Full text of Federal Reserve Bulletin : April 1992
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VOLUME 7 8 • NUMBER 4 • APRIL 1 9 9 2 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C . PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Table of Contents 223 MONETARY POLICY TO THE CONGRESS REPORT The monetary stimulus already in train, coupled with lessening drags from credit supply disruptions and from the restructuring of household and business balance sheets, is expected to provide effective support for economic growth this year. Nonetheless, the pace of expansion this year is expected to remain weaker than in previous business-cycle recoveries. "Core" inflation, however, is expected to move down appreciably in 1992, and this trend should carry into 1993—a pattern that bodes well for the achievement of a balanced, sustained economic expansion. 242 TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS The dollar declined during the period from November 1991 through January 1992 a net 3lA percent against the mark and 4 percent against the yen. On a trade-weighted basis, as measured by the Federal Reserve Board's index, the dollar declined 22A percent, on balance, over the period. 248 INDUSTRIAL PRODUCTION CAPACITY UTILIZATION AND The index of industrial production dropped 0.9 percent in January, after having fallen 0.4 percent in December. Total industrial capacity utilization dropped 0.8 percentage point in January, to 78.0 percent. 251 STATEMENTS TO THE CONGRESS David W. Mullins, Jr., Vice Chairman, Board of Governors, presents the Board's views on reforms to the regulation of the government securities market and says that the proposals contained in a joint report by the Federal Reserve, the Treasury Department, and the Securities and Exchange Commission, along with other reforms announced earlier, constitute a careful, comprehensive modernization of the mechanisms and practices in the government securities market, before the Subcommittee on Oversight of the House Committee on Ways and Means, February 3, 1992. 253 Alan Greenspan, Chairman, Board of Governors, focuses on some of the broad considerations bearing on our economic prospects and says that the attainment of rising living standards in the future will hinge crucially on our ability to elevate productivity growth and that bolstering the supply of saving available to support productive private investment must be a priority for fiscal policy, before the House Committee on the Budget, February 4, 1992. 256 Vice Chairman Mullins discusses reforms to the regulation of the government securities market and says that over the longer term, the most effective force in enhancing market efficiency and reducing the potential for manipulative abuses is the force of competition and that proposed reforms to the market will open it up to broad-based participation, before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, February 6, 1992. 258 E. Gerald Corrigan, President, Federal Reserve Bank of New York, shares his views on the Joint Report on the Government Securities Market and says that he strongly supports the overall thrust of the joint report and believes that the changes and legislative recommendations outlined in it represent a comprehensive yet well-balanced approach to the problems that surfaced in the government securities market last year, before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, February 6, 1992. 262 Edward C. Ettin, Deputy Director, Division of Research and Statistics, Board of Governors, discusses issues related to bank mergers in the United States and says that a substantial volume of bank mergers has been a natural response to a changing banking environment and that the Board is continuing to analyze the competitive effects of all proposed mergers and acquisitions, before the Subcommittee on Treasury, Postal Service, and General Government of the Senate Committee on Appropriations, February 24, 1992. 264 Chairman Greenspan presents the Federal Reserve's Monetary Policy Report to the Congress (pages 223^1 of this issue) and says that even though the recovery that seemed to be in train at the time of the last report to the Congress has stalled, there are reasons to believe that business activity will pick up, before the Senate Committee on Banking, Housing, and Urban Affairs, February 25, 1992. (Chairman Greenspan presented similar testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, February 19, 1992.) Errata in Federal Reserve Bulletin. Revisions to money stock data. 280 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE At its meeting on December 17, 1991, the Committee adopted a directive that called for initially maintaining the existing degree of pressure on reserve positions but that included a marked bias toward easing during the intermeeting period. Accordingly, the directive indicated that in the context of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to economic, financial, and monetary developments, slightly greater reserve restraint might be acceptable or somewhat lesser reserve restraint would be acceptable during the intermeeting period. The reserve conditions contemplated at this meeting were expected to be consistent with growth of M2 and M3 at annual rates of around 3 percent and 1 xh percent respectively over the four-month period from November through March. 287 LEGAL DEVELOPMENTS 272 ANNOUNCEMENTS Reappointment of Alan Greenspan as Chairman of the Board of Governors and as a member of the Board. Reduction in reserve requirements on transaction accounts of depository institutions. Discontinuance of use of the supervisory definition of highly leveraged transactions. Availability of Consumer Affairs brochures on mortgage financing. Proposal to revise the Board's Regulations O and Y; proposal to revise the Board's capital adequacy guidelines for bank holding companies and state member banks to provide explicit guidance on the types of intangible assets that may be included in the tier 1 capital calculation for risk-based and leverage capital purposes. Various bank holding company, bank service corporation, and bank merger orders; and pending cases. A1 FINANCIAL AND BUSINESS STATISTICS These tables reflect data available as of February 26, 1992. A3 GUIDE TO TABULAR PRESENTATION A4 Domestic Financial Statistics A44 Domestic Nonfinancial Statistics A53 International Statistics A69 GUIDE TO STATISTICAL RELEASES SPECIAL AND TABLES A70 INDEX TO STATISTICAL TABLES A72 BOARD OF GOVERNORS AND STAFF A74 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS A78 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES A76 FEDERAL RESERVE BOARD PUBLICATIONS A79 MAP OF THE FEDERAL RESERVE SYSTEM Monetary Policy Report to the Congress The faltering of the recovery process apparently Report submitted to the Congress on February 19, 1992, pursuant to the Full Employment and Bal- owed to a variety of forces, some of which were operating well before the oil price shock of 1990 anced Growth Act of 19781 tipped the economy into recession. In a sluggish economy and amid unexpectedly weak asset values—particularly in real estate—deteriorating MONETARY POLICY AND THE ECONOMIC financial positions of debt-laden households and OUTLOOK FOR 1992 corporations further damped credit demands and When the Federal Reserve presented its midyear aggregate spending. Financial intermediaries, chasmonetary policy report to Congress last July, a tened by their negative experience with earlier moderate economic upturn was under way. Conloans, became more hesitant about extending new sumer spending and housing activity had risen concredit; the resultant tighter lending standards deepsiderably since the winter, bolstered by the decline ened the slowdown in economic activity and inhibin oil prices, by a rebound in consumer confidence ited the subsequent recovery. In the government in the wake of the allied victory in the Persian Gulf sector, where deficits remained large, not only at conflict, and by lower interest rates. Inventories the federal level but also in many state and local had been trimmed appreciably, orders were rising, jurisdictions, efforts to curb spending and increase and businesses, while still cautious, had begun to revenues constituted a further drag on aggregate increase employment and production. The key demand in the short run. monetary aggregates had accelerated and were Inflation, meanwhile, moved down over the secaround the middle of their 1991 target ranges. With ond half of 1991. Weak demand reduced pressures the stance of monetary policy seemingly conducive in both labor and product markets, and, after some to an upturn in economic activity, the Federal Reacceleration of wages and prices in 1989 and 1990, serve, after having progressively reduced pressures an underlying disinflationary trend has now been on reserve positions earlier in the year, maintained established. Important in this process has been a a more neutral money market posture in the spring reduction in inflation expectations, visible not only and early summer. in a variety of survey data but also in the behavior As the year wore on, however, the incipient of securities markets. recovery lost its momentum. Consumer spending With actual and prospective inflationary presturned down, and business and consumer sentiment sures easing, economic activity flagging, and the began to erode. Inventories at wholesale and retail broader monetary aggregates weakening and growtrade establishments began to increase relative to ing near the bottom of their target ranges, the sales, inducing a new outbreak of production adFederal Reserve resumed easing money market justments and layoffs that continued through yearconditions in the second half of the year. As a end. Although the economy—as measured by its result, the federal funds rate fell from 53A percent real gross domestic product—continued to grow in in July to 4 percent by year-end, and most other the second half of the year, the pace of expansion short-term rates followed suit; the discount rate was only marginally positive. was also reduced over this period, from 5Vi percent to 3V2 percent, the lowest rate in nearly thirty years. Long-term interest rates, which had failed to respond to declines in money market rates in the 1. The charts for the report are available on request from Publiearly months of the year, came down significantly cations Services, Board of Governors of the Federal Reserve Sysin the latter part of 1991, partly in response to the tem, Washington, DC 20551. 224 Federal Reserve Bulletin • April 1992 easing in inflationary expectations. Although longterm rates have backed up some in recent weeks, they remain appreciably below the levels of last summer. The decline in rates has helped reduce the financial burdens of highly leveraged households and corporations, which have taken this opportunity to refinance mortgages and to replace existing debt with new lower-cost bonds. Lower interest rates also have contributed to an increase in stock prices, inducing firms to boost equity issuance and to pay down debt, further strengthening their balance sheets. With the decline in U.S. interest rates, the foreign exchange value of the dollar has largely reversed the upward movement that had occurred earlier in the year. The unusually slow growth of the key monetary and credit aggregates last year was, to a degree, indicative of the continuing restraint on private credit usage and spending. The aggregate debt of domestic nonfinancial sectors—abstracting from federal government debt, which continued to grow briskly—expanded only 23A percent in 1991, the slowest advance in decades, and below the pace of nominal GDP; households, nonfinancial businesses, and state and local governments all retrenched, curbing spending and borrowing in order to buttress deteriorating financial positions. The weakness in the monetary aggregates M2 and M3 reflected not only subdued overall credit usage but also a continued decline in the share of credit intermediated by depositories. With the thrift industry contracting further, commercial banks exercising caution in their credit extensions, and borrowing demand concentrated in longer-term instruments, depository credit continued to shrink as a share of overall credit extensions. As a result, the velocity of M3—a monetary aggregate that comprises most of the liabilities used by depositories to fund credit growth—increased again in 1991, as M3 grew only 1 lA percent, near the bottom of its target range. Depository restructuring also restrained M2, which grew in line with nominal GDP despite a steep drop in short-term market interest rates; ordinarily such a drop would have been expected to depress the velocity of this aggregate. Banks, eager to improve capital positions, reduced deposit rates more than loan rates, increasing the incentive for households to pay down debt rather than to accumulate monetary assets. Less aggressive pursuit of retail accounts by depositories also 1. Ranges for growth of monetary and debt aggregates 1 Percent Aggregate M2 M3 Debt 2 1990 3-7 1-5 5-9 1991 l 2VS-6 /t 1-5 4>/2-8'/2 1992 2V2-6V2 1-5 4V4-8V4 1. Change from average for fourth quarter of preceding year to average for fourth quarter of year indicated. Ranges for monetary aggregates are targets; range for debt is a monitoring range. 2. Domestic nonfinancial sector. led investors to switch into other financial assets, such as bond and stock mutual funds. Flows into these funds helped finance credit that had formerly been intermediated by depositories, facilitating shifts to longer-term borrowing and reducing the adverse effects of any retrenchment by banks and thrifts on the cost and availability of credit to many borrowers. However, some types of lending that are not so easily rechanneled—such as construction loans and credits to small and lower-rated businesses—have been curtailed, and a number of borrowers now face more stringent credit terms. Monetary Objectives for 1992 In formulating its objectives for monetary policy for 1992, the Federal Open Market Committee has sought to promote a sustainable upturn in economic activity while continuing to build upon the hardwon gains against inflation that have already been made. The task of translating these objectives into specific ranges for money and debt continues to be complicated by the ongoing restructurings of depositories and by the evolving attitudes toward credit on the part of borrowers and lenders. The Committee believes that the rechanneling of credit flows away from depository institutions could well continue to produce slower growth in the broad monetary aggregates than normally would be associated with a given path for nominal GDP. Taking account of these effects, the Committee has deemed the ranges for 1992 tentatively adopted last July as appropriate for achieving its objectives. The target range for M2 growth in 1992 is 2Vi percent to 6V2 percent, unchanged from 1991. Demands for M2 relative to income would be damped if, as seems likely, banks and thrifts continue to reduce deposit rates in lagged response to the de- Monetary Policy Report to the Congress 2. 225 Economic projections for 1992 Percent change, fourth quarter to fourth Nominal GDP Real GDP Consumer price index 2 Administration Range Central tendency 4-6 4>/S-53/4 5.4 PA-2V2 3-31/2 2.2 3.1 6V*-7 6.8 quarter1 Average level, fourth quarter Unemployment rate3 3.2 .2 2.9 l'A-23/* 2'/2-3'A 6.9 6¥*-7>/* (percent) 1. From average for fourth quarter of 1990 to average for fourth quarter of 1991. cline that has occurred in market rates. These deposit-rate reductions could be especially large if credit continues to be channeled outside depositories; in this case, relatively modest growth in M2 would be adequate to support a satisfactory outcome for the economy. On the other hand, as the balance sheets and capital positions of depositories continue to improve, banks and thrifts may adopt a generally more accommodative posture with respect to credit extensions and would therefore have greater need for retail deposits. In that event, somewhat faster growth of M2 would be appropriate. On balance, the Committee's M2 range for 1992 allows room for a variety of developments in the intermediation process and thus in the behavior of monetary velocity. Flexibility in interpreting M2 within its range is particularly important at this time, in light of the ongoing and unpredictable shifts in the patterns of credit usage and financial intermediation that likely will continue to buffet our financial system. Looking ahead to future years, the Committee also recognizes that the range for M2 growth may eventually have to be lowered in order to put in place the monetary and credit conditions consistent with price level stability. The target range for M3 growth in 1992 remains at 1 percent to 5 percent. Although credit growth is expected to pick up somewhat in 1992, in line with a firming of economic activity, much of this credit likely will be financed outside the depository system. The thrift industry is expected to contract further as activity by the Resolution Trust Corporation continues apace, and banks, faced with continued—though moderating—pressures on capital positions, will still be somewhat hesitant to expand. At the same time, additional households FOMC members and other FRB presidents Memo: 1991 actual Item 2. All urban consumers. 3. Percentage of civilian labor force. are likely to refinance adjustable-rate mortgages withfixed-rateobligations that can easily be securitized, and corporations will probably continue to turn to equity markets and long-term bonds rather than bank loans. As a result, depository funding needs are likely to remain damped relative to the pace of economic activity, and the velocity of M3 should consequently rise further. The monitoring range for the aggregate debt of domestic nonfinancial sectors for 1992 is 41/2 percent to 8»/2 percent, also unchanged from 1991. Federal government borrowing is expected to remain heavy in 1992, given the large budget deficit. Debt growth in nonfederal sectors, however, should remain fairly subdued relative to economic activity as borrowers and lenders alike maintain a cautious approach to leverage, in part because of a desire to make further repairs to damaged balance sheets. Economic Projections for 1992 Although the long-standing structural problems that aborted the fledgling recovery last summer clearly are being addressed, the speed of their resolution— and the associated restraint on economic growth— is quite difficult to gauge, augmenting the usual uncertainties in assessing the economic outlook. On the whole, however, the members of the Board of Governors and the Reserve Bank presidents believe that, with the easing of monetary conditions to date providing considerable impetus to the economy, the most likely outcome is for a moderate reacceleration of activity over 1992. At the same time, they anticipate that the trend toward 226 Federal Reserve Bulletin • April 1992 price stability, which now appears to be rooted more securely, will be sustained through this year. The forecasts of most of the governors and presidents for growth of real gross domestic product are in a range of 13A percent to 2Vi percent measured from the fourth quarter of 1991 to the fourth quarter of 1992. With employers likely to be cautious about hiring until they are fully persuaded of the sustained vitality of the upturn, gains in employment are expected to come slowly. Thus, only a small improvement in the unemployment rate is anticipated this year, with the central tendency of projections being a range of 63A percent to 7 percent for the fourth quarter of 1992. With regard to inflation, the central tendency range for the CPI increase this year is 3 percent to 3V2 percent. These forecasts are, in general, very similar to the projections presented by the Administration in the fiscal year 1993 budget. Indeed, the Administration's forecast for nominal GDP is well within the Committee's central tendency range and thus appears to be quite consistent with the FOMC's monetary ranges. In their early February discussion of the economic outlook, the Board members and Reserve Bank presidents observed that the effects of recent job losses and weak consumer confidence are likely to restrain activity in the near term. Under the circumstances, the Board members and Bank presidents stressed that economic developments need to be monitored closely to guard against the possibility that the economy might falter. Nonetheless, the monetary stimulus already in train is expected to provide effective support for economic growth this year, and in this regard the early indications of a marked pickup in residential real estate activity and a rise in retail sales are a particularly favorable sign. It is also expected that the drags on growth from disruptions in credit supply and from the restructuring of household and business balance sheets will begin to lessen over the year. As noted above, this is obviously an area of substantial uncertainty. However, as household and corporate debt loads diminish in an environment of stronger economic activity, and as lower interest rates continue to ease financing burdens of borrowers, consumers and businesses should be poised to participate more fully in the economic expansion. Moreover, the problems of credit availability that have plagued the economy over the past couple of years should begin to ease in 1992 as the economic recovery takes hold and lenders become more confident about extending credit. Nonetheless, the pace of expansion this year is expected to remain weaker than in previous business cycle recoveries. In large part, this expectation reflects some still-unresolved economic and financial imbalances in particular segments of the economy. The persistent overhang of space in office and other commercial buildings undoubtedly will inhibit new construction in that sector for some time. In addition, the budgetary constraints that have capped government spending are likely to linger; a good many states and localities are finding that budget gaps are reopening despite the spending cuts and tax increases they instituted last year. Meanwhile, the external sector is expected to have a relatively neutral net influence on domestic production this year; foreign demand—particularly from Mexico and developing countries in Asia— should continue to boost export growth, but the anticipated pickup in domestic purchases is likely to draw in additional imports as well, limiting the potential for further substantial improvement in the trade balance. Only a minority of Board members and Reserve Bank presidents foresee a smaller increase this year in the overall CPI than the 3 percent rise experienced in 1991. But the pickup in inflation suggested by the 3 percent to 3V2 percent central tendency range is deceptive: the underlying trends in price movement are more favorable. The CPI was held down to a substantial degree last year by the unwinding of the energy price shock that followed Iraq's invasion of Kuwait in August 1990, and further sharp declines in energy prices do not appear likely in the current environment. However, an ongoing deceleration in prices is evident for a wide range of other goods and services, and with inflationary tendencies under considerable restraint from several factors—including further moderation in labor cost growth, continued slack in industrial product markets, and small increases in import prices—"core" inflation is expected to move down appreciably in 1992. Indeed, this trend should carry into 1993—a pattern that bodes well for the achievement of a balanced, sustained economic expansion. Monetary Policy Report to the Congress THE PERFORMANCE OF THE ECONOMY IN 1991 The year 1991 began with the U.S. economy in the midst of recession. Activity had contracted sharply after the jump in oil prices that followed Iraq's invasion of Kuwait in August 1990, and this weakness spilled into the first quarter with further reductions in production and employment. By the spring, however, economic data indicated that the decline in economic activity had bottomed out. The rapid conclusion of the Persian Gulf war boosted consumer confidence, and the reversal of the earlier runup in oil prices and the cumulative effects of declining interest rates were providing support for an increase in household spending. Indeed, construction of single-family homes had already turned up noticeably by April, and consumer spending posted a moderate rise in the second quarter. Although businesses continued to liquidate inventories at a fairly rapid pace, industrial production grew steadily from April through July, and hiring activity increased. However, the pickup in the economy evident from April to July failed to develop any momentum, as the thrust to domestic demand initiated by the end of the Gulf war dissipated during the summer. The absence of a more robust recovery likely reflected the drag on aggregate demand from some longer-term economic and financial adjustments. For example, imbalances long evident in the commercial and multifamily construction sectors damped enthusiasm for new projects, and ongoing difficulties in the financial sector continued to restrain credit availability; these influences undoubtedly muted the stimulus that normally would have been forthcoming from the decline in interest rates. Fiscal restraint evident at all levels of government weighed on aggregate demand in a way not typically observed in previous economic cycles. Significant restructurings of operations in a number of sectors had the effect of retarding employment and income growth, at least in the short run. And concerns about debt-servicing burdens as well as about economic prospects sustained a reluctance on the part of businesses and consumers to borrow and increase spending. Despite their cautious planning, some businesses experienced inventory backups in the late summer and fall, necessitating another round of production 227 adjustments. In part, the impact of these adjustments was felt abroad as businesses cut back their imports of foreign goods. However, domestic adjustments were evident as well, and, apart from atypical weather patterns that temporarily increased the demand for electricity, industrial production was flat over the second half of the year. The sluggish pace of activity in the industrial sector was joined by weakness in other parts of the economy, and overall, the nation's real gross domestic product is estimated to have risen a scant V* percent at an annual rate in the fourth quarter of last year. In the labor market, layoffs proliferated once again, and the civilian unemployment rate rose to 7.1 percent at the end of 1991. The deterioration in both industrial activity and nonfarm employment extended into this year, with factory production down sharply in January and private payrolls edging beneath the low of last April. On the other hand, housing market activity appears to have picked up somewhat since the beginning of the year, and nominal retail sales rose about V2 percent in January. Inflation slowed in 1991, with consumer prices up 3 percent over the year, much less than the 6 percent rise posted during 1990. In part, the slowing in inflation reflected the sharp drop in oil prices early in the year; consumer energy prices in December were IV2 percent below their level at the end of 1990, with the decline concentrated in the first quarter of the year. Food price inflation also moderated considerably, amounting to only 2 percent last year after three years of increases in excess of 5 percent. Even apart from food and energy, inflation now appears to be on a downward trend. To be sure, there were sizable increases in the CPI excluding food and energy early in the year, as higher federal excise taxes and a pass-through of the sharp rise in energy prices boosted prices for a variety of goods and services. With the subsequent reversal in oil prices and no further major tax hikes, however, price pressures eased visibly beginning in the spring. On balance, the CPI excluding food and energy rose less than 4 percent at an annual rate in the second half of 1991, well below the 5 percent pace of 1990. Labor cost pressures also diminished last year, although substantial increases in health care expenses remained a problem for employers. As measured by the employment cost index, 228 Federal Reserve Bulletin • April 1992 nominal compensation per hour rose about AVz percent over 1991, somewhat less than the increases recorded in each of the three previous years. Household Spending—Consumption and Residential Construction With household finances adversely affected by job losses and declining real incomes, real consumer spending rose just lA percent over the year, the same as in 1990. At the beginning of the year, consumer purchasing power already had been sapped by the rise in energy prices and by declines in employment. And although the retreat in oil prices then in progress and an improvement in consumer confidence following the end of the Gulf war provided a boost to spending in the spring, the failure of the recovery to take hold and concerns about financial prospects and debt burdens restrained spending in the second half of the year. On balance, real consumer outlays edged down between July and December, retracing part of the rise that had occurred during the spring and early summer. The weakness in consumer spending over the past year was particularly evident for durable goods. A sharp drop in motor vehicle purchases accounted for much of the overall decline in spending on durables; indeed, the level of motor vehicle sales in 1991, at 12V4 million units, was the lowest since 1983. Outlays for other durable goods were down slightly over the year, after a IV2 percent decline in 1990. As with total spending, purchases of other durables picked up somewhat in the spring and early summer, but then fell in the fourth quarter as consumers retrenched. Spending on nondurable goods also declined last year, with expenditures, especially for apparel, down sharply in the fourth quarter. In contrast, outlays for services continued to trend up at a pace similar to that registered in the two previous years. The patterns of change among the components of consumer spending—particularly the steep decline in outlays for "big ticket" durable goods— underscore the role of household balance sheet concerns in restraining economic growth last year. Household debt burdens rose substantially during the 1980s, when consumers stepped up spending on motor vehicles and other consumer durables, oftenfinancingtheir purchases with credit. In some parts of the nation, this spending boom spread to residential real estate as well, with the associated borrowing, which was often predicated on expectations of rapidly rising family incomes, adding further to the financing burdens of households. As income growth weakened over the past year and a half, consumers struggled to meet the monthly obligations on their accumulated debt and apparently deferred some discretionary spending in the process. Thisfinancialstress also was evidenced by an increase in delinquency rates for consumer and mortgage loans last year to levels comparable to those experienced in the previous two recessions. A renewed pessimism on the part of households may also have contributed to the reluctance of consumers to step up spending over the latter part of 1991. As noted previously, consumer confidence, which was quite low at the beginning of the year, rose markedly upon the conclusion of the Gulf war. However, as it became apparent that the anticipated recovery in the economy was not materializing and announcements of layoffs resumed, confidence turned down, dropping especially sharply toward the end of the year. In January 1992, the Survey Research Center's index of consumer sentiment stood at the levels of last winter, while the Conference Board's confidence index was below that seen in the 1981-82 recession. Many analysts observed that consumers appeared to be more apprehensive than normally might be expected, given the broad macroeconomic circumstances—for example, the unemployment rate has remained well below that reached in the early 1980s—suggesting that concerns about longer-run economic prospects may have contributed to the heightened anxiety among households last fall. After dropping sharply in January, housing starts posted a moderate recovery over the remainder of the year, fueled by a reduction in mortgage rates to their lowest levels since the 1970s. Sales of new and existing single-family homes rose over the year, with the pickup in demand reportedly especially pronounced from first-time buyers. Reflecting the strengthening in demand, the excess supply of unsold new homes diminished, and the pace of single-family housing starts moved above 900,000 units at an annual rate by the fourth quarter, an increase of more than 16 percent from a year earlier. Nevertheless, production was well below Monetary Policy Report to the Congress that of earlier years, and, despite the upturn in activity, the single-family housing market remains softer than would be expected given recent mortgage rates and the rising number of households of prime homebuying age. Continued lender caution about granting land-acquisition and construction loans reportedly has damped production in some locales. However, given the absence of significant price pressures in the housing market, restraint on the demand for single-family homes, stemming from weak income growth, concerns about employment prospects, and poor conditions for home selling, likely has been a more prominent influence on homebuilding than have supply constraints. In the multifamily housing market, an excess supply of vacant units and restraints on credit availability continued to depress construction last year. Starts of multifamily units fell about 30 percent over the twelve months of 1991, and the number of starts during the year was the lowest since the 1950s. There have been numerous reports of restrictive lending practices damping activity in this sector. However, vacancy rates for rental units remain exceptionally high—and rents soft— suggesting that in many areas new projects might well be of questionable economic viability. Until market supplies begin to tighten discernibly, activity in this segment of the market is unlikely to show appreciable improvement. Business Spending—Investment in Inventories and Fixed Capital In early 1991, the investment climate was dominated by the effects of the decline in the demand for business output and the jump in energy prices during the second half of 1990. With profit margins down sharply and inventory imbalances emerging in a number of sectors, businesses reduced production and employment substantially between October 1990 and March 1991. Cutbacks in the motor vehicle sector were especially sharp over that period, although output of most other types of goods and materials turned down as well. By the spring, inventories generally were better aligned with sales, and operating profits, while still low, had turned up. As a result, the improvement in aggregate demand in the second quarter was accompanied by an increase in business output, and 229 industrial production rose an average 0.7 percent per month from April to July. Despite the firming in sales, businesses remained cautious, and inventory levels continued to decline through midyear. In late summer, however, final demand slackened, and after seven months of decline, business inventories accumulated at a substantial rate from September through December. The rise in inventories was centered in wholesale and retail trade, and inventory-sales ratios there moved into ranges that appeared undesirably high in light of carrying costs and expected sales. A portion of the accumulation appeared to consist of goods ordered from abroad; indeed, a partial reaction to the overhang may have been visible in the sharp drop in nonoil imports in November. Nonetheless, retailers evidently also reduced orders from domestic suppliers, contributing to the sluggish pattern of manufacturing output in the fourth quarter. By January of this year, factory production had dropped back to its level of a year earlier, and the operating rate in industry was back down to levels that, prior to last winter, had not been seen since the brief industrial slump of 1986. Business investment in fixed capital fell 7 percent in real terms over the four quarters of 1991. As is typical during recessions, spending was inhibited by weak profits, a rise in excess capacity, and uncertainty regarding the outlook for sales. However, investment outlays last year also were depressed by a desire on the part of many businesses to reduce debt burdens and by a continued oversupply of office and other commercial space. Even adjusting for cyclical considerations, last year's weak pace of investment appeared to extend the relatively slow rate of capital formation evident for some time. The capital stock in the nonresidential business sector, net of depreciation, has risen about 23A percent at an annual rate over the past decade— down from 33A percent annually during the previous decade. In part, this pattern has owed to a shift toward shorter-lived assets—such as computers— that depreciate more quickly. However, such outlays, by generating a relatively high flow of capital services per dollar of investment, have cushioned the impact on productivity of the slowing pace of capital formation. Even so, the quantity of investment, which has also been depressed by large federal budget deficits and the resulting low level of national saving, has been inimical to productivity growth and thus to the advance of living standards. 230 Federal Reserve Bulletin • April 1992 Real spending for equipment fell 3lA percent over 1991, as outlays plunged in the first quarter and showed only limited improvement on net over the remainder of the year. The strongest area in investment spending was computers, for which real outlays increased more than 40 percent at an annual rate over the second half of the year; these gains were driven by new product introductions and by the substantial price cuts offered by computer manufacturers. In contrast, business investment in other types of equipment generally declined, on balance, over the year. Outlays for industrial equipment continued to deteriorate as excess capacity limited expansion in the manufacturing sector, and business purchases of motor vehicles dropped off sharply. In addition, domestic orders for commercial aircraft plunged after midyear as a number of domestic airlines trimmed investment plans. Although the large backlog of unfilled orders that still remains should sustain production and shipments for some time, the slackening in demand indicated by the sharp downturn in aircraft orders suggests that the growth surge in this sector may have run its course. Nonresidential construction plummeted 15 percent in real terms over the four quarters of 1991. The contraction was broadly based, but especially large declines in outlays were evident for office buildings and other commercial structures. Despite the sharp cutbacks in construction in recent years, prices of existing commercial properties have continued to fall, contributing to the substantial stress evident in thefinancialsector. Of course, the fundamental problem is the space overhang from the earlier overbuilding; the vacancy rate for office buildings nationwide was still close to 20 percent at the end of the year. However, a lack of liquidity in this market—in particular, the reluctance of lenders to finance acquisitions of commercial properties—has made the adjustment still more difficult. Such problems are especially acute in the market for office buildings, where appraised values have declined nearly 30 percent since 1985 and where lenders and developers generally have shown little interest in new projects. For other commercial structures—primarily shopping centers and warehouses—the outlook is slightly less downbeat, with the data on new contracts and building permits suggesting that the steepest declines may have already occurred. Spending for industrial structures also generally declined over the year, as low rates of capacity utilization curtailed plans for new factory construction. Petroleum drilling activity, meanwhile, dropped sharply in response to the decline in oil prices. Federal banking regulators have taken a number of steps to ensure that supervisory pressures do not unduly restrict real estate lending. The agencies have, for example, addressed issues relating to accounting and appraisal, to make sure that illiquid real estate exposures are evaluated sensibly and consistently. And, they have issued guidance to examiners—and simultaneously to bankers— emphasizing that banks should not be criticized for renewing loans to creditworthy borrowers whose real estate collateral has fallen in value—even when the banks need to build up capital or reduce loan concentrations over time. However, with so adverse a supply-demand imbalance in the property market, lenders understandably have remained reluctant to bear the risks of real estate exposures. The Government Sector Budgetary pressures were widespread in the government sector in 1991. At the federal level, the unified budget deficit increased to $269 billion in fiscal year 1991, up $48 billion from the 1990 deficit. In large part, the rise in the deficit was attributable to the slowdown in economic activity, which reduced tax receipts and increased outlays for income-support programs such as unemployment insurance and food stamps. However, as in 1990, the fiscal 1991 deficit also was affected by special factors: A pickup in net outlays for deposit insurance added to the deficit, while one-time contributions from our allies to defray the costs of Operations Desert Shield and Desert Storm reduced it. Excluding deposit insurance and these foreign contributions, the 1991 deficit totaled $246 billion. On the revenue side, federal tax receipts rose just 2 percent in fiscal 1991, the smallest increase in many years. The slowing in receipts largely stemmed from weak nominal income growth; indeed, personal income tax payments in 1991, which accounted for nearly half of total receipts, were about the same as in 1990 despite changes in tax provisions that were projected to raise $16 billion in new revenues. Monetary Policy Report to the Congress Meanwhile, spending rose nearly 6 percent in fiscal 1991. Part of the $71 billion increase in nominal federal outlays reflected the slightly more rapid pace at which the Resolution Trust Corporation resolved insolvent thrift institutions last year. In contrast, outlays were reduced by allied contributions to the Defense Cooperation Account. These contributions, which are scored as negative outlays in the budget accounts, exceeded the outlays made in 1991 for U.S. involvement in the conflict; the excess will be put toward the replacement of munitions in 1992 and beyond. Excluding deposit insurance and contributions of allies, outlays rose about 9 percent in fiscal 1991. Spending for health programs continued to rise rapidly, elevated by large increases in health care costs and in outlays for the medicaid program. Among other entitlement programs, outlays for social security and other incomesupport programs, which together account for onethird of total federal spending, rose more than 11 percent in fiscal 1991, reflecting substantial increases in the number of beneficiaries. In contrast, declining interest rates reduced the growth of interest payments on the federal debt. Defense outlays—excluding foreign contributions—were up 5Vi percent from fiscal year 1990 to fiscal year 1991, as the additional U.S. outlays for the Persian Gulf conflict were only partially offset by the spending cuts enacted in the 1990 budget agreement and in previous years. Federal purchases of goods and services, the portion of federal spending that is included directly in GDP, fell 3 lA percent in real terms over the four quarters of 1991. Defense purchases jumped sharply early in the year to support operations in the Persian Gulf, but declined substantially over the remainder of the year as the effects of scheduled cuts in defense outlays were augmented by a dropoff in purchases for Desert Storm; on net, defense purchases were down about 41/2 percent last year. In contrast, nondefense purchases were up slightly in 1991; increases for law enforcement, space exploration, and health research offset a drawdown in inventories held by the Commodity Credit Corporation. The fiscal position of state and local governments, which had deteriorated sharply in 1990, remained poor in 1991. The deficit in the combined operating and capital accounts (excluding social insurance funds) narrowed to $34 billion in the 231 third quarter of 1991 from a high of nearly $47 billion in the fourth quarter of 1990; the shrinkage of this deficit represents the first major improvement since 1984, when the state and local budget surplus peaked. Even so, relative to GDP, the deficit still is quite high on a historical basis. The credit quality of state and local government debt also continued to deteriorate last year, as illustrated by the downgrading of the general obligation debt of eight states by one rating agency; most of the rating changes were the direct result of budgetary imbalances. The poor fiscal position of state and local budgets led to both severe restraints on spending and sizable tax hikes. Overall, real purchases of goods and services edged down over the four quarters of 1991. In nominal terms, total expenditures by these governments were up 4 percent last year, less than one-half the average pace in recent years. Receipts rose an estimated 7 percent over 1991, as numerous jurisdictions imposed a variety of new tax measures and federal aid to state and local governments—especially for medicaid—increased substantially. Nonetheless, many state and local governments continue to report revenue shortfalls and spending overruns for the current fiscal year, setting the stage for another round of budgetbalancing measures ahead. The External Sector Measured in terms of the other Group of Ten (G-10) currencies, the trade-weighted foreign exchange value of the U.S. dollar appreciated 14 percent, on balance, from December 1990 to July 1991, reversing more than one-half of the decline that had occurred from the middle of 1989 to the end of 1990. In large part, the rise in the dollar over this period reflected the quick end to the Gulf war and expectations of a recovery in the U.S. economy, as well as developments in Eastern Europe that initially weighed on the German mark. However, as the U.S. economic recovery faltered in late summer and market participants viewed further easing actions by the Federal Reserve as more likely, the dollar again turned down, averaging in December 1991 only about 3 percent above its level in December 1990. The dollar rebounded somewhat in January on market perceptions of a 232 Federal Reserve Bulletin • April 1992 diminished likelihood of an additional easing in U.S. interest rates and expectations that German authorities would not push their interest rates up further. On a bilateral basis, the dollar rose 19 percent against the mark between December 1990 and July 1991, amid disappointment about the effect of German unification on German inflation and trade. During the second half of last year, German monetary policy tightened, and the dollar gave up much of its previous gains, finishing the year just 4 percent above its December 1990 level. Other currencies in the European Monetary System generally moved with the mark during 1991, although sterling slipped somewhat near year-end. The dollar declined about 4 percent on net against the yen in 1991, as increasing Japanese trade surpluses led to the view that an appreciation of the yen would be welcomed by the authorities. The merchandise trade deficit narrowed to less than $75 billion in 1991, compared with $108 billion in 1990; the trade deficit last year was the smallest since 1983. An especially large decline in the deficit was registered early in the year, as the drop in oil prices sharply reduced the value of imports. In addition, trade flows during the first half of 1991 were influenced by the weakening of U.S. activity (which reduced demand for imports), by continued growth abroad (which boosted exports), and by the lagged effects of the decline in dollar exchange rates that had taken place in 1990. However, imports rose sharply in the third quarter, and the trade deficit widened somewhat in the second half of the year. The current account balance recorded a small surplus, on average, during the first three quarters of 1991, a sharp improvement from the $92 billion deficit in 1990. However, about half of that improvement resulted from cash grants from foreign governments to support operations in the Persian Gulf; excluding these transfers, the current account showed an average deficit of $48 billion at an annual rate over the first three quarters of 1991. The improvement in the current account (excluding transfers) was somewhat greater than that in the trade balance owing to a strengthening of net service receipts in such areas as travel, education, and professional services. U.S. merchandise exports grew about 10 percent in real terms over the four quarters of 1991, tempering the production declines associated with the weakness in domestic demand. Exports rose fairly strongly in the second quarter, as high levels of investment in such countries as Germany and Japan boosted exports of computers and other capital equipment. Economic activity in the major foreign industrial countries weakened as the year wore on, however, and with a deterioration in the competitive position of U.S. companies following the appreciation of the dollar over the first half of the year, export growth slowed markedly in the third quarter. Exports surged again in the fourth quarter, led by sales of computers, aircraft, and other capital goods. However, some of the recent increase appears to represent a bunching of sales rather than an increase in economic activity abroad. Merchandise imports excluding oil grew about 4 percent in real terms during 1991. Imports declined early in the year as weak domestic spending reduced the demand for foreign goods. As domestic demand in the United States turned up in the spring, imports—especially of automotive products, computers, and consumer goods—rose and remained strong through the summer. With the subsequent weakening in demand, however, some of the additional import volume apparently ended up on retailers' shelves. In response, U.S. businesses reduced orders from abroad, and import growth slowed sharply over the fourth quarter. The quantity of oil imports, which had plunged after the sharp rise in oil prices in the fall of 1990, generally moved up through the third quarter as refiners moved to rebuild inventories. However, oil import volumes turned down again in the fourth quarter, reflecting sluggish U.S. activity and unseasonably warm weather. The sharp reduction in the recorded U.S. current account deficit in the first three quarters of 1991 was mirrored by changes in recorded capital inflows and the statistical discrepancy. The statistical discrepancy in the international accounts, which had jumped to $64 billion in 1990, declined to virtually zero in the first three quarters of 1991. Inflows of official capital were about matched by outflows of private capital in the first three quarters of 1991. Net official inflows amounted to $16 billion despite net intervention sales of dollars in foreign exchange markets by the G-10 countries and a drawdown of reserves held in the United States by countries helping to cover the costs of Desert Storm; some countries also financed their Monetary Policy Report to the Congress contributions by borrowing and liquidating investments in the Euromarkets. Net private capital outflows were $18 billion in the first three quarters, largely accounted for by banks. In part, these outflows reflected the increased net demand for funds in the Euromarkets associated with Desert Storm transfers. In addition, the elimination by the Federal Reserve of certain reserve requirements in December 1990 led some U.S. agencies and branches of foreign banks to increase their issuance of large time deposits in the United States and to reduce their reliance on borrowing from abroad. Securities transactions in the first three quarters of 1991 reflected the continued internationalization of financial markets. Although the net inflow was modest, private foreigners added substantially to their holdings of U.S. stocks and bonds, while U.S. residents bought a large volume of foreign stocks and bonds. Reflecting interest rate developments that encouraged shifting from short- to long-term financing, both issues of foreign bonds in the United States and issues of Eurobonds by U.S. corporations were strong. Capital outflows associated with U.S. direct investment abroad also were sizable, as U.S. investors positioned themselves to take advantage of EC 1992 and participated in the privatization of previously state-owned enterprises in such countries as Mexico. In contrast, foreign direct investment in the United States was far below recent peaks; foreign takeovers of U.S. businesses declined, and reinvested earnings were depressed by the recession. Labor Markets Labor market conditions generally deteriorated in 1991, and the unemployment rate rose above 7 percent by the end of the year, the highest level since 1986. Employers had moved quickly to shed workers when the recession took hold during the second half of 1990, and this pattern continued into 1991, with nonfarm payroll employment down sharply over the first four months of the year. Economic conditions improved in the spring, and labor demand turned up for a time. However, the subsequent weakening in activity in the late summer led to a renewed bout of layoffs that has continued into early 1992, retracing the job gains recorded during the spring and summer. 233 The net job losses last year were widespread by industry and reflected both the cyclical weakness in labor demand associated with the recession and more fundamental efforts by many businesses to restructure operations and permanently reduce the size of their workforces. Employment in manufacturing, which began its decline in 1989, fell more than 400,000 over 1991' with most of the losses in the durable goods sector. The continued contraction in commercial building depressed construction employment despite the moderate recovery in residential housing demand. Efforts to restructure existing operations and to downsize workforce levels were evident in the finance, insurance, and real estate sector as well, where job losses last year stood in contrast to the past pattern of continued hiring during recessions. Employment in trade establishments also fell substantially over the year, pushed down by the decline in consumer spending and the high degree of financial distress among retailers. In contrast, employment in services continued to trend up over the latter part of the year, as steady gains in health services more than offset sluggish hiring in the more cyclically sensitive business and personal service industries. Reflecting the substantial declines in output and employment over the past year and a half, the unemployment rate rose more than IV2 percentage points between July 1990 and December 1991. Moreover, the distribution of job losses was especially wide compared with previous episodes of rising unemployment. Increases in unemployment were broadly based across regions, industries, and occupations, and an unusually large proportion appeared to constitute permanent layoffs. Nonetheless, the rise in the jobless rate has been less than in prior episodes of increasing unemployment. In part, the rise has been smaller because labor force growth has been unusually slow over the past two years. In particular, the labor force participation rate, which stood at about 66 percent at the beginning of this year, is Vi percentage point below its average during the first half of 1990. This decline in participation appears to contain some elements of a cyclical pattern: The number of discouraged workers rose over the year, and sizable increases in the number of retirees were reported, perhaps reflecting to some extent a spate of early retirement programs. However, the weak labor force growth of recent years may also represent a 234 Federal Reserve Bulletin • April 1992 downshift in the trend rate of increase in labor supply that—if not offset by productivity gains— could translate into a reduction in the rate of trend potential output growth. In this regard, the composition of the corresponding increase in nonparticipants is, in part, a favorable long-term development. There has been a sharp rise in recent years in the number of individuals who have left the labor force in order to attend school. Although that increase may, to some degree, reflect declining opportunity costs associated with the poor job prospects of last year, recognition of the longer-term decline in relative wages among lower-skilled workers may also have played a role. As these individuals reenter the labor force upon completion of their schooling, their increased skills should boost labor productivity and potential output in future years. Efforts to increase labor productivity have also intensified in the business community. If the aforementioned plans to reorganize corporate structures and to downsize the labor force requirements of existing operations are successful, the possible outcome is a significant improvement in the productivity trend, much as occurred in the manufacturing sector after the considerable compression of manufacturing organizations in the early 1980s. The performance of productivity, which rose about 1 percent for the nonfarm business sector in 1991, has been somewhat better than is typical in a weak economy. However, last year's advance came after a decline in 1989 and no change in 1990, and it is difficult at this stage to distinguish more fundamental changes in productivity trends from the apparent cyclical tendency last year for employers to reduce labor inputs aggressively in response to deteriorating sales. With widespread layoffs and the unemployment rate rising throughout the year, the upward pressures on wages that had intensified between 1987 and mid-1990 diminished somewhat over 1991. As measured by the employment cost index, increases in hourly compensation for private nonfarm workers rose 4Vi percent over the four quarters of 1991, down from more than 5 percent in the first half of 1990. The wage and salary component of hourly compensation, which rose 3 percent at an annual rate over the second half of last year, exhibited the most deceleration. Although employer costs for benefits have also decelerated from their mid-1990 peak, increases in benefit costs—at 6V\ percent in 1991—remained well above those for wages alone. Expenses for health insurance have continued to spiral upward despite considerable efforts on the part of employers to control costs by negotiating directly with providers and by increasing workers' share of health expenditures. Employer premiums for workers compensation insurance also rose sharply last year, reflecting both a swelling in the number of claims and the rapid pace of inflation of medical care costs. Price Developments Evidence that a significant slowing of inflation is under way mounted over 1991. The consumer price index rose 3 percent during the year, about half the rate of increase in 1990. A sharp swing in energy prices accounted for a major part of this deceleration. However, the elements of a more fundamental diminution of inflation moved into place: Labor cost increases moderated; expectations of inflation eased; and upward pressures from import prices and industrial raw material prices were virtually absent during the year. Energy prices dropped sharply in 1991, mirroring the changes in oil prices over the year. The CPI for energy fell 30 percent at an annual rate in the first quarter of last year, as the sequence of events in the Middle East reduced the posted price of West Texas Intermediate crude oil from a peak of about $39 per barrel in October of 1990 to less than $20 by February of last year. Oil prices subsequently held near that level, but gasoline prices firmed somewhat during the summer as reduced imports and domestic refinery problems led to some tightness in inventories. However, these forces were offset by declines in natural gas and electricity rates, and energy prices changed little, on balance, in the second and third quarters. Price pressures again emerged in the fall as crude oil prices trended up in September and October on concerns about supplies from the Soviet Union. Since October, however, oil prices have retreated again, with the most recent quotes at about $18 per barrel. These latest reductions probably will show up at the retail level in the first quarter of 1992; indeed, the energy component of the producer price index fell nearly 3 percent in January, and other preliminary infor- Monetary Policy Report to the Congress mation points to sizable declines in both retail gasoline and heating oil prices. The CPI for food rose just 2 percent over 1991, well below the increases of 5 percent to 5V2 percent in the three previous years. In part, the subdued pace of food price inflation reflects an increased supply of livestock products. Beef production turned up last year in response to the strong prices that prevailed in the preceding few years, and supplies of pork and poultry rose sharply; in response, meat and poultry prices fell about 2 percent over the year. The deceleration in food prices also extended to food groups whose prices are influenced more by the cost of nonfarm inputs than by supply conditions in agriculture; for example, the increase in the price of food away from home last year was the smallest since 1964. Elsewhere, there were large monthly variations in prices for fruits and vegetables, as adverse weather conditions temporarily boosted prices in the first half of the year and prices for some fresh vegetables jumped toward the end of the year because of the whitefly infestation in California. The consumer price index for items other than food and energy rose 4V2 percent in 1991, about 3 A percentage point less than in 1990. The index was boosted early in the year by increases in federal excise taxes on cigarettes and alcoholic beverages and by an increase in postal rates. Price increases last winter also were enlarged by the passthrough of the rise in energy prices to a wide range of nonenergy goods and services. However, the subsequent decline in energy prices soon spread to the nonenergy sector, and except for an uptick during the summer associated with some bunching of price increases, this measure of core inflation moderated significantly over the remainder of the year. Prices for nonenergy services decelerated considerably last year, rising 4J/2 percent after an increase of 6 percent in 1990. Reflecting weak real estate markets, rent increases slowed sharply, with both tenants' rent and owners' equivalent rent up less than 4 percent last year. The drop in interest rates pushed down autofinancingcosts more than 7 percent. And, after a brief spurt early in the year, airfares receded as energy costs fell and the weak economy cut into demand; more recently, however, airfares have turned up again as carriers have reduced the availability of and increased restrictions 235 on low-end "super-saver" fares. In contrast, prices for medical care services rose 8 percent over the year, while tuition costs and other school fees were up nearly 10 percent. The CPI for commodities excluding food and energy rose 4 percent in 1991, about Vi percentage point faster than in 1990. In large part, the more rapid rate of inflation in goods prices reflected the aforementioned hike in excise taxes and, despite weak sales, larger increases in prices for both new and used cars. However, a slowing in price increases was evident for a number of other goods, notably apparel, household paper products, and personal care items. The easing of inflationary pressures has been even more evident at earlier stages of processing. The producer price index for finished goods edged down over 1991 after an average 5 percent annual rate of increase over the three preceding years; this index posted another small decline in January of this year. Falling prices for energy and consumer foods accounted for much of the overall deceleration last year. Even apart from food and energy, however, producer prices slowed to a 3 percent pace. Prices for intermediate materials excluding food and energy declined 3A percent over the year, reflecting declining fuel and petroleum feedstock costs, an easing of wage pressures, and weak demand. The downturn in economic activity also depressed industrial commodity markets last year. After dropping sharply in the fourth quarter of 1990, spot prices for these commodities continued to decline gradually over most of 1991. MONETARY AND FINANCIAL DEVELOPMENTS IN 1991 The principal objective of monetary policy this past year has been to help lay the groundwork for a sustainable expansion without sacrificing the progress against inflation that had already been set in motion. The Federal Reserve progressively eased money market conditions in 1991 amid signs of continued sluggish economic activity, weak growth in the broader monetary and credit aggregates, and diminishing inflationary pressures. A more generous provision of reserves through open market operations, coupled with five separate reductions in the discount rate—which now stands at its lowest level in nearly 30 years—brought the federal funds 236 Federal Reserve Bulletin • April 1992 rate and most other short-term interest rates down about 3 percentage points over the course of the year. These actions, building on earlier easing efforts, pushed the federal funds rate down to 4 percent, its lowest sustained level since the 1960s and nearly 6 percentage points below its most recent peak in the spring of 1989. The faltering of the economic recovery in the second half of 1991 owed in part to an unusually cautious approach to credit on the part of both borrowers and lenders. Efforts by debt-burdened households and businesses to pare debt in order to strengthen balance sheets that had been strained by the general slowdown in income and by declines in property values exerted further damping effects on credit demands and on aggregate spending. Faced with deteriorating asset values and pressures on capital positions, depositories and other lenders maintained tighter lending standards and were somewhat hesitant to extend credit. The more circumspect attitude toward credit and spending on the part of borrowers and financial intermediaries was manifest in the behavior of the aggregate debt of domestic nonfinancial sectors, which grew near the bottom of the Federal Open Market Committee's monitoring range despite burgeoning U.S. Treasury borrowing. Not only was overall credit growth subdued, but credit flows continued to be rechanneled away from depositories, reflecting the more restrictive lending standards at banks and thrifts as well as efforts by borrowers to make greater use of longer-term debt and equity in order to strengthen their balance sheets. Partly as a result, the monetary aggregates M2 and M3 also finished the year near the bottoms of their target ranges. To prevent these forces from stifling the recovery, the Federal Reserve eased money market conditions aggressively in the latter part of the year. In light of weak aggregate demand and reduced inflationary potential, long-term interest rates—which had largely failed to respond to monetary easings earlier in the year—came down substantially toward the end of 1991. This decline prompted a flood of mortgage refinancings and additional corporate and municipal bond offerings, which helped reduce the financing burdens of nonfederal sectors. Lower interest rates also contributed to a major stock market rally, which induced firms to boost equity issuance and pay down debt, partially reversing the trend of the 1980s toward increased leverage that had severely stretched corporate balance sheets. On the whole, the nation made considerable progress in strengthening its balance sheet in 1991. Less reliance on debt, greater use of equity, and lower financing costs have helped ease debtservicing burdens for many financially troubled households and corporations. Although to date the trend toward deleveraging has exerted a restraining effect on aggregate spending, over time this trend should help put consumers, firms, and financial intermediaries on a sounder financial footing, paving the way for healthy, sustainable economic growth. The Implementation of Monetary Policy The Federal Reserve eased money market conditions several times in the first few months of 1991, extending the series of easing moves initiated in the latter stages of 1990. Against a backdrop of further declines in economic activity, abating price pressures, weakness in the monetary aggregates early in the year, and continuing credit restraint by banks and other financial intermediaries, a more expansive open market posture was adopted, in conjunction with two xh percentage point reductions in the discount rate, to engender a 125 basis point decline in the federal funds rate over the first four months of the year. Short-term Treasury rates generally followed suit, and banks reduced the prime rate in three 50 basis point increments to 8V2 percent. Long-term interest rates, by contrast, were roughly unchanged on balance over the first few months of the year. At first, these rates fell somewhat in response to the continued downturn in economic activity and declining energy prices, especially in light of initial successes in the Gulf war that ensured an unimpeded flow of oil. Success in the initial phases of the war also prompted a brief dip in the exchange value of the dollar, as safehaven demands that had been propping up the dollar's value in the face of falling interest rates in the United States dissipated. In March, bond yields drifted up on the post-war rebound in consumer confidence and other evidence, particularly from the housing industry, that an economic upturn was at hand. The improving outlook for recovery also contributed to narrowing Monetary Policy Report to the Congress risk premiums on private securities, especially on below-investment-grade issues, which had reached very high levels in January. The debt and equity instruments of banks performed especially well over this period, responding to lower short-term interest rates and the likelihood that an economic rebound would help limit the deterioration in their loan portfolios. Moderate official support for the dollar, better prospects for a U.S. economic recovery, and a rise in U.S. long-term interest rates relative to those abroad, together with an uncertain economic and political situation overseas, especially in the Soviet Union, helped to reverse the dollar's slide on foreign exchange markets. As evidence of a nascent economic recovery cumulated through the remainder of the spring and into early summer, interest rates and die dollar continued to firm, and quality spreads narrowed further. Although the increases in rates during this period were most pronounced at the long end of the maturity spectrum, short-term rates backed up a bit as well as prospects for additional monetary easings faded. Indeed, with the pace of economic activity apparently quickening, and with the broader monetary aggregates near the middles of their target ranges, the Federal Reserve held money market conditions steady, as the stimulus already in train seemed sufficient to support an upturn in aggregate spending. As the summer passed, however, the strength and durability of the recovery appeared less assured. Aggregate spending, production, and employment began to falter, easing wage and price pressures. In addition, the broader monetary aggregates suddenly weakened dramatically, with M2 coming to a virtual standstill and M3 actually declining in the third quarter. The softness in the aggregates was symptomatic of a warier approach to spending and borrowing on the part of households and corporations, whose balance sheet problems were exacerbated by the stagnant economy. In addition, credit standards at financial intermediaries remained restrictive, and spreads between loan and deposit rates remained high by historical standards, reinforcing households' inclinations to pay down debt rather than to accumulate assets. To help ensure that these forces did not imperil the recovery, the Federal Reserve moved to ease money market conditions further during the latter part of the year. Pressures on reserve positions 237 were reduced slightly in August and again in September, with the latter move accompanied by a 50 basis point reduction in the discount rate. With the economic climate remaining stagnant, price pressures subdued, and the broader monetary aggregates still mired near the bottoms of their target ranges, the System's easing moves became more aggressive in the fourth quarter, culminating in a full 1 percentage point reduction in the discount rate on December 20. All told, these moves combined to drive the federal funds rate down from 5% percent in July to 4 percent by year-end. Most other short-term interest rates declined by similar magnitudes, and the prime rate was reduced by 2 percentage points, to 6V2 percent. The decline in short-term interest rates, in combination with flagging economic activity, depressed credit demands, and prospects for lower inflation, contributed to bringing long-term interest rates down significantly in the latter part of 1991. The thirty-year Treasury bond rate dropped about a percentage point over the second half of the year, and mortgage interest rates tumbled to their lowest levels in many years. Declining interest rates prompted a spate of mortgage refinancings, corporate and municipal bond offerings, and a major stock market rally, which propelled most indexes to record highs. Although monetary growth bounced back a bit in the fourth quarter, both M2 and M3 remained near the lower ends of their respective growth cones. The dollar, which had begun to lose ground in foreign exchange markets in the summer—when the weakness in money and credit raised the specter of additional easings of U.S. monetary policy—depreciated further in the fourth quarter as the economic situation deteriorated and the pace of policy easings quickened. Rising interest rates in Germany also put downward pressure on the foreign exchange value of the dollar. In January 1992, the dollar rebounded somewhat, reflecting an emerging view that interest rate declines in the United States and interest rate increases in Germany might have come to an end. The former view was also reflected in the U.S. bond market, where rates retraced a portion of their earlier declines, partly on brightening prospects for the U.S. economy but also on concerns that impending fiscal stimulus may increase federal government demands on credit markets. 238 Federal Reserve Bulletin • April 1992 Monetary and Credit Flows Patterns of credit usage and financial intermediation, which began to shift even before the onset of the economic downturn, continued to evolve in 1991, distorting traditional relationships between overall economic activity and the monetary and credit aggregates. These changes were evident in the behavior of the aggregate debt of nonfinancial sectors, which expanded 43A percent in 1991, leaving this aggregate near the bottom of its monitoring range. Robust growth in federal government debt, owing to the economic downturn and to additional outlays for federal deposit insurance, masked an even weaker picture for nonfederal debt. Households, nonfinancial corporations, and state and local governments accumulated debt at an anemic 23/4 percent rate in 1991, the slowest advance in decades and below even the sluggish growth rate of nominal GDP. The small rise in nonfederal debt velocity last year runs counter to the pattern seen in the 1980s, when the accumulation of debt vastly outstripped growth in nominal GDP. The rapid buildup of debt in the 1980s was likely a result of the deregulation of interest rates and financial innovations, which combined to lower the cost of borrowing to households and businesses, spawning a surge in leveraging activity. Greater debt burdens may also have been accumulated under the assumption that nomi3. nal income growth would be sustained at the elevated pace of the mid-1980s and that the prices of assets purchased with credit would continue to climb. In recent years, however, asset values and income growth have fallen short of these expectations. In particular, depressed commercial and residential real estate values, coupled with slower income growth, have eroded the net worth of some borrowers and severely strained the ability of highly leveraged households and corporations to service debt. These difficulties, in turn, have fed back on to the strength of thefinancialintermediaries that extended the credit. In an effort to bolster depleted capital positions, reduce financing burdens, and shore up weakened balance sheets, both borrowers and lenders have adopted a more chary attitude toward additional credit. This more cautious approach to leverage has interacted with the sluggish pace of economic activity to restrain borrowing across nearly all sectors of the economy. Nonfinancial business sector debt, held in check by the decline in financing needs associated with weak aggregate demand and by efforts of debt-laden firms to restructure their balance sheets, grew only Vi percent in 1991. Taking advantage of a buoyant stock market, particularly in the latter part of the year, corporations turned to equity financing; net equity issuance for the year was positive for the first time since 1983, and the ratio of the book value of nonfinancial corporate Growth of money and debt Percent Ml M2 M3 Debt of domestic nonfinancial sectors Annually, fourth quarter to fourth quarter1 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 7.5 5.4 (2.5 J ) 8.8 10.4 5.4 12.0 15.5 6.3 4.3 0.6 4.2 8.0 8.9 9.3 9.1 12.2 8.0 8.7 9.2 4.3 5.2 4.8 3.8 3.1 9.5 12.3 9.9 9.9 10.8 7.6 9.0 5.9 6.4 3.6 1.7 1.3 9.2 9.9 9.2 11.3 14.1 13.8 13.8 10.4 9.4 8.2 6.9 4.7 Quarterly (annual rate)3 1991: 1 2 3 4 5.2 7.4 7.5 11.1 3.5 4.3 1.1 3.3 3.3 1.8 -1.1 1.2 4.5 4.0 4.9 5.2 Period 1. From average for fourth quarter of preceding year to average for fourth quarter of year indicated. 2. Adjusted for shift to NOW accounts in 1981. 3. From average for preceding quarter to average for quarter indicated. Monetary Policy Report to the Congress debt to equity, which had soared in the 1980s amid a flurry of corporate restructurings, actually turned down in 1991. Firms also took advantage of lower interest rates to refinance higher-rate long-term bonds and to reduce uncertainty about their futurefinancingburdens by substituting longterm debt for short-term borrowing. Overall, the mixture of less debt, more equity, and lower interest rates had a salubrious effect on the financial positions of manyfirms.Indeed, the ratio of interest payments to cash flow for all nonfinancial firms declined in 1991, reversing some of the runup seen in the late 1980s. Consistent with an improving financial picture and prospects of an economic rebound, quality spreads on corporate issues narrowed considerably from their peaks in early 1991, especially on below-investment-grade securities. In addition, downgradings of corporate bonds dropped sharply in the third and fourth quarters, although they still ran higher than the pace of upgrades. Deleveraging was also evident in the household sector in 1991. Consumer credit declined as households reined in expenditures, curbed their accumulation of financial assets, and pared existing debt burdens. Households took advantage of declining interest rates, particularly in the fourth quarter, by refinancing outstanding mortgages; they also substituted home equity loans for installment debt and other consumer credit, which carry higher financing costs and are no longer tax deductible. By reducing their net accumulation of debt and refinancing a substantial volume of their remaining borrowings at lower rates, households were able to ease their financing burdens, reducing the ratio of scheduled debt payments to disposable personal income, which had risen sharply in the 1980s. Even so, loan delinquency rates rose through much of 1991, albeit to levels not out of line with what was seen in previous cyclical downturns. On the other side of the ledger, many households that had net creditor positions saw their interest incomes decline last year. Faced with intensifying budgetary pressures and numerous downgradings, state and local governments also put only limited net demands on credit markets in 1991. The outstanding debt of this sector grew but 3 percent last year, the smallest increase in more than a decade. Gross issuance of municipal bonds was substantial, however, as states 239 and localities moved to refinance debt at lower rates. Efforts by borrowers to restructure balance sheets by substituting long-term debt and equity for short-term borrowing, along with more restrictive credit standards by some lenders and the closing and shrinkage of troubled thrifts, have affected the channels through which debtflows.In particular, in recent years there has been a major rerouting of credit flows away from depository institutions. The decline in the importance of depositories, when measured by the credit they book relative to the total debt of nonfinancial sectors, has been striking, and this trend was extended in 1991. Not only did the thrift industry continue to contract, as the direct result of RTC resolutions as well as the retrenchment of marginally capitalized institutions, but commercial banks cut back on their net credit extensions. Indeed, bank credit increased only 4 percent, not even enough to offset the continued runoff at thrifts. Weakness was particularly evident in bank lending, which shrank VA percent last year; banks' holdings of government securities, by contrast, expanded at a rapid clip. Although the shifting composition of bank asset flows in 1991 was reminiscent of patterns seen in previous periods of languid economic activity, the magnitude of the downturn in loan growth last year was more pronounced than the usual experience. Apparently, loan growth was depressed not only by reduced credit demands, but also by a more restrained bank lending posture. Faced with deterioration in the quality of their assets, higher deposit insurance premiums, and more stringent requirements for capital, banks retrenched, adopting a more cautious attitude regarding credit extensions. Concerns about capital, especially in light of rising loan delinquency rates and mounting loan loss provisions, induced many banks to continue tightening lending standards through the early part of 1991 and to maintain fairly restrictive standards over the balance of the year. A more prudent approach to capitalization and lending decisions is, in the main, a positive development that ultimately will result in strengthened balance sheets for the nation's depositories. Reflecting this improved outlook, prices of outstanding bank debt and equity increased markedly from their lows in late 1990 and early 1991, outperforming broader market indexes. Bank profits, benefit- 240 Federal Reserve Bulletin • April 1992 ting from wide spreads between loan rates and deposit rates, also showed improvement relative to the depressed levels of recent years, although they remained low by broader historical standards. To date, depository retrenchment appears to have had some restraining effects on aggregate borrowing. Of course, in some areas, much of the credit formerly extended by banks and thrifts has been supplanted by other intermediaries and by credit advanced directly through securities markets, at little if any additional cost to borrowers. For example, growing markets for securitized loans largely have filled the vacuum created by depository restraint in the areas of residential mortgage and consumer lending. Similarly, many large businesses have turned to stock and bond markets to meet credit needs and to restructure balance sheets, reducing their reliance on banks as well. Both banks and thrifts have cut back on other types of lending that can less easily be rechanneled, however, including construction and nonresidential real estate loans, loans to highly leveraged and lower-rated borrowers, and loans to small and medium-sized businesses. Other financial intermediaries, including life insurance companies, have been afflicted by some of the same balance sheet problems plaguing depositories and have also curbed their lending to these sectors. As a result of the pullback in credit supplies, these borrowers now face somewhat more stringent borrowing terms. As in 1990, the retrenchment of banks and thrifts and the associated redirection of credit flows away from depositories continued in 1991 to have profound effects on the broad monetary aggregates and their traditional relationships with aggregate economic activity. M3, which comprises most of the liabilities used by banks and thrifts to fund credit expansion, has been most affected by the reduced importance of depository credit in funding spending. The velocity of this aggregate, which declined through much of the 1980s, has trended up in recent years; this trend continued in 1991, as M3 rose only VA percent, well below the pace of nominal GDP, leaving this aggregate near the bottom of its target range. In the first few months of the year, M3 showed surprising strength, boosted in part by afirmingof its M2 component, which benefited from declining interest rates. The most important single factor contributing to strong M3 growth in the early part of 1991, however, was the rebirth of the market for "Yankee CDs"—large time deposits issued by foreign banks in the United States. After the 3 percent reserve requirement against nonpersonal time deposits and net Euroborrowings was lifted at the end of 1990, foreign banks showed a distinct preference for funding with such instruments, rather than borrowing from their overseas affiliates or in the federal funds or repurchase agreement markets. Domestic depositories, by contrast, faced with high and rising U.S. deposit insurance premiums, exhibited no inclination to alter their funding strategies in favor of large time deposits. The surge in Yankee CD issuance, which totaled nearly $40 billion over the first quarter, began to taper off a bit as the year progressed, revealing the underlying weakness in M3. After slowing somewhat in the second quarter, this aggregate contracted at a VA percent annual rate in the third quarter, reflecting feeble loan demand in a tepid economy as well as the restructuring of depositories. The Resolution Trust Corporation played a direct role in damping M3 growth by taking assets formerly held by thrifts and funded with M3 deposits onto its own books and financing them with Treasury securities. Although M3 rebounded a bit in the fourth quarter, in line with some firming of bank credit, its growth remained subdued. The effects of depository restructuring on M2 remain imperfectly understood. In the past, the velocity of M2 has tended to move in tandem with changes in a simple measure of the opportunity cost of holding this aggregate—that is, with changes in the returns on alternative short-term investments relative to those available on assets included in M2. Typically, when the opportunity cost of holding M2 declines as decreases in money market interest rates outpace drops in yields on deposits, holdings of M2 strengthen relative to expenditures—and velocity drops. In recent years, however, this relationship appears to have broken down, with the velocity of M2 holding up despite a steep, persistent drop in this measure of opportunity cost. This was particularly evident in 1991, when M2 expanded at about the same pace as nominal GDP despite a significant decline in such opportunity costs. M2 finished the year near the bottom of its target range and much weaker than would be expected on the basis of historical rela- Monetary Policy Report to the Congress tionships among income, interest rates, and the public's appetite for monetary assets. In the early months of the year, M2 growth accelerated somewhat from its lackluster pace of late 1990. Narrowing opportunity costs generated substantial inflows to liquid deposits, particularly those in Ml, which more than offset continued runoffs in small CDs. Money growth also was temporarily boosted by strong foreign demands for U.S. currency as a safe haven during the crisis in the Persian Gulf. Through May, M2 growth remained broadly consistent with the general configuration of opportunity costs and income, and near the middle of its target range. M2 began to slow in June, however, and stalled in the third quarter, despite expansion in nominal income and further declines in opportunity costs. Growth in this aggregate resumed in the following quarter, fueled by a surge in transactions deposits owing to additional declines in opportunity costs, but inflows to M2 remained fairly weak, and this aggregate ended the year only a little above the bottom of its target range. Although the unusual behavior of M2 relative to income and opportunity costs has not been fully explained, it surely is related to the restructuring of financial flows and to the downsizing of the banking system. With inflows of M2 deposits apparently tending to be more than sufficient to fund weak depository credit growth, banks and thrifts seem to have pursued additional retail deposits less aggressively than in the past. Although rates offered on these deposits did not, until very recently, fall unusually rapidly in response to declining market interest rates, depositories seem to have acted in other ways to reduce the cost of funds, including adjustments in advertising and marketing strategies that would not show up in traditional measures of opportunity costs. In addition, by keeping deposit rates very low relative to loan rates, partly in an attempt to bolster profit margins while shrinking their balance sheets, depositories provided households with a greater incentive to finance spending by holding down the accumulation of M2 assets rather than by taking on new debt. This incentive likely reinforced the impetus to borrowing restraint stemming from household concerns about their own balance sheets. The slowdown in M2 growth, particularly in the third quarter, also appears to have been related to 241 the configuration of returns on financial assets. Yields on small time deposits and money market mutual funds largely tracked the downward path of market interest rates, falling to their lowest levels since the deregulation of deposit rates and prompting significant outflows from these components of M2. Although some of these funds shifted into the liquid deposit components of M2—whose offering rates responded slowly, as they normally do, to the declines in market interest rates—a portion of these funds appear to have left the aggregate. The primary lure seems to have been the stock and bond markets, which offered higher returns, in part because of the steep upward slope of the yield curve. Indeed, inflows to stock and bond mutual funds were robust throughout 1991, and especially since midyear, when investors seemed particularly intent on reaching for higher yields by lengthening the maturity of their portfolios. Depositories, faced with weak loan demand and pressures on capital positions, seemed disinclined to compete aggressively for these funds by offering competitive rates on longer-term CDs. The rapid pace of activity by the Resolution Trust Corporation also likely depressed M2 growth in the third quarter, as it did throughout the year. The abrogation of existing retail CD contracts and the disruption of long-standing depositor relationships often attending resolutions of failed thrift institutions may have encouraged investors to reshape their portfolios, substituting nonmonetary financial assets for M2 deposits. Despite sluggish income growth, Ml expanded 8 percent in 1991, the swiftest advance since 1986. Unlike M2, this aggregate has responded to declining market interest rates about as would be expected given historical relationships. Ml was boosted by large inflows to NOW accounts, whose offering rates responded very slowly, until the end of the year, to declining market interest rates. Falling rates also brought new life to demand deposits, as compensating balances to pay for bank services surged. Demand deposits likely benefited as well from the pickup in mortgage refinancings, because the proceeds from mortgage prepayments are sometimes housed temporarily in demand accounts. Rapid growth in currency, owing in part to continued strong foreign demands, also contributed to the strength in Ml, as well as in the monetary base, which increased 8LA percent last year. • 242 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period November 1991 through January 1992, provides information on Treasury and System foreign exchange operations. It was presented by William J. McDonough, Executive Vice President in charge of the Foreign Group at the Federal Reserve Bank of New York and Manager of Foreign Operations for the System Open Market Account. Robert Ennis was primarily responsible for preparation of the report.1 The dollar declined through the end of the calendar year, approaching historical lows against both the German mark and the Japanese yen as sentiment toward the prospects for U.S. economic recovery turned increasingly negative and large short-dollar positions were built up. Early in the new year, however, the dollar recovered somewhat as expectations about the economy tended to stabilize and short positions were significantly reduced. The dollar' s decline was consequently pared back at the end of the period to a net V/i percent against the mark and 4 percent against the yen. On a tradeweighted basis, the dollar declined 23/4 percent, on balance, over the period.2 On January 17, the U.S. authorities sold $50 million against yen in thenonly intervention operation of the period. NOVEMBER AND DECEMBER As the period opened, skepticism was deepening about the prospects for a U.S. economic recovery. During the fall, it had become increasingly apparent that the tentative pickup in consumer spending after the Persian Gulf war had served merely to 1. The charts for the report are available on request from Publications Services, Board of Governors of the Federal Reserve System, mail stop 138, Washington, DC 20551. 2. The trade-weighted basis is as measured by the Federal Reserve Board index. work off inventories and would not lead to a sustained pattern of growth. Then, just before the period, any remaining hopes of recovery suffered a severe blow when the Conference Board's index of consumer confidence took an unexpected plunge. Thus, by early November, market participants were beginning to question what mechanism might still be able to spark recovery, noting that up to that point monetary policy had been about the only instrument available to support the economy. Under these circumstances, the November 6 announcement that the Federal Reserve had cut its discount rate Vi percentage point to AVi percent was widely anticipated. But market observers noted that the Federal Reserve had now cut the discount ratefivetimes in eleven months, producing a cumulative drop of 2Vi percentage points, and they were beginning to doubt whether monetary policy could do much more to facilitate recovery. At the same time, they were sensitive to the political pressures generated by disappointment about the economy and concerned about what alternative measures might be proposed. Operators in the exchange markets, who were mindful that interest rate differentials were already widely unfavorable to the dollar, especially in relation to the German mark, felt a strong incentive to sell the dollar short. The dollar declined as events in November and early December tended to confirm pessimism about U.S. economic prospects. In mid-November, when financial markets grew nervous about a congressional proposal to spur consumer spending by capping credit card interest rates, a sharp drop in U.S. equity prices dragged the dollar down for a few days. In late November and early December, release of data showing a further drop in consumer confidence and a much sharper-than-expected drop in payroll employment prompted another sell-off. Meanwhile, statistics for consumer price inflation suggested to financial markets that the Federal Reserve had further leeway to ease monetary policy. 243 In addition, speculation mounted that an excessively expansionist fiscal package might be forthcoming. The dollar declined more against the German mark during this period than against other currencies. This occurred, in part, because interest rates in Germany were at, and were expected to stay near, historically high levels. The German economy was still going through the transition associated with unification. Although the full force of the unityrelated boom had dissipated earlier in the year, credit demands were still significant enough to keep monetary aggregate growth stronger than desired, and inflationary pressures were being kept alive by high wage demands. Accordingly, market participants believed that the Bundesbank would seek to maintain a tight monetary policy stance. They interpreted the Bundesbank's money market operations as clear evidence of its intention to resist domestic and international pressures to ease. They saw this policy stance as implying that the large interest rate differentials against the dollar would be maintained for the foreseeable future. Market participants also suspected that there might be tension between the monetary policy objectives of Germany and those of other European countries where economic activity was generally decelerating more rapidly. And they were wary of the possibility that these tensions might be reflected sooner or later in pressures within the exchange rate relationships of the European Monetary System (EMS), pressures that might spill over into the exchange markets more broadly—especially because final negotiations over eventual monetary union in Europe were scheduled for early December in Maastricht, the Netherlands. In this environment, two announcements by the Finnish authorities in mid-November, first, that the Finnish markka would float and, later, that it would be effectively devalued about 12 percent, heightened the sense of exchange rate risk and boosted the German mark. This episode served as a reminder that market pressures could at times force unwanted changes in exchange rate policy. In response, market participants rushed to reduce thenholdings of assets denominated in those European currencies that had previously appeared attractive because of their high yields but that no longer carried a yield sufficient to compensate for their perceived exchange risk. The Swedish krona, for example, came under significant pressure, forcing the Riksbank to raise its marginal lending rate a total of 7 percentage points by early December. As market participants sought to shift funds from higher-yielding currencies into the mark, the exchange rate mechanism (ERM) of the EMS became strained. Market participants questioned whether an ERM realignment at the upcoming Maastricht summit could be avoided, raising further uncertainty about the effects such developments might have on the dollar. Support for the mark was partly offset, from time to time, by concerns about the rapidly moving political situation in the Soviet Union and its possible negative effects on European countries, including Germany. In the event, the Maastricht summit proceeded without incident, and tensions among European currencies abated somewhat by mid-December. But the growing disparity in economic conditions between the United States and Germany persisted. As wage negotiations in Germany became more tense, the Bundesbank moved to increase interest rates both sooner and by a larger amount than the market had expected, announcing VI percentage point rises for both its discount and Lombard rates on December 19. To avoid renewed exchange rate pressures, all other EMS central banks except the Bank of England followed this interest rate move, at least in part, over the next several days. By contrast, on December 20, the Federal Reserve reduced its discount rate more than had been expected. The cut of 1 percentage point brought the discount rate to 3V2 percent, its lowest level since 1964. The Federal Reserve also appeared to signal that it had relaxed reserve pressures to an extent consistent with a decline of about VI percentage point in the federal funds rate. As the foreign exchange market responded to these divergent moves in interest rates, the dollar continued its decline against the German mark. After having moved irregularly lower in November and early December, the dollar moved down a further 3Vi percent after December 19, hitting its low of the period of DM1.5025 on December 27. At this level, the dollar had depreciated 10 percent from DM1.6713 at the period's start and I8V2 percent from its 1991 high. The dollar's decline against the yen during November and December was more tempered than its decline against the mark. Evidence was accumulat- 244 Federal Reserve Bulletin • April 1992 ing that the pace of expansion in Japan was clearly decelerating. Japan's monetary growth was slowing, business confidence and investment intentions were weakening, and flagging domestic demand was being reflected in a widening of Japan's trade surplus. Market participants had therefore come to expect that the Japanese monetary authorities, who had eased official interest rates the previous July, would continue moving to a somewhat more accommodative monetary policy stance so that U.S.Japanese interest differentials would remain relatively stable. Indeed, official Japanese interest rates declined during these two months. The Bank of Japan trimmed its official discount rate once in mid-November and again at the end of December. At the same time, persistent weakness in Japan's equity market and political uncertainty caused by recent scandals also weighed on the yen at a time when the dollar was declining generally. As a result, the dollar eased only moderately against the yen during November. Although the pace of decline quickened during December, the dollar rebounded at the end of the year to close December at ¥124.80, down on balance 43A percent from ¥130.75 at the beginning of the period. JANUARY By early January, the dissolution of the Soviet Union was introducing a new level of uncertainty, especially regarding the outlook for Europe. Although recurring rumors about the Soviet Union's financial condition had been a concern during the earlier months, market participants were now faced with the prospects of greater disarray stemming from changing political structures and moves to liberalize prices in January. Accordingly, the German mark was increasingly susceptible to selling pressures whenever new financial or political difficulties in the former Soviet Union became evident. Meanwhile, market participants' assessment of the German mark and the German economy weakened considerably after the new year. Press commentary at that time increasingly focused on the sustained slowdown in Germany's expansion. Not only was the pace of domestic demand moderating but export orders were also sagging under the weight of slowing economies in other industrialized countries. Market participants did not believe that this evidence would lead to any near-term moderation of the Bundesbank's tight monetary policies; indeed, the Bundesbank appeared still to be concerned about wage inflation and credit demands. But the evidence did suggest that the scope for further policy tightening was more limited and the prospects for growth in the coming year more clouded than previously perceived. Under these circumstances, market participants began to question whether interest differentials so unfavorable to the dollar would continue to widen. Moreover, thefinancialmarkets appeared to react positively to the Federal Reserve's policy move of mid-December. The capital markets in the United States had responded favorably, with long-term interest rates easing and the stock market showing sustained strength. Also, the move appeared to have broken the pattern of market expectations concerning U.S. interest rates. Market participants were less certain that a weaker-than-expected U.S. economic statistic would immediately trigger another monetary policy action, and they were more likely than before to attribute weakness in the data to temporary factors. Moreover, they became mindful once again of the possibility that some statistics might show greater-than-expected strength. The dollar's decline against the European currencies therefore lost momentum early in January. Market participants were aware that the dollar had been under virtually continuous selling pressure for almost six months. Many investors as well as foreign exchange market operators had portfolios that were heavily weighted in assets denominated in European currencies. The developments of November and December had led to an even greater concentration in these portfolios of assets denominated in German marks. Under the circumstances, there was a perception of a large risk of loss if market sentiment should switch in favor of the dollar and a perception of a diminishing chance for gain if sentiment should remain negative to the dollar. For a short while, however, the focus of market attention was the Japanese yen, a currency against which the dollar continued to decline in early January. Talk had already begun to circulate before the turn of the year that the United States and Japan would agree on some official action to support yen appreciation. Commentary about President Bush's trip to Japan to meet with Prime Minister Miyazawa suggested that the deteriorating condi- Treasury and Federal Reserve Foreign Exchange Operations tion of the U.S. economy would prompt the President to seek ways to reduce the U.S. trade deficit. There was also speculation the Japanese government was looking for ways to counter weakness in Japan's stock market. In this context an upward move in the yen's exchange rate was thought to be acceptable to both governments. In response to these expectations, the dollar received only a temporary boost from the year-end cut in the Bank of Japan's discount rate. During the first five business days of January, the dollar resumed its downward trend against the yen, declining IV2 percent to a low of ¥122.80 on January 7, the day that President Bush arrived in Tokyo. At this level, the dollar was down 6 percent from the start of the period and 13 V2 percent from its 1991 high. Thereafter, expectations of official action to support the Japanese yen gradually faded. Market participants became less convinced during President Bush's stay in Japan that the two countries would take immediate steps to strengthen the yen against the dollar. In keeping with these diminished expectations, the President and the Prime Minister agreed "that recent exchange rate movements were consistent with current economic developments." Nontheless, market participants continued to focus on the possibility that a more generalized Group of Seven (G-7) policy toward the yen might be con- 1. Federal Reserve reciprocal currency arrangements Millions of dollars Institution Amount of facility, January 31, 1992 250 Austrian National Bank National Bank of Belgium.. Bank of Canada National Bank of Denmark Bank of England Bank of France Deutsche Bundesbank Bank of Italy Bank of Japan 2,000 250 3,000 2,000 6,000 3,000 5,000 Bank of Mexico Netherlands Bank . . . Bank of Norway Bank of Sweden Swiss National Bank 700 500 250 300 4,000 Bank for International Settlements Dollars against Swiss Francs Dollars against other authorized European currencies — Total 1,000 600 1,250 30,100 245 sidered at an upcoming G-7 meeting on January 25. This possibility seemed credible to market participants because the yen had lagged behind rising European currencies during previous months and because this gap appeared to be generating economic and political concerns in several countries other than the United States. But in time, even this proposition lost standing in the marketplace. When the G-7 meeting occurred in New York, the finance ministers and central bank governors issued a communique in which they agreed to intensify their cooperative efforts to strengthen world economic growth. With reference to exchange markets, the G-7 "agreed to continue to monitor market developments and reaffirmed their commitment to cooperate closely in exchange markets, thus contributing to favorable conditions for stable exchange markets and economic recovery." Market participants, however, were somewhat disappointed by the absence of any specific mention of the yen exchange rate. As expectations of a yen appreciation subsided, market participants began to worry that there was an overhang of short-dollar positions against the yen as well as against the European currencies. Concerns about the technical position of the market came to the surface when the dollar did not fall off sharply on news that President Bush had become ill and had had to leave a state dinner during his Tokyo trip. The dollar's unusual lack of sensitivity to potentially disturbing news about an American president's health was interpreted as indicating how unwilling market professionals were to extend their short-dollar positions further and how great the risks were that the dollar might rise abruptly if a general effort to cover some of these short-dollar positions were to develop. Under these circumstances, the dollar drifted higher and staged an uneven recovery during most of January. In some instances, particular events triggered dollar buying: the announcement in January of a stronger-than-expected report for U.S. employment, testimony by Chairman Greenspan that further dampened expectations of an early easing of Federal Reserve monetary policy, and rumors out of the former Soviet Union of violence and political upheaval. In other instances, however, the dollar's rise was precipitated by the bidding of market professionals and their customers that reflected pent-up demand from previous months. 246 2. Federal Reserve Bulletin • April 1992 Drawings and repayments by foreign central banks under special swap arrangements with the U.S. Treasury1 Millions of dollars; drawings or repayments ( - ) Central bank drawing on the U.S. Treasury Amount of facility Outstanding as of October 31, 1991 November December 143.0 2 January Outstanding as of January 31, 1992 143.0 143.0 1. Data are on a value-date basis. Components may not add to totals because of rounding. 2. Represents a bilateral credit facility with the National Bank of Panama that was established on January 28. These pressures were particularly intense around midmonth. The dollar rose sharply to trade at levels that had not been expected just weeks before and that therefore threatened to unleash yet further rounds of bidding as market participants continued to cover their short positions. Under these circumstances, the U.S. monetary authorities entered the market on January 17, in an operation coordinated with the Japanese monetary authorities, selling $50 million against yen. The intervention sale was shared equally by the Federal Reserve and the Treasury's Exchange Stabilization Fund (ESF). After this operation, the dollar declined sharply. Although subsequently finding support, it remained below the highs of DM1.6355 and ¥129.37 reached on January 15. The dollar closed the period at DM1.6125 and ¥125.75, down on balance over the three months nearly 4 percent against the two currencies. At these levels, the dollar was about 12 percent below its 1991 highs against both the mark and the yen. In other operations, a total of $1,301 million in off-market spot and forward foreign currency sales, executed by the U.S. monetary authorities with foreign monetary authorities, settled during the period. The ESF continued to purchase special drawing rights (SDRs) against marks in transactions by agreement with the International Monetary Fund (IMF). During the period, a total of $341.7 million equivalent of such SDR purchases settled, of which $41 million equivalent was transacted in the previous report period. The ESF also purchased a total of $443.4 million against sales of SDRs in transactions by agreement with foreign monetary authorities needing SDRs to pay IMF charges or for repurchases. An additional $50.6 million, which was transacted in October, settled in the period. The Treasury agreed to participate in a special financial facility for the first time since March 1991. On January 28, the Treasury, through the ESF, established a $143 million bilateral credit facility to assist Panama in repaying its arrears to international creditors. Panama drew the full amount on January 31. The facility is scheduled to expire on March 20,1992. During the November-January period, the Federal Reserve and the ESF realized profits of $75 million and $3.9 million respectively from the sales of foreign currencies. As of the end of January, cumulative bookkeeping or valuation gains • The two remaining forward purchases of $551.1 million and $549.9 million against marks settled on November 27 and December 27 respectively completing the $5,548.5 million of spot and forward dollar purchases from the Bundesbank. As previously reported, the operation was initiated in June 1991 to adjust the foreign currency reserves of the Federal Reserve and the ESF. For each transaction, 60 percent was executed for the account of the Federal Reserve and 40 percent for the ESF account. • On November 22, the Federal Reserve agreed to purchase $200 million against German marks from a foreign monetary authority. 3. Net profits or losses ( - ) on U.S. Treasury and Federal Reserve foreign exchange operations1 Millions of dollars Period and item Valuation profits and losses on outstanding assets and liabilities as of October 31, 1991 November 1,1991-January 31,1992 Realized Valuation profits and losses on outstanding assets and liabilities as of January 31, 1992 1. Data are on a value-date basis. Federal Reserve U.S. Treasury Exchange Stabilization Fund 2,764.8 1,132.6 75.0 3.9 3,615.2 1,941.6 Treasury and Federal Reserve Foreign Exchange Operations on outstanding foreign currency balances were $3,615.2 million for the Federal Reserve and $1,941.6 million for the ESF. The Federal Reserve and the ESF regularly invest their foreign currency balances in a variety of instruments that yield market-related rates of return and that have a high degree of quality and liquidity. A portion of the 247 balances is invested in securities issued by foreign governments. As of the end of January, Federal Reserve holdings in these securities amounted to $8,938.8 million equivalent, and the Treasury holdings amount to $9,203.5 million equivalent, valued at end-of-period exchange rates. • 248 Industrial Production and Capacity Utilization of its 1987 annual average, total industrial production in January was about even with its year-ago level. Total industrial capacity utilization dropped 0.8 percentage point in January, to 78.0 percent. When analyzed by market group, the data show that the production of consumer goods fell 0.7 percent in January, mainly because of the drop in motor vehicle production. The output of consumer Released for publication February 14 The index of industrial production dropped 0.9 percent in January, after having fallen 0.4 percent in December. The decline in January was broadly based, although the most significant loss occurred in the motor vehicles and parts industry, where output declined about 8 percent. At 106.7 percent Industrial production indexes Twelve-month percent change 1987 1988 1989 1990 1991 Twelve-month percent change 1987 1992 1988 1989 1990 1991 1992 Capacity and industrial production Ratio scale, 1987 production = 100 — Total industry Capacity Ratio scale, 1987 production = 100 — 140 -——— — Manufacturing Capacity . * — 140 120 ^ ^ - V Production " 100 - 80 120 ^ " • v / — P r o d u c t i o n 1 1 1 1 — 80 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 Utilization _ . 90 Utilization —^ 80 - 70 1982 1984 1986 1988 1990 1992 1980 1 1982 1 1 1 1984 All series are seasonally adjusted. Latest series, January. Capacity is an index of potential industrial production. 80 70 1 1980 100 1 1986 1 1 1988 1 1 1990 1 1 1992 249 Industrial production and capacity utilization Industrial production, index, 1987 = 100' Percentage change Category 1992 1991 1991 Oct.' Nov.' Dec.P Jan.P Total 108.4 108.1 107.6 106.7 Previous estimate 108.2 108.0 107.8 Major market groups Products, total Consumer goods . . . Business equipment Construction supplies Materials 109.0 109.7 122.3 95.4 107.4 109.0 110.0 121.7 95.8 106.6 108.8 109.7 121.7 95.6 105.8 Major industry groups Manufacturing Durable Nondurable Mining Utilities 109.0 108.2 110.1 100.7 109.4 108.6 107.7 109.7 99.3 108.5 107.2 110.1 97.8 108.1 111.0 Nov.' Oct.' .0 1992 2 2 Dec.f Jan.p -.9 -.4 -.2 -.2 107.8 108.9 120.3 95.3 104.9 .1 .3 .1 -1.2 -.1 .0 .3 -.5 .5 -.8 -.2 -.2 -.1 -.2 -.7 -.9 -.7 -1.1 -.3 -.9 -.0 3.1 -1.0 -2.5 -.1 107.5 105.8 109.6 97.6 107.7 .1 -.2 .4 -.7 -.3 -.4 -.4 .4 -1.4 1.5 .1 -.5 .4 -1.6 -2.6 -1.0 -1.3 -.5 -.2 -.4 .4 -1.3 2.5 -4.1 .0 MEMO 1991 Low, 1982 .0 -J -.1 Capacity utilization, percent Average, 1967-90 Jan. 1991 to Jan. 1992 1992 High, 1988-89 Jan. Oct.' Nov.' Dec.' Jan.p Capacity, percentage change, Jan. 1991 to Jan. 1992 Total 82.1 71.8 85.0 80.0 79.8 793 78.8 78.0 2.6 Manufacturing Advanced processing Primary processing . Mining Utilities 81.4 81.0 82.3 87.4 86.7 70.0 71.4 66.8 80.6 76.2 85.1 83.6 89.0 87.2 92.3 78.9 78.2 80.6 89.5 84.1 78.7 77.6 81.4 87.9 84.8 78.2 77.2 80.8 86.6 85.9 78.0 76.9 80.5 85.2 83.6 77.0 75.9 79.7 85.0 83.2 2.8 3.2 2.1 .9 1.1 1. Seasonally adjusted. 2. Change from preceding month to month indicated. goods other than automotive products also edged down in January. The production of business equipment other than motor vehicles again drifted down in January because of further weakness in industrial equipment. Continued retrenchments by manufacturers of defense and space equipment and by oil and gas well drillers also contributed to the overall decrease in equipment production. The production of construction supplies declined a bit in each of the past two months; materials output dropped sharply in January for the third consecutive month. Although the production of energy materials flattened out in January after having fallen rapidly in November and December, the output of both durable and nondurable materials fell more than 1 percent last month. Although the declines were widespread, the reductions in output of parts and supplies for the motor vehicle industry and in paper were the most noticeable. r Revised, p Preliminary. When analyzed by industry group, the data show that manufacturing production fell 1.0 percent in January, after having declined V2 percent over the last two months of 1991. The factory operating rate dropped to 77.0 percent in January, its lowest level since August 1983. The slack in utilization is especially evident in advanced-processing industries, where the operating rate in January fell to 75.9 percent, 5 percentage points below its 1967-91 average and about 1 percentage point below its low in March 1991. In recent months, the decline in advanced processing has mainly resulted from cutbacks in motor vehicle production, where the operating rate in January was still 4 percentage points above its level in March 1991. Unlike motor vehicle production, the output of instruments, electrical and nonelectrical machinery, and aerospace and miscellaneous transportation equipment never recovered significantly last spring and summer, and 250 Federal Reserve Bulletin • April 1992 their operating rates in January were below their levels of last March. The utilization rate for primary processing declined for a third consecutive month in January; paper, industrial chemicals, and stone, clay and glass products have been the largest contributors to this recent decline. Nonetheless, in contrast to the utilization rate for advanced process- ing, the rate for primary-processing industries in January was only 2VI percentage points below its long-run average and was still above its level of last March. Mining output decreased 0.2 percent in January, despite a 2VI percent increase in coal mining. Utilities output fell 0.4 percent. 251 Statements to the Congress Statement by David W. Mullins, Jr., Vice Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Oversight of the Committee on Ways and Means, U.S. House of Representatives, February 3, 1992 Thank you for this opportunity to present the Federal Reserve Board's views on reforms to the regulation of the government securities market. Since September, when I last testified before this Committee, staff of the Federal Reserve, the Treasury Department, and the Securities and Exchange Commission (SEC) have conducted an exhaustive examination of this market, the results of which were released two weeks ago. My prepared remarks will touch upon some of the main conclusions of this report from the particular perspective of the Board of Governors of the Federal Reserve System. Our perspective differs somewhat from the perspectives of the other agencies contributing to the report because of differences in legislative mandates. The Board of Governors has little direct regulatory authority for the U.S. government securities market. Although the Board has general oversight responsibility for all Federal Reserve District Banks, it is the District Banks that act as fiscal agents of the Treasury, thus sharing operating responsibility for the market with the Treasury. The SEC's charge is to enforce the securities laws that seek to foster a high degree of fairness in the marketplace. With neither the direct responsibilities of funding the government nor substantial regulatory oversight, the Board of Governors can view this market from a somewhat different vantage point—a policy perspective that allows it to examine these issues in an economywide context. When we look to the government securities market, we see a market that works as well as any on earth. U.S. government debt is an ideal trading vehicle because it is all closely substitutable and has none of the default risk or idiosyncratic problems of private issues. As a result, market participants, in the aggregate, willingly commit substantial amounts of risk capital and exchange a large volume of securities each day. Positions are large, yet trading skills are so sharply refined that bid-ask spreads are razor thin, a small fraction of the size of spreads in major equity markets. The government securities market generates widespread macroeconomic benefits. It efficiently absorbs the large quantity of new issues required to finance the deficit. With real-time quotes on a range of instruments, this market serves as the foundation for private market rates and a haven for ready liquidity. Further, this deep and liquid market gives the Federal Reserve a powerful, reliable mechanism for implementing monetary policy. Nonetheless, the admission of wrongdoing by Salomon Brothers, episodes of price distortions, and other evidence uncovered in our joint study all suggest that this market has faults. It can be improved. The proposals contained in the joint report, along with other reforms announced earlier, constitute a careful, comprehensive modernization of the mechanisms and practices in the government securities market. In our view, implementing these proposals represents a formidable, though feasible, task. Over the longer term, the most effective force in enhancing market efficiency and reducing the potential for manipulative abuses is the force of competition. And the effect of these proposals is to open up the government securities market to broad-based participation. Automating Treasury auctions; facilitating direct bidding by customers, including nonprimary dealers; implementing a single-price open-auction technique; and reducing the barriers to primary dealer membership— all will serve, in time, to broaden participation in the primary market and in the secondary market for newly issued securities. More depth and breadth in this end of the market should increase efficiency, reduce Treasury financing costs, and 252 Federal Reserve Bulletin • April 1992 lessen the potential for manipulative trading abuses. In addition, the competitive force of broader participation will be reinforced by proposals targeted at manipulative abuse: tighter enforcement of auction rules and enhanced market surveillance by the Federal Reserve Bank of New York to identify potential manipulative episodes that could trigger SEC investigation and Treasury supply management to reopen offerings. Taken together, these actions should serve to deter manipulative practices and allow quick detection of abuses should they occur. Moreover, they are relatively low-cost, market-based responses that should achieve these benefits without impairing the efficiency and liquidity of this vital market. Of course, many other alternatives could be considered to combat the potential for abuses in this market. However, the government securities market is too important a national resource and works too well to be put at risk by regulatory change for the sake of change. From the Board of Governors' perspective, a compelling case must be established that the benefits outweigh the costs. In our view, such a compelling cost-benefit analysis has not been made with respect to proposals to establish a broad-based apparatus of reporting requirements or audit trails in this market. Although increased reporting would deter manipulation and facilitate the investigation of abuses, such systems would impose substantial potential costs on this market. The reporting burden would fall on all traders—the good and the bad—boosting the cost of every trade. While the direct costs of additional recordkeeping might be kept manageable, an indirect cost looms larger. Rather than risk divulging their finances and trading strategies, participants might withdraw from this market, thereby raising the cost of Treasury finance. And, of course, the stakes are high: A tiny increase in Treasury rates aggregates into a very substantial increase in cost to U.S. taxpayers. Because it might be difficult to resist implementing, even backup authority risks sending a chilling message about the U.S. market to all participants choosing a trading arena in the global marketplace. Moreover, in view of the extensive nature of the other changes proposed in this report, one might question the capacity of this market to absorb, at an acceptable cost, this additional change—the imposition of broadbased reporting requirements for this market. The agencies agree that large position reporting requirements should not be implemented at this time. Rather than risk slipping into this fundamental change through backup authority, the Board of Governors feels it would be a wiser course of action to return to the Congress in the future should such authority appear necessary. The interagency report provides an alternative to burdensome regulation—a low-cost, marketbased solution to the problem that targets manipulative behavior without impairing the liquidity of this important market. This overall strategy has three basic elements: improved auction mechanisms, enhanced market surveillance, and active supply management. Although many aspects of the Salomon Brothers admission of wrongdoing and the results of the subsequent investigation cause concern, one is particularly unsettling: Because of the falsification of bids at auctions, the Treasury was the direct counterparty in attempts to manipulate the market. Immediate steps were taken to reduce the risk of a reoccurrence, including tightening the enforcement of auction rules and implementing measures to encourage more direct bidding. Looking forward, automation of the auction process, already under way and expected to be completed by year-end, should efficiently snare any infraction of the rules. More important still, automation will facilitate consideration of alternative auction techniques. At a minimum, switching to single-price awards from the current multiple-price format should foster greater participation and likely reduce gaming behavior at the auction. But more can be done. Linking bidders directly by a computer network and conducting the auction in real time will expose any would-be manipulator to public scrutiny in time for the competition to react. With the element of surprise gone, the potential return to manipulation should disappear. Thus, the auction of the near future may well be played in the open, on a level field, with sharply defined and easily policed foul lines. The report also finds that the benefits of enhanced monitoring extend to when-issued and secondary market trading. Manipulative behavior leaves its footprints in market quotes because Statements to the Congress 253 a shortage of an issue will be evidenced by a yield below that of similar securities and by depressed financing rates. The agencies agreed that the Federal Reserve Bank of New York, with its substantial experience as the operating arm of the Federal Open Market Committee and (along with the other Reserve Banks) as one of the fiscal agents of the Treasury, should have primary responsibility for market surveillance; the Bank, in turn, will provide information to the Treasury, the SEC, and the Board of Governors. The view of the Board of Governors is that rigorous monitoring of the behavior of market rates will expose manipulative behavior without the need to gather the positions of large traders routinely. Indeed, automation and enhanced market monitoring also present the opportunity to correct a longstanding market misimpression. Although the Federal Reserve Bank of New York has no statutory authority to regulate the primary dealers, many people view the primary dealer system as evidence of some measure of oversight of those firms by the Federal Reserve Bank of New York. Ongoing automation and enhanced monitoring capabilities will let the Bank move to a more open set of trading relationships, thus disabusing market participants of the notion that the primary dealers have a special status. To further that end, the Bank will eliminate its dealer surveillance unit, showing unambiguously that responsibility rests with the primary regulator. The Bank will also lower the impediments to primary-dealer membership, thereby encouraging a broadening of membership in the primary-dealer system. The careful monitoring of the market will be made more credible by action: Persistent and large-scale price anomalies consistent with a manipulative squeeze will call forth two sets of policy responses. First, if other evidence (including discussions with market participants) suggests manipulation, then the SEC will begin an investigation to determine if any security laws have been broken. Second, and more immediately, the Trea- sury will act in the market to narrow those price anomalies, thereby limiting the extent of the market disruption in general and reducing the potential gain if manipulative behavior was the root cause. The Treasury's actions will be effected by eitiier holding a new auction of the sought-after security—a reopening—or through the sale of those securities into the market by the Trading Desk of the Federal Reserve Bank of New York on behalf of the Treasury—a tap issuance. The resulting expansion of supply should slash the manipulator's potential gain, making it unlikely that any one would even try to manipulate the market. Circumstance and experience over time will dictate when an increase in supply will be required and which means of augmenting the issue will be taken. It is the judgment of the Board of Governors that the reforms that I have outlined—changes in auction mechanisms, active and rigorous monitoring of market rates, and the clear willingness to use relative supplies to punish manipulative behavior—will work to prevent a replay of last year's events. These reforms are fundamental changes in market mechanisms that promise to open this market to broad-based participation while, at the same time, enhancing regulatory surveillance and remedial capabilities. These responses are measured, targeted, and commensurate to the problem at hand and in our view obviate the need to punish many with reporting burdens because of the actions of a few. This strategy also offers flexibility to deal with future problems as they arise. It is perhaps ironic that the most serious abuses in the history of this market—the Salomon Brothers episode—have served as the catalyst for changes that promise substantial long-term benefits. Taken together, these proposals and those already implemented constitute a thorough, thoughtful, and feasible renovation of the government securities market and will result in a healthier, more efficient market for U.S. government securities. • Statement by Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System, before the Committee on the Budget, U.S. House of Representatives, February 4, 1992 I am pleased to appear here today. As you know, the Federal Reserve will submit its semiannual report on monetary policy to the Congress later this month. That report will cover in detail the 254 Federal Reserve Bulletin • April 1992 System's policy targets for 1992, as well as our expectations for growth and inflation. Today, I would like to focus on some of the broad considerations bearing on our economic prospects. The recent performance of the economy clearly has been disappointing, and it is apparent that some strong forces have been working against a typical cyclical revival in economic activity. Indeed, in many respects, these underlying forces, which were obscured for a time by the gyrations associated with the crisis in the Persian Gulf, have been impeding growth since well before the economy tilted into recession in the fall of 1990. During the 1980s, large stocks of physical assets were amassed in several sectors, largely financed by huge increases in indebtedness. The buildup of debt was originally largely collateralized or matched by rising asset values, but because of the weakening of property values, the debts have become more troubling. The endeavor to redress these debt imbalances has led many businesses and households to divert cash flows to debt repayment rather than investment and consumption, thereby depressing aggregate economic demand. In the business sector, the most obvious example is that of commercial real estate, with the accumulation of vast amounts of office and other commercial space—space beyond the plausible needs in most locales well into the future. Our financial intermediaries, not just depository institutions but other lenders as well, lavished credit upon developers, and they are paying the price today in the form of loan losses and impaired capital positions, with adverse effects on their willingness to extend credit. This process has also damaged the asset positions, creditworthiness, and possibly the willingness to borrow of many developers, entrepreneurs, and other businesses. Another characteristic of the 1980s was the wave of mergers and buyouts—purchases of corporate assets, often involving the substitution of debt for equity and anticipating the sale of assets at higher prices. In the household sector, purchases of motor vehicles and other consumer durables ran for several years at remarkably high levels and were often paid for with installment or other debt that carried longer maturities than had been normal. In some parts of the United States, the household spending boom reached to the purchase of homes, not simply for essential shelter, but as speculative investments—and often involving borrowing that constituted a heavy call on current and expected family incomes. Most analysts, of course, were aware of the increasingly disturbing trends of rising household debt and elevated corporate leverage. However, they did not think that these burdens had reached a magnitude that would restrain the U.S. economy from a moderate cyclical recovery in 1991. Indeed, output began to move up last spring and, as inventory liquidation abated at midyear, closed the gap with the consumption of goods and services in much the same manner evident in the early stages of recoveries in other recent business cycles. By late summer, however, with half the decline in output during the recession recovered, it became clear that the cumulative upward momentum that had characterized previous recoveries was spent. The continued strong propensity of households to pare debt and businesses to reduce leverage was a signal that the balance sheet restraints, a concern of many for a long time, had indeed taken hold. Consumer spending on motor vehicles and other items softened, while household and business sentiment, which had rebounded in a normal fashion as the cyclical recovery began last spring, fell back in the autumn as the recovery stalled. Inventories backed up in the wholesale and retail trade sectors, particularly of goods ordered earlier from abroad in anticipation of climbing sales. The inventory bulge, in turn, contributed to the drop in imports of late and to the persistent slackness in industrial production in the United States. Moreover, although export activity has remained a bright spot for us, recessions and slower-than-expected economic growth in several major industrial countries over the second half of 1991 limited the growth of demand from abroad for our goods. All told, U.S. industrial output changed little between July and December. Against a backdrop of sluggish activity, receding inflationary pressures, and weakness in the monetary aggregates, the Federal Reserve eased monetary policy over the last several months of Statements 1991—at times aggressively. As we indicated in our press release accompanying the cut in the discount rate to 3l/i percent in December, we expect that the amount of monetary ease in the pipeline is adequate to turn the economy onto the path of sustained recovery.1 But, assessing the economic outlook at the present time is extraordinarily difficult. We are, of course, continuing to evaluate whether some additional insurance in the way of further monetary ease would be appropriate. Not unexpectedly, lower interest rates are reducing debt service burdens and are encouraging companies and households to hasten the repair of stretched balance sheets. Offerings of new corporate equity shares in our capital markets have risen to record levels, and large bond issues are funding short-term liabilities and highercost long-term debt. Households are not only repaying debt but are initiating heavy mortgage refinancings that are reducing their debt service burdens as well. We thus have already made considerable progress in the balance sheet adjustment process, and this unusual restraint on economic activity should begin to dissipate, it is hoped, in the reasonably near future. But resumption of a sustainable, healthy recovery also depends, among other things, on a restoration of consumer and business confidence. On the surface, the extraordinary apprehension on the part of consumers and businesses does not seem to square with the broad macroeconomic circumstances. To be sure, our recent economic performance is disappointing when measured against the norms of previous recoveries—or even against the forecasts made last summer. And such gains as have occurred since last spring have not reached all sectors of the economy or all regions of the nation. But, it does not appear that we are tumbling into another significant contraction in overall activity. This situation suggests that the highly aggregated macroeconomic data may not be capturing the full story. For example, although consumers as a group are clearly benefiting from the recent 1. See Federal Reserve Bulletin, vol. 78 (February 1992), p. 125. to the Congress 255 developments in financial markets, some individuals—many of them retirees—are suffering because their interest income has shrunk. And on the employment front, the unexpectedly sharp slowing in labor force growth over the past few years suggests that individuals' assessments of job availability may be much more negative than is implied by many of the traditional labor market indicators. In addition, the string of job cuts announced by many large corporations undoubtedly has heightened concern about job security— both now and in the future. More fundamentally, I suspect that what troubles consumers, and indeed everyone, is that the current pause in activity may be underscoring a sense of retardation in the growth of living standards over the long run. So long as the recovery remained convincingly on track, these latent concerns did not surface. But as the recovery failed to meet expectations, earlier worries about our long-run economic prospects and whether the current generation will live as well as previous ones reemerged. The record of the past decade provides ample reason for concern. Although we saw some improvement in productivity trends—at least relative to the experience of the late 1970s—our performance left much to be desired, a fact reflected in our loss of international competitiveness in several industries and in the disappointing real incomes of too many American families. Especially disturbing was the failure of many young persons to acquire the education and skills needed to keep pace with the demands of our rapidly changing economy—and the prospect that they will fall even further behind in the 1990s. The attainment of rising living standards in the future will hinge crucially on our ability to elevate productivity growth. To be sure, economists have not had great success in forecasting, or even explaining after the fact, the shifts in productivity in years past. It is thus conceivable that the payoff from the restructuring efforts of American business will turn out to be considerably larger than we now expect. But we cannot count on such an outcome. The surest way to ensure a better productivity trend is to take actions that will increase domestic investment; it is here that our major policy focus must rest. 256 Federal Reserve Bulletin • April 1992 I, and others, have long argued before this committee that bolstering the supply of saving available to support productive private investment must be a priority for fiscal policy. In that regard, reducing the call of the federal government on the nation's pool of saving is essential. Above all, I urge you to adhere to a budgetary strategy for fiscal year 1993 and beyond that is geared to the longer-run needs of the U.S. economy. At a minimum, maintaining a commitment to the elimination of the structural budget deficit over the coming years will help enormously to alleviate the concerns of the American people about our economic future. • Statement by David W. Mullins, Jr., Vice Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking Finance and Urban Affairs, U.S. House of Representatives, February 6, 1992 tive that allows it to examine these issues in an economy wide context. When we look to the government securities market, we see a market that works as well as any on earth. U.S. government debt is an ideal trading vehicle because it is all closely substitutable and has none of the default risk or idiosyncratic problems of private issues. As a result, market participants, in the aggregate, willingly commit substantial amounts of risk capital and exchange a large volume of securities each day. Positions are large, yet trading skills are so sharply refined that bid-ask spreads are razor thin, a small fraction of the size of spreads in major equity markets. The government securities market generates widespread macroeconomic benefits. It efficiently absorbs the large quantity of new issues required to finance the deficit. With real-time quotes on a range of instruments, this market serves as the foundation for private market rates and a haven for ready liquidity. Further, this deep and liquid market gives the Federal Reserve a powerful, reliable mechanism for implementing monetary policy. Nonetheless, the admission of wrongdoing by Salomon Brothers, episodes of price distortions, and other evidence uncovered in our joint study all suggest that this market has faults. It can be improved. The proposals contained in the joint report, along with other reforms announced earlier, constitute a careful, comprehensive modernization of the mechanisms and practices in the government securities market. In our view, implementing these proposals represents a formidable, though feasible, task. Over the longer term, the most effective force in enhancing market efficiency and reducing the potential for manipulative abuses is the force of competition. And the effect of these proposals is Thank you for this opportunity to present the Federal Reserve Board's views on reforms to the regulation of the government securities market. Just two weeks ago, staff of the Federal Reserve, the Treasury Department, and the Securities and Exchange Commission (SEC) released results of their exhaustive examination of this market. My prepared remarks will touch upon some of the main conclusions of this report from the particular perspective of the Board of Governors of the Federal Reserve System. Our perspective differs somewhat from the perspectives of the other agencies contributing to the report because of differences in legislative mandates. The Board of Governors has little direct regulatory authority for the U.S. government securities market. Although the Board has general oversight responsibility for all Federal Reserve District Banks, it is the District Banks that act as fiscal agents of the Treasury, thus sharing operating responsibility for the market with the Treasury. In addition, it is the District Banks that routinely examine the financial institutions for which the Federal Reserve System has primary oversight responsibility, virtually all of which hold, and some of which actively trade, government securities. The SEC's charge is to enforce the securities laws that seek to foster a high degree of fairness in the marketplace. With neither the direct responsibilities of funding the government nor substantial regulatory oversight, the Board of Governors can view this market from a somewhat different vantage point—a policy perspec- Statements to open up the government securities market to broad-based participation. Automating Treasury auctions; facilitating direct bidding by customers, including nonprimary dealers; implementing a single-price, open auction technique; and reducing the barriers to primary dealer membership—all will serve, in time, to broaden participation in the primary market and in the secondary market for newly issued securities. More depth and breadth in this end of the market should increase efficiency, reduce Treasury financing costs, and lessen the potential for manipulative trading abuses. In addition, the competitive force of broader participation will be reinforced by proposals targeted at manipulative abuse: tighter enforcement of auction rules and enhanced market surveillance by the Federal Reserve Bank of New York to identify potential manipulative episodes that could trigger SEC investigation and Treasury supply management to reopen offerings. Taken together, these actions should serve to deter manipulative practices and quickly detect abuses should they occur. Moreover, they are relatively low-cost, market-based responses that should achieve these benefits without impairing the efficiency and liquidity of this vital market. Of course, many other alternatives could be considered to combat the potential for abuses in this market. However, the government securities market is too important a national resource and works too well to be put at risk by regulatory change for the sake of change. From the Board of Governors' perspective, a compelling case must be established that the benefits outweigh the costs. In our view, such a compelling cost-benefit analysis has not been made with respect to proposals to establish a broad-based apparatus of reporting requirements in this market, either directly or through audit trails or transparency requirements. Although increased reporting would deter manipulation and facilitate the investigation of abuses, such systems would impose substantial potential costs on this market. The reporting burden would fall on all traders—the good and the bad—boosting the cost of every trade. Although the direct costs of additional recordkeeping might be kept manageable, an indirect cost looms larger. Rather than risk di- to the Congress 257 vulging their finances and trading strategies, participants might withdraw from this market, thereby raising the cost of Treasury finance. And, of course, the stakes are high. A tiny increase in Treasury rates aggregates into a very substantial increase in cost to U.S. taxpayers. Because it might be difficult to resist implementing, even backup authority risks sending a chilling message about the U.S. market to all participants choosing a trading arena in the global marketplace. Moreover, in view of the extensive nature of the other changes proposed in this report, one might question the capacity of this market to absorb, at an acceptable cost, this additional change—the imposition of broadbased reporting requirements for this market. The agencies agree that large position reporting requirements should not be implemented at this time. Rather than risk slipping into this fundamental change through backup authority, the Board of Governors feels it would be a wiser course of action to return to the Congress for enabling legislation in the future should such authority appear necessary. This committee's important mandate is to ensure that a legislative framework that provides for the adequate supervision of the government securities activities of banks is in place. In the Board's opinion, the current supervisory structure secures a full measure of prudential oversight of the activities of commercial banks and bank-related dealers in government securities. The Federal Reserve System's share of responsibility for that supervision and oversight has three components. First, under the Government Securities Act of 1986 (GSA), government securities brokers and dealers that are financial institutions are subject to oversight by their primary federal supervisory agency. In this capacity, the Federal Reserve's watch extends to state member banks of the Federal Reserve System, foreign banks, state branches and agencies of foreign banks, and commercial lending companies owned or controlled by foreign banks. As a part of their annual examinations, Federal Reserve examiners review dealer compliance with all aspects of GSAmandated rules adopted by the Treasury Department. Specifically included are rules designed for protection of investor securities and funds, re- 258 Federal Reserve Bulletin • April 1992 cordkeeping, registration of associated persons, and rules governing custodial holdings of government securities—the latter of which are applicable to all depository institutions. Second, the Federal Reserve examines the trading and investment practices of nonbank subsidiaries of bank holding companies that deal in or underwrite securities—including government securities—to ensure that they are being prudently managed and do not pose an undue risk to bank affiliates. These subsidiaries are registered with the SEC and are examined by a self-regulatory organization (SRO), such as the National Association of Securities Dealers, for compliance with all rules applicable to brokerdealers. Federal Reserve inspection procedures are designed to prevent, to the extent possible, duplication of the procedures of the various SROs. For the so-called "section 20 subsidiaries," which have been authorized to underwrite and deal in bank-ineligible securities, the Federal Reserve also examines for compliance with its "firewall" provisions, which importantly insulate affiliated depositories and the federal safety net from the risks inherent in the securities business. Moreover, section 20 inspections check compliance with the Board's revenue test, verifying that section 20 subsidiaries do not become principally engaged in the distribution of securities in violation of the Glass-Steagall Act. Moreover, all inspections of nonbank subsidiaries include an evaluation of their financial impact, if any, on the parent bank holding company. Third, the Federal Reserve supervises state member banks' investment activities, which in virtually all instances include investments in government securities. Despite the diminished concerns about credit quality afforded by a portfolio of government securities, examiners still must scrutinize those holdings. For example, a portfolio's liquidity and interest rate risk must be evaluated to determine whether the investments are consistent with the institution's financial position and management's expertise. Indeed, only last month the Federal Reserve and other depository institution regulatory agencies issued a revised supervisory policy statement that describes securities trading practices that are inappropriate to be conducted in an investment portfolio. Returning to the broader issue of the health of the government securities market, it is the Board of Governors'judgment that the reforms outlined in the interagency report—changes in auction mechanisms, active and rigorous monitoring of market rates, and the clear willingness to use relative supplies to punish manipulative behavior—will work to prevent .a replay of last year's events. These reforms are fundamental changes in market mechanisms that promise to open up this market to broad-based participation while, at the same time, enhancing regulatory surveillance and remedial capabilities. These responses are measured, targeted, and commensurate to the problem at hand and, in our view, obviate the need to punish many with reporting burdens because of the actions of a few. This strategy also offers flexibility to deal with future problems as they arise. It is perhaps ironic that the most serious abuses in the history of this market—the Salomon Brothers episode—have served as the catalyst for changes that promise substantial long-term benefits. Taken together, these proposals and those already implemented constitute a thorough, thoughtful, and feasible renovation of the government securities market and will result in a healthier, more efficient market for U.S. government securities. • Statement by E. Gerald Corrigan, President, Federal Reserve Bank of New York, before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, February 6, 1992 before you this morning to share with you my observations on the Joint Report on the Government Securities Market, with particular emphasis on those aspects of the report that relate directly to the activities or responsibilities of the Federal Reserve Bank of New York. Let me say at the outset that I strongly support the overall thrust of the joint report. Taken as a I am pleased to have this opportunity to appear Statements whole, the changes and legislative recommendations outlined in the report represent a comprehensive yet well-balanced approach to the problems that surfaced in the government securities market last year. Let me quickly add that the changes are at or near the outer threshold of what I believe the market can reasonably absorb in the near term without running undue risks to market efficiency, Treasury debt management practices, or the flexibility of Federal Reserve open market operations. With those general observations in mind, let me turn to the specific aspects of the report that relate directly to the responsibilities of the Federal Reserve Bank of New York. There are three such major areas: first, the changes in the Bank's administration of relationships with primary dealers; second, the Bank's role in the development, testing, and implementation of new automated systems for Treasury auctions and Federal Reserve open market operations; and third, the Bank's expanded role with regard to day-to-day surveillance of the government securities market. The statement concludes with a brief status report from the Federal Reserve's standpoint on the Salomon Brothers situation, as requested by the committee. ADMINISTRATION OF RELATIONSHIPS PRIMARY DEALERS WITH Attached to this statement is a paper issued late last month by the Federal Reserve Bank of New York outlining revised procedures for the administration of the Bank's relationships with primary dealers.1 Although that document itself represents a careful balancing of many considerations and viewpoints, it is based on the following key and interrelated considerations: First, although change was needed, the complete dismantling of the primary-dealer system— including the responsibility of dealers to make markets for Federal Reserve open market operations and to participate meaningfully in Trea- 1. The attachment to this statement is available on request from Publications Services, Board of Governors of the Federal Reserve System, Washington, DC 20551. to the Congress 259 sury auctions—would not have been a prudent step. Second, it was important to provide for a more "open" system of primary dealers, in part because the existing approach has been viewed as conferring on dealer firms special status that carries with it elements of "franchise" value, and in part because of fairness and equity considerations. This provision has been accomplished by the elimination of the so-called 1 percent market share requirement and the use of straightforward and objective capital standards for eligibility as a primary dealer. Taken together, these changes will substantially increase the potential number of firms that can become primary dealers. Third, it was important that the Federal Reserve Bank of New York make absolutely clear to the marketplace that the Bank does not regulate the primary-dealer firms, in part because of "moral hazard" considerations and in part because of legal and regulatory realities. For this reason we are disbanding the Bank's dealer surveillance unit. Fourth, for obvious reasons, it was necessary to clarify the reasons and the conditions under which the Federal Reserve Bank of New York would alter its relationship with a primary-dealer firm. Under the new administrative procedures, the three independent sets of circumstances under which that might occur, are the following: • A dealer firm's status will be altered if the firm fails to meet its responsibilities to make reasonable markets for Federal Reserve open market operations or if it fails to participate meaningfully in Treasury auctions or if it fails to meet its responsibilities to provide the Federal Reserve with meaningful market intelligence over time. To the extent that a firm's dealer status is altered for any or all of the above reasons, that action by the Federal Reserve will reflect considerations relating to the business relationship alone and will carry no implication about the creditworthiness, financial strength, or managerial competence of the firm. • A dealer firm's status will be altered if its capital falls below the relevant capital standards and it does not, in the eyes of its primary federal regulator, have a credible plan to restore such capital in a reasonable period of time. 260 Federal Reserve Bulletin • April 1992 • A dealer firm's status will be altered if the firm is convicted of a felony under U.S. law or pleads guilty or nolo contendere to a felony under U.S. law for activities directly or indirectly related to its business relationship with the Federal Reserve. This provision should create powerful incentives for a firm—when faced with wrongdoing by individual employees—to take immediate and strong actions to root out the source of the problem to minimize the risk to that firm. Although major elements of the changes in the administration of the relationships with primary dealers will begin to take place immediately, the full benefits of these changes will occur only as the automation of Treasury auctions and Federal Reserve open market operations take place and as the other changes contemplated by the Joint Report take hold. Over time, however, the automation efforts may prove particularly important. These initiatives are described below. AUTOMATION EFFORTS OF THE FEDERAL RESERVE BANK OF NEW YORK The design work for the automation of the competitive bidding portion of Treasury auctions based on existing auction techniques has been under way for some time and should be completed late this year. The software for the automation of the auctions is not particularly difficult to develop. The difficult aspects of this task relate more to its communications system—particularly as the number and nature of prospective direct participants in the auctions change. But what makes this automation effort especially difficult is the need to build into the computer systems and the communications systems a very high level of operation integrity as well as multiple levels of backup for various contingencies. If the Treasury were to decide to move to a different auction technique, the strategy would be to enhance the system now being developed to accommodate both types of auctions. Although important elements of the work being done for the current auction procedures can be used with a new auction technique, the enhancement of the system being developed to accommodate the new procedures will take some time after the requirements have been defined. This enhancement will not, however, delay the planned implementation of automated procedures for the current auction by the end of this year. The committee might gain a more useful insight into exactly how the automated Treasury auction system will work in practice if the major characteristics of the system are thought of, at the risk of a great oversimplification, in the following terms: First, each institution that is "eligible" to submit competitive bids in Treasury auctions would have a terminal-based telecommunications link to the Federal Reserve Bank of New York, either directly or through another Federal Reserve Bank. The basic "hardware" used for this purpose will be the FedLine terminal that is currently used in more than 9,000 depository institutions nationwide. The communications network will be the proven and highly reliable Fedwire telecommunications system. Finally, the new auction system will utilize the same security and encryption devices that are currently used for Fedwire operations. Second, for each such "eligible" bidder, certain data—including any affiliations with other "eligible" bidders—would have to be housed in our database, as would acceptable methods for making payment for securities and for receiving delivery of securities awarded in the auctions. Because payment and delivery must be made in electronic form, nonbanks would have to have suitable "auto-charge" agreements in place with banks for this purpose. Third, after electronic announcements of notices of auctions, bidders would be able to submit bids electronically until the auction cutoff time, which currently is 1:00 p.m. Eastern time. To provide adequate backup for contingencies, however, the system must be designed so that all bids can be routed to both the Federal Reserve Bank of New York's main data processing center in lower Manhattan and its remote backup processing center. Fourth, the computers would then sort through the bids on the basis of the highest prices (lowest yields) received, in much the same fashion as in today's manual procedures. As a part of this process, several internal audit and control procedures are planned to ensure compliance with Statements Treasury auction rules and to "flag" outlier bids, including those resulting from clerical errors in message preparation. Fifth, once the proper audits have been performed, the information has been sent to the Treasury, and the "awards" have been made, the payment for and delivery of the securities must be initiated and completed. This process will be carried out through the Federal Reserve's money and securities transfer systems (Fedwire). Finally, and in the normal course, after the initial delivery and payment for the securities in question is completed, end-of-day verifications and reconcilements must be made as a part of the overall controls on operating systems that often handle more than $1 trillion of transaction per day. The full automation of Federal Reserve open market operations is even a more complex and time-consuming task, especially because it is impossible to prejudge with any precision the number, location, and other characteristics of potential counterparties for such operations. Moreover, the operating systems and communications systems associated with this effort must be integrated with several other highly complex automated systems, including the Federal Reserve's existing money and securities transfer systems. Because of this complexity, an extraordinarily high level of reliability and integrity will be needed. To illustrate the concerns I have in mind, just imagine for a moment what might have occurred on the morning of October 20, 1987, if the Federal Reserve had been unable—because of technical problems with such a system—to furnish substantial liquidity through open market operations as a part of the effort to stabilize financial markets in the wake of the stock market crash. THE ROLE OF THE FEDERAL RESERVE BANK OF NEW YORK IN THE MARKET SURVEILLANCE PROCESS Little needs to be added to what is contained in the joint report as it pertains to the expanded role of the Federal Reserve Bank of New York—in cooperation with the other agencies—with regard to day-to-day surveillance of the government to the Congress 261 securities market except to emphasize that (1) market surveillance is quite distinct from dealer surveillance, which we are discontinuing and (2) it will take some time to put in place the new or altered statistical reporting arrangements that might be agreed upon by the interagency surveillance working group over the period immediately ahead. As a first step, the Federal Reserve Bank of New York expects to have the initial redeployment of key personnel necessary for this effort in place later this month. Final decisions about the number and mix of personnel needed for this effort will have to await agreement among the agencies about the precise scope and nature of the statistical reporting and other aspects of the market surveillance effort, which should be essentially completed in a month or two. THE SALOMON BROTHERS SITUATION Because the official investigation into the Salomon Brothers wrongdoings is still under way, very little can be said at this time regarding the particulars of that situation. The firm, in response to inquiries by the Federal Reserve Bank of New York, has provided the Bank with several reports over the period of September through December 1991. In general, these reports cover (1) the sweeping changes in management and management structure that were put in place after the disclosures made by the firm last August, (2) the major changes in internal control procedures and compliance systems that have been put in place over the period in question, (3) various estimates of the profits associated with the auctions in which irregularities have been acknowledged by the firm, and (4) further details regarding the firm's financing activities in certain of the Treasury issues. All relevant materials have been made available to the Securities and Exchange Commission (SEC) and the U.S. Attorney. It is contemplated that any decision by the Federal Reserve Bank of New York regarding the status of Salomon Brothers as a primary dealer will be made in the context of the findings reached by the SEC as a result of its ongoing investigation of the matter. This approach, which 262 Federal Reserve Bulletin • April 1992 has the support of the other agencies, is being followed in deference to fairness and due process considerations and to minimize uncertainties that might follow from multiple and uncoordinated announcements of this nature. The timing of the Salomon Brothers episode is such that certain sanctions by the Federal Reserve Bank of New York might apply even if thefirmis not convicted of, or if it pleads guilty or nolo contendere to, a felony under U.S. law. • Statement by Edward C. Ettin, Deputy Director, Division of Research and Statistics, Board of Governors of the Federal Reserve System, before the Subcommittee on Treasury, Postal Service, and General Government of the Committee on Appropriations, U.S. Senate, February 24, 1992 Ware's testimony of last fall, which I understand you already have. I am pleased to have this opportunity to appear before this subcommittee on behalf of the Federal Reserve Board and to discuss issues related to bank mergers in the United States. However, I am not in a position to discuss issues or to answer questions directly related to the proposed BankAmerica-Security Pacific merger—which I understand is the subject of these hearings— because that merger is under "consideration by the staff, preparatory to presentation to the Board of Governors. As you know, the U.S. banking system is in the midst of a major restructuring in response to a variety of forces in the marketplace and the continuing removal of legal barriers to entry by the individual states. A substantial volume of bank mergers has been a natural response to the changing banking environment. The Board is very aware of this evolution but is equally aware of its statutory responsibility to manage events so as to preserve competition and ensure a safe and sound banking system for the benefit of consumers, businesses, and taxpayers. My testimony will discuss recent structural changes in the banking system, the Federal Reserve's continuing efforts to ensure that competition is maintained, and some of the potential benefits that may be expected from the restructuring of the banking industry that is currently under way. In my brief remarks today, I will not address specifically two other areas of Board concern—bank safety and soundness and Community Reinvestment Act issues. Both of these areas were covered, however, in Governor La- RECENT STRUCTURAL IN BANKING CHANGES The restructuring of the banking industry accelerated in the past decade. There were 188 mergers of healthy banks involving about $9 billion in acquired assets in 1980,710 such mergers involving $131 billion in acquired assets in 1987, and an estimated 550 mergers of healthy banks with $60 billion in acquired assets in 1989. Such an increase in merger activity did not come about spontaneously. It was instead a natural response to the removal of many longstanding legal restrictions on entry that had, until recently, balkanized the banking industry, not only between states but within states as well. As recently as 1985, only eighteen states allowed statewide branching, but by early 1992 only four states prohibited statewide banking. In 1985, only nine states permitted interstate banking, but by early 1992, only two states prohibited banking operations by out-of-state banks. As the banking industry has responded to the changing environment, mergers have not been the only source of structural change. Indeed, the banking industry has been characterized by a great deal of entry and exit that is indicative of a very healthy, active competitive environment. For example, while there were approximately 5,000 acquisitions of healthy banks during the 1980s, about 2,700 new banks were formed, 16,000 new bank branches were opened, 6,600 branches were closed, and about 1,100 banks failed. After a decade of remarkable changes in the banking industry, and with a major restructuring of the industry under way, almost no change has occurred in the concentration in local banking markets, the battlefield on which competition is Statements measured and analyzed. The fact that concentration in both urban and rural banking markets has remained largely unchanged during the past decade is an indication of the continuing intensely competitive structure of the banking industry. This structure reflects, in part, the efforts of the regulators to ensure a competitive banking environment. That concentration has not increased, especially in urban markets, is even more notable because in many of these markets banking concentration could increase considerably without raising any questions about competition under the antitrust laws or the merger guidelines of the Justice Department. THE FEDERAL RESERVE'S ENSURE COMPETITION EFFORTS TO In view of the apparent success of the regulators in ensuring a competitive banking environment, I would like to discuss briefly what the Federal Reserve does to carry out its responsibilities for evaluating the competitive effects of mergers. Each and every bank merger or acquisition subject to the Board's jurisdiction—that is, those mergers involving member banks and all acquisitions by, and mergers of, bank holding companies—are reviewed for the possibility of anticompetitive effects. The review process begins at one of the twelve Federal Reserve Banks. At this stage, the appropriate geographic market for analyzing the merger is determined. This determination may involve the collection of data on commuting, shopping patterns, banking relationships, and so forth. If such data prove to be insufficient, telephone surveys may be conducted and, if necessary, on-site visits made by Federal Reserve staff to conduct interviews. Once the appropriate geographic area that encompasses the local banking market is determined, an initial screening analysis is conducted. This analysis essentially involves calculating basic pre-merger and post-merger measures of market structure (market shares and the Herfindahl index) to determine whether the proposed merger would be acceptable under the merger guidelines of the Justice Department. If these guidelines are not breached, the application is approved at the Reserve Bank and the process to the Congress 263 goes no further. However, structural measures that exceed the merger guidelines are taken as an indication that the merger may have anticompetitive effects, and Board review is required. The reason I say that a merger that exceeds the merger guidelines may have anticompetitive effects is that, although market structure is important, it is only one factor that may influence competition in banking. For cases submitted to Board review, other factors are analyzed that would not need to be examined if the basic commercial bank concentration ratios imply competitive structures. These factors include the following: (1) the importance of nonbank thrift institutions as commercial bank rivals, especially with respect to their newer lending and checking powers; (2) the importance of potential competition, both in terms of the likelihood of new entry into the market and the current competitive effect from the threat of entry; (3) the importance of other depository and nonbank financial institutions, such as credit unions and finance companies, in the market; (4) the financial health of the target firm; (5) the economic health of the market (to determine whether exit from a declining market is necessary marketplace adjustment); and (6) the competitive importance of the target bank if the target has proved to be an unusually weak competitor. This brief overview of procedures for the competitive analysis of merger proposals at the Federal Reserve suggests the seriousness with which the Federal Reserve takes its responsibility for ensuring competition in banking. The Federal Reserve's bank merger policy and past actions discourage the filing of merger applications that would clearly be anticompetitive. The self-screening of such cases means that the vast majority of merger proposals submitted to the Board do not raise any competitive issues. Furthermore, in some of the relatively few cases in which a merger application does raise competitive problems, the Federal Reserve will accept a divestiture of the merged bank's offices in local markets when competition may otherwise be harmed. Such divestitures eliminate the anticompetitive aspects of the merger while allowing the basic merger to proceed. Thus, the Board accepted divestiture proposals in thirty-five merger cases from 1982 to 1991. The rationale for such a 264 Federal Reserve Bulletin • April 1992 policy is to ensure that competition is maintained in local markets while government interference with the marketplace in our private-propertybased system is minimized. That is, if there are no competitive or other public policy problems arising from a merger, no reason exists to impede decisions in the marketplace, whether or not clear public benefits are evident. This issue of public benefits brings me to the last point I would like to discuss—the potential for public benefits from bank mergers. POTENTIAL PUBLIC BENEFITS Possible public benefits from a merger are considered under the "convenience and needs" test and may be used to override some of the anticompetitive elements that may exist in a given merger application. If, for example, a target bank is expected to fail, the benefit to the community of uninterrupted banking servicesvices, the continued operation of convenient offices, and possibly the maintenance of some employment may provide the basis for approving the merger in spite of some anticompetitive effects. During the past few years, poor operating performance and the increasingly competitive environment have caused many banks, as well as other firms, to focus a great deal of attention on increasing their efficiency. Banks, like other firms, must be efficient to be profitable; equally important, they must be profitable to be healthy. Researchers, bankers, and bank consultants all agree that some banks are much more efficient than others and that opportunities exist to increase the overall efficiency of the industry. Many bankers believe that mergers provide an Statement by Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System, before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, February 25, 1992 I am pleased to present the Federal Reserve's Monetary Policy Report to the Congress.1 The important vehicle for achieving significant efficiency gains, particularly from merging large, sophisticated back-office and computer operations and from closing redundant offices. Or mergers may provide the environment necessary to justify the tough cost-cutting measures that are required. The historical evidence indicates that there have been few efficiency gains from past mergers, but these studies have been based on mergers from an era in which banks were almost surely less cost conscious. Today, bankers, like other business managers, know that if they are to remain competitive they must carefully manage their costs. Thus, the future may hold a potential for more cost savings than research has demonstrated to date. Moreover, the possibility of efficiency gains may be greater in some cases than in others. Thus, the Board carefully considers the potential for these gains on a case-by-case basis. In the last analysis, however, regardless of any anticipated efficiency gains, the Board is sensitive to its statutory responsibility to maintain competitive banking markets. Let me conclude by emphasizing that the Board is aware of, and is monitoring, the changes that are taking place in the financial system. It continues to devote substantial efforts to the analysis of the competitive effects of all proposed mergers and acquisitions. Although we at the Board have not yet seen systematic evidence of efficiency gains from mergers, the potential for substantial cost savings clearly exists. Thus, we continue to research this topic because of the possibility of important public benefits in this area, not the least of which is that a safe and sound banking system is also a profitable one. • policy decisions discussed in the report were made against the backdrop of a troubled economy. The recovery that seemed to be in train at the time of our last report to the Congress 1. See "Monetary Policy Report to the Congress," Federal Reserve Bulletin, vol. 78 (April 1992), pp. 223-41. Statements stalled, job losses have mounted, and confidence remains low. Looking forward, however, there are reasons to believe that business activity will pick up. Indeed, anecdotal reports and early data seem to be indicating that spending is starting to firm in some sectors. These signs should not be exaggerated; the prospective incipient recovery could peter out, as indeed the much more vigorous recovery of last spring petered out. Nonetheless distinct financial indications of improvement are apparent at this time. Several measures suggest that the balance sheets of many households and businesses have been strengthened, a development that should facilitate spending in the recovery. Similarly, banks and other lenders have taken steps to bolster their capital positions so that they will be able to supply the credit to support additional spending. And, most recently, broad measures of money have strengthened. Moreover, there are clear signals that core inflation rates are falling, implying the prospect that within the foreseeable future we will have attained the lowest rates of inflation in a generation, an encouraging indicator of future gains in standards of living for the American people. Still, the outlook remains particularly uncertain. This means that we at the Federal Reserve have to be particularly sensitive to signs that the anticipated strengthening in business activity is not emerging and be prepared to act should the need arise. As background, I would like to discuss our recent economic performance, reviewing in some detail the causes of the disappointments we have experienced and the important balance sheet adjustments in process that promise eventually to support a resumption of sustainable economic growth. MACROECONOMIC PERFORMANCE MONETARY POLICY IN 1991 AND After the contraction of economic activity in the autumn of 1990 that resulted from the invasion of Kuwait and the subsequent sharp rise in oil prices, economic activity continued to decline in the first quarter of 1991. In response to the weakening of activity and anemic money growth, to the Congress 265 the Federal Reserve eased policy substantially over late 1990 and into early 1991. By the spring, many signs pointed to economic recovery. The quick and successful conclusion of the Gulf war bolstered consumer confidence. Growth of the money stock was strengthening. Homebuilding had begun to stir, consumer spending had turned up, and industrial production was advancing. The lower interest rates and the retracing of the earlier jump in oil prices appeared to be providing support for an expansion of aggregate demand. In these circumstances, the odds appeared to favor a continued moderate recovery in jobs and employment during 1991. Over the third quarter, however, evidence began to surface that the recovery had not taken hold. The impetus to consumer sentiment and spending that was provided by the completion of the Gulf war seemed to ebb, and consumer outlays turned down again. Businesses, apparently caught by surprise by this development, saw their inventories back up in the late summer and fall. With demand slackening, businesses engaged in another round of layoffs, and private nonfarm payrolls declined over the second half of 1991 while the civilian unemployment rate rose to 7.1 percent. In addition, growth of the monetary aggregates slowed unexpectedly during the third quarter. Expansion of M2 virtually ceased, while M3 actually contracted—a nearly unprecedented occurrence. Judging from our surveys of banks, other contacts in the financial industry, and anecdotal information from borrowers, the supply of credit for many borrowers remained quite tight, particularly for those firms without access to open market sources of funds. Moreover, private credit demands weakened further. Against this background, and with signs that inflationary pressures were diminishing, the Federal Reserve took several steps to ease policy further in the second half of 1991. Through both open market operations and reductions in the discount rate, money market interest rates were lowered nearly 2 percentage points between August and December. These monetary policy actions, building on those actions over the previous two and one-half years, have resulted in a large cumulative reduc- 266 Federal Reserve Bulletin • April 1992 tion of interest rates. The federal funds rate has declined nearly 6 percentage points from its cyclical peak and the discount rate 3V2 percentage points. Other short-term interest rates have fallen substantially as well. The prime rate also has been reduced appreciably but by somewhat less than market rates as commercial banks have sought to bolster lending margins. In longer-term markets, bond and mortgage yields have dropped 1 to 2 percentage points on balance from their cyclical highs, with much of the decline coming in the latter half of 1991. The decreases in interest rates appear to have given stock prices a boost as well, with most major indexes rising to record levels early this year. Despite substantial decreases in interest rates in late 1990 and throughout 1991, however, M2 growth was only about 3 percent in 1991, the same as the sluggish pace of expansion of nominal gross domestic product (GDP). M3 rose only VA percent. Both aggregates ended the year only modestly above the lower bounds of their respective annual ranges. Growth of domestic nonfinancial sector debt, at 43A percent, also was near the lower bound of its monitoring range. Outside the federal sector, debt increased less than 3 percent for the year in reflection not only of depressed spending but also of a deleveraging in the household and business sectors and financial difficulties of many state and local governments. The behavior of the monetary aggregates in 1991 relative to other economic variables was somewhat puzzling. Doubtless, part of the slow money growth was related to the weakness in borrowing and spending. But even after taking account of weak spending, growth of money was unusually slow. The velocity of M2 was about unchanged over the year rather than falling as would ordinarily be expected in circumstances of sharp declines in short-term market interest rates. It appears that certain interest rate relationships gave households incentives to limit their money holdings. Commercial banks, restraining their own balance sheets in response to weak loan demand and in an attempt to conserve capital, lowered deposit interest rates appreciably, especially late in the year. On the other hand, interest rates on consumer debt, particularly when adjusted for the lack of tax deductibil- ity, remained relatively high. As a result, many households apparently used deposit balances to pay off or to avoid taking on consumer credit. Also, the steep yield curve and the attractive returns recorded by bond mutual funds, as well as impressive gains in the stock market, apparently led many households to shift funds out of deposits and into capital market instruments, which are not included in the monetary aggregates. Finally, £ brisk pace of activity by the Resolution Trust Corporation (RTC) appears to have depressed the monetary aggregates, especially M3. When the RTC takes savings and loan assets onto its own balance sheet, they are financed with Treasury securities rather than depository liabilities. In effect, the RTC has taken on some of the role of thrift institutions, but its liabilities are not included in the monetary aggregates. In addition, the disruption of banking relationships as institutions are resolved, including the abrogation of some time deposit contracts, seems to lead investors to reassess their portfolio allocation and, in some cases, to shift funds out of deposits. Thus, several factors reduced the public's demands for monetary balances in 1991. Some of these factors tended to raise the velocity of money so that to an extent slow growth of M2 was not reflected in income flows. But the pattern of money and credit growth over the past half of the year appeared also to stem importantly from forces depressing spending and economic activity, which the Federal Reserve attempted to counter through easing money market conditions. BALANCE SHEET ADJUSTMENTS Understanding these forces and the appropriate role for monetary policy under the circumstances requires stepping back several years. As I have discussed with you previously, the 1980s saw outsized accumulation of certain kinds of real assets and even more rapid growth of debt and leverage. To a degree, this buildup of balance sheets was a natural and economically efficient outcome of deregulation and financial innovation. It also may have reflected a lingering infla- Statements tion psychology from the 1970s—that is, people may have expected a rapid increase in the general price level and especially in the prices of specific real assets such as real estate properties that would make debt-financed purchases profitable. But in retrospect, the growth of debt and leverage was out of line with subsequent economic expansion and asset price appreciation. Indeed, the burden of debt relative to income mounted as asset values, especially for real property, declined or stagnated. In part, our current economic adjustments can be seen as arising out of a process in which debt is being realigned with a more realistic outlook for incomes and asset values. Rapid rates of debt-financed asset accumulation were broad-based during the 1980s. For example, households purchased cars and other consumer goods at a brisk pace. Although household income was increasing swiftly in this period, the growth of expenditures was faster. Household saving rates dropped from about 8 percent at the beginning of the decade to a 4 to 5 percent range by its end. This drop was reflected in part in burgeoning consumer installment credit, which expanded at an average annual rate of 15 percent between 1983 and 1986. In addition, mortgage debt expanded at an 11 percent pace between 1983 and 1989. Most of this increase was against existing homes, representing borrowing against rising values either in the process of home turnover or as owners borrowed against higher equity. Mortgage borrowing also financed a substantial amount of buying of new homes, which in some parts of the country at times seemed to be motivated more by speculative considerations than by fundamental needs. The 1980s also witnessed a dramatic increase in desired leverage of the business sector, which fostered a wave of mergers and buyouts. These transactions typically involved substantial retirements of equity financed through issuance of debt; equity retirements in the nonfinancial corporate sector exceeded new equity issuance by a staggering $640 billion in the 1984-90 period. Such restructurings often were based, at least in part, on a well-founded quest for increased efficiency, and gains were achieved by several firms. However, many of these deals also were predicated on overly to the Congress 267 optimistic assumptions about what the economy could deliver—that rapid economic growth could continue without setback and that asset prices would always rise. A primary example of the accumulation of debt and real assets occurred in commercial real estate markets. In the early 1980s, when space was in unusually short supply, commercial real estate received an additional push from the Economic Recovery Tax Act, which provided an acceleration of depreciation allowances for capital goods. Although an adjustment was appropriate and overdue, that for commercial structures was excessive, resulting in tax lives that were far shorter than economic fundamentals would dictate. This shift in incentives led to a surge in debt-financed commercial construction during the 1980s. Financial institutions, of course, participated in this process by lending heavily; indeed, their aggressive lending behavior probably contributed to the speed of debt accumulation. During the economic expansion, bank credit expanded at an average annual rate of nearly 9 percent, well in excess of the growth of nominal income. Banks lent heavily against real estate collateral, for corporate restructurings, and for consumer credit, and, in addition, for more traditional business purposes. Life insurance companies also expanded their portfolios rapidly, with growth in real estate loans especially prominent. By the end of the 1980s, the inevitable correction was upon us. The economy was operating close to capacity, so that growth had to slow to a pace more in line with its long-run potential. Inflation did not pick up much, contrary to what some might have expected as capacity was approached. In the commercial real estate sector, soaring vacancy rates and a change in tax law in 1986 brought the boom to an end, producing sharp decreases in prices of office buildings in particular. Together, these developments resulted in declines in the value of assets and growing problems in servicing the associated debt out of current income. Because of the runup in leverage over previous years, these problems have been more severe than might be expected just from the slowing in income and spending. And the difficulties of both borrowers and lenders have fed 268 Federal Reserve Bulletin • April 1992 back on spending, exacerbating the economic downturn during the Gulf crisis and inhibiting the recovery. Faced with mounting financial problems and uncertainty about the future, people's natural reaction is to withdraw from commitments when possible and to conserve and even build savings and capital. Both households and businesses, concerned about their economic prospects, over the past two years or so have taken several measures to reduce drains on their cash flow and to lower their exposure to further surprises. Part of this process has involved unusually conservative spending patterns, and part has involved the early stages of a restructuring of financial positions. Businesses, for example, have strived to reduce fixed costs. To do this, they have cut back staffing levels and closed plants. They have tried to decrease production promptly to keep inventories in line. Firms also have taken steps to lower their risk exposures by restructuring their sources of funds to reduce leverage, enhance liquidity, and cut down on interest obligations. The response of households has been analogous. To increase their net worth, households have taken steps to increase their savings by restraining expenditures. To reduce interest expenses, they have paid down consumer debt, and as long-term interest rates have declined, they have refinanced mortgages and other debt at lower interest rates. Lenders too have drawn back. With capital impaired by actual and prospective losses on loans, especially on commercial real estate, banks and other intermediaries have not only adopted much more cautious lending standards but also have attempted to hold down asset growth and bolster capital. They have done so, in part, by aggressively reducing what they pay for funds by more than they have reduced what they charge for credit. Like other businesses, they have taken steps to pare expenses generally, including reducing work forces and looking for cost-saving consolidations with other institutions. To a considerable extent, this response has been rational and positive for the long-term health of our financial intermediaries. But in many cases it seems to have gone too far, impelled to an extent by the reaction of supervisors to the deteriorating situation. The Federal Reserve has taken several measures to facilitate balance sheet restructuring and adequate flows of credit. Together with other supervisors, we have directed examiners to consider not only the current market value of collateral against performing loans but the overall quality of the credits. We also have met on numerous occasions with bankers as well as bank examiners to clarify bank supervisory policies and to emphasize the importance of banks continuing to lend and take reasonable risks. Monetary policy also has, in part, been directed in recent quarters to supporting balance sheet restructuring that is laying the groundwork for renewed, sustained, economic expansion. We recently reduced reserve requirements on transactions deposits. This reduction will free up some funds for lending or investment and should over time enhance the ability of banks and their customers to build capital. In addition, lower short-term interest rates clearly have been helpful to debtors, but their contribution to the restructuring process would be relatively muted if long-term rates had not also declined at the same time and stock prices were not buoyant. Reductions in short-term rates that were expected very soon to be reversed or that were not seen as consistent with containing inflation would contribute little to the strengthening of balance sheets fundamental to enhancing our long-term economic prospects. In part, because we have seen declines in longas well as short-term rates and increases in equity prices, progress has been made in balance sheet restructuring, and it is hoped that more is in train. As a result of lower interest rates, household debt service as a percentage of disposable personal income has fallen in the past year from about 19V2 to about 18V2 percent. Moreover, further declines are in prospect as more refinancing occurs and as interest costs on floating-rate debt, such as adjustable-rate mortgages, gradually reflect current interest rates. In the business sector, similar patterns can be observed. With corporate bond rates close to their lowest levels in more than a decade, a large number of firms in recent months have called, retired, and replaced a considerable volume of high-cost debt. A flood of issuance of longer-term debt and equity shares has reduced dependence Statements of firms on short-term obligations. Several of the equity deals constituted so-called reverse LBOs—the deleveraging of highly leveraged and therefore rather risky firms. The ratio of corporate debt to equity in book value terms has only begun to edge down, but the increase in equity, together with the lower level of interest rates, has enabled many corporations to make significant headway in lowering interest expenses over the past two years, and further decreases in corporate debt burdens are presumably in prospect. Restraint on inventories and other spending has contributed to this result by keeping outlays in close alignment with internally generated funds. And the strengthening of balance sheets is paying off in terms of credit evaluations. Downgrades of nonfinancial firms, though still greater than upgrades, are well below the levels of last winter and spring, and upgrades have risen slightly. The condition of our financial institutions also is improving. In the banking sector, wider interest margins seemed to be boosting profits by the end of last year. In addition, many institutions have taken difficult but necessary measures to control noninterest expenses. Reflecting an improved earnings outlook and a generally favorable equity market, the stock prices of large banks have doubled on average from their 1990 lows, and the premium paid by many moneycenter banks on uninsured debentures has dropped several percentage points. Increased share prices have spurred several holding companies to sell substantial volumes of new equity shares in the market, contributing to a significant rise of capital ratios in the banking system, despite still-large provisions for loan losses. Measures of bank liquidity, such as the ratio of securities to loans in bank portfolios, have risen appreciably, signalling an improved ability of banks to lend. The balance sheet adjustments that are in progress in the financial and nonfinancial sectors alike are without parallel in the postwar period. Partly for that reason, assessing how far the process has come and how far it has to go is extraordinarily difficult. As increasingly comfortable financial structures are built, however, the restraint arising from this source eventually should begin to diminish. In any case, the nature and speed of balance sheet restructuring are to the Congress 269 important elements that we will need to continue to monitor on a day-by-day basis in assessing whether further adjustments to the stance of monetary policy are appropriate. ECONOMIC EXPANSION AND MONEY AND CREDIT GROWTH IN 1992 Against this background of significant progress in balance sheet strengthening as well as lower real interest rates, the Board members and Reserve Bank Presidents expect a moderate upturn in economic activity during 1992, although in the current context the outlook remains particularly uncertain. According to the central tendency of these views, real output should grow between PA and 2Vi percent this year. The unemployment rate is projected to begin declining, finishing the year in the vicinity of 63/t to 7 percent. An especially favorable aspect of the outlook is that for inflation. The central tendency of the Board members' and Reserve Bank Presidents' forecast is that inflation, as measured by the consumer price index (CPI), will be in the neighborhood of 3 to 3Vi percent over the four quarters of 1992, compared with a 3 percent rise in 1991. However, the CPI was held down last year by a retracing of the sharp runup in oil prices that had resulted from the Gulf crisis. Consequently, our outlook anticipates a significant improvement in the so-called core rate of inflation. With appropriate economic policies, the prospects are good for further declines in 1993 and beyond even as the economy expands. To support these favorable outcomes for economic activity and inflation, the committee reaffirmed the ranges for M2, M3, and debt that it had selected on a tentative basis last July—that is, 21/2 to 6V2 percent for M2, 1 to 5 percent for M3, and 4Vi to 8V2 percent for debt, measured on a fourth-quarter-to-fourth-quarter basis. These ranges are the same as those used for 1991. The 1992 ranges were chosen against the backdrop of anomalous monetary behavior during the past two years. Since 1989, M2 has posted widening shortfalls from the levels that historical experience indicates would have been compatible with actual nominal GDP and short-term market interest rates. 270 Federal Reserve Bulletin • April 1992 The appropriate pace of M2 growth within its range during 1992 thus will depend on the intensity with which forces other than nominal GDP turn out to affect money demand. Depository institutions are likely to continue reducing their rates on retail deposits in lagged response to the steep declines in money market yields before year-end. Those deposit-rate reductions could be significant, especially if banks are not seeking retail deposits, given their continued caution in extending credit and borrowers' continued preference for longer-term sources of credit to strengthen balance sheets. With the effects of lower deposit rates contributing to further shifts of funds into longer-term mutual funds and into debt repayment, and with the RTC remaining active in resolving troubled thrift institutions, the velocity of M2 could increase this year, independently of changes in market interest rates. The ongoing restructuring of depository institutions, as in the past two years, is likely to continue to have an even larger influence on M3 than on M2 growth. Assets previously on the books of thrift institutions that are acquired by the RTC will be financed by Treasury debt rather than by the liabilities of thrift institutions. Managed liabilities in M3 should continue to be more depressed by resolution activity than retail certificates of deposit. The reaffirmed range for M3 growth thus remains lower than that for M2. Nonfinancial debt growth is likely to be a little faster than last year's 43A percent increase. The wider federal deficit in prospect for 1992 will increase Treasury borrowing. Assuming that output and incomes are again expanding, balance sheets are in somewhat better condition, and credit conditions are no longer tightening, the borrowing of households and businesses may pick up a little, although their overall posture probably will remain cautious. Will these ranges for money and credit growth prove to be appropriate? Obviously, we believe that the answer is yes. But I should reemphasize the sizable uncertainties that prevail. The ongoing process of balance sheet restructuring may affect spending, as well as the relationship of various measures of money and credit to spending, in ways we are not anticipating. In assessing monetary growth in 1992, the Federal Reserve will have to continue to be sensitive to evolving velocity patterns. CONCLUDING COMMENTS Our focus, quite naturally and appropriately, has been on our immediate situation—the causes of the recent slowdown and the prospects for returning to solid growth this year. However, as we move forward, we cannot lose sight of the crucial importance of the longer-run performance of the economy. As I have noted before, much of the difficulty and dissatisfaction with our economy comes from a sense that it is not delivering the kind of long-term improvement in living standards we have come to expect. The contribution monetary policy can make to addressing this deficiency is to provide a financial background that fosters saving and investment and sound balance sheet structures. Removing over time the costs and uncertainties associated with ongoing inflation encourages productivity-enhancing investment. Moreover, inflation tends to promote leverage and overaccumulation of real assets as a hedge against increases in price levels; progress toward price stability provides a backdrop for borrowing and lending decisions that lead to strong balance sheets, far less apt to magnify economic disturbances. A crucial aspect of our recent economic performance is the difficult situation of our financial sector. Clearly, some of the weakness of the economy over the past two years arose from the restraint on the supply of credit—the so-called credit crunch. Both depository institutions and other financial intermediaries made some of the same mistakes of judgment about the likely appreciation of asset prices as did borrowers. In addition, however, the balance sheets of many financial intermediaries themselves were not robust; many lacked adequate capital to continue to lend to good credit risks in the face of losses from their previous lending mistakes. Our emphasis on improving the capitalization of depository institutions over time, where we have already made substantial progress, should help bolster their ability to lend both in good times and bad. We could make further strides in strengthening our depository institutions through removal of Statements outmoded constraints on their behavior. By loosening strictures on the ability of these firms to compete across arbitrary boundaries of product line and geography, we would improve their profitability and capital. Their strengthened position should augment their ability to lend and potentially could reduce demands on the federal safety net. Finally, we should consider carefully the effects of the extremely low rates of national saving that we have experienced for a decade. Certainly, low personal and corporate saving rates have contributed to the deterioration in balance sheets that has impaired our economic performance in recent years. The large stocks of to the Congress 271 federal debt that have been built up, too, likely have adversely affected our economic prospects by putting upward pressure on real interest rates and thus stunting the growth of the capital stock, on which our future incomes depend. In considering the various fiscal options that are before you as members of the Congress, I urge you to keep in mind their long-term implications for national saving. Through a combination of fiscal policies directed at reducing budget deficits and boosting private saving and monetary policies aimed at noninflationary growth, we can achieve the strong economic performance that our fellow citizens rightly expect. • Chairman Greenspan presented similar testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, February 19, 1992. 272 Announcements REAPPOINTMENT OF ALAN GREENSPAN AS CHAIRMAN OF THE BOARD OF GOVERNORS AND AS A MEMBER OF THE BOARD President Bush on July 10, 1991, announced his intention to reappoint Alan Greenspan as Chairman of the Board of Governors and as a member of the Board for a full fourteen-year term. Dr. Greenspan's appointments were subsequently confirmed by the Senate on February 27, 1992, and he took the oath of office on March 3, 1992. His full term as a member of the Board began February 1, 1992, while his four-year term as Chairman began March 2. In making the announcement at a White House press conference on July 10, 1991, President Bush stated: Just to top the day with a very important announcement, I want to say that it is my intention to send as soon as possible to the Senate my intention to reappoint Chairman Greenspan as Chairman of the Federal Reserve, and also nominating him to another term as a Governor of the Federal Reserve. I, of course, would encourage the Senate to move as quickly as possible on this important nomination. The respect that Alan Greenspan has around the world and in this country, particularly in the financial marketplaces, is unparalleled. And it gives me great pleasure to move forward at this time, quite a bit in advance of the expiration of the term, but nevertheless, I think, most appropriately, to ask him to serve. And, you know, it's not a one-way street. This is a very complicated job. It is a time-consuming job. It's a job of great pressure. And I'm extraordinarily grateful to Chairman Greenspan for being willing to undertake another term as Chairman of the Fed. He has done an outstanding job. Everyplace I go abroad, I get the same reports and the same vote of confidence that I get here from the central bankers abroad, from the finance ministers abroad, as well as from the heads of state and government. So this country is very fortunate to have the important affairs of the Federal Reserve Bank in Alan Greenspan's hands, and I am very grateful that he is willing to continue in this most important job. And so, Alan, my thanks to you, sir, for your service to your country, and the mike is all yours. Chairman Greenspan made the following comment at that time: I thank you very much, Mr. President. It's certainly been an honor to serve as Chairman of the Federal Reserve under your presidency. And, hopefully, if the Senate sees fit to find my credentials appropriate, I look forward to another four years of what is really, for an economist, the most interesting job that there is in government. Needless to say, the last four years have been rather extraordinary, and I suspect that the next four years will have as many surprises as the last four. Again, let me thank you very much, Mr. President. It has certainly been an honor to work with you. (On August 9, 1991, President Bush announced the recess appointment of Dr. Greenspan as Chairman, effective August 10. Dr. Greenspan's first four-year appointment as Chairman expired on August 10, 1991.) REDUCTION IN RESERVE REQUIREMENTS ON TRANSACTION ACCOUNTS OF DEPOSITORY INSTITUTIONS The Federal Reserve Board announced on February 18, 1992, that it will reduce reserve requirements on transaction accounts of depository institutions effective in April. The reduction from 12 percent to 10 percent in the reserve ratio on net transaction accounts will reduce funding costs for depositories and strengthen their balance sheets. Over time, it is expected that most of these cost savings will be passed on to depositors and borrowers. The Board noted that the reduction should strengthen the financial condition of banks and thereby improve their access to capital markets, thus putting them in a better position to extend credit. The effective date in April is designed to provide depository institutions time to adjust their reserve 273 management strategies by increasing use of their required clearing balances, economizing on vault cash, and generally providing more efficient management of their accounts. This change is the first major one in the reserve ratio on net transaction accounts since the Monetary Control Act was adopted by the Congress in 1980. That law made all depositories—not just member commercial banks—subject to reserve requirements. In an action announced in December 1990, the Board reduced from 3 percent to 0 the reserve requirement on nonpersonal time deposits and Eurocurrency liabilities. Reserve requirements are held by depositories in the form of deposits at Federal Reserve Banks and vault cash. Had the lower reserve ratio been in place in 1991, required reserves would have been about $8 billion below the nearly $50 billion level that prevailed last year. About %1Va billion of the decline would have been in required reserve balances and less than $1 billion in applied vault cash. In light of the increase in required reserves over last year, the drop in required reserves and required reserve balances will be somewhat larger when today's action is implemented. Today's action will be effective with the twoweek reserve maintenance period beginning on April 2, 1992. At the same time, on February 18, 1992, the Board said that it will request public comment on the following proposed changes in reserve requirement regulations: 1. A proposal to double the carryover allowance for reserve balances to the larger of $50,000 or 4 percent of required reserves plus required clearing balances. This change will provide institutions with more flexibility in managing reserves from one maintenance period to another. 2. A proposal to shorten by two weeks the lag in counting vault cash toward required reserves to reduce the decline in required reserve balances early in the year. The Board also said that previous proposals to prevent erosion of the reserve base for transaction accounts remain under consideration. The proposals, issued for comment last April 12, would classify certain sweep arrangements including certain commingled time deposits as transaction accounts and make other changes designed to prevent avoidance of reserve requirements. DISCONTINUANCE OF THE USE OF THE SUPERVISORY DEFINITION OF HIGHLY LEVERAGED TRANSACTIONS The Federal Reserve Board has voted to discontinue use of the supervisory definition of highly leveraged transactions (HLTs) after June 30, 1992. The Board will also discontinue the reporting of HLT exposure by banking organizations it regulates after the June 30, 1992, reporting date. In the interim, the Board has approved revisions to the supervisory definition of HLTs to be used by banks and bank holding companies for reporting their HLT exposure as of March 31, 1992, and June 30, 1992. Although the Board will phase out the use of the formal supervisory definition of HLTs, guidance previously issued by the Board for assessing individual credits that finance corporate restructurings and for evaluating internal processes for initiating and reviewing these credits will continue to be used by examiners for this purpose. Because of the complex nature and level of risk associated with such HLT financings, boards of directors and management at banking organizations will be expected to continue to monitor carefully their banking organization's risk exposure to these credits. Similar action to discontinue use of the HLT definition and reporting has also been approved by the Comptroller of the Currency and the Federal Deposit Insurance Corporation. CONSUMER AFFAIRS BROCHURES ON MORTGAGE FINANCING AVAILABLE Buying a new house? Refinancing your existing home? One of the following pamphlets published by the Federal Reserve may be of help to you: • A Consumer's Guide to Mortgage Refinancings • A Consumer's Guide to Mortgage Settlement Costs • A Consumer's Guide to Mortgage Lock-Ins • Consumer Handbook on Adjustable Rate Mortgages • Home Mortgages: Understanding the Process and Your Right to Fair Lending 274 Federal Reserve Bulletin • April 1992 Copies of any or all of these pamphlets may be obtained by writing or telephoning Publications Services, Federal Reserve Board, mail stop 138, Washington, DC 20551 (telephone 202-452-3245). There is no charge for single copies of these brochures. PROPOSED ACTIONS The Federal Reserve Board issued for public comment on February 13,1992, a proposal to revise the Board's Regulations O (Loans to Executive Officers of Member Banks) and Y (Bank Holding Companies) to conform the regulations to the amendments of section 22(h) of the Federal Reserve Act (12 U.S.C. §375b) made by section 306 of the Federal Reserve Deposit Insurance Corporation Improvement Act of 1991. Comment was requested by March 20, 1992. The Federal Reserve Board requested public comment on February 19, 1992, on a proposal to revise its capital adequacy guidelines for bank holding companies and state member banks to provide explicit guidance on the types of intangible assets that may be included in the tier 1 capital calculation for risk-based and leverage capital purposes. Comments were due by March 27, 1992. ERRATA Federal Reserve Bulletin Two textual errors have been identified in the January 1992 Bulletin article "Changes in Family Finances from 1983 to 1989: Evidence from the Survey of Consumer Finances." First, on page 4 the article states that real median family income was virtually unchanged between 1983 and 1989 and that this fact was supported by data from the Current Population Survey (CPS). The reference to the CPS is in error. The CPS estimate of household income increased about $2,900 over this period. Nevertheless, the amount of increase in family income estimated from the Survey of Consumer Finances (SCF)—an increase of about $100—was calculated correctly. The difference probably reflects a combination of sampling and definitional variations in the two surveys. As the appendix to the article indicates, the SCF definition of "family" differs from that used by the CPS. In particular, the SCF excludes household members who are outside the main economic unit and who have independent finances. As a result, differences between the SCF incomefiguresand those of the CPS could occur. In addition, the SCF and the CPS have very different sample designs. Estimates based on these surveys may also differ because of sampling error, which is present in all sample surveys. Second, on page 2 the figures in table 1 on income for families with heads having at least some college education are correct. However, the words "at least" should have been deleted from the sentence on page 4, "The median income for families headed by persons with at least some college experience rose, but this increase was offset by declines in all other education categories." Family income rose only for those with some college and fell for all other education groups except the lowest (those with eight or fewer years of education) for whom income did not change significantly. REVISIONS TO MONEY STOCK DATA Measures of the money stock were revised in February of this year as a result of the annual benchmark and seasonal factor review. Data in tables 1.10 and 1.21 in the statistical appendix to the Bulletin reflect these changes beginning with this issue. Data for the monetary aggregates were benchmarked using call reports through September 1991 and other sources. Seasonal factors for the monetary aggregates have been revised using the X-llARIMA procedure that has been employed for this purpose since 1982. Following the method introduced last year, seasonal factors for deposit series, beginning with January 1990, have been constructed with data aggregated across banks and thrift institutions. Owing to changes in the deposit reports (FR 2900) effective September 17, 1991, the series for savings deposits and MMDAs have been combined. Beginning with January 1990, seasonal factors have been constructed from this combined series. Up to December 1989, each of the four series—savings deposits at banks, savings deposits at thrift institutions, money market deposit accounts (MMDAs) at banks, and MMDAs at Announcements thrift institutions—continues to be seasonally adjusted individually. Through that date, the four adjusted bank and thrift series are then summed to yield the seasonally adjusted total savings deposits and MMDAs. More detail on the revisions is available in the Board's H.6 statistical release, "Money Stock, Liquid Assets, and Debt Measures," dated February 13, 1992. Complete historical data are available 1. 275 from the Money and Reserves Projections Section, Division of Monetary Affairs, mail stop 72, Board of Governors of the Federal Reserve System, Washington, DC 20551. Revised monthly historical data for Ml, M2, M3, and total nonfinancial debt also are available from the economic bulletin board of the U.S. Department of Commerce. Call 202-377-1986 for information on subscriptions to the Commerce bulletin board. Monthly seasonal factors used to construct M l , M2, and M3, January 1991-March 1993 Year and month Currency Nonbank travelers' checks Demand deposits Other checkable deposits1 Total Held at banks In M2 In M3 only 1.0205 .9714 .9753 1.0057 .9757 .9991 1.0056 .9952 .9928 .9999 1.0121 1.0469 1.0105 .9913 1.0309 .9906 .9980 .9950 .9930 .9942 .9881 .9972 1.0100 1.0197 .9994 1.0053 1.0334 .9866 .9933 .9877 .9884 .9920 .9855 .9954 1.0132 1.0003 1.0007 1.0034 1.0023 .9970 .9982 1.0003 1.0006 .9987 1.0003 1.0003 .9979 .9957 1.0021 1.0055 .9977 1.0043 1.0017 .9975 1.0052 1.0001 .9961 1.0031 1.0063 .9982 1.0048 1.0018 .9971 1.0052 .9995 .9931 .9982 .9956 1991—January February March April May June July August September October November December .9931 .9921 .9983 .9989 1.0029 1.0058 1.0060 1.0026 .9956 .9939 1.0101 .9493 .9608 .9625 .9545 .9699 1.0280 1.0943 1.1067 1.0616 1.0076 .9607 .9419 1992—January February March April May June July August September October November December .9943 .9924 .9970 .9993 1.0036 1.0040 1.0067 1.0022 .9940 .9951 1.0004 1.0089 .9519 .9621 .9630 .9545 .9689 1.0275 1.0927 1.1057 1.0614 1.0081 .9616 .9428 1.0209 .9714 .9755 1.0053 .9757 .9988 1.0053 .9954 .9928 .9994 1.0124 1.0471 1.0103 .9911 1.0013 1.0309 .9906 .9984 .9949 .9932 .9944 .9879 .9972 1.0099 1.0197 .9993 1.0054 1.0335 .9865 .9935 .9875 .9884 .9922 .9854 .9954 1.0131 .9949 .9923 .9967 .9530 .9625 .9632 1.0213 .9712 .9754 1.0101 .9909 1.0014 1.0197 .9992 1.0054 1993—January February March 1.0011 1. Seasonally adjusted other checkable deposits at thrift institutions are derived as the difference between total other checkable deposits, seasonally Nontransaction components 1.0011 1.0006 1.0035 1.0024 .9970 .9982 1.0003 1.0006 .9988 1.0005 1.0002 .9978 1.0000 1.0005 1.0035 1.0001 .9939 .9986 .9957 .9963 1.0039 1.0068 adjusted, and seasonally adjusted other checkable deposits at commercial banks. Additional tables on seasonal factors follow. 276 2. Federal Reserve Bulletin • April 1992 Monthly seasonal factors for selected components of the monetary aggregates, January 1991-March 1993 Deposits 1 Year and month Money market mutual funds Savings and MMDAs Small denomination time Large denomination time In M2 In M3 only 1991—January February March April May June July August September October November December .9952 .9947 1.0021 1.0035 .9996 1.0044 1.0048 1.0024 .9985 .9983 .9998 .9962 1.0028 1.0026 1.0006 .9992 .9972 .9966 .9998 .9993 .9993 1.0018 1.0008 1.0003 .9934 .9969 1.0014 .9967 1.0031 1.0034 .9991 1.0048 1.0042 1.0005 .9993 .9965 .9989 1.0136 1.0242 1.0175 .9925 .9874 .9876 .9954 .9965 .9947 .9976 .9933 1.0303 1.0453 1.0310 1.0066 1.0027 .9805 .9749 .9848 .9679 .9719 .9946 1.0064 1992—January February March April May June July August September October November December .9946 .9946 1.0023 1.0040 1.0047 1.0050 1.0026 .9986 .9983 .9995 .9958 1.0031 1.0025 1.0004 .9990 .9969 .9963 .9996 .9993 .9994 1.0019 1.0010 1.0006 .9930 .9968 1.0014 .9968 1.0038 1.0042 .9994 1.0051 1.0038 .9987 .9964 .9988 1.0139 1.0249 1.0178 .9923 .9877 .9874 .9952 .9967 .9952 .9969 .9927 1.0308 1.0461 1.0327 1.0087 1.0037 .9800 .9735 .9846 .9668 .9716 .9935 1.0064 .9942 .9946 1.0024 1.0031 1.0025 1.0005 .9929 .9970 1.0016 .9989 1.0141 1.0251 1.0306 1.0473 1.0341 1.0000 1993—January February March 1.0001 1. These seasonal factors are applied to deposits data at both commercial banks and thrift institutions. 3. Weekly seasonal factors used to construct M l , M2, and M3, December 1991-April 5, 1993 Week ending Currency Nonbank travelers' checks Demand deposits Other checkable deposits1 Nontransaction components Total Held at banks In M2 In M3 only 1991—December 2 9 16 23 30 1.0037 1.0095 1.0080 1.0165 1.0092 .9402 .9399 .9412 .9425 .9438 1.0316 1.0331 1.0445 1.0420 1.0633 .9990 1.0218 1.0084 1.0063 1.0022 .9925 1.0165 1.0070 1.0137 1.0161 .9972 1.0008 .9999 .9955 .9948 1.0025 .9970 .9952 .9944 .9952 1992—January 6 13 20 27 1.0048 .9986 .9951 .9871 .9460 .9492 .9524 .9555 1.0863 1.0410 1.0089 .9807 1.0111 1.0432 1.0292 .9974 1.0014 1.0012 .9804 1.0487 1.0349 1.0192 .9946 .9824 .9988 .9986 .9984 3 10 17 24 .9877 .9962 .9945 .9897 .9587 .9603 .9619 .9635 .9877 .9829 .9760 .9542 .9849 1.0015 .9891 .9826 .9958 1.0075 .9979 .9912 1.0006 1.0004 1.0005 1.0035 1.0065 1.0008 1.0002 March 2 9 16 23 30 .9898 1.0010 .9982 .9968 .9949 .9651 .9644 .9634 .9624 .9614 .9623 .9795 .9773 .9627 .9753 .9911 1.0123 1.0006 .9942 .9954 .9945 1.0119 1.0051 .9997 1.0032 1.0012 1.0023 1.0038 1.0034 1.0045 1.0055 1.0052 1.0058 1.0067 1.0083 April 6 13 20 27 1.0031 1.0035 1.0006 .9950 .9596 .9567 .9537 .9508 1.0171 1.0211 1.0169 .9797 1.0336 1.0446 1.0498 1.0105 1.0319 1.0471 1.0560 1.0098 1.0074 1.0076 1.0010 .9973 1.0008 .9975 .9971 .9959 May 4 11 18 25 1.0001 .9496 .9587 .9678 .9768 .9849 .9757 .9854 .9550 1.0019 1.0023 .9884 .9818 1.0038 .9936 .9809 .9763 .9959 .9960 .9976 .9975 1.0023 1.0047 February 1.0057 1.0026 1.0024 1.0001 1.0000 1.0011 1.0060 Announcements 3. 277 Weekly seasonal factors used to construct M l , M2, and M3—continued Week ending Currency Nonbank travelers' checks Other checkable deposits1 Nontransaction components Total Held at banks In M2 In M3 only .9798 1.0127 1.0074 .9932 .9807 .9836 1.0052 .9995 .9854 .9869 .9978 .9993 .9991 .9971 .9974 1.0094 1.0037 1.0067 .9998 .9966 1 8 15 22 29 .9983 1.0077 1.0053 1.0038 1.0020 1.0187 1.0361 1.0534 .9843 1.0043 1.0134 .9873 .9824 July 6 13 20 27 1.0148 1.0113 1.0059 1.0004 1.0687 1.0815 1.0944 1.1072 1.0350 1.0205 1.0024 .9770 1.0099 1.0061 .9933 .9765 1.0040 .9978 .9850 .9710 .9980 1.0019 1.0007 .9997 .9963 .9914 .9946 .9999 August 3 10 17 24 31 1.0011 1.0083 1.0022 .9982 .9934 1.1201 1.1137 1.1074 1.1010 1.0947 .9995 1.0068 1.0033 .9813 .9819 .9953 1.0078 .9945 .9824 .9815 .9879 .9965 .9912 .9823 .9808 1.0010 1.0015 1.0010 1.0073 1.0059 1.0067 1.0052 1.0022 28 1.0017 .9976 .9932 .9886 1.0842 1.0705 1.0567 1.0430 1.0086 1.0143 .9802 .9679 1.0118 1.0090 .9916 .9718 1.0087 1.0059 .9881 .9739 5 12 19 26 .9953 .9982 .9943 .9910 1.0301 1.0191 1.0081 .9972 1.0160 .9948 1.0083 .9810 .9952 .9967 .9899 .9736 .9948 .9938 .9867 .9724 November 2 9 16 23 30 .9919 1.0028 .9989 1.0007 .9862 .9756 .9651 .9546 .9441 1.0012 1.0118 1.0183 .9985 1.0188 .9821 1.0055 .9983 .9930 .9921 .9799 1.0017 .9964 .9905 .9934 December 7 14 21 28 1.0072 1.0069 1.0120 1.0142 .9404 .9418 .9432 .9445 1.0352 1.0452 1.0480 1.0460 1.0179 1.0107 1.0104 1.0012 1.0157 1.0135 1.0125 1.0116 4 11 18 25 1.0047 1.0007 .9945 .9889 .9462 .9494 .9525 .9557 1.1008 1.0510 1.0218 .9810 1.0225 1.0290 1.0151 .9965 1 8 15 22 .9864 .9941 .9939 .9913 .9589 .9607 .9620 .9633 .9767 .9816 .9762 .9628 .9909 .9991 .9980 .9954 .9646 .9644 .9635 .9627 .9619 1.0006 .9596 June September 7 14 21 October 1993—January February March April 1 8 15 22 29 5 1.0000 1.0000 .9858 Demand deposits 1.0011 .9996 .9997 1.0000 .9979 .9974 .9997 1.0014 1.0011 .9998 1.0001 1.0006 1.0014 1.0010 .9978 1.0000 1.0001 1.0005 1.0007 .9991 .9991 .9952 .9960 .9909 .9909 .9934 .9999 .9963 .9946 1.0033 .9969 .9941 .9949 .9960 .9911 1.0002 1.0245 1.0320 1.0251 1.0097 .9982 1.0017 1.0007 .9995 .9963 .9904 .9957 .9977 .9866 1.0005 .9905 .9856 1.0000 1.0051 .9971 .9956 .9990 .9997 1.0003 1.0010 1.0024 1.0016 1.0099 .9971 .9634 .9806 .9811 .9685 .9635 .9884 1.0138 1.0042 1.0004 .9911 .9960 1.0097 1.0063 1.0054 1.0032 1.0013 1.0022 1.0039 1.0035 1.0040 1.0077 1.0039 1.0069 1.0045 1.0114 1.0044 1.0157 1.0185 1.0059 1.0077 1. Seasonally adjusted other checkable deposits at thrift institutions are derived as the difference between total other checkable deposits, seasonally 1.0001 adjusted, and seasonally adjusted other checkable deposits at commercial banks Additional table on seasonal factors follows. 278 4. Federal Reserve Bulletin • April 1992 Weekly seasonal factors for selected components of the monetary aggregates, December 1991-April 5, 1993 Deposits 1 Week ending Money market mutual funds Savings and MMDAs Small denomination time Large denomination time In M2 In M3 only .9980 1.0017 1.0001 .9926 .9892 1.0009 1.0003 .9995 .9993 1.0007 .9963 .9970 .9966 .9949 .9961 .9975 .9970 .9968 .9940 .9869 1.0017 1.0012 1.0116 1.0091 1.0085 6 13 20 27 .9968 .9988 .9950 .9902 1.0030 1.0035 1.0032 1.0026 .9942 .9945 .9926 .9918 .9736 .9972 1.0068 1.0098 .9811 1.0368 1.0454 1.0473 February 3 10 17 24 .9908 .9950 .9951 .9941 1.0029 1.0034 1.0029 1.0018 .9917 .9965 .9975 .9978 1.0060 1.0112 1.0121 1.0180 1.0389 1.0490 1.0459 1.0439 March 2 9 16 23 30 .9965 1.0015 1.0034 1.0018 1.0028 1.0014 1.0009 1.0003 .9996 1.0006 .9980 1.0011 1.0029 1.0019 1.0005 1.0190 1.0225 1.0250 1.0268 1.0271 1.0498 1.0354 1.0360 1.0364 1.0219 April 6 13 20 27 1.0099 1.0116 1.0020 .9963 1.0004 .9993 .9987 .9984 1.0017 .9986 .9945 .9938 1.0235 1.0292 1.0198 1.0095 1.0080 1.0219 1.0062 1.0043 May 4 11 18 25 .9976 1.0002 1.0007 .9992 .9980 .9975 .9970 .9964 .9952 1.0001 1.0039 1.0085 .9953 .9893 .9880 .9966 .9960 1.0113 .9947 1.0156 June 1 8 15 22 29 1.0015 1.0084 1.0082 1.0021 1.0002 .9961 .9957 .9958 .9957 .9976 1.0082 1.0087 1.0091 1.0044 .9951 .9938 .9918 .9906 .9859 .9830 .9969 .9889 .9806 .9768 .9737 July 6 13 20 27 1.0066 1.0085 1.0049 1.0014 1.0001 .9998 .9995 .9994 .9951 .9978 1.0003 1.0022 .9785 .9884 .9903 .9903 .9640 .9684 .9810 .9802 August 3 10 17 24 31 1.0027 1.0057 1.0045 1.0009 .9992 .9995 1.0000 .9995 .9990 .9987 1.0026 1.0036 1.0041 1.0061 1.0077 .9885 .9937 .9924 .9993 .9981 .9719 .9855 .9873 .9919 .9794 September 7 14 21 28 1.0031 1.0027 .9960 .9926 .9992 .9987 .9987 1.0000 1.0050 1.0053 1.0028 1.0025 .9923 1.0002 1.0016 .9946 .9745 .9722 .9688 .9566 October 5 12 19 26 .9991 1.0013 .9990 .9953 1.0028 1.0030 1.0017 1.0011 1.0033 1.0017 .9990 .9988 .9906 .9956 .9937 1.0013 .9504 .9724 .9631 .9838 November 2 9 16 23 30 .9964 1.0019 1.0018 .9984 .9968 1.0010 1.0011 1.0010 1.0009 1.0010 .9981 .9993 .9991 .9990 .9976 .9928 .9950 .9954 1.0011 .9972 .9864 .9874 .9883 1.0026 .9978 December 7 14 21 28 1.0000 .9992 .9927 .9904 1.0010 1.0005 .9999 1.0002 .9968 .9974 .9964 .9958 .9954 .9980 .9956 .9875 .9998 1.0129 1.0173 1.0054 .9976 1.0000 .9946 .9891 1.0026 1.0037 1.0035 1.0029 .9947 .9939 .9930 .9923 .9789 .9887 1.0044 1.0079 .9838 1.0229 1.0374 1.0435 1991—December 2 9 16 23 30 1992—January 1993—January 4 11 18 25 Announcements 4. Weekly seasonal factors for selected components of the monetary aggregates—continued Deposits1 Week ending Savings and MMDAs Small denomination time Money market mutual funds Large denomination time In M2 In M3 only February 1 8 15 22 .9908 .9947 .9952 .9942 1.0028 1.0034 1.0030 1.0021 .9909 .9947 .9980 .9978 1.0070 1.0102 1.0148 1.0155 1.0478 1.0462 1.0479 1.0416 March 1 8 15 22 29 .9950 1.0012 1.0038 1.0026 1.0013 1.0013 1.0012 1.0006 .9995 1.0003 .9985 1.0000 1.0022 1.0025 1.0027 1.0174 1.0210 1.0251 1.0274 1.0276 1.0542 1.0386 1.0413 1.0378 1.0226 5 1.0081 1.0007 .9998 1.0260 1.0105 April 1. These seasonal factors are applied to deposits data at both commercial banks and thrift institutions. 279 280 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON DECEMBER 17, 1991 Domestic Policy Directive The information reviewed at this meeting indicated that the economy was sluggish and that business and consumer confidence remained depressed. Spending for housing and business equipment had been rising, but consumption expenditures had softened, commercial construction activity was still declining, and government spending at all levels was being restrained by budgetary imbalances. Recently, industrial production had fallen, and payroll employment had dropped sharply. Wage and price increases had continued to trend downward. Total nonfarm payroll employment fell sharply in November after rising somewhat in the third quarter and changing little in October. Declines in employment were widespread: The number of manufacturing jobs decreased in November for a third straight month, and further job losses were reported in construction and in wholesale and retail trade. However, the average weekly hours worked by production or nonsupervisory workers in the private nonfarm sector edged up in November, and the civilian unemployment rate remained at 6.8 percent. Industrial production fell appreciably in November after changing little in the previous three months. A portion of the November decline reflected a sizable drop in the output of motor vehicles and parts. In addition, however, the production of non-auto consumer goods slackened, and the output of business equipment other than motor vehicles remained near its low of last March; the latter reflected in part the persisting effects of a strike at a major producer of industrial equipment. As in most earlier months of the year, the production of defense and space products declined. With industrial output down in November, total industrial capacity utilization decreased, and de- clines in operating rates were widespread across industries. Real consumer spending had been soft on balance in recent months, reflecting sluggish growth in disposable incomes, weak labor-market conditions, and depressed consumer confidence. Nominal retail sales expanded somewhat in November from a downward revised level for October. The November increase reflected a rebound in sales of nondurable goods other than food and a rise in sales at automotive dealers; sales of durable goods other than autos were about unchanged. Housing starts fell in November, retracing part of a substantial advance in October; on average, starts were appreciably higher in October and November than in the third quarter. Despite low mortgage interest rates and steady house prices, sales of singlefamily homes in October remained well below their spring levels. After changing little over the third quarter, shipments of nondefense capital goods registered a sharp rise in October, reflecting a bulge in outlays for computing equipment; shipments of most other types of business equipment remained sluggish. Recent data on orders suggested little growth in aggregate outlays for business equipment over the near term. Nonresidential construction, notably of office and other commercial structures, continued to shrink in October. The vacancy rate for office buildings was still very high, and this along with available information on contracts and commitments suggested that nonresidential construction activity would remain weak for an extended period. Business inventories turned up sharply in September after many months of liquidation. At the retail level, inventories rose further in October, with nearly half of the buildup occurring at auto dealers. The additional rise in stocks coupled with declines in sales led to higher inventory-to-sales ratios at many types of retail establishments. Aggregated over all retail establishments other than 281 auto dealers, the ratio of inventories to sales in October was close to the peak posted in early 1991. By contrast, in manufacturing, stocks changed little in October, and the ratio of stocks to sales decreased and nearly reached its low of August 1990. Wholesale inventories were up slightly in October after a sizable decline in the previous month; the inventory-to-sales ratio remained in the narrow range that had prevailed in recent months. The nominal U.S. merchandise trade deficit widened slightly further in September. For the third quarter, the deficit was somewhat above its average rate over the first half of 1991 but well below its rate in 1990. The value of exports in the third quarter remained close to the record high reached in the second quarter while the value of imports increased appreciably, with most of the rise reflecting larger imports of automotive products and consumer goods. The increase in imports of consumer goods appeared to have contributed to the substantial buildup in retail inventories in the United States, particularly in the month of September. The available data on economic activity in the major foreign industrial countries provided further evidence of relatively weak growth on balance in these countries in the third quarter and gave few indications of a revival in the fourth quarter. The trend toward reduced inflation had continued in most of the industrial countries. Producer prices of finished goods advanced in November at about the slow pace recorded since midyear; over this period, declines in food prices roughly offset increases in energy prices. At the consumer level, food and energy prices jumped in November, but the increase in the prices of nonfood, non-energy items was about the same as that registered since midyear and considerably below the 1990 pace. Average hourly earnings of production or nonsupervisory workers in the OctoberNovember period increased at about the reduced third-quarter rate; over the past twelve months, average hourly earnings had risen more slowly than in the previous twelve-month period. At its meeting on November 5, 1991, the Committee adopted a directive that called for an immediate slight easing in the degree of pressure on reserve positions and that provided for giving special weight to potential developments that might require some additional easing during the intermeeting period. Accordingly, the directive indi- cated that slightly greater reserve restraint might be acceptable during the intermeeting period or slightly lesser reserve restraint would be acceptable depending on progress toward price stability, trends in economic activity, the behavior of the monetary aggregates, and developments in foreign exchange and domestic financial markets. The reserve conditions contemplated under this directive were expected to be consistent with growth of M2 and M3 at annual rates of around 3 percent and 1 percent respectively over the three-month period from September through December. Immediately following the November meeting, open market operations were directed toward a slight easing of conditions in reserve markets; this step was taken in conjunction with the reduction in the discount rate from 5 to 4V2 percent approved by the Board of Governors on November 6. In early December, as economic indicators continued to point to a faltering recovery and growth of the broad monetary aggregates remained sluggish, an additional slight easing of reserve conditions was carried out. Several technical reductions were made during the intermeeting period to expected levels of adjustment plus seasonal borrowing to reflect the declining usage of seasonal credit during the autumn. For most of the intermeeting interval, adjustment plus seasonal borrowing tended to run a little below expected levels, averaging slightly more than $100 million over the three complete reserve maintenance periods. The federal funds rate averaged around 43A percent over most of the period but softened to around 4l/z percent after the second easing action. Other short-term interest rates declined more than the federal funds rate as market participants reacted to actual and anticipated further easing steps amid growing evidence that the economic recovery had stalled. Expectations of more subdued economic activity contributed to declines in yields on longer-term instruments as well. Yields on intermediate maturity securities dropped almost as much as short-term rates while rates on mortgages, corporate bonds, and long-term Treasuries fell by less. The prime rate was reduced by Vi percentage point to IVi percent early in the intermeeting period. Broad stock price indexes were down slightly. The trade-weighted value of the dollar in terms of the other G-10 currencies declined further on 282 Federal Reserve Bulletin • April 1992 balance over the intermeeting period. During most of the period, signs of weakness in the U.S. economy and the easings of U.S. monetary policy had a depressing effect on the value of the dollar. The dollar's depreciation was primarily against the mark and other European currencies; the mark was supported by reports of further increases in wage and price inflation in Germany and associated expectations that German monetary policy would be tightened. The dollar declined less against the Japanese yen as evidence accumulated that the Japanese economy was slowing further and some easing was implemented in Japanese monetary policy. Expansion in M2 picked up in November from a slow pace in October. At least in part this reflected the cumulative effect of earlier declines in shortterm market interest rates in lowering the opportunity costs of holding liquid deposits. The somewhat faster expansion of M2 was consistent with the Committee's expectations for M2 growth in the fourth quarter. The more rapid growth of M2 showed through to a limited extent to M3. For the year through November, expansion of both M2 and M3 was estimated to have been at the lower ends of the Committee's annual ranges. The staff projection prepared for this meeting pointed to a recovery in economic activity. However, a variety of incoming information, notably indications of a depressed state of confidence, weaker than expected consumer spending, and sluggish industrial production suggested a pause in the recovery that might extend into early 1992. By the spring, the cumulative effects of declines in interest rates in recent months would contribute to a resumption of economic growth at a moderate rate, with the risks of a stronger or weaker trajectory for the economy being viewed as about in balance. Increases in residential construction, somewhat larger consumption expenditures, and some pickup in business equipment spending were projected to provide the underpinnings for the resumption of growth. As in earlier forecasts, the continuing downtrend in commercial construction and ongoing adjustments in state and local government spending in response to budget imbalances were expected to have a retarding effect on aggregate demand. At the federal level, projected declines in defense outlays, which would be only partially offset by higher nondefense spending, also would be a source of restraint, at least in the absence of new fiscal initiatives. The substantial though diminishing slack expected in labor and product markets in coming quarters was projected to induce further declines in the underlying rate of inflation. In the Committee's discussion of current and prospective economic developments, the members focused on an evident pause in the business recovery and its interaction with very gloomy business and consumer sentiment. A number of factors that had been expected to damp the expansion— including the retrenchment associated with the rebuilding of balance sheets by heavily indebted businesses and consumers and the efforts of many firms to improve efficiency by streamlining operations and reducing employment—had in fact proved to be stronger and more persistent than anticipated. The timing of a renewed expansion in business activity was uncertain, and a number of members commented that the economy might well remain quite sluggish over the months immediately ahead. Nonetheless, considerable progress in business and financial restructuring activities was in train, and the latter, together with the stimulus that could be expected from the lagged effects of earlier monetary policy easing actions, was likely to lead to a moderate pickup in the economy later in 1992. With regard to the outlook for inflation, many members observed that the statistical and anecdotal evidence pointed to faster progress toward price stability than they had anticipated earlier. As they had at earlier meetings, the members gave considerable emphasis to current business and consumer sentiment, which they judged to be much more negative than under similar business and employment conditions in the past. The underlying reasons were difficult to ascertain but probably reflected a variety of developments, including widespread disappointment over the pace of the economic recovery, related consumer concerns about employment opportunities, and fears associated with heavy debt burdens and the weakened financial condition of many business and financial institutions. The size of the federal budget deficit was adding to those concerns, and the budgetary problems of many state and local governments were seen as likely to result in higher taxes and spending cutbacks. On the positive side, while the efforts to rebuild balance sheets and to restructure business activities were likely to continue to exert Record of Policy Actions of the Federal Open Market Committee restraining effects on the economy, such developments had favorable implications for the financial health and the competitive strength of the economy over the longer run. Members noted in this connection that a record volume of equity issues was helping to reduce balance sheet leverage and that proceeds from large offerings of debt securities were being used to a considerable extent to pay down short-term liabilities. The sizable decline in interest rates over the course of recent months was easing the debt service burdens of many borrowers, and in a few geographic areas banking institutions were reported to be making funds more readily available. The stock market continued to display appreciable strength, reflecting the drop in interest rates and suggesting investor confidence in the longer-run outlook for the economy. Some members also cited the indications of reviving growth in the broader monetary aggregates as an encouraging if still tentative development. Turning to developments in key sectors of the economy, the members commented that it was still too early to get a firm indication regarding holiday spending by consumers, though retailers in some parts of the country reported that sales were somewhat better than they had projected. Nonetheless, consumers remained quite cautious nationwide, and some members commented that consumer spending for durable goods might well continue sluggish over the months ahead, especially in a context of widespread consumer concerns about employment prospects, debt burdens, and softness in real estate prices. Some members also observed that the saving rate was already on the low side and that the risks of a rise in that rate could not be ruled out in the environment that was likely to prevail during the months ahead. The members did not discern signs of significant strengthening in business expenditures for equipment over the nearer term, though the output of capital goods appeared to be on a slowly rising trend in at least one major capital-producing region. Nonresidential construction activity remained very weak in most parts of the country, and high vacancy rates suggested little prospect for improvement in the commercial building sector for an extended period. On the other hand, significant improvement in housing construction was reported in some parts of the country, and housing activity appeared to be holding up reasonably well on a 283 nationwide basis. The declines that had occurred in interest rates would tend over time to stimulate housing and other interest-sensitive sectors of the economy. The outlook for U.S. exports was tempered by more sluggish business conditions in several key countries than had been expected earlier, but exports would be supported by the depreciation in the foreign exchange value of the dollar since mid-1991. Businesses continued to pursue cautious inventory investment policies. Contacts in most parts of the country described current inventories as lean, and many retailers were prepared to accept reduced sales rather than to add to their inventories under prevailing conditions, although some buildup had occurred in recent months in association with weak demands. While rising inventories were not likely to make a major contribution to the anticipated recovery, any significant firming in final demands probably would be reflected fairly promptly in increased production. With regard to the outlook for the government sectors, members commented that the massive size of current federal budget deficits greatly limited any flexibility in providing some stimulus through fiscal policy actions. It was noted in this connection that any legislation that was seen as significantly increasing the size of the federal deficits over the longer run could have adverse repercussions on long-term interest rates and business and consumer confidence. Some members also referred to the negative effects on confidence and spending stemming from the budgetary difficulties of numerous state and local governments; at least in some areas, however, capital expenditures by such government entities were being accelerated by lower interest and other costs. The members were encouraged by evidence that inflationary pressures appeared to be subsiding at a faster pace than they had anticipated earlier. Anecdotal reports suggested very competitive conditions in producer and retail markets and favorable wage patterns. Employee benefit costs were still rising rapidly, notably medical costs, but members cited some examples of promising efforts on the part of medical providers to curb the escalation in their costs. It was suggested that the behavior of commodity prices over the past year was consistent with an outlook for stable producer prices. The members saw little risk of worsening inflationary 284 Federal Reserve Bulletin • April 1992 pressures over the forecast horizon even if the pace of the recovery proved to be somewhat more vigorous than they currently expected; however, some stressed that it was important for monetary policy to sustain the downtrend in inflation over an even longer horizon. In the Committee's discussion of policy for the period ahead, most of the members indicated that they favored or could accept a directive that called for no immediate change in the degree of pressure on reserve positions but that carried an especially strong presumption that some easing in reserve conditions would be implemented unless improvement in the economy became evident fairly promptly or there was significant evidence of a pickup in M2 growth in the period immediately ahead. Separately, the Board of Governors would need to decide how the discount rate should be structured in order to get the maximum benefits from any easing, given the current state of business and consumer confidence. The policy discussion focused on the need to foster a sustained, noninflationary recovery. Such an environment would promote continuing balance sheet adjustments and business restructurings that would over time enhance the financial soundness and competitive strength of the economy. For now, however, these activities were having restraining effects on the economy, and there were as yet no clear indications that the recovery was resuming. While the risks of a substantial weakening in the economy were perhaps small, such a development would have severe consequences for the economy and financial institutions. In these circumstances, many of the members believed that some further easing of reserve conditions likely would be called for, especially if indications of some strengthening in the economy or in the growth of the monetary aggregates should fail to materialize in the near future. A number of members also commented that against the background of better-than-expected progress toward price stability, a stalled recovery, and slow monetary growth, the inflation risks of further easing were minimal. Some members indicated that they saw an advantage in making a more substantial policy move at some point in the period ahead rather than additional limited easing actions of the sort that had been implemented in recent years. In this view, a larger and more visible policy action, which gener ally was not anticipated infinancialmarkets, would have greater effectiveness in part because it would be more likely to bolster confidence. The level of interest rates and money growth that would be expected to ensue from such an action, against the background of the substantial easing that had already been implemented, should be sufficient to foster expansion and promote the view that further easing would not be needed. Other members, while not disagreeing that further easing might be desirable, nonetheless expressed reservations about the urgency to ease in the near term and especially the need for a sizable move. These members emphasized that a substantial amount of easing had been implemented over the past several months and that to a considerable extent the effects of such easing had not yet shown through in the economy. A number of these members also expressed the view that monetary policy could do little to offset the restraining effects of the balance sheet adjustments and business restructuring activities that were currently under way. Moreover, a resurgence of inflation pressures as the recovery gathered strength could not be ruled out, and too much easing in the period immediately ahead might have to be reversed later with unsettling consequences. According to a staff analysis prepared for this meeting, M2 and M3 were likely to continue to grow at a restrained pace over the months ahead in light of sluggish expansion in nominal income and very limited loan growth. A decision to implement somewhat easier reserve conditions would stimulate slightly faster monetary expansion in the early months of next year, though the broader aggregates would probably remain appreciably below the midpoints of the tentative ranges that the Committee had established for 1992. The members observed that to an important extent the weakness of the monetary aggregates appeared to be related to developments that involved some reduction in the intermediary role of depository institutions and might not have adverse implications for the overall availability of financing in the economy. Some members suggested that a number of indicators, including the behavior of commodity prices, the slope of the yield curve, and trends in the growth of reserves and narrow measures of money, pointed to an adequate availability of liquidity in the economy. Nonetheless, several members expressed con- Record of Policy Actions of the Federal Open Market Committee cern about the continuing lagging growth in the broad measures of money, and they felt that consideration should be given to an easing of reserve conditions if incoming data were to suggest that the recent pickup was not being sustained. In the course of the Committee's discussion, the members reviewed a proposal to amend the wording of the statement in the operational paragraph of the directive that related to possible intermeeting adjustments to the degree of reserve pressures. While several members expressed a slight preference for retaining the current statement, which contained an ordering of the factors considered by the Committee in guiding intermeeting policy adjustments, and a few preferred to delete the listing of factors altogether from the sentence, all of the members indicated that they could support a proposed alternative. That alternative would make clearer the Committee's focus on its long-term goals by inserting a reference to those goals at the beginning of the sentence and would refer in a more general way to the immediate economic, financial, and monetary developments that might prompt an intermeeting adjustment. This new wording implied less focus in the directive itself on the ranking of the factors, but the understandings reached at meetings regarding their relative importance would continue to be explained fully in the policy record. The members agreed that the revised statement should be reviewed every year or more often if warranted by changing economic or financial conditions. At the conclusion of the Committee's discussion, all but one of the members indicated that they favored or could accept a directive that would call initially for maintaining the existing degree of pressure on reserve positions. The members also noted their preference or acceptance of a directive that included a marked bias toward easing during the intermeeting period. Accordingly, in the context of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to economic, financial, and monetary developments, slightly greater reserve restraint might be acceptable or somewhat lesser reserve restraint would be acceptable during the intermeeting period. The reserve conditions contemplated at this meeting were expected to be consistent with growth of M2 and M3 at annual rates of around 3 percent and IV2 percent respec- 285 tively over the four-month period from November through March. At the conclusion of the meeting the following domestic policy directive was issued to the Federal Reserve Bank of New York: The information reviewed at this meeting continues to portray a sluggish economy and a depressed state of business and consumer confidence. Total nonfarm payroll employment fell sharply in November; however, the average workweek in the private nonfarm sector edged up and the civilian unemployment rate remained at 6.8 percent. Industrial production fell in November, partly reflecting a sizable drop in motor vehicle assemblies. Consumer spending has been soft on balance in recent months. Real outlays for business equipment appear to be rising slowly, and nonresidential construction has continued to decline. Housing starts were appreciably higher on average in October and November than in the third quarter. The nominal U.S. merchandise trade deficit widened slightly further in September; the deficit in the third quarter was substantially larger than in the second quarter. Wage and price increases have continued to trend downward. Interest rates have declined appreciably since the Committee meeting on November 5. The Board of Governors approved a reduction in the discount rate from 5 to 4V2 percent on November 6. In foreign exchange markets, the trade-weighted value of the dollar in terms of the other G-10 currencies declined further over the intermeeting period; the dollar depreciated primarily against the mark and other European currencies. Expansion in M 2 and M3 edged up in November from a slow pace in October; the slightly faster growth reflected a strengthening in the most liquid components of the aggregates. For the year through November, expansion of both M 2 and M3 is estimated to have been at the lower ends of the Committee's ranges. The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. In furtherance of these objectives, the Committee at its meeting in July reaffirmed the ranges it had established in February for growth of M 2 and M3 of 2Vi to 6V2 percent and 1 to 5 percent, respectively, measured from the fourth quarter of 1990 to the fourth quarter of 1991. The monitoring range for growth of total domestic nonfinancial debt also was maintained at AV2 to 8V2 percent for the year. For 1992, on a tentative basis, the Committee agreed in July to use the same ranges as in 1991 for growth in each of the monetary aggregates and debt, measured from the fourth quarter of 1991 to the fourth quarter of 1992. With regard to M3, the Committee anticipated that the ongoing restructuring of thrift depository institutions would continue to depress the growth of this aggregate relative to spending and total credit. The behavior of the monetary aggregates will continue to be evaluated in the light of progress toward price level stability, movements 286 Federal Reserve Bulletin • April 1992 in their velocities, and developments in the economy and financial markets. In the implementation of policy for the immediate future, the Committee seeks to maintain the existing degree of pressure on reserve positions. In the context of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to economic, financial, and monetary developments, slightly greater reserve restraint might or somewhat lesser reserve restraint would be acceptable in the intermeeting period. The contemplated reserve conditions are expected to be consistent with growth of M 2 and M3 over the period from November through March at annual rates of about 3 and 1 Vi percent, respectively. Votes for this action: Messrs. Greenspan, Corrigan, Angell, Black, Forrestal, Keehn, Kelley, Lindsey, Mullins, Parry, and Ms. Phillips. Vote against this action: Mr. LaWare. Mr. LaWare dissented because he did not favor the inclusion in the directive of a strong presumption that monetary policy would be eased further during the intermeeting period. While future developments might call for further easing, he preferred not to prejudge that need but to wait and assess the effects of the considerable easing actions undertaken earlier. In his view, the main barrier to a satisfactory economic performance was a crisis in confidence that was not likely to be alleviated by further incremental easing. In present circumstances, a steady policy could provide a firm signal that the downward drift in interest rates associated with a long series of small easing actions had come to an end. This signal might well prove to be beneficial to the economy as interest-sensitive deci- sions to spend no longer were postponed in anticipation of still lower interest rates. He recognized that lower interest rates could alleviate heavy debt service burdens, but he was concerned about the effects of a further decline in interest rates on the value of the dollar in foreign exchange markets. At a telephone conference on December 20, 1991, the Committee discussed the approval by the Board of Governors of a 1 percentage point reduction in the discount rate, effective that day, and the implications of that action for the implementation of the Committee's policy with regard to the degree of pressure to be sought in reserve markets. It was noted during this discussion that the limited data received since the Committee's meeting on December 17 continued to point to a very sluggish economy. In keeping with the Committee's decision at its recent meeting, it was deemed appropriate to direct open market operations toward allowing part of the reduction in the discount rate to be reflected in the federal funds rate. Members commented that the substantial cut in the discount rate and the accompanying adjustment in open market operations were likely to have a favorable effect on financial markets and the behavior of the monetary aggregates and in conjunction with the ongoing effects of earlier easing actions would provide the financial basis for a resumption of sustainable economic growth. In light of the substantial size of these actions, it would be appropriate to view the directive as symmetrical with regard to any further changes in policy over the remainder of the intermeeting period. 287 Legal Developments FINAL RULE—AMENDMENT TO RULES REGARDING DELEGATION OF AUTHORITY The Board of Governors is amending 12 C.F.R. Part 265, its Rules Regarding Delegation of Authority. The amendment expands the duties Delegated to the General Counsel and the Director of the Board's Division of Banking Supervision and Regulation to include the Authority to enter into, stay, modify, terminate or suspend a cease-and-desist order, removal and prohibition order, or civil money penalty assessment order, when the order has been consented to by the institution or individual subject to the order. The Board believes that the Federal Reserve's enforcement functions can be made more efficient and responsive by delegating this authority. Effective February 28, 1992, 12 C.F.R. Part 265 is amended as follows: 1. The authority citation for 12 C.F.R. Part 265 continues to read as follows: Authority: Section 11 (i) and (k) of the Federal Reserve Act, (12 U . S . C . 248(i) and (k)). 2. Section 265.6 is amended by republishing the introductory text and adding paragraph (e) to read as follows: Part 265—Rules Authority Regarding Delegation of Section 265.6—Functions delegated to General Counsel. The Board's general counsel (or the general counsel's delegee) is authorized: (e) Consent enforcement orders. With the concurrence of the director of the Board's Division of Banking Supervision and Regulation (or the director's delegee): (1) To enter into a cease-and-desist order, removal and prohibition order, or civil money penalty assessment order with a bank holding company or any nonbanking subsidiary thereof, with a state member bank, or with any other person or entity subject to the Board's jurisdiction, when the order has been consented to by the institution or individual subject to the order ; (2) To stay, modify, terminate, or suspend an order issued pursuant to paragraph (1). Orders Issued Under Section Holding Company Act 3 of the Bank Norwest Corporation Minneapolis, Minnesota Order Approving Acquisition of a De Novo Bank Norwest Corporation, Minneapolis, Minnesota ("Norwest"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has applied under section 3 of the BHC Act (12 U . S . C . § 1842) to acquire Norwest Bank, Waseca, N . A . , Waseca, Minnesota ("Waseca Bank"), a de novo bank. Notice of the application, affording interested persons an opportunity to submit comments, has been duly published (56 Federal Register 58,383 (1991)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the BHC Act. Norwest is the largest commercial banking organization in Minnesota, controlling $10.0 billion in deposits in the state, representing 23.5 percent of total deposits in commercial banking organizations in Minnesota. 1 Waseca Bank a de novo institution will provide a full range of commercial banking services in the Owatonna banking market. 2 In view of the de novo status of Waseca Bank and based upon the facts in the record, the Board concludes that the proposed transaction would have no adverse effect on existing com- 1. Data are as of June 30, 1991. 2. The Owatonna, Minnesota banking market consists of Steele County, Minnesota; Waseca County, Minnesota, less Jamesville, Alton, Freedom and Vivian townships; and Ellington, Claremont, Ripley, and Westfield townships in Dodge County, Minnesota. Norwest will transfer certain assets and liabilities from the Owatonna branch of Norwest Bank Minnesota South, N . A . , Faribault, Minnesota to Waseca Bank. 288 Federal Reserve Bulletin • April 1992 petition, nor would it increase the concentration of resources in any relevant market. Several local Waseca banks and the Independent Bankers of Minnesota (collectively "Protestants") have filed comments objecting to Norwest's proposal. Under Minnesota law, N o r w e s t is prohibited by the so-called "home office protection rule" from establishing a branch of an existing subsidiary bank in a community like Waseca with a population of 10,000 or less unless the local banks consent to the addition of the branch. 3 Protestants maintain that Norwest's proposal is prohibited by Minnesota's home office protection rule because the proposal would be an illegal circumvention of this provision. 4 Protestants note that Norwest has announced plans to merge Waseca Bank with N o r w e s t Bank, Minnesota South, N . A . , Faribault, Minnesota ( " N B M S " ) , and to operate it as a branch of N B M S within t w o years. Protestants also allege that by this acquisition, N o r w e s t would violate a commitment to the Board not to operate a branch in Waseca if to do s o would be inconsistent with Minnesota law. 5 The record does not indicate that N o r w e s t will operate the Waseca Bank as a branch of another bank. For example, Waseca Bank will be separately chartered, separately incorporated, and separately capitalized; loans made by the Waseca Bank will be accounted for as assets of that bank; and the W a s e c a Bank will have lending officers on site w h o will have independent lending authority subject to the same policies that apply throughout the Norwest system. 8 Protestants have not provided facts to indicate that the Waseca Bank will operate as a branch of another bank. In the Board's view, issues regarding Norwest's future plans for Waseca Bank are more appropriately raised if and when N o r w e s t seeks the required regulatory approvals. In approving N o r w e s t ' s acquisition of First Minnesota Savings Bank, F . S . B . , Minneapolis, Minnesota ("First Minnesota") in 1990, the Board relied on a commitment by N o r w e s t not to maintain First Minnesota's branch in W a s e c a if this branch were impermissible under Minnesota l a w . 9 This commitment w a s given to assure that the acquisition of First Minnesota would not violate the h o m e office protection rule. At this time, N o r w e s t has not proposed to establish a branch of a subsidiary bank in a small community, and approval of N o r w e s t ' s application before the Board only authorizes the acquisition of a de novo bank in the W a s e c a community. Minnesota law does not require the consent of local banks for the acquisition of a new bank in a small community. Minnesota's branching restrictions do not prohibit entry into a small community if such entry can be accomplished without establishing a branch, and the Minnesota Commerce Commission previously has approved alternative means of entry into a small community when the applicant was unable to obtain the required consent of local banks. 6 Moreover, additional regulatory approvals would be required before N B M S could establish a branch in Waseca by merging with a N o r w e s t subsidiary bank. 7 After consummation of the proposal, N o r w e s t converted First Minnesota's Waseca branch into a service center. In July 1991 the OCC conducted an unannounced visitation to the Waseca service center and confirmed that it was not being operated as a branch. The acquisition of a new bank in Waseca would not violate the commitment to the Board. In light of these facts, the Board believes that N o r w e s t has complied with the commitment it made to the Board in connection with its acquisition of First Minnesota. 1 0 The financial and managerial resources and future prospects of N o r w e s t , its subsidiary banks and W a s e c a Bank are consistent with approval. The Board also finds that considerations relating to the c o n v e n i e n c e and needs of the communities to be 3. Minn. Stat. § 47.52 (1991). 4. Protestants raised similar objections in Norwest's application to charter Waseca Bank, as a national bank. The Office of the Comptroller of the Currency ("OCC") has approved Norwest's charter application and the Minnesota Commerce Commission, the state's bank regulator, has not objected to Norwest's application to acquire Waseca Bank. 5. See Norwest Corporation, 76 Federal Reserve Bulletin 873 (1990). 6. The Commission's approval was upheld by the Supreme Court of Minnesota in First National Bank of Long Prairie v. Department of Commerce, 350 N.W. 2d 363 (1984). 7. The OCC's approval of the Waseca Bank charter specifically noted that the OCC expressed no opinion on the permissibility of merging Waseca Bank into NBMS. The merger of Waseca Bank into a Norwest subsidiary bank and its operation as a branch would require the approval of the appropriate federal or state regulator. In the event that OCC approval were required, the McFadden Act would permit Norwest to operate Waseca Bank as a branch only if a similarly situated state-chartered bank could operate a branch in Waseca, and subject to the same restrictions as those imposed on similarly situated state-chartered banks. 12 U.S.C. § 36(c). 8. See Grandview Bank and Trust Co. v. Board of Governors of the Federal Reserve System, 550 F.2d 415 (8th Cir. 1977), cert, denied 434 U.S. 821 (1977); North Hills Bank v. Board of Governors of the Federal System, 506 F.2d 623 (8th Cir. 1974). See also Commerce Bancshares, Inc., 64 Federal Reserve Bulletin 803 (1978); United Banks of Colorado, Inc., 64 Federal Reserve Bulletin 37 (1978); First International Bancshares, Inc., 63 Federal Reserve Bulletin 744 (1977). 9. Norwest Corporation, 76 Federal Reserve Bulletin 873 (1990). 10. Protestants maintain that Norwest's unsuccessful legislative attempts to change Minnesota branching restrictions and the establishment of a branch in a neighboring community evidences Norwest's bad faith in complying with its commitment. In the Board's opinion, neither allegation is inconsistent with Norwest's commitment not to establish a branch in Waseca if to do so would be inconsistent with Minnesota law. Legal Developments s e r v e d , and s u p e r v i s o r y factors are c o n s i s t e n t with approval. 1 1 B a s e d o n the foregoing and other facts o f record, the Board has determined that the application should be, and hereby is, approved. Approval of this proposal is specifically conditioned o n compliance b y N o r w e s t and all of its subsidiaries with the conditions refere n c e d in this order. The conditions relied o n in reaching this d e c i s i o n are conditions i m p o s e d in writing by the Board in c o n n e c t i o n with its findings and decision and m a y be e n f o r c e d in proceedings under applicable law. T h e acquisition shall not be c o n s u m m a t e d before the thirtieth calendar day following the effective date of this Order, or later than three m o n t h s after the effective date of this Order, and W a s e c a Bank shall be o p e n e d for b u s i n e s s not later than six m o n t h s after the effective date of this Order. T h e latter t w o periods may be e x t e n d e d for g o o d c a u s e by the Board or by the Federal R e s e r v e Bank of Minneapolis, acting pursuant to delegated authority. B y order o f the Board of Governors, February 12, 1992. effective Voting for this action: Chairman Greenspan and Governors Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips. Associate JENNIFER J . JOHNSON Secretary of the Board Texas Regional Bancshares, Inc. McAllen, Texas Texas State Bank Mc Allen, Texas Order Approving Acquisition of a Bank Merger Banks, and Establishment of Branches of T e x a s Regional B a n c s h a r e s , Inc., M c Allen, T e x a s ( " T e x a s R e g i o n a l " ) , a bank holding c o m p a n y within 11. The Board has carefully considered comments filed by a Waseca resident who maintains along with Protestants that his community is adequately served by the four financial institutions currently operating in Waseca. This commenter also asserts without further explanation that Norwest drains local deposits from communities like Waseca for use in other service areas and has generally abandoned serving the credit needs of rural agricultural communities. As discussed above, the addition of Waseca Bank as a provider of a full range of commercial banking services should serve to increase the level of competition among providers of these services. In addition, the Board has recently reviewed Norwest's record of performance under the Community Reinvestment Act ("CRA"), including relevant examination reports, and concluded that Norwest's assistance in meeting the credit needs of its entire communities, is consistent with approval of applications under the BHC Act. Norwest Corporation, 77 Federal Reserve Bulletin 110,112 (1991) and Norwest Corporation, 77 Federal Reserve Bulletin 343 (1991). On the basis of these and other facts of record, the Board concludes that these comments do not warrant denial of the application. 289 the meaning of the Bank Holding C o m p a n y A c t ( " B H C A c t " ) , has applied under section 3(a)(3) of the B H C A c t (12 U . S . C . § 1842(a)(3)) to acquire Mid Valley Bank, W e s l a c o , T e x a s . 1 T e x a s State Bank, M c A l l e n , T e x a s , the lead subsidiary bank of T e x a s Regional, has applied under section 18(c) of the Federal D e p o s i t Insurance A c t (12 U . S . C . § 1828(c)) ( " B a n k Merger A c t " ) to merge with T e x a s Regional's other subsidiary bank, Harlingen State Bank, Harling e n , T e x a s , and T S B - W e s l a c o , the s u c c e s s o r by merger to Mid Valley Bank. T e x a s State Bank will be the surviving entity. In addition, T e x a s State Bank has applied t o establish branches at the locations of Harlingen State Bank and Mid Valley Bank, and an automated teller machine ( " A T M " ) in Harlingen, T e x a s , pursuant to section 9 of the Federal R e s e r v e A c t (12 U . S . C . § 321). N o t i c e o f the applications, affording interested persons an opportunity to submit c o m m e n t s , has b e e n given in a c c o r d a n c e with the B H C A c t , the Bank Merger A c t , and the Board's Rules o f Procedure (12 C . F . R . 262.3(b)). A s required by the Bank Merger A c t , reports o n the competitive effects of the merger were requested f r o m the U n i t e d States Attorney General, the Office of the Comptroller of the Currency, and the Federal D e p o s i t Insurance Corporation ( " F D I C " ) . The time for filing c o m m e n t s has expired, and the Board has considered the applications and all c o m m e n t s received in light of the factors set forth in the B H C A c t , the Bank Merger A c t , and the Federal Reserve Act. T e x a s Regional is the 50th largest commercial banking organization in T e x a s , controlling t w o subsidiary banks with total deposits o f $229.8 million, representing l e s s than 1 percent of total d e p o s i t s in commercial banking organizations in the state. 2 Mid Valley Bank is the 254th largest commercial banking organization in T e x a s , controlling deposits of $72.3 million, representing less than 1 percent of total deposits in commercial banking organizations in the state. U p o n c o n s u m m a tion of this proposal, T e x a s Regional w o u l d b e c o m e the 32nd largest banking organization in T e x a s , controlling deposits of $302.1 million, representing l e s s than 1 percent of total deposits in commercial banking organizations in the state. C o n s u m m a t i o n of this proposal w o u l d not result in any significantly adverse effect on the concentration of commercial banking resources in T e x a s . 1. Mid Valley Bank is an affiliate of Texas Regional through common shareholders and directors. Texas Regional has formed Texas State Bank, Weslaco, Texas ("TSB-Weslaco"), a de novo bank, for the purpose of effecting this proposal. TSB-Weslaco will be merged with Mid Valley Bank with TSB-Weslaco as the survivor. 2. State data and market data are as of June 30, 1990. 290 Federal Reserve Bulletin • April 1992 Texas State Bank and Mid Valley Bank compete directly in the McAllen-Edinburg-Mission M S A banking market. 3 Texas State Bank is the sixth largest commercial banking organization in the market, controlling deposits of $145 million, representing 5.3 percent of total deposits in commercial banking organizations in the market. Mid Valley Bank is the 11th largest commercial banking organization in the market, controlling deposits of $72.3 million, representing 2.6 percent of total deposits in commercial banking organizations in the market. U p o n consummation, Texas Regional would b e c o m e the fifth largest commercial banking organization in the market, controlling total deposits of $217.3 million, representing 7.9 percent of total deposits in commercial banking organizations in the market. The Herfindahl-Hirschman Index ( " H H I " ) would increase 28 points to a level of 1176. 4 In light of the small increase in concentration, the number of competitors remaining in the market, and other facts of record, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effect on competition in any relevant banking market. The Board also concludes that the financial and managerial resources, supervisory factors, and future prospects of Texas Regional and Mid Valley Bank are consistent with approval of these applications. In considering the convenience and needs of the communities to be served by these institutions, the Board has taken into account the record of the subsidiary banks of Texas Regional and Mid Valley Bank under the Community Reinvestment Act (12 U . S . C . § 2901 et je«?.)("CRA"). The CRA requires the federal financial supervisory agencies to encourage financial institutions to help m e e t the credit n e e d s of the local communities in which they operate consistent with the safe and sound operation of such institutions. T o accomplish this end, the CRA requires the appropriate federal supervisory authority to " a s s e s s an institution's record of meeting the credit needs of its entire community, including low- and moderate- 3. The McAllen-Edinburg-Mission MSA banking market is approximated by Hidalgo County, Texas. 4. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is between 1000 and 1800 is considered to be moderately concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger or acquisition increases the HHI by at least 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. income neighborhoods, consistent with the safe and sound operation of the institution." 5 The Board has received comments from the McAllen Minority Business Development Center and an individual (collectively "Protestants") alleging generally that Mid Valley Bank's efforts in meeting the credit needs of the Hispanic community are inadequate. Protestants also allege that credit decisions are delayed for Hispanic applicants at Mid Valley Bank. The Board has carefully reviewed the CRA performance record of T e x a s Regional's subsidiary banks and Mid Valley Bank, as well as Protestants' comments and Texas Regional's responses to those comments, in light of the C R A , the Board's regulations, and the Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act ("Agency CRA Statement"). 6 The Agency CRA Statement provides guidance regarding the types of policies and procedures that supervisory agencies believe financial institutions should have in place in order to fulfill their responsibilities under the CRA on an ongoing basis, and the procedures that the supervisory agencies will use during the application process to review an institution's CRA compliance and performance. The Agency CRA Statement also suggests that decisions by agencies to allow financial institutions to expand will be made pursuant to an analysis of the institution's overall CRA performance and will be based on the actual record of performance of the institution. 7 Texas State Bank's most recent examination rating for CRA performance as of July 22, 1991, by its primary regulator, the Federal Reserve Bank of Dallas ("Reserve Bank"), was satisfactory. 8 Mid Valley Bank has also received a satisfactory rating in the most recent examination of its CRA performance by its primary regulator, the FDIC, as of August 13, 1990. The Agency CRA Statement provides that although CRA examination reports do not provide conclusive evidence of an institution's CRA record, these reports will be given great weight in the application process. Texas State Bank has a program in place designed to assist the bank in meeting the credit needs of its entire community, including low- and moderate-income neighborhoods. The Board notes that Texas Regional intends to merge Mid Valley Bank and Harlingen State Bank into Texas State Bank and to continue the C R A program of Texas State Bank. The CRA program in place at Texas State Bank includes a compliance 5. 12 U.S.C. 6. 54 Federal l.ld. 8. Harlingen performance by § 2901. Register 13,742 (1989). State Bank was also rated satisfactory for CRA its primary regulatory, the FDIC, as of April 22,1991. Legal Developments committee which meets every two months and monitors consumer compliance and the bank's CRA program. Texas State Bank's efforts to ascertain the credit needs of its communities rely primarily on personal contact by its board members, officers, and employees with members of the community. The bank has supplemented these efforts by mailing community contact letters and questionnaires to various persons and organizations within its community in order to obtain information regarding whether the credit needs of the community were being met and what other services T e x a s State Bank could provide to meet needs that were not being addressed. Although Texas State Bank's marketing program is not extensive, given its size and resources, the program appears sufficient. T e x a s State Bank makes use of radio, television, and billboards, and its loan-to-deposit ratio reflects a demand for its products. Texas State Bank also actively participates in projects that support community development activities. The chairman of the bank's board of directors serves as the president of McAllen Affordable H o m e s , a corporation which provides funds for development of subdivisions for first time home buyers with low- to moderate-incomes. In February 1991, Texas State Bank provided $500,000 in funding to McAllen Affordable H o m e s for the development of a subdivision. Moreover, the bank's executive vice president in charge of lending serves as president of R o n c o Enterprises, Inc., a corporation that engages in real estate development of low-income single family housing. Ronco Enterprises also provides counseling to individuals on how to qualify for a mortgage loan and provides assistance in avoiding default. Texas State Bank participates in governmentally guaranteed lending programs, such as those of the Small Business Administration ( " S B A " ) , and has taken steps to b e c o m e a certified S B A lender. The bank has made seven S B A guaranteed loans totalling $783,000 from N o v e m b e r 1990 through July 1991, and is active in providing funds for minority businesses. According to the Protestant McAllen Minority Business Development Center, Texas State Bank has been involved with this organization during the past year and a half in providing funding for minority business enterprises. In light of Protestants' allegations regarding Mid Valley Bank's inadequate efforts to assist in meeting the credit needs of the Hispanic community, the Reserve Bank conducted an on-site review over a ten-day period in N o v e m b e r 1991. 9 The results of this 9. This review was conducted in connection with the proposed merger of Mid Valley Bank into Texas State Bank. 291 review were provided to the Protestants and one Protestant submitted comments regarding the findings of this review. The Board has carefully reviewed the results of this review and comments relating to its conclusions. Mid Valley Bank has taken several steps to ensure that its CRA performance includes meeting the credit needs of the Hispanic community. For example, a substantial portion of Mid Valley Bank's staff, including loan officers, speak Spanish, and Mid Valley Bank is in the process of translating all of its credit applications into Spanish. 1 0 Moreover, Mid Valley Bank's A T M machine has been programmed to permit customers to conduct transactions in either Spanish or English. The bank's CRA notices and Statement are also available in Spanish. Mid Valley Bank's business development and officer call programs include Hispanic businesses, and Hispanic borrowers constitute approximately 53 percent of Mid Valley Bank's total commercial loans, representing approximately 37 percent of the total dollar amount of the bank's commercial loan portfolio. 1 1 Moreover, approximately 80 percent of Mid Valley Bank's total installment loans, representing approximately 65 percent of the dollar amount of the bank's total installment loans, were made to Hispanic individuals or Hispanic-owned businesses. Mid Valley Bank also participates in organizations supporting community development activities, including the Weslaco Development Committee, Leadership Mid Valley, Better Business Bureau, and Weslaco Tomorrow Commission, and has invested in 22 separate issues of revenue and general obligation bonds from municipalities located in the bank's community. Protestants have generally alleged that loan applications from Hispanics are subjected to delays in processing at Mid Valley Bank. Illegal credit practices, such as unequal treatment of loan applicants solely on the basis of ethnic background, are prohibited under the Equal Credit Opportunity Act (15 U . S . C . § 1601 et seq.). Mid Valley Bank's most recent CRA performance examination found no evidence of illegal discrimination or other illegal credit practices. In addition, the Reserve Bank's review found no evidence of Mid Valley Bank's failure to comply with the Equal 10. Protestants state that more Hispanics should be employed or serve in decision-making positions. While the Board fully supports affirmative programs designed to promote equal opportunity in every aspect of a bank's personnel policies and practices in the employment, development, advancement, and treatment of employees and applicants for employment, the Board believes that the bank's general personnel practices are beyond the scope of factors that may be assessed under the CRA. 11. These percentages exclude loans purchased from other banks and loans extended to municipalities. 292 Federal Reserve Bulletin • April 1992 Credit Opportunity A c t or the Board's implementing regulation, Regulation B. The Board n o t e s that, although Mid Valley B a n k ' s C R A performance is satisfactory, the R e s e r v e B a n k ' s r e v i e w indicated that the bank could improve the documentation of its ascertainment and marketing efforts, to include h o w t h e s e efforts identify specific credit n e e d s in the c o m m u n i t i e s served by Mid Valley Bank. T e x a s State Bank has proposed a program to address t h e s e areas o f w e a k n e s s , and the Board exp e c t s T e x a s State Bank to put this program in place as s o o n as possible. T h e Board will review T e x a s Regional's progress in improving ascertainment and marketing efforts in future applications. On the basis o f these and other facts of record, including the satisfactory C R A performance records of T e x a s State Bank and Mid Valley Bank, the Board c o n c l u d e s that considerations relating to the c o n v e nience and n e e d s of the communities to be served are consistent with approval of these applications. T e x a s State Bank has also applied under section 9 of the Federal R e s e r v e A c t (12 U . S . C . § 322) to establish a branch at the location of Mid Valley Bank in W e s l a c o , T e x a s ; a branch at the location of Harlingen State Bank in Harlingen, T e x a s ; and an A T M at an additional location in Harlingen, T e x a s . T h e Board has considered the factors it is required to consider w h e n reviewing applications for establishing branches and finds t h o s e factors to b e consistent with approval. B a s e d o n the foregoing and other facts of record, the Board has determined that the applications under the B H C A c t , the Bank Merger A c t , and the Federal R e s e r v e A c t should b e , and hereby are, approved. The Board's approval is e x p r e s s l y conditioned upon compliance with all of the c o m m i t m e n t s made by T e x a s Regional in c o n n e c t i o n with these applications. Further, t h e s e c o m m i t m e n t s and conditions referred to in this Order are conditions imposed in writing by the Board in c o n n e c t i o n with its findings and decision and m a y b e enforced in proceedings under applicable law. T h e proposed acquisitions shall not be c o n s u m m a t e d before the thirtieth calendar day following the effective date of this Order, or later than three m o n t h s following the effective date of this Order, unless such period is e x t e n d e d for g o o d c a u s e by the Board or by the Federal R e s e r v e Bank of Dallas, acting pursuant to delegated authority. B y order of the Board of Governors, February 24, 1992. effective Voting for this action: Chairman Greenspan and Governors Mullins, Angell, LaWare, Lindsey, and Phillips. Absent and not voting: Governor Kelley. Associate JENNIFER J . JOHNSON Secretary of the Board Orders Issued Under Section 4 of the Bank Holding Company Act Australia and New Zealand Banking Group Limited Melbourne, Australia Order Approving Application to Provide Investment Advisory and Securities Brokerage Services on a Combined Basis, to Provide Certain Financial Advisory Services, and to Arrange as Agent the Purchase and Sale of Loans and Other Extensions of Credit Australia and N e w Zealand Banking Group Limited, Melbourne, Australia, ( " A p p l i c a n t " ) , a foreign bank subject to the provisions of the Bank Holding Company A c t (the " B H C A c t " ) , has applied, pursuant t o section 4(c)(8) of the BHC Act (12 U . S . C . § 1843(c)(8)), to engage, through its indirect w h o l l y o w n e d subsidiary, A N Z M c C a u g h a n Securities ( U S A ) Inc., N e w York, N e w York ( " C o m p a n y " ) , in the following activities: (1) providing i n v e s t m e n t advisory services and securities brokerage s e r v i c e s o n a c o m b i n e d basis ("full-service brokerage") t o institutional customers; 1 (2) providing corporate finance advisory services to institutional c u s t o m e r s by: (a) acting as a financial advisor either o n a retainer or s u c c e s s f e e basis, including a d v i c e with respect to structuring, financing, and negotiating d o m e s t i c and international mergers and acquisitions, joint ventures, divestitures, capital-raising v e h i c l e s , interest rate s w a p s , interest rate c a p s , interest rate collars, currency s w a p s , similar hedging d e v i c e s , and other corporate transactions, and providing 1. Australia and N e w Zealand defines an institutional customer as: (1) banks (acting in an individual or fiduciary capacity); savings banks or savings and loan associations; insurance companies; investment companies registered under the Investment Company Act of 1940; or corporations, partnerships, proprietorships, organizations or institutional entities that regularly invest in the types of securities as to which investment advice is provided or that regularly engage in transactions in securities; (2) employee benefit plans with assets exceeding $1,000,000 or whose investment decisions are made by a bank, insurance company or investment advisor registered under the Investment Advisors Act of 1940; (3) natural persons whose individual net worth (or joint net worth with his or her spouse) at the time of receipt of the investment advice or brokerage services exceeds $1,000,000; (4) broker-dealers or options traders registered under the Securities Exchange Act of 1934, or other securities, investment, or banking professionals; or (5) an entity all of the equity owners of which are institutional customers. Legal Developments ancillary services or functions incidental to the foregoing activities; (b) performing feasibility studies, principally in the context of determining the financial attractiveness and feasibility of particular corporate transactions; (c) providing valuation services; and (d) rendering fairness opinions in connection with corporate transactions; and (3) arranging as agent the purchase and sale of loans or other extensions of credit originated by affiliated and unaffiliated lenders. Notice of the application, affording interested persons an opportunity to submit comments, has been duly published (56 Federal Register 67,621 (1991)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 4(c)(8) of the B H C Act. Applicant is the 89th largest banking organization worldwide and the second largest banking organization in Australia, controlling consolidated assets equivalent to approximately $78.4 billion. 2 Applicant operates branches in N e w York and Chicago, and agencies in L o s Angeles and Houston. Applicant currently provides, through Company's offices in N e w York, certain brokerage, advisory, and loan marketing services as incidental to Applicant's activities outside the United States pursuant to the Board's Regulation K. Company is registered as a broker-dealer with the Securities Exchange Commission under the Securities Exchange Act of 1934 ("Exchange A c t " ) and is registered as a broker-dealer in various states. Company is subject to the recordkeeping, reporting, fiduciary standards, and other requirements of the Exchange Act and the National Association of Securities Dealers. The Board has previously determined by order that the proposed full-service brokerage activities are closely related to banking and permissible for bank holding companies under section 4(c)(8) of the B H C Act. 3 Applicant proposes that Company will conduct full-service brokerage in accordance with all of the requirements established by the Board in its orders concerning these activities. 4 2. Asset data are as of September 30, 1991. Ranking data are as of December 31, 1990. 3. See Banc One Corporation, 76 Federal Reserve Bulletin 756 (1990); The Bank of Tokyo, Ltd., 76 Federal Reserve Bulletin 654 (1990); Norwest Corporation, 76 Federal Reserve Bulletin 79 (1990); Bank of New England Corporation, 74 Federal Reserve Bulletin 700 (1988); Bankers Trust New York Company, 74 Federal Reserve Bulletin 695 (1988). 4. Id. 293 The Board has also determined by order that the proposed financial advisory services are closely related to banking and permissible for bank holding companies under section 4(c)(8) of the B H C Act. 5 Applicant proposes that Company will engage in financial advisory activities in accordance with all of the conditions set forth in the Board's orders concerning these activities. 6 In addition, the Board has previously determined that arranging for the purchase and sale of loans or other extensions of credit originated by affiliated and unaffiliated lenders as agent is encompassed within the authorization of section 225.25(b)(1) of the Board's Regulation Y, 12 C.F.R. 225.25(b)(1). 7 In order to approve this proposal, the Board is required to determine that the performance of the proposed activities "can reasonably be expected to produce benefits to the public . . . that outweigh the possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices." 12 U . S . C . § 1843(c)(8). Consummation of the proposal would provide added convenience to Applicant's customers. In addition, the Board expects that the de novo entry of Applicant into the market for the proposed services in which it does not currently engage in the United States would increase the level of competition among providers of these services. Under the framework established in this and prior decisions, consummation of this proposal is not likely to result in any significant adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. The financial and managerial resources of Applicant are consistent with approval. Accordingly, based upon the facts of record and the 5. See, e.g., The Dai-Ichi Kangyo Bank Limited, 11 Federal Reserve Bulletin 184 (1991); First Regional Bancorp, Inc., 76 Federal Reserve Bulletin 859 (1990),Creditanstalt-Bankverein, 76 Federal Reserve Bulletin 761 (1990);77ie Fuji Bank, Limited, 75 Federal Reserve Bulletin 577 (1989). 6. Id. For example, Applicant has committed that: (1) Company's financial advisory activities will not encompass the performance of routine tasks or operations for a client on a daily or continuous basis; (2) Disclosure will be made to each potential client of Company that Company is an affiliate of Applicant; (3) Advice rendered by Company on an explicit fee basis will be without regard to correspondent balances maintained by a client of Company at Applicant or any of Applicant's depository subsidiaries or U.S. branches or agencies; and (4) Company will not make available to Applicant or any of Applicant's subsidiaries confidential information received from Company's clients, except with the client's consent. 7. See The Toronto-Dominion Bank, 76 Federal Reserve Bulletin 573 (1990); Bryn Mawr Bank Corporation, 74 Federal Reserve Bulletin 329 (1988). See also Sovran Financial Corporation, 73 Federal Reserve Bulletin 939 (1987); Post-och Kreditbanken, PKbanken, 68 Federal Reserve Bulletin 787 (1982); Societe Generate, 67 Federal Reserve Bulletin 453 (1981). 294 Federal Reserve Bulletin • April 1992 commitments made by Applicant regarding the conduct of the proposed activities, the Board has determined that performance of these activities b y Company can reasonably be e x p e c t e d to produce benefits t o the public that would outweigh adverse effects under the proper incident to banking standard of section 4(c)(8) of the B H C Act. B a s e d o n the foregoing and other facts of record, as well as the commitments made by Applicant, the Board has determined to, and hereby d o e s , approve this application, subject to all of the terms and conditions set forth a b o v e and in the above-noted Board orders. The Board's determination is also subject to all of the conditions set forth in Regulation Y , including t h o s e in sections 225.4(d) and 225.23(b), and to the Board's authority to require modification or termination of the activities of a bank holding c o m p a n y or any of its subsidiaries as the Board finds n e c e s s a r y to assure c o m p l i a n c e with, and to prevent e v a s i o n of, the provisions of the B H C A c t and the Board's regulations and orders issued thereunder. The Board's decision is specifically conditioned on continued compliance with all of the c o m m i t m e n t s made in this application, including the c o m m i t m e n t s discussed in this Order and the conditions set forth in the above-noted Board orders. T h e s e c o m m i t m e n t s are conditions i m p o s e d in writing by the Board in connection with its findings and d e c i s i o n s , and m a y be enforced in proceedings under applicable law. This transaction shall not be c o n s u m m a t e d later than three m o n t h s after the effective date of this order, unless such period is e x t e n d e d for g o o d c a u s e by the Board or by the Federal R e s e r v e Bank, of San Franc i s c o , acting pursuant t o delegated authority. B y order of the Board of Governors, effective February 11, 1992. Voting for this action: Chairman Greenspan and Governors Angell, Kelley, LaWare, Lindsey, and Phillips. Absent and not voting: Governor Mullins. Associate JENNIFER J . JOHNSON Secretary of the Board PNC Financial Corp Pittsburgh, Pennsylvania Order Approving Application to Act as Agent in the Private Placement of Securities, and to Act as "Riskless Principal" in Buying and Selling Securities P N C Financial Corp, Pittsburgh, Pennsylvania ( " P N C " ) , a bank holding c o m p a n y within the meaning of the Bank Holding C o m p a n y A c t ( " B H C A c t " ) , has applied under section 4(c)(8) of the B H C A c t (12 U . S . C . § 1843(c)(8)) and section 225.23(a) of the Board's Regulation Y (12 C . F . R . 225.23(a)) for its wholly o w n e d subsidiary, P N C Securities Corp, Pittsburgh, Pennsylvania ( " C o m p a n y " ) , t o act as agent in the private placement of all t y p e s of securities, including providing related advisory s e r v i c e s , and to buy and sell all types of securities on the order o f investors as a "riskless principal." N o t i c e of the application, affording interested pers o n s an opportunity to submit c o m m e n t s , has b e e n duly published (56 Federal Register 26,820 (1991)). The time for filing c o m m e n t s has expired, and the Board has considered the application and all c o m ments received in light of the public interest factors set forth in section 4(c)(8) of the B H C A c t . P N C , with approximately $44.3 billion in total consolidated assets, is the s e c o n d largest commercial banking organization in Pennsylvania. 1 P N C operates 26 subsidiary banks and engages directly and through its subsidiaries in a broad range of permissible nonbanking activities in the U n i t e d States. Company is currently authorized to engage in underwriting and dealing in commercial paper, municipal revenue bonds, certain mortgage-related securities, and consumer-receivable-related securities. C o m p a n y also is authorized to engage in underwriting and dealing in government obligations and m o n e y market instruments, pursuant to 12 C . F . R . 225.25(b)(16), and in providing investment advisory and brokerage s e r v i c e s on a combined basis to retail and institutional customers. Company is, and will continue to be, a brokerdealer registered with the Securities and E x c h a n g e C o m m i s s i o n and subject to the record-keeping, reporting, fiduciary standards, and other requirements of the Securities E x c h a n g e A c t of 1934 and the National A s s o c i a t i o n of Securities Dealers. Private placement i n v o l v e s the placement o f n e w i s s u e s of securities with a limited number of sophisticated purchasers in a nonpublic offering. A financial intermediary in a private placement transaction acts solely as an agent of the issuer in soliciting purchasers, and d o e s not purchase the securities and attempt to resell them. Securities that are privately placed are not subject to the registration requirements o f the Securities A c t of 1933, and are offered only t o financially sophisticated institutions and individuals and not the public. P N C will not privately place registered securities and will only place securities with c u s t o m e r s w h o qualify as accredited investors. 1. Asset data are as of March 31, 1991. Ranking, based on deposits, is as of December 31, 1990. Legal Developments "Riskless principal" is the term used in the securities business to refer to a transaction in which a broker-dealer, after receiving an order to buy (or sell) a security from a customer, purchases (or sells) the security for its o w n account to offset a contemporaneous sale to (or purchase from) the customer. 2 "Riskless principal" transactions are understood in the industry to include only transactions in the secondary market. Thus, P N C proposes that Company would not act as a "riskless principal" in selling securities at the order of a customer that is the issuer of the securities to be sold or in any transaction where Company has a contractual agreement to place the securities as agent of the issuer. Company also would not act as a "riskless principal" in any transaction involving a security for which it makes a market. The Board has previously determined by order that, subject to certain prudential limitations that address the potential for conflicts of interests, unsound banking practices or other adverse effects, the proposed private placement and "riskless principal" activities are so closely related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the B H C Act. 3 The Board also has previously determined that acting as agent in the private placement of securities, and purchasing and selling securities on the order of investors as a "riskless principal" do not constitute underwriting and dealing in securities for purposes of section 20 of the Glass-Steagall Act, and that revenue derived from these activities is not subject to the 10 percent revenue limitation on ineligible securities underwriting and dealing. 4 P N C has committed that Company will conduct its private placement and "riskless principal" activities using the same methods and procedures, and subject to the same prudential limitations established by the Board in the Bankers Trust and J.P. Morgan orders, 5 including the comprehensive frame- 2. See Securities and Exchange Commission Rule 10b-10. 17 C. F. R.240.1Ob-10(a)(8)(i). 3. Bankers Trust New York Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). 4. J.P. Morgan and Company, Inc., 76 Federal Reserve Bulletin 26 (1990) C'J.P. Morgan"); Bankers Trust. 5. As detailed more fully in those orders, in addition to the commitments imposed by the Board in connection with underwriting and dealing in securities, PNC has committed that Company will maintain specific records that will clearly identify all "riskless principal" transactions, and Company will not engage in any "riskless principal" transactions for any securities carried in its inventory. When acting as a "riskless principal", Company will only engage in transactions in the secondary market, and not at the order of a customer that is the issuer of the securities to be sold, will not act as "riskless principal" in any transaction involving a security for which it makes a market, nor hold itself out as making a market in the securities that it buys and sells as a "riskless principal." Moreover, Company will not engage in "riskless principal" transactions on behalf of its foreign affiliates that engage in securities dealing activities outside the United States and will not act as "riskless principal" for registered investment company securities. In addition, Company will 295 work of restrictions designed to avoid potential conflicts of interest, unsound banking practices and other adverse effects imposed by the Board in connection with underwriting and dealing in securities. 6 In every case involving a nonbanking acquisition by a bank holding company under section 4 of the B H C Act, the Board considers the financial condition and resources of the applicant and its subsidiaries and the effect of the transaction on these resources. 7 Based on the facts of this case, the Board concludes that financial considerations are consistent with approval of this application. The managerial resources of P N C also are consistent with approval. In order to approve this application, the Board is required to determine that the performance of the proposed activities by P N C can reasonably be expected to produce public benefits which would outweigh adverse effects under the proper incident to banking standard of section 4(c)(8) of the B H C Act. Under the framework established in this and prior decisions, consummation of this proposal is not likely to result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. Consummation of the proposal would provide added convenience to Company's customers. In addition, the Board expects that the de novo entry of Company into the market for these services would increase the level of competition among providers of these services. Accordingly, the Board has determined that the performance of the proposed activities by Company can reasonably be expected to produce public benefits which would outweigh adverse effects under the proper incident to banking standard of section 4(c)(8) of the B H C Act. not act as a "riskless principal" with respect to any securities of investment companies that are advised by PNC or any of its affiliates. With regard to private placement activities, PNC has committed that Company will not privately place registered investment company securities. Further, Company will not privately place any securities of investment companies that are advised by PNC or any of its affiliates. 6. See First Union Corporation, 75 Federal Reserve Bulletin 645 (1989). The Board modified this framework of restrictions for "riskless principal" and private placement activities in Bankers Trust and J.P. Morgan, and PNC has committed to conduct its private placement activities and likewise has agreed to conduct its "riskless principal" activities subject to this modified framework of restrictions. See First Union Corporation, 76 Federal Reserve Bulletin 174 (1990). These modifications relate to extensions of credit to an issuer of securities for which Company would act as "riskless principal," purchases by affiliates of securities for which Company would act as "riskless principal," acting as a "riskless principal" for sophisticated institutions purchasing or selling unrated securities of Company's affiliates, and including "riskless principal" transactions in Company's policies limiting overall exposure to a single customer whose securities are underwritten by Company. 7. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 155, 156 (1987). 296 Federal Reserve Bulletin • April 1992 B a s e d o n all the facts of record, and subject to the c o m m i t m e n t s made b y P N C , as well as all of the terms and conditions set forth in this order and in the a b o v e - n o t e d Board orders, the Board has determined that the application should b e , and hereby is, approved. Approval o f this proposal is specifically conditioned o n c o m p l i a n c e by P N C and Company with the c o m m i t m e n t s made in connection with its application, as supplemented, and with the conditions refere n c e d in this order. The Board's determination also is subject to all of the conditions set forth in Regulation Y , including t h o s e in s e c t i o n 225.4(d) and 225.23(b), and to the Board's authority t o require modification or termination of the activities of a bank holding c o m pany or any of its subsidiaries as the Board finds necessary to assure c o m p l i a n c e with, and to prevent e v a s i o n of, the provisions of the B H C A c t and the Board's regulations and orders issued thereunder. The c o m m i t m e n t s and conditions relied on in reaching this d e c i s i o n are conditions imposed in writing by the Board in c o n n e c t i o n with its findings and decision and m a y be enforced in proceedings under applicable law. This transaction shall not be c o n s u m m a t e d later than three m o n t h s after the effective date of this Order, unless such period is extended for g o o d cause by the Board or by the Federal R e s e r v e Bank of Cleveland, pursuant to delegated authority. B y order of the Board of Governors, effective February 18, 1992. Voting for this action: Chairman Greenspan and Governors Mullins, Angell, Kelley, Lindsey, and Phillips. Absent and not voting: Governor La Ware. Associate JENNIFER J . JOHNSON Secretary of the Board Stichting Prioriteit ABN AMRO Holding Stichting Administratiekantoor ABN AMRO Holding ABN AMRO Holding N.V. ABN AMRO Bank, N.V. all of Amsterdam, The Netherlands ABN AMRO North America, Inc. Chicago, Illinois Order Approving Association Application to Acquire a Savings Stichting Prioriteit A B N A M R O Holding, Stichting Administratiekantoor A B N A M R O Holding, and A B N A M R O Holding N . V . , all of A m s t e r d a m , The Netherlands, foreign banking organizations subject to the Bank Holding C o m p a n y A c t ( " B H C A c t " ) ; and A B N A M R O Bank, N . V . , A m s t e r d a m , T h e Netherlands, and A B N A M R O N o r t h A m e r i c a , I n c . , Chicago, Illinois, bank holding c o m p a n i e s within the meaning of the B H C A c t (collectively, " A p p l i c a n t " ) , h a v e applied under section 4(c)(8) of the B H C A c t (12 U . S . C . § 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C . F . R . 225.23), t o acquire T h e Talman H o m e Federal Savings and L o a n A s s o c i a t i o n of Illinois, Chicago, Illinois ( " T a l m a n " ) . Talman will be acquired through a purchase of a s s e t s and assumption of liabilities transaction with LaSalle Talman Bank, F . S . B . , Chicago, Illinois ( " L a S a l l e T a l m a n " ) , a n e w l y chartered federal stock savings bank to be o w n e d by Applicant's United States subsidiary, A B N A M R O North America. Talman and LaSalle Talman will be o w n e d by Applicants in a c c o r d a n c e with section 225.25(b)(9) of the Board's Regulation Y (12 C . F . R . 225.25(b)(9)). 1 N o t i c e of the application, affording interested pers o n s an opportunity to submit c o m m e n t s , has b e e n published (56 Federal Register 51 Ml (1991)). The time for filing c o m m e n t s has expired, and the Board has considered the application and all c o m m e n t s rec e i v e d in light of the public interest factors set forth in section 4(c)(8) of the B H C A c t . 2 The Board has determined that the operation of a savings association is c l o s e l y related to banking and permissible for bank holding c o m p a n i e s . 12 C . F . R . 225.25(b)(9). In making this determination, the Board 1. Applicant also has applied to acquire the following nonbanking subsidiaries of Talman: Talman Home Mortgage Corporation, Norridge, Illinois, and thereby engage in the origination and servicing of residential mortgage loans pursuant to 12 C.F.R. 225.25(b)(1); and Talman Insurance Services, Inc., Chicago, Illinois ("TISI"), and thereby engage in credit-related insurance agency activities pursuant to 12 C.F.R. 225.25(b)(8)(i). Applicant also has applied to engage in securities brokerage activities pursuant to 12 C.F.R. 225.25(b)(15), through a lease agreement with G N A Securities; and to retain Talman's investment in the Savings and Loan Network, Inc., Chicago, Illinois, and thereby engage in community development activities pursuant to 12 C.F.R. 225.25(b)(6). 2. The Board has received comments from the National Training Institute and Information Center ("NTIIC") and the Woodstock Institute, both of Chicago, Illinois, stating that the public benefits of permitting Applicant to acquire Talman weigh for approval of this case and outweigh potential adverse effects from the proposal. NTIIC has endorsed the lending record of Talman, as well as its participation in special loan programs, and the Woodstock Institute has endorsed Talman's home mortgage lending record in the community. The Board also has received comments from several members of Congress in favor of the proposal. In addition, another member of Congress requests that the Board thoroughly review the CRA aspects of the proposal and not diminish the weight given to the CRA in reviewing this case. The Board also has received comments filed by a customer of LaSalle Bank, alleging that interest on his home equity line of credit was incorrectly calculated. These allegations are under review by the Office of the Comptroller of the Currency ("OCC"), LaSalle Bank's primary regulator. Legal Developments required that savings associations acquired by bank holding companies conform their direct and indirect activities to those activities permissible for bank holding companies under section 4 of the B H C Act. 3 In this regard, the Board has previously determined that the mortgage lending, credit-related insurance agency, discount brokerage and community development activities of Talman's nonbanking subsidiaries are permissible activities for bank holding companies. In addition, Applicant has committed to conform all activities of LaSalle Talman to the requirements of section 4 of the B H C Act and Regulation Y . 4 In reviewing proposals under section 4(c)(8) of the B H C Act, the Board is required to determine that the ownership and operation of the acquired company by the applicant "can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices." 12 U . S . C . § 1843(c)(8). 3. Applicant commits that should Talman engage in any activities that are impermissible for bank holding companies under section 4(c)(8) of the BHC Act, these activities will be divested as follows: (1) any impermissible securities activities conducted by Talman or its subsidiaries will cease on or before consummation; and (2) any impermissible real estate investments will be divested within two years of consummation of the proposal, no new impermissible projects or investments will be undertaken during this period, and capital adequacy guidelines will be met excluding specified real estate investments. Talman, through a joint venture, owns 10 percent of the stock of the Bank for Financial Institutions, Chicago, Illinois ("BFI"), a bank chartered under Illinois law to provide banking services to financial institutions. Applicant has committed to divest its interest in BFI as soon as possible following consummation of this transaction and, in any event, within one year from the date of consummation of this transaction. 4. TISI also engages in the sale as agent of insurance products in Illinois under the Home Owners' Loan Act. These activities are not permissible for bank holding companies under section 4(c)(8) of the BHC Act. These insurance agency activities include the sale of credit-related insurance on extensions of credit made by non-affiliated lenders, and the sale of homeowners, life, health, automobile, accident, property and casualty, surety coverage and professional liability coverage. Section 461 of the Federal Deposit Insurance Corporation Improvement Act of 1991, Pub. L. No. 102-242, § 461; 105 Stat. 2236 (1991), permits a Qualified Savings Association chartered in December 1986 and acquired without federal financial assistance by a bank holding company before March 1, 1992, to continue to engage in insurance agency activities in its home state if the savings association was continuously engaged in such activity from June 1, 1991, to the date of acquisition. On the basis of the record on this application, the Board concludes that this provision would permit LaSalle Talman to continue TISI's insurance agency activities in Illinois following its acquisition by LaSalle National Corporation ("LNC") for so long as LaSalle Talman is operated as a Qualified Savings Association. Applicant has committed that in the event Talman ceases to be a Qualified Savings Association, Applicant will cease or divest immediately all impermissible insurance activities, and will conduct its insurance activities in accordance with the BHC Act and the Board's Regulation Y. 297 Applicant is the largest banking institution in The Netherlands, and is the sixth largest banking institution in Europe. A B N A M R O North America, a wholly owned subsidiary of A B N A M R O Bank, N . V . , has consolidated assets of $8.6 billion. Applicant also operates European American Bank, Uniondale, N e w York, and numerous agencies, branches, and representative offices in Atlanta, Boston, Chicago, Houston, Los Angeles, San Francisco, Miami, N e w York, Pittsburgh, and Seattle. A B N AMRO North America operates s e v e n bank subsidiaries in Illinois through LaSalle National Corporation ( " L N C " ) . L N C is the fourth largest banking organization in Illinois, controlling approximately $5.3 billion in commercial bank deposits in Illinois, representing 4 percent of the total deposits in commercial banking organizations in the state. 5 Talman is the largest savings association in Illinois, controlling approximately $4.1 billion in deposits. U p o n consummation of the proposed acquisition, L N C would become the third largest commercial banking organization in Illinois, controlling approximately $9.4 billion in deposits in Illinois. L N C and Talman compete directly in the Chicago, Illinois banking market. 6 L N C is the fourth largest depository organization in this market, controlling $5.3 billion in deposits, representing approximately 4.9 percent of the deposits held by banks and savings associations operating in the market ("market deposits"). 7 Talman is the seventh largest depository institution in the Chicago banking market, controlling $3.9 billion in deposits, representing approximately 1.8 percent of market deposits. U p o n consummation of this proposal, Applicant would b e c o m e the third largest depository organization in the market, controlling $9.2 billion in deposits, representing approximately 6.7 percent of market deposits. The HerfindahlHirschman Index ( " H H I " ) would increase by 23 points to 609, and the banking market would remain unconcentrated. 8 5. State deposit data are as of June 30, 1990. 6. The Chicago, Illinois banking market is approximated by Cook, DuPage, and Lake Counties, all in Illinois. 7. Market share data are as of June 30,1990. The pre-merger market deposit data are based on calculations in which the deposits of Talman and all other thrifts are included at 50 percent. Upon consummation of the proposal, LaSalle Talman would be affiliated with a commercial banking organization. Therefore, on a pro forma basis, the deposits of LaSalle Talman are included at 100 percent, while the deposits of other savings associations continue to be included at 50 percent. 8. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is less than 1000 is considered unconcentrated. Generally, the Department of Justice will not challenge a bank merger (in the absence of other factors indicating anticompetitive effects) if the post-merger HHI is less than 1800. 298 Federal Reserve Bulletin • April 1992 On the basis of all the facts of record, the Board concludes that consummation of the proposed acquisition would not have a significantly adverse effect on competition in any banking market. The Board also notes that the markets for the nonbanking activities in which both L N C and Talman compete are served by numerous competitors, and the share of the market controlled by L N C and Talman is small in each case. Accordingly, the Board concludes that consummation of this proposal would not have a significantly adverse effect on competition in the provision of these services in any relevant market. The record d o e s not indicate that this proposal is likely to result in any other significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices. The Board also has taken into account the financial condition of Talman, and Applicant's proposal to provide substantial n e w capital to Talman. Talman has recently experienced significant financial difficulties, and has reported negative net worth. The Office of Thrift Supervision ( " O T S " ) has informed the Board that Talman has incurred l o s s e s that have depleted substantially all of its capital and that Talman is an institution "in danger of default." A s part of this transaction, Applicant has committed to provide substantial capital resources to Talman sufficient to restore Talman's capital levels above the regulatory minimum levels. The Board previously has determined that the performance record under the Community Reinvestment A c t (12 U . S . C . § 2901 et seq.) ( " C R A " ) of banks o w n e d by an applicant must be considered in the analysis of the public benefits of any proposal to acquire a savings association. In this regard, the Board has considered that t w o of L N C ' s subsidiary banks, LaSalle National Bank, Chicago, Illinois ("LaSalle B a n k " ) , and the LaSalle Bank, Matteson, Matteson, Illinois ( " M a t t e s o n Bank"), have not received satisfactory ratings in the most recent examination of their performance under the C R A . 9 The C R A performance records of all the remaining L N C subsidiary banks are currently rated satisfactory by the banks' primary regulators, and have been rated satisfactory for at least t w o preceding examinations. LaSalle Bank and Matteson Bank also received sat- 9. LaSalle Bank, LNC's lead bank, received a "needs to improve" CRA performance rating from the OCC in a CRA performance examination in December 1991 (the "December 1991 examination"). Matteson Bank, which comprises approximately 2.6 percent of LNC total consolidated assets, received a less than satisfactory rating from the Federal Deposit Insurance Corporation ("FDIC") in April 1990. isfactory C R A performance ratings from their primary regulators in their t w o preceding examinations. Applicant has committed to take a number of steps at LaSalle Bank to address the concerns raised in the December 1991 examination. 1 0 The OCC has informed the Board that these steps, w h e n fully implemented, will satisfactorily address the CRA weaknesses at LaSalle, and that LaSalle Bank has been responsive in correcting weaknesses identified in previous examinations. In the case of Matteson Bank, substantial steps have already been taken to address the criticisms noted in the FDIC's examination. 1 1 The Board has also taken into account as a significant mitigating factor the fact that this proposal would serve the c o n v e n i e n c e and needs of the community by maintaining Talman and its s u c c e s s o r s as an active lender in its market. The financial support provided to Talman under this proposal will enable LaSalle Talman, without federal assistance, to continue to provide credit opportunities and banking services to its local communities, including low- and moderate-income neighborhoods. On the basis of these and all of the other facts of record, including a review of the C R A performance record of Applicant, the Board finds that the public benefits that would result from this transaction are substantial and outweigh the possible adverse effects. Accordingly, based upon consideration of all the facts in this case, the Board has determined that the balance of the public interest factors it is required to consider under section 4(c)(8) of the B H C A c t is favorable and consistent with approval of the application to acquire Talman. Although the Board d o e s not generally consider commitments made in the applications p r o c e s s as adequate to o v e r c o m e a deficient CRA performance record, the Board and the other federal banking agencies have indicated in the Statement of the Federal Financial Supervisory 10. LaSalle Bank received its most recent CRA rating during the pendency of this application and immediately developed proposals to address deficiencies identified by the OCC. LaSalle Bank has not had sufficient time before this application was considered by the Board to implement all of the steps. LaSalle Bank's proposed corrective measures include a review of all denials of credit applications received from low- and moderate-income residents; expansion of the scope of the bank's audits for compliance with fair lending laws to include an analysis of the reasons for loan denials as well as monitoring of the location of the applicants; establishment of a small business lending unit; and expansion of LaSalle Bank's outreach and marketing efforts. 11. For example, Matteson Bank has significantly improved its efforts to ascertain the credit needs of its communities through increased contacts with community groups, public officials, and consumers in general through mail surveys. Matteson Bank's marketing efforts now include the use of local newspapers and statement inserts that advertise specific services and products. The geographic distribution of Matteson Bank's loans are reviewed quarterly by its CRA committee and data from these reports have served as a basis for redefining the bank's service area. Matteson Bank has also significantly increased its community development activities. Legal Developments A g e n c i e s Regarding the C o m m u n i t y R e i n v e s t m e n t A c t that c o m m i t m e n t s m a y b e appropriate in addressing C R A p e r f o r m a n c e in certain c i r c u m s t a n c e s , including in the c o n t e x t of an acquisition of a troubled financial institution. In this regard, the B o a r d has directed the Federal R e s e r v e Bank o f C h i c a g o ("Reserve Bank") to monitor Applicant's progress in i m p l e m e n t i n g the C R A programs and p o l i c i e s d e s c r i b e d in the application as s u p p l e m e n t e d , and to report t o the B o a r d o n A p p l i c a n t ' s progress. A s a c o n d i t i o n o f the B o a r d ' s a c t i o n in this c a s e , Applicant m u s t submit quarterly reports t o the R e s e r v e B a n k that include a description of the s t e p s it has taken t o c o m p l y with its representations and c o m m i t m e n t s t o t h e B o a r d , as w e l l as the steps it has i m p l e m e n t e d to i m p r o v e the C R A p e r f o r m a n c e of the t w o subsidiary banks. B a s e d o n all the f a c t s o f record, the Board has d e t e r m i n e d that the application should be, and h e r e b y is, a p p r o v e d . T h e B o a r d ' s approval is specifically c o n d i t i o n e d u p o n c o m p l i a n c e with all the c o m m i t m e n t s m a d e b y Applicant in c o n n e c t i o n with this application, including i m p l e m e n t a t i o n o f the planned c o r r e c t i v e a c t i o n s at L a S a l l e B a n k , and the conditions i m p o s e d in this Order. This determination is a l s o subject t o all of the c o n d i t i o n s set forth in the B o a r d ' s R e g u l a t i o n Y , including s e c t i o n s 225.4(d) and 225.23, and t o the B o a r d ' s authority t o require s u c h m o d i f i c a t i o n s or termination o f the activities o f a bank holding c o m p a n y or any of its subsidiaries as the B o a r d finds n e c e s s a r y t o assure c o m p l i a n c e with, or t o p r e v e n t e v a s i o n o f , the p r o v i s i o n s and p u r p o s e s of the B H C A c t and the B o a r d ' s regulations and Orders i s s u e d thereunder. All of the c o m m i t m e n t s and c o n d i t i o n s relied o n b y the Board in reaching its d e c i s i o n in this c a s e are c o n d i t i o n s i m p o s e d in writing b y the B o a r d in c o n n e c t i o n with its findings and d e c i s i o n and m a y b e e n f o r c e d in p r o c e e d i n g s under applicable l a w s . T h e transaction a p p r o v e d in this Order shall not b e c o n s u m m a t e d later than three m o n t h s after the e f f e c tive date o f this Order, u n l e s s such period is e x t e n d e d f o r g o o d c a u s e b y the Board or by the Federal R e s e r v e B a n k of C h i c a g o , pursuant to d e l e g a t e d authority. B y order o f the Board of Governors, effective February 27, 1992. Voting for this action: Chairman Greenspan and Governors Mullins, LaWare, and Phillips. Abstaining from this action: Governors Angell and Lindsey. Absent and not voting: Governor Kelley. Associate JENNIFER J . JOHNSON Secretary of the Board 299 Orders Issued Under Sections 3 and 4 of the Bank Holding Company Act BankAmerica Corporation San Francisco, California Nevada First Development Corporation Las Vegas, Nevada Order Approving Acquisition Company and Banks of a Bank Holding BankAmerica Corporation, San F r a n c i s c o , California ( " B a n k A m e r i c a " ) , and its w h o l l y o w n e d subsidiary, N e v a d a First D e v e l o p m e n t Corporation, L a s V e g a s , N e v a d a ( " N F D C " ) , both bank holding c o m p a n i e s within the meaning o f the Bank Holding C o m p a n y A c t ( " B H C A c t " ) , h a v e applied under section 3 of the B H C A c t (12 U . S . C . § 1842) to acquire Valley Capital Corporation, L a s V e g a s , N e v a d a ( " V a l l e y Capital"), and thereby acquire Valley Bank of N e v a d a , L a s V e g a s , N e v a d a , and Caliber Bank, P h o e n i x , Arizona. 1 BankAmerica and N F D C h a v e also applied for the Board's approval under section 4(c)(8) of the B H C A c t to acquire the shares of certain nonbanking c o m p a n i e s o w n e d by Valley Capital that are listed in the Appendix to this order. E a c h of the nonbanking c o m p a n i e s conducts nonbanking activities that h a v e b e e n authorized by the Board by order or by regulation. N o t i c e of the applications, affording an opportunity for interested p e r s o n s to c o m m e n t , has b e e n duly published (56 Federal Register 51,898 (1991)). The time for filing c o m m e n t s has expired, and the Board has considered the application and all c o m m e n t s rec e i v e d in light of the factors set forth in sections 3 and 4 of the B H C Act.2 Interstate Banking Provisions Section 3(d) of the B H C A c t , the D o u g l a s A m e n d ment, prohibits the Board f r o m approving an application by a bank holding c o m p a n y to acquire control of any bank located outside of the bank holding c o m pany's h o m e state, unless such acquisition is " s p e c i f ically authorized b y the statute l a w s of the State in which [the] bank is located, b y language to that effect 1. The proposed transaction would be effected through the merger of Valley Capital with and into NFDC. BankAmerica has also applied to acquire an option that gives BankAmerica the right to acquire up to 14.9 percent of Valley Capital's common stock upon the occurrence of certain triggering events defined in the Plan and Agreement of Merger between BankAmerica and Valley Capital. The option will expire upon consummation of the proposed acquisition. 2. With the exception of a report from the U.S. Department of Justice, the Board received no comments on this application. 300 Federal Reserve Bulletin • April 1992 and not merely by implication." For purposes of the Douglas Amendment, California is the home state of BankAmerica. 3 BankAmerica proposes to acquire Valley Capital's N e v a d a and Arizona bank subsidiaries. The laws of both Arizona and N e v a d a permit out-of-state bank holding companies, including bank holding companies located in California, to acquire established banks located in those states, subject to the prior approval of the respective state banking supervisors. 4 Accordingly, Board approval of this proposal is not barred by the Douglas Amendment. Competitive Considerations Nevada BankAmerica is the third largest commercial banking organization in the United States and operates banking subsidiaries in California, Arizona, Idaho, Nevada, N e w Mexico, Oregon, Texas and Washington. 5 BankAmerica is the fifth largest commercial banking organization in Nevada, where it controls deposits of approximately $436.0 million, representing approximately 4.9 percent of the total deposits in commercial banks in Nevada. Valley Capital is the second largest commercial banking organization in Nevada, where it controls deposits of approximately $2.7 billion, representing approximately 29.9 percent of the total deposits in commercial banks in Nevada. Upon consummation, BankAmerica would become the largest commercial banking organization in Nevada, accounting for approximately 34.8 percent of the total deposits in commercial banks in the state. BankAmerica competes directly with Valley Capital in seven N e v a d a banking markets. 6 In order to miti- 3. 12 U.S.C. § 1842(d). A bank holding company's home state for purposes of the Douglas Amendment is that state in which the total deposits of its banking subsidiaries were largest on July 1, 1966, or on the date it became a bank holding company, whichever date is later. Id. 4. Ariz. Rev. Stat. § 6-321 to -323 (1991); Nev. Rev. Stat. Ann. § 666.225-305, -315 (Michie 1991). The Board has determined previously that the Douglas Amendment does not bar a California bank holding company's acquisition of a bank holding company and bank located in Nevada. BankAmerica Corporation, 75 Federal Reserve Bulletin 825 (1989). BankAmerica's application to acquire Valley Capital's Nevada subsidiary bank is pending before the Nevada Commissioner of Financial Institutions. The Board's action in this case is specifically conditioned on BankAmerica's obtaining any approvals required under Nevada law. By order dated December 4, 1991, the Arizona Superintendent of Banks approved BankAmerica's application to acquire Valley Capital's Arizona subsidiary bank. 5. State deposit data are as of June 30,1991. Market deposit data are as of June 30, 1990. 6. These banking markets are: Bullhead City; Carson City; Churchill County; Elko; Humboldt County; Las Vegas; and Reno. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. In such markets, the Justice Department is likely to challenge a merger that increases the HHI by gate the potential anticompetitive effects of the proposed acquisition in these markets, BankAmerica has committed to divest of all of the operations of BankAmerica Nevada, its N e v a d a bank subsidiary, to a substantial bank holding company that does not have significant operations in N e v a d a . 7 After giving effect to the divestitures proposed in these N e v a d a markets, the Herfindahl-Hirschman Index ( " H H I " ) and other measures of concentration would not increase significantly and the number of competitors remaining in any relevant market would not change. 8 The Bullhead City banking market includes portions of Arizona, California, and Nevada. BankAmerica competes with Valley Capital in this market through BankAmerica Arizona, a bank subsidiary located in Arizona. In order to mitigate the potentially anticompetitive effect of the proposed transaction in the Bullhead City banking market, BankAmerica has committed to divest a branch in this market. 9 After giving effect to the proposed divestiture, the H H I and other measures of concentration would not increase significantly and the number of competitors remaining in this market would not change. Accordingly, the Board believes that consummation of the proposal would not result in a significantly adverse effect on competition in any banking market in Nevada. Arizona BankAmerica is the third largest commercial banking organization in Arizona, where it controls deposits of more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 7. BankAmerica has committed to execute an agreement for the sale of BankAmerica Nevada prior to consummation of this proposal. BankAmerica has committed that, if it is unsuccessful in consummating the divestiture of BankAmerica Nevada within 180 days of consummation of the proposal to acquire Valley Capital, BankAmerica will transfer all of the shares of BankAmerica Nevada to an independent trustee with instructions that the trustee sell the bank promptly. See, e.g., First Hawaiian, Inc., 11 Federal Reserve Bulletin 52, (1991); First Union Corporation, 76 Federal Reserve Bulletin 83 (1990). 8. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See, e.g., First Union Corporation, 76 Federal Reserve Bulletin 83 (1990). In considering the competition offered by thrifts in all banking markets in this case, thrift deposits are weighted at 50 percent, unless otherwise noted. See, e.g.,Fleet/Norstar Financial Group, Inc., 11 Federal Reserve Bulletin 751 (1991). 9. The Board will consider BankAmerica's request to defer the proposed divestiture in the Bullhead City banking market when the Board reviews the other divestitures proposed by BankAmerica in Arizona in connection with BankAmerica's application to acquire Security Pacific Corporation, Los Angeles, California. Legal Developments approximately $5.3 billion, representing approximately 17.9 percent of the total deposits in commercial banks in Arizona. Valley Capital is the 11th largest commercial banking organization in Arizona, where it controls deposits of approximately $164.9 million, representing approximately 0.6 percent of the total deposits in commercial banks in Arizona. U p o n consummation of the proposal, BankAmerica would remain the third largest commercial banking organization in Arizona, accounting for approximately 18.5 percent of the total deposits in commercial banks in the state. BankAmerica c o m p e t e s directly with Valley Capital in one banking market in Arizona through BankAmerica Arizona. Based on post-consummation concentration levels, market share, and the number of competitors remaining in the market, the Board believes that the proposal would not result in a significantly adverse effect on competition in any banking market in Arizona. 1 0 Accordingly, based on all the facts of record in this case, and subject to the divestiture commitments made by BankAmerica in this case, the Board concludes that consummation of this proposal would not have a significantly adverse effect on competition or the concentration of banking resources in any relevant banking market. The Board has sought comments from the United States Attorney General, the Office of the Comptroller of the Currency ("OCC"), and the Federal Deposit Insurance Corporation ( " F D I C " ) on the competitive effects of this proposal. The Attorney General has indicated that, subject to consummation by BankAmerica of the proposed divestitures in the Churchill County, Elko, Humboldt County, Las Vegas, and Reno, N e v a d a banking markets, the proposal would not have significantly adverse effects on competition in any relevant banking market. Neither the OCC nor the FDIC has provided any objection to consummation of this proposal nor indicated that the proposal would have any significantly adverse competitive effects. Other Considerations Based on the facts of record, the Board also concludes that financial considerations, managerial resources, future prospects, supervisory factors, and conve- 10. BankAmerica competes directly with Valley Capital in the Phoenix, Arizona banking market. The Phoenix banking market is approximated by the Phoenix Ranally Metropolitan Area with the addition of the towns of Carefree, Cave Creek, and Buckeye, Arizona. Upon consummation, BankAmerica would remain the largest depository institution in the market, holding deposits of approximately $5.6 billion, representing 24.2 percent of the market deposits. The HHI would increase by 37 points to 1788. 301 nience and needs considerations related to this proposal are consistent with approval of this transaction. The Board notes that BankAmerica has applied for Board approval to acquire Security Pacific Corporation. In acting upon the proposal to acquire Valley Capital, the Board considered the statutory factors only as they relate to the Valley Capital proposal and did not consider the statutory factors as they may relate to the Security Pacific proposal or to any other proposal pending before the Board. BankAmerica has also applied under section 4(c)(8) of the B H C Act to acquire the shares of the nonbanking subsidiaries of Valley Capital listed in the Appendix. The Board has determined by order or by regulation that each of the activities conducted by these companies is closely related to banking and generally permissible for bank holding companies under section 4(c)(8) of the B H C Act. BankAmerica nonbank subsidiaries compete with five of Valley Capital's six nonbank subsidiaries. In each instance, the markets for these nonbanking services are not highly concentrated and numerous providers of the services would remain after consummation of the proposal. A s a result, consummation of the this proposal would have a minimal effect on competition for these services, and the Board concludes that the proposal would not result in a significantly adverse effect on competition in any relevant market. For the reasons discussed above, the Board has determined that the proposal is not likely to result in any significant adverse effects, such as undue concentration or resources, decreased or unfair competition, conflicts of interests, unsound banking practices, concentration of resources or other adverse effects, and that the balance of public interest factors that the Board is required to consider under section 4(c)(8) of the B H C Act is favorable. Based on the foregoing and other facts of record, and subject to the commitments made by BankAmerica and the conditions in this order, the Board has determined that the applications should be, and hereby are, approved. Approval of these proposals is specifically conditioned on compliance by BankAmerica with the commitments made in connection with its applications in this case and with the conditions referenced in this order. The determinations as to the nonbanking activities are also subject to all the conditions set forth in the Board's Regulation Y , including those in sections 225.4(d) and 225.23(b), and to the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, or to prevent evasion of, the provisions and purposes of the B H C Act and the Board's regulations and orders issued 302 Federal Reserve Bulletin • April 1992 thereunder. Further, the commitments and conditions referenced in this order are conditions imposed in writing by the Board in connection with its findings and decision and m a y be enforced under applicable provisions of law. The acquisition of Valley Capital Corporation's subsidiary banks shall not be c o n s u m m a t e d before the thirtieth calendar day following the effective date of this Order, and no acquisition may be c o n s u m m a t e d later than three m o n t h s after the effective date of the order. This period m a y be e x t e n d e d for g o o d c a u s e by the Board or the Federal R e s e r v e Bank of San Franc i s c o , acting pursuant to delegated authority. B y order o f the Board of Governors, effective February 12, 1992. Voting for this action: Chairman Greenspan and Governors Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips. Associate JENNIFER J . JOHNSON Secretary of the Board Appendix B a n k A m e r i c a will acquire the following nonbank subsidiaries o f V a l l e y Capital: (a) Valley Capital Life Insurance C o . , Inc., and thereby engage in underwriting and reinsurance of credit life insurance and credit accident, health and u n e m p l o y m e n t insurance w h i c h is directly related to e x t e n s i o n s of credit b y Valley Bank pursuant to section 225.25(b)(8)(i) of the Board's Regulation Y . (b) V a l l e y Electronic S e r v i c e s , Inc., and thereby engage in providing electronic banking services by operating and servicing the automatic teller machines at affiliate bank branch locations; owning, operating and servicing terminals at off-site locations such as grocery stores, hotels and c a s i n o s throughout N e v a d a ; proc e s s i n g credit and debit card transactions; providing c o n n e c t i o n s to national and regional A T M networks, pursuant to section 225.25(b)(7) of Regulation Y . (c) Valley L e a s i n g C o m p a n y , Inc., and thereby engage in leveraged and non-leveraged leasing of personal property, including gaming equipment, furniture and fixtures, and industrial, high-tech and medical equipment, pursuant to s e c t i o n 225.25(b)(5) of Regulation Y. (d) Valley Mortgage C o m p a n y , Inc., and thereby engage in originating residential mortgage loans for resale in the s e c o n d a r y market, servicing such loans, making residential real estate construction loans, and servicing such loans for third parties, pursuant to section 225.25(b)(1) of Regulation Y . (e) Pacific Century Finance Company (dba Caliber Finance Company), and thereby engage in the financing of non-recourse automobile dealer installment sales contracts, pursuant to s e c t i o n 225.25(b)(1) of Regulation Y . (f) Caliber Premium C o m p a n y , and thereby engage in insurance premium financing pursuant to section 225.25(b)(1) of Regulation Y. Society Corporation Cleveland, Ohio Order Approving Company the Acquisition of a Bank Holding S o c i e t y Corporation, Cleveland, Ohio ( " S o c i e t y " ) , a bank holding c o m p a n y within the meaning o f the Bank Holding C o m p a n y A c t (the " B H C A c t " ) , has applied under section 3 of the B H C A c t (12 U . S . C . § 1842) to merge with Ameritrust Corporation, Cleveland, Ohio ("Ameritrust"), and thereby indirectly acquire Ameritrust C o m p a n y , N . A . , and Ameritrust D e v e l o p m e n t Bank, both of Cleveland, Ohio; Ameritrust Indiana Corporation, Elkhart, Indiana, and its subsidiary banks, Ameritrust National Bank Central Indiana, Indianapolis, Indiana; Ameritrust National Bank, Michiana (Elkhart), Elkhart, Indiana; Ameritrust N a tional Bank, Michiana (Sturgis), Sturgis, Michigan; and Ameritrust Bank, H o w a r d County, K o k o m o , Indiana. 1 Society also has applied under section 4(c)(8) of the B H C A c t to acquire the nonbanking subsidiaries of Ameritrust listed in the Appendix t o this Order. E a c h of these activities has been previously approved b y the Board. Society also has applied t o acquire Ameritrust International Corporation, Cleveland, Ohio, an inactive corporation that is chartered pursuant to section 25(a) of the Federal Reserve A c t (12 U . S . C . § 611 et seq.) ("Edge Act").2 N o t i c e of the applications, affording interested persons an opportunity to submit c o m m e n t s , has b e e n published (56 Federal Register 61,251 (1991)). T h e time for filing c o m m e n t s has expired, and the Board has considered the applications and all c o m m e n t s received in light of the factors set forth in s e c t i o n s 3(c) and 4 of the B H C Act. 1. In connection with this transaction, Ameritrust has granted Society an option to purchase up to 19.9 percent of the outstanding common stock of Ameritrust, and Society has applied to exercise the option if any of several preconditions occur. This option will become moot upon consummation of the Society application to acquire Ameritrust. 2. Ameritrust International has been inactive since 1986. Society has committed not to engage in any activities through it without obtaining prior Board approval. Legal Developments Douglas Amendment Section 3(d) of the B H C A c t , the Douglas Amendment, prohibits the Board from approving an application by a bank holding company to acquire any bank located outside of the bank holding company's h o m e state, unless such acquisition is "specifically authorized by the statute laws of the State in which [the] bank is located, by language to that effect and not merely by implication." 3 Society seeks to acquire bank subsidiaries of Ameritrust located in Indiana and Michigan. For purposes of the Douglas Amendment, the home state of Society is Ohio. 4 The Board previously has determined that the interstate banking statutes of Indiana permit the acquisition of Indiana banking organizations by Ohio banking organizations. 5 The Board also has determined that the Michigan interstate banking statute expressly authorizes the acquisition of a Michigan bank by an Ohio bank holding c o m p a n y . 6 Accordingly, Board approval of this proposal is not prohibited by the Douglas Amendment. H o w e v e r , approval of this proposal is conditioned upon Society receiving all required state regulatory approvals. Competitive, Financial, Considerations Managerial and the total deposits in commercial banking organizations in Michigan. 7 Society and Ameritrust compete directly in ten banking markets in Ohio and Indiana. 8 After considering the competition offered by thrift institutions, 9 the number of competitors remaining in the market, the increase in concentration, and the other facts of record, the Board has concluded that consummation of the proposal would not result in a significantly adverse effect on competition in the following banking markets: Akron, Canton, Cincinnati, Cleveland, Columbus and Youngstown-Warren in Ohio; and Elkhart-Niles-South Bend and Warsaw County in Indiana. Society has proposed divestitures to mitigate the anticompetitive effects of the proposed merger in the remaining banking markets of Ashtabula, Ohio, and Starke County, Indiana. 1 0 In the Ashtabula banking market, 11 Society is the largest of ten depository institutions, with $186.8 million in deposits, which represents approximately 25.1 percent of the total deposits in depository institutions in the market ("market deposits"). Ameritrust is the third largest depository institution in the market, with $132.8 million in deposits, which represents approxi- Supervisory U p o n consummation of the transaction, Society would become the largest banking organization in Ohio, controlling deposits of $16.5 billion, representing 18.3 percent of the deposits in commercial banking organizations in the state; the fourth largest banking organization in Indiana, controlling deposits of $2.8 billion, representing 6.0 percent of the deposits in commercial banking organizations in the state; and would remain the twelfth largest commercial banking organization in Michigan, controlling approximately $748.0 million in total deposits, representing approximately 1 percent of 3. 12 U.S.C. § 1842(d). 4. A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 5. Ind. Code § 28-2-15-18 (Supp. 1991). See Banc One Corporation,72 Federal Reserve Bulletin 422 (1986). 6. Michigan law authorizes acquisitions of Michigan banking organizations by out-of-state banking organizations on a national reciprocal basis, provided that the acquisition meets state safety and soundness considerations, and that it does not a£fect adversely the activities of any Michigan banking institution. Mich. Stat. Ann. § 23.710(130b) (1991). The Acting Commissioner of the State of Michigan Department of Commerce, Financial Institutions Bureau, has determined that Society's acquisition of Ameritrust's Michigan subsidiaries meets the requirements of section 130b of the Michigan Banking Code of 1969, as amended, Mich. Stat. Ann. § 23.710(130b) (1991), and that the acquisition is permissible, subject to approval by the Board. 303 7. State deposit data are as of September 30, 1991, and reflect all proposed divestitures. Market data are as of June 30, 1990. 8. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered highly concentrated. In such markets, the Department is likely to challenge a merger that increases the HHI by more than 50 points. The Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 9. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); First Union Corporation, 76 Federal Reserve Bulletin 83 (1990); Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989). Thus, the Board has regularly included thrift deposits in the calculation of market share on a 50 percent weighted basis. See e.g., First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991). In considering the competition offered by thrifts in all banking markets in this case, thrift deposits are weighted at 50 percent, unless otherwise noted. See e.g., Ames National Corporation, 78 Federal Reserve Bulletin 59 (1992); Fleet/Norstar Financial Group Inc., 77 Federal Reserve Bulletin 750 (1990). 10. In each market in which Society has committed to divest branch offices to mitigate possible anticompetitive effects of this acquisition, Society has executed agreements that require consummation of these divestitures within 180 days of consummation of the proposal. If Society is unsuccessful in divesting these branches within 180 days of consummation, Society has committed to transfer these branches to an independent trustee with instructions to sell these branches promptly. See e.g., United New Mexico Financial Corporation, 77 Federal Reserve Bulletin 484, 485 (1991); First Union Corporation, 76 Federal Reserve Bulletin 83 (1990). 11. The Ashtabula banking market is approximated by Ashtabula County, Ohio. 304 Federal Reserve Bulletin • April 1992 mately 17.9 percent of market deposits. Society has committed to divest four of the five Ameritrust branches in this market, representing approximately $105.0 million in market deposits, to a banking organization not currently operating in this market. With this divestiture, the number of competitors in the Ashtabula banking market will not change following consummation of this proposal, and the H H I in this market would increase by 81 points to 1850. 12 In the Starke County banking market, 1 3 Society is the second largest of five depository institutions, holding $43.5 million in deposits, which represents approximately 28.6 percent of the total market deposits. Ameritrust is the fifth largest depository institution in the market, with $6.9 million in deposits, which represents approximately 4.5 percent of market deposits. Society has committed to divest Ameritrust's single branch in this market to a banking organization not currently operating in this market. A s a result of this divestiture, the number of depository institutions in the Starke County banking market will not change following the consummation of the proposal, and the H H I in this market would remain unchanged. The Department of Justice ("Department") has indicated to the Board the Department's opinion that the proposal would have a significantly adverse competitive effect in Cuyahoga County and Lake County, Ohio. 1 4 The Department bases this conclusion on an analysis of the supply of and demand for credit to commercial customers, in particular small and medium-sized businesses, in these areas. The Department believes that the relevant product market for analyzing the competitive effects of this transaction is commercial loans other than commercial mortgage loans, and, that the relevant geographic markets consist of four counties, including Cuyahoga County and Lake County. The Department has stated its belief that the divestitures currently proposed by Applicant in Cuyahoga County do not appear to be sufficient to address the Department's concern regarding competition in that area. The Department has also indicated that it is continuing to discuss this matter with Applicant. For the reasons explained in previous decisions and based on the record in this case, the Board believes that competitive analysis of this acquisition proposal should be based on the availability of the cluster of 12. Following this proposed divestiture in the Ashtabula banking market, Society would remain the largest depository institution in the market, controlling approximately $214.6 million in deposits, representing approximately 28.9 percent of deposits in the market. 13. The Starke County banking market is approximated by Starke County, Indiana. 14. The Department has indicated that, after taking into account the divestitures proposed in other markets, the transaction would not raise competitive concerns in other relevant banking markets. banking services to a range of customers in the local banking market. 1 5 A recent study conducted by Board staff supports the conclusion that customers still seek to obtain this cluster of services. 1 6 Based on this product market definition, the Board believes that the relevant geographic market is the Cleveland banking market. 1 7 The Cleveland banking market is moderately concentrated, with 48 banking and thrift competitors in the market. Following consummation, the market would remain moderately concentrated with numerous competitors providing or poised to provide the cluster of banking products and services. 1 8 Furthermore, statistics relating to population per banking office, deposits per banking office, total banking assets and household income in the market, all indicate that Cleveland is an attractive market for entry. It is a major urban area, and includes the second largest city in Ohio. Seven banking organizations have entered the Cleveland banking market de novo since 1983, three of them in the last t w o years. In considering the views of the Department, the Board notes that the Department has not provided the Board with evidence to support the Department's conclusions regarding the definition of the product market in this case. The Board also notes that, assuming the product market is defined by non-real estate commercial lending to small businesses, the Department does not indicate that it has taken into account competition in these products from nonbanking institutions, including finance companies, or the degree to which a variety of banking and nonbanking competitors supply other products, such as home equity loans and credit card loans, that may be effective substitutes for the products identified by the Department. In light of the record before the Board, the Board believes that the appropriate product market is the cluster of banking products and services and the relevant geographic market is the Cleveland banking market as defined above. Based on all of the facts of record in this case, and subject to the divestiture proposals made by Society, the Board concludes that consummation of this pro- 15. See First Hawaiian, Inc., 77 Federal Reserve Bulletin 52 (1991); Fleet/Norstar Financial Group, Inc., 77 Federal Reserve Bulletin 750 (1991); and U.S. v. Philadelphia National Bank, 374 U.S. 321 (1963). 16. Elliehausen and Wolken, Banking Markets and the Use of Financial Services by Small- and Medium-Sized Businesses, 76 Federal Reserve Bulletin 726 (1990). 17. The Cleveland banking market is approximated by Cuyahoga, Geauga, Lake, and Lorain Counties, the northern third of Summit County, the northern two-thirds of Medina County, Aurora and Streetsboro townships in Portage County, and the City of Vermilion in Erie County, all in Ohio. 18. With thrift deposits weighted at 50 percent, Society would control 34.4 percent of the market deposits, and the HHI would increase by 568 points to 1699 in the Cleveland market upon consummation of the proposal. Legal Developments posal would not have a significantly adverse effect on competition or the concentration of banking resources in any relevant banking market. The Board has also sought comments from the Office of the Comptroller of the Currency ("OCC"), and the Federal Deposit Insurance Corporation ( " F D I C " ) on the competitive effects of this proposal. Neither the OCC nor the FDIC has provided any objection to consummation of this proposal or indicated that the proposal would have any significantly adverse competitive effects. Based on the entire record, the Board also concludes that the financial and managerial resources, future prospects of Society, its subsidiary banks, and Ameritrust, and the supervisory factors in this case, are consistent with approval of this proposal. 1 9 Convenience and Needs Considerations In analyzing the effect of this merger on the convenience and needs of the communities served by Society and Ameritrust, the Board has taken into account the record of the subsidiary banks of Society and Ameritrust under the Community Reinvestment Act (12 U . S . C . § 2901 et seq.) ("CRA"). The CRA requires the federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of the local communities in which they operate consistent with the safe and sound operation of such institutions. T o accomplish this end, the CRA requires the appropriate federal supervisory authority to "assess the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution", and to take that record into account in its evaluation of bank holding company applications. 2 0 In this regard, the Board has considered comments filed by several protestants ("Protestants") expressing concerns regarding the efforts by Society and Ameritrust to meet the credit needs of their entire communities, including low- and moderate-income neighborhoods primarily in Cleveland. 2 1 Some of the 19. The Board has considered comments filed after the close of the public comment period by two individuals involved in litigation alleging mismanagement of trust funds by a Society subsidiary bank. Under the Board's rules, the Board may in its discretion take into consideration the substance of such comments. 12 C.F.R. 262.3(e). The Board has reviewed these comments in light of all of the facts of record in this case, including recent examination reports of this bank's trust operations by this bank's primary regulator, and concludes that these comments do not reflect so adversely upon the managerial resources of Society as to warrant denial of these applications. 20. 12 U.S.C. § 2903. 21. These comments were submitted by the St. Clair-Superior Coalition ("SCSC"), Stockyard Area Development Association ("SADA"), Cleveland Coalition Against Plant Closings, all of Cleveland, Ohio, as well as two Cleveland City Councilmen. CA$H PLU$, 305 Protestants expressed concerns regarding the effect of the merger on local commercial lending and home mortgage availability, and alleged that the 1990 data available under the H o m e Mortgage Disclosure Act indicate that Society and Ameritrust have insufficient shares of the first mortgage home financing market. Protestants have also raised issues regarding possible branch closings that may result from the proposal. 2 2 The Board has carefully reviewed the CRA performance records of Society, Ameritrust, and their subsidiary banks, the comments and evidence presented in written submissions, and Society's responses to those comments, in light of the CRA, the Board's regulations, and the Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act ("Agency CRA Statement"). 2 3 The Agency CRA Statement provides guidance regarding the types of policies and procedures that the supervisory agencies believe financial institutions should have in place in order to fulfill their responsibilities under the CRA on an ongoing basis, and the procedures that the supervisory agencies will use during the application process to review an institution's CRA compliance and performance. The Agency CRA Statement explains that decisions to allow financial institutions to expand will be made pursuant to an analysis of the institution's overall CRA performance and will be based on the actual record of performance of the institution. 24 Initially, the Board notes that all of Society's five subsidiary banks have received an "outstanding" or "satisfactory" rating from their primary supervisors during the most recent examination of each bank's CRA performance, and all of Ameritrust's subsidiary banks received "satisfactory" ratings. 25 The Agency CRA Statement provides that a CRA examination is an important and often controlling factor in the consider- South Bend, Indiana, submitted comments which were withdrawn after discussions with Society. 22. Two Protestants that have received financing from Ameritrust Development Bank have questioned the future of this subsidiary under the proposal. Society has committed to retain a specialized financing affiliate dedicated to neighborhood development projects that will be capitalized at the same level as Society's current development affiliate and the Ameritrust Development Bank, and that will offer the same lending services and expertise that is currently available from these operations. 23. 54 Federal Register 13,742 (1989). 24. Id. 25. Society's banking subsidiaries have received the following CRA ratings: Society Bank, N . A . , Dayton, Ohio, and Society National Bank, Cleveland, Ohio, each received an "outstanding" rating in examinations conducted by the OCC, in September 1991 and October 1990 respectively; Society Bank and Trust, Toledo, Ohio, received an "outstanding" rating in September 1991, in an examination conducted by the Federal Reserve Bank of Cleveland; Society Bank, Indiana, South Bend, Indiana, and Society Bank of Michigan, Ann Arbor, Michigan, each received a "satisfactory" rating in examinations conducted by the FDIC, in May 1991 and September 1989, respectively. 306 Federal Reserve Bulletin • April 1992 ation of an institution's CRA record and that, although CRA examination reports do not provide conclusive evidence of an institution's CRA record, these reports will be given great weight in the applications process. 2 6 Society and its subsidiary banks have in place the type of policies outlined in the Agency CRA Statement that contribute to an effective CRA program. Society's corporate CRA policy sets out CRA-related goals for all its banks, and includes comprehensive community development programs in each of the states in which these banks currently operate. A review of the CRA records of Society's subsidiary banks indicates that these banks maintain regular contacts in the communities they serve in order to ascertain credit needs. They meet with members of minority groups and community organizations on a regular basis, and have corporate programs in place to evaluate the information received from those contacts. Society has advertising programs targeted at low-income and minority residents, including the use of news media that are targeted at minority communities, and marketing campaigns that are specifically aimed at low- to moderateincome borrowers. A s a result of these ascertainment efforts, Society has established special credit products for low- to moderate-income customers, such as its low- to moderate-income installment loan product. Society's subsidiary banks participate actively in governmentally-insured, guaranteed, and subsidized loan programs for housing and small business lending. Society participates in HomeAssist, which provides financing and grants to mortgage customers seeking downpayments for homes. The program includes counseling services to provide information and assistance to home buyers with a variety of credit and financial needs, budgeting, and reconciliation of budget issues. Society's HomeAssist program has more flexible credit underwriting requirements that permit more low- and moderate-income residents to obtain mortgages. Society National Bank, Cleveland, Ohio ("Bank"), has been actively engaged in mortgage lending in lowand moderate-income areas in Cleveland. The 1990 H M D A data for Bank indicates that Bank makes approximately t w o loans per thousand owner-occupied units in low- and moderate-income areas, compared to 1.3 in middle-income areas and 2.3 in high-income areas. Overall, 18.8 percent of the mortgage loans originated in Cleveland by Bank and 20.1 percent of its home improvement loans were originated in low-income owner-occupied neighborhoods. Owner-occupied housing in low- and moderate-income housing comprises only 14.9 percent of Cleveland's housing stock. 26. 54 Federal Register at 13,745. In addition, Bank recently entered into a Neighborhood Reinvestment Agreement ("Agreement") with the City of Cleveland to enhance further Bank's CRA program. 27 Under the Agreement, Bank has committed to a four-year, $260 million goal to increase home mortgage and home improvement lending in minority and low- and moderate-income neighborhoods in Cleveland. Bank also has made commitments to provide $20 million to fund the construction of new housing and $12 million for the purchase and rehabilitation of existing distressed housing in Cleveland, and to provide at least $100 million in new loans to small businesses over the next four years. Bank intends to work with the City of Cleveland to develop initiatives for large scale housing and community development programs. 2 8 The Agreement also provides for the maintenance of full-service branches in 23 Cleveland neighborhoods for five years, to give written notification to the mayor of any branch closings, and to follow its existing branch closing policy. The branch closing policy involves an evaluation of whether there are solutions which do not involve closing the branch; meetings with the affected community groups; attempts to have the branch remain open if the neighborhood will be left without banking services; and review by both an internal community committee and the full board of directors prior to closing any branch. On the basis of all the facts of record, including the comments received and relevant examination reports, the Board concludes that the convenience and needs considerations, including the CRA performance records of Society and Ameritrust, are consistent with approval of these applications. 2 9 27. In light of this Agreement, the mayor of Cleveland has endorsed the proposal. 28. Society also has made certain commitments to the City of Cleveland regarding job retention in the downtown area and job training and outplacement services for displaced employees; the maintenance of a leadership role for civic contributions and participation; the provision of checking accounts for a nominal fee and consulting services for certain marketing and research projects involving housing and lending patterns in Cleveland. 29. SCSC has requested that the Board hold a public hearing or meeting on these applications. Generally, under the Board's rules, the Board may, in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 U.S.C. § 262.3(e) and 262.25(d). The Board has carefully considered this request. In the Board's view, the parties have had ample opportunity to present written submissions, and the commenter requesting the public hearing or meeting has submitted written comments that have been considered by the Board. Further, SCSC has not identified facts that are material to the Board's decision and that are in dispute. In light of this, the Board has determined that a public meeting or hearing is not necessary to clarify the factual record in these applications, or otherwise warranted in this case. Accordingly, the request for a public meeting or hearing on these applications is denied. Legal Developments Acquisition of Nonbanking Companies S o c i e t y also has applied, pursuant t o s e c t i o n 4(c)(8) of the B H C A c t , t o acquire certain nonbanking subsidiaries o f Ameritrust. T h e Board has determined by regulation or order that e a c h of the activities of these c o m p a n i e s is c l o s e l y related t o banking under section 4(c)(8) of the B H C A c t , and generally permissible for bank holding c o m p a n i e s under section 4(c)(8) of the B H C A c t , and has approved applications by Ameritrust to o w n shares in e a c h o f these companies. S o c i e t y operates subsidiaries engaged in nonbanking activities that c o m p e t e with many o f Ameritrust's subsidiaries. In e a c h c a s e , the markets for these serv i c e s are unconcentrated and there are numerous providers of these services. In light of these factors and the shares of e a c h o f the markets controlled by S o c i e t y and Ameritrust, the Board c o n c l u d e s that c o n s u m m a t i o n o f this proposal would not have any significantly adverse effect o n competition in the provision of t h e s e services in any relevant market. Furthermore, the record d o e s not indicate that c o n s u m mation of this proposal is likely t o result in any significantly adverse effects such as undue concentration of r e s o u r c e s , decreased or unfair competition, conflicts o f interests, or unsound banking practices. Accordingly, the Board has determined that the bala n c e o f public interest factors it must consider under section 4(c)(8) of the B H C A c t is favorable and consistent with approval o f S o c i e t y ' s application to acquire the nonbanking subsidiaries of Ameritrust. In addition, after consideration o f all the factors specified in the Board's Regulation K and based upon all the facts o f record, the Board has determined that disapproval of S o c i e t y ' s investment in Ameritrust International Corporation is not warranted. B a s e d o n the foregoing and other facts of record, including the c o m m i t m e n t s made by S o c i e t y , the Board has determined that the applications should be, and hereby are, approved. The Board's approval of this proposal is specifically conditioned o n compliance b y S o c i e t y with the c o m m i t m e n t s made in c o n n e c t i o n with its application, including the c o m m i t m e n t s to divest certain bank offices and conditions discussed in this Order. T h e determination as t o the nonbanking activities approved in this c a s e is also subject to all of the conditions contained in Regulation Y , including t h o s e in s e c t i o n s 225.4(d) and 225.23(b)(3) (12 C . F . R . 225.4(d) and 225.23(b)(3)), and to the Board's authority t o require s u c h notification or termination of the activities o f a holding c o m p a n y or any of its subsidiaries as the Board finds n e c e s s a r y to assure compliance with, or t o prevent e v a s i o n of, the provisions and purposes o f the B H C A c t and the Board's regulations and orders i s s u e d thereunder. All of the c o m m i t m e n t s 307 and c o n d i t i o n s relied o n in reaching this d e c i s i o n in this c a s e are c o n d i t i o n s i m p o s e d in writing by the Board in c o n n e c t i o n with its findings and d e c i s i o n and m a y b e e n f o r c e d in p r o c e e d i n g s under applicable law. The acquisition of Ameritrust's banking subsidiaries shall not be c o n s u m m a t e d before the thirtieth calendar day following the effective date of this Order, and n o acquisitions may b e c o n s u m m a t e d later than three months following the effective date o f this Order, unless such period is e x t e n d e d for g o o d c a u s e by the Board or b y the Federal R e s e r v e Bank of Cleveland, acting pursuant to delegated authority. B y order of the Board of Governors, February 13, 1992. effective Voting for this action: Chairman Greenspan and Governors Mullins, Kelley, LaWare, Lindsey, and Phillips. Voting against this action: Governor Angell. Associate JENNIFER J . JOHNSON Secretary of the Board Appendix Nonbanking Subsidiaries Ameritrust Company of New York, N e w Y o r k , N e w York, and thereby engage in providing corporate trust services to the public pursuant t o § 225.25(b)(3) of the Board's Regulation Y ; Ameritrust Southeast, National Association, Tampa, Florida, and thereby engage in providing corporate and personal trust services to the public pursuant to § 225.25(b)(3) of the Board's Regulation Y ; Ameritrust Texas, National Association, Dallas, T e x a s , and thereby engage in providing corporate and personal trust s e r v i c e s to the public pursuant to § 225.25(b)(3) of the Board's Regulation Y ; Ameritrust Petroleum Corp., Dallas, T e x a s , and thereby engage in: (1) investment advisory s e r v i c e s in an a g e n c y capacity to the public pursuant to § 225.25(b)(4) of the Board's Regulation Y ; and (2) real estate appraisal services t o the public pursuant to § 225.25(b)(13) of the B o a r d ' s Regulation Y; Ameritrust Realty Corp., Dallas, T e x a s , and thereby engage in: (1) providing investment advisory s e r v i c e s to the public with respect to i n v e s t m e n t s in real estate pursuant t o § 225.25(b)(4) of the B o a r d ' s Regulation Y; 308 Federal Reserve Bulletin • April 1992 (2) providing real estate appraisal services to the public pursuant to § 225.25(b)(13) of the Board's Regulation Y; and (3) acting as an intermediary in arranging equity financing for commercial and industrial incomeproducing real estate pursuant to § 225.25(b)(14) of the Board's Regulation Y; Ameritrust Securities Corp., Dallas, Texas, and thereby engage in providing investment advisory services to the public, including the provision of portfolio investment advice both to unaffiliated corporate entities, endowment funds and foundations, and to individuals, pursuant to § 225.25(b)(4) of the Board's Regulation Y ; AT Investment Services Corporation, Cleveland, Ohio, and thereby engage in: (1) offering securities brokerage services to the public pursuant to § 225.25(b)(15) of the Board's Regulation Y , and (2) the purchase and sale of gold and silver bullion and gold coins for the accounts of its customers pursuant to Ameritrust Corp., 14 Federal Reserve Bulletin 341 (1988); First Indiana Life Insurance, Elkhart, Indiana, and thereby engage, as a reinsurer, in underwriting life insurance and accident and health insurance written in connection with extensions of credit by affiliate banks pursuant to § 225.25(b)(8)(i) of the Board's Regulation Y; and Lake Life Insurance Company, Cleveland, Ohio, and thereby engage, as a reinsurer, in underwriting life insurance and accident and health insurance written in connection with extensions of credit by affiliate banks pursuant to § 225.25(b)(8)(i) of the Board's Regulation Y. of Society has also applied pursuant to section 4(c)(8) the Bank Holding Company Act (12 U . S . C . § 1843(c)(8)) to acquire the following companies that are inactive: AT Acceptance Corp., Cleveland, Ohio — purchasing and selling installment loan contracts from automobile dealers and making other extensions of credit to finance consumer purchases; and AT Financial Corp., Cleveland, Ohio—making, acquiring and servicing loans; and ATEK Check Printing Company, Cleveland, Ohio — providing checks and related documents to financial institutions; and Franklin Financial Corporation, Indianapolis, Indiana — mortgage loan servicing activities for its Ameritrust National Bank, Central Indiana, and in servicing commercial lines of credit for unaffiliated financial institutions. Dissenting Statement of Governor Angell I dissent from the Board's action in this case. A s I have indicated in previous cases, I believe that the structural measures used by the Board in analyzing bank acquisition proposals do not accurately reflect the competitive effects of these proposals. In particular, I believe that these measures do not adequately account for the effect of these acquisitions on the availability and pricing of credit to small businesses. I believe that the Board should focus particular attention on this aspect of the cluster of banking services in conducting its analysis of the competitive effects of bank acquisitions. In this case, I agree with the conclusion expressed by the Department of Justice that this acquisition would have a significantly adverse effect on competition in the market for small business lending in these areas. February 13, 1992 Legal Developments 309 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 4 Southern National Corporation, Lumberton, North Carolina Trans Financial Bancorp, Inc. Bowling Green, Kentucky Effective Date Bank(s) Applicant(s) Workmen's Bancorp, Inc., Mount Airy, North Carolina First Federal Savings Bank of Tennessee, Tullahoma, Tennessee Maury Federal Savings Bank, Columbia, Tennessee February 19, 1992 February 21, 1992 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) American Interstate Bancorporation, Inc., Omaha, Nebraska CBS Bancshares, Inc., Spencer, Tennessee Community First Bankshares, Inc., Fargo, North Dakota First Autauga Bancshares, Inc., Montgomery, Alabama Galatia Bancorp, Inc., Galatia, Illinois Investors Banking Corporation, Portland, Oregon KLT Bancshares, Inc., Farley, Missouri Reserve Bank Bank(s) American Interstate Bancorporation, Inc., Omaha, Nebraska First State Bank, Maynardville, Tennessee First Interstate of North Dakota, Inc., Fargo, North Dakota Cee Bee Corporation, Prattville, Alabama The First National Bank of Metropolis, Metropolis, Illinois Colonial Banking Company, Grants Pass, Oregon Farley Bancshares, Inc., Farley, Missouri Effective Date Chicago February 7, 1992 Atlanta February 11, 1992 Minneapolis February 20, 1992 Atlanta February 12, 1992 St. Louis February 7, 1992 San Francisco February 13, 1992 Kansas City February 12, 1992 310 Federal Reserve Bulletin • April 1992 Section 3—Continued Applicant(s) Mahoning National Bancorp, Inc., Youngstown, Ohio Mason-Dixon Bancshares, Inc., Westminster, Maryland Ohio County Community Bancshares, Inc., Hartford, Kentucky United Nebraska Financial Company, Grand Island, Nebraska Wilton Holding Company, Wilton, North Dakota Bank(s) The Mahoning National Bank of Youngstown, Youngstown, Ohio Carroll County Bank and Trust Company, Westminster, Maryland The Hartford Bank and Trust Company, Hartford, Kentucky Citizens Bank & Trust Company, Columbus, Nebraska First State Bank of Wilton, Wilton, North Dakota Reserve Bank Effective Date Cleveland February 6, 1992 Richmond February 6, 1992 St. Louis February 18, 1992 Kansas City February 7, 1992 Minneapolis February 5, 1992 Section 4 Applicant(s) Banc One Corporation, Columbus, Ohio Banc One Mortgage Corporation, Indianapolis, Indiana First Community Bancshares, Inc., Knob Noster, Missouri First Union Corporation, Charlotte, North Carolina National City Corporation, Cleveland, Ohio Nonbanking Activity/Company Reserve Bank Effective Date Diamond Mortgage Corporation, Findlay, Ohio Cleveland February 7, 1992 Bancshares of Knob Noster, Inc., Knob Noster, Missouri Ionia Bancshares, Inc., Windsor, Missouri Sweet Springs Bancshares, Inc., Sweet Springs, Missouri M&M Financial, Inc., Austell, Georgia B & L Consultants, Inc., Norwood, Massachusetts Kansas City February 20, 1992 Richmond February 7, 1992 Cleveland February 14, 1992 Legal Developments 311 Sections 3 and 4 Applicant(s) Johnson Holdings, Inc., Isanti, Minnesota Mahaska Investment Company ESOP, Oskaloosa, Iowa Reserve Bank Bank(s) First State Bank of Isanti, Isanti, Minnesota Isanti Agency, Inc., Isanti, Minnesota Mahaska Investment Company, Oskaloosa, Iowa Effective Date Minneapolis February 14, 1992 Chicago February 5, 1992 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. .. A Apphcant(s) Chemical Bank, N e w York, N e w York r» w x Bank(s) Reserve Bank Anchor Savings Bank, F.S.B., Hewlett, N e w York N e w York Effective Date February 5, 1992 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party. Davis v. Board of Governors, No. 91-6972 (Supreme Court, filed December 4, 1991). Petition for certiorari seeking review of Burke v. Board of Governors, 940 F.2d 1360 (10th Cir. 1991), in which the court of appeals upheld Board orders assessing civil money penalties and issuing orders of prohibition. In re Subpoena Served on the Board of Governors, N o s . 91-5427, 91-5428 (D.C. Cir., filed December 27, 1991). Appeal of order of district court, dated December 3, 1991, requiring the Board and the Office of the Comptroller of the Currency to produce confidential examination material to a private litigant. The court of appeals stayed the district court order on January 7, 1992, and will hear oral argument on the case on March 17, 1992. Greenberg v. Board of Governors, N o . 91-4200 (2d Cir., filed December 4, 1991). Petition for review of orders of prohibition issued by the Board on October 28, 1991. Oral argument is scheduled for the week of April 13, 1992. First Interstate BancSystem of Montana, Inc. v. Board of Governors, No. 91-1525 (D.C. Cir., filed November 1, 1991). Petition for review of Board's order denying on Community Reinvestment Act grounds the petitioner's application under section 3 of the Bank Holding Company Act to merge with Commerce BancShares of Wyoming, Inc. The case is pending. Board of Governors v. Kemal Shoaib, N o . CV 91-5152 (C.D. California, filed September 24, 1991). Action to freeze assets of individual pending administrative adjudication of civil money penalty assessment by the Board. On October 15, the court issued a preliminary injunction restraining the transfer or disposition of the individual's assets. 312 Federal Reserve Bulletin • April 1992 Board of Governors v. Ghaith R. Pharaon, N o . 91CIV-6250 (S.D. N e w York, filed September 17, 1991). Action to freeze assets of individual pending administrative adjudication of civil money penalty assessment by the Board. On September 17, the court issued an order temporarily restraining the transfer or disposition of the individual's assets. In re Smouha, N o . 91-B-13569 (Bkr. S.D. N e w York, filed August 2, 1991). Ancillary proceeding under the U . S . Bankruptcy Code brought by provisional liquidators of BCCI Holdings (Luxembourg) S.A. and affiliated companies. On August 15, 1991, the bankruptcy court issued a temporary restraining order staying certain judicial and administrative actions, which has been continued by consent. Hanson v. Greenspan, N o . 91-1599 ( D . D . C . , filed June 28, 1991). Suit for return of funds and financial instruments allegedly owned by plaintiffs. The Board's motion to dismiss was granted on December 6, 1991. Fields v. Board of Governors, N o . 3:91CV069 ( N . D . Ohio, filed February 5, 1991). Appeal of denial of request for information under the Freedom of Information Act. Citicorp v. Board of Governors, N o . 9 0 - 4 1 2 4 (2d Circuit, filed October 4, 1990). Petition for review of Board order requiring Citicorp to terminate certain insurance activities conducted pursuant to Delaware law by an indirect nonbank subsidiary. On June 10, 1991, the court of appeals granted the petition and vacated the Board's order. On January 13, 1992, the Supreme Court denied the petition for certiorari filed by the Independent Insurance Agents of America and others. Synovus Financial Corp. v. Board of Governors, No. 89-1394 (D.C.Circuit, filed June 21, 1989). Petition for review of Board order permitting relocation of a bank holding company's national bank subsidiary from Alabama to Georgia. On December 20, 1991, the Court of Appeals vacated the Board's order, ruling that the Board has no authority over interstate relocations of national banks. Synovus's petition for rehearing is pending. No. CA3-88-2693 MCorp v. Board of Governors, ( N . D . Texas, filed October 10, 1988). Application for injunction to set aside temporary cease and desist orders. The case is pending. 1 Financial and Business Statistics CONTENTS WEEKLY REPORTING A3 Guide to Tabular Presentation Assets and liabilities A20 All reporting banks A22 Branches and agencies of foreign banks Domestic Financial Statistics MONEY STOCK AND BANK A4 A5 A6 A7 CREDIT Reserves, money stock, liquid assets, and debt measures Reserves of depository institutions, Reserve Bank credit Reserves and borrowings—Depository institutions Selected borrowings in immediately available funds—Large member banks POLICY INSTRUMENTS BANKS A l l Condition and Federal Reserve note statements A12 Maturity distribution of loan and security holdings MONETARY AND CREDIT BANKING INSTITUTIONS A18 Major nondeposit funds A19 Assets and liabilities, last-Wednesday-of-month series MARKETS FINANCE A26 A27 A28 A28 Federal fiscal and financing operations U.S. budget receipts and outlays Federal debt subject to statutory limitation Gross public debt of U.S. Treasury—Types and ownership A29 U.S. government securities dealers—Transactions A30 U.S. government securities dealers—Positions and financing A31 Federal and federally sponsored credit agencies—Debt outstanding AGGREGATES A13 Aggregate reserves of depository institutions and monetary base A14 Money stock, liquid assets, and debt measures A16 Bank debits and deposit turnover A17 Loans and securities—All commercial banks COMMERCIAL BANKS A23 Commercial paper and bankers dollar acceptances outstanding A23 Prime rate charged by banks on short-term business loans A24 Interest rates—money and capital markets A25 Stock market—Selected statistics A26 Selected financial institutions—Selected assets and liabilities FEDERAL A8 Federal Reserve Bank interest rates A9 Reserve requirements of depository institutions A10 Federal Reserve open market transactions FEDERAL RESERVE FINANCIAL COMMERCIAL SECURITIES MARKETS AND CORPORATE FINANCE A32 New security issues—State and local governments and corporations A3 3 Open-end investment companies—Net sales and asset position A33 Corporate profits and their distribution A33 Total nonfarm business expenditures on new plant and equipment A34 Domestic finance companies—Assets and liabilities and business credit A2 Federal Reserve Bulletin • April 1992 Domestic Financial Statistics—Continued REAL ESTATE A35 Mortgage markets A36 Mortgage debt outstanding CONSUMER INSTALLMENT CREDIT A37 Total outstanding and net change A3 8 Terms FLOW OF FUNDS A39 Funds raised in U.S. credit markets A41 Direct and indirect sources of funds to credit markets A42 Summary of credit market debt outstanding A43 Summary of credit market claims, by holder Domestic Nonfinancial Statistics SELECTED A54 U.S. reserve assets A54 Foreign official assets held at Federal Reserve Banks A55 Foreign branches of U.S. banks—Balance sheet data A57 Selected U.S. liabilities to foreign official institutions MEASURES A44 Nonfinancial business activity—Selected measures A45 Labor force, employment, and unemployment A46 Output, capacity, and capacity utilization A47 Industrial production—Indexes and gross value A49 Housing and construction A50 Consumer and producer prices A51 Gross domestic product and income A52 Personal income and saving REPORTED BY BANKS IN THE UNITED STATES A57 A58 A60 A61 Liabilities to and claims on foreigners Liabilities to foreigners Banks' own claims on foreigners Banks' own and domestic customers' claims on foreigners A61 Banks' own claims on unaffiliated foreigners A62 Claims on foreign countries—Combined domestic offices and foreign branches REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES A63 Liabilities to unaffiliated foreigners A64 Claims on unaffiliated foreigners SECURITIES HOLDINGS AND A65 Foreign transactions in securities A66 Marketable U.S. Treasury bonds and notes—Foreign transactions INTEREST AND EXCHANGE International Statistics SUMMARY STATISTICS A53 U.S. international transactions—Summary A54 U.S. foreign trade TRANSACTIONS RATES A67 Discount rates of foreign central banks A67 Foreign short-term interest rates A68 Foreign exchange rates A69 Guide to Statistical Releases and Special Tables 3 Guide to Tabular Presentation SYMBOLS AND ABBREVIATIONS c e P r * 0 ATS CD CMO FFB FHA FHLBB FHLMC FmHA FNMA FSLIC G-7 G-10 GNMA Corrected Estimated Preliminary Revised (Notation appears on column heading when about half of the figures in that column are changed.) Amounts insignificant in terms of the last decimal place shown in the table (for example, less than 500,000 when the smallest unit given is millions) Calculated to be zero Cell not applicable Automatic transfer service Certificate of deposit Collateralized mortgage obligation Federal Financing Bank Federal Housing Administration Federal Home Loan Bank Board Federal Home Loan Mortgage Corporation Farmers Home Administration Federal National Mortgage Association Federal Savings and Loan Insurance Corporation Group of Seven Group of Ten Government National Mortgage Association GNP HUD IMF IO IPCs IRA MMDA n.a. n.e.c. NOW OCD OPEC OTS PO REIT REMIC RP RTC SAIF SCO SDR SMSA VA Gross national product Department of Housing and Urban Development International Monetary Fund Interest only Individuals, partnerships, and corporations Individual retirement account Money market deposit account Not available Not elsewhere classified Negotiable order of withdrawal Other checkable deposit Organization of Petroleum Exporting Countries Office of Thrift Supervision Principal only Real estate investment trust Real estate mortgage investment conduit Repurchase agreement Resolution Trust Corporation Savings Association Insurance Fund Securitized credit obligation Special drawing right Standard metropolitan statistical area Veterans Administration GENERAL INFORMATION In some of the tables, details do not add to totals because of rounding. Minus signs are used to indicate (1) a decrease, (2) a negative figure, or (3) an outflow. "U.S. government securities" may include guaranteed issues of U.S. government agencies (the flow of funds figures also include not fully guaranteed issues) as well as direct obligations of the Treasury. "State and local government" also includes municipalities, special districts, and other political subdivisions. A4 DomesticNonfinancialStatistics • April 1992 1.10 RESERVES, M O N E Y STOCK, LIQUID ASSETS, A N D DEBT MEASURES Percent annual rate of change, seasonally adjusted 1 1991r 1991r 1992 Monetary and credit aggregate Q1 Q2 Q3 Q4 Sept. Oct. Nov. Dec. Jan. institutions2 1 2 3 4 Reserves of depository Total Required Nonborrowed Monetary base 3 5 6 7 8 9 Concepts of money, liquid assets, and debt4 Ml M2 M3 L Debt 9.1 4.5 8.9 13.3 3.0 8.9 3.4 4.2 7.4 7.9 4.3 6.6 15.3 15.5 19.3 8.4 6.2 10.1 9.1 6.9 15.7 12.3 25.0 9.2 20.3 25.3 24.0 8.2 24.1 22.5 22.2 7.8 13.7 13.4 12.9 9.1 5.2 3.5 3.3 2.8 4.5 7.4 4.3 1.8 -1.8 4.0 7.5 1.1 -1.2 1.1 4.9 11.1 3.3 1.2 .5 5.2 7.6 1.6 -.8 -1.8 5.2 12.2 4.3 2.1 2.0 5.6 14.3 4.9 2.6 2.5 5.5 9.0 2.7 1.2 -2.2 3.7 16.7 3.5 1.6 n.a. n.a. 2.9 2.8 3.3 -8.9 -1.0 -11.0 .7 -8.2 -.4 -11.9 1.5 -7.7 1.7 -8.3 .5 -5.9 -1.2 -7.4 8.1 9.4 6.5 13.1 .4 -1.9 13.3 3.3 -10.4 16.2 -4.8 -20.5 12.4 -.6 -17.1 17.2 -1.2 -33.5 18.0 -15.0 -18.2 17.4 -15.6 -10.4 20.0 -21.9 -27.1 -.4 -10.8 -32.4 16.7 -14.1 -34.9 9.8 -24.2 -40.4 10.3 -21.3 -37.4 6.3 -19.2 -40.9 12.1 -23.7 -42.4 13.0 -18.7 -31.6 14.1 -19.0 -28.2 24.5 -23.9 -24.5 Money market mutual funds 18 General purpose and broker-dealer 19 Institution-only 16.9 43.0 7.6 28.8 -3.6 11.4 -3.2 37.2 -5.3 30.3 -.7 41.3 -1.0 38.5 .3 38.0 -2.7 22.1 Debt components4 20 21 Nonfederal 10.4 2.7 6.8 3.1 13.8 2.1 12.4 3.0 12.4 2.8 13.6 3.1 11.2 3.6 7.6 2.5 n.a. n.a. Nontransaction 10 In M2 11 In M3 only 6 components Time and savings deposits Commercial banks Savings, including MMDAs Small time Large time • Thrift institutions 15 Savings, including MMDAs 16 Small time 17 Large time8, 12 13 14 1. Unless otherwise noted, rates of change are calculated from average amounts outstanding during preceding month or quarter. 2. Figures incorporate adjustments for discontinuities associated with regulatory changes in reserve requirements. (See also table 1.20.) 3. Seasonally adjusted, break-adjusted monetary base consists of (1) seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency component of the money stock, plus (3) (for all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters 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 requirements. 4. Composition of the money stock measures and debt is as follows: Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) travelers checks of nonbank issuers; (3) demand deposits at all commercial banks other than those due to depository institutions, the U.S. government, and foreign banks and official institutions, less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted Ml is computed by summing currency, travelers checks, demand deposits, and OCDs, each seasonally adjusted separately. M2: Ml plus (1) overnight (and continuing-contract) repurchase agreements (RPs) issued by all depository institutions and overnight Eurodollars issued to U.S. residents by foreign branches of U.S. banks worldwide, (2) savings and small time deposits (time deposits—including retail repurchase agreements (RPs)—in amounts of less than $100,000), and (3) balances in both taxable and tax-exempt general-purpose and broker-dealer money market funds. Excludes individual retirement accounts (IRAs) and Keogh balances at depository institutions and money market funds. Also excludes all balances held by U.S. commercial banks, money market funds (general purpose and broker-dealer), foreign governments and commercial banks, and the U.S. government. Seasonally adjusted M2 is computed by adjusting its non-Mi component as a whole and then adding this result to seasonally adjusted Ml. M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of $100,000 or more) issued by all depository institutions, (2) term Eurodollars held by U.S. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom and Canada, and (3) balances in both taxable and tax-exempt, institution-only money market funds. Excludes amounts held by depository institutions, the U.S. government, money market funds, and foreign banks and official institutions. Also excluded is the estimated amount of overnight RPs and Eurodollars held by institution-only money market funds. Seasonally adjusted M3 is computed by adjusting its non-M2 component as a whole and then adding this result to seasonally adjusted M2. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury securities, commercial paper, and bankers acceptances, net of money market fund holdings of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted separately, and then adding this result to M3. Debt: Debt of domestic nonfinancial sectors consists of outstanding creditmarket debt of the U.S. government, state and local governments, and private nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers acceptances, and other debt instruments. Data are derived from the Federal Reserve Board's flow of funds accounts. Data on debt of domestic nonfinancial sectors are monthly averages, derived by averaging adjacent month-end levels. Growth rates for debt reflect adjustments for discontinuities over time in the levels of debt presented in other tables. 5. Sum of (1) overnight RPs and Eurodollars, (2) money market fund balances (general purpose and broker-dealer), (3) MMDAs, and (4) savings and small time deposits. 6. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. residents, and (4) money market fund balances (institution-only), less (5) a consolidation adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market funds. This sum is seasonally adjusted as a whole. 7. Small time deposits—including retail RPs—are those issued in amounts of less than $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions are subtracted from small time deposits. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those booked at international banking facilities. 9. Large time deposits at commercial banks less those held by money market funds, depository institutions, and foreign banks and official institutions. Money Stock and Bank Credit 1.11 RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE BANK CREDIT A5 1 Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending 1991 1992 Nov. Dec. Jan. Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 1 Reserve Bank credit outstanding U.S. government securities 2 Bought outright-system account 3 Held under repurchase agreements . . . Federal agency obligations Bought outright 4 5 Held under repurchase agreements . . . 6 Acceptances Loans to depository institutions 7 Adjustment credit 8 Seasonal credit 9 Extended credit 10 Float 11 Other Federal Reserve assets 300,929 312,013 307,590 306,457 314,947 320,626 312,035 307,108 306,410 261,764 1,004 266,743 4,993 264,753 1,489 266,780 0 266,439 7,754 265,519 13,842 266,736 3,335 265,888 0 264,615 562 6,130 15 0 6,081 6,005 32 0 6,090 0 0 6,090 273 0 6,045 419 0 6,045 33 0 6,015 0 0 6,001 144 0 18 86 1 635 31,276 84 39 1 845 33,084 279 16 1 797 34,219 12 42 1 765 32,767 137 39 1 730 33,483 141 27 1 666 33,965 857 16 0 935 34,078 47 10 0 971 34,176 199 15 0 808 34,199 12 Gold stock 13 Special drawing rights certificate account . 14 Treasury currency outstanding 11,059 10,018 20,965 11,058 11,058 11,058 11,058 10,018 10,018 10,018 21,008 10,018 10,018 10,018 21,039 10,018 21,000 10,018 21,001 21,017 21,031 21,045 21.059 299,098 633 304,649 632 303,218 666 303,668 630 305,668 632 307,623 633 306,786 637 303,847 674 301,959 677 5,731 209 7,816 284 7,180 369 5,838 217 9,723 295 13,005 520 6,147 453 5,455 389 6,072 291 3,456 220 4,140 268 4,332 262 4,372 223 4,249 214 4,109 654 4,124 183 4,204 238 4,321 216 Jan. 29 SUPPLYING RESERVE FUNDS 11,058 11,058 11,058 12 0 11.058 ABSORBING RESERVE FUNDS 15 Currency in circulation 16 Treasury cash holdings Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 18 Foreign 19 Service-related balances and adjustments 20 Other 21 Other Federal Reserve liabilities and capital 22 Reserve balances with Federal Reserve Banks 8,580 9,204 8,440 8,709 8,849 8,593 8,277 8,592 8,538 24,785 27,098 25,238 24,875 27,403 27,582 27,535 25,831 26,471 Wednesday figures End-of-month figures Nov. 1991 1992 1991 Dec. Jan. Dec. 18 1992 Dec. 25 Jan. Jan. 22 Jan. 8 Jan. 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding U.S. government securities 2 2 Bought outright-system account 3 Held under repurchase agreements . . . Federal agency obligations 4 Bought outright 5 Held under repurchase agreements . . . 6 Acceptances Loans to depository institutions 7 Adjustment credit 8 Seasonal credit 9 Extended credit 10 Float 11 Other Federal Reserve assets 12 Gold stock 13 Special drawing rights certificate account . 14 Treasury currency outstanding 304,408 323,906 306,533 308,118 317,319 324,100 313,432 306,589 312,057 265,212 0 266,486 15,345 262,619 3,529 268,084 0 265,932 10,002 266,486 15,345 266,189 0 264,909 0 265,146 3,932 6,090 0 0 6,045 553 0 5,960 135 0 6,090 0 0 6,090 400 0 6,045 553 0 6,045 0 0 6,011 0 0 5,976 83 0 59 45 1 660 32,341 194 23 1 731 34,529 21 3 198 33,980 14 45 2 1,144 32,740 153 28 1 975 33,738 194 23 1 997 34,456 5,459 14 0 1,071 34,655 174 10 0 1,508 33,977 1,142 17 0 1,140 34,622 11,058 11,059 10,018 10,018 10,018 10,018 21,000 10,018 21,008 10,018 21,017 21,060 10,018 20,996 21,017 21,031 21,045 21.059 301,830 636 307,759 636 299,879 684 304,446 631 306,619 634 307,759 636 305,587 673 302,964 677 301,709 677 6,317 346 17,697 968 10,828 321 7,494 235 9,834 268 17,697 968 6,262 224 5,002 406 9,163 307 4,033 221 4,118 1,706 4,560 251 4,372 219 4,249 200 4,109 1,706 ,124 144 4,204 207 4,321 201 11,058 11,059 11,058 10,018 11,058 10,018 11,058 11,058 11.058 ABSORBING RESERVE FUNDS 15 Currency in circulation 16 Treasury cash holdings Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 18 Foreign 19 Service-related balances and adjustments 20 Other 21 Other Federal Reserve liabilities and capital 22 Reserve balances with Federal Reserve Banks 10,156 8,113 7,629 8,391 8,961 8,113 8,427 8,248 8,383 22,942 25,004 24,516 24,405 28,639 25,207 30,097 27,002 29,432 1. For amounts of cash held as reserves, see table 1.12. Components may not sum to totals because of rounding. 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged with Federal Reserve Banks—and excludes any securities sold and scheduled to be bought back under matched sale-purchase transactions. 3. Excludes required clearing balances and adjustments to compensate for float, A6 DomesticNonfinancialStatistics • April 1992 1.12 RESERVES A N D BORROWINGS Depository Institutions 1 Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1 2 3 4 5 6 7 8 9 10 Reserve balances with Reserve Banks Total vault cash' Applied vault cash Surplus vault cash Total reserves 6 Required reserves Excess reserve balances at Reserve Banks 7 . . . Total borrowings at Reserve Banks 8 Seasonal borrowings Extended credit 1989 1990 1991 Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Jan. 35,436 29,828r 27,374 2,454r 62,810 61,887 923 265 84 20 30,237 31,786r 28,884 2,903r 59,120 57,456 1,664 326 76 23 26,659r 32,513 28,872 3,641 55,532 54,553rr 979 192 38 1 23,271 31,317r 27,389 3,928r 50,660 49,754 906 607 317 46 22,810 31,779 27,798 3,981 50,607 49,521 1,086 764 331 300 23,447 31,536r 27,680 3,856r 51,127 50,198 929 645 287 302 23,197 32,299* 28,386 3,913r 51,584 50,501 1,083 261 211 12 25,004 31,714r 28,053 3,661r 53,057 52,165 892 108 86 1 26,659" 32,513 28,872 3,641 55,532 54,553r 9791 192 38 1 25,416 34,136 30,397 3,739 55,813 54,809 1,004 233 17 1 1991 1992 Biweekly averages of daily figures for weeks ending 1992 1 2 3 4 5 6 7 8 9 10 Reserve balances with Reserve Banks Total vault cash 3 Applied vault cash Surplus vault cash 5 Total reserves 6 Required reserves Excess reserve balances at Reserve Banks . . . Total borrowings at Reserve Banks 8 Seasonal borrowings Extended credit Oct. 16 Oct. 30 Nov. 13 23,418 32,330r 28,506 3,824r 51,924 50,908 1,016 290 228 7 22,980 32,376r 28,377 3,999r 51,357 50,191 1,167 225 191 14 25,494 30,844r 27,326 3,518r 52,820 51,907 913 114 98 2 1. Data in this table also appear in the Board's H.3 (502) weekly statistical release. For ordering address, see inside front cover. Components may not sum to totals because of rounding. 2. Excludes required clearing balances and adjustments to compensate for float and includes other off-balance-sheet " a s - o f ' adjustments. 3. Total "lagged" vault cash held by depository institutions subject to reserve requirements. Dates refer to the maintenance periods during which the vault cash can be used to satisfy reserve requirements. Under contemporaneous reserve requirements, maintenance periods end thirty days after the lagged computation periods during which the balances are held. 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" 24,155 32,656r 28,825 3,832r 52,979 52,045 934 103 84 2 26,839 31,093 27,607 3,486 54,446 53,842 605 110 45 1 Dec. 25 Jan. 8 r Jan. 22 Feb. 5 26,133 33,284 29,554 3,730 55,687 54,484 1,203 116 41 1 27,557 33,318 29,601 3,717 57,158 56,020 1,138 521 22 1 26,147 33,157 29,732 3,425 55,879 54,966 913 136 13 0 22,375 36,386 32,139 4,248 54,514 53,487 1,027 130 20 2 institutions (that is, those whose vault cash exceeds their required reserves) to satisfy current reserve requirements. 5. Total vault cash (line 2) less applied vault cash (line 3). 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash (line 3). 7. Total reserves (line 5) less required reserves (line 6). 8. Also includes adjustment credit. 9. Extended credit consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions deal with sustained liquidity pressures. Because there is not the same need to repay such borrowing promptly as there is with traditional short-term adjustment credit, the money market impact of extended credit is similar to that of nonborrowed reserves. Money Stock and Bank Credit 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE F U N D S A7 Large Banks 1 Millions of dollars, averages of daily figures 1991, week ending Monday Source and maturity 1 2 3 4 Federal funds purchased, repurchase agreements, and other selected borrowings From commercial banks in the United States For one day or under continuing contract For all other maturities From other depository institutions, foreign banks and official institutions, and U.S. government agencies For one day or under continuing contract For all other maturities Sept. 30 Oct. 7 Oct. 14 Oct. 21 Oct. 28 Nov. 4 Nov. 11 Nov. 18 Nov. 25 77,654 15,270 83,101 14,569 80,744 15,267 81,028 14,915 75,541 15,471 83,958 15,872 81,717 17,536 84,312 17,012 75,936 16,947 22,030 20,396 22,966 20,656 23,064 21,336 23,249 20,191 20,383 19,280 23,901 19,582 20,765 20,136 22,199 21,513 22,555 21,466 Repurchase agreements on U.S. government and federal agency securities Brokers and nonbank dealers in securities For one day or under continuing contract For all other maturities All other customers For one day or under continuing contract For all other maturities 9,336 16,165 10,461 15,961 11,663 16,349 12,207 16,663 11,351 17,566 12,629 17,475 11,676 16,688 13,553 15,085 12,668 15,264 25,459 11,520 25,618 11,028 25,484 11,554 24,372 11,231 24,265 11,824 25,174 11,634 23,862 11,329 24,154 10,991 24,608 11,232 MEMO: Federal funds loans and resale agreements in immediately available funds in maturities of one day or under continuing contract 9 To commercial banks in the United States 10 To all other specified customers 47,539 18,343 47,607 19,356 42,467 17,774 46,359 16,985 40,334 16,747 49,190 21,939 46,558 19,883 49,708 20,659 40,723 19,686 5 6 7 8 1. Banks with assets of $4 billion or more as of Dec. 31, 1988. Data in this table also appear in the Board's H.5 (507) weekly statistical release. For ordering address, see inside front cover. 2. Brokers and nonbank dealers in securities, other depository institutions, foreign banks and official institutions, and U.S. government agencies. A8 DomesticNonfinancialStatistics • April 1992 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Adjustment credit1 Federal Reserve Bank Boston New York Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City, Dallas San Francisco . . . Seasonal credit2 On 2/28/92 Effective date Previous rate On 2/28/92 3.5 12/20/91 12/20/91 12/20/91 12/20/91 12/20/91 12/20/91 12/20/91 4.5 4.05 12/24/91 12/23/91 12/20/91 12/20/91 12/20/91 3.5 4.5 4.05 Extended credit3 Effective date Previous rate On 2/28/92 Effective date Previous rate 2/20/92 2/20/92 2/20/92 2/20/92 2/20/92 2/20/92 2/20/92 4.10 4.55 2/20/92 2/20/92 2/20/92 2/20/92 2/20/92 2/20/92 2/20/92 4.60 2/20/92 2/20/92 2/20/92 2/20/92 2/20/92 4.10 4.55 2/20/92 2/20/92 2/20/92 2/20/92 2/20/92 4.60 Range of rates for adjustment credit in recent years 4 Effective date In effect Dec. 31, 1977. 1978—Jan. 9 20 May 11 12 July 3 10 Aug. 21 Sept. 22 Oct. 16 20 Nov. 1 3 1979—July 20 Aug. 17 20 Sept. 19 21 Oct. 8 10 1980—Feb. 15 19 May 29 30 June 13 16 29 July 28 Sept. 26 Nov. 17 Dec. 5 Range (or level)— All F.R. Banks 6 F.R. Bank of N.Y. 6 6-6.5 6.5 6.5-7 7 7-7.25 7.25 7.75 8 8-8.5 8.5 8.5-9.5 9.5 6.5 6.5 7 7 7.25 7.25 7.75 8 8.5 8.5 9.5 9.5 10 10-10.5 10.5 10.5-11 11 11-12 12 10 10.5 10.5 11 11 12 12 12-13 13 12-13 12 11-12 11 10 10-11 11 12 12-13 13 13 13 12 11 11 10 10 11 12 13 Effective 1981-—May 5 Nov. 7 6 4 Dec. -July 1982--July 70 73 7 3 16 77 30 Oct. 17 13 Nov. 77 76 Dec. 14 15 17 Aug. 13-14 14 13-14 13 12 11.5-12 11.5 11-11.5 11 10.5 10-10.5 10 9.5-10 9.5 9-9.5 9 8.5-9 8.5-9 8.5 F.R. Bank of N.Y. 14 14 13 13 12 11.5 11.5 11 11 10.5 10 10 9.5 9.5 9 9 9 8.5 8.5 1984-—Apr. —Apr. 9 n Nov. 71 76 Dec. 74 8.5-9 9 8.5-9 8.5 8 9 9 8.5 8.5 8 1985-—May —May 70 74 7.5-8 7.5 7.5 7.5 1. Adjustment credit is available on a short-term basis to help depository institutions meet temporary needs for funds that cannot be met through reasonable alternative sources. The highest rate established for loans to depository institutions may be charged on adjustment-credit loans of unusual size that result from a major operating problem at the borrower's facility. 2. Seasonal credit is available to help relatively small depository institutions meet regular seasonal needs for funds that arise from a clear pattern of intrayearly movements in their deposits and loans and that cannot be met through special industry lenders. The discount rate on seasonal credit takes into account rates on market sources of funds and ordinarily is reestablished on the first business day of each two-week reserve maintenance period; however, it is never less than the discount rate applicable to adjustment credit. 3. Extended credit may be made available to depository institutions when similar assistance is not reasonably available from other sources, including special industry lenders. Such credit may be provided when exceptional circumstances (including sustained deposit drains, impaired access to money market funds, or sudden deterioration in loan repayment performance) or practices involve only a particular institution, or to meet the needs of institutions experiencing difficulties adjusting to changing market conditions over a longer period (particularly at times of deposit disintermediation). The discount rate applicable to adjustment credit Range(or level)— All F.R. Banks Effective date Range (or level)— All F.R. Banks F.R. Bank of N.Y. 1986—Mar. 7 10 Apr. 21 July 11 Aug. 21 22 7-7.5 7 6.5-7 6 5.5-6 5.5 7 7 6.5 6 5.5 5.5 1987—Sept. 4 11 5.5-6 6 6 6 1988—Aug. 9 11 6-6.5 6.5 6.5 6.5 1989—Feb. 24 27 6.5-7 7 7 7 1990—Dec. 19 1991—Feb. Apr. May Sept. Sept. Nov. Dec. 1 4 30 2 13 17 6 7 20 24 In effect Feb. 28, 1992 6.5 6.5 6-6.5 6 5.5-6 5.5 5-5.5 5 4.5-5 4.5 3.5-4.5 3.5 6 6 5.5 5.5 5 5 4.5 4.5 3.5 3.5 3.5 3.5 ordinarily is charged on extended-credit loans outstanding less than thirty days; however, at the discretion of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a flexible rate somewhat above rates on market sources of funds is charged. The rate ordinarily is reestablished on the first business day of each two-week reserve maintenance period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis points. 4. For earlier data, see the following publications of the Board of Governors: Banking and Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, 1970-1979. In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustment-credit borrowings by institutions with deposits of $500 million or more that had borrowed in successive weeks or in more than four weeks in a calendar quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the surcharge was changed from a calendar quarter to a moving thirteen week period. The surcharge was eliminated on Nov. 17, 1981. Policy Instruments 1.15 A9 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1 Requirements Type of deposit 2 Net transaction accounts3 1 $0 million-$42.2 million 2 More than $42.2 million 1. Required reserves must be held in the form of deposits with Federal Reserve Banks or vault cash. Nonmember institutions may maintain reserve balances with a Federal Reserve Bank indirectly on a pass-through basis with certain approved institutions. For previous reserve requirements, see earlier editions of the Annual Report or the Federal Reserve Bulletin. Under provisions of the Monetary Control Act, depository institutions include commercial banks, mutual savings banks, savings and loan associations, credit unions, agencies and branches of foreign banks, and Edge corporations. 2. The Garn-St Germain Depository Institutions Act of 1982 (Public Law 97-320) requires that $2 million of reservable liabilities of each depository institution be subject to a zero percent reserve requirement. The Board is to adjust the amount of reservable liabilities subject to this zero percent reserve requirement each year for the succeeding calendar year by 80 percent of the percentage increase in the total reservable liabilities of all depository institutions, measured on an annual basis as of June 30. No corresponding adjustment is to be made in the event of a decrease. On Dec. 17, 1991, the exemption was raised from $3.4 million to $3.6 million. The exemption applies in the following order: (1) net negotiable order of withdrawal (NOW) accounts (NOW accounts less allowable deductions); and (2) net other transaction accounts. The exemption applies only to accounts that would be subject to a 3 percent reserve requirement. 3. Transaction accounts include all deposits against which the account holder is permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers in excess of three per month for the purpose of making payments to third persons or others. Percent of deposits Effective date 3 12 12/17/91 12/17/91 0 12/27/90 0 12/27/90 However, money market deposit accounts (MMDAs) and similar accounts subject to the rules that permit no more than six preauthorized, automatic, or other transfers per month, of which no more than three may be checks, are not transaction accounts (such accounts are savings deposits). The Monetary Control Act of 1980 requires that the amount of transaction accounts against which the 3 percent reserve requirement applies be modified annually by 80 percent of the percentage change in transaction accounts held by all depository institutions, determined as of June 30 each year. Effective Dec. 17, 1991, for institutions reporting quarterly, and Dec. 24, 1991, for institutions reporting weekly, the amount was increased from $41.1 million to $42.2 million. 4. For institutions that report weekly, the reserve requirement on nonpersonal time deposits with an original maturity of less than 1 Vi years was reduced from 3 percent to IV2 percent for the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that began Dec. 27, 1990. The reserve requirement on nonpersonal time deposits with an original maturity of IVi years or more has been zero since Oct. 6, 1983. For institutions that report quarterly, the reserve requirement on nonpersonal time deposits with an original maturity of less than 1 Vi years was reduced from 3 percent to zero on Jan. 17, 1991. 5. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to zero in the same manner and on the same dates as were the reserve requirement on nonpersonal time deposits with an original maturity of less than W2 years (see note 4). A10 1.17 DomesticNonfinancialStatistics • April 1992 FEDERAL RESERVE OPEN MARKET TRANSACTIONS1 Millions of dollars 1991 Type of transaction 1989 1990 1991 June July Aug. Sept. Oct. Nov. Dec. U . S . TREASURY SECURITIES Outright transactions (excluding matched transactions) 1 2 3 4 Treasury bills Gross purchases Gross sales Exchanges Redemptions Others within one year Gross purchases Gross sales 7 Maturity shifts 8 Exchanges 9 Redemptions 5 6 14,284 12,818 231,211 12,730 24,739 7,291 241,086 4,400 20,158 120 277,314 1,000 37 0 19,680 0 1,359 0 25,ISO1 0 5,776 0 28,009 0 529 0 19,508 0 2,198 0 25,409 0 2,823r 0 24,141 0 837 0 21,967 0 327 0 28,848 -25,783 500 425 0 25,638 -27,424 0 3,043 0 24,454 -28,090 1,000 0 0 0 0 0 625 0 1,478 -3,136 0 340 0 3,425 -2,443 0 200 0 1,131 -2,202 0 0 0 2,002 -2,034 0 178 0 1,655 -2,585 0 0 0 1,570 -3,562 0 10 11 12 13 One to five years Gross purchases Gross sales Maturity shifts Exchanges 1,436 490 -25,534 23,250 250 200 -21,770 25,410 6,583 0 -21,211 24,594 0 0 0 0 0 0 -1,192 2,601 0 0 -3,425 1,993 650 0 -1,131 2,202 0 0 -1,877 1,686 2,133 0 -1,492 2,135 300 0 -1,570 3,562 14 13 16 17 Five to ten years Gross purchases Gross sales Maturity shifts Exchanges 287 29 -2,231 1,934 0 100 -2,186 789 1,280 0 -2,037 2,894 0 0 0 0 0 0 -286 534 0 0 688 300 0 0 0 0 0 0 -126 347 880 0 -163 300 0 0 0 0 18 19 20 21 More than ten years Gross purchases Gross sales Maturity shifts Exchanges 284 0 -1,086 600 0 0 -1,681 1,226 375 0 -1,209 600 0 0 0 0 0 0 0 0 0 0 -688 150 0 0 0 0 0 0 0 0 375 0 0 150 0 0 0 0 22 23 24 All maturities Gross purchases Gross sales Redemptions 16,617 13,337 13,230 25,414 7,591 4,400 31,439 120 1,000 37 0 0 1,984 0 0 6,116 0 0 1,379 0 0 2,198 0 0 6,390* 0 0 1,137 0 0 1,323,480 1,326,542 1,369,052 1,363,434 1,570,456 1,571,534 118,903 118,239 120,292 121,803 112,414 110,280 116,266 118,481 137,073 135,281 98,063 97,925 129,518 132,688 219,632 202,551 310,084 311,752 9,440 8,478 35,149 36,111 16,847 16,847 40,447 40,447 12,432 3,718 14,165 22,879 Matched transactions 25 Gross sales 26 Gross purchases 118,127 118,263 2 Repurchase agreements 27 Gross purchases 28 Gross sales 51,345 36,000 r -10,055 24,886 29,729 335 2,532 3,981 3,595 9,121 —2,462 16,619 0 0 442 0 0 183 0 5 292 0 0 0 0 0 55 0 0 0 0 5 0 0 0 14 0 51r 0 0 45 Repurchase agreements2 33 Gross purchases 34 Gross sales 38,835 40,411 41,836 40,461 22,807 23,595 1,225 748 3,245 3,722 537 537 3,061 3,061 714 695 275 294 1,744 1,191 35 Net change in federal agency obligations -2,018 1,192 -1,085 477 -532 0 -5 5 -70* 508 36 Total net change in System Open Market Account -12,073 26,078 28,644 812 2,000 3,981 3,590 9,126 —2,532r 17,127 29 Net change in U.S. government securities FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 31 Gross sales 32 Redemptions 1. Sales, redemptions, and negative figures reduce holdings of the System Open Market Account; all other figures increase such holdings. Details may not sum to totals because of rounding. 2. In July 1984 the Open Market Trading Desk discontinued accepting bankers acceptances in repurchase agreements, Federal Reserve Banks 1.18 FEDERAL RESERVE BANKS All Condition and Federal Reserve Note Statements 1 Millions of dollars Wednesday End of month Jan. 1 Jan. 8 1992 1991 1992 Account Jan. 15 Jan. 22 Jan. 29 Nov. 29 Dec. 31 Jan. 31 Consolidated condition statement ASSETS 1 Gold certificate account 2 Special drawing rights certificate account 3 Coin Loans 4 To depository institutions 5 Other 6 Acceptances held under repurchase agreements Federal agency obligations 7 Bought outright 8 Held under repurchase agreements 11,059 10,018 528 11,058 10,018 522 11,058 10,018 548 11,058 10,018 574 11,058 10,018 600 11,058 10,018 557 11,059 10,018 528 11,058 10,018 614 218 0 0 5,473 0 0 184 0 0 1,159 0 0 119 0 0 106 0 0 218 0 0 112 0 0 6,045 553 6,045 0 6,011 0 5,976 83 5,960 0 6,090 0 6,045 553 5,960 135 281,831 266,189 264,909 269,078 261,957 265,213 281,831 266,148 10 Bought outright2 11 Bills 12 Notes 13 Bonds 14 Held under repurchase agreements 266,486 132,635 101,520 32,331 15,345 266,189 132,338 101,520 32,331 0 264,909 131,058 101,520 32,331 0 265,146 131,295 101,520 32,331 3,932 261,957 128,106 101,520 32,331 0 265,213 131,661 101,220 32,332 0 266,486 132,635 101,520 32,332 15,345 262,619 128,767 101,520 32,332 3,529 15 Total loans and securities 288,647 277,706 271,104 276,295 268,036 271,407 288,647 272,354 7,678 987 6,897 989 6,479 989 10,055 992 5,190 991 4,059 976 8,286 987 5,034 994 27,626 5,911 27,646 5,237 27,683 5,349 27,747 6,031 27,771 5,906 26,739 4,705 27,626 5,911 26,928 6,130 352,453 340,073 333,227 342,771 329,571 329,519 353,061 333,129 9 Total U.S. Treasury securities 16 Items in process of collection 17 Bank premises Other assets 18 Denominated in foreign currencies 19 All other 4 20 Total assets LIABILITIES 287,906 285,811 283,144 281,902 280,422 282,027 287,906 280,117 22 Total deposits 49,784 40,271 36,735 44,139 36,254 34,129 49,783 40,595 23 24 25 26 29,413 17,697 968 1,706 33,640 6,262 224 144 31,120 5,002 406 207 34,468 9,163 307 201 26,432 9,048 554 219 27,246 6,317 346 221 29,413 17,697 968 1,706 29,195 10,828 321 252 6,651 2,810 5,574 2,645 5,101 2,556 8,348 2,724 4,575 2,594 3,207 2,947 7,259 2,810 4,788 2,558 347,150 334,300 327,535 337,113 323,845 322,310 347,758 328,058 2,652 2,652 0 2,652 2,652 470 2,661 2,652 380 2,671 2,652 336 2,678 2,652 396 2,642 2,423 2,144 2,652 2,652 0 2,683 2,383 6 33 Total liabilities and capital accounts 352,453 340,073 333,227 342,771 329,571 329,519 353,061 333,129 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 251,209 252,853 251,021 257,523 258,793 254,484 251,209 266,801 21 Federal Reserve notes Depository institutions U.S. Treasury—General account Foreign—Official accounts Other 27 Deferred credit items 28 Other liabilities and accrued dividends 29 Total liabilities CAPITAL ACCOUNTS 30 Capital paid in 31 Surplus 32 Other capital accounts Federal Reserve note statement 35 Federal Reserve notes outstanding (issued to Bank) 36 LESS: Held by Federal Reserve Bank 37 Federal Reserve notes, net 38 39 40 41 Collateral held against notes, net: Gold certificate account Special drawing rights certificate account Other eligible assets U.S. Treasury and agency securities 42 Total collateral 366,468 78,562 287,906 365,559 79,749 285,811 364,580 81,437 283,144 364,205 82,303 281,902 364,259 83,837 280,422 371,067 89,040 282,027 366,468 78,562 287,906 364,621 84,504 280,117 11,059 10,018 0 266,829 11,058 10,018 0 264,735 11,058 10,018 0 262,067 11,058 10,018 0 260,826 11,058 10,018 0 259,346 11,058 10,018 0 260,951 11,059 10,018 0 266,829 11,058 10,018 0 259,041 287,906 285,811 283,144 281,902 280,422 282,027 287,906 280,117 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical release. For ordering address, see inside front cover. Components may not sum to totals because of rounding. 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. 3. Valued monthly at market exchange rates. 4. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury bills maturing within ninety days. 5. Includes exchange-translation account reflecting the monthly revaluation at market exchange rates of foreign-exchange commitments. A12 1.19 DomesticNonfinancialStatistics • April 1992 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding 1 Millions of dollars End of month Wednesday 1991 1992 Type and maturity grouping Jan. 1 Jan. 8 1992 Jan. 15 Jan. 22 Jan. 29 Nov. 29 Dec. 31 Jan. 31 1 Total loans 218 5,473 184 1,159 119 106 218 112 2 3 4 217 2 0 5,470 3 0 181 3 0 1,159 0 0 119 0 0 84 22 0 217 2 0 112 0 0 5 Total acceptances 0 0 0 0 0 0 0 0 6 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 281,831 266,189 264,909 269,078 261,957 265,212 281,831 262,619 21,109 66,759 90,655 64,299 14,469 24,540 12,037 62,763 88,080 64,299 14,469 24,540 10,551 65,149 85,769 64,103 14,796 24,540 13,708 64,206 87,724 64,104 14,796 24,540 11,678 60,009 86,831 64,104 14,7% 24,540 5,174 69,572 88,931 62,527 14,469 24,540 21,109 66,759 90,655 64,299 14,469 24,540 8,864 64,603 86,028 63,788 14,7% 24,540 6,597 6,045 6,011 6,059 5,960 6,090 6,597 5,960 753 811 1,329 2,508 1,007 188 60 976 1,304 2,508 1,008 188 101 931 1,284 2,683 858 154 257 823 1,349 2,635 841 154 108 867 1,343 2,647 841 154 308 565 1,430 2,608 990 188 753 811 1,329 2,508 1,008 188 108 867 1,343 2,647 841 154 Within fifteen days Sixteen days to ninety days Ninety-one days to one year Within fifteen days Sixteen days to ninety days Ninety-one days to one year 9 Total U.S. Treasury securities 10 11 12 13 14 15 Within fifteen days 2 Sixteen days to ninety days Ninety-one days to one year One year to five years Five years to ten years More than ten years 16 Total Federal agency obligations 17 18 19 20 21 22 Within fifteen days 2 Sixteen days to ninety days Ninety-one days to one year One year to five years Five years to ten years More than ten years 1. Components may not sum to totals because of rounding. fifteen 2. Holdings under repurchase agreements are classified as maturing within days in accordance with the maximum possible maturity of the agreements. Monetary and Credit Aggregates A13 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS A N D MONETARY BASE 1 Billions of dollars, averages of daily figures 1991 Item 1988 Dec. 1989 Dec. 1990 Dec. June Total reserves 3 Nonborrowed reserves 4 ^ Nonborrowed reserves plus extended credit Required reserves Monetary base 6 July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 2 1 2 3 4 5 1992 1991 Dec. 49.10 53.75 50.35 50.41 51.15 51.82 47.60 47.73 50.89 52.69 53.75 48.78 53.56 50.01 49.80 50.50 45.88 47.46 50.12 51.56 52.59 53.56 48.80 53.56 50.01 49.85 50.80 47.12 47.48 50.42 51.57 52.59 53.56 47.44 52.77 49.34 49.50 50.22 46.55 46.81 49.80 50.73 51.80 52.77 263.77r 274.57r 300.35r 325.22r 312.47r 314.22r 316.68r 318.50r 320.93r 323.13r 325.22r 54.37 54.13 54.13 53.36 327.70 Not seasonally adjusted 6 7 8 9 10 Total reserves Nonborrowed reserves Nonborrowed reserves plus extended credit Required reserves Monetary base 9 49.00 47.29 48.53 47.96 267.46 49.18 48.91 48.93 48.26 278.30 50.58 55.38 50.25 55.18 50.28 55.19 48.91 54.40 304.04 329.35r 50.32 49.98 49.99 49.31 314.00 50.56 49.95 50.00 49.65 316.14 50.49 49.73 50.03 49.41 316.68 50.99 50.35 50.65 50.07 317.28 51.43 51.17 51.18 50.35 319.14 52.89 55.38 52.78 55.18 52.78 55.19 51.99 54.40 323.06 329.35r 55.79 55.56 55.56 54.79 328.77 63.75 62.03 63.27 62.70 283.00 1.05 1.72 62.81 62.54 62.56 61.89 292.55 .92 .27 59.12 55.53 58.79 55.34 58.82 55.34 57.46 54.55 313.70 333.61r 1.66 .98 .33 .19 50.41 50.07 50.08 49.40 317.25 1.01 .34 50.66 50.05 50.10 49.75 319.46 .91 .61 50.61 49.84 50.14 49.52 320.07 1.09 .76 51.13 50.48 50.78 50.20 320.70 .93 .65 51.58 51.32 51.33 50.50 322.71 1.08 .26 53.06 55.53 52.95 55.34 52.95 55.34 52.16 54.55 326.88 333.61r .89 .98 .11 .19 55.81 55.58 55.58 54.81 333.11 N O T ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 11 12 13 14 15 16 17 Total reserves 11 Nonborrowed reserves Nonborrowed reserves plus extended credit Required reserves Monetary base 12 Excess reserves Borrowings from the Federal Reserve 1. Latest monthly and biweekly figures are available from the Board's H.3 (502) weekly statistical release. Historical data and estimates of the impact on required reserves of changes in reserve requirements are available from the Monetary and Reserves Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. 2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory changes in reserve requirements. 3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, break-adjusted required reserves (line 4) plus excess reserves (line 16). 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, break-adjusted total reserves (line 1) less total borrowings of depository institutions from the Federal Reserve (line 17). 5. Extended credit consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions deal with sustained liquidity pressures. Because there is not the same need to repay such borrowing promptly as there is with traditional short-term adjustment credit, the money market impact of extended credit is similar to that of nonborrowed reserves. 6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency component of the money stock, plus (3) (for all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters 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 requirements. 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess reserves (line 16). 8. To adjust required reserves for discontinuities that are due to regulatory 1.00 .23 changes in reserve requirements, a multiplicative procedure is used to estimate what required reserves would have been in past periods had current reserve requirements been in effect. Break-adjusted required reserves include required reserves against transactions deposits and nonpersonal time and savings deposits (but not reservable nondeposit liabilities). 9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6), plus (2) the (unadjusted) currency component of the money stock, plus (3) (for all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose vault cash exceeds their required reserves) the break-adjusted difference between current vault cash and the amount applied to satisfy current reserve requirements. 10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no adjustments to eliminate the effects of discontinuities associated with changes in reserve requirements. 11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy reserve requirements. 12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1) total reserves (line 11), plus (2) required clearing balances and adjustments to compensate for float at Federal Reserve Banks, plus (3) the currency component of the money stock, plus (4) (for all quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters whose vault cash exceeds their required reserves) the difference between current vault cash and the amount applied to satisfy current reserve requirements. Since the introduction of changes in reserve requirements (CRR), currency and vault cash figures have been measured over the computation periods ending on Mondays. 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). A14 1.21 DomesticNonfinancialStatistics • April 1992 MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES 1 Billions of dollars, averages of daily figures 1991r Item 1988 Dec. r 1989 Dec. r 1990 Dec. r 1992 1991 Dec/ Oct. Nov. Dec. Jan Seasonally adjusted 1 1 2 3 4 5 Measures Ml M2 M3 L Debt 6 7 8 9 Ml components Currency Travelers checks Demand deposits5 Other checkable deposits 6 786.9 3,071.1 3,923.1 4,677.9 9,362.5 794.1 3,227.3 4,059.8 4,891.5 10,113.3 826.1 3,332.4 4,114.4 4,966.7 10,791.0 898.1 3,442.2 4,175.1 4,991.9 11,292.4 880.9 3,420.3 4,161.8 4,990.7 11,206.5 891.4 3,434.4 4,170.8 5,001.0 11,257.5 898.1 3,442.2 4,175.1 4,991.9 11,292.4 910.6 3,452.1 4,180.5 n.a. n.a. 212.3 7.5 286.5 280.6 222.6 7.4 279.0 285.1 246.8 8.3 277.1 293.9 267.3 8.2 289.5 333.2 264.8 7.9 283.8 324.5 266.0 8.0 287.6 329.7 267.3 8.2 289.5 333.2 269.4 8.3 293.9 339.0 2,284.2 852.0 2,433.2 832.5 2,506.3 782.1 2,544.1 732.8 2,539.4 741.5 2,543.0 736.4 2,544.1 732.8 2,541.6 728.3 Commercial banks 12 Savings deposits, including MMDAs 13 Small time deposits 14 Large time deposits 10 ' 11 542.7 447.0 366.9 541.4 531.0 398.2 581.9 599.8 380.4 664.9 598.5 354.0 645.7 614.1 362.6 655.4 606.4 357.1 664.9 598.5 354.0 676.0 587.6 346.0 Thrift institutions 15 Savings deposits, including MMDAs 16 Small time deposits 9 17 Large time deposits 10 383.5 585.9 174.3 349.7 617.5 161.1 338.8 562.3 120.9 377.7 466.6 83.1 369.3 481.6 87.4 373.3 474.1 85.1 377.7 466.6 83.1 385.4 457.3 81.4 Money market mutual funds 18 General purpose and broker-dealer 19 Institution-only 241.9 91.0 316.3 107.2 348.9 133.7 361.5 179.1 361.7 168.2 361.4 173.6 361.5 179.1 360.7 182.4 2,101.5 7,261.0 2,249.9 7,863.4 2,493.6 8,297.3 2,766.9 8,525.5 2,724.0 8,482.5 2,749.5 8,508.0 2,766.9 8,525.5 Nontransaction 10 In M2 11 In M38 components Debt components 20 Federal debt 21 Nonfederal debt n.a. n.a. Not seasonally adjusted 22 23 24 25 26 Measures Ml M2 M3 L Debt 27 28 29 30 Ml components Currency Travelers checks 4 Demand deposits5 Other checkable deposits 6 804.1 3.083.8 3,934.7 4,695.0 9.347.9 811.9 3,240.0 4,070.3 4,910.7 10,098.9 844.1 3,345.2 4,124.5 4,986.5 10,778.2 917.3 3,456.1 4,185.8 5,013.1 11,280.8 875.4 3,415.7 4,152.7 4,980.7 11,172.7 893.9 3,437.6 4,173.0 5,008.9 11,232.6 917.3 3,456.1 4,185.8 5,013.1 11,280.8 918.3 3,460.1 4,185.6 n.a. n.a. 214.8 6.9 298.9 283.5 225.3 6.9 291.5 288.1 249.5 7.8 289.9 296.9 270.0 7.7 303.1 336.5 263.1 8.0 283.7 320.6 266.3 7.7 291.1 328.8 270.0 7.7 303.1 336.5 267.9 7.9 300.0 342.5 2,279.7 850.8 2,428.1 830.3 2,501.1 779.3 2,538.8 729.7 2,540.3 737.0 2,543.7 735.3 2,538.8 729.7 2,541.8 725.5 Commercial banks 33 Savings deposits, including MMDAs 34 Small time deposits 35 Large time deposits 10 ' 11 543.8 446.0 365.9 543.0 529.5 397.1 580.0 599.7 379.4 662.3 598.7 352.8 644.6 615.2 362.8 655.3 606.9 356.9 662.3 598.7 352.8 672.4 589.4 343.6 Thrift institutions 36 Savings deposits, including MMDAs 37 Small time deposits 38 Large time deposits 10 381.1 584.9 175.2 347.6 616.0 162.0 337.7 562.2 120.6 376.3 466.7 82.8 368.7 482.5 87.4 373.2 474.5 85.1 376.3 466.7 82.8 383.3 458.7 80.8 Money market mutual funds 39 General purpose and broker-dealer 40 Institution-only 240.8 91.4 314.6 107.8 346.8 134.4 359.1 180.3 359.8 163.4 360.6 172.7 359.1 180.3 360.2 188.1 Repurchase agreements and eurodollars 41 Overnight 42 Term 83.2 227.4 77.5 178.5 74.7 158.3 75.6 129.4 69.5 138.5 73.3 136.0 75.6 129.4 77.8 128.1 2,099.0 7,249.0 2,247.5 7,851.4 2,491.3 8,286.9 2,765.0 8,515.9 2,707.6 8,465.1 2,740.7 8,491.9 2,765.0 8,515.9 Nontransaction 31 In M2 32 In M38 components Debt components 43 Federal debt 44 Nonfederal debt For notes see following page. n.a. n.a. Monetary and Credit Aggregates A15 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly statistical release. Historical data are available from the Money and Reserves Projection Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. 2. Composition of the money stock measures and debt is as follows: Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) travelers checks of nonbank issuers; (3) demand deposits at all commercial banks other than those due to depository institutions, the U.S. government, and foreign banks and official institutions, less cash items in the process of collection and Federal Reserve float; and (4), other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted Ml is computed by summing currency, travelers checks, demand deposits, and OCDs, each seasonally adjusted separately. M2: Ml plus (1) overnight (and continuing-contract) repurchase agreements (RPs) issued by all depository institutions and overnight Eurodollars issued to U.S. residents by foreign branches of U.S. banks worldwide, (2) money market deposit accounts (MMDAs), (3) savings and small time deposits (time deposits— including retail RPs—in amounts of less than $100,000), and (4) balances in both taxable and tax-exempt general purpose and broker-dealer money market funds. Excludes individual retirement accounts (IRAs) and Keogh balances at depository institutions and money market funds. Also excludes all balances held by U.S. commercial banks, money market funds (general purpose and broker-dealer), foreign governments and commercial banks, and the U.S. government. Seasonally adjusted M2 is computed by adjusting its non-Mi component as a whole and then adding this result to seasonally adjusted Ml. M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of $100,000 or more) issued by all depository institutions, (2) term Eurodollars held by U.S. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom and Canada, and (3) balances in both taxable and tax-exempt, institution-only money market funds. Excludes amounts held by depository institutions, the U.S. government, money market funds, and foreign banks and official institutions. Also excluded is the estimated amount of overnight RPs and Eurodollars held by institution-only money market funds. Seasonally adjusted M3 is computed by adjusting its non-M2 component as a whole and then adding this result to seasonally adjusted M2. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury securities, commercial paper, and bankers acceptances, net of money market fund holdings of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds, short-term Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted separately, and then adding this result to M3. Debt: Debt of domestic nonfinancial sectors consists of outstanding credit market debt of the U.S. government, state and local governments, and private nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers acceptances, and other debt instruments. Data are derived from the Federal Reserve Board's flow of funds accounts. Debt data are based on monthly averages. This sum is seasonally adjusted as a whole. 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository institutions. 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Travelers checks issued by depository institutions are included in demand deposits. 5. Demand deposits at commercial banks and foreign-related institutions other than those due to depository institutions, the U.S. government, and foreign banks and official institutions, less cash items in the process of collection and Federal Reserve float. 6. Consists of NOW and ATS account balances at all depository institutions, credit union share draft account balances, and demand deposits at thrift institutions. 7. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund balances (general purpose and broker-dealer), (3) MMDAs, and (4) savings and small time deposits. 8. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. residents, and (4) money market fund balances (institution-only), less a consolidation adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market funds. 9. Small time deposits—including retail RPs—are those issued in amounts of less than $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are subtracted from small time deposits. 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those booked at international banking facilities. 11. Large time deposits at commercial banks less those held by money market funds, depository institutions, and foreign banks and official institutions. A16 1.22 DomesticNonfinancialStatistics • April 1992 B A N K DEBITS A N D DEPOSIT TURNOVER1 Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates 1991 Bank group, or type of customer June 4 ATS-NOW accounts 4 5 Savings deposits Aug. Sept. Oct. Nov. Seasonally adjusted DEBITS TO Demand deposits3 1 All insured banks 2 Major New York City banks 3 Other banks July 219,795.7 115,475.6 104,320.2 256,150.4 129,319.9 126,830.5 277,916.3 131,784.0 146,132.3 266,704.2 133,761.4 132,942.8 284,872.2 139,089.0 145,783.2 275,915.9 136,906.9 139,009.0 283,521.6 142,138.4 141,383.2 290,074.6 144,208.2 145,866.4 280,263.3 140,754.1 139,509.2 2,478.1 537.0 2,910.5 547.5 3,349.6 558.8 3,460.1 519.9 3,822.8 552.6 3,659.4 516.7 3,679.1 2,904.0 3,759.9 2,733.0 3,553.7 3,233.1 622.9 2,897.2 333.3 735.1 3,421.5 408.3 800.6 3,804.1 467.7 768.4 4,141.9 422.3 833.4 4,413.3 469.8 798.0 4,448.0 441.4 823.9 4,490.7 452.5 843.2 4,606.2 466.4 793.0 4,211.8 435.9 13.2 2.9 15.2 3.0 16.5 2.9 15.5 2.4 16.9 2.5 15.9 2.3 15.7 4.7 15.9 4.4 14.8 5.0 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 7 Major New York City banks 8 Other banks 9 ATS-NOW accounts 4 10 Savings deposits Not seasonally adjusted DEBITS TO Demand deposits3 11 All insured banks 12 Major New York City banks 13 Other banks 14 ATS-NOW accounts 4 15 MMDAs 6 16 Savings deposits 219,790.4 115,460.7 104,329.7 256,133.2 129,400.1 126,733.0 277,400.0 131,784.7 145,615.3 270,144.7 133,851.7 136,293.0 286,068.7 139,527.4 146,541.3 289,049.5 146,342.8 142,706.6 273,967.0 137,659.5 136,307.5 298,196.7 149,704.6 148,492.0 269,949.6 136,592.8 133,356.8 2,477.3 2,342.7 536.3 2,910.7 2,677.1 546.9 3,342.2 2,923.8 557.9 3,446.1 2,714.5 516.4 3,729.0 2,868.0 558.2 3,693.2 2,751.7 537.0 3,679.4 n.a 3,110.7 3,770.6 n.a 3,132.6 3,314.0 n.a 2,939.5 622.8 2,896.7 333.2 735.4 3,426.2 408.0 799.6 3,810.0 466.3 781.7 4,154.4 434.9 831.4 4,334.6 469.8 849.5 4,771.4 460.9 796.0 4,305.8 436.6 864.8 4,775.5 473.7 757.1 4,059.4 413.0 13.2 6.6 2.9 15.2 7.9 2.9 16.4 8.0 2.9 15.5 6.8 2.4 16.7 7.2 2.5 16.3 6.8 2.4 15.9 n.a 4.9 16.2 n.a 4.9 13.9 n.a 4.5 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 18 Major New York City banks 19 Other banks 20 ATS-NOW accounts 4 21 MMDAs6 22 Savings deposits 1. Historical tables containing revised data for earlier periods can be obtained from the Banking and Money Market Statistics Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Data in this table also appear on the Board's G.6 (406) monthly statistical release. For ordering address, see inside front cover. 2. Annual averages of monthly figures. 3. Represents accounts of individuals, partnerships, and corporations and of states and political subdivisions. 4. Accounts authorized for negotiable orders of withdrawal (NOWs) and accounts authorized for automatic transfer to demand deposits (ATSs). 5. Excludes ATS and NOW accounts. 6. Money market deposit accounts. Commercial Banking Institutions 1.23 LOANS A N D SECURITIES A17 All Commercial Banks 1 Billions of dollars, averages of Wednesday figures 1991r 1992 Item Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted 1 Total loans and securities2 2 U.S. government securities 3 Other securities 4 Total loans and leases 2 5 Commercial and industrial . . . . . 6 Bankers acceptances held . . . 7 Other commercial and industrial 8 U.S. addressees 4 9 Non-U.S. addressees 4 10 Real estate 11 Individual 12 Security 13 Nonbank financial institutions 14 Agricultural 15 State and political subdivisions 16 Foreign banks 17 Foreign official institutions 18 Lease-financing receivables . . . . 19 All other loans 2,747.3 2,759.9 2,763.9 2,765.7 2,774.6 2,776.4 2,778.3 2,789.4 2,805.1 2,821.6 2,836.0 2,843.5 460.7 178.3 2,108.3 638.2 9.0 470.8 178.5 2,110.6 638.7 8.7 478.2 177.5 2,108.3 635.1 8.7 484.1 176.9 2,104.8 630.6 8.2 493.9 176.2 2,104.6 626.0 7.7 503.7 175.3 2,097.4 623.6 7.5 513.2 174.0 2,091.1 619.4 7.8 523.4 175.8 2,090.2 622.0 7.4 538.4 177.1 2,089.6 622.6 7.0 550.5 177.6 2,093.4 621.0 7.6 562.5 178.5 2,095.0 617.6 7.9 564.2 179.0 2,100.2 614.5 7.3 629.2 623.3 5.9 852.8 376.3 51.8 630.0 623.9 6.1 857.7 375.2 48.2 626.5 620.6 5.8 861.5 374.3 48.5 622.4 616.6 5.9 863.8 373.6 49.1 618.3 612.6 5.7 868.6 372.9 49.0 616.1 610.3 5.7 867.7 371.0 47.4 611.6 605.7 5.9 866.9 370.3 48.4 614.6 608.5 6.1 867.9 367.2 50.0 615.6 608.9 6.7 869.0 364.4 51.1 613.4 606.8 6.6 870.6 363.2 53.6 609.7 602.9 6.8 871.1 363.9 54.6 607.2 601.1 6.1 870.7 363.9 59.1 36.1 31.9 36.9 33.0 36.0 33.6 36.5 33.7 39.3 33.9 38.8 34.0 37.7 34.2 37.6 34.3 38.1 34.1 39.2 33.9 40.6 34.1 40.3 33.7 32.9 6.6 2.7 33.0 45.9 32.8 7.5 2.8 33.1 44.7 32.3 7.1 2.5 33.1 44.2 31.7 6.6 2.4 33.0 43.6 31.3 6.5 2.5 33.2 41.5 30.9 6.6 2.4 32.4 42.8 30.5 6.6 2.3 31.7 43.1 30.1 6.9 2.3 31.7 40.2 29.7 6.6 2.4 31.5 40.1 29.4 6.8 2.6 31.3 41.8 29.2 7.2 2.5 31.4 42.9 28.3 7.1 2.4 31.3 49.0 Not seasonally adjusted 20 Total loans and securities2 2,748.6 2,759.0 2,762.7 2,761.6 2,775.7 2,769.6 2,775.4 2,789.5 2,807.8 2,826.9 2,842.4 2,840.3 21 U.S. government securities 22 Other securities 23 Total loans and leases 2 24 Commercial and industrial . . . . . 25 Bankers acceptances h e l d 3 . . . 26 Other commercial and industrial 71 U.S. addressees 4 . 28 Non-U.S. addressees ?9 Real estate 30 Individual 31 Security 32 Nonbank financial institutions 33 Agricultural 34 State and political subdivisions 35 Foreign banks 36 Foreign official institutions 37 Lease-financing receivables 38 All other loans 463.8 178.3 2,106.5 637.5 9.1 474.9 178.5 2,105.5 641.3 8.7 479.9 177.0 2,105.7 638.3 8.4 484.0 176.5 2,101.0 633.4 8.2 493.1 176.2 2,106.5 628.0 7.7 501.5 174.3 2,093.8 623.5 7.2 511.7 174.2 2,089.5 617.6 7.6 521.9 175.8 2,091.8 619.1 7.4 537.3 177.4 2,093.1 621.1 7.0 551.5 177.9 2,097.6 619.7 7.9 558.5 178.7 2,105.2 618.9 8.2 563.8 179.5 2,096.9 611.4 7.4 628.3 622.1 6.3 849.9 376.2 55.7 632.6 626.4 6.2 854.3 372.5 49.5 629.9 623.8 6.0 860.2 371.6 49.8 625.2 619.3 5.9 864.4 371.9 46.7 620.3 614.3 6.0 868.9 370.7 49.1 616.3 610.5 5.7 868.8 368.3 46.3 609.9 604.1 5.8 868.8 369.3 47.3 611.8 605.8 6.0 868.8 368.7 48.7 614.1 607.9 6.2 870.3 365.3 50.8 611.9 605.7 6.1 872.0 364.7 53.6 610.7 604.3 6.4 871.3 368.6 55.2 604.0 597.5 6.5 870.1 368.1 58.6 35.7 31.0 36.3 31.7 35.5 32.7 36.1 33.3 39.6 34.2 39.0 34.7 37.8 35.1 37.2 35.3 37.8 35.0 39.5 34.2 41.9 34.1 40.8 33.3 33.0 6.5 2.7 33.2 45.0 32.8 7.3 2.8 33.3 43.6 32.2 6.9 2.5 33.1 42.8 31.7 6.4 2.4 33.0 41.6 31.3 6.3 2.5 32.9 43.0 30.7 6.5 2.4 32.1 41.6 30.4 6.5 2.3 31.6 42.9 30.1 6.9 2.3 31.6 43.2 29.7 6.8 2.4 31.6 42.3 29.4 7.1 2.6 31.4 43.3 29.1 7.7 2.5 31.4 44.6 28.6 6.9 2.4 31.6 45.2 1. Data have been revised to reflect new seasonal adjustment factors and benchmarking to Call reports. Historical data may be obtained from the Banking and Money Market Statistics Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve System, Washington, DC 20551. Components may not sum to totals because of rounding, 2. Adjusted to exclude loans to commercial banks in the United States, 3. Includes nonfinancial commercial paper held. 4. United States includes the fifty states and the District of Columbia. A18 1.24 DomesticNonfinancialStatistics • April 1992 MAJOR NONDEPOSIT F U N D S OF COMMERCIAL BANKS 1 Billions of dollars, monthly averages 1991r 1992 Source of funds Seasonally adjusted 1 Total nondeposit funds 2 2 Net balances due to related foreign offices3 3 Borrowings from other than commercial banks in United States 4 4 Domestically chartered banks 5 Foreign-related banks Not seasonally adjusted 6 Total nondeposit funds 7 Net balances due to related foreign offices3 8 Domestically chartered banks 9 Foreign-related banks 10 Borrowings from other than commercial banks in United States 4 11 Domestically chartered banks 12 Federal funds and security RP borrowings5 13 Other 6 14 Foreign-related banks 6 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. 266.7 23.8 264.8 28.5 265.7 28.7 260.8 24.6 250.2 17.8 247.9 18.4 245.4 17.8 248.7 20.8 262.8 31.7 264.0 33.9 274.5 39.8 277.3 44.1 242.9 176.2 66.7 236.4 169.6 66.8 237.1 170.4 66.7 236.2 167.2 69.0 232.4 163.9 68.6 229.5 160.2 69.3 227.6 156.0 71.6 227.9 154.7 73.2 231.0 153.2 77.8 230.0 149.2 80.9 234.7 150.9 83.8 233.2 153.0 80.2 267.7 24.0 -15.1 39.1 268.8 28.6 -5.7 34.2 263.1 27.4 -3.3 30.7 266.9 27.1 -.3 27.4 251.3 17.3 -3.7 20.9 244.1 15.2 -7.3 22.5 242.2 15.9 -7.2 23.2 246.0 19.9 -8.8 28.8 264.0 31.3 -7.2 38.5 268.2 34.8 -4.4 39.3 273.0 43.4 -3.8 47.2 273.3 44.8 -4.8 49.6 243.7 176.9 240.2 173.0 235.8 168.5 239.9 170.3 234.0 164.1 228.9 158.4 226.2 154.3 226.1 153.6 232.7 154.0 233.4 153.4 229.6 149.6 228.5 148.7 174.1 2.8 66.8 169.7 3.2 67.2 165.7 2.9 67.2 167.6 2.8 69.5 161.2 2.8 69.9 155.2 3.2 70.4 150.6 3.7 71.9 150.2 3.5 72.5 150.9 3.2 78.6 150.2 3.2 80.0 146.5 3.1 80.0 145.3 3.4 79.8 449.3 448.0 448.8 449.4 449.5 448.2 451.0 452.3 450.0 451.3 443.8 443.5 444.6 446.4 440.9 442.5 429.5 429.7 426.1 425.8 423.9 422.6 416.0 413.6 30.9 39.3 31.1 28.4 22.8 20.4 15.8 19.9 24.1 23.6 22.8 20.7 25.3 17.2 23.8 26.9 29.2 28.7 34.2 28.5 26.5 25.4 27.8 33.1 MEMO Gross large time deposits1 15 Seasonally adjusted 16 Not seasonally adjusted U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 18 Not seasonally adjusted 1. Commercial banks are nationally and state-chartered banks in the fifty states and the District of Columbia, agencies and branches of foreign banks, New York investment companies majority owned by foreign banks, and Edge Act corporations owned by domestically chartered and foreign banks. Data in this table also appear in the Board's G.10 (411) release. For ordering address, see inside front cover. Data have been revised to reflect new seasonal adjustment factors and benchmarking to Call reports. Historical data may be obtained from the Banking and Money Market Statistics Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve System, Washington, DC 20551. 2. Includes federal funds, repurchase agreements (RPs), and other borrowing from nonbanks and net balances due to related foreign offices. 3. Reflects net positions of U.S. chartered banks, Edge act corporations, and U.S. branches and agencies of foreign banks with related foreign offices plus net positions with own International Banking Facilities (IBFs). 4. Borrowings through any instrument, such as a promissory note or due bill, given for the purpose of borrowing money for the banking business. This includes borrowings from Federal Reserve Banks and from foreign banks, term federal funds, loan RPs, and sales of participations in pooled loans. 5. Figures are based on averages of daily data reported weekly by approximately 120 large banks and quarterly or annual data reported by other banks. 6. Figures are partly averages of daily data and partly averages of Wednesday data. 7. Time deposits in denominations of $100,000 or more. Estimated averages of daily data. 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at commercial banks. Averages of daily data. Commercial Banking Institutions 1.25 ASSETS A N D LIABILITIES OF COMMERCIAL B A N K S A19 Last-Wednesday-of-Month Series' Billions of dollars 1992 1991 Account Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. ALL COMMERCIAL BANKING INSTITUTIONS 2 1 Total assets ? Loans and securities 3 Investment securities 4 U.S. government securities 5 Other Trading account assets 6 7 Total loans Interbank loans 8 9 Loans excluding interbank Commercial and industrial 10 Real estate 11 Individual 1? All other 13 14 Total cash assets 15 Reserves with Federal Reserve Banks .. 16 Cash in vault 17 Cash items in process of collection . . . 18 Demand balances at U.S. depository institutions 19 Other cash assets 3,385.3 3,370.8 3,413.3 3,416.8 3,443.6 3,403.4 3,433.3 3,470.1 3,508.4 3,536.0 3,496.1 2,917.7 627.2 460.4 166.8 25.9 2,264.6 167.6 2,097.0 641.3 855.3 371.5 229.0 2,913.6 627.7 462.5 165.1 27.3 2,258.6 156.3 2,102.4 637.3 861.0 372.4 231.6 2,929.7 633.2 468.4 164.8 26.9 2,269.6 167.9 2,101.7 632.0 865.7 370.9 233.2 2,941.0 640.6 477.5 163.1 30.1 2,270.3 161.4 2,108.8 627.6 868.8 370.7 241.8 2,947.9 650.5 488.2 162.3 33.4 2,264.0 169.2 2,094.8 622.2 867.8 369.5 235.4 2,933.7 654.0 492.1 161.9 31.3 2,248.4 161.3 2,087.1 616.5 868.2 369.3 233.1 2,953.1 663.5 500.6 162.9 32.4 2,257.3 163.8 2,093.5 619.0 867.9 368.7 237.8 2,980.6 686.3 522.3 164.0 34.9 2,259.4 168.4 2,091.0 618.5 871.5 365.5 235.5 3,001.8 695.9 530.6 165.2 36.0 2,270.0 171.4 2,098.6 620.3 871.4 363.8 243.1 3,022.0 704.9 538.5 166.4 33.2 2,283.9 172.4 2,111.5 620.4 871.3 370.2 249.7 3,011.3 704.8 539.6 165.2 38.1 2,268.4 176.0 2,092.4 608.7 870.7 367.5 245.5 203.6 24.5 28.8 76.8 196.2 22.4 29.1 74.3 219.8 26.7 31.1 87.2 210.8 29.3 29.8 78.2 212.9 24.3 29.7 88.0 197.5 22.6 31.0 71.9 204.0 26.1 30.2 75.5 206.8 25.9 30.7 75.3 225.3 24.7 29.6 90.5 230.6 29.2 30.7 87.5 203.2 23.7 31.1 72.8 28.0 45.6 26.2 44.1 31.0 43.8 29.1 44.3 27.3 43.6 27.6 44.4 27.2 44.9 29.3 45.5 32.8 47.7 33.3 49.9 28.2 47.4 263.9 261.0 263.8 265.0 282.8 272.2 276.2 282.8 281.3 283.4 281.7 21 Total liabilities 3,156.7 3,142.8 3,181.9 3,185.4 3,210.3 3,167.3 3,195.6 3,235.0 3,272.9 3,299.4 3,255.8 V Total deposits 23 Transaction accounts 24 Savings deposits (excluding checkable) 25 Time deposits 76 Borrowings ?7 Other liabilities 28 Residual (assets less liabilities) 2,387.8 602.6 2,387.3 601.4 2,418.1 617.7 2,410.5 611.4 2,453.5 639.8 2,435.2 612.4 2,435.2 614.3 2,448.5 628.7 2,489.9 670.4 2,495.6 682.9 2,449.2 643.9 596.2 1,189.0 486.3 282.5 228.6 597.6 1,188.4 486.7 268.8 228.0 608.7 1,191.7 489.8 274.0 231.4 613.4 1,185.8 500.4 274.5 231.4 623.1 1,190.6 489.0 267.7 233.3 627.4 1,195.4 466.7 265.4 236.1 631.3 1,189.6 483.8 276.6 237.7 643.0 1,176.8 501.3 285.1 235.1 650.7 1,168.8 487.3 295.6 235.5 656.1 1,156.7 499.5 304.3 236.6 667.7 1,137.7 507.2 299.3 240.3 29 Total assets 2,988.1 2,970.6 3,002.4 3,003.5 3,021.4 2,985.4 3,000.9 3,025.1 3,052.3 3,068.7 3,032.2 30 Loans and securities 31 Investment securities 32 U.S. government securities 33 Other 34 Trading account assets 35 Total loans Interbank loans 36 37 Loans excluding interbank Commercial and industrial 38 39 Real estate Revolving home equity 40 Other real estate 41 Individual 4? All other 43 2,645.3 587.7 439.0 148.8 25.9 2,031.6 144.9 1,886.7 504.3 805.2 63.4 741.8 371.5 205.8 2,639.1 591.6 444.0 147.5 27.3 2,020.2 130.7 1,889.5 501.3 810.6 64.5 746.1 372.4 205.2 2,647.8 594.7 447.7 147.0 26.9 2,026.2 141.0 1,885.2 494.4 814.3 65.3 749.0 370.9 205.7 2,655.3 602.1 456.9 145.1 30.1 2,023.1 136.8 1,886.3 490.0 816.8 66.0 750.8 370.7 208.9 2,665.1 611.3 467.2 144.1 33.4 2,020.5 146.5 1,874.1 482.5 815.1 66.6 748.4 369.5 207.0 2,650.3 613.0 470.0 143.0 31.3 2,005.9 141.5 1,864.4 475.6 814.9 67.3 747.6 369.3 204.6 2,659.4 621.1 477.2 143.8 32.4 2,006.0 142.8 1,863.2 472.9 814.3 68.1 746.2 368.7 207.4 2,673.8 638.2 493.4 144.8 34.9 2,000.6 144.5 1,856.2 471.0 817.1 68.9 748.2 365.5 202.6 2,687.9 644.9 499.4 145.4 36.0 2,007.1 150.7 1,856.4 468.3 816.8 69.2 747.6 363.8 207.5 2,694.7 651.0 505.6 145.4 33.2 2,010.5 150.5 1,860.1 463.4 816.3 69.9 746.4 370.2 210.2 2,688.2 652.3 508.5 143.8 38.1 1,997.8 156.3 1,841.5 454.9 815.7 71.0 744.8 367.5 203.4 44 Total cash assets 45 Reserves with Federal Reserve Banks. 46 Cash in vault 47 Cash items in process of collection . . . 48 Demand balances at U.S. depository institutions 49 Other cash assets 177.3 24.1 28.8 74.9 171.8 22.0 29.1 72.7 194.2 25.8 31.1 85.6 185.2 28.2 29.8 76.2 187.7 23.9 29.7 86.3 171.5 22.1 31.0 70.3 176.5 24.9 30.1 74.0 179.1 25.1 30.7 73.6 197.6 24.0 29.6 88.3 201.7 28.5 30.7 85.4 176.3 23.3 31.1 71.0 26.1 23.4 24.6 23.4 29.1 22.7 27.3 23.6 25.6 22.3 25.7 22.3 25.2 22.3 27.4 22.4 30.7 25.0 31.1 25.9 26.2 24.7 50 Other assets 165.5 159.7 160.4 163.0 168.5 163.6 165.0 172.2 166.8 172.3 167.7 2,767.4 2,794.2 2,821.0 2,836.2 2,796.1 20 Other assets DOMESTICALLY CHARTERED COMMERCIAL BANKS 4 51 Total liabilities 2,763.5 2,746.8 2,775.1 2,776.2 2,792.2 2,753.4 5? Deposits 53 Transaction accounts 54 Savings deposits (excluding checkable) 55 Time deposits 56 Borrowings 57 Other liabilities 58 Residual (assets less liabilities)3 2,270.7 592.6 2,263.7 592.1 2,285.6 608.3 2,275.7 601.7 2,313.5 630.4 2,289.3 603.1 2,286.9 605.3 2,301.2 619.4 2,340.9 660.4 2,342.5 672.6 2,292.0 634.1 592.7 1,085.3 356.1 136.8 224.6 594.0 1,077.5 349.9 133.1 223.9 605.1 1,072.2 357.6 131.9 227.3 609.7 1,064.3 369.8 130.7 227.2 619.3 1,063.8 352.7 126.0 229.2 623.7 1,062.6 339.1 125.0 232.0 627.5 1,054.1 354.6 125.9 233.5 639.2 1,042.6 362.1 130.8 230.9 646.8 1,033.7 346.8 133.3 231.3 652.1 1,017.8 356.8 136.9 232.4 663.6 994.3 367.9 136.2 236.1 1. Data have been revised to reflect benchmarking to quarterly Call reports. Back data are available from the Banking and Monetary Statistics Section, Board of Governors of the Federal Reserve System, Washington, D.C., 20551. Data in this table also appear in the Board's H.8 (510) weekly statistical release. Data are partly estimated. They include all bank-premises subsidiaries and other significant majority-owned domestic subsidiaries. Components may not sum to totals because of rounding. 2. Includes insured domestically chartered commercial banks, agencies and branches of foreign banks, Edge act and agreement corporations, and New York State foreign investment corporations. Data are estimates for the last Wednesday of the month based on a sample of weekly-reporting foreign-related institutions and quarter-end condition reports. 3. This balancing item is not intended as a measure of equity capital for use in capital adequacy analysis. 4. Includes all member banks and insured nonmember banks. Loans and securities data are estimates for the last Wednesday of the month based on a sample of weekly-reporting banks and quarter-end condition reports. A20 1.26 DomesticNonfinancialStatistics • April 1992 ASSETS A N D LIABILITIES OF LARGE WEEKLY-REPORTING COMMERCIAL BANKS 1 Millions of dollars, Wednesday figures 1991 1992 Account Dec. 4 Dec. 11 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 ASSETS 1 Cash and balances due from depository institutions 2 U.S. Treasury and government securities 3 Trading account 4 Investment account 5 Mortgage-backed securities All others, by maturity 6 One year or less 7 One year through five years 8 More than five years 9 Other securities 10 Trading account 11 Investment account 12 State and political subdivisions, by maturity 13 One year or less 14 More than one year 15 Other bonds, corporate stocks, and securities 16 Other trading account assets 115,247r 226,906 21,945 204,961r 77,542r 112,422 225,142 21,041 204,101 77,352* 110,424* 224,460 19,867 204,593 78,029* 120,462 221,687 18,486 203,201 78,121* 125,862 227,934 17,962 209,972 79,183 106,684 227,696 18,659 209,036 78,827 123,478 229,257 19,590 209,667 78,562 123,366 230,739 20,598 210,141 78,949 104,397 228,760 20,659 208,102 78,583 25,534 55,213 46,672r 55,710* 1,330 54,380* 22,724 3,043r 19,681* 31,656* 12,151* 25,452* 54,655* 46,642* 55,455 1,326 54,130 22,637 3,011 19,626 31,493* 11,998* 25,671 54,144* 46,748* 55,646 1,872 53,774 22,517 2,980 19,536 31,257 11,672* 25,284 53,113* 46,684* 56,221 1,836 54,384 22,667 3,112 19,555 31,717 11,336* 25,494 54,525 50,770 56,766 2,019 54,747 22,984 3,275 19,709 31,763 11,447 26,034 55,980 48,195 55,624 1,269 54,355 22,673 3,161 19,512 31,682 12,596 26,889 57,013 47,202 55,479 1,225 54,254 22,641 3,171 19,470 31,613 11,842 26,526 57,688 46,978 55,440 1,212 54,228 22,689 3,241 19,448 31,539 12,371 24,731 57,960 46,827 55,455 1,614 53,841 22,580 3,231 19,349 31,261 13,178 17 Federal funds sold3 18 To commercial banks in the United States 19 To nonbank brokers and dealers 20 To others 4 21 Other loans and leases, gross 22 Commercial and industrial 23 Bankers acceptances and commercial paper 24 All other 25 U.S. addressees 26 Non-U.S. addressees 82,829 56,286 21,819 4,724 998,028 292,878* 2,218 290,660* 289,340* 1,320 86,075 84,023 86,112 57,749 56,608 57,9% 22,636 23,161 23,641 4,778 5,166 4,475 996,116 1,000,859 1,001,038 290,937* 292,147* 290,125* 2,056 2,043 2,038 290,104* 288,881* 288,088* 287,622* 288,746* 286,599* 1,259 1,357 1,488 77,213 53,021 20,056 4,137 1,017,136 293,378 1,946 291,432 289,884 1,548 95,687 64,397 24,463 6,828 1,013,033 290,189 1,633 288,557 287,033 1,523 107,976 73,712 28,690 5,574 1,012,652 290,143 1,608 288,535 286,999 1,536 100,767 70,880 24,247 5,640 1,009,936 289,363 1,597 287,766 286,221 1,545 95,321 66,540 22,943 5,837 1,008,215 288,643 1,584 287,059 285,551 1,508 27 Real estate loans 28 Revolving, home equity 29 All other 30 To individuals for personal expenditures 31 To financial institutions 32 Commercial banks in the United States 33 Banks in foreign countries 34 Nonbank financial institutions 35 For purchasing and carrying securities 36 To finance agricultural production 37 To states and political subdivisions 38 To foreign governments and official institutions 39 All other loans 40 Lease-financing receivables 41 LESS: Unearned income 42 Loan and lease reserve 6 43 Other loans and leases, net 44 Other assets 395,313* 39,539 355,774* 180,400* 44,679 18,980* 1,964 23,735* 13,304 5,906 17,654 1,032 21,547* 25,315 3,279 37,265 957,483 155,776* 395,624* 39,621 356,003* 181,352* 44,411 18,960* 2,150 23,302* 12,813 5,850 17,586 941 21,248* 25,355 3,270 37,481 955,365 154,727* 403,044 41,494 361,550 188,466 46,473 20,872 2,080 23,521 12,495 6,190 17,683 918 22,733 25,755 3,306 37,215 976,614 170,439 403,135 41,472 361,662 187,964 45,717 20,772 1,858 23,086 13,791 6,039 17,534 1,001 21,845 25,819 3,255 37,127 972,651 159,466 402,634 41,594 361,041 187,150 45,768 21,514 2,091 22,163 14,374 6,022 17,443 928 22,383 25,808 3,244 37,257 972,151 162,351 401,846 41,665 360,181 186,972 44,872 20,831 2,065 21,976 14,784 5,948 17,432 939 21,982 25,798 3,233 37,206 969,498 157,556 402,392 41,685 360,706 186,788 45,521 21,565 1,934 22,022 14,107 5,850 17,344 898 20,909 25,764 3,275 37,056 967,884 154,723 1,606,102* 1,599,131* 1,600,132* 1,614,031* 1,646,276 1,630,405 1,662,534 1,649,737 1,619,719 45 Total assets Footnotes appear on the following page. 394,631* 39,717 354,914* 182,749* 44,403 19,213* 1,934 23,255* 15,017 5,872 17,543 931 22,243* 25,323 3,254 37,227 960,378 151,476* 393,905* 39,916 353,988* 183,732* 45,719 20,147* 2,484 23,088* 14,805 5,842 17,581 947 23,024* 25,358 3,256 36,709 961,073 157,141* Weekly Reporting Commercial Banks 1.26 A21 ASSETS A N D LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1992 1991 Account Dec. 4 Dec. 11 1,120,281 46 Deposits 47 Demand deposits 239,253 192,900 48 Individuals, partnerships, and corporations 46,353 49 Other holders 50 7,658 States and political subdivisions 51 1,664 U.S. government 52 Depository institutions in the United States 20,816 4,998 53 Banks in foreign countries 768 54 Foreign governments and official institutions 55 10,449 Certified and officers' checks 99,801 56 Transaction balances other than demand deposits . . . . 781,227 57 Nontransaction balances 750,441 58 Individuals, partnerships, and corporations 30,787 59 Other holders 25,513 60 States and political subdivisions 1,170 61 U.S. government 3,690 62 Depository institutions in the United States 414 63 Foreign governments, official institutions, and banks . . . . 1,112,598 234,198 188,307 45,891 8,020 1,799 20,271 5,649 870 9,281 97,628 780,773 749,780 30,993 25,823 1,116 3,653 401 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 1,158,676 267,363 214,354 53,008 9,242 3,050 23,997 5,788 1,000 9,932 105,006 786,308 757,385 28,923 23,989 1,105 3,452 377 1,135,387 237,786 193,174 44,613 7,896 1,754 19,772 5,294 532 9,365 106,020 791,581 761,643 29,938 24,687 1,494 3,383 374 1,158,334 262,416 207,201 55,214 8,001 4,975 25,408 5,538 604 10,689 104,795 791,124 761,308 29,816 24,598 1,484 3,363 370 1,129,716 245,168 193,318 51,850 8,389 2,439 23,401 5,813 694 11,115 101,460 783,087 753,033 30,054 24,427 1,484 3,782 361 1,110,245 230,396 182,853 47,543 7,753 1,7% 20,094 5,194 668 12,037 99,458 780,391 749,290 31,101 25,049 1,517 4,176 360 262,650 0 25,798 236,852 273,104 4,583 16,173 252,348 280,785 0 16,865 263,919 294,938 965 29,461 264,512 282,183 0 29,817 252,366 LIABILITIES 64 Liabilities for borrowed money6 65 Borrowings from Federal Reserve Banks 66 Treasury tax and loan notes 67 Other liabilities for borrowed money 68 Other liabilities (including subordinated notes and debentures) 1,110,123" 1,119,817 238,536" 251,299 190,421 200,832 48,115" 50,467 8,047 8,671 1,848 2,129 20,949" 23,470 5,275 5,545 604 880 11,394 9,772 98,320 98,859 773,267 769,659 740,164 743,178 30,089 29,495 25,024 24,405 1,110 1,094 3,584 3,613 384 372 263,726 0 11,010" 252,716r 262,038 600 7,290 254,148 106,195r 108,306r 103,763" 108,121" 107,029 103,802 105,286 105,899 107,223 L,490,203 R L,482,943 R 1,484,223" 1,499,051" 1,528,355 1,512,293 1,544,406 1,530,553 1,499,652 115,899" 116,189" 115,909" 114,980" 117,921 118,111 118,128 119,183 120,067 r Total loans and leases, gross, adjusted, plus securities . . l,300,358 1,297,165" 1,301,751" 1,298,250" 170,555 169,399 166,249 163,958" Time deposits in amounts of $100,000 or more 10 1,258 1,242 1,299 1,221 Loans sold outright to affiliates 681 675 654 654 Commercial and industrial 618 583 588 566 Other 24,452 24,179 24,217 24,141 Foreign branch credit extended to U.S. residents -2,855" -5,760" -4,771 -4,229 Net due to related institutions abroad 1,316,603 162,887 1,232 680 553 23,603 -11,695 1,319,467 164,539 1,247 701 546 23,822 -5,753 1,321,980 162,927 1,233 695 538 23,829 -7,972 1,317,542 161,499 1,230 697 534 23,685 -3,792 1,312,825 160,639 1,224 685 538 23,409 453 69 Total liabilities 70 Residual (total assets less total liabilities)8 270,337 0 26,117 244,220 271,114 31 27,780 243,303 MEMO 71 72 73 74 75 76 77 1. Components may not sum to totals because of rounding. 2. Includes certificates of participation, issued or guaranteed by agencies of the U.S. government, in pools of residential mortgages. 3. Includes securities purchased under agreements to resell. 4. Includes allocated transfer risk reserve. 5. Includes negotiable order of withdrawal (NOW) , automatic transfer service (ATS), and telephone and preauthorized transfer savings deposits. 6. Includes borrowings only from other-than-directly-related institutions. 7. Includes federal funds purchased and securities sold under agreements to repurchase. 8. This balancing item is not intended as a measure of equity capital for use in capital-adequacy analysis. 9. Excludes loans to and federal funds transactions with commercial banks in the United States. 10. Affiliates include a bank's own foreign branches, nonconsolidated nonbank affiliates of the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank subsidiaries of the holding company. 11. Credit extended by foreign branches of domestically chartered weeklyreporting banks to nonbank U.S. residents. Consists mainly of commercial and industrial loans, but includes an unknown amount of credit extended to other than nonfinancial businesses. NOTE. Data that formerly appeared in table 1.28, Assets and Liabilities of Large Weekly Reporting Commercial Banks in New York City, can be obtained from the Board's H.4.2 (504) weekly statistical release. For ordering address see inside front cover. A22 1.30 DomesticNonfinancialStatistics • April 1992 LARGE WEEKLY-REPORTING U.S. BRANCHES A N D AGENCIES OF FOREIGN B A N K S Liabilities 1 Assets and Millions of dollars, Wednesday figures 1991 1992 Account Dec. 4r 1 Cash and balances due from depository institutions 2 U.S. Treasury and government agency securities 3 Other securities 4 Federal funds sold1 5 To commercial banks in the United States . . . 6 To others 7 Other loans and leases, gross 8 Commercial and industrial 9 Bankers acceptances and commercial paper 10 All other 11 U.S. addressees 17 Non-U.S. addressees 13 Loans secured by real estate 14 To financial institutions 15 Commercial banks in the United States.. 16 Banks in foreign countries 17 Nonbank financial institutions 18 For purchasing and carrying securities . . . . 19 To foreign governments and official institutions 20 All other 21 Other assets (claims on nonrelated parties) . . 22 Total assets3 23 Deposits or credit balances due to other than directly related institutions 24 Demand deposits 4 25 Individuals, partnerships, and corporations 76 Other 27 Nontransaction accounts 28 Individuals, partnerships, and corporations 29 Other 30 Borrowings from other than directly related institutions 31 Federal funds purchased 5 32 From commercial banks in the United States 33 From others 34 Other liabilities for borrowed money 35 To commercial banks in the United States 36 To others 37 Other liabilities to nonrelated parties 38 Total liabilities6 MEMO 39 Total loans (gross) and securities, adjusted .. 40 Net due to related institutions abroad Dec. 11 Dec. 18 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 16,576 16,307 17,291 17,711 17,349 16,733 17,412 17,074 16,543 19,572 7,876 8,846 3,963 4,883 151,110 88,285 20,631 7,911 11,115 4,512 6,602 151,121r 88,145r 20,590 8,153 10,186 4,115 6,071 152,797r 89,412r 21,600 8,366 9,516 5,233 4,284 157,256r 91,161r 21,792 8,890 13,061 6,472 6,590 168,317 98,150 22,167 8,927 9,531 3,774 5,756 162,735 97,116 21,947 8,826 10,533 3,812 6,721 163,266 97,669 20,836 8,949 13,692 7,519 6,173 163,363 97,263 20,459 8,913 11,276 3,905 7,371 164,761 97,690 2,174 86,111 83,345 2,766 33,588 21,319 7,754 2,247 11,318 5,412 l,994r 86,^O 1 83,331rr 2,819 33,462 21,219r 7,778r 1,965 11,476r 5,834 2,236r 87,176r 84,23lrr 2,945 33,392 21,443r 7,458r 2,220 11,765r 6,024 2,199r 88,962r 86,047r 2,915r 33,604 22,47l r 7,688r 2,776 12,006r 7,469r 2,573 95,577 92,589 2,988 36,660 22,230 8,292 1,919 12,020 8,310 2,322 94,794 91,930 2,864 36,581 21,396 7,889 1,941 11,567 5,173 2,288 95,381 92,525 2,856 36,652 20,314 7,566 1,816 10,932 6,113 2,373 94,890 92,021 2,869 36,638 20,369 7,704 1,807 10,858 6,591 2,314 95,376 92,495 2,881 36,564 20,851 7,824 1,866 11,161 7,225 408 2,098 31,685 410 2,052 33,342r 410 2,116 30,544r 384 2,166r 31,206r 405 2,563 32,232 393 2,075 30,963 394 2,124 30,229 407 2,094 29,811 420 2,011 30,142 297,449 288,063 292,890 293,020 291,881 96,363 4,200 95,232 3,792 95,339 3,755 97,834 3,824 101,546 3,669 275,720 278,963 93,069 3,565 95,855 3,453 280,485 283,060 98,778r 4,980" 97,847 4,260 r 2,707 859 89,503 2,667r 787r 92,402 3,976r l,003r 93,799 3,141 1,119" 93,586 3,381 819 92,163 2,970 823 91,439 2,928 827 91,584 3,000 825 94,009 2,801 867 97,877 64,195 25,308 66,296 26,106 67,343 26,455 67,502 26,085 65,058 27,104 64,477 26,963 64,529 27,054 66,736 27,273 69,212 28,665 99,472 54,634 95,274r 47,127 97,137r 50,158 97,144r 46,879 107,426 52,742 104,537 53,691 105,354 58,103 102,142 53,445 99,849 51,208 21,059 33,576 44,838 20,183 26,943 48,148r 20,707 29,451 46,978r 20,123 26,756 50,266r 22,490 30,252 54,684 24,043 29,648 50,846 26,338 31,766 47,251 20,803 32,642 48,698 22,282 28,926 48,641 13,197 31,641 13,999 34,148r 30,730" 28,796 R 13,761 33,218r 14,779 35,487r 16,605 38,079 29,456 15,241 35,606 28,584 15,050 32,201 28,079 14,778 33,920 27,704 16,097 32,544 27,317 29,918 29,382 R 275,720 278,963 280,485 283,060 297,449 288,063 292,890 293,020 291,881 175,687 13,204 178,488r 18,568 180,153r 14,850 183,816r 21,282 197,297 28,397 191,697 22,704 193,194 23,442 191,618 26,046 193,680 23,382 1. Includes securities purchased under agreements to resell. 2. Includes transactions with nonbank brokers and dealers in securities. 3. Includes net due from related institutions abroad for U.S. branches and agencies of foreign banks having a net "due from" position. 4. Includes other transaction deposits. Dec. 25 5. Includes securities sold under agreements to repurchase. 6. Includes net to related institutions abroad for U.S. branches and agencies of foreign banks having a net "due to" position. 7. Excludes loans to and federal funds transactions with commercial banks in the United States. Financial Markets A23 COMMERCIAL PAPER A N D BANKERS DOLLAR ACCEPTANCES OUTSTANDING 1 1.32 Millions of dollars, end of period 1991 1987 Dec. Item 1988 Dec. 1990 Dec. 1989 Dec. 1991 Dec. July Aug. Sept. Oct. Nov. Dec. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 358,997 458,464 530,123 566,688 535,998 545,493r 538,179" 532,931" 529,981" 538,567" 535,998 102,742 159,777 186,343 218,953 218,687 205,099 208,159 211,821 219,028 220,402 218,687 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 174,332 194,931 212,640 201,862 185,074 195,144r 191,902" 189,427" 180,540" 182,109" 185,074 2 2 3 4 5 Financial companies Dealer-placed paper Total Bank-related (not seasonally adjusted) Directly placed paper5 Total Bank-related (not seasonally adjusted) 6 Nonfinancial companies 6 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 81,923 103,756 131,140 145,873 132,237 145,250 138,118 131,683 130,413 136,056 132,237 Bankers dollar acceptances (not seasonally adjusted) 7 7 Total Holder Accepting banks Own bills Bills bought Federal Reserve Banks Own account Foreign correspondents Others Basis 14 Imports into United States 15 Exports from United States 16 All other 8 9 10 11 12 13 70,565 66,631 62,972 54,771 43,770 44,756 44,228 43,462 44,910 43,947 43,770 10,943 9,464 1,479 9,086 8,022 1,064 9,433 8,510 924 9,017 7,930 1,087 11,027 9,356 1,670 9,081 7,906 1,175 9,622 7,826 1,795 10,174 8,237 1,937 9,876 8,306 1,570 10,750 8,754 1,996 11,027 9,356 1,670 0 965 58,658 0 1,493 56,052 0 1,066 52,473 0 918 44,836 0 1,739 31,004 0 1,274 34,401 0 1,665 32,941 0 1,678 31,610 0 1,862 33,172 0 1,705 31,491 0 1,739 31,004 16,483 15,227 38,855 14,984 14,410 37,237 15,651 13,683 33,638 13,096 12,703 28,973 12,843 10,351 20,577 12,728 11,468 20,561 12,968 11,044 20,215 12,876 10,966 19,620 13,265 11,105 20,541 13,472 10,486 19,989 12,843 10,351 20,577 1. Components may not sum to totals because of rounding. 2. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, personal, and mortgage financing; factoring, finance leasing, and other business lending; insurance underwriting; and other investment activities. 3. Includes all financial-company paper sold by dealers in the open market. 4. Bank-related series were discontinued in January 1989. 5. As reported by financial companies that place their paper directly with investors. 1.33 6. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and services. 7. Data on bankers acceptances are gathered from institutions whose acceptances total $100 million or more annually. The reporting group is revised every January. In January 1988, the group was reduced from 155 to 111 institutions. The current group, totaling approximately 100 institutions, accounts for more than 90 percent of total acceptances activity. PRIME RATE CHARGED BY BANKS on Short-Term Business Loans 1 Percent per year Date of change Period Rate 1989— Jan. 1 Feb. 10 24 June 5 July 31 10.50 11.00 11.50 11.00 10.50 1990— Jan. 8 10.00 1991— Jan. 2 Feb. 4 May 1 Sept. 13 . Nov. 6 Dec. 23 9.50 9.00 8.50 8.00 7.50 6.50 Average rate 1989 1990 1991 10.87 10.01 8.46 1989— Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 10.50 10.93 11.50 11.50 11.50 11.07 10.98 10.50 10.50 10.50 10.50 10.50 1. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) monthly statistical releases. For ordering address, see inside front cover. Period 1990—Jan. ... Feb. .. Mar. .. Apr. .. May ... June .. July ... Aug. .. Sept. .. Oct. ... Nov. .. Dec. .. Average rate 10.11 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 Period 1991— Jan. .. Feb. . Mar. . Apr. . May .. June . July ... Aug. .. Sept. .. Oct. ... Nov. .. Dec. .. 1992— Jan. ... Feb. A24 1.35 DomesticNonfinancialStatistics • April 1992 INTEREST RATES Money and Capital Markets Averages, percent per year; weekly, monthly and annual figures are averages of business day data unless otherwise noted. 1991 Item 1989 1990 1992 1992, week ending 1991 Oct. Nov. Dec. Jan. Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 MONEY MARKET INSTRUMENTS 1 Federal funds 1,2,3 2 Discount window borrowing 2,4 9.21 6.93 8.10 6.98 5.69 5.45 5.21 5.00 4.81 4.58 4.43 4.11 4.03 3.50 4.19 3.50 4.19 3.50 4.01 3.50 3.87 3.50 4.01 3.50 9.11 8.99 8.80 8.15 8.06 7.95 5.89 5.87 5.85 5.29 5.35 5.33 4.95 4.98 4.93 4.98 4.61 4.49 4.11 4.07 4.06 4.57 4.27 4.17 4.09 4.02 3.99 4.10 4.08 4.08 4.08 4.07 4.08 4.08 4.09 4.09 paper3,5,6 3 4 5 Commercial 1-month 3-month 6-month 6 7 8 Finance paper, directly placed3,5,7 1-month 3-month 6-month 8.99 8.72 8.16 8.00 7.87 7.53 5.73 5.71 5.60 5.18 5.19 5.12 4.80 4.87 4.76 4.69 4.39 4.31 3.99 3.99 3.95 4.16 4.07 4.00 3.95 3.94 3.92 3.99 4.00 3.95 3.97 3.99 3.97 4.00 4.01 3.98 9 10 Bankers acceptances3'5'8 3-month 6-month 8.87 8.67 7.93 7.80 5.70 5.67 5.21 5.15 4.85 4.76 4.42 4.28 3.97 3.96 4.05 3.97 3.92 3.87 3.99 3.99 3.96 3.95 4.00 4.02 11 12 13 Certificates of deposit, secondary marker9 1-month 3-month 6-month 9.11 9.09 9.08 8.15 8.15 8.17 5.82 5.83 5.91 5.23 5.33 5.32 4.86 4.94 4.92 4.84 4.47 4.41 4.07 4.05 4.07 4.35 4.15 4.11 4.04 3.98 3.97 4.08 4.09 4.12 4.06 4.06 4.08 4.06 4.08 4.11 9.16 8.16 5.86 5.34 4.96 4.48 4.06 4.16 3.96 4.10 4.08 4.08 8.11 8.03 7.92 7.50 7.46 7.35 5.38 5.44 5.52 4.99 5.04 5.04 4.56 4.61 4.64 4.07 4.10 4.17 3.80 3.87 3.95 3.87 3.87 3.93 3.77 3.81 3.87 3.81 3.88 3.98 3.77 3.86 3.95 3.84 3.92 4.02 8.12 8.04 7.91 7.51 7.47 7.36 5.42 5.49 5.54 5.03 5.08 5.12 4.60 4.66 4.72 4.12 4.16 4.20 3.84 3.88 3.84 3.91 3.91 n.a. 3.85 3.86 n.a. 3.83 3.87 3.84 3.78 3.84 n.a. 3.84 3.93 n.a. 14 Eurodollar deposits, 3-month 3,10 18 19 20 U.S. Treasury bills Secondary market • 3-month 6-month 1-year Auction average ' • 3-month 6-month 1-year 21 22 23 24 25 26 27 Constant maturities12 1-year 2-year 3-year 5-year 7-year 10-year 30-year 8.53 8.57 8.55 8.50 8.52 8.49 8.45 7.89 8.16 8.26 8.37 8.52 8.55 8.61 5.86 6.49 6.82 7.37 7.68 7.86 8.14 5.33 5.91 6.23 6.87 7.25 7.53 7.93 4.89 5.56 5.90 6.62 7.06 7.42 7.92 4.38 5.03 5.39 6.19 6.69 7.09 7.70 4.15 4.96 5.40 6.24 6.70 7.03 7.58 4.14 4.79 5.14 5.98 6.46 6.78 7.45 4.06 4.74 5.12 6.01 6.48 6.80 7.43 4.17 5.02 5.45 6.34 6.76 7.04 7.57 4.14 5.02 5.47 6.32 6.80 7.14 7.65 4.23 5.14 5.65 6.41 6.88 7.25 7.74 Composite13 28 Over 10 years (long-term) 8.58 8.74 8.16 7.88 7.83 7.58 7.48 7.32 7.29 7.49 7.57 7.66 7.00 7.40 7.23 6.96 7.29 7.27 6.56 6.99 6.92 6.28 6.70 6.68 6.24 6.58 6.73 6.32 6.65 6.69 6.13 6.47 6.54 6.22 6.54 6.52 6.22 6.54 6.40 6.02 6.37 6.56 6.08 6.42 6.59 6.20 6.54 6.65 9.66 9.77 9.23 8.99 8.93 8.75 8.64 8.60 8.57 8.64 8.67 8.70 9.26 9.46 9.74 10.18 9.32 9.56 9.82 10.36 8.77 9.05 9.30 9.80 8.55 8.83 9.08 9.49 8.48 8.78 9.01 9.45 8.31 8.61 8.82 9.26 8.20 8.51 8.72 9.13 8.17 8.45 8.65 9.11 8.14 8.43 8.64 9.05 8.20 8.52 8.72 9.11 8.22 8.56 8.76 9.16 8.25 8.58 8.76 9.20 37 A-rated, recently offered utility bonds17 . . . . 9.79 10.01 9.32 9.02 8.95 8.68 8.57 8.46 8.49 8.58 8.67 8.72 MEMO: Dividend-price ratio18 38 Preferred stocks 39 Common stocks 9.05 3.45 8.96 3.61 8.17 3.25 7.84 3.14 7.81 3.15 7.62 3.11 7.54 2.90 7.57 2.91 7.52 2.89 7.51 2.87 7.50 2.89 7.61 2.96 15 16 17 U . S . TREASURY NOTES AND BONDS STATE AND LOCAL NOTES AND BONDS Moody's series14 29 Aaa 30 Baa 31 Bond Buyer series15 CORPORATE BONDS 32 Seasoned issues, all industries16 33 34 35 36 Rating group Aaa Aa A Baa 1. The daily effective federal funds rate is a weighted average of rates on trades through N.Y. brokers. 2. Weekly figures are averages of seven calendar days ending on Wednesday of the current week; monthly figures include each calendar day in the month. 3. Annualized using a 360-day year or bank interest. 4. Rate for the Federal Reserve Bank of New York. 5. Quoted on a discount basis. 6. An average of offering rates on commercial paper placed by several leading dealers for firms whose bond rating is AA or the equivalent. 7. An average of offering rates on paper directly placed by finance companies. 8. Representative closing yields for acceptances of the highest rated money center banks. 9. An average of dealer offering rates on nationally traded certificates of deposit. 10. Bid rates for Eurodollar deposits at 11 a.m. London time. Data are for indication purposes only. 11. Auction date for daily data; weekly and monthly averages computed on an issue-date basis. 12. Yields on actively traded issues adjusted to constant maturities. Source: U.S. Treasury. 13. Unweighted average of rates on all outstanding bonds neither due nor callable in less than 10 years, including one very low yielding "flower"bond. 14. General obligations based on Thursday figures; Moody's Investors Service. 15. General obligations only, with twenty years to maturity, issued by twenty state and local government^ units of mixed quality. Based on figures for Thursday. 16. Daily figures from Moody's Investors Service. Based on yields to maturity on selected long-term bonds. 17. Compilation of the Federal Reserve. This series is an estimate of the yield on recently-offered, A-rated utility bonds with a thirty-year maturity and five years of call protection. Weekly data are based on Friday quotations. 18. Standard and Poor's corporate series. Preferred stock ratio based on a sample of ten issues: four public utilities, four industrials, one financial, and one transportation. Common stock ratios on the 500 stocks in the price index. NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. For address, see inside front cover. Financial Markets 1.36 STOCK MARKET A25 Selected Statistics 1992 1991 Indicator 1990r 1989 1991 May June July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading volume (averages of daily figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 2 Industrial 3 Transportation 4 Utility Finance 5 180.13 228.04 174.90 94.33 162.01 183.66 226.06 158.80 90.72 133.21 206.35 258.16 173.97 92.64 150.84 207.07 260.13 170.77 90.73 151.32 207.32 261.16 177.05 89.01 152.30 208.29 262.48 177.15 90.05 151.69 213.33 268.22 178.42 92.38 157.70 212.55 266.21 177.99 93.72 157.69 213.10 265.68 187.45 95.25 158.94 213.25 264.89 188.52 96.78 159.78 214.26 266.01 185.47 98.08 159.96 229.34 286.62 201.55 99.31 174.50 6 Standard & Poor's Corporation (1941-43 = 10)1 323.05 335.01 376.20 378.27 378.29 380.23 389.40 387.20 386.88 385.87 388.51 416.08 7 American Stock Exchange (Aug. 31, 1973 = 50? 356.67 338.32 360.32 362.67 366.06 364.33 367.38 369.55 376.82 382.38 373.08 409.08 165,568 13,124 156,359 13,155 179,411 12,486 170,337 10,995 162,154 11,477 157,871 10,883 171,490 12,514 163,242 13,378 177,502 13,764 187,191 14,487 197,914 17,475 239,903 20,444 Volume of trading (thousands of shares) 8 New York Stock Exchange 9 American Stock Exchange Customer financing (millions of dollars, end-of-period balances) 10 Margin credit at broker-dealers3 34,320 28,210 36,660 29,980 31,280 30,600 32,240 33,170 33,360 34,840 36,660 36,350 Free credit balances at brokers4 11 Margin accounts 12 Cash accounts 7,040 18,505 8,050 19,285 8,290 19,255 7,200 16,650 6,690 18,110 6,545 16,945 7,040 17,040 6,950 17,595 6,965 17,100 7,040 17,780 8,290 19,255 7,865 19,990 Margin requirements (percent of market value and effective date) 6 13 Margin stocks 14 Convertible bonds 15 Short sales Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 70 50 70 80 60 80 65 50 65 55 50 55 65 50 65 50 50 50 1. Effective July 1976, includes a new financial group, banks and insurance companies. With this change the index includes 400 industrial stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 financial. 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting previous readings in half. 3. Since July 1983, under the revised Regulation T, margin credit at brokerdealers has included credit extended against stocks, convertible bonds, stocks acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds, and subscription issues was discontinued in April 1984. 4. Free credit balances are amounts in accounts with no unfulfilled commitments to brokers and are subject to withdrawal by customers on demand. 5. New series since June 1984. 6. These requirements, stated in regulations adopted by the Board of Governors pursuant to the Securities Exchange Act of 1934, limit the amount of credit that can be used to purchase and carry "margin securities" (as defined in the regulations) when such credit is collateralized by securities. Margin requirements on securities other than options are the difference between the market value (100 percent) and the maximum loan value of collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the initial margin required for writing options on securities, setting it at 30 percent of the current market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the same as the option maintenance margin required by the appropriate exchange or self-regulatory organization; such maintenance margin rules must be approved by the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC approved new maintenance margin rules, permitting margins to be the price of the option plus 15 percent of the market value of the stock underlying the option. Effective June 8, 1988, margins were set to be the price option plus 20 percent of the market value of the stock underlying the option (or 15 percent in the case of stock-index options). A26 1.37 DomesticNonfinancialStatistics • April 1992 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1991 Account 1989 1990 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. SAIF-insured institutions 1 Assets 1,249,055 1,084,821 1,054,654 1,041,977 1,027,464 1,020,677 1,001,582 984,971 972,529 949,047 937,776 934,295 733,729 633,385 619,720 610,618 608,857 605,947 596,022 586,280 578,269 566,107 560,830 556,997 170,532 155,228 149,318 147,431 143,968 141,582 139,536 137,098 135,751 135,377 135,084 133,341 25,457 32,150 58,685 16,897 24,125 48,753 14,872 23,205 47,729 14,592 22,294 47,653 14,413 21,903 46,702 14,438 21,724 45,827 14,625 20,645 45,174 14,242 20,301 44,352 14,031 20,390 43,259 13,115 18,507 42,441 12,471 18,159 43,062 12,261 17,525 42,732 2 Mortgages 3 Mortgage-backed securities 4 Contra-assets to mortgage assets 1 . 5 Commercial loans 6 Consumer loans 7 Contra-assets to nonmortgage loans . 8 Cash and investment securities 9 Other 3,592 1,939 1,876 1,827 1,742 1,739 1,745 1,676 1,546 1,399 1,372 1,146 166,053 116,955 146,644 95,522 138,884 92,546 138,976 91,424 132,878 89,301 134,012 87,757 130,443 86,133 130,264 82,594 132,011 78,425 125,774 75,354 120,675 73,809 123,370 73,738 10 Liabilities and net worth . 1,249,055 1,084,821 1,054,654 1,041,977 1,027,464 1,020,677 1,001,582 984,971 972,529 949,047 937,776 934,295 835,4% 197,353 100,391 96,962 21,332 30,640 816,477 183,660 94,658 89,002 23,355 31,162 816,991 169,412 90,555 78,857 20,350 35,223 806,266 164,268 86,779 77,489 21,752 35,178 801,678 159,625 82,312 77,313 23,647 35,720 792,923 151,474 78,966 72,508 20,480 36,705 775,445 146,901 76,104 70,797 21,647 40,977 763,763 142,908 74,424 68,484 22,642 43,216 749,372 132,726 68,792 63,934 19,070 47,878 741,371 127,356 66,578 60,778 20,368 48,681 737,379 125,146 65,976 59,170 21,677 50,093 11 12 13 14 15 16 Savings capital Borrowed money FHLBB Other Other Net worth 945,656 252,230 124,577 127,653 27,556 23,612 1. Contra-assets are credit-balance accounts that must be subtracted from the corresponding gross asset categories to yield net asset levels. Contra-assets to mortgage loans, contracts, and pass-through securities include loans in process, unearned discounts and deferred loan fees, valuation allowances for mortgages "held for sale," and specific reserves and other valuation allowances. 2. Contra-assets are credit-balance accounts that must be subtracted from the corresponding gross asset categories to yield net asset levels. Contra-assets to nonmortgage loans include loans in process, unearned discounts and deferred loan fees, and specific reserves and valuation allowances. 1.38 3. Includes holding of stock in Federal Home Loan Bank and finance leases plus interest. NOTE. Components do not sum to totals because of rounding. Data for credit unions and life insurance companies have been deleted from this table. They will be shown in a separate table which will appear quarterly, starting in the December issue. SOURCE. Savings Association Insurance Fund (SAIF)-insured institutions: Estimates by the Office of Thrift Supervision (OTS) for all institutions insured by the SAIF and based on the OTS thrift institution Financial Report. FEDERAL FISCAL A N D FINANCING OPERATIONS 1 Millions of dollars Calendar year Type of account or operation U.S. budget2 1 Receipts, total 2 On-budget 3 Off-budget 4 Outlays, total 5 On-budget 6 Off-budget 7 Surplus or deficit ( - ) , total 8 On-budget 9 Off-budget Source of financing (total) 10 Borrowing from the public 11 Operating cash (decrease, or increase ( - ) ) . . . 12 Other Fiscal year 1989 Fiscal year 1990 Fiscal year 1991 1991 1992 Aug. Sept. Oct. Nov. Dec. Jan. 990,701 727,035 263,666 1,144,020 933,107 210,911 -153,319 -206,072 52,753 1,031,308 749,652 281,656 1,251,766 1,026,711 225,065 -220,469 -277,059 56,590 1,054,260r 760,377 293,883r 1,322,989 l,081,303r 241,685r -268,729 -320,926 52,198 76,426 54,651 21,775 120,071 97,247 22,824 -43,645 -42,596 -1,049 109,345 83,130" 26,215r 116,174 91,516r 24,658r -6,829 -8,386 1,557 78,068 57,216 20,852 114,045 94,062 19,983 -35,976 -36,846 869 73,194 50,898 22,296 117,731r 95,438r 22,293 -44,537 r -44,540" 3 103,662 80,172 23,490 106,094r 95,396r 10,698 -2,432 r -15,224 r 12,792 104,040 79,886 24,154 119,742 97,189 22,553 -15,702 -17,303 1,601 141,806 3,425 8,088 220,101 818 -451 276,802 -1,329 -6,744 32,574 18,504 -7,433 27,970 -23,133 1,992 40,657 -11,235 6,554 25,641 28,195 -9,299" 22,825 -24,258 3,865r 11,449 925 3,328 40,973 13,452 27,521 40,155 7,638 32,517 41,484 7,928 33,556 18,351 6,745 11,606 41,484 7,928 33,556 52,719 18,111 34,608 24,524 6,317 18,207 48,782 17,697 31,085 47,857 10,828 37,028 MEMO 13 Treasury operating balance (level, end of period) 14 Federal Reserve Banks 15 Tax and loan accounts 1. Components may not sum to totals because of rounding. 2. In accordance with the Balanced Budget and Emergency Deficit Control Act of 1985, all former off-budget entries are now presented on-budget. Federal Financing Bank (FFB) activities are now shown as separate accounts under the agencies that use the FFB to finance their programs. The act also moved two social security trust funds (federal old-age survivors insurance and federal disability insurance trust fund) off-budget. The Postal Service is included as an off-budget item in the Monthly Treasury Statement beginning in 1990. 3. Includes special drawing rights (SDRs); reserve position on the U.S. quota in the International Monetary Fund (IMF); loans to the IMF; otheT cash and monetary assets; accrued interest payable to the public; allocations of SDRs; deposit funds; miscellaneous liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF loan-valuation adjustment; and profit on sale of gold. SOURCES. Monthly Treasury Statement of Receipts and Outlays of the U.S. Government (MTS) and the Budget of the U.S. Government. Federal Finance 1.39 All U.S. BUDGET RECEIPTS A N D OUTLAYS 1 Millions of dollars Calendar year Source or type Fiscal year 1990 Fiscal year 1991 1992 1991 1991 1990 HI H2 HI H2 Nov. Dec. Jan. RECEIPTS 1 All sources 2 Individual income taxes, net 3 Withheld 4 Presidential Election Campaign Fund . 5 Nonwithheld 6 Refunds Corporation income taxes 7 Gross receipts Refunds 8 9 Social insurance taxes and contributions, net 10 Employment taxes and contributions 11 Self-employment taxes and contributions 12 Unemployment insurance 13 Other net receipts 14 15 16 17 Excise taxes Customs deposits Estate and gift taxes Miscellaneous receipts 1,031,308 1,054,260 548,861 503,123 540,504 519,288 73,194 103,662 104,040 466,884 388,384 32 151,285 72,817 467,827 404,152 32 142,693 79,050 243,087 190,219 30 117,675 64,838 230,745 207,469 3 31,728 8,455 232,389 193,440 31 109,405 70,487 233,983 210,552 1 33,2% 9,867 31,987 32,448 0 1,743 2,205 41,722 39,943 0 2,614 835 60,451 36,047 0 25,601 1,197 110,017 16,510 113,599 15,513 58,830 8,326 54,044 7,603 58,903 7,904 54,016 7,956 2,411 895 22,546 827 3,856 864 380,047 396,011 210,476 178,468 214,303 186,839 31,502 30,9% 31,832 353,891 370,526 195,269 167,224 199,727 175,802 28,835 30,418 30,797 21,795 21,635 4,522 25,457 20,922 4,563 19,017 12,929 2,278 2,638 8,996 2,249 22,150 12,2% 2,279 3,306 8,721 2,317 0 2,293 374 0 228 350 -1,361 619 415 35,345 16,707 11,500 27,316 42,430 15,921 11,138 22,847 18,153 8,096 6,442 12,106 17,535 8,568 5,333 16,032 20,703 7,488 5,631 8,991 24,690 8,694 5,521 13,503 4,200 1,412 984 1,593 3,912 1,405 757 3,151 3,349 1,367 930 3,119 1,251,776 1,322,989 640,867 647,218 631,737 693,499' 117,731r 106,094r 119,742 272,514 16,167 15,946 1,750 18,708 14,864 152,733 6,770 6,974 1,216 7,343 7,450 149,497 8,943 8,081 979 9,933 6,878 122,089 7,592 7,4% 816 8,324 7,684 147,531 7,651 8,473 1,436 11,221 7,335 25,794 1,836 1,293 667 1,829 2,291 24,138 1,252 1,501 160 1,580 2,409 25,675 1,678 1,308 -23 1,232 878 75,639 31,531 7,432 38,672 13,754 3,987 37,491 16,218 3,939 17,992 14,748 3,552 36,579 17,094 3,784 2,099 2,882 664 -6,650 2,731 546 4,736 2,546 599 OUTLAYS 18 All types 19 20 21 22 23 24 National defense International affairs General science, space, and technology . Energy Natural resources and environment Agriculture 299,331 13,762 14,444 2,372 17,067 11,958 25 26 27 28 Commerce and housing credit Transportation Community and regional development .. Education, training, employment, and social services 67,160 29,485 8,498 38,497 41,479 19,537 18,988 21,234 21,104 3,581 3,937 4,375 29 Health 30 Social security and medicare 31 Income security 57,716 346,383 147,314 71,183 373,495 171,618 29,488 175,997 78,475 31,424 176,353 75,948 35,608 190,247 88,778 41,458 193,156 87,215 7,283 32,186 14,970 7,329 32,676 16,191 6,688 33,497 17,663 32 33 34 35 36 29,112 10,004 10,724 184,221 -36,615 31,344 12,295 11,358 195,012 -39,356 15,217 4,868 4,916 91,155 -17,688 15,479 5,265 6,976 94,650 -19,829 14,326 6,187 5,212 98,556 -18,702 17,425 6,586 6,821 99,405 -20,435 4,060 1,124 1,303 16,557 -2,566 2,637 1,142 1,313 16,564 -3,148 2,465 1,058 937 17,577 -3,147 Veterans benefits and services Administration of justice General government Net interest 6 Undistributed offsetting receipts 1. Functional details do not sum to total outlays for calendar year data because revisions to monthly totals have not been distributed among functions. Fjscal year total for outlays does not correspond to calendar year data because revisions from the Budget have not been fully distributed across months. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. 3. Old-age, disability, and hospital insurance. 4. Federal employee retirement contributions and civil service retirement and disability fund. 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. 6. Net interest function includes interest received by trust funds. 7. Consists of rents and royalties on the outer continental shelf, U.S. government contributions for employee retirement. SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government, and the U.S. Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 1990. A28 1.40 DomesticNonfinancialStatistics • April 1992 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION 1 Billions of dollars, end of month 1989 1990 1991 Item Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec 31 1 Federal debt outstanding 2,975.50 3,081.90 3,175.50 3,266.10 3,397.30 3,491.70 3,562.90 3,683.10 3,736.30r 2 Public debt securities 3 Held by public 4 Held by agencies 2,953.00 2,245.20 707.80 3,052.00 2,329.30 722.70 3,143.80 2,368.80 775.00 3,233.30 2,437.60 795.80 3,364.80 2,536.60 828.30 3,465.20 2,598.40 866.80 3,538.00 2,642.90 895.10 3,665.30 2,745.70 919.60 3,801.70 n.a. n.a. 22.50 22.40 .10 29.90 29.80 .20 31.70 31.60 .20 32.80 32.60 .20 32.50 32.40 .10 26.50 26.40 .10 25.00 24.80 .10 17.80 17.60 .10 5 Agency securities 6 Held by public 7 Held by agencies n.a. n.a. n.a. 2,921.70 2,988.90 3,077.00 3,161.20 3,281.70 3,377.10 3,450.30 3,569.30 9 Public debt securities 10 Other debt 2 2,921.40 .30 2,988.60 .30 3,076.60 .40 3,160.90 .40 3,281.30 .40 3,376.70 .40 3,449.80 .40 3,569.00 .30 3,706.40 .40 11 MEMO: Statutory debt limit 3,122.70 3,122.70 3,122.70 3,195.00 4,145.00 4,145.00 4,145.00 4,145.00 4,145.00 8 Debt subject to statutory limit 1. Components may not sum to totals because of rounding. 2. Consists of guaranteed debt of Treasury and other federal agencies, specified participation certificates, notes to international lending organizations, and District 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY of Columbia stadium bonds. SOURCES. Treasury Bulletin and Monthly Statement of the Public Debt of the United States. Types and Ownership 1 Billions of dollars, end of period 1991 Type and holder 1 Total gross public debt 2 3 4 5 6 7 8 9 10 11 12 13 14 By type Interest-bearing Marketable Bills Notes Bonds Nonmarketable 2 State and local government series Foreign issues 3 Government Public Savings bonds and notes Government account series4 Non-interest-bearing By holder 5 15 U.S. Treasury and other federal agencies and trust funds 16 Federal Reserve Banks 17 Private investors 18 Commercial banks 19 Money market funds 20 Insurance companies 21 Other companies 22 State and local treasuries Individuals 23 Savings bonds 24 Other securities 25 Foreign and international 26 Other miscellaneous investors 1988 1990 1991 Q1 Q2 Q3 Q4 2,684.4 2,953.0 3,364.8' 3,801.7 3,465.2 3,538.0 3,665.3 3,801.7 2,663.1 1,821.3 414.0 1,083.6 308.9 841.8 151.5 6.6 6.6 .0 107.6 575.6 21.3 2,931.8 1,945.4 430.6 1,151.5 348.2 986.4 163.3 6.8 6.8 .0 115.7 695.6 21.2 3,362.0 2,195.8 527.4 1,265.2 388.2 1,166.2 160.8 43.5 43.5 .0 124.1 813.8 2.8 3,798.9 2,471.6 590.4 1,430.8 435.5 1,327.2 159.7 41.9 41.9 .0 135.9 959.2 2.8 3,441.4 2,227.9 533.3 1,280.4 399.3 1,213.5 159.4 42.8 42.8 .0 127.7 853.1 23.8 3,516.1 2,268.1 521.5 1,320.3 411.2 1,248.0 161.0 42.1 42.1 .0 131.3 883.2 21.9 3,662.8 2,390.7 564.6 1,387.7 423.4 1,272.1 158.1 41.6 41.6 .0 133.5 908.4 2.5 3,798.9 2,471.6 590.4 1,430.8 435.5 1,327.2 159.7 41.9 41.9 .0 135.9 959.2 2.8 589.2 238.4 1,858.5 193.8 11.8 107.3 87.1 313.6 707.8 228.4 2,015.8 174.8 14.9 130.1 93.4 338.7 828.3 259.8 2,288.3 188.2 45.4 149.7 108.9 329.6 866.8 247.3 2,360.6 194.8 65.7 149.3 114.9 329.5 895.1 255.1 2,397.9 204.2 55.2 155.1 130.8 327.0 919.6 264.7 2,489.4 214.0 64.5 157.0 142.0 326.0 109.6 79.2 362.2 593.4 117.7 98.7 392.9 654.6 126.2 107.6 423.2 822.4 129.7 108.6 430.7 837.4 133.2 110.3 441.2 840.9 135.4 122.1 444.8 883.6 1. Components may not sum to totals because of rounding. 2. Includes (not shown separately) securities issued to the Rural Electrification Administration, depository bonds, retirement plan bonds, and individual retirement bonds. 3. Nonmarketable series denominated in dollars, and series denominated in foreign currency held by foreigners. 4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. 5. Data for Federal Reserve Banks and U.S. government agencies and trust 1989 n.a. n.a. funds are actual holdings; data for other groups are Treasury estimates. 6. Consists of investments of foreign balances and international accounts in the United States. 7. Includes savings and loan associations, nonprofit institutions, credit unions, mutual savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury deposit accounts, and federally-sponsored agencies. SOURCES. Data by type of security, U.S. Treasury Department, Monthly Statement of the Public Debt of the United States; data by holder, the Treasury Bulletin. Federal Finance All 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions 1 Millions of dollars, daily averages, par value 1992, week ending 1991, week ending 1991 Item Dec. 4 Dec. 11 Dec. 18 Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 Jan. 29 30,957r 28,497 34,549" 32,804 30,880 26,080 37,021 47,436 33,151 32,335 42,034 33,385 18,691 18,559 32,848rr 29,975 14,018r 14,508r 33,775 31,799 13,578 11,601 37,494 36,389 19,959 21,265 37,513 32,629 13,752 13,150 34,762 32,028 13,611 15,500 18,599 15,218 7,663 8,949 35,863 41,188 16,713 16,784 59,975 53,921 24,708 21,137 49,491 44,476 18,752 18,481 51,138 40,483 18,515 14,787 4,428 571 736 4,089 700 904 4,636 610 739 4,205 933 1,167 4,998 843 999 4,983 680 707 4,352 375 597 4,359 226 275 6,009 704 611 3,562 678 885 5,060 663 597 6,276 620 622 11,954 2,638 14,169 2,934 11,900 2,662 10,193 2,440 15,685 3,019 14,184 3,161 11,919 2,388 5,576 2,035 16,940 2,507 14,124 3,242 14,354 3,200 10,624 2,978 88,007 93,690" 73,458r 72,738 93,103r 78,975 72,225 43,776 90,502 131,312 102,953 103,810 1,216 7,142 1,344 8,303 1,534 5,818 Oct. Nov. Dec. 35,273 36,252r 38,280 35,454 16,202 15,710 IMMEDIATE TRANSACTIONS2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 By type of security U.S. Treasury securities Bills Coupon securities, by maturity Less than 3.5 years 3.5 to 7.5 years 7.5 to 15 years 15 years or more Federal agency securities Debt, maturing in Less than 3.5 years 3.5 to 7.5 years 7.5 years or more Mortgage-backed securities Pass-throughs All others By type of counterparty Primary dealers and brokers U.S. Treasury securities Federal agency securities Debt Mortgage-backed Customers U.S. Treasury securities Federal agency securities Debt Mortgage-backed 1,585 6,803 1,387 8,245 1,383 6,227 1,790 5,317 1,693 8,323 1,495 7,672 1,026 5,996 907 2,714 1,779 8,691 52,913 55,231 48,848r 46,511 56,553 50,873 54,554 32,733 57,067 75,866 61,399 53,448 4,150 7,788 4,305 8,858 4,604 8,336 4,516 7,315 5,148 10,381 4,876 9,673 4,299 8,312 3,953 4,897 5,546 10,756 3,909 10,224 4,976 9,251 5,984 7,784 3,073 3,740 3,295 4,102 6,001 2,170 2,431 1,576 5,801 3,125 3,157 4,234 1,312 812 941 9,273 1,673 864 1,224 10,328 l,801r 1,096 1,052 7,264 1,195 872 776 5,937 1,381 1,305 1,498 10,178 1,289 867 1,218 6,612 4,093 1,888 703 8,496 1,130 495 844 4,200 1,619 1,220 1,372 10,160 2,600 1,851 2,078 14,160 2,131 1,390 1,859 11,839 2,552 1,477 1,680 10,259 92 38 25 94 73 63 119 39 30 22 134 49 22 47 13 204 17 54 315 16 24 12 6 14 4 10 7 28 160 51 285 71 38 17 55 8 12,076 2,339 12,374 1,745 9,lllr 1,308 7,270 927 13,528 2,024 9,813 1,169 9,683 1,456 3,521 725 16,120 1,225 22,000 2,094 14,748 2,288 15,722 2,657 1,025 420 381 2,205 975 640 523 3,482 1,074 526 386 2,019 807 631 631 1,877 1,200 1,058 381 2,420 425 234 252 1,739 2,273 517 413 2,528 728 156 350 1,467 1,332 507 575 2,304 1,973 492 490 2,350 1,560 210 696 3,057 1,390 211 1,323 2,877 532 334 480 339 875 176 713 237 1,758 601 402 438 FUTURE AND FORWARD TRANSACTIONS4 By type of deliverable security U.S. Treasury securities 17 Bills Coupon securities, by maturity 18 Less than 3.5 years 19 3.5 to 7.5 years 20 7.5 to 15 years 21 15 years or more Federal agency securities Debt, maturing in 22 Less than 3.5 years 23 3.5 to 7.5 years 24 7.5 years or more Mortgage-backed 25 Pass-throughs 26 Others OPTION TRANSACTIONS5 27 28 29 30 31 By type of underlying security U.S. Treasury, coupon securities, by maturity Less than 3.5 years 3.5 to 7.5 years 7.5 to 15 years 15 years or more Federal agency, mortgagebacked securities Pass-throughs 1. Transactions are market purchases and sales of securities as reported to the Federal Reserve Bank of New York by the U.S. government securities dealers on its published list of primary dealers. Averages for transactions are based on the number of trading days in the period. Immediate, forward, and future transactions are reported at principal value, which does not include accrued interest; option transactions are reported at the face value of the underlying securities. Dealers report cumulative transactions for each week ending Wednesday. 2. Transactions for immediate delivery include purchases or sales of securities (other than mortgage-backed agency securities) for which delivery is scheduled in five business days or less and "when-issued" securities that settle on the issue date of offering. Transactions for immediate delivery of mortgage-backed securities include purchases and sales for which delivery is scheduled in thirty days or less. Stripped securities are reported at market value by maturity of coupon or corpus. 3. Includes such securities as collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), interest only securities (IOs), and principal only securities (POs). 4. Futures transactions are standardized agreements arranged on an exchange. Forward transactions are agreements made in the over-the-counter market that specify delayed delivery. All futures transactions are included regardless of time to delivery. Forward contracts for U.S. Treasury securities and federal agency debt securities are included when the time to delivery is more than five days. Forward contracts for mortgage-backed securities are included when the time to delivery is more than thirty days. 5. Options transactions are purchases or sales of put-and-call options, whether arranged on an organized exchange or in the over-the-counter market, and include options on futures contracts on U.S. Treasury and federal agency securities. NOTE. In tables 1.42 and 1.43, the term "n.a." refers to data that are not published because of insufficient activity. Data formerly shown under option transactions for U.S. Treasury securities, bills; Federal agency securities, debt; and mortgage-backed securities, other than pass-throughs are no longer available because of insufficient activity. A30 1.43 DomesticNonfinancialStatistics • April 1992 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing 1 Millions of dollars 1992, week ending 1991, week ending 1991 item Oct. Dec. Nov. Nov. 27 Dec. 4 Dec. 11 Dec. 18 Positions Dec. 25 Jan. 1 Jan. 8 Jan. 15 Jan. 22 2 N E T IMMEDIATE TRANSACTIONS3 By type of security U.S. Treasury securities 1 Bills Coupon securities, by maturity 2 Less than 3.5 years 3 3.5 to 7.5 years 4 7.5 to 15 years 5 15 years or more Federal agency securities Debt, maturing in 6 Less than 3.5 years 7 3.5 to 7.5 years 8 7.5 years or more Mortgage-backed securities 9 Pass-throughs 10 All others' . Other money market instruments 11 Certificates of deposit 12 Commercial paper 13 Bankers acceptances 15,720 15,482 17,034 10,990 14,921 17,261 18,469 17,134 16,202 11,629 10,224 13,120 6,362 -2,993 -3,733 -8,144 7,368 -8,509 -3,844 -7,296 5,510 -6,729 -5,926 -1,437 5,197 -8,204 -4,885 -5,493 5,771 -10,663 -6,332 -3,816 3,636 -8,291 -6,640 -2,050 7,501 -8,598 -5,232 -1,450 6,137 -2,872 -5,484 -293 4,788 -4,176 -6,080 -632 4,524 -2,328 -7,638 -455 840 -5,312 -4,873 -2,292 6,508 -11,486 -6,086 -2,049 4,104 1,940 5,108 4,099 2,314 4,231 4,469 2,723 3,695 3,298 2,462 3,685 6,035 2,698 4,046 3,841 2,796 3,720 4,121 2,678 3,580 5,398 2,719 3,830 3,508 2,696 3,492 2,951 2,856 3,656 4,005 3,527 3,572 4,130 3,795 3,648 25,712 14,414 27,555 15,780 22,350 17,575 21,506 17,795 18,525 17,868 27,315 16,620 26,517 16,373 24,685 17,397 13,550 20,119 23,937 20,670 29,624 18,725 29,668 18,717 3,355 6,481 1,495 3,147 6,194 1,574 2,928 5,420 1,413 2,644 5,847 1,630 3,435 5,296 1,840 2,610 5,889 1,564 2,562 6,148 1,257 3,168 5,200 1,301 3,110 4,361 1,264 3,709 4,253 1,330 3,593 5,653 1,000 3,445 5,833 1,392 -8,523 -10,708 -9,316 -10,350 -13,238 -11,880 -8,267 -6,389 -8,082 -12,918 -11,273 -11,078 1,195 -1,553 -1,061 -3,551 394 -1,565 -500 -2,016 2,144 -516 -542 -5,074 111 -1,566 -575 -2,594 209 -1,077 -337 -4,149 441 -945 449 -5,747 2,984 -235 -730 -5,356 3,645 -719 -1,042 -5,217 2,650 -16 -1,617 -4,746 2,142 1,870 -34 -5,532 1,987 3,040 224 -4,306 243 3,263 1,740 -5,009 35 -60 -18 54 16 94 112 123 18 180 75 287 -45 -65 180 -14 109 56 -97 145 -83 428 187 231 135 58 -14 187 -24 300 39 0 1,061 317 100 FUTURE AND FORWARD TRANSACTIONS5 14 15 16 17 18 19 20 21 22 23 24 By type of deliverable security U.S. Treasury securities Bills Coupon securities, by maturity Less than 3.5 years 3.5 to 7.5 years 7.5 to 15 years 15 years or more Federal agency securities Debt, maturing in Less than 3.5 years 3.5 to 7.5 years 7.5 years or more Mortgage-backed securities Pass-throughs All others Certificates of deposit -1 -6,874 -9,585 4,041 -7,472 -13,065 -11,497 -15,336 -14,580 -2,912 -12,654 -12,046 -8,898 1,460 2,223 338 1,365 1,883 1,081 1,779 1,506 1,417 1,867 3,429 1,363 -153,734 -175,570 -190,580 -179,251 -179,492 -190,448 -190,469 -198,974 -196,901 -193,222 -135,563 -133,527 Financing6 Reverse repurchase agreements 25 Overnight and continuing 26 182,835 251,079 179,781 254,361 167,562 233,972 162,257 252,491 183,095 234,131 180,718 245,766 172,652 236,075 149,592 243,182 156,887 206,910 203,686 263,130 210,043 278,315 208,845 281,433 Repurchase agreements 27 Overnight and continuing 28 Term 287,307 234,937 270,661 255,652 263,365 231,374 221,264 292,960 282,007 219,421 285,609 232,870 286,300 225,806 242,050 258,941 223,096 211,932 314,115 233,496 332,437 258,725 332,730 263,295 Securities borrowed 29 Overnight and continuing 30 59,052 23,690 62,159 28,080 62,441 29,811 64,400 32,989 64,191 29,679 62,784 30,823 62,399 29,610 60,518 31,048 63,168 27,509 65,749 32,103 68,424 32,833 69,153 30,336 Securities loaned 31 Overnight and continuing 32 Term 9,304 742 9,271 1,363 8,302 897 9,330 4,057 7,434 387 7,352 410 8,763 396 8,621 1,775 9,080 1,364 8,702 834 10,566 1,249 10,295 833 Collateralized loans 33 Overnight and continuing 8,547 10,097 10,755 10,204 9,567 9,692 10,719 10,881 12,684 19,105 17,833 17,984 MEMO: Matched book7 Reverse repurchases 34 Overnight and continuing 35 Term 124,310 205,104 123,670 205,613 116,612 197,052 114,179 205,149 124,129 193,840 119,955 203,366 123,691 200,344 109,340 209,184 107,925 173,832 142,013 226,219 150,223 239,862 146,554 241,594 Repurchases 36 Overnight and continuing 37 Term 143,450 181,206 135,345 192,103 137,254 170,102 112,602 208,512 143,575 163,073 148,199 178,622 140,897 175,124 125,160 185,520 130,128 141,000 176,104 177,584 179,318 193,902 179,831 197,339 1. Data for positions and financing are obtained from reports submitted to the Federal Reserve Bank of New York by the U.S. government securities dealers on its published list of primary dealers. Weekly figures are close-of-business Wednesday data; monthly figures are averages of weekly data. Data for positions and financing are averages of close-of-business Wednesday data. 2. Securities positions are reported at market value. 3. Net immediate positions include securities purchased or sold (other than mortgage-backed agency securities) that have been delivered or are scheduled to be delivered in five business days or less and "when-issued" securities settle on the issue date of offering. Net immediate positions of mortgage-backed securities include securities purchased or sold that have been delivered or are scheduled to be delivered in thirty days or less. 4. Includes securities such as collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), interest only (IOs), and principal only (POs). 5. Futures positions are standardized contracts arranged on an exchange. Forward positions reflect agreements made in the over-the-counter market that specify FRASER delayed delivery. All futures positions are included regardless of time to Digitized for delivery. Forward contracts for U.S. Treasury securities and for federal agency debt securities are included when the time to delivery is more than five business days. Forward contracts for mortgage-backed securities are included when the time to delivery is more than thirty days. 6. Overnight financing refers to agreements made on one business day that mature on the next business day; continuing contracts are agreements that remain in effect for more than one business day but have no specific maturity and can be terminated without advance notice by either party; term agreements have a fixed maturity of more than one business day . 7. Matched-book data reflect financial intermediation activity in which the borrowing and lending transactions are matched. Matched-book data are included in the financing breakdowns given above. The reverse repurchase and repurchase numbers are not always equal because of the "matching" of securities of different values or types of collateralization. NOTE. Data for future and forward commercial paper and bankers' acceptances and term financing of collateralized loans are no longer available because of insufficient activity. Federal Finance All 1.44 FEDERAL A N D FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1991 Agency 1 Federal and federally sponsored agencies 2 Federal agencies 3 Defense Department 1 4 Export-Import Bank 2,3 5 Federal Housing Administration4 6 Government National Mortgage Association participation certificates 7 Postal Service 6 8 Tennessee Valley Authority 9 United States Railway Association6 10 Federally sponsored agencies7 11 Federal Home Loan Banks 12 Federal Home Loan Mortgage Corporation 13 Federal National Mortgage Association 14 Farm Credit Banks 8 15 Student Loan Marketing Association 16 Financing Corporation 17 Farm Credit Financial Assistance Corporation11 18 Resolution Funding Corporation 12 1988 1987 1989 1990 July Aug. Sept. Oct. Nov. 341,386 381,498 411,805 434,668 432,637 437,942 436,189 438,032 439,670 37,981 13 11,978 183 35,668 8 11,033 150 35,664 7 10,985 328 42,159 7 11,376 393 40,380 7 11,244 300 40,923 7 11,244 315 42,409 7 11,267 336 42,638 7 11,267 337 42,951 7 11,267 365 1,615 6,103 18,089 0 0 6,142 18,335 0 0 6,445 17,899 0 0 6,948 23,435 0 0 6,621 22,208 0 0 6,621 22,745 0 0 8,421 22,378 0 0 8,421 22,606 0 0 8,421 22,891 0 303,405 115,727 17,645 97,057 55,275 16,503 1,200 0 0 345,830 135,836 22,797 105,459 53,127 22,073 5,850 690 0 375,407 136,108 26,148 116,064 54,864 28,705 8,170 847 4,522 392,509 117,895 30,941 123,403 53,590 34,194 8,170 1,261 23,055 392,257 106,397 29,559 128,764 51,318 36,742 8,170 1,261 29,9% 397,019 107,469 31,650 128,589 52,056 37,778 8,170 1,261 29,996 393,780 106,510 31,502 127,460 52,010 36,821 8,170 1,261 29,9% 395,394 105,945 31,818 128,594 52,488 37,072 8,170r 1,261 29,9% 3%,719 107,344 31,099 130,197 52,105 36,497 8,170 1,261 29,9% 152,417 142,850 134,873 179,083 186,752 188,920 194,234 192,747 194,837 11,972 5,853 4,940 16,709 0 11,027 5,892 4,910 16,955 0 10,979 6,195 4,880 16,519 0 11,370 6,698 4,850 14,055 0 11,238 6,401 4,850 12,828 0 11,238 6,401 4,850 12,373 0 11,261 8,201 4,850 11,875 0 11,261 8,201 4,820 11,375 0 11,261 8,201 4,820 11,375 0 59,674 21,191 32,078 58,496 19,246 26,324 53,311 19,265 23,724 52,324 18,890 70,8% 51,334 18,832 81,269 51,334 18,846 83,878 50,694 18,597 88,756 48,534 18,599 89,957 48,534 18,628 92,018 MEMO 19 Federal Financing Bank debt13 20 21 22 23 24 Lending to federal and federally sponsored agencies Export-Import Bank Postal Service 6 Student Loan Marketing Association Tennessee Valley Authority United States Railway Association6 Other Lending14 25 Farmers Home Administration 26 Rural Electrification Administration 27 Other 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 under family housing and homeowners assistance programs. 2. Includes participation certificates reclassified as debt beginning Oct. 1,1976. 3. On-budget after Sept. 30, 1976. 4. Consists of debentures issued in payment of Federal Housing Administration insurance claims. Once issued, these securities may be sold privately on the securities market. 5. Certificates of participation issued before fiscal 1969 by the Government National Mortgage Association acting as trustee for the Farmers Home Administration; Department of Health, Education, and Welfare; Department of Housing and Urban Development; Small Business Administration; and the Veterans Administration. 6. Off-budget. 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Some data are estimated. 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, shown in line 17. 9. Before late 1982, the Association obtained financing through the Federal Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22. 10. The Financing Corporation, established in August 1987 to recapitalize the Federal Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987. 11. The Farm Credit Financial Assistance Corporation, established in January 1988 to provide assistance to the Farm Credit System, undertook its first borrowing in July 1988. 12. The Resolution Funding Corporation, established by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 1989. 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations issued, sold, or guaranteed by other federal agencies. Since FFB incurs debt solely for the purpose of lending to other agencies, its debt is not included in the main portion of the table in order to avoid double counting. 14. Includes FFB purchases of agency assets and guaranteed loans; the latter contain loans guaranteed by numerous agencies with the guarantees of any particular agency being generally small. The Farmers Home Administration item consists exclusively of agency assets, while the Rural Electrification Administration entry contains both agency assets and guaranteed loans. A32 t.45 DomesticNonfinancialStatistics • April 1992 N E W SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1991 Type of issue or issuer, or use 1989 1 All issues, new and refunding1 113,646 1992 1991r 1990 June July Aug. Sept. Oct. Nov. Dec.* Jan. 120,339 154,402r 13,804 11,629 15,744 13,240 11,357 17,734 15,796 12,612 By type of issue 2 General obligation 3 Revenue 35,774 77,873 39,610 81,295 55,100* 99,302* 4,442 9,362 3,900 7,729 5,919 9,825 5,253 7,987 3,088 8,269 6,510 11,224 5,871 9,925 3,954 8,658 By Type of issuer 4 State 5 Special district or statutory authority2 6 Municipality, county, or township 11,819 71,022 30,805 15,149 72,661 32,510 n.a. n.a. n.a. 1,529 5,057 7,218 650 7,320 3,659 2,328 8,890 4,526 3,371 6,272 3,597 7,195 605 3,557 1,171 10,817 5,746 1,671 9,435 4,690 1,036 8,243 3,333 7 Issues for new capital, total 84,062 10,008 9,513 12,164 9,586 8,967 13,495 12,020 7,127 By use of proceeds Education Transportation Utilities and conservation Social welfare Industrial aid Other purposes 15,133 6,870 11,427 16,703 5,036 28,894 1,568 1,570 1,884 2,220 895 1,871 2,033 629 1,763 1,986 511 2,591 1,585 720 1,673 4,119 676 3,391 1,507 1,248 1,573 2,793 916 1,549 1,511 1,744 1,825 1,276 973 1,638 1,297 2,682 1,915 2,621 349 4,631 1,924 488 1,931 3,070 1,083 3,524 2,385 1,194 1,953 868 218 n.a. 8 9 10 11 12 13 103,235 116,953r 17,042 11,650 11,739 23,099 6,117 n.a. 21,664* 13,395* 21,447 26,121 8,542 n.a. 1. Par amounts of long-term issues based on date of sale. 2. Since 1986, has included school districts. 1.46 NEW SECURITY ISSUES SOURCES. Investment Dealer's Digest beginning April 1990. Securities Data/ Bond Buyer Municipal Data Base beginning 1986. Public Securities Association for earlier data. U.S. Corporations Millions of dollars 1991 Type of issue, offering, or issuer 1989 1990 1991 May June July Aug. Sept. Oct. Nov. Dec. 1 All issues1 378,760* 340,197* 379,560 37,908* 31,837* 23,176* 35,450* 32,180* 34,893* 34,276* 31,586 2 Bonds2 320,889* 299,959* 314,201 30,490* 26,219* 20,494* 28,720* 26,759* 26,029* 25,223* 24,066 By type of offering 3 Public, domestic 4 Private placement, domestic 3 5 Sold abroad 180,618* 117,420 22,851 189,917* 86,988 23,054 287,010 n.a. 27,192 27,660* n.a. 2,830 23,797* n.a. 2,422* 18,920* n.a. 1,574* 26,845* n.a. 1,875* 23,856* n.a. 2,902* 23,469* n.a. 2,560* 23,200* n.a. 2,070* 23,300 n.a. 1,000 76,456* 49,615* 10,032 18,696* 8,461 157,629* 53,110 40,019 12,818* 17,621* 6,597* 169,789* 69,710 20,694 6,998 20,454 8,541 187,806 7,080* 1,213* 665 2,722 337 18,474 4,260* 1,773 567 1,644 1,838 16,138* 3,600* 1,500 697 1,457 749* 12,492* 7,643* 1,388 809 1,897 668 16,315* 6,949* 1,012 231 1,315* 408 16,844* 4,732* 1,209 744* 1,430* 958 16,957* 4,536* 2,044 180* 3,063* 226* 15,175* 4,956 1,977 150 2,238 1,085 13,660 12 Stocks2 57,870 40,165 n.a. 7,418 5,618 2,682 6,730 5,421 8,864 9,053 7,520 By type of offering 13 Public preferred 14 Common 15 Private placement3 6,194 26,030 25,647 3,998 19,443 16,736 17,408 47,860 n.a. 1,392 6,027 n.a. 1,731 3,887 n.a. 203 2,479 n.a. 1,952 4,778 n.a. 666 4,755 n.a. 3,527 5,337 n.a. 3,240 5,813 n.a. 2,771 4,749 n.a. 9,308 7,446 1,929 3,090 1,904 34,028 5,649 10,171 369 416 3,822 19,738 n.a. n.a. n.a. n.a. n.a. n.a. 2,291 1,563 277 573 0 2,714 1,909 851 0 471 295 2,091 685 1,427 18 143 46 350 3,167 2,050 56 150 8 1,298 1,842 858 0 55 0 2,666 3,623 2,095 16 320 25 2,622 4,054 2,158 0 174 84 2,583 2,684 2,535 0 233 17 2,014 6 7 8 9 10 11 16 17 18 19 20 21 By industry group Manufacturing Commercial and miscellaneous Transportation Public utility Communication Real estate and financial By industry group Manufacturing Commercial and miscellaneous Transportation Public utility Communication Real estate and financial 1. Figures represent gross proceeds of issues maturing in more than one year; they are the principal amount or number of units calculated by multiplying by the offering price. Figures exclude secondary offerings, employee stock plans, investment companies other than closed-end, intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include ownership securities issued by limited partnerships. 2. Monthly data cover only public offerings. 3. Monthly data are not available. SOURCES. IDD Information Services, Inc., the Board of Governors of the Federal Reserve System, and, before 1989, the U.S. Securities and Exchange Commission. Securities Market and Corporate Finance 1.47 O P E N - E N D INVESTMENT COMPANIES A33 Net Sales and Assets Millions of dollars 1991 Item1 1991 1990" May June July Aug. Sept. Oct. Nov. r Dec. 1 Sales of own shares2 344,420 464,488 36,719 33,922 39,329 38,014 37,316 45,218 41,365 52,035 3 Net sales3 288,441 55,979 342,088 122,400 26,972 9,747 27,629 6,293 28,767 10,562 28,128 9,886 26,319 10,997 27,957 17,261 28,454 12,911 38,557 13,478 4 Assets4 568,517 807,001 671,852 661,643 (90,486 712,782 730,426 753,344 752,798 807,001 48,638 519,875 60,937 746,064 55,450 616,402 55,057 606,586 55,293 635,193 52,791 659,992 53,884 676,543 59,902 695,492 59,689 693,109 60,937 746,064 5 5 Cash 6 Other 4. Market value at end of period, less current liabilities. 5. Includes all U.S. Treasury securities and other short-term debt securities. SOURCE. Investment Company Institute. Data based on reports of membership, which comprises substantially all open-end investment companies registered with the Securities and Exchange Commission. Data reflect underwritings of new companies. 1. Data on sales and redemptions exclude money market mutual funds but include limited-maturity municipal bond funds. Data on asset positions exclude both money market mutual funds and limited-maturity municipal bond funds. 2. Includes reinvestment of dividends. Excludes reinvestment of capital gains distributions. 3. Does not includes sales or redemptions resulting from transfers of shares into or out of money market mutual funds within the same fund family. 1.48 CORPORATE PROFITS A N D THEIR DISTRIBUTION Billions of dollars; quarterly data at seasonally adjusted annual rates 1989 Account 1988 1989 1990 1991 1990 Q4 Ql Q2 Q3 Q4 Ql Q2 Q3 1 Profits with inventory valuation and capital consumption adjustment 2 Profits before taxes 3 Profits tax liability 4 Profits after taxes 5 Dividends Undistributed profits 6 365.0 347.5 137.0 210.5 115.3 95.2 351.7 344.5 138.0 206.6 127.9 78.7 319.0 332.3 135.3 197.0 133.7 63.3 334.7 332.8 129.8 203.0 130.7 72.3 340.2 336.6 137.6 199.1 132.3 66.7 339.8 331.6 137.9 193.7 132.5 61.2 299.8 335.1 138.8 196.3 133.8 62.5 296.1 326.1 127.1 199.0 136.2 62.8 302.1 309.1 119.4 189.7 137.8 51.9 303.5 306.2 123.5 182.7 136.7 46.1 306.1 318.2 128.6 189.6 138.1 51.5 7 Inventory valuation 8 Capital consumption adjustment -27.3 44.7 -17.5 24.7 -14.2 .8 -13.5 15.4 -6.6 10.2 3.8 4.4 -32.6 -2.7 -21.2 -8.8 6.7 -13.6 9.9 -12.6 -4.8 -7.3 SOURCE. Survey of Current Business (U.S. Department of Commerce). 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment Billions of dollars; quarterly data at seasonally adjusted annual rates 19911 1990 Industry 1990 1991 19921 19921 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Total nonfarm business 532.61 529.97 558.60 534.55 534.11 530.13 535.50 524.57 527.86 531.96 563.31 Manufacturing 2 Durable goods industries 3 Nondurable goods industries 82.58 110.04 77.04 107.27 79.38 104.68 84.15 110.87 82.48 111.57 79.03 110.69 81.24 109.90 79.69 107.66 74.51 102.54 72.74 108.98 80.58 107.52 9.88 10.06 9.50 9.77 9.97 10.12 9.89 10.09 10.09 10.15 10.58 6.40 8.87 6.20 5.84 9.84 6.50 6.78 12.34 7.12 6.67 9.37 5.90 5.66 9.55 5.87 6.81 7.54 6.82 5.59 11.18 6.48 6.27 10.10 6.68 6.50 9.81 6.52 5.02 8.27 6.32 5.52 12.88 6.41 44.10 23.11 241.43 43.56 22.42 247.44 47.34 24.10 267.35 42.83 21.80 243.18 43.80 23.88 241.32 45.88 24.36 238.87 43.36 23.68 244.19 42.87 21.71 239.50 43.09 23.38 251.42 44.90 20.92 254.66 48.54 22.98 268.28 Nonmanufacturing 4 Mining Transportation 5 Railroad 6 Air 7 Other Public utilities 8 Electric 9 Gas and other 10 Commercial and o t h e r 1. Figures are amounts anticipated by business. 2. "Other" consists of construction, wholesale and retail trade, finance and insurance, personal and business services, and communication. SOURCE. Survey of Current Business (U.S. Department of Commerce). A34 1.51 DomesticNonfinancialStatistics • April 1992 DOMESTIC FINANCE COMPANIES Assets and Liabilities Billions of dollars, end of period; not seasonally adjusted 1990 Account 1987 1988 1991 1989 Q1 Q2 Q3 Q4 Ql Q2 Q3 ASSETS Accounts receivable, gross1 Consumer Business Real estate 388.1 141.1 207.4 39.5 426.2 146.2 236.5 43.5 445.7 140.8 256.0 48.9 452.8 137.9 262.9 52.1 468.8 138.6 274.8 55.4 474.0 140.9 275.4 57.7 486.7 136.0 290.8 59.9 478.9 131.6 290.0 57.3 487.9 133.9 295.5 58.5 487.8 132.5 296.6 58.7 45.3 6.8 50.0 7.3 52.0 7.7 51.9 7.9 54.3 8.2 55.1 8.6 56.6 9.2 57.0 10.3 58.7 10.8 59.6 12.9 7 Accounts receivable, net 8 All other 336.0 58.3 368.9 72.4 386.1 91.6 393.0 92.5 406.3 95.5 410.3 102.8 420.9 99.6 411.6 103.4 418.4 106.1 415.2 111.9 9 Total assets 394.2 441.3 477.6 485.5 501.9 513.1 520.6 515.0 524.5 527.1 16.4 128.4 15.4 142.0 14.5 149.5 13.9 152.9 15.8 152.4 15.6 148.6 19.4 152.7 22.0 141.2 22.7 140.6 24.0 138.1 28.0 137.1 n.a. n.a. 52.8 31.5 n.a. n.a. 50.6 137.9 59.8 35.6 n.a. n.a. 63.8 147.8 62.6 39.4 n.a. n.a. 70.5 145.7 61.7 40.7 n.a. n.a. 72.8 153.0 66.1 41.8 n.a. n.a. 82.0 156.6 68.7 41.6 n.a. n.a. 82.7 157.0 66.0 42.8 n.a. n.a. 77.8 162.4 68.0 43.7 n.a. n.a. 81.7 164.2 72.2 43.0 n.a. n.a. 87.4 163.4 72.1 42.1 394.2 441.3 477.6 485.5 501.9 513.1 520.6 515.0 524.5 527.1 1 2 3 4 5 LESS: Reserves for unearned income 6 Reserves for losses LIABILITIES AND CAPITAL 10 Bank loans 11 Commercial paper Debt Other short-term Long-term Due to parent Not elsewhere classified All other liabilities Capital, surplus, and undivided profits 12 13 14 15 16 17 18 Total liabilities and capital 1. Excludes pools of securitized assets. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Outstanding and Net Change 1 Millions of dollars, end of period; seasonally adjusted, except as noted 1991 Type of credit July Aug. Sept. Oct. Nov. Dec. 258,957 292,638 309,709 300,161 305,024 307,599 310,876 311,632 309,709 39,479 29,627 698 38,110 31,784 951 33,204 35,404 819 35,491 32,194 793 34,665 33,146 833 34,119 34,822 797 34,167 33,989 769 33,664 33,375 746 33,204 35,404 819 Wholesale Automotive Equipment All other Pools of securitized assets 2 33,814 6,928 9,985 0 32,283 11,569 9,126 2,950 32,487 9,790 8,459 4,905 29,454 11,344 8,807 2,843 30,637 10,631 8,712 3,508 30,072 10,594 8,695 4,053 31,831 11,075 8,407 4,458 32,292 10,414 8,418 4,639 32,487 9,790 8,459 4,905 Leasing 9 Automotive 10 Equipment 11 Pools of securitized assets 2 26,804 68,240 1,247 39,129 75,626 1,849 44,445 87,821 1,820 43,024 84,311 1,750 44,628 86,145 1,679 45,387 86,732 1,844 45,837 87,701 1,803 45,299 90,079 1,885 44,445 87,821 1,820 12 Loans on commercial accounts receivable and factored commercial accounts receivable 13 All other business credit 18,511 23,623 22,475 26,784 23,859 26,697 23,125 27,025 23,366 27,073 23,204 27,279 23,295 27,544 23,338 27,483 23,859 26,697 1 Total Retail financing of installment sales 2 Automotive 3 Equipment 4 Pools of securitized assets 2 5 6 7 8 Net change (during period) 24,066 33,681 17,071 1,933 4,862 2,576 3,277 756 -1,923 2,269 1,442 -26 -1,369 2,157 253 -4,906 3,619 -132 100 4 86 -825 952 40 -547 1,676 -36 48 -833 -28 -503 -614 -23 -460 2,029 73 Wholesale Automotive Equipment All other Pools of securitized assets 2 861 957 628 0 -1,532 4,641 -859 2,950 204 -1,779 -668 1,955 149 917 -44 38 1,183 -713 -95 665 -564 -37 -17 545 1,759 481 -289 405 461 -662 11 181 195 -624 41 266 Leasing 9 Automotive 10 Equipment 11 Pools of securitized assets 2 2,111 10,581 526 12,325 7,386 602 5,316 12,195 -29 1,421 350 25 1,604 1,834 -71 759 587 165 450 969 -41 -538 2,378 82 -854 -2,258 -65 825 2,446 3,964 3,161 1,383 -87 -914 -199 240 47 -162 207 91 264 43 -60 520 -786 1 Total Retail financing of installment sales 2 Automotive 3 Equipment 4 Pools of securitized assets 5 6 7 8 12 Loans on commercial accounts receivable and factored commercial accounts receivable 13 All other business credit 1. Data in this table also appear in the Board's G.20 (422) monthly http://fraser.stlouisfed.org/ release. For ordering address, see inside front cover. Federal Reserve Bank of St. Louis statistical 2. Data on pools of securitized assets are not seasonally adjusted, Real Estate 1.53 A35 MORTGAGE MARKETS Conventional Mortgages on New Homes Millions of dollars, except as noted 1991 Item 1989 1990 1992 1991 July Aug. Sept. Oct. Nov. Dec. Jan. Terms and yields in primary and secondary markets PRIMARY MARKETS 1 2 3 4 5 6 Terms1 Purchase price (thousands of dollars) Amount of loan (thousands of dollars) Loan-price ratio (percent) Maturity (years) Fees and charges (percent of loan amount) Contract rate (percent per year) Yield (percent per year) 7 OTS series3 8 HUD series4 159.6 117.0 74.5 28.1 2.06 9.76 153.2 112.4 74.8 27.3 1.93 9.68 155.0 114.0 75.0 26.8 1.71 9.02 165.1 121.6 75.0 27.0 1.85 9.12 159.0 115.7 74.6 27.1 1.74 9.19 157.8 114.3 73.3 25.9 1.86 9.00 153.4 115.0 76.5 27.5 1.61 8.78 162.6 116.0 73.5 26.4 1.53 8.38 159.1 113.8 73.1 26.4 1.50 8.28 153.9 114.9 75.2 26.2 1.85 8.17 10.11 10.21 10.01 10.08 9.30 9.20 9.43 9.46 9.48 9.22 9.30 8.88 9.04 8.76 8.64 8.67 8.53 8.30 8.49 8.69 10.24 9.71 10.17 9.51 9.25 8.59 9.59 8.93 9.14 8.69 9.06 8.60 8.71 8.34 8.69 8.09 8.10 7.81 8.72 7.81 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 10 GNMA securities6 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 12 FHA/VA-insured 13 Conventional 104,974 19,640 85,335 113,329 21,028 92,302 122,837 21,702 101,135 123,770 21,511 102,259 124,230 21,529 102,701 124,954 21,636 103,318 125,884 21,576 104,308 126,624 21,547 105,077 128,983 21,796 107,187 131,058 21,981 109,077 Mortgage transactions (during period) 14 Purchases 22,518 23,959 37,202 3,183 3,069 3,032 3,408 3,299 5,114 4,809 Mortgage commitments (during period)1 15 Issued8 16 To sell9 n.a. n.a. 23,689 5,270 40,010 7,608 2,975 1,374 3,453 1,051 3,1% 762 4,122 917 3,806 569 5,285 78 7,202 249 Mortgage holdings (end of period)9 17 Total 18 FHA/VA-insured 19 Conventional 20,105 590 19,516 20,419 547 19,871 n.a. n.a. n.a. 24,061 481 23,581 24,217 475 23,742 23,906 471 23,435 24,922 462 24,460 25,239 468 24,772 n.a. n.a. n.a. n.a. n.a. n.a. Mortgage transactions (during period) 20 Purchases 21 Sales 78,588 73,446 75,517 73,817 n.a. 92,870 8,649 8,057 9,191 8,803 9,155 9,305 8,644 7,449 10,170 9,545 n.a. 9,929 n.a. 10,597 Mortgage commitments (during period)10 22 Contracted 88,519 102,401 n.a. 8,890 12,430 7,468 6,358 11,594 n.a. n.a. FEDERAL HOME LOAN MORTGAGE CORPORATION 1. Weighted averages based on sample surveys of mortgages originated by major institutional lender groups; compiled by the Federal Housing Finance Board in cooperation with the Federal Deposit Insurance Corporation. 2. Includes all fees, commissions, discounts, and "points" paid (by the borrower or the seller) to obtain a loan. 3. Average effective interest rates on loans closed, assuming prepayment at the end of ten years; from Office of Thrift Supervision (OTS). 4. Average contract rates on new commitments for conventional first mortgages; from U.S. Department of Housing and Urban Development (HUD). 5. Average gross yields on thirty-year, minimum-downpayment, first mortgages insured by the Federal Housing Administration (FHA) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent month. Large monthly movements in average yields may reflect market adjustments to changes in maximum permissible contract rates. 6. Average net yields to investors on fully modified pass-through securities backed by mortgages and guaranteed by the Government National Mortgage Association (GNMA), assuming prepayment in twelve years on pools of thirtyyear mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs carrying the prevailing ceiling rate. Monthly figures are averages of Friday figures from the Wall Street Journal. 7. Includes some multifamily and nonprofit hospital loan commitments in addition to one- to four-family loan commitments accepted in the Federal National Mortgage Association's (FNMA's) free market auction system, and through the FNMA-GNMA tandem plans. 8. Does not include standby commitments issued, but includes standby commitments converted. 9. Includes participation as well as whole loans. 10. Includes conventional and government-underwritten loans. The Federal Home Loan Mortgage Corporation's mortgage commitments and mortgage transactions include activity under mortgage securities swap programs, while the corresponding data for FNMA exclude swap activity. A36 1.54 DomesticNonfinancialStatistics • April 1992 MORTGAGE DEBT OUTSTANDING 1 Millions of dollars, end of period 1990 Type of holder and property 1 All holders 2 3 4 5 By type of property One- to four-family residences Multifamily residences Commercial Farm By type of holder 6 Major financial institutions 7 Commercial banks 8 One- to four-family 9 Multifamily 10 Commercial 11 Farm 12 Savings institutions3 13 One- to four-family 14 Multifamily 15 Commercial 16 Farm 17 Life insurance companies 18 One- to four-family 19 Multifamily Commercial 20 21 Farm 22 Finance companies4 1987 1988 1991 1989 Q3 Q4 Ql Q2 Q3P 2,986,425 3,270,118 3,556,370 3,870,156r 3,912,197r 3,943,103r 3,995,164 4,026,139 1,962,958 278,899 657,036 87,532 2,201,231 291,405 692,236 85,247 2,429,689 303,416 739,240 84,025 2,724,873r 306,073r 754,926r 84,284 2,765,11 l r 307,049r 756,075r 83,%2 r 2,789,693r 309,633r 759,852r 83,925r 2,837,098 311,769 762,546 83,752 2,876,979 309,368 756,018 83,775 1,665,291 592,449 275,613 32,756 269,648 14,432 860,467 602,408 106,359 150,943 757 212,375 13,226 22,524 166,722 9,903 1,831,472 674,003 334,367 33,912 290,254 15,470 924,606 671,722 110,775 141,433 676 232,863 11,164 24,560 187,549 9,590 1,931,537 767,069 389,632 38,876 321,906 16,656 910,254 669,220 106,014 134,370 650 254,214 12,231 26,907 205,472 9,604 1,933,303 831,193 445,882 37,900 330,086 17,326 836,047 626,297 94,790 114,430 530 266,063 12,773 28,100 214,585 10,605 l,913,945r 844,456r 455,698r 37,008r 334,520r 17,231 801,628 600,154 91,806 109,168 500 267,861r 13,005r 28,979" 215,121 10,756 1,902,050"^ 856,499r 463,547r 37,927r 337,518r 17,507r 776,551 583,694 88,743 103,647 468 269, OOC 11,737r 29,493r 216,768r ll,001 r 1,898,114 871,222 476,133 37,864 339,186 18,039 755,219 570,044 86,448 98,280 447 271,674 11,743 30,006 219,204 10,721 1,868,554 870,684 478,628 36,669 337,063 18,323 722,754 549,406 82,361 90,583 404 275,117 11,947 30,527 221,750 10,893 29,716 37,846 45,476 49,784 48,777 48,187 48,972 50,800 23 Federal and related agencies 24 Government National Mortgage Association 25 One- to four-family 26 Multifamily , 27 Farmers Home Administration 28 One- to four-family 29 Multifamily 30 Commercial 31 Farm 32 Federal Housing and Veterans Administration 33 One- to four-family 34 Multifamily 35 Federal National Mortgage Association 36 One- to four-family 37 Multifamily 38 Federal Land Banks 39 One- to four-family 40 Farm 41 Federal Home Loan Mortgage Corporation 42 One- to four-family 43 Multifamily 192,721 444 25 419 43,051 18,169 8,044 6,603 10,235 5,574 2,557 3,017 96,649 89,666 6,983 34,131 2,008 32,123 12,872 11,430 1,442 200,570 26 26 0 42,018 18,347 8,513 5,343 9,815 5,973 2,672 3,301 103,013 95,833 7,180 32,115 1,890 30,225 17,425 15,077 2,348 209,498 23 23 0 41,176 18,422 9,054 4,443 9,257 6,087 2,875 3,212 110,721 102,295 8,426 29,640 1,210 28,430 21,851 18,248 3,603 242,695 21 21 0 41,269 18,476 9,477 4,608 8,708 7,938 3,248 4,690 113,718 103,722 9,9% 29,441 1,766 27,675 20,508 17,810 2,697 250,761 20 20 0 41,439 18,527 9,640 4,690 8,582 8,801 3,593 5,208 116,628 106,081 10,547 29,416 1,838 27,577 21,857 19,185 2,672 264,189rr 22 22r 0 41,307 18,522 9,720 4,715 8,350 9,492 3,600 5,891 119,1% 108,348 10,848 29,253 1,884 27,368 23,221r 20,570r 2,651 276,798 22 22 0 41,430 18,521 9,898 4,750 8,261 10,210 3,729 6,480 122,806 111,560 11,246 29,152 2,041 27,111 23,649 21,120 2,529 283,395 22 22 0 41,506 18,542 10,037 4,803 8,124 11,395 3,948 7,446 125,451 113,6% 11,755 29,053 2,124 26,929 23,906 21,489 2,417 44 Mortgage pools or trusts 6 45 Government National Mortgage Association 46 One- to four-family 47 Multifamily 48 Federal Home Loan Mortgage Corporation 49 One- to four-family 50 Multifamily 51 Federal National Mortgage Association 52 One- to four-family 53 Multifamily 54 Farmers Home Administration 55 One- to four-family 56 Multifamily 57 Commercial 58 Farm 718,297 317,555 309,806 7,749 212,634 205,977 6,657 139,960 137,988 1,972 245 121 0 63 61 811,847 340,527 331,257 9,270 226,406 219,988 6,418 178,250 172,331 5,919 104 26 0 38 40 946,766 368,367 358,142 10,225 272,870 266,060 6,810 228,232 219,577 8,655 80 21 0 26 33 1,062,729 394,859 384,474 10,385 301,797 293,721 8,077 281,806 273,335 8,471 70 18 0 24 29 l,110,555r 403,613 391,505 12,108 316,359 308,369 7,990 299,833 291,194 8,639 66 17 0 24 26 l,144,733r 409,929 397,631 12,298 318,215' 319,978 8,237r 312,101 303,554 8,547 62 14 0 23 24 1,184,4% 413,707 401,304 12,403 341,132 332,624 8,509 331,089 322,444 8,645 13 13 0 0 0 1,232,394 422,501 409,826 12,675 348,843 341,183 7,660 351,917 343,430 8,487 12 12 0 0 0 59 Individuals and others 7 60 One- to four-family 61 Multifamily 62 Commercial 63 Farm 410,116 246,061 80,977 63,057 20,021 426,229 259,971 79,209 67,618 19,431 468,569 294,517 81,634 73,023 19,395 445,534r 83,714r 82,769" 19,412 636,935r 449,440" 84,388r 83,816r 19,291r 632,131r 444,865r 83,567r 84,493r 19,207r 635,756 448,215 83,101 85,267 19,173 641,7% 453,147 83,382 86,164 19,102 1. Based on data from various institutional and governmental sources, with figures for some quarters estimated in part by the Federal Reserve. Multifamily debt refers to loans on structures of five or more units. 2. Includes loans held by nondeposit trust companies but not loans held by bank trust departments. 3. Includes savings banks and savings and loan associations. Beginning 1987:1, data reported by institutions insured by the Federal Savings and Loan Insurance Corporation include loans in process and other contra-assets (credit balance accounts that must be subtracted from the corresponding gross asset categories to yield net asset levels). 4. Assumed to be entirely loans on one- to four-family residences. 5. Securities guaranteed by the Farmers Home Administration (FmHA) sold to the Federal Financing Bank were reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986:4 because of accounting changes by the FmHA. 6. Outstanding principal balances of mortgage-backed securities insured or guaranteed by the agency indicated. Includes private pools, which are not shown as a separate line item. 7. Other holders include mortgage companies, real estate investment trusts, state and local credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and other U.S. agencies. Consumer Installment Credit 1.55 A37 CONSUMER INSTALLMENT CREDIT Total Outstanding and Net Change 1 Millions of dollars, amounts outstanding, end of period 1991 Holder and type of credit 1988 1989 1990 July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted 1 Total 664,049 718,863 735,102 729,962 729,108 729,152 730,317 730,147 728,425 2 3 4 5 284,214 174,104 25,348 180,383 290,676 199,082 22,471 206,633 284,585 220,110 20,919 209,487 273,565 228,199 19,615 208,582 271,906 229,453 19,495 208,253 270,219 232,070 18,892 207,971 270,013 233,661 18,943 207,700 268,123 234,666 19,059 208,300 267,434 234,459 19,109 207,424 Automobile Revolving Mobile home Other Not seasonally adjusted 674,855 730,901 748,300 727,754 731,531 732,183 730,722r 732,256 742,548 By major holder Commercial banks Finance companies Credit unions Retailers Savings institutions Gasoline companies Pools of securitized assets 324,792 146,212 88,340 48,438 63,399 3,674 n.a. 342,770 140,832 93,114 44,154 57,253 •3,935 48,843 347,466 137,450 92,911 43,552 45,616 4,822 76,483 334,273 134,120 92,017 36,392 39,012 4,712 87,228 335,662 135,509 92,843 37,296 37,893 4,857 87,471 335,509 132,471 93,305 37,281 37,036 4,753 91,829 335,258 131,778 92,746 37,359 37,424 4,529 91,628 334,904 130,679 92,373 38,651 36,987 4,388 94,274 340,594 129,566 92,188 43,130 35,941 4,362 96,767 By major type of credit3 14 Automobile 15 Commercial banks 16 Finance companies 17 Pools of securitized assets 284,328 123,392 97,245 0 290,705 126,288 82,721 18,235 284,813 126,259 74,396 24,537 274,222 121,319 70,444 25,609 274,190 120,577 71,571 25,071 273,354 119,730 69,853 26,808 272,092 119,276 69,364 26,803 268,297 118,502 67,907 26,237 267,808 117,349 66,549 27,997 18 Revolving 19 Commercial banks 20 Retailers 21 Gasoline companies 22 Pools of securitized assets 184,045 123,020 43,833 3,674 n.a. 210,310 130,811 39,583 3,935 23,477 232,370 132,433 39,029 4,822 44,335 226,145 124,645 32,076 4,712 53,094 229,224 125,787 32,962 4,857 54,017 231,281 125,524 32,964 4,753 56,438 231,862 126,234 33,055 4,529 56,290 235,674 125,734 34,319 4,388 59,459 247,471 132,624 38,652 4,362 60,139 25,143 9,025 7,191 22,240 9,112 4,716 20,666 9,763 5,252 19,639 9,552 5,669 19,468 9,534 5,700 18,996 9,614 5,300 19,026 9,600 5,358 19,021 9,656 5,401 18,870 9,552 5,520 181,339 69,355 41,776 4,605 n.a. 207,646 76,559 53,395 4,571 7,131 210,451 79,011 57,801 4,523 7,611 207,748 78,757 58,007 4,316 8,525 208,649 79,764 58,238 4,334 8,383 208,553 80,641 57,318 4,317 8,583 207,742 80,148 57,056 4,304 8,535 208,633 81,012 57,371 4,332 8,578 208,399 81,069 57,497 4,478 8,631 6 Total 7 8 9 10 11 12 13 23 Mobile home 24 Commercial banks 25 Finance companies 26 Other 27 Commercial banks 28 Finance companies 29 Retailers 30 Pools of securitized assets 2 1. The Board's series on amounts of credit covers most short- and intermediate-term credit extended to individuals that is scheduled to be repaid (or has the option of repayment) in two or more installments. Data in this table also appear in the Board's G.19 (421) monthly statistical release. For ordering address, see inside front cover. 2. Outstanding balances of pools upon which securities have been issued; these balances are no longer carried on the balance sheets of the loan originator. 3. Totals include estimates for certain holders for which only consumer credit totals are available. A38 DomesticNonfinancialStatistics • April 1992 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT 1 Percent per year, except as noted 1991 Item 1989 1990 1991 June July Aug. Sept. Oct. Nov. Dec. INTEREST RATES Commercial banks32 48-month new car 24-month personal 120-month mobile home 3 Credit card 12.07 15.44 14.11 18.02 11.78 15.46 14.02 18.17 11.14 15.18 13.70 18.23 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 11.06 15.24 13.73 18.24 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10.61 14.88 13.37 18.19 n.a. n.a. n.a. n.a. Auto finance companies 5 New car 6 Used car 12.62 16.18 12.54 15.99 12.41 15.60 12.77 15.74 12.55 15.66 12.40 15.63 12.38 15.60 12.23 15.46 10.79 15.06 10.41 14.90 54.2 46.6 54.6 46.1 55.1 47.2 55.5 47.3 55.5 47.4 55.4 47.2 55.4 47.2 55.4 47.0 54.1 47.0 53.7 46.9 91 97 87 95 88 96 88 97 88 % 88 97 87 96 88 97 88 % 88 93 12,001 7,954 12,071 8,289 12,494 8,884 12,343 8,916 12,572 8,989 12,518 8,902 12,460 8,996 12,684 9,077 13,245 9,029 13,476 9,105 1 2 3 4 OTHER TERMS 4 Maturity (months) 7 New car 8 Used car Loan-to-value ratio 9 New car 10 Used car Amount financed (dollars) 11 New car 12 Used car 1. Data in this table also appear in the Board's G.19 (421) monthly statistical release. For ordering address, see inside front cover. 2. Data are available only for the second month of each quarter. 3. Before 1983 the maturity for new car loans was 36 months, and for mobile home loans was 84 months. 4. At auto finance companies. Flow of Funds 1.57 A39 F U N D S RAISED IN U.S. CREDIT MARKETS Billions of dollars; quarterly data at seasonally adjusted annual rates 1991 1990 1989 Instrument or sector Q4 Qi Q2 Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors .. 836.9 687.0 760.8 678.2 639.3 620.2 803.4 596.9 657.7 499.3 411.4 462.6 By lending sector and instrument ? U.S. government Treasury securities 4 Agency issues and mortgages 215.0 214.7 .4 144.9 143.4 1.5 157.5 140.0 17.4 151.6 150.0 1.6 272.5 264.4 8.2 185.0 189.6 -4.6 247.3 217.8 29.6 228.2 222.9 5.4 286.1 287.5 -1.3 328.4 329.4 -1.0 204.7 228.7 -24.0 241.8 248.0 -6.2 5 Private 621.9 542.1 603.3 526.6 366.8 435.2 556.1 368.7 371.6 170.9 206.7 220.9 465.8 22.7 126.8 316.3 218.7 33.5 73.6 -9.5 156.1 58.0 66.9 -9.3 40.5 453.2 49.3 79.4 324.5 234.9 24.4 71.6 -6.4 88.9 33.5 10.0 2.3 43.2 459.2 49.8 102.9 306.5 231.0 16.7 60.8 -2.1 144.1 50.2 39.8 11.9 42.2 379.8 30.4 73.7 275.7 218.0 16.4 42.7 -1.5 146.8 39.1 39.9 20.4 47.4 298.2 20.1 49.7 228.3 212.6 6.5 9.3 .0 68.7 14.3 1.3 9.7 43.4 347.0 19.1 87.4 240.5 214.3 9.5 19.9 -3.2 88.2 44.1 7.7 -6.9 43.3 391.0 12.4 30.2 348.4 298.7 22.7 26.5 .5 165.1 30.4 16.3 69.6 48.8 309.3 24.5 68.8 216.0 220.0 -15.5 13.4 -1.9 59.4 2.8 15.4 -6.2 47.4 275.5 30.0 32.8 212.7 184.7 16.2 9.9 2.0 96.0 21.3 -2.5 17.3 60.0 216.8 13.5 67.1 136.3 147.1 2.7 -12.8 -.7 -45.9 2.5 -24.2 -41.7 17.5 230.5 11.3 80.6 138.6 136.8 4.6 -3.0 .2 -23.8 -23.6 14.2 5.1 -19.5 292.7 27.5 95.3 169.9 176.6 2.9 -8.0 -1.6 -71.9 -20.4 -51.6 -22.6 22.6 36.2 293.0 292.7 -16.3 99.2 209.7 48.8 302.2 191.0 -10.6 77.9 123.7 45.6 314.9 242.8 -7.5 65.7 184.6 29.6 285.0 211.9 1.6 50.8 159.5 17.2 254.0 95.6 2.6 13.7 79.4 16.5 291.8 126.9 8.9 35.0 83.1 16.0 377.2 162.9 6.2 45.5 111.2 17.2 257.5 94.0 -10.8 3.5 101.3 28.1 227.3 116.2 11.7 19.6 84.8 7.6 154.0 9.4 3.1 -14.0 20.2 12.2 162.6 32.0 4.7 -18.7 46.0 16.8 199.7 4.3 -1.6 -3.6 9.5 25 Foreign net borrowing in United States 76 77 Bank loans n.e.c 28 Open market paper 29 U.S. government loans 9.7 3.1 -1.0 11.5 -3.9 4.5 7.4 -3.6 2.1 -1.4 6.3 6.9 -1.8 8.7 -7.5 10.9 5.3 -.1 13.3 -7.5 23.5 21.6 -2.9 12.3 -7.5 16.9 -1.0 -4.3 22.2 .1 2.0 32.7 -6.9 -16.4 -7.3 41.2 25.8 -1.8 23.1 -5.9 29.7 1.2 1.9 27.3 -.8 21.1 26.5 -4.7 15.3 -16.0 50.6 8.9 10.3 45.5 -14.1 -53.0 22.0 -7.1 -52.0 -15.8 30 Total domestic plus foreign 846.6 691.5 767.1 689.1 662.8 637.1 805.5 638.1 687.3 520.4 462.0 409.7 7 8 9 10 11 1? n 14 n 16 17 18 19 70 7.1 77 23 24 By instrument Debt capital instruments Tax-exempt obligations Corporate bonds Mortgages Home mortgages Multifamily residential Commercial Farm Other debt instruments Consumer credit Bank loans n.e.c Open market paper Other By borrowing sector State and local government Household Nonfinancial business Nonfarm noncorporate Corporate Financial sectors 31 Total net borrowing by financial sectors 285.1 300.2 247.6 205.5 202.1 187.3 190.2 170.4 180.0 267.7 102.6 95.4 By instrument U.S. government-related Sponsored-credit-agency securities Mortgage pool securities Loans from U.S. government 154.1 15.2 139.2 -.4 171.8 30.2 142.3 -.8 119.8 44.9 74.9 .0 151.0 25.2 125.8 .0 167.4 17.1 150.3 -.1 156.4 -4.7 161.1 .0 171.7 9.7 162.0 .0 184.0 17.1 166.8 .0 139.2 22.3 116.9 .0 174.6 19.5 155.5 -.5 155.8 14.5 141.3 .0 150.6 -22.4 173.0 .0 36 Private 37 Corporate bonds 38 Mortgages 39 Bank loans n.e.c 40 Open market paper 41 Loans from Federal Home Loan Banks 131.0 82.9 .1 4.0 24.2 19.8 128.4 78.9 .4 -3.2 27.9 24.4 127.8 51.7 .3 1.4 54.8 19.7 54.5 36.8 .0 1.8 26.9 -11.0 34.7 49.8 .3 .7 8.6 -24.7 30.9 39.6 -.4 4.2 36.3 -48.8 18.5 33.5 .1 -2.3 9.2 -22.0 -13.5 71.2 .2 -.6 -53.4 -30.9 40.8 18.0 .3 2.0 51.0 -30.5 93.1 76.7 .5 3.8 27.6 -15.5 -53.2 39.5 .1 1.0 -65.9 -27.9 -55.2 63.2 -.1 -5.8 -59.7 -52.9 By borrowing sector 4? Sponsored credit agencies 43 Mortgage pools 44 Private 45 Commercial banks 46 Bank affiliates 47 Savings and loan associations 48 Mutual savings banks 49 Finance companies 50 Real estate investment trusts (REITs) 51 Securitized credit obligation (SCO) issuers 14.9 139.2 131.0 -3.6 15.2 20.9 4.2 54.7 .8 39.0 29.5 142.3 128.4 6.2 14.3 19.6 8.1 40.8 .3 39.1 44.9 74.9 127.8 -3.0 5.2 19.9 1.9 67.7 3.5 32.5 25.2 125.8 54.5 -1.4 6.2 -14.1 -1.4 46.3 -1.9 20.8 17.0 150.3 34.7 -1.1 -27.7 -31.2 -.5 57.1 -1.9 40.1 -4.7 161.1 30.9 -.7 -3.9 -56.2 .7 52.6 .1 38.2 9.7 162.0 18.5 -5.7 -8.0 -15.8 -8.3 28.2 -3.8 32.1 17.1 166.8 -13.5 -13.9 -32.1 -53.5 6.5 27.0 -2.7 55.1 22.3 116.9 40.8 -5.6 -40.4 -31.9 -4.2 97.3 -1.8 27.5 19.0 155.5 93.1 20.9 -30.2 -23.4 4.0 75.7 .6 45.6 14.5 141.3 -53.2 -22.0 -18.5 -29.5 -2.2 -9.2 -.7 28.9 -22.4 173.0 -55.2 -16.6 -7.1 -55.6 -1.4 -11.7 -.2 37.3 3? 33 34 35 A40 DomesticNonfinancialStatistics • April 1992 1.57—Continued 1989 Transaction category or sector 1986 1987 1988 1989 1990 1991 1990 Q4 Ql Q2 Q3 Q4 Ql Q2 All sectors 52 Total net borrowing, all sectors 53 54 55 56 57 58 59 60 U.S. government securities State and local obligations Corporate and foreign bonds Mortgages Consumer credit Bank loans n.e.c Open market paper Other loans 61 MEMO: U.S. government, cash balance Totals net of changes in U.S. government cash balances 62 Net borrowing by domestic nonfinancial sectors 63 Net borrowing by U.S. government 1,131.7 991.7 1014.7 894.5 864.9 824.4 995.7 808.5 867.3 788.1 564.7 505.1 369.5 22.7 212.8 316.4 58.0 69.9 26.4 56.1 317.5 49.3 165.7 324.9 33.5 3.2 32.3 65.5 277.2 49.8 161.5 306.7 50.2 39.4 75.4 54.4 302.6 30.4 115.8 275.7 39.1 41.5 60.6 28.9 440.0 20.1 121.1 228.6 14.3 -.9 30.7 11.1 341.4 19.1 125.9 240.1 44.1 7.5 51.6 -5.4 419.0 12.4 96.4 348.5 30.4 7.1 62.3 19.5 412.2 24.5 165.8 216.2 2.8 13.0 -36.6 10.6 425.4 30.0 52.0 213.0 21.3 1.4 95.7 28.6 503.4 13.5 170.3 136.7 2.5 -25.1 1.2 -14.5 360.5 11.3 129.0 138.7 -23.6 25.6 -15.2 -61.6 392.4 27.5 180.5 169.8 -20.4 -64.5 -134.3 -46.0 .0 -7.9 10.4 -5.9 8.3 -7.3 22.9 -38.1 21.1 27.4 51.6 -64.3 836.9 215.0 694.9 152.8 750.4 147.1 684.1 157.5 631.0 264.2 627.6 192.4 780.5 224.4 635.0 266.3 636.6 265.1 471.9 301.0 359.8 153.1 526.9 306.1 External corporate equity funds raised in United States 64 Total net share issues 65 Mutual funds 66 All other 67 Nonfinancial corporations 68 Financial corporations 69 Foreign shares purchased in United States 86.8 10.9 -124.2 -63.7 9.6 14.9 -9.2 48.0 -24.1 23.6 108.0 173.9 159.0 -72.2 -85.0 11.6 1.2 73.9 -63.0 -75.5 14.6 -2.1 1.1 -125.3 -129.5 3.3 .9 41.3 -105.1 -124.2 2.4 16.7 61.4 -51.7 -63.0 4.3 6.9 72.4 -57.6 -79.3 4.5 17.2 47.8 -57.0 -69.0 10.3 1.7 71.0 -22.9 -48.0 1.3 23.8 46.1 -70.2 -74.0 4.8 -1.0 80.6 -56.9 -61.0 .9 3.2 87.8 20.2 -12.0 3.4 28.8 122.2 51.7 11.0 4.3 36.4 Flow of Funds 1.58 A41 DIRECT A N D INDIRECT SOURCES OF F U N D S TO CREDIT MARKETS Billions of dollars, except as noted; quarterly data at seasonally adjusted annual rates 1989r Transaction category or sector r 1986 1989r r r 1988 1987 1991r 1990" 1990" Q4 Ql Q2 Q3 Q4 Ql Q2 1 Total hinds advanced in credit markets to domestic nonfinancial sectors 861.6 722.8 767.2 714.7 630.0 696.4 780.6 669.3 588.3 482.0 427.1 515.7 2 Total net advances by federal agencies and foreign sectors 280.6 248.0 208.1 188.1 261.7 188.5 218.5 290.1 347.4 190.8 302.9 211.3 3 4 5 6 By instrument U.S. government securities Residential mortgages Federal Home Loan Bank advances to thrifts Other loans and securities 69.4 136.3 19.8 55.1 70.1 139.1 24.4 14.3 85.2 86.3 19.7 16.8 30.2 137.9 -11.0 31.0 74.4 184.1 -24.7 27.8 25.5 173.2 -50.3 40.2 9.2 194.5 -28.9 43.6 100.9 185.2 -26.9 31.0 142.0 176.3 -27.3 56.4 45.6 180.5 -15.7 -19.6 140.1 176.0 -35.7 22.5 50.9 186.7 -48.5 22.3 7 8 9 10 By lender U.S. government Sponsored credit agencies and mortgage pools Monetary authority Foreign 9.7 153.3 19.4 98.2 -7.9 169.3 24.7 61.8 -9.4 112.0 10.5 95.0 -2.6 125.3 -7.3 72.7 33.6 166.7 8.1 53.2 3.9 149.3 -4.5 39.9 38.3 179.1 -.3 1.4 36.1 163.6 30.8 59.6 63.6 182.4 26.2 75.1 -3.7 141.9 -24.2 76.8 48.1 164.0 60.2 30.6 26.5 123.9 1.8 59.1 154.1 9.7 171.8 6.2 119.8 6.4 151.0 10.6 167.4 23.5 167.0 15.6 164.8 12.5 172.8 36.3 146.2 26.2 185.6 19.0 149.6 62.0 118.0 -59.2 13 Total private domestic funds advanced 744.8 652.8 685.3 688.2 559.2 690.4 739.4 588.2 413.4 495.8 335.8 363.1 14 15 16 17 18 19 301.0 45.7 89.8 115.9 212.3 19.8 246.3 83.5 67.5 120.2 159.8 24.4 189.7 53.7 94.4 161.3 205.9 19.7 267.2 65.0 65.5 96.5 183.1 -11.0 340.0 45.5 63.2 26.3 59.5 -24.7 305.5 78.3 74.5 67.2 114.7 -50.3 389.9 70.7 55.0 72.3 122.6 -28.9 311.5 56.2 75.7 25.7 92.1 -26.9 246.6 36.5 27.2 23.4 52.3 -27.3 411.9 18.3 94.8 -16.1 -28.9 -15.7 208.7 336.2 25.3 38.4 63.5 82.5 -27.1 -16.3 29.7 -126.2 -35.7 -48.5 743.5 497.3 538.5 534.0 380.0 574.6 422.8 282.4 294.9 520.1 284.9 194.8 107.6 174.0 267.1 135.3 136.8 149.1 76.2 157.0 118.0 176.4 87.1 181.7 121.2 177.0 -90.9 -153.4 -194.0 218.1 197.9 183.2 368.8 229.1 249.9 174.3 -70.0 169.2 149.2 By source of funds 25 Private domestic deposits and repurchase agreements . . . 26 Credit market borrowing 27 Other sources 28 Foreign funds 29 Treasury balances 30 Insurance and pension reserves 31 Other, net 262.4 124.0 357.1 12.9 1.7 171.3 171.1 173.8 92.4 231.1 43.7 -5.8 94.9 98.4 229.6 93.7 215.3 9.3 7.3 174.1 24.5 209.5 40.0 284.5 -9.9 -3.4 192.0 105.8 53.3 -6.8 333.5 24.0 5.3 164.1 140.0 178.6 10.0 386.1 -.8 6.4 159.9 220.5 196.3 -27.4 253.9 13.5 5.2 96.8 138.3 -5.7 19.5 268.6 23.5 -1.0 209.1 36.9 Private domestic nonfinancial investors 32 Direct lending in credit markets 33 U.S. government securities 34 State and local obligations 35 Corporate and foreign bonds 36 Open market paper 37 Other loans and mortgages 125.3 20.3 1.6 44.8 9.5 49.1 247.8 100.5 96.1 6.4 13.3 31.5 240.5 134.5 57.3 -32.2 41.9 39.0 194.2 125.5 62.7 -26.5 2.9 29.6 172.4 123.4 24.9 -31.2 18.8 36.6 125.8 47.6 76.9 -29.6 -35.5 66.3 289.2 189.0 65.3 -22.5 19.0 38.5 325.4 59.0 175.4 134.6 40.0 7.6 21.3 -125.5 53.0 12.8 29.4 35.7 16.0 -5.5 -13.5 1.7 -9.5 42.8 -19.2 17.7 15.2 -9.2 -55.2 12.2 126.2 157.1 22.7 18.8 -83.7 11.3 38 Deposits and currency 39 Currency 40 Checkable deposits 41 Small time and savings accounts 42 Money market fund shares 43 Large time deposits 44 Security repurchase agreements 45 Deposits in foreign countries 282.8 14.4 98.2 120.6 43.2 -19.7 20.2 5.9 190.3 19.0 -.3 76.0 28.9 47.6 21.6 -2.5 233.1 14.7 12.5 122.4 21.2 40.6 32.9 -11.2 225.7 11.7 .6 98.2 86.7 9.1 14.9 4.4 83.0 22.6 .4 59.4 56.0 -42.1 -20.5 7.0 211.2 16.1 34.1 117.0 52.8 -13.9 -11.4 16.5 212.7 20.0 31.1 109.3 108.6 -15.7 -37.1 -3.6 24.7 22.6 -4.6 28.9 -32.7 -15.5 18.2 7.8 74.2 30.9 -1.8 38.5 106.0 -70.7 -26.5 -2.2 20.3 16.9 -23.0 61.0 42.1 -66.4 -36.6 26.2 231.2 38.7 63.2 98.0 171.0 -61.2 -56.4 -22.1 -92.8 6.0 4.2 14.7 -63.5 -74.3 2.7 17.5 46 Total of credit market instruments, deposits, and currency 408.1 438.2 473.6 419.9 255.4 336.9 501.9 350.1 133.2 36.3 212.0 33.4 32.2 99.8 111.1 34.0 76.2 105.5 26.9 78.6 104.3 25.9 77.6 62.8 40.0 68.0 77.2 26.5 83.2 39.1 27.5 57.2 14.9 41.1 48.0 83.1 56.5 71.3 162.6 38.1 104.9 48.3 61.9 84.9 39.8 46.3 58.9 -40.1 88.5 160.9 -72.4 61.1 27.4 7.1 70.2 -63.1 22.2 -15.1 -119.3 -65.4 6.1 38.5 -125.4 -103.9 4.1 18.9 -123.3 -84.3 15.8 65.7 -50.0 32.0 -16.2 16.7 73.4 -56.7 63.7 -47.0 -.8 56.3 -57.1 37.7 -38.5 56.4 77.1 -20.7 62.9 -6.6 -19.1 45.9 -65.0 -27.9 8.8 26.6 83.7 -57.0 55.4 -28.8 116.5 97.6 18.9 61.0 55.6 179.5 125.2 54.3 56.3 123.2 Agency and foreign borrowing not included in line I 11 Sponsored credit agencies and mortgage pools 12 Foreign U.S. government securities State and local obligations Corporate and foreign bonds Residential mortgages Other mortgages and loans LESS: Federal Home Loan Bank advances 20 Total credit market funds advanced by private financial institutions 21 22 23 24 By lending institution Commercial banks Savings institutions Insurance and pension funds Other financial institutions MEMO 47 Public holdings as percent of total 48 Private financial intermediation (percent) 49 Total foreign funds Corporate equities not included above 50 Total net issues 51 Mutual fund shares 52 Other equities 53 Acquisitions by financial institutions 54 Other net purchases NOTES BY LINE NUMBER. 1. Line 1 of table 1.57. 2. Sum of lines 3 - 6 or 7-10. 6. Includes farm and commercial mortgages. 11. Credit market funds raised by federally sponsored credit agencies, and net issues of federally related mortgage pool securities. 13. Line 1 less line 2 plus lines 11 and 12. Also line 20 less line 26 plus line 32. Also sum of lines 28 and 47 less lines 40 and 46. 18. Includes farm and commercial mortgages. 25. Line 38 less lines 39 and 45. 26. Excludes equity issues and investment company shares. Includes line 19. 28. Foreign deposits at commercial banks, plus bank borrowings from foreign branches, plus liabilities of foreign banking agencies to foreign affiliates, less claims on foreign affiliates and deposits by banking institutions in foreign banks. FRASER 29. Demand deposits and note balances at commercial banks. Digitized for 213.7 111.4 140.9 107.6 61.8 19.8 -211.9 -160.8 -171.0 -173.8 -150.0 241.6 135.6 208.0 210.3 186.2 111.7 212.4 139.4 443.1 133.6 45.5 -59.4 308.8 87.5 13.7 128.3 79.4 214.6 -116.3 -22.8 40.2 -70.1 -23.2 140.4 502.6 353.1 9.2 -99.3 -28.5 20.6 -22.3 3.4 267.0 222.1 191.8 305.6 -156.5 282.8 30. Excludes investment of these reserves in corporate equities. 31. Mainly retained earnings and net miscellaneous liabilities. 32. Line 13 less line 20 plus line 26. 33-37. Lines 14-18 less amounts acquired by private finance plus amounts borrowed by private finance. Line 37 includes mortgages. 39. Mainly an offset to line 9. 46. Sum of lines 32 and 38, or line 13 less line 27 plus lines 39 and 45. 47. Line 2 divided by line 1. 48. Line 20 divided by line 13. 49. Sum of lines 10 and 28. 50. 52. Includes issues by financial institutions. NOTE. Full statements for sectors and transaction types in flows and in amounts outstanding may be obtained from Flow of Funds Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. A42 1.59 DomesticNonfinancialStatistics • April 1992 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars, end of period 1989 Transaction category or sector 1987 1988 1990 1991 1989 Q4 Q2 Ql Q3 Q4 Ql Q2 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 7,646.3 8,343.9 9,096.0 9,805.2 9,805.2 10,073.3 10,226.8 10,386.9 10,557.3 10,615.5 10,735.3 By lending sector and instrument 2 U.S. government 3 Treasury securities 4 Agency issues and mortgages 1,815.4 1,811.7 3.6 1,960.3 1,955.2 5.2 2,117.8 2,095.2 22.6 2,269.4 2,245.2 24.2 2,269.4 2,245.2 24.2 2,360.9 2,329.3 31.6 2,401.7 2,368.8 32.9 2,470.2 2,437.6 32.6 2,568.9 2,536.5 32.4 2,624.7 2,598.4 26.4 2,667.7 2,642.9 24.8 5 Private 5,831.0 6,383.6 6,978.2 7,535.8 7,535.8 7,712.5 7,825.1 7,916.7 7,988.4 7,990.8 8,067.7 6 7 8 9 10 11 12 13 14 15 16 17 18 By instrument Debt capital instruments Tax-exempt obligations Corporate bonds Mortgages Home mortgages Multifamily residential Commercial Farm Other debt instruments Consumer credit Bank loans n.e.c Open market paper Other 3,962.7 679.1 669.4 2,614.2 1,720.8 246.2 551.4 95.8 1,868.2 659.8 666.0 62.9 479.6 4,427.9 728.4 748.8 2,950.7 1,943.1 270.0 648.7 88.9 1,955.7 693.2 673.3 73.8 515.3 4,886.4 790.8 851.7 3,243.8 2,173.9 286.7 696.4 86.8 2,091.9 743.5 713.1 85.7 549.6 5,283.3 821.2 925.4 3,536.6 2,404.3 304.4 742.6 85.3 2,252.6 790.6 763.0 107.1 591.9 5,283.3 821.2 925.4 3,536.6 2,404.3 304.4 742.6 85.3 2,252.6 790.6 763.0 107.1 591.9 5,451.9 822.2 933.0 3,696.7 2,558.3 304.5 750.0 83.9 2,260.6 782.3 748.5 126.0 603.7 5,533.8 827.2 950.2 3,756.4 2,619.5 300.5 752.5 84.0 2,291.3 789.4 756.1 128.7 617.1 5,608.8 837.9 958.4 3,812.6 2,670.0 304.5 753.8 84.3 2,307.9 798.7 753.6 131.8 623.8 5,669.9 841.3 975.1 3,853.4 2,710.0 306.0 753.5 84.0 2,318.5 808.9 757.4 116.9 635.4 5,709.8 842.2 995.3 3,872.3 2,730.1 306.5 752.0 83.6 2,281.0 782.3 749.0 119.9 629.9 5,787.5 847.6 1,019.1 3,920.9 2,781.0 307.1 748.9 83.9 2,280.1 784.2 740.3 118.4 637.3 19 20 21 22 23 24 By borrowing sector State and local government Household Nonfinancial business Farm Nonfarm noncorporate Corporate 510.1 2,596.1 2,724.8 156.6 997.6 1,570.6 558.9 2,879.1 2,945.6 145.5 1,075.4 1,724.6 604.5 3,191.5 3,182.2 137.6 1,145.1 1,899.5 634.1 3,501.8 3,400.0 139.2 1,195.9 2,064.8 634.1 3,501.8 3,400.0 139.2 1,195.9 2,064.8 633.8 3,654.8 3,423.9 137.3 1,208.3 2,078.3 636.9 3,726.5 3,461.7 138.7 1,208.7 2,114.3 647.1 3,790.3 3,479.4 141.6 1,209.0 2,128.7 649.1 3,847.2 3,492.2 140.5 1,209.6 2,142.1 650.2 3,853.3 3,487.3 139.3 1,205.9 2,142.1 652.8 3,911.3 3,503.6 143.0 1,204.6 2,155.9 238.3 244.6 253.9 261.5 261.5 261.7 273.0 279.4 284.9 297.2 285.1 74.9 26.9 37.4 99.1 82.3 23.3 41.2 97.7 89.2 21.5 49.9 93.2 94.5 21.4 63.0 82.6 94.5 21.4 63.0 82.6 103.3 18.9 59.3 80.2 108.4 19.3 65.1 80.2 108.9 19.8 71.5 79.3 116.1 18.5 75.3 75.0 118.9 20.4 87.0 70.9 123.0 19.5 74.0 68.6 7,884.7 8,588.5 9,349.9 10,066.8 10,066.8 10,335.0 10,499.8 10,666.3 10,842.2 10,912.8 11,020.5 25 Foreign credit market debt held in United States 26 27 28 29 Bonds Bank loans n.e.c Open market paper U.S. government loans 30 Total credit market debt owed by nonfinancial sectors, domestic and foreign Financial sectors 31 Total credit market debt owed by financial sectors 32 33 34 35 36 37 38 39 40 41 By instrument U.S. government-related Sponsored credit-agency securities Mortgage pool securities Loans from U.S. government Private Corporate bonds Mortgages Bank loans n.e.c Open market paper Loans from Federal Home Loan Banks By borrowing sector 42 Sponsored credit agencies 43 Mortgage pools 44 Private financial sectors 45 Commercial banks 46 Bank affiliates 47 Savings and loan associations 48 Mutual savings banks 49 Finance companies 50 Real estate investment trusts (REITs) 51 Securitized credit obligation (SCO) issuers... 1,529.8 1,836.8 2,084.4 2,322.4 2,322.4 2,359.0 2,405.5 2,448.8 2,527.7 2,540.1 2,567.3 810.3 273.0 531.6 5.7 719.5 287.4 2.7 36.1 284.6 108.6 978.6 303.2 670.4 5.0 858.2 366.3 3.1 32.8 322.9 133.1 1,098.4 348.1 745.3 5.0 986.1 418.0 3.4 34.2 377.7 152.8 1,249.3 373.3 871.0 5.0 1,073.0 482.7 3.4 36.0 409.1 141.8 1,249.3 373.3 871.0 5.0 1,073.0 482.7 3.4 36.0 409.1 141.8 1,288.2 378.1 905.2 5.0 1,070.8 491.7 4.0 33.2 409.1 132.9 1,330.1 381.0 944.2 5.0 1,075.4 510.0 4.0 34.8 400.3 126.3 1,367.9 384.4 978.5 5.0 1,080.9 514.4 4.1 34.9 409.6 117.9 1,418.4 393.7 1,019.9 4.9 1,109.3 533.6 4.2 36.7 417.7 117.1 1,452.2 397.0 1,050.4 4.9 1,087.9 543.0 4.2 34.8 398.8 107.0 1,485.1 389.6 1,090.7 4.9 1,082.2 559.5 4.2 35.2 388.6 94.7 278.7 531.6 719.5 75.6 116.8 119.8 8.6 328.1 6.5 64.0 308.2 670.4 858.2 81.8 131.1 139.4 16.7 378.8 7.3 103.1 353.1 745.3 986.1 78.8 136.2 159.3 18.6 446.1 11.4 135.7 378.3 871.0 1,073.0 77.4 142.5 145.2 17.2 496.2 10.1 184.4 378.3 871.0 1,073.0 77.4 142.5 145.2 17.2 496.2 10.1 184.4 383.0 905.2 1,070.8 73.2 142.0 137.1 15.4 499.2 10.9 193.1 385.9 944.2 1,075.4 71.6 134.3 125.6 16.7 509.7 10.4 206.9 389.4 978.5 1,080.9 70.7 122.9 116.2 16.2 530.9 10.2 213.8 398.5 1,019.9 1,109.3 76.3 114.8 114.0 16.7 551.8 10.6 225.2 401.8 1,050.4 1,087.9 68.1 111.7 102.8 16.4 545.9 10.6 232.4 394.4 1,090.7 1,082.2 65.9 110.3 90.8 15.8 547.0 10.8 241.7 All sectors 52 Total credit market debt, domestic and foreign.. 9,414.4 10,425.3 11,434.3 12,389.1 12,389.1 12,694.0 12,905.3 13,115.1 13,369.9 13,452.9 13,587.7 53 54 55 56 57 58 59 60 2,620.0 679.1 1,031.7 2,617.0 659.8 729.0 384.9 693.1 2,933.9 728.4 1,197.4 2,953.8 693.2 729.5 437.9 751.1 3,211.1 790.8 1,358.9 3,247.2 743.5 768.9 513.4 800.5 3,513.7 821.2 1,502.6 3,540.1 790.6 820.3 579.2 821.4 3,513.7 821.2 1,502.6 3,540.1 790.6 820.3 579.2 821.4 3,644.1 822.2 1,527.9 3,700.7 782.3 800.7 594.4 821.7 3,726.9 827.2 1,568.6 3,760.5 789.4 810.2 594.0 828.5 3,833.1 837.9 1,581.6 3,816.7 798.7 808.3 612.9 826.0 3,982.5 841.3 1,624.8 3,857.7 808.9 812.6 609.9 832.3 4,072.1 842.2 1,657.3 3,876.5 782.3 804.1 605.7 812.7 4,147.9 847.6 1,701.6 3,925.1 784.2 794.9 581.1 805.5 U.S. government securities State and local obligations Corporate and foreign bonds Mortgages Consumer credit Bank loans n.e.c Open market paper Other loans Flow of Funds 1.60 A43 SUMMARY OF CREDIT MARKET CLAIMS, BY HOLDER Billions of dollars, except as noted, end of period 1990r 1989r Transaction category or sector 1986r 1987r 1988r 1991r 1989r Q4 Ql Q2 Q3 Q4 Ql Q2 1 Total funds advanced in credit markets to domestic nonfinancial sectors 7,749.8 8,483.8 9,242.3 2 Total held by federal agencies and foreign sector 1,810.5 2,037.7 2,223.2 2,413.1 2,413.1 2,450.6 2,529.9 2,611.3 2,673.1 2,733.8 2,793.8 3 4 5 6 By instrument U.S. government securities Residential mortgages Federal Home Loan Bank advances to thrifts Other loans and securities 509.8 678.5 108.6 513.5 570.9 814.1 133.1 519.7 651.5 900.4 152.8 518.5 688.9 1,038.4 141.8 544.1 688.9 1,038.4 141.8 544.1 682.7 1,081.5 132.9 553.6 714.1 1,126.5 126.3 563.1 745.6 1,171.8 117.9 576.0 763.0 1,221.0 117.1 572.0 789.3 1,261.4 107.0 576.1 808.5 1,306.8 94.7 583.9 7 8 9 10 By type of lender U.S. government Sponsored credit agencies and mortgage pools Monetary authority Foreign 255.2 835.9 205.5 513.9 239.9 1,001.0 230.1 566.7 214.6 1,113.0 240.6 655.0 207.0 1,238.2 233.3 734.6 207.0 1,238.2 233.3 734.6 217.1 1,274.8 224.4 734.2 227.4 1,315.0 237.8 749.8 242.7 1,360.5 240.8 767.5 240.6 1,403.4 241.4 787.7 253.2 1,438.8 247.3 794.5 261.1 1,468.7 253.7 810.4 Agency and foreign debt not in line I 11 Sponsored credit agencies and mortgage pools 12 Foreign 810.3 245.1 978.6 254.3 1,098.4 255.7 1,249.3 265.4 1,249.3 265.4 1,288.2 265.7 1,330.1 277.0 1,367.9 283.4 1,418.4 297.9 1,452.1 310.2 1,480.3 297.7 13 Total private domestic holdings 6,994.8 7,678.9 8,373.2 9,130.6 9,130.6 9,430.6 9,564.0 9,678.4 9,844.8 9,898.6 9,973.3 14 15 16 17 18 19 2,100.6 789.6 583.0 1,288.5 2,341.6 108.6 2,352.5 873.1 653.4 1,399.0 2,534.0 133.1 2,546.8 939.4 744.8 1,560.2 2,734.7 152.8 2,806.8 1,046.2 809.8 1,670.4 2,939.2 141.8 2,806.8 1,046.2 809.8 1,670.4 2,939.2 141.8 2,910.5 1,060.6 824.3 1,834.9 2,933.0 132.9 2,958.5 1,073.2 842.7 1,849.7 2,966.2 126.3 3,027.7 1,084.8 850.5 1,857.8 2,975.3 117.9 3,148.6 1,091.7 882.0 1,849.2 2,990.4 117.1 3,206.8 1,094.6 898.7 1,836.6 2,968.9 107.0 3,259.0 1,102.7 918.2 1,840.7 2,947.4 94.7 5,995.9 6,515.1 7,055.3 7,602.9 7,602.9 7,862.0 7,931.6 7,988.8 8,131.4 8,191.0 8,252.4 2,183.9 1,297.9 1,506.7 1,007.4 2,319.2 1,445.5 1,659.6 1,090.8 2,476.2 1,565.2 1,836.1 1,177.9 2,643.9 1,478.2 2,034.0 1,446.7 2,643.9 1,478.2 2,034.0 1,446.7 2,667.2 1,476.1 2,103.7 1,615.0 2,709.5 1,424.2 2,153.3 1,644.5 2,739.0 1,385.9 2,173.8 1,690.2 2,765.1 1,345.0 2,217.5 1,803.7 2,772.9 1,302.7 2,274.0 1,841.4 2,784.9 1,264.3 2,326.7 1,876.5 By source of funds 25 Private domestic deposits and repurchase agreements 76 Credit market debt 77 Other sources 28 Foreign funds 29 U.S. Treasury balances 30 Insurance and pension reserves 31 Other, net 3,166.2 703.1 2,126.6 18.6 27.5 1,462.2 618.4 3,336.2 807.3 2,371.7 62.3 21.6 1,568.0 719.8 3,581.3 901.4 2,572.6 71.6 29.0 1,723.2 748.9 3,790.4 970.0 2,842.5 62.1 25.6 1,908.2 846.6 3,790.4 970.0 2,842.5 62.1 25.6 1,908.2 846.6 3,816.0 1,089.3 2,956.7 62.1 16.7 1,951.4 926.4 3,806.5 1,095.1 3,030.0 63.5 32.1 1,983.0 951.3 3,812.1 1,078.5 3,098.2 86.6 36.6 2,018.6 956.3 3,843.8 1,093.5 3,194.2 86.1 30.9 2,067.7 1,009.4 3,873.3 1,072.9 3,244.8 84.7 26.3 2,120.7 1,013.0 3,836.5 1,067.7 3,348.2 55.3 36.0 2,171.8 1,085.1 Private domestic nonfinancial investors 37 Credit market claims 33 U.S. government securities 34 State and local obligations 35 Corporate and foreign bonds 36 Open market paper 37 Other loans and mortgages 1,702.0 807.4 320.3 69.3 183.5 321.6 1,971.1 909.7 416.4 91.2 198.0 355.8 2,219.3 1,050.7 486.7 52.4 243.0 386.5 2,497.8 1,169.0 591.2 64.7 245.9 427.0 2,497.8 1,169.0 591.2 64.7 245.9 427.0 2,657.9 1,196.8 597.8 204.6 247.6 411.2 2,727.5 1,214.5 610.8 217.8 264.5 420.0 2,768.1 1,256.8 615.7 200.1 266.4 429.1 2,806.9 1,278.3 616.1 203.7 264.7 444.2 2,780.5 1,278.2 610.1 203.5 248.0 440.7 2,788.7 1,289.7 618.8 206.6 230.4 443.1 38 Deposits and currency 39 Currency 40 Checkable deposits 41 Small time and savings accounts 47 Money market fund shares 43 Large time deposits 44 Security repurchase agreements 45 Deposits in foreign countries 3,377.3 186.3 522.2 1,948.3 268.9 298.2 128.5 24.8 3,565.9 205.4 521.5 2,017.1 297.8 349.7 150.1 24.3 3,814.5 220.1 532.9 2,156.2 318.9 390.3 182.9 13.1 4,039.7 231.8 532.9 2,254.7 405.6 399.3 197.9 17.6 4,039.7 231.8 532.9 2,254.7 405.6 399.3 197.9 17.6 4,062.4 234.4 508.1 2,286.6 438.1 394.9 188.4 11.9 4,066.6 242.7 514.2 2,287.6 425.9 386.1 192.7 17.5 4,076.1 247.2 503.5 2,296.8 452.1 373.1 186.6 16.8 4,122.7 254.4 533.3 2,314.2 461.6 357.3 177.4 24.6 4,149.5 262.0 515.6 2,343.4 509.6 341.8 162.9 14.3 4,124.8 265.9 524.2 2,340.8 489.6 318.2 163.6 22.5 46 Total of credit market instruments, deposits, and currency 5,079.3 5,537.0 6,033.8 6,537.5 6,537.5 6,720.3 6,794.2 6,844.2 6,929.6 6,930.0 6,913.5 22.6 104.0 532.4 23.3 98.6 628.9 23.4 97.2 726.6 23.4 94.2 796.7 23.4 94.2 796.7 23.1 91.6 796.4 23.5 91.6 813.3 23.9 90.5 854.1 24.1 87.8 873.7 24.5 86.5 879.3 24.8 85.5 865.7 3,360.6 413.5 2,947.1 942.0 2,418.6 3,325.0 460.1 2,864.9 979.4 2,345.7 3,619.8 478.3 3,141.6 1,113.6 2,506.2 4,374.8 555.1 3,819.7 1,416.9 2,958.0 4,374.8 555.1 3,819.7 1,416.9 2,958.0 4,171.1 550.3 3,620.8 1,359.2 2,811.9 4,334.4 587.9 3,746.5 1,455.8 2,878.6 3,779.7 547.3 3,232.4 1,231.4 2,548.3 3,986.5 579.9 3,406.6 1,338.4 2,648.1 4,552.8 643.0 3,909.7 1,568.6 2,984.2 4,587.5 681.3 3,906.2 1,574.9 3,012.6 U.S. government securities State and local obligations Corporate and foreign bonds Residential mortgages Other mortgages and loans LESS: Federal Home Loan Bank advances 20 Total credit market claims held by private financial institutions 71 77 73 24 By holding institution Commercial banks Savings institutions Insurance and pension funds Other finance MEMO 47 Public holdings as percent of total 48 Private financial intermediation (percent) 49 Total foreign funds Corporate equities not included above 50 Total market value 51 Mutual fund shares 57 Other equities 53 Holdings by financial institutions 54 Other holdings NOTES BY LINE NUMBER. 1. Line 1 of table 1.59. 2. Sum of lines 3 - 6 or 7-10. 6. Includes farm and commercial mortgages. 11. Credit market debt of federally sponsored agencies, and net issues of federally related mortgage pool securities. 13. Line 1 less line 2 plus lines 11 and 12. Also line 20 less line 26 plus line 32. Also sum of lines 27 and 46 less lines 39 and 45. 18. Includes farm and commercial mortgages. 25. Line 38 less lines 39 and 45. 26. Excludes equity issues and investment company shares. Includes line 19. 28. Foreign deposits at commercial banks, plus bank borrowings from foreign affiliates, less claims on foreign affiliates and deposits by banking in foreign banks. 29. Demand deposits and note balances at commercial banks. 10,029.0 10,029.0 10,327.3 10,486.8 10,638.4 10,801.7 10,870.0 10,989.1 30. Excludes net investment of these reserves in corporate equities. 31. Mainly retained earnings and net miscellaneous liabilities. 32. Line 13 less line 20 plus line 26. 33-37. Lines 14-18 less amounts acquired by private finance plus amounts borrowed by private finance. Line 37 includes mortgages. 39. Mainly an offset to line 9. 46. Sum of lines 32 and 38, or line 13 less line 27 plus lines 39 and 45. 47. Line 2 divided by lines 1 plus 12. 48. Line 20 divided by line 13. 49. Sum of lines 10 and 28. 50-52. Includes issues by financial institutions. NOTE. Full statements for sectors and transaction types in flows and in amounts outstanding can be obtained from Flow of Funds Section, Stop 95, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. A44 Domestic Nonfinancial Statistics • April 1992 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, except as noted 1991 1989 Measure 1 Industrial production1 (1987=100) 1990 1992 1991 May June July Aug. Sept. Oct. r Nov. Dec. r Jan. 108.1 109.2 107.1 106.4 107.3 108.1 108.0 108.4 108.4 IO8.r 107.6 106.7 Market groupings (1987=100) Products, total Final, total Consumer goods Equipment Intermediate Materials 108.6 109.1 106.7 112.3 106.8 107.4 110.1 110.9 107.3 115.5 107.7 107.8 108. r 109.6r 107.6r 112.2 103.4R 105.5r 107.7 109.3 106.6 112.7 102.7 104.5 108.6 110.1 108.0 112.8 104.0 105.4 108.7 110.2 108.3 112.8 104.0 107.0 108.5 109.8 108.4 111.6 104.4 107.2 108.9 110.4 109.4 111.8 104.3 107.5 109.0 110.6 109.7 111.9 104.1 107.4 KW.O1 110.6r llO.O1 111.4r 104.1r 106.6 108.8 110.2 109.7 110.9 104.2 105.8 107.8 109.2 108.9 109.5 103.5 104.9 Industry groupings (1987=100) 8 Manufacturing 108.9 109.9 107.5 106.6 107.5 108.3 108.4 108.9 109.0 108.6 108.5 107.5 2 3 4 5 6 7 9 Capacity utilization, manufacturing (percent)2 83.9 82.3 78.2 77.8 78.3 78.7 78.6 78.8 78.7 78.2 78.0 77.0 172.9 156.2 140.8 138.0 133.0 144.0 150.0 143.0 157.0 134.0 152.0 n.a. 11 Nonagricultural employment, total4 12 Goods-producing, total 13 Manufacturing, total 14 Manufacturing, production worker 15 Service-producing 16 Personal income, total 17 Wages and salary disbursements 18 Manufacturing 19 Disposable personal income 20 Retail sales 106.0 102.5 102.2 102.3 107.1 115.2 114.4 110.6 115.2 113.2 107.6 101.0 100.5 100.0 109.7 123.1 121.1 113.4 123.4 117.4 106.6 96.4 96.9 96.0 109.9 127.1 124.2 113.5 128.2 118.4r 106.5 96.5 96.9 95.8 109.7 126.9 123.8 112.7 128.1 119.0 106.5 96.3 96.6 95.7 109.8 127.5 124.8 113.4 128.6 119.0 106.5 96.3 96.7 96.0 109.8 127.1 124.2 113.8 128.3 119.4 106.6 96.4 96.9 96.3 109.9 127.7 124.9 114.4 128.9 118.6 106.7 96.3 96.8 96.0 110.0 128.2 125.4 114.6 129.3 119.0 106.7 96.0 96.6 95.9 110.1 128.4 125.1 115.6 129.6 118.9 106.5 95.5 96.4 95.6 110.0 128.2r 125.2 114.4r 129.4r 118.9* 106.5 95.3 96.1 95.5 110.1 129.5 126.0 115.5 130.8 119.0 106.4 95.1 95.9 95.1 110.0 n.a. n.a. n.a. n.a. 119.7 Prices7 21 Consumer (1982-84=100) 22 Producer finished goods (1982=100) 124.0 113.6 130.7 119.2 136.2 121.7 135.6 121.8 136.0 121.9 136.2 121.6 136.6 121.7 137.2 121.4r 137.4 122.3 137.8 122.3 137.9 121.9 138.1 121.7 10 Construction contracts (1982=100) 3 1. A major revision of the industrial production index and the capacity utilization rates was released in April 1990. See "Industrial Production: 1989 Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. 2. Ratio of index of production to index of capacity. Based on data from the Federal Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources. 3. Index of dollar value of total construction contracts, including residential, nonresidential, and heavy engineering, from McGraw-Hill Information Systems Co., F.W. Dodge Division. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the armed forces. 5. Based on data in Survey of Current Business (U.S. Department of Commerce). 6. Based on U.S. Bureau of the Census data published in Survey of Current Business. 7. Based on data not seasonally adjusted, as published in Monthly Labor Review. Seasonally adjusted data for changes in the price indexes can be obtained from the Bureau of Labor Statistics, U.S. Department of Labor. NOTE. Basic data (not indexes) for series mentioned in notes 4, 5,and 6, and indexes for series mentioned in notes 3 and 7 can also be found in the Survey of Current Business. Figures for industrial production for the latest month are preliminary, and many figures for the three months preceding the latest month have been revised. See "Recent Developments in Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. 411-35. Selected Measures 2.11 A45 LABOR FORCE, EMPLOYMENT, A N D UNEMPLOYMENT Thousands of persons; monthly data seasonally adjusted; exceptions noted 1991 Category 1989 1990 1992 1991 June July Aug. Sept. Oct. Nov. Dec. Jan. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 188,601 190,216 191,883 191,805 191,955 192,095 192,240 192,386 192,522 192,661 192,796 2 Labor force (including Armed Forces) 1 3 Civilian labor force Employment 4 Nonagricultural industries 5 Agriculture Unemployment 6 Number 7 Rate (percent of civilian labor force) 8 Not in labor force 126,077 123,869 126,954 124,787 127,421 125,303 127,661 125,524 127,320 125,204 127,126 125,004 127,708 125,590 127,605 125,508 127,444 125,374 127,675 125,619 128,083 126,046 114,142 3,199 114,728 3,186 114,644 3,233 113,623 3,286 113,485 3,244 113,230 3,254 113,806 3,283 113,663 3,204 113,500 3,272 113,545 3,183 113,951 3,166 6,528 5.3 62,524 6,874 5.5 63,262 8,426 6.7 64,462 8,615 6.9 64,144 8,475 6.8 64,635 8,520 6.8 64,969 8,501 6.8 64,532 8,641 6.9 64,781 8,602 6.9 65,078 8,891 7.1 64,986 8,929 7.1 64,713 9 Nonagricultural payroll employment3 108,329 109,971 108,975 108,885 108,859 108,971 109,066 109,073 108,843 108,846 108,755 Manufacturing Mining Contract construction Transportation and public utilities Trade Finance Service Government 19,442 693 5,187 5,644 25,770 6,695 27,120 17,779 19,111 711 5,136 5,826 25,843 6,739 28,240 18,322 18,427 697 4,696 5,823 25,412 6,707 28,778 18,434 18,378 704 4,710 5,809 25,413 6,703 28,712 18,456 18,402 701 4,695 5,809 25,411 6,688 28,733 18,420 18,442 693 4,691 5,820 25,393 6,687 28,831 18,414 18,414 684 4,699 5,829 25,387 6,692 28,937 18,424 18,377 679 4,671 5,828 25,335 6,697 29,019 18,467 18,337 674 4,584 5,816 25,261 6,694 29,008 18,469 18,290 671 4,593 5,798 25,238 6,693 29,043 18,520 18,238 667 4,587 5,814 25,173 6,695 29,050 18,531 ESTABLISHMENT SURVEY DATA 10 11 12 13 14 15 16 17 1. Persons sixteen years of age and older. Monthly figures are based on sample data collected during the calendar week that contains the twelfth day; annual data are averages of monthly figures. By definition, seasonality does not exist in population figures. 2. Includes self-employed, unpaid family, and domestic service workers. 3. Includes all full- and part-time employees who worked during, or received pay for, the pay period that includes the twelfth day of the month, and exclude proprietors, self-employed persons, household and unpaid family workers, and members of the armed forces. Data are adjusted to the March 1984 benchmark, and only seasonally adjusted data are available at this time. SOURCE. Based on data from Employment and Earnings (U.S. Department of Labor). A46 2.12 Domestic Nonfinancial Statistics • April 1992 OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION 1 Seasonally adjusted 1991 1991 1991 Series Ql Q2 Q3 Q4r Ql Q2 Q3 Q4 Capacity (percent of 1987 output) Output (1987=100) Ql Q2 Q3 Q4r Capacity utilization rate (percent) 1 Total industry 105.8 106.4 108.1 108.0 133.6 134.5 135.3 136.2 79.2 79.1 79.9 79.3 2 Manufacturing 106.1 106.7 108.5 108.7 136.0 136.9 137.9 138.9 78.0 77.9 78.7 78.3 3 4 Primary processing Advanced processing 100.6 108.6 100.8 109.4 104.1 110.6 104.2 110.8 126.8 140.2 127.5 141.3 128.1 142.4 128.8 143.5 79.4 77.5 79.1 77.4 81.2 77.7 80.9 77.2 5 6 7 8 9 10 11 12 13 Durable goods Lumber and products Primary metals Iron and steel Nonferrous Nonelectrical machinery Electrical machinery Motor vehicles and parts Aerospace and miscellaneous transportation equipment 106.1 92.3 97.9 96.3 100.2 124.4 108.1 80.8 106.7 94.0 95.9 92.8 100.3 123.5 110.6 89.5 108.1 95.1 102.0 100.3 104.5 123.5 111.2 95.9 107.7 95.4 103.1 104.3 101.4 122.8 110.3 97.0 139.9 125.0 128.2 133.0 121.3 157.9 142.7 133.4 140.9 125.2 128.6 133.5 121.5 159.5 144.0 134.2 141.8 125.4 129.0 134.0 121.7 161.2 145.3 134.9 142.8 125.7 129.3 134.5 121.9 162.8 146.6 135.6 75.8 73.9 76.4 72.4 82.6 78.8 75.8 60.5 75.7 75.1 74.6 69.5 82.6 77.4 76.8 66.7 76.2 75.8 79.1 74.8 85.8 76.6 76.5 71.1 75.4 75.9 79.7 77.5 83.2 75.5 75.3 71.5 109.9 106.4 105.2 102.8 137.0 137.9 138.7 139.6 80.2 77.2 75.9 73.6 14 15 16 17 18 19 Nondurable goods Textile mill products Paper and products Chemicals and products Plastics materials Petroleum products 106.1 94.6 102.6 109.1 113.2 107.3 106.7 99.4 102.7 109.3 115.6 107.6 109.1 104.1 107.6 112.1 125.4 108.1 110.0 104.9 107.4 113.4 127.7 106.6 130.9 117.3 116.4 138.4 135.7 121.4 131.9 117.7 117.1 139.7 139.2 121.4 132.9 118.0 117.9 141.0 142.6 121.4 133.8 118.3 118.7 142.3 146.1 121.4 81.0 80.6 88.2 78.8 83.4 88.4 80.9 84.5 87.7 78.2 83.0 88.6 82.1 88.2 91.2 79.5 87.9 89.0 82.2 88.6 90.5 79.7 87.4 87.8 102.0 106.2 109.3 101.1 109.6 114.4 101.8 110.4 115.2 99.3 109.5 111.6 113.8 128.1 123.8 114.3 128.4 124.3 114.6 128.8 124.7 114.7 129.2 125.2 89.6 82.9 88.3 88.4 85.3 92.1 88.9 85.7 92.4 86.6 84.8 89.2 20 Mining 21 Utilities 22 Electric Previous cycle High Low Latest cycle High 1991 1992 June Low July Aug. Sept Oct. r Nov. r Dec. r Jan." 78.0 Capacity utilization rate (percent) 1 Total industry 89.2 72.6 87.3 71.8 80.0 79.6 80.0 79.8 79.9 79.8 79.3 78.8 2 Manufacturing 88.9 70.8 87.3 70.0 78.9 78.3 78.7 78.6 78.8 78.7 78.2 78.0 77.0 3 4 92.2 87.5 68.9 72.0 89.7 86.3 66.8 71.4 80.6 78.2 79.9 77.6 81.1 77.8 81.2 77.5 81.3 77.7 81.4 77.6 80.8 77.2 80.5 76.9 79.7 75.9 65.0 60.9 46.8 38.3 62.2 64.9 71.1 44.5 76.8 75.4 77.8 74.5 83.0 79.8 75.7 62.3 76.0 77.2 74.9 69.5 83.5 77.1 77.2 68.9 76.4 75.6 78.5 74.3 85.1 77.2 76.6 71.8 76.0 76.0 79.6 75.0 86.7 76.5 76.8 67.9 76.2 75.8 79.3 75.1 85.7 76.1 76.2 73.6 75.9 74.6 79.4 76.2 84.5 76.1 75.1 74.2 75.5 76.5 80.0 78.5 82.5 75.5 75.5 70.7 74.9 76.6 79.7 77.8 82.6 74.8 75.2 69.7 73.8 76.6 79.6 78.7 81.0 74.3 74.8 63.9 Primary processing Advanced processing 5 6 7 8 9 10 11 12 13 Durable goods Lumber and products Primary metals Iron and steel Nonferrous Nonelectrical machinery Electrical machinery Motor vehicles and parts Aerospace and miscellaneous transportation equipment. 88.8 90.1 100.6 105.8 92.9 96.4 87.8 93.4 68.5 62.2 66.2 66.6 61.3 74.5 63.8 51.1 86.9 87.6 102.4 110.4 90.5 92.1 89.4 93.0 77.0 66.6 81.1 66.9 81.1 76.8 76.1 76.1 75.3 74.8 73.9 72.1 70.3 14 15 16 17 18 19 Nondurable goods Textile mill products Paper and products Chemicals and products Plastics materials Petroleum products 87.9 92.0 96.9 87.9 102.0 96.7 71.8 60.4 69.0 69.9 50.6 81.1 87.0 91.7 94.2 85.1 90.9 89.5 76.9 73.8 82.0 70.1 63.4 68.2 81.8 80.2 89.8 79.8 86.2 86.2 81.4 86.4 89.7 78.2 84.1 90.2 82.0 88.4 91.9 79.3 89.6 89.2 82.1 88.8 90.4 79.7 87.1 88.4 82.3 87.4 91.4 79.6 87.0 89.4 82.4 89.2 92.1 80.0 89.5 87.3 82.0 88.2 89.4 79.4 87.2 87.9 82.1 88.4 90.1 79.6 85.5 88.3 81.5 87.4 87.7 79.0 84.4 87.8 94.4 95.6 99.0 88.4 82.5 82.7 96.6 88.3 88.3 80.6 76.2 78.7 89.5 84.1 89.3 89.2 86.7 94.1 89.6 86.2 93.6 88.5 85.9 92.7 88.5 85.1 90.8 87.9 84.8 89.7 86.6 85.9 90.0 85.2 83.6 87.7 85.0 83.2 87.3 20 Mining 21 Utilities 22 Electric 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. For ordering address, see inside front cover. For a detailed description of the series, see "Recent Developments in Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp. 411-35. 2. Monthly high, 1973; monthly low, 1975. 3. Monthly highs, 1978 through 1980; monthly lows, 1982. Selected Measures 2.13 INDUSTRIAL PRODUCTION A47 Indexes and Gross Value 1 Monthly data seasonally adjusted portion 1992 1991 1987 Group 1991 avg. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. r Nov/ Dec. r Jan." Index (1987 = 100) MAJOR MARKETS 1 7 3 4 6 7 8 9 10 11 1? N 14 IS 16 17 18 19 ?0 71 22 ?3 74 75 76 ?7 78 79 30 31 37 33 34 35 36 37 38 39 40 41 4? 43 44 45 46 47 48 49 50 100.0 Total index Final products Consumer goods, total Durable consumer goods Automotive products Autos and trucks Autos, consumer Trucks, consumer Auto parts and allied goods... Other Appliances, A/C, and TV Carpeting and furniture Miscellaneous home goods . . . Nondurable consumer goods Clothing Chemical products Residential utilities Transit Other Defense and space equipment Oil and gas well drilling Manufactured homes Intermediate products, total Construction supplies Business supplies Durable consumer parts Other Basic metal materials Nondurable goods materials Pulp and paper materials Chemical materials Other Primary energy Converted fuel materials 107.1 106.6 105.7 105.0 105.5 106.4 107.3 108.1 108.0 108.4 108.4 108.1 107.6 106.7 108.6 110.1 108.0 104.2 100.4 92.5 83.8 107.1 112.2 107.3 104.8 99.2 113.8 109.0 106.9 93.9 114.3 123.3 110.0 104.9 111.9 108.7 110.2 108.3 105.5 102.3 98.1 92.8 106.9 108.6 108.1 100.6 103.1 115.5 109.0 106.9 94.3 115.4 122.1 109.4 105.2 110.9 108.5 109.8 108.4 104.0 98.6 90.2 83.0 102.2 111.3 108.3 99.6 103.9 115.9 109.6 107.1 94.8 117.4 122.6 109.5 104.0 111.5 108.9 110.4 109.4 107.7 106.5 103.0 94.6 117.1 111.8 108.7 104.1 101.8 115.6 109.8 107.8 95.2 117.3 124.8 106.7 104.4 107.6 109.0 110.6 109.7 107.5 106.7 105.1 92.6 126.1 109.1 108.1 102.1 101.8 115.6 110.3 107.8 96.3 117.0 125.6 108.5 103.5 110.3 109.0 110.6 110.0 106.0 103.6 99.0 89.8 114.5 110.4 108.0 102.3 101.6 115.2 111.0 108.1 96.5 117.7 126.0 112.0 103.6 115.1 108.8 110.2 109.7 105.2 101.5 96.7 88.2 108.8 108.0 100.3 102.6 115.8 111.0 108.2 96.8 118.7 126.1 109.2 103.7 111.3 107.8 109.2 108.9 101.8 94.2 84.3 79.1 93.0 109.2 107.8 101.4 102.0 115.1 110.9 108.4 96.5 118.0 126.3 108.8 104.0 110.6 60.8 46.0 26.0 5.6 2.5 1.5 .9 .6 1.0 3.1 .8 .9 1.4 20.4 9.1 2.6 3.5 2.5 2.7 .7 2.0 108.1 109.6 107.6 102.3 97.8 90.2 84.6 99.6 109.3 105.8 99.6 99.4 113.4 109.0 106.8 93.5 115.9 123.6 108.5 103.5 110.4 107.8 109.1 105.6 97.6 90.6 79.6 83.2 73.6 107.1 103.2 92.8 100.3 110.8 107.8 106.3 90.6 114.7 122.1 106.5 99.8 109.0 106.9 108.3 104.7 95.2 88.1 74.7 78.6 68.1 108.3 100.7 94.5 92.0 109.8 107.3 105.9 90.8 114.8 121.0 105.2 103.4 105.9 106.5 108.1 104.7 95.9 88.9 76.7 76.3 77.4 107.3 101.4 96.2 93.9 109.2 107.1 105.4 90.4 114.2 122.2 105.5 104.3 105.9 106.9 108.7 105.5 99.3 94.2 85.0 78.3 96.3 108.0 103.4 97.3 97.0 110.8 107.2 105.3 90.6 115.0 122.7 104.4 101.4 105.5 107.7 109.3 106.6 101.1 97.4 89.2 81.9 101.6 109.5 104.1 96.8 96.9 112.8 108.1 106.2 92.0 113.9 121.8 109.0 103.6 111.0 20.0 13.9 5.6 1.9 4.0 2.5 1.2 1.9 5.4 .6 .2 112.2 121.5 131.5 155.6 108.1 126.9 88.6 113.6 91.0 93.3 85.5 113.6 121.6 130.1 155.0 111.5 124.0 79.8 115.0 94.4 106.4 83.1 112.9 120.6 131.6 157.3 109.1 120.3 75.0 112.5 94.5 108.2 77.3 112.5 120.3 131.2 155.1 109.5 120.4 76.7 110.8 93.9 107.7 79.3 112.8 121.3 131.5 155.6 109.3 124.1 84.4 112.7 92.5 105.1 83.1 112.7 121.7 131.8 155.6 109.3 125.9 87.9 113.0 91.5 101.3 86.6 112.8 121.9 130.9 154.0 109.1 128.0 90.8 114.8 91.0 103.0 90.8 112.8 122.5 131.1 156.0 109.0 131.2 96.6 114.0 90.0 97.8 86.5 111.6 121.3 130.3 153.1 108.6 126.7 86.2 114.8 89.8 86.7 90.3 111.8 122.2 130.3 152.2 108.2 132.7 99.3 114.2 89.1 80.1 86.2 111.9 122.3 131.7 156.0 106.8 133.1 101.1 113.6 89.1 79.0 86.3 111.4 121.7 133.5 158.5 104.1 130.5 96.5 113.4 88.8 78.1 87.0 110.9 121.7 133.9 159.3 103.1 129.9 96.1 114.2 87.4 75.8 87.9 109.5 120.3 133.9 160.4 102.2 124.1 84.9 114.2 85.9 71.8 89.5 14.7 6.0 8.7 103.4 96.1 108.4 103.8 97.7 108.1 102.6 96.4 106.8 101.3 94.0 106.4 101.2 94.9 105.6 102.7 95.8 107.5 104.0 97.4 108.5 104.0 96.9 109.0 104.4 96.7 109.7 104.3 96.5 109.7 104.1 95.4 110.1 104.1 95.8 109.9 104.2 95.6 110.1 103.5 95.3 109.2 39.2 19.4 4.2 7.3 7.9 2.8 9.0 1.2 1.9 3.8 2.1 10.9 7.2 3.7 105.5 107.1 96.5 114.4 106.0 106.0 106.0 97.2 106.9 106.2 109.8 102.3 102.3 102.2 104.8 106.8 94.2 115.9 105.2 104.6 104.9 89.1 106.0 106.7 109.3 101.1 101.3 100.9 103.9 105.5 90.4 116.2 103.8 104.8 103.6 91.5 104.1 104.1 108.8 101.1 102.1 99.2 102.6 103.3 87.5 114.8 101.0 101.2 102.8 92.7 102.4 102.7 108.8 101.3 101.5 100.8 103.4 104.9 92.1 114.6 102.6 101.6 103.1 94.7 102.0 102.9 109.0 101.1 100.5 102.4 104.5 106.2 95.5 114.8 103.8 103.0 103.7 96.8 101.5 103.9 109.2 102.4 101.2 104.7 105.4 106.7 97.3 113.6 105.3 105.9 104.9 98.1 106.9 103.9 108.6 103.4 104.7 101.0 107.0 108.2 100.2 113.5 107.5 108.8 108.1 101.4 110.3 107.7 110.5 104.1 106.2 100.1 107.2 109.1 100.1 114.3 109.0 110.2 107.8 101.5 108.2 107.9 110.9 103.3 104.5 101.0 107.5 109.3 101.3 113.9 109.3 109.5 108.3 99.5 110.4 108.2 111.3 103.6 103.8 103.4 107.4 108.8 101.6 113.6 108.2 107.7 109.6 101.8 112.0 109.9 111.2 103.1 102.8 103.8 106.6 108.6 100.5 113.7 108.2 107.7 107.6 99.9 108.4 108.3 110.1 102.1 100.8 104.6 105.8 108.2 97.6 114.1 108.3 108.5 107.6 99.6 110.0 107.6 109.9 100.2 99.1 102.4 104.9 107.0 95.3 113.5 107.1 107.8 106.3 98.7 105.5 107.5 109.1 100.0 99.5 101.0 97.3 95.3 107.6 107.9 107.4 107.8 106.6 107.0 105.7 106.2 106.1 106.5 106.9 107.3 107.8 108.1 108.4 108.6 108.5 108.8 108.6 108.8 108.5 108.8 108.3 108.7 107.9 108.2 107.3 107.6 97.5 105.9 105.4 104.4 103.7 104.2 105.2 106.2 106.9 106.8 107.3 107.2 106.8 106.3 105.3 106.5 104.7 106.4 104.6 106.7 105.6 107.6 106.3 108.9 107.7 108.9 108.1 109.5 108.3 109.8 109.7 109.9 109.8 110.6 109.7 110.5 109.8 110.4 108.9 111.0 SPECIAL AGGREGATES 51 Total excluding autos and trucks 52 Total excluding motor vehicles and parts... 53 Total excluding office and computing machines 54 Consumer goods excluding autos and 55 Consumer goods excluding energy 56 Business equipment excluding autos and trucks 57 Business equipment excluding office and computing equipment 58 Materials excluding energy 24.5 23.3 108.6 107.5 107.2 105.5 12.7 124.7 125.7 125.0 124.5 124.9 125.0 125.0 125.0 124.7 124.4 124.4 124.2 124.1 123.8 12.0 28.4 116.0 106.8 116.2 106.2 114.6 104.9 114.6 103.1 115.7 104.3 116.3 105.4 116.7 106.1 117.0 108.2 116.2 108.7 117.3 109.0 116.9 109.1 115.8 108.3 115.6 108.0 113.9 106.8 A48 Domestic Nonfinancial Statistics • April 1992 2.13 —Continued Group SIC 2 code 1987 proportion 1991 1992 1991 avg. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct/ Nov/ Dec/ Jan." Index (1987 = 100) MAJOR INDUSTRIES 1 Total index . 100.0 107.1 106.6 105.7 105.0 105.5 106.4 107.3 108.1 108.0 108.4 108.4 108.1 107.6 106.7 84.4 26.7 57.7 107.5 102.4 109.8 107.0 102.0 109.3 106.1 100.8 108.5 105.2 99.0 108.0 105.9 99.6 108.9 106.6 100.7 109.3 107.5 102.1 109.9 108.3 103.7 110.5 108.4 104.1 110.3 108.9 104.4 111.0 109.0 104.7 111.0 108.6 104.1 110.7 108.5 103.9 110.6 107.5 102.9 109.5 Durable goods 24 Lumber and products . . . 25 Furniture and fixtures . . . Clay, glass, and stone 32 products Primary metals 33 Iron and steel 331,2 Raw steel 333-6,9 Nonferrous Fabricated metal 34 products 35 Nonelectrical machinery. Office and computing 357 machines 36 Electrical machinery . . . . Transportation 37 equipment Motor vehicles and 371 parts Autos and light trucks Aerospace and miscellaneous transportation equipment.. 372-6,9 38 Instruments Miscellaneous 39 47.3 2.0 1.4 107.1 94.3 99.2 107.2 94.2 99.0 106.1 91.5 94.9 105.0 91.2 95.4 106.0 92.7 98.3 106.7 92.5 98.5 107.3 96.7 99.4 108.1 94.8 100.5 107.8 95.3 101.3 108.4 95.2 101.2 108.2 93.8 100.5 107.7 96.2 99.9 107.2 96.4 101.2 105.8 96.4 101.4 2.5 3.3 1.9 .1 1.4 94.9 99.6 98.3 97.3 101.6 97.2 99.7 99.0 104.7 100.6 98.9 99.5 98.0 97.9 101.6 94.4 94.7 92.0 89.8 98.4 94.2 94.5 91.6 91.0 98.5 95.1 96.9 94.0 88.9 101.0 95.0 96.4 92.9 94.0 101.5 95.8 101.2 99.5 102.6 103.5 95.5 102.6 100.6 102.4 105.5 94.4 102.3 100.8 100.9 104.4 94.4 102.6 102.4 101.3 102.9 92.8 103.5 105.6 99.1 100.5 91.9 103.1 104.8 97.6 100.7 91.1 102.9 105.8 100.1 98.8 5.4 8.6 100.4 123.6 101.7 125.5 99.1 124.5 97.8 123.1 98.0 123.5 99.1 123.6 99.8 123.4 100.9 123.9 101.4 123.3 101.9 123.1 101.9 123.5 101.8 122.9 101.3 122.1 99.5 121.8 2.5 8.6 155.6 110.1 155.0 107.6 157.3 108.2 155.1 108.6 155.6 109.7 155.6 110.6 154.0 111.5 156.0 111.0 153.0 111.5 152.2 111.0 155.9 109.8 158.5 110.7 159.3 110.5 160.4 110.2 Nondurable goods Foods Tobacco products Textile mill products Apparel products Paper and products Printing and publishing . . Chemicals and products . Petroleum products Rubber and plastic products Leather and products . . . 2 Manufacturing 3 Primary processing .. 4 Advanced processing 23 24 25 26 27 28 29 30 31 32 33 34 Mining 35 Metal 36 Coal 37 Oil and gas extraction... 38 Stone and earth minerals 39 Utilities... 40 Electric. 41 Gas . . . . 9.8 98.6 97.6 95.5 95.0 97.2 98.2 99.7 101.3 99.0 102.2 102.4 99.7 97.9 93.1 4.7 90.4 83.0 79.4 79.8 86.2 89.8 92.5 96.7 91.6 99.5 100.4 95.9 94.7 86.9 2.3 89.4 80.1 75.3 76.6 84.0 88.2 91.2 97.3 89.1 101.8 103.2 97.6 95.5 83.5 5.1 3.3 1.2 106.0 118.2 119.4 110.8 119.0 116.1 110.0 119.3 114.6 108.8 118.4 115.3 107.2 118.6 117.5 105.8 118.2 118.7 106.1 117.3 119.8 105.4 116.5 121.6 105.6 116.9 123.2 104.6 118.1 121.5 104.3 118.2 120.6 103.1 118.5 120.7 100.9 118.9 121.6 98.6 118.5 122.2 20 21 22 23 26 27 28 29 37.2 8.8 1.0 1.8 2.4 3.6 6.4 8.6 1.3 108.0 108.6 100.5 100.7 96.2 105.1 112.4 111.0 107.4 106.8 108.3 100.0 94.0 92.9 104.2 112.1 110.1 104.7 106.0 107.6 100.1 94.3 93.1 102.2 110.9 109.1 108.8 105.4 107.4 98.2 95.4 92.5 101.3 110.4 108.2 108.5 105.9 107.6 97.6 97.2 93.2 101.3 110.7 109.0 105.7 106.5 107.8 98.7 99.2 95.2 101.3 110.6 109.2 107.5 107.6 108.6 99.4 101.7 96.2 105.3 111.2 109.6 109.6 108.6 108.3 102.6 104.2 97.8 108.1 111.9 111.5 108.3 109.0 108.7 103.1 104.7 98.3 106.5 112.3 112.3 107.3 109.6 109.5 102.7 103.2 98.1 108.0 113.3 112.6 108.6 110.1 109.4 102.2 105.5 98.7 109.0 114.4 113.5 106.0 109.7 110.0 100.5 104.4 98.8 106.1 114.3 113.0 106.7 110.1 110.0 100.9 104.7 98.9 107.2 115.0 113.7 107.2 109.6 110.0 104.0 103.7 98.4 104.5 114.3 113.1 106.6 30 31 3.0 .3 110.0 88.2 108.8 89.6 106.1 90.8 104.4 91.5 106.6 90.0 109.2 89.5 110.5 90.9 110.1 91.0 112.6 87.1 113.8 85.8 113.2 83.9 112.6 84.3 112.7 83.7 112.2 83.3 10 11,12 13 14 7.9 .3 1.2 5.7 .7 101.0 149.4 109.2 95.7 108.3 101.7 143.1 108.4 96.0 119.2 102.9 148.0 112.8 97.2 112.0 101.5 147.6 109.9 96.4 108.0 100.9 145.7 105.9 96.6 107.0 100.2 148.0 103.4 96.0 107.5 102.1 157.0 110.2 96.9 106.4 102.7 153.0 116.0 96.4 107.8 101.3 155.5 110.8 95.7 107.0 101.4 153.1 110.1 96.0 107.3 100.7 146.5 107.9 96.0 105.9 99.3 148.4 108.4 93.9 105.9 97.8 147.2 107.6 91.7 108.4 97.6 145.1 110.4 91.1 106.9 7.6 6.0 1.6 109.2 112.6 96.3 107.6 110.4 97.5 104.6 107.8 92.8 106.4 109.8 93.6 105.9 109.8 91.6 111.4 116.4 92.8 111.5 117.1 90.7 110.9 116.6 89.7 110.7 115.6 92.4 109.7 113.4 95.8 109.4 112.2 98.9 111.0 491,3PT 492,3PT 112.7 104.8 108.1 109.9 101.7 107.7 109.6 100.7 79.8 108.5 108.4 107.6 106.7 107.1 107.6 108.3 109.0 109.3 109.5 109.5 109.3 109.3 108.7 82.0 106.0 105.6 104.5 103.7 104.4 105.1 106.1 106.9 107.0 107.6 107.6 107.1 107.0 105.9 SPECIAL AGGREGATES 42 Manufacturing excluding motor vehicles and parts 43 Manufacturing excluding office and computing machines Gross value (billions of 1982 dollars, annual rates) MAJOR MARKETS 44 Products, total 1734.8 45 Final 46 Consumer goods 47 Equipment 48 Intermediate 1350.9 1,482.2 1,459.6 1,452.8 1,455.6 1,464.6 1,478.1 1,490.5 1,496.1 1,484.5 1,501.5 1,510.0 1,504.0 1,492.5 1,476.0 833.4 880.1 857.9 852.7 857.4 862.9 874.4 884.2 888.3 882.7 898.3 902.4 901.8 898.5 885.5 517.5 602.1 601.7 600.1 598.2 601.7 603.7 606.2 607.8 601.8 603.3 607.6 602.2 594.0 590.5 384.0 398.1 400.8 395.6 389.8 388.7 397.6 400.1 399.2 401.0 400.3 401.4 402.6 401.9 402.0 1,880.3 1,860.4 1,848.4 1,845.4 1,853.3 1,875.7 1. Data in this table also appear in the Board's G.17 (419) weekly statistical release. For ordering address see inside front cover. A major revision of the industrial production index and the capacity utilization rates was released in April 1990. See "Industrial Production: 1989 1,890.5 1,895.3 1,885.5 1,901.8 1,911.4 1,906.5 1,894.4 1,878.0 Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. 2. Standard industrial classification. Selected Measures 2.14 A49 HOUSING A N D CONSTRUCTION Monthly figures at seasonally adjusted annual rates, except as noted 1991 Item 1989 1990 1991 Mar. Apr. May June July Aug. Sept. Oct. r Nov. r Dec. Private residential real estate activity (thousands of units, except as noted) NEW UNITS 3 4 5 6 7 8 9 10 11 1? 13 Permits authorized One-family Two-or-more-family Started One-family Two-or-more-family Under construction at end of period .. One-family Two-or-more-family Completed One-family Two-or-more-family Mobile homes shipped 14 15 Merchant builder activity in one-family units Number sold Number for sale at end of period 16 17 Price of units sold (thousands of dollars)2 Median Average 18 Number sold 1 ? ... 982 782 200 1,020 R 864 R 156 632 453 179 1,194 869 325 172 1,028 796 232 1,085 887 198 629 449 180 1,069 876 193 171 993 787 206 1,085 907 178 635 457 178 1,023 826 197 171 1,055 851 204 1,106 %5 141 644 467 177 991 820 171 176 522 291 498 R 291 518 287 559 284 522 283 120.0 148.2 120.8 141.8 120.0" 147.3 R 123.5 147.8 117.3 140.5 123.8 148.2 3,590 3,320 3,250 3,120 3,160 3,310 3,340 102.0 130.5 103.6 132.2 102.2 131.0 99.7 127.7 99.2 126.4 97.9 124.9 100.0 127.1 406,983 410,342 408,410 407,403 293,402 2%,621 297,537 295,714 162,800 166,578 168,251 168,212 130,602 130,043 129,286 127,502 21,494 21,643 20,418 20,321 44,479 42,316 46,341 45,589 20,708 20,443 19,973 20,615 42,605 43,100 43,870 43,518 294,956 167,259 127,697 22,371 41,237 21,242 42,847 892 689 203 918 R 75 R 167R 680 442 238 1,190 881 309 159*^ 913 742 171 978R 802R 176 674 443 231 1,089 821 268 177R 966 760 206 983 830" 153R 665 443 222 1,070 800 270 173R 999 780 219 L,036R 870R 166R 655 446 209 1,105 815 290 172R 1,005 794 211 L,053R 881 R 172R 652 451 201 1,069 806 263 175 953 769 184 L,053R 881 R 172R 649 455 194 1,054 821 233 175R 503 283 495 308 506 303 507 299 518 295 507 2% 122.3 149.0 120.1 147.4 122.5 156.4 121.0 150.8 116.0 145.4 119.0 145.9 3,439 3,316 3,283 3,220 3,310 3,540 92.9 118.0 95.2 118.3 99.5 127.3 98.2 125.2 100.3 128.9 101.1 130.6 1,339 932 407 1,376 1,003 373 850 535 315 1,423 1,026 396 198 1,111 794 317 1,193 895 298 711 449 262 1,308 966 342 188 %1 759 202 1,015 841 173 617 443 174 1,088 835 253 171 650 363 535 318 120.4 148.3 EXISTING UNITS ( o n e - f a m i l y ) Price of units sold (thousands of dollars)2 19 20 Average Value of new construction3 (millions of dollars) CONSTRUCTION 407,050 399,030 398,189 3 9 8 , 4 0 9 21 Total put in place 443,720 22 Private 23 Residential 24 Nonresidential, total 25 Industrial buildings 26 Commercial buildings 27 Other buildings 28 Public utilities and other 345,416 337,776 295,737 293,262 299,044 291,048 290,871 290,299 196,551 182,856 160,962 152,447 151,836 154,567 158,282 158,039 148,865 154,920 134,775 140,815 147,208 136,481 132,589 132,260 20,868 20,885 20,683 24,301 23,089 21,710 20,412 23,849 47,144 50,220 47,5% 48,036 51,766 54,824 65,496 62,866 20,429 20,674 20,858 21,928 20,743 20,628 19,683 21,591 45,332 46,155 44,720 43,696 43,557 43,274 46,614 44,286 29 Public 30 Military 31 Highway 32 Conservation and development 33 Other 98,303 3,520 28,171 4,989 61,623 446,433 108,655 2,734 30,595 4,718 70,608 404,891 109,156 1,849 29,041 5,347 72,919 401,883 108,621 1,866 108,007 29,9% 4,586 72,173 28,591 5,833 71,755 1. Not at annual rates. 2. Not seasonally adjusted. 3. Recent data on value of new construction may not be strictly comparable with data for previous periods because of changes by the Bureau of the Census in its estimating techniques. For a description of these changes, see Construction Reports (C-30-76-5), issued by the Bureau in July 1976. 1,828 107,982 1,918 29,246 5,123 71,695 107,318 1,864 28,776 5,807 70,871 108,110 1,759 28,854 4,688 72,809 403,151 109,749 1,783 30,047 4,901 73,018 110,361 2,261 28,610 4,226 75,264 112,805 1,205 29,079 6,109 76,412 112,697 1,912 28,680 6,814 75,291 112,447 2,200 28,805 5,613 75,829 SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are private, domestic shipments as reported by the Manufactured Housing Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are published by the National Association of Realtors. All back and current figures are available from the originating agency. Permit authorizations are those reported to the Census Bureau from 17,000 jurisdictions beginning in 1984. A50 2.15 Domestic Nonfinancial Statistics • April 1992 CONSUMER A N D PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 months earlier Change from 3 months earlier (annual rate) Item Change from 1 month earlier 1991r 1991 Jan. 1991r 1992 1992 Jan. Mar. June Sept. Dec. Sept. Oct. Nov. Dec. Index level, Jan. 1992 Jan. CONSUMER PRICES2 (1982-84=100) 1 All items 5.7 2.6 2.7 3.0 3.0 3.2 .4 .2 .4 .2 .1 2 3 Energy items 4 All items less food and energy 5 Commodities 6 Services 4.1 1.0 2.4 4.8 -2.3 2.7 .1 -.1 .4 .3 -.4 137.2 9.7 5.6 4.0 6.3 -6.5 3.9 3.3 4.3 -29.4 6.8 8.2 6.2 -.8 3.2 2.2 3.3 1.2 4.6 4.4 4.6 3.6 3.1 .6 4.3 .2 .4 .4 .4 .0 .2 .1 .3 .8 .3 .3 .3 .1 .2 -.2 .4 -1.5 .3 .2 .4 100.1 144.9 130.1 153.4 4.0 .7 13.6 4.2 3.9 -.5 -1.8 -10.0 2.9 1.9 -2.9 .0 -32.6 5.6 5.2 .7 -.6 -1.5 1.8 1.6 1.3 -4.4 3.7 3.6 1.3 1.0 -1.3 -.5 2.4 1.9 .2 -.1 .4 .3 .2 .3 .0 1.2 .3 .2 .0 -.2 .1 .1 .2 -.1 -.2 -1.4 .2 .2 -.3 -.3 -2.8 .4 .2 121.7 122.5 74.3 136.2 128.3 3.0 2.0 -2.9 -1.1 -7.6 -1.0 -1.0 -.7 .4 -1.3 -1.7 .0 .2 -.1 -.3 -.1 .1 .0 -.2 .1 -.5 -.2 113.4 121.0 -5.6 18.6 1.1 -3.0 -23.0 -8.2 -3.6 -54.0 -5.3 -8.6 .5 -14.1 -6.6 -.5 -4.9 -3.8 4.8 -7.4 1.6 -2.5 -.8 -.2 4.0 -.5 -.4 1.2 -1.3 -.4 -3.9 -.2 1.7 -3.5 .0 104.0 75.2 122.6 138.1 PRODUCER PRICES (1982=100) 7 Finished goods 8 Consumer foods 9 Consumer energy 10 Other consumer goods 11 Capital equipment Intermediate materials 12 Excluding foods and feeds 13 Excluding energy Crude materials 14 Foods 15 Energy 16 Other 1. Not seasonally adjusted. 2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence measure of homeownership. SOURCE. Bureau of Labor Statistics. Selected Measures 2.16 GROSS DOMESTIC PRODUCT A N D INCOME Billions of current dollars, except as noted; quarterly data at seasonally adjusted annual rates 1991 1990 1991 Q4 Ql Q2 Q3 GROSS DOMESTIC PRODUCT 5,244.0 5,513.8 5,671.8 5,557.5 5,589.0 5,652.6 5,709.2 3,517.9 459.8 1,146.9 1,911.2 3.742.6 465.9 1.217.7 2,059.0 3.886.8 445.2 1,251.0 2,190.5 3,812.0 451.9 1,246.4 2,113.6 3,827.7 440.7 1,246.3 2.140.7 3.868.5 440.0 1,252.9 2.175.6 3,916.4 452.9 1,257.4 2,206.1 837.6 801.6 570.7 193.1 377.6 230.9 802.6 802.7 587.0 198.7 388.3 215.7 725.3 745.6 550.4 174.5 376.0 195.1 750.9 787.4 585.2 191.2 394.0 202.2 709.3 748.4 560.0 184.0 375.9 188.4 708.8 745.8 554.6 180.0 374.7 191.2 740.9 744.5 546.8 169.0 377.8 197.7 36.0 35.5 .0 -2.0 -20.2 -17.0 -36.5 -28.9 -39.2 -35.0 -37.1 -34.0 -3.6 -3.2 14 Net exports of goods and services 15 Exports 16 Imports -82.9 504.9 587.8 -74.4 550.4 624.8 -27.1 593.3 620.4 -76.6 572.6 649.2 -36.8 565.9 602.7 -17.2 589.8 607.0 -37.3 597.0 634.3 17 Government purchases of goods and services .. 18 Federal 19 State and local 971.4 401.4 570.0 1,042.9 424.9 618.0 1.086.9 445.1 641.8 1,071.2 434.5 636.7 1.088.8 451.5 637.3 1,092.5 452.1 640.4 1,089.1 444.9 644.2 5.208.1 2,062.1 892.9 1.169.2 2,634.7 511.3 5,513.8 2,167.6 934.7 1,233.0 2,834.0 512.2 5,692.0 2,213.0 929.0 1,284.0 3,012.7 466.4 5,594.0 2,194.5 927.2 1,267.3 2,905.5 494.0 5,628.2 2,208.6 916.4 1,292.1 2,951.7 467.9 5.689.6 2,223.2 939.5 1.283.7 2,999.0 467.4 5,712.8 2,214.1 929.4 1,284.7 3,035.1 463.5 36.0 26.9 9.1 .0 -7.0 7.0 -20.2 -24.6 4.3 -36.5 -29.4 -7.1 -39.2 -43.5 4.3 -37.1 -33.5 -3.6 -3.6 -9.2 5.6 4,836.9 4,884.9 4,848.4 4,855.1 4,824.0 4,840.7 4,862.7 4.244.7 4,459.6 4,506.8 4.489.8 4,530.8 4,559.8 3,101.3 2.585.8 478.6 2,107.2 515.5 261.7 253.7 3,290.3 2,738.9 514.0 2,224.9 551.4 277.3 274.0 3,387.7 2,807.7 540.2 2,267.6 580.0 289.3 290.6 3,340.0 2,778.3 525.4 2,253.0 561.6 281.7 279.9 3.342.9 2,771.1 536.0 2,235.1 571.8 287.5 284.2 3,377.4 2,800.2 540.1 577.2 288.7 288.5 3.405.3 2.822.4 541.8 2,280.6 582.9 290.2 292.8 347.0 305.5 373.2 330.7 379.6 344.5 373.9 332.7 41.4 42.5 35.2 41.2 364.2 331.4 32.8 380.0 340.4 39.6 382.5 350.5 32.0 -7.9 -12.9 -13.2 -9.5 -11.9 -11.7 -14.2 42 Corporate profits' 43 Profits before tax 44 Inventory valuation adjustment 45 Capital consumption adjustment 351.7 344.5 -17.5 24.7 319.0 332.3 -14.2 n.a. n.a. 3.8 -9.1 296.1 326.1 -21.2 302.1 309.1 6.7 -13.6 303.5 306.2 9.9 -12.6 306.1 318.2 -4.8 -7.3 46 Net interest 452.6 492.6 481.6 480.1 1 Total 2 3 4 5 By source Personal consumption expenditures Durable goods Nondurable goods Services 6 Gross private domestic investment 7 Fixed investment 8 Nonresidential Structures 9 10 Producers' durable equipment 11 Residential structures 12 13 Change in business inventories Nonfarm By major type of product 20 Final sales, total 21 Goods 22 Durable 23 Nondurable 24 Services 25 Structures 26 Change in business inventories 27 Durable goods 28 Nondurable goods MEMO 29 Total GDP in 1987 dollars NATIONAL INCOME 30 Total 31 Compensation of employees 32 Wages and salaries 33 Government and government enterprises .. 34 Other 35 Supplement to wages and salaries 36 Employer contributions for social insurance 37 Other labor income 38 Proprietors'income 1 39 Business and professional 40 Farm 1 41 Rental income of persons 2 1. With inventory valuation and capital consumption adjustments. 2. With capital consumption adjustment. 481.3 2,260.1 3. For after-tax profits, dividends, and the like, see table 1.48. SOURCE. Survey of Current Business (U.S. Department of Commerce). A51 A52 2.17 Domestic Nonfinancial Statistics • April 1992 PERSONAL INCOME A N D SAVING Billions of current dollars, except as noted; quarterly data at seasonally adjusted annual rates 1991 Account 1989 1990 Q4 Q1 Q2 Q3 PERSONAL INCOME AND SAVING 1 Total personal income 4,380.2 4.679.8 4,833.9 4,764.7 4,768.0 4,821.1 4.853.3 2 Wage and salary disbursements 3 Commodity-producing industries Manufacturing 4 5 Distributive industries 6 Service industries 7 Government and government enterprises 2,585.8 723.8 542.1 607.5 775.9 478.6 2.738.9 745.4 555.8 634.6 845.0 514.0 2.807.8 738.7 556.5 641.2 887.6 540.2 2,778.2 745.2 557.3 639.0 868.8 525.2 2,770.9 733.4 549.3 635.1 866.5 535.8 2,800.6 735.2 552.3 642.0 883.0 540.5 2.822.4 742.3 559.9 644.0 894.4 541.8 253.7 347.0 305.5 41.4 -7.9 119.8 669.0 624.4 274.0 373.2 330.7 42.5 -12.9 124.8 721.3 684.9 352.0 290.6 379.6 344.5 35.2 -13.2 128.5 719.4 759.1 379.7 279.9 373.9 332.7 41.2 -9.5 127.0 736.9 705.8 358.4 284.2 364.2 331.4 32.8 -11.9 128.7 730.1 737.2 373.1 288.5 380.0 340.4 39.6 -11.7 127.4 721.8 751.5 377.2 292.8 382.5 350.5 32.0 -14.2 128.7 716.7 763.7 381.7 224.3 238.0 227.5 235.4 237.0 239.3 4,679.8 4.833.9 4,764.7 4,768.0 4,821.1 4,853.3 621.0 616.0 627.2 617.1 613.6 615.1 4,238.2 8 9 10 11 12 13 14 15 16 17 Other labor income Proprietors' income1 Business and professional 1 Farm 1 Rental income of persons Dividends Personal interest income Transfer payments Old-age survivors, disability, and health insurance benefits . . . LESS: Personal contributions for social insurance 18 EQUALS: Personal income 19 LESS: Personal tax and nontax payments 20 EQUALS: Disposable personal income 21 LESS: Personal outlays 22 EQUALS: Personal saving 325.1 211.7 4,380.2 591.7 3,788.6 3,621.6 166.9 4,058.8 4,217.8 4,137.5 4,151.0 4,207.5 3,852.2 3,995.8 3,921.7 3,937.5 3,977.9 4,024.9 206.6 222.1 215.8 213.4 229.6 213.3 19,539.6 13,050.4 14,154.0 19,186.4 12,887.6 13,987.0 19,337.3 12,951.6 14,058.0 19,166.5 12,877.4 13,965.0 19,187.7 12,892.0 14,022.0 19,220.2 12,929.6 13,992.0 5.1 5.5 5.0 MEMO Per capita (1987 dollars) 23 Gross domestic product 24 Personal consumption expenditures 25 Disposable personal income 19.550.5 13.027.6 14,030.0 5.3 26 Saving rate (percent) GROSS SAVING 744.2 711.8 n.a. 678.3 713.9 698.0 827.3 851.3 n.a. 853.9 893.0 876.4 29 savingcorporate profits1 30 Personal Undistributed 31 Corporate inventory valuation adjustment 166.9 85.8 -17.5 206.6 49.9 -14.2 n.a. 3.8 -21.2 213.4 45.0 6.7 229.6 43.4 9.9 213.3 39.4 -4.8 Capital consumption allowances 32 Corporate 33 Noncorporate 350.5 224.0 365.5 229.3 384.0 239.5 372.7 232.7 380.1 235.3 383.2 236.8 384.6 239.1 34 Government surplus, or deficit ( - ) , national income and product accounts 35 Federal 36 State and local -83.0 -124.2 41.1 -139.5 -165.3 25.7 -171.2 -200.7 29.6 -175.6 -193.6 18.0 -126.1 -146.4 20.4 -179.1 -206.7 27.6 -178.4 -210.2 31.8 765.8 730.4 720.0 837.6 -96.0 802.6 725.3 11.5 750.9 -70.4 709.3 56.5 708.8 21.7 740.9 -20.9 27 Gross saving 28 Gross private saving 222.1 215.8 32.8 37 Gross investment 38 Gross private domestic 39 Net foreign 40 Statistical discrepancy 1. With inventory valuation and capital consumption adjustments 2. With capital consumption adjustment. -82.8 8.1 16.5 SOURCE. Survey of Current Business (U.S. Department of Commerce). Summary Statistics 3.10 U.S. INTERNATIONAL TRANSACTIONS A53 Summary Millions of dollars; quarterly data seasonally adjusted, except as noted 1 1990 Item credits or debits Not seasonally adjusted Merchandise trade balance 2 Merchandise exports Merchandise imports Military transactions, net Investment income, net Other service transactions, net Remittances, pensions, and other transfers . U.S. government grants (excluding military) -126,236 -106,305 -92,123 -126,986 320,337 -447,323 -5,743 5,353 -115,917 361,451 -477,368 -6,203 2,689 28,618 -4,420 -11,071 -108,115 389,550 -497,665 -7,219 11,945 33,595 -4,843 -17,486 16,082 -4,437 -10,506 Q3 Q4 Ql Q2 Q3P -23,881 -29,112 -28,760 %,638 -125,398 -1,683 2,802 8,086 -1,302 -3,024 -23,402 -25,136 -27,728 100,580 -128,308 -2,243 6,133 9,716 -1,201 -8,079 10,501 15,507 -18,394 100,900 -119,294 -2,329 4,883 9,402 -1,316 18,255 3,028 4,593 -15,391 104,245 -119,636 -1,484 2,345 10,429 -1,315 8,444 -10,459 -15,593 -20,486 104,532 -125,018 -1,168 2,502 10,630 -1,267 -670 11 Change in U.S. government assets other than official reserve assets, net (increase, - ) 2,966 1,320 2,976 4,759 1,422 -493 2,715 12 Change in U.S. official reserve assets (increase, - ) . 13 Gold 14 Special drawing rights (SDRs) 15 Reserve position in International Monetary Fund. 16 Foreign currencies -3,912 0 127 1,025 -5,064 -25,293 0 -535 471 -25,229 -2,158 0 -192 731 -2,697 1,739 0 363 8 1,368 -1,092 0 -93 -4 -995 -353 0 31 -341 -43 1,014 0 -190 72 1,132 3,878 0 6 -114 3,986 17 Change in U.S. private assets abroad (increase, - ) . 18 Bank-reported claims 19 Nonbank-reported claims 20 U.S. purchases of foreign securities, net 21 U.S. direct investments abroad, net -85,112 -56,322 -3,064 -7,846 -17,880 -104,637 -51,255 2,581 -22,575 -33,388 -58,524 5,333 -1,944 -28,476 -33,437 -28,114 -9,984 676 -1,014 -17,792 -38,370 -24,513 -2,509 -7,546 -3,802 -1,992 20,598 -1,308 -9,430 -11,852 -15,503 1,215 -2,076 -12,833 -1,809 -18,564 -178 22 Change in foreign official assets in United States (increase, +) . . 23 U.S. Treasury securities 24 Other U.S. government obligations 25 Other U.S. government liabilities4 26 Other U.S. liabilities reported by U.S. banks 3 27 Other foreign official assets 39,657 41,741 1,309 -568 -319 -2,506 8,624 149 1,383 281 4,976 1,835 32,425 28,643 667 1,703 2,998 -1,586 13,341 11,849 134 -248 1,871 -265 20,301 20,119 708 1,102 -707 -921 6,631 2,381 -29 2,501 766 -3,105 -2,287 -219 370 -1,084 115 4,309 5,717 407 1,302 -3,144 27 28 Change in foreign private assets in United States (increase, + ) . . 29 U.S. bank-reported liabilities3 30 U.S. nonbank-reported liabilities 31 Foreign private purchases of U.S. Treasury securities, net 32 Foreign purchases of other U.S. securities, net 33 Foreign direct investments in United States, net 181,877 70,235 5,626 20,239 26,353 59,424 207,925 63,382 5,454 29,618 38,920 70,551 53,879 9,975 3,779 1,131 1,781 37,213 35,754 26,%8 4,260 24 -2,558 7,060 18,732 17,261 -1,840 -2,029 802 4,538 -7,360 -18,795 -1,616 3,409 5,306 4,336 6,608 -28,687 -760 13,434 15,073 7,548 18,507 8,840 -1,389 9,653 1,403 34 Allocation of special drawing rights 35 Discrepancy 36 Due to seasonal adjustments 37 Statistical discrepancy in recorded data before seasonal adjustment 0 -9,240 0 18,366 0 63,526 0 1,475 -6,473 0 19,072 2,007 0 -8,849 3,995 0 8,451 166 0 -386 -6,059 63,526 7,948 17,066 -12,844 8,285 1,012 -i2,5n -5,875 MEMO Changes in official assets U.S. officii reserve assets (increase, - ) Foreign official assets in United States excluding line 25 (increase, +) 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 38 39 -25,293 -2,158 1,739 -1,092 -353 1,014 40,225 8,343 30,722 13,589 19,199 5,619 -3,475 3,007 -2,9% 10,738 2,163 -1,699 575 -3,162 -4,298 1. Seasonal factors not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 38-40. 2. Data are on an international accounts (IA) basis. The data differ from the Census basis data, shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from merchandise trade data and are included in line 6. 3. Reporting banks include all kinds of depository institutions besides commer- 3,878 -3,912 cial banks, as well as some brokers and dealers. 4. Associated primarily with military sales contracts and other transactions arranged with or through foreign official agencies. 5. Consists of investments in U.S. corporate stocks and in debt securities of private corporations and state and local governments. SOURCE. Survey of Current Business (U.S. Department of Commerce). A54 3.11 International Statistics • April 1992 U.S. FOREIGN TRADE 1 Millions of dollars; exports, F . A . S . value; imports, Customs value; monthly data seasonally adjusted 1991 Item 1989 1990 1991 June July Aug. Sept. Oct. Nov/ Dec. p 34,975 35,227 34,380 35,348 37,114 36,939 36,129 1 Exports of domestic and foreign merchandise, excluding grant-aid shipments 363,812 393,592 421,851 2 General imports, including merchandise for immediate consumption plus entries into bonded warehouses 473,211 495,311 488,055 38,764 41,176 40,910 42,282 43,434 41,109 42,065 -66,205 -3,789 -5,949 -6,530 -6,934 -6,320 -4,171 -5,936 -109,399 3 Trade balance -101,718 1. The Census basis data differ from merchandise trade data shown in table 3.10, U.S. International Transactions Summary, because of coverage and timing. On the export side, the largest difference is the exclusion of military sales (which are combined with other military transactions and reported separately in the "service account" in table 3.10, line 6). On the import side, this table includes imports of gold, ship purchases, imports of electricity from Canada, and other transactions; military payments are excluded and shown separately in table 3.10, 3.12 as indicated above. Since Jan. 1, 1987 census data have been released forty-five days after the end of the month; the previous month is revised to reflect late documents. Total exports and the trade balance reflect adjustments for undocumented exports to Canada. Components may not sum to totals because of rounding. SOURCE. FT900, Summary of U.S. Export and Import Merchandise Trade (U.S. Department of Commerce, Bureau of the Census). U.S. RESERVE ASSETS Millions of dollars, end of period 1991 Type 1 Total 2 Gold stock, including Exchange Stabilization Fund 1 3 Special drawing rights 4 Reserve position in International Monetary Fund 2 5 Foreign currencies 4 1988 1989 July Aug. Sept. Oct. Nov. Dec. Jan." 47,802 74,609 83,316 74,816 73,514 74,731 74,508 74,651 77,719 75,868 11,057 9,637 11,059 9,951 11,058 10,989 11,062 10,360 11,062 10,479 11,062 10,722 11,059 10,710 11,058 10,942 11,057 11,240 11,058 10,980 9,745 17,363 9,048 44,551 9,076 52,193 8,730 44,664 8,726 43,247 9,094 43,853 9,065 43,674 8,943 43,708 9,488 45,934 9,113 44,717 1. Gold held "under earmark" at Federal Reserve Banks for foreign and international accounts is not included in the gold stock of the United States; see table 3.13. Gold stock is valued at $42.22 per fine troy ounce. 2. Special drawing rights are valued according to a techique adopted by the International Monetary Fund (IMF) in July 1974. Values are based on a weighted average of exchange rates for the currencies of member countries. From July 1974 through December 1980, 16 currencies were used; since January 1981, 5 curren- 3.13 1992 1990 cies have been used. U.S. SDR holdings and reserve positions in the IMF also have been valued on this basis since July 1974. 3. Includes allocations by the International Monetary Fund of SDRs as follows: $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 million on Jan. 1, 1981; plus net transactions in SDRs. 4. Valued at current market exchange rates. FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS 1 Millions of dollars, end of period 1991 Assets 1988 1989 July 1 Deposits Assets held in custody 2 U.S. Treasury securities2 3 Earmarked gold3 Aug. Sept. Oct. Nov. Dec. Jan." 347 589 369 314 256 384 223 346 968 321 232,547 13,636 224,911 13,456 278,499 13,387 274,514 13,330 279,394 13,330 279,013 13,330 280,249 13,326 285,905 13,307 281,107 13,303 293,958 13,303 1. Excludes deposits and U.S. Treasury securities held for international and regional organizations. 2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury securities payable in dollars and in foreign currencies at face value. 1992 1990 3. Earmarked gold and the gold stock are valued at $42.22 per fine troy ounce, Earmarked gold is gold held for foreign and international accounts; it is not included in the gold stock of the United States. Summary Statistics 3.14 FOREIGN BRANCHES OF U.S. BANKS A55 Balance Sheet Data 1 Millions of dollars, end of period 1991 Assets 1988 1989 1990 June July Aug. Sept. Oct. Nov. Dec. All foreign countries 505,595 545,366 556,925 533,017 529,313 528,077 547,359 546,570 550,777 549,177 2 Claims on United States 3 Parent bank 4 Other banks in United States 5 Nonbanks 6 Claims on foreigners 7 Other branches of parent bank 8 Banks 9 Public borrowers 10 Nonbank foreigners 11 Other assets 169,111 129,856 14,918 24,337 299,728 107,179 96,932 17,163 78,454 36,756 198,835 157,092 17,042 24,701 300,575 113,810 90,703 16,456 79,606 45,956 188,496 148,837 13,296 26,363 312,449 135,003 72,602 17,555 87,289 55,980 181,135 142,222 12,011 26,902 294,421 115,420 75,1% 17,223 86,582 57,461 174,802 137,159 11,100 26,543 294,826 112,205 77,711 18,416 86,494 59,685 169,061 130,169 12,447 26,445 2%,855 112,916 76,393 19,110 88,436 62,161 177,572 137,036 13,692 26,844 300,229 114,845 77,293 18,930 89,161 69,558 176,959 136,570 13,432 26,957 299,915 108,269 80,060 18,685 92,901 69,6% 177,828 137,165 13,543 27,120 304,049 107,180 84,980 18,940 92,949 68,900 176,270 137,478 12,884 25,908 303,934 111,729 81,970 18,652 91,583 68,973 12 Total payable in U.S. dollars 357,573 382,498 379,479 373,441 365,008 359,316 368,149 365,223 365,143 363,910 n Claims on United States 14 Parent bank 15 Other banks in United States 16 Nonbanks 17 Claims on foreigners 18 Other branches of parent bank 19 Banks 20 Public borrowers 21 Nonbank foreigners 22 Other assets 163,456 126,929 14,167 22,360 177,685 80,736 54,884 12,131 29,934 16,432 191,184 152,294 16,386 22,504 169,690 82,949 48,396 10,961 27,384 21,624 180,174 142,962 12,513 24,699 174,451 95,298 36,440 12,298 30,415 24,854 174,775 138,262 11,502 25,011 171,752 84,318 43,578 12,479 31,377 26,914 168,353 132,883 10,605 24,865 169,494 79,112 45,589 13,565 31,228 27,161 163,593 126,746 11,973 24,874 167,039 79,317 41,761 14,160 31,801 28,684 171,393 133,450 13,109 24,834 166,9% 80,179 40,656 13,609 32,552 29,760 170,615 132,929 12,904 24,782 164,543 75,649 41,132 13,889 33,873 30,065 171,701 133,984 12,668 25,049 165,490 75,823 42,808 13,671 33,188 27,952 169,631 133,445 12,025 24,161 167,010 78,114 41,635 13,685 33,576 27,269 1 Total, all currencies United Kingdom 23 Total, all currencies 156,835 161,947 184,818 165,534 161,869 162,879 172,113 172,795 174,648 175,599 24 Claims on United States 25 Parent bank 26 Other banks in United States 27 Nonbanks 28 Claims on foreigners 29 Other branches of parent bank 30 Banks 31 Public borrowers 32 Nonbank foreigners 33 Other assets 40,089 34,243 1,123 4,723 106,388 35,625 36,765 4,019 29,979 10,358 39,212 35,847 1,058 2,307 107,657 37,728 36,159 3,293 30,477 15,078 45,560 42,413 792 2,355 115,536 46,367 31,604 3,860 33,705 23,722 37,574 34,534 711 2,329 103,608 38,333 31,019 3,584 30,672 24,352 32,475 29,241 860 2,374 103,067 36,588 31,866 3,676 30,937 26,327 31,315 28,189 816 2,310 103,935 38,382 30,168 3,717 31,668 27,629 34,409 31,205 997 2,207 105,699 39,077 31,658 3,502 31,462 32,005 32,615 29,021 1,502 2,092 108,397 36,757 33,375 3,492 34,773 31,783 32,531 28,901 1,259 2,371 111,160 36,474 36,709 3,512 34,465 30,957 35,257 31,931 1,267 2,059 109,692 35,735 36,394 3,306 34,257 30,650 34 Total payable in U.S. dollars 103,503 103,208 116,762 106,536 101,040 100,966 105,243 103,439 103,591 105,974 38,012 33,252 964 3,796 60,472 28,474 18,494 2,840 36,404 34,329 843 1,232 59,062 29,872 16,579 2,371 41,259 39,609 334 1,316 63,701 37,142 13,135 3,143 34,726 32,790 555 1,381 58,565 30,108 14,983 3,082 28,870 26,608 680 1,582 56,127 30,279 12,534 3,083 31,772 29,673 727 1,372 56,354 30,840 12,485 2,899 10,240 10,281 10,392 10,231 10,130 5,019 7,742 11,802 13,245 15,%9 17,117 29,995 27,404 1,378 1,213 57,155 28,655 13,269 2,%9 12,262 16,289 30,054 27,689 894 1,471 59,037 29,047 15,480 2,848 11,662 14,500 32,418 30,370 822 1,226 58,791 28,667 15,219 2,853 10,664 29,352 27,085 759 1,508 57,861 29,111 15,723 3,032 9,995 13,827 35 Claims on United States 36 Parent bank 37 Other banks in United States 38 Nonbanks 39 Claims on foreigners 40 Other branches of parent bank 41 Banks 42 Public borrowers 43 Nonbank foreigners 44 Other assets 12,052 14,765 Bahamas and Caymans 45 Total, all currencies 170,639 176,006 162,316 169,194 170,044 166,333 170,219 170,529 170,846 168,295 46 Claims on United States 47 Parent bank 48 Other banks in United States 49 Nonbanks 50 Claims on foreigners 51 Other branches of parent bank 52 Banks 53 Public borrowers 54 Nonbank foreigners 55 Other assets 105,320 73,409 13,145 18,766 58,393 17,954 28,268 5,830 6,341 6,926 124,205 87,882 15,071 21,252 44,168 11,309 22,611 5,217 5,031 7,633 112,989 77,873 11,869 23,247 41,356 13,416 16,310 5,807 5,823 7,971 115,128 80,%3 10,718 23,447 45,346 12,886 20,917 5,916 5,627 8,720 114,870 81,974 9,683 23,213 46,6% 10,880 21,836 7,136 6,844 8,478 111,787 77,566 11,119 23,102 46,318 10,774 21,113 7,394 7,037 8,228 116,263 80,890 12,063 23,310 45,640 10,645 20,535 7,149 7,311 8,316 117,782 83,286 11,028 23,468 43,662 9,086 20,300 7,435 6,841 9,085 118,164 83,348 11,457 23,359 44,177 10,268 19,865 7,363 6,681 8,505 115,213 81,489 10,907 22,817 45,229 11,098 20,174 7,161 6,7% 7,853 56 Total payable in U.S. dollars 163,518 170,780 158,390 165,290 166,115 162,260 166,287 166,598 166,582 163,740 1. Since June 1984, reported claims held by foreign branches have been reduced by an increase in the reporting threshold for "shell" branches from $50 million to $150 million equivalent in total assets, the threshold now applicable to all reporting branches. A56 International Statistics • April 1992 3.14—Continued 1991 1988 1989 1990 June July Aug. Sept. Oct. Nov. Dec. All foreign countries 57 Total, all currencies 505,595 545,366 556,925 533,017 529,313 528,077 547,359 546,570 550,777 549,177 58 Negotiable certificates of deposit (CDs) .. 59 To United States 60 Parent bank 61 Other banks in United States 62 Nonbanks 28,511 185,577 114,720 14,737 56,120 23,500 197,239 138,412 11,704 47,123 18,060 189,412 138,748 7,463 43,201 16,503 188,025 128,352 11,789 47,884 19,692 182,270 127,284 10,090 44,896 18,796 178,249 122,179 10,085 45,985 17,579 188,448 131,998 11,843 44,607 18,928 186,246 130,092 10,356 45,798 18,334 188,686 131,383* 12,892* 44,411 16,284 198,163 136,473 13,040 48,650 63 To foreigners 64 Other branches of parent bank 65 Banks 66 Official institutions 67 Nonbank foreigners 68 Other liabilities 270,923 111,267 72,842 15,183 71,631 20,584 296,850 119,591 76,452 16,750 84,057 27,777 311,668 139,113 58,986 14,791 98,778 37,785 290,277 116,253 57,236 20,394 96,394 38,212 287,887 112,521 59,975 17,245 98,146 39,464 290,257 112,845 62,329 18,030 97,053 40,775 295,645 114,101 62,665r 19,420 99,459* 45,687 295,282 108,534 68,286* 17,247 101,215* 46,114 298,152 109,085 67,945* 19,394 101,728* 45,605 288,488 111,960 63,097 15,596 97,835 46,242 69 Total payable in U.S. dollars 367,483 396,613 383,522 372,871 363,869 360,397 367,771 366,449 369,515* 370,530 70 Negotiable CDs 71 To United States 72 Parent bank 73 Other banks in United States 74 Nonbanks 24,045 173,190 107,150 13,468 52,572 19,619 187,286 132,563 10,519 44,204 14,094 175,654 130,510 6,052 39,092 12,620 175,882 121,118 10,647 44,117 14,538 170,610 120,558 8,815 41,237 14,183 167,207 115,999 8,449 42,759 13,180 176,709 125,496 10,368 40,845 14,157 174,274 123,399 9,011 41,864 13,813 176,254 124,625* 11,436* 40,193 11,909 185,328 129,711 11,487 44,130 75 To foreigners 76 Other branches of parent bank 77 Banks 78 Official institutions 79 Nonbank foreigners 80 Other liabilities 160,766 84,021 28,493 8,224 40,028 9,482 176,460 87,636 30,537 9,873 48,414 13,248 179,002 98,128 20,251 7,921 52,702 14,772 170,334 84,952 21,142 13,972 50,268 14,035 163,451 79,909 21,470 11,563 50,509 15,270 164,188 79,277 23,330 11,496 50,085 14,819 163,551 79,679 21,239* 12,591 50,042r 14,331 161,850 75,243 25,653* 10,565 50,389* 16,168 164,275 76,224 24,501* 13,375 50,175* 15,173* 158,920 76,528 24,156 10,304 47,932 14,373 United Kingdom 81 Total, all currencies 156,835 161,947 184,818 165,534 161,869 162,879 172,113 172,795 174,648 175,599 82 Negotiable CDs 83 To United States 84 Parent bank 85 Other banks in United States 86 Nonbanks 24,528 36,784 27,849 2,037 6,898 20,056 36,036 29,726 1,256 5,054 14,256 39,928 31,806 1,505 6,617 12,196 31,084 23,238 1,092 6,754 14,889 26,599 19,545 1,490 5,564 14,148 27,915 20,367 1,662 5,886 12,941 31,534 23,707 1,724 6,103 14,145 29,137 21,080 2,053 6,004 13,506 30,560 22,629 1,934 5,997 11,333 37,720 29,834 1,438 6,448 87 To foreigners 88 Other branches of parent bank 89 Banks 90 Official institutions 91 Nonbank foreigners 92 Other liabilities 86,026 26,812 30,609 7,873 20,732 9,497 92,307 27,397 29,780 8,551 26,579 13,548 108,531 36,709 25,126 8,361 38,335 22,103 99,756 29,371 22,994 13,062 34,329 22,498 97,263 28,591 24,310 10,010 34,352 23,118 96,773 27,457 25,131 10,722 33,463 24,043 98,572 29,898 23,525r 12,071 33,078r 29,066 100,267 26,879 28,254* 10,045 35,089* 29,246 102,299 26,977 27,959* 12,628 34,735* 28,283 98,167 30,054 25,541 9,670 32,902 28,379 105,907 108,178 116,094 104,523 99,756 100,131 104,303 103,238 104,433 108,755 94 Negotiable CDs 95 To United States 96 Parent bank 97 Other banks in United States 98 Nonbanks 22,063 32,588 26,404 1,752 4,432 18,143 33,056 28,812 1,065 3,179 12,710 34,697 29,955 1,156 3,586 10,833 27,106 21,848 892 4,366 12,758 22,355 17,924 1,233 3,198 12,337 23,788 18,949 1,216 3,623 11,249 27,272 22,228 1,259 3,785 12,397 24,394 19,391 1,704 3,299 12,042 25,517 20,923 1,481 3,113 10,076 33,003 28,260 1,177 3,566 99 To foreigners 100 Other branches of parent bank 101 Banks 102 Official institutions 103 Nonbank foreigners 104 Other liabilities 47,083 18,561 13,407 4,348 10,767 4,173 50,517 18,384 12,244 5,454 14,435 6,462 60,014 25,957 9,488 4,692 19,877 8,673 58,068 20,452 8,758 10,032 18,826 8,516 55,433 19,509 9,678 7,519 18,727 9,210 54,848 18,480 9,731 7,929 18,708 9,158 56,829 20,878 8,401r 9,149 18,401r 8,953 56,639 18,319 12,040* 7,050 19,230* 9,808 57,527 18,678 10,542* 9,995 18,312* 9,347 56,626 20,800 11,069 7,156 17,601 9,050 93 Total payable in U.S. dollars Bahamas and Caymans 105 Total, all currencies 170,639 176,006 162,316 169,194 170,044 166,333 170,219 170,529 170,846 168,295 106 Negotiable CDs 107 To United States 108 Parent bank 109 Other banks in United States 110 Nonbanks 953 122,332 62,894 11,494 47,944 678 124,859 75,188 8,883 40,788 646 114,738 74,941 4,526 35,271 696 126,182 76,980 9,449 39,753 904 127,083 81,541 7,484 38,058 963 123,117 77,159 7,036 38,922 1,055 128,217 82,142 8,841 37,234 981 130,223 84,853 7,070 38,300 1,034 129,781 83,057* 9,728* 36,9% 1,173 129,914 79,436 10,011 40,467 45,161 23,686 8,336 1,074 12,065 2,193 47,382 23,414 8,823 1,097 14,048 3,087 44,444 24,715 5,588 622 13,519 2,488 40,180 21,701 5,734 931 11,814 2,136 39,624 21,765 4,877 661 12,321 2,433 39,994 21,846 5,558 655 11,935 2,259 38,868 20,767 5,431 647 12,023 2,079 36,861 19,675 5,218 666 11,302 2,464 37,857 19,555 5,984 646 11,672 2,174 35,127 17,315 5,662 572 11,578 2,081 162,950 171,250 157,132 164,906 165,708 162,040 165,556 166,226 166,157 163,572 111 To foreigners 112 Other branches of parent bank 113 Banks 114 Official institutions 115 Nonbank foreigners 116 Other liabilities 117 Total payable in U.S. dollars Summary Statistics 3.15 A57 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1991 Item 1 Total1 By type 2 Liabilities reported by banks in the United States 3 U.S. Treasury bills and certificates 3 U.S. Treasury bonds and notes 4 Marketable 5 Nonmarketable 4 6 U.S. securities other than U.S. Treasury securities 7 8 9 10 11 12 By area Western Europe 1 Canada Latin America and Caribbean Asia Africa Other countries 1989 1990 July Aug. Sept. Oct. Nov/ Dec." 312,477 344,529 347,118 350,476 356,885 350,518 358,025r 366,009 363,954 36,496 76,985 39,880 79,424 41,232 84,526 43,417 86,071 47,374 88,5% 38,402 90,394 41,526r 94,428 42,701 92,855 37,959 92,692 179,269 568 19,159 202,487 4,491 18,247 197,808 4,672 18,880 197,104 4,704 19,180 196,815 4,734 19,366 197,645 4,765 19,312 198,157 4,7% 19,118 205,354 4,827 20,272 207,983 4,858 20,462 132,849 9,482 9,313 153,338 1,030 6,469 167,191 8,671 21,184 138,0% 1,434 7,955 164,009 9,229 29,415 134,310 1,259 8,892 166,349 9,260 30,064 134,806 1,183 8,812 170,467 10,001 31,377 134,826 1,202 9,010 165,061 9,608 31,911 133,082 1,558 9,2% 170,423r 9,121 32,604r 134,667r 1,519 9,689 173,708 9,428 33,993 137,513 1,383 9,982 169,287 7,310 36,057 139,610 2,091 9,597 1. Includes the Bank for International Settlements. 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, negotiable time certificates of deposit, and borrowings under repurchase agreements. 3. Includes nonmarketable certificates of indebtedness (including those payable in foreign currencies through 1974) and Treasury bills issued to official institutions of foreign countries. 4. Excludes notes issued to foreign official nonreserve agencies. Includes 3.16 June bonds and notes payable in foreign currencies; zero coupon bonds are included at current value. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and U.S. corporate stocks and bonds. 6. Includes countries in Oceania and Eastern Europe. SOURCE. Based on Treasury Department data and on data reported to the Treasury Department by banks (including Federal Reserve Banks) and securities dealers in the United States and on the 1984 benchmark survey of foreign portfolio investment in the United States. LIABILITIES TO A N D CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies 1 Millions of dollars, end of period 1990 1987 Item 1 Banks' own liabilities 2 Banks' own claims 5 Claims of banks' domestic customers 2 55,438 51,271 18,861 32,410 551 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 1988 74,980 68,983 25,100 43,884 364 1991 1989 67,835 65,127 20,491 44,636 3,507 Dec. Mar. June Sept/ 70,477 66,7% 29,672 37,124 6,309 64,929 66,919 27,586 39,333 5,569 59,487 61,619 27,792 33,827 1,646 63,189 64,988 30,230 34,758 2,348 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. A58 3.17 International Statistics • April 1992 LIABILITIES TO FOREIGNERS Payable in U.S. dollars Reported by Banks in the United States 1 Millions of dollars, end of period 1991 Holder and type of liability 1989 1990 1991 June July Aug. Sept. Oct/ Nov/ Dec. p 1 All foreigners 736,878 759,634 753,451 729,866 726,807 733,321 735,950 750,205 758,065 753,451 2 Banks' own liabilities 3 Demand deposits 4 Time deposits 5 Other. 6 Own foreign offices4 577,498 22,032 168,780 67,823 318,864 577,229 21,723 168,017 65,822 321,667 572,848 20,518 158,736 66,179 327,415 550,103 18,797 148,572 65,3% 317,338 548,063 17,929 148,667 66,823 314,644 552,670 18,423 146,395 72,595 315,257 554,557 19,841 149,708 67,646 317,362 565,347 17,637 154,552 73,223 319,935 575,503 21,630 154,302 75,763 323,808 572,848 20,518 158,736 66,179 327,415 159,380 91,100 182,405 96,7% 180,603 110,731 179,763 100,876 178,744 101,809 180,651 105,325 181,393 107,019 184,858 112,280 182,562 110,938 180,603 110,731 19,526 48,754 17,578 68,031 18,656 51,216 18,040 60,848 17,351 59,584 16,508 58,818 16,820 57,554 17,076 55,502 17,225 54,399 18,656 51,216 7 Banks' custody liabilities5 8 U.S. Treasury bills and certificates 6 9 Other negotiable and readily transferable instruments 10 Other 11 Nonmonetary inteniational and regional organizations 4,894 5,918 8,150 5,932 6,236 6,945 6,915 7,689 8,719 8,150 12 Banks' own liabilities 13 Demand deposits 14 Time deposits 15 O t h e r . 3,279 96 927 2,255 4,540 36 1,050 3,455 5,9% 43 2,214 3,739 3,878 26 2,025 1,827 4,127 44 1,742 2,341 4,971 28 1,550 3,393 5,410 36 2,307 3,067 5,988 28 2,490 3,470 6,826 24 2,392 4,410 5,9% 43 2,214 3,739 16 Banks' custody liabilities5 17 U.S. Treasury bills and certificates 6 18 Other negotiable and readily transferable instruments 19 Other 1,616 197 1,378 364 2,154 1,730 2,054 1,287 2,109 1,404 1,974 1,269 1,505 1,032 1,701 1,246 1,893 1,530 2,154 1,730 1,417 2 1,014 0 424 0 767 0 705 0 705 0 473 0 455 0 363 0 424 0 20 Official institutions9 113,481 119,303 130,651 125,758 129,488 135,970 128,796 135,954 135,556 130,651 21 Banks' own liabilities 22 Demand deposits 23 Time deposits 24 O t h e r . 31,108 2,196 10,495 18,417 34,910 1,924 14,359 18,628 33,974 2,840 16,024 15,110 36,864 1,542 14,671 20,651 38,886 1,396 14,970 22,520 43,156 1,683 14,747 26,726 33,854 1,645 13,237 18,972 37,559 1,307 14,544 21,708 38,860 1,621 13,145 24,094 33,974 2,840 16,024 15,110 25 Banks' custody liabilities5 26 U.S. Treasury bills and certificates 6 27 Other negotiable and readily transferable instruments 28 Other 82,373 76,985 84,393 79,424 %,677 92,692 88,894 84,526 90,602 86,071 92,814 88,5% 94,942 90,394 98,395 94,428 %,6% 92,855 %,677 92,692 5,028 361 4,766 203 3,879 106 4,101 267 4,324 207 4,047 171 4,128 420 3,832 135 3,627 214 3,879 106 10 29 Banks 515,275 540,805 520,022 506,023 498,681 500,544 509,557 515,933 521,576 520,022 30 Banks' own liabilities 31 Unaffiliated foreign banks 32 Demand deposits 33 Time deposits 34 Other. 35 Own foreign offices4 454,273 135,409 10,279 90,557 34,573 318,864 458,470 136,802 10,053 88,541 38,208 457,337 129,922 8,618 82,901 38,403 432,258 114,920 8,584 69,941 36,395 427,648 113,004 8,423 70,185 34,3% 429,732 114,475 8,252 70,608 35,615 439,924 122,562 8,959 74,861 38,742 321,667 327,415 317,338 314,644 315,257 317,362 447,667 127,732 8,164 78,038 41,530 319,935 455,844 132,036 11,396 80,170 40,470 323,808 457,337 129,922 8,618 82,901 38,403 327,415 61,002 9,367 82,335 10,669 62,685 7,471 73,765 8,664 71,033 7,970 70,812 8,242 69,633 8,161 68,266 8,363 65,732 7,855 62,685 7,471 5,124 46,510 5,341 66,325 5,808 49,406 5,928 59,173 5,472 57,591 5,316 57,254 5,819 55,653 6,083 53,820 5,948 51,929 5,808 49,406 36 Banks' custody liabilities5 37 U.S. Treasury bills and certificates 6 38 Other negotiable and readily transferable instruments 7 39 Other 103,228 93,608 94,628 92,153 92,402 89,862 90,682 90,629 92,214 94,628 41 Banks' own liabilities 42 Demand deposits 43 Time deposits 44 O t h e r . 88,839 9,460 66,801 12,577 79,309 9,711 64,067 5,530 75,541 9,017 57,597 8,927 77,103 8,645 61,935 6,523 77,402 8,066 61,770 7,566 74,811 8,460 59,490 6,861 75,369 9,201 59,303 6,865 74,133 8,138 59,480 6,515 73,973 8,589 58,595 6,789 75,541 9,017 57,597 8,927 45 Banks' custody liabilities5 46 U.S. Treasury bills and certificates 6 47 Other negotiable and readily transferable instruments 7 48 Other 14,389 4,551 14,299 6,339 19,087 8,838 15,050 6,399 15,000 6,364 15,051 7,218 15,313 7,432 16,4% 8,243 18,241 8,698 19,087 8,838 7,958 1,880 6,457 1,503 8,545 1,704 7,244 1,408 6,850 1,786 6,440 1,393 6,400 1,481 6,706 1,547 7,287 2,256 8,545 1,704 7,203 7,073 7,456 8,186 7,073 7,062 7,542 7,5% 7,137 7,456 40 Other foreigners 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 2. Excludes negotiable time certificates of deposit, which are included in "Other negotiable and readily transferable instruments." 3. Includes borrowing under repurchase agreements. 4. For U.S. banks, includes amounts due to own foreign branches and foreign subsidiaries consolidated in "Consolidated Report of Condition" filed with bank regulatory agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists principally of amounts due to head office or parent foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of head office or parent foreign bank. 5. Financial claims on residents of the United States, other than long-term securities, held by or through reporting banks. 6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official institutions of foreign countries. 7. Principally bankers acceptances, commercial paper, and negotiable time certificates of deposit. 8. Principally the International Bank for Reconstruction and Development and the Inter-American and Asian Development Banks. Data exclude "holdings of dollars" of the International Monetary Fund. 9. Foreign central banks, foreign central governments, and the Bank for International Settlements. 10. Excludes central banks, which are included in "Official institutions." Nonbank-Reported Data 3.17—Continued 1991 1989 Area and country 1990 1991 June 2 Foreign countries 3 Europe 4 5 Belgium-Luxembourg 6 Denmark 7 8 France 9 Germany 10 11 Italy 1? Netherlands 13 Norway 14 15 16 Sweden 17 Switzerland 18 Turkey 19 United Kingdom Yugoslavia 70 71 Other Western Europe" 77 U.S.S.R Other Eastern Europe 12 23 24 Canada Aug. Sept. Oct. Nov." Dec. p 759,634 753,451 729,866 726,807 733,321 735,950 750,205" 758,065 753,451 731,984 753,716 745,301 723,934 720,571 726,376 729,035 742,516r 749,346 745,301 237,501 1,233 10,648 1,415 570 26,903 7,578 1,028 16,169 6,613 2,401 2,418 4,364 1,491 34,4% 1,818 102,362 1,474 13,563 350 608 254,452 1,229 12,382 1,399 602 30,946 7,485 934 17,735 5,350 2,357 2,958 7,544 1,837 36,690 1,169 109,555 928 11,689 119 1,545 249,112 1,205 13,241 937 1,341 31,817 8,638 763 13,543 7,132 1,888 2,183 11,390 2,222 37,286 1,598 100,622 622 8,974 241 3,469 236,543 1,067 11,849 1,370 732 26,382 7,822 791 14,347 6,100 1,926 2,392 9,392 745 36,089 1,806 98,311 925 11,393 178 2,925 228,782 1,234 12,292 1,197 1,222 26,747 7,056 817 13,883 6,069 1,653 2,279 10,4% 858 34,808 1,720 90,059 1,016 12,423 75 2,878 235,018 %1 11,168 1,065 1,170 26,580 7,037 851 12,507 5,651 1,279 2,313 10,3% 1,424 35,%7 1,780 95,359 955 15,176 136 3,243 237,000 1,109 13,912 1,038 618 27,476 7,500 944 12,507 6,310 1,444 2,391 10,834 1,435 38,341 1,538 95,628 854 9,640 117 3,364 246,806r 1,232 13,495 912 938 30,500" 7,891r 840 12,274 6,546 1,192 2,431 12,280" l,217 r 36,733 1,493 99,472r 807 12,964" 178 3,411 251,266 1,313 14,471 1,143 1,080 31,104 8,032 890 13,288 6,124 1,489 2,223 11,148 1,105 36,711 1,845 99,841 544 15,257 236 3,422 249,112 1,205 13,241 937 1,341 31,817 8,638 763 13,543 7,132 1,888 2,183 11,390 2,222 37,286 1,598 100,622 622 8,974 241 3,469 18,865 20,349 21,696 23,900 22,519 23,919 24,038 24,685 23,131 21,6% 337,729 6,978 93,977 3,520 6,074 162,590 3,162 4,735 9 1,236 1,613 235 20,357 5,732 4,748 1,287 2,439 12,249 6,788 340,519 6,858 %,577 3,120 6,068 163,040 3,092 4,641 8 1,226 1,585 213 20,937 5,565 4,374 1,305 2,507 12,348 7,055 340,561" 7,190 99,858" 3,191 5,998" 160,555" 3,348 4,823 4 1,237 1,541 202 19,979 5,499" 4,450 1,234" 2,442" 12,237 6,773" 345,163 7,452 100,339 3,295 5,811 163,459 3,388 4,797 12 1,236 1,589 201 20,515 5,924 4,563 1,240 2,373 12,171 6,798 343,653 7,758 99,713 3,178 5,924 162,428 3,284 4,662 2 1,232 1,593 231 19,927 5,593 4,694 1,249 2,111 13,151 6,923 736,878 1 July 75 Latin America and Caribbean 76 Argentina 77 78 Bermuda 79 Brazil 30 British West Indies 31 Chile 3? Colombia 33 Cuba 34 35 Guatemala 36 37 Netherlands Antilles 38 39 Panama 40 Peru 41 Venezuela 4? 43 Other 311,028 7,304 99,341 2,884 6,351 138,309 3,212 4,653 10 1,391 1,312 209 15,423 6,310 4,362 1,984 2,284 9,482 6,206 332,997 7,365 107,386 2,822 5,834 147,321 3,145 4,492 11 1,379 1,541 257 16,650 7,357 4,574 1,294 2,520 12,271 6,779 343,653 7,758 99,713 3,178 5,924 162,428 3,284 4,662 2 1,232 1,593 231 19,927 5,593 4,694 1,249 2,111 13,151 6,923 334,668 7,504 %,900 2,919 5,747 157,229 3,229 4,446 7 1,286 1,663 273 19,552 5,934 4,670 1,340 2,571 12,581 6,816 339,202 7,097 98,011 3,087 5,837 161,253 3,305 4,419 2 1,267 1,641 219 20,008 5,828 4,435 1,333 2,450 12,170 6,840 44 156,201 136,844 120,471 120,750 122,194 121,689 118,830 120,443" 120,039 120,471 1,773 19,588 12,416 780 1,281 1,243 81,184 3,215 1,766 2,093 13,370 17,491 2,421 11,246 12,754 1,233 1,238 2,767 67,076 2,287 1,585 1,443 15,829 16,%5 2,599 11,514 14,373 2,418 1,464 2,014 47,112 2,538 2,449 2,252 15,731 16,007 2,412 9,878 14,581 1,959 1,612 2,355 51,449 2,211 2,408 11,220 14,719 2,122 1,191 2,376 50,144 2,444 2,247 11,579 14,206 2,373 1,232 2,697 48,875 2,272 2,198 9,425 14,468 2,474 1,065 2,848 48,089 2,107 2,494 12,443" 13,943" 2,504" 1,230 2,115 47,068" 2,169" 2,599 11,514 14,373 2,418 1,464 2,014 47,112 2,538 1,587 1,537 1,465 1,647 1,926 2,386 13,371 16,949 2,368 15,750 15,915 2,650 14,835 17,258 3,348 15,310 15,851 3,113" 15,534" 15,904 2,783 11,675 13,812 2,613 1,414 2,108 46,004 2,555 2,139 3,581 16,302 15,053 3,824 686 78 206 86 1,121 1,648 4,630 1,425 104 228 53 1,110 1,710 5,141 1,619 79 228 31 1,082 2,102 4,188 1,017 122 241 45 1,105 1,6^8 3,929 999 81 221 24 960 1,644 4,017 957 91 137 58 992 1,782 4,483 1,125 82 242 37 1,145 1,852 4,558 1,241 78 207 42 1,182 1,808 4,465 1,060 93 173 32 1,280 1,827 5,141 1,619 79 228 31 1,082 2,102 4,564 3,867 697 4,444 3,807 637 5,228 4,464 764 3,885 3,103 781 3,945 3,173 772 4,004 3,149 855 4,165 3,231 934 5,463 4,445 1,018 5,282 4,116 1,166 5,228 4,464 764 4,894 3,947 684 263 5,918 4,390 1,048 479 8,150 5,658 1,177 1,315 5,932 4,040 1,410 482 6,236 4,356 1,273 607 6,945 4,371 1,531 1,043 6,915 4,877 1,094 944 7,689" 5,435" 1,242" 1,012 8,719 6,178 1,366 1,175 8,150 5,658 1,177 1,315 45 46 47 48 49 50 51 57 53 54 55 56 57 58 59 60 61 62 63 China Mainland Taiwan Hong Kong India Thailand Middle-East oil-exporting countries Other 3 South Africa Oil-exporting countries 14 Other 64 Other countries 65 66 All other 67 Nonmonetary international and regional 68 69 70 International Latin American regional Other regional 16 11. Includes the Bank for International Settlements and Eastern European countries not listed in line 23. 12. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. 13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 2,449 2,252 15,731 16,007 14. Comprises Algeria, Gabon, Libya, and Nigeria. 15. Excludes "holdings of dollars" of the International Monetary Fund. 16. Asian, African, Middle Eastern, and European regional organizations, except the Bank for International Settlements, which is included in "Other Western Europe." A59 A60 3.18 International Statistics • April 1992 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States 1 Payable in U.S. Dollars Millions of dollars, end of period 1991 Area and country 1989 1990 1991 June July Aug. Sept. Oct. Nov.* Dec. p 1 Total 534,492 511,543 511,917 505,424 497,814 502,559 498,985 511,091r 513,540 511,917 2 Foreign countries 530,630 506,750 506,153 501,195 495,415 500,079 496,416 509,310* 510,250 506,153 119,025 415 6,478 582 1,027 16,146 2,865 788 6,662 1,904 609 376 1,930 1,773 6,141 1,071 65,527 1,329 1,302 1,179 921 113,093 362 5,473 497 1,047 14,468 3,343 727 6,052 1,761 782 292 2,668 2,094 4,202 1,405 65,151 1,142 597 530 499 114,225 327 6,157 686 1,912 15,091 3,369 553 8,242 2,508 669 344 1,844 2,315 4,495 1,053 60,522 824 787 1,930 597 99,037 303 6,736 896 668 14,302 2,751 654 6,339 2,132 701 378 2,056 1,993 2,969 1,593 51,369 932 734 911 617 97,767 269 5,924 898 642 14,300 2,682 619 5,911 2,234 661 260 2,582 1,858 3,627 1,458 50,775 877 832 772 586 98,575 185 6,534 945 771 13,827 3,106 495 5,931 2,101 599 308 1,995 1,633 3,609 1,407 51,625 820 1,024 1,015 645 103,395 297 7,175 670 908 14,504 2,672 473 6,541 1,955 679 266 2,333 1,896 4,048 1,382 54,305 802 773 1,157 559 103,756* 374 7,677* 609* 1,195* 13,080 2,107* 487 6,370 2,139* 682 301 2,410* 1,842 4,195* 1,192 55,490* 803 714 1,358 731 107,780 325 6,962 656 1,378 14,813 2,869 555 6,362 2,190 776 358 2,480 2,347 4,469 1,147 55,967 848 1,001 1,669 608 114,225 327 6,157 686 1,912 15,091 3,369 553 8,242 2,508 669 344 1,844 2,315 4,495 1,053 60,522 824 787 1,930 597 3 Europe 4 Austria 5 Belgium-Luxembourg 6 Denmark 7 Finland 8 France 9 Germany 10 Greece 11 Italy 12 Netherlands 13 Norway 14 Portugal 15 Spain 16 Sweden 17 Switzerland 18 Turkey 19 United Kingdom 20 Yugoslavia 21 Other Western Europe 22 U.S.S.R 23 Other Eastern Europe 3 15,451 16,091 15,207 17,446 16,719 14,495 14,734 16,076* 15,796 15,207 25 Latin America and Caribbean 26 Argentina 27 Bahamas 28 Bermuda 29 Brazil 30 British West Indies 31 Chile 32 Colombia 33 Cuba 34 Ecuador 35 Guatemala 36 Jamaica 37 Mexico 38 Netherlands Antilles 39 Panama 40 Peru 41 Uruguay 42 Venezuela 43 Other 24 Canada 230,438 9,270 77,921 1,315 23,749 68,749 4,353 2,784 1 1,688 197 297 23,376 1,921 1,740 771 929 9,652 1,726 231,506 6,967 76,525 4,056 17,995 88,565 3,271 2,587 0 1,387 191 238 14,851 7,998 1,471 663 786 2,571 1,384 244,280 5,877 87,094 2,188 11,845 106,016 2,802 2,424 0 1,053 222 158 16,662 1,286 1,554 739 599 2,514 1,247 248,841 6,127 78,023 3,893 15,248 115,284 2,917 2,349 0 1,344 203 187 15,408 1,639 1,429 726 590 2,222 1,252 246,051 5,944 81,294 5,804 12,350 110,628 2,832 2,202 0 1,263 190 144 15,447 1,563 1,501 712 577 2,405 1,195 249,305 5,749 78,414 11,773 12,332 111,119 2,779 2,368 0 1,238 182 150 15,279 1,540 1,490 728 571 2,394 1,199 250,313 5,749 80,217 6,847 11,880 112,589 2,732 2,431 0 1,115 185 150 16,427 3,606 1,489 712 577 2,443 1,164 255,080* 5,735* 85,940* 4,298* 11,499* 116,401* 2,721 2,541 0 1,095 191 162 16,871* 1,247* 1,558 722 555 2,406* 1,138* 251,745 5,778 87,145 4,095 11,897 110,735 2,831 2,571 0 1,090 191 161 17,400 1,122 1,652 724 550 2,634 1,169 244,280 5,877 87,094 2,188 11,845 106,016 2,802 2,424 0 1,053 222 158 16,662 1,286 1,554 739 599 2,514 1,247 44 157,474 138,722 125,220 128,210 127,560 130,220 120,353 127,019* 127,214 125,220 634 2,776 11,128 621 651 813 111,300 5,323 1,344 1,140 10,149 11,594 620 1,952 10,648 655 933 774 90,699 5,766 1,247 1,573 10,749 13,106 747 2,088 9,698 440 952 853 84,782 6,025 1,910 1,625 8,284 7,816 992 2,019 9,312 432 891 851 85,708 5,924 1,506 1,977 10,468 8,131 659 1,696 9,051 409 874 818 88,183 5,597 1,647 1,975 9,771 6,880 575 1,522 9,154 425 858 919 90,604 5,383 1,682 1,870 9,741 7,487 621 1,460 9,467 449 852 945 80,498 5,140 1,633 1,934 10,439 6,915 597 1,577 10,203 481 841* 994* 84,839* 5,340* 1,916 1,826 9,973 8,432 698 1,583 10,171 449 872 907 85,559 5,773 1,971 1,798 9,957 7,476 747 2,088 9,698 440 952 853 84,782 6,025 1,910 1,625 8,284 7,816 57 Africa 58 Egypt 59 Morocco 60 South Africa 61 Zaire 62 Oil-exporting countries 5 63 Other 5,890 502 559 1,628 16 1,648 1,537 5,445 380 513 1,525 16 1,486 1,525 4,919 286 575 1,231 4 1,298 1,525 5,429 315 590 1,626 12 1,336 1,550 5,417 324 597 1,627 9 1,285 1,575 5,344 315 576 1,610 9 1,273 1,561 5,272 312 579 1,498 8 1,270 1,605 5,264 294 589 1,494 9 1,260 1,618 5,234 343 583 1,493 7 1,320 1,488 4,919 286 575 1,231 4 1,298 1,525 64 Other countries 65 Australia 66 All other 2,354 1,781 573 1,892 1,413 479 2,302 1,665 637 2,233 1,621 611 1,901 1,384 517 2,140 1,464 676 2,349 1,526 823 2,115* 1,503 612* 2,481 1,718 763 2,302 1,665 637 67 Nonmonetary international and regional organizations6 3,862 4,793 5,764 4,229 2,399 2,480 2,569 1,781 3,290 5,764 45 46 47 48 49 50 51 52 53 54 55 56 China Mainland Taiwan Hong Kong India Indonesia Israel Japan Korea Philippines Thailand Middle East oil-exporting countries Other 1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 2. Includes the Bank for International Settlements and Eastern European countries not listed in line 23. 3. Comprises Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 5. Comprises Algeria, Gabon, Libya, and Nigeria. 6. Excludes the Bank for International Settlements, which is included in "Other Western Europe." Nonbank-Reported 3.19 Data BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States 1 Payable in U.S. Dollars Millions of dollars, end of period 1991 Type of claim 1989 1991 1990 June July Aug. 497,814 35,174 305,470 115,041 69,302 45,739 42,129 502,559 35,423 301,649 116,553 70,730 45,823 48,934 Sept. 1 Total 593,087 579,044r 2 Banks' own claims on foreigners 3 Foreign public borrowers 4 Own foreign offices 5 Unaffiliated foreign banks 6 Deposits Other 7 8 All other foreigners 534,492 60,511 296,011 134,885 78,185 56,700 43,085 511,543 41,900 304,315 117,272 65,253 52,019 48,056 58,594 13,019 67,501r 14,375 67,296 19,390 67,339 19,512 30,983 41,333 35,147 35,054 14,592 11,792r 12,758 12,773 12,899 13,628 10,420 8,665 45,744 44,554 9 Claims of banks' domestic customers 3 ... 11 Negotiable and readily transferable 12 Outstanding collections and other 13 MEMO: Customer liability on 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States . . . . 505,424 39,460 306,089 115,018 69,130 45,889 44,857 36,026 n.a. Dec." 40,425 41,717 498,985 35,076 303,948 113,853 68,369 45,484 46,108 511,091 34,878 313,052 119,847 72,493 47,354 43,314 513,540 35,908 312,764 120,234 71,578 48,656 44,634 511,917 35,988 316,917 116,529 69,227 47,302 42,483 37,856 39,761 40,509 n.a. subsidiaries of head office or parent foreign bank. 3. Assets owned by customers of the reporting bank located in the United States that represent claims on foreigners held by reporting banks for the account of their domestic customers. 4. Principally negotiable time certificates of deposit and bankers acceptances. 5. Includes demand and time deposits and negotiable and nonnegotiable certificates of deposit denominated in U.S. dollars issued by banks abroad. For description of changes in data reported by nonbanks, see July 1979 Bulletin, p. 550. 1. Data for banks' own claims are given on a monthly basis, but the data for claims of banks' own domestic customers are available on a quarterly basis only. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidiaries consolidated in "Consolidated Report of Condition" filed with bank regulatory agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists principally of amounts due from head office or parent foreign bank, and foreign branches, agencies, or wholly owned 3.20 Nov. r 566,324 572,720 511,917 35,988 316,917 116,529 69,227 47,302 42,483 Oct. r BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States 1 Payable in U.S. Dollars Millions of dollars, end of period 1990 Maturity, by borrower and area 1987 1988 1991 1989 Dec. Mar. June Sept. r 1 235,130 233,184 238,123 206,903 199,254 199,085 194,820 By borrower Maturity of one year or less2 3 Foreign public borrowers 4 All other foreigners 5 Maturity of more than one year 2 6 Foreign public borrowers 7 All other foreigners 163,997 25,889 138,108 71,133 38,625 32,507 172,634 26,562 146,071 60,550 35,291 25,259 178,346 23,916 154,430 59,776 36,014 23,762 165,985 19,305 146,680 40,918 22,269 18,649 158,220 21,216 137,004 41,034 22,498 18,536 159,465 18,596 140,869 39,620 20,624 18,996 159,385 17,088 142,297 35,435 17,791 17,644 59,027 5,680 56,535 35,919 2,833 4,003 55,909 6,282 57,991 46,224 3,337 2,891 53,913 5,910 53,003 57,755 3,225 4,541 49,184 5,450 49,782 53,258 3,040 5,272 49,641 5,938 42,660 54,042 3,008 2,931 49,917 7,290 41,121 53,177 2,945 5,016 51,104 5,671 47,260 49,291 2,815 3,244 6,696 2,661 53,817 3,830 1,747 2,381 4,666 1,922 47,547 3,613 2,301 501 4,121 2,353 45,816 4,172 2,630 684 3,859 3,290 25,774 5,165 2,374 456 4,329 3,387 24,961 5,414 2,426 517 4,285 3,820 23,219 5,645 2,456 195 3,819 3,673 19,241 6,095 2,385 222 ?. 8 9 10 11 1? 13 14 15 16 17 18 19 By area Maturity of one year or less Europe Canada Latin America and Caribbean Asia Africa All other 3 Maturity of more than one yean Europe Canada Latin America and Caribbean Asia Africa All other 3 1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers. 2. Remaining time to maturity, 3. Includes nonmonetary international and regional organizations. A61 A62 3.21 International Statistics • April 1992 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks 1 Billions of dollars, end of period 1989 Area or country 1987 1990 1991 1988 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 382.4 346.3 346.5 338.8 333.9 321.7 331.5 317.8 325.3" 320.2 335.8' 159.7 10.0 13.7 12.6 7.5 4.1 2.1 5.6 68.8 5.5 29.8 152.7 9.0 10.5 10.3 6.8 2.7 1.8 5.4 66.2 5.0 34.9 146.4 6.9 11.1 10.4 6.8 2.4 2.0 6.1 63.7 5.9 31.0 152.9 6.3 11.7 10.5 7.4 3.1 2.0 7.1 67.2 5.4 32.2 146.6 6.7 10.4 11.2 5.9 3.1 2.1 6.2 64.0 4.8 32.2 139.3 6.2 10.2 11.2 5.4 2.7 2.3 6.3 59.9 5.1 30.1 143.6 6.5 11.1 11.1 4.4 3.8 2.3 5.6 62.6 5.0 31.3 132.1 5.9 10.4 10.6 5.0 3.0 2.2 4.4 60.8 5.9 23.9 129.9" 6.2 9.7 8.8 4.0 3.3 2.0 3.7 62.3" 6.8 23.2 130.1 6.1 10.5 8.3 3.6 3.3 2.5 3.3 59.8 8.2 24.6 134.7 5.8 11.1 9.7 4.5 3.0 2.1 3.9 65.6 5.8 23.2 13 Other developed countries 14 Austria 13 Denmark 16 Finland 17 Greece 18 Norway 19 Portugal 20 Spain 21 Turkey 22 Other Western Europe 23 South Africa 24 Australia 26.4 1.9 1.7 1.2 2.0 2.2 .6 8.0 2.0 1.6 2.9 2.4 21.0 1.5 1.1 1.1 1.8 1.8 .4 6.2 1.5 1.3 2.4 1.8 21.0 1.5 1.1 1.1 2.4 1.4 .4 6.9 1.2 1.0 2.1 2.1 20.7 1.5 1.1 1.0 2.5 1.4 .4 7.1 1.2 .7 2.0 1.6 23.0 1.5 1.2 1.1 2.6 1.7 .4 8.2 1.3 1.0 2.0 2.1 22.4 1.5 1.1 .9 2.7 1.4 .8 7.8 1.4 1.1 1.9 1.8 23.0 1.6 1.1 .8 2.8 1.6 .6 8.4 1.6 .7 1.9 2.0 22.6 1.4 1.1 .7 2.7 1.6 .6 8.3 1.7 .9 1.8 1.8 23.1 1.4 .9 1.0 2.5 1.5 .6 9.0 1.7 .8 1.8 1.9 21.1 1.1 1.2 .8 2.4 1.5 .6 7.0 1.9 .9 1.8 2.0 21.7 1.0 .9 .7 2.3 1.4 .5 8.3 1.6 1.0 1.6 2.4 25 OPEC countries 2 26 Ecuador 27 Venezuela 28 Indonesia 29 Middle East countries 30 African countries 17.4 1.9 8.1 1.9 3.6 1.9 16.6 1.7 7.9 1.7 3.4 1.9 16.2 1.5 7.4 2.0 3.5 1.9 17.1 1.3 7.0 2.0 5.0 1.7 15.5 1.2 6.1 2.1 4.3 1.8 15.3 1.1 6.0 2.0 4.4 1.8 14.2 1.1 6.0 2.3 3.1 1.7 12.8 1.0 5.0 2.7 2.5 1.7 17.1 .9 5.1 2.8 6.6 1.6 14.0 .9 5.3 2.6 3.7 1.5 15.6 .8 5.6 2.8 5.0 1.5 31 Non-OPEC developing countries 97.8 85.3 81.2 77.5 68.8 66.7 67.1 65.4 66.3 64.9" 65.2 9.5 24.7 6.9 2.0 23.5 1.1 2.8 9.0 22.4 5.6 2.1 18.8 .8 2.6 7.6 20.9 4.9 1.6 17.2 .6 2.9 6.3 19.0 4.6 1.8 17.7 .6 2.8 5.6 17.5 4.3 1.8 12.8 .5 2.8 5.2 16.7 3.7 1.7 12.6 .5 2.3 5.0 15.4 3.6 1.8 12.8 .5 2.4 5.0 14.4 3.5 1.8 13.0 .5 2.3 4.7 13.9 3.6 1.7 13.7 .5 2.2 4.6 11.6 3.6 1.6 14.3 .5 2.0 4.7 10.5 3.7 1.6 16.1 .4 1.9 .3 8.2 1.9 1.0 5.0 1.5 5.2 .7 .7 .3 3.7 2.1 1.2 6.1 1.6 4.5 1.1 .9 .3 5.0 2.7 .7 6.5 1.7 4.0 1.3 1.0 .3 4.5 3.1 .7 5.9 1.7 4.1 1.3 1.0 .3 3.8 3.5 .6 5.3 1.8 3.7 1.1 1.2 .2 3.6 3.6 .7 5.6 1.8 3.9 1.3 1.1 .2 4.0 3.6 .6 6.2 1.8 3.9 1.5 1.6 .2 3.5 3.3 .5 6.2 1.9 3.8 1.5 1.7 .4 3.6 3.5 .5 6.8 2.0 3.7 1.6 2.1 .6 4.1 3.0 .5 6.9 2.1 3.7 1.7 2.3 .4 4.1 2.8 .5 6.5" 2.3 3.6 1.9 2.3" 1 Total 2 G-10 countries and Switzerland 3 Belgium-Luxembourg 4 France 3 Germany 6 Italy 7 Netherlands 8 Sweden 9 Switzerland 10 United Kingdom 11 Canada 12 32 33 34 35 36 37 38 Latin America Argentina Brazil Chile Colombia Mexico Peru Other Latin America 39 40 41 42 43 44 43 46 47 Asia China Mainland Taiwan India Israel Korea (South) Malaysia Philippines Thailand Other Asia3 48 49 50 51 Africa Egypt Morocco Zaire Other Africa 3 .6 .9 .0 1.3 .4 .9 .0 1.1 .5 .8 .0 1.0 .4 .9 .0 1.0 .4 .9 .0 .9 .5 .9 .0 .8 .4 .9 .0 .8 .4 .8 .0 1.0 .4 .8 .0 .8 .4 .7 .0 .8 .4 .7 .0 .8 52 Eastern Europe 53 U.S.S.R 54 Yugoslavia 33 Other 3.2 .3 1.8 1.1 3.6 .7 1.8 1.1 3.5 .8 1.7 1.1 3.5 .7 1.6 1.3 3.3 .8 1.4 1.2 2.9 .4 1.4 1.1 2.7 .4 1.3 1.1 2.3 .2 1.2 .9 2.1 .3 1.0 .8 2.1 .4 1.0 .7 1.8 .4 .8 .7 56 OflFshore banking centers 57 Bahamas 58 Bermuda 59 Cayman Islands and other British West Indies 60 Netherlands Antilles 61 Panama4 62 Lebanon 63 Hong Kong 64 Singapore 65 Others 5 54.5 17.3 .6 13.5 1.2 3.7 .1 11.2 7.0 .0 44.2 11.0 .9 12.9 1.0 2.5 .1 9.6 6.1 .0 49.2 11.4 1.3 15.3 1.1 1.5 .1 10.7 7.8 .0 36.6 5.5 1.7 9.0 2.3 1.4 .1 9.7 7.0 .0 43.1 9.2 1.2 10.9 2.6 1.3 .1 9.8 8.0 .0 40.3 8.5 2.5 8.5 2.3 1.4 .1 10.0 7.0 .0 42.6 8.9 4.5 9.3 2.2 1.5 .1 8.7 7.5 .0 42.5 2.8 4.4 11.5 7.9 1.4 .1 7.7 6.6 .0 49.9" 8.1 4.4 14.2" 1.1 1.4 .1 11.6" 8.9 .0 48.2 6.5 4.2 15.1 1.4 1.3 .1 12.4 7.2 .0 51.9 6.1 7.1 14.0 3.5 1.3 .1 12.1" 7.7 .0 66 Miscellaneous and unallocated6 23.2 22.6 28.7 30.3 33.3 34.5 38.1 39.8 36.5" 39.6 44.6 -. 1. The banking offices covered by these data are the U.S. offices and foreign branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. Offices not covered include (1) U.S. agencies and branches of foreign banks, and (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are adjusted to exclude the claims on foreign branches held by a U.S. office or another foreign branch of the same banking institution. The data in this table combine foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims of U.S. offices in table 3.18 (excluding those held by agencies and branches of foreign banks and those constituting claims on own foreign branches). Since June 1984, reported claims held by foreign branches have been reduced by an increase in the reporting threshold for "shell" branches from $50 million to $150 million equivalent in total assets, the threshold now applicable to all reporting branches. 2. This group comprises the Organization of Petroleum Exporting Countries shown individually, other members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates), and Bahrain and Oman (not formally members of OPEC). 3. Excludes Liberia. 4. Includes Canal Zone beginning December 1979. 5. Foreign branch claims only. 6. Includes New Zealand, Liberia, and international and regional organizations. Nonbank-Reported 3.22 Data A63 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States 1 Millions of dollars, end of period 1991 1990 Type and area or country 1987 28,302 1 1988 32,952 1989 38,776 June Sept. Dec. Mar. June Sept. p 39,831 45,165 42,928 40,753 39,311 40,459 38,529 4,399 36,635 4,119 35,291 4,019 36,057 4,402 ?.Payable in dollars 3 Payable in foreign currencies 22,785 5,517 27,335 5,617 33,985 4,791 35,351 4,480 40,034 5,131 By type 4 Financial liabilities 5 Payable in dollars 6 Payable in foreign currencies 12,424 8,643 3,781 14,507 10,608 3,900 17,891 14,047 3,844 19,025 15,663 3,363 19,898 16,059 3,839 17,979 14,731 3,247 17,104 14,182 2,922 16,767 13,872 2,895 17,603 14,673 2,930 15,878 7,305 8,573 14,142 1,737 18,445 6,505 11,940 16,727 1,717 20,885 8,070 12,815 19,938 947 20,806 7,256 13,550 19,688 1,117 25,267 10,960 14,306 23,974 1,292 24,949 10,494 14,456 23,798 1,152 23,650 8,865 14,784 22,453 1,197 22,544 8,697 13,846 21,420 1,124 22,856 9,067 13,789 21,384 1,472 8,320 213 382 551 866 558 5,557 9,962 289 359 699 880 1,033 6,533 11,672 340 258 464 941 541 8,830 11,802 332 165 547 928 552 8,832 11,251 350 463 606 942 628 7,632 9,813 344 695 622 990 576 5,976 9,187 285 627 561 945 577 5,551 9,244 297 535 664 917 535 5,706 9,739 347 3S4 654 943 510 6,370 7 Commercial liabilities 8 Trade payables 9 Advance receipts and other liabilities 10 Payable in dollars 11 Payable in foreign currencies 12 13 14 15 16 17 18 By area or country Financial liabilities Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom 19 Canada 360 388 610 306 309 223 272 287 305 70 71 2.2 73 24 75 26 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 1,189 318 0 25 778 13 0 839 184 0 0 645 1 0 1,357 157 17 0 724 6 0 2,774 312 0 0 1,920 4 0 3,560 395 0 0 2,548 4 0 3,400 371 0 0 2,407 5 4 3,636 392 0 0 2,674 6 4 3,308 375 12 0 2,319 6 4 3,518 337 0 1 2,578 6 4 77 28 29 Asia Japan Middle East oil-exporting countries 2,451 2,042 8 3,312 2,563 3 4,151 3,299 2 4,085 2,883 5 4,296 3,161 4 4,132 2,930 5 4,005 2,932 1 3,918 2,865 4 4,037 2,802 226 30 31 Africa Oil-exporting countries 4 1 2 0 2 0 3 1 2 0 2 0 2 0 9 7 3 2 100 4 100 55 479 409 2 2 1 5,516 132 426 909 423 559 1,599 7,319 158 455 1,699 587 417 2,079 9,071 175 877 1,392 710 693 2,620 8,652 291 1,049 990 606 665 2,450 10,039 245 1,270 1,051 699 746 2,839 10,310 275 1,218 1,270 844 775 2,792 9,877 263 1,216 1,389 731 661 2,852 8,848 254 1,246 1,044 750 586 2,336 9,280 1% 999 913 792 560 3,2% 1,301 1,217 1,124 1,179 1,263 1,251 1,231 1,186 1,018 864 18 168 46 19 189 162 1,090 49 286 95 34 217 114 1,224 41 308 100 27 323 164 1,321 22 412 109 29 315 129 1,690 18 371 129 42 592 165 1,671 12 538 145 30 475 130 1,621 14 495 218 36 346 126 1,631 6 505 180 50 364 121 1,512 14 450 209 46 290 101 6,565 2,578 1,964 6,915 3,094 1,385 7,550 2,914 1,632 7,365 3,197 1,285 9,533 3,356 2,728 9,471 3,639 2,016 8,669 3,413 1,569 8,847 3,383 1,699 8,943 3,359 1,812 574 135 576 202 886 339 900 287 1,334 610 841 422 655 225 594 224 835 356 1,057 1,328 1,030 1,390 1,408 1,406 1,5% 1,436 1,268 32 33 34 35 36 37 38 39 All other 4 Commercial liabilities Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom 40 Canada 41 42 43 44 45 46 47 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 48 49 50 Asia Japan Middle East oil-exporting countries 2 ' 5 51 52 Africa Oil-exporting countries 53 All other 4 1. For a description of the changes in the International Statistics tables, see July 1979 Bulletin, p. 550. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 3. Comprises Algeria, Gabon, Libya, and Nigeria. 4. Includes nonmonetary international and regional organizations. 5. Revisions include a reclassification of transactions, which also affects the totals for Asia and the grand totals. A64 International Statistics • April 1992 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS United States 1 Reported by Nonbanking Business Enterprises in the Millions of dollars, end of period 1990 Type, and area or country 1987 1988 1991 1989 June Sept. Dec. Mar. June Sept. p 1 Total 30,964 33,805 33,080 33,098 32,239 34,780 35,272 36,946 38,361 2 Payable in dollars 3 Payable in foreign currencies 28,502 2,462 31,425 2,381 30,742 2,338 30,765 2,333 29,836 2,402 32,354 2,426 33,068 2,204 V 34,948 1,997 36,154 2,207 By type 4 Financial claims 5 Deposits 6 Payable in dollars 7 Payable in foreign currencies 8 Other financial claims 9 Payable in dollars 10 Payable in foreign currencies 20,363 14,894 13,765 1,128 5,470 4,656 814 21,640 15,643 14,544 1,099 5,997 5,220 777 19,235 12,336 11,409 927 6,899 6,145 754 19,438 11,615 10,533 1,082 7,823 7,090 733 17,758 11,810 10,616 1,193 5,949 5,296 652 19,444 13,331 12,318 1,012 6,114 5,247 866 19,392 12,835 11,893 942 6,557 5,861 696 20,687 12,300 11,595 705 8,387 7,699 688 22,392 15,522 14,712 810 6,870 6,260 610 11 Commercial claims 12 Trade receivables 13 Advance payments and other claims 14 Payable in dollars 15 Payable in foreign currencies 10,600 9,535 1,065 10,081 519 12,166 11,091 1,075 11,660 505 13,845 12,221 1,624 13,188 657 13,660 11,951 1,708 13,142 518 14,480 12,702 1,778 13,924 556 15,336 13,458 1,878 14,788 548 15,879 13,691 2,189 15,314 565 16,259 13,963 2,296 15,654 605 15,969 13,345 2,624 15,182 787 9,531 7 332 102 350 65 8,467 10,278 18 203 120 348 217 9,039 8,401 28 153 87 303 91 7,496 10,780 126 126 76 339 131 9,757 8,924 27 145 79 327 163 7,956 9,363 76 358 302 330 293 7,760 10,524 85 193 249 443 358 8,981 11,756 74 255 233 494 367 10,184 12,928 75 257 438 492 527 10,886 16 17 18 19 20 21 22 By area or country Financial claims Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom 23 Canada 2,844 2,325 1,904 2,036 1,989 2,887 1,850 1,986 2,066 24 25 26 27 28 29 30 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 7,012 1,994 7 63 4,433 172 19 8,160 1,846 19 47 5,763 151 21 8,020 1,890 7 224 5,486 94 20 5,998 1,499 3 84 4,003 164 20 6,107 1,443 4 70 4,191 158 23 6,091 1,594 3 68 4,021 177 25 6,119 1,847 6 68 3,769 179 28 5,849 1,031 4 127 4,307 161 29 5,969 1,356 19 124 4,100 173 32 31 32 33 Asia Japan Middle East oil-exporting countries 879 605 8 623 354 5 590 213 8 534 185 6 531 207 9 860 523 8 568 246 11 757 409 4 1,069 721 3 34 35 Africa Oil-exporting countries 65 7 106 10 140 12 62 8 49 7 37 0 62 3 64 1 61 1 All other 4 33 148 180 28 158 206 268 275 299 4,180 178 650 562 133 185 1,073 5,181 189 672 669 212 344 1,324 6,207 242 963 696 479 313 1,575 6,076 209 924 670 480 234 1,582 6,495 188 1,206 641 491 300 1,673 7,032 212 1,240 805 552 301 1,774 7,181 226 1,292 873 604 392 1,669 7,545 220 1,408 957 756 2% 1,822 6,973 186 1,328 855 651 259 1,867 36 37 38 39 40 41 42 43 Commercial claims Europe Belgium-Luxembourg France Germany Netherlands Switzerland United Kingdom 44 Canada 936 983 1,087 1,150 1,148 1,070 1,212 1,240 1,232 45 46 47 48 49 50 51 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 1,930 19 170 226 26 368 283 2,241 36 230 299 22 461 227 2,176 58 323 293 36 507 147 2,207 17 284 233 47 576 223 2,402 25 340 251 35 650 224 2,333 14 246 320 40 656 189 2,314 15 231 309 49 653 181 2,433 16 245 297 43 711 195 2,575 8 338 391 37 739 196 52 53 54 Asia Japan Middle East oil-exporting countries 2,915 1,158 450 2,993 946 453 3,561 1,197 518 3,473 1,097 418 3,631 1,221 407 4,049 1,396 459 4,306 1,778 507 4,159 1,604 510 4,216 1,752 497 55 56 Africa Oil-exporting countries 401 144 435 122 422 108 387 97 371 72 488 67 394 68 428 59 518 79 57 All other 4 238 333 392 366 433 364 471 453 455 1. For a description of the changes in the International Statistics tables, see July 1979 Bulletin, p. 550. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 3. Comprises Algeria, Gabon, Libya, and Nigeria. 4. Includes nonmonetary international and regional organizations. Securities Holdings and Transactions 3.24 A65 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1991 1991 Transaction and area or country 1990 1991 Jan.Dec. June July Aug. Sept. Oct. Nov. 1 Dec. p 12,919 13,659 17,201 16,791 20,515 19,594 14,713 17,446 U.S. corporate securities STOCKS 173,293 188,419 Foreign purchases 2 Foreign sales 1 210,694 199,598 210,694 199,598 17,356 16,122 16,462 15,304 17,934 16,192 3 Net purchases, or sales (—) -15,126 11,095 11,095 1,234 1,158 1,742 -740 410 921 -2,733 4 Foreign countries -15,197 10,527 10,527 1,190 1,135 1,606 -850 365 884 -2,716 -8,479 -1,234 -367 -397 -2,866 -2,980 886 -1,330 -2,435 -3,477 -2,891 -63 -298 94 18 -63 -228 -139 -310 3,809 2,177 -126 4,263 1,181 153 158 94 18 -63 -228 -139 -310 3,809 2,177 -126 4,263 1,181 153 158 710 170 45 60 346 -148 383 287 -460 96 74 9 165 5 -41 -8 47 42 -130 159 160 272 110 -15 6 423 753 39 21 -209 % 831 439 315 67 -33 -96 4 61 -567 -95 62 38 -48 -501 16 25 -402 210 135 -7 -125 -452 -21 12 6 -93 -216 385 366 -6 267 156 20 -215 -310 -50 22 -42 -508 182 694 -197 39 735 158 14 -91 -1,899 -125 44 -52 -7 -1,653 131 -280 -35 -665 -429 7 25 71 568 568 44 23 136 110 45 37 -17 118,764 102,047 152,507 125,001 152,507 125,001 12,427 8,754 9,994 7,681 14,989 10,812 14,492 12,315 12,844 10,558 15,842 13,059 14,977 12,351 5 6 7 8 9 10 11 12. 13 14 15 16 17 Europe France Germany Netherlands Switzerland United Kingdom Canada Latin America and Caribbean Middle East 1 Other Asia Japan Africa Other countries 18 Nonmonetary international and regional organizations BONDS 2 19 Foreign purchases 20 Foreign sales 21 Net purchases, or sales (—) 16,717 27,506 27,506 3,673 2,313 4,177 2,177 2,286 2,783 2,626 22 Foreign countries 17,187 27,637 27,637 3,735 2,340 4,274 2,216 2,349 2,682 2,583 73 74 25 26 77 28 79 30 31 37 33 34 35 10,079 373 -377 172 284 10,383 1,906 4,291 76 1,083 727 % -344 13,498 854 1,577 482 661 9,301 1,340 2,449 2,185 8,237 5,730 56 -128 13,498 854 1,577 482 661 9,301 1,340 2,449 2,185 8,237 5,730 56 -128 2,167 2 -120 130 327 1,744 68 538 160 898 685 -1 -96 921 15 -1 -1 9 629 34 378 430 558 285 -1 20 1,727 -26 106 47 116 1,405 -40 172 449 2,015 1,818 4 -53 -111 93 156 -18 -52 384 -155 130 350 2,027 1,149 -2 -23 1,873 -25 213 44 -64 2,029 86 -365 182 526 237 12 35 1,091 110 274 91 -449 714 51 110 313 1,164 874 13 -60 968 75 113 13 162 90 114 627 253 543 149 11 67 -471 -131 -131 -62 -27 -97 -39 -63 101 43 -1,538 13,121 14,659 787 29,925 29,138 -5,686 10,941 16,627 -1,769 26,2% 28,065 Europe France Germany Netherlands Switzerland United Kingdom Canada Latin America and Caribbean Middle East 1 Other Asia Japan Africa Other countries 36 Nonmonetary international and regional organizations Foreign securities 37 Stocks, net purchases, or sales ( - ) 3 38 Foreign purchases 39 Foreign sales 40 Bonds, net purchases, or sales ( - ) 41 Foreign purchases 42 Foreign sales -9,205 122,641 131,846 -22,412 314,645 337,057 43 Net purchases, or sales (—), of stocks and bonds . . . . -31,617 44 Foreign countries -28,943 -8,443 -7,502 -8,854 -3,828 -137 -180 -2,673 45 46 47 48 49 50 Europe Canada Latin America and Caribbean Africa Other countries 51 Nonmonetary international and regional organizations -3,590 10,053 13,643 -1,945 19,918 21,863 -3,155 10,174 13,329 -807 22,041 22,848 -3,521 9,586 13,107 -2,168 22,186 24,354 -50,754 -50,754 -5,536 -3,962 -5,689 -3,297 —7,120r -751 -7,455 -50,466 -50,466 -5,816 -4,476 -5,794 -3,477 —6,753r -1,186 -7,825 -38,064 -7,608 993 -7,043 -8 1,265 -38,064 -7,608 993 -7,043 -8 1,265 -3,428 -1,011 -26 -1,172 -198 19 -5,035 278 130 105 8 38 -4,769 -1,009 108 -305 -7 188 -2,666 -352 454 -1,153 2 238 -5,691 r -1,619 549 -197 1 204 -4,546 675 1,136 1,502 -41 88 -8,334 36 -470 388 159 3% -288 -288 280 514 105 180 435 370 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 2. Includes state and local government securities and securities of U.S. government agencies and corporations. Also includes issues of new debt securi- -2,159 9,913 12,072 -1,138 23,442 24,580 -2,370 r 11,292 13,662r -4,750 r 33,201 37,951r -34,912 119,646 154,558 -15,842 324,642 340,484 -34,912 119,646 154,558 -15,842 324,642 340,484 -367 ties sold abroad by U.S. corporations organized to finance direct investments abroad. 3. As a result of the merger of a U.S. and U.K. company in July 1989, the former stockholders of the U.S. company received $5,453 million in shares of the new combined U.K. company. This transaction is not reflected in the data. A66 3.25 International Statistics • April 1992 MARKETABLE U.S. TREASURY BONDS A N D NOTES Foreign Transactions Millions of dollars 1991 Country or area 1990 1991 1991 Jan.Dec. June July Aug. Sept. Oct. Nov. Dec. p Transactions, net purchases or sales ( - ) during period1 1 Estimated total2 18,927 22,546 22,546 -5,740 725 1,356 -3,862 414 5,449r 4,671 2 Foreign countries 2 18,764 22,318 22,318 -5,271 407 722 -2,804 -171 5,355 3,912 18,455 10 5,880 1,077 1,152 112 -1,260 11,463 13 -4,627 9,654 568 -4,725 -3,735 -662 1,005 5,649 11,540 13 -2,745 9,654 568 -4,725 -3,735 -662 1,005 5,649 11,540 13 -2,745 -4,184 -104 -1,458 -727 31 207 -1,249 -886 3 -114 -1,082 -109 684 -997 -299 -218 -398 258 -3 395 1,554 71 -360 -372 -239 292 388 1,774 0 -118 464 -190 195 -426 3 -184 -32 1,090 8 78 228 1 326 549 46 195 -311 -578 0 -838 5,033 183 707 -25 -74 l,105r 212 2,938r -13 -441 2,900 42 -139 -888 582 -778 2,351 1,720 10 -1,840 14,734 33 3,943 10,757 -10,952 -14,785 313 842 11,552 10 5,329 6,213 3,467 -4,054 689 -299 11,552 10 5,329 6,213 3,467 -4,054 689 -299 161 20 -233 374 -879 1,422 104 -358 1,669 7 242 1,420 -491 45 7 -91 1,436 -20 -2,010 3,466 -2,115 -364 27 -62 -1,076 -2 -1,883 809 -2,067 -3,625 10 -213 -2,086 20 -14 -2,092 3,467 4,111 39 -981 -3,840 7 -523 -3,324 3,700 503 -26 929 1,086 122 -1,054 2,018 869 -1,352 318 579 163 287 -2 228 -308 -72 228 -308 -72 -469 3 -9 318 168 150 634 654 -146 -1,058 -1,211 152 585 287 72 94r 95r -133 759 836 -156 18,764 23,218 -4,453 22,318 5,496 16,822 22,318 5,4% 16,822 -5,271 -5,832 560 407 -704 1,111 722 -289 1,011 -2,804 830 -3,634 -171 512 -683 5,355 7,197r -1,842 r 3,912 2,629 1,283 -387 0 -6,822 239 -6,822 239 -505 0 -643 0 -3,731 0 -795 0 313 0 % 0 -163 219 3 Europe 2 4 Belgium-Luxembourg 5 Germany 2 6 Netherlands 7 Sweden 8 Switzerland2 9 United Kingdom 10 Other Western Europe 11 Eastern Europe 12 Canada 13 14 15 16 17 18 19 20 Latin America and Caribbean Venezuela Other Latin America and Caribbean Netherlands Antilles Asia Japan Africa All other 21 Nonmonetary international and regional organizations 22 International 23 Latin American regional MEMO 24 Foreign countries 2 25 Official institutions 26 Other foreign Oil-exporting countries 27 Middle East 3 28 1. Estimated official and private transactions in marketable U.S. Treasury securities having an original maturity of more than one year. Data are based on monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes, denominated in foreign currencies, publicly issued to private foreign residents. 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 4. Comprises Algeria, Gabon, Libya, and Nigeria. Interest and Exchange Rates 3.26 A67 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Country Country Percent 8.0 8.5 7.50 9.5 9.6 France* Month effective Dec. Dec. Feb. Dec. Dec. 1991 1991 1992 1991 1991 Percent Germany, Fed. Rep. o f . . . Italy 1. Since Feb. 1981, the rate has been that at which the Bank of France discounts Treasury bills for seven to ten days. 2. Minimum lending rate suspended as of Aug. 20, 1981. NOTE. Rates shown are mainly those at which the central bank either discounts 3.27 Rate on Feb. 29, 1992 Rate on Feb. 29, 1992 Rate on Feb. 29, 1992 Country 8.0 12.0 4.5 8.5 Month effective Dec. Nov. Dec. Dec. 1991 1991 1991 1991 Switzerland United Kingdom2 Percent Month effective 10.50 7.0 July 1990 Aug. 1991 or makes advances against eligible commercial paper or government securities for commercial banks or brokers. For countries with more than one rate applicable to such discounts or advances, the rate shown is the one at which it is understood the central bank transacts the largest proportion of its credit operations. FOREIGN SHORT-TERM INTEREST RATES Averages of daily figures, percent per year 1992 1991 Type or country 1 -> 3 4 5 6 7 8 Italy 9 10 1989 1990 1991 Sept. Oct. Nov. Dec. Jan. Feb. 9.16 13.87 12.20 7.04 6.83 8.16 14.73 13.00 8.41 8.71 5.86 11.47 9.07 9.15 8.01 5.65 10.85 8.73 9.23 7.80 5.50 10.24 8.59 9.16 7.90 5.34 10.38 8.29 9.28 8.09 4.96 10.44 7.75 9.33 7.89 4.48 10.73 7.50 9.48 7.99 4.06 10.60 7.23 9.45 7.55 4.05 10.33 7.42 9.51 7.28 7.28 9.27 12.44 8.65 5.39 8.57 10.20 12.11 9.70 7.75 9.19 9.49 12.04 9.30 7.33 9.27 9.46 11.86 9.25 7.31 9.21 9.30 11.63 9.01 6.70 9.27 9.20 11.44 9.22 6.41 9.32 9.41 11.66 9.39 6.22 9.59 9.97 12.46 9.61 6.02 9.45 9.86 12.00 9.41 5.18 9.52 9.93 12.17 9.50 5.19 NOTE. Rates are for three-month interbank loans, with the following exceptions: Canada, finance company paper; Belgium, three-month Treasury bills; and Japan, CD rate. Aug. A68 3.28 International Statistics • April 1992 FOREIGN EXCHANGE RATES 1 Currency units per dollar 1991 Country/currency 1989 1990 Sept. 1 2 3 4 5 6 7 8 9 10 Australia/dollar^ Austria/schilling Belgium/franc Canada/dollar China, P.R./yuan Denmark/krone Finland/markka France/franc Germany/deutsche mark Greece/drachma 11 12 13 14 15 16 17 18 19 20 Hong Kong/dollar India/rupee Ireland/pound Italy/lira Japan/yen Malaysia/ringgit Netherlands/guilder New Zealand/dollar2 Norway/krone Portugal/escudo 21 22 23 24 25 26 27 28 29 30 Singapore/dollar South Africa/rand South Korea/won Spain/peseta Sri Lanka/rupee Sweden/krona Switzerland/franc Taiwan/dollar Thailand/baht United Kingdom/pound 1992 1991 Oct. Nov. Dec. Jan. Feb. 79.186 13.236 39.409 1.1842 3.7673 7.3210 4.2963 6.3802 1.8808 162.60 78.069 11.331 33.424 1.1668 4.7921 6.1899 3.8300 5.4467 1.6166 158.59 77.872 11.686 34.195 1.1460 5.3337 6.4038 4.0521 5.6468 1.6610 182.63 79.369 11.910 34.878 1.1370 5.3869 6.5367 4.1241 5.7621 1.6933 188.07 79.251 11.887 34.787 1.1279 5.3917 6.5246 4.1155 5.7583 1.6893 188.50 78.660 11.408 33.391 1.1302 5.3994 6.2947 4.1953 5.5391 1.6208 183.68 77.122 11.003 32.198 1.1467 5.4232 6.0831 4.2447 5.3406 1.5630 179.52 74.756 11.108 32.501 1.1571 5.4618 6.1257 4.2971 5.3858 1.5788 182.42 75.178 11.391 33.307 1.1825 5.4776 6.2763 4.4230 5.5088 1.6186 187.13 7.8008 16.213 141.80 1,372.28 138.07 2.7079 2.1219 59.561 6.9131 157.53 7.7899 17.492 165.76 1,198.27 145.00 2.7057 1.8215 59.619 6.2541 142.70 7.7712 22.712 158.26 1,241.28 134.59 2.7503 1.8720 57.832 6.4912 144.77 7.7524 25.834 157.87 1,266.25 134.30 2.7577 1.9084 57.989 6.6266 145.64 7.7542 25.797 158.21 1,263.20 130.77 2.7469 1.9039 56.306 6.6136 145.41 7.7591 25.802 164.75 1,221.04 129.63 2.7412 1.8269 56.352 6.3643 141.43 7.7738 25.818 170.46 1,182.21 128.04 2.7417 1.7618 55.256 6.1558 138.90 7.7612 25.863 168.73 1,189.76 125.46 2.6891 1.7780 54.194 6.2044 136.92 7.7582 25.992 164.87 1,215.92 127.70 2.6012 1.8218 54.177 6.3472 139.47 1.9511 2.6214 674.29 118.44 35.947 6.4559 1.6369 26.407 25.725 163.82 1.8134 2.5885 710.64 101.% 40.078 5.9231 1.3901 26.918 25.609 178.41 1.7283 2.7633 736.73 104.01 41.200 6.0521 1.4356 26.759 25.528 176.74 1.7002 2.8316 744.18 106.28 41.935 6.1652 1.4803 26.559 25.617 172.65 1.6940 2.8314 753.54 106.54 42.179 6.1552 1.4781 26.406 25.397 172.31 1.6709 2.7916 757.44 102.56 42.374 5.9246 1.4348 25.975 25.497 177.96 1.6453 2.7665 761.68 99.70 42.523 5.7158 1.3855 25.759 25.431 182.72 1.6337 2.7831 767.09 100.05 42.665 5.7461 1.4039 25.150 25.328 180.90 1.6361 2.8156 769.93 101.73 42.879 5.8764 1.4561 25.049 25.463 177.78 98.60 89.09 89.84 91.18 90.69 87.98 85.65 86.09 88.04 MEMO 31 United States/dollar3 1. Averages of certified noon buying rates in New York for cable transfers. Data in this table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, see inside front cover. 2. Value in U.S. cents. 3. Index of weighted-average exchange value of U.S. dollar against the currencies of ten industrial countries. The weight for each of the ten countries is the 1972-76 average world trade of that country divided by the average world trade of all ten countries combined. Series revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), p. 700). 69 Guide to Statistical Releases and Special Tables STATISTICAL RELEASES—List Published Semiannually, with Latest B U L L E T I N Reference Issue December 1991 Anticipated schedule of release dates for periodic releases SPECIAL TABLES—Quarterly Page A86 Data Published Irregularly, with Latest BULLETIN Reference Title and Date Issue Page Assets and liabilities of commercial banks December 31, 1990 March 31, 1991 June 30, 1991 September 30, 1991 May August November February 1991 1991 1991 1992 All A72 A70 A70 Terms of lending at commercial February 1991 May 1991 August 1991 November 1991 August October December March 1991 1991 1991 1992 A78 A72 A70 A70 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1990 March 31, 1991 June 30, 1991 September 30, 1991 June November December February 1991 1991 1991 1992 A72 A76 A74 A80 Pro forma balance sheet and income statements for priced service June 30, 1990 March 31, 1991 June 30, 1991 September 30, 1991 October August November January 1990 1991 1991 1992 A72 A82 A80 A70 December 1991 A79 banks Assets and liabilities of life insurance June 30, 1991 operations companies 70 Index to Statistical Tables References are to pages A3-A68 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Agricultural loans, commercial banks, 20, 21 Assets and liabilities (See also Foreigners) Banks, by classes, 19—21 Domestic finance companies, 34 Federal Reserve Banks, 11 Financial institutions, 26 Foreign banks, U.S. branches and agencies, 22 Automobiles Consumer installment credit, 37, 38 Production, 47, 48 BANKERS acceptances, 10, 23, 24 Bankers balances, 19—21. (See also Foreigners) Bonds (See also U.S. government securities) New issues, 33 Rates, 24 Branch banks, 22, 55 Business activity, nonfinancial, 44 Business expenditures on new plant and equipment, 33 Business loans (See Commercial and industrial loans) CAPACITY utilization, 46 Capital accounts Banks, by classes, 19 Federal Reserve Banks, 11 Central banks, discount rates, 67 Certificates of deposit, 24 Commercial and industrial loans Commercial banks, 17, 20 Weekly reporting banks, 20-22 Commercial banks Assets and liabilities, 19-21 Commercial and industrial loans, 17, 19, 20, 21, 22 Consumer loans held, by type and terms, 37, 38 Loans sold outright, 20 Nondeposit funds, 18 Real estate mortgages held, by holder and property, 36 Time and savings deposits, 4 Commercial paper, 23, 24, 34 Condition statements (See Assets and liabilities) Construction, 44, 49 Consumer installment credit, 37, 38 Consumer prices, 44, 46 Consumption expenditures, 52, 53 Corporations Nonfinancial, assets and liabilities, 33 Profits and their distribution, 33 Security issues, 32, 65 Cost of living (See Consumer prices) Credit unions, 37 Currency and coin, 19 Currency in circulation, 5, 14 Customer credit, stock market, 25 DEBITS to deposit accounts, 16 Debt (See specific types of debt or securities) Demand deposits Banks, by classes, 19-22 Demand deposits—Continued Ownership by individuals, partnerships, and corporations, 22 Turnover, 16 Depository institutions Reserve requirements, 9 Reserves and related items, 4, 5, 6, 13 Deposits (See also specific types) Banks, by classes, 4, 19-21, 22 Federal Reserve Banks, 5,11 Turnover, 16 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) Dividends, corporate, 33 EMPLOYMENT, 45 Eurodollars, 24 FARM mortgage loans, 36 Federal agency obligations, 5, 10, 11, 12, 29, 30 Federal credit agencies, -31 Federal finance Debt subject to statutory limitation, and types and ownership of gross debt, 28 Receipts and outlays, 26, 27 Treasury financing of surplus, or deficit, 26 Treasury operating balance, 26 Federal Financing Bank, 26, 31 Federal funds, 7, 18, 20, 21, 22, 24, 26 Federal Home Loan Banks, 31 Federal Home Loan Mortgage Corporation, 31, 35, 36 Federal Housing Administration, 31, 35, 36 Federal Land Banks, 36 Federal National Mortgage Association, 31, 35, 36 Federal Reserve Banks Condition statement, 11 Discount rates (See Interest rates) U.S. government securities held, 5, 11, 12, 28 Federal Reserve credit, 5, 6, 11, 12 Federal Reserve notes, 11 Federally sponsored credit agencies, 31 Finance companies Assets and liabilities, 34 Business credit, 34 Loans, 37, 38 Paper, 23, 24 Financial institutions Loans to, 20, 21, 22 Selected assets and liabilities, 26 Float, 51 Flow of funds, 39,41,42, 43 Foreign banks, assets and liabilities of U.S. branches and agencies, 21, 22 Foreign currency operations, 11 Foreign deposits in U.S. banks, 5,11, 20, 21 Foreign exchange rates, 68 Foreign trade, 54 71 Foreigners Claims on, 55, 57, 60, 61, 62, 64 Liabilities to, 21, 54, 55, 57, 58, 63, 65, 66 GOLD Certificate account, 11 Stock, 5, 54 Government National Mortgage Association, 31, 35, 36 Gross national product, 51 HOUSING, new and existing units, 49 INCOME, personal and national, 44, 51, 52 Industrial production, 44, 47 Installment loans, 37, 38 Insurance companies, 28, 36 Interest rates Bonds, 24 Consumer installment credit, 38 Federal Reserve Banks, 8 Foreign central banks and foreign countries, 67 Money and capital markets, 24 Mortgages, 35 Prime rate, 23 International capital transactions of United States, 53-67 International organizations, 57, 58, 60, 63, 64 Inventories, 51 Investment companies, issues and assets, 33 Investments (See also specific types) Banks, by classes, 19, 20, 21, 22, 26 Commercial banks, 4, 17, 19-21 Federal Reserve Banks, 11, 12 Financial institutions, 36 LABOR force, 45 Life insurance companies (See Insurance companies) Loans (See also specific types) Banks, by classes, 19—21 Commercial banks, 4, 17, 19-21 Federal Reserve Banks, 5, 6, 8, 11, 12 Financial institutions, 26, 36 Insured or guaranteed by United States, 35, 36 MANUFACTURING Capacity utilization, 46 Production, 46, 48 Margin requirements, 25 Member banks (See also Depository institutions) Federal funds and repurchase agreements, 7 Reserve requirements, 9 Mining production, 48 Mobile homes shipped, 49 Monetary and credit aggregates, 4, 13 Money and capital market rates, 24 Money stock measures and components, 4, 14 Mortgages (See Real estate loans) Mutual funds, 33 Mutual savings banks (See Thrift institutions) NATIONAL defense outlays, 27 National income, 51 OPEN market transactions, 10 PERSONAL income, 52 Prices Consumer and producer, 44, 50 Stock market, 25 Prime rate, 23 Producer prices, 44, 50 Production, 44,47 Profits, corporate, 33 REAL estate loans Banks, by classes, 17, 20, 21, 36 Financial institutions, 26 Terms, yields, and activity, 35 Type of holder and property mortgaged, 36 Repurchase agreements, 7, 18, 20, 21, 22 Reserve requirements, 9 Reserves Commercial banks, 19 Depository institutions, 4, 5, 6, 13 Federal Reserve Banks, 11 U.S. reserve assets, 54 Residential mortgage loans, 35 Retail credit and retail sales, 37, 38, 44 SAVING Flow of funds, 39,41, 42, 43 National income accounts, 51 Savings and loan associations, 36, 37, 39. (See also SAIF-insured institutions) Savings Association Insurance Funds (SAIF) insured institutions, 26 Savings banks, 26, 36, 37 Savings deposits (See Time and savings deposits) Securities (See also specific types) Federal and federally sponsored credit agencies, 31 Foreign transactions, 65 New issues, 32 Prices, 25 Special drawing rights, 5, 11, 53, 54 State and local governments Deposits, 20, 21 Holdings of U.S. government securities, 28 New security issues, 32 Ownership of securities issued by, 20, 21 Rates on securities, 24 Stock market, selected statistics, 25 Stocks (See also Securities) New issues, 32 Prices, 25 Student Loan Marketing Association, 31 TAX federal, 27 also Credit unions and Savings and Thriftreceipts, institutions, 4. (See loan associations) Time and savings deposits, 4, 14, 18, 19, 20, 21, 22 Trade, foreign, 54 Treasury cash, Treasury currency, 5 Treasury deposits, 5, 11, 26 Treasury operating balance, 26 UNEMPLOYMENT, 45 U.S. government balances Commercial bank holdings, 19, 20, 21 Treasury deposits at Reserve Banks, 5, 11, 26 U.S. government securities Bank holdings, 19-21, 22, 28 Dealer transactions, positions, and financing, 30 Federal Reserve Bank holdings, 5, 11, 12, 28 Foreign and international holdings and transactions, 11, 28, 66 Open market transactions, 10 Outstanding, by type and holder, 26, 28 Rates, 23 U.S. international transactions, 53-67 Utilities, production, 48 VETERANS Administration, 35, 36 WEEKLY reporting banks, 20-22 Wholesale (producer) prices, 44, 50 YIELDS (See Interest rates) 72 Federal Reserve Board of Governors and Official Staff A L A N GREENSPAN, Chairman DAVID W . M U L L I N S , JR., Vice Chairman OFFICE OF BOARD DIVISION MEMBERS JOSEPH R. COYNE, Assistant DONALD J. WINN, Assistant WAYNE D . A N G E L L EDWARD W . KELLEY, JR. to the Board to the Board THEODORE E. ALLISON, Assistant to the Board for Federal Reserve System Affairs LYNN S. Fox, Special Assistant to the Board WINTHROP P. HAMBLEY, Special Assistant to the Board BOB STAHLY MOORE, Special Assistant to the Board DIANE E. WERNEKE, Special Assistant to the Board OF INTERNATIONAL EDWIN M. TRUMAN, Staff FINANCE Director LARRY J. PROMISEL, Senior Associate Director CHARLES J. SIEGMAN, Senior Associate Director DALE W. HENDERSON, Associate Director DAVID H. HOWARD, Senior Adviser DONALD B. ADAMS, Assistant Director PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director RALPH W. SMITH, JR., Assistant Director LEGAL DIVISION J. VIRGIL MATTINGLY, JR., General Counsel SCOTT G. ALVAREZ, Associate General Counsel RICHARD M. ASHTON, Associate General Counsel OLIVER IRELAND, Associate General Counsel RICKI R. TIGERT, Associate General Counsel KATHLEEN M. O'DAY, Assistant General Counsel MARYELLEN A. BROWN, Assistant to the General Counsel OFFICE OF THE WILLIAM W. WILES, SECRETARY Secretary JENNIFER J. JOHNSON, Associate Secretary BARBARA R. LOWREY, Associate RICHARD C. STEVENS, Assistant Secretary Secretary1 DIVISION OF RESEARCH MICHAEL J. PRELL, AND STATISTICS Director EDWARD C. ETTIN, Deputy Director WILLIAM R. JONES, Associate Director THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director DAVID J. STOCKTON, Associate Director MARTHA BETHEA, Deputy Associate Director PETER A. TINSLEY, Deputy Associate Director MYRON L. KWAST, Assistant Director PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director JOYCE K. ZICKLER, Assistant JOHN J. MINGO, Director Adviser DIVISION OF CONSUMER AND COMMUNITY AFFAIRS LEVON H. GARABEDIAN, Assistant GRIFFITH L. GARWOOD, DIVISION OF MONETARY AFFAIRS Director GLENN E. LONEY, Assistant Director ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director AND REGULATION RICHARD SPILLENKOTHEN, Director STEPHEN C. SCHEMERING, Deputy DON E. KLINE, Associate Director Director DAVID E. LINDSEY, Deputy Director BRIAN F. MADIGAN, Assistant Director FREDERICK M. STRUBLE, Associate Director Director HERBERT A. BIERN, Assistant Director ROGER T. COLE, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer 1. On loan from the Division of Information Resources Management. Director NORMAND R.V. BERNARD, Special Assistant to the Board OFFICE OF THE INSPECTOR BRENT L. BOWEN, Inspector Director WILLIAM A. RYBACK, Associate DONALD L . KOHN, RICHARD D. PORTER, Assistant DIVISION OF BANKING SUPERVISION Director (Administration ) GENERAL General BARRY R. SNYDER, Assistant Inspector General J O H N P. LAWARE LAWRENCE B . LINDSEY SUSAN M . PHILLIPS OFFICE OF STAFF DIRECTOR FOR MANAGEMENT DIVISION OF RESERVE BANK OPERATIONS AND PAYMENT SYSTEMS S. DAVID FROST, Staff Director WILLIAM SCHNEIDER, Special Assignment- CLYDE H . FARNSWORTH, JR., Project Director, National Information Center PORTIA W. THOMPSON, Equal Employment Opportunity Programs Officer DIVISION OF HUMAN RESOURCES MANAGEMENT DAVID L . S H A N N O N , ANTHONY V. DIGIOIA, Assistant JOSEPH H. HAYES, JR., Assistant Director Director Director OFFICE OF THE CONTROLLER GEORGE E . LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E . FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director DIVISION OF INFORMATION RESOURCES MANAGEMENT STEPHEN R . MALPHRUS, Director BRUCE M. BEARDSLEY, Deputy ROBERT J. ZEMEL, Senior Director Adviser MARIANNE M. EMERSON, Assistant Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant EDWARD T. MULRENIN, Assistant Director Director DAY W. RADEBAUGH, JR., Assistant ELIZABETH B. RIGGS, Assistant EARL G. HAMILTON, Assistant JOHN H. PARRISH, Assistant Director FRED HOROWITZ, Assistant Director CHARLES W. BENNETT, Assistant JACK DENNIS, JR., Assistant Director Director JEFFREY C. MARQUARDT, Assistant Director JOHN R. WEIS, Associate Director DAVID L. ROBINSON, Deputy Director (Finance and Control) BRUCE J. SUMMERS, Deputy Director (Payments and Automation) Director Director Director Director LOUISE L. ROSEMAN, Assistant FLORENCE M. YOUNG, Assistant Director Director A74 Federal Reserve Bulletin • April 1992 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS A L A N GREENSPAN, E. GERALD CORRIGAN, Vice Chairman Chairman WAYNE D . ANGELL JOHN P. LAWARE THOMAS H . HOENIG LAWRENCE B . LINDSEY SUSAN M . PHILLIPS JERRY L . JORDAN THOMAS C . MELZER RICHARD F. SYRON DAVID W . MULLINS, JR. EDWARD W . KELLEY, JR. ALTERNATE MEMBERS ROBERT D . MCTEER, JR. EDWARD G . BOEHNE JAMES H . OLTMAN SILAS KEEHN GARY H . STERN STAFF DONALD L. KOHN, Secretary and Economist NORMAND R.V. BERNARD, Deputy Secretary JOSEPH R. COYNE, Assistant Secretary GARY P. GILLUM, Assistant Secretary J. VIRGIL MATTINGLY, JR., General Counsel ERNEST T. PATRIKIS, Deputy General Counsel MICHAEL J. PRELL, Economist EDWIN M . TRUMAN, Economist ANATOL B. BALBACH, Associate Economist JOHN M. DAVIS, Associate Economist RICHARD G. DAVIS, Associate Economist THOMAS E. DAVIS, Associate Economist DAVID E. LINDSEY, Associate Economist ALICIA H. MUNNELL, Associate Economist LARRY J. PROMISEL, Associate Economist CHARLES J. SIEGMAN, Associate Economist THOMAS D. SIMPSON, Associate Economist DAVID J. STOCKTON, Associate Economist PETER D. STERNLIGHT, Manager for Domestic Operations, System Open Market Account WILLIAM J. MCDONOUGH, Manager for Foreign Operations, System Open Market Account FEDERAL ADVISORY COUNCIL RONALD G . STEINHART, TERRENCE A . LARSEN, Vice IRA STEPANIAN, First District CHARLES S. SANFORD, JR., Second District TERRENCE A. LARSEN, Third District JOHN B. MCCOY, Fourth District EDWARD E. CRUTCHFTELD, Fifth District E.B. ROBINSON, JR., Sixth District President President EUGENE A. MILLER, Seventh District DAN W. MITCHELL, Eighth District JOHN F. GRUNDHOFER, Ninth District DAVID A. RISMILLER, Tenth District RONALD G. STEINHART, Eleventh District RICHARD M. ROSENBERG, Twelfth District HERBERT V. PROCHNOW, WILLIAM J. KORSVIK, Associate Secretary Secretary 75 CONSUMER ADVISORY COUNCIL COLLEEN D. HERNANDEZ, Kansas City, Missouri, Chairman DENNY D. DUMLER, Denver, Colorado, Vice Chairman BARRY A . ABBOTT, S a n F r a n c i s c o , C a l i f o r n i a JOYCE HARRIS, M a d i s o n , W i s c o n s i n JOHN R . ADAMS, P h i l a d e l p h i a , P e n n s y l v a n i a GARY S . HATTEM, N e w Y o r k , N e w Y o r k JOHN A . BAKER, A t l a n t a , G e o r g i a JULIA E . HILER, M a r i e t t a , G e o r g i a VERONICA E . BARELA, D e n v e r , C o l o r a d o HENRY JARAMILLO, B e l e n , N e w M e x i c o MULGUGETTA BIRRU, P i t t s b u r g h , P e n n s y l v a n i a KATHLEEN E . KEEST, B o s t o n , M a s s a c h u s e t t s GENEVIEVE BROOKS, B r o n x , N e w Y o r k EDMUND MIERZWINSKI, W a s h i n g t o n , D . C . TOYE L . BROWN, B o s t o n , M a s s a c h u s e t t s BERNARD F. PARKER, JR., D e t r o i t , M i c h i g a n CATHY CLOUD, W a s h i n g t o n , D . C . OTIS PITTS, JR., M i a m i , F l o r i d a MICHAEL D . EDWARDS, Y e l m , W a s h i n g t o n JEAN POGGE, C h i c a g o , I l l i n o i s GEORGE C . GALSTER, W o o s t e r , O h i o JOHN V. SKINNER, I r v i n g , T e x a s E . THOMAS GARMAN, B l a c k s b u r g , V i r g i n i a NANCY HARVEY STEORTS, D a l l a s , T e x a s DONALD A . GLAS, H u t c h i n s o n , M i n n e s o t a LOWELL N . SWANSON, P o r t l a n d , O r e g a o n DEBORAH B . GOLDBERG, W a s h i n g t o n , D . C . MICHAEL W . TIERNEY, P h i l a d e l p h i a , P e n n s y l v a n i a MICHAEL M . GREENFIELD, St. L o u i s , M i s s o u r i SANDRA L . WILLETT, B o s t o n , M a s s a c h u s e t t s THRIFT INSTITUTIONS ADVISORY COUNCIL LYNN W. HODGE, Greenwood, South Carolina, President DANIEL C. ARNOLD, Houston, Texas, Vice President JAMES L . BRYAN, R i c h a r d s o n , T e x a s PRESTON MARTIN, S a n F r a n c i s c o , C a l i f o r n i a VANCE W. CHEEK, Johnson City, Tennessee RICHARD D . PARSONS, N e w Y o r k , N e w Y o r k BEATRICE D'AGOSTINO, S o m e r v i l l e , N e w J e r s e y THOMAS R . RICKETTS, T r o y , M i c h i g a n THOMAS J. HUGHES, M e r r i f i e l d , V i r g i n i a EDMOND M . SHANAHAN, C h i c a g o , I l l i n o i s RICHARD A. LARSON, West Bend, Wisconsin WOODBURY C . TITCOMB, W o r c e s t e r , M a s s a c h u s e t t s 76 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, MS-138, Board of Governors of the Federal Reserve System, Washington, D.C. 20551 or telephone (202) 452-3244 or FAX (202) 728-5886. When a charge is indicated, payment should accompany request and be made payable to the Board of Governors of the Federal Reserve System. Payment from foreign residents should be drawn on a U.S. bank. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. 1984. 120 pp. ANNUAL REPORT. ANNUAL REPORT: BUDGET REVIEW, 1 9 9 0 - 9 1 . FEDERAL RESERVE BULLETIN. M o n t h l y . $ 2 5 . 0 0 p e r y e a r o r $2.50 each in the United States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $3.00 each. ANNUAL STATISTICAL DIGEST 1974-78. 1981. 1982. 1983. 1984. 1985. 1986. 1987. 1988. 1980-89. 1990. 1980. 1982. 1983. 1984. 1985. 1986. 1987. 1988. 1989. 1991. 1991. 305 239 266 264 254 231 288 272 256 712 196 pp. pp. pp. pp. pp. pp. pp. pp. pp. pp. pp. $10.00 $ 6.50 $ 7.50 $11.50 $12.50 $15.00 $15.00 $15.00 $25.00 $25.00 $25.00 per per per per per per per per per per per copy. copy. copy. copy. copy. copy. copy. copy. copy. copy. copy. Monetary Policy and Reserve Requirements Handbook. $75.00 per year. Securities Credit Transactions Handbook. $75.00 per year. The Payment System Handbook. $75.00 per year. Federal Reserve Regulatory Service. 3 vols. (Contains all four Handbooks plus substantial additional material.) $200.00 per year. Rates for subscribers outside the United States are as follows and include additional air mail costs: Federal Reserve Regulatory Service, $250.00 per year. Each Handbook, $90.00 per year. THE U . S . ECONOMY IN AN INTERDEPENDENT WORLD: A MULTI- COUNTRY MODEL, May 1984. 590 pp. $14.50 each. WELCOME TO THE FEDERAL RESERVE. M a r c h 1 9 8 9 . 1 4 p p . INDUSTRIAL PRODUCTION—1986 EDITION. D e c e m b e r 1 9 8 6 . 440 pp. $9.00 each. FINANCIAL FUTURES AND OPTIONS IN THE U . S . ECONOMY. December 1986. 264 pp. $10.00 each. FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL ANALY- SIS AND POLICY ISSUES. August 1990. 608 pp. $25.00 each. CONSUMER EDUCATION PAMPHLETS Short pamphlets suitable for classroom use. Multiple are available without charge. copies SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF CHARTS. Weekly. $30.00 per year or $.70 each in the United States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $.80 each. THE FEDERAL RESERVE ACT and other statutory provisions affecting the Federal Reserve System, as amended through August 1990. 646 pp. $10.00. REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. A N N U A L PERCENTAGE RATE TABLES (Truth i n L e n d i n g — Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one address, $2.00 each. Introduction to Flow of Funds. 1980. 68 pp. $1.50 each; 10 or more to one address, $1.25 each. Federal Reserve Regulatory Service. Looseleaf; updated at least monthly. (Requests must be prepaid.) Consumer and Community Affairs Handbook. $75.00 per year. Consumer Handbook on Adjustable Rate Mortgages Consumer Handbook to Credit Protection Laws A Guide to Business Credit for Women, Minorities, and Small Businesses How to File A Consumer Credit Complaint Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System The Federal Open Market Committee Federal Reserve Bank Board of Directors Federal Reserve Banks Organization and Advisory Committees A Consumer's Guide to Mortgage Lock-Ins A Consumer's Guide to Mortgage Settlement Costs A Consumer's Guide to Mortgage Refinancing Home Mortgages: Understanding the Process and Your Right to Fair Lending Making Deposits: When Will Your Money Be Available? When Your Home is on the Line: What You Should Know About Home Equity Lines of Credit 77 STAFF STUDIES: Summaries Only Printed 1 6 0 . BANKING MARKETS AND THE USE OF FINANCIAL SERVICES BY SMALL AND MEDIUM-SIZED BUSINESSES, b y in the Bulletin Gregory E. Elliehausen and John D. Wolken. September 1990. 35 pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series may be sent to Publications Services. 1 6 1 . A REVIEW OF CORPORATE RESTRUCTURING ACTIVITY, Staff Studies 1-145 are out of print. 1 6 2 . EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORTGAGE LOAN RATES IN TWENTY CITIES, b y S t e p h e n 1 4 6 . THE ROLE OF THE PRIME RATE IN THE PRICING OF BUSINESS LOANS BY COMMERCIAL BANKS, 1 9 7 7 - 8 4 , b y 1 6 3 . CLEARANCE AND SETTLEMENT IN U . S . SECURITIES MAR- 1980-90, by Margaret Hastings Pickering. May 1991. 21pp. A. Rhoades. February 1992. 11 pp. Thomas F. Brady. November 1985. 25 pp. 1 4 7 . REVISIONS IN THE MONETARY SERVICES (DIVISIA) INDEXES OF THE MONETARY AGGREGATES, b y H e l e n T. Farr KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob, Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary Ann Taylor. March 1992. 37 pp. and Deborah Johnson. December 1985. 42 pp. 1 4 8 . THE MACROECONOMIC AND SECTORAL EFFECTS OF THE ECONOMIC RECOVERY TAX ACT: SOME SIMULATION RESULTS, by Flint Brayton and Peter B. Clark. December 1985. 17 pp. 1 4 9 . THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN BANKING BEFORE AND AFTER ACQUISITION, b y S t e p h e n REPRINTS OF SELECTED Bulletin ARTICLES Some Bulletin articles are reprinted. The articles listed below are those for which reprints are available. Most of the articles reprinted do not exceed twelve pages. Limit of ten copies A. Rhoades. April 1986. 32 pp. 1 5 0 . STATISTICAL COST ACCOUNTING MODELS IN BANKING: A REEXAMINATION AND AN APPLICATION, b y J o h n T. Rose and John D. Wolken. May 1986. 13 pp. 1 5 1 . RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice P. White, Paul F. O'Brien, and Mary M. McLaughlin. January 1987. 30 pp. 1 5 2 . DETERMINANTS OF CORPORATE MERGER ACTIVITY: A REVIEW OF THE LITERATURE, by Mark J. Warshawsky. April 1987. 18 pp. 1 5 3 . STOCK MARKET VOLATILITY, b y C a r o l y n D . D a v i s and Alice P. White. September 1987. 14 pp. 1 5 4 . T H E EFFECTS ON CONSUMERS AND CREDITORS OF PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES, by Glenn B. Canner and James T. Fergus. October 1987. 26 pp. 1 5 5 . THE FUNDING OF PRIVATE PENSION PLANS, b y M a r k J. Warshawsky. November 1987. 25 pp. 1 5 6 . INTERNATIONAL TRENDS FOR U . S . BANKS AND BANKING MARKETS, by James V. Houpt. May 1988. 47 pp. 1 5 7 . M 2 PER UNIT OF POTENTIAL G N P AS AN ANCHOR FOR THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. Porter, and David H. Small. April 1989. 28 pp. 1 5 8 . THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIREMENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE PRODUCTS, by Mark J. Warshawsky with the assistance of Dietrich Earnhart. September 1989. 23 pp. 1 5 9 . N E W DATA ON THE PERFORMANCE OF NONBANK SUBSIDIARIES OF BANK HOLDING COMPANIES, b y N e l l i e L i a n g and Donald Savage. February 1990. 12 pp. Recent Developments in the Bankers Acceptance Market. 1/86. The Use of Cash and Transaction Accounts by American Families. 2/86. Financial Characteristics of High-Income Families. 3/86. Prices, Profit Margins, and Exchange Rates. 6/86. Agricultural Banks under Stress. 7/86. Foreign Lending by Banks: A Guide to International and U.S. Statistics. 10/86. Recent Developments in Corporate Finance. 11/86. Measuring the Foreign-Exchange Value of the Dollar. 6/87. Changes in Consumer Installment Debt: Evidence from the 1983 and 1986 Surveys of Consumer Finances. 10/87. Home Equity Lines of Credit. 6/88. Mutual Recognition: Integration of the Financial Sector in the European Community. 9/89. The Activities of Japanese Banks in the United Kingdom and in the United States, 1980-88. 2/90. Industrial Production: 1989 Developments and Historical Revision. 4/90. Recent Developments in Industrial Capacity and Utilization. 6/90. Developments Affecting the Profitability of Commercial Banks. 7/90. Recent Developments in Corporate Finance. 8/90. U.S. Exchange Rate Policy: Bretton Woods to Present. 11/90. The Transmission Channels of Monetary Policy: How Have They Changed? 12/90. U.S. International Transactions in 1990. 5/91. Changes in Family Finances from 1983 to 1989: Evidence from the Survey of Consumer Finances. 1/92. 78 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK branch, or facility Zip Chairman Deputy Chairman President First Vice President BOSTON* 02106 Richard N. Cooper Jerome H. Grossman Richard F. Syron Cathy E. Minehan NEW YORK* 10045 Ellen V. Futter Maurice R. Greenberg Herbert L. Washington E. Gerald Corrigan James H. Oltman Buffalo 14240 James O. Aston PHILADELPHIA 19105 Peter A. Benoliel Jane G. Pepper Edward G. Boehne William H. Stone, Jr. CLEVELAND* 44101 Jerry L. Jordan William H. Hendricks Cincinnati Pittsburgh 45201 15230 John R. Miller A. William Reynolds Marvin Rosenberg Robert P. Bozzone RICHMOND* 23219 Anne Marie Whittemore Henry J. Faison John R. Hardesty, Jr. Anne M. Allen Robert P. Black Jimmie R. Monhollon Edwin A. Huston Leo Benatar Nelda P. Stephenson Lana Jane Lewis-Brent Michael T. Wilson Harold A. Black Victor Bussie Robert P. Forrestal Jack Guynn Richard G. Cline Robert M. Healey J. Michael Moore Silas Keehn Daniel M. Doyle H. Edwin Trusheim Robert H. Quenon James R. Rodgers Daniel L. Ash Seymour B. Johnson Thomas C. Melzer James R. Bowen Delbert W. Johnson Gerald A. Rauenhorst J. Frank Gardner Gary H. Stern Thomas E. Gainor Burton A. Dole, Jr. Herman Cain Barbara B. Grogan Ernest L. Holloway Sheila Griffin Thomas M. Hoenig Henry R. Czerwinski Leo E. Linbeck, Jr. Henry G. Cisneros Alvin T. Johnson Judy Ley Allen Roger R. Hemminghaus Robert D. McTeer, Jr. Tony J. Salvaggio James A. Vohs Robert F. Erburu Walfred J. Fassler William A. Hilliard Gary G. Michael George F. Russell, Jr. Robert T. Parry Patrick K. Barron Baltimore 21203 Charlotte 28230 Culpeper Communications and Records Center 22701 ATLANTA Birmingham Jacksonville Miami Nashville New Orleans 30303 35283 32231 33152 37203 70161 CHICAGO* 60690 Detroit 48231 ST. LOUIS 63166 Little Rock Louisville Memphis 72203 40232 38101 MINNEAPOLIS 55480 Helena KANSAS CITY Denver Oklahoma City Omaha DALLAS El Paso Houston San Antonio 59601 64198 80217 73125 68102 75222 79999 77252 78295 SAN FRANCISCO 94120 Los Angeles Portland Salt Lake City Seattle 90051 97208 84125 98124 Vice President in charge of branch Charles A. Cerino1 Harold J. Swart1 Ronald B. Duncan1 Walter A. Varvel1 John G. Stoides1 Donald E. Nelson 1 Fred R. Herr1 James D. Hawkins1 James T. Curry III Melvyn K. Purcell Robert J. Musso Roby L.Sloan 1 Karl W. Ashman Howard Wells Ray Laurence John D. Johnson Kent M. Scott David J. France Harold L. Shewmaker Sammie C.Clay Robert Smith, III1 Thomas H. Robertson John F. Moore1 Leslie R. Watters Andrea P. Wolcott Gordon Werkema1 *Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. 1. Senior Vice President. 79 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories — IL* r.E»RR/ I i TT— — E Htlt*, — mam , rv ; © —1— Tl(lili Minneapolis^ ! © Detroit i t I © tco OmahM*i \S,l'L,keCi,y • II Denver Kansas , I r-j/4 ) Cir,® ), NaskvillS Iktakoma City iemphts Nt . \/ I \ ^ Little Rock BirmingMnn^Jj^^ 1 *f}/rs ' Dallas® " ® 1: 'M Antonio ^^^m^mmxmm 4H MH Vf l i MNH •HIM LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch Territories * Federal Reserve Branch Cities Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System •M illillrtliliB Publications of Interest FEDERAL RESERVE REGULATORY SERVICE To promote public understanding of its regulatory functions, the Board publishes the Federal Reserve Regulatory Service, a three-volume looseleaf service containing all Board regulations and related statutes, interpretations, policy statements, rulings, and staff opinions. For those with a more specialized interest in the Board's regulations, parts of this service are published separately as handbooks pertaining to monetary policy, securities credit, consumer affairs, and the payment system. These publications are designed to help those who must frequently refer to the Board's regulatory materials. They are updated at least monthly, and each contains citation indexes and a subject index. The Monetary Policy and Reserve Requirements Handbook contains Regulations A, D, and Q, plus related materials. For convenient reference, it also contains the rules of the Depository Institutions Deregulation Committee. The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchases of securities, together with all related statutes, Board interpreta- U.S. MONETARY U.S. Monetary POLICY Policy and AND FINANCIAL Financial Markets The Consumer and Community Affairs Handbook contains Regulations B, C, E, M, Z, AA, and BB, and associated materials. The Payment System Handbook deals with expedited funds availability, check collection, wire transfers, and risk-reduction policy. It includes Regulation CC, Regulation J, the Expedited Funds Availability Act and related statutes, official Board commentary on Regulation CC, and policy statements on risk reduction in the payment systems. For domestic subscribers, the annual rate is $200 for the Federal Reserve Regulatory Service and $75 for each Handbook. For subscribers outside the United States, the price including additional air mail costs is $250 for the Service and $90 for each Handbook. All subscription requests must be accompanied by a check or money order payable to the Board of Governors of the Federal Reserve System. Orders should be addressed to Publications Services, mail stop 138, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. MARKETS by Ann-Marie Meulendyke offers an in-depth description of the way monetary policy is developed by the Federal Open Market Committee and the techniques employed to implement policy at the Open Market Trading Desk. Written from her perspective as a senior economist in the Open Market Function at the Federal Reserve Bank of New York, Ann-Marie Meulendyke describes the tools and the setting of policy, including many of the complexities that differentiate the process from simpler textbook models. Included is an account of a day at the Trading Desk, from morning information-gathering through daily decisionmaking and the execution of an open market operation. The book also places monetary policy in a broader tions, rulings, and staff opinions. Also included is the Board's list of OTC margin stocks. context, examining first the evolution of Federal Reserve monetary policy procedures from their beginnings in 1914 to the end of the 1980s. It indicates how policy operates most directly through the banking system and the financial markets and describes key features of both. Finally, the book turns its attention to the transmittal of monetary policy actions to the U.S. economy and throughout the world. The book is $5.00 a copy for U.S. purchases and $10.00 for purchasers outside the United States. Copies are available from the Public Information Department, Federal Reserve Bank of New York, 33 Liberty Street, New York, N.Y. 10045. Checks must accompany orders and should be payable to the Federal Reserve Bank of New York in U.S. dollars. Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve System makes some of its statistical releases available to the public through the U.S. Department of Commerce's economic bulletin board. Computer access to the releases can be obtained by sub- scription. For further information regarding a subscription to the economic bulletin board, please call 202-377-1986. The releases transmitted to the economic bulletin board, on a regular basis, are the following: 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 and Foreign Related Banking Institutions Weekly/Monday 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.7 Flow of Funds Quarterly