Full text of Federal Reserve Bulletin : April 1993
The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
VOLUME 79 •
NUMBER 4 •
APRIL 1993
FEDERAL RESERVE
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 • Richard Spillenkothen • 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
251 THE COMMUNITY REINVESTMENT ACT:
EVOLUTION AND CURRENT ISSUES
The Community Reinvestment Act has had a
major influence on reinvestment activity
throughout the country and has stimulated
greater attention to local needs, especially in
low-income and minority areas. Yet many
financial institutions complain that complying
with the CRA is costly and burdensome, while
community and consumer groups believe that
financial institutions are not doing enough to
help meet the credit needs of residents and
business in low- and moderate-income areas.
Today the act remains a source of concerns
to regulators, bankers, and community activists, but it also continues to offer wide opportunities for creatively meeting the credit needs
of communities.
268 TREASURY AND FEDERAL RESERVE
FOREIGN EXCHANGE OPERATIONS
During the November-January period under
review, the dollar continued to appreciate
against the German mark and the Japanese
yen from the low levels established in the
previous period. The dollar gained 1 percent
against the yen, 4.5 percent against the mark,
and 5.5 percent on a trade-weighted basis.
271 INDUSTRIAL PRODUCTION AND
CAPACITY UTILIZATION
Industrial production rose 0.4 percent in January, compared with revised gains of 0.2 percent in December and 0.5 percent in November. Total industrial capacity utilization
increased 0.2 percentage point in January, to
79.5 percent, the highest rate since October
1991.
274 STATEMENTS TO THE CONGRESS
Griffith L. Garwood, Director, Division of
Consumer and Community Affairs, gives the
Federal Reserve's perspectives on bankholding-company-related community development corporations (CDCs) and other types of
community development equity investments,
which are approved by the Federal Reserve,
and says that although the Federal Reserve
fully supports the CDC concept, it believes
that its use has limitations and that it should
not be oversold, before the Subcommittee on
Financial Institutions Supervision, Regulation
and Insurance of the House Committee on
Banking, Finance and Urban Affairs, February 3, 1993.
279 Richard F. Syron, President, Federal Reserve
Bank of Boston, testifies on the credit availability problems that have arisen in lowincome communities and focuses on abusive
practices in second-mortgage lending in Boston, before the Subcommittee on Consumer
Credit and Insurance of the House Committee
on Banking, Finance and Urban Affairs, February 4, 1993.
281 John R LaWare, Member, Board of Governors, and Chairman, Federal Financial Institutions Examination Council, discusses the
appropriate level of regulation of banking
institutions and also the study of regulatory
burden made by the Federal Financial Institutions Examination Council in 1992 and says
that the regulatory burden imposed on banks
may threaten their role in providing important
services to the economy, before the Subcommittee on Financial Institutions Supervision,
Regulation and Insurance of the House Committee on Banking, Finance and Urban
Affairs, February 18, 1993.
285 Lawrence B. Lindsey, Member, Board of Governors, provides the Federal Reserve's perspectives on the current status of the Community Reinvestment Act (CRA), and says that
the CRA is working better than is often recognized and that it has provided much of the
momentum for the responses by financial
institutions to the needs of their communities,
especially in lower-income areas, before the
Subcommittee on Consumer Credit and Insurance of the House Committee on Banking,
Finance and Urban Affairs, February 18,1993.
292 Alan Greenspan, Chairman, Board of Governors, discusses developments in the economy
and the conduct of monetary policy and
says that in 1992 the financial condition of
households, firms, and financial institutions
improved and confidence rebounded late in
the year, before the Senate Committee on
Banking, Housing, and Urban Affairs, February 19, 1993. (Chairman Greenspan presented
identical testimony before the Subcommittee
on Economic Growth and Credit Formation of
the House Committee on Banking, Finance
and Urban Affairs, February 23, 1993.)
302 Chairman Greenspan focuses on the economic
outlook and the relationship between fiscal
policy and monetary policy and says that the
Federal Reserve intends to continue to foster
economic expansion in the near term while
using the tools at its disposal to promote a
financial environment conducive to sustainable, long-term growth, before the House
Committee on the Budget, February 24, 1993.
307 Governor La Ware speaks about concerns
related to credit discrimination in mortgage
lending, and says that the Federal Reserve
Board is committed to rigorously enforcing
fair lending laws, before the Senate Committee on Banking, Housing, and Urban Affairs,
February 24, 1993.
314 President Syron discusses the Federal Reserve
Bank of Boston's recent study of mortgage
lending patterns and says that a statistically
significant and economically important gap
exists between denial rates for white and
minority applicants for home mortgages and
that regulators, lenders, and community
groups must work together to eliminate this
gap, before the Senate Committee on Banking, Housing, and Urban Affairs, February 24,
1993.
317 ANNOUNCEMENTS
Issuance of final rule to revise the capital
adequacy guidelines for bank holding
companies.
Proposal to extend the provisions of Regulation E to electronic benefit transfer programs;
proposed amendments to capital adequacy
guidelines for state member banks and bank
holding companies.
Revisions to the money stock data.
323 RECORD OF POLICY ACTIONS OF THE
FEDERAL OPEN MARKET COMMITTEE
At its meeting on December 22, 1992, the
Committee adopted a directive that called for
maintaining the existing degree of pressure on
reserve positions and that did not include a
presumption about the likely direction of any
adjustments to policy during the intermeeting
period. Accordingly, the directive indicated
that in the context of the Committee's longrun objectives for price stability and sustainable economic growth, and giving careful
consideration to economic, financial, and
monetary developments, slightly greater or
slightly lesser reserve restraint would be
acceptable during the intermeeting period. The
reserve conditions contemplated at this meeting were expected to be consistent with M2
growth at an annual rate of about 1V2 percent
and with M3 about unchanged over the fourmonth period from November through March.
331 LEGAL DEVELOPMENTS
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 24, 1993.
All
BOARD OF GOVERNORS AND STAFF
A74 FEDERAL OPEN MARKET COMMITTEE
AND STAFF; ADVISORY COUNCILS
A3 GUIDE TO TABULAR PRESENTATION
A4 Domestic Financial Statistics
A44 Domestic Nonfinancial Statistics
A53 International Statistics
A69 GUIDE TO STATISTICAL RELEASES AND
SPECIAL TABLES
A70 INDEX TO STATISTICAL TABLES
A76 FEDERAL RESERVE BOARD
PUBLICATIONS
A78 MAPS OF THE FEDERAL RESERVE
SYSTEM
A80 FEDERAL RESERVE BANKS, BRANCHES,
AND OFFICES
The Community Reinvestment Act:
Evolution and Current Issues
Griffith L. Garwood and Dolores S. Smith, of the
Division of Consumer and Community Affairs,
prepared this article. Jane E. Ahrens, Michael S.
Bylsma, and Adrienne D. Hurt provided research
assistance.
The Community Reinvestment Act took effect in
November 1978. How well is it working? The
answer is, probably a lot better than is often recognized. The legislation has had a major influence on
reinvestment activity throughout the country and
has brought greater attention to local needs, especially in low-income and minority areas. It has also
engendered creative strategies and techniques to
stimulate lending for community development. In
many parts of the country, community groups and
financial institutions have moved from adversarial
relations to cooperation in pursuit of mutual goals.
Yet many financial institutions complain that
complying with the Community Reinvestment Act
(CRA) is costly and burdensome. Some criticize
the law's requirements as too vague; others say that
its implementation amounts, de facto, to credit
allocation. Some also are adversely affected by the
law's existence when they seek to expand operations, particularly if a public protest is filed. Many
community and consumer groups, on the other
hand, believe that financial institutions are not
doing enough to help meet the credit needs of
residents and businesses in low- and moderateincome areas. In part, they blame the supervisory
agencies for being too lenient in assessing CRA
performance and too generous in assigning grades.
Caught in the middle, the agencies over the years
have addressed the divergent views and expanded
the guidance they offer while seeking to maintain
the flexibility called for by the law.
Today the act remains a source of concerns common to regulators, bankers, and community
activists—the paperwork burden, the disproportionate effect on small institutions, and a lack of cer
tainty in the law's application. But it also continues
to offer each depository institution wide opportunities for meeting its CRA responsibilities creatively,
in a manner that best accommodates the institution
and the community it serves.
BACKGROUND
In the mid-1970s, a prevalent view among some
members of the Congress was that many financial
institutions accepted deposits from households and
small businesses in inner cities while lending and
investing those deposits primarily elsewhere. They
believed that, given this disinvestment, or "redlining," credit needs for urban areas in decline were
not being met by the private sector; moreover, the
problem was worsening because public resources
were becoming increasingly scarce.
In January 1977, the original Senate bill on community reinvestment was introduced. In the hearings that followed, opponents of the legislation
voiced serious concerns that the bill threatened to
allocate credit to geographic areas, according to the
volume of deposits coming from those areas, or to
specific types of loans, without regard for credit
demand or the merits of loan applications. The law
would therefore disrupt the normal flow of capital
from areas of excess supply to areas of strong
demand and undermine the safety and soundness of
depository institutions. Proponents of the bill stated
that it was meant to ensure only that lenders did not
ignore good borrowing prospects in their communities and that they treated creditworthy borrowers
evenhandedly. Senator William A. Proxmire, the
bill's sponsor, stressed that it would neither force
high-risk lending nor substitute the views of regulators for those of banks. He said that safety and
soundness should remain the overriding factor
when agencies evaluate applications for corporate
252
Federal Reserve Bulletin • April 1993
expansion; meeting the credit needs of the community was only one of the criteria to consider.
Believing that systematic, affirmative programs
would encourage lenders to give priority to credit
needs in their home areas, the Congress passed the
Community Reinvestment Act, and the President
signed it into law on October 12, 1977.1 The CRA
reaffirmed the principle that financial institutions
must serve "the convenience and needs" of the
communities in which they are chartered to do
business by extending credit in these communities.
This principle is one that federal law governing
deposit insurance, bank charters, and bank mergers
had embodied long before the enactment of the
CRA. Likewise, the Bank Holding Company Act—
passed initially in 1956—requires the Board, in
acting on acquisitions by banks and bank holding
companies, to evaluate how well an institution
meets the convenience and needs of its communities within the limits of safety and soundness. Thus,
the mandate of the CRA was, in many respects,
already in place.
BASIC PROVISIONS
The CRA is directed primarily at the four federal
agencies that supervise the institutions covered by
the law—the Board of Governors of the Federal
Reserve System (the Board), the Office of the
Comptroller of the Currency (OCC), the Federal
Deposit Insurance Corporation (FDIC), and the
Office of Thrift Supervision (OTS, formerly the
Federal Home Loan Bank Board). First, the
agencies are to use their supervisory authority to
encourage financial institutions to help meet local
credit needs in a manner consistent with safe and
sound operation. Second, as part of their examinations, the agencies are to assess an institution's
record of serving its entire community, including
low- and moderate-income neighborhoods. Third,
they must take that record into account when they
assess an institution's application for approval
1. In retrospect, the Congress enacted the CRA with surprising
ease. In the Senate, a markup of the original bill was reported out of
the Banking Committee and adopted as part of the Housing and
Community Development Act of 1977. No companion reinvestment bill was introduced in the House; after minimal floor debate,
House members adopted the Senate bill as amended by a conference committee of the two houses.
regarding a deposit facility—a charter, a merger,
an acquisition, a branch, an office relocation, or
deposit insurance.
The act sets no criteria or guidelines for assessing the performance of an institution. It does not
explain how an institution's "community" should
be selected, how credit needs are to be determined,
how to define low- and moderate-income neighborhoods, or what constitutes satisfactory compliance.
With little guidance available from the statute, the
agencies held hearings in 1978 to elicit the public's
suggestions on how the CRA should be interpreted
and implemented. Not surprisingly, views differed.
Consumer groups favored specific rules—for example, the application of loan-to-deposit ratios for
evaluating CRA performance—whereas industry
witnesses voiced concerns about credit allocation
and focused on the need for flexible standards.
The joint regulations subsequently adopted by
the agencies reflected a set of principles that continues to mark the administration of the CRA: Flexibility is important, agency rules should not allocate
credit, and institutions in different communities
may approach the CRA in various ways. To deal
with the lack of standards in the law, the regulations established twelve factors against which the
agencies would assess the performance of institutions (see box).
In assessing an institution's CRA record, the
supervisory agency examines for technical compliance with a few specific rules and qualitatively
evaluates the institution's performance in serving
its entire community. The rules call for an institution to do the following:
• Formulate and adopt a public "CRA statement" that delineates the communities it serves,
lists the principal types of credit it offers, and
indicates where a person should write to comment
on the institution's CRA performance
• Maintain a file of comments from the public
about its CRA performance (as of 1990, this "public comment file" also must contain the supervisory agency's most recent assessment of the institution's CRA record)
• Publicly display a notice about the availability
of the CRA statement and the public comment file.
The agencies also adopted uniform examination
procedures. Like the regulations, the procedures
The Community Reinvestment Act: Evolution and Current Issues
Twelve Performance Factors
The federal supervisory agencies consider the following
factors in assessing an institution's record of performance under the Community Reinvestment Act:
• Activities conducted by the institution to ascertain
the credit needs of its community, including the extent of
the institution's efforts to communicate with members of
its community regarding the credit services being provided by the institution
• The extent of the institution's marketing and special
credit-related programs to make members of the community aware of the credit services offered by the institution
• The extent of participation by the institution's board
of directors in formulating the institution's policies and
reviewing its performance with respect to the purposes of
the Community Reinvestment Act
• Any practices intended to discourage applications
for types of credit set forth in the institution's CRA
statement
• The geographic distribution of the institution's credit
extensions, credit applications, and credit denials
• Evidence of prohibited discriminatory credit practices or other illegal credit practices
stressed that financial institutions could use various
means to learn about, and help meet, the financial
needs of the surrounding community. The CRA did
not establish hard and fast rules or ratios by which
to judge an institution's performance. But an institution could expect negative marks if its pattern of
loan applications, extensions, and rejections
showed a concentration of credit approvals in highincome neighborhoods that was inappropriate given
the institution's delineated service area and the
presence of qualified applicants in lower-income
areas.
In considering an application for a deposit facility, the supervisory agency assesses the applicant's
CRA record—including its CRA rating and any
actions taken to improve performance following an
examination—as part of its decision to approve or
deny the application. In the past, the agencies at
times approved an application even though CRA
performance was unsatisfactory if the applicant
offered substantial commitments for future performance. Today, an institution generally is expected
to have a satisfactory CRA program in place and
working well before its application can receive
253
ijliisisi
• The institution's record of opening and closing
offices and providing services at offices
• The institution's participation, including investment,
in local community development and redevelopment
projects or programs
• The institution's origination of residential mortgage
loans, housing rehabilitation loans, home improvement
loans, and small business or small farm loans within its
community, or the purchase of such loans originated in
the community
• The institution's participation in government insured, guaranteed, or subsidized loan programs for housing, small businesses, or small farms
• The institution's ability to meet various community
credit needs based on its financial condition and size,
legal impediments, local economic conditions, and other
• Other factors that, in the supervisory agency's judgment, reasonably bear upon the extent to which an institution is helping to meet the credit needs of its entire
H
P
I
approval. A poor CRA performance may, however,
be outweighed by other factors, such as the need to
merge a weak institution into a strong one, in
which case the application may still be approved.
Policy Statements
of 1980 and 1989
In December 1979 the Federal Reserve Board
issued a policy statement on the CRA to guide state
member banks; the Board also forwarded the statement to the Federal Financial Institutions Examination Council (FFIEC) for consideration by the three
other supervisory agencies responsible for implementing the CRA. In September 1980 the FFIEC
adopted a statement similar to the Board's and
covering these principal points:
• Although directed toward meeting community
credit needs, the CRA does not impose credit
allocation.
• Disparities in loan-to-deposit ratios are not, on
their face, evidence of discrimination or poor performance under the CRA.
254
Federal Reserve Bulletin • April 1993
• In the absence of substantial efforts to ascertain credit needs and publicize credit services, a
lack of applications is not an adequate explanation
for little or no lending in a particular neighborhood.
• Institutions are expected to offer throughout
their communities the types of credit listed on their
CRA statements.
• Favorable weight will be given to an institution's conceited effort to tailor and adapt programs
and services to the needs of low- and moderateincome neighborhoods in its community.
• Commitments for future action will not be
viewed as part of the CRA record of performance,
but they may receive weight as an indicator of
potential for improvement.
• Communication between applicants and protesting parties is encouraged, but the agencies will
not approve or enforce agreements.
In subsequent years the CRA attracted increasing
public attention. Reduced federal funding for
community and housing programs and charges of
discriminatory lending patterns intensified interest
in bank performance. Community groups grew in
number and experience and became more sophisticated in dealing with information about lending
patterns. Challenges to applications multiplied,
the handling of CRA protests became a significant
aspect of the application process, particularly in
major acquisitions by bank holding companies, and
the volume and complexity of the CRA issues rose
as the number of low CRA ratings grew.
The growing pressure on institutions increased
their demands for guidance regarding the adequacy
of a CRA record and what to expect in the application process. In April 1989 the agencies released a
second CRA policy statement based on their
decade of experience in evaluating applications,
dealing with protests, and conducting examinations. Given the discomfort caused, on the one
hand, by any notion of credit allocation and, on the
other, by a perceived lack of detailed direction, the
1989 statement attempted to give more guidance
to institutions but not hamstring them with rigid
requirements. The statement added specificity
about the responsibilities of institutions under the
CRA, the manner in which the agencies would
assess performance, and some of the elements
found in effective programs.
A crucial feature of the 1989 policy statement
was its emphasis on an institution's management of
CRA performance as part of day-to-day activities.
The statement reaffirmed the value of an institution's discretion in developing the products best
suited to its expertise and the specific needs of its
community. It stressed that the CRA requires an
ongoing effort by an institution to ascertain the
needs of its entire community, develop products
in response, and market them throughout the
community.
The statement also dealt with the CRA in the
context of protested applications. It stressed that an
institution's CRA evaluation rating would receive
great weight. It encouraged community groups to
bring CRA issues to the attention of banks and
regulators without delay rather than to wait until an
application was pending. Given the desirability of
processing cases in a timely manner, the statement
made clear that extensions of comment periods
would be the exception, not the rule. The agencies
also cautioned institutions to address their CRA
responsibilities and to have policies in place and
working well before they filed an application, signaling a shift away from approving applications on
the strength of promised performance. In general,
institutions could not hope to use commitments
made in the application process to overcome a
seriously deficient record.
Guidelines for CRA
Evaluations
In August 1989 the Congress amended the CRA to
require public release of examination assessments
and change the CRA rating scale, effective July 1,
1990. To define the standards, the FFDEC issued
"Guidelines for Disclosure of Written Evaluations
and Revised Assessment Rating System" in April
1990. The guidelines detailed performance requirements and information about how examiners would
evaluate institutions. They placed emphasis on the
need for a managed CRA program: Were procedures in place at the institution to promote community dialogue? How did the institution take its
assessment of community needs into account in
product design and marketing? If it analyzed its
geographic distribution of credit on an ongoing
basis, what were the institution's own goals for
lending distribution, and had they been met?
The Community Reinvestment Act: Evolution and Current Issues
Although this approach steered clear of any semblance of credit allocation, it created a different
problem by appearing to place undue emphasis on
documentation. Widely reported statements from
some regulators that "if it isn't documented, it
didn't happen" contributed to that belief. So did
some efforts of trade associations and CRA consultants, who prepared elaborate check lists of the
documentation that institutions should provide to
examiners. The requirement that public assessments be factually supported by "facts and data"—
a provision added to the law in 1991—brought
other requests for recorded activities that the examiners could cite.
In 1992, amid rising concerns about excessive
reliance on paperwork, the agencies issued new
examiner guidelines. These made clear that examiners should base the evaluation of CRA performance primarily on how well an institution was
helping to meet credit needs, not on the amount of
documentation it maintained. A lack of documentation was not a sufficient basis for assigning a poor
rating if satisfactory performance was otherwise
demonstrated or apparent. The agencies also
emphasized their expectation that documentation
would normally be found in a well-managed program and that it would generally be less formal and
less extensive in small and rural institutions.
255
institutions are serving the credit needs of minority
populations in their local communities. The provisions of the CRA focus on issues broader than the
financing of low- and moderate-income housing,
but community activists have always emphasized
mortgage lending, in large part because of the
combination of unmet needs in low-income areas
and the ready availability of mortgage data.2 As
amended in 1989, HMDA calls for lenders to
record the race, sex, and income of applicants for
all mortgages and home improvement loans,
including loans denied and withdrawn; lenders previously reported only loans that they originated or
purchased.3 For both 1990 and 1991, the HMDA
data have shown the rate of loan denials to be
generally higher for minority and Hispanic loan
applicants than for Asian and white applicants. The
data also show that the rate of such denials generally increases in neighborhoods as the percentage
of nonwhite residents increases.4
Other factors have contributed to an intensified
focus on the CRA. The financial support of federal
programs for low- and moderate-income housing,
for example, has dropped significantly over the
past decade. In constant dollars, the total budget for
low-income housing programs was reduced by
more than half between 1980 and 1991, and federal
support for rental housing also contracted sharply.
These cutbacks have placed yet greater pressure on
PUBLIC FOCUS ON THE CRA
In recent years, interest in CRA activities has
increased dramatically, especially since the CRA
evaluations became publicly available. Public disclosure in some respects has further empowered
community groups and individuals concerned about
financial institutions' lending practices. Application activities, marking a movement toward interstate banking and the industry's restructuring, have
provided a ready forum in which to raise CRA
issues. Those interested in the CRA, moreover,
now include not just the traditional groups of community activists but also local government officials,
unions, churches, the media, and others.
Coverage of mortgage lending issues by news
organizations, particularly of the data produced
under the Home Mortgage Disclosure Act
(HMDA), has fueled the debate over how well
2. Bills to expand HMDA to other types of credit, such as small
business loans and personal loans, have been introduced over the
years. For example, in 1992 Representative Maxine Waters of
California introduced a bill to expand the types of loans for which
applicant characteristics are collected under HMDA and to expand
the analysis required to evaluate an institution's CRA performance
(Community Credit Improvement Act of 1992, H.R. 6206 § 101,
102 Cong. 2 Sess., 1992).
3. To maximize use of the expanded data, the Federal Reserve
has developed a system that facilitates access and provides analyses
of the data by demographic characteristics, such as race, gender,
and income levels, and by geographic boundaries. Examiners are
able to compare the HMDA data for a single reporting lender with
the HMDA data for others within a defined geographic market.
They also can compare the income levels and race of applicants
with characteristics of the census tracts where the properties that
secure the loans are located.
4. Glenn B. Canner and Dolores S. Smith, "Home Mortgage
Disclosure Act: Expanded Data on Residential Lending," Federal
Reserve Bulletin, vol. 77 (November 1991), pp. 859-84; and Canner and Smith, "Expanded HMDA Data on Residential Lending:
One Year Later," Federal Reserve Bulletin, vol. 78 (November
1992), pp. 801-24.
256
Federal Reserve Bulletin • April 1993
financial institutions to support local efforts to
create housing.5
Some state governments require commitments to
community reinvestment before out-of-state institutions can operate in their localities. They premise
entry on a standard of net new benefits to the state,
such as increased in-state lending and investments.
To encourage CRA-related programs, some municipalities, too, condition their placement of deposits
upon the institution's making specific types of
loans. In Chicago, for example, institutions must
file reports on their residential and commercial
lending in the Chicago metropolitan area before
they can qualify for the city's deposits. Even private organizations may evaluate potential depositories using CRA factors; in 1991, the American Bar
Association resolved to place its accounts whenever possible in financial institutions that have
shown outstanding or satisfactory performance in
helping to meet the credit needs of their communities, including low- and moderate-income neighborhoods.
All this interest has turned the public and congressional spotlight on the agencies' process for
examining the CRA performance of institutions
and encouraging economic development efforts.
EXAMINATIONS
The CRA relies primarily on the examination process to ensure that depository institutions meet the
credit needs of their local communities. The federal
agencies have virtually identical CRA regulations,
and they work together to promote uniform measures of performance among depository institutions
and consistent results within and among agencies.
A major change for the CRA examination process occurred with passage of the Financial Institu5. For data on HUD's budget for low-income housing, see
Cushing N. Dolbeare, "At a Snail's Pace, FY 1993: A Source Book
on the Proposed 1993 Budget and How it Compares to Prior
Years" (Washington: Low Income Housing Information Service,
1992). See also, Marion A. Cowell, Jr., and Monty D. Hagler, "The
Community Reinvestment Act in the Decade of Bank Consolidation," Wake Forest Law Review, vol. 27 (1992), p. 90, note 64.
For data on the participation of the Federal Housing Administration in insuring mortgages on multifamily residential projects, see
Report on the Status of the Community Reinvestment Act, before the
Subcommittee on Housing and Urban Affairs of the Senate Committee on Banking, Housing and Urban Affairs, 102 Cong. 2 Sess.,
p. 21 (Government Printing Office, 1992).
tions Reform, Recovery and Enforcement Act of
1989 (FIRREA). FIRREA amended the CRA to
give the public access to examination assessments
and CRA ratings prepared by federal regulators.
The disclosure mandated by FIRREA had implications for depository institutions and examiners:
Institutions with a negative CRA assessment now
had to face the public display of the rating; and
examiners preparing CRA reports were under much
greater pressure to be precise and to be able to
substantiate their findings.
The agencies' written evaluations have two sections: public and confidential. The public section
discloses the examiner's conclusions, using the
assessment factors developed jointly by the four
supervisory agencies, and supporting facts; it gives
a rating and explains the basis for it. The amended
CRA mandates four possible choices ("outstanding," "satisfactory," "needs to improve," and
"substantial noncompliance") from which agencies are to select in assessing the record of depository institutions. The confidential portion includes
references to customers, employees, or other members of the community who provided information
to the examiner and comments of a supervisory
nature that the agencies believe ought not be public.
To implement these rules and promote uniformity in evaluations, the FFIEC published interagency guidelines and a rating system. The guidelines group the regulation's twelve assessment
factors into five performance categories:
• What the institution does to ascertain community needs
• How the institution markets products and what
types of credit are offered and actually extended
• Where the institution makes loans and where it
has placed offices or closed them
• Whether evidence of discrimination or other
illegal credit practices exists
• To what extent the institution participates in
community development.
The guidelines provide examiners and institutions with sample profiles of CRA records of performance; these profiles correlate the quality and
quantity of certain actions and efforts to the ratings
for each assessment factor.
The public can influence an agency's evaluation
of an institution's CRA record. Examiners review
The Community Reinvestment Act: Evolution and Current Issues
CRA comments from persons in the community
placed in the institution's public comment file, and
may contact such persons directly. The examiners
also seek out local officials, community groups,
and others knowledgeable about local credit needs
so that they can make an informed judgment about
those needs and the institution's responsiveness.
The Federal Reserve uses consumer compliance
examinations—as distinct from the commercial
examinations for safety and soundness—to assess
the CRA records of state member banks and their
compliance with fair lending and other consumer
statutes. These consumer examinations are conducted, in general, every eighteen months. Banks
with a demonstrated need for greater oversight are
examined more often; the lowest CRA rating of
"substantial noncompliance" can bring a reexamination within six months. Banks with exemplary
records may be examined every twenty-four
months. The frequency with which other regulators
examine their respective institutions may differ
somewhat from the Federal Reserve schedule.
The CRA examinations take into account the
size, location, and organizational structure of the
individual institutions and the nature and needs of
the communities they serve. Size and financial
strength will affect the expected scope of an institution's efforts to identify and respond to credit
needs. For example, examiners would generally
expect large institutions to undertake specialized
CRA-related activities to a greater extent, given
their relative resources and expertise. Institutions
that are part of a multibank holding company may
be able to draw on the resources of the parent and
affiliates.
Expectations also vary about how banks of various sizes demonstrate CRA performance in different settings. For example, CRA recordkeeping and
documentation will generally be less formal and
extensive in small and rural banks than in large
urban institutions. This also holds true for the
extent and sophistication of analyses of lending
patterns for the CRA and other purposes.
Consistency
and Level of Ratings
The agencies have worked to promote uniformity
in CRA enforcement—using a common rating
scheme, conducting interagency examiner training,
257
adopting jointly developed examination standards
and guidelines, and even reviewing examination
reports across agencies to identify any lack of
comparability in approach. Within the Federal
Reserve, staff members at the Board participate
regularly in CRA examinations of state member
banks in connection with reviews of each Reserve
Bank and sample reports from each Reserve Bank
District to test for the consistent application of the
Board's examination policy.
Nonetheless, institutions and the public alike
express concern that, among the regulatory agencies and between different regions, examiners may
apply differing standards when they assign ratings
for CRA performance. Given the subjective nature
of the CRA and the thousands of institutions
examined—each with its own business goals and
strengths, in communities with different needs and
characteristics—some unevenness is probably
unavoidable. Even though consistency remains
elusive, it is an important goal.
Critics of the agencies' enforcement of the CRA
also complain about the current ratings results,
which in the aggregate are roughly comparable
across agencies (table 1). About 10 percent of
examined institutions receive an "outstanding" rating, and another 70 percent to 80 percent receive a
"satisfactory." Some community groups see a contradiction between these results and public data
indicating that even highly rated institutions have
significant racial disparities in their home mortgage
lending.
There probably is good reason for the current
distribution of CRA ratings. All banks and thrift
institutions pledge to meet the "convenience and
needs" of their communities when they are chartered; this was so long before the CRA came on the
scene. The fact that regulators have been assessing
their CRA performance since 1978 also could be
expected to have a positive effect. In addition, the
"satisfactory" category—into which the vast
majority of institutions fall—is quite broad and
includes some with good performance and some
with marginal but still satisfactory records. Adding
a fifth rating has been suggested; doing so might
permit a finer distinction in rating activities at the
high or low end of a "satisfactory" rating and help
produce a wider array of ratings.
The reliability of the rating system takes on
special importance in light of legislation proposed
258
1.
Federal Reserve Bulletin • April 1993
Distribution of CRA ratings, by supervisory agency and asset size of institution, January 1-September 30, 1992
Number except as noted
in recent years to reward institutions for good CRA
ratings. Institutions that have a "satisfactory" or
"outstanding" CRA rating—and meet other statutory criteria—could be eligible for expedited
approval procedures for opening new branches or
could self-certify their compliance with the CRA
and avoid routine examination. They could establish branches across state lines, or engage in new
expanded powers, or enjoy a "safe harbor" from
protests.
Given the current rating distribution, the tying of
legislative rewards to CRA ratings does raise certain concerns, however. If the standard for any
reward were set at a rating of "satisfactory" or
better, almost all institutions would qualify; yet
limiting the rewards to the "outstanding" category
could be overly restrictive.
Ratings
Anomalies
The CRA rating system—one rating per depository
institution—may affect similar institutions differently depending on their corporate structure. A
bank holding company with ten subsidiary banks
will have ten separate CRA ratings because each
bank is examined and assigned a rating. A poor
rating for even one bank, depending on its size,
may cause problems for the holding company. Yet
a bank holding company of similar size, but structured as a single bank with multiple branches, will
have a single CRA rating, and deficiencies in a few
branches might have no major effect on that rating.
If legislation for interstate branching is enacted,
the concept of a single CRA rating for a multistate,
multibranch depository institution becomes more
troublesome. Would the agency simultaneously
examine branches in each state for compliance with
the CRA? If examinations were not contemporaneous, how would a "moving" rating be determined?
One answer would be to change the nature of the
focus and of the examination itself from the bank
to the areas that it serves. Some legislative proposals, for example, call for separate evaluations for
each metropolitan area in which an institution
maintains a branch, or separate evaluations for
branches in each state, all to be factored into a
single rating or used to assign separate ratings for
each major locality.
APPLICATIONS
The CRA offers a very big carrot—or stick—for
encouraging depository institutions to meet their
communities' credit needs. Agencies consider an
institution's record when evaluating an application
The Community Reinvestment Act: Evolution and Current Issues
to start a new facility, open or relocate a branch, or
merge, consolidate with, or acquire another institution. Thus, depository institutions and holding companies wanting to expand banking operations must
assess their CRA performance, as well as financial,
managerial, and competitive factors, when gauging
their chances for approval.
Because the 1989 policy statement gives guidelines for evaluating the CRA aspects of applications, a common thread runs through the agencies'
evaluation procedures, although timing and other
processing rules may differ. In the case of the
Federal Reserve, Federal Reserve Banks decide
most applications under authority delegated by the
Board. Often, a prospective applicant may discuss
its proposed application with Reserve Bank officials in advance of its submission. Once an application is filed, the depository institution publishes
notices in local newspapers and the Federal
Reserve publishes a notice in the Federal Register.
The Board's public comment period is thirty days
for most applications, but because the notices in the
newspaper and in the Federal Register generally
are not published concurrently, the public usually
has a longer period in which to comment.
Protests
of
Applications
Protests of applications are received from many
sources and on many grounds. Protests from the
insurance industry have commonly been made, for
example, when bank holding companies seek to
engage in insurance activities, on the ground that
doing so is unlawful. Disgruntled shareholders may
challenge the adequacy of the price offered for
shares. Other protestants may raise antitrust issues.
Protests of applications are therefore neither new
nor restricted to CRA matters. Nonetheless, the
linkage between the approval of an application and
the evaluation of CRA performance raises the political and economic stakes of the application process
both for community groups and for applicants.
The restructuring of the financial industry has
involved high-profile expansion moves, and community groups have used protests aggressively to
apply leverage on applicants. In private negotiations, protestants may threaten to create regulatory
delays—and perhaps impediments to approval—
and applicants often complain of "unreasonable
259
demands" for lending commitments, financial contributions, and other concessions. At times, the
applicants themselves may want to negotiate, rather
than stand on their record.
Few applications filed with the Federal Reserve
are protested on CRA grounds—between 1 percent
and 2 percent since 1988. If a protest is received,
the Federal Reserve stands ready to facilitate private meetings between the applicant and the protestant. These meetings are not required. Their purpose is to collect information and find areas of
agreement or misunderstanding, not to force negotiated settlements. Neither the Federal Reserve nor
the other agencies will defer action pending negotiation between the parties. Nor will the agencies
enforce agreements that may be reached between
an institution and a protestant; the agencies' CRA
enforcement extends only to commitments made
by applicants directly to the agencies.
Agencies may hold public meetings to obtain
information not available otherwise or to expedite
the application process. For example, the Board in
the past two years held public meetings and
received testimony from numerous witnesses on
the application by Mitsui Taiyo Kobe Bank, Limited, to convert Taiyo Kobe Bank and Trust Company from a nonbank trust company into a bank; on
the application by NCNB Corporation to acquire
C&S/Sovran Corporation; and on the application
by BankAmerica Corporation to acquire Security
Pacific Corporation.
The Board is required to consider CRA performance in all applications to acquire or expand a
depository institution. Not all applications that raise
CRA issues for the agencies involve protests. At
the Federal Reserve in the past three years, 63 percent of applications with CRA issues were subjected to an intensive analysis, not because of a
protest but because of deficiencies brought to light
during the examination process.
In holding company cases, CRA evaluations may
especially complicate the application process because of the likely involvement of several agencies.
Outdated or incomplete CRA examinations can
cause delays. If a protest is filed, the agencies will
evaluate the merits and investigate allegations. If a
public meeting is held, the volume of information
to be considered can be formidable. In BankAmerica's application to acquire Security Pacific, for
example, the Board received almost 350 comments
260
Federal Reserve Bulletin • April 1993
and heard the testimony of about 175 witnesses in
public hearings held in four cities.6
In a contested application, the ability to request
and obtain information to conduct an evaluation
can be slowed by procedural rules governing communication that includes some parties to the dispute but not others. Once an application is protested, the Federal Reserve generally must notify
all parties before discussing issues raised in the
protest with any one of them. The agency may
communicate with the parties individually about
purely procedural matters or matters unrelated to
the protest, but isolating issues that are not related
in some substantive way to the protest is often
difficult. Thus, whereas ordinarily the information
needed to complete an application record might
readily be obtained from an institution, the process
in a contested application is more formal and timeconsuming.
In dealings between applicants and protestants,
the agencies are sometimes caught in the middle.
Their responsibility is to evaluate fairly the entire
record on an application, including the issues raised
by protestants. Throughout the application process,
they attempt to balance the need for a thorough
review of the statutory factors with the necessity
for an orderly process and a timely decision. In the
case of the Federal Reserve, a substantive written
protest has the potential to extend the processing
period somewhat. In general, however, the worry
about delay is exaggerated. Significant delay as the
result of a CRA protest or a rating issue is the
exception, not, as commonly assumed, the rule. For
example, of the cases acted on by the System in
1992 that involved CRA issues, only about 9.5 percent took longer to process than 60 days—the
Board's internal deadline.7
Commitments
Since 1989 the supervisory agencies have viewed
commitments for future action as largely inapplicable to an assessment of the applicant's CRA performance. In February 1989 the Board denied on CRA
6. "Legal Developments," Federal Reserve Bulletin, vol. 78
(May 1992), BankAmerica Corporation, pp. 338-69.
7. Some of the cases may have involved proposals that required
the applicant to file more than one application.
grounds an application from Continental Bank Corporation and Continental Illinois Bancorp, Inc., to
acquire an Arizona bank despite commitments from
Continental to improve its CRA performance in
specific ways. The Board stated that such commitments could be taken into account only "when
there has been a basic level of compliance on
which the commitments can be evaluated."8 In
Continental's case, the inadequacy of past CRA
performance made it inappropriate to consider such
commitments.
More recently, the Board denied an application
from Gore-Bronson Bancorp, Inc., to acquire a
Chicago bank despite Gore-Bronson's commitment to address CRA deficiencies at two subsidiary
banks. The CRA record had been less than satisfactory for two examination cycles for one bank, and
for the other bank the CRA record had actually
deteriorated under Gore-Bronson's ownership.9
And in February 1993 the Board denied the application of Farmers & Merchants Bank of Long
Beach to establish another branch and make additional investments in bank premises. The denial
was based on the bank's prolonged compliance
problems in the consumer lending area (which had
led to a cease-and-desist order) and a deficient
CRA program. Although the bank had begun taking corrective measures during the application process, the Board was unconvinced that the bank's
compliance and CRA programs were viable and
successful.10
Still, the Board may deem commitments appropriate when the proposed acquisition involves a
troubled institution whose loss would be a detriment to the convenience and needs of its community. For example, the Board approved the application of First Union Corporation, Charlotte, North
Carolina, and First Union Corporation of Florida,
Jacksonville, Florida, to acquire Florida National
Banks of Florida, Inc., a financially weak institution. The CRA performance of First Union's subsidiary banks showed problems in certain specific
areas; but under section 3 of the BHC Act, the
8. "Legal Developments," Federal Reserve Bulletin, vol. 75
(April 1989), Continental Bank Corporation and Continental Illinois Bancorp, Inc., p. 305.
9. "Legal Developments," Federal Reserve Bulletin, vol. 78
(October 1992), Gore-Bronson Bancorp, Inc., pp. 784-86.
10. "Legal Developments," Federal Reserve Bulletin (this
issue), Farmers & Merchants Bank of Long Beach, p. 365.
The Community Reinvestment Act: Evolution and Current Issues
Board also must consider the convenience and
needs of the communities the applicant will serve.
The Board reasoned that maintaining services to
Florida National's customers—including those in
low- to moderate-income neighborhoods—was an
overriding factor; the Board also noted that First
Union recently had taken significant steps to
improve its CRA performance.11
The Federal Reserve Board has denied few applications on CRA grounds, but it denies relatively
few applications generally. In 1992, only six applications were turned down, one of them because of
CRA deficiencies. This record does not, however,
fully reflect the influence that the CRA has had.
Institutions with poor CRA records often do not
file an application with their supervisory agency.
Others take concrete steps to address weaknesses in
their CRA performance before filing an application. Still other applications are withdrawn if applicants anticipate an adverse finding after the agency's preliminary review.
What happens when some subsidiaries of a bank
holding company have less than satisfactory
records and the other subsidiaries have adequate, or
better, records? In the application of SunTrust
Banks, Inc., to acquire shares of Peoples Bank of
Lakeland, substantially all of SunTrust's subsidiary
banks had ratings that were satisfactory or better.
The four subsidiaries identified as having CRA
problems represented less than 10 percent of SunTrust's assets, and the problems did not indicate
either chronic institutional or CRA deficiencies.
The Board approved the application, noting that
whenever problems were identified in the CRA
performance of its banks, SunTrust had taken
immediate steps to correct them and had done so in
the case of these four institutions. The Board
applied the principle that weight can be given to
CRA commitments in addressing specific problems
when the institution has an otherwise satisfactory
CRA record.12
In the case of First Interstate BancSystem of
Montana, on the other hand, the Board denied an
application for a corporate reorganization based on
11. "Legal Developments," Federal Reserve Bulletin, vol. 76
(February 1990), First Union Corporation, p. 88.
12. "Legal Developments," Federal Reserve Bulletin, vol. 76
(July 1990), SunTrust Banks, Inc., pp. 542^5.
261
the CRA record of a quite small banking subsidiary. The deficiencies in that case were serious and
substantive; they had continued through successive
examinations, and steps taken over a significant
period of time had been insufficient to cure the
problems.13
Over the years, questions have been raised about
the bearing of the CRA on various kinds of applications. The obligation to help meet the credit needs
of local communities rests with insured depository
institutions and their deposit facilities. Thus, the
CRA does not apply to applications by bank holding companies to acquire most nonbanking entities
under section 4(c)(8) of the BHC Act. The Board
had determined, however, that the terms and purposes of the CRA and the BHC Act indicate that
the Board has to consider CRA performance in a
section 4(c)(8) application by a bank holding company to acquire a savings association. As a depository institution, a savings association is subject to
the CRA, and consequently its acquisition as a
deposit facility is covered by the CRA.14
COMMUNITY AFFAIRS PROGRAM
The CRA mandates that the regulators encourage
institutions to help meet local credit needs. In furtherance of this mandate, the Board established a
community affairs program more than a decade
ago. The community affairs staff of each Reserve
Bank routinely assists institutions with information
about community development strategies and techniques and other reinvestment issues. They work
with financial institutions, banking associations,
government, businesses, and community groups to
create programs for community development lending that help finance affordable housing, small and
13. "Legal Developments," Federal Reserve Bulletin, vol. 77
(December 1991), First Interstate BancSystem of Montana, Inc.,
pp. 1007-10.
14. Similarly, regulators consider CRA performance when a
bank holding company acquires the assets and liabilities of a thrift
institution in a merger that is subject to the so-called Oakar amendment to the Federal Deposit Insurance Act. See "Legal Developments," Federal Reserve Bulletin, vol. 79 (February 1993), letter,
Jennifer J. Johnson, Associate Secretary of the Board of Governors
of the Federal Reserve System, to John H. HufFstutler, Assistant
General Counsel, BankAmerica Corporation, pp. 148-52. Conversely, the Board has determined that the CRA does not apply to
applications under the Change of Bank Control Act.
262
Federal Reserve Bulletin • April 1993
minority business, and other community revitalization projects.
Reserve Banks help facilitate the broad-based
offering of credit through conferences for bankers
on topics such as barriers faced by minority borrowers, steps to ensure that credit is offered on an
equitable basis, ways of participating in economic
development programs, and credit issues affecting
Native Americans. Reserve Banks also provide
technical assistance, helping institutions to create
community development corporations (CDCs) and
multibank lending consortiums and, in the case of
institutions with unsatisfactory CRA ratings, helping them to strengthen their CRA program. Reserve
Banks publish descriptions of CDCs, limited partnerships, and other community development
projects in which bank holding companies have
been allowed to invest. They prepare profiles that
identify key community and economic development needs and describe resource organizations in
major communities.
For example, the Federal Reserve Banks of San
Francisco and Philadelphia have produced community profiles used by local financial institutions to
address specific issues and projects. The Federal
Reserve Bank of Boston has developed a training
curriculum on community-development finance for
bankers. Reserve Banks also publish a variety of
other brochures and manuals that assist lenders in
community development activities. Their community affairs newsletters have a combined circulation
of more than 40,000.
Other federal banking agencies also have community affairs programs. The OCC's Community
Development Division, for instance, oversees CDC
and investment programs and approves applications by national banks to invest in CDCs in accordance with the National Bank Act and its interpretations. The FDIC has a community affairs program
that, like the Federal Reserve's, has a regional
presence.
INDUSTRY INITIATIVES
The CRA has stimulated an abundance of activity
by financial institutions and others. For example, in
late 1992 the American Bankers Association established a Center for Community Development
whose primary mission is to provide information
and technical assistance to its members. The center
has already published an educational guide, and in
1993 it expects to sponsor workshops and publish a
compendium of contacts at community lending
agencies and organizations. The center is also
involved in credit counseling outreach, offering
camera-ready copies of a five-part series of brochures on such issues as home buying and credit
rights for member banks to publish and distribute
in their communities.
Two recent surveys illustrate the banking industry's efforts. In a survey of banks, thrifts, and
holding companies, the Consumer Bankers Association found that roughly 90 percent of its respondents have programs that target purchase-money
lending for low- to moderate-income housing.
Nearly 95 percent of the programs include mortgage products with flexible requirements for downpayment, loan-to-value ratios, and debt-to-income
ratios designed to make home financing more available and affordable.15 And in late 1992, the OCC
announced the results of a survey to which nearly
55 percent of all national banks responded. A majority of the respondents engaged in community
development lending and financed low- to
moderate-income housing, small businesses, and
small farms. The type of lending tended to differ
according to their asset size. For instance, among
the largest banks (assets of more than $1 billion),
86 percent focused on low- to moderate-income
housing, whereas among the smallest banks (assets
of less than $100 million), 72 percent reported
making small-farm loans.
Depository institutions have access to various
forms of assistance to support their CRA activities.
For example, the Federal Home Loan Bank System
offers two loan programs to its membership of
savings banks, savings and loan associations, and
banks. It advances funds or subsidizes belowmarket-rate loans originated for low- to moderateincome families and for businesses in low- to
moderate-income neighborhoods. Its Community
Investment Program provides home lending funds
to projects aimed at individuals with incomes of up
to 115 percent of an area's median income; an
Affordable Housing Program provides home lend-
15. Consumer Bankers Association, Affordable Mortgage Survey: A Survey of Bank Mortgage Programs as of June 30, 1992
(Washington: CBA, 1992), pp. 2,4.
The Community Reinvestment Act: Evolution and Current Issues
ing funds to support housing for people with
incomes of 80 percent of an area's median income
and rental housing funds where at least 20 percent
of the units are occupied by very low income
tenants.16
Increasingly, attention has turned to the role of
the secondary markets in funding loans to low- to
moderate-income applicants or in low- to
moderate-income neighborhoods. Secondary markets provide liquidity to lenders by purchasing the
loans that lenders originate, enabling them to meet
additional credit needs. For example, more than
half of the "affordable mortgages" reported by the
respondents to the Consumer Bankers' survey are
sold to the secondary market.
The Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) have both announced initiatives in recent years to purchase
loans with underwriting guidelines or payment
terms that do not meet their more traditional loan
purchase programs. The Congress has spurred these
corporations to support low- and moderate-income
loans by setting specific volume goals over a twoyear period beginning with 1993. For example, for
all the loans they purchase, 30 percent of the units
financed must be for low- to moderate-income borrowers, 30 percent must be located in central urban
areas, and $3.5 billion ($1.5 billion for Freddie
Mac, $2 billion for Fannie Mae) must finance loans
to low-income and very low income home
buyers.17
OTHER ISSUES
Throughout its fifteen-year history, the CRA's
seemingly simple but vague and imprecise charge
has caused much consternation. The act, after all, is
not an arcane banking matter of interest only to
specialists in finance; in practice, it touches on
social issues of great sensitivity and complexity,
including issues of race and economic class, and its
day-to-day influence on covered institutions has
been significant. As a result, questions about the
263
law's administration, including potential conflict
with safety and soundness, continue to be raised—
as do numerous proposals for better definitions of
standards, easing of the regulatory burden, and
incentives for superior performance.
Concern with Safety and
Soundness
The mandate of the CRA, that institutions are to
help meet community credit needs in a manner
consistent with safety and soundness, requires lending choices in which some lenders believe they are
"damned if they do and damned if they don't."
Loans in low- to moderate-income neighborhoods,
whether residential or commercial, often require
underwriting standards or terms that differ from an
institution's more traditional products and from an
agency's loan classification standards.
Anecdotal evidence suggests that, by and large,
the losses on lending that addresses CRA responsibilities is not significantly different from the losses
on other product lines. But lenders express frustration that federal financial regulatory agencies may
criticize the very loans the agencies are otherwise
encouraging. They argue that the nontraditional
loans may satisfy examiners monitoring CRA compliance, but the loans could well be downgraded
internally by the bank's loan committee or by
commercial examiners unfamiliar with special
features—such as "equity substitutes" in the form
of government guarantees—that may in fact make
them very sound loans.
The agencies have repeatedly emphasized that
the CRA does not contemplate the erosion of safety
and soundness. To reduce the perception that commercial and CRA examiners work at cross purposes, for example, the Federal Reserve provides
training to commercial examiners on the CRA.
Nevertheless, there is a widespread impression that
institutions are being "whipsawed," and the agencies are having to take special care not to send
mixed messages.
Lack of
Certainty
16. Federal Home Loan Bank Act, 12 U.S.C. § 1430(i),(j) (Supp.
Ill 1992).
17. Housing and Community Development Act of
P.L. 102-550, 106 Stat. 3672, §§ 1332-34 (1992).
1992,
Rules that are more precise would, of course, ease
the task of examiners, institutions, and the public in
264
Federal Reserve Bulletin • April 1993
determining the adequacy of CRA performance.
Many lenders express frustration at the business of
translating the broad mission of the CRA into
specific actions. To be sure, most lenders would
oppose overt credit allocation and would resist
being told what products to offer, or in what volume, or on what terms, or to whom. But many want
to know, from the start, exactly what the "right"
activities might be for CRA performance and what
it takes to get an "outstanding" CRA rating. Examiners who judge performance, and community
groups who evaluate institutions, likewise would
be more comfortable with greater certainty.
The problem lies in preserving flexibility and
providing precision at the same time. The CRA can
be criticized for its ambiguities, but that same
"flaw" allows for variations by institutions in
meeting their responsibilities under the law. Over
the years, the regulators have emphasized their
position that no single community reinvestment
program is perfect for every institution. Financial
institutions can design CRA programs that fit thenown business orientation and the special needs of
their communities. Still, the agencies have offered
extensive guidance on the CRA—policy statements, examination procedures, assessment factors
considered in evaluations, elements of successful
CRA programs, and advice through community
affairs programs. Throughout, they have emphasized flexibility, seeking to give detailed guidance
without imposing specific mandates.
Initially the industry wanted flexible CRA rules
out of concern about regulatory credit allocation.
The industry argued that neither the law nor the
regulations should set minimums or mandate the
types of loans an institution must offer. Increasingly, however, depository institutions and trade
groups have asked for more precise rules. Recent
interest in community development banks has even
brought suggestions that institutions be allowed to
meet their CRA obligations by specified investments in such institutions.
The State of New York, which has a community
reinvestment law much like the federal law, is
considering a proposal that would identify specific
activities for which depository institutions covered
by the state's statute could earn CRA "credit." The
system would require institutions to establish
investment targets for the CRA, measure these
investments in relation to the institution's assets,
and tie CRA ratings to minimum specified amounts
of such investments.18
Moving toward a cafeteria-style menu of valueweighted, "approved" CRA activities—in a manner similar to what New York has proposed—has
some appeal in that it would offer certainty. Potentially it also could increase desirable CRA-related
activities in local communities. At the same time,
creating such a list would inevitably transfer decisionmaking in some measure from an institution to
the government. As it stands, the CRA's broad
standard allows each depository institution to be
creative in meeting credit needs within its lending
community. The incentive to offer innovative service may be lost if institutions find it necessary to
choose between engaging in services they know
will earn them CRA credit and taking a chance on
something that does not quite fit into a preapproved pigeonhole. Also, the CRA is meant to
encourage institutions to meet the credit needs of
their entire community. Communities could be left
with unmet credit needs if institutions were able to
fulfill their total CRA responsibilities by a single
CRA-related action, such as a passive investment
in one community development organization in a
sole low- to moderate-income neighborhood.
Paperwork
Burden
Among lenders, and even community representatives, one major source of dissatisfaction with the
CRA is the paperwork that they believe the agencies require to demonstrate an institution's record
of performance. Small institutions, in particular,
complain that the documentation provided to
agency examiners is costly and unnecessary.
Recent studies by trade groups among banks of all
sizes point to the CRA as imposing substantial
compliance costs. In a June 1992 study by the
American Bankers Association on the sources of
regulatory burden, the CRA topped the list as the
most significant. A study by the Independent Bankers Association of America estimated that compli18. The state's community reinvestment law is in N.Y. Banking
Law §28-b (McKinney 1990). The proposal for earning CRA
credits is in New York State Banking Department, "Proposed
Comprehensive Policy Statement Relating to the New York State
Community Reinvestment Act: Request for Public Comment"
(September 9, 1992).
The Community Reinvestment Act: Evolution and Current Issues
265
ance with the CRA cost about $1 billion annually
out of a total $3 billion for selected laws.
Some community groups, too, criticize regulators for elevating form over substance. More attention is focused on documenting community outreach, they say, than on whether an institution
actually is making loans. While they may have a
common complaint with some in the industry, however, their suggested correction for the problem is
likely to be more mandated lending—a result most
in the industry would oppose.
The technical "hard paper" burden of the CRA
is in fact rather small: a CRA statement listing the
types of loans the institution is willing to make; a
map showing the boundaries of the local communities it serves; evidence (usually a notation in the
minutes) that the board of directors has reviewed
the statement at least annually; a lobby notice
describing how the public can comment on the
institution's CRA performance; and a file with its
CRA statement, agency assessment, and public
comments available for inspection. All are modest
requirements, but they do not, of course, reflect the
true extent of the documentation actually needed.
Other paperwork is unavoidable. The statute calls
for the public CRA assessments to contain "facts
and data" to support the examiner's conclusions,
and as a practical matter most of these "facts and
data" can come only from the institution.
meeting credit needs, not on process, and that an
institution's size has a bearing on how formal the
proof of performance needs to be. Regarding geographic analysis, the FFIEC stated that the extent
and sophistication of analyses expected by the
agencies will depend on the size and location of the
institution. What may be required for a large institution to track its loans, for instance, is not required
for a small institution, which could be served by a
more informal system.
Any well-conceived, ongoing CRA process will
involve normal business documentation. To recognize the credit needs in their communities, as well
as to know whether they are meeting those needs,
institutions must have a process in place that provides relevant information. This is certainly the
case for most large institutions, especially those
with widespread branch networks. Smaller institutions, too, need to demonstrate performance, but
their documentation may not have to be as sophisticated or extensive.
Despite agency efforts to contain the problem of
CRA paperwork, it remains troubling. Through the
FFIEC, the federal regulators continue to evaluate
the paperwork issue as well as other CRA enforcement matters to see whether clarification or additional change is warranted.
One of the twelve assessment factors for CRA
performance requires the examiner to evaluate the
geographic distribution of the institution's credit
extensions, applications, and credit denials. After
considerable debate on this point, the FFIEC in
December 1991 issued a policy that strongly
encourages institutions to analyze the geographic
distribution of their major product lines as part of
their CRA planning process. Institutions also are
encouraged to collect lending data and correlate
them with the relevant demographic facts relating
to the institution's community. The board of directors and senior management are expected to review
the analyses in setting and evaluating the institution's CRA program. Understandably, this geographic tracking also has contributed to complaints
about CRA paperwork.
In June 1992 the FFIEC issued examination procedures to address the outcry about unnecessary
paperwork burden. The revised procedures emphasize that examiners should focus on performance in
Exempting Small
Institutions
The agencies generally have tried to be sensitive to
the complaints of small institutions that they are
disproportionately affected by the CRA. The institutions say they must serve the needs of their entire
community just to exist as viable businesses, and
that, therefore, CRA requirements are unnecessary
for them. Exemptions for small institutions are not
a novel concept. For example, a depository institution's size determines whether it is covered by
HMDA and, if it is covered, the data that it must
report.
Community groups do not believe that small
institutions necessarily meet the credit needs of
their communities as a matter of course, and they
point to the low loan-to-deposit ratios of some
small banks.19 They say small institutions need to
19. FFIEC, Study on Regulatory Burden (Washington: FFIEC,
1992), Appendix A, p. 2.
266
Federal Reserve Bulletin • April 1993
do more, not less, to comply with the CRA, and
therefore they strongly oppose proposals for a
small-institution exemption and for selfcertification.
Apparently, the size of an institution is not a
good indicator of CRA performance. Most institutions in all asset-size categories received "outstanding" or "satisfactory" ratings in examinations in the first three quarters of 1992 (table 1).
Some members of the Congress have taken up
the proposal to exempt small institutions from the
CRA. One bill would exempt an institution from
the CRA if it is in a small town, has assets (aggregated with the assets of its holding company) of
$75 million or less, and can show that its loans
come to 50 percent or more of deposits. Such a
proposal would exempt about one-fourth of the
12,000 institutions supervised by the Federal
Reserve, the FDIC, and the OCC, but it would
maintain CRA coverage of almost all banking
assets. Of the total group's $3.6 trillion in assets,
the banks that would be exempted account for
about 3 percent, or $107 billion.
Another proposal would allow institutions with
total assets of $250 million or less to certify their
compliance with the CRA—provided, among other
things, that they have a "satisfactory" or higher
rating and remain in compliance with the Equal
Credit Opportunity Act. Self-certification would
take the place of agency examinations. The regulators would be required to examine an institution
only in response to an allegation that it was not
meeting the credit needs of its entire community. If
banks with assets of up to $250 million were
exempted from the CRA, as many as 87 percent of
all financial institutions in the country could be
excluded. But again, in terms of total dollars of
community lending and investments, the likely
effect of the exemption would not be major. Thus,
such an exemption might respond to much of the
concern about paperwork without undermining the
force of the CRA.
Lack of
mance should bring its own rewards—new business and enhanced public relations. But after
assessing what it might cost to be rated outstanding, some institutions believe the payoff is not
worth the extra effort under current law.
Various ideas have been proposed for adding
statutory "carrots" to the CRA to increase the
incentives, including a "safe harbor." A safe harbor might limit formal protests against applications, for instance, except when the evidence of
a CRA performance problem is substantial and
specific.
The state of New York is taking public comment
on establishing a safe harbor in the application
process. A bank with an outstanding rating on its
three most recent CRA examinations would be
assured that its CRA performance would not bar
application approval. The theory is that such a
scheme would encourage banks to make the CRA a
part of their overall, day-to-day business plans.
They would strive for outstanding performance and
not view the CRA primarily in the context of
applications. The Banking Department acknowledges that a safe harbor might be perceived as
reducing community groups' involvement in the
CRA. But state officials believe that if public comment were part of CRA examinations and not limited to the application context, its influence could
be greatly enhanced.
The Congress has taken a first step in providing
incentives. Under the Bank Enterprise Act of 1991,
insured depository institutions that do business in
economically distressed communities can earn
assessment credits for application against their
deposit insurance premiums.20
CONCLUSION
From modest beginnings and minimal legislative
review, the CRA has grown in national importance.
At the same time, the vague nature of the act has
bedeviled its implementation through the years. In
essence, instead of imposing hard and fast rules,
Incentives
Financial institutions complain about the lack of
incentives for outstanding performance, noting that
even a superior CRA rating offers no protection
from a protest. Ideally, of course, good perfor
20. 12 U.S.C.A. § 1834 (Supp. 1992). The Congress has provided funds for establishing a Community Enterprise Assessment
Credit Board, which will create the guidelines for qualifying activities. The program cannot be implemented, however, until additional money is appropriated to fund the assessment credits.
The Community Reinvestment Act: Evolution and Current Issues
the statute relies on individual institutions and their
local communities to define credit needs, with the
expectation that the agencies will encourage this
process and assess its success. To make up for the
lack of precision, the agencies charged with enforcing the CRA have sought to measure CRA performance in a fair and comprehensive manner and to
provide increasing guidance while avoiding any
appearance of credit allocation.
Through a combination of efforts, the CRA has
stimulated loans for home purchase, construction,
and rehabilitation and for the development of small
business and minority-owned business in low- and
moderate-income areas. It has brought increased
participation in public-private partnerships in
urban and rural communities and has encouraged
support for community development corporations
and multibank lending consortiums that benefit
267
low- and moderate-income communities. Indeed,
many financial institutions have discovered that
complying with the CRA helps them to compete
for new customers and generate profitable
business.
Although progress in community reinvestment
marks the evolution of the CRA, unresolved problems remain and frustrations abound for financial
institutions, supervisory agencies, and the public.
In many cases, the major source of frustration rests
on the law's lack of specificity. Yet that very lack
also may be the law's most important strength.
While providing strong incentives for institutions
to reach out to their entire communities, it leaves
the question of "how" largely in the hands of the
institution and its community. In so doing, it continues to encourage and produce important reinvestment efforts throughout the nation.
•
268
Treasury and Federal Reserve
Foreign Exchange Operations
This quarterly report, covering the period November 1992 through January 1993, provides information on Treasury and System foreign exchange
operations. It was presented by William J. McDonough, Executive Vice President of the Federal
Reserve Bank of New York and Manager of the
System Open Market Account. John W. Dickey
was primarily responsible for preparation of the
report.1
During the November-January period, the dollar
continued to appreciate against the German mark
and Japanese yen from the low levels established in
the prior period. The U.S. authorities did not intervene in the foreign exchange markets.
DEVELOPMENTS
EXCHANGE
IN
DOLLAR
MARKETS
Over the period, the dollar gained 1 percent in
value against the yen, 4.5 percent against the mark,
and 5.5 percent on a trade-weighted basis.2 The
dollar's upward movement was supported, first, by
the perception that the incoming Clinton Administration would pursue a policy of fiscal stimulus
and, subsequently, by stronger-than-expected U.S
economic growth and persistent expectations of
official rate reductions in Germany and Japan. The
dollar's trend was interrupted by changing estimates of the amount of any U.S. fiscal stimulus, by
perceived postponements of German rate reductions, and by widespread market reports of European central bank sales of dollars.
1. The charts for the report are available from Publications
Services, Board of Governors of the Federal Reserve System, mail
stop 138, Washington, DC 20551.
2. The dollar's movements on a trade-weighted basis are measured using an index developed by the staff of the Board of
Governors of the Federal Reserve System.
The Dollar Trends Higher
After the U.S. election in November, analysts were
predicting that the U.S. economy would begin to
outperform those of other industrialized countries
and that a narrowing of interest rate differentials
would favor the dollar in the coming year. The
prospect of a strengthening dollar was given continued support by indications that President-elect
Clinton would apply fiscal stimulus early in 1993
should there be any signs of economic weakness.
Although hopes for a reduction in official rates by
the Bundesbank were disappointed in both November and December, expectations for such a move
early in the new year persisted. Anticipating a
stronger dollar in the new year, market participants
in late December and early January bid up the
dollar to its period highs of DM1.6490 on January
8 and ¥126.21 on January 13.
After mid-January, however, there was an
unwinding of long-dollar positions as it became
apparent that a reduction in official rates by the
Bundesbank was not imminent and that the Clinton
Administration's overall fiscal policy might put
greater weight on reducing the budget deficit. Many
market participants then assumed that if U.S. economic conditions were to worsen, responsibility for
ensuring adequate economic growth would fall on
the Federal Reserve. Although a reduction in official U.S. rates was still not seen as likely, an easing
was perceived to be in the range of possible monetary policies, and that perception contributed to the
dollar's brief reversal. But at the end of January,
the release of stronger-than-expected U.S. economic data, particularly the strong fourth-quarter
1992 gross domestic product and December 1992
durable goods orders, seemed to erase the prospects for interest rate reductions by the Federal
Reserve and refresh the expectation that the U.S.
economy would be outperforming others over the
year. Thus, in the closing days of the period, the
269
dollar moved up from January lows of DM1.5660
and ¥122.85 to close the period at DM1.6102 and
¥124.60.
Federal Reserve reciprocal currency arrangements
Millions of dollars
Amount of
facility,
January 31, 1993
Institution
The Market Awaits Interest Rate
in Germany and Japan
Reductions
Throughout the period, on-again, off-again expectations for reductions in official interest rates by the
Bundesbank and the Bank of Japan punctuated the
dollar's movements.
In response to continued pressures within the
European exchange rate mechanism (ERM), many
market participants expected that the Bundesbank
would ease interest rates in early November, and,
when this did not occur, attention focused on the
prospects for an easing in December. Although no
official rate reduction came in December, the
Bundesbank's market operations were designed to
avoid end-of-year upward pressure on interest
rates. Moreover, in statements that appeared to
acknowledge a weakening in the German economy
while expressing optimism about the central bank's
ability to control inflation, senior Bundesbank officials predicted sharp reductions in German interest
rates during the course of 1993. In the final week of
December, Bundesbank officials added that an easing could occur earlier in 1993 than was previously
expected. During this period, the dollar posted most
of its gains toward its January 8 high against the
mark.
In early January, the Bundesbank did engineer a
small reduction in market interest rates through its
market repurchase operations. However, by midJanuary, when the decline in market rates had not
been followed by a reduction in the Bundesbank's
official discount and Lombard rates, expectations
were that an easing in German monetary policy
would be postponed until early March, and the
dollar began its brief reversal against the mark.
Expectations of a reduction in the official discount rate (ODR) by the Bank of Japan persisted
during the period, gaining in strength as the period
closed, although with less direct effect on exchange
rates than in the German case. In December, comments by Japanese officials focused on the need to
stimulate demand through fiscal policy, and, as a
result, prospects for a cut in the ODR receded. But
in January, the release of weak Japanese retail
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
250
1,000
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
1,250
600
30,100
Total
sales, production, and employment data and a
declining stock market heightened concerns about
weakness in the Japanese economy and returned
attention to the prospects for an immediate reduction in the ODR. Despite widespread expectations
for an ODR cut at the end of January, the dollar
was not able to sustain its mid-January high against
the yen as exchange market attention focused on
the January 22 report of a record Japanese trade
surplus for the calendar year 1992 and on the risk
that policymakers might respond to the trade imbalance by seeking an appreciation of the yen.
2.
N e t profits or l o s s e s ( - )
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, 1992
Realized, October 31, 1992January 31, 1993
Valuation profits and losses
on outstanding assets
and liabilities as of
January 31, 1993
1. Data are on a value-date basis.
Federal
Reserve
U.S. Treasury
Exchange
Stabilization
Fund
3.746.3
2,293.8
109.5
25.1
2.868.4
1,749.9
270
Federal Reserve Bulletin • April 1993
Currency Tensions in Europe
Continue
Pressures on several European exchange rates, particularly the German mark-French franc rate, persisted during the November-January period. In response to these pressures, German and French
authorities repeatedly stated their commitment to
the existing parity between their currencies and
confirmed their participation in market intervention
in support of the franc. The Spanish peseta and the
Portuguese escudo were each devalued within the
ERM 6 percent on November 22, and the Irish punt
was devalued 10 percent on January 30. In addition, the Swedish and Norwegian monetary authorities abandoned their currencies' links to the European currency unit on November 19 and December
10 respectively.
Although these exchange rate pressures within
Europe had little direct impact on dollar exchange
rates, particularly in comparison with the previous
period, transactions related to the financing of
official European intervention were perceived as
affecting the dollar. Throughout the period, market
participants reported that both in the course of
rebuilding official reserves and in transactions
related to financing official borrowings, several
European central banks were heavy sellers of dollars and that, at times, this selling pressure
restrained the dollar's upward trend against the
mark.
Although the U.S. authorities did not execute any
foreign exchange transactions during the period,
settlements were completed on a total of
$1,455.8 million in forward sales of German marks.
As previously reported, these settlements were executed in May 1992 with the Deutsche Bundesbank
in an effort by both the U.S. and German monetary
authorities to adjust the level of their respective
foreign currency holdings. During the period,
$729.4 million and $726.5 million against marks
settled on November 23 and December 21 respectively, completing the total of $6,176.6 million of
spot and forward dollar purchases from the
Bundesbank. For each transaction, 60 percent was
executed for the account of the Federal Reserve
and 40 percent for the account of the Treasury's
exchange stabilization fund (ESF). The Federal
Reserve and the ESF realized profits of $109.5 million and $25.1 million respectively from these settlements. As of the end of January, cumulative
valuation gains on outstanding foreign currency
balances were $2,868.4 million for the Federal
Reserve and $1,749.9 million for the ESF.
The Federal Reserve and the ESF invest their
foreign currency holdings in a variety of instruments that yield market-related rates of return and
have a high degree of liquidity and credit quality. A
portion of the balances is invested in securities
issued by foreign governments. As of the end of
January, the Federal Reserve and the ESF held
either directly or under repurchase agreements
$7,834.0 million and $8,356.0 million equivalent
respectively in foreign government securities valued at end-of-period exchange rates.
•
271
Industrial Production and Capacity Utilization
Released for publication
February 15
Industrial production rose 0.4 percent in January,
compared with revised gains of 0.2 percent in
December and 0.5 percent in November. The rise
of 4.7 percent in the output of motor vehicles and
parts accounted for about one-half of the overall
gain in total industrial production. Excluding motor
vehicles and parts, the output of consumer goods
and business equipment advanced, as did that of
construction supplies; the production of materials
was little changed, and the output of defense
and space equipment continued its decline. At
111.0 percent of its 1987 average, total industrial
production in January was 4.0 percent above its
year-ago level. Total industrial capacity utilization
Industrial production indexes
Twelve-month percent change
Twelve-month percent change
1988
1989
1990
1991
1992
1993
1988
1989
1990
1991
1992
1993
Capacity and industrial production
Ratio scale, 1987 production = 100
Ratio scale, 1987 production = 1 0 0
— Total industry
Capacity
140
.
—
-
—
120
-
100
Production
1
1
1
1
1
1
1
— Manufacturing
—
Capacity
1
1
1
1
1
1
1
1
Percent of capacity
All series are seasonally adjusted. Latest series, January. Capacity is an index of potential industrial production.
—
120
-
100
Production
80
1
140
•
1
1
80
1
1
1
1
1
Percent of capacity
272
Federal Reserve Bulletin • April 1993
Industrial production and capacity utilization 1
Industrial production, index, 1987 = 1 0 0
Percentage change
1992
Category
1993
1992
Oct.
r
Nov.
r
Dec.
r
Jan.P
111.0
2
r
1993 2
r
r
Nov.
.7
.5
.2
.7
.4
.3
Oct.
Total
109.7
110.3
110.5
Previous estimate
109.7
110.1
110.5
Major market groups
Products, total3
Consumer goods
Business equipment
Construction supplies
Materials
110.7
111.9
126.8
98.5
108.2
111.3
112.6
128.2
98.5
108.6
111.9
113.2
129.1
98.6
108.4
112.5
114.1
130.1
98.9
108.5
1.0
1.1
1.1
1.5
.3
.6
.7
1.1
.0
.4
Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities
110.6
109.5
112.0
98.8
110.7
111.2
110.1
112.6
99.8
111.3
111.7
110.7
113.1
98.3
109.6
112.4
111.5
113.4
98.6
108.2
.7
1.2
.2
.5
.5
.5
.5
.6
.9
.5
Dec.
Jan.?
Jan. 1992
to
Jan. 1993
.4
4.0
.5
.5
.8
.2
-.3
.5
.8
.8
.3
.1
4.6
5.5
8.6
3.7
3.1
.5
.6
.4
-1.5
-1.4
.6
.8
.3
.4
-1.3
4.6
5.4
3.6
.8
1.3
Capacity utilization, percent
1992
Average,
1967-92
Low,
1982
High,
1988-89
1993
Jan.
Oct. r
Nov.1
Dec.
Jan.p
Total
82.0
71.8
85.0
78.0
79.0
79.3
79.3
79.5
2.1
Manufacturing
Advanced processing
Primary processing .
Mining
Utilities
81.3
80.8
82.3
87.4
86.6
70.0
71.4
66.8
80.6
76.2
85.1
83.6
89.0
87.2
92.3
77.0
75.7
80.2
85.3
82.6
77.9
76.3
81.9
86.1
85.0
78.2
76.6
82.3
86.9
85.3
78.4
76.8
82.4
85.6
84.0
78.7
77.2
82.5
85.9
82.8
2.3
2.9
1.0
.1
.9
1. Data seasonally adjusted or calculated from seasonally adjusted
monthly data.
2. Change from preceding month.
increased 0.2 percentage point in January, to
79.5 percent, the highest rate since October 1991.
When analyzed by market group, the data show
that the output of consumer goods excluding autos
and trucks rose 0.4 percent last month: Production
advanced in durable goods for the home, such as
carpeting and furniture, and in nondurable goods,
particularly foods and chemical products. The output of business equipment other than motor vehicles, which had risen sharply in October and
November, increased more slowly—about 0.3 percent—in both December and January; growth in
the production of information processing equipment and of industrial equipment also slowed in
December and January. The production of materials edged up last month, with gains in durable
materials, particularly those used by the motor
vehicle industry, nearly offset by losses among
3. Contains components in addition to those shown,
r Revised,
p Preliminary.
nondurables, such as paper and chemicals; the output of energy materials was about unchanged.
Since October, the overall output of materials has
improved only slightly as declines in energy materials have about offset increases in durable and
nondurable materials.
When analyzed by industry group, the data show
that output in manufacturing increased 0.6 percent
in January and now stands 4.6 percent above its
year-ago level. In addition to the sharp rise in the
output of motor vehicles and parts, output grew
nearly 1 percent or more in petroleum refining,
primary metals, nonelectrical machinery, and miscellaneous manufacturing.
In January, the rate of factory utilization rose
0.3 percentage point, to 78.7 percent, and has risen
1.2 percentage points since September. Among advanced processing industries, motor vehicles and
Industrial Production and Capacity Utilization
consumer chemicals contributed most significantly
to the recent increase in operating rates. By contrast, the utilization rate for aerospace and miscellaneous transportation equipment dropped nearly
1 percentage point, a decline reflecting slack
demand for both defense and nondefense aircraft;
this rate has fallen nearly 7 percentage points dur-
273
ing the past year. Among primary processing industries, operating rates for steel and petroleum refining rose sharply in January, while the utilization
rate for paper and industrial chemicals declined.
In January, production at mines increased
0.4 percent, with strong gains in coal mining, while
output at utilities fell 1.3 percent.
•
274
Statements to the Congress
Statement by Griffith L. Garwood, Director,
Division of Consumer and Community Affairs,
Board of Governors of the Federal Reserve
System, before the Subcommittee on Financial
Institutions Supervision, Regulation and Deposit Insurance of the Committee on Banking,
Finance and Urban Affairs, U.S. House of
Representatives, February 3, 1993
Thank you for inviting us to share the Federal
Reserve's perspectives on bank-related community development corporations (CDCs) and other
types of community development equity investments. In my testimony today, I will confine my
discussion primarily to bank holding company
CDCs and community development investments,
which are approved by the Federal Reserve.
State-chartered banks that are Federal Reserve
members now have authority similar to that of
bank holding companies based on amendments to
the Federal Reserve Act passed in late 1992, and
the Federal Reserve Board is currently developing regulatory guidelines that will govern the
CDCs and community development investments
of state-chartered banks.
I want to call the subcommittee's attention to
two publications we have provided with our
written statement.1 The first is Community Development Investments, which describes in some
detail the Federal Reserve's policies and guidelines for bank holding company CDCs and community development project investments and
also outlines key issues that holding companies
should address when considering such investments. Although I will touch briefly on some of
these guidelines and issues today, those who are
interested in additional detail should consult the
publication. The second publication is Directory:
Bank Holding Company Community Develop-
ment Investments, which includes profiles that
describe the CDCs and other community development projects in which bank holding companies have invested.
In my remarks today I begin by discussing
CDCs in the context of banking's overall role in
financing community development. Second, I will
provide the subcommittee with some background
on the Federal Reserve's policies and guidelines
for bank holding company CDCs and community
development investments. Finally, I will share
with you some observations about key ways in
which the equity investment option is being used
around the country and some of the more common misperceptions about bank-related CDCs.
As you know, interest in banking's overall role
in financing community development is increasing
in banks and their communities. Those seeking
funds for low-income housing projects, small and
minority business development, and other community revitalization efforts have increasingly
looked to banks as the primary source of financing. Because of their expertise in finance, their
local presence, and their community reinvestment
obligations, financial institutions are viewed as
natural partners in the community development
process by housing groups, community organizations, small businesses, neighborhood development groups, and city and county governments,
as well as private developers.
Over the past five years, in particular, we have
observed significant growth of bank financing for
community development in both large and small
communities throughout the country. Some of that
growth has been reflected in the increasing use of
community development corporations and investments by banks and bank holding companies.
THE
ROLE
OF BANKS
IN
COMMUNITY
DEVELOPMENT
1. These publications are available from Publications Services, Board of Governors of the Federal Reserve System,
Washington, DC 20551.
I want to make clear at the outset, however, that
although CDCs and community development in-
Statements
vestments remain important tools for banks and
bank holding companies, they are, in fact, only
one part of a much larger picture. Despite the
significant growth in the number of bank-related
CDCs and the expanding scope of their activities,
the primary way in which financial institutions
support community development programs and
projects continues to be in the more traditional
form of loans. These loans may include direct
loans or loan participations, involvement in special housing or small business lending consortium
organizations, the offering of credit lines to other
community development lenders, or the purchase of loans and other common forms of debt
securities to help meet the credit needs of a
bank's community. Often these loans are provided through collaborative public-private partnerships. Financing packages may include public
funds used as loan guarantees, interest rate subsidies, second and third position loans, contingency reserves, or project grants. But, at its
core, the financing of community development
by banks is still primarily through lending.
To illustrate this point, I have included with
my written testimony a list of more than ninety
examples of activities of banks in community
development. These examples were recently
compiled by the Community Affairs Officers of
the Federal Reserve Banks. Although this compilation includes a very small sample of projects,
based on information that was readily available,
we do believe that it reflects the wide variety of
community development and reinvestment activities being undertaken around the country by
banks. With few exceptions, these projects include a combination of public and bank financing.
SPECIAL
ROLE
FOR
CDCs
In the context of banking's overall role in community development, I want to draw a simple
distinction between CDCs, project investments,
and other forms of community development finance in which the banking community engages.
Typical bank lending for community development requires others who own property or businesses to commit capital before lending can
occur. On the other hand, authority granted to
to the Congress
275
banks and bank holding companies for investment in special community development enables
them to take a position of ownership by investing
equity capital through CDCs and other means.
The practical result is that these institutions
can expand the roles they can play in the community development process. Rather than waiting for others to initiate projects, institutions
using this special authority can also buy, rehabilitate, and sell properties or provide supplemental
equity or special debt investments that help make
projects or business ventures feasible. In effect,
the CDC option provides an additional dimension
that allows financial institutions to become catalysts for the revitalization of economically distressed areas.
Commonly, this option enables financial institutions to fill gaps in equity capital projects,
making the participation of other lenders and
investors possible. The capacity to provide additional equity to a project is especially important
in areas that are poor in capital or with nonprofit
community-based development corporations that
typically have little working capital to support
neighborhood revitalization projects or to help
them obtain loans.
LEGAL
AND REGULATORY
ISSUES
The Federal Reserve's formal involvement with
bank holding company CDCs began shortly after
the 1970 amendments to the Bank Holding Company Act, which provided some flexibility to the
Federal Reserve Board concerning permissible
bank holding company activities. In 1971 the Board
revised its Regulation Y to authorize bank holding
companies to invest in community development
equity activities. Section 225.25(b)(6) defines the
term "community development" as "making equity
and debt investments in corporations or projects
designed primarily to promote community welfare,
such as the economic rehabilitation and development of low-income areas by providing housing,
services or jobs for residents."
Let me emphasize that equity investments in
corporations or development projects are not
part of the traditional role played by financial
institutions. Such investments constitute exceptions to laws that restrict bank and bank holding
276
Federal Reserve Bulletin • April 1993
company ownership of real estate or nonbanking
business ventures and thus require special legal
and regulatory authority. They also necessitate a
cautious approach by supervisory agencies to
ensure that bank holding companies are using
this authority only for legitimate community development purposes and in a manner that does
not pose undue risk to the bank holding company
or its insured financial institution subsidiaries.
Nevertheless, several Federal Reserve decisions have provided bank holding companies
with considerable flexibility in tailoring their investments to meet the needs of their disparate
communities. Generally, the Federal Reserve
has held that holding company investments in
CDC ventures or community development
projects generally meet the "community welfare" test if they primarily benefit low- and
moderate-income persons and economically disadvantaged neighborhoods and communities.
More than seventy bank holding companies
have been authorized by the Federal Reserve to
invest in CDCs and projects. These investments
have had a variety of purposes, including construction or rehabilitation of rental housing for
low- and moderate-income families; purchase,
rehabilitation, and sale of affordable homes; industrial development and the development or
expansion of small and minority business enterprises in economically distressed areas; and development of community facilities that provide
health, educational, and other essential services
for low- and moderate-income persons.
Over the years, the Federal Reserve has made
clear that investments for corporations or
projects that are organized to build or rehabilitate
high-income housing or commercial, office, and
industrial facilities that are not designed explicitly to create long-term job opportunities for lowand moderate-income persons—even though
such investments might provide some indirect
benefits to low- and moderate-income persons—
would be presumed not to meet the community
welfare test. That distinction is important. The
Federal Reserve does not want CDC authority
used to enable bank holding companies to engage
in large-scale real estate development or nonbanking business ventures as a conventional business activity.
Nonetheless, the Federal Reserve recognizes
that neighborhoods and communities in both
urban and rural settings vary greatly in size,
population mix, and economic condition, and it
has remained flexible in applying the standards of
Regulation Y for approval of community development activities. For example, approved community development activities have included, in
one case, the creation of a rural test farm for crop
experimentation that could help diversify a rural
farm economy, and in another case, the rehabilitation of a medical services clinic to help attract
doctors to a small rural community.
CHARACTERISTICS
OF
CDCS
Under Federal Reserve guidelines, community
development investments by bank holding companies may be made on either a for-profit or a
nonprofit basis, although most holding company
CDCs and investments have been for-profit ventures. Although the Federal Reserve does not
discourage profit seeking from community development investments by holding companies, significant profits are, as a practical matter, generally not expected.
The Federal Reserve also takes a flexible approach concerning the amount of capital that bank
holding companies commit for community development investments. Although the Federal Reserve
sets no minimum or maximum levels for capital
investment by bank holding companies in CDCs or
community development projects, it does expect
that use of holding company equity for such purposes will be appropriate for anticipated investment
activities, and certainly prudent with respect to the
size, financial condition, and capitalization of the
holding company. The Federal Reserve will not
allow community development equity investments
in amounts that might pose undue risk to the safety
and soundness of the holding company. Recent
legislation related to bank investments sets certain
limits for banks themselves.
For practical reasons related to the functions
of bank holding companies, the Federal Reserve
also does not limit the geographic scope of a
holding company's community development investments. Bank holding companies typically
conduct their CDC and project investment activities in economically disadvantaged neighbor-
Statements
hoods and communities in the market areas
served by their subsidiary banks. As a result,
although some holding companies focus their
community development investment activities in
one community or one state, others with banks in
several states have established CDCs that have
been approved to make investments on an interstate or even national basis.
Despite this flexibility, we do expect that bank
holding companies will seek and consider the
views of the affected neighborhoods or communities when making an investment decision, although the Board does not specify any particular
approach for ensuring community involvement.
Some holding company CDCs have established
community advisory committees in each community where projects are considered, while others
use community outreach vehicles already established by their affiliate banks. Although community representation on the board of directors of a
bank holding company's CDC may be helpful in
certain situations, it is not required.
TYPES OF COMMUNITY
INVESTMENTS
DEVELOPMENT
Let me now turn to the various approaches used
by bank holding companies when making community development investments. There are four
primary ways in which bank holding companies
utilize their authority for community development equity investment, and these methods are
not unlike those used by national banks. First,
the bank holding company can establish a wholly
owned, de novo CDC as a stand-alone subsidiary. Usually, the holding company capitalizes
the CDC with an initial equity contribution and
may provide loans or lines of credit to fund
the C D C s investments and lending. The CDC
then becomes the vehicle that makes debt and
equity investments in community development
projects. An advantage in having a subsidiary
CDC is that it can be used by the holding
company to support a variety of projects over
time.
Currently there are about forty CDCs operating as wholly owned subsidiaries of bank holding
companies. One example is Banc One's CDC,
which provides equity investments for projects
to the Congress
277
identified and supported by the holding company's subsidiary banks that are located in many
states. The CDC has participated in several
neighborhood housing renovation projects in
Cleveland, Columbus, and Dayton, Ohio, and in
Milwaukee, Wisconsin. It also has invested in
the Ohio Equity Fund, the Wisconsin Equity
Fund, and the National Equity Fund, all of which
help finance acquisition and renovation of lowerincome housing projects in several communities.
Other large holding companies, such as Citicorp,
Chase Manhattan Corporation, and J.P. Morgan
and Company in New York, have formed wholly
owned CDCs, but many smaller holding companies that serve smaller communities or neighborhoods have also used this approach. For example, Moxham Bank Corporation of Johnstown,
Pennsylvania, formed a CDC that became a
limited partner in a fifty-eight-unit apartment
complex for lower-income senior citizens.
A second approach, one that is increasingly
popular, is participation in a multi-investor consortium CDC that, in turn, invests in one or more
community development projects and business
ventures. Sometimes called multibank or nonbank CDCs, these CDCs are intermediaries that
pool the investments of several financial institutions or other investors. Participation in a multiinvestor CDC enables a bank holding company to
share community development expertise, resources, and risks with others; such participation
is an especially valuable tool for smaller institutions that do not have sufficient capital by themselves to make larger investments, which can
have the most significant impact on community
development needs. In rural Illinois, for example, the Tri-County Community Development
Corporation was created by two bank holding
companies—FirstBank of Illinois Company, in
Springfield, and Farmers Holding Company, in
Jacksonville—along with several smaller banks,
all located in three adjacent counties in western
Illinois. A local utility, a power cooperative, and
a local chamber of commerce are also investors.
The C D C s purpose is to promote economic
development and to help new and existing small
businesses to expand, thereby creating jobs in
the three-county area. The CDC provided financing that helped attract a music company
distribution center to the area, and it is also
278
Federal Reserve Bulletin • April 1993
participating in a state program that assists companies in retooling and modernizing their facilities.
A third approach used by bank holding companies is investment in limited partnerships that
are formed to invest in one or more community
development projects. The availability of federal low-income housing tax credits has made
investments in limited partnerships that finance
low-income housing projects increasingly attractive. An increasing number of large and
small bank holding companies have invested in
such partnerships. Holding companies can be
the sole limited partner, or they can be one of
many partners.
For example, BB & T Financial Corporation, a
parent of Branch Banking and Trust Company,
has invested as the sole limited partner in three
separate low-income housing limited partnerships that developed a total of 118 rental units in
three North Carolina communities. In another
case, First Bank System, headquartered in Minnesota, formed a CDC that in turn has become an
investor in several limited partnerships in the
Minneapolis-St. Paul area that support fifteen
separate low-income housing projects; it has also
invested in limited partnerships and projects in
other states that are served by First Bank System
subsidiaries.
Finally, bank holding companies may make direct
investments in single-purpose community development projects or business ventures alone or jointly
with others. This investment can be made without
forming a CDC or participating in a limited partnership. For example, Perry Bancshares, Inc., in
Perry, Oklahoma, purchased an industrial site in its
community and is working with the local chamber of
commerce to market the site to potential industrial
users while exploring other potential uses that will
benefit the community.
As these examples illustrate, the option to
make equity investments for community development purposes produces several benefits for
financial institutions and their communities.
Through its Community Affairs programs at
each of the Federal Reserve Banks, the Federal
Reserve System provides information and technical assistance to banks and holding companies about community development investment
options.
ISSUES RELATED
TO
CDCS
Although fully supporting the CDC concept, the
Federal Reserve believes that the use of community development corporations and investments
has limitations and that these mechanisms should
not be oversold. In that regard, there are several
issues that both financial institutions and policymakers should address.
First, bank-related CDCs should not be viewed
as a panacea for the ills of our urban neighborhoods and rural communities nor as the main
vehicle for bank activity. As I noted earlier, the
option for community development equity investment is an important and useful tool, one that
we believe can effectively supplement ongoing
bank lending programs and community efforts to
revitalize economically disadvantaged areas. Although we continue to expect increased CDC
activity by state member banks and bank holding
companies, we believe that community development lending by financial institutions and other
intermediaries will continue to be the primary
nongovernmental source of funding for community development.
Second, as interest develops in CDCs, there is
a growing need to reiterate how bank CDCs
relate to the Community Reinvestment Act
(CRA). Under current provisions of the CRA,
CDCs and project investments can provide positive contributions to an institution's CRA performance, but they are not considered to be a
substitute for the institution's CRA program. By
making loans and equity investments in low- and
moderate-income areas, CDCs help fulfill CRA's
aims. But any expectation a bank may have that
forming a CDC or making a few low-income
housing investments will automatically result in a
satisfactory or better CRA performance rating is
unrealistic under current law. In the absence of
any other CRA-related activities, a CDC, unless
it is extremely active in community outreach and
lending, would not make up for an otherwise
deficient CRA record of performance.
Third, it is clear that no one model is appropriate for every financial institution or every
community it serves. As even the few examples
discussed here illustrate, there are many options.
Banks and holding companies must continue to
have the flexibility to look at community needs
Statements
to the Congress
279
and create the community development response
that best fits their circumstances.
Fourth, several other issues can impact the
effectiveness of bank CDCs and community development investments. For example, there are
practical limitations on the amount of bank and
bank holding company capital that can be devoted to community development purposes. Expectations concerning widespread use of bank
capital for community development purposes
may be too optimistic. Although we believe that
the trend will continue to be very positive over
the longer term, for many institutions there are
limits to the speed with which they can commit
large amounts of capital to CDCs and related
community development investments.
In addition, financial institutions must consider
community resources. CDCs are rarely successful unless there are effective partners with which
to work. These might include other nonprofit
CDCs, the local business community, local and
state government agencies and program resources, or federal program funds that help provide the subsidies that make community development projects feasible and affordable for
lower-income people. While some communities
have many effective partners and can assemble
appropriate resources for projects, others do not.
Finally, I think financial institutions and policymakers need to consider the human resources
aspect of CDCs. Community development investment requires special knowledge of real estate development and business ownership, an
understanding of public-private partnerships,
and a somewhat different approach to finance
issues. Although community development finance as a specialty in banks continues to grow,
we believe that development of effective specialists and managers to meet the demand and current expectations of community groups, local
governments, and financial institution management will take time.
•
Statement by Richard F. Syron, President, Federal Reserve Bank of Boston, before the Subcommittee on Consumer Credit and Insurance of the
Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives February 4,
1993
improvements and tide themselves over in periods of economic distress. Striking the right balance between protecting homeowners and ensuring widespread access to credit is no easy task.
The problems created by abusive second-mortgage practices in Boston came to light in the
spring of 1991, when numerous media accounts
appeared of minority homeowners having been
victimized by second-mortgage lenders. Community activists were effective in bringing these
abuses to the attention of the public and to
government officials.
The rapid appreciation of house prices in the
Boston area in the 1980s resulted in many homeowners accumulating significant wealth in the
form of home equity. Middle- and higher-income
homeowners frequently took advantage of these
gains by borrowing through home equity loans to
improve their properties, to send their children to
college, or simply to finance higher spending.
Low- and moderate-income homeowners should
have the same opportunities; but unfortunately,
some unsophisticated residents, frequently unaware of the value of their assets, fell prey to
unregulated and aggressive loan brokers and
home improvement contractors. The end result
Thank you for this opportunity to testify on the
credit availability problems that have arisen in
low-income communities. As you know, this
issue has been an important one in the First
Federal Reserve District. Accordingly, my prepared statement will focus on what we have
learned from second-mortgage abuses in Boston.
Second-mortgage abuses represent one of the
most emotional issues facing the Congress, regulators, lenders, and the public. Some homeowners, usually the elderly or disadvantaged, have
been literally "conned" out of their homes
through abusive second-mortgage practices. Others, who have not lost their homes, have been so
burdened by high payments that their lives have
been severely disrupted. At the same time, home
equity is the major asset of most households;
borrowing against this asset is the only way that
many homeowners can make needed repairs and
280
Federal Reserve Bulletin • April 1993
of these abuses was to take the equity these
people had built, sometimes over a lifetime.
In some cases, unsophisticated homeowners
were induced to borrow against their home equity in amounts that were larger than their incomes could comfortably support. When they
ran into difficulty, the day of reckoning was
postponed with yet larger loans until the potential to refinance was exhausted. At that point, the
monthly payments were far beyond their means.
Media stories of elderly and infirm homeowners losing their homes understandably fostered
deep anger and outrage and fed speculation that
the extent of victimization reached many thousands. To help understand the problem, the
Federal Reserve Bank of Boston undertook a
study to estimate the number of potentially abusive loans secured by real estate in Boston. I
would like to submit this report for the official
record.
We found that, out of a total of more than
50,000 nonacquisition mortgages made in the
four years 1987 through 1990, 698 carried an
initial interest rate of 18 percent or more. Another 1,630 were estimated to have interest rates
in the 15 to 18 percent range. The bulk of the
loans with interest rates higher than 18 percent
was made by a small group of lenders, identified
in the report. No banks were among the lenders
with the highest rates or even among the lenders
making loans at 15 to 18 percent. However, most
of the large banks had provided financing to some
high-rate lenders or purchased mortgages from
them.
The report by the Federal Reserve Bank of
Boston is subject to several qualifications. Most
important, the report focused on loans at high
interest rates, and, therefore, it did not identify
as problems those loans with relatively low interest rates but high points and fees; nor did it
uncover instances of shoddy workmanship, high
pressure sales tactics, or fraudulent documents.
Some people have also noted that the study was
limited to loans made in the four years 1987 to
1990, whereas newspaper accounts indicated that
some problems dated back to 1985. However,
bias in the study may overstate the value of
problem mortgages.
The report helped to accomplish the following.
First, identifying the type and the names of the
companies that were most active in making potentially abusive loans helped state officials formulate their response. A relatively small number
of companies accounted for most of the problems. Legislation was enacted to license mortgage lenders and brokers and also home improvement contractors, and new consumer protection
regulations were promulgated by the Massachusetts Attorney General. In addition, the Attorney
General initiated several enforcement actions,
including litigation against several mortgage and
home improvement companies, as well as some
individuals. During this process we worked with
State officials and made specific suggestions
about approaches that could be taken.
Second, the report confirmed that banks did,
indeed, bear some responsibility for the problems arising from second mortgages, even though
they themselves were not high-rate lenders.
Third, the report indicated that the problem
was manageable, although it was severe. Once
the dimensions and nature of the problem were
understood, remedies were developed. Earlier
estimates of the problem's size had been so large
that everyone was overwhelmed. One outcome
was that the Massachusetts Community and
Banking Council was able to develop a process
for identifying and aiding victims of secondmortgage abuses that was acceptable to both
banks and community representatives.
Our experience in Boston has demonstrated
that traditional lenders must play a larger role in
lending in low- and moderate-income neighborhoods but that there is a place for nontraditional
lenders to provide credit to individuals who do
not qualify for bank credit. However, these nontraditional lenders should be licensed and regulated to avoid the unscrupulous lending activity
that occurred in the Boston area.
The Federal Reserve continues to encourage
and assist banks to increase their presence in
low-income and minority communities. Our recent study of mortgage denial rates in the Boston
area is spurring the banking industry to accelerate their efforts to detect and eliminate discriminatory lending practices.
One of the most encouraging developments, to
which the Congress, banks and community
groups, and, we hope, the Boston Reserve Bank
has contributed, has been the increase in bank
Statements
to the Congress
281
branches and automated teller machines (ATMs)
in Boston's minority communities. To date twenty-nine branches have either opened, been preserved, or upgraded, and thirty-eight ATMs have
been installed in these neighborhoods. Increased
access to banking services for lower-income people will help reduce opportunities for abuse as in
the second-mortgage scams.
In summary, the subject of this hearing is a
serious problem for low-income and minority
neighborhoods. Anyone who has listened to the
stories of the human suffering involved cannot
help but also be deeply moved. We hope that we
are making progress not only in understanding
the issue but also in doing something about it.
Undoubtedly, however, more remains to be
done. We hope that this hearing and others in
your series will help bring that about.
•
Statement by John P. LaWare, Chairman, Federal Financial Institutions Examination Council
and Member, Board of Governors of the Federal
Reserve System, before the Subcommittee on
Financial Institutions Supervision,
Regulation
and Insurance of the Committee on Banking,
Finance and Urban Affairs, U.S. House of Representatives, February 18, 1993
interests. More recently, because of the banks'
importance in providing financial services to consumers and others, they have been viewed as
vehicles for implementing social policies, including consumer protection and law enforcement.
The ever-increasing number and detail of regulatory requirements and restrictions, whatever
their purpose, have increased the costs and reduced the availability of services from banking
institutions. Excessive requirements and restrictions have imposed a heavy burden on institutions. They have reached the point where the
aggregate burden may frustrate the purposes of
the individual regulations by driving traditional
banking functions to alternative providers of
these services that may not be subject to the
same requirements and restrictions.
I am pleased to be here to discuss regulatory
burden and particularly the study of this subject
that the Federal Financial Institutions Examination Council (FFIEC) conducted last year in
response to section 221 of the Federal Deposit
Insurance Corporation Improvement Act of 1991
(FDICIA). Some of you may recall that I testified
before this subcommittee on behalf of the Federal Reserve on regulatory burden last June,
while the FFIEC study was in progress.
The issue of the appropriate level of regulation
of banking institutions is not new. Banking institutions serve a vital role in the U.S. economy
because of the critical functions they perform in
the payments mechanism, as chartered recipients
of federally insured deposits, as credit intermediaries, and as the principal vehicle through
which monetary policy is implemented. The
strength of the U.S. economy depends on a
healthy banking system to support its operations
and growth.
It is because of the important role that banking
institutions play in the economy that they are
regulated. Safety and soundness regulations
were introduced in the past century to minimize
the destabilizing effects on the economy of difficulties in the banking system. Federal deposit
insurance, introduced in the 1930s, further increased the government's need to protect its
SECTION
BURDEN
221: STUDY
ON
REGULATORY
In enacting section 221 of the FDICIA, the
Congress recognized the growing significance of
this burden. Section 221 required that the FFIEC
review the regulatory policies and procedures of
the banking agencies and the Department of the
Treasury to determine whether they impose "unnecessary" burden on banking institutions and to
identify any revisions that might reduce burden
without endangering safety and soundness or
without diminishing compliance with or enforcement of consumer laws. The FFIEC was directed
to report its findings by December 19, 1992.
During early 1992, the four federal banking
agencies and the Department of the Treasury
undertook extensive internal reviews of their
policies, procedures, recordkeeping, and docu-
282
Federal Reserve Bulletin • April 1993
mentation requirements. In addition, an interagency task force assembled and reviewed the
public comments that the Federal Deposit Insurance Corporation (FDIC), the Office of the
Comptroller of the Currency (OCC), and the
Office of Thrift Supervision (OTS) had received
in response to their requests in spring 1992 for
comments on regulatory burden. The FFIEC
also requested and received public comments on
ways that the burden might be reduced, and it
held public hearings on this topic in Kansas City,
San Francisco, and Washington, D.C.
At the outset, the FFIEC stated its belief that
the goal of this process was not to examine and
develop proposed revisions to the overall statutory scheme governing financial institutions.
Rather, it appeared to the council that the congressional intent was to accept the statutory
scheme as a given and instead to examine the
manner in which the federal banking agencies
and the Department of the Treasury have implemented that scheme through regulations, policy
statements, procedures, and recordkeeping requirements.
Many commentators, as well as the four federal banking agencies themselves, recommended
changes that were within the jurisdiction of the
agencies. During the year, the agencies acted on
many of these suggestions for regulatory improvement, particularly those related to required
reports, examination procedures, and application
processes. A summary of those actions is included in the study. Regulators have also increased their efforts to coordinate policies and
procedures, which should lessen the burden on
banking organizations.
Other specific recommendations from the public for regulatory change were reviewed by interagency working groups and divided into three
categories. The first category consists of approximately sixty recommendations that warrant further consideration as changes that may be effective in reducing regulatory burden. In most cases,
the federal banking agencies agreed on the general
approach to a recommendation and developed a
consensus position, which is described in the
accompanying discussion. In a few cases, further
consideration and possibly some compromise
may be required to implement a change in current
procedures, and in some cases a recommendation
was controversial and an agency supported it only
in part or preferred an alternative approach to
meet the goal of the recommendation.
Some of the more notable recommendations
include clarifying standards for loan- and leaseloss allowances, developing a uniform interagency policy regarding supervisory standards
for assets sold with recourse, and instituting
unified Call Reports so that all the banking agencies request the same information from regulated
institutions. Each recommendation is currently
being considered in FFIEC subcommittees and
task forces.
After careful consideration, the agencies concluded that the other suggestions either did not
fully meet the standards set forth in section 221
or concerned noncouncil member agencies. Separately, the Department of the Treasury contributed an analysis of the public recommendations
concerning the rules implementing the Bank Secrecy Act (BSA).
In addition to the analysis of specific suggestions for change, the study addressed more generally the nature and cost of regulatory burden.
Burden ultimately arises from two sources: (1)
prohibitions that prevent regulated institutions
from engaging in activities that they might otherwise undertake and (2) requirements for certain
specific actions or behavior patterns that regulated institutions would not undertake in the
absence of the requirements. Restrictions on
activities, such as limitations on interstate
branching and on investment banking activities,
fall into the first category, while paperwork and
required compliance activities fall into the second. Both prohibitions and requirements can be
costly to the regulated entity.
Furthermore, it is often not only the prohibitions and requirements themselves but changes
in either of them that can impose costs. Cost
studies, as well as public comments and testimony, indicate that the costs of adjusting to
frequent (and sometimes minor) revisions to laws
and regulations are a major component of regulatory burden. Therefore, slowing the pace of
legislative and regulatory change, avoiding marginally necessary changes, and allowing reasonable transition times for implementation of revisions in legal requirements could reduce burden
meaningfully.
Statements
The current approach to regulation, which
often relies on mandates and uniform standards,
has led to inflexibility, which can be costly. Very
specific requirements necessarily bring standardization, especially when detailed standards or
methods of compliance are set out in the law
itself and no exceptions are allowed. However,
such inflexibility can be costly because it tends to
preclude new approaches, prevent innovation,
and even limit access to new technology and new
markets.
Overall, the study concluded that the regulatory burden on the banking system is large and
growing. Although the FFIEC did not conduct
new cost studies of its own, available studies
conducted by other researchers suggest that the
costs attributable to banking regulation are substantial. Despite methodological and coverage
differences, findings are reasonably consistent
that regulatory costs might be in the range of 6
percent to 14 percent of noninterest expenses,
without including any measurement of the opportunity cost of reserve requirements. Because
noninterest expenses of the banking industry
were $124.6 billion in 1991, if the percentage
estimates are correct, regulatory costs to the
industry in 1991 could have been between $7.5
billion and $17 billion, without any adjustment
for the costs of reserve requirements or prohibited activities.
Additionally, cost studies of consumer regulations indicate that there appear to be economies
of scale appear in compliance costs. In other
words, the cost of regulation may fall heaviest on
smaller banks. Descriptive statistics from the
recently completed study by the Independent
Bankers Association of America (IBAA) suggest
that scale economies may exist for regulations
other than consumer regulations.
REDUCING
REGULATORY
BURDEN
In the weeks since the study was submitted to the
Congress, the agencies have continued to consider the suggestions, and I anticipate that further action will be taken in the near term. The
steps already taken by the regulatory agencies
and the sixty specific suggestions for further
consideration represent a beginning—an impor
to the Congress
283
tant first step. Nonetheless, the sixty suggestions
are generally quite technical, and their overall
impact on regulatory burden is likely to be modest. Although many of the suggestions are good
ideas and the agencies will give them further
consideration, significant relief from regulatory
burden will require more substantial changes.
Administrative relief, however, is limited by
statutory requirements. In many cases, legislation contains very detailed requirements, and the
regulations must track the statutory provisions.
Thus, the agencies have little power to change
many provisions that impose substantial burdens. Legislative changes are required.
Although proposed statutory reforms to ease
regulatory burden were not the intended or primary focus of last year's study, the council
recognized when it began the study that suggestions might well arise regarding appropriate legislative action to ease regulatory burden. During
the course of the study, many valuable suggestions regarding potential statutory revisions were
indeed forthcoming. Accordingly, the council's
member agencies have agreed to continue meeting to identify and recommend possible statutory
changes to further reduce regulatory burden. The
council hopes to prepare a separate report to the
Congress on those issues by late spring.
RECOMMENDATIONS
FOR THE
FUTURE
As I have noted, banking institutions are regulated because of important public policy considerations. Much of the regulation arises ultimately
from four fundamental public policy concerns:
banking market structure and competition, banking safety and soundness, systemic stability, and
consumer protection. The safety and stability of
the banking system are vital to the economy.
Further, it is difficult to quarrel with the purposes
of individual consumer protections. Nevertheless, the aggregate effect of the implementation
of a substantial number of desirable policies may
result in burdening individual banking transactions to an unacceptable degree.
Many have noted, for example, the tremendous growth in the number of documents involved in a home mortgage loan. Similarly, making a small business loan, which is often secured
284
Federal Reserve Bulletin • April 1993
by real estate, has become costly and can take up
to ninety days, largely because of real estate
appraisal requirements. Often, the need to adopt
regulations to implement many statutes may generate substantial detailed documentation that
banks must read and interpret as the agencies
respond to public comments and address concerns about potential bank liability.
In the aggregate, this burden has become substantial, raising the costs of banking services and
thus encouraging bank customers to seek less
costly loans and services or higher-yielding investments from other financial intermediaries
that are not subject to the same regulatory requirements and restrictions. The movement of
business from banking institutions to other intermediaries and directly to money and capital
markets may frustrate the purposes for which
banking regulations were adopted. I believe this
burden has already begun to threaten the competitiveness of the banking industry itself.
Fundamental review is needed of approaches
to regulation in search of mechanisms that will
achieve the same goals but with less burden and
without the problems that accompany the current
approach. New approaches to regulation that are
more sensitive to cost-benefit trade-offs must be
sought and considered. In particular, existing
market forces and incentives should be harnessed as much as possible to achieve regulatory
goals, rather than relying on microlevel regulations that eliminate the flexibility that is important in a dynamic industry.
To the greatest extent possible, banking regulation should provide flexibility by tailoring requirements to specific facts and circumstances
and by distinguishing among institutions according to meaningful criteria such as condition, size,
and management competence. Regulations that
provide insufficient flexibility can cause unnecessary regulatory burden and create inefficiencies
by preventing depository institutions from finding the most cost-effective means of complying
with the law or regulation and by impairing the
ability of banking institutions to react to changing
market conditions.
These approaches must be applied not only to
future regulatory actions but also to existing
regulations. Efforts to substantially reduce regulatory burden will undoubtedly raise difficult
questions about the trade-offs to be made between competing public policies, much like the
ongoing discussion of the federal budget. Because achieving political consensus for change
may be difficult, in my judgment, an independent
nonpolitical commission charged with exploring
possibilities for legislative change would be useful. Such a commission could address a broad
range of banking issues (such as regulatory burden and the competitive position of U.S. banking
organizations), offer suggestions and guidance
for legislative and regulatory changes, and assist
the Congress in developing a specific legislative
agenda.
SUMMARY
AND
CONCLUSION
Banking institutions serve a vital role in the U.S.
economy. The regulatory burden that we have
imposed, however, may now threaten their role
in providing the services that are so important to
the health of our economy. We must be careful
not to constrain our banking system so much that
it is not responsive to the country's needs. In an
increasingly global and competitive financial
market, the United States can ill afford to handicap its banking institutions—and therefore the
individuals and businesses they serve—with stifling and constantly changing rules and regulations.
The regulatory burden on banking institutions
is large and growing. The cumulative regulatory
burden on the banking industry may well be more
than the sum of its parts. This burden has grown
slowly but relentlessly over the years, layer by
layer by layer. Although genuine public policy
benefits may develop from any single regulatory
proposal, it is important to recognize that the
combined banking regulations and prohibitions
create a substantial, if not approaching unmanageable, burden for many institutions. When
these burdens are aggregated, they affect the
economy by reducing the efficiency and competitiveness of the banking industry.
At this time, we need to make fundamental
decisions. If there is to be a real reduction in
burden, we must revisit our overall approach for
developing banking laws and establish a more
direct process for balancing the benefits of regu-
Statements
to the Congress
285
latory proposals with the burdens they inevitably
impose. We cannot continue to view banking
institutions as the appropriate vehicle for implementing government policies without recognizing
the costs. While the intended benefits of a regulation may be evident, we should recognize that
those benefits are not free to society, or to
consumers, because they appear to be paid for by
the banking system. Those costs are shifted to
consumers through lower interest rates paid on
deposits and higher costs for loans and other
banking services.
Administrative relief is limited by statutory
requirements, however. In many instances, the
agencies have little power to change the provisions that impose substantial burdens. Significant
reductions in regulatory burden will require legislative action—and more than minor adjustments to the existing laws and regulations.
I hope that the FFIEC study completed last
year represents the start of an ongoing process
to address the problem of regulatory burden on
the banking industry. The steps already taken
by the regulatory agencies and the sixty specific
suggestions still under consideration represent
an important, if modest, first step. Perhaps
regulatory relief, like regulatory burden, can be
cumulative.
•
Statement by Lawrence B. Lindsey, Member,
Board of Governors of the Federal Reserve System, before the Subcommittee on Consumer
Credit and Insurance of the Committee on Banking, Finance and Urban Affairs, U.S. House of
Representatives, February 18, 1993 1
"real" community lending. Community groups
say that our grades are too high and that our
effort is lax.
Over the years, critics have made many other
charges about bank and supervisory agency performance, some of which have little foundation
in the CRA's intent, actual provisions, or regulations. For example, some believe that an institution's record of making mortgage loans in
minority areas should be the only CRA criteria,
while others think that if a bank has a community
development corporation (CDC), it should automatically get a "pass" on the CRA. But the CRA
is more complex than the taking into account of
home lending and CDCs.
Hearing this cacophony of divergent critiques,
ideas, and proposals over the past few years, you
would likely have concerns that the CRA may
not be working as intended. In considering this
point, I would like to cover several related areas
in my testimony today. First, as a basis for my
comments, I want to provide an overview of the
act and its implementing regulation. Second, I
would like to bring the subcommittee up to date
on recent activities by the supervisory agencies
to strengthen our CRA assessment programs.
Third, I would like to touch on some of the
recurring issues affecting the CRA that are of
concern to bankers, community representatives,
and the supervisory agencies. Finally, I want to
share with you some thoughts on the CRA's
impact—which we believe has been quite considerable.
I appreciate the opportunity to provide the Federal Reserve's perspectives on the current status
of the Community Reinvestment Act (CRA). I
will include a few comments on the Home Mortgage Disclosure Act (HMDA) and the fair lending
laws, but they are extensive subjects in their own
right.
The CRA continues to be the source of concern
and frustration. Many members of the banking
community consider the CRA as unnecessary,
vague, burdensome, and unfair. Community and
consumer groups often view enforcement as weak
and have suggested several changes, including
new disclosure provisions, to help ensure that
banks and supervisory agencies effectively approach their CRA responsibilities.
We, as regulators, are often caught in the
middle. Despite a dramatic increase in resources
and efforts devoted to the CRA, we continue to
receive brickbats from all sides. Bankers think
that we grade too harshly and that we focus on
process and paperwork instead of assessing
1. Griffith L. Garwood, Director of the Board's Division of
Consumer and Community Affairs, presented this statement
on behalf of Governor Lindsey.
286
Federal Reserve Bulletin • April 1993
I want to make it clear, however, that agencies
other than the Federal Reserve are also deeply
involved with the CRA. In fact, from an examination perspective we have by far the smallest
number of supervised institutions—less than 10
percent of the total. I caution the subcommittee,
therefore, that a serious exploration of the CRA
would require testimony from others. This requirement, of course, would also be true with
regard to HMDA and fair lending.
WHAT
THE CRA
SAYS
AND
REQUIRES
Let me begin by reviewing the act and its implementing regulations. Given what seems like a
blizzard of recent proposals to change the CRA,
increase its scope, provide safe harbors, or reduce its burden, it is especially important that the
discussion be grounded in a clear understanding
about the objectives of the act and its current
requirements.
On its face, the CRA is a short, rather simple
law, as banking laws go. It is only a few pages. It
reminds financial institutions that they have a
continuing obligation to help meet the credit
needs of their entire community, including those
of low- and moderate-income neighborhoods.
These obligations stem from bank charters that
state that banks should meet the convenience
and needs of the communities they serve.
But the CRA also emphasizes that the obligation
to help meet community credit needs, including
those of low- and moderate-income areas, is an
affirmative one. The CRA's fundamental message is
simply that each financial institution should, as part
of its day-to-day business functions, be as attentive
to the credit needs of low- and moderate-income
areas of its community as it is to other areas.
When considering the CRA's overall message,
I think that it is important to recognize that the
actual legislative language contains few directives and virtually no requirements that fall directly on financial institutions.
The CRA does not require that an institution
make any specific types of loans, make any
quantity of loans to particular types of persons or
businesses, or make any specific number of loans
in any targeted geographic area. The Congress
has wisely avoided mandating credit allocation.
The CRA does not require that institutions make
housing loans, nor does it require that they make
loans with below-market interest rates or loans
with other terms and conditions that would be
inconsistent with safe and sound lending. None
of these items are required, or, in my view, even
implied by the CRA.
The CRA's actual requirements are really
directives to the financial institution supervisory agencies. First, the CRA requires that
these agencies encourage each financial institution they supervise to help meet the credit
needs of its entire community, including the
credit needs of low- and moderate-income
neighborhoods, in a way that is consistent with
safe and sound banking practices. Second, the
CRA requires that the supervisory agencies
assess the performance of financial institutions
in meeting community credit needs. We do that
primarily through CRA examinations that use
twelve assessment factors outlined in the CRA
regulation. Third, as a result of 1989 and 1991
amendments to the CRA, the supervisory agencies are required to prepare for each institution
examined a public written CRA evaluation that
includes the CRA rating and provides supporting facts and data. Finally, the CRA requires
that the agencies consider the CRA performance of each financial institution when reviewing its applications for expansion of depository facilities through branching, mergers, or
acquisitions.
In performing their responsibilities, the agencies have issued regulations that impose a few
specific requirements on banks and thrift institutions, but these are essentially technical and
procedural in nature. For example, each bank
must develop and update a CRA statement that
delineates its community with a map and describes services offered within that community.
Institutions must also post CRA notices in the
lobbies of depository facilities and maintain a
public comment file that may be inspected by the
public and the banking agencies.
NATURE
OF THE
LAW
I believe that virtually everyone who is affected
by the CRA senses that this law is clearly
Statements
unusual. It encourages but does not require
action by financial institutions. It reminds
banks and thrift institutions about their charter
obligations but does not mandate any particular
activities. It states that banks should be encouraged to "help" meet community credit needs
but does not specify how such encouragement
is to be provided or how much help in meeting
credit needs is expected.
Further, the CRA directs the supervisory
agencies to assess bank performance in helping
meet community credit needs, but it does not
define good CRA performance. The act also
implies potential punishment for institutions with
poor performance—in the form of denials of
applications to expand—but provides no particular incentives to encourage institutions to seek
outstanding performance. With the exception of
requirements for such items as CRA statements
or CRA notices, lack of action by institutions
does not constitute a "violation" of the law.
And most important, the fundamental approach of the act, and perhaps the primary
source of most concerns and issues, is that the
CRA's focus is on assessments of performance.
That is, the CRA, at its very heart, is "valuative." It requires judgments based on a set of
facts and circumstances that vary greatly among
communities and institutions.
SUPERVISORY
AGENCY
AND
ACTIONS
ROLES
Under the CRA, the supervisory agencies are
charged with encouraging financial institutions to
help meet community credit needs and with
evaluating their performance. At the Federal
Reserve, we provide "encouragement" in two
primary ways: by conducting CRA examinations
and by carrying out a comprehensive set of
educational, technical assistance, and informational programs, primarily through our Community Affairs program.
Over the years, the Federal Reserve System
has strengthened its CRA-related activities on
several fronts. My impression is that, in all the
talk about the problems with CRA, not enough
information has been conveyed about the many
to the Congress
287
positive happenings. Let me first talk about the
examination side.
Examination
Improvements
First, examiner training has been expanded and
significantly enhanced. Our consumer compliance schools for examiners devote considerable
time to the CRA and related regulations, such as
those covering fair lending and home mortgage
disclosure. A more advanced compliance school
also includes segments on community development. In addition, we regularly conduct a unique,
one-week intensive course for examiners, called
CRA Advanced Examination Techniques. Over
the past three years, virtually all of our consumer
compliance examiners have completed this
course. We are also taking steps to help our
safety and soundness examiners understand the
essentials of the community development market
so that they can fairly assess the quality of a
bank's reinvestment loans.
Second, in addition to enhanced training for
our examiners, we have been concerned about
providing them with better tools to help them get
the job done. To this end, on behalf of the
Federal Financial Institutions Examination
Council (FFIEC) the Federal Reserve has developed a computerized system for analyzing the
expanded data collected under the Home Mortgage Disclosure Act (HMDA). The system is
extremely versatile and allows the data to be
segmented by demographic characteristics such
as race, gender, and income levels, or geographic
boundaries. Examiners can now sort through
vast quantities of data to focus attention on
specific lending markets and draw comparisons
between an individual HMDA reporter's performance and of all lenders in the area. With these
capabilities, examiners can more readily determine whether a bank is effectively serving all
segments of its market, including low- and moderate-income and minority neighborhoods.
Third, in June 1992, the FFIEC issued revised,
uniform CRA examination procedures that clarify CRA examination policies. For example, they
emphasize the importance of using numerical
data in the public CRA evaluation to the extent
that they are used in the assessment process and
support the conclusions reached. Our examiners
288
Federal Reserve Bulletin • April 1993
now routinely factor into their CRA assessments
"hard data" derived from HMDA tables, the
supervisory Call Reports, bank lending records,
and other sources.
Fourth, we have been mindful of the widely
shared perception, often vocalized by bankers,
that the CRA entails an undue amount of paperwork. In developing the new examination procedures, we endeavored to help reduce the
amount of paperwork and documentation by
emphasizing that institutions should retain for
examiners' review only information that is useful to the institution's own management needs.
We have emphasized to our examiners that
CRA documentation will generally be less formal and less extensive in small and rural banks
than it is in larger, urban banks. We want to
reduce as much as possible the paperwork
burden on bankers so that they can focus on the
lending side.
Fifth, personnel resources allocated to CRA examinations have increased significantly since 1989.
Our examiners and Reserve Bank staff also spend
considerable time in follow-up to the examinations
through correspondence, advisory visits, and educational activities directed to the industry as a
whole. The frequency of CRA examinations by the
Federal Reserve System has been maintained, despite the fact that CRA examinations have become a
more demanding and time-consuming job for examiners. For more than a decade, we have examined
state member banks with a satisfactory or better
record of past CRA performance every eighteen to
twenty-four months. "Problem banks," or those
with demonstrated weaknesses, are examined every
six to twelve months.
Sixth, the agencies have successfully implemented the public disclosure of CRA evaluations
and ratings. Written, public evaluations of CRA
performance have been a reality for well over two
years. We and the other supervisory agencies have
devoted substantial time and effort in developing the
system and in training examiners for an unprecedented change in the way they do their jobs.
Since the disclosure provisions became effective, the Federal Reserve has examined for CRA
purposes every bank it supervises at least once,
and many twice, and has presented its findings to
the public. We believe that this process has
proceeded relatively smoothly and has had a
positive impact on financial institutions and their
responses to their CRA obligations.
Expanded
Technical
Educational,
Assistance
Informational,
and
In addition to examinations, a second key way
that the supervisory agencies fulfill our CRA
"encouragement" responsibilities is through educational, informational, and technical assistance activities. These activities are conducted
jointly by the agencies and through programs
administered in each agency. At the Federal
Reserve, we provide these educational and informational services primarily through our Community Affairs program at each of the twelve Federal Reserve Banks.
To help educate the public and the banking
community about CRA and community development lending, the Reserve Banks sponsor
Community Affairs conferences, seminars, and
workshops. Over the past four years, we have
sponsored or cosponsored more than 400 conferences, seminars, and workshops for bankers
and others focusing on such topics as CRA and
HMDA compliance, options for bank participation in low- and moderate-income housing development, downtown and neighborhood revitalization, small and minority business lending,
the formation of community development corporations, and housing finance in rural areas.
During the past year, several Reserve Banks
conducted workshops on the CRA targeted for
members of bank boards of directors and for
bank senior executives. Community Affairs
staff members have developed community development lending curricula and have conducted numerous community development
workshops for bankers.
In addition, during this same four-year period,
Community Affairs staff members of both the
Board and the Reserve Banks made more than
1,000 formal presentations at conferences, seminars, and meetings of banking, community, and
other organizations on community development,
the CRA, and other related topics. They have
responded to thousands of inquiries and requests
for information about the CRA.
Community Affairs staff members also provide
CRA-related technical assistance and advice to
Statements
individual banks, and some are conducting special visitations to bank holding companies to
discuss CRA issues and opportunities directly
with senior management. Community Affairs
staff members have helped several banks and
banking groups structure lending consortia or
community development corporations. They
have helped mediate disputes between banks and
community organizations. They produce a variety of publications, from community profiles that
outline CRA-related opportunities for banks—
such as one recently prepared on South Central
Los Angeles—to compendiums of programs that
banks can use to complement their CRA programs. Nine of the Reserve Banks publish their
own community affairs newsletters, which reach
a combined total of more than 40,000 bankers,
community representatives, and others.
Increasingly, the Community Affairs program
is providing direct support to our examination
staff members, helping them identify community
contacts to meet with during examinations, or
helping examiners identify community programs
in which banks could be involved.
Overall, we believe that the Federal Reserve's
Community Affairs program has greatly strengthened our efforts to "encourage" and help institutions to meet their CRA obligations.
EFFECTS
ON
APPLICATIONS
Applications that present CRA issues, which
include those affected by poor CRA ratings as
well as by CRA protests, have grown more
numerous in recent years. During 1992, adverse
CRA ratings were an issue in forty-four applications received by the Federal Reserve from
banks and bank holding companies, compared
with thirty-one such applications in 1991. Protested applications also increased to thirty in
1992 from twenty-four in 1991.
Although there have been relatively few outright denials of applications on CRA grounds, we
would urge caution in using this as a significant
measure of CRA's impact. We have found that
institutions are taking this aspect of CRA quite
seriously. They do not want poor CRA examination results, which are afforded great weight in
our consideration of applications, to reduce their
to the Congress
289
expansion options or to impede the timing of
their applications. This gives them added incentive to have good programs in place. Some
undoubtedly avoid filing applications, or decide
to withdraw them, when faced with potentially
adverse findings. Through the years, many institutions have made substantial commitments to
the agencies or to protestants during the application process.
Coupled with our examination and educational
efforts, I think that the application procedures
have also contributed to overall CRA performance.
RECURRENT
ISSUES
As should be apparent from this summary of
recent agency activities, the CRA continues to
consume an increasing amount of our time and
resources. Despite our belief that things are
much better than many realize, we also recognize
that several controversies continue to be related
to the structure and administration of the CRA.
Let me touch on a few.
Consistency
One of the recurring issues involves the consistency, or lack thereof, in the way CRA evaluations are written and ratings assigned. Both community groups and bankers have alleged that the
evaluations of the agencies are not equally comprehensive and that in some cases the assigned
CRA ratings are not always the same for banks
that appear to have similar performance.
Let me say that the supervisory agencies have
spent much time and energy, both on an interagency basis, and within each agency, to deal with
inconsistencies in evaluation write-ups. We have
an extensive program within the Federal Reserve
to review reports across Federal Reserve Districts to promote uniformity. In May 1991, the
FFIEC convened a working group of field examiners and senior staff members from each of the
agencies to review evaluations across agencies to
help ensure a common approach. We have also
received input from the Federal Reserve's Consumer Advisory Council, national community
290
Federal Reserve Bulletin • April 1993
organizations, and many others on how we can
enhance the quality and consistency of public
information. We believe that these issues are
being resolved.
It should be recognized, however, that it will
probably always be somewhat difficult to make
all ratings read consistently, simply because we
are rarely comparing "apples to apples." Each
financial institution is unique with respect to its
business strategy, size, geographical market
reach, product mix, and organizational structure.
Even banks of the same size in the same communities may offer very different products and
services. Each community is also different with
respect to its economic condition, credit needs,
organizations, and resources.
Process
vs.
Product
Both bankers and community groups continue to
charge that the agencies appear more interested
in ensuring that institutions have the appropriate
CRA procedures and documentation than actual
lending programs in their communities. I believe,
however, that if that was the case at one point, it
most certainly is not the case now. However, as
I will indicate, this issue is not as simple as it may
first appear.
In conducting CRA examinations, we do not
focus on process to the exclusion of lending.
We have cautioned our examiners about just
this issue in our revised examination procedures, and we discuss it regularly in examiner
training and other meetings. However, we do
not consider certain basic business processes to
be irrelevant to the CRA. Most successful institutions understand that, if they do not have a
well-thought-out CRA program, they may be
less effective in finding good lending opportunities in their communities or in being able to take
credit for their lending activities at examination
time.
We do not believe that most larger institutions, especially those with large branch networks, can reasonably claim to know the credit
needs in their diverse communities unless they
have an effective program in place to find out.
Similarly, they probably cannot truly know
whether they are meeting the credit needs with
loans unless they have a process in place that
would provide them with this information. But
this process involves, after all, basic types of
information that most bank managements regularly want to see for all products and services.
For smaller institutions, the process is much
simpler and usually should involve use of dayto-day information that bank management collects in any case.
However, this "process versus product" debate is not an easy one for one fundamental
reason—the agencies were not given the task,
nor have they assumed the role, of providing
rules that allocate credit. Certainly, it would
make everything much easier if we had lists of
"blessed" loans and customers and mathematical ratios of loans by category that would match
various ratings under the CRA—then we would
simply count the product and be done with it. In
fact, the CRA—wisely in my view—provides
flexibility for institutions to meet their obligation
in many different ways, depending on their
strengths and the specialized needs of their community. Thus, there will always be considerable
focus on having an adequate process in place
which, in fact, delivers product.
Easy
Grading
The distribution of ratings is another recurring
issue. Community groups say that the CRA
grades are much too high, and they contend that
the banking agencies are much too lenient. And
roughly 90 percent of the institutions do get a
satisfactory or better rating. Some bankers, argue, of course, that because an institution would
be out of business if it did not meet the needs of
its community, all should pass.
When haggling over the grade distribution, we
should remember that the CRA ultimately involves performance evaluations. Disagreements
will always occur over such assessments,
whether they involve a teacher or a professor
grading a paper, a music critic judging a recital,
or an employer evaluating an employee. No
matter how well the criteria are understood,
different people—reasonable people— can often
make different judgments based on the same
information.
But, clearly, few institutions fail. I think there
are several good reasons for the current distribu-
Statements
tion. First, all banks pledge to meet the "convenience and needs" of their communities when
they are chartered. This pledge occurred long
before the CRA came on the scene. Second, we
have been examining banks for compliance since
1977, and one would expect this pledge to have
had a positive effect. Third, it should be recognized that the "satisfactory" category, in which
about 80 percent fall, is a very broad one—and it
includes some with good performance and some
with more marginal records.
Discrimination
Lending
and Home
Mortgage
Finally, a highly sensitive and recurring issue
involves the relationship of the CRA to both the
Home Mortgage Disclosure Act (HMDA) and
the fair lending laws, such as the Equal Credit
Opportunity Act. Although CRA assessments
incorporate the objectives of these civil rights
laws, the CRA is also much broader in scope.
It is well known that regulators have faced
considerable difficulties in identifying instances
of discrimination. It is extremely difficult to find
conclusive evidence of discrimination through
inspection of individual loan files during examinations. Lenders usually can demonstrate that
the applicant was denied because certain credit
standards, involving such elements as debt ratios
or credit history, were not met.
But we have learned much from the intensive
study on mortgage denials conducted by the
Federal Reserve Bank of Boston and from the
Justice Department's recent case involving Decatur Federal Savings and Loan. We are very
concerned about the results of the Boston study
and have taken several steps that we hope will
help strengthen the capacity of our examiners
to detect and deter discriminatory treatment of
applicants. Fortunately, we are seeing a significant growth in affirmative marketing of mortgage and other loan products in minority areas
as well as development of special mortgage
products that meet the needs of low- and moderate-income persons. Institutions that are
making positive efforts to offer and extend
credit in minority communities are helping fulfill the CRA's aims.
THE IMPACT
OF THE
to the Congress
291
CRA
How well is the CRA working? Frankly, I think
it is working a lot better than is often recognized.
By any measure it has had a major impact on
reinvestment activity by financial institutions
throughout the United States. In recent years,
we have seen real momentum in financial institution responses to the needs of their communities, especially in lower-income areas. I believe
that a good part of that momentum is because of
the CRA.
The CRA has helped stimulate loans for home
mortgages, housing construction and rehabilitation, and small and minority business development in low- and moderate-income communities.
More banks and thrift institutions are seeking
and participating in public and private partnerships, in both urban and rural communities, than
ever before. A growing number of bank-led community development corporations or multibank
lending consortia are supporting projects that
benefit low-and moderate-income areas. Included with my testimony is a sample of such
activities gathered from across the nation by our
Community Affairs officers. 2
Although beginnings are sometimes adversarial, banks and community groups in many cities
have proved that they can work together to
promote the goals of the CRA process. I think
bankers are generally viewing the world a little
differently because of the CRA, and the world
views bankers a little differently as well. For
many institutions, the CRA is becoming increasingly important. Good CRA performance enhances their ability to take advantage of opportunities afforded by mergers and interstate
banking. Many bankers are also discovering that
good CRA performance also helps them compete
for customers. Finally, a growing number of
bankers are seeing that CRA-related activities
can lead to just good, profitable business.
2. The attachment to this statement is available from the
Board of Governors of the Federal Reserve System, Division
of Consumer and Community Affairs, Washington, DC 20051.
292
Federal Reserve Bulletin • April 1993
CONCLUSION
I would conclude from all of this that despite its
weaknesses, the CRA is indeed working and working quite well. The supervisory agencies have
stepped up their activities. We continue to
strengthen our CRA examination, educational, and
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 19, 1993
I appreciate this opportunity to discuss with you
developments in the economy and the conduct of
monetary policy. Nineteen ninety-two saw an improved performance of our economy. The expansion firmed, and inflation moderated. Some of the
structural impediments to growth seemed to diminish. In particular, the financial condition of households, firms, and financial institutions improved. In
addition, confidence rebounded late in the year.
Nevertheless, the expansion seemed to exhibit
little momentum through much of 1992, unemployment remained high, and money and credit
growth was sluggish. In response, the Federal
Reserve took steps to increase the availability of
bank reserves on several occasions. These actions brought short-term interest rates to their
lowest levels in thirty years. Long-term interest
rates also fell in 1992 and in early 1993, as
inflation expectations gradually moderated and
optimism developed about a potential for genuine
progress in reducing federal budget deficits.
Our economy has been held back in the past
few years by a variety of structural factors that
have not been typical of post-World-War II business cycles—certainly not occurring all at once.
These factors have included record debt burdens, overbuilding in commercial real estate, and
a substantial cutback in defense spending. We
have not been alone in this. Other major industrial countries have also been experiencing unusual impediments to growth, and by comparison
the recent performance of the U.S. economy has
been relatively good. Our monetary policy actions have been directed at facilitating adjustments to these developments and have in the
technical assistance programs. The banking community is responding positively, although certainly
more can be done. The CRA is a simple and unusual
law. Its lack of specificity—the source of many of its
frustrations—may be its strength. In view of this, I
would counsel that radical changes to the CRA be
cautiously approached.
•
process improved our economy's prospects for
long-run sustainable growth. Significant hurdles,
of course, still remain to be overcome in the
short run. Nonetheless, in the view of the vast
majority of business analysts, prospects appear
reasonable for continued economic expansion
and further declines in the unemployment rate.
The tasks of the monetary and fiscal authorities
alike will be not only to support this prospective
growth but also to set policies to enhance the
capacity of our economy to produce rising living
standards over time. Before discussing the outlook in more detail, I will reflect on how monetary policy has interacted with the forces that
have shaped developments over recent years.
RECENT ECONOMIC
MONETARY
POLICY
DEVELOPMENTS
AND
IN
PERSPECTIVE
I have often noted before this committee the
distinctly different nature of the current business
cycle. Several extraordinary factors contributed
to the earlier weakening in the economy and have
worked against a brisk and normal rebound from
the recession.
Balance sheet restructuring has been, perhaps,
the most important of these factors. In the 1980s,
debt growth, hand in hand with rising asset
prices, considerably exceeded that of income,
and debt burdens rose to record levels. Debtfinanced construction in the commercial real
estate market was an extreme manifestation of
this development, but it was apparent as well in
other sectors of the economy.
The development of these imbalances should
not be entirely surprising. The economy grew
continuously for nearly eight years—from late
1982 through mid-1990, the longest peacetime
expansion on record. In this unusual period of
Statements
uninterrupted growth, unrealistic expectations of
what the economy could deliver seem to have
developed. In addition, households and businesses apparently were skeptical that inflation
would continue to decline and, based on their
experience during the 1970s, may even have
expected it to rebound. As a consequence, many
may have shaped their investment decisions importantly based on expectations of inflationinduced appreciation of asset prices rather than
on more fundamental economic considerations.
In the commercial real estate sector, assessments
of profit potential that were formed during the
first half of the 1980s simply went too far, leading
to an unavoidable period of retrenchment.
The difficulties faced by borrowers in servicing
their debts as the expansion slowed and the
leveling out or decline in asset prices prompted
many to cut back expenditures and divert abnormal proportions of their cash flows to debt repayment. This, in turn, fed back into slower economic growth. In addition, financial institutions
were faced with impaired equity positions, owing
to sizable loan losses as well as more stringent
supervision and regulation and demands by investors and regulators for better capital ratios. In
response, they limited the availability of credit
with particular effects on smaller businesses.
During the past year or so, however, considerable progress has been made in strengthening
balance sheets in both the nonfinancial and financial sectors. Moreover, by some measures the
rate of deterioration of the commercial real estate
industry might be slowing, and prices in this
sector may soon begin to stabilize. Such developments should contribute to the sustainability
of the expansion in the period ahead.
Intensive business restructuring has been another important characteristic of the evolving
economic situation. In an environment of weak
demand and intense competition here and
abroad, many firms have found it necessary to
take aggressive measures to reduce costs. These
actions have included selling or closing down
unprofitable units and reducing their work force.
The availability of new computing and communication technologies has given the process of
restructuring added momentum. Although these
changes involve difficult adjustments in the short
run, they are producing important gains in pro-
to the Congress
293
ductivity, which will boost real wages and living
standards over time.
A third development restraining the expansion
has been the contraction in defense spending.
Real federal defense expenditures dropped about
6 percent in 1992 and are down 9 percent from
their 1987 peak. Those regions of the country
with substantial defense-related activity have
been among the areas whose economies have
performed especially poorly. Although this development is having a contractionary influence
on the economy in the short run, over a longer
period the productive resources freed in this
process will find employment in the private sector contributing to capital formation and the
growth potential of the economy.
Another less-discussed factor that contributed
to the formulation of our recent monetary policy
dates not from the 1980s but rather from the
1970s—inflation and inflation expectations. Over
the past decade or so, the importance of the
interactions of monetary policy with these expectations has become increasingly apparent. The
effects of policy on the economy critically depend on how market participants react to Federal
Reserve actions as well as on expectations of our
future actions. These expectations—and thus the
credibility of monetary policy—are influenced
not only by the statements and behavior of the
Federal Reserve but by those of the Congress
and the Administration as well.
Through the first two decades of the postWorld-War II period, this interaction was patently less important. Savers, investors, firms,
and households made economic and financial
decisions based on an implicit assumption that
inflation over the long run would remain low
enough to be inconsequential. There was a sense
that our institutional structure and culture, unlike
those of many other nations of the world, were
alien to inflation. As a consequence, inflation
premiums embodied in long-term interest rates
were low and effectively capped. Inflation expectations were reasonably impervious to unexpected shifts in aggregate demand or supply. In
those circumstances, monetary policy had far
more room to maneuver; monetary policy, for
example, could ease aggressively without igniting inflation expectations.
Even during the rise in inflation of the late
294
Federal Reserve Bulletin • April 1993
1960s and 1970s there was a clear reluctance to
believe that the inflation being experienced was
other than transitory; it was presumed that inflation would eventually retreat to the 1 percent to
2 percent area that prevailed during the 1950s and
the first half of the 1960s. Consequently, longterm interest rates remained contained.
But the dam eventually broke, and the huge
losses suffered by bondholders during the 1970s
and early 1980s sensitized them to the slightest
sign, real or imagined, of rising inflation. At the
first indication of an inflationary policy—monetary or fiscal—investors dump bonds, driving up
long-term interest rates. To guard against unexpected losses, investors now demand a considerable premium in bond yields—a premium that
seems out of proportion to the likely future path
of inflation but one that nevertheless conditions
the environment of monetary policy today. The
steep slope of the yield curve and the expectations about future interest rates that the slope
implies suggest that investors remain quite concerned about the possibility of higher inflation
over the longer run, even as they appear less
concerned about that possibility for the next year
or two.
This heightened sensitivity affects the way
monetary policy interacts with the economy.
An overly expansionary monetary policy, or
even its anticipation, is embedded fairly soon in
higher inflation expectations and nominal bond
yields. Producers incorporate expected cost
increases quickly into their own prices, and
eventually any increase in output disappears as
inflation rises and any initial decline in longterm nominal interest rates is more than retraced. To be sure, a stimulative monetary
policy can prompt a short-run acceleration of
economic activity. But the experience of the
1970s provided convincing evidence that there
is no lasting tradeoff between inflation and
unemployment; in the long run, higher inflation
buys no increase in employment.
This view of the capabilities of monetary policy is entirely consistent with the HumphreyHawkins Act. As you know, the act requires that
the Federal Reserve "maintain long-run growth
of the monetary and credit aggregates commensurate with the economy's long-run potential to
increase production, so as to promote effectively
the goals of maximum employment, stable
prices, and moderate long-term interest rates."
The goal of moderate long-term interest rates
is particularly relevant in the current circumstances, in which balance sheet constraints have
been a major—if not the major—drag on the
expansion. The halting, but substantial, declines
in intermediate- and long-term interest rates that
have occurred over the past few years have been
the single most important factor encouraging
balance sheet restructuring by households and
firms and fostering the very significant reductions
in debt-service burdens. Monetary policy also
has played a crucial role in facilitating balance
sheet adjustments—and thus has enhanced the
sustainability of the expansion—by easing in
measured steps, gradually convincing investors
that inflation was likely to remain subdued and
fostering the decline in longer-term interest rates.
We have conducted monetary policy against this
background for the past several years. During this
period, Federal Reserve policy was directed at
fostering sustainable growth in the economy. The
Federal Reserve began to ease monetary policy in
spring 1989, when it recognized tendencies for the
economy to slow. Responding to the downturn that
began in August 1990, we accelerated the reduction
in short-term interest rates. Last year, we extended
our earlier reductions in interest rates by lowering
the federal funds rate another percentage point
through another cut in the discount rate and by
injections of a large volume of reserves. In addition
to reducing interest rates, the Federal Reserve lowered reserve requirements last year for the second
time in eighteen months to help reduce depository
institutions' costs and to encourage lending.
Although the easing actions over the past few
years have been purposely gradual, cumulatively
they have been quite large. Short-term interest
rates have been reduced since their 1989 peak by
nearly 7 percentage points; looked at differently,
short rates have been lowered by two-thirds.
Some have argued that monetary policy has been
too cautious and that rates should have been
lowered more sharply or in larger increments.
In my view, these arguments miss the crucial
features of our current experience: the sensitivity
of inflation expectations and the necessity to
work through structural imbalances to establish a
basis for sustained growth. In these circum-
Statements
stances, monetary policy clearly has a role to
play in helping the economy grow; the process by
which monetary policy can contribute, however,
has been different in some respects than in past
business cycles. Lower intermediate- and longterm interest rates and inflation are essential to
the structural adjustments in our economy, and
monetary policy thus has given considerable
weight to helping such rates move lower.
Some have suggested that the decline in inflation
permitted more aggressive moves, and, had the
downward trajectory of short-term interest rates
been a bit steeper, that aggregate demand would
have been appreciably stronger. I question that as
well. Basing this argument on the lower inflation
that has occurred is a non sequitur; the disinflation
very likely would not have occurred in the context
of an appreciably more stimulative policy, and such
a policy could have led to higher inflation in the next
few years. Moreover, such a policy would not have
dealt fundamentally with the very real imbalances in
our economy that needed to be resolved before
sustainable growth could resume. And it would
have run the risk of aborting the process of balance
sheet adjustment before it was completed. The
credibility of noninflationary policies would have
been strained, and longer-term interest rates likely
would be higher, thereby inhibiting the restructuring
of balance sheets and reducing the odds on sustainable growth.
Recent evidence suggests that our approach to
monetary policy in recent years has been appropriate and productive. Even by last July, when I
presented our midyear report to the Congress,
some straws in the wind suggested that the easing
of monetary policy to that date and the various
financial adjustments under way in the economy
were proving successful in paving the way for
better economic performance. Households and
businesses appeared to have made significant
progress in shoring up their balance sheets; considerable reductions in debt-servicing requirements had been achieved, equity had risen, and
liquidity was higher. In the financial sector, bank
profitability had improved, and a brisker flow of
bank earnings as well as issuance of new equity
shares and subordinated debt had bolstered capital ratios, which helped arrest the tightening of
lending terms and standards. The lower level of
interest rates, both short- and long-term, helped
to the Congress
295
limit the decline in real estate values and boost
the profitability of thrift institutions, as a byproduct reducing the losses that would have been
borne by the Resolution Trust Corporation and,
ultimately, the taxpayer.
It is now apparent that our July expectation of
a firmer trajectory of output has been borne out.
Gross domestic product (GDP) growth is estimated to have picked up to a 2>Vi percent rate
during the second half of 1992 after a more
modest increase in the first half. Some quickening in the pace of auto sales could be detected in
the late summer, and spending on other consumer durables strengthened as well. Singlefamily housing starts rebounded. Industrial orders, production, and shipments all rose. In
association with this stronger trend, payroll employment growth has picked up, and the unemployment rate has dropped back to 7.1 percent by
early this year—certainly too high but well below
the level at midyear. For 1992 as a whole, real
gross domestic product is currently estimated to
have increased at about a 3 percent rate. And
indications are that the expansion is continuing in
the early months of 1993 although perhaps at a
slightly reduced rate.
The news on inflation in 1992 likewise was
quite encouraging. The consumer price index
(CPI) rose just 3 percent in 1992, at the lower end
of the central tendency of our July projections.
Excluding volatile food and energy prices, inflation last year was the lowest in two decades.
Although the January CPI was surprisingly high,
judging from survey evidence and the behavior of
long-term interest rates, inflation expectations
appear to be gradually diminishing, as market
participants gain more confidence that inflation is
being contained.
MONEY
AND CREDIT
IN
1992
These favorable outcomes occurred despite slow
growth of the money and credit aggregates. The
Federal Open Market Committee (FOMC) had
established ranges of 2Vi to 6V2 percent for M2, 1
to 5 percent for M3, and 4Vi to 8V2 percent for
domestic nonfinancial sector debt. Over the year,
M2 actually rose 2 percent, M3 rose Yi percent,
and debt 4YI percent. Thus, both of the monetary
aggregates finished the year about Vi percentage
296
Federal Reserve Bulletin • April 1993
point below their ranges and debt just at its lower
bound.
Interpreting this slow growth was one of the
major challenges the Federal Reserve faced last
year. You may recall that, in establishing the
ranges in February and reviewing them in July,
the committee took note of the substantial uncertainties regarding the relationships between income and money in 1992. Although the velocity
of the broad monetary aggregates—the ratio of
nominal GDP to the quantity of money—had not
changed much in 1991, that result itself was
surprising. In the past, when market interest
rates declined, as they had in 1991, savers shifted
funds into M2 because deposit rates usually did
not fall as much as market rates, and this produced a decline in velocity in contrast to what
occurred in 1991. As we moved into 1992, there
appeared to be an appreciable likelihood that
unusual weakness in M2 growth relative to
spending would continue. But, in the absence of
convincing evidence for increases in velocity, the
FOMC elected to leave the ranges unchanged
from the previous year and noted that it would
need to be flexible in assessing the implications
of monetary growth relative to the ranges.
In the event, nominal GDP was even stronger
relative to the broad aggregates in 1992 than
seemed likely when their ranges were established. Income increased 3V2 percent faster than
M2 over the year and 43A percent faster than M3.
The unusual nature of these increases in velocity
can be illustrated by noting that before 1992 the
velocity of M3 had risen more than 3 percent in a
year only once; the historical increases in M2
velocity comparable with last year's occurred
solely in the context of sizable increases in
market interest rates in contrast to last year's
declines.
What accounts for this unusual behavior? Why
is it that our financial system was able to support
5V2 percent growth in nominal GDP with only 2
percent growth in M2 and Vi percent growth in
M3? We cannot be entirely certain we have all
the answers, but certain elements of our evolving
financial picture clearly have played a major role.
The most important element perhaps was that
savers believed they could earn considerably
more on their funds if they were invested in
something other than the deposits and money
market mutual funds that make up M2. The
unprecedented steepness of the yield curve was
one factor contributing to the apparent rate disadvantage of M2 assets. The high level of longterm yields relative to shorter-term rates—rates
on deposits, in particular—has attracted funds
from bank and thrift deposits into alternative,
longer-term investments. For example, bond and
stock mutual funds, which are not included in our
standard monetary measures, flourished in 1992.
Assets in those funds, excluding institutional
holdings and Individual Retirement Accounts
(IRAs) and Keogh accounts, increased $125 billion. In the absence of such growth, a sizable
proportion of the additional shares doubtless
would have resided in deposits. Shifts from deposits to mutual funds have been abetted by the
spread of facilities in banks and thrift institutions
to sell mutual funds directly to their customers.
In addition, the high relative cost of consumer
debt, which has resulted partly from the elimination of the tax deductibility of consumer interest
expenses, no doubt has prompted households to
use funds that otherwise would be held in M2 to
pay off, or avoid taking on, consumer debt.
Mortgage interest rates also are high, compared
with interest rates on deposits, reflecting the
steep yield curve. This relationship has led some
households to repay mortgage debt with funds
that might otherwise be held in deposits.
Of course, if banks and thrift institutions had
been expanding their loan portfolios, they would
have had to bid more vigorously for deposits. But
several developments damped growth of bank
and thrift credit. Consequently depositories have
been prompt to reduce rates on deposits. In the
business sector, the higher levels of stock and
bond prices have encouraged many corporations
to pay down bank debt with the proceeds of a
large volume of bond and stock offerings. More
generally, the attitudes of households and firms
toward debt and leverage appear to have changed
considerably in recent years, perhaps, in part,
mirroring revised expectations about prospects
for inflation to ease debt burdens or reward
leverage.
The supplies of credit by depositories also
have been constrained. Incentives to lend have
been damped by market and regulatory pressures
for depository institutions to increase capital
Statements
ratios as well as by other factors raising their
costs of intermediating credit, such as higher
deposit insurance premiums, rising regulatory
costs, and more stringent supervisory oversight.
As a result, banking and thrift institutions have
sought to limit or to actually shrink balance sheet
growth.
Together, these supply and demand factors
have accelerated a long-standing process of rechannelling credit flows outside depository institutions. With reduced needs to fund asset
growth, banks and thrift institutions have bid less
vigorously for deposits as can be observed in the
very low returns on such instruments. These low
yields, as I have noted, provide incentives for
depositors to redirect cash toward alternative
investments and repayment of debt. In addition,
the proceeds of banking firms' offerings of equity
shares and subordinated debt have substituted
for banks' deposit funding and have thus reduced
monetary growth.
The adjustments in our depository sector have
significant implications for the overall operation
of the financial system and the performance of
the economy. Historically, banking institutions
have played a critical role in financing small- and
medium-sized businesses—firms that in the past
have been a key source of growth in the economy. Some of the factors leading to the relative
shrinkage of our banking industry, by limiting the
availability of credit to smaller firms, have restrained aggregate demand and thus have significantly hindered the economic expansion.
Nevertheless, the financial markets have
shown a remarkable capacity to adjust to the
contraction of the depository sector in a way that
mutes the impact on the overall economy. For
instance, despite a massive contraction in the
thrift industry since 1988, housing credit has
remained readily available and, in fact, relatively
inexpensive as a result of the further exploitation
of financial innovations such as mortgage-related
securities. Similarly, open market sources of
funds have flourished in recent years and have
allowed many firms to tap the stock or bond
markets to restructure their balance sheets.
As a result of such adaptations, the relationship between money and the economy may be
undergoing a significant transformation. In contrast to earlier work that suggested a stable
to the Congress
297
long-run relationship between M2 growth and
inflation, recent developments may indicate that
the velocities of the broader monetary aggregates
are moving toward higher trend levels. It may be
that the opening of securities markets to increasing numbers of borrowers and lenders—in part
through securitization of loans by depositories as
well as their offerings of mutual funds to deposit
customers—is permanently shunting financing
around depository institutions. If this is true, the
liabilities of these institutions will not be as good
a gauge of financial conditions as they once were.
This is not to argue that money growth can be
ignored in formulating monetary policy. The
Federal Reserve in 1992 paid substantial attention to developments in the money supply, and
we will continue to do so in 1993 and beyond.
Selecting ranges for monetary growth over the
coming year consistent with desired economic
performance, however, is especially difficult
when the relationship between money and income has become uncertain. Recent experience
suggests that, at least for a time, measuring
money against such ranges may lead to erroneous conclusions regarding the stance of monetary
policy.
The shortfall of the aggregates from their
ranges and suggestions that the Federal Reserve
should have been more vigorous in preventing
the shortfall have raised the general question of
the role of the ranges in conducting monetary
policy. The annual ranges for money and credit
growth can be useful in communicating to the
Congress and the public the Federal Reserve's
plans for monetary policy and their relationship
to the country's broader economic objectives.
Lowering the ranges during the 1980s, for instance, served as an important signal of the
anti-inflationary commitment of the Federal Reserve.
In some circumstances, the monetary aggregates can also be valuable by serving as indicators of the thrust of monetary policy. Deviations
of money growth from expectations may well
signal that policy is not having its intended effect
and that adjustments should be considered. Over
much of our nation's financial history several
measures of the money supply had reasonably
predictable relationships with aggregate income.
The period of rapid financial change had not yet
298
Federal Reserve Bulletin • April 1993
begun, and measuring money was more straightforward. Recognition of these predictable money-income relationships was the basis for the
Federal Reserve's increased emphasis on money
in the 1970s and the subsequent HumphreyHawkins legislation. The Congress passed the
Monetary Control Act at the beginning of the
1980s, and the Federal Reserve adopted procedures to provide greater assurance that targets
for Ml could be achieved.
But, even by the mid-1970s, the relationship of
the monetary aggregates to the economy was
becoming more complex. Financial innovation
and deregulation significantly altered the spectrum of available transaction and saving instruments. In the mid-1970s, advances in corporate
cash management techniques, such as sweep
accounts, reduced the need for business demand
deposit balances for any given level of transactions. And in the early 1980s, the widespread
availability of negotiable order of withdrawal
(NOW) accounts—transaction accounts that pay
interest—led households to treat their checking
accounts to some degree as savings instruments
and to shift funds in and out of such accounts
mainly on the basis of interest rate relationships.
Such developments primarily affected Ml. The
FOMC made repeated adjustments to its Ml
range to take account of changing velocity and
soon after the mid-1980s had eliminated its target
for this aggregate. Many of the shifts were captured within the broader aggregates, but adjustments to their ranges also had to be made from
time to time.
In the past few years, the broader aggregates,
in turn, have become much less reliable guides
for the conduct of policy. Eventually, these
measures may resume a more stable relationship
with the economy, or experience may suggest
useful new definitions for the aggregates. We are
currently investigating several possible alternative measures. But, in the meanwhile, the FOMC
necessarily has given less weight to monetary
aggregates in the conduct of policy and has relied
on a broad range of indicators of future financial
and economic developments and price pressures.
And, in particular, the FOMC judged in 1992 that
more determined efforts to push the aggregates
into their ranges would not have been consistent
with achieving the nation's longer-term objective
of maximum sustainable economic growth. Indeed, had there been an attempt to force M2 and
M3 toward the middle of their ranges, intermediate- and long-term rates might have been significantly higher by now than they are currently,
threatening the durability of the expansion.
This use of a broad range of indicators is
appropriate because achievement of the ranges
for growth of particular measures of money and
credit is not, and should not be, the objective of
monetary policy. Rather, the ranges are a means
to an end. The Humphrey-Hawkins Act, incorporating this view, does not require that the
ranges be attained in circumstances in which
doing so would not be consistent with achieving
the more fundamental economic objectives.
RANGES
1993
FOR MONEY
AND CREDIT
FOR
In establishing ranges for the monetary and
credit aggregates in the current year, the FOMC
took into account the likelihood that many of the
factors that have acted in recent years to restrain
money and credit growth relative to income
would continue, although perhaps with somewhat diminishing intensity. The yield curve could
well remain steep, absent very marked progress
in deficit reduction or a distinct break in longterm inflation expectations, which would tend to
lower long-term interest rates. Banking and thrift
institutions are unlikely to step up the pace of
balance sheet expansion sharply, and the large
volume of securities they have accumulated in
recent years will allow them to fund a pickup in
loan growth without as marked an acceleration of
deposit growth. And households and firms are
expected to continue to be relatively cautious in
using credit. Other factors may add to tendencies
for money to expand more slowly than income.
For example, a resumption of resolutions by the
Resolution Trust Corporation, which has been
inactive for nearly a year, by shifting assets from
thrift institutions onto government balance
sheets, would tend to substitute federal liabilities
for those of thrift institutions, reducing monetary
growth.
Reflecting the expectation that sluggish monetary growth will be associated with sustainable
Statements
expansion in the economy, the Federal Open
Market Committee has elected to reduce the
ranges for M2 and M3 for 1993 by Vi of 1
percentage point. For M2, a range of 2 percent to
6 percent, measured as usual on a fourth-quarterto-fourth-quarter basis, was established. A range
of Vi percent to AVi percent was specified for M3.
As I have indicated in correspondence with
members of the Congress, the FOMC does not
view the reductions in the monetary ranges as
signaling a change in the stance of monetary
policy. And most emphatically, these reductions
do not indicate a desire on the part of the Federal
Reserve to thwart the expansion. The Federal
Reserve, to the contrary, is endeavoring to conduct monetary policy in a way that promotes
sustainable economic expansion. The lowering of
these ranges does not imply any change in our
fundamental objectives. The necessity for a reduction in the monetary ranges at this time is
wholly technical in nature and is a result of the
forces that are altering the money-income relationship. Consistent with this view, the FOMC
decided to maintain a range of AVi percent to 8V2
percent for domestic nonfinancial sector debt, an
aggregate whose relationship with nominal GDP
has been less distorted in the past few years than
that of the monetary aggregates.
Significant uncertainties regarding the appropriate ranges for monetary growth remain. Although we have made some progress in understanding the behavior of the money and credit
aggregates over the past year, to a degree this
increased understanding has reinforced our appreciation of the complexity—and limited predictability—of the economic and financial relationships that affect money growth and its
linkages with the economy.
These uncertainties imply that the relationship
between money and GDP growth could turn out
significantly different from what currently seems
likely. Accordingly, the Federal Reserve again
will interpret the growth of money and credit
relative to their ranges in the context of other
indicators of the financial system, the performance of the economy, and prices. Should recent
trends affecting the money-income relationship
continue, growth of the monetary aggregates in
the lower portions of their ranges might be expected. On the other hand, the upper ends of the
to the Congress
299
ranges provide ample room for adequate monetary growth should demands for money relative
to income come more into line with historical
patterns. In any event, until the relationship
between the monetary aggregates and spending
returns to a more reliable basis, flexibility in the
interpretation of the aggregates relative to their
new ranges is required.
ECONOMIC
OUTLOOK
FOR
1993
Several of the forces affecting relationships between money and income also complicate the
task of assessing the economic outlook itself. For
example, the prospects for an easing of supply
restrictions on credit from banks and other intermediaries are difficult to assess, but any major
change in this situation could have important
implications for the economy. Although banking
institutions have become much more healthy and
are well positioned to meet an increase in loan
demand, very few signals of any easing of terms
or standards on business loans have been apparent to date.
In addition, other factors that hobbled the
economy in the past several years are likely to
persist in 1993, although perhaps with diminished
intensity. Households and business are likely to
remain cautious in using credit—a healthy development for sustained growth but potentially continuing to constrain spending in the short run.
Sizable imbalances in commercial real estate
remain, and a significant rebound in this sector is
doubtless several years off. Government spending at the federal, state, and local levels is likely
to remain constrained. Several foreign nations
are confronting slow economic growth or recession, which is likely to hold back demand for our
exports. And it is apparent from recent announcements by several large firms that corporate restructuring, involving significant cutbacks
in operations and employment, is continuing.
Another very considerable uncertainty in the
economic outlook is fiscal policy. The Congress
and the Administration are considering short-run
fiscal stimulus and steps to reduce the deficit in
the long run. Obviously, government spending
and taxes could be affected by such measures in
such a way as to influence directly the overall
300
Federal Reserve Bulletin • April 1993
economy this year, although the bulk of any
effect likely would occur in succeeding years. In
addition, depending on the timing, dimensions,
and credibility of any fiscal measures, market
interest rates and stock prices could be affected
appreciably, with implications for private expenditures.
While uncertainties thus remain, the economy
appears to have entered the year with noticeable
momentum to spending. In addition, inventories
are at relatively low levels, and factory orders
have been rising. Consumer confidence has recovered, and spending on durables and homes
appears to be moving at a brisker pace. Recent
surveys suggest an appreciable increase in business investment this year.
Against this background, members of the
Board and the Federal Reserve Bank presidents
project a further gain in economic activity in
1993. The central tendency of our projections is
for real GDP to increase at a 3 to 3V4 percent rate
this year. Such an increase should result in a
decline in the unemployment rate, which would
be expected to finish 1993 at a level of 63A to 7
percent. Inflation is expected to remain low next
year.
Containing, and over time eliminating, inflation is a key element in a strategy to foster
maximum sustainable long-run growth of the
economy. As I have often emphasized, monetary
policy, by achieving and maintaining price stability, can foster a stable economic and financial
environment that is conducive to private economic planning, savings, investment, and economic growth. It is no accident that the periods
in our nation's history of low inflation were the
times when the economy experienced high rates
of private saving, investment, and hence productivity and economic growth. When inflation is
low, endeavors to boost profit margins necessarily involve reductions in cost rather than increasing prices; thus, low rates of inflation tend to be
associated with relatively high productivity
growth. Conversely, periods of high and rising
inflation here and abroad have been characterized by financial instability, an excessive amount
of resources devoted to protecting financial
wealth rather than production of goods and services, and substandard economic growth.
Over the past decade or so, our nation has
made very substantial progress toward the
achievement of price stability, reversing a dangerous upward trend of inflation and inflationary
expectations. Last year's VA percent increase in
the core CPI was the lowest in twenty years and
far lower than the debilitating double-digit rates
at the close of the 1970s. As I have indicated to
this committee on numerous occasions, price
stability does not require that measured inflation
literally be zero but rather is achieved when
inflation is low enough that changes in the general price level are insignificant for economic and
financial planning. At current inflation rates, we
are thus quite close to attaining this goal.
Going forward, the strategy of monetary policy
will be to provide sufficient liquidity to support
the economic expansion while containing inflationary pressures. The existing slack implies that
the economy can grow more rapidly than potential GDP for a time, permitting further reductions
in the unemployment rate even while inflation is
contained.
Implementing this strategy, however, will be
challenging. Judging the level of potential output
and its rate of growth is difficult. Recent increases in productivity have been unusually
strong, given the moderate pace of economic
growth during much of the expansion, and it is
unclear whether these rates of productivity gain
can be continued. In addition, the monetary
aggregates do not appear to be giving reliable
indications of economic developments and price
pressures, and numerous other uncertainties
cloud the particular features of the outlook.
Monetary policy will have to adjust to unexpected developments as they occur, taking into
account a variety of economic and financial indicators.
The contributions that monetary policy can
make to maximum sustainable economic growth
would be complemented by a fiscal policy focused on long-term deficit reduction. In the current environment, reducing the federal government's drain on scarce savings would take
pressure off long-term interest rates, facilitating
the readjustment of balance sheets and helping to
promote capital formation and more robust economic growth over the longer term.
The Federal Reserve, in formulating monetary
policy, certainly needs to take into account fiscal
Statements
policy developments. Of course, it is not possible
for the Federal Reserve to specify in advance
what actions might be taken in the presence of
particular fiscal policy strategies. Clearly, the
course of interest rates and financial market
conditions more generally will depend importantly on a host of forces—in addition to fiscal
policy—affecting the economy and prices. And
the effects of fiscal policy on the economy, in
turn, will depend importantly on the credibility of
long-run deficit reduction and the market reaction to any package. The lower long-term interest
rates that resulted from a credible deficit-reduction plan would themselves have an immediate
positive effect on the economy. In any event, I
can assure you of our shared goal for the American economy—the greatest possible increase in
living standards for our citizens over time.
The past several years have been difficult, and
the economy is still adjusting to structural imbalances that have built up over recent decades. The
near-term outlook, as always, is somewhat uncertain. But I believe that in many respects the
inevitable painful adjustments have laid the foundation for better performance of our economy
over the longer term. Financial positions have
been strengthened; inflation is low and should
remain subdued; labor productivity is increasing;
resources are being shifted from national defense
to investment and consumption. Nevertheless,
the challenges ahead for policymakers will be
considerable. While continuing to be supportive
of the expansion of our economy over coming
quarters, the monetary and fiscal authorities
alike need to structure our policies to enable our
economy to reach its full potential over time.
SUPPLEMENTAL
STATEMENT
The President is to be commended for placing on
the table for active debate the issue of our
burgeoning structural budget deficit, which will
increasingly threaten the stability of our economic system if we continue to fail to address it.
Leaving aside the specific details, it is a serious
proposal; its baseline economic assumptions are
plausible; and it is a detailed program-by-program set of recommendations as distinct from
general goals.
to the Congress
301
It is obviously very difficult to get a consensus
on deficit cutting. If it were easy, it would have
been done long ago. The debate among the
nation's elected representatives will be profoundly political, in the best sense of the word.
As the nation's central bankers, our primary and
professional concern is soon having the structural deficit sharply reduced.
Time is no longer on our side. After declining
through 1996, the current services deficit starts
on an inexorable upward path again. The deficit
and the mounting federal debt as a percentage of
gross domestic product are corrosive forces
slowly undermining the vitality of our free market system.
If we fail to resolve our structural deficit at this
time, the next opportunity will doubtless confront us with still more difficult choices. How the
deficit is reduced is very important; that it be
done, is crucial.
In this regard, certain issues that I have discussed with this committee and others of the
Congress throughout the years are worth repeating.
First, with current services outlays from 1997
and beyond rising faster than the tax base, stabilizing the deficit as a percentage of nominal gross
domestic product, not to mention a reduction,
would require ever-increasing tax rates. Hence,
there is no alternative to achieving much slower
growth of outlays. This implies not only the need
to make cuts now but also to control future
spending impulses. I trust that the President's
endeavor to reign in medical costs will contribute
importantly to this goal.
Second, the hope that we can possibly inflate
or grow our way out of the structural deficit is
fanciful. Certainly greater inflation is not the
answer; aside from its serious debilitating effects
on our economic system, higher inflation, given
the explicit and implicit indexing of receipts and
expenditures, would not reduce the deficit. As I
indicated in testimony last month to the Joint
Economic Committee, productivity growth may
be moving into a faster long-term channel and
may be boosting real growth over time. But even
if that turns out to be the case, it would not by
itself resolve the basic long-term imbalance in
our budgetary accounts.
Finally, I find misplaced the fear that the
302
Federal Reserve Bulletin • April 1993
deficit reduction can be overdone and create a
degree of "fiscal drag" that would significantly
harm the economy. In our current political environment, to presume that the Congress and the
President would jointly cut too much from the
deficit too soon is in the words of my predecessor
"nothing I would lose sleep over."
The Federal Reserve recognizes that it has an
important role to play in this regard. In formulating monetary policy, we certainly need to take
into account fiscal policy developments. But it is
not possible for the Federal Reserve to specify in
advance what actions might be taken in the
presence of particular fiscal policy strategies.
Clearly, the course of interest rates and financial
market conditions more generally will depend
importantly on a host of forces—in addition to
fiscal policy—affecting the economy and prices.
In any event, I can assure you of our shared goal
for the American economy—the greatest possible increase in living standards for our citizens
over time.
•
Chairman Greenspan presented identical testimony before the Subcommittee on Economic Growth
and Credit Formation of the House Committee on Banking, Finance and Urban Affairs,
February 23, 1993.
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 24, 1993
I very much appreciate the opportunity to meet
with you today, especially in view of the crucial
budgetary issues now before the Congress. As
you know, in the last few days I have given
detailed testimony on the conduct of monetary
policy in 1992 and our plans for 1993. Accordingly, I shall be rather general today in discussing
monetary policy, focusing instead on the economic outlook and the relationship between fiscal policy and monetary policy.
Our economy recently has made considerable
progress in overcoming structural imbalances
and improving the prospects for sustainable longrun growth. The Federal Reserve has contributed
to this progress by easing the stance of monetary
policy in a measured fashion and thus helping to
encourage appreciable declines in long-term interest rates. As I will be discussing, considerable
imbalances in the economy remain, and the uncertainties are sizable. But, on balance, the prospects are reasonably good for continued economic growth and declines in unemployment in
1993. We at the Federal Reserve intend to continue to conduct policy in such a way as to
support the economic expansion while contain
ing inflation and making further progress toward
price stability. This policy approach should help
promote sustainable long-term growth of our
economy.
Fiscal policy similarly can contribute to sustainable and robust economic growth. The President's budget proposals have prompted anticipation in the markets that there will be genuine
progress in the reduction of federal budget deficits. This anticipation has been the most important factor behind the very significant recent
declines in intermediate- and long-term interest
rates. These lower rates are a striking reminder
that reducing federal deficits will free up private
savings, reduce the cost of credit to private
borrowers, and encourage accumulation of capital that will help enhance growth in the future.
To provide some background for discussion of
future monetary and fiscal policies, I would first
like to review recent economic developments
and the conduct of monetary policy. I will then
turn to the economic outlook and our monetary
policy plans for 1993 and conclude with some
comments on fiscal policy and its relationship
with monetary policy.
RECENT
ECONOMIC
DEVELOPMENTS
Our economy has experienced considerable impediments to growth in the past few years. In my
Statements
view, adjustments to certain imbalances and
structural changes in the economy have been
important causes of the sluggish performance of
the economy until recently.
As I have often noted, balance sheet adjustments have been a key element. By the late
1980s, balance sheets had been weakened considerably by the large runup in debt over the
previous seven years or so. But, in addition,
actual declines in asset prices—particularly in
commercial real estate prices but, in many locales, in housing prices as well—unambiguously
signaled a serious imbalance between demands
and supplies for certain structures. These declines, in turn, represented a significant reduction in the wealth of many firms and households.
These entities, and many others who experienced difficulties servicing debt, typically responded by restraining expenditures on real
goods and services, reducing the forward momentum of the economy.
The difficulties of borrowers and declines in
real estate values spilled over onto the financial
institutions that financed such purchases. With
loan losses mounting and under pressure from
the markets and regulators to improve their capital ratios, those institutions tightened terms and
standards on many types of loans. The reduced
availability of credit limited the ability of certain
smaller and medium-sized firms to expand and
contributed to the weakening of the economy.
After the invasion of Kuwait and the associated jump in oil prices and drop in confidence, a
recession began. From peak to trough, real gross
domestic product declined 214 percent. Total
employment declined considerably, industrial
production fell, and capacity utilization dropped.
Although an economic recovery began in
spring 1991, it was rather anemic. Some of the
factors that had earlier weakened the economy
continued to weigh on aggregate demand, particularly efforts by businesses and households to
bring down debt burdens, the reduced availability of business credit, and the hangover in the
commercial real estate sector. In addition, state
and local governments, faced with a recessioninduced decline in revenues, retrenched. And
real federal defense purchases, after having
peaked in 1987, have moved down considerably,
depressing demand further. As a result, real
to the Congress
303
gross domestic product (GDP) expanded at only
a 1.6 percent average annual rate during the first
five quarters of the recovery. As real GDP
growth was below the expansion of the economy's potential to produce, unemployment continued to rise substantially.
More recently, however, the expansion has
shown somewhat more vigor. Real GDP rose at a
3V2 percent rate in the third quarter and is
currently estimated to have increased at a 33A
percent rate in the fourth quarter. And data that
have become available since this estimate was
prepared suggest that the fourth-quarter growth
could well be revised up substantially. Halfway
through the first quarter, we appear to be growing at a somewhat slower pace than in the second
half of last year.
The stronger pace of economic growth has
aided the employment picture somewhat. Although payroll employment fluctuated over 1992,
on balance it rose during the year for the first
time since 1989. Nevertheless, unemployment
remained a serious problem. The number of
unemployed persons rose considerably in the
first half of 1992, despite a moderate gain in GDP,
and the unemployment rate climbed to 73/4 percent by midyear. Over the second half of the
year, the number of unemployed persons declined appreciably, and the unemployment rate
moved down to 7.3 percent. In January, the rate
edged down further to 7.1 percent.
The modest gains in employment and the continuing high unemployment rate reflect, in part,
determined efforts by firms to limit costs and
boost productivity in an environment of intense
domestic and foreign competition. Many firms
have taken measures to boost profitability by
shrinking their work forces, closing down unprofitable units, and employing recent advances
in computing and communications technology
more effectively. As a result, labor productivity
has shown remarkable gains recently. For example, output per hour in the nonfarm business
sector surged 3 percent in 1992, the strongest
gain since 1975.
The substantial slack in labor markets and
improvements in productivity growth have contributed to downward pressure on the inflation
rate. The consumer price index rose just 3 percent in 1992, and excluding volatile food and
304
Federal Reserve Bulletin • April 1993
energy prices, the increase was the lowest in
twenty years. Inflation expectations, while lagging somewhat actual inflation developments,
have moved down gradually.
RECENT
MONETARY
POLICY
In the circumstances of hesitant economic
growth and downward pressures on inflation,
monetary policy in 1992 was directed at fostering
a more vigorous, but sustainable, rebound, consistent with progress toward price stability. The
Federal Reserve, extending a series of policy
moves that began in mid-1989, eased policy several times in 1992. We reduced the federal funds
rate a total of 1 percentage point by providing
additional bank reserves and by reducing the
discount rate. In addition, we again lowered
reserve requirements for depository institutions.
These actions helped intermediate- and longterm interest rates move lower. During 1992, the
yield on long-term Treasury bonds averaged
nearly Vi percentage point lower than in the
previous year. In the past few weeks, these
reductions have been extended, bringing the rate
on long-term Treasuries below 7 percent—the
lowest since the early 1970s.
The declines in intermediate- and long-term
interest rates have helped foster significant balance sheet restructuring by households and by
business firms. Low mortgage rates have encouraged many households to refinance existing
mortgage debt, and some have used the opportunity to tap into home equity to pay off consumer credit. Lower interest rates on mortgage
as well as consumer credit, combined with more
moderate growth of household debt, have resulted in a considerable reduction in household
debt service payments since their 1990-91 peak.
The lower levels of long-term interest rates also
have helped buoy housing prices as well as stock
prices. These factors may well have contributed
to the substantial acceleration in personal consumption expenditures over the second half of
1992.
In the business sector, balance sheet restructuring activity has been encouraged by the high
level of stock prices as well as by relatively low
long-term interest rates. Nonfinancial corpora
tions stepped up their issuance of equity shares
and bonds last year. These issues frequently
were used to pay down bank debt as well as
bonds carrying relatively high interest rates, and
thus they helped lengthen liability structures
while reducing the interest cost of debt. In the
nonfinancial business sector, net interest payments as a percentage of cash flow are estimated
to have reversed roughly two-thirds of the runup
that occurred during the previous economic expansion.
Financial institutions also strengthened their
financial positions. Commercial banks, for instance, considerably bolstered their risk-based
and total capital ratios. In addition, their liquidity
increased substantially as a result of their purchases of a large volume of Treasury and mortgage-backed securities. With their financial position more secure and the economy firming, banks
no longer tightened business lending terms and
standards in 1992; however, very little, if any,
easing of lending conditions occurred either, and
credit remained somewhat difficult for smaller
firms to obtain.
The less accommodative stance of banks as
well as the reluctance of firms and households to
take on debt and the focus of borrowing on
long-term markets have resulted in a rechanneling of credit flows outside depository institutions. This rechanneling, in turn, has markedly
affected the behavior of the monetary aggregates
in relation to income. Both M2 and M3 expanded
very sluggishly in 1992, leaving both aggregates
Vi percentage point below the ranges set by the
Federal Open Market Committee. Domestic nonfinancial sector debt, by contrast, expanded appreciably more quickly, AYi percent, leaving this
aggregate at the bottom of its range.
The relatively slow growth of the broad monetary aggregates in 1992 was associated with
much brisker growth of nominal income; that is,
velocity increased considerably. Several factors
appeared to contribute to the strength in income
relative to money growth. The steep yield curve
encouraged households to shift funds from deposits into longer-term instruments, especially
bond and stock mutual funds. In addition, interest rate incentives encouraged some households
to use deposit balances to pay off or avoid taking
on additional debt. Much of business and house-
Statements
hold borrowing was funded in the open markets,
either through direct issuance of securities, in the
case of businesses, or through issuance by banks
and thrift institutions of securities backed by
mortgage and consumer debt. Depository institutions generally sought to restrain growth in
their balance sheets as a result of market and
regulatory factors. Although some small businesses continued to experience unusual difficulties in obtaining credit, most other sectors remained able to tap credit; thus the restraint on
credit by banking institutions had only a modest
negative impact on the overall economy. The net
impact of these developments is that the economy was able to grow at a fairly good pace,
particularly in the second half of the year, despite
very slow money growth.
ECONOMIC OUTLOOK AND
POLICY PLANS FOR 1993
MONETARY
Many of the factors that contributed to the
unusual strength of velocity in 1992 appear likely
to continue this year. Accordingly, the Federal
Open Market Committee has decided to lower
the target ranges for monetary aggregates onehalf percentage point. The new range for M2 is 2
percent to 6 percent, and that for M3 is Vz percent
to 4V2 percent. The lower ranges do not indicate
a change in the Federal Reserve's monetary
policy. Rather, they are a result of technical
factors that are altering the money-income relationship. This view is reflected in the FOMC's
decision to leave the range for domestic nonfinancial sector debt unchanged at 4V2 percent to
8V2 percent.
Although we have made some progress in
understanding the factors that recently have affected money growth, considerable uncertainties
regarding the money-income relationship remain. The upper ends of the monetary ranges
provide substantial room for more rapid money
growth should velocity tend to return to previous
patterns, while growth in the lower parts of the
ranges could be appropriate should velocity continue to strengthen.
Some of the same uncertainties that affect the
money-income relationship also affect the outlook for income growth itself, including uncer
to the Congress
305
tainties regarding credit availability and attitudes
of borrowers toward credit. The effects of these
factors in limiting economic growth may be
slowly ebbing. As I noted earlier, households,
firms, and financial institutions have made considerable progress in cleaning up their balance
sheets, which should help to reduce impediments
to the flow of credit. Still, borrowers and lenders
alike in the past few years have become a good
deal more cautious about the use of credit; this
development, while restraining aggregate demand in the short run, is likely to contribute to
the sustainability of the expansion over the
longer term.
A rebound in commercial real estate construction is still several years off. However, there are
some signs that prices of commercial real estate
are bottoming in certain areas. If this proves to
be the case, it could bode well for borrowing on
the basis of real estate collateral. Loan officers
are likely to remain chary about extending such
loans as long as declining prices and illiquid real
estate markets make it difficult to assess the
future value of collateral. But as uncertainties
about loan losses and capital positions ebb,
banks are likely to become gradually more willing to extend credit generally.
The Federal Reserve is working closely with
other banking regulators to ensure that undue
impediments to credit flows are removed. In
addition, we continue to monitor indicators of
the availability of credit and take them into
account in formulating monetary policy. They
have been an important factor behind our measures to reduce short-term interest rates in the
past few years, and our reductions in reserve
requirements were intended to reduce depository
institutions' costs and foster a better flow of
credit.
The improvements in household balance
sheets probably supported the gains in consumption spending in the second half of 1992. Declines
in the unemployment rate, by fostering a sense of
a stabilizing jobs situation, may also have played
a role. Going forward, the employment picture
will probably continue to be an important factor
governing the pace of consumption spending. It
is possible that the recent strong gains in productivity will be extended and may damp employment growth temporarily. But productivity
306
Federal Reserve Bulletin • April 1993
growth will boost real wages over time and
contribute to rising living standards of our citizens.
Certain other factors will probably continue to
restrain growth of the economy in 1993. These
factors include the budgetary problems of state
and local governments, the downsizing of the
defense sector, and slow growth or recession in
the economies of some of our major trading
partners. Those regions of the United States that
have particular concentrations of defense-related
employment may continue to experience soft
conditions during 1993.
Impediments to growth thus remain, but they
have diminished significantly. Against this background, the central tendency of the governors'
and Federal Reserve Bank presidents' forecasts
is for real GDP to expand 3 percent to 3!/4 percent
in 1993. This growth would be expected to be
associated with some decline in the unemployment rate. Inflation is expected to remain well
contained.
Looking ahead, the strategy of monetary policy will be to provide sufficient liquidity to support the economic expansion while containing
inflationary pressures. The existing slack implies
that the economy can grow for a time more
rapidly than potential GDP, permitting further
reductions in the unemployment rate even while
further progress toward price stability is made.
As I have often emphasized, monetary policy, by
achieving and maintaining price stability, can
foster a stable economic and financial environment that is conducive to private economic planning, savings, investment, productivity, and economic growth. In light of the uncertainties in the
economic outlook and in the relationship between the monetary aggregates and the economy, the Federal Reserve will need to continue
to carefully monitor a variety of economic and
financial indicators in conducting monetary policy this year and to make adjustments in our
stance as necessary.
THE ROLE
OF FISCAL
POLICY
Fiscal policy, also, can make an important contribution toward enhancing the ability of our
economy to produce rising living standards. The
case for bringing down the structural budget
deficit is compelling. The deficit has for some
time been eroding the foundations of our economic strength. Pressures on credit markets resulting from large federal deficits have led to high
real interest rates, which, in turn, have curtailed
investment in productive plant and equipment
that would have boosted growth in real wages
and output. The federal budget deficits are of
particular concern because they have occurred in
the context of very low private saving and have
contributed to large current account deficits.
Substantial reductions in structural budget deficits, conversely, would confer appreciable benefits on the economy. The absorption of private
savings by the government would be reduced.
Concerns about the government's future claim
on real resources would be lowered, and inflation
expectations might well decline. As a result,
nominal and real intermediate- and long-term
interest rates would be substantially lower than
otherwise. The lower level of real interest rates
would encourage capital formation in the private
sector—particularly investment in longer-lived
capital—and would boost productivity growth
and real incomes.
The President is to be commended for placing
on the table a serious proposal for the reduction
of structural budgetary deficits. Discussion about
this proposal, and alternatives to it, has already
begun in the Congress and in public forums
across the United States. The debate will be
intensely political in the best sense of the word,
and identifying what is in the long-term interest
of the country will not be easy. But reducing the
structural deficit is crucial. And action must be
taken now. Postponing action would only extend
the pattern of sluggish growth of the capital stock
and, with incomes and living standards lagging,
would ultimately make it even more difficult to
engage in the programmatic actions that are
necessary.
I have recently articulated certain key points
that I believe are useful to keep in mind in
evaluating alternative fiscal approaches. Let me
repeat them.
First, current services outlays under present
law rise faster than the tax base and would thus
require ever-increasing tax rates, simply to keep
the budget deficit as a percentage of nominal
Statements
to the Congress
307
income from beginning to rise again after the mid
1990s. Such tax rate increases could stifle incentives and dampen economic growth and, incidentally, tax revenues. Hence, there is no alternative
to achieving much slower growth of health-related and other outlays.
Second, we can no longer afford to hope to
inflate or grow our way out of structural budget
deficits. Given the explicit and implicit indexing
of receipts and expenditures, higher inflation
would not reduce the deficit, and even under
optimistic assumptions regarding productivity
growth, budget deficits would remain massive.
Finally, I find misplaced the fear that deficit
reduction would be overdone and create an undesirable degree of "fiscal drag." It seems to me
highly unlikely that in the current political environment the Congress and the Administration
would cut too much too soon from the deficit.
Moreover, given the lags in the impact of
changes in fiscal programs on the economy, a
program oriented toward fiscal consolidation is
unlikely to have significant restraining effects on
the economy in the near term. Indeed, the President's proposal would likely involve a modest
degree of fiscal stimulus over the first year.
At this pivotal moment, I should emphasize
that the Federal Reserve shares with the Congress and the Administration the goal of maximum sustainable economic growth. I assure you
that the Federal Reserve will do its part to
support your efforts. We at the Federal Reserve
intend to continue to foster the economic expansion in the near term while using the tools at our
disposal to promote a financial environment conducive to sustainable long-term growth. Fiscal
policymakers, in turn, by taking difficult but
necessary measures to reduce the structural deficit now, can enhance the growth of the economy
and promote rising living standards for the American people for years to come.
•
Statement by John P. LaWare, Chairman, Federal Financial Institutions Examination Council,
and Member, Board of Governors of the Federal
Reserve System, before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate,
February 24, 1993
the Board is committed to vigorously enforcing
fair lending laws.
As chairman of the Federal Financial Institutions Examination Council (FFIEC), I was asked
to focus my testimony on current efforts to
enforce fair lending laws and the steps being
taken by member agencies to strengthen them. I
am pleased to do so. However, as my recent
letter to Chairman Riegle indicated, I will be
unable to answer detailed questions about the
fair lending enforcement programs of the other
federal banking agencies. Each of the other
FFIEC agencies (the Office of the Controller of
the Currency (OCC), the Office of Thrift Supervision (OTS), the National Credit Union Administration (NCUA), and the Federal Deposit Insurance Corporation (FDIC)) is represented here
today, and they will respond to any questions
you may have about their specific programs.
Before I move on to a discussion of the efforts
of the FFIEC, let me give you a sense of some of
the actions the Board has undertaken. First, in
consultation with the other FFIEC agencies, we
have implemented a system that increases our
ability to analyze the Home Mortgage Disclosure
Act (HMDA) data for use in our fair lending and
I appreciate the opportunity to speak today to
this committee about concerns related to credit
discrimination in mortgage lending.
This hearing is very timely given the troubling
questions that have been raised about the fairness of the mortgage lending process. Parity in
how applications are considered, without regard
to race, sex, or other prohibited bases, is absolutely essential in the United States. Let no one
have any misunderstanding on the point. Racial
discrimination, no matter how subtle and
whether intended or not, cannot be tolerated.
Simply stated, excluding any segment of our
society from fundamental economic opportunities, such as home ownership and equal access to
credit, is morally repugnant and illegal. Moreover, it robs the lending industry and our economy of growth potential. I can assure you that
308
Federal Reserve Bulletin • April 1993
Community Reinvestment Act (CRA) enforcement efforts. Second, we are working with the
Department of Justice to target certain state
member banks for fair lending examinations
where HMD A data suggest disparate treatment
of minority mortgage loan applicants. Third, we
have referred several consumer complaints alleging violations of the Fair Housing Act to the
Department of Housing and Urban Development
(HUD) and recently referred a matter to the
Department of Justice. Fourth, we have taken
formal enforcement actions, including assessment of civil money penalties, to enforce compliance with consumer protection laws, including
the prohibitions against credit discrimination
based on marital status, age, and race found in
the fair lending laws. Fifth, the Board has denied
three applications in the past two years from
financial institutions, primarily because of poor
CRA performance. In each case, significant evidence in the record indicated that these banks
were not adequately serving the credit needs of
their communities. These actions demonstrate, I
believe, the strong commitment the Federal Reserve has made to enforce fair lending laws.
RECENT
DEVELOPMENTS
Some recent developments have changed the
nature of the discussion regarding the issue of
credit discrimination. The debate has moved
from a discussion about whether unequal treatment is occurring to how to strengthen enforcement of fair lending laws. One of these developments was a study that the Boston Reserve Bank
completed. Another event was a settlement between the Department of Justice and an Atlanta
savings and loan association that resulted from a
fair lending investigation by the department. In
each of these cases, evidence was found of
disparate treatment in mortgage lending between
minorities and whites. This finding has increased
our understanding of this complex issue and will
provide a basis from which the Federal Reserve
and other agencies can better focus our efforts to
strengthen the enforcement of fair lending laws.
Boston Study. As I mentioned, the Boston
study furthered our understanding of issues related to credit discrimination, and I would like to
share with you some of its findings. During 1992,
the Boston Reserve Bank undertook a detailed
study of mortgage lending in the Boston metropolitan area, in cooperation with the other federal financial supervisory agencies and HUD.
The study was initiated in response to the large
differences in rates of home loan denials among
white, black, and Hispanic applicants in Boston
as revealed by the 1990 HMD A data: a ratio of
nearly three rejections for black and Hispanic
applicants to one for white applicants. The study
sought to analyze whether disparities in denial
rates for mortgage loans among surveyed lenders
reflected the equal application of legitimate credit
standards or whether race was a factor in the
decisions.
Because income is the only financial attribute
of loan applicants collected under HMDA, the
Reserve Bank augmented the HMDA data with
thirty-eight additional items of information pertaining to financial characteristics, employment
experience, and credit history—data that the
lenders participating in the study voluntarily provided from their files. The study revealed substantial differences in the financial and other
economic circumstances of typical white applicants and those of minority applicants. Statistical
analysis also revealed, however, that even after
having controlled for significant economic factors, unexplained differences remained in loan
approval rates for black, Hispanic, and white
applicants. Specifically, the study revealed that
minority applicants who had the same credit
characteristics as white applicants would experience a 17 percent denial rate, compared with an
11 percent denial rate for white applicants.
Significantly, racial background generally was
not found to be a factor in the case of clearly
qualified or clearly unqualified applicants, whatever their race. Disparities were evident, however, among applicants with some imperfections,
such as a relatively high debt-to-income ratio or
weaknesses in credit history. For such applicants, national origin or ethnic background appeared to be a consideration. The authors of the
study suggest that differences in treatment may
reflect differences in the level of assistance that
applicants received from loan officers to address
those deficiencies, although no specific evidence
from the Boston study is available on this point.
Statements
The degree to which the findings reflect outright
discrimination by individual loan officers and
financial institutions in the market is unclear. The
reason for this lack of clarity is that this study
was made of the lenders in the Boston market in
general and did not include a review of individual
lenders to assess whether any specific individuals
were treated differently because of their race.
The findings do confirm, however, that greater
attention is needed to ensure the fairness of the
mortgage granting process.
EFFORTS BY THE FFIEC TO
STRENGTHEN
FAIR LENDING
ENFORCEMENT
While the FFIEC agencies have separate programs through which they enforce fair lending
laws, I know that all of us take our enforcement
responsibility very seriously. We have been
working hard to ensure that our efforts are responsive to the concerns expressed by the Congress and others. In this regard, the FFIEC has
undertaken several initiatives to strengthen its
member agencies' enforcement of fair lending
laws.
Boston Study Follow-Up. After the release of
the results of the Boston study in October, the
member agencies of the FFIEC issued a joint
statement that addressed the issue of disparate
treatment. In the statement, we attempted to
shift the focus from a debate about whether
unequal treatment is occurring to initiatives that
will ensure that it does not. The interagency
statement reiterated the agencies' concerns
about fair treatment of applicants for mortgage
loans. It pointed to increased empirical data that
suggested that differences in denial rates may be
unsupported by economic factors. The agencies
also encouraged financial institutions to intensify
their fair lending education programs for management, lending personnel, and consumers. We
encouraged efforts to identify and promote examples of successful techniques used by institutions to ensure equal treatment of loan applicants, such as self-testing and second reviews of
minority applications.
In addition, each of the agencies has under
way investigations of those financial institutions
that took part in the Boston study where evi
to the Congress
309
dence of disparate treatment was present. These
investigations include review of loan files and
other relevant documents to discover whether
any individual applicants were treated less favorably because of race. As I previously indicated,
the Board did refer the name of one institution to
the Department of Justice where the data from
the Boston study raised concerns about that
mortgage company's compliance with fair lending laws.
HMDA Analysis. Like the HMDA data for
1990, the data for 1991 indicate that greater
proportions of black and Hispanic loan applicants are turned down for credit than are Asian
or white applicants. Income levels account for
some of the variation in loan disposition rates
among racial groups. However, even after having
controlled for income, white applicants for conventional home loans in all income groupings had
lower rates of denial than did black and Hispanic
applicants. Of course, many factors other than
income are relevant to a credit decision. And it
would be erroneous to conclude that the HMDA
disparities themselves necessarily all reflect discriminatory practices. Nevertheless, some of
these disparities may be caused by the unequal
application of lending criteria, and the data as a
whole are obviously troubling.
Analyzing the disturbing disparities revealed
by the HMDA data for use in our fair lending and
CRA enforcement efforts has become a high
priority for the FFIEC. In this regard, I am
pleased to report that the FFIEC has made
significant progress in the manner in which the
HMDA data are utilized and the ways in which
the data are analyzed. Before 1989, the HMDA
data revealed information only about the geographic distribution of residential lending by covered institutions. Statutory amendments to the
HMDA, enacted in 1989, expanded disclosures
to include the disposition of applications— approved, denied, withdrawn, or files closed for
incompleteness—and the race or national original, income, and sex of all applicants, whether
approved or denied. The amendments also expanded coverage to independent mortgage companies, that is, those that are not subsidiaries of
depository institutions or holding companies.
The HMDA data enable the agencies to select
specific loan files to review during on-site exam-
310
Federal Reserve Bulletin • April 1993
inations and also to target specific lenders for
more extensive fair lending and CRA investigations. Several supervisory agencies, as well as
the Department of Justice, are using the new
HMDA data to identify institutions to review,
based on either the large disparities in denial
rates among different racial groups or the low
number of applications from minority households
compared with the racial composition in the
community.
Over the past two years, the Federal Reserve,
in consultation with the FFIEC agencies, has
developed and implemented a computer-based
HMDA data analysis system. The system, which
uses both the HMDA data and demographic
information, is extremely versatile and allows the
new data to be examined and analyzed in a
variety of ways. It provides a series of set reports
(in addition to the standard HMDA tables) as
well as the capability of querying the database for
more tailored information about an institution's
lending activity. The FFIEC is also working to
develop a set of standard paper-based reports for
examiners to use without electronically accessing the database.
The FFIEC has also worked to ensure that the
HMDA data are as accurate as possible. In this
regard, the FFIEC issued a revised version of A
Guide to HMDA Reporting, Getting it Right to
help institutions compile and report their data.
The guide discusses the law's requirements, coverage, and management responsibilities; it also
sets forth detailed directions for gathering data,
plus step-by-step instructions for completing the
reporting form. We have also provided, free of
charge, computer software that may be used for
reporting HMDA data, which will help screen
out inaccuracies before the data are submitted.
In addition, the FFIEC has developed a process
that assists reporting institutions in identifying
and correcting errors.
The FFIEC agencies continue to pursue discussions with the Department of Justice, the
HUD, and the Federal Trade Commission to
strengthen enforcement of civil rights laws. In
particular, the banking agencies are also exploring ways to work with the Department of Justice
in detecting possible patterns of discrimination
against minority applicants. One example of coordination involves targeted examinations of fi
nancial organizations with mortgage lending records that raise concerns. Staff members of the
Justice Department may, in some instances, participate in these reviews by going into the financial institution with our examiners.
The FFIEC has also been working to increase
coordination with the HUD. This work reflects
the expanded enforcement authority assigned to
the HUD by amendments to the Fair Housing
Act in 1990. One example is a memorandum of
understanding among the agencies calling for
formal referral of complaints alleging fair housing
violations to each other and coordination of
investigations, when that is feasible.
In December 1992, the FFIEC contracted with
an outside consultant for a review of the agencies' examination procedures to enforce civil
rights laws. The contractor will also review the
existing training processes and recommend improvements. We believe that this third-party
review will ultimately help strengthen the enforcement of fair lending laws by providing a
fresh look at the current examination procedures
and training.
In March 1992, the agencies distributed to the
institutions they supervise a brochure, prepared
by the FFIEC agencies, entitled Home Mortgage
Lending and Equal Treatment. The brochure
identifies and cautions lenders about lending
standards and practices that may produce unintended discriminatory effects. It focuses on race
and includes examples of subtle forms of discrimination, such as unduly conservative appraisal
practices in minority areas; property standards
such as size and age that may exclude homes in
minority and low-income areas; and unrealistically high minimum-loan amounts. The Federal
Reserve published a companion brochure in
1991, entitled Home Mortgages:
Understanding
the Process and Your Right to Fair Lending, to
inform consumers about the mortgage application process and about their rights under fair
lending and consumer protection laws.
The FFIEC is also offering specialized training
for examiners from the member agencies responsible for enforcement of fair lending laws. In fact,
one of these training sessions will be held next
week. The issue of credit discrimination and use
of the HMDA data will be a focus during this
session.
Statements
The Federal Reserve is committed to working
within the FFIEC to develop ways to enhance
enforcement effectiveness under the fair lending
laws. Although substantial progress has been
made, the FFIEC recognizes that its job in this
area is certainly not finished.
FEDERAL
RESERVE
EFFORTS
At the beginning of my testimony, I described
particular efforts that the Board has taken to
enforce the fair lending laws. Those actions—
denial of applications, formal enforcement actions, civil money penalties, referrals to the
HUD and the Department of Justice, and coordination among the agencies to make the best use
of the HMDA data—have each been possible
because the Board has had a solid program in
place Systemwide for many years to address our
fair lending responsibilities. I would next like to
describe these efforts for you in some detail.
The Board supervises approximately 1,000
state member banks for compliance with fair
lending laws. This supervision has involved consumer compliance examinations, consumer complaint investigations, and community affairs efforts. Examiners at the Reserve Banks who are
specially trained in consumer affairs and civil
rights examination techniques conduct the consumer compliance examinations. The Board and
each of the Reserve Banks also have staff members who deal with consumer complaints. In
addition, the System has a substantial Community Affairs program, many of whose activities
help to advance fair lending. The Board provides
general guidance and oversight to Reserve Banks
in these areas.
COMPLIANCE
EXAMINATIONS
The Board first established a specialized consumer compliance examination program in 1977.
Through it, the twelve Reserve Banks conduct
examinations of state member banks to determine compliance with consumer protection legislation by using a cadre of specially trained
examiners. The scope of these examinations specifically includes the Equal Credit Opportunity
to the Congress
311
and Fair Housing Acts. From the beginning, the
examiners were instructed to place special emphasis on violations involving potential discrimination of the kind prohibited by those statutes.
Over the years, the Board has reassessed its
enforcement responsibilities and made several
changes to its consumer affairs program. This
included increased training for examiners in detecting
discriminatory
lending
practices.
Changes were also made in the System's processing of consumer complaints to place increased emphasis on investigating serious complaints such as allegations of loan discrimination.
We have made it clear that failure to comply with
certain provisions of the fair lending laws was
viewed by the Board as particularly serious and
would require retroactive corrective action.
The Federal Reserve System's consumer compliance examinations are scheduled at regular
intervals, are comprehensive, and are conducted
by specialized examiners. Each state member
bank is examined on a regular basis. An average
of two-thirds of state member banks are examined each year. Examinations are scheduled every eighteen months for a bank with a satisfactory record. A limited number of banks with
exceptional records can be examined every two
years. Those banks with less-than-satisfactory
records are to be examined every six months or
every year, depending on the severity of their
problems.
The examination procedures focus primarily
on comparing the treatment of members of a
protected class with other loan applicants. First,
the bank's loan policies and procedures are reviewed. Bank documents are reviewed, and loan
personnel are interviewed. During this phase, the
examiner will seek to determine, among other
things, the bank's credit standards. After the
standards have been identified, the examiner will
determine whether those standards were, in fact,
applied uniformly, using a sample of actual loan
applicants. Special note will be taken of applications received from minorities, women, and others whom the laws were designed to protect. The
examiner is looking at the same information that
the bank used to make its credit decision, including credit history, income, and total debt burden.
If those standards appear not to have been used,
or not to have been used consistently, the matter
312
Federal Reserve Bulletin • April 1993
would be discussed with lending personnel discuss the matter, and a more intensive investigation would typically be made. Finally, an overall
analysis of the bank's treatment of applications
from minorities, women, and others who have
the characteristics described in the laws is conducted to determine whether there are any patterns or individual instances in which such applicants were treated less favorably than other loan
applicants.
Another regular part of the examination includes conversations with persons in the community who are knowledgeable about local credit
needs. The examiners will routinely ask about
public perceptions of the availability of credit to
minorities and low- and moderate-income persons. This information may suggest that a particular area of the bank needs additional scrutiny
and may provide insights into how the bank is
serving the credit needs of its local community,
particularly those protected by the antidiscrimination statutes.
The Board believes that expecting a bank
examiner to master both the "safety and soundness" and consumer affairs-civil rights aspects
of bank examinations is not practical given the
existing complexities of both areas. Consequently, the Federal Reserve has developed a
separate career path for consumer affairs examiners equivalent to that of our commercial examiners. The Board provides them with special
training, including instruction on the CRA and
fair lending laws. New examiners attend a threeweek basic consumer compliance school. Examiners who have eighteen to twenty-four months
of field experience attend a weeklong advanced
compliance school and the one-week advanced
CRA class. Special training sessions at the Reserve Banks supplement this training as necessary. For example, last week, the San Francisco
Federal Reserve sponsored a conference for all
the agencies, which focused on issues relating to
credit discrimination.
The examination procedures for detecting
loan discrimination are set forth in the Board's
Consumer Compliance Handbook. These procedures take, on average, twenty-nine hours
per examination to complete and result in a
comprehensive assessment of the institution's
lending practices. Assessing a bank's perfor
mance under the Community Reinvestment Act
takes, on average, an additional thirty-nine
hours to complete.
Although much of the Board's recent effort to
improve its fair lending examination procedures
has been in concert with the FFIEC, we have
under way several individual initiatives that we
believe will strengthen our own consumer compliance examination program. They represent a
continuation of our ongoing efforts to improve
our examination techniques and are indicative of
our commitment in this area.
The Board has authorized its Division of Consumer and Community Affairs to hire a person
whose primary job responsibility will be to work
in the area of fair lending enforcement. This
person will help coordinate our efforts in this
area and assist our examiners in analyzing the
complex issues associated with detection of
credit discrimination.
The Federal Reserve is also developing the
capability to map the geographic location of a
bank's lending products, including mortgage
loans, with computer programs. This mapping
will include demographic information for the
bank's local community. We believe that this
type of analysis and presentation will enhance
our ability to assess a bank's CRA performance
in meeting the credit needs of its local community, including minority areas. It should also be
helpful in evaluating a bank's geographic delineation of its local CRA service area to ensure that
it does not exclude low- and moderate-income
neighborhoods.
Finally, Federal Reserve examiners have begun testing a system that will use a statistical
model, much like the model used in the Boston
study, to analyze the HMDA data and information drawn from loan files from individual institutions for purposes of helping to determine
compliance with fair lending laws. Notwithstanding the usefulness of the HMDA data, the data
alone are not sufficient to determine whether a
lender is discriminating unlawfully. Specifically,
the data do not reflect the wide range of financial
and property-related factors that lenders consider in evaluating loan applications. Consequently, our use of a statistical model will include
detailed information from specific application
files. We hope, and expect, that use of such a
Statements
model will enable our examiners to more effectively identify any questionable application files.
CONSUMER
COMPLAINT
PROGRAM
The Federal Reserve's consumer complaint program is an important element in our overall
efforts to enforce fair lending laws. The investigation procedures in this regard provide special
guidance with respect to complaints involving
loan discrimination. Such complaints, given appropriate circumstances, will prompt an on-site
investigation by Reserve Bank personnel at the
state member bank accused of discrimination. As
mentioned previously, we have a referral agreement with HUD for mortgage complaints. I
should note that the Federal Reserve System
receives few complaints alleging loan discrimination, and few of these, after investigation, have
been resolved in favor of the complainant.
COMMUNITY
AFFAIRS
PROGRAM
The Board believes that ensuring fair access to
credit can, in addition to enforcement of fair
lending laws, be advanced by focusing on positive
actions that a lender may take to address such
concerns. Consequently, through its Community
Affairs program, the Federal Reserve conducts
outreach, education, and technical assistance activities to help financial institutions and the public
understand and address community development
and reinvestment issues. During 1992, resources
devoted to Community Affairs activities at the
Reserve Banks were increased to enable the Federal Reserve System to respond to the growing
number of requests for information and assistance
from banks and others on the Community Reinvestment Act, fair lending, and community development topics. Efforts were expanded to work
with financial institutions, banking associations,
governmental entities, business, and community
groups to develop community lending programs
that help finance affordable housing, small and
minority business, and other revitalization
projects. For example, the Federal Reserve Bank
of Kansas City sponsored a conference for bankers on "Credit and the Economically Disadvan
to the Congress
313
taged," focusing on barriers faced by minority
borrowers and steps banks can institute to ensure
that credit is offered on an equitable basis. The
Boston and New York Reserve Banks cosponsored a conference on credit issues affecting economic development programs for Native Americans, especially those living on reservations.
These programs are but an example of a comprehensive community affairs program at work
throughout the Federal Reserve System.
CONCLUSION
In my view, we are beyond the point of debating
whether disparate treatment of minorities is occurring in credit markets. We have known for
some time that certain segments of our society,
particularly minority consumers and minority
small business owners, have difficulty obtaining
credit. This difficulty has had an impact on the
ability of minorities to build businesses, own
homes, accumulate wealth, and, generally, participate in our economy on an equal footing. We
now know that this difficulty may not be justified
by economic factors alone.
The process of fully integrating the minority
community into the economic mainstream of our
country as quickly as possible should be the
ultimate goal of efforts to strengthen enforcement
of fair lending laws. I have concentrated today on
agency initiatives. But it is important not to
overlook those positive actions that lenders have
taken to help improve access to credit. Many
lenders have undertaken critical self-analysis of
their activities, and this has resulted in positive
programs like reexamination of credit criteria,
second reviews of lending decisions affecting
minority applicants, and specialized consumer
credit education on qualifying for credit. These
initiatives are only a few of those recently undertaken by some lenders.
In conclusion, I appreciate the opportunity to
appear before you today to testify on the important and complex issues regarding credit discrimination. The Board and the FFIEC share your
concerns about this issue, and we look forward
to working with the Congress and others to
address this important topic.
•
314
Federal Reserve Bulletin • April 1993
Statement by Richard F. Syron, President, Federal Reserve Bank of Boston, before the Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, February 24, 1993
Thank you for this opportunity to discuss the
Federal Reserve Bank of Boston's recent study
of mortgage lending patterns and the report's
implications for combatting discrimination in
mortgage lending.
As the committee knows, the Home Mortgage
Disclosure Act (HMDA) data for 1990 showed
substantially higher denial rates for black and
Hispanic applicants than for white applicants.
This was true in all the major metropolitan statistical areas, and it was certainly true in Boston.
Approximately 30 percent of black and Hispanic
mortgage applicants were denied loans in the
Boston metropolitan statistical area in 1990,
compared with only 11 percent of white applicants. The 1991 data for Boston, which became
available in fall 1992, show a narrower but still
sizable gap, with 24 percent of black and Hispanic applicants denied loans, compared with 11
percent of white applicants.
When the 1990 HMDA were released, the
implications of the racial disparities in denial
rates were unclear. Although the HMDA data
included information on applicant income, no
information was collected on applicants' credit
histories, loan-to-value ratios, debt-to-income or
so called obligation ratios, and other factors that
lenders commonly consider when they make
mortgage loan decisions. Some felt that this
missing information could explain the high denial
rates experienced by minorities. Others argued
that even if all relevant information were included, substantial bias in mortgage lending still
existed. This disagreement has made it difficult to
formulate solutions to improve credit flows to
poor and minority neighborhoods.
The Federal Reserve Bank of Boston, with
the support of the Federal Reserve Board and
other supervisory agencies and the cooperation
of mortgage lenders in the Boston area, undertook a major study of mortgage lending in an
effort to clarify this issue. Racial disparities in
mortgage lending patterns have been a concern
in Boston for some years, and in 1989 the
Boston Fed had undertaken a study of mortgage
lending within the city of Boston. Although that
study had found that housing and mortgage
markets were functioning in a way that hurt
black neighborhoods, the data available at that
time could not distinguish the role played by
lenders from the actions of buyers, sellers,
realtors, and other market participants. After
the 1990 HMDA data on applications were
released, the Boston Fed was able to improve
upon its earlier research and focus on the
activities of the mortgage lending industry. I
would like to submit for the record a copy of the
Boston Fed's study, "Mortgage Lending in
Boston: Interpreting HMDA Data."
The 131 financial institutions that had been the
most active mortgage lenders in the Boston metropolitan area were asked to provide additional
information on thirty-eight financial, credit history, and employment variables for all 1,143 of
their black and Hispanic mortgage applicants and
for a random sample of 3,300 white applicants.
To protect the confidentiality of borrowers, we
assured the lenders that all information collected
would remain with the Federal Reserve and other
bank regulatory agencies. The response from
lenders was excellent, although missing information, errors in recording the original data, and
withdrawn applications resulted in a final sample
of 722 black and Hispanic applicants and 2,340
white applicants.
The additional variables collected were chosen
after numerous conversations with underwriters,
examiners, and others familiar with the mortgage
lending process. We attempted to include all the
variables that lenders view as relevant to their
mortgage decisions. The information collected
from the financial institutions was then combined
with information on neighborhood characteristics from the 1990 Census and used to develop a
model of mortgage lending decisions in the Boston area. Using this model, it was possible to test
whether race was a significant factor in the
lending decision once financial, credit history,
employment, and neighborhood characteristics
were taken into account.
The analysis revealed that the additional information about each applicant substantially reduced the disparity in denial rates but did not
eliminate the gap. Black and Hispanic mortgage
applicants in Boston, on average, had larger debt
Statements
burdens, higher loan-to-value ratios, and weaker
credit histories, and in other respects did not fare
as well according to the evaluation criteria used
by mortgage lenders. But after having taken all
these factors into account, black and Hispanic
mortgage applicants were still more likely to be
turned down than white applicants. Minority
applicants with the same financial, credit history,
employment, and neighborhood characteristics
as the white applicants in Boston would have
experienced a denial rate of 17 percent rather
than the actual white denial of 11 percent.
The information gathered in this study provides
some insight into how this outcome occurs. Many
observers have difficulty accepting that discrimination exists because they do not believe that rational
lenders would turn down a perfectly good application simply because the applicant was black or
Hispanic. The problem is that few applications fit a
narrow definition of perfect. Most applicants, white
as well as minority, exceed some guideline for
obligation or loan-to-value ratios or credit history;
or some possess a characteristic that requires additional documentation, such as self-employment or
the fact that they are purchasing a two- to fourfamily home. As a consequence, the mortgage decision is not a purely mechanical process. Loan
originators must exercise judgment, and they have
considerable discretion in the way they evaluate
these deviations from perfection and in the degree to
which they take compensating factors into consideration.
On balance, this discretion is both necessary
and desirable. Historically, residential mortgages
have been very safe investments. And applicants
need not be perfect to be creditworthy. However, discrimination may enter into the decisionmaking process. Precisely how this happens is
not something that can be answered by this
study. It could be as simple as loan officers being
more willing to exercise discretion and put their
own reputations at risk for people who look or
talk like themselves than for others. However the
discrimination occurs, black and Hispanic applicants are more likely to be turned down for
mortgages than white applicants who have the
same economic and other characteristics.
What can be done to address the problem of
discrimination in mortgage lending?
In my judgment, the most critical step is for
to the Congress
315
mortgage lenders to acknowledge at least the
possibility that the results of their lending process are discriminatory. As long as lenders
sincerely believe that their procedures are beyond reproach, efforts to get them to change
will have limited success. This area is one in
which we hope that we have made a contribution. At least in Boston, our study seems to
have ended the debate over how to interpret the
HMDA data. Economic factors do explain
some of the disparity in denial rates, but race
also plays a role. Lenders' reactions to the
study suggest that they are now questioning
what they have always taken for granted. They
are starting to recognize that simply having a
policy that prohibits discrimination does not
prevent discrimination.
Consumer advocates, government agencies,
and lending institutions have developed several
strategies to help lenders ensure that they are
treating all prospective borrowers fairly. The
Federal Reserve Bank of Boston is in the process
of compiling these strategies in a guide that will
soon be available for distribution to lenders. I
suspect that the members of this committee have
heard many of these ideas. They include the
following: (1) ensuring that all employees involved with the loan process are thoroughly
familiar with laws related to fair lending, (2)
having a staff that reflects the racial and ethnic
composition of the communities served by the
lending institutions, (3) ensuring that compensation structures for employees do not deter them
from serving low-income and minority markets,
(4) using carefully designed second review processes for denied applications, and (5) taking
several other approaches.
Although the guide does not present something
totally new, it makes a contribution by tailoring
each recommendation to the lender's board of
directors and senior management as well as to
loan originators. The commitment to eliminating
discrimination must start at the top and continue
right through the organization to those who meet
the public face to face.
The efforts of financial institutions will have to
be reinforced by enhanced regulatory methods.
Because so many mortgage applications violate
some guideline or in some way require that the
lender exercise judgment, most denials can ap-
316
Federal Reserve Bulletin • April 1993
pear appropriate by objective standards. Thus,
discrimination can be difficult to prove when one
looks case by case. It is also necessary to examine broad patterns and an institution's entire
loan-making process. The Federal Financial Institutions Examination Council is aware of this
problem and is working on improving its examination procedures.
Finally, I would like to emphasize that although lending discretion may permit discrimination to occur, removing the discretionary element would be a major mistake. If current
guidelines were to become rules to be applied
with no exceptions, then even if these rules were
not as tight as the guidelines are today, many
creditworthy applicants would be denied loans
and, thus, the opportunity to own a home. And if
the Boston experience is representative of that
nationally, black and Hispanic applicants would
fare worse than white applicants because they
have higher obligation and loan-to-value ratios
and weaker credit histories.
In conclusion, the Federal Reserve Bank of
Boston's study of mortgage lending patterns in
the Boston metropolitan statistical area shows
that the large disparities in denial rates revealed
by the HMDA data are partially attributable to
the fact that black and Hispanic applicants have
greater debt burdens, higher loan-too-value ratios, weaker credit histories, and other economic
characteristics that lenders view with disfavor.
However, even after having taken account of all
these factors, a statistically significant and economically important gap remains in denial rates
for white and minority applicants. Eliminating
this gap requires that regulators, lenders, and
community groups understand the nature and
likely causes of that gap, stop arguing about
whether a problem exists, and work more effectively together for the future.
•
317
Announcements
ISSUANCE OF FINAL RULE TO REVISE
CAPITAL ADEQUACY GUIDELINES
The Federal Reserve Board on February 4, 1993,
issued a final rule revising 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. The rule is effective
March 9, 1993.
The revised guidelines also include limits and
discounts that are applicable to those intangible
assets included in capital.
The revision was formulated in a coordinated
effort by the staffs of the four federal regulatory
agencies for financial institutions and, when made
final by the other agencies, will achieve greater
consistency among the agencies with respect to the
capital treatment of intangible assets. Certain
aspects of the final rule also implement provisions
of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA).
PROPOSED ACTIONS
The Federal Reserve Board on February 8, 1993,
issued for public comment a proposal to extend the
provisions of Regulation E (Electronic Fund Transfers) to electronic benefit transfer (EBT) programs.
Comments should be received by May 21, 1993.
The Federal Reserve Board on February 11,
1993, also issued for public comment proposed
amendments to its capital adequacy guidelines for
state member banks and bank holding companies to
establish a limitation on the amount of certain
deferred tax assets that may be included in the
tier 1 capital calculation for risk-based and
leverage capital purposes. Comments should be
received by March 6, 1993.
REVISIONS TO THE 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 data from Call Reports through
September 1992 and other sources. The benchmark
incorporated a change in the type of data used to
measure large time deposits held by domestic
banks. Reports from issuing banks on holdings of
their certificates of deposit (CDs) by other banks
had previously been used; reports from banks of
CDs they hold are now used, as reports on these
holdings have been found to be more accurate.
(This item is one of several that are subtracted from
gross large time deposits to measure the quantity of
such time deposits held by the nonbank public).
The benchmark also incorporates corrections for
the previous misreporting by banks of some brokered time deposits. Initially, these deposits had
been misclassified as large time deposits, rather
than as small time deposits. In addition, the benchmark folded in historical data for several money
market mutual funds that began reporting for the
first time in 1992.
Seasonal factors for the monetary aggregates
have been revised using the X-11-ARIMA procedure that was applied to data through preliminary
estimates for January 1993. The components of the
monetary aggregates that are seasonally adjusted
this year are identical to those of last year.
More detail on the revisions is available in the
Board's H.6 statistical release, "Money Stock,
Liquid Assets, and Debt Measures," dated February 4, 1993. Complete historical data are
available 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, or telephone
318
Federal Reserve Bulletin • April 1993
(202) 452-3062. The historical data are also available on floppy diskette for a fee of $25 per diskette
from the Federal Reserve Board's Publications Section, mail stop 138, Board of Governors of the
Federal Reserve System, Washington, DC 20551,
(202) 452-3245. 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) 482-1986 for information on how to gain
access to the Economic Bulletin Board.
1. Monthly seasonal factors used to construct Ml, M2, and M3, January 1992-March 1994
Year and month
Currency
Nonbank
travelers
checks
Demand
deposits
Other checkable deposits1
Nontransaction components
Total
Held at banks
In M2
In M3 only
1992—January
February
March
April
May
June
July
August
September
October
November
December
.9955
.9949
.9967
.9989
1.0019
1.0022
1.0046
1.0016
.9941
.9963
1.0008
1.0091
.9661
.9708
.9663
.9545
.9669
1.0197
1.0753
1.0863
1.0539
1.0128
.9686
.9571
1.0124
.9770
.9825
1.0096
.9798
.9968
1.0004
.9917
.9912
1.0023
1.0130
1.0422
1.0106
.9953
1.0056
1.0320
.9938
.9989
.9924
.9903
.9916
.9870
.9949
1.0063
1.0198
1.0022
1.0081
1.0311
.9883
.9946
.9869
.9876
.9905
.9861
.9940
1.0098
.9997
1.0019
1.0046
1.0032
.9973
.9983
.9993
.9998
.9979
.9997
1.0002
.9980
.9957
1.0042
1.0046
.9936
1.0033
.9997
.9960
1.0075
1.0012
.9939
1.0036
.9968
1993—January
February
March
April
May
June
July
August
September
October
November
December
.9960
.9949
.9964
.9999
1.0013
1.0022
1.0047
1.0008
.9949
.9973
.9997
1.0106
.9698
.9727
.9671
.9538
.9656
1.0185
1.0731
1.0838
1.0539
1.0136
.9689
.9586
1.0124
.9778
.9835
1.0096
.9802
.9970
.9993
.9910
.9907
1.0023
1.0136
1.0419
1.0105
.9960
1.0064
1.0318
.9943
.9992
.9924
.9902
.9913
.9868
.9947
1.0057
1.0198
1.0029
1.0086
1.0307
.9887
.9948
.9869
.9875
.9903
.9862
.9939
1.0091
.9995
1.0020
1.0047
1.0034
.9974
.9984
.9991
.9997
.9978
.9997
1.0002
.9981
.9952
1.0051
1.0047
.9934
1.0032
.9993
.9954
1.0079
1.0014
.9939
1.0040
.9966
.9957
.9953
.9965
.9716
.9734
.9672
1.0126
.9783
.9839
1.0106
.9966
1.0068
1.0199
1.0034
1.0089
.9995
1.0020
1.0047
.9946
1.0055
1.0049
1994—January
February
March
1. Seasonally adjusted other checkable deposits at thrift institutions are
derived as the difference between total other checkable deposits, seasonally
adjusted, and seasonally adjusted other checkable deposits at commercial
banks.
Additional tables on seasonal factors follow.
Announcements
319
2. Monthly seasonal factors for selected components of the monetary aggregates, January 1992-March 1994
Deposits1
Year and month
Money market mutual funds
Savings
and
MMDAs
Smalldenomination
time
Largedenomination
time
In M2
In M3 only
1992—January
February
March
April
May
June
July
August
September
October
November
December
.9943
.9963
1.0043
1.0058
1.0009
1.0040
1.0033
1.0009
.9975
.9977
.9992
.9950
1.0033
1.0014
.9989
.9978
.9958
.9966
1.0004
1.0012
1.0023
1.0013
1.0015
.9933
.9980
1.0028
.9970
1.0057
1.0051
.9989
1.0041
1.0013
.9972
.9996
.9963
.9991
1.0178
1.0271
1.0187
.9942
.9899
.9870
.9923
.9927
.9916
.9950
.9933
1.0252
1.0419
1.0144
.9952
1.0004
.9809
.9836
.9987
.9815
.9784
1.0014
1.0004
1993—January
February
March
April
May
June
July
August
September
October
November
December
.9939
.9965
1.0047
1.0063
1.0014
1.0043
1.0035
1.0008
.9972
.9975
.9989
.9946
1.0036
1.0013
.9986
.9976
.9954
.9962
.9999
1.0003
1.0015
1.0025
1.0015
1.0018
.9931
.9984
1.0031
.9971
1.0060
1.0055
.9988
1.0041
1.0014
.9969
.9993
.9961
.9987
1.0186
1.0275
1.0189
.9950
.9906
.9872
.9918
.9920
.9912
.9947
.9935
1.0229
1.0420
1.0135
.9951
1.0009
.9804
.9834
.9998
.9823
.9787
1.0023
1.0002
1994—January
February
March
.9937
.9967
1.0050
1.0037
1.0012
.9984
.9931
.9986
1.0032
.9985
1.0189
1.0277
1.0214
1.0421
1.0124
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 Ml, M2, and M3, December 7, 1992-April 4, 1994
Week ending
Currency
Nonbank
travelers
checks
Demand
deposits
Other checkable deposits1
Nontransaction components
Total
Held at banks
In M2
In M3 only
1992—December
7
14
21
28
1.0049
1.0055
1.0114
1.0155
.9483
.9534
.9585
.9634
1.0310
1.0420
1.0376
1.0464
1.0176
1.0022
1.0021
.9970
1.0142
1.0038
1.0095
1.0054
1.0012
1.0007
.9968
.9937
.9918
.9975
.9966
1.0082
1993—January
4
11
18
25
1.0061
1.0022
.9977
.9907
.9678
.9688
.9697
.9707
1.0743
1.0448
1.0146
.9771
1.0405
1.0390
1.0150
.9841
1.0406
1.0481
1.0281
.9964
.9974
1.0018 ,
.9996
.9985
.9805
.9907
.9961
1.0007
February
1
8
15
22
.9861
1.0004
.9996
.9918
.9717
.9722
.9726
.9730
.9767
.9836
.9862
.9687
.9802
1.0089
.9968
.9885
.9866
1.0139
1.0034
.9978
.9994
1.0010
1.0022
1.0024
1.0028
1.0018
1.0067
1.0035
March
1
8
15
22
29
.9878
1.0013
.9982
.9955
.9905
.9733
.9715
.9687
.9660
.9632
.9719
.9889
.9953
.9716
.9709
.9931
1.0248
1.0099
.9989
.9931
.9989
1.0258
1.0121
1.0042
.9932
1.0029
1.0039
1.0057
1.0046
1.0041
1.0095
1.0058
1.0105
1.0036
1.0029
April
5
12
19
26
1.0004
1.0056
1.0004
.9946
.9603
.9570
.9536
.9502
1.0151
1.0205
1.0282
.9874
1.0353
1.0440
1.0500
1.0116
1.0296
1.0408
1.0525
1.0155
1.0068
1.0088
1.0035
.9992
.9888
.9969
.9919
.9938
May
3
10
17
24
31
.9970
1.0069
.9469
.9552
.9635
.9718
.9800
.9896
.9859
.9916
.9575
.9766
1.0041
1.0074
.9935
.9824
.9847
.9999
.9991
.9863
.9778
.9799
.9969
.9977
.9976
.9967
.9977
.9947
1.0005
1.0003
1.0068
1.0089
1.0011
.9988
1.0001
320
Federal Reserve Bulletin • April 1993
3. Continued
Week ending
Currency
Nonbank
travelers
checks
Demand
deposits
Other checkable deposits1
Nontransaction components
Total
Held at banks
In M2
In M3 only
June
7
14
21
28
1.0080
1.0043
1.0002
.9937
.9925
1.0082
1.0238
1.0392
1.0059
1.0122
.9849
.9776
1.0222
1.0121
.9965
.9722
1.0127
1.0090
.9936
.9701
.9996
1.0003
.9976
.9966
1.0055
1.0064
.9988
.9927
July
5
12
19
26
1.0100
1.0096
1.0056
.9994
1.0531
1.0631
1.0731
1.0831
1.0284
1.0146
1.0023
.9716
1.0109
1.0063
.9887
.9721
1.0009
.9980
.9832
.9708
.9976
1.0017
.9991
.9979
.9775
.9913
.9981
1.0016
August
2
9
16
23
30
.9985
1.0103
1.0048
.9986
.9894
1.0931
1.0906
1.0860
1.0814
1.0768
.9901
1.0020
1.0032
.9731
.9787
.9851
1.0088
.9941
.9805
.9739
.9809
1.0029
.9893
.9810
.9740
.9987
1.0006
.9995
.9989
1.0067
1.0052
1.0092
1.0063
1.0112
September 6
13
20
27
1.0036
.9976
.9930
.9869
1.0703
1.0612
1.0521
1.0429
1.0014
1.0135
.9864
.9634
1.0146
1.0096
.9868
.9556
1.0099
1.0091
.9916
.9610
.9989
.9997
.9973
.9957
1.0069
1.0061
1.0022
1.0017
October
4
11
18
25
.9936
1.0061
.9997
.9947
1.0337
1.0243
1.0148
1.0053
1.0030
1.0086
1.0126
.9836
.9938
.9964
.9892
.9732
.9903
.9941
.9867
.9710
.9973
1.0003
1.0006
.9992
.9769
.9947
.9939
.9988
November
1
8
15
22
29
.9896
1.0034
1.0010
.9972
.9980
.9958
.9852
.9741
.9631
.9522
1.0025
1.0149
1.0230
.9989
1.0120
.9891
1.0160
1.0099
.9927
.9838
.9829
1.0046
.9992
.9892
.9814
1.0002
1.0015
1.0021
.9973
.9989
1.0027
1.0010
1.0020
1.0118
6
13
20
27
1.0033
1.0076
1.0122
1.0207
.9483
.9538
.9593
.9649
1.0333
1.0403
1.0386
1.0438
1.0153
1.0021
.9916
.9848
1.0093
1.0056
1.0068
1.0013
1.0008
1.0015
.9977
.9945
.9995
1.0047
.9942
1.0012
3
10
17
24
31
1.0058
1.0033
.9975
.9915
.9858
.9704
.9709
.9714
.9719
.9724
1.0763
1.0535
1.0191
.9760
.9652
1.0179
1.0397
1.0193
.9973
.9796
1.0295
1.0459
1.0303
1.0094
.9894
.9950
1.0009
1.0006
.9997
.9988
.9742
.9902
.9990
.9976
1.0004
February
7
14
21
28
.9982
.9985
.9966
.9874
.9729
.9732
.9735
.9739
.9866
.9833
.9708
.9725
1.0131
.9973
.9901
.9867
1.0163
1.0042
.9984
.9948
1.0008
1.0018
1.0024
1.0030
1.0023
1.0101
1.0056
1.0041
March
7
14
21
28
1.0002
.9986
.9956
.9900
.9723
.9694
.9665
.9636
.9934
.9932
.9788
.9680
1.0214
1.0117
1.0049
.9916
1.0233
1.0127
1.0064
.9959
1.0039
1.0056
1.0044
1.0041
1.0057
1.0045
1.0084
1.0103
April
4
.9999
.9606
1.0142
1.0263
1.0232
1.0061
.9828
December
1994—January
1. Seasonally adjusted other checkable deposits at thrift institutions are
derived as the difference between total other checkable deposits, seasonally
1.0001
1.0000
adjusted, and seasonally adjusted other checkable deposits at commercial
banks.
Announcements
4. Weekly seasonal factors for selected components of the monetary aggregates, December 7, 1992-April 4, 1994
Deposits1
Week ending
Money market mutual funds
Savings
and
MMDAs
Smalldenomination
time
Largedenomination
time
In M2
In M3 only
1992—December
7
14
21
28
.9996
1.0001
.9927
.9882
1.0016
1.0014
1.0011
1.0016
.9967
.9979
.9954
.9987
.9953
.9992
.9954
.9891
1.0044
1.0190
1.0105
.9971
1993—January
4
11
18
25
.9931
.9990
.9945
.9905
1.0036
1.0041
1.0038
1.0033
.9874
.9956
.9958
.9932
.9793
.9949
1.0050
1.0060
.9295
.9736
1.0470
1.0412
February
1
8
15
22
.9917
.9965
.9980
.9958
1.0033
1.0029
1.0017
1.0005
.9909
.9953
.9997
.9988
1.0005
1.0112
1.0171
1.0237
1.0945
1.0465
1.0493
1.0252
March
1
8
15
22
29
.9965
1.0030
1.0070
1.0047
1.0034
.9998
.9995
.9985
.9979
.9984
1.0011
1.0029
1.0039
1.0021
1.0040
1.0261
1.0270
1.0278
1.0275
1.0306
1.0389
1.0164
1.0299
1.0109
1.0201
April
5
12
19
26
1.0112
1.0160
1.0074
.9975
1.0000
.9984
.9976
.9963
1.0019
1.0007
.9962
.9917
1.0183
1.0291
1.0233
1.0153
.9186
1.0220
.9988
1.0169
May
3
10
17
24
31
.9971
1.0023
1.0034
1.0008
1.0009
.9961
.9957
.9954
.9957
.9949
.9960
1.0026
1.0041
1.0108
1.0110
1.0003
.9927
.9929
.9960
.9959
.9997
1.0025
.9971
1.0061
.9983
June
7
14
21
28
1.0071
1.0088
1.0032
.9981
.9953
.9960
.9956
.9972
1.0108
1.0128
1.0021
.9988
.9933
.9937
.9914
.9888
.9908
.9816
.9916
.9791
July
5
12
19
26
1.0037
1.0070
1.0046
1.0008
1.0002
1.0004
.9999
.9997
.9967
1.0000
.9980
.9982
.9736
.9885
.9907
.9907
.9059
.9731
1.0117
.9998
August
2
9
16
23
30
1.0009
1.0050
1.0041
.9987
.9952
.9998
1.0012
1.0003
.9998
1.0001
1.0011
1.0017
1.0041
1.0048
1.0066
.9893
.9886
.9903
.9943
.9947
1.0125
.9941
1.0046
.9938
1.0057
September 6
13
20
27
1.0001
1.0022
.9966
.9915
1.0011
1.0012
1.0013
1.0018
1.0048
1.0045
1.0021
.9969
.9921
.9941
.9935
.9910
.9826
1.0024
.9894
.9771
October
4
11
18
25
.9949
1.0011
.9993
.9954
1.0031
1.0034
1.0026
1.0022
.9961
.9998
.9962
.9960
.9859
.9928
.9919
.9909
.9310
.9872
.9738
.9962
November
1
8
15
22
29
.9954
1.0013
1.0023
.9974
.9951
1.0017
1.0017
1.0021
1.0006
1.0017
.9958
.9980
.9993
1.0008
.9998
.9923
.9918
.9946
.9942
.9979
.9854
.9982
.9908
1.0133
1.0076
December
6
13
20
27
.9993
1.0002
.9936
.9879
1.0021
1.0020
1.0020
1.0016
.9985
1.0001
.9958
.9939
.9980
1.0005
.9977
.9892
1.0118
1.0174
1.0168
.9932
3
10
17
24
31
.9915
.9987
.9965
.9908
.9900
1.0017
1.0044
1.0047
1.0038
1.0031
.9894
.9944
.9925
.9932
.9938
.9751
.9897
1.0028
1.0057
1.0058
.9364
.9764
1.0519
1.0482
1.0449
1994—January
321
322
Federal Reserve Bulletin • April 1993
4. Continued
Deposits1
Week ending
Savings
and
MMDAs
Money market mutual funds
Smalldenomination
time
Largedenomination
time
In M2
In M3 only
February
7
14
21
28
.9968
.9992
.9957
.9952
1.0024
1.0016
1.0006
1.0004
.9960
.9986
.9994
1.0003
1.0110
1.0159
1.0219
1.0266
1.0318
1.0528
1.0374
1.0465
March
7
14
21
28
1.0031
1.0076
1.0052
1.0025
.9994
.9979
.9975
.9987
1.0021
1.0026
1.0025
1.0056
1.0265
1.0269
1.0296
1.0287
1.0214
1.0280
1.0082
1.0131
April
4
1.0083
.9994
1.0027
1.0261
.9636
1. These seasonal factors are applied to deposits data at both commercial banks and thrift institutions.
323
Record of Policy Actions
of the Federal Open Market Committee
MEETING
HELD ON DECEMBER
22,1992
The information reviewed at this meeting suggested that economic activity was rising appreciably in the fourth quarter. Consumer spending, in
association with an apparent upturn in wage
income and a surge in confidence, had improved
considerably; sizable gains were being registered in
the sales and starts of single-family homes; and
business spending for capital equipment remained
strong. There also had been solid advances in
industrial output, and private payroll employment
had turned up. Data on wages and prices had been
slightly less favorable recently, and on balance they
raised the possibility that the trend toward lower
inflation might be slowing a little.
Total nonfarm payroll employment expanded
for the third consecutive month in November, and
the average workweek increased further. A sizable
rise in government employment largely reflected
temporary hiring to staff polling places during the
general election. Private employment also picked
up somewhat, despite a decline in construction
jobs and weaker-than-usual seasonal hiring in the
retail trade sector. A range of service industries
recorded further gains in employment, and the
number of jobs in manufacturing increased after
three months of sizable declines. The civilian
unemployment rate fell further in November, to
7.2 percent.
Industrial production recorded another advance
in November. Motor vehicle assemblies were about
unchanged, but significant gains were evident elsewhere, notably in the production of business equipment, construction supplies, and industrial materials. The output of consumer goods rose slightly
further in November; all of the increase was in the
production of nondurable goods. Reflecting the
higher level of output, total utilization of industrial
capacity edged higher in November to a level
slightly above that at the end of 1991.
Retail sales, buoyed by strong gains in disposable income and a marked improvement in consumer attitudes, rose sharply in October and posted
a further increase in November. Sales of light
trucks were up substantially in the OctoberNovember period, and sales of a wide variety of
other goods, both durable and nondurable, also
advanced considerably. Single-family starts rose
over October and November to their highest level
since February, but starts of multifamily units
remained at depressed levels. Sales of new and
existing homes continued on an upward trend,
although the preliminary estimate for new home
sales was down in October.
The limited data available suggested that real
business fixed investment was continuing to
expand at a brisk pace. Shipments of nondefense
capital goods were up on balance over September
and October. A decline in shipments of office and
computing equipment, which had accounted for
most of the gains in shipments since early 1991,
was more than offset by a considerable rise in
shipments of other items. Among other indicators
of spending for durable equipment over the
September-October period, sales of heavy trucks
rose sharply, and business purchases likely
accounted for some of the recent sizable increase in
sales of light trucks; on the other hand, shipments
of complete aircraft were weak. Nonresidential
construction activity turned up on balance in September and October, partly reflecting a steadying of
expenditures for office buildings, which had
plunged during the summer. At the same time,
construction of other commercial structures recovered from a sharp decline in August, while outlays
for industrial structures remained weak. A sharp
increase in drilling activity occurred in October,
apparently in response to higher natural gas prices
and the expiration at year-end of a drilling subsidy.
Business inventories were drawn down appreciably further in October. In manufacturing, reduc-
324
Federal Reserve Bulletin • April 1993
tions in stocks were smaller in October than in
September. The ratios of stocks to shipments in
most industries were at or near the bottom of their
recent ranges. In the trade sector, a sharp drop in
stocks held by auto dealers more than accounted
for an overall decline in retail inventories in October. Aside from auto dealers, a slight increase in
retail stocks coupled with a strong increase in sales
produced a small decline in inventory-to-sales
ratios. Wholesale inventories fell again in October,
and the inventory-to-sales ratio for this sector was
near the low end of the range observed over the
past two years.
The nominal U.S. merchandise trade deficit narrowed somewhat in October from its average rate
in the third quarter, reflecting both a considerable
increase in the value of exports and a decline in the
value of imports. Most of the expansion in exports
was in capital goods, notably aircraft and industrial
machinery, and consumer goods. The reduction in
imports was primarily in consumer goods and in
passenger cars imported from Canada. Recent indicators generally pointed to continued weakness in
the economies of the major foreign industrial countries. During the third quarter, economic activity
contracted further in Japan and western Germany
and expanded slowly in France and Canada. In
the United Kingdom, activity appeared to have
changed little.
Producer prices of finished goods fell slightly in
November, reflecting sharp declines in the prices of
food, gasoline, and fuel oil. Excluding the finished
food and energy components, producer prices
edged higher and, for the twelve months ended in
November, rose at a considerably slower pace than
in the comparable year-earlier period. By contrast,
at the consumer level, prices of nonfood, nonenergy goods increased over October and November at a faster rate than in the previous several
months. Consumer prices of apparel, tobacco, and
used cars rose sharply in October, and airfares
surged in October and November as domestic airlines sought to restore profit margins that had been
squeezed by promotions over the summer. Even
with these upticks, however, the index of consumer
prices excluding food and energy increased considerably more slowly in the twelve months ended in
November than in the year-earlier period. Average
hourly earnings of private production or nonsupervisory workers also rose more rapidly in Novem-
ber; the strongest gains were in the finance, insurance, and real estate category, but sizable increases
were recorded in several other sectors as well.
Nevertheless, average hourly earnings rose more
slowly over the twelve months ended in November
than over the year-earlier period.
At its meeting on November 17, the Committee
adopted a directive that called for maintaining the
existing degree of pressure on reserve positions and
that included some bias toward possible 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 slightly lesser reserve
restraint would be acceptable during the intermeeting period. The contemplated reserve conditions
were expected to be consistent with growth of M2
and M3 at annual rates of about 3]A and 1 percent
respectively over the three-month period from
September through December.
Open market operations during the intermeeting
period were directed toward maintaining the existing degree of pressure on reserve positions. One
small technical decrease was made during the
period to expected levels of adjustment plus
seasonal borrowing to reflect the usual pattern of
diminishing needs for seasonal credit. Because of
settlement-day pressures, actual borrowing along
with the federal funds rate tended to average a little
above expected levels.
Changes in other short-term interest rates were
mixed over the intermeeting period. In the market
for Treasury securities, bill rates were essentially
unchanged while bond yields fell despite the emergence of a more robust economic picture. Tending
to offset the effects of the latter on long-term rates
was the tenor of statements emanating from the
incoming Administration, which were viewed by
market participants as reducing the likelihood of a
large fiscal stimulus package. The recent step-up in
the size of bill auctions and the potential for some
shortening of the maturity of Treasury debt issues
under the new Administration also might have contributed to the flattening of the Treasury yield
curve. Market expectations of year-end pressures
sharply boosted interest rates on very short-term
private paper for a time; however, concerns about
Record of Policy Actions of the Federal Open Market Committee
year-end pressures subsequently abated, and much
of the rise in rates was retraced. Most three- to
six-month private rates fell on balance over the
period; the lower rates likely were associated with
lessened expectations of year-end pressures but
also might have reflected perceptions of reduced
credit risks in a strengthening economy. Buoyed
by the prospects for a stronger economy and the
declines that had occurred in bond yields, most
major indexes of stock prices reached record highs.
In foreign exchange markets, the trade-weighted
value of the dollar in terms of the other G-10
currencies was essentially unchanged on balance
over the intermeeting period. The dollar moved
moderately higher over the first half of the period
in response to incoming data suggesting that the
prospects for sustained economic growth in the
United States were improving while the economic
outlook for Japan and Germany was deteriorating
somewhat. Later in the period, the dollar gave up
its gains, partly as a result of strong antiinflationary statements from Bundesbank officials
that damped market expectations of near-term monetary easing in Germany. The relative stability of
the dollar contrasted sharply with the rekindling of
exchange rate pressures among a number of European currencies.
The growth of M2 slowed in November, and on
average it had expanded at a moderate pace in
recent months; the limited available data indicated
a further reduction in growth of this aggregate in
December. The recent behavior of M2 largely
reflected a sharp falloff in the expansion of demand
deposits associated with a backup in money market
rates in previous months and a likely slowing in the
rate of increase in mortgage refinancing activity.
M3 expanded at a relatively slow rate in November
and appeared to be declining in December. For the
year, both M2 and M3 apparently grew at rates a
little below the lower ends of the annual ranges
established by the Committee.
The staff projection prepared for this meeting
suggested a continuing expansion in economic
activity that would be associated with gradual
reductions in the margins of unemployed or
underutilized labor and capital resources. The
pickup in economic activity in recent months,
through its positive effects on confidence and
incomes, was expected to provide greater momentum to the economy in the near term. However, this
325
impetus would in part be offset by weaker export
demand as a result of slower growth abroad and the
higher level of the dollar; the earlier backup in
long-term interest rates, only part of which was
retraced in recent weeks, also would have a
restraining effect. Consumer spending, which had
outpaced income growth in the second half of
1992, was projected to expand more in line with
incomes in coming quarters. Residential construction was expected to strengthen gradually as concerns about employment security receded and
incomes improved. Spending increases on business
equipment were expected to be sustained in part
by continuing efforts to improve productivity, and
investment in industrial building and in commercial structures other than office buildings would
begin to pick up in 1993. While recognizing the
possibility of a stimulative fiscal initiative in 1993,
the staff retained for this forecast the assumption in
several recent forecasts that fiscal policy would be
mildly restrictive. The persisting, though diminishing, slack in resource utilization over the forecast
period was expected to be associated with additional progress in reducing inflation.
In the Committee's discussion of current and
prospective economic developments, the members
cited growing indications of a somewhat stronger
expansion than had seemed to be under way earlier
and a marked improvement in business and consumer confidence, especially over the past month
or two. Although substantial uncertainties still surrounded the outlook, these developments provided
encouraging support for forecasts of continued economic growth at a pace sufficient to reduce gradually margins of unutilized resources. The expansion now seemed to have gathered fairly broadbased momentum that might be reinforced over
the quarters ahead by business efforts to build
up inventories in the context of generally low
inventory-to-sales ratios. Moreover, the improving
financial condition of many households and business firms, notably banking institutions, was a
promising development that should reduce constraints on economic growth over coming quarters.
The possibility of expansionary fiscal measures
was another source of potential short-term stimulus
to the economy, though one surrounded by substantial uncertainty with respect to the nature, size, and
timing of any fiscal initiatives and the longer-run
consequences. On the negative side, many of the
326
Federal Reserve Bulletin • April 1993
members stressed what they regarded as a worsening outlook for U.S. exports; they also noted the
continuing weakness in commercial construction,
defense spending, and the retarding effects on
employment of ongoing downsizing and restructuring by many business and financial firms. With
regard to the outlook for inflation, some of the
recent reports on prices and wages had been less
favorable than earlier. However, against the background of continuing though diminishing slack in
production resources, favorable trends in productivity, and restrained growth in the broad measures
of money, the members generally continued to
anticipate further progress toward price stability
over the forecast horizon.
The statistical evidence of a stronger expansion
was bolstered by anecdotal reports of improving
business conditions across much of the nation.
Confidence appeared to be rising in most areas
and indeed seemed to be leading the statistics.
Some members observed, however, that representatives of many larger business firms did not seem to
share the ebullient mood of their smaller business
counterparts, possibly reflecting the still active
retrenchment efforts of many large firms and growing indications for some of weakening markets
abroad. There also were significant geographic
exceptions to the improving business climate, notably in areas that were substantially affected by
cutbacks in defense spending, business consolidation and cost-cutting activities, and underlying
weakness in the energy industry. On balance, regional weakness in parts of the country such as
southern California tended to be masked in the
overall economic statistics by what were increasingly robust business conditions in the rest of the
nation.
Personal consumption expenditures had posted
relatively good gains over the past several months,
and retail sales were displaying considerable
strength in the ongoing holiday season according to
anecdotal reports from around the country. Further
growth in consumer expenditures was expected to
provide a key underpinning for continuing economic expansion. A development that might well
be buttressing consumer spending was the improvement in existing home sales and the related capital
gains that were tending to supplement the recent
strengthening in disposable incomes. Nonetheless,
the contribution of the consumer sector was likely
to be constrained by a number of factors despite the
recent surge in consumer confidence. In particular,
an already low saving rate and still substantial
household debt burdens would tend to restrain the
growth in consumption expenditures. Moreover, it
seemed likely that gains in employment would
continue to be relatively limited, owing to further
business restructuring activities and related
improvements in productivity that would tend to
hold down the demand for new workers. Even so,
the pace of business hiring could be expected to
quicken as existing workers were utilized more
fully and the practical limits to increasing output
through overtime work were reached.
Continuing efforts to improve productivity were
seen as likely to stimulate appreciable further
expansion in business fixed investment. Much of
that expansion was expected to take the form of
substantial further growth in outlays for business
equipment, especially if an investment tax credit
were to be enacted. At the same time, investment in
nonresidential structures was projected to stabilize
for the nation as a whole next year after declining
in recent years. In this connection, members drew
some encouragement from anecdotal reports that
prices, rental rates, and other terms relating to the
value of commercial real estate seemed to be bottoming out in several depressed markets, though a
turnaround involving significant new construction
was unlikely for an extended period in many of
those markets. The outlook for housing construction was more promising, especially for the singlefamily sector. Housing activity had strengthened at
least marginally in recent months in many parts of
the country, and the conjunction of reduced mortgage rates and some projected increase in incomes
was expected to support at least a gradual uptrend
in housing construction.
With regard to fiscal policy, members noted that
the bond markets had responded favorably in recent
weeks to indications that the incoming Administration would give emphasis to reducing the federal
budget deficit over time. Indeed, the prompt enactment of legislation to achieve that objective
undoubtedly would bolster business and consumer
confidence as well as bond markets, with favorable
effects on the economy. Some members cautioned,
however, that those effects would tend to be
negated to the extent that lower federal spending
was offset by legislated increases in required
Record of Policy Actions of the Federal Open Market Committee
spending by business firms to finance worker benefits and other programs; such spending would
reduce profits and incentives to expand and ultimately would boost costs and prices. In any event,
the course of fiscal legislation remained highly
uncertain in terms of its size, structure, and timing
and thus its near- and longer-term effects on the
economy.
Many of the members saw a substantial risk that
lagging exports could exert a significant constraint
on the domestic expansion. There were increasing
indications of a weaker economic performance in
many foreign countries, which were reinforced by
recent anecdotal reports from contacts at domestic
firms engaged in international business activities.
However, while the risks for prospective economic
activity abroad seemed to be tilted to the downside, stimulative policy responses by foreign
authorities—some of which had already been
initiated—might well alter developing trends. For
now, though, diverging business trends in the
United States and foreign nations in association
with the rise that had occurred in the dollar over the
course of recent months pointed to a worsening
trade balance for the United States.
The members generally anticipated further
progress toward price stability, although some now
expected somewhat less improvement than they
had earlier. In the view of many members, key
factors underlying a favorable inflation outlook
included the persisting, though decreasing, slack in
the utilization of production resources associated
with the moderate expansion expected in overall
economic activity and the slow growth that had
occurred for an extended period in the broad measures of money. While recent data on consumer
prices and wages had a somewhat less favorable
tenor, price competition remained vigorous in markets for many goods and developments in longterm debt markets suggested some shift in expectations toward lower inflation. It also was noted that
ongoing cutbacks in work forces by many employers, including widely publicized reductions by
some major corporations, were tending to limit
demands for higher wages. Another important
influence was the strong competition from foreign
suppliers in the context of sluggish demands in
their own markets and the rise in the foreign
exchange value of the dollar. Rapid increases in the
narrow measures of money and reserves also were
327
cited as possibly signifying a risk on the other side
if such increases persisted—that is, that monetary
policy might soon be accommodating renewed
inflationary pressures.
In the Committee's discussion of short-run policy for the period until the next meeting, all of the
members expressed a preference for maintaining an
unchanged degree of pressure on reserve positions;
all also indicated that they could support a shift
from the tilt toward ease incorporated in recent
directives to a symmetrical directive that would not
include any bias with regard to possible adjustments to the degree of reserve restraint during the
intermeeting period. Improved prospects for moderate economic growth argued for maintaining the
Committee's current stance in reserve markets, and
they also warranted a shift toward a more balanced
approach to possible intermeeting changes in
policy. At the same time, the still considerable
uncertainties surrounding the economic outlook,
including some lingering questions about the
sustainability of the expansion, indicated the
desirability of a cautious approach to any policy
changes. In this connection, several members
referred to the swings in the outlook that had
characterized the current expansion, including the
recent reversal of sentiment regarding the strength
of the expansion, and the associated risks of premature or misdirected policy moves.
The members observed that the next policy move
might be in either direction. For example, the need
for some easing could not be ruled out should the
expansion again appear to be faltering. Substantial
weakness in the monetary aggregates over coming
months would be one factor to be weighed in
assessing the economic outlook, though velocity
developments also would have to be taken into
account. On the other hand, a stronger economic
performance might raise questions as to the need
for a tightening move at some point during the year
ahead as a means of maintaining progress toward
price stability while continuing to encourage maximum sustainable economic expansion. If a tightening move were to be needed, it would be desirable
to implement such a move before inflation pressures showed through in the actual price statistics
in order to avoid sharp and potentially disruptive
tightening actions later. One member expressed
concern about the risk of maintaining an overly
stimulative monetary policy for too long, with
328
Federal Reserve Bulletin • April 1993
adverse consequences for inflation; while not prepared to tighten policy at this point, he indicated
a preference for biasing the directive toward
restraint.
In the course of this discussion, the members
took account of a staff analysis that pointed to quite
sluggish growth in M2 and M3 over the months
ahead and to a marked slowing in the expansion
of Ml. The broader monetary aggregates were
expected to continue to be affected by the various
factors that had inhibited their growth over the past
two years and that had induced a substantial diversion of credit flows from banking institutions into
capital market instruments. Moreover, some special
factors that had boosted the growth of the broader
aggregates in recent months, such as the enlarged
volume of mortgage refinancing activity, would
tend to dissipate in the months immediately ahead,
assuming no significant change in mortgage interest rates. While the atypically slow growth of the
broader aggregates during the current economic
recovery did not under prevailing circumstances
have the usual implications for the performance of
the economy, given the concomitant and unusual
rise in their velocities, several members nonetheless expressed concern about the persistence of the
lagging growth. A few were more concerned about
the behavior of the narrower measures of money
such as Ml or the monetary base whose growth
had been unsustainably rapid over much of 1992,
though these now gave some indications of moderating. There was general agreement that the performance of the various monetary aggregates should
continue to be monitored with special care.
At the conclusion of the Committee's discussion,
all of the members indicated their support of a
directive that called for maintaining the existing
degree of pressure on reserve positions and that did
not include a presumption about the likely direction
of any adjustments to policy 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, the Committee decided that slightly
greater or slightly lesser monetary restraint would
be acceptable during the intermeeting period. The
reserve conditions contemplated at this meeting
were expected to be consistent with M2 growth at
an annual rate of about IV2 percent and with M3
about unchanged 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 suggests
that economic activity has been rising appreciably in the
current quarter. Total nonfarm payroll employment has
increased slightly since September, and the average
workweek has moved higher. The civilian unemployment rate fell further in November to 7.2 percent. Industrial production posted solid gains in October and
November. Retail sales increased sharply in October and
rose further in November. Residential construction activity appears to have increased from the third-quarter pace.
Indicators of business fixed investment have been mixed
recently, but on balance they suggest further growth. The
nominal U.S. merchandise trade deficit narrowed somewhat in October from its average rate in the third quarter.
Recent data on wages and prices suggest on balance a
possible slowing in the trend toward lower inflation.
Changes in short-term interest rates have been mixed
since the Committee meeting on November 17 while
bond yields have edged lower. In foreign exchange markets, the trade-weighted value of the dollar in terms of
the other G-10 currencies was essentially unchanged on
balance over the intermeeting period.
Over the course of recent months, M2 has expanded at
a moderate pace, while M3 has continued to expand at a
very slow rate. More recently, both aggregates have
weakened somewhat. Both appear to have grown at rates
a little below the lower ends of the ranges established by
the Committee for the year.
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 on
June 30-July 1 reaffirmed the ranges it had established
in February for growth of M2 and M3 of 2Vi to 6V2 percent and 1 to 5 percent respectively, measured from the
fourth quarter of 1991 to the fourth quarter of 1992. The
Committee anticipated that developments contributing to
unusual velocity increases could persist in the second
half of the year. The monitoring range for growth of total
domestic nonfinancial debt also was maintained at AV2 to
8V2 percent for the year. For 1993, the Committee on a
tentative basis set the same ranges as in 1992 for growth
of the monetary aggregates and debt measured from the
fourth quarter of 1992 to the fourth quarter of 1993. The
behavior of the monetary aggregates will continue to be
evaluated in the light of progress toward price level
stability, movements in their velocities, and developments in the economy andfinancialmarkets.
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
Record of Policy Actions of the Federal Open Market Committee
consideration to economic, financial, and monetary
developments, slightly greater reserve restraint or
slightly lesser reserve restraint would be acceptable in
the intermeeting period. The contemplated reserve conditions are expected to be consistent with M2 growing at
a rate of around 1V2 percent and M3 about unchanged in
the period from November through March.
329
Votes for this action: Messrs. Greenspan, Corrigan,
Angell, Hoenig, Jordan, Kelley, LaWare, Lindsey,
Melzer, Mullins, Ms. Phillips, and Mr. Syron. Votes
against this action: None.
•
331
Legal Developments
FINAL RULE—AMENDMENTS
HAND
Y
TO
REGULATIONS
The Board of Governors is amending 12 C.F.R. Parts
208 and 225, Regulations H and Y, 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
(that is, not deducted from) the Tier 1 capital calculation for risk-based and leverage capital purposes.
The revision also includes limits and discounts that
are applicable to those intangible assets included in
capital. The revision was formulated in conjunction
with the staffs of the four federalfinancialinstitutions
regulatory agencies [the Federal Reserve, Federal
Deposit Insurance Corporation (FDIC), Office of the
Comptroller of the Currency (OCC), and Office of
Thrift Supervision (OTS)] and, when made final by
the other agencies, will achieve greater consistency
among the agencies with respect to the capital treatment of intangible assets. In addition, certain aspects
of the final rule implement provisions of the Federal
Deposit Insurance Corporation Improvement Act of
1991 (FDICIA).
Effective March 9, 1993, 12 C.F.R. Parts 208 and
225 are amended as follows:
Part 208—Membership of State Banking
Institutions in the Federal Reserve System
1. The authority citation for Part 208 is revised to read
as follows:
Authority: 12 U.S.C. 321-338, 248(a), 248(c), 461,
481-486, 601, and 611; 12 U.S.C. 1814 and 1823(j);
12 U.S.C. 3105; 12 U.S.C. 3906-3909; 15 U.S.C. 78b,
78/(b), 78/(g), 78/(i), 78o-4(c) (5), 78q, 78q-l, and 78w;
12 U.S.C. 36; 12 U.S.C. 3310 and 3331-3351.
APPENDIX
A—[AMENDED]
2. Appendix A to Part 208 is amended by revising the
first sentence and by removing the second sentence of
the first undesignated paragraph of section II. A. 1. ; by
revising the first undesignated paragraph of section
II.A.2.; by revising the first sentence of section
II.A.2.d.; by revising paragraph (i) of section II.B.; by
revising section II.B.l.b.; by revising footnote 14 in
section II.B.l.b.; and by revising footnote 16 of
section II.B.2., to read as follows:
II. Definition of Qualifying Capital for the
Risk-Based Capital Ratio
*
*
*
1. * * * Tier 1 capital is generally defined as the sum of
core capital elements5 less goodwill and other intangible assets required to be deducted in accordance with
section II.B.l.b. of this appendix. * * *
2 * * * The maximum amount of Tier 2 capital that
may be included in a bank's qualifying total capital is
limited to 100 percent of Tier 1 capital (net of
goodwill and other intangible assets required to be
deducted in accordance with section II.B.l.b. of this
appendix). * * *
d. * * * The aggregate amount of term subordinated
debt (excluding mandatory convertible debt) and
intermediate-term preferred stock that may be treated
as supplementary capital is limited to 50 percent of
Tier 1 capital (net of goodwill and other intangible
assets required to be deducted in accordance with
section II.B.l.b. of this appendix). * * *
Q ** *
(i) (a) Goodwill—deducted from the sum of core
capital elements.
(b) Certain identifiable intangible assets, that is,
intangible assets other than goodwill—deducted
from the sum of core capital elements in accordance with section II.B.l.b. of this appendix.
*
*
*
5. During the transition period and subject to certain limitations set
forth in section IV below, Tier 1 capital may also include items defined
as supplementary capital elements.
332
Federal Reserve Bulletin • April 1993
j ** *
b. Other intangible assets. The only types of identifiable intangible assets that may be included in, that is,
not deducted from, a bank's capital are readily marketable purchased mortgage servicing rights and purchased credit card relationships, provided that, in the
aggregate, the total amount of these assets included in
capital does not exceed 50 percent of Tier 1 capital.
Purchased credit card relationships are subject to a
separate sublimit of 25 percent of Tier 1 capital.14
For purposes of calculating these limitations on
purchased mortgage servicing rights and purchased
credit card relationships, Tier 1 capital is defined as
the sum of core capital elements, net of goodwill and
all identifiable intangible assets other than purchased
mortgage servicing rights and purchased credit card
relationships, regardless of the date acquired. This
method of calculation could result in purchased mortgage servicing rights and purchased credit card relationships being included in capital in an amount
greater than 50 percent—or in purchased credit card
relationships being included in an amount greater than
25 percent—of the amount of Tier 1 capital used to
calculate an institution's capital ratios. In such instances, the Federal Reserve may determine that a
bank is operating in an unsafe and unsound manner
because of overreliance on intangible assets in Tier 1
capital.
Banks must review the book value of all intangible
assets at least quarterly and make adjustments to these
values as necessary. The fair market value of purchased mortgage servicing rights and purchased credit
card relationships also must be determined at least
quarterly. The fair market value generally shall be
determined by applying an appropriate market discount rate to the expected future net cash flows. This
determination shall include adjustments for any significant changes in original valuation assumptions, including changes in prepayment estimates or account
attrition rates.
Examiners will review both the book value and the
fair market value assigned to these assets, together
with supporting documentation, during the examination process. In addition, the Federal Reserve may
14. Amounts of purchased mortgage servicing rights and purchased
credit card relationships in excess of these limitations, as well as all
other identifiable intangible assets, including core deposit intangibles
and favorable leaseholds, are to be deducted from a bank's core
capital elements in determining Tier 1 capital. However, identifiable
intangible assets (other than purchased mortgage servicing rights and
purchased credit card relationships) acquire on or before February 19,
1992, generally will not be deducted from capital for supervisory
purposes, although they will continue to be deducted for applications
purposes.
require, on a case-by-case basis, an independent valuation of a bank's intangible assets.
The amount of purchased mortgage servicing rights
and purchased credit card relationships that a bank
may include in capital shall be the lesser of 90 percent
of their fair market value, as determined in accordance
with this section, or 100 percent of their book value, as
adjusted for capital purposes in accordance with the
instructions in the commercial bank Consolidated Reports of Condition and Income (Call Report). If both
the application of the limits on purchased mortgage
servicing rights and purchased credit card relationships and the adjustment of the balance sheet amount
for these intangibles would result in an amount being
deducted from capital, the bank would deduct only the
greater of the two amounts from its core capital
elements in determining Tier 1 capital.
The treatment of identifiable intangible assets set
forth in this section generally will be used in the
calculation of a bank's capital ratios for supervisory
and applications purposes. However, in making an
overall assessment of a bank's capital adequacy for
applications purposes, the Board may, if it deems
appropriate, take into account the quality and composition of a bank's capital, together with the quality and
value of its tangible and intangible assets. * * *
2. 16 An exception to this deduction would be made in
the case of shares acquired in the regular course of
securing or collecting a debt previously contracted in
good faith. The requirements for consolidation are
spelled out in the instructions to the Call Report.
3. Appendix A to Part 208 is amended by revising the
third undesignated paragraph of section III.C.4. to
read as follows:
III. Procedures for Computing Weighted-Risk
Assets and Off-Balance-Sheet Items
£ ** *
4. * * * The following assets also are assigned a risk
weight of 100 percent if they have not been deducted
from capital: investments in unconsolidated companies, joint ventures, or associated companies; instruments that qualify as capital issued by other
banking organizations; and any intangibles, including those that may have been grandfathered into
capital.
4. Appendix A to Part 208 is amended by revising the
first, second, and third sentences of the first undesignated paragraph of section IV.A. to read as follows:
Legal Developments
IV. Minimum Supervisory Ratios and
Standards
A. * * * As reflected in Attachment VI, by year-end
1992, all state member banks should meet a minimum
ratio of qualifying total capital to weighted risk assets
of 8 percent, of which at least 4.0 percentage points
should be in the form of Tier 1 capital. For purposes of
section IV.A., Tier 1 capital is defined as the sum of
core capital elements less goodwill and other intangible assets required to be deducted in accordance with
section II.B.l.b. of this appendix. The maximum
amount of supplementary capital elements that qualifies as Tier 2 capital is limited to 100 percent of Tier 1
capital. * * *
5. In Appendix A to Part 208, the table in Attachment
II is amended by revising the fifth entry of the left
column and by revising footnote 1 of the fifth entry of
the left column to read as follows:
Attachment II—Summary Definition of
Qualifying Capital for State Member Banks*
Using the Year-End 1992 Standards
Components
Less: Goodwill and other intangible assets required to
be deducted from capital.1
*See discussion in section II of the guidelines for a
complete description of the requirements for, and the
limitations on, the components of qualifying capital.
1
Requirements for the deduction of other intangible
assets are set forth in section II.B.l.b. of this
appendix.
333
and other intangible assets required to be deducted
from capital. 3
3
Requirements for the deduction of other intangible
assets are set forth in section II.B.l.b. of this appendix.
APPENDIX
B—[AMENDED]
7. Appendix B to Part 208 is amended by revising
footnote 2 and by revising the last sentence of the
second undesignated paragraph of section II to read as
follows:
II. THE TIER 1 LEVERAGE
RATIO
2
At the end of 1992, Tier 1 capital for state member
banks includes common equity, minority interest in
equity accounts of consolidated subsidiaries, and qualifying noncumulative perpetual preferred stock. In
addition, as a general matter, Tier 1 capital excludes
goodwill; amounts of purchased mortgage servicing
rights and purchased credit card relationships that, in
the aggregate, exceed 50 percent of Tier 1 capital;
amounts of purchased credit card relationships that
exceed 25 percent of Tier 1 capital; and all other
intangible assets. The Federal Reserve may exclude
certain investments in subsidiaries or associated companies as appropriate.
Final Arrangement—Year End 1992
* * * As a general matter, average total consolidated
assets are defined as the quarterly average total assets
(defined net of the allowance for loan and lease losses)
reported on the bank's Reports of Condition and
Income (Call Report), less goodwill; amounts of purchased mortgage servicing rights and purchased credit
card relationships that, in the aggregate, are in excess
of 50 percent of Tier 1 capital; amounts of purchased
credit card relationships in excess of 25 percent of
Tier 1 capital; all other intangible assets; and any
investments in subsidiaries or associated companies
that the Federal Reserve determines should be deducted from Tier 1 capital.3
Common equity, qualifying noncumulative perpetual
preferred stock, and minority interest less goodwill
3. Deductions from Tier 1 capital and other adjustments are
discussed more fully in section II.B. of Appendix A to this Part.
6. In Appendix A to Part 208, the table in Attachment
VI is amended by revising the second entry of the
fourth column and by adding a new footnote number 3
to the second entry of the fourth column to read as
follows:
Attachment VI—Summary of:
334
Federal Reserve Bulletin • April 1993
Part 225—Bank Holding Companies and
Change in Bank Control
1. The authority citation for Part 225 continues to read
as follows:
Authority: 12 U.S.C. 18170) (13), 1818, 1831i, 1843(c)
(8), 1844(b), 3106, 3108, 3907, 3909, 3310, and 33313351.
APPENDIX
A—[AMENDED]
2. Appendix A to Part 225 is amended by revising the
first sentence and by removing the second sentence of
the first undesignated paragraph of section II. A. 1. ; by
revising the first undesignated paragraph of section
II.A.2.; by revising the first sentence of section
II.A.2.d.; by revising paragraph (i) of section II.B.; by
revising section II.B.l.b.; by revising footnote 15 in
section II.B.l.b.; and by revising footnote 17 of section II.B.2. to read as follows:
II. DEFINITION OF QUALIFYING CAPITAL FOR
THE RISK-BASED CAPITAL RATIO
1. * * * Tier 1 capital is generally defined as the sum of
core capital elements6 less goodwill and other intangible assets required to be deducted in accordance with
section II.B.l.b. of this appendix. * * *
2 * * * xhe maximum amount of Tier 2 capital that
may be included in an organization's qualifying total
capital is limited to 100 percent of Tier 1 capital (net of
goodwill and other intangible assets required to be
deducted in accordance with section II.B.l.b. of this
appendix). * * *
d. * * * The aggregate amount of term subordinated
debt (excluding mandatory convertible debt) and
intermediate-term preferred stock that may be
treated as supplementary capital is limited to 50
6. During the transition period and subject to certain limitations set
forth in section IV below, Tier 1 capital may also include items defined
as supplementary capital elements.
percent of Tier 1 capital (net of goodwill and other
intangible assets required to be deducted in accordance with section II.B.l.b. of this appendix). * * *
Q ** *
(i) (a) Goodwill—deducted from the sum of core
capital elements,
(b) Certain identifiable intangible assets, that is,
intangible assets other than goodwill—deduct
ed from the sum of core capital elements in
accordance with section II.B.l.b. of this
j * * appendix,
*
b. Other intangible assets. The only types of identifiable intangible assets that may be included in,
that is, not deducted from, an organization's capital
are readily marketable purchased mortgage servicing rights and purchased credit card relationships,
provided that, in the aggregate, the total amount of
these assets included in capital does not exceed 50
percent of Tier 1 capital. Purchased credit card
relationships are subject to a separate sublimit of 25
percent of Tier 1 capital.15
For purposes of calculating these limitations on purchased mortgage servicing rights and purchased credit
card relationships, Tier 1 capital is defined as the sum
of core capital elements, net of goodwill and all
identifiable intangible assets other than purchased
mortgage servicing rights and purchased credit card
relationships, regardless of the date acquired. This
method of calculation could result in purchased mortgage servicing rights and purchased credit card relationships being included in capital in an amount
greater than 50 percent—or in purchased credit card
relationships being included in an amount greater than
25 percent—of the amount of Tier 1 capital used to
calculate an institution's capital ratios. In such instances, the Federal Reserve may determine that an
organization is operating in an unsafe and unsound
manner because of overreliance on intangible assets in
Tier 1 capital.
Bank holding companies must review the book
value of all intangible assets at least quarterly and
15. Amounts of purchased mortgage servicing rights and purchased
credit card relationships in excess of these limitations, as well as all
other identifiable intangible assets, including core deposit intangibles
and favorable leaseholds, are to be deducted from an organization's
core capital elements in determining Tier 1 capital. However, identifiable intangible assets (other than purchased mortgage servicing
rights and purchased credit card relationships) acquired on or before
February 19, 1992, generally will not be deducted from capital for
supervisory purposes, although they will continue to be deducted for
applications purposes.
Legal Developments
make adjustments to these values as necessary. The
fair market value of purchased mortgage servicing
rights and purchased credit card relationships also
must be determined at least quarterly. The fair market
value generally shall be determined by applying an
appropriate market discount rate to the expected future net cash flows. This determination shall include
adjustments for any significant changes in original
valuation assumptions, including changes in prepayment estimates or account attrition rates.
Examiners will review both the book value and the
fair market value assigned to these assets, together
with supporting documentation, during the inspection
process. In addition, the Federal Reserve may require,
on a case-by-case basis, an independent valuation of
an organization's intangible assets.
The amount of purchased mortgage servicing
rights and purchased credit card relationships that a
bank holding company may include in capital shall
be the lesser of 90 percent of their fair market value,
as determined in accordance with this section, or
100 percent of their book value, as adjusted for
capital purposes in accordance with the instructions
to the Consolidated Financial Statements for Bank
Holding Companies (FR Y-9C Report). If both the
application of the limits on purchased mortgage
servicing rights and purchased credit card relationships and the adjustment of the balance sheet amount
for these intangibles would result in an amount being
deducted from capital, the bank holding company
would deduct only the greater of the two amounts
from its core capital elements in determining Tier 1
capital.
The treatment of identifiable intangible assets set
forth in this section generally will be used in the
calculation of a bank holding company's capital ratios
for supervisory and applications purposes. However,
in making an overall assessment of an organization's
capital adequacy for applications purposes, the Board
may, if it deems appropriate, take into account the
quality and composition of an organization's capital,
together with the quality and value of its tangible and
intangible assets. * * *
2. 17 An exception to this deduction would be made
in the case of shares acquired in the regular course of
securing or collecting a debt previously contracted
in good faith. The requirements for consolidation
are spelled out in the instructions to the FR Y-9C
Report.
3. Appendix A to Part 225 is amended by revising the
third undesignated paragraph of section III.C.4. to
read as follows:
335
III. PROCEDURES FOR COMPUTING
WEIGHTED-RISK ASSETS AND
OFF-BALANCE-SHEET
ITEMS
£ ** *
4. * * * The following assets also are assigned a risk
weight of 100 percent if they have not been deducted
from capital: investments in unconsolidated companies, joint ventures, or associated companies; instruments that qualify as capital issued by other
banking organizations; and any intangibles, including those that may have been grandfathered into
capital.
4. Appendix A to Part 225 is amended by revising the
first, second, third, and fourth sentences of the first
undesignated paragraph of section IV.A. to read as
follows:
IV. MINIMUM SUPERVISORY
STANDARDS
*
*
*
RATIOS
*
AND
*
A. * * * As reflected in Attachment VI, by year-end
1992, all bank holding companies56 should meet a
minimum ratio of qualifying total capital to weighted
risk assets of 8 percent, of which at least 4.0 percentage points should be in the form of Tier 1 capital.
For purposes of section IV.A., Tier 1 capital is
defined as the sum of core capital elements less
goodwill and other intangible assets required to be
deducted in accordance with section II.B.l.b. of this
appendix. The maximum amount of supplementary
capital elements that qualifies as Tier 2 capital is
limited to 100 percent of Tier 1 capital. In addition,
the combined maximum amount of subordinated debt
and intermediate-term preferred stock that qualifies
as Tier 2 capital is limited to 50 percent of Tier 1
capital. * * *
5. In Appendix A to Part 225, the table in Attachment
II is amended by revising the fifth entry of the left
column and by revising footnote 1 of the fifth entry of
the left column to read as follows:
56. As noted in section I above, bank holding companies with less
than $150 million in consolidated assets would generally be exempt
from the calculation and analysis of risk-based ratios on a consolidated holding company basis, subject to certain terms and conditions.
336
Federal Reserve Bulletin • April 1993
Attachment II—Summary Definition of
Qualifying Capital for Bank Holding
Companies* (Using the Year-End 1992
Standards)
Components
Less: Goodwill and other intangible assets required to
be deducted from capital.1
See discussion in section II of the guidelines for a
complete description of the requirements for, and the
limitations on, the components of qualifying capital.
1
Requirements for the deduction of other intangible
assets are set forth in section II.B.l.b. of this appendix.
6. In Appendix A to Part 225, the table in Attachment VI
is amended by revising the second entry of the fourth
column; by revising footnote 1; and by revising footnote
3, which is referenced in the second entries of the second,
third, and fourth columns, to read as follows:
Attachment VI—Summary of:
Final Arrangement—Year-End 1992
Common equity, qualifying noncumulative and cumulative perpetual preferred stock,1 and minority interest
less goodwill and other intangible assets required to be
deducted from capital. 3
II. THE TIER 1 LEVERAGE
RATIO
3
At the end of 1992, Tier 1 capital for bank holding
companies includes common equity, minority interest
in equity accounts of consolidated subsidiaries, qualifying noncumulative perpetual preferred stock, and
qualifying cumulative perpetual preferred stock. (Cumulative perpetual preferred stock is limited to
25 percent of Tier 1 capital.) In addition, as a general
matter, Tier 1 capital excludes goodwill; amounts of
purchased mortgage servicing rights and purchased
credit card relationships that, in the aggregate, exceed
50 percent of Tier 1 capital; amounts of purchased
credit card relationships that exceed 25 percent of
Tier 1 capital; and all other intangible assets. The
Federal Reserve may exclude certain investments in
subsidiaries or associated companies as appropriate.
* * * As a general matter, average total consolidated
assets are defined as the quarterly average total assets
(defined net of the allowance for loan and lease losses)
reported on the banking organization's Consolidated
Financial Statements (FR Y-9C Report), less goodwill;
amounts of purchased mortgage servicing rights and
purchased credit card relationships that, in the aggregate, are in excess of 50 percent of Tier 1 capital;
amounts of purchased credit card relationships in
excess of 25 percent of Tier 1 capital; all other intangible assets; and any investments in subsidiaries or
associated companies that the Federal Reserve determines should be deducted from Tier 1 capital.4
ORDERS ISSUED UNDER BANK
COMPANY ACT
1
Cumulative perpetual preferred stock is limited
within Tier 1 to 25% of the sum of common stockholders' equity, qualifying perpetual preferred stock, and
minority interest.
2** *
3
Requirements for the deduction of other intangible
assets are set forth in section II.B. 1 .b. of this appendix.
APPENDIX
D—[AMENDED]
2. Appendix D to Part 225 is amended by revising
footnote 3 and by revising the last sentence of the
second undesignated paragraph of section II to read as
follows:
HOLDING
Orders Issued Under Section 3 of the Bank
Holding Company Act
Broadstreet, Inc.,
Atlanta, Georgia
AmTrade International Bank of Georgia
Atlanta, Georgia
Order Approving Application to Acquire a Bank, and
Applications to Become a Member of the Federal
Reserve System and to Establish an Agreement
Corporation
Broadstreet, Inc., Atlanta, Georgia ("Broadstreet"),
has applied pursuant to section 3 of the Bank Holding
4. Deductions from Tier 1 capital and other adjustments are
discussed more fully in section II.B. of Appendix A to this Part.
Legal Developments
Company Act (12 U.S.C. § 1842) ("BHC Act") to
acquire 94 percent of the shares of AmTrade International Bank of Georgia, Atlanta, Georgia ("Bank"),
and thereby become a bank holding company within
the meaning of the BHC Act. Bank, a de novo bank
chartered under the laws of Georgia,1 has applied
pursuant to section 9 of the Federal Act
(12 U.S.C. § 321) and section 208.4 of the Board's
Regulation H (12 C.F.R. 208.4) to become a member
of the Federal Reserve System. Bank also has applied
pursuant to section 25 of the Federal Reserve Act
(12 U.S.C. §§ 601-604a) to establish AmTrade International Bank of Florida, Miami, Florida ("AmTrade
International Bank"), an agreement corporation
within the meaning of the Federal Reserve Act.2
Notice of the applications, affording interested persons an opportunity to submit comments, has been
published (57 Federal Register 54,081 (1992)). The
time for filing comments has expired, and the Board
has considered the applications and all comments
received in light of the factors set forth in section 3(c)
of the BHC Act and in the Federal Reserve Act.
In reviewing Broadstreet's application under section 3 of the BHC Act, the Board is required to
consider various supervisory and other factors, including the financial and managerial resources and future
prospects of Broadstreet and Bank, the effects of the
transaction on competition, and the convenience and
needs of the community to be served.
The record in this case indicates that Broadstreet
and Bank will be managed by individuals with banking
experience, and that both Broadstreet and Bank will
be capitalized in excess of minimum capital requirements upon consummation of this transaction. The
de novo entry of Bank into the market for international
banking services should provide added competition for
these services. Additionally, Bank has devised a business plan that includes methods for meeting the
convenience and needs of its community, including a
plan for meeting its responsibilities under the Community Reinvestment Act (12 U.S.C. §§ 2901 et seq.)
For these reasons, and based on all the facts of record,
the Board concludes that the factors it must consider
1. Bank has received approval from the Georgia Department of
Banking and Finance to be chartered as a "special purpose" bank
which, under Georgia law, may be organized for the purpose of
"conducting a limited banking business which facilitates the economic, commercial, and export-import trade growth" of Georgia. Ga.
Code Ann. § 7-l-394(c). In this capacity, Bank will accept deposits,
make loans, and otherwise provide credit and banking services
primarily to firms and individuals in Georgia and other southeastern
states that are engaged in foreign trade and export activities.
2. These applications comprise the proposal by a group of
investors to acquire First American International Bank, Miami,
Florida, the agreement corporation subsidiary of First American
Bank of Georgia, N . A . (In Liquidation), Marietta, Georgia ("First
American-Georgia'').
337
under section 3 of the BHC Act are consistent with
approval of Broadstreet's application to acquire Bank.
The Board also has considered the factors it is
required to consider when reviewing applications for
membership pursuant to section 9 of the Federal
Reserve Act and section 208.4 of the Board's Regulation H, 3 and finds those factors to be consistent with
approval. Bank appears to meet all the criteria in the
Federal Reserve Act for admission to membership,
including capital requirements and considerations related to management character and quality.4
The Board also has considered all the factors it must
consider under section 25 of the Federal Reserve Act
and section 211.4 of the Board's Regulation K in
considering Bank's application to establish AmTrade
International Bank, and finds that this application is
consistent with approval and with the purposes of the
Federal Reserve Act.5 Bank has agreed to conform the
activities of Amtrade International Bank to the requirements of section 25A of the Federal Reserve Act
and the Board's Regulation K. 6
On the basis of the foregoing and all the facts of
record, including all commitments made by Broadstreet
and Bank in the applications and in related correspondence, the Board has determined that the applications
should be, and hereby are, approved. The Board's
determination also is subject to all of the conditions set
forth in Regulation Y and Regulation K, and to the
Board's authority to require 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, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and
orders issued thereunder. For purposes of this action,
these commitments and conditions are both considered
conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be
enforced in proceedings under applicable law. The
Board's approval of these applications is also conditioned upon Broadstreet's and Bank's receiving all
necessary Federal and state regulatory approvals. The
acquisition by Broadstreet of the voting shares of Bank
may not be consummated before the fifth calendar day
following the effective date of this Order.
By order of the Board of Governors, effective
February 19, 1993.
3. See 12 U.S.C. §§ 322 and 1816; 12 C.F.R. 208.4.
4. See id.
5. See 12 U.S.C. §§ 601-604a; 12 C.F.R. 211.4. An agreement
corporation is a company formed to engage in international banking
and financial operations. A member bank may invest in such a
company if the company enters into an agreement with the Board to
limit its activities to those permissible for an Edge Act corporation.
See 12 U.S.C. §§ 603, 611-631.
6. See 12 U.S.C. § 611-631; 12 C.F.R. 211, Subpart A.
338
Federal Reserve Bulletin • April 1993
Voting for this action: Chairman Greenspan and Governors
Kelley, Lindsey, and Phillips. Voting against this action:
Governors Mullins and Angell. Absent and not voting: Governor La Ware.
JENNIFER J . JOHNSON
Associate Secretary of the Board
Dissenting Statement of Governors Mullins and
Angell
In our view, the structure of the proposed transaction is
not clearly consistent with the requirements or purposes
of the Federal Reserve Act. The Federal Reserve Act
imposes limits on the amount that a bank may invest in a
so-called agreement corporation. As a result of these
limits, proposals to establish or acquire agreement corporations have involved well-established banks.
In this case, a newly chartered bank proposes to
acquire an established agreement corporation. The
business of this newly chartered bank, at least over the
foreseeable future, will involve primarily business that
is generated by the agreement corporation. We note
that the shareholders in this case could have structured the proposal in a manner that we believe would
be consistent with the Federal Reserve Act, for example, by acquiring the assets of the agreement corporation through a bank in Florida or by acquiring the
agreement corporation through an established bank.
We do not believe that the structure chosen by the
shareholders in this case is clearly consistent with the
Federal Reserve Act. We would, therefore, deny these
applications.
February 19, 1993
First Commercial Corporation
Little Rock, Arkansas
Order Approving the Acquisition of Banks and
Formation of a Bank Holding Company
First Commercial Corporation, Little Rock, Arkansas
("FCC"), 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(a)(3)) to acquire all the voting shares of Citizens
First National Bank of Tyler, Tyler, Texas ("Tyler
Bank") and Lufkin National Bank, Lufkin, Texas
("Lufkin Bank") (collectively, "Banks") through its
wholly owned subsidiary, FCC Texas, Inc., Little
Rock, Arkansas ("FCC Texas"). In connection with
this application, FCC Texas has applied under section
3(a)(1) of the BHC Act (12 U.S.C. § 1842(a)(1)) to
become a bank holding company by acquiring Banks
directly.
Notice of these applications, affording interested
persons an opportunity to submit comments, has been
given in accordance with the BHC Act and the Board's
Rules of Procedure, 12 C.F.R. 262.3. The time for
filing comments has expired, and the Secretary of the
Board of Governors ("Secretary"), acting pursuant to
authority delegated by the Board, has considered the
applications and all comments received in light of the
factors set forth in section 3(c) of the BHC Act.
On October 30,1992, the twenty subsidiary banks of
First City Bancorporation were declared insolvent and
the FDIC was appointed receiver of each of the banks.
Pursuant to section ll(n) of the Federal Deposit Insurance Act (12 U.S.C. § 1821(n)) ("FDI Act"), the
FDIC established twenty bridge banks to acquire the
assets and to assume the liabilities and deposits of the
closed banks. The FDIC solicited offers for the acquisition of the bridge banks from qualified bidders pursuant to sections ll(n) and 13(c) of the FDI Act
(12 U.S.C. §§ 1821(n) and 1823(c)). On January 26,
1993, the FDIC selected First Commercial's bid for the
bridge banks in Lufkin and Tyler, Texas. Tyler Bank
and Lufkin Bank will each engage in a purchase and
assumption transaction with the bridge banks in Tyler
and Lufkin, respectively, subject to OCC approval
under the Bank Merger Act (12 U.S.C. § 1828(c)). The
FDIC has requested that the Board process this application expeditiously due to the condition of the bridge
banks and to minimize the cost of the transaction to
the FDIC.
Section 3(d) of the BHC Act, 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 home
state, unless such acquisition is "specifically authorized by the statute laws of the State in which such
bank is located, by language to that effect and not
merely by implication."1 FCC, whose home state is
Arkansas for purposes of the Douglas Amendment,
seeks to acquire two banks in Texas. The Texas
Banking Code expressly authorizes the acquisition by
an out-of-state bank holding company of Texas banks
that have been in existence for at least five years,2 and
the Board previously has determined that the inter-
1.12 U.S.C. § 1842(d).
2. Tyler Bank and Lufkin Bank will each purchase the assets and
assume the liabilities of a New First City bridge bank established by
the FDIC in connection with the resolution of the First City Bancorporation of Texas, Inc., The First City bridge banks are, and Banks
will be, the successors to the First City Banks, which were in
existence for more than five years and are therefore eligible to be
acquired by an out-of-state bank holding company under Texas law.
Tex. Rev. Civ. Stat. Ann. art. 342-916, § 2(b) (West 1992).
Legal Developments
state banking statutes of Texas permit the acquisition
of Texas banking organizations by Arkansas banking
organizations.3 Based on all the facts of record, the
Secretary concludes that approval of this proposal is
not prohibited by the Douglas Amendment.
In connection with this application, the Secretary
has taken into consideration the competitive effects of
the proposed transaction and concludes that consummation of this proposal under the BHC Act would not
have a significantly adverse effect on competition in
any relevant banking market. The Secretary also concludes that the financial and managerial resources and
future prospects of FCC and Banks are consistent with
approval. Supervisory factors and factors relating to
the convenience and needs of the communities to be
served are also consistent with approval.
On the basis of the information in the record, the
Secretary finds that an emergency situation exists so
as to require that the Secretary act expeditiously
pursuant to the provisions of section 3(b) of the BHC
Act (12 U.S.C. § 1842(b)). Based on all the facts of
record, the Secretary has determined that the applications should be, and hereby are, approved. The Secretary's decision is specifically conditioned on compliance with all of the commitments made in this
application. For the purpose of this action, these
commitments and conditions are deemed to be conditions imposed in writing by the Secretary in connection with his findings and decision, and, as such, may
be enforced in proceedings under applicable laws.
This transaction may not be consummated before
the fifth day following the effective date of this Order
or later than three months after the effective date of
this Order, unless such period is extended by the
Federal Reserve Bank of St. Louis, acting pursuant to
delegated authority.
By order of the Secretary of the Board, acting
pursuant to delegated authority for the Board of Governors, effective February 8, 1993.
JENNIFER J. JOHNSON
Associate Secretary of the Board
Overton Financial Corporation
Overton, Texas
Order Approving Acquisition of a Bank Holding
Company
Overton Financial Corporation, Overton, Texas, and
its subsidiary, Overton Delaware Corporation, Dover,
3. State First Financial Corporation,
307 (1987).
73 Federal Reserve
Bulletin
339
Delaware (together "Overton"), both bank holding
companies within the meaning of the Bank Holding
Company Act ("BHC Act"), have applied for the
Board's approval under section 3(a)(3) of the BHC Act
(12 U.S.C. § 1842(a)(3)) to acquire up to 20 percent of
the outstanding shares of Longview Financial Corporation, Longview, Texas ("Longview"), and thereby
indirectly acquire Longview's subsidiary bank,
Longview Bank & Trust Company, Longview, Texas
("Longview Bank"). Following consummation of this
acquisition, Overton would own approximately
20 percent of the voting shares of Longview, and
certain management officials of Overton, who also
hold management positions with Longview, would
collectively control an additional 19 percent of the
shares of Longview.1 Thus, as a result of this acquisition, Longview would be considered a subsidiary of
Overton.
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (57 Federal Register 59,352 (1992)). 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.
Overton is the 277th largest commercial banking
organization in Texas, controlling deposits of
$79.8 million, representing less than 1 percent of the
total deposits in commercial banking organizations in
the state.2 Longview is the 80th largest commercial
banking organization in Texas, controlling deposits of
$217.6 million, representing less than 1 percent of the
total deposits in commercial banking organizations in
the state.
Overton and Longview do not compete directly in
any relevant banking market. Based on all the facts of
record, the Board concludes that consummation of
this proposal will not result in significantly adverse
effects on competition in any relevant banking market.
Overton proposes to inject additional capital into
Longview Bank, and Overton has demonstrated that it
has the resources to act as a source of financial and
managerial strength to Longview Bank. Thus, based
on all of the facts of the record, the Board concludes
that the financial and managerial resources and future
prospects of Overton, Longview, and their subsidiaries, and other supervisory factors the Board is re-
1. Overton currently owns approximately 4.8 percent of the shares
of Longview, and this proposal represents the acquisition of additional
shares. Members of one family hold a total of 64 percent of the shares
of Overton and a total of 19 percent of the shares of Longview, and
this family has significant representation in the management of both
organizations.
2. Deposit data are as of June 30, 1991.
340
Federal Reserve Bulletin • April 1993
quired to consider under section 3 of the BHC Act, are
also consistent with approval of this proposal.
Records of Performance Under the CRA
A. CRA Performance Examinations
Convenience and Needs Considerations
In considering an application under section 3 of the
BHC Act, the Board must consider the convenience
and needs of the communities to be served and take
into account the records of the relevant depository
institutions under the Community Reinvestment Act
(12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires the federal financial supervisory agencies to
encouragefinancialinstitutions to help meet the credit
needs of the local communities in which they operate,
consistent with the safe and sound operation of such
institutions. To 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 operations of such institution," and to
take that record into account in its evaluation of bank
holding company applications.3
In this regard, the Board has received comments
from the Black State Employees Association of Texas,
Inc., ("Protestant"), alleging generally that Overton
and Longview and their subsidiary banks have not
complied with the spirit of CRA and other consumer
lending laws in conducting their lending and outreach
activities. In particular, Protestant alleges, on the
basis of data collected under the Home Mortgage
Disclosure Act ("HMDA"), that the subsidiary banks
of Overton and Longview discriminate against
African-Americans and other ethnic minorities in their
lending activities.4 The Board has carefully reviewed
the CRA performance records of Overton, Longview,
and their subsidiary banks, the comments received
and responses to those comments, and all other relevant facts, 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").5
3. 12 U.S.C. § 2903.
4. Protestant also alleges that Overton and Longview engage in
discriminatory employment practices. Overton disputes this allegation
and maintains that both organizations follow a policy of equal employment opportunity throughout their respective organizations. 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 banks' general personnel practices are beyond the scope of
factors that may be assessed under the CRA.
5. 54 Federal Register 13,742 (1989).
The Agency CRA Statement provides that a CRA
examination is an important and often controlling
factor in the consideration of an institution's CRA
record, and that these reports will be given great
weight in the application process.6 In this case, both of
Overton's subsidiary banks—First State Bank, Overton, Texas ("Overton Bank"), and Lindale State
Bank, Lindale, Texas ("Lindale Bank")—have received satisfactory ratings from their primary regulator in their most recent examinations for CRA performance.7 In addition, Longview Bank also received a
satisfactory rating in its most recent examination for
CRA performance.8
B. Community Outreach Efforts
Overton Bank, Lindale Bank and Longview Bank all
have engaged in various activities to ascertain and
meet the credit needs of their delineated communities,
including low- and moderate-income areas. For example, the most recent CRA examination of Overton
Bank noted that the involvement of its directorate and
senior management in local civic, social and religious
organizations has enabled bank management to better
discern community credit needs. As a result of these
activities, Overton Bank has made contributions to
area churches, including predominately minority
member churches, and the bank has extended an
unsecured loan to a predominately minority member
church in the bank's community.
In the case of Longview Bank, examiners have
commended its ascertainment efforts, including the
participation of bank management and personnel in
civic and charitable groups, as well as its sponsoring of
various credit education seminars, including homebuying seminars and seminars in managing personal
finances. A community focus group, comprised of
individuals from various ethnic and racial backgrounds, meets regularly to provide Longview Bank
with information on the loan and deposit needs of its
delineated community. Additionally, Longview Bank
has sought to ascertain the credit needs of minorities in
its community by meeting with various individuals and
groups representing
minority
neighborhoods.
6. Id. at 13,745.
7. Overton Bank received a "satisfactory" rating from the Federal
Deposit Insurance Corporation ("FDIC") on February 18, 1991;
Lindale Bank received a "satisfactory" rating from the FDIC on
February 22, 1991.
8. Longview Bank received a "satisfactory" rating from the FDIC
on February 1, 1991.
Legal Developments
Longview Bank also trains bank employees in practices designed to afford equal treatment to credit
applicants. Lindale Bank also has sought to ascertain
and meet community credit needs through the direct
involvement of the bank's management and employees
in various community and civic groups. As a result of
these outreach efforts, Lindale Bank has provided
financing for several years to minority owned businesses and companies whose employees are predominantly minorities.
C. HMDA Data and Lending Practices
The Board has carefully reviewed the 1990 and 1991
HMDA data reported by Lindale Bank and Longview
Bank, in light of Protestant's comments.9 Because all
banks are obligated to ensure that their lending practices are based on criteria that assure not only safe and
sound lending, but also assure equal access to credit
by creditworthy applicants regardless of race, the
Board is concerned when the record of an institution
indicates disparities in lending to minority applicants.
The Board recognizes, however, that HMDA data
alone provide only a limited measure of any given
institution's lending in its community. The Board also
recognizes that HMDA data have limitations that
make the data an inadequate basis, absent other information, for conclusively determining whether an institution has engaged in illegal discrimination on the basis
of race or ethnicity in making lending decisions. In this
case, an analysis of the relevant HMDA data does not
indicate that there are disparities in the rates of
housing-related loan applications, and in approvals
and denials that vary by racial or ethnic group in the
areas served by these banks. Moreover, the most
recent examinations for CRA performance conducted
by bank supervisory agencies found no evidence of
illegal discrimination or other illegal credit practices at
the subsidiary banks of Overton and Longview.
The Board also notes that Overton and Longview
have taken certain measures to make the housingrelated financing activities of their subsidiary banks
more responsive to the credit needs of low- and
moderate-income communities within their delineated
service areas. For example, the president of Overton
Bank serves as the chairman of the Neighborhood
Improvement Committee, a newly formed organization that aims to identify substandard housing in the
low- and moderate-income areas within Overton
Bank's delineated community and distribute funds to
the property owners. To date, this committee has
9. Because Overton Bank does not operate in a Metropolitan
Statistical Area, it is not subject to HMDA reporting requirements.
341
identified 15 residences that could receive low interest
loans for home-improvement from a fund that Overton
Bank has agreed to establish. Additionally, Overton
Bank reports that 132 (or approximately 21 percent) of
its 643 installment loans currently outstanding are to
minorities.
In the most recent CRA examination of Lindale
Bank, examiners noted that this bank is committed to
funding construction of low-income housing. For example, Lindale Bank has provided interim financing to
Amy House, Inc., for the construction of low-income
homes, and the bank is also providing financing for the
purchase of vacant lots upon which several lowincome homes will be constructed. Examiners also
noted that Lindale Bank participates in loan programs
sponsored by the Farmers Home Administration and
the Small Business Administration ("SBA").
In an effort to provide financing to potential homebuyers in low- and moderate-income areas, Longview
Bank has worked closely with the City of Longview to
develop a program that:
(1) Provides grants of up to $2,500 to cover closing
costs;
(2) Offers below-market interest rates and requires
only a 5 percent down payment; and
(3) Allows applicants to establish a favorable credit
history through non-traditional credit references
such as statements from previous landlords and
utility companies.
Longview Bank has closed several loans under this
program since introducing it in August 1992. In addition, Longview Bank has been active in making SBAguaranteed loans, and the bank was recently authorized to offer Federal Housing Administration loans to
first-time homebuyers. In its most recent CRA examination, examiners also found that the geographic
distribution of the bank's credit applications, extensions and denials demonstrates a reasonable penetration of all segments of its local community, including
low- and moderate-income neighborhoods.
D. Conclusion Regarding Convenience and
Needs Factors
The Board has carefully considered the entire record
of this application, including the comments submitted
by Protestant, in reviewing the convenience and needs
factor under the BHC Act. Based on a review of the
entire record of performance of Overton and
Longview and their subsidiary banks, including the
performance examinations by the banks' primary regulator, the Board believes that the efforts of Overton
and Longview and their subsidiary banks to help meet
the credit needs of all segments of their delineated
342
Federal Reserve Bulletin • April 1993
communities, including low- and moderate-income
neighborhoods, are consistent with approval of this
application. Thus, based on all of the facts of record,
the Board concludes that convenience and needs considerations are consistent with approval of this application.
Based on the foregoing, including the conditions and
commitments described in this Order and those made
in this application, and all the facts of record, the
Board has determined that this application should be,
and hereby is, approved.10 The Board's approval is
specifically conditioned upon compliance by Overton
with all the commitments made in connection with this
application. The commitments and conditions relied
on by the Board in reaching this decision are deemed
to be conditions imposed in writing by the Board in
connection with its findings and decision, and as such
may be enforced in proceedings under applicable law.
This approval is also conditioned upon Overton receiving all necessary Federal and state approvals.
This transaction should not be consummated before
the thirtieth calendar day following the effective date
of this Order, or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or the Federal
Reserve Bank of Dallas, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
February 22, 1993.
Voting for this action: Chairman Greenspan and Governors
Mullins, Angell, La Ware, Lindsey, and Phillips. Absent and
not voting: Governor Kelley.
JENNIFER J. JOHNSON
Associate Secretary of the Board
10. Protestant has requested a public hearing or meeting on the
issues raised in its comments. Section 3(b) of the BHC Act does not
require the Board to hold a hearing or meeting on an application unless
the appropriate supervisory authority of the bank to be acquired
makes a timely written recommendation of denial of the application.
In this case, the Board has not received such a recommendation.
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 C.F.R. 262.3(e) and 262.25(d). The
Board has carefully considered this request. In the Board's view,
Protestant has had ample opportunity to present written submissions,
and Protestant has submitted substantial written comments that have
been considered by the Board. In light of these facts, the Board has
determined that a public hearing or meeting is not necessary to clarify
the factual record in this application, or otherwise warranted in this
case. Accordingly, Protestant's request for a public hearing or meeting on this application is denied.
Orders Issued Under Section 4 of the Bank
Holding Company Act
BB&T Financial Corporation
Wilson, North Carolina
Order Approving Applications to Acquire a Savings
Association and to Engage in Consumer Lending
Activities
BB&T Financial Corporation, Wilson, North Carolina ("BB&T"), a bank holding company within the
meaning of the Bank Holding Company Act ("BHC
Act"), has applied for the Board's approval under
section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23), to acquire indirectly
First Financial Savings Bank, Inc., Kinston, North
Carolina ("Savings Bank"),1 a state chartered savings association, and also to engage in consumer
lending activities through a subsidiary of Savings
Bank.2 BB&T also has requested Board approval
pursuant to section 5(d)(3) of the Federal Deposit
Insurance Act, 12 U.S.C. § 1815(d)(3)(A)(ii) (the
"FDI Act"), as amended by the Federal Deposit
Insurance Corporation Improvement Act of 1991,
Pub. L. No. 102-242, § 501, 105 Stat. 2236, 2388
(1991), to merge Savings Bank with and into Bank.
Section 5(d)(3) of the FDI Act requires the Board to
follow the procedures and consider the factors set
forth in the Bank Merger Act, 12 U.S.C. § 1828(c),
in its evaluation of applications under section 5(d)(3)
of the FDI Act. 3
Notice of the applications, affording interested
persons an opportunity to submit comments, has
been published (57 Federal Register 43,229 (1992)).
As required by the Bank Merger Act, reports on the
competitive effects of the mergers were requested
1. BB&T has proposed a two-step transaction to acquire Savings
Bank. Savings Bank's parent company, First Fincorp, Inc., Kinston,
North Carolina ("Fincorp"), a unitary savings and loan holding
company, would merge with and into BB&T. BB&T proposes to
operate Savings Bank as a savings association for a short period of
time, and then merge Savings Bank with and into its subsidiary bank,
Branch Banking and Trust Company, Wilson, North Carolina
("Bank"). The merger of Savings Bank into Bank is subject to
approval by the Federal Deposit Insurance Corporation ("FDIC")
under the Federal Deposit Insurance Act and the Bank Merger Act.
12 U.S.C. §§ 1815(d)(3)(A)(i) and 1828(c).
In connection with this proposal, Fincorp has issued to BB&T an
option to purchase, under certain circumstances, up to 24.9 percent of
the outstanding common stock of Fincorp. The option will terminate
upon the occurrence of certain events.
2. Savings Bank engages in consumer lending activities through City
Finance Company, Inc., Kinston, North Carolina.
3. These factors include considerations relating to competition,
financial and managerial resources, future prospects of the existing
and proposed institutions, and the convenience and needs of the
communities to be served. 12 U.S.C. § 1828(c).
Legal Developments
from the United States Attorney General, the Office
of the Comptroller of the Currency, and the Federal
Deposit Insurance Corporation. The time for filing
comments has expired, and the Board has considered
the applications and all comments received in light of
the factors set forth in section 4(c)(8) of the BHC Act
and in the Bank Merger Act.
The Board has determined that the operation of a
savings association by a bank holding company is
closely related to banking for purposes of section
4(c)(8) of the BHC Act. 4 In making this determination, the Board required that savings associations
acquired by bank holding companies conform their
direct and indirect activities to those permissible for
bank holding companies under section 4(c)(8) of the
BHC Act. BB&T has committed to conform all
activities of Savings Bank to the requirements of
section 4 of the BHC Act and Regulation Y. 5
The Board previously has determined by regulation
that the consumer lending activities that BB&T
proposes to conduct are closely related to banking
for purposes of section 4(c)(8) of the BHC Act. 6
BB&T proposes to conduct these activities through
Savings Bank in accordance with the Board's regulations.
Competitive
Considerations
Under section 4(c)(8) of the BHC Act and under the
Bank Merger Act, the Board is required to consider
the competitive effects of this transaction. BB&T and
Savings Bank compete directly in the following banking markets in North Carolina: Kinston, Goldsboro,
Winston-Salem, and Carteret.7 Upon consummation
4. See 12 C.F.R. 225.25(b)(9).
5. Savings Bank engages through subsidiaries in insurance agency
activities and real estate activities that would not be permissible for a
bank holding company under the BHC Act. BB&T has committed to
terminate all impermissible insurance and real estate activities within
two years of consummation of the proposal. During this two-year
period, BB&T has also committed to limit Savings Bank's insurance
activities to renewals of existing policies and not to begin or enter into
any new real estate activities or projects. Savings Bank's remaining
nonbanking subsidiaries, First Fin, Inc., (which engages in disposition
of property acquired by Savings Bank through foreclosure) and
Forsyth Financial Services, Inc., (which formerly engaged in real
estate activities and is currently inactive), both located in Kinston,
North Carolina will be dissolved shortly after consummation.
6. See 12 C.F.R. 225.25(b)(1).
7. The Kinston banking market is approximated by Lenoir County
(excluding the town of LaGrange), the southern portion of Greene
County (including the towns of Hookerton and Snow Hill), and the
western half of Jones County; the Goldsboro Ranally Metro Area
("RMA") banking market is approximated by Wayne County and the
town of LaGrange; the Winston-Salem RMA banking market is
approximated by Forsyth County, the southern half of Stokes County,
the northeastern corner of Davie County, and the northwest portion of
Davidson County; and the Carteret banking market is approximated
by Carteret County, Craven County, Jones County, and Pamlico
County, all in North Carolina.
343
of this proposal, BB&T would become the largest
depository institution8 in the Kinston banking market,
controlling deposits of approximately $151.4 million,
representing approximately 31.1 percent of total deposits in depository institutions in the market ("market deposits").9 The Herfindahl-Hirschman Index
("HHI") would increase 357 points to 2392 in the
Kinston banking market.10
In order to mitigate the adverse competitive effects
that would otherwise result from consummation of this
proposal, BB&T has committed to divest a branch of
Savings Bank with deposits of approximately
$11.7 million located in the Kinston banking market.11
Accounting for this divestiture, the HHI would increase 219 points to 2254 in the Kinston banking
market.
In the Goldsboro banking market, BB&T would also
become the largest depository institution, controlling
deposits of approximately $215.6 million, representing
approximately 29.6 percent of total market deposits.
The HHI would increase by 204 points to 1823. Nine
depository institutions would remain in the market,
including the six largest commercial banking organizations in North Carolina, and numerous potential competitors may enter the market due to North Carolina
statutes permitting statewide branching and reciprocal
regionwide interstate acquisitions. In the Winston-
8. In this context, depository institutions include commercial banks,
savings banks, and savings associations. Market share data before
consummation are based on calculations in which the deposits of thrift
institutions are included at 50 percent. The Board previously has
indicated that thrift institutions have become, or have the potential to
become, significant competitors of commercial banks. See WM Ban-
corp, 76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). Because the deposits of
Savings Bank will be transferred to a commercial bank under this
proposal, those deposits are included at 100 percent in the calculation
of pro forma market share. See Norwest Corporation, 78 Federal
Reserve Bulletin 452 (1992); First Banks, Inc.,, 76 Federal Reserve
Bulletin 669, 670 n.9 (1990).
9. Market deposit data are as of June 30, 1991.
10. 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 to be highly concentrated. In such markets, the Justice Department is likely to challenge
a merger that increases the HHI by 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.
11. BB&T has entered into a binding agreement with a third party
purchaser of the branch to be divested, and has committed to
complete the divestiture within six months after consummation of the
proposal. If BB&T is unable to complete the divestiture within this
time, BB&T will transfer the branch to an independent trustee with
instructions to sell the branch promptly. See, e.g., Integra Financial
Corporation, 78 Federal Reserve Bulletin 623, 624 n.9 (1992); First
Hawaiian, Inc., 11 Federal Reserve Bulletin 52 (1991).
344
Federal Reserve Bulletin • April 1993
Salem and Carteret banking markets, the HHI increase would not exceed Department of Justice guidelines.12
In light of the relatively small increases in concentration, the divestiture proposed in this case, the
competition offered by other depository institutions,
the number of competitors remaining in these markets,
and the ease of entry into these markets through
interstate regional acquisitions and statewide branching under North Carolina law, and all of the facts of
record, the Board concludes that consummation of
this proposal would not result in any significantly
adverse effect on competition in the Kinston, Goldsboro, Winston-Salem, or Carteret banking markets, or
in any other relevant banking market.
Other Considerations
The record does not indicate that consummation of
this proposal is 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 that are not
likely to be outweighed by the public benefits of this
proposal. Accordingly, the Board has determined that
the balance of public interest factors it must consider
under section 4(c)(8) of the BHC Act is favorable and
consistent with approval of BB&T's application to
acquire Savings Bank and to engage in consumer
lending activities.
Additionally, the financial and managerial resources
and future prospects of BB&T and its bank subsidiaries and Savings Bank are consistent with approval.
Considerations relating to the convenience and needs
of the communities to be served are also consistent
with approval of this application under the factors
considered under the Bank Merger Act.
The Board has also considered the special factors it
must review under section 5(d)(3) of the FDI Act. In
this regard, the record in this case reflects that:
(1) The transaction will not result in the transfer of
any federally insured depository institution's federal
deposit insurance from one federal deposit insurance fund to the other;
12. BB&T would become the ninth largest depository institution in
the Winston-Salem banking market, controlling approximately
$117.8 million in deposits, representing approximately 2.1 percent of
market deposits, and the third largest depository institution in the
Carteret banking market, controlling approximately $82.5 million in
deposits, representing approximately 20.8 percent of market deposits.
The HHI would decrease by 42 points to 3973 in the Winston-Salem
banking market, and would increase by 47 points to 2618 in the
Carteret banking market.
(2) BB&T and Bank currently meet and upon
consummation of the proposed transaction will
continue to meet, all applicable capital standards;
and
(3) Since Savings Bank is located in North Carolina
and is merging with a North Carolina savings association, the proposed transaction would comply
with the Douglas Amendment if Savings Bank were
a state bank that BB&T was applying to acquire
directly. See 12 U.S.C. § 1815(d)(3).
Based on the foregoing and all the facts of record,
the Board has determined that the applications
should be, and hereby are, approved. The Board's
approval of this proposal is specifically conditioned
on compliance by BB&T with the commitments
made in connection with its applications, as supplemented, including compliance with BB&T's divestiture commitments within the prescribed time periods. The commitments and conditions relied on by
the Board in reaching this decision are deemed to
be conditions imposed in writing by the Board in
connection with its findings and decision, and as
such may be enforced in proceedings under applicable law. This approval is also conditioned upon
BB&T's receiving all necessary federal and state
approvals.
The Board's determination also is subject to all of
the conditions set forth in Regulation Y, including
those in sections 225.4(d) and 225.23(b)(3), and to the
Board's authority to require 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, and to prevent evasion
of, the provisions and purposes of the BHC Act and
the Board's regulations and Orders issued thereunder.
The merger of Savings Bank with and into Bank
shall not be consummated before the thirtieth calendar
day following the effective date of this Order, and the
acquisition of Savings Bank and the nonbanking companies of Savings Bank shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of
Richmond, pursuant to delegated authority.
By order of the Board of Governors, effective
February 22, 1993.
Voting for this action: Chairman Greenspan and Governors
Mullins, Angell, LaWare, Lindsey, and Phillips. Absent and
not voting: Governor Kelley.
J E N N I F E R J . JOHNSON
Associate Secretary of the Board
Legal Developments
The Long-Term Credit Bank of Japan, Limited
Tokyo, Japan
Order Approving Application to Engage in Various
Interest Rate and Currency Swap Activities
The Long-Term Credit Bank of Japan, Limited,
Tokyo, Japan ("LTCB"), a bank holding company
within the meaning of the Bank Holding Company Act
("BHC Act"), has applied under section 4(c)(8) of the
BHC Act (12 U.S.C. § 1843(c)(8)) to engage de novo
through its subsidiaries, Greenwich Capital Derivatives, Inc., and Greenwich Capital Markets, Inc., both
of Greenwich, Connecticut ("Companies"), in the
following activities:
(1) Intermediating in the international swap markets
by acting as an originator and principal in interest
rate swap and currency swap transactions;
(2) Acting as an originator and principal with respect
to certain interest rate and currency risk-management products such as caps, floors and collars, as
well as options on swaps, caps, floors and collars
("swap derivative products");
(3) Acting as a broker or agent with respect to the
foregoing transactions or instruments; and
(4) Acting as adviser to institutional customers regarding financial strategies involving interest rate
and currency swaps and swap derivative products.
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (54 Federal Register 7030 (1990)). 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 of the BHC
Act.
With total consolidated assets equivalent to approximately $290.8 billion, LTCB is the 21st largest banking organization in the world.1 In the United States,
LTCB owns a bank subsidiary in New York, New
York; an agency in Los Angeles, California; and
branches in New York, New York; and Chicago,
Illinois. Companies engage in a variety of nonbanking
activities, including underwriting and dealing in certain bank-ineligible securities to a limited extent.
The Board previously has determined by order or
regulation that the proposed activities are closely
related to banking and permissible for bank holding
companies within the meaning of section 4(c)(8) of the
BHC Act. 2 LTCB has committed to engage in these
345
swap activities in accordance with all of the provisions
and conditions set forth in these orders and the
Board's regulations.
In order to approve this application, the Board is
required to determine that the performance of the
proposed activities by LTCB "can reasonably be
expected to produce benefits to the public . . . 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).
Companies appear to be capable of managing the
risks associated with the proposed activities. LTCB,
which has extensive experience in lending and financing services worldwide, has undertaken to provide
credit screening for all potential counterparties of
Companies. In appropriate cases, Companies will obtain a letter of credit on behalf of, or collateral from, a
counterparty. In addition, Companies will establish
separate credit risk exposure limits for each swap
counterparty. Companies will monitor this exposure
on an ongoing basis, in the aggregate and with respect
to each counterparty. Senior management will be
periodically informed of the potential risk to which
Companies are exposed.
In order to manage the risk associated with adverse
changes in interest or currency exchange rates ("price
risk"), Companies will seek to match all the swaps and
related instruments in which it is principal and will
hedge any unmatched positions pending a suitable
match. Companies will not enter into unmatched or
unhedged swaps for its own account for speculative
purposes. Companies' managements will set absolute
limits on the level of risk to which their swap portfolios
may be exposed. Companies' exposure to price risk
will be monitored by both business management and
internal auditing personnel to guarantee compliance
with the risk limitations imposed by management.
Auditing personnel will report directly to senior management to ensure that any violations of portfolio risk
limitations are reported and corrected. With respect to
the risk associated with the potential for differences
between the floating rate indices on two matched or
hedged swaps ("basis risk"), Companies' managements will impose absolute limits on the aggregate
basis risk to which Companies' swaps portfolios may
be exposed. If the level of risk threatens to exceed the
limits at any time, Companies will actively seek to
enter into matching transactions for its unmatched,
hedged positions. Companies' internal auditing staff,
together with management, will monitor compliance
1. Asset and ranking data are as of September 30, 1992.
2. See, e.g., The Sanwa Bank, Limited, 77 Federal Reserve Bulletin
64 (1991); The Fuji Bank, Limited, 76 Federal Reserve Bulletin 768
(1990); The Sumitomo Bank, Limited, 75 Federal Reserve Bulletin 582
(1989). See also 12 C.F.R. 225.25(b)(4).
346
Federal Reserve Bulletin • April 1993
with the management-imposed basis risk limits.3 In
addition, Companies intend to minimize operations
risk through the recruitment and training of an experienced back-office support staff and the use of a
separate operational and data processing structure for
processing swap and hedging transactions.
In order to minimize any possible conflicts of interests between Companies' roles as a principal or broker
in swap transactions and their roles as advisor to
potential counterparties, Companies will disclose to
each customer the fact that Companies may have an
interest as a counterparty principal or broker in the
course of action ultimately chosen by the customer.
Also, in any case in which Companies have an interest
in a specific transaction as an intermediary or principal, Companies will advise its customer of that fact
before recommending participation in that transaction.4 In addition, Companies' advisory services will
be offered only to sophisticated institutional customers
who would be unlikely to place undue reliance on
investment advice received and better able to detect
investment advice motivated by self-interest.5 LTCB
has committed to conduct its financial advisory activities in accordance with Regulation Y.6
In every case involving a nonbanking acquisition by
a bank holding company under section 4 of the BHC
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 LTCB's
consolidated tier 1 and total risk-based capital ratios
3. In addition to price and basis risk, the value of a swap option is
subject to market expectations of the future direction and rate of
change in interest rates, or volatility risk. Company's management
will impose absolute limits on the level of volatility risk to which
Company's swap portfolio may be exposed.
4. In any transaction in which Company arranges a swap transaction
between an affiliate and a third party, the third party will be informed
that Company is acting on behalf of an affiliate.
5. LTCB defines an institutional customer as:
(A) A bank (acting in an individual or fiduciary capacity), a savings
and loan association, an insurance company, a registered investment company under the Investment Company Act of 1940, or a
corporation, partnership, trust, proprietorship, organization or institutional entity that regularly engages in swaps or swap derivative
products transactions;
(B) An employee benefit plan with assets exceeding $1 million or
whose investment decisions are made by a bank, insurance company or investment advisor registered under the Investment Advisers Act of 1940;
(C) A natural person whose individual net worth (or joint net worth
with his or her spouse) at the time of receipt of Company's services
exceeds $1 million;
(D) A broker-dealer or options trader registered under the Securities
Exchange Act of 1934; or other securities, investment or banking
professional;
(E) Any government or government entity; or
(F) An entity all of the equity owners of which are institutional
customers.
6. See e.g. 12 C.F.R. 225.25(b)(4)(vi)(C).
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 (1987).
meet applicable risk-based capital standards under the
Basle Accord. The Board has also considered that this
proposal requires a de minimis capital investment.
Based on all the facts of record, the Board concludes
that financial considerations are consistent with approval of this application. The managerial resources of
LTCB are also consistent with approval.
Consummation of the proposal would provide added
convenience to LTCB's customers. In addition, the
Board expects that the de novo entry of LTCB into the
market for these activities would increase the level of
competition among providers of these services. Accordingly, the Board has determined that the performance of the proposed activities by LTCB can reasonably be expected to produce benefits to the public.
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 that are not outweighed by these benefits.
Based on the above and all the facts of record, the
Board has determined that the balance of public interest factors it must consider weigh in favor of approval
of this proposal. On this basis, the Board has determined to, and hereby does, approve the application
subject to the commitments made by LTCB, as well as
all the terms and conditions set forth in this order and
in the above-noted Board orders that relate to these
activities. The Board's determination is also subject to
all the conditions set forth in Regulation Y, including
those 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 company or any
of its subsidiaries as the Board finds necessary to
assure compliance with, and to prevent evasion of, the
provisions of the BHC Act and the Board's regulations
and orders issued thereunder. The commitments and
conditions relied on by the Board in this case are
conditions imposed in writing by the Board in connection with its findings and decisions and may be enforced in proceedings under applicable law.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
February 16, 1993.
Voting for this action: Chairman Greenspan and Governors
Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips.
JENNIFER J . JOHNSON
Associate Secretary of the Board
Legal Developments
The Long-Term Credit Bank of Japan, Limited
Tokyo,Japan
Order Approving an Application to Engage in
Various Securities-Related Activities, Including
Private Placement, "Riskless Principal",
Full-Service Brokerage, and Futures Commission
Merchant Activities, and Trading Foreign Exchange
Related Products
The Long-Term Credit Bank of Japan, Tokyo, Japan
("Applicant"), a foreign bank subject to the provisions of the Bank Holding Company Act ("BHC
Act"), has applied under section 4(c)(8) of the BHC
Act (12 U.S.C. § 1843(c)(8)), and section 225.23 of
the Board's Regulation Y (12 C.F.R. 225.23), to engage de novo through its wholly owned subsidiaries,
Greenwich Capital Markets, Inc., Greenwich, Connecticut ("Company"), and Greenwich Asset Management, Inc. ("Management Inc."), in the following
securities-related activities:
(1) Acting as agent in the private placement of all
types of securities, including providing related advisory services;
(2) Buying and selling all types of securities on the
order of investors as a "riskless principal";
(3) Providing securities brokerage and related investment advisory services on a combined basis
("full-service brokerage activities") pursuant to
section 225.25(b)(15) of the Board's Regulation Y
(12 C.F.R. 225.25(b)(15)) to institutional and retail
customers, in conjunction with Company's previously approved portfolio investment advisory activities.
(4) Trading foreign exchange forward, futures, options, and options on futures transactions for Company's own account for purposes other than hedging, in combination with Company's previously
approved trading and investment advisory activities
in foreign exchange-related products for non-affiliated customers; and
(5) Acting as a futures commission merchant
("FCM") in the execution and clearance on major
commodity exchanges of the futures contracts and
options on futures contracts set forth in the Appendix, and providing investment advice as an FCM or
a commodity trading advisor ("CTA") with respect
to such contracts.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (57 Federal Register 19,623
(1992)). The time for filing comments has expired, and
the Board has considered the application and all
347
comments received in light of the public interest
factors set forth in section 4(c)(8) of the BHC Act.
Applicant, with total consolidated assets equivalent
to approximately $290.8 billion, is the 21st largest bank
in the world, and the 13th largest bank in Japan.1
Applicant is a registered bank holding company by
virtue of its ownership of LTCB Trust Company, New
York, New York, a state-chartered trust company
whose deposits are insured by the Federal Deposit
Insurance Corporation. In addition, Applicant maintains branches in New York, New York, and Chicago,
Illinois, and an agency in Los Angeles, California.
Applicant has received approval from the Federal
Reserve System to engage directly and through subsidiaries in a broad range of nonbanking activities.
Company is engaged in limited bank-ineligible securities underwriting and dealing activities permissible
under section 20 of the Glass-Steagall Act (12 U.S.C.
§ 377).2 In addition, Company has been designated a
primary dealer in United States government securities
by the Federal Reserve Bank of New York. Company
also is, and will continue to be, a broker-dealer registered with the Securities and Exchange Commission
("SEC"), an FCM registered with the Commodity
Futures Trading Commission ("CFTC"), and a member of the National Association of Securities Dealers
("NASD"). Accordingly, Company is subject to the
record-keeping, reporting, fiduciary standards, and
other requirements of the Securities Exchange Act of
1934 (15 U.S.C. § 78c et seq.), the Commodity Exchange Act (7 U.S.C. § 1 et seq.), the SEC, the
CFTC, and the NASD. Management Inc. is an investment advisor registered under the Investment Advisors Act of 1940 (15 U.S.C. § 80b-l et seq.), and a
CTA registered under the Commodity Exchange Act. 3
Management Inc. provides investment advice with
respect to the purchase and sale of futures contracts
and options on futures contracts in accordance with
section 225.25(b)(19) of the Board's Regulation Y
(12 C.F.R. 225.25(b)(19)).
Private Placement and "Riskless Principal"
Activities
Private placement involves the placement of new
issues of securities with a limited number of sophisticated purchasers in a non-public offering. A financial
1. Data are as of September 30, 1992.
2. Company may underwrite and deal in municipal revenue bonds,
1-4 family mortgage-related securities, commercial paper, and
consumer-receivable-related securities.
3. Both Company and Management Inc. are wholly owned subsidiaries of Greenwich Capital Holdings, a non-operating Delaware
holding company that is a direct, wholly owned subsidiary of Applicant.
348
Federal Reserve Bulletin • April 1993
intermediary in a private placement transaction acts
solely as an agent of the issuer in soliciting purchasers,
and does not purchase the securities and attempt to
resell them. Securities that are privately placed are not
subject to the registration requirements of the Securities Act of 1933, and are offered only to financially
sophisticated institutions and individuals and not to
the public generally. Applicant has committed that
Company will not privately place registered securities,
and will only place securities with "institutional customers" as that term is defined in section 225.2(g) of
the Board's Regulation Y (12 C.F.R. 225.2(g)).
"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 own account to offset a contemporaneous sale to (or purchase from) the customer.4
"Riskless principal" transactions are understood in
the industry to include only transactions in the
secondary market. Thus, Applicant 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 previously has determined that, subject
to a number of prudential limitations that address the
potential for conflicts of interests, unsound banking
practices, and other adverse effects, the proposed
private placement and riskless principal activities are
closely related to banking within the meaning of
section 4(c)(8) of the BHC Act. 5 In those orders, the
Board also found 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 (12 U.S.C. § 377), and that revenue derived from such activities is not subject to the
10 percent revenue limitation on underwriting and
dealing in ineligible securities.6 In order to address
the potential for conflicts of interests, unsound banking practices, or other adverse effects, Applicant has
committed that Company will conduct its private
4. See Securities and Exchange Commission Rule 10b-10. 17 C.F.R.
240.10b-10(a)(8)(i).
5. See J.P. Morgan & Company Incorporated, 76 Federal Reserve
Bulletin 26 (1990); Bankers Trust New York Corporation, 75 Federal
Reserve Bulletin 829 (1989).
6. Id.
placement and "riskless principal" activities in a
manner consistent with the limitations, methods, and
procedures established by the Board in prior orders,7
as modified to reflect Applicant's status as a foreign
bank.8
Full-Service Brokerage Activities
The Board recently amended its Regulation Y to
permit bank holding companies, subject to certain
restrictions, to engage in full-service brokerage activities for institutional and retail customers, having
previously determined, by order, that these activities
are closely related to banking within the meaning of
section 4(c)(8) of the BHC Act. 9 Applicant has committed to conduct its proposed full-service brokerage
activities in accordance with Regulation Y. Moreover, in any transaction in which Company provides
full-service brokerage services with respect to securities that Company may hold as a principal in
connection with its authorized underwriting and
dealing activities, Company will provide full and
appropriate disclosure of its interest in the transaction, as required by the securities laws, NASD, and
fiduciary principles.10
7. Id.
8. See Sumitomo Bank, Limited, 77 Federal Reserve Bulletin 339
(1991); Creditanstalt-Bankverein, 77 Federal Reserve Bulletin 183
(1991); The Royal Bank of Scotland Group PLC, 76 Federal Reserve
Bulletin 866 (1990).
As detailed more fully in these orders, in addition to the commitments imposed by the Board in connection with underwriting and
dealing in securties, Applicant has made a number of commitments
regarding the conduct of this activity. In particular, Applicant has
committed that Company will maintain specific records that will
clearly identify all "riskless principal" transactions, and that 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; and will
not 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 not act as a "riskless principal"
with respect to any securities of investment companies that are
advised by Applicant or any of its affiliates.
With regard to private placement activities, Applicant has committed that Company will not privately place registered investment
company securities or securities of investment companies that are
advised by Applicant or any of its affiliates, and will abide by the other
restrictions discussed in the above orders.
9. See 12 C.F.R. 225.25(b)(15).
10. In this regard, Applicant has committed that Company will
inform its customers at the commencement of the relationship that, as
a general matter, Company may be a principal or may be engaged in
underwriting with respect to, or may purchase from an affiliate, those
securities for which brokerage and advisory services are provided. At
the time any brokerage order is taken, or any advisory services are
provided, the customer will be informed (usually orally) whether
Legal Developments
Trading in Foreign Exchange Related Products
Applicant proposes that Company engage in trading
for its own account in foreign exchange forward,
futures, options, and options on futures transactions
for purposes other than hedging, in combination with
Company's previously approved trading and investment advisory activities in foreign exchange-related
products for non-affiliated customers.11 The Board
previously has determined that an FCM trading foreign exchange-related products for its own account
for purposes other than hedging is an activity closely
related to banking for purposes of section 4(c)(8) of
the BHC Act. 12 Applicant also proposes that Management Inc. provide investment advisory services
to non-affiliated customers with respect to the foreign
exchange-related products that Company would
trade for its own account for purposes other than
hedging.13
Company's broad experience in foreign exchangerelated activities indicates that Company would have
the expertise to engage in the proposed activities. As a
primary dealer and a registered FCM, Company has
developed broad experience in the execution of foreign exchange futures transactions, including the trading and monitoring of futures and options positions.
Company maintains internal financial and audit controls, reporting personnel, experienced management
and support staff, and sophisticated computer support
and operational procedures in order to facilitate the
Company is acting as agent or principal with respect to a security.
Confirmations sent to customers also will state whether Company is
acting as agent or principal. See PNC Financial Corp., 75 Federal
Reserve Bulletin 396 (1989).
11. Company also trades for its own account in foreign exchange
and foreign exchange forward, options, futures, and options on
futures contracts for risk-reduction purposes in accordance with
section 225.142 of the Board's Regulation Y (12 C.F.R. 225.142).
Company proposes to provide certain advisory services to nonaffiliated customers with respect to the foreign exchange-related
contracts that Company proposes to trade for its own account for
purposes other than hedging. These advisory services, however, will
be limited to discussions regarding current market conditions, and will
not be provided on a separate fee basis. Moreover, Company will not
recommend that a customer purchase or sell particular instruments or
contracts.
12. See The Bank of Tokyo, Ltd., 76 Federal Reserve Bulletin 654
(1990); The Hongkong and Shanghai Banking Corporation, 75 Federal Reserve Bulletin 217 (1989).
13. The Board previously has determined that an affiliate of an FCM
engaged in trading foreign exchange-related products for its own
account for purposes other than hedging may provide investment
advisory services to non-affiliated customers with respect to those
same exchange-related products. See The Sanwa Bank, Limited, 77
Federal Reserve Bulletin 64 (1991). Applicant has committed that
Management Inc. will make prior disclosure of the fact that Company
trades foreign exchange and foreign exchange-related products for its
own account before advising customers to purchase or sell foreign
exchange or foreign exchange-related contracts. This disclosure will
occur both at the beginning of the relationship with the customer, and
upon confirmation by Management Inc. of any order.
349
processing, reporting, and supervision of foreign exchange transactions. Company also has the operational, accounting, and control systems in place to
monitor positions resulting from trading in the proposed foreign exchange-related contracts. Applicant
also has indicated that the proposed activities will be
monitored in connection with the overall risk management and monitoring of Company's primary business
activities, that the proposed foreign exchange activities would bear a reasonable relationship to the size of
Company's securities portfolio, and that revenues
generated from Company's present and proposed foreign exchange-related futures activities are expected
to represent less than one percent of Company's total
gross revenues.
As a primary dealer, Company also is subject to
the regular review and reporting requirements of the
Federal Reserve Bank of New York. Moreover, in
order to address the potential for conflicts of interests, unsound banking practices, or other adverse
effects, Applicant has committed that Company will
conduct these trading activities in a manner consistent with the limitations, methods, and procedures
previously established by the Board.14 Accordingly,
the Board finds that these controls and limitations
should ensure prudent operations, minimize any potential financial risks, and lessen the possibility of
14. In this regard, Applicant has made the following commitments:
(1) Company will adopt and periodically review and revise written
policies, position limits, internal review procedures and financial
controls regarding its trading of foreign exchange forward, futures,
options, and options on futures contracts for its own account;
(2) Management of Company will review its foreign exchangerelated futures activities on a regular basis, and the internal audit
department will review such activities regularly to ensure conformity with established policies and position limits;
(3) Company will not engage in pit arbitrage activities;
(4) Floor traders will not have discretion to execute trades other
than in accordance with Company's instructions, and will be
authorized to trade only within position limits established by senior
management;
(5) Company will not engage, without prior Board approval,
in market-making or specialist activities; and
(6) Company will submit quarterly reports to the Federal Reserve
Bank of N e w York indicating:
(i) the total revenue derived from, and the trading volume of, its
foreign exchange activities,
(ii) foreign exchange risk position limits relative to overall risk
position limits, and
(iii) the value of open foreign exchange trading positions (Company may use existing management reports to provide such
information);
(7) Applicant and Company will not, without prior Board approval,
advise third parties regarding foreign exchange forward, futures,
options, and options on futures transactions; and
(8) Company will make prior disclosure of the fact that Company
trades foreign exchange for its own account before executing
foreign exchange contracts on behalf of customers; this disclosure
will occur both at the beginning of the relationship with the
customer and upon confirmation of each order.
See The Sanwa Bank, Limited, 77 Federal Reserve Bulletin 64
(1991); The Hongkong and Shanghai Banking Corporation, 75 Federal Reserve Bulletin 217 (1989).
350
Federal Reserve Bulletin • April 1993
any conflicts of interest involved in the proposed
activities.
Futures Commission Merchant Activities
Applicant has applied to provide, through Company,
FCM execution, clearance, and advisory services for
affiliated and non-affiliated customers with respect to
the futures contracts and options on futures contracts
set forth in the Appendix.15 Applicant also has applied
to act, through Management Inc., as a CTA for affiliated and non-affiliated customers with respect to those
contracts.
The Board previously has determined, by regulation
and order, that the execution and clearance of futures
contracts and options on futures contracts for a variety
of financial instruments, and the provision of investment advisory services with respect to such contracts,
are activities that are closely related to banking within
the meaning of section 4(c)(8) of the BHC Act.16
Applicant seeks to engage in FCM execution, clearance and advisory activities with respect to 55 proposed futures contracts and options on futures contracts. The Board previously has approved such FCM
activities in seven of these contracts,17 but has not
previously approved these activities in the other
48 contracts.
Each of these proposed contracts are related to
financial instruments that are broad-based, widely
traded, and comparable to the contracts previously
approved by the Board. Moreover, the execution and
clearance of these proposed contracts will be governed by the same operations and procedures applicable to other previously approved contracts.18
15. Company is currently engaged in providing FCM execution,
clearance and investment advisory services to non-affiliated customers in accordance with sections 225.25(b)(18) and (19) of the Board's
Regulations Y (12 C.F.R. 225.25(18) and (19)), and in providing such
FCM services to affiliates in accordance with section 4(c)(1)(C) of the
BHC Act.
16. See, e.g.,12 C.F.R. 225.25(b)(18) and (19); Manufacturers Hanover Corporation,
76 Federal Reserve Bulletin 114 (1990); The
Hongkong and Shanghai Banking Corporation, 76 Federal Reserve
Bulletin 770 (1990); Republic New York Corporation,63
Federal
Reserve Bulletin 951 (1977).
17. See National Westminster Bank PLC, 78 Federal
Reserve
Bulletin 953 (1992) (Long U K Government Bond Futures, 10-Year and
3-Year Australian Government Bond Futures, Australian All Ordinary
Share Index Futures, 20-Year and 10-Year Japanese Government
Bond Futures, and Tokyo Stock Price Index Futures).
18. In considering Applicant's proposal to execute and clear contracts on 10-Year Canadian Government Bond Futures on the Montreal Stock Exchange ("MSE"), and contracts on U . S . Dollar Index
Futures and Options on U.S. Dollar Index Futures on the Financial
Futures Exchange ( " F N X " ) , the Board also has taken into account
the rules of these exchanges, information provided by the SEC
regarding the MSE, and information provided by the CFTC regarding
the FNX. The Board also has noted that neither the MSE nor the F N X
would require Applicant to provide a parent company guarantee if
The Board believes that Company has the skills and
experience necessary to engage in providing execution, clearance, and investment advisory services in
the proposed contracts. In addition, the proposed
FCM activities involve comparable techniques, operations, and risks, and serve very similar purposes, as
the FCM activities that previously have been approved for Company.
Applicant has committed to conduct its proposed
FCM and CTA activities so as to be consistent with
the conditions and restrictions on FCM activities set
forth in Regulation Y. 19 The Board has taken into
account and has relied upon these commitments, as
well as the regulatory framework established pursuant
to law by the CFTC for the trading of futures, and the
conditions set forth in sections 225.25(b)(18) and
(b)(19) of the Board's Regulation Y (12 C.F.R.
225.25(b)(18) and (b)(19)) with respect to the execution, clearance, and provision of investment advice as
an FCM or CTA as to futures or options on futures
contracts.
Other Considerations
In every case involving a nonbanking acquisition under section 4 of the BHC Act, the Board considers the
financial condition and resources of Applicant and its
subsidiaries and the effect of the proposal on these
resources.20 Applicant's consolidated tier 1 and total
risk-based capital ratios meet applicable risk-based
capital standards under the Basle Accord. In view of
these and other facts of record, the Board has determined that the financial factors are consistent with
approval of this application. The managerial resources
of Applicant and its subsidiaries also are consistent
with approval.
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 these services in the
United States would increase the level of competition among providers of these services. Accordingly,
the Board has determined that the performance of the
proposed activities by Applicant can reasonably be
expected to produce public benefits. Under the
Company were to seek to become a clearing member of either
exchange.
19. The requirement in sections 225.25(b)(18)(ii) and (b)(19)(i) of
Regulation Y (12 C.F.R. 225.25(b)(18)(ii) and (b)(19)(i)) that Company
not engage in trading for its own account except for hedging purposes
has been modified consistent with the authority granted above to
permit Company to trade foreign exchange for its own account for
purposes other than hedging, subject to the limits discussed above.
20. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal
Reserve
Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal
Reserve
Bulletin 155 (1987).
Legal Developments
framework established in this and prior Board decisions, consummation of this proposal is not likely to
result in any significantly adverse effects, such as an
undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound
banking practices that are not outweighed by these
benefits.
Based on the foregoing and all the facts of record,
the Board has determined to, and hereby does,
approve the application subject to all of the terms
and conditions set forth in this order, and in the
above-noted Board regulations and orders that relate
to these activities. The Board's determination is also
subject to all of the terms and 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 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, and to prevent evasion of, the provisions
of the BHC Act, and the Board's regulations and
orders issued thereunder. The Board's decision is
specifically conditioned on compliance with all of the
commitments made in this application, including the
commitments discussed in this order and the conditions set forth in the above-noted Board regulations
and orders. These commitments and conditions shall
be deemed to be conditions imposed in writing by the
Board in connection with its findings and decisions,
and may be enforced in proceedings under applicable
law.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
February 16, 1993.
351
Options on 3-Year Interest Rate Swap Futures
Financial Futures Exchange
U.S. Dollar Index Futures
Options on U.S. Dollar Index Futures
London International Financial Futures and Options
Exchange
ECU-CD Interest Rate Futures
ECU Bond Futures
Eurotrak 100 Stock Index Futures
3-Month Euro Swiss Franc CD Futures
Options on 3-Month Euro Swiss Franc CD Futures
3-Month Sterling Euro-CD Futures
Options on 3-Month Sterling Euro-CD Futures
3-Month Deutschemark Euro-CD Futures
Options on 3-Month Deutschemark Euro-CD Futures
10-Year Japanese Government Bond Futures
Options on 10-Year Japanese Government Bond
Futures
10-Year German Government Bond Futures
Options on 10-Year German Government Bond
Futures
Long UK Government Bond Futures
Options on Long UK Government Bond Futures
Marche a Terme d'Instruments Financiers
French Franc PIBOR-CD Futures
ECU Bond Futures
MATIF French Stock Index Futures
3-Month Deutschemark Euro-CD Futures
Options on 3-Month Deutschemark Euro-CD Futures
10-Year French Government Bond Futures
Options on 10-Year French Government Bond Futures
Montreal Stock Exchange
Voting for this action: Chairman Greenspan and Governors
Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips.
10-Year Canadian Government Bond Futures
JENNIFER J. JOHNSON
Associate Secretary of the Board
Appendix
Chicago Board of Trade
10-Year Japanese Government Bond Futures
Options on 10-Year Japanese Government Bond
Futures
5-Year Interest Rate Swap Futures
Options on 5-Year Interest Rate Swap Futures
3-Year Interest Rate Swap Futures
New York Futures Exchange
Commodity Research Bureau Index Futures
Options on Commodity Research Bureau Index
Futures
New Zealand Futures Exchange
5-Year New Zealand Government Bond Futures
Options on 5-Year New Zealand Government Bond
Futures
10-Year New Zealand Government Bond Futures
352
Federal Reserve Bulletin • April 1993
Options on 10-Year New Zealand Government Bond
Futures
3-Month New Zealand Government Bill Futures
Options on 3-Month New Zealand Government Bill
Futures
Barclay's Stock Index Futures
Options on Barclay's Stock Index Futures
Osaka Stock Exchange
Osaka 50 Stock Index Futures
Sydney Futures Exchange
10-Year Australian Government Bond Futures
Options on 10-Year Australian Government Bond
Futures
3-Year Australian Government Bond Futures
Options on 3-Year Australian Government Bond
Futures
3-Month Australian Government Bill Futures
Options on 3-Month Australian Government Bill
Futures
Australian All Ordinary Share Index Futures
Options on Australian All Ordinary Share Index
Futures
Singapore International Monetary Exchange
3-Month Euro-Yen CD Futures
Tokyo Stock Exchange
20-Year Japanese Government Bond Futures
Tokyo Stock Price Index (TOPIX) Futures
10-Year Japanese Government Bond Futures
Options on 10-Year Japanese Government Bond
Futures
Metrocorp, Inc.
East Moline, Illinois
Metro Armored Courier, Inc.
East Moline, Illinois
Order Denying Application to Engage in Armored
Car Services
Metrocorp, Inc., East Moline, Illinois ("Metrocorp"),
a bank holding company within the meaning of the
Bank Holding Company Act ("BHC Act"), has applied, pursuant to section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23(a)(3) of
the Board's Regulation Y (12 C.F.R. 225.23(a)(3)), for
permission for its subsidiary, to be known as Metro
Armored Courier, Inc., East Moline, Illinois
("MAC"), to engage in the following armored car
activities:
(i) Fully-insured transportation of cash, negotiable
instruments, securities, and valuables; collecting
currency and checks from commercial customers
and nonbank financial institutions and transporting
and depositing these collections at financial institutions; and delivering cash, negotiable instruments,
securities, and valuables to commercial customers
and nonbank financial institutions;
(ii) Providing related services such as interbank
transfers, coin wrapping, change delivery, mail delivery, and payroll check cashing; and
(iii) Providing incidental courier services as permitted under section 225.25(b)(10) of Regulation Y.
These activities would be performed in the Quad Cities
market, comprising Rock Island County, Illinois and
Scott County, Iowa. With the exception of the proposed incidental courier services, these activities have
not previously been approved by the Board for bank
holding companies.
I. Background
In order for the Board to approve an application under
section 4(c)(8), the Board must find that two separate
tests are met. The Board must first determine that, as
a general matter, the proposed activity is "closely
related to banking." Second, the Board must determine that the performance of the activity by the
applicant bank holding company would be a "proper
incident" to banking, i.e., that the activity is likely to
produce public benefits that outweigh possible adverse
effects.
A. The Application
Metrocorp owns 100 percent of the common stock of
Metrobank, a state-chartered nonmember bank located in East Moline, Illinois, with assets of
$232 million.1 Metrobank operates a number of automatic teller machines ("ATMs") throughout the Illinois side of the Quad Cities market area.
In February 1983, Metrobank purchased and began
using an armored van to service its expanding network
of ATMs. The van made daily stops at each ATM
location, collecting deposits, replenishing cash supplies, and performing maintenance. These activities
did not use the full capacity of the van, so Metrobank
began providing for-hire service of cash delivery and
1. Data are as of September 30, 1992.
Legal Developments
pick-up for several credit unions and other commercial
accounts. In May 1984, the Illinois Commissioner of
Banks and Trust Companies informed Metrobank that
its activities for third parties were inconsistent with
the Illinois Banking Act, because they constituted
unauthorized branch banking, and the for-hire activities ceased.2 Although the Bank's ATM network has
grown since that time, the armored van is in service
only about 60 percent of the time.
In order to better utilize its armored van, Metrocorp
proposes to transfer ownership of the armored van to
a de novo subsidiary, MAC, and to make armored car
services available to the public on an explicit-fee basis.
In its application, Metrocorp made certain commitments aimed at minimizing possible conflicts of interest and anti-competitive practices, similar to those
required of bank holding company-owned courier services. See 12 C.F.R. 225.129. Included among those
commitments was a representation that the armored
car subsidiary would operate as a separate profit
center, and would not be subsidized in any way by the
bank holding company or its banking subsidiaries.
B. Initial Board Order
Notice of Metrocorp's application, affording interested persons the opportunity to submit comments,
was duly published in the Federal Register (53 Federal
Register 50,292 (1988)). Following publication of notice of the application, the National Armored Car
Association ("Protestant") submitted comments in
opposition to the application, and asked the Board to
order a formal hearing.
On May 10, 1989, the Board published an Order
requiring a public formal administrative hearing on
Metrocorp's proposal (54 Federal Register 20,200
(1989)). The Board directed that the issues to be
considered at the hearing were whether the proposed
armored car services are "so closely related to banking or managing or controlling banks as to be a proper
incident thereto," within the meaning of section
225.4(a) of Regulation Y and section 4(c)(8) of the
BHC Act, and whether the proposed activities can
reasonably be expected to produce benefits to the
public that outweigh the possible adverse effects. In
addition, the Board requested evidence on the risks
involved in conducting the activity, the availability of
insurance against such risks, and the issue of state
branching restrictions.
A formal public administrative hearing, conducted
in accordance with the then-applicable Board Rules of
2. The Illinois Commissioner determined that the provision of
armored car services for the bank's own operations was not prohibited
by law.
353
Practice for Hearings (12 C.F.R. Part 263 (1990)), was
held on June 16 and July 11, 1989, before an Administrative Law Judge ("ALJ") appointed at the request
of the Board.3 In a Recommended Decision dated
January 23, 1990, the ALJ concluded that the proposed armored car activities were not "closely related
to banking" within the meaning of section 4(c)(8) of
the BHC Act, and recommended that the Board deny
the application. In light of his conclusion regarding the
"closely related" issue, the ALJ declined to make any
factual or legal determinations concerning the "proper
incident" test or state branching laws.
Following the receipt of exceptions to the Recommended Decision, the Board reviewed the entire
record of the proceeding, and determined that the ALJ
erred in concluding that armored car services are not
"closely related to banking" under the relevant statute, case law, and prior Board determinations. Accordingly, by Order dated June 18,1990 (the "Remand
Order"),4 the Board determined that the provision of
armored car services to the general public on a for-hire
basis is an activity that is "closely related to banking
or managing or controlling banks" within the meaning
of section 4(c)(8) of the BHC Act. The Board remanded the case to the ALJ for a recommended
decision on the "proper incident" standard and other
unresolved issues, including the effect of state branching laws on the proposed activities.5 In view of the
passage of time since the application was filed, and
certain deficiencies then existing in the record, the
ALJ was ordered to address and, to the extent necessary, reopen the record regarding, certain issues relevant to the "proper incident" test.6
3. At the hearing, the ALJ granted motions to intervene in opposition to the application by Brink's Inc., Federal Armored Express,
Inc., and Independent Armored Car Operators Association (hereafter,
with the National Armored Car Association, collectively referred to as
"Protestants"). Federal Armored Express, Inc., subsequently withdrew its protest by letter dated October 26, 1990.
4. Metrocorp, Inc., 76 Federal Reserve Bulletin 676 (1990).
5. Under the Board's regulations then applicable to this case, an
administrative law judge was required to provide a recommended
decision with regard to these unresolved issues prior to a final
determination by the Board. See 12 C.F.R. 263.11 (1990). Thus, a final
disposition of Metrocorp's application was not possible at that juncture.
6. The areas listed by the Board for which additional information
was necessary included, among others, further information on pricing
in order to comply with Metrocorp's commitment not to subsidize the
operations of MAC (the pricing information then part of the record
suggested that Metrobank would pay more per pick-up than new
customers on the existing route); projections that included marketing
and advertising expenses, if any; and a precise breakdown of the
services MAC would purchase from Metrobank and the projected
costs of these services. 76 Federal Reserve Bulletin at 681 n.34 (1990).
354
Federal Reserve Bulletin • April 1993
C. The Supplemental Decision
In accordance with the Remand Order, a formal hearing (the "Remand Hearing") was held before the ALJ.
Additional evidence was received on the "proper
incident" test and the state branching law issues,
through the submission of exhibits and testimony and
through the participation of Metrocorp, Protestants,
and Board Counsel.7 Following submission of posthearing briefs and additional evidence in connection
with the state branching law issue, the ALJ issued his
Supplemental Decision—On Remand ("Supplemental Decision"). The Supplemental Decision again recommended denial of the application, and also denied
Protestants' request for partial attorneys' fees and
expenses. Metrocorp, Board Counsel, and the Protestants filed exceptions to various aspects of the Supplemental Decision, and Metrocorp and Protestants filed
replies to the exceptions.
II. The Proper Incident Test
In order to find that the activity is a "proper incident"
to banking, section 4(c)(8) requires the Board to consider whether performance of an activity by a bank
holding company affiliate 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, or unsound banking practices.8 These
examples of benefits and adverse effects are "nonexhaustive,"9 and serve as illustrations of the kinds of
factors Congress has instructed the Board to consider.
The burden of proof is upon the applicant in connection with section 4(c)(8) to establish that the nonbanking activity it proposes to conduct is not only
closely related to banking, but that it is a proper
incident thereto. E.g., Citicorp v. Board of Governors,
589 F.2d 1182, 1190 (2d Cir.), cert, denied, 442 U.S.
929 (1979).
In his Supplemental Decision, the ALJ first found
that under Regulation Y an applicant must submit
evidence that the proposed activity meets the standards of section 4(c)(8) of the BHC Act and that in this
case Metrocorp's application and the record fail to
7. At the Remand Hearing, all parties incorporated by reference
their earlier submissions and testimony. As the Board noted in its
Remand Order, "a substantial portion of the record is devoted to
matters related to the 'proper incident' test." 76 Federal
Reserve
Bulletin at 680 (1990).
8. 12 U.S.C. § 1843(c)(8).
9. Alabama Ass'n of Ins. Agents v. Board of Governors, 533 F.2d
224, 246 (5th Cir. 1976), modified on other grounds, 558 F.2d 729
(1977), cert, denied, 435 U.S. 904 (1978).
provide a definitive proposal on the basis of which the
Board could make a determination under the proper
incident test. The ALJ found that Metrocorp had
offered only a skeletal structure and operating plan
that was fleshed out only to a limited extent at the
hearings. The ALJ stated that Metrocorp's response to
possible adverse effects was simply to commit to
operate MAC in conformance with any restrictions the
Board might require to avoid such effects.
The ALJ further determined that on the record as
developed, Metrocorp had failed to show that the
performance of the proposed armored car services can
reasonably be expected to produce benefits to the
public that outweigh possible adverse effects. With
respect to possible public benefits, the ALJ concluded
that the proposal would produce internal gains in
efficiency for Metrocorp, but determined that on the
record no presumption of increased competition resulting from MAC's de novo entry into the activity
could be supported on this record.
With regard to possible adverse effects, the ALJ
ruled that the proposal would likely undermine the
solvency of Metrobank. Finding that MAC would be
"a hollow corporate entity" that would rely on
Metrobank as the "sole basis for funding the armored
car service," the ALJ concluded that Metrobank
would be the "sole source of funds to offset potential
losses and liabilities that may result from MAC's
operations." Supp. Dec. at 24. According to the ALJ,
therefore, it would be the bank, and not the bank
holding company, whose assets would be at risk in the
armored car operation.
Finally, the ALJ determined that the record is
convincing that Metrocorp has not shown that the
proposed activity, as currently structured, would be
lawful under the branch banking laws of Illinois and
Iowa, the states in which MAC proposes to operate.
Metrocorp and Board Counsel have excepted to the
ALJ's Supplemental Decision. Board Counsel and
Metrocorp argue that the record is sufficient to show
that increases in efficiency, added convenience of
service to armored car customers, and increased competition would likely result from MAC's operations.
With respect to possible adverse effects and the state
branching laws, Board Counsel and Metrocorp argue
that MAC could operate within sufficient commitments and restrictions, both as provided in the application and as would be required by the Board in its
Order, so as to eliminate the risk of adverse effects and
render its operations acceptable to state authorities.10
10. Protestants filed exceptions to two aspects of the ALJ's Supplemental Decision. First, they argued that because the activities as
proposed would violate state branching laws in Iowa and Illinois, they
cannot be found to be a "proper incident" to banking. Second, they
Legal Developments
Based on its review of the entire record of this
proceeding, including the transcript, exhibits, written
testimony, rulings, and briefs filed in connection with
the hearing, the Recommended Decision and the Supplemental Decision filed by the ALJ, the exceptions
thereto and the responses to the exceptions, the Board
has determined that the record with respect to this
application fails to support a finding, in this instance,
that the performance of the proposed armored car
activities by Metrocorp is a "proper incident" to
banking or to managing or controlling banks. The
Board therefore adopts the ALJ's recommendation to
deny the application. However, because the Board's
decision is based on the narrow grounds explained
below, the Board is not addressing all of the issues
raised in the Supplemental Decision and the exceptions to that decision. Accordingly, to the extent they
are expressly incorporated in this Order, the Board
adopts the findings, conclusions and recommendations
of the Supplemental Decision as supported by the
evidence of record.
A. Violation of Section 23B
The entire record in this proceeding has been reviewed
to determine whether there is sufficient evidence to
support a finding that Metrocorp's proposal would
result in net benefits to the public. Based on this
review, it is evident that certain aspects of the present
application would on their face violate the arm'slength transaction requirement of section 23 B of the
Federal Reserve Act (12 U.S.C. § 371c-l) and that
therefore the Board would be precluded on that basis
from approving Metrocorp's application as currently
structured.
Section 23B of the Federal Reserve Act requires
that certain transactions between an insured bank,
such as Metrobank, and its affiliates, such as MAC, be
conducted on an arm's-length basis. Section 23B governs any transaction in which an affiliate receives a fee
for its services to the bank or in which the bank
furnishes services to the affiliate. Accordingly, any
such transaction is permissible only if it is furnished:
(A) On terms and under circumstances . . . that are
substantially the same, or at least as favorable to
such bank . . . , as those prevailing at the time for
comparable transactions with or involving other
nonaffiliated companies, or
(B) In the absence of comparable transactions, on
terms and under circumstances . . . that in good faith
excepted to the ALJ's denial of their costs and fees incurred in
connection with the branching law issue. The fees issue is considered
in the Appendix to this Order.
355
would be offered to, or would apply to, nonaffiliated
companies. 12 U.S.C. § 371c-l(a)(l).
1. MAC's Pricing Structure Violates Section 23B
First, the record shows that the proposed service by
MAC would cost Metrobank more than it is now
paying for similar armored car services by an unaffiliated provider. Under the proposal, Metrobank would
pay MAC a flat per-stop fee, and an additional mileage
fee based on the number of miles travelled to the
branch or ATM being serviced. The record demonstrates, however, that Metrobank currently pays an
unaffiliated armored car service a per-stop fee that is
lower than that proposed to be paid to MAC. In
addition, the record indicates that Metrobank pays no
mileage fee to the unaffiliated carrier. Although
MAC's higher fee would at times include additional
services (such as ATM servicing) not now provided by
the contract carrier, the record indicates that at other
times MAC would simply substitute for the pick-up
and delivery services currently provided by the unaffiliated entity at a lower cost. It is evident, therefore,
that in the case of these services Metrobank would not
be obtaining services from MAC "on terms . . . at least
as favorable to such bank . . . as those prevailing for
comparable transactions with or involving other nonaffiliated companies," as required by section 23B.
While there may be explanations for MAC's higher
price that would justify it under the standards set forth
in section 23B, no such explanations appear in this
record, and the Board is constrained on this record to
conclude that the higher price results in a violation of
section 23B.
2. Metrobank's Provision of Back-Office Services
Violates Section 23B
Under Metrocorp's proposal, the bulk of MAC's operations, other than the armored car itself and its
drivers, would be provided by Metrobank and its
employees. MAC would lease a desk from Metrobank
for use by the armored car guards and would use
Metrobank's office equipment for its operations. MAC
would use Metrobank's employees for its billing and
accounting, auditing, recordkeeping, street inspections, compliance, and customer service functions. A
Metrobank employee would act as dispatcher and
determine MAC's route. All of MAC's officers and
directors would be officers and directors of
Metrobank. All of MAC's operations, except the physical pick-ups and deliveries by the armored car, would
be handled by employees of Metrobank.
In its prior Order in this matter, the Board specifically called for additional information concerning
356
Federal Reserve Bulletin • April 1993
"precise breakdown of the services MAC will purchase from Metrobank and the projected costs of these
services."11 Despite the fact that Metrobank has been
operating its armored car for a number of years and
thus has a basis on which to determine the costs of at
least some of the services to be provided, Metrocorp
has provided no detailed cost figures for the wide
variety of services Metrobank will provide to MAC.
Instead, Metrocorp proposes that MAC pay
Metrobank a fee of 15 percent of MAC's direct operating expenses to cover all of the services provided by
Metrobank to MAC.12 Metrobank's Vice President of
Operations, who would be the de facto manager of
MAC, testified that there was no "factual basis" for
the 15 percent figure, but that it was "just an estimate"
of the value of services provided by Metrobank. Rem.
Tr. at 57.
Under section 23B, the provision of services by a
bank to an affiliate must be paid for on an arm's-length
basis. This requires, where there are no comparable
transactions between a bank and a nonaffiliate, that the
bank's provision of services to its affiliate must be on
terms that in good faith would be offered to or would
apply to nonaffiliated companies. The Board finds that
Metrobank would not in good faith provide back office
services to an unaffiliated armored car company by
charging a flat fee that had no factual basis and without
determining the relationship of the fee to the actual
costs of providing the services.
3. The Violations of Section 23B Requires Denial of
the Application as Currently Structured
Because the proposal would be inconsistent with the
requirements of section 23B, the Board believes that it
is constrained to deny the application as currently
structured. In the Board's view, a proposal to engage
in nonbanking activities pursuant to section 4(c)(8) will
not produce net benefits to the public if it violates the
kind of statutory requirement, such as section 23B,
that was specifically intended to prevent unsafe or
unsound banking practices when a bank affiliate engages in nonbanking activities. Although section 23B
was not explicitly addressed by the ALJ or by the
parties in this proceeding, the issue of the cost of the
services to be provided by Metrobank to MAC was
expressly raised by the Board in its Remand Order and
questions concerning the overall pricing structure of
MAC's services were specifically considered during
the Remand Hearing. Moreover, the facts of record
showing the violations of section 23B are not disputed.
The Board notes that Metrocorp has committed to
operate MAC in a manner that complies with all
applicable laws, including section 23B. In a number of
cases that involved transactions subject to section
23B, the Board has approved applications based in
part on the applicants' commitments to comply with
that section.13 Those cases, however, did not present
proposals that on their face violate section 23B. In
view of the clear concern expressed by the Board over
the very matters that remain unresolved on the present
record, the Board does not believe that mere commitments to operate in accordance with section 23B will
suffice in this case.
The Board is also reluctant to impose conditions
covering the costs and pricing of proposed services
where, as here, the evidence submitted by Metrocorp
in the record before the Board with regard to the
specifics of the proposed operations of MAC, especially the projections of MAC's expected costs and
revenues, is exceptionally general and indefinite.
Metrocorp introduced projections of MAC's expected costs and revenues, based on "full capacity,"
showing only a slight profit before taxes. Furthermore,
as the ALJ found, the projections are unusually vague
and speculative.
Moreover, the credibility of those projections is
significantly undermined by the fact that compliance
with state bank branching laws is likely to increase
costs substantially without resulting in a corresponding increase in revenue. The ALJ found that MAC's
operations, as currently proposed, would violate state
branching laws in the two states, Illinois and Iowa, in
which MAC proposes to operate. The Board agrees
with Metrocorp and Board Counsel that nothing in the
record shows that MAC is absolutely precluded by law
from engaging in armored car activities in those states.
However, the structural changes required to permit
operation would undoubtedly increase MAC's costs.
Metrocorp's bank subsidiary is a state-chartered
nonmember bank subject to the laws of Illinois. Illinois
law limits the number and location of branches by
state-chartered banks. Illinois Banking Act § 5(15), 111.
Ann. Stat. ch. 17, para. 311(15) (Smith-Hurd 1981 &
Supp. 1992). Mobile branches are not authorized.
Illinois law defines a "branch," with certain exceptions not relevant here, as "any place of business of a
bank at which deposits are received, checks paid, or
loans made."14 Illinois Banking Act § 2, 111. Ann.
Stat. ch. 17, 11 302. It is clear that Metrocorp intends
13. See, e.g., The Sumitomo Bank, Limited, 11 Federal Reserve
Bulletin 339 (1991); The Dai-Ichi Kangyo Bank, Limited, 11 Federal
11. 76 Federal Reserve Bulletin at 681 n.34 (1990).
12. The desk and telephone would be subject to a separate lease
payment to Metrobank.
Reserve Bulletin 184 (1991).
14. The definition is thus similar to that contained in the National
Bank Act, 12 U.S.C. § 36(f).
Legal Developments
that MAC will pick up funds from Metrobank customers to be deposited at Metrobank.15
As noted earlier, the Illinois Commissioner of Banks
and Trust Companies informed Metrobank in the
1980s that its armored car activities for third parties
were inconsistent with the Illinois Banking Act, apparently since the armored car would provide banking
services at locations where Metrobank was not permitted to have a branch. The current application is
premised on the assumption that the separate corporate status of MAC as a subsidiary of Metrobank's
holding company would alter that result.
Prior to the Initial Hearing, the Illinois Commissioner was requested to comment on the application.
He concluded that he would not consider MAC's
operation to be a branch, based on the proposed
operation described in the application and commitments made by Metrocorp to operate MAC as a
"separate and bona fide armored car subsidiary rather
than as an agent" of a bank.
Following the Remand Hearing, at which a representative of the Illinois Commissioner testified and
was apprised of additional information concerning the
proposed operation, the General Counsel to the Illinois Commissioner submitted a second letter concerning the application. The letter stated that the Commissioner's office "does not have sufficient information to
draw a conclusion as to whether the operation of
[MAC] would violate branching restrictions." The
letter set forth a number of areas of additional information needed to make such a determination, including the extent to which bank personnel are involved in
MAC's operation, the manner in which MAC's route
is established, the extent to which bank assets, equipment and services are available to MAC, and the
method of compensation for those assets, equipment,
services, and personnel.
The General Counsel of the Iowa Division of Banking has expressed even more serious reservations
about MAC's operations in that state. Iowa law prohibits persons from " engaging] in this state in the
business of receiving money for deposit, [or] transacting] Iowa law. Iowa Code Ann. § 524.107. Moreover,
branching by Iowa banks is strictly limited in terms of
location and number of offices. Iowa Code
Ann. §§ 524.1102, 524.1202. In a letter submitted after
the Remand Hearing, the General Counsel opined that
"due to the extreme dependency on and interrelationship of Metro Armored Courier, Inc., and Metrobank,
Metro Armored Courier, Inc., and Metrobank are, in
reality, one and the same corporation, which indirectly
15. According to the application, MAC will also "providfej related
services such as . . . payroll check cashing."
357
allows Metrobank to establish interstate branches,
which would be violative of Iowa law."
While the Illinois Commissioner has not made a final
determination as to the permissibility of MAC's
planned operations, it is clear that both the Commissioner and the Iowa Banking Department have focused
on the issue of the degree of connection between the
bank and the affiliate in determining whether MAC
operates as an agent of the bank when it offers
off-premises banking services such as deposit taking
and check cashing.16 Thus, it would appear that in
order to satisfy the concerns of Illinois and Iowa
authorities, MAC would have to revise its operations
substantially to assure a more complete separation of
MAC's operations from those of the bank.
Metrocorp does not contest the opinions of the
Illinois and Iowa authorities. Rather, Metrocorp suggests that the Board grant conditional approval of the
application subject to commitments and restrictions
designed to enforce the separation required by those
authorities. For example, Metrocorp has suggested
that the Board require that the majority of the Board of
Directors of MAC not be officers or directors of the
Bank; that no officers, managers, employees or other
personnel of MAC be employed by or leased from the
Bank; and that Bank assets, equipment, and services
may be provided to MAC only on terms available to
the general public or on the basis of explicit, arm'slength, commercially reasonable terms. Metrocorp's
Proposed Findings of Fact Nos. 75-79.
These structural changes proposed by Metrocorp,
and any others required by Illinois or Iowa authorities,
will necessarily increase the costs of MAC's operations. There is no suggestion in the record, however,
that MAC's revenues will increase to cover these
costs. The existing revenue projections already include customers in areas where branching laws might
preclude operations absent resort to expensive structural changes. This uncertainty counsels against a
conditional approval on the existing record.
B. Other Adverse Effects and Possible Public
Benefits
In view of the narrow grounds for decision in this case,
the Board need not reach the other factors listed in
section 4(c)(8). Many of the findings and conclusions
of the ALJ regarding these factors have been excepted
16. The same considerations have guided the Board in previous
determinations of whether a bank affiliate is operating as a branch.
See, e.g., Grandview Bank & Trust Co. v. Board of Governors, 550
F.2d 415, 417 (8th Cir. 1977); First State Bank of Clute v. Board of
Governors, 553 F.2d 950 (5th Cir. 1977); Commercial Nat'l Bank v.
Board of Governors, 451 F.2d 86, 90 (8th Cir. 1971).
358
Federal Reserve Bulletin • April 1993
to by the parties. The Board need not reach these
issues in order to decide this case. Thus, as stated
above, the Board does not adopt any of the findings
and conclusions of the ALJ except as reflected in this
Order.
Access to Justice Act ("EAJA") and under certain
principles applicable injudicial proceedings.1
Upon a careful review of the entire record, the
Board agrees with the ALJ that Protestants' request
for partial reimbursement of their fees and costs
should be denied.2
III. Conclusion
I. Protestants' EAJA Claim
On the basis of the record as a whole, the Board finds
that Metrocorp has not met its burden of showing that
the public benefits resulting from its proposal would
outweigh the likely adverse effects of the proposal as
currently structured.
This denial does not affect the Board's prior ruling in
this case that armored car services are closely related
to banking and permissible for bank holding companies, and is without prejudice to the filing of a new
proposal by this (or any other) applicant to establish a
record based on substantial evidence from which a
favorable determination could be made with respect'to
the conduct of this activity under the "proper incident" test, as well as the resolution of all other issues
relevant to a particular proposal.
By order of the Board of Governors, effective
February 10, 1993.
Voting for this action: Chairman Greenspan and Governors
Mullins, Angell, Kelley, LaWare, Lindsey, and Phillips.
JENNIFER J . JOHNSON
Associate Secretary of the Board
Appendix
Denial of Protestants' Application for
Reimbursement of Certain Costs and Fees
Protestants have excepted to the Supplemental Decision's finding that they are not entitled to reimbursement of some of their costs and attorneys' fees associated with the Remand Hearing. After the Remand
Hearing, Protestants submitted a joint request to the
ALJ seeking reimbursement from the Board and from
Metrocorp for fees Protestants incurred in producing
representatives of the Illinois and Iowa state bank
regulators as witnesses at the Remand Hearing. Protestants asserted that these two witnesses would not
have had to testify except for alleged misconduct by
Board Counsel and by counsel for Metrocorp.
In the Supplemental Decision, the ALJ denied the
request, finding no legal support for granting such an
award and stating that the request was not a matter
encompassed in the Remand Order. In their exceptions, Protestants assert that an award of fees and
costs to them jointly is authorized under the Equal
With respect to Protestants' claim for reimbursement
under the EAJA, it is clear that the Act precludes such
an award to Protestants on the current record. The
EAJA provides that an agency that conducts an adversary adjudication shall award to a prevailing party
other than the United States fees and other expenses
incurred by that party in connection with the proceeding. Such an award is not required if, among other
things, the agency determines that the position of the
agency was substantially justified.3 The EAJA further
provides that a party seeking such an award must,
"within thirty days of a final disposition in the adversary adjudication," submit to the agency an application showing that the party is a prevailing party and is
eligible to receive an award under the Act. 4 In general,
a partnership, corporation, or other organization is
eligible for an award under the Act only if its net worth
did not exceed $7 million and it had fewer than 500
employees at the time the adversary adjudication was
initiated.5
Because the EAJA's authorization for making
awards of fees or other expenses is by its terms limited
to agencies, the statute provides no basis for requiring
Metrocorp to reimburse Protestants for any expenses.
Moreover, because Protestants' claim for reimbursement from the Board took the form of a motion submitted to the ALJ during the hearing prior to the Board's
final disposition of this proceeding, their claim was
premature under the terms of the Act and failed to show
how they are a prevailing party for purposes of the Act
in light of that disposition. In addition, Protestants'
motion failed to make any showing whatever that any of
1. Protestants submitted a claim for $12,713.50 in attorneys' fees
and $781.48 in witness travel expenses related to the testimony of state
regulatory officials on the branching issue.
2. Counsel for Metrocorp has also requested that should the Board
determine it has authority to award such expenses and fees under the
arguments advanced by Protestants, that it be awarded expenses and
costs related to its opposition to Protestants' request for reimbursement, based on the conduct of counsel for Protestants in this matter.
Counsel for Metrocorp has submitted an affidavit listing those expenses for which it seeks reimbursement. In view of the Board's
disposition of Protestants' request, however, and in light of its
consideration of the entire record, the Board denies Metrocorp's
request.
3. 5 U.S.C. § 504(a)(1).
4. 5 U.S.C. § 504(a)(2).
5. 5 U.S.C. § 504(b)(1)(B).
Legal Developments
the Protestants met the minimum net worth and number-of-employee eligibility requirements for an award
under the EAJA.6 Accordingly, to the extent Protestants' claim for reimbursement is based on the EAJA,
that claim is denied based on the existing record.
Although it is possible that one or more of the
Protestants, if eligible, might within thirty days of this
Order seek to renew a claim for an EAJA award, the
Board believes that there is serious doubt that Act
would authorize any such award in connection with
this proceeding. By its terms, the EAJA does not
apply in an adjudication for the purpose of "granting
or renewing a license."7 This proceeding, an application by a bank holding company for prior Board
approval to acquire a nonbank company, appears to
fall squarely within the definition of a licensing proceeding for which no EAJA award is authorized.8
II. Reimbursement of Fees Under Principles
Applicable in Judicial Proceedings
The Board also finds that, to the extent Protestants'
reimbursement claim is grounded on principles governing fee awards in judicial proceedings, the claim
must also be denied. Recognizing that, apart from the
EAJA, there is no statute or regulation that would
authorize the Board to award fees or costs to Protestants in connection with this proceeding, Protestants
assert that the Board may order reimbursement of fees
and expenses in the same circumstances in which
courts would make such awards without an explicit
grant of authority.
Even if it is assumed that an administrative agency
like the Board may rely on these judicially-created
principles governing fee awards, in the Board's view,
6. On the current record, it is far from clear whether any of the
Protestants is eligible for an EAJA award. One Protestant apparently
is a major business enterprise. The other two Protestants, which are
trade associations, may be required to aggregate the net worth and
employees of their member businesses for purposes of EAJA eligibility. See National Truck Equipment Ass'n v. National Highway Traffic
Safety Admin., 972 F.2d 669, 671-74 (6th Cir. 1992).
7. 5 U.S.C. § 504(b)(1)(C).
8. For purposes of the EAJA, a licensing proceeding includes any
agency process respecting the granting of an agency "permit, certificate, a p p r o v a l , . . . or other form of permission." 5 U.S.C. § 551(9),
(8). Agency approvals for a business to engage in specific activities are
uniformly viewed as licenses within this definition. E.g., Air North
America v. Department of Transportation, 937 F.2d 1427, 1437 (9th
Cir. 1991) (certificates of authority to provide air transportation);
Atlantic Richfield Co. v. United States, 774 F.2d 1193,1200 (D.C. Cir.
1985) (approvals to enter Alaskan-Panama domestic oil trade). The
Board's Rules of Practice and Procedure for Hearings refer to
proceedings with respect to applications for "initial licenses" as
including, but not limited to, applications for Board approval under
section 3 of the BHC Act. 12 C.F.R. 263.56. For purposes of the
definition of a licensing proceeding, an application under section
4(c)(8) of the BHC Act is essentially the same as an application under
section 3.
359
these would not provide for such an award on the
record in this case. The fundamental rule applicable in
judicial proceedings in this country is that a prevailing
litigant is not entitled to collect attorneys' fees or other
general costs from the loser, except in limited circumstances.9 Although courts may award attorneys' fees
and costs against a party that has acted in bad faith or
"vexatiously, wantonly, or for oppressive reasons,"10
this exception to the general rule applies only in
extraordinary circumstances. Awards for bad faith
conduct are limited to circumstances where a party, by
acting without any reasonable basis, violates a clearly
imposed duty that requires the injured party to undertake unnecessary litigation to vindicate its rights.11
Protestants have failed to make any showing that
would meet this very heavy burden of proof. Aside
from a bare assertion of bad faith, Protestants cannot
point to, and indeed the record is wholly devoid of,
any evidence of unreasonable or oppressive conduct
on the part of counsel for Metrocorp or Board Counsel
that would have required unnecessary litigation by the
Protestants.
Upon a review of the undisputed representations of
counsel, the Boardfindsno evidentiary basis whatever
to support a conclusion that either Metrocorp's counsel or Board Counsel acted in bad faith when seeking
opinions of the Illinois and Iowa bank regulators on
the branch banking issue prior to the initial hearing in
this case. The mere fact that both state regulators
revised their initial conclusions after reviewing testimony at the Remand Hearing in no way supports an
inference of any improper conduct by counsel with
regard to the initial opinion letters. In addition, the
Board cannot find that Board Counsel's actions in
unsuccessfully opposing the taking of testimony on the
branching issue at the Remand Hearing were unreasonable or beyond the bounds of their proper role,
given the fact that the branching issue had been raised
at the initial hearing and Protestants could have sought
the introduction of any relevant evidence on this point
at that hearing.12
9. E.g., Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S.
240,247,257-60 (1975); F.D. Rich Co. v. United States, 417 U . S . 116,
129-30 (1974).
10. Alyeska Pipeline Serv. Co., supra, 420 U . S . at 257; F.D. Rich
Co., supra, 411 U.S. at 129.
11. E.g., American Hospital Ass'n v. Sullivan, 938 F.2d 216, 220
(D.C. Cir. 1991); Sierra Club v. United States Corps of Engineers, 776
F.2d 383, 390 (2d Cir. 1985), cert, denied, 475 U . S . 1084 (1986).
12. Courts may also allow a successful litigant who has preserved or
recovered a fund for the benefit of others as well as the litigant to
recover fees and other expenses from the members of the benefitted
class. E.g., Alyeska Pipeline Serv. Co., supra, 421 U . S . at 257-58.
This rationale has no applicability here, since Protestants' participation in this proceeding to oppose approval of this application did not
preserve or recover any fund for the benefit of either Metrocorp or the
Board.
360
Federal Reserve Bulletin • April 1993
For these reasons, the Board adopts the ALJ's
recommendation that Protestants' request for partial
attorneys' fees be denied.
Supplement to Order Approving Modifications
to Section 20 Orders
Supplement to Order Approving Modifications to
Section 20 Orders to Allow Use of Alternative
Indexed Revenue Test to Measure Compliance with
the 10 Percent Limit on Bank-Ineligible Securities
Activities
On January 26, 1993, the Board adopted an alternative
indexed revenue test pursuant to which a section 20
subsidiary could choose to adjust its revenue by a
series of factors supplied by the Board that vary
according to the average duration of the securities
portfolio of the section 20 subsidiary. The Board has
received a request for an interpretation of that part of
the January 26 Order regarding the operation of the
indexed revenue test. The request asks whether a
section 20 subsidiary may, consistent with the January 26 Order, immediately begin measuring compliance with the indexed test on an eight-quarter rolling
average basis using revenue figures from the seven
quarters prior to 1993 adjusted according to the average duration of its securities portfolio during these
quarters.
The Board implemented the indexed revenue test on
a prospective basis to allow a section 20 subsidiary
that may not have data regarding the average duration
of its securities portfolio prior to 1993 to adopt the
indexed method nevertheless. If a section 20 subsidiary has the duration data available to begin measuring
compliance with the test on an eight-quarter rolling
average basis immediately, it may do so after notifying
the relevant Federal Reserve Bank.1
By order of the Board of Governors, effective
February 23, 1993.
V o t i n g for this action: Chairman G r e e n s p a n and G o v e r n o r s
Mullins, A n g e l l , L a W a r e , L i n d s e y , and Phillips. A b s e n t and
not voting: G o v e r n o r K e l l e y .
JENNIFER J. JOHNSON
Associate Secretary of the Board
1. Tables of adjustment factors for each of the seven quarters prior
to the first quarter of 1993 will be published in the near future.
Orders Issued Under Sections 3 and 4 of the
Bank Holding Company Act
First Insurance Finance Company
Des Moines, Iowa
Order Approving the Formation of a Bank Holding
Company
First Insurance Finance Company, Des Moines, Iowa
("FIFCO"), has applied under section 3(a)(1) of the
Bank Holding Company Act ("BHC Act")
(12 U.S.C. § 1842(a)(1)) to become a bank holding
company by acquiring all the voting shares of Farmers
and Miners State Bank, Lucas, Iowa ("Bank").
FIFCO also has applied under section 4(c)(8) of the
BHC Act (12 U.S.C. § 1843(c)(8)) to continue to make
and service loans and other extensions of credit pursuant to the Board's Regulation Y (12 C.F.R.
225.25(b)(1)).
Notice of the applications, affording interested persons an opportunity to submit comments, has been
published (57 Federal Register 57,461 (1992)). The
time for filing comments has expired, and the Board
has considered the applications and all comments
received in light of the factors set forth in sections 3(c)
and 4(c)(8) of the BHC Act.
FIFCO, an Iowa corporation licensed by the Iowa
Division of Banking as an industrial loan company,
does not operate any commercial banks in Iowa.1
Bank controls deposits of $2.8 million and is the
smallest commercial banking organization in Iowa,
representing less than 1 percent of total deposits in
commercial banking deposits in the state.2 Based on
all the facts of record, the Board concludes that
consummation of the proposed transaction would not
result in any significantly adverse effects on competition in any relevant banking market, and concludes
that competitive considerations are consistent with
approval of the application.
As part of this proposal, FIFCO proposes to relocate the main office of Bank to Indianola, Iowa, which
is located approximately 26 miles from Lucas, and
maintain a bank office at the former location of its main
office in Lucas. Bank has been chartered by the state
for approximately nine years to conduct a banking
business in Lucas, Iowa.
The Board has received comments from a bank in
Indianola, Iowa ("Protestant"), contending that
1. FIFCO is engaged currently in the business of making loans to
commercial borrowers to finance insurance premiums. FIFCO does
not accept deposits and is not insured by the Federal Deposit
Insurance Corporation ("FDIC").
2. State data are as of June 30, 1992.
Legal Developments
Bank's small amount of deposits and loans make this
proposal, in effect, the establishment of a de novo
bank in Indianola that does not meet the minimum
capital requirements imposed on de novo banks.3
In addition to establishing a de novo bank or a bank
office, Iowa law generally authorizes a bank, with the
prior approval of the Iowa Superintendent of Banking ("Superintendent"), to relocate its main office to
another community and retain its former main office
as a bank office. 4 In this case, Bank has been in
existence for approximately nine years, and the
Superintendent concluded that the proposal was
properly subject to the Iowa relocation statute. In
approving the proposal under the relocation law, the
Superintendent found that the proposal to relocate
Bank's main office and to establish a bank office at its
former main office was consistent with all of the
requirements of Iowa law.5 The Office of the Iowa
Attorney General also reviewed the Iowa statute and
concluded that this proposal is consistent with requirements of state law and properly governed under
the relocation statute.6 The FDIC also approved this
proposal under the relocation provisions of the Federal Deposit Insurance Act. 7 The Board believes that
these interpretations of Iowa law are reasonable, and
that the proposal represents a permissible relocation
of Bank's main office consistent with applicable law.8
On the basis of all the facts of record, the Board
concludes that the proposed relocation of Bank's
main office to Indianola and the establishment of a
3. U p o n consummation of this proposal, Bank would have $842,000
in capital. The FDIC requires a de novo bank to operate with at least
$2 million in capital. F D I C Statement of Policy, "Applications for
Deposit Insurance," 57 Federal Register 12,822 (April 13, 1992). The
minimum capital requirement for a bank under Iowa law is $100,000 or
such higher amount as the Superintendent deems necessary. Iowa
Code Ann. § 524.401 (Supp. 1992).
4. Id. § 524.312(2). Relocations are limited geographically and
FIFCO's proposal complies with these limitations. De novo banks and
bank offices are authorized by §§ 524.305 and 524.1201, respectively.
5. See Order dated January 26, 1993, by R.H. Buenneke, Superintendent of Banking, State of Iowa. In granting this approval, the
Superintendent is required by statute to consider the capital structure
of the proposed institution, the ability of the community to support a
bank, the character and fitness of the bank's directors, and the
sufficiency of the proposed bank's personnel. Iowa Code Ann.
§§ 524.1507(2) and 524.305(l)(c)-(f). S e e a/jo id. § 524.305.
6. Opinion dated February 4, 1993, by Donald E. Sennefif, Assistant
Attorney General, State of Iowa Department of Justice.
7. 12 U . S . C . § 1828(d). See Letter dated February 8, 1993, from
James O. L e e s e , to Board of Directors, Farmers & Miners State Bank.
8. In previously considering the effect of a state law, the Board has
examined the statute itself, judicial interpretations of that law and, in
the absence of judicial interpretations, the opinions of the state's
Attorney General or the state's relevant administrative agency. See
The Jackson State Bank, 79 Federal Reserve Bulletin 240 (1993).
When the Board has concluded that the opinion of the state authority
is well reasoned, consistent with the statutory language and not
inconsistent with the apparent intent of the statute or its legislative
history, the Board has accorded deference to the state authority. See
Bancorp of Mississippi, 72 Federal Reserve Bulletin 257 (1986).
361
bank office at its former location in Lucas is consistent with applicable state and federal law. The Board
also concludes that the financial and managerial
resources and future prospects of FIFCO and Bank,
and the other supervisory factors that the Board
must consider under section 3 of the BHC Act, are
consistent with approval.
Protestant also asserts that Bank has a poor record
of performance under the Community Reinvestment
Act (12 ILS.C. § 2901 et seq.) ("CRA"). The Board
notes that the Bank will be under new ownership and
management that has initiated affirmative steps to
substantially improve the performance of Bank under
the CRA, and to correct deficiencies in Bank's performance identified in Bank's last examination report.9 In general, the Statement of the Federal Financial Supervisory Agencies Regarding the
Community Reinvestment Act indicates that commitments for future corrective actions offered in the
application process will not be sufficient to overcome
a seriously deficient CRA record.10 In this case,
however, the inadequate CRA record reflected the
actions of previous owners, and the proposed new
owners have committed to take steps to correct
deficiencies in CRA performance in a timely fashion
and to report to the Federal Reserve Bank of Chicago
on their progress within six months of consummation
of the proposal.11
FIFCO has committed to ascertain the credit needs
of its communities through various outreach activities. For example, Bank's new management will
meet with local community groups quarterly to discuss the credit needs of the community, and to
discuss products and services the bank should offer.
Information gained from these meetings will be presented directly to Bank's board of directors and used
to develop products and services. Bank will distribute in its lobby questionnaires to its customers
to further assess which products and services individuals believe are needed in Bank's communities.
Bank will also make ongoing needs ascertainment
calls on businesses, business leaders, and elected
officials of its communities to document any bank
services and loan programs that need to be implemented. Bank intends to advertise its credit services
in community newspapers, free shopper guides and,
where appropriate, on the radio. The board of directors and Bank's employees will also be responsible
9. In its November 1991 compliance examination, Bank received a
"substantial noncompliance" C R A rating from the FDIC.
10. 54 Federal Register 13,742 (1989).
11. Bank's proposed new president is currently president of another
bank in Iowa that received a "satisfactory" C R A rating in its most
recent CRA compliance examination conducted by the FDIC in April
1991.
362
Federal Reserve Bulletin • April 1993
for marketing Bank's credit, loan, and deposit services.
Bank will also offer a variety of credit products and
services to its customers. For example, Bank will
originate residential mortgage loans, home improvement loans, housing rehabilitation loans, small business loans, and agricultural loans. In addition, Bank
will use the secondary mortgage market to provide
customers with long-term real estate mortgage loans,
and will lend under a variety of government-sponsored
lending programs, including the Small Business Administration, the Farmers Home Administration, the
Iowa Finance Authority, the Young Farmers Loan
Program, and the Iowa Business Development Corporation.
Bank has proposed to establish a geocoding system
to ensure even distribution of credit throughout its
delineated area. In addition, Bank intends to provide
funds for community development through real estate
loans, and the acquisition of general obligation bonds
and industrial development bonds.
FIFCO has committed to maintain a full service
bank office in Lucas for at least one year. During this
period, FIFCO will evaluate the office's operations
and report to the Reserve Bank within six months of
consummation on its financial condition and CRArelated activities.12
In light of all the facts of record, including the CRA
programs to be implemented by Bank's new management, the Board believes that considerations relating
to the convenience and needs of the communities to be
served are consistent with approval.
FIFCO also has applied, pursuant to section 4(c)(8)
of the BHC Act, to continue to engage directly in
making and servicing loans. The Board has determined
by regulation that this activity is closely related to
banking and generally permissible for bank holding
companies, and FIFCO proposes to conduct this activity in accordance with the Board's regulations.
Numerous companies provide similar nonbanking
services, and this proposal would not have a significantly adverse competitive effect on the markets for
this nonbanking service. In addition, there is no evidence in the record to indicate that consummation of
this proposal is likely to result in any significantly
adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of
interests, or unsound banking practice. Accordingly,
the Board has determined that the balance of public
interest factors it must consider under section 4(c)(8)
12. The Federal Deposit Insurance Corporation Improvement Act
of 1992 requires 90-day's notice before closure of a branch bank.
12 U.S.C. § 1831p.
of the BHC Act is favorable and consistent with
approval of FIFCO's application.
Based on the foregoing, including the conditions and
commitments described in this Order and those made
in these applications, and all of the facts of record, the
Board has determined that these applications should
be, and hereby are, approved. The Board's approval is
specifically conditioned upon compliance by FIFCO
with all the commitments made in connection with
these applications. The commitments and conditions
relied on by the Board in reaching this decision are
deemed to be conditions imposed in writing by the
Board in connection with its findings and decision, and
as such may be enforced in proceedings under applicable law.
The determinations as to the nonbanking activity are
subject to all the conditions in the Board's Regulation
Y, including those in sections 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 to require such modification or
termination of the activities of a holding company or
any of its subsidiaries as the Board finds necessary to
assure compliance with, or to prevent evasions of, the
provisions and purposes of the BHC Act and the
Board's regulations and orders issued thereunder.
The banking acquisition should not be consummated
before the thirtieth calendar day following the effective
date of this Order, and the banking and nonbanking
acquisitions shall not be consummated later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
the Federal Reserve Bank of Chicago, acting pursuant
to delegated authority.
By order of the Board of Governors, effective
February 17, 1993.
Voting for this action: Chairman Greenspan and Governors
Mullins, Angell, Kelley, Lindsey, and Phillips. Absent and
not voting: Governor La Ware.
JENNIFER J. JOHNSON
Associate Secretary of the Board
Orders Issued Under Bank Merger
Act
Alice Bank of Texas
Alice, Texas
Order Approving the Merger of Banks and
Establishment of Bank Branch
Alice Bank of Texas, Alice, Texas ("Alice Bank"), a
state member bank, has applied under section 18(c) of
the Federal Deposit Insurance Act (12 U.S.C.
§ 1828(c)) (the "Bank Merger Act") to purchase the
Legal Developments
assets and assume the liabilities of New First City,
Texas-Alice, Alice, Texas ("NFC Bank"). Alice Bank
also has applied under sections 9 and 24A of the
Federal Reserve Act (12 U.S.C. §§ 321 and 371d) to
establish a branch and make an additional investment
in bank premises at the location of NFC Bank.
Notice of the applications, affording interested persons an opportunity to submit comments, has been
given in accordance with the Bank Merger Act and the
Board's Rules of Procedure (12 C.F.R. 262.3(b)). As
required by the Bank Merger Act, reports on the
competitive effects of the merger were requested from
the United States Attorney General, the Office of the
Comptroller of the Currency ("OCC"), and the Federal
Deposit Insurance Corporation ("FDIC"). The time for
filing comments has expired, and the Board has considered the applications and all comments received, as
well as Alice Bank's response to those comments, in
light of the factors set forth in the Bank Merger Act and
in section 9 of the Federal Reserve Act.
On October 30, 1992, the 20 subsidiary banks of
First City Bancorporation were declared insolvent and
the FDIC was appointed receiver of each of the banks.
Pursuant to section 1 l(n) of the Federal Deposit Insurance Act ("FDI Act") (12 U.S.C. § 1821(n)), the
FDIC established 20 bridge banks to acquire the assets
and to assume the liabilities and deposits of the closed
banks, and NFC Bank was established to acquire the
assets and to assume the liabilities and deposits of
First City, Texas-Alice, N.A. The FDIC solicited
offers for the acquisition of NFC Bank as well as the
other subsidiaries of First City Bancorporation from
qualified bidders pursuant to sections ll(n) and 13(c)
of the FDI Act (12 U.S.C. §§ 1821(n) and 1823(c)). On
January 26, 1993, the FDIC selected Alice Bank's bid
for NFC Bank. The FDIC also has requested that the
Board process this application expeditiously due to the
condition of the bridge banks and to minimize the cost
of the transaction to the FDIC.
Alice Bancshares, Inc., Alice Bank's parent bank
holding company, is the 145th largest commercial banking organization in Texas, controlling deposits of $110.9
million, representing less than 1 percent of total deposits in commercial banking organizations in the state.
NFC Bank controls deposits of $149.3 million, representing less than 1 percent of total deposits in commercial banking organizations in the state. Upon consummation of the proposal, Alice Bancshares would
become the 64th largest commercial banking organization in Texas, controlling $260.2 million in deposits,
representing less than 1 percent of the total deposits in
commercial banking organizations in the state.1
1. State deposit data are as of June 30, 1991.
363
Definition of Relevant Banking Market
The Bank Merger Act provides that the Board may not
approve a proposal submitted under the Bank Merger
Act if the proposal would result in a monopoly or the
effect of the proposal may be substantially to lessen
competition in any relevant market unless the Board
finds "that the anticompetitive effects of the proposed
transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting
the convenience and needs of the community to be
served." 12 U.S.C. § 1828(c)(5).
In evaluating the competitive factors in this case,
the Board has carefully considered the comments of
First National Bank of South Texas, San Antonio,
Texas ("FNB") and other commenters.2 FNB argues
that the relevant geographic market for analyzing the
competitive effects of this proposal should be limited
to Jim Wells County, Texas, and that consummation
of this proposal would substantially lessen competition
for banking services in this banking market. FNB
relies principally on data relating to the geographic
distribution of deposits and loans, commuting times,
newspaper circulation and other means of commercial
advertising, and other data regarding the employment
and services available in Jim Wells County.
The Board and the courts have found that the
relevant banking market for analyzing the competitive
effects of a proposal must reflect commercial and
banking realities and must consist of the local area
where the banks involved offer their services and
where local customers can practicably turn for alternatives.3 The Board has considered all the facts in this
case, including the comments and information provided by FNB and other commenters, and an on-site
study conducted by the Federal Reserve Bank of
Dallas ("Reserve Bank"), and concludes that the
relevant geographic market within which to evaluate
the competitive effects of this proposal is defined as:
Nueces and San Patricio Counties, Alice and Orange
Grove in Jim Wells County, and San Diego in Duvall
County, all in Texas (the "Corpus Christi banking
market").
Alice, Texas ("Alice"), is the county seat of Jim
Wells County and is located 44 miles west of Corpus
2. One commenter alleges that this proposal will result in an
increase in unemployment in Alice. The Board has considered these
comments in light of all the facts of record, including the response by
Alice Bank and the condition of N F C Bank, and does not believe that
these comments warrant denial of the applications.
3. See CB Financial Corporation, 79 Federal Reserve Bulletin 118
(1993); St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673, 674
(1982).
364
Federal Reserve Bulletin • April 1993
Christi, with access by means of a major highway.4 In
recent years, Corpus Christi has become a hub in
south Texas for retail trade, health care and recreation
facilities. For example, the record indicates that Corpus Christi provides a wide range of medical services
and commercial retail stores that are used by Alice
area residents.5 In this regard, Corpus Christi has been
designated as a Rand McNally Basic Trading Center
for the area that includes Alice, because Corpus
Christi serves as a center for goods purchased by
residents of that area.6 Residents in the Alice area are
exposed to substantial advertising by Corpus Christi
retailers in newspapers and on radio and television
stations.
Corpus Christi also is the location of the area's
largest employers and offers a variety of employment
opportunities to the residents of Alice. Census data
indicate that commuting from Jim Wells County to the
Corpus Christi MSA increased substantially from 1980
to 1990, and the Alice Chamber of Commerce estimates that approximately 20 percent of the workers
residing in Alice commute to the Corpus Christi area
for jobs.
The Reserve Bank conducted a survey of Corpus
Christi area financial institutions and found that bankers consider their market area to cover a 50-mile
radius, which includes Alice, and financial institutions
in both areas have comparable deposit rates and hours
of operation. Alice bankers surveyed also indicated
that they consider deposit rates of Corpus Christi
banks in pricing their products, and deposit data for
Alice Bank and NFC Bank indicate that these institutions compete with Corpus Christi financial institutions for customers in Nueces County.
After review of these data and the other facts of
record, the Board believes that the record indicates
that customers in Alice reasonably can and do turn to
providers of banking services throughout the Corpus
Christi banking market. On this basis, the Board
disagrees with the contention of FNB that the geographic market in this case should be limited to Jim
Wells County. Instead, based on all of the facts of
4. State Highway 44 is a four-lane, divided highway that connects
Alice with downtown Corpus Christi, and traffic flow is not impeded
by the few small towns located along this highway. Traffic count data
indicate substantial local travel between Corpus Christi and Alice, and
between Alice and San Diego.
5. A Reserve Bank survey employing a small random sample of
Alice residents suggested that a majority of the surveyed residents
travel to Corpus Christi for medical services and shopping. In addition, check clearing data from Alice Bank indicate that a substantial
portion of the checks were negotiated to purchase goods and services
in Nueces County.
6. Basic Trading Centers such as Corpus Christi are also viewed as
serving their surrounding areas with various specialized services, such
as medical care, entertainment, higher education, and a daily newspaper.
record, the Board finds that the relevant geographic
market in this case is the Corpus Christi banking
market as defined above.
Competitive Effects in the Corpus Christi Banking
Market
Alice Bank is the 12th largest depository institution in
the market, controlling deposits of $95.8 million, representing 2.9 percent of the total deposits in depository
institutions in the market.7 NFC Bank controls deposits of $149.3 million, representing approximately
4.5 percent of total deposits in depository institutions
in the market.8 Upon consummation, Alice Bank
would become the fifth largest depository institution in
the market, controlling total deposits of $245 million,
representing approximately 7.4 percent of total deposits in depository institutions in the market. The Herfindahl-Hirschman Index ("HHI") would decrease
117 points from a level of 955 to a level of 838.9
Accordingly, in light of the decrease in market concentration, the unconcentrated nature of the market
and all 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 market. In addition, the Department of Justice has advised the Board that the proposed acquisition will not have a significantly adverse effect on
competition.
Thefinancialand managerial resources and future prospects of Alice Bank and Alice Bancshares are consistent
with approval. In addition, the Board also finds that
considerations relating to the convenience and needs of
the community to be served are consistent with approval.
The Board also has considered the factors it is required to
7. Market data are as of June 30, 1991. In this context, depository
institutions include commercial banks and savings associations. Market share data are based on calculations in which the deposits of thrift
institutions are included at 50 percent. The Board previously has
indicated that thrift institutions have become, or have the potential to
become, major competitors of commercial banks. See Midwest Finan-
cial Group, 75 Federal Reserve Bulletin 386 (1989); National City
Corporation, 70 Federal Reserve Bulletin 743 (1984).
8. These data do not account for deposit run-off that may have
occurred since June 30, 1991.
9. The First City organization, which operated two banks in the
Corpus Christi market, ranked first among depository institutions in
total deposits in the market, and Alice Bank is purchasing only one of
those First City banks. 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 less than 1000 points is
considered to be unconcentrated. The Department of Justice 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 at least 200 points. The Justice Department has stated that the higher than normal HHI thresholds for
screening bank mergers and acquisitions for anticompetitive effects
implicitly recognizes the competitive effect of limited-purpose lenders
and other non-depository financial entities.
Legal Developments
consider when approving applications for establishment
of and investment in branches pursuant to sections 9 and
24A of the Federal Reserve Act andfindsthose factors to
be consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that the applications should be,
and hereby are, approved. The Board's approval is
specifically conditioned upon compliance by Alice
Bank with all the commitments made in its application.
For purposes of this action, these commitments and
conditions are deemed to be conditions imposed in
writing by the Board in connection with its findings
and decision, and, as such, may be enforced in proceedings under applicable laws.
This transaction may not be consummated before
the fifth day following the effective date of this Order
or later than three months after the effective date of
this Order, unless such period is extended by the
Federal Reserve Bank of Dallas, acting pursuant to
delegated authority.
By order of the Board of Governors, effective
February 8, 1993.
V o t i n g for this action: V i c e Chairman Mullins and G o v e r nors A n g e l l , K e l l e y , L aWare, L i n d s e y , and Phillips. A b s e n t
and not voting: Chairman Greenspan.
JENNIFER J. JOHNSON
Associate Secretary of the Board
Orders Issued Under Federal Reserve Act
Farmers & Merchants Bank of Long Beach
Long Beach, California
Order Denying Establishment of a Branch and
Investment in Bank Premises
Farmers & Merchants Bank of Long Beach, Long Beach,
California ("Bank"), a state member bank, has applied
pursuant to sections 9 and 24A of the Federal Reserve Act
(12 U.S.C. §§ 321 and 371(d)), to establish a branch office
at 3233 Park Center Drive, Costa Mesa, California, and to
make an additional investment in bank premises.
Notice of these applications, affording interested
persons an opportunity to submit comments, has been
duly published. The time for filing comments has
expired, and the Board has considered the applications
and all comments received in light of the factors
contained in the Federal Reserve Act.
Bank, with approximately $1.4 billion in deposits,
has 16 branches located throughout Los Angeles and
Orange Counties, California.1 This proposal would
1. Deposit data are as of June 30, 1992.
365
increase to eight the number of branches Bank would
operate in Orange County.
In considering an application by a state member bank
to establish an additional branch, the Board is required
to consider the convenience and needs of the community to be served, and to take into account the institution's record of performance under the Community
Reinvestment Act ("CRA").2 In this regard, examinations of Bank conducted by the Federal Reserve Bank
of San Francisco ("Reserve Bank") reveal chronic
deficiencies in Bank's regulatory compliance3 and CRA
performance efforts4 that have continued over a prolonged period of time. In March 1992, the Board issued
a cease and desist order regarding Bank's violations of
laws and regulations relating to Bank's consumer lending and credit activities and the Bank's responsibilities
under the CRA, which continues in effect.5 The Board
also assessed civil money penalties against Bank in
December 1992 in connection with Bank's violations of
consumer lending and credit laws.6
During the processing of these applications, Bank
has provided numerous submissions relating to its
efforts to improve its regulatory compliance and CRA
performance records, including comments from individuals and organizations in support of Bank's lending
and community development activities. The Board has
carefully considered these submissions, as well as
Bank's record of regulatory compliance and CRA
performance, in light of the CRA, the Board's regulations, and the Statement of the Federal Financial
2. See e.g., First of America Bank - Ann Arbor,, 78 Federal Reserve
Bulletin 450 (1992); see also 12 U.S.C. § 321; 12 C.F.R. 209, 208.5;
12 U.S.C. §§ 2902(3)(C), 2903(2).
3. Examiners noted in compliance examinations as of February 22,
1988, January 23, 1989, November 6, 1989, August 6, 1990, and
April 22, 1991, that Bank had violated numerous provisions of various
consumer lending and credit laws and regulations. In particular,
examiners have cited violations of the following provisions:
(1) Regulation B (12 C.F.R. part 202) (relating to the Equal Credit
Opportunity Act (15 U.S.C. § 1691 et seq.))\
(2) The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.);
(3) Regulation Z (12 C.F.R. part 226) (relating to Truth in Lending
and Fair Credit Billing Acts, Title 1 of the Consumer Credit
Protection Act (15 U.S.C. § 1601 et seq.))-,
(4) Regulation CC (12 C.F.R. part 229) (relating to the Expedited
Funds Availability Act (12 U.S.C. §§ 4001-4010)); and
(5) Regulation C (12 C.F.R. part 203) (relating to amendments to the
Home Mortgage Disclosure Act that require banks to report publicly data on the race, sex, and income of loan applicants).
4. In recent CRA examinations, the Reserve Bank identified deficiencies in Bank's CRA program in the following areas:
(1) Ascertainment of community credit needs;
(2) Geographic distribution of lending activities; and
(3) Marketing and types of credit products offered and extended.
5. Docket No. 91-080-B-SM, 78 Federal Reserve Bulletin 384 (1992)
("F&M Cease and Desist Order"). Under this order, Bank is required
to institute specific steps to remedy past violations and report regularly to the Reserve Bank on its progress in complying with the
requirements of this enforcement action.
6. 79 Federal Reserve Bulletin 165 (1993).
366
Federal Reserve Bulletin • April 1993
Supervisory Agencies Regarding the Community Reinvestment Act.7
Bank's repeated violations of consumer lending
laws and record of performance under the CRA are
indicative of a record that is not consistent with
approval of these applications. Bank has undertaken
efforts during the processing of these applications to
address the long-standing concerns noted in multiple
examinations by the Reserve Bank. However, in light
of Bank's prolonged compliance problems,8 its deficient CRA program, and the relatively short period of
time since its implementation of corrective measures,
the Board is unable to conclude on this record that
Bank's compliance policies and CRA programs are in
place and working well.
Accordingly, the Board believes that convenience
and needs considerations are not consistent with approval of this proposal.9 Other factors the Board is
required to consider under the Federal Reserve Act do
not lend sufficient weight to warrant approval of these
applications.10 It is therefore the judgment of the
Board that approval of these applications would not be
in the public interest and that these applications should
be, and hereby are, denied.11 The Board notes that this
denial is without prejudice to future applications when
Bank is in compliance with all applicable consumer
lending laws and Bank's CRA program is in place and
working well.
By order of the Board of Governors, effective
February 9, 1993.
Voting for this action: Vice Chairman Mullins and Governors Angell, Kelley, LaWare, Lindsey, and Phillips. Absent
and not voting: Chairman Greenspan.
JENNIFER J . JOHNSON
Associate Secretary of the Board
Orders Issued Under International
Banking
Act
Banco de Sabadell, S.A.
Sabadell, Spain
Order Approving Establishment of an Agency
7. 54 Federal Register 13,742 (1989).
8. The F&M Cease and Desist Order is based on repeated violations
of consumer lending and credit laws and regulations, including some
violations that Bank has failed to correct since 1988. Of particular
concern is Bank's repeated violations of the Equal Credit Opportunity
Act and the Board's Regulation B.
9. The Board has previously stated that disregard for consumer
compliance laws provides a separate basis for concluding that convenience and needs considerations do not warrant approval of an
application, even if an applicant has a satisfactory record of performance under the CRA. See First State Holding Company, Inc.,
67 Federal Reserve Bulletin 802 (1981).
10. See 12 U.S.C. § 322; 12 C.F.R. 208.5.
11. Bank has requested a public hearing on its CRA examination
report. The Uniform Interagency Community Reinvestment Act Final
Guidelines for Disclosure of Written Evaluations and Revised Assessment Rating System (55 Federal Register 18,163 (1990)) do not
provide for a formal appeals process under the revised examination
ratings system. Additionally, the Board is not required under the
Federal Reserve Act to hold a public hearing or meeting in this case.
However, 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 C.F.R. 262.3(e) and 262.25(d).
Banco de Sabadell, S.A., Sabadell, Spain
("Bank"), a foreign bank within the meaning of the
International Banking Act ("IBA"), has applied under section 7(d) of the IB A (12 U.S.C. § 3105(d)) to
establish a state-licensed agency in Miami, Florida.
A foreign bank must obtain the approval of the Board
to establish a branch, agency, commercial lending
company, or representative office in the United
States under the Foreign Bank Supervision Enhancement Act of 1991 ("FBSEA"), which amended the
IBA.
Notice of the application, affording interested persons an opportunity to submit comments, has been
published in a newspaper of general circulation in
Miami, Florida {Miami Herald, May 1,1992). The time
for filing comments has expired and no public comments were received.
Bank was established in 1881 and operates as a
private bank under Spanish law.1 Bank, with total
assets of $11.8 billion as of June 30, 1992, was the
eighth largest bank in Spain as of December 31, 1991.
Bank owns 29 subsidiaries that operate in the banking,
financial services, and insurance fields in Spain, Singapore, Switzerland, Portugal, the Netherlands, Luxembourg, and the United States. Bank also operates
one branch in London, five branches in France, and
representative offices in New York, Italy, Singapore,
Mexico and Switzerland.
Bank engages in nonbanking activities in the United
States through five subsidiaries.2 Bank will become
The Board has carefully considered the hearing requests made by
Bank and by other commenters. In the Board's view, Bank and these
commenters have had ample opportunity to present submissions, and
Bank and these commenters have in fact submitted substantial written
comments that have been considered by the Board. In light of these
facts, 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, all requests for a public
meeting or hearing on these applications, including Bank's request,
are hereby denied.
1. The shares of Bank are widely held with no single shareholder
owning 1 percent or more of these shares.
2. These subsidiaries are: PRS International Consulting Inc.,
Miami, Florida; PRS International Brokerage, Inc., Miami, Florida;
PRS International Advisory Services, Inc., Miami, Florida; PRS
International Real Estate Services, Inc., Miami, Florida; and MB
Trade Promotion, Inc., New York, New York. These companies
Legal Developments
subject to the nonbanking restrictions of section 4 of
the Bank Holding Company Act upon establishment of
the proposed agency. In accordance with this provision, Bank has committed to bring its nonbanking
activities in the United States into compliance with
these restrictions within two years after establishing
the proposed agency. Bank also will become a qualifying foreign banking organization under Regulation K
after establishing the proposed agency (12 C.F.R.
211.23(b)).
Under the IB A, in order to approve an application by
a foreign bank to establish an agency in the United
States, the Board must determine that the foreign bank:
(1) Engages directly in the business of banking
outside of the United States;
(2) Has furnished to the Board the information it
needs to assess adequately the application; and
(3) Is subject to comprehensive supervision or regulation on a consolidated basis by its home country
supervisor (12 U.S.C. § 3105(d)(2)).
The Board may also take into account additional
standards as set forth in the IBA (12 U.S.C.
§ 3105(d)(3)-(4)) and Regulation K (12 C.F.R.
211.24(c)).
Bank engages directly in the business of banking
outside of the United States through its extensive
banking operations in Spain. Bank also has provided
the Board with the information necessary to assess the
application through submissions that address the relevant issues.
The Banco de Espana generally conducts the direct
supervision and regulation of credit entities, such as
Bank, in Spain and functions as Bank's home country
supervisor.3 The Banco de Espana monitors compliance by credit entities with Spanish laws, regulations,
and prudential measures, sets reporting requirements,
conducts periodic and special examinations, sets prudential and financial standards and limits, and may
take action to enforce such measures.
Regulation K provides that a foreign bank will be
considered to be subject to comprehensive supervision or
provide brokerage, investment advisory, investment management,
organization, and administration services with respect to certain
offshore mutual funds and to non-U.S. resident customers. PRS Real
Estate also engages in real estate brokerage activities, as an incidental
service for clients of the PRS companies. MB Trade provides sales,
liaison, and trade services to non-U.S. customers in the international
trade business.
3. The Ministry of Economy and Finance of Spain ("Ministry") has
overall responsibility for the Spanish banking system and monetary
policy. It develops regulations and issues orders to ensure the
efficiency and solvency of the Spanish banking system, and has
delegated authority to the Banco de Espana regarding the supervision
and inspection of credit entities in Spain. The Ministry may also
establish minimum capital levels and ratios and impose sanctions for
violations of rules and regulations.
367
regulation on a consolidated basis if the Board determines
that the bank is supervised and regulated in such a manner
that its home country supervisor receives sufficient information on the bank's worldwide operations, including its
relationship to any affiliate, to assess the bank's overall
financial condition and its compliance with law and regulation (12 C.F.R. 211.24(c)(1)).4 In making its determination on this application, the Board considered the following information.
The Banco de Espana ensures that Bank has
adequate procedures for monitoring and controlling
its worldwide operations through required periodic
reports, internal controls, accounting requirements
and sanctions for noncompliance. The Banco de
Espana imposes reporting requirements on credit
entities that require establishing internal controls for
compliance. Bank has implemented internal control
procedures to facilitate compliance with these requirements.
The Banco de Espana requires Bank to maintain
annual accounts and to commission independent
audits of Bank's separate and consolidated accounts
each year. In accordance with the procedures and
standards governing the accounting practices of a
credit entity prescribed by the Banco de Espana,
Bank must consolidate for accounting purposes any
branch and any credit and financial subsidiary that
has more than 50 percent of its capital owned by
Bank.5 A credit entity, such as Bank, must provide
consolidated balance sheets and income statements
every six months. The Banco de Espana also exercises supervisory powers over any subsidiary of
Bank that is majority-owned or controlled, and may
impose sanctions on Bank or its management for not
complying with any Spanish law or regulation, including laws designed to ensure oversight of a credit
entity's overall condition.
The Banco de Espana regularly receives financial
reports from Bank that permit analysis of Bank's
4. In assessing this standard, the Board considers, among other
factors, the extent to which the home country supervisor:
(i) ensures that the bank has adequate procedures for monitoring
and controlling its activities worldwide;
(ii) obtains information on the condition of the bank and its
subsidiaries and offices through regular examination reports, audit
reports, or otherwise;
(iii) obtains information on the dealings with and relationship
between the bank and its affiliates, both foreign and domestic;
(iv) receives from the bank financial reports that are consolidated on
a worldwide basis, or comparable information that permits analysis
of the bank's financial condition on a worldwide consolidated basis;
(v) evaluates prudential standards, such as capital adequacy and
risk asset exposure, on a worldwide basis.
These are indicia of comprehensive, consolidated supervision. N o
single factor is essential, and other elements may inform the Board's
determination.
5. The Banco de Espana generally does not require consolidation of
insurance subsidiaries.
368
Federal Reserve Bulletin • April 1993
worldwide condition on a consolidated basis, and
obtains similar information through periodic meetings
with management and on-site examinations. The
Banco de Espana also may request any additional
information needed to address any issues presented in
the reports, meetings, or examinations. The Banco de
Espana may conduct special examinations regarding
any supervisory matter.
Information on the dealings and relationship between Bank and its subsidiaries is obtained through
reports to and examinations by the Banco de Espana
and through the requirement that the Ministry approve
investments in other companies. These reports provide information on subsidiaries that Bank need not
include in its consolidated statements, as well as
information on transactions between Bank and its
subsidiaries. The Banco de Espana evaluates prudential standards, such as capital adequacy and risk asset
exposure, for Bank on a worldwide basis. The Spanish
government adopted risk-based capital standards, as
required by the European Community, into law in July
1992.
Based on all the facts of record, which include the
information described above, the Board concludes
that Bank is subject to comprehensive supervision and
regulation on a consolidated basis by its home country
supervisor.
In considering this application, the Board has also
taken into account the additional standards set forth in
section 7 of the IBA (12 U.S.C. § 3105(d)(3)-(4».
Bank has received the consent of its home country
supervisor to establish the proposed agency. In addition, the Banco de Espana may share information on
Bank's operations with other supervisors, including
the Board.
Bank must comply with risk-based capital standards
adopted by Spain. Bank's capital is in excess of the
minimum levels that would be required by the Basle
Accord and is considered equivalent to capital that
would be required of a U.S. banking organization.
Managerial and other financial resources of Bank are
also considered consistent with approval. Bank, which
has a number of branches and subsidiaries outside
Spain, appears to have the experience and capacity to
conduct banking operations in the United States
through the proposed agency. In addition, Bank has
established controls and procedures for its U.S. offices
to ensure compliance with U.S. law. Under the IBA,
the proposed state-licensed agency may not engage in
any type of activity that is not permissible for a
federally-licensed branch without the Board's approval.
Finally, Bank has committed that it will make
available to the Board such information on the operations of Bank and any affiliate of Bank that the
Board deems necessary to determine and enforce
compliance with the IBA, the Bank Holding Company Act of 1956, as amended, and other applicable
Federal law. The Board has reviewed relevant provisions of Spanish law and has communicated with
the appropriate government authorities concerning
access to information. Bank also has committed to
cooperate with the Board to obtain any approvals or
consents that may be needed to gain access to
information that may be requested by the Board. In
light of these commitments and other facts of record,
and subject to the condition described below, the
Board concludes that Bank has provided adequate
assurances of access to any necessary information
the Board may request.
On the basis of all of the facts of record, and subject
to the commitments made by Bank, as well as the
terms and conditions set forth in this Order, the Board
has determined that Bank's application to establish an
agency should be, and hereby is, approved. Should
any restrictions on access to information on the operations or activities of Bank and any of its affiliates
subsequently interfere with the Board's ability to
determine the safety and soundness of Bank's U.S.
operations or the compliance by Bank or its affiliates
with applicable Federal banking statutes, the Board
may require termination of any of the Bank's direct or
indirect activities in the United States. Approval of
this application is also specifically conditioned on
compliance by Bank with the commitments made in
connection with this application, and with the conditions contained in this Order.6 The commitments and
conditions referred to above are conditions imposed in
writing by the Board in connection with its decision,
and may be enforced in proceedings under 12 U.S.C.
§ 1818 or 12 U.S.C. § 1847 against Bank, its offices
and its affiliates.
By order of the Board of Governors, effective
February 10, 1993.
V o t i n g f o r this action: Chairman G r e e n s p a n and G o v e r n o r s
Mullins, A n g e l l , K e l l e y , L aW a r e , L i n d s e y , and Phillips.
JENNIFER J. JOHNSON
Associate Secretary of the Board
6. The Board's authority to approve the establishment of the
proposed agency parallels the continuing authority of the Florida
Department of Banking and Finance to license offices of a foreign
bank. The Board's approval of this application does not supplant the
authority of the State of Florida, and its agent, the Florida Department
of Banking and Finance, to license the proposed agency of Bank in
accordance with any terms or conditions that the Department may
impose.
Legal Developments
ACTIONS
1991
TAKEN
UNDER THE FEDERAL DEPOSIT INSURANCE
CORPORATION
IMPROVEMENT
369
ACT OF
By the Director of the Division of Banking Supervision and Regulation and the General Counsel of
the Board
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.
Acquired
Thrift
Bank Holding Company
HomeFed Bank, F.A.,
San Diego, California
First Interstate Bancorp,
Los Angeles, California
APPLICATIONS
APPROVED
Surviving
Bank(s)
UNDER BANK HOLDING
First Interstate Bank
of California,
Los Angeles,
California
COMPANY
Approval
Date
February 25, 1993
ACT
By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon
request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.
Section 3
Applicant(s)
First Bank System, Inc.,
Minneapolis, Minnesota
Liberty National Bancorp Inc.
Louisville, Kentucky
LNB Acquisition Corp.,
Louisville, Kentucky
Old National Bancorp,
Evansville, Indiana
SunTrust Banks, Inc.,
Atlanta, Georgia
Bank(s)
Bank Western, F.S.B.,
Denver, Colorado
Financial Dominion of Kentucky
Corporation,
Radcliff, Kentucky
DCB Corporation,
Jasper, Indiana
The Flagler Bank Corporation,
West Palm Beach, Florida
Effective
Date
February 22, 1993
February 26, 1993
February 25, 1993
February 2, 1993
370
Federal Reserve Bulletin • April 1993
Section 4
Nonbanking
Activity/Company
Applicant(s)
to engage de novo in executing and
clearing futures contracts and
options on those futures contracts
for customers with respect to
NIKKEI 225 Stock Average
contracts to be traded on the
Chicago Mercantile Exchange
Northern Trust Corporation,
Chicago, Illinois
APPLICATIONS
APPROVED
By Federal Reserve
UNDER BANK HOLDING
COMPANY
Effective
Date
February 10, 1993
ACT
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)
CCB Financial Corporation,
Durham, North Carolina
Citizens Bancshares Company,
Chillicothe, Missouri
Citizens Bancshares Company,
Chillicothe, Missouri
Commerce Bank Corporation,
Winter Haven, Florida
Dairyland Bank Holding
Corporation,
La Crosse, Wisconsin
FBOP Corporation,
Oak Park, Illinois
Fidelity Bancorp, Inc.,
Pittsburgh, Pennsylvania
Horizon Bancorp, Inc.,
Beckley, West Virginia
Raton Capital Corporation,
Raton, New Mexico
Bank(s)
Mutual Savings Bank,
Lenoir, North Carolina
Blackwater Bancshares,
Inc.,
Blackwater, Missouri
First Security Bank of
Brookfield/Keytesville,
Brookfield, Missouri
Commerce Bank of
Central Florida,
Winter Haven, Florida
Bank of Alma,
Alma, Wisconsin
La Farge State Bank,
La Farge, Wisconsin
Drovers Bank,
Madisonville, Texas
The Fidelity Savings
Bank,
Pittsburgh,
Pennsylvania
Allegheny Bankshares
Corporation,
Lewisburg, West
Virginia
International State Bank,
Raton, New Mexico
Reserve
Bank
Effective
Date
Richmond
February 25, 1993
Kansas City
February 11, 1993
Kansas City
February 11, 1993
Atlanta
February 1, 1993
Minneapolis
January 29, 1993
Chicago
February 8, 1993
Cleveland
February 24, 1993
Richmond
February 11, 1993
Kansas City
January 29, 1993
Legal Developments
371
Section 3—Continued
Applicant(s)
Snyder Holding Corporation,
Kittanning, Pennsylvania
F&A Financial Company,
Kittanning, Pennsylvania
Van Diest Investment Company,
Ankeny, Iowa
Reserve
Bank
Bank(s)
The Armstrong County
Trust Company,
Kittanning,
Pennsylvania
The Farmers National
Bank of Kittanning,
Kittanning,
Pennsylvania
Hamilton County
Bancshares, Inc.,
Webster City, Iowa
Effective
Date
Cleveland
January 29, 1993
Chicago
February 2, 1993
Section 4
Applicant(s)
Banterra Corp,
Eldorado, Illinois
BB&T Financial Corporation,
Wilson, North Carolina
Dunn County Bankshares, Inc.,
Menomonie, Wisconsin
First Abilene Bankshares, Inc.,
Abilene, Texas
First Union Corporation,
Charlotte, North Carolina
Garwin Bancorporation,
Garwin, Iowa
The Long-Term Credit Bank of
Japan, Limited,
Tokyo,Japan
Old Kent Financial Corporation,
Grand Rapids, Michigan
UJB Financial Corp.,
Princeton, New Jersey
Union Planters Corporation,
Pemphis, Tennessee
Nonbanking
Activity/Company
Blankenship Insurance
Agency, Inc.,
Eldorado, Illinois
Security Financial
Holding Company,
Durham, North
Carolina
Premium Finance
Corporation Inc.,
Eau Claire, Wisconsin
First Financial
Investments, Inc.,
Abilene, Texas
City Finance Company,
Big Spring, Texas
Garwin Insurance
Agency,
Garwin, Iowa
Peers Holdings, Inc.,
New York, New York
Gladeshire L.D.H.A.,
Limited Partnership,
Kalamazoo, Michigan
Richard Blackman & Co.
Inc.,
Paramus, New Jersey
First Federal Savings
Bank of Maryville,
Maryville, Tennessee
Reserve
Bank
Effective
Date
St. Louis
February 1, 1993
Richmond
February 4, 1993
Minneapolis
February 12, 1993
Dallas
February 3, 1993
Richmond
February 16, 1993
Chicago
February 2, 1993
New York
February 19, 1993
Chicago
January 28, 1993
New York
February 4, 1993
St. Louis
February 11, 1993
372
Federal Reserve Bulletin • April 1993
PENDING CASES INVOLVING
GOVERNORS
THE BOARD OF
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.
Adams v. Greenspan, No. 93-0167 (D.D.C., filed
January 27,1993). Action by former employee under
the Civil Rights Act of 1964 concerning termination
of employment.
Sisti v. Board of Governors, No. 93-0033 (D.D.C.,
filed January 6, 1993). Challenge to Board staff
interpretation with respect to margin accounts.
U.S. Check v. Board of Governors, No 92-2892
(D.D.C., filed December 30, 1992). Challenge to
partial denial of request for information under the
Freedom of Information Act.
UCBC, Inc. v. Board of Governors, No. 92-9572 (10th
Cir., filed December 2, 1992). Petition for review of
civil money penalty assessment against a bank holding company and three of its officers and directors
for failure to comply with reporting requirements.
DLG Financial Corporation v. Board of Governors,
No. 392 Civ. 2086-G (N.D. Texas, filed October 9,
1992). Action to enjoin the Board and the Federal
Reserve Bank of Dallas from taking certain enforcement actions, and seeking money damages on a
variety of tort and contract theories. On October 9,
1992, the court denied plaintiffs' motion for a temporary restraining order. On November 20, 1992,
the Board filed a motion to dismiss. On December
17, 1992, plaintiffs filed an amended complaint.
Zemel v. Board of Governors, No. 92-1056 (D. District
of Columbia, filed May 4, 1992). Age Discrimination
in Employment Act case.
State of Idaho, Department of Finance v. Board of
Governors, No. 92-70107 (9th Cir., filed February
24, 1992). Petition for review of Board order returning without action a bank holding company application to relocate its subsidiary bank from Washington
to Idaho. The Board's brief was filed on June 29,
1992. Oral argument was held October 6, 1992.
In re Subpoena Served on the Board of Governors,
Nos. 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. On June 26, 1992, the court of appeals affirmed
the district court order in part, but held that the bank
examination privilege was not waived by the agencies' provision of examination materials to the ex
amined institution, and remanded for further consideration of the privilege issue. On August 6, 1992, the
district court ordered the matter held in abeyance
pending settlement of the underlying action.
Board of Governors v. Kemal Shoaib, No. 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, 1991, the court issued a
preliminary injunction restraining the transfer or
disposition of the individual's assets.
Board of Governors v. Ghaith R. Pharaon, No. 91CIV-6250 (S.D. New 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, 1991,
the court issued an order temporarily restraining the
transfer or disposition of the individual's assets.
FINAL ENFORCEMENT DECISIONS
THE BOARD OF GOVERNORS
ISSUED
BY
On Certification of the Department of the
Treasury—Office of the Comptroller of the
Currency
In the Matter of a Notice to Prohibit Further Participation Against
Wesley Godfrey, Jr., Former Chairman and Director
Security National Bank
Shreveport, Louisiana
OCC No. AA-EC-91-189
Final
Decision
This is an administrative proceeding pursuant to the
Federal Deposit Insurance Act ("FDI Act") in which
the Office of Comptroller of the Currency of the
United States of America ("OCC") seeks to prohibit
the Respondent, Wesley Godfrey, Jr., from further
participation in the affairs of any financial institution as
a result of his conduct as chairman of the board of
directors, and acting chief executive officer of Security
National Bank, Shreveport, Louisiana (the "Bank").
The proceeding comes to the Board of Governors of
the Federal Reserve System (the "Board") in the form
of a Recommended Decision by Administrative Law
Judge ("ALJ") Walter J. Alprin recommending that
the Board issue an Order of Prohibition against Godfrey by default pursuant to the provisions of
12 U.S.C. § 1818(e)(4) and 12 C.F.R. 19.23(d)(2).
Legal Developments
Upon review of the administrative record, the Board
issues this Final Decision adopting the ALJ's Recommended Decision and orders that the attached Order of
Prohibition issue against Godfrey.
I. Statement of the Case
A. Procedural History
On October 17, 1991, the OCC issued a Notice of
Intention to Prohibit Further Participation against
Godfrey pursuant to the provisions of 12 U.S.C.
§ 1818(e)(1), based on allegations that Godfrey had
engaged in misconduct during his tenure as chairman
and acting chief executive officer of the Bank. The
OCC charged that Godfrey's misconduct included:
writing approximately 70 overdrafts upon his demand
deposit account at the Bank; commingling personal
funds with a bank escrow account; failing to secure fire
and automobile insurance for bank property ; making
an improper capital injection into the Bank; and causing the Bank to make numerous extensions of credit in
violation of the legal lending limit for the Bank. The
OCC alleged that this conduct violated the law
(12 U.S.C. §§ 57, 84 and 375b(4); 12 C.F.R. 215.4(d)
and 32.5(a)(l)(i)), and constituted unsafe and unsound
banking practices and breaches of Godfrey's fiduciary
duty. The OCC also alleged that the conduct caused
substantial financial loss to the Bank, and evidenced
Godfrey's personal dishonesty and willful or continuing disregard for the Bank's safety or soundness. The
Notice required that Godfrey file an answer to the
charges within 20 days of service of the Notice. The
OCC issued a second Notice of Intention to Prohibit
against Godfrey, identical to the first, on November
20, 1991, after Godfrey contended that he never received the original Notice.
A lawyer who had been Godfrey's counsel in unrelated proceedings accepted service of the Notice on
Godfrey's behalf. Then, by agreement of the parties,
the proceeding was stayed for sixty days by ALJ
Alprin to permit the parties to attempt to reach a
settlement.
On March 28, 1992, after settlement negotiations
had concluded unsuccessfully, and after Godfrey's
lawyer had submitted notice that he would not appear
for Godfrey in this proceeding,1 Godfrey pro se submitted a request for a hearing and a conclusory one1. On February 28, 1992, Godfrey's lawyer wrote Godfrey, with a
copy to OCC Counsel, advising him that he would no longer represent
Godfrey in any matter because Godfrey had not paid legal fees. The
lawyer also advised Godfrey to contact the OCC to request a
continuance or to perfect his right to a hearing, and not to ignore the
existence of the proceeding. The letter indicated that Godfrey had
been given all the original documents relating to this proceeding.
373
sentence answer to the charges in the notice.2 On
April 16, 1992, the ALJ issued an order convening a
scheduling conference and establishing a provisional
hearing schedule. On the day designated for the conference, April 27, 1992, counsel for the OCC participated in a telephonic scheduling conference with the
ALJ's attorney-advisor, but Godfrey did not participate.
On May 21, 1992, counsel for the OCCfileda motion
to require Godfrey to supply more definite answers to
the OCC's charges. OCC Counsel argued that Godfrey's conclusory denial did not meet the standards set
by the Uniform Rules of Practice and Procedure
("Uniform Rules")3 applicable to this proceeding,
which do not permit general denials to suffice as an
answer. 12 C.F.R. 19.19(b). On June 9, 1992, ALJ
Alprin sua sponte issued an order striking Godfrey's
answers as failing to provide a specific response to
each paragraph of the Notice. Godfrey was granted
until July 2, 1992 — twenty days, plus three days for
mail delivery — to file his answer.
When Godfrey failed to file the required answer
within the designated time, OCC Counsel filed a motion for entry of an order of default. Under the
Uniform Rules of Practice and Procedure applicable to
the proceeding, a failure to file an answer constitutes a
waiver of a respondent's right to appear and contest
the allegations in the notices. 12 C.F.R. 19.19(c). OCC
Counsel argued that Godfrey's failure to file a responsive answer, after his initial general denial had been
stricken as non-responsive, constituted a waiver of
Godfrey's right to a hearing, and warranted the entry
of a recommended order of default. Godfrey did not
file any opposition to the motion for default.
On August 13, 1992, the ALJ granted the OCC's
motion for default, noting that Godfrey had not responded to the motion for default in the three weeks
that had elapsed since the motion was filed. The
recommended decision on default was referred to the
Board for final decision on September 30, 1992. Godfrey has filed no exceptions to the recommended
decision.
2. Godfrey's response to the charges read in its entirety: "All
articles except Article I are denied and all issues were explained and
corrective actions were taken to avoid violations." Article I of the
Notice consisted entirely of jurisdictional allegations.
3. The Uniform Rules, adopted concurrently by each of the financial
institution regulatory agencies, including the Board and the OCC,
constitute a materially identical set of procedural rules that control
most aspects of those agencies' enforcement proceedings. Compare
12 C.F.R. Part 19, Subpart A (OCC) with 12 C.F.R. Part 263, Subpart
A (Board).
374
Federal Reserve Bulletin • April 1993
B. Statutory Framework
The FDI Act sets forth the basis upon which a federal
banking agency may issue against a bank official an
order of removal from office or prohibition from further participation in banking. In order to issue such an
order pursuant to section 1818(e)(1), the Board must
make each of three findings:
(1) There must be a specified type of misconduct —
violation of law, unsound practice, or breach of
fiduciary duty ;
(2) The misconduct must have a prescribed effect —
financial gain to the respondent orfinancialharm or
other damage to the institution; and
(3) The misconduct must involve culpability of a
certain degree—personal dishonesty or willful or
continuing disregard for the safety or soundness of
the institution. 12 U.S.C. § 1818(e)(1).
In prohibition cases brought by the OCC with respect
to a party affiliated with a national bank, the findings
and conclusions of the ALJ are certified to the Board
to determine whether any order shall issue.
12 U.S.C. § 1818(e)(4).
The Uniform Rules state that an answer must specifically respond to each paragraph or allegation of fact
contained in the notice and must admit, deny, or state
that the party lacks sufficient information to admit or
deny each allegation of fact. 12 C.F.R. 19.19(b). Denials must fairly meet the substance of each allegation
of fact denied; general denials are not permitted. Id.
The Uniform Rules provide that, following the issue
of a notice of intention to prohibit an institutionaffiliated party, a Respondent's failure to file an answer within the time provided constitutes a waiver of
his or her right to appear and to contest the allegations
in the notice. 12 C.F.R. 19.19(c). If no timely answer
is filed, Enforcement Counsel is authorized to file a
motion for entry of an order of default. Id. Upon a
finding that no good cause has been shown for the
failure to file a timely answer, the ALJ is directed to
file a recommended decision containing the findings
and relief sought by the agency. Id.
II. Discussion
In the circumstances of this case, it is clear that the
OCC has established the basis for a default order of
prohibition under the terms of the Uniform Rules. The
fact that Godfrey was duly served with notice of the
proceeding is supported by the letter from his counsel
attesting to that service, and by Godfrey's letter requesting a hearing and generally denying the allegations. The OCC and the ALJ provided Godfrey with
repeated opportunities to appear and contest the
charges, and there is no basis for any inference that
Godfrey's default is the result of any mischance or
inadvertence.4 The ALJ acted reasonably and in accordance with the Uniform Rules in refusing to accept
Godfrey's general denials as an answer and in finding
that no good cause existed for relieving Godfrey from
the consequences of his failure to submit an answer to
the Notice that complied with the requirements of the
Uniform Rules.
Conclusion
For these reasons, the Board orders that the attached
Order of Prohibition issue.
Order of Removal and Prohibition
Whereas, pursuant to section 8(e) of the Federal
Deposit Insurance Act, as amended, (the "Act")
(12 U.S.C. § 1818(e)), the Board of Governors of the
Federal Reserve System ("the Board") is of the opinion, for the reasons set forth in the accompanying
Final Decision, that a final Order of Removal and
Prohibition should issue against WESLEY GODFREY, JR.
NOW, THEREFORE, IT IS HEREBY ORDERED, pursuant to sections 8(b)(3), 8(e), and 8(j) of
the Act, (12 U.S.C. §§ 1818(b)(3), 1818(e) and
1818(j)), that:
1. WESLEY GODFREY, JR. is removed from all
offices he holds with Security National Bank,
Shreveport, Louisiana, and any other insured depository institution or bank holding company;
2. In the absence of prior written approval by the
Board, and by any other Federalfinancialinstitution
regulatory agency where necessary pursuant to
section 8(e)(7)(B) of the Act (12 U.S.C.
§ 1818(e)(7)(B)), WESLEY GODFREY, JR. is
hereby prohibited:
(a) From participating in the conduct of the affairs
of any bank holding company, any insured depository institution or any other institution specified
in subsection 8(e)(7)(A) of the Act (12 U.S.C.
§ 1818(e)(7)(A));
(b) From soliciting, procuring, transferring, attempting to transfer, voting or attempting to vote
any proxy, consent, or authorization with respect
to any voting rights in any institution described in
subsection 8(e)(7)(A) of the Act (12 U.S.C.
§ 1818(e)(7)(A));
4. Indeed, the fact that Godfrey's lawyer felt it necessary to warn
him not to ignore this proceeding suggests that Godfrey's failure to
appear was a deliberate choice on Godfrey's part.
Legal Developments
(c) From violating any voting agreement previously approved by the appropriate Federal banking agency; or
(d) From voting for a director, or from serving or
acting as an institution-affiliated party as defined
in section 3(u) of the Act, (12 U.S.C. § 1813(u)),
such as an officer, director, or employee.
3. This Order, and each provision hereof, is and
shall remain fully effective and enforceable until
expressly stayed, modified, terminated or suspended in writing by the Board.
This Order shall become effective upon the expiration of thirty days after service is made.
By Order of the Board of Governors, this 1st day of
February, 1993.
Board of Governors of the
Federal Reserve System
WILLIAM W . WILES
Secretary of the Board
On Certification of the Department of the
Treasury—Office of the Comptroller of the
Currency
In the Matter of a Notice to Prohibit Further Participation Against
Tommie J. Owen, Former President and
Chairman of Board of Directors
Everman National Bank
Fort Forth, Texas
OCC No. AA-EC-92-143
Final Decision
This is an administrative proceeding pursuant to the
Federal Deposit Insurance Act ("FDI Act") in which
the Office of Comptroller of the Currency of the
United States of America ("OCC") seeks to prohibit
the Respondent, Tommie J. Owen, from further participation in the affairs of anyfinancialinstitution as a
result of his conduct as president and chairman of the
board of directors of Everman National Bank, Fort
Worth, Texas, (the "Bank"). The proceeding comes
to the Board of Governors of the Federal Reserve
System (the "Board") in the form of a Recommended
Decision by Administrative Law Judge ("ALJ")
Arthur L. Shipe recommending that the Board issue an
Order of Prohibition against Owen by default pursuant
to the provisions of 12 U.S.C. § 1818(e) and 12 C.F.R.
19.19(c).
375
Upon review of the administrative record, the Board
issues this Final Decision adopting the ALJ's Recommended Decision and orders that the attached Order of
Prohibition issue against Owen.
I. Statement of the Case
A. Procedural History
On May 11, 1992, the OCC issued a Notice of Intention to Prohibit Further Participation against Owen
pursuant to the provisions of 12 U.S.C. § 1818(e)(1),
based on allegations that Owen had engaged in misconduct during his tenure as chairman of the board of
directors and president of the Bank, which subsequently failed. The OCC charged that Owen's misconduct included: causing the Bank to file materially
inaccurate regulatory reports for three years by failing
to record $600,000 in letters of credit that Owen had
caused to be issued; participating in violations of a
consent cease and desist order requiring the Bank to
correct unsafe and unsound practices; and concealing
losses on extensions of credit by, among other things,
altering the loan due dates on loan documents. The
OCC alleged that this conduct violated laws and regulations applicable to national banks and constituted
unsafe and unsound banking practices and breaches of
Owen'sfiduciaryduty. The OCC also alleged that the
conduct caused substantial financial loss or other
damage to the Bank, and evidenced Owen's personal
dishonesty or a willful or continuing disregard for the
Bank's safety or soundness. The Notice required that
Owen file an answer to the charges within 20 days of
service of the Notice.
For reasons that do not appear in the record, the
Notice was not served until June 30,1992, when it was
sent to Owen's address by certified mail. Under the
Uniform Rules of Practice and Procedure ("Uniform
Rules")1 applicable to this proceeding, Owen's answer
was due to be filed on July 23, 1992—20 days from
June 30 plus three extra days for service by mail.
12 C.F.R. 19.12(c)(1). The record contains a certified
mail return receipt signed by Joan Owen as Agent for
Owen dated July 3, 1992. The record also contains a
certificate from OCC Docket Clerk Lisa Chase, dated
September 9, 1992, certifying that the OCC had received no answer to the Notice, no entry of appear-
1. The Uniform Rules, adopted concurrently by each of the financial
institution regulatory agencies, including the Board and the OCC,
constitute a materially identical set of procedural rules that control
most aspects of those agencies' enforcement proceedings. Compare
12 C.F.R. Part 19, Subpart A (OCC) with 12 C.F.R. Part 263, Subpart
A (Board).
376
Federal Reserve Bulletin • April 1993
ance by counsel on Owen's behalf, and no notice of
self-representation by Owen.
On September 9, 1992, OCC Enforcement Counsel
filed with the ALJ a motion for entry of an order of
default pursuant to the Uniform Rules, which provide
that a failure to file an answer constitutes a waiver of
a respondent's right to appear and contest the allegations in the notice. 12 C.F.R. 19.19(c). Owen did not
file any opposition to the motion for default.
On October 1, 1992, ALJ Shipe issued a Show Cause
Order, directing that Owen show cause within ten days
of receipt of the order why the ALJ should not file a
recommended decision containing the findings and relief sought in the OCC's Notice. The Show Cause Order
was personally served upon Owen on October 17,1992.
Owen filed no response to the Order.
On November 18, 1992, the ALJ granted the OCC's
motion for default, finding that the Notice had been
duly served upon Owen and that Owen had never filed
an answer. The ALJ further noted that Owen had not
responded either to the OCC's motion or to the ALJ's
Show Cause Order. Accordingly, the ALJ found that
the record satisfied all of the requisites for default
pursuant to 12 C.F.R. 19.19 and that no good cause
had been shown as to why an Order of Default should
not be entered.
The Recommended Decision on Default was referred to the Board for final decision on January 22,
1993. Owen has filed no exceptions to the Recommended Decision.
The Uniform Rules provide that, following the issue
of a notice of intention to prohibit an institutionaffiliated party, a Respondent's failure to file an answer within the time provided constitutes a waiver of
his or her right to appear and to contest the allegations
in the notice. 12 C.F.R. 19.19(c). If no timely answer
is filed, Enforcement Counsel is authorized to file a
motion for entry of an order of default. Id. Upon a
finding that no good cause has been shown for the
failure to file a timely answer, the ALJ is directed to
file a recommended decision containing the findings
and relief sought by the agency. Id.
B. Statutory Framework
Conclusion
The FDI Act sets forth the basis upon which a federal
banking agency may issue against a bank official an
order of removal from office or prohibition from further participation in banking. In order to issue such an
order pursuant to section 1818(e)(1), the Board must
make each of three findings:
(1) There must be a specified type of misconduct —
violation of law, unsound practice, or breach of
fiduciary duty ;
(2) The misconduct must have a prescribed effect —
financial gain to the respondent or financial harm or
other damage to the institution; and
(3) The misconduct must involve culpability of a
certain degree—personal dishonesty or willful or
continuing disregard for the safety or soundness of
the institution. 12 U.S.C. § 1818(e)(1).
For these reasons, the Board orders that the attached
Order of Prohibition issue.
In prohibition cases brought by the OCC with respect
to a party affiliated with a national bank, the findings
and conclusions of the ALJ are certified to the Board
to determine whether any order shall issue.
12 U.S.C. § 1818(e)(4).
II. Discussion
In the circumstances of this case, it is clear that the
OCC has established the basis for a default order of
prohibition under the terms of the Uniform Rules. The
fact that Owen was duly served with notice of the
proceeding and of his obligation to answer is supported by the signed certified mail return receipt. The
OCC and the ALJ provided Owen with repeated
opportunities to respond to the charges, and there is
no basis for any inference that Owen's default is the
result of any mischance or inadvertence. The ALJ
acted reasonably and in accordance with the Uniform
Rules in finding that no good cause existed for relieving Owen from the consequences of his failure to
submit an answer to the Notice.
In the Matter of a Notice to Prohibit Further Participation Against
Tommie J. Owen, Former President and
Chairman of Board
Everman National Bank
Fort Worth, Texas
OCC No. AA-EC-92-143
Order of Removal and Prohibition
WHEREAS, pursuant to section 8(e) of the Federal
Deposit Insurance Act, as amended, (the "Act")
(12 U.S.C. § 1818(e)), the Board of Governors of the
Federal Reserve System ("the Board") is of the opinion, for the reasons set forth in the accompanying
Final Decision, that a final Order of Removal and
Prohibition should issue against TOMMIE J. OWEN.
Legal Developments
NOW, THEREFORE, IT IS HEREBY ORDERED,
pursuant to sections 8(b)(3), 8(e), and 8(j) of the Act,
(12 U.S.C. §§ 1818(b)(3), 1818(e) and 1818(j)), that:
1. TOMMIE J. OWEN is removed from all offices
he holds with Everman National Bank, Fort Worth,
Texas, and any other insured depository institution
or bank holding company;
2. In the absence of prior written approval by the
Board, and by any other Federal financial institution
regulatory agency where necessary pursuant to section 8(e)(7)(B) of the Act (12 U.S.C. § 1818(e)(7)(B)),
TOMMIE J. OWEN is hereby prohibited:
(a) From participating in the conduct of the affairs
of any bank holding company, any insured depository institution or any other institution specified
in subsection 8(e)(7)(A) of the Act (12 U.S.C.
§ 1818(e)(7)(A));
(b) From soliciting, procuring, transferring, attempting to transfer, voting or attempting to vote
any proxy, consent, or authorization with respect
to any voting rights in any institution described in
subsection 8(e)(7)(A) of the Act (12 U.S.C.
§ 1818(e)(7)(A));
(c) From violating any voting agreement previously approved by the appropriate Federal banking agency; or
(d) From voting for a director, or from serving or
acting as an institution-affiliated party as defined
in section 3(u) of the Act, (12 U.S.C. § 1813(u)),
such as an officer, director, or employee.
3. This Order, and each provision hereof, is and
shall remain fully effective and enforceable until
expressly stayed, modified, terminated or suspended in writing by the Board.
This Order shall become effective upon the expiration of thirty days after service is made.
By Order of the Board of Governors, this 11th day
of February, 1993.
Board of Governors of the
Federal Reserve System
WILLIAM W. WILES
Secretary of the Board
FINAL ENFORCEMENT
ORDERS ISSUED
BOARD OF GOVERNORS
377
BY THE
Donald E. Stuwe
Hugo, Colorado
The Federal Reserve Board announced on February 17, 1993, the issuance of an Order of Assessment
of a Civil Money Penalty against Donald E. Stuwe, an
institution-affiliated party of First Liberty Capital Corporation, Hugo, Colorado.
WRITTEN
RESERVE
AGREEMENTS
BANKS
APPROVED
BY
FEDERAL
BSD Bancorp, Inc.
San Diego, California
The Federal Reserve Board announced on February 9,
1993, the execution of a Written Agreement between
the Federal Reserve Bank of San Francisco, and BSD
Bancorp, Inc., San Diego, California.
Carney Bank
Boynton Beach, Florida
The Federal Reserve Board announced on February 11, 1993, the execution of a Written Agreement
among the Federal Reserve Bank of Atlanta, the State
Comptroller and Banking Commissioner of the State
of Florida, and the Carney Bank, Boynton Beach,
Florida.
Union State Bank
Upton, Wyoming
The Federal Reserve Board announced on February 24, 1993, the execution of a Written Agreement
among the Federal Reserve Bank of Kansas City,
the Wyoming State Banking Commissioner, Division
of Banking, and the Union State Bank, Upton,
Wyoming.
Financial and Business Statistics
CONTENTS
A3
WEEKLY REPORTING COMMERCIAL
Guide to Tabular Presentation
Domestic Financial Statistics
BANKS
Assets and liabilities
A21 All reporting banks
A23 Branches and agencies of foreign banks
MONEY STOCK AND BANK CREDIT
FINANCIAL
A4 Reserves, money stock, liquid assets, and debt
measures
A5 Reserves of depository institutions, Reserve Bank
credit
A6 Reserves and borrowings—Depository
institutions
A7 Selected borrowings in immediately available
funds—Large member banks
A24 Commercial paper and bankers dollar
acceptances outstanding
A24 Prime rate charged by banks on short-term
business loans
A25 Interest rates—money and capital markets
A26 Stock market—Selected statistics
A27 Selectedfinancialinstitutions—Selected assets
and liabilities
POLICY
INSTRUMENTS
FEDERAL
A8 Federal Reserve Bank interest rates
A9 Reserve requirements of depository institutions
A10 Federal Reserve open market transactions
FEDERAL RESERVE BANKS
A l l Condition and Federal Reserve note statements
A12 Maturity distribution of loan and security
holdings
MONETARY AND CREDIT
INSTITUTIONS
A18 Major nondeposit funds
A19 Assets and liabilities, last-Wednesday-of-month
series
FINANCE
All
A28
A29
A29
Federal fiscal andfinancingoperations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—Types
and ownership
A30 U.S. government securities
dealers—Transactions
A31 U.S. government securities dealers—Positions
and financing
A32 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 BANKING
MARKETS
SECURITIES MARKETS AND
CORPORATE
FINANCE
A3 3 New security issues—State and local
governments and corporations
A34 Open-end investment companies—Net sales
and asset position
A34 Corporate profits and their distribution
A34 Nonfarm business expenditures on new
plant and equipment
A35 Domesticfinancecompanies—Assets and
liabilities and business credit
2
Federal Reserve Bulletin • April 1993
Domestic Financial Statistics—Continued
REAL ESTATE
A3 6 Mortgage markets
A37 Mortgage debt outstanding
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
CONSUMER INSTALLMENT CREDIT
A3 8 Total outstanding and net change
A3 8 Terms
FLOW OF FUNDS
A39
A41
A42
A43
Funds raised in U.S. credit markets
Summary offinancialtransactions
Summary of credit market debt outstanding
Summary offinancialassets and liabilities
Domestic Nonfinancial Statistics
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
SELECTED
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
A63 Liabilities to unaffiliated foreigners
A64 Claims on unaffiliated foreigners
SECURITIES HOLDINGS AND TRANSACTIONS
A65 Foreign transactions in securities
A66 Marketable U.S. Treasury bonds and
notes—Foreign transactions
INTEREST AND EXCHANGE
International Statistics
RATES
SUMMARY STATISTICS
A67 Discount rates of foreign central banks
A67 Foreign short-term interest rates
A68 Foreign exchange rates
A53 U.S. international transactions—Summary
A54 U.S. foreign trade
A69 Guide to Statistical Releases and
Special Tables
A3
Guide to Tabular Presentation
SYMBOLS AND
c
e
n.a.
n.e.c.
P
r
*
0
ATS
CD
CMO
FFB
FHA
FHLBB
FHLMC
FmHA
FNMA
FSLIC
G-7
G-10
GENERAL
ABBREVIATIONS
Corrected
Estimated
Not available
Not elsewhere classified
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
GNMA
GDP
HUD
IMF
IO
IPCs
IRA
MMDA
NOW
OCD
OPEC
OTS
PO
REIT
REMIC
RP
RTC
SAIF
SCO
SDR
SIC
SMSA
VA
Government National Mortgage Association
Gross domestic product
Department of Housing and Urban
Development
International Monetary Fund
Interest only
Individuals, partnerships, and corporations
Individual retirement account
Money market deposit account
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 Industrial Classification
Standard metropolitan statistical area
Veterans Administration
INFORMATION
In many of the tables, components do not sum 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
1.10
DomesticNonfinancialStatistics • April 1993
RESERVES, MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES
Percent annual rate of change, seasonally adjusted 1
1992r
1992r
1993
Monetary and credit aggregate
Q1
Q2
Q3
Q4
Sept.
Oct.
Nov.
Dec.
Jan.
1
2
3
4
Reserves of depository institutions2
Total
Required
Nonborrowed
Monetary base3
23.4
23.5
24.0
9.1
14.9
15.4
14.8
7.8
9.3
9.9
8.4
10.5
27.9
27.4
29.2
12.9
24.4
23.4
23.7
17.2
42.0
40.9
45.6
12.2
20.9
22.1
21.8
10.3
9.1
6.7
8.7
9.8
2.6
.4
1.7
7.7
5
6
7
8
9
Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt
15.4
3.3
2.0
1.4
4.3
10.6
.6
-.3
1.5
5.4
11.7
.8
.1
1.1
4.2
16.8
3.1
.2
2.3
4.2
18.0
2.7
1.2
2.7
3.3
19.1
4.6
.0
2.0
2.6
15.7
3.0
.6
3.9
6.2
8.8
-.7
-4.3
-1.4
6.6
7.8
-4.1
-8.3
n.a.
n.a.
-1.0
-4.2
-3.0
-4.9
-3.2
-3.6
-2.3
-13.6
-3.3
-6.3
-1.3
-22.7
-2.2
-11.1
-4.6
-22.7
-9.1
-29.9
18.8
-19.6
-15.2
12.6
-13.4
-13.3
10.9
-17.4
-18.6
12.9
-17.1
-18.3
15.8
-18.1
-16.8
14.5
-17.3
-26.5
10.3
-18.5
-16.2
5.7
-11.5
-9.8
-3.3
-12.3
-32.2
20.2
-24.0
-26.8
18.1
-29.8
-31.9
9.2
-18.6
-14.9
8.7
-21.6
-11.3
10.0
-18.7
-1.7
7.7
-26.8
.0
9.9
-21.0
-29.1
5.6
-21.1
-21.0
.8
-15.8
-5.3
-2.4
33.0
-3.3
23.9
-7.3
32.9
-.9
-19.4
-17.4
-1.1
14.5
-53.3
-2.4
-9.7
-7.2
-39.6
-10.0
-27.3
10.0
2.5
14.4
2.5
10.8
1.9
5.9
3.6
5.0
2.7
-1.4
4.0
10.5
4.7
16.3
3.2
Nontransaction components
10 In M25
11 In M3 only6
Time and savings deposits
Commercial banks
Savings, including MMDAs
Small time7
Large time •
Thrift institutions
15 Savings, including MMDAs
16 Small time7
17 Large time8-9
12
13
14
Money market mutual funds
18 General purpose and broker-dealer
19 Institution-only
Debt components4
20 Federal
21 Nonfederal
1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding during preceding month or quarter.
2. Figures incorporate adjustments for discontinuities, or "breaks," 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 (including MMDAs) 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
n.a.
n.a.
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 fcr 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
A5
CREDIT1
Millions of dollars
Average of
daily figures
Average of daily figures for week ending on date indicated
1993
1992
1993
1992
Dec. 23
Dec. 30
Jan. 6
Jan. 13
Jan. 20
Jan. 27
333,627
338,688
342,155r
344,234
336,140
337,363
332,703
294,929
1,865
2%, 138
6,119
297,076
6,432
295,539
9,348
299,052
864
298,631
2,290
2%, 880
0
5,379
189
0
5,485
0
0
5,450
103
0
5,434
546
0
5,413
728
0
5,413
32
0
5,403
168
0
5,331
0
0
62
18
1
l,310r
29,795
182
10
1
1,028
29,913
20
18
2
1,592
29,717
59
20
1
831
29,%9
78
18
0
2,384r
30,187
435
6
0
2,628
30,136
40
6
0
1,132
29,601
341
15
1
741
29,773
71
10
3
527
29,879
11,059
10,018
21,396
11,057
8,663
21,447
11,055
8,018
21,509
11,057
8,304
21,441
11,057
8,018
21,455
11,056
8,018
21,469
11,056
8,018
21,483
11,056
8,018
21,497
11,055
8,018
21,511
11,055
8,018
21,525
324,505
504
330,563
515
330,373
505
329,149
517
331,166
512
334,120
510
334,533
507
331,912
505
329,782
502
327,958
502
5,617
284
6,011
201
7,693
215
5,002
203
7,764
220
6,320
207
8,360
218
5,492
196
6,988
212
8,761
215
5,898
293
5,953
295
6,428
285
5,845
293
5,780
313
6,333r
290
6,179
342
6,539
255
6,969
282
6,228
276
Nov.
Dec.
Jan.
1 Reserve Bank credit outstanding
U.S. government securities
2
Bought outright—System account . . . .
3
Held under repurchase agreements . . .
Federal agency obligations
4
Bought outright
Held under repurchase agreements . . .
5
6 Acceptances
Loans to depository institutions
7
Adjustment credit
8
Seasonal credit
9
Extended credit
10 Float
11 Other Federal Reserve assets
327,923
335,874r
336,825
288,434
2,640
295,258
3,780
297,541
2,582
5,534
145
0
5,477
174
0
81
39
0
575
30,474
12 Gold stock
13 Special drawing rights certificate account .
14 Treasury currency outstanding
Dec. 16
SUPPLYING RESERVE FUNDS
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 Banks3
7,834
8,109
8,523
8,052
8,399
8,402
8,027
8,262
8,692
8,739
25,460
25,394
23,388
25,369
25,063
26,518
26,624
23,550
24,520
20,622
Jan. 13
Jan. 20
Jan. 27
Wednesday figures
End-of-month figures
Nov.
Dec.
Jan.
Dec. 16
Dec. 23
Dec. 30
Jan. 6
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit outstanding
U.S. government securities
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
331,113
342,512r
333,085
334,709
347,401
343,646r
350,590
334,532
348,010
332,652
292,6%
3,256
295,011
7,463
296,977
0
297,995
0
2%,066
13,132
296,212
5,130
296,363
16,076
296,764
0
296,550
10,128
297,426
0
5,534
254
0
5,413
631
0
5,310
0
0
5,450
0
0
5,450
277
0
5,413
646
0
5,413
920
0
5,413
0
0
5,348
1,027
0
5,310
0
0
10
25
0
-20
29,358
671
4
0
3,253r
30,067
21
10
4
234
30,529
15
22
2
1,501
29,724
87
19
0
2,181
30,190
39
16
1
5,904r
30,286
162
4
0
1,108
30,544
36
4
0
2,558
29,757
2,233
5
2
2,1%
30,521
251
15
4
-335
29,982
11,059
10,018
21,413
11,056
8,018
21,483
11,055
8,018
21,539
11,057
8,018
21,441
11,056
8,018
21,455
11,056
8,018
21,469
11,056
8,018
21,483
11,056
8,018
21,497
11,055
8,018
21,511
11,055
8,018
21,525
327,261
525
334,737
508
326,623
508
329,863
513
333,200
510
335,001
508
333,619
506
330,872
502
329,352
501
327,185
508
6,985
229
7,492
206
9,572
244
6,958
221
6,568
178
7,270
254
7,840
175
5,080
203
17,577
226
10,750
274
6,066
296
6,179r
372
6,009
282
5,845
266
5,780
305
6,333r
266
6,179
228
6,539
282
6,969
279
6,228
273
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 Banks3
7,759
7,984
9,141
8,069
8,344
8,278
8,143
8,360
8,649
8,624
24,481
25,592r
21,318
23,490
33,045
26,279
34,457
23,265
25,042
19,408
1. For amounts of cash held as reserves, see table 1.12.
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 1993
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 Banks2
Total vault cash3
Applied vault cash
Surplus vault cash
Total reserves6
Required reserves
Excess reserve balances at Reserve Banks . . .
Total borrowings at Reserve Banks8
Seasonal borrowings
Extended credit9
1990
1991
1992
Dec.
Dec.
Dec.r
July
Aug.
Sept.
Oct.
Nov.
Dec. r
Jan.
30,237
31,786
28,884
2,903
59,120
57,456
1,664
326
76
23
26,659
32,510"
28,872
3,638r
55,532
54,553
979
192
38
1
25,368
34,535
31,172
3,364
56,540
55,385
1,155
124
18
1
21,206
32,145
28,617
3,528
49,823
48,857
965
284
203
0
21,272
32,458r
28,890
3,568r
50,162
49,227
935
251
223
0
22,627
32,342r
28,894
3,448
51,521
50,527
994
287
193
0
23,626
32,987r
29,510
3,477r
53,136
52,062
1,074
143
114
0
25,462
32,457
29,205
3,252
54,666
53,624
1,043
104
40
0
25,368
34,535
31,172
3,364
56,540
55,385
1,155
124
18
1
23,636
35,991
32,367
3,624
56,003
54,746
1,257
165
11
1
1992
1993
Biweekly averages of daily figures for weeks ending
1992
1
2
3
4
5
6
7
8
9
10
2
Reserve balances with Reserve Banks
Total vault cash3
Applied vault cash 4 ,
Surplus vault cash
Total reserves6
Required reserves
....
Excess reserve balances at Reserve Banks . . .
Total borrowings at Reserve Banks8
Seasonal borrowings
Extended credit9
Sept. 30
Oct. 14
Oct. 28
Nov. 11
Nov. 25
Dec. 9
Dec. 23
Jan. 6r
Jan. 20
Feb. 3
22,048
33,033
29,351
3,682
51,399
50,217
1,182
259
196
0
23,810
32,928r
29,438
3,490"
53,248
52,099
1,149
185
146
0
23,031
33,324r
29,790
3,534r
52,821
51,750
1,071
118
95
0
25,535
31,688r
28,539
25,730
32,398
29,117
3,281
54,846
53,485
1,361
138
37
0
24,548
34,315
30,918
3,397
55,466
54,625
841
95
22
0
25,209
34,770
31,373
3,397
56,582
55,357
1,225
60
19
2
26,569
34,374
31,105
3,269
57,674
56,289
1,385
269
12
0
24,057
36,389
32,829
3,560
56,886
55,657
1,229
202
11
1
21,500
36,369
32,468
3,901
53,968
52,744
1,224
64
11
3
1. Data in this table also appear in the Board's H.3 (502) weekly statistical
release. For ordering address, see inside front cover.
2. Excludes required clearing balances and adjustments to compensate for float
and includes other off-balance-sheet "as-of' 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"
institutions (that is, those whose vault cash exceeds their required reserves) to
satisfy current reserve requirements.
1993
3,15c
54,074
53,346
728
66
53
0
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. 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
1992, week ending Monday
Source and maturity
1
2
3
4
5
6
7
8
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
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
Nov. 2
Nov. 9
Nov. 16
Nov. 23
Nov. 30
Dec. 7
Dec. 14
Dec. 21
Dec. 28
67,659"^
15,148
73,216r
15,385
72,722r
16,007
72,006r
15,626
73,294r
16,355
78,107
15,108
79,155
14,754
74,281
14,242
71,828
13,825
19,074
17,575r
18,264
18,399r
18,965
19,538r
22,633
20,914r
17,881
19,369r
16,203
18,294
18,475
19,201
19,157
19,013
20,597
18,783
15,647
20,699
14,849
20,852
12,884
20,203
13,790
21,173
11,784
20,397
12,150
20,577
11,568
22,850
11,118
18,899
10,237
18,183
23,464
13,206
22,855
12,731
22,846
12,882
23,570
12,860
20,912
15,722
23,747
13,102
23,883
13,173
23,265
12,897
22,808
14,151
39,535r
17,793
38,369r
18,799
39,813r
21,181
34,462r
21,060
36,849r
20,546
40,002
22,053
38,196
22,097
38,439
20,570
37,991
18,270
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 customers2
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 1993
1.14
FEDERAL RESERVE BANK INTEREST RATES
Percent per year
Current and previous levels
Adjustment credit
Federal Reserve
Bank
On
2/26/93
Effective date
Extended credit3
Seasonal credit
Previous rate
On
2/26/93
Effective date
Previous rate
On
2/26/93
3.10
3.55
Boston
New York . . .
Philadelphia..
Cleveland
Richmond
Atlanta
7/2/92
7/2/92
7/2/92
7/6/92
7/2/92
7/2/92
2/18/93
2/18/93
2/18/93
2/18/93
2/18/93
2/18/93
Chicago
St. Louis
Minneapolis ..
Kansas City..
Dallas
San Francisco
7/2/92
7/7/92
7/2/92
7/2/92
7/2/92
7/2/92
2/18/93
2/18/93
2/18/93
2/18/93
2/18/93
2/18/93
3.5
3.05
Effective date
Previous rate
2/18/93
2/18/93
2/18/93
2/18/93
2/18/93
2/18/93
3.60
2/18/93
2/18/93
2/18/93
2/18/93
2/18/93
2/18/93
3.10
Range of rates for adjustment credit in recent years4
Effective date
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
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
May
July
Aug.
Sept.
Oct.
Nov.
9
70
11
17
3
10
?1
77
16
70
1
3
1979--July 70
Aug. 17
70
Sept. 19
71
Oct. 8
10
1980-- F e b . 15
19
May 79
30
June 13
16
79
July 78
Sept. 7,6 , .
Nov. 17
Dec. 5
10
10-10.5
10.5
10.5-11
11
11-12
12
12-13
13
12-13
12
11-12
11
10
10-11
11
12
12-13
10
10.5
10.5
11
11
12
12
13
13
13
12
11
11
10
10
11
12
13
F.R.
Bank
of
N.Y.
Effective date
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
5.5
5.5
1986—Aug. 21
22
5.5-6
5.5
1987—Sept. 4
11
5.5-6
6
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
11.5
11.5
11
11
10.5
10
10
9.5
9.5
9
9
9
8.5
8.5
1988—Aug. 9
11
9
13
Nov. 21
26
Dec. 24
8.5-9
9
8.5-9
8.5
9
9
8.5
8.5
1985—May 20
24
7.5-8
7.5
7.5
7.5
1986—Mar. 7
10
Apr. 21
July 11
7-7.5
7
6.5-7
6
7
7
6.5
6
5
8
Nov. 2
6
Dec. 4
1982—July 20
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
1984—Apr.
13-14
14
13-14
13
12
1989—Feb. 24
27
1990—Dec. 19
1991—Feb.
Apr.
May
Sept.
Sept.
Nov.
Dec.
1992—July
1
4
30
2
13
17
6
7
20
24
2
7
6.5-7
7
7
7
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
3-3.5
3
3
3
In effect Feb. 26, 1993
1. 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. 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. 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
14
14
13
13
12
1981—May
In effect Dec. 31, 1977
1978-—Jan.
Effective date
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 deposit2
Net transaction
Percent of
deposits
Effective date
3
10
12/15/92
12/15/92
0
12/27/90
0
12/27/90
accounts3
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. 15, 1992, the exemption was raised from $3.6
million to $3.8 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. 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. 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. 15,
1992, for institutions reporting quarterly, and Dec. 24, 1992, for institutions
reporting weekly, the amount was increased from $42.2 million to $46.8 million.
4. The reserve requirement was reduced from 12 percent to 10 percent on Apr.
2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions
that report quarterly.
5. For institutions that report weekly, the reserve requirement on nonpersonal
time deposits with an original maturity of less than IV2 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 1V5 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.
6. 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
1 Vi years (see note 4).
A10
1.17
DomesticNonfinancialStatistics • April 1993
F E D E R A L R E S E R V E OPEN MARKET TRANSACTIONS 1
Millions of dollars
1992
Type of transaction
1990
1992
1991
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
4,072
0
28,907
0
1,064
0
25,468
0
3,669
0
29,562
0
U . S . TREASURY SECURITIES
Outright transactions (excluding matched
transactions)
Treasury bills
Gross purchases
Gross sales
Exchanges
4
Redemptions
24,739
7,291
241,086
4,400
20,158
120
277,314
1,000
14,714
1,628
308,699
1,600
306
0
22,028r
0
0
0
30,755r
0
271
0
25,041
0
22,lit
Others within one year
Gross purchases
Gross sales
Maturity shifts
Exchanges
Redemptions
425
0
25,638
-27,424
0
3,043
0
24,454
-28,090
1,000
1,096
0
36,662
-30,543
0
285r
0
3,447r
-1,854
0
0
0
985r
-1,669
0
0
0
4,448r
-4,617
0
350"^
0
2,753
-1,905
0
0
0
2,010
-982
0
461r
0
7,160
-4,615
0
0
0
2,777
-1,570
0
10
11
1?
13
One to five years
Gross purchases
Gross sales
Maturity shifts
Exchanges
250
200
-21,770
25,410
6,583
0
-21,211
24,594
13,118
0
-34,478
25,811
l,993r
0
-3,447
1,854
0
0
—514r
1,478
400
0
-4,036
3,567
3,50C
0
-2,753
1,905
200
0
-1,762
884
4,172r
0
-6,800
3,415
200
0
-2,777
1,570
14
IS
16
17
Five to ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
0
100
-2,186
789
1,280
0
-2,037
2,894
2,818
0
-1,915
3,532
597
0
0
0
0
0
-471
191
195r
0
-412
700
75^
0
0
0
0
0
-248
97
1,176
0
-187
800
100
0
0
0
18
19
20
21
More than ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
0
0
-1,681
1,226
375
0
-1,209
600
2,333
0
-269
1,200
655
0
0
0
0
0
0
0
O1
0
0
350
731
0
0
0
0
0
0
0
947
0
-173
400
0
0
0
0
27.
73
24
All maturities
Gross purchases
Gross sales
Redemptions
25,414
7,591
4,400
31,439
120
1,000
34,079
1,628
1,600
3,836
0
0
0
0
0
866
0
0
5,927
0
0
4,272
0
0
7,820
0
0
3,969
0
0
1,369,052
1,363,434
1,570,456
1,571,534
1,482,467
1,480,140
126,977
129,216
127,051
126,137
103,708r
101,410*^
116,331
115,579
116,024
114,917
115,020
117,020
144,232
142,578
219,632
202,551
310,084
311,752
378,374
386,257
10,792
11,036
12,224
12,224
39,484
31,868
68,697
59,628
18,698
35,383
42,373
39,117
48,904
44,697
24,886
29,729
20,642
5,831
-914
6,184
14,244
-13,520
13,075
6,521
0
0
0
5
292
0
183
0
632
0
0
40
0
0
85
0
0
54
0
0
37
0
0
0
0
0
0
0
0
121
41,836
40,461
22,807
23,595
14,565
14,486
402
402
94
94
601
548
3,222
1,800
1,778
3,253
2,760
2,506
1,601
1,224
35 Net change in federal agency obligations
1,192
-1,085
-554
-40
-85
-1
1,385
-1,475
254
256
Total net change in System Open Market
Account
26,078
28,644
20,089
5,791
-1,000
15,629
-14,995
13,329
6,777
1
?.
5
6
7
8
9
Matched transactions
75 Gross sales
26 Gross purchases
Repurchase agreements2
7.7 Gross purchases
28 Gross sales
29 Net change in U.S. government securities
595
0
0
FEDERAL AGENCY OBLIGATIONS
Outright transactions
30 Gross purchases
31 Gross sales
32 Redemptions
Repurchase agreements1
33 Gross purchases
34 Gross sales
36
1. Sales, redemptions, and negative figures reduce holdings of the System Open
Market Account; all other figures increase such holdings.
6,183
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
End of month
Wednesday
Account
1992
Dec.
30
Jan.
6
Jan.
13
1993
1992
1993
Jan.
20
Jan.
Nov.
27
30
Dec.
31
Jan.
31
Consolidated condition statement
ASSETS
1
2
3
4
5
6
Gold certificate account
Special drawing rights certificate account
Loans
To depository institutions
Acceptances held under repurchase agreements
7
8
Federal agency obligations
Bought outright
Held under repurchase agreements
9
11,056
8,018
455
11,056
8,018
449
11,056
8,018
462
11,055
8,018
483
11,055
8,018
508
11,059
10,018
491
11,056
8,018
446
11,055
8,018
519
56
0
0
166
0
0
40
0
0
2,241
0
0
269
0
0
35
0
0
675
0
0
35
0
0
5,413
646
5,413
920
5,413
0
5,348
1,027
5,310
0
5,534
254
5,413
631
5,310
0
Total U.S. Treasury securities
301,342
312,439
296,764
306,678
297,426
295,952
302,474
296,977
10
11
1?
N
14
Bought outright2
Bills
Notes
Bonds
Held under repurchase agreements
296,212
142,9%
118,179
35,037
5,130
296,363
143,147
118,179
35,037
16,076
296,764
143,548
118,179
35,037
0
296,550
143,334
118,179
35,037
10,128
297,426
144,210
118,179
35,037
0
292,696
139,780
117,879
35,037
3,256
295,011
141,794
118,179
35,037
7,463
296,977
143,761
118,179
35,037
0
15
Total loans and securities
307,456
318,938
302,217
315,293
303,005
301,775
309,192
302,321
16
17
Items in process of collection
Bank premises
11,756
1,028
7,923
1,026
7,394
1,026
11,280
1,026
5,337
1,026
1,912
1,029
8,378
1,026
4,565
1,026
18
19
Other assets
Denominated in foreign currencies
All other4
21,852
7,468
21,522
7,995
21,543
7,179
21,587
8,024
21,609
7,373
22,150
6,245
21,514
7,738
21,980
7,572
20
Total assets
369,089
376,927
358,894
376,767
357,932
354,679
367,368
357,057
LIABILITIES
21
Federal Reserve notes
314,494
313,091
310,339
308,826
306,675
306,863
314,208
306,110
22
Total deposits
40,960
49,325
35,183
50,256
38,052
37,840
40,148
37,632
23
24
25
26
Depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
33,170
7,270
254
266
41,083
7,840
175
228
29,619
5,080
203
282
32,175
17,577
226
279
26,753
10,750
274
273
30,348
6,985
229
296
32,079
7,492
206
372
27,533
9,572
244
282
?7
28
Deferred credit items
Other liabilities and accrued dividends
5,356
1,873
6,367
2,337
5,011
2,242
9,036
2,366
4,580
2,281
2,216
1,894
5,028
1,876
4,174
2,288
29
Total liabilities
362,683
371,120
352,775
370,484
351,589
348,814
361,260
350,204
3,054
2,649
702
3,064
2,716
27
3,065
2,866
188
3,069
2,924
290
3,069
2,967
307
3,028
2,546
291
3,054
3,054
0
3,074
2,974
806
369,089
376,927
358,894
376,767
357,932
354,679
367,368
357,057
290,166
289,250
292,767
296,251
300,586
285,765
291,393
297,501
CAPITAL ACCOUNTS
30
31
32
Capital paid in
Surplus
Other capital accounts
33
Total liabilities and capital accounts
MEMO
34
Marketable U.S. Treasury securities held in custody
for foreign and international 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
363,714
49,220
314,494
362,922
49,832
313,091
364,076
53,736
310,339
364,614
55,788
308,826
366,095
59,420
306,675
359,274
52,410
306,863
363,479
49,271
314,208
366,486
60,376
306,110
11,056
8,018
0
295,420
11,056
8,018
0
294,017
11,056
8,018
0
291,266
11,055
8,018
0
289,752
11,055
8,018
0
287,602
11,059
10,018
0
285,787
11,056
8,018
0
295,134
11,055
8,018
0
287,037
314,494
313,091
310,339
308,826
306,675
306,863
314,208
306,110
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.
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 1993
FEDERAL RESERVE BANKS
1
Maturity Distribution of L o a n and Security Holding
Millions of dollars
Wednesday
Type and maturity grouping
1992
End of month
1993
1992
1993
Dec. 30
Jan. 6
Jan. 13
Jan. 20
Jan. 27
Nov. 30
Dec. 31
Jan. 31
1 Total loans
56
166
40
2,241
269
35
675
35
2
3
4
55
1
0
165
1
0
39
1
0
2,240
1
0
268
1
0
23
12
0
673
1
0
33
1
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
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
308,435
312,439
296,764
306,678
297,426
295,952
302,474
296,977
Within fifteen days2
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
18,785
70,610
103,582
68,750
18,903
27,805
28,631
70,208
98,142
68,750
18,903
27,805
12,914
73,285
95,106
68,750
18,903
27,805
21,160
71,940
98,361
68,686
18,726
27,805
14,844
68,910
98,456
68,686
18,726
27,805
8,620
75,398
95,569
69,757
18,803
27,805
12,824
70,610
103,582
68,750
18,903
27,805
9,160
74,289
98,311
68,686
18,726
27,805
16 Total federal agency obligations
6,059
6,333
5,413
6,375
5,310
5,788
6,044
5,310
Within fifteen days2
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
836
810
1,064
2,511
696
142
985
975
1,024
2,511
696
142
103
995
966
2,511
696
142
1,173
887
966
2,511
696
142
183
840
1,023
2,426
696
142
647
548
1,109
2,608
722
154
821
810
1,064
2,511
696
142
183
840
1,023
2,426
696
142
9 Total U.S. Treasury securities
10
11
12
13
14
15
17
18
19
20
21
22
1. Holdings under repurchase agreements are classified as maturing within
fifteen days in accordance with maximum maturity of the agreements.
Monetary
and Credit
Aggregates
A13
1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1
Billions of dollars, averages of daily figures
1992
Item
1989
Dec.
1990
Dec.
1991
Dec.
June
Total reserves3
Nonborrowed reserves
Nonborrowed reserves plus extended credit5
Required reserves
Monetary base6
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Seasonally adjusted
ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 2
1
2
3
4
5
1993
1992
Dec.
40.56
40.29
40.31
39.64
267.77
41.83 45.60
49.23
50.32
54.07
54.48
54.60
54.48
49.49
51.35
53.14
41.51 45.41
50.07
53.97
54.36r
54.43
54.36r 49.01
49.21
51.06
53.00
41.53 45.41
50.07
53.97
54.36r
54.43
54.36r 49.01
49.21
51.06
53.00
r
40.17 44.62
48.32
49.39
53.03
53.32r
53.34
53.32
48.52
50.35
52.07
293.29 317.24r 350.93r 330.14r 333.02r 336.80" 341.64r 345.12r 348.09" 350.93" 353.19
Not seasonally adjusted
6
7
8
9
10
Total reserves7
Nonborrowed reserves
Nonborrowed reserves plus extended credit
Required reserves8
Monetary base9
41.77
41.51
41.53
40.85
271.18
43.07
42.74
42.77
41.40
296.68
46.98 56.10
46.78 55.98
46.78 55.98
46.00 54.95
321.07 354.59
49.25
49.02
49.02
48.33
330.94
49.52
49.24
49.24
48.56
334.09
49.81
49.56
49.56
48.88
336.59
51.11
50.83
50.83
50.12
340.11
52.66
52.52
52.52
51.59
343.66
54.13 56.10
54.03 55.98
54.03 55.98
53.09 54.95
347.92 354.59
55.97
55.80
55.80
54.71
354.46
62.81
62.54
62.56
61.89
292.55
.92
.27
59.12
58.80
58.82
57.46
313.70
1.66
.33
55.53 56.54
49.50
55.34 56.42
49.27
55.34 56.42
49.27
54.55 55.39
48.58
333.61 360.91 336.43
.98
1.16"
.91
.19
.12
.23
49.82
49.54
49.54
48.86
339.87
.97
.28
50.16
49.91
49.91
49.23
342.49
.94
.25
51.52
51.23
51.23
50.53
346.21
.99
.29
53.14
52.99
52.99
52.06
349.81
1.07
.14
54.67 56.54
56.00
55.84
54.56 56.42
55.84
54.56 56.42
54.75
53.62 55.39
354.25 360.91 360.92
1.04
1.16"
1.26
.17
.10
.12
N O T ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS
11
12
13
14
15
16
17
Total reserves11
Nonborrowed reserves
Nonborrowed reserves plus extended credit5
Required reserves
Monetary base12
Excess reserves13
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, DC 20551.
2. Figures reflect adjustments for discontinuities, or "breaks," associated with
regulatory changes in reserve requirements. (See also table 1.10)
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
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 1993
MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES 1
Billions of dollars, averages of daily figures
1992r
Item
1989
Dec.
1990
Dec.
1991
Dec.r
1993
1992
Dec.r
Oct.
Nov.
Dec.
Jan.
Seasonally adjusted
1
2
3
4
5
Measures
Ml
M2
M3
L
Debt
6
7
8
9
Ml components
Currency
Travelers checks4
Demand deposits5
Other checkable deposits6
794.1
3,227.3
4,059.8
4,890.6
10,076.7
826.1
3,339.0
4,114.6
4,965.2
10,751.3
899.3
3,445.8
4.168.1
4.982.2
11,201.3
1,026.6
3,503.5
4,173.5
5,059.2
11,746.0
1,005.9
3,496.9
4,186.2
5,048.5
11,621.8
1,019.1
3,505.6
4,188.4
5,065.0
11,681.7
1,026.6
3,503.5
4,173.5
5,059.2
11,746.0
1,033.3
3,491.5
4,144.7
n.a.
n.a.
222.6
7.4
279.0
285.1
246.8
8.3
277.1
293.9
267.2
7.8
290.5
333.8
292.4
8.1
340.9
385.2
288.0
8.3
336.0
373.7
289.8
8.2
339.5
381.6
292.4
8.1
340.9
385.2
294.8
8.0
342.0
388.5
2,433.2
832.5
2,512.9
775.6
2,546.6
722.3
2,476.9
670.0
2,490.9
689.3
2,486.4
682.9
2,476.9
670.0
2,458.2
653.3
Commercial banks
12 Savings deposits, including MMDAs
13 Small time deposits9
14 Large time deposits10, 11
541.5
531.0
398.2
581.9
606.4
374.0
666.2
601.5
341.3
756.1
507.0
290.4
746.1
519.9
296.8
752.5
511.9
292.8
756.1
507.0
290.4
754.0
501.8
282.6
Thrift institutions
15 Savings deposits, including MMDAs
16 Small time deposits
17 Large time deposits10
349.7
617.5
161.1
338.8
562.3
120.9
376.3
463.2
83.4
429.9
363.5
67.3
424.4
376.6
70.2
427.9
370.0
68.5
429.9
363.5
67.3
430.2
358.7
67.0
Money market mutual funds
18 General purpose and broker-dealer .
19 Institution-only
316.3
107.2
348.9
133.7
363.9
182.1
348.8
202.3
351.6
210.9
350.9
209.2
348.8
202.3
345.9
197.7
2,249.5
7,827.2
2,493.4
8,258.0
2,764.8
8,436.5
3,068.9
8,677.2
3,001.4
8,620.4
3,027.7
8,654.1
3,068.9
8,677.2
Nontransaction components
10 In M27
11 In M38
Debt components
20 Federal debt
21 Nonfederal debt
n.a.
n.a.
Not seasonally adjusted
2
22
23
24
25
26
Measures
Ml
M2
M3
L
Debt
Ml components
Nontransaction components
31 In M28
32 In M3
Commercial banks
Thrift institutions
Money market mutual funds
Repurchase agreements and eurodollars
42 Term
Debt components
For notes see following page.
811.9
3,240.0
4,070.3
4,909.9
10,063.6
844.1
3,351.9
4,124.7
4,984.9
10,739.9
916.4
3,457.9
4,178.1
5,004.2
11,191.4
1,045.8
3,517.7
4,185.6
5,084.0
11,737.4
1,000.9
3,491.1
4,176.2
5,037.7
11,599.9
1,021.5
3,508.4
4,193.7
5,077.9
11,662.7
1,045.8
3,517.7
4,185.6
5,084.0
11,737.4
1,040.2
3,497.2
4,147.4
n.a.
n.a.
225.3
6.9
291.5
288.1
249.5
7.8
289.9
296.9
269.9
7.4
302.9
336.3
295.0
7.8
355.3
387.6
287.0
8.4
336.7
368.8
290.0
7.9
343.9
379.7
295.0
7.8
355.3
387.6
293.6
7.8
346.2
392.6
2,428.1
830.3
2,507.8
772.8
2,541.5
720.1
2,472.0
667.9
2,490.2
685.1
2,486.9
685.3
2,472.0
667.9
2,457.0
650.2
543.0
529.5
397.1
580.0
606.3
373.0
663.3
602.0
340.1
752.3
507.8
289.3
744.4
521.1
296.0
751.9
512.5
292.7
752.3
507.8
289.3
749.4
503.5
280.6
347.6
616.0
162.0
337.7
562.2
120.6
374.7
463.6
83.1
427.8
364.1
67.1
423.4
377.5
70.0
427.5
370.5
68.5
427.8
364.1
67.1
427.5
360.0
66.6
314.6
107.8
346.8
134.4
361.5
182.4
346.5
202.4
348.7
206.3
349.1
209.5
346.5
202.4
345.5
202.3
77.5
178.5
74.7
158.3
76.3
130.1
73.6
128.8
75.1
128.5
75.4
131.0
73.6
128.8
71.1
124.4
2,247.5
7,816.2
2,491.3
8,248.6
2,765.0
8,426.4
3,069.8
8,667.6
2,998.1
8,601.9
3,028.3
8,634.4
3,069.8
8,667.6
n.a.
n.a.
Monetary and Credit Aggregates
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, DC 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) savings (including MMDAs) and small time deposits (time deposits—including retail 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
A15
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 owed 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 1993
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
1992
Bank group, or type of customer
July
June
4 Other checkable deposits4
5 Savings deposits including MMDAs
Sept.
Oct.
Nov.
Seasonally adjusted
DEBITS TO
Demand deposits3
1 All insured banks
2 Major New York City banks
3 Other banks
Aug.
255,953.4
129,509.7
126,443.7
277,157.5
131,699.1
145,458.4
277,758.0
137,352.3
140,405.7
323,630.8
166,773.7
156,857.1
339,216.4
177,296.3
161,920.1
306,923.0
157,221.1
149,702.0
346,658.3
184,740.9
161,917.4
327,148.1
176,369.8
150,778.3
322,541.8
173,388.8
149,153.0
2,918.4
3,233.4
3,349.0
3,483.3
3,645.5
3,266.1
4,020.0
3,355.3
4,078.7
3,513.7
3,763.9
3,139.8
3,942.1
3,559.1
3,687.7
3,476.6
3,618.4
3,522.9
733.0
3,428.0
406.1
797.8
3,819.8
464.9
803.5
4,270.8
447.9
870.7
4,922.2
464.3
916.6
5,349.6
480.6
800.0
4,550.9
428.8
892.4
5,254.5
458.3
818.0
4,855.4
414.6
793.8
4,623.6
404.4
15.2
6.2
16.5
6.2
16.2
5.3
15.4
4.7
15.6
4.9
14.2
4.4
14.7
4.9
13.5
4.7
12.9
4.7
DEPOSIT TURNOVER
Demand deposits3
6 All insured banks
7 Major New York City banks
8 Other banks
9 Other checkable deposits4
10 Savings deposits including MMDAs
Not seasonally adjusted
DEBITS TO
Demand deposits3
11 All insured banks
12 Major New York City banks
13 Other banks
14 Other checkable deposits4
15 Savings deposits including MMDAs
255,975.7
129,582.2
126,393.4
277,290.5
131,784.7
145,505.8
277,715.4
137,307.2
140,408.3
333,406.4
173,392.8
160,013.6
341,278.3
178,555.6
162,722.7
315,724.4
162,973.3
152,751.0
334,831.5
178,998.2
155,833.4
335,550.6
182,584.2
152,966.5
308,354.7
167,578.4
140,776.3
2,916.2
3,233.0
3,346.7
3,483.0
3,645.6
3,267.7
4,048.4
3,467.1
3,987.9
3,523.9
3,696.9
3,173.5
3,945.7
3,374.3
3,677.0
3,411.5
3,359.1
3,264.2
733.4
3,433.6
405.9
798.2
3,825.9
465.0
803.4
4,274.3
447.9
900.4
5,174.3
475.1
916.2
5,317.6
480.2
836.5
4,870.2
444.1
864.2
5,180.1
441.6
838.3
5,025.6
420.3
752.1
4,494.4
377.7
15.2
6.2
16.4
6.2
16.2
5.3
15.6
4.9
15.4
4.9
14.1
4.4
14.9
4.6
13.6
4.6
12.0
4.4
DEPOSIT TURNOVER
Demand deposits3
16 All insured banks
17 Major New York City banks
18 Other banks
19 Other checkable deposits4
^
20 Savings deposits including MMDAs
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, DC
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. Money market deposit accounts.
Commercial Banking Institutions
1.23
LOANS A N D SECURITIES
All
All C o m m e r c i a l B a n k s 1
Billions of dollars, averages of Wednesday figures
1992r
1993
Item
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Seasonally adjusted
1
1 Total loans and securities
2 U.S. government securities
3 Other securities
4 Total loans and leases1
5 Commercial and industrial . . . . .
Bankers acceptances held . . .
6
Other commercial and
7
industrial
U.S. addressees3
8
9
Non-U.S. addressees3
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
2,855.4
2,862.7
2,874.3
2,875.3
2,882.8
2,886.9
2,902.2
2,916.5
2,925.7
2,932.8
2,938.9
2,935.3
570.9
180.3
2,104.3
613.5
7.0
579.6
178.5
2,104.5
610.8
6.8
590.8
178.5
2,104.9
609.0
6.5
600.2
176.9
2,098.2
607.6
6.7
610.7
175.8
2,096.2
604.6
6.3
619.2
177.9
2,089.8
602.5
6.5
632.6
178.2
2,091.4
601.4
6.5
639.9
178.4
2,098.2
601.7
6.3
647.1
179.4
2,099.1
600.6
7.3
651.8
177.6
2,103.4
600.9
7.5
657.9
176.3
2,104.6
598.8
7.1
657.4
174.4
2,103.6
601.3
6.9
606.5
597.5
9.0
876.7
363.8
58.9
604.0
594.9
9.1
879.1
362.3
60.7
602.6
593.2
9.4
881.8
360.8
63.4
600.9
590.8
10.1
883.3
359.2
60.9
598.4
588.3
10.1
881.8
359.0
63.3
596.0
585.3
10.7
881.5
358.6
60.5
594.9
584.3
10.6
883.1
357.4
61.6
595.4
584.1
11.3
886.7
357.0
63.8
593.3
582.1
11.1
890.6
355.5
64.7
593.4
582.1
11.3
892.2
355.1
64.3
591.7
580.6
11.1
892.1
355.0
64.9
594.4
582.9
11.5
888.7
357.6
63.1
43.0
34.1
43.6
34.3
43.2
34.3
43.3
34.3
42.4
34.6
41.5
34.9
42.0
35.3
43.7
35.2
43.9
35.1
44.8
35.1
43.7
34.9
44.8
34.5
28.3
6.9
2.2
31.5
45.5
28.0
6.6
2.1
31.4
45.5
27.6
6.7
2.0
31.1
45.1
27.3
7.0
2.0
30.9
42.4
26.8
7.5
2.0
31.0
43.3
26.2
7.7
2.2
30.8
43.2
25.9
7.2
2.3
30.8
44.3
25.8
7.9
2.4
30.9
43.1
25.5
7.3
2.4
30.8
42.8
25.2
7.0
2.8
30.7
45.3
24.9
7.0
2.9
30.6
49.9
24.3
6.8
2.9
30.0
49.7
Not seasonally adjusted
20 Total loans and securities1
2,857.4
2,864.9
2,875.8
2,870.7
2,882.9
2,876.1
2,894.5
2,913.9
2,924.9
2,939.4
2,948.7
2,937.4
21 U.S. government securities
22 Other securities
23 Total loans and leases1
24 Commercial and industrial . . . . .
25
Bankers acceptances held . . .
Other commercial and
26
industrial
27
U.S. addressees3
28
Non-U.S. addressees3
29 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
574.0
180.5
2,102.9
612.7
7.3
584.0
178.2
2,102.6
614.0
6.9
592.6
178.0
2,105.2
612.1
6.3
599.4
176.5
2,094.8
609.4
6.6
608.9
175.4
2,098.7
606.5
6.2
615.3
176.8
2,084.0
601.5
6.3
631.3
178.1
2,085.0
597.6
6.3
638.0
178.1
2,097.9
598.1
6.2
644.9
179.8
2,100.2
598.2
7.2
654.4
178.7
2,106.3
601.2
7.8
656.6
176.6
2,115.5
601.8
7.4
657.8
174.9
2,104.7
599.7
7.1
605.4
596.2
9.2
875.1
363.8
61.3
607.2
598.2
9.0
876.7
359.8
62.6
605.8
596.3
9.5
880.7
358.1
66.9
602.7
592.7
10.0
883.4
357.4
58.4
600.3
589.5
10.8
882.0
357.2
63.5
595.2
584.2
11.0
881.6
356.4
58.0
591.4
580.5
10.8
883.7
356.9
59.4
591.9
580.8
11.1
887.5
358.6
62.4
591.0
580.3
10.8
891.4
355.9
64.2
593.4
582.7
10.7
893.6
355.9
63.6
594.4
583.4
11.0
893.4
359.4
65.7
592.7
581.2
11.4
888.4
361.7
64.6
42.8
32.8
43.2
33.0
42.6
33.5
42.8
34.0
42.9
35.1
41.3
35.8
41.8
36.5
43.1
36.7
43.5
36.1
45.1
35.2
45.7
34.7
45.0
33.6
28.2
6.7
2.2
31.7
45.8
28.0
6.4
2.1
31.6
45.2
27.6
6.4
2.0
31.2
44.1
27.3
6.8
2.0
30.9
42.5
26.8
7.3
2.0
31.0
44.4
26.1
7.8
2.2
30.6
42.6
25.9
7.0
2.3
30.6
43.2
25.9
8.1
2.4
30.7
44.5
25.6
7.6
2.4
30.7
44.6
25.3
7.3
2.8
30.5
45.7
24.9
7.4
2.9
30.5
49.1
24.1
6.9
2.9
30.3
47.5
1. Adjusted to exclude loans to commercial banks in the United States.
2. Includes nonfinancial commercial paper held.
3. United States includes the fifty states and the District of Columbia.
A18
1.24
DomesticNonfinancialStatistics • April 1993
MAJOR NONDEPOSIT F U N D S OF COMMERCIAL
BANKS1
Billions of dollars, monthly averages
1992r
1993
Source of funds
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Seasonally adjusted
1 Total nondeposit funds2
2 Net balances due to related foreign offices . . .
3 Borrowings from other than commercial banks
in United States4
4
Domestically chartered banks
5
Foreign-related banks
285.1
41.4
287.2
44.8
291.9
50.9
292.4
53.7
295.9
61.2
297.0
61.7
302.4
61.4
309.2
64.0
305.3
64.1
309.6
68.5
312.9
71.1
313.0
74.2
243.8
159.7
84.1
242.4
157.3
85.0
241.0
154.6
86.5
238.7
151.8
86.9
234.7
147.6
87.2
235.3
147.2
88.1
241.1
151.5
89.6
245.2
153.4
91.8
241.1
154.5
86.6
241.2
153.7
87.5
241.7
154.3
87.4
238.8
155.1
83.7
Not seasonally adjusted
6 Total nondeposit funds
7 Net balances due to related foreign offices . . .
8 Domestically chartered banks
9 Foreign-related banks
10 Borrowings from other than commercial banks
in United States4
11 Domestically chartered banks
12
Federal funds and security RP
borrowings5
13
Other6
14 Foreign-related banks6
289.6
43.2
.1
43.1
292.2
45.6
.2
45.4
288.4
47.9
-4.6
52.6
297.1
55.9
-4.5
60.4
295.2
59.2
-6.3
65.6
291.5
58.4
-7.0
65.4
297.5
57.6
-9.3
66.9
303.7
61.6
-11.0
72.6
307.5
65.3
-12.8
78.1
314.9
70.1
-11.7
81.8
312.7
75.2
-15.1
90.3
311.8
76.7
-15.9
92.6
246.3
161.5
246.6
160.2
240.5
152.7
241.2
153.3
236.0
147.4
233.1
144.1
239.9
150.4
242.1
152.2
242.3
155.7
244.8
158.1
237.5
153.4
235.1
152.1
158.0
3.5
84.9
156.9
3.3
86.4
149.2
3.4
87.8
149.4
3.9
87.9
143.3
4.1
88.6
139.9
4.2
89.0
146.5
3.9
89.5
148.4
3.8
89.9
152.1
3.6
86.6
154.0
4.1
86.6
149.4
4.0
84.1
148.4
3.6
83.0
413.7
413.1
407.2
408.1
401.5
400.5
397.5
399.4
393.3
394.9
387.7
387.4
385.8
387.1
383.2
383.6
375.7
374.9
371.3
371.1
366.6
365.5
360.2
358.2
20.2
25.2
21.9
20.1
20.8
17.7
19.2
21.0
24.7
25.2
23.1
19.6
28.0
22.4
24.1
28.6
21.5
21.9
20.7
16.5
20.4
19.5
25.6
33.0
MEMO
Gross large time deposits
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.
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
A S S E T S A N D LIABILITIES OF COMMERCIAL B A N K S 1
A19
Wednesday figures
Millions of dollars
1992r
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
Jan. 6
Jan. 13
Jan. 20
Jan. 27
3,121,974
796,035
633,704
162,331
42,665
27,832
2,969
11,864
2,283,274
172,020
2,111,254
602,531
892,449
73,403
819,046
357,021
259,253
223,842
28,460
33,225
31,733
85,881
44,643
296,598
3,127,535
794,499
632,519
161,979
39,995
25,930
2,949
11,115
2,293,042
179,588
2,113,455
599,002
894,770
73,448
821,323
357,071
262,612
204,843
25,614
32,613
30,289
72,575
43,851
295,191
3,125,019
793,052
631,237
161,815
38,146
24,576
2,958
10,612
2,293,821
179,598
2,114,224
601,669
894,630
73,386
821,244
358,059
259,866
219,833
26,535
32,529
32,010
87,121
41,738
302,200
3,114,488
795,473
633,168
162,304
36,014
21,569
3,285
11,160
2,283,001
169,284
2,113,717
601,941
892,089
73,143
818,946
360,711
258,975
234,179
35,183
31,445
34,729
91,864
41,058
297,291
3,115,506
798,542
635,246
163,2%
35,612
21,030
3,029
11,554
2,281,352
160,909
2,120,444
604,287
891,816
73,246
818,570
361,929
262,412
236,533
29,199
36,439
35,730
93,335
41,930
300,678
3,123,753
797,211
635,703
161,507
35,901
20,619
2,870
12,411
2,290,642
178,271
2,112,371
599,719
890,071
73,386
816,685
362,679
259,901
226,212
36,922
34,755
32,662
82,686
39,287
295,722
3,105,158
798,865
637,834
161,031
33,519
19,881
2,4%
11,141
2,272,774
163,713
2,109,061
597,593
891,464
73,309
818,155
361,565
258,439
209,488
26,325
34,227
30,134
78,784
40,104
287,150
3,099,118
793,944
633,085
160,859
37,291
23,947
2,5%
10,748
2,267,883
163,870
2,104,013
599,585
887,915
73,305
814,611
361,322
255,191
233,235
28,090
33,376
35,307
94,736
41,812
288,191
3,076,522
792,223
630,995
161,228
36,896
23,233
2,472
11,192
2,247,403
154,468
2,092,935
600,167
884,632
73,2%
811,335
361,345
246,791
197,836
24,089
32,550
29,984
69,934
41,279
281,492
3,642,414
3,627,570
3,647,052
3,645,958
3,652,717
3,645,686
3,601,795
3,620,545
3,555,850
2,530,396
768,816
3,520
41,123
724,174
748,886
638,246
374,449
501,004
13,481
487,523
342,475
2,512,986
748,012
2,922
38,467
706,622
753,091
637,441
374,442
506,242
6,016
500,226
339,156
2,537,670
776,197
5,910
41,979
728,308
753,416
637,619
370,438
497,161
23,348
473,813
344,414
2,528,716
780,351
5,217
43,211
731,923
742,933
636,105
369,327
498,297
18,020
480,277
351,293
2,542,338
799,456
5,926
43,530
750,001
742,140
634,767
365,975
495,834
29,773
466,061
343,378
2,532,159
783,345
4,663
40,915
737,767
750,756
636,765
361,294
498,810
14,886
483,924
343,282
2,510,487
759,838
3,287
38,516
718,036
750,603
634,436
365,610
477,939
22,771
455,168
341,819
2,504,461
763,116
5,582
45,833
711,700
741,100
635,101
365,145
506,598
34,561
472,037
339,151
2,452,864
717,572
3,202
37,652
676,717
737,741
633,294
364,258
485,812
34,921
450,891
346,152
3,373,875
3,358,384
3,379,245
3,378,306
3,381,549
3,374,251
3,330,245
3,350,211
3,284,828
268,539
269,186
267,807
267,652
271,168
271,436
271,550
270,334
271,022
ALL COMMERCIAL BANKING INSTITUTIONS 2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Assets
Loans and securities
Investment securities
U.S. government securities
Other
Trading account assets
U.S. government securities
Other securities
Other trading account assets
Total loans
Interbank loans
Loans excluding interbank
Commercial and industrial
Real estate
Revolving home equity
Other
Individual
All other
Total cash assets
Balances with Federal Reserve Banks
Cash in vault
Demand balances at U.S. depository institutions
Cash items
Other cash assets
Other assets
25 Total assets
26
27
28
29
30
31
32
33
34
35
36
37
Liabilities
Total deposits
Transaction accounts
Demand, U.S. government
Demand, depository institutions
Other demand and all checkable deposits
Savings deposits (excluding checkable)
Small time deposits
Time deposits over $100,000
Borrowings
Treasury tax and loan notes
Other
Other liabilities
38 Total liabilities
39 Residual (assets less liabilities)3
Footnotes appear on the following page.
A20
1.25
DomesticNonfinancialStatistics • April 1993
ASSETS A N D LIABILITIES OF COMMERCIAL BANKS1
Wednesday
figures—Continued
Millions of dollars
1992r
1993
Account
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
Jan. 6
Jan. 13
Jan. 20
Jan. 27
56
All other
57
58 Balances with Federal Reserve Banks
59 Cash in vault
60 Demand balances at U.S. depository institutions .
61
6? Other cash assets
63 Other assets
2,763,847
731,295
590,850
140,445
42,665
27,832
2,969
11,864
1,989,888
144,237
1,845,651
440,366
839,661
73,403
766,258
357,021
208,602
196,159
27,886
33,190
30,203
83,676
21,303
176,534
2,762,841
730,287
590,227
140,059
39,995
25,930
2,949
11,115
1,992,559
147,785
1,844,774
437,044
841,847
73,448
768,400
357,071
208,812
177,948
24,783
32,579
28,758
70,430
21,498
177,529
2,762,668
727,870
587,789
140,081
38,146
24,576
2,958
10,612
1,996,652
151,120
1,845,532
438,214
841,532
73,386
768,147
358,059
207,727
193,109
25,973
32,490
30,382
84,750
19,614
180,152
2,745,952
730,402
590,205
140,197
36,014
21,569
3,285
11,160
1,979,536
138,961
1,840,575
437,045
839,030
73,143
765,887
360,711
203,789
207,160
34,235
31,407
32,975
89,700
18,943
175,738
2,749,785
731,627
591,313
140,314
35,612
21,030
3,029
11,554
1,982,545
137,720
1,844,826
438,683
839,129
73,246
765,883
361,929
205,085
210,163
28,649
36,402
34,023
91,131
20,058
178,449
2,754,991
731,221
592,364
138,857
35,901
20,619
2,870
12,411
1,987,870
148,030
1,839,840
436,652
838,160
73,386
764,774
362,679
202,348
200,082
35,944
34,717
30,989
80,292
18,240
182,942
2,739,722
732,672
593,701
138,971
33,519
19,881
2,496
11,141
1,973,531
137,989
1,835,542
433,961
839,238
73,309
765,928
361,565
200,778
182,905
25,783
34,191
28,527
75,891
18,597
178,496
2,736,266
728,036
589,198
138,838
37,291
23,947
2,596
10,748
1,970,940
136,799
1,834,141
436,562
835,966
73,305
762,662
361,322
200,291
205,660
27,025
33,336
33,578
92,193
19,614
176,140
2,717,220
727,449
587,891
139,558
36,896
23,233
2,472
11,192
1,952,874
130,445
1,822,430
435,601
832,482
73,296
759,186
361,345
193,001
170,438
23,574
32,514
28,319
67,610
18,422
171,179
64 Total assets
3,136,540
3,118,318
3,135,930
3,128,850
3,138,397
3,138,015
3,101,122
3,118,067
3,058,838
2,370,795
758,901
3,520
38,751
716,630
744,149
635,748
231,998
365,810
13,481
352,329
135,004
2,351,994
738,514
2,922
36,225
699,367
748,217
634,919
230,344
369,110
6,016
363,094
131,636
2,376,536
765,699
5,900
39,635
720,164
748,643
635,111
227,082
363,760
23,348
340,412
131,435
2,367,287
770,342
5,216
40,821
724,306
738,352
633,618
224,975
366,232
18,020
348,212
131,288
2,381,434
789,040
5,925
41,139
741,976
737,581
632,289
222,524
361,745
29,773
331,972
127,657
2,375,352
773,036
4,662
38,483
729,891
746,211
634,284
221,821
365,144
14,886
350,258
129,692
2,352,008
749,448
3,287
36,099
710,063
746,062
631,958
224,540
349,393
22,771
326,622
131,779
2,345,104
752,419
5,582
43,112
703,726
736,514
632,627
223,543
375,989
34,561
341,428
130,248
2,294,577
708,083
3,202
35,394
669,487
733,203
630,820
222,472
365,173
34,921
330,252
131,673
2,871,609
2,852,740
2,871,731
2,864,807
2,870,837
2,870,188
2,833,180
2,851,341
2,791,424
264,199
264,044
267,560
267,828
267,942
266,726
267,414
DOMESTICALLY CHARTERED COMMERCIAL BANKS 4
Assets
4(1
41
4?
43
44
45
46
47
48
49
50
51
5?
53
54
Investment securities
U.S. government securities
Other
Trading account assets
U.S. government securities
Other securities
Other trading account assets
Loans excluding interbank
Commercial and industrial
Revolving home equity
Other
55
Liabilities
65
66
67
68
69
70
71
7?
73
74
IS
76
Demand, U.S. government
Demand, depository institutions
Other demand and all checkable deposits
Savings deposits (excluding checkable)
Time deposits over $100,000
Treasury tax and loan notes
Other
Other liabilities
77 Total liabilities
3
78 Residual (assets less liabilities)
264,931
265,578
1. Excludes assets and liabilities of International Banking Facilities.
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 and domestic
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.
Weekly Reporting
1.26
Commercial Banks
ASSETS A N D LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL B A N K S
M i l l i o n s of dollars, W e d n e s d a y
figures
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
Jan. 6
Jan. 13
Jan. 20
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 1
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
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Federal funds sold 2
To commercial banks in the United States
To nonbank brokers and dealers
To others 3
Other loans and leases, gross
Commercial and industrial
Bankers acceptances and commercial paper . . ,
All other
U.S. addressees
Non-U.S. addressees
Real estate loans
Revolving, home equity
All other
To individuals for personal expenditures
To financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank financial institutions
For purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other loans 4
Lease-financing receivables
LESS: Unearned income
<
Loan and lease reserve 5
Other loans and leases, net
Other assets
45 Total assets
Footnotes appear on the following page.
117
276,
25,
251,
83,
29,
77,
61
55
2,
53
20
3,
17,
32,
11,
86
55,
25,
5
981
279,
2,
277,
275,
1
399
43
356
177,
40
15
2,
22,
13
5
14
1
24
24
2,
37
942
161
1,651,293
104,315
273,052
22,307
250,745
82,916
116,290
269,717
21,564
248,153
81,847
126,937
265,790
18,676
247,114
81,511
126,270
266,081
18,471
247,610
81,298
119,096
270,738
18,036
252,702
83,234
109,305
269,585
17,404
252,181
82,416
124,065
269,192
21,290
247,902
78,596
30,531
75,653
61,645
55,810
2,595
53,215
20,486
3,274
17,212
32,730
10,857
29,702
75,612
60,992
55,905
2,684
53,221
20,460
3,269
17,191
32,761
10,349
29,922
75,804
59,877
56,423
3,131
53,291
20,448
3,264
17,184
32,844
10,887
31,017
74,844
60,450
56,060
2,875
53,185
20,398
3,258
17,139
32,787
11,280
33.943
75,829
59,6%
55,926
2,720
53,206
20,443
3,249
17,194
32,763
12,166
35,624
73,959
60,182
55,209
2,345
52,864
20,344
3,211
17,133
32,520
10,895
34,984
74,658
59,663
55,176
2,445
52,731
20,343
3,201
17,142
32,389
10,501
89,244
57,321
5,661
979,646
276,828
2,500
274,328
272,504
1,823
401,747
43,050
358.697
177,874
38,780
14,929
2,245
21,607
15,944
5,794
14,737
1,299
22,528
24,114
2,259
37,688
939.698
164,994
92,013
63,043
23,932
5,037
984,443
278,248
2,440
275,808
274,024
1,784
401,794
43,012
358,782
180,279
37,551
13,879
2,424
21,248
15,205
5,887
14,688
1,421
25,247
24,124
2,286
37,641
944,517
167,454
79,033
54,734
19,412
4,888
984,143
277,113
2,227
274,886
273,203
1,683
399,331
42,769
356,562
181,976
37,441
13,839
2,381
21,221
16,938
5,805
14,676
1,342
25,371
24,149
2,289
37,328
944,525
163,158
54,599
20,781
4,701
986,437
278,235
2,046
276,189
274,566
1,623
399,120
42,772
356,348
182,635
38,296
14,514
2,159
21,623
15,603
5,961
14,620
1,384
26,141
24,441
2,290
36,494
947,654
162,306
84,717
58,728
21,693
4,296
990,449
277,766
1,885
275,881
274,249
1,632
403,186
43,370
359,816
185,938
38,055
14,377
21,468
14.944
5,875
14,522
1,451
23,920
24,793
2,289
36,462
951,698
170,206
82,811
54,333
23,432
5,046
985,587
275,227
1,859
273,368
271,716
1,652
404,073
43,312
360,762
185,458
35,931
13,814
1,930
20,188
15,381
5,733
14,458
1,353
23,301
24,671
2,293
36,594
946,700
166,716
80,110
55,521
20,024
4,566
988,844
277,713
2,190
275,523
273,778
1,745
401,351
43,336
358,015
185,176
36,408
13,686
2,225
20,497
16,604
5,690
14,443
1,408
25,622
24,430
2,282
36,534
950,028
162,553
1,637,969
1,656,244
1,646,753
1,649,730
1,664,547
1,641,222
1,651,626
26,261
2,210
A21
A22
1.26
DomesticNonfinancialStatistics • April 1993
A S S E T S A N D LIABILITIES OF L A R G E W E E K L Y REPORTING COMMERCIAL BANKS—Continued
Millions of dollars, Wednesday figures
1992
1993
Account
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
Jan. 6
Jan. 13
Jan. 20
Jan. 27
1,136,181
282,192
228,485
53,707
10,754
2,129
23,526
5,927
907
10,464
117,007
736,981
710,708
26,273
21,633
2,346
1,986
308
1,120,538
265,679
216,634
49,044
9,611
1,824
21,674
5,578
861
9,497
116,446
738,414
711,972
26,442
21,789
2,348
1,979
326
1,143,030
287,073
230,753
56,320
10,466
3,623
24,084
5,876
619
11,652
117,184
738,774
712,697
26,077
21,415
2,353
1,976
332
1,132,889
287,876
230,310
57,566
10,129
3,318
25,133
6,096
653
12,236
118,457
726,557
701,259
25,297
20,681
2,342
1,952
322
1,142,809
300,030
241,191
58,839
9,847
3,816
25,721
6,036
558
12,861
119,813
722,965
698,923
24,043
20,610
1,247
1,873
312
1,142,823
281,350
227,633
53,717
10,740
2,874
23,885
5,628
495
10,095
125,271
736,202
712,918
23,285
20,499
690
1,775
320
1,132,291
273,228
221,183
52,045
9,138
2,263
22,403
5,348
483
12,410
121,263
737,800
712,705
25,095
20,825
2,031
1,913
326
1,123,951
276,669
217,992
58,677
10,572
4,307
27,015
6,090
579
10,113
118,325
728,956
704,328
24,629
20,413
1,980
1,908
328
1,091,588
253,220
203,499
49,721
9,487
2,077
22,118
5,194
765
10,079
114,177
724,191
699,405
24,786
20,394
1,989
2,075
327
274,938
0
11,146
263,792
280,461
0
4,426
276,035
276,785
0
19,878
256,907
276,995
0
14,530
262,465
272,360
0
24,934
247,426
281,739
40
12,122
269,577
266,678
0
18,783
247,895
286,934
2,100
29,045
255,789
277,701
200
29,923
247,578
LIABILITIES
46 Deposits
47 Demand deposits
48
Individuals, partnerships, and corporations
49
Other holders
50
States and political subdivisions
51
U.S. government
52
Depository institutions in the United States
53
Banks in foreign countries
54
Foreign governments and official institutions
55
Certified and officers' checks
56 Transaction balances other than demand deposits4
57 Nontransaction balances
58
Individuals, partnerships, and corporations
59
Other holders
60
States and political subdivisions
61
U.S. government
62
Depository institutions in the United States
63
Foreign governments, official institutions, and banks
64 Liabilities for borrowed money5
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)
104,638
101,061
100,945
101,132
97,202
100,048
101,713
100,363
101,440
1,515,757
1,502,061
1,520,760
1,511,016
1,512,371
1,524,610
1,500,682
1,511,247
1,470,729
135,536
135,909
135,483
135,736
137,359
139,937
140,540
140,379
140,561
71 Total loans and leases, gross, adjusted, plus securities8 .. 1,341,407
12 Time deposits in amounts of $100,000 or more
121,573
1,007
IS Loans sold outright to affiliates
460
74 Commercial and industrial
75 Other
547
24,813
76 Foreign branch credit extended to U.S. residents
-15,407
77 Net due to related institutions abroad
1,336,358
120,149
999
457
542
24,939
-19,739
1,335,505
117,534
970
457
513
24,799
-17,005
1,327,702
115,759
962
456
506
24,614
-16,476
1,330,826
113,791
954
452
502
24,318
-17,685
1,340,891
113,972
921
454
467
24,534
-19,937
1,335,941
116,737
929
454
474
24,627
-19,467
1,334,617
115,798
926
453
473
24,640
-16,439
1,325,315
114,532
917
453
464
24,327
-10,010
69 Total liabilities
70 Residual (total assets less total liabilities)7
MEMO
1. Includes certificates of participation, issued or guaranteed by agencies of the
U.S. government, in pools of residential mortgages.
2. Includes securities purchased under agreements to resell.
3. Includes allocated transfer risk reserve.
4. Includes negotiable order of withdrawal accounts (NOWs), automatic transfer service (ATS), and telephone and preauthorized transfers of savings deposits.
5. Includes borrowings only from other than directly related institutions.
6. Includes federal funds purchased and securities sold under agreements to
repurchase.
7. This balancing item is not intended as a measure of equity capital for use in
capital-adequacy analysis.
8. Excludes loans to and federal funds transactions with commercial banks in
the United States.
9. 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.
10. Credit extended by foreign branches of domestically chartered weekly
reporting 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.
Weekly Reporting Commercial Banks
1.30
L A R G E W E E K L Y REPORTING U . S . B R A N C H E S A N D A G E N C I E S OF FOREIGN B A N K S
Liabilities 1
A23
Assets and
Millions of dollars, Wednesday figures
1993
1992
Account
1 Cash and balances due from depository
institutions
? U.S. Treasury and government agency
3 Other securities
4 Federal funds sold1
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
10
11
1?
13
14
15
16
17
18
19
All other
U.S. addressees
Loans secured by real estate
To financial institutions
Commercial banks in the United States..
Banks in foreign countries
Nonbank financial institutions
For purchasing and carrying securities
To foreign governments and official
70 All other
21 Other assets (claims on nonrelated parties) ..
22 Total assets3
73 Deposits or credit balances due to other
than directly related institutions
24 Demand deposits
75 Individuals, partnerships, and
corporations
76 Other
27 Nontransaction accounts
28 Individuals, partnerships, and
7,9 Other
30 Borrowings from other than directly
31 Federal funds purchased
32 From commercial banks in the
33
34 Other liabilities for borrowed money
35 To commercial banks in the
36
37 Other liabilities to nonrelated parties
6
38 Total liabilities
MEMO
39 Total loans (gross) and securities, adjusted ..
40 Net due to related institutions abroad
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
18,367
17,815
17,671r
17,875"
17,329"
Jan. 13
Jan. 20
Jan. 27
17,330
17,586
18,356
18,209
27,121
8,342
24,642
7,046
17,596
165,030
99,352
26,598
8,193
23,692
6,062
17,630
164,360
100,018
26,565
8,242
22,902
7,081
15,820
163,965r
99,213r
26,216
8,257
27,300
8,734
18,566
164,125r
98,995r
26,904
8,172
22,244
6,995
15,249
167,227
99,827r
26,596
8,318
25,954
8,111
17,844
167,695
100,742"
27,064
8,618
22,331
4,940
17,391
169,255
100,576"
26,759
8,583
27,446
7,860
19,586
166,171
99,406
27,159
8,322
27,398
6,392
21,007
164,084
99,256
2,697
96,516r
93,543r
2,973r
34,540
23,866r
5,892
2,158
15,815r
3,656
2,513
96,482r
93,418r
3,065r
34,632
23,738r
5,923
2,200
15,615r
4,269
2,494
97,333r
94,306r
3,027r
34,701
24,950"
6,457
2,075
16,417r
5,163
2,540
98,202"
95,203"
2,999"
34,669
24,567"
5,908
2,101
16,558"
5,122
2,449"
98,127"
95,033"
3,094"
34,249
26,343"
6,164
2,119
18,061"
5,219
2,589
96,818
93,771
3,046
33,826
25,524
6,269
2,105
17,149
4,799
2,367
96,890
93,695
3,195
33,913
24,174
5,586
1,834
16,754
4,144
2,528
96,824
93,649
3,175
33,877
25,101
5,502
1,959
17,639
4,118
2,509
97,510
94,098
3,412
33,964
24,060
5,048
1,854
17,158
3,807
376
2,315
30,840"
366
2,124
30,469"
365
2,221
31,224
375
2,221
30,712
364
2,503
30,730
354
2,261
31,075
356
2,242
30,955
360
2,223
30,177
352
2,159
30,716
312,983
315,145
316,341r
320,171'
318,388"
314,573
310,095
311,250
307,752
103,964
3,794
104,91 l r
3,561r
105,747"
4,ISO"
105,565"
3,860"
104,983
4,079
102,342
4,024
103,374
4,068
103,617
4,224
103,426
3,569
2,948
847
100,170
2,803
758r
101,350
3,096
l,054r
101,597
2,977"
883
101,705
3,252
827
100,904
3,214
810
98,318
2,976
1,092
99,306
3,189
1,036
99,393
2,792
777
99,857
70,872
29,298
70,850
30,499
71,241
30,356
71,315
30,390
71,043
29,861
69,719
28,598
71,403
27,902
71,074
28,318
70,955
28,902
92,880
46,626
94,150
46,602
90,755
46,244
91,148
44,625
92,318
49,349
92,368
48,858
88,813
45,482
90,684
50,730
83,756
45,776
16,271
30,354
46,254
15,867
30,734
47,549
18,926
27,319
44,511
12,891
31,733
46,523
14,748
34,601
42,969
15,045
33,813
43,510
12,185
33,297
43,331
14,764
35,966
39,954
12,134
33,642
37,980
9,635
36,619
30,847
9,982
37,567
30,708r
10,184
34,327
29,999"
10,427
36,096
30,987"
10,357
32,611
31,772
10,054
33,456
30,151
10,345
32,986
30,529
9,191
30,763
30,533
9,319
28,661
31,193
312,983
315,145
316,341r
320,171"
318,388"
314,573
310,095
311,250
307,752
208,700r
43,190
211,240"
44,412
211,095
46,941"
214,545
49,450"
216,164
46,254"
214,830
52,504
214,985
52,788
212,586
48,835
211,733
53,393
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.
Jan. 6
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.
A24
1.32
DomesticNonfinancialStatistics • April 1993
COMMERCIAL PAPER A N D B A N K E R S D O L L A R ACCEPTANCES O U T S T A N D I N G
Millions of dollars, end of period
Year ending December
1992
Item
1989
1988
1990
1991
1992
July
Aug.
Sept.
Oct.
Nov.
Dec.
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
458,464
525,831
561,142
530,300
547,480
547,268r
546,042r
549,969" 558,708r
561,909
547,480
159,777
183,622
215,123
214,445
227,566
226,943
231,586
233,977
231,132
231,384
227,566
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
210,930
199,835
183,195
172,639
179,751r
174,013r
179,969"
182,299"
180,177
172,639
1
2
3
4
5
Financial companies
Dealer-placed paper
Total
Bank-related (not seasonally
adjusted)
Directly placed paper4
Total
Bank-related (not seasonally
adjusted)
1,248
194,931
6 Nonfinancial companies5
43,155
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
103,756
131,279
146,184
132,660
147,275
140,574
140,443
136,023
145,277
150,348
147,275
Bankers dollar acceptances (not seasonally adjusted)6
7 Total
8
9
10
11
12
Holder
Accepting banks
Own bills
Bills bought from other banks
Federal Reserve Banks
Foreign correspondents
Others
Basis
13 Imports into United States
14 Exports from United States
15 All other
66,631
62,972
54,771
43,770
38,194
37,733
37,090
37,814
37,599
37,651
38,194
9,086
8,022
1,064
9,433
8,510
924
9,017
7,930
1,087
11,017
9,347
1,670
10,555
9,097
1,458
9,225
7,808
1,417
9,372
7,927
1,446
10,436
9,073
1,363
10,236
8,764
1,472
10,301
9,156
1,145
10,555
1,493
56,052
1,066
52,473
918
44,836
1,739
31,014
1,276
26,364
1,269
27,239
1,851
25,866
1,803
25,575
1,204
26,159
1,289
26,061
1,276
26,364
14,984
14,410
37,237
15,651
13,683
33,638
13,095
12,703
28,973
12,843
10,351
20,577
12,209
8,096
17,890
11,825
9,015
16,893
11,600
7,861
17,628
12,227
8,051
17,536
12,116
7,849
17,633
12,133
7,673
17,846
17,890
1. 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.
2. Includes all financial-company paper sold by dealers in the open market.
3. Bank-related series were discontinued in January 1989.
4. As reported by financial companies that place their paper directly with
investors.
1.33
Percent per year
Period
1990— Jan.
1
8
10.50
10.00
1991— Jan.
Feb.
May
Sept.
Nov.
Dec.
2
4
1
13
6
23
9.50
9.00
8.50
8.00
7.50
6.50
1992— July
2
6.00
Average
rate
10.01
8.46
6.25
1990
1991
1992
1990Feb.
Mar.
Apr.
May .
June
July .
Aug.
Sept.
Oct. .
Nov.
Dec.
10.11
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
10.00
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.
1,458
12,209
8,096
5. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
6. Data on bankers acceptances are gathered from approximately 100 institutions. The reporting group is revised every January.
7. In 1977 the Federal Reserve discontinued operations in bankers acceptances
for its own account.
PRIME RATE C H A R G E D BY B A N K S on Short-Term Business Loans 1
Date of change
9,097
Period
1991—Jan. ...
Feb. ..
Mar. ..
Apr. ..
May ...
June ..
July ...
Aug. ..
Sept. ..
Oct. ...
Nov. ..
Dec. ..
Average
rate
9.52
9.05
9.00
9.00
8.50
8.50
8.50
8.50
8.20
8.00
7.58
7.21
Period
1992— Jan. ...
Feb. ..
Mar. ..
Apr. ..
May ...
June ..
July ...
Aug. ..
Sept. ..
Oct. ...
Nov. ..
Dec. ..
1993— Jan. ...
Feb.
Financial Markets
1.35
A25
INTEREST RATES Money and Capital Markets
Averages, percent per year; weekly, monthly, and annual figures are averages of business day data unless otherwise noted
1993
1992
Item
1990
1991
1993, week ending
1992
Oct.
Nov.
Dec.
Jan.
Jan. 1
Jan. 8
Jan. 15
Jan. 22
Jan. 29
MONEY MARKET INSTRUMENTS
1 Federal funds1'2'3
Commercial paper3,5,6
Finance paper, directly placed3,5,7
Bankers acceptances3
11
5.69
5.45
3.52
3.25
3.10
3.00
3.09
3.00
2.92
3.00
3.02
3.00
2.86
3.00
3.03
3.00
2.98
3.00
3.10
3.00
2.94
3.00
8.15
8.06
7.95
5.89
5.87
5.85
3.71
3.75
3.80
3.22
3.33
3.33
3.25
3.66
3.67
3.71
3.67
3.70
3.21
3.25
3.35
3.56
3.51
3.57
3.34
3.35
3.44
3.20
3.25
3.36
3.16
3.21
3.32
3.14
3.18
3.29
8.00
7.87
7.53
5.73
5.71
5.60
3.62
3.65
3.63
3.14
3.24
3.23
3.20
3.59
3.56
3.68
3.58
3.52
3.25
3.32
3.29
3.56
3.51
3.39
3.34
3.40
3.36
3.25
3.32
3.30
3.21
3.30
3.26
3.18
3.27
3.23
7.93
7.80
5.70
5.67
3.62
3.67
3.19
3.19
3.51
3.51
3.44
3.47
3.14
3.23
3.31
3.39 •
3.21
3.32
3.14
3.24
3.12
3.20
3.08
3.15
8.15
8.15
8.17
5.82
5.83
5.91
3.64
3.68
3.76
3.11
3.26
3.27
3.23
3.58
3.60
3.57
3.48
3.55
3.14
3.19
3.33
3.30
3.34
3.47
3.20
3.27
3.44
3.15
3.20
3.33
3.12
3.17
3.30
3.08
3.13
3.26
8.16
5.86
3.70
3.30
3.67
3.50
3.22
3.34
3.29
3.24
3.16
3.18
7.50
7.46
7.35
5.38
5.44
5.52
3.43
3.54
3.71
2.86
3.04
3.17
3.13
3.34
3.52
3.22
3.36
3.55
3.00
3.14
3.35
3.15
3.32
3.46
3.09
3.25
3.44
3.00
3.14
3.36
2.99
3.11
3.33
2.92
3.07
3.26
7.51
7.47
7.36
5.42
5.49
5.54
3.45
3.57
3.75
2.84
2.98
3.12
3.14
3.35
3.61
3.25
3.39
3.57
3.06
3.17
3.52
3.22
3.38
n.a.
3.15
3.28
n.a.
3.07
3.19
3.52
3.03
3.13
n.a.
2.98
3.09
n.a.
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
3.89
4.77
5.30
6.19
6.63
7.01
7.67
3.30
4.08
4.64
5.60
6.15
6.59
7.53
3.68
4.58
5.14
6.04
6.49
6.87
7.61
3.71
4.67
5.21
6.08
6.46
6.77
7.44
3.50
4.39
4.93
5.83
6.26
6.60
7.34
3.62
4.59
5.13
6.03
6.42
6.70
7.39
3.60
4.52
5.06
5.95
6.39
6.67
7.38
3.50
4.43
4.98
5.90
6.34
6.68
7.43
3.47
4.37
4.91
5.82
6.23
6.59
7.31
3.41
4.24
4.78
5.66
6.08
6.46
7.23
8.74
8.16
7.52
7.26
7.43
7.30
7.17
7.24
7.24
7.27
7.15
7.03
6.96
7.29
7.27
6.56
6.99
6.92
6.09
6.48
6.44
6.10
6.51
6.41
6.05
6.46
6.36
5.91
6.27
6.22
n.a.
n.a.
6.16
5.94
6.30
6.17
5.85
6.19
6.17
5.97
6.33
6.19
n.a.
n.a.
6.16
n.a.
n.a.
6.10
5,8
Certificates of deposit, secondary
market 9
1-month
U.S. Treasury bills
Secondary market •
18
8.10
6.98
Auction average '5 U
3-month
U . S . TREASURY NOTES AND BONDS
Constant maturities12
26
27
10-year
30-year
Composite
STATE AND LOCAL NOTES AND BONDS
Moody's series13
29 Aaa
30 Baa
CORPORATE BONDS
9.77
9.23
8.55
8.41
8.51
8.35
8.24
8.31
8.29
8.30
8.22
8.14
Rating group
33 Aaa
34 Aa
35 A
36 Baa
9.32
9.56
9.82
10.36
8.77
9.05
9.30
9.80
8.14
8.46
8.62
8.98
7.99
8.32
8.49
8.84
8.10
8.40
8.58
8.96
7.98
8.24
8.37
8.81
7.91
8.11
8.26
8.67
7.90
8.18
8.32
8.75
7.92
8.19
8.31
8.74
7.96
8.16
8.33
8.73
7.90
8.09
8.24
8.65
7.84
8.02
8.15
8.55
37 A-rated, recently offered utility bonds16 . . . .
10.01
9.32
8.52
8.40
8.51
8.27
8.13
8.21
8.28
8.13
8.05
7.95
8.96
3.61
8.17
3.25
7.46
2.99
7.22
3.07
7.43
2.98
7.45
2.90
7.25
2.88
7.44
2.87
7.30
2.89
7.34
2.90
7.37
2.90
7.39
2.83
MEMO
Dividend-price ratio1
1. The daily effective federal funds rate is a weighted average of rates on
trades through New York 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. General obligations based on Thursday figures; Moody's Investors Service.
14. General obligations only, with twenty years to maturity, issued by twenty
state and local governmental units of mixed quality. Based on figures for
Thursday.
15. Daily figures from Moody's Investors Service. Based on yields to maturity
on selected long-term bonds.
16. 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.
17. 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 ordering address, see inside front cover.
A26
1.36
DomesticNonfinancialStatistics • April 1993
STOCK M A R K E T
Selected Statistics
1993
1992
Indicator
1991
1990
1992
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)
183.66
226.06
158.80
90.72
133.21
206.35
258.16
173.97
92.64
150.84
229.00
284.26
201.02
99.48
179.29
228.55
285.17
207.88
98.24
175.89
224.68
279.54
202.02
97.23
174.82
228.17
281.90
198.36
101.18
180.96
230.07
284.44
191.31
103.41
180.47
230.13
285.76
191.61
102.26
178.27
226.97
279.70
192.30
101.62
181.36
232.84
287.80
204.63
101.13
189.27
239.47
290.77
212.35
103.85
196.87
239.67
292.11
221.00
105.52
203.38
6 Standard & Poor's Corporation
(1941-43 = 10)'
335.01
376.20
415.75
414.81
408.27
415.05
417.93
418.48
412.50
422.84
435.64
435.40
7 American Stock Exchange
(Aug. 31, 1973 = 50p
338.32
360.32
391.28
392.63
385.56
384.07
385.80
382.67
371.27
387.75
392.69
402.75
156,359
13,155
179,411
12,486
202,558
14,171
182,027
13,455
195,089
11,216
194,138
10,722
174,003
11,875
191,774
11,198
204,787
11,966
208,221
14,925
222,736
16,523
266,011
17,184
4
Utility
Volume of trading (thousands of shares)
Customer financing (millions of dollars, end-of-period balances)
10 Margin credit at broker-dealers3
28,210
36,660
43,990
39,890
39,690
39,640
39,940
41,250
41,590
43,630
43,990
44,020
Free credit balances at brokers4
11 Margin accounts
12 Cash accounts
8,050
19,285
8,290
19,255
8,970
22,510
7,700
18,695
7,780
19,610
7,920
18,775
8,060
18,305
8,060
19,650
8,355
18,700
8,500
19,310
8,970
22,510
9,080
21,525
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
70
50
70
80
60
80
65
50
65
55
50
55
65
50
65
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 the 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
Jan. 3, 1974
50
50
50
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 of the option plus 20
percent of the market value of the stock underlying the option (or 15 percent in the
case of stock-index options).
Financial Markets
1.37
S E L E C T E D F I N A N C I A L INSTITUTIONS
All
Selected Assets and Liabilities
Millions of dollars, end of period
1992
Account
1990
1991
Feb.
Mar.
May
Apr.
June"
July
Aug.
Sept."
Oct."
Nov.
SAIF-insured institutions
1 Assets
1,084,821
919,979
906,142
883,407
872,026
870,334
861,517
856,390"
856,165"
847,235
846,730
840,605
633,385
551,322
541,734
529,158
524,954
521,911
516,654
512,264
512,077
508,815
502,863
4%,974
155,228
129,461
127,766
125,272
124,763
124,225
123,282
122,385"
120,438"
119,715
120,715
120,292
16,897
24,125
48,753
12,307
17,139
41,775
11,608
16,050
39,908
10,979
15,400
38,717
10,959
15,075
37,999
11,120
14,607
37,868
11,282
14,020
37,403
11,044
13,929
37,230
11,164
13,525
37,123"
11,073
13,419
36,732
11,207
13,630
35,938
10,509
13,180
36,019
2 Mortgages
3 Mortgage-backed
securities
4 Contra-assets to
mortgage assets1 .
5 Commercial loans
6 Consumer loans
7 Contra-assets to nonmortgage loans 1 ..
8 Cash and investment
securities
9 Other2
1,939
1,239
1,115
-1,008
980
146,644
95,522
120,077
73,751
121,969
71,637
119,543
67,387
116,462
64,711
949
120,763
63,030"
944
119,539
62,844
932"
982
931
845
124,140
60,958"
120,684
59,925
126,719
59,002
127,893
57,600
910
120,220
62,317"
10 Liabilities and net worth . 1,084,821
919,979
906,142
883,407
872,026
870,334
861,517
856,390"
856,165"
847,235
846,730
840,605
835,496
197,353
100,391
96,962
21,332
30,640
731,937
121,923
65,842
56,081
17,560
48,559
717,026
118,554
63,138
55,416
21,329
49,233
703,811
110,031
62,628
47,403
18,295
51,271
689,777
111,262
62,268
48,994
18,883
52,103
688,199
110,126
61,439
48,687
19,626
52,383
682,535
108,943
62,760
46,183
17,740
52,299
676,141
109,036
62,359
46,677
18,570
52,642"
672,354
110,109
62,225
47,884
20,523
53,178"
667,027
110,022
64,105
45,917
18,017
52,169
660,906
114,123
63,065
51,058
19,853
51,846
654,047
114,354
64,742
49,612
20,406
51,798
11
12
13
14
15
16
Deposits
Borrowed money
FHLBB
Other
Other
Net worth
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 assets, 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. Contra-assets to nonmortgage loans include loans in process, unearned
discounts and deferred loan fees, and specific reserves and valuation allowances.
2. Includes holding of stock in Federal Home Loan Bank and finance leases
plus interest.
1.38
NOTE. Components do not sum to totals because of rounding. Data for credit
unions and life insurance companies have been deleted from this table. Starting in
the December 1991 issue, data for life insurance companies are shown in a special
table of quarterly data.
SOURCE. Office of Thrift Supevision (OTS), insured by the Savings Association
Insurance Fund (SAIF) and regulated by the OTS.
F E D E R A L FISCAL A N D F I N A N C I N G OPERATIONS
Millions of dollars
Fiscal year
Calendar year
1992
Type of account or operation
1990
U.S. budget1
1 Receipts, total
7 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 1
1991
1993
1992"
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
1,091,200"
788,774"
302,426
1,381,404"
1,129,044"
252,316
-290,160
-340,270
50,110
78,216"
55,432"
22,784
102,918"
79,126"
23,792
-24,702
-23,694
-1,008
118,338"
92,807"
25,531
112,918"
86,703"
26,235
5,400
6,104
-704
76,832"
55,056"
21,776
125,620"
103,780"
21,841
-48,788"
-48,724"
-65
74,633"
51,219"
23,414
107,363"
83,444"
23,919
-32,730
-32,225
-505
113,756"
89,660"
24,096
152,701"
116,640"
36,061
-38,945
-26,980
-11,965
112,809
90,220
22,589
82,996
85,022
-2,025
29,812
24,614
24,614
-1,552
39,420
10,920"
61,969
-7,346
-21,893
21,078
-3,175
21,042
-8,355
-16,436
-5,021
26,715
6,985
19,729
29,890
7,492
22,399
46,326
9,572
36,754
1,031,308
749,654
281,654
1,251,766
1,026,701
225,064
-220,458
-277,047
56,590
1,054,265
760,382
293,883
1,323,757
1,082,072
241,685
-269,492
-321,690
52,198
220,101
818
-461
276,802
-1,329
-5,981
310,918
-17,305
-3,453
38,841
1,523
-15,662
9,853
-22,807
7,554
40,155
7,638
32,517
41,484
7,928
33,556
58,789
24,586
34,203
35,982
6,232
29,749
58,789
24,586
34,203
MEMO
13 Treasury operating balance (level, end of
period)
14 Federal Reserve Banks
15 Tax and loan accounts
1. 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) off budget. The Postal Service is included as an off-budget
item in the Monthly Treasury Statement beginning in 1990.
2. Includes special drawing rights (SDRs); reserve position on the U.S. quota
in the International Monetary Fund (IMF); loans to the IMF; other cash and
19,369
4,413
14,956
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.
A28
1.39
Domestic Financial Statistics • April 1993
U . S . B U D G E T RECEIPTS A N D O U T L A Y S 1
Millions of dollars
Fiscal year
Calendar year
Source or type
1991
1991
1992
1992
1993
1992
HI
H2
Hl r
H2
540,504
519,293r
560,647
540,849r
r
246,%l
215,591
10
39,371r
8,011
Nov.
Dec.
Jan.
74,633r
113,756r
112,809
r
33,097
33,085
0
l,772 r
1,760
51,171r
48,189
73,704
36,255
3,665
683
38,452
1,003
23,721
772
3,%9
758
29,416
RECEIPTS
1
7
3
4
fi
7
8
9
10
11
1?
13
1,054,265
All sources
Individual income taxes, net
Withheld
Presidential Election Campaign Fund
Nonwithheld
Refunds
Corporation income taxes
Gross receipts
Refunds
Social insurance taxes and contributions,
net
Employment taxes and
contributions
Self-employment taxes and
contributions
Unemployment insurance
Other net receipts
14 Excise taxes
IS Customs deposits
16 Estate and gift taxes
17 Miscellaneous receipts
1,091,200'
467,827
404,152
32
142,693
79,050
476,465
408,352
30
149,342
81,259
232,389
193,440
31
109,405
70,487
234,949
210,552
33,2%
8,900
237,049
198,868
19
112,032
73,869
113,599
15,513
117,951
17,680
58,903
7,904
54,016
8,649
61,682
9,402
58,022
7,219
2,312
833
1
r
0r
0
396,011
413,689
214,303
186,839
224,569
192,599
32,900
31,918
370,526
385,491
199,727
175,802
208,110
180,758
30,264
31,252
28,209
25,457
20,922
4,563
24,421
23,410
4,788
22,150
12,2%
2,279
3,306
8,721r
2,317
20,433
14,070
2,389
3,988
9,397
2,445
0
2,270
366
0
245
421
-3,032
844
363
42,430
15,921
11,138
22,852
45,570
17,359
11,143
27,195
20,703
7,488
5,631
8,991
24,429r
8,694r
5,507r
13,508
22,388
8,145
5,701
10,992
23,456
9,497
5,733
11,815
4,082
1,503
954
618
4,014
1,539
959
1,206
3,307
1,310
888
971
l,381,404r
632,153
694,474
704,590
723,760r
107,363r
152,701r
82,996
272,514
16,167
15,946
2,511
18,708
14,864
298,361
16,106
16,409
4,509
20,017
14,997
122,089
7,592
7,4%
1,235
8,324
7,684
147,669
7,691
8,472
1,698
11,130
7,418
147,015
8,544
7,952
1,442
8,617
7,527
155,501
9,911
8,521
3,109
11,617
8,881
20,819
4,018
1,612
529
1,801
2,139
30,010
1,170
1,571
525
1,540
3,428
19,683
1,161
1,395
15
1,372
1,206
75,639
31,531
7,432
9,514
33,337
7,411
17,992
14,748
3,552
36,534
17,093
3,783
15,565
15,678
3,902
-7,843
18,477
4,540
-2,417
2,981
728
-1,874
2,983
774
-1,832
2,363
650
OUTLAYS
18
All types
19
70
21
7?
73
24
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
75 Commerce and housing credit
76 Transportation
27 Community and regional development
28 Education, training, employment, and
social services
1,323,757
41,479
45,248
21,234
21,114
23,224
20,922
3,882
4,393
4,360
?9 Health
30 Social security and medicare
31 Income security
71,183
373,495
171,618
89,570
406,585r
198,073
35,608
190,247
88,778
41,459
193,098
87,805
43,702
205,516
105,928
47,223
232,109
99,272
7,420
33,346
14,188
8,191
59,837
18,689
7,828
10,376
16,225
3? Veterans benefits and services
33 Administration of justice
34
35
36 Undistributed offsetting receipts
31,344
12,295
11,358
195,012
-39,356
34,133
14,450
12,939
199,429
-39,280
14,326
6,187
5,212
98,556
-18,702
17,425
6,574
6,794
99,149
-20,436
15,597
7,432
5,465
100,188
-18,228
18,561
7,283
8,138
98,549
-20,914
1,743
1,277
106
16,148
-2,954
4,148
1,236
2,306
16,559
-2,783
1,641
1,222
133
17,858
-2,660
1. Functional details do not sum to total outlays for calendar year data because
revisions to monthly totals have not been distributed among functions. Fiscal 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. Includes interest received by trust funds.
7. Consists of rents and royalties for the outer continental shelf and 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 1993.
Federal Finance
1.40
A29
F E D E R A L D E B T SUBJECT TO STATUTORY LIMITATION
Billions of dollars, end of month
1992
1991
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
1 Federal debt outstanding .
3,397
3,492
3,563
3,683
3,820
3,897
4,001
4,083
2 Public debt securities.
3 Held by public
4 Held by agencies ..
3,365
2,537
828
3,465
2,598
867
3,538
2,643
895
3,665
2,746
920
3,802
2,833
969
3,881
2,918
964
3,985
2,977
1,008
4,065
3,048
1,016
33
32
27
26
25
25
18
18
19
19
16
16
16
16
18
18
3,282
3,377
3,450
3,569
3,707
3,784
3,891
3,973
3,281
3,377
3,450
3,569
3,706
3,783
3,890
3,972
4,085
4,145
4,145
4,145
4,145
4,145
4,145
4,145
4,145
4,145
5 Agency securities ..
6 Held by public...
Held by agencies
7
0
8 Debt subject to statutory limit.
9 Public debt securities.
10 Other debt1
0
MEMO
11 Statutory debt limit
0
0
1. Consists of guaranteed debt of Treasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District
of Columbia stadium bonds.
1.41
GROSS P U B L I C D E B T OF U.S. T R E A S U R Y
0
0
0
0
Dec. 31
Mar. 31
Dec. 31
0
0
0
0
0
0
0
0
4,177
n.a.
n.a.
n.a.
n.a.
n.a.
0
SOURCES. U.S. Treasury Department, Monthly Statement of the Public Debt of
the United States and Treasury Bulletin.
Types and Ownership
Billions of dollars, end of period
1992
Type and holder
1 Total gross public debt
By type
2 Interest-bearing
3 Marketable
4
Bills
5
Notes
6
Bonds
7 Nonmarketable1
8
State and local government series
9
Foreign issues
10
Government
11
Public
12
Savings bonds and notes .
13
Government account series
14 Non-interest-bearing
By holder 4
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 investors6
1989
1991
1992
Q1
Q2
Q3
Q4
2,953.0
3,364.8
3,801.7
4,177.0
3,881.3
3,984.7
4,064.6
4,177.0
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
4,173.9
2,754.1
657.7
1,608.9
472.5
1,419.8
153.5
37.4
37.4
.0
155.0
1,043.5
3.1
3,878.5
2,552.3
615.8
1,477.7
443.8
1,326.2
157.8
42.0
42.0
.0
139.9
956.1
2.8
3,981.8
2,605.1
618.2
1,517.6
454.3
1,376.7
161.9
38.7
38.7
.0
143.2
1,002.5
2.9
4,061.8
2,677.5
634.3
1,566.4
461.8
1,384.3
157.6
37.0
37.0
.0
148.3
1,011.0
2.8
4,173.9
2,754.1
657.7
1,608.9
472.5
1,419.8
153.5
37.4
37.4
.0
155.0
1,043.5
3.1
707.8
228.4
2,015.8
164.9
14.9
125.1
93.4
487.5
828.3
259.8
2,288.3
171.5
45.4
142.0
108.9
490.4
968.7
281.8
2,563.2
233.4
80.0
168.7
150.8
520.3
963.7
267.6
2,664.0
256.6
84.0
176.9
166.0
521.8
1,007.9
276.9
2,712.4
267.2
79.4
181.3
175.0
528.5
1,016.3
296.4
2,765.5
270.0
79.4
185.0
180.8
530.0
117.7
98.7
392.9
520.7
126.2
107.6
421.7
674.5
138.1
125.8
455.0
691.1
142.0
126.1
471.2
719.5
145.4
129.7
492.9
713.1
150.3
130.9
499.0
740.0
1. Includes (not shown separately) securities issued to the Rural Electrification
Administration, depository bonds, retirement plan bonds, and individual retirement bonds.
2. Nonmarketable series denominated in dollars, and series denominated in
foreign currency held by foreigners.
3. Held almost entirely by U.S. Treasury and other federal agencies and trust
funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust
funds are actual holdings; data for other groups are Treasury estimates.
1990
n.a.
n.a.
5. Consists of investments of foreign balances and international accounts in the
United States.
6. 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. U.S. Treasury Department, data by type of security, Monthly
Statement of the Public Debt of the United States; data by holder, the Treasury
Bulletin.
A30
1.42
DomesticNonfinancialStatistics • April 1993
U.S. GOVERNMENT SECURITIES DEALERS
Transactions 1
Millions of dollars, daily averages
1992
1992, week ending
1993, week ending
nem
Oct.
Nov.
Dec.
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
Jan. 6
Jan. 13
Jan. 20
Jan. 27
IMMEDIATE TRANSACTIONS2
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, by maturity
6
Less than 3,5 years
7
3.5 to 7.5 years
7.5 years or more
8
Mortgage-backed
Pass-throughs
9
All others
10
11
12
13
14
15
16
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
46,769"
43,954"
42,358"
39,909"
48,336
44,201
37,314
38,654
48,188
52,807
50,836
42,636
49,540"
45,744r
20,425
14,672
52,682"
39,524"
18,1%"
13,855"
36,143"
28,723"
13,054"
11,093"
41,655"
29,538"
15,279"
10,000"
43,175
35,628"
18,501"
14,807"
36,669
30,726
12,126
10,468
39,085
29,754
12,070
10,792
21,267
15,626
7,503
8,143
32,120
29,778
13,123
11,132
45,550
49,463
19,853
15,387
51,024
45,958
20,257
19,152
58,100
56,318
21,395
18,220
4,824
718
1,040
5,451
471
751
5,635
552
827
4,960
286
671
6,356
901
775
5,431
494
774
5,674
502
827
5,229
345
932
5,824
700
1,252
6,884
888
1,079
5,018
792
1,225
6,526
873
1,230
16,051r
3,069"
17,254
3,551"
14,208
3,122
13,217
6,457
19,565
2,753
14,763
2,119
13,252
3,438
8,435
3,007
14,506
2,201
26,941
3,150
22,744
4,680
16,675
4,211
115,221"
106,377"
80,472"
86,834"
100,047"
81,542
78,631
54,359
78,175
115,030
115,525
122,359
1,697
8,254
1,191
9,765"
1,276
7,917
1,271
9,023
1,527
10,366
1,366
7,995
1,201
7,679
805
4,532
1,834
7,809
1,840
13,082
1,524
12,034
1,869
9,111
61,929"
61,832"
50,898"
49,547"
60,400"
52,648
50,384
36,833
56,166
68,028
71,701
74,310
4,885
10,866"
5,483
11,040"
5,738
9,413
4,645
10,651
6,505
11,952
5,333
8,887
5,802
9,011
5,700
6,910
5,942
8,898
7,011
17,009
5,511
15,390
6,760
11,775
FUTURES 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, by maturity
22
Less than 3.5 years
3.5 to 7.5 years
23
24
7.5 years or more
Mortgage-backed
Pass-tlyoughs
25
Others3
26
3,689
3,242"
2,464"
2,462"
4,923
2,421
1,004
1,087
3,189
2,856
2,345
1,860
2,253
1,309
3,050
10,612
2,221"
1,969
3,548
8,782
1,637"
1,179"
2,336"
6,427"
1,549"
2,490
3,719
7,315
1,960
1,484"
3,156"
8,642"
1,548
1,150
2,262
6,455
1,840
995
2,277
5,984
1,219
480
1,028
3,928
1,290
903
1,369
5,653
2,036
1,475
3,060
9,391
2,600
1,758
2,745
11,224
2,540
1,614
3,059
9,673
67
66
20
161
117
16
108
37
16
198
4
17
20
5
12
15
160
64
109
138
192
28
91
62
17,052"
843
15,581
1,152
9,145
1,070
3,811
365
15,297
562
18,847
638
17,297
1,767
15,700
2,181
2,640
717
309
1,191
1,192
214
313
726
945
313
363
922
478
72
227
253
1,058
1,194
672
876
1,735
732
676
846
1,628
836
441
1,431
1,817
545
5%
1,890
523
328
279
173
617
472
577
644
18,011"
1,613"
15,801
1,132
97
48
18
11,895"
829
58
235
23
11,124
444
25
38
31
86
n.a
7
OPTIONS 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
1,317
837
742
1,623
299
1,663"
824
817
1,607
1,401"
378
341
820
1,981"
305
493
975
344
338
243
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 are based on the number of trading
days in the period. Immediate, forward, and futures transactions are reported at
principal value, which does not include accrued interest; options 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 agency
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 business
days. Forward contracts for mortgage-backed agency 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, "n.a." indicates that data are not published
because of insufficient activity.
Data for several types of options transactions—U.S. Treasury securities, bills;
Federal agency securities, debt; and mortgage-backed securities, other than
pass-throughs—are no longer available because activity is insufficient.
Federal Finance
1.43
U.S. GOVERNMENT SECURITIES DEALERS
A31
Positions and Financing 1
Millions of dollars
1992, week ending
1992
1993, week ending
Item
Oct.
Nov.
Dec.
Dec. 2
Dec. 9
Dec. 16
Dec. 23
Dec. 30
Jan. 6
Jan. 13
Jan. 20
Positions2
NET IMMEDIATE POSITIONS3
1
2
3
4
5
6
7
8
9
10
11
12
13
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, by maturity
Less than 3.5 years
3.5 to 7.5 years
7.5 years or more
Mortgage-backed
Pass-throughs
All others
Other money market instruments
Certificates of deposit
Commercial paper
Bankers acceptances
11,475
17,896
15,994
29,725
21,574
19,434
14,136
5,897
9,069
12,746
7,028
804
-13,685
-13,207
6,617
1,755
-12,280
-9,567
5,028r
25
-7,221
-10,158
7,071
3,131
-11,515
-9,643
5,295
2,369
-8,953
-10,755
7,865
-3,290
-8,366
-9,477
6,647
2,760
-4,713
-9,475
6,870
-2,284
-5,630
-10,760
7,390
-2,385
-7,193
-12,355
7,216
-4,343
-8,986
-14,007
5,863
-9,699
-8,902
-14,080
8,024
6,724
2,955
4,190
6,384
3,119"^
3,418
4,299
3,282r
3,331
4,854
3,434
3,186
4,271
3,338
2,891
4,339
3,270
3,561
3,086
3,166
3,682
4,756
2,924
3,681
3,214
2,779
3,809
6,195
2,542
3,707
32,278
26,555r
27,626
25,617r
24,575
24,932
15,923
25,614
25,614
24,948
31,688
23,931
26,285
24,951
17,272
25,783
23,951
24,367
39,588
24,215
39,619
25,127
3,501
6,374
790
3,006
6,930
864
2,743r
7,368r
758
2,886
7,603
737
2,335
7,745
633
2,510
8,120
745
2,865
6,963
737
3,249
6,459
921
2,563
8,198
766
2,372
5,310
505
2,978
6,836
638
-2,336
2,797
-1,820
2,825
-3,416
-2,250
-1,839
-1,060
-2,120
-4,844
-5,943
731
2,286
2,882
-4,237
2,105
1,206
2,614
-5,164
612
609
2,138
-7,258
1,455
113
2,908
-7,107
213
-475
3,005
-8,435
676
164
1,207
-7,225
805
653
679
-7,320
509
1,953
3,217
-6,180
630
2,593
3,700
-6,670
1,998
3,153
4,124
-4,733
1,109
2,394
2,503
-7,642
134
-21
-1
1
91
-6
-123
-115
-16
52
184
22
-25
-42
48
-48
-150
-72
-107
-186
2
-378
-177
-51
-18
-42
-42
31
-55
-85
109
113
-14,399
5,757
-172,555
-7,047
1,911
-125,734
5,258
-291
-103,656
-3,089
301
-98,120
-8,007
270
-61,896
-2,167
1,059
-60,445
6,223
37
-59,719
-909
257
-60,181
-14,631
1,025
-66,521
-16,701
1,964
-65,954
6,325
3,180*
3,173
FUTURES AND FORWARD POSITIONS5
By type of deliverable security
U.S. Treasury securities
14 Bills
Coupon securities, by maturity
15 Less than 3.5 years
16 3.5 to 7.5 years
17 7.5 to 15 years
18 15 years or more
Federal agency securities
Debt, by maturity
19
Less than 3.5 years
20
3.5 to 7.5 years
21
7.5 years or more
Mortgage-backed
Pass-throughs
22
23
All others
24 Certificates of deposit
-1,280
366
-71,895r
-1
Financing6
Reverse repurchase agreements
25 Overnight and continuing
26
214,066
341,487
212,187r
335,351r
208,771r
331,994r
217,381r
315,985r
212,837
341,254
210,357
332,175
196,211
343,399
209,641
320,130
233,811
301,147
226,031
346,177
232,592
340,163
Repurchase agreements
27 Overnight and continuing
28 Term
383,324
317,708
362,381rr
329,318
358,179*r
325,323
380,700rr
294,098
367,605
330,268
384,686
314,312
331,356
364,181
339,421
307,859
380,668
280,463
373,457
321,782
401,407
323,946
Securities borrowed
29 Overnight and continuing
30 Term
101,102
44,031
104,281r
44,260r
99,940r
46,934r
101,330*
43,250*
102,144
45,754
101,411
47,141
103,225
47,816
92,882
47,689
97,859
49,658
98,389
52,757
101,843
51,220
Securities loaned
31 Overnight and continuing
32
4,603r
422r
4,158r
314r
4,274r
603r
3,897r
215r
3,882
223
4,419
224
4,895
446
4,087
1,687
3,721
211
3,418
200
4,725
359
Collateralized loans
33 Overnight and continuing
17,160
15,142r
16,800*
13,348r
17,483
16,128
18,419
15,998
17,896
16,345
17,015
MEMO: Matched book
Reverse repurchase agreements
34 Overnight and continuing
35
146,398
295,545
153,453r
287,013r
157,388r
289,381r
159,110*
271,004*
160,780
298,724
159,562
290,223
151,038
298,406
155,374
278,344
173,522
268,933
163,772
305,960
167,627
297,287
Repurchase agreements
36 Overnight and continuing
37
196,777
240,478
188,840*
244,397r
192,187r
243,025r
202,575*
221,247*
194,390
248,227
205,239
233,949
173,178
268,752
190,112
231,648
212,201
213,245
217,569
248,413
227,036
246,276
7
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.
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 that settle
on the issue date of offering. Net immediate positions of mortgage-backed agency
securities include securities purchased or sold that have been delivered or are
scheduled to be delivered in thirty days or less.
4. Includes such securities as collateralized mortgage obligations (CMOs), real
estate mortgage investment conduits (REMICs), interest-only securities (IOs),
and principal-only securities (POs).
5. Futures positions reflect standardized agreements arranged on an exchange.
Forward positions reflect agreements made in the over-the-counter market that
FRASER
specify delayed delivery. All futures positions are included regardless of time to
Digitized for
delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days.
Forward contracts for mortgage-backed agency 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 different types of collateralization.
NOTE. Data for futures and forward commercial paper and bankers acceptances and
for termfinancingof collateralized loans are no longer available because of insufficient
activity.
A32
1.44
DomesticNonfinancialStatistics • April 1993
FEDERAL A N D FEDERALLY SPONSORED CREDIT AGENCIES
Debt Outstanding
Millions of dollars, end of period
1992
Agency
1 Federal and federally sponsored agencies
2 Federal agencies
3 Defense Department1
4 Export-Import Bank '
5 Federal Housing Administration
6 Government National Mortgage Association certificates of
participation
7 Postal Service6
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
15 Student Loan Marketing Association9
16 Financing Corporation
17 Farm Credit Financial Assistance Corporation
18 Resolution Funding Corporation
1988
1989
1990
1991
July
Aug.
Sept.
Oct.
Nov.
381,498
411,805
434,668
442,772
457,369
464,773
475,606
479,978
481,050
35,668
8
11,033
150
35,664
7
10,985
328
42,159
7
11,376
393
41,035
7
9,809
397
39,773
7
8,156
194
40,034
7
8,156
229
41,319
7
7,698
301
41,470
7
7,698
309
42,081
7
7,698
344
0
6,142
18,335
0
0
6,445
17,899
0
0
6,948
23,435
0
0
8,421
22,401
0
0
10,123
21,293
0
0
10,123
21,519
0
0
10,123
23,190
0
0
10,123
23,333
0
0
10,660
23,372
0
345,832
135,836
22,797
105,459
53,127
22,073
5,850
690
0
375,428
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
401,737
107,543
30,262
133,937
52,199
38,319
8,170
1,261
29,9%
417,5%
107,343
33,959
147,377
49,241
39,765
8,170
1,261
29,9%
424,739
108,564
34,295
150,280
52,137
39,552
8,170
1,261
29,9%
434,287
110,830
36,750
155,232
52,734
38,830
8,170
1,261
29,9%
438,508
112,436
34,108
159,764
52,510
39,766
8,170
1,261
29,9%
438,%9
114,364
30,914
161,308
52,728
39,737
8,170
1,261
29,9%
142,850
134,873
179,083
185,576
177,700
174,003
164,422
159,899
156,579
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
9,803
8,201
4,820
10,725
0
8,150
9,903
4,820
8,475
0
8,150
9,903
4,820
7,275
0
7,692
9,903
4,820
7,175
0
7,692
9,903
4,790
7,175
0
7,692
10,440
4,790
6,975
0
58,496
19,246
26,324
53,311
19,265
23,724
52,324
18,890
70,896
48,534
18,562
84,931
43,209
18,227
84,916
43,009
18,238
82,608
42,979
18,143
73,710
42,979
18,172
69,188
42,979
18,172
65,531
MEMO
19 Federal Financing Bank debt13
20
21
22
23
24
Lending to federal and federally sponsored agencies
Export-Import Bank
Postal Service6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association
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 since 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 year 1969 by the Government
National Mortgage Association acting as trustee for the Farmers Home Administration, the Department of Health, Education, and Welfare, the Department of
Housing and Urban Development, the 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 on line 17.
9. Before late 1982, the Association obtained financing through the Federal
Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is
shown on line 22.
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. Because 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
are loans guaranteed by numerous agencies, with the amounts guaranteed by any
one agency generally being small. The Farmers Home Administration entry
consists exclusively of agency assets, while the Rural Electrification Administration entry consists of both agency assets and guaranteed loans.
Securities Market and Corporate Finance
1.45
N E W SECURITY I S S U E S
A33
Tax-Exempt State and Local Governments
Millions of dollars
1992
Type of issue or issuer,
or use
1990
1 All issues, new and refunding1
1993
1992
1991
120,339 154,402 215,191
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
24,084
17,386
19,774
18,698
21,092
14,133
19,577
17,580
By type of issue
2 General obligation
3 Revenue
39,610
81,295
55,100
99,302
78,611
136,580
8,806
15,278
7,136
10,250
7,005
12,769
7,461
11,237
7,733
13,359
5,203
8,930
6,024
13,553
4,650
12,930
By type of issuer
4 State
5 Special district or statutory authority
6 Municipality, county, or township
15,149
72,661
32,510
24,939
80,614
48,849
25,295
127,618
73,178
2,063
16,477
5,544
2,836
10,040
4,510
2,933
11,203
n.a.
1,710
11,054
5,934
2,742
13,113
5,237
1,688
8,197
4,248
2,339
11,159
6,079
1,339
12,556
3,685
103,235 116,953 120,272
14,096
7,565
11,993
10,496
13,760
8,028
8,010
4,878
22,071
17,334
20,058
n.a.
n.a.
n.a.
2,132
2,618
1,851
4,266
724
2,505
1,747
571
629
887
91
3,640
1,737
2,130
2,604
767
503
4,252
1,237
1,977
2,265
1,869
1,176
1,972
2,083
1,364
3,340
2,365
367
4,241
1,800
531
960
1,070
581
3,086
1,658
831
1,258
1,121
339
2,803
1,005
848
891
540
178
1,416
7 Issues for new capital
8
9
10
11
12
13
By use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
17,042
11,650
11,739
23,099
6,117
34,607
21,121
13,395
21,039
25,648
8,376
30,275
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts.
1.46
N E W SECURITY I S S U E S
SOURCES. Securities Data Company beginning January 1993. Investment Dealer's Digest for earlier data.
U . S . Corporations
Millions of dollars
1992
Type of issue, offering,
or issuer
1989
1990
1991
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
377,855
340,049
465,483
29,064
44,977
48,136
46,235
37,091
42,849
39,123
35,679
2 Bonds
319,985
299,884
390,018
23,726
38,061
39,113
39,758
31,815
37,539
32,157
31,180
By type of offering
3 Public, domestic
4 Private placement, domestic
5 Sold abroad
179,714
117,420
22,851
188,848
86,982
23,054
287,125
74,930
27,962
22,352
n.a.
1,373
35,089
n.a.
2,972
36,085
n.a.
3,027
37,833
n.a.
1,924
28,561
n.a.
3,254
36,185
n.a.
1,355
30,249
n.a.
1,909
29,000
n.a.
2,409
74,736
50,268
10,221
18,611
9,276
156,873
51,779
40,733
12,776
17,621
6,687
170,288
86,628
36,666
13,598
23,945
9,431
219,750
4,170
2,381
140
3,548
1,205
12,282
6,046
2,492
621
3,051
1,590
24,261
7,338
1,665
899
4,266
1,028
23,916
5,509
3,488
766
6,902
2,081
21,011
4,720
2,159
393
4,509
1,053
18,982
5,974
2,374
677
5,230
1,191
22,093
7,975
2,813
290
3,700
427
16,953
3,467
2,393
0
1,289
374
23,656
12 Stocks
57,870
40,165
75,467
5,338
6,916
9,023
6,477
5,276
5,310
6,966
4,499
By type of offering
13 Public preferred
14 Common
15 Private placement3
6,194
26,030
25,647
n.a.
n.a.
16,736
17,408
47,860
10,109
334
5,004
n.a.
1,552
5,364
n.a.
2,933
6,090
n.a.
2,413
4,064
n.a.
1,148
4,129
n.a.
1,233
4,077
n.a.
2,901
4,065
n.a.
1,540
2,958
n.a.
9,308
7,446
1,929
3,090
1,904
34,028
5,649
10,171
369
416
3,822
19,738
24,154
19,418
2,439
3,474
475
25,507
1,586
1,099
122
577
211
1,743
2,499
2,080
176
826
12
1,324
3,000
1,079
1,064
610
n.a.
3,271
857
1,599
n.a.
564
n.a.
3,457
713
1,315
n.a.
921
n.a.
2,327
307
602
59
595
1,051
2,695
1,779
940
53
359
99
3,735
288
1,366
304
150
22
2,369
1 All issues'
2
By industry group
6 Manufacturing
7 Commercial and miscellaneous
8 Transportation
9 Public utility
10 Communication
11 Real estate and financial
2
16
17
18
19
70
21
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.
A34
1.47
DomesticNonfinancialStatistics • April 1993
OPEN-END INVESTMENT COMPANIES
N e t Sales and A s s e t s
Millions of dollars
1992
Item1
1991
1992
May
June
July
Aug.
Sept.
Oct.
Nov. r
Dec.
1 Sales of own shares2
463,645
647,055
48,127
51,457
54,915
50,627
50,039
52,214
52,019
70,618
2 Redemptions of own shares
3 Net sales
342,547
121,098
447,140
199,915
31,409
16,718
37,457
14,000
34,384
20,703
35,223
15,404
37,862
12,177
37,134
15,080
34,126
17,893
51,993
18,625
4 Assets4
808,582 1,056,310
897,211
911,218
951,806
957,145
978,507
983,151
5 Cash5
6 Other
60,292
748,290
67,270
829,941
69,508
841,710
72,732
879,074
77,245
879,900
76,498
902,009
75,808
907,343
73,999
982,311
1. Data on sales and redemptions exclude money market mutual funds but
include limited-maturity municipal bond funds. Data on assets exclude both
money market mutual funds and limited-maturity municipal bond funds.
2. Includes reinvestment of dividends. Excludes reinvestment of capital gains
distributions.
3. Excludes sales and 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
1,019,618 1,056,310
80,247
939,371
73,999
982,311
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.
DISTRIBUTION
Billions of dollars; quarterly data at seasonally adjusted annual rates
1991
Account
1990
1991
1992
1992
Ql
Q2
Q3
Q4
Ql
Q2
Q3
04
1 Profits with inventory valuation and
capital consumption adjustment
2 Profits before taxes
3 Profits tax liability
4 Profits after taxes
5 Dividends
6 Undistributed profits
361.7
355.4
136.7
218.7
149.3
69.4
346.3
334.7
124.0
210.7
146.5
64.2
n.a.
n.a.
n.a.
n.a.
149.4
n.a.
349.6
337.6
121.3
216.3
150.6
65.7
347.3
332.3
122.9
209.4
146.2
63.2
341.2
336.7
127.0
209.6
145.1
64.5
347.1
332.3
125.0
207.4
143.9
63.4
384.0
366.1
136.4
229.7
143.6
86.2
388.4
376.8
144.1
232.7
146.6
86.1
374.1
354.1
131.8
222.2
151.1
71.1
n.a.
n.a.
n.a.
n.a.
156.2
n.a.
7 Inventory valuation
8 Capital consumption adjustment
-14.2
20.5
3.1
8.4
-8.3
29.3
6.7
5.3
9.9
5.1
-4.8
9.3
.7
14.1
-5.4
23.3
-15.5
27.0
-9.7
29.7
-2.7
37.3
SOURCE. U.S. Department of Commerce, Survey of Current Business.
1.50
N O N F A R M B U S I N E S S E X P E N D I T U R E S o n N e w Plant and E q u i p m e n t
Billions of dollars; quarterly data at seasonally adjusted annual rates
1991
Industry
1991
1992
19931
1992
19931
Q2
Q3
Q4
Ql
Q2
Q3
Q41
Ql 1
1 Total nonfarm business
528.39
547.39
576.55
525.02
526.59
529.87
535.72
540.91
547.53
565.40
576.07
Manufacturing
2 Durable goods industries
3 Nondurable goods industries
77.64
105.17
74.07
99.41
76.08
106.49
79.31
107.20
74.94
102.55
76.40
102.66
74.19
99.79
74.26
97.52
71.84
100.39
75.98
99.95
77.30
106.63
10.02
9.25
9.97
10.08
10.09
9.99
8.87
9.18
9.09
9.87
10.97
5.95
10.17
6.54
6.91
9.69
7.06
7.43
8.63
7.69
6.25
9.95
6.67
6.32
9.61
6.63
5.44
10.41
6.45
6.65
8.86
6.37
6.50
9.75
7.27
6.87
10.13
7.69
7.64
10.00
6.90
6.71
8.80
7.96
43.76
22.82
246.32
48.10
24.09
268.81
54.23
25.59
280.43
43.09
22.00
240.46
43.27
23.25
249.94
44.75
22.67
251.11
46.06
22.75
262.17
48.45
24.19
263.80
47.73
23.92
269.86
50.15
25.51
279.42
52.96
24.74
280.00
Nonmanufacturing
4 Mining
Transportation
5 Railroad
6 Air
7 Other
Public utilities
8 Electric
9 Gas and other
10 Commercial and other2
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. U.S. Department of Commerce, Survey of Current Business.
Securities Markets and Corporate Finance
1.51
A35
Assets and Liabilities 1
DOMESTIC FINANCE COMPANIES
Billions of dollars, end of period; not seasonally adjusted
1992
1991
Account
1989
1991
1990
Q1
Q2
Q3
Q4
Ql
Q2
Q3r
ASSETS
1 Accounts receivable, gross2
2 Consumer
3 Business
4 Real estate
462.9
138.9
270.2
53.8
492.9
133.9
293.5
65.5
480.3
121.9
292.6
65.8
482.9
127.1
291.7
64.1
488.5
127.5
295.2
65.7
484.7
125.3
293.2
66.2
480.3
121.9
292.6
65.8
475.7
118.4
291.6
65.8
477.0
116.7
293.9
66.4
475.8
116.6
291.1
68.1
54.7
8.4
57.6
9.6
55.1
12.9
57.2
10.7
58.0
11.1
57.6
13.1
55.1
12.9
53.6
13.0
51.2
12.3
50.8
12.0
7 Accounts receivable, net
8 All other
399.8
102.6
425.7
113.9
412.3
149.0
415.0
118.7
419.3
122.8
414.1
136.4
412.3
149.0
409.1
145.5
413.6
139.4
412.9
146.5
9 Total assets
502.4
539.6
561.2
533.7
542.1
550.5
561.2
554.6
553.0
559.4
27.0
160.7
31.0
165.3
42.3
159.5
35.6
155.5
36.9
156.1
39.6
156.8
42.3
159.5
38.0
154.4
37.8
147.7
38.1
153.2
n.a.
n.a.
35.2
162.7
61.5
55.2
n.a.
n.a.
37.5
178.2
63.9
63.7
n.a.
n.a.
34.5
191.3
69.0
64.8
n.a.
n.a.
32.4
182.4
64.3
63.4
n.a.
n.a.
34.2
184.5
67.1
63.3
n.a.
n.a.
36.5
185.0
68.8
63.8
n.a.
n.a.
34.5
191.3
69.0
64.8
n.a.
n.a.
34.5
189.8
72.0
66.0
n.a.
n.a.
34.8
191.9
73.4
67.1
n.a.
n.a.
34.9
191.4
73.7
68.1
502.4
539.6
561.2
533.7
542.1
550.5
561.2
554.6
548.4
559.4
5 LESS: Reserves for unearned income
6
Reserves for losses
LIABILITIES AND CAPITAL
10 Bank loans
11 Commercial paper
12
13
14
15
16
17
Debt
Other short-term
Long-term
Owed to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits
18 Total liabilities and capital
1. Includes finance company subsidiaries of bank holding companies but not of
retailers and banks. Data are amounts carried on the balance sheets of finance
1.52
companies; securitized pools are not shown since they are not on the books.
2. Before deduction for unearned income and losses.
DOMESTIC FINANCE COMPANIES 1
Millions of dollars, amounts outstanding, end of period
1992
Type of credit
1990
1991
1992
July
Aug.
Sept.
Oct.
Nov.
Dec.
Seasonally adjusted
1 Total
523,023
519,573
534,045
522,834
528,117
527,858
527,323
529,232'
534,045
2 Consumer
3 Real estate
4 Business
161,070
65,147
296,807
154,786
65,388
299,400
157,623
67,284
309,138
153,588
66,843
302,403
154,729
67,753
305,634
155,618
67,717
304,523
154,501
68,035
304,787
156,593r
67,838
304,801
157,623
67,284
309,138
Not seasonally adjusted
5 Total
6 Consumer
7 Motor vehicles
8 Other consumer
9 Securitized motor vehicles4
10 Securitized other consumer4
11 Real estate
1? Business
n
Motor vehicles
14
Retail5
15
Wholesale6
Leasing
16
17 Equipment
18
Retail
19
Wholesale6
70
Leasing
71 Other business
77 Securitized business assets
Retail
73
Wholesale
74
Leasing
25
526,441
522,853
537,354
522,686
523,448
524,999
526,874
528,895'
537,354
161,965
75,045
58,818
19,837
8,265
65,509
298,967
92,072
26,401
33,573
32,098
137,654
31,968
11,101
94,585
63,774
5,467
667
3,281
1,519
155,677
63,413
58,488
23,166
10,610
65,764
301,412
90,319
22,507
31,216
36,5%
141,399
30, %2
9,671
100,766
60,887
8,807
576
5,285
2,946
158,546
57,604
59,437
29,775
11,729
67,678
311,130
87,454
19,301
27,158
38,191
151,683
32,212
8,669
110,802
60,403
11,590
1,118
5,756
4,716
154,099
60,400
56,568
25,392
11,739
67,065
301,522
87,686
21,086
27,158
39,443
145,787
32,370
9,128
104,289
59,099
8,951
170
4,649
4,132
155,529
60,393
56,782
26,852
11,503
68,104
299,815
85,745
20,743
n.a.
39,889
145,790
32,250
9,084
104,455
59,013
9,268
158
5,193
3,917
156,416
59,806
56,808
28,204
11,598
68,064
300,519
85,261
20,407
n.a.
39,506
147,319
31,571
8,994
106,754
58,493
9,447
152
5,378
3,917
155,505
59,290
57,013
27,823
11,379
68,477
302,892
86,747
20,763
n.a.
39,536
147,146
31,475
8,928
106,743
58,898
10,101
634
5,593
3,874
157,005r
58,286
58,128
28,964"
11,626"
68,016
303,875
85,621
19,708
n.a.
39,020
148,202
31,427
8,824
107,952
59,269
10,782
607
5,813
4,362
158,546
57,604
59,437
29,775
11,729
67,678
311,130
87,454
19,301
n.a.
38,191
151,683
32,212
8,669
110,802
60,403
11,590
1,118
5,756
4,716
1. Includes finance company subsidiaries of bank holding companies but not of
retailers and banks. Data are before deductions for unearned income and losses.
Data in this table also appear in the Board's G.20 (422) monthly statistical release.
For ordering address, see inside front cover.
2. Includes all loans secured by liens on any type of real estate, for example,
first and junior mortgages and home equity loans.
3. Includes personal cash loans, mobile home loans, and loans to purchase other
types of consumer goods such as appliances, apparel, general merchandise, and
recreation vehicles.
FRASER
4. Outstanding balances of pools upon which securities have been issued; these
balances are no longer carried on the balance sheets of the loan originator.
Digitized for
5. Passenger car fleets and commercial land vehicles for which licenses are
required.
6. Credit arising from transactions between manufacturers and dealers, that is,
floor plan financing.
7. Includes loans on commercial accounts receivable, factored commercial
accounts, and receivable dealer capital; small loans used primarily for business or
farm purposes; and wholesale and lease paper for mobile homes, campers, and
travel trailers.
A36
1.53
DomesticNonfinancialStatistics • April 1993
MORTGAGE MARKETS Conventional Mortgages on New Homes
Millions of dollars except as noted
1992
Item
1990
1991
1993
1992
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)
/ OTS series3
8 HUD series4
153.2
112.4
74.8
27.3
1.93
9.68
155.0
114.0
75.0
26.8
1.71
9.02
158.1
118.1
76.6
25.6
1.60
7.98
173.5
132.6
77.5
26.4
1.19
7.81
148.4
113.6
78.7
24.8
1.62
7.72
146.0
109.3
77.0
25.7
1.52
7.68
159.2
119.7
77.3
25.2
1.42
7.65
165.4
117.3
75.3
24.9
1.54
7.81
154.0
117.7
77.7
26.1
1.31
7.65
158.6
119.5
76.8
25.7
1.49
7.57
10.01
10.08
9.30
9.20
8.25
8.43
8.00
8.14
8.00
8.01
7.93
7.95
7.90
8.29
8.07
8.38
7.88
8.19
7.82
7.93
10.17
9.51
9.25
8.59
8.46
7.77
8.12
7.63
8.08
7.28
8.06
7.31
8.29
7.53
8.54
7.90
8.12
7.57
8.04
7.39
SECONDARY MARKETS
Yield (percent per year)
9 FHA mortgages (HUD series)5
10 GNMA securities
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Mortgage holdings (end of period)
11 Total
12 FHA/VA-insured
13 Conventional
113,329
21,028
92,302
122,837
21,702
101,135
142,833
22,168
120,664
142,465
22,263
120,202
142,246
22,199
120,047
144,904
22,275
122,629
149,133
22,399
126,734
153,306
22,372
130,934
158,119
22,593
135,526
159,204
22,640
136,564
Mortgage transactions (during period)
14 Purchases
23,959
37,202
75,905
4,191
3,651
6,779
8,380
7,980
8,832
4,993
Mortgage commitments (during period)1
15 Issued
16 To sell9
23,689
5,270
40,010
7,608
74,970
10,493
4,663
807
6,053
10
8,880
148
8,195
0
6,084
237
6,185
1,811
4,189
1,159
Mortgage holdings (end of period)9
17 Total
18 FHA/VA-insured
19 Conventional
20,419
547
19,871
24,131
484
23,283
29,959
408
29,552
28,510
419
28,091
29,367
376
28,990
31,629
371
31,259
32,995
365
32,630
32,703
359
32,343
33,665
352
33,313
n.a.
n.a.
n.a.
Mortgage transactions (during period)
20 Purchases
21 Sales
75,517
73,817
97,727
92,478
191,125r
179,208
12,172
11,849
13,562
12,314
16,391
14,267
20,199
18,771
19,607
19,154r
20,792r
19,602
n.a.
16,536
102,401
114,031
261,637
26,488
14,212
17,132
27,380
29,717
32,453
n.a.
FEDERAL HOME LOAN MORTGAGE CORPORATION
Mortgage commitments (during period)10
22 Contracted
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 of 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 loans 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.
Real Estate
1.54
A37
MORTGAGE DEBT OUTSTANDING 1
Millions of dollars, end of period
1992
1991
Type of holder and property
1988
1989
1990
Q3
Q4
Q1
Q2
Q3
3,288,064
3,574,975
3,797,727
3,904,394
3,919,465
3,966,775
3,992,878
4,008,590
2,208,192
296,585
698,040
85,247
2,435,158
306,762
749,031
84,025
2,644,652
310,311
758,795
83,969
2,755,381
307,846
758,002
83,165
2,777,876
308,648
749,767
83,173
2,831,195
308,398
744,271
82,910
2,870,724
300,509
738,066
83,579
2,900,748
297,840
726,150
83,853
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
1,914,315
844,826
455,931
37,015
334,648
17,231
801,628
600,154
91,806
109,168
500
267,861
13,005
28,979
215,121
10,756
1,860,710
870,937
478,851
36,398
337,365
18,323
719,679
547,799
81,883
89,595
402
270,094
11,720
29,962
218,179
10,233
1,846,910
876,284
486,572
37,424
333,852
18,436
705,367
538,358
79,881
86,741
388
265,258
11,547
29,562
214,105
10,044
1,825,983
880,377
492,910
37,710
330,837
18,919
682,338
524,536
77,166
80,278
358
263,269
11,214
29,693
212,865
9,497
1,806,122
884,598
4%,518
38,314
330,229
19,538
659,624
508,545
74,788
75,947
345
261,900
11,087
29,745
211,913
9,155
1,794,455
886,453
502,935
38,761
324,857
19,900
648,082
501,518
73,722
72,508
334
259,920
11,007
29,525
210,293
9,095
22 Federal and related agencies
23 Government National Mortgage Association
24
One- to four-family
25
Multifamily
26 Farmers Home Administration
27
One- to four-family
28
Multifamily
29
Commercial
30
Farm
31 Federal Housing and Veterans' Administrations
32
One- to four-family
33
Multifamily
34 Resolution Trust Corporation
35
One- to four-family
36
Multifamily
37
Commercial
38
Farm
39 Federal National Mortgage Association
40
One- to four-family
41
Multifamily
42 Federal Land Banks
43
One- to four-family
44
Farm
45 Federal Home Loan Mortgage Corporation
46
One- to four-family
47
Multifamily
200,570
26
26
0
42,018
18,347
8,513
5,343
9,815
5,973
2,672
3,301
0
0
0
0
0
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
0
0
0
0
0
110,721
102,295
8,426
29,640
1,210
28,430
21,851
18,248
3,603
250,761
20
20
0
41,439
18,527
9,640
4,690
8,582
8,801
3,593
5,208
32,600
15,800
8,064
8,736
0
116,628
106,081
10,547
29,416
1,838
27,577
21,857
19,185
2,672
282,115
20
20
0
41,566
18,598
9,990
4,829
8,149
10,057
3,649
6,408
52,063
21,957
14,451
15,655
0
125,451
113,696
11,755
29,053
2,124
26,929
23,906
21,489
2,417
282,856
19
19
0
41,713
18,496
10,141
4,905
8,171
10,733
4,036
6,697
45,822
14,535
15,018
16,269
0
128,983
117,087
11,8%
28,777
1,693
27,084
26,809
24,125
2,684
2%,664
19
19
0
41,791
18,488
10,270
4,%1
8,072
11,332
4,254
7,078
49,345
15,458
16,266
17,621
0
136,506
124,137
12,369
28,776
1,693
27,083
28,895
26,182
2,713
297,300
23
23
0
41,628
17,718
10,356
4,998
8,557
11,480
4,403
7,077
44,624
15,032
13,316
16,276
0
142,148
129,392
12,756
28,775
1,693
27,082
28,621
26,001
2,620
295,874
27
27
0
41,671
17,292
10,468
5,072
8,839
11,768
4,531
7,236
37,099
12,614
11,130
13,356
0
144,904
131,835
13,069
28,775
1,693
27,082
31,629
29,039
2,591
48 Mortgage pools or trusts5
49 Government National Mortgage Association....
50
One- to four-family
51
Multifamily
52 Federal Home Loan Mortgage Corporation
53
One- to four-family
54
Multifamily
55 Federal National Mortgage Association
56
One- to four-family
57
Multifamily
58 Farmers Home Administration
59
One- to four-family
60
Multifamily
61
Commercial
62
Farm
63 Private mortgage conduits
64
One- to four-family
65
Multifamily
66
Commercial
67
Farm
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
66,560
66,560
0
0
0
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
77,217
77,217
0
0
0
1,110,555
403,613
391,505
12,108
316,359
308,369
7,990
299,833
291,194
8,639
66
17
0
24
26
90,684
90,684
0
0
0
1,229,836
422,500
412,715
9,785
348,843
341,183
7,660
351,917
343,430
8,487
52
12
0
20
20
106,523
105,023
1,500
0
0
1,262,685
425,295
415,767
9,528
359,163
351,906
7,257
371,984
362,667
9,317
47
11
0
19
17
106,1%
104,1%
2,000
0
0
1,302,217
421,977
412,574
9,404
367,878
360,887
6,991
389,853
380,617
9,236
43
10
0
18
16
122,465
119,825
2,640
0
0
1,339,172
422,922
413,828
9,094
382,797
376,177
6,620
413,226
403,940
9,286
43
9
0
18
15
120,184
120,184
0
0
0
1,364,537
422,255
413,063
9,192
391,762
385,400
6,362
429,935
420,835
9,100
41
9
0
18
14
120,545
120,545
0
0
0
68 Individuals and others6
69 One- to four-family
70 Multifamily
71 Commercial
72 Farm
444,175
266,933
84,389
73,423
19,431
487,174
299,986
84,980
82,814
19,395
522,0%
328,748
87,643
86,408
19,298
531,734
333,116
87,149
92,360
19,109
527,013
326,860
87,244
93,876
19,034
541,911
338,392
86,863
97,690
18,966
550,284
346,173
86,538
98,687
18,887
553,724
348,405
86,684
100,047
18,588
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
Multifamily
9
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
20
Commercial
21
Farm
1. Based on data from various institutional and governmental sources; 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. FmHA-guaranteed securities 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 Farmers Home Administration.
5. Outstanding principal balances of mortgage-backed securities insured or
guaranteed by the agency indicated.
6. 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 finance companies.
A38
1.55
DomesticNonfinancialStatistics • April 1993
CONSUMER INSTALLMENT CREDIT 1
Millions of dollars, amounts outstanding, end of period
1992
Holder and type of credit
1990
1991
1992
July
Aug.
Sept.
Oct.
Nov. r
Dec.
Seasonally adjusted
1 Total
735,338
727,799
725,908
721,820
720,664
722,104
722,372r
723,448
725,908
2 Automobile
3 Revolving
4 Other
284,993
222,950
227,395
263,003
242,785
222,012
259,298
250,966
215,643
257.743
247,332
216.744
256,944
248,043
215,677
257,384
250,017
214,703
256,846r
250,454r
215,071r
257,740
250,620
215,088
259,298
250,966
215,643
Not seasonally adjusted
748,524
742,058
740,621
718,599
721,985
724,198
722,760r
725,178
740,621
By major holder
Commercial banks
Finance companies
Credit unions
Retailers
Savings institutions
Gasoline companies
Pools of securitized assets2 ..
347,087
133,863
93,057
44,822
46,969
4,822
77,904
339,565
121,901
92,254
44,030
40,315
4,362
99,631
329,896
116,482
92,199
44,952
33,861
4,365
118,866
323,899
117,002
91,778
37,219
35,552
4,506
108,643
323,866
117,175
92,270
38,791
35,378
4,542
109,963
324,046
116,650
92,698
38,778
35,069
4,499
112,458
324,697
116,304
92,228r
39,299
34,148r
4,452
111 ,632r
324,529
116,414
91,838
39,539
34,171
4,365
114,322
329,896
116,482
92,199
44,952
33,861
4,365
118,866
By major type of credit3
13 Automobile
14 Commercial banks
15 Finance companies
16 Pools of securitized assets2
285,050
124,913
75,045
24,428
263,108
111,912
63,413
28,057
259,428
108,598
57,037
33,593
258,104
107,722
60,400
30,454
259,128
107,978
60,393
30,826
260,395
108,355
59,806
31,971
259,055r
108,068
59,290
31,757
258,539
107,675
58,286
32,672
259,428
108,598
57,037
33,593
17 Revolving
18 Commercial banks
19 Retailers
20 Gasoline companies
21
Pools of securitized assets2
235,056
133,385
40,003
4,822
44,335
255,895
137,968
39,352
4,362
60,139
264,493
132,639
40,064
4,365
72,695
244,661
127,476
32,617
4,506
65,791
247,051
126,922
34,167
4,542
66,985
248,692
127,234
34,148
4,499
68,252
248,526r
127,257
34,654
4,452
67,699
251,422
128,164
34,857
4,365
69,415
264,493
132,639
40,064
4,365
72,695
22 Other
23 Commercial banks
24 Finance companies
25 Retailers
26 Pools of securitized assets2
228,418
88,789
58,818
4,819
9,141
223,055
89,685
58,488
4,678
11,435
216,700
88,659
59,445
4,888
12,578
215,834
88,701
56,602
4,602
12,398
215,806
88,966
56,782
4,624
12,152
215,111
88,457
56,844
4,630
12,235
215,179r
89,372
57,014
4,645
12,176r
215,217
88,690
58,128
4,682
12,235
216,700
88,659
59,445
4,888
12,578
5 Total
6
7
8
9
10
11
12
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.
1.56
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.
TERMS OF CONSUMER INSTALLMENT CREDIT 1
Percent per year except as noted
1992
Item
1990
1991
1992
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
INTEREST RATES
Commercial banks2
48-month new car
24-month personal
120-month mobile home
Credit card
11.78
15.46
14.02
18.17
11.14
15.18
13.70
18.23
9.29
14.04
12.67
17.78
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
9.15
13.94
12.57
17.66
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
8.60
13.55
12.36
17.38
n.a.
n.a.
n.a.
n.a.
Auto finance companies
5 New car
6 Used car
12.54
15.99
12.41
15.60
9.93
13.79
10.24
13.89
9.94
13.67
8.88
13.49
8.65
13.44
9.51
13.37
9.65
13.37
9.65
13.53
54.6
46.0
55.1
47.2
54.0
48.0
54.4
48.0
54.4
48.0
53.6
47.9
53.3
47.7
54.1
47.9
54.1
47.8
53.6
48.0
87
95
88
96
89
97
89
97
89
97
90
97
90
97
89
97
89
97
90
97
12,071
8,289
12,494
8,884
13,592
9,121
13,369
9,201
13,570
9,293
13,745
9,238
13,889
8,402
13,885
9,373
14,043
9,475
14,408
9,495
1
2
3
4
OTHER TERMS
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
3
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 for only the second month of each quarter,
3. At auto finance companies.
Flow of Funds
1.57
A39
F U N D S RAISED IN U.S. CREDIT MARKETS1
Billions of dollars; quarterly data at seasonally adjusted annual rates
1992
1991
Transaction category or sector
Ql
Q2
Q3
Q4
Ql
Q2
Q3
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors ..
721.2
775.8
740.8
665.0
452.7
455.4
543.3
405.6
406.3
667.5
535.1
379.9
By sector and instrument
7 U.S. government
Treasury securities
4 Agency issues and mortgages
143.9
142.4
1.5
155.1
137.7
17.4
146.4
144.7
1.6
246.9
238.7
8.2
278.2
292.0
-13.8
227.4
251.4
-24.0
276.7
282.9
-6.2
288.4
317.2
-28.8
320.4
316.6
3.8
368.9
380.1
-11.2
351.9
351.5
.4
193.4
184.4
9.0
5 Private
577.3
620.7
594.4
418.2
174.4
228.0
266.6
117.2
85.9
298.6
183.2
186.5
6
7
8
9
10
11
17
n
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
487.2
83.5
78.8
325.0
235.3
24.4
71.6
-6.4
90.1
32.9
9.9
1.6
45.7
474.1
53.7
103.1
317.3
241.8
16.7
60.8
-2.1
146.6
50.1
41.0
11.9
43.6
441.8
65.0
73.8
303.0
245.3
16.4
42.7
-1.5
152.6
41.7
40.2
21.4
49.3
342.3
51.2
47.1
244.0
219.4
3.7
21.0
-.1
75.8
17.5
4.4
9.7
44.2
254.6
45.8
78.8
130.0
142.2
-2.0
-9.4
-.8
-80.2
-12.5
-33.4
-18.4
-15.8
296.1
35.6
76.7
183.8
153.0
6.3
24.6
-.1
-68.0
-10.4
-15.0
-14.3
-28.3
329.9
48.5
96.5
184.8
158.1
12.5
14.9
-.7
-63.3
-7.8
-34.5
-15.9
-5.2
182.0
53.5
81.7
46.8
122.4
-29.4
-43.8
-2.5
-64.8
-24.0
-18.2
-36.3
13.7
210.6
45.5
60.3
104.8
135.1
2.7
-33.1
.0
-124.7
-8.0
-66.1
-7.0
-43.6
312.9
52.0
76.3
184.7
209.6
-1.3
-22.6
-1.1
-14.4
3.1
-26.9
12.6
-3.2
218.4
73.0
77.5
67.9
121.6
-31.6
-24.9
2.7
-35.2
-12.4
-21.5
-3.4
2.1
196.4
52.3
61.3
82.8
147.2
-10.7
-54.7
1.1
-10.0
.4
-23.3
1.7
11.2
19
20
21
22
23
24
By borrowing sector
State and local government
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
83.0
2%. 4
197.8
-10.6
65.3
143.1
48.9
318.6
253.1
-7.5
61.8
198.8
63.2
305.6
225.6
1.6
50.4
173.6
48.3
254.2
115.6
2.5
26.7
86.4
38.5
158.0
-22.1
.9
-23.6
.6
36.0
160.8
31.2
3.9
13.2
14.0
38.6
188.8
39.2
2.1
9.8
27.2
37.6
136.1
-56.5
-.3
-65.9
9.7
41.9
146.3
-102.4
-2.2
-51.5
-48.7
46.1
217.1
35.4
-1.6
-20.7
57.7
63.4
143.3
-23.4
7.1
-65.6
35.2
50.0
148.1
-11.7
2.4
-51.4
37.4
25 Foreign net borrowing in United States
26 Bonds
77 Bank loans n.e.c
28 Open market paper
29 U.S. government loans
6.2
7.4
-3.6
3.8
-1.4
6.4
6.9
-1.8
8.7
-7.5
10.2
4.9
-.1
13.1
-7.6
23.9
21.4
-2.9
12.3
-6.9
14.1
14.9
3.1
6.4
-10.2
63.1
11.1
8.1
46.7
-2.8
-63.2
10.6
-3.5
-51.9
-18.3
15.6
15.5
1.4
16.0
-17.2
41.0
22.3
6.5
14.9
-2.7
9.9
4.9
1.5
-7.8
11.4
55.9
22.8
14.1
27.7
-8.8
30.1
23.2
3.4
12.8
-9.3
30 Total domestic plus foreign
727.4
782.2
750.9
688.9
466.8
518.5
480.1
421.2
447.3
677.3
591.0
410.1
Financial sectors
31 Total net borrowing by financial sectors
259.0
211.4
220.1
187.1
139.2
108.9
104.0
143.4
200.5
108.9
218.4
246.2
By instrument
U.S. government-related
Sponsored-credit-agency securities
Mortgage pool securities
Loans from U.S. government
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
147.7
9.2
138.6
.0
154.6
13.1
141.5
.0
127.4
-29.7
157.1
.0
156.3
20.6
135.8
.0
152.7
32.6
120.1
-.1
126.8
11.5
115.3
.0
199.5
48.3
151.2
.0
152.9
62.3
90.6
.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
87.2
39.1
.4
-3.6
26.9
24.4
91.7
16.2
.3
.6
54.8
19.7
69.1
46.8
.0
1.9
31.3
-11.0
19.7
34.4
.3
1.2
8.6
-24.7
-8.6
57.7
.6
3.2
-32.0
-38.0
-45.7
41.4
.1
1.0
-52.5
-35.8
-23.4
72.4
.9
-2.9
-46.0
-47.7
-12.9
29.5
-.2
10.2
-16.7
-35.7
47.8
87.5
1.5
4.5
-12.7
-33.0
-17.9
-25.1
.9
8.2
7.6
-9.5
18.9
25.5
.1
3.9
-16.3
5.7
93.2
54.5
.1
5.5
11.8
21.3
By borrowing sector
42 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
29.5
142.3
87.2
6.2
14.3
19.6
8.1
-.5
.4
39.1
44.9
74.9
91.7
-3.0
5.2
19.9
1.9
31.5
3.6
32.5
25.2
125.8
69.1
-1.4
6.2
-14.1
-1.4
59.7
-1.9
22.0
17.0
150.3
19.7
-1.1
-27.7
-29.9
-.5
35.6
-1.9
45.2
9.1
138.6
-8.6
-13.3
-2.5
-39.5
-3.5
14.5
.0
35.6
13.1
141.5
-45.7
-18.4
-9.3
-42.9
2.0
-10.3
.1
33.2
-29.7
157.1
-23.4
-11.7
-3.5
-48.7
-1.7
3.4
.1
38.7
20.6
135.8
-12.9
-9.2
-6.8
-41.1
-5.5
12.2
-.9
38.5
32.5
120.1
47.8
-14.1
9.6
-25.1
-8.7
52.9
.8
32.3
11.5
115.3
-17.9
7.2
2.7
-20.3
4.3
-39.0
4.6
22.5
48.3
151.2
18.9
.8
-8.2
2.7
.3
-20.9
.9
43.2
62.3
90.6
93.2
1.6
2.2
10.1
8.3
34.6
-.7
37.1
32
33
34
35
A40
DomesticNonfinancialStatistics • April 1993
1.57—Continued
1991
Transaction category or sector
1987
1988
1989
1990
1992
1991
Q1
Q2
Q3
Q4
Ql
Q2
Q3
All sectors
52 Total net borrowing, all sectors
986.4
993.6
971.0
876.0
606.0
627.4
584.1
564.6
647.7
786.2
809.4
656.2
53
54
55
56
57
58
59
60
316.4
83.5
125.2
325.4
32.9
2.7
32.3
68.0
274.9
53.7
126.3
317.5
50.1
39.9
75.4
55.8
297.3
65.0
125.5
303.0
41.7
41.9
65.9
30.6
414.4
51.2
102.9
244.3
17.5
2.8
30.7
12.4
426.0
45.8
151.4
130.6
-12.5
-27.1
-44.0
-64.2
382.0
35.6
129.2
183.9
-10.4
-5.9
-20.2
-66.9
404.1
48.5
179.5
185.8
-7.8
-40.9
-113.8
-71.2
444.8
53.5
126.6
46.5
-24.0
-6.7
-37.0
-39.1
473.2
45.5
170.1
106.2
-8.0
-55.1
-4.9
-79.3
495.7
52.0
56.0
185.6
3.1
-17.2
12.4
-1.3
551.4
73.0
125.9
67.9
-12.4
-3.5
8.1
-1.0
346.4
52.3
139.0
82.9
.4
-14.3
26.3
23.3
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
External corporate equity funds raised in United States
61 Total net share issues
62 Mutual funds
63 All other
64
Nonfinancial corporations
65
Financial corporations
66
Foreign shares purchased in United States
7.1
-118.4
-65.7
22.1
198.8
112.4
182.3
231.8
268.9
271.7
281.5
305.3
70.2
-63.2
-75.5
14.5
-2.1
6.1
-124.5
-129.5
4.1
.9
38.5
-104.2
-124.2
2.7
17.2
67.9
-45.8
-63.0
9.8
7.4
150.5
48.3
18.3
-.1
30.2
98.1
14.3
-6.0
-6.7
27.0
125.6
56.7
12.0
8.1
36.6
182.5
49.3
19.0
-3.8
34.1
195.9
72.9
48.0
2.0
22.9
189.8
81.9
46.0
6.0
29.9
223.3
58.2
36.0
9.7
12.5
249.2
56.2
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical
release, tables F.2 through F.5. For ordering address, see inside front cover.
11.0
9.2
36.0
Flow of Funds
1.58
SUMMARY OF FINANCIAL
A41
TRANSACTIONS1
Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates
1992
1991
Transaction category or sector
1987
1988
1989
1990
1991
Ql
Q2
627.4
Q3
Q4
Ql
Q2
Q3
647.7
786.2
809.4
656.2
NET LENDING IN CREDIT MARKETS 2
1 Total net lending in credit markets
2 Private domestic nonfinancial sectors
3
Households
4 Nonfarm noncorporate business
Nonfinancial corporate business
6 State and local governments
7 U.S. government
8 Foreign
9 Financial sectors
10 Sponsored credit agencies
11 Mortgage pools
12 Monetary authority
13 Commercial banking
14
U.S. commercial banks
Foreign banking offices
IS
Bank affiliates
16
17
Banks in U.S. possession
18
Private nonbank finance
Thrift institutions
19
20
Savings and loan associations
Mutual savings banks
21
Credit unions
22
23
Insurance
24
Life insurance companies
25
Other insurance companies
26
Private pension funds
State and local government retirement funds .
27
28
Finance n.e.c
Finance companies
29
Mutual funds
30
Money market funds
31
32
Real estate investment trusts (REITs)
33
Brokers and dealers
Securitized credit obligation (SCOs) issuers .
34
986.4
993.6
971.0
584.1
564.6
237.4
180.7
-5.6
18.5
43.9
-7.9
61.8
695.0
27.0
142.3
24.7
135.3
99.1
34.2
2.0
.1
365.8
136.9
93.5
25.6
17.8
153.5
91.7
39.5
-4.7
27.0
75.4
38.2
25.8
1.8
1.0
-30.6
39.1
226.2
198.9
3.1
5.7
18.6
-10.6
96.3
681.8
37.1
74.9
10.5
157.1
127.1
29.4
-.1
.7
402.2
119.0
87.4
15.3
16.3
186.2
103.8
29.2
18.1
35.1
96.9
49.2
11.9
10.7
.9
-8.2
32.5
190.5
209.6
21.6
49.4
203.8
174.1
179.5
172.3 -13.7
13.3
-2.0
-.8
-1.4
-1.9
-1.8
12.9
20.9
-7.6
29.0
6.6
17.9
16.3
45.4 -10.6
26.2
24.8
-3.1
33.7
10.0
35.2
44.7
51.4
74.1
58.4
19.1
317.4
690.4
580.2
529.7
523.8
14.2
-.5
16.4
27.4 -22.3
157.1
125.8
138.6
141.5
150.3
-4.0
-7.3
8.1
31.1
58.1
125.4
84.0
114.4
34.7
176.8
6.4
38.9
145.7
95.2
77.0
48.5
33.7
26.7
28.4
42.2
-1.5
-2.6
2.8
-2.8
-4.7
4.5
-1.9
-.1
-2.8
1.6
261.8
152.0
395.7
279.9
182.3
-91.0 -151.9 -144.9 -188.3 -164.8
-93.9 -143.9 -140.9 -179.8 -144.0
-16.5
-15.5
-11.7
-31.1
-4.8
7.7
8.5
11.5
3.3
10.2
207.7
215.4
219.5
188.5
236.2
83.2
132.8
94.4
112.9
93.1
34.7
37.0
29.7
26.5
32.7
.7
36.2
16.6
60.6
42.1
48.7
37.0
48.5
49.0
51.0
97.4
278.9
243.3
191.3
134.4
69.3
-18.5
-14.5
41.6 -13.1
23.8
41.4
90.3
44.0
75.3
67.1
80.9
30.1
134.2 -68.9
-.1
.5
-.7
-.7
-1.6
96.3
49.0 -56.9
66.8
34.9
35.6
33.2
38.7
22.0
45.2
-135.3
-177.9
-1.6
32.2
12.1
-2.1
37.3
664.7
33.7
135.8
48.1
82.4
26.5
56.7
2.4
-3.3
364.7
-176.8
-156.3
-30.8
10.3
254.5
73.8
36.8
110.5
33.4
287.0
-5.2
117.1
1.1
-.3
135.8
38.5
986.4
993.6
971.0
876.0
606.0
627.4
584.1
564.6
24.8
-9.7
4.0
4.1
.5
.5
28.8
26.0
25.3
221.4
104.5
193.6
2.9 -16.5
34.8
290.0
141.1
259.9
6.1
4.1
43.2
96.7
120.8
76.3
17.6
53.6
50.6
90.1
24.0
21.9
78.3
23.5
-10.9
-3.1
1.1
-3.1
38.5
70.2
6.1
-63.2 -124.5 -104.2
15.6
-27.4
3.0
60.0
57.7
89.2
2.0
5.4
5.3
-32.5
-31.2
-60.9
269.9
222.3
241.2
2.0
2.5
25.7
186.8
34.2
96.8
44.2
59.9
-66.7
70.3
-23.5
12.6
67.9
-45.8
3.5
44.1
-.5
-39.3
120.5
-5.9
1.5
.0
-1.2
22.0
27.9
263.5
284.1
-5.0
-3.0
61.1
244.8
75.8
76.2
16.7
97.3
-60.9
15.1
41.3
193.0
-16.4 -160.7
4.6
24.0
150.5
98.1
48.3
14.3
51.4 -17.5
10.3 -39.6
-9.1
-34.8
-1.4
-21.5
145.0
219.6
-4.8
.4
31.4
197.9
-79.8
-75.4
7.9
-1.1
-63.0
-58.7
43.1
-3.6
125.6
56.7
20.1
41.1
-11.5
-34.1
65.0
-15.5
-5.0
.4
.5
19.4
9.2
339.6
232.5
99.5
-36.8
27.3
47.8
104.5
114.4
-42.4
13.0
-78.1 -117.4
4.0
26.8
36.3
16.0
3.0
-5.0
182.5
195.9
49.3
72.9
82.4
120.7
47.5
-7.7
13.0
-3.3
44.9
5.1
52.3
243.2
876.0
606.0
139.2
-18.2
-64.4
160.0
-1.9
-2.1
-2.9
30.1
18.2 -16.1
13.9
-17.9
88.4
71.0
544.7
612.9
93.0
17.8
115.3
120.1
33.2
22.3
98.9
104.3
91.9
45.6
.6
61.3
6.4
-1.1
.0
-1.5
204.4
348.3
-49.7 -113.3
-83.3 -137.9
7.6
11.5
17.0
22.2
120.4
151.4
80.6
13.2
33.1
32.1
89.2 -22.5
29.2
17.0
197.2
246.5
-14.1
.8
105.3
124.8
61.8
53.9
-.7
-.9
7.5
50.5
22.5
32.3
73.5 -252.7
47.6 -276.4
-1.9
-2.5
21.4
38.0
7.1
-12.3
-27.8
-25.1
58.4
142.5
618.4
878.3
39.9
73.9
90.6
151.2
10.8
9.8
101.5
58.4
.5
105.2
-2.7
58.6
-1.4
-.6
.4
-.1
359.2
601.5
-21.8
-81.6
-14.5
-92.4
-7.4
-17.5
10.2
18.3
224.6
192.9
98.7
92.5
2.5
22.2
88.7
51.9
34.7
26.3
398.7
247.9
18.9
-23.0
172.3
156.1
-20.9
-16.3
2.6
2.6
89.8
184.0
37.1
43.2
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
35 Net flows through credit markets
Other financial sources
36 Official foreign exchange
37 Treasury currency and special drawing rights
38
39
40
41 Deposits at financial institutions
4? Checkable deposits and currency
43
Small time and savings deposits
44 Large time deposits
45
46 Security repurchase agreements
47
48
49
50
5] Trade debt
5? Taxes payable
53 Noncorporate proprietors' equity
54 Miscellaneous
55 Total financial sources
Floats not included in assets (-)
56 U.S. government checking deposits
57 Other checkable deposits
58 Trade credit
59
60
61
6?
63
Liabilities not identified as assets ( - )
Treasury currency
Interbank claims
Security repurchase agreements
Taxes payable
Miscellaneous
64 Totals identified to sectors as assets
1,506.7 1,650.2 1,772.7 1,374.3 1,336.8 1,400.3
.0
.4
-8.5
1.6
.8
-.9
8.4
-3.2
.6
3.3
2.5
21.5
-.1
-4.0
-21.2
6.7
10.0
-.1
-3.0
-29.8
6.3
4.4
-.2
-4.4
23.9
2.3
-95.6
.2
1.6
-34.8
6.5
-13.8
809.4
656.2
3.5
-6.5
.1
.3
21.2
30.3
185.5
145.9
48.8
27.4
93.2 -47.4
89.0
93.2
-27.7
-88.5
-81.3 -106.0
106.1 -38.3
15.5
136.7
-8.3
-44.5
189.8
223.3
81.9
58.2
-70.0
-4.3
82.6
45.5
-4.4
14.2
-24.6
12.5
124.5
298.9
2.5
.2
19.9
312.2
120.8
191.7
202.2
-73.3
-63.5
-13.0
135.4
4.0
249.2
56.2
73.6
42.1
-4.3
1.1
190.0
786.2
916.7 1,507.3 1,522.9 1,478.7 1,647.2 1,911.4
-18.8
13.3
9.8
15.6
3.0
40.5
23.9
-2.1
27.1
-73.1
-6.1
-4.0
4.4
-13.3
14.7
-11.7
-17.5
-12.1
.4
-23.9
-6.5
-.6
-1.9
26.2
55.3
10.4 -115.4
7.4 -14.4
-29.9 -119.9
-.3
20.8
76.2
2.0
9.3
-.2
28.4
36.9
23.4
-194.2
-.1
.2
44.0
18.5
185.0
-.4
13.4
-41.1
-18.3
-78.0
-.1
-15.1
101.5
29.5
-64.4
-.3
-8.4
67.7
11.9
36.3
-13.1
2.0
18.3
1,523.4 1,670.7 1,841.0 1,387.5 1,316.1 1,592.2
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical
release, tables F.6 and F.7. For ordering address, see inside front cover.
647.7
749.5 1,564.2 1,358.6 1,597.2 1,637.2 1,834.3
2. Excludes corporate equities and mutual fund shares,
A42
1.59
Domestic Financial Statistics • April 1993
S U M M A R Y OF CREDIT MARKET DEBT OUTSTANDING1
Billions of dollars, end of period
1991
1992
Q2
Ql
Q3
Q4
Ql
Q2
Q3
Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors
9,316.3
10,087.1
10,760.8
11,210.8
10,832.3
10,960.3
11,082.5
11,210.8
11,336.7
11,464.8
11,583.6
By lending sector and instrument
2 U.S. government
3 Treasury securities
4 Agency issues and mortgages
2,104.9
2,082.3
22.6
2,251.2
2,227.0
24.2
2,498.1
2,465.8
32.4
2,776.4
2,757.8
18.6
2,548.8
2,522.4
26.4
2,591.9
2,567.1
24.8
2,687.2
2,669.6
17.6
2,776.4
2,757.8
18.6
2,859.7
2,844.0
15.8
2,923.3
2,907.4
15.9
2,998.9
2,980.7
18.1
5 Private
7,211.4
7,835.9
8,262.6
8,434.5
8,283.5
8,368.3
8,395.3
8,434.5
8,477.0
8,541.5
8,584.8
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
5,119.0
939.4
852.2
3,327.3
2,257.5
286.7
696.4
86.8
2,092.5
742.1
710.6
85.7
554.1
5,577.9
1,004.4
926.1
3,647.5
2,515.1
304.4
742.6
85.3
2,258.0
791.8
760.7
107.1
598.4
5,936.0
1,055.6
973.2
3,907.3
2,760.0
305.8
757.6
84.0
2,326.7
809.3
758.0
116.9
642.6
6,190.6
1,101.4
1,052.0
4,037.3
2,902.1
303.8
748.2
83.2
2,243.9
796.7
724.6
98.5
624.1
5,997.7
1,061.5
992.3
3,943.8
2,788.9
307.3
763.7
83.9
2,285.8
785.3
748.3
120.8
631.5
6,087.5
1,072.5
1,016.5
3,998.6
2,836.9
310.4
767.4
83.8
2,280.8
786.7
742.0
119.4
632.6
6,138.4
1,089.3
1,036.9
4,012.2
2,869.5
303.1
756.5
83.1
2,256.9
785.9
734.1
107.0
629.8
6,190.6
1,101.4
1,052.0
4,037.3
2,902.1
303.8
748.2
83.2
2,243.9
7%.7
724.6
98.5
624.1
6,256.9
1,111.5
1,071.0
4,074.4
2,945.5
303.5
742.6
82.9
2,220.0
775.7
712.5
110.3
621.6
6,319.4
1,128.6
1,090.4
4,100.5
2,985.0
295.6
736.4
83.6
2,222.1
775.8
709.4
111.7
625.1
6,373.9
1,145.6
1,105.7
4,122.6
3,023.2
292.9
722.7
83.8
2,210.9
781.1
699.6
108.3
621.9
19
20
21
22
23
24
By borrowing sector
State and local government
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
752.5
3,177.3
3,281.6
137.6
1,127.1
2,016.9
815.7
3,508.2
3,512.0
139.2
1,177.5
2,195.3
864.0
3,780.6
3,618.0
140.5
1,204.2
2,273.4
902.5
3,938.6
3,593.3
138.8
1,180.6
2,273.9
870.1
3,788.3
3,625.2
136.8
1,207.1
2,281.3
878.5
3,848.3
3,641.5
139.6
1,210.8
2,291.1
891.4
3,888.7
3,615.3
140.4
1,191.0
2,283.9
902.5
3,938.6
3,593.3
138.8
1,180.6
2,273.9
911.3
3,960.8
3,604.9
136.3
1,174.9
2,293.7
925.9
4,009.9
3,605.8
140.2
1,160.0
2,305.6
942.3
4,051.6
3,590.9
141.7
1,144.0
2,305.2
244.6
254.8
278.6
292.7
291.3
277.6
282.2
292.7
282.4
298.5
307.0
83.1
21.5
49.9
90.1
88.0
21.4
63.0
82.4
109.4
18.5
75.3
75.4
124.2
21.6
81.8
65.2
112.1
20.5
87.0
71.6
114.8
19.7
74.0
69.1
118.6
20.0
78.0
65.6
124.2
21.6
81.8
65.2
125.4
22.0
70.5
64.4
131.1
25.5
77.5
64.4
137.0
26.4
80.7
63.1
9,560.9
10,341.9
11,039.4
11,503.6
11,123.6
11,237.9
11,364.7
11,503.6
11,619.1
11,763.3
11,890.7
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 Privatefinancialsectors
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...
2,082.9
2,333.0
2,524.2
2,667.8
2,546.3
2,571.4
2,608.2
2,667.8
2,686.9
2,739.9
2,802.6
1,098.4
348.1
745.3
5.0
984.6
415.1
3.4
35.6
377.7
152.8
1,249.3
373.3
871.0
5.0
1,083.7
491.9
3.4
37.5
409.1
141.8
1,418.4
393.7
1,019.9
4.9
1,105.8
528.2
4.2
38.6
417.7
117.1
1,566.2
402.9
1,158.5
4.8
1,101.6
590.2
4.8
41.8
385.7
79.1
1,452.1
397.0
1,050.3
4.9
1,094.1
545.4
4.2
36.5
400.9
107.0
1,482.8
389.6
1,088.4
4.9
1,088.6
562.2
4.5
37.0
390.1
94.7
1,524.4
394.7
1,124.8
4.9
1,083.9
569.5
4.4
39.0
387.0
83.9
1,566.2
402.9
1,158.5
4.8
1,101.6
590.2
4.8
41.8
385.7
79.1
1,592.9
405.7
1,182.4
4.8
1,094.0
578.2
5.0
41.6
392.9
76.3
1,641.6
417.8
1,219.0
4.8
1,098.3
583.2
5.0
43.7
389.5
76.9
1,682.2
433.4
1,244.0
4.8
1,120.4
597.0
5.1
44.5
393.7
80.2
353.1
745.3
984.6
78.8
136.2
159.3
18.6
444.6
11.4
135.7
378.3
871.0
1,083.7
77.4
142.5
145.2
17.2
504.2
10.1
187.1
398.5
1,019.9
1,105.8
76.3
114.8
115.3
16.7
539.8
10.6
232.3
407.7
1,158.5
1,101.6
63.0
112.3
75.9
13.2
557.9
11.4
268.0
401.8
1,050.3
1,094.1
68.1
114.4
104.2
16.4
539.6
10.8
240.6
394.4
1,088.4
1,088.6
65.9
113.3
91.0
16.6
540.4
11.0
250.3
399.5
1,124.8
1,083.9
64.6
110.6
79.0
15.2
543.7
11.0
259.9
407.7
1,158.5
1,101.6
63.0
112.3
75.9
13.2
557.9
11.4
268.0
410.5
1,182.4
1,094.0
60.8
115.0
71.2
13.5
547.1
12.7
273.6
422.6
1,219.0
1,098.3
61.7
112.7
70.3
14.3
541.8
13.2
284.4
438.2
1,244.0
1,120.4
63.3
112.3
71.0
16.2
550.8
13.2
293.7
All sectors
52 Total credit market debt, domestic and foreign..
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
11,643.9
12,674.9
13,563.6
14,171.3
13,669.9
13,809.2
13,973.0
14,171.3
14,306.0
14,503.3
14,693.3
3,198.3
939.4
1,350.4
3,330.7
742.1
767.7
513.4
801.9
3,495.6
1,004.4
1,506.0
3,650.9
791.8
819.6
579.2
827.5
3,911.7
1,055.6
1,610.7
3,911.5
809.3
815.1
609.9
839.9
4,337.7
1,101.4
1,766.4
4,042.1
796.7
788.0
565.9
773.2
3,9%. 1
1,061.5
1,649.9
3,948.1
785.3
805.3
608.8
814.9
4,069.8
1,072.5
1,693.5
4,003.1
786.7
798.7
583.6
801.4
4,206.7
1,089.3
1,725.0
4,016.7
785.9
793.2
572.0
784.2
4,337.7
1,101.4
1,766.4
4,042.1
7%.7
788.0
565.9
773.2
4,447.8
1,111.5
1,774.6
4,079.4
775.7
776.1
573.7
767.1
4,560.1
1,128.6
1,804.7
4,105.5
775.8
778.7
578.7
771.2
4,676.2
1,145.6
1,839.7
4,127.6
781.1
770.4
582.6
770.0
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical
For ordering address, see inside front cover.
release, tables L.2 through L.4.
Flow of Funds
1.60
A43
S U M M A R Y OF FINANCIAL ASSETS A N D LIABILITIES1
Billions of dollars except as noted, end of period
1991
Transaction category or sector
1988
1989
1990
1992
1991
Ql
Q2
Q3
Q4
Q2
Ql
Q3
CREDIT MARKET DEBT OUTSTANDING 2
1
Total credit market assets
7
Private domestic nonfinancial sectors
Households
Nonfarm noncorporate business
Nonfinancial corporate business
State and local governments
U.S. government
4
.5
6
7
8
9
10
11
1?
N
14
15
16
17
18
19
20
71
7?
n
74
25
26
27
78
79
30
31
32
33
34
Sponsored credit agencies
Mortgage pools
Monetary authority
Commercial banking
U.S. commercial banks
Foreign banking offices
Bank affiliates
Banks in U.S. possession
Private nonbank finance
Thrift institutions
Savings and loan associations
Mutual savings banks
Credit unions
Life insurance companies
Other insurance companies
Private pension funds
State and local government retirement funds.
Finance companies
Mutual funds
Money market funds
Real estate investment trusts (REITs)
Brokers and dealers
Securitized credit obligation (SCOs) issuers .
11,643.9 12,674.9 13,563.6 14,171.3 13,669.9 13,809.2 13,973.0 14,171.3 14,306.0 14,503.3 14,693.3
2,185.5
1,485.1
57.2
167.4
475.8
213.2
653.2
8,592.0
367.7
745.3
240.6
2,476.3
2,231.9
215.6
13.4
15.4
4,762.1
1,572.0
1,184.2
240.6
147.2
1,932.6
920.0
287.9
358.5
366.2
1,257.5
559.2
283.4
224.7
7.8
46.7
135.7
2,440.5
1,710.1
56.4
180.3
493.7
205.1
734.2
9,295.1
367.2
871.0
233.3
2,643.9
2,368.4
242.3
16.2
17.1
5,179.7
1,484.9
1,088.9
241.1
154.9
2,140.3
1,013.1
317.5
394.7
414.9
1,554.5
617.1
307.2
291.8
8.4
142.9
187.1
2,644.2
1,882.3
55.0
186.9
519.9
238.7
792.4
9,888.3
383.6
1,019.9
241.4
2,769.3
2,463.6
270.8
13.4
21.6
5,474.1
1,335.5
945.1
227.1
163.4
2,329.1
1,116.5
344.0
431.3
437.4
1,809.4
658.7
360.2
372.7
7.7
177.9
232.3
2,490.8
1,693.6
53.1
207.9
536.2
246.2
837.2
10,597.2
397.7
1,158.5
272.5
2,853.3
2,502.5
319.2
11.9
19.7
5,915.1
1,190.6
804.2
211.5
174.9
2,723.8
1,199.6
378.7
671.1
474.3
2,000.7
645.6
450.5
402.8
7.0
226.9
268.0
2,634.3
1,875.4
53.8
174.5
530.6
245.5
797.1
9,992.9
388.5
1,050.3
247.3
2,780.2
2,470.8
275.6
12.3
21.6
5,526.7
1,287.8
901.3
224.1
162.3
2,392.0
1,148.5
352.2
441.8
449.5
1,846.9
649.4
374.6
411.4
7.3
163.6
240.6
2,653.8
1,882.0
53.3
189.7
528.8
252.9
810.0
10,092.6
382.7
1,088.4
253.7
2,796.6
2,480.0
284.4
11.3
20.9
5,571.2
1,248.4
866.3
216.4
165.7
2,448.8
1,183.7
361.4
442.0
461.7
1,874.0
651.7
394.4
389.9
7.3
180.4
250.3
2,648.2
1,875.5
52.9
189.9
530.0
252.0
819.3
10,253.3
389.5
1,124.8
264.7
2,817.8
2,488.7
297.5
11.6
20.0
5,656.5
1,205.1
826.1
208.7
170.2
2,511.7
1,201.4
370.7
469.6
470.1
1,939.7
647.4
421.4
389.5
7.2
214.3
259.9
2,490.8
1,693.6
53.1
207.9
536.2
246.2
837.2
10,597.2
397.7
1,158.5
272.5
2,853.3
2,502.5
319.2
11.9
19.7
5,915.1
1,190.6
804.2
211.5
174.9
2,723.8
1,199.6
378.7
671.1
474.3
2,000.7
645.6
450.5
402.8
7.0
226.9
268.0
2,496.1
1,716.6
51.9
196.2
531.4
250.2
859.3
10,700.4
419.9
1,182.4
271.8
2,860.6
2,514.0
313.3
13.6
19.7
5,965.8
1,161.8
771.1
213.4
177.2
2,750.5
1,224.3
387.0
657.6
481.6
2,053.6
641.0
480.3
423.1
6.8
228.8
273.6
2,487.1
1,690.9
51.3
210.7
534.2
245.2
894.9
10,876.1
429.0
1,219.0
282.6
2,882.9
2,521.9
328.2
13.1
19.7
6,062.6
1,143.0
748.8
211.6
182.6
2,801.0
1,249.8
392.5
670.5
488.2
2,118.6
641.6
520.4
413.5
7.5
251.2
284.4
2,456.8
1,665.7
50.8
211.0
529.4
237.8
909.5
11,089.1
445.6
1,244.0
285.2
2,908.9
2,550.0
326.6
12.5
19.8
6,205.3
1,137.5
743.2
207.2
187.1
2,856.2
1,273.5
393.1
692.7
496.9
2,211.6
642.5
561.2
408.8
8.1
297.3
293.7
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
35
Total credit market debt
36
37
Other liabilities
Official foreign exchange
Treasury currency and special drawing rights
Life insurance reserves
Pension fund reserves
Interbank claims
41 Deposits at financial institutions
42
Checkable deposits and currency
43 Small time and savings deposits
44
Large time deposits
45
Money market fund shares
46
Security repurchase agreements
47
Foreign deposits
4 8 Mutual fund shares
4 9 Security credit
50 Trade debt
51 Taxes payable
5 2 Miscellaneous
38
39
40
53
Total liabilities
11,643.9 12,674.9 13,563.6 14,171.3 13,669.9 13,809.2 13,973.0 14,171.3 14,306.0 14,503.3 14,693.3
27.1
53.6
61.3
55.4
56.6
53.6
52.9
55.4
52.7
54.4
55.4
19.8
325.5
2,755.0
46.9
4,354.7
882.8
2,169.2
596.9
338.0
325.0
42.8
478.3
118.3
838.4
79.8
2,312.0
23.8
354.3
3,210.5
32.4
4,644.6
888.6
2,265.4
615.4
428.1
403.2
43.9
566.2
133.9
903.9
81.8
2,508.3
26.3
380.0
3,303.0
64.0
4,741.4
932.8
2,325.3
548.7
498.4
379.7
56.6
602.1
137.4
938.0
81.4
2,678.8
26.3
402.0
4,235.9
63.9
4,802.5
1,008.5
2,342.0
487.9
539.6
363.4
61.2
812.4
188.9
940.8
72.2
2,813.7
26.0
385.0
3,520.6
59.2
4,776.4
905.1
2,355.3
553.1
551.7
348.6
62.6
661.6
132.5
903.5
75.1
2,688.6
26.1
392.3
3,555.8
35.8
4,765.7
933.1
2,351.5
532.6
532.8
354.0
61.7
683.7
137.5
909.4
65.8
2,691.0
26.2
397.2
3,720.8
60.7
4,769.5
948.3
2,339.7
517.1
533.1
368.9
62.4
744.2
158.1
935.3
71.8
2,729.0
26.3
402.0
4,235.9
63.9
4,802.5
1,008.5
2,342.0
487.9
539.6
363.4
61.2
812.4
188.9
940.8
72.2
2,813.7
26.3
407.3
4,251.2
64.2
4,801.4
984.7
2,341.3
468.8
571.0
376.4
59.1
859.3
195.1
942.6
73.5
2,816.2
26.4
414.9
4,304.4
69.2
4,797.5
1,032.8
2,315.3
437.5
557.2
406.8
47.9
936.7
194.1
949.4
70.1
2,870.5
26.5
419.8
4,439.7
100.6
4,841.7
1,071.9
2,296.4
425.5
553.2
445.7
48.9
1,013.4
212.4
976.2
72.2
2,929.0
22,999.5 25,188.3 26,577.2 28,585.4 26,954.9 27,125.9 27,638.6 28,585.4 28,795.8 29,190.9 29,780.2
Financial assets not included in liabilities (+)
54 Gold and special drawing rights
55 Corporate equities
56 Household equity in noncorporate business
3,141.6
2,373.1
Floats not included in assets ( - )
57 U.S. government checking deposits
58 Other checkable deposits
59 Trade credit
5.9
29.6
-164.3
60
61
62
63
64
Liabilities not identified as assets ( - )
Treasury currency
Interbank claims
Security repurchase agreements
Taxes payable
Miscellaneous
65 Totals identified to sectors as assets
40.0
40.3
3,819.7
2,524.9
41.3
41.6
40.7
40.7
41.1
41.6
3,506.6
4,630.0
2,372.5
4,047.2
2,478.4
4,104.7
2,509.4
4,338.5
4,630.0
2,372.5
2,449.4
26.5
15.0
28.9
-159.7
-148.0
6.1
-4.1
-4.3
-4.1
-28.5
-31.0
11.5
-32.0
-23.3
20.6
-253.3
21.8
-249.7
-12.4
21.4
-134.6
-4.8
-4.2
-12.9
18.8
-451.6
8.3
41.3
4,739.7
2,381.4
41.5
4,678.8
2,362.6
23.2
4,832.4
2,335.6
5.2
26.7
19.8
3.8
.9
23.6
22.0
-157.7
-154.2
30.9
-134.1
1.4
20.1
4.1
29.9
-157.9
-133.3
-148.6
-154.3
-4.7
-4.7
-10.6
-4.9
-1.8
-10.1
16.6
-441.1
-4.9
-5.0
-7.4
-4.6
-4.7
-15.5
-39.6
21.4
-25.8
11.7
17.5
-262.4
-244.5
-303.2
-9.9
-4.8
-4.2
-12.9
18.8
-451.6
-4.0
11.0
12.4
-441.2
8.3
32.9
9.4
-467.8
28,841.1 31,956.8 32,966.0 36,183.5 33,947.9 34,173.4 34,930.5 36,183.5 36,510.0 36,827.5 37,551.1
1. Data in this table also appear in the Board's Z.l (780) quarterly statistical
release, tables L.6 through L.7. For ordering address, see inside front cover.
3.8
30.9
-134.1
2,495.9
2. Excludes corporate equities and mutual fund shares,
A44
2.10
Domestic Nonfinancial Statistics • April 1993
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures
Monthly data seasonally adjusted, 1987=100 except as noted
1992
Measure
1
1 Industrial production
Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
1990
109.2
1991
107.1
1993
1992
108.7
r
May
June
July
Aug.
Sept.
Oct.
Nov/
Dec.
Jan.
108.9
108.5
109.4
109.1
108.9
109.7
110.3
110.5
111.0
110.1
110.9
107.3
115.5
107.7
107.8
108.1
109.6
107.5
112.2
103.4
105.5
109.5
ni.r
110.4r
111.9"
104.6r
107.4r
109.7
111.4
110.8
112.3
104.4
107.7
109.0
110.5
109.6
111.6
104.4
107.6
109.6
111.0
110.4
111.8
105.1
109.0
109.8
111.5
110.8
112.5
104.4
108.1
109.6
111.2
110.7
111.9
104.5
107.9
110.7
112.4
111.9
113.0
105.5r
108.2
111.3
113.2
112.6
114.0
105.5
108.6
lll.^
113.2r
114.7r
105^
108.4r
112.5
114.6
114.1
115.2
106.2
108.5
109.9
107.4
109.7
109.9
109.6
110.2
110.1
109.8
110.6
111.2
111.7
112.4
82.3
78.2
77.8
78.2
77.8
78.1
77.9
77.5
77.9
78.2
78.4
78.7
95.3
89.7r
92.8
86.0
90.0
89.0
90.0
89.0
104.0
92.0
90.0
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
107.4r
101.0
100.5
100.1
109.5
122.7
121.3
113.5
122.9
118.7
106.0
96.4
97.0
96.1
109.0
127.0
124.4
113.6
128.0
119.8
106.1
94.8
95.6
95.2
109.7
133.0
129.0
115.4
134.7
125.6
106.2
95.3
96.1
95.7
109.6
132.4
128.6
115.5
134.2
124.1
106.1
95.0
95.9
95.4
109.6
132.5
128.5
115.1
134.4
124.0
106.3
94.9
95.9
95.5
109.9
132.8
128.7
115.5
134.5
125.4
106.2
94.6
95.4
94.9
109.9
133.0
129.6
115.3
134.6
125.5
106.2
94.3
95.2
94.6
110.0
133.6
129.5
115.3
135.2
126.5
106.2
94.2
94.9
94.3
110.1
135.2
130.5r
116.5r
136.91
129.2
106.3
94.2
95.0
94.6
110.2
135.1
131.1
116.0
136.6
129.0
106.4
94.1r
94.91
94.7
110.3
136.4
132.1
117.7
138.0
130. l r
106.5
94.1
95.1
95.1
110.5
n.a.
n.a.
n.a.
n.a.
130.5
Prices7
21 Consumer (1982-84=100)
22 Producer finished goods (1982=100)
130.7
119.2
136.2
121.7
140.3
123.2
139.7
123.2
140.2
123.9
140.5
123.7
140.9
123.6
141.3
123.3
141.8
124.3
142.0
123.9
141.9
123.8
142.6
124.0
2
3
4
5
6
7
Industry groupings
8 Manufacturing
9 Capacity utilization, manufacturing
(percent)
10 Construction contracts3
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 from U.S. Department of Labor, Employment and Earnings.
Series covers employees only, excluding personnel in the armed forces.
5. Based on data from U.S. Department of Commerce, Survey of Current
Business.
6. Based on data from U.S. Bureau of the Census, Survey of Current Business.
7. Based on data not seasonally adjusted. Seasonally adjusted data for changes
in the price indexes can be obtained from the Bureau of Labor Statistics, U.S.
Department of Labor, Monthly Labor Review.
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 except as noted
1992
Category
1990
1991
1993
1992
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
HOUSEHOLD SURVEY DATA
1 Noninstitutional population1
190,216
191,883
193,542
193,431
193,588
193,749
193,893
194,051
194,210
194,379
194,514
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
126,954
124,787
127,421
125,303
128,948
126,982
129,274
127,298
129,316
127,350
129,363
127,404
129,220
127,274
128,986
127,066
129,259
127,365
129,461
127,591
128,953
127,083
114,728
3,186
114,644
3,233
114,391
3,207
114,266
3,244
114,515
3,207
114,562
3,218
114,503
3,221
114,518
3,169
114,855
3,209
115,049
3,262
114,879
3,191
6,874
5.5
63,262
8,426
6.7
64,462
9,384
7.4
64,594
9,788
7.7
64,157
9,628
7.6
64,272
9,624
7.6
64,386
9,550
7.5
64,673
9,379
7.4
65,065
9,301
7.3
64,951
9,280
7.3
64,918
9,013
7.1
65,561
109,782r
108,310
108,434
108,423
108,594
108,485
108,497
108,571
108,646r
108,736r
108,842
19,117
710
5,133
5,808
25,877
6,729
28,130
18,304
18,455
691
4,685
5,772
25,328
6,678
28,323
18,380
18,192
635
4,594
5,741
25,120
6,672
28,903
18,578
18,236
634
4,600
5,745
25,144
6,672
28,854
18,538
18,242
633
4,584
5,742
25,156
6,660
28,971
18,606
18,145
626
4,591
5,729
25,070
6,661
28,981
18,682
18,102
620
4,574
5,738
25,079
6,669
29,065
18,650
18,046
623
4,601
5,731
25,115
6,680
29,152
18,623
18,068r
622
4,590r
5,732r
25,092r
6,669
29,188r
18,685r
18,061r
6191
4,581r
5,740r
25,127r
6,677
29,23l r
18,700r
18,095
615
4,544
5,764
25,232
6,685
29,212
18,695
ESTABLISHMENT SURVEY DATA
3
9 Nonagricultural payroll employment
10
11
12
13
14
15
16
17
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
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; excludes
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 U.S. Department of Labor, Employment and
Earnings.
A46
Domestic Nonfinancial Statistics • April 1993
2.12
OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION 1
Seasonally adjusted
1992
Ql
Q2
1992
Q3
Q4r
Output (1987=100)
Ql
Q2
1992
Q3
Q4
Capacity (percent of 1987 output)
Ql
Q2
Q3
Q4r
Capacity utilization rate (percent)
1 Total industry
107.1
108.S
109.1
110.2
137.0
137.7
138.4
139.1
78.2
78.8
78.8
79.2
2 Manufacturing
108.0
109.5
110.0
111.2
139.7
140.6
141.4
142.2
77.3
77.9
77.8
78.2
3
4
Primary processing
Advanced processing
104.0
109.9
105.4
111.4
106.4
111.7
107.1
113.1
129.3
144.6
129.6
145.6
129.9
146.7
130.3
147.7
80.5
76.0
81.3
76.5
81.9
76.2
82.2
76.6
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 .
106.6
98.5
102.2
103.8
100.0
122.1
110.5
91.7
108.4
96.7
101.7
101.6
101.7
125.7
111.8
100.5
108.8
98.5
104.0
104.6
103.0
128.8
112.6
98.1
110.1
101.5
104.0
105.9
101.3
131.9
113.0
103.5
143.7
125.9
129.1
134.1
122.1
164.3
147.9
136.2
144.4
126.1
128.3
132.7
122.2
165.9
149.1
136.7
145.2
126.3
127.5
131.2
122.3
167.4
150.4
137.2
146.0
126.5
126.7
129.8
122.4
168.9
151.6
137.7
74.2
78.2
79.2
77.4
81.9
74.3
74.7
67.3
75.0
76.7
79.2
76.6
83.3
75.8
75.0
73.5
74.9
78.0
81.5
79.7
84.3
76.9
74.9
71.5
82.1
81.6
82.7
78.1
74.5
75.1
99.3
96.8
94.9
93.3
140.4
140.9
141.5
142.1
70.8
68.7
67.1
65.7
14
15
16
17
18
19
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
109.8
104.3
105.8
113.6
124.4
107.7
110.9
106.2
106.7
116.8
129.7
109.2
111.6
106.6
108.2
118.0
132.4
106.9
112.5
107.1
107.5
119.6
135.6
119.2
119.9
144.3
150.5
121.5
136.5
119.7
120.5
145.1
152.2
121.6
137.4
120.2
121.1
146.0
121.7
81.5
87.9
88.7
79.2
83.7
88.7
81.7
89.0
89.0
81.0
86.2
89.9
81.8
89.1
89.8
81.3
87.0
87.9
81.9
89.1
88.8
81.9
110.3
134.8
118.8
119.3
143.4
148.7
121.4
97.9
107.0
109.7
98.9
107.4
110.3
99.2
109.4
113.2
98.9
110.5
113.4
114.7
129.5
125.6
114.7
129.8
126.0
114.8
130.1
126.4
114.8
130.4
126.8
85.3
82.6
87.3
86.2
82.7
87.6
86.5
84.1
89.5
86.2
84.8
89.5
20 Mining
21 Utilities
22 Electric
Previous cycle2
High
Low
Latest cycle3
1992
Low
Jan.
High
July
Aug.
90.6
1993
1992
June
75.4
80.3
Sept.
Oct/
Nov/
Dec/
Jan."
Capacity utilization rate (percent)
1 Total industry
89.2
72.6
87.3
71.8
78.0
78.6
79.1
78.8
78.6
79.0
79.3
79.3
79.5
2 Manufacturing
88.9
70.8
87.3
70.0
77.0
77.8
78.1
77.9
77.5
77.9
78.2
78.4
78.7
3
4
92.2
87.5
68.9
72.0
89.7
86.3
66.8
71.4
80.2
75.7
81.4
76.3
82.7
76.2
81.7
76.3
81.3
76.0
81.9
76.3
82.3
76.6
82.4
76.8
82.5
77.2
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
65.0
60.9
46.8
38.3
62.2
64.9
71.1
44.5
73.8
77.4
79.2
78.1
81.0
74.1
74.6
64.0
75.0
75.6
79.7
77.0
83.9
76.0
75.0
73.3
75.2
79.1
82.6
80.8
85.4
76.6
75.1
71.3
75.2
78.3
81.8
79.5
85.2
77.3
75.1
72.5
74.4
76.6
80.1
78.8
82.2
76.9
74.3
70.8
75.1
79.7
82.0
81.6
82.7
77.4
74.5
73.6
75.4
80.6
83.0
82.5
83.7
78.2
74.9
74.1
75.7
80.5
81.2
80.7
81.8
78.5
74.1
77.7
76.1
80.5
82.4
82.1
82.8
79.0
74.0
81.3
77.0
66.6
81.1
66.9
71.2
68.2
67.7
67.0
66.4
66.3
65.4
65.3
64.4
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
81.4
86.9
89.9
78.7
83.1
87.8
81.6
88.2
89.3
81.3
85.9
89.6
82.0
89.6
91.1
81.5
89.8
89.8
81.6
88.7
88.2
81.1
86.0
85.8
81.7
88.9
90.0
81.4
85.1
88.3
81.7
88.4
87.8
81.4
82.8
91.5
82.0
89.2
88.9
82.0
84.1
91.0
82.1
89.6
89.6
82.3
82.2
90.1
88.8
82.5
89.4
90.5
94.4
95.6
99.0
88.4
82.5
82.7
96.6
88.3
88.3
80.6
76.2
78.7
85.3
82.6
87.1
85.4
82.1
87.0
87.6
84.1
89.5
86.1
83.6
89.2
85.6
84.6
89.9
86.1
85.0
89.8
86.9
85.3
90.0
85.6
84.0
88.7
85.9
82.8
87.4
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
1993
1992
1987
Group
1992
avg.
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.r
Nov. r
Dec. r
Jan.p
Index (1987 = 100)
MAJOR MARKETS
1 Total index
100.0
108.7
106.6
107.2
107.6
108.1
108.9
108.5
109.4
109.1
108.9
109.7
110.3
110.5
111.0
109.8
111.5
110.8
109.2
106.8
100.6
87.2
123.1
116.2
111.1
110.6
103.6
116.1
111.2
110.1
95.0
122.0
121.8
106.2
99.0
108.9
109.6
111.2
110.7
106.9
104.5
98.2
88.1
115.1
114.0
108.9
108.5
100.9
114.2
111.7
108.9
95.5
124.1
124.2
108.1
103.5
109.7
110.7
112.4
111.9
108.1
108.8
105.9
88.5
135.1
113.3
107.6
103.8
100.5
114.3
112.9
109.8
94.9
126.8
124.1
111.5
110.3
112.0
111.3
113.2
112.6
109.4
110.1
107.2
89.4
137.1
114.4
108.9
103.8
101.4
116.5
113.5
109.8
95.5
128.4
126.1
111.9
107.6
113.5
111.9
113.9
113.2
112.1
114.7
116.5
97.7
148.1
112.0
110.0
104.2
104.4
116.7
113.5
109.6
95.9
129.8
126.5
109.7
105.8
111.2
112.5
114.6
114.1
114.9
120.3
125.0
103.9
160.3
113.3
110.6
103.0
106.0
117.8
113.9
110.0
95.6
131.4
127.4
108.7
107.6
109.2
7 Products
Final products
Consumer goods, total
5
Durable consumer goods
6
Automotive products
7
Autos and trucks
8
Autos, consumer
9
Trucks, consumer
10
Auto parts and allied goods...
11
Other
1?
Appliances, A/C, and TV
N
Carpeting and furniture
Miscellaneous home goods . . .
14
IS
Nondurable consumer goods
16
Foods and tobacco
Clothing
17
18
Chemical products
19
Paper products
70
Energy
71
Fuels
22
Residential utilities
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
109.5
111.1
110.4
108.1
106.7
102.0
90.0
122.1
113.7
109.2
104.7
102.7
115.8
111.1
108.5
95.2
122.6
124.3
107.5
104.7
108.6
107.5
108.7
108.1
101.3
94.2
84.3
79.1
93.0
109.1
106.9
99.6
101.1
114.7
110.0
107.3
95.0
118.1
126.8
106.8
103.8
108.0
108.1
109.4
108.8
105.3
101.6
94.3
84.8
110.2
112.6
108.3
102.9
102.4
115.0
109.8
107.4
95.2
118.3
124.7
106.4
103.5
107.5
108.5
109.8
109.3
106.2
103.6
95.7
81.9
118.8
115.5
108.3
103.5
102.5
114.7
110.2
107.8
95.1
119.4
124.6
107.0
103.7
108.2
109.0
110.6
110.1
107.9
106.5
102.5
93.1
118.3
112.5
109.1
103.4
104.4
115.2
110.7
107.6
95.3
120.8
125.1
108.9
105.1
110.3
109.7
111.4
110.8
111.1
110.6
107.8
98.6
123.3
114.8
111.5
107.4
105.9
117.3
110.7
107.7
96.4
121.4
124.3
107.2
104.0
108.4
109.0
110.5
109.6
109.2
108.0
104.0
97.6
114.8
114.0
110.2
106.2
103.2
116.9
109.7
107.2
95.5
121.6
121.7
104.8
104.4
105.0
109.6
111.0
110.4
108.6
106.6
100.5
92.3
114.3
115.7
110.3
102.3
103.8
118.8
110.8
108.6
96.8
121.5
121.9
107.4
105.3
108.2
?3
74
75
76
77
78
79
30
31
37
33
Equipment
Business equipment
Information processing and related ..
Office and computing
Industrial
Transit
Autos and trucks
Other
Defense and space equipment
Oil and gas well drilling
Manufactured homes
20.0
13.9
5.6
1.9
4.0
2.5
1.2
1.9
5.4
.6
.2
111.9
124.5
141.1
176.4
102.2
131.4
101.2
114.0
83.0
78.3
108.8
109.4
119.9
134.1
160.6
100.7
124.2
84.9
113.1
86.7
71.8
98.4
110.2
121.0
134.6
162.4
101.3
129.2
94.7
112.2
86.2
73.9
99.7
110.4
121.5
136.0
164.9
101.3
128.9
95.0
112.2
85.6
76.2
98.7
111.3
123.0
137.9
168.2
101.7
131.7
101.3
113.2
84.7
79.2
100.7
112.3
124.5
139.2
170.5
103.4
133.3
105.6
115.0
84.2
79.2
100.3
111.6
124.1
140.4
174.0
102.9
131.8
101.7
111.5
83.6
74.6
97.1
111.8
124.4
141.9
178.0
103.4
128.7
98.1
112.2
82.7
78.6
112.0
112.5
125.9
143.5
182.0
102.7
132.6
101.3
114.4
81.8
75.0
106.1
111.9
125.4
143.5
184.0
101.6
130.4
99.1
115.8
81.1
74.4
111.2
113.0
126.8
145.7
187.0
102.0
133.0
105.2
115.5
80.5
80.2
119.9
114.0
128.2
147.7
190.0
103.4
133.8
107.7
115.9
79.8
85.2
127.1
114.7
129.1
148.4
192.9
103.2
137.2
114.4
117.4
79.3
88.5
138.0
115.2
130.1
149.4
195.8
103.7
139.8
122.3
117.1
78.7
84.7
138.2
34
35
36
Intermediate products, total
Construction supplies
Business supplies
14.7
6.0
8.7
104.6
97.4
109.5
103.9
95.5
109.9
104.0
96.0
109.6
104.4
96.7
109.7
103.9
96.5
109.0
104.4
97.8
109.0
104.4
97.2
109.4
105.1
98.6
109.7
104.4
98.5
108.5
104.5
97.1
109.6
105.5
98.5
110.4
105.5
98.5
110.4
105.9
98.6
111.0
106.2
98.9
111.3
37
38
39
40
41
47
43
44
45
46
47
48
49
50
Durable goods materials
Durable consumer parts
Equipment parts
Other
Basic metal materials
Nondurable goods materials
Textile materials
Pulp and paper materials
Chemical materials
Other
Energy materials
Primary energy
Converted fuel materials
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
107.4
109.9
100.9
116.1
108.8
108.2
109.7
102.7
109.8
110.4
112.4
101.2
100.3
102.9
105.2
107.0
95.3
114.1
106.7
105.1
107.3
98.9
107.4
107.6
111.2
100.4
100.5
100.2
105.8
108.1
97.1
115.2
107.5
107.3
107.1
101.5
106.8
106.6
111.2
100.5
100.6
100.4
106.1
108.3
97.9
115.1
107.5
106.3
108.9
102.0
107.8
109.3
112.7
100.1
98.2
103.8
106.8
108.7
99.3
114.7
108.1
106.3
109.4
103.2
109.2
109.9
112.2
101.3
99.8
104.1
107.7
110.4
102.5
116.2
109.2
108.3
109.7
102.9
107.8
111.2
112.4
101.3
99.7
104.3
107.6
110.2
102.9
116.2
108.7
107.7
110.4
102.3
110.8
110.9
113.4
100.6
99.6
102.6
109.0
111.2
101.8
117.5
110.2
111.5
111.7
103.9
111.8
113.4
112.8
102.9
102.3
104.1
108.1
111.1
103.9
117.0
109.5
110.9
110.3
102.9
108.9
111.9
112.6
100.9
101.4
100.0
107.9
109.9
102.3
116.4
108.1
108.1
110.5
103.9
112.7
110.9
111.5
102.0
101.8
102.5
108.2
110.9
103.5
117.2
109.1
108.5
109.7
103.3
109.6
110.2
112.6
102.0
102.1
101.7
108.6
111.4
103.1
117.7
110.0
110.8
110.6
103.9
111.0
111.1
113.0
102.0
101.3
103.5
108.4
111.6
103.2
118.2
109.9
108.1
111.0
103.7
113.2
110.7
113.7
100.5
99.4
102.6
108.5
112.3
105.2
118.3
110.5
108.9
110.2
104.3
110.7
110.2
113.1
100.4
99.6
101.9
97.3
95.3
108.9
109.2
107.3
107.6
107.6
107.8
107.9
108.2
108.3
108.6
109.0
109.2
108.6
108.8
109.6
109.9
109.3
109.6
109.2
109.5
109.8
110.1
110.4
110.7
110.4
110.7
110.6
110.9
97.5
107.0
105.3
105.8
106.1
106.6
107.4
106.8
107.6
107.3
107.0
107.8
108.3
108.5
108.8
111.0
110.7
111.4
111.3
111.4
111.0
112.2
111.9
112.9
112.7
113.0
113.6
113.4
114.7
4
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
trucks
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
111.0
110.8
109.6
108.3
109.7
109.1
110.2
109.6
110.6
110.3
110.9
111.2
109.9
110.1
12.7
126.8
123.3
123.6
124.1
125.2
126.4
126.3
127.0
128.3
127.9
128.9
130.2
130.6
130.9
12.0
28.4
116.1
109.8
113.3
107.1
114.3
107.8
114.5
108.5
115.7
108.9
117.1
110.2
116.1
110.3
115.8
111.3
116.8
110.8
115.9
110.1
117.0
110.5
118.2
111.2
118.8
111.4
119.5
111.6
A48
Domestic Nonfinancial Statistics • April 1993
2.13—Continued
„
Uroup
SIC
code
1987
proportion
1992
1993
1992
avg.
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.r
Nov. r
Dec. r
Jan."
Index (1987 = 100)
MAJOR INDUSTRIES
100.0
108.7
106.6
107.2
107.6
108.1
108.9
108.5
109.4
109.1
108.9
109.7
110.3
110.5
111.0
2 Manufacturing
3 Primary processing
4 Advanced processing
84.4
26.7
57.7
109.7
105.7
111.5
107.4
103.6
109.2
108.1
103.9
110.0
108.5
104.5
110.3
109.0
105.0
110.8
109.9
105.6
111.9
109.6
105.6
111.4
110.2
107.3
111.6
110.1
106.2
112.0
109.8
105.7
111.7
110.6
106.6
112.5
111.2
107.2
113.1
111.7
107.5
113.7
112.4
107.7
114.6
5
6
7
8
Durable goods
Lumber and products . . .
"'24
Furniture and fixtures . . .
25
Clay, glass, and stone
products
32
Primary metals
33
Iron and steel
331,2
Raw steel
333-6,9
Nonferrous
Fabricated metal
products
34
35
Nonelectrical machinery.
Office and computing
357
machines
Electrical machinery . . . .
36
Transportation
37
equipment
Motor vehicles and
parts
371
Autos and light
trucks
Aerospace and miscellaneous transportation equipment.. 372-6,9
Instruments
38
Miscellaneous
39
47.3
2.0
1.4
108.4
98.7
100.3
105.8
97.4
98.7
107.0
98.8
98.1
107.0
99.2
98.6
107.6
97.2
101.1
109.1
97.4
103.3
108.5
95.4
100.3
109.0
99.8
101.0
109.2
98.9
101.7
108.2
96.7
100.5
109.5
100.8
99.6
110.1
101.9
99.5
110.7
101.9
101.3
111.5
101.9
101.9
2.5
3.3
1.9
.1
1.4
96.2
102.9
103.9
101.2
101.5
92.8
102.5
105.0
103.3
98.9
94.6
102.7
103.7
102.7
101.2
95.0
101.4
102.5
98.8
99.9
95.6
100.9
100.9
99.9
100.9
96.7
102.0
102.2
98.5
101.8
96.6
102.1
101.8
101.5
102.5
97.1
105.6
106.4
105.3
104.4
96.4
104.3
104.4
101.9
104.2
96.1
102.0
103.0
99.8
100.5
97.7
104.2
106.3
101.7
101.2
97.4
105.2
107.1
101.5
102.5
98.7
102.6
104.4
100.4
100.2
98.6
104.0
105.8
101.2
101.3
5.4
8.6
101.7
127.2
99.7
121.4
100.5
121.9
100.0
122.9
100.6
124.1
102.2
126.7
102.2
126.4
102.6
127.8
102.5
129.3
101.3
129.1
102.9
130.4
102.5
132.1
103.7
133.1
104.4
134.3
2.5
8.6
176.5
111.8
160.5
110.0
162.4
110.7
164.9
110.9
168.2
111.0
170.5
112.3
174.0
112.2
178.0
112.6
182.0
113.0
184.0
112.1
187.0
112.7
190.0
113.6
192.9
112.7
195.8
112.9
101.5
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 . . .
1
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Total index
34 Mining
35 Metal
36 Coal
37 Oil and gas extraction
38 Stone and earth minerals ..
39 Utilities
40 Electric
41 Gas
9.8
97.3
93.8
96.8
96.5
98.0
99.6
98.2
96.7
97.0
95.6
97.5
97.3
99.6
4.7
98.7
87.1
93.8
94.2
98.5
102.7
100.4
97.7
99.4
97.2
101.2
102.1
107.1
112.2
2.3
100.2
83.5
92.9
93.7
101.1
106.5
103.0
99.3
98.6
96.7
103.1
104.6
113.7
121.9
5.1
3.3
1.2
96.1
118.3
120.0
99.8
118.3
121.2
99.6
118.6
120.0
98.6
118.6
120.0
97.4
119.0
118.9
96.8
119.8
118.4
96.3
118.5
117.8
95.7
118.5
120.4
94.9
118.2
118.2
94.1
118.1
118.6
94.1
117.8
119.7
93.0
117.8
123.0
92.9
118.0
124.5
91.7
118.4
125.6
"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
111.2
110.1
105.5
106.0
97.7
107.1
113.3
117.2
108.6
109.5
109.2
98.8
103.1
97.5
107.1
114.8
112.7
106.6
109.6
109.6
99.4
104.7
97.7
104.6
114.4
113.4
106.9
110.4
110.2
101.3
105.3
97.8
105.8
113.8
114.8
109.7
110.7
109.6
101.0
106.3
98.0
107.0
113.7
115.8
110.3
110.9
109.3
102.5
106.8
99.0
105.8
113.4
117.0
108.5
111.0
109.0
103.6
105.3
98.1
107.3
113.0
117.5
108.9
111.7
109.8
106.6
107.1
99.4
109.6
112.3
118.0
109.1
111.3
110.6
115.9
106.1
97.6
106.3
111.4
117.6
104.3
111.8
110.2
110.5
106.6
97.6
108.6
113.2
118.3
107.4
112.0
111.2
107.6
106.1
97.2
106.2
113.4
118.7
111.3
112.6
111.1
108.4
107.2
98.1
107.6
113.7
119.7
110.7
113.1
110.7
109.8
107.9
97.7
108.7
114.8
120.5
108.8
113.4
111.1
110.5
108.6
97.7
107.9
115.5
121.0
110.2
30
31
3.0
.3
117.3
85.5
113.2
83.0
114.0
81.4
115.4
82.9
116.5
84.1
117.1
86.2
117.3
86.2
118.5
87.1
119.0
84.8
117.3
86.4
118.3
87.0
119.4
87.5
120.9
87.4
121.3
87.4
10
11,12
13
14
7.9
.3
1.2
5.7
.7
98.7
158.1
105.5
93.2
105.9
97.8
144.2
107.3
92.4
104.8
98.4
152.9
107.9
92.7
103.5
97.5
155.8
103.0
91.9
107.4
99.1
154.2
104.0
94.2
105.9
99.7
166.4
107.6
93.4
108.0
98.0
154.0
98.6
93.9
105.6
100.6
163.7
112.0
94.0
106.2
98.8
165.6
107.5
92.4
106.4
98.3
158.6
103.7
93.0
105.2
98.8
155.7
103.9
93.9
104.9
99.8
164.6
106.8
94.0
105.9
98.3
162.8
106.7
92.0
105.8
98.6
160.4
110.0
91.9
106.6
49L3PT
492,3PT
7.6
6.0
1.6
108.3
111.3
97.1
106.8
109.3
97.5
106.4
109.0
96.9
107.7
110.7
96.7
108.2
111.0
97.7
107.3
110.2
96.6
106.7
109.7
95.3
109.3
113.0
95.4
108.8
112.7
94.1
110.2
113.8
97.0
110.7
113.7
99.6
111.3
114.0
101.0
109.6
112.5
99.0
108.2
111.0
97.7
79.8
110.3
108.6
108.9
109.3
109.6
110.3
110.1
110.9
110.7
110.5
111.1
111.7
112.0
112.4
82.0
107.7
105.8
106.5
106.8
107.2
108.1
107.6
108.2
108.0
107.6
108.3
108.8
109.3
109.9
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
1,734.8 1,931.9 1,869.5 1,889.7 1,902.8 1,918.7 1,935.5 1,920.1 1,936.2 1,935.9 1,937.0 1,969.8 1,983.0 1,992.9 2,016.9
45
46
47
48
Final
Consumer goods
Equipment
Intermediate
1,350.9 1,529.3 1,468.7 1,490.8 1,501.5 1,518.2 1,532.1 1,519.1 1,530.4 1,532.8 1,534.6 1,563.8 1,574.9 1,585.2 1,606.4
877.6 890.2 896.2 905.6 912.4 901.3 909.3
833.4 907.7
905.3 907.1
928.2 932.0 934.4 948.7
517.5 621.6 591.1
600.6 605.3 612.7 619.7 617.8 621.0 627.5
627.5 635.6 643.0 650.8 657.8
384.0 402.6 400.7
398.9 401.2 400.5
403.4 401.1 405.8 403.1
402.4 406.0 408.1
407.6 410.5
1. Data in this table also appear in the Board's G.17 (419) monthly 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
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
1992
Item
1990
1991
1992
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
156r
655
484
171
1,067
889
178
193r
1,054
879
175
l,197r
1,019
178r
653
484
169
1,204
1,011
193
194r
1,032
872
160
l,141r
994r
147r
643
483
160
1,184
982
202
194
1,080
879
201
l,106r
961r
145r
628
476
152
1,229
1,019
210
210r
1,076
877
199
1,22?
l,038r
191
633
480
153
1,144
955
189
202r
1,125
913
212
l,218r
l,045r
173r
639
487
152
1,125
937
188
217r
1,139
959
180
1,226
1,079
147
644
493
151
1,140
965
175
228
1,126
955
171
1,226
1,089
137
641
497
144
1,241
1,007
234
244
1,201
1,044
157
1,285
1,133
152
648
507
141
1,184
986
198
266
555
277
546
274
554
272
583
272
616
271
627
269
671
268
618
268
617
270
656
276
120.3
144.3
120.0
144.8
120.0
145.0
113.0
146.0
124.5
146.6
118.0
137.7
123.5
145.3
119.5r
142.2r
122.0
147.5
128.9
147.8
117.0
140.2
3,219
3,500
3,510
3,490
3,460
3,350
3,450
3,310
3,300
3,640
3,830
4,020
99.7
127.4
103.4
130.7
104.0
130.2
103.3
130.6
102.5
130.6
105.1
133.7
102.7
132.2
104.6
132.2
103.4
131.0
103.4
129.4
103.0
129.0
103.9
130.4
1,094
907
187
l,318r
1,050"
268r
657
482
175
1,127
975
152
197
1,058
873
185
l,095r
607
276
120.0
147.0
3,211
95.2
118.3
1 Permits authorized
2 One-family
3 Two-or-more-family
4 Started
5 One-family
6 Two-or-more-family
7 Under construction at end of period ..
8 One-family
9 Two-or-more-family
10 Completed
11 One-family
12 Two-or-more-family
13 Mobile homes shipped
1,111
794
317
1,193
895
298
711
449
262
1,308
966
342
188
949
754
195
1,014
840
174
606
434
173
1,091
838
253
171
1,097
913
184
1,200
1,030
170
618
479
139
1,155
961
193
210
Merchant builder activity in
one-family units
14 Number sold
15 Number for sale at end of period . . .
535
321
507
283
122.3
149.0
18 Number sold
Price of units sold (thousands
of dollars)2
19 Median
20 Average
Price of units sold (thousands
of dollars)
16 Median
17 Average
939R
EXISTING UNITS ( o n e - f a m i l y )
Value of new construction (millions of dollars)3
CONSTRUCTION
21 Total put in place
442,066 400,955 425,807 421,512 427,585 427,980 426,730 425,700 419,598 429,291 430,494 434,295 434,351
22 Private
23 Residential
24 Nonresidential, total
Industrial buildings
25
26
Commercial buildings
27
Other buildings
28
Public utilities and other
334,153 290,707 307,066 301,142 309,832
182,856 157,837 183,044 172,660 182,644
151,297 132,870 124,022 128,482 127,188
23,721
21,335
23,849 22,281
20,155
62,866 48,482 40,231
42,108 40,712
20,797
21,573 21,479 21,409
21,591
42,991
41,310 42,063 41,174 43,732
306,999 312,182 305,848 301,984 308,813 312,177 314,118
182,892 184,630 181,162 184,201 186,343 188,675 190,701
124,107 127,552 124,686 117,783 122,470 123,502 123,417
18,594
21,008
20,285
20,594
19,019
19,046
17,862
40,003
39,643 43,310 39,988
37,010
39,333
40,537
21,991
21,648
21,582
21,993
22,228
21,518
22,068
43,257
41,463 41,966 41,876 41,393
42,050
42,252
314,228
194,198
120,030
18,572
35,915
21,942
43,601
29 Public
30 Military
31 Highway
32 Conservation and development...
33 Other
107,909
2,664
31,154
4,607
69,484
120,981
2,668
32,633
5,767
79,913
120,122
2,604
32,911
7,848
76,759
110,247
1,837
29,918
4,958
73,534
118,739
2,490
32,882
6,092
77,275
120,370
2,548
30,895
6,197
80,730
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 Census Bureau in its
estimating techniques. For a description of these changes, see Construction
Reports (C-30-76-5), issued by the Census Bureau in July 1976.
117,753
2,329
31,447
5,818
78,159
114,548
2,503
31,496
5,889
74,660
119,853
2,372
32,682
5,772
79,027
117,614
2,438
33,451
5,382
76,343
120,478
3,172
34,651
6,364
76,291
118,317
2,299
32,200
6,698
77,120
120,177
2,705
34,834
7,093
75,545
SOURCE. Census Bureau 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 1993
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
1992r
1992
Jan.
19931
1992
1993
Jan.
Mar.
June
Sept.
Dec.
Sept.
Oct.
Nov.
Dec.
Jan.
Index
level,
Jan.
19931
CONSUMER PRICES2
(1982-84=100)
1 All items
2 Food
3 Energy items
4 All items less food and energy
5 Commodities
6 Services
2.6
3.3
3.5
2.6
2.6
3.2
.LR
.4
.2
.1
.5
142.6
1.0
-6.5
3.9
3.3
4.3
1.9
3.3
3.5
2.7
3.8
2.4
-3.9
4.5
4.1
4.5
-1.2
8.6
2.8
2.5
3.1
3.2
1.2
2.5
1.8
2.9
1.4
1.9
3.8
1.5
4.7
,3r
.0
.R
,3r
-,2r
,2r
,2r
.0
.5
.5
.3
.5r
.4
.5
.5
.5
.4
139.8
103.4
149.9
133.6
159.3
-.4
-1.8
-10.0
3.1
2.1
1.8
1.1
3.1
1.9
1.4
2.0
-.3
-1.0
3.6
3.5
3.3
-.6
16.6
2.4
.9
1.3
4.3
-3.5
1.5
1.2
-.3
2.9
-9.8
.9
.3
,2r
.4r
-.R
-.R
.3
.0
-.I
.2
-.9
.9
.4
.3
124.0
123.8
76.6
139.0
130.4
-3.0
-1.1
1.9
1.5
1.1
2.0
5.0
1.7
.7
1.3
-1.4
-.3
.R
.R
-3.3
-23.8
-7.9
1.4
6.5
8.9
8.4
-26.6
15.8
2.7
51.5
4.8
-4.8
19.8
2.2
4.3
-20.2
1.5
5.1r
-,4r
.R
,OR
,2r
.3
.1
,4r
-.R
.3
PRODUCER PRICES
(1982 = 100)
7 Finished goods
8 Consumer foods
9 Consumer energy
TO
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.
.R
.R
-.2
.R
— 5
-I.R
1.3r
-2.3 r
.R
,I
.2
-.2r
-.2
-.R
-.R
-.R
.2
.3
.3
115.5
122.9
,7R
-.6
.6
~.7 r
l.(f
-4.9
2.3r
.3
.0
3.1
105.2
79.2
133.9
-1.2 r
-1.2 r
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
1992
1991
Q4
Ql
Q2
Q3
GROSS DOMESTIC PRODUCT
5,522.2
5,677.5
5,945.7
5,753.3
5,840.2
5,902.2
5,978.5
3.748.4
464.3
1.224.5
2,059.7
3,887.7
446.1
1,251.5
2,190.1
4,093.9
479.9
1,289.5
2,324.5
3,942.9
450.4
1,251.4
2,241.1
4,022.8
469.4
1,274.1
2,279.3
4,057.1
470.6
1,277.5
2.309.0
4.108.7
482.5
1.292.8
2,333.3
799.5
793.2
577.6
201.1
376.5
215.6
721.1
731.3
541.1
180.1
360.9
190.3
769.7
766.3
548.0
169.0
379.0
736.1
726.9
528.7
169.7
358.9
198.2
722.4
738.2
531.0
170.1
360.8
207.2
773.2
765.1
550.3
170.3
380.0
214.8
781.6
766.6
549.6
166.1
383.5
217.0
6.3
3.3
-10.2
-10.3
3.4
1.2
9.2
14.5
-15.8
-13.3
8.1
6.4
15.0
9.7
-68.9
557.0
625.9
-21.8
598.2
620.0
-32.7
634.3
667.0
-16.0
622.9
638.9
-8.1
628.1
636.2
-37.1
625.4
662.5
-36.0
639.0
675.0
1,043.2
426.4
616.8
1,090.5
447.3
643.2
1,114.8
449.1
665.7
1,090.3
440.8
649.5
1,103.1
445.0
658.0
1.109.1
444.8
664.3
1,124.2
455.2
669.0
5,515.9
5.687.7
2.192.8
907.6
1,285.1
3,030.3
464.7
5,942.3
2,254.9
940.2
1,314.7
3,197.1
490.3
5.744.2
2,188.4
905.7
1,282.7
3.090.3
465.5
5,855.9
2,233.6
923.6
1,310.0
3,142.2
480.1
5.894.1
2.233.2
932.3
1,300.8
3,173.4
487.6
5.963.5
2,258.4
943.8
1.314.6
3,217.8
487.3
6.3
-.9
7.2
-10.2
3.4
-2.3
5.7
9.2
-8.1
17.3
-15.8
-19.3
3.5
8.1
-19.3
9.0
9.5
-1.4
15.0
2.7
12.3
4,877.5
4,821.0
4,919.9
4,838.5
4,873.7
4,892.4
4,933.7
30 Total
4,468.3
4,544.2
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
3,291.2
2,742.9
514.8
2,228.0
548.4
277.4
271.0
3,390.8
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
14 Net exports of goods and services
15 Exports
16 Imports
17 Government purchases of goods and services ..
18 Federal
19 State and local
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
2,160.1
920.6
1,239.5
2,846.4
509.4
218.2
NATIONAL INCOME
4,599.1
4,679.4
4,716.5
4,719.6
543.5
2,268.7
578.7
290.4
288.3
3,524.2
2,915.9
562.2
2,353.7
608.3
302.6
305.7
3,433.8
2,845.0
546.4
2,298.6
588.7
293.7
295.0
3,476.3
2,877.6
554.6
2,323.0
598.7
299.4
299.2
3,506.3
2,901.3
561.4
2,339.9
605.0
301.5
303.6
3,534.3
2,923.5
564.3
2,359.1
610.8
302.9
307.9
404.2
364.6
39.6
377.9
340.0
37.9
393.6
353.6
40.1
398.4
359.9
38.5
397.4
365.9
31.5
2,812.2
38 Proprietors' income1 ••••••.
39 Business and professional
40 Farm1
366.9
325.2
41.7
368.0
332.2
35.8
41 Rental income of persons2
-12.3
-10.4
4.7
-6.6
-4.5
3.3
6.4
42 Corporate profits1
43 Profits before tax
44 Inventory valuation adjustment
45 Capital consumption adjustment
361.7
355.4
-14.2
20.5
346.3
334.7
3.1
8.4
n.a.
n.a.
-8.3
29.3
347.1
332.3
.7
14.1
384.0
366.1
-5.4
23.3
388.4
376.8
-15.5
27.0
374.1
354.1
-9.7
29.7
46 Net interest
460.7
449.5
n.a.
446.9
430.0
420.0
407.3
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. U.S. Department of Commerce, Survey of Current Business.
A51
A52
2.17
Domestic Nonfinancial Statistics • April 1993
PERSONAL INCOME A N D SAVING
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1992
1991
Account
1990
1991
1992
Q4
Ql
Q2
Q3
Q4
PERSONAL INCOME AND SAVING
1 Total personal income
4,664.2
4,828.3
5,056.8
4,907.2
4,980.5
5,028.9
5,062.0
5,155.7
2 Wage and salary disbursements
3 Commodity-producing industries
2,742.8
745.6
556.1
634.6
847.8
514.8
2,812.2
737.4
556.9
647.4
883.9
543.6
2,917.4
743.1
565.6
666.7
945.5
562.2
2,845.0
741.5
563.9
652.9
904.3
546.4
2,877.6
736.8
559.9
660.9
925.3
554.6
2,901.3
743.1
564.7
662.9
933.9
561.4
2,923.5
742.4
565.5
667.7
949.1
564.3
2,967.3
750.0
572.3
675.4
973.6
568.4
271.0
366.9
325.2
41.7
-12.3
140.3
694.5
685.8
352.0
288.3
368.0
332.2
35.8
-10.4
137.0
700.6
771.1
382.0
305.7
404.2
364.6
39.6
4.7
139.3
669.7
866.3
414.4
295.0
377.9
340.0
37.9
-6.6
134.3
703.3
799.8
390.6
299.2
393.6
353.6
40.1
-4.5
133.9
684.8
842.7
405.7
303.6
398.4
359.9
38.5
3.3
136.6
675.2
859.7
412.1
307.9
397.4
365.9
31.5
6.4
141.0
663.2
874.1
417.1
312.2
427.2
379.1
48.1
13.5
145.8
655.7
888.6
422.6
5
Distributive industries
7
Government and government enterprises
9 Proprietors' income
10 Business and professional
11 Farm1
12 Rental income of persons2
14 Personal interest income
16
Old-age survivors, disability, and health insurance benefits . . .
17
LESS: Personal contributions for social insurance
18 EQUALS: Personal income
224.8
238.4
250.5
241.5
246.8
249.3
251.5
254.5
4,664.2
4,828.3
5,056.8
4,907.2
4,980.5
5,028.9
5,062.0
5,155.7
621.3
618.7
627.2
622.3
619.6
617.1
628.8
643.1
20 EQUALS: Disposable personal income
4,042.9
4,209.6
4,429.6
4,284.9
4,360.9
4,411.8
4,433.2
4,512.5
21
LESS: Personal outlays
3,867.3
4,009.9
4,216.1
4,065.5
4,146.3
4,179.5
4,229.9
4,308.5
22 EQUALS: Personal saving
175.6
199.6
213.5
219.4
214.6
232.3
203.3
204.0
19,513.0
13,043.6
14,068.0
19,077.1
12,824.1
13,886.0
19,260.9
12,967.7
14,032.0
19,066.0
12,802.6
13,913.0
19,158.5
12,930.2
14,017.0
19,181.8
12,893.3
14,021.0
19,288.4
12,973.3
13,998.0
19,413.4
13,073.8
14,090.0
4.3
4.7
4.8
5.1
4.9
5.3
4.6
4.5
27 Gross saving
718.0
708.2
n.a.
698.2
677.5
682.9
696.9
n.a.
28 Gross private saving
854.1
901.5
n.a.
934.8
950.1
968.1
992.1
n.a.
30 Undistributed corporate profits
31 Corporate inventory valuation adjustment
175.6
75.7
-14.2
199.6
75.8
3.1
213.5
n.a.
-8.3
219.4
78.3
.7
214.6
104.0
-5.4
232.3
97.7
-15.5
203.3
91.2
-9.7
204.0
n.a.
-2.7
368.3
234.6
383.0
243.1
395.0
258.6
386.3
250.7
386.1
245.3
391.2
247.0
407.2
290.4
395.5
251.8
-136.1
-166.2
30.1
-193.3
-210.4
17.1
-281.0
-295.3
14.2
-236.6
-258.7
22.0
-272.6
-289.2
16.6
-285.2
-302.9
17.7
-295.2
-304.4
9.2
19
LESS: Personal tax and nontax payments
MEMO
Per capita (1987 dollars)
24 Personal consumption expenditures
25 Disposable personal income
26 Saving rate (percent)
GROSS SAVING
Capital consumption allowances
33 Noncorporate
34 Government surplus, or deficit ( - ) , national income and
36
State and local
n.a.
n.a.
n.a.
37 Gross investment
723.4
730.1
721.4
714.6
706.5
713.8
732.0
733.4
38 Gross private domestic
799.5
-76.1
721.1
9.0
769.7
n.a.
736.1
-21.5
722.4
-16.0
773.2
-59.4
781.6
-49.6
801.5
n.a.
5.4
21.9
16.4
29.0
30.9
35.1
40 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
n.a.
SOURCE. U.S. Department of Commerce, Survey of Current Business.
n.a.
Summary Statistics
3.10
U.S. INTERNATIONAL TRANSACTIONS
A53
Summary
Millions of dollars; quarterly data seasonally adjusted except as noted 1
1992
1991
Item
1989
1990
1991
Q3
Q4
Ql
Q2
Q3P
-5,903
-17,222
107,946
-125,168
-624
14,468
4,474
-2,620
-858
-3,521
-17,802
-24,558
107,464
-132,022
-623
13,261
1,930
-3,085
-1,146
-3,581
-14,238
-26,538
110,812
-137,350
-548
16,173
3,551
-2,490
-%9
-3,417
-90,428
-108,853
388,705
-497,558
-7,818
39,873
19,287
-17,597
-2,945
-12,374
-3,682
-73,436
415,962
-489,398
-5,524
50,821
16,429
24,487
-3,462
-12,9%
-11,087
-20,174
104,151
-124,325
-995
13,018
3,076
-1,986
-793
-3,233
-7,218
-18,539
107,851
-126,390
-540
13,676
2,458
78
-1,080
-3,271
1,271
2,304
3,397
3,180
-437
-38
-277
-385
12 Change in U.S. official reserve assets (increase, - )
N
Gold
14 Special drawing rights (SDRs)
15 Reserve position in International Monetary Fund
16 Foreign currencies
-25,293
0
-535
471
-25,229
-2,158
0
-192
731
-2,697
5,763
0
-177
-367
6,307
3,877
0
6
-114
3,986
1,225
0
-23
17
1,232
-1,057
0
-172
111
-9%
1,464
0
-168
1
1,631
1,952
0
-173
-118
2,243
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
-90,923
-51,255
11,398
-22,070
-28,9%
-56,467
7,469
-2,477
-28,765
-32,694
-71,379
-4,753
5,526
-45,017
-27,135
-17,426
2,403
-298
-12,403
-7,128
-44,947
-23,219
1,269
-11,305
-11,692
-3,155
15,859
4,764
-8,703
-15,075
-1,150
10,943
3,137
-8,221
-7,009
-21,724
-440
-14,103
-7,181
27 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 liabilities
26 Other U.S. liabilities reported by U.S. banks3
27 Other foreign official assets
8,489
149
1,383
146
4,976
1,835
33,908
29,576
667
1,866
3,385
-1,586
18,407
15,815
1,301
1,600
-1,668
1,359
4,115
5,624
474
654
-2,732
95
12,819
12,619
1,075
-344
-914
383
21,192
14,909
540
%
5,534
113
20,895
11,126
1,699
598
7,547
-75
-7,738
-323
912
875
-8,202
-1,000
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 .
37 Foreign purchases of other U.S. securities, net
33 Foreign direct investments in United States, net
205,205
63,382
5,565
29,618
38,767
67,873
65,471
16,370
4,906
-2,534
1,592
45,137
48,573
-13,677
-405
16,241
34,918
11,498
18,818
8,508
1,575
-1,306
10,012
29
36,110
23,465
725
1,408
4,832
5,680
-2,629
-4,474
1,942
-828
4,551
-3,820
26,520
-551
1,141
10,286
10,333
5,311
25,024
19,945
5,364
3,076
-3,361
0
2,394
0
47,370
0
-1,078
2,394
47,370
-1,078
0
-1,478
-6,137
4,659
0
2,447
613
1,835
0
-8,410
4,023
-12,433
0
-29,650
410
-30,060
0
17,109
-7,680
24,789
-25,293
-2,158
5,763
3,877
1,225
-1,057
1,464
1,952
8,343
32,042
16,807
3,461
13,163
21,0%
20,297
-8,613
10,738
1,707
-5,604
-4,288
1,023
2,459
-2,125
3,061
1 Balance on current account
7 Merchandise trade balance2
3
Merchandise exports
Merchandise imports
4
5 Military transactions, net
6 Other service transactions, net
7 Investment income, net
8 U.S. government grants
9 U.S. government pensions and other transfers
10 Private remittances and other transfers
11 Change in U.S. government assets other than official
reserve assets, net (increase, - )
34 Allocation of special drawing rights
35 Discrepancy
36 Due to seasonal adjustment
37 Before seasonal adjustment
-101,142
-115,668
361,697
-477,365
-6,837
32,604
14,366
-10,773
-2,517
-12,316
MEMO
Changes in official assets
38 U.S. official reserve assets (increase, - )
39 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)
1. Seasonal factors not calculated for lines 12-16, 18-20, 22-34, and 38-40.
2. Data are on an international accounts 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 types of depository institution 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. U.S. Department of Commerce, Survey of Current Business.
A54
3.11
International Statistics • April 1993
U.S. FOREIGN TRADE 1
Millions of dollars; monthly data seasonally adjusted
1992
Item
1 Exports of domestic and foreign
merchandise, excluding grant-aid
shipments
2 General imports including merchandise
for immediate consumption
plus entries into bonded
warehouses
3 Trade balance
1990
393,592
1991
421,730
1992
448,156
Julyr
Aug/
Sept/
Oct/
Nov/
Dec."
38,165
37,806
35,799
37,882
39,072
38,187
39,728
495,311
487,129
532,498
44,957
45,170
44,974
46,551
46,324
45,535
46,681
-101,718
-65,399
-84,341
-6,792
-7,364
-9,174
-8,669
-7,252
-7,348
-6,953
1. Government and nongovernment shipments of merchandise between foreign
countries and the fifty states, including the District of Columbia, Puerto Rico, the
U.S. Virgin Islands, and U.S. Foreign Trade Zones. Data exclude (1) shipments
among the United States, Puerto Rico, the U.S. Virgin Islands, and other U.S.
affiliated insular areas, (2) shipments to U.S. Armed Forces and diplomatic
missions abroad for their own use, (3) U.S. goods returned to the United States by
its Armed Forces, (4) personal and household effects of travelers, and (5)
in-transit shipments. Data reflect the total arrival of merchandise from foreign
countries that immediately entered consumption channels, warehouses, or U.S.
Foreign Trade Zones (general imports). Import data are Customs value; export
data are F.A.S. value. Beginning in 1990, data for U.S. exports to Canada are
derived from import data compiled by Canada; similarly, in Canadian statistics,
Canadian exports to the United States are derived from import data compiled by
3.12
June
the United States. Since Jan. 1, 1987, merchandise trade data have been released
forty-five days after the end of the month; the previous month is revised to reflect
late documents.
Data in this table differ from figures for merchandise trade shown in the U.S.
balance of payments accounts (table 3.10, lines 2 to 4) primarily for reasons of
coverage. For both exports and imports a large part of the difference is the
treatment of military sales and purchases. The military sales to foreigners
(exports) and purchases from foreigners (imports) that are included in this table as
merchandise trade are shifted, in the balance of payments accounts, from
"merchandise trade" into the broader category "military transactions."
SOURCE. FT900, U.S. Merchandise Trade, (U.S. Department of Commerce,
Bureau of the Census).
U.S. RESERVE ASSETS
Millions of dollars, end of period
1992
Asset
1 Total
2 Gold stock, including Exchange
Stabilization Fund1
3 Special drawing rights '
4 Reserve position in International
Monetary Fund2
5 Foreign currencies4
1989
1990
July
Aug.
Sept.
Oct.
Nov.
Dec/
74,609
83,316
77,719
77,370
78,474
78,527
74,207
72,231
71,323
11,059
9,951
11,058
10,989
11,057
11,240
11,059
11,702
11,059
12,193
11,059
12,111
11,060
11,561
11,059
11,495
11,056
8,503
9,048
44,551
9,076
52,193
9,488
45,934
9,625
44,984
9,762
45,460
9,778
45,579
9,261
42,325
8,781
40,8%
11,759
40,005
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, line 3. Gold stock is valued at $42.22 per fine troy ounce.
2. Special drawing rights (SDRs) are valued according to a technique 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,
3.13
1993
1991
5 currencies 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 of SDRs by the International Monetary Fund on Jan. 1
of the year indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—
$710 million; 1979—$1,139 million; 1980—$1,152 million; 1981—$1,093 million;
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
1992
Asset
1989
1990
July
1 Deposits
Held in custody
2 U.S. Treasury securities
3 Earmarked gold3
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.P
589
369
968
264
297
546
415
229
205
325
224,911
13,456
278,499
13,387
281,107
13,303
316,431
13,261
318,328
13,261
306,971
13,241
311,538
13,201
308,959
13,192
314,481
13,686
324,356
13,077
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 at face value in dollars or foreign currencies.
1993
1991
3. Held for foreign and international accounts and valued at $42.22 per fine
troy ounce; not included in the gold stock of the United States.
Summary Statistics
3.14
FOREIGN B R A N C H E S OF U.S. B A N K S
A55
Balance Sheet Data1
Millions of dollars, end of period
1992
Account
1989
1990
1991
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
All foreign countries
ASSETS
Total payable in any currency
545,366
556,925
548,901
564,466
537,529
544,815
544,332r
554,042r
566,519r
541,871
2
3
4
5
6
7
8
9
10
11
Claims on United States
Parent bank
Other banks in United States
Nonbanks
Claims on foreigners
Other branches of parent bank
Banks
Public borrowers
Nonbank foreigners
Other assets
198,835
157,092
17,042
24,701
300,575
113,810
90,703
16,456
79,606
45,956
188,4%
148,837
13,2%
26,363
312,449
135,003
72,602
17,555
87,289
55,980
176,301
137,509
12,884
25,908
303,934
111,729
81,970
18,652
91,583
68,666
183,933
147,626
10,418
25,889
311,990
115,398
84,534
20,162
91,8%
68,543
171,911
136,287
9,576
26,048
311,578
112,177
85,141
19,645
94,615
54,040
163,039
128,267
9,181
25,591
321,631
116,674
87,347
20,423
97,187
60,145
167,258
134,019
8,083
25,156
319,115
118,105
83,912
20,485
%,613
57,959 R
175,019
139,058
10,658
25,303
318,901
115,589
86,400
20,783
%,129
60,122 R
177,417 R
141,526
10,009
25,882 R
328,417 R
125,143
85,911
20,378
%,985R
60,685
166,782
131,609
10,397
24,776
317,711
123,185
81,904
20,727
91,895
57,378
12
Total payable in U.S. dollars
382,498
379,479
363,941
369,561
349,145
340,819
346,633
363,787r
374,196r
365,429
N
14
15
16
17
18
19
20
21
22
Claims on United States
Parent bank
Other banks in United States
Nonbanks
Claims on foreigners
Other branches of parent bank
Banks
Public borrowers
Nonbank foreigners
Other assets
169,662
133,476
12,025
24,161
167,010
78,114
41,635
13,685
33,576
27,269
177,638
144,287
10,016
23,335
168,586
76,700
43,307
13,723
34,856
23,337
166,507
133,120
9,135
24,252
162,843
72,250
41,718
13,320
35,555
19,795
157,405
124,737
8,876
23,792
161,500
70,693
40,350
13,661
36,7%
21,914
161,302
130,346
7,476
23,480
166,360
72,116
42,281
13,965
37,998
18,971
169,323
136,274
9,335
23,714
173,138
76,106
45,276
13,941
37,815
21,326 R
171,912 R
138,408
9,281
24,223 R
182,172 R
83,902
45,756
13,995
38,519*
20,112
162,109
128,663
9,807
23,639
183,202
83,060
46,955
14,313
38,874
20,118
1
191,184
152,294
16,386
22,504
169,690
82,949
48,3%
10,961
27,384
21,624
180,174
142,%2
12,513
24,699
174,451
95,298
36,440
12,298
30,415
24,854
United Kingdom
23
Total payable in any currency
161,947
184,818
175,599
171,027
159,317
165,832
161,157
168,063
168,333
165,591
24
25
26
27
28
29
30
31
32
33
Claims on United States
Parent bank
Other banks in United States
Nonbanks
Claims on foreigners
Other branches of parent bank
Banks
Public borrowers
Nonbank foreigners
Other assets
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
35,257
31,931
1,267
2,059
109,692
35,735
36,394
3,306
34,257
30,650
38,0%
35,343
756
1,997
104,270
36,952
34,783
2,995
29,540
28,661
38,763
35,542
1,065
2,156
105,990
35,359
36,777
3,128
30,726
14,564
37,511
34,593
744
2,174
108,895
37,732
37,711
3,046
30,406
19,426
35,891
32,929
1,067
1,895
106,758
37,977
36,1%
3,371
29,214
18,508
39,558
36,413
1,400
1,745
109,919
40,594
36,701
3,692
28,932
18,586
38,358
35,027
925
2,406
113,193
45,092
34,559
3,370
30,172
16,782
36,403
32,889
1,869
1,645
111,623
46,165
33,399
3,329
28,730
17,565
34
Total payable in U.S. dollars
103,208
116,762
105,974
102,737
98,828
99,610
100,449
107,342
109,479
109,449
35
36
37
38
39
40
41
42
43
44
Claims on United States
Parent bank
Other banks in United States
Nonbanks
Claims on foreigners
Other branches of parent bank
Banks
Public borrowers
Nonbank foreigners
Other assets
32,418
30,370
822
1,226
58,791
28,667
15,219
2,853
12,052
14,765
35,376
33,751
627
998
56,888
28,541
15,380
2,474
10,493
10,473
36,133
33,936
785
1,412
56,264
26,751
15,930
2,653
10,930
6,431
34,948
32,786
625
1,537
55,812
26,825
15,565
2,353
11,069
8,850
33,618
31,578
711
1,329
59,099
27,986
16,808
2,604
11,701
7,732
37,359
35,299
769
1,291
61,658
30,217
17,269
2,515
11,657
8,325
35,956
33,765
438
1,753
65,164
34,434
16,848
2,501
11,381
8,359
34,508
31,615
1,593
1,300
66,335
34,124
17,089
2,349
12,773
8,606
36,404
34,329
843
1,232
59,062
29,872
16,579
2,371
10,240
7,742
41,259
39,609
334
1,316
63,701
37,142
13,135
3,143
10,281
11,802
Bahamas and Cayman Islands
45
Total payable in any currency
176,006
162,316
168,326
168,963
153,691
144,089
145,450
153,853
155,974
147,087
46
47
48
49
50
51
52
53
54
55
Claims on United States
Parent bank
Other banks in United States
Nonbanks
Claims on foreigners
Other branches of parent bank
Banks
Public borrowers
Nonbank foreigners
Other assets
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
115,244
81,520
10,907
22,817
45,229
11,098
20,174
7,161
6,7%
7,853
114,467
83,316
9,118
22,033
45,600
9,392
21,548
7,084
7,576
8,8%
102,850
72,107
8,045
22,698
41,886
8,678
18,837
6,728
7,643
8,955
94,595
64,454
8,060
22,081
41,315
8,5%
17,570
7,125
8,024
8,179
%,750
68,209
6,562
21,979
41,712
7,753
18,412
7,102
8,445
6,988
102,619
72,185
8,174
22,260
42,514
7,287
19,680
7,120
8,427
8,720
104,219
73,840
8,272
22,107
43,981
8,238
19,947
7,209
8,587
7,774
%,242
66,600
7,798
21,844
44,214
7,293
20,917
7,786
8,218
6,631
56
Total payable in U.S. dollars
170,780
158,390
163,771
163,313
147,905
138,348
139,769
148,865
151,234
142,526
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
3.14
International Statistics • April 1993
FOREIGN B R A N C H E S OF U . S . B A N K S
Account
1989
Balance Sheet Data 1 —Continued
1990
July
Aug.
Sept.
Oct.
Nov.
All foreign countries
LIABILITIES
57 Total payable in any currency
545,366
556,925
548,901
564,466
537,529
544,815
544,332"
554,042'
566,519"
541,871
58 Negotiable certificates of deposit (CDs)
59 To United States
60 Parent bank
61
Other banks in United States
62
Nonbanks
23,500
197,239
138,412
11,704
47,123
18,060
189,412
138,748
7,463
43,201
16,284
198,121
136,431
13,260
48,430
13,040
204,929
143,474
14,009
47,446
12,758
192,087
133,051
11,833
47,203
14,246
179,246
126,794
10,959
41,493
12,389
185,054
127,573
12,386
45,095
12,056
188,517
132,630
12,259
43,628
12,342
187,802"
131,620"
13,390
42,792"
10,032
188.926
133.927
12,180
42,819
63 To foreigners
64 Other branches of parent bank . . .
65
Banks
66
Official institutions
67
Nonbank foreigners
68 Other liabilities
296,850
119,591
76,452
16,750
84,057
27,777
311,668
139,113
58,986
14,791
98,778
37,785
288,254
112,033
63,097
15,5%
97,528
46,242
302,376
116,760
65,983
16,399
103,234
44,121
301,943
114,226
65,419
18,058
104,240
30,741
314,910
120,349
68,565
18,241
107,755
36,413
311,556
119,634
68,537
16,724
106,661
35,333"
315,654
118,019
70,483
20,576
106,576
37,815"
330,314"
126,018"
74,536
20,645
109,115
36,061"
309,498
125,144
62,187
19,730
102,437
33,415
69 Total payable in U.S. dollars
3 % ,6 1 3
383,522
370,561
374,506
354,666
346,377
346,239'
364,674'
372,118'
367,317
70 Negotiable CDs
71 To United States
72 Parent bank
73
Other banks in United States
74 Nonbanks
19,619
187,286
132,563
10,519
44,204
14,094
175,654
130,510
6,052
39,092
11.909
185,286
129,669
11,707
43.910
8,475
192,792
136,273
13,251
43,268
8,531
179,395
125,647
10,816
42,932
8,755
166,377
119,339
9,866
37,172
7,628
170,757
119,714
11,095
39,948
6,710
175,548
125,122
11,387
39,039
7,503
175,655"
124,472
12,244
38,939"
6,238
177,667
127,049
11,510
39,108
75 To foreigners
76 Other branches of parent bank . . .
77
Banks
78
Official institutions
79
Nonbank foreigners
80 Other liabilities
176,460
87,636
30,537
9,873
48,414
13,248
179,002
98,128
20,251
7,921
52,702
14,772
158,993
76,601
24,156
10,304
47,932
14,373
158,532
77,604
23,474
10,119
47,335
14,707
155,352
73,699
22,955
11,543
47,155
11,388
157,475
74,037
22,973
10,713
49,752
13,770
155,018
72,947
22,822
9,939
49,310
12,836"
166,126
77,353
25,209
12,097
51,467
16,290"
175,293"
82,957"
28,404
12,342
51,590
13,667"
171,624
83,700
26,118
12,430
49,376
11,788
United Kingdom
81 Total payable in any currency ..
161,947
184,818
175,599
171,027
159,317
165,832
161,157
168,063
168,333
165,591
82 Negotiable CDs
83 To United States
84
Parent bank
85
Other banks in United States
86
Nonbanks
20,056
36,036
29,726
1,256
5,054
14,256
39,928
31,806
1,505
6,617
11,333
37,720
29,834
1,438
6,448
7,612
36,660
28,201
1,326
7,133
7,731
37,164
29,104
1,315
6,745
8,083
35,527
27,695
1,632
6,200
7,266
35,885
27,528
1,670
6,687
6,064
35,399
27,427
1,341
6,631
5,636
34,532
26,471
1,689
6,372
4,517
39,172
31,196
1,065
6,911
87 To foreigners
88
Other branches of parent bank
89
Banks
90 Official institutions
91
Nonbank foreigners
92 Other liabilities
92,307
27,397
29,780
8,551
26,579
13,548
108,531
36,709
25,126
8,361
38,335
22,103
98,167
30,054
25,541
9,670
32,902
28,379
100,340
31,464
25,315
10,167
33,394
26,415
100,738
30,205
25,155
11,091
34,287
13,684
104,892
31,234
26,435
10,699
36,524
17,330
101,082
29,839
25,823
9,131
36,289
16,924
109,358
33,6%
28,792
11,687
35,183
17,242
113,395
35,560
30,609
11,438
35,788
14,770
107,178
35,983
25,233
12,090
33,872
14,724
93 Total payable in U.S. dollars
108,178
116,094
108,755
101,901
97,565
99,092
95,642
104,521
105,699
107,610
94 Negotiable CDs
95 To United States
96 Parent bank
Other banks in United States .
97
98 Nonbanks
18,143
33,056
28,812
1,065
3,179
12,710
34,697
29,955
1,156
3,586
10,076
33,003
28,260
1,177
3,566
5,750
32,300
26,720
1,084
4,4%
6,139
32,178
27,351
857
3,970
5,890
30,357
25,873
1,088
3,3%
5,689
30,330
25,700
992
3,638
4,213
31,266
26,021
866
4,379
4,494
30,204
25,160
906
4,138
3,894
34,857
29,497
709
4,651
99 To foreigners
100 Other branches of parent bank
101 Banks
102 Official institutions
103 Nonbank foreigners
104 Other liabilities
50,517
18,384
12,244
5,454
14,435
6,462
60,014
25,957
9,488
4,692
19,877
8,673
56,626
20,800
11,069
7,156
17,601
9,050
54,262
20,918
9,848
7,049
16,447
9,589
52,894
18,634
9,399
7,808
17,053
6,354
54,381
18,983
9,289
6,956
19,153
8,464
51,677
17,747
9,112
6,156
18,662
7,946
59,938
22,080
10,956
8,142
18,760
9,104
62,899
22,8%
13,050
8,459
18,494
8,102
62,048
22,026
12,540
8,847
18,635
6,811
Bahamas and Cayman Islands
105 Total payable in any currency ..
176,006
162,316
168,326
168,963
153,691
144,089
145,450
153,853
155,974
147,087
106 Negotiable CDs
107 To United States
108 Parent bank
109 Other banks in United States .
110 Nonbanks
678
124,859
75,188
8,883
40,788
646
114,738
74,941
4,526
35,271
1,173
129,872
79,394
10,231
40,247
1,894
130,815
80,998
11,708
38,109
1,330
115,589
67,356
9,641
38,592
1,814
105,816
64,008
8,522
33,286
872
108,966
63,057
9,779
36,130
1,394
113,894
69,201
10,281
34,412
1,939
116,385
71,083
10,942
34,360
1,350
111,414
66,908
10,443
34,063
111 To foreigners
112 Other branches of parent bank
113 Banks
114 Official institutions
115 Nonbank foreigners
116 Other liabilities
47,382
23,414
8,823
1,097
14,048
3,087
44,444
24,715
5,588
622
13,519
2,488
35,200
17,388
5,662
572
11,578
2,081
34,637
16,799
6,075
770
10,993
1,617
35,136
17,668
6,390
862
10,216
1,636
34,878
17,315
6,242
935
10,386
1,581
34,054
16,071
6,787
984
10,212
1,558
34,889
15,441
6,987
1,058
11,403
3,676
35,411
16,287
7,574
932
10,618
2,239
32,556
15,169
6,422
805
10,160
1,767
171,250
157,132
163,603
163,951
148,744
138,864
139,963
148,881
151,325
142,815
117 Total payable in U.S. dollars
Summary Statistics
3.15
A57
S E L E C T E D U . S . LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1992
Item
1 Total1
2
3
4
5
6
7
8
9
10
11
12
By type
Liabilities reported by banks in the United States
U.S. Treasury bills and certificates
U.S. Treasury bonds and notes
Marketable
Nonmarketable
U.S. securities other than U.S. Treasury securities
By area
Western Europe1
Canada
Latin America and Caribbean
Asia
Africa
,
Other countries
1990
1991
July
Aug.
Sept.
Oct.
Nov/
Dec. p
344,529
360,530
401,950
404,162
406,671
393,758
405,385
394,876
398,398
39,880
79,424
38,396
92,692
51,462
109,278
48,879
114,781
52,078
113,307
43,675
113,634
60,853
104,286
54,038
100,702
54,549
104,598
202,487
4,491
18,247
203,677
4,858
20,907
213,477
4,625
23,108
212,710
4,582
23,210
213,407
4,476
23,403
208,924
4,505
23,020
211,875
4,473
23,898
211,272
4,503
24,361
210,551
4,532
24,168
167,191
8,671
21,184
138,096
1,434
7,955
168,365
7,460
33,554
139,465
2,092
9,592
191,377
9,302
39,433
150,207
3,265
8,364
194,465
9,876
39,146
150,043
3,218
7,412
196,061
9,990
38,356
151,785
2,860
7,617
186,434
7,027
37,703
151,667
3,360
7,565
194,611
8,111
38,538r
153,555
3,481
7,087r
184,276
6,381
38,912
154,493
3,779
7,033
188,903
7,870
39,607
152,150
3,565
6,301
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
bonds and notes payable in foreign currencies; zero coupon bonds are included at
current value.
3.16
June
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 O N , FOREIGNERS Reported by Banks in the United States 1
Payable in Foreign Currencies
Millions of dollars, end of period
1992r
1991
Item
1 Banks' liabilities
2 Banks' claims
3 Deposits
4 Other claims
5 Claims of banks' domestic customers
1988
74,980
68,983
25,100
43,884
364
1. Data on claims exclude foreign currencies held by U.S. monetary
authorities.
1989
67,835
65,127
20,491
44,636
3,507
1990
70,477
66,796
29,672
37,124
6,309
Dec.
Mar.
June
Sept.
75,129
73,195
26,192
47,003
3,398
68,071
60,435
23,270
37,165
2,962
70,842
58,262
23,462
34,800
4,375
85,278
73,174
29,412
43,762
3,908
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 1993
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Reported by Banks in the United States 1
Millions of dollars, end of period
1992
1990
1991
1992
June
July
Aug.
Sept.
Oct.
Nov. r
Dec."
HOLDER AND TYPE OF LIABILITY
1 Total, all foreigners
759,634
756,066
806,132
786,700
777,058
768,819
793,159
793,149"
799,276
806,132
2 Banks' own liabilities
3 Demand deposits
4 Time deposits
5 Other3
6 Own foreign offices4
577,229
21,723
168,017
65,822
321,667
575,374
20,321
159,649
66,305
329,099
602,550
22,008
160,631
93,553
326,358
587,899
20,930
151,965
85,656
329,348
571,516
19,739
148,254
82,953
320,570
564,071
21,698
144,119
86,611
311,643
585,806
22,474
143,768
82,484
337,080
590,768r
21,288
158,ISC
91,673r
319,627r
600,843
21,916
157,401
95,552
325,974
602,550
22,008
160,631
93,553
326,358
182,405
96,796
180,692
110,734
203,582
127,530
198,801
128,672
205,542
135,579
204,748
135,744
207,353
134,894
202,381r
127,993
198,433
122,480
203,582
127,530
17,578
68,031
18,664
51,294
21,960
54,092
18,020
52,109
19,339
50,624
18,541
50,463
19,341
53,118
19,954
54,434r
21,699
54,254
21,960
54,092
5,918
4,540
36
1,050
3,455
8,981
6,827
43
2,714
4,070
9,056
6,657
46
3,328
3,283
12,851
10,628
40
3,788
6,800
11,321
8,192
24
3,008
5,160
12,874
9,767
21
2,630
7,116
10,810
8,173
24
2,527
5,622
10,736r
7,010r
73
l,908r
5,029*
9,702
6,769
58
2,570
4,141
9,056
6,657
46
3,328
3,283
1,378
364
2,154
1,730
2,399
1,908
2,223
1,687
3,129
2,602
3,107
2,654
2,637
1,991
3,726
3,085
2,933
2,371
2,399
1,908
1,014
0
424
0
486
5
534
2
527
0
453
0
646
0
641
0
561
1
486
5
119,303
34,910
1,924
14,359
18,628
131,088
34,411
2,626
16,504
15,281
159,147
50,784
1,279
17,267
32,238
160,740
47,574
1,630
17,570
28,374
163,660
45,334
1,372
18,129
25,833
165,385
48,526
1,676
18,098
28,752
157,309
40.524
1,761
16,238
22.525
165,139
57,145
1,723
19,703
35,719
154,740
50,058
1,492
17,901
30,665
159,147
50,784
1,279
17,267
32,238
84,393
79,424
96,677
92,692
108,363
104,598
113,166
109,278
118,326
114,781
116,859
113,307
116,785
113,634
107,994
104,286
104,682
100,702
108,363
104,598
4,766
203
3,879
106
3,726
39
3,602
286
3,459
86
3,466
86
2,922
229
3,595
113
3,784
1%
3,726
39
540,805
458,470
136,802
10,053
88,541
38,208
321,667
522,265
459,335
130,236
8,648
82,857
38,731
329,099
543,208
472,091
145,733
10,410
90,773
44,550
326,358
526,453
459,987
130,639
9,705
80,118
40,816
329,348
514,526
448,210
127,640
8,442
77,229
41,969
320,570
501,804
435,147
123,504
9,851
73,175
40,478
311,643
536,759
466,796
129,716
10,443
74,447
44,826
337,080
525,448r
454,496r
134,869*
9,741
86,312r
38,816
319,627r
544,301
473,354
147,380
10,088
88,187
49,105
325,974
543,208
472,091
145,733
10,410
90,773
44,550
326,358
82,335
10,669
62,930
7,471
71,117
11,087
66,466
8,927
66,316
9,444
66,657
10,429
69,963
10,905
70,952r
10,481
70,947
10,444
71,117
11,087
5,341
66,325
5,694
49,765
7,561
52,469
6,647
50,892
7,129
49,743
6,920
49,308
7,373
51,685
7,276
53,195r
7,516
52,987
7,561
52,469
93,608
79,309
9,711
64,067
5,530
93,732
74,801
9,004
57,574
8,223
94,721
73,018
10,273
49,263
13,482
86,656
69,710
9,555
50,489
9,666
87,551
69,780
9,901
49,888
9,991
88,756
70,631
10,150
50,216
10,265
88,281
70,313
10,246
50,556
9,511
91,826r
72,117r
9,751
50,257r
12,109
90,533
70,662
10,278
48,743
11,641
94,721
73,018
10,273
49,263
13,482
14,299
6,339
18,931
8,841
21,703
9,937
16,946
8,780
17,771
8,752
18,125
9,354
17,968
8,364
19,709
10,141
19,871
8,963
21,703
9,937
6,457
1,503
8,667
1,423
10,187
1,579
7,237
929
8,224
795
7,702
1,069
8,400
1,204
8,442
1,126
9,838
1,070
10,187
1,579
7,073
7,456
9,114
7,351
6,976
7,279
7,452
7,672
7,716
9,114
7 Banks' custodial liabilities5
8
U.S. Treasury bills and certificates6
9
Other negotiable and readily transferable
instruments7
10 Other
11 Nonmonetary international and regional
organizations8
12 Banks' own liabilities
13
Demand deposits
14
Time deposits
15
Other3.
16
17
18
19
Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
9
20 Official institutions
21
Banks' own liabilities
22
Demand deposits
23
Time deposits
24
Other3
25
26
27
28
Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
10
29 Banks
30 Banks' own liabilities
31
Unaffiliated foreign banks
32
Demand deposits
33
Time deposits
34
Other3
35
Own foreign offices4
36
37
38
39
Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
40 Other foreigners
41 Banks' own liabilities
42
Demand deposits
43
Time deposits
44
Other3
45
46
47
48
Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other
MEMO
49 Negotiable time certificates of deposit in custody for
foreigners
1. Reporting banks include all types of depository institution, 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, the
Inter-American Development Bank, and the Asian Development Bank. Excludes
"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
1992
Item
1990
1991
1992
June
July
Aug.
Sept.
Oct.
Nov.
Dec. p
AREA
1 Total, all foreigners
759,634
756,066
806,132
786,700
777,058
768,819
793,159
793,149r 799,276r
806,132
2 Foreign countries
753,716
747,085
797,076
773,849
765,737
755,945
782,349
782,413r
789,574r
797,076
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
249,097
1,193
13,337
937
1,341
31,808
8,619
765
13,541
7,161
1,866
2,184
11,391
2,222
37,238
1,598
100,292
622
9,274
241
3,467
309,037
1,615
20,587
3,059
1,300
41,371
19,014
910
10,414
7,376
3,319
2,465
9,790
3,043
39,531
2,666
112,358
503
25,714
581
3,421
279,569
1,490
16,740
1,263
843
30,132
8,068
1,374
10,362
9,456
1,359
2,530
15,844
4,125
35,987
1,580
111,712
555
21,607
440
4,102
283,144
1,445
16,797
1,348
720
28,900
8,%7
998
10,164
9,653
1,421
2,659
15,313
3,710
39,568
1,789
111,913
547
22,743
609
3,880
289,388
1,427
18,449
1,329
976
29,456
11,032
934
10,992
10,422
1,341
2,664
14,904
4,162
40,569
2,021
111,521
554
21,872
525
4,238
290,344
1,456
17,942
1,760
685
32,153
14,739
1,069
12,236
10,397
1,851
2,245
15,589
3,194
39,314
2,087
115,747
567
12,867
499
3,947
306,499
1,584
21,177
1,788
949
34,876
13,810
872
11,104
9,334
1,577
2,258
14,602
5,313
311,821r
1,358
19,631
1,481
1,144
39,%3rr
15,401
749
12,494r
8,41 l r
2,014
2,255
10,383r
4,485r
40,791r
2,360
117,335r
575
26.6911
601
3,699
309,037
1,615
20,587
3,059
1,300
41,371
19,014
910
10,414
7,376
3,319
2,465
9,790
3,043
39,531
2,666
112,358
503
25,714
581
3,421
3 Europe
4 Austria
5 Belgium and 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
Others in Western Europe
27. U.S.S.R
23
Other Eastern Europe12
24 Canada
25
26
77
78
79
30
31
37
33
34
35
36
37
38
39
40
41
47
43
Latin America and Caribbean
Argentina
Bahamas
Bermuda
Brazil
British West Indies
Chile
Colombia
Cuba
Ecuador
Guatemala
Jamaica
Mexico
Netherlands Antilles
Panama
Peru
Uruguay
Venezuela
Other
44
45
46
47
48
49
China
People's Republic of China
Republic of China (Taiwan)
Hong Kong
50
51
57
53
Korea (South)
54
Thailand
Middle Eastern oil-exporting countries
Other
55
56
il,S6T
2,524
114,668
577
27.2281
450
3,941
20,349
21,605
22,177
20,358
22,350
20,410
22,668
21,378
22,052
22,177
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
345,529
7,753
100,622
3,178
5,704
163,620
3,283
4,661
2
1,232
1,594
231
19,957
5,592
4,695
1,249
2,096
13,181
6,879
312,763
9,475
82,176
7,079
5,581
148,871
3,030
4,580
3
987
1,375
371
19,429
5,208
3,982
1,056
1,954
11,370
6,236
339,161
9,698
101,822
3,598
5,397
156,525
3,701
4,721
3
1,137
1,447
309
19,491
5,313
4,286
1,156
2,169
11,448
6,940
325,397
10,041
92,546
4,848
5,311
151,591
3,605
4,686
12
1,074
1,420
271
19,642
5,085
4,457
1,131
2,163
11,080
6,434
310,989
9,397
82,571
4,782
5,283
148,164
3,393
4,711
9
1,214
1,432
272
20,046
4,825
4,302
1,123
2,182
10,802
6,481
315,512
9,065
76,295
4,275
5,393
159,703
3,440
4,792
33
1,073
1,416
309
19,650
4,751
4,595
1,143
2,019
11,101
6,459
309,%3r
9,387
85,899r
5,889
5,828
143,240r
3,253
4,767
10
1,026
1,376
274
19,226
4,708
4,115
1,124
2,087
11,504r
6,250
309,7 l l r
8,715
86,159r
6,552r
5,235r
143,005r
2,925
4,677
11
1,016
1,323
271
19,543r
6,101
3,975r
l,026 r
2,092
ll,003 r
6,082r
312,763
9,475
82,176
7,079
5,581
148,871
3,030
4,580
3
987
1,375
371
19,429
5,208
3,982
1,056
1,954
11,370
6,236
136,844
120,462
143,077
124,553
124,905
125,215
144,145
134,327r
136,103r
143,077
2,421
11,246
12,754
1,233
1,238
2,767
67,076
2,287
1,585
1,443
15,829
16,965
2,626
11,491
14,269
2,418
1,463
2,015
47,069
2,587
2,449
2,252
15,752
16,071
4,327
7,221
18,365
1,369
1,465
3,746
58,208
3,336
2,266
5,565
21,445
15,764
2,378
9,985
16,980
1,715
1,387
2,976
44,269
2,839
1,813
4,586
18,983
16,642
2,292
10,277
16,840
1,567
1,256
2,850
45,826
3,288
1,994
4,017
19,828
14,870
2,508
10,362
17,775
1,480
958
2,620
45,683
3,644
1,920
4,624
18,938
14,703
2,480
9,430
17,991
1,372
1,507
2,613
64,651
3,672
2,028
4,517
19,977
13,907
2,582
8,617
17,513r
1,234
1,249
2,208
56,070
3,531
2,275
5,082
19,040
14,926
2,550
8,721r
16,330r
1,213
1,232
3,691
55,374
3,685
2,222
5,797
20,266
15,022
4,327
7,221
18,365
1,369
1,465
3,746
58,208
3,336
2,266
5,565
21,445
15,764
4,825
1,621
79
228
31
1,082
1,784
5,852
2,472
76
189
19
1,344
1,752
5,810
2,540
87
248
29
1,232
1,674
5,516
2,324
85
269
17
1,211
1,610
5,314
2,143
93
275
24
1,090
1,689
5,592
2,243
100
190
14
1,339
1,706
5,843
2,598
98
240
24
1,201
1,682
6,062r
2,601r
93
214
23
1,402
1,729
5,852
2,472
76
189
19
1,344
1,752
57
58
59
60
61
67
63
Oil-exporting countries
Other
4,630
1,425
104
228
53
1,110
1,710
64
65
66
Australia
Other
4,444
3,807
637
5,567
4,464
1,103
4,170
3,047
1,123
4,398
3,192
1,206
4,425
3,066
1,359
4,629
3,322
1,307
4,088
2,927
1,161
4,403
2,987
1,416
3,825
2,654
1,171
4,170
3,047
1,123
5,918
4,390
1,048
479
8,981
6,485
1,181
1,315
9,056
7,136
1,419
501
12,851
9,7%
2,436
619
11,321
7,402
2,699
1,220
12,874
9,651
2,319
904
10,810
7,714
2,289
807
10,736r
7,689r
2,139
908
9,702*
6,542r
2,257
903
9,056
7,136
1,419
501
Egypt
Morocco
South Africa
67 Nonmonetary international and regional
organizations
International
Latin American regional16
Other regional17
68
69
70
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).
14. Comprises Algeria, Gabon, Libya, and Nigeria.
15. Principally the International Bank for Reconstruction and Development.
Excludes "holdings of dollars" of the International Monetary Fund.
16. Principally the Inter-American Development Bank.
17. 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 1993
B A N K S ' O W N CLAIMS ON FOREIGNERS Reported by Banks in the United States 1
Payable in U . S . Dollars
Millions of dollars, end of period
1992
Area and country
1990
1991
1992
June
July
Aug.
Sept.
Oct.
Nov.*
Dec."
1 Total, all foreigners
511,543
514,339
495,312
511,801
502,941
479,705
485,349
493,411r
491,083
495,312
2 Foreign countries
506,750
508,056
490,168
505,807
499,520
475,316
481,178
490,939r
488,202
490,168
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
114,310
327
6,158
686
1,907
15,112
3,371
553
8,242
2,546
669
344
1,881
2,335
4,540
1,063
60,395
825
789
1,970
597
124,052
340
6,384
707
1,414
14,847
4,229
717
9,050
2,490
356
325
2,801
4,982
4,670
962
63,889
573
1,716
3,148
452
126,187
433
6,166
1,436
1,516
14,440
3,311
506
10,621
2,272
722
367
3,880
6,720
3,974
988
63,917
697
771
3,035
415
124,453
647
6,475
951
1,269
14,154
3,870
590
10,508
2,042
731
382
3,730
5,967
3,683
1,174
62,800
693
1,227
3,153
407
119,126
606
6,344
901
1,081
13,011
4,707
619
9,876
2,075
707
387
2,590
6,567
3,934
1,002
58,861
678
1,356
3,280
544
117,235
341
7,524
1,007
1,299
15,004
4,074
606
9,487
1,980
639
383
3,304
5,494
3,112
986
56,456
674
1,216
3,199
450
126,109*
373
6,971
825
817
16,081
5,628
601
9,754
2,334
666
327
4,630
6,698
3,698
1,177
60,191r
668
964
3,190
516
122,128
440
6,427
1,056
1,230
15,698
5,327
598
9,443
3,006
435
330
3,504
5,786
3,590
950
58,921
661
1,019
3,174
533
124,052
340
6,384
707
3 Europe
4 Austria
5 Belgium and 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
Others in Western Europe
22 U.S.S.R
23 Other Eastern Europe
1,414
14,847
4,229
717
9,050
2,490
356
325
2,801
4,982
4,670
962
63,889
573
1,716
3,148
452
16,091
15,113
14,131
16,370
17,429
15,151
15,902
16,826
15,830
14,131
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
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
246,137
5,869
87,138
2,270
11,894
107,846
2,805
2,425
0
1,053
228
158
16,567
1,207
1,560
739
599
2,516
1,263
213,344
4,878
60,560
6,046
10,818
97,023
3,435
2,750
2
882
262
186
15,043
1,379
4,481
730
936
2,528
1,405
243,472
5,396
83,101
4,951
12,020
106,631
3,228
2,304
0
936
175
150
16,464
920
2,208
720
765
2,216
1,287
234,066
5,614
74,806
6,099
12,186
104,133
3,118
2,398
0
950
167
151
16,341
941
2,025
708
749
2,360
1,320
217,582
4,789
62,615
6,302
12,286
99,775
3,220
2,322
0
949
189
150
16,564
966
2,053
708
799
2,585
1,310
210,329
4,560
58,502
3,567
11,308
99,294
3,320
2,475
0
920
237
160
17,313
1,045
1,945
732
921
2,654
1,376
213,340*
4,568
64,848r
2,798
11,558
96,741r
3,340
2,595
5
936
277
147
16,666
1,080
1,988
721
882
2,702
1,488
217,450
4,601
66,461
6,023
11,583
95,443
3,298
2,698
0
926
255
162
16,492
1,529
2,087
723
877
2,880
1,412
213,344
4,878
60,560
6,046
10,818
97,023
3,435
2,750
2
882
262
186
15,043
1,379
4,481
730
936
2,528
1,405
44
138,722
125,262
131,383
112,365
115,933
116,509
130,614
127,228r
126,114
131,383
620
1,952
10,648
655
933
774
90,699
5,766
1,247
1,573
10,749
13,106
747
2,087
9,617
441
952
860
84,807
6,048
1,910
1,713
8,284
7,796
1,409
2,046
9,645
529
1,165
820
78,265
6,175
2,145
1,860
18,589
8,735
685
1,778
8,272
458
1,085
891
69,231
5,910
1,648
1,767
14,505
6,135
642
1,965
9,103
512
1,090
901
71,120
6,063
1,635
1,716
14,323
6,863
696
1,983
8,015
528
1,108
920
71,469
6,201
1,775
1,691
14,783
7,340
636
2,054
10,087
499
1,089
800
83,201
6,247
1,852
1,795
14,613
7,741
978r
1,848
9,127r
500
1,112
826
80,091r
6,113
2,181r
1,764
15,488
7,200*
624
1,653
9,268
539
1,135
937
77,666
6,288
2,034
1,873
16,858
7,239
1,409
2,046
9,645
529
1,165
820
78,265
6,175
2,145
1,860
18,589
8,735
57 Africa
58 Egypt
59 Morocco
60 South Africa
61
Zaire
<
62 Oil-exporting countries
63 Other
5,445
380
513
1,525
16
1,486
1,525
4,928
294
575
1,235
4
1,298
1,522
4,281
194
439
1,041
4
1,003
1,600
4,548
256
527
1,070
4
1,159
1,532
4,452
261
4%
1,047
4
1,157
1,487
4,455
243
483
1,066
4
1,130
1,529
4,333
256
467
1,055
4
1,067
1,484
4,303
229
452
1,036
4
1,056
1,526
4,233
214
443
1,063
4
1,029
1,480
4,281
194
439
1,041
4
1,003
1,600
64 Other
65 Australia
66 Other
1,892
1,413
479
2,306
1,665
641
2,977
2,264
713
2,865
1,727
1,138
3,187
1,937
1,250
2,493
1,463
1,030
2,765
1,765
1,000
3,133
1,951
1,182
2,447
1,601
846
2,977
2,264
713
67 Nonmonetary international and regional
organizations6
4,793
6,283
5,144
5,994
3,421
4,389
4,171
2,472
2,881
5,144
24 Canada
45
46
47
48
49
50
51
52
53
54
55
56
China
People's Republic of China
Republic of China (Taiwan)
Hong Kong
India
Indonesia
Israel
Japan
Korea (South)
Philippines
Thailand
Middle Eastern oil-exporting countries
Other
1. Reporting banks include all types of depository institutions, 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
1992
June
July
Aug.
502,941
32,940
302,061
113,963
62,897
51,066
53,977
479,705
32,263
287,523
105,987
56,294
49,693
53,932
Sept.
1 Total
579,044
579,683
2 Banks' claims
3 Foreign public borrowers
4 Own foreign offices2
5 Unaffiliated foreign banks
6
Deposits
7
Other
8 All other foreigners
511,543
41,900
304,315
117,272
65,253
52,019
48,056
514,339
37,126
318,800
116,602
69,018
47,584
41,811
67,501
14,375
65,344
15,280
53,520
17,098
66,786
15,348
41,333
37,125
24,114
38,258
11,792
12,939
12,308
13,180
13 Customer liability on acceptances
13,628
8,974
7,584
8,505
14 Dollar deposits in banks abroad,
reported by nonbanking business
enterprises in the United States5
44,638
39,111
9 Claims of banks' domestic customers 3 ...
10 Deposits
11 Negotiable and readily transferable
instruments4
12 Outstanding collections and other
claims
565,321
495,312
31,468
298,853
110,272
61,288
48,984
54,719
511,801
35,950
314,599
111,971
63,521
48,450
49,281
Oct.r
Nov. r
Dec."
493,411
32,062
297,682
112,508
60,876
51,632
51,159
491,083
30,851
291,386
113,815
62,194
51,621
55,031
495,312
31,468
298,853
110,272
61,288
48,984
54,719
34,152
32,918
n.a.
552,135
485,349
31,426
297,590
105,796
54,316
51,480
50,537
MEMO
n.a.
33,440
33,223
34,091r
foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of
head office or parent foreign bank.
3. Assets 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 Federal Reserve
Bulletin, vol. 65 (July 1979), p. 550.
1. For banks' claims, data are monthly ; for claims of banks' domestic customers, data are quarterly.
Reporting banks include all types of depository institution, 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
3.20
34,712
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
1991
Maturity, by borrower and area
1988r
1989r
Dec.
1 Total
2
3
4
5
6
7
8
9
10
11
12
13
By borrower
Maturity of one year or less 2
Foreign public borrowers
All other foreigners
Maturity of more than one year
Foreign public borrowers
All other foreigners
By area
Maturity of one year or less
Europe
Canada
Latin America and Caribbean
Africa
All other3
Maturity of more than one year2
14 Europe
15 Canada
16 Latin America and Caribbean
17
18 Africa
19 All other3
Mar.
June
Sept.r
233,184
238,123
206,903
195,302
194,455
196,874
187,422
172,634
26,562
146,072
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
162,573
21,050
141,523
32,729
15,859
16,870
161,456
20,231
141,225
32,999
16,189
16,810
162,402
20,492
141,910
34,472
15,147
19,325
155,135
17,837
137,298
32,287
13,303
18,984
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
51,835
6,444
43,597
51,059
2,549
7,089
52,790
6,907
48,582
43,645
2,486
7,046
54,955
7,935
49,138
41,412
2,142
6,820
55,842
5,973
45,300
40,754
2,195
5,071
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
3,878
3,595
18,277
4,459
2,335
185
4,360
3,284
18,196
4,729
2,191
239
6,793
3,153
16,915
5,007
2,341
263
6,663
3,243
15,160
4,848
2,095
278
1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.
1992
1990r
2. Maturity is time remaining to maturity,
3. Includes nonmonetary international and regional organizations.
A61
A62
3.21
International Statistics • April 1993
CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks 1
Billions of dollars, end of period
1990
Area or country
1988
1991
1992
1989
Sept.
Dec.
Mar.
June
Sept.
Dec.
Mar.
June
Sept.
346.2
338.8
331.5
317.8
325.3
320.4
335.7
341.5
347.6
355.2
345.3R
152.7
9.0
10.5
10.3
6.8
2.7
1.8
5.4
66.2
5.0
34.9
152.9
6.3
11.7
10.5
7.4
3.1
2.0
7.1
67.2
5.4
32.2
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
129.8
6.1
10.5
8.3
3.6
3.3
2.5
3.3
59.5
8.2
24.6
134.0
5.8
11.1
9.7
4.5
3.0
2.1
3.9
64.9
5.8
23.2
137.2
6.0
11.0
8.3
5.6
4.7
1.9
3.4
68.5
5.8
22.2
130.5
5.3
10.0
8.4
5.4
4.3
2.0
3.2
64.8
6.5
20.7
135.6
6.2
11.9
8.7
8.0
3.3
1.9
4.6
65.9
6.7
18.3
136. r
6.2
15.4R
10.9
6.4
3.7
2.2
5.0
61.4r
6.7
18.3
13 Other industrialized countries
14 Austria
15 Denmark
16 Finland
17 Greece
18 Norway
19 Portugal
20 Spain
21 Turkey
22 Other Western Europe
23 South Africa
24 Australia
21.0
1.5
1.1
1.1
1.8
1.8
.4
6.2
1.5
1.3
2.4
1.8
20.7
1.5
1.1
1.0
2.5
1.4
.4
7.1
1.2
.7
2.0
1.6
23.0
1.6
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
7.1
1.9
.9
1.8
2.0
21.8
1.0
.9
.6
2.3
1.4
.5
8.3
1.6
1.0
1.6
2.4
22.7
.6
.9
.7
2.6
1.4
.6
8.3
1.4
1.6
1.9
2.7
21.2
.8
.8
.8
2.3
1.5
.5
7.7
1.2
1.3
1.8
2.3
25.5
.8
1.3
.8
2.8
1.7
.5
10.1
1.5
1.9
1.7
2.3
24.9
25 OPEC2
26 Ecuador
27
Venezuela
28 Indonesia
29 Middle East countries
30 African countries
16.6
1.7
7.9
1.7
3.4
1.9
17.1
1.3
7.0
2.0
5.0
1.7
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
14.6
.7
5.4
2.8
4.2
1.5
15.8
.7
5.4
3.0
5.3
1.4
16.2
.7
5.3
3.0
5.9
1.4
15.9
.7
5.4
3.0
5.4
1.4
31 Non-OPEC developing countries
85.3
77.5
67.1
65.4
66.4
65.0
65.0
64.3
70.6
68.9
73.2r
9.0
22.4
5.6
2.1
18.8
.8
2.6
6.3
19.0
4.6
1.8
17.7
.6
2.8
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
4.5
10.5
3.7
1.6
16.2
.4
1.9
4.8
9.6
3.6
1.7
15.5
.4
2.1
5.0
10.8
3.9
1.6
18.2
.4
2.2
5.1
10.6
4.0
1.6
16.6
.4
2.2
6.2
10.8
4.2
1.7
17.1r
.5
2.5
1 Total
2 G-10 countries and Switzerland
3 Belgium and Luxembourg
France
4
5 Germany
6 Italy
7 Netherlands
8 Sweden
9
Switzerland
10 United Kingdom
11 Canada
12 Japan
.7
1.5
1.0
3.0
1.6
.5
9.8
1.5
1.4
1.7
2.3
32
33
34
35
36
37
38
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other
39
40
41
42
43
44
45
46
47
Asia
China
Peoples Republic of China
Republic of China (Taiwan)
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia3
.3
3.7
2.1
1.2
6.1
1.6
4.5
1.1
.9
.3
4.5
3.1
.7
5.9
1.7
4.1
1.3
1.0
.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
.3
4.1
3.0
.5
6.8
2.3
3.7
1.7
2.4
.3
4.8
3.6
.4
6.9
2.5
3.6
1.7
2.7
.3
4.6
3.8
.4
6.9
2.7
3.0
1.9
3.1
.3
5.0
3.6
.4
7.4
3.0
3.3
2.2
3.3
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa3
.4
.9
.0
1.1
.4
.9
.0
1.0
.4
.9
.0
.8
.4
.8
.0
1.0
.4
.8
.0
.8
.4
.7
.0
.8
.4
.7
.0
.8
.4
.7
.0
.7
.3
.7
.0
.7
.5
.7
.0
.6
.3
.6
.0
.9
52 Eastern Europe
53 U.S.S.R
54 Yugoslavia
55 Other
3.6
.7
1.8
1.1
3.5
.7
1.6
1.3
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
2.4
.9
.9
.7
2.9
1.4
.8
.6
3.0
1.7
.7
.6
3.1
1.8
.7
.7
56 Offshore banking centers
57 Bahamas
58 Bermuda
59 Cayman Islands and other British West Indies
60 Netherlands Antilles
61 Panama
62 Lebanon
63 Hong Kong
64 Singapore
65 Other
44.2
11.0
.9
12.9
1.0
2.5
.1
9.6
6.1
.0
36.6
5.5
1.7
9.0
2.3
1.4
.1
9.7
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
50.0
8.3
4.4
14.1
1.1
1.5
.1
11.6
8.9
.0
48.3
6.8
4.2
14.9
1.4
1.3
.1
12.4
7.2
.0
52.7
6.7
7.1
13.8
3.9
1.3
.1
12.1
7.7
.0
52.0
11.9
2.3
15.8
1.2
1.3
.1
12.2
7.1
.0
58.5
14.0
3.9
17.4
1.0
1.3
.1
12.2
8.5
.0
56.9
12.0
5.1
18.0
.8
1.4
.1
13.0
6.4
.0
53.5r
66 Miscellaneous and unallocated6
22.6
30.3
38.1
39.8
36.4
39.9
44.6
48.2
48.0
49.1
38.3
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
8.1 R
3.8
16. l r
.9"
L.SP
.1
15.2r
7.3r
.0
$150 million equivalent in total assets, the threshold now applicable to all
reporting branches.
2. 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
1992
1991
Type and area or country
1988r
1989*
1990*
June
Sept.
Dec.
Mar.
June
Sept.
1 Total
32,952
38,764
46,169
41,774
43,256
43,244
44,170
44,231
45,001
2 Payable in dollars
3 Payable in foreign currencies
27,335
5,617
33,973
4,791
40,912
5,257
37,258
4,516
38,520
4,736
37,852
5,392
38,719
5,451
37,536
6,695
36,571
8,430
By type
4 Financial liabilities
5 Payable in dollars
6 Payable in foreign currencies
14,507
10,608
3,900
17,879
14,035
3,844
21,192
17,105
4,087
19,562
16,202
3,360
21,690
17,985
3,705
21,981
17,869
4,112
22,339
18,111
4,228
22,043
16,799
5,244
23,336
16,500
6,836
18,445
6,505
11,940
16,727
1,717
20,885
8,070
12,815
19,938
947
24,977
10,683
14,294
23,807
1,170
22,212
8,569
13,644
21,056
1,157
21,566
8,313
13,253
20,535
1,031
21,263
8,310
12,953
19,983
1,280
21,831
8,914
12,917
20,608
1,223
22,188
9,516
12,672
20,737
1,451
21,665
9,407
12,258
20,071
1,594
9,962
289
359
699
880
1,033
6,533
11,660
340
258
464
941
541
8,818
11,086
394
975
621
1,081
545
6,455
10,503
355
937
658
1,026
513
6,018
12,343
397
2,164
682
1,050
497
6,610
12,002
217
2,106
682
1,056
408
6,513
12,539
174
1,997
666
1,025
355
7,415
13,091
194
2,324
836
979
490
7,392
14,083
256
2,830
956
951
525
7,723
388
610
229
293
305
267
283
337
320
4,307
537
114
6
3,047
7
4
4,047
396
114
8
2,915
7
4
3,308
343
114
10
2,167
8
4
3,257
192
115
18
2,231
12
5
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
19
By area or country
Financial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
27
28
29
Asia
Japan
Middle East oil-exporting countries2 ..
30
Africa
31
32
33
34
35
36
37
38
39
40
Oil-exporting countries3
All other4
Commercial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
839
184
0
0
645
1
0
1,357
157
17
0
724
6
0
4,153
371
0
0
3,160
5
4
3,808
375
12
0
2,816
6
4
3,883
314
0
6
2,961
6
4
3,312
2,563
3
4,151
3,299
2
5,313
4,077
5
4,947
3,771
4
5,155
4,006
19
5,347
4,108
13
5,375
4,113
13
5,218
4,122
10
5,586
4,553
17
2
0
2
0
2
0
9
7
3
2
6
4
7
6
0
0
5
0
4
100
409
2
1
52
88
89
85
7,319
158
455
1,699
587
417
2,079
9,071
175
877
1,392
710
693
2,620
10,310
275
1,218
1,270
844
775
2,792
8,607
245
1,185
1,040
729
580
2,289
8,084
225
992
911
751
492
2,217
7,808
248
830
944
709
488
2,310
7,491
256
671
878
574
482
2,444
7,144
240
659
702
605
400
2,404
6,714
173
688
744
601
369
2,262
1,217
1,124
1,261
1,208
1,011
990
1,094
1,077
1,055
1,224
41
308
100
27
323
164
1,672
12
538
145
30
475
130
1,619
5
504
180
49
358
119
1,512
14
450
211
46
291
102
1,352
3
310
219
107
304
94
1,701
13
493
230
108
375
168
1,803
8
409
212
73
475
279
1,518
3
338
115
85
322
147
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,090
49
286
95
34
217
114
48
49
50
Asia
Japan
Middle Eastern oil-exporting countries'
6,915
3,094
1,385
7,550
2,914
1,632
9,483
3,651
2,016
8,752
3,411
1,657
8,855
3,363
1,780
9,330
3,720
1,498
9,889
3,548
1,591
10,439
3,537
1,778
10,988
3,899
1,813
51
52
Africa
Oil-exporting countries
576
202
886
339
844
422
596
226
836
357
713
327
644
253
775
389
674
337
53
Other4
1,328
1,030
1,406
1,431
1,268
1,070
1,012
950
716
1. For a description of the changes in the international statistics tables, see
Federal Reserve Bulletin, vol. 65, (July 1979), 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 1993
3.23
CLAIMS O N U N A F F I L I A T E D FOREIGNERS
the United States 1
Reported by Nonbanking Business Enterprises in
Millions of dollars, end of period
1991
Type, and area or country
1988r
1989r
1992
1990r
June
Sept.
Dec.
Mar.
June
Sept.p
1 Total
33,805
33,173
35,348
37,101
38,315
42,635
42,203
41,884
38,607r
2 Payable in dollars
3 Payable in foreign currencies
31,425
2,381
30,773
2,400
32,760
2,589
35,014
2,087
35,952
2,363
40,068
2,567
39,563
2,640
38,915
2,969
35,689"^
2,918
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
21,640
15,643
14,544
1,099
5,997
5,220
777
19,297
12,353
11,364
989
6,944
6,190
754
19,874
13,577
12,552
1,025
6,297
5,280
1,017
20,881
12,544
11,758
786
8,337
7,632
704
22,536
16,188
15,182
1,006
6,348
5,611
737
25,463
17,218
16,343
875
8,245
7,365
880
25,355
16,964
15,803
1,161
8,391
7,644
747
24,640
15,116
13,829
1,287
9,524
8,799
725
21,347
12,535
11,477
1,058
8,812
7,780
1,032
11 Commercial claims
12 Trade receivables
13 Advance payments and other claims
14 Payable in dollars
15 Payable in foreign currencies
12,166
11,091
1,075
11,660
505
13,876
12,253
1,624
13,219
657
15,475
13,657
1,817
14,927
548
16,220
14,120
2,100
15,623
597
15,779
13,429
2,350
15,159
620
17,172
14,447
2,725
16,360
812
16,848
14,243
2,605
16,116
732
17,244
14,743
2,501
16,287
957
17,260r
10,278
18
203
120
348
217
9,039
8,463
28
153
152
238
153
7,496
9,645
76
371
367
265
357
7,971
11,873
74
271
298
429
433
10,222
13,129
76
255
434
420
580
10,997
13,546
13
312
342
385
591
11,251
14,207
12
277
290
727
682
11,631
13,207
25
786
381
732
779
8,773
11,229
16
809
321
766
602
7,707
16
17
18
19
20
21
22
By area or country
Financial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
14,528
2,732r
16,432r
828
23
Canada
2,325
1,904
2,934
2,015
2,163
2,679
2,755
2,534
2,256
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
8,160
1,846
19
47
5,763
151
21
8,020
1,890
7
224
5,486
94
20
6,201
1,090
3
68
4,635
177
25
5,926
457
4
127
4,957
161
29
6,289
652
19
137
5,106
176
32
7,932
758
8
192
6,384
321
40
7,070
415
12
191
5,912
318
34
7,260
523
12
181
6,018
343
32
6,523
1,099
65
135
4,792
222
26
31
32
33
Asia
Japan
Middle East oil-exporting countries2
623
354
5
590
213
8
860
523
8
742
398
4
614
277
3
957
385
5
966
380
3
1,280
712
4
995
481
4
34
35
Africa
Oil-exporting countries3
106
10
140
12
37
0
64
1
61
1
57
1
60
0
57
0
66
1
148
180
195
261
280
292
297
302
278
5,181
189
672
669
212
344
1,324
6,209
242
964
696
479
313
1,575
7,044
212
1,240
807
555
301
1,775
7,464
220
1,402
958
707
296
1,817
6,884
190
1,330
858
641
258
1,807
7,950
192
1,544
943
643
295
2,088
7,894
181
1,562
936
646
328
2,086
8,137
255
1,563
908
666
399
2,173
36
37
38
39
40
41
42
43
All other
4
Commercial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
7,786r
170
l,738r
885
588r
294
l,974r
44
Canada
983
1,091
1,074
1,241
1,232
1,174
1,176
1,131
1,168
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,241
36
230
299
22
461
227
2,184
58
323
297
36
508
147
2,375
14
246
326
40
661
192
2,433
16
247
309
43
710
195
2,494
8
255
385
37
741
196
2,591
11
263
418
41
829
202
2,572
11
272
364
45
892
206
2,672
9
291
438
32
847
251
3,139
7
245
395
43
968
300
52
53
54
Asia
Japan
Middle Eastern oil-exporting countries2
2,993
946
453
3,570
1,199
518
4,127
1,460
460
4,201
1,645
501
4,282
1,808
4%
4,563
1,869
621
4,351
1,780
635
4,462
1,786
609
4,310
1,797
512
55
56
Africa
Oil-exporting countries3
435
122
429
108
488
67
428
63
431
80
418
95
418
75
422
73
427
66
333
393
367
454
456
476
437
420
43ff
57
4
Other
1. For a description of the changes in the international statistics tables, see
Federal Reserve Bulletin, vol. 65, (July 1979), 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
1992
Transaction and area or country
1991
1992
Jan.Dec.
June
July
Aug.
Sept.
Oct.r
Nov. r
Dec. p
U.S. corporate securities
STOCKS
211,207
200,116
221,251
226,422
221,251
226,422
16,525
17,537
18,547
18,769
13,174
14,841
13,884
17,034
18,830
18,179
17,885
16,598
22,616
20,305
3 Net purchases or sales ( - )
11,091
-5,171
-5,171
-1,012
-222
-1,667
-3,150
651
1,287
2,311
4 Foreign countries
10,522
-5,204
-5,204
-1,170
-239
-1,622
-3,059
654
1,284
2,287
53
9
-63
-227
-131
-352
3,845
2,177
-134
4,255
1,179
153
174
-4,963
-1,334
-69
-284
131
-3,298
1,402
2,210
-88
-3,944
-3.598
10
169
-4,963
-1,334
-69
-284
131
-3,298
1,402
2,210
-88
-3,944
-3,598
10
169
-1,184
-148
-4
-217
-10
-691
74
-109
51
141
35
-1
-142
-965
10
-14
-14
-55
-742
130
-24
4
370
172
-7
253
-1,089
-46
-26
-54
-150
-652
-59
-24
-14
-442
-301
-1
7
-1,683
-234
-112
-107
-189
-869
-278
-90
136
-1,064
-97
14
-94
75
-92
-52
-24
-124
362
-227
236
-57
767
184
-21
-119
371
-50
47
-4
-40
361
43
649
-219
373
220
-18
85
1,476
-157
157
186
209
701
173
422
70
122
215
-7
31
568
33
33
158
17
-45
-91
-3
3
24
153,096
125,637
214,779
175,342
214,779
175,342
16,691
12,407
18,343
16,311
19,785
16,620
17,160
14,452
19,315
15,224
18,082
16,317
19,242
15,582
1 Foreign purchases
2 Foreign sales
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 East1
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 ( - )
27,459
39,437
39,437
4,284
2,032
3,165
2,708
4,091
1,765
3,660
22 Foreign countries
27,590
38,321
38,321
4,205
2,153
3,150
2,573
4,045
1,600
3,115
23
24
25
26
27
28
29
30
31
32
33
34
35
13,112
847
1,577
482
656
8,931
1,623
2,672
1,787
8,459
5,767
52
-116
18,070
1,221
2,496
531
-514
12,990
236
8,833
3,461
7,736
-259
58
-73
18,070
1,221
2,496
531
-514
12,990
236
8,833
3,461
7,736
-259
58
-73
1,420
364
11
64
-53
847
-111
619
376
1,904
740
-6
3
1,029
161
-37
177
-13
760
67
676
239
231
-710
22
-111
1,516
-5
-13
22
-94
1,447
-100
878
284
593
-1,229
1
-22
1,818
155
387
58
-51
1,319
48
548
-5
171
-590
-7
0
1,993
-4
-34
133
-23
1,568
198
842
273
790
467
-50
-1
-491
-7
-113
144
-260
-312
281
540
515
692
266
-5
68
1,948
217
850
48
104
920
-38
513
655
76
-34
7
-46
-131
1,116
1,116
79
-121
15
135
46
165
545
-2,854
13,580
16,434
—) ,561
45,747
47,308
-4,269
12,420
16,689
-2,352
49,108
51,460
-3,590
11,633
15,223
-1,036
51,611
52,647
-4,358
12,720
17,078
-2,890
38,217
41,107
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East1
Other Asia
Japan
Africa
Other countries
36 Nonmonetary international and
regional organizations
Foreign securities
37 Stocks, net purchases or sales ( - )
38 Foreign purchases
39 Foreign sales
40 Bonds, net purchases or sales ( - )
41
Foreign purchases
42 Foreign sales
3
-31,967
120,598
152,565
-14,828
330,311
345,139
-32,073
149,742
181,815
-19,075
482,745
501,820
-32,073
149,742
181,815
-19,075
482,745
501,820
68
14,638
14,570
-1,681
40,332
42,013
-3,244
13,496
16,740
-4,280
43,301
47,581
-2,959
9,759
12,718
275
45,938
45,663
43 Net purchases or sales (—), of stocks and bonds
-46,795
-51,148
-51,148
-1,613
-7,524
-2,684
-4,415
-6,621
-4,626
-7,248
44 Foreign countries
-46,711
-54,684
-54,684
-1,997
-8,383
-2,771
-4,436
-6,648
-4,714
-7,387
45
46
47
48
49
50
-34,452
-7,004
759
-7,350
-9
1,345
-38,863
-6,643
-1,816
-6,223
-57
-1,082
-38,863
-6,643
-1,816
-6,223
-57
-1,082
-1,494
-852
-560
374
7
528
-5,333
-2,212
1,631
-2,461
14
-22
-1,244
207
-430
-1,376
11
61
-3,282
-136
308
-1,667
-14
355
-6,862
-1,014
1,091
727
-2
-588
-5,215
570
-1,671
1,568
42
-8
-4,932
-1,235
526
-1,357
-11
-378
-84
3,536
3,536
384
859
87
21
27
88
139
Europe
Canada
Latin America and Caribbean
Africa
Other countries
51 Nonmonetary international and
regional organizations
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 securities sold abroad by U.S. corporations organized to finance direct investments
abroad.
3. In a July 1989 merger, the former stockholders of a 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 1993
M A R K E T A B L E U . S . T R E A S U R Y B O N D S A N D NOTES
Foreign Transactions
Millions of dollars
1992
Country or area
1991
1992
Jan.Dec.
June
July
Aug.
Oct.r
Sept.
Nov. r
Dec."
Transactions, net purchases or sales ( - ) during period1
Estimated total
19,865
38,955
38,955
14,444
-1,862
6,458
-5,995
3,576
17,654
2 Foreign countries
19,687
37,602
37,602
11,754
-2,286
6,785
-6,204
4,381
17,667
-594
3 Europe
4
Belgium and Luxembourg
5 Germany
6
Netherlands
7
Sweden
8
Switzerland
9
United Kingdom
10 Other Western Europe
11
Eastern Europe
12 Canada
8,663
523
-4,725
-3,735
-663
1,007
6,218
10,024
13
-3,019
19,619
1,981
2,076
-2,923
-804
481
24,220
-6,066
654
557
19,619
1,981
2,076
-2,923
-804
481
24,220
-6,066
654
557
3,828
-49
824
227
372
-111
1,664
701
200
47
-2,445
331
-829
-1,046
-26
-703
212
-581
197
2,520
3,450
80
255
367
-1,289
-87
3,681
428
15
900
-4,655
-25
900
-239
-843
292
16
-4,761
5
-4,281
4,701
232
-8
-40
202
769
4,098
-551
-1
458
7,290
370
-1,584
1,827
668
1,334
7,215
-2,758
218
-1,087
3,099
-32
898
-804
13
14
15
16
17
18
19
20
10,285
10
4,179
6,097
3,367
-4,081
689
-298
-3,223
539
-1,957
-1,805
23,195
9,484
1,103
-3,649
-3,223
539
-1,957
-1,805
23,195
9,484
1,103
-3,649
3,585
-149
1,791
1,943
4,129
1,638
92
73
-2,869
216
-589
-2,496
1,783
2,221
149
-1,424
-1,563
60
-758
-865
4,112
1,887
56
-170
-1,479
31
-2,537
1,027
4,004
2,448
59
148
-1,915
155
-3,233
1,163
1,416
-339
-37
-242
7,270
27
2,385
4,858
4,000
3,383
119
75
-4,519
11
415
-4,945
857
1,868
0
73
178
-358
-72
1,353
1,018
533
1,353
1,018
533
2,690
2,421
127
424
365
-68
-327
-133
-75
209
-31
201
-805
-903
219
-13
-38
-31
202
76
97
19,687
1,190
18,496
37,602
6,874
30,728
37,602
6,874
30,728
11,754
5,408
6,346
-2,286
-767
-1,519
6,785
697
6,088
-6,204
-4,483
-1,721
4,381
2,951
1,430
17,667
-603
18,270
-594
-721
127
-6,822
239
4,323
11
4,323
11
947
-56
856
0
1,093
0
750
-271
0
407
0
511
0
1
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Asia
Japan
Africa
Other
21 Nonmonetary international and regional organizations
22
International
Latin American regional
23
-392
-344
213
2,833
331
4
-104
MEMO
24 Foreign countries
25
Official institutions
Other foreign
26
Oil-exporting countries
27 Middle East 2
28
1. 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.
4
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
Interest and Exchange Rates
3.26
A67
DISCOUNT RATES OF FOREIGN CENTRAL BANKS 1
Percent per year
Country
Country
Country
Percent
Month
effective
7.5
7.5
6.09
10.5
9.0
Feb. 1993
Oct. 1992
Feb. 1993
Feb. 1993
Dec. 1992
Austria..
Belgium .
Canada..
Denmark
France2..
Germany...
Italy
Japan
Netherlands
1. Rates shown are mainly those at which the central bank either discounts 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
that the central bank transacts the largest proportion of its credit operations.
3.27
Rate on Feb. 28, 1993
Rate on Feb. 28, 1993
Rate on Feb. 28, 1993
Percent
Month
effective
8.0
11.5
2.5
7.5
Feb. 1993
Feb. 1993
Feb. 1993
Jan. 1993
Month
effective
Nov. 1992
Jan. 1993
Sept. 1992
17.0
5.5
Norway
Switzerland
United Kingdom
12.0
2. Since Feb. 1981, the rate has been that at which the Bank of France
discounts Treasury bills for seven to ten days.
FOREIGN SHORT-TERM INTEREST RATES 1
Averages of daily figures, percent per year
1993
1992
Type or country
8 Italy
1990
8.16
14.73
13.00
8.41
8.71
8.57
10.20
12.11
9.70
7.75
1991
5.86
11.47
9.07
9.15
8.01
9.19
9.49
12.04
9.30
7.33
1992
3.70
9.56
6.76
9.42
7.67
9.25
10.14
13.91
9.31
4.39
1. 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.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
3.33
10.27
5.15
9.79
8.09
9.73
10.27
15.27
9.71
3.87
3.15
9.86
5.33
9.37
7.20
9.23
10.51
17.54
9.44
3.89
3.30
8.23
7.57
8.85
6.28
8.63
10.82
15.52
8.70
3.85
3.67
7.16
7.63
8.84
6.44
8.66
9.58
14.38
8.64
3.77
3.50
7.11
7.93
8.93
6.13
8.55
10.75
13.60
8.65
3.76
3.22
6.88
7.03
8.50
5.52
8.00
11.69
12.56
8.19
3.70
3.12
6.10
6.38
8.29
5.34
7.98
11.70
11.43
8.75
3.27
A68
3.28
International Statistics • April 1993
FOREIGN EXCHANGE RATES 1
Currency units per dollar except as noted
1992
Country/currency unit
1
2
3
4
S
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/pound2
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder 2
New Zealand/dollar
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
1990
1991
1993
1992
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
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
73.521
10.992
32.148
1.2085
5.5206
6.0372
4.4865
5.2935
1.5618
190.81
72.255
10.214
29.917
1.2225
5.5048
5.6203
4.4764
4.9378
1.4514
182.70
71.481
10.436
30.581
1.2453
5.5486
5.7278
4.7096
5.0370
1.4851
192.50
68.984
11.168
32.661
1.2674
5.6134
6.1166
5.0615
5.3706
1.5875
206.48
68.974
11.130
32.545
1.2725
5.8106
6.1206
5.1444
5.3974
1.5822
209.48
67.297
11.368
33.239
1.2779
5.77%
6.2319
5.4242
5.4751
1.6144
215.97
68.294
11.556
33.841
1.2602
5.7874
6.3019
5.8534
5.5594
1.6414
220.60
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
161.39
1,241.28
134.59
2.7503
1.8720
57.832
6.4912
144.77
7.7402
28.156
170.42
1,232.17
126.78
2.5463
1.7587
53.792
6.2142
135.07
7.7298
28.476
181.90
1,176.21
122.60
2.5029
1.6348
54.112
5.8116
127.86
7.7298
28.477
177.19
1,309.64
121.17
2.5044
1.6717
53.943
6.0562
132.33
7.7348
28.474
166.17
1,364.45
123.88
2.5227
1.7862
51.9%
6.4714
141.71
7.7416
28.979
166.71
1,412.38
124.04
2.5710
1.7788
51.570
6.6804
142.05
7.7376
29.043
163.37
1,491.07
124.99
2.5985
1.8155
51.270
6.8721
145.36
7.7335
30.042
148.11
1,550.43
120.76
2.6295
1.8473
51.603
6.9779
149.89
1.8134
2.5885
710.64
101.96
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
1.6294
2.8524
784.58
102.38
44.013
5.8258
1.4064
25.160
25.411
176.63
1.5988
2.8037
788.76
98.19
44.159
5.3685
1.2780
25.227
25.209
184.65
1.6081
2.8923
786.79
105.74
44.276
5.6006
1.3176
25.278
25.253
165.29
1.6338
2.9959
787.09
113.83
44.404
6.2528
1.4291
25.405
25.462
152.68
1.6397
3.0140
791.75
112.95
45.046
6.8903
1.4219
25.452
25.488
155.10
1.6527
3.0713
794.87
114.62
46.307
7.2536
1.4774
25.452
25.523
153.25
1.6463
3.1313
799.25
117.51
46.351
7.5566
1.5178
25.837
25.508
143.95
89.09
89.84
86.61
81.98
85.03
90.04
90.50
92.36
93.82
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).
A69
Guide to Statistical Releases and Special Tables
STATISTICAL RELEASES—List
Published Semiannually, with Latest
BULLETIN
Reference
Issue
December 1992
Anticipated schedule of release dates for periodic releases
SPECIAL TABLES—Quarterly
Data Published Irregularly, with Latest
BULLETIN
Page
A78
Reference
Title and Date
Issue
Page
Assets and liabilities of commercial banks
December 31, 1991
March 31, 1992
June 30, 1992
September 30, 1992
May
August
November
February
1992
1992
1992
1993
A70
A70
A70
A70
Terms of lending at commercial banks
February 1992
May 1992
August 1992
November 1992
September
September
November
February
1992
1992
1992
1993
A74
A78
A76
A76
Assets and liabilities of U.S. branches and agencies of foreign banks
December 31, 1991
March 31, 1992
June 30, 1992
September 30, 1992
May
September
November
February
1992
1992
1992
1993
A76
A82
A80
A80
Pro forma balance sheet and income statements for priced service operations
June 30, 1991
September 30, 1991
March 30, 1992
June 30, 1992
November
January
August
October
1991
1992
1992
1992
A80
A70
A80
A70
Assets and liabilities of life insurance companies
June 30, 1991
September 30, 1991
December 31, 1991
September 30, 1992
December
May
August
March
1991
1992
1992
1993
A79
A81
A83
A71
A70
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, 21, 22
Assets and liabilities (See also Foreigners)
Banks, by classes, 19-22
Domestic finance companies, 35
Federal Reserve Banks, 11
Financial institutions, 27
Foreign banks, U.S. branches and agencies, 23
Automobiles
Consumer installment credit, 38
Production, 47,48
BANKERS acceptances, 10, 24, 25
Bankers balances, 19-22. (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 34
Rates, 25
Branch banks, 23, 55
Business activity, nonfinancial, 44
Business expenditures on new plant and equipment, 34
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, 25
Commercial and industrial loans
Commercial banks, 17, 21
Weekly reporting banks, 21-23
Commercial banks
Assets and liabilities, 19-22
Commercial and industrial loans, 17, 19,20, 21, 22, 23
Consumer loans held, by type and terms, 38
Loans sold outright, 21
Nondeposit funds, 18
Real estate mortgages held, by holder and property, 37
Time and savings deposits, 4
Commercial paper, 24, 25, 35
Condition statements (See Assets and liabilities)
Construction, 44, 49
Consumer installment credit, 38
Consumer prices, 44, 46
Consumption expenditures, 52, 53
Corporations
Nonfinancial, assets and liabilities, 34
Profits and their distribution, 34
Security issues, 33, 65
Cost of living (See Consumer prices)
Credit unions, 38
Currency in circulation, 5, 14
Customer credit, stock market, 26
DEBITS to deposit accounts, 16
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 19-23
Ownership by individuals, partnerships, and
corporations, 23
Demand deposits—Continued
Turnover, 16
Depository institutions
Reserve requirements, 9
Reserves and related items, 4, 5, 6, 13
Deposits (See also specific types)
Banks, by classes, 4, 19-22, 23
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, 34
EMPLOYMENT, 45
Eurodollars, 25
FARM mortgage loans, 37
Federal agency obligations, 5, 10, 11, 12, 30, 31
Federal credit agencies, 32
Federal finance
Debt subject to statutory limitation, and types and ownership
of gross debt, 29
Receipts and outlays, 27, 28
Treasury financing of surplus, or deficit, 27
Treasury operating balance, 27
Federal Financing Bank, 27, 32
Federal funds, 7, 18, 21, 22, 23, 25, 27
Federal Home Loan Banks, 32
Federal Home Loan Mortgage Corporation, 32, 36, 37
Federal Housing Administration, 32, 36, 37
Federal Land Banks, 37
Federal National Mortgage Association, 32, 36, 37
Federal Reserve Banks
Condition statement, 11
Discount rates (See Interest rates)
U.S. government securities held, 5, 11, 12, 29
Federal Reserve credit, 5, 6, 11, 12
Federal Reserve notes, 11
Federally sponsored credit agencies, 32
Finance companies
Assets and liabilities, 35
Business credit, 35
Loans, 38
Paper, 24, 25
Financial institutions
Loans to, 21, 22, 23
Selected assets and liabilities, 27
Float, 51
Flow of funds, 39,41, 42, 43
Foreign banks, assets and liabilities of U.S. branches and
agencies, 22, 23
Foreign currency operations, 11
Foreign deposits in U.S. banks, 5, 11, 21, 22
Foreign exchange rates, 68
Foreign trade, 54
Foreigners
Claims on, 55, 57, 60, 61, 62, 64
Liabilities to, 22, 54, 55, 57, 58, 63, 65, 66
A71
GOLD
Certificate account, 11
Stock, 5, 54
Government National Mortgage Association, 32, 36, 37
Gross domestic product, 51
HOUSING, new and existing units, 49
INCOME, personal and national, 44, 51, 52
Industrial production, 44, 47
Installment loans, 38
Insurance companies, 29, 37
Interest rates
Bonds, 25
Consumer installment credit, 38
Federal Reserve Banks, 8
Foreign central banks and foreign countries, 67
Money and capital markets, 25
Mortgages, 36
Prime rate, 24
International capital transactions of United States, 53-67
International organizations, 57, 58, 60, 63, 64
Inventories, 51
Investment companies, issues and assets, 34
Investments (See also specific types)
Banks, by classes, 19, 20, 21, 22, 23,27
Commercial banks, 4, 17, 19-22
Federal Reserve Banks, 11, 12
Financial institutions, 37
LABOR force, 45
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 19-22
Commercial banks, 4, 17, 19-22
Federal Reserve Banks, 5, 6, 8, 11, 12
Financial institutions, 27, 37
Insured or guaranteed by United States, 36, 37
MANUFACTURING
Capacity utilization, 46
Production, 46, 48
Margin requirements, 26
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, 25
Money stock measures and components, 4, 14
Mortgages (See Real estate loans)
Mutual funds, 34
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 28
National income, 51
OPEN market transactions, 10
PERSONAL income, 52
Prices
Consumer and producer, 44, 50
Stock market, 26
Prime rate, 24
Producer prices, 44, 50
Production, 44, 47
Profits, corporate, 34
REAL estate loans
Banks, by classes, 17, 21, 22, 37
Financial institutions, 27
Real estate loans—Continued
Terms, yields, and activity, 36
Type of holder and property mortgaged, 37
Repurchase agreements, 7, 18, 21, 22, 23
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, 36
Retail credit and retail sales, 38, 39, 44
SAVING
Flow of funds, 39,41,42, 43
National income accounts, 51
Savings and loan associations, 37, 38, 39. (See also SAIF-insured
institutions)
Savings Association Insurance Funds (SAIF) insured institutions, 27
Savings banks, 27, 37, 38
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 32
Foreign transactions, 65
Life insurance companies, 70
New issues, 33
Prices, 26
Special drawing rights, 5, 11, 53, 54
State and local governments
Deposits, 21, 22
Holdings of U.S. government securities, 29
New security issues, 33
Ownership of securities issued by, 21, 22
Rates on securities, 25
Stock market, selected statistics, 26
Stocks (See also Securities)
New issues, 33
Prices, 26
Student Loan Marketing Association, 32
TAX receipts, federal, 28
Thrift institutions, 4. (See also Credit unions and Savings and
loan associations)
Time and savings deposits, 4, 14, 18, 19, 20, 21, 22, 23
Trade, foreign, 54
Treasury cash, Treasury currency, 5
Treasury deposits, 5, 11, 27
Treasury operating balance, 27
UNEMPLOYMENT, 45
U.S. government balances
Commercial bank holdings, 19, 20, 21, 22
Treasury deposits at Reserve Banks, 5, 11, 27
U.S. government securities
Bank holdings, 19-22, 23, 29
Dealer transactions, positions, and financing, 31
Federal Reserve Bank holdings, 5, 11, 12, 29
Foreign and international holdings and
transactions, 11, 29, 66
Open market transactions, 10
Outstanding, by type and holder, 27, 29
Rates, 24
U.S. international transactions, 53-67
Utilities, production, 48
VETERANS Administration, 36, 37
WEEKLY reporting banks, 21-23
Wholesale (producer) prices, 44, 50
YIELDS (See Interest rates)
A72
Federal Reserve Board of Governors
and Official Staff
ALAN GREENSPAN, Chairman
DAVID W . MULLINS, JR., Vice Chairman
OFFICE OF BOARD
DIVISION OF INTERNATIONAL
MEMBERS
JOSEPH R. COYNE, Assistant
DONALD J. WINN, Assistant
WAYNE D . ANGELL
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
EDWIN M. TRUMAN, Staff
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
LEGAL
FINANCE
Director
Director
DIVISION
J. VIRGIL MATTINGLY, JR., General
Counsel
SCOTT G. ALVAREZ, Associate General Counsel
RICHARD M. ASHTON, Associate General Counsel
OLIVER IRELAND, Associate General Counsel
KATHLEEN M. O'DAY, Associate General Counsel
MARYELLEN A. BROWN, Assistant to the General Counsel
OFFICE OF THE SECRETARY
WILLIAM W . WILES,
Secretary
JENNIFER J. JOHNSON, Associate Secretary
BARBARA R. LOWREY, Associate
Secretary
ELLEN MALAND, Assistant
Secretary
DIVISION OF BANKING
SUPERVISION AND REGULATION
RICHARD SPILLENKOTHEN,
Director
STEPHEN C. SCHEMERING, Deputy
DON E. KLINE, Associate
Director
Director
WILLIAM A. RYBACK, Associate
Director
FREDERICK M. STRUBLE, Associate Director
HERBERT A. BIERN, Deputy Associate Director
ROGER T. COLE, Deputy Associate Director
JAMES I. GARNER, Deputy Associate Director
HOWARD A. AMER, Assistant
Director
GERALD A. EDWARDS, JR., Assistant
Director
JAMES D. GOETZINGER, Assistant
Director
STEPHEN M. HOFFMAN, JR., Assistant
Director
LAURA M . HOMER, Assistant
Director
JAMES V. HOUPT, Assistant
Director
DIVISION OF RESEARCH AND
MICHAEL J. PRELL,
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
LEVON H. GARABEDIAN, Assistant
Director
(Administration)
DIVISION OF MONETARY
DONALD L . KOHN,
AFFAIRS
Director
DAVID E. LINDSEY, Deputy Director
BRIAN F. MADIGAN, Assistant Director
RICHARD D. PORTER, Assistant
Director
NORMAND R.V. BERNARD, Special Assistant to the Board
DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS
GRIFFITH L . GARWOOD,
Director
GLENN E. LONEY, Associate
DOLORES S. SMITH, Associate
Director
Director
JACK P. JENNINGS, Assistant Director
MAUREEN P. ENGLISH, Assistant
MICHAEL G. MARTINSON, Assistant
Director
RHOGER H PUGH, Assistant
Director
SIDNEY M. SUSSAN, Assistant
Director
MOLLY S. WASSOM, Assistant
Director
IRENE SHAWN MCNULTY, Assistant
STATISTICS
Director
Director
Director
A73
JOHN P. LAWARE
LAWRENCE B . LINDSEY
OFFICE OF
STAFF DIRECTOR
SUSAN M . PHILLIPS
FOR
MANAGEMENT
S. DAVID FROST, Staff
Director
WILLIAM SCHNEIDER, Special
Assignment:
Project Director, National Information Center
PORTIA W. THOMPSON, Equal Employment Opportunity
Programs Officer
DIVISION OF RESERVE BANK
AND PAYMENT SYSTEMS
CLYDE H . FARNSWORTH, JR.,
DAVID L . S H A N N O N ,
RESOURCES
CHARLES W. BENNETT, Assistant
Director
JACK DENNIS, JR., Assistant
Director
LOUISE L. ROSEMAN, Assistant
FLORENCE M. YOUNG, Assistant
Director
ANTHONY V. DIGIOIA, Assistant
JOSEPH H. HAYES, JR., Assistant
FRED HOROWITZ, Assistant
OFFICE OF THE
Director
Director
Controller
STEPHEN J. CLARK, Assistant Controller {Programs and
Budgets)
DARRELL R. PAULEY, Assistant Controller (Finance)
DIVISION OF SUPPORT
SERVICES
Director
GEORGE M. LOPEZ, Assistant
Director
DAVID L. WILLIAMS, Assistant Director
DIVISION OF INFORMATION
MANAGEMENT
STEPHEN R . MALPHRUS,
RESOURCES
Director
BRUCE M. BEARDSLEY, Deputy Director
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 Director
ELIZABETH B. RIGGS, Assistant
RICHARD C. STEVENS, Assistant
Director
Director
Director
Director
Director
OFFICE OF THE INSPECTOR
BRENT L. BOWEN, Inspector
Director
CONTROLLER
GEORGE E . LIVINGSTON,
ROBERT E . FRAZIER,
Director
JEFFREY C. MARQUARDT, Assistant
JOHN H. PARRISH, Assistant Director
Director
JOHN R. WEIS, Associate
Director
DAVID L. ROBINSON, Deputy Director (Finance and
Control)
EARL G. HAMILTON, Assistant
DIVISION OF HUMAN
MANAGEMENT
OPERATIONS
GENERAL
General
DONALD L. ROBINSON, Assistant Inspector General
BARRY R. SNYDER, Assistant Inspector General
74
Federal Reserve Bulletin • April 1993
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
EDWARD W . KELLEY, JR.
EDWARD G . BOEHNE
JOHN P. LAWARE
SUSAN M . PHILLIPS
SILAS KEEHN
LAWRENCE B . LINDSEY
GARY H . STERN
DAVID W . MULLINS, JR.
ROBERT D . MCTEER, JR.
ALTERNATE
J. ALFRED BROADDUS, JR.
JERRY L . JORDAN
ROBERT P. FORRESTAL
JAMES H . OLTMAN
MEMBERS
ROBERT T. PARRY
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
RICHARD G. DAVIS, Associate
Economist
RICHARD W. LANG, Associate
Economist
DAVID E. LINDSEY, Associate
Economist
LARRY J. PROMISEL, Associate
Economist
ARTHUR J. ROLNICK, Associate
Economist
HARVEY ROSENBLUM, Associate
Economist
KARL A. SCHELD, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
THOMAS D. SIMPSON, Associate
Economist
LAWRENCE SLIFMAN, Associate
Economist
WILLIAM J. MCDONOUGH, Manager of the System Open Market Account
MARGARET L. GREENE, Deputy Manager for Foreign Operations
JOAN E. LOVETT, Deputy Manager for Domestic Operations
FEDERAL ADVISORY
COUNCIL
E. B. ROBINSON, JR.,
President
JOHN B. MCCOY, Vice President
MARSHALL N. CARTER, First District
CHARLES S. SANFORD, JR., Second District
ANTHONY P. TERRACCIANO, Third District
JOHN B. MCCOY, Fourth District
EDWARD E. CRUTCHFIELD, JR., Fifth District
E.B. ROBINSON, JR., Sixth District
EUGENE A. MILLER, Seventh District
ANDREW B. CRAIG, III, Eighth District
JOHN F. GRUNDHOFER, Ninth District
DAVID A. RISMILLER, Tenth District
CHARLES R. HRDLICKA, Eleventh District
RICHARD M. ROSENBERG, Twelfth District
HERBERT V. PROCHNOW,
WILLIAM J. KORSVIK, Associate
Secretary
Secretary
A75
CONSUMER
ADVISORY
COUNCIL
DENNY D. DUMLER, Denver, Colorado, Chairman
JEAN POGGE, Chicago, Illinois, 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
BONNIE GUITON, C h a r l o t t e s v i l l e , V i r g i n i a
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
JOYCE HARRIS, M a d i s o n , W i s c o n s i n
JOHN A . BAKER, A t l a n t a , G e o r g i a
GARY S . HATTEM, N e w Y o r k , N e w Y o r k
VERONICA E . BARELA, D e n v e r , C o l o r a d o
JULIA E . HILER, M a r i e t t a , G e o r g i a
MULUGETTA BIRRU, P i t t s b u r g h , P e n n s y l v a n i a
RONALD HOMER, B o s t o n , M a s s a c h u s e t t s
DOUGLAS D . BLANKE, St. P a u l , M i n n e s o t a
THOMAS L . HOUSTON, D a l l a s , T e x a s
GENEVIEVE BROOKS, B r o n x , N e w Y o r k
HENRY JARAMILLO, B e l e n , N e w M e x i c o
TOYE L . BROWN, B o s t o n , M a s s a c h u s e t t s
EDMUND MIERZWINSKI, W a s h i n g t o n , D . C .
CATHY CLOUD, W a s h i n g t o n , D . C .
JOHN V. SKINNER, I r v i n g , T e x a s
MICHAEL D . EDWARDS, Y e l m , W a s h i n g t o n
LOWELL N . SWANSON, P o r t l a n d , O r e g o n
MICHAEL FERRY, St. L o u i s , M i s s o u r i
MICHAEL W . TIERNEY, W a s h i n g t o n , D . C .
NORMA L . FREIBERG, N e w O r l e a n s , L o u i s i a n a
LORI GAY,
Los Angeles,
California
DONALD A . GLAS, H u t c h i n s o n , M i n n e s o t a
THRIFT INSTITUTIONS
ADVISORY
GRACE W . WEINSTEIN, E n g l e w o o d , N e w J e r s e y
JAMES L . WEST, T i j e r a s , N e w M e x i c o
ROBERT O . ZDENEK, W a s h i n g t o n , D . C .
COUNCIL
DANIEL C. ARNOLD, Houston, Texas, President
BEATRICE D'AGOSTINO, Somerville, New Jersey, Vice President
WILLIAM A . COOPER, M i n n e a p o l i s , M i n n e s o t a
CHARLES JOHN KOCH, C l e v e l a n d , O h i o
PAUL L . ECKERT, D a v e n p o r t , I o w a
ROBERT MCCARTER, N e w B e d f o r d , M a s s a c h u s e t t s
GEORGE R . GLIGOREA, S h e r i d a n , W y o m i n g
NICHOLAS W. MITCHELL, JR., Winston-Salem, North Carolina
THOMAS J. HUGHES, M e r r i f i e l d , V i r g i n i a
STEPHEN W . PROUGH, I r v i n e , C a l i f o r n i a
KERRY KILLINGER, S e a t t l e , W a s h i n g t o n
THOMAS R . RICKETTS, T r o y , M i c h i g a n
A76
Federal Reserve Board Publications
For ordering assistance, write PUBLICATIONS SERVICES,
MS-138, Board of Governors of the Federal Reserve System,
Washington, DC 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 1 - 9 2 .
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: period covered, release date,
number of pages, and price.
$ 6.50
October 1982
239 pp.
1981
December 1983
$ 7.50
266 pp.
1982
264 pp.
$11.50
October 1984
1983
$12.50
October 1985
254 pp.
1984
$15.00
October 1986
231 pp.
1985
$15.00
November 1987
288 pp.
1986
$15.00
272 pp.
October 1988
1987
$25.00
November 1989
256 pp.
1988
$25.00
712 pp.
1980-89
March 1991
November 1991
$25.00
185 pp.
1990
$25.00
November 1992
215 pp.
1991
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
Lending—
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.
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 MULTICOUNTRY MODEL, M a y 1 9 8 4 . 5 9 0 p p . $ 1 4 . 5 0 e a c h .
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 copies are
available without charge.
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 Refinancings
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
All
STAFF STUDIES: Summaries Only Printed in the
Bulletin
1 6 0 . BANKING MARKETS AND THE USE OF FINANCIAL SERVICES BY SMALL AND MEDIUM-SIZED BUSINESSES, b y
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-
Gregory E. Elliehausen and John D. Wolken. September
1990. 35 pp.
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
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.
154.
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 U N I T 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.
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
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.
Changes in Family Finances from 1983 to 1989: Evidence from
the Survey of Consumer Finances. 1/92.
U.S. International Transactions in 1991. 5/92.
A78
Maps of the Federal Reserve System
HAWAII
LEGEND
Both pages
• Federal Reserve Bank city
• Board of Governors of the Federal
Reserve System, Washington, D.C.
Facing page
• Federal Reserve Branch city
— Branch boundary
NOTE
The Federal Reserve officially identifies Districts
by number and Reserve Bank city (shown on both
pages) and by letter (shown on the facing page).
In the 12th District, the Seattle Branch serves
Alaska, and the San Francisco Bank serves Hawaii.
The System serves commonwealths and territories as follows: the New York Bank serves the
Commonwealth of Puerto Rico and the U.S. Virgin
Islands; the San Francisco Bank serves American
Samoa, Guam, and the Commonwealth of the
Northern Mariana Islands. The Board of Governors
revised the branch boundaries of the System most
recently in December 1991.
A79
1-A
3-C
2-B
5-E
4-D
Baltimore
Pittsburgh
J
CI
{
Buffalo
MAB
CT
Charlotte
/
• Cincinnati
• • NY
\
KY
NJ
BOSTON
NEW YORK
6-F
8-H
7-G
• Nashville
RICHMOND
CLEVELAND
PHILADELPHIA
Birmingham.
WI
)
MS
GA
•
MO
Ml
./^Louisville
Detroit •
IA
L• /V
Memphis
IL •
LA
'
a
Jacksonville
IN
y
New Orleans
„
Little* >
Rock \
MS
Miami
#
ATLANTA
9-1
CHICAGO
ST. LOUIS
MT
1 NO
• Hel<:na
MN
Ml
1
•
SD
WI
MINNEAPOLIS
12-L
10-J
™ L
•J
#
Denver
NM
Omaha*
> Mfl
/
ALASKA
•
v^Seattle
•
—
[—
Portland
Oklahoma City
•
OR
^
OK
CA
KANSAS CITY
/
NV
7
UT
11-K
1
NM
TX
Salt Lake City
/
•
EI Paso
J
r
•
AZ
Y Houston
• f •
San Antonio >
• Los Angeles
HAWAII
DALLAS
SAN FRANCISCO
A80
Federal Reserve Banks, Branches,
and Offices
FEDERAL RESERVE BANK
branch, or facility
Zip
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106
Jerome H. Grossman
Warren B. Rudman
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
Jane G. Pepper
James M. Mead
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101
Jerry L. Jordan
Sandra Pianalto
Cincinnati
Pittsburgh
45201
15230
A. William Reynolds
To be announced
Marvin Rosenberg
Robert P. Bozzone
RICHMOND*
23219
Anne Marie Whittemore
Henry J. Faison
To be announced
Anne M. Allen
J. Alfred Broaddus, Jr.
Jimmie R. Monhollon
Edwin A. Huston
Leo Benatar
Donald E. Boomershine
Joan D. Ruffier
R. Kirk Landon
James R. Tuerff
Lucimarian Roberts
Robert P. Forrestal
Jack Guynn
Richard G. Cline
Robert M. Healey
J. Michael Moore
Silas Keehn
William C. Conrad
Robert H. Quenon
Janet McAfee Weakley
Robert D. Nabholz, Jr.
John A. Williams
Seymour B. Johnson
Thomas C. Melzer
James R. Bowen
Delbert W. Johnson
Gerald A. Rauenhorst
James E. Jenks
Gary H. Stern
Thomas E. Gainor
Burton A. Dole, Jr.
Herman Cain
Barbara B. Grogan
Ernest L. Hollo way
Sheila Griffin
Thomas M. Hoenig
Henry R. Czerwinski
Leo E. Linbeck, Jr.
Cece Smith
W. Thomas Beard, III
Judy Ley Allen
Erich Wendl
Robert D. McTeer, Jr.
Tony J. Salvaggio
James A. Vohs
Judith M. Runstad
Donald G. Phelps
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
75201
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. Sloan1
Karl W. Ashman
Howard Wells
John P. Baumgartner
John D. Johnson
Kent M. Scott
David J. France
Harold L. Shewmaker
Sammie C. Clay
Robert Smith, III1
Thomas H. Robertson
John F. Moore1
E. Ronald Liggett1
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.
Publications of Interest
FEDERAL
RESERVE
CONSUMER
CREDIT
PUBLICATIONS
The Federal Reserve Board publishes a series of
pamphlets covering individual credit laws and topics,
as pictured below. The series includes such subjects
as how the Equal Credit Opportunity Act protects
women against discrimination in their credit dealings,
how to use a credit card, and how to resolve a billing
error.
The Board also publishes the Consumer Handbook
to Credit Protection Laws, a complete guide to consumer credit protections. This forty-four-page booklet
explains how to shop and obtain credit, how to maintain a good credit rating, and how to dispute unfair
credit transactions.
Three booklets on the mortgage process are also
available: A Consumer's Guide to Mortgage Lock-Ins,
A Consumer's Guide to Mortgage Refinancings, and
A Consumer's Guide to Mortgage Settlement Costs.
These booklets were prepared in conjunction with the
Federal Home Loan Bank Board and in consultation
with other federal agencies and trade and consumer
groups.
Copies of consumer publications are available free
of charge from Publications Services, mail stop 138,
Board of Governors of the Federal Reserve System,
Washington, DC 20551. Multiple copies for classroom use are also available free of charge.
A guide to
A Consumer's
Guide to
Mortgage
Lock-Ins
A Coiwiimer's
GuMeto
Business
Credit
for Women,
Minorities, and
Small Businesses
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 as well as 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 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.
The Securities Credit Transactions Handbook contains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together
with related statutes, Board interpretations, rulings,
and staff opinions. Also included are the Board's list
of marginable OTC stocks and its list of foreign
margin stocks.
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, the official Board commentary on Regulation CC, and policy statements on risk
reduction in the payment system.
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, DC 20551.
U.S. MONETARY POLICY AND FINANCIAL MARKETS
U.S. Monetary Policy and Financial Markets by AnnMarie 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
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. purchasers 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, NY 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) 482-1986. 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
Row of Funds
Quarterly
@FedFRASER