — A \ /A /\ \ — 20 — / Y* i ' \T\ — 18 \ — 18 — v/ \A/ \ — 16 — 16 — Total saving ^ — 14 1984 1987 1990 1993 1996 1999 2002 1 1 1 1 1 1 1 t 1 1 1 I 1 1 1 1 1 1 1 1 1 1 1 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 NOTE. The budget data are from the unified budget and are for fiscal years (October through September); GDP is for Q3 to Q3. NOTE. The data are quarterly and extend through 2002:Q3. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 107 Federal government debt held by the public State and local government current surplus or deficit Percent of nominal GDP Percent of GDP WRSm I I NOTE. Through 2001, the data for debt are year-end figures and the NOTE. The data, which are quarterly, are on a national income and product corresponding value for GDP is for Q4 at an annual rate; the final observation account basis and extend through 2002:Q3. The current surplus or deficit is for 2002:Q3. Excludes securities held as investments of federal gov- excludes social insurance funds. ernment accounts. offset an increase in saving by households and busi- states), most state governments are reported to be nesses, and gross national saving declined to 15 per- facing significant shortfalls. Although a variety of cent of GDP by the third quarter of last year—the strategies may be available for the purpose of technilowest national saving rate since the 1940s. cally complying with balanced-budget requirements, After it reentered the credit markets as a significant including tapping nearly $20 billion in combined borrower of net new funds in the second half of 2001, rainy-day and general fund balances and turning to the Treasury continued to tap markets in volume last the capital markets, many states will be forced to year. Federal net borrowing was especially brisk over boost revenues and hold the line on spending. the first half of the year. With federal debt rapidly Real expenditures for consumption and gross approaching its statutory borrowing limit, the Secre- investment by state and local governments rose less tary of the Treasury declared a debt ceiling emer- than 2 percent in 2002—the smallest increase in ten gency on May 16 and identified about $80 billion years. The slowdown in spending growth was wideworth of accounting measures that could be used to spread across expenditure categories and included create financing room within the existing $5.95 tril- notably smaller increases in outlays for construction. lion limit. The Secretary's announcement and subse- Employment in the state and local sector continued to quent employment of one of these devices—in which rise in 2002, but at a slower rate than in recent years. Treasury securities held in government trust funds Debt of the state and local government sector were temporarily replaced by Treasury IOUs not expanded last year at the fastest pace since 1987. subject to the debt ceiling—had little effect on Trea- Governments used the proceeds to finance capital sury yields, as market participants were apparently spending and to refund existing debt in advance. Net confident that the ceiling would be raised in time to issuance of short-term municipal bonds was also well avoid default. And indeed, the Congress approved maintained, as California and some other states faclegislation raising the statutory borrowing limit to ing fiscal difficulties turned to shorter-term borrow- $6.4 trillion on June 27. With its credit needs remain- ing while fashioning more permanent solutions to ing substantial, the Treasury continued to borrow their budget problems. Worsening budget situations heavily over the second half of 2002. The increase contributed to some deterioration in municipal credit in the Treasury's net borrowing last year caused the quality last year. Credit-rating downgrades outpaced ratio of publicly held debt to nominal GDP to rise for upgrades by a significant margin, and the yield spread the first time since 1993. of BBB-rated over insured AAA-rated municipal bonds rose significantly over the second half of 2002. State and Local Governments The External Sector State and local governments have continued to struggle in response to sluggish growth of receipts. In The U.S. current account deficit widened again in the current fiscal year (which ends June 30 for most 2002 after a brief respite during the cyclical slow- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin • March 2003 U.S. trade and current account balances Change in real imports and exports of goods and services Billions of dollars, annual rate Percent, annual rate • Imports • Exports 20 15 10 II 1] Jk. 10 15 1 I I I I I I I I I I I I I I I I, I I I I I 1 I. I I I 1 I I I I I J L 1996 1997 1998 1999 2000 2001 2002 1996 1998 2000 2002 NOTE. The data are quarterly and extend through 2002:Q3. and spending on travel recovered from the post- U.S. dollar real exchange rate, broad index September 11 slump. As is often the case, the amplitude of the recent cycle in trade has been greater than January 2000 = 100 that of real GDP. In 2001, stagnant real GDP in the United States and abroad was coupled with declines — 115 of 11^2 percent in real exports and 8 percent in real imports. Last year, moderate growth of both foreign and domestic real GDP was exceeded by gains of 5 percent and 9 percent, respectively, in our real exports and imports. The faster growth of imports relative to exports over the past two years was consistent with the historical pattern in which the responsiveness of imports to income is greater in the United States than in the rest of the world. Although the I i I i i I i i I i i I i i I I i ( I i i I i i I i i I i i I i i 1 i i I i I dollar depreciated on balance last year, the lagged 2000 2001 2002 2003 effects of its prior appreciation over the two previous NOTE. The data are monthly. The last observation is the average of trading years contributed to the faster growth in imports days through February 5, 2003. Exchange rates are adjusted for inflation with the consumer price index and are in foreign currency units per dollar. The relative to exports in 2002. broad index is a weighted average of the foreign exchange values of the U.S. dollar against the currencies of a large group of major U.S. trading partners. Real exports of goods posted a strong gain in the The index weights, which change over time, are derived from U.S. export second quarter of 2002 after six consecutive quarters shares and from U.S. and foreign import shares. of decline. However, as output growth slowed abroad, exports decelerated in the third quarter and then fell down in 2001. Two-thirds of the expansion of the in the fourth quarter. On balance, exports of goods deficit last year was attributable to a decline in the rose about 2 percent over the course of the year, balance on goods and services, although net investreversing only a small portion of the previous year's ment income also fell sharply as receipts from abroad decline. Not surprisingly, the increase in goods declined more than payments to foreign investors in exports in 2002 was concentrated in the destinations the United States. The broad exchange value of the where GDP growth was strongest—Canada, Mexico, dollar peaked around February 2002 after appreciatand several developing Asian economies. A gain of ing about 13 percent in real terms from January 2000; 12 percent in real exports of services in 2002 in early February 2003 it was down about 5 percent more than reversed the previous year's decline and from the February 2002 level. reflected both a pickup in tourism and an increase in other private services. Export prices turned up in the second quarter after a year of decline and continued Trade and the Current Account to rise at a moderate pace in the second half. Both exports and imports rebounded in 2002 as the The very rapid growth of real imports of goods in cyclical downturn of the previous year was reversed the first half of last year was a reaction to the revival Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 109 of U.S. activity, and they gained about 9 percent over in February and March of last year in response to the year. The particularly large gains in imports of both improving global economic activity as well as consumer goods and automotive products reflected a production-limiting agreement between OPEC and the buoyancy of U.S. consumption expenditures. several major non-OPEC producers. Even though Imports of most major categories of capital goods production in a number of OPEC and non-OPEC also increased on balance over the year. However, countries in fact exceeded the agreed limits last year, as with exports, import growth was considerably heightened tensions in the Middle East along with stronger in the first half of the year than in the severe political turmoil in Venezuela continued to put second. This pattern likely reflected the deceleration upward pressure on prices. The pressure intensified in U.S. GDP, along with the effects of some deprecia- late in the year as a strike in Venezuela that began on tion of the dollar. In addition, there may have been December 2 virtually shut down that country's oil some shifting of import demand from later in the year industry, and Venezuelan oil production was still well to the earlier months as it began to appear more likely below pre-strike levels in early 2003. Concern over a that labor contract negotiations at West Coast ports possible war with Iraq, along with a very low level of would not go smoothly.1 Imports of services more crude oil inventories in the United States, has helped than reversed their 2001 decline over the course to keep spot prices high. Also in response to the of the year, and gains were recorded for both travel heightened tensions, the price of gold shot up about and other private services. Prices of non-oil imports 30 percent over the past year. turned up in the second quarter after declining over the preceding four quarters, as a result of the weaker exchange rate and a turnaround in prices of inter- The Financial Account nationally traded commodities. The increase in the current account deficit in 2002 The spot price of West Texas intermediate crude was about equal on balance to the stepped-up foreign oil climbed above $35 per barrel in early 2003, its highest level since the beginning of 2000. Oil prices official purchases of U.S. assets, as changes in the had fallen to around $20 per barrel during 2001 amid general economic weakness, but they began rising U.S. international securities transactions Billions of dollars 1. The dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union eventually led to an Private foreign purchases of U.S. securities eleven-day port closure in late September and early October that ended when President Bush invoked the Taft-Hartley Act. Although — • Bonds, net the monthly pattern of trade was influenced by the closure, the overall • Equities, net level of imports for the year does not appear to have been much affected. Prices of oil and of nonfuel commodities January 2001 = 100 Dollars per bar.r el Private U.S. purchases of foreign securities Nonfuel ' * I NOTE. The data are monthly; the last observation for oil is the average of trading days through February 5, 2003; the last observation for nonfuel commodities is December 2002. The oil price is the spot price of West Texas intermediate crude oil. The price of nonfuel commodities is a weighted average of thirty-nine primary-commodity prices from the International Monetary Fund. SOURCE. Department of Commerce and the Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • March 2003 components of private capital flows were offsetting. Net change in payroll employment Private foreign purchases of U.S. securities were about $360 billion at an annual rate through Novem- Thousands of jobs, monthly average ber, a volume similar to last year's total. However, Private nonfarm there was some shift in the composition of flows 300 away from equities and toward Treasury securities. 200 This shift may have reflected the damping of equity Jan. demand caused by slower economic growth and con- LA 100 + tinued concern about corporate governance and accounting. Over the same period, purchases by pri- II 0 vate U.S. investors of foreign securities declined 100 nearly $100 billion. Accordingly, the net balance of private securities trading recorded a sharp increase in 200 net inflows. J I L J I I I L . In contrast, net foreign direct investment inflows 1991 1993 1995 1997 1999 2001 2003 fell about $70 billion between 2001 and 2002. Foreign investment in the United States and investment abroad by U.S. residents both declined, but the 200 decline in flows into the United States was consider- Jan. ably larger, as merger activity slowed and corporate profits showed little vigor. U.S. direct investment 1 III. • II abroad held up fairly well in 2002, a result largely reflecting retained earnings. 1 200 The Labor Market 2000 2001 2002 2003 Employment and Unemployment Labor markets appeared to stabilize last spring after down again later in the year. And employment in the sharp deterioration of 2001 and early 2002. retail trade, though quite erratic, leveled off over the Employment on private payrolls, which had declined summer before declining further in the fall. However, an average of 160,000 per month in 2001, leveled off in the spring and moved slightly higher over the Measures of labor utilization summer. But labor demand weakened again as the economy softened later in the summer, and private Percent employment declined about 80,000 per month on average in the last four months of the year. Private — 15 payrolls rebounded nearly 150,000 in January, though / \ Augmented (V . / \ civilian unemployment rate the magnitude of both the especially sharp decline — 12 in December and the rebound in January likely was exaggerated by difficulties in adjusting for the normal ^ 9 seasonal movements in employment during these months. — 6 The manufacturing sector continued to be the Civilian unemployment rate^w weakest segment of the labor market; even during — 3 the spring and early summer, when the overall labor 1 1 1 II 11 1 1 1 II 1 1 1 1 11 1 II 1 1 1 1 II 1 1 11 11 IIII 1 market seemed to be improving, factory payrolls 1973 1983 1993 2003 contracted on average. Declines in factory employ- NOTE. The data extend through January 2003. The civilian rate is the ment were more pronounced—at about 50,000 per number of civilian unemployed divided by the civilian labor force. The month—toward the end of the year. Employment at augmented rate adds to the numerator and the denominator of the civilian rate the number of those who are not in the labor force but want a job. The small help-supply firms and in wholesale trade—two sec- break in the augmented rate in January 1994 arises from the introduction of a tors in which activity closely tracks that of manufac- redesigned survey. For the civilian rate, the data are monthly; for the augmented rate, the data are quarterly through December 1993 and monthly turing proper—rose over the summer but also turned thereafter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 111 employment in services other than help supply grew tivity typically suffers in an economic downturn as reasonably steadily throughout the year and rose businesses reduce hours worked by proportionally nearly 50,000 per month after March; health services less than the decline in output; conversely, productivand education services contributed more than half of ity typically rebounds early in an expansion as labor those job gains. The finance and real estate sectors is brought back toward fuller utilization. During the also added jobs last year, probably because of the most recent downturn, however, productivity held up surge in mortgage refinancings and high levels of comparatively well, a performance that makes last activity in housing markets. Last year's job losses in year's surge all the more impressive. Indeed, producthe private sector were partially offset by an increase tivity rose at an average annual rate of nearly 3 perin government employment that averaged about cent over the past two years, faster than the average 20,000 per month; the increase resulted mostly from pace of increase during the late 1990s. hiring by states and municipalities, but it also Very likely, the rapid pace of last year's productivreflected hiring in the fall by the Transportation Secu- ity growth was due in part to the special circumrity Administration. stances that developed after the September 11 attacks. Overall employment moved lower, on net, and Businesses cut labor substantially in late 2001 and the unemployment rate increased a little less than early 2002 amid widespread fear of a sharp decline in Vi percentage point over the year, to 6 percent, before demand; when demand held up better than expected, dropping back to 5.7 percent in January 2003. The businesses proved able to operate satisfactorily with unemployment rate probably has been boosted their existing workforces. Moreover, the fact that this slightly by the federal temporary extended unemploy- step-up in productivity was not reversed later in the ment compensation program. By extending benefits year suggests that at least a portion of it is sustainfor an additional three months, the program allows able. The recent rapid growth in productivity may unemployed individuals whose regular benefits have derive in part from ongoing improvements in the use expired to be more selective in accepting job offers of the vast amount of capital installed in earlier years, and provides them with an incentive not to with- and it may also stem from organizational innovations draw from the labor force. In addition, as would be induced by the weak profit environment. expected in a still-weak labor market, the labor force Indicators of hourly compensation sent mixed sigparticipation rate moved lower last year. nals last year. The rise in the employment cost index (ECI) for hourly compensation in private nonfarm businesses, 3lA percent, was 1 percentage point lower Productivity and Labor Costs than the increase in 2001. Compensation increases likely were damped last year by the soft labor market Labor productivity rose impressively in 2002. Output and expectations of lower consumer price inflation. per hour in the nonfarm business sector increased an estimated 33A percent from the fourth quarter of 2001 to the fourth quarter of 2002. Labor produc- Measures of change in hourly compensation Change in output per hour Nonfarm compensation per hour 1994 1996 1998 2000 2002 NOTE. The data extend through 2002:Q4. For nonfarm compensation, change is over four quarters; for the employment cost index (ECI), change is over the twelve months ending in the last month of each quarter. Nonfarm compensation is for the nonfarm business sector; the ECI is for private in- NOTE. Nonfarm business sector. dustry excluding farm and household workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin • March 2003 The wages and salaries component and the benefits Change in consumer prices excluding food and energy component of the ECI both posted smaller increases last year. The deceleration was less pronounced for the benefits component, however, which was boosted O Consumer price index • Chain-type price index for PCE by further large increases in employers' health insurance costs. According to the ECI, health insurance costs, which constitute about 6 percent of overall compensation, rose 10 percent last year after having risen about 9 percent in each of the preceding two years. An alternative measure of compensation costs is compensation per hour in the nonfarm business sector, which is derived from information in the national income and product accounts. According to this measure, hourly compensation rose 4lA percent last 1992 1994 1996 1998 2000 2002 year—a little more than the increase in the ECI and up from a much smaller increase in 2001. One important difference between these two measures of com- appeared to be lower in 2002 than in most of 2001. pensation is that the ECI omits stock options, while The increase in PCE prices excluding food and nonfarm compensation per hour captures the value of energy, which was just l3/4 percent, was about Vi perthese options upon exercise. The very small increase centage point less than in 2001. The price index for in the latter measure in 2001 likely reflects, in part, a GDP was less affected by last year's rise in energy drop in option exercises in that year, and the larger prices than was the PCE measure; much of the energy increase in 2002 may point to a firming, or at least to price increase was attributable to higher prices of a smaller rate of decline, of these exercises. imported oil, which are not included in GDP because they are not part of domestic production. On net, GDP prices rose only 1 lA percent last year, a decele- Prices ration of 3A percentage point that reflected not just the deceleration in core consumer prices but also consid- The chain-type price index for personal consumption erably smaller increases for prices of construction. expenditures (PCE) rose about 2 percent last year, The upturn in consumer energy prices in 2002 was compared with an increase of IV2 percent in 2001. driven by a jump in crude oil prices. Gasoline prices This step-up in consumer price inflation resulted from increased some 25 percent from December 2001 to a jump in energy prices. Outside of the energy sector, December 2002; prices of fuel oil increased considerconsumer price inflation was pushed lower last year ably as well. By contrast, consumer prices of natural by continued slack in labor and product markets gas posted only a modest rise after declining sharply as well as by expectations of future inflation that in 2001, and electricity prices moved lower. More recently, the rise in crude oil prices since mid- December, together with cold weather, has increased Change in consumer prices the demand for natural gas and has led to higher spot Alternative measures of price change • Consumer price index • Chain-type price index for PCE Percent Price measure 2001 2002 Chain-type Gross domestic product 22..00 11..33 Gross domestic purchases 11..33 11..66 Personal consumption expenditures 11..55 11..99 Excluding food and energy 11..99 11..77 no - Chained CPI 11..22 11..99 Excluding food and energy 11..88 11..66 Fixed-weight Consumer price index 11..99 22..33 Excluding food and energy 22..77 22..11 NOTE. Changes are based on quarterly averages and are measured to the 1992 1994 1996 1998 2000 2002 fourth quarter of the year indicated from the fourth quarter of the preceding year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 113 gas prices; the higher spot prices for both oil and gas of taking consumer substitution into account, but it are likely to be boosting consumer energy prices is otherwise identical to the official CPI. In 2001, an early this year. unusually large gap between increases in the official The PCE price index for food and beverages CPI and the chained CPI arose, pointing to very large increased only IV2 percent last year; the increase substitution bias in the official CPI in that year. This followed a 3 percent rise in 2001 that reflected gap narrowed in 2002, indicating that substitution supply-related price increases for many livestock bias declined between the two years. (Final estimates products including beef, poultry, and dairy products. of the chained CPI are not yet available; the currently But livestock supplies had recovered by early last available data for both 2001 and 2002 are preliminary year, and a drought-induced selloff of cattle herds last and subject to revision.) summer pushed prices still lower. Survey measures of expected inflation generally The prices of goods other than food and energy ran a little lower in 2002 than in 2001. According to items decelerated sharply last year. Prices for apparel, the Michigan SRC, median one-year inflation expecnew and used motor vehicles, and a wide range of tations plummeted after the September 11 attacks, other durable goods all declined noticeably and, on but by early 2002, expectations returned to the average, at a faster pace than in 2001. Price increases 23/4 percent range that had prevailed during the prefor services were much larger than for goods and vious summer. These expectations gradually moved slowed less from the previous year. Both tenants' rent lower over the course of last year and now stand and the imputed rent of owner-occupied housing— around 2Vi percent. Meanwhile, the Michigan SRC's categories that account for a sizable share of measure of five- to ten-year inflation expectations services—rose significantly less last year than they remained steady at about 23/4 percent during 2002, a did in 2001. But many other services prices posted rate a little lower than the 3 percent inflation expectaincreases in 2002 that were about the same as in tions that had prevailed through most of 2001. 2001. Information on medical prices was mixed. According to the CPI, the price of medical services continued to accelerate, rising 5V2 percent last year. U.S. Financial Markets But the increase in the PCE measure of medical services prices was less than 3 percent, a smaller Developments in financial markets last year were increase than in 2001. One reason for this difference shaped importantly by sharp declines, on net, in is that the prices of services paid for by Medicare and equity prices and most long-term interest rates and Medicaid are included in the PCE index but not in by periods of heightened market volatility. In contrast the CPI (because services provided by Medicare and to 2001, when the Federal Reserve eased the stance Medicaid do not represent out-of-pocket costs to of monetary policy eleven times, last year saw one consumers and so are outside of the CPI's scope), reduction in the intended federal funds rate—in early and Medicare reimbursement rates for physicians November—and interest rates on short-term Treasury were reduced last year. securities had moved little until then. Longer-term Despite the acceleration in medical prices in the interest rates, by contrast, were more volatile. Inves- CPI but not in the PCE price index, the CPI exclud- tors' optimism about future economic prospects ing food and energy decelerated notably more than pressured longer-term Treasury bond yields higher did the core PCE price index between 2001 and early in 2002. But as the year progressed, that opti- 2002. The two price measures differ in a number of mism faded when the economy failed to gather much respects, but much of last year's greater deceleration momentum, and longer-term Treasury yields ended in the CPI can be traced to the fact that the CPI the year appreciably lower. Softer-than-expected suffers from a form of "substitution bias" that is not readings of the economic expansion, a marked detepresent in the PCE index. The CPI, being a fixed- rioration in corporate credit quality, concerns about weight price index, overstates increases in the cost corporate governance, and heightened geopolitical of living because it does not adequately take into tensions made investors especially wary about risk. account the fact that consumers tend to substitute Lower-rated firms found credit substantially more away from goods that are rising in relative price; expensive, as risk spreads on speculative-grade debt by contrast, the PCE price index does a better job of soared for most of the year before narrowing sometaking this substitution into account. Last year, the what over the last few months. Even for higher- Bureau of Labor Statistics began to publish a new quality firms, risk spreads widened temporarily durindex called the chained CPI; like the PCE price ing the tumultuous conditions that prevailed in index, the chained CPI does a more complete job financial markets over the summer. In addition, com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • March 2003 mercial banks tightened standards and terms for busi- with the sharp upward tilt of money market futures ness borrowers, on net, in 2002, and risk spreads rates, which suggested that market participants on business loans remained in an elevated range expected that the FOMC would almost double the throughout the year. Increased caution on the part of intended level of the funds rate by year's end. Howinvestors was particularly acute in the commercial ever, as readings on the strength of the economic paper market, where the riskiest issuers discontinued expansion came in on the soft side, investors substantheir programs. tially trimmed their expectations for policy tighten- Federal borrowing surged last year, while private ing, and yields on longer-term Treasury securities borrowing was held down by the significantly turned down in the spring. reduced credit needs of business borrowers. Declines The slide in longer-term Treasury yields intensified in longer-term interest rates during the first half of over the summer amid weaker-than-expected ecothe year created incentives for both businesses and nomic data, heightened geopolitical tensions, fresh households to lock in lower debt-service obligations revelations of corporate malfeasance, and disappointby heavily tapping corporate bond and home mort- ing news about near-term corporate profits. In congage markets, respectively. While mortgage borrow- cert, these developments prompted investors to mark ing remained strong, businesses sharply curtailed down their expectations for economic growth and, their issuance of longer-term debt during the second consequently, their anticipated path for monetary polhalf of 2002 amid the nervousness then prevailing in icy. A widespread retrenchment in risk-taking sent the financial markets. yields on speculative-grade corporate bonds sharply higher and kept those on the lower rungs of investment grade from declining, even as longer-term Interest Rates nominal Treasury yields fell to very low levels by the end of July. Reflecting an unchanged stance of monetary policy The uneventful passing of the Securities and over most of last year, short-term market interest Exchange Commission's August 14 deadline for offirates moved little until early November, when the cers of large companies to certify corporate financial FOMC lowered the target federal funds rate Vi per- statements somewhat assuaged investors' anxieties centage point, and other short-term interest rates fol- about corporate governance problems. But subselowed suit. Yields on intermediate- and long-term quent news suggesting that the economy was losing Treasury securities, by contrast, declined as much as momentum and a flare-up in tensions with Iraq fur- Wz percentage points, on net, in 2002. Longer-term ther boosted demand for Treasury securities. The interest rates began last year under upward pressure, FOMC's decision at the August meeting—to leave as signs that the economy had bottomed out started to the intended federal funds rate unchanged but to nudge rates higher in the final weeks of 2001. Posi- judge the balance of risks to the outlook as weighted tive economic news pushed interest rates up appre- toward economic weakness—pulled the expected ciably further during the first quarter of 2002. The increase in longer-term interest rates was consistent Implied volatility of short-term interest rates Interest rates on selected Treasury securities Percent Percent Three-month 1997 1998 1999 2000 2001 2002 2003 NOTE. The data are daily and extend through February 5, 2003. The series shown is the implied volatility of the three-month eurodollar rate over the NOTE. The data are daily and extend through February 5, 2003. coming four months, as calculated from option prices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 115 path of the funds rate lower, and longer-term Trea- 2003, though they remain elevated by historical stansury yields sank to forty-year lows in early autumn. dards; risk spreads for the weaker speculative-grade A high degree of investor uncertainty about the future credits remain exceptionally wide, as investors evipath of monetary policy was evidenced by implied dently anticipate a continued high level of defaults volatilities of short-term interest rates derived from and low recovery rates. option prices, which soared to record levels in early autumn. The size of the FOMC's November cut in the target federal funds rate and the shift to balance in Equity Markets its assessment of risks surprised market participants, but the policy easing appeared to lead investors to Equity prices were buffeted last year by considerable raise the odds that the economy would pick up from fluctuations in investors' assessments of the outlook its sluggish pace. Generally positive economic news for the economy and corporate earnings and by and rising equity prices over the remainder of the doubts about the quality and transparency of coryear also bolstered confidence and prompted market porate balance sheets. Net declines in stock prices participants to mark up the expected path for mone- in 2002 exceeded those posted during either of the tary policy and push up longer-term Treasury yields. preceding two years. Worries about the pervasiveness Yields on higher-quality investment-grade cor- of questionable corporate governance and a deterioraporate bonds generally tracked those on Treasuries tion in the earnings outlook—especially in the techof comparable maturity last year, although risk nology sector—depressed equity prices in early 2002. spreads on these instruments widened moderately The positive tenor of economic data, however, manover the summer and early autumn before narrow- aged to outweigh those concerns, and stock prices ing over the remainder of the year. Interest rates on staged a rally halfway through the first quarter, with below-investment-grade corporate debt, by contrast, the gains tilted toward "old economy" firms. But increased for much of last year, as spreads over the rebound was short lived. Share prices started to Treasuries ballooned in response to mounting con- tumble in early spring across all sectors as weakercerns about corporate credit quality, historically low than-expected economic data eroded investors' confirecovery rates on defaulted bonds, and revelations of dence in the strength of the economic expansion. improper corporate governance; credit risk spreads These developments were reinforced by first-quarter widened in all speculative sectors but especially in corporate earnings reports that, though mostly matchtelecom and energy. By the summer, investors' retreat ing or exceeding investors' expectations, painted a from risk-taking had widened bid-asked spreads in bleak picture of prospective sales and profits. the corporate bond market enough to impair trading. Over the spring and summer, accounting scandals, Risk spreads on speculative-grade bonds narrowed widespread warnings about near-term corporate profconsiderably over the year's final quarter and in early itability, and heightened geopolitical tensions intensified the slide in stock prices. Particularly large declines in share prices were posted for technology Corporate bond yields Major stock price indexes January 2, 2001 = 100 20 15 125 l Nasdaq 10 Wilshire 5000 100 75 J I I I I I L J I L 50 1991 1993 1995 1997 1999 2001 2003 NOTE. The data are monthly averages and extend through January 2003. I I I I I I I I I ! I 1 , i . , i , , I The AA rate is calculated from bonds in the Merrill Lynch AA index with 2001 2002 2003 seven to ten years remaining maturity. The high-yield rate is the yield on the Merrill Lynch 175 high-yield index. NOTE. The data are daily and extend through February 5, 2003. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • March 2003 Implied S&P 100 volatility simple measure of the equity premium—to levels not seen since the mid-1990s. Share prices turned around in late October, as the third-quarter corporate earnings reports were not as weak as investors had originally feared. Equity prices were also given a boost in early November by the larger-than-expected monetary policy easing, and the rally was sustained over the remainder of the year by the generally encouraging tone of economic data. Greater confidence among investors in the economic outlook also helped bring down the implied volatility on the S&P 100 significantly by year-end, although it remains at an elevated level by historical standards. Despite the fourth-quarter rebound, broad equity ^ 1997 1^998 1999 2—0—00 2001 2002 2003 indexes were down, on net, about 20 percent in 2002, while the tech-heavy Nasdaq lost more than NOTE. The data are daily and extend through February 5, 2003. The series shown is the implied volatility of the S&P 100 stock price index as calculated 30 percent. from the prices of options that expire over the next several months. SOURCE. Chicago Board Options Exchange. The decline in equity prices during the first three quarters of 2002 is estimated to have erased more firms, whose prospects for sales and earnings were than $3Vz trillion in household wealth, a loss of especially gloomy. Equity prices were boosted briefly nearly 9 percent of total household net worth, by the uneventful passing of the August 14 dead- although the fourth-quarter rise in stock prices line to certify financial statements, but they quickly restored about $600 billion. Still, the level of housereversed course on continued concerns about the pace hold net worth at the end of last year was more than of economic growth and corporate earnings and the 40 percent higher than it was at the start of the escalating possibility of military action against Iraq. bull market in 1995. Equity prices maintained their By early October, equity indexes sank to their lowest upward momentum during the first half of January levels since the spring of 1997, and implied stock 2003 but then fell sharply amid the looming prosprice volatility on the S&P 100 surged to its highest pects of military action against Iraq and a stillreading since the stock market crash of 1987. The gloomy outlook for corporate earnings. Broad stock drop in stock prices widened the gap between the price indexes have lost almost 5 percent this year; expected year-ahead earnings-price ratio for the however, solid fourth-quarter earnings from many S&P 500 and the real ten-year Treasury yield—one prominent technology companies helped brighten investors' sentiment regarding that sector, and the Nasdaq is down about 3 percent this year. S&P 500 forward earnings-price ratio and the real interest rate Percent Debt and Financial Intermediation A deceleration of business borrowing slowed growth of the debt of nonfederal sectors about 1 percentage point in 2002, to 6V2 percent. By contrast, the decline in interest rates last year kept borrowing by households and state and local governments brisk. At the federal level, weak tax receipts and an acceleration in spending pushed debt growth to IV2 percent last year after a slight contraction in 2001. For the year as a whole, corporate borrowing was quite weak, mainly because of sagging capital expenditures, a drying up of merger and acquisition activ- 1990 1992 1994 1996 1998 2000 2002 ity, and a reliance on liquid assets. Although busi- NOTE. The data are monthly and extend through December 2002. The nesses tapped bond markets in volume over the first earnings-price ratio is based on I/B/E/S consensus estimates of earnings over the coming year. The real rate is estimated as the difference between the half of the year, subsequent concerns about the reliaten-year Treasury rate and the five-year to ten-year expected inflation rate from the FRB Philadelphia survey. bility of financial statements and the quality of cor- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 117 Change in domestic nonfinancial debt Net percentage of domestic banks tightening standards on commercial and industrial loans to large and medium-sized firms Percent Percent Nonfederal NOTE. The data are based on a survey generally conducted four times per year; the last reading is from the January 2003 survey. Large and medium-sized firms are those with annual sales of $50 million or more. Net percentage is the percentage reporting a tightening less the percentage reporting an easing. SOURCE. Federal Reserve, Senior Loan Officer Opinion Survey on Bank Lending Practices. Federal, held by public By contrast, business lending at commercial banks dropped 7 percent last year after falling almost 4 percent in 2001; last year's decline kept overall loan 1988 1990 1992 1994 1996 1998 2000 2002 growth for 2002 to about 5 percent. In the October NOTE. For 2002, change is from 2001 :Q4 to 2002:Q3 at an annual rate. For Senior Loan Officer Opinion Survey on Bank Lendearlier years, the data are annual and are computed by dividing the annual flow for a given year by the level at the end of the preceding year. The total ing Practices, respondents noted that the decline in consists of nonfederal debt and federal debt held by the public. Nonfederal commercial and industrial (C&I) lending since the debt consists of the outstanding credit market debt of state and local governments, households, nonprofit organizations, nonfinancial businesses, beginning of the year reflected not only the limited and farms. Federal debt held by the public excludes securities held as funding needs of creditworthy borrowers that found investments of federal government accounts. bond financing or a runoff of liquid assets more attractive, but also a reduction in the pool of creditporate governance and deteriorating creditworthiness worthy borrowers. Over the course of last year, banks ruined investors' appetite for corporate debt in the reported some additional net tightening of standards summer and early autumn. Households, by contrast, and terms on C&I loans, mainly in response to greater flocked to the mortgage markets to take advantage of uncertainty about the economic outlook and rising low mortgage rates throughout the year, and strong corporate bond defaults, although the proportions of motor vehicle sales supported the expansion of banks that reported doing so declined noticeably. consumer credit. For depository institutions, the net Direct measures of loan pricing conditions from the effect of these developments was an acceleration of Federal Reserve's quarterly Survey of Terms of Busicredit to 6V2 percent last year, 2 percentage points ness Lending also indicated that banks were cautious above the pace of 2001. The growth of credit at lenders last year, as the average spread of C&I loan thrift institutions moderated, though the slowdown rates over market interest rates on instruments of can be attributed for the most part to a large thrift comparable maturity remained wide, and spreads institution's conversion to a bank charter. The on new higher-risk loans declined only slightly from growth of credit at commercial banks accelerated to the lofty levels that prevailed over the first half of 63/4 percent—a significant increase from the anemic the year. Although bank lenders were wary about pace in 2001; the pickup was driven by large acquisi- business borrowers, especially toward lower-rated tions of securities, especially mortgage-backed secu- credits, they did not significantly constrict the suprities, as well as a surge in home equity and residen- ply of loans: Most small firms surveyed by the tial real estate lending. National Federation of Independent Businesses in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • March 2003 Delinquency rates on selected types of loans at banks Regulatory capital ratios of commercial banks Percent Percent — ^V Commercial and industrial — 6 | Total (tier 1 + tier 2) ratio — 14 — / ^ — 12 — ^ \ Consumer — 4 / Tier 1 ratio 10 ' — 3 — Residential real estate / — 8 — 2 1 1 1 1 1 1 1 1 1 I 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1992 1994 1996 1998 2000 2002 1990 1992 1994 1996 1998 2000 2002 NOTE. The data, from bank Call Reports, are quarterly, seasonally ad- NOTE. The data, which are quarterly and extend through 2002:Q3, are justed, and extend through 2002:Q3. ratios of capital to risk-weighted assets. Tier 1 capital consists primarily of common equity and certain perpetual preferred stock. Tier 2 capital consists primarily of subordinated debt, preferred stock not included in tier 1 capital, 2002 reported that they experienced little or no diffi- and a limited amount of loan-loss reserves. culty satisfying their borrowing needs. Loan quality at commercial banks improved over- residential mortgage loans rose late in the year to all last year. Loan delinquency rates edged down the highest share in the past decade, but nonetheless through the third quarter of 2002—the latest period remained quite low. Commercial banks generally regfor which Call Report data are available—in response istered strong profit gains last year, although steep to better performance of residential real estate and losses on loans to energy and telecommunications consumer loans and a stable delinquency rate on C&I firms significantly depressed profits at several large loans. Despite the improvement in consumer loan bank holding companies. Despite the increased rate quality, domestic banks imposed somewhat more of provisioning for loan losses, the banking sector's stringent credit conditions when lending to house- profitability stayed in the elevated range recorded for holds, according to the survey on bank lending prac- the past several years, as a result of the robust fee tices. Moderate net proportions of surveyed institu- income from mortgage and credit card lending, effections tightened credit standards and terms for credit tive cost controls, and the relatively inexpensive card and other consumer loans throughout last year. funding offered by inflows of core deposits. As of The net fraction of banks that tightened standards on the third quarter of last year, virtually all assets in the banking sector were at well-capitalized institu- Net percentage of domestic banks tightening standards on tions, and the substitution of securities for loans on consumer loans and residential mortgage loans banks' balance sheets helped edge up risk-based capital ratios. Percent The financial condition of insurance companies, by contrast, worsened notably last year. Both property and casualty insurers and life and health insurers sustained significant investment losses from the decline in equity prices and the deterioration in corporate credit quality. However, these negative pressures were offset somewhat by the continued strong growth of insurance premiums, and both sectors of the insurance industry stayed fairly well capitalized in 2002. Monetary Aggregates 1991 1993 1995 1997 1999 2001 2003 NOTE. The data are based on a survey generally conducted four times per year; the last reading is from the January 2003 survey. Net percentage is the The broad monetary aggregates decelerated noticepercentage reporting a tightening less the percentage reporting an easing. ably last year after surging in 2001. Short-term mar- SOURCE. Federal Reserve, Senior Loan Officer Opinion Survey on Bank Lending Practices. ket interest rates, which had declined swiftly dur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 119 M2 growth rate M3 growth rate Percent, annual rate Percent, annual rate 1990 1992 1994 1996 1998 2000 2002 NOTE. M2 consists of currency, travelers checks, demand deposits, other NOTE. M3 consists of M2 plus large-denomination time deposits, balances checkable deposits, savings deposits (including money market deposit in institutional money market funds, repurchase-agreement liabilities accounts), small-denomination time deposits, and balances in retail money (overnight and term), and eurodollars (overnight and term). market funds. ing 2001, were stable over the first half of the year; cause prepayments to accumulate temporarily in deposit rates, in a typical pattern of lagged adjust- deposit accounts before being distributed to investors ment, continued to fall. Consequently, the opportu- in mortgage-backed securities.) All told, over the nity cost of holding M2 assets increased, especially four quarters of the year, M2 increased 7 percent, a for its liquid deposit (checking and savings accounts) pace that exceeded the expansion of nominal income. and retail money fund components, thereby restrain- As a result, M2 velocity—the ratio of nominal GDP ing the demand for such assets. After decelerating in to M2—declined for the fifth year in a row, roughly the first half of the year, M2 rebounded significantly in line with the drop in the opportunity cost of M2 in the second half, because of a surge in liquid over this period. deposits and retail money market mutual funds. The Reflecting in part the slowing of its M2 compostrength in both components partly reflected elevated nent, M3—the broadest money aggregate—expanded volatility in equity markets against the backdrop of 6!/2 percent in 2002, a pace well below the 123/4 pera still-low opportunity cost of holding such deposits. cent advance posted in 2001. Growth in M3 was also In addition, another wave of mortgage refinancing held down by a sharp deceleration of institutional boosted M2 growth during this period. (Refinancings money funds, as their yields dropped to close alignment with short-term market interest rates. This effect was only partly offset by the pickup in needs to fund M2 velocity and opportunity cost bank credit, which resulted in an acceleration in the Ratio, ratio scale Percentage points, ratio scale issuance of managed liabilities, including large time deposits. M3 velocity continued to decline in 2002. 2.3 — 8 M2 velocity — 4 New Discount Window Programs 2.1 — / On October 31, 2002, following a three-month public M2 2 opportunity \ \ comment period, the Board of Governors approved cost \ \ changes to its Regulation A that established two new \\ — 1 types of loans to depository institutions—primary 1.9 — ^ and secondary credit—and discontinued the adjustment and extended credit programs. The new pro- 1 1 1 1 1 1 1 1 1 1 1 1 1 grams were implemented on January 9, 2003. The 1993 1996 1999 2002 seasonal credit program was not altered. NOTE. The data are quarterly and extend through 2002:Q4. The velocity of M2 is the ratio of nominal gross domestic product to the stock of M2. The The primary reason for adopting the new programs opportunity cost of holding M2 is a two-quarter moving average of the was to eliminate the subsidy to borrowing institudifference between the three-month Treasury bill rate and the weighted average return on assets included in M2. tions that was implicit in the basic discount rate, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Federal Reserve Bulletin • March 2003 which since the late 1960s had usually been set below cial condition, extensions of secondary credit usually market interest rates. The subsidy required Fed- involve some administration. eral Reserve Banks to administer credit extensions heavily in order to ensure that borrowing institutions used credit only in appropriate circumstances— International Developments specifically, when they had exhausted other reasonably available funding sources. That administration The international economy rebounded in 2002 after was necessarily somewhat subjective and conse- a stagnant performance in 2001, but recovery was quently difficult to apply consistently across Reserve uneven in both timing and geographical distribution. Banks. In addition, the heavy administration was one Growth abroad picked up sharply in the first half of factor that caused depository institutions to become last year, as a strong rally in the high-tech exporting reluctant to use the window even in appropriate con- economies in developing Asia was joined by robust ditions. Also, depository institutions were concerned growth in Canada and, to a lesser extent, Mexico. at times about being marked with a "stigma" if Japan also posted respectable growth in the first market analysts and counterparties inferred that the half, largely as a result of a surge of exports. Howinstitution was borrowing from the window and sus- ever, performance in the euro area remained sluggish, pected that the borrowing signaled that the institution and several South American economies experienced was having financial difficulties. The resulting reluc- difficulties, with full-fledged crises in Argentina and tance to use the window reduced its usefulness in Venezuela and mounting concerns about prospects buffering shocks to the reserve market and in serving for Brazil. As the U.S. economy decelerated in the as a backup source of liquidity to depository insti- second half, the rapid pace of recovery slowed in tutions, and thus undermined its performance as a developing Asia and in Canada, while performance monetary policy tool. remained lackluster in much of the rest of the world. To address these issues, the Board of Governors Monetary policy actions abroad also diverged specified that primary credit may be made available across countries in 2002 as authorities reacted to at an above-market interest rate to depository insti- differing economic conditions. In Canada, official tutions in generally sound financial condition. The interest rates were raised in three steps by July amid above-market interest rate eliminates the implicit concerns that buoyant domestic demand and sharply subsidy. Also, restricting eligibility for the program rising employment would ignite inflationary presto generally sound institutions should reduce insti- sures. Monetary authorities in Australia and Sweden tutions' concerns that their borrowing could signal also increased policy rates in the first half of the year. financial weakness. However, as economic conditions weakened around The Federal Reserve set the initial primary credit the world in the second half, official interest rates rate at 2.25 percent, 100 basis points above the were held constant in Canada and Australia and were FOMC's target federal funds rate as of January 9, lowered in Sweden. Monetary policy was held steady 2003. The target federal funds rate remained throughout 2002 in the United Kingdom, where unchanged, and thus the adoption of the new pro- growth was moderate and inflation subdued, but offigrams did not represent a change in the stance of cial interest rates were lowered 25 basis points, to monetary policy. In the future, the primary credit 3.75 percent, in early February 2003 in response to rate will be adjusted from time to time as appropriate, concerns about the prospects for global and domesusing the same discretionary procedure that was tic demand. The European Central Bank (ECB) held used in the past to set the adjustment credit rate. The rates constant through most of the year, as inflation Federal Reserve also established procedures to reduce remained above the ECB's 2 percent target ceiling, the primary credit rate to the target federal funds rate but rates were lowered 50 basis points in Decemin a national emergency, even if key policymakers ber as the euro area's already weak recovery appeared are unavailable. to be stalling. Japanese short-term interest rates remained near zero, while authorities took some lim- Institutions that do not qualify for primary credit ited further steps to stimulate demand through nontramay obtain secondary credit when the borrowing is ditional channels. Monetary policy was tightened in consistent with a prompt return to market sources of both Mexico and Brazil in response to concerns about funds or is necessary to resolve severe financial diffithe inflationary effects of past currency depreciation. culties. The interest rate on secondary credit is set by formula 50 basis points above the primary credit rate. Yield curves in the major foreign industrial coun- The rate was set initially at 2.75 percent. Because tries steepened and shifted up in the first quarter of secondary credit borrowers are not in sound finan- 2002 in response to generally favorable economic Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 121 Equity indexes in selected foreign industrial countries appeared that the United States was poised to lead a global economic recovery. However, the dollar weak- Week ending January 5, 2001 * 100 ened sharply in the late spring and early summer amid deepening concerns about U.S. corporate governance and profitability. Around that time market analysts also appeared to become more worried about the growing U.S. current account deficit and its potential negative influence on the future value of the dollar. The dollar rebounded somewhat around midyear as growth prospects for other major economies, particularly in the euro area, appeared to dim; the dollar dropped back again late in the year, as geopolitical tensions intensified, and continued to depreciate in early 2003. In nominal terms the dollar has declined about 5 percent on balance over the past year, with depreciations against the currencies of the major NOTE. The data are weekly. The last observations are the average of trading days through February 5, 2003. industrial countries and several of the developing Asian economies partly offset by appreciation against news, but later they flattened out and moved back the currencies of several Latin American countries. down as the outlook deteriorated. Similarly, equity prices in the major foreign industrial economies held up well early in the year but then declined along with Industrial Economies the U.S. stock market and ended the year down sharply from the previous year. The performance of The Canadian economy recorded the strongest perthe stock markets in the emerging-market econo- formance among the major foreign industrial counmies was mixed. Share prices in Brazil and Mexico tries last year despite some slowing in the second fell sharply in the second and third quarters but half. The strength, which was largely homegrown, then showed some improvement toward the end reflected robust growth of consumption and residenof the year. In the Asian emerging-market econo- tial construction as well as an end to inventory runmies, equity prices rose in the first half of 2002 on offs early in the year. The expansion was accoma general wave of optimism, especially in the high- panied by very rapid increases in employment and technology producing economies; equity prices began utilization of capacity, and the core inflation rate to decline around midyear as global demand softened breached the upper end of the government's 1 perbut posted modest rebounds late in the year. cent to 3 percent target range near the end of the year. The foreign exchange value of the dollar continued The Canadian dollar appreciated against the U.S. its mild upward trend into the early part of 2002, as it dollar in the first half of the year, but it dropped back somewhat in the second half as the economy slowed; Equity indexes in selected emerging markets by the end of the year it was up only slightly on balance. The Canadian dollar has moved up some- Week ending January 5,2001 = 100 what more so far this year. The Japanese economy recorded positive growth during 2002, although it was not enough to fully reverse the decline in output that occurred in 2001. Despite about 10 percent appreciation of the yen against the dollar in 2002, Japanese growth was driven largely by exports, with smaller contributions from both increased consumption and a slower pace of inventory reduction. In contrast, private investment continued to decline, although not as sharply as in 2001. Labor market conditions remained quite depressed, and consumer prices continued to fall. Little progress was made on the serious structural 2001 2002 2003 problems that have plagued the Japanese economy, NOTE. The data are weekly. The last observations are the average of trading days through February 5, 2003. including the massive and growing amount of bad Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Federal Reserve Bulletin • March 2003 U.S. dollar exchange rate against selected major currencies owing to higher food and energy prices and in small part to the introduction of euro notes and coins. Week ending January 5, 2001 = 100 Increased slack in the economy, however, together with the 15 percent appreciation of the euro by the end of the year, helped to mitigate inflation concerns, \japanese yen — 110 and the ECB lowered its policy interest rate in December. The euro continued to appreciate in early 2003. U.K. \ ~ ^Canadian dollar pound 100 Economic growth in the United Kingdom held up better than in the other major European countries last year, and sterling strengthened about 10 percent 90 versus the dollar. However, the expansion remained Euro uneven, with the services sector continuing to grow more rapidly than the smaller manufacturing sector. 1 1 , . i , . i , , i , , 1 . , i . . i 1 2001 2002 2003 Despite tight labor markets, inflation remained a bit below the Bank of England's target of 2Vi percent for NOTE. The data are weekly. Exchange rates are in foreign currency units per dollar. Last observations are the average of trading days through February most of the past year. A sharp rise in housing prices 5, 2003. has, however, raised some concern about the possibility of a real estate price bubble. The British governloans on the books of Japanese banks. A new set of ment announced its intention to complete a rigorous official measures that aims at halving the value of bad assessment of its criteria for joining the European loans within two and a half years was announced in Monetary Union (EMU) by the middle of this year the fall, but the details of this plan are still not fully and, if they are met, to hold a referendum on entry. specified. In September, the Bank of Japan announced a plan to buy shares from banks with excessive holdings of equity, which would help to reduce bank Emerging-Market Economies exposure to stock market fluctuations. Because the transactions are to occur at market prices, there would The Brazilian economy posted a surprisingly strong be no net financial transfer to the banks. Near the end rebound in 2002 despite a major political transition of last year the Bank of Japan (BOJ) raised its target and accompanying turbulence in financial markets. range for bank reserves at the BOJ from ¥10-15 tril- The Brazilian real depreciated sharply between May lion to ¥15-20 trillion, increased the monthly amount and October, and sovereign bond spreads climbed to of its outright purchases of long-term government 2,400 basis points as it became increasingly likely bonds, and broadened the range of collateral that that Luiz Inacio Lula da Silva (Lula), the Workers' can be used for market operations. In December the Party candidate, would win the presidential election. monetary base was up about 20 percent from a year Given some of the past stances of the party, this earlier, a rise partially reflecting the increased level possibility fueled concerns among foreign investors of bank reserves at the BOJ. However, the twelve- about a potential erosion of fiscal and monetary discimonth rate of base money growth was considerably pline. In response to the sharp deterioration in finanbelow the 36 percent pace registered in April. Broad cial conditions facing Brazil, a $30 billion IMF promoney growth remains subdued. gram was approved in September 2002, $6 billion of Economic performance in the euro area was quite which was disbursed by the end of the year. However, sluggish last year. Although exports were up sharply, financial conditions improved markedly after Lula growth in consumption was modest, and private won the election in late October and appointed a investment declined. The area's lackluster economic cabinet perceived to be supportive of orthodox fiscal performance pushed the unemployment rate up by and monetary policies, including greater central bank several tenths of a percentage point by the end of independence. By January 2003 the real had reversed the year. Economic weakness was particularly pro- about one-fourth of its previous decline against the nounced in some of the larger countries—Germany, dollar, and bond spreads had fallen sharply. However, Italy, the Netherlands, and, to a lesser extent, France. the new administration still faces some major chal- In contrast, growth in Spain and some of the smaller lenges. In particular, serious concerns remain over euro-area countries—Ireland, Portugal, Finland, and the very large quantity and relatively short maturity Greece—was much more robust. Headline inflation of the outstanding government debt. In addition, last jumped to a bit above 21/2 percent early in the year, year's currency depreciation fueled a rise in inflation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 123 Exchange rates and bond spreads dence in the banking system, already shaken, was for selected emerging markets further impaired. Financial and economic conditions eventually stabilized in the second half of the year, Week ending January 5,2001 = 100 Week ending January 5, 2001 = 100 but there are no signs yet of a sustained recovery. The Dollar exchange rates government also defaulted on obligations to multilateral creditors in late 2002 and early 2003. In January, Argentina and the International Monetary Fund reached agreement on a $6.6 billion short-term program that will go to meeting Argentina's payments to the IMF at least through the elections expected in the spring and also to clearing its overdue obligations to the multilateral development banks. Venezuela experienced extreme economic and political turmoil over the past year. In February 2002 the central bank abandoned the bolivar's crawling peg to the dollar, and the bolivar depreciated sharply. Opponents of President Hugo Chavez mounted a short-lived coup in April and declared a national strike in early December. The strike brought the already-weak economy to a standstill, and output in the key oil industry plummeted. The strike abated in early February in all sectors but oil. In response to the strike, Chavez increased his control of the stateowned oil company and oil production began rising in early 2003, but it was still well below pre-strike levels. With the exchange rate plunging in late January, the government suspended currency trading for two weeks before establishing a fixed exchange rate regime and some restrictions on foreign currency NOTE. The data are weekly. Exchange rates (top panel) are in foreign currency units per dollar. Bond spreads (bottom panel) are the J.P. Morgan transactions. Emerging Market Bond Index (EMBI+) spreads over U.S. Treasuries. Last One of the few bright spots in Latin America last observations are the average of trading days through February 5, 2003. year was the Mexican economy. Boosted by the U.S. recovery, growth was moderate for the year as a that has prompted several increases in the monetary whole despite some late slowing. However, finanpolicy interest rate. In January the government raised cial conditions deteriorated somewhat after midyear the upper bound of its inflation target range for this as market participants reevaluated the strength of the year to 8.5 percent from 6.5 percent, although the North American recovery. Mexican stock prices slid target for next year was lowered at the same time to about 25 percent between April and September, and 5.5 percent from 6.25 percent. sovereign bond spreads widened nearly 200 basis Argentine GDP contracted further in 2002 after points to around 430 basis points over the same declining 10 percent in 2001. The currency board period. Nevertheless, the Mexican economy did not arrangement that had pegged the peso at a one-to-one appear to be much affected by spillovers from the rate with the dollar collapsed early last year; the peso problems elsewhere in Latin America; bond spreads lost nearly three-fourths of its value by late June, and dropped sharply between October and the end of the sovereign bond spreads spiked to more than 7,000 year to around 300 basis points, a level considerably basis points. By early 2002, the banking system had lower than elsewhere in the region. The peso deprebecome effectively insolvent as a result of the plung- ciated about 12 percent against the dollar over the ing peso, the weak economy, and the government's course of last year. The decline fueled an increase default on debt that the banks held mostly involun- in twelve-month inflation to more than 5V2 percent tarily. Confronted with this situation, the govern- by year-end. The acceleration put inflation above ment forced the conversion of the banks' dollar- the government target rate of 41/2 percent and well denominated assets and liabilities to pesos and also above the ambitious 3 percent target set for 2003. In mandated the rescheduling of a large share of depos- response to increasing inflation, the Bank of Mexico its. As a result of these and other measures, confi- has tightened monetary policy four times since Sep- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Federal Reserve Bulletin • March 2003 tember 2002. The peso has continued to depreciate in and Thailand—also was generally robust in 2002, early 2003, and bond spreads have moved back up a although the overall softening in global demand in bit. the second half of the year was evident there as well. The Asian emerging-market economies generally The second-half slowing in production was parperformed well in 2002, although there were signifi- ticularly pronounced in Singapore, which is heavily cant differences within the region. Outside of China, dependent on exports of high-technology products. the strongest growth was recorded in South Korea, Taiwan, another high-technology producer, also which benefited in the first half of the year from both showed a significant deceleration in output between an upturn in global demand for high-tech products the first and second halves of the year. Both of these and a surge in domestic demand, particularly con- economies experienced some mild deflation in 2002, sumption. However, consumer confidence deterio- although prices turned up toward the end of the year. rated at the end of the year as tensions over North Although the Hong Kong economy did not show Korea intensified; the uneasy situation, as well as the as much improvement as most other emerging Asian substantial existing consumer debt burden, pose sig- economies in the first half of last year, it recorded nificant risks to growth in consumption this year. The very strong growth in the third quarter. Nevertheless, Korean won appreciated sharply against the dollar prices continued to fall for the fourth consecutive between April and midyear in response to improv- year. The mainland Chinese economy, which again ing economic conditions; it then dropped back in late outperformed the rest of the region in 2002, enjoyed summer and early fall as perceptions about the surging investment by the government and by foreign strength of the global recovery were adjusted down- investors as well as robust export growth. The Chiward. However, the won turned back up against the nese economy continued to experience mild deflation dollar late last year. last year. • The performance of the ASEAN-5 economies— Indonesia, Malaysia, the Philippines, Singapore, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

125 Announcements FEDERAL OPEN MARKET COMMITTEE governance requirements of the Sarbanes-Oxley Act DIRECTIVE of 2002 for those state member banks that have a class of securities registered under the Securities The Federal Open Market Committee decided on Exchange Act of 1934. January 29, 2003, to keep its target for the federal The final rule, like the interim rule it replaces, funds rate unchanged at 1 ]A percent. requires such state member banks to comply with any Oil price premiums and other aspects of geopoliti- rules adopted by the Securities and Exchange Comcal risks have reportedly fostered continued restraint mission under designated sections of the Sarbaneson spending and hiring by businesses. However, the Oxley Act. Committee believes that as those risks lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in produc- REVISION AND INTERPRETATION OF tivity, will provide support to an improving economic REGULATION K climate over time. In these circumstances, the Committee believes The Federal Reserve Board on January 6, 2003, that, against the background of its long-run goals of approved revisions to Subpart D of Regulation K, price stability and sustainable economic growth and governing international banking operations. of the information currently available, the risks are The final rule reduces the regulatory burden on balanced with respect to the prospects for both goals banking institutions engaged in international lending for the foreseeable future. by simplifying the requirements concerning account- Voting for the FOMC monetary policy action were ing for fees on international loans to make the regula- Alan Greenspan, Chairman; William J. McDonough, tion consistent with generally accepted accounting Vice Chairman; Ben S. Bernanke; Susan S. Bies; principles (GAAP). J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; The final rule will become effective thirty days Edward M. Gramlich; Jack Guynn; Donald L. Kohn; after publication in the Federal Register, which is Michael H. Moskow; Mark W. Olson; and Robert T. expected shortly. Parry. The Federal Reserve Board on February 7, 2003, issued an interpretation concerning securities underwriting by banking organizations that are subject to the Bank Holding Company Act. STATEMENT BY CHAIRMAN GREENSPAN ON THE The interpretation clarifies that a banking organi- RETIREMENT OF WILLIAM J. MCDONOUGH, zation that wishes to engage in underwriting securi- PRESIDENT OF THE FEDERAL RESERVE BANK ties that are to be distributed in the United States OF NEW YORK must be either a financial holding company or have authority to engage in underwriting activity under I will greatly miss Bill McDonough's counsel and section 4(c)(8) of the Bank Holding Company Act. advice. After a decade of exemplary service to the Federal Reserve System, his retirement will leave a pronounced void. REAUTHORIZATION OF THE NATIONAL FLOOD INSURANCE PROGRAM ADOPTION OF FINAL RULE IMPLEMENTING The Federal Reserve Board on January 14, 2003, SARBANES-OXLEY ACT informed state member banks of the reauthorization of the National Flood Insurance Program (NFIP) by The Federal Reserve Board on January 31, 2003, the Congress, retroactive to December 31, 2002. announced the adoption of a final rule implementing The authority of the Federal Emergency Manageseveral of the reporting, disclosure, and corporate ment Agency (FEMA) to issue flood insurance poli- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • March 2003 cies expired on December 31, 2002, after the Con- have incurred and imputed profits they would have gress adjourned without extending FEMA's issuance expected to earn had the services been provided by a authority. On December 20, 2002, the federal finan- private business firm. cial institution regulatory agencies jointly issued The changes, approved by the Reserve Banks' interim guidance to assist borrowers and lenders in Conference of Presidents, are expected to reduce dealing with questions about what to do during the operating costs for check services about $60 million lapse. in 2005 and about $300 million over the next five On January 13, 2003, President Bush signed the years. The changes also are consistent with a decision National Flood Insurance Program Reauthorization reached after a 1998 Federal Reserve study of the Act into law. The act extends the authorization of the payments system that the Reserve Banks would NFIP to December 31, 2003. remain a provider of check services. "Nationwide, consumers and businesses have made a significant shift in how they make payments, CHANGES TO INCREASE EFFICIENCY IN substituting electronic payments for checks. This FEDERAL RESERVE BANK CHECK SERVICES development is good news for the nation's payments system, and the Federal Reserve has strongly sup- The Federal Reserve Banks, collectively the nation's ported this shift," Minehan said. "But declining largest processor of checks, announced on Febru- check volumes are requiring the Reserve Banks to ary 6, 2003, changes to their back office check- make changes in their check operations to address processing operations intended to improve operating the challenges posed by the changing market. The efficiency while maintaining high-quality check ser- changes we are announcing today will help us meet vices to depository institutions nationwide. these challenges." Reflecting the ongoing shift in consumer and busi- Reserve Banks will continue to provide check serness preferences from checks to electronic payments, vices on a nationwide basis and are working to mainthe Reserve Banks will reduce their check service tain deposit times and availability as close to current operating costs through a combination of streamlin- service levels as possible for depository institutions ing their check-management structure, reducing staff, in the affected markets. In addition, new checkdecreasing the number of check-processing locations, imaging and check-adjustments technology should and increasing processing capacity in other locations. enable the Reserve Banks to provide new services "The Federal Reserve Banks are committed to and help maintain the high quality of Reserve Bank remaining a leader in providing payment services, check services offered to the nation's depository including check processing. Adjusting our operations institutions. to respond to changes in the marketplace will posi- With the changes, Reserve Bank check processing tion the Banks to continue to fulfill this role," said will be performed at 32 sites, down from 45. Addi- Cathy Minehan, President and Chief Executive Offi- tionally, the Reserve Banks will streamline their cer of the Federal Reserve Bank of Boston and Chair check-adjustment functions, now being handled in of the Reserve Banks' Financial Services Policy 43 locations, to 12 of their current locations nation- Committee. wide. (The term "check adjustments" refers to the Even though check payments remain the most part of the check-processing operation in which popular form of noncash retail payment, they make check-processing errors are resolved.) Of the up only 60 percent of all noncash retail payments 13 offices that will no longer process checks (see today compared with 85 percent in 1979. Recent table 1), the 5 regional sites that process only checks Federal Reserve studies suggest that roughly 40 bil- will close. The volume from these 13 offices will be lion checks were written in the United States in 2002, handled by 9 offices (see table 2). down from about 50 billion in 1995. The Reserve Banks handle about 17 billion of these checks annu- 1. Offices that will no longer process checks ally, and this volume is expected to decline as well. The changes reflect the changing market environ- Pittsburgh, Pa. Peoria, 111.1 ment and will enable the Reserve Banks to continue Richmond, Va. Little Rock, Ark. to meet the requirements of the Monetary Control Charleston, W.Va.1 Louisville, Ky. Columbia, S.C.1 Omaha, Nebr. Act of 1980. That act requires the Reserve Banks to Miami, Fla. El Paso, Tex. set prices to recover, over the long run, their total Indianapolis, Ind.1 San Antonio, Tex. costs of providing payment services to depository Milwaukee, Wis.1 institutions, including the imputed costs they would 1. These offices will close. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 127 2. Offices that will expand check-processing capacity INTERAGENCY GUIDANCE ON CREDIT CARD ACCOUNT MANAGEMENT AND LOSS Cleveland, Ohio Chicago, 111. ALLOWANCE PRACTICES Cincinnati, Ohio Des Moines, Iowa Baltimore, Md. Memphis, Tenn. Charlotte, N.C. Dallas, Tex. Under the auspices of the Federal Financial Institu- Jacksonville, Fla. tions Examination Council, the Office of the Comptroller of the Currency, the Federal Reserve Board, As a result of these changes, the Reserve Banks the Federal Deposit Insurance Corporation, and the will reduce their overall check staff by slightly more Office of Thrift Supervision issued on January 8, than 400 positions, representing about 8 percent of 2003, guidance governing account-management and their current check service positions. In the offices loss allowance practices for credit card lending. where check processing will be eliminated, almost The guidance applies to all banks and thrifts. The 1,300 positions will be affected. At this time, agencies developed the guidance in response to recent however, the number of involuntary separations is examinations that disclosed a number of inappropriunclear. Some staff reductions will occur through ate account-management, risk-management, and loss attrition, and there will be some opportunities for allowance practices. reassignment. In addition, the Reserve Banks esti- The agencies' objective in issuing the guidance is mate that they will add about 900 positions at the to assist financial institutions in conducting credit offices that will continue processing checks. card lending activities in a safe and sound manner, The Reserve Banks will offer a variety of programs while meeting the needs of their customers. The to assist affected staff. These programs include sepa- guidance outlines the supervisory agencies' expectaration packages, enhanced pension benefits for some tions for prudent risk management, income recognilonger-service staff nearing retirement, extended tion, and loss allowance practices. The agencies caremedical coverage, and career transition assistance. fully reviewed and considered the comments received The changes are projected to begin in some offices in from individuals, institutions, community groups, and the second half of this year and to continue through trade associations after publication of a draft of the 2004, with an expected completion at all offices by guidance on July 22. In response to the comments, the end of that year. the agencies made changes to address the following According to Minehan, issues: One of the missions of the Federal Reserve System is • Clarify documentation expectations for line to foster the efficiency, accessibility, and integrity of the increase programs. nation's payments system. We believe that the changes we are announcing are essential because they will provide the • Clarify expectations for over-limit practices. Reserve Banks greater flexibility to manage check opera- • Provide guidance for minimum payments and tions in an environment of declining volumes. We regret negative amortization. that this decision will affect a portion of the Fed's check- • Revise the repayment period for workout processing management and staff, but we have a range of accounts. programs in place to help ease the transition for affected staff members. The agencies recognize that some institutions From 1992 to 2001, the Reserve Banks earned an may require additional time to implement changes in average annual after-tax return on equity for all policies, practices, and systems in order to achieve priced payment services of 12.2 percent. In 2002, full consistency with the credit card guidance. Those however, mainly because of declining check vol- institutions should work with their primary federal umes, the Reserve Banks' after-tax return on equity regulator to ensure implementation of needed for all priced payment services declined, to 4.2 per- changes as promptly as possible. cent. In 2003, the Reserve Banks expect to post an With respect to income recognition and loss allowafter-tax loss reflecting the up-front costs associated ance practices for credit card lending, the guidance with the changes. The Reserve Banks project that reflects generally accepted accounting principles these changes will position check services to return (GAAP), existing interagency policies on loss allowto full cost recovery by 2005. ances, and current Call Report and Thrift Financial For more information on the affected banks, see Report instructions. The agencies expect continthe announcement at http://www.federalreserve.gov/ ued and ongoing compliance with GAAP and these boarddocs/press/other/2003/20030206/default.htm. reporting instructions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • March 2003 INTERAGENCY GUIDANCE ON IDENTIFYING TESTING REVEALS NO ANTHRAX ON BOARD INFORMATION SECURITY RISKS MAIL SAMPLE The Federal Financial Institutions Examination The Federal Reserve Board on January 15, 2003, Council (FFIEC) on January 29, 2003, issued revised received results from further testing conducted by the guidance for examiners and financial institutions to State of North Carolina, under the guidance of the use in identifying information security risks and Centers for Disease Control (CDC). It showed no evaluating the adequacy of controls and applicable anthrax bacteria present on a sample from a piece of risk-management practices of financial institutions. mail that earlier had tested presumptively positive for The safety and soundness of the federal financial the bacteria in a private laboratory. industry and the privacy of customer information The most recent tests conducted are considered definitive by CDC standards. The sample will be sent depend on the security practices of banks, thrift instito the CDC in Atlanta for additional testing and tutions, and credit unions. The Information Security identification. booklet describes how an institution should protect and secure the systems and facilities that process and maintain information. The booklet calls for financial RELEASE OF MINUTES OF DISCOUNT RATE institutions and technology service providers (TSPs) MEETINGS to maintain effective security programs, tailored to the complexity of their operations. The Federal Reserve Board on February 7, 2003, This guidance is the first in a series of updates to released the minutes of its discount rate meetings the 1996 FFIEC Information Systems (IS) Examina- from November 18, 2002, to December 9, 2002. tion Handbook. These updates will address significant changes in technology since 1996 and incorpo- ENFORCEMENT ACTIONS rate a risk-based examination approach. The FFIEC currently plans to issue the updates The Federal Reserve Board on January 23, 2003, in separate booklets that will ultimately replace all announced the issuance of an order of assessment of chapters of the 1996 handbook and make up the a civil money penalty against The Bank of Yellville, new FFIEC Information Technology (IT) Examina- Yellville, Arkansas, a state member bank. tion Handbook. In addition to the booklet on infor- The Bank of Yellville, without admitting to any mation security, future booklets will address busi- allegations, consented to the issuance of the order in ness continuity planning, supervision of technology connection with its alleged violations of the Board's service providers, electronic banking, IT audit, regulations implementing the National Flood Insurpayment systems, outsourcing, IT management, ance Act. computer operations, and systems development and The order requires The Bank of Yellville to pay a acquisition. civil money penalty of $1,750, which will be remitted The FFIEC agencies plan to distribute these book- to the Federal Emergency Management Agency for lets electronically to financial institutions and TSPs. deposit into the National Flood Mitigation Fund. The documents will be available on the Internet through the FFIEC's InfoBase application. InfoBase The Federal Reserve Board on January 23, 2003, will include each booklet in Adobe Acrobat PDF file announced the issuance of an order of assessment of format, as well as an on-line version with links to a civil money penalty against the Central State Bank, various resource materials, and an orientation to the Calera, Alabama, a state member bank. handbook update process. The Central State Bank, without admitting to any The electronic version of the Information Security allegations, consented to the issuance of the order in booklet is available at www.ffiec.gov/guides.htm. connection with its alleged violations of the Board's The FFIEC is composed of the five federal finan- regulations implementing the National Flood Insurcial regulators: the Board of Governors of the Federal ance Act. Reserve System, the Federal Deposit Insurance Corpo- The order requires the Central State Bank to pay a ration, the National Credit Union Administration, the civil money penalty of $2,000, which will be remitted Office of the Comptroller of the Currency, and the to the Federal Emergency Management Agency for Office of Thrift Supervision. deposit into the National Flood Mitigation Fund. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 129 The Federal Reserve Board on January 23, 2003, Division of International Finance. Ms. Johnson will announced the issuance of an order of assessment of work on issues related to financial markets in a civil money penalty against the La Salle State emerging-market economies. Bank, La Salle, Illinois, a state member bank. Ms. Johnson served as U.S. Executive Director to The La Salle State Bank, without admitting to any the African Development Bank in 2000-2001. She allegations, consented to the issuance of the order in worked at the Federal Reserve Bank of New York connection with its alleged violations of the Board's from 1982 to 2000 in a variety of positions in the regulations implementing the National Flood Insur- international area. When she left the Bank in 2000, ance Act. Ms. Johnson was Vice President and Senior Officer The order requires the La Salle State Bank to pay a for Equal Employment Opportunity. Ms. Johnson has civil money penalty of $3,150, which will be remitted a B.A. from Radcliffe College and a Ph.D. in ecoto the Federal Emergency Management Agency for nomics from Columbia University. deposit into the National Flood Mitigation Fund. The Board of Governors has approved the fol- The Federal Reserve Board on January 23, 2003, lowing changes of assignments in the Division of announced the issuance of an order of assessment International Finance. Dale Henderson will assume of a civil money penalty against the Simmons First the position of Senior Adviser. Jon Faust, Assistant Bank of Russellville, Russellville, Arkansas, a state Director, will have direct oversight responsibility of member bank. the Trade and Financial Studies Section. Mr. Faust The Simmons First Bank of Russellville, without will relinquish his position as chief, Trade and Finanadmitting to any allegations, consented to the issu- cial Studies Section. ance of the order in connection with its alleged Michael Leahy, Assistant Director, will have overviolations of the Board's regulations implementing sight responsibility of the Financial Markets Section the National Flood Insurance Act. and the International Banking Section. Mr. Leahy The order requires the Simmons First Bank of will relinquish his position as chief, Financial Mar- Russellville to pay a civil money penalty of $1,500, kets Section. which will be remitted to the Federal Emergency Management Agency for deposit into the National NEW BOOKLET AVAILABLE ON IDENTITY THEFT Flood Mitigation Fund. The Federal Reserve Board on January 16, 2003, The Federal Reserve Board on February 5, 2003, announced the availability of a new brochure announced the execution of a written agreement by designed to help consumers protect themselves and between Premier Financial Bancorp, Inc., Hun- against identity theft. tington, West Virginia, and the Federal Reserve Bank "Identity Theft" was developed by the Federal of Cleveland. Reserve Bank of Boston and complements the Bank's 2001 issuance of the video, "Identity Theft: Protect BOARD STAFF CHANGES Yourself." Addressed to consumers, the booklet describes the dangers posed by identity thieves, what The Board of Governors has approved the promotion people can do to protect themselves, and what they of Stephanie Martin to associate general counsel in should do if they discover that their identities have the Monetary and Reserve Bank Affairs Section of been stolen. the Legal Division. Identity theft is one of the fastest-growing crimes The section provides legal advice in support of the in the United States, and the FBI estimates that Board's monetary policy, financial markets, and pay- 500,000 to 700,000 Americans are now victimized ment systems activities. Ms. Martin joined the Legal every year. When one person's identification, which Division in 1987 after receiving her J.D. from Har- can include name, social security number, or bank vard Law School. She was appointed to the official and credit account numbers, is used by another to staff in April 2001. open new accounts, take out loans, or apply for new credit cards, the damage can take months to repair. The Board of Governors has approved the appoint- The "Identity Theft" brochure describes some ment of Willene A. Johnson as an adviser in the common sense precautions that consumers should Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • March 2003 take to protect personal information, shows how to b. A change to Regulation Y that was approved by monitor for signs of identity theft, and offers a guide the Board on January 8, 2002 (effective April 1, 2002). This revised rule established special minimum risk-based for consumers whose identities have been stolen. The capital requirements for equity investments in nonfinancial brochure also has useful contact information for the companies. The requirements impose a series of marginal national credit bureaus, federal agencies that can capital charges on authorized covered equity investments provide help, and nonprofit organizations that advise that increase with the level of a bank's overall exposure to consumers and businesses. equity investments relative to its tier 1 capital. The highest The brochure is available, free of charge, from the marginal capital charge requires a 25 percent deduction from tier 1 capital for authorized covered investments that Federal Reserve Bank of Boston. To order a copy, aggregate more than 25 percent of a bank holding compaconsumers may call 1-800-409-1333 or write to the ny's tier 1 capital. (See SR letter 02-4.) address below: c. The Board's approval of a limited risk-based capital change to Regulation Y on March 27, 2002, effective Identity Theft Brochure July 1, 2002. (See the Federal Reserve's joint press release Public and Community Affairs Department of April 9, 2002, and its attachment.) The change lowered, from 100 percent to 20 percent, the risk weight that is Federal Reserve Bank of Boston applied to certain securities claims on, or guaranteed by, a P.O. Box 2076 qualifying securities firm in the United States and in other Boston, MA 02016-2076 countries that are members of the Organization for Economic Cooperation and Development. The publication is also available on line, at the d. The May 17, 2002, interagency advisory on the Bank's public web site: http://www.bos.frb.org/ risk-based capital treatment of accrued interest receivables (AIR) related to credit card securitizations. The AIR asset consumer/identity/index, htm. typically represents a subordinated retained interest in the transferred assets. The asset therefore meets the definition of a "residual interest" that requires dollar-for-dollar capital, even if the amount exceeds the fully equivalent risk- PUBLICATION OF THE DECEMBER 2002 UPDATE based capital charge on the transferred assets under the TO THE BANK HOLDING COMPANY November 2001 Regulation Y amendment. When accounting under FAS 140, "Accounting for Transfers and Ser- SUPERVISION MANUAL vicing of Financial Assets and the Extinguishment of Liabilities," for the securitization and sale of credit card The December 2002 update to the Bank Holding receivables, and in computing the gain or loss on sale, a Company Supervision Manual, Supplement No. 23, banking organization (seller) should report the AIR asset has been published and is now available. The Manual on the date of transfer, at adjusted cost, based on its relative fair (market) value. (See SR letters 02-12 and 02-22.) comprises the Federal Reserve System's regulatory, e. The joint September 5, 2002, interagency intersupervisory, and inspection guidance for bank holdpretive guidance discussing the appropriate applications ing companies. The new supplement includes the of the November 2001, joint final rale on the treatment of following subjects: recourse obligations, direct-credit substitutes, and residual interests in asset securitizations. The guidance addresses 1. Capital Adequacy. The revised sections on the assess- the risk-based capital treatment for (1) split or partially ment of capital adequacy include various rule changes, rated instruments, (2) nonqualification of corporate bonds clarifying interpretations, an advisory, and other super- or other securities for the ratings-based approach, visory guidance. They include (3) spread accounts that function as credit-enhancing a. A change to Regulation Y (12 CFR 225, appen- interest-only strips, (4) audits of internal credit risk rating dix A) that was approved by the Board on November 8, systems, and (5) cleanup calls. (See SR letter 02-16.) 2001 (effective January 1, 2002) and issued in a joint f. The Federal Reserve's March 23, 2002, superinteragency press release dated November 29, 2001. The visory guidance on derivative contracts hedging trust revised rule addresses the risk-based capital treatment for preferred stock as to the inclusion of such trust preferred recourse obligations, residual interests (except credit- stock in tier 1 capital. In order for an issuing bank holding enhancing I/Os), direct-credit substitutes, and senior subor- company to include the stock in tier 1 capital, it must have dinated securities in asset securitizations that expose bank- the ability to defer payments for at least 20 consecutive ing organizations (including bank holding companies) quarters without giving rise to an event of default. Such primarily to credit risk. New standards are added for the a deferral feature, which typically is cumulative in trust treatment of residual interests, as well as a concentration preferred stock, is essential in a tier 1 instrument because it limit for credit-enhancing I/O strips. Credit ratings from allows the issuer to conserve its cash resources at a time rating agencies and certain limited alternative-credit-rating when its financial condition is deteriorating. Issues of trust approaches are used to match more closely the risk-based preferred stock may not be included in tier 1 capital if they capital requirement for these banking organizations to are covered by a derivative contract that defeats the cashtheir relative risk of loss for certain positions in asset conserving purpose of the deferral mechanism on the trust securitizations. preferred stock. (See SR letter 02-10.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 131 g. The revised Regulation Y (12 CFR 225, appen- examiner's responsibilities are discussed with regard to dix D) that was approved by the Board on November 8, ensuring that a banking organization's management of 2001 (effective January 1, 2002), which amended the country risks is appropriately addressed during the bank tier 1 leverage measure of the capital adequacy guidelines holding company inspection process. Inspection objectives for bank holding companies for agreements involving and procedures are included. (See SR letter 02-5.) recourse, direct-credit substitutes, and residual interests. 5. Formal corrective actions. Various statutory provi- Also included is the Regulation Y revision for nonfinancial sions are discussed in a revised section on formal correcequity investments, approved by the Board on January 7, tive actions, including actions that must be taken by the 2002 (effective April 1, 2002). (See the January 8, 2002, Federal Reserve. Also discussed are the Federal Reserve's joint interagency press release and SR letter 02-4.) supervisory concerns and guidance that focus on the 2. Asset Securitization. This revised section addresses FDIC's regulations on indemnification agreements and the following issues: payments. (See SR letter 02-17.) a. The asset securitization process and credit en- 6. Allowance for loan and lease losses (ALLL). A new hancements. The guidance is expanded and also includes a section contains supervisory guidance on ALLL methodgeneral discussion of the November 2001 changes to the ologies and documentation practices. (See the July 2, 2001, risk-based capital rule for bank holding companies in FFIEC policy statement.) Although this policy statement, Regulation Y. The revised rule provides for a multilevel, by its terms, applies only to federally insured depository ratings-based approach for agreements involving recourse, institutions, the Federal Reserve believes the guidance it direct credit substitutes, and residual interests. contains is broadly applicable to bank holding companies. b. Implicit recourse provided to asset securitiza- A banking organization's board of directors is responsible tions. The interagency guidance, issued May 23, 2002, on for ensuring that controls are in place to determine the implicit recourse is addressed. Implicit recourse occurs appropriate level of the ALLL. The banking organization when a banking organization (including a bank holding should maintain and support the ALLL with documentacompany) provides post-sale credit support beyond its tion that is consistent with its stated policies and procedures, generally accepted accounting principles (GAAP), contractual obligation to one or more of its securitizations. and applicable supervisory guidance. The ALLL method- Implicit recourse demonstrates that the securitizing bankology must be a thorough, disciplined, and consistently ing organization is re-assuming risk associated with the applied process that incorporates management's current securitized asset—risk that it initially transferred to the judgment about the credit quality of the loan portfolio. (See marketplace. Illustrative examples are provided and sev- SR letter 01-17.) eral supervisory actions are discussed that the Federal Reserve may take upon a determination that a banking 7. Supplemental subprime-lending interagency guidorganization has provided implicit recourse. (See SR letter ance. The subprime-lending section was revised to include 02-15.) the January 2001 guidance that is directed primarily to c. Covenants in asset-securitization contracts that are banking organizations that have subprime-lending prolinked to supervisory thresholds or adverse supervisory grams that equal or exceed 25 percent of tier 1 regulatory actions that are triggers for early amortization events or capital. Banking organizations are expected to recognize the transfer of servicing. An interagency advisory, dated that the elevated levels of credit and other risks arising May 23, 2002, discusses these covenants, which are con- from these activities require more intensive risk managesidered unsafe and unsound banking practices that under- ment and, often, additional capital. Questions and answers mine the objective of supervisory actions. A banking orga- pertaining to the January 2001 guidance are included in an appendix. Revised inspection objectives and procedures nization's board of directors and senior management are are provided. (See SR letter 01-4.) encouraged to amend, modify, or remove these types of covenants in existing transactions. Such covenants could create or exacerbate any liquidity and earnings problems A more detailed summary of changes is included for a banking organization, possibly leading to a further with the update package. The Manual and updates, deterioration in its financial condition. (See SR letter including pricing information, are available from 02-14.) Publications Fulfillment, Mail Stop 127, Board of 3. BHC surveillance program. The discussion on the Governors of the Federal Reserve System, Wash- Federal Reserve System's surveillance program is amended so that it applies only to those bank holding companies that ington, DC 20551 (or charge by facsimile: 202have $1 billion or more in consolidated assets. The section 728-5886). The Manual is also available on the recognizes the separate surveillance program for BHCs Board's public web site at www.federalreserve.gov/ with consolidated assets of less than $1 billion. (See SR let- boarddocs/supmanual/. ter 02-01.) 4. International-country risk. The country risk section is substantially revised to include the February 22, 2002, interagency supervisory and examination guidance on an DISCONTINUANCE OF STATISTICAL TABLE 3.21 effective country-risk management process for banking organizations (including bank holding companies). Coun- Publication of table 3.21, "Claims on Foreign Country risk is the risk that economic, social, or political conditries Held by U.S. and Foreign Offices of U.S. tions in a foreign country might adversely affect an organization's financial condition, primarily through impaired Banks," will be discontinued in the Federal Reserve credit quality or transfer risk (a subset of country risk). The Bulletin after the March 2003 issue. Table 3.21 was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • March 2003 originally published as a more timely report of a results of the annual seasonal factor review. Data in geographic breakdown of assets of foreign branches table 1.10 and table 1.21 in the statistical appendix than the report released by the Federal Finan- to the Federal Reserve Bulletin reflect these changes cial Institutions Examination Council (FFIEC), beginning with the March 2003 issue. FFIEC 009 Country Exposure Report, which once Seasonally adjusted measures of the money stock lagged five months. Currently, the Country Exposure and components incorporate revised seasonal factors Report from FFIEC is being published with a quarter produced from not-seasonally-adjusted data through lag and has data that are more complete on country December 2002. Monthly seasonal factors were estirisk exposure of U.S. banks. The data are available on mated using the X-12-ARIMA procedure. The revithe FFIEC's web site: http://www.ffiec.gov/el6.htm, sions to seasonal factors raised M2 and M3 growth or may be obtained from Publications Fulfillment, rates on average in the first half of 2002 while lower- Mail Stop 127, Board of Governors of the Federal ing them in the second half of the year. Reserve System, Washington, DC 20551, or call 202- Historical data, updated each week, are available 452-3244 or 3245. through the Federal Reserve's web site (http:// www.federalreserve.gov/releases/) with the H.6 statistical release. Current and historical data are also on REVISION TO THE MONEY STOCK DATA the Economic Bulletin Board of the U.S. Department of Commerce. For paid electronic access to the Eco- Measures of the money stock and components were nomic Bulletin Board, call STAT-USA at 1-800-782revised in January of this year to incorporate the 8872 or 202-482-1986. 1. Monthly seasonal factors used to construct Ml, January 2002-March 2004 Other checkable deposits1 NNoonnbbaannkk ttrraavveelleerrss YYeeaarr aanndd mmoonntthh CCuurrrreennccyy DDeemmaanndd ddeeppoossiittss cchheecckkss Total At banks 2002—January .9961 1.0103 1.0129 1.0160 1.0423 February .9985 1.0133 .9725 .9837 .9915 March 1.0006 1.0158 .9956 1.0099 1.0048 April .9997 1.0190 1.0130 1.0439 1.0400 May 1.0009 1.0112 .9782 1.0014 .9969 June 1.0022 .9802 .9876 1.0008 .9887 July 1.0034 .9571 .9961 .9892 .9852 August 1.0007 .9684 .9910 .9799 .9756 September .9971 .9890 .9908 .9802 .9755 October .9959 1.0042 .9854 .9877 .9909 November .9993 1.0214 1.0071 .9885 .9822 December 1.0052 1.0173 1.0689 1.0216 1.0292 2003—January .9966 1.0095 1.0161 1.0156 1.0433 February .9985 1.0127 .9722 .9830 .9909 March .9995 1.0155 .9962 1.0099 1.0038 April 1.0002 1.0186 1.0123 1.0428 1.0374 May 1.0011 1.0103 .9764 1.0003 .9956 June 1.0019 .9792 .9885 .9995 .9869 July 1.0038 .9573 .9920 .9897 .9864 August 1.0019 .9701 .9970 .9799 .9761 September .9968 .9889 .9866 .9805 .9771 October .9963 1.0024 .9865 .9867 .9913 November .9985 1.0213 1.0096 .9903 .9817 December 1.0049 1.0164 1.0671 1.0233 1.0308 2004—January .9966 1.0097 1.0160 1.0167 1.0439 February .9987 1.0130 .9756 .9832 .9911 March .9990 1.0151 .9926 1.0099 1.0030 1. Seasonally adjusted other checkable deposits at thrift institutions are derived as the difference between total other checkable deposits, seasonally adjusted, and seasonally adjusted other checkable deposits at commercial banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 133 2. Monthly seasonal factors used to construct M2 and M3, January 2002-March 2004 SSaavviinnggss aanndd SSmmaallll-- LLaarrggee-- Money market mutual funds YYeeaarr aanndd mmoonntthh MMMMDDAA ddeennoommiinnaattiioonn ddeennoommiinnaattiioonn RRPPss EEuurrooddoollllaarrss ddeeppoossiittss11 ttiimmee ddeeppoossiittss'' ttiimmee ddeeppoossiittss11 In M2 In M3 only 2002—January .9964 1.0008 .9935 1.0090 1.0309 1.0071 1.0040 February .9951 1.0003 .9963 1.0130 1.0303 1.0232 1.0181 March 1.0061 .9987 .9982 1.0206 1.0197 1.0115 1.0201 April 1.0112 .9981 .9992 1.0226 .9974 .9903 1.0178 May .9951 .9984 1.0086 .9871 .9957 1.0140 1.0123 June .9978 .9981 1.0069 .9852 .9884 1.0176 .9953 July .9944 .9991 .9999 .9886 .9813 1.0024 .9849 August .9964 1.0004 .9968 .9944 .9828 .9936 .9827 September .9983 1.0011 1.0004 .9909 .9671 .9731 .9865 October .9978 1.0016 1.0031 .9936 .9799 .9712 .9842 November 1.0065 1.0024 1.0031 .9958 1.0033 .9894 .9975 December 1.0061 1.0011 .9976 1.0016 1.0225 1.0038 1.0027 2003—January .9978 1.0003 .9917 1.0086 1.0311 1.0077 1.0039 February .9948 .9998 .9945 1.0123 1.0318 1.0235 1.0157 March 1.0053 .9986 .9969 1.0189 1.0186 1.0123 1.0174 April 1.0115 .9983 .9979 1.0211 .9975 .9923 1.0148 May .9950 .9988 1.0084 .9863 .9947 1.0144 1.0079 June .9954 .9988 1.0066 .9849 .9888 1.0178 .9933 July .9930 .9996 .9998 .9902 .9812 1.0030 .9862 August .9963 1.0007 .9985 .9959 .9824 .9930 .9852 September .9980 1.0010 1.0014 .9913 .9681 .9711 .9899 October .9987 1.0013 1.0062 .9942 .9810 .9710 .9893 November 1.0073 1.0018 1.0045 .9969 1.0032 .9887 1.0007 December 1.0079 1.0008 .9972 1.0016 1.0216 1.0031 1.0035 2004—January .9993 .9999 .9903 1.0078 1.0316 1.0083 1.0035 February .9946 .9995 .9931 1.0117 1.0325 1.0240 1.0125 March 1.0040 .9988 .9961 1.0177 1.0184 1.0131 1.0138 1. Seasonal factors are applied to deposit data at both commercial banks and thrift institutions. 3. Weekly seasonal factors used to construct Ml, December 2, 2002-April 5, 2004 Other checkable deposits1 NNoonnbbaannkk ttrraavveelleerrss WWeeeekk eennddiinngg CCuurrrreennccyy DDeemmaanndd ddeeppoossiittss cchheecckkss Total At banks —December 2 1.0005 1.0266 1.1175 1.0340 1.0298 9 1.0007 1.0227 .9782 .9929 .9704 16 1.0017 1.0189 1.0358 .9877 .9825 23 1.0098 1.0150 1.0839 1.0328 1.0560 30 1.0101 1.0113 1.1586 1.0670 1.1094 —January 6 1.0039 1.0075 1.0589 1.0414 1.0473 13 .9977 1.0085 1.0102 1.0073 1.0094 20 .9958 1.0096 1.0057 1.0134 1.0512 27 .9929 1.0106 .9984 1.0094 1.0680 February 3 .9942 1.0117 1.0165 1.0107 1.0402 10 .9992 1.0122 .9393 .9705 .9736 17 1.0005 1.0127 .9738 .9662 .9746 24 .9976 1.0132 .9762 .9856 .9994 March 3 .9985 1.0136 .9871 1.0087 .9983 10 1.0011 1.0145 .9408 .9910 .9654 17 .9992 1.0153 .9869 .9929 .9795 24 .9978 1.0161 .9981 1.0159 1.0268 31 .9987 1.0169 1.0641 1.0405 1.0493 April 7 1.0036 1.0175 .9650 1.0364 1.0029 14 1.0024 1.0182 .9991 1.0258 1.0119 21 .9993 1.0188 1.0401 1.0597 1.0624 28 .9975 1.0195 1.0424 1.0536 1.0794 May 5 1.0013 1.0201 .9776 1.0144 .9927 12 1.0019 1.0152 .9314 .9807 .9694 19 .9996 1.0103 .9722 .9895 .9904 26 1.0014 1.0055 .9867 1.0012 1.0134 June 2 .9998 1.0007 1.0460 1.0310 1.0213 9 1.0029 .9913 .9381 .9889 .9503 16 1.0017 .9822 .9748 .9823 .9557 23 1.0010 .9732 .9816 .9982 1.0017 30 1.0016 .9644 1.0443 1.0211 1.0335 July 7 1.0083 .9618 .9669 .9920 .9654 14 1.0044 .9592 .9632 .9696 .9619 21 1.0033 .9566 .9990 .9867 .9909 28 1.0015 .9541 1.0351 1.0034 1.0254 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • March 2003 3.—Continued Other checkable deposits1 NNoonnbbaannkk ttrraavveelleerrss WWeeeekk eennddiinngg CCuurrrreennccyy DDeemmaanndd ddeeppoossiittss cchheecckkss Total At banks August 4 1.0043 .9515 .9698 .9982 .9765 11 1.0047 .9601 .9298 .9539 .9358 18 1.0014 .9690 .9869 .9627 .9579 25 .9976 .9779 1.0257 .9833 1.0005 September 1 1.0005 .9871 1.0846 1.0176 1.0208 8 1.0009 .9878 .9445 .9788 .9616 15 .9977 .9886 .9554 .9638 .9478 22 .9950 .9893 .9767 .9723 .9751 29 .9935 .9900 1.0595 1.0001 1.0179 October 6 .9978 .9908 .9331 .9799 .9693 13 .9987 .9969 .9609 .9576 .9577 20 .9964 1.0032 .9927 .9837 .9912 27 .9941 1.0095 1.0366 1.0049 1.0289 November 3 .9948 1.0159 1.0239 1.0244 1.0160 10 .9993 1.0183 .9257 .9629 .9417 17 .9974 1.0208 .9795 .9602 .9523 24 .9971 1.0232 1.0216 .9943 1.0020 December 1 1.0007 1.0257 1.1196 1.0355 1.0241 8 1.0012 1.0221 .9773 .9963 .9703 15 1.0027 1.0185 1.0159 .9789 .9771 22 1.0084 1.0149 1.0921 1.0304 1.0523 29 1.0096 1.0113 1.1688 1.0733 1.1078 2004—January 5 1.0046 1.0077 1.0701 1.0539 1.0722 12 .9979 1.0087 1.0015 1.0086 1.0112 19 .9954 1.0097 .9995 1.0090 1.0401 26 .9922 1.0107 1.0042 1.0078 1.0612 February 2 .9928 1.0117 1.0332 1.0178 1.0466 9 .9991 1.0123 .9524 .9799 .9876 16 1.0003 1.0128 .9692 .9620 .9757 23 .9985 1.0134 .9684 .9796 .9863 March 1 .9979 1.0140 .9974 1.0056 1.0020 8 1.0018 1.0144 .9488 .9960 .9755 15 .9998 1.0148 .9781 .9870 .9682 22 .9985 1.0153 .9894 1.0076 1.0078 29 .9974 1.0157 1.0465 1.0377 1.0487 April 5 1.0010 1.0162 .9827 1.0378 1.0294 1. Seasonally adjusted other checkable deposits at thrift institutions are derived as the difference between total other checkable deposits, seasonally adjusted, and seasonally adjusted other checkable deposits at commercial banks. 4. Weekly seasonal factors used to construct M2 and M3, December 2, 2002-April 5, 2004 SSaavviinnggss aanndd SSmmaallll-- LLaarrggee-- Money market mutual funds WWeeeekk eennddiinngg MMMMDDAA ddeennoommiinnaattiioonn ddeennoommiinnaattiioonn RRPPss EEuurrooddoollllaarrss ddeeppoossiittss11 ttiimmee ddeeppoossiittss11 ttiimmee ddeeppoossiittss11 In M2 In M3 only 2002—December 2 .9972 1.0021 .9969 .9990 1.0139 .9890 1.0035 9 1.0192 1.0018 .9973 1.0030 1.0252 1.0040 .9937 16 1.0198 1.0013 1.0027 1.0046 1.0361 1.0064 .9970 23 .9989 1.0006 1.0002 1.0026 1.0238 1.0052 .9983 30 .9869 1.0005 .9942 .9984 1.0117 1.0054 1.0200 2003—January 6 1.0196 1.0016 .9917 .9933 .9907 .9926 1.0148 13 1.0133 1.0009 .9955 1.0113 1.0331 1.0062 .9995 20 .9979 1.0001 .9915 1.0144 1.0455 1.0076 1.0010 27 .9754 .9991 .9885 1.0130 1.0491 1.0145 1.0032 February 3 .9814 .9995 .9915 1.0097 1.0319 1.0213 1.0014 10 1.0029 .9999 .9961 1.0123 1.0350 1.0290 1.0083 17 .9994 1.0000 .9958 1.0122 1.0333 1.0263 1.0187 24 .9880 .9997 .9923 1.0134 1.0337 1.0178 1.0241 March 3 .9950 .9994 .9951 1.0122 1.0204 1.0210 1.0194 10 1.0149 .9989 .9982 1.0184 1.0261 1.0232 1.0082 17 1.0113 .9987 .9935 1.0186 1.0211 1.0170 1.0109 24 .9956 .9984 .9946 1.0208 1.0193 1.0138 1.0229 31 .9968 .9983 1.0021 1.0205 1.0070 .9914 1.0268 April 7 1.0313 .9991 1.0038 1.0261 .9966 .9869 1.0163 14 1.0296 .9985 .9998 1.0326 1.0075 .9922 1.0087 21 1.0140 .9979 .9935 1.0249 .9939 .9874 1.0110 28 .9846 .9976 .9942 1.0097 .9950 .9985 1.0245 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 135 4.—Continued SSaavviinnggss aanndd SSmmaallll-- LLaarrggee-- Money market mutual funds WWeeeekk eennddiinngg MMMMDDAA ddeennoommiinnaattiioonn ddeennoommiinnaattiioonn RRPPss EEuurrooddoollllaarrss ddeeppoossiittss11 ttiimmee ddeeppoossiittss11 ttiimmee ddeeppoossiittss11 In M2 In M3 only MMaayy 5 1.0035 .9983 .9981 .9900 .9865 1.0077 1.0111 12 1.0060 .9988 1.0045 .9879 .9965 1.0150 .9992 19 .9953 .9988 1.0113 .9853 .9974 1.0079 1.0053 26 .9802 .9990 1.0126 .9854 1.0003 1.0175 1.0136 June 2 .9842 .9990 1.0144 .9833 .9889 1.0252 1.0123 9 1.0099 .9991 1.0067 .9859 .9969 1.0264 .9979 16 1.0075 .9988 1.0055 .9872 .9949 1.0212 .9882 23 .9848 .9985 1.0108 .9857 .9868 1.0120 .9848 30 .9776 .9989 1.0011 .9814 .9767 1.0097 .9966 JJuullyy 7 1.0105 .9998 .9981 .9830 .9718 1.0008 .9915 14 1.0044 .9995 .9995 .9912 .9855 1.0001 .9807 21 .9908 .9995 .9998 .9923 .9848 1.0027 .9861 28 .9766 .9996 1.0014 .9935 .9859 1.0065 .9879 AAuugguusstt 4 1.0024 1.0001 1.0011 .9919 .9734 1.0071 .9834 11 1.0066 1.0005 1.0005 .9962 .9830 1.0100 .9763 18 .9984 1.0007 .9974 .9968 .9827 .9896 .9774 25 .9834 1.0008 .9957 .9982 .9891 .9815 .9870 SSeepptteemmbbeerr 1 .9819 1.0011 .9990 .9945 .9794 .9814 1.0041 8 1.0137 1.0014 1.0020 .9926 .9686 .9790 .9821 15 1.0129 1.0011 1.0018 .9946 .9743 .9739 .9892 22 .9914 1.0007 .9986 .9913 .9675 .9721 .9893 29 .9752 1.0008 1.0026 .9868 .9612 .9604 .9982 October 6 1.0103 1.0020 1.0081 .9862 .9629 .9545 .9829 13 1.0070 1.0018 1.0107 .9943 .9824 .9661 .9867 20 1.0006 1.0013 1.0040 .9984 .9847 .9717 .9830 27 .9834 1.0005 1.0029 .9973 .9909 .9801 .9980 November 3 .9952 1.0010 1.0048 .9933 .9814 .9868 .9989 10 1.0164 1.0017 1.0078 .9952 .9953 .9963 .9942 17 1.0163 1.0019 1.0070 .9955 1.0045 .9854 .9992 24 .9987 1.0020 1.0046 1.0002 1.0119 .9845 1.0048 December 1 .9988 1.0019 .9975 .9985 1.0117 .9894 1.0060 8 1.0194 1.0015 .9967 1.0035 1.0209 1.0032 .9977 15 1.0171 1.0009 1.0007 1.0052 1.0327 1.0063 .9998 22 1.0064 1.0002 .9995 1.0024 1.0214 1.0050 1.0006 29 .9938 1.0002 .9938 .9981 1.0183 1.0038 1.0131 22000044——JJaannuuaarryy 5 1.0203 1.0006 .9902 .9931 1.0018 .9903 1.0116 12 1.0132 1.0005 .9944 1.0068 1.0296 1.0051 1.0001 19 .9996 1.0001 .9915 1.0135 1.0411 1.0086 1.0007 26 .9784 .9994 .9861 1.0130 1.0459 1.0150 1.0045 FFeebbrruuaarryy 2 .9804 .9991 .9886 1.0089 1.0311 1.0212 1.0030 9 1.0009 .9995 .9928 1.0112 1.0324 1.0297 .9997 16 .9968 .9997 .9947 1.0113 1.0329 1.0283 1.0148 23 .9895 .9995 .9926 1.0129 1.0359 1.0176 1.0175 March 1 .9940 .9993 .9939 1.0123 1.0286 1.0206 1.0222 8 1.0131 .9990 .9979 1.0160 1.0244 1.0221 .9981 15 1.0125 .9988 .9942 1.0175 1.0243 1.0187 1.0097 22 1.0022 .9986 .9923 1.0192 1.0187 1.0148 1.0153 29 .9921 .9984 .9984 1.0176 1.0107 1.0032 1.0304 April 5 1.0210 .9991 1.0023 1.0221 .9966 .9882 1.0150 1. Seasonal factors are applied to deposit data at both commercial banks and thrift institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Legal Developments FINAL RULE—AMENDMENT TO REGULATION A Federal Reserve Bank Rate Effective The Board of Governors is amending 12 C.F.R. Part 201, Boston 2.75 January 9, 2003 New York 2.75 January 9, 2003 its Regulation A and D (Extensions of Credit by Federal Philadelphia 2.75 January 9, 2003 Reserve Banks). The Board is publishing final amendments Cleveland 2.75 January 9, 2003 Richmond 2.75 January 9, 2003 to Regulation A to reflect its approval of the initial interest Atlanta 2.75 January 9, 2003 rates for extensions of primary and secondary credit. The Chicago 2.75 January 9, 2003 St. Louis 2.75 January 9, 2003 amendments also correct a typographical error. These Minneapolis 2.75 January 9, 2003 Kansas City 2.75 January 9, 2003 amendments supersede the text of one section of the final Dallas 2.75 January 9, 2003 rule that the Board approved on October 31, 2002, and San Francisco 2.75 January 9, 2003 published in the Federal Register on January 9, 2003. The new primary and secondary credit rates do not indicate a (c) Seasonal credit. The rate for seasonal credit extended change in the stance of monetary policy. to depository institutions under section 201.4(c) is a Effective January 9, 2003, 12 C.F.R. Part 201 is amended flexible rate that takes into account rates on market as follows: sources of funds. Part 201—Extensions of Credit by Federal Reserve Banks (Regulation A) FINAL RULE—AMENDMENT TO REGULATION H 1. The authority citation for Part 201 is revised to read as The Board of Governors is amending 12 C.F.R. Part 208, follows: its Regulation H (Reporting and Disclosure Requirements for State Member Banks with Securities Registered Under Authority: 12 U.S.C. 248(i)-(j), 343 et seq., 347a, 347b, the Securities Exchange Act of 1934). The final rule 347c, 348 et seq., 357, 374, 374a, and 461. reflects the amendments made to section 12(i) of the Securities Exchange Act of 1934 by the Sarbanes-Oxley Act of 2. Section 201.51(a) through (c) are revised to read as 2002. These amendments vest the Board with the authority follows: to administer and enforce several of the enhanced reporting, disclosure and corporate governance obligations Section 201.51—Interest rates applicable to credit imposed by the Sarbanes-Oxley Act with respect to state extended by a Federal Reserve Bank. member banks that have a class of securities registered under the Securities Exchange Act of 1934. (a) Primary credit. The interest rates for primary credit Effective April 1, 2003, 12 C.F.R. Part 208 is amended provided to depository institutions under sec- as follows: tion 201.4(a) are: Federal Reserve Bank Rate Effective Part 208—Membership of State Banking Institutions in the Federal Reserve System (Regulation H) Boston 2.25 January 9, 2003 New York 2.25 January 9, 2003 Philadelphia 2.25 January 9, 2003 1. The authority citation for Part 208 continues to read as Cleveland 2.25 January 9, 2003 Richmond 2.25 January 9, 2003 follows: Atlanta 2.25 January 9, 2003 Chicago 2.25 January 9, 2003 St. Louis 2.25 January 9, 2003 Authority: 12 U.S.C. 24, 24a, 36, 92a, 93a, 248(a), 248(c), Minneapolis 2.25 January 9, 2003 Kansas City 2.25 January 9, 2003 321-338a, 371d, 461, 481^186, 601, 611, 1814, 1816, Dallas 2.25 January 9, 2003 1818, 1820(d)(9), 1823(j), 1828(o), 1831, 1831o, 1831p-l, San Francisco 2.25 January 9, 2003 183 lr-1, 1831w, 1831x, 1835a, 1843(1), 1882, 2901-2907, 3105, 3310, 3331-3351, and 3906-3909; 15 U.S.C. 78b, (b) Secondary credit. The interest rates for secondary 781(b), 781(g), 781(i), 78o-4(c)(5), 78q, 78q-l, and 78w; credit provided to depository institutions under sec- 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104a, 4104b, 4106, and ion 201.4(b) are: 4128. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

137 2. Section 208.36(a) is revised to read as follows: (a) Authority. This subpart is issued by the Board of Governors of the Federal Reserve System (Board) Section 208.36—Reporting requirements for State under the authority of the International Lending Supermember banks subject to the Securities Exchange Act vision Act of 1983 (Pub. L. 98-181, title IX, 97 Stat. of 1934. 1153) (International Lending Supervision Act); the Federal Reserve Act (12 U.S.C. 221 et seq.) (FRA), (a) Filing, disclosure and other requirements— and the Bank Holding Company Act of 1956, as (1) General. Except as otherwise provided in this sec- amended (12 U.S.C. 1841 et seq.) (BHC Act). tion, a member bank whose securities are subject (b) Purpose and scope. This subpart is issued in furtherto registration pursuant to section 12(b) or sec- ance of the purposes of the International Lending tion 12(g) of the Securities Exchange Act of 1934 Supervision Act. It applies to State banks that are (the 1934 Act) (15 U.S.C. 781(b) and (g)) shall members of the Federal Reserve System (State memcomply with the rules, regulations and forms ber banks); corporations organized under section 25A adopted by the Securities and Exchange Commis- of the FRA (12 U.S.C. 611 through 631) (Edge Corsion (Commission) pursuant to— porations); corporations operating subject to an agree- (i) Sections 10A(m), 12, 13, 14(a), 14(c), 14(d), ment with the Board under section 25 of the FRA 14(f) and 16 of the 1934 Act (15 U.S.C. (12 U.S.C. 601 through 604a) (Agreement Corpora- 78f(m), 781, 78m, 78n(a), (c), (d) and (f), and tions); and bank holding companies (as defined in 78p); and section 2 of the BHC Act (12 U.S.C. 1841(a)) but not (ii) Sections 302, 303, 304, 306, 401(b), 404, 406 including a bank holding company that is a foreign and 407 of the Sarbanes-Oxley Act of 2002 banking organization as defined in section 211.21(o). (codified at 15 U.S.C. 7241, 7242, 7243, 7244, 7261,7262, 7264 and 7265). (2) References to the Commission. Any references to Section 211.42—Definitions. the "Securities and Exchange Commission" or the "Commission" in the rules, regulations and forms For the purposes of this subpart: described in paragraph (a)(1) of this section shall with respect to securities issued by member banks (a) Administrative cost means those costs which are spebe deemed to refer to the Board unless the context cifically identified with negotiating, processing and otherwise requires. consummating the loan. These costs include, but are not necessarily limited to: legal fees; costs of preparing and processing loan documents; and an allocable portion of salaries and related benefits of employees FINAL RULE—AMENDMENT TO REGULATION K engaged in the international lending function. No portion of supervisory and administrative expenses or The Board of Governors is amending 12 C.F.R. Part 211, its Regulation K (International Banking Operations; Inter- other indirect expenses such as occupancy and other national Lending Supervision). The amendments relate to similar overhead costs shall be included. international lending by simplifying the discussion con- (b) Banking institution means a State member bank; bank cerning the accounting for fees on international loans to holding company; Edge Corporation and Agreement make the regulation consistent with generally accepted Corporation engaged in banking. Banking institution accounting principles (GAAP). does not include a foreign banking organization as Effective February 7, 2003, 12 C.F.R. Part 211 is defined in section 211.21(o). amended as follows: (c) Federal banking agencies means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Part 211—International Banking Operations Corporation. (Regulation K) (d) International assets means those assets required to be included in banking institutions' Country Exposure 1. The authority citation for Part 211 continues to read as Report forms (FFIEC No. 009). follows: (e) International loan means a loan as defined in the instructions to the Report of Condition and Income for Authority. 12 U.S.C. 221 et seq., 1818, 1835a, 1841 etseq., the respective banking institution (FFIEC Nos. 031 3101 etseq., 3109 etseq. and 041) and made to a foreign government, or to an individual, a corporation, or other entity not a citizen 2. Sections 211.41 through 211.45 are revised to read as of, resident in, or organized or incorporated in the follows: United States. (f) Restructured international loan means a loan that Section 211.41—Authority, purpose, and scope. meets the following criteria: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • March 2003 (1) The borrower is unable to service the existing loan (B) Whether no definite prospects exist for according to its terms and is a resident of a foreign the orderly restoration of debt service, country in which there is a generalized inability of (ii) Determination of amount of ATRR. public and private sector obligors to meet their (A) In determining the amount of the ATRR, external debt obligations on a timely basis because the Federal banking agencies shall of a lack of, or restraints on the availability of, consider: needed foreign exchange in the country; and (7) The length of time the quality of the (2) The terms of the existing loan are amended to asset has been impaired; reduce stated interest or extend the schedule of (2) Recent actions taken to restore debt payments; or service capability; (3) A new loan is made to, or for the benefit of, the (5) Prospects for restored asset quality; borrower, enabling the borrower to service or refi- and nance the existing debt. (4) Such other factors as the Federal (g) Transfer risk means the possibility that an asset cannot banking agencies may consider relebe serviced in the currency of payment because of vant to the quality of the asset. a lack of, or restraints on the availability of, needed (B) The initial year's provision for the ATRR foreign exchange in the country of the obligor. shall be ten percent of the principal amount of each specified international asset, or such greater or lesser percentage Section 211.43—Allocated transfer risk reserve. determined by the Federal banking agencies. Additional provision, if any, for (a) Establishment of Allocated Transfer Risk Reserve. A the ATRR in subsequent years shall be banking institution shall establish an allocated transfer fifteen percent of the principal amount of risk reserve (ATRR) for specified international assets each specified international asset, or such when required by the Board in accordance with this greater or lesser percentage determined section. by the Federal banking agencies. (b) Procedures and standards (3) Board notification. Based on the joint agency (1) Joint agency determination. At least annually, the determinations under paragraph (b)(1) of this sec- Federal banking agencies shall determine jointly, tion, the Board shall notify each banking institubased on the standards set forth in paragraph (b)(2) tion holding assets subject to an ATRR: of this section, the following: (i) Of the amount of the ATRR to be established (i) Which international assets subject to transfer by the institution for specified international risk warrant establishment of an ATRR; assets; and (ii) The amount of the ATRR for the specified (ii) That an ATRR established for specified assets assets; and may be reduced. (iii) Whether an ATRR established for specified (c) Accounting treatment of ATRR— assets may be reduced. (1) Charge to current income. A banking institution (2) Standards for requiring ATRR— shall establish an ATRR by a charge to current (i) Evaluation of assets. The Federal banking income and the amounts so charged shall not be agencies shall apply the following criteria in included in the banking institution's capital or determining whether an ATRR is required for surplus. particular international assets: (2) Separate accounting. A banking institution shall (A) Whether the quality of a banking insti- account for an ATRR separately from the Allowtution's assets has been impaired by a ance for Loan and Lease Losses, and shall deduct protracted inability of public or private the ATRR from "gross loans and leases" to arrive obligors in a foreign country to make at "net loans and leases." The ATRR must be payments on their external indebtedness established for each asset subject to the ATRR in as indicated by such factors, among oth- the percentage amount specified. ers, as whether: (3) Consolidation. A banking institution shall estab- (7) Such obligors have failed to make lish an ATRR, as required, on a consolidated basis. full interest payments on external For banks, consolidation should be in accordance indebtedness; or with the procedures and tests of significance set (2) Such obligors have failed to comply forth in the instructions for preparation of Conwith the terms of any restructured solidated Reports of Condition and Income indebtedness; or (FFIEC 031 and 041). For bank holding compa- (3) A foreign country has failed to com- nies, the consolidation shall be in accordance with ply with any International Monetary the principles set forth in the "Instructions to Fund or other suitable adjustment Consolidated Financial Statements for Bank Holdprogram; or ing Companies" (Form F.R. Y-9C). Edge and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 139 Agreement corporations engaged in banking shall paragraph (a) of this section banking institutions that, report in accordance with instructions for prepara- in the Federal banking agencies' judgment, have tion of the Report of Condition for Edge and de minimis holdings of international assets, Agreement Corporations (Form F.R. 2886b). (c) Reservation of authority. Nothing contained in this rule (4) Alternative accounting treatment. A banking insti- shall preclude the Board from requiring from a banktution need not establish an ATRR if it writes ing institution such additional or more frequent infordown in the period in which the ATRR is required, mation on the institution's holding of international or has written down in prior periods, the value of assets as the Board may consider necessary. the specified international assets in the requisite amount for each such asset. For purposes of this Section 211.45—Accounting for fees on international paragraph, international assets may be written loans. down by a charge to the Allowance for Loan and Lease Losses or a reduction in the principal (a) Restrictions on fees for restructured international amount of the asset by application of interest pay- loans. No banking institution shall charge, in connecments or other collections on the asset; provided, tion with the restructuring of an international loan, any that only those international assets that may be fee exceeding the administrative cost of the restructurcharged to the Allowance for Loan and Lease ing unless it amortizes the amount of the fee exceeding Losses pursuant to generally accepted accounting the administrative cost over the effective life of the principles may be written down by a charge to the loan. Allowance for Loan and Lease Losses. However, (b) Accounting treatment. Subject to paragraph (a) of this the Allowance for Loan and Lease Losses must be section, banking institutions shall account for fees replenished in such amount necessary to restore it on international loans in accordance with generally to a level which adequately provides for the estiaccepted accepted accounting principles. mated losses inherent in the banking institution's loan portfolio. (5) Reduction of ATRR. A banking institution may ORDERS ISSUED UNDER BANK HOLDING reduce an ATRR when notified by the Board or, COMPANY ACT at any time, by writing down such amount of the international asset for which the ATRR was Orders Issued Under Section 3 of the Bank Holding established. Company Act Royal Bank of Canada Section 211.44—Reporting and disclosure of Montreal, Canada international assets. RBC Centura Banks, Inc., and (a) Requirements. RBC Centura Bank, (1) Pursuant to section 907(a) of the International Rocky Mount, North Carolina Lending Supervision Act of 1983 (Title IX, Pub. L. 98-181, 97 Stat. 1153) (ILSA), a banking insti- Order Approving the Acquisition of a Bank Holding tution shall submit to the Board, at least quarterly, Company, Merger of Depository Institutions, and information regarding the amounts and composi- Establishment of Branches tion of its holdings of international assets. (2) Pursuant to section 907(b) of ILSA, a banking Royal Bank of Canada ("RBC"), a foreign banking organiinstitution shall submit to the Board information zation subject to the provisions of the Bank Holding Comregarding concentrations in its holdings of internapany Act ("BHC Act"), and its wholly owned subsiditional assets that are material in relation to total ary, RBC Centura Banks, Inc. ("RBC Centura"), have assets and to capital of the institution, such inforrequested the Board's approval under section 3 of the BHC mation to be made publicly available by the Board Act (12 U.S.C. § 1842) to acquire Admiralty Bancorp, Inc. on request. ("Admiralty") and its wholly owned subsidiaiy, Admiralty (b) Procedures. The format, content and reporting and Bank, both in Palm Beach Gardens, Florida.1 RBC Centura filing dates of the reports required under paragraph (a) Bank ("RBC Bank"), RBC Centura's wholly owned subof this section shall be determined jointly by the Fedsidiary, has also requested the Board's approval under eral banking agencies. The requirements to be prescribed by the Federal banking agencies may include changes to existing reporting forms (such as the Country Exposure Report, form FFIEC No. 009) or such 1. RBC is treated as a financial holding company in accordance other requirements as the Federal banking agencies with sections 225.90 and 225.91 of Regulation Y (12 C.F.R. 225.90- 225.91). Through its subsidiaries and affiliates, RBC engages in a deem appropriate. The Federal banking agencies also variety of nonbanking activities, including investment banking, asset may determine to exempt from the requirements of management, and mortgage lending. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • March 2003 section 18(c) of the Federal Deposit Insurance Act for an interstate acquisition enumerated in section 3(d) are (12 U.S.C. § 1828(c)) ("Bank Merger Act") to merge with met in this case.7 In light of all the facts of record, the Admiralty Bank, with RBC Bank as the surviving entity.2 Board is permitted to approve the proposal under sec- In addition, RBC Bank proposes to retain and operate tion 3(d) of the BHC Act. branches at the main and branch offices of Admiralty Bank.3 Financial, Managerial, and Supervisory Considerations Notice of the proposal, affording interested persons an opportunity to comment, has been published in accordance The BHC Act and the Bank Merger Act require the Board with the Bank Merger Act and the Board's Rules of Pro- to consider the financial and managerial resources and cedure (12 C.F.R. § 262.3(b)) in the Federal Register future prospects of the companies and banks involved in a (67 Federal Register 63,661 and 63,662 (2002)) and proposal and certain other supervisory factors. In assessing locally. As required by the BHC Act and the Bank Merger the financial and managerial strength of RBC and its sub- Act, reports on the competitive effects of the merger were sidiaries, the Board has reviewed information provided by requested from the U.S. Attorney General and relevant RBC, confidential supervisory and examination informabanking agencies. The time for filing comments has tion, and publicly reported and other financial informaexpired, and the Board has considered the applications and tion.8 RBC's capital levels exceed the minimum levels that all comments received in light of the factors set forth in would be required under the Basel Capital Accord, and its section 3 of the BHC Act, the Bank Merger Act, and the capital levels are considered equivalent to the capital levels statutory provisions that govern the retention and operation that would be required of a U.S. banking organization. of interstate branches. Based on all the facts of record, the Board concludes that RBC, with total assets of $225.4 billion, is the largest the financial and managerial resources and future prospects banking organization in Canada.4 RBC operates depository of the organizations involved in the proposal are consistent institutions in Florida, Georgia, North Carolina, South with approval.9 Carolina, and Virginia. RBC Centura's subsidiary commercial bank, RBC Bank, controls deposits of $20.8 million in 7. RBC Centura is adequately capitalized and adequately managed, Florida, representing less than 1 percent of total deposits of as defined by applicable law. In addition, RBC Centura would control insured depository institutions in the state ("state depos- less than 10 percent of the total amount of deposits of insured its").5 Admiralty's subsidiary commercial bank, Admiralty depository institutions in the United States on consummation of the Bank, controls deposits of $527.0 million in Florida, repre- proposal. See 12 U.S.C. § 1842(d)(1)(A) & (B), 1842(d)(2)(A) & (B). RBC Centura also would control less than 30 percent of the total senting less than 1 percent of state deposits. On consummadeposits of insured depository institutions in Florida. Florida law tion of the proposal, RBC Bank would become the 35th prohibits the interstate acquisition of a Florida bank that has been in largest depository institution in Florida, controlling depos- existence and continuously operating for three years or fewer. This its of approximately $547.8 million, representing less than transaction would meet the minimum age requirements imposed by Florida law. See Fla. Stat. Ann. §658.295(8). 1 percent of state deposits. 8. The commenter alleged that an insurance company subsidiary of RBC, Liberty Life Insurance Co. of Greenville, South Carolina ("Lib- Interstate Analysis erty Life"), discriminated against African-American clients by charging them higher premiums than white clients for industrial life insur- Section 3(d) of the BHC Act allows the Board to approve ance policies issued between 1905 and 1967. On August 23, 2002, the Administrative Law Judge Division of the South Carolina Department an application by a bank holding company to acquire of Insurance ("S.C. Insurance Department") upheld the S.C. Insurcontrol of a bank located in a state other than the home ance Department's determination that Liberty Life had engaged state of such bank holding company if certain conditions in discriminatory pricing of its insurance premiums. RBC acquired are met. For purposes of the BHC Act, the home state of Liberty Life in November 2000, and the S.C. Insurance Department's RBC Centura is North Carolina, and RBC Centura pro- findings related to practices that occurred before RBC acquired Liberty Life. RBC currently has policies in place at Liberty Life designed poses to acquire a depository institution in Florida.6 Based to prevent discrimination in pricing based on race or other prohibited on a review of all the facts of record, including a review of bases. Liberty Life has appealed the findings of the S.C. Insurance relevant state statutes, the Board finds that all conditions Department. Although the Board has only limited authority to address matters related to the insurance activities of regulated insurance companies, the Board will continue to monitor this matter. 2. The transaction would be effected through a series of steps. 9. The commenter suggests, based on a general news article about Admiralty would merge with a newly created, wholly owned subsidi- the ability of U.S. taxpayers to evade tax liability by using offshore ary of RBC, with Admiralty surviving. Admiralty then would merge international banking accounts, that the availability of RBC accounts with and into RBC Bank. Immediately thereafter, Admiralty Bank in Guernsey, Channel Islands, reflects unfavorably on RBC's managewould merge with and into RBC Bank. ment. RBC has indicated that it maintains strict "source of funds" 3. See 12 U.S.C. §§321 & 1831u. The Admiralty Bank branches to guidelines and "know your customer" rules and advises clients of be acquired by RBC Bank are listed in the Appendix. RBC's international private banking group that they may be obligated 4. Asset and national ranking data for RBC are as of December 31, to declare income in their home countries and may be liable for tax in 2001, and are based on the exchange rate then available. those jurisdictions. 5. Deposit and state ranking data are as of June 30, 2002, and The commenter also submitted press accounts concerning a brokerare adjusted to reflect mergers and acquisitions completed through age subsidiary, RBC Dain Rauscher Corp. ("Dain Rauscher"), dis- November 6, 2002. In this context, depository institutions include cussing the decision by the Securities and Exchange Commission to commercial banks, savings banks, and savings associations. settle regulatory charges brought against Dain Rauscher in its capacity 6. 12 U.S.C. §1841(o)(4)(C). as successor to Rauscher Pierce Refsnes, Inc. RBC acquired Dain Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 141 Section 3 of the BHC Act also provides that the Board necessary to enable RBC and its affiliates to make such may not approve an application involving a foreign bank- information available to the Board. In light of these coming organization unless it is "subject to comprehensive mitments, the Board concludes that RBC has provided supervision or regulation on a consolidated basis by the adequate assurances of access to any appropriate informaappropriate authorities in the bank's home country." 10 The tion that the Board may request. Based on these and all home country supervisor of RBC is Canada's Office of the the facts of record, the Board concludes that the super- Superintendent of Financial Institutions ("OSFI"), which visory factors it is required to consider are consistent with is responsible for the supervision and regulation of Cana- approval. dian financial institutions. In approving applications under the BHC Act, the Board Competitive Considerations previously has determined that Canadian banks, including RBC, were subject to comprehensive consolidated super- As part of the Board's review under section 3 of the BHC vision by the OSFI.11 In this case, the Board finds that the Act and the Bank Merger Act, the Board has considered OSFI continues to supervise RBC in substantially the same carefully the competitive effects of the proposal in light manner as it supervised Canadian banks at the time of of all the facts of record. RBC and Admiralty compete those previous determinations. Based on this finding and directly in the Miami-Fort Lauderdale, Florida, banking all the facts of record, the Board concludes that RBC market ("Miami banking market").13 The Board has continues to be subject to comprehensive supervision on a reviewed the competitive effects of the proposal in this consolidated basis by its home country supervisor. banking market in light of all the facts of record, including In addition, section 3 of the BHC Act requires the Board the number of competitors that would remain in the marto determine that a foreign bank has provided adequate ket, the relative share of total deposits in depository instiassurances that it will make available to the Board such tutions in the market ("market deposits")14 controlled by information on its operations and activities and those of its RBC and Admiralty, the concentration level of market affiliates that the Board deems appropriate to determine deposits and the increase in this level as measured by the and enforce compliance with the BHC Act.12 The Board Herfindahl-Hirschman Index ("HHI") under the Departhas reviewed the restrictions on disclosure in relevant ment of Justice Merger Guidelines ("DOJ Guidelines"), jurisdictions in which RBC operates and has commu- and other characteristics of the market.15 nicated with relevant government authorities concerning RBC operates an agency office in the Miami banking access to information. In addition, RBC previously has market that does not accept insured deposits, and Admicommitted to make available to the Board such informa- ralty operates a branch in the market, which opened August tion on the operations of RBC and its affiliates that the 2001, and controls deposits of $30.7 million, representing Board deems necessary to determine and enforce compli- less than 1 percent of market deposits. Consummation of ance with the BHC Act and other applicable federal law. this proposal would not result in an appreciable increase RBC also previously has committed to cooperate with the in the level of concentration of market deposits, and RBC Board to obtain any waivers or exemptions that may be Bank would become the 78th largest depository institution in the Miami banking market, with less than 1 percent of market deposits. Rauscher in 2001, and the charges related to matters that occurred in The Department of Justice has reviewed the proposal 1993 and 1994. There are no facts of record to suggest that Dain and advised the Board that consummation would not likely Rauscher engaged in the conduct that gave rise to the regulatory have a significantly adverse effect on competition in any action after RBC acquired it in 2001. The commenter further requested that the Board consider media relevant market. No banking agency has indicated that the reports discussing litigation that arose from a total return swap proposal raises competitive issues. agreement between RBC and Cooperatieve Centrale Raiffeisen- Based on all the facts of record, the Board concludes that Boerenleenbank B.A., and the subsequent indictment of three former consummation of the proposal would not result in any RBC employees for fraud. These matters also are in private litigation. The Board will monitor the various judicial proceedings and has significantly adverse effects on competition or on the consupervisory authority under federal banking laws to require that RBC centration of banking resources in the Miami banking take appropriate action based on the court findings. market or in any other relevant banking market. 10. 12 U.S.C. § 1842(c)(3)(B). Under Regulation Y, the Board uses the standards enumerated in Regulation K to determine whether a foreign bank that has submitted an application under section 3 of the Convenience and Needs Considerations BHC Act is subject to consolidated home country supervision. See 12 C.F.R. 225.13(a)(4). Regulation K provides that a foreign bank will In acting on this proposal, the Board also must consider the be considered to be subject to comprehensive supervision or regulaconvenience and needs of the communities to be served tion on a consolidated basis if the Board determines that the bank is supervised and regulated in such a manner that its home country supervisor receives sufficient information on the worldwide operations 13. The Miami banking market is defined as Broward and Dade of the bank, including its relationship to affiliates, to assess the bank's Counties, Florida. overall financial condition and its compliance with law and regula- 14. Market share data are as of June 30, 2002, and are based on tions. See 12 C.F.R. 211.24(c)(1). calculations in which the deposits of thrift institutions are included at 11. See Royal Bank of Canada, 83 Federal Reserve Bulletin 442 50 percent. See First Hawaiian, Inc., 77 Federal Reserve Bulletin (1997). 52(1991). 12. See, e.g., 12 U.S.C. § 1842(c)(3)(A). 15. See DOJ Guidelines, 49 Federal Register 26,823 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • March 2003 and take into account the records of performance of the lending.19 Examiners reported that RBC Bank served its relevant depository institutions under the Community Rein- assessment areas by offering a variety of credit products, vestment Act (12 U.S.C. §2901 et seq.) ("CRA"). The including residential mortgage, home equity, consumer, CRA requires the federal supervisory agencies to encour- small business, and commercial loans. age financial institutions to help meet the credit needs of Examiners noted that RBC Bank originated a substantial local communities in which they operate, consistent with majority of its loans, by number and dollar volume, to safe and sound operation, and requires the appropriate businesses and consumers in its assessment areas and was federal financial supervisory agency to take into account an highly responsive to community credit needs. Examiners institution's record of meeting the credit needs of its entire also found that RBC Bank was an active lender relative community, including low- and moderate-income ("LMI") to its lending capacity and taking into account economic neighborhoods, in evaluating bank expansion proposals. conditions in the bank's assessment areas (as evidenced by The Board has considered carefully the convenience and the bank's quarterly average loan-to-deposit ratio, which needs factor and the CRA performance records of RBC consistently exceeded that of all banks headquartered in Bank and Admiralty Bank in light of all the facts of record, metropolitan areas of North Carolina and of similar asset including a public comment received on the effect of the size). Examiners commended RBC Bank for its lending proposal on the communities to be served by the combined distribution by geographical and income levels, commentorganization.16 ing favorably on the bank's small business and HMDA lending penetration in particular. Examiners also found that in most markets, small business and HMDA-reportable A. CRA Performance Evaluations loans accounted for the majority of the bank's loan portfolio. During the review period, RBC Bank extended more As provided in the CRA, the Board has evaluated the convenience and needs factor in light of examinations by than $2 billion in HMDA-reportable loans. the appropriate federal supervisors of the CRA perfor- Examiners found that RBC Bank, in an effort to meet the mance records of RBC Bank and Admiralty Bank. An needs of its local communities, offered and participated in institution's most recent CRA performance evaluation is assorted special loan programs to benefit LMI individuals a particularly important consideration in the applications and LMI areas or to promote economic development. process because it represents a detailed, on-site evaluation Included among these loan programs were credit products of the institution's overall record of performance under the offered through the Federal Housing Administration CRA by its appropriate federal supervisor.17 ("FHA"), Department of Veterans Affairs ("VA"), and RBC Bank received a "satisfactory" CRA rating at its Farm Service Housing and/or Rural Housing Service most recent CRA performance evaluation, as of March 4, ("FSH/RHS").20 During the review period, RBC Bank 2002, from the Federal Reserve Bank of Richmond.18 originated 1,069 FHA, VA, and FSH/RHS loans total- Admiralty Bank also received a "satisfactory" CRA rating ing $102.1 million. Examiners also found that RBC Bank at its most recent CRA performance evaluation, as of offered "Affordable Housing Program" ("AHP") loans July 6, 1998, from the Federal Reserve Bank of Atlanta. that provided as much as 100 percent financing and flexible Examiners found no violations of the substantive provi- underwriting terms to certain borrowers who did not meet sions of fair lending and consumer protection laws at either the underwriting criteria necessary for the secondary marinstitution and no evidence of prohibited discrimination or ket.21 During the review period, RBC Bank originated 751 other illegal credit practices. AHP loans, totaling $56.4 million, to eligible borrowers. Examiners concluded that RBC Bank extended a high level of loans, approximately $22 million, for community B. RBC Bank's CRA Performance Record development purposes. The loans were used primarily to provide housing for LMI individuals and to facilitate small 1. Lending Test business development. Examiners observed that 72.3 percent of the qualified loans were made in North Carolina.22 Examiners rated RBC Bank "high satisfactory" under the lending test for the review period in its most recent CRA 19. The review period for RBC Bank's CRA evaluation was Januperformance evaluation based on the bank's lending activary 1, 2000, through December 31, 2001. During the review period, ity, distribution of loans, and community development RBC Bank's assessment areas included 16 Metropolitan Statistical Areas ("MSAs") and 13 non-MSAs. Full scope reviews were conducted in ten of the bank's assessment areas that together accounted 16. The commenter alleged, among other things, that RBC Bank for a substantial portion of the bank's dollar volume. and RBC Mortgage engaged in disparate treatment of minority and 20. Examiners also noted that RBC Bank continued to participate nonminority individuals in mortgage lending, based on data submitted in the Community Investment Corporation of North Carolina, which is under the Home Mortgage Disclosure Act, 12 U.S.C. §2801 et seq. a statewide affordable housing loan consortium that provides long- ("HMDA"). term permanent financing for LMI multifamily housing developments. 17. See Interagency Questions and Answers Regarding Community 21. The AHP offers home purchase loans to families whose Reinvestment, 66 Federal Register 36,620 and 36,639 (2001). incomes do not exceed 80 percent to 100 percent of the HUD median 18. RBC and RBC Centura also control RBC Centura Card Bank, family income for the county of residence. Atlanta, Georgia, a credit card bank that has not been examined for 22. RBC Bank provided 33 community development loans totaling CRA performance since opening for business in July 2000. $15.8 million in North Carolina during the review period, including Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 143 Also, the bank entered a partnership with the Federal RBC Bank also stated that it has taken several other Home Loan Bank of Atlanta and various community measures to provide economic and community support to groups to extend 208 loans to assist first-time homebuyers, projects and programs that assist LMI and minority populadevelop multifamily low-income housing, and rehabilitate tions. RBC Bank, along with other lenders, has coordinated and rebuild low-income housing damaged by Hurricane an effort to organize and fund an eastern North Carolina Floyd. Examiners commended RBC Bank for its commit- regional economic development not-for-profit organization ment to its local market areas and for its willingness to known as the Foundation for Renewal for Eastern North participate in flexible and somewhat complex credit trans- Carolina ("FOR ENC"). FOR ENC will establish a venactions to benefit LMI borrowers and LMI areas. ture and incentive fund to provide monetary support for Since its most recent performance evaluation, RBC Bank community development projects in the region. In addireported that it has provided and committed approximately tion, RBC Bank reported that its Community Development $26.5 million in community development loans to finance Manager and Compliance Manager have met with comthe creation of affordable housing for the benefit of LMI munity organizations in Atlanta to evaluate and develop families and LMI areas and for small business devel- a CRA strategic plan for the Atlanta market. The plan opment in Virginia, Florida, Georgia, North Carolina, and resulted in the creation of production goals for LMI and South Carolina. The funding includes projects in partner- minority mortgage customers. RBC Bank also represented ship with the Virginia Housing Development Authority, that its commercial lending officers have established relathe Self-Help Credit Union of North Carolina, Habitat for tionships with affordable housing developers in the Atlanta Humanity, the North Carolina Institute for Minority Eco- market. nomic Development, and the Florida Community Loan Fund.23 3. Service Test 2. Investment Test RBC Bank was rated "high satisfactory" at its most recent performance evaluation for its provision of retail banking Examiners rated RBC Bank "high satisfactory" for its and community development services. Examiners found record of responding to community development needs that RBC Bank's delivery systems, branch locations, and through investments. Examiners noted that RBC Bank hours of operation were readily accessible to all portions made significant investments in low-income housing tax of its assessment areas. Examiners observed that approxicredit limited partnerships, equity housing funds, and low- mately 19 percent of the bank's 242 branches were in LMI income mortgage pools. During the review period, RBC areas. In addition, examiners found that bank personnel Bank committed to participate in qualified investments provided support to community development organizatotaling $50.8 million and funded $27.2 million of that tions, which, in turn, offered community development sercommitment. Examiners also noted that during the review vices throughout the bank's assessment areas. One RBC period, RBC Bank supported various community develop- Bank officer served on the advisory committee of the North ment organizations, whose operations assist LMI individu- Carolina Community College System's Small Business als and areas or support small business development, Center Network ("SBNC"), which operates 58 offices through contributions of more than $341,000. throughout North Carolina. The SBNC promotes micro- RBC Bank has represented that since its most recent enterprise development through economic and workforce performance evaluation, it has committed an additional development programs. As previously noted, RBC Bank $18.7 million in qualified investments for community also is a majority owner of a small business investment development purposes. Such investments include a $25,000 corporation that provides capital and management assisdonation to the Rocky Mount Habitat for Humanity; up to tance to qualifying small businesses. $8 million in low-income housing tax credit investments through the Community Affordable Housing Equity Corpo- C. Admiralty Bank's CRA Performance Record ration syndicate, which operates in Virginia, North Carolina, South Carolina, and Georgia; a purchase of $10 mil- As previously noted, Admiralty Bank received a satisfaclion in LMI mortgages throughout the bank's Atlanta tory CRA rating at its most recent performance evaluaassessment area; and a $200,000 grant to the East Lake tion.24 Examiners determined that Admiralty Bank's loan- Community Foundation to renovate Atlanta's East Lake to-deposit ratio was reasonable given the bank's size and neighborhood. assessment area credit needs. Examiners also found that the majority of consumer loans originated during the review period were made to individuals inside the bank's one loan of 2.2 million in Greene County to build an LMI housing facility. 23. RBC Bank received a Bank Enterprise Award from the Depart- 24. The review period for Admiralty Bank's CRA evaluation was ment of the Treasury for a $5 million loan that the bank originated to October 1996 through June 15, 1998. Admiralty Bank's assessment the Self-Help Credit Union of North Carolina, a community develop- area included 28 census tracts in the northern part of the West Palm ment financial institution. RBC Bank donated the award of $550,000 Beach-Boca Raton MSA. Examiners noted that although the bank's to the credit union to provide financing for additional low-income assessment area contains no low-income census tracts, the bank did housing in North Carolina. not unreasonably exclude any LMI areas from the assessment area. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • March 2003 assessment area.25 Examiners noted that Admiralty Bank's applicants regardless of their race, gender or national distribution of business and consumer loans inside the origin. The Board recognizes, however, that HMDA data assessment area reflected effective loan penetration to busi- alone provide an incomplete measure of an institution's nesses and individuals of different income levels. lending in its community because these data cover only a Examiners found that Admiralty Bank is primarily a few categories of housing- related lending. HMDA data, commercial lender with particular expertise in originating moreover, provide only limited information about the covbusiness loans guaranteed by the Small Business Adminis- ered loans.28 HMDA data, therefore, have limitations that tration ("SBA"). Approximately 88 percent of the loans make them an inadequate basis, absent other information, originated by Admiralty Bank during the exam period were for concluding that an institution has not assisted adecommercial loans. Although only 42 percent of the sample quately in meeting its community's credit needs or has of business loans reviewed by examiners were originated engaged in illegal lending discrimination. to businesses in the bank's assessment area, examiners Because of the limitations of HMDA data, the Board has found that the availability of SBA loan products was suffi- considered these data carefully in light of other informacient to meet demand in and around the assessment area. tion, including examination reports that provide on-site Examiners noted that the loans originated to businesses evaluation of RBC Bank's compliance with fair lending outside the assessment area were almost all SBA loans and laws and the overall lending and community development were distributed over an extended area of the southeast activities of RBC Bank.29 The Board also has considered, Florida region. and hereby adopts, the findings and explanations discussed RBC Bank stated that it intends to apply its CRA com- in its review of these matters in the Tucker Federal Bank pliance policies to Admiralty Bank after the merger. RBC proposal.30 Bank has represented that it intends to evaluate the Florida As noted, examiners found no evidence of prohibited market that Admiralty Bank serves and to visit local orga- discriminatory practices or of substantive violations of fair nizations to evaluate community development opportuni- lending laws at RBC Bank's most recent performance ties. The resulting evaluation would become the basis for evaluation. The Board also notes that the lower percentthe RBC Bank plan for CRA compliance in the markets ages of mortgage loans to African Americans and in prethat Admiralty Bank now serves. dominantly minority census tracts by RBC Bank appear to reflect a lower percentage of applications received by the D. HMDA bank from these individuals and areas as compared with the aggregate. RBC Bank's approval rate for such loans RBC recently acquired Eagle Bancshares, Inc. and its approximated or exceeded that of the aggregate in all four thrift subsidiary, Tucker Federal Bank, both in Tucker, markets reviewed. Georgia.26 In evaluating that proposal, the Board consid- As noted above, RBC Bank has in place a number of ered comments filed by the commenter about RBC Bank's programs designed to help meet the credit needs of its HMDA data that were substantially the same as the comments submitted in this case.27 In considering this earlier 28. The data do not, for example, account for the possibility that an proposal, the Board reviewed extensively RBC Bank's and institution's outreach efforts may attract a larger proportion of margin- RBC Mortgage's 2000 and 2001 HMDA data and assessed ally qualified applicants than other institutions attract and do not each institution's performance in lending to minority appli- provide a basis for independent assessment of whether an applicant who was denied credit was, in fact, creditworthy. Credit history cants and to applicants in LMI census tracts in eleven problems and excessive debt levels relative to income (reasons most markets. In connection with RBC's current proposal, the frequently cited for a credit denial) are not available from HMDA Board reviewed its previous HMDA analysis and analyzed data. RBC's performance in additional markets. 29. The commenter expressed concern about the apparent increase in the denial disparity ratios for African-American and Latino appli- The Board is concerned when the record of an institution cants to RBC Mortgage in the St. Louis, Missouri, MSA, and the indicates disparities in lending and believes that all banks apparent disparity in the Chicago, Illinois, MSA in originations of are obligated to ensure that their lending practices are loans to African-American and nonminority applicants. In addition, based on criteria that ensure not only safe and sound the commenter questioned whether RBC Mortgage is complying with lending but also equal access to credit by creditworthy the requirements of HMDA. The commenter requested on-site examinations of and enforcement actions against RBC Bank and RBC Mortgage to address these HMDA-related issues. 25. Examiners concluded that the 47 consumer loans originated by RBC has provided information about the policies and procedures it the Admiralty Bank since its previous performance evaluation consti- has implemented to comply with fair lending laws and HMDA and to tuted a significant volume of consumer loans for a bank its size. ensure accurate HMDA reporting. The Board notes that the Federal 26. See Royal Bank of Canada, 88 Federal Reserve Bulletin 385 Reserve Bank of Richmond concluded an on-site review of RBC (2002). Bank's record of compliance with fair lending laws on March 4, 2002. 27. The commenter noted that RBC Bank's denial disparity ratios, The examiners' findings did not substantiate the commenter's allegawhich compare the denial rate for minority loan applicants with that tions about the bank's lending practices. With respect to RBC Mortfor nonminority applicants—particularly for African-American gage, the Board has forwarded the commenter's letter to the Departapplicants in the Rocky Mount, Greensboro, and Charlotte MSAs, all ment of Housing and Urban Development and the Federal Trade in North Carolina, and the Norfolk, Virginia MSA compared unfa- Commission, the agencies responsible for enforcing compliance with vorably with those of the HMDA-reporting lenders in the aggregate in fair lending laws by nondepository institutions. those four MSAs. Aggregate data are based on all lenders reporting 30. See Royal Bank of Canada, 88 Federal Reserve Bulletin 385 HMDA data in a particular market. (2002). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 145 communities and examiners found that RBC Bank has considered all the facts of record in light of the factors that engaged in substantial lending throughout its assessment it is required to consider under the BHC Act, the Bank areas. The HMD A data also reflected overall improve- Merger Act, and the statutory provisions that govern the ments in the number of mortgage loans originated by the retention and operation of interstate branches. bank to African Americans, LMI individuals, and to indi- The Board's approval is specifically conditioned on viduals residing in predominantly minority and LMI cen- compliance by RBC, RBC Centura, and RBC Bank with sus tracts during 2000 and 2001. In addition, the applicant all the commitments and representations made in connechas implemented a number of programs and made efforts tion with the applications. The Board's determination also to improve its outreach efforts to minorities and to LMI is conditioned specifically on the Board's receiving access individuals and LMI areas. to information on the operations or activities of RBC and any of its affiliates that the Board determines to be appro- E. Conclusion on Convenience and Needs priate to assess and enforce compliance by RBC and its Considerations affiliates with applicable federal statutes. These commitments, representations, and conditions are deemed to be conditions imposed in writing by the Board in connection In reviewing the effect of the proposal on the convenience with its findings and decisions and, as such, may be and needs of the communities to be served, the Board has enforced in proceedings under applicable law. considered carefully all the facts of record, including the comments received and the responses to the comments, The proposed transactions may not be consummated evaluations of the performance of RBC Bank and Admi- before the fifteenth calendar day after the effective date of ralty Bank under the CRA, the relevant HMD A data for this order, or later than three months after the effective date RBC Bank and RBC Mortgage, other information provided of this order, unless such period is extended for good cause by RBC Bank, and confidential supervisory information. by the Board or the Federal Reserve Bank of Richmond, acting pursuant to delegated authority. The Board also has reviewed information submitted by RBC Bank concerning its CRA performance and its activi- By order of the Board of Governors, effective Januties to help ensure compliance with fair lending laws since ary 13, 2003. its last performance evaluation. Voting for this action: Chairman Greenspan, Vice Chairman Fergu- The record indicates that RBC Bank has performed son, and Governors Gramlich, Bies, Olson, Bernanke, and Kohn. adequately under the CRA. Based on all the facts of record, and for the reasons discussed above, the Board concludes ROBERT DEV. FRIERSON that considerations relating to the convenience and needs Deputy Secretary of the Board of the communities to be served, including the CRA performance records of the institutions involved, are consistent Appendix with approval of the proposal. Addresses of Main Office and Branches to be Acquired Conclusion by RBC Bank Based on the foregoing, and all facts of record, the Board 1. 4400 PGA Boulevard has determined that the applications should be, and hereby Palm Beach Gardens, FL 33410 are, approved.31 In reaching its conclusion, the Board has 2. 496 Central Parkway West Altamonte Springs, FL 32714 31. The commenter also requested that the Board hold a public 3. 1401 North Federal Highway hearing or meeting on the proposal. Section 3(b) of the BHC Act does Boca Raton, FL 33432 not require the Board to hold a public hearing on an application unless the appropriate supervisory authority for the bank to be acquired 4. 4350 North Atlantic Avenue makes a timely written recommendation of denial of the application. Cocoa Beach, FL 32931 The Board has not received such a recommendation from the appropri- 5. 300 West Broward Boulevard ate supervisory authority. In addition, the Bank Merger Act does not Fort Lauderdale, FL 33312 require the Board to hold a public hearing or meeting. 6. 14235 U.S. Highway One Under its rules, the Board may, in its discretion, hold a public meeting or hearing on an application to acquire a bank if a meeting or Juno Beach, FL 33408 hearing is necessary or appropriate to clarify factual issues related to 7. 620 West Indiantown Road the application and to provide an opportunity for testimony. 12 C.F.R. Jupiter, FL 33458 225.16(e). The Board has considered carefully the commenter's re- 8. 2 South Orange Avenue quest in light of all the facts of record. In the Board's view, the public has had ample opportunity to submit comments on the proposal, and, Orlando, FL 32801 in fact, the commenter has submitted written comments that the Board 9. 5811 South Orange Avenue has considered carefully in acting on the proposal. The commenter's Orlando, FL 32806 request fails to demonstrate why its written comments do not 10. 6769 North Wickham Road, Suite B100 adequately present evidence in support of its position and fails to identify disputed issues of fact that are material to the Board's Melbourne, FL 32940 decision that would be clarified by a public meeting or hearing. For these reasons, and based on all the facts of record, the Board has ranted in this case. Accordingly, the request for a public meeting or determined that a public meeting or hearing is not required or war- hearing on the proposal is denied. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • March 2003 ORDERS ISSUED UNDER INTERNATIONAL loans and letters of credit, and other banking services for BANKING ACT international businesses and non-U.S. persons. In order to approve an application by a foreign bank BBVA Bancomer, SA. to establish an agency in the United States, the IBA and Mexico City, Mexico Regulation K require the Board to determine that the foreign bank applicant engages directly in the business of Order Approving Establishment of an Agency banking outside the United States and has furnished to the Board the information it needs to assess the application BBVA Bancomer, S.A.("Bank"), Mexico City, Mexico, a adequately. The Board also shall take into account whether foreign bank within the meaning of the International Bankthe foreign bank and any foreign bank parent is subject ing Act ("IBA"), has applied under section 7(d) of the IBA to comprehensive supervision or regulation on a consoli- (12 U.S.C. § 3105(d)) to establish an agency in Houston, dated basis by its home country supervisor (12 U.S.C. Texas. The Foreign Bank Supervision Enhancement Act § 3105(d)(2); 12 C.F.R. 211.24).4 The Board may also take of 1991, which amended the IBA, provides that a foreign into account additional standards as set forth in the IBA bank must obtain the approval of the Board to establish an and Regulation K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. agency in the United States. 211.24(c)(2)-(3)). Notice of the application, affording interested persons an As noted above, Bank engages directly in the business of opportunity to comment, has been published in a newsbanking outside the United States. Bank also has provided paper of general circulation in Houston, Texas (Houston the Board with information necessary to assess the applica- Chronicle, August 5, 2002). The time for filing comments tion through submissions that address the relevant issues. has expired, and all comments have been considered. With respect to supervision by home country authorities, Bank, with total assets of approximately $41 billion, is the Federal Reserve previously has determined, in connecthe largest bank in Mexico.1 Bank is a subsidiary of Grupo tion with an application involving another bank in Mexico, Financiero BBVA Bancomer, S.A. de C.V. ("Grupo"), also that bank was subject to home country supervision on a in Mexico City, a financial services holding company consolidated basis.5 Bank is supervised by the banking that owns 99.9 percent of Bank's shares. Grupo's ultiregulatory authorities in Mexico on substantially the same mate parent is Banco Bilbao Vizcaya Argentaria, S.A. terms and conditions as that other bank. With respect to ("BBVA"), Bilbao, Spain, which directly or indirectly Bank's parent, BBVA, the Federal Reserve also previously owns approximately 55 percent and has voting control has determined that other Spanish banks are subject to over an additional approximately 9 percent of the common comprehensive supervision on a consolidated basis in shares of Grupo. No other shareholder controls more than connection with their applications to establish U.S. opera- 5 percent of the shares of Grupo. Bank and its subsidiaries tions.6 BBVA is subject to supervision by the banking represent more than 95 percent of Grupo's consolidated regulatory authorities in Spain on substantially the same assets. BBVA, with assets of approximately $277 billion, is terms and conditions as those other banks. Based on all the second largest banking organization in Spain. BBVA the facts of record, it has been determined that Bank and provides a broad range of banking, financial, and other BBVA are subject to comprehensive supervision on a conservices throughout the world, and operates banking offices solidated basis by their home country supervisors. and subsidiaries in more than 24 countries.2 BBVA is a The Board has also taken into account the additional qualifying foreign banking organization under Regulastandards set forth in section 7 of the IBA and Regtion K. Bank currently operates state-licensed agencies in Los Angeles, California, and New York, New York. Bank 4. In assessing this standard, the Board considers, among other factors, the extent to which the home country supervisors: and Grupo also operate several U.S. nonbanking subsidiaries, all headquartered in Houston, Texas.3 (i) Ensure that the bank has adequate procedures for monitoring and controlling its activities worldwide; Bank seeks to establish the Houston agency to relocate (ii) Obtain information on the condition of the bank and its subsidiand consolidate the existing operations of its Los Angeles aries and offices through regular examination reports, audit and New York agencies. On the establishment of the pro- reports, or otherwise; posed Houston agency, all operations, assets, and liabilities (iii) Obtain information on the dealings with and relationship between of Bank's existing U.S. agencies would be transferred to the bank and its affiliates, both foreign and domestic; (iv) Receive from the bank financial reports that are consolidated on a the Houston agency. The proposed Houston agency would worldwide basis or comparable information that permits analysis continue the business of the existing agencies, which of the bank's financial condition on a worldwide consolidated includes deposit accounts for non-U.S. persons, corporate basis; (v) Evaluate prudential standards, such as capital adequacy and risk 1. Asset data are as of September 30, 2002. asset exposure, on a worldwide basis. These are indicia of com- 2. In the United States, BBVA's banking operations include a prehensive, consolidated supervision. No single factor is essensubsidiary bank, Banco Bilbao Vizcaya Argentaria Puerto Rico, tial, and other elements may inform the Board's determination. San Juan, Puerto Rico; a branch in New York, New York; and an 5. See Grupo Financiero Banamex Accival, 82 Federal Reserve agency in Miami, Florida. BBVA also has several U.S. nonbanking Bulletin 1047 (1996). subsidiaries. 6. See Caixa de Aforros de Vigo, 88 Federal Reserve Bulletin 132 3. These subsidiaries engage in money transmission, brokerage, (2002); Caja de Ahorros y Monte de Piedad de Madrid, 87 Federal foreign exchange activities, and related services and support. Reserve Bulletin 785 (2001). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 147 ulation K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. Board may be prohibited by law or otherwise, Bank and 211.24(c)(2)-(3)). The home country supervisors of Bank its ultimate parent have committed to cooperate with the and BBVA have no objection to the establishment of the Board to obtain any necessary consents or waivers that proposed agency. might be required from third parties for disclosure of such Mexico's risk-based capital standards are consistent with information. In light of these commitments and other facts those established by the Basel Capital Accord. Bank's of record, and subject to the condition described below, it capital is in excess of the minimum levels that would be has been determined that Bank has provided adequate required by the Basel Capital Accord and is considered assurances of access to any necessary information that the equivalent to capital that would be required of a U.S. Board may request. banking organization. Managerial and other financial On the basis of all the facts of record, and subject to the resources of Bank also are considered consistent with commitments made by Bank and BBVA, as well as the approval, and Bank appears to have the experience and terms and conditions set forth in this order, Bank's applicacapacity to support the proposed agency. In addition, Bank tion to establish an agency in Houston, Texas, is hereby has established controls and procedures for the proposed approved.7 Should any restrictions on access to informaagency to ensure compliance with U.S. law, as well as tion on the operations or activities of Bank and its affiliates controls and procedures for its worldwide operations subsequently interfere with the Board's ability to obtain generally. information to determine and enforce compliance by Bank Mexico is a member of the Financial Action Task Force or its affiliates with applicable federal statutes, the Board and subscribes to its recommendations on measures to may require termination of any of Bank's direct or indirect combat money laundering. In accordance with these rec- activities in the United States. Approval of this application ommendations, Mexico has enacted laws and created legis- also is specifically conditioned on compliance by Bank lative and regulatory standards to deter money laundering. and BBVA with the commitments made in connection with Money laundering is a criminal offense in Mexico, and this application and with the conditions in this order.8 The financial institutions are required to establish internal poli- commitments and conditions referred to above are condicies, procedures, and systems for the detection and pre- tions imposed in writing by the Board in connection with vention of money laundering throughout their worldwide this decision and may be enforced in proceedings under operations. Bank has policies and procedures to comply 12 U.S.C. § 1818 against Bank and its affiliates. with these laws and regulations that are monitored by By order, approved pursuant to authority delegated by governmental entities responsible for anti-money launder- the Board, effective January 29, 2003. ing compliance. With respect to access to information about Bank's JENNIFER J. JOHSON operations, the Board has reviewed the restrictions on Secretary of the Board disclosure in relevant jurisdictions in which Bank and BBVA operate and has communicated with relevant gov- 7. Approved by the Director of the Division of Banking Superviernment authorities regarding access to information. Bank sion and Regulation, with the concurrence of the General Counsel, and its ultimate parent have committed to make available pursuant to authority delegated by the Board. to the Board such information on the operations of Bank 8. The Board's authority to approve the establishment of the proand any of its affiliates that the Board deems necessary to posed agency parallels the continuing authority of the State of Texas determine and enforce compliance with the IB A, the Bank to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of Texas Holding Company Act, and other applicable federal law. Department of Banking to license the proposed agency of Bank in To the extent that the provision of such information to the accordance with any terms or conditions that it may impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • March 2003 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 Community Banc shares of Community Bank of West Georgia, Atlanta January 2, 2003 West Georgia, Inc., Villa Rica, Georgia Villa Rica, Georgia FEB Banc shares, Inc., Golden Sands Bankshares, Inc., Chicago January 9, 2003 Neshkoro, Wisconsin Neshkoro, Wisconsin Farmers Exchange Bank, Neshkoro, Wisconsin First Merchants Corporation, CNBC Bancorp, Chicago January 6, 2003 Muncie, Indiana Columbus, Ohio Commerce National Bank, Columbus, Ohio First Olathe Bancshares, Inc., Bannister Bancshares, Inc., Kansas City January 8, 2003 Overland Park, Kansas Kansas City, Missouri F T Bancshares, Inc., Aurelia F T & S Bankshares, Inc., Chicago January 9, 2003 Aurelia, Iowa Aurelia, Iowa The First Trust & Savings Bank, Marcus, Iowa MB Financial, Inc., South Holland Bancorp, Inc., Chicago January 9, 2003 Chicago, Illinois South Holland, Illinois South Holland Trust and Savings Bank, South Holland, Illinois Olmsted Holding Corporation, Colmsted National Bank, Minneapolis January 14, 2003 Byron, Minnesota Rochester, Minnesota Tropical Bancshares of Florida, Inc., Englewood Bank, Atlanta January 3, 2003 Englewood, Florida Englewood, Florida 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 FNB Southeast, Guaranty Bank, Richmond January 3,2003 Reidsville, North Carolina Charlottesville, Virginia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 149 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Community Bank & Trust v. United States, No. 01-571C Federal Reserve Banks in which the Board of Governors is (Ct. Fed, CI., filed October 3, 2001). Action challenging not named a party. on constitutional grounds the failure to pay interest on reserve accounts held at Federal Reserve Banks. Sedgwick v. United States, No. 02-5378 (D.C. Circuit, filed Artis v. Greenspan, No. 01-CV-0400 (EGS) (D.D.C., com- November 26, 2002). Appeal of the dismissal of appel- plaint filed February 22, 2001). Employment discriminalant's claim for a declaratory judgment under the Fed- tion action. On August 15, 2001, the district court coneral Tort Claims Act and the Constitution regarding the solidated the action with Artis v. Greenspan, No. 99-CVbanking agencies' alleged failure to intervene on his 2073 (EGS) (D.D.C., filed August 3, 1999), also an behalf in civil litigation involving a regulated institution. employment discrimination action. Albrecht v. Board of Governors, No. 02-5325 (D.C. Cir., Fraternal Order of Police v. Board of Governors, filed October 18, 2002). Appeal of district court order No. 1:98CV03116 (WBB)(D.D.C., filed December 22, dismissing challenge to the method of funding of the 1998). Declaratory judgment action challenging Board retirement plan for certain Board employees. regulation on labor-management relations at Reserve Caesar v. United States, No. 02-0612 (EGS) (D.D.C.), Banks. removed on April 1, 2002 from No. 02-1502 (D.C. Superior Court, originally filed March 1, 2002). Action seeking damages for personal injury. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics A3 GUIDE TO TABLES Federal Finance A25 Federal debt subject to statutory limitation DOMESTIC FINANCIAL STATISTICS A25 Gross public debt of U.S. Treasury— Types and ownership Money Stock and Bank Credit A26 U.S. government securities A4 Reserves and money stock measures dealers—Transactions A5 Reserves of depository institutions and Reserve Bank A27 U.S. government securities dealers— credit Positions and financing A6 Reserves and borrowings—Depository A28 Federal and federally sponsored credit institutions agencies—Debt outstanding Policy Instruments Securities Markets and Corporate Finance A7 Federal Reserve Bank interest rates A29 New security issues—Tax-exempt state and local A8 Reserve requirements of depository institutions governments and U.S. corporations A9 Federal Reserve open market transactions A30 Open-end investment companies—Net sales and assets Federal Reserve Banks A30 Domestic finance companies—Assets and liabilities A31 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 A3 2 Mortgage markets—New homes A3 3 Mortgage debt outstanding A12 Aggregate reserves of depository institutions and monetary base Consumer Credit A13 Money stock measures A34 Total outstanding Commercial Banking Institutions— A34 Terms Assets and Liabilities Flow of Funds A15 All commercial banks in the United States A16 Domestically chartered commercial banks A35 Funds raised in U.S. credit markets A17 Large domestically chartered commercial banks A37 Summary of financial transactions A19 Small domestically chartered commercial banks A3 8 Summary of credit market debt outstanding A20 Foreign-related institutions A39 Summary of financial assets and liabilities Financial Markets DOMESTIC NONFINANCIAL STATISTICS A22 Commercial paper outstanding A22 Prime rate charged by banks on short-term Selected Measures business loans A23 Interest rates—Money and capital markets A40 Output, capacity, and capacity utilization A24 Stock market—Selected statistics A42 Industrial production—Indexes and gross value Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

62 Federal Reserve Bulletin • March 2003 INTERNATIONAL STATISTICS Reported by Nonbanking Business Enterprises in the United States Summary Statistics A52 Liabilities to unaffiliated foreigners A44 U.S. international transactions A53 Claims on unaffiliated foreigners A45 U.S. reserve assets A45 Foreign official assets held at Federal Reserve Securities Holdings and Transactions Banks A54 Foreign transactions in securities A46 Selected U.S. liabilities to foreign official A55 Marketable US. Treasury bonds and institutions notes—Foreign transactions Reported by Banks in the United States Interest and Exchange Rates A46 Liabilities to, and claims on, foreigners A56 Foreign exchange rates A47 Liabilities to foreigners A49 Banks' own claims on foreigners A50 Banks' own and domestic customers' claims on A57 GUIDE TO SPECIAL TABLES AND foreigners STATISTICAL RELEASES A50 Banks' own claims on unaffiliated foreigners A51 Claims on foreign countries—Combined A58 INDEX TO STATISTICAL TABLES domestic offices and foreign branches Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 Guide to Tables SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GDP Gross domestic product n.a. Not available GNMA Government National Mortgage Association n.e.c. Not elsewhere classified GSE Government-sponsored enterprise P Preliminary HUD Department of Housing and Urban r Revised (Notation appears in column heading Development when about half the figures in the column have IMF International Monetary Fund been revised from the most recently published IOs Interest only, stripped, mortgage-backed securities table.) IPCs Individuals, partnerships, and corporations * Amount insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is in millions) MSA Metropolitan statistical area 0 Calculated to be zero NAICS North American Industry Classification System 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-backed securities CRA Community Reinvestment Act of 1977 REIT Real estate investment trust FAMC Federal Agricultural 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 TIIS Treasury inflation-indexed securities FSLIC Federal Savings and Loan Insurance Corporation VA Department of Veterans Affairs G-7 Group of Seven 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 U.S. 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 • March 2003 1.10 RESERVES AND MONEY STOCK MEASURES Percent annual rate of change, seasonally adjusted1 2002 2002 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Qlr Q2r Q3f Q4 Aug.r Sept.r Oct.r Nov.r Dec. Reserves of depository institutions2 1 Total -9.7 -15.9 -.9 -1.5 11.3 -23.3 -10.9 19.8 15.4 2 Required -9.2 -14.9 -3.6 -4.0 3.5 -19.3 -13.7 18.5 4.0 3 Nonborrowed -9.3 -16.5 -2.4 -.7 7.1 -20.4 -8.3 15.9 21.3 4 Monetary base3 8.9 7.3 6.9 5.2 4.9 3.0 5.2 6.0 7.7 Concepts of money* 3 Ml 5.7 -.6 3.1 4.8 -11.1 6.3 11.5 -.5 8.1 6 M2 6.7 4.1 9.2 6.9 8.3 5.6 8.0 7.7 2.7 7 M3 5.8 4.1 7.7 7.3 10.2 6.2 .6 16.9 7.2 Nontransaction components 8 In M25 7.0 5.4 10.8 7.5 13.6 5.4 7.1 9.9 1.3 9 In M3 only6 3.8 4.2 4.5 8.2 14.3 7.5 -15.4 37.1 16.8 Time and savings deposits Commercial banks 10 Savings, including MMDAs 20.4 15.1 20.1 16.9 28.7 16.7 14.3 20.9 3.6 1 1 Small time7 -16.1 -6.3 -6.3 -10.2 -8.5 -12.0 -10.3 -9.3 -11.1 12 Large time8-9 5.2 12.4 3.7 -3.4 .0 -3.4 10.7 -12.2 -31.4 Thrift institutions 13 Savings, including MMDAs 31.0 24.0 20.4 20.9 21.7 21.5 22.9 14.6 22.2 14 Small time7 -12.3 -16.6 -11.7 -7.8 -7.8 -9.4 -7.9 -7.5 -5.6 15 Large time8 1.5 -8.1 -3.1 10.2 15.1 2.1 8.5 15.9 14.6 Money market mutual funds 16 Retail -7.8 -9.2 4.7 -5.0 -1.0 -13.0 -3.5 .9 -9.1 17 Institution-only 3.4 3.9 -.8 1.8 -.9 -8.3 -41.4 68.6 25.2 Repurchase agreements and eurodollars 18 Repurchase agreements10 3.0 -.7 27.5 45.0 86.6 67.8 -4.8 55.3 77.7 19 Eurodollars10 3.6 -4.7 .2 12.4 21.6 21.2 9.8 8.0 1.7 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- time deposits, and retail money fund balances, each seasonally adjusted separately, and ing during preceding month or quarter. adding this result to seasonally adjusted Ml. 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with regula- M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) tory changes in reserve requirements (See also table 1.20.) balances in institutional money funds, (3) RP liabilities (overnight and term) issued by all 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally depository institutions, and (4) eurodollars (overnight and term) held by U.S. residents at adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom component of the money stock, plus (3) (for all quarterly reporters on the "Report of and Canada. Excludes amounts held by depository institutions, the U.S. government, money Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose market funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculated vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference by summing large time deposits, institutional money fund balances, RP liabilities, and between current vault cash and the amount applied to satisfy current reserve requirements. eurodollars, each seasonally adjusted separately, and adding this result to seasonally adjusted 4. Composition of the money stock measures is as follows: M2. Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all money fund balances, each seasonally adjusted separately. commercial banks other than those owed to depository institutions, the U.S. government, and 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities foreign banks and official institutions, less cash items in the process of collection and Federal (overnight and term) issued by depository institutions, and (4) eurodollars (overnight and Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of term) of U.S. addressees, each seasonally adjusted separately. withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, 7. Small time deposits—including retail RPs—are those issued in amounts of less than credit union share draft accounts, and demand deposits at thrift institutions. Seasonally $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions adjusted Ml is computed by summing currency, travelers checks, demand deposits, and are subtracted from small time deposits. OCDs, each seasonally adjusted separately. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time booked at international banking facilities. deposits—including retail RPs—in amounts of less than S 100,000), and (3) balances in retail 9. Large time deposits at commercial banks less those held by money market funds, money market mutual funds. Excludes individual retirement accounts (IRAs) and Keogh depository institutions, the U.S. government, and foreign banks and official institutions. balances at depository institutions and money market funds. 10. Includes both overnight and term. Seasonally adjusted M2 is calculated by summing savings deposits, small-denomination Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1 Millions of dollars Average of Average of daily figures for week ending on date indicated daily figures 2002 2002 Oct. Nov. Dec. Nov. 13 Nov. 20 Nov. 27 Dec. 4 Dec. 11 Dec. 18 Dec. 25 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 659,702 666,517 690,026 666,349 666,072 669,023 672,622 670,747 692.554 703,577 U.S. government securities2 2 Bought outright—System account3 609,157 608,689 621,818 608,480 608,053 609,235 609,586 609,905 626,469 629,400 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 agreeements4 11,242 19,308 29,476 16,821 20,929 23,036 25,857 22,000 28,179 34,321 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 13 213 42 242 310 3 2 164 6 13 9 Seasonal credit 120 61 46 66 60 54 54 46 49 46 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 363 104 604 649 -310 15 266 1,472 -161 1,078 13 Other Federal Reserve assets 38,797 38,133 38,029 40,081 37,020 36,671 36,847 37,150 38,003 38,708 14 Gold stock 11,042 11,042 11,043 11,042 11,042 11,042 11,042 11,043 11,043 11,043 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 34,349 34,424' 34,539 34,407' 34,428' 34,450' 34,472 34,503 34,535 34,566 ABSORBING RESERVE FUNDS 17 Currency in circulation 662,719 668,237' 678,660 668,079' 667,813' 669,935' 674,544 674,339 675,482 681,523 18 Reverse repurchase agreements5 0 0 13,291 0 0 0 0 0 18,202 20,908 19 Treasury cash holdings 389 387 370 386 387 384 377 376 370 361 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 4,873 5,024 4,891 5,013 4,868 5,016 4,664 4,107 5,959 4,678 21 Foreign 164 118 134 77 147 125 127 138 148 114 22 Service-related balances and adjustments . . 10,266 10,483 10,808 10,328 10,461' 10,625 10,684 10,554 10,899 11,181 23 Other 223 228 242 236 250 180 228 208 210 212 24 Other Federal Reserve liabilities and capital . . 19,530 19,765 20,061 20,012 19,791 19,483 19,571 19,799 20,203 20,441 25 Reserve balances with Federal Reserve Banks6 9,128 9,943 9,781 9,867 10,025' 10,968 10,139 8,973 8,858 11,969 End-of-month figures Wednesday figures Oct. Nov. Dec. Nov. 13 Nov. 20 Nov. 27 Dec. 4 Dec. 11 Dec. 18 Dec. 25 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 662,905 674,241 708,078 673,934 662,991 676,116 666,887 679,720 698,549 708,372 U.S. government securities2 2 Bought outright—System account3 607,865 608,985 629,406 608,984 606,396 609,614 610,876 608,947 629,397 629,402 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 agreeements4 16,500 28,500 39,500 21,000 19,250 29,000 18,000 30,750 30,000 37,250 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 0 2 9 2 1 6 2 1,076 2 9 9 Seasonal credit 80 57 31 65 56 54 49 45 43 50 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 -695 -334 418 3,624 752 599 1,081 1,498 895 2,693 13 Other Federal Reserve assets 39,144 37,022 38,703 40,249 36,527 36,833 36,867 37,394 38,202 38,958 14 Gold stock 11,042 11,042 11,043 11,042 11,042 11,042 11,043 - 11,043 11,043 11,043 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 34,385 34,472' 34,597 34.407' 34,428' 34,450' 34,472 34,503 34,535 34,566 ABSORBING RESERVE FUNDS 17 Currency in circulation 663,370 673,853' 687,518 669,444' 668,869' 674,314' 675,400 675,548 678,744 685,083 18 Reverse repurchase agreements5 0 0 21,091 0 0 0 0 0 21,905 20,396 19 Treasury cash holdings 397 377 367 387 386 377 377 372 360 367 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 5,878 4,928 4,420 4,592 4,519 5,082 3,504 5,506 6,595 4,662 21 Foreign 89 78 136 76 72 224 153 139 172 139 22 Service-related balances and adjustments . . 10,423 10,684' 10,648 10,328 10,461' 10,625 10,684 10,554 10,899 11,181 23 Other 233 253 1,152 238 231 184 207 201 213 203 24 Other Federal Reserve liabilities and capital . . 19,720 19,616 18,977 19,693 19,307 19,435 19,452 19,786 19,907 20,670 25 Reserve balances with Federal Reserve Banks6 10,422 12,167' 11,608 16,825 6,818' 13,566 4,823 15,360 7,532 13,482 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 4. Cash value of agreements, which are collateralized by U.S. Treasury and federal agency 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 5. Cash value of agreements, which are collateralized by U.S. Treasury securities. under matched sale-purchase transactions. 6. Excludes required clearing balances and adjustments to compensate for float. 3. Includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • March 2003 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RRReeessseeerrrvvveee ccclllaaassssssiiifffiiicccaaatttiiiooonnn 2000 2001 2002 2002 Dec. Dec. Dec. June July Aug. Sept. Oct. Nov. Dec. 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 7,022 9,053 9,873 7,923 8,099 8,520 8,731 8,836 9,695' 9,873 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh33333 45,245 43,919 43,334 41,655 42,718 42,892 42,231 42,933 42,144' 43,334 33333 AAAAAppppppppppllllliiiiieeeeeddddd vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 31,451 32,024 30,300 30,694 31,313 31,335 30,176 29,849 29,446 30,300 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh55555 13,794 11,895 13,033 10,961 11,406 11,557 12,055 13,084 12,698' 13,033 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss66666 38,473 41,077 40,173 38.617 39,412 39,854 38,907 38,685 39,141' 40,173 66666 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss 37,046 39,428 38,176 37,378 38,038 38,217 37,431 37,134 37,525 38,176 77777 EEEEExxxxxccccceeeeessssssssss rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss77777 1,427 1,649 1,997 1,238 1,374 1,637 1,476 1,550 1,616 1,997 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnnggggg aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 210 67 80 142 191 333 229 143 272 80 99999 AAAAAdddddjjjjjuuuuussssstttttmmmmmeeeeennnnnttttt 99 34 35 6 16 148 60 23 211 35 1111100000 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll 111 33 45 136 176 185 169 120 60 45 1111111111 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt88888 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two-week periods ending on dates indicated 2002 2003 Sept. 4 Sept. 18 Oct. 2 Oct. 16 Oct. 30 Nov. 13 Nov. 27 Dec. llr Dec. 25 Jan. 8 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss22222 10,024 7,666 9,543 7,935 9,634 8,864 10,497 9,559 10,408 9,200 22222 TTTTToooootttttaaaaalllll vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh33333 41,632 41,581 43,190 43,452 42,465r 41,720r 42,605r 41,827 43,740 45,148 33333 AAAAAppppppppppllllliiiiieeeeeddddd vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh44444 30,698 28,528 31,925 28,939 30,573 28,302 30,514 29,419 30,292 31,935 44444 SSSSSuuuuurrrrrpppppllllluuuuusssss vvvvvaaaaauuuuulllllttttt cccccaaaaassssshhhhh55555 10,935 13,053 11,265 14,513 1 l,892r 13,418r 12,092r 12,408 13,448 13,213 55555 TTTTToooootttttaaaaalllll rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss66666 40,722 36,194 41,468 36,874 40,207 37,166 41,010 38,978 40,700 41,135 66666 RRRRReeeeeqqqqquuuuuiiiiirrrrreeeeeddddd rrrrreeeeessssseeeeerrrrrvvvvveeeeesssss 38,436 35,225 39,670 35,337 38,688 35,492 39,441 37,394 38,225 39,495 77777 EEEEExxxxxccccceeeeessssssssss rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss77777 2,286 969 1,797 1,537 1,519 1,674 1,569 1,583 2,475 1,640 88888 TTTTToooootttttaaaaalllll bbbbbooooorrrrrrrrrrooooowwwwwiiiiinnnnnggggg aaaaattttt RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 626 167 170 155 111 366 214 133 57 36 99999 AAAAAdddddjjjjjuuuuussssstttttmmmmmeeeeennnnnttttt 438 4 1 25 4 299 157 83 10 8 1111100000 SSSSSeeeeeaaaaasssssooooonnnnnaaaaalllll 188 163 170 130 107 67 57 50 48 29 1111111111 EEEEExxxxxttttteeeeennnnndddddeeeeeddddd cccccrrrrreeeeedddddiiiiittttt88888 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 (line 3). 2. Excludes required clearing balances and adjustments to compensate for float and 7. Total reserves (line 5) less required reserves (line 6). includes other off-balance-sheet "as-of" adjustments. 8. Consists of borrowing at the discount window under the terms and conditions estab- 3. Vault cash eligible to satisfy reserve requirements. It includes only vault cash held by lished for the extended credit program to help depository institutions deal with sustained those banks and thrift institutions that are not exempt from reserve requirements. Dates refer liquidity pressures. Because there is not the same need to repay such borrowing promptly as to the maintenance periods in which the vault cash can be used to satisfy reserve require- with traditional short-term adjustment credit, the money market effect of extended credit is ments. similar to that of nonborrowed reserves. 4. All vault cash held during the lagged computation period by "bound" institutions (that is, those whose required reserves exceed their vault cash) plus the amount of vault cash applied during the maintenance period by "nonbound" institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Primary credit1 Secondary credit2 Seasonal credit3 Federal Reserve Bank 2/1 O 4 n / 03 Effective date Previous rate 2/1 O 4 n / 03 2/1 O 4 n / 03 Effective date Boston New York . . . Philadelphia . Cleveland .. . Richmond . . . Atlanta Chicago St. Louis Minneapolis . Kansas City . Dallas San Francisco Range of rates for primary credit Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank Effective date level)—All of Effective date level)—All of Effective date level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Jan. 9, 2003 2.25 2.25 (beginning of program) Range of rates for adjustment credit in recent years4 Range (or F.R. Bank Range (or F.R. Bank Range (or F.R. Bank level)—All of Effective date level)—All of level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1995 5.25 5.25 2000—Feb. 2 5.00-5.25 5.25 2001—June 27 . . . 3.25-3.50 3.25 4 5.25 5.25 29 ... 3.25 3.25 1996—Jan. 31 5.00-5.25 5.00 Mar. 21 5.25-5.50 5.50 Aug. 21 . . . 3.00-3.25 3.00 Feb. 3 . . . 5.00 5.00 23 5.50 5.50 23 ... 3.00 3.00 MMaayy 16 5.50-6.00 5.50 Sept. 17 . . . 2.50-3.00 2.50 1998—Oct. 15 . . . 4.75-5.00 4.75 19 6.00 6.00 18 . . . 2.50 2.50 16 ... 4.75 4.75 Oct. 2 ... 2.00-2.50 2.00 Nov. 17 . . . 4.50-4.75 4.50 2001— Jan. 3 5.75-6.00 5.75 4 ... 2.00 2.00 19 . . . 4.50 4.50 4 5.50-5.75 5.50 Nov. 6 ... 1.50-2.00 1.50 5 5.50 5.50 8 ... 1.50 1.50 1999—Aug. 24 . . . 4.50-4.75 4.75 31 5.00-5.50 5.00 Dec. 11 ... 1.25-1.50 1.25 26 . . . 4.75 4.75 Feb. 1 5.00 5.00 13 . . . 1.25 1.25 Nov. 16 . . . 4.75-5.00 4.75 Mar. 20 4.50-5.00 4.50 5.00 5.00 21 4.50 4.50 2002—Nov. 61 ..... . 0.75-1.25 0.75 AApprr.. 18 4.00-4.50 4.00 0.75 0.75 20 4.00 4.00 22000011——MMaayy 15 3.50-4.00 3.50 In effect Jan. 8, 2003 0.75 0.75 17 3.50 3.50 (end of program) 1. Available for very short terms as a backup source of liquidity to depository institutions into account rates charged by market sources of funds and ordinarily is reestablished on the that are in generally sound financial condition in the judgment of the lending Federal Reserve first business day of each two-week reserve maintenance period. Bank. 4. Was available until January 8, 2003, to help depository institutions meet temporary 2. Available in appropriate circumstances to depository institutions that do not qualify for needs for funds that could not be met through reasonable alternative sources. For earlier data, primary credit. see the following publications of the Board of Governors: Banking and Monetary Statistics, 3. Available to help relatively small depository institutions meet regular seasonal needs for 1914-1941, and 1941-1970; and the Statistical Digest, 1970-1979, 1980-1989, and funds that arise from a clear pattern of intrayearly movements in their deposits and loans and 1990-1995. See also the Board's Statistics: Releases and Historical Data web pages that cannot be met through special industry lenders. The discount rate on seasonal credit takes (http://www.federalreserve.gov/releases/H15/data.htm). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • March 2003 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirement Type of deposit Net transaction accounts2 1 $0 million-$6 million® 12/26/02 2 More than $6 million-$42.1 million4 12/26/02 3 More than $42.1 million5 12/26/02 4 Nonpersonal time deposits6 12/27/90 5 Eurocurrency liabilities7 12/27/90 1. Required reserves must be held in the form of deposits with Federal Reserve Banks or 4. The Monetary Control Act of 1980 requires that the amount of transaction accounts vault cash. Nonmember institutions may maintain reserve balances with a Federal Reserve against which the 3 percent reserve requirement applies be modified annually by 80 percent of Bank indirectly, on a pass-through basis, with certain approved institutions. For previous the percentage change in transaction accounts held by all depository institutions, determined reserve requirements, see earlier editions of the Annual Report or the Federal Reserve as of June 30 of each year. Effective with the reserve maintenance period beginning Bulletin. Under the Monetary Control Act of 1980, depository institutions include commercial December 26. 2002, for depository institutions that report weekly, and with the period banks, savings banks, savings and loan associations, credit unions, agencies and branches of beginning January 16, 2003, for institutions that report quarterly, the amount was increased foreign banks, and Edge Act corporations. from $41.3 million to $42.1 million. 2. Transaction accounts include all deposits against which the account holder is permitted 5. The reserve requirement was reduced from 12 percent to 10 percent on April 2, 1992, to make withdrawals by negotiable or transferable instruments, payment orders of with- for institutions that report weekly, and on April 16, 1992, for institutions that report quarterly. drawal, or telephone or preauthorized transfers for the purpose of making payments to third 6. For institutions that report weekly, the reserve requirement on nonpersonal time deposits persons or others. However, accounts subject to the rules that permit no more than six with an original maturity of less than 1.5 years was reduced from 3 percent to 1.5 percent for preauthorized, automatic, or other transfers per month (of which no more than three may be the maintenance period that began December 13, 1990, and to zero for the maintenance by check, draft, debit card, or similar order payable directly to third parties) are savings period that began December 27, 1990. For institutions that report quarterly, the reserve deposits, not transaction accounts. requirement on nonpersonal time deposits with an original maturity of less than 1.5 years was 3. Under the Garn-St Germain Depository Institutions Act of 1982, the Board adjusts the reduced from 3 percent to zero on January 17, 1991. amount of reservable liabilities subject to a zero percent reserve requirement each year for the The reserve requirement on nonpersonal time deposits with an original maturity of 1.5 succeeding calendar year by 80 percent of the percentage increase in the total reservable years or more has been zero since October 6, 1983. liabilities of all depository institutions, measured on an annual basis as of June 30. No 7. The reserve requirement on eurocurrency liabilities was reduced from 3 percent to zero corresponding adjustment is made in the event of a decrease. The exemption applies only to in the same manner and on the same dates as the reserve requirement on nonpersonal time accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve deposits with an original maturity of less than 1.5 years (see note 5). maintenance period beginning December 26, 2002, for depository institutions that report weekly, and with the period beginning January 16, 2003, for institutions that report quarterly, the exemption was raised from $5.7 million to $6.0 million. 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 2002 TTyyppee ooff ttrraannssaaccttiioonn 11999999 22000000 22000011 aanndd mmaattuurriittyy May June July Aug. Sept. Oct. Nov. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 0 8,676 15,503 3,524 3,656 4,838 529 750 0 250 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 464,218 477,904 542,736 70,978 53,015 45,828 63,083 53,314 62,947 51,394 4 For new bills 464,218 477,904 542,736 70,978 53,015 45,828 63,083 53,314 62,947 51,394 5 Redemptions 0 24,522 10,095 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 11,895 8,809 15,663 2,826 0 1,104 445 1,286 0 0 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 50,590 62,025 70,336 6,714 0 11,052 8,987 11,174 6,143 3,688 9 Exchanges -53,315 -54,656 -72,004 -9,031 0 -14,183 -5,040 -15,189 -5,435 -1,419 10 Redemptions 1,429 3,779 16,802 0 0 0 0 0 0 0 One to five years 11 Gross purchases 19,731 14,482 22,814 1,439 0 1,755 1,921 0 0 0 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts ^14,032 -52,068 -45,211 -1,620 0 -11,052 -629 -11,174 -6,143 -2,380 14 Exchanges 42,604 46,177 64,519 8,639 0 13,283 3,396 15,189 5,435 1,308 Five to ten years 15 Gross purchases 4,303 5,871 6,003 259 542 577 690 51 0 0 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -5,841 -6,801 -21,063 -5,094 0 0 -6.714 0 0 722 18 Exchanges 7,578 6,585 6,063 391 0 900 1,645 0 0 111 More than ten years 19 Gross purchases 9,428 5,833 8,531 0 0 63 80 0 0 0 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -717 -3,155 -4,062 0 0 0 -1,645 0 0 -2,030 22 Exchanges 3,133 1,894 1,423 0 0 0 0 0 0 0 All maturities 23 Gross purchases 45,357 43,670 68,513 8,048 4,198 8,336 3,665 2,087 0 250 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 1,429 28,301 26,897 0 0 0 0 0 0 0 Matched transactions 26 Gross purchases 4,413,430 4,415,905 4,722,667 466,807 447,555 513,400 495,729 449,250 429,029 378,381 27 Gross sales 4,431,685 4,397,835 4,724,743 469,046 448,330 511,902 497,031 449,986 425,399 377,535 Repurchase agreements 28 Gross purchases 281,599 0 0 0 0 0 0 0 0 0 29 Gross sales 301,273 0 0 0 0 0 0 0 0 0 30 Net change in U.S. Treasury securities 5,999 33,439 39,540 5,810 3,423 9,834 2,363 1,351 3,630 1,096 FEDERAL AGENCY OBLIGATIONS Outright transactions 31 Gross purchases 0 0 0 0 0 0 0 0 0 0 32 Gross sales 0 0 0 0 0 0 0 0 0 0 33 Redemptions 157 51 120 0 0 0 0 0 0 0 Repurchase agreements 34 Gross purchases 360,069 0 0 0 0 0 0 0 0 0 35 Gross sales 370,772 0 0 0 0 0 0 0 0 0 36 Net change in federal agency obligations -10,859 -51 -120 0 0 0 0 0 0 0 Reverse repurchase agreements 37 Gross purchases 0 0 0 0 0 0 0 0 0 0 38 Gross sales 0 0 0 0 0 0 0 0 0 0 Repurchase agreements 39 Gross purchases 304,989 890,236 1,497,713 106,426 98,850 68,750 84,000 93,500 72,000 113,501 40 Gross sales 164,349 987,501 1,490,838 109,926 94,850 81,250 80,500 94,750 77,250 101,501 41 Net change in triparty obligations 140,640 -97,265 6,875 -3,500 4,000 -12,500 3,500 -1,250 -5,250 12,000 42 Total net change in System Open Market Account . . 135,780 -63,877 46,295 2,310 7,423 -2,666 5,863 101 -1,620 13,096 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market 2. Transactions exclude changes in compensation for the effects of inflation on the Account; all other figures increase such holdings. principal of inflation-indexed securities. Transactions include the rollover of inflation compensation into new securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic NonfinancialS tatistics • March 2003 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 2002 2002 Nov. 27 Dec. 4 Dec. 11 Dec. 18 Dec. 25 Oct. Nov. Dec. Consolidated condition statement ASSETS 1 Gold certificate account 11,038 11,039 11,039 11,039 11,039 11,038 11,038 11,039 2 Special drawing rights certificate account 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 3 Coin 1,049 1,028 1,032 1,035 1,011 1,091 1,051 988 Loans 4 To depository institutions 60 52 1,121 45 59 80 59 40 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 1 Repurchase agreements2 29,000 18,000 30,750 30,000 37,250 16,500 28,500 3399,,550000 Federal agency obligations3 8 Bought outright 10 10 10 10 10 10 1100 1100 9 Held under repurchase agreements 0 0 0 0 0 0 0 0 10 Total U.S. TVeasury securities3 609,614 610,876 608,947 629,397 629,402 607,865 608,985 629,406 11 Bought outright4 609,614 610,876 608,947 629,397 629,402 607,865 608,985 629,406 12 Bills 207,568 208,172 206,238 226,682 226,682 205,840 206,937 226,682 13 Notes 297,339 297,881 297,884 297,887 297,890 295,908 297,340 297,893 14 Bonds 104,707 104,823 104,825 104,828 104,830 106,117 104,708 104,832 15 Held under repurchase agreements 0 0 0 0 0 0 0 0 16 Total loans and securities 638,684 628,938 640,828 659,452 666,721 624,456 637,554 668,956 17 Items in process of collection 8,118 9,589 10,116 8,800 13,239 6,256 5,147 10,291 18 Bank premises 1,530 1,530 1,532 1,534 1,540 1,527 1,529 1,543 Other assets 19 Denominated in foreign currencies5 16,160 16,091 16,252 16,551 16,655 16,091 16,161 16,913 20 All other6 19,162 19,231 19,627 19,990 20,702 21,553 19,340 20,118 21 Total assets 697,941 689,645 702,625 720,601 733,107 684,212 694,021 732,048 LIABILITIES 22 Federal Reserve notes 641,286 642,328 642,444 645,599 651,891 630,469 640,806 654,272 23 Reverse repurchase agreements7 0 0 0 21,905 20,396 0 0 21,091 24 Total deposits 29,463 19,535 31,871 24,923 29,704 27,077 28,236 28,249 25 Depository institutions 23,972 15,670 26,025 17,943 24,701 20,878 22,978 22,541 26 U.S. Treasury—General account 5,082 3,504 5,506 6,595 4,662 5,878 4,928 4,420 27 Foreign—Official accounts 224 153 139 172 139 89 78 136 28 Other 184 207 201 213 203 233 253 1,152 29 Deferred credit items 7,757 8,329 8,523 8,266 10,447 6,946 5,364 9,459 30 Other liabilities and accrued dividends8 2,427 2,425 2,451 2,418 2,461 2,479 2,443 2,217 31 Total liabilities 680,933 672,618 685,290 703,111 714,898 666,971 676,848 715,288 CAPITAL ACCOUNTS 32 Capital paid in 8,349 8,353 8,359 8,376 8,382 8,278 8,349 8,380 33 Surplus 7,312 7,312 7,312 7,312 7,312 7,312 7,312 8,380 34 Other capital accounts 1,348 1,362 1,664 1,802 2,516 1,652 1,513 0 35 Total liabilities and capital accounts 697,941 689,645 702,625 720,601 733,107 684,212 694,021 732,048 MEMO 36 Marketable U.S. government and federal agency securities held in custody for foreign official and international accounts 831,289 833,276 839,532 847,705 848,468 812,239 832,089 855,053 Federal Reserve note statement 37 Federal Reserve notes outstanding (issued to Banks) 757,885 759,934 762,428 762,435 760,778 752,063 757,793 759,255 38 LESS: Held by Federal Reserve Banks 116,599 117,606 119,984 116,836 108,887 121,595 116,988 104,983 39 Federal Reserve notes, net 641,286 642,328 642,444 645,599 651,891 630,469 640,806 654,272 Collateral held against notes, net 40 Gold certificate account 11,038 11,039 11,039 11,039 11,039 11,038 11,038 11,039 41 Special drawing rights certificate account 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 42 Other eligible assets 0 204 0 0 0 0 0 0 43 U.S. Treasury and agency securities 628,048 628,886 629,205 632,361 638,652 617,231 627,567 641,034 44 Total collateral 641,286 642,328 642,444 645,599 651,891 630,469 640,806 654,272 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, which are collateralized by U.S. Treasury and federal agency bills maturing within ninety days. securities. 7. Cash value of agreements, which are collateralized by U.S. Treasury securities. 3. Face value of the securities. 8. 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 2002 2002 Nov. 27 Dec. 4 Dec. 11 Dec. 18 Dec. 25 Oct. Nov. Dec. 1 Total loans 60 52 1,121 45 59 80 59 40 2 Within fifteen days1 56 30 1,089 43 57 62 44 35 3 Sixteen days to ninety days 4 22 32 3 2 18 15 5 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Total US. Treasury securities2 609,614 610,876 608,947 629,397 629,402 607,865 608,985 629,406 6 Within fifteen days' 25,646 21,260 19,955 47,253 33,670 6,607 12,306 27,444 7 Sixteen days to ninety days 135,245 142,625 141,835 134,262 146,846 129.715 147,874 154,225 8 Ninety-one days to one year 142,115 139,936 140,097 140,816 141,815 162,163 142,194 141,840 9 One year to five years 173,805 173,934 173,935 173,935 173,936 176,182 173,805 172,758 10 Five years to ten years 52,974 53,290 53,293 53,295 53,298 51,458 52,975 53,300 11 More than ten years 79,829 79,831 79,833 79,836 79,838 81,739 79,830 79,840 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 10 10 0 0 10 16 One year to five years 10 10 10 0 0 10 10 0 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 Domestic NonfinancialS tatistics • March 2003 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 2002 IItteemm 1999 2000 2001 2002 Dec. Dec. Dec. Dec. May June July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 41.82 38.54 41.22 40.07 39.16 39.31 39.68 40.05 39.28 38.92 39.56 40.07 2 Nonborrowed reserves4 41.50 38.33 41.15 39.99 39.05 39.17 39.49 39.72 39.05 38.78 39.29 39.99 3 Nonborrowed reserves plus extended credit5 41.50 38.33 41.15 39.99 39.05 39.17 39.49 39.72 39.05 38.78 39.29 39.99 4 Required reserves 40.53 37.11 39.57 38.07 37.90 38.08 38.31 38.42 37.80 37.37 37.95 38.07 5 Monetary base6 593.73r 584.96r 635.78' 682.01 657.64' 662.02' 666.91' 669.66' 671.35' 674.28' 677.63' 682.01 Not seasonally adjusted 6 Total reserves7 41.89 38.53 41.20 40.03 40.23 38.54 39.32 39.74 38.78 38.54 38.98 40.03 7 Nonborrowed reserves 41.57 38.32 41.13 39.95 40.11 38.40 39.13 39.41 38.55 38.40 38.71 39.95 8 Nonborrowed reserves plus extended credit5 41.57 38.32 41.13 39.95 40.11 38.40 39.13 39.41 38.55 38.40 38.71 39.95 9 Required reserves8 40.59 37.10 39.55 38.03 38.96 37.30 37.94 38.10 37.31 36.99 37.37 38.03 10 Monetary base9 600.72 590.06 639.91 686.17 657.98 662.87 668.76 669.32 669.72 671.49 676.66' 686.17 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 41.65 38.47 41.08 40.17 40.29 38.62 39.41 39.85 38.91 38.69 39.14 40.17 12 Nonborrowed reserves 41.33 38.26 41.01 40.09 40.18 38.47 39.22 39.52 38.68 38.54 38.87 40.09 13 Nonborrowed reserves plus extended credit5 41.33 38.26 41.01 40.09 40.18 38.47 39.22 39.52 38.68 38.54 38.87 40.09 14 Required reserves 40.36 37.05 39.43 38.18 39.03 37.38 38.04 38.22 37.43 37.13 37.53 38.18 15 Monetary base12 608.02 596.98 648.74 697.09 668.12 673.01 678.98 679.55 679.96 681.83 687.23' 697.09 16 Excess reserves13 1.30 1.43 1.65 2.00 1.26 1.24 1.37 1.64 1.48 1.55 1.62 2.00 17 Borrowings from the Federal Reserve .32 .21 .07 .08 .11 .14 .19 .33 .23 .14 .27 .08 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 adjusted required reserves include required reserves against transactions deposits and nonper- Reserve 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 MEASURES1 Billions of dollars, averages of daily figures 2002 1999 2000 2001 2002 Dec. Dec. Dec. Dec. Sept.' Oct.' Nov.' Dec. Seasonally adjusted Measures2 1 Ml l,121.9r 1,084.9' 1,173.4' 1,211.5 1,192.5 1,203.9 1,203.4 1,211.5 7 M2 4,648.0r 4,926.9' 5,440.6' 5,791.8 5,703.5 5,741.7 5,778.6 5,791.8 3 M3 6,528.6' 7,090.5' 7,993.5' 8,505.7 8,333.5 8,338.0 8,455.3 8,505.7 Ml components 4 Currency3 517.5' 531.0' 581.4' 627.0 617.8 620.5 623.3 627.0 Travelers checks4 8.3 8.0 7.8 7.5 7.9 7.7 7.5 7.5 6 Demand deposits5 352.2' 306.7' 325.6' 296.5 292.0 299.3 294.1 296.5 7 Other checkable deposits6 244.0' 239.2' 258.8' 280.5 274.7 276.4 278.7 280.5 Nontransaction components 8 In M27 3,526.0' 3,842.0' 4,267.1' 4,580.3 4,511.0 4,537.8 4,575.2 4,580.3 9 In M3 only8 1,880.6' 2,163.6' 2,552.9' 2,714.0 2,630.0 2,596.3 2,676.6 2,714.0 Commercial banks 10 Savings deposits, including MMDAs 1,288.8' 1,422.3' 1,734.5' 2,047.3 1,982.7 2,006.3 2,041.2 2,047.3 11 Small time deposits9 634.7' 698.8' 634.2' 580.9 596.0 590.9 586.3 580.9 12 Large time deposits1011 650.2' 717.4' 670.8' 685.1 704.4 710.7 703.5 685.1 Thrift institutions 13 Savings deposits, including MMDAs 449.6' 451.7' seg-C 711.0 676.8 689.7 698.1 711.0 14 Small time deposits9 320.3' 344.4' 338.7' 299.0 304.3 302.3 300.4 299.0 15 Large time deposits10 91.0' 102.9 114.9' 116.4 112.7 113.5 115.0 116.4 Money market mutual funds 16 Retail 832.7' 924.8' 990.7' 942.0 951.3 948.5 949.2 942.0 17 Institution-only 634.4' 788.2' 1,189.7' 1,232.9 1,183.0 1,142.2 1,207.5 1,232.9 Repurchase agreements and eurodollars 18 Repurchase agreements12 335.7' 363.5' 375.0' 468.6 422.4 420.7 440.1 468.6 19 Eurodollars12 169.2' 191.5' 202.5' 210.9 207.5 209.2 210.6 210.9 Not seasonally adjusted Measures1 70 Ml 1,148.3 1,112.3 1,203.5 1,241.4 1,182.5 1,193.6 1,202.0 1,241.4 71 M2 4,675.0 4,962.3 5,483.5 5,841.1 5,681.3 5,720.9 5,793.1 5,841.1 22 M3 6,571.1 7,145.0 8,065.2 8,583.2 8,258.6 8,281.4 8,471.0 8,583.2 Ml components 23 Currency3 521.5 535.2 584.9 630.3 616.1 617.9 622.8 663300..33 74 Travelers checks4 8.4 8.1 7.9 7.7 7.8 7.7 7.6 7.7 75 Demand deposits5 371.8 326.5 347.6 316.9 289.3 294.9 296.2 316.9 26 Other checkable deposits6 246.6 242.5 263.2 286.6 269.3 273.0 275.4 286.6 Nontransaction components 77 In M27 3,526.7 3,849.9 4,280.0 4,599.7 4,498.8 4,527.3 4,591.1 4,599.7 28 In M3 only8 1,896.2 2,182.8 2,581.7 2,742.1 2,577.2 2,560.5 2,677.9 2,742.1 Commercial banks 29 Savings deposits, including MMDAs 1,288.8 1,426.9 1,742.3 2,059.9 1,979.4 2,002.0 2,054.4 2,059.9 30 Small time deposits9 635.7 700.0 635.2 581.6 596.6 591.9 587.7 581.6 31 Large time deposits1011 651.7 717.6 669.7 683.4 704.7 712.9 705.7 683.4 Thrift institutions 32 Savings deposits, including MMDAs 449.6 453.1 571.5 715.4 675.6 688.2 702.6 715.4 33 Small time deposits9 320.8 345.0 339.2 299.3 304.6 302.8 301.1 299.3 34 Large time deposits10 91.2 103.0 114.7 116.1 112.7 113.9 115.3 116.1 Money market mutual funds 35 Retail 832.0 925.0 991.8 943.5 942.6 942.5 945.2 943.5 36 Institution-only 648.2 805.6 1,217.7 1,260.7 1,144.1 1,119.2 1,211.4 1,260.7 Repurchase agreements and eurodollars 37 Repurchase agreements12 334.7 364.2 376.5 470.4 411.1 408.6 435.5 470.4 38 Eurodollars12 170.4 192.4 203.0 211.5 204.7 205.8 210.0 211.5 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • March 2003 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly ory institutions, the U.S. government, money market funds, and foreign banks and official statistical release. Historical data starting in 1959 are available from the Money and Reserves institutions. Seasonally adjusted M3 is calculated by summing large time deposits, institu- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal tional money fund balances, RP liabilities, and eurodollars, each seasonally adjusted sepa- Reserve System, Washington, DC 20551. rately, and adding this result to seasonally adjusted M2. 2. Composition of the money stock measures is as follows: 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of institutions. depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. commercial banks other than those owed to depository institutions, the U.S. government, and Travelers checks issued by depository institutions are included in demand deposits. foreign banks and official institutions, less cash items in the process of collection and Federal 5. Demand deposits at commercial banks and foreign-related institutions other than those Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of owed to depository institutions, the U.S. government, and foreign banks and official instituwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, tions, less cash items in the process of collection and Federal Reserve float. credit union share draft accounts, and demand deposits at thrift institutions. Seasonally 6. Consists of NOW and ATS account balances at all depository institutions, credit union adjusted Ml is computed by summing currency, travelers checks, demand deposits, and share draft account balances, and demand deposits at thrift institutions. OCDs, each seasonally adjusted separately. 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time money fund balances. deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities balances in retail money market mutual funds. Excludes individual retirement accounts (overnight and term) issued by depository institutions, and (4) eurodollars (overnight and (IRAs) and Keogh balances at depository institutions and money market funds. Seasonally term) of U.S. addressees. adjusted M2 is calculated by summing savings deposits, small-denomination time deposits, 9. Small time deposits—including retail RPs—are those issued in amounts of less than and retail money fund balances, each seasonally adjusted separately, and adding this result to $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are seasonally adjusted M1. subtracted from small time deposits. M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those issued by all depository institutions, (2) balances in institutional money funds, (3) RP booked at international banking facilities. liabilities (overnight and term) issued by all depository institutions, and (4) eurodollars 11. Large time deposits at commercial banks less those held by money market funds, (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and depository institutions, the U.S. government, and foreign banks and official institutions. at all banking offices in the United Kingdom and Canada. Excludes amounts held by deposit- 12. Includes both overnight and term. 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 2001 2002 2002 Dec. June' July Aug. Sept.' Oct.' Nov.' Dec. Dec. 4 Dec. 11 Dec. 18 Dec. 25 Seasonally adjusted Assets 1 Bank credit 5,451.0 5,540.8 5,591.5' 5,673.2' 5,730.4 5,759.7 5,837.4 5,885.8 5,839.7 5,905.9 5,896.6 5,912.8 2 Securities in bank credit 1,496.8 1,562.5 1,594.6' 1,632.9' 1,643.5 1,643.1 1,688.0 1,714.3 1,679.2 1,719.4 1,696.7 1,725.4 U.S. government securities 856.2' 909.3 918.9' 946.3' 962.9 972.4 1,001.4 1,012.3 1,006.4 1,025.7 997.8 1,010.3 4 Other securities 640.6r 653.3 675.8' 686.6' 680.6 670.7 686.6 702.1 672.8 693.7 698.9 715.1 Loans and leases in bank credit2 .... 3,954.2 3,978.3 3,996.9' 4,040.2' 4,086.9 4,116.6 4,149.4 4,171.4 4,160.5 4,186.5 4,200.0 4,187.3 6 Commercial and industrial 1,031.4r 993.5 981.9' 981.8' 975.1 969.9 967.3 965.0 969.4 967.4 965.5 966.2 7 Real estate 1,784.5 1,838.4 1,869.2 1,900.7 1,935.0 1,967.4 2,000.1 2,020.6 2,012.3 2,030.0 2,021.4 2,017.0 8 Revolving home equity 155.5 186.1 192.9 197.7 200.9 204.9 207.7 212.4 209.7 211.1 213.1 212.8 9 Other 1,628.9 1,652.4 1,676.3 1,703.0 1,734.2 1,762.6 1,792.3 1,808.2 1,802.6 1,818.9 1,808.3 1,804.3 10 Consumer 557.9r 568.8 564.7 574.8 582.8 584.8 585.6 587.0 584.7 587.0 589.2 588.0 11 Security3 146.8r 170.2 178.1' 176.7' 181.4 183.1 186.7 191.6 185.4 193.6 212.4 202.6 1? Other loans and leases 433.7' 407.4 403.0' 406.3 412.6 411.3 409.7 407.2 408.6 408.4 411.5 413.5 n Interbank loans 293.1 282.4 288.6 305.6 318.3 326.8 328.3 331.5 319.9 327.8 334.6 346.2 14 Cash assets4 297.5 306.7 309.4 318.1 317.2 318.7 315.0 317.5 300.0 326.6 316.5 333.2 15 Other assets5 486.3 475.6 484.0 499.5 498.7 512.0 517.8 517.9 508.2 530.0 507.4 517.2 16 Total assets6 6,454.5 6,529.9 6,598.2r 6,721.4r 6,789.6 6,841.8 6,922.9 6,976.9 6,892.2 7,014.5 6,978.9 7,033.4 Liabilities 17 Deposits 4.239.8 4,377.4 4,414.0 4,460.5 4,473.4 4,482.9 4,500.1 4,483.8 4,492.8 4,478.2 4,473.1 4,508.9 18 Transaction 640.9 597.4 612.2 599.1 584.0 611.4 606.2 613.8 579.7 587.7 611.2 650.0 19 Nontransaction 3.598.9 3,780.0 3,801.8 3,861.4 3,889.4 3,871.5 3,894.0 3,870.0 3,913.0 3,890.6 3,861.9 3,858.9 20 Large time 981.2 1,036.1 1,048.1 1,049.2 1,043.2 1,019.9 1,002.5 978.5 994.7 981.7 984.1 979.3 21 Other 2,617.8 2,743.9 2,753.7 2,812.2 2,846.2 2,851.6 2,891.5 2,891.5 2,918.3 2,908.8 2,877.8 2,879.6 22 Borrowings 1,245.5 1,232.3 1,231.7 1,292.7 1,322.2 1,332.6 1,364.4 1,396.9 1,343.3 1,426.4 1,408.9 1,410.5 73 From banks in the U.S 402.9' 380.2 386.1' 405.0' 416.3 415.2 421.0 416.1 414.5 423.4 414.1 416.0 24 From others 842.6' 852.1 845.6' 887.7' 905.9 917.3 943.5 980.8 928.8 1,003.0 994.8 994.5 25 Net due to related foreign offices 150.1 89.6 99.2 94.1 100.3 119.5 122.4 150.6 135.6 163.9 151.0 146.7 26 Other liabilities 360.8 378.4 408.0 430.4 435.4 440.0 444.4 453.4 431.3 446.6 453.7 466.3 27 Total liabilities 5,996.3 6,077.7 6,152.9 6,277.7 6,331.4 6,375.0 6,431.4 6,484.7 6,403.0 6,515.1 6,486.8 6,532.4 28 Residual (assets less liabilities)7 458.2 452.2 445.3' 443.7' 458.2 466.8 491.5 492.1 489.1 499.3 492.1 500.9 Not seasonally adjusted Assets 29 Bank credit 5,483.8 5,535.3 5,564.9' 5,650.7' 5,723.5 5,763.7 5,854.0 5,922.6 5,865.0 5,933.0 5,936.2 5,950.7 30 Securities in bank credit 1,504.1 1,558.4 1,580.5' 1,624.3' 1,639.7 1,642.4 1,692.2 1,723.3 1,690.9 1,728.6 1,704.9 1,729.9 31 U.S. government securities 861.1' 906.5 910.6' 940.0' 959.4 968.6 1,002.3 1,018.0 1,014.3 1,032.6 1,004.5 1,013.3 32 Other securities 643.1' 651.9 669.9' 684.3' 680.3 673.8 690.0 705.3 676.6 695.9 700.4 716.6 33 Loans and leases in bank credit2 .... 3,979.7 3,976.9 3,984.4' 4,026.5' 4,083.8 4,121.3 4,161.8 4,199.3 4,174.1 4,204.5 4,231.3 4,220.8 34 Commercial and industrial 1,031.1' 995.7 980.9' 976.3' 973.0 971.2 968.6 964.8 968.0 961.9 964.7 968.4 35 Real estate 1,788.8 1,839.4 1,868.5 1,901.8 1,937.2 1,969.6 2,005.1 2,025.4 2,016.9 2,036.8 2,024.8 2,022.4 36 Revolving home equity 155.7 186.3 192.7 197.8 201.9 205.4 208.5 212.5 210.1 211.3 213.3 213.0 37 Other 1,633.1 1,653.1 1,675.8 1,704.0 1,735.3 1,764.1 1,796.7 1,812.9 1,806.8 1,825.5 1,811.5 1,809.5 38 Consumer 567.4' 564.6 558.9' 571.3 582.3 585.4 588.2 597.1 589.1 593.2 599.8 602.8 39 Credit cards and related plans . . 232.0 221.0 215.3 224.4 231.2 232.2 232.0 239.2 233.1 236.4 241.8 243.8 40 Other 335.4' 343.6 343.6' 346.9 351.1 353.2 356.2 357.9 356.0 356.8 358.1 359.0 41 Security3 153.2' 169.2 173.5' 172.2' 179.6 185.5 190.3 200.5 189.2 204.4 226.0 209.1 42 Other loans and leases 439.2' 408.0 402.6' 404.9' 411.8 409.6 409.5 411.5 410.9 408.1 415.8 418.1 43 Interbank loans 299.4 284.5 282.8 299.2 310.5 321.5 332.2 338.4 333.3 335.8 347.1 341.3 44 Cash assets4 317.3 299.0 300.2 303.8 314.1 321.0 325.0 338.1 312.2 324.8 339.3 348.9 45 Other assets5 489.4 473.9 482.8 496.8 501.2 510.8 519.0 521.3 512.2 529.5 510.5 519.1 46 Total assets6 6,516.3 6,517.0 6,555.5r 6,675.4r 6,774.0 6,841.9 6,954.4 7,044.5 6,946.6 7,046.8 7,056.7 7,084.1 Liabilities 47 Deposits 4,290.4 4,365.2 4,384.9 4,413.7 4,441.4 4,467.8 4,520.0 4,533.5 4,535.4 4,511.9 4,521.8 4,545.4 48 Transaction 669.5 594.4 604.7 583.8 577.8 606.2 611.8 641.4 591.9 588.5 637.0 676.8 49 Nontransaction 3,620.9 3,770.8 3,780.1 3,829.9 3,863.6 3,861.6 3,908.2 3,892.1 3,943.5 3,923.4 3,884.9 3,868.6 50 Large time 995.5 1,033.8 1,037.1 1,033.5 1,028.6 1,013.8 1,009.4 992.4 1,006.0 996.5 998.1 995.5 51 Other 2,625.4 2,737.0 2,743.0 2,796.4 2,834.9 2,847.8 2,898.8 2,899.8 2,937.5 2,926.9 2,886.7 2,873.2 52 Borrowings 1,245.4 1,231.3 1,221.7 1,272.6 1,319.6 1,334.5 1,367.6 1,396.5 1,346.7 1,413.3 1,415.7 1,408.4 53 From banks in the U.S 404.5' 377.7 382.1' 399.8' 409.5 413.5 418.2 417.5 414.6 421.3 417.6 417.6 54 From others 840.9' 853.6 839.7' 872.8' 910.1 921.0 949.5 979.0 932.1 992.0 998.1 990.8 55 Net due to related foreign offices 156.9 85.7 90.0 91.1 100.9 118.9 126.0 157.0 137.3 168.6 155.6 157.1 56 Other liabilities 366.4 375.5 399.1 427.6 435.5 440.1 450.0 460.5 434.4 452.4 459.1 477.3 57 Total liabilities 6,059.1 6,057.7 6,095.7 6,205.0 6,297.5 6,361.3 6,463.6 6,547.6 6,453.7 6,546.2 6,552.2 6,588.2 58 Residual (assets less liabilities)7 457.2 459.3 459.8' 470.4' 476.6 480.6 490.7 496.9 492.9 500.6 504.5 495.9 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • March 2003 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 2001 2002 2002 Dec. June' July Aug. Sept.' Oct.' Nov.' Dec. Dec. 4 Dec. 11 Dec. 18 Dec. 25 Seasonally adjusted Assets 1 Bank credit 4,854.8 4,935.2 4,977.2' 5,052.2' 5,111.7 5,145.6 5,216.6 5,251.1 5,221.9 5,254.6 5,253.8 5,270.1 2 Securities in bank credit 1,255.2 1,324.2 1,353.4' 1,383.0' 1,396.0 1,398.0 1,439.0 1,450.5 1,433.4 1,451.9 1,432.2 1,457.9 U.S. government securities 774.1' 833.2 842.4' 864.4' 876.2 883.6 908.6 911.1 915.2 918.5 896.5 908.9 4 Other securities 481.1' 491.1 511.0' 518.5' 519.8 514.4 530.4 539.4 518.2 533.4 535.7 549.0 5 Loans and leases in bank credit2 .... 3,599.6 3,610.9 3,623.8' 3,669.3 3,715.7 3,747.6 3,777.6 3,800.6 3,788.5 3,802.7 3,821.6 3,812.2 6 Commercial and industrial 836.1' 800.4 790.7' 791.9' 789.6 788.6 788.2 786.8 788.4 786.7 787.4 788.0 7 Real estate 1,766.7 1,820.0 1,850.4 1,881.8 1,916.0 1,947.9 1,980.3 2,001.2 1,993.1 2,010.4 2,001.9 1,997.6 8 Revolving home equity 155.5 186.1 192.9 197.7 200.9 204.9 207.7 212.4 209.7 211.1 213.1 212.8 9 Other 1,611.2 1,633.9 1,657.5 1,684.2' 1,715.1 1,743.0 1,772.5 1,788.8 1,783.4 1,799.3 1,788.8 1,784.9 10 Consumer 557.9' 568.8 564.7 574.8 582.8 584.8 585.6 587.0 584.7 587.0 589.2 588.0 11 Security3 71.9' 84.7 87.2' 86.2' 86.7 86.0 81.5 81.4 79.0 76.3 94.7 86.6 12 Other loans and leases 367.0' 337.1 330.8' 334.7 340.6 340.3 341.9 344.1 343.4 342.2 348.4 351.9 13 Interbank loans 272.5 262.2 271.1 287.1 296.6 301.9 301.8 299.7 293.2 291.1 303.8 313.4 14 Cash assets4 258.2 261.2 263.4 271.6 271.2 273.3 274.1 275.0 259.8 286.3 268.9 289.3 15 Other assets5 456.8 447.8 454.5 470.5 470.2 476.9 479.8 476.1 470.6 485.7 468.4 475.2 16 Total assets6 5,769.3 5,831.1 5,891.4r 6,006.9r 6,075.1 6,122.8 6,197.0 6,226.5 6,170.2 6,242.1 6,219.0 6,272.4 Liabilities 17 Deposits 3,799.3 3,872.2 3,915.2 3,965.5 3,987.4 4,016.6 4,051.6 4,060.1 4,049.8 4,046.3 4,048.2 4,090.1 18 Transaction 629.7 587.1 602.3 589.1 573.9 601.6 596.7 604.3 570.6 578.7 601.9 640.6 19 Nontransaction 3,169.6 3,285.1 3,312.8 3,376.4 3,413.5 3,415.0 3,454.9 3,455.7 3,479.2 3,467.7 3,446.3 3,449.5 20 Large time 554.3 543.8 562.3 569.9 573.3 571.3 571.7 570.8 567.6 567.6 573.3 575.1 21 Other 2,615.3 2,741.3 2,750.5 2,806.5 2,840.3 2,843.7 2,883.2 2,885.0 2,911.5 2,900.1 2,873.0 2,874.4 22 Borrowings 1,047.1 1,039.4 1,030.4 1,078.9 1,098.2 1,098.8 1,109.9 1,113.4 1,088.6 1,136.2 1,121.3 1,116.0 23 From banks in the U.S 379.0' 358.8 365.3' 383.4' 393.6 392.1 395.5 386.2 385.0 397.8 383.8 383.8 24 From others 668.2' 680.5 665.1' 695.5' 704.6 706.7 714.5 727.2 703.5 738.4 737.5 732.2 25 Net due to related foreign offices 192.5 175.7 181.0 179.7 184.1 191.9 196.8 211.4 208.6 215.2 205.6 208.4 26 Other liabilities 278.8 292.9 317.1 333.6 342.7 340.3 345.3 353.5 332.5 344.9 352.7 369.1 27 Total liabilities 5,317.7 5,380.2 5,443.7 5,557.7 5,612.4 5,647.5 5,703.6 5,738.3 5,679.5 5,742.7 5,727.8 5,783.7 28 Residual (assets less liabilities)7 451.6 450.9 447.7' 449.2' 462.8 475.2 493.3 488.1 490.7 499.4 491.2 488.7 Not seasonally adjusted Assets 29 Bank credit 4,880.1 4,932.7 4,956.6' 5,036.0' 5,108.2 5,149.6 5,230.4 5,278.9 5,244.2 5,273.3 5,283.9 5,299.1 30 Securities in bank credit 1,262.5 1,320.1 1,339.3' 1,374.3' 1,392.3 1,397.3 1,443.2 1,459.5 1,445.1 1,461.1 1,440.4 1,462.4 31 U.S. government securities 779.0' 830.4 834.1' 858.1' 872.7 879.8 909.4 916.8 923.1 925.4 903.2 911.9 32 Other securities 483.6' 489.7 505.2' 516.1' 519.6 517.6 533.8 542.7 522.0 535.6 537.2 550.5 33 Loans and leases in bank credit2 .... 3,617.6' 3,612.6 3,617.3 3,661.7 3,715.9 3,752.3 3,787.2 3,819.4 3,799.1 3,812.2 3,843.5 3,836.7 34 Commercial and industrial 834.1' 803.7 791.0' 788.0' 787.6 789.2 788.0 785.1 786.3 781.4 785.4 787.6 35 Real estate 1,771.1 1,821.0 1,849.8 1,883.0 1,918.1 1,950.1 1,985.3 2,006.0 1,997.7 2,017.2 2,005.3 2,003.0 36 Revolving home equity 155.7 186.3 192.7 197.8 201.9 205.4 208.5 212.5 210.1 211.3 213.3 213.0 37 Other 1,615.4 1,634.7 1,657.0 1,685.2 1,716.2 1,744.6 1,776.8 1,793.5 1,787.6 1,805.9 1,792.0 1,790.1 38 Consumer 567.4' 564.6 558.9' 571.3 582.3 585.4 588.2 597.1 589.1 593.2 599.8 602.8 39 Credit cards and related plans .. 232.0 221.0 215.3 224.4 231.2 232.2 232.0 239.2 233.1 236.4 241.8 243.8 40 Other 335.4' 343.6 343.6' 346.9 351.1 353.2 356.2 357.9 356.0 356.8 358.1 359.0 41 Security3 74.3' 85.2 85.9' 85.0' 87.7 88.3 83.9 84.4 81.2 79.3 101.7 88.9 42 Other loans and leases 370.7' 338.0 331.8' 334.5 340.2 339.4 341.7 346.7 344.8 341.1 351.2 354.2 43 Interbank loans 278.8 264.2 265.3 280.7 288.8 296.5 305.6 306.6 306.5 299.1 316.3 308.4 44 Cash assets4 275.5 255.5 256.1 258.7 268.0 274.8 281.6 293.0 269.5 282.7 288.7 302.0 45 Other assets5 459.2 447.2 454.4 468.3 472.2 476.3 481.3 478.4 473.7 483.4 470.5 476.3 46 Total assets6 5,820.4 5,824.4 5,857.7r 5,968.9r 6,062.3 6,122.5 6,223.4 6,281.3 6,218.2 6,262.6 6,283.3 6,310.2 Liabilities 47 3,837.6 3,861.8 3,895.0 3,933.0 3,967.4 4,008.9 4,067.8 4,098.1 4,085.7 4,069.7 4,085.9 4,110.6 48 Transaction 657.6 584.3 594.9 574.0 567.6 596.3 602.2 631.2 582.5 579.2 626.9 666.5 49 Nontransaction 3,180.0 3,277.5 3,300.1 3,359.1 3,399.8 3,412.5 3,465.7 3,466.9 3,503.2 3,490.5 3,459.1 3,444.1 50 Large time 557.2 543.0 560.2 568.3 570.7 572.5 575.3 573.8 572.6 572.5 577.3 576.3 51 Other 2,622.8 2,734.4 2,739.9 2,790.8 2,829.1 2,840.1 2,890.4 2,893.1 2,930.7 2,918.0 2,881.8 2,867.8 52 Borrowings 1,047.0 1,038.4 1,020.4 1,058.8 1,095.6 1,100.8 1,113.1 1,113.0 1,092.0 1,123.1 1,128.1 1,113.9 53 From banks in the U.S 380.5' 356.3 361.3' 378.2' 386.8 390.4 392.7 387.7 385.2 395.7 387.4 385.4 54 From others 666.5' 682.1 659.1' 680.6' 708.8 710.4 720.5 725.3 706.8 727.4 740.7 728.5 55 Net due to related foreign offices 196.4 174.5 175.8 178.7 183.6 192.5 201.5 215.6 212.1 219.9 208.9 214.1 56 Other liabilities 283.2 291.4 310.4 332.0 342.2 341.2 351.7 359.1 336.9 350.7 357.2 377.1 57 Total liabilities 5,364.3 5,366.1 5,401.7 5,502.6 5,588.8 5,643.3 5,734.1 5,785.8 5,726.7 5,763.3 5,780.2 5,815.7 58 Residual (assets less liabilities)7 456.2' 458.4 456.0' 466.3' 473.5 479.2 489.3 495.5 491.5 499.3 503.1 494.5 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 Liabilities1—Continued C. Large domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 2001 2002 2002 Dec.r Juner July' Aug.' Sept.' Oct.' Nov.' Dec. Dec. 4 Dec. 11 Dec. 18 Dec. 25 Seasonally adjusted Assets 1 Bank credit 2,662.3 2,642.0 2,675.0 2,724.4 2,762.5 2,775.6 2,828.5 2,855.6 2,827.8 2,857.1 2,852.8 2,876.7 ? Securities in bank credit 636.1 684.0 713.6 736.9 745.8 743.7 780.1 787.9 769.8 790.4 769.7 798.1 U.S. government securities 378.9 400.3 411.1 427.7 432.1 435.4 455.6 455.6 458.4 463.7 442.5 455.1 4 Trading account 33.9 42.4 43.1 48.0 42.6 37.8 48.1 44.5 47.6 47.6 41.7 42.5 5 Investment account 345.0 357.9 368.0 379.6 389.5 397.6 407.5 411.1 410.8 416.1 400.8 412.6 6 Other securities 257.2 283.7 302.5 309.3 313.7 308.3 324.5 332.4 311.4 326.7 327.2 343.0 7 Trading account 130.0 148.3 168.8 174.5 172.7 161.5 171.8 176.2 158.0 170.7 171.2 184.7 8 Investment account 127.2 135.4 133.7 134.8 141.0 146.7 152.7 156.2 153.4 156.0 156.1 158.4 1 i n 9n 2 Lo C an o s m a m O S nd t e t a h r t l c e e e r i a a a s l n e d a s n l i d n o c i b a n a l d n u g k s o t v c r r i e a e r l d n i m t2 ent . .. . . . 2,0 5 9 2 3 2 9 7 6 6 . . . . 9 3 4 2 1, 5 9 1 0 2 5 0 0 7 8 8 . . . . 1 3 0 0 1, 4 9 1 8 2 6 0 8 8 1 5 . . . . 7 3 5 4 1, 4 9 1 8 2 8 0 7 8 7 6 . . . . 7 0 8 5 2, 4 0 1 8 1 2 1 4 6 8 2 . . . . 2 6 4 6 2, 4 0 1 8 3 2 1 2 1 8 8 . . . . 5 9 7 0 2, 4 0 1 8 4 2 2 0 9 8 3 . . . . 1 9 4 6 2, 4 0 1 7 2 6 2 8 9 7 6 . . . . 8 4 6 8 2, 4 0 1 8 5 2 2 0 8 9 4 . . . . 6 0 0 4 2, 4 0 1 7 6 2 2 9 6 9 6 . . . . 7 4 3 7 2, 4 0 1 7 8 2 2 3 9 9 6 . . . . 1 7 5 6 2, 4 0 1 7 7 2 2 9 8 9 8 . . . . 9 7 6 6 13 Bankers acceptances .0 .0 .0 .0 .0 .0 .0 .0 n.a. n.a. n.a. n.a. 14 Other 536.4 500.1 488.7 487.7 484.2 482.5 480.9 478.8 480.6 479.4 479.7 479.9 I1S 6 Re R al e e v s o t l a v te in g home equity 8 9 6 8 4 . . 4 9 8 1 6 1 2 6 . .9 0 8 1 8 2 2 1 . . 1 6 9 1 0 2 1 4 . . 1 6 9 1 2 2 2 6 . . 0 8 9 1 4 2 1 9 . . 5 5 9 1 6 3 5 1 . . 0 7 9 1 8 3 3 5 . . 9 7 9 1 7 3 6 3 . . 0 3 9 1 8 3 9 4 . . 5 6 9 1 8 3 0 6 . . 3 1 9 1 8 3 3 5 . . 1 9 17 Other 766.5 745.2 760.5 776.6 795.2 811.9 833.2 848.3 842.7 854.9 844.2 847.2 18 Consumer 292.5 282.2 282.2 289.2 296.0 296.5 295.2 295.0 294.2 294.6 295.4 296.0 19 Security3 64.0 77.2 79.4 78.2 78.5 77.6 73.2 73.0 70.7 68.0 86.3 77.9 20 Federal funds sold to and repurchase agreements 71 Other w ith broker-dealers 4 1 8 5 . . 6 5 6 1 4 2 . . 7 5 6 1 6 3 . . 4 0 6 1 6 1 . . 3 9 6 1 7 0 . . 9 5 6 1 6 0 . . 8 8 6 1 2 1 . . 0 3 6 1 2 1 . . 0 0 6 1 0 0 . . 3 4 5 1 6 1 . . 7 3 7 1 5 0 . . 8 6 66 1 66 1 .. . 00 9 22 State and local government 15.0 13.0 12.8 12.9 13.0 12.9 12.1 11.8 12.0 11.8 11.8 11.7 23 Agricultural 9.9 9.1 9.0 8.2 8.2 8.1 8.1 8.1 8.1 8.1 8.1 8.1 24 Federal funds sold to and repurchase agreements with others 28.9 17.6 13.7 16.6 19.8 19.2 18.5 22.4 19.6 19.6 26.2 2266..99 All other loans 80.5 70.0 67.1 67.5 69.2 69.4 72.4 72.8 74.0 73.4 73.2 73.3 76 Lease-financing receivables 134.2 126.8 126.3 126.1 125.9 124.2 123.0 121.8 122.7 122.3 122.1 121.7 27 Interbank loans 171.9 163.5 165.0 176.5 182.0 181.7 180.3 178.7 174.9 172.5 182.5 186.8 28 Federal funds sold to and repurchase agreements with commercial banks 102.0 77.2 77.2 86.8 89.2 84.0 87.3 85.3 83.2 79.3 90.7 8866..77 ?9 Other 69.9 86.2 87.7 89.7 92.9 97.7 93.0 93.4 91.7 93.2 91.8 100.1 30 Cash assets4 149.0 143.2 142.5 146.9 144.4 144.1 145.0 146.4 134.4 154.0 142.7 156.5 31 Other assets5 326.5 306.5 314.1 325.2 323.1 331.8 331.7 326.2 320.4 334.1 326.9 324.4 32 Total assets6 3,267.4 3,211.0 3,252.6 3,329.8 3,369.0 3,390.2 3,442.3 3,463.8 3,414.4 3,474.5 3,461.6 3,501.3 Liabilities 33 Deposits 1,816.6 1,817.8 1,847.1 1,872.9 1,883.6 1,899.9 1,924.4 1,936.3 1,926.8 1,924.4 1,930.7 1,960.2 34 Transaction 326.3 286.8 292.3 282.4 268.4 286.9 282.6 288.4 268.6 271.9 289.8 310.0 35 Nontransaction 1,490.3 1,531.1 1,554.9 1,590.5 1,615.2 1,612.9 1,641.8 1,647.9 1,658.2 1,652.5 1,640.9 1,650.2 36 Large time 250.2 244.3 261.5 268.3 270.8 266.4 265.3 261.8 260.2 258.3 263.8 266.1 37 Other 1,240.1 1,286.7 1,293.4 1,322.1 1,344.4 1,346.6 1,376.5 1,386.2 1,398.0 1,394.2 1,377.1 1,384.2 38 Borrowings 719.0 699.5 685.7 720.6 724.0 721.7 733.5 724.9 706.8 752.8 731.5 719.3 39 From banks in the U.S 264.7 237.9 240.3 251.3 258.0 257.8 264.2 246.2 249.8 262.2 241.5 236.4 40 From others 454.3 461.6 445.4 469.3 466.0 463.9 469.3 478.7 457.0 490.6 490.0 483.0 41 Net due to related foreign offices 182.3 164.0 171.2 171.2 175.4 179.5 185.5 199.0 196.4 202.3 193.1 195.5 42 Other liabilities 226.0 228.6 253.0 267.3 274.5 271.3 274.4 283.1 262.4 272.5 282.1 299.6 43 Total liabilities 2,943.9 2,909.9 2,957.0 3,032.0 3,057.5 3,072.3 3,117.8 3,143.3 3,092.3 3,152.0 3,137.3 3,174.6 44 Residual (assets less liabilities)7 323.5 301.1 295.6 297.8 311.6 317.9 324.5 320.5 322.1 322.5 324.3 326.7 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • March 2003 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 2001 2002 2002 Dec.r June' July' Aug.' Sept.' Oct.' Nov.' Dec. Dec. 4 Dec. 11 Dec. 18 Dec. 25 Not seasonally adjusted Assets 45 Bank credit 2,675.4 2,642.1 2,659.7 2,711.1 2,756.9 2,774.3 2,836.6 2,870.0 2,844.3 2,865.5 2,869.7 2,884.4 46 Securities in bank credit 641.0 680.3 701.6 730.6 743.1 744.2 784.5 794.1 781.0 797.0 775.0 797.8 47 U.S. government securities 381.3 398.0 404.9 423.7 429.7 432.8 456.6 458.4 465.8 468.0 446.2 453.3 48 Trading account 34.1 42.2 42.4 47.6 42.4 37.6 48.2 44.8 48.4 48.0 42.0 42.3 49 Investment account 347.2 355.9 362.5 376.1 387.3 395.2 408.4 413.7 417.4 420.0 404.2 411.0 50 Mortgage-backed securities . 280.5 277.6 287.5 304.7 308.2 313.1 324.6 317.0 332.5 328.0 304.0 308.2 51 Other 66.7 78.2 75.0 71.4 79.1 82.2 83.8 96.6 84.9 92.0 100.3 102.7 52 One year or less 17.6 14.9 18.7 17.4 19.9 21.8 23.2 24.1 22.2 22.1 26.6 27.6 53 One to five years 36.2 50.0 43.7 42.2 46.3 49.9 47.1 56.2 46.8 54.0 57.8 58.7 54 More than five years .... 12.9 13.3 12.7 11.8 12.9 10.4 13.5 16.3 15.8 15.9 15.9 16.5 55 Other securities 259.7 282.3 296.7 306.9 313.4 311.4 327.9 335.7 315.2 328.9 328.8 344.5 56 Trading account 131.2 147.5 165.5 173.1 172.6 163.2 173.6 177.9 159.9 171.8 172.0 185.5 57 Investment account 128.5 134.7 131.2 133.8 140.9 148.2 154.3 157.8 155.3 157.1 156.8 159.1 58 State and local government . 27.6 27.2 27.7 27.8 28.4 29.0 29.4 29.7 29.4 29.5 29.6 29.9 59 Other 100.9 107.5 103.5 105.9 112.5 119.2 124.9 128.1 125.9 127.6 127.2 129.2 60 Loans and leases in bank credit2 . . . 2,034.4 1,961.8 1,958.1 1,980.5 2,013.8 2,030.1 2,052.1 2,075.9 2,063.3 2,068.6 2,094.7 2,086.6 61 Commercial and industrial 534.3 501.3 488.4 485.3 483.8 483.2 481.7 477.0 479.7 475.0 477.8 478.3 62 Bankers acceptances .0 .0 .0 .0 .0 .0 .0 .0 n.a. n.a. n.a. n.a. 63 Other 534.3 501.3 488.4 485.3 483.8 483.2 481.7 477.0 479.7 475.0 477.8 478.3 64 Real estate 866.7 863.9 882.4 901.6 922.4 940.3 966.9 985.8 979.2 993.7 981.7 983.1 65 Revolving home equity 98.1 117.3 121.9 124.9 127.3 129.5 131.9 135.2 133.3 134.3 135.8 135.3 66 Other 453.4 435.2 448.8 464.5 482.2 495.3 518.7 534.7 529.8 543.4 529.7 532.4 67 Commercial 315.2 311.4 311.7 312.2 312.9 315.5 316.4 315.9 316.1 315.9 316.1 315.5 68 Consumer 295.5 282.1 280.3 287.0 293.5 293.6 293.9 298.2 294.5 295.6 298.3 300.8 69 Credit cards and related plans . 127.3 111.8 110.0 114.2 117.9 116.4 114.0 116.9 114.1 114.7 116.8 119.2 70 Other 168.2 170.2 170.4 172.8 175.6 177.2 180.0 181.3 180.3 180.9 181.5 181.6 71 Security3 66.2 77.9 78.3 77.1 79.7 80.0 75.3 75.9 72.4 70.6 93.1 80.4 12 Federal funds sold to and repurchase agreements with broker-dealers 50.2 65.3 65.5 65.3 69.0 68.8 63.7 64.5 61.7 58.9 81.7 68.1 73 Other 16.0 12.6 12.8 11.7 10.7 11.1 11.6 11.4 10.7 11.7 11.4 12.3 74 State and local government 15.0 13.0 12.8 12.9 13.0 12.9 12.1 11.8 12.0 11.8 11.8 11.7 75 Agricultural 9.8 9.3 9.2 8.2 8.2 8.0 8.0 8.1 8.0 8.0 8.0 8.0 lb Federal funds sold to and repurchase agreements with others 29.8 17.6 13.7 16.6 19.8 19.2 18.5 22.4 19.6 19.6 26.2 26.9 77 All other loans 82.4 70.4 67.3 67.0 69.4 69.3 72.9 74.5 75.4 72.1 75.7 75.2 78 Lease-financing receivables 134.7 126.4 125.6 124.8 124.0 123.6 122.7 122.2 122.5 122.2 122.1 122.2 79 Interbank loans 175.7 168.5 164.0 172.0 177.0 177.3 182.1 182.9 179.7 173.1 191.8 185.7 80 Federal funds sold to and repurchase agreements with commercial banks 104.2 79.5 76.8 84.6 86.8 82.0 88.2 87.3 85.5 79.6 95.3 86.2 81 Other 71.5 89.0 87.2 87.4 90.2 95.3 93.9 95.5 94.2 93.5 96.4 99.5 82 Cash assets4 160.1 139.1 137.1 137.9 141.6 145.1 148.0 157.2 138.6 151.4 155.7 164.7 83 Other assets5 328.8 305.9 313.9 323.0 325.1 331.1 333.1 328.5 323.6 331.8 328.9 325.4 84 Total assets6 3,297.6 3,211.6 3,230.9 3,300.5 3,357.5 3,385.1 3,456.5 3,495.4 3,442.7 3,478.4 3,502.6 3,517.2 Liabilities 85 Deposits 1,834.3 1,816.3 1,839.1 1,856.4 1,874.8 1,896.8 1,933.4 1,952.5 1,944.0 1,930.2 1,948.1 1,963.3 86 Transaction 344.3 285.2 287.3 271.0 264.0 283.0 285.5 304.9 274.5 270.5 306.5 326.3 87 Nontransaction 1,490.0 1,531.1 1,551.8 1,585.5 1,610.9 1,613.9 1,647.9 1,647.6 1,669.4 1,659.8 1,641.6 1,637.0 88 Large time 253.1 243.6 259.4 266.7 268.3 267.6 268.9 264.8 265.1 263.3 267.8 267.2 89 Other 1,236.9 1,287.6 1,292.4 1,318.8 1,342.6 1,346.3 1,379.0 1,382.8 1,404.3 1,396.5 1,373.8 1,369.7 90 Borrowings 718.8 698.5 675.7 700.6 721.4 723.6 736.6 724.5 710.2 739.7 738.3 717.2 91 From banks in the U.S 266.3 235.4 236.3 246.1 251.1 256.0 261.3 247.7 249.9 260.1 245.1 238.0 92 From nonbanks in the U.S 452.5 463.1 439.4 454.4 470.3 467.6 475.3 476.9 460.3 479.6 493.2 479.3 93 Net due to related foreign offices 186.3 162.8 166.0 170.2 175.0 180.2 190.2 203.2 199.9 206.9 196.4 201.1 94 Other liabilities 230.4 227.0 246.4 265.7 274.0 272.2 280.8 288.7 266.8 278.2 286.6 307.5 95 Total liabilities 2,969.9 2,904.6 2,927.1 2,992.9 3,045.2 3,072.8 3,141.1 3,169.0 3,120.8 3,155.1 3,169.4 3,189.2 96 Residual (assets less liabilities)1 327.7 307.0 303.8 307.6 312.3 312.3 315.4 326.4 321.8 323.3 333.3 328.0 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 LiabilitiesContinued D. Small domestically chartered commercial banks Billions of dollars Monthly averages Wednesday figures Account 2001 2002 2002 Dec/ Juner July' Aug.' Sept.' Oct.' Nov.' Dec. Dec. 4 Dec. 11 Dec. 18 Dec. 25 Seasonally adjusted Assets 1 Bank credit 2,192.5 2,293.2 2,302.3 2,327.8 2,349.2 2,370.0 2,388.0 2,395.5 2,394.1 2,397.5 2,401.0 2,393.4 ?. Securities in bank credit 619.1 640.3 639.9 646.0 650.2 654.4 658.8 662.6 663.6 661.5 662.5 659.8 U.S. government securities 395.2 432.9 431.4 436.8 444.1 448.2 452.9 455.6 456.8 454.8 454.0 453.8 4 Other securities 223.9 207.4 208.5 209.2 206.1 206.2 205.9 207.0 206.8 206.7 208.4 206.0 5 Loans and leases in bank credit2 .... 1,573.5 1,653.0 1,662.4 1,681.8 1,699.0 1,715.6 1,729.2 1,732.9 1,730.4 1,736.0 1,738.5 1,733.6 6 Commercial and industrial 299.7 300.3 302.0 304.2 305.5 306.1 307.4 308.0 307.7 307.4 307.7 308.1 7 Real estate 901.8 958.0 968.3 980.7 994.0 1,006.4 1,015.3 1,017.3 1,017.1 1,020.9 1,021.6 1,014.5 8 Revolving home equity 57.2 69.2 71.3 73.1 74.1 75.3 76.0 76.7 76.4 76.5 77.0 76.8 i9n Co O ns th u e m r er 2 84 6 4 5 . . 7 4 2 88 8 8 6 . . 8 6 2 8 8 9 2 7 . . 6 0 9 2 0 8 7 5 . . 6 6 9 2 1 8 9 6 . . 9 8 2 93 8 1 8 . . 1 3 9 2 3 9 9 0 . . 3 4 9 2 4 9 0 2 . . 6 0 2 9 9 4 0 0 . . 5 7 9 2 4 9 4 2 . . 5 5 9 2 4 9 4 3 . . 6 9 9 2 3 9 7 2 . . 7 0 i11? O Se th cu er r i l t o y a 3 ns and leases 98 7. . 9 6 10 7 0 . . 5 6 10 7 1 . . 7 9 10 8 3 . . 0 3 10 8 4 . . 2 6 10 8 6 . . 4 4 10 8 7. . 8 3 10 8 7 . . 4 2 10 8 6 . . 2 9 10 8 7 . . 3 0 10 8 7 . . 4 0 110 8 . . 3 7 1 1 3 4 I C n a t s e h r b a a s n s k e t l s o 4 ans 1 10 0 9 0 . . 2 6 1 9 1 8 8 . . 7 0 1 1 0 2 6 0 . . 1 9 1 1 2 1 4 0 . . 7 6 1 1 1 2 4 6. . 9 6 1 12 2 0 9 . . 2 2 112219..51 1 12 2 0 8 . . 9 7 1 11 2 8 5 . . 3 4 1 11 3 8 2 . . 7 3 1 1 2 2 6 1 . . 2 3 1 12 3 6 2 . . 5 8 15 Other assets5 130.4 141.3 140.5 145.2 147.1 145.1 148.1 149.9 150.1 151.6 141.6 150.8 16 Total assets6 2,501.9 2,620.1 2,638.8 2,677.1 2,706.1 2,732.6 2,754.7 2,762.6 2,755.8 2,767.6 2,757.4 2,771.1 Liabilities 17 Deposits 1,982.7 2,054.3 2,068.1 2,092.6 2,103.8 2,116.7 2,127.2 2,123.8 2,123.0 2,122.0 2,117.5 2,129.9 1189 N Tr o a n n t s r a a c n t s i a o c n t ion 1, 3 6 0 7 3 9 . . 4 3 1, 3 7 0 5 0 4. . 1 3 1, 3 7 1 5 0 8 . . 1 0 1, 3 7 0 8 6 5 . . 7 9 1, 3 7 0 9 5 8 . . 5 3 1, 3 8 1 0 4 2 . . 7 0 1, 3 8 1 1 4 3 . . 2 1 1, 3 8 1 0 5 7 . . 9 8 1, 3 8 0 2 2 1 . . 0 0 1, 3 8 0 1 6 5 . . 8 2 1, 3 8 1 0 2 5 . . 1 4 1, 3 7 3 99 0 . . 3 6 70 Large time 304.1 299.5 300.8 301.6 302.4 304.9 306.4 309.0 307.5 309.3 309.5 309.0 ?l Other 1,375.2 1,454.6 1,457.2 1,484.3 1,495.9 1,497.1 1,506.7 1,498.8 1,513.5 1,505.9 1,495.9 1,490.2 ?? Borrowings 328.1 339.9 344.7 358.3 374.2 377.2 376.5 388.5 381.8 383.4 389.8 396.7 73 From banks in the U.S 114.2 121.0 125.0 132.1 135.6 134.3 131.3 140.0 135.3 135.6 142.3 147.5 74 From others 213.9 219.0 219.7 226.2 238.6 242.8 245.2 248.5 246.5 247.8 247.5 249.2 75 Net due to related foreign offices 10.1 11.7 9.8 8.5 8.6 12.3 11.3 12.4 12.2 13.0 12.6 13.0 26 Other liabilities 52.8 64.4 64.1 66.3 68.2 69.0 70.9 70.4 70.2 72.4 70.6 69.6 27 Total liabilities 2,373.8 2,470.3 2,486.7 2,525.7 2,554.9 2,575.2 2,585.9 2,595.0 2,587.2 2,590.7 2,590.5 2,609.1 28 Residual (assets less liabilities)7 128.1 149.8 152.1 151.4 151.2 157.4 168.8 167.6 168.6 176.9 166.9 162.0 Not seasonally adjusted Assets ?9 Bank credit 2,204.7 2,290.6 2,297.0 2,324.9 2,351.2 2,375.4 2,393.8 2,408.9 2,399.9 2,407.7 2,414.2 2,414.6 30 Securities in bank credit 621.5 639.8 637.7 643.7 649.2 653.2 658.7 665.4 664.1 664.1 665.4 664.6 31 U.S. government securities 397.6 432.4 429.2 434.4 443.0 447.0 452.8 458.4 457.3 457.4 457.0 458.6 37 Other securities 223.9 207.4 208.5 209.2 206.1 206.2 205.9 207.0 206.8 206.7 208.4 206.0 33 Loans and leases in bank credit2 .... 1,583.2 1,650.8 1,659.2 1,681.2 1,702.1 1,722.2 1,735.1 1,743.5 1,735.8 1,743.7 1,748.7 1,750.1 34 Commercial and industrial 299.8 302.4 302.6 302.7 303.8 306.0 306.3 308.1 306.6 306.4 307.6 309.4 35 Real estate 904.4 957.1 967.4 981.3 995.7 1,009.7 1,018.4 1,020.2 1,018.5 1,023.5 1.023.6 1,019.9 36 Revolving home equity 57.6 69.0 70.9 72.9 74.6 75.9 76.6 77.3 76.8 77.0 77.5 77.7 37 Other 846.8 888.1 896.5 908.5 921.1 933.8 941.8 942.9 941.7 946.5 946.1 942.2 38 Consumer 271.9 282.6 278.5 284.3 288.8 291.8 294.3 298.9 294.7 297.6 301.5 302.0 439n O Cr t e h d er it cards and related plans . . 1 1 0 6 4 7 . . 8 2 1 1 7 0 3 9 . . 4 2 1 1 7 0 3 5 . . 2 3 1 1 1 7 0 4. . 1 2 1 1 1 7 3 5 . . 3 5 1 1 1 7 5 6 . . 8 0 1 1 1 7 8 6 . . 1 2 1 1 2 7 2 6 . . 3 6 1 1 7 1 5 9 . . 7 0 1 17 2 5 1 . . 9 7 1 1 7 2 6 5 . . 5 0 1 1 2 7 4 7 . . 7 3 441? S O e t c h u er r i l t o y3 a ns and leases 99 8 . . 0 1 10 7 1 . . 3 4 10 7 3 . . 6 2 10 7 4 . . 9 9 10 8 5 . . 0 8 10 8 6 . . 3 4 10 8 7 . . 6 4 10 8 7 . . 6 7 10 8 7 . . 8 3 10 8 7 . . 8 3 10 8 7 . . 6 4 11 8 0 . . 5 3 43 Interbank loans 103.1 95.7 101.3 108.7 111.8 119.2 123.6 123.7 126.8 126.0 124.5 122.7 44 Cash assets4 115.5 116.4 119.0 120.9 126.4 129.7 133.7 135.8 130.9 131.3 133.0 137.2 45 Other assets5 130.4 141.3 140.5 145.2 147.1 145.1 148.1 149.9 150.1 151.6 141.6 150.8 46 Total assets6 2,522.9 2,612.8 2,626.7 2,668.4 2,704.8 2,737.4 2,767.0 2,786.0 2,775.6 2,784.2 2,780.7 2,793.0 Liabilities 47 Deposits 2,003.3 2,045.5 2,055.9 2,076.6 2,092.6 2,112.0 2,134.4 2,145.5 2,141.7 2,139.5 2,137.8 2,147.3 48 Transaction 313.3 299.1 307.6 303.0 303.6 313.4 316.6 326.3 307.9 308.8 320.4 340.2 4s9o No L n a tr r a g n e s t a i c m t e io n 1, 3 6 0 9 4 0 . . 1 0 1, 2 7 9 4 9 6 . . 5 4 1, 3 7 0 4 0 8 . . 8 3 1, 3 7 0 7 1 3 . . 6 6 1, 3 7 0 8 2 9 . . 4 0 1, 3 7 0 9 4 8 . . 9 7 1, 3 8 0 1 6 7 . . 4 8 1, 3 8 0 1 9 9 . . 0 3 1, 3 8 0 3 7 3 . . 5 8 1, 3 8 0 3 9 0 . . 3 7 1, 3 8 0 1 9 7 . . 5 4 1, 3 8 0 0 9 7 . . 0 1 51 Other 1,385.9 1,446.9 1,447.5 1,472.0 1,486.5 1,493.8 1,511.3 1,510.3 1,526.3 1,521.5 1,507.9 1,498.1 5? Borrowings 328.1 339.9 344.7 358.3 374.2 377.2 376.5 388.5 381.8 383.4 389.8 396.7 53 From banks in the U.S 114.2 121.0 125.0 132.1 135.6 134.3 131.3 140.0 135.3 135.6 142.3 147.5 54 From others 213.9 219.0 219.7 226.2 238.6 242.8 245.2 248.5 246.5 247.8 247.5 249.2 55 Net due to related foreign offices 10.1 11.7 9.8 8.5 8.6 12.3 11.3 12.4 12.2 13.0 12.6 13.0 56 Other liabilities 52.8 64.4 64.1 66.3 68.2 69.0 70.9 70.4 70.2 72.4 70.6 69.6 57 Total liabilities 2,394.4 2,461.4 2,474.5 2,509.6 2,543.6 2,570.5 2,593.0 2,616.8 2,605.9 2,608.2 2,610.8 2,626.5 58 Residual (assets less liabilities)7 128.5 151.4 152.2 158.7 161.2 166.9 173.9 169.1 169.7 175.9 169.8 166.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic NonfinancialS tatistics • March 2003 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 2001 2002 2002 Dec. June July Aug. Sept.' Oct.' Nov.' Dec. Dec. 4 Dec. U Dec. 18 Dec. 25 Seasonally adjusted Assets 1 Bank credit 596.2 605.6 614.3r 620.9r 618.7 614.1 620.8 634.6 617.8 651.3 642.9 642.6 2 Securities in bank credit 241.6 238.3 241.2 250.0 247.4 245.0 249.0 263.8 245.8 267.5 264.5 267.5 3 U.S. government securities 82.1 76.1 76.4 81.8 86.7 88.8 92.8 101.1 91.2 107.2 101.3 101.4 4 Other securities 159.5 162.2 164.8 168.1 160.8 156.2 156.2 162.7 154.6 160.3 163.2 166.1 5 Loans and leases in bank credit2 .... 354.6 367.3 373. r 370.9' 371.3 369.0 371.8 370.8 372.0 383.8 378.4 375.1 6 Commercial and industrial 195.3 193.1 191.2 189.9 185.5 181.4 179.1 178.2 181.0 180.7 178.1 178.2 7 Real estate 17.7 18.4 18.8 18.8 19.0 19.5 19.8 19.4 19.2 19.6 19.5 19.4 8 Security3 74.8 85.6r 91,0r 90.5r 94.8 97.1 105.1 110.2 106.5 117.3 117.7 116.0 9 Other loans and leases 66.7 70.3 72.1 71.7 72.0 71.0 67.8 63.1 65.3 66.2 63.2 61.5 10 Interbank loans 20.6 20.2 17.5 18.5 21.7 24.9 26.6 31.8 26.7 36.7 30.9 32.9 11 Cash assets4 39.3 45.5 46.0 46.5 46.0 45.4 40.9 42.5 40.2 40.4 47.6 43.9 12 Other assets5 29.4 27.8 29.4 29.0 28.5 35.1 38.0 41.9 37.7 44.4 39.0 42.0 13 Total assets6 685.2 698.8 706.9r 714.5r 714.5 719.1 725.9 750.4 722.0 772.3 759.9 761.0 Liabilities 14 Deposits 440.5 505.2 498.9 495.1 486.0 466.3 448.5 423.7 443.0 431.9 424.9 418.9 15 Transaction 11.2 10.3 9.9 10.1 10.1 9.8 9.5 9.5 9.1 9.0 9.3 9.5 16 Nontransaction 429.3 494.9 489.0 485.0 475.9 456.5 439.1 414.2 433.8 422.9 415.6 409.4 17 Borrowings 198.4 192.9 201.3 213.8 224.0 233.8 254.5 283.5 254.7 290.2 287.6 294.5 18 From banks in the U.S 24.0 21.3 20.8 21.6 22.7 23.1 25.5 29.9 29.4 25.6 30.3 32.1 19 From others 174.4 171.6 180.5 192.1 201.3 210.6 229.0 253.7 225.3 264.6 257.3 262.3 20 Net due to related foreign offices -42.3 -86.1 -81.8 -85.6 -83.7 -72.4 -74.4 -60.7 -73.0 -51.3 -54.6 -61.7 21 Other liabilities 82.0 85.5 90.9 96.8 92.7 99.7 99.1 99.8 98.8 101.7 101.1 97.1 22 Total liabilities 678.6 697.5 709.3 720.0 719.1 727.5 727.7 746.4 723.5 772.4 759.0 748.7 23 Residual (assets less liabilities)7 6.6 1.3 -2.4r -5.5r -4.6 -8.4 -1.8 4.0 -1.5 -.1 .9 12.3 Not seasonally adjusted Assets 24 Bank credit 603.7 602.6 608.2r 614.7' 615.4 614.0 623.6 643.7 620.8 659.8 652.3 651.7 25 Securities in bank credit 241.6 238.3 241.2 250.0 247.4 245.0 249.0 263.8 245.8 267.5 264.5 267.5 26 U.S. government securities 82.1 76.1 76.4 81.8 86.7 88.8 92.8 101.1 91.2 107.2 101.3 101.4 27 Trading account 13.3 10.4 10.7 13.0 15.2 18.6 20.2 30.6 19.1 35.2 30.2 31.9 28 Investment account 68.9 65.7 65.8 68.8 71.5 70.2 72.7 70.6 72.0 72.0 71.1 69.5 29 Other securities 159.5 162.2 164.8 168.1 160.8 156.2 156.2 162.7 154.6 160.3 163.2 166.1 30 Trading account 105.0 103.5 108.4 109.8 103.9 100.5 99.3 99.3 95.4 98.5 99.4 99.3 31 Investment account 54.5 58.7 56.4 58.4 56.9 55.8 56.9 63.3 59.2 61.8 63.8 66.8 32 Loans and leases in bank credit2 .... 362.1 364.3 367.0r 364.8r 367.9 369.0 374.6 379.9 375.0 392.3 387.8 384.1 33 Commercial and industrial 197.0 191.9 189.9 188.3 185.4 182.0 180.6 179.7 181.7 180.5 179.4 180.8 34 Real estate 17.7 18.4 18.8 18.8 19.0 19.5 19.8 19.4 19.2 19.6 19.5 19.4 35 Security3 78.8 84.0 87.5r 87.2' 91.9 97.2 106.4 116.0 108.0 125.1 124.3 120.1 36 Other loans and leases 68.5 70.0 70.8 70.4 71.6 70.2 67.8 64.8 66.1 67.1 64.7 63.9 37 Interbank loans 20.6 20.2 17.5 18.5 21.7 24.9 26.6 31.8 26.7 36.7 30.9 32.9 38 Cash assets4 41.7 43.5 44.1 45.1 46.1 46.3 43.3 45.1 42.8 42.1 50.7 46.9 39 Other assets5 30.2 26.6 28.3 28.6 29.0 34.5 37.8 43.0 38.5 46.1 40.0 42.8 40 Total assets6 695.9 692.6 697.8r 706.5' 711.7 719.4 730.9 763.2 728.4 784.2 773.4 773.9 Liabilities 41 Deposits 452.8 503.4 489.8 480.6 474.0 458.9 452.1 435.4 449.7 442.2 435.9 434.8 42 Transaction 11.9 10.1 9.8 9.8 10.3 9.9 9.6 10.2 9.4 9.3 10.1 10.2 43 Nontransaction 440.9 493.3 480.0 470.8 463.7 449.0 442.5 425.3 440.3 433.0 425.8 424.6 44 Borrowings 198.4 192.9 201.3 213.8 224.0 233.8 254.5 283.5 254.7 290.2 287.6 294.5 45 From banks in the U.S 24.0 21.3 20.8 21.6 22.7 23.1 25.5 29.9 29.4 25.6 30.3 32.1 46 From others 174.4 171.6 180.5 192.1 201.3 210.6 229.0 253.7 225.3 264.6 257.3 262.3 47 Net due to related foreign offices -39.6 -88.8 -85.8 -87.6 -82.7 -73.7 -75.4 -58.6 -74.9 -51.3 -53.4 -57.0 48 Other liabilities 83.2 84.1 88.7 95.6 93.4 98.9 98.4 101.4 97.5 101.7 101.9 100.2 49 Total liabilities 694.9 691.6 694.0 702.4 708.6 718.0 729.5 761.8 727.0 782.9 772.1 772.5 50 Residual (assets less liabilities)7 1.0 1.0 3.8' 4.1' 3.1 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A21 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued F. Memo items Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 2001 2002 2002 Dec. June' July' Aug.' Sept.' Oct.' Nov.' Dec. Dec. 4 Dec. 11 Dec. 18 Dec. 25 Not seasonally adjusted MEMO Large domestically chartered banks, adjusted for mergers 1 Revaluation gains on off-balance-sheet items8 80.6 92.9 105.8 112.3 119.1 110.9 117.1 124.4 106.5 120.7 118.8 130.9 2 Revaluation losses on off-balancesheet items8 68.4 75.7 89.7 94.2 100.5 94.2 100.8 105.6 89.7 101.2 101.0 112.7 3 Mortgage-backed securities9 311.5r 313.0 320.4 338.5 343.9 355.2 370.4 363.1 378.4 374.4 350.5 354.4 4 Pass-through 209.2r 224.9 236.7 253.7 255.0 261.7 274.6 265.6 277.7 275.3 254.5 258.6 5 CMO, REMIC, and other 102.2 88.0 83.7 84.8 88.9 93.5 95.8 97.4 100.7 99.1 96.0 95.8 6 Net unrealized gains (losses) on available-for-sale securities10 4.6 6.7 8.3 9.1 11.5 12.5 11.8 11.0 10.1 10.9 10.8 11.2 7 Off-shore credit to U.S. residents" .... 19.1 19.6 19.1 19.0 19.0 18.4 18.5 18.7 18.6 18.7 19.1 18.7 8 Securitized consumer loans12 140.5' 140.0 144.1 141.5 140.6 142.7 146.8 148.3 148.6 148.5 148.6 147.8 9 Credit cards and related plans 129.4' 126.9 128.1 125.5 125.0 127.5 131.4 133.2 133.4 133.4 133.5 132.8 10 Other 11.2 13.1 16.0 16.0 15.6 15.2 15.3 15.0 15.2 15.1 15.0 15.0 11 Securitized business loans12 19.7 16.9 17.1 17.8 17.7 17.5 17.1 16.9 17.0 17.0 16.9 16.8 Small domestically chartered commercial banks, adjusted for mergers 12 Mortgage-backed securities9 275.1' 298.8 297.1 298.7 304.2 307.0 308.9 311.0 311.0 311.2 309.8 310.6 13 Securitized consumer loans12 206.1' 207.3 203.0 202.1 199.9 198.3 198.7 201.2 198.1 198.5 200.2 203.0 14 Credit cards and related plans 197.7' 200.3 199.4 199.0 195.9 189.3 189.8 192.5 189.3 189.7 191.2 194.4 15 Other 8.4 7.0 3.6 3.1 3.9 8.9 8.9 8.7 8.8 8.8 8.9 8.6 Foreign-related institutions 16 Revaluation gains on off-balancesheet items8 60.7 55.2 61.5 65.1 62.5 61.9 63.2 64.1 60.8 62.9 63.7 64.4 17 Revaluation losses on off-balancesheet items8 54.2 49.3 57.4 64.8 61.5 60.2 60.4 59.8 58.1 59.2 59.2 59.5 18 Securitized business loans12 12.9 9.9 9.4 9.1 8.1 7.6 7.3 6.9 7.1 7.0 7.0 6.8 NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8 acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table ratio procedure is used to adjust past levels. 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer in the United States, all of which are included in "Interbank loans." being published in the Bulletin. Instead, abbreviated balance sheets for both large and small 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry domestically chartered banks have been included in table 1.26, parts C and D. Data are both securities. merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. 4. Includes vault cash, cash items in process of collection, balances due from depository branches and agencies of foreign banks have been replaced by balance sheet estimates of all institutions, and balances due from Federal Reserve Banks. foreign-related institutions and are included in table 1.26, part E. These data are break- 5. Excludes the due-from position with related foreign offices, which is included in "Net adjusted. due to related foreign offices." The not-seasonally-adjusted data for all tables now contain additional balance sheet items, 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for which were available as of October 2, 1996. transfer risk. Loans are reported gross of these items. 1. Covers the following types of institutions in the fifty states and the District of Columbia: 7. This balancing item is not intended as a measure of equity capital for use in capital domestically chartered commercial banks that submit a weekly report of condition (large adequacy analysis. On a seasonally adjusted basis, this item reflects any differences in the domestic); other domestically chartered commercial banks (small domestic); branches and seasonal patterns estimated for total assets and total liabilities. agencies of foreign banks, and Edge Act and agreement corporations (foreign-related institu- 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity tions). Excludes International Banking Facilities. Data are Wednesday values or pro rata and equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. averages of Wednesday values. Large domestic banks constitute a universe; data for small 9. Includes mortgage-backed securities issued by U.S. government agencies, U.S. domestic banks and foreign-related institutions are estimates based on weekly samples and on government-sponsored enterprises, and private entities. quarter-end condition reports. Data are adjusted for breaks caused by reclassifications of 10. Difference between fair value and historical cost for securities classified as availableassets 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 • March 2003 1.32 COMMERCIAL PAPER OUTSTANDING Millions of dollars, seasonally adjusted, end of period Year ending December 2002 IItteemm 1997 1998 1999 2000 2001 June July Aug. Sept. Oct. Nov. 1 All issuers 966,699 1,163,303 1,403,023 1,615,341 1,438,764 1,327,569 1,345,922 1,375,414 1,338,119 1,350,182 1,351,428 Financial companies1 2 Dealer-placed paper, total2 513,307 614,142 786,643 973,060 989,364 986,489 959,798 863,215 856,037 973,150 982,239 3 Directly placed paper, total3 252,536 322,030 337,240 298,848 224,553 169,193 206,942 343,733 322,729 219,581 211,574 4 Nonfinancial companies4 200,857 227,132 279,140 343,433 224,847 171,887 179,182 168,466 159,353 157,451 157,615 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. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Average Average Average Date of change Rate Period rate rate rate 2000—Jan. 1 8.50 2000 9.23 2001—Jan. 9.05 2002—Jan. 4.75 Feb. 3 8.75 2001 6.91 Feb. 8.50 Feb. 4.75 Mar. 22 9.00 2002 4.67 Mar. 8.32 Mar. 4.75 May 17 9.50 Apr. 7.80 Apr. 4.75 2000—Jan 8.50 May 7.24 May 4.75 2001—Jan. 4 9.00 Feb 8.73 June 6.98 June 4.75 Feb. 1 8.50 Mar. 8.83 July 6.75 July 4.75 Mar. 21 8.00 Apr 9.00 Aug. 6.67 Aug. 4.75 Apr. 19 7.50 May 9.24 Sept. 6.28 Sept. 4.75 May 16 7.00 June 9.50 Oct. 5.53 Oct. 4.75 June 28 6.75 July 9.50 Nov. 5.10 Nov. 4.35 Aug. 22 6.50 Aug 9.50 Dec. 4.84 Dec. 4.25 Sept. 18 6.00 Sept 9.50 Oct. 3 5.50 Oct 9.50 2003—Jan. 4.25 Nov. 7 5.00 Nov 9.50 Dec. 12 4.75 Dec 9.50 2002—Nov. 7 4.25 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 2002 2002, week ending 22000000 22000011 22000022 Sept. Oct. Nov. Dec. Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 MONEY MARKET INSTRUMENTS 1 Federal funds1,2,3 6.24 3.88 1.67 1.75 1.75 1.34 1.24 1.27 1.24 1.23 1.27 1.23 2 Discount window primary credit2,4 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Commercial paper3 5 6 Nonfinancial 3 1-month 6.27 3.78 1.67 1.73 1.72 1.34 1.31 1.30 1.29 1.32 1.32 1.33 4 2-month 6.29 3.68 1.67 1.72 1.70 1.35 1.32 1.33 1.33 1.30 1.32 1.32 5 3-month 6.31 3.65 1.69 1.72 1.70 1.36 1.31 1.33 1.31 1.31 1.32 1.31 Financial 6 1-month 6.28 3.80 1.68 1.74 1.73 1.34 1.31 1.25 1.32 1.32 1.30 1.31 7 2-month 6.30 3.71 1.69 1.74 1.72 1.37 1.32 1.33 1.33 1.31 1.32 1.32 8 3-month 6.33 3.65 1.70 1.74 1.71 1.37 1.32 1.34 1.33 1.32 1.32 1.32 Certificates of deposit, secondary market3,7 9 1 -month 6.35 3.84 1.72 1.78 1.77 1.39 1.37 1.35 1.37 1.37 1.37 1.37 10 3-month 6.46 3.71 1.73 1.76 1.73 1.39 1.34 1.36 1.36 1.34 1.34 1.35 11 6-month 6.59 3.66 1.81 1.74 1.69 1.40 1.36 1.39 1.39 1.36 1.36 1.35 12 Eurodollar deposits, 3-month3,8 6.45 3.70 1.73 1.75 1.73 1.39 1.35 1.37 1.36 1.35 1.34 1.34 U.S. Treasury bills Secondary market3,5 13 4-week n.a. 2.43 1.60 1.65 1.60 1.24 1.18 1.24 1.22 1.20 1.18 1.11 14 3-month 5.82 3.40 1.61 1.63 1.58 1.23 1.19 1.21 1.20 1.19 1.20 1.16 15 6-month 5.90 3.34 1.68 1.60 1.56 1.27 1.24 1.27 1.27 1.25 1.24 1.23 U.S. TREASURY NOTES AND BONDS Constant maturities9 16 1-year 6.11 3.49 2.00 1.72 1.65 1.49 1.45 1.55 1.53 1.47 1.43 1.41 17 2-year 6.26 3.83 2.64 2.00 1.91 1.92 1.84 2.07 2.01 1.87 1.83 1.71 18 3-year 6.22 4.09 3.10 2.32 2.25 2.32 2.23 2.50 2.44 2.27 2.23 2.08 19 5-year 6.16 4.56 3.82 2.94 2.95 3.05 3.03 3.26 3.24 3.06 3.02 2.89 20 7-year 6.20 4.88 4.30 3.50 3.54 3.64 3.63 3.84 3.84 3.65 3.63 3.47 21 10-year 6.03 5.02 4.61 3.87 3.94 4.05 4.03 4.19 4.17 4.04 4.05 3.92 22 20-year 6.23 5.63 5.43 4.87 5.00 5.04 5.01 5.14 5.13 5.01 5.04 4.91 Treasury long-term average10,11 n.a. n.a. 5.41 4.90 5.07 5.10 5.06 5.18 5.16 5.04 5.10 4.99 23 25 years and above STATE AND LOCAL NOTES AND BONDS Moody's series12 5.58 4.99 4.87 4.58 4.66 4.77 4.70 4.88 4.83 4.70 4.65 4.63 24 Aaa 6.19 5.75 5.64 5.31 5.47 5.62 5.57 5.75 5.68 5.57 5.52 5.50 25 Baa 5.71 5.15 5.04 4.74 4.88 4.95 4.85 5.00 4.94 4.83 4.82 4.79 26 Bond Buyer series13 CORPORATE BONDS 7.98 7.49 7.10 6.73 6.93 6.88 6.77 6.91 6.87 6.77 6.79 6.70 27 Seasoned issues, all industries14 Rating group 7.62 7.08 6.49 6.15 6.32 6.31 6.21 6.37 6.33 6.20 6.23 6.14 28 Aaa15 7.83 7.26 6.93 6.63 6.73 6.71 6.63 6.76 6.73 6.65 6.64 6.56 29 Aa 8.11 7.67 7.18 6.76 6.95 6.89 6.80 6.90 6.88 6.80 6.83 6.73 30 A 8.37 7.95 7.80 7.40 7.73 7.62 7.45 7.60 7.55 7.45 7.45 7.38 31 Baa MEMO Dividend-price ratio'6 32 Common stocks 1.15 1.32 1.61 1.80 1.86 1.73 1.77 1.69 1.73 1.75 1.79 1.79 NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly 8. Bid rates for eurodollar deposits collected around 9:30 a.m. Eastern time. Data are for statistical release. For ordering address, see inside front cover. indication purposes only. 1. The daily effective federal funds rate is a weighted average of rates on trades through 9. Yields on actively traded issues adjusted to constant maturities. New York brokers. 10. Based on the unweighted average of the bid yields for all Treasury fixed-coupon 2. Weekly figures are averages of seven calendar days, ending on Wednesday of the securities with remaining terms to maturity of 25 years and over. current week; monthly figures include each calendar day in the month. 11. A factor for adjusting the daily long-term average in order to estimate a 30-year rate 3. Annualized using a 360-day year or bank interest. can be found at http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ 4. The rate charged for primary credit under an amendment to the Board's Regulation A, ltcompositeindex.html. which became effective January 9, 2003. This rate replaces that for adjustment credit, which 12. General obligation bonds based on Thursday figures; Moody's Investors Service. was discontinued after January 8, 2003. For further information, see: http:// 13. State and local government general obligation bonds maturing in twenty years are used www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate is that in compiling this index. The twenty-bond index has a rating roughly equivalent to Moody's reported for the Federal Reserve Bank of New York. Historical series for the rate on A1 rating. Based on Thursday figures. adjustment credit is available at: http://www.federalreserve.gov/releases.gov/releases/hl5/ 14. Daily figures are averages of Aaa, Aa, A, and Baa yields from Moody's Investors data.htm. Service. Based on yields to maturity on selected long-term bonds. 5. Quoted on a discount basis. 15. Effective December 7, 2001, the Moody's Aaa yield includes yields only for industrial 6. Interest rates interpolated from data on certain commercial paper trades settled by the firms. Prior to December 7, 2001, the Aaa yield represented both utilities and industrial. Depository Trust Company. The trades represent sales of commercial paper by dealers or 16. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in direct issuers to investors (that is, the offer side). See the Board's Commercial Paper web the price index. pages (http://www.federalreserve.gov/releases/cp) for more information. SOURCE: U.S. Department of the Treasury. 7. An average of dealer offering rates on nationally traded certificates of deposit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • March 2003 1.36 STOCK MARKET Selected Statistics 2002 IInnddiiccaattoorr 22000000 22000011 22000022 Apr. May June July Aug. Sept. Oct. Nov. Dec. Prices and trading volume (averages of daily figures) CCCCCCCooooooommmmmmmmmmmmmmooooooonnnnnnn ssssssstttttttoooooooccccccckkkkkkk ppppppprrrrrrriiiiiiiccccccceeeeeeesssssss (((((((iiiiiiinnnnnnndddddddeeeeeeexxxxxxxeeeeeeesssssss))))))) 1111111 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((DDDDDDDeeeeeeeccccccc....... 33333331111111,,,,,,, 1111111999999966666665555555 -------55555550000000))))))) 6,806.46' 6,407.95' 5,571.46 6,212.88' 6,087.85' 5,755.89' 5,139.94' 5,200.62' 4,980.65' 4,862.70' 5,104.89' 5,075.76 2222222 IIIIIIInnnnnnnddddddduuuuuuussssssstttttttrrrrrrriiiiiiiaaaaaaalllllll 809.40 749.46 656.44 732.71 718.12 677.58 603.04 611.34 589.14 574.45 597.75 593.15 3333333 TTTTTTTrrrrrrraaaaaaannnnnnnssssssspppppppooooooorrrrrrrtttttttaaaaaaatttttttiiiiiiiooooooonnnnnnn 414.73 444.45 430.63 470.00 459.55 449.42 416.07 409.96 388.19 383.41 405.03 401.39 4444444 UUUUUUUtttttttiiiiiiillllllliiiiiiitttttttyyyyyyy 478.99 377.72 260.50 300.57 287.10 265.21 230.21 225.52 210.76 207.83 229.41 236.71 5555555 FFFFFFFiiiiiiinnnnnnnaaaaaaannnnnnnccccccceeeeeee 552.48 596.61 554.88 610.24 603.15 577.05 524.01 533.60 506.05 494.06 523.50 519.72 6666666 SSSSSSStttttttaaaaaaannnnnnndddddddaaaaaaarrrrrrrddddddd &&&&&&& PPPPPPPoooooooooooooorrrrrrr'''''''sssssss CCCCCCCooooooorrrrrrrpppppppooooooorrrrrrraaaaaaatttttttiiiiiiiooooooonnnnnnn (((((((1111111999999944444441111111^^^^^^^11111113333333 ------- 11111110000000)))))))''''''' 1,427.22 1,194.18 993.94 1,112.03 1,079.27 1,014.05 903.59 912.55 867.81 854.63 909.93 899.18 7777777 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((AAAAAAAuuuuuuuggggggg....... 33333331111111,,,,,,, 1111111999999977777773333333 ------- 55555550000000)))))))2222222 922.22 879.08 860.11 915.09 935.10 911.59 840.76 843.89 852.03 807.38 820.62 823.77 VVVVVVVooooooollllllluuuuuuummmmmmmeeeeeee ooooooofffffff tttttttrrrrrrraaaaaaadddddddiiiiiiinnnnnnnggggggg (((((((ttttttthhhhhhhooooooouuuuuuusssssssaaaaaaannnnnnndddddddsssssss ooooooofffffff ssssssshhhhhhhaaaaaaarrrrrrreeeeeeesssssss))))))) 8888888 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 1,026,867 1,216,529 1,411,689 1,280,714 1,215,786 1,539,282 1,848,962 1,317,105 1,370,143 1,619,896 1,427,254 1,210,332 9999999 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 51,437 68,074 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Customer financing (millions of dollars, end-of-period balances) 11111110000000 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrr-------dddddddeeeeeeeaaaaaaallllllleeeeeeerrrrrrrsssssss3333333 198,790 150,450 134,380 150,940 150,860 146,270 136,160 132,800 130,210 130,570 133,060 134,380 FFFFFFFrrrrrrreeeeeeeeeeeeee cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt bbbbbbbaaaaaaalllllllaaaaaaannnnnnnccccccceeeeeeesssssss aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrrsssssss4444444 11111111111111 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn aaaaaaaccccccccccccccooooooouuuuuuunnnnnnntttttttsssssss5555555 100,680 101,640 95,690 92,140 92,950 95,830 98,080 95,400 98,630 96,620 91,240 95,690 11111112222222 CCCCCCCaaaaaaassssssshhhhhhh aaaaaaaccccccccccccccooooooouuuuuuunnnnnnntttttttsssssss 84,400 78,040 73,340 68,540 66,120 68,280 68,860 63,700 67,550 66,780 67,380 73,340 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 11111113333333 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn ssssssstttttttoooooooccccccckkkkkkksssssss 70 80 65 55 65 50 11111114444444 CCCCCCCooooooonnnnnnnvvvvvvveeeeeeerrrrrrrtttttttiiiiiiibbbbbbbllllllleeeeeee bbbbbbbooooooonnnnnnndddddddsssssss 50 60 50 50 50 50 11111115555555 SSSSSSShhhhhhhooooooorrrrrrrttttttt sssssssaaaaaaallllllleeeeeeesssssss 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 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 2000 2001 2002 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 5,803.5 5,800.6 5,753.9 5,834.5 5,970.3 6,032.4 6,153.3 6,255.4 6,433.0 2 Public debt securities 5,662.2 5,773.7 5,726.8 5,807.5 5,943.4 6,006.0 6,126.5 6,228.2 6,405.7 3 Held by public 3,527.4 3,434.4 3,274.2 3,338.7 3,393.8 3,443.7 3,463.5 3,552.6 3,647.4 4 Held by agencies 2,248.7 2,339.4 2,452.6 2,468.8 2,549.7 2,562.4 2,662.9 2,675.6 2,758.3 Agency securities 27.4 26.8 27.1 27.0 26.8 26.4 26.8 27.2 27.3 6 Held by public 27.3 26.8 27.1 27.0 26.8 26.4 26.8 27.2 27.3 7 Held by agencies .1 .1 .0 .0 .0 .0 .0 .0 .0 8 Debt subject to statutory limit 5,580.5 5,692.5 5,645.0 5,732.6 5,871.4 5,935.1 6,058.3 6,161.4 6,359.4 9 Public debt securities 5,580.2 5,692.3 5,644.8 5,732.4 5,871.2 5,935.0 6,058.1 6,161.1 6,359.1 10 Other debt' .2 .2 .2 .2 .3 .2 .2 .3 .3 MEMO 11 Statutory debt limit 5,950.0 5,950.0 5,950.0 5,950.0 5,950.0 5,950.0 6,400.0 6,400.0 6,400.0 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 2002 TTyyppee aanndd hhoollddeerr 11999999 22000000 22000011 22000022 Qi Q2 Q3 Q4 1 Total gross public debt 5,776.1 5,662.2 5,943.4 6,405.7 6,006.0 6,126.5 6,228.2 6,405.7 By type 2 Interest-bearing 5,766.1 5,618.1 5,930.8 6,391.4 5,962.2 6,087.0 6,216.3 6,391.4 3 Marketable 3,281.0 2,966.9 2,982.9 3,205.1 3,003.3 3,024.8 3,136.6 3,205.1 4 Bills 737.1 646.9 811.3 888.8 834.4 822.5 868.3 888.8 5 Notes 1,784.5 1,557.3 1,413.9 1,580.8 1,411.7 1,446.9 1,521.5 1,580.8 6 Bonds 643.7 626.5 602.7 588.7 596.7 592.9 592.9 588.7 7 Inflation-indexed notes and bonds' 100.7 121.2 140.1 146.9 145.6 147.5 138.9 146.9 8 Nonmarketable2 2,485.1 2,651.2 2,947.9 3,186.3 2,958.9 3,062.2 3,079.6 3,186.3 9 State and local government series 165.7 151.0 146.3 153.4 141.1 142.8 144.3 153.4 10 Foreign issues3 31.3 27.2 15.4 11.2 14.6 13.3 12.5 11.2 11 Government 31.3 27.2 15.4 11.2 14.6 13.3 12.5 11.2 1? Public .0 .0 .0 .0 .0 .0 .0 .0 n Savings bonds and notes 179.4 176.9 181.5 184.8 183.6 184.8 185.6 184.8 14 Government account series4 2,078.7 2,266.1 2,574.8 2,806.9 2,589.7 2,691.4 2,707.3 2,806.9 15 Non-interest-bearing 10.0 44.2 12.7 14.3 43.8 39.5 12.0 14.3 Bv holder* 16 U.S. Treasury and other federal agencies and trust funds 2,064.2 2,270.1 2,572.2 n.a. 2,581.4 2,686.0 2,701.3 n.a. 17 Federal Reserve Banks6 478.0 511.7 551.7 629.4 575.4 590.7 604.2 629.4 18 Private investors 3,233.9 2,880.4 2,819.5 n.a. 2,849.2 2,849.8 2,924.8 n.a. 19 Depository institutions 248.7 201.5 181.5 n.a. 187.6 204.4 210.5 n.a. 20 Mutual funds 228.6 220.8 257.5 n.a. 264.9 250.0 252.4 n.a. 21 Insurance companies 123.4 110.2 105.7 n.a. 108.4 110.3 115.4 n.a. 22 State and local treasuries7 266.8 236.2 256.5 n.a. 261.2 271.7 269.4 n.a. Individuals 23 Savings bonds 186.4 184.8 190.3 n.a. 191.9 192.7 193.3 n.a. 74 Pension funds 321.0 304.1 281.6 n.a. 293.3 286.0 283.4 n.a. 75 Private 109.8 108.4 104.2 n.a. 106.3 108.8 110.9 n.a. 76 State and Local 211.2 195.7 177.4 n.a. 187.0 177.2 172.5 n.a. 27 Foreign and international8 1,268.7 1,034.2 1,053.1 n.a. 1,055.7 1,071.3 1,133.7 n.a. 28 Other miscellaneous investors7-9 589.9 587.7 494.1 n.a. 487.7 451.9 n.a. n.a. 1. The U.S. Treasury first issued inflation-indexed securities during the first quarter of 8. Includes nonmarketable foreign series Treasury securities and Treasury deposit funds. 1997. Excludes Treasury securities held under repurchase agreements in custody accounts at the 2. Includes (not shown separately) securities issued to the Rural Electrification Administra- Federal Reserve Bank of New York. tion, depository bonds, retirement plan bonds, and individual retirement bonds. 9. Includes individuals, government-sponsored enterprises, brokers and dealers, bank 3. Nonmarketable series denominated in dollars, and series denominated in foreign cur- personal trusts and estates, corporate and noncorporate businesses, and other investors. rency held by foreigners. SOURCES. Data by type of security, U.S. Treasury Department, Monthly Statement of the 4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. Public Debt of the United States; data by holder, Federal Reserve Board of Governors, Flow 5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual of Funds Accounts of the United States and U.S. Treasury Department, Treasury Bulletin, holdings; data for other groups are Treasury estimates. unless otherwise noted. 6. U.S. Treasury securities bought outright by Federal Reserve Banks, see Bulletin 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

A26 Domestic Nonfinancial Statistics • March 2003 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions' Millions of dollars, daily averages 2002 2002, week ending Sept. Oct. Nov. Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 Dec. 4 Dec. 11 Dec. 18 Dec. 25 By type of security 1 U.S. Treasury bills 46,861 44,804 48,070 47,376 48,003 54,630 43,156 48,074 46,650 49,102 43,060 37,679 Treasury coupon securities by maturity 2 Three years or less 133,211 133,181 141,467 144,196 136,338 156,502 117,133 159,943 131,140 112,904 97,605 110022,,882266 3 More than three but less than or equal to six years 106,075 114,643 118,430 109,668 143,887 121,503 122,395 95,173 100,771 107,472 87,610 5566,,550055 4 More than six but less than or equal to eleven years 83,783 99,139 98,012 92,675 115,775 118,456 90,931 78,117 80,059 82,733 65,588 47,865 5 More than eleven 22,090 21,405 20,833 20,452 20,685 26,370 21,121 16,598 19,019 19,169 17,393 12,380 6 Inflation-indexed2 2,439 4,122 2,603 3,737 3,410 2,408 2,531 2,325 1,914 3,274 2,536 2,265 Federal agency and governmentsponsored enterprises 7 Discount notes 49,573 50,271 51,785 48,678 54,698 55.383 52,351 45,143 56,129 51,714 59,092 50,202 Coupon securities by maturity 8 Three years or less 11,389 11,841 12,727 14,536 13,776 15,684 12,861 10,072 9,312 10,000 9,062 99,,882288 9 More than three years but less than or equal to six years 10,317 9,301 8,893 6,829 7,877 8,577 11,565 8,094 4,847 12,860 5,563 33,,666644 10 More than six years but less than or equal to eleven years .... 7,337 6,776 7,383 4,228 6,523 5,178 9,563 7,661 7,349 7,235 6,205 66,,882200 11 More than eleven years 1,147 1,325 1,219 831 1,202 1,378 1,031 1,377 801 1,313 676 880088 12 Mortgage-backed 186,023 191,937 194,006 131,645 164,887 287,422 211,256 131,296 164,112 250,141 155,212 99,579 Corporate securities 13 One year or less 106,097 101,115 111,148 95,235 110,984 119,849 120,220 101,266 81,049 106,654 125,831 100,301 14 More than one year 18,433 16,294 22,421 17,405 22,812 19,890 22,993 24,053 19,955 18,201 21,111 13,047 By type of counterparty With interdealer broker 15 U.S. Treasury 184,949 197,089 205,144 194,377 228,772 228,274 186,794 192,175 174,715 178,506 148,043 113,090 16 Federal agency and governmentsponsored enterprises 10,217 10,473 10,018 11,031 11,172 10,763 10,705 8,175 8,204 9,903 7,078 7,097 17 Mortgage-backed 58,896 55,734 49,075 42,141 43,165 71,907 52,025 34,248 40,764 52,998 40,057 26,086 18 Corporate 373 387 431 431 394 307 562 428 432 620 665 278 With other 19 U.S. Treasury 209,510 220,204 224,271 223,726 239,325 251,594 210,472 208,055 204,838 196,146 165,749 146,429 20 Federal agency and governmentsponsored enterprises 69,548 69,041 71,989 64,073 72,904 75,437 76,666 64,172 70,234 73,219 73,521 64,226 21 Mortgage-backed 127,127 136,203 144,931 89,504 121,722 215,515 159,231 97,048 123,348 197,143 115,155 73,494 22 Corporate 124,156 117,022 133,138 112,208 133,403 139,431 142,651 124,892 100,572 124,235 146,277 113,070 NOTE. Major changes in the report form filed by primary dealers induced a break in the backed, and corporate securities scheduled for immediate and forward delivery, as well as all dealer data series as of the week ending July 4, 2001. Current weekly data may be found at the U.S. government securities traded on a when-issued basis between the announcement and Federal Reserve Bank of New York web site (http:www.newyorkfed.org/pihome/statistics) issue date. Data do not include transactions under repurchase and reverse repurchase (resale) under the Primary Dealer heading. agreements. Averages are based on the number of trading days in the week. 1. The figures represent purchases and sales in the market by the primary U.S. government 2. Outright Treasury inflation-indexed securities (TIIS) transactions are reported at princisecurities dealers reporting to the Federal Reserve Bank of New York. Outright transactions pal value, excluding accrued interest, where principal value reflects the original issuance par include all U.S. government, federal agency, government-sponsored enterprise, mortgage- amount (unadjusted for inflation) times the price times the index ratio. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A27 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 2002 2002, week ending IItteemm,, bbyy ttyyppee ooff sseeccuurriittyy Sept. Oct. Nov. Oct. 30 Nov. 6 Nov. 13 Nov. 20 Nov. 27 Dec. 4 Dec. 11 Dec. 18 Net outright positions2 1 U.S. Treasury bills 8,379 12,301 21,827r 19,761 16,287 25,352 25,046 17,755 26,670 34,712 27,956 Treasury coupon securities by maturity 2 Three years or less -17,680 -25,208 -25,283r -19,784 -19,378 -27,268 -27,545 -26,591 -24,130 -20,421 -23,106 3 More than three years but less than or equal to six years -35,388 -35,886 -30,766' -4 1,066 -31,991 -28,074 -31,684 -30,518 -33,030 -36,338 -33,501 4 More than six but less than or equal to eleven years -15,420 -13,591 ~15,248r -11,316 -12,125 -11,665 -17,696 -16,389 -21,479 -20,545 -20,125 5 More than eleven 9,083 6,885 l,106r 4,297 1,489 1,131 1,607 573 361 1,301 913 6 Inflation-indexed 1,239 2,260 1,402' 566 228 720 927 1,812 5,495 5,052 4,580 Federal agency and governmentsponsored enterprises 7 Discount notes 49,345 51,159 51,259' 52,944 46,402 57,549 46,692 51,953 55,329 5533,,222299 5555,,117755 Coupon securities, by maturity 8 Three years or less 14,031 16,704 16,344' 17,635 15,400 16,319 17,292 16,435 15,867 18,822 18,444 9 More than three years but less than or equal to six years 1,826 785 -407' -320 -1,764 -1,279 -307 878 1,107 713 1,169 10 More than six but less than or equal to eleven years 2,242 2,717 1,556' 2,217 690 1,793 2,954 961 861 2,231 3,754 11 More than eleven 2,303 2,252 2,994 2,482 2,898 3,074 3,309 2,745 2,847 2,766 2,892 12 Mortgage-backed 16,667 15,565 8,176 8,997 13,629 2,417 11,891 7,051 4,669 6,865 15,637 Corporate securities 13 One year or less 23,363 24,010 21,645 24,644 21,861 27,588 22,072 16,470 18,420 26,089 30,252 14 More than one year 48,908 51,861 50,912' 48,561 52,254 46,335 52,631 51,796 52,832 55,056 55,274 Financing3 Securities in, U.S. Treasury 15 Overnight and continuing 627,852 619,723 614,961 589,729 638,874 623,270 649,316 545,752 629,076 643,349 586,712 16 Term 904,116 905,616 937,618' 954,104 939,740 975,976 880,865 962,001 919,406 965,753 1,010,804 Federal agency and governmentsponsored enterprises 17 Overnight and continuing 156,069 157,351 145,420 156,398 152,871 160,910 144,090 124,797 145,595 144,826 142,661 18 Term 306,858 314,993 315,176 321,660 313,358 327,393 307,624 314,905 308,558 313,885 315,348 Mortgage-backed securities 19 Overnight and continuing 44,642 41,613 48,995 42,430 60,626 55,376 48,869 36,532 40,216 42,235 29,626 20 Term 278,235 280,317 277,966 283,536 264,648 275,969 281,206 286,387 282,049 288,335 284,767 Corporate securities 21 Overnight and continuing 50,351 49,081 49,184 48,740 48,855 49,599 51,008 48,027 47,322 48,783 47,420 22 Term 25,606 26,306 26,247 26,681 26,499 26,621 26,175 25,680 26,366 25,567 24,042 MEMO Reverse repurchase agreements 23 Overnight and continuing 477,054 465,644 456,710 450,481 495,162 478,104 479,639 376,716 463,040 482,234 420,215 24 Term 1,363,411 1,366,558 1,404,106 1,419,579 1,390,367 1,451,324 1,348,935 1,433,237 1,382,172 1,439,232 1,478,663 Securities out, U.S. Treasury 25 Overnight and continuing 596,372 565,825 573,787 540,078 578,135 580,756 616,134 507,121 605,574 616,166 585,059 26 Term 829,047 837,262 875,065 889,161 882,193 913,939 814,690 908,160 833,761 896,457 921,011 Federal agency and governmentsponsored enterprises 27 Overnight and continuing 279,838 292,282 276,128 303,501 283,435 300,538 272,542 244,436 286,870 287,362 275,938 28 Term 237,666 235,801 245,811 236,777 235,654 249,153 239,956 259,896 239,120 245,639 254,196 Mortgage-backed securities 29 Overnight and continuing 303,749 319,058 316,240 306,332 311,270 310,033 335,515 316,211 295,757 304,599 307,090 30 Term 176,871 172,948 170,818 170,392 158,121 158,107 189,453 180,315 160,232 171,289 186,603 Corporate securities 31 Overnight and continuing 127,796 132,186 133,692 135,430 132,565 137,006 135,343 131,552 129,358 135,864 139,661 32 Term 19,734 23,097 20,946 24,791 22,574 20,808 20,297 21,592 18,015 17,976 16,746 MEMO Repurchase agreements 33 Overnight and continuing 1,150,894 1,147,149 1,139,287 1,122,791 1,148,750 1,170,074 1,193,299 1,038,786 1,156,998 1,178,292 1,144,365 34 Term 1,231,403 1,232,858 1,279,914 1,283,897 1,262,433 1,305,156 1,234,632 1,339,821 1,221,855 1,301,205 1,348,686 NOTE. Major changes in the report form filed by primary dealers included a break in many 2. Net outright positions include all U.S. government, federal agency, governmentseries as of the week ending July 4, 2001. Current weekly data may be found at the Federal sponsored enterprise, mortgage-backed, and corporate securities scheduled for immediate and Reserve Bank of New York web site (http://www.newyorkfed.org/pihome/statistics) under the forward delivery, as well as U.S. government securities traded on a when-issued basis Primary Dealer heading. between the announcement and issue date. 1. Data for positions and financing are obtained from reports submitted to the Federal 3. Figures cover financing U.S. government, federal agency, government-sponsored enter- Reserve Bank of New York by the U.S. government securities dealers on its published list of prise, mortgage-backed, and corporate securities. Financing transactions for Treasury primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar inflation-indexed securities (TIIS) are reported in actual funds paid or received, except for days of the report week are assumed to be constant. Monthly averages are based on the pledged securities. TIIS that are issued as pledged securities are reported at par value, which number of calendar days in the month. is the value of the security at original issuance (unadjusted for inflation). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic NonfinancialS tatistics • March 2003 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 2002 AAggeennccyy 11999988 11999999 22000000 22000011 June July Aug. Sept. Oct. 1 Federal and federally sponsored agencies 1,296,477 1,616,492 1,851,632 2,121,057 2,161,580 2,213,366 2,226,713 n.a. n.a. 2 Federal agencies 26,502 26,376 25,666 276 223 223 164 304 318 3 Defense Department1 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2-3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Federal Housing Administration" 205 126 255 26,828 26,826 26,541 26,274 27,170 26,725 6 Government National Mortgage Association certificates of participation5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 7 Postal Service6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority 26,496 26,370 25,660 270 217 217 158 298 312 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 1,269,975 1,590,116 1,825,966 2,120,781 2,207,212 2,213,143 2,226,549 n.a. n.a. 11 Federal Home Loan Banks 382,131 529,005 594,404 623,740 643,102 651,253 659,258 668,703 679,209 12 Federal Home Loan Mortgage Corporation 287,396 360,711 426,899 565,071 601,363 604,853 603,135 623,267 625,328 13 Federal National Mortgage Association 460,291 547,619 642,700 763,500 789,000 784,020 789,900 800,300 804,800 14 Farm Credit Banks8 63,488 68,883 74,181 76,673 80,951 81,265 81,658 82,741 n.a. 15 Student Loan Marketing Association9 35,399 41,988 45,375 48,350 49,600 48,500 49,500 50,800 n.a. 16 Financing Corporation1® 8,170 8,170 8,170 8,170 8,170 8,170 8,170 8,170 n.a. 17 Farm Credit Financial Assistance Corporation11 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1,261 n.a. 18 Resolution Funding Corporation12 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29,996 n.a. MEMO 19 Federal Financing Bank debt13 44,129 42,152 40,575 39,096 37,091 37,830 42,825 39,604 37,084 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 21 Postal Service6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 22 Student Loan Marketing Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 24 United States Railway Association6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Other lending14 25 Farmers Home Administration 9,500 6,665 5,275 n.a. n.a. n.a. n.a. n.a. n.a. 26 Rural Electrification Administration 14,091 14,085 13,126 13,876 14,301 14,338 13,599 14,029 14,058 27 Other 20,538 21,402 22,174 25,220 22,790 23,492 29,226 25,575 23,026 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 claims. Once issued, these securities may be sold privately on the securities market. Reform, Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 5. Certificates of participation issued before fiscal year 1969 by the Government National 1989. Mortgage Association acting as trustee for the Farmers Home Administration; the Department 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations of Health, Education, and Welfare; the Department of Housing and Urban Development; the issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the Small Business Administration; and the Veterans Administration. purpose of lending to other agencies, its debt is not included in the main portion of the table to 6. Off-budget. avoid double counting. 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans Federal Agriculture Mortgage Corporation; therefore, details do not sum to total. Some data guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally are estimated. being small. The Farmers Home Administration entry consists exclusively of agency assets, 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is whereas the Rural Electrification Administration entry consists of both agency assets and shown on line 17. guaranteed loans. 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 A29 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 2002 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11999999 22000000 22000011 May June July Aug. Sept. Oct. Nov. Dec. 1 All issues, new and refunding1 215,427 180,403 288,601' 33,813r 38,916r 27,993r 31,879' 27,379r 42,670' 35,965r 27,391 By type of issue 2 General obligation 73,308 64,475 100,519 10,446 16,166 10,130 10,226 9,562 16,075 8,159 7,909 3 Revenue 142,120 115,928 170,047 22,413 20,149 15,642 18,692 17,751 24,074 24,942 18,961 By type of issuer 4 State 16,376 19,944 30,099 1,531 3,718 3,404 3,472 2,442 4,199 2,109 1,670 5 Special district or statutory authority2 152,418 111,695 179,427 23,866 27,283 16,007 20,144 19,105 29,273 25,422 19,629 6 Municipality, county, or township 46,634 39,273 61,040 7,461 5,315 6,361 5,302 5,767 6,678 5,570 5,570 7 Issues for new capital 161,065 154,257 199,134' 2 l,101r 24,624' 19,766r 20,972r 15,126r 28,685r 25,331' 19,991 By use of proceeds 8 Education 36,563 38,665 50,054 6,027 7,060 4,205 3,968 3,529 5,209 3,743 5,292 9 Transportation 17,394 19,730 21,411 1,795 3,351 3,251 4,413 1,398 1,476 1,250 1,060 10 Utilities and conservation 15,098 11,917 21,917 1,785 1,087 1,660 2,806 2,038 6,922 8,379 2,031 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 9,099 7,122 6,607 614 631 760 283 574 1,225 821 796 13 Other purposes 47,896 47,309 55,733 6,962 7,653 5,893 6,537 5,597 6,996 7,189 4,992 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment Dealer's Digest 2. Includes school districts. before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 2002 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, oorr iissssuueerr 11999999 22000000 22000011'' Apr. May June July Aug. Sept. Oct. Nov. 1 A11 issues' 1,105,535 1,079,727 1,541,821 116,952 123,894 149,753 68,426 97,665 135,176 93,439 119,659 2 Bonds2 973,967 944,810 1,413,267 106,416 114,932 133,217 63,912 93,659 127,881 85,606 109,726 By type of offering 3 Sold in the United States 851,352 822,012 1,356,879 101,427 105,070 121,491 60,549 90,215 123,449 81,409 104,112 4 Sold abroad 122,615 122,798 56,389 4,989 9,862 11,725 3,362 3,444 4,432 4,197 5,614 MEMO 5 Private placements, domestic 24,703 18,370 8,734 0 4,506 3,068 0 0 65 0 3,525 By industry group 6 Nonfinancial 302,256 258,804 459,560 35,741 19,804 27,693 7,624 14,960 19,988 14,906 22,029 7 Financial 671,711 686,006 953,707 70,675 95,128 105,524 56,288 78,699 107,893 70,700 87,697 8 Stocks3 254,540' 311,941' 230,632 10,536 8,962 16,536 4,514 4,006 7,295 7,833 9,933 By type of offering 9 Public 131,568 134,917 128,554 10,536 8,962 16,536 4,514 4,006 7,295 7,833 9,933 10 Private placement4 122,972' 177,024' 102,078 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. By industry group 11 Nonfinancial 110,284 118,369 77,577 7,834 6,633 11,608 1,833 539 2,754 3,731 4,533 12 Financial 21,284 16,548 50,977 2,702 2,329 4,928 2,681 3,467 4,541 4,102 5,400 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 for private placements are not available at a monthly frequency. 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

A30 Domestic NonfinancialS tatistics • March 2003 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets' Millions of dollars 2002 IItteemm 22000011 22000022 May June July Aug. Sept. Oct. Nov/ Dec. 1 Sales of own shares2 1,806,474 1,827,331 154,987 138,520 170,946 151,136 125,408 164,959 137,914 135,669 2 Redemptions of own shares 1,677,266 1,703,269 138,052 144,153 200,148 136,210 126,760 167,039 122,125 135,811 3 Net sales3 129,208 124,062 16,935 -5,633 -29,202 14,926 -1,352 -2,080 15,789 -142 4 Assets4 4,689,624 4,119,237 4,693,928 4,434,603 4,124,186 4,170,641 3,899,858 4,059,765 4,249,351 4,119,237 5 Cash5 219,620 209,104 243,755 208,390 199,586 220,425 199,778 204,019 219,213 209,104 6 Other 4,470,004 3,910,133 4,450,173 4,226,213 3,924,600 3,950,216 3,700,080 3,855,746 4,030,138 3,910,133 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. 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 2001 2002 AAccccoouunntt 11999999 22000000 22000011 Qi Q2 Q3 Q4 Qi Q2 Q3 ASSETS 1 Accounts receivable, gross2 845.4 958.7 948.3 954.5 988.8 967.8 948.3 930.0 941.9' 945.4 2 Consumer 304.4 328.0 340.1 319.3 324.6 329.3 340.1 329.8 332.0' 334.5 3 Business 395.1 458.4 447.0 459.1 481.9 451.1 447.0 443.0 449.4 445.5 4 Real estate 145.8 172.3 161.3 176.1 182.3 187.4 161.3 157.2 160.5 165.3 5 LESS: Reserves for unearned income 61.4 69.7 60.6 69.9 61.5 60.8 60.6 59.5 58.5 58.0 6 Reserves for losses 14.7 16.7 21.0 17.2 17.4 18.0 21.0 21.5 21.6 22.1 7 Accounts receivable, net 769.3 872.3 866.7 867.3 909.8 889.0 866.7 849.0 861.9' 865.4 8 All other 406.6 461.5 523.4 474.8 458.9 478.7 523.4 515.2 530.6 556.7 9 Total assets 1,175.9 1,333.7 1,390.1 1,342.1 1,368.7 1,367.7 1,390.1 1,364.2 1,392.5 1,422.1 LIABILITIES AND CAPITAL 10 Bank loans 35.4 35.9 50.8 41.6 45.3 44.5 50.8 49.4 56.9 74.9 11 Commercial paper 230.4 238.8 158.6 180.9 181.6 171.0 158.6 137.0 130.8 143.1 Debt 12 Owed to parent 87.8 102.5 99.2 97.2 93.4 91.7 99.2 82.6 83.3 82.9 13 Not elsewhere classified 429.9 502.2 567.4 533.8 542.1 555.8 567.4 574.4 597.2 584.9 14 AH other liabilities 237.8 301.8 325.5 325.2 336.3 327.6 325.5 329.1 331.5 341.9 15 Capital, surplus, and undivided profits 154.5 152.5 188.6 163.5 170.0 177.2 188.6 191.7 192.9 194.6 16 Total liabilities and capital 1,175.9 1,333.7 1,390.1 1,342.1 1,368.7 1,367.7 1,390.1 1,364.2 1,392.5 1,422.3 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 Markets and Corporate Finance A31 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables1 Billions of dollars, amounts outstanding 2002 Juner July Aug.' Sept. Oct.' Nov. Seasonally adjusted 1 Total 1,031.2 1,187.0 1,248.5 1,258.3 1,269.0 1,269.1 1,269.5 1,267.2 1,269.2 2 3 C Re o a n l s u es m ta e t r e 4 1 1 7 0 4 . . 2 0 r 4 1 6 9 5 8 . . 2 9 r 52104.16 .T 5 2 2 03 5 . . 1 0 5 20 2 6 8 . .1 7 r 5 20 2 9 2 . . 6 8 5 20 2 7 2 . .2 9 ' 5 21 1 1 7 . . 6 2 5 21 1 3 4 . . 9 4 4 Business 446.9 522.8 526.2 530.2 534.2r 536.7 539.4 538.4 540.8 Not seasonally adjusted 5 Total 1,036.4 1,192.2 1,253.7 1,264.4 1,264.2 1,261.1 1,262.2 1,262.0 1,263.3 6 Consumer 412.7 468.3 518.1 524.9 528.6r 525.0 524.3 518.9 517.7 7 Motor vehicle loans 129.2 141.6 173.9 170.3 172.5r 170.3 176.5' 169.9 160.3 8 Motor vehicle leases 102.9 108.2 103.5 96.4 94.9 90.5 88.5 86.7 85.2 9 Revolving2 32.5 37.6 31.5 32.1 36.6 36.5 37.3 37.4 37.2 10 Other3 39.8 40.7 31.1 33.2 33.0 33.0 32.3 31.3 31.4 Securitized assets4 11 Motor vehicle loans 73.1 97.1 131.9 142.4 141.9r 144.4 138.9' 144.1 153.5 12 Motor vehicle leases 9.7 6.6 6.8 6.2 6.1 6.0 6.0' 5.9 5.8 13 Revolving 6.7 19.6 25.0 29.2 28.9r 29.9 30.5' 29.2 30.2 14 Other 18.8 17.1 14.3 15.0 14.7 14.4 14.4' 14.4 14.2 15 Real estate 174.0 198.9 207.7 203.1 206.7 209.6 207.9' 211.6 213.9 16 One- to four-family 108.2 130.6 120.1 121.8 125.7 128.7 126.5 130.5 132.8 17 Other 37.6 41.7 41.2 38.7 38.7 38.8 39.0 38.8 39.0 Securitized real estate assets4 18 One- to four-family 28.0 24.7 40.7 40.9 40.6r 40.4 40.1' 40.1 39.9 19 Other .2 1.9 5.7 1.7 1.7r 1.7 2.2' 2.2 2.2 20 Business 449.6 525.0 527.9 536.5 529.0' 526.4 530.0 531.5 531.7 21 Motor vehicles 69.4 75.5 54.0 59.9 56.7 56.0 56.9 57.4 60.3 22 Retail loans 21.1 18.3 16.1 17.0 17.5 17.2 17.6 18.1 17.7 23 Wholesale loans5 34.8 39.7 20.3 25.8 22.3 22.2 23.3 23.5 26.7 24 Leases 13.6 17.6 17.6 17.1 16.9 16.6 15.9 15.9 15.9 25 Equipment 238.7 283.5 289.4 288.0 286.0 287.5 289.2 287.2 286.0 26 Loans 64.5 70.2 77.8 78.9 80.0 81.4 82.8 80.9 80.2 27 Leases 174.2 213.3 211.6 209.2 206.1 206.1 206.4 206.4 205.8 28 Other business receivables6 87.0 99.4 103.5 101.5 102.8 99.8 99.4 96.7 95.3 Securitized assets4 29 Motor vehicles 31.5 37.8 50.1 45.5 41.5' 41.0 43.8' 47.0 47.0 30 Retail loans 2.9 3.2 5.1 2.4 2.3' 2.2 2.2' 1.9 1.9 31 Wholesale loans 26.4 32.5 42.5 40.8 36.9' 36.5 39.3' 42.8 42.8 32 Leases 2.1 2.2 2.5 2.3 2.3' 2.3 2.3' 2.3 2.3 33 Equipment 14.6 23.1 23.2 21.7 21.6' 22.0 21.6' 23.9 23.9 34 Loans 7.9 15.5 16.4 15.0 15.0' 15.4 14.8' 17.2 17.2 3.5 Leases 6.7 7.6 6.8 6.7 6.7' 6.6 6.7' 6.7 6.7 36 Other business receivables6 8.4 5.6 7.7 19.9 20.3' 20.1 19.1' 19.2 19.1 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 subsidibreakdowns have been obtained for some components. In addition, previously unavailable aries 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

A32 Domestic NonfinancialS tatistics • March 2003 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 2002 June July Aug. Sept. Oct. Nov. Dec. Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 234.5 245.0 261.1 268.2 268.2 267.5 266.7 258.7 256.7 266.9 2 Amount of loan (thousands of dollars) 177.0 184.2 197.0 201.1 201.6 199.1 201.1 195.0 193.3 205.1 3 Loan-to-price ratio (percent) 77.4 77.3 77.8 77.1 77.5 77.3 77.6 77.7 77.4 79.0 4 Maturity (years) 29.2 28.8 28.9 29.0 29.1 29.0 29.1 28.8 28.4 28.7 5 Fees and charges (percent of loan amount)2 .70 .67 .62 .56 .62 .59 .60 .63 .61 .64 Yield (percent per year) 6 Contract rate1 7.41 6.90 6.35 6.38 6.28 6.17 6.09 6.00 5.99 5.95 7 Effective rate1-3 7.52 7.00 6.44 6.47 6.37 6.26 6.17 6.09 6.08 6.04 8 Contract rate (HUD series)4 n.a. n.a. 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 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 GNMA securities6 7.57 6.36 5.81 6.03 5.82 5.53 5.15 5.31 5.29 5.17 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 610,122 707,015 790,800 740,744 743,025 746,101 751,423 751,347 760,759 790,800 12 FHA/VA insured 61,539 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 Conventional 548,583 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 Mortgage transactions purchased (during period) 154,231 270,384 370,641 16,310 17,586 23,123 33,518 32,853 47,807 67,891 Mortgage commitments (during period) 15 Issued7 163,689 304,084 247,809 24.700 29,786 42,555 58,055 n.a. n.a. n.a. 16 To sell8 11,786 7,586 9,072 2,535 62 1,292 1,016 n.a. n.a. n.a. FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end ofperiodf 17 Total 385,693 491,719 568,173 518,816 521,137 525,795 530,694 536,389 549,380 568,173 18 FHA/VA insured 3,332 3,506 n.a. 3,649 3,413 4,195 4,634 n.a. n.a. n.a. 19 Conventional 382,361 488,213 n.a. 515,167 517,724 521,600 526,060 n.a. n.a. n.a. Mortgage transactions (during period) 20 Purchases 174,043 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 21 Sales 166,901 389,611 547,046 30,767 29,335 34,937 46,369 60,516 62,354 73,184 22 Mortgage commitments contracted (during period)9 169,231 417,434 n.a. 32,468 34,827 44,401 57,793 n.a. n.a. n.a. 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 by National Mortgage Association exclude swap activity. the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Real Estate A3 3 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 2001 2002 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999988 11999999 22000000 Q3 Q4 Ql Q2 Q3P 1 All holders 5,715,556 6,320,690 6,885,547 7,407,530 7,589,968 7,754,015 7,971,417 8,209,266 By type of property 7 One- to four-family residences 4,365,968 4,790,601 5,203,899 5,600,651 5,732,907 5,871,331 6,043,139 66,,224422,,666611 3 Multifamily residences 331,602 369,251 406,530 440,753 454,715 462,579 474,170 482,851 4 Nonfarm, nonresidential 921,482 1,057,874 1,166,261 1,251,517 1,286,011 1,301,988 1,333,680 1,360,371 5 96,504 102,964 108,858 114,610 116,336 118,116 120,428 123,383 By type of holder 6 Major financial institutions 2,194,591 2,394,271 2,618,969 2,734,217 2,791,076 2,789,654 2,861,044 22,,998811,,009955 7 Commercial banks2 1,336,996 1,495,420 1,660,054 1,736,631 1,789,819 1,800,362 1,873,203 1,961,908 8 One- to four-family 797,004 879,576 965,635 987,682 1,023,851 1,018,478 1,070,522 1,143,938 9 Multifamily 54,632 67,665 77,803 83,949 84,851 86,719 90,743 90,929 10 Nonfarm, nonresidential 456,323 516,333 582,577 629,624 645,619 659,187 674,972 689,288 11 Farm 29,037 31,846 34,039 35,375 35,498 35,978 36,966 37,753 12 Savings institutions3 643,955 668,064 722,974 758,344 758,236 745,998 742,732 773,689 13 One- to four-family 533,501 548,222 594,221 620,392 620,579 605,171 599,402 625,424 14 Multifamily 57,037 59,309 61,258 64,405 64,592 65,199 66,009 68,668 15 Nonfarm, nonresidential 53,002 60,063 66,965 72,977 72,534 75,077 76,768 79,036 16 Farm 414 470 529 569 531 551 552 560 17 Life insurance companies 213,640 230,787 235,941 239,243 243,021 243,293 245,109 245,498 18 One- to four-family 6,590 5,934 4,903 5,091 4,931 4,938 5,188 5,197 19 Multifamily 31,522 32,818 33,681 33,885 35,631 35,671 35,844 35,900 70 Nonfarm, nonresidential 164,004 179,048 183,757 186,469 188,376 188,599 189,988 190,287 21 Farm 11,524 12,987 13,600 13,798 14,083 14,085 14,089 14,114 22 Federal and related agencies 291,961 320,054 344,225 363,001 376,999 385,027 396,091 412,014 23 Government National Mortgage Association 7 7 6 9 8 8 8 8 24 One- to four-family 7 7 6 9 8 8 8 8 25 Multifamily 0 0 0 0 0 0 0 0 76 Farmers Home Administration4 40,851 73,871 73,323 72,118 72,452 72,362 71,970 72,030 27 One- to four-family 16,895 16,506 16,372 15,916 15,824 15,665 15,273 15,139 28 Multifamily 11,739 11,741 11,733 11,710 11,712 11,707 11,692 11,686 79 Nonfarm, nonresidential 7,705 41,355 41,070 40,470 40,965 41,134 41,188 41,439 30 Farm 4,513 4,268 4,148 4,023 3,952 3,855 3,817 3,766 31 Federal Housing Admin, and Dept. of Veterans Affairs 3,674 3,712 3,507 3,155 3,290 3,361 3,473 2,973 32 One- to four-family 1,849 1,851 1,308 1,251 1,260 1,255 1,254 1,252 33 Multifamily 1,825 1,861 2,199 1,904 2,031 2,105 2,218 1,721 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 361 152 45 26 13 7 22 13 40 One- to four-family 58 25 7 4 2 1 4 2 41 Multifamily 70 29 9 5 3 1 4 2 42 Nonfarm, nonresidential 233 98 29 17 8 4 14 8 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 156,023 149,422 155,626 165,687 169,908 176,051 180,491 184,191 45 One- to four-family 147,594 141,195 144,150 151,786 155,060 160,300 164,038 167,006 46 Multifamily 8,429 8,227 11,476 13,901 14,848 15,751 16,453 17,185 47 Federal Land Banks 32,983 34,187 36,326 39,722 40,885 41,981 42,951 44,782 48 One- to four-family 1,941 2,012 2,137 2,337 2,406 2,470 2,527 2,635 49 Farm 31,042 32,175 34,189 37,385 38,479 39,511 40,424 42,147 50 Federal Home Loan Mortgage Corporation 57,085 56,676 59,240 59,638 62,792 59,624 58,872 60,934 51 One- to four-family 49,106 44,321 42,871 39,217 40,309 35,955 34,062 34,616 52 Multifamily 7,979 12,355 16,369 20,421 22,483 23,669 24,810 26,318 53 Mortgage pools or trusts5 2,581,297 2,948,245 3,231,415 3,583,240 3,715,692 3,868,993 3,988,381 4,075,446 54 Government National Mortgage Association 537,446 582,263 611,553 603,186 591,368 587,204 583,791 567,631 55 One- to four-family 522,498 565,189 592,624 581,796 569,460 564,108 559,595 542,453 56 Multifamily 14,948 17,074 18,929 21,391 21,908 23,096 24,196 25,178 57 Federal Home Loan Mortgage Corporation 646,459 749,081 822,310 927,490 948,409 1,012,478 1,053,261 1,058,176 58 One- to four-family 643,465 744,619 816,602 921,709 940,933 1,005,136 1,045,981 1,050,899 59 Multifamily 2,994 4,462 5,708 5,781 7,476 7,342 7,280 7,277 60 Federal National Mortgage Association 834,517 960,883 1,057,750 1,228,131 1,290,351 1,355,404 1,404,594 1,458,945 61 One- to four-family 804,204 924,941 1,016,398 1,177,995 1,238,125 1,301,374 1,349,442 1,402,929 62 Multifamily 30,313 35,942 41,352 50,136 52,226 54,030 55,152 56,016 63 Farmers Home Administration4 1 0 0 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 1 0 0 0 0 0 0 0 68 Private mortgage conduits 562,874 656,018 739,802 824,433 885,564 913,907 946,735 990,694 69 One- to four-family6 405,153 455,021 499,834 550,200 591,200 616,300 638,300 671,200 70 Multifamily 33,784 42,293 48,786 53,627 57,009 57,535 59,491 61,239 71 Nonfarm, nonresidential 123,937 158,704 191,182 220,606 237,355 240,072 248,944 258,256 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 647,708 658,120 690,939 727,071 706,201 710,341 725,902 740,711 74 One- to four-family 435,137 459,385 490,900 522,793 501,465 508,679 519,364 532,988 75 Multifamily 76,320 75,244 77,006 79,464 79,791 79,612 80,153 80,623 76 Nonfarm, nonresidential 116,277 102,274 100,681 101,354 101,154 97,915 101,807 102,057 77 Farm 19,974 21,217 22,352 23,460 23,792 24,135 24,579 25,043 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

A34 Domestic Nonfinancial Statistics • March 2003 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 2002 June July Aug. Sept. Oct. Nov. Seasonally adjusted 1 Total 1,416,316 1,560,634 1,667,928 1,707,452 l,714,828r 1,717,799 1,722,549 l,724,064r 1,721,859 2 Revolving 597,669 666,607 699,875 712,126 715,795' 719,483 721,274 723,695' 722,122 3 Nonrevolving2 818,647 894,027 968,053 995,326 999,033 998,317 1,001,274 1,000,369' 999,737 Not seasonally adjusted 4 Total 1,446,127 1,593,116 1,701,856 l,700,282r 1,705,621 1,719,577 1,720,643 l,723,788r 1,729,920 By major holder 5 Commercial banks 499,758 541,470 558,421 554,864 557,285 572,446 575,732 578,554 582,837 6 Finance companies 201,549 219,848 236,559 235,640 242,088 239,857 246,072 238,642' 228,787 7 Credit unions 167,921 184,434 189,570 191,618 194,060 195,559 196,059 197,213' 197,280 8 Savings institutions 61,527 64,557 69,070 68,451 67,370 66,289 65,243 65,243 65,243 9 Nonfinancial business 80,311 82,662 67,955 53,010 51,296 52,101 49,170 49,120 50,901 10 Pools of securitized assets3 435,061 500,145 580,281 596,700 593,522 593,326 588,366 595,016 604,872 By major type of credit1 11 Revolving 621,914 693,020 727,297 709,469 709,018 716,233 715,990 717,119' 721,650 12 Commercial banks 189,352 218,063 224,878 215,765 214,092 224,698 226,197 226,023 228,484 13 Finance companies 32,483 37,627 31,538 32,131 36,570 36,529 37,280 37,424' 37,158 14 Credit unions 20,641 22,226 22,265 20,988 21,206 21,505 21,388 21,229' 21,356 15 Savings institutions 15,838 16,560 17,767 17,795 16,751 15,707 14,696 14,696 14,696 16 Nonfinancial business 42,783 42,430 29,790 17,859 16,467 16,747 14,129 14,100 15,298 17 Pools of securitized assets3 320,817 356,114 401,059 404,930 403,933 401,048 402,299 403,646 404,658 18 Nonrevolving 824,213 900,095 974,559 990,814 996,603 1,003,344 1,004,653 1,006,669' 1,008,270 19 Commercial banks 310,406 323,407 333,543 339,099 343,193 347,748 349,535 352,531 354,353 20 Finance companies 169,066 182,221 205,021 203,509 205,518 203,329 208,792 201,218 191,629 21 Credit unions 147,280 162,208 167,305 170,630 172,854 174,054 174,671 175,984' 175,924 22 Savings institutions 45,689 47,997 51,303 50,656 50,619 50,582 50,547 50,547 50,547 23 Nonfinancial business 37,528 40,232 38,165 35,150 34,829 35,354 35,041 35,020 35,603 24 Pools of securitized assets3 114,244 144,031 179,222 191,770 189,590 192,277 186,067 191,370 200,214 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 2002 IItteemm 11999999 22000000 22000011 May June July Aug. Sept. Oct. Nov. INTEREST RATES Commercial banks2 1 48-nionth new car 8.44 9.34 8.50 7.74 n.a. n.a. 5.95 n.a. n.a. 5.67 2 24-month personal 13.39 13.90 13.22 12.57 n.a. n.a. 11.28 n.a. n.a. 10.78 Credit card plan 3 All accounts 15.21 15.71 14.89 13.55 n.a. n.a. 13.37 n.a. n.a. 13.13 4 Accounts assessed interest 14.81 14.91 14.44 13.34 n.a. n.a. 13.26 n.a. n.a. 12.78 Auto finance companies 5 New car 6.66 6.61 5.65 6.15 6.25 3.58 2.17 2.29 2.79 3.41 6 Used car 12.60 13.55 12.18 10.90 10.71 10.59 10.46 10.44 10.67 10.70 OTHER TERMS3 Maturity (months) 7 New car 52.7 54.9 55.1 57.3 58.6 58.9 59.2 58.4 57.2 57.2 8 Used car 55.9 57.0 57.5 57.8 57.7 57.8 57.6 57.5 57.3 n.a. Loan-to-value ratio 9 New car 92 92 91 92 91 95 97 97 96 95 10 Used car 99 99 100 101 100 100 100 100 100 n.a. Amount financed (dollars) 11 New car 19,880 20,923 22,822 23,324 23,436 25,089 26,455 26,331 26,232 26,104 12 Used car 13,642 14,058 14,416 14,700 14,631 14,701 14,679 14,801 14,645 n.a. 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 5 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr Ql Q2 Q3 Q4 Q1 Q2 Q3 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 733.3 804.4 1,042.4 1,057.5 853.9 949.1 1,032.4 1,276.8 1,213.7 927.3 1,613.7 1,329.4 By sector and instrument 2 Federal government 144.9 23.1 -52.6 -71.2 -295.9 -59.3 -215.8 209.3 43.4 39.8 526.0 265.7 3 Treasury securities 146.6 23.2 -54.6 -71.0 -294.9 -57.0 -216.9 209.7 44.2 41.6 524.2 264.2 4 Budget agency securities and mortgages -1.6 -.1 2.0 -.2 -1.0 -2.2 1.1 -.4 -.7 -1.8 1.8 1.6 5 Nonfederal 588.3 781.3 1,095.0 1,128.7 1,149.8 1,008.4 1,248.2 1,067.4 1,170.2 887.5 1,087.7 1,063.7 By instrument 6 Commercial paper -.9 13.7 24.4 37.4 48.1 -199.2 -133.4 -66.1 45.5 -155.7 -93.0 -28.7 7 Municipal securities and loans 2.6 71.4 96.8 68.2 35.3 102.9 107.3 70.0 190.1 70.3 181.2 152.8 8 Corporate bonds 116.3 150.5 218.7 229.9 171.1 399.5 419.5 187.9 323.5 233.8 207.0 -23.4 9 Bank loans n.e.c 70.4 106.4 108.2 82.8 101.7 -19.5 -121.0 -24.4 -164.5 -18.8 -192.8 -125.1 in Other loans and advances 28.7 59.5 82.1 46.0 95.0 32.5 132.3 59.4 -107.3 -20.6 77.2 84.0 n Mortgages 280.1 322.3 489.8 564.9 559.6 547.7 767.5 770.0 732.9 696.8 831.8 944.0 12 Home 241.7 258.3 387.7 424.6 413.7 423.4 607.8 559.3 530.6 601.1 657.4 786.2 13 Multifamily residential 9.8 7.3 23.4 35.7 35.2 37.6 40.8 56.5 56.5 29.2 44.3 35.8 14 Commercial 25.8 53.5 72.2 98.8 104.2 82.3 107.0 147.1 139.0 59.6 121.0 109.5 15 Farm 2.7 3.1 6.5 5.8 6.5 4.3 11.9 7.0 6.8 6.9 9.1 12.4 16 Consumer credit 91.3 57.5 75.0 99.5 139.0 144.5 76.0 70.6 149.9 81.7 76.4 60.1 By borrowing sector 17 Household 339.8 332.7 454.8 498.0 541.3 506.5 650.6 661.3 623.3 702.6 679.8 770.7 18 Nonfinancial business 255.3 392.5 559.9 578.4 581.4 405.7 495.1 349.6 389.2 122.6 239.5 153.2 19 Corporate 183.1 291.6 392.1 390.5 399.8 237.7 313.5 191.3 239.8 7.1 98.3 10.7 20 Nonfarm noncorporate 67.3 94.7 159.7 182.4 170.7 162.2 170.1 153.8 141.1 110.3 132.7 128.9 21 Farm 4.9 6.2 8.0 5.5 10.9 5.7 11.5 4.4 8.3 5.3 8.5 13.5 22 State and local government -6.8 56.1 80.3 52.3 27.2 96.3 102.5 56.6 157.7 62.3 168.4 139.9 23 Foreign net borrowing in United States 88.4 71.8 43.2 25.2 65.7 -8.5 -50.5 -106.7 16.0 75.3 15.0 -36.8 24 Commercial paper 11.3 3.7 7.8 16.3 31.7 -33.8 -3.8 -25.2 5.9 64.8 36.3 3.8 25 Bonds 67.0 61.4 34.9 14.1 23.9 21.4 -15.8 -83.9 29.7 -2.3 -41.0 -27.6 26 Bank loans n.e.c 9.1 8.5 6.6 .5 11.4 14.3 -31.4 4.2 -16.3 13.9 22.0 -11.7 27 Other loans and advances 1.0 -1.8 -6.0 -5.7 -1.3 -10.4 .5 -1.8 -3.3 -1.2 -2.3 -1.3 28 Total domestic plus foreign 821.7 876.2 1,085.6 1,082.6 919.6 940.6 981.9 1,170.1 1,229.6 1,002.6 1,628.8 1,292.6 Financial sectors 29 Total net borrowing by financial sectors 550.1 662.2 1,087.2 1,073.3 809.0 915.8 828.2 1,118.6 979.1 860.8 866.3 855.9 By instrument 30 Federal government-related 231.4 212.9 470.9 592.0 433.5 432.6 674.6 818.4 591.8 691.1 487.9 425.6 31 Government-sponsored enterprise securities 90.4 98.4 278.3 318.2 234.1 262.3 268.3 326.2 306.5 191.3 141.7 253.2 32 Mortgage pool securities 141.0 114.6 192.6 273.8 199.4 170.3 406.2 492.2 285.3 499.8 346.2 172.4 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 318.7 449.3 616.3 481.3 375.5 483.3 153.7 300.2 387.3 169.7 378.4 430.3 35 Open market paper 92.2 166.7 161.0 176.2 127.7 -83.8 -77.9 -72.2 -13.6 -178.3 -109.1 84.3 36 Corporate bonds 178.1 218.9 310.2 207.1 199.3 459.7 223.2 313.9 375.3 345.1 431.9 194.7 37 Bank loans n.e.c 12.6 13.3 30.1 -14.2 -.2 24.3 10.8 1.6 18.3 .2 31.9 82.2 38 Other loans and advances 27.9 35.6 90.2 107.1 42.5 90.6 -18.7 58.8 8.9 -3.9 16.7 71.9 39 Mortgages 7.9 14.9 24.8 5.1 6.2 -7.5 16.2 -1.9 -1.6 6.6 7.0 -2.7 By borrowing sector 40 Commercial banking 13.0 46.1 72.9 67.2 60.0 138.1 -10.5 39.7 44.1 24.3 13.3 111.3 41 Savings institutions 25.5 19.7 52.2 48.0 27.3 55.5 3.4 39.4 -68.6 -33.1 -12.1 -10.2 42 Credit unions .1 .1 .6 2.2 .0 -.6 .8 1.5 4.4 2.4 2.0 1.0 43 Life insurance companies 1.1 .2 .7 .7 -.7 -2.4 .1 3.5 1.4 2.4 1.2 .7 44 Government-sponsored enterprises 90.4 98.4 278.3 318.2 234.1 262.3 268.3 326.2 306.5 191.3 141.7 253.2 45 Federally related mortgage pools 141.0 114.6 192.6 273.8 199.4 170.3 406.2 492.2 285.3 499.8 346.2 172.4 46 Issuers of asset-backed securities (ABSs) 150.8 202.2 321.4 212.3 189.7 320.5 205.9 318.9 432.6 254.5 237.7 203.0 47 Finance companies 50.6 57.8 57.1 70.3 81.2 -54.0 36.8 41.8 -25.3 -31.2 80.2 106.4 48 Mortgage companies 4.1 -A.6 1.6 .2 .1 .7 .6 .8 .6 .8 .7 .7 49 Real estate investment trusts (REITs) 11.9 39.6 62.7 6.3 2.7 -6.1 10.5 -2.4 7.8 7.4 25.3 18.4 50 Brokers and dealers -2.0 8.1 7.2 -17.2 15.6 -23.7 35.6 12.6 -18.9 -15.7 17.5 15.0 51 Funding corporations 63.8 79.9 40.0 91.5 -.4 55.3 -129.6 -155.7 9.1 12.4 -16.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • March 2003 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS '—Continued Billions of dollars; quarterly data at seasonally adjusted annual rates 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999966 11999977 11999988 11999999 22000000 QI Q2 Q3 Q4 Ql Q2 Q3 All sectors 52 Total net borrowing, all sectors 1,371.7 1,538.5 2,172.8 2,155.9 1,728.6 1,856.5 1,810.1 2,288.7 2,208.7 1,863.4 2,495.1 2,148.5 53 Open market paper 102.6 184.1 193.1 229.9 207.6 -316.8 -215.1 -163.5 37.8 -269.2 -165.8 59.4 54 U.S. government securities 376.3 236.0 418.3 520.7 137.6 373.3 458.8 1,027.8 635.2 730.9 1,013.9 691.4 55 Municipal securities 2.6 71.4 96.8 68.2 35.3 102.9 107.3 70.0 <90.1 70.3 181.2 152.8 56 Corporate and foreign bonds 361.3 430.8 563.7 451.2 394.3 880.6 626.9 417.9 728.4 576.6 597.9 143.7 57 Bank loans n.e.c 92.1 128.2 145.0 69.0 112.8 19.2 -141.6 -18.6 -162.4 -4.6 -139.0 -54.7 58 Other loans and advances 57,7 93.2 166.3 147.4 136.2 112.7 114.2 116.5 -101.8 -25.7 91.5 154.6 59 Mortgages 287.9 337.2 514.6 570.0 565.9 540.2 783.7 768.0 731.3 703.4 838.8 941.2 60 Consumer credit 91.3 57.5 75.0 99.5 139.0 144.5 76.0 70.6 149.9 81.7 76.4 60.1 Funds raised through mutual funds and corporate equities 61 Total net issues 233.4 181.8 114.4 158.1 194.6 230.8 407.2 133.4 375.5 438.3 284.0 -90.2 62 Corporate equities -4.2 -83.3 -165.1 -33.1 -40.4 114.8 133.6 -27.0 119.6 51.4 183.9 -133.1 63 Nonfinancial corporations -69.5 -114.4 -267.0 -143.5 -159.7 -25.0 -70.7 -126.6 -25.0 -8.7 18.5 -139.0 64 Foreign shares purchased by U.S. residents 82.8 57.6 101.3 114.3 103.6 86.1 222.9 43.5 74.7 -5.9 80.9 -68.2 65 Financial corporations -17.6 -26.5 .6 -4.0 15.7 53.7 -18.5 56.1 69.9 65.9 84.5 74.1 66 Mutual fund shares 237.6 265.1 279.5 191.2 235.0 116.0 273.5 160.4 255.9 386.9 100.0 42.9 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables F.2 through F4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 7 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999966 11999977 11999988 11999999 22000000 Qi Q2 Q3 Q4 Ql Q2 Q3 NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 1,371.7 1,538.5 2,172.8 2,155.9 1,728.6 1,856.5 1,810.1 2,288.7 2,208.7 1,863.4 2,495.1 2,148.5 7 Domestic nonfederal nonfinancial sectors 108.2 29.8 255.2 253.1 -100.1 -115.9 -165.2 1.1 16.4 167.8 257.4 -233.8 3 Household 148.1 39.8 123.4 243.4 -103.1 -135.5 -174.4 -5.6 -33.8 115.9 207.0 -250.3 4 Nonfinancial corporate business -10.2 -12.7 -16.0 -15.6 5.0 -22.5 -24.6 -34.1 5.8 49.7 4.5 .8 5 Nonfarm noncorporate business 4.0 2.6 13.3 -3.0 -1.2 3.2 .3 3.3 2.0 3.3 3.3 -2.2 6 State and local governments -33.7 .1 134.5 28.4 -.8 38.9 33.5 37.4 42.4 -1.1 42.5 17.8 7 Federal government -7.2 5.1 13.5 5.8 7.3 4.4 9.4 3.3 7.0 4.7 8.9 7.3 8 Rest of the world 379.6 259.6 172.5 139.7 225.9 325.7 254.9 269.2 432.5 171.8 566.1 561.7 9 Financial sectors 891.2 1,244.0 1,731.6 1,757.3 1,595.4 1,642.3 1,711.1 2,015.1 1,752.8 1,519.1 1,662.7 1,813.3 10 Monetary authority 12.3 38.3 21.1 25.7 33.7 39.0 26.9 8.4 85.1 81.6 43.4 67.3 11 Commercial banking 187.5 324.3 305.6 312.2 357.9 130.4 107.8 267.9 314.6 188.9 384.3 623.5 1? U.S.-chartered banks 119.6 274.9 312.1 318.6 339.5 92.3 156.5 242.5 275.0 168.2 343.8 599.6 n Foreign banking offices in United States 63.3 40.2 -11.6 -17.0 23.9 34.5 -50.1 21.1 -7.8 2.1 33.7 21.5 14 Bank holding companies 3.9 5.4 -.9 6.2 -12.2 7.3 -2.8 -1.4 13.6 12.0 1.9 -1.6 is Banks in U.S.-affiliated areas .7 3.7 6.0 4.4 6.7 -3.6 4.2 5.7 33.9 6.6 4.9 4.0 16 Savings institutions 19.9 —4.7 36.2 67.7 56.2 46.8 55.8 -4.7 73.1 12.3 -23.5 80.7 17 Credit unions 25.5 16.8 18.9 27.5 28.0 34.9 9.6 61.1 60.5 58.3 41.1 39.9 18 Bank personal trusts and estates -7.7 -25.0 -12.8 27.8 .8 4.0 5.5 4.9 8.9 11.3 11.4 4.9 19 Life insurance companies 69.6 104.8 76.9 53.5 57.9 111.8 143.6 186.9 81.3 260.6 175.1 229.1 20 Other insurance companies 22.5 25.2 5.8 -3.0 -8.7 2.1 .1 5.1 28.5 36.7 35.4 35.3 ?l Private pension funds -4.1 47.6 -23.4 17.0 33.4 20.7 44.7 10.4 5.3 27.4 45.9 35.5 ?? State and local government retirement funds 35.8 67.1 72.1 46.9 54.6 -70.7 77.0 -74.2 -2.7 70.5 -54.5 -33.0 Money market mutual funds 88.8 87.5 244.0 182.0 143.0 326.4 210.0 339.3 108.4 -296.8 -122.3 -42.1 74 Mutual funds 48.9 80.9 127.3 48.4 21.0 93.0 169.1 102.7 139.3 243.3 42.0 164.8 ?5 Closed-end funds 5.2 -2.8 5.2 8.2 -6.3 -6.9 -4.9 24.4 14.8 20.9 2.2 11.6 26 Government-sponsored enterprises 97.1 106.3 314.0 291.3 256.4 329.2 297.2 274.3 335.3 236.7 129.0 174.8 71 Federally related mortgage pools 141.0 114.6 192.6 273.8 199.4 170.3 406.2 492.2 285.3 499.8 346.2 172.4 28 Asset-backed securities issuers (ABSs) 120.5 163.8 281.7 194.1 159.9 292.5 177.6 293.4 409.9 230.3 215.5 180.4 29 Finance companies 18.9 23.1 77.3 97.0 108.0 8.9 112.1 —43.1 -100.5 -28.2 39.6 79.1 30 Mortgage companies 8.2 -9.1 3.2 .3 .2 1.4 1.1 1.7 1.2 1.6 1.4 1.5 31 Real estate investment trusts (REITs) 4.4 20.2 -5.1 -2.6 -6.3 4.0 1.1 7.8 14.0 26.3 31.8 25.0 37 Brokers and dealers -15.7 14.9 6.8 -34.7 68.9 242.3 53.4 184.5 -110.5 -219.5 403.0 -191.4 33 Funding corporations 12.6 50.4 -15.8 124.0 37.4 -137.9 -182.9 -128.0 1.0 56.8 -84.3 139.1 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 1,371.7 1,538.5 2,172.8 2,155.9 1,728.6 1,856.5 1,810.1 2,288.7 2,208.7 1,863.4 2,495.1 2,148.5 Other financial sources 35 Official foreign exchange -6.3 .7 6.6 -8.7 -.4 -1.5 4.7 13.7 .2 --33..00 1122..99 55..66 36 Special drawing rights certificates -.5 -.5 .0 -3.0 -4.0 .0 .0 .0 .0 .0 .0 .0 37 Treasury currency .5 .5 .6 1.0 2.4 -1.1 1.1 .0 .0 .0 .0 .0 38 Foreign deposits 85.9 107.7 6.5 61.0 135.1 228.3 -175.9 41.5 17.9 -59.1 89.3 40.0 39 Net interbank transactions -51.6 -19.7 -31.8 15.0 15.1 -141.8 -25.4 -1.1 41.5 -1.2 -149.3 48.7 40 Checkable deposits and currency 15.7 41.2 47.3 151.2 -71.4 164.1 155.2 212.1 278.9 3.2 285.9 284.6 41 Small time and savings deposits 97.2 97.1 152.4 45.1 188.8 266.9 242.1 230.3 329.7 259.7 249.0 325.6 4? Large time deposits 114.0 122.5 91.8 131.1 116.2 133.9 43.0 19.5 77.8 270.0 34.9 28.1 43 Money market fund shares 145.4 155.9 287.2 249.1 233.3 578.4 370.0 386.1 379.8 -315.7 103.4 -192.6 44 Security repurchase agreements 41.4 120.9 91.3 169.8 113.2 -94.3 114.0 215.6 -139.1 -55.8 252.8 -135.9 45 Corporate equities -4.2 -83.3 -165.1 -33.1 ^10.4 114.8 133.6 -27.0 119.6 51.4 183.9 -133.1 46 Mutual fund shares 237.6 265.1 279.5 191.2 235.0 116.0 273.5 160.4 255.9 386.9 100.0 42.9 47 Trade payables 123.3 139.8 106.4 268.6 170.2 186.4 -119.6 -^17.3 -96.5 217.9 67.0 148.1 48 Security credit 52.4 111.0 103.2 104.4 146.1 -91.1 -73.9 561.3 -383.7 -190.7 -129.4 -118.2 49 Life insurance reserves 44.5 59.3 48.0 50.8 50.2 62.3 52.2 74.7 119.6 93.9 92.2 117.4 50 Pension fund reserves 148.3 201.4 217.4 181.8 209.0 295.9 209.1 180.3 150.8 134.1 145.5 263.4 51 Taxes payable 19.5 22.3 19.6 23.2 21.7 4.3 14.8 104.9 -67.0 20.4 62.4 -60.4 52 Investment in bank personal trusts -5.1 -53.0 -46.1 -8.1 56.6 27.1 31.9 31.7 35.2 26.5 26.8 20.7 53 Noncorporate proprietors' equity 5.5 -40.7 -57.8 -38.7 -10.2 -19.7 -26.4 -44.6 -1.8 -13.2 -51.8 -75.9 54 Miscellaneous 522.4 493.8 956.9 1,053.8 1,164.9 748.6 867.3 857.0 190.9 132.6 523.3 752.1 55 Total financial sources 2,957.8 3,280.5 4,286.6 4,761.4 4,460.0 4,434.1 3,901.5 5,258.0 3,518.4 2,821.3 4,394.0 3,509.7 Liabilities not identified as assets (—) 56 Treasury currency -.4 -.2 -.1 -.7 -1.2 -3.6 -.5 -1.4 .0 -2.4 -.7 -1.3 57 Foreign deposits 59.4 106.2 -8.5 42.6 55.9 182.1 -166.8 54.5 -28.7 -36.6 130.9 9.7 58 Net interbank liabilities -3.3 -19.9 3.8 .1 20.4 21.8 17.0 7.4 22.6 39.4 -9.3 12.2 59 Security repurchase agreements 2.4 63.2 57.7 35.7 118.6 -277.2 124.6 110.4 -166.8 -17.3 115.9 -349.8 60 Taxes payable 23.1 28.0 19.7 11.7 26.2 24.9 3.1 25.4 22.8 31.1 -30.3 74.6 61 Miscellaneous -177.4 -248.3 -158.9 -290.4 -398.0 -253.8 -538.9 84.5 -197.6 -396.0 -86.9 152.8 Floats not included in assets (-) 62 Federal government checkable deposits .5 -2.7 2.6 -7.4 9.0 64.9 64.7 -23.0 -91.1 190.3 185.7 28.0 63 Other checkable deposits -4.0 -3.9 -3.1 -.8 1.7 3.6 3.9 5.0 5.7 6.1 7.1 7.6 64 Trade credit -25.7 -25.5 -43.3 2.8 26.1 48.1 28.6 -49.3 37.8 3.1 -72.7 -1.6 65 Total identified to sectors as assets 3,083.5 3,383.6 4,416.7 4,967.7 4,601.5 4,623.2 4,365.7 5,044.4 3,913.8 3,003.6 4,154.3 3,577.6 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

A38 Domestic Nonfinancial Statistics • March 2003 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999977 11999988 11999999 22000000 Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 15,243.1 16,285.5 17,377.6 18,250.6 18,498.8 18,673.4 18,988.9 19,369.2 19,601.0 19,915.4 20,257.3 By sector and instrument 2 Federal government 3,804.8 3,752.2 3,681.0 3,385.1 3,408.8 3,251.4 3,320.0 3,379.5 3,430.3 3,451.4 3,540.8 3 Treasury securities 3,778.3 3,723.7 3,652.7 3,357.8 3,382.0 3,224.3 3,293.0 3,352.7 3,404.0 3,424.6 3,513.6 4 Budget agency securities and mortgages 26.5 28.5 28.3 27.3 26.8 27.0 27.0 26.8 26.3 26.8 27.2 5 Nonfederal 11,438.3 12,533.3 13,696.7 14,865.5 15,090.1 15,422.0 15,669.0 15,989.7 16,170.7 16,464.1 16,716.4 By instrument 6 Commercial paper 168.6 193.0 230.3 278.4 253.2 223.3 201.3 190.1 167.5 148.4 142.2 7 Municipal securities and loans 1,367.5 1,464.3 1,532.5 1,567.8 1,597.5 1,629.8 1,635.3 1,685.4 1,707.5 1,758.2 1,783.8 8 Corporate bonds 1,610.9 1,829.6 2,059.5 2,230.6 2,330.4 2,435.3 2,482.3 2,563.2 2,621.6 2,673.4 2,667.5 9 Bank loans n.e.c 1,040.4 1,148.6 1,231.4 1,333.1 1,320.7 1,293.6 1,285.1 1,251.4 1,237.3 1,192.1 1,159.1 10 Other loans and advances 825.1 907.2 953.5 1,059.6 1,073.6 1,103.6 1,110.1 1,088.8 1,089.2 1,105.6 1,118.2 11 Mortgages 5,154.3 5,644.1 6,243.4 6,803.0 6,929.3 7,128.2 7,324.4 7,507.6 7,670.4 7,886.0 8,125.1 12 Home 3,978.3 4,366.0 4,790.6 5,204.3 5,299.4 5,458.4 5,602.1 5,734.6 5,873.4 6,045.4 6,245.2 13 Multifamily residential 284.6 308.0 343.9 379.2 388.6 398.8 412.9 427.0 434.3 445.4 454.4 14 Commercial 801.4 873.6 1,006.5 1,110.7 1,131.3 1,158.0 1,194.8 1,229.6 1,244.5 1,274.7 1,302.1 15 Farm 90.0 96.6 102.3 108.9 110.0 113.0 114.6 116.3 118.1 120.4 123.4 16 Consumer credit 1,271.6 1,346.6 1,446.1 1,593.1 1,585.3 1,608.1 1,630.5 1,703.3 1,677.2 1,700.3 1,720.6 By borrowing sector 17 Households 5,556.9 6,011.8 6,510.0 7,070.4 7,139.3 7,315.1 7,486.9 7,680.8 7,794.2 7,979.0 8,178.3 18 Nonfinancial business 4,761.9 5,321.7 5,934.5 6,515.9 6,643.3 6,769.0 6,841.4 6,926.4 6,973.7 7,035.5 7,065.5 19 Corporate 3,382.0 3,774.1 4,199.0 4,598.9 4,686.1 4,763.7 4,798.1 4,845.1 4,865.2 4,889.0 4,885.2 20 Nonfarm noncorporate 1,224.0 1,383.7 1,566.1 1,736.8 1,777.5 1,820.1 1,857.4 1,893.6 1,921.3 1,954.6 1,985.6 21 Farm 155.9 163.9 169.4 180.2 179.7 185.2 185.9 187.7 187.1 191.8 194.7 22 State and local government 1,119.5 1,199.8 1,252.1 1,279.3 1,307.5 1,337.8 1,340.6 1,382.5 1,402.8 1,449.6 1,472.6 23 Foreign credit market debt held in United States 607.9 651.3 676.7 742.3 740.4 726.1 701.7 704.9 724.2 725.6 719.1 24 Commercial paper 65.1 72.9 89.2 120.9 112.8 110.1 106.3 106.7 123.6 130.2 134.0 25 Bonds 427.7 462.6 476.7 500.6 505.9 502.0 481.0 488.4 487.9 477.6 470.7 26 Bank loans n.e.c 52.1 58.7 59.2 70.5 74.1 66.2 67.3 63.2 66.7 72.2 69.3 27 Other loans and advances 63.0 57.1 51.6 50.3 47.5 47.7 47.0 46.6 46.0 45.5 45.0 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 15,851.0 16,936.8 18,054.3 18,993.0 19,239.2 19,399.4 19,690.6 20,074.1 20,325.2 20,641.0 20,976.3 Financial sectors 29 Total credit market debt owed by financial sectors 5,458.0 6,545.2 7,618.5 8,439.5 8,647.8 8,851.0 9,121.3 9,397.2 9,591.4 9,803.4 10,007.3 By instrument 30 Federal government-related 2,821.1 3,292.0 3,884.0 4,317.4 4,422.9 4,591.6 4,796.2 4,944.1 5,116.9 5,238.9 5,345.3 31 Government-sponsored enterprise securities . . . 995.3 1,273.6 1.591.7 1,825.8 1,888.7 1,955.8 2,037.4 2,114.0 2,161.8 2,197.2 2,260.5 32 Mortgage pool securities 1,825.8 2,018.4 2,292.2 2,491.6 2,534.2 2,635.7 2,758.8 2,830.1 2,955.1 3,041.6 3,084.8 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 2,636.9 3,253.2 3,734.6 4,122.0 4,224.8 4,259.4 4,325.2 4,453.1 4,474.5 4,564.5 4,662.0 35 Open market paper 745.7 906.7 1,082.9 1,210.7 1,180.8 1,144.5 1,110.2 1,148.8 1,090.9 1,046.9 1,049.5 36 Corporate bonds 1,568.6 1,878.7 2,085.9 2,297.2 2,414.8 2,478.7 2,562.9 2,640.2 2,730.3 2,845.8 2,901.2 37 Bank loans n.e.c 77.3 107.5 93.2 93.0 97.3 100.4 100.2 106.8 105.1 113.5 133.2 38 Other loans and advances 198.5 288.7 395.8 438.3 450.9 450.7 467.2 473.2 462.4 470.8 491.2 39 Mortgages 46.8 71.6 76.7 82.9 81.1 85.1 84.6 84.2 85.9 87.6 86.9 By borrowing sector 40 Commercial banks 140.6 188.6 230.0 266.7 273.8 274.7 281.4 296.0 295.8 310.4 331.6 41 Bank holding companies 168.6 193.5 219.3 242.5 266.5 269.0 272.7 266.1 269.0 264.2 271.4 42 Savings institutions 160.3 212.4 260.4 287.7 295.1 294.4 305.6 295.1 280.5 275.3 274.5 43 Credit unions .6 1.1 3.4 3.4 3.2 3.5 3.8 4.9 5.5 6.0 6.3 44 Life insurance companies 1.8 2.5 3.2 2.5 1.9 1.9 2.8 3.1 3.7 4.0 4.2 45 Government-sponsored enterprises 995.3 1,273.6 1,591.7 1,825.8 1,888.7 1,955.8 2,037.4 2,114.0 2,161.8 2,197.2 2,260.5 46 Federally related mortgage pools 1,825.8 2,018.4 2,292.2 2,491.6 2,534.2 2,635.7 2,758.8 2,830.1 2,955.1 3,041.6 3,084.8 47 Issuers of asset-backed securities (ABSs) 1,076.6 1,398.0 1,610.3 1,812.0 1,884.5 1,937.3 2,020.3 2,131.4 2,187.3 2,248.2 2,302.3 48 Brokers and dealers 35.3 42.5 25.3 40.9 35.0 43.9 47.1 42.3 38.4 42.8 46.6 49 Finance companies 568.3 625.5 695.7 776.9 756.2 769.0 771.2 776.7 760.8 784.9 802.9 50 Mortgage companies 16.0 17.7 17.8 17.9 18.1 18.2 18.5 18.6 18.8 19.0 19.2 51 Real estate investment trusts (REITs) 96.1 158.8 165.1 167.8 166.2 168.9 168.3 170.2 172.1 178.4 183.0 52 Funding corporations 372.6 412.6 504.0 503.7 524.3 478.6 433.6 448.4 442.6 431.3 420.1 All sectors 53 Total credit market debt, domestic and foreign . 21,309.1 23,482.0 25,672.8 27,432.4 27,886.9 28,250.4 28,811.9 29,471.4 29,916.6 30,444.4 30,983.6 54 Open market paper 979.4 1,172.6 1,402.4 1,610.0 1,546.8 1,477.9 1,417.8 1,445.6 1,382.0 1,325.5 1,325.7 55 U.S. government securities 6,625.9 7,044.2 7,564.9 7,702.5 7,831.7 7,842.9 8,116.2 8,323.6 8,547.2 8,690.2 8,886.1 56 Municipal securities 1,367.5 1,464.3 1,532.5 1,567.8 1,597.5 1,629.8 1,635.3 1,685.4 1,707.5 1,758.2 1,783.8 57 Corporate and foreign bonds 3,607.2 4,170.9 4,622.0 5,028.3 5,251.1 5,416.0 5,526.2 5,691.8 5,839.7 5,996.7 6,039.4 58 Bank loans n.e.c 1,169.8 1,314.8 1,383.8 1,496.6 1,492.1 1,460.2 1,452.6 1,421.4 1,409.1 1,377.8 1,361.6 59 Other loans and advances 1,086.5 1,253.0 1,400.9 1,548.2 1,572.0 1,602.0 1,624.4 1,608.6 1,597.6 1,622.0 1,654.4 60 Mortgages 5,201.1 5,715.7 6,320.1 6,886.0 7,010.3 7,213.3 7,409.0 7,591.8 7,756.2 7,973.6 8,212.0 61 Consumer credit 1,271.6 1,346.6 1,446.1 1,593.1 1,585.3 1,608.1 1,630.5 1,703.3 1,677.2 1,700.3 1,720.6 1. Data in this table 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 9 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999977 11999988 11999999 22000000 Ql Q2 Q3 Q4 Ql Q2 Q3 CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 21,309.1 23,482.0 25,672.8 27,432.4 27,886.9 28,250.4 28,811.9 29,471.4 29,916.6 30,444.4 30,983.6 7 Domestic nonfederal nonfinancial sectors 3,110.2 3,357.4 3,671.5 3,542.8 3,488.1 3,426.6 3,409.2 3,463.3 3,476.0 3,519.6 3,447.7 3 Household 2,193.5 2,308.9 2,613.2 2,481.5 2,440.5 2,370.4 2,354.6 2,380.6 2,401.4 2,425.1 2,351.3 4 Nonfinancial corporate business 257.5 241.5 226.0 231.0 206.2 203.0 195.0 212.2 202.7 207.8 209.8 5 Nonfarm noncorporate business 54.2 67.5 64.4 63.2 64.0 64.1 64.9 65.4 66.2 67.1 66.5 6 State and local governments 605.0 739.4 767.8 767.0 777.4 789.1 794.6 805.1 805.6 819.7 820.1 7 Federal government 205.4 219.0 258.0 265.3 266.4 268.7 269.6 271.3 272.5 274.7 276.5 8 Rest of the world 2,097.7 2,278.2 2,354.6 2,621.1 2,706.0 2,766.8 2,837.5 2,954.4 3,000.6 3,139.1 3,283.3 9 Financial sectors 15,895.8 17,627.4 19,388.8 21,003.3 21,426.4 21,788.2 22,295.7 22,782.4 23,167.5 23,511.0 23,976.0 10 Monetary authority 431.4 452.5 478.1 511.8 523.9 535.1 534.1 551.7 575.4 590.7 604.2 11 Commercial banking 4,031.9 4,336.1 4,648.3 5,006.3 5,013.8 5,041.5 5,100.6 5,210.5 5,231.3 5,328.3 5,476.1 1? U.S.-chartered banks 3,450.7 3,761.4 4,080.0 4,419.5 4,420.8 4,463.5 4,513.5 4,610.1 4,629.3 4,719.7 4,858.3 N Foreign banking offices in United States 516.1 504.5 487.4 511.3 516.6 501.3 509.3 510.7 507.7 512.6 521.2 14 Bank holding companies 27.4 26.5 32.7 20.5 22.3 21.6 21.3 24.7 27.7 28.1 27.7 IS Banks in U.S.-affiliated areas 37.8 43.8 48.3 55.0 54.1 55.1 56.5 65.0 66.6 67.9 68.8 16 Savings institutions 928.5 964.7 1,032.4 1,088.6 1,100.5 1,116.1 1,118.1 1,131.4 1,134.7 1,130.9 1,153.9 17 Credit unions 305.3 324.2 351.7 379.7 387.0 392.4 408.4 421.2 434.3 447.7 458.5 18 Bank personal trusts and estates 207.0 194.1 222.0 222.8 223.8 225.2 226.4 228.6 231.4 234.3 235.5 19 Life insurance companies 1,751.1 1,828.0 1,886.0 1,943.9 1,969.6 2,004.8 2,054.8 2,074.8 2,136.9 2,180.1 2,241.0 70 Other insurance companies 515.3 521.1 518.2 509.4 510.0 510.0 511.3 518.4 527.6 536.4 545.3 71 Private pension funds 674.6 651.2 668.2 701.6 706.8 718.0 720.6 721.9 728.7 740.2 749.1 7? State and local government retirement funds 632.5 704.6 751.4 806.0 788.3 807.6 789.0 788.4 806.0 792.4 784.1 73 Money market mutual funds 721.9 965.9 1,147.8 1,290.9 1,404.2 1,414.3 1,494.9 1,536.9 1,496.4 1,419.3 1,405.7 74 Mutual funds 901.1 1,028.4 1,076.8 1,097.8 1,113.9 1,160.3 1,188.2 1,223.8 1,276.8 1,291.6 1,335.0 75 Closed-end funds 93.3 98.5 106.8 100.5 98.7 97.5 103.6 107.3 112.5 113.1 116.0 76 Government-sponsored enterprises 938.3 1,252.3 1,543.5 1,807.1 1,877.7 1,956.1 2,026.1 2,114.3 2,163.8 2,199.9 2,245.5 77 Federally related mortgage pools 1,825.8 2,018.4 2,292.2 2,491.6 2,534.2 2,635.7 2,758.8 2,830.1 2,955.1 3,041.6 3,084.8 78 Asset-backed securities (ABSs) issuers 937.7 1,219.4 1,413.6 1,585.4 1,650.9 1,696.6 1,773.3 1,878.7 1,928.5 1,983.9 2,032.4 79 Finance companies 568.2 645.5 742.5 850.5 848.0 878.5 859.5 844.8 832.4 845.6 856.9 30 Mortgage companies 32.1 35.3 35.6 35.9 36.2 36.5 36.9 37.2 37.6 38.0 38.3 31 Real estate investment trusts (REITs) 50.6 45.5 42.9 36.6 37.6 37.9 39.8 43.3 49.9 57.9 64.1 37 Brokers and dealers 182.6 189.4 154.7 223.6 317.7 288.4 366.4 316.0 299.6 352.7 339.6 33 Funding corporations 166.7 152.3 276.0 313.4 283.7 235.7 184.9 203.0 208.6 186.6 206.3 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 21,309.1 23,482.0 25,672.8 27,432.4 27,886.9 28,250.4 28,811.9 29,471.4 29,916.6 30,444.4 30,983.6 Other liabilities 35 Official foreign exchange 48.9 60.1 50.1 46.1 42.8 43.4 49.0 46.8 45.7 52.0 53.1 36 Special drawing rights certificates 9.2 9.2 6.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 37 Treasury currency 19.3 19.9 20.9 23.2 22.9 23.2 23.2 23.2 23.2 23.2 23.2 38 Foreign deposits 618.5 642.3 703.6 824.5 881.6 837.6 848.0 908.9 894.1 916.5 926.5 39 Net interbank liabilities 219.4 189.4 202.4 221.2 156.7 158.7 166.5 187.7 157.6 130.9 146.8 40 Checkable deposits and currency 1,286.1 1,333.3 1,484.5 1,413.1 1,404.9 1,448.4 1,485.1 1,601.4 1,567.2 1,640.0 1,698.0 41 Small time and savings deposits 2,474.2 2,626.5 2,671.6 2,860.4 2,962.7 2,992.4 3,047.6 3,127.6 3,229.6 3,257.6 3,338.5 47 Large time deposits 713.4 805.3 936.4 1,052.6 1,077.0 1,087.3 1,094.2 1,121.1 1,178.9 1,188.7 1,197.7 43 Money market fund shares 1,042.5 1,329.7 1,578.8 1,812.1 1,994.7 2,014.7 2,115.4 2,240.7 2,202.6 2,150.3 2,105.9 44 Security repurchase agreements 822.4 913.8 1,083.6 1,196.8 1,187.4 1,206.6 1,253.9 1,233.6 1,220.4 1,273.7 1,233.1 45 Mutual fund shares 2,989.4 3,613.1 4,538.5 4,434.6 3,990.4 4,259.5 3,753.1 4,135.5 4,247.0 3,926.6 3,418.9 46 Security credit 469.1 572.2 676.6 822.7 799.3 781.5 919.9 825.9 778.0 746.2 714.7 47 Life insurance reserves 665.0 718.3 783.9 819.1 823.0 840.3 844.0 880.0 904.2 915.2 928.3 48 Pension fund reserves 7,323.4 8,208.4 9,065.3 9,069.0 8,584.0 8,862.6 8,281.0 8,694.0 8,822.2 8,328.1 7,737.4 49 Trade payables 1,967.4 2,073.8 2,342.4 2,512.6 2,536.4 2,498.4 2,502.4 2,493.4 2,526.0 2,533.2 2,587.8 50 Taxes payable 151.1 170.7 193.9 215.6 223.3 222.5 251.4 229.9 241.3 252.9 240.3 51 Investment in bank personal trusts 942.5 1,001.0 1,130.4 1,095.8 1,007.9 1,063.3 955.4 1,025.3 1,035.2 970.1 888.2 52 Miscellaneous 6,733.1 7,633.7 8,500.3 9,427.9 9,862.5 10,140.3 10,545.9 10,091.1 10,104.6 10,369.1 10,882.0 53 Total liabilities 49,803.8 55,402.6 61,642.2 65,281.9 65,446.6 66,733.3 66,950.1 68,339.8 69,096.5 69,120.9 69,106.2 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 21.1 21.6 21.4 21.6 21.4 21.5 22.0 21.8 21.9 22.7 22.8 55 Corporate equities 13,301.7 15,577.3 19,581.2 17,611.9 15,347.5 16,281.6 13,673.4 15,245.5 15,264.1 13,363.0 10,960.1 56 Household equity in noncorporate business 4,052.7 4,285.7 4,544.3 4,765.8 4,807.7 4,823.5 4,865.8 4,824.9 4,845.0 4,906.5 4,947.4 Liabilities not identified as assets (-) 57 Treasury currency -6.3 -6.4 -7.1 -8.5 -9.4 -9.5 -9.8 -9.8 -10.4 -10.6 -10.9 58 Foreign deposits 535.0 542.8 585.7 627.4 673.0 631.3 644.9 694.1 685.0 717.7 720.1 59 Net interbank transactions -32.2 -26.5 -28.5 -4.3 1.1 3.8 4.5 11.1 21.8 18.3 16.2 60 Security repurchase agreements 172.9 230.6 266.4 385.0 341.4 376.2 396.6 346.3 355.6 390.2 292.4 61 Taxes payable 104.2 121.2 121.9 127.7 111.9 131.7 148.6 100.0 92.3 150.7 113.5 62 Miscellaneous -1,376.7 -1,956.2 -2,436.0 -2,968.9 -2,919.9 -2,862.5 -2,692.6 -3,203.2 -3,178.9 -3,223.2 -3,030.3 Floats not included in assets (-) 63 Federal government checkable deposits -8.1 -3.9 -9.8 -2.3 -2.8 -4.8 -5.9 -14.1 32.4 61.3 72.2 64 Other checkable deposits 26.2 23.1 22.3 24.0 21.1 25.5 19.2 28.6 26.3 31.4 25.8 65 Trade credit 128.1 84.8 91.7 117.7 84.6 63.8 48.7 134.0 87.8 40.3 39.2 66 Totals identified to sectors as assets 67,636.1 76,277.7 87,182.4 89,383.3 87,322.3 89,504.4 86,957.2 90,345.2 91,115.7 89,237.0 86,798.1 1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. 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

A40 Domestic Nonfinancial Statistics • March 2003 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 2002 2002 2002 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 Q3 Q4 Output (1997=100) Capacity (percent of 1997 output) Capacity utilization rate (percent)2 1 Total industry 109.3 110.5 111.4 110.7 145.4 145.9 146.2 146.6 75.1 75.7 76.2 75.5 2 Manufacturing 110.5 111.4 112.3 111.6 150.5 150.9 151.1 151.4 73.4 73.9 74.3 73.8 3 Manufacturing (NAICS) 110.8 111.8 112.6 111.9 151.8 152.2 152.5 152.8 73.0 73.5 73.8 73.2 4 Durable manufacturing 119.7 121.2 122.3 121.8 171.5 172.5 173.4 174.2 69.8 70.2 70.5 69.9 5 Primary metal 84.9 85.6 85.9 88.0 112.7 112.0 111.4 110.8 75.3 76.4 77.1 79.4 6 Fabricated metal products 98.0 99.1 99.5 99.4 139.0 139.3 139.4 139.6 70.5 71.2 71.3 71.2 7 Machinery 87.5 88.6 88.7 87.0 129.9 129.9 129.9 129.9 67.3 68.2 68.3 67.0 8 Computer and electronic products 216.2 219.6 222.6 223.6 344.0 350.1 355.4 360.3 62.9 62.7 62.6 62.1 9 Electrical equipment, appliances, and components 97.6 98.3 97.7 98.2 129.6 129.1 128.6 128.2 75.3 76.1 75.9 76.6 10 Motor vehicles and parts 112.8 116.8 121.7 119.8 144.9 145.9 147.1 148.4 77.9 80.0 82.7 80.7 11 Aerospace and miscellaneous transportation equipment 90.8 87.6 85.9 85.7 145.7 145.5 145.3 145.1 62.3 60.2 59.1 59.1 12 Nondurable manufacturing 99.1 99.7 100.1 99.2 127.9 127.7 127.5 127.3 77.5 78.1 78.5 77.9 13 Food, beverage, and tobacco products .... 100.8 100.8 100.1 99.2 125.9 125.8 125.7 125.6 80.1 80.2 79.7 79.0 14 Textile and product mills 82.1 83.3 82.9 82.2 112.8 112.3 111.7 111.1 72.8 74.2 74.2 74.0 15 Paper 91.7 94.2 95.7 95.4 114.5 114.2 114.0 113.8 80.1 82.5 84.0 83.9 16 Petroleum and coal products 103.3 103.3 102.3 102.0 114.7 114.9 115.2 115.7 90.1 89.9 88.7 88.2 17 Chemical 104.9 105.3 106.4 105.1 141.0 141.2 141.2 141.3 74.4 74.6 75.3 74.3 18 Plastics and rubber products 103.6 106.6 107.3 105.6 134.8 134.2 133.6 132.9 76.9 79.4 80.4 79.4 19 Other manufacturing (non-NAICS) 105.2 104.6 106.0 106.5 131.1 130.3 129.5 128.7 80.3 80.3 81.8 82.7 20 Mining 94.0 93.4 93.5 93.3 110.3 110.2 110.1 110.2 85.2 84.8 84.9 84.7 21 Electric and gas utilities 105.6 110.2 112.5 110.9 123.5 125.5 127.6 129.7 85.5 87.8 88.2 85.5 MEMOS 22 Computers, communications equipment, and semiconductors 282.2 290.3 295.5 298.6 456.8 466.7 475.3 483.3 61.8 62.2 62.2 61.8 23 Total excluding computers, communications equipment, and semiconductors 99.6 100.6 101.3 100.6 130.3 130.4 130.5 130.6 76.5 77.1 77.6 77.0 24 Manufacturing excluding computers, communications equipment, and semiconductors 99.2 99.9 100.5 99.9 132.7 132.6 132.6 132.6 74.8 75.3 75.8 75.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A41 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1—Continued Seasonally adjusted 1973 1975 Previous cycle3 Latest cycle4 2001 2002 Series High Low High Low High Low Dec. July Aug. Sept/ Oct.' Nov.' Dec." Capacity utilization rate (percent)2 1 Total industry 88.8 74.0 86.6 70.8 85.1 78.6 74.6 76.4 76.1 76.0 75.6 75.6 75.4 2 Manufacturing 88.0 71.6 86.3 68.6 85.5 77.2 73.0 74.3 74.3 74.1 73.8 73.8 73.6 3 Manufacturing (NAICS) 88.1 71.4 86.3 67.9 85.5 77.0 72.5 74.0 73.9 73.6 73.3 73.3 73.1 4 Durable manufacturing 88.9 69.6 87.0 63.1 84.5 73.4 69.6 70.6 70.8 70.2 69.9 70.2 69.7 5 Primary metal 100.9 68.9 91.3 47.2 95.3 75.2 69.0 76.2 78.7 76.5 79.1 78.9 80.2 6 Fabricated metal products .... 91.8 69.6 83.1 61.7 80.1 71.0 70.3 71.5 71.2 71.2 71.7 71.1 70.8 7 Machinery 94.2 74.2 92.8 58.3 84.7 72.9 66.1 68.0 68.8 67.9 66.9 66.9 67.2 8 Computer and electronic products 87.0 66.9 89.8 77.3 81.5 76.4 63.6 62.6 62.7 62.5 62.2 62.0 62.0 9 Electrical equipment, appliances, and components 99.3 68.5 91.9 64.4 87.5 75.0 75.7 76.4 76.2 75.1 75.8 77.0 76.9 10 Motor vehicles and parts 95.3 55.3 96.2 45.2 90.0 56.6 77.7 83.2 82.9 82.1 80.0 83.1 79.0 11 Aerospace and miscellaneous transportation equipment . 75.0 66.3 84.6 69.8 88.9 81.9 64.0 59.0 59.4 59.0 59.2 58.8 59.2 12 Nondurable manufacturing 87.5 72.5 85.7 75.6 86.9 81.8 76.5 78.7 78.4 78.4 78.0 77.8 77.9 13 Food, beverage, and tobacco products 85.9 78.0 84.3 80.2 85.5 81.3 79.1 80.0 79.6 79.5 79.6 78.8 78.6 14 Textile and product mills .... 89.8 62.8 90.1 72.3 91.1 77.1 71.5 75.0 73.9 73.8 73.5 74.1 74.3 15 Paper 97.4 74.7 95.6 81.3 94.0 85.4 79.7 83.5 84.0 84.4 83.9 83.7 84.1 16 Petroleum and coal products .. 93.2 81.0 92.3 71.1 88.9 82.5 87.6 89.5 89.2 87.6 86.3 88.4 89.8 17 Chemical 85.0 68.9 83.0 67.9 85.6 80.8 73.6 75.7 75.2 75.1 74.4 74.2 74.5 18 Plastics and rubber products .. 96.3 61.6 90.5 70.5 91.2 77.1 75.8 80.3 80.3 80.4 79.9 79.2 79.0 19 Other manufacturing (non-NAICS). 85.7 75.7 88.1 85.7 90.2 79.1 81.4 80.9 81.7 82.8 82.7 82.3 83.2 20 Mining 93.6 87.6 94.2 78.6 85.6 83.3 86.1 85.7 85.3 83.8 83.9 84.4 85.8 21 Electric and gas utilities 96.2 82.7 87.9 77.2 92.6 84.2 83.5 89.6 86.5 88.4 86.3 85.9 84.4 MEMOS 22 Computers, communications equipment, and semiconductors . 84.5 63.1 89.9 75.6 80.4 74.6 62.5 62.1 62.4 62.0 61.9 61.7 6611..77 23 Total excluding computers, communications equipment, and semiconductors 89.1 74.3 86.6 70.5 85.5 78.8 75.8 77.9 77.6 77.5 77.0 77.1 7766..99 24 Manufacturing excluding computers communications equipment, and semiconductors . 88.3 71.9 86.3 68.1 86.1 77.3 74.2 75.9 75.9 75.7 75.4 75.4 75.2 Note. The statistics in the G. 17 release cover output, capacity, and capacity utilization in the data are also available on the Board's web site http://www.federalreserve.gov/releases/gl7. industrial sector, which the Federal Reserve defines are manufacturing, mining, and electric The latest historical revision of the industrial production index and the capacity utilization and gas utilities. Manufacturing consists of those industries included in the North American rates was released in December 2002. The recent annual revision will be described in an Industry Classification System, or NAICS, manufacturing plus those industries—logging and upcoming issue of the Bulletin. newspaper, periodical, book and directory publishing—that have traditionally been consid- 2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally ered manufacturing and included in the industrial sector. adjusted index of industrial production to the corresponding index of capacity. 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. The 3. Monthly highs, 1978-80; monthly lows, 1982. 4. Monthly highs, 1988-89; monthly lows, 1990-91. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • March 2003 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted _ up 1 p p 9 r o o 9 r - - 2 2 a 0 v 0 g 2 . 2001 2002 tion Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept.' Oct.' Nov.' Dec.P Index (1997= 100) MAJOR MARKETS 1 Total IP 100.0 110.5 108.3 109.0 109.2 109.6 110.1 110.4 110.8 111.6 111.3 111.2 110.7 110.8 110.6 Market groups 2 Final products and nonindustrial supplies 60.8 109.4 108.0 108.3 108.5 108.9 109.1 109.3 109.6 110.1 109.8 109.8 109.2 109.3 108.9 3 Consumer goods 29.0 107.6 105.7 106.2 106.7 107.4 107.5 107.3 107.8 108.5 107.8 107.9 107.1 107.7 107.1 4 Durable 5.8 117.3 114.0 114.2 115.3 115.7 116.5 117.2 118.6 120.0 119.3 118.7 116.9 120.7 118.1 Automotive products 2.5 125.4 120.5 120.2 121.3 121.7 123.8 124.2 127.4 130.6 130.6 129.3 125.9 132.2 126.5 6 Home electronics 0.4 142.3 149.9 154.3 153.1 150.2 139.9 143.8 135.3 137.0 135.4 142.6 138.5 140.9 141.4 7 Appliances, furniture, carpeting 1.3 106.8 104.9 105.7 107.9 108.1 108.2 109.1 107.5 106.9 104.5 104.6 104.8 106.7 107.7 8 Miscellaneous goods 1.6 98.5 96.4 96.4 97.1 98.2 98.1 98.9 100.2 99.2 98.3 97.8 98.3 98.3 99.0 y Nondurable 23.2 104.2 102.7 103.3 103.6 104.4 104.4 103.9 104.1 104.6 103.8 104.2 103.7 103.4 103.3 10 Non-energy 20.2 102.7 102.7 103.0 103.0 103.5 102.8 102.2 102.8 102.8 102.4 102.6 102.3 101.7 101.6 n Foods and tobacco 10.4 99.7 98.9 99.6 100.2 100.8 100.4 100.0 100.2 99.8 99.2 99.1 99.3 98.3 97.9 12 Clothing 2.4 72.4 73.4 73.0 72.7 74.4 72.7 72.9 72.9 73.2 71.3 72.1 70.2 71.0 70.3 13 Chemical products 4.6 119.3 120.5 120.7 119.9 120.1 118.5 116.8 118.3 119.5 119.0 119.5 118.4 118.5 118.6 14 Paper products 2.9 108.1 109.0 107.8 106.6 107.2 106.0 106.2 107.2 107.1 108.4 109.8 109.8 109.0 109.6 15 Energy 3.0 111.7 102.8 105.0 107.1 109.4 112.8 112.5 110.9 114.0 111.6 112.8 110.7 112.2 112.3 16 Business equipment 13.2 107.4 108.6 108.8 108.1 107.8 107.7 108.0 108.0 107.3 108.1 106.9 106.2 106.0 105.5 IV Transit 2.5 81.2 89.5 87.5 86.9 84.8 83.2 82.0 81.1 80.2 81.1 79.7 78.1 11A 74.6 18 Information processing 5.4 153.7 155.0 155.3 154.3 155.5 154.7 154.9 154.9 153.5 153.7 152.1 152.9 152.1 152.3 19 Industrial and other 5.3 91.7 90.0 91.1 90.5 90.3 91.1 91.9 92.2 92.0 92.9 92.0 91.3 91.5 91.7 20 Defense and space equipment 3.4 101.3 100.3 99.6 99.7 99.8 99.9 100.6 101.2 101.2 101.9 102.0 102.6 102.1 103.3 21 Construction supplies 5.4 104.0 102.5 102.6 103.1 104.0 104.0 104.6 104.5 104.4 104.8 104.5 104.2 103.5 102.9 22 Business supplies 9.1 122.0 119.0 119.2 119.4 119.7 120.7 121.5 121.8 123.2 122.6 123.6 123.2 122.8 122.9 23 Materials 39.2 112.3 108.8 110.0 110.2 110.7 111.6 112.2 112.6 113.8 113.6 113.4 112.9 113.0 113.2 24 Non-energy 29.6 115.9 112.1 113.4 113.7 114.0 115.0 115.8 116.4 117.2 117.4 117.2 116.9 117.0 117.0 25 Durable 20.7 128.2 123.5 124.9 125.6 125.8 127.1 127.8 128.6 129.4 130.0 129.5 129.6 130.1 129.6 26 Consumer parts 4.0 110.9 106.2 107.6 109.2 109.2 110.8 110.1 110.4 113.4 112.3 112.4 111.9 114.6 111.8 21 Equipment parts 7.5 182.8 176.7 178.1 177.6 177.6 179.8 182.3 183.6 184.2 186.3 185.7 185.3 185.6 186.6 28 Other 9.2 97.2 93.9 95.1 95.9 96.0 96.7 97.2 97.9 97.7 98.3 97.7 98.2 97.7 97.8 29 Nondurable 8.9 97.1 94.3 95.5 95.4 95.9 96.5 97.3 97.6 98.4 98.2 98.3 97.5 97.1 97.6 30 Textile 1.1 77.9 75.6 76.2 76.3 77.7 77.8 78.2 78.5 79.6 77.8 78.4 78.1 77.7 77.9 31 Paper 1.8 94.8 92.1 93.4 92.6 91.9 93.3 94.8 93.6 95.8 96.1 96.7 96.9 96.2 96.8 32 Chemical 4.0 99.4 94.6 97.0 97.2 98.8 99.6 100.4 100.6 101.3 100.7 100.2 99.0 98.5 99.3 33 Energy 9.6 98.6 96.2 97.1 97.1 97.9 98.6 98.5 98.6 101.0 99.3 99.1 98.2 98.6 99.1 SPECIAL AGGREGATES 34 Total excluding computers, communication equipment, and semiconductors 94.7 100.6 98.7 99.3 99.6 99.9 100.3 100.5 100.8 101.5 101.2 101.2 100.6 100.7 100.5 35 Total excluding motor vehicles and parts 94.3 110.1 108.1 108.8 108.9 109.4 109.7 110.1 110.3 110.8 110.5 110.5 110.1 109.9 110.1 Gross value (billions of 1996 dollars, annual rates) 36 Final products and nonindustrial supplies 100.0 2,793.6 2,756.7 2,764.9 2,774.9 2,787.1 2,796.7 2,802.2 2,809.9 2,828.0 2,821.5 2,817.8 2,794.7 2,812.1 2,794.0 37 Final products 77.2 2,018.6 1,993.4 2,001.1 2,006.4 2,013.9 2,020.7 2,021.4 2,028.7 2,042.2 2,038.1 2,031.4 2.011.5 2,031.1 2,016.3 38 Consumer goods 51.9 1,384.6 1,358.7 1,365.3 1,371.5 1,380.1 1,386.3 1,384.8 1,390.2 1,404.1 1,395.9 1,394.3 1,379.1 1,398.4 1,387.4 39 Equipment total 25.3 624.9 628.6 629.2 627.5 625.4 625.3 628.1 629.9 627.9 633.6 627.7 623.6 621.8 618.4 40 Nonindustrial supplies 22.8 774.9 763.2 763.7 768.5 773.2 776.1 780.9 781.3 785.9 783.5 786.6 783.7 781.0 777.8 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A43 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued Monthly data seasonally adjusted 1992 2001 2002 Group N c A od IC e2 S p p r o o r - - 2 a 0 v 0 g 2 . tion Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept.r Oct/ Nov.r Dec." Index(1997= 100) INDUSTRY GROUPS 41 Manufacturing 85.4 111.5 109.6 110.3 110.4 110.7 111.0 111.4 111.9 112.3 112.4 112.1 111.6 111.7 111.5 42 Manufacturing (NAICS) 79.1 111.8 109.8 110.6 110.8 111.0 111.4 111.9 112.2 112.7 112.8 112.4 111.9 112.1 111.8 43 Durable manufacturing 43.0 121.2 118.9 119.6 119.8 119.8 120.5 121.2 121.8 122.2 122.7 122.0 121.6 122.3 121.6 44 Wood products 321 1.5 100.5 99.9 100.6 99.9 101.7 100.8 101.0 102.2 101.9 102.5 100.7 99.4 97.7 96.5 45 Nonmetallic mineral products 327 2.0 107.9 105.7 106.0 106.4 106.6 107.4 107.7 106.6 107.7 108.5 109.8 109.1 109.4 108.6 46 Primary metal 331 2.7 86.0 78.2 84.3 85.3 85.1 84.6 85.9 86.2 85.0 87.6 85.0 87.9 87.4 88.7 47 Fabricated metal products . 332 5.3 99.1 97.6 97.7 98.2 98.2 98.4 99.7 99.3 99.7 99.3 99.4 100.0 99.3 98.9 48 Machinery 333 5.7 88.0 85.9 87.2 87.3 88.0 88.3 88.5 88.9 88.4 89.4 88.2 86.8 86.9 87.3 49 Computer and electronic products 334 8.8 220.2 215.8 216.3 215.5 216.9 217.9 220.0 220.8 221.5 223.0 223.2 223.3 223.3 224.3 50 Electrical equipment, appliances, and components 335 2.5 98.0 98.3 98.4 97.7 96.8 97.2 98.9 98.7 98.4 98.0 96.5 97.3 98.7 98.5 51 Motor vehicles and parts . . 3361-3 5.7 117.2 112.0 111.8 113.4 113.3 115.9 115.8 118.6 122.1 122.0 121.1 118.3 123.4 117.6 52 Aerospace and miscellaneous transportation equipment 3364-9 4.5 87.7 93.4 92.1 90.9 89.5 88.3 87.6 86.9 85.7 86.3 85.7 86.0 85.4 85.9 53 Furniture and related products 337 1.5 101.7 101.3 101.9 102.6 101.7 101.8 101.5 101.6 101.4 100.5 101.4 100.9 101.9 101.9 54 Miscellaneous 339 2.8 109.6 107.7 108.2 107.8 107.4 109.6 110.2 110.7 110.6 110.2 109.1 109.5 108.7 110.1 55 Nondurable manufacturing . . 36.1 99.6 98.0 98.8 99.0 99.5 99.5 99.7 99.9 100.4 100.0 100.0 99.4 99.1 99.2 56 Food, beverage, and tobacco products .... 311,2 10.9 100.3 99.7 100.2 100.8 101.4 101.0 100.6 100.9 100.5 100.0 99.9 100.0 99.0 98.7 57 Textile and product mills . . 313,4 1.8 82.7 80.9 81.7 81.8 83.0 82.9 83.6 83.4 83.9 82.5 82.3 81.9 82.3 82.4 58 AAppppaarreell aanndd lleeaatthheerr 315,6 2.2 72.2 73.2 72.9 72.5 74.1 72.5 72.7 72.6 73.0 71.2 71.8 70.1 70.9 70.3 59 PPaappeerr 322 3.3 94.3 91.5 91.9 91.8 91.6 93.0 95.0 94.7 95.2 95.8 96.1 95.5 95.2 95.6 60 Printing and support 323 2.8 98.0 95.6 97.8 96.9 95.2 95.5 96.2 95.5 98.4 98.6 99.9 100.1 99.7 100.0 61 Petroleum and coal products 324 1.4 102.7 100.3 102.4 104.0 103.5 104.2 103.4 102.4 103.0 102.7 101.0 99.7 102.2 104.0 62 Chemical 325 10.3 105.4 103.7 104.9 104.6 105.2 105.1 105.0 105.7 106.9 106.2 106.1 105.1 104.8 105.3 63 Plastics and rubber products 326 3.4 106.0 102.5 102.5 103.3 105.1 105.7 106.7 107.4 107.5 107.3 107.2 106.4 105.4 104.9 64 Other manufacturing (non-NAICS) 1133,5111 4.3 105.7 107.1 105.8 104.9 105.0 104.1 104.2 105.5 105.0 105.8 107.1 106.7 106.0 106.9 65 Mining 21 6.6 93.7 95.1 94.4 94.2 93.6 93.4 93.4 93.5 94.4 93.9 92.2 92.4 93.0 94.6 66 Utilities 2211,2 10.1 110.0 102.2 103.7 105.2 108.0 110.6 110.1 110.1 113.7 110.4 113.3 111.3 111.3 110.0 67 Electric 2211 8.6 111.6 104.5 106.1 107.1 110.1 112.5 111.2 111.4 115.7 112.2 115.8 113.1 112.8 111.8 68 Natural gas 2212 1.6 97.0 89.9 90.9 95.0 96.9 100.2 104.4 103.2 102.7 100.8 99.9 101.6 103.6 100.2 69 Manufacturing excluding computers, communications equipment, and semiconductors 78.0 99.9 98.5 99.1 99.2 99.4 99.5 99.9 100.2 100.6 100.6 100.4 99.9 100.0 99.7 70 Manufacturing excluding motor vehicles and parts 77.6 111.0 109.4 110.2 110.2 110.5 110.5 111.0 111.3 111.4 111.5 111.3 111.1 110.7 111.0 Note. The statistics in the G. 17 release cover output, capacity, and capacity utilization in the 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data industrial sector, which the Federal Reserve defines are manufacturing, mining, and electric are also available on the Board's web site http://www.federalreserve.gov/releases/gl7. The and gas utilities. Manufacturing consists of those industries included in the North American latest historical revision of the industrial production index and the capacity utilization rates Industry Classification System, or NAICS, manufacturing plus those industries—logging and was released in December 2002. The recent annual revision will be described in an upcoming newspaper, periodical, book and directory publishing—that have traditionally been consid- issue of the Bulletin. ered manufacturing and included in the industrial sector. 2. North American Industry Classification System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 International Statistics • March 2003 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 2001 2002 IItteemm ccrreeddiittss oorr ddeebbiittss 11999999 22000000 22000011 Q3 Q4 Ql Q2 Q3P 1 Balance on current account -292,856 -410,341 -393,371 -91,331 -95,086 -112,454 -127,611 -127,041 2 Balance on goods and services -262,237 -378,681 -358,290 -79,778 -88,028 -95,492 -109,313 -110,861 3 Exports 957,146 1,064,239 998,022 242,325 232,930 233,252 244,540 249,409 4 Imports -1,219,383 -1,442,920 -1,356,312 -322,103 -320,958 -328,744 -353,853 -360,270 5 Income, net 18,138 21,782 14,382 807 6,521 -946 -5,287 -2,959 6 Investment, net 23,877 27,651 20,539 2,345 8,102 682 -3,629 -1,375 7 Direct 75,009 88,862 102,595 23,908 28,602 22,069 18,795 18,821 8 Portfolio -51,132 -61,211 -82,056 -21,563 -20,500 -21,387 -22,424 -20,196 y Compensation of employees -5,739 -5,869 -6,157 -1,538 -1,581 -1,628 -1,658 -1,584 10 Unilateral current transfers, net -48,757 -53,442 -49,463 -12,360 -13,579 -16,016 -13,011 -13,221 n Change in U.S. government assets other than official reserve assets, net (increase, -) 2,750 -941 -486 77 143 133 42 172 12 Change in U.S. official reserve assets (increase, ~) 8,747 -290 —4,911 -3,559 -199 390 -1,843 -1,416 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 10 -722 -630 -145 -140 -109 -107 -132 15 Reserve position in International Monetary Fund 5,484 2,308 -3,600 -3,242 83 652 -1,607 -1,136 16 Foreign currencies 3,253 -1,876 -681 -172 -142 -153 -129 -148 17 Change in U.S. private assets abroad (increase, -) ^189,066 -605,258 -365,565 28,460 -100,032 -26,441 -129,278 25,164 18 Bank-reported claims2 -76,263 -148,657 -128,705 69,576 -83,682 727 -68,655 46,419 19 Nonbank-reported claims -95,466 -150,805 -14,358 -9,479 37,210 65 -16,693 -12,087 20 U.S. purchase of foreign securities, net -128,436 -127,502 -94,662 10,087 -26,090 2,047 -9,675 18,295 21 U.S. direct investments abroad, net -188,901 -178,294 -127,840 -41,724 -27,470 -29,280 -34,255 -27,463 22 Change in foreign official assets in United States (increase, +) 43,666 37,640 5,224 16,882 5,086 7,641 47,252 9,319 23 U.S. Treasury securities 12,177 -10,233 10,745 15,810 16,760 -582 15,193 1,424 24 Other U.S. government obligations 20,350 40,909 20,920 -216 7,630 7,296 6,548 10,885 25 Other U.S. government liabilities2 -2,740 -1,909 -1,882 89 -504 -790 54 999 26 Other U.S. liabilities reported by U.S. banks2 12,964 5,746 -30,278 -782 -20,507 991 24,531 -4,824 27 Other foreign official assets3 915 3,127 5,719 1,981 1,707 726 926 835 28 Change in foreign private assets in United States (increase, +) 698,813 978,346 747,582 1,007 245,711 105,855 157,055 139,191 29 U.S. bank-reported liabilities4 54,232 116,971 110,667 ^15,567 85,598 -11,051 32,240 8,299 30 U.S. nonbank-reported liabilities 78,383 174,251 82,353 -25,154 1,170 32,345 21,056 15,961 31 Foreign private purchases of U.S. Treasury securities, net -44,497 -76,965 -7,670 -15,470 27,229 -7,282 -5,124 54,691 32 U.S. currency flows 22,407 1,129 23,783 8,203 10,497 4,525 7,183 2,556 33 Foreign purchases of other U.S. securities, net 298,834 455,213 407,653 64,787 99,320 71,095 104,404 46,647 34 Foreign direct investments in United States, net 289,454 307,747 130,796 14,208 21,897 16,223 -2,704 11,037 35 Capital account transactions, net5 -3,340 837 826 206 205 208 200 223 36 Discrepancy 31,286 7 10,701 48,258 -55,828 24,668 54,183 •^15,612 37 Due to seasonal adjustment -10,286 1,721 10,019 1,256 -14,063 38 Before seasonal adjustment 31,286 7 10,701 58,544 -57,549 14,649 52,927 -31,549 MEMO Changes in official assets 39 U.S. official reserve assets (increase, -) 8,747 -290 -4,911 -3,559 -199 390 --11,,884433 --11,,441166 40 Foreign official assets in United States, excluding line 25 (increase, +) 46,406 39,549 7,106 16,793 5,590 8,431 47,198 8,320 41 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 1,621 12,000 -1,725 -4,081 3,382 -8,532 838 -1,299 1. Seasonal factors are not calculated for lines 11-16, 18-20, 22-35, and 38—41. 5. Consists of capital transfers (such as those of accompanying migrants entering or 2. Associated primarily with military sales contracts and other transactions arranged with leaving the country and debt forgiveness) and the acquisition and disposal of nonproduced or through foreign official agencies. nonfinancial assets. 3. Consists of investments in U.S. corporate stocks and in debt securities of private SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current corporations and state and local governments. Business. 4. Reporting banks included all types of depository1 institutions as well as some brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A45 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 2002 2003 AAsssseett 11999999 22000000 22000011 June July Aug. Sept. Oct. Nov. Dec. Jan.e 1 Total 71,516 67,647 68,654 74,696 74,751 75,307 75,860 75,499 75,690 79,006 78,434 2 Gold stock1 11,048 11,046 11,045 11,044 11,042 11,042 11,042 11,042 11,043 11,043 11,043 3 Special drawing rights2-3 10,336 10,539 10,774 11,645 11,575 11,752 11,710 11,700 11,855 12,166 11,298 4 Reserve position in International Monetary Fund2 17,950 14,824 17,854 19,841 19,863 20,043 20,857 20,586 20,480 21,979 21,953 5 Foreign currencies4 32,182 31,238 28,981 32,166 32,271 32,470 32,251 32,171 32,312 33,818 34,140 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 2002 2003 AAsssseett 11999999 22000000 22000011 June July Aug. Sept. Oct. Nov. Dec. Jan.P 1 Deposits 71 215 61 90 164 86 150 89 78 136 102 Held in custody 2 U.S. Treasury securities2 632,482 594,094 592,630 619,226 635,036 638,003 644,381 647,165 669,092 678,106 683,837 3 Earmarked gold3 9,933 9,451 9,099 9,077 9,071 9,064 9,057 9,050 9,045 9,045 9,045 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

A46 International Statistics • March 2003 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 2000 2000 2001 2002 IItteemm 11999999 Mar.6 Mar.6 Dec. Dec. Aug. Sept. Oct. NOV.P 1 Total1 888800006666,,,,333311118888 888822229999,,,,222299990000 999955558888,,,,777722225555 999977775555,,,,333300004444 999988887777,,,,555577772222 1111,,,,000044448888,,,,999999990000 1111,,,,000055550000,,,,000055556666 1111,,,,000044448888,,,,000000007777 1111,,,,000066669999,,,,222277778888 By type 1 Liabilities reported by banks in the United States2 111133338888,,,,888844447777 111133336666,,,,555577777777 111133336666,,,,555577777777 111144444444,,,,555599993333 111122223333,,,,444422229999 111133338888,,,,222288881111 111144443333,,,,000022228888 111133336666,,,,666633339999 111133338888,,,,000088882222 3 U.S. Treasury bills and certificates3 111155556666,,,,111177777777 111166664444,,,,777788881111 111166664444,,,,777788881111 111155553333,,,,000011110000 111166661111,,,,777711119999 111188888888,,,,888800005555 111188885555,,,,111188887777 111188888888,,,,444477774444 111199990000,,,,111111111111 U.S. Treasury bonds and notes 4 Marketable 444422222222,,,,222266666666 444433330000,,,,222244443333 444466665555,,,,111111111111 444455550000,,,,888833332222 444455554444,,,,333300006666 444455550000,,,,333377771111 444444446666,,,,888866660000 444444446666,,,,333300007777 444466662222,,,,888888884444 5 Nonmarketable4 6666,,,,111111111111 5555,,,,777733334444 5555,,,,777733334444 5555,,,,333344448888 3333,,,,444411111111 3333,,,,000044440000 3333,,,,000055558888 3333,,,,000077778888 3333,,,,000099997777 6 U.S. securities other than U.S. Treasury securities5 88882222,,,,999911117777 99991111,,,,999955555555 111188886666,,,,555522222222 222222221111,,,,555522221111 222244444444,,,,777700007777 222266668888,,,,444499993333 222277771111,,,,999922223333 222277773333,,,,555500009999 222277775555,,,,111100004444 By area 7 Europe1 222244444444,,,,888800005555 222255551111,,,,888811115555 222233338888,,,,555544448888 222244440000,,,,333322225555 222244443333,,,,444455552222 222255555555,,,,222233335555 222266660000,,,,444422223333 222255554444,,,,333344445555 222266665555,,,,777788884444 8 Canada 11112222,,,,555500003333 11113333,,,,666688883333 11115555,,,,000011116666 11113333,,,,777722227777 11113333,,,,444444440000 11110000,,,,888888886666 11110000,,,,000099997777 11110000,,,,333300000000 11110000,,,,999977775555 9 Latin America and Caribbean 77773333,,,,555511118888 77777777,,,,111199995555 77770000,,,,888888884444 77770000,,,,444444442222 77771111,,,,111100003333 66662222,,,,000022226666 66662222,,,,222222227777 66664444,,,,222288889999 66663333,,,,000000000000 10 Asia 444466663333,,,,777700003333 444477774444,,,,222266669999 666611112222,,,,111111116666 666622226666,,,,000011117777 666633335555,,,,111188880000 666699993333,,,,777755552222 666699990000,,,,999900002222 666699992222,,,,333355551111 777700001111,,,,111155558888 7777,,,,555522223333 7777,,,,999977779999 11113333,,,,555500004444 11114444,,,,666699990000 11115555,,,,111166667777 11115555,,,,222255557777 11114444,,,,555511114444 11115555,,,,555522224444 11115555,,,,222255553333 12 Other countries 4444,,,,222266666666 4444,,,,333344449999 8888,,,,666655555555 11110000,,,,111100001111 9999,,,,222222228888 11111111,,,,888833332222 11111111,,,,888899991111 11111111,,,,111199996666 11113333,,,,111100006666 1. Includes the Bank for International Settlements. 6. Data in the two columns shown for this date reflect different benchmark bases for 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, foreigners' holdings of selected U.S. long-term securities. Figures in the first column are negotiable time certificates of deposit, and borrowings under repurchase agreements. comparable to those for earlier dates; figures in the second column are based in part on a 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official benchmark survey as of end-March 2000 and are comparable to those shown for following institutions of foreign countries. dates. 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of SOURCE. Based on U.S. Department of the Treasury data and on data reported to the zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning Treasury by banks (including Federal Reserve Banks) and securities dealers in the United March 1990, 30-year maturity issue; Venezuela, beginning December 1990, 30-year maturity States, and in periodic benchmark surveys of foreign portfolio investment in the United issue; Argentina, beginning April 1993, 30-year maturity issue. States. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and U.S. corporate stocks and bonds. 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 2001 2002 IItteemm 11999988 11999999 22000000 Dec. Mar. June Sept. 1 Banks' liabilities 101,125 88,537 77,779 79,363 74,955 89,892 81,761 2 Banks' claims 78,162 67,365 56,912 74,840 77,746 90,695 85,292 3 Deposits 45,985 34,426 23,315 44,094 46,778 51,933 44,638 4 Other claims 32,177 32,939 33,597 30,746 30,968 38,762 40,654 5 Claims of banks' domestic customers2 20,718 20,826 24,411 17,631 16,642 15,848 20,475 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 A47 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 2002 IItteemm 11999999 22000000 22000011 May' June' July' Aug. Sept.' Oct.' NOV.P BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,408,740 1,511,410 l,655,348r 1,726,164 1,741,987 1,723,335 l,782,832r 1,769,232 1,861,732 1,795,330 2 Banks' own liabilities 971,536 1,077,636 l,181,097r 1,219,532 1,198,735 1,178,576 1,224,916 1,218,213 1,305,746 1,241,875 3 Demand deposits 42,884 33,365 33,603 32,060 34,600 32,558 31,428 32,027 31,607 34,599 4 Time deposits2 163,620 187,883 155,466 136,664 130,682 124,167 125,270 120,348 127,915 125,270 5 Other3 155,853 171,401 199,737' 235,816 237,490 257,097 261,964 277,640 268,324 261,648 6 Own foreign offices4 609,179 684,987 792,291' 814,992 795,963 764,754 806,254 788,198 877,900 820,358 7 Banks' custodial liabilities5 437,204 433,774 474,251' 506,632 543,252 544,759 557,916' 551,019 555,986 553,455 8 U.S. Treasury bills and certificates6 185,676 177,846 188,051' 193,330 210,411 224,629 227,788' 225,163 223,996 226,303 9 Short-term agency securities7 n.a. n.a. 65,534 77,706 86,015 71,211 73,724' 75,649 80,148 69,430 10 Other negotiable and readily transferable instruments8 132,617 145,840 91,147 97,316 97,950 106,697 110,171' 107,779 107,746 107,756 11 Other 118,911 110,088 129,519' 138,280 148,876 142,222 146,233' 142,428 144,096 149,966 12 Nonmonetary international and regional organizations9 15,276 12,542 10,830' 12,129 11,568 11,495 10,540 11,796 13,153 12,253 13 Banks' own liabilities 14,357 12,140 10,169 11,756 11,138 10,993 9,986 11,008 12,538 11,475 14 Demand deposits 98 41 35 14 32 15 34 52 61 42 15 Time deposits2 10,349 6,246 3,756 6,730 6,401 7,394 6,294 5,702 6,156 5,181 16 Other3 3,910 5,853 6,378 5,012 4,705 3,584 3,658 5,254 6,321 6,252 17 Banks' custodial liabilities5 919 402 661' 373 430 502 554 788 615 778 18 U.S. Treasury bills and certificates6 680 252 600' 328 407 481 532 764 597 760 19 Short-term agency securities7 n.a. n.a. 40 18 0 0 0 0 0 0 20 Other negotiable and readily transferable instruments8 233 149 21 27 23 21 22 18 18 18 21 Other 6 1 0 0 0 0 0 6 0 0 22 Official institutions10 295,024 297,603 285,148 299,779 323,316 329,868 327,086' 328,215 325,113 328,193 23 Banks' own liabilities 97,615 96,989 83,828 86,419 92,989 93,572 89,340 96,513 91,468 93,144 24 Demand deposits 3,341 3,952 2,988 2,002 1,707 2,146 1,946 1,900 2,915 3,664 25 Time deposits2 28,942 35,573 19,467 15,531 14,568 13,475 14,405 13,275 13,902 12,753 26 Other3 65,332 57,464 61,373 68,886 76,714 77,951 72,989 81,338 74,651 76,727 27 Banks' custodial liabilities5 197,409 200,614 201,320 213,360 230,327 236,296 237,746' 231,702 233,645 235,049 28 U.S. Treasury bills and certificates6 156,177 153,010 161,719 162,034 175,686 187,997 188,805' 185,187 188,474 190,111 29 Short-term agency securities7 n.a. n.a. 36,351 49,266 51,531 45,184 45,131' 44,082 42,767 42,479 30 Other negotiable and readily transferable instruments8 41,182 47,366 2,180 1,255 2,088 2,281 2,615' 1,489 1,624 1,658 31 Other 50 238 1,070 805 1,022 834 1,195 944 780 801 32 Banks" 900,379 972,932 1.071,890' 1,139,176 1,125,620 1,078,997 1,121,245' 1,108,102 1,214,241 1,149,792 33 Banks' own liabilities 728,492 821,306 914,488' 941,574 914,078 875,065 911,686 901,654 998,917 936,391 34 Unaffiliated foreign banks 119,313 136,319 122,197' 126,582 118,115 110,311 105,432 113,456 121,017 116,033 35 Demand deposits 17,583 15,522 13,091 12,875 14,620 12,790 11,804 11,391 10,989 12,193 36 Time deposits2 48,140 66,904 53,105 41,364 37,094 31,780 33,899 30,936 35,672 36,876 37 Other3 53,590 53,893 56,001' 72,343 66,401 65,741 59,729 71,129 74,356 66,964 38 Own foreign offices4 609,179 684,987 792,291' 814,992 795,963 764,754 806,254 788,198 877,900 820,358 39 Banks' custodial liabilities5 171,887 151,626 157,402' 197,602 211,542 203,932 209,559' 206,448 215,324 213,401 40 U.S. Treasury bills and certificates6 16,796 16,023 13,477 17,092 18,557 20,287 20,913' 20,509 19,680 18,887 41 Short-term agency securities7 n.a. n.a. 7,831 9,325 14,629 5,176 6,132' 10,221 18,131 9,626 42 Other negotiable and readily transferable instruments8 45.695 36,036 33,102 54,661 52,454 60,104 61,428' 58,487 57,891 58,839 43 Other 109,396 99,567 102,992' 116,524 125,902 118,365 121,086' 117,231 119,622 126,049 44 Other foreigners 198,061 228,333 287,480' 275,080 281,483 302,975 323,961' 321,119 309,225 305,092 45 Banks' own liabilities 131,072 147,201 172,612' 179,783 180,530 198,946 213,904 209,038 202,823 200,865 46 Demand deposits 21,862 13,850 17,489 17,169 18,241 17,607 17,644 18,684 17,642 18,700 47 Time deposits2 76,189 79,160 79,138 73,039 72,619 71,518 70,672 70,435 72,185 70,460 48 Other3 33,021 54,191 75,985' 89,575 89,670 109,821 125,588 119,919 112,996 111,705 49 Banks' custodial liabilities5 66,989 81,132 114,868 95,297 100,953 104,029 110,057' 112,081 106,402 104,227 50 U.S. Treasury bills and certificates6 12,023 8,561 12,255 13,876 15,761 15,864 17,538' 18,703 15,245 16,545 51 Short-term agency securities7 n.a. n.a. 21,312 19,097 19,855 20,851 22,461' 21,346 19,250 17,325 52 Other negotiable and readily transferable instruments8 45,507 62,289 55,844 41,373 43,385 44,291 46,106' 47,785 48,213 47,241 53 Other 9,459 10,282 25,457 20,951 21,952 23,023 23,952' 24,247 23,694 23,116 MEMO 54 Negotiable time certificates of deposits in custody for foreigners 30,345 34,217 20,440 24,337 28,943 29,399 29,847' 29,700 29,198 26,434 55 Repurchase agreements7 n.a. n.a. 150,806 154,803 159,627 180,775 192,299 205,171 191,970 182,817 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 deposit, which are included in "Other negotiable 7. Data available beginning January 2001. and readily transferable instruments." 8. Principally bankers acceptances, commercial paper, and negotiable time certificates of 3. Includes borrowing under repurchase agreements. deposit. 4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidi- 9. Principally the International Bank for Reconstruction and Development, the Interaries 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

A48 International Statistics • March 2003 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued Payable in U.S. dollars Millions of dollars, end of period 2002 IItteemm 11999999 22000000 22000011 May June July Aug. Sept. Oct. Nov.p AREA OR COUNTRY 56 Total, all foreigners 1,408,740 1,511,410 l,655,348r 1,726,164' 1,741,987' 1,723,335' 1,782,832' 1,769,232' 1,861,732' 1,795,330 57 Foreign countries 1,393,464 1,498,867 l,644,518r l,714,035r 1,730,419' l,711,840r 1,772,290' 1,757,435' l,848,579r 1,783,077 58 Europe 441,810 446,788 521,331 548,440' 537,615' 533,760' 557,091' 577,947' 658,662' 615,692 59 Austria 2,789 2,692 2,922 3,096 3,563 2,862 3,537 3,081 3,053 2,439 60 Belgium12 44,692 33,399 6,557 6,723 6,066 6,462 6,270 8,389 7,420 8,020 61 Denmark 2,196 3,000 3,626 3,426' 3,387' 3,478' 4,061' 3,112' 3,004' 3,340 62 Finland 1,658 1,411 1,446 1,198 1,197 3,503 1,498 1,259 5,170 2,631 63 France 49,790 37,833 49,056 36,174 35,390 39,809 35,447 37,915 38,515' 40,646 64 Germany 24,753 35,519 22,375 26,799' 25,203' 27,832' 27,081' 31,334' 31,558' 32,053 65 Greece 3,748 2,011 2,307 2,700 3,570 2,815 2,677 2,612 3,357 3,353 66 Italy 6,775 5,072 6,354 4,606' 4,680' 3,900' 3,426' 3,439' 5,029' 5,566 67 Luxembourg12 n.a. n.a. 16,894 23,589' 24,173' 24,294' 25,436' 25,750' 25,680' 27,720 68 Netherlands 8,143 7,047 12,411 8,612' 6,552' 6,012' 8,208' 7,65c 7,974' 8,638 69 Norway 1,327 2,305 3,727 7,681 11,164 14,540 10,047 17,747 18,895 14,681 70 Portugal 2,228 2,403 4,033 4,905 4,616 3,496 3,055 3,695 3,220 3,093 71 Russia 5,475 19,018 20,800 24,211 25,060 24,189 24,196 25,252 24,407 25,466 72 Spain 10,426 7,787 8,811 9,764 11,032 10,394 12,423 12,596 12,825 15,575 73 Sweden 4,652 6,497 3,375 5,677 4,176 4,815 5,709 4,137 4,857 3,859 74 Switzerland 63,485 74,635 66,403 114,780' 100,117' 85,613' 102,088' 105,386' 182,152' 141,123 75 Turkey 7,842 7,548 7,474 11,216 9,912' 10,701 12,393 12,790' 11,226 11,748 76 United Kingdom 172,687 167,757 204,396 173,076' 176,926' 176,397' 184,152' 183,756' 184,483' 181,921 77 Channel Islands and Isle of Man13 n.a. n.a. 36,059 38,725' 38,881' 39,432' 38,215' 38,982' 40,070' 38,889 78 Yugoslavia14 286 276 309 273 267 279 276 280 316 332 79 Other Europe and other former U.S.S.R.15 28,858 30,578 41,996 41,209' 41,683' 42,937' 46,896' 48,785' 45,451' 44,599 80 Canada 34,214 30,982 27,25 lr 24,778' 24,452' 26,629' 24,887' 24,946' 26,570' 24,381 81 Latin America 117,495 120,041 118,025' 110,059' 106,035' 105,762' 106,466' 104,148' 106,888' 103,939 82 Argentina 18,633 19,451 10,704 11,703' 11,408' 11,362' 11,482' 11,223' 12,091' 11,643 83 Brazil 12,865 10,852 14,169 12.892 12,968 12,537 12,051 11,583 11,581' 10,275 84 Chile 7,008 5,892 4,939 6,643 6,121 6,394 5,798 5,494 5,827 5,363 85 Colombia 5,669 4,542 4,695 4,273 4,010 3,872 3,718 4,509 3,847 4,644 86 Ecuador 1,956 2,112 2,390 2,294 2,259 2,324 2,266 2,374 2,155 2,254 87 Guatemala 1,626 1,601 1,882 1,335 1,319 1,323 1,384 1,535 1,500 1,382 88 Mexico 30,717 32,166 39,87 lr 35,250 32,441' 33,301 34,916 32,486 34,665' 32,606 89 Panama 4,415 4,240 3,610 3,273 3,894 3,143 3,154 3,225 3,574' 3,659 90 Peru 1,142 1,427 1,359 1,270 1,417 1,502 1,353 1,369 1,300 1,361 91 Uruguay 2,386 3,003 3,172' 2,410 2,373 1,885 2,614 2,613 2,583 2,589 92 Venezuela 20,192 24,730 24,974 22,333 21,738 21,771 21,547 21,355 21,661 22,309 93 Other Latin America16 10,886 10,025 6,260 6,383 6,087 6,348 6,183 6,382 6,104' 5,854 94 Caribbean 461,200 573,337 665.797' 694,453' 701,778' 695,012' 735,460' 704,288' 721,354' 700,649 95 Bahamas 135,811 189,298 178,472' 172,138' 179,365' 160,425' 172,518' 166,477' 159,867' 146,043 96 Bermuda 7,874 9,636 10,539 13,984' 16,420' 20,436' 24,968' 24,692' 23,158' 25,764 97 British West Indies17 312,278 367,197 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 98 Cayman Islands17 n.a. n.a. 458,848' 489,323' 484,453' 491,372' 509,570' 494,793' 519,782' 509,380 99 Cuba 75 90 88 93 96 92 99 92 92 94 100 Jamaica 520 794 1,182 996 924 931 948 932 856 827 101 Netherlands Antilles 4,047 5,428 3,264 3,307' 3,749' 3,94a 10,538' 4,381' 5,293' 5,476 102 Trinidad and Tobago 595 894 1,269 1,634 1,593 1,691 1,803 1,562 1,471 1,580 103 Other Caribbean16 n.a. n.a. 12,135' 12,978' 15,178' 16,125' 15,016' 11,359' 10,835' 11,485 104 319,489 305,554 294,496 316,486' 339,418' 329,479' 325,959' 324,958' 313,912' 315,088 China 105 Mainland 12,325 16,531 10,498 22,410 20,779 18,106 18,808 14,621 15,852 14,439 106 Taiwan 13,603 17,352 17,633 21,733 23,480 19,068 20,103 21,726 23,269 23,517 107 Hong Kong 27,701 26,462 26,494 32,076' 32,902' 34,485' 31,003' 31,663' 30,073' 32,291 108 India 7,367 4,530 3,708 4,980 7,061 7,370 7,240 7,488 7,182 7,489 109 Indonesia 6,567 8,514 12,383 12,623 13,871 13,589 13,805 13,098 12,316 12,895 110 Israel 7,488 8,053 7,870 8,965 8,954 9,757 7,952 11,619 9,105 8,870 111 Japan 159,075 150,415 155,314 162,464' 180,557' 177,329' 175,289' 171,091' 161,253' 162,114 112 Korea (South) 12,988 7,955 9,019 6,592 6,826 7,038 6,845 6,562 6,287 6,481 113 Philippines 3,268 2,316 1,772 1,544 1,754 2,080 1,572 2,064 1,589 1,452 114 Thailand 6,050 3,117 4,743 5,060 5,966 4,591 5,113 5,044 7,021 8,692 115 Middle Eastern oil-exporting countries18 21,314 23,763 20,035 16,894' 15,348' 14,233' 15,434' 15,992' 14,351' 11,473 116 Other 41,743 36,546 25,027 21,145' 21,920' 21,833' 22,795' 23,990' 25,614' 25,375 117 9,468 10,824 11,365 11,675' 11,839' 12,105' 12,098' 11,115' 11,905' 11,631 118 Egypt 2,022 2,621 2,778 3,605 3,672 3,411 3,179 2,538 2,545 2,484 119 Morocco 179 139 274 271' 346' 297' 307 329 335 255 120 South Africa 1,495 1,010 839 653' 655' 694' 747' 747' 662' 695 121 Congo (formerly Zaire) 14 4 4 7 n.a. 1 n.a. 86 n.a. 2 122 Oil-exporting countries19 2,914 4,052 4,377 3,561 3,522 3,757 3,940 3,670 4,635 4,983 123 Other 2,844 2,998 3,093 3,578 3,644 3,945 3,925 3,745 3,728 3,212 124 Other countries 9,788 11,341 6,253 8,144' 9,282' 9,093' 10,329' 10,033' 9,288' 11,697 125 Australia 8,377 10,070 5,599 6,503' 7,858' 7,506' 8,593' 7,917' 7,547' 9,330 126 New Zealand20 n.a. n.a. 242 1,152' 1,061' 1,230' 1,321' 1,592' 1,257' 2,121 127 All other 1,411 1,271 412 489 363 357 415 524 484 246 128 Nonmonetary international and regional organizations 15,276 12,543 10,830' 12,129 11,568 11,495 10,542 11,797' 13,153 12,253 129 International21 12,876 11,270 9,331' 10,851 10,490 10,097 9,422 9,567' 11,725 10,582 130 Latin American regional22 1,150 740 480 644 342 386 402 394 561 478 131 Other regional23 1,250 533 935 550 645 894 643 1,766 789 1,120 12. Before January 2001, data for Belgium-Luxembourg were combined. 18. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 13. Before January 2001, these data were included in data reported for the United Emirates (Trucial States). Kingdom. 19. Comprises Algeria, Gabon, Libya, and Nigeria. 14. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 20. Before January 2001, these data were included in "All other." 15. Includes the Bank for International Settlements and the European Central Bank. Since 21. Principally the International Bank for Reconstruction and Development. Excludes December 1992, has included all parts of the former U.S.S.R. (except Russia), and Bosnia, "holdings of dollars" of the International Monetary Fund. Croatia, and Slovenia. 22. Principally the Inter-American Development Bank. 16. Before January 2001, data for "Other Latin America" and "Other Caribbean" were 23. Asian, African, Middle Eastern, and European regional organizations, except the Bank combined in "Other Latin America and Caribbean." for International Settlements, which is included in "Other Europe." 17. Beginning January 2001, data for the Cayman Islands replaced data for the British West Indies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A49 3.18 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 2002 AArreeaa oorr ccoouunnttrryy 11999999 22000000 22000011 May June July' Aug.' Sept.' Oct.' NOV.p 1 Total, all foreigners 793,139 904,642 l,055,069r l,089,443r l,lll,028r 1,048,304 1,086,297 1,064,643 1,136,002 1,096,183 2 Foreign countries 788,576 899,956 l,050,123r l,084,669r l,106,782r 1,043,668 1,082,050 1,062,005 1,133,302 1,092,865 3 Europe 311,686 378,115 461,176r 51 l,308r 504,071' 464,450 483,076 470,315 543,149 490,654 4 Austria 2,643 2,926 4,981r 3,558 3,963 4,046 4,297 4,336 3,876 4,224 5 Belgium2 10,193 5,399 6,39 LR 4,019 5,197 7,126 5,140 4,689 5,590 5,784 6 Denmark 1,669 3,272 1,105 1,062 1,248 856 1,546 1,483 1,534 940 7 Finland 2,020 7,382 10,350 14,279 16,517 13,718 16,230 15,812 14,821 9,028 8 France 29,142 40,035 60,620r 58,156' 58,714' 59,052 51,798 51,083 47,065 54,089 9 Germany 29,205 36,834 29,902 29,033 28,891 26,156 26,072 23,344 21,101 22,103 10 Greece 806 646 330 354 330 393 438 408 388 331 11 Italy 8,496 7,629 4,205 4,050 4,378 5,568 4,442 4,942 3,984 3,945 1? Luxembourg2 n.a. n.a. 1,267 3,552 3,547 3,526 3,067 2,847 2,818 3,224 13 Netherlands 11,810 17,043 15,908r 16,275' 16,421' 13,660 18,232 17,691 13,284 15,572 14 Norway 1,000 5,012 6,236r 8,288' 8,513' 9,420 10,578 11,036 11,848 11,464 IS Portugal 1,571 1,382 1,603 1,594 1,780 1,995 1,823 2,006 2,000 2,134 16 Russia 713 517 594 826 1,145 867 842 801 858 787 17 Spain 3,796 2,603 3,260 3,130 3,081 3,336 3,589 4,675 3,183 4,776 18 Sweden 3,264 9,226 12,544 13,348 13,814 14,932 14,618 13,970 15,366 15,239 19 Switzerland 79,158 82,085 87,333 137,532 119,244 87,969 106,281 103,920 184,039 134,425 20 Turkey 2,617 3,059 2,124 2,953 2,662 2,410 2,515 2,474 2,622 2,532 ?l United Kingdom 115,971 144,938 201,183' 198,176' 203,608' 198,133 202,178 194,757 195,816 183,305 72 Channel Islands and Isle of Man3 n.a. n.a. 4,478 3,835 4,246 4,962 5,076 5,926 7,281 11,466 23 Yugoslavia4 50 50 n.a. 1 n.a. n.a. n.a. n.a. n.a. n.a. 24 Other Europe and other former U.S.S.R.5 7,562 8,077 6,762 7,287 6,772 6,325 4,314 4,115 5,675 5,286 25 Canada 37,206 39,837 54,421 57,451 60,591' 63,235 60,310 62,836 57,522 59,871 ?6 Latin America 74,040 76,561 69,762 65,501' 66,851 63,194 62,214 60,377 59,261 58,223 71 Argentina 10,894 11,519 10,763 9,234' 11,019 8,202 8,090 7,663 7,608 7,253 ?8 Brazil 16,987 20,567 19,434 18,797 19,019 18,512 17,945 17,266 16,863 15,871 99 Chile 6,607 5,815 5,317 4,950 4,874 4,949 4,960 5,118 5,142 5,328 30 Colombia 4,524 4,370 3,602 3,516 3,266 3,216 3,158 3,078 2,834 2,758 31 Ecuador 760 635 495 519 500 462 479 467 451 451 3? Guatemala 1,135 1,244 1,495 905 882 871 861 925 907 889 33 Mexico 17,899 17,415 16,522 16,449' 16,266 16,349 16,015 15,805 15,367 15,828 34 Panama 3,387 2,933 3,061 2,750' 2,599 2,466 2,433 1,959 2,021 1,961 35 Peru 2,529 2,807 2,185 1,923 1,833 1,748 1,649 1,599 1,504 1,484 36 Uruguay 801 673 447 357 324 314 527 345 319 292 37 Venezuela 3,494 3,518 3,077 3,353 3,337 3,306 3,291 3,301 3,389 3,231 38 Other Latin America6 5,023 5,065 3,364 2,748 2,932 2,799 2,806 2,851 2,856 2,877 39 Caribbean 281,128 319,403 370,945 360,258 374,959' 345,580 367,915 347,755 356,635 372,513 40 Bahamas 99,066 114,090 101,034 107,269 108,369 96,886 95,704 91,146 96,126 93,814 41 Bermuda 8,007 9,260 7,900 8,380 11,088 11,723 11,847 11,304 12,196 9,902 42 British West Indies7 167,189 189,289 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 43 Cayman Islands7 n.a. n.a. 250,376 234,758 243,868' 225,681 248,107 234,435 236,096 257,502 44 Cuba 0 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 45 Jamaica 295 355 418 408 361 350 353 463 429 393 46 Netherlands Antilles 5,982 5,801 6,729 5,578 6,859 6,387 7,334 6,194 7,427 6,744 47 Trinidad and Tobago 589 608 931 834 862 881 877 916 920 910 48 Other Caribbean6 n.a. n.a. 3,557 3,031 3,552' 3,672 3,693 3,297 3,441 3,248 49 Asia 75,143 77,829 85,882 83,214' 92,508' 99,551 100,484 112,440 109,359 104,181 China 50 Mainland 2,110 1,606 2,073 4,857 6,047 7,832 5,904 7,256 8,515 6,575 51 Taiwan 1,390 2,247 4,407 3,262' 6,531' 6,954 7,443 8,656 8,599 7,034 57 Hong Kong 5,903 6,669 9,995 5,350 5,596 6,614 6,531 8,481 5,778 6,849 53 India 1,738 2,178 1,348 1,414 1,462 1,083 1,293 1,258 999 921 54 Indonesia 1,776 1,914 1,752 1,564 1,571 1,553 1,457 1,426 1,390 1,360 IS Israel 1,875 2,729 4,396 3,747 3,411 4,647 4,952 5,067 4,710 3,836 56 Japan 28,641 34,974 34,125 32,949' 36,413' 35,947 37,559 45,058 42,252 47,071 57 Korea (South) 9,426 7,776 10,622 13,384' 14,990' 18,065 18,961 17,404 19,439 14,293 58 Philippines 1,410 1,784 2,587 1,332 1,995 1,857 1,593 2,134 1,843 1,555 59 Thailand 1,515 1,381 2,499 716 730 1,160 1,175 1,841 1,205 756 60 Middle Eastern oil-exporting countries8 14,267 9,346 7,882 9,555 9,061 8,960 8,975 8,619 9,253 8,251 61 Other 5,092 5,225 4,196 5,084 4,701 4,879 4,641 5,240 5,376 5,680 6? Africa 2,268 2,094 2,095 1,877 2,069 1,914 1,887 1,891 1,790 1,658 63 Egypt 258 201 416 337 418 405 324 332 326 428 64 Morocco 352 204 106 85 79 77 72 58 50 52 65 South Africa 622 309 710 559 649 545 601 576 554 435 66 Congo (formerly Zaire) 24 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 67 Oil-exporting countries' 276 471 167 247 232 227 247 303 261 225 68 Other 736 909 696 649 691 660 643 622 599 518 69 Other countries 7,105 6,117 5,842 5,060 5,733 5,744 6,164 6,391 5,586 5,765 70 Australia 6,824 5,868 5,455 4,633 5,272 5,345 5,616 5,589 5,088 5,303 71 New Zealand10 n.a. n.a. 349 406 455 392 541 789 485 439 72 All other 281 249 38 21 6 7 7 13 13 23 73 Nonmonetary international and regional organizations11 4,563 4,686 4,946 4,774 4,246 4,636 4,247 2,638 2,700 3,318 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

A50 International Statistics • March 2003 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 2002 May June' July' Aug.' Sept.' Oct.' NOV.P 1 Total 944,937 1,095,869 l,254,863r 1,322,094 1,252,079 2 Banks' claims 793,139 904,642 l,055,069r 1,089,443' 1,111,028 1,048,304 1,086,297 1,064,643 1,136,002 1,096,183 3 Foreign public borrowers 35,090 37,907 49,404r 49,441' 51,250 61,067 61,541 61,297 63,404 56,235 4 Own foreign offices2 529,682 630,137 749,124 782,253' 793,890 720,252 758,173 734,051 807,006 777,034 5 Unaffiliated foreign banks 97,186 95,243 100,367 89,279 92,152 91,946 86,225 94,274 94,610 98,792 6 Deposits 34,538 23,886 26,189 21,598 24,012 24,449 19,051 24,213 26,742 28,210 7 Other 62,648 71,357 74.178 67,681 68,140 67,497 67,174 70,061 67,868 70,582 8 All other foreigners 131,181 141,355 156,174' 168,470' 173,736 175,039 180,358 175,021 170,982 164,122 9 Claims of banks' domestic customers3 151,798 191,227 199,794 211,066 187,436 10 Deposits 88,006 100,352 93,565 94,129 86,455 11 Negotiable and readily transferable instruments4 51,161 78,147 90,412 104,532 88,648 12 Outstanding collections and other claims 12,631 12,728 15,817 12,405 12,333 MEMO 13 Customer liability on acceptances 4,553 4,257 2,588 2,356 2,353 14 Banks' loans under resale agreements5 n.a. n.a. 137,655 134,901 152,383 162,975 164,355 159,880 159,662 148,438 15 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States6 31,125 53,153 60,745' 48,488 60,480 57,572 53,100 52,470 55,284 46,840 1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are principally of amounts due from the head office or parent foreign bank, and from foreign for quarter ending with month indicated. branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Reporting banks include all types of depository institution as well as some brokers and 3. Assets held by reporting banks in the accounts of their domestic customers. dealers. 4. Principally negotiable time certificates of deposit and bankers acceptances, and commer- 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidi- cial paper. aries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Data available beginning January 2001. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 6. Includes demand and time deposits and negotiable and nonnegotiable certificates of deposit denominated in U.S. dollars issued by banks abroad. 3.20 BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 2001 2002 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999988 11999999 22000000 Dec. Mar. June Sept.P 1 Total 250,418 267,082 274,009 305,326 307,305 316,596 330,137 By borrower 2 Maturity of one year or less 186,526 187,894 186,103 200,240 187,488 202,952 214,599 3 Foreign public borrowers 13,671 22,811 21,399 27,501 26,736 26,781 32,106 4 All other foreigners 172,855 165,083 164,704 172,739 160,752 176,171 182,493 5 Maturity of more than one year 63.892 79,188 87,906 105,086 119,817 113,644 115,538 6 Foreign public borrowers 9,839 12,013 15,838 21,324 28,167 23,939 28,751 7 All other foreigners 54,053 67,175 72,068 83,762 91,650 89,705 86,787 By area Maturity of one year or less 8 Europe 68,679 80,842 142,464 83,233 79,182 82,220 86,522 9 Canada 10,968 7,859 8,323 10,072 7,733 8,069 6,357 10 Latin America and Caribbean 81,766 69,498 151,840 70,648 68,824 78,762 80,156 11 Asia 18,007 21,802 43,371 29,693 24,553 28,375 36,608 12 Africa 1,835 1,122 2,263 1,104 1,124 918 896 13 All other3 5.271 6,771 11,717 5,490 6,072 4,611 4,060 Maturity of more than one year 14 Europe 14,923 22,951 57,770 34,230 43,284 39,208 38,571 15 Canada 3.140 3,192 3,174 3,633 3,623 3,480 4,146 16 Latin America and Caribbean 33,442 39,051 82,684 47,382 48,744 51,292 47,961 17 Asia 10,018 11,257 19,536 15,190 19,553 15,025 20,720 18 Africa 1,232 1,065 1,567 769 720 907 812 19 All other3 1,137 1,672 5,954 3,882 3,893 3,732 3,328 Note. Owing to changes in reporting requirements, this table will be discontinued in the 2. Maturity is time remaining until maturity, third quarter of 2003 after publication of the end-December 2003 data. 3. Includes nonmonetary international and regional organizations. 1. Reporting banks include all types of depository institutions as well as some brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A51 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks' Billions of dollars, end of period 2000 2001 2002 Area or country iyys tyyy Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 1 Total 1,051.6 945.5 954.4 1,027.3 1,141.1 1,137.0 1,282.1 912.9r 799.5 867. lr 851.2 2 G-10 countries and Switzerland 217.7 243.4 280.3 300.7 334.6 336.3 290.7 404.4 324.1' 346.6' 316.3 3 Belgium and Luxembourg 10.7 14.3 13.0 14.2 15.2 13.0 14.3 19.1 16.4 17.0 18.1 4 France 18.4 2y.o 29.0 29.6 30.0 35.8 34.4 39.1 34.1' 43.5' 34.5 5 Germany 30.9 38.7 37.6 45.1 45.0 51.4 40.9 42.9 49.2 52.0 48.9 6 Italy 11.5 18.1 18.6 21.3 20.3 23.6 22.6 20.9 19.0 20.3 15.9 7 Netherlands 7.8 12.3 17.5 18.4 22.1 18.6 20.7 19.3 23.7' 20.9 22.7 8 Sweden 2.3 3.0 4.3 3.6 4.7 4.7 5.1 5.3 5.5 6.2 5.9 9 Switzerland 8.5 10.3 10.9 13.2 13.7 13.3 12.8 12.4 13.5 14.0 12.7 10 United Kingdom 85.4 79.3 112.8 115.6 140.2 126.2 92.7 193.1 110.4' 117.8 101.9 11 Canada 16.8 16.3 18.5 16.7 15.4 21.3 20.3 19.1 16.9 18.3 18.7 12 Japan 25.4 22.1 18.1 23.0 28.0 28.3 26.8 33.1 35.3 36.7 36.9 13 Other industrialized countries 69.0 68.4 73.7 74.5 75.2 70.0 70.6 70.4' 69.9 78.4 80.7 14 Austria 1.4 3.5 3.5 4.1 3.8 3.6 4.4 4.8 5.1 5.7 6.5 15 Denmark 2.2 2.6 1.8 1.9 3.1 2.7 2.7 2.6 3.5 2.9 2.8 16 Finland 1.4 .9 2.8 1.5 1.4 1.2 1.3 1.1 2.1 1.5 1.6 17 Greece 5.9 6.0 6.4 8.3 4.1 3.6 3.6 3.2 3.3 3.7 4.1 18 Norway 3.2 3.3 8.5 8.3 10.2 7.9 6.2 8.1 9.0 10.6 12.7 19 Portugal 1.4 1.0 1.5 2.0 1.9 1.4 1.4 1.6 1.8 1.8 1.4 20 Spain 13.7 12.1 10.5 10.3 12.4 12.4 13.7 12.1 12.1 13.3 15.2 21 Turkey 4.8 4.8 5.6 5.9 5.0 4.5 4.1 3.9 5.3 4.3 4.0 22 Other Western Europe 10.4 6.8 8.3 6.5 7.1 6.9 7.2 8.3 8.4 9.0 7.6 23 South Africa 4.4 3.8 4.2 3.6 4.1 3.8 4.4 4.1 3.3 3.5 2.5 24 Australia 20.3 23.5 20.5 22.1 21.9 22.1 21.6 20.6 15.9 22.2 22.3 25 OPEC2 27.1 31.4 31.4 28.9 27.9 27.1 27.4 27.3 27.5 26.7 26.4 26 Ecuador 1.3 .8 .6 .6 .6 .6 .6 .6 .6 .6 .5 27 Venezuela 3.2 2.8 2.9 2.5 2.7 2.6 2.6 2.4 2.4 2.2 2.4 28 Indonesia 4.7 4.2 4.4 4.6 4.4 4.2 4.0 3.7 3.6 3.3 3.0 29 Middle East countries 17.0 23.1 22.4 20.3 19.7 19.3 19.9 20.3 20.6 20.2 20.1 30 African countries 1.0 .5 1.2 .8 .5 .4 .4 .3 .3 .4 .4 31 Non-OPEC developing countries 143.4 149.4 149.5 145.5 150.1 157.6 201.6 203.3 196.0' 195.1' 188.3 Latin America 32 Argentina 23.1 23.2 21.4 21.4 20.9 19.8 19.2 19.2 12.8 12.3 9.0 33 Brazil 24.7 27.7 28.5 28.8 29.4 30.9 30.9 28.0 26.6 24.8 21.9 34 Chile 8.3 7.4 7.3 7.6 7.3 7.0 6.4 7.0 7.1 7.1 6.8 35 Colombia 3.2 2.5 2.4 2.4 2.4 2.4 2.5 2.5 2.4 2.4 2.2 36 Mexico 18.9 18.7 17.5 15.7 16.7 16.3 60.0 68.2 67.1 63.5 57.9 37 Peru 2.2 1.7 2.1 2.0 2.0 2.0 1.9 1.8 1.5 1.5 1.4 38 Other 5.4 5.9 6.2 6.3 8.6 8.3 8.1 8.9 7.9 7.4 7.2 Asia China 39 Mainland 3.0 3.6 3.4 2.9 3.2 6.7 5.9 5.0 7.0 8.6 9.3 40 Taiwan 13.3 12.0 12.8 10.8 11.2 10.7 10.8 12.2 12.6 15.1' 17.3 41 India 5.5 7.7 5.8 9.1 6.5 11.8 14.1 6.9 6.3 5.9 5.6 42 Israel 1.1 1.8 1.1 2.7 2.2 2.0 3.2 3.7 2.4 2.4 3.9 43 Korea (South) 13.7 15.2 21.4 15.5 19.9 19.3 19.3 18.5 22.5' 24.6' 25.4 44 Malaysia 5.6 6.1 6.9 7.1 6.5 6.7 6.1 6.7 6.4 6.3 6.6 45 Philippines 5.1 6.2 4.7 5.1 5.2 5.4 5.2 5.6 5.4 5.3 5.3 46 Thailand 4.7 4.1 3.9 4.0 4.2 4.2 3.9 5.1 4.0 3.5 4.5 47 Other Asia 2.9 2.9 1.7 1.9 1.7 1.8 1.6 1.9 1.9 2.0 2.0 Africa 48 Egypt 1.3 1.4 1.1 1.1 1.2 1.2 1.4 1.2 1.3 1.5 1.3 49 Morocco .5 .4 .4 .3 .3 .3 .3 .1 .1 .1 .1 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 1.0 .8 .7 .7 .7 .8 .7 .7 .8 .7 52 Eastern Europe 5.5 5.2 9.0 10.1 9.5 9.5 10.2 10.1 10.6 11.9 12.8 53 Russia4 2.2 1.6 1.4 1.0 1.5 1.5 1.6 1.6 2.8 2.8 2.6 54 Other 3.3 3.6 7.6 9.1 8.0 8.0 8.5 8.5 7.9 9.0 10.2 55 Offshore banking centers 93.9 59.9 59.4 76.3 71.4 58.1 73.1 72.0 56.6 90.6 93.3 56 Bahamas 35.4 13.7 9.3 13.5 7.0 .0 1.1 7.5 7.5 10.9 5.5 57 Bermuda 4.6 8.0 6.3 9.0 7.9 5.7 7.6 7.6 8.1 12.7 11.8 58 Cayman Islands and other British West Indies 12.8 1.3 5.9 14.6 13.6 11.9 21.8 16.4 5.0 27.8 40.8 59 Netherlands Antilles 2.6 1.7 1.9 1.9 2.9 1.7 5.8 2.8 3.3 2.8 2.2 60 Panama5 3.9 3.9 2.5 3.2 3.8 3.4 3.5 3.2 3.3 3.2 3.0 61 Lebanon 62 Hong Kong, China 23.3 2L0 20^6 187 2L5 223 17.9 18.9 15.7 16.5 18.7 63 Singapore 11.1 10.1 12.6 15.2 14.6 12.9 15.2 15.5 13.5 16.6 11.2 64 Other .2 .1 .1 .2 .1 .1 .0 .1 .0 .0 .0 65 Miscellaneous and unallocated7 495.1 387.9 351.1 391.2 472.4 478.6 608.7 125.4 114.8 117.8 133.4 NOTE. Publication of table 3.21, "Claims on Foreign Countries Held by U.S. and Foreign are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign Offices of U.S. Banks," will be discontinued in the Federal Reserve Bulletin after the March branch of the same banking institution. 2003 issue. Table 3.21 was originally published as a more timely report of a geographic These data are on a gross claims basis and do not necessarily reflect the ultimate country breakdown of assets of foreign branches than the report released by the Federal Financial risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks Institutions Examination Council (FFIEC), FFIEC009 Country Exposure Report, which once are available in the quarterly Country Exposure Lending Survey published by the Federal lagged by five months. Currently, the Country Exposure Report from FFIEC is being Financial Institutions Examination Council. published with a quarter lag and has more complete data on country risk exposure of U.S. 2. Organization of Petroleum Exporting Countries, shown individually; other members of banks. The data are available on FFIEC's web site: http://www.lifiec.gov/el6.htm, or can be OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United obtained from Publications Services, Mail Stop 127, Board of Governors of the Federal Arab Emirates), and Bahrain and Oman (not formally members of OPEC). Reserve System, Washington, DC 20551, or call 202-452-3244 or 45. 3. Excludes Liberia. Beginning March 1994 includes Namibia. 1. The banking offices covered by these data include U.S. offices and foreign branches of 4. As of December 1992, excludes other republics of the former Soviet Union. U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered 5. Includes Canal Zone. include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include 6. Foreign branch claims only. large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository 7. Includes New Zealand, Liberia, and international and regional organizations. institutions as well as some types of brokers and dealers. To eliminate duplication, the data Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 International Statistics • March 2003 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 2001 2002 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999988 11999999 22000000 June Sept. Dec. Mar. June Sept.? 1 Total 46,570 53,044 73,904 68,028 53,526 66,718 74,280 70,179 68,366 2 Payable in dollars 36,668 37,605 48,931 41,734 35,347 42,957 47,050 48,103 44,969 3 Payable in foreign currencies 9,902 15,415 24,973 26,294 18,179 23,761 27,230 22,076 23,397 By type 4 Financial liabilities 19,255 27,980 47,419 41,908 27,502 41,034 45,833 42,365 40,879 5 Payable in dollars 10,371 13,883 25,246 17,655 11,415 18,763 20,367 21,892 18,775 6 Payable in foreign currencies 8,884 14,097 22,173 24,253 16,087 22,271 25,466 20,473 22,104 7 Commercial liabilities 27,315 25,064 26,485 26,120 26,024 25,684 28,447 27,814 27,487 8 Trade payables 10,978 12,857 14,293 13,127 11,740 11,820 14,872 13,959 13,712 y Advance receipts and other liabilities 16,337 12,207 12,192 12,993 14,284 13,864 13,575 13,855 13,775 10 Payable in dollars 26,297 23,722 23,685 24,079 23,932 24,194 26,683 26,211 26,194 li Payable in foreign currencies 1,018 1,318 2,800 2,041 2,092 1,490 1,764 1,603 1,293 By area or country Financial liabilities 12 Europe 12,589 23,241 34,172 32,785 22,083 31,806 38,942 34,682 34,511 13 Belgium and Luxembourg 79 31 147 98 76 154 119 120 232 14 France 1,097 1,659 1,480 1,222 1,538 2,841 3,531 4,071 3,517 li Germany 2,063 1,974 2,168 2,463 1,994 2,344 2,982 2,622 2,865 16 Netherlands 1,406 1,996 2,016 1,763 1,998 1,954 1,951 1,939 1,918 17 Switzerland 155 147 104 93 92 94 84 61 61 18 United Kingdom 5,980 16,521 26,362 25,363 14,819 22,852 28,180 23,859 23,125 19 Canada 693 284 411 628 436 955 942 946 457 20 Latin America and Caribbean 1,495 892 4,125 2,100 414 2,858 1,547 1,832 1,088 21 Bahamas 7 1 6 40 5 157 5 5 0 22 Bermuda 101 5 1,739 461 47 960 836 626 588 23 Brazil 152 126 148 21 22 35 35 38 65 24 British West Indies 957 492 406 1,508 243 1,627 612 1,000 377 25 Mexico 59 25 26 20 24 36 27 25 26 26 Venezuela 2 0 2 1 3 2 1 5 1 27 Asia 3,785 3,437 7,965 5,639 3,869 5,042 4,010 4,491 4,442 28 Japan 3,612 3,142 6,216 3,297 3,442 3,269 3,299 2,387 2,447 29 Middle Eastern oil-exporting countries' 0 4 11 8 9 10 15 14 16 30 Africa 28 28 52 61 59 53 122 120 128 31 Oil-exporting countries2 0 0 0 0 5 5 91 91 91 32 All other3 665 98 694 695 672 320 270 294 253 Commercial liabilities 33 Europe 10,030 9,262 9,629 8,723 8,855 9,230 8,372 8,468 8,704 34 Belgium and Luxembourg 278 140 293 297 160 99 105 94 134 35 France 920 672 979 665 892 735 701 827 709 36 Germany 1,392 1,131 1,047 1,017 966 908 584 570 856 37 Netherlands 429 507 300 343 343 1,163 463 765 1,182 38 Switzerland 499 626 502 697 683 790 637 749 592 39 United Kingdom 3,697 3,071 2,847 2,706 2,296 2,280 2,747 2,551 2,288 40 Canada 1,390 1,775 1,933 1,957 1,569 1,633 1,798 2,027 1,672 41 Latin America and Caribbean 1,618 2,310 2,381 2,293 2,879 2,729 3,454 2,746 2,850 42 Bahamas 14 22 31 31 44 52 23 12 14 43 Bermuda 198 152 281 367 570 591 433 422 468 44 Brazil 152 145 114 279 312 290 277 320 290 45 British West Indies 10 48 76 21 28 45 67 46 47 46 Mexico 347 887 841 762 884 901 1,457 958 997 47 Venezuela 202 305 284 218 242 166 281 204 327 48 Asia 12,342 9,886 10,983 11,384 11,114 10,532 12,969 12,693 12,313 49 Japan 3,827 2,609 2,757 2,377 2,421 2,592 4,281 4,143 4,041 50 Middle Eastern oil-exporting countries' 2,852 2,551 2,832 3,087 3,053 2,642 3,142 3,259 3,669 51 Africa 794 950 948 1,115 938 836 976 916 876 52 Oil-exporting countries2 393 499 483 539 471 436 454 349 445 53 Other3 1,141 881 614 648 669 724 878 964 1,072 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 A53 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 2001 2002 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999988 11999999 22000000 June Sept. Dec. Mar. June Sept.p 1 Total 77,462 76,669 90,157 97,470 94,076 113,155 115,743 116,137 112,114 ? Payable in dollars 72,171 69,170 79,558 87,690 83,292 103,937 106,171 107,095 103,892 3 Payable in foreign currencies 5,291 7,472 10,599 9,780 10,784 9,218 9,572 9,042 8,222 By type 4 Financial claims 46,260 40,231 53,031 61,891 60,015 81,287 85,381 87,324 84,033 5 Deposits 30,199 18,566 23,374 25,381 22,391 29,801 41,813 42,136 38,074 6 Payable in dollars 28,549 16,373 21,015 23,174 19,888 27,850 40,002 40,323 36,382 7 Payable in foreign currencies 1,650 2,193 2,359 2,207 2,503 1,951 1,811 1,813 1,692 R Other financial claims 16,061 21,665 29,657 36,510 37,624 51,486 43,568 45,188 45,959 9 Payable in dollars 14,049 18,593 25,142 32,038 32,076 46,621 39,553 41,875 42,734 10 Payable in foreign currencies 2,012 3,072 4,515 4,472 5,548 4,865 4,015 3,313 3,225 11 Commercial claims 31,202 36,438 37,126 35,579 34,061 31,868 30,362 28,813 28,081 17 Trade receivables 27,202 32,629 33,104 30,631 29,328 27,586 25,597 24,252 23,506 13 Advance payments and other claims 4,000 3,809 4,022 4,948 4,733 4,282 4,765 4,561 4,575 14 Payable in dollars 29,573 34,204 33,401 32,478 31,328 29,466 26,616 24,897 24,776 15 Payable in foreign currencies 1,629 2,207 3,725 3,101 2,733 2,402 3,746 3,916 3,305 By area or country Financial claims 16 Europe 12,294 13,023 23,136 23,975 23,069 26,118 35,933 36,863 31,967 17 Belgium and Luxembourg 661 529 296 262 372 625 751 797 656 IS France 864 967 1,206 1,376 1,682 1,450 3,489 3,921 3,854 19 Germany 304 504 848 1,163 1,112 1,068 4,114 3,972 4,292 ?0 Netherlands 875 1,229 1,396 1,072 954 2,138 3,253 3,995 4,024 ?1 Switzerland 414 643 699 653 665 589 308 1,010 1,135 22 United Kingdom 7,766 7,561 15,900 15,913 15,670 16,510 17,910 16,037 11,310 23 Canada 2,503 2,553 4,576 4,787 4,254 6,193 5,471 5,537 5,485 74 Latin America and Caribbean 27,714 18,206 19,317 24,403 26,099 41,201 35,001 37,511 38,822 ?5 Bahamas 403 1,593 1,353 818 649 976 1,197 1,332 715 ?6 Bermuda 39 11 19 426 80 918 611 704 1,157 ?7 Brazil 835 1,476 1,827 1,877 2,065 2,127 1,892 2,036 2,226 ?8 British West Indies 24,388 12,099 12,596 17,505 19,234 32,965 27,350 29,591 30,859 ?9 Mexico 1,245 1,798 2,448 2,633 2,910 3,075 2,777 2,823 2,871 30 Venezuela 55 48 87 66 80 83 79 60 71 31 Asia 3,027 5,457 4,697 6,829 5,274 6,430 6,489 5,826 6,121 37 Japan 1,194 3,262 1,631 1,698 1,761 1,604 2,009 1,093 1,074 33 Middle Eastern oil-exporting countries' 9 23 80 76 100 135 79 78 88 34 Africa 159 286 411 476 456 414 390 431 379 35 Oil-exporting countries2 16 15 57 35 83 49 51 64 29 36 All other3 563 706 894 1,421 891 931 2,097 1,156 1,259 Commercial claims 37 Europe 13,246 16,389 15,938 14,469 14,381 14,036 12,708 11,861 11,971 38 Belgium and Luxembourg 238 316 452 403 354 268 272 207 253 39 France 2,171 2,236 3,095 3,190 3,062 2,922 2,883 2,828 2,972 40 Germany 1,822 1,960 1,982 1,993 1,977 1,662 1,198 1,163 1,158 41 Netherlands 467 1,429 1,729 863 844 529 415 379 409 4? Switzerland 483 610 763 473 514 611 436 472 403 43 United Kingdom 4,769 5,827 4,502 . 3,724 3,571 3,839 3,579 3,387 3,206 44 Canada 2,617 2,757 3,502 3,470 3,116 2,855 2,760 2,752 2,619 45 Latin America and Caribbean 6,296 5,959 5,851 6,033 5,590 4,874 4,891 4,520 4,351 46 Bahamas 24 20 37 39 35 42 42 28 32 47 Bermuda 536 390 376 650 526 369 422 214 270 48 Brazil 1,024 905 957 1,363 1,183 958 837 829 866 49 British West Indies 104 181 137 135 124 95 73 26 12 50 Mexico 1,545 1,678 1,507 1,375 1,442 1,401 1,225 1,283 1,180 51 Venezuela 401 439 328 321 301 288 312 316 350 5? Asia 7,192 9,165 9,630 9,499 8,704 7,855 7,513 7,309 6,769 53 Japan 1,681 2,074 2,796 3,148 2,438 2,007 1,975 2,064 2,083 54 Middle Eastern oil-exporting countries' 1,135 1,625 1,024 1,040 919 851 657 889 819 55 Africa 711 631 672 601 838 645 630 604 637 56 Oil-exporting countries2 165 171 180 102 170 88 109 93 107 57 Other3 1,140 1,537 1,572 1,507 1,432 1,603 1,860 1,767 1,734 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

A54 International Statistics • March 2003 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 2002 2002 TTrraannssaaccttiioonn,, aanndd aarreeaa oorr ccoouunnttrryy 22000000 22000011 Jan.- Nov. May June' July' Aug.' Sept.' Oct.' NOV.P U.S. corporate securities STOCKS 1 Foreign purchases 3,605,196 3,051,332 2,942,155 274,543 248,561 318,210 257,265 206,729 297,181 264,362 2 Foreign sales 3,430,306 2,934,942 2,895,040 274,890' 244,551 308,557 252,651 213,195 293,565 257,882 3 Net purchases, or sales (-) 174,890 116,390 47,115 -347R 4,010 9,653 4,614 -6,466 3,616 6,480 4 Foreign countries 174,903 116,187 47,185 -325R 3,994 9,580 4,603 -6,451 3,610 6,473 5 Europe 164,656 88,099 28,260 -2,549' -656 3,204 3,830 -5,154 2,187 4,407 6 France 5,727 5,914 1,452 -1,270 -1,249 38 942 -936 982 -323 7 Germany 31,752 8,415 -640 -48 -131 -595 -328 -1,175 276 31 8 Netherlands 4,915 10,919 3,752 41 36 1,440 900 4 760 629 y Switzerland 11,960 3,456 1,769 89 -710 -341 -306 -949 -176 1,581 10 United Kingdom 58,736 38,493 14,551 -1,830' 1,115 1,828 2,801 -1,232 1,403 2,075 n Channel Islands and Isle of Man1 n.a. -698 -246 -3 -2 73 -47 -21 94 10 12 Canada 5,956 10,984 6,707 546 373 1,939 1,336 -772 342 47 13 Latin America and Caribbean -17,812 -5,154 -13,129 -703 -673 -1,319 -3,849 -2,903 -2,874 2,692 14 Middle East2 9,189 1,789 -1,366 -30 198 43 -58 46 -90 -232 15 Other Asia 12,494 20,726 23,561 2,253 3,986 4,755 3,231 2,012 3,985 -775 lb Japan 2,070 6,788 13,468 3,116 3,193 3,660 2,249 238 -7 -961 1/ 415 -366 -60 9 -1 3 -34 36 -22 -16 18 Other countries 5 109 3,212 149 767 955 147 284 82 350 19 Nonmonetary international and regional organizations -11 203 -69 -22 16 73 11 -15 6 7 BONDS3 20 Foreign purchases 1,208,386 1,942,690 2,346,801 219,525' 204,478 221,130 220,918 208,602 217,402 268,479 21 Foreign sales 871,416 1,556,745 2,002,438 174,534' 171,609 205,389 189,016 183,671 185,366 227,942 22 Net purchases, or sales (-) 336,970 385,945 344,363 44,991 32,869 15,741 31,902 24,931 32,036 40,537 23 Foreign countries 337,074 385,380 344,270 45,121 32,694 16,072 31,871 25,022 31,632 40,497 24 Europe 180,917 195,412 152,588 19,149 19,905 3,253 10,891 11,758 16,532 16,714 25 France 2,216 5,028 4,167 350 458 183 483 252 1,089 372 26 Germany 4,067 12,362 3,559 132 691 693 366 -390 -71 211 27 Netherlands 1,130 1,538 -410 —49 -518 393 55 -35 149 -59 28 Switzerland 3,973 5,721 8,544 1,412 1,109 1,406 1,825 356 355 1,070 29 United Kingdom 141,223 152,772 98,683 15,309 12,902 -233 3,690 7,374 9,852 8,453 30 Channel Islands and Isle of Man1 n.a. 2,000 10,214 92 -14 -20 1,203 1,342 2,239 4,917 31 Canada 13,287 4,595 1,133 -193 925 -610 166 -383 540 -757 32 Latin America and Caribbean 59,444 77,019 75,454 15,618 2,936 1,840 9,706 3,464 4,339 5,471 33 Middle East1 2,076 2,338 2,379 -172 24 125 578 40 196 372 34 Other Asia 78,794 106,400 108,495 10,608 8,521 10,336 9,026 9,602 10.126 18,374 35 Japan 39,356 33,687 43,588 5,046 3,290 4,754 1,975 6,135 5,505 10,456 36 Africa 938 760 832 13 330 112 77 171 -18 56 37 Other countries 1,618 -1,144 3,389 98 53 1,016 1,427 370 -83 267 38 Nonmonetary international and regional organizations -70 566 93 -130 175 -331 31 -91 404 40 Foreign securities 39 Stocks, net purchases, or sales (-) -13,088 -50,113 426 -7,855' -5,019 13,299 3,061 790 -6,196 -1,004 40 Foreign purchases 1,802,185 1,397,664 1,195,850 1 13,332' 111,483 139,307 92,731 87,080 120,594 101,813 41 Foreign sales 1,815,273 1,447,777 1,195,424 121,187' 116,502 126,008 89,670 86,290 126,790 102,817 42 Bonds, net purchases, or sales (-) ^1,054 30,502' 33,563 7,325' 5,574 7,722 -1,749 1,064 6,920 2,269 43 Foreign purchases 958,932 1,160,102' 1,265,888 125,354' 118,965 120,870 112,167 126,078 123,139 144,719 44 Foreign sales 962,986 1,129,600' 1,232,325 118,029' 113,391 113,148 113,916 125,014 116,219 142,450 45 Net purchases, or sales (-), of stocks and bonds -17,142 -I9,6IR 33,989 -530R 555 21,021 1,312 1,854 724 1,265 46 Foreign countries -17,278 -19,023R 34,037 -579R 589 21,111 1,287 1,876 671 1,277 47 Europe -25,386 -12,108' 23,966 1,288' ^,666 11,479 568 1,420 679 6,119 48 Canada -3,888 2,943 3,986 57' 2,239 1,917 4 -585 -1,326 -204 49 Latin America and Caribbean -15,688 4,315' 3,519 -1,815' 2,621 1,897 -755 -521 -32 518 50 Asia 24,488 -11,869 2,571 381 342 4,990 1,028 1,018 1,694 -5,256 51 Japan 20,970 -20,116 -7,080 -518 -871 3,453 379 -862 13 -6,617 52 Africa 943 -557 -423 -118 8 205 393 -39 104 100 53 Other countries 2,253 -1,747 420 -372 45 623 49 583 -448 0 54 Nonmonetary international and regional organizations 150 -587 -51 49 -34 -90 25 -22 53 -12 1. Before January 2001, data 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 A55 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (-) during period Area or country Jan.- May July' Aug/ Sept/ Nov. 1 Total estimated -54,032 18,514 66,712 8,408 18,097 -3,226 31,141 6,652 18,987 2 Foreign countries -53,571 19,200 65,418 -39 18,331 -3,639 31,106 5,904 19,401 3 Europe -50,704 -20,604 -4J63 -6,274 -3,208 -6,859 11,087 640 5,841 4 Belgium2 73 -598 1,932 8 298 252 1,349 -138 -210 511 5 Germany -7,304 -1,668 -8,382 649 -867 -3,725 -2,599 -1,096 ^169 1,595 6 Luxembourg2 n.a. 462 -1,408 -166 85 -84 -14 -265 61 -139 7 Netherlands 2,140 -6,728 -20,079 -9,328 -1,343 171 -700 1,436 -2,856 538 8 Sweden 1,082 -1,190 2,022 55 192 -169 471 234 -203 1,652 9 Switzerland -10,326 1,412 1,783 341 359 246 -705 1,150 -1,727 2,137 10 United Kingdom -33,669 -7,279 23,019 2,312 -1,396 6,515 -4,878 12,703 4,872 -1,490 11 Channel Islands and Isle of Man3 n.a. -179 798 84 793 177 444 -43 -116 -299 12 Other Europe and former U.S.S.R -2,700 ^1,836 ^t,448 -229 -1,329 -2,775 -227 -2,894 1,288 1,336 13 Canada -550 -1,634 -2,868 454 -1,886 -1,327 -1,558 2,236 -2,449 3,717 14 Latin America and Caribbean -4,914 4,272 15,973 7,939 6,469 4,745 -11,841 7,753 7,219 -1,738 15 Venezuela 1,288 290 14 6 160 -58 -15 -79 5 -1 16 Other Latin America and Caribbean -11,581 14,726 21,234 1,933 3,385 3,879 -7,444 5,516 4,485 339 17 Netherlands Antilles 5,379 -10,744 -5,275 6,000 2,924 924 -4,382 2,316 2,729 -2,076 18 Asia 1,639 36,332 53,251 -2,826 6,020 13,230 16,024 9,987 54 11,973 19 Japan 10,580 16,114 28,396 195 2,499 7,691 6,676 13,096 -1,313 3,516 20 Africa -414 -880 751 -38 299 112 495 -93 12 -17 21 Other 1,372 1,714 3,074 706 516 963 100 136 428 -375 22 Nonmonetary international and regional organizations —461 1,294 -500 198 -234 413 35 748 —414 23 International —483 -290 1,478 -240 -21 -64 418 -45 329 314 24 Latin American Caribbean regional 76 41 -3 -14 28 11 -A 29 4 -19 MEMO 25 Foreign countries -53,571 19,200 65,418 -39 8,210 18,331 -3,639 31,106 5,904 19,401 26 Official institutions -6,302 3,474 8,578 -69 2,161 -5,268 635 -3,511 -553 16,577 27 Other foreign -47,269 15,726 56,840 30 6,049 23,599 —4,274 34,617 6,457 2,824 Oil-exporting countries 28 Middle East4 3,483 865 -268 -753 -148 -1,133 -412 913 -160 29 Africa5 0 -2 -26 0 0 0 -1 0 1 1. Official and private transactions in marketable U.S. Treasury securities having an 3. Before January 2001, these data were included in the data reported for the United original maturity of more than one year. Data are based on monthly transactions reports. Kingdom. Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab countries. Emirates (Trucial States). 2. Before January 2001, combined data reported for Belgium and Luxembourg. 5. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • March 2003 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 2002 2003 Aug. Sept. Oct. Nov. Dec. Jan. Exchange rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 58.15 51.69 54.37 54.13 54.65 55.02 56.13 56.24 58.29 2 Brazil/real 1.8301 2.3527 2.9213 3.1082 3.3548 3.7966 3.5924 3.6268 3.4375 .3 Canada/dollar 1.4855 1.5487 1.5704 1.5694 1.5761 1.5780 1.5715 1.5592 1.5414 4 China, P.R./yuan 8.2784 8.2770 8.2770 8.2767 8.2760 8.2772 8.2772 8.2777 8.2775 5 Denmark/krone 8.0953 8.3323 7.8862 7.5948 7.5752 7.5732 7.4201 7.2874 6.9980 6 European Monetary Union/euro3 0.9232 0.8952 0.9454 0.9781 0.9806 0.9812 1.0013 1.0194 1.0622 7 Greece/drachma 365.92 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8 Hong Kong/dollar 7.7924 7.7997 7.7997 7.8008 7.7999 7.7995 7.7994 7.7988 7.7994 9 India/rupee 45.00 47.22 48.63 48.62 48.46 48.39 48.29 48.15 47.96 10 Japan/yen 107.80 121.57 125.22 118.99 121.08 123.91 121.61 121.89 118.81 11 Malaysia/ringgit 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 3.8000 12 Mexico/peso 9.459 9.337 9.663 9.839 10.071 10.094 10.195 10.225 10.622 13 New Zealand/dollar2 45.68 42.02 46.45 46.35 47.02 48.18 49.73 51.08 53.98 14 Norway/krone 8.8131 8.9964 7.9839 7.6042 7.5018 7.4873 7.3157 7.1557 6.9138 15 Singapore/dollar 1.7250 1.7930 1.7908 1.7553 1.7682 1.7843 1.7653 1.7532 1.7363 16 South Africa/rand 6.9468 8.6093 10.5176 10.5878 10.5967 10.3058 9.6509 8.9479 8.6949 17 South Korea/won 1,130.90 1,292.01 1,250.31 1,197.51 1,211.61 1,240.19 1,210.20 1,206.61 1,176.45 18 Sri Lanka/rupee 76.964 89.602 95.773 96.281 96.207 96.402 96.426 96.705 96.813 19 Sweden/krona 9.1735 10.3425 9.7233 9.4610 9.3400 9.2846 9.0652 8.9303 8.6368 20 Switzerland/franc 1.6904 1.6891 1.5567 1.4972 1.4931 1.4932 1.4658 1.4388 1.3765 21 Taiwan/dollar 31.260 33.824 34.536 33.884 34.573 34.947 34.673 34.799 34.571 21 Thailand/baht 40.210 44.532 43.019 42.193 42.893 43.641 43.353 43.318 42.773 23 United Kingdom/pound2 151.56 143.96 150.25 153.68 155.63 155.75 157.11 158.63 161.75 24 Venezuela/bolivar 680.52 724.10 1,161.19 1,379.73 1,458.39 1,440.50 1,358.61 1,328.29 1,714.45 Indexes4 NOMINAL 25 Broad (January 1997=100)' 119.68' 126.08' 127.19' 125.65' 126.65' 127.63' 126.33' 125.70' 124.21 26 Major currencies (March 1973=100)6 98.31' 104.28' 102.85' 100.15' 100.43' 100.93' 99.53' 98.62' 96.03 27 Other important trading partners (January 1997—100) 130.34' 136.36' 141.42' 142.07' 144. Iff 145.69' 144.85' 144.87' 145.72 REAL 28 Broad (March 1973-100)5 104.32' 110.28' 110.66' 109.58' 110.33' 111.03' 109.55' 108.75' 107.65 29 Major currencies (March 1973=100)6 103.17' 110.48' 109.11' 106.31' 106.65' 107.18' 105.66' 104.50' 102.31 30 Other important trading partners (March 1973-11X1) 114.54' 119.19' 122.01' 123.12' 124.49' 125.49' 123.96' 123.59' 123.99 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 4. Starting with the March 2003 Bulletin, revised index values resulting from the periodic 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 the foreign exchange value of the dollar, see Federal Reserve Bulletin, vol. 2. U.S. cents per currency unit. 84 (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. Euro equals 6. Weighted average of the foreign exchange value of the U.S. dollar against a subset of 13.7603 Austrian schillings 1,936.27 Italian lire broad index currencies that circulate widely outside the country of issue. The weight for each 40.3399 Belgian francs 40.3399 Luxembourg francs currency is its broad index weight scaled so that the weights of the subset of currencies in the 5.94573 Finnish markkas 2.20371 Netherlands guilders index sum to one. 6.55957 French francs 200.482 Portuguese escudos 7. Weighted average of the foreign exchange value of the U.S. dollar against a subset of 1.95583 German marks 166.386 Spanish pesetas broad index currencies that do not circulate widely outside the country of issue. The weight .787564 Irish pounds 340.750 Greek drachmas for each currency is its broad index weight scaled so that the weights of the subset of currencies in the index sum to one. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A57 Guide to Special Tables and Statistical Releases SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks December 31, 2001 May 2002 A64 March 31,2002 August 2002 A58 June 30, 2002 November 2002 A58 September 30, 2002 February 2003 A58 Terms of lending at commercial banks February 2002 May 2002 A66 May 2002 August 2002 A60 August 2002 November 2002 A60 November 2002 February 2003 A60 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 2001 May 2002 A72 March 31, 2002 August 2002 A66 June 30, 2002 November 2002 A66 September 30, 2002 February 2003 A66 Pro forma financial statements for Federal Reserve priced services March 31, 2001 August 2001 A76 June 30, 2001 October 2001 A64 September 30,2001 January 2002 A64 Residential lending reported under the Home Mortgage Disclosure Act 1988-2000 September 2001 A64 1989-2001 September 2002 A58 Disposition of applications for private mortgage insurance 1997-2000 September 2001 A73 1998-2001 September 2002 A67 Small loans to businesses and farms 1996-2000 September 2001 A76 1996-2001 September 2002 A70 Community development lending reported under the Community Reinvestment Act 2000 September 2001 A79 2001 September 2002 A73 STATISTICAL RELEASES—A List of Statistical Releases Published by the Federal Reserve is Printed Semiannually in the Bulletin Issue Page Schedule of anticipated release dates for periodic releases December 2002 A66 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 Federal Reserve Bulletin • March 2003 Index to Statistical Tables References are to pages A3-A56, although the prefix 'A" is omitted in this index. ACCEPTANCES, bankers (See Bankers acceptances) Federal National Mortgage Association, 28, 32, 33 Assets and liabilities (See also Foreigners) Federal Reserve Banks Commercial banks, 15-21 Condition statement, 10 Domestic finance companies, 30, 31 Discount rates (See Interest rates) Federal Reserve Banks, 10 U.S. government securities held, 5, 10, 11, 25 Foreign-related institutions, 20 Federal Reserve credit, 5, 6, 10, 12 Automobiles Federal Reserve notes, 10 Consumer credit, 34 Federally sponsored credit agencies, 28 Production, 42, 43 Finance companies Assets and liabilities, 30 BANKERS acceptances, 5, 10 Business credit, 31 Loans, 34 Bankers balances, 15-21 (See also Foreigners) Paper, 22, 23 Bonds (See also U.S. government securities) Float, 5 New issues, 29 Rates, 23 Flow of funds, 35-39 Business loans (See Commercial and industrial loans) Foreign currency operations, 10 Foreign deposits in U.S. banks, 5 Foreign exchange rates, 56 CAPACITY utilization, 40, 41 Foreign-related institutions, 20 Capital accounts Foreigners Commercial banks, 15-21 Claims on, 46, 49-51, 53 Federal Reserve Banks, 10 Liabilities to, 45-48, 52, 54, 55 Certificates of deposit, 23 Commercial and industrial loans Commercial banks, 15-21 GOLD Weekly reporting banks, 17, 18 Certificate account, 10 Commercial banks Stock, 5, 45 Assets and liabilities, 15-21 Government National Mortgage Association, 28, 32, 33 Commercial and industrial loans, 15-21 Consumer loans held, by type and terms, 34 INDUSTRIAL production, 42, 43 Real estate mortgages held, by holder and property, 33 Insurance companies, 25, 33 Time and savings deposits, 4 Interest rates Commercial paper, 22, 23, 30 Bonds, 23 Condition statements (See Assets and liabilities) Consumer credit, 34 Consumer credit, 34 Federal Reserve Banks, 7 Corporations Money and capital markets, 23 Security issues, 29, 55 Mortgages, 32 Credit unions, 34 Prime rate, 22 Currency in circulation, 5, 13 International capital transactions of United States, 44—55 Customer credit, stock market, 24 International organizations, 46, 47, 49, 52, 53 Investment companies, issues and assets, 30 DEBT (See specific types of debt or securities) Investments (See also specific types) Demand deposits, 15-21 Commercial banks, 4, 15-21 Depository institutions Federal Reserve Banks, 10, 11 Reserve requirements, 8 Financial institutions, 33 Reserves and related items, 4-6, 12 Deposits (See also specific types) LIFE insurance companies (See Insurance companies) Commercial banks, 4, 15-21 Loans (See also specific types) Federal Reserve Banks, 5, 10 Commercial banks, 15-21 Discount rates at Reserve Banks and at foreign central banks and Federal Reserve Banks, 5-7, 10, 11 foreign countries (See Interest rates) Financial institutions, 33 Discounts and advances by Reserve Banks (See Loans) Insured or guaranteed by United States, 32, 33 EURO, 56 MANUFACTURING Capacity utilization, 40, 41 Production, 42, 43 FARM mortgage loans, 33 Margin requirements, 24 Federal agency obligations, 5, 9-11, 26, 27 Member banks, reserve requirements, 8 Federal credit agencies, 28 Mining production, 43 Federal finance Monetary and credit aggregates, 4, 12 Debt subject to statutory limitation, and types and ownership of Money and capital market rates, 23 gross debt, 25 Money stock measures and components, 4, 13 Federal Financing Bank, 28 Mortgages (See Real estate loans) Federal funds, 23 Mutual funds, 13, 30 Federal Home Loan Banks, 28 Federal Home Loan Mortgage Corporation, 28, 32, 33 Federal Housing Administration, 28, 32, 33 Mutual savings banks (See Thrift institutions) Federal Land Banks, 33 OPEN market transactions, 9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A59 PRICES Stock market, selected statistics, 24 Stock market, 24 Stocks (See also Securities) Prime rate, 22 New issues, 29 Production, 42, 43 Prices, 24 Student Loan Marketing Association, 28 REAL estate loans Banks, 15-21, 33 THRIFT institutions, 4 (See also Credit unions and Savings Terms, yields, and activity, 32 institutions) Type and holder and property mortgaged, 33 Time and savings deposits, 4, 13, 15-21 Reserve requirements, 8 Treasury cash, Treasury currency, 5 Reserves Treasury deposits, 5, 10 Commercial banks, 15-21 Depository institutions, 4-6 U.S. GOVERNMENT balances Federal Reserve Banks, 10 Commercial bank holdings, 15-21 U.S. reserve assets, 45 Treasury deposits at Reserve Banks, 5, 10 Residential mortgage loans, 32, 33 U.S. government securities Retail credit and retail sales, 34 Bank holdings, 15-21, 25 Dealer transactions, positions, and financing, 27 SAVING Federal Reserve Bank holdings, 5, 10, 11, 25 Flow of funds, 33, 34, 35-39 Foreign and international holdings and transactions, 10, 25, 55 Savings deposits (See Time and savings deposits) Open market transactions, 9 Savings institutions, 33, 34, 35-39 Outstanding, by type and holder, 25, 26 Securities (See also specific types) Rates, 23 Federal and federally sponsored credit agencies, 28 U.S. international transactions, 44-55 Foreign transactions, 54 Utilities, production, 43 New issues, 29 Prices, 24 VETERANS Affairs, Department of, 32, 33 Special drawing rights, 5, 10, 44, 45 State and local governments Holdings of U.S. government securities, 25 WEEKLY reporting banks, 17, 18 New security issues, 29 Rates on securities, 23 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 Federal Reserve Bulletin • March 2003 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD M. GRAMLICH ROGER W. FERGUSON, JR., Vice Chairman SUSAN SCHMIDT BIES OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE DONALD J. WINN, Assistant to the Board and Director KAREN H. JOHNSON, Director LYNN S. Fox, Assistant to the Board DAVID H. HOWARD, Deputy Director MICHELLE A. SMITH, Assistant to the Board THOMAS A. CONNORS, Associate Director WINTHROP P. HAMBLEY, Deputy Congressional Liaison RICHARD T. FREEMAN, Deputy Associate Director JOHN LOPEZ, Special Assistant to the Board STEVEN B. KAMIN, Deputy Associate Director ROSANNA PIANALTO-CAMERON, Special Assistant to the Board WILLIAM L. HELKIE, Senior Adviser DAVID W. SKIDMORE, Special Assistant to the Board DALE W. HENDERSON, Senior Adviser JON W. FAUST, Assistant Director LEGAL DIVISION JOSEPH E. GAGNON, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel MICHAEL P. LEAHY, Assistant Director SCOTT G. ALVAREZ, Associate General Counsel D. NATHAN SHEETS, Assistant Director RICHARD M. ASHTON, Associate General Counsel RALPH W. TRYON, Assistant Director STEPHANIE MARTIN, Associate General Counsel WILLENE A. JOHNSON, Adviser KATHLEEN M. O'DAY, Associate General Counsel ANN E. MISBACK, Assistant General Counsel DIVISION OF RESEARCH AND STATISTICS STEPHEN L. SICILIANO, Assistant General Counsel DAVID J. STOCKTON, Director KATHERINE H. WHEATLEY, Assistant General Counsel EDWARD C. ETTIN, Deputy Director CARY K. WILLIAMS, Assistant General Counsel DAVID W. WILCOX, Deputy Director MYRON L. KWAST, Associate Director OFFICE OF THE SECRETARY STEPHEN D. OLINER, Associate Director JENNIFER J. JOHNSON, Secretary PATRICK M. PARKINSON, Associate Director ROBERT DEV. FRIERSON, Deputy Secretary LAWRENCE SLIFMAN, Associate Director MARGARET M. SHANKS, Assistant Secretary CHARLES S. STRUCKMEYER, Associate Director JOYCE K. ZICKLER, Deputy Associate Director DIVISION OF BANKING SUPERVISION J. NELLIE LIANG, Assistant Director AND REGULATION S. WAYNE PASSMORE, Assistant Director RICHARD SPILLENKOTHEN, Director DAVID L. REIFSCHNEIDER, Assistant Director STEPHEN C. SCHEMERING, Deputy Director JANICE SHACK-MARQUEZ, Assistant Director HERBERT A. BIERN, Senior Associate Director WILLIAM L. WASCHER III, Assistant Director ROGER T. COLE, Senior Associate Director MARY M. WEST, Assistant Director WILLIAM A. RYBACK, Senior Associate Director ALICE PATRICIA WHITE, Assistant Director GERALD A. EDWARDS, JR., Associate Director GLENN B. CANNER, Senior Adviser STEPHEN M. HOFFMAN, JR., Associate Director DAVID S. JONES, Senior Adviser JAMES V. HOUPT, Associate Director THOMAS D. SIMPSON, Senior Adviser JACK P. JENNINGS, Associate Director MICHAEL G. MARTINSON, Associate Director DIVISION OF MONETARY AFFAIRS MOLLY S. WASSOM, Associate Director HOWARD A. AMER, Deputy Associate Director VINCENT R. REINHART, Director NORAH M. BARGER, Deputy Associate Director DAVID E. LINDSEY, Deputy Director BETSY CROSS, Deputy Associate Director BRIAN F. MADIGAN, Deputy Director DEBORAH P. BAILEY, Assistant Director WILLIAM C. WHITESELL, Deputy Associate Director BARBARA J. BOUCHARD, Assistant Director JAMES A. CLOUSE, Assistant Director ANGELA DESMOND, Assistant Director WILLIAM B. ENGLISH, Assistant Director JAMES A. EMBERSIT, Assistant Director RICHARD D. PORTER, Senior Adviser CHARLES H. HOLM, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM G. SPANIEL, Assistant Director DAVID M. WRIGHT, Assistant Director WILLIAM C. SCHNEIDER, JR., Project Director, National Information Center Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A61 MARK W. OLSON DONALD L. KOHN BEN S. BERNANKE DIVISION OF CONSUMER DIVISION OF RESERVE BANK OPERATIONS AND COMMUNITY AFFAIRS AND PAYMENT SYSTEMS DOLORES S. SMITH, Director LOUISE L. ROSEMAN, Director GLENN E. LONEY, Deputy Director PAUL W. BETTGE, Associate Director SANDRA F. BRAUNSTEIN, Senior Associate Director JEFFREY C. MARQUARDT, Associate Director MAUREEN P. ENGLISH, Associate Director KENNETH D. BUCKLEY, Assistant Director ADRIENNE D. HURT, Associate Director JOSEPH H. HAYES, JR., Assistant Director IRENE SHAWN MCNULTY, Associate Director EDGAR A. MARTINDALE III, Assistant Director JAMES A. MICHAELS, Assistant Director MARSHA W. REIDHILL, Assistant Director TONDA E. PRICE, Assistant Director JEFF J. STEHM, Assistant Director JACK K. WALTON II, Assistant Director OFFICE OF STAFF DIRECTOR FOR MANAGEMENT OFFICE OF THE INSPECTOR GENERAL STEPHEN R. MALPHRUS, Staff Director BARRY R. SNYDER, Inspector General SHEILA CLARK, EEO Programs Director DONALD L. ROBINSON, Deputy Inspector General MANAGEMENT DIVISION WILLIAM R. JONES, Director STEPHEN J. CLARK, Associate Director DARRELL R. PAULEY, Associate Director DAVID L. WILLIAMS, Associate Director CHRISTINE M. FIELDS, Assistant Director BILLY J. SAULS, Assistant Director DONALD A. SPICER, Assistant Director DIVISION OF INFORMATION TECHNOLOGY MARIANNE M. EMERSON, Deputy Director MAUREEN T. HANNAN, Associate Director TILLENA G. CLARK, Assistant 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 RAYMOND ROMERO, Assistant Director ROBERT F. TAYLOR, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 Federal Reserve Bulletin • March 2003 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman SUSAN SCHMIDT BIES EDWARD M. GRAMLICH MICHAEL H. MOSKOW BEN S. BERNANKE JACK GUYNN MARK W. OLSON J. ALFRED BROADDUS, JR. DONALD L. KOHN ROBERT T. PARRY ROGER W. FERGUSON, JR. ALTERNATE MEMBERS THOMAS M. HEONIG SANDRA PIANALTO JAMIE B. STEWART, JR. CATHY E. MINEHAN WILLIAM POOLE STAFF VINCENT R. REINHART, Secretary and Economist CHRISTINE M. CUMMING, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary ROBERT A. EISENBEIS, Associate Economist GARY P. GILLUM, Assistant Secretary MARVIN S. GOODFRIEND, Associate Economist MICHELLE A. SMITH, Assistant Secretary DAVID H. HOWARD, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel WILLIAM C. HUNTER, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel JOHN P. JUDD, Associate Economist KAREN H. JOHNSON, Economist DAVID E. LINDSEY, Associate Economist DAVID J. STOCKTON, Economist CHARLES S. STRUCKMEYER, Associate Economist THOMAS A. CONNORS, Associate Economist DAVID W. WILCOX, Associate Economist DINO KOS, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL L. PHILLIP HUMANN, President ALAN G. MCNALLY, Vice President DAVID A. SPINA, First District ALAN G. MCNALLY, Seventh District DAVID A. COULTER, Second District DAVID W. KEMPER, Eighth District RUFUS A. FULTON, JR., Third District JERRY A. GRUNDHOFER, Ninth District MARTIN G. MCGUINN, Fourth District CAMDEN R. FINE, Tenth District FRED L. GREEN III, Fifth District GAYLE M. EARLS, Eleventh District L. PHILLIP HUMANN, Sixth District MICHAEL E. O'NEILL, Twelfth District JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A63 CONSUMER ADVISORY COUNCIL RONALD A. REITER, San Francisco, California, Chairman AGNES BUNDY SCANLAN, Boston, Massachusetts, Vice Chairman ANTHONY S. ABBATE, Saddlebrook, New Jersey J. PATRICK LIDDY, Cincinnati, Ohio JANIE BARRERA, San Antonio, Texas RUHI MAKER, Rochester, New York KENNETH R BORDELON, Baton Rouge, Louisiana OSCAR MARQUIS, Park Ridge, Illinois SUSAN BREDEHOFT, Cherry Hill, New Jersey ELSIE MEEKS, Kyle, South Dakota MANUEL CASANOVA, JR., Brownsville, Texas PATRICIA MCCOY, Cambridge, Massachusetts CONSTANCE K. CHAMBERLIN, Richmond, Virginia MARK PINSKY, Philadelphia, Pennsylvania ROBIN COFFEY, Chicago, Illinois ELIZABETH RENUART, Boston, Massachusetts DAN DIXON, Washington, District of Columbia DEBRA S. REYES, Tampa, Florida THOMAS FITZGIBBON, Chicago, Illinois BENSON ROBERTS, Washington, District of Columbia JAMES GARNER, Baltimore, Maryland BENJAMIN ROBINSON III, Charlotte, North Carolina CHARLES GATSON, Kansas City, Missouri DIANE THOMPSON, East St. Louis, Illinois LARRY HAWKINS, Houston, Texas HUBERT VAN TOL, Sparta, Wisconsin W. JAMES KING, Cincinnati, Ohio CLINT WALKER, Wilmington, Delaware EARL JAROLIMEK, Fargo, North Dakota THRIFT INSTITUTIONS ADVISORY COUNCIL KAREN L. MCCORMICK, Port Angeles, Washington, President WILLIAM J. SMALL, Defiance, Ohio, Vice President MICHAEL J. BROWN, SR., Ft. Pierce, Florida D. TAD LOWREY, Brea, California JOHN B. DICUS, Topeka, Kansas GEORGE W. NISE, Philadelphia, Pennsylvania RICHARD J. DRISCOLL, Arlington, Texas KEVIN E. PIETRINI, Virginia, Minnesota CURTIS L. HAGE, Sioux Falls, South Dakota ROBERT F. STOICO, Swansea, Massachusetts OLAN O. JONES, JR., Kingsport, Tennessee DAVID L. VIGREN, Rochester, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Federal Reserve Bulletin • March 2003 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS, MS-127, Board Rates for subscribers outside the United States are as follows of Governors of the Federal Reserve System, Washington, DC and include additional air mail costs: 20551, or telephone (202) 452-3244, or FAX (202) 728-5886. You Federal Reserve Regulatory Service, $250.00 per year. may also use the publications order form available on the Board's Each Handbook, $90.00 per year. World Wide Web site (http://www.federalreserve.gov). When a FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL charge is indicated, payment should accompany request and be COMPUTERS. CD-ROM; updated monthly. made payable to the Board of Governors of the Federal Reserve Standalone PC. $300 per year. System or may be ordered via Mastercard, Visa, or American Network, maximum 1 concurrent user. $300 per year. Express. Payment from foreign residents should be drawn on a Network, maximum 10 concurrent users. $750 per year. 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, 2001. 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 1996-2000 March 2002 352 pp. $25.00 Businesses Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF The Federal Open Market Committee CHARTS. Weekly. $30.00 per year or $.70 each in the United Federal Reserve Bank Board of Directors States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $.80 each. Federal Reserve Banks A Consumer's Guide to Mortgage Lock-Ins REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL A Consumer's Guide to Mortgage Settlement Costs RESERVE SYSTEM. A Consumer's Guide to Mortgage Refinancings ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Home Mortgages: Understanding the Process and Your Right Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. to Fair Lending Vol. II (Irregular Transactions). 1969. 116 pp. Each volume How to File a Consumer Complaint about a Bank (also available $5.00. in Spanish) GUIDE TO THE FLOW OF FUNDS ACCOUNTS. January 2000. In Plain English: Making Sense of the Federal Reserve 1,186 pp. $20.00 each. Making Sense of Savings FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated Welcome to the Federal Reserve monthly. (Requests must be prepaid.) When Your Home is on the Line: What You Should Know Consumer and Community Affairs Handbook. $75.00 per year. About Home Equity Lines of Credit Monetary Policy and Reserve Requirements Handbook. $75.00 Keys to Vehicle Leasing (also available in Spanish) per year. Looking for the Best Mortgage (also available in Spanish) Securities Credit Transactions Handbook. $75.00 per year. Privacy Choices for Your Personal Financial Information The Payment System Handbook. $75.00 per year. When Is Your Check Not a Check? 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

A65 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 PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, Studies and papers on economic and financial subjects that are of by Stephen A. Rhoades. July 1994. 37 pp. general interest. Staff Studies 1-158, 161, 163, 165, 166, 168, and 170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU- 169 are out of print, but photocopies of them are available. Staff LATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH Studies 165-174 are available on line at www.federalreserve.gov/ 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. 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. 175. THE FUTURE OF RETAIL ELECTRONIC PAYMENTS SYSTEMS: Rhoades. February 1992. 11 pp. INDUSTRY INTERVIEWS AND ANALYSIS, Federal Reserve 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by Staff, for the Payments System Development Committee, James T. Fergus and John L. Goodman, Jr. July 1993. Federal Reserve System. December 2002. 27 pp. 20 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Federal Reserve Bulletin • March 2003 Maps of the Federal Reserve System J 2- BOS•T ON _ O 9 NEW YORK CLE 4 TC I.AND 3 Pa " XI„,PHIA RICHMOND 6 • in AIUNTA • H MHM •HI ALASKA HAWAII 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

A67 1-A 2-B 3-C 4-D 5-E Mh Pittsburgh BavltiJmLore ^MD NY y PA VAB \ f ^ w\ NC Ml Cincinnati •Charlotte Buffalo MA " / CR " RI sr BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7 -G TN •Na sh\ille 7 • AL - \ Ml Birmingham Wl •L / IN. I )etroit1 Louisville MS \ GA MO -A • TN Jacksonville ' Memphis New Orleans IN Y Mi^mi ATLANTA CHICAGO ST. LOUIS 9-1 VRR ND MMNN MB • lie It ssssii iiAAffffeejj111111^^!!** •• ww SD MINNEAPOLIS 10-J 12-L WY NE CO Omaha® ^ MO KKSS aa Denver NM ' Oklahoma Citv • OK KANSAS CITY 11-K Salt Lake C ity •Los Angeles San Antonio DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Federal Reserve Bulletin • March 2003 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 James J. Norton Cathy E. Minehan Samuel O. Thier Paul M. Connolly NEW YORK* 10045 Peter G. Peterson William J. McDonough John E. Sexton Jamie B. Stewart, Jr. Buffalo 14240 Marguerite D. Hambleton Barbara L. Walter1 PHILADELPHIA 19105 Glenn A. Schaeffer Anthony M. Santomero Ronald J. Naples William H. Stone, Jr. CLEVELAND* 44101 Robert W. Mahoney Jerry L. Jordan Charles E. Bunch Sandra Pianalto Cincinnati 45201 Dennis C. Cuneo Barbara B. Henshaw Pittsburgh 15230 Roy W. Haley Robert B. Schaub RICHMOND* 23219 Wesley S. Williams, Jr. J. Alfred Broaddus, Jr. Irwin Zazulia Walter A. Varvel Baltimore 21203 Owen E. Herrnstadt William J. Tignanelli1 Charlotte 28230 Michael A. Almond Dan M. Bechter1 ATLANTA 30303 Paula Lovell Jack Guynn David M. Ratcliffe Patrick K. Barron James M. McKee1 Birmingham 35242 W. Miller Welborn Lee C. Jones Jacksonville 32231 William E. Flaherty Christopher L. Oakley Miami 33152 Brian E. Keeley James T. Curry III Nashville 37203 Whitney Johns Martin Melvyn K. Purcell1 New Orleans 70161 Dave Dennis Robert J. Musso1 CHICAGO* 60690 Robert J. Darnall Michael H. Moskow W. James Farrell Gordon R. G. Werkema Detroit 48231 Timothy D. Leuliette Glenn Hansen1 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 Norman Pfau, Jr. Thomas A. Boone Memphis 38101 Gregory M. Duckett Martha Perine Beard MINNEAPOLIS 55480 Ronald N. Zwieg Gary H. Stern Linda Hall Whitman James M. Lyon Helena 59601 Thomas O. Markle Samuel H. Gane KANSAS CITY 64198 Terrence P. Dunn Thomas M. Hoenig Richard H. Bard Richard K. Rasdall Denver 80217 Robert M. Murphy Maryann Hunter1 Oklahoma City 73125 Patricia B. Fennell Dwayne E. Boggs Omaha 68102 A.F. Raimondo Steven D. Evans DALLAS 75201 Ray L. Hunt Robert D. McTeer, Jr. Patricia M. Patterson Helen E. Holcomb El Paso 79999 Gail Darling Robert W. Gilmer3 Houston 77252 Lupe Fraga Robert Smith III1 San Antonio 78295 Ron R. Harris 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 Karla S. Chambers Richard B. Hornsby Salt Lake City 84125 H. Roger Boyer Andrea P. Wolcott Seattle 98124 Mic R. Dinsmore D.Kerry 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, Indian a46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607. 1. Senior Vice President. 2. Executive Vice President 3. Acting Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A69 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, mail stop 127, Board of Govcontains Regulations B, C, E, G, M, P, Z, AA, BB, and ernors of the Federal Reserve System, Washington, DC DD, and associated materials. 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, Mail Stop 127, Board are constructed. It lists each flow series in the Board's of Governors of the Federal Reserve System, Washingflow of funds publication, "Flow of Funds Accounts of ton, DC 20551. the United States" (the Z.l quarterly statistical release), Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 Federal Reserve Bulletin • March 2003 Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce's economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z. 1 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis