Full text of Federal Reserve Bulletin : April 1996
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VOLUME 8 2 •
NUMBER 4 •
APRIL 1 9 9 6
FEDERAL RESERVE
BULLETIN
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn
• J. Virgil Mattingly, Jr. • Michael J. Prell • 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
285 MONETARY POLICY REPORT TO THE
CONGRESS
The economy performed well in 1995. Moderate
economic growth kept the unemployment rate at
a relatively low level, and inflation, as measured
by the change in the consumer price index, was
in a range of 3 percent or less for the fifth
straight year, the first such occurrence in thirty
years. This desirable combination of low inflation and low unemployment provided further
substantiation of a fundamental point that the
Board has made in past reports—namely, that
there is no trade-off in the long run between the
monetary policy goals of maximum employment and stable prices set in the Federal Reserve
Act.
302 THE FISCAL POSITION OF THE STATE
AND LOCAL GOVERNMENT SECTOR:
DEVELOPMENTS IN THE 1990S
After a difficult period during the early 1990s,
the fiscal position of state and local governments
has improved considerably in the past three
years. States, as a group, have fared relatively
well, although some local governments are still
struggling with fiscal difficulties. In addition, the
sector as a whole continues to face persistent
underlying structural problems. This article first
examines the primary budget concepts that are
generally used to evaluate the fiscal condition of
state and local governments. Then it surveys the
status of the various levels of government, and
finally, it discusses some of the underlying problems in state and local budgeting, particularly in
the areas of health care, education, corrections,
and pensions.
312 INDUSTRIAL PRODUCTION AND CAPACITY
UTILIZATION FOR FEBRUARY 1996
Industrial production rose 1.2 percent in February, to 123.7 percent of its 1987 average, after
having fallen 0.4 percent in January. Capacity
utilization rose 0.8 percentage point in February,
to 82.9 percent.
315 STATEMENTS TO THE CONGRESS
Alan Greenspan, Chairman of the Board of Governors, presents the Federal Reserve's semiannual report on monetary policy and says that
the U.S. economy performed reasonably well in
1995 with the unemployment rate at the lowest
sustained level in five years and with the consumer price index rising less than 3 percent—
the fifth year running at 3 percent or below,
before the Subcommittee on Domestic and International Monetary Policy of the House Committee on Banking and Financial Services, February 20, 1996. (Chairman Greenspan presented
identical testimony before the Senate Committee on Banking, Housing, and Urban Affairs,
February 21, 1996.)
320 Theodore E. Allison, Assistant to the Board,
presents information on the security of U.S. currency and says that the currency of the United
States is safe—that is, relatively free from
counterfeits—both domestically and internationally and that the Federal Reserve is confident
that its procedures permit thorough identification of counterfeits and thus prevent their reissuance, before the Subcommittee on General
Oversight and Investigations of the House Committee on Banking and Financial Services, February 27, 1996.
322 Edward W. Kelley, Jr., member, Board of Governors, discusses the impact of crime on the
stability of the banking system and the Federal
Reserve's efforts to assist banks and law
enforcement officials in countering criminal
activity and says that a banking organization's
best protection against illicit activities is its own
policies and procedures designed to identify and
then reject potentially illegal or damaging transactions; in this effort the Federal Reserve and
other regulators have implemented various
directives for banks to establish internal controls
and procedures designed to detect unusual or
suspicious transactions that, if unchecked, could
lead to fraud, money laundering, or other types
of criminal misconduct, before the House Committee on Banking and Financial Services, February 28, 1996.
326
ANNOUNCEMENTS
A3 GUIDE TO TABULAR
Election of Alan Greenspan as Chairman Pro
Tempore of the Board of Governors of the
Federal Reserve System.
Final rule to amend Regulation K.
Adjustment of dollar amount triggering disclosure requirements under Regulation Z.
Proposed revision to Regulation K.
Availability of the Federal Reserve Regulatory
Service on computer diskette with search-andretrieval software.
Revisions to the money stock data.
333 LEGAL
DEVELOPMENTS
STATISTICS
These tables reflect data available as of
February 27, 1996.
A4 Domestic Financial Statistics
A45 Domestic Nonfinancial Statistics
A53 International Statistics
A67 GUIDE TO STATISTICAL RELEASES
SPECIAL TABLES
A68 INDEX TO STATISTICAL
AND
TABLES
A70 BOARD OF GOVERNORS AND STAFF
A72 FEDERAL OPEN MARKET COMMITTEE
STAFF; ADVISORY COUNCILS
AND
A74 FEDERAL RESERVE BOARD PUBLICATIONS
Various bank holding company, bank service
corporation, and bank merger orders; and pending cases.
A1 FINANCIAL AND BUSINESS
PRESENTATION
A76 MAPS OF THE FEDERAL RESERVE
A78 FEDERAL RESERVE BANKS,
AND OFFICES
SYSTEM
BRANCHES,
Monetary Policy Report to the Congress
Report submitted to the Congress on February 20,
1996, pursuant to the Full Employment and Balanced
Growth Act of 19781
MONETARY POLICY AND THE
ECONOMIC OUTLOOK
The economy performed well in 1995. Moderate
economic growth kept the unemployment rate at a
relatively low level, and inflation, as measured by the
change in the consumer price index, was in a range
of 3 percent or less for the fifth straight year, the
first such occurrence in thirty years. This desirable
combination of low inflation and low unemployment
provided further substantiation of a fundamental
point that the Board has made in past reports—
namely, that there is no trade-off in the long run
between the monetary policy goals of maximum
employment and stable prices set in the Federal
Reserve Act. Indeed, it is by fostering price stability
that a central bank can make its greatest contribution
to the efficient operation and overall ability of the
nation's economy to create jobs and advance living
standards over time.
As economic prospects changed in 1995 and early
1996, the Federal Reserve found that promoting full
employment and price stability required several
adjustments in its policy settings. Last February, the
economy still seemed to be pressing against its potential, and prices were tending to accelerate. To reduce
the risk that inflation might mount, with the attendant
threat to continued economic expansion, the Federal
Open Market Committee raised the federal funds rate
an additional V2 percentage point, to 6 percent. Inflation did, in fact, pick up in the first part of 1995, but
data released during the spring indicated that price
pressures were receding, and the Committee reduced
the federal funds rate lA percentage point at its July
meeting. Through the remainder of the year, inflation
was even more favorable than had been anticipated in
July, and inflation expectations decreased. In addition, an apparent slowing of economic activity late in
1. The charts for the report are available on request from Publications Services, Mail Stop 127, Board of Governors of the Federal
Reserve System, Washington, DC 20551.
the year further reduced the potential for inflationary
pressures going forward. To forestall an undue
increase in real interest rates as inflation slowed, and
to guard against the possibility of unnecessary slack
developing in the economy, the Committee eased
reserve conditions in December and again at the end
of January 1996, reducing the federal funds rate a
total of Vi percentage point.
Monetary policy easings since mid-1995 contributed to declines in short-term market interest rates,
which by mid-February were down 1 to 2 percentage
points from the highs reached early last year.
Intermediate- and long-term rates also moved sharply
lower last year as the risks of rising inflation receded
and as prospects for substantial progress in reducing
the federal budget deficit seemed to improve. As of
mid-February, these rates were 13A to 23A percentage
points below their levels at the beginning of 1995.
Helped by lower interest rates and favorable earnings, major equity price indexes rose 30 percent to
40 percent last year and have moved still higher in
early 1996. These financial developments reduced the
cost to businesses of financing investment and to
households of buying homes and consumer durables;
households were also aided by substantial additions
to financial wealth from rising bond and equity
prices.
The foreign exchange value of the U.S. dollar,
measured in terms of the currencies of the other
Group of Ten (G-10) countries, fell about 5 percent,
on net, during 1995. The dollar appreciated substantially from the summer on and has advanced further
on balance in 1996 but not enough to offset a sharp
decline that took place in the first four months of
1995. Interest rates fell in most other foreign industrial countries, which also were experiencing slower
economic growth, but by less than the decline in rates
in the United States. Early in 1995, the dollar also
was pulled down by the reactions to the crisis in
Mexico, but the negative influence on the dollar from
this source appeared to lessen as Mexican financial
markets stabilized over the balance of the year. Inflation rates in major industrial countries held fairly
steady in 1995 at levels somewhat lower than those
prevailing in this country; thus, depreciation of the
dollar in real terms against other G-10 currencies was
less than the depreciation in nominal terms. Against
286
Federal Reserve Bulletin • April 1996
the currencies of a broader group of U.S. trading
partners, the dollar's real depreciation in 1995 was
even smaller.
Borrowing and spending in the United States was
facilitated not only by lower interest rates but also
by favorable supply conditions in credit markets.
Spreads between interest rates on securities issued by
private firms and those issued by the Treasury generally remained narrow, and banks continued to ease
terms and qualifying standards on loans to businesses
and households through most of the year. Total debt
of domestic nonfinancial sectors grew slightly more
than 5 percent last year, just above the midpoint of
the Committee's 3 percent to 7 percent monitoring
range. Rapid growth of business spending on inventories and fixed capital early in the year boosted the
credit demands of firms, despite strong corporate
profits. Borrowing was also lifted by the financing of
heavy net retirements of equity shares in connection
with mergers and share repurchase programs. Growth
of household debt slowed a bit but remained brisk;
consumer credit continued to grow quite rapidly.
Federal debt growth was relatively modest for a
second year, influenced by a lower deficit and constraints on normal seasonal borrowing at year-end
owing to the federal debt ceiling. Outstanding state
and local government debt ran off more rapidly than
in 1994.
Commercial banks and thrift institutions again
financed a large portion of the borrowing last year;
their share of total outstanding debt of nonfederal
sectors edged up in 1994 and 1995 after having
declined for more than fifteen years. The growth in
depository credit was funded primarily with deposits,
boosting the expansion of the broad monetary aggregates. M3 grew 6 percent, at the upper end of its
2 percent to 6 percent annual range established by the
Committee at midyear. Depositories relied heavily on
large-denomination time deposits for funding, but
retail deposits also showed gains as declining market
interest rates made these deposits more attractive to
retail customers. M2 advanced 4lA percent, putting it
in the upper portion of its 1 percent to 5 percent
annual range. The expansion of M2 was the largest in
six years, and its velocity was unchanged after having increased during the previous three years. Nonetheless, growth of the aggregate was erratic through
the year, and the stability of its relationship to nominal spending remains in doubt. Ml declined last year
for the first time since the beginning of the official
series in 1959. An increasing number of banks
introduced retail sweep accounts, which shift money
from interest-bearing checkable accounts to savings
accounts to reduce banks' reserve requirements.
Without these shifts, Ml would have risen in 1995,
although slowly.
Economic Projections for 1996
The relatively small amount of information that is
available for 1996 indicates that the economy has
started off slowly early this year, but fundamental
conditions appear to be more encouraging than recent
data might seem to suggest. Bad weather in a number
of regions and the partial shutdown of the federal
government have been disruptive to the economy this
winter. These influences seem likely to leave only
temporary imprints on spending and production, creating volatility in incoming data over the near term
while having little effect on underlying trends.
The economy has also been slowed by production
adjustments in some industries in which efforts are
being made to bring stocks into better alignment with
sales. Inventory accumulation apparently slowed in
the fourth quarter, and with financial conditions
remaining broadly conducive to growth of private
final sales, inventory problems of a degree that might
prompt a sustained period of widespread production
adjustments do not seem likely. In the household
sector, the accumulation of financial wealth brought
on by the rise in the stock market has provided
the wherewithal for increases in consumption greater
than would otherwise have been expected—
countering the potential negative influences of more
burdensome levels of consumer debt. At the same
time, reductions in mortgage interest rates have put
the cost of financing a house within reach of a greater
number of families and made it possible for a significant number of households to ease their debt-service
burdens by refinancing their homes at lower rates. In
1.
Economic projections for 1996
Percent
Federal Reserve Governors
and Reserve Bank presidents
Indicator
Administration
D
Ran
Change, fourth quarter
to fourth
quarter1
Nominal GDP
Real G D P 2
Consumer price index 3
Average level,
fourth
quarter
Civilian unemployment
rate
..
«e
Central
tendency
4-5
l'/2-2'/2
2'/2-3
4</4-43A
2-2Va
23A-3
5.1
2.2
3.1
5'/2-6
5'/2-5%
5.74
1. Change from average for fourth quarter of preceding year to average for
fourth quarter of 1996.
2. Chain-weighted.
3. All urban consumers.
4. Annual average.
Monetary Policy Report to the Congress
the business sector, reductions in the cost of financing
investment in new capital are providing some offset
to the slowing tendencies that normally accompany a
cyclical moderation in the growth of aggregate output. In addition, business investment in high-tech
equipment likely will continue to be boosted not only
by the ready availability of finance but also by technological upgrades and ongoing steep declines in the
effective price of real computing power.
In the U.S. external sector, growth of exports
strengthened after some sluggishness early in 1995.
Expansion of income abroad seems likely to pick up
this year, although the prospects still are subject to
some downside risk. Imports, meanwhile, have
slowed from the very rapid pace seen earlier in the
expansion. On net, the underlying trends in exports
and imports of goods and services appear to be
essentially canceling out in terms of their combined
contribution to growth of U.S. real gross domestic
product.
Against the backdrop of these developments, members of the Board of Governors and the Reserve Bank
Presidents, all of whom participate in the deliberations of the Federal Open Market Committee, anticipate that the U.S. economy will grow moderately,
with little change in underlying inflation trends. The
central tendency of the participants' forecasts of real
GDP growth ranges from 2 percent to 2V4 percent,
measured as the cumulative change in output from
the final quarter of 1995 to the final quarter of 1996.
The rise in activity is expected to be accompanied by
further expansion of job opportunities and little
change, on net, in the civilian unemployment rate
over the four quarters of 1996. The central tendency
of the unemployment rate forecasts for the fourth
quarter of 1996 is a range of 5'A percent to 53A percent, compared with an average of 5.6 percent in the
final quarter of 1995. The Committee's forecasts of
economic growth and unemployment are quite similar to those of the Administration.
The central tendency of the Governors' and
Reserve Bank presidents' forecasts of the rise in the
consumer price index over the four quarters of 1996
is a range of 23A percent to 3 percent, a shade to the
high side of the actual outcome of 1995. At this early
point in 1996, with grain stocks exceptionally tight,
there is some risk that food price increases at retail
could be larger than those of recent years, especially
if crop production should remain subpar again this
year; and, even though recent upward pressures on
energy prices should diminish with the return of
normal weather, another year of declining prices cannot be taken as a given. Nonetheless, the experience
with inflation at high levels of resource utilization
287
was favorable in 1995, and with businesses still
tightly focused on cost control and efficiency gain,
broad tendencies toward increased rates of price
increase are not anticipated. The Administration forecast of inflation is higher than the forecasts of the
Federal Reserve officials, but the difference is not
significant given the uncertainties of forecasting.
Price increases like those being forecast for the
coming year would leave inflation no higher than it
was in the first year or so of the current economic
expansion, with the rate of increase holding appreciably below the average rate seen during the expansion
of the 1980s. Although the Federal Reserve's longrun goal of restoring price stability has not yet been
achieved, the capping of inflation and its diminution
over recent business cycles is a clear indication of the
substantial progress that has been made to date.
Money and Debt Ranges for 1996
The Committee's intention to make further progress
over time toward price stability formed the basis for
the selection of the growth ranges for the monetary
aggregates in 1996. In reaffirming the ranges that
were adopted on a provisional basis in July, the
Committee noted that it viewed them as benchmarks
for what would be expected under conditions of
reasonable price stability and historical velocity
behavior. The Committee set the range for M2 at
1 percent to 5 percent and the range for M3 at
2 percent to 6 percent.
Given its expectations for inflation in 1996, the
Committee anticipates that nominal GDP will grow
somewhat faster this year than would be the case if
the economy already were at price stability. If velocities of the aggregates were to exhibit roughly normal
behavior this year and nominal income were to
expand as anticipated by the Committee, M2 and M3
might grow near the upper ends of their ranges. In
assessing the possible outcomes, the Committee
noted that considerable uncertainty remains about the
usefulness of the monetary aggregates in guiding the
2.
Ranges for growth of monetary and debt aggregates
Percent
Aggregate
M2
M3
Debt2
1994
1995
1996
1-5
0-4
4-8
1-5
2-61
3-7
1-5
2-6
3-7
NOTE.. Change from average for fourth quarter of preceding year to average
for fourth quarter of year indicated.
1. Revised at July 1995 FOMC meeting.
2. Monitoring range for debt of domestic nonfinancial sectors.
288
Federal Reserve Bulletin • April 1996
pursuit of its macroeconomic objectives. Although
the monetary aggregates have been behaving more in
line with historical patterns than was the case earlier
in the decade, the effects of financial innovation and
deregulation over the years have raised questions
about the stability of the relationships between the
aggregates and nominal GDP that have yet to be
resolved.
The Committee also reaffirmed the 3 percent to
7 percent growth range for debt. Although there are
indications that lenders may no longer be easing
terms and conditions for granting credit to businesses
and households, the Committee anticipated that credit
supplies would remain ample and that debt would
grow at about the same pace as nominal GDP. Such
increases would be consistent with containing inflation and promoting sustainable growth.
THE PERFORMANCE OF THE ECONOMY
Measured in terms of the chain-type indexes that are
now being emphasized by the Bureau of Economic
Analysis, growth of real GDP averaged slightly less
than 1 Vz percent at an annual rate over the first three
quarters of 1995 after a gain of
percent in 1994.
The rise in aggregate output this past year was
accompanied by an increase in payroll employment
of PA million, and the unemployment rate, after
having fallen sharply in 1994, held fairly steady over
the course of 1995, keeping to a range of about
5Vi percent to 53A percent. Consumer prices, as measured by the CPI for all items, rose 23A percent over
the four quarters of 1995, an increase that was virtually the same as those of the two previous years.
Growth of output during the past year was slowed
in part by the actions of businesses to reduce the pace
of inventory accumulation after a burst of stockpiling
in 1994. Final sales—a measure of current output that
does not end up in inventories—rose at an average
rate of 2 percent over the first three quarters of 1995
after an increase of 3 percent over the four quarters of
1994. The slowing of final sales was largely a reflection of a downshifting in growth of the real outlays of
households and businesses, from elevated rates of
increase in 1994 to rates that were more sustainable.
Real government outlays for consumption and investment edged down slightly, on net, during the first
three quarters of 1995. Increases in real exports
and real imports of goods and services were smaller
than those of 1994; their combined contribution to
GDP growth in the first three quarters was slightly
negative.
The Household
Sector
Real personal consumption expenditures rose at an
annual rate of about 2lA percent over the first three
quarters of 1995 after having risen slightly more than
3 percent over the four quarters of 1994. Available
data suggest that growth of real outlays slowed further in the fourth quarter. The reduced rate of rise in
consumption spending this past year came against the
backdrop of moderate gains in employment and
income. The financial wealth of households surged,
but impetus to spending from this source evidently
was countered by other influences, such as increases
in debt burdens among some households and an
apparent rise, according to survey data, in consumers' concerns about job security.
Real consumer expenditures for durable goods
increased at an annual rate of 2XA percent over the
first three quarters of 1995, a slower rate of rise than
in other recent years. Consumer expenditures for
motor vehicles declined slightly, on net, over the first
three quarters after having moved up nearly 20 percent over the three previous years; in the fourth
quarter, unit sales of cars and light trucks, a key
indicator of real outlays for vehicles, were down
slightly from their third-quarter pace. Incentive programs that provided price concessions of one sort or
another to buyers probably gave some lift to sales
in 1995. However, "pent-up" demand, which had
helped to boost sales earlier in the expansion, probably was no longer an important factor. Recent sales
data do not seem to point to any big shifts in demand
for vehicles around the turn of the year: The average
rate of sales of cars and light trucks in December and
January was a touch above the average for 1995 as a
whole.
Real outlays for durable goods other than motor
vehicles continued to rise at a brisk pace in 1995 but
not so rapidly as in other recent years. Spending for
furniture and household equipment hit a temporary
lull in the first part of 1995 but picked up again over
the next two quarters, lifted in part by a rebound in
construction of new houses. Fourth-quarter data on
retail sales seem to point to a further sizable increase
in outlays for household durables; according to most
anecdotal accounts, spending for home computers
and other electronic gear, which has been surging in
recent years, continued to move up rapidly through
the latter part of 1995.
Consumer expenditures for nondurables increased
at an annual rate of about 1Vi percent, in real terms,
over the first three quarters of 1995, a little less than
the average of the previous ten years and considerably less than in 1994. The growth of real expendi-
Monetary Policy Report to the Congress
tures on apparel slowed sharply after three years of
sizable advances. In the fourth quarter, real outlays
for nondurables appear to have been lackluster.
Real expenditures for services—which account for
more than half of total consumer outlays—increased
at an annual rate of about 23A percent over the first
three quarters of 1995, moderately faster than in
either 1993 or 1994. After having declined in 1994,
outlays for energy services increased sharply over the
first three quarters of 1995: The unusually mild
weather of late 1994 gave way, first, to more normal
winter conditions in early 1995 and, later on, to hot
summer weather that lifted fuel requirements for
cooling. Spending gains for other categories of services proceeded at an annual rate of about 2XA percent over the first three quarters of 1995, about the
same rate of rise as in the two previous years.
Real disposable personal income rose at an average
annual rate of about 2Vi percent over the first three
quarters of 1995, a gain that was about in line with
the previous year's increase. Monthly data through
November suggest that growth of real income may
have picked up a little in the fourth quarter. Nominal
personal income appears to have increased slightly
faster in 1995 than it did in 1994, and growth of
nominal disposable income, which excludes income
taxes, apparently held close to its 1994 pace. Inflation
continued to take only a moderate bite from increases
in nominal receipts: The chain-type price index for
personal consumption expenditures rose at an annual
rate of 2Vi percent over the first three quarters of
1995, matching, almost exactly, the increases in each
of the two previous years.
After little change during 1994, the real value of
household wealth surged in 1995. The value of assets
was boosted substantially by huge increases in the
prices of stocks and bonds. Liabilities continued to
rise fairly rapidly but at a rate well below the rate of
increase in household assets; rapid growth of consumer credit was again the most notable feature on
the liability side. Behind these aggregate measures of
household assets and liabilities was some wide variation in the circumstances of individual households.
Appreciation of share prices and the rally in the bond
market provided a substantial boost to the wealth of
households holding large amounts of those assets.
However, households holding few such assets benefited little from the rally in securities prices, and
some of these households began to experience greater
financial pressure in 1995. Debts taken on earlier
proved to be difficult to repay in some instances, and
a rising number of households saw their loans fall
into delinquency. Overall, however, the incidence of
financial stress among households appears to have
289
been limited, as sustained increases in personal
income helped to facilitate timely repayment of
obligations.
Consumers maintained relatively upbeat perceptions of current and future economic conditions during 1995. The measure of consumer confidence that
is prepared by the Conference Board held fairly
steady at a high level. The index of consumer sentiment that is compiled by the University of Michigan
Survey Research Center edged down a little, on net,
from the end of 1994 to the end of 1995, but its level
also remained relatively high. By contrast, some survey questions dealing specifically with perceptions of
labor market conditions pointed to increased concerns about job prospects during the year; although
employment continued to rise in the aggregate,
announcements of job cuts by some major corporations may have rekindled consumers' anxieties about
job security. In January of this year, consumer assessments of labor market conditions softened further,
and the broader indexes of sentiment also declined.
The January levels of the indexes were on the low
side of their averages of the past couple of years but
were well above levels that were reported through
most of the first three years of the expansion.
Consumers tended to save a slightly higher proportion of their income in 1995 than they had in 1994.
Large increases in financial wealth usually cause
households to spend a greater share of their current
income, thereby reducing the share of income that is
saved. However, rising debt burdens and increased
nervousness about job prospects would work in the
opposite direction, and these influences may have
offset the effect of increases in wealth. Some households also may have started focusing more intently
on saving for retirement, especially in light of
increased political debate about curbing the growth
of entitlements provided under government programs.
Nonetheless, the personal saving rate for all of 1995,
while moving up a little, remained in a range that was
relatively low by historical standards.
Residential investment fell in the first half of 1995
but turned up in the third quarter. Both the downswing in the first half and the subsequent rebound
after midyear appear to have been shaped, at least in
a rough way, by swings in mortgage interest rates.
Although housing activity had been slow to respond
to increases in mortgage interest rates through much
of 1994, sizable declines in sales of new and existing
homes started to show up toward the end of that year,
and by early 1995, permits and starts also were
dropping. However, the decline in activity proved to
be relatively short and mild. By March, mortgage
interest rates already were down appreciably from the
290
Federal Reserve Bulletin • April 1996
peaks of late 1994, and midway through the second
quarter, most indicators of housing activity were starting to rebound. Sales of new homes surged to especially high levels during the summer, and permits
and starts of single-family units rose appreciably.
In the autumn, sales retreated from their midyear
peaks. Starts also slipped back somewhat during the
autumn, but permits held firm.
The intrayear swings in the various housing indicators left the annual totals for these indicators at fairly
elevated levels. The average pace of sales of existing
homes over the first eleven months of 1995 was well
above the average for the 1980s, even after having
adjusted for increases in the stock of houses. Starts
and sales of new single-family dwellings in 1995
were about one-tenth higher than their averages for
the 1980s. So far in the 1990s, demographic influences have been less supportive of housing activity
than in the 1980s, as the rate of household formation
has lagged—in part because many young adults have
delayed setting up their own domiciles. However, an
offsetting impetus to demand has come from the
improved affordability of housing, brought about in
particular by declines in mortgage interest rates.
Construction of multifamily units, after having
taken a notable step toward recovery in 1994, rose
only moderately further in 1995. Over the first eleven
months of 1995, starts of multifamily units amounted
to 280,000 at an annual rate, compared with about
260,000 the previous year and a low of 162,000 in
1993. Financing for the construction of new multifamily projects appeared to be readily available this
past year. However, the national vacancy rate for
multifamily rental units, while down from the peaks
of a few years ago, remained relatively high, and
increases in rents were not of a magnitude to provide
much incentive for the construction of new units.
The Business Sector
Most indicators of business activity remained favorable in 1995, but strength was less widespread than it
had been in 1994, and growth overall was less robust.
The output of all nonfarm businesses rose at an
annual rate of slightly less than 2 percent over the
first three quarters of 1995, after a gain of 4 percent
in 1994—a pace that could not have been sustained
given already high operating levels. Inventory problems cropped up in some lines of manufacturing and
trade in 1995 and prompted production adjustments.
Scattered structural problems were apparent as well,
especially in parts of retail trade in which intense
competition for market share caused financial losses
and eventual bankruptcy for some enterprises. More
generally, however, business profits remained high in
1995, as firms continued to emphasize strategies that
have served them well throughout the 1990s—most
notably, tight control over costs and rapid adoption of
new technologies, achieved by way of heavy investment in high-tech equipment.
In total, real business fixed investment increased at
an annual rate of 8 percent over the first three quarters of 1995 after a gain of 10 percent in 1994.
Growth in business spending for equipment continued to outpace the growth of investment in structures,
even though the latter scored its largest gain of the
past several years. On a quarterly basis, investment
remained very strong through the first quarter of
1995. After having slowed sharply in the spring, it
then picked up somewhat in the third quarter. Fragmentary data for the fourth quarter suggest that
investment in plant and equipment recorded a gain of
at least moderate size in that period.
Businesses continued to invest heavily in computers in 1995. In real terms, these expenditures rose at
an annual rate of nearly 30 percent over the first three
quarters of the year, an increase that was even more
rapid than that of 1994. Excluding computers, real
investment outlays increased less rapidly, on balance,
than in 1994, and growth after the first quarter was
modest, on net. In the equipment category, outlays
for information-processing equipment other than
computers moved up at an annual rate of about
13 percent in the first half of 1995 but fell back a
little in the third quarter. Spending for industrial
equipment followed a roughly similar pattern, with a
small third-quarter decline coming on the heels of
large gains in the first half of the year. Real outlays
for transportation equipment declined in the second
quarter but rebounded in the third. Real investment
in nonresidential structures moved up in each of
the first three quarters of 1995, at an annual rate of
more than 6 percent, on average, after a gain of
3V2 percent during 1994; the most recent year brought
increased construction of most types of nonresidential buildings.
In the industrial sector, elevated levels of investment in equipment and structures in 1995 led to a
gain of about 4 percent in industrial capacity. However, in a turnabout from the outcome of the previous
year, output of the industrial sector rose considerably
less rapidly than capacity: A gain of IVi percent in
total industrial production over the four quarters of
1995 was a sharp slowdown from a 1994 rise of more
than 6V2 percent. Production of consumer goods followed a choppy pattern during 1995 and rose less
than V2 percent over the year as a whole, the smallest
Monetary Policy Report to the Congress
annual increase of the current expansion. The output
of business equipment advanced in each quarter, but
a cumulative gain of 4Vz percent for this category
was smaller than the increases of other recent years.
Production of materials faltered temporarily in the
second quarter, but production gains resumed thereafter, leading to a rise of about 2lA percent over the
four quarters of the year.
With capacity expanding rapidly and production
growth slowing, the rate of capacity utilization in
industry turned down sharply in 1995, backing away
from the high operating rates of late 1994. As of this
past December, the utilization rate in manufacturing
was about Vi percentage point above its long-term
average. In January of this year, utilization rates fell
noticeably: Vehicle producers reduced assembly rates
last month, and winter storms temporarily shut down
manufacturing operations more generally.
After having risen rapidly during 1994, business
inventories continued to build at a substantial pace in
the early part of 1995. By the end of the first quarter,
real inventories of nonfarm businesses were about
5Vi percent above the level of a year earlier. Meanwhile, strength that had been evident in final sales
during 1994 gave way to more subdued growth in the
first quarter of 1995, and the ratio of inventories to
sales rose. In the second and third quarters, growth of
inventories was roughly in line with growth of business final sales; consequently, aggregate inventorysales ratios held fairly steady during this period.
Although data on inventory change in the year's final
quarter are not yet complete, the available indicators
suggest that significant imbalances probably were
present in only a few industries at year-end. Potential
for wider inventory problems appears to have been
contained through a combination of production
restraint late in 1995, caution in ordering merchandise from abroad, and discounting by some retailers
during the holiday shopping season. Wholesalers
reduced their inventories in the final two months of
1995, and manufacturers' stocks rose only slightly;
aggregate inventory-sales ratios moved down in both
sectors.
Business profits rose further over the first three
quarters of 1995. Economic profits of all U.S. corporations increased at an annual rate of nearly 11 percent, a pace similar to that seen over the four quarters
of 1994. The profits of corporations from their operations in the rest of the world moved up sharply, on
net, and earnings from domestic operations also continued to advance. The strongest gains in domestic
profits came at financial corporations and reflected, in
part, an increased volume of lending by financial
institutions, reduced premiums on deposit insurance
291
at commercial banks, and rising profits of securities
dealers. The economic profits earned by nonfinancial
corporations from their domestic operations rose at
an annual rate of about 3V2 percent over the first three
quarters of 1995 after three years in which the annual
increases were 15 percent or more. A moderation of
output growth at nonfinancial corporations and a
flattening of the rise in profits per unit of output both
worked to reduce the rate of growth in nominal
earnings in 1995. Nonetheless, with unit costs also
moving up at a moderate pace, the share of the value
of nonfinancial corporate output that ended up as
profits changed little, on net, in the first three quarters, holding in a range that was relatively high in
comparison to the average profit share over the past
couple of decades.
The Government Sector
At the federal level, combined real outlays for investment and consumption fell at an annual rate of about
4lA percent over the first three quarters of 1995,
dropping to a level about 13 percent below its annual
peak in 1990. Both investment and consumption were
cut back over the first three quarters of 1995. Outlays
for defense continued to contract, and nondefense
expenditures turned down, reversing a moderate
increase that took place over the four quarters of
1994.
Federal outlays in the unified budget, which covers
items such as transfers and grants, as well as consumption and investment expenditures other than the
consumption of fixed capital, rose 33A percent in
nominal terms in fiscal 1995, matching almost
exactly the percentage rise of the previous fiscal year.
Nominal outlays for defense declined 3lA percent in
both fiscal 1995 and fiscal 1994. Outlays for social
security increased about 5 percent in both years.
Spending for Medicare and Medicaid continued to
rise at rates appreciably faster than the growth of
nominal GDP. Net interest payments jumped in fiscal
1995 after three years of relatively little change, but
working in the other direction, net outlays for deposit
insurance were more negative than in 1994 (that is,
the margin between insurance premiums and the payout for losses increased). Proceeds from auctions of
spectrum rights also helped to hold down expenditures; like the premiums for deposit insurance, these
proceeds enter the budget as a negative outlay. In the
first three months of fiscal 1996—that is, the threemonth period ended in December—federal outlays
were about 1 percent lower in nominal terms than in
the comparable period of fiscal 1995. Nominal out-
292
Federal Reserve Bulletin • April 1996
lays for defense have continued to trend down this
fiscal year, and the spending restraint embodied in
recent continuing budget resolutions has translated
into sharp cuts in nondefense outlays.
Federal receipts rose IV2 percent in fiscal 1995,
after having increased 9 percent in fiscal 1994. In
both years, categories of receipts that are most closely
related to the state of the economy showed sizable
increases. With receipts moving up more rapidly than
spending in fiscal 1995, the federal budget deficit fell
for a third consecutive year, to $164 billion. Progress
in reducing the deficit in recent years has come from
cyclical expansion of the economy, tax increases,
nonrecurring factors such as the sale of spectrum
rights, and adherence to the budgetary restraints
embodied in the Budget Enforcement Act of 1990
and the Omnibus Budgetary Reconciliation Act of
1993.
The economic expansion also has helped to relieve
budgetary pressures that many state and local governments were experiencing earlier in the 1990s. Excluding social insurance funds, surpluses in the combined
current accounts of state and local governments were
equal to about V2 percent of nominal GDP in the first
three quarters of 1995; this figure was more than
double the average for 1991 and 1992, when budgetary pressures were most severe.
Even so, state and local budgets remain at the
center of strongly competing pressures, with the
demand for many of the services that typically are
provided by these governments continuing to rise at a
time when the public also is expressing desire for tax
relief. Although states and localities have responded
to these pressures in different ways, the aggregate
picture is one in which expenditures and revenues
have continued to rise faster than nominal GDP—but
by smaller margins than in the early part of the
1990s. In total, the current expenditures of state and
local governments, made up mainly of transfers and
consumption expenditures, were equal to about
I2V2 percent of nominal GDP in the first three quarters of 1995, up slightly from the percentages of the
two previous years and about PA percentage points
higher than the comparable figure for 1989. Total
receipts of state and local governments were equal to
about 133/4 percent of nominal GDP in the first three
quarters of 1995, up just a touch from the comparable
percentages of the two previous years but about
VA percentage points higher than the percentage in
1989.
State and local outlays that are included in GDP
have been rising less rapidly than the current expenditures of these jurisdictions because GDP excludes
transfer payments, which have been growing faster
than other outlays. In real terms, combined state and
local outlays for consumption and investment
increased at an annual rate of about 2lA percent over
the first three quarters of 1995. Real investment
expenditures, which consist mainly of outlays for
construction, moved up at an annual rate of almost
7 percent. By contrast, consumption expenditures,
which are about four times the size of investment
outlays, rose only modestly in real terms—at an
average annual rate of about 1V2 percent.
The External Sector
Growth of real GDP in the major foreign industrial
countries other than Japan slowed sharply in 1995
from the robust rates of 1994. In Canada, where
economic activity had been particularly vigorous
through the end of 1994, the slowdown reflected
weaker U.S. growth as well as macroeconomic policies intended to achieve improved fiscal balance and
to prevent the reemergence of inflationary pressures.
In Germany and the other European economies,
appreciation of their currencies in terms of the dollar
during the early months of the year and efforts to
reduce public sector deficits contributed to the decline
in the rate of real output growth. In contrast, Japan
showed some tentative signs of recovery late in 1995
after almost no growth during the previous three
years.
With the expansion of real GDP slowing in the
foreign G-10 countries at a time when some slack
remained, inflation stayed low. The average rate of
consumer price inflation in these countries remained
about 2 percent last year, essentially the same as in
1994 and somewhat less than in the United States.
Economic growth in the major developing countries slowed on average in 1995 from the strong pace
recorded for 1994. The substantial contraction of
economic activity in Mexico had important effects on
U.S. trade, but real output also slowed in other developing countries, including Argentina. In response to
the December 1994 collapse of the Mexican peso,
the Mexican government adopted a set of policies
intended to tighten monetary conditions, maintain
wage restraint, and reduce government spending to
mitigate the inflationary impact of the peso's devaluation and to achieve significant reduction in the current account deficit in 1995. Through the third quarter, the Mexican current account was approximately
balanced; a deficit of about $20 billion had cumulated
during the comparable three quarters of 1994. The
merchandise trade balance improved to moderate
Monetary Policy Report to the Congress
surplus in 1995 from a substantial deficit in 1994.
The improved trade performance in part reflected a
severe contraction in aggregate demand. Mexican
real output fell sharply early in the year but picked up
toward the end of the year, for an annual decline of
nearly 7 percent.
The newly industrializing economies in Asia—for
example, Malaysia, Korea, and Taiwan—continued
to grow rapidly during 1995, at about the same rate as
in 1994. Although growth in most of these countries
was driven by a strong expansion in internal demand,
especially in investment, most countries also benefited from very fast export growth. The marked acceleration in exports was attributable at least in part to a
real depreciation of their currencies against the yen
and key European currencies during the early part of
the year.
In the first eleven months of 1995 the nominal U.S.
trade deficit in goods and services reached about
$115 billion at a seasonally adjusted annual rate, a
level slightly greater than the $106 billion recorded
for 1994. U.S. income growth in 1995 was similar to
the average for our trading partners, but as is typically the case, comparable increases in income
seemed to bring forth an increase in U.S. demand for
imports that was larger than the average increases in
demand for our exports by the foreign countries with
which we trade. Effects of the dollar's depreciation
during 1994 and early 1995 worked in the opposite
direction, tending to boost exports and hold down
imports. Overall, the result of these offsetting tendencies was that the dollar value of exports grew somewhat faster than the dollar value of imports through
November. Nonetheless, with the level of imports
exceeding the level of exports at the start of the year,
these growth rates translated into a slightly larger
deficit. The current account deficit averaged about
$160 billion at an annual rate during the first three
quarters of 1995. Both the trade deficit and the deficit
on net investment income widened somewhat, resulting in an increase from the $150 billion current
account deficit experienced in 1994.
Real exports of goods and services grew at an
annual rate of about 5 percent over the first three
quarters of 1995. Agricultural exports remained at
elevated levels, and the volume of computer exports
continued to rise sharply. Other merchandise exports
expanded in real terms at a marginally slower rate
than did the total; within this broad category, machinery and industrial supplies accounted for the largest
increases. Tabulation of the export data by country of
destination showed divergent patterns: Exports to
Mexico dropped in response to the economic crisis in
that country, but shipments to developing countries
293
in Asia rose sharply. Exports to Western Europe,
Canada, and Japan increased as well.
Imports of goods and services increased at an
annual rate of about 6 percent in real terms during the
first three quarters, a slower rate of advance than
during 1994. Imports of computers and semiconductors rose sharply, but imports of other machinery,
consumer goods, and industrial supplies slowed.
Import prices increased about 21/2 percent in the
twelve months ending in December 1995. An end to
the very rapid rise in world non-oil commodity prices
and low inflation abroad helped to restrain the rise in
import prices.
In the first three quarters of 1995, recorded net
capital inflows into the United States were substantial
and nearly balanced the deficit in the U.S. current
account. Sharp increases were reported in both foreign assets in the United States and U.S. assets
abroad.
Foreign official asset holdings in the United States
increased almost $100 billion through September.
These increases reflected both intervention by certain
industrial countries to support the foreign exchange
value of the dollar and very substantial accumulation
of reserves by several developing countries in Asia
and Latin America. Private foreign assets in the
United States also rose rapidly. Net purchases of U.S.
Treasury securities by private foreigners totaled
$97 billion, an amount far exceeding previous
records. Net purchases of U.S. government agency
bonds and corporate bonds were also very large.
Direct investment inflows reached almost $50 billion in the first three quarters of 1995; this total was
about equal to the inflow during all of 1994 and
almost matched the record pace of 1989. Mergers and
acquisitions added substantially to the inflow of funds
from foreign direct investors in the United States.
U.S. direct investment abroad was even larger than
foreign direct investment in the United States and
also approached previous peak rates. U.S. net purchases of foreign stocks and bonds were up from
1994 but below the 1993 peak rate. The bulk of the
net U.S. purchases of foreign securities were from the
industrial countries; net purchases from emerging
markets played a relatively small role.
Labor Markets
The number of jobs on nonfarm payrolls increased
l3/4 million over the twelve months ended in December 1995. After a sharp rise during 1994, gains in
employment slowed in the first part of 1995, and the
second quarter brought only a small increase. There-
294
Federal Reserve Bulletin • April 1996
after, increases picked up somewhat. Nearly 450,000
jobs were added in the final three months of the year,
a gain of about IV2 percent at an annual rate. In
January of this year, with the weather keeping many
workers at home during the reference week for the
monthly survey of establishments, payroll employment fell sharply.
As in 1994, increases in payroll employment in
1995 came mainly in the private sector of the economy, but gains there were more mixed than those of
1994. In manufacturing, employment fell about
160,000 over the twelve months ended in December,
reversing almost half of the previous year's gain.
Losses were concentrated in industries that produce
nondurables. A decline this past year in the number
of jobs at apparel manufacturers was one of the
largest ever in that industry. Sizable reductions in
employment also were reported by manufacturers of
textiles, tobacco, leather products, and petroleum and
coal. In many of these industries, cyclical deceleration of the economy in 1995 compounded the effects
of adjustments stemming from longer-run structural
changes. In contrast to the widespread contraction in
employment among producers of nondurables, employment at the manufacturers of durable goods
increased slightly during 1995. Hiring continued to
expand briskly at firms that produce business equipment. Metal fabricators also sustained growth in
employment but at a slower pace than in 1994. The
number of jobs in transportion equipment declined,
on net.
In most other sectors of the economy, employment
rose moderately last year. The number of jobs in
construction increased 140,000 over the twelve
months ended in December, a rise of more than
3 percent. In the private service-producing sector,
which now accounts for about three-fourths of all
jobs in the private sector, employment increased
1.7 million in 1995 after having advanced 2.6 million
in 1994. Establishments that are involved in wholesale trade continued to boost payrolls at a relatively
brisk pace in 1995. Retailers also added to employment but at a considerably slower rate than in 1994;
within retail trade, employment at apparel outlets fell
substantially last year, and payrolls at stores selling
general merchandise dropped moderately after a large
increase in 1994. Providers of health services added
slightly more jobs than in other recent years. At firms
that supply services to other businesses, employment
growth was sizable again in 1995 but less rapid than
in either of the two previous years; in this category,
providers of computer services expanded their job
counts at an accelerated pace in 1995, but suppliers
of personnel—a category that includes temporary
help agencies—added jobs at a much slower rate than
in other recent years.
Results from the monthly survey of households
showed the civilian unemployment rate holding in a
narrow range throughout 1995, and the rate reported
in December—5.6 percent of the labor force—
was near the midpoint of that narrow range. In January of this year, the unemployment rate ticked up to
5.8 percent.
The proportion of working-age persons choosing
to participate in the labor force edged down slightly,
on net, over the course of 1995. It has changed little,
on balance, since the start of the 1990s. By contrast,
the two previous decades brought substantial net
increases in labor force participation, although
longer-term trends during the two decades were interrupted at times by spells of cyclical sluggishness in
the economy. Two or three years ago, cyclical influences also seemed to be a plausible explanation for
the sluggishness of labor force participation in the
current business expansion. But, with the participation rate remaining sluggish as job opportunities have
continued to expand, the evidence is pointing increasingly toward a slower rate of rise in the trend of
participation. Slower growth of participation will tend
to limit the growth of potential output unless an
offsetting rise is forthcoming in the trend of productivity growth. So far in the current expansion, measured increases in productivity seem to have followed
a fairly typical cyclical pattern, with larger increases
early in the expansion and smaller gains, on average,
in subsequent years. Overall, however, this pattern
has not yielded evidence of a significant pickup in the
longer-term trend of productivity growth.
The average unemployment rate for all of 1995
was about V2 percentage point below the average for
1994, and it was only a little above the levels to
which the unemployment rate fell in the latter stages
of the long business expansion of the 1980s. The low
unemployment rates reached back then proved to be
unsustainable, as they eventually were accompanied
by a significant step-up in the rate of inflation,
brought on in part by faster rates of rise in hourly
compensation and unit labor costs. The current
expansion, in contrast, has remained relatively free of
increased inflation pressures working through the
labor markets. The employment cost index for hourly
compensation of workers in private nonfarm industries rose only 2.8 percent over the twelve months
ended in December, the smallest annual increase on
record in a series that goes back to the start of the
1980s. Hourly wages increased 2.8 percent during the
past year, the same relatively low rate of increase as
in 1994. The cost of fringe benefits, prorated to an
Monetary Policy Report to the Congress
hourly basis, rose only 2.7 percent last year, the
smallest annual rise on record. With many firms still
undergoing restructurings and reorganizations, many
of which have involved permanent job losses, workers probably have been more reluctant to press for
wage increases than they normally would have been
during a period of tight labor markets. Also, firms
have been making unprecedented efforts to gain better control over the rate of rise in the cost of benefits
provided to employees, especially those related to
health care. Although some of these efforts may have
only a one-time effect on the level of benefit costs,
groundwork also seems to have been laid for slower
growth of benefits over time than would otherwise
have prevailed.
Prices
Early in 1995, inflation pressures that had started
building in 1994 seemed to be gaining in intensity.
Indexes of spot commodity prices continued to surge
in the early part of last year, and in the producer price
index, materials prices recorded some of the largest
monthly increases of the past decade and a half.
Consumer prices also began to exhibit some upward
pressure, with the index for items other than food and
energy moving up fairly rapidly over the first four
months of the year.
The surge in inflation proved to be relatively shortlived, however. The spot prices of industrial commodities turned down in the spring of the year and
fell further, on net, after midyear. Price increases for
intermediate materials slowed in the second and third
quarters of 1995, and by the final quarter of the year
these prices also were declining. Monthly increases
in the core CPI slowed in May; thereafter, increases
generally were small over the remainder of the year.
The slowing of the economy after the start of the year
appears to have cut short the buildup of inflationary
pressures before they could have much effect on the
underlying processes of wage and price determination. In the end, the rise in the CPI excluding food
and energy from the final quarter of 1994 to the final
quarter of 1995 amounted to 3 percent, an increase
that differed little from those of the two previous
years. The increase in the total CPI in 1995 came in
at 23/4 percent, the fifth consecutive year in which it
has been in a range of 3 percent or less.
In the aggregate, rates of price increase held fairly
steady for both goods and services this past year. The
CPI for commodities other than food and energy rose
l3/4 percent over the four quarters of 1995 after
increases of IV2 percent in both 1993 and 1994. The
295
last three-year period in which prices of these goods
rose by such small amounts came in the middle part
of the 1960s. Apparel prices continued to decline last
year but not so rapidly as in the previous year. Price
increases for vehicles moderated. The 1995 rise in
the CPI for services other than energy was 33A percent; although this increase exceeded the 1994 rise by
a slight amount, the results for both years were
among the smallest increases for this category in the
last three decades.
Trends in food prices and energy prices remained
favorable to consumers in 1995. The rise in food
prices from the final quarter of 1994 to the final
quarter of 1995 was slightly more than 2lA percent,
almost exactly the same as the increases of the two
previous years. The last yearly increase in food prices
in excess of 3 percent came five years ago, in 1990.
In the intervening years, production adjustments by
farmers and weather problems of one sort or another
have caused temporary surges in the prices of some
farm commodities, but these surges have not resulted
in widespread pressures on food prices at the retail
level. Moderate rates of increase in the costs of
nonfarm inputs that contribute heavily to value added
have been an important anchor in the setting of food
prices at the consumer level. Also, if only by chance,
years of poor crops—like that of 1995, when grain
and oilseed production plummeted—have tended to
be interspersed with years of good crops, a pattern
that has prevented sustained upward pressures on
farm and food prices. In the energy area, prices at the
consumer level fell l3A percent, on net, over the four
quarters of 1995, more than reversing a moderate
1994 increase. Gasoline prices dropped nearly 5 percent, on net, over the four quarters of the year, and
consumer prices of natural gas also declined appreciably. However, some upward pressures developed
in late 1995 and early this year, largely in response to
unexpectedly cold temperatures that boosted fuel
requirements for winter heating.
All told, the price developments of 1995 appear to
have left a favorable imprint on expectations of future
rates of inflation, if results from various surveys of
consumers and forecasters are an accurate reflection
of the views held by the broader public. Monthly
responses to the surveys tend to bounce around somewhat, but over 1995 as a whole, average readings of
anticipated price increases one year into the future
were slightly lower than those of 1994, and survey
responses about inflation prospects over the longer
term came down more substantially. Although the
responses regarding expected inflation still tended, on
balance, to run to the high side of actual rates of price
increase, the easing of inflation expectations this past
296
Federal Reserve Bulletin • April 1996
year provided another encouraging sign that inflation
processes that helped to undermine other recent
business expansions are still in check in the current
expansion.
FINANCIAL, CREDIT, AND MONETARY
DEVELOPMENTS
In 1995 and early 1996, the Federal Reserve had to
adjust its policy stance several times to promote
credit market conditions supportive of sustained
growth with low inflation. At the beginning of 1995,
some risk remained that inflation might rise. To provide additional insurance against that development,
the Federal Open Market Committee (FOMC) tightened reserve conditions, raising the intended federal
funds rate Vi percentage point, to 6 percent, thereby
extending the episode of policy firming that had
begun one year earlier. As time passed, it became
clear that these policy tightenings had been successful in containing inflationary pressures, and the System initiated lA point reductions in the federal funds
rate in July and December 1995 and January 1996.
Most market interest rates had peaked before the
policy tightening last February. During the spring,
interest rates declined appreciably, as market participants increasingly came to believe that no additional
policy restraint would be forthcoming, and, indeed,
that easing might be in the cards. Mounting evidence
that the growth of spending had downshifted and
price pressures were muted, along with greater hopes
that substantial progress would be made toward
reducing the federal budget deficit, contributed to the
change in attitudes and to the drop in interest rates,
especially longer-term rates. On balance during 1995,
interest rates dropped 1 to 2Vi percentage points,
with the largest declines registered on intermediateand long-term securities. This year, short- and
intermediate-term interest rates have fallen somewhat
further, while long-term rates are unchanged to a
little higher.
During the first part of last year, expectations of
lower U.S. interest rates relative to other G-10 countries and other factors such as the crisis in Mexico
contributed to a 10 percent depreciation of the tradeweighted exchange value of the dollar. By year-end,
though, the dollar had retraced about half of these
losses, and it has appreciated further on balance in
1996.
The course of interest rates during the year influenced overall credit flows and their composition. The
expansion of the total debt of domestic nonfinancial
sectors was relatively strong during the first half of
the year but moderated later in 1995. For the year,
debt grew 5lA percent, a bit above the midpoint of its
annual growth range. Initially, household and nonfinancial business credit demands were concentrated
in floating-rate or short-term debt instruments. As the
yield curve flattened, credit demands shifted to fixedrate, long-term debt instruments.
Because depository institutions are important
sources of short-term and floating-rate credit to
households and businesses, depository assets grew
rapidly early on and then backed off. The need to
fund the increase in assets, along with declines in
market interest rates relative to yields on retail deposits, led to the fastest growth in M2 and M3 since the
late 1980s; M2 ended the year in the upper part of its
annual range, and M3 was at the upper end of its
range. In contrast, Ml declined for the first time since
the beginning of the official series in 1959, as many
banks introduced retail sweep accounts that shifted
deposits from interest-bearing checking accounts to
savings-type accounts in order to reduce reserve
requirements.
The Course of Policy and Interest Rates
The Federal Reserve entered 1995 having tightened
policy appreciably during the previous year. Shortterm interest rates had risen more than 2Vi percentage
points from the end of 1993, and long-term rates
were up 2 percentage points. Policy tightening had
been necessitated by the threat of rising inflation
posed by unusually low real short-term interest rates
earlier in the 1990s. Rates had been kept low to
counter the effects of impediments to credit flows and
economic growth. But as these impediments were
reduced, the economy expanded at an unsustainable
pace and margins of underutilized labor and capital
began to erode. Ultimately, absent a firmer policy,
excessive demands on productive resources and
resulting higher inflation would have produced
strains, threatening economic expansion.
In early February the policy actions taken in 1994
did not appear to be sufficient to head off inflationary
pressures. The growth of economic activity had not
shown convincing signs of slowing to a more sustainable pace, and available information, including a
marked rise in materials prices during the last half of
1994, seemed indicative of emerging resource constraints and building inflationary pressures. In these
circumstances, the FOMC agreed on a Vi percentage
point increase in the federal funds rate, and the Board
of Governors approved an equal increase in the discount rate.
Monetary Policy Report to the Congress
During the remainder of the winter and through the
spring, incoming data signaled that economic growth
was finally moderating. At first, it was unclear if the
slowdown was temporary or if it was a lasting shift
toward a sustainable rate of economic expansion in
the neighborhood of the economy's potential. Adding
to the uncertainty was a pickup of consumer price
inflation and a pronounced weakening in the foreign
exchange value of the dollar. At the March meeting,
the FOMC determined that it would be prudent to
await further information before taking any additional policy actions, but it alerted the Manager of the
System Open Market Account that, if intermeeting
action were to be required, the step would more
likely be to firm than to ease.
By the May meeting, substantial evidence had
accumulated that the threat of rising inflation had
lessened. Economic growth had slowed; although the
adjustment to inventory imbalances that had developed earlier in the year was contributing to the slowdown, the underlying trajectory of final sales was still
uncertain. The FOMC determined that the existing
stance of policy was appropriate and expressed no
presumption as to the direction of potential policy
action over the intermeeting period, issuing a symmetric directive to the Account Manager.
Intermediate- and long-term interest rates had
fallen throughout the winter and spring, as evidence
accumulated that the expansion of economic activity
was slowing and that inflationary pressures were
ebbing. Furthermore, budget discussions in the
Congress seemed to foreshadow significant fiscal
restraint over the balance of the decade, putting additional downward pressure on these rates. Short-term
rates had declined less, but in late spring, financial
market participants had begun to anticipate an
easing of monetary policy. By midyear, the threemonth Treasury bill rate had declined about lA percentage point from its level at the beginning of the
year, while rates on securities with maturities greater
than one year had dropped as much as 2 percentage
points.
Employment data released shortly after the May
FOMC meeting were surprisingly weak, and by the
July meeting it appeared that growth of aggregate
output had sagged markedly during the second quarter as businesses sought to keep inventories from
rising to undesirable levels. This deceleration of output growth was accompanied by a softening of industrial prices and a marked reduction in the pace at
which materials prices were rising. With the economy growing more slowly than had been anticipated
and potential inflationary pressures receding, the
FOMC voted to ease reserve pressures slightly with a
l
297
A percentage point decline in the intended federal
funds rate.
Although financial market participants had anticipated a decline in the federal funds rate at some
point, bond and equity markets rallied strongly immediately after the change in policy was announced.
However, a pickup in economic growth during the
summer made further reductions in the funds rate
appear less likely, and interest rates backed up for a
time.
The Committee did keep rates unchanged at the
August and September meetings. Although inflation
had improved, the slowdown had been anticipated to
a considerable extent. Moreover, uncertainties about
federal budget policies and their effects on the economy remained substantial.
At the November meeting, the economic signals
were mixed. Anecdotal information tended to suggest
a softening in spending after the third quarter, but the
extent of any slowing of spending and inflation was
unclear. Although short-term rates remained above
long-term averages on a real, inflation-adjusted basis,
substantial rallies in bond and stock markets were
thought likely to buoy spending. Against this backdrop, the FOMC voted to maintain the existing stance
of monetary policy.
The generally positive news about inflation and
hopes for a budget agreement had helped propel the
bond market higher throughout the fall. By the
December meeting, intermediate- and long-term
interest rates were \3A to IVi percentage points below
their levels at the beginning of the year. The bond
market rally, along with strong earnings reports,
pushed equity prices higher during the year, and by
mid-December, equity price indexes were up about
35 percent from levels at the beginning of the year.
Since the last easing in July, inflation had been somewhat more favorable than anticipated, and the expansion of economic activity had moderated substantially after having posted a strong third quarter. With
both inflation and inflation expectations more subdued than expected, and with the slowing in economic growth suggesting that price pressures would
continue to be contained, the FOMC decided to reduce the intended federal funds rate an additional
l
A percentage point, bringing it to 5Vi percent.
The data available at the time of the FOMC meeting in late January gave stronger evidence of slowing
economic expansion. This development reduced
potential inflationary pressures going forward and
raised questions about whether monetary policy
might unduly restrain the pace of expansion. The
Committee believed that a further slight easing in
monetary policy was consistent with keeping infla-
298
Federal Reserve Bulletin • April 1996
tion contained and fostering sustainable growth,
given that price and cost trends were already subdued. In these circumstances, the Committee lowered
the intended federal funds rate lA percentage point, to
5Y4 percent, and the Board approved an equivalent
reduction in the discount rate, to 5 percent.
Partly as a consequence of the System actions in
December and January, short- and intermediate-term
interest rates have fallen XA to Vi percentage point
since mid-December. However, on balance, longerterm rates are unchanged to a little higher. The
absence of a firm agreement to reduce the federal
budget deficit, and some tentative signs most recently
that the economy might not be so sluggish as some
market participants had feared, have held up longerterm rates.
Credit and Money Flows
On balance in 1995, the debt of the domestic nonfinancial sectors grew at about the same pace as in the
previous year, although within the year, debt growth
was much stronger in the first half than in the second.
Credit supplies remained plentiful: Banks continued
to be willing lenders, and in securities markets most
interest-rate spreads remained quite narrow. Debt
burdens for households increased, but except for a
few types of consumer credit obligations, delinquency rates remained at low levels. Rising equity
3.
prices bolstered the overall financial condition of
households.
Federal debt rose VA percent in 1995, slightly less
than in 1994. The federal government's demands for
credit fell largely because the budget deficit shrank
about 20 percent for the calendar year. Federal debt
growth also slowed toward year-end as the Treasury
drew down its cash balance to keep borrowing within
the $4.9 trillion debt ceiling.
State and local government debt fell 5Vi percent—
more than in 1994. A few years earlier, municipalities
had taken advantage of low long-term rates to prerefund a substantial volume of issues, many of which
were eligible to be called in 1995. As those securities
were called, and with gross issuance light, the stock
of municipal securities contracted for a second consecutive year. Despite the overall reduction in debt
outstanding, the ratios of tax-exempt to taxable yields
jumped in the first half of the year and, for long-term
debt, held at an elevated level during the remainder
of the year. This increase was associated with concerns about the effect on demands for tax-free
municipal debt of proposals for changes in federal
taxation that would sharply reduce the tax advantages
of holding municipal bonds.
Household borrowing remained robust in 1995,
moderating only a bit from 1994, and the ratio of
household debt to disposable personal income rose
further. Even so, the financial condition of this sector
remained good on balance, although there were signs
Growth of money and debt
Percent
Ml
M2
M3
Domestic
nonfinancial debt
Year1
1980
1981
1982
1983
1984
7.5
5.4 (2.5 2 )
8.8
10.3
5.4
8.7
9.0
8.8
11.8
8.1
9.6
12.4
9.7
9.5
10.8
9.5
10.2
9.8
11.9
14.6
1985
1986
1987
1988
1989
12.0
15.5
6.3
4.3
.5
8.6
9.2
4.2
5.7
5.2
7.7
9.0
5.9
6.3
4.0
14.3
13.3
9.9
9.0
7.8
1990
1991
1992
1993
1994
4.2
7.9
14.3
10.5
2.4
4.1
3.1
1.8
1.4
.6
1.8
1.2
.6
1.0
1.6
6.8
4.6
4.7
5.2
5.2
-1.8
4.2
6.1
5.3
-.1
-.5
-1.5
-5.1
1.4
4.3
7.0
4.0
4.8
6.7
8.0
4.4
5.3
7.0
4.6
3.9
Period
1995
Quarter (annual
1995:1
2
3
4
rate)3
1. From average for fourth quarter of preceding year to average for fourth
quarter of year indicated.
2. Adjusted for shifts to NOW accounts in 1981.
3. From average for preceding quarter to average for quarter indicated.
Monetary Policy Report to the Congress
of deterioration. The rally in the domestic equity
markets supported household balance sheets by
boosting net worth sharply. In addition, delinquency
rates on home mortgages and closed-end consumer
loans at banks, while rising, remained at low levels.
Other indicators, however, provided evidence that
some households were likely beginning to experience
increased financial pressures. For instance, delinquency rates on credit card debt held by banks and on
auto loans booked at captive finance companies rose
sharply. Furthermore, the average household debtservice burden—calculated as the share of disposable
income needed to meet required payments on mortgage and consumer debt—continued to rise last year.
This measure of debt burden has now reversed about
one-half of the decline it posted earlier in the decade.
The average debt-service burden of nonfinancial
corporations—the ratio of net interest payments to
cash flow—also rose last year, but it remained well
beneath the most recent peak reached in 1990. The
increase in debt burden was in part associated with
the relatively strong growth of the debt of nonfinancial businesses. This sector's debt growth was especially robust early in the year, when business fixed
investment picked up further and inventory accumulation was rapid. Debt issuance was also boosted
by the rising wave of mergers, although a good
number involved stock swaps. Financing needs fell
back later on as investment growth slowed and profits
increased. Funding patterns also shifted as bond
yields fell, and firms relied more heavily on longerterm debt. Despite the increase in credit demands,
interest rate spreads of investment-grade private
securities over comparable Treasuries widened only
slightly and remained narrow by historical standards,
suggesting that lenders continued to view balance
sheets of nonfinancial corporations as remaining
healthy on the whole. Spreads on below-investmentgrade debt rose more sharply but stayed well beneath
levels reached early in the decade.
Commercial banks met a significant portion of the
increase in business credit demands last year, which,
in turn, contributed to the rapid expansion of bank
balance sheets. Banks funded a portion of the loan
4.
Distribution of bank assets by capital status
Percentage of industry assets
1990:Q4
1995:Q3
Undercapitalized
31.3
.5
Adequately capitalized
38.6
2.9
Well capitalized
30.1
96.6
NOTE. Adjusted for examiner ratings.
299
increase by reducing their securities holdings,
although higher market prices of securities and offbalance-sheet contracts left reported securities holdings slightly higher for the year. In fact, bank security
holdings relative to the size of their balance sheets
remained elevated and, together with banks' strong
capital positions, indicated that late in the year banks
were well positioned to continue accommodating the
credit demands of households and businesses.
Although qualitative information suggested that
banks were no longer reducing the standards businesses needed to meet to qualify for loans, some
easing of credit terms continued, with interest rate
spreads on business loans narrowing further. Growth
of real estate loans held by banks slowed over the
year as the share of fixed rate mortgages in total
originations rose with the decline in long-term rates.
Banks tend to securitize fixed rate mortgages more
than adjustable rate loans. Consumer loans on the
books of banks began the year growing at very high
rates; this growth decelerated throughout 1995 as the
volume of securitization increased. In response to
rising delinquency rates, some banks tightened terms
and standards for consumer loans toward the end of
1995 and early 1996.
Total assets of thrift institutions are estimated to
have risen slightly last year. Growth at healthy thrift
institutions more than offset a substantial transfer of
thrift assets to commercial banks through mergers.
The revival of growth in thrift assets, along with the
strong showing of bank credit, helped to nudge up
depository credit as a share of domestic nonfinancial
debt for the second straight year after fifteen years of
declines. Banks and thrift institutions still account for
more than one-third of all credit to nonfinancial
sectors.
Banks and thrift institutions funded a large share of
their asset growth with deposits, and M3 grew 6 percent. The non-M2 portion of M3 was especially
strong, in part as depository institutions substituted
large time deposits for nondeposit sources of funds.
The sharp reduction in deposit insurance premiums,
which made large time deposits a more attractive
source of funds, probably contributed to this shift.
Late in the year, branches and agencies of Japanese
banks, facing some resistance in U.S. funding markets, ran off time deposits while continuing to
increase their funding from overseas offices.
M2 rose as lower market interest rates and a flatter
yield curve increased the relative attractiveness of
retail deposits.2 As is typical, deposit interest rates,
2. In February 1996 M2 was redefined to exclude overnight repurchase agreements (RPs) and overnight Eurodollars; these instruments
300
Federal Reserve Bulletin • April 1996
and to a lesser extent returns on money market
mutual funds, adjusted slowly to declines in market
rates last year. Falling interest rates for comparable
maturity market instruments were not the whole story
for the growth of M2, however. As the yield curve
flattened, the relative gains from holding longer-term
assets with less certain price behavior fell, and this
probably strengthened household demand for components of M2. Even so, M2 velocity was about
unchanged after having increased for four years.
Ml fell almost 2 percent in 1995, the first annual
decline since the beginning of the Board's official
series in 1959. Sweeps of deposits from reservable
checking accounts, a component of Ml, to nonreservable money market deposit accounts were a major
influence. Without these sweeps, Ml would have
risen 1 percent. By the end of last year, sweeps had
spread to thirty-two bank holding companies, and the
initial amounts swept by these programs totaled
$54 billion. The corresponding decline of more
than $5 billion in required reserves largely showed
through to reserve balances maintained at Federal
Reserve Banks. As banks continue to introduce retail
sweep programs in the future, the aggregate level of
required reserve balances will tend to fall further.
Although it has not happened yet, one possible consequence of the declining required reserve balances is
greater instability in the aggregate demand for
reserves and in overnight interest rates. In 1991, after
the cut in reserve requirements at the end of 1990,
unusually low levels of required reserve balances
were associated with greater variability in the federal
funds rate, as banks' volatile clearing needs began to
dominate the demand for reserves, making daily reserve demand more difficult to estimate.
The run-off in reserve balances held down the
growth of the monetary base to 4 percent in 1995. In
addition, currency growth slowed, primarily owing to
reduced shipments abroad. Foreign demand moderated with the stabilization of financial conditions in
some countries where dollars circulate widely.
Indeed, reduced demands from abroad contributed to
will remain in M3. These items were first included in M2 in 1980
because they were being substituted for demand deposits as businesses were in the process of managing their cash holdings more
closely. Since then, other uses of overnight RPs and Eurodollars have
come to dominate movements. Moreover, while RPs and Eurodollars
are only 3 percent of M2, they contribute substantially to the short-run
volatility of that aggregate. Removing these components from M2
should make the weekly levels of the aggregate less volatile and
reduce the reporting burden on banks that have had to distinguish
between overnight and term RPs and Eurodollars. On a monthly and
quarterly basis, the relationships of the two measures of M2 to income
and interest rates are almost indistinguishable. The historical M2
data presented in this report exclude overnight RPs and overnight
Eurodollars.
a rare decline in the currency component of Ml this
past summer, the first decrease since the early 1960s.
The demand for existing Federal Reserve notes also
slackened in anticipation of the introduction of a
newly designed $100 bill that will be more difficult to
counterfeit.
Foreign Exchange
Developments
The weighted-average foreign exchange value of the
dollar in terms of the other G-10 currencies declined
about 5 percent on balance last year. The dollar fell
sharply through April and reached a low almost
10 percent below its value at the end of 1994. The
downward pressure against the dollar was sparked by
indications of some slowing of the pace of U.S. real
output growth, which contributed to expectations that
further increases in U.S. interest rates were unlikely,
and by the acrimony surrounding the ongoing trade
dispute between the United States and Japan. The
crisis in Mexico also weighed on the dollar. On
several occasions in March and early April the Trading Desk at the Federal Reserve Bank of New York,
joined by some other central banks, intervened to buy
dollars on behalf of the Department of the Treasury
and the Federal Reserve System in an effort to
counter the pressure for dollar depreciation.
The release by the G-7 officials of the communique
from their meeting in late April supporting an orderly
reversal of the dollar's decline and the signing of a
trade agreement between the United States and Japan
at the end of June helped to stabilize the dollar, which
had fluctuated narrowly until early August. The dollar then rebounded somewhat and remained within a
narrow range through the end of the year. The recovery of the dollar stemmed, in part, from perceptions
that its earlier decline, particularly in terms of the
yen, had been excessive in light of the underlying
fundamentals. Moreover, weakness in the economies
of some other major industrial countries began to
emerge, reducing prospective returns available
abroad. At times from May through August, the
Trading Desk again entered the market in conjunction with other central banks to intervene in support
of the dollar, reinforcing the view that U.S. authorities were committed to a strong dollar.
In all of the major foreign industrial countries,
long-term interest rates declined during 1995, nearly
reversing the increases that had occurred during the
previous year. On average, rates on foreign government issues with maturities of ten years fell about
150 basis points in the twelve months to December,
somewhat less than the decline that occurred in the
Monetary Policy Report to the Congress
comparable U.S. rate. In Canada, where economic
activity slowed sharply, the drop in long-term rates
nearly matched that in the United States, while in
Italy, where political uncertainty remained a concern
throughout the year, rates fell only 100 basis points.
During the first few weeks of this year, long-term
rates abroad generally moved down somewhat more
but then most recently returned to their December
average levels. An important exception is Japan,
where rates have risen from their late-December levels, apparently reflecting market perceptions that the
stage is set for a Japanese economic recovery. Shortterm market rates in the major foreign industrial
countries were mixed, but on average rates moved
down.
On balance, the dollar depreciated about 8 percent
in terms of the German mark during 1995 and by
similar amounts in terms of most other currencies
participating in the Exchange Rate Mechanism of the
European Union. After substantial depreciation
against the mark early in the year, the dollar stabilized and then partly recovered as economic indicators revealed significant softening in economic activity in Germany. Easing by the Bundesbank during the
second half of the year reinforced the view that mark
interest rates were not likely to rise and might fall
further. The dollar depreciated slightly, on balance, in
terms of the Canadian dollar, despite periods of selling pressure on the Canadian dollar during the year
related to Canada's fiscal situation and possible
secession by Quebec.
Although the dollar did fall to a record low, below
80 yen to the dollar in mid-April, by year-end the
dollar had appreciated slightly in terms of the yen
from its level at the end of 1994. So far this year, the
dollar has appreciated somewhat further against the
yen. Resolution of the trade dispute and repeated
episodes of exchange market intervention by the
301
Bank of Japan, sometimes in conjunction with U.S.
and foreign monetary authorities, contributed to the
appreciation of the dollar in terms of the yen during
the second half of the year. However, the fundamental cause of the yen's decline during that period
probably was the easing of monetary policy by the
Bank of Japan that pushed short-term market interest
rates to extremely low levels.
In terms of the Mexican peso, the dollar appreciated sharply from the onset of the crisis in late
December 1994 to March. The dollar subsequently
retraced some of those gains, and the peso-dollar rate
fluctuated narrowly through the middle of the year.
Uncertainty about the prospects for Mexican economic performance and macroeconomic policy
sparked renewed appreciation of the dollar in terms
of the peso in November. Since November, data
indicating that the decline in Mexican real economic
activity may have ended, some intervention by the
Bank of Mexico in support of the peso, and a perception that the decline in the peso may have gone too
far given the underlying fundamentals have contributed to some rebound of the peso. During the year,
the Mexican authorities drew $3 billion on shortterm swap lines with the Federal Reserve and the
Exchange Stabilization Fund (ESF) of the U.S. Treasury and $10.5 billion on a medium-term swap facility provided by the ESF. By the end of January 1996,
the short-term drawings had been entirely repaid.
Adjusted for relative consumer price inflation, the
dollar was little changed, on balance, against a
multilateral-trade-weighted average of the currencies
of eight developing countries that are important
U.S. trading partners. The dollar's 30 percent real
appreciation against the Mexican peso was about
offset by real depreciations against the other seven
currencies.
•
302
The Fiscal Position of the State and Local
Government Sector: Developments in the 1990s
Laura S. Rubin, of the Board's Division of Research
and Statistics, prepared this article. Jeff Campione
and Robin McKnight provided research assistance.
After difficulties during the early 1990s, the fiscal
position of state and local governments has improved
considerably in the past three years. States, as a
group, have fared relatively well, although some local
governments are still struggling with fiscal difficulties. In addition, the sector as a whole continues to
face persistent underlying structural problems. This
article first examines the primary budget concepts
that are generally used to evaluate the fiscal condition
of state and local governments. Next it surveys the
status of the various levels of government, that is,
states, cities, counties, and school districts. Then it
discusses some of the underlying problems in state
and local budgeting, particularly in the areas of health
care, education, corrections, and pensions.
BUDGET
which are the primary accounts for financing day-today operations of both state and local governments.
In every state except Vermont, the general fund and
many other budget accounts are required to be balanced, either within each fiscal year or over a twoyear period. The accompanying box discusses state
balanced-budget requirements and the ways states
meet them.
The general fund accounts of state governments
exclude earmarked funds, federal funds, and pension
funds. They also exclude most outlays for capital
investment. As a result, the general fund accounts of
all state and local governments cover only about half
of the sector's spending, and therefore any reading of
1.
State and local sector surplus, 1968-95
CONCEPTS
The national income and product accounts (NIPA),
published by the Commerce Department, provide a
comprehensive summary of the receipts and expenditures of all state and local governments and their
enterprises. Up-to-date NIPA information for the state
governments and the local governments separately is
not available, although social insurance fund data for
the sector are published and will be discussed later.
According to the NIPA, the fiscal position of state
and local governments, excluding their social insurance funds, has improved in recent years: Although
the surplus of current accounts dipped markedly in
1990, it then trended up for several years and
remained about unchanged over 1994 and 1995. A
similar pattern is apparent for the surplus as a share
of GDP, but more broadly, when measured this way,
the surplus has been on a general downward trend for
the past quarter-century (chart 1).
The examination of data published by a variety of
state and local organizations provides some insight
into how the various levels of government are faring.
These sources focus on the general fund budgets,
NOTE. Shaded areas indicate periods of recession as defined by the National
Bureau of Economic Research. Data are quarterly and on a NIPA basis; they
exclude social insurance funds; the figure for 1995 is through Q3.
303
the fiscal position of a government based solely on its
general fund budget is incomplete. However, data on
the general fund accounts, particularly for states, are
readily available and are viewed as a good indicator
of state fiscal conditions. Although both the general
fund accounts and the NIPA include interest outlays,
only the NIPA includes the services of capital
assets—equipment and structures—as expenditures.1
The general fund accounts of state and local governments may include revenues that are not counted
in the NIPA but that could buoy, or mask, an other1. Until the revision to the NIPA, released in January 1996, the
spending measure that determined the NIPA surplus or deficit for state
and local governments included purchases of all durable goods and
structures. However, the NIPA now feature a current account measure
of the surplus or deficit. Thus, outlays for equipment, a component of
durable goods, and structures have been reclassified as investment,
and services of these assets, along with compensation and spending on
other services, nondurable goods, and certain durable goods that are
not capitalized, like parts, are being reported as current-account purchases or government consumption expenditures.
wise tenuous budgetary picture. The following are
examples of budgetary practices used by many states.
• States focus on a general funds measure that
reflects their balance sheet position rather than the
difference between revenues and outlays over a year.
Thus, states whose current-year expenditures exceed
their current-year revenues could still be reporting a
positive year-end general fund "balance" as long as
that gap does not exceed the net surpluses accumulated in previous years. For example, for fiscal year
1995, which ended June 30, 1995, the National Conference of State Legislators (NCSL) projected a closing balance of $4 billion even though planned expenditures were expected to exceed revenues by more
than $1 billion.2
2. Corina L. Eckl, Karen Carter, and Arturo Perez, State Budget
Actions 1994, National Conference of State Legislatures (November
1994), p. 42.
State Requirements for Balanced Budgets
The definition of "balance" used by state governments does
not necessarily accord with the generally accepted view, say
for individuals, that current revenues cover current expenditures. For state governments, a balanced general fund
budget for a given fiscal year requires that revenues plus
surpluses from preceding years be at least as large as
outlays. Forty-nine states have balanced-budget requirements. They focus on general fund budgets, although, in
many states, other state funds are also expected to balance.
More states have constitutionally mandated balancedbudget requirements than statutory requirements. Generally,
the governor must submit a balanced budget or the legislature must enact one. In some states the budget need not be
in balance at the end of the fiscal year, whereas other states
allow the carryover of a deficit into the next fiscal year if
necessary.
If a shortfall in the general fund is anticipated during the
planning stages of a budget, which occur during the legislative session preceding a given fiscal year, state governments
usually cut spending or increase taxes, fees, and charges. In
addition, many governments rely on interfund transfers, for
example, from so-called rainy-day funds or from other
funds, to ensure fiscal balance. Forty-five states have budget
stabilization, or rainy-day, funds whose primary purpose is
to provide revenue during periods of fiscal distress.1 In
addition, some states transfer money from trust funds, which
always have a large, positive balance. For example, funds
1. Revenues for the rainy-day funds are determined through appropriations or automatically as a function of a state's budget surplus. Only
Arkansas, Hawaii, Illinois, Montana, and Oregon, along with the District of
Columbia, do not have rainy-day funds.
may be transferred from a state's education or transportation trust fund to the general fund near year-end and then
transferred back shortly thereafter. Generally, these types of
transfers do not involve pension funds.
Some states have also used proceeds of short-term debt
offerings, and occasionally bonds, to cover shortfalls in their general fund accounts, thereby "balancing"
those budgets. Other balancing techniques employed when
shortfalls appear toward the end of the fiscal year include
the postponement of payments until after the end of the year
or, sometimes, the acceleration of some receipts into the
year. Finally, certain functions may be moved outside the
realm of the general fund budget. Thus, although a simple
comparison of expected outlays and receipts from current
sources may imply a deficit, considerable fiscal maneuvering can produce a "balance."
Analysts emphasize that state officials want and try to act
responsibly to balance their budgets. Moreover, concern
about a state's municipal bond rating may encourage actions
to balance its budget. Therefore, even without explicit laws,
the manifest intention of officials is to balance state and
local budgets according to the terms and definitions described above, and the primary motivation for balanced
budgets is not the formal requirement but rather "tradition,
practice, and public expectation." 2 Wyoming is a case in
point: Although the state is not legally required by constitution or statutory provision to balance its budget, the expectation is so strong that it is considered to have the requirement in practice.
2. Ron Snell, State Balanced Budget Requirements: Provisions and Practice, National Conference of State Legislatures, forthcoming.
304
Federal Reserve Bulletin • April 1996
• Second, governments may count the proceeds of
short-term debt offerings as a source of funds (revenue), although these are not included in the NIPA.
• Third, governments may transfer funds into their
general fund from other accounts, or they may sell an
asset. For example, in the period from fiscal 1991 to
1994, the State of New York sold more than
$300 million of assets to public authorities, which
borrowed to finance the purchases. A transaction of
this type increases revenue in the general fund but
does not change the fiscal condition for the state on a
NIPA basis.
THE CURRENT FISCAL CONDITION OF STATES
AND LOCAL
GOVERNMENTS
Like the NIPA, the general fund accounts of states
and many local governments suggest significant
improvement from weakness earlier in the 1990s.
Expenditures for the sector are split about evenly
between states and local governments. At the local
government level, the share of expenditures is
roughly one-third each for cities and school districts,
with counties making up most of the remaining outlays. State revenues have come in above the expectations of state budget planners for the past few years,
and year-end balances have grown to more than
5 percent of expenditures. For some local governments, general fund data are not available. However,
even though the data sources are varied, the story is
clear: Many local governments still appear to be
struggling to improve their budgetary positions.
States
The fiscal position of most states has continued to
improve. According to a recent survey by the
2.
National Conference of State Legislatures (NCSL),
general fund balances have risen from less than 1 percent of states' expenditures in fiscal 1992 to an
estimated 5.1 percent in fiscal 1995 (chart 2). Indeed,
the recent improvement compares favorably with the
period from 1984 to 1990 when general fund balances averaged 4 percent of expenditures. Even so,
while the improvement is nationwide, weakness is
still apparent in a number of states.
In fiscal 1995, which ended last June for most state
governments, tax collections were stronger than
expected; as a result, budgets improved despite considerable growth in outlays and small legislated tax
reductions. However, budget officers are expecting
their fiscal stance to weaken a little in fiscal 1996
because they are expecting revenue growth to slow.
According to a midyear survey of the 1996 fiscal
situation by NCSL, forty states estimated that revenues would come in at or above target for the current
fiscal year. But ten states were expecting revenues to
be below projections, compared with just two states
last year. Several of these states indicated that the
weakness was due to smaller-than-expected sales and
excise taxes, whereas a few states blamed weaker
personal income tax collections. The states reporting
problems were Idaho, Hawaii, Maine, Maryland,
Nebraska, New Mexico, Rhode Island, South Dakota,
Vermont, and Wyoming. On the spending side, most
states indicated that expenditures were expected to
end up close to planned levels, and fewer states than
last year are expecting overruns.
The strengthening in fiscal positions since the early
1990s reflects several factors. Among these factors
were tax hikes and spending restraint early in the
decade and a slowing of the growth in outlays for
Medicaid from the enormous advances seen early in
the 1990s. Even so, Medicaid payments increased
Indicators of the fiscal position of states
Percent
Percent
Net tax changes
by fiscal year of enactment
as a percentage of collections
in previous year
Fiscal year-end balances
of general fund accounts
as a percentage of expenditures'
1980
1985
1990
1995
1. Annual data. Figure for 1995 is an estimate and for 1996, a forecast.
1985
1987
1989
1991
SOURCE. National Conference of State Legislatures.
1993
1995
The State and Local Government Sector
nearly 10 percent in each of the past two years, and
they are expected to rise at about the same rate in
fiscal 1996.
With the improvements in budget positions, many
states have cut taxes in recent years. In 1995, many
states cut the personal income tax, and some acted to
reduce local property taxes. However, according to
the Center for the Study of the States, "Few of the
reductions were large enough to make a big difference in the income of taxpayers or the fiscal situation
of the states."3 States tend to raise taxes during or
immediately after a recession to make up for shortfalls and then to hold the line or even cut taxes
several years later when receipts are strong. The
small tax reductions in fiscal 1995, like those in 1985,
followed that general cyclical pattern (chart 2).
Local Governments
Although no comprehensive data sources on the current fiscal position of local governments are available, information from various sources indicates that
the budgets of local governments as a group have not
fared as well as those of states. According to the
Census of Governments, which is available only
through 1992, local governments experienced considerably more fiscal distress than states between the
mid-1980s and 1992. Although local governments
recorded deficits beginning in 1986, state governments were not in deficit until 1991. In addition, local
government deficits were larger as a percentage of
their expenditures than were state government deficits. Other data sources also substantiate the continuation of fiscal difficulties at the local government
level.
305
cits. A more recent opinion survey indicates that in
fiscal 1995 economic and fiscal conditions continued
to improve; as a result, the budgetary position of
many cities may turn out to have been better than
expected earlier. The factors having the most negative effects on the fiscal position of cities included
infrastructure needs and spending, unfunded federal
and state mandates, city employee health benefits,
and crime.
Counties
The National Association of Counties has been surveying counties for only a few years. In general, the
survey reports suggest continuing fiscal weakness.
According to the 1995 report, when counties were
asked to describe their fiscal condition, less than
5 percent of respondents said that revenues were
expanding and that they were able to undertake new
programs. In contrast, more than 60 percent either
3.
Indicators of the fiscal position of local governments,
1985-95
Cities
Public school districts
According to survey data from the National League
of Cities, the fiscal condition of cities improved considerably in 1993 and 1994. In fiscal 1995, however,
more than half of large cities reporting were expecting to run deficits in their general fund accounts
(chart 3). If, after final data are available, these deficits are substantiated, the percentage of cities with
deficits in 1995 will be the largest since at least 1985.
Fiscal 1994 turned out to be a better year than had
been projected primarily because cities succeeded in
holding down the growth of expenditures. Even so, in
1994, nearly 30 percent of cities were reporting defi3. S t e v e n D . G o l d , " 1 9 9 5 Tax Cuts: W i d e s p r e a d But N o t R e v o l u tionary," State
Fiscal
Brief
( D e c e m b e r 1995), p. 1.
Surplus (deficit) as percentage o f expenditures
1985
1987
1989
1991
1993
1995
NOTE. For cities, figure for 1995 is an estimate. For school districts, figures
for 1994 and 1995 are estimates.
SOURCES. For cities. National League of Cities, City Fiscal Conditions in
1995, June 1995. For public school districts, National Education Association,
1994-95 Estimates of School Statistics, April 1995.
306
Federal Reserve Bulletin • April 1996
were having difficulty maintaining services or were
reducing discretionary programs, and 4 percent characterized their fiscal position as in crisis.
School Districts
Data from the National Education Association suggest that the fiscal condition of school districts
appears no better than that of cities and counties.
Public school districts, whose data include capital
accounts, ran a surplus through the school year ending in 1989 and have been in deficit ever since
(chart 3). The deficits reflect imbalances in operating
accounts as well as a step-up in school construction
early in the 1990s.
In summary, a number of local governments have
continued to experience budgetary problems. The
weakness probably is due partly to reductions in aid
by state governments, especially in the early 1990s,
as states tried to deal with their own fiscal distress.
For example, the growth of state aid for public education slowed sharply beginning in 1991 (chart 4).
However, after years of cutting aid to local governments, about half the states are planning to help local
governments during fiscal 1996, particularly through
increased school aid.
CONTINUING
PRESSURES
Although the current situation looks more favorable
for many governments, difficult problems may be
looming on the horizon. Problems could arise from
4.
State aid for public education (K-12) measured by the
percentage change from year to year, 1986-95
1986
1989
1992
NOTE. Figures for 1994 and 1995 are estimates.
SOURCE. National Education Association, 1994-95
tistics, April 1995.
1995
Estimates of School Sta-
political and economic events, such as reductions in
federal aid or an economic downturn, as well as from
the fundamental underlying changes in demand that
have been stretching governments for the past decade. Three particular areas of concern—corrections,
health, and education—reflect both demographic and
social trends. In addition, with a considerable share
of state and local pension plans underfunded, meeting payments for future retirees could add significantly to fiscal pressure. Finally, if legislation to
reduce the federal budget deficit is enacted, it will
likely entail reductions in aid to state and local
governments.
Corrections
Though still a relatively small portion of total spending, corrections has been one of the fastest-growing
programs of state and local governments in recent
years. Spurred by rising crime rates and a growing
awareness of and concern about safety, legislators
have been eager to get tough on criminals. As a
result, governments have been quick to adopt measures that set mandatory minimum sentences and to
try juveniles as adults. Between 1993 and the end of
1995, twenty-four states had passed "three strikes
and you're out" type of laws, which require mandatory sentences for habitual offenders.
Not surprisingly, the costs of the criminal justice
system appear to be rising. In fiscal 1995, appropriations for corrections rose at least 10 percent in fourteen states. Funds were spent on hiring additional
prosecutors and policemen, adding beds to existing
facilities, and building new jails and prisons. The
"three strikes" laws could prove particularly costly
as they raise the need for prison capacity. Several
states have estimated significant increases in state
expenditures to build more prisons in the years ahead.
In addition, some states anticipate additional court
costs. For example, the California Judicial Council
anticipates a rising number of felony jury trials.4
Defendants may be more willing to accept the risk of
a trial and less willing to take a plea bargain that
would result in a lengthy jail term.
The number of prison inmates rose dramatically
between 1980 and 1995, with the number of state
prisoners tripling to about 1 million in 1995
(chart 5).5 By comparison, the state prison population
4. Donna Lyons, 'Three Strikes' Legislation Update, National Conference of State Legislatures (December 1995).
5. In 1994, state facilities held 62 percent of incarcerated individuals, and jails under the jurisdictions of local governments held 33 percent; federal prisons held the remaining 6 percent.
The State and Local Government Sector
was essentially flat from 1930 to 1970 and rose only
a little during the 1970s. The recent wave of anticrime legislation, including the "three strikes" laws,
appears to be bolstering prison populations further. In
1995, the number of prisoners under the jurisdiction
of state authorities jumped 9.1 percent, compared
with a gain of 7.2 percent, on average, during the
preceding five years.
5.
Demand for state and local services, 1977-95
307
The recent increases in prison populations reflect
both more arrests and an increased likelihood of
incarceration after arrest. These trends are associated
with the increase in anti-crime measures and the rise
of illegal drug use; notably, the percentage of prisoners serving sentences for drug-related charges rose
from 6 percent to 22 percent during the past fifteen
years. However, the good news is that the rate of
violent crime came down a little in 1993 and 1994
and that the rate for property crime has fallen 9 percent since its high in 1991. These developments
likely are improving the perception of public safety.
Medicaid
Medicaid provides specific medical services to most
recipients of federal cash assistance programs (Aid to
Families with Dependent Children and Supplemental
Security Income) and to others meeting a separate
test of financial need. States administer the program
and, with the federal government, fund it. The programs vary considerably because states may choose
to offer optional services that are not mandated and
because their policies on reimbursement and administration differ. The federal match is a function of the
per capita income of the particular state, and the
federal government's share ranges from 50 percent to
78 percent.
Between 1988 and 1993, total transfer payments
for Medicaid rose from 10 percent to more than
16 percent of state and local government expenditures.6 The increase reflected various factors including the recession, rising health care costs, a surge
in the use of provider taxes, and the shift of many
beneficiaries from state general assistance programs
to Medicaid.7 The number of recipients also rose
because federal mandates were expanded to require
states to cover individuals at higher levels of income
and to include previously optional services. In particular, coverage of pregnant women and children
was significantly expanded primarily by raising the
income limit below which families qualified and by
extending the age limit for eligible children.
1. Annual data as of June 30 of each year.
2. Figure for 1995 is estimated by the Health Care Financing Administration.
3. Figures for 1994 and 1995 are estimates by the Department of Education.
SOURCES. Data for the number of state prison inmates are from the Department of Justice; for Medicaid recipients, the Health Care Financing Administration; for public school enrollment, the Department of Education.
6. State and local transfer payments for Medicaid include the
federal matching grant along with state and local government
payments.
7. Early in the decade, many states accepted donations from or
imposed taxes on health care providers, such as hospitals, in schemes
to help bolster federal matching requirements for Medicaid. The term
"provider taxes" includes these taxes, fees, and contributions. In
recent years, the use of provider taxes has been muted by federal
regulations.
308
Federal Reserve Bulletin • April 1996
In recent years, the pressure on state budgets from
Medicaid expenditures has waned as the economy
has strengthened and the rise in health care costs has
slowed. Moreover, most of the newly eligible individuals have now been added to the rolls. Notably,
the growth of Medicaid recipients has slowed from a
high of 12 percent in 1991 to just 3 percent in 1995
(chart 5). Correspondingly, the share of Medicaid
spending has stabilized since 1993 as advances in
state and local government expenditures on Medicaid
have come down from the nearly 30 percent increase
in 1991. Nevertheless, at a range of 8-9 percent,
growth in Medicaid spending has remained high in
recent years and is expected to exceed increases in
most other state and local programs in the near term
(chart 6).
Education
After a major push to upgrade public school systems
in the 1970s and 1980s, many state and local governments reduced their efforts in the 1990s. Although
state spending on education increased during the first
half of the 1990s, states assigned higher priorities to
other programs, particularly corrections and Medicaid, and the pace of growth of education spending
lagged. As a result, state spending on education fell
as a share of general fund spending from just under
50 percent in 1989 to less than 42 percent in 1995,
even as public school enrollment steadily increased
(chart 5).
The increase in public education programs during
the 1970s and 1980s added noticeably to costs. As a
Comparison of nominal government expenditures
by program,
1988-95
Medicaid
All other
result of the Education of the Handicapped Act
passed in 1975, proportionately more handicapped
children were educated in the public school system.
In addition, programs for gifted, learning-disabled,
and bilingual children were expanded, all adding
significantly to costs. Besides the increase in programs, some states adopted quality standards for their
education systems, and these measures also helped to
speed up growth in operational outlays.
Because of the reordering of priorities, in fiscal
1991 growth in actual K-12 spending—at less than
half the pace of the previous year—fell far short of
planned increases in appropriations, as states made
midyear adjustments to spending plans with the goal
of balancing their budgets. Again in 1994, growth in
actual spending fell short of appropriations. On balance, states reduced the growth in aid to local public
schools in the 1990s (chart 4). Higher education took
an even bigger hit: Growth in appropriations fell in
1991 and 1992, and the level of appropriations actually declined slightly in fiscal 1993.
With the improvement in state budgets in recent
years, some efforts are being made to make up for
cuts earlier in the decade. For fiscal 1995, growth in
actual spending rose about 8 percent for K-12 education, but based on appropriations, growth in outlays
for education is likely to slow again in fiscal 1996.
Growth in spending for higher education rose somewhat to nearly 4 percent in fiscal 1995 and is
expected to remain at that pace in 1996. In addition,
some states are working on plans to aid local governments in 1996. Nonetheless, the demographics are
such that state and local governments will be facing a
rising demand for public education. Annual increases
in K-12 enrollment in public schools are expected to
hover in the 2 percent range through 1997 and then
to rise more gradually over the next decade. Public
elementary school enrollment is expected to peak in
2002, whereas enrollment in high schools is forecast
to advance for several more years. As a result, governments may be forced to increase spending on
education in the years ahead, even if they are not
expanding programs.
Pensions
NOTE. Expenditures are measured as percentage changes from Q4 to Q4.
Figures for 1995:Q4 are estimates by Federal Reserve Board staff members.
SOURCE.
NIPA.
Another area of concern affecting state and
local budgets is pensions. Many are considerably
underfunded, and meeting pension obligations will
add to fiscal pressure in the years ahead for many
governments.
State and local public employee retirement systems
(PERS), along with other social insurance systems,
The State and Local Government Sector
are included in the NIPA. Inflows to the insurance
funds include contributions by employers and personnel as well as interest earnings. Offsetting these revenues are transfer payments to retirees and administrative expenses. Surpluses of state and local social
insurance funds are a source of saving that is available each year to the rest of the economy through the
credit and equity markets. Through the 1970s and
1980s the surpluses grew steadily on a NIPA basis;
after peaking at $68 billion in 1992, the surplus fell to
$58 billion in 1995.
For the state and local sector as a whole, the
retirement systems constitute approximately 90 percent of all the social insurance funds, which in some
states also include workers' compensation and temporary disability insurance. Roughly 90 percent of
the pension assets of all state and local government
workers are held by about 10 percent of the approximately 6,000 pension funds in the sector. About
90 percent of state and local government employees
are covered by defined benefit pension plans, and
9 percent of workers are covered by defined contribution plans.8 PERS alone control more than $1 trillion
in assets—nearly 30 percent of all pension assets.
Assets of PERS are invested mainly in U.S. government securities and in corporate stocks and bonds.
State and local governments administer the retirement systems, and state and local laws govern the
provision of retirement benefits and the protection of
the plans' assets. In some cases the pension fund is
the sole guarantor, and in others the employers, that
is, the governments themselves, stand behind the
systems. The Public Pension Coordinating Council
(PPCC) provides information and helps coordinate
activities of the pension administrators.9 Unlike
private pension plans, however, PERS are not subject
to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). ERISA provides standards for participation, vesting, funding, fiduciary
duties, disclosure, and reporting and prescribes
mechanisms to enforce these standards.
An important distinction exists between the corpus, or assets, of state and local pension trusts and the
government's contributions. Although state and local
governments have rarely borrowed from the corpus,
they have, at times, altered their pension fund contributions in response to budgetary distress. Annual
contributions depend on actuarial assumptions, one
8. State and local government employees have the option of participating in social security, but given the broad availability of the public
employees retirement systems, most have chosen not to do so.
9. PPCC is conducting a survey to determine the proportion of
those systems backed by the governments themselves.
309
of which is the expected rate of return on pension
fund investments. In the early 1990s, many states
adopted unrealistically high rates of return, which
allowed them to reduce their own contributions,
thereby freeing up funds for general government
purposes. Meanwhile, some states took other steps to
help bolster the general fund. For example, California
postponed normal employer contributions for fiscal
1994 until fiscal 1995, and Maine made the decision
to spread the unfunded pension liability over more
years. As a result, government contributions actually
fell in real terms in the late 1980s and early 1990s.
According to the Government Accounting Office, in
1991 only 80 percent of actuarially required annual
contributions were being made.
Based on definitions applied by state and local
governments, in the early 1990s total assets of PERS
covered more than 80 percent of total liabilities,
which are calculated to include current liabilities plus
liabilities based on assumed future salary and service
increases up to retirement.10 Governments expect to
exist indefinitely and therefore include the stream of
future benefits in this calculation. The ratio of assets
to liabilities is referred to as the actuarial accrued
liability funding ratio. By comparison, for private
sector pension plans, the funding ratio omits liabilities accruing from future services.
The view of the PPCC is that PERS are fairly well
funded and that plan participants are also protected
by the laws of state and local governments.11 In 1975,
the funding level was just 51 percent. Then, spurred
partly by concern about the prospect of being
included under the terms of ERISA, state and local
governments worked to increase the level of funding
in the pension funds up to the 82 percent level in
fiscal 1992. However, the funding status of public
pension plans varies widely, and many plans are
significantly underfunded, with funding ratios of less
than 75 percent. In addition, the funding ratios may
vary according to the type of plan. For example,
proportionately more plans for police and firefighters
are poorly funded compared with plans for general
government employees (chart 7).
Data from the Bureau of Economic Analysis indicate that net inflows to state and local pension funds,
in the aggregate, deteriorated between the late 1980s
and 1995. The accumulated surpluses of these
10. Current liabilities are accrued benefits earned to date by workers and retirees based on years of service and salaries.
11. Some analysts argue that one can compare the pension funding
ratio to a home mortgage; that is, if 80 percent of a home mortgage is
paid off, with twenty to twenty-five years left on the mortgage, the
mortgage holder is in good shape.
310
Federal Reserve Bulletin • April 1996
accounts fund future pension liabilities, and the
adequacy of these surpluses must be judged in relation to the growth of liabilities. Although a good
measure of liabilities is not available, total wages and
salaries is used as a very rough indicator. The surplus
of the social insurance funds measured in relation to
state and local employee wages and salaries rose
steadily through the 1970s and leveled off in the
1980s.12 However, in recent years, the surplus has
come down relative to payrolls (chart 8). Much of
this decline can be explained by the weakness in real
government contributions as previously noted; personal contributions by government workers trended
up until 1994 and then flattened. Meanwhile, the
growth in real benefits to annuitants appears to have
accelerated. In addition, the ratio of active state and
local workers to retirees is declining.
12. The charts show social insurance funds instead of retirement
funds because the data are more readily available.
7.
Distribution of state and local pension plans
by funding ratio, fiscal year 1992
Number of plans
General employees
—
30
Clearly, problems exist for many state and local
retirement systems, and some governments will find
pension fund requirements a source of financial strain
in the years ahead. However, although data are not
yet available, the stock market boom of 1995 appears
to have raised the assets of pension funds considerably and probably helped improve funding ratios for
many state and local pension plans.
SUMMARY
Some states have only recently pulled out of the
period of fiscal distress that characterized much of
the early 1990s, and many cities, counties, and school
districts are still wrestling to balance their budgets. In
addition, tax burdens have remained at roughly the
same high levels that have prevailed for the past
twenty-five years (chart 9), and some citizens appear
to be calling for lower taxes and less government.
Therefore, many governments may not be in a financial or political position to make up possible federal
cutbacks in aid.
On balance, despite the recent rosy picture, the
sector's future fiscal health is far from certain. As
described, many governments are coping with underlying structural changes, particularly growing populations of prisoners, school-age children, and low8.
State and local social insurance funds, 1973-95
Percent
Surplus as a percentage
of total state and local
wages and salaries 1
„—-
—
N.
1
I I
1 !
1 1 t
I
I I
11
1
20
15
—
10
—
5
1 1 1 1 I I
1 1 1
Billions of chained (1992) dollars
Real revenue and payments 2
—
80
—
60
Benefits to annuitants
—
—
40
—Government contributions
—
20
Funding ratio
60 or 6 0 less
70
7080
8090
90100
100- 110- 120- 130- 140 or
110 120 130 140 more
Personal contributions
1
1 1
1 1
1975
NOTE. The funding ratio is the ratio of plan assets to the actuarial accrued
liability.
SOURCE. Public Pension Coordinating Council, Survey of State and Local
Government Employee Retirement Systems.
1 1 M
1980
1 1 1
11
1985
1 I I
11
(
1 1
1990
NOTE. Data are annual and on a NIPA basis.
1. Data for 1995 are averages of the first three quarters.
2. Deflated by the personal consumption expenditures deflator.
I I
1995
The State and Local Government Sector
income individuals in need of health care. In addition, some governments will need to add to pension
funds in the years ahead to bring them to full funding.
Many governments may not be prepared if the
economy weakens or if federal aid is cut. Reductions
in federal grants have been under consideration for
9.
State and local tax revenue as a percentage of nominal
GDP, 1959-95
Percent
—
1960
1965
1970
1975
1980
1985
1990
10.0
1995
NOTE. Data are annual and on a NIPA basis; the figure for 1995 is through Q3.
311
some time, and the current impasse in Washington is
creating uncertainty for state and local budget planners. Many state and local officials are concerned;
however, most have still not developed specific coping strategies, and most state legislatures have not
taken any formal action. Rather, planning has centered on fiscal analysis, data collection, and issue
monitoring. Some governments have established
interagency review committees, but quite a few have
adopted a wait-and-see approach. In addition, some
private groups, such as charitable organizations and
business groups, have developed proposals.
Another important factor contributing to the uncertain future for the state and local sector is the direction of aggregate economic activity. Most forecasters
are calling for continued growth in 1996 and 1997,
perhaps at a somewhat slower pace than in the previous two years. Generally, state and local planners
incorporate those forecasts into their own revenue
projections. As always, unexpected weakness in economic growth could upset state and local fiscal positions. Given the uncertainties on the receipt side and
continuing demand pressures, state and local governments may have to work hard to maintain program
•
goals and keep their budgets in balance.
312
Industrial Production and Capacity Utilization
for February 1996
ment and in related durable goods materials; the
recovery of aircraft and parts production after the
settlement of a strike at a major manufacturer in
mid-December accounted for nearly one-third of the
overall growth in total industrial output since the end
of last year. Among other major market groups, the
levels of production of consumer goods and construction supplies were about the same as in December,
while the output of materials other than durables
Released for publication March 15
Industrial production rose 1.2 percent in February
after having fallen 0.4 percent in January; part of the
gain reflects a bounceback from the temporary disruptions caused by the blizzard that hit the East Coast
in early January. The level of total output in February
was 0.8 percent higher than in December, with the
improvement concentrated mainly in business equipIndustrial production indexes
Twelve-month percent change
Twelve-month percent change
Manufacturing
5
A
-
^
/
y
\
—
+
0
—
5
Materials
5
Durable
manufacturing
1993
i
C\\/
v' W /—r ~T
1994
1995
Nondurable
manufacturing
\ /
-
—
i
1992
i
10
_
+
0
Products
1991
i
10
5
1990
i
1
1
1990
1996
i
1991
1
1
1992
1
1993
1
1994
1995
1996
Capacity and industrial production
Ratio scale, 1987 production = 100
Ratio scale, 1987 production = 100
140
Capacity
— Manufacturing
120
100
— —
r
-
—
"
_
140
-
120
~~~
100
Production
80
80
i
i
i i
I
1
1
1
1
Percent of capacity
1
1
1
1
1
Percent of capacity
Manufacturing
Total industry
90
Utilization
,
80
90
Utilization
80
70
J
1982
L
I
1984
1986
I
I
1988
I I
1990
I I I
1992
70
1 1 1 1
1994
1996
1982
1984
1986
All series are seasonally adjusted. Latest series, February. Capacity is an index of potential industrial production.
I
1988
1990
1992
l
1994
l
1996
313
Industrial production and capacity utilization, February 1996
Industrial production, index, 1 9 8 7 = 1 0 0
Percentage change
1995
Category
1996
1995
Nov.
r
Dec.
r
Jan.
r
Total
122.6
122.7
122.1
1
1996'
r
Jan.
r
Feb. p
Nov/
Dec.
123.7
.3
.1
-.4
.2
.2
-.6
Feb. p
Feb. 1995
to
Feb. 1996
1.2
1.6
Previous estimate
122.4
122.6
121.9
Major market groups
Products, total 2
Consumer goods
Business equipment
Construction supplies
Materials
118.8
115.9
156.9
108.7
128.4
118.9
115.2
158.2
110.4
128.4
118.4
113.7
160.7
108.0
128.0
120.0
115.1
163.8
110.5
129.3
.4
.9
.2
.3
.3
.1
-.6
.9
1.6
.0
-.5
-1.3
1.6
-2.2
-.3
1.4
1.2
1.9
2.3
1.0
1.5
.2
6.2
.9
1.8
Major industry
Manufacturing
Durable
Nondurable
Mining
Utilities
124.5
134.3
113.7
98.3
125.4
124.7
134.8
113.5
97.8
124.7
124.3
134.6
112.9
97.3
123.2
126.1
137.2
113.8
98.8
121.8
.1
.6
-.5
.1
3.1
.2
.4
-.2
-.6
-.6
-.3
-.2
-.6
-.4
-1.1
1.4
1.9
.8
1.5
-1.2
1.7
3.9
-.9
-2.0
2.7
groups
MEMO
Capacity utilization, percent
1995
Average,
1967-95
Low,
1982
Feb.
Total
82.1
71.8
84.9
84.7
Previous estimate
Manufacturing
Advanced processing
Primary processing
Mining
Utilities
81.4
80.7
82.6
87.4
86.9
70.0
71.4
66.8
80.6
76.2
85.2
83.5
89.0
86.5
92.6
NOTE. Data seasonally adjusted or calculated from seasonally adjusted
monthly data.
1. Change from preceding month.
declined, on balance, over the past two months. At
123.7 percent of its 1987 average, industrial production in February was up 1.6 percent from February
1995. Capacity utilization rose 0.8 percentage point
in February, to 82.9 percent.
When analyzed by market group, the data show
that the production of consumer goods rebounded
1.2 percent after having dropped a similar amount in
January. The output of durable consumer goods rose
3.7 percent but remained below its December level,
as the pickup in production of goods for the home,
such as appliances, did not fully reverse its drop in
January. The production of motor vehicles was about
1 percent higher than in December. The output of
nondurable consumer goods rose 0.6 percent, to a
level a bit higher than in December. The production
of consumer chemicals and food exceeded their
December levels. The output of business equipment
rose sharply in both January and February, reflecting,
in part, the increase in aircraft production. The output of information processing equipment remained
strong, and the production of industrial equipment,
1996
High,
1988-89
84.2
82.0
89.3
90.0
88.2
Capacity,
percentage
change,
Feb. 1995
to
Feb. 1996
Dec. r
Jan. r
Feb.P
82.9
82.7
82.1
82.9
3.9
82.8
82.7
81.9
81.9
80.3
85.9
87.7
92.5
81.8
80.1
85.7
87.2
91.9
81.2
79.6
84.9
86.8
90.7
82.1
80.6
85.7
88.1
89.6
4.3
4.9
2.8
.1
1.1
Nov.'
|
2. Contains components in addition to those shown,
r Revised,
p Preliminary.
which had been sluggish since last summer, picked
up.
The output of construction supplies increased more
than 2 percent, returning to the high level at the end
of last year. The production of materials rose sharply,
more than reversing the loss in January. The output of
durable materials rose 1.5 percent after having posted
a small gain in January. February's gain in the
production of durable materials mainly reflected
increases in parts and components for equipment,
particularly those used in information processing
equipment and in aircraft; the output of basic metals
also rose sharply. The production of nondurable
materials rose 0.9 percent but remained 0.7 percent
below its level in December. The output of energy
materials was about unchanged.
When analyzed by industry group, the data show
that manufacturing output rose 1.4 percent in February and was more than 1 percent higher than in
December. The strength since the end of last year has
been primarily concentrated in durables; in addition
to the rebound in the production of aircraft and parts,
314
Federal Reserve Bulletin • April 1996
noticeable growth occurred in primary metals, industrial machinery and equipment, electrical machinery,
instruments, and stone, clay, and glass products. The
level of output of nondurables was just slightly higher
than in December; the food and petroleum industries
showed the most notable improvements, while the
output of apparel fell. The output of mining rose
1.5 percent, with a rebound in coal mining accounting for nearly half of the gain. The output at utilities
fell 1.2 percent, its third successive monthly decline.
Capacity utilization in manufacturing rose 0.9 percentage point, to 82.1 percent, the same as it was
in October. Utilization in the advanced-processing
industries rose 1.0 percentage point, to 80.6 percent, its highest level since last September. Among
the primary-processing industries, utilization rose
0.8 percentage point, to 85.7 percent, the same as
it was in December. The rate of factory utilization
increased for all major manufacturing industries
except chemicals. The operating rate in mining
advanced 1.3 percentage points, to 88.1 percent,
while the rate at utilities declined 1.1 percentage
points, to 89.6 percent.
•
315
Statements to the Congress
Statement by Alan Greenspan, Chairman, Board of
Governors of the Federal Reserve System, before the
Subcommittee on Domestic and International Monetary Policy, Committee on Banking and Financial
Services, US. House of Representatives, February 20,
1996
I appreciate the opportunity to appear before this
committee to present the Federal Reserve's semiannual report on monetary policy.1
The U.S. economy performed reasonably well in
1995. One and three-quarter million new jobs were
added to payrolls over the year, and the unemployment rate was at the lowest sustained level in five
years. Despite the relatively high level of resource
utilization, inflation remained well contained, with
the consumer price index (CPI) rising less than 3 percent—the fifth year running at 3 percent or below. A
reduction in inflation expectations, together with
anticipation of significant progress toward eliminating federal budget deficits, was reflected in financial
markets, where long-term interest rates dropped
sharply and stock prices rose dramatically over the
year.
This outcome was influenced, in part, by monetary
policy actions taken by the Federal Reserve in recent
years. Responding to evidence that inflationary pressures were building, we progressively raised shortterm interest rates over 1994 and early 1995. Rates
had been purposely held at quite low, stimulative
levels in 1993. We moved in 1994 to levels more
consistent with sustainable growth. Our intent was to
be preemptive—to head off an incipient increase in
inflationary pressures and to forestall the emergence
of imbalances that so often in the past have undermined economic expansions.
As we entered the spring of 1995, it became
increasingly evident that our policy was likely to
succeed. Although various price indexes were rising
a bit more rapidly, there were indications that pressures would not continue to intensify and might even
reverse to a degree. Moderating overall demand
growth left businesses with excess inventories. In
response, firms initiated production cutbacks to pre-
1. See "Monetary Policy Report to the Congress," in this issue.
vent serious inventory imbalances, and the growth
of economic activity slowed substantially. With inflation pressures apparently receding, the previous
degree of restraint in monetary policy was no longer
deemed necessary, and the Federal Open Market
Committee (FOMC) consequently implemented a
small reduction in reserve market pressures last July.
During the summer and early fall, aggregate
demand growth strengthened. As a result, business
stocks of raw materials and finished goods appeared
somewhat better aligned with sales. In sum, the economy, as hoped, appeared to have moved onto a trajectory that could be maintained—one less steep than in
1994, when the rate of growth was clearly unsustainable, but one that nevertheless would imply continued significant growth in employment and incomes.
Importantly, the performance of the economy
seemed to be consistent with maintaining low inflation. Despite the step-up in growth and the relatively
high levels of resource utilization, measured inflation
abated a little, and many of the signs that had been
pointing toward greater price pressures gradually disappeared. Expectations of both near- and longer-term
inflation fell substantially over the second half of the
year, as gauged by survey results as well as by the
downward movements in longer-term interest rates.
The fall in bond rates was also encouraged by
improving prospects for significant progress in reducing the federal budget deficit. The declines in actual
and expected inflation meant that maintaining the
existing nominal federal funds rate would raise real
short-term interest rates, implying a slight effective
firming in the stance of monetary policy. Such a shift
would have been particularly inappropriate because
economic growth near the end of the year seemed to
be slowing, and some FOMC members were concerned about the risks of prolonged sluggishness.
Consequently, the Committee decided in December
that a further reduction in the funds rate was
warranted.
Information becoming available in late December
and January raised additional questions about the
prospective pace of expansion. The situation was
difficult to judge, partly because economic statistics
were more sparse than usual, mainly because of the
government shutdowns. In addition, harsh weather in
January disrupted both data flows and patterns of
316
Federal Reserve Bulletin • April 1996
economic activity. But several indicators—including
initial claims for unemployment insurance, purchasing managers' surveys, and consumer confidence
measures—appeared to signal some softening in the
economy. Consonant with this pattern, some Reserve
Bank presidents reported that they seemed to be
detecting anecdotal indications of weakness in the
expansion within their Districts with somewhat
greater frequency than previously. Moreover, growth
in several of our major trading partners seemed to be
lagging, which could tend to moderate demand for
exports.
A number of factors have prompted the recent
tendency toward renewed weakness. Some are clearly
quite transitory—related, for example, to bad weather
or to the federal government shutdown. Others may
be somewhat more significant but still temporary.
The constraint on government spending while permanent budget authorizations are being negotiated is
one. Another may be a temporary reduction in output
in some industries as businesses have further adjusted
inventories to disappointing sales. As I noted last
July, the change in the pace of inventory investment
when the economy shifts gears can be substantial.
Inventory investment surged in 1994 and into the
early months of 1995 but proceeded to fall markedly
throughout the rest of the year. This has placed significant downward pressure on output, which should
lift as inventory adjustments subside. But for the
moment, the pressures remain in the motor vehicle
industry and elsewhere.
Ultimately, of course, it is the path of final demand
after the temporary influences work themselves out
that determines the trajectory of the economy. There
are some factors, such as high consumer debt levels,
that may be working to restrain spending. But as I
shall be detailing shortly, a number of fundamentals
point to an economy basically on track for sustained
growth, so any weakness is likely to be temporary.
Nonetheless, the Committee decided in late January
that the evidence suggested sufficient risk of subpar
performance going forward to warrant another slight
easing of the stance of monetary policy. Given the
subdued trends in costs and wages, the odds that such
a move would boost inflation pressures seemed low.
In assessing the likely course of the economy and
the appropriate stance of policy, one question is the
significance, if any, of the age of the business expansion. Some analysts, viewing recent weakness, have
observed that the expansion is approaching the start
of its sixth year and is now one of the longer peacetime spans of growth in the past half century. Economic expansions, however, do not necessarily die of
old age. Although the factors governing each indi
vidual business cycle are not always clear, expansions usually end because serious imbalances eventually develop.
When aggregate demand exceeds the economy's
potential, for example, inflationary pressures pick up.
The inevitable increase in market interest rates, as
inflation expectations rise and price pressures intensify, depresses final demand. Lagging demand, in
turn, sets off an inventory correction that frequently
triggers a downturn in the economy. As I noted, we
acted in 1994 to forestall such a process. Monetary
policy began to tighten in advance of the buildup
of inflationary pressures, and at least to date, these
pressures appear to have been held in check.
Capital expenditures by households and firms can
also contribute significantly to the development of
cycle-ending imbalances. The levels of stocks of
such real assets have effects on output very similar to
those of business inventories. In typical cycles, capital expenditures tend to grow rapidly in the early
stages of recovery: Pent-up demands coming out of a
recession by consumers and businesses are satisfied
by rapid growth of spending on capital assets. There
is a limit, however, on, say, how many cars people
choose to own or how many square feet of floor
space retailers need to service customers. Spending
on such assets generally tends to grow more slowly
after the pent-up demand is met. As with business
inventories, the downshifting of spending on consumer durable goods or business plant and equipment
may not occur smoothly. The dynamics of expanding
output and rising profit expectations often create a
degree of exuberance, which, as in much of human
nature, tends on occasion to excess—in this case, in
the form of a temporary overaccumulation of assets.
The ensuing correction in demand for such assets
triggers production adjustments that can significantly
mute growth for a time or even cause a downturn if
the imbalances are large enough.
The current extent of any asset overhang is difficult
to determine. The growth of demand for durables and
some categories of capital goods has evidently
slowed, but the available evidence does not suggest a
degree of saturation in capital assets that would tip
the economy into a downturn.
Moreover, financial conditions are likely to be generally supportive of spending. The low level of longterm interest rates should have an especially favorable effect. Low rates increase the affordability of
housing for consumers and foster investment in productive plant and equipment by businesses. The
decline in interest rates has also contributed to a
pronounced rise in stock prices. The spread of mutual
fund investments has meant that the gain in wealth as
Statements to the Congress
financial asset prices have risen has been shared by
an ever-wider segment of households. These developments should tend to counter, in part, the depressing
effects on spending of rising debt burdens. In addition, with the condition of most financial institutions
strong, lenders are likely to remain willing to extend
credit to firms and households on favorable terms.
We have seen some move by lenders toward tighter
standards, but these actions are a modest correction
after a marked swing toward ease and should not
constrain the availability of funds to creditworthy
borrowers.
Against this backdrop, Federal Reserve policymakers expect that the most likely outcome for 1996 as a
whole is further moderate growth. On the new chainweighted basis, the central tendency of the forecasts
of Board members and Reserve Bank presidents is
for real gross domestic product to expand 2 percent
to 2'/4 percent on a fourth-quarter-to-fourth-quarter
basis, similar to the Administration's outlook. With
output expanding roughly in line with standard estimates of the increase in the productive capacity of the
economy, the unemployment rate is expected to
remain around recent levels, as is also forecast by the
Administration.
The Federal Open Market Committee expects a
continuation of reasonably good inflation performance in 1996. The success during 1995 in keeping
the increase in the consumer price index below 3 percent in the fifth year of an expansion illustrates that
an extended period of growth with low inflation is
possible. And most on the Committee anticipate consumer price inflation at or somewhat below 3 percent
in 1996. Although well-known biases in the CPI, as
well as the more favorable price performance of
business equipment, which is not included in that
index, indicate that the true rate of inflation for the
whole economy would be significantly lower than
3 percent, the Committee recognized that its expectations for inflation do not imply that price stability has
as yet been reached. Nonetheless, keeping inflation
from rising significantly during economic expansions
will permit a gradual ratcheting down of inflation
over the course of successive business cycles that
will eventually result in the achievement of price
stability.
To emphasize its continued commitment to price
stability, the Committee chose to reaffirm the relatively low ranges for money growth in 1996 that it
had selected on a provisional basis last July. These
ranges are identical to those employed in 1995—
1 percent to 5 percent for M2 and 2 percent to
6 percent for M3. The Committee also reaffirmed the
3 percent to 7 percent range for debt. Patterns of
317
money growth and velocity have been erratic in
recent years, but should the monetary aggregates at
some point reestablish their previous trend relationships with nominal income, average growth near the
center of these ranges should be consistent with the
eventual achievement of price stability.
Determining whether further changes to the stance
of monetary policy will be necessary in the months
ahead to foster progress toward our goals will be a
continuing challenge. In formulating monetary policy, while we have in mind a forecast of the most
likely outcome, we must also evaluate the consequences of other possible developments. Thus, it is
sometimes the case that we take out monetary policy
"insurance" when we perceive an imbalance in the
net costs or benefits of coming out on one side or the
other of the most probable scenario. For example, in
our most recent actions, we saw a decline in the
federal funds rate as not increasing inflationary risks
unacceptably, while addressing the downside risks to
the most likely forecast. In assessing the costs and
benefits of adjustments to the stance of policy, members of the Committee recognize that policy affects
the economy and inflation with a lag and thus needs
to be formulated with a focus on the future. Over the
past year, we have kept firmly in mind our goals of
containing inflation in the near term and moving over
time toward price stability, and they will continue to
guide us in the period ahead.
Structural forces may be assisting us in this regard.
Increases in producers' costs and in output prices
proved to be a little lower last year than many had
anticipated. Although it is too soon to draw any
definitive conclusions, this experience provides some
tentative evidence that basic, ongoing changes in the
structure of the economy may be helping to hold
down price pressures. These changes stem from the
introduction of new technologies into a wide variety
of production processes throughout the economy.
Successive generations of these new technologies are
being quickly embodied in the nation's capital stock,
and older technologies are, at a somewhat slower
pace, being phased out. As a consequence, the
nation's capital stock is turning over at an increasingly rapid pace, not primarily because of physical
deterioration but reflecting technological and economic obsolescence.
The more rapid advance of information and communications technology and the associated acceleration in the turnover of the capital stock are being
mirrored in a brisk restructuring of firms, in line with
their adoption of new organizational structures and
technologies, many enterprises are finding that their
needs for various forms of labor are evolving just as
318
Federal Reserve Bulletin • April 1996
quickly. In some cases, the job skills that were
adequate only five years ago are no longer as relevant. Partly for that reason, most corporate restructurings have involved a significant number of permanent
dismissals.
The phenomenon of restructuring can be especially
unfortunate for those workers directly caught up in
the process. Many dedicated, long-term workers in
all types of U.S. businesses—including longestablished, stable, and profitable firms—have been
let go.
An important consequence of the layoffs and dismissals associated with restructuring activity is a
significant and widely reported increase in the sense
of job insecurity. Concern about employment has
been manifested in unusually low levels of indicators
of labor unrest. Work stoppages, for example, were at
a fifty-year low last year. And contract negotiators for
labor unions have sought to obtain greater job security for their members through very long-term labor
contracts, including some with virtually unprecedented lengths of five or six years.
Of particular relevance to the inflation outlook, the
sense of job insecurity is having a pronounced effect
in damping labor costs. For example, the increase in
the employment cost index for compensation in the
private sector, which includes both wage and salary
payments and benefit costs, slowed further in 1995,
to 23A percent, despite labor market conditions that,
by historical standards, were fairly tight. With productivity also expanding, the increase in unit labor
costs was even lower. In manufacturing, such costs
have actually been falling in recent years. While the
link between labor costs, which account for twothirds of consolidated business sector costs, and
prices is not rigid, these very limited increases in
labor expenses nonetheless constitute a significant
restraint on inflation.
In addition to its effect on labor costs, the more
rapid pace of technological change is reducing business costs through other channels. Initially most
important, the downsizing of products resulting from
semiconductor technologies, together with the
increasing proportion of national output accounted
for by high-tech products, has reduced costs of transporting the average unit of gross domestic product.
Quite simply, small products can be moved more
quickly and at lower cost.
More recently, dramatic advances in telecommunications technologies have lowered the costs of production for a variety of products by further slashing
the information component of those costs. Increasingly, the physical distance between communications
endpoints is becoming less relevant in determining
the difficulty and cost of transporting information.
Once fiber-optic and satellite technologies are in
place, the added resource cost of another 200 miles or
2,000 miles is often quite trivial. As a consequence,
the movement of inputs and outputs across geographic distance is progressively becoming a smaller
component of overall business expenses, particularly
as intellectual—and therefore immaterial—products
become proportionately more important in the economy. This enables an average business firm to
broaden markets and sales far beyond its original
domicile. Accordingly, fixed costs are spread more
widely. For the world market as a whole, the specialization of labor is enhanced to the benefit of standards of living of all market participants.
To be sure, advancing technology, with its profound implications for the nature of the economy, is
nothing new, and the pace of improvement has never
been even. But it is possible that we may be in the
midst of a quickening of the process. It is possible
that the rate at which earlier computer technologies
are being applied to new production processes is still
increasing. This would explain the recent decline in
the growth of unit costs. Nonetheless, we have to be
careful in projecting a further acceleration in the
application of technology indefinitely into the future,
as would be required for technological change to
depress the rate of increase in unit business costs
even more. Similarly, suppressed wage cost growth
as a consequence of job insecurity can be carried only
so far. At some point in the future, the tradeoff of
subdued wage growth for job security has to come to
an end. While it is difficult to judge the time frame on
such adjustments, the risks to cost and price inflation
going forward are not entirely skewed to the downside, especially with the economy so recently operating at high levels of resource utilization.
In light of the quickened pace of technological
change, the question arises whether the U.S. economy
can expand more rapidly on an ongoing basis than the
2 percent to 2V4 percent range for measured GDP
forecasted for 1996 by government agencies and
most private forecasters without adding to inflationary pressures, which, in turn, would undermine
growth. The Federal Reserve would certainly welcome faster growth—provided that it is sustainable.
The particular rate of maximum sustainable growth
in an economy as complex and ever-changing as ours
is difficult to pin down. Fortunately, the Federal
Reserve does not need to have a firm judgment on
such an estimate, for persistent deviations of actual
growth from that of capacity potential will soon send
signals that a policy adjustment is needed. Should the
nation's true growth potential exceed actual growth,
Statements to the Congress
for example, the disparity and lessened strain would
be signaled in shorter lead times on the delivery of
materials, declining overtime, and ebbing inflationary
pressures. Conversely, actual growth in excess of the
economy's true potential would soon result in tightened markets and other distortions that, as history
amply demonstrates, would propel the economy into
recession. Consequently, we must be cautious in
reaching conclusions that growth in productivity and
hence of potential output has as yet risen to match the
evident step-up in technological advance.
The hypothesis that advancing technology has
enhanced productivity growth would be more persuasive if national data on productivity increases showed
a distinct improvement. To a degree, the lack of any
marked pickup may be a shortcoming of the statistics
rather than a refutation of the hypothesis. Faulty data
could be arising, in part, because business purchases
are increasingly concentrated in items that are
expensed but which market prices suggest should be
capitalized. Growing disparities between book capital
and its valuation in equity markets may, in part,
reflect widening effects of this misclassification. If
this problem is indeed growing, we may be underestimating the growth of our GDP and productivity.
This classification problem compounds other difficulties with measuring output in the increasingly
important service sector. The output of services—and
the productivity of labor in that sector—is particularly hard to measure. In part, the statisticians have
simply thrown up their hands, gauging output in
some service industries just in terms of labor input.
By construction, such a procedure will miss improvements in productivity caused by other inputs. In
manufacturing, where output is more tangible and
therefore easier to assess, measured productivity has
been rising briskly, suggesting that technological
advances are indeed having some effect.
Nonetheless, there is still a nagging inconsistency:
The evidence of significant restructurings and
improvements in technology and real costs within
business establishments does not seem to be fully
reflected in our national productivity measurements.
It is possible that some of the frenetic pace of business restructuring is mere wheel spinning—changing
production inputs without increasing output—rather
than real increases in productivity. One cause of the
wheel spinning, if that is what it is, may be that it
takes some time for firms to adapt in such a way that
major new technology is translated into increased
output.
In an intriguing parallel, electric motors in the late
nineteenth century were well known as a technology
but were initially integrated into production systems
319
that were designed for steam-driven power plants. It
was not until the gradual conversion of previously
vertical factories into horizontal facilities, mainly in
the 1920s, that firms were able to take full advantage
of the synergies implicit in the electric dynamo, thus
achieving dramatic productivity increases. Analogously, existing production systems today to some
degree cannot be easily integrated with new information and communication technologies. Some existing
equipment is not capable of control by computer, for
example. Thus, it may be that the full advantage of
even the current generation of information and communication equipment will be exploited over a span
of quite a few years and only after a considerably
updated stock of physical capital has been put in
place.
While the Federal Reserve does not need to establish targets—and definitely not limits—for long-term
growth, it is helpful in coming to shorter-run policy
insights to have some judgments about the growth in
potential GDP in the past and what it is likely to be in
the future. Judgments of potential, quite naturally, are
based on experience. Through the four quarters of
1994, for example, real GDP, pressed by strong
demand, rose 3 ¥2 percent. If that were the true rate of
increase in the economy's long-run potential, then we
would have expected no change in rates of resource
utilization. Instead, industrial capacity utilization rose
nearly 3 percentage points, and the unemployment
rate dropped 1 percentage point. Moreover, we began
to see signs of strains on facilities; deliveries of
materials slowed appreciably, and factory overtime
rose sharply. These signs of developing pressures on
capacity suggest that the growth rate in economic
potential in 1994 was below 3V2 percent. In general,
as we get close to presumed potential, we are required
to step up our surveillance for inflationary pressures.
Estimates of potential growth necessarily recognize that expansion in the economy over time comes
essentially from three factors—growth in population,
increases in labor force participation, and gains in
average labor productivity. Of these factors, the first
two are determined basically by demographic and
social factors and seem unlikely to change dramatically over the next few years. Thus, the source of any
significant pickup of output growth would need to be
a more rapid pace of productivity growth. Here, the
uncertainty of the pace of conversion of rapid technological advance into productivity gains is crucial to
the determination.
To be fully effective in achieving potential productivity improvements, technological innovations also
require a considerable amount of human investment
on the part of workers who have to deal with these
320
Federal Reserve Bulletin • April 1996
devices on a day-to-day basis. On this score, we still
may not have progressed very far. Many workers still
possess only rudimentary skills in manipulating
advanced information technology. In these circumstances, firms and employees alike need to recognize
that obtaining the potential rewards of the new technologies in the years ahead will require a renewed
commitment to effective education and training, especially on-the-job training. This is especially the case
if we are to prevent the disruptions to lives and the
nation's capacity to produce that arise from mismatches between jobs and workers. We need to
improve the preparation for the job market our
schools do, but even better schools are unlikely to be
able to provide adequate skills to support a lifetime of
work. Indeed, the need to ensure that our labor force
has the ongoing education and training necessary to
compete in an increasingly sophisticated world economy is a critical task for the years ahead.
Our nation faces many important and difficult challenges in economic policy. Nonetheless, we have
made significant and fundamental gains in macroeconomic performance in recent years that enhance
the prospects for maximum sustainable economic
growth. Inflation, as measured by the consumer price
index, has been gradually reduced from a peak of
more than 13 percent in 1979 to IVi percent last year.
Lower rates of inflation have brought a variety of
benefits to the economy, including lower long-term
interest rates, a sense of greater economic stability, an
improved environment for household and business
planning, and more robust investment in capital
expenditures. The years ahead should see further
progress against inflation and the eventual achievement of price stability.
We have also made considerable progress on the
fiscal front. Over the past ten years and especially
since 1993, our elected political leaders, through
sometimes prolonged and even painful negotiations,
have been successful in reaching several agreements
that have significantly narrowed the budget deficit.
But more remains to be done. As I have emphasized
many times, lower budget deficits are the surest and
most direct way to increase national saving. Higher
national saving would help to reduce real interest
rates further, promoting more rapid accumulation of
productive capital embodying recent technological
advances. Agreement is widely shared that attaining
a higher national saving rate quite soon is crucial,
particularly in view of the anticipated shift in the
nation's demographics in the first few decades of the
next century.
Lower inflation and reduced budget deficits will by
no means solve all of the economic problems we
face. But the achievement of price stability and federal budget balance or surplus will provide the best
possible macroeconomic climate in which the nation
can address other economic challenges.
Chairman Greenspan presented identical testimony before the
Committee on Banking, Housing, and Urban Affairs, U.S. Senate, February 21, 1996.
Statement by Theodore E. Allison, Assistant to the
Board, Board of Governors of the Federal Reserve
System, before the Subcommittee on General Oversight and Investigations of the Committee on Banking
and Financial Services, U.S. House of Representatives, February 27, 1996
Thank you for providing the Federal Reserve Board
an opportunity to present information on the security
of U.S. currency. I am Theodore E. Allison, Assistant
to the Board with responsibility for the security of
Federal Reserve notes.
In my statement today, I will provide evidence that
the currency of the United States is safe—that is,
relatively free from counterfeits—both domestically
and internationally. To do so, I will show that the
Federal Reserve receives from circulation a sufficient
quantity of currency notes to always have an up-todate and reasonably accurate view of the notes in
circulation. I will outline the equipment and procedures used to verify the genuineness of the notes
processed by the Federal Reserve Banks. We are
confident that these procedures permit thorough identification of counterfeits and thus prevent the reissuing of counterfeits. Finally, I will report the level of
counterfeit notes that we detect, which is very low.
I recommend for the subcommittee's further consideration an important statement on this subject presented by the Honorable Edward W. Kelley, Jr.,
Member of the Board of Governors, to the House
Banking Committee on July 13, 1994, setting forth
the Federal Reserve's support for design improvements in the currency notes.1 That statement
describes, among other things, the enormous con1. The attachment to this statement is available from Publications
Services, Mail Stop 127, Board of Governors of the Federal Reserve
System, Washington DC 20551.
Statements to the Congress
fidence and esteem with which our currency is
regarded throughout the world and the importance of
maintaining that confidence and esteem. I would suggest that a copy of Governor Kelley's statement be
included along with mine in the record.
Despite the relatively low level of counterfeiting of
Federal Reserve notes at this time, counterfeiting is a
serious crime. If it were to take place in much higher
volumes, it might undermine confidence in the genuine currency and might, in extreme circumstances,
also threaten the nation's economic stability. For this
reason, the Federal Reserve has developed procedures for ensuring that all notes paid out by the
Reserve Banks are genuine.
The Federal Reserve's confidence in the safety of
U.S. currency notes in circulation has two foundations. The first is the large proportion of outstanding notes that the Reserve Banks receive from
circulation each year and are therefore able to examine. The second is the ability of note-counting equipment at Reserve Banks to distinguish genuine notes
accurately.
Depository institutions in the United States make
frequent deposits with the Federal Reserve of currency notes that will not be needed to meet their
customers' requirements, for credit to the depository
institution's reserve account at the Reserve Bank.
(Similarly, depository institutions withdraw currency
notes from the Federal Reserve, for a charge to their
reserve account, when their stocks fall to insufficient
levels.)
During 1995, the Federal Reserve received from
circulation 22 billion currency notes having a value
of $344 billion. The amount outstanding was 17 billion notes with a value of about $390 billion, in
circulation worldwide, at year-end. The Federal
Reserve received the currency notes estimated to be
circulating within the United States, on average, more
than twice during the year, so that the Reserve Banks
receive and examine a number of notes equal to about
20 percent of the domestic circulation each month.
Consequently, the Federal Reserve has an up-to-date,
and quite clear, picture of the notes in circulation in
the United States. Moreover, if there were an increase
in the passing of counterfeit notes in the future, the
Federal Reserve would be able to detect it promptly.
Importantly, given the concerns of this subcommittee, about $1 in every seven that were held outside
the United States was sent back through a depository
institution to the Federal Reserve. This amount represents a significant sample of the U.S. currency notes
held abroad and also gives the Federal Reserve a
fairly good picture of the notes in circulation outside
the country.
321
Because $100 notes circulate somewhat more
slowly than notes of other denominations, Reserve
Banks have a somewhat less frequent opportunity to
inspect them. Nevertheless, the data show that for
$100 notes, as for other denominations, the Federal
Reserve has a fairly good picture of the outstanding
circulation, both at home and abroad.
Having established that we have a fairly clear and
current view on the outstanding circulation, I will
turn now to the Federal Reserve's tools and procedures for examining incoming receipts of currency
notes.
Each of the 22 billion notes received by the Federal Reserve each year is individually inspected by a
highly automated and highly sophisticated countingand-verification machine. The machines count the
notes and examine each one for genuineness, correct
denomination, and fitness (essentially, cleanliness and
absence of tears). At the end of the line, shredders in
the machines destroy all genuine notes that are not fit
to be issued again.
The machine examination of each $100 note and
$50 note for genuineness involves three independent
levels of scrutiny.2 To be regarded by the machine as
a genuine note that is potentially suitable to be recirculated, the note must successfully pass all three
levels. We have great confidence in the security features in the notes to which the sensors in the
machines are keyed. We have a similarly very high
level of confidence in the accuracy and reliability of
the sensors. Moreover, to reduce to a practical minimum the probability of falsely accepting a counterfeit
note as genuine, we set the decision criteria in the
processing machines to be very suspicious of possible counterfeits.
Every note that is separated out by a machine as
possibly not genuine is then put back through a
second, slower-speed processing machine equipped
with the same sensors for a second check for genuineness. If the second machine also separates out a
note as a possible counterfeit, the note is inspected by
a Federal Reserve technician. These individuals are
highly trained, both by the Reserve Bank itself and
periodically by the Secret Service, and they have the
final word as to genuineness. Any note that is identified by the technician as counterfeit is set aside to be
forwarded to the Secret Service. The combination of
our highly sophisticated processing machines, our
practice of operating the machines at a high level of
2. This statement describes the procedures for genuineness examination of $100 notes and $50 notes. Procedures for other denominations are similar but not identical.
322
Federal Reserve Bulletin • April 1996
suspicion, and our highly capable technicians enable
us to detect virtually all counterfeits that we receive.
So far, it has been established both that the Federal
Reserve has an up-to-date and reasonably clear view
on the outstanding circulation, at home and abroad,
and that we have the tools and procedures to identify
virtually all counterfeit notes in the deposits that we
receive.
The remaining issue is, what fraction of counterfeits do we see in our incoming deposits and, as
a consequence, what may we say about the safety
of the outstanding circulation? The answers are
reassuring.
Counterfeits in $100 deposits at the Federal
Reserve during 1995 amounted to three-quarters of
1 percent of 1 percent (.0075%). That is, we found on
average seventy-five counterfeits in every 1 million
notes processed. In value, the total was $6.9 million
in receipts of $93 billion.
Deposits of $100 notes at the Federal Reserve that
were understood to have originated outside the
United States had a lower proportion, about fifty-five
counterfeits in every million notes processed.
Counterfeits in $50 deposits at the Federal Reserve
during the year amounted to eight per million of the
$50 notes processed. For $20 notes, $10 notes, and
$5 notes, the proportions were seven per million,
sixteen per million, and two per million respectively.
The grand total was $8.8 million of counterfeits in
incoming receipts of $344 billion.
Depository institutions, exchange houses, and
retailers, both domestic and foreign, also detect counterfeit notes. Based on Secret Service statistics, the
total value of counterfeit notes detected in the United
States was about $32 million in 1995, an amount that,
at about 12 cents per capita, was still relatively low.
The Federal Reserve does not believe that counterfeiting is an inconsequential matter. Counterfeiting at
any level is unacceptable. Counterfeits successfully
passed on the public represent real losses to real
individuals and firms. The existence of this level of
successful passing demonstrates that the dollar is a
frequent target of would-be counterfeiters and that
constant vigilance is essential, both by law enforcement personnel and by the general public who handle
$1 notes.
There is considerable evidence from the Federal
Reserve's note-processing activity, however, that the
successful passing of counterfeits, within the United
States and abroad, is so small as to be insignificant
from a macroeconomic perspective and has no discernible effect on public confidence in U.S. currency.
Statement by Edward W. Kelley, Jr., Member, Board
of Governors of the Federal Reserve System, before
the Committee on Banking and Financial Services,
U.S. House of Representatives, February 28, 1996
of about $4.2 trillion, combined capital of approximately $350 billion, and earnings of $37 billion for
the first three quarters of 1995.
In view of the current financial strength of the U.S.
banking system and estimates of the extent of banks'
losses resulting from criminal misconduct, which
include the banking industry's 1994 estimates of
approximately $800 million in losses associated with
check fraud and $700 million from credit card fraud,
we believe that losses from criminal activities do not
pose a systemic risk to the banking system. Also, we
have no information that suggests that any individual
U.S. banking organization has been overtaken or substantially threatened by criminal organizations or
activities.
Although we see no systemic threat to the banking
system, we obviously are concerned about the risks
to the reputation and integrity of our nation's banks
arising from criminal elements using the banking
system for illicit purposes. These risks are best illustrated by money laundering, estimates of which range
between $300 billion and $500 billion annually.
Although no amount of money laundering is acceptable, there is no evidence that the flow of these funds
I am pleased to appear before the banking committee
on behalf of the Federal Reserve to discuss the impact
of crime on the stability of the banking system and
the Federal Reserve's efforts to assist banks and law
enforcement officials in countering criminal activity.
As a bank supervisory agency, the Federal Reserve
Board places a high priority on providing assistance
in deterring, detecting, and reporting criminal activities directed at banking organizations, and we appreciate the committee's interest in this important area.
Your letter of invitation asked me to address the
threat that criminal activity poses to the banking
system, and I would like to turn initially to that issue.
Although all bank losses that result from criminal
activity are unacceptable, it is important to put the
risks associated with criminal activities affecting
banks in the appropriate context. As of September 30,
1995, the more than 10,000 insured commercial
banks in the United States had total aggregate assets
Statements to the Congress
through U.S. banks on its own poses a systemic risk.
However, if left unchecked, the use of our banking
system by criminal elements could undermine the
reputation of banks or weaken the public's confidence in banks as safekeepers of their funds. For this
reason, and to support our law enforcement agencies
in their efforts to combat crime, the Federal Reserve's
efforts to attack the money laundering problem continue to be one of our highest bank supervisory
priorities.
FEDERAL RESERVE ROLE
As a banking supervisor, the Federal Reserve has
an important role in ensuring that criminal activity
does not pose a systemic threat and, as important, in
improving the ability of individual banking organizations in the United States and abroad to protect
themselves from illicit activities. Because bank systems and bank employees are the first and strongest
line of defense against financial crimes, the Federal
Reserve places a high priority on ensuring that banking organizations have appropriate controls in place
to protect themselves and their customers from criminal activities. The Federal Reserve places an equally
high priority on supporting efforts by U.S. law
enforcement agencies to apprehend criminal enterprises before they can cause harm to consumers and
banking organizations.
A banking organization's best protection against
illicit activities is its own policies and procedures
designed to identify and then reject potentially illegal
or damaging transactions. For this reason, the Federal
Reserve and other regulators have implemented various directives for banks to establish internal controls
and procedures designed to detect unusual or suspicious transactions that, if unchecked, could lead to
fraud, money laundering, or other types of criminal
misconduct.
To understand and properly evaluate the effectiveness of a banking organization's controls and procedures, we have developed extensive examination procedures and manuals, and our bank examiners are
provided with comprehensive training and with
timely information to assist them in identifying suspicious or unusual transactions. I need to emphasize,
however, that we do not expect our examiners to act
as police. The Federal Reserve is a bank supervisory
agency, not a criminal law enforcement authority; we
see our role as auxiliary to the legitimate law enforcement duties of criminal justice agencies. Our examiners do not, nor should they, possess the necessary
323
tools required to fully investigate and prosecute
criminal conduct. This is a function ably handled by
our law enforcement colleagues.
In recent years, however, the Federal Reserve
determined that in some instances it is necessary to
go beyond the scope of an ordinary bank examination
to determine if violations of law or regulation have
occurred. For this reason, in 1993 the Special Investigations and Examinations Unit was created in the
Board's Division of Banking Supervision and Regulation. This unit's function, in part, continues to be
that of taking information developed during the
course of an examination and conducting a specialized investigation or examination to determine what,
if any, laws have been violated through activity conducted at a bank. The unit notifies the appropriate law
enforcement agency when apparent criminal violations are detected and works hand in hand with them
whenever necessary.
KNOWING YOUR CUSTOMER AND
TRANSACTION REPORTING
SUSPICIOUS-
The Federal Reserve believes that the most prudent
method for banking organizations to protect themselves from allowing criminal transactions to be conducted at, or through, their institutions is to adopt
what has become known as "Know Your Customer"
policies and procedures. Safety and soundness considerations dictate that banking organizations have
adequate policies and procedures in this area, including procedures to ensure compliance with the rules
and regulations designed to assist in the detection of
criminal activity; decrease illegal activity through
increased awareness by employees; protect the reputation of a banking organization; and promote good,
as opposed to unsavory, customer relationships.
"Know Your Customer" procedures, which are
applied to all facets of a banking operation, allow the
organization to identify its customers and the transactions that they conduct on a regular basis, be alert to
transactions that may be irregular or abnormal for a
particular customer, determine whether there is an
apparent valid or lawful purpose for the transactions,
and report to the appropriate authorities those transactions that appear to be suspicious or criminal in
nature. One of the more significant components of
"Know Your Customer" procedures is the ability of
banking organizations to identify and report suspicious or potentially criminal activities. For the past
ten years, the Federal Reserve and the other federal
bank supervisory agencies have required banking
324
Federal Reserve Bulletin • April 1996
organizations to report suspected criminal activities
to us, as well as to various federal law enforcement
agencies. In 1995, more than 70,000 criminal referrals were filed.
To reduce the burden on financial institutions while
increasing the usefulness of the information provided
on suspected criminal conduct, the Federal Reserve,
together with the other federal bank supervisory
agencies and the Department of the Treasury, revised
the criminal referral process in several significant
respects. First, effective on April 1 of this year, the
new process combines the current criminal referral
rules of the bank supervisory agencies with the
Treasury Department's suspicious-activity reporting
requirements related to money laundering offenses.
Second, a uniform interagency reporting form has
been developed for purposes of referrals to all agencies. Third, we have provided for the filing of the
uniform form in one location as opposed to the
current requirement of filing six or seven copies, and
banks will have the ability to use computer software,
to be distributed by us, to assist in the preparation and
magnetic filing of the reports.
Another important improvement is the statutory
protection recently afforded banking organizations
that report suspicious or criminal conduct, which
provides banking organizations and their employees
with immunity from civil liability for reporting
known or suspected criminal offenses or suspicious
activities. This protection, long sought by the banking
community and supported by the Federal Reserve,
gives great comfort to banking organizations that
they will not be held liable for providing timely and
useful information to law enforcement authorities.
FEDERAL RESERVE INFORMATION
ASSISTANCE
Over the years the Federal Reserve has also taken the
initiative to provide timely and useful information to
banking organizations with regard to ongoing criminal conduct or potential schemes that may have an
adverse impact on them. In the past few years, the
Federal Reserve and the other federal banking supervisory agencies have issued bulletins on such matters
as "Prime Bank Fraud" schemes and credit card
fraud. Such notices to the banking industry are
intended to alert banks of the potential dangers of
such schemes and practices.
From time to time, the Federal Reserve has also
developed and issued policy statements with regard
to activities occurring in banking organizations that
we have determined could pose a threat to the integ
rity of a bank. One such example was the Federal
Reserve's development and issuance of a policy statement on "payable through accounts" in 1994. The
purpose of the policy statement was to ensure that
banks that engage in payable-through activity—
which basically involves the use of a checking
account at a bank in the United States by an individual who resides outside of this country—have
appropriate procedures in place to ensure that no
illicit activities are being conducted through these
accounts.
Also, in accordance with section 404 of the Money
Laundering Suppression Act of 1994, the Federal
Reserve has been working with the Treasury to establish a process whereby the federal law enforcement
community will provide, on a regular basis, information with regard to new or emerging money laundering schemes, which will then be disseminated to
financial institutions.
ANTI-MONEY
LAUNDERING
EFFORTS
The Federal Reserve continues to be a leader among
the federal banking supervisory agencies in addressing money laundering-related matters. The staff of
the Federal Reserve has been in the forefront of the
battle to deter money laundering through banking
organizations by, among other things, developing
anti-money laundering guidelines, conducting money
laundering investigations, providing expertise for law
enforcement initiatives, and providing training to
various government agencies.
Training provided by the Federal Reserve staff to
law enforcement agencies has included programs at
the FBI Academy and the Treasury's Federal Law
Enforcement Training Center. Additionally, the Federal Reserve staff has provided training in antimoney laundering procedures to foreign governments, such as Russia, Poland, Hungary, the Czech
Republic, Brazil, Ecuador, Argentina, and several
other countries in the Middle East and the Far East.
In accordance with section 404 of the Money
Laundering Suppression Act of 1994, the Federal
Reserve chaired a working group that has developed
enhanced examination procedures to identify appropriate anti-money laundering procedures initiated by
banking organizations. Along with these enhanced
money laundering procedures, the Federal Reserve
will very shortly release newly revised Bank Secrecy
Act examination procedures that will allow examiners to determine more efficiently and effectively compliance with the Bank Secrecy Act.
Statements to the Congress
COORDINATION
ACTIVITIES
The Federal Reserve routinely coordinates with federal law enforcement agencies with regard to potential criminal matters, including anti-money laundering activities. The scope of this coordination ranges
from our work on the criminal referral process to
specific, case-by-case assistance to law enforcement
agencies resulting from examinations of banking
organizations.
The Federal Reserve is a founding member and
active participant in the well-regarded interagency
Bank Fraud Working Group, which consists of representatives of thirteen federal law enforcement and
bank supervisory agencies. Among other things, this
group, which has been meeting on a monthly basis
since the mid-1980s, has coordinated the dissemination of relevant and timely information on such
matters of mutual interest or concern as Asian
gangs' use of check fraud and check counterfeiting;
West African advance fee schemes and credit card
fraud; and asset forfeiture of criminally derived
funds.
The Federal Reserve is also an active participant in
the Financial Action Task Force (FATF), which was
established by the Group of Seven countries. The
Board staff has contributed significantly to the
FATF's mission of educating countries around the
world in anti-money laundering and fraud prevention
efforts.
OFFSHORE CORPORATIONS AND BANKS
As a result of our staff's work with law enforcement
authorities, we recognize that crime is an international activity that is increasingly making use of
offshore corporations and banks. These are two separate problems that we address in different manners.
With regard to offshore corporations, because the
Federal Reserve cannot control a sovereign nation's
laws governing the establishment of corporations in
its territory, we can only address the activities of
these companies when they seek to do business in the
United States through banks we supervise. In this
regard, our principal tool is the "Know Your Customer" policy. As I said before, every domestic and
foreign banking organization supervised by the Federal Reserve should have adequate policies in this
area. This means, for example, that if a state member
325
bank or a U.S. branch of a foreign bank maintains a
deposit relationship with a corporate entity, wherever
it is chartered, it should take steps to identify its
business and the nature of its routine transactions to
evaluate better whether it is engaging in any suspicious activities. While no federal bank regulator or
law enforcement agency can monitor every transaction undertaken by every corporation doing business
with a U.S. financial institution, we can, and we
routinely do, measure the internal controls and risk
management systems implemented by the banks to
make certain that the banks are, in fact, adhering to
their policies and are aware of the business of their
customers, including any that may use offshore
corporations.
With regard to foreign banks, the Board, since
it was given the power by the Congress in 1991,
carefully scrutinizes any foreign bank seeking to do
business in the United States. This includes making
certain that the bank is subject to comprehensive
consolidated supervision in its home country, reviewing the bank's global anti-money laundering procedures, and conducting background checks with U.S.
law enforcement and other agencies. In addition,
as I mentioned, we thoroughly review the operations of these banks in the United States to make
certain their activities here fully comply with U.S.
laws and regulations. The Federal Reserve is also
working in a number of areas to improve the bank
supervisory standards in other banking centers and
to make certain that there is adequate cooperation
among supervisors so that gaps do not occur in the
consolidated supervision of international banking
organizations.
CONCLUSION
In conclusion, we have undertaken extensive efforts
and have used significant resources to combat illegal
activities involving domestic and international banking organizations. I believe that the Federal Reserve
has made significant contributions to the federal government's law enforcement endeavors. Because we
have a vital interest in protecting the banking system
from criminal elements, we will be continuing our
cooperative efforts with other bank supervisors and
the criminal justice agencies to develop and implement programs to better detect criminal misconduct
involving banks.
•
326
Announcements
ELECTION OF ALAN GREENSPAN AS CHAIRMAN
PRO TEMPORE OF THE BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
The Federal Reserve Board on March 1,1996, elected
Alan Greenspan as Chairman Pro Tempore pending
Senate confirmation of his appointment to a third
term as Chairman. The action was effective beginning Sunday, March 3.
On February 22, President Clinton announced his
intent to nominate Dr. Greenspan to a third term as
Chairman. His current term expired on March 2. The
designation as Chairman Pro Tempore will permit
Dr. Greenspan to continue to carry out the duties of
the Chairman while the confirmation process is under
way.
REGULATION
K: FINAL
RULE
The Federal Reserve Board on February 16, 1996,
announced a final rule setting out the criteria for
evaluating continued operation of a foreign bank in
the United States. The rule applies in cases in which
the foreign bank is not subject to comprehensive
supervision or regulation on a consolidated basis by
its home-country supervisor. The final rule, which
amends Regulation K (International Banking Operations), was effective March 25, 1996.
The Board will take these criteria into account in
reaching a view regarding whether a foreign bank
that the Board has determined is not subject to comprehensive, consolidated, home-country supervision
should be permitted to continue its U.S. operations
with or without supervisory constraints or whether
such U.S. operations should be terminated.
tion Z (Truth in Lending) for mortgage loans that
bear fees above a certain amount.
The Home Ownership and Equity Protection Act
of 1994 bars credit terms such as balloon payments
and requires additional disclosures when total points
and fees payable by the consumer exceed $400 or
8 percent of the total loan amount, whichever is
larger. The Board must adjust this amount each year
based on the percent change in the consumer price
index as of June 1. Accordingly, the Board has
adjusted the dollar amount from $400 to $412.
PROPOSED
ACTION
The Federal Reserve Board on February 16, 1996,
requested comment on a proposed revision to Regulation K with respect to the management of offshore
offices by U.S. branches and agencies of foreign
banks. Comments were requested by March 25, 1996.
FEDERAL RESERVE REGULATORY SERVICE
AVAILABLE ON DISKETTE FOR PERSONAL
COMPUTERS
The Federal Reserve Regulatory Service (FRRS) is
available on diskette for use on personal computers.
Created using Folio VIEWS® search-and-retrieval
software, this electronic service allows users to
construct searches that are as simple or as complex
as they need. The software enables users to do the
following:
ADJUSTMENT OF DOLLAR AMOUNT
TRIGGERING ADDITIONAL
DISCLOSURE
REQUIREMENTS UNDER REGULATION Z
• Search for any word, phrase, or combination of
words and phrases
• Search the complete text or only main headings
• Limit searches to a specific portion of the FRRS
(for example, to a statute, a regulation, or one section
of a statute or regulation)
• Condense the results of a search to make it easier
to review.
The Federal Reserve Board published on February 1,
1996, an adjustment of the dollar amount that triggers
additional disclosure requirements under Regula-
The electronic version, like the print version, is
updated once a month. Monthly diskettes are simply
loaded to update the text on the floppy drive.
327
Besides an on-screen user's manual and a
command-specific help system, a printed user's guide
will explain the basic features of the software and
how best to use them in researching the FRRS. A
telephone number will also be provided for technical
assistance.
Other features of this service include the following:
• Cross-references and indexes with hypertext
links that take the user directly to referenced text in
the FRRS
• Pop-up footnotes
• The capability of printing text or transferring it
to a diskette for word processing
• Mouse compatability (will operate as a DOS
application under Windows).
The electronic FRRS requires the following:
• IBM-compatible PC, DOS 3.0 or higher
• Drive capable of handling 3.5-inch high-density
floppy disks
• Available disk space of 17 megabytes
• Available RAM of 512K
• EGA or VGA board to view graphics
• Color monitor (recommended but not required).
For a standalone PC, the annual subscription fee is
$300. For network subscriptions, the annual fee
is $300 for one concurrent user, $750 for a maximum
of ten concurrent users, $2,000 for a maximum of
fifty concurrent users, and $3,000 for a maximum of
one hundred concurrent users. Subscribers outside
the United States should add $50 to cover additional
airmail costs. Each network subscriber will receive a
single set of diskettes and a corresponding number of
user's guides. Additional user's guides may be purchased for $5 each.
Orders should be sent to Publications Services,
Mail Stop 127, Board of Governors of the Federal
Reserve System, Washington, DC 20551. All subscription requests must be accompanied by a check or
money order payable to the Board of Governors
of the Federal Reserve System or charged to VISA or
MasterCard. Charge customers only may fax their
orders to (202) 728-5886.
REVISIONS TO THE MONEY STOCK DATA
Measures of the money stock were revised in February of this year to incorporate the result of the annual
benchmark and seasonal factor review, as well as a
minor redefinition of M2. Data in tables 1.10 and
1.21 in the statistical appendix to the Bulletin reflect
these changes beginning with this issue.
The revisions had no effect on the annual growth
rate of M2 over 1995, but they raised the annual
growth rates of Ml and M3 by 0.1 percentage point
over the past year. For earlier years, revisions to the
annual growth rates of M2 ranged between -0.5 and
+0.4 percentage point, while the annual growth rates
of Ml and M3 were revised by smaller amounts.
Redefinition
A minor redefinition of M2 was implemented with
this year's benchmark. Overnight wholesale repurchase agreements and overnight Eurodollars have
been removed from M2. They are now included in
the non-M2 component of M3. These overnight components are quite volatile and difficult to measure
accurately. Their movements no longer exhibit the
negative correlation with demand deposits that had
been observed in 1980, when they were originally
included in M2. The redefinition does not affect the
quarterly and annual behavior of M2 nor its relationship to interest rates and income. The redefinition,
which has no effect on Ml or M3, lowered M2 in
all years since 1969 by amounts that cumulated to
$118 billion in 1995.
Benchmark
Revisions
The benchmark incorporated minor revisions to data
reported on the weekly and quarterly deposit reports,
and it took account of deposit data from Call Reports
for banks and thrift institutions that were not weekly
or quarterly deposit reporters. The benchmark also
incorporated historical data for a number of money
market mutual funds that began reporting for the first
time during 1995, raising the levels of M2 and M3
over the year by amounts that cumulated to $ 1 billion
and $9 billion respectively.
Seasonal Review Revisions
In a process similar to that used in previous years,
seasonal factors for the monetary aggregates were
revised using the X-ll ARIMA procedure applied to
the benchmarked data through December 1995. However, this year, seasonal factors were constructed for
total repurchase agreements and total Eurodollar
deposits, both of which are now entirely in the
328
Federal Reserve Bulletin •
April 1996
non-M2 component of M3. Furthermore, the non-Mi
component of M2 and the non-M2 component of M3
have been seasonally adjusted by summing their seasonally adjusted components; previously, both the
non-Mi component of M2 and the non-M2 component of M3 were each seasonally adjusted as a whole.
Complete historical data are available in printed
form from the Money and Reserves Projection Section, Mail Stop 72, Division of Monetary Affairs,
Board of Governors of the Federal Reserve System,
Washington, DC 20551 (202) 452-3062. The historical data are also available on floppy diskette for a fee
of $25 per diskette from Publications Services, Mail
Stop 127, 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 are also 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.
Tables on seasonal factors follow.
Announcements
1.
Monthly seasonal factors used to construct M l , January 1995-March 1997
Year and month
1995—January
February
March
April
May
June
July
August
September
October
November
December
1996—January
February
March
April
May
June
July
August
September
October
November
December
1997—January
February
March
Currency
Other checkable deposits 1
Nonbank travelers
checks
Demand deposits
1.0140
.9773
.9767
Total
At banks
1.0165
.9953
1.0008
1.0210
.9901
.9956
.9921
.9892
.9943
.9916
1.0242
1.0012
1.0024
1.0196
.9868
.9921
.9874
.9878
.9938
.9901
.9995
1.0168
.9950
.9943
.9973
1.0015
1.0008
1.0032
1.0049
1.0016
.9995
.9978
1.0002
1.0080
.9568
.9541
.9656
.9723
.9867
1.0274
1.0668
1.0745
1.0495
1.0124
.9750
.9584
.9948
.9935
.9974
.9995
1.0013
1.0030
1.0031
1.0023
.9984
.9965
1.0005
1.0057
.9557
.9527
.9648
.9740
.9884
1.0285
1.0674
1.0753
1.0495
1.0109
.9744
.9581
1.0141
.9771
.9765
.9994
.9752
.9907
1.0015
.9941
.9980
1.0076
1.0193
1.0465
1.0166
.9949
1.0004
1-.0209
.9894
.9955
.9924
.9893
.9948
.9915
.9952
.9934
.9969
.9551
.9522
.9649
1.0140
.9771
.9767
1.0163
.9948
1.0003
1.0000
.9763
.9905
1.0009
.9936
.9975
1.0077
1.0197
1.0466
1. Seasonally adjusted other checkable deposits at thrift institutions are
derived as the difference between total other checkable deposits, seasonally
2.
329
1.0000
1.0144
1.0243
1.0006
1.0016
1.0195
.9860
.9919
.9876
.9880
.9943
.9901
.9999
1.0171
1.0001
1.0147
1.0241
1.0003
1.0011
adjusted, and seasonally adjusted other checkable deposits at commercial banks,
Monthly seasonal factors used to construct M2 and M3, January 1995-March 1997
Savings and
MMDA
deposits 1
Smalldenomination
time deposits'
Largedenomination
time deposits 1
1995—January
February
March
April
May
June
July
August
September
October
November
December
.9952
.9939
.9981
.9993
.9981
1.0022
1.0027
1.0033
1.0023
1.0019
1.0040
1.0000
.9967
.9984
1.0015
1.0028
1.0029
1.0031
1.0039
1.0023
1.0004
.9989
.9951
.9932
1996—January
February
March
April
May
June
July
August
September
October
November
December
.9953
.9935
.9976
.9988
.9976
1.0020
1.0029
1.0036
1.0027
1.0022
1.0041
.9999
.9960
.9983
1.0020
1.0034
1.0037
1.0036
1.0042
1.0024
.9953
.9934
.9974
Year and month
1997—January
February
March
Money market mutual funds
RPs
Eurodollars
1.0315
1.0263
1.0032
.9886
.9915
.9792
.9876
.9994
.9834
.9915
1.0103
1.0097
.9916
.9845
.9913
.9954
.9994
1.0202
1.0028
1.0056
1.0045
1.0104
.9992
.9919
.9995
.9999
1.0102
.9872
.9862
.9909
.9897
1.0011
1.0026
1.0110
1.0179
1.0082
1.0043
1.0069
1.0092
1.0099
.9961
.9929
.9991
1.0028
.9924
.9902
.9959
1.0007
1.0330
1.0232
1.0015
.9888
.9899
.9802
.9894
.9988
.9823
.9933
1.0101
1.0096
.9930
.9851
.9904
.9966
1.0016
1.0199
1.0031
1.0054
1.0051
1.0096
.9976
.9907
.9986
.9964
1.0042
.9856
.9873
.9921
.9936
1.0043
1.0050
1.0121
1.0166
1.0051
1.0043
1.0070
1.0083
1.0344
1.0220
1.0007
.9938
.9866
.9896
.9993
.9941
1.0014
In M2
In M3 only
.9922
.9952
.9953
.9928
1.0068
1.0025
.9957
1.0028
1.0023
1.0069
1.0085
.9997
1.0037
1.0078
1.0111
1.0104
.9967
.9933
.9980
1.0018
.9918
.9905
.9960
1.0006
.9985
.9948
.9928
.9920
.9956
.9957
.9923
1.0064
1.0021
.9955
1.0022
1.0020
1.0077
1.0090
.9997
.9958
.9983
1.0024
.9918
.9957
.9963
1.0001
1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions.
ll ]
:asi
:ndi
4
11
18
25
1
8
15
22
29
5
12
19
26
4
11
18
25
1
8
15
22
29
6
13
20
27
3
10
17
24
1
8
15
22
29
5
12
19
26
2
9
16
23
30
7
14
21
28
4
11
18
25
2
9
16
23
30
6
13
20
27
3
10
17
24
3
10
17
24
31
idju
fen
•
April 1996
used to construct M l , December 4, 1995-March 31, 1997
Other checkable deposits 1
Nonbank travelers
checks
Demand deposits
.9981
1.0048
1.0054
1.0173
.9573
.9578
.9583
.9588
1.0067
1.0029
.9969
.9931
.9866
Currency
Total
At banks
1.0284
1.0395
1.0391
1.0449
1.0132
1.0198
1.0130
1.0073
1.0099
1.0187
1.0171
1.0148
.9593
.9583
.9566
.9549
.9533
1.0814
1.0592
1.0310
.9945
.9666
1.0161
1.0497
1.0293
1.0078
.9827
1.0219
1.0558
1.0386
1.0187
.9888
.9927
.9966
.9952
.9893
.9522
.9524
.9527
.9530
.9880
.9787
.9795
.9652
1.0073
1.0010
.9895
.9813
1.0129
1.0061
.9957
.9882
.9947
1.0000
.9976
.9950
.9539
.9590
.9642
.9693
.9771
.9786
.9766
.9587
1.0085
1.0081
.9969
.9876
1.0111
1.0104
.9987
.9887
.9956
1.0053
1.0035
.9977
.9926
.9745
.9754
.9744
.9735
.9726
.9922
1.0066
1.0178
.9960
.9803
.9981
1.0361
1.0380
1.0259
.9901
.9971
1.0295
1.0383
1.0265
.9901
1.0025
1.0031
1.0003
1.0002
.9751
.9822
.9893
.9964
.9865
.9796
.9756
.9537
1.0055
.9959
.9864
.9717
1.0018
.9919
.9800
.9703
1.0010
1.0072
1.0035
.9991
1.0035
1.0149
1.0262
1.0375
.9898
.9994
.9938
.9682
.9950
1.0160
1.0024
.9772
.9942
1.0084
.9986
.9760
1.0015
1.0102
1.0057
1.0010
.9976
1.0488
1.0569
1.0637
1.0705
1.0773
1.0018
1.0247
1.0181
.9909
.9730
.9806
1.0166
.9997
.9824
.9733
.9780
1.0095
.9942
.9794
.9694
1.0040
1.0063
1.0021
.9970
1.0813
1.0783
1.0753
1.0722
1.0058
1.0016
1.0034
.9718
1.0039
.9983
.9847
.9710
.9984
.9940
.9846
.9741
1.0009
1.0055
.9999
.9946
.9918
1.0692
1.0613
1.0525
1.0437
1.0350
.9874
1.0138
1.0091
.9801
.9922
.9913
1.0202
1.0048
.9810
.9722
.9904
1.0157
1.0032
.9818
.9761
.9999
.9992
.9954
.9931
1.0262
1.0174
1.0087
.9999
1.0198
1.0198
1.0073
.9827
1.0080
1.0000
.9887
.9711
1.0042
.9939
.9871
.9764
.9993
1.0046
1.0001
.9989
.9912
.9831
.9750
.9669
1.0144
1.0162
1.0290
1.0070
1.0011
1.0078
.9993
.9861
.9995
1.0067
.9999
.9898
.9952
1.0008
1.0030
1.0122
1.0098
.9587
.9577
.9580
.9582
.9584
1.0308
1.0368
1.0417
1.0430
1.0625
1.0038
1.0243
1.0119
1.0099
1.0097
.9994
1.0228
1.0135
1.0158
1.0153
1.0021
.9984
.9948
.9896
.9579
.9564
.9549
.9535
1.0797
1.0341
1.0031
.9681
1.0519
1.0393
1.0151
.9795
1.0569
1.0451
1.0266
.9891
.9916
.9962
.9953
.9895
.9520
.9521
.9522
.9523
.9835
.9821
.9832
.9646
.9935
1.0109
.9928
.9814
.9996
1.0133
.9976
.9896
.9930
1.0006
.9973
.9947
.9954
.9524
.9579
.9635
.9691
.9748
.9745
.9859
.9836
.9621
.9740
.9944
1.0172
1.0017
.9913
.9896
1.0016
1.0197
1.0028
.9908
.9874
eckable deposits at thrift institutions are
total other checkable deposits, seasonally
adjusted, and seasonally adjusted other checkable deposits at commercial banks,
Announcements
4.
331
Weekly seasonal factors used to construct M2 and M3, December 4, 1995-March 31, 1997
Week ending
Savings and
MMDA
deposits 1
Smalldenomination
time deposits 1
Largedenomination
time deposits'
1.0047
1.0047
Money market mutual funds
RPs
Eurodollars
In M2
In M3 only
1.0066
1.0085
1.0132
1.0072
.9949
.9906
.9932
.9866
1.0133
1.0020
1.0033
1.0083
1.0035
1.0049
1.0014
.9958
.9937
.9933
.9926
.9925
1.0011
.9976
1.0002
1.0067
1.0062
.9989
8
15
22
29
.9951
1.0008
.9979
.9921
.9872
.9941
.9952
.9958
.9962
.9966
.9915
.9898
.9929
.9925
.9914
.9887
.9919
1.0055
1.0120
1.0093
1.0095
.9978
1.0372
1.0419
1.0577
.9962
.9906
.9938
.9915
.9986
1.0177
1.0022
.9987
.9912
1.0034
February
5
12
19
26
.9922
.9959
.9939
.9913
.9975
.9980
.9982
.9985
.9915
.9967
.9966
.9963
1.0068
1.0086
1.0053
1.0073
1.0372
1.0318
1.0181
1.0207
.9833
.9873
.9848
.9858
.9857
.9886
.9969
1.0083
March
4
11
18
25
.9947
.9981
.9984
.9966
.9999
1.0013
1.0020
1.0026
.9956
.9984
.9962
.9966
1.0067
1.0092
1.0098
1.0118
1.0063
1.0046
1.0032
1.0055
.9819
.9860
.9909
.9971
1.0028
.9964
1.0040
1.0078
8
15
22
29
.9989
1.0074
1.0041
.9947
.9898
1.0036
1.0038
1.0034
1.0031
1.0030
.9908
.9914
.9894
.9928
.9946
1.0071
1.0125
1.0142
1.0123
1.0035
.9941
.9925
.9950
.9859
.9852
.9927
.9965
.9943
.9978
.9986
1.0101
.9838
.9810
.9827
.9935
6
13
20
27
.9952
.9993
.9980
.9956
1.0037
1.0038
1.0037
1.0035
1.0001
1.0060
1.0063
1.0116
.9963
.9952
.9951
.9990
.9828
.9879
.9933
.9975
.9965
.9970
1.0012
1.0043
.9713
.9725
.9880
1.0101
3
10
17
24
1.0010
1.0066
1.0048
.9988
1.0036
1.0037
1.0033
1.0030
1.0079
1.0082
1.0054
.9991
.9931
.9954
.9945
.9922
.9838
.9835
.9833
.9784
1.0132
1.0175
1.0276
1.0199
.9962
.9833
.9901
.9931
1
8
15
22
29
.9975
1.0059
1.0056
1.0019
.9987
1.0045
1.0053
1.0046
1.0038
1.0032
.9918
.9912
.9952
.9963
.9985
.9880
.9889
1.0014
1.0025
1.0040
.9701
.9756
.9893
.9951
.9979
1.0173
.9995
1.0016
1.0028
1.0074
1.0014
.9761
.9861
.9965
1.0116
5
12
19
26
1.0037
1.0063
1.0044
1.0008
1.0033
1.0031
1.0025
1.0017
.9999
1.0012
1.0053
1.0023
1.0042
1.0027
1.0054
.9923
.9988
.9973
1.0064
.9997
1.0075
1.0033
1.0088
1.0044
1.0026
.9978
1.0094
2
9
16
23
30
1.0025
1.0078
1.0065
.9996
.9971
.9991
.9997
1.0032
1.0022
1.0018
1.0012
1.0022
.9983
.9942
.9949
.9926
.9871
.9949
.9858
.9886
.9789
.9721
1.0064
1.0022
1.0084
1.0045
1.0051
1.0088
.9943
1.0003
1.0017
1.0226
October
7
14
21
28
1.0046
1.0053
1.0014
.9974
1.0008
.9994
.9981
.9967
1.0089
1.0073
1.0065
1.0080
.9867
.9922
.9913
.9914
.9850
.9850
.9969
1.0004
.9980
1.0105
1.0098
1.0197
1.0073
1.0050
1.0101
1.0254
November
4
11
18
25
1.0024
1.0070
1.0061
1.0018
.9962
.9958
.9948
.9939
1.0081
1.0119
1.0087
1.0091
.9905
.9936
.9946
1.0013
1.0040
1.0068
1.0038
1.0161
1.0102
.9952
.9907
1.0140
1.0082
1.0130
1.0264
2
9
16
23
30
1.0018
1.0053
1.0032
.9960
.9943
.9935
.9931
.9923
.9921
.9931
1.0060
1.0043
1.0039
1.0002
.9904
.9976
1.0018
1.0060
1.0024
.9953
1.0164
1.0034
1.0125
1.0085
1.0117
.9969
.9911
.9940
.9813
.9946
1.0214
.9953
.9998
1.0023
1.0183
6
13
20
27
1.0014
1.0009
.9947
.9881
.9948
.9956
.9959
.9961
.9871
.9926
.9934
.9940
.9854
1.0040
1.0101
1.0125
.9961
1.0329
1.0427
1.0564
.9906
.9947
.9933
.9980
1.0059
1.0007
.9937
1.0020
February
3
10
17
24
.9899
.9954
.9947
.9918
.9967
.9975
.9982
.9989
.9912
.9945
.9959
.9978
1.0075
1.0083
1.0055
1.0067
1.0414
1.0321
1.0189
1.0174
.9902
.9827
.9911
.9865
.9921
.9827
.9945
1.0024
March
3
10
17
24
31
.9931
.9986
.9994
.9967
.9966
1.0001
1.0015
1.0022
1.0029
1.0040
.9972
.9996
.9979
.9962
.9912
1.0068
1.0084
1.0092
1.0102
1.0060
1.0091
1.0015
1.0059
.9996
.9973
.9829
.9840
.9905
.9936
.9934
1.0004
.9909
1.0021
1.0052
1.0079
1995—December
1996—January
April
May
June
July
August
September
December
1997—January
4
11
18
25
1
1
1.0014
1.0011
1.0000
1.0011
1. Seasonal factors are applied to deposits data at both commercial banks and thrift institutions.
1.0001
333
Legal Developments
FINAL RULE—AMENDMENT
TO REGULATION A
The Board of Governors is amending 12 C.F.R. Part 201,
its Regulation A (Extensions of Credit by Federal Reserve
Banks; Change in Discount Rate) to reflect its approval of
a decrease in the basic discount rate at each Federal Reserve Bank. The Board acted on requests submitted by the
Boards of Directors of the twelve Federal Reserve Banks.
Effective February 5, 1996, 12 C.F.R. Part 201 is
amended as follows:
Part 201—Extensions of Credit by Federal Reserve
Banks (Regulation A)
1. The authority citation for 12 C.F.R. Part 201 continues
to read as follows:
Authority: 12 U.S.C. 343 et seq., 347a, 347b, 347c, 347d,
348 et seq., 357, 374, 374a and 461.
Section 201.51—Adjustment credit for depository institutions.
The rates for adjustment credit provided to depository
institutions under section 201.3(a) are:
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
FINAL RULE—AMENDMENTS
AND Y
Rate
Effective
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
February 1,
January 31,
January 31,
January 31,
February 1,
January 31,
February 1,
February 5,
January 31,
February 1,
January 31,
January 31,
1996
1996
1996
1996
1996
1996
1996
1996
1996
1996
1996
1996
TO REGULATIONS H, K,
The Board of Governors is amending 12 C.F.R. Parts 208,
211, and 225, its Regulations H, K, and Y (Membership of
State Banking Institutions in the Federal Reserve System;
International Banking Operations; Bank Holding Companies and Change in Control; Reports of Suspicious Activity
Part 208—Membership of State Banking
Institutions in the Federal Reserve System
(Regulation H)
1. The authority citation for 12 C.F.R. Part 208 continues
to read as follows:
2. Section 201.51 is revised to read as follows:
Federal Reserve Bank
Under the Bank Secrecy Act), on the reporting of known or
suspected criminal and suspicious activities by the domestic and foreign banking organizations supervised by the
Board. This final rule streamlines reporting requirements
by providing that such an organization file a new Suspicious Activity Report ( " S A R " ) with the Board and the
appropriate federal law enforcement agencies by sending a
SAR to the Financial Crimes Enforcement Network of the
Department of the Treasury to report a known or suspected
criminal offense or a transaction that it suspects involves
money laundering or violates the Bank Secrecy Act.
Effective April 1, 1996, 12 C.F.R. Parts 208, 211, and
225 are amended as follows:
Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a, 371d,
461, 481-486, 601, 611, 1814, 1823(j), 1828(o), 1831o,
1831p-l, 3105, 3310, 3331-3351, and 3906-3909;
15 U.S.C. 78b, 781(b), 781(g), 781(i), 78o-4(c)(5), 78q,
78q-l and 78w; 31 U.S.C. 5318; 42 U.S.C. 4102a, 4104a,
4104b, 4106, and 4128.
2. Section 208.20 and its heading are revised to read as
follows:
Section 208.20—Suspicious Activity Reports.
(a) Purpose. This section ensures that a state member bank
files a Suspicious Activity Report when it detects a known
or suspected violation of Federal law, or a suspicious
transaction related to a money laundering activity or a
violation of the Bank Secrecy Act. This section applies to
all state member banks.
(b) Definitions. For the purposes of this section:
(1) FinCEN means the Financial Crimes Enforcement
Network of the Department of the Treasury.
(2) Institution-affiliated
party means any institutionaffiliated party as that term is defined in 12 U.S.C.
1786(r), or 1813(u) and 1818(b)(3),(4) or (5).
(3) SAR means a Suspicious Activity Report on the form
prescribed by the Board.
(c) SARs required. A state member bank shall file a SAR
with the appropriate Federal law enforcement agencies and
the Department of the Treasury in accordance with the
334
Federal Reserve Bulletin • April 1996
form's instructions by sending a completed SAR to FinCEN in the following circumstances:
(1) Insider abuse involving any amount. Whenever the
state member bank detects any known or suspected
Federal criminal violation, or pattern of criminal violations, committed or attempted against the bank or involving a transaction or transactions conducted through
the bank, where the bank believes that it was either an
actual or potential victim of a criminal violation, or
series of criminal violations, or that the bank was used to
facilitate a criminal transaction, and the bank has a
substantial basis for identifying one of its directors,
officers, employees, agents or other institution-affiliated
parties as having committed or aided in the commission
of a criminal act regardless of the amount involved in
the violation.
(2) Violations aggregating $5,000 or more where a
suspect can be identified. Whenever the state member
bank detects any known or suspected Federal criminal
violation, or pattern of criminal violations, committed or
attempted against the bank or involving a transaction or
transactions conducted through the bank and involving
or aggregating $5,000 or more in funds or other assets,
where the bank believes that it was either an actual or
potential victim of a criminal violation, or series of
criminal violations, or that the bank was used to facilitate a criminal transaction, and the bank has a substantial
basis for identifying a possible suspect or group of
suspects. If it is determined prior to filing this report that
the identified suspect or group of suspects has used an
"alias," then information regarding the true identity of
the suspect or group of suspects, as well as alias identifiers, such as drivers' license or social security numbers,
addresses and telephone numbers, must be reported.
(3) Violations aggregating $25,000 or more regardless
of a potential suspect. Whenever the state member bank
detects any known or suspected Federal criminal violation, or pattern of criminal violations, committed or
attempted against the bank or involving a transaction or
transactions conducted through the bank and involving
or aggregating $25,000 or more in funds or other assets,
where the bank believes that it was either an actual or
potential victim of a criminal violation, or series of
criminal violations, or that the bank was used to facilitate a criminal transaction, even though there is no
substantial basis for identifying a possible suspect or
group of suspects.
(4) Transactions aggregating $5,000 or more that involve potential money laundering or violations of the
Bank Secrecy Act. Any transaction (which for purposes
of this paragraph (c)(4) means a deposit, withdrawal,
transfer between accounts, exchange of currency, loan,
extension of credit, purchase or sale of any stock, bond,
certificate of deposit, or other monetary instrument or
investment security, or any other payment, transfer, or
delivery by, through, or to a financial institution, by
whatever means effected) conducted or attempted by, at
or through the state member bank and involving or
aggregating $5,000 or more in funds or other assets, if
the bank knows, suspects, or has reason to suspect that:
(i) The transaction involves funds derived from illegal
activities or is intended or conducted in order to hide
or disguise funds or assets derived from illegal activities (including, without limitation, the ownership, nature, source, location, or control of such funds or
assets) as part of a plan to violate or evade any law or
regulation or to avoid any transaction reporting requirement under federal law;
(ii) The transaction is designed to evade any regulations promulgated under the Bank Secrecy Act; or
(iii) The transaction has no business or apparent lawful purpose or is not the sort in which the particular
customer would normally be expected to engage, and
the bank knows of no reasonable explanation for the
transaction after examining the available facts, including the background and possible purpose of the transaction.
(d) Time for reporting. A state member bank is required to
file a SAR no later than 30 calendar days after the date of
initial detection of facts that may constitute a basis for
filing a SAR. If no suspect was identified on the date of
detection of the incident requiring the filing, a state member bank may delay filing a SAR for an additional 30
calendar days to identify a suspect. In no case shall reporting be delayed more than 60 calendar days after the date of
initial detection of a reportable transaction. In situations
involving violations requiring immediate attention, such as
when a reportable violation is on-going, the financial institution shall immediately notify, by telephone, an appropriate law enforcement authority and the Board in addition to
filing a timely SAR.
(e) Reports to state and local authorities. State member
banks are encouraged to file a copy of the SAR with state
and local law enforcement agencies where appropriate.
(f) Exceptions. (1) A state member bank need not file a
SAR for a robbery or burglary committed or attempted
that is reported to appropriate law enforcement authorities.
(2) A state member bank need not file a SAR for lost,
missing, counterfeit, or stolen securities if it files a
report pursuant to the reporting requirements of
17 C.F.R. 240.17f-l.
(g) Retention of records. A state member bank shall maintain a copy of any SAR filed and the original or business
record equivalent of any supporting documentation for a
period of five years from the date of the filing of the SAR.
Supporting documentation shall be identified and maintained by the bank as such, and shall be deemed to have
been filed with the SAR. A state member bank must make
all supporting documentation available to appropriate law
enforcement agencies upon request.
(h) Notification to board of directors. The management of a
state member bank shall promptly notify its board of
directors, or a committee thereof, of any report filed pursuant to this section.
(i) Compliance. Failure to file a SAR in accordance with
Legal Developments
this section and the instructions may subject the state
member bank, its directors, officers, employees, agents, or
other institution- affiliated parties to supervisory action,
(j) Confidentiality of SARs. SARs are confidential. Any
state member bank subpoenaed or otherwise requested to
disclose a SAR or the information contained in a SAR shall
decline to produce the SAR or to provide any information
that would disclose that a SAR has been prepared or filed
citing this section, applicable law (e.g., 31 U.S.C. 5318(g)),
or both, and notify the Board.
(k) Safe Harbor. The safe harbor provisions of 31 U.S.C.
5318(g), which exempts any state member bank that makes
a disclosure of any possible violation of law or regulation
from liability under any law or regulation of the United
States, or any constitution, law or regulation of any state or
political subdivision, covers all reports of suspected or
known criminal violations and suspicious activities to law
enforcement and financial institution supervisory authorities, including supporting documentation, regardless of
whether such reports are filed pursuant to this section or
are filed on a voluntary basis.
Part 211—International Banking Operations
(Regulation K)
1. The authority citation for 12 C.F.R. Part 211 continues
to read as follows:
Authority: 12 U.S.C. 221 et seq., 1818, 1841 et seq., 3101
et seq., 3901 et seq.
FINAL RULE-AMENDMENT
335
TO REGULATION K
The Board of Governors is amending 12 C.F.R. Part 211,
its Regulation K (International Banking Operations). Section 202(e)(7) of the Federal Deposit Insurance Corporation Improvement Act of 1991 ( " F D I C I A " or "Act") provides that the Board, in consultation with the Treasury,
develop and publish criteria to be used in evaluating the
operations of any foreign bank in the United States that the
Board has determined is not subject to comprehensive
supervision or regulation on a consolidated basis. This final
rule amends Regulation K on International Banking Operations to set out such criteria pursuant to section 202(e)(7)
of FDICIA.
Effective March 25, 1996, 12 C.F.R. Part 211 is amended
as follows:
Part 211—International Banking Operations
(Regulation K)
1. The authority citation for Part 211 continues to read as
follows:
Authority. 12 U.S.C. 221 et seq., 1818, 1841 et seq., 3101
et seq., 3901 et seq.
2. A new section 211.30 is added to Subpart B to read as
follows:
Section 211.30—Criteria for evaluating the U.S.
operations of foreign banks not subject to
consolidated supervision.
Sections 211.8 and 211.24.
2. In sections 211.8 and 211.24(f), remove the words
"criminal referral f o r m " and add, in their place, the words
"suspicious activity report".
Part 225—Bank Holding Companies and Change in
Bank Control (Regulation Y)
1. The authority citation for 12 C.F.R. Part 225 continues
to read as follows:
Authority. 12 U.S.C. 1817(j)(13), 1818, 1831i, 1831p-l,
1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 33313351, 3907, and 3909.
Section 225.4—[Amended].
2. In section 225.4, the heading of paragraph (f) is revised
to read "Suspicious Activity
Report.".
3. In section 225.4(f), remove the words "criminal referral
f o r m " and add, in their place, the words "suspicious
activity report".
(a) General. Pursuant to the Foreign Bank Supervision
Enhancement Act, Pub.L. 102-242, 105 Stat. 2286 (1991),
the Board shall develop and publish criteria to be used in
evaluating the operations of any foreign bank in the United
States that the Board has determined is not subject to
comprehensive supervision or regulation on a consolidated
basis.
(b) Criteria. Following a determination by the Board that,
having taken into account the standards set forth in section
211.24(c)(1) of this subpart, a foreign bank is not subject to
comprehensive, consolidated supervision by its home
country supervisor, the Board shall consider the following
criteria in determining whether the foreign bank's U.S.
operations should be permitted to continue and, if so,
whether any supervisory constraints should be placed upon
the bank in connection with those operations:
(1) The proportion of the foreign bank's total assets and
total liabilities that are located or booked in its home
country, as well as the distribution and location of its
assets and liabilities that are located or booked elsewhere;
(2) The extent to which the operations and assets of the
foreign bank and any affiliates are subject to supervision
by its home country supervisor;
336
Federal Reserve Bulletin • April 1996
(3) Whether the appropriate authorities in the home
country of such foreign bank are actively working to
establish arrangements for the comprehensive, consolidated supervision of such bank and whether demonstrable progress is being made;
(4) Whether the foreign bank has effective and reliable
systems of internal controls and management information and reporting, which enable its management properly to oversee its worldwide operations;
(5) Whether the foreign bank's home country supervisor
has any objection to the bank continuing to operate in
the United States;
(6) Whether the foreign bank's home country supervisor
and the home country supervisor of any parent of the
foreign bank share material information regarding the
operations of the foreign bank with other supervisory
authorities;
(7) The relationship of the U.S. operations to the other
operations of the foreign bank, including whether the
foreign bank maintains funds in its U.S. offices that are
in excess of amounts due to its U.S. offices from the
foreign bank's non-U.S. offices;
(8) The soundness of the foreign bank's overall financial
condition;
(9) The managerial resources of the foreign bank, including the competence, experience, and integrity of the
officers and directors and the integrity of its principal
shareholders;
(10) The scope and frequency of external audits of the
foreign bank;
(11) The operating record of the foreign bank generally
and its role in the banking system in its home country;
(12) The foreign bank's record of compliance with relevant laws, as well as the adequacy of its money laundering controls and procedures, in respect of its worldwide
operations;
(13) The operating record of the U.S. offices of the
foreign bank;
(14) The views and recommendations of the Office of
the Comptroller of the Currency or the state banking
regulators in those states in which the foreign bank has
operations, as appropriate;
(15) Whether the foreign bank, if requested, has provided the Board with adequate assurances that such
information will be made available on the operations or
activities of the foreign bank and any of its affiliates as
the Board deems necessary to determine and enforce
compliance with the International Banking Act, the Bank
Holding Company Act, and other applicable federal
banking statutes; and
(16) Any other information relevant to the safety and
soundness of the U.S. operations of the foreign bank.
(c) Restrictions on U.S. operations.
(1) Terms of agreement. Any foreign bank that the Board
determines is not subject to comprehensive supervision
or regulation on a consolidated basis by its home country supervisor may be required to enter into an agreement to conduct its U.S. operations subject to such
restrictions as the Board, having considered the criteria
set forth in paragraph (b) of this section, determines to
be appropriate in order to assure the safety and soundness of its U.S. operations.
(2) Failure to enter into or comply with agreement. A
foreign bank that is required by the Board to enter into
an agreement pursuant to paragraph (c)( 1) of this section
and either fails to do so or fails to comply with the terms
of such agreement may be subject to enforcement action
in order to assure safe and sound banking operations
under 12 U.S.C. 1818, or to termination or a recommendation for termination of its U.S. operations under section 211.25(a) and (e) of this subpart and section (7)(e)
of the IBA (12 U.S.C. 3105(e)).
ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT
Orders Issued Under Section 3 of the Bank Holding
Company Act
Mille Lacs Bancorporation, Inc.
Onamia, Minnesota
Order Approving
Company
the Formation
of a Bank
Holding
Mille Lacs Bancorporation, Inc. ("Applicant"), has applied
under section 3(a)(1) of the Bank Holding Company Act
(12 U.S.C. § 1842(a)(1) et seq.) ( " B H C A c t " ) to become a
bank holding company by acquiring all the voting shares of
Mille Lacs Bancshares, Inc. ("Bancshares"), and thereby
indirectly acquire First State Bank of Onamia ( " B a n k " ) ,
all of Onamia, Minnesota. 1
Notice of the application, affording interested persons an
opportunity to submit comments, has been published (60
Federal Register 46,596 (1995)). 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.
Applicant is a nonoperating corporation formed for the
purpose of acquiring Bancshares. Based on all the facts of
record, the Board believes that consummation of the proposal would not result in any significantly adverse effects
on competition or the concentration of banking resources
in any relevant banking market. Accordingly, the Board
concludes that competitive considerations are consistent
with approval.
As part of this proposal, the Mille Lacs Band of Ojibwe
Indians ("the Band"), a federally recognized Native American tribe with approximately 2,800 enrolled members,
1. Immediately after consummation, Applicant would merge Bancshares out of existence. Bank has received preliminary approval from
the Oifice of the Comptroller of the Currency to convert from a bank
chartered under the laws of Minnesota to a national banking association, subject to and contingent on the successful completion of Applicant's acquisition of Bancshares.
Legal Developments
would acquire directly up to 100 percent of the shares of
Applicant. The Band's ownership of more than 25 percent
of the voting shares of Applicant raises the issue of whether
the Band would be considered a "company" within the
meaning of the BHC Act and, therefore, a bank holding
company.
Section 2(b) of the BHC Act defines "company" as
"any corporation, partnership, business trust, association,
or similar organization . . . , but shall not include any
corporation the majority of the shares of which are owned
by the United States or by any state." 2 The list of types of
entities that are within the definition of "company" does
not include a reference to any type of sovereign government, indicating that Congress did not intend the definition
to include sovereign governments. While the definition
specifically excludes a company the majority of which is
owned by the United States or by any state, it does not
specifically exclude the sovereign government owner of a
company. This suggests that Congress believed that an
exclusion for sovereign governments was not necessary
because sovereign governments were not included within
the definition.
On this basis, the Board has determined that foreign
governments are not companies for purposes of the BHC
Act. 3 Native American tribes are unique, domestic sovereign entities that possess extensive self-government powers and have many of the attributes of a sovereign government. 4 The Supreme Court has characterized Native
American tribes as "domestic, dependent nations" 5 and,
thus, "much more than private, voluntary organizations." 6
The Band is a federally recognized Native American
tribal government organized under the Indian Reorganization Act of 1934,7 which is governed by both a constitution
and by-laws adopted by the Band's Legislative Branch. For
these reasons, the Board concludes that the Band should be
considered a sovereign government, and, therefore, excluded from the BHC Act's definition of "company." 8 In
this case, the Band would hold Applicant's shares commu-
2. 12 U.S.C. § 1841(b).
3. Although the Board has approved applications in which foreign
government ownership of an applicant was noted, it has not applied
the BHC Act to a foreign government that controls a bank or bank
holding company. See Letter dated August 19, 1988, from William W.
Wiles, Secretary of the Board, to Patricia S. Skigen; see also Corporation Bancaria de Espaha, 81 Federal Reserve Bulletin 598 (1995);
Societe Generate, 67 Federal Reserve Bulletin 453 (1981).
4. Native American tribes and the Federal government share a
unique relationship—while tribes retain certain attributes of sovereignty, "all aspects of Indian sovereignty are subject to defeasance by
Congress." National Farmers Union Ins. Co. v. Crow Tribe of Indians,
471 U.S. 845, 851 n.16 (1985) (quoting Escondido Mutual Water Co.
v. LaJolla Bands of Mission Indians, 466 U.S. 765, 788 n.30 (1984));
see United States v. Wheeler, 435 U.S. 313, 323 (1977).
5. Cherokee Nation v.Georgia, 30 U.S. (5 Pet.) 1 (1831)
6. United States v. Mazurie, 419 U.S. 544, 557 (1975).
7. Act of June 18, 1934, ch. 576, § 16, 48 Stat. 987 (codified at
25 U.S.C. §461-178).
8. On the other hand, if a company or similar organization that was
controlled by a Native American tribe owned a U.S. bank, that
organization would be, as in the case of a company controlled by a
foreign government, a "company" under the BHC Act. See Letter
337
nally for the benefit of the Band's members. 9 Based on
these and all the facts of record, the Board concludes that
the Band would not become a bank holding company on
consummation of its proposal to acquire more than
25 percent of the voting shares of Applicant.
The Band would own and control Bank through Applicant, a registered bank holding company. The Band, its
affiliates, Applicant, and Bank have made a number of
commitments to ensure that the activities of Applicant and
Bank would be consistent with the purposes of the BHC
Act and other federal banking laws. The commitments
separate the Bank's lending activities from certain commercial activities of the Band, recognize that the Band and
its affiliates are subject to limitations imposed by sections
23A and 23B of the Federal Reserve Act and the Board's
Regulation O (Loans to Insiders), and provide the Board
with adequate assurances that the Band and its affiliates
will make available the information on their operations and
activities that is necessary for the Board to determine and
enforce compliance with applicable federal banking laws.
The Band also has recognized the jurisdiction of the Board
to enforce compliance with the banking laws and agreed to
the jurisdiction of the federal courts for purposes of enforcement of the banking laws. The Band also has made
several commitments to assure the Board of the safe and
sound operation of Bank and Applicant. In light of these
commitments, and based on all facts of record, the Board
concludes that the future prospects of Bank and Applicant,
and all other supervisory factors the Board must consider
under section 3 of the BHC Act, are consistent with approval.
Financial and managerial considerations are also consistent with approval, as are considerations relating to the
convenience and needs of the community to be served and
other supervisory factors the Board is required to consider
under section 3 of the BHC Act also are consistent with
approval.
Based on the foregoing and all the facts of record, the
Board has determined that this application should be, and
hereby is, approved. The Board's approval is specifically
conditioned on compliance by Applicant with all the commitments made in connection with this application, including those made by the Band and its affiliates. For purposes
of this action, 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.
dated August 19, 1988, from William W. Wiles, Secretary of the
Board, to Patricia S. Skigen.
9. The stock of Applicant will be owned directly by the Band, and
the Band's Executive Branch would be authorized to vote the shares
under the Band's constitution and by-laws. Although the Executive
Branch's members share certain attributes with trustees, in light of the
unique form and structure of the Band's proposed stock holdings, the
recognized sovereignty of the Band, and other facts of record, the
Board believes that no regulatory purpose would be served by requiring a notice under the Change in Bank Control for changes in the
Executive Branch's membership.
338
Federal Reserve Bulletin • April 1996
This transaction shall not be consummated before the
fifteenth 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 Federal Reserve Bank of Minneapolis, acting pursuant
to delegated authority.
By order of the Board of Governors, effective February 28, 1996.
Voting for this action: Chairman Greenspan and Governors Lindsey, Phillips and Yellen. Absent and not voting: Governor Kelley.
WILLIAM W. WILES
Secretary of the Board
North Fork Bancorporation, Inc.
Mattituck, New York
Order Approving the Acquisition
of a Bank
North Fork Bancorporation, Inc., Mattituck, New York
("North Fork"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has
applied under section 3 of the BHC Act (12 U.S.C. § 1842)
to acquire indirectly all the voting securities of Extebank,
Stony Brook, New York.1
Notice of the applications, affording interested persons
an opportunity to submit comments, has been published
(60 Federal Register 52,185 and 56,151 (1995)). 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 the BHC Act.
North Fork, with total consolidated assets of approximately $2.9 billion, is the 15th largest commercial banking
organization in New York State, controlling approximately
$2.4 billion in deposits, representing approximately 1 percent of total deposits in commercial banking organizations
in the state. 2 After the transfer of the assets and liabilities
related to its international and fiduciary businesses, Extebank would be the 43d largest commercial banking organization in New York State, with approximately $442 million
in total assets, and would control approximately
$392 million in deposits, representing less than 1 percent
of total deposits of commercial banking organizations in
the state. Upon consummation of the proposal, North Fork
would become the 13th largest commercial banking organization in New York State, and would control approximately
1. Extebank is a wholly owned subsidiary of Banco Exterior de
Espana, S.A., Madrid, Spain ("Banco Exterior"). Extebank proposes
to transfer all deposits and assets associated with its fiduciary and
international banking businesses to Banco Exterior before consummation of this proposal. Immediately after acquiring all of the Extebank
shares, North Fork would merge Extebank with and into North Fork
Bank, Mattituck, New York ("NFB"), a wholly owned subsidiary of
North Fork. NFB, a state nonmember bank, has received approval
from the Federal Deposit Insurance Corporation ("FDIC") and the
New York State Banking Board to effect this merger.
2. Asset and state deposit data are as of June 30, 1995. Market
deposit data are as of June 30, 1994.
$2.8 billion in deposits, representing approximately 1 percent
of total deposits in the state.
North Fork and Extebank compete directly in the Metropolitan New York-New Jersey banking market. 3 After consummation of this proposal, this banking market would
remain unconcentrated as measured by the Herfindahl-Hirschman Index ("HHI"), 4 and numerous competitors would remain in the market. Based on all the facts of
record, the Board concludes that consummation of this
proposal is not likely to result in significantly adverse
effects on competition in the Metropolitan New York-New
Jersey banking market or any other relevant banking market.
The Board also has reviewed the financial resources of
the companies and banks involved in this proposal and the
effect of the proposed transaction on the future prospects of
these organizations. North Fork and NFB are well capitalized and would remain well capitalized following consummation of this proposal. 5 North Fork would not incur any
additional debt as a result of this transaction. Based on all
the facts of record, including a review of relevant examination reports and other supervisory information, the Board
concludes that financial considerations, including the future prospects of North Fork and NFB, are consistent with
approval. 6 The Board also has carefully reviewed the managerial resources of North Fork and NFB in light of confidential examination reports and other relevant supervisory
3. The Metropolitan New York-New Jersey banking market is
approximated by New York City; Long Island, and Orange, Putnam,
Rockland, Sullivan and Westchester Counties in New York; Bergen,
Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean,
Passaic, Somerset, Sussex, Union, Warren and portions of Mercer
Counties in New Jersey; Pike County in Pennsylvania; and portions of
Fairfield and Litchfield Counties in Connecticut.
4. The HHI for the Metropolitan New York-New Jersey banking
market would remain at 536 points. Under the revised Department of
Justice Merger Guidelines, 40 Federal Register 26,823 (June 29,
1984), a market in which the post-merger HHI is less than 1000 is
considered to be unconcentrated. The Department of Justice has
informed the Board that a bank merger or acquisition 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 Department of Justice
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.
5. The Board received comments from Inner City Press/Community
on the Move ("Protestant") contending that a dividend recently paid
by Extebank to Banco Exterior may have left Extebank undercapitalized. The dividend was reviewed and approved by the FDIC and the
Superintendent of the New York State Banking Department
("NYSBD") before its payment. Extebank did not become undercapitalized after payment of the dividend.
6. Protestant suggests that Extebank has not properly transferred its
fiduciary business to Banco Exterior. Protestant provided no substantiation for this claim and bases the allegation solely on Protestant's
contention that Extebank quickly received the customer approvals
necessary to effect this transfer. The record does not support any
finding of impropriety in the transfer of this business. The Board and
the FDIC have sufficient supervisory authority to address any issues
under the federal banking laws that may be raised if any necessary
customer approvals for this transfer were not obtained.
Legal Developments
information. 7 Based on all the facts of record, the Board
concludes that managerial factors are consistent with approval of this proposal, 8 as are the other supervisory factors
that the Board is required to consider under section 3 of the
BHC Act. 9
Convenience and Needs
Considerations
In acting on an application to acquire a depository institution, 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 encourage financial institutions to help
meet the credit needs of the local communities in which
they operate, consistent with their safe and sound operation. 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- to moderate-income neighborhoods, consistent with the safe and sound operation of such
institution," and to take that record into account in its
evaluation of bank expansion proposals. 10
339
Protestant alleges, on the basis of data filed under the
Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.)
("HMDA"), that NFB has failed to assist in meeting the
housing-related credit needs of low- to moderate-income
communities in the New York State counties of Nassau,
Westchester, and Rockland. In addition, Protestant criticizes NFB's record of marketing and lending to minorities
in New York State and alleges that NFB has failed to lend
to individuals in communities with predominantly minority
populations ("minority communities") in Nassau, Queens,
Manhattan, the Bronx, and Brooklyn. 11 Protestant also
alleges that NFB's lending activities violate the Equal
Credit Opportunity Act (15 U.S.C. § 1691 et seq.) and the
Fair Housing Act (42 U.S.C. § 3601 et seq.) (together, the
"fair lending laws"). 1 2
The Board has carefully reviewed the CRA performance
record of NFB, Protestant's comments and North Fork's
responses, and all other relevant facts of record in light of
the CRA, relevant fair lending laws and related regulatory
materials, the Board's regulations, and the Statement of the
Federal Financial Supervisory Agencies Regarding the
Community Reinvestment Act ("Agency CRA Statement"). 1 3
Evaluation of CRA Performance
A. Examination Record of CRA Performance
7. Protestant contends that North Fork conducted an inadequate due
diligence review of Bayside Federal Savings Bank, Queens, New
York ("Bayside"), before its acquisition of that institution in November 1994. Protestant also contends that North Fork and Extebank have
taken certain improper actions in anticipation of the approval of this
proposal, including the implementation by Extebank of changes in its
employee retirement plans and mailing Extebank depositors information about the proposed transaction. In addition, Protestant asserts that
its allegations relating to the convenience and needs factor and the
recent departure of certain officers of North Fork and Extebank raise
adverse managerial concerns. In reviewing the financial and managerial factors in this case, the Board has considered these comments
carefully in light of all the facts of record, including relevant examination reports and supervisory information.
8. Protestant alleges that North Fork has violated certain passivity
commitments it made to the Board in connection with its acquisition
of voting shares of Suffolk Bancorp ("Suffolk") by publicly expressing an interest in acquiring Suffolk and by subsequently agreeing to
permit Suffolk to repurchase all of its stock from North Fork. See
North Fork Bancorporation, Inc., 81 Federal Reserve Bulletin 734
(1995). The Board has carefully reviewed these allegations in light of
all the facts of record, including a review by the Federal Reserve Bank
of New York of North Fork's compliance with the commitments and
other confidential supervisory information. Based on all the facts of
record, the Board concludes that North Fork's actions have not
constituted the exercise of a controlling influence over Suffolk in
violation of the commitments made by North Fork or the BHC Act.
9. Protestant asserts that the amount of a particular loan transaction
reflected in NFB's 1994 loan application register was unsafe and
unsound based on the borrower's stated income. The loan application
register provides only limited information, which is insufficient to
permit the evaluation of any single loan transaction. In addition, the
transaction referred to by Protestant is isolated in NFB's loan application register of over 1,000 transactions. Based on all the facts of
record, the Board concludes that this single transaction does not reflect
adversely on the financial or managerial resources or safety and
soundness of North Fork or NFB.
10. 12 U.S.C. § 2903.
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
reports of these examinations will be given great weight in
the applications process. 14 NFB received a "satisfactory"
rating from the FDIC, its primary federal supervisor, in its
most recent examination for CRA performance, as of November 28, 1994. 15 Extebank also received a "satisfactory" rating from the FDIC at its most recent CRA performance examination, as of March 13, 1995.
B. HMDA Data and Lending Activities
The Board has carefully considered Protestant's allegations
about NFB's lending in low- to moderate-income communities and to minorities in New York in light of 1993, 1994,
11. These areas include the South Bronx, defined as Community
Districts 1-4, East and Central Harlem in Manhattan, and the Bushwick, Bedford-Stuyvesant, Brownsville, and East New York sections
of Brooklyn.
12. Protestant also submitted a letter from an anonymous party
alleging that certain customers of Extebank are not in favor of the
proposed transaction and that consummation of this proposal would
result in the loss of services currently provided by Extebank, branch
closures and job losses.
13. 54 Federal Register 13,742 (1989).
14. Id. at 13,745.
15. The NYSBD also assigned NFB a "satisfactory" rating in its
most recent assessment of the bank's compliance with the CRA, as of
June 30, 1994, pursuant to section 28-b of New York Banking Law.
340
Federal Reserve Bulletin • April 1996
and preliminary 1995 HMDA data for NFB. 16 The 1994
CRA performance examination by the FDIC concluded, on
the basis of 1993 HMDA data, that NFB had achieved an
overall satisfactory level of performance in meeting the
credit needs of low- to moderate-income communities. The
data for 1993, 1994, and 1995 generally indicate that NFB
is assisting in meeting the housing- related credit needs of
low- to moderate-income communities. For example, 1994
HMDA data indicate that approximately 24 percent of
NFB's loan originations in the five counties currently
within its delineated community were in low- to moderateincome census tracts. 17 This compares favorably to lenders
in the aggregate, which in 1994 originated approximately
8 percent of their HMDA-reportable loans in this fivecounty area in low- to moderate-income census tracts. 18 In
Suffolk, where the majority of NFB's branches are located,
approximately 30 percent of NFB's loan originations in
1994 and 33 percent in 1993 were in low- to moderateincome census tracts. 19 In addition, a comparison of 1993
and 1994 HMDA data for NFB indicates an increase in the
number of applications received from borrowers in low- to
moderate-income census tracts in Nassau, Westchester, and
Queens. 20
Preliminary 1995 HMDA data filed by NFB indicate that
approximately 53 percent of the bank's HMDA-reportable
loan originations in the Bronx were in minority census
tracts, and approximately 24 percent of its HMDAreportable loan originations in Manhattan were in minority
census tracts. 21 In comparison, lenders in the aggregate
originated approximately 52 percent of their loans in the
16. Preliminary 1995 HMDA data filed by North Fork reflects
lending through November 30, 1995.
17. The counties are Suffolk, Nassau, Westchester, Rockland, and
Queens counties in New York State.
18. In 1993, approximately 29 percent of NFB's HMDA-reportable
loan originations in this five-county area were for properties in low- to
moderate-income census tracts. In 1993, lenders in the aggregate
originated approximately 7 percent of their loans in this five-county
area in low- to moderate-income census tracts, based on 1993 HMDA
data.
19. Approximately 21 percent of the census tracts in Suffolk are
low- to moderate-income census tracts, and lenders in the aggregate
originated approximately 16 percent of their loans in Suffolk in lowto moderate-income census tracts in 1994 and 1993.
20. The 1994 FDIC performance examination encouraged the bank
to increase its level of lending in low- to moderate-income areas in
Nassau, Westchester, and Rockland, based on a review of the bank's
1993 HMDA data. As noted above, NFB's 1994 HMDA data indicate
an increase in the number of applications received from low- to
moderate-income census tracts in Nassau and Westchester, and the
percentage of loan applications received by NFB in 1994 from low- to
moderate-income census tracts in Westchester exceeded the percentage received by lenders in the aggregate in this county in 1994.
Rockland County contains only one low- to moderate-income census
tract, and this tract generated less than one-half of 1 percent of
HMDA-reportable applications received by all lenders in Rockland in
1994. NFB has developed programs and entered into commitments
with the NYSBD that are designed to increase the bank's lending in
low- to moderate-income communities in Nassau, Westchester, and
Rockland counties.
21. In this context, "minority census tracts" is defined as census
tracts with a minority population exceeding 75 percent.
Bronx and 5 percent of their loans in Manhattan in minority census tracts, based on 1994 HMDA data. 22
HMDA data for NFB, however, also generally indicate
some disparities in the rate of loan originations, denials,
and applications by racial group and income level. The
Board is concerned when an institution's record indicates
disparities in lending to minority applicants and believes
that all banks are obligated to ensure that their lending
practices are based on criteria that assure not only safe and
sound banking, but also equal access to credit by creditworthy applicants regardless of race. The Board recognizes,
however, that HMDA data alone provide an incomplete
measure of an institution's lending in its community and
have limitations that make the data an inadequate basis,
absent other information, for concluding that an institution
has engaged in illegal discrimination in making lending
decisions.
Because of the limitations of HMDA data, the Board has
carefully reviewed other information, particularly examination reports that provide an on-site evaluation of compliance by the bank with the fair lending laws. FDIC examiners found no evidence of prohibited discriminatory
practices or of any practices intended to discourage applications for the types of credit set forth in the bank's CRA
statement, in NFB's most recent CRA performance examination. During its most recent CRA performance assessment of NFB, the NYSBD also found no evidence of
illegal discrimination or any lending policies or underwriting standards that would tend to be biased against any class
of persons protected by the fair lending laws. FDIC examiners found that NFB solicits credit applications from all
segments of its local community, including low- to
moderate-income neighborhoods, and that NFB had
achieved a reasonable penetration of all segments of its
delineated community, including low- to moderate-income
communities, based on a review of the bank's aggregate
1993 HMDA data.
Since 1993, NFB has initiated a number of loan programs designed to assist in meeting the housing-related
credit needs of low- to moderate-income borrowers. In
1994, the bank began participating in the Federal National
Mortgage Association ("FNMA") Community Homebuyer
program, which provides affordable mortgages to qualifying low- to moderate-income borrowers, and permits loanto-value ratios of up to 97 percent. Also, in 1994, NFB
began its Alternate Financing for Overextension of Revolving Debt ("AFFORD") program. This portfolio mortgage
product is designed specifically for low- to moderateincome borrowers, uses flexible underwriting criteria, and
seeks to provide mortgages to persons who do not meet
FNMA and Federal Home Loan Mortgage Corporation
underwriting guidelines. NFB also developed an
22. Comparisons are to aggregate 1994 data because aggregate data
for 1995 are not yet available. Preliminary 1995 HMDA data for NFB
indicate that approximately 62 percent of NFB's loan originations in
Brooklyn were in minority census tracts. In comparison, lenders in the
aggregate originated approximately 32 percent of their loans in Brooklyn in minority census tracts, based on 1994 HMDA data.
Legal Developments
adjustable-rate mortgage product ("ARM") for first-time
home buyers and low- to moderate-income borrowers that
uses flexible underwriting standards, including higher debtto-income ratios. 23 In the third quarter of 1995, NFB also
received approval to offer below- market-rate mortgage
loans with reduced down payment requirements in conjunction with the State of New York Mortgage Agency. In
1994, NFB originated 12 loans, totalling approximately
$1.2 million, under these affordable mortgage programs. 24
NFB also is a certified Small Business Administration
("SBA") lender, and made four SB A loans for a total of
more than $300,000 in 1994. Moreover, in 1993 and 1994,
NFB provided approximately $750,000 in funding to the
New York Business Development Corporation, which
makes loans to small- and medium-sized businesses in
New York.
NFB has established policies and procedures designed to
ensure that bank personnel do not discriminate in the
lending process on a basis prohibited by the fair lending
laws. All branch employees, for example, including employees hired through the acquisition of other banking
organizations, are required to participate in a video-based
fair lending seminar. Bank tellers also receive instructions
on the requirements of the CRA, HMDA, and fair lending
laws during this introductory training program. In 1994,
NFB began conducting annual fair lending seminars for
key branch employees. Attendance at annual seminars is
mandatory for branch managers, assistant branch managers, and client service representatives, and approximately
356 employees attended the seminars conducted in 1995.
In 1995, the bank's lending division conducted fair lending
sessions for all lending personnel involved with the bank's
consumer, commercial, and residential lending programs.
Self-testing materials are distributed to employees during
each training program. NFB's compliance officer also conducts annual fair lending compliance audits of the bank's
lending departments, and the results of the reviews are
given to the bank's management and board of directors. 25
23. Application fees on this ARM may be waived if the loan is
generated at an NFB-sponsored home buyer seminar.
24. During the first ten months of 1995, NFB originated an additional nine loans, totalling over $1 million, under these programs.
25. Protestant contends that the multi-family lending program of
Bayside Federal Savings Bank ("Bayside"), prior to North Fork's
acquisition of Bayside, illegally "redlined" predominantly minority
areas in New York, and that North Fork continued these practices after
acquiring Bayside. Protestant alleges that a current shareholder of
North Fork ("Shareholder") participated in the discriminatory lending
practices of Bayside and other financial institutions, and that Shareholder and his affiliates are involved in the multi-family lending
activities of North Fork. North Fork has denied these allegations.
Preliminary 1995 HMDA data filed by North Fork indicate that a
substantial percentage of NFB's multi-family loan originations in the
Bronx (56 percent), Brooklyn (62 percent), and Manhattan (28 percent) were for properties in census tracts with a minority population
exceeding 75 percent. North Fork also states that Shareholder, who
controls approximately 2.6 percent of North Fork's outstanding shares,
holds no position with North Fork or NFB and does not control the
multi-family lending activities of North Fork or NFB.
341
NFB has entered into a commitment with the NYSBD to
originate $20 million in loans in low- to moderate-income
census tracts in Nassau, Westchester, and Rockland counties between 1996 and 1998. 26 Pursuant to this commitment, NFB will implement a program designed to increase
the bank's lending to low- to moderate-income and minority residents of these counties. NFB has committed, for
example, that it will launch an advertising campaign in
these counties, hire two additional loan originators for the
counties, and provide commission incentives to originators
of loans to low- to moderate-income and minority individuals. In addition, the bank will conduct two first-time home
buyer seminars in each county during each year of the
program. The bank's progress in implementing this program will be monitored by a committee consisting of the
bank's senior management, including its president and
chief executive officer, and the bank will submit periodic
progress reports to the NYSBD.
C. Other Aspects of CRA Performance
NFB ascertains the credit needs of its delineated community primarily through a call program that maintains ongoing contact with business owners and civic, community,
and religious leaders. During the first six months of 1994,
NFB contacted 23 community organizations and more than
100 charitable organizations. 27 Examiners noted that NFB
maintained regular contact with the Community Preservation Corporation ("CPC"), the Mount Vernon Economic
Council, the Long Island Mid-Suffolk Business Association, and the Chamber of Commerce in the bank's delineated communities. In addition, examiners noted that NFB
maintained frequent contacts with the Board of Realtors of
Long Island to determine the housing-related credit needs
of the bank's Long Island communities.
Examiners also concluded that NFB's marketing program was designed to inform all segments of its delineated
community of the bank's credit products, and that the bank
solicited credit applications from all segments of its local
community, including low- to moderate-income neighborhoods. For example, NFB advertised its credit products in
local newspapers, including free publications, and sponsored first-time home buyer seminars to inform community
members of the affordable housing products offered by the
bank. 28
NYSBD examiners noted that the bank had a total of
$57.5 million in commitments outstanding to small businesses, non-profit organizations that benefit low- to
moderate-income individuals, minorities, and other disad-
26. Specifically, NFB has committed to lend at least $9.7 million,
$9.2 million, and $1.1 million in low- to moderate-income census
tracts in Nassau, Westchester, and Rockland counties, respectively,
during the three-year period ending December 31, 1998.
27. In 1993, NFB contacted more than 190 religious and charitable
groups, and 37 local community groups.
28. NYSBD examiners noted that the bank held two first-time home
buyer seminars in the first quarter of 1994, and an additional four
seminars were scheduled for the remainder of 1994.
342
Federal Reserve Bulletin • April 1996
vantaged communities, as of May 31, 1994. NFB participated in a variety of community development activities,
either through loans to community development organizations or through direct loans to nonprofit or community
service organizations. For example, in 1994, NFB committed $816,000 to the revolving loan and permanent financing lending facilities of the CPC, which provides construction and permanent loans for the rehabilitation of low- to
moderate-income housing and funding for the purchase
and rehabilitation of foreclosed properties. 29 Furthermore,
NFB provided $146,000 in permanent funding to the
Greenport Affordable Housing Project in 1994 for the
construction of two residential properties. In 1994, NFB
also provided a $157,000 commercial mortgage and a
$32,000 unsecured term note to the Selden-Centereach
Community Coalition, a nonprofit foster care residence, 30
and a $600,000 revolving line of credit to A Planned
Program for Life Enrichment, Inc., a nonprofit social service provider.
D. Community Delineation
Protestant alleges that NFB improperly excludes the Bronx,
Brooklyn, Manhattan, and portions of Queens from its
delineated local community for purposes of the CRA. 31
NFB currently operates branches in Suffolk, Nassau,
Westchester, Rockland, and Queens counties, and the
bank's delineation consists of those counties. NFB selected
those counties for its delineated community using a methodology permitted by applicable regulations. 32 The bank's
delineation was reviewed by the New York State Banking
29. In 1995, NFB committed approximately $1 million for CPC's
financing activities.
30. The term note was used by the Coalition for partial funding of
its purchase of a safe house for abused and abandoned children.
31. Protestant also asserts that North Fork should be required to
submit its branch closing plans. The Board also received comments
from the East Yaphank Civic Association, Yaphank, New York,
contending that its community would be adversely affected if Extebank's Yaphank branch were closed. North Fork has indicated that it
does not plan to close any branch in a low- to moderate-income census
tract in connection with this proposal, and that no decision has been
made regarding the Yaphank branch. The Board notes that branch
closing decisions would be made under NFB's branch closure policy,
which requires that the bank solicit the views of community leaders
and customers to determine if reasonable alternatives exist to any
proposed branch closure. NFB's branch closure policy also requires
that the bank provide customers, the NYSBD, and the FDIC at least
90 days prior notice of any proposed branch closure.
32. NFB has 28 branches in Suffolk, seven branches in Nassau,
seven branches in Queens, four branches in Westchester, and three
branches in Rockland. A bank may delineate its local community by
using any one of the following methods:
(1) The existing boundaries, such as those of standard metropolitan
statistical areas or counties in which the bank's office or offices are
located, and adjacent areas if appropriate;
(2) The local areas around each office or group of offices where it
makes a substantial portion of its loans and all other areas equidistant from its offices; and
(3) Any other reasonable delineation that meets the purpose of the
CRA and does not exclude low- and moderate-income neighborhoods. See, e.g., 12 C.F.R. 228.3(b).
Board in connection with this proposal and found not to
arbitrarily exclude low- to moderate-income communities. 33 Furthermore, NFB's most recent performance assessment by the NYSBD and performance examination by
the FDIC concluded that the bank's community delineation
was reasonable and did not arbitrarily exclude low- to
moderate-income neighborhoods. After this performance
examination and assessment, NFB acquired branches in
Queens County through its acquisition of Bayside in November 1994, and NFB subsequently adjusted its local
delineation to include all of Queens County. 34
The reasonableness of an institution's delineated local
community depends on a number of factors, including a
careful review of the areas surrounding the locations of an
institution's main office, branches and deposit-taking automated teller machines. The review of an institution's delineated community also requires consideration of whether
the institution has arbitrarily excluded low- and moderateincome areas, taking into account the institution's size and
financial condition. The Board believes that an assessment
of an institution's delineated community can be most effectively considered in an on-site examination by the institution's primary federal supervisor. The Board also believes
that an on-site examination provides a better opportunity to
consider whether an institution's delineated community
reflects illegal discrimination in light of all the institution's
lending activities.
NFB has followed applicable regulations in establishing
its community delineation. NFB's primary supervisors
have reviewed this delineation during the bank's most
recent CRA examinations and since the completion of the
examinations and found the bank's delineation to be reasonable. In light of NFB's recent acquisitions, the Board
expects NFB to review its delineated community under
applicable regulations with its primary federal supervisor
at its upcoming CRA examination. The Board notes that
NFB has recognized in the past that an acquisition may
require NFB to expand its delineated community beyond
that of the acquired institution. As noted above, NFB
recently expanded its local community to include all of
Queens County as a result of the Bayside acquisition, and
the bank has indicated that it would reassess Extebank's
33. Protestant alleges that North Fork has violated fair lending laws
by expanding its branch presence outside Suffolk County in a manner
that avoids minority and low- to moderate-income communities, particularly the Bronx. North Fork acquired its branches in Westchester,
Rockland, and Queens through the acquisition of other banking organizations. FDIC and NYSBD examiners found no evidence of prohibited discrimination by NFB in its delineation, branch locations or
other activities. As discussed above, NFB has adopted policies designed to prevent lending discrimination on a basis prohibited by the
fair lending laws.
34. The Board notes that, prior to North Fork's acquisition of
Bayside, the Office of Thrift Supervision had concluded, at the most
recent CRA evaluation of Bayside, as of November 1993, that Bayside's delineated community, which included all of New York City
(including the Bronx, Manhattan, and Brooklyn), and Nassau, Suffolk,
and Westchester counties, was unreasonably large. Bayside accordingly reduced the size of its delineation to include only portions of
Queens County.
Legal Developments
delineated local community in Manhattan after operating
Extebank's Manhattan branch for a period of time. 35 NFB
also has made a commitment to file with the NYSBD a
comprehensive CRA plan that will include a study of its
delineated community. 36
Conclusion Regarding Convenience
Considerations
and Needs
The Board has carefully considered all the facts of record,
including Protestant's comments, in reviewing the convenience and needs factor under the BHC Act. Based on a
review of North Fork's entire record of performance, including information submitted by North Fork and Protestant, the Board concludes that North Fork's record of
performance in helping to meet the credit needs of its
community, including low- and moderate-income neighborhoods, is consistent with approval of these applications.
The Board expects North Fork to continue to strengthen its
CRA performance and will monitor North Fork's progress
in considering future applications by North Fork to acquire
deposit-taking facilities. 37 To permit the Board to monitor
North Fork's progress, North Fork must file with the Federal Reserve Bank of New York ("Reserve Bank") the
CRA plan and other information filed by NFB with the
NYSBD for a period of two years from the date of this
order. In addition, North Fork must file quarterly reports
with the Reserve Bank on its lending in minority communities within the five counties currently in its delineated
community for two years from the date of this order.
Based on the foregoing and all the facts of record, the
Board has determined that these applications should be,
35. North Fork has indicated that it will modify its delineated
community to reflect its proposed acquisition of Extebank by adopting
Extebank's current delineated area in Manhattan. FDIC examiners
found Extebank's delineation of this area to be reasonable at Extebank's most recent CRA performance examination, as of March 1995.
36. A preliminary plan must be submitted to the NYSBD by
March 31, 1996.
37. Protestant contends that the Board should delay consideration of
this proposal and consider it in conjunction with NFB's proposed
purchase of ten branches from First Nationwide Bank, FSB, Dallas,
Texas ("First Nationwide"). Protestant also suggests that the Board
delay consideration of this proposal until Protestant's suit against the
NYSBD stemming from its approval of this proposal is resolved and
the Board obtains additional information from North Fork, including
information about North Fork's multi-family lending activities and its
relationship with Shareholder or his affiliates. Because the First Nationwide branches would be acquired directly by NFB, a state nonmember bank, no application to the Federal Reserve System is required for that proposal. That proposal is subject to approval by the
FDIC, which is the primary federal supervisor of NFB. The Board
notes that Protestant has filed extensive comments on this branch
acquisition with the FDIC. The Board is required under applicable law
and its processing procedures to act on applications submitted under
the BHC Act within specified time periods. As discussed above, the
Board has carefully reviewed the record of this case, including Protestant's comments relating to North Fork's multi-family lending activities. Based on all the facts of record, the Board concludes that the
record is sufficient to act on this proposal at this time, and that delay or
denial of this proposal on the grounds of informational insufficiency is
not warranted.
343
and hereby are, approved. 38 The Board's approval is specifically conditioned on compliance by North Fork and NFB
with the commitments made in connection with these applications, as well as the conditions discussed in this order.
For purposes of this action, the commitments and conditions relied on in reaching this decision are deemed to be
conditions imposed in writing by the Board and, as such,
may be enforced in proceedings under applicable law.
These transactions shall not be consummated before the
fifteenth 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 Reserve Bank, acting pursuant to delegated authority.
By order of the Board of Governors, effective February 26, 1996.
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
UJB Financial Corp.
Princeton, New Jersey
United Jersey Bank
Hackensack, New Jersey
Order Approving the Acquisition and Merger of a Bank
UJB Financial Corp., Princeton, New Jersey ("UJB Financial") a bank holding company within the meaning of the
Bank Holding Company Act ("BHC Act"), has applied
under section 3 of the BHC Act (12 U.S.C. § 1842) to
acquire Flemington National Bank and Trust Company,
Flemington, New Jersey ("Flemington"). UJB Financial's
lead bank subsidiary, United Jersey Bank, Hackensack,
New Jersey ("UJB Bank"), a state member bank, also has
applied pursuant to section 18(c) of the Federal Deposit
Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger
38. Protestant has requested that the Board hold a public hearing or
meeting on these applications. 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 of Procedure, 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). Protestant has had an opportunity to present written submissions, and has submitted substantial written comments that have
been considered by the Board. Protestant's request fails to demonstrate why its written submissions do not adequately present its
allegations or why a public hearing or meeting is otherwise warranted
in this case. Based on all the facts of record, the Board has determined
that a public hearing or meeting is not necessary to clarify the factual
record in these applications, and is not warranted in this case. Accordingly, Protestant's request for a public hearing or meeting is denied.
344
Federal Reserve Bulletin • April 1996
Act"), and section 9 of the Federal Reserve Act (12 U.S.C.
§ 321) to merge with Flemington and to establish branches
at the locations set forth in the Appendix.
Notice of the applications, affording interested persons
an opportunity to submit comments, has been published
(60 Federal Register 58,361 (1995)). 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, and
the Federal Deposit Insurance Corporation ("FDIC"). The
time for filing comments has expired, and the Board has
considered this proposal and all comments received in light
of the factors set forth in the BHC Act, the Bank Merger
Act and section 9 of the Federal Reserve Act.
UJB Financial, with total consolidated assets of
$21.2 billion, controls subsidiary banks in New Jersey and
Pennsylvania. 1 UJB Financial is the second largest commercial banking organization in New Jersey, controlling
$15.1 billion in deposits, representing 11.9 percent of total
deposits in insured depository institutions in the state. 2
Flemington is the 67th largest insured depository institution in New Jersey, controlling $253.2 million in deposits,
representing less than 1 percent of total deposits in insured
depository institutions in the state. Upon consummation of
this proposal, UJB Financial would remain the second
largest commercial banking organization in New Jersey,
controlling deposits of approximately $15.4 billion, representing approximately 12.1 percent of total deposits in
insured depository institutions in the state.
UJB Financial and Flemington compete in the New
York-New Jersey Metropolitan banking market, 3 where
UJB Financial is the sixth largest commercial banking
organization, controlling $13.4 billion in deposits, representing 3.9 percent of the total deposits in insured depository institutions in the market ("market deposits"). 4 Flem-
1. Asset data are as of September 30, 1995. All data have been
updated to reflect the Board's approval of UJB Financial's application
to acquire Summit Bancorporation, Summit, New Jersey. UJB Financial Corp., 82 Federal Reserve Bulletin 345 (1996) ("Summit Order").
2. State deposit data are as of June 30, 1995. In this context, insured
depository institutions include commercial banks, savings banks, and
savings associations.
3. The New York-New Jersey Metropolitan banking market includes Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth,
Morris, Ocean, Passaic, Somerset, Sussex, Union, and Warren Counties, and seven municipalities in Mercer County, all in New Jersey;
Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens,
Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester
Counties in New York; Pike County, Pennsylvania; and 22 municipalities in Fairfield and Litchfield Counties in Connecticut.
4. Market deposit data are as of June 30, 1994. 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 Financial Group, 75
Federal Reserve Bulletin 386 (1989); National City Corporation, 70
Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly
included thrift deposits in the calculation of market concentration on a
50-percent weighted basis. See e.g., First Hawaiian, Inc., 77 Federal
Reserve Bulletin 51 (1991).
ington is the 111th largest insured depository institution in
the market, controlling $241.7 million in deposits, representing less than 1 percent of market deposits. Upon consummation of these proposals, UJB Financial would remain the sixth largest commercial banking organization in
the market, controlling approximately $13.6 billion, representing approximately 4.6 percent of market deposits. The
Herfindahl-Hirschman Index ("HHI") would increase by
less than 1 point to 783. 5 Based on all the facts of record,
the Board concludes that consummation of this proposal
would not have a significantly adverse effect on competition or the concentration of banking resources in any
relevant market.
The financial and managerial resources and future prospects of UJB Financial and Flemington, and their respective subsidiaries are consistent with approval of this proposal, as are the other supervisory factors the Board must
consider under the BHC Act, Bank Merger Act, and the
Federal Reserve Act. Considerations relating to the convenience and needs of the communities to be served are also
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. 6 The Board's approval is specifically
conditioned on compliance with all the commitments made
by UJB Financial in connection with this application. For
purposes of this action, the commitments and conditions
relied on in reaching this decision shall be deemed to be
conditions imposed in writing by the Board and, as such,
may be enforced in proceedings under applicable law.
The transactions shall not be consummated before the
fifteenth 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 Federal Reserve Bank of New York, acting pursuant to
delegated authority.
5. 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 is considered unconcentrated. 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 anti-competitive 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 threshold for an increase in the HHI when screening bank
mergers and acquisitions for anticompetitive effects implicitly recognizes the competitive effect of limit-purpose lenders and other nondepository financial entities.
6. The Board received comments from an individual ("Protestant")
requesting that this proposal be denied or delayed until the Board can
conduct an investigation and hold a hearing or public meeting on the
issues raised in her comments. These comments were carefully considered by the Board in connection with the proposal by UJB Financial to
acquire Summit. Based on all the facts of record, and for the reasons
explained in the Summit Order, which are incorporated herein by
reference, Protestant's requests relating to this proposal are denied.
Legal Developments
By order of the Board of Governors, effective February 5, 1996.
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
Appendix
Main Office, 56 Main Street, Flemington, New Jersey
Circle Office, 224 South Main Street, Flemington, New
Jersey
Clinton Point Office, 189 Center Street, Clinton Township,
New Jersey
Ringoes Office, Highway 179 and Boss Road, East Amwell
Township, New Jersey
Sergeantsville Office, 775 Rte 523, Delaware Township,
New Jersey
Shop Rite Office, Commerce St., Rte 202 & 31, Raritan
Township, New Jersey
Three Bridges Office, 698 Broad Street, Three Bridge, New
Jersey
Lambertville Office, 333 North Main St., Suite 1, Larnbertville, New Jersey
UJB Financial Corp.
Princeton, New Jersey
United Jersey Bank
Hackensack, New Jersey
Order Approving the Merger of Bank Holding
Companies, the Merger of Banks, and Establishment
Branches
of
UJB Financial Corp., Princeton, New Jersey ("UJB Financial"), a bank holding company within the meaning of the
Bank Holding Company Act ("BHC Act"), has applied
under section 3 of the BHC Act (12 U.S.C. § 1842) to
merge with Summit Bancorporation ("Summit"), and
thereby indirectly acquire Summit Bank ("Summit
Bank"), both in Chatham, New Jersey.1 UJB Financial's
lead subsidiary bank, United Jersey Bank, Hackensack,
New Jersey ("UJB Bank"), a state member bank, also has
applied pursuant to section 18(c) of the Federal Deposit
Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger
Act"), and section 9 of the Federal Reserve Act (12 U.S.C.
§321) to merge with Summit Bank, and to establish
branches at the locations set forth in the Appendix.
Notice of the applications, affording interested persons
an opportunity to submit comments, has been published
(60 Federal Register 58,627 (1995)). As required by the
1. UJB Financial also has applied to acquire up to 19.9 percent of
the voting shares of Summit through the exercise of an option granted
by Summit in connection with this proposal. Upon consummation of
this proposal, this option would become moot.
345
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, and
the Federal Deposit Insurance Corporation ("FDIC"). The
time for filing comments has expired, and the Board has
considered this proposal and all comments received in light
of the factors set forth in the BHC Act, the Bank Merger
Act and section 9 of the Federal Reserve Act.
UJB Financial, with total consolidated assets of
$15.5 billion, controls subsidiary banks in New Jersey and
Pennsylvania. 2 UJB Financial is the third largest commercial banking organization in New Jersey, controlling
$10.6 billion in deposits, representing 8.4 percent of total
deposits in insured depository institutions in the state. 3
Summit is the seventh largest commercial banking organization in New Jersey, controlling $4.5 billion in deposits,
representing 3.5 percent of total deposits in insured depository institutions in the state. Upon consummation of this
proposal, UJB Financial would become the second largest
commercial banking organization in New Jersey, controlling deposits of $15.1 billion, representing 11.9 percent of
total deposits in insured depository institutions in the state.
UJB Financial and Summit compete in the New YorkNew Jersey Metropolitan banking market. 4 In the New
York-New Jersey Metropolitan market, UJB Financial is
the seventh largest commercial banking organization, controlling $9 billion in deposits, representing 2.6 percent of
the total deposits in insured depository institutions in the
market ("market deposits"). 5 Summit is the 14th largest
commercial banking organization in the market, controlling $4.4 billion in deposits, representing 1.3 percent of
market deposits. On consummation of these proposals,
UJB Financial would become the sixth largest commercial
banking organization in the market, controlling $13.4 billion in deposits, representing 3.9 percent of market deposits, and numerous banking institutions would remain in the
market. The Herfindahl-Hirschman Index ("HHI") would
2. Asset data are as of September 30, 1995.
3. State deposit data are as of June 30, 1995. In this context, insured
depository institutions include commercial banks, savings banks, and
savings associations.
4. The New York-New Jersey Metropolitan banking market includes Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth,
Morris, Ocean, Passaic, Somerset, Sussex, Union, and Warren Counties, and seven municipalities in Mercer County, all in New Jersey;
Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens,
Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester
Counties in New York; Pike County, Pennsylvania; and 22 municipalities in Fairfield and Litchfield Counties in Connecticut.
5. Market deposit data are as of June 30, 1994. 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 Financial Group, 75
Federal Reserve Bulletin 386 (1989); National City Corporation, 70
Federal Reserve Bulletin 743 (1984). Thus, the Board has regularly
included thrift deposits in the calculation of market concentration on a
50-percent weighted basis. See e.g., First Hawaiian, Inc., 11 Federal
Reserve Bulletin 51 (1991).
346
Federal Reserve Bulletin • April 1996
increase by 7 points to 782. 6 Based on all the facts of
record, the Board concludes that consummation of this
proposal would not have a significantly adverse effect on
competition or the concentration of banking resources in
any relevant market.
The financial and managerial resources 7 and future prospects of UJB Financial, Summit, and their respective subsidiaries, and other supervisory factors the Board must
consider under the BHC Act, Bank Merger Act, and the
Federal Reserve Act are consistent with approval of this
proposal. 8 Considerations relating to the convenience and
needs of the communities to be served also are consistent
with approval. 9
6. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (June 29, 1984), a market in which the postmerger HHI is less than 1000 is considered unconcentrated. 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 anti-competitive 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 threshold for an increase in the HHI when screening bank
mergers and acquisitions for anticompetitive effects implicitly recognizes the competitive effect of limit-purpose lenders and other nondepository financial entities.
7. The Board has carefully reviewed comments from an attorney
("Protestant") based on allegations contained in several lawsuits filed
by Protestant against UJB Bank, UJB Financial, and its wholly owned
subsidiary Trico Mortgage Company, Inc. ("Trico"), on behalf of
individual borrowers. These allegations relate to certain activities by a
mortgage broker employed from 1988 to 1989 by First Central Mortgage Services, Inc. ("First Central"), an unaffiliated mortgage originator that sold mortgages to UJB Financial and other financial institutions. UJB Financial and its subsidiaries have denied these allegations
and have said that they had no knowledge of these activities at the
time they occurred. None of the individuals involved in these allegations is currently employed by or associated with UJB Financial or
any of its subsidiaries, and there are no allegations that management
of UJB Financial was involved in these matters. UJB Financial is in
the process of liquidating Trico, and the amount of the mortgage
transactions in dispute represents a small percentage of UJB Financial's total assets. The civil actions initiated by Protestant are in their
preliminary stages and have not to date resulted in any findings of
wrongdoing by UJB Financial or any of its subsidiaries or management. The Board has also considered information contained in relevant reports of examination assessing the managerial resources of
UJB Financial and its subsidiaries. If a court determines, or an
examination finds, that UJB Financial or any of its subsidiaries have
engaged in improper activities, the Board or the primary federal
supervisor of the relevant subsidiary of UJB Financial retains jurisdiction and full supervisory authority to take appropriate action.
8. Protestant maintains that UJB Financial failed to disclose the
existence of pending litigation related to the events at First Central to
the Board in connection with these applications and to examiners from
the Federal Reserve Bank of New York ("Reserve Bank") during a
recent consumer compliance examination. Protestant contends that
these omissions raise supervisory issues relevant to these applications
and to UJB Bank's performance rating under the Community Reinvestment Act ("CRA"). After a review of all the facts of record,
including relevant reports of examination, information made available
to the examiners, and information provided by UJB Financial during
the processing of these applications, the Board concludes that issues
related to this litigation have been fully disclosed to the Board in
connection with the Reserve Bank's examination and this application.
9. Protestant also questions the record of UJB Financial under the
CRA. All of UJB Financial's subsidiary banks were rated "satisfacto-
Based on the foregoing and other facts of record, the
Board has determined that the applications should be, and
hereby are, approved. 10 The Board's approval is specifically conditioned on compliance with all the commitments
made by UJB Financial in connection with this application.
For purposes of this action, the commitments and conditions relied on in reaching this decision shall be deemed to
be conditions imposed in writing by the Board and, as
such, may be enforced in proceedings under applicable
law.
The transactions shall not be consummated before the
fifteenth 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 Federal Reserve Bank of New York, acting pursuant to
delegated authority.
By order of the Board of Governors, effective February 5, 1996.
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
ry" or "outstanding" by their primary federal supervisors, in their
most recent examinations for CRA performance, and examiners found
no evidence of discriminatory or other illegal credit practices. UJB
Bank received a "satisfactory" CRA performance rating as of July
1995, from the Reserve Bank. Summit Bank was also rated "satisfactory" in its most recent examination for CRA performance by its
primary federal supervisor.
10. Protestant requests that the Board delay action on these applications until the Board has conducted an investigation and held a
hearing or a public meeting on the issues raised in her comments.
Section 3(b) of the BHC Act does not require the Board to hold a
public hearing or meeting on an application unless the appropriate
supervisory authority for the bank to be acquired makes a timely
written recommendation of denial of the application. The Board has
not received such a recommendation from any state or federal supervisory authority in this case. Under its Rules of Procedure, 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 is also required under applicable law and its
processing procedures to act on applications submitted under the BHC
Act and the Bank Merger Act within specified time periods.
Protestant has had ample opportunity to submit her views and has,
in fact, submitted materials that have been considered by the Board in
acting on these applications. Protestant's request fails to demonstrate
why her written submissions do not adequately present her allegations. As discussed above, the Board has carefully reviewed the record
in this case, including information provided by the Protestant and UJB
Financial, and contained in relevant reports of examination. Based on
all the facts of record, the Board concludes that the record is sufficient
to act on this proposal at this time, and that delay or denial of this
proposal on the grounds of informational insufficiency or inaccuracy
is not warranted. The Board also concludes that a public meeting or
hearing is not necessary to clarify the factual record in these applications, or otherwise warranted in this case, and, therefore, the request
for a public hearing or meeting on these applications is denied.
Legal Developments
Appendix
401 Hackensack Avenue, Hackensack, New Jersey
80 Main Street, West Orange, New Jersey
343 Millburn Avenue, Millburn, New Jersey
250 Passaic Avenue, Fairfield, New Jersey
161 Maplewood Avenue, Maplewood, New Jersey
161 Eagle Rock Avenue, Roseland, New Jersey
1521 Springfield Avenue, Maplewood, New Jersey
One Newark Center, Newark, New Jersey
1882 Springfield Avenue, Maplewood, New Jersey
301 South Livingston Avenue, Livingston, New Jersey
263 Rte 202-31 South, Flemington, New Jersey
400 Voorhees Corner Road, Flemington, New Jersey
92 Rte 173, Clinton, New Jersey
16 Nassau Street, Princeton, New Jersey
11 State Road, Princeton, New Jersey
5001 Stelton Road, South Plainfield, New Jersey
800 Inman Avenue, Colonia, New Jersey
900 Oak Tree Road, South Plainfield, New Jersey
1876 Highway 27, Edison, New Jersey
378 Amboy Avenue, Woodbridge, New Jersey
46 Parsonage Road, Menlo Park, New Jersey
1050 Raritan Road, Clark, New Jersey
135 Jefferson Avenue, Elizabeth, New Jersey
10 Westfield Avenue, Clark/Rahway, New Jersey
Lincoln Boulevard & Broadway, Clark/Rahway, New Jersey
145 Snyder Avenue, Berkeley Heights, New Jersey
556 Morris Avenue, Ciba/Geigy, New Jersey
100 First Street, Elizabeth, New Jersey
15 South Street, New Providence, New Jersey
Village Shopping Center, New Providence, New Jersey
173 Elm Street, Westfield, New Jersey
865 Mountain Avenue, Mountainside, New Jersey
335 East Front Street, Plainfield, New Jersey
175 Morris Avenue, Springfield, New Jersey
707 New Brunswick Avenue, Pohatcong, New Jersey
Route 57 at Mill Pond, Washington, New Jersey
382 Memorial Parkway, Phillipsburg, New Jersey
711 Lacey Road, Lacey, New Jersey
785 Rte 72, Manahawkin, New Jersey
200 Rte 37 East, Toms River, New Jersey
65 Nautilus Drive, Ocean Acres, New Jersey
2114 Lake wood Road, Pleasant Plains, New Jersey
501 Arnold Avenue, Point Pleasant Beach, New Jersey
1508 Central Avenue, Barnegat Light, New Jersey
385 Adamston Road, Adamston, New Jersey
531 Main Avenue, Bay Head, New Jersey
2205 Grand Central Avenue, Lavallette, New Jersey
Manhattan Street, Jackson, New Jersey
137 Van Zile Road, Channel Plaza, New Jersey
2701 Lake wood Road, Rte 88, Ocean County, New Jersey
60 Stirling Road, Watchung Circle, New Jersey
Somerset Shopping Center, Bridgewater, New Jersey
Washington Valley Road, Martinsville, New Jersey
50 West Main Street, Somerville, New Jersey
19 West High Street, Somerville, New Jersey
347
619 East Main Street, Finderne, New Jersey
15 Mountain View Road, Warren-Chubb, New Jersey
One State Bank Plaza, Manville, New Jersey
Martinsville Road, West Gate/Chubb, New Jersey
3421 Rte 22 East, Branchburg, New Jersey
Lamington Road, Bedminster, New Jersey
367 Springfield Avenue, Summit, New Jersey
DeForest Avenue & Beechwood, Summit, New Jersey
467 Park Avenue, Scotch Plains, New Jersey
26 Morris Turnpike, Short Hills, New Jersey
600 Mountain Avenue, Bell Labs, New Jersey
1322 Sea Girt Avenue, Wall Township, New Jersey
634 Newman Springs Road, Lincroft, New Jersey
First Avenue at Rte 36, Atl. Highlands, New Jersey
611 Main Street, Belmar, New Jersey
99 Broad Avenue, Eatontown, New Jersey
Route 66 at Neptune Blvd, Neptune Twp, Monmouth
County, New Jersey
155 Main Street, Manasquan, New Jersey
517 Prospect Avenue, Little Silver, New Jersey
405 Union Avenue, Brielle, New Jersey
1184 Rte 35, Middletown, New Jersey
Route 9 and Campbell Court, Freehold, New Jersey
30 Columbia Turnpike, Florham Park, New Jersey
1031 Valley Road, Stirling, New Jersey
117 Main Street, Madison, New Jersey
355 Madison Avenue, Morristown, New Jersey
3799 Rte 46, Parsippany, New Jersey
269 Main Street, Chatham, New Jersey
Erie Lackawana RR Station, Chatham, New Jersey
188 South Street, Morristown, New Jersey
10 Park Place, Morristown, New Jersey
38 Broadway, Denville, New Jersey
640 Shunpike Road, Chatham, New Jersey
16 Waverly Place, Madison, New Jersey
1501 Long Beach Blvd, Ship Bottom, New Jersey
1051 Rte 37 West, West Dover, New Jersey
200 Webster Avenue, Seaside Heights, New Jersey
2232 Bridge Avenue, Bridge Avenue, New Jersey
889 Fischer Boulevard, Toms River, New Jersey
401 Bay Avenue, Beach Haven, New Jersey
Rte 35 & Atlantic Ave., Manasquan Borough, Monmouth
County, New Jersey
150 Chambers Bridge Road, Brick Township, Ocean
County, New Jersey
2 Rte 37 West at Rte 9, Dover Township, Ocean County,
New Jersey
2284 West County Line Road, Jackson Township, New
Jersey
206 East Kennedy Boulevard, Lakewood Township, Ocean
County, New Jersey
395 Rte 70, Lakewood Township, Ocean County, New
Jersey
Columbus Blvd & Hamilton Ave., Seaside Hgts, Ocean
County, New Jersey
Rte 37 & Law Road, Dover Township, Ocean County, New
Jersey
111 Lacey Road, Manchester Township, Ocean County,
New Jersey
348
Federal Reserve Bulletin • April 1996
Orders Issued Under Section 4 of the Bank Holding
Company Act
Compagnie Financiere de Paribas
Paris, France
Order Approving Notice to Provide Mobile
Billing Software
Telephone
Compagnie Financiere de Paribas, Paris, France ("Paribas"), a bank holding company within the meaning of the
Bank Holding Company Act ("BHC Act"), has given
notice under section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23(a) of the Board's Regulation Y (12 C.F.R. 225.23(a)) to engage de novo through a
new United States subsidiary ("Company") in providing
certain data processing and transmission services nationwide, under section 225.25(b)(7) of Regulation Y
(12 C.F.R. 225.25(b)(7)). 1
Paribas, through Company, would offer an integrated
software program ("CABS") to operators of digital mobile
telephone networks ("Operator") to perform billing and
account-related services for the Operator's customer accounts. CABS would not be a part of an Operator's network operating and switching system, and it would be
operated on dedicated hardware that is separate from the
hardware and software that runs the network.
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published (60
Federal Register 62,092 (1995)). The time for filing comments has expired, and the Board has considered the notice
and all comments received in light of the factors set forth
in section 4(c)(8) of the BHC Act. 2
Paribas, with $282.5 billion in consolidated assets, is the
fifth largest commercial banking organization in France
and the 29th largest commercial banking organization in
the world, and it engages in a wide range of banking and
nonbanking activities outside the United States. 3 Paribas
operates branches in New York, New York, and Chicago,
Illinois; agencies in Los Angeles, California, and Houston,
Texas; and representative offices in San Francisco, California, and Dallas, Texas. Paribas also engages through its
subsidiaries in the United States in a broad range of nonbanking activities.
Proposed
Activities
CABS calculates an Operator's customer bills based on
data provided by the Operator's network operating system
1. Paribas owns 50.1 percent and France Telecom, the French
national telephone operating company, owns 49.9 percent of Financi
re Sema, a French investment company that owns 41.6 percent of the
voting shares of Sema Group pic, London, England ("Sema Group").
Sema Group developed the software described in this order and
proposes to establish Company as a wholly owned United States
subsidiary to sell the described software in the United States.
2. The Board received one comment from another banking organization supporting this proposal.
3. Asset data are as of June 30, 1995. Ranking data are as of
December 31, 1994.
after customers' calls are completed (such as the date,
time, duration, and destination of the call); additional data
provided by the Operator concerning the terms of customers' service contracts (such as subscription fees, applicable
discounts, and special charges); and individual account
balances. Based on these data, CABS produces the billing
statements that the Operator sends to its customers for
payment by customers directly to the Operator.
CABS also performs general accounting services, such
as making summary entries in the Operator's general ledger reflecting payments and changes in accounts receivable
and payable, and recording payments automatically and
making pre-authorized debits directly from customers'
bank or credit card accounts. CABS also reports past due
and closed accounts to the Operator. In addition, CABS
can submit call data to a network clearing house and
receive such data from a clearing house to ensure proper
billing and account settlements for multi-network telephone calls.
To facilitate these billing functions, CABS stores basic
information (such as name, address, and telephone number) necessary to identify a customer when a new account
is opened. 4 CABS also stores information that identifies the
services to be provided to the customer and the customer's
handset. CABS transmits the latter information, and information about the payment status of each account and
instructions for the issuance of personal identification numbers, to the Operator's caller and equipment verification
files, for use by the Operator to limit access to the telephone network. The caller and equipment verification files
are maintained by the Operator independently of CABS.
As noted previously, CABS is not part of and does not
intervene in the operation of the Operator's network access
or switching system. 5 CABS is operated on dedicated
hardware that is separate from the hardware and software
that runs the mobile telephone network itself.
Closely Related to Banking
Analysis
Section 4(c)(8) of the BHC Act provides that a bank
holding company may, with Board approval, engage in any
activity that the Board determines to be "so closely related
to banking or managing or controlling banks as to be a
proper incident thereto." 6 The Board has determined that
4. Company would play no role in soliciting or contacting new or
prospective customers. These functions would be handled by the
Operator or a third party.
5. Data compiled by CABS for billing purposes may be reported by
CABS to the Operator for use in identifying atypical usage patterns
that indicate fraudulent use. All access determinations, including
those based on usage patterns and customer and equipment identification and account data, are made by the Operator.
6. 12 U.S.C. § 1843(c)(8). See National Courier
Association
Board of Governors of the Federal Reserve System, 516 F.2d 1229,
1237 (D.C. Cir. 1975) ("National Courier"). In addition, the Board
may consider any other basis that may demonstrate that the proposed
activity has a reasonable or close connection or relationship to banking or managing or controlling banks. See Board Statement Regarding
Regulation Y, 49 Federal Register 806 (1984); Securities
Industry
Legal Developments
certain data processing activities are closely related to
banking and, therefore, permissible for bank holding companies under section 4(c)(8) of the BHC Act. Section
225.25(b)(7) of Regulation Y permits bank holding companies to provide data processing and data transmission services, facilities (including software), or data bases, or
access thereto, by any technological means, so long as the
data to be processed or furnished are "financial, banking,
or economic" in nature. 7 Regulation Y also provides that
bank holding companies may engage in incidental activities that are necessary to carry on an activity that is closely
related to banking. 8
In 1971, when data processing services were added to
Regulation Y's list of activities deemed closely related to
banking, the performance of billing services was specifically included in the rule as an example of processing
"banking, financial, or related economic data". 9 The Board
noted at that time that banks historically had performed
certain types of billing services for nonfinancial customers, 10 and commenters had suggested that billing services
(like the other services specifically mentioned) were integrally related to the "basic money transfer function" of
banks. 11
In 1982, the Board amended its data processing regulation to expand the types of services that could be performed by bank holding companies and the types of data
on which data processing could be performed. 12 In particular, the types of permissible data were expanded to include
all "financial, banking or economic" information. 13 This
change permitted bank holding companies to process all
types of economic data and eliminated the requirement that
economic data be "related" to other banking or financial
data.
Association v. Board of Governors of the Federal Reserve System,
468 U.S. 207, 210-211 n.5 (1984).
7. Regulation Y also requires that the services be provided pursuant
to a written agreement and places certain limitations on the facilities
and hardware provided with the data processing services. In particular,
the facilities must be designed, marketed, and operated for the processing and transmission of financial, banking, or economic data;
hardware must be provided only in conjunction with permissible
software; and general purpose hardware must not constitute more than
30 percent of the cost of any packaged offering. See 12 C.F.R.
225.25(b)(7). Paribas has committed that Company will comply with
these requirements and limitations in providing the proposed services.
8. See 12 C.F.R. 225.21(a)(2); National Courier, 516 F.2d at 123941.
9. Approved data processing activities included "storing and processing other banking, financial, or related economic data, such as
performing payroll, accounts receivable or payable, or billing services." 57 Federal Reserve Bulletin 512 (1971).
10. See Memorandum from Legal Division to Board of Governors
(June 7, 1971) at 8.
11. See Supplemental Statement of the American Bankers Association (April 30, 1971), at 6-7; see also BankAmerica Corporation, 66
Federal Reserve Bulletin 511 (1980).
12. See 47 Federal Register 37,368 (August 26, 1982); Memorandum from Legal Division to Board of Governors (August 12, 1982).
13. The language of the 1982 amendment remains in the current
version of Regulation Y. See 12 C.F.R. 225.25(b)(7).
349
In making this change, the Board deleted the reference to
specific examples of permissible data processing functions,
such as performing payroll, accounts receivable, and billing services. The Board stated, however, that it intended
the changes to expand the delineation of permissible data
processing services and types of data that could be processed by bank holding companies. On this basis, the
Board has continued to approve data processing proposals
to provide billing services for nonfinancial customers. 14
The principal function of CABS is to collect data necessary to prepare and transmit bills for Operators. In light of
the foregoing, the Board has determined that the performance of these billing functions—including opening customer accounts, preparing customer account statements,
initiating payments by customers and other networks, recording payments and accounts receivable and payable in
the Operator's general ledger, and reporting past due and
closed accounts—is an activity that is closely related to
banking and constitutes the processing and transmission of
banking, financial, or economic data within the meaning of
Regulation Y and prior Board decisions.
As described above, CABS also would perform certain
limited nonfinancial data processing and transmission services in connection with its billing functions. These services are the transmission of customer identification and
account information to the Operator's verification files; and
the generation or certain reports based on these data that
may be used by the Operator to detect possible fraudulent
use of the network. The data that CABS processes and
transmits to the Operator for access and security purposes
consist of data that CABS stores and uses to perform its
basic billing function.
Paribas has stated that CABS would not perform these
functions apart from its billing services, and that these
functions would be a relatively small part of its operation. 15 In light of the foregoing, the Board has concluded
that the limited role to be played by CABS in an Operator's
access and security functions appears to be incidental to
the primary billing and account functions that would be
provided to the Operator, and therefore permissible under
Regulation Y and prior Board decisions.
Other
Considerations
In order to approve this proposal, the Board also must
determine that the proposed activity is a proper incident to
banking, that is, that the proposal "can reasonably be
expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices." 16 As
14. See, e.g., BNCCORP, INC., 81 Federal Reserve Bulletin 295,
297 (1995).
15. Paribas indicates that it is likely that less than 5 percent of the
data screens generated by CABS would consist of fraud detection and
other network access information.
16. 12 U.S.C. § 1843(c)(8).
350
Federal Reserve Bulletin • April 1996
part of the Board's evaluation of these factors, the Board
considers the financial and managerial resources of the
notificant and its subsidiaries and the effect the transaction
would have on such resources. 17 The record indicates that
Company's de novo entry would enhance competition in
the market for the proposed services. In addition, the
experience of Sema Group in providing the described
services abroad should assist it in making improved billing
and account-related services available to Operators. Moreover, there is no evidence in the record to indicate that this
proposal would lead to any undue concentration of resources, conflicts of interests, unsound banking practices,
or other adverse effects that would outweigh the public
benefits of this proposal. 18 Accordingly, the Board has
determined that the balance of the public interest factors it
is required to consider under the proper incident to banking
standard of section 4(c)(8) of the BHC Act is favorable and
consistent with approval of this notice.
Based on all the facts of record, the Board has determined that the notice should be, and hereby is, approved.
The Board's approval is specifically conditioned on compliance with the commitments made in connection with
this notice and with the conditions referred to in this order.
The Board's determination also is subject to all the conditions set forth in Regulation Y, including those in sections
225.7 and 225.23(g) of Regulation Y, and to the Board's
authority to require such modification or termination of the
activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure 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 conditions and
commitments 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 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, acting pursuant to
delegated authority.
By order of the Board of Governors, effective February 26, 1996.
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
17. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73
Federal Reserve Bulletin 155 (1987). The Board notes that Paribas's
capital ratios satisfy applicable risk-based standards under the Basle
Accord and are considered equivalent to the capital levels that would
be required of a U.S. banking organization.
18. Paribas also has made certain commitments previously relied on
by the Board to address potentially adverse competitive and other
effects that may be presented by joint venture proposals.
Corporation Bancaria de Espana, S.A.
Madrid, Spain
Order Approving a Notice to Engage De Novo in Certain
Securities Brokerage, Investment Advisory, "Riskless
Principal," and Private Placement Activities
Corporation Bancaria de Espana, S.A., Madrid, Spain
("Notificant"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has
requested the Board's approval pursuant to 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 subsidiary, Argentaria International Securities Inc., New York, New York
("Company"), in the following securities-related activities:
(1) Providing financial and investment advisory services
pursuant to section 225.25(b)(4) of Regulation Y
(12 C.F.R. 225.25(b)(4));
(2) Providing full-service brokerage services pursuant to
section 225.25(b)(15) of Regulation Y (12 C.F.R.
225.25(b)(15));
(3) Acting as agent in the private placement of all types
of securities; and
(4) Buying and selling all types of securities on the order
of investors as a "riskless principal."
Notificant proposes to engage in these activities worldwide.
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published (61
Federal Register 1029 (1996)). The time for filing comments has expired, and the Board has considered the notice
and all comments received in light of the factors set forth
in section 4(c)(8) of the BHC Act.
Notificant, with consolidated assets equivalent to approximately $89.5 billion, is the third largest commercial
banking organization in Spain and provides a wide range
of banking, financial, and related services worldwide
through its various subsidiaries and affiliated companies. 1
Through its subsidiary, Banco Exterior de Espana, S.A.,
Madrid, Spain ("Banco Exterior"), Notificant controls
Extebank, Stonybrook, New York, the 40th largest commercial bank in New York. 2 Banco Exterior also maintains
an agency in Miami, Florida, and a branch in New York,
New York.
Company intends to register as a broker-dealer with the
Securities and Exchange Commission ("SEC"), and to
seek admission to the National Association of Securities
Dealers Inc. ("NASD"). Upon registration with the SEC
and admission to the NASD, Company would be subject to
the recordkeeping, reporting, fiduciary standards, and other
requirements of the Securities Exchange Act of 1934
(15 U.S.C. § 78a et seq.), the SEC, and the NASD.
1. Asset data are as of December 31, 1994.
2. Deposit data are as of September 30, 1995.
Legal Developments
The Board previously has determined by regulation that
engaging in financial and investment advisory activities
and securities brokerage activities is closely related to
banking and permissible for bank holding companies under
section 4(c)(8) of the BHC Act. 3 Notificant has committed
that Company will conduct these activities in accordance
with the limitations of sections 225.25(b)(4) and (15) of
Regulation Y.
Private placement involves the placement of new issues
of securities with a limited number of sophisticated purchasers in a nonpublic offering. A financial intermediary in
a private placement transaction acts solely as an agent of
the issuer in soliciting purchasers, and 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 (15 U.S.C. 77a et seq.)
and are offered only to financially sophisticated institutions
and individuals and not to the public. Notificant 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
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 from a customer to buy (or sell) a
security, 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, under the proposal, 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 by order that,
subject to 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 so closely related to banking as to be a proper incident thereto within the meaning of
section 4(c)(8) of the BHC Act. 5 The Board also has
previously determined that acting as agent in the private
placement of securities, and purchasing and selling securities on the order of investors as a "riskless principal," do
not constitute underwriting and dealing in securities for
purposes of section 20 of the Glass-Steagall Act (12 U.S.C.
§ 377), and that revenue derived from such activities is not
subject to the 10-percent revenue limitation on underwrit-
3. See 12 C.F.R. 225.25(b)(4) and (15).
4. See Securities and Exchange Commission Rule 10b-10 (17 C.F.R.
240.1 Ob- 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).
351
ing and dealing in ineligible securities. 6 Notificant has
committed that Company will conduct its private placement and "riskless principal" activities in a manner consistent with the limitations, methods, and procedures established by the Board in prior orders, as modified to reflect
the status of Notificant as a foreign banking organization. 7
In order to approve these notices, the Board also is
required to determine that the performance of the proposed
activities by Notificant can reasonably be expected to produce public benefits that would outweigh possible adverse
effects under the proper incident to banking standard of
section 4(c)(8) of the BHC Act. 8 The public benefits in this
case are expected to include increased competition and
new services for Notificant's customers. 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 proposal on
those resources that are not outweighed by public benefits
in this case. 9 In this case, the Board notes that Notificant
and its subsidiaries meet the relevant risk-based capital
standards established under the Basle Accord, and have
capital equivalent to that which would be required of a
United States banking organization. In view of these and
other facts of record, the Board has determined that financial factors are consistent with approval of this proposal.
The managerial resources of Notificant also are consistent
with approval. Under the framework established in this and
prior decisions, consummation of this proposal is not likely
to result in any significantly adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices.
6. Id.
7. See The 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); Canadian Imperial Bank of Commerce,
et al, 76 Federal Reserve Bulletin 158 (1990). Among the prudential
limitations detailed more fully in these orders are 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 a
"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 Notificant or any of its
affiliates. With regard to private placement activities, Notificant has
committed that Company will not privately place registered investment company securities or securities of investment companies that
are advised by Notificant or any of its affiliates.
8. 12 U.S.C. § 1843(c)(8).
9. 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).
352
Federal Reserve Bulletin • April 1996
Based on the foregoing and other facts of record, and
subject to the commitments made by Notificant, the Board
has determined that the balance of public interest factors it
is required to consider under section 4(c)(8) is favorable.
Accordingly, the Board has determined that this notice
should be, and hereby is, approved, subject to all the terms
and conditions set forth in this order, and in the regulations
and orders noted above. The Board's determination also is
subject to all the terms and conditions set forth in its
Regulation Y, including those in sections 225.7 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 it 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 the commitments made in connection with this notice, including
those discussed in this order and the conditions set forth in
the Board regulations and orders noted above. These commitments and conditions shall be deemed to be conditions
imposed in writing by the Board in connection with its
findings and decisions, and, as such, may be enforced in
proceedings under applicable law.
This transaction shall not be consummated later that
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, acting pursuant to
delegated authority.
By order of the Board of Governors, effective February 12, 1996.
Voting for this action: Chairman Greenspan and Governors Lindsey, Phillips, and Yellen. Absent and not voting: Governor Kelley.
JENNIFER J. JOHNSON
Deputy
Secretary
of the
Board
First U n i o n Corporation
Charlotte, North Carolina
Order Approving Notice to Engage in Data
Activities
Processing
First Union Corporation, Charlotte, North Carolina ("First
Union"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has given
notice under section 4 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) of its proposal to acquire up to
20 percent the voting shares of Internet, Inc., Reston,
Virginia ("Internet"), and thereby continue to engage in
data processing and transmission services pursuant to
12 C.F.R. 225.25(b)(7), and providing bank management
consulting advice to depository institutions pursuant to
12 C.F.R. 225.25(b)(l 1). This application would permit
First Union to retain shares of Internet it acquired through
its national providing bank subsidiaries and transfer those
shares to First Union. 1
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published (61
Federal Register 1758 (1996)). The time for filing comments has expired, and the Board has considered the notice
and all comments received in light of the factors set forth
in section 4(c)(8) of the BHC Act.
First Union, with total consolidated assets of $129 billion, operates banks in Connecticut, Delaware, Florida,
Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia,
and the District of Columbia. 2 First Union engages in a
number of banking and nonbanking activities in these
states and nationwide. 3
Section 4(c)(8) of the BHC Act provides that a bank
holding company may, with Board approval, engage in any
activity that the Board determines to be "so closely related
to banking or managing or controlling banks as to be a
proper incident thereto." 4 The Board previously has determined by regulation that, subject to the limitations established in Regulation Y, certain data processing and management consulting activities are closely related to banking
for purposes of section 4(c)(8) of the BHC Act and, therefore, are permissible for bank holding companies. 5 First
Union has committed that the proposed activities will be
conducted in conformity with the limitations established in
Regulation Y.
In order to approve this notice, the Board is required to
determine that the continued performance of the proposed
activities by First Union can reasonably be expected to
produce benefits to the public that would outweigh possible adverse effects under the proper incident to banking
standard of section 4(c)(8) of the BHC Act. 6 The Board
expects that this proposal would maintain or increase the
level of competition among providers of those services.
The Board also anticipates that First Union's proposed
activities would result in enhanced efficiency and increased
convenience for customers. Moreover, there is no evidence
in the record that consummation of this proposal would
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 outweighed by the benefits of this proposal.
Accordingly, the Board has concluded that the balance of
the public interest factors it is required to consider under
the proper incident to banking standard of section 4(c)(8)
1. In January 1994, First Union received approval to acquire up to
9.4 percent of the Internet's voting shares (80 Federal Reserve Bulletin 263 (1994)). First Union acquired the additional shares through its
subsidiary national banks (First Union National Bank of Virginia,
Roanoke, Virginia, acquired 4 percent in October 1995, and First
Union acquired an additional 5.7 percent, when it acquired First
Fidelity Bank, N.A., Elkton, Maryland).
2. Asset data are as of December 31, 1995.
3. State deposit data are as of June 30, 1995.
4. 12 U.S.C. § 1843(c)(8).
5. 12 C.F.R. 225.25(b)(7) and (11).
6. 12 U.S.C. § 1843(c)(8).
Legal Developments
of the BHC Act is favorable and consistent with approval
of this notice.
In every case involving a nonbanking acquisition by a
bank holding company under section 4 of the BHC Act, the
Board also considers the financial condition and resources
of the applicant and its subsidiaries and the effect of the
transaction on those resources. Based on all the facts of
record, the Board has concluded that the financial considerations are consistent with approval of this proposal. 7
Based on the foregoing and all the facts of record, the
Board has determined that this notice should be, and hereby
is, approved. The Board's approval is specifically conditioned on compliance by First Union with all commitments
made in connection with this notice and the conditions
referred to in this order. The Board's determination also is
subject to all the conditions in Regulation Y, including
those in sections 225.7 and 225.23(b)(3) (12 C.F.R. 225.7
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
evasion of, the provisions and purposes of the BHC Act
and the Board's regulations and orders issued thereunder.
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 transaction shall not be consummated later than
three months following 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, acting
pursuant to delegated authority.
By order of the Board of Governors, effective February 26, 1996.
7. The Board has received comments from Inner City
Press/Community on the Move ("Protestant") objecting to First
Union's management in light of reported investigations by the Securities and Exchange Commission with regard to First Union and a
passive investor, Banco Santander. Protestant's comments regarding
First Union's management were carefully considered by the Board in
connection with the proposal by First Union to acquire Society First
Federal Savings Bank, Fort Myers, Florida ("Society FSB"). In
addition, Protestant objects to this notice on the basis that First Union
failed to notify the Board of its increased ownership of Internet. The
Board has reviewed the circumstances surrounding the acquisition of
the additional Internet shares and notes that in this application, First
Union seeks approval to retain the shares of Internet. Based on these
and all the other facts of record, including review of relevant reports
of examination and the findings explained in the Society FSB Order,
which are incorporated herein by reference, the Board believes that
managerial factors are consistent with approval of this proposal. The
Board also notes that Protestant's comments relating to First Union's
performance under the Community Reinvestment Act (12 U.S.C.
§ 2901 et seq.) ("CRA") are not relevant to the factors required to be
considered in an application under section 4(c)(8) of the BHC Act to
acquire a nondepository company because the CRA by its terms does
not apply to such applications. See The Mitsui Bank, Ltd., 76 Federal
Reserve Bulletin 381 (1990). The Board, however, reviewed Protestant's allegations regarding the CRA record of First Union in connection with the review of First Union's proposal to acquire Society FSB.
353
Voting for this action: Chairman Greenspan, and Governors Kelley,
Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
First Union Corporation
Charlotte, North Carolina
Order Approving Acquisition
of a Savings
Association
First Union Corporation, Charlotte, North Carolina ("First
Union"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has given
notice under section 4 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) of its proposal to acquire all the
voting shares of Society First Federal Savings Bank, Fort
Myers, Florida ("Society FSB"). 1
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published (61
Federal Register 1758 (1996)). The time for filing comments has expired, and the Board has considered the notice
and all comments received in light of the factors set forth
in section 4(c)(8) of the BHC 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. 2
The Board requires savings associations acquired by bank
holding companies to conform their direct and indirect
activities to those permissible for bank holding companies
under section 4(c)(8) of the BHC Act and Regulation Y.
First Union has committed to conform all activities of
Society FSB to those requirements. 3
First Union, with total consolidated assets of $129 billion, operates banks in Connecticut, Delaware, Florida,
Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia,
and the District of Columbia. 4 First Union is the second
largest commercial depository institution in Florida, controlling $26.7 billion in deposits, representing approxi-
1. Following the acquisition of Society FSB and approval by the
Office of the Comptroller of the Currency ("OCC"), First Union
proposes to merge Society FSB with and into its subsidiary bank, First
Union National Bank of Florida, Jacksonville, Florida ("FUNB-FL").
2. See 12 C.F.R. 225.25(b)(9).
3. First Union has committed that all impermissible real estate
activities will be divested or terminated within two years of consummation of the proposal, that no new impermissible projects or investments will be undertaken during this period, and that capital adequacy
guidelines will be met, excluding specified real estate investments.
First Union also has committed that any impermissible securities or
insurance activities conducted by Society FSB will cease on or before
consummation.
First Union also has committed to divest Society FSB's interest in
Florida Informanagement Services, Inc. ("FIS"), which is a company
engaged in data processing activities, within two years of consummation of this proposal, pending consideration by the Board of First
Union's notice to acquire FIS.
4. Asset data are as of December 31, 1995.
354
Federal Reserve Bulletin • April 1996
mately 15.5 percent of total deposits in depository institutions in the state. 5 Society FSB is the 17th largest
depository institution in Florida, controlling $1.1 billion in
deposits, representing less than one percent of total deposits in depository institutions in Florida. 6 On consummation
of this proposal, First Union would remain the second
largest depository institution in the state, controlling deposits of $27.8 billion, representing approximately 16.2 percent of total deposits in depository institutions in the state.
Competitive
Considerations
Under section 4(c)(8) of the BHC Act the Board is required
to consider whether a proposal is likely to result in any
significantly adverse effects, such as undue concentration
of resources or unfair competition, conflicts of interests, or
unsound banking practices. First Union and Society FSB
compete directly in four banking markets in Florida. 7 Consummation of this proposal would not result in concentration levels in those markets that would exceed the threshold standards of market concentration as measured by the
Herfindahl-Hirschman Index ("HHI") under the Department of Justice merger guidelines. 8 After considering First
Union's share of total deposits in depository institutions 9 in
the market ("market share"), the change in concentration
5. State deposit data are as of June 30, 1995.
6. Depository institutions include commercial banks, savings banks,
and savings associations.
7. These banking markets are Fort Myers, Naples, Polk County, and
Punta Gorda, all in Florida. The Inner City Press/Community on the
Move ("Protestant") maintains that the increase in concentration and
in First Union's share of deposits that would result from this proposal
would adversely affect competition in these banking markets.
8. Market data are as of June 30, 1995. 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 over 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 that the competitive effects of limited-purpose lenders and other non-depository financial
entities.
9. Market 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, major competitors of commercial banks.
See Midwest Financial Group, 75 Federal Reserve Bulletin 386
(1989); National City Corporation, 70 Federal Reserve Bulletin 743
(1984). Thus, the Board has regularly included thrift deposits in the
calculation of market share on a 50 percent weighted basis. See, e.g.,
First Hawaiian Inc., 11 Federal Reserve Bulletin 52 (1991). Because
the deposits of Society FSB would be controlled by a commercial
banking organization after consummation of the proposal, they have
been included at 100 percent in the calculation of the market share of
First Union after consummation of this proposal. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Banks, Inc., 76
Federal Reserve Bulletin 669, 670 n.9 (1990).
as measured by the HHI, 10 the number of competitors that
would remain in these markets, and all other facts of
record, the Board concludes that consummation of this
proposal would not result in any significantly adverse
effects on competition or the concentration of banking
resources in any relevant banking market.
Convenience and Needs
Considerations
In acting on an application to acquire a savings association
under section 4 of the BHC Act, the Board reviews the
records of the relevant depository institutions under the
Community Reinvestment Act (12U.S.C. § 2901 et seq.)
("CRA"). 1 1 The CRA requires the federal financial supervisory agencies to encourage financial institutions to help
meet the credit needs of the local communities in which
they operate, consistent with their safe and sound operation. 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 operation of
such institution," and to take that record into account in its
evaluation of bank holding company applications. 12
The Board received comments from Protestant criticizing the CRA performance record of First Union and maintaining that First Union's branch closing and fee policies
present adverse considerations under the CRA. 13 In particular, Protestant contends that First Union's past practices
indicate that a substantial number of Society FSB's
branches would be closed to the detriment of low- and
moderate-income areas. Protestant also maintains that First
Union's recently announced policy to charge a fee for
inquiries about balances and other information to account
10. Upon consummation of the proposal, the HHI for the four
Florida banking markets would increase as follows: in Fort Myers
(379 points to 1698), in Naples (91 points to 1638), in Polk County
(52 points to 1576), and in Punta Gorda (72 points to 1542). After
consummation, First Union's relative size and market share in each
market would be as follows: Fort Myers (the largest with 28.1 percent
market share); Naples (second largest with 18.9 percent market share);
Polk County (second largest with 19.3 percent market share); and
Punta Gorda (fourth largest with 16.3 percent market share).
11. The Board previously has determined that the CRA by its terms
generally does not apply to applications by bank holding companies to
acquire nonbanking companies under section 4(c)(8) of the BHC Act.
The Mitsui Bank, Ltd., 76 Federal Reserve Bulletin 381 (1990). The
Board also has stated that, unlike other companies that may be
acquired by bank holding companies under section 4(c)(8) of the BHC
Act, savings associations are depository institutions, as that term is
defined in the CRA, and thus acquisitions of savings associations are
subject to review under the express terms of the CRA. Norwest
Corporation, 76 Federal Reserve Bulletin 873 (1990).
12. 12 U.S.C. § 2903.
13. Protestant also contends that a number of Society FSB employees would lose their jobs as a result of this proposal. Although First
Union has not indicated the number, if any, of jobs that will be
eliminated as a result of this proposal, the record indicates that in
previous cases, First Union has taken several steps to minimize
adverse effects on employees. These steps include outplacement services to displaced workers and giving employees priority consideration for other openings at First Union.
Legal Developments
holders who do not maintain a minimum balance would
primarily disadvantage low-income account holders in
New Jersey, New York, and Connecticut.
The Board has carefully reviewed the CRA performance
records of First Union, its subsidiary banks, and Society
FSB, and all the comments received on this application,
responses to those comments submitted by First Union,
and all other relevant facts of record 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"). 14
The Board recently reviewed the CRA performance
record of First Union in light of similar issues raised by
Protestant and other commenters in the context of another
application. 15 In evaluating that proposal, the Board carefully considered First Union's CRA performance record
and, in particular, the record of its lead subsidiary bank,
First Union National Bank of North Carolina, Charlotte,
North Carolina ("FUNB-NC").
FUNB-NC received an "outstanding" rating from its
primary federal supervisor, the OCC, at its most recent
publicly available examination for CRA performance in
April 1994, and First Union's remaining seven subsidiary
banks, 16 received "satisfactory" ratings from the OCC in
the most recent examinations of their CRA performance,
including its subsidiary bank in Florida, First Union National Bank of Florida, Jacksonville, Florida ("FUNBFL). 17 Examiners also found that all of First Union's banks
were in compliance with applicable antidiscrimination laws
and regulations and that none of the banks engaged in
practices that would discourage individuals from applying
for credit. 18
The 1994 CRA performance examinations for both
FUNB-NC and FUNB-FL found that geographic distribution of credit throughout the delineated communities of
both banks were reasonable and that management of both
banks developed policies and procedures to identify and
address customer needs, including adjusting its normal
business hours. First Union's CRA plans and related lending activities were developed locally by its subsidiary
banks to incorporate the unique credit needs of particular
communities. For example, First Union has several specialized lending programs designed to improve its lending to
low- and moderate-income communities. In particular, the
1994 FUNB-NC Examination found that the bank offered
14. 54 Federal Register 13,742 (1989).
15. See First Union Corporation, 81 Federal Reserve Bulletin 1143
(1995) ("First Union/First Fidelity Order").
16. The OCC conducted a joint CRA examination of all of First
Union's subsidiary banks in April 1994.
17. In May 1995, Society FSB also received a "satisfactory" CRA
performance rating from the Office of Thrift Supervision, its primary
federal supervisor.
18. The OCC's examiners noted that First Union and its bank
subsidiaries had implemented a comprehensive program to promote
compliance with fair lending laws and regulations and to promote
consistent treatment of all credit applicants. Examiners also noted that
First Union's compliance efforts were periodically assessed through
internal reviews by its management.
355
the Affordable Home Mortgage Loan, a specialized product that offered flexible terms, such as higher-than-normal
debt-to-income requirements and lower down payments.
FUNB-NC also participated, directly or through First
Union Mortgage, in government-insured loan programs,
including programs sponsored by the Small Business Administration, the Farmers Home Administration, Federal
Housing Administration, and the Veterans Administration.
First Union's subsidiary banks also engaged in other small
business lending activity. For example, in July 1993,
FUNB-NC introduced a program for small business owners to borrow amounts up to $100,000. All of First Union's
subsidiary banks also participated and invested in local
community development projects. In light of these and
other facts discussed in detail in the First Union/First
Fidelity Order, which are incorporated by reference, the
Board concluded that the CRA performance record of First
Union was consistent with approval of the applications
under the BHC Act.
Protestant alleges that First Union's fees in general and
its recently announced phone and teller fees, illegally discriminate against low- and moderate-income individuals. 19
The Board notes that First Union offers a full range of
credit products and banking services that assist in meeting
the credit and banking needs of low- and moderate-income
individuals, including products to provide loans in small
amounts to low- and moderate-income individuals, nominimum-balance checking accounts for low- and
moderate-income customers that allow ten free posted
checks per statement period, and overdraft protection for
small business owners. First Union has also stated that it
would not impose fees for "chargeable inquiries," such as
inquiries about account balances and information on outstanding checks on customer accounts not maintaining a
minimum balance in urban communities with low- and
moderate-income census tracts served by the former First
Fidelity banks in New Jersey, New York, and Connecticut,
including the Bronx. There is no evidence in the record of
this application that the fees charged by First Union are
based on any factor that would be prohibited under law.
19. Protestant also contends that the allegations of "price discrimination," which were reviewed in the First Union/First Fidelity Order,
should be reconsidered in this application because First Union would
increase its market share in Florida. Those allegations were based on
information provided by a commenter on the First Union/First Fidelity
application, that alleged that customers outside First Union's home
state of North Carolina, particularly in Florida, paid higher fees for
certain services than First Union's North Carolina customers. The
Board reviewed this matter carefully in the First Union/First Fidelity
Order and adopts the reasons and findings on this matter explained in
the First Union/First Fidelity Order. The Board has also considered
the facts of record developed in this case, including the fact that there
is no evidence of discrimination on an illegal basis and that there are
numerous other depository institution competitors. As explained
above, the Board concludes that First Union would not, as a result of
this acquisition, gain a dominant position in any Florida banking
market that could support anticompetitive pricing by First Union. The
Board also notes that the Department of Justice has full statutory
authority to investigate and redress any illegal pricing practices that
Protestant can substantiate.
356
Federal Reserve Bulletin • April 1996
While the Board has recognized that banks help serve the
banking needs of their communities by making basic banking services available at a nominal or no charge, the CRA
does not require that banks limit fees for services.
First Union has indicated that any branches of Society
that are closed would be subject to its branch closing
policy, which was carefully reviewed in the First Union!
First Fidelity Order. First Union's subsidiary banks have
adopted a branch closing policy that provides for objective
determinations of branches to be closed, consideration of
alternative solutions, examination of options to minimize
potential adverse effects and inconvenience on the communities, and sufficient advance notice to communities. The
policy also specifies that if an action affects a low- and
moderate-income community, additional analyses, community contacts and/or review of needs ascertainment calls
are appropriate. Each subsidiary bank's branch closing
policy was reviewed as part of its CRA performance evaluation by the OCC and found to be satisfactory. 20
The Board has carefully reviewed all the facts of record
in considering the CRA performance records of First Union
and Society FSB. Based on these facts, including information provided by the Protestant and First Union and the
facts and review in the First Union/First Fidelity Order,
which are incorporated by reference in this order, the
Board concludes that considerations relating to the CRA
are consistent with approval.
Other
Considerations
The Board also concludes that the financial and managerial
resources of First Union and Society FSB are consistent
with approval of this proposal. 21
The record also indicates that consummation of this
proposal would result in a broader financial network
20. Protestant has requested that the Board deny this application as
informationally incomplete or, in the alternative, delay this proposal
until First Union provides information regarding Society FSB
branches that would be closed. As explained above, the Board has
evaluated First Union's branch closing policy and believes that the
policy is adequate. The Board is required under applicable law and its
processing procedures to act on applications submitted under the BHC
Act within a specified time. Based on all the facts of record, including
reports of examination and other information from regulatory agencies, the Board concludes that the record is sufficient to act on this
proposal at this time, and that delay or denial of this proposal on the
grounds of informational insufficiency is not warranted.
21. Protestant maintains, based on several media sources, that
investigations by the Securities and Exchange Commission ("SEC")
into insider trading violations by Banco Santander, a passive investor
in First Union, and into alleged violations of standard practices in the
sale of mutual funds by a brokerage subsidiary of First Union's
subsidiary national bank warrant denial or delay of this application
until the Board can conduct its own investigation of the alleged
matters currently under consideration by the SEC. Based on all the
facts of record, including confidential information from the relevant
supervisory agencies, the Board does not believe that the reports cited
by the Protestant warrant denial of this proposal. The Board and the
OCC, the primary supervisor of First Union's subsidiary banks, also
retain sufficient supervisory authority to address any improper practices that are substantiated.
through which First Union could serve its customers in
Florida. In addition, former Society FSB customers would
have increased services, including special lending and leasing programs, corporate banking products, trust services,
and investment management services, and access to First
Union's extensive banking network in Florida. The Board
also finds that consummation of this proposal is not likely
to result in any significantly adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices
that would outweigh 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.
Based on the foregoing and all the facts of record, the
Board has determined that this notice should be, and hereby
is, approved. The Board's approval is specifically conditioned on compliance by First Union with all commitments
made in connection with this notice. The Board's determination is also subject to all the conditions in Regulation Y,
including those in sections 225.7 and 225.23(b)(3)
(12 C.F.R. 225.7 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 evasion of, the provisions and purposes of the
BHC Act and the Board's regulations and orders issued
thereunder. 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 transaction shall not be consummated later than
three months following 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, acting
pursuant to delegated authority.
By order of the Board of Governors, effective February 26, 1996.
Voting for this action: Chairman Greenspan, and Governors Kelley,
Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
HSBC Holdings pic
London, England
HSBC Holdings BV
Amsterdam, The Netherlands
Order Approving a Notice to Engage in Underwriting
and Dealing in Bank-Ineligible Securities on a Limited
Basis, and Certain Other Nonbanking Activities
Legal Developments
HSBC Holdings pic, London, England, and HSBC Holdings BV, Amsterdam, The Netherlands (together, "Notificants"), bank holding companies within the meaning of the
Bank Holding Company Act ("BHC Act"), have requested
the Board's approval under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the
Board's Regulation Y (12 C.F.R. 225.23(a)) to engage
de novo in the following activities through their wholly
owned subsidiary, HSBC Securities, Inc., New York, New
York ("HSBC Securities"): 1
(1) Underwriting and dealing in, to a limited extent, all
types of debt and equity securities, other than ownership
interests in open-end investment companies;
(2) Trading futures, options on futures, and options
based on U.S. government securities, certificates of deposit and other money market instruments that are permissible investments for national banks, and non-U.S.
sovereign debt securities; and
(3) Acting as agent in the syndication of loans.
Notificants propose to conduct these activities worldwide.
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published (61
Federal Register 1936 (1996)). The time for filing comments has expired, and the Board has considered the notice
and all comments received in light of the factors set forth
in section 4(c)(8) of the BHC Act.
Notificants, with consolidated assets equivalent to approximately $344 billion, provide a wide range of banking,
financial, and related services worldwide through various
subsidiaries and affiliated companies. 2 Notificants own Marine Midland Bank, Buffalo, New York, which has deposits
of approximately $16.6 billion. In addition, Notificants'
Hong Kong banking subsidiaries, The Hongkong and
Shanghai Banking Corporation Limited and Hang Seng
Bank Limited, maintain branches in Los Angeles and
San Francisco, California; Chicago, Illinois; New York,
New York; Portland, Oregon; and Seattle, Washington; and
an agency in Houston, Texas. Midland Bank pic, London,
England, a banking subsidiary of Notificants, maintains a
branch in New York, New York.
HSBC Securities is a broker-dealer registered with the
Securities and Exchange Commission ("SEC") and is a
member of the National Association of Securities Dealers
("NASD"). Accordingly, HSBC Securities is subject to the
recordkeeping, reporting, fiduciary standards, and other
1. Notificants recently merged their wholly owned subsidiary, James
Capel, Inc., New York, New York, into HSBC Securities. HSBC
Securities is currently engaged in a number of nonbanking activities,
including securities brokerage, underwriting and dealing in bankeligible securities, and trading foreign exchange for nonhedging purposes. See HSBC Holdings pic, 81 Federal Reserve Bulletin 728
(1995); The Hong Kong Shanghai Banking Corporation, 72 Federal
Reserve Bulletin 345 (1986); The Hong Kong Shanghai
Banking
Corporation, 75 Federal Reserve Bulletin 217 (1989).
2. Asset data are as of June 30, 1995, and use exchange rates then in
effect. Deposit data are as of December 31, 1995.
357
requirements of the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.), the SEC, and the NASD.
The Board previously has determined by regulation and
order that the proposed lending and derivatives trading
activities are closely related to banking and permissible for
bank holding companies under section 4(c)(8) of the BHC
Act. 3 Notificants have stated that HSBC Securities would
conduct these activities in accordance with the limitations
previously imposed by the Board.
Underwriting and Dealing in Bank-Ineligible
Securities
The Board also has determined that, subject to the prudential framework of limitations established in previous decisions to address the potential for conflicts of interests,
unsound banking practices, or other adverse effects ("section 20 firewalls"), the proposed activities of underwriting
and dealing in bank-ineligible securities are so closely
related to banking as to be a proper incident thereto within
the meaning of section 4(c)(8) of the BHC Act. 4 Notificants have committed that HSBC Securities will conduct
the proposed underwriting and dealing activities using the
same methods and procedures and subject to the prudential
limitations established by the Board in the Section 20
Orders.
The Board also has determined that the conduct of these
securities underwriting and dealing activities is consistent
with section 20 of the Glass-Steagall Act (12 U.S.C.
§ 377), provided that the company engaged in the activities
derives no more than 10 percent of its total gross revenue
from underwriting and dealing in bank-ineligible securities
over any two-year period. 5 Notificants have committed that
3. See 12 C.F.R. 225.25(b)(1); Swiss Bank Corporation, 81 Federal
Reserve Bulletin 182(1995).
4. See Canadian Imperial Bank of Commerce, et al., 76 Federal
Reserve Bulletin 158 (1990); J.P. Morgan & Co. Incorporated, et al.,
75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities
Industries Ass'n v. Board of Governors of the Federal Reserve System,
900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal Reserve
Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board
of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir.
1988), cert, denied, 486 U.S. 1059 (1988) (collectively, "Section 20
Orders").
5. See Section 20 Orders. Compliance with the 10-percent revenue
limitation shall be calculated in accordance with the method stated in
the Section 20 Orders, as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751
(1989); the Order Approving Modifications to the Section 20 Orders,
19 Federal Reserve Bulletin 226 (1993); and the Supplement to Order
Approving Modifications to Section 20 Orders, 79 Federal Reserve
Bulletin 360 (1993) (collectively, "Modification Orders"). The Board
notes that Notificants have not adopted the Board's alternative
indexed-revenue test to measure compliance with the 10-percent limitation on bank-ineligible securities activities, and, absent such election, will continue to employ the Board's original 10-percent revenue
test. The Board also notes that HSBC Securities may engage in
activities that are necessary incidents to the proposed underwriting
and dealing activities, provided they are treated as part of the bankineligible securities activities, unless HSBC Securities receives specific approval under section 4(c)(8) of the BHC Act to conduct the
activities independently. Until such approval is obtained, any revenues
from the incidental activities must be counted as ineligible revenues
subject to the 10-percent revenue limitation.
358
Federal Reserve Bulletin • April 1996
HSBC Securities will conduct its underwriting and dealing
activities in bank-ineligible securities subject to the
10-percent revenue test.
Financial Factors, Managerial Resources, and Other
Considerations
In order to approve this notice, the Board also must determine that the proposed activities "can reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices." 6 In
evaluating these factors under section 4(c)(8) of the BHC
Act, the Board considers the financial and managerial
resources of the notificant and its subsidiaries and the effect
the transaction would have on such resources. 7 The Board
notes that Notificants' capital ratios satisfy applicable riskbased standards established under the Basle Accord, and
are considered equivalent to the capital levels that would
be required of a U.S. banking organization. The Board also
has reviewed the capitalization of Notificants and HSBC
Securities in accordance with the standards set forth in the
Section 20 Orders. Based on all the facts of record, including Notificants' projections of the volume of underwriting
and dealing in bank-ineligible securities that would be
performed by HSBC Securities, the Board concludes the
capitalization of Notificants and HSBC Securities is consistent with approval. On the basis of all the facts of record,
including the foregoing, the Board has concluded that
financial and managerial considerations are consistent with
approval of this notice.
Notificants and HSBC Securities have substantial experience in trading bank-eligible securities and derivative products. HSBC Securities, as a primary dealer, currently engages in a significant volume of dealing in U.S. government
securities for its own account, and has broad experience in
trading and monitoring bank-eligible securities positions.
HSBC Securities has gained substantial experience in trading derivative products based on bank-eligible securities in
connection with its primary dealer activities. Moreover,
Notificants have extensive, worldwide experience in trading futures, options, and options on futures contracts based
on financial instruments.
The Board has reviewed the risk management policies,
procedures, systems and controls to be used by HSBC
Securities in conducting and monitoring the proposed activities. These policies and risk management systems
should help in minimizing the likelihood of significant
losses that could result from the activities that are the
subject of this notice.
6. 12 U.S.C. § 1843(c)(8).
7. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73
Federal Reserve Bulletin 155 (1987).
For example, HSBC Securities has instituted internal
controls to restrict the credit risk, market risk, and operations risk associated with futures and options trading. Notificants would establish credit exposure limits for HSBC
Securities. The Credit Manager of HSBC Securities would
manage and monitor the company's exposure to credit
risk. 8
Market risk at HSBC Securities is controlled by imposing exposure limits for each business unit and for the
portfolio as a whole. The HSBC Securities board of directors formally adopts market sensitivity limits and stop loss
limitations for the company, which are set forth in HSBC
Securities's Market Risk Limit Mandate. Each trading desk
is subject to specific exposure limits, and trading desk
managers set trading limits that restrict each trader's authority to open or close positions.
Operations risk is mitigated by comprehensive review
and monitoring procedures, including independent verification of trade data and compliance with trading limits, as
well as the hiring of experienced operations staff and the
implementation of detailed recordkeeping procedures and
systems. Monitoring and enforcement of HSBC Securities's risk management policies and procedures would be
facilitated by computer systems that would report all positions on a real-time basis.
Senior management and internal auditing personnel
would be closely involved with monitoring the conduct of
the proposed derivatives trading activities. HSBC Securities's Risk Management Unit would oversee directly all the
proposed trading activities. Trading managers would be
responsible for monitoring intra-day compliance with established trading limits and the Risk Management Unit and
senior management would review daily reports of HSBC
Securities's positions.
As a registered broker-dealer, HSBC Securities would be
required to comply with the SEC's net capital rule. 9 Notificants anticipate that HSBC Securities's position in derivative instruments would be small in comparison with its
primary dealer operations.
8. Exchange-traded derivatives transactions of HSBC Securities
would be executed and cleared by HSBC Futures, Inc., New York,
New York ("HSBC Futures"). HSBC Futures also provides futuresrelated services to unaffiliated parties. In order to minimize any
potential conflicts of interests that could result from the related activities of HSBC Securities and HSBC Futures, Notificants have committed that HSBC Futures will disclose to its customers its affiliate
relationship with HSBC Securities, and the fact that HSBC Securities
trades futures, options, and options on futures contracts for its own
account. This disclosure will occur both at the beginning of the
customer relationship and upon confirmation of any order. In addition,
Notificants have committed that HSBC Futures will not share nonpublic customer information with HSBC Securities without the express written consent of the customer, and that in any case in which
HSBC Futures knowingly executes a transaction to which HSBC
Securities is a party, it will make prior disclosure of that fact to its
customer and obtain the customer's prior consent to the arrangement.
See The Dai-Ichi Kangyo Bank, Limited, 80 Federal Reserve Bulletin
148 (1994).
9. See 15 C.F.R. 240.15c3-l.
Legal Developments
359
Under the framework established in this and prior decisions, consummation of this proposal is not likely to result
in significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts
of interests, or unsound banking practices. 10 The Board
also expects that HSBC Securities's engaging in the proposed activities de novo would enhance market competition and provide greater convenience to HSBC Securities's
customers. On the basis of the foregoing and all the other
facts of record, the Board has concluded that the balance of
public interest factors it is required to consider under
section 4(c)(8) of the BHC Act is favorable, and, therefore,
that the proposed activities constitute a proper incident to
banking within the meaning of the BHC Act.
debt and equity securities that is adequate to ensure compliance with the requirements of this order and the Section 20
Orders. On the basis of the Reserve Bank's review and all
the facts of record, including the steps taken and the
policies and procedures implemented by Notificants and by
HSBC Securities in connection with this notice and in
response to the infrastructure review, the Board has determined that HSBC Securities has in place the managerial
and operational infrastructure and other policies and procedures necessary to comply with the requirements of the
Section 20 Orders and this order. Accordingly, HSBC
Securities may commence underwriting and dealing in all
types of debt and equity securities as permitted by and
subject to the conditions of this order.
Accordingly, and for the reasons set forth in this order
and in the Section 20 Orders, the Board has concluded that
Notificants' proposal to engage through HSBC Securities
in the proposed activities is consistent with the GlassSteagall Act, and that the proposed activities are so closely
related to banking as to be proper incidents thereto within
the meaning of section 4(c)(8) of the BHC Act, provided
that Notificants limit HSBC Securities's activities as specified in this order and the Section 20 Orders, as modified by
the Modification Orders.
The Board's determination is also subject to all the terms
and conditions set forth in Regulation Y, including those in
sections 225.7 and 225.23(g), 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 the commitments made in connection with this
notice, 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.
On the basis of the record, the Board has determined to,
and hereby does, approve this notice subject to all the
terms and conditions discussed in this order and in the
Section 20 Orders as modified by the Modification Orders.
The Board's approval of this proposal extends only to
activities conducted within the limitations of those orders
and this order, including the Board's reservation of authority to establish additional limitations to ensure that HSBC
Securities's activities are consistent with safety and soundness, conflicts of interests, and other relevant considerations under the BHC Act. Underwriting and dealing in
any manner other than as approved in this order and the
Section 20 Orders (as modified by the Modification Orders) is not authorized for HSBC Securities.
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, acting pursuant to
delegated authority.
By order of the Board of Governors, effective February 15, 1996.
The Federal Reserve Bank of New York has reviewed
the operational and managerial infrastructure of HSBC
Securities, including its computer, audit, and accounting
systems, and internal risk management procedures and
controls. The Reserve Bank has determined that HSBC
Securities has established an operational and managerial
infrastructure for underwriting and dealing in all types of
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, Phillips, and Yellen.
10. The Board notes that in order to address potential conflicts of
interests arising from HSBC Securities's conduct of full-service brokerage activities together with underwriting and dealing in bankineligible securities, Notificants have committed that HSBC Securities
will inform its customers at the commencement of the relationship
that, as a general matter, HSBC Securities 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. In addition, at the time any brokerage order is taken, the
customer will be informed (usually orally) whether HSBC Securities
is acting as agent or principal with respect to a security. Confirmations
sent to customers also will state whether HSBC Securities is acting as
agent or principal. See PNC Financial Corp., 75 Federal Reserve
Bulletin 396 (1989).
Order Approving a Notice to Engage in Certain
Nonhanking Activities
JENNIFER J. JOHNSON
Deputy Secretary of the Board
KeyCorp
Cleveland, Ohio
Key Corp, Cleveland, Ohio ("Notificant"), a bank holding
company within the meaning of the Bank Holding Company Act ("BHC Act"), has given notice 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)
of its intention to establish a de novo subsidiary, Key
Capital Markets, Inc., Cleveland, Ohio ("Company"), and
thereby engage in the following nonbanking activities:
360
Federal Reserve Bulletin • April 1996
(1) Underwriting and dealing in, to a limited extent,
certain municipal revenue bonds (including certain unrated municipal revenue bonds),
family mortgagerelated securities, consumer receivable-related securities,
and
commercial
paper
("bank-ineligible
securities");
(2) Acting as agent in the private placement of all types
of securities, and buying and selling all types of securities on the order of customers as a "riskless principal";
(3) Trading for its own account, for purposes other than
hedging, in futures, options, and options on futures
contracts based on bank-eligible securities and certificates of deposits or other money market instruments
eligible for investment by national banks;
(4) Providing investment and financial advisory services, pursuant to section 225.25(b)(4) of Regulation Y
(12 C.F.R. 225.25(b)(4));
(5) Providing discount and full-service securities brokerage services, pursuant to section 225.25(b)(15) of Regulation Y (12 C.F.R. 225.25(b)(15));
(6) Underwriting and dealing in obligations of the United
States and other obligations that state member banks
may underwrite and deal in under 12 U.S.C. §§335 and
24(7) ("bank-eligible securities"), pursuant to section
225.25(b)(16)
of
Regulation
Y
(12 C.F.R.
225.25(b)(16)); and
(7) Providing foreign exchange advisory and transactional services, pursuant to section 225.25(b)(17) of
Regulation Y (12 C.F.R. 225.25(b)(17)).
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published (60
Federal Register 67,136 (1995)). The time for filing comments has expired, and the Board has considered the notice
and all comments received in light of the factors set forth
in section 4(c)(8) of the BHC Act.
Notificant, with total consolidated assets of approximately $68 billion, is the eighth largest banking organization in the United States. 1 Notificant operates banking
subsidiaries in Alaska, Colorado, Idaho, Indiana, Maine,
Michigan, New York, Ohio, Oregon, Utah, and Washington and engages, through other subsidiaries, in various
permissible nonbanking activities. Company has applied to
register as a broker-dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and has
sought membership in the National Association of Securities Dealers, Inc. ("NASD"). On registration with the SEC
and admission to the NASD, Company would be subject to
the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange
Act of 1934, the SEC, and the NASD.
1. Asset and ranking data are as of September 30, 1995.
Activities Approved by
Regulation
As noted above, Company's proposed investment and financial advisory, securities brokerage, bank-eligible securities underwriting and dealing, and foreign exchange advisory and transactional service activities have been
determined by regulation to be activities that are closely
related to banking for purposes of section 4(c)(8) of the
BHC Act. 2 Notificant has committed that Company will
conduct these activities in accordance with the limitations
set forth in Regulation Y and the Board's orders relating to
these activities. 3
Underwriting and Dealing in Bank-Ineligible
Securities
The Board has determined that, subject to the prudential
framework of limitations established in previous decisions
to address the potential for conflicts of interests, unsound
banking practices, or other adverse effects, the proposed
activities of underwriting and dealing in bank-ineligible
securities are so closely related to banking as to be a proper
incident thereto within the meaning of section 4(c)(8) of
the BHC Act. 4 Notificant has committed that Company
will conduct the proposed underwriting and dealing activities in bank-ineligible securities using the same methods
and procedures and subject to the same prudential limitations established by the Board in the Section 20 Orders.
2. See 12 C.F.R. 225.25(b)(4), (b)(15), (b)(16), and (b)(17).
3. The Board notes that in order to address potential conflicts of
interests arising from Company's conduct of full-service brokerage
activities along with underwriting and dealing in bank-ineligible securities, Notificant has committed that Company will inform its full-service brokerage 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. In addition, at the time any brokerage order is taken, the
customer will be informed (usually orally) whether the Company is
acting as agent or principal with respect to a security. Confirmations
sent to customers also will state whether the Company is acting as
agent or principal. See PNC Financial Corp., 75 Federal Reserve
Bulletin 396 (1989).
4. See Citicorp, et al, 73 Federal Reserve Bulletin 473 (1987), aff'd
sub nom. Securities Industry Ass'n v. Board of Governors of the
Federal Reserve System, 839 F.2d 47 (2d Cir.), cert, denied, 486 U.S.
1059 (1988), as modified by Order Approving Modifications to Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989) (collectively,
"Section 20 Orders"). Notificant proposes that Company underwrite
and deal in, to a limited extent, "private ownership" industrial development bonds that are issued for the provision of the following
governmental services: water facilities, sewer facilities, solid waste
disposal facilities, electric energy and gas facilities, and local district
heating or cooling facilities (collectively, "traditional governmental
services"). All "private ownership" bonds that Company proposes to
underwrite and deal in would qualify as "exempt facility bonds"
under the Internal Revenue Code. See 26 U.S.C. § 142. The Board
previously has concluded that underwriting and dealing in "private
ownership" industrial development bonds issued for traditional government services is a permissible activity under section 4(c)(8) of the
BHC Act if conducted subject to the conditions and prudential limitations set forth in the Section 20 Orders. See Bank South
Corporation,
81 Federal Reserve Bulletin 1116 (1995).
Legal Developments
Notificant has requested that the Board permit limited
director and officer interlocks between Company and the
bank and thrift subsidiaries of Notificant, or the subsidiaries of such banks and thrifts ("affiliated banks"). Notificant proposes to have two director interlocks between
Company and affiliated banks. The directors would not be
officers of the affiliated banks, nor would they have authority to conduct the day-to-day business of affiliated banks or
to handle individual transactions. In addition, the interlocking directors would represent less than a majority of the
board of Company and the affiliated banks. Notificant also
has requested the Board to permit one officer interlock
between Company and its affiliated banks. This officer
would be an attorney or other officer of a nonbanking
subsidiary of Notificant who would serve as assistant secretary of Company and its affiliated banks. Notificant has
indicated that this interlock is sought primarily to facilitate
the provision of corporate legal and recordkeeping services
to Company. The officer would provide only legal counsel
and corporate recordkeeping services to Company, and
would not serve as a management official of or have policy
making responsibilities for Company, nor would the officer
have any sales responsibilities or have any contact with
customers of Company or the general public.
The Board previously has permitted the type of limited
director and officer interlocks proposed by Notificant. 5 In
view of the limitations and commitments proposed by
Notificant, the Board believes that Company would remain
operationally distinct from its affiliated banks and that the
proposed interlocks are not likely to result in conflicts of
interests, unsound banking practices, or other adverse effects. Accordingly, the Board has concluded that Notificant's proposed interlocks should be permitted. The Board
expects Notificant to ensure that the framework established
pursuant to the Section 20 Orders will be maintained in all
other respects. 6
The Board also has determined that the conduct of the
securities underwriting and dealing activities proposed by
Notificant is consistent with section 20 of the GlassSteagall Act (12 U.S.C. § 377), provided that the company
engaged in the underwriting and dealing activities derives
no more than 10 percent of its total gross revenue from
underwriting and dealing in bank-ineligible securities over
5. See National City Corporation, 80 Federal Reserve Bulletin 346
(1994).
6. In connection with its proposal to underwrite and deal in unrated
municipal revenue bonds, including unrated public ownership and
"private ownership" industrial development bonds, Notificant has
committed that Company will not underwrite any unrated municipal
revenue bond until Company conducts an independent credit review
and determines that the securities are of investment grade quality.
Notificant also has committed that no single issue of unrated municipal revenue bonds, including unrated public ownership and "private
ownership" industrial development bonds, underwritten by Company
would exceed $7.5 million, and has provided other commitments
previously relied upon by the Board in authorizing a section 20
company to underwrite and deal in, to a limited extent, unrated
municipal revenue bonds. See Letter Interpreting Section 20 Orders,
81 Federal Reserve Bulletin 198 (1995).
361
any two-year period. 7 Notificant has committed that Company will conduct its underwriting and dealing activities in
bank- ineligible securities subject to the 10-percent revenue test established by the Board in previous orders. 8
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 nonpublic offering. A financial 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. Company would not privately place
registered securities and would place securities only with
customers that qualify as accredited investors.
"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 for a
customer, purchases (or sells) the security for its own
account to offset a contemporaneous sale to (or purchase
from) the customer. 9 Riskless principal transactions are
understood in the industry to include only transactions in
the secondary market. Thus, Company would not act as a
riskless principal in selling securities at the order of a
customer that is the issuer of the securities to be sold or in
any transaction where Company has a contractual agreement to place the securities as agent of the issuer. Company
also would not act as a riskless principal in any transaction
involving a security for which it makes a market.
The Board has determined by order that, subject to
prudential limitations that address the potential for conflicts of interests, unsound banking practices, or other
adverse effects, the proposed private placement and riskless principal activities are so closely related to banking as
to be a proper incident thereto within the meaning of
7. See Section 20 Orders. Compliance with the 10-percent revenue
limitation shall be calculated in accordance with the method stated in
J.P. Morgan & Co. Incorporated, 75 Federal Reserve Bulletin 192
(1989), as modified by the Order Approving Modifications to the
Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989); the Order
Approving Modifications to the Section 20 Orders, 79 Federal Reserve
Bulletin 226 (1993); and the Supplement to Order Approving Modifications to Section 20 Orders, 79 Federal Reserve Bulletin 360 (1993).
The Board notes that Notificant has not adopted the Board's alternative indexed-revenue test to measure compliance with the 10-percent
limitation on bank-ineligible securities activities, and, absent such
election, Notificant would continue to employ the Board's original
10-percent revenue test.
8. Company also may engage in activities that are necessary incidents to the proposed underwriting and dealing activities, provided
that they are treated as part of the bank-ineligible securities activities,
unless Company has received specific approval under section 4(c)(8)
of the BHC Act to conduct the activities independently. Until such
approval is obtained, any revenues from the incidental activities must
be counted as ineligible revenues subject to the 10-percent revenue
limitation.
9. See SEC Rule 10b-10(a)(8)(i) (17 C.F.R. 240.10b-10(a)(8)(i)).
362
Federal Reserve Bulletin • April 1996
section 4(c)(8) of the BHC Act. 10 The Board also has
determined that acting as agent in the private placement of
securities and purchasing and selling securities on the
order of investors as a riskless principal do not constitute
underwriting and dealing in securities for purposes of
section 20 of the Glass-Steagall Act, and that revenue
derived from these activities is not subject to the
10-percent revenue limitation on bank-ineligible securities
underwriting and dealing. 11
Notificant has committed that Company will conduct its
private placement and riskless principal activities using the
same methods and procedures, and subject to the same
prudential limitations established by the Board in Bankers
Trust and J.P. Morgan,12 including the comprehensive
framework of restrictions imposed by the Board in connection with underwriting and dealing in bank-ineligible securities, which were designed to avoid potential conflicts of
interests, unsound banking practices, and other adverse
effects. 13
Trading Futures and Options on Bank Eligible
Instruments
The Board also previously has determined that purchasing
and selling, for purposes other than hedging, exchange-
10. See J.P. Morgan & Company Incorporated, 76 Federal Reserve
Bulletin 26 (1990) ("J.P. Morgan")-, Bankers Trust New York Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust").
11. See Bankers Trust.
12. Among the prudential limitations discussed more fully in Bankers Trust and J.P. Morgan are 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 not hold itself out as making a market in the
securities that it buys and sells as a riskless principal. In addition,
Company will not act as a riskless principal for open-end investment
company securities or with respect to any securities of investment
companies that are advised by Notificant or any of its affiliates. With
regard to private placement activities, Notificant has committed that
Company will not privately place registered investment company
securities or securities of investment companies that are sponsored or
advised by Notificant or any of its affiliates.
13. In previous orders approving riskless principal activities, the
Board has relied on commitments by bank holding companies to
refrain from entering quotes for specific securities in the NASDAQ or
any other dealer quotation system in connection with riskless principal
transactions. See Bankers Trust. Notificant proposes that Company, in
acting as a riskless principal, be permitted to enter bid or ask quotations, or publish "offering wanted" or "bid wanted" notices, on
trading systems other than an exchange or the NASDAQ.
In order to ensure that Company would not hold itself out as a
market maker with respect to securities for which it acts as riskless
principal, Notificant has committed that Company will not enter price
quotations on different sides of the market for a particular security
during the same two business day period. In other words, Company
would not enter an "ask" quote for two business days after entering a
"bid" quote with respect to the same security, and vice versa. The
Board previously has determined that these activities are permissible
and do not constitute underwriting and dealing in securities for purposes of the Glass-Steagall Act. See BankAmerica Corporation, 79
Federal Reserve Bulletin 1163 (1993); Dauphin Deposit
Corporation,
11 Federal Reserve Bulletin 672 (1991).
traded and over-the-counter futures, options, and options
on futures based on bank-eligible securities and certificates
of deposit or other money market instruments eligible for
investment by national banks is closely related to banking. 14
Proper Incident to Banking Standard and Other
Considerations
Under the proper incident to banking standard of section
4(c)(8) of the BHC Act, in order to approve this notice, the
Board must determine that the performance of the proposed activities by Notificant can reasonably be expected
to produce public benefits that would outweigh possible
adverse effects. As part of the Board's evaluation of these
factors, the Board considers the financial and managerial
resources of the notificant and its subsidiaries and the effect
the transaction would have on such resources. 15 Based on
all the facts of record, the Board concludes that financial
and managerial considerations are consistent with approval
of this notice.
As noted above, Notificant has committed that Company
will conduct its bank-ineligible securities underwriting and
dealing activities in accordance with the prudential framework established by the Board in its Section 20 Orders.
Under the framework and conditions established in this
order and the Section 20 Orders, the Board concludes that
Company's proposed underwriting and dealing in, to a
limited extent, bank-ineligible securities is not likely to
result in significantly adverse effects, such as undue concentration of resources, decreased or unfair competition,
conflicts of interest, or unsound banking practices. Moreover, the Board expects that the de novo entry of Company
into the market for the proposed services would provide
added convenience to Notificant's customers and would
increase the level of competition among existing providers
of these services.
With respect to trading activities, Notificant, through its
bank subsidiaries, has gained substantial experience in
trading and monitoring positions in bank-eligible securities. In connection with these activities, Notificant has
developed expertise in trading derivative instruments related to bank-eligible securities and money market instruments and has established comprehensive operational, accounting, and control systems to limit and monitor the risks
associated with trading derivative products based on bankeligible securities and money market instruments. The
Board has carefully reviewed the operational, accounting,
and risk management policies and systems used by Notificant and its subsidiaries in connection with their trading
activities. These policies and systems are designed to mitigate the credit risk, market risk, and operations risk that
14. See Swiss Bank Corporation, 81 Federal Reserve Bulletin 185
(1995); Swiss Bank Corporation, 11 Federal Reserve Bulletin 759
(1991) ("1991 Swiss Bank Order").
15. See 12 C.F.R. 225.24; see also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73
Federal Reserve Bulletin 155 (1987).
Legal Developments
arise from the proposed trading activities and are similar to
the policies and systems relied on by the Board in approving such activities for section 20 companies. 16
Notificant has indicated that Company would implement
the procedures and systems currently in place at Notificant's bank subsidiaries for conducting and monitoring
Company's proposed trading activities in bank-eligible securities and related derivative instruments. 17 The Board
also notes that Notificant proposes to transfer to Company
personnel who have substantial experience in operating
Notificant's risk management systems. Based on these
representations and all other facts of record, the Board has
determined that the performance of the proposed activities
by Notificant can reasonably be expected to produce public
benefits that outweigh possible adverse effects under the
proper incident to banking standard of section 4(c)(8) of
the BHC Act. 18
Based on all the facts of record, and subject to the
commitments made by Notificant, as well as the terms and
conditions set forth in this order and in the Board orders
noted above, the Board has determined that the notice
should be, and hereby is, approved. Approval of this proposal is specifically conditioned on compliance by Notificant and Company with the commitments made in connection with this notice and the conditions referenced in this
order and the above- cited Board regulations and orders.
The Board's determination also is subject to all the terms
and conditions set forth in Regulation Y, including those in
sections 225.7 and 225.23(g) (12 C.F.R. 225.7 and
225.23(g)) 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 eva-
16. See Swiss Bank Corporation, 81 Federal Reserve Bulletin 185
(1995); The Dai-Ichi Kangyo Bank, Limited, 80 Federal Reserve
Bulletin 148 (1994); 1991 Swiss Bank Order.
17. Notificant has committed that Company will not become a
specialist or market-maker with respect to eligible derivative instruments. The Board notes that Company would use the instruments
listed in the 1991 Swiss Bank Order to hedge the market risk resulting
from its proposed derivative activities, and that Company, as a registered broker-dealer, would be required to comply with the SEC's
minimum net capital rules. See 15 C.F.R. 240.15c3-l.
18. Society Asset Management, Inc. ("SAMI"), an indirect wholly
owned subsidiary of Notificant's subsidiary bank, Society National
Bank, Cleveland, Ohio, engages in providing investment advice on
certain of the derivative instruments proposed to be traded in by
Company. In order to minimize any potential conflicts of interests that
could result from the related activities of Company and SAMI, Notificant has committed that SAMI will disclose to its customers that it is
affiliated with Company, and that Company trades futures, options,
and options on futures for its own account. This disclosure will occur
both at the commencement of the customer relationship and upon
confirmation of any order. In addition, Notificant has committed that
SAMI will not share nonpublic customer information with Company
without the express written consent of the customer, and that in any
case in which SAMI knowingly executes a transaction to which
Company is a party, it will make prior disclosure of that fact to its
customer and obtain the customer's prior consent to the arrangement.
These commitments are similar to commitments relied on by the
Board in similar previous cases. See The Dai-Ichi Kangyo Bank,
Limited, 80 Federal Reserve Bulletin 148 (1994).
363
sion of, the provisions of the BHC Act and the Board's
regulations and orders issued thereunder. In approving this
proposal, the Board has relied on all the facts of record and
all the representations and commitments made by Notificant. 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 the
Federal Reserve Bank of Cleveland, acting pursuant to
delegated authority.
By order of the Board of Governors, effective February 20, 1996.
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, and Phillips. Absent and not voting: Governor Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
The Royal Bank of Canada
Montreal, Quebec, Canada
Order Approving a Notice to Engage in Data
Activities
Processing
The Royal Bank of Canada, Montreal, Quebec, Canada
("RBOC"), a foreign banking organization that is subject
to the provisions of the Bank Holding Company Act
("BHC Act"), has requested approval under section 4(c)(8)
of the BHC Act (12 U.S.C. § 1843(c)(8)) and section
225.23(a) of the Board's Regulation Y (12 C.F.R.
225.23(a)) to acquire 20 percent of the voting shares of
MECA Software, L.L.C., Fairfield, Connecticut ("Company"). As a result of this proposal, RBOC would engage
through Company in the development, production, and
provision of home banking, personal financial management, and other computer software pursuant to section
225.25(b)(7) of Regulation Y (12 C.F.R. 225.25(b)(7))
throughout the United States and Canada.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published (61
Federal Register 168 (1996)). The time for filing comments has expired, and the Board has considered this
proposal and all comments received, in light of the factors
set forth in section 4(c)(8) of the BHC Act.
RBOC, with total consolidated assets equivalent to approximately $136.5 billion, operates a branch in New York,
New York; a representative office in Chicago, Illinois; and
agencies in Los Angeles, California, and Miami, Florida. 1
RBOC also engages through subsidiaries in permissible
nonbanking activities in the United States.
1. Asset data are as of October 31, 1995, and are based on exchange
rates then in effect.
364
Federal Reserve Bulletin • April 1996
Company is currently jointly owned by national bank
subsidiaries of BankAmerica Corporation, San Francisco,
California, and NationsBank Corporation, Charlotte, North
Carolina. 2
Proposed
Activities
Company currently develops, produces, markets, and supports computer software products that enable individuals to
organize their personal finances. Company's principal software product is Managing Your Money, a computer program that permits customers to conduct basic banking
transactions and personal financial management using their
personal computers. 3 Following consummation of this proposal, Company would continue to market Managing Your
Money and other financial software to financial institutions
and other customers. In addition, Company would continue
to provide customized financial and banking computer
software to financial institutions to permit them to offer
home banking and personal finance services to their customers.
The Board previously has determined that processing
financial, banking, and economic data is closely related to
banking and therefore permissible for bank holding companies under section 4(c)(8) of the BHC Act. 4 The Board
believes that the development, production, and sale of
computer software, such as Managing Your Money, to
process financial, banking, or economic data, is closely
related to banking under section 4(c)(8) of the BHC Act
and encompassed within the activities permissible under
the Board's data processing regulation. RBOC has committed that Company will conduct these data processing activities in accordance with the requirements set forth in Regulation Y.5
2. OCC Interpretative Letter No. 677, reprinted in [1994-1995
transfer Binder] Fed. Banking L. Rep. (CCH) t 83,625. National bank
subsidiaries of Fleet Financial Group, Inc., Providence, Rhode Island,
and First Bank Systems, Inc., Minneapolis, Minnesota, have applied
to the Office of the Comptroller of the Currency to acquire an interest
in Company.
3. For example, Managing Your Money enables customers to pay
bills, view and reconcile checking account registers, gain access to
their checking and savings account statements, transfer funds between
accounts, receive stock quotations, and engage in tax and financial
planning.
4. In particular, section 225.25(b)(7) of Regulation Y permits bank
holding companies to provide data processing and data transmission
services, facilities (including software), data bases, or access to such
services, facilities, or data bases by any technological means, so long
as the data to be processed or furnished are "financial, banking, or
economic" in nature. See 12 C.F.R. 225.25(b)(7).
5. Regulation Y also requires that the services be provided pursuant
to a written agreement and places certain limitations on the facilities
and hardware provided with the data processing services. In particular,
the facilities must be designed, marketed and operated for the processing and transmission of financial, banking, or economic data;
hardware must be provided only in conjunction with permissible
software; and general purpose hardware must not constitute more than
30 percent of the cost of any packaged offering. RBOC has committed
that Company will provide the proposed services pursuant to a written
Company also previously developed several nonfinancial software products, including games, a computer security program, a medical reference library, and a program
providing basic legal forms. RBOC indicates that Company does not dedicate any employees or resources exclusively to the development or marketing of nonfinancial
software, and that revenues from the separate sale of nonfinancial software accounted for approximately 7 percent of
Company's 1994 revenues. RBOC also indicates that Company has no intention to develop any new nonfinancial
software or to upgrade, enhance, or promote its current
nonfinancial programs, and that this portion of Company's
business is expected to diminish over time. In view of the
limited nature of this activity in this case, the Board
concludes that RBOC may proceed to acquire the proposed
20 percent interest in Company.
In order to approve this notice, the Board also must
determine that the proposed activities are a proper incident
to banking, that is, that the performance of the proposed
activities by RBOC through Company "can reasonably be
expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices." 6
As part of its review of these factors in every case
involving a nonbanking acquisition by a bank holding
company under section 4 of the BHC Act, the Board
considers the financial and managerial resources of the
notificant and its subsidiaries, and the company to be
acquired, and the effect of the proposed transaction on
those resources. 7 Based on all the facts of record, the Board
has concluded that financial and managerial considerations
are consistent with approval of this proposal.
The Board expects that the proposed capital investment
by RBOC in Company would improve Company's ability
to compete in the financial software market. RBOC's participation in Company also would likely result in an expansion of Company's customer base and thereby help establish Company as a viable competitor in the industry. The
Board also anticipates that Company's proposed activities,
which should be enhanced as a result of this proposal,
would result in a wider range of services and products,
greater efficiency, and increased convenience for customers
of RBOC and other financial institutions.
There is no evidence in the record that consummation of
this proposal would 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 outweighed by the
public benefits of this proposal. RBOC does not currently
provide these products and services and the Board notes
agreement and will provide facilities and hardware within the limitations established by Regulation Y.
6. 12 U.S.C. § 1843(c)(8).
7. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); and Bayerische Vereinsbank, AG,
73 Federal Reserve Bulletin 155 (1987).
Legal Developments
that there is no evidence that the proposed transaction
would decrease the level of existing or potential competition among providers of these services.
On the basis of the foregoing and all the facts of record,
the Board has concluded that the balance of the public
interest factors it is required to consider under the proper
incident to banking standard of section 4(c)(8) of the BHC
Act is favorable, and consistent with approval of this
notice.
Conclusion
Based on the foregoing and all the facts of record, the
Board has determined that the notice should be, and hereby
is, approved. Approval of this proposal is specifically conditioned on compliance by RBOC with the commitments
made in connection with this notice and with the conditions referred to in this order. The Board's determination
also is subject to all the conditions set forth in Regulation Y, including those in sections 225.7 and 225.23(g) of
Regulation Y (12 C.F.R. 225.7 and 225.23(g)), and to the
Board's authority to require such modification or termination of the activities of a bank holding company or any of
its subsidiaries as the Board finds necessary to ensure
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 shall be 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 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, acting pursuant to
delegated authority.
By order of the Board of Governors, effective February 6, 1996.
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON
Deputy Secretary of the Board
The Sumitomo Bank, Limited
Osaka, Japan
Order Approving a Notice to Engage in Trust Company
Activities
The Sumitomo Bank, Limited, Osaka, Japan ("Sumitomo"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has given
notice 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) of its proposal to acquire,
through its subsidiary, the Sumitomo Bank of New York
365
Trust Company, New York, New York ("Sumitomo
Trust"), the trust business of Daiwa Bank Trust Company,
New York, New York ("Daiwa Trust"), a wholly owned
subsidiary of The Daiwa Bank, Limited, Osaka, Japan
("Daiwa"), and the custody business of the New York
branch of Daiwa and thereby engage in trust company
activities pursuant to section 225.25(b)(3) of Regulation Y
(12 C.F.R. 225.25(b)(3)).
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(61 Federal Register 352 (1996)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors set
forth in section 4(c)(8) of the BHC Act.
Sumitomo, with total consolidated assets equivalent to
approximately $541 billion, is the fourth largest banking
organization in Japan and the world. 1 In the United States,
in addition to Sumitomo Trust, a limited purpose trust
company, Sumitomo operates The Sumitomo Bank of California, San Francisco, California, and owns a 13.6 percent
interest in CPB Inc., Honolulu, Hawaii ("CPB"). 2 Sumitomo operates branches in Los Angeles and San Francisco,
California; Chicago, Illinois; and New York, New York.
Sumitomo also operates agencies in Atlanta, Georgia, and
Houston, Texas; and a representative office in Seattle,
Washington. Sumitomo also engages directly and through
subsidiaries in other permissible nonbanking activities in
the United States and abroad.
The Board previously has determined by regulation that,
subject to the limitations established in Regulation Y, engaging in trust related and custodial activities is closely
related to banking within the meaning of the BHC Act and,
therefore, is permissible for bank holding companies. 3
Sumitomo has committed that these proposed activities
will be conducted in conformity with the limitations established in Regulation Y.
In order to approve this notice, the Board is required to
determine that the performance of the proposed activities
by Sumitomo can reasonably be expected to produce benefits to the public that would outweigh possible adverse
effects under the proper incident to banking standard of
section 4(c)(8) of the BHC Act. 4
The Board expects that this proposal would provide
gains in efficiency, added convenience to Sumitomo customers, and another source of trust services for Daiwa's
former customers. 5 Moreover, consummation of this proposal is not likely to result in any significantly adverse
effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or
1. Asset data are as of September 30, 1995.
2. CPB controls 100 percent of the voting shares of Central Pacific
Bank, Honolulu, Hawaii.
3. See 12 C.F.R. 225.25(b)(3).
4. 12 U.S.C. § 1843(c)(8).
5. On November 1, 1995, Daiwa and Daiwa Trust entered into
consent orders with the Board and other federal and state authorities to
terminate the banking operations of Daiwa and Daiwa Trust in the
United States by February 2, 1996.
366
Federal Reserve Bulletin • April 1996
unsound banking practices. Accordingly, the Board has
concluded that the performance of the proposed activities
by Sumitomo can reasonably be expected to produce public benefits that would outweigh any adverse effects under
the proper incident to banking standard of section 4(c)(8)
of the BHC Act. 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 notificant and its subsidiaries and the effect of the
transaction on these resources. 7 The Board notes that Sumitomo meets the relevant risk-based capital standards established under the Basle Accord, and has capital equivalent
to that which would be required of a United States banking
organization. In view of these and other facts of record, the
Board has determined that the financial factors are consistent with approval of the notice. The managerial resources
of Sumitomo and its subsidiaries also are consistent with
approval.
Based on the foregoing and all the facts of record, the
Board has determined that the notice should be, and hereby
is, approved. The Board's determination is subject to all
the terms and conditions set forth in Regulation Y, including those in sections 225.7 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
6. The Board received comments from the Inner City Press/
Community on the Move ("ICP") on this proposal. ICP urges the
Board to scrutinize closely the transaction in light of the Board's
consent order terminating the operations of Daiwa and to pay particular attention to compliance by Sumitomo and Daiwa with the Community Reinvestment Act (12U.S.C. § 2901 et seq.) ("CRA"). ICP
argues that the proposal by Sumitomo to acquire only the nonbanking
operations of Daiwa Trust through a nonbank company will eliminate
a financial institution that currently is subject to the CRA in favor of
one that is not subject to the CRA. In addition, ICP argues that the
Board should carefully evaluate whether the possibility that Sumitomo might merge with Daiwa could result in a circumvention of the
Board's termination order.
The Board has carefully reviewed this transaction, including Sumitomo's compliance record, in light of all the facts of record and the
standards that apply under the BHC Act. The Board does not believe
that ICP's concern that the transaction would result in the elimination
of an institution that is subject to the CRA justifies denial of this
proposal. The CRA does not provide any basis for the Board to
require that Daiwa and Daiwa Trust transfer their trust and custody
operations to an institution that is subject to the CRA.
The Board believes there is no evidence in the record to show that
the proposal would circumvent the regulators' termination order.
Sumitomo, which would acquire the trust operations of Daiwa and
Daiwa Trust, is a separate commercial bank that currently has an
established trust and banking business in the United States. ICP
provides no evidence that, if Sumitomo were to acquire all of Daiwa's
operations in the future, the proposed acquisition of the United States
operations of Daiwa by Sumitomo at this time would in fact permit
Daiwa to continue to operate in the United States in contravention of
the Board's termination order. If Sumitomo or any other organization
were to acquire or merge with Daiwa in the future, the Board would
retain jurisdiction to review the facts surrounding such a transaction
and monitor and enforce its termination order with Daiwa.
7. See 12 C.F.R. 225.24; Fuji Bank, Limited, 75 Federal
Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal
Bulletin 155 (1987).
Reserve
Reserve
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 also is specifically conditioned on compliance with all the commitments made in
connection with this notice, including, but not limited to,
commitments made with respect to retention and maintenance of documents, and the conditions set forth in this
order and in the Board's regulations as noted above. These
commitments and conditions shall be deemed to be conditions imposed in writing by the Board in connection with
its findings and decisions and, as such, may be enforced in
proceedings under applicable law.
This transaction shall not be consummated later than
three months following the effective date of this order,
unless such period is extended for good cause by the Board
or by the Federal Reserve Bank of San Francisco, acting
pursuant to delegated authority.
By order of the Board of Governors, effective February 2, 1996.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
WILLIAM w . WILES
Secretary of the Board
ORDERS ISSUED UNDER BANK MERGER ACT
The Fifth Third Bank
Cincinnati, Ohio
The Fifth Third Bank of Columbus
Columbus, Ohio
Order Approving
of Branches
the Merger of Banks and
Establishment
The Fifth Third Bank, Cincinnati, Ohio ("Fifth ThirdCincinnati"), and The Fifth Third Bank of Columbus,
Columbus, Ohio ("Fifth Third-Columbus") (collectively,
"Fifth Third"), both state member banks, have applied
under section 18(c) of the Federal Deposit Insurance Act
(12 U.S.C. § 1828(c)) (the "Bank Merger A c t " ) to acquire
certain assets and assume certain liabilities of 25 branches
of NBD Bank, Columbus, Ohio ( " N B D " ) . Fifth Third also
has applied under section 9 of the Federal Reserve Act
(12 U.S.C. § 321) to establish branches at the current locations of 14 of the NBD branches. 1
Notice of the proposals, affording interested persons an
opportunity to submit comments, has been given in accordance with the Bank Merger Act and the Board's Rules of
1. The locations of the branches that each bank proposes to acquire
are listed in the Appendix, which includes 11 branches to be acquired
and merged into existing branches of Fifth Third.
Legal Developments
Procedure (12 C.F.R. 262.3(b)). 2 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, and
the Federal Deposit Insurance Corporation ("FDIC"). The
time for filing comments has expired, and the Board has
considered the proposal and all comments received in light
of the factors set forth in the Bank Merger Act and the
Federal Reserve Act.
Fifth Third Bancorp, Cincinnati, Ohio ("Bancorp"),
controls six banks and one thrift institution in Ohio, including Fifth Third-Cincinnati and Fifth Third-Columbus. Bancorp is the fourth largest commercial banking or thrift
organization in Ohio, controlling deposits of $8.5 billion,
representing approximately 6.5 percent of total deposits in
depository institutions in Ohio. 3 The branches of NBD that
Fifth Third-Cincinnati and Fifth Third-Columbus propose
to acquire control deposits of $529 million, representing
less than 1 percent of total deposits in depository institutions in Ohio. On consummation of the proposed transaction, Bancorp would remain the fourth largest commercial
banking or thrift organization in Ohio, controlling deposits
of $9 billion, representing approximately 6.9 percent of
total deposits in depository institutions in the state.
Fifth Third-Cincinnati and NBD compete directly in the
Dayton, Ohio banking market, and Fifth Third-Columbus
and NBD compete directly in the Columbus, Ohio banking
market. 4 On consummation of this proposal, these banking
markets would remain moderately concentrated as mea-
2. The Board received comments from an individual ("Protestant")
who maintains that notice of this proposal should have been provided
to all customers of the affected institutions in their monthly account
statements and to the public through an electronic on-line data base.
Protestant also believes that access to applications filed with the
Federal Reserve System should be made available through an on-line
data base similar to the access provided by the Government Printing
Office for the Congressional Record, the Federal Register, and other
publications distributed by the Superintendent of Documents, pursuant to the Government Printing Office Electronic Information Access
Enhancement Act of 1993, P.L. 103-40, 107 Stat. 112 (June 8, 1993)
("Access Act").
The Board's Rules of Procedure (12 C.F.R. 262.3(b)(3)) require an
applicant state member bank to publish notice at least three times in a
newspaper of general circulation in the community in which the head
office of each of the banks to be a party to the merger is located and to
provide a public comment period of at least 30 days after publication
of the first notice. Applicants have complied with these publication
requirements. In addition, copies of the nonconfidential portion of
applications filed with the System, which are not subject to the Access
Act, are provided by the Federal Reserve Banks or the Board upon
request, and a copy of all nonconfidential portions of these applications has been provided to Protestant. Based on all the facts of record,
the Board concludes that notice and copies of this proposal have been
provided in accordance with the Board's rules, and that the public,
including Protestant, was adequately informed of the proposal.
3. Deposit data are as of June 30, 1995. In this context, depository
institutions include commercial banks, savings banks, and savings
associations.
4. The Dayton banking market is approximated by Greene, Miami,
and Montgomery Counties; Bethel and Mad River Townships in Clark
County; and Clear Creek, Wayne, and Massie Townships in Warren
County, all in Ohio. The Columbus banking market is approximated
by Franklin, Delaware, Fairfield, Licking, Madison, Pickaway, and
367
sured by the Herfindahl-Hirschman Index ("HHI"). 5 In
light of the competition offered by other depository institutions in the market, the number of competitors that would
remain in the market after consummation of the proposal,
the relatively small increase in concentration as measured
by the HHI, 6 and all other facts of record, the Board
concludes that consummation of the proposal would not
result in a significantly adverse effect on competition in
any relevant banking market.
Convenience and Needs
Considerations
In acting on an application under the Bank Merger 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 encourage financial institutions to help
meet the credit needs of the local communities in which
they operate, consistent with their safe and sound operation. 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 operation of
such institution," and to take that record into account in its
evaluation of bank expansion proposals. 7
Protestant generally contends that Fifth Third has failed
to meet the credit needs of commercial borrowers in Dayton, Ohio, and that NBD illegally discriminates against
making loans on commercial properties in certain areas in
Dayton. 8 The Board has carefully reviewed the CRA performance records of Fifth Third and NBD; Protestant's
comments and applicants' responses to those comments;
and all other relevant facts of record in light of the CRA,
Union Counties, Perry Township in Hocking County, and Thorn
Township in Perry County, all in Ohio.
5. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (June 29, 1984), a market in which the postmerger HHI is less than 1000 is considered unconcentrated, and a
market in which the post-merger HHI is between 1000 and 1800 is
considered moderately concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not
be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the
merger 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 nondepository financial institutions.
6. The HHI would increase by 21 points to 1550 in the Columbus
banking market, and by 76 points to 1494 in the Dayton banking
market.
7. 12 U.S.C. § 2903.
8. Protestant cites the denial of his loan application by NBD as
evidence of illegal discrimination against commercial borrowers. Fifth
Third responds that financial considerations were not consistent with
approval of the loan request. Protestant's allegations relating to his
loan denial have been referred to NBD's primary federal supervisor,
the FDIC, for consideration.
368
Federal Reserve Bulletin • April 1996
the Board's regulations, and the Statement of the Federal
Financial Supervisory Agencies Regarding the Community
Reinvestment Act ("Agency CRA Statement"). 9
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 reports of these examinations will be given great weight in
the applications process. 10 Fifth Third-Cincinnati and Fifth
Third-Columbus both received "outstanding" ratings from
the Federal Reserve Bank of Cleveland and the FDIC,
respectively, in their most recent examinations for CRA
performance, as of December 1994 and February 1994.
NBD also received an "outstanding" CRA rating from the
FDIC in its most recent examination for CRA performance, as of May 1994. Examiners found no evidence of
practices intended to discourage loan applications at any of
these institutions and found all of the banks to be in
compliance with federal fair lending laws.
The Board also notes that it reviewed Fifth ThirdCincinnati's record of CRA performance, particularly its
small business lending activities in low- and moderateincome areas in Ohio, in light of substantially similar
comments submitted by Protestant in connection with a
recent application filed by the bank. 11 The bank's small
business lending activities include Small Business Administration lending programs, officer call programs, and a
second review program. The bank also participates in
Ohio's Mini-Loan Program, and has provided funding and
technical assistance to the Dayton Minority Business Development Center. Based on all the facts of record, including for the reasons explained in the Fifth Third Order,
which are incorporated herein by reference, the Board
believes that considerations relating to the convenience and
needs of the communities to be served, including the CRA
performance records of the banks involved, are consistent
with approval.
Other
Considerations
The Board also concludes that the financial and managerial
resources and future prospects of Fifth Third are consistent
with approval, as are the other factors required to be
considered under the Bank Merger Act and the Federal
Reserve Act. 12
Based on the foregoing and all the facts of record, the
Board has determined that these proposals should be, and
hereby are, approved. 13 The Board's approval is specifically conditioned on compliance by Fifth Third with
all commitments made in connection with these proposals.
The commitments and conditions relied on by the Board
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.
These transactions may not be consummated before the
fifteenth calendar day after the effective date of this order,
or later than three months after the effective date of this
order, unless such period is extended by the Board or by
the Federal Reserve Bank of Cleveland, acting pursuant to
delegated authority.
By order of the Board of Governors, effective February 7, 1996.
Voting for this action: Chairman Greenspan and Governors Kelley,
Lindsey, and Phillips. Absent and not voting: Governor Yellen.
BARBARA R . LOWREY
Associate Secretary of the Board
Appendix
Branch offices of NBD to he acquired by Fifth
Third-Cincinnati:
100 West Second Street, Dayton, Ohio*
5130 Salem Avenue, Trotwood, Ohio*
896 E. National Road, Vandalia, Ohio*
2829 Miamisburg-Centerville, Miamisburg, Ohio*
2601 Far Hills Avenue, Oakwood, Ohio
1 E. Central Avenue, West Carrollton, Ohio
4884 Airway Road, Dayton, Ohio
3245 E. Patterson Road, Beavercreek, Ohio*
Branch offices of NBD to be acquired by Fifth
Third-Columbus:
6500 Tussing Road, Reynoldsburg, Ohio*
2757 Festival Lane, Dublin, Ohio*
9. 54 Federal Register 13,742 (1989).
10. Id. at 13,745.
11. See The Fifth Third Bank, 81 Federal Reserve Bulletin 976
(1995) ("Fifth Third Order") (Order dated August 23, 1995, approving the acquisition of certain branches from PNC Bank, Ohio, N.A.,
Cincinnati, Ohio, "PNC"). Protestant asserts that, in connection with
this acquisition, Fifth Third-Cincinnati lost materials related to his
loan application, which was denied later by PNC. Applicants state that
files on loans that had been denied were not acquired in this proposal.
As noted in the Fifth Third Order, Protestant's comments on his
denied loan application have been referred to PNC's primary federal
supervisor, the Office of the Comptroller of the Currency, for consideration.
company. Based on all the facts of record, including supervisory
information, and for the reasons stated in the Fifth Third Order, these
allegations do not warrant denial of this proposal.
13. Protestant maintains that applicants should be required to provide additional information related to their CRA performance, other
business activities, and compliance with the Board's Regulations C
and CC. The Board is required under applicable law and its application processing regulations to act on applications submitted under the
Bank Merger Act and the Federal Reserve Act within specified time
periods. As discussed above, the Board has carefully reviewed the
record in this case, including information provided by Protestant, the
applicants, and by relevant reports of examination. Based on all the
facts of record, the Board concludes that delay or denial of this
proposal on the grounds of informational insufficiency is not warranted.
12. Protestant reiterates his allegations that fees were improperly
assessed by Fifth Third against an account maintained by Protestant's
*Branch offices of N B D to be merged into Fifth Third upon consummation of the proposed transaction.
Legal Developments
1330 Morse Road, Columbus, Ohio*
175 S. 3rd Street, Columbus, Ohio*
6300 Frantz Road, Dublin, Ohio*
1851 W. Henderson Road, Upper Arlington, Ohio
1756 W. Lane Avenue, Columbus, Ohio
54 W. Wilson Bridge Road, Worthington, Ohio
2500 Dublin-Granville Road, Columbus, Ohio
3407 Cleveland Avenue, Columbus, Ohio
45 Huber Village Boulevard, Westerville, Ohio
3460 S. High Street, Columbus, Ohio
3870 E. Livingston Avenue, Columbus, Ohio
2450 E. Main Street, Bexley, Ohio
7070 E. Main Street, Reynoldsburg, Ohio*
2680 W. Broad Street, Columbus, Ohio*
5727 Emporium Square, Columbus, Ohio*
ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT
The Sumitomo Bank, Limited
Osaka, Japan
Order Approving
Establishment
of Representative
Offices
The Sumitomo Bank, Limited, Osaka, Japan ( " B a n k " ) , a
foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the
IBA (12 U.S.C. § 3107(a)) to establish representative
offices in the following locations: Los Angeles and San
Francisco, California; Miami and Tampa, Florida; Atlanta,
Georgia; Baltimore, Maryland; Boston, Massachusetts;
Minneapolis, Minnesota; St. Louis, Missouri; New York,
New York; Philadelphia and Pittsburgh, Pennsylvania; and
Dallas and Houston, Texas. The Foreign Bank Supervision
Enhancement Act of 1991, which amended the IBA, provides that a foreign bank must obtain the approval of the
Board to establish representative offices in the United
States.
Notice of the applications, affording interested persons
an opportunity to submit comments, has been published in
a newspaper of general circulation with regard to each
representative office. 1 The time for filing comments has
1. Notices were published in the following communities where
Bank proposes to establish representative offices: Los Angeles, California (The Los Angeles Times, December 15, 1995); San Francisco,
California (The San Francisco Chronicle, December 15, 1995); Miami, Florida (The Miami Herald, December 15, 1995); Tampa, Florida
{The Tampa Tribune, December 15, 1995); Atlanta, Georgia (The
Atlanta Journal and Constitution, December 15, 1995); Baltimore,
Maryland (The Baltimore Sun, December 14, 1995); Boston, Massachusetts (The Boston Globe, December 15, 1995); Minneapolis, Minnesota (The Star Tribune, December 15, 1995); St. Louis, Missouri
(The St. Louis Post-Dispatch, December 15, 1995); New York, New
York (The New York Times, December 15, 1995); Philadelphia, Pennsylvania (The Philadelphia Inquirer, December 15, 1995); Pittsburgh,
Pennsylvania (The Pittsburgh Post-Gazette,
December 15, 1995);
Dallas, Texas (The Daily Commercial Record, December 15, 1995);
and Houston, Texas (The Houston Chronicle, December 15, 1995).
369
expired, and the Board has considered the applications and
all comments received. 2
Bank, with total consolidated assets equivalent to approximately $541 billion, 3 is the fourth largest banking
organization in Japan and the world. In the United States,
Bank currently operates subsidiary banks in San Francisco,
California and Honolulu, Hawaii; a limited purpose trust
company in New York, New York; branches in Los Angeles and San Francisco, California; Chicago, Illinois; and
New York, New York; agencies in Atlanta, Georgia; and
Houston, Texas; and a representative office in Seattle,
Washington. Bank also engages directly and through subsidiaries in other permissible nonbanking activities in the
United States and abroad.
The proposed representative offices would assume the
existing business of certain offices of The Daiwa Bank,
Limited. 4 The proposed representative offices would engage in traditional representative functions, including loan
production and researching potential markets. The proposed representative offices would not accept any deposits
or make any loans, and would limit their operations to
those consistent with the Board's regulations. 5
In acting on applications to establish representative offices, the IBA and Regulation K provide that the Board
shall take into account whether the foreign bank engages
directly in the business of banking outside of the United
States and has furnished the Board with the information it
needs to assess the application adequately. The Board also
shall take into account whether the foreign bank and any
foreign bank parent is subject to comprehensive supervision or regulation on a consolidated basis by its home
country supervisor (12 U.S.C. § 3105(d)(2); 12 C.F.R.
211.24). 6 The Board may also take into account additional
2. For discussion of the comment received from the Inner City
Press/Community on the Move, see the Board's Order dated February 2, 1996, approving the notice by Bank to engage in trust company
activities.
3. All financial data are as of September 30, 1995.
4. On November 1, 1995, The Daiwa Bank, Limited entered into a
Consent Order with the Board and other Federal and state authorities
to terminate its banking operations in the United States by February 2,
1996.
5. 12 C.F.R. 211.24(d)(1).
6. In assessing this standard, the Board considers, among other
factors, the extent to which the home country supervisors:
(i) Ensure that the bank has adequate procedures for monitoring
and controlling its activities worldwide;
(ii) Obtain information on the condition of the bank and its
subsidiaries and offices through regular examination reports,
audit reports, or otherwise;
(iii) Obtain information on the dealings with and relationship
between the bank and its affiliates, both foreign and domestic;
(iv) Receive from the bank financial reports that are consolidated
on a worldwide basis, or comparable information that permits
analysis of the bank's financial condition on a worldwide consolidated basis; and
(v) Evaluate prudential standards, such as capital adequacy and
risk asset exposure, on a worldwide basis.
These are indicia of comprehensive, consolidated supervision. No
single factor is essential and other elements may inform the Board's
determination.
370
Federal Reserve Bulletin • April 1996
standards as set forth in the IBA and Regulation K
(12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)).
In this case, with respect to the issue of supervision by
home country authorities, the Board has considered the
following information. Bank is subject to the regulatory
and supervisory authority of the Japanese Ministry of Finance ( " M O F " ) and the Bank of Japan. The Board previously has determined in connection with an application
involving another Japanese bank that the bank was subject
to comprehensive, consolidated home country supervision. 7 In this case, Bank is supervised on substantially the
same terms and conditions as the other Japanese bank.
Moreover, the MOF recently announced plans to enhance
its bank supervision in a number of areas, including
strengthening on-site inspections; establishing more comprehensive guidelines for internal audits, controls, and risk
management; increasing enforcement tools for distressed
banking institutions; and promoting closer information exchanges with foreign supervisory authorities. Based on all
the facts of record, the Board has determined that Bank is
subject to comprehensive supervision on a consolidated
basis by its home country supervisors.
The Board also notes that Bank engages directly in the
business of banking outside the United States through its
banking operations in Japan and elsewhere. Bank has provided the Board with the information necessary to assess
the application adequately.
The Board also has taken into account the additional
standards set forth in section 7 of the IBA and Regulation K (See 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R.
211.24(c)(2)). In this regard, the Japanese Ministry of
Finance has consented to the establishment of the proposed
representative offices.
Taking into consideration Bank's record of operations in
its home country, its overall financial resources, and its
standing with its home country supervisors, the Board also
has determined that financial and managerial factors are
consistent with approval of the proposed representative
offices. Bank appears to have the experience and capacity
to support the proposed representative offices and has
established controls and procedures for the proposed representative offices to ensure compliance with U.S. law.
Finally, with respect to access to information about
Bank's operations, Bank has committed to make available
to the Board such information on the operations of Bank
and its affiliates 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. To the extent that the provision of
such information may be prohibited by law, Bank has
committed to cooperate with the Board in obtaining any
consents or waivers that might be required from third
parties for disclosure. In light of these commitments and
other facts of record, and subject to the condition described
below, the Board concludes that Bank has provided ade-
7. Bank of Tokyo, 81 Federal Reserve Bulletin 279 (1995).
quate assurances of access to any necessary information
the Board may request.
On the basis of all 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 applications to establish representative offices
should be, and hereby are, 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 compliance by
Bank or its affiliates with applicable federal statutes, the
Board may require termination of any of Bank's or its
affiliates' direct or indirect activities in the United States.
Approval of these applications is also specifically conditioned on compliance by Bank with all commitments made
in connection with these applications, including but not
limited to commitments made with respect to retention and
maintenance of documents, and with the conditions in this
order.8 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 against Bank, its offices, and its
affiliates.
By order of the Board of Governors, effective February 2, 1996.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
WILLIAM W. WILES
Secretary of the Board
Union Bank of Switzerland
Zurich, Switzerland
Order Approving Establishment
of a Branch
Union Bank of Switzerland ("Bank"), Zurich, Switzerland, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 7(d)
of the IBA (12 U.S.C. § 3105(d)) to establish a statelicensed limited branch in New York, New York. The
Foreign Bank Supervision Enhancement Act of 1991
("FBSEA"), which amended the IBA, provides that a
foreign bank must obtain the approval of the Board to
establish a branch in the United States.
Notice of the application, affording interested persons an
opportunity to submit comments, has been published in a
newspaper of general circulation in New York, New York
(The New York Times, November 17, 1995). The time for
8. The Board's authority to approve the establishment of the proposed offices parallels the continuing authority of state banking regulators to license offices of a foreign bank. The Board's approval of
these applications does not supplant the authority of the relevant state
banking regulators to license the proposed offices of Bank in accordance with any terms or conditions that such state banking regulators
may impose.
Legal Developments
filing comments has expired, and all comments have been
considered.
Bank, with total consolidated assets of approximately
$306.6 billion, 1 is the largest bank in Switzerland, and it
engages in a wide range of banking activities worldwide
directly and through subsidiaries. 2 As of December 31,
1995, shares of Bank representing approximately 10.7 percent of total voting rights were held by BK Vision AG, BZ
Stiftung, and Stillhalter Vision AG, which are members of
the BZ Group. No other shareholder holds more than
5 percent of total voting rights.
In the United States, Bank operates branches in New
York, New York; Chicago, Illinois; and Los Angeles, California; an agency in Houston, Texas; and a representative
office in San Francisco, California. Bank also operates
UBS Securities, Inc., New York, New York, a subsidiary
engaged in securities activities that are grandfathered under
the IBA; UBS Finance (Delaware) Inc., Wilmington, Delaware, a commercial paper issuing subsidiary; and several
other subsidiaries in the United States.
Bank's primary purpose for establishing the proposed
limited branch is to provide private banking and asset
management services in the U.S. market. Bank already
provides similar services at its existing New York branch.
As a limited branch, the proposed branch would be prohibited from accepting deposits from sources other than those
permitted under section 5 of the IBA and section 25 A of
the Federal Reserve Act. 3 Bank would continue to be a
qualifying foreign banking organization within the meaning of Regulation K after establishing the proposed branch.
12 C.F.R. 211.23(b).
Bank has received approvals from the Swiss Federal
Banking Commission ("SFBC") and the New York State
Banking Department of its proposal to establish the proposed branch.
In order to approve an application by a foreign bank to
establish a branch in the United States, the IBA and Regulation K require the Board to determine that the foreign
bank applicant engages directly in the business of banking
outside of the United States, and has furnished to the Board
the information it needs to adequately assess the application. The Board also must determine that the foreign bank
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)).
1. Asset data are as of June 30, 1995.
2. The principal subsidiaries of Bank are engaged in the securities
and banking business.
3. Bank's home state is California. Under section 5 of the IBA, a
foreign bank may establish a branch outside its home state that limits
its deposit-taking to that of an Edge corporation operating under
section 25A of the Federal Reserve Act.
371
Bank engages directly in the business of banking outside
of the United States through its commercial banking operations in Switzerland and several other countries. Bank also
has provided the Board with the information necessary to
assess the application through submissions that address the
relevant issues.
Regulation K provides that a foreign bank will be considered to be subject to comprehensive supervision or
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 foreign bank's worldwide operations, including the relationship of the foreign bank to any affiliate, to
assess the overall financial condition of the foreign bank
and its compliance with law and regulation (12 C.F.R.
211.24(c)(1)). 4 In making its determination under this standard, the Board has considered the following information.
Bank is supervised and regulated by the SFBC. The
SFBC is responsible for the prudential supervision and
regulation of credit institutions. The Board has previously
determined, in connection with an application involving
another Swiss bank, Coutts & Co., AG ("Coutts"), that
Coutts was subject to home country supervision on a
consolidated basis. 5 Bank is supervised by the SFBC on the
same terms and conditions as Coutts. Bank also has provided additional information regarding the supervision and
regulation of Bank's activities by entities other than the
SFBC. Based on all the facts of record, the Board has
determined that Bank is subject to comprehensive supervision and regulation on a consolidated basis by its home
country supervisors.
The Board has also taken into account the additional
standards set forth in section 7 of the IBA (See 12 U.S.C.
§3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). Bank has provided the Board with the information necessary to assess
the application through submissions that address the relevant issues. As noted above, Bank has received the consent
of the SFBC to establish the proposed state-licensed
branch.
Switzerland is a signatory to the Basle risk-based capital
standards, and Swiss risk-based capital standards meet
4. In assessing this standard, the Board considers, among other
factors, the extent to which the home country supervisors:
(i) Ensure that the bank has adequate procedures for monitoring
and controlling its activities worldwide;
(ii) Obtain information on the condition of the bank and its
subsidiaries and offices through regular examination reports,
audit reports, or otherwise;
(iii) Obtain information on the dealings with and relationship
between the bank and its affiliates, both foreign and domestic;
(iv) Receive from the bank financial reports that are consolidated
on a worldwide basis, or comparable information that permits
analysis of the bank's financial condition on a worldwide consolidated basis;
(v) Evaluate prudential standards, such as capital adequacy and
risk asset exposure, on a worldwide basis.
These are indicia of comprehensive, consolidated supervision. No
single factor is essential, and other elements may inform the Board's
determination.
5. See Coutts & Co., AG, 79 Federal Reserve Bulletin 636 (1993).
372
Federal Reserve Bulletin • April 1996
those established by the Basle Capital Accord and the
European Union. Bank's capital is in excess of the minimum levels that would be required by the Basle Capital
Accord and is considered equivalent to capital that would
be required of a U.S. banking organization. Managerial and
other financial resources of Bank also are considered consistent with approval, and Bank appears to have the experience and capacity to support the proposed branch. Bank
has established controls and procedures for the proposed
branch in order to ensure compliance with U S . law, as well
as controls and procedures for its worldwide operations in
general.
Finally, the Board has reviewed the restrictions on disclosure in relevant jurisdictions in which Bank operates
and has communicated with relevant government authorities about access to information. 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. To the extent
that the provision of such information is prohibited or
impeded by law, Bank has committed to cooperate with the
Board to obtain any necessary consents or waivers that
might be required from third parties in connection with
disclosure of certain information. In addition, subject to
certain conditions, the SFBC may share information on
Bank's operations with other supervisors, including 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 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 a state-licensed limited
branch should be, and hereby is, approved. Should any
restrictions on access to information on the operations or
activities of Bank and its affiliates subsequently interfere
with the Board's ability to obtain information to determine
and enforce compliance by Bank or its affiliates with
applicable federal 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 Bank's compliance with the commitments made in connection with this application, and with
the conditions 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. § 1 8 1 8 or
12 U.S.C. § 1847 against Bank, its office, and its affiliates.
By order of the Board of Governors, effective February 28, 1996.
Voting for this action: Chairman Greenspan and Governors Lindsey, Phillips and Yellen. Absent and not voting: Governor Kelley.
WILLIAM W. WILES
Secretary of the Board
6. The Board's authority to approve the establishment of the proposed branch parallels the continuing authority of the State of New
York to license offices of a foreign bank. The Board's approval of this
application does not supplant the authority of the State of New York,
and its agent, the New York State Banking Department, to license the
proposed branch of Bank in accordance with any terms or conditions
that the State of New York may impose.
INDEX OF ORDERS ISSUED OR ACTIONS TAKEN BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
(October 1,1995-December 31, 1995)
Applicant
1st United Bancorp,
Boca Raton, Florida
Banc One Corporation,
Columbus, Ohio
Banco Santander, S.A.,
Madrid, Spain
FFB Participates e Servigos, S.A.
Funchal, Portugal
Bulletin
Volume
and Page
Merged or Acquired Bank
or Activity
Date of
Approval
The American Bancorporation of the
South,
Merritt Island, Florida
The American Bank of the South,
Merritt Island, Florida
Premier Acquisition Corporation,
Columbus, Ohio
Premier Bancorp, Inc.,
Baton Rouge, Louisiana
Premier Bank, N.A.,
Baton Rouge, Louisiana
First Union Corporation,
Charlotte, North Carolina
December 11,
1995
82, 151
November 29,
1995
82, 88
October 26,
1995
81, 1139
Legal Developments
Index of Orders—Continued
Applicant
Bank South Corporation,
Atlanta, Georgia
Barclays PLC,
London, England
Barclays Bank PLC,
London, England
The Berens Corporation,
Houston, Texas
Berens Delaware, Inc.,
Wilmington, Delaware
Boatmen's Bancshares, Inc.,
St. Louis, Missouri
Chemical International Finance
Limited,
New York, New York
Citibank Overseas Investment
Corporation,
New Castle, Delaware
Credit Communal de Belgique S.A.,
Brussels, Belgium
Deutsche Bank AG,
Frankfurt, Germany
First American Corporation,
Nashville, Tennessee
Merged or Acquired Bank
or Activity
Date of
Approval
Bank South Securities Corporation,
Atlanta, Georgia
Wells Fargo Investment Advisors,
San Francisco, California
The Nikko Building U.S.A., Inc.,
San Francisco, California
Wells Fargo Institutional Trust
Company, N.A.,
San Francisco, California
Wells Fargo Nikko Investment
Advisors,
San Francisco, California
Wells Fargo Nikko Investment Advisors
International,
San Francisco, California
Wells Fargo Foreign Funds Advisors,
San Francisco, California
401(k) MasterWorks Division of Wells
Fargo Bank, N.A.,
San Francisco, California
First National Bank of Dayton,
Dayton, Texas
Berens Credit Corporation,
Houston, Texas
Fourth Financial Corporation,
Wichita, Kansas
Bank IV, N.A.,
Wichita, Kansas
Bank IV Oklahoma, N.A.,
Tulsa, Oklahoma
Chemical Bank Norge, A.S.,
Oslo, Norway
October 24,
1995
December 21,
1995
Bulletin
Volume
and Page
81, 1116
82, 158
December 6,
1995
82, 166
December 21,
1995
82, 167
October 2,
1995
81, 1160
Citibank Espana, S.A.,
Madrid, Spain
October 4,
1995
81, 1161
To establish a state-licensed branch in
New York, New York
Deutsche Bank Sharps Pixley, Inc.,
New York, New York
Deutsche Sharps Pixley Metals, Inc.,
New York, New York
First City Bancorp,
Murfreesboro, Tennessee
First City Bank,
Murfreesboro, Tennessee
Citizens Bank,
Smithville, Tennessee
November 20,
1995
December 13,
1995
82, 104
December 11,
1995
82, 161
82, 153
373
374
Federal Reserve Bulletin • April 1996
Index of Orders—Continued
Applicant
Firstar Corporation,
Milwaukee, Wisconsin
Firstar Corporation of Iowa,
Des Moines, Iowa
First Bank System, Inc.,
Minneapolis, Minnesota
First Union Corporation,
Charlotte, North Carolina
First Union Corporation of New
Jersey,
Newark, New Jersey
First National of Nebraska, Inc.,
Omaha, Nebraska
First Union Corporation,
Charlotte, North Carolina
RS Financial Corporation,
Raleigh, North Carolina
Fleet Bank,
Albany, New York
Fleet Bank-NH,
Nashua, New Hampshire
Fleet Financial Group,
Providence, Rhode Island
Keystone Financial, Inc.,
Harrisburg, Pennsylvania
Mercantile Bancorporation Inc.,
St. Louis, Missouri
National Australia Bank Limited,
Melbourne, Australia
National Equities Limited,
Melbourne, Australia
National Australia Group Limited,
London, England
National Americas Holding Limited,
London, England
MNC Acquisition Co.,
Melbourne, Australia
NationsBank Corporation,
Charlotte, North Carolina
Bulletin
Merged or Acquired Bank
or Activity
Date of
Approval
Harvest Financial Corp.,
Dubuque, Iowa
Harvest Savings Bank, a Federal
Savings Bank,
Dubuque, Iowa
FirsTier Financial, Inc.,
Omaha, Nebraska
First Fidelity Bancorporation,
Newark, New Jersey
First Fidelity Bancorporation,
Philadelphia, Pennsylvania
First Fidelity Bank, N.A.,
Elkton, Maryland
First Fidelity Bank,
Stamford, Connecticut
First Fidelity Bank, Delaware,
Wilmington, Delaware
First Technology Solutions, Inc.,
Omaha, Nebraska
Raleigh Federal Savings Bank,
Raleigh, North Carolina
December 11,
1995
82, 162
December 18,
1995
October 26,
1995
82, 169
November 27,
1995
October 26,
1995
82, 82
Shawmut Bank New York,
Schenectady, New York
Shawmut Bank NH,
Manchester, New Hampshire
Shawmut National Corporation,
Hartford, Connecticut,
Shawmut National Corporation,
Boston, Massachusetts
Martindale Andres & Company, Inc.,
West Conshohocken, Pennsylvania
Security Bank of Conway, F.S.B.,
Conway, Arkansas
Michigan National Corporation,
Farmington Hills, Michigan
Michigan National Bank,
Farmington Hills, Michigan
November 14,
1995
November 14,
1995
November 14,
1995
82, 50
November 6,
1995
November 29,
1995
October 16,
1995
82, 84
CSF Holdings, Inc.,
Miami, Florida
Citizens Federal Bank, a Federal
Savings Bank,
Miami, Florida
October 17,
1995
81, 1121
Volume
and Page
81, 1143
81, 1118
82, 50
82, 50
82, 86
81, 1153
Legal Developments
Index of Orders—Continued
Applicant
NationsBank Corporation,
Charlotte, North Carolina
NationsBank Corporation,
Charlotte, North Carolina
NB Holdings, Inc.,
Charlotte, North Carolina
NationsBank Corporation,
Charlotte, North Carolina
NB Holdings, Inc.,
Charlotte, North Carolina
NBD Bancorp, Inc.,
Detroit, Michigan
Norwest Corporation,
Minneapolis, Minnesota
Norwest Corporation,
Minneapolis, Minnesota
Norwest Corporation,
Minneapolis, Minnesota
Norwest Financial Services, Inc.,
Des Moines, Iowa
Premier Bancorp, Inc.,
Baton Rouge, Louisiana
The Shorebank Corporation,
Chicago, Illinois
Signet Bank/Virginia,
Richmond, Virginia
SouthTrust Corporation,
Birmingham, Alabama
Bulletin
Volume
and Page
Merged or Acquired Bank
or Activity
Date of
Approval
Bank South Corporation,
Atlanta, Georgia
Bank South,
Atlanta, Georgia
Intercontinental Bank,
Miami, Florida
December 18,
1995
82, 172
October 17,
1995
81, 1105
North Florida Bank Corporation,
Madison, Florida
Bank of Madison County, National
Association,
Madison, Florida
First Chicago Corporation,
Chicago, Illinois
American National Corporation,
Chicago, Illinois
First National Bank of Chicago,
Chicago, Illinois
American National Bank & Trust
Company,
Chicago, Illinois
FCC National Bank,
Wilmington, Delaware
Canton Bancshares, Inc.,
Canton, Illinois
Canton State Bank,
Canton, Illinois
The Foothill Group, Inc.,
Los Angeles, California
Orlandi Valuta,
Los Angeles, California
Orlandi Valuta Nacional,
Boulder City, Nevada
HNB Corporation,
Homer, Louisiana
Homer National Bank,
Homer, Louisiana
Indecorp, Inc.,
Chicago, Illinois
Independence Bank,
Chicago, Illinois
Drexel National Bank,
Chicago, Illinois
Signet Bank/Maryland,
Baltimore, Maryland
SouthTrust Securities, Inc.,
Birmingham, Alabama
December 6,
1995
82, 154
November 7,
1995
82, 93
December 18,
1995
82, 156
October 17,
1995
October 17,
1995
81, 1128
81, 1130
November 9,
1995
82, 75
October 16,
1995
81, 1107
October 2,
1995
October 30,
1995
81, 1157
81, 1132
375
376
Federal Reserve Bulletin • April 1996
Index of Orders—Continued
Applicant
Stichting Prioriteit ABN AMRO
Holding,
Amsterdam, The Netherlands
Stichting Administratiekantoor ABN
AMRO Holding,
Amsterdam, The Netherlands
ABN AMRO Holding N.V.,
Amsterdam, The Netherlands
ABN AMRO Bank N.V.,
Amsterdam, The Netherlands
SunTrust Banks, Inc.,
Atlanta, Georgia
UB&T Financial Corporation,
Dallas, Texas
UB&T Delaware Financial
Corporation,
Dover, Delaware
Union Planters Corporation,
Memphis, Tennessee
U.S. Bancorp,
Portland, Oregon
Wellington State Bank,
Wellington, Texas
Wells Fargo & Company,
San Francisco, California
Bulletin
Volume
and Page
Merged or Acquired Bank
or Activity
Date of
Approval
Alfred Berg, Inc.,
New York, New York
October 30,
1995
81, 1134
SunTrust Capital Markets, Inc.,
Atlanta, Georgia
United Bank & Trust, N.A.,
Dallas, Texas
Southeast Bancshares, Inc.,
Dallas, Texas
Commercial National Bank,
Dallas, Texas
Capital Bancorporation, Inc.,
Cape Girardeau, Missouri
Maryland Avenue Bancorporation,
Clayton, Missouri
Century State Bancshares,
Jackson, Missouri
West One Bancorp,
Boise, Idaho
Bank of America Texas, N.A.,
Irving, Texas
Wells Fargo Equity Capital, Inc.,
San Francisco, California
October 16,
1995
October 23,
1995
81, 1137
November 20,
1995
82, 78
December 11,
1995
December 6,
1995
December 13,
1995
82, 177
81, 1112
82, 183
82, 165
APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT
By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to
the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Section 3
Applicant(s)
Bank(s)
Effective Date
Whitney Holding Corporation,
New Orleans, Louisiana
First Citizens BancStock, Inc.,
Morgan City, Louisiana
First National Bank in St. Mary Parish,
Morgan City, Louisiana
February 9, 1996
Legal Developments
377
Section 4
Applicant(s)
Bank(s)
Effective Date
Old National Bancorp,
Evansville, Indiana
Advantage Financial Services, Inc.,
Indianapolis, Indiana
February 13, 1996
APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT
By Federal Reserve Banks
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to
the Reserve Banks.
Section 3
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Ameribanc, Inc.,
St. Louis, Missouri
MidAmerican Corporation,
Roeland Park, Kansas
MidAmerican Insurance Agency, Inc.
Roeland Park, Kansas
Associated Banc-Shares, Inc.,
Madison, Wisconsin
Greater Columbia Bancshares, Inc.,
Portage, Wisconsin
The First National Bank
of Portage,
Portage, Wisconsin
Electronic Payment Services, Inc.,
Wilmington, Delaware
Kansas City
January 25, 1996
Chicago
February 8, 1996
Cleveland
February 13, 1996
Kansas City
February 16, 1996
Kansas City
February 15, 1996
Atlanta
February 15, 1996
Atlanta
February 20, 1996
Chicago
February 16, 1996
Atlanta
February 16, 1996
Atlanta
February 8, 1996
Associated Banc-Corp.,
Green Bay, Wisconsin
Banc One Corporation,
Columbus, Ohio
KeyCorp,
Cleveland, Ohio
National City Corporation,
Cleveland, Ohio
PNC Bank Corp,
Pittsburgh, Pennsylvania
Bancshares of Nichols Hills, Inc.
Ponca City, Oklahoma
Baxter Bancshares, Inc.,
Baxter Springs, Kansas
Citi-Bancshares, Inc.,
Leesburg, Florida
Durden Bankshares, Inc.,
Twin City, Georgia
Evans Bancshares, Inc.,
Evansdale, Iowa
FABP Bancshares, Inc.,
Pensacola, Florida
The First Bancshares, Inc.,
Hattiesburg, Mississippi
Bank of Nichols Hills,
Oklahoma City, Oklahoma
The Baxter State Bank,
Baxter Springs, Kansas
People's National Bank,
Seneca, Missouri
Citizens First Bancshares, Inc.,
Ocala, Florida
Durden Banking Company, Inc.,
Twin City, Georgia
Olmsted National Bank,
Rochester, Minnesota
First American Bank of Pensacola,
National Association,
Pensacola, Florida
The First National Bank of Mississippi,
Hattiesburg, Mississippi
378
Federal Reserve Bulletin • April 1996
Section 3—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
FirstBank Holding Company of
Colorado,
Lakewood, Colorado
FirstBank Holding Company of
Colorado Employee Stock
Ownership Plan,
Lakewood, Colorado
First Decatur Bancshares, Inc.,
Decatur, Illinois
Bank of Douglas County,
Castle Rock, Colorado
Kansas City
February 2, 1996
First Shelby Financial Group, Inc.,
Shelbyville, Illinois
First Trust Bank,
Shelbyville, Illinois
FirstMerit Bank, N.A.,
Clearwater, Florida
First National Bank of Edmond,
Edmond, Oklahoma
First National Bank,
Lisbon, North Dakota
Thurman State Corporation,
Lincoln, Nebraska
United National Bank of Iowa,
Sidney, Iowa
Bank of Isle of Wight,
Smithfield, Virginia
Harrisonville Bancshares, Inc.,
Harrisonville, Missouri
Marine Bank, Springfield,
Springfield, Illinois
River Bend Bancshares, Inc.,
East Alton, Illinois
Mercantile Bank of Jackson County, In
Organization,
Kansas City, Missouri
Farmers & Traders Bank of Campton,
Campton, Kentucky
Henrietta Bancshares, Inc.,
Henrietta, Texas
Henrietta Delaware Financial
Corporation,
Dover, Delaware
The First National Bank of Henrietta,
Henrietta, Texas
First State Bank of Hubbard,
Hubbard, Texas
Lindsey Bancshares, Inc.,
Harrisonville, Missouri
Bancshares of Nichols Hills, Inc.,
Ponca City, Oklahoma
Chicago
January 30, 1996
Cleveland
February 12, 1996
Kansas City
February 21, 1996
Minneapolis
February 7, 1996
Chicago
February 5, 1996
Richmond
February 8, 1996
Kansas City
February 15, 1996
St. Louis
February 1, 1996
St. Louis
February 6, 1996
Kansas City
January 25, 1996
Cleveland
January 29, 1996
Minneapolis
February 6, 1996
Kansas City
February 15, 1996
Kansas City
February 16, 1996
Lindsey Bancshares, Inc.,
Harrisonville, Missouri
Kansas City
February 15, 1996
FirstMerit Corporation,
Akron, Ohio
First National Bancshares, Inc.,
Edmond, Oklahoma
FNB Bankshares, Inc.,
Milnor, North Dakota
Hamburg Financial, Inc.,
Hamburg, Iowa
James River Bankshares, Inc.,
Suffolk, Virginia
Lindsey Bancshares, Inc.,
Harrisonville, Missouri
Marine Bancorp, Inc.,
Springfield, Illinois
Magna Group, Inc.,
St. Louis, Missouri
Mercantile Bancorporation, Inc.,
St. Louis, Missouri
Middlefork Financial Group, Inc.
Hyden, Kentucky
Norwest Corporation,
Minneapolis, Minnesota
Peoples Bancshares, Inc.,
Kansas City, Missouri
Pioneer Bancshares, Inc.,
Ponca City, Oklahoma
Pioneer Bancshares, Inc., Employee
Stock Ownership Plan,
Ponca City, Oklahoma
Platte Valley Bancshares, Inc.,
Kansas City, Missouri
Legal Developments
379
Section 3—Continued
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Regions Merger Subsidiary, Inc.
Gainesville, Georgia
Sabine Bancshares, Inc.,
Many, Louisiana
First National Bancorp,
Gainesville, Georgia
First Community Bancshares, Inc.,
Winnfield, Louisiana
Winn Bancshares, Inc.,
Winnfield, Louisiana
Security Trust & Savings Bank,
Storm Lake, Iowa
Atlanta
January 26, 1996
Dallas
February 1, 1996
Chicago
January 31, 1996
Atlanta
January 26, 1996
San Francisco
February 6, 1996
San Francisco
February 20, 1996
Cleveland
February 2, 1996
Storm Lake Security
Bancorporation,
Storm Lake, Iowa
Sunset Bancorp, Inc.,
Sunset, Louisiana
Valley Bancorp, Inc.,
Phoenix, Arizona
ValliCorp Holdings, Inc.,
Fresno, California
Wells River Bancorp, Inc.,
Wellsville, Ohio
Bank of Sunset and Trust Company,
Sunset, Louisiana
Valley Bank of Arizona,
Phoenix, Arizona
Commerce Bank of San Luis Obispo,
National Association,
San Luis Obispo, California
CoBank Financial Corporation,
San Luis Obispo, California
Perpetual Savings Bank,
Wellsville, Ohio
Section 4
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Banque Nationale de Paris,
Paris, France
BancWest Corporation,
San Francisco, California
Firstbank of Illinois Co.,
Springfield, Illinois
Mountain Bank Systems, Inc.,
Whitefish, Montana
Ohio Valley Banc Corp.,
Gallipolis, Ohio
Pinellas Bancshares Corporation,
St. Petersburg, Florida
Regions Financial Corporation,
Birmingham, Alabama
Regions Merger Subsidiary, Inc.,
Gainesville, Georgia
Northbay Financial Corporation,
Petaluma, California
Northbay Savings Bank, F.S.B.,
Petaluma, California
MidCountry Financial, Inc.,
Highland, Illinois
Mountain Financial, Inc.,
Eureka, Montana
Loan Central, Inc., Gallipolis, Ohio
San Francisco
February 16, 1996
Chicago
January 30, 1996
Minneapolis
February 13, 1996
Cleveland
January 26, 1996
Atlanta
January 26, 1996
Atlanta
January 26, 1996
Cleveland
February 15, 1996
Dallas
February 16, 1996
Summit Bancorp,
Akron, Ohio
Texas Community Bancshares, Inc.
Dallas, Texas
First Lakewood, Inc.,
Dover, Delaware
Eickhoff, Pieper & Willoughby, Inc.,
Tampa, Florida
First National Bancorp,
Gainesville, Georgia
FF Bancorp, Inc.,
New Smyrna Beach, Florida
First Federal Savings Bank of New
Smyrna Beach,
New Smyrna Beach, Florida
First Federal Savings Bank
of Citrus County,
Inverness, Florida
Summit Banc Investments Corporation,
Akron, Ohio
Fiduciary Consulting Services, LLC,
Dallas, Texas
380
Federal Reserve Bulletin • April 1996
Section 4 — C o n t i n u e d
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Texas Community Bancshares, Inc.
Dallas, Texas
First Lakewood, Inc.,
Dover, Delaware
Traxshares, Inc.,
Le Center, Minnesota
Wells Fargo & Company,
San Francisco, California
Texas Community Financial Services,
Inc.,
Dallas, Texas
Dallas
January 31, 1996
To engage de novo in making loans for
its own account
To engage de novo in the activities of
installing, owning, operating, and
maintaining automatic teller machines
in the State of Oregon
Minneapolis
February 1, 1996
San Francisco
February 14, 1996
Sections 3 and 4
Applicant(s)
Nonbanking Activity/Company
Reserve Bank
Effective Date
Reliance Bancshares, Inc.,
Milwaukee, Wisconsin
Whitaker Bank Corporation of
Kentucky,
Lexington, Kentucky
Reliance Savings Bank,
Milwaukee, Wisconsin
Mount Sterling National Holding
Corporation,
Mount Sterling, Kentucky
Chicago
February 16, 1996
Cleveland
February 2, 1996
APPLICATIONS APPROVED UNDER BANK MERGER ACT BY FEDERAL RESERVE BANKS
Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to
the Reserve Banks.
Applicant(s)
Bank(s)
Reserve Bank
Effective Date
Bank of Isle of Wight,
Smithfield, Virginia
ValliWide Bank,
Fresno, California
BIW Acquisition Bank,
Suffolk, Virginia
Commerce Bank of San Luis Obispo,
National Association,
San Luis Obispo, California
Vectra Bank of Boulder,
Boulder, Colorado
Richmond
February 8, 1996
San Francisco
February 20, 1996
Kansas City
February 1, 1996
Vectra Bank,
Denver, Colorado
PENDING CASES INVOLVING THE BOARD OF
GOVERNORS
Research Triangle Institute v. Board of Governors, No.
1:96CV00102 (M.D.N.C., filed February 12, 1996). Contract dispute.
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.
In re: Subpoena Duces Tecum, Misc. No. 96-MS-(TPJ) (D.
D.C., filed February 7, 1996). Motion to enforce a subpoena
issued to the Board seeking, among other things, bank
examination material. The Board's opposition was filed on
February 20, 1996.
Henderson v. Board of Governors, No. 96-1054 (D.C. Cir.,
filed February 16, 1996). Petition for review of a Board
order dated January 17, 1996, approving the merger of First
Citizens BancShares, Inc., Raleigh, North Carolina, with
Allied Bank Capital, Inc., Sanford, North Carolina. On
February 16, the petitioners moved for a stay of the Board's
order. The Board opposed the motion on February 26, 1996.
Inner City Press/Community on the Move v. Board of Governors, No. 96-4008 (2nd Cir., filed January 19, 1996). Petition for review of a Board order dated January 5, 1996,
approving the applications and notices by Chemical Banking Corporation to merge with The Chase Manhattan Corporation, both of New York, New York, and by Chemical
Legal Developments
Bank to merge with The Chase Manhattan Bank, N.A., both
of New York, New York.
Hotchkiss v. Board of Governors, No. 3:96CV7033 (N.D.
Ohio, filed January 19, 1996). Appeal of order of bankruptcy court granting Board's motion for summary judgment in adversary proceeding challenging dischargeability
of Board consent order. The Board's brief is due April 1,
1996.
Menick v. Greenspan, No. 95-CV-01916 (D. D.C., filed October 10, 1995). Complaint alleging sex, age, and handicap
discrimination in employment.
Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed
September 21, 1995). Petition for review of Board order
dated August 23, 1995, approving the applications of The
Fifth Third Bank, Cincinnati, Ohio, to acquire certain assets
and assume certain liabilities of 12 branches of PNC Bank,
Ohio, N.A., Cincinnati, Ohio, and to establish certain
branches. The Board's motion to dismiss was filed on
October 26, 1995.
Lee v. Board of Governors, No. 94^-134 (2nd Cir., filed
August 22, 1995). Petition for review of Board orders dated
July 24, 1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New York, New York,
and the acquisition of U.S. Trust by Chase Manhattan
Corporation, New York, New York. On September 12,
1995, the court denied petitioners' motion for an emergency
stay of the Board's orders.
Jones v. Board of Governors, No. 95-1359 (D.C. Cir., filed
July 17, 1995). Petition for review of a Board order dated
June 19, 1995, approving the application by First Commerce Corporation, New Orleans, Louisiana, to acquire
Lakeside Bancshares, Lake Charles, Louisiana. On November 15, 1995, the court granted the Board's motion to
dismiss. On December 26, 1995, the petitioner filed a
request for reconsideration. The motion was denied on
February 26, 1996.
Beckman v. Greenspan, No. 95-35473 (9th Cir., filed May 4,
1995). Appeal of dismissal of action against Board and
others seeking damages for alleged violations of constitutional and common law rights. The appellants' brief was
filed on June 23, 1995; the Board's brief was filed on
July 12, 1995.
Board of Governors v. Scott, Misc. No. 95-127 (LFO/PJA) (D.
D.C., filed April 14, 1995). Application to enforce an administrative investigatory subpoena for documents and testimony. On August 3, 1995, the magistrate judge issued an
order granting in part and denying in part the Board's
application. On September 18, 1995, the intervenor moved
for reconsideration of a portion of the magistrate's ruling.
Money Station, Inc. v. Board of Governors, No. 95-1182
(D.C. Cir., filed March 30, 1995). Petition for review of a
381
Board order dated March 1, 1995, approving notices by
Bank One Corporation, Columbus, Ohio; CoreStates Financial Corp., Philadelphia, Pennsylvania; PNC Bank Corp.,
Pittsburgh, Pennsylvania; and KeyCorp, Cleveland, Ohio,
to acquire certain data processing assets of National City
Corporation, Cleveland, Ohio, through a joint venture subsidiary. Oral argument was heard on February 2, 1996.
Jones v. Board of Governors, No. 95-1142 (D.C. Cir., filed
March 3, 1995). Petition for review of a Board order dated
February 2, 1995, approving the applications by First Commerce Corporation, New Orleans, Louisiana, to merge with
City Bancorp, Inc., New Iberia, Louisiana, and First Bankshares, Inc., Slidell, Louisiana. Oral argument was heard on
February 27, 1996.
In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C., filed
January 6, 1995). Action to enforce subpoena seeking predecisional supervisory documents sought in connection with
an action by Bank of New England Corporation's trustee in
bankruptcy against the Federal Deposit Insurance Corporation. The Board filed its opposition on January 20, 1995.
Oral argument on the motion was held July 14, 1995.
Board of Governors v. Pharaon, No. 91-CIV-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 ORDERS ISSUED BY THE BOARD
OF GOVERNORS
Steen Ronlov
Lakewood, Colorado
The Federal Reserve Board announced on February 2,
1996, the issuance of an Order of Prohibition against Steen
Ronlov, a former institution- affiliated party of the Jefferson
Bank and Trust, Lakewood, Colorado, a former state member bank.
Mitchell A. Vasquez
New York, New York
The Federal Reserve Board announced on February 29,
1996, the issuance of a Combined Cease and Desist Order
and Assessment of a Civil Money Penalty against Mitchell
A. Vasquez, a former employee of BT Securities Corporation, New York, a subsidiary of Bankers Trust New York
Corporation, New York, New York.
A1
Financial and Business Statistics
A3
GUIDE TO TABULAR
DOMESTIC FINANCIAL
STATISTICS
Money Stock and Bank Credit
A4
A5
A6
A7
Federal Finance
PRESENTATION
Reserves, money stock, liquid assets, and debt
measures
Reserves of depository institutions, Reserve Bank
credit
Reserves and borrowings—Depository
institutions
Selected borrowings in immediately available
funds—Large member banks
A28
A29
A30
A30
Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—
Types and ownership
A31 U.S. government securities
dealers—Transactions
A32 U.S. government securities dealers—
Positions and financing
A3 3 Federal and federally sponsored credit
agencies—Debt outstanding
Securities Markets and Corporate Finance
Policy Instruments
A8 Federal Reserve Bank interest rates
A9 Reserve requirements of depository institutions
A10 Federal Reserve open market transactions
Federal Reserve Banks
A11 Condition and Federal Reserve note statements
A12 Maturity distribution of loan and security
holdings
Monetary and Credit Aggregates
A13 Aggregate reserves of depository institutions
and monetary base
A14 Money stock, liquid assets, and debt measures
A16 Deposit interest rates and amounts outstanding—
commercial and BIF-insured banks
A17 Bank debits and deposit turnover
A34 New security issues—Tax-exempt state and local
governments and corporations
A35 Open-end investment companies—Net sales
and assets
A35 Corporate profits and their distribution
A36 Domestic finance companies—Assets and
liabilities, and consumer, real estate, and business
credit
Real Estate
A37 Mortgage markets
A3 8 Mortgage debt outstanding
Consumer Installment Credit
A39 Total outstanding
A39 Terms
Flow of Funds
Commercial Banking Institutions
A18 Assets and liabilities, Wednesday figures
Weekly Reporting Commercial Banks—
Assets and liabilities
A21 Large reporting banks
A23 Branches and agencies of foreign banks
A40
A42
A43
A44
Funds raised in U.S. credit markets
Summary of financial transactions
Summary of credit market debt outstanding
Summary of financial assets and liabilities
DOMESTIC NONFINANCIAL
STATISTICS
Selected Measures
Financial Markets
A24 Commercial paper and bankers dollar
acceptances outstanding
A25 Prime rate charged by banks on short-term
business loans
A26 Interest rates—money and capital markets
A27 Stock market—Selected statistics
A45 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
2
Federal Reserve Bulletin • April 1996
DOMESTIC NONFINANCIAL
CONTINUED
STATISTICS-
Selected Measures—Continued
A51 Gross domestic product and income
A52 Personal income and saving
INTERNATIONAL
A53
A54
A54
A54
U.S. international transactions—Summary
U.S. foreign trade
U.S. reserve assets
Foreign official assets held at Federal Reserve
Banks
A55 Selected U.S. liabilities to foreign official
institutions
Reported by Banks in the United States
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A59 Banks' own claims on unaffiliated foreigners
Reported by Nonbanking Business
Enterprises in the United States
A61 Liabilities to unaffiliated foreigners
A62 Claims on unaffiliated foreigners
STATISTICS
Summary Statistics
A55
A56
A58
A59
A60 Claims on foreign countries—
Combined domestic offices and foreign branches
Securities Holdings and Transactions
A63 Foreign transactions in securities
A64 Marketable U.S. Treasury bonds and
notes—Foreign transactions
Interest and Exchange Rates
A65 Discount rates of foreign central banks
A65 Foreign short-term interest rates
A66 Foreign exchange rates
A67 GUIDE TO STATISTICAL RELEASES
SPECIAL TABLES
A68 INDEX TO STATISTICAL
TABLES
AND
A3
Guide to Tabular Presentation
SYMBOLS AND
c
e
n.a.
n.e.c.
P
r
*
0
ATS
BIF
CD
CMO
FFB
FHA
FHLBB
FHLMC
FmHA
FNMA
FSLIC
G-7
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
Bank insurance fund
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
G-10
GNMA
GDP
HUD
IMF
IO
IPCs
IRA
MMDA
MSA
NOW
OCD
OPEC
OTS
PO
REIT
REMIC
RP
RTC
SAIF
SCO
SDR
SIC
VA
Group of Ten
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
Metropolitan statistical area
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
Department of Veterans Affairs
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
DomesticNonfinancialStatistics • April 1996
1.10
RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Percent annual rate of change, seasonally adjusted'
1995 r
1995 r
1996
Monetary or credit aggregate
1
2
3
4
Resenes of depository
Total
Required
Nonborrowed
Monetary base 3
5
6
7
8
9
Concepts
Ml
M2
M3
L
Debt
Q2
Q3
Q4
Sept.
Oct.
Nov.
Dec.
Jan.
-3.7
-4.0
-2.4
6.0
-8.0
-7.0
-8.6
5.7
-1.2
-2.3
-2.2
1.7
-7.2
-8.0
-6.7
2.7
-3.1
-2.3
-3.0
2.4
-11.4
-14.4
-10.8
2.9
-11.7
-8.9
-10.8
1.2
1.4
-5.9
.3
5.2
-15.7
-20.6
-11.1
.4
-.1
1.4
4.8
6.3
5.3
-.4
4.3
6.7
7.6
7.0
-1.5
7.0
8.0
9.0
4.6
-5.1
4.0
4.4
5.9
4.0
-3.8
4.4
5.5
9.9
3.4
-8.8
2.3
3.9
5.7
3.6
-3.0
3.7
2.7
1.5
5.5
-4.5
5.6
3.7
5.8
3.0
-6.1
5.2
7.8
n.a.
n.a.
2.2
19.8
6.6
16.9
11.0
12.1
8.1
5.9
8.2
9.7
7.5
9.8
6.6
-.9
10.1
-3.8
10.1
18.4
-12.7
24.5
11.8
-6.5
20.4
13.6
9.0
11.0
13.2
13.1
3.9
20.2
11.7
4.0
12.6
12.2
3.1
32.7
10.2
4.6
20.4
23.2
1.7
7.0
29.7
4.4
4.9
-20.1
19.7
22.6
-14.5
23.5
16.7
-7.3
4.3
14.1
-2.8
4.7
8.2
-1.0
4.7
6.5
.3
4.4
11.4
-6.3
6.1
4.8
-2.7
3.7
4.8
-2.7
-9.3
16.0
11.7
17.6
19.0
30.5
36.5
27.6
16.8
9.2
18.6
17.6
12.8
10.3
14.0
2.1
13.8
12.9
9.9
17.0
31.7
26.0
7.8
18.6
-5.3
9.4
-13.5
-13.6
-2.5
7.7
-15.6
-20.5
-25.4
-39.1
-46.6
-5.4
33.7
44.6
5.1
5.4
5.4
7.5
4.6
4.6
2.1
4.7
.8
4.4
2.9
3.8
4.4
5.9
-2.4
4.9
institutions2
of money, liquid assets, and
Nontransaction
10 In M 2 5
11 In M 3 only 6
Ql
debt4
components
Time and savings
deposits
Commercial banks
Savings, including M M D A s
Small time 7
Large time 8 ' 9
Thrift institutions
15
Savings, including M M D A s
16
Small time 7
17
Large time 8
12
13
14
Money market mutual
18 Retail
19 Institution-only
funds
Repurchase agreements and
20 Repurchase agreements 1 0
21 Eurodollars 1 0
Debt
components''
22 Federal
23 Nonfederal
Eurodollars
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. 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 C a s h " 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:
M l : (1) currency outside the U.S. 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 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, 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 M l is computed by summing currency, travelers checks, demand deposits, and
OCDs, each seasonally adjusted separately.
M2: M l plus (1) savings (including M M D A s ) , (2) small-denomination time deposits (time
deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail
money market mutual f u n d s (money f u n d s with m i n i m u m initial investments of less than
$50,000). Excludes individual retirement accounts (IRAs) and Keogh balances at depository
institutions and money market funds. Seasonally adjusted M2 is calculated by summing
savings deposits, small-denomination time deposits, and retail money fund balances, each
seasonally adjusted separately, and adding this result to seasonally adjusted M1.
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2)
balances in institutional money funds (money funds with minimum initial investments of
$50,000 or more), (3) R P liabilities (overnight and term) issued by all depository institutions,
and (4) Eurodollars (overnight and term) held by U S . residents at foreign branches of U.S.
banks worldwide and at all banking offices in the United Kingdom and Canada. Excludes
n.a.
n.a.
amounts held by depository institutions, the U.S. government, money market funds, and
foreign banks and official institutions. Seasonally adjusted M 3 is calculated by summing large
time deposits, institutional money fund balances, R P liabilities, and Eurodollars, each
seasonally adjusted separately, and adding this result to seasonally adjusted M2.
L: M 3 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 M 3 .
Debt: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial
sectors—the federal sector (U.S. government, not including government-sponsored enterprises or federally related mortgage pools) and the nonfederal sectors (state and local
governments, households and nonprofit organizations, nonfinancial corporate and nonfarm
noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and
corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data,
which are derived f r o m the Federal Reserve B o a r d ' s flow of f u n d s accounts, are breakadjusted (that is, discontinuities in the data have been smoothed into the series) and
month-averaged (that is, the data have been derived by averaging adjacent month-end levels).
5. Sum of (1) savings deposits (including M M D A s ) , (2) small time deposits, and (3) retail
money fund balances, each seasonally adjusted separately.
6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) R P liabilities
(overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and
term) of U.S. addressees, each seasonally adjusted separately.
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, the U.S. government, and foreign banks and official institutions.
10. Includes both overnight and term.
Money Stock and Bank Credit
1.11
RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT1
Millions of dollars
Average of
daily figures
average of daily figures for week ending on date indicated
Dec. 2 0
Dec. 27
Jan. 3
Jan. 10
Jan. 17
Jan. 24
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit outstanding
U.S. g o v e r n m e n t securities 2
2
Bought o u t r i g h t — S y s t e m account
3
Held under repurchase agreements
Federal agency obligations
4
Bought outright
5
Held under repurchase agreements
6
Acceptances
Loans to depository institutions
7
A d j u s t m e n t 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
416,469
421,941
424,004 r
416,530
412,457
373,648
3,249
378,548
5,626
376,397
1,810
378,879
4,848
378,595
7,997
378,555
11,794
378,425
2,556
377,756
548
374,412
2,796
320
2,654
343
2,634
590
2,637
2,636
979
2,634
885
2,634
1,572
2,634
643
2,634
166
67
139
40
76
5
516
43
44
43
324
24
4
4
33
3
12
4
901
32,018
l,176r
32,231
2,461
32,496
2,769
32,249
895 r
32,815
1,082
33,252
3,950
32,358
2,475
32,439
2,837
32,558
11,050
10,168
23,893 r
11,050
10,168
23,958 r
11,051
10,168
24,020
11,050
10,168
23,960 r
11,050
10,168
23,974 r
11,050
10,168
23,988
11,050
10,168
24,002
11,050
10,168
24,016
11,050
10,168
24,030
414,038r
287
419,587'
271
417,877
247
418,824r
271
422,532r
270
424,346
262
421,507
217
419,161
225
415,696
271
5,410
203
5,108
326
13,006
19,897
6,762
204
5,487 r
366
12,847
20,410 r
6,298
191
5,997
333
12,741
18,024
8,633
210
5,250
304
13,164
20,465
7,169
172
5,558 r
296
13,070
20,130 r
6,306
297
6,349
741
12,463
22,992
5,313
182
5,672
232
12,593
21,005
5,548
174
5,428
287
12,940
18,000
7,218
174
6,421
310
12,877
14,739
413,165
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve B a n k s
17
Treasury
18
Foreign
19
Service-related balances and adjustments . .
20
Other
21 O t h e r Federal Reserve liabilities and capital ,
22 Reserve balances with Federal Reserve Banks
End-of-month
Wednesday
figures
figures
Jan. 3
Jan. 10
Jan. 17
425,020 r
SUPPLYING RESERVE FUNDS
1 Reserve Bank credit outstanding
U.S. government securities 2
2
Bought o u t r i g h t — S y s t e m account
3
Held under repurchase agreements
Federal agency obligations
4
B o u g h t outright
5
Held under repurchase agreements
6
Acceptances
Loans to depository institutions
7
A d j u s t m e n t 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
428,440 r
435,257
415,603
426,583
373,819
6,983
378,197
12,762
378,208
378,439
8,235
381,141
6,724
378,749
11,745
376,543
377,701
1,500
372,514
2,692
2,634
1,100
2,634
2,637
2,634
2,634
1,592
2,634
2,634
3,000
2,634
111
24
10
5
3,432
45
41
289
10
5
4
142
3
13
4
0
0
5
50
0
0
0
0
0
0
0
0
0
0
0
0
22
0
0
0
0
0
0
0
0
0
0
0
0
0
-1,817
31,136
107'
33,504
929
31,350
4,125
32,424
l,642r
32,815
7,240
32,998
4,190
32,228
9,237
32,367
930
32,675
11,050
10,168
23,932 r
11,050
10,168
23,988 r
11,052
10,168
24,044
11,050
10,168
23,960 r
11,050
10,168
23,974 r
11,050
10,168
23,988
11,050
10,168
24,002
11,050
10,168
24,016
11,052
10,168
24,030
416,719 r
276
424,230 r
270
412,629
273
421,304 r
270
424,680 r
270
424,595
217
420,591
218
418,643
270
414,422
272
5,703
194
5,239
282
12,697
16,908
5,979
386
6,349 r
932
12,342
23,159 r
8,210
165
6,317
406
11,832
18,569
11,383
220
5,250
308
12,959
22,820
5,779
178
5,558 r
279
12,838
20,630 r
4,787
165
6,349
257
12,459
31,634
5,796
177
5,672
236
12,557
15,577
7,859
166
5,428
306
12,678
26,466
7,089
173
6,421
313
12,633
12,697
ABSORBING RESERVE FUNDS
15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve B a n k s
17
Treasury
18
Foreign
19
Service-related balances and adjustments . .
20
Other
21 Other Federal Reserve liabilities and capital ,
22 Reserve balances with Federal Reserve Banks
1. A m o u n t s of cash held as reserves are s h o w n in table 1.12, line 2.
2. Includes securities l o a n e d — f u l l y guaranteed by U.S. government securities pledged
with Federal Reserve B a n k s — a n d excludes securities sold and scheduled to be bought back
under matched s a l e - p u r c h a s e transactions.
3. Excludes required clearing balances and adjustments to compensate for float.
A5
A6
DomesticNonfinancialStatistics • April 1996
1.12
RESERVES AND BORROWINGS
Depository Institutions'
Millions of dollars
Prorated monthly averages of biweekly averages
Reserve classification
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks 2
Total vault cash 3
Applied vault cash 4
Surplus vault cash 5
Total reserves 6
Required reserves
Excess reserve balances at Reserve Banks 7
Total borrowings at Reserve Banks 8
Seasonal borrowings
Extended credit 9
1993
1994
1995
1995
1996
Dec.
Dec.
Dec.
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
29,374
36,818
33,484
3,334
62,858
61,795
1,063
82
31
0
24,658
40,378 r
36,682
3,696 r
61,340
60,172
1,168
209
100
0
20,440 r
42,117
37,460 r
4,657 r
57,900 r
56,622
1,278
257
40
0
20,840
40,530 r
36,550
3,980 r
57,390
56,300
1,090
371
231
0
20,565
40,186'
36,255
3,932 r
56,819
55,832
988
282
258
0
20,519
40,652 r
36,640
4,012 r
57,159
56,209
950
278
252
0
20,055
40,564 r
36,345
4,219 r
56,400
55,319
1,081
245
199
0
20,066
40,576'
36,332
4,244
56,397
55,454
943
204
73
0
20,440'
42,117
37,460'
4,657'
57,900'
56,622
1,278
257
40
0
17,766
44,790
39,172
5,619
56,937
55,451
1,486
38
7
0
Biweekly averages of daily figures for two week periods ending on dates indicated
1995
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks
Total vault cash 3
Applied vault cash 4
Surplus vault cash 5
Total reserves 6
Required reserves
Excess reserve balances at Reserve Banks 7
Total borrowings at Reserve Banks 8
Seasonal borrowings
Extended credit 9
Sept. 27
Oct. 11
Oct. 25
Nov. 8
Nov. 22
Dec. 6
Dec. 20
Jan. 3 '
Jan. 17
Jan. 31
20,182
40,631'
36,556
4,075'
56,738
55,781
957
274
261
0
19,886
41,156'
36,805
4,352'
56,690
55,312
1,378
338
240
0
20,496
39,859'
35,770
4,090'
56,265
55,406
860
227
204
0
19,334
41,126'
36,846
4,280'
56,180
55,129
1,052
121
116
0
20,270
40,218
36,071
4,148
56,341
55,544
797
236
63
0
20,438
40,653
36,274
4,379
56,712
55,623
1,089
233
51
0
19,563
42,943
38,053
4,890
57,615
56,508
1,107
300
41
0
21,558
41,865
37,353
4,513
58,910
57,313
1,597
218
34
0
19,658
44,166
39,104
5,062
58,762
57,143
1,619
22
4
0
15,060
46,042
39,629
6,413
54,689
53,361
1,329
16
5
0
1. Data in this table also appear in the B o a r d ' s H.3 (502) weekly statistical release. For
ordering address, see inside front cover. Data are not break-adjusted or seasonally adjusted.
2. Excludes required clearing balances and adjustments to compensate for float and
includes other off-balance-sheet " a s - o f " adjustments.
3. Total " l a g g e d " vault cash held by depository institutions subject to reserve
requirements. Dates refer to the maintenance periods during which the vault cash may be used
to satisfy reserve requirements. The maintenance period for weekly reporters ends sixteen
days after the lagged computation period during which the vault cash is held. Before Nov. 25,
1992, the maintenance period ended thirty days after the lagged computation period.
4. All vault cash held during the lagged computation period by " b o u n d " institutions (that
is, those whose required reserves exceed their vault cash) plus the amount of vault cash
applied during the maintenance period by " n o n b o u n d " institutions (that is, those whose vault
cash exceeds their required reserves) to satisfy current reserve requirements.
1996
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
with traditional short-term adjustment credit, the money market effect of extended credit is
similar to that of nonborrowed reserves.
Money Stock and Bank Credit
1.13
SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS
A7
Large Banks'
Millions of dollars, averages of daily figures
1996, week ending Monday
1995, 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
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
Dec. 4
Dec. 11
Dec. 18
Dec. 25
Jan. 1
Jan. 8
Jan. 15
Jan. 22
Jan. 29
92,013
14,382
91,010
14,208
95,899
14,699 r
93,042
16,230 r
87,495
17,781
94,378
14,765
90,305
14,524
85,691
13,759
78,477
14,068
22,676
19,903
22,680
20,178
20,692
19,985
20,590
21,315
20,342
21,663
23,127
19,427
23,688
19,529
24,098
19,155
19,658
19,908
19,435
25,700
16,784
27,003
18,413
24,221
16,121
25,024
17,233
22,925
20,104
25,774
20,047
27,454
19,938
26,854
18,932
28,083
44,887
16,251
42,598
16,079
43,097
16,103
41,224
17,141
41,272
18,286
45,524
16,154
43,602
16,790
43,700
15,799
41,234
15,225
60,904
30,909
58,461
28,636
63,983
32,478
67,332
30,494
64,799
30,267
68,303
34,492
64,929
37,095
65,987
32,429
60,616
29,037
federal
MEMO
Federal funds loans and resale agreements in immediately
available funds in maturities of one day or under
continuing
contract
9 To commercial banks in the United States
10 To all other specified customers 2
1. Banks with assets of $4 billion or more as of Dec. 31, 1988.
Data in this table also appear in the B o a r d ' 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 1996
1.14
FEDERAL RESERVE BANK INTEREST RATES
Percent per year
Current and previous levels
Seasonal credit 2
Adjustment credit'
Federal Reserve
Bank
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
On
3/8/96
5.00
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
5.00
Extended credit 3
Effective date
Previous rate
On
3/8/96
Effective date
Previous rate
On
3/8/96
Effective date
Previous rate
2/1/96
1/31/96
1/31/96
1/31/96
2/1/96
1/31/96
5.25
5.20
2/29/96
5.15
5.70
2/29/96
5.65
5.25
5.20
2/29/96
5.15
5.70
2/29/96
5.65
2/1/96
2/5/96
1/31/96
2/1/96
1/31/96
1/31/96
Range of rates for adjustment credit in recent years 4
Range (or
level)—All
F.R. Banks
F.R. Bank
of
N.Y.
9
20
11
12
3
10
21
22
16
20
1
3
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
1979—July 20
Aug. 17
20
Sept. 19
21
Oct. 8
10
10-10.5
10.5
10.5-11
11
11-12
12
1981—Nov.
In effect Dec. 31, 1977
1978—Jan.
May
July
Aug.
Sept.
Oct.
Nov.
10
1980—Feb.
May
June
July
Sept.
Nov.
Dec.
1981—May
15
19
29
30
13
16
28
29
26
17
5
8
5
Range (or
evel)—All
F.R. Banks
12-13
13
12-13
12
11-12
11
10-11
10
11
12
12-13
13
13-14
14
10
10.5
10.5
11
11
12
12
13
13
13
12
11
11
10
10
11
12
13
13
14
14
Dec.
2
6
4
13
13
12
11.5-12
11.5
11-11.5
11
10.5
10-10.5
10
9.5-10
9.5
9-9.5
9
8.5-9
8.5-9
8.5
11.5
11.5
11
11
10.5
10
10
9.5
9.5
9
9
9
8.5
8.5
9
13
Nov. 21
26
Dec. 24
8.5-9
9
8.5-9
8.5
8
9
9
8.5
8.5
8
1985—May 20
24
7.5-8
7.5
7.5
7.5
1986—Mar.
7-7.5
7
6.5-7
6.5
6
5.5-6
5.5
7
7
6.5
6.5
6
5.5
5.5
5.5-6
6
6
6
1982—July 20
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
1984—Apr.
7
10
Apr. 21
23.
July 11
Aug. 21
22
Effective date
1988—Aug.
4
11
Range (or
level)—All
F.R. Banks
F.R. Bank
of
N.Y.
9
11
6-6.5
6.5
6.5
6.5
1989—Feb. 24
27
6.5-7
7
7
7
1990—Dec. 19
1991—Feb.
Apr.
May
Sept.
Nov.
Dec.
1992—July
6.5
6.5
1
4
30
2
13
17
6
7
20
24
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
2
7
3-3.5
3
1994—May 17
18
Aug. 16
18
Nov. 15
17
3
3
3-3.5
3.5
3.5-4
4
4—4.75
4.75
3.5
3.5
4
4
4.75
4.75
1
9
4.75-5.25
5.25
5.25
5.25
1996—Jan. 31
Feb. 5
5.00-5.25
5.00
5.00
5.00
5.00
5.00
1995—Feb.
In effect Mar. 8, 1996
1987—Sept.
1. Available on a short-term basis to help depository institutions meet temporary needs for
f u n d s 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 f r o m a m a j o r operating problem at the borrower's facility.
2. Available to help relatively small depository institutions meet regular seasonal needs for
f u n d s 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 charged by market sources of f u n d s 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 f r o m 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 ordinarily is
charged on extended-credit loans outstanding less than thirty days; however, at the discretion
13-14
13
12
F.R. Bank
of
N.Y.
of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a
flexible rate somewhat above rates charged on market sources of f u n d s is charged. T h e 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,
19701979.
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 f r o m Mar. 17, 1980, through M a y 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 f r o m 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
Type of deposit
1
2
Net transaction
accounts
$0 million-$52.0 million 3 . .
More than $52.0 million 4 . .
12/19/95
12/19/95
3
Nonpersonal time deposits 5 .
12/27/90
4
6
Eurocurrency liabilities . . ..
1. Required reserves must be held in the form of deposits with Federal R e s e r v e B a n k s
or vault cash. N o n m e m b e r institutions may maintain reserve balances with a Federal
Reserve Bank indirectly, on a pass-through basis, with certain a p p r o v e d institutions. For
previous reserve requirements, see earlier editions of the Annual Report or the Federal
Reserve Bulletin.
U n d e r the M o n e t a r y Control Act of 1980, depository institutions
include c o m m e r c i a l banks, mutual savings banks, savings and loan associations, credit
unions, agencies and branches of foreign banks, and Edge Act corporations.
2. Transaction accounts include all deposits against which the account holder is permitted
to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers for the purpose of making payments to
third persons or others. However, money market deposit accounts ( M M D A s ) 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 savings deposits, not
transaction accounts.
3. 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 of each year. Eifective Dec. 19, 1995, the amount was decreased from $54.0
million to $52.0 million.
Under the G a r n - S t Germain Depository Institutions Act of 1982, the Board adjusts the
amount of reservable liabilities subject to a zero percent reserve requirement each year for the
12/27/90
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 made in the event of a decrease. Eifective Dec. 19, 1995, the
exemption was raised from $4.2 million to $4.3 million. The exemption applies only to
accounts that would be subject to a 3 percent reserve requirement.
4. T h e reserve requirement was reduced f r o m 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 1V5 years was reduced f r o m 3 percent to 1 Vi 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 1 l /i 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 years was reduced f r o m 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 was the reserve requirement on nonpersonal
time deposits with an original maturity of less than 1 Vi years (see note 5).
A10
DomesticNonfinancialStatistics • April 1996
1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS 1
Millions of dollars
1995
Type of transaction
and maturity
U.S. TREASURY
1
2
4
5
6
/
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
1994
1995
July
Aug.
Sept.
Oct.
Nov.
Dec.
matched
Matched
transactions
25 Gross purchases
26 Gross sales
Repurchase
agreements
27 Gross purchases
28 Gross sales
29 Net change in U.S. Treasury securities
17,717
0
332,229
0
17,484
0
376,277
0
10,932
0
398,487
900
4,470
0
42,983
0
0
0
25,213
0
433
0
39,195
0
409
0
30,333
0
1,350
0
29,397
900
4,271
0
39,057
0
0
0
31,535
0
1,223
0
31,368
-36,582
0
1,238
0
0
-21,444
0
390
0
0
0
0
0
0
2,177
-1,392
0
0
0
2.063
-562
300
0
0
7,805
-5,599
0
0
0
0
0
485
0
0
1,745
-2,049
0
0
0
6,108
-4,937
0
390
0
0
0
0
10,350
0
-27,140
0
9,168
0
-6,004
17,801
4,966
0
0
0
0
0
-2,177
1,392
0
0
-2,063
562
0
0
-3,379
4,905
100
0
0
0
0
0
-1,745
2,049
0
0
-5,292
3,237
2,317
0
0
0
4,168
0
0
0
3,818
0
-3,145
2,903
1,239
0
0
0
0
0
0
0
0
0
0
0
0
0
-319
1,800
0
0
0
0
0
0
0
0
400
0
-816
1,700
0
0
0
0
3,457
0
0
0
3,606
0
-918
775
3,122
0
0
0
0
0
0
0
0
0
0
0
0
0
-525
1,100
100
0
0
0
0
0
0
0
0
0
0
0
1,884
0
0
0
36,915
0
767
35,314
0
2,337
20,649
0
2,376
4,470
0
0
0
0
0
433
0
0
609
0
0
1,350
0
1,385
4,671
0
0
4,591
0
0
1,475,941
1,475,085
1,700,836
1,701,309
2,197,736
2,202,030
170,083
171,959
166,674
163,490
179,571
185,711
195,830
198,587
216,755
213,161
226,340
228,419
227,858
228,071
475,447
470,723
309,276
311,898
331,694
328,497
40,989
28,196
8,527
24,851
4,130
1,075
43,286
39,896
28,825
32,980
44,569
39,876
34,325
28,546
41,729
29,882
17.175
15,387
-13,141
-2,651
1,241
-597
7,285
10,157
0
0
774
0
0
1,002
0
0
1,303
0
0
262
0
0
333
0
0
122
0
0
46
0
0
83
0
0
120
0
0
58
35,063
34,669
52,696
52,696
36,851
36,776
1,941
2,180
711
1,172
1,610
1,510
1,434
1,459
3,740
3,605
3,763
3,973
2,888
1,788
-380
-1,002
-1,228
-501
-794
-22
-71
52
-330
1,042
41,348
28,880
15,948
14,886
-13,935
-2,673
1,170
-545
6,955
11,199
OBLIGATIONS
Outright
transactions
30 Gross purchases
31 Gross sales
32 Redemptions
Repurchase
agreements
33 Gross purchases
34 Gross sales
35 Net change in federal agency obligations
36 Total net c h a n g e in System O p e n M a r k e t A c c o u n t . . .
1. Sales, redemptions, and negative figures reduce holdings of the System Open Market
Account; all other figures increase such holdings.
June
SECURITIES
Outright transactions (excluding
transactions)
Treasury bills
Gross purchases
Gross sales
Exchanges
Redemptions
Others within one year
Gross purchases
Gross sales
Maturity shifts
Exchanges
Redemptions
One to five years
Gross purchases
Gross sales
Maturity shifts
Exchanges
Five to ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
More than ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
All maturities
Gross purchases
Gross sales
Redemptions
FEDERAL AGENCY
1993
Federal Reserve Banks
1.18
FEDERAL RESERVE BANKS
All
Condition and Federal Reserve Note Statements1
Millions of dollars
End of month
Wednesday
Account
Jan.
3
Jan.
10
Jan.
1996
1995
1996
17
Jan.
24
Jan.
31
Nov.
30
Dec.
31
Jan.
31
Consolidated condition statement
ASSETS
1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4 To depository institutions
5 Other
6 Acceptances held under repurchase agreements
11,050
10,168
412
11,050
10,168
447
11,052
10,168
417
11,050
10,168
492
11,050
10,168
424
11,052
10,168
513
135
0
15
0
0
0
2,634
2,634
2,692
2,634
2,634
0
0
0
1,100
0
379,201
372,514
378,208
380,802
390,959
378,208
372,514
178,660
149,785
44,069
378,208
184,355
149,785
44,069
0
0
373,819
183,328
147,881
42,610
6,983
378,197
183,116
151,013
44,069
12,762
378,208
184,355
149,785
44,069
0
377,701
183,847
149,785
44,069
1,500
379,185
384,980
375,165
380,857
383,549
394,829
380,857
15,725
1,125
10,434
1,130
18,912
1,135
5,797
1,135
6,374
1,134
4,319
1,146
4,769
1,126
6,374
1,134
21,102
10,756
21,113
10,098
21,124
10,130
21,134
10,406
19,798
10,447
21,049
8,860
21,099
11,258
19,798
10,447
465,357
443,596
457,945
435,350
440,344
440,582
454,723
440,344
17
0
0
0
0
2,634
2,634
2,634
1,592
0
3,000
390,494
376,543
10 Bought outright 2
11
Bills
12
Notes
13
Bonds
14 Held under repurchase agreements
378,749
183,667
151,013
44,069
11,745
376,543
181,461
151,013
44,069
15 Total loans a n d securities
395,019
16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies 3
19 All other 4
20 Total assets
10,168
442
55
0
0
145
0
0
9 Total U.S. T r e a s u r y securities
513
11,050
0
8
0
Federal agency
obligations
7 Bought outright
8 Held under repurchase agreements
11,052
10,168
299
0
15
0
0
LIABILITIES
401,236
397,224
395,344
391,156
389,371
393,505
400,935
389,371
22 Total deposits
43,525
28,565
40,266
26,473
33,903
30,549
36,908
33,903
23
24
25
26
38,316
4,787
165
257
22,356
5,796
177
236
31,936
7,859
166
306
18,898
7,089
173
313
25,122
8,210
165
406
24,369
5,703
194
282
29,611
5,979
386
932
25,122
8,210
165
406
8,137
4,328
5,250
4,141
9,656
4,280
5,087
4,192
5,239
4,181
3,832
4,645
4,538
4,409
5,239
4,181
457,225
435,180
449,547
426,910
432,693
432,531
446,790
432,693
3,976
3,964
192
3,983
3,966
466
3,988
3,966
444
3,991
3,966
483
3,996
3,654
1
3,958
3,671
422
3,966
3,966
0
3,996
3,654
1
465,357
443,596
457,945
435,350
440,344
440,582
454,723
440,344
502,958
504,929
506,981
503,921
509,044
506,035
500,174
509,044
21 Federal Reserve notes
Depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
27 Deferred credit items
28 Other liabilities and accrued dividends 5
29 Total liabilities
CAPITAL
ACCOUNTS
30 Capital paid in
31 Surplus
32 Other capital accounts
33 Total liabilities a n d c a p i t a l a c c o u n t s
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 Banks)
36
LESS: Held by Federal Reserve Banks
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 c o l l a t e r a l
480,013
78,778
401,236
480,114
82,890
397,224
480,715
85,371
395,344
484,906
93,750
391,156
489,867
100,496
389,371
477,946
84,441
393,505
481,044
80,109
400,935
489,867
100,496
389,371
11,050
10,168
0
380,018
11,050
10,168
0
376,006
11,050
10,168
0
374,126
11,052
10,168
0
369,936
11,052
10,168
0
368,150
11,050
10,168
0
372,286
11,050
10,168
0
379,717
11,052
10,168
0
368,150
401,236
397,224
395,344
391,156
389,371
393,505
400,935
389,371
1. S o m e 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 1996
FEDERAL RESERVE BANKS
Maturity Distribution of Loan and Security Holding
Millions of dollars
Wednesday
Type of holding and maturity
End of month
1996
Jan. 3
1995
1996
Jan. 10
Jan. 17
Jan. 24
Jan. 31
Nov. 30
Dec. 31
Jan. 31
1 Total loans
299
8
145
17
15
55
87
15
2 Within fifteen days'
3 Sixteen days to ninety days
297
2
6
2
144
1
16
1
15
29
26
85
2
15
390,494
376,543
379,201
372,514
378,208
373,819
378,197
378,208
26,631
88,402
121,568
85,503
31,469
36,921
14,549
90,887
117,234
85,503
31,469
36,921
11,546
92,858
121,502
84,904
31,469
36,921
14,402
83,280
121,537
84,904
31,469
36,921
20,294
84,103
119,461
85,961
31,469
36,921
5,924
87,792
130,641
82,956
30,876
35,630
7,580
93,738
123,217
85,273
31,469
36,921
20,294
84,103
119,461
85,961
31,469
36,921
4,226
2,664
5,634
2,634
2,634
2,692
2,634
2,634
1,592
1,754
487
841
' 527
25
0
754
647
681
527
25
3,141
613
647
681
527
25
141
613
664
664
527
25
141
660
617
664
527
25
372
384
531
853
527
25
240
474
527
841
527
25
141
660
617
664
527
25
4 Total U.S. T r e a s u r y securities
5
6
7
8
9
10
Within fifteen days'
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
11 Total f e d e r a l agencv obligations
12
13
14
15
16
17
Within fifteen days'
Sixteen days to ninety days
Ninety-one days to one year
One year to five years
Five years to ten years
More than ten years
1. Holdings under repurchase agreements are classified as maturing within fifteen days in
accordance with maximum maturity of the agreements.
NOTE. Total acceptances data have been deleted from this table because data are no longer
available.
Monetary and Credit Aggregates
1.20
A13
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE 1
Billions of dollars, averages of daily figures
1995
Item
1992
Dec.
1993
Dec.
1994
Dec.
1996
1995
Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
57.37
57.09
57.09
56.42
431.65'
56.82
56.58
56.58
55.74
432.70'
56.27
56.07
56.07
55.33
433.15'
56.33'
56.08
56.08
55.06
435.02'
55.60
55.56
55.56
54.11
435.17
Seasonally adjusted
A D J U S T E D FOR
C H A N G E S IN R E S E R V E R E Q U I R E M E N T S 2
1
2
3
4
5
Total reserves 3
Nonborrowed reserves 4
Nonborrowed reserves plus extended credit 5
Required reserves
Monetary base 6
54.35
54.23
54.23
53.20
351.27 r
60.50
60.42
60.42
59.44
386.90 r
59.34
59.13
59.13
58.17
418.74 r
56.33 r
56.08
56.08
55.06
435.02 r
57.35
57.08
57.08
56.39
429.26 r
57.66
57.28
57.28
56.57
429.79'
57.52
57.23
57.23
56.53
430.78'
Not seasonally adjusted
6
7
8
9
10
Total reserves 7
Nonborrowed reserves
Nonborrowed reserves plus extended credit 5
Required reserves 8
Monetary base 9
56.06
55.93
55.93
54.90
354.55
62.37
62.29
62.29
61.31
390.59
61.13
60.92
60.92
59.96
422.51
58.01
57.76
57.76
56.74
439.01 r
57.13
56.85
56.85
56.16
430.26
57.49
57.12
57.12
56.40
431.30
56.93
56.65
56.65
55.95
431.08
57.29
57.01
57.01
56.34
431.62
56.54
56.30
56.30
55.46
431.58'
56.56
56.35
56.35
55.62
433.21'
58.01
57.76
57.76
56.74
439.01'
56.96
56.93
56.93
55.48
435.98
56.54
56.42
56.42
55.39
360.90
1.16
.12
62.86
62.78
62.78
61.80
397.62
1.06
.08
61.34
61.13
61.13
60.17
427.25
1.17
.21
57.90
57.64
57.64
56.62
444.44 r
1.28
.26
57.04
56.77
56.77
56.08
434.57
.96
.27
57.39
57.02
57.02
56.30
435.56
1.09
.37
56.82
56.54
56.54
55.83
435.59
.99
.28
57.16
56.88
56.88
56.21
436.20
.95
.28
56.40
56.15
56.15
55.32
436.34'
1.08
.25
56.40
56.19
56.19
55.45
438.19'
.94
.20
57.90
57.64
57.64
56.62
444.44'
1.28
.26
56.94
56.90
56.90
55.45
441.92
1.49
.04
N O T A D J U S T E D FOR
C H A N G E S IN R E S E R V E R E Q U I R E M E N T S ' 0
11
12
13
14
15
16
17
Total r e s e r v e s "
Nonborrowed reserves
Nonborrowed reserves plus extended credit 5
Required reserves
Monetary base 1 2
Excess reserves' 3
Borrowings f r o m the Federal Reserve
1. Latest monthly and biweekly figures are available from the B o a r d ' s H.3 (502) weekly
statistical release. Historical data starting in 1959 and estimates of the effect on required
reserves of changes in reserve requirements are available f r o m the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, D C 20551.
2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory
changes in reserve requirements. (See also table 1.10.)
3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, breakadjusted 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 with traditional short-term adjustment credit, the money market effect
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 C a s h " 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. Breakadjusted 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 C a s h " and for all
those 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 regulatory 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 " R e p o r t of Transaction Accounts, Other Deposits and Vault
C a s h " 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 contemporaneous reserve requirements in February
1984, 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
Domestic Financial Statistics • April 1996
MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES 1
Billions of dollars, averages of daily figures
1995 r
1992 r
Dec.
Item
1993 r
Dec.
1994 r
Dec.
1996
1995 r
Dec.
Oct.
Nov.
Dec.
Jan.
Seasonally adjusted
1
2
3
4
5
Measures2
Ml
M2
M3
L
Debt
6
7
8
9
Ml
components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6
1,024.4
3,438.7
4,187.3
5,075.8
11,881.7
1,128.6
3,494.1
4,249.6
5,164.5
12,516.4
1,148.7
3,509.4
4,319.4
5,303.4
13,153.2
1,124.8
3,670.2
4,582.0
5,695.1
13,841.8
1,131.8
3,642.1
4,557.5
5,660.6
13,745.0
1,129.0
3,653.2
4,567.9
5,667.9
13,807.8
1,124.8
3,670.2
4,582.0
5,695.1
13,841.8
1,119.1
3,686.0
4,611.8
n.a.
n.a.
292.9
8.1
339.1
384.2
322.4
7.9
384.3
414.0
354.9
8.5
382.4
402.9
373.2
8.9
389.8
353.0
370.8
8.8
388.1
364.1
371.6
8.9
388.2
360.3
373.2
8.9
389.8
353.0
373.6
8.9
393.5
343.1
2,414.3
748.6
2,365.4
755.6
2,360.7
809.9
2,545.4
911.8
2,510.3
915.4
2,524.2
914.7
2,545.4
911.8
2,566.9
925.8
Commercial
hanks
12 S a v i n g s deposits, i n c l u d i n g M M D A s
13 S m a l l t i m e d e p o s i t s 9
14 L a r g e time d e p o s i t s ' 0 , "
754.1
509.3
286.6
785.0
470.4
272.3
751.9
505.4
298.7
775.0
576.2
343.5
753.9
573.2
335.8
760.3
575.4
341.5
775.0
576.2
343.5
794.2
578.3
344.9
Thrift
institutions
15 S a v i n g s deposits, i n c l u d i n g M M D A s
16 S m a l l t i m e d e p o s i t s 9
17 L a r g e t i m e d e p o s i t s ' 0
433.0
361.9
67.1
433.8
317.6
61.5
397.0
318.2
64.8
359.5
359.5
75.1
362.2
356.6
74.5
360.3
358.4
74.8
359.5
359.5
75.1
358.7
356.7
76.1
Money market mutual
18 Retail
19 Institution-only
356.0
199.8
358.7
197.9
388.1
183.7
475.1
226.4
464.3
223.6
469.7
224.0
475.1
226.4
479.0
229.6
128.1
66.9
157.5
66.3
180.4
82.3
178.1
88.7
189.3
92.1
185.3
89.1
178.1
88.7
183.1
92.0
3,068.6
8,813.1
3,328.3
9,188.1
3,497.6
9,655.6
3,638.4
10,203.4
3,632.6
10,112.3
3,645.8
10,162.1
3,638.4
10,203.4
n.a.
Nontransaction
10 In M 2 7
11 In M 3 o n l y 8
components
funds
Repurchase
agreements
and
20 Repurchase agreements12
21 E u r o d o l l a r s ' 2
Eurodollars
Debt
components
22 F e d e r a l d e b t
23 N o n f e d e r a l d e b t
Not s e a s o n a l l y a d j u s t e d
24
25
26
27
28
Measures2
Ml
M2
M3
L
Debt
29
30
31
32
Ml
components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6
1,046.0
3,455.1
4,205.3
5,103.1
11,883.2
1,153.7
3,514.1
4,271.3
5,194.2
12,509.3
1,174.2
3,529.8
4,341.1
5,332.9
13,145.8
1,150.7
3,689.9
4,603.0
5,724.7
13,828.6
1,131.0
3,638.1
4,557.3
5,650.1
13,703.7
1,136.5
3,658.8
4,580.8
5,681.2
13,771.3
1,150.7
3,689.9
4,603.0
5,724.7
13,828.6
1,128.0
3,687.8
4,616.4
n.a.
n.a.
295.0
7.8
354.4
388.9
324.8
7.6
401.8
419.4
357.5
8.1
400.1
408.4
376.1
8.5
408.0
358.0
370.0
8.9
391.1
361.0
371.7
8.7
395.8
360.3
376.1
8.5
408.0
358.0
371.7
8.5
399.0
348.8
2,409.1
750.2
2,360.4
757.1
2,355.6
811.4
2,539.2
913.2
2,507.0
919.3
2,522.3
922.0
2,539.2
913.2
2,559.8
928.6
Commercial
banks
35 S a v i n g s d e p o s i t s , i n c l u d i n g M M D A s
3 6 S m a l l time d e p o s i t s 9
37 L a r g e t i m e d e p o s i t s ' 0 , "
752.9
507.8
286.2
784.3
468.2
272.1
751.6
502.5
298.5
775.0
572.3
343.4
755.4
572.6
338.1
763.4
572.6
344.3
775.0
572.3
343.4
790.4
576.0
342.2
Thrift
institutions
3 8 S a v i n g s d e p o s i t s , including M M D A s
3 9 S m a l l time d e p o s i t s 9
4 0 Large time deposits'0
432.4
360.9
67.0
433.4
316.1
61.5
396.9
316.4
64.8
359.5
357.1
75.1
362.9
356.2
75.0
361.7
356.7
75.5
359.5
357.1
75.1
357.0
355.2
75.5
Money market mutual
41 Retail
4 2 Institution-only
355.1
201.1
358.3
199.4
388.2
185.5
475.3
228.6
459.9
221.8
467.8
226.3
475.3
228.6
481.1
237.2
127.2
68.7
156.6
67.6
179.2
83.4
176.7
89.4
191.2
93.2
185.1
90.7
176.7
89.4
181.8
91.9
3,069.8
8,813.4
3,329.5
9,179.8
3,499.0
9,646.8
3,639.8
10,188.8
3,610.1
10,093.6
3,635.9
10,135.4
3,639.8
10,188.8
Nontransaction
3 3 In M 2 7
3 4 In M 3 o n l y 8
components
funds
Repurchase
agreements
and
43 Repurchase agreements12
44 Eurodollars'2
Eurodollars
Debt
components
45 Federal debt
4 6 Nonfederal debt
F o o t n o t e s a p p e a r on f o l l o w i n g page.
n.a.
n.a.
Monetary and Credit Aggregates
A15
NOTES T O TABLE 1.21
1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly
statistical release. Historical data starting in 1959 are available from the Money and Reserves
Projections Section, Division of Monetary Affairs, Board of Governors of the Federal Reserve
System, Washington, D C 20551.
2. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the U.S. 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 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, 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 M l is computed by summing currency, travelers checks, demand deposits, and
OCDs, each seasonally adjusted separately.
M2: M l plus (1) savings deposits (including MMDAs), (2) small-denomination time
deposits (time deposits—including retail R P s — i n amounts of less than $100,000), and (3)
balances in retail money market mutual funds (money funds with m i n i m u m initial investments of less than $50,000). Excludes individual retirement accounts (IRAs) and Keogh
balances at depository institutions and money market funds. Seasonally adjusted M 2 is
calculated by summing savings deposits, small-denomination time deposits, and retail money
fund balances, each seasonally adjusted separately, and adding this result to seasonally
adjusted M l .
M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more)
issued by all depository institutions, (2) balances in institutional money funds (money f u n d s
with minimum initial investments of $50,000 or more), (3) RP liabilities (overnight and term)
issued by all depository institutions, and (4) Eurodollars (overnight and term) held by U.S.
residents at foreign branches of U.S. banks worldwide and at all banking offices in the United
Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. government, money market funds, and foreign banks and official institutions. Seasonally adjusted
M 3 is calculated by summing large time deposits, institutional money fund balances, R P
liabilities, and Eurodollars, each seasonally adjusted separately, and adding this result to
seasonally adjusted M2.
L: M 3 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: The debt aggregate is the outstanding credit market debt of the domestic nonfinancial
sectors—the federal sector (U.S. government, not including government-sponsored enterprises or federally related mortgage pools) and the nonfederal sectors (state and local
governments, households and nonprofit organizations, nonfinancial corporate and nonfarm
noncorporate businesses, and farms). Nonfederal debt consists of mortgages, tax-exempt and
corporate bonds, consumer credit, bank loans, commercial paper, and other loans. The data,
which are derived from the Federal Reserve B o a r d ' s flow of funds accounts, are breakadjusted (that is, discontinuities in the data have been smoothed into the series) and
month-averaged (that is, the data have been derived by averaging adjacent month-end levels).
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 N O W and ATS account balances at all depository institutions, credit union
share draft account balances, and demand deposits at thrift institutions.
7. Sum of (1) savings deposits (including M M D A s ) , (2) small time deposits, and (3) retail
money fund balances.
8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) R P liabilities
(overnight and term) issued by depository institutions, and (4) Eurodollars (overnight and
term) of U.S. addressees.
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, the U.S. government, and foreign banks and official institutions.
12. Includes both overnight and term.
A16
1.22
DomesticNonfinancialStatistics • April 1996
Commercial and BIF-insured saving banks1
DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING
1995
1993
Dec.
1996
1994
Dec.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec. r
Jan.
Interest rates (annual effective yields) 2
INSURED COMMERCIAL
BANKS
1 Negotiable order of withdrawal accounts
2 Savings deposits 3
3
4
5
6
7
Interest-hearing time deposits with balances
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2'/? years
More than 2vz years
BIF-INSURED SAVINGS
1.96
2.92
2.00
3.19
1.97
3.17
1.93
3.13
1.93
3.12
1.94
3.14
1.93
3.11
1.95
3.13
1.92
3.10
1.92
3.01
2.65
2.91
3.13
3.55
4.28
3.79
4.44
5.12
5.74
6.30
4.25
4.93
5.49
5.82
6.11
4.20
4.81
5.27
5.53
5.79
4.17
4.77
5.18
5.38
5.62
4.10
4.77
5.15
5.39
5.63
4.10
4.75
5.14
5.32
5.60
4.11
4.75
5.15
5.31
5.56
4.12
4.74
5.12
5.27
5.49
4.11
4.69
5.03
5.18
5.41
3.97
4.58
4.92
5.04
5.26
1.87
2.63
1.94
2.87
1.97
2.93
1.98
2.97
1.97
2.97
1.98
2.96
1.98
2.96
1.97
2.97
1.94
2.99
1.91
2.99
1.84
2.96
2.81
3.02
3.31
3.67
4.62
3.80
4.89
5.52
6.09
6.43
4.27
5.34
5.82
6.09
6.33
4.24
5.22
5.61
5.78
5.99
4.28
5.16
5.47
5.62
5.82
4.34
5.12
5.45
5.60
5.78
4.29
5.08
5.35
5.51
5.74
4.34
5.06
5.32
5.50
5.69
4.45
5.02
5.28
5.46
5.64
4.44
4.95
5.19
5.32
5.47
4.39
4.87
5.07
5.22
5.34
of
BANKS4
8 Negotiable order of withdrawal accounts
9 Savings deposits 3
10
11
12
13
14
1.86
2.46
Interest-bearing time deposits with balances
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2 '/2 years
More than 2'A years
of
Amounts outstanding (millions of dollars)
INSURED COMMERCIAL
BANKS
15 Negotiable order of withdrawal accounts
16 Savings deposits 3
17
Personal
18
Nonpersonal
19
20
21
22
23
Interest-bearing time deposits with balances
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2 [/2 years
More than 2 Vl years
305,237
767,035
598,276
168,759
304,896
737,068
580,438
156,630
275,446
715,843
561,875
153,968
276,406
721,498
566,220
155,279
274,140
726,697
570,299
156,398
267,644
735,930
575,204
160,726
253,174
744,839
584,239
160,600
258,411
747,943
587,235
160,707
259,259
767,431
599,787
167,644
252,434
793,168
628,372
164,796
250,508
785,837
626,183
159,654
29,362
109,050
145,386
139,781
180,461
32,265
96,650
163,062
164,395
192,712
31,655
93,084
185,983
195,557
194,400
32,258
92,364
189,110
198,805
195,689
33,142
91,975
189,011
202,467
195,623
30,937
90,796
189,565
204,453
201,306
29,804
92,220
189,338
203,548
200,182
29,940
94,418
188,859
206,993
200,201
31,083
97,401
188,043
211,169
202,357
32,807
96,902
187,828
211,388
203,227
33,846
98,494
188,948
215,161
204,178
144,011
144,097
149,496
149,488
150,426
150,648
149,570
151,094
151,869
152,390
153,056
11,191
80,376
77,263
3,113
11,175
70,082
67,159
2,923
10,967
67,349
64,127
3,222
11,237
66,952
63,736
3,216
11,147
66,409
63,194
3,215
10,999
66,478
63,149
3,329
11,408
69,752
66,403
3,349
11,317
69,636
66,193
3,443
11,613
70,265
66,688
3,577
12,727
71,402
67,919
3,482
11,950
69,619
66,095
3,524
2,746
12,974
17,469
16,589
20,501
2,144
11,361
18,391
17,787
21,293
1,804
11,323
21,491
23,996
22,548
1,555
10,939
21,545
24,413
22,733
1,769
11,030
21,969
24,876
22,713
1,856
11,079
22,294
25,029
22,563
1,739
11,258
24,837
27,825
23,351
1,768
11,231
25,036
27,755
23,470
1,903
11,848
25,887
28,247
23,574
2,115
12,754
27,072
28,966
24,247
2,074
13,046
27,907
28,124
23,923
19,791
19,008
20,200
20,196
20,286
20,333
21,913
21,784
21,758
21,949
22,089
of
24 IRA and Keogh plan deposits
BIF-INSURED SAVINGS BANKS4
25 Negotiable order of withdrawal accounts
26 Savings deposits 3
27
Personal
28
Nonpersonal
29
30
31
32
33
Interest-bearing time deposits with balances
less than $100,000, by maturity
7 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2 [/l years
More than 2[/i years
34 IRA and Keogh plan accounts
of
1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 (508)
Special Supplementary Table monthly statistical release. For ordering address, see inside
front cover. Estimates are based on data collected by the Federal Reserve System from a
stratified random sample of about 425 commercial banks and 75 savings banks on the last day
of each month. Data are not seasonally adjusted and include IRA and Keogh deposits and
foreign currency-denominated deposits. Data exclude retail repurchase agreements and deposits held in U.S. branches and agencies of foreign banks.
2. As of October 31, 1994, interest rate data for NOW accounts and savings deposits
reflect a series break caused by a change in the survey used to collect these data.
3. Includes personal and nonpersonal money market deposits.
4. Includes both mutual and federal savings banks.
Monetary and Credit Aggregates
1.23
A17
BANK DEBITS AND DEPOSIT TURNOVER1
Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates
1995
Bank group, or type of deposit
19932
July
June
4 Other checkable deposits 4
5 Savings deposits (including M M D A s ) 5
Sept.
Oct. r
Nov.
Seasonally adjusted
DEBITS
Demand
deposits3
1 All insured banks
2
Major New York City banks
3
Other banks
Aug.
313,128.1
165,447.7
147,680.4
334,784.1
3,780.3
3,309.1
3,481.5
3,497.4
825.9
785.9
4,198.1
171,224.3
163,559.7
413,335.1
203,342.3
209,992.8
391,053.7
197,712.2
407,389.4
397,843.6
207,576.7
413,944.4
206,835.9
210,336.4
409,491.8
204,483.4
177,860.3
193,341.5
200,553.5
190,266.9
203,608.0
205,008.4
3,798.6
3,766.3
4,142.3
4,326.8
3,593.7
3,986.7
4,236.1
4,745.4
4,366.8
4,898.4
4,690.6
4,891.5
5,702.9
817.4
901.8
4,718.9
849.3
4,624.7
462.9
887.9
4,970.9
480.7
858.0
5,018.0
369,029.1
191,168.8
5,328.5
DEPOSIT TURNOVER
Demand
deposits3
6 All insured banks
7
Major New York City banks
Other banks
8
9 Other checkable deposits 4
10 Savings deposits (including M M D A s ) 5
4,795.3
428.7
424.6
4,481.5
435.1
14.4
11.9
12.6
4.7
4.6
4.9
14 Other checkable deposits 4
15 Savings deposits (including M M D A s ) 5
15.1
6.0
907.7
905.8
5,222.2
450.5
5,269.7
489.3
15.5
6.5
16.3
18.0
6.6
7.1
421,875.3
213,958.6
207,916.7
395,203.2
207,994.2
413,565.0
212,506.0
187,209.0
201,059.0
202,744.5
195,504.7
4,203.3
4,431.9
4,849.1
4.565.7
4,566.5
5,075.0
5,411.1
895.5
5,292.2
12.9
5.5
496.5
19.1
7.6
Not seasonally adjusted
DEBITS
Demand
deposits'
11 All insured banks
12
Major N e w York City banks
13
Other banks
505.7
313,344.9
165,595.0
147,749.9
334,899.2
171,283.5
163,615.7
369,121.8
191,226.0
425,855.1
209,349.5
216,505.6
390,226.6
196,873.1
177,895.7
3,783.6
3,481.7
3,498.3
3,795.6
3,764.4
4,261.6
4,432.7
3,525.4
4,054.1
3,310.0
193,353.5
4,750.1
398,249.2
DEPOSIT TURNOVER
Demand
deposits3
16 All insured banks
17
Major New York City banks
18
Other banks
19 Other checkable deposits 4
20 Savings deposits (including M M D A s ) 5
826.1
4,803.5
428.8
14.4
4.7
786.1
4,197.9
424.8
818.2
941.3
848.2
936.7
856.4
4,490.3
435.3
4,972.0
527.7
4,657.5
462.8
5,343.0
506.7
5,069.5
445.3
12.6
15.7
6.1
12.9
5.6
15.6
4.9
16.7
6.6
11.9
4.6
1. Historical tables containing revised data for earlier periods can be obtained from the
Publications Section, Division of Support Services, Board of Governors of the Federal
Reserve System, Washington, D C 20551.
Data in this table also appear in 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.
6.5
860.8
476.8
5,046.6
462.7
17.7
6.8
17.8
7.2
4. As of January 1994, other checkable deposits (OCDs), previously defined as automatic
transfer to demand deposits (ATSs) and negotiable order of withdrawal ( N O W ) accounts,
were expanded to include telephone and preauthorized transfer accounts. This change
redefined O C D s for debits data to be consistent with O C D s for deposits data.
5. Money market deposit accounts.
A18
1.26
Domestic Financial Statistics • April 1996
ASSETS AND LIABILITIES OF COMMERCIAL BANKS 1
Billions of dollars
Monthly averages
Account
1995 r
1995
Jan.
July
Aug.
Sept.
1996
Oct.
A L L COMMERCIAL
B A N K I N G INSTITUTIONS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security 3
Other
Interbank loans 4
Cash assets 5
Other assets 6
16 Total assets 7
17
18
19
20
21
22
23
24
25
26
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices
Other liabilities 8
27 Total liabilities
28 Residual (assets less liabilities) 9
Wednesday figures
Nov.
Dec.
1996
Jan.
Jan. 10
Jan. 17
Jan. 24
Jan. 31
Seasonally adjusted
3,354.8
950.1
729.3
220.8
2,404.6
656.7
1,013.8
75.7
938.0
457.2
73.3
203.6
177.0
218.8
225.7
3,526.2
975.9
703.9
272.0
2,550.3
697.8
1,062.3
78.0
984.3
481.1
87.1
222.1
192.8
213.8
223.7
3,541.3
978.1
708.5
269.6
2,563.2
701.9
1,068.1
78.2
989.8
485.7
84.3
223.2
189.4
211.6
223.2
3,564.1
982.2
708.4
273.8
2,581.9
708.5
1.072.1
78.4
993.7
489.5
86.6
225.2
192.1
214.9
225.6
3,576.2
985.1
713.9
271.2
2,591.1
710.7
1,075.5
78.4
997.1
489.3
86.6
229.1
193.0
222.2
226.2
3,586.2
986.8
715.8
271.1
2,599.4
715.0
1,076.8
78.8
997.9
491.2
86.2
230.2
193.9
216.0
226.9
3,595.8
989.1
712.7
276.4
2,606.7
718.3
1,077.0
79.2
997.9
493.3
82.7
235.4
193.7
223.5
233.4
3,621.9
988.6
704.5
284.1
2,633.2
725.1
1,083.6
79.7
1,003.9
497.7
83.9
242.8
200.3
232.9
231.1
3,622.2
983.1
706.2
276.9
2,639.1
722.9
1,083.6
79.6
1,004.0
498.0
87.8
246.7
201.3
234.5
230.9
3,618.2
986.6
702.4
284.2
2,631.6
725.0
1,084.0
79.7
1,004.4
499.0
81.4
242.2
203.3
245.2
234.1
3,627.2
991.7
703.4
288.3
2,635.4
726.9
1,083.9
79.7
1,004.2
497.2
84.9
242.6
198.7
216.0
230.1
3,622.7
994.3
704.3
290.0
2,628.4
726.8
1,085.1
79.8
1,005.3
497.0
79.1
240.5
195.2
232.5
228.1
3,919.4
4,099.5
4,108.6
4,139.9
4,160.9
4,166.5
4,189.9
4,2293
4,231.7
4,243.8
4,215.2
4,221.7
2,540.0
805.7
1,734.3
366.4
1,367.9
645.9
181.5
464.4
244.9
166.1
2,609.0
792.0
1,817.0
402.4
1,414.6
685.8
195.6
490.2
235.7
210.6
2,616.9
783.3
1,833.6
409.5
1,424.1
687.8
194.3
493.5
244.7
212.4
2,629.6
781.1
1,848.5
415.8
1,432.7
687.3
197.9
489.5
252.0
219.0
2,642.5
777.8
1,864.7
423.6
1,441.1
682.3
197.8
484.5
257.6
219.1
2,638.1
766.1
1,872.0
423.1
1,448.8
672.6
195.9
476.7
264.0
220.0
2,653.2
770.8
1,882.4
421.8
1,460.5
687.7
194.6
493.2
263.6
227.4
2,680.0
779.9
1,900.1
421.9
1,478.1
701.5
204.4
497.1
270.2
220.6
2,688.1
785.3
1,902.8
424.2
1,478.5
695.7
205.7
490.0
265.0
213.2
2,687.2
785.5
1,901.7
421.3
1,480.4
702.8
207.8
495.0
278.5
219.7
2,663.4
767.0
1,896.4
419.0
1,477.4
704.6
202.0
502.6
268.6
224.5
2,682.3
783.4
1,898.8
423.5
1,475.4
700.0
200.4
499.6
267.3
225.4
3,596.9
3,741.0
3,761.9
3,787.9
3,801.5
3,794.8
3,831.8
3,872.4
3,862.0
3,888.2
3,861.2
3,874.9
322.5
358.4
346.7
352.0
359.4
371.8
358.1
356.9
369.8
355.6
354.0
346.8
Not seasonally adjusted
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2 . . .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security- 1
Other
Interbank loans 4
Cash assets 5
Other assets 6
44 Total assets 7
45
46
47
48
49
50
51
52
53
54
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices
Other liabilities 8
55 Total liabilities
56 Residual (assets less liabilities)'
Footnotes appear onfollowingpage.
3,348.2
940.6
723.7
216.9
2,407.6
653.9
1,013.4
75.6
937.8
461.5
75.3
203.5
185.1
225.5
226.4
3,518.9
972.6
701.9
270.8
2,546.3
698.6
1,062.2
78.1
984.1
478.6
84.3
222.7
189.6
211.7
224.0
3,540.0
981.7
711.4
270.4
2,558.2
698.7
1,067.7
78.5
989.3
485.9
82.1
223.8
184.6
202.6
225.1
3,568.9
985.2
710.1
275.2
2.583.7
703.9
1,074.0
78.9
995.1
490.8
86.3
228.7
187.9
215.8
226.7
3,577.9
986.8
712.1
274.7
2,591.1
706.7
1,078.6
79.1
999.6
489.9
85.2
230.7
192.2
223.2
226.6
3.592.6
985.8
714.1
271.7
2,606.9
713.3
1,082.4
79.3
1,003.1
492.1
87.5
231.5
197.2
220.1
226.5
3,603.3
979.5
708.0
271.5
2,623.9
716.5
1,081.8
79.2
1,002.6
499.1
86.5
240.1
206.0
238.1
233.1
3,612.4
976.3
699.0
277.3
2,636.2
722.1
1,083.4
79.6
1,003.9
502.3
85.6
242.6
209.1
240.3
231.7
3,616.4
972.8
699.4
273.4
2,643.6
719.5
1,085.0
79.5
1,005.4
504.0
87.7
247.4
211.9
2293
230.1
3,613.1
975.1
698.7
276.4
2,638.0
721.7
1,084.6
79.5
1,005.1
503.5
85.1
243.1
216.6
272.2
234.3
3,603.5
975.7
697.8
277.9
2,627.8
722.3
1,082.1
79.6
1,002.5
500.6
84.4
238.4
199.2
213.7
227.7
3,611.0
981.8
699.8
282.0
2,629.2
724.6
1,083.2
79.6
1,003.6
499.7
83.1
238.6
201.5
228.2
232.6
3,928.8
4,087.5
4,0953
4,1423
4,163.4
4,179.6
4,223.8
4,237.0
4,231.0
4,279.7
4,187.7
4,216.8
2,547.7
818.1
1,729.6
363.9
1,365.6
636.8
187.4
449.4
251.3
167.3
2,601.6
784.2
1,817.4
400.5
1,416.9
695.4
193.7
501.7
234.0
209.8
2,603.8
769.0
1,834.8
408.7
1,426.1
686.2
188.3
497.9
243.0
212.3
2.628.4
779.8
1,848.6
414.9
1,433.7
693.5
190.2
503.3
247.6
219.2
2,642.5
778.0
1,864.5
422.0
1,442.5
688.0
192.9
495.1
258.7
218.4
2,654.0
779.7
1,8743
424.2
1,450.2
681.6
198.0
483.6
262.9
222.0
2,684.3
805.9
1,878.3
420.8
1,457.5
692.1
207.4
484.8
264.1
222.7
2,686.7
791.6
1,895.1
419.0
1,476.1
688.7
211.3
477.4
277.3
222.3
2,698.7
797.3
1,901.4
419.9
1,481.5
686.0
214.3
471.8
270.3
215.4
2,7183
820.1
1,898.2
418.2
1,480.1
694.9
219.1
475.8
283.2
221.1
2,633.9
745.6
1,888.3
417.7
1,470.7
682.5
201.6
480.9
282.8
225.9
2,667.4
775.7
1,891.8
421.5
1,470.2
684.1
202.7
481.4
272.2
229.2
3,603.1
3,740.8
3,7453
3,788.7
3,807.6
3,820.5
3,863.2
3,875.0
3,870.5
3,917.5
3,825.0
3352.9
325.7
346.7
350.0
353.6
355.8
359.1
360.6
362.1
360.5
362.1
362.6
363.9
Commercial Banking Institutions
1.26
A19
ASSETS AND LIABILITIES OF COMMERCIAL BANKS'—Continued
Billions of dollars
Wednesday figures
Monthly averages
Account
1995 r
1995
Jan.
July
Aug.
Sept.
1996
Oct.
DOMESTICALLY CHARTERED
COMMERCIAL BANKS
57
58
59
60
61
6?
63
64
65
66
67
68
69
70
71
73
74
75
76
77
78
79
80
81
82
7
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
F r o m banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices . . . .
Other liabilities 8
83 Total liabilities
84 Residual (assets less liabilities)
Dec.
Jan.
Jan. 10
Jan. 17
Jan. 24
Jan. 31
3.191.7
852.4
641.8
210.6
2.339.2
538.6
1,048.6
79.6
969.0
498.0
56.5
3.190.5
854.9
3,196.2
85S.1
640.8
217.4
2.338.1
540.4
1.049.4
3,192.8
857.7
642.0
215.7
2,335.2
541.6
54.1
56.7
197.5
181.4
203.0
193.9
184.4
213.9
194.5
182.2
177.4
178.7
173.7
172.4
Seasonally adjusted
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2
Commercial and industrial
Real estate
Revolving h o m e equity
Other
Consumer
Security-'
Other
Interbank loans 4
Cash assets 5
Other assets 6
72 Total a s s e t s
Nov.
1996
9
3,001.4
867.4
669.1
198.3
2,133.9
491.5
973.2
•
75.7
897.5
457.2
46.0
165.9
153.0
191.6
172.5
3.109.9
849.3
639.8
209.5
2.260.6
522.8
1.024.4
78.0
946.4
481.1
51.9
180.4
171.3
187.0
171.7
3.121.6
848.2
641.5
206.7
2.273.3
525.4
1,030.8
78.2
952.6
485.7
51.0
180.4
165.4
184.4
170.9
3,139.0
852.7
642.7
210.0
2,286.3
528.5
1,035.2
78.4
956.8
489.5
51.7
181.5
168.1
187.9
171.6
3.148.9
853.1
647.4
205.8
2,295.8
531.4
1.038.2
78.4
959.8
489.3
51.6
185.3
167.2
194.0
172.8
3,160.0
855.2
648.1
207.0
2.304.9
534.5
1,040.1
78.8
961.3
491.2
53.6
185.4
168.8
185.8
173.7
3.171.7
856.1
645.0
211.2
2.315.5
534.7
1,041.3
79.2
962.2
493.3
56.4
189.9
173.9
193.0
178.2
3.192.6
855.7
641.2
214.5
2,336.8
539.9
1.048.9
79.7
969.2
3,461.7
3,582.9
3.585.4
3,609.9
3,6263
3,631.8
3,660.3
3,695.5
3,696.4
3,710.5
3,678.8
3,688.5
2.388.3
795.7
1,592.6
227.4
1.365.2
542.5
164.6
378.0
90.1
122.7
2.445.1
782.6
1.662.5
248.2
1.414.3
567.2
176.5
390.7
82.9
137.2
2.448.4
774.0
1,674.4
250.3
1.424.1
567.2
175.9
391.3
90.8
136.9
2.458.9
772.1
1,686.8
255.0
1.431.8
569.6
178.8
390.7
92.2
141.6
2,469.8
768.7
1,701.1
260.9
1,440.1
567.0
178.1
388.9
92.6
141.2
2,471.3
756.6
1.714.7
267.4
1.447.3
565.1
176.1
389.0
89.8
142.8
2,488.5
760.8
1.727.7
269.8
1.458.0
577.2
176.0
401.1
91.4
146.7
2,519.5
769.8
1,749.7
2.522.4
2.527.7
775.7
2.506.4
774.6
757.2
2,523.6
773.1
1.747.8
1.752.1
271.6
270.4
1.477.4
271.9
1.480.2
1,749.3
271.5
1.477.8
273.1
1,477.4
591.3
184.9
592.5
179.1
406.4
98.8
413.3
92.2
144.4
584.4
185.5
398.9
88.3
140.0
145.2
146.7
145.6
3,143.7
3.2323
3.2433
3.262.3
3,270.6
3,268.9
3,303-8
3347.5
3335.1
3363.0
3337.8
3,348.4
318.1
350.6
342.1
347.6
355.6
362.9
356.5
348.0
361.3
347.5
341.0
340.2
3,183.3
842.8
3.181.3
843.9
3,173.1
844.5
3,178.3
845.8
633.8
209.1
633.2
633.1
211.4
2.328.6
634.S
211.0
2,332.4
536.2
1.047.7
539.5
1.049.1
79.5
968.1
,'9.6
969.5
500.6
53.3
499.7
53.6
190.7
180.7
190.5
497.7
55.7
194.5
182.6
201.3
176.0
1,478.1
590.3
182.7
407.6
93.3
639.0
215.9
2.335.6
539.4
1.049 1
969.5
79.7
969.7
499.0
497.2
79.7
183.4
1,051.0
79.8
971.2
497.0
53.2
192.3
179.0
201.0
1,750.5
590.3
179.3
411.0
S8.8
Not seasonally adjusted
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
Assets
Bank credit
Securities in bank credit
U.S. government securities
Other securities
Loans and leases in bank credit 2
Commercial and industrial
Real estate
Revolving h o m e equity
Other
Consumer
Security 1
Other
Interbank loans 4
Cash assets 5
Other assets 6
100 Total a s s e t s 7
101
10?
103
104
105
106
107
108
109
110
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
F r o m banks in the U.S
From nonbanks in the U.S
Net due to related foreign offices . . . .
Other liabilities 8
111 Total liabilities
112 Residual (assets less liabilities)'
Footnotes appear on following page.
2,990.1
856.8
661.6
195.2
2.133.3
488.6
972.9
75.6
897.4
461.5
44.9
165.4
159.7
198.7
173.3
3.102.3
845.4
637.9
207.5
2,256.9
522.7
1.024.3
78.1
946.3
478.6
50.5
180.8
168.2
184.4
172.6
3.118.8
850.3
643.5
206.8
2.268.5
521.5
1,030.4
78.4
952.0
485.9
49.9
180.8
161.3
174.8
171.6
3,142.8
854.7
644.9
209.8
2,288.1
524.5
1.036.9
78.9
958.1
490.8
51.6
184.2
163.0
187.9
172.6
3.153.6
854.2
646.3
207.8
2,299.4
528.9
1.041.4
79.0
962.3
489.9
51.9
187.4
164.6
194.6
173.5
3.169.7
856.0
647.2
208.8
2,313.7
533.5
1,045.6
79.3
966.3
492.1
55.5
187.1
172.8
190.2
172.3
3.177.4
849.5
641.1
208.4
2,327.9
532.6
1.046.1
79.2
966.9
499.1
57.1
193.1
184.9
207.9
177.5
3,180.6
844.5
633.9
210.6
2,336.1
536.7
1.048.8
79.5
969.3
502.3
54.1
194.1
190.4
209.1
176.9
3,465.4
3,570.8
3369.6
3,609.2
3,629.7
3,648.4
3,691.0
2.395.3
808.0
1,587.3
225.2
1,362.0
536.8
170.0
366.7
89.9
123.3
2.439.4
774.8
1.664.6
248.3
1.416.3
571.6
173.6
398.0
81.8
137.0
2.436.7
759.7
1.677.0
251.4
1.425.6
564.1
170.0
394.0
89.1
135.8
2.457.9
770.2
1,687.7
254.6
1.433.0
573.2
171.0
402.2
88.7
141.7
2,471.4
768.8
1,702.7
260.7
1,442.0
574.7
174.6
400.2
92.0
141.6
2.486.2
770.0
1,716.2
267.2
1,449.0
576.1
178.5
397.6
88.4
144.4
3,145 J
3,229.8
3,225.6
3,261.6
3,279.7
320.1
341.0
344.0
347.6
350.0
2.340.4
210.7
2,337.4
534.5
1.050.1
1,049.8
79.5
970.5
504.0
54.0
536.1
79.5
970.3
503.5
191.9
53.2
194.8
197.2
198.2
176.3
241.0
179.9
181.7
171.9
3,700.4
3,693.2
3,742.9
3.651.0
3,680.3
2.518.7
795.6
1,723.1
265.4
1,457.7
583.3
187.7
395.6
89.3
144.8
2,525.3
781.4
1.743.9
268.9
1,475.0
580.8
189.5
391.4
93.0
145.1
2.533.9
786.8
1.747.2
267.5
1,479.7
578.0
193.3
384.7
85.6
141.0
2.558.2
2.474.6
2.506.7
810.0
1.748.3
735.8
I.73S.8
765.3
1.741.4
269.5
1,478.8
269.5
271.2
1.4 70.2
145"
1.469.3
575.3
IS0.9
394.5
97.4
146.9
3,295.1
3336.2
3344.2
3338.4
3386.6
3,294.2
3.322.2
353.4
354.8
356.3
354.8
356.3
356.8
35S.1
197.8
585.8
195.9
389.8
96.'
184.3
197.3
176.S
577.9
1 S0.6
397.3
90.0
14/.6
A20
DomesticNonfinancialStatistics • April 1996
N O T E S T O TABLE 1.26
1. Covers the following types of institutions in the fifty states and the District of
Columbia: domestically chartered commercial banks that submit a weekly report of condition
(large domestic); other domestically chartered commercial banks (small domestic); branches
and agencies of foreign banks; New York State investment companies, and Edge Act and
agreement corporations (foreign-related institutions). Excludes international banking facilities. Data are Wednesday values, or pro rata averages of Wednesday values. Large domestic
banks constitute a universe: data for small domestic banks and foreign-related institutions are
estimates based on weekly samples and on quarter-end condition reports. Data are adjusted
for breaks caused by reclassifications of assets and liabilities.
2. Excludes federal funds sold to, reverse repurchase agreements with, and loans to
commercial banks in the United States.
3. Consists of reserve repurchase agreements with broker-dealers and loans to purchase
and carry securities.
4. Consists of federal funds sold to, reverse repurchase agreements with, and loans to
commercial banks in the United States.
5. Includes vault cash, cash items in process of collection, demand balances due from
depository institutions in the United States, balances due from Federal Reserve Banks, and
other cash assets.
6. Excludes the due-from position with related foreign offices, which is included in lines
25, 53, 81, and 109.
7. Excludes unearned income, reserves for losses on loans and leases, and reserves for
transfer risk. Loans are reported gross of these items.
8. Excludes the due-to position with related foreign offices, which is included in lines 25,
53, 81, and 109.
9. This balancing item is not intended as a measure of equity capital for use in capital
adequacy analysis.
NOTE. Data have been benchmarked to the September 1995 Call Report; they also reflect
new seasonal factors.
Weekly Reporting
1.27
Commercial
Banks
A21
ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS
Millions of dollars, Wednesday figures
1996
1995
Account
Dec. 6
Dec. 13
120,350
295,845 r
24,677 r
271,169
108,656 r
120,285 r
293,978 r
24,564 r
269,413
107,348 r
43,437
67,73 l r
51,345'
125,071 r
1,617
65,353
19,459
4,893
14,566
45,894
58,102 r
Jan. 10
Jan. 17
Jan. 24
Jan. 31
Dec. 27
Jan. 3
132,782
293,621'
25,260'
268,361
107,863'
135,731
287,030'
24,106'
262,924
106,580'
160,189
287,313
25,123
262,190
109,253
125,982
285,647
25,614
260,033
109,422
157,574
286,376
26,136
260,240
110,128
114,680
283,857
22,866
260,991
110,486
124,466
285,431
23,713
261,717
111,662
43,358
68,185 r
50,52 r
123,914 r
1,562
65,261
19,320
4,839
14,480
45,942
57,090 r
47,111'
63,794'
49,594'
122,374'
1,955
64,489
19,281
4,797
14,485
45,207
55,930'
44,425
63,310'
48,609'
122,753'
1,780
64,541
19,236
4,768
14,469
45,304
56,432'
41,356
63,494
48,088
126,712
2,022
64,916
19,036
4,473
14,563
45,880
59,774
39,877
62,864
47,870
124,219
1,693
66,311
19,036
4,455
14,581
47,275
56,216
39,607
63,092
47,412
125,452
1,572
66,107
19.034
4,441
14,594
47,072
57,773
39,031
63,578
47,896
125,849
1,579
66,067
19,038
4,442
14,596
47,029
58,202
38,404
63,467
48,185
125,312
1,544
65,380
18,997
4,424
14,573
46,382
58,388
107,412
70,763
32,068
4,581
l,266,093 r
346,883 r
1,397
345,486 r
342,889 r
2,598
503,917 r
47,573 r
456,344 r
246,755 r
66,36 l r
37,792 r
3,078
25,491
16,006
6,454 r
10,769
1,021
28,060
39,867
1,736
33,686 r
1,230,67 l r
142,038'
102,984
67,252
30,350
5,382
1,267,937'
345,045'
1,408
343,637'
341,018'
2,619
503,270'
47,706'
455,564'
248,985'
66,672'
38,293'
2,877
25,501
16,599
6,489'
10,936
1,131
28,799'
40,011
1,732
33,704'
1,232,501'
139,979'
118,032
80,700
32,102
5,230
1,280,818'
348,165'
1,303
346,862'
344,228'
2,634
502,152'
47,771'
454,381'
252,212'
67,814'
38,825'
4,075
24,914
20,609
6,483'
10,807
1,091
31,221
40,262
1,731
33,620
1,245,468'
145,076'
110,392
75,328
30,039
5,025
1,285,900'
348,306'
1,361
346,945'
344,352'
2,592'
500,807'
47,838'
452,969'
255,865'
73,288'
44,399'
3,560
25,329
18,950
6,532'
10,672
1,121
29,664
40,694'
1,757'
33,462
1,250,681'
141,504'
129,208
89,162
33,045
7,001
1,296,495
351,660
1,402
350,258
347,574
2,684
503,704
47,971
455,734
255,780
74,024
44,798
3,691
25,536
18,335
6,892
10,492
1,136
32,557
41,915
1,729
33,591
1,261,175
143,573
113,626
75,639
30,551
7,437
1,292,137
348,203
1,372
346,832
344,149
2,683
508,009
47,982
460,028
255,999
72,529
43,943
2,983
25,603
15,716
6,700
10,549
1,364
30,777
42,289
1,764
33,457
1,256,916
141,847
119,105
83,482
29,494
6,128
1,292,323
349,183
1,366
347,817
345,096
2,721
507,755
48,033
459,722
255,095
72,985
44,792
3,108
25,085
16,165
6,594
10,554
1,196
30,364
42,431
1,732
33,455
1,257,135
142,533
110,323
73,330
30,575
6,418
1,281,905
349,477
1,404
348,073
345,327
2,746
505,832
48,019
457,813
252,221
71,046
42,887
3,701
24,458
15,425
6,579
10,713
1,182
26,975
42,455
1,736
33,288
1,246,880
138,716
110,591
74,148
29,894
6,549
1,285,560
352,561
1,318
351,242
348,472
2,770
506,327
48,000
458,327
251,132
69,537
41,267
3,153
25,117
17,495
6,522
10,606
1,159
27,530
42,691
1,735
33,277
1,250,548
142,061
2,021,387
2,013,640 r
2,057,352
2,048,090 r
2,108,169
2,048,237
2,088,176
2,020,305
2,038,409
Dec. 20
ASSETS
1 Cash and balances due from depository institutions
2 U.S. Treasury and government securities
Trading account
3
Investment account
4
Mortgage-backed securities 1
5
All others, by maturity
One year or less
6
One year through five years
7
More than five years
8
9 Other securities
Trading account
10
Investment account
11
State and local government, by maturity
12
One year or less
13
14
More than one year
Other bonds, corporate stocks, and securities
15
Other trading account assets
16
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 in securities
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 depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other 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
Lease-financing receivables
LESS: Unearned income
Loan and lease reserve 3
Other loans and leases, net
All other assets
45 Total assets
Footnotes appear on the following page.
A22
1.27
DomesticNonfinancialStatistics • April 1996
ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued
Millions of dollars, Wednesday figures
1995
1996
Account
Dec.
6
Dec.
Dec.
13
20
Dec.
27
Jan.
3
Jan.
10
Jan.
17
Jan.
24
Jan.
31
LIABILITIES
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
Deposits
Demand deposits
Individuals, partnerships, and corporations
Other holders
States and political subdivisions
U.S. government
Depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits 4
Nontransaction balances
Individuals, partnerships, and corporations
Other holders
States and political subdivisions
U.S. government
Depository institutions in the United States
Foreign governments, official institutions, and banks . .
Liabilities for borrowed money 5
Borrowings from Federal Reserve Banks
Treasury tax and loan notes
Other liabilities for borrowed m o n e y 6
Other liabilities (including subordinated notes and debentures) . . .
69
Total liabilities
70
Residual (total assets less total liabilities) 7
1,201,626R
1,213,783
1,265,024
1,229,595
1,249,088
1,191,403
312.540""
263.308R
327,561
270,614
335,375
280,300
358,957
299,667
323,010
272,983
341,290
282,675
299,095
251,544
56,947
9,874
55,075
10,388
59,290
10,314
50,027
8,330
58,615
9,010
1,895
23,659
5,837
2,738
28,236
2,235
23,228
5,166
2,356
22.719
4,986
818
12,023
96,862
625
13,043
95,104
675
16,337
96,214
5,213
649
12,140
5,615
914
3,528
28,776
5,171
47,551
9,167
2,384
9,706
619
11,511
565
10,157
709
9,911
796,017
773,224R
793,982
771,594"
790,009
768,096R
95,598
787,801"
95,501
810,566
787,318
93,456
814,342
791,014
87,023
805,286
781,919
88,848
806,467
765,886"
93,267
813,318
789,721
22,793R
20,393R
594
1,512
294
22,388R
20,064R
21,913R
19,667R
554
1,393
300
21,915"
19,518"
623
1,474
300
23,248
21,038
649
1,198
364
23,597
23,328
23,366
782,628
23,839
21,176
647
1,415
20,747
747
1,475
359
358
20,581
772
1,669
344
20,905
829
1,835
270
407,442R
401,459R
435,442R
419,136"
428,120
413,913
418,726
406,710
409,504
3,405
30,895
401,142R
170
5,393
422,557
0
4,444
130
10,501
222,939
409,469
211,286
408,095
226,170
0
23,060
383,650
215,603R
0
17,121"
402,014""
219,014"
227,098
388,099
221,315
1,864,829
l,856,923r
1,916,083
1,854,794
1,893,983
1,825,211
1,842,390
192,086
193,443
194,193
195,094
196,019
1,705,768
113,989
1,696,047
116,464
1,694,982
1,691,478
1,246
118,011
1,237
1,685,716
117,244
1,286
277
1,009
26,955
277
970
27,812
277
960
27,364
91,518
80,409
91,151
1,204,606
311,726
262,860
48,866
8,204
1,806
20,880
5,134
0
3,232
49,232
8,635
1,878
19.885
628
1.404
293
0
5,028
404,210R
216,566R
3 9 6 , 4 3 1"
2I7,677R
1,828,613
1,820,762
r
192,774
192,878
192,524
1,218,774"
596
12,700
191,167
20,075
5,204
1,211,570
316,255
265,977
50,278
10,164
2,382
21,496
5,615
0
21,405
MEMO
71
72
73
74
75
76
77
Total loans and leases, gross, adjusted, plus securities 8
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates 9
Commercial and industrial
Other
Foreign branch credit extended to U.S. residents 1 0
Net owed to related institutions abroad
L,685,866R
116,043
1,328
279
1,049
26,125
77,108
L,683,267R
116,040
1,318
279
1,038
26,120
79,467
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 (NOWs) and automatic transfer service (ATS)
accounts, 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 capitaladequacy analysis.
1,695,319"
114,751
1,309
279
1,030
26,414
82,925
1,686,348"
112,085"
1,294
277
1,017
27,092
88,067""
1,226
276
950
27,143
91,295
118,296
1,215
275
940
27,814
83,845
8. E x c l u d e s loans to and federal f u n d s transactions with c o m m e r c i a l banks in the
United States.
9. Affiliates include a b a n k ' s own foreign branches, nonconsolidated nonbank affiliates of
the bank, the b a n k ' 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.
Weekly Reporting Commercial Banks
1.28
A23
LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS
Assets and Liabilities
Millions of dollars, Wednesday figures
1996
1995
Account
Dec.
6
Dec.
13
Dec.
20
Dec.
27
Jan.
3
Jan.
10
Jan.
17
Jan.
24
Jan.
31
ASSETS
20
21
Cash and balances due from depository
institutions
U.S. Treasury and government agency
securities
Other securities
Federal funds sold 1
To commercial banks in the United States
To others 2
Other loans and leases, gross
Commercial and industrial
Bankers acceptances and commercial paper .
All other
U.S. addressees
Non-U.S. addressees
Loans secured by real estate
Loans to depository and 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
institutions
All other
Other assets (claims on nonrelated parties)
22
Total assets 3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
17,596
17,445
18,439
18,852
18,596
18,650
18,805
19,282
18,636
44,123
40,228
44,605
40,464
27,534
44,127
39,537
42,680
39,985
29,623
42,284
42,760
40,854
32,484
42,772
43,387
42,214
42,544
43,857
31,089
8,890
22,199
29,905
8,091
21,814
46,968
27,917
7,602
20,314
27,315
8,761
18,554
180,857
116,785
4,602
117,610
4,753
181,623
118,359
4,920
180,999
118,615
5,035
181,613
118,802
5,134
113,368
107,679
5,689
21,759
112,856
107,167
5,689
21,510
113,439
107,713
5,725
21,502
113,580
107,626
5,954
113,668
107,765
5,903
21,253
21,165
30,290
2,746
3,254
30,590
2,752
30,330
2,618
3,235
29,737
2,630
2,844
30,063
2,444
3,209
30,089
2,387
3,003
24,290
24,629
6,807
24,478
5,267
24,699
5,033
24,262
4,732
24,800
4,888
633
4,654
650
4,957
40,274
4,476
38,941
643
4,491
587
4,557
40,739
39,981
40,230
117,715
4,548
113,166
107,399
5,307
22,057
107,448
5,718
22,016
3,118
2,994
29,708
3,117
3,129
23,612
6,152
23,462
7,458
112,018
106,909
5,110
30,231
3,239
29,724
467
117,927
4,559
117,064
4,358
112,706
112,183
107,087
5,095
22,202
3,145
23,846
5,611
8,993
23,491
182,012
11,597
18,026
182,989
116,560
4,542
22,027
452
455
4,146R
40,703
40,604
27,848
7,933
19,915
183,954
25,573
7,415
18,158
182,299
9,952
17,582
180,452
6,417
452
642
2,819
4,150R
43,138
4,131R
45,088
380,121
381,261
378,404
380,079
379,852
382,644
384,586
383,607
386,938
104,370
105,439
4,380
3,190
1,190
107,409
4,059
3,145
914
105,326
5,094
4,016
102,209
4,541
100,494
4,134
103,011
74,527
28,484
1,079
100,231
100,709
4,483
3,416
1,067
101,059
74,155
26,904
3,584
770
97,004
3,118
100,311
72,925
27,386
102,853
4,556
3,809
747
98,297
101,358
4,354
3,653
888
97,668
71,569
28,663
69,031
28,637
69,258
29,039
67,936
29,067
72,197
73,498
44,606
9,166
35,440
28,892
72,072
73,802
48,196
10,882
37,314
27,466
4,587
74,151
48,649
10,481
38,168
25,502
4,212
73,765
50,333
10,122
40,212
24,310
60,434
22,878
59,897
21,290
59,171
23,431
3,786
19,646
25,606
4,396
21,210
37,751
25,406
4,090
21,316
65,823
4,551
24,341
66,092
74,531
45,723
9,760
35,963
28,808
4,498
58,626
60,148
62,936
4,013
20,119
64,696
380,121
381,261
378,404
380,079
379,852
382,644
384,586
383,607
386,938
280,522
110,865
279,985
110,559
281,004
280,935
116,402
284,005
118,495
286,499
121,790
287,593
121,309
286,254
288,996
120,048
120,818
4,55 R
39,567
LIABILITIES
35
36
37
Deposits or credit balances owed to other
than directly related institutions
Demand deposits 4
Individuals, partnerships, and corporations . . . .
Other
Nontransaction accounts
Individuals, partnerships, and corporations . . . .
Other
Borrowings f r o m other than directly
related institutions
Federal funds purchased 5
From commercial banks in the United States . .
From others
Other liabilities for borrowed money
To commercial banks in the United States
To others
Other liabilities to nonrelated parties
38
Total liabilities 6
23
24
25
26
27
28
29
30
31
32
33
34
45,535
8,425
37,110
26,662
4,446
22,217
4,398
3,620
777
44,607
9,503
35,104
1,015
96,360
66,080
30,280
72,761
47,355
9,604
96,226
65,759
30,466
71,685
47,553
11,188
36,365
24,132
MEMO
39
40
Total loans (gross) and securities, adjusted 7
Net owed to related institutions abroad
108,304
1. Includes securities purchased under agreements to resell.
2. Includes transactions with nonbank brokers and dealers in securities.
3. For U.S. branches and agencies of foreign banks having a net " d u e f r o m " position,
includes net due f r o m related institutions abroad.
4. Includes other transaction deposits.
5. Includes securities sold under agreements to repurchase.
6. For U.S. branches and agencies of foreign banks having a net " d u e t o " position,
includes net owed to related institutions abroad.
7. Excludes loans to and federal funds transactions with commercial banks in the United
States.
A24
1.32
DomesticNonfinancialStatistics • April 1996
COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
Year ending December
1995
Item
1991
1992
1993
1994
1995
July
Aug.
Sept.
Oct.
Nov.
Dec.
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
528,832
545,619
555,075
595,382
671,577
657,938
660,719
669,686
673,392
671,081
671,577
Financial companies'
2
Dealer-placed paper 2 , total
Directly placed paper 3 , total
3
212,999
182,463
226,456
171,605
218,947
180,389
223,038
207,701
273,978
208,136
262,695
215,473
261,904
215,361
268,838
213,883
271,299
215,214
277,337
214,420
273,978
208,136
4 Nonfinancial companies 4
133,370
147,558
155,739
164,643
189,463
179,770
183,454
186,965
186,879
179,324
189,463
n.a.
n.a.
n.a.
Bankers dollar acceptances (not seasonally adjusted) 5
5 Total
6
7
8
9
10
By holder
Accepting banks
Own bills
Bills bought from other banks
Federal Reserve Banks 6
Foreign correspondents
Others
By basis
11 Imports into United States
12 Exports from United States
13 All other
43,770
38,194
32,348
29,835
11,017
9,347
1,670
10,555
9,097
1,458
12,421
10,707
1,714
11,783
10,462
1,321
1,739
31,014
1,276
26,364
725
19,202
410
17,642
12,843
10,351
20,577
12,209
8,096
17,890
10,217
7,293
14,838
10,062
6,355
13,417
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. As reported by financial companies that place their paper directly with investors.
4. Includes public utilities and firms engaged primarily in such activities as communications, construction, manufacturing, mining, wholesale and retail trade, transportation, and
services.
n.a.
n.a.
n.a.
n.a.
5. Data on bankers dollar acceptances are gathered f r o m approximately 100 institutions.
T h e reporting group is revised every January. Beginning January 1995, data for Bankers
dollar acceptances will be reported annually in September.
6. In 1977 the Federal Reserve discontinued operations in bankers dollar acceptances for
its own account.
Financial Markets
1.33
PRIME RATE CHARGED BY BANKS
A25
Short-Term Business Loans1
Percent per year
Date of change
1993—Jan.
Rate
1
6.00
24
19
17
16
15
6.25
6.75
7.25
7.75
8.50
1995—Feb.
1
July
7
Dec. 20
9.00
8.75
8.50
1996—Feb.
8.25
1994—Mar.
Apr.
May
Aug.
Nov.
1
Period
Average
rate
1993
1994
1995
6.00
7.15
8.83
1993—Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
1. The prime rate is one of several base rates that banks use to price short-term business
loans. The table shows the date on which a new rate came to be the predominant one quoted
by a majority of the twenty-five largest banks by asset size, based on the most recent Call
Period
1994—jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Ocl
Nov
Dec
Average
rate
6.00
6.00
6.06
6.45
6.99
7.25
7.25
7.51
7.75
7.75
8.15
8.50
Period
Average
rate
1995—Jan
Feb
Mar
Apr.
May
June
July
Aug
Sept
Ocl
Nov
Dei.
8.50
9.00
9.00
9.00
9.00
9.00
8.80
8.75
8.75
8.75
8.75
8.65
1996—Jan
Feb
8.50
8.25
Report. Data in this table also appear in the B o a r d ' s H.15 (519) weekly and G.13 (415)
monthly statistical releases. For ordering address, see inside front cover,
A26
1.35
DomesticNonfinancialStatistics • April 1996
INTEREST RATES
M o n e y and Capital M a r k e t s
Percent per year; figures are averages of business day data unless otherwise noted
1995
Item
MONEY MARKET
1993
1995,
week
ending
1995
1996, week ending
Oct.
Nov.
Dec.
Jan.
Dec. 29
Jan. 5
Jan. 12
Jan. 19
Jan. 26
INSTRUMENTS
1 Federal funds 1 , 2 , 3
2 Discount window borrowing 2 , 4
3.02
3.00
4.21
3.60
5.83
5.21
5.76
5.25
5.80
5.25
5.60
5.25
5.56
5.24
5.48
5.25
5.35
5.25
5.53
5.25
5.61
5.25
5.44
5.25
3.17
3.22
3.30
4.43
4.66
4.93
5.93
5.93
5.93
5.81
5.82
5.71
5.80
5.74
5.59
5.84
5.64
5.43
5.56
5.40
5.23
5.83
5.61
5.39
5.63
5.49
5.32
5.59
5.45
5.29
5.57
5.40
5.23
5.51
5.35
5.17
3.12
3.16
3.15
4.33
4.53
4.56
5.81
5.78
5.68
5.71
5.66
5.51
5.69
5.59
5.35
5.70
5.47
5.20
5.44
5.25
5.01
5.60
5.39
5.12
5.50
5.34
5.10
5.47
5.32
5.06
5.44
5.26
5.01
5.40
5.19
4.95
3.13
3.21
4.56
4.83
5.81
5.80
5.71
5.61
5.64
5.47
5.52
5.34
5.31
5.14
5.46
5.28
5.37
5.21
5.36
5.20
5.32
5.14
5.28
5.10
3.11
3.17
3.28
4.38
4.63
4.96
5.87
5.92
5.98
5.75
5.79
5.76
5.75
5.74
5.64
5.75
5.62
5.49
5.47
5.39
5.28
5.64
5.53
5.42
5.53
5.44
5.35
5.52
5.45
5.35
5.48
5.39
5.28
5.44
5.36
5.23
3.18
4.63
5.93
5.81
5.75
5.64
5.40
5.56
5.49
5.47
5.39
5.34
3.00
3.12
3.29
4.25
4.64
5.02
5.49
5.56
5.60
5.28
5.32
5.28
5.36
5.27
5.14
5.14
5.13
5.03
5.00
4.92
4.82
4.89
4.98
4.94
5.02
5.00
4.91
5.03
4.98
4.89
4.98
4.85
4.77
4.97
4.90
4.79
3.02
3.14
3.33
4.29
4.66
5.02
5.51
5,59
5.69
5.30
5.34
5.30
5.35
5.29
5.15
5.16
5.15
5.06
5.02
4.97
4.89
4.91
5.04
n.a.
5.04
5.03
n.a.
5.03
5.02
4.89
5.02
4.93
n.a.
4.99
4.88
n.a.
3.43
4.05
4.44
5.14
5.54
5.87
6.29
6.59
5.32
5.94
6.27
6.69
6.91
7.09
7.49
7.37
5.94
6.15
6.25
6.38
6.50
6.57
6.95
6.88
5.59
5.70
5.77
5.86
5.97
6.04
6.45
6.37
5.43
5.48
5.57
5.69
5.83
5.93
6.33
6.26
5.31
5.32
5.39
5.51
5.63
5.71
6.12
6.06
5.09
5.11
5.20
5.36
5.54
5.65
6.11
6.05
5.21
5.22
5.29
5.44
5.56
5.64
6.06
6.00
5.18
5.18
5.26
5.39
5.54
5.63
6.06
6.00
5.17
5.20
5.29
5.44
5.62
5.74
6.18
6.12
5.03
5.04
5.13
5.30
5.47
5.58
6.06
6.01
5.05
5.09
5.18
5.35
5.53
5.65
6.11
6.06
6.45
7.41
6.93
6.43
6.31
6.11
6.07
6.04
6.03
6.14
6.03
6.08
5.38
5.83
5.60
5.77
6.17
6.18
5.80
6.10
5.95
5.74
5.95
5.80
5.63
5.79
5.64
5.40
5.66
5.45
5.27
5.59
5.43
5.29
5.00
5.44
5.22
5.59
5.37
5.25
5.45
5.50
5.30
5.69
5.40
5.30
5.61
5.46
7.54
8.26
7.83
7.39
7.30
7.11
7.10
7.05
7.05
7.15
7.08
7.10
7.22
7.40
7.58
7.93
7.46
7.97
8.15
8.28
8.63
8.29
7.59
7.72
7.83
8.20
7.86
7.12
7.27
7.39
7.75
7.36
7.02
7.18
7.32
7.68
7.30
6.82
6.99
7.13
7.49
7.10
6.80
6.99
7.12
7.47
7.09
6.76
6.93
7.07
7.43
6.98
6.75
6.94
7.07
7.42
7.08
6.86
7.02
7.18
7.52
7.17
6.80
6.96
7.11
7.45
7.00
6.81
7.00
7.13
7.47
7.11
2.78
2.82
2.56
2.41
2.37
2.30
2.31
2.31
2.28
2.37
2.35
2.30
papeP,5,6
3
4
5
Commercial
1-month
3-month
6-month
6
7
8
Finance paper, directly
1-month
3-month
6-month
placed3,5,7
9
10
Bankers
acceptances3,5,8
3-month
6-month
11
12
13
Certificates of deposit,
1-month
3-month
6-month
secondary
market3,9
14 Eurodollar deposits, 3-month 3 , 1 0
18
19
20
U.S. Treasury hills
Secondary market 3 , 5
3-month
6-month
1-year
Auction average 3 , 5 , 1 1
3-month
6-month
1-year
21
22
23
24
25
26
27
28
Constant
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
15
16
17
1994
1996
U.S. TREASURY NOTES AND BONDS
maturitiesu
Composite
29 More than 10 years (long-term)
STATE AND LOCAL NOTES AND BONDS
Moody's
series'3
30 Aaa
31 Baa
32 Bond Buyer series 1 4
CORPORATE
BONDS
33 Seasoned issues, all industries 1 5
34
35
36
37
38
Rating group
Aaa
Aa
A
Baa
A-rated, recently offered utility bonds 16
MEMO
Dividend-price
ratio17
39 C o m m o n stocks
1. The daily eifective 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 for 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 A A 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 approximately 11:00 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. Department of the Treasury.
13. General obligation bonds based on Thursday figures; M o o d y ' s Investors Service.
14. State and local government general obligation bonds maturing in twenty years are used
in compiling this index. The twenty-bond index has a rating roughly equivalent to M o o d y s '
A1 rating. Based on Thursday figures.
15. Daily figures from M o o d y ' 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 & Poor's corporate series. C o m m o n stock ratio is based on the 500 stocks in
the price index.
NOTE. Some of the data in this table also appear in the B o a r d ' s H.15 (519) weekly and
G.13 (415) monthly statistical releases. For ordering address, see inside front cover.
Financial Markets
1.36
STOCK MARKET
A27
Selected Statistics
1996
1995
Indicator
1994
1993
1995
June
May
July
Aug.
Sept.
Prices and trading volume (averages of daily
Oct.
Nov.
Dec.
Jan.
figures)
Common stock prices
(indexes)
1 N e w York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
Transportation
3
4
Utility
Finance
5
249.71
300.10
242.68
114.55
216.55
254.16
315.32
247.17
104.96
209.75
291.18
367.40
270.14
114.61
238.48
281.81
357.01
254.70
106.02
228.45
289.52
366.75
256.80
108.12
236.26
298.18
379.13
279.15
109.59
240.49
300.05
379.79
285.63
111.06
245.27
310.41
390.42
295.54
114.67
260.72
311.78
389.63
291.16
123.59
265.12
317.58
398.66
300.06
119.49
266.12
327.90
412.11
303.53
173.95
273.36
329.22
413.05
300.43
127.09
274.96
6 Standard & Poor's Corporation
( 1 9 4 1 - 4 3 = 10)'
451.63
460.42
541.72
523.83
539.35
557.37
559.11
578.77
582.92
595.53
614.57
614.42
438.77
449.49
498.13
487.03
492.60
513.25
526.86
547.64
530.26
529.93
538.01
540.48
263,374
18,188
290,652
17,951
345,729'
20,387
341,905
19,266
345,547
24,622
363,780
23,283
309,879
21,825
352,184
25,422
365,108'
17,865
360,199
16,724
384,310
21,085
416,048
21,069
7 American Stock Exchange
(Aug. 31, 1973 = 50) 2
Volume of trading (thousands
8 New York Stock Exchange
9 American Stock Exchange
of
shares)
Customer financing (millions of dollars, end-of-period balances)
10 M a r g i n c r e d i t a t b r o k e r - d e a l e r s 3
Free credit balances
11 Margin accounts 5
12 Cash accounts
at
60,310
61,160
76,680
64,070
66,340
67,600
71,440
77,076
75,005
77,875
76,680
73,530
12,360
27,715
14,095
28,870
16,250
34,340
13,403
27,464
13,710
29,860
13,830
28,600
13,900
29,190
14,806
29,796
14,753
29,908
15,590
30,340
16,250
34,340
14,950
32,465
brokers4
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. In July 1976 a financial group, composed of banks and insurance companies, was added
to the group of stocks on which the index is based. The index is now based on 400 industrial
stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and
4 0 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 broker-dealers 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. Series initiated in June 1984.
6. Margin 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 " m a r g i n securities" (as defined in the regulations) when such credit is
Jan. 3, 1974
50
50
50
collateralized by securities. Margin requirements on securities other than options are the
difference between the market value (100 percent) and the maximum loan value of collateral
as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U,
effective May 1, 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective
Nov. 1, 1971.
On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the
initial margin required for writing options on securities, setting it at 30 percent of the current
market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the
required initial margin, allowing it to be the same as the option maintenance margin required
by the appropriate exchange or self-regulatory organization; such maintenance margin rules
must be approved by the Securities and Exchange Commission. Effective Jan. 31, 1986, the
SEC approved new maintenance margin rules, permitting margins to be the price of the option
plus 15 percent of the market value of the stock underlying the option.
Effective June 8, 1988, margins were set to be the price 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).
A28
DomesticNonfinancialStatistics • April 1996
1.38
FEDERAL FISCAL AND FINANCING OPERATIONS
Millions of dollars
Fiscal year
Calendar year
Type of account or operation
1995
1993
1994
1996
1995
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
1
U.S. budget
1 Receipts, total
On-budget
2
3
Off-budget
4 Outlays, total
On-budget
5
Off-budget
6
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 2
1,153,226
841,292
311,934
1,408,532
1,141,945
266,587
-255,306
-300,653
45,347
1,257,45 l r
922,425 r
335,026
l,460,553 r
l,181,181 r
279,372
-203,370
258.756 r
55,654
1,350,576
999,496
351,080
1,514.389
1.225,724
288,665
-163,813
-226,228
62,415
96,560
69,265
27,295
130,411
104,135
26,276
-33,851
-34,870
1,019
143,219
112,510
30,709
135,933
105,098
30,836
7,286
7,412
-126
95,593
72,200
23,393
118,352
92,151
26,200
-22,758
-19,951
-2,807
90,008
63,651
26,357
128,458
101,767
26,691
-38,450
-38,116
-334
138,271
110,322
27,949
132,984
121,753
11,232
5,286
-11,431
16,717
142,922
110,615
32,307
123,647
98,057
25,591
19,274
12,558
6,716
248,594
6,283
429
184,696 r
16,564
1,842 r
171,288
-2,007
-5.468
16,071
30,776
-12,996
-6,618
-19,820
19,152
13,353
16,755
-7,350
38,339
-4,911
5,022
-18,358
5,610
7,462
-4,747
-16,959
2,432
35,942
6,848
29,094
37,949
8,620
29,329
18,129
4,767
13,363
37,949
8,620
29,329
21,194
7,018
14,176
26,105
5,703
20,402
20,495
5,979
14,515
37,454
8,210
29,243
MEMO
13 Treasury operating balance (level, end of
period)
14
Federal Reserve Banks
Tax and loan accounts
15
52,506
17,289
35,217
1. Since 1990, off-budget items have been the social security trust funds (federal old-age
survivors insurance and federal disability insurance) and the U S . Postal Service.
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 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 I M F loanvaluation adjustment; and profit on sale of gold.
SOURCE. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and
Outlays of the U.S. Government; and U.S. Office of Management and Budget, Budget of the
U.S. Government.
Federal FinanceA33
1.39
U.S. BUDGET RECEIPTS AND OUTLAYS'
Millions of dollars
Calendar year
Fiscal year
1994
Source or type
1994
1995
1995
1996
1995
HI
H2
HI
H2
Nov.
Dec.
Jan.
RECEIPTS
1 All s o u r c e s
2 Individual income taxes, net
Withheld
3
4
Presidential Election Campaign Fund
5
Nonwithheld
Refunds
6
Corporation income taxes
7
Gross receipts
Refunds
8
9 Social insurance taxes and contributions, net . . .
Employment taxes and contributions 2
10
11
Self-employment taxes and contributions 3 .
12
Unemployment insurance
13
Other net receipts 4
14
15
16
17
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts 5
1,257,453
1,350,576
652,234
625,557
710,542
656,400
90,008
138,271
142,922
543,055
459,699
70
160,047
76,761
590,157
499,898
69
175,815
85,624
275,052
225,387
63
117,937
68,325
273,474
240,062
10
42,031
9,207
307,498
251,398
58
132,006
75,958
292,393
256,918
9
43,100
10,058
39,524
39,945
1
1,991
2,414
53,179
50,597
0
3,227
646
86,192
55,351
1
31,159
319
154,205
13,820
461,475
428,810
24,433
28,004
4,661
174,422
17,334
484,474
451,046
27,127
28,878
4,550
80,536
6,933
248,301
228,714
20,762
17,301
2,284
78,392
7,331
220,141
206,613
4,135
11,177
2,349
92,132
10,399
261,837
228,663
23,429
18,001
2,267
88,302
7,518
224,269
211,323
3,557
10,702
2,247
3,056
1,362
38,199
34,919
91
2,940
340
38,954
932
37,762
37,123
333
223
416
6,381
1,223
42,197
40,742
2,188
1,081
374
55,225
20,099
15,225
21,988
57,485
19,300
14,764
27,306
26,444
9,500
8,197
11,170
30,062
11,042
7,071
13,305
27,452
8,847
7,424
15,749
30,014
9,849
7,718
11,374
5,154
1,593
1,349
2,496
4,870
1,439
1,383
1,618
4,241
1,482
1,288
2,364
OUTLAYS
1,460,553
1,514,428
710,620
752,151
760,824
752,505
128,458
132,984
123,647
19
20
21
22
23
24
National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
281,563
17,083
16,227
5,219
21,064
15,057
272,179
16,448
17,563
5,146
23,328
9,763
133,844
5,800
8,502
2,237
10,111
7,451
141,885
11,889
7,604
2,923
11,911
7,623
135,930 r
4,726 r
8,611
2,358
10,273
4,040 r
132,954
6,994
8,810
2,203
12,633
3,062
21,234
1,616
1,474
489
2,245
2,291
25,376
431
1,274
-163
1,711
708
20,243
1,089
1,536
115
1,869
336
25
26
27
28
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services
-5,122
38,134
10,454
-18,740
38,555
11,000
-4,962
16,739
4,571
-4,270
21,835
6,283
- 13,937 r
18,192
4,857 r
-4,412
19,931
6,085
-1,465
3,284
1,087
-451
3,117
912
-2,014
3,094
1,009
46,307
52,706
19,262
27,450
25,738
24,820
4,185
3,623
5,418
58,759
251,975
117,639
57,013
251,387 r
104,214
10,189
41,947
18,134
8,567
43,299
19,738
8,665
42,786
17,188
19,268 r
8,062
5,797
116,170
-17,632
18,684
8,113
7,623
119,350
-26,994
3,280
1,258
717
19,058
-2,565
4,435
1,233
1,924
19,934
-2,683
2,165
1,806
391
20,765
-2,812
18 All t y p e s
29 Health
30 Social security and Medicare
31 Income security
106,836
464,312
214,036
114,760
495,700 r
220,214
53,195
232,777
109,080
54,147
236,817
101,806
32
33
34
35
36
37,642
15,238
11,316
202,957
-37,772
37,935
16,255
13,856
232,175
-44,455
16,686
7,718
5,084
99,844
-17,308
19,761
7,753
7,355
109,434
-20,066
Veterans benefits and services
Administration of justice
General government
Net interest 6
Undistributed offsetting receipts
1. Functional details do not sum to total outlays for calendar year data because revisions to
monthly totals have not been distributed among functions. 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. F e d e r a l e m p l o y e e r e t i r e m e n t c o n t r i b u t i o n s and civil service r e t i r e m e n t and
disability f u n d .
5. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts.
6. Includes interest received by trust funds.
7. Rents and royalties for the outer continental shelf, U.S. government contributions for
employee retirement, and certain asset sales.
SOURCE. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and
Outlays of the U.S. Government-, and U.S. Office of Management and Budget, Budget of the
U.S. Government, Fiscal Year 1996.
A30
1.40
DomesticNonfinancialStatistics • April 1996
FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars, end of month
1993
1994
1995
Item
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
1 Federal debt outstanding
4,562
4,602
4,673
4,721
4,827
4,891
4,978
5,001
5,017
2 Public debt securities
3
Held by public
4
Held by agencies
4,536
3,382
1,154
4,576
3,434
1,142
4,646
3,443
1,203
4,693
3,480
1,213
4.800
3,543
1,257
4,864
3,610
1,255
4,951
3,635
1,317
4,974
3,653
1,321
4,989
n.a.
n.a.
27
27
0
26
26
0
28
27
0
29
29
0
27
27
0
27
26
0
27
27
0
27
27
0
28
n.a.
n.a.
5 Agency securities
6
Held by public
/
Held by agencies
8 D e b t s u b j e c t to s t a t u t o r y limit
9 Public debt securities
10 Other debt 1
Dec. 31
4,446
4,491
4,559
4,605
4,711
4,775
4,861
4,885
4,900
4,445
0
4,491
0
4,559
0
4,605
0
4,711
0
4,774
0
4,861
0
4,885
0
4,900
0
4,900
4,900
4,900
4,900
4,900
4,900
4,900
4,900
4,900
MEMO
11 Statutory debt limit
1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District of Columbia stadium bonds.
1.41
GROSS PUBLIC DEBT OF U.S. TREASURY
SOURCES. U.S. Department of the Treasury, Monthly
United States and Treasury
Bulletin.
Statement
of the Public Debt of the
Types and Ownership
Billions of dollars, end of period
1995
Type and holder
1 Total g r o s s p u b l i c d e b t
2
3
4
5
6
7
8
9
10
11
12
13
14
By type
Interest-bearing
Marketable
Bills
Notes
Bonds
Nonmarketable 1
State and local government series
Foreign issues 2
Government
Public
Savings bonds and notes
Government account series 3
Non-interest-bearing
By holder 4
15 U.S. Treasury and other federal agencies and trust funds
16 Federal Reserve Banks
1/ Private investors
18
Commercial banks
Money market funds
19
20
Insurance companies
21
Other companies
22
State and local treasuries
Individuals
23
Savings bonds
24
Other securities
23
Foreign and international 5
Other miscellaneous investors 6
26
1992
1994
1995
Qi
Q2
Q3
Q4
4,177.0
4,535.7
4,800.2
4,988.7
4,864.1
4,951.4
4,974.0
4,988.7
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
4,532.3
2,989.5
714.6
1,764.0
495.9
1,542.9
149.5
43.5
43.5
.0
169.4
1.150.0
3.4
4,769.2
3,126.0
733.8
1,867.0
510.3
1,643.1
132.6
42.5
42.5
.0
177.8
1,259.8
31.0
4,964.4
3,307.2
760.7
2,010.3
521.2
1,657.2
104.5
40.8
40.8
.0
181.9
1,299.6
24.3
4,860.5
3,227.3
756.5
1,938.2
517.7
1,633.2
122.9
41.8
41.8
.0
178.8
1,259.2
3.6
4,947.8
3,252.6
748.3
1,974.7
514.7
1,695.2
121.2
41.4
41.4
.0
180.1
1,322.0
3.6
4,950.6
3,260.5
742.5
1,980.3
522.6
1,690.2
113.4
41.0
41.0
.0
181.2
1,324.3
23.3
4,964.4
3,307.2
760.7
2,010.3
521.2
1,657.2
104.5
40.8
40.8
,0
181.9
1,299.6
24.3
1,047.8
302.5
2,839.9
294.4
79.7
197.5
192.5
476.7
1,153.5
334.2
3,047.7
322.2
80.8
234.5
213.0
508.9
1,257.1
374.1
3,168.0
290.6
67.6
242.8
226.5
440.8
1,254.7
369.3
3,239.2
307.5
67.7
249.2
230.3
402.7
1,316.6
389.0
3,245.0
297.7
58.7
253.5
227.7
375.8
1,320.8
374.1
3,279.5
295.0
64.2
255.0
224.1
370.0
157.3
131.9
549.7
760.2
171.9
137.9
623.0
755.4
180.5
150.7
688.6
879.9
181.4
161.4
729.0
910.0
182.6
161.6
784.1
903.4
183.5
162.4
847.8
877.5
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.
1993
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, Treasury
Bulletin.
Federal Finance
1.42
U.S. GOVERNMENT SECURITIES DEALERS
A3 3
Transactions1
Millions of dollars, daily averages
1995 r
1996, week ending
1995, week ending
Item
OUTRIGHT
7
8
9
10
11
By type of
counterparty
With interdealer broker
U.S. Treasury
Federal agency
Mortgage-backed
With other
U.S. Treasury
Federal agency
Mortgage-backed
FUTURES
Dec.
Dec. 6
Dec. 13
Dec. 20
45,200
57,014
54,313
52,604
59,422
63,364
91,621
49,845
24,426
29,520
94,461
50,029
26,013
34,071
84,303
43,615
26,368
33,205
98,063
63,752
26,334
46,112
93,082
45,811
23,038
49,166
94,515
45,429
27,843
29,672
108,427
711
11,425
114,669
775
12,428
104,651
672
12,863
121,087
860
16,360
118,376
649
19,343
78,238
23,715
18,095
86,835
25,238
21,643
77,580
25,696
20,342
93,332
25,474
29,752
79,940
22,389
29,823
Dec. 27
Jan. 17
Jan. 24
Jan. 31
Jan. 3
Jan. 10
41,678
47,601
52,037
50,869
56,486
56,939
57,488
22,243
27,813
12,273
62,937
36,055
28,180
18,185
80,614
53,920
26,535
53,361
100,864
54,687
28,897
46,897
126,171
59,142
29,975
28,581
121,484
58,119
26,477
28,703
115,336
724
12,312
68,973
470
5,091
82,108
623
6,594
109,151
631
16,778
119,761
750
16,481
141,748
1,328
10,475
139,201
1,200
9,989
87,972
27,118
17,360
52,436
27,343
7,182
64,485
27,557
11,591
77,421
25,904
36,584
86,659
28,147
30,416
100,050
28,647
18,107
97,341
25,278
18,714
TRANSACTIONS3
By type of deliverable
security
12 U.S. Treasury bills
Coupon securities, by maturity
Five years or less
13
14
More than five years
15 Federal agency
16 Mortgage-backed
OPTIONS
Nov.
TRANSACTIONS2
By type of security
1 U.S. Treasury bills
Coupon securities, by maturity
2
Five years or less
3
More than five years
4 Federal agency
5 Mortgage-backed
6
Oct.
617
764
603
903
907
390
345
294
459
297
405
678
1,583
14,720
0
0
2,154
14,536
0
0
2,045
12,577
0
0
3,682
17,398
0
0
1,798
14,199
0
0
2,082
14,180
0
0
835
5,150
0
0
1,715
9,722
0
0
1,159
15,565
0
0
1,344
14,384
0
0
2,254
14,646
0
0
1,513
14,583
0
0
TRANSACTIONS4
By type of underlying
security
17 U.S. Treasury bills
Coupon securities, by maturity
18
Five years or less
More than five years
19
20 Federal agency
21 Mortgage-backed
0
0
0
0
0
0
0
0
0
0
0
0
2,111
4,709
0
971
1,655
4,668
0
1,099
1,098
3,898
0
862
985
5,771
0
1,229
1,227
3,175
0
618
1,272
4,366
0
537
918
2,881
0
1,161
928
2,828
0
954
1,472
3,853
0
989
2,793
3,832
0
919
2,046
4,862
0
821
1,688
4,345
0
685
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. Monthly averages are based on the number of trading days in the month.
Transactions are assumed evenly distributed among the trading days of the report week.
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. Outright transactions include immediate and forward transactions. Immediate delivery
refers to purchases or sales of securities (other than mortgage-backed federal agency securities) for which delivery is scheduled in five business days or less and " w h e n - i s s u e d "
securities that settle on the issue date of offering. Transactions for immediate delivery of mortgagebacked agency securities include purchases and sales for which delivery is scheduled in thirty business
days or less. Stripped securities are reported at market value by maturity of coupon or corpus.
Forward transactions are agreements made in the over-the-counter market that specify
delayed 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 business days.
3. Futures transactions are standardized agreements arranged on an exchange. All futures
transactions are included regardless of time to delivery.
4. 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, " n . a . " indicates that data are not published because of insufficient activity.
Major changes in the report form filed by primary dealers induced a break in the dealer data
series as of the week ending July 6, 1994.
A131 DomesticNonfinancialStatistics • April 1996
1.43
U.S. GOVERNMENT SECURITIES DEALERS
Positions and Financing1
Millions of dollars
1995
Oct.
1995, w e e k e n d i n g
Nov.
Dec.
Dec. 6
D e c . 13
1996, w e e k e n d i n g
Dec. 20
Dec. 27
Jan. 3
Jan. 10
Jan. 17
Jan. 2 4
Positions2
N E T OUTRIGHT POSITIONS3
By type of
security
1 U.S. T r e a s u r y bills
C o u p o n securities, by m a t u r i t y
2
F i v e y e a r s or less
3
M o r e than five years
4 Federal agency
5 Mortgage-backed
-64
11,391
16,960
20,027
28,476
13,812
11,313
7,601
14,302
14,043
6,551
14,476
-15,124
24,009
36,240
12,423
-9,732
21,768
35,869
21,659
-11,698
22,446
39,509
25,979
-10,167
20,212
39,964
18,846
-10,082
21,058
39,497
20,330
-13,002
21,540
39,062
20,901
-13,109
24,992
39,516
23,756
-12,069
25,356
39,621
18,612
-11,958
24,789
37,124
17,387
-14,101
24,991
37,785
25,287
-15,848
23,637
40,213
-3,462
-5,175
-2,484
-4,142
-1,899
-1,973
-2,212
-2,393
-3,001
-3,147
-2,505
-930
-13,744
0
0
-4,508
-17,358
0
0
-4,338
-17,662
0
0
-3,263
-19,050
0
0
-4,088
-18,305
0
0
-5,242
-17,328
0
0
-4,596
-17,830
0
0
-4,351
-14,745
0
0
-3,176
-10,127
0
0
-3,158
-13,600
0
0
-1,144
-14,908
0
0
NET FUTURES POSITIONS4
By type of deliverable
security
6 U.S. T r e a s u r y bills
C o u p o n securities, by m a t u r i t y
7
F i v e y e a r s or less
8
M o r e than five years
9 Federal agency
10 M o r t g a g e - b a c k e d
N E T OPTIONS POSITIONS
11
12
13
14
15
By type of deliverable
security
U.S. T r e a s u r y bills
C o u p o n securities, by m a t u r i t y
F i v e y e a r s or less
M o r e than five years
Federal agency
Mortgage-backed
n.a.
3,044
-427
0
1,591
0
0
0
0
0
0
0
0
0
0
479
3,629
0
1,199
-1,439
7,216
0
-90
-1,120
6,800
0
-9
-1,550
6,173
0
-427
-1,158
6,978
0
-752
-2,101
7,980
0
440
-1,058
8,748
0
608
-1,443
4,854
0
1,219
-147
8,286
0
209
-273
8,149
0
498
Financing5
Reverse repurchase
agreements
16 O v e r n i g h t a n d c o n t i n u i n g
17 T e r m
228,244
420,502
249,011
404,181
240,460
389,626
235,317
398,590
247,871
409,436
243,019
382,918
230,890
380,824
247,477
368,655
248,451
396,047
253,892
403,107
243,761
446,293
Securities
borrowed
18 O v e r n i g h t a n d c o n t i n u i n g
19 T e r m
162,865
65,506
152,800
64,611
154,078
62,835
153,410
64,263
152,319
63,508
149,905
62,352
154,473
63,822
164,769
58,637
175,912
60,169
173,330
59,834
168,665
60,040
2,377
43
2,005
56
4,132
69
3,683
89
4,118
88
3,988
21
4,343
106
4,712
28
5,002
39
2,461
79
2,286
47
Repurchase
agreements
22 Overnight and continuing
23 Term
509,729
356,662r
522,501
370,772r
535,088
355,266
538,239
352,087
537,813
378,976
546,540
349,504
519,030
348,698
533,654
340,117
556,821
351,104
549,853
366,579
543,788
405,734
Securities
loaned
24 O v e r n i g h t a n d c o n t i n u i n g
25 T e r m
5,715
2,710
6,001
2,794
5,543
1,916
5,726
2,572
5,607
2,610
5,175
1,560
5,402
1,265
6,051
1,479
6,155
1,657
5,524
1,534
5,678
1,564
Securities
pledged
26 Overnight and continuing
27 T e r m
30,091
3,958
28,087
4,577
34,010
5,518
29,342
5,543
33,127
5,639
33,274
5,508
38,743
5,744
35,559
4,892
35,999
5,250
34,854
5,301
33,846
5,488
Collateralized
loans
28 Overnight and continuing
29 T e r m
16,631
2,367
17,639
2,092
12,694
1,989
17,223
1,964
15,213
2,010
10,960
n.a.
7,316
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
MEMO: M a t c h e d b o o k 6
Securities
in
30 O v e r n i g h t a n d c o n t i n u i n g
31 T e r m
232,058
410,727
244,861
401,682
240,188
391,284
234,682
402,536
240,410
412,825
243,757
385,012
232,213
379,807
255,769
367,770
258,116
397,677
271,371
401,084
253,080
441,503
Securities
out
32 O v e r n i g h t a n d c o n t i n u i n g
33 T e r m
321,797
302,123
313,847
318,594
311,005
309,089
310,366
308,691
317,969
330,882
315,510
303,412
300,351
300,465
310,539
296,576
339,072
304,557
328,967
321,064
330,979
347,962
Securities
received as pledge
20 Overnight and continuing
21 T e r m
1. D a t a f o r p o s i t i o n s a n d financing are o b t a i n e d f r o m reports s u b m i t t e d to the Federal
R e s e r v e B a n k of N e w York by the U.S. g o v e r n m e n t securities d e a l e r s on its p u b l i s h e d list of
p r i m a r y dealers. W e e k l y figures are c l o s e - o f - b u s i n e s s W e d n e s d a y data. Positions f o r c a l e n d a r
d a y s of the report w e e k are a s s u m e d t o be c o n s t a n t . M o n t h l y a v e r a g e s are b a s e d on the
n u m b e r of c a l e n d a r d a y s in the m o n t h .
2. Securities p o s i t i o n s are reported at m a r k e t value.
3. N e t o u t r i g h t p o s i t i o n s i n c l u d e i m m e d i a t e a n d f o r w a r d positions. N e t i m m e d i a t e positions i n c l u d e securities p u r c h a s e d or sold (other than m o r t g a g e - b a c k e d a g e n c y securities) that
h a v e b e e n d e l i v e r e d or are s c h e d u l e d t o b e d e l i v e r e d in five b u s i n e s s d a y s or less a n d
" w h e n - i s s u e d " securities that settle on t h e issue d a t e of offering. N e t i m m e d i a t e p o s i t i o n s f o r
m o r t g a g e - b a c k e d a g e n c y securities i n c l u d e securities p u r c h a s e d or sold that h a v e b e e n
d e l i v e r e d or are s c h e d u l e d to be d e l i v e r e d in thirty b u s i n e s s d a y s or less.
F o r w a r d p o s i t i o n s reflect a g r e e m e n t s m a d e in the o v e r - t h e - c o u n t e r m a r k e t that s p e c i f y
d e l a y e d delivery. F o r w a r d c o n t r a c t s f o r U.S. T r e a s u r y securities a n d federal a g e n c y d e b t
securities are included w h e n the t i m e to d e l i v e r y is m o r e than five b u s i n e s s d a y s . F o r w a r d
c o n t r a c t s f o r m o r t g a g e - b a c k e d a g e n c y securities are included w h e n the time to d e l i v e r y is
m o r e than thirty b u s i n e s s d a y s .
4 . F u t u r e s p o s i t i o n s reflect s t a n d a r d i z e d a g r e e m e n t s a r r a n g e d on an e x c h a n g e . A l l f u t u r e s
positions are i n c l u d e d r e g a r d l e s s of t i m e t o delivery.
5. O v e r n i g h t financing r e f e r s to a g r e e m e n t s m a d e o n o n e b u s i n e s s d a y that m a t u r e o n t h e
next b u s i n e s s d a y ; c o n t i n u i n g c o n t r a c t s are a g r e e m e n t s that r e m a i n in e f f e c t f o r m o r e t h a n o n e
b u s i n e s s d a y but h a v e n o specific m a t u r i t y a n d can be t e r m i n a t e d w i t h o u t a d v a n c e n o t i c e by
either party; t e r m a g r e e m e n t s h a v e a fixed m a t u r i t y of m o r e than o n e b u s i n e s s day. F i n a n c i n g
d a t a are r e p o r t e d in t e r m s of actual f u n d s p a i d o r r e c e i v e d , i n c l u d i n g a c c r u e d interest.
6. M a t c h e d - b o o k d a t a reflect financial i n t e r m e d i a t i o n activity in w h i c h the b o r r o w i n g a n d
l e n d i n g t r a n s a c t i o n s are m a t c h e d . M a t c h e d - b o o k d a t a are included in the financing b r e a k d o w n s g i v e n a b o v e . T h e r e v e r s e r e p u r c h a s e a n d r e p u r c h a s e n u m b e r s are not a l w a y s e q u a l
b e c a u s e of the " m a t c h i n g " of securities of different v a l u e s or different t y p e s of collateralization.
NOTE, " n . a . " i n d i c a t e s that d a t a are n o t p u b l i s h e d b e c a u s e of insufficient activity.
M a j o r c h a n g e s in the report f o r m filed by p r i m a r y dealers i n d u c e d a b r e a k in the d e a l e r d a t a
series as of the w e e k e n d i n g July 6, 1994.
Federal Finance
1.44
FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES
A3 3
Debt Outstanding
Millions of dollars, end of period
1995
Agency
1991
1
F e d e r a l a n d f e d e r a l l y s p o n s o r e d agencies
2
Federal agencies
Defense Department 1
Export-Import Bank 2 , 3
Federal Housing Administration 4
Government National Mortgage Association certificates of
participation 5
Postal Service 6
Tennessee Valley Authority
United States Railway Association 6
3
4
5
6
7
8
9
18
Federally sponsored agencies 7
Federal Home Loan Banks
Federal Home Loan Mortgage Corporation
Federal National Mortgage Association
Farm Credit Banks 8
Student Loan M a r k e t i n g A s s o c i a t i o n 9
Financing Corporation 1 0
Farm Credit Financial Assistance C o r p o r a t i o n "
Resolution Funding Corporation 1 2
19
Federal Financing Bank debt13
10
11
12
13
14
15
16
17
1992
1993
1994
July
Aug.
Sept.
442,772
483,970
570,711
738,928
788,323
801,819
811,182
41,035
41,829
7
45,193
6
5,315
39,186
39,403
39,581
38,030
6
3,455
116
6
2,652
84
6
2,652
83
n.a.
n.a.
n.a.
7
9,809
397
n.a.
8,421
22,401
7,208
374
n.a.
255
n.a.
10,660
9.732
23,580
29,885
8,073
27,536
8,615
28,046
8,615
28,225
Oct.
Nov.
n.a.
n.a.
39,207
6
2.512
38,273
6
2,512
87
88
n.a.
7,265
28,160
n.a.
7,265
28.366
93
n.a.
7,265
29.331
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
401,737
107,543
30,262
442,141
523,452
699,742
748,920
762,238
773,152
n.a.
n.a.
114,733
29,631
205,817
93,279
223.100
111,427
228,299
112,341
239,034
115,603
166,300
51,910
39,650
8,170
257,230
53,175
50,335
8,170
268,458
54,635
51,325
8,170
275,271
236,851
111,6)0
277,192
55,800
51,672
234,192
133,937
52,199
139,512
49,993
201,112
1,261
38,319
8,170
1,261
53,123
39,784
8,170
54,979
51,323
8,170
1,261
8,170
1,261
n.a.
6
2,512
115,626
280.582
56,529
51,906
8,170
29,996
29,996
1,261
29,996
86,776
84,297
82,622
n.a.
289.768
56.694
50,535
8.170
29,996
1,261
29,996
1,261
29,996
29,996
1,261
29,996
1.261
29,996
185,576
154,994
128,187
103,817
88,892
81,693
9,803
8,201
4,820
7,202
10,440
5,309
9,732
3,449
2,646
8,615
2,646
8,615
2,506
8,073
7,265
7,265
7,265
4,790
6,975
4,760
6,325
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3,200
3,200
3.200
3,200
3,200
3.200
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
48,534
18,562
42,979
18,172
27,384
26,845
17,276
26,210
17,045
26,396
21,015
17,141
64,436
38,619
17,578
45,864
28,419
17,274
84,931
MEMO
20
21
22
23
24
Lending to federal and federally sponsored
Export-Import Bank 3
Postal Service 6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association 6
agencies
10,725
2,506
2,506
14
25
26
27
Other
lending
Farmers Home Administration
Rural Electrification Administration
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 Fanners 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. Includes
Federal Agricultural Mortgage Corporation; therefore details do not sum to total. Some data
are estimated.
8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is
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.
33,719
17,392
37,984
28,738
17,276
27,655
27.205
30.566
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 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,
whereas the Rural Electrification Administration entry consists of both agency assets and
guaranteed loans.
A34
1.45
DomesticNonfinancialStatistics • April 1996
NEW SECURITY ISSUES
Tax-Exempt State and Local Governments
Millions of dollars
1995
Type of issue or issuer,
or use
1993
1994
1996
1995
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
10,351
1 All issues, new a n d r e f u n d i n g 1
279.945
153,950
146,204
17,230
11,575
12.450
9,698
13,336
16,580
17,220
By type of issue
2 Genet al obligation
3 Revenue
90.599
189.346
54,404
99.546
56.265
88.197
5.755
12.201
3.529
6.248
4.519
7.789
3.635
6,129
6,252
7.322
6,084
10,496
5,680
11,540
BY type of issuer
4 State
5 Special district or statutory authority"
6 Municipality, countv, or township
27.999
178.714
73.232
19.186
95.896
38,868
14.762
92.470
37.230
1.329
11.382
5.245
645
7.399
1.733
617
7.491
4,200
1,510
5,821
2,433
1,825
7,831
3,918
1,491
10,477
4,612
951
11,920
4,349
91,434
105,972
102,823
13,083
8,740
6,685
6,339
7,828
11,439
11,929
16.831
9,167
12.014
13.837
6,862
32.723
21,267
10,836
10.192
20,289
8.161
35.227
23.963
12.596
11.125
19.380
6.032
31.339
2.494
3.127
1.235
2.062
411
4.467
1.924
1.926
485
1.333
500
2.216
1.180
869
1.504
1,421
201
1.967
1,929
446
563
1.228
627
2.050
1,725
631
1,794
1,587
203
2,114
3.250
1,452
756
2.253
404
3,324
2,463
1,174
1,741
1,604
1,269
3,678
7 Issues f o r new capital
8
9
10
11
12
13
By ML of proceeds
Education
Transportation
Utilities and conservation
Social wcllare
Industrial aid
Other purposes
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts.
1.46
NEW SECURITY ISSUES
SOURCES.
Securities
Data
Dealer's Digest before then.
Company
beginning
January
1993;
n.a.
Investment
U.S. Corporations
Millions of dollars
1995 r
Type of issue, offering,
or issuer
1993
1994
1995
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
1 All issues'
769,088
582,569
n a.
55,145
57,054
36,437
50,052
56,980
53,850
56,115
40,452
2 Bonds2
646,634
497,414
n.a.
48,807
49,293
31,833
43,800
49,655
45,197
48,506
34,836
By type of offering
3 Public, domestic
4 Private placement, domestic 3
5 Sold abroad
487,029
121.226
38.379
365.115
76.061
56.238
487.071
n a.
79.384
40.280
n.a.
8.528
43.106
n.a.
6.186
25.617
n.a.
6,216
34.465
n.a.
9.335
43,137
n.a.
6.518
36.792
n.a.
8,406
43,232
n.a.
5,274
32,112
n.a.
2,723
88.160
58,559
10.816
56.330
31.950
400,820
43.423
40,652
6,867
13.298
13.340
379.834
42.439
37,001
5,727
12.270
18.158
371.475
2.359
6.085
1.005
2.530
1.767
35.061
6,808
4.528
657
2.675
1.745
32,880
4,456
1,403
10
540
1,520
23.904
4.057
2.480
133
640
1,240
35,249
3,284
2,607
908
911
2,829
39,115
3.497
3,532
187
1.241
2.389
34.352
4,092
4,178
225
782
3,333
35.897
3,305
3,099
1,240
685
648
25,858
122,454
85,155
n.a.
6,338
7,761
4,604
6,252
7,353
8,646
7,768
5,502
18.897
82.657
20.900
12,527
47,828
24.800
11,048
57.228
1,548
4,702
n.a.
742
7.019
n.a.
768
3.836
n.a.
1,261
4,991
n.a.
1,035
6,318
n.a.
836
7.810
n.a.
2.210
5,558
n.a.
890
4,612
n.a.
22.271
25.761
2.237
7,050
3.439
61.004
17,798
15,713
2.203
2.214
494
46.733
2,370
1.134
101
185
0
2.536
2.345
2.749
0
209
0
2.458
1.306
1.969
0
133
64
1.132
2.254
1,533
87
91
0
2,287
2,389
2,791
32
190
47
1,905
1,801
4,628
39
60
0
2,118
2,200
2,969
97
336
0
2.166
678
2,631
148
322
0
1,724
6
7
8
9
10
11
By iiul't.sH v group
MamilaaLirinsi
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
12 Stocks 2
By f.vc of offering
13 Public preferred
14 Common
15 Private placement'
16
17
18
19
20
21
By industry group
Man.uiaUuiing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
n a.
1. Figures represent gross proceeds of issues maturing in more than one year; they
principal amount or number of units calculated by multiplying by the offering price.
exclude secondary offerings, employee stock plans, investment companies other than
end. intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data
ownership securities issued by limited partnerships.
are the
Figures
closedinclude
2. Monthly data cover only public offerings.
3. Monthly data are not available.
SOURCES. Beginning July 1993. Securities Data Company and the Board of Governors of
the Federal Reserve System.
Securities
1.47
OPEN-END INVESTMENT COMPANIES
Market and Corporate
Finance
A3 5
Net Sales and Assets 1
Millions of dollars
1995
Item
1994
1993
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
1 Sales of o w n s h a r e s 2
851,885
841,286
70,798
74,749
76,081
72,113
68,694
72,730
70,499
99,059
2 Redemptions of own shares
3 Net sales 3
567,881
284,004
699,823
141,463
57,033
13,765
61,932
12,817
56,344
19,736
57,610
14,503
54,473
14,221
56,174
16,556
52,727
17,772
67,885
31,173
4 Assets 4
1,510,209
1,550,490
1,769,287
1,808,753
1,880,754
1,908,525
1,962,817
1,963,496
2,032,958
2,070,527
5 Cash 5
6 Other
100,209
1,409,838
121,296
1,429,195
128,375
1,640,913
122,461
1,686,292
126,340
1,754,415
127,173
1,781,352
127,446
1,835,371
133,653
1,829,843
141,489
1,891,470
142,852
1,927,675
1. Data on sales and redemptions exclude money market mutual funds but include
limited-maturity municipal bond funds. Data on asset positions exclude both money market
mutual funds and limited-maturity municipal bond funds.
2. Includes reinvestment of net income dividends. Excludes reinvestment of capital gains
distributions and share issue of conversions from one fund to another in the same group.
3. Excludes sales and redemptions resulting from transfers of shares into or out of money
market mutual f u n d s within the same fund family.
1.48
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 o p e n - e n d investment companies registered with the Securities and
Exchange Commission. Data reflect underwritings of newly formed companies after their
initial offering of securities.
CORPORATE PROFITS AND THEIR DISTRIBUTION
B i l l i o n s of d o l l a r s ; q u a r t e r l y d a t a at s e a s o n a l l y a d j u s t e d a n n u a l r a t e s
1994
Account
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
7 Inventory valuation
8 Capital consumption adjustment
SOURCE. U.S. Department of Commerce, Survey of Current
1993
1994
1995
1995
01
Q2
Q3
Q4
Q1
Q2
Q3
Q4
464.5
464.3
163.8
300.5
197.3
103.3
526.5
528.2
195.3
332.9
211.0
121.9
n.a.
n.a.
n.a.
n.a.
227.4
n.a.
455.9
471.7
171.4
300.3
204.4
95.9
531.5
523.2
192.8
330.4
208.8
121.7
549.8
547.5
203.4
344.1
212.5
131.6
568.9
570.4
213.5
356.8
218.5
138.3
559.6
594.1
217.3
376.8
221.7
155.1
561.1
588.4
214.2
374.1
224.6
149.6
614.9 r
609.6
224.5
385.1
228.5
156.6
n.a.
n.a.
n.a.
n.a.
234.7
n.a.
-6.6
6.7
-13.3
11.6
-27.6
15.9
-3.9
-11.8
-9.8
18.1
-16.5
18.8
-22.8
21.3
-51.9
17.4
-42.3
15.0
—9.3 r
14.6
-6.8
16.5
Business.
A36
1.51
DomesticNonfinancialStatistics • April 1996
DOMESTIC FINANCE COMPANIES
Assets and Liabilities'
Billions of dollars, e n d of period; not seasonally a d j u s t e d
1994
Account
1992
1993
1995
1994
QL
Q2
Q3
Q4
QL
Q2
Q3
551.0
134.8
494.5
120.1
551.0
134.8
568.5
586.9
302.3
72.1
511.3
124.3
313.2
524.1
337.6
78.5
135.8
351.9
141.7
361.8
594.7
146.2
362.4
73.8
76.6
78.5
80.8
83.4
86.1
51.2
11.6
51.9
12.1
51.1
12.1
55.0
12.4
58.9
62.1
61.2
ASSETS
1
2
3
4
Accounts receivable, gross 2
Consumer
Business
Real estate
5 LESS: R e s e r v e s f o r u n e a r n e d i n c o m e
491.8
118.3
482.8
301.3
72.2
116.5
294.6
71.7
53.2
50.7
130.3
317.2
337.6
16.2
11.2
55.0
12.4
12.9
13.7
13.8
422.4
142.5
420.9
170.9
483.5
183.4
431.7
171.2
447.3
174.6
460.9
177.2
483.5
183.4
496.7
8
Accounts receivable, net
All other
194.6
511.1
198.1
519.7
198.1
9
Total assets
564.9
591.8
666.9
602.9
621.9
638.1
666.9
691.4
709.2
717.8
21.2
24.2
184.6
165.9
23.3
171.2
21.6
171.0
21.2
184.6
21.0
181.3
21.5
181.3
21.8
178.0
51.0
235.0
99.5
44.7
219.6
50.0
228.2
51.0
211.7
235.0
95.0
72.3
99.5
75.7
57.5
264.4
102.1
75.7
89.9
73.2
52.5
254.4
102.5
59.0
272.1
90.5
69.5
79.7
82.5
101.7
84.4
666.9
602.9
621.9
638.1
666.9
691.4
709.2
717.1
Reserves for losses
6
7
LIABILITIES AND CAPITAL
10
11
Bank loans
Commercial paper
37.6
156.4
25.3
159.2
12
13
14
39.5
196.3
68.0
206.0
13
Debt
Owed to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits
67.1
87.1
71.4
16
Total liabilities a n d c a p i t a l
564.9
591.8
42.7
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 companies; securitized
pools are not shown, as they are not on the books.
1.52
DOMESTIC FINANCE COMPANIES
41.1
2. Before deduction for unearned income and losses,
Consumer, Real Estate, and Business Credit'
Millions of dollars, a m o u n t s outstanding, end of period
1995
July
Aug.
Sept.
Oct.
Nov.
Dec.
686,645
Seasonally adjusted
1
Total
545,533
614,784
686,645
661,656
671,807
675,247
682,627
687,187
2
Consumer
Real estate 2
Business
160,349
176,198
189,898
84,886
191,806
194,620
197,303
85,756
193,555
86,121
195,895
86,944
394,245
395,571
87,266
400,741
87,699
386,872
402,185
403,805
3
4
71,965
78,770
195,895
86,944
313,219
359,816
403,805
Not seasonally adjusted
5
Total
Consumer
Motor vehicles
/
Other c o n s u m e r '
8
9
Securitized motor vehicles 4
10
Securitized other consumer 4
11 Real estate'
6
12
13
14
15
16
17
18
19
20
21
22
23
24
23
Motor vehicles
Retail 5
Wholesale 6
Leasing
Equipment
Retail
Wholesale 6
Leasing
Other business 7
Securitized business assets 4
Retail
Wholesale
Leasing
550,751
620,975
693,739
658,140
665,535
672,653
681,965
687,944
693,739
162,770
56,057
178.999
61,609
73,221
199,088
190,830
68,271
77,251
198,072
199,088
69,650
80,732
31.897
12.272
78.479
363,497
118,197
21,514
33,633
15,073
86,606
408,045
133,242
25,157
193,615
68,857
77,345
31,693
15,720
86,128
392,910
125,053
194,931
70,816
77,865
71,727
316,254
95,173
18,091
187,803
65,861
76,302
32,381
13,259
84,987
31,148
45,934
35.037
36,402
32,147
23,883
31,392
61,646
71,683
68,905
69,169
145,452
157,953
176,745
170,825
35,513
8,001
39,680
46,420
170,253
42,541
9,678
10,254
101,938
108,595
120,071
12,111
115,601
53,997
61,495
65.363
63,869
21,632
2,869
25,852
4,494
32,695
28,388
4,587
14.826
4,723
21,327
27,223
4,784
10,584
8,179
17,986
6.532
6,645
16,469
5,970
5,815
60,396
36,024
10,293
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 B o a r d ' 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.
69,650
80,732
385,350
124,005
22,953
31,551
13,757
86,107
388,598
124,444
30,096
16,154
68,167
78,926
34,394
16,585
87,672
402,200
129,708
33,633
15,073
86,606
408,045
133,242
24,564
25,157
25,006
87,471
399,563
129,216
25,752
29,313
70,734
32,209
33,519
71,255
71,625
71,683
171,239
42,823
172,657
176,745
43,697
173,183
44,194
12,278
12,210
115,426
64,941
116,206
66,111
11,581
117,379
10,889
118,100
120,071
66,238
66,678
65,363
30,507
4,818
31,452
4,586
32,631
4,974
32,695
4,723
19,773
20,390
21,208
21,327
5,916
6,476
6,449
6,645
43,121
36,402
46,420
10,254
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.
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.
Real Estate
1.53
MORTGAGE MARKETS
A37
Mortgages on New Homes
Millions of dollars except as noted
1995
Item
1993
1994
1996
1995
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Terms and yields in primary and secondary markets
PRIMARY
1
2
3
4
5
MARKETS
Terms'
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan-to-price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount) 2
Yield (percent per year)
6 Contract rate 1
7 Effective rate 1 , 3
8 Contract rate ( H U D series) 4
SECONDARY
163.1
123.0
78.0
26.1
1.30
170.4
130.8
78.8
27.5
1.29
175.8
134.5
78.6
27.7
1.21
169.4
130.4
78.9
26.6
1.18
170.4
130.6
78.9
27.3
1.12
174.8
131.8
78.1
28.0
1.20
174.3
133.0
77.8
26.6
1.11
178.6
136.4
78.9
27.7
1.22
181.7
140.9
79.1
27.6
1.21
179.2
135.8
77.3
27.7
1.07
7.03
7.24
7.37
7.26
7.47
8.58
7.65
7.85
8.05
7.58
7.78
7.98
7.56
7.75
7.91
7.50
7.69
7.78
7.39
7.58
7.62
7.27
7.46
7.46
7.20
7.40
7.30
7.15
7.32
7.23
7.46
6.65
8.68
7.96
8.18
7.57
8.09
7.27
8.03
7.49
8.03
7.26
7.61
7.16
7.51
7.01
7.52
6.82
7.11
6.71
MARKETS
Yield (percent per year)
9 F H A mortgages (Section 203) 5
10 G N M A securities 6
Activity in secondary markets
FEDERAL NATIONAL MORTGAGE
Mortgage holdings (end of
11 Total
FHA/VA insured
1?
13
Conventional
ASSOCIATION
period)
222,057
27,558'
194,499
253,511
28,762'
224,749
14 Mortgage transactions purchased (during period)
92,037
62,389
56,598
5,657
5,688
5,002
7,443
Mortgage
15 Issued 7
16 To sell 8
92,537
5,097
54,038
1,820
56,092
360
4,512
26
6,284
53
6,019
9
55,012
321
54,691
72,693
276
72,416
107,424
267
107,157
88,874
250
88,624
91,544
246
91,298
229,242
208,723
124,697
117,110
98,470
85,877
7,316
6,074
274,599
136,067
118,659
8,106
commitments
(during
FEDERAL HOME LOAN MORTGAGE
(during
241,378
28,726'
212,652
249,928
28,901'
221,027
253,511
28,762'
224,749
255,619
28,622
226,997
6,148
6,243
4,810
6,732
0
6,038
10
4,765
0
5,750
3
94,989
281
94,708
99,758
276
99,482
102,997
271
102,726
107,424
267
107,157
111,143
270
110,873
9,594
8,161
11,458
10,239
11,092
9,856
9,989
9,011
13,108
11,712
13,357
11,624
10,578
12,469
10,388
11,339
14,609
12,765
CORPORATION
period)
22 Mortgage commitments contracted (during period) 9
1. Weighted averages based on sample surveys of mortgages originated by m a j o r institutional lender groups for purchase of newly built homes; compiled by the Federal Housing
Finance Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and " p o i n t s " paid (by the borrower or the
seller) to obtain a loan.
3. Average effective interest rate on loans closed for purchase of newly built homes,
assuming prepayment at the end of ten years.
4. Average contract rate on new commitments for conventional first mortgages; f r o m U.S.
Department of Housing and Urban Development (HUD). Based on transactions on the first
day of the subsequent month.
5. Average gross yield on thirty-year, m i n i m u m - d o w n p a y m e n t first mortgages insured
by the Federal H o u s i n g A d m i n i s t r a t i o n ( F H A ) for immediate delivery in the private
secondary m a r k e t . Based on transactions on first day of subsequent m o n t h .
238,850
28,787'
210,063
period)
Mortgage holdings (end of period f
17 Total
FHA/VA insured
18
19
Conventional
Mortgage transactions
70 Purchases
21
235,882
28,655'
207,227
246,234
28,765'
217,469
190,861
23,857
167,004
6. Average net yields to investors on fully modified pass-through securities backed by
mortgages and guaranteed by the Government National Mortgage Association ( G N M A ) ,
assuming prepayment in twelve years on pools of thirty-year mortgages insured by the
Federal Housing Administration or guaranteed by the Department of Veterans Affairs.
7. Does not include standby commitments issued, but includes standby commitments
converted.
8. Includes participation loans as well as whole loans.
9. Includes conventional and government-underwritten loans. The Federal H o m e Loan
Mortgage Corporation's mortgage commitments and mortgage transactions include activity
under mortgage securities swap programs, whereas the corresponding data for F N M A
exclude swap activity.
A38
1.54
DomesticNonfinancialStatistics • April 1996
MORTGAGE DEBT OUTSTANDING1
Millions of dollars, end of period
1994
Type of holder and property
1991
1992
1995
1993
Q3
Q4
Q1
Q2
Q3p
1 All h o l d e r s
3,962,607
4,094,067
4,268,983
4,419,367
4,475,242
4,517,245
4,585,646
4,654,573
By type of property
2 One- to four-family residences
3 Multifamily residences
4 Commercial
3
2,849,780
284,412
749,110
79,305
3,037,408
274,234
701,687
80,738
3,227,633
270,796
689,360
81,194
3,375,955
275,956
684,831
82,625
3,432,165
275,304
684,803
82.971
3,466,120
276,445
691,276
83,404
3,524,669
280,602
696,526
83,850
3,583,881
283,767
702,506
84,419
1,846,726
876,100
483,623
36,935
337,095
18,447
705,367
538,358
79,881
86,741
388
265,258
11,547
29,562
214,105
10,044
1,769,187
894,513
507.780
38,024
328,826
19,882
627,972
489,622
69,791
68,235
324
246,702
11,441
27,770
198,269
9,222
1,767,835
940,444
556,538
38,635
324,409
20,862
598,330
469,959
67,362
60,704
305
229,061
9,458
25,814
184,305
9,484
1,786,074
981,365
592,021
38,004
328,931
22,408
587,545
466,704
65,532
55,017
291
217,165
7,984
24,534
175,168
9,479
1,815,810
1,004.280
611,697
38,916
331,100
22,567
596,199
477,499
64,400
54,011
289
215,332
7,910
24,306
173,539
9,577
1,841,815
1,024,854
625,378
39,746
336,795
22,936
601,777
483,625
63,778
54,085
288
215,184
7.892
24,250
173,142
9,900
1,868,175
1,053,048
648,705
40,593
340,176
23,575
599,745
482,005
64,404
53,054
282
215,382
7,911
24,310
173,565
9,596
1,895,299
1,072,791
663,307
42,537
343,123
23,823
604,616
488.707
63,437
52,182
291
217,892
8,006
24,601
175,643
9,643
266,146
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
0
0
0
0
0
112,283
100,387
11,896
28,767
1,693
27,074
26,809
24,125
2,684
286,263
30
30
0
41,695
16,912
10,575
5,158
9,050
12,581
5,153
7,428
32,045
12,960
9,621
9,464
0
0
0
0
0
0
137,584
124,016
13,568
28,664
1,687
26,977
33,665
31,032
2,633
328,598
22
15
7
41,386
15,303
10,940
5,406
9,739
12,215
5,364
6,851
17,284
7,203
5,327
4,754
0
14,112
2,367
1,426
10,319
0
166,642
151,310
15,332
28,460
1,675
26,785
48,476
45,929
2,547
329,304
12
12
0
41,587
14,084
11,243
5,608
10,652
10,533
4,321
6,212
15,403
6,998
4.569
3,836
0
9,169
1,241
2,090
5,838
0
177,200
161,255
15,945
28,538
1,679
26,859
46,863
44,208
2,655
323,491
6
6
0
41,781
13,826
11,319
5,670
10,966
10,964
4,753
6,211
10,428
5,200
2,859
2,369
0
7,821
1,049
1,595
5.177
0
178,059
162,160
15,899
28,555
1,671
26,885
45,876
43,046
2,830
319,770
15
15
0
41,857
13,507
11,418
5,807
11,124
10,890
4,715
6,175
9,342
4,755
2,494
2,092
0
6,730
840
1,310
4,580
0
177,615
161,780
15,835
28,065
1,651
26,414
45,256
42,122
3,134
315,208
7
7
0
41,917
13,217
11,512
5,949
11,239
10,098
4,838
5,260
6,456
2,870
1,940
1,645
0
6,039
731
1,135
4,173
0
178,462
162,674
15,788
28,005
1,648
26,357
44,224
40,963
3,261
314,358
2
2
0
41,858
12,914
11,557
6,096
11,291
9,535
4,918
4,617
4,889
2,299
1,420
1,170
0
5,015
618
722
3,674
0
182,229
166,393
15,836
28,151
1,656
26,495
42,678
39,244
3,434
1,258,155
425,295
415,767
9,528
359,163
351,906
7,257
371,984
362,667
9,317
47
11
0
19
17
101,665
91,489
3,698
6,479
0
1,434,264
419,516
410,675
8,841
407,514
401,525
5,989
444,979
435,979
9,000
38
8
0
17
13
162,217
140,718
6,305
15,194
0
1,563,453
414,066
404,864
9,202
446,029
441,494
4,535
495,525
486,804
8,721
28
5
0
13
10
207,806
173,635
8,701
25,469
0
1,693,908
444,976
435,511
9,465
482,987
479,539
3,448
523,512
514,375
9,137
20
4
0
9
7
242,413
193,787
13,891
34,735
0
1,716,209
450,934
441,198
9,736
486,480
483,354
3,126
530,343
520,763
9,580
19
3
0
9
7
248,433
196,733
14,925
36,774
0
1,731,272
454,401
444,632
9,769
488,723
485,643
3,080
533,262
523,903
9,359
14
2
0
7
5
254,871
201,314
15,743
37,814
0
1,759,314
457,101
446,855
10,246
496,139
493,105
3,034
543,669
533,091
10,578
13
2
0
6
5
262,393
205,018
17,281
40,094
0
1,797,162
463,654
453,114
10,540
503,457
500,504
2,953
559,585
548,400
11,185
12
2
0
5
5
270,454
209,713
18,903
41,838
0
591,580
431,122
61,798
83,496
15,164
604,353
447,871
64,688
76,524
15,270
609,097
455,709
65,397
73,982
14,009
610,080
452,232
69,230
75,689
12,929
619,732
461,297
69,602
76,153
12,681
624,388
464,346
70,352
76,955
12,736
642,949
481,028
71,261
77,864
12,796
647,754
484,084
72,024
78,774
12,871
By type of holder
6 Major financial institutions
Commercial banks 2
/
One- to four-family
8
Multifamily
9
10
Commercial
11
Farm
12
Savings institutions'
13
One- to four-family
Multifamily
14
13
Commercial
Farm
lb
1/
Life insurance companies
18
One- to four-family
Multifamily
19
20
Commercial
21
Farm
22 Federal and related agencies
23
Government National Mortgage Association
24
One- to four-family
23
Multifamily
26
Farmers Home Administration 4
27
One- to four-family
Multifamily
28
29
Commercial
30
Farm
31
Federal Housing and Veterans' Administrations
32
One- to four-family
Multifamily
33
Resolution Trust Corporation
34
33
One- to four-family
Multifamily
36
3/
Commercial
Farm
38
39
Federal Deposit Insurance Corporation
40
One- to four-family
Multifamily
41
42
Commercial
43
Farm
44
Federal National Mortgage Association
43
One- to four-family
Multifamily
46
41
Federal Land Banks
48
One- to four-family
49
Farm
Federal H o m e Loan Mortgage Corporation
30
One- to four-family
31
Multifamily
32
53 Mortgage pools or trusts 5
34
Government National Mortgage Association
33
One- to four-family
Multifamily
36
Federal Home Loan Mortgage Corporation
3/
One- to four-family
38
Multifamily
39
Federal National Mortgage Association
60
61
One- to four-family
Multifamily
62
63
Farmers Home Administration 4
64
One- to four-family
Multifamily
63
66
Commercial
67
Farm
68
Private mortgage conduits
One- to four-family
69
Multifamily
10
n
Commercial
72
Farm
73 Individuals and others 6
One- to four-family
74
73
Multifamily
Commercial
76
7/
1. 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.
4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from
F m H A mortgage pools to F m H A mortgage holdings in 1986:Q4 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.
SOURCE. Based on data f r o m various institutional and government sources. Separation of
nonfarm mortgage debt by type of property, if not reported directly, and interpolations and
extrapolations, when required for some quarters, are estimated in part by the Federal Reserve.
Line 69 from Inside Mortgage Securities.
Consumer Installment Credit
1.55
A39
CONSUMER INSTALLMENT CREDIT'
Millions of dollars, amounts outstanding, end of period
1995
Holder and type of credit
1993
1994
1995
Aug.
July
Sept.
Oct.
Nov.
Dec.
Seasonally a d j u s t e d
1 Total
790,351
902,853
1,022,925
979,375
989,695
993,843
1,005,178
l,015,031r
1,022,925
?
280,566
286,588
223,197
317,237
334,511
251,106
353,105
394,752
275,067
337,127
375,272
266,976
339,770
379,669
270,255
341,155
382,094
270,595
344,671
387,180
273,326
349,080r
390,140
275,811
353,105
394,752
275,067
Automobile
3 Revolving
4 Other2
Not seasonally a d j u s t e d
809,440
925,000
1,048,715
971,965
990,428
996,525
1,005,423
l,018,963r
1,048,715
By major
holder
Commercial banks
Finance companies
Credit unions
Savings institutions
Nonfinancial b u s i n e s s 3
P o o l s of securitized assets 4
367,566
116,453
101,634
37,855
55,296
130,636
427,851
134,830
119,594
38,468
60,957
143,300
464,993
150,382
133,128
38,500
57,497
204,215
441,165
142,163
126,500
38,907
56,360
166,870
451,784
145,522
128,424
38,634
55,723
170,341
449,502
146,202
129,027
38,894
54,177
178,723
451,232
148,681
130,261
38,500
54,607
182,142
453,690
147,093
130,972
38,500
53,139
195,569 r
464,993
150,382
133,128
38.500
57,497
204,215
By major type of credit5
12 A u t o m o b i l e
13
Commercial banks
14
Finance c o m p a n i e s
15
Pools of securitized assets 4
281,458
122,000
56,057
39,481
318,213
141,851
61,609
34,918
354,174
151,057
69,650
43,666
336,154
146,149
65,861
37,071
341,716
148,549
68,271
36,681
344,401
148,901
68,857
37,476
347,513
150,782
70,816
36,453
350,966r
149,905
68,167
43,240r
354,174
151,057
69,650
43,666
16 R e v o l v i n g
Commercial banks
17
18
Nonfinancial b u s i n e s s 3
19
Pools of securitized assets 4
301,837
149,920
50,125
79,878
352,266
180,183
55,341
94,376
415,679
198,076
51,971
142,722
370,520
184,245
50,520
114,338
377,784
189,163
48,976
117,729
380,341
185,572
48,968
123,749
384,625
186,463
49,358
126,739
392,706
189,405
47,839
132,978
415,679
198,076
51,971
142,722
70 Other
Commercial banks
71
22
Finance c o m p a n i e s
23
Nonfinancial b u s i n e s s 3
24
Pools of securitized assets
226,145
95,646
60,396
5,171
11,277
254,521
105,817
73,221
5,616
14,006
278,862
115,860
80,732
5,526
17.827
264,734
110,771
76,302
5,283
15,461
269,467
114,072
77,251
5,286
15,931
271,845
115,029
77,345
5,271
17,498
273,285
113,987
77,865
5,249
18,950
275,291
114,380
78,926
5,300
19,351
278,862
115,860
80,732
5,526
17,827
5 Total
7
8
9
in
u
1. T h e B o a r d ' s series on a m o u n t s of credit c o v e r s m o s t short- and intermediate-term credit
e x t e n d e d to individuals that is s c h e d u l e d to be repaid (or has the option of r e p a y m e n t ) in t w o
or m o r e installments. Data in this table also appear in the B o a r d ' s G . 1 9 (421) m o n t h l y
statistical release. For ordering address, see inside front cover.
2. C o m p r i s e s m o b i l e h o m e loans and all other installment loans that are not included in
automobile or revolving credit, such as loans f o r education, boats, trailers, or vacations. T h e s e
loans m a y be secured or u n s e c u r e d .
1.56
3. Includes retailers and gasoline c o m p a n i e s .
4. O u t s t a n d i n g balances of pools u p o n w h i c h securities h a v e b e e n issued; these balances
are no longer carried o n the balance sheets of the loan originator.
5. Totals include estimates f o r certain holders for w h i c h only c o n s u m e r credit totals are
available.
TERMS OF CONSUMER INSTALLMENT CREDIT'
Percent per year except as noted
1995
Item
1993
1994
1995
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
INTEREST RATES
Commercial
banks'
1 4 8 - m o n t h n e w car
2 2 4 - m o n t h personal
8.09
13.47
8.12
13.19
9.57
13.94
n.a.
n.a.
n.a.
n.a.
9.44
13.84
n.a.
n.a.
n.a.
n.a.
9.36
13.80
n.a.
n.a.
Credit card plan
3 All a c c o u n t s
4 A c c o u n t s assessed interest
n.a.
n.a.
15.69
15.77
16.02
15.79
n.a.
n.a.
n.a.
n.a.
15.98
15.94
n.a.
n.a.
n.a.
n.a.
15.81
15.71
n.a.
n.a.
Auto finance
5 N e w car
6 Used car
9.48
12.79
9.79
13.49
11.19
14.48
11.08
14.63
11.01
14.35
10.85
14.23
10.75
14.12
10.89
14.06
10.84
13.98
10.52
13.83
54.5
48.8
54.0
50.2
54.1
52.2
53.9
52.3
54.1
52.4
53.5
52.3
53.4
52.3
54.6
52.3
54.5
52.2
53.6
51.8
91
98
92
99
92
99
92
99
92
100
92
99
92
100
92
99
92
99
92
99
14,332
9,875
15,375
10,709
16,210
11,590
16,083
11,518
16,086
11,637
16,056
11,662
16,402
11,725
16,430
11,883
16,583
12,012
17,034
12,152
companies
OTHER TERMS3
Maturity
7 N e w car
8 U s e d car
(months)
Loan-to-value
9 N e w car
10 U s e d car
Amount
financed
ratio
(dollars)
11 N e w car
12 U s e d car
1. T h e B o a r d ' s series on a m o u n t s of credit covers m o s t short- and intermediate-term credit
e x t e n d e d to individuals that is scheduled to be repaid (or has the option of r e p a y m e n t ) in t w o
or m o r e installments. Data in this table also appear in the B o a r d ' s G . 1 9 (421) m o n t h l y
statistical release. For ordering address, see inside front cover.
2. Data are available for only the second m o n t h of each quarter,
3. At auto finance c o m p a n i e s ,
A40
1.57
DomesticNonfinancialStatistics • April 1996
F U N D S R A I S E D IN U.S. CREDIT MARKETS 1
Billions of dollars; quarterly data at seasonally adjusted annual rates
1994
Transaction ratpporv nr sector
1990
1991
1992
1995
1993
Ql
Q2
Q3
Q4
Ql
Q2
Q3
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial s e c t o r s . . . .
669.4
480.6
545.3
625.9
617.0
652.5
581.2
580.0
654.3
831.0
877.5
513.1
By sector and instrument
2 U.S. government
3
Treasury securities
4
Budget agency issues and mortgages
246.9
238.7
8.2
278.2
292.0
-13.8
304.0
303.8
.2
256.1
248.3
7.8
155.9
155.7
.2
206.4
207.7
-1.3
131.3
126.6
4.7
135.6
132.8
2.9
150.1
155.7
-5.7
266.8
268.0
-1.2
202.8
201.2
1.6
65.8
65.4
.4
5 Private
422.5
202.4
241.3
369.8
461.1
446.1
449.9
444.3
504.2
564.2
674.8
447.3
6
7
8
y
10
11
12
13
14
15
16
By instrument
Municipal securities
Corporate bonds
Mortgages
Home mortgages
Multifamily residential
Commercial
Farm
Consumer credit
Bank loans n.e.c
Commercial paper
Other loans and advances
49.3
47.1
232.4
226.3
1.5
6.1
-1.6
15.6
.4
9.7
68.1
87.8
78.8
158.4
173.6
-5.5
-10.0
.4
-14.8
-40.9
-18.4
-48.5
30.5
67.6
130.9
187.6
-10.4
-47.8
1.4
7.3
-13.7
8.6
10.1
74.8
75.2
157.2
187.9
-6.0
-25.0
.5
58.9
3.8
10.0
-10.2
-29.3
23.3
196.5
204.5
1.3
-11.1
1.8
121.2
72.7
21.4
55.4
15.7
34.2
174.2
203.3
-.3
-29.4
.6
65.0
57.7
26.1
73.2
-20.7
37.4
194.2
186.2
4.0
1.1
2.9
129.8
58.7
9.7
40.8
-58.4
15.4
203.9
208.8
5.6
-12.7
2.2
124.8
97.1
26.4
35.1
-53.8
6.2
213.5
219.8
-4.2
-3.4
1.4
165.2
77.1
23.5
72.4
-53.3
55.3
219.6
192.5
2.9
22.5
1.7
93.8
143.5
23.1
82.2
-10.6
99.0
238.8
204.2
15.0
17.8
1.8
158.1
94.4
37.5
57.7
-115.8
60.7
251.9
215.3
11.9
22.4
2.3
109.6
99.4
16.0
25.6
17
18
19
20
21
22
By borrowing sector
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
State and local government
263.7
112.2
1.0
1.1
110.0
46.6
182.7
-61.9
2.1
-11.0
-53.0
81.6
200.7
19.5
1.3
-16.0
34.1
21.1
246.5
61.0
2.0
7.0
52.0
62.3
360.3
144.3
2.8
12.1
129.3
-43.4
292.3
154.1
3.1
13.2
137.7
-.3
349.9
139.4
7.8
10.0
121.7
-39.5
379.7
130.0
2.4
8.8
118.8
-65.4
419.1
153.6
-2.0
16.5
139.1
-68.5
301.8
314.5
.9
51.3
262.3
-52.1
388.9
302.8
3.6
43.5
255.7
-16.9
380.3
187.0
4.3
21.5
161.1
-119.9
23 Foreign net borrowing in United States
24
Bonds
25
Bank loans n.e.c
26
Commercial paper
27
Other loans and advances
23.9
21.4
-2.9
12.3
-7.0
14.8
15.0
3.1
6.4
-9.8
22.6
15.7
2.3
5.2
-.6
68.8
81.3
.7
-9.0
-4.2
-20.3
7.1
1.4
-27.3
-1.6
-100.3
-2.6
6.0
-101.8
-1.8
-34.2
-17.4
-4.5
-5.2
-7.1
19.6
20.8
4.7
-8.1
2.2
33.5
27.7
-.5
5.9
.4
61.4
13.5
8.1
37.9
1.9
40.4
49.9
5.6
-11.1
-4.0
97.5
55.0
8.2
30.9
3.4
28 Total domestic plus foreign
693.2
495.4
568.0
694.7
596.6
552.2
547.0
599.5
687.8
892.4
918.0
610.6
Financial sectors
29 Total net borrowing by financial sectors
30
31
32
33
34
35
36
37
38
39
fiv instrument
U.S. government-related
Government-sponsored enterprises securities
Mortgage pool securities
Loans from U.S. government
Corporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Other loans and advances
By borrowing sector
40 Government-sponsored enterprises
41 Federally related mortgage pools
42 Private financial sectors
Commercial banks
43
44
Bank holding companies
45
Funding corporations
46
Savings institutions
47
Credit unions
48
Life insurance companies
49
Finance companies
50
Mortgage companies
51
Real estate investment trusts (REITs)
52
Brokers and dealers
53
Issuers of asset-backed securities (ABSs)
210.9
154.5
240.1
290.8
459.4
493.1
380.1
419.7
544.8
268.7
432.0
407.7
167.4
17.1
150.3
-.1
145.7
9.2
136.6
.0
155.8
40.3
115.6
.0
164.2
80.6
83.6
.0
284.3
176.9
112.1
-4.8
309.4
160.0
168.5
-19.2
264.5
146.6
117.9
.0
245.7
152.1
93.6
.0
317.5
249.0
68.5
.0
93.0
62.9
30.0
.0
197.7
127.2
70.5
.0
230.1
101.5
128.6
.0
43.6
53.5
.6
4.7
8.6
-23.9
8.7
68.8
.5
8.8
-32.0
-37.3
84.3
82.8
.6
2.2
-.7
-.6
126.6
119.8
3.6
-13.0
-6.2
22.4
175.2
113.4
9.8
-12.3
41.6
22.6
183.8
161.1
9.8
-12.0
35.1
-10.3
115.5
96.4
12.4
-27.4
4.3
29.8
174.0
99.5
12.0
-11.7
41.3
32.8
227.3
96.5
4.9
1.9
85.9
38.1
175.7
156.5
5.1
.1
38.5
-24.5
234.4
170.2
4.8
24.1
34.0
1.3
177.6
133.0
2.3
-6.8
43.3
5.9
17.0
150.3
43.6
.9
-27.7
15.4
-30.9
.0
.0
23.8
.0
.8
1.5
59.8
9.1
136.6
8.7
-10.7
-2.5
-6.5
-44.7
.0
.0
17.7
-2.4
1.2
3.7
52.9
40.2
115.6
84.3
7.7
2.3
13.2
-7.0
.0
.0
-1.6
8.0
.3
2.7
58.6
80.6
83.6
126.6
4.6
8.8
2.9
11.3
.2
.2
.2
.0
3.4
12.0
83.0
172.1
112.1
175.2
9.9
10.3
24.2
12.8
.2
.3
50.2
-11.5
13.7
.5
64.5
140.8
168.5
183.8
.9
3.5
48.8
-5.5
.1
.0
63.7
-21.8
14.5
-9.9
89.4
146.6
117.9
115.5
10.6
10.1
-10.5
5.8
.2
.0
63.6
-18.2
15.3
.3
38.5
152.1
93.6
174.0
23.9
11.5
47.3
14.8
.5
.0
16.3
-7.0
18.8
-7.6
55.4
249.0
68.5
227.3
4.1
16.0
11.1
36.1
.2
1.3
57.3
1.1
6.3
19.3
74.5
62.9
30.0
175.7
6.3
13.3
61.6
-18.9
-.3
.0
83.1
-7.4
6.9
-29.5
60.8
127.2
70.5
234.4
18.2
23.8
21.4
-6.8
-.1
.1
57.2
14.8
6.4
-.1
99.4
101.5
128.6
177.6
9.6
25.2
41.9
4.9
.1
-.1
6.5
-12.0
2.2
2.1
97.1
Flow of Funds
1.57
A41
FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued
1994
Transaction category or sector
1995
1994
Ql
Q2
Q3
Q4
Ql
Q2
Q3
All sectors
54 Total net b o r r o w i n g , all s e c t o r s
904.1
649.9
808.0
985.5
1,056.0
1,045.3
927.0
1,019.2
1,232.6
1,161.1
1,350.0
1,018.3
55
5b
5/
58
59
60
61
62
414.4
49.3
122.0
233.0
15.6
2.2
30.7
37.1
424.0
87.8
162.5
158.9
-14.8
-29.1
-44.0
-95.6
459.8
30.5
166.1
131.5
7.3
-9.3
13.1
8.9
420.3
74.8
276.3
160.8
58.9
-8.5
-5.1
8.0
444.9
-29.3
143.8
206.3
121.2
61.8
35.7
71.7
534.9
15.7
192.7
184.0
65.0
51.8
-40.7
41.9
395.8
-20.7
116.4
206.6
129.8
26.8
8.8
63.5
381.3
-58.4
135.7
215.9
124.8
90.1
59.6
70.2
467.5
-53.8
130.4
218.4
165.2
78.5
115.3
359.8
-53.3
225.3
224.7
93.8
151.7
99.5
59.6
400.5
-10.6
319.1
243.6
158.1
124.1
60.4
55.0
295.9
-115.8
248.7
254.2
109.6
100.7
90.2
34.8
U.S. government securities
Municipal securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans and advances
111.0
Funds raised through mutual funds and corporate equities
63 Total net s h a r e issues
64 Mutual funds
65 Corporate equities
66
Nonfinancial corporations
67
Financial corporations
68
Foreign shares purchased by U.S. residents
18.4
209.1
293.5
428.6
140.7
294.4
252.8
104.7
-89.1
5.2
161.2
193.9
63.0
-44.6
-63.0
11.0
7.4
146.9
62.2
18.3
13.3
30.7
207.7
85.8
27.0
310.2
118.4
21.3
36.6
60.5
119.6
21.1
—44.9
23.3
42.7
187.2
107.2
-9.6
48.3
68.5
190.2
62.6
-2.0
18.6
45.9
121.8
-17.1
-50.0
9.8
23.1
-20.6
-68.5
-118.0
16.3
33.2
56.1
-50.9
-68.4
4.8
12.8
165.1
-3.9
-59.6
18.7
37.0
168.8
25.1
-84.8
27.9
82.0
28.1
30.7
1. Data in this table also appear in the B o a r d ' s Z. 1 (780) quarterly statistical release, tables
F.2 through F.5. For ordering address, see inside front cover.
A42
1.58
DomesticNonfinancialStatistics • April 1996
S U M M A R Y OF FINANCIAL TRANSACTIONS 1
Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates
1994 r
1990 r
Transaction category or sector
1991 r
1992 r
1993 r
Ql
N E T L E N D I N G IN C R E D I T
1
MARKETS
Total net l e n d i n g in c r e d i t m a r k e t s
2 Private domestic nonfinancial sectors
3
Households
4
Nonfarm noncorporate business
5
Nonfinancial corporate business
6
State and local governments
/ U.S. government
8 Rest of the world
y Financial sectors
10
Government sponsored enterprises
N
Federally related mortgage pools
12
Monetary authority
Commercial banking
13
14
U.S. chartered banks
Foreign banking offices in United States
15
16
Bank holding companies
Banks in U.S. affiliated areas
1/
Funding corporations
18
iy
Thrift institutions
Life insurance companies
20
21
Other insurance companies
22
Private pension funds
23
State and local government retirement funds
24
Finance companies
25
Mortgage companies
Mutual funds
26
27
Closed-end funds
Money market mutual funds
28
Real estate investment trusts (REITs)
2y
Brokers and dealers
30
31
Asset-backed securities issuers (ABSs)
32
Bank personal trusts
1995 r
1994 r
Q2
Q3
Q4
Q2
Ql
Q3
2
904.1
649.9
808.0
985.5
1,056.0
1,045.3
927.0
1,019.2
1,232.6
1,161.1
1,350.0
1,018.3
223.6
210.6
-3.5
-26.1
42.6
33.7
86.7
560.2
14.0
150.3
8.1
125.1
94.9
28.4
-2.8
4.5
-13.8
-157.6
107.2
26.4
54.0
32.8
29.5
.0
36.2
1.3
77.5
-.7
2.8
51.1
15.9
96.6
20.4
-5.3
30.7
50.8
10.5
13.3
529.5
15.1
136.6
31.1
80.8
35.7
48.5
-1.5
-1.9
15.7
-146.1
86.5
30.0
35.4
41.1
-9.2
11.2
80.1
12.8
32.7
-.7
17.5
48.9
10.0
90.2
87.0
-.1
27.8
-24.5
-11.9
98.2
631.6
68.8
115.6
27.9
95.3
69.5
16.5
5.6
3.7
17.7
-61.3
78.5
6.7
41.1
23.0
7.5
.1
126.2
18.2
4.7
1.1
-1.3
53.8
8.0
49.4
23.8
.6
21.3
3.7
-18.4
128.3
826.2
90.2
83.6
36.2
142.2
149.6
-9.8
.0
2.4
-5.7
-1.7
100.9
27.7
45.9
19.8
-9.0
.0
159.5
11.0
20.4
.6
14.8
80.5
9.5
262.5
307.5
.7
51.9
-97.6
-24.2
134.4
683.3
123.2
112.1
31.5
163.4
148.1
11.2
.9
3.3
-34.2
34.9
66.3
24.9
47.0
29.0
68.2
-22.9
-10.6
-5.5
30.7
4.7
-44.2
57.8
7.1
284.3
258.5
344.2
386.3
58.6
-32.4
-46.4
123.3
684.2
91.3
168.5
41.5
167.4
126.3
37.3
3.1
.7
-2.4
11.8
69.7
21.8
20.9
44.1
67.9
-43.5
15.8
13.2
-17.9
6.6
-89.3
87.9
8.9
27.5
-71.1
-14.6
65.7
531.7
100.9
117.9
24.9
128.5
136.1
-10.0
.2
2.1
-73.1
41.5
26.7
22.3
49.9
46.4
61.2
-36.3
4.2
-11.6
26.6
6.6
-57.7
42.8
10.2
167.7
246.5
.7
37.5
-117.0
-11.3
137.5
725.3
125.4
93.6
29.7
183.4
155.6
22.9
2.7
2.2
-37.3
53.8
89.5
25.3
42.5
-11.1
63.1
-14.0
-.1
-13.6
57.7
5.5
-21.9
46.3
7.7
253.9
338.6
.9
84.1
-169.7
-24.4
210.9
792.1
175.2
68.5
30.0
174.5
174.2
-5.6
-2.4
8.3
-23.9
32.4
79.4
30.4
74.7
36.6
80.4
2.1
-62.4
-10.0
56.5
.2
-8.0
54.3
1.4
6.9
198.3
.5
-85.0
-106.9
-13.2
242.6
924.8
11.2
30.0
16.3
342.7
183.4
158.8
-2.0
2.4
-8.4
28.2
132.4
20.7
93.6
62.4
91.8
-14.8
-14.8
-.5
50.5
2.5
30.5
48.7
1.6
-176.0
-118.0
-1.0
48.6
-105.7
-24.3
325.5
1,224.8
86.9
70.5
20.8
316.0
222.4
83.9
5.7
4.0
-23.1
9.1
131.2
20.4
87.8
3.2
70.1
29.7
21.6
7.2
135.2
3.1
146.2
87.0
1.8
-173.8
63.7
-1.0
-28.5
-208.0
-23.4
354.7
860.8
50.8
128.6
-11.1
243.8
227.5
24.3
-9.0
1.0
-12.9
40.9
77.0
18.6
103.5
52.9
40.3
-24.0
22.0
10.0
32.4
2.1
-.8
85.2
1.5
904.1
649.9
808.0
985.5
1,056.0
1,045.3
927.0
1,019.2
1,232.6
1,161.1
1,350.0
1,018.3
2.0
1.5
1.0
25.7
241.7
35.0
43.6
63.7
-66.1
68.6
-24.2
27.9
63.0
-44.6
3.5
35.5
-4.8
13.0
29.7
154.5
-5.9
.0
.0
25.7
196.4
-3.4
86.3
1.5
-58.5
41.6
-16.5
-26.5
146.9
62.2
51.4
29.7
-6.2
4.5
16.1
284.9
-1.6
-2.0
.2
27.3
236.8
43.5
113.5
-57.2
-73.2
4.5
43.1
-3.5
207.7
85.8
4.6
46.0
8.5
23.8
.8
.0
287.2
-.2
.0
.7
24.9
237.3
143.8
112.6
-3.7
-38.7
-3.8
9.3
6.6
187.2
107.2
42.6
86.6
10.8
-24.4
15.0
307.6
-14.6
.0
.6
21.7
217.5
113.5
-44.9
-57.5
-3.6
34.0
166.0
50.6
190.2
62.6
-20.7
110.7
-13.1
53.3
24.7
32.4
.2
.0
.8
67.7
234.8
3.1
-66.0
-51.8
84.0
56.4
86.0
28.1
121.8
-17.1
-59.3
104.5
10.1
63.5
23.6
301.9
-8.6
.0
.7
21.6
290.0
98.1
-40.5
-46.9
36.5
86.5
51.9
97.9
-20.6
-68.5
37.1
163.5
4.3
42.1
11.9
361.0
17.8
.0
35.2
244.8
57.9
117.3
-70.3
-23.5
20.2
71.2
-18.5
310.2
118.4
61.4
34.4
4.5
10.2
1.6
335.8
-5.8
.0
.7
34.0
244.9
89.6
-9.7
-40.0
19.6
43.3
78.3
45.8
119.6
21.1
-.1
116.3
3.0
33.6
18.8
250.8
54.0
307.2
-22.6
42.8
18.1
116.8
59.9
163.6
39.2
56.1
-50.9
-10.7
112.6
15.5
42.9
21.0
231.0
10.3
.0
.7
49.9
280.3
30.5
133.4
112.9
69.0
233.5
129.5
90.6
165.1
-3.9
30.8
29.3
-3.9
45.0
22.3
459.5
9.0
8.6
.8
29.9
252.6
-16.5
-150.3
106.4
110.0
120.8
85.2
31.0
168.8
25.1
14.0
118.6
5.1
61.8
20.8
113.7
-.4
1.5
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
33 Net flows t h r o u g h credit m a r k e t s
34
35
36
37
38
3y
40
41
42
43
44
45
46
47
48
49
50
51
52
53
Other financial sources
Official foreign exchange
Special drawing rights certificates
Treasury currency
Life insurance reserves
Pension fund reserves
Interbank claims
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Foreign deposits
Mutual fund shares
Corporate equities
Security credit
Trade payables
Taxes payable
Noncorporate proprietors' equity
Investment in bank personal trusts
Miscellaneous
54 Total financial s o u r c e s
-7.1
.4
.7
1,574.3
1,480.1
1,795.9
2,297.5
2,119.9
2,267.0
1,850.5
2,011.7
2,350.6
2,376.0
3,234.8
2,133.6
Floats not included in assets ( —)
55 U.S. government checkable deposits
56 Other checkable deposits
5 / Trade credit
3.3
8.5
-8.2
-13.1
4.5
30.8
.7
1.6
13.0
-1.5
-1.3
15.4
-4.8
-2.8
35.3
-3.1
-1.9
100.6
.8
-3.5
54.4
7.4
-3.3
33.6
-24.4
-2.3
-47.5
13.2
-3.7
25.5
-16.3
-3.9
49.0
2.9
-3.5
-12.9
Liabilities not identified as assets
Treasury currency
Interbank claims
Security repurchase agreements
Foreign deposits
Taxes payable
Miscellaneous
.2
1.6
-32.1
25.9
-1.7
-86.3
-.6
26.2
-9.5
-24.0
-1.0
20.8
_
-.2
4.2
34.3
-7.1
10.4
23.7
-.2
-2.7
29.3
36.5
8.5
-141.6
-.2
-24.8
-25.1
-3.7
17.7
-148.1
-.2
5.4
103.9
56.1
6.2
-514.1
-.2
10.1
-19.2
38.7
10.8
-57.4
-.2
-1.7
57.6
54.8
-.8
153.1
-.2
.8
73.8
47.1
-8.7
-340.3
-.4
-4.9
.6
-2.8
10.8
-1.4
8.2
-42.0
82.2
31.9
-156.9
-.3
7.9
7.4
1.5
11.8
-178.7
1,663.2
1,446.0
1,778.6
2,219.5
2,162.6
2,355.6
2,141.5
1,991.2
2,162.0
2,568.5
3,282.8
2,297.6
58
59
60
61
62
63
(—)
64 Total identified to s e c t o r s a s assets
1. Data in this table also appear in the B o a r d ' s Z. 1 (780) quarterly statistical release, tables
F.6 and F.7. For ordering address, see inside front cover.
I
2. Excludes corporate equities and mutual fund shares.
Flow of Funds
1.59
A43
S U M M A R Y OF CREDIT MARKET DEBT OUTSTANDING1
Billions of dollars, end of period
1995
1994
Transaction category or sector
1991
1992
1993
1994
Q2
Ql
Q3
Q4
Ql
Q2
Q3
Nonfinancial sectors
1 Total c r e d i t m a r k e t d e b t o w e d by
domestic nonfinancial sectors
11,348.2
11,896.7
12,537.4
13,160.6
12,676.2
12,808.0
12,962.6
13,160.6
13,336.6
13,541.7
13,680.0
By sector and instrument
2 U.S. government
Treasury securities
3
4
Budget agency issues and mortgages
2,776.4
2,757.8
18.6
3,080.3
3,061.6
18.8
3,336.5
3,309.9
26.6
3,492.3
3,465.6
26.7
3,387.7
3,361.4
26.3
3,395.4
3,368.0
27.4
3,432.3
3,404.1
28.2
3,492.3
3,465.6
26.7
3,557.9
3,531.5
26.4
3,583.5
3,556.7
26.8
3,603.4
3,576.5
26.9
5 Private
8,571.8
8,816.3
9,200.9
9,668.3
9,288.5
9,412.6
9,530.3
9,668.3
9,778.6
9,958.2
10,076.6
6
7
8
9
10
11
12
13
14
15
16
By instrument
Municipal securities
Corporate bonds
Mortgages
Home mortgages
Multifamily residential
Commercial
Farm
Consumer credit
Bank loans n.e.c
Commercial paper
Other loans and advances
1,272.2
1,086.9
3,957.8
2,849.8
282.8
745.9
79.3
797.2
686.0
98.5
673.2
1,302.8
1,154.5
4,088.7
3,037.4
272.5
698.1
80.7
804.6
672.2
107.1
686.5
1,377.5
1,229.7
4,260.0
3,227.6
267.8
683.4
81.2
863.5
676.0
117.8
676.3
1,348.2
1,253.0
4,456.5
3,432.2
269.1
672.3
83.0
984.7
748.6
139.2
738.0
1,379.9
1,238.3
4,289.7
3,264.6
267.8
676.0
81.3
859.6
686.5
129.9
704.5
1,372.2
1,247.6
4,345.8
3,318.7
268.8
676.3
82.1
891.6
705.3
135.7
714.4
1,362.6
1,251.5
4,401.9
3,376.0
270.2
673.1
82.6
929.4
724.7
138.7
721.6
1,348.2
1,253.0
4,456.5
3,432.2
269.1
672.3
83.0
984.7
748.6
139.2
738.0
1,333.6
1,266.8
4,497.2
3,466.1
269.8
677.9
83.4
987.9
781.0
149.8
762.3
1,328.3
1,291.6
4,564.4
3,524.7
273.6
682.3
83.9
1,026.5
808.8
162.9
775.8
1,304.3
1,306.8
4,632.8
3,583.9
276.6
687.9
84.4
1,060.8
828.0
163.3
780.8
17
18
19
20
21
22
By borrowing
sector
Household
Nonfinancial business
Farm
N o n f a r m noncorporate
Corporate
State and local government
3,822.9
3,674.2
135.0
1,137.3
2,401.9
1,074.8
4,023.6
3,696.8
136.3
1,122.9
2,437.6
1,095.9
4,272.4
3,770.3
138.3
1,129.9
2,502.0
1,158.2
4,632.3
3,921.1
141.2
1,142.0
2,637.9
1,114.8
4,311.9
3,819.9
136.7
1,132.9
2,550.3
1,156.6
4,407.5
3,860.8
141.5
1,135.6
2,583.7
1,144.2
4,511.8
3,885.6
143.1
1,137.4
2,605.0
1,132.8
4,632.3
3,921.1
141.2
1,142.0
2,637.9
1,114.8
4,674.6
4,003.6
138.9
1,154.5
2,710.1
1,100.4
4,779.5
4,085.1
142.8
1,165.6
2,776.7
1,093.5
4,883.8
4,124.2
144.9
1,170.6
2,808.8
1,068.5
23 F o r e i g n c r e d i t m a r k e t d e b t held in
United States
299.7
313.1
381.9
361.6
356.5
348.7
352.4
361.6
376.8
387.6
410.7
24
25
26
27
130.5
21.6
81.8
65.9
146.2
23.9
77.7
65.3
227.4
24.6
68.7
61.1
234.6
26.1
41.4
59.6
226.8
26.2
43.3
60.3
222.4
25.1
42.0
59.2
227.6
26.3
39.9
58.6
234.6
26.1
41.4
59.6
237.9
28.2
50.9
59.8
250.4
29.6
48.1
59.5
264.2
31.6
55.8
59.1
11,647.9
12,209.7
12,919.3
13,522.2
13,032.7
13,156.7
13,315.0
13,522.2
13,713.4
13,929.3
14,090.7
Bonds
Bank loans n.e.c
Commercial paper
Other loans and advances
28 Total credit m a r k e t debt owed by nonfinancial
sectors, domestic a n d foreign
Financial sectors
29 Total credit m a r k e t debt owed by
financial sectors
30
31
32
33
34
35
36
37
38
39
By instrument
U.S. government-related
Government-sponsored enterprises securities
Mortgage pool securities
Loans from U.S. government
Private
Coiporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Other loans and advances
By borrowing sector
40 Government-sponsored enterpnses
41 Federally related mortgage pools
42 Private financial sectors
Commercial banks
43
44
Bank holding companies
Funding corporations
45
46
Savings institutions
Credit unions
47
48
Life insurance companies
Finance companies
49
Mortgage companies
50
51
Real estate investment trusts (REITs)
Brokers and dealers
52
Issuers of asset-backed securities (ABSs)
53
2,769.2
3,024.9
3,321.0
3,785.7
3,447.3
3,545.3
3,648.1
3,785.7
3,854.5
3,965.4
4,065.0
1,564.2
402.9
1,156.5
4.8
1,205.1
649.1
4.8
78.4
385.7
87.1
1,720.0
443.1
1,272.0
4.8
1,304.9
738.2
5.4
80.5
394.3
86.6
1,884.1
523.7
1,355.6
4.8
1,436.9
858.0
8.9
67.6
393.5
108.9
2,168.4
700.6
1,467.8
.0
1,617.3
969.0
18.7
55.3
442.8
131.6
1,961.5
563.7
1,397.8
.0
1,485.8
895.9
11.4
63.4
408.8
106.3
2,030.5
600.3
1,430.1
.0
1,514.9
920.0
14.5
56.3
410.3
113.8
2,089.8
638.3
1,451.5
.0
1,558.3
944.8
17.5
53.4
420.5
122.0
2,168.4
700.6
1,467.8
.0
1,617.3
969.0
18.7
55.3
442.8
131.6
2,192.7
716.3
1,476.4
.0
1,661.8
1,008.1
20.0
54.2
454.1
125.4
2,245.0
748.1
1,496.9
.0
1,720.3
1,050.6
21.2
59.9
462.8
125.7
2,300.2
773.5
1,526.7
.0
1,764.8
1,083.9
21.8
58.3
473.6
127.2
407.7
1,156.5
1,205.1
72.3
112.3
139.1
95.4
.0
.0
391.9
22.2
13.6
19.0
339.3
447.9
1,272.0
1,304.9
80.0
114.6
161.6
88.4
.0
.0
390.4
30.2
13.9
21.7
404.2
528.5
1,355.6
1,436.9
84.6
123.4
169.9
99.6
.2
.2
390.5
30.2
17.4
33.7
487.2
700.6
1,467.8
1,617.3
94.5
133.6
199.3
112.4
.5
.6
440.7
18.7
31.1
34.3
551.6
563.7
1,397.8
1,485.8
83.7
124.2
190.7
98.3
.3
.3
401.9
24.8
21.0
31.3
' 509.5
600.3
1,430.1
1,514.9
86.7
126.8
191.5
99.7
.3
.3
414.2
20.2
24.8
31.3
519.2
638.3
1,451.5
1,558.3
92.6
129.6
200.6
103.4
.4
.3
420.9
18.5
29.5
29.4
533.0
700.6
1,467.8
1,617.3
94.5
133.6
199.3
112.4
.5
.6
440.7
18.7
31.1
34.3
551.6
716.3
1,476.4
1,661.8
95.0
136.9
221.1
107.7
.4
.6
456.7
16.9
32.8
26.9
566.8
748.1
1,496.9
1,720.3
99.9
142.9
229.9
106.0
.3
.6
467.2
20.6
34.4
26.8
591.7
773.5
1,526.7
1,764.8
102.2
149.2
237.4
107.2
.4
.6
471.9
17.6
35.0
27.4
615.9
All sectors
54 Total credit m a r k e t debt, domestic a n d f o r e i g n . . . .
55
56
57
58
59
60
61
62
U.S. government securities
Municipal securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans and advances
14,417.1
15,234.6
16,240.3
17,307.9
16,480.0
16,702.0
16,963.1
17,307.9
17,567.8
17,894.6
18,155.7
4,335.7
1,272.2
1,866.5
3,962.6
797.2
785.9
565.9
831.0
4,795.5
1,302.8
2,038.9
4,094.1
804.6
776.6
579.0
843.1
5,215.8
1,377.5
2,315.2
4,269.0
863.5
768.2
580.0
851.1
5,660.7
1,348.2
2,456.5
4,475.2
984.7
830.0
623.5
929.1
5,349.2
1,379.9
2,360.9
4,301.1
859.6
776.1
582.0
871.2
5,425.9
1,372.2
2,390.0
4,360.3
891.6
786.7
587.9
887.4
5,522.1
1,362.6
2,423.9
4,419.4
929.4
804.3
599.2
902.2
5,660.7
1,348.2
2,456.5
4,475.2
984.7
830.0
623.5
929.1
5,750.6
1,333.6
2,512.9
4,517.2
987.9
863.3
654.7
947.5
5,828.5
1,328.3
2,592.6
4,585.6
1,026.5
898.2
673.8
961.0
5,903.6
1,304.3
2,654.8
4,654.6
1,060.8
917.9
692.7
967.1
1. Data in this table also appear in the Board's Z . l (780) quarterly statistical release, tables
L.2 through L.4. For ordering address, see inside front cover.
A44
1.60
DomesticNonfinancialStatistics • April 1996
SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1
Billions of dollars except as noted, end of period
1994 r
iyy i
1995 r
iyy3
Q1
Q2
Q3
Q4
Q1
Q2
Q3
CREDIT MARKET DEBT OUTSTANDING2
1 Total credit m a r k e t assets
2
3
4
3
6
/
8
y
10
n
12
13
14
IS
16
17
18
iy
20
21
22
23
24
25
26
27
28
29
30
31
32
Private d o m e s t i c nonfinancial sectors
Households
N o n f a r m n o n c o r p o r a t e business
Nonfinancial corporate business
State and local g o v e r n m e n t s
U.S. g o v e r n m e n t
Rest of the world
Financial sectors
G o v e r n m e n t - s p o n s o r e d enterprises
Federally related m o r t g a g e pools
M o n e t a r y authority
C o m m e r c i a l banking
U.S. chartered b a n k s
Foreign banking offices in United States
B a n k holding c o m p a n i e s
B a n k s in U.S. affiliated areas
F u n d i n g corporations
T h r i f t institutions
Life insurance c o m p a n i e s
O t h e r insurance c o m p a n i e s
Private pension f u n d s
State and local government retirement funds
Finance companies
Mortgage companies
Mutual funds
Closed-end funds
M o n e y market mutual f u n d s
Real estate investment trusts ( R E I T s )
Brokers and dealers
Asset-backed securities issuers ( A B S s )
B a n k personal trusts
14,417.1
15,234.6
16,240.3
17,307.9
16,480.0
16,702.0
16,963.1
17,307.9
17,567.8
17,894.6
18,155.7
2,591.4
1,561.4
38.3
230.0
761.7
246.9
928.8
10,650.1
389.0
1,156.5
272.5
2,853.3
2,502.5
319.2
11.9
19.7
144.8
1,192.6
1,224.6
376.6
530.6
394.5
488.9
60.3
440.2
49.5
403.9
7.0
124.0
317.8
223.5
2,673.7
1,640.6
38.1
257.8
737.2
235.0
1,022.8
11,303.1
457.8
1,272.0
300.4
2,948.6
2,571.9
335.8
17.5
23.4
162.5
1,134.5
1,309.1
389.4
571.7
417.5
496.4
60.5
566.4
67.7
408.6
8.1
122.7
377.9
231.5
2,729.3
1,666.0
38.8
283.7
740.8
230.7
1,146.6
12,133.7
548.0
1,355.6
336.7
3,090.8
2,721.5
326.0
17.5
25.8
149.5
1,132.7
1.420.6
422.7
617.6
437.3
482.8
60.4
725.9
78.6
429.0
8.6
137.5
458.4
240.9
3,018.0
1,999.6
39.5
335.6
643.3
206.5
1,255.7
12,827.7
671.2
1,467.8
368.2
3,254.3
2,869.6
337.1
18.4
29.2
127.2
1.167.6
1,487.0
446.4
664.6
466.3
551.0
37.5
715.3
73.1
459.6
13.3
93.3
516.1
248.0
2,780.8
1,719.5
38.7
291.5
731.1
219.0
1.192.0
12,288.2
570.2
1,397.8
341.5
3,119.8
2,743.8
331.8
18.2
26.0
142.8
1,134.2
1,441.1
427.8
622.8
447.2
494.5
49.5
733.8
81.9
434.1
10.3
115.2
480.3
243.2
2,856.2
1,801.9
39.1
298.5
716.8
215.4
1,205.4
12,425.0
596.0
1,430.1
351.6
3,155.9
2,780.3
330.8
18.3
26.5
120.0
1,146.1
1,449.0
433.1
635.3
459.2
511.3
40.4
735.0
79.0
433.5
11.9
100.8
491.0
245.7
2,910.6
1,879.3
39.3
306.8
685.3
212.6
1,240.7
12,599.1
627.5
1,451.5
356.8
3,203.9
2,822.3
335.5
19.0
27.1
119.2
1,160.4
1,470.7
439.1
645.9
454.3
524.1
37.0
736.3
75.6
437.9
13.3
95.3
502.6
247.7
3,018.0
1,999.6
39.5
335.6
643.3
206.5
1,255.7
12,827.7
671.2
1,467.8
368.2
3,254.3
2,869.6
337.1
18.4
29.2
127.2
1,167.6
1,487.0
446.4
664.6
466.3
551.0
37.5
715.3
73.1
459.6
13.3
93.3
516.1
248.0
2,985.3
2,023.8
39.6
307.3
614.6
203.2
1,324.7
13,054.6
673.3
1,476.4
367.1
3,327.7
2,906.5
373.6
17.9
29.8
130.2
1,173.4
1,523.1
451.3
688.0
480.7
568.5
33.8
715.9
73.0
480.6
13.9
101.0
528.3
248.4
2,922.4
1,971.7
39.4
319.3
592.1
197.1
1,402.8
13,372.3
695.8
1,496.9
375.7
3,409.8
2,963.7
396.0
19.3
30.8
128.1
1,177.3
1,557.1
456.1
709.9
482.1
586.9
41.2
721.5
74.8
508.0
14.7
137.5
550.1
248.8
2,897.7
2,009.5
39.1
311.5
537.7
191.3
1,492.5
13,574.2
708.5
1,526.7
370.6
3,473.0
3,023.7
401.2
17.0
31.0
128.7
1,188.1
1,575.5
460.5
735.8
493.3
594.1
35.2
728.3
77.3
505.5
15.2
137.3
571.4
249.2
14,417.1
15,234.6
16,240.3
17,307.9
16,480.0
16,702.0
16,963.1
17,307.9
17,567.8
17,894.6
18,155.7
55.4
10.0
16.3
405.7
3,655.4
96.4
5,024.3
1,020.9
2,350.7
488.4
535.0
355.8
273.5
769.5
188.9
957.6
71.2
639.3
4,443.8
51.8
8.0
16.5
433.0
4,055.1
132.6
5,050.2
1,134.4
2,293.5
415.2
539.5
399.9
267.7
992.5
217.7
1,003.7
79.7
660.6
4,791.2
53.4
8.0
17.0
468.2
4,471.6
190.8
5,154.9
1,251.7
2,223.2
391.7
559.6
471.1
257.6
1,375.4
279.0
1,038.2
84.2
691.3
5,128.9
53.2
8.0
17.6
502.2
4,693.9
281.4
5,296.0
1,242.0
2,183.3
411.2
602.9
549.4
307.1
1,477.3
279.0
1,154.5
87.3
699.4
5,379.0
56.4
8.0
17.1
474.4
4,469.6
223.4
5,158.1
1,220.5
2,233.9
382.7
575.6
486.2
259.2
1,414.2
283.7
1,033.3
89.2
685.4
5,240.0
54.9
8.0
17.3
479.9
4,524.0
239.6
5,186.7
1,229.9
2,214.4
379.3
569.2
522.1
271.9
1,445.4
279.1
1,068.3
82.0
680.0
5,232.3
55.5
8.0
17.5
496.8
4,675.6
251.9
5,212.4
1,205.0
2,199.1
402.6
578.7
548.1
278.9
1,515.8
263.9
1,093.1
86.3
701.1
5,328.2
53.2
8.0
17.6
502.2
4,693.9
281.4
5,296.0
1,242.0
2,183.3
411.2
602.9
549.4
307.1
1,477.3
279.0
1,154.5
87.3
699.4
5,379.0
64.1
8.0
17.8
515.7
4,905.9
272.1
5,390.0
1,193.9
2,200.1
441.1
634.0
603.9
316.9
1,552.8
269.5
1,155.7
93.5
736.3
5,426.2
67.1
8.0
18.0
528.1
5,110.8
266.3
5,572.7
1,246.3
2,222.7
456.2
678.5
629.5
339.6
1,664.4
277.9
1,170.5
88.6
774.6
5,502.1
65.1
10.2
18.2
535.6
5,356.1
274.5
5,639.1
1,200.7
2,246.9
485.8
702.6
655.7
347.3
1,793.1
280.9
1,197.5
91.6
817.0
5,534.0
RELATION OF LIABILITIES
TO FINANCIAL ASSETS
33 Total credit m a r k e t debt
34
33
36
3/
38
3y
40
41
42
43
44
4b
46
41
48
49
30
31
32
Other
liabilities
Official foreign e x c h a n g e
Special d r a w i n g rights certificates
Treasury currency
L i f e insurance reserves
Pension f u n d reserves
Interbank claims
Deposits at financial institutions
C h e c k a b l e deposits and currency
Small time and savings deposits
L a r g e time deposits
M o n e y market f u n d shares
Security repurchase a g r e e m e n t s
Foreign deposits
M u t u a l f u n d shares
Security credit
Trade payables
Taxes p a y a b l e
I n v e s t m e n t in bank personal trusts
Miscellaneous
5 3 T o t a l liabilities
30,751.0
32,727.2
35,201.2
37,236.8
35 632 8
35,999.5
36,669.1
Financial assets not included in liabilities ( + )
54 Gold and special d r a w i n g rights
3 3 C o r p o r a t e equities
36 H o u s e h o l d equity in n o n c o r p o r a t e business
22.3
4,863.6
2,519.4
19.6
5,462.9
2,451.7
20.1
6,278.5
2,448.6
21.1
6,293.4
2,548.9
20.4
6,142.6
2,498.8
20.8
5,965.8
2,531.2
21.0
6,228.7
2,559.7
21.1
6,293.4
2,548.9
22.7
6,835.8
2,564.6
22.9
7,393.0
2,584.2
22.1
8,013.8
2,597.6
Floats not included in assets ( - )
57 U.S. g o v e r n m e n t checkable deposits
38 O t h e r c h e c k a b l e deposits
SY T r a d e credit
3.8
40.4
-192.1
6.8
42.0
-178.3
5.6
40.7
-156.6
3.4
38.0
-122.3
.3
36.3
-190.8
.9
38.7
-203.6
1.2
30.6
-203.2
3.4
38.0
-122.3
4.2
33.3
-177.9
2.0
35.7
-193.2
.4
27.3
-203.9
Liabilities
not identified as assets
Treasury c u r r e n c y
Interbank claims
Security r e p u r c h a s e a g r e e m e n t s
Foreign deposits
Taxes payable
Miscellaneous
-4.7
-4.2
25.9
222.6
17.8
-700.7
-4.9
-9.3
27.5
217.6
25.3
-578.4
-5.1
-4.7
61.8
218.3
26.2
-594.6
-5.4
-6.5
91.1
258.3
24.2
-755.9
-5.2
-7.7
63.6
217.4
15.5
-546.2
-5.2
-7.4
84.5
231.4
21.3
-634.4
-5.3
-3.4
90.3
241.1
22.0
-666.2
-5.4
-6.5
91.1
258.3
24.2
-755.9
-5.4
-2.7
117.6
270.1
7.9
-821.1
-5.5
-2.9
100.5
290.6
21.3
-833.3
-5.6
.1
114.3
291.0
23.8
-882.7
38,747.5
41,113.2
44,356.8
46,575.2
44,711.4
44,991.1
45,971.5
46,575.2
47,972.7
49,528.8
51,037.3
60
61
62
63
64
63
( —)
66 T o t a l i d e n t i f i e d t o s e c t o r s a s a s s e t s
1. Data in this table also a p p e a r in the B o a r d ' s Z. 1 (780) quarterly statistical release, tables
L.6 and L.7. For ordering address, see inside f r o n t cover.
37,975.4
2. E x c l u d e s corporate equities and m u t u a l f u n d shares.
Selected Measures
2.10
NONFINANCIAL BUSINESS ACTIVITY
A45
Selected Measures
Monthly data seasonally adjusted, and indexes 1987=100, except as noted
1996
1995
Measure
1993
1994
1995
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
1 Industrial production1
111.5
118.1
121.9
121.3
121.4
121.5
122.7
122.8
122.2 r
122.4 r
122.6 r
121.9
Market
groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
110.0
112.7
109.5
117.5
101.8
113.8
115.6
118.3
113.7
125.3
107.3
122.0
118.3
121.3
115.0
131.4
109.0
127.4
117.5
120.6
114.1
130.8
108.2
127.2
117.9
121.1
114.8
131.2
108.2
126.8
118.0
121.2
114.6
131.6
108.5
126.8
119.2
122.4
115.9
132.9
109.4
128.1
119.4
122.6
116.0
133.1
109.5
128.1
118.3 r
121.3 r
114.9 r
131.5
109.2 r
128.1 r
118.6 r
121.7 r
115.5
131.3 r
109.4 r
128.3 r
119.0
121.9 r
115.3 r
132.4 r
110.0 r
128.2 r
118.2
121.2
113.6
133.4
109.1
127.6
112.3
119.7
123.9
123.2
123.3
123.3
124.2
124.9
124.4
124.5'
124.7 r
124.0
2
3
4
5
6
7
Industry
groupings
8 Manufacturing
2
r
80.6
83.3
82.9
82.8
82.6
82.3
82.6
82.8
82.T
82.0
10 Construction contracts 3
105.1
114.2
115.8
119.0
122.0
118.0
123.0
119.0
116.0
114.0
107.0
n.a.
11 Nonagricultural employment, total 4
12
Goods-producing, total
Manufacturing, total
13
14
Manufacturing, production workers
15
Service-producing
16 Personal income, total
Wages and salary disbursements
17
Manufacturing
18
19
Disposable personal income
20 Retail sales 5
108.4
94.3
94.8
95.3
112.9
141.3
136.0
119.3
142.4
134.7
111.3
95.6
95.1
97.4
116.3
148.3
142.6
125.0
149.2
145.1
114.4
98.2
96.9
98.3
119.5
157.4
150.5
129.3
n.a.
152.6
114.0
98.2
97.1
98.6
119.1
155.9
148.5
128.5
156.5
152.2
114.3
98.2
97.0
98.3
119.4
157.0
149.9
128.8
157.4
153.5
114.3
97.9
96.6
97.8
119.6
157.8
151.2
129.0
158.2
152.9
114.6
97.9
96.6
97.9
119.9
157.9
150.9
129.3
158.3
153.9
114.7
97.9
96.4
97.7
120.1
158.7
151.9
129.6
159.0
153.8
114.8
97.9
96.3
97.5
120.1
159.9
153.2
129.5
160.2
153.4
115.0
97.8
96.2
97.4
120.4
160.2
153.1
129.6
160.6
154.7 r
115.1
98.0
96.4
97.7
120.6
n.a.
n.a.
n.a.
n.a.
155.7 r
114.9
97.8
96.0
97.2
120.4
n.a.
n.a.
n.a.
n.a.
155.2
Prices6
21 Consumer ( 1 9 8 2 - 8 4 = 1 0 0 )
22 Producer finished goods ( 1 9 8 2 = 1 0 0 )
144.5
124.7
148.2
125.5
152.4
127.9
152.2
128.1
152.5
128.2
152.5
128.2
152.9
128.1
153.2
127.9
153.7
128.5
153.6
128.6
153.5
129.0
154.4
129.5
9 Capacity utilization, manufacturing ( p e r c e n t ) . .
1. Data in this table also appear in the B o a r d ' s G.17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal
Reserve
Bulletin, vol. 82 (January 1996), pp. 16—25. For a detailed description of the industrial
production index, 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 Company, F.W. Dodge
Division.
4. Based on data f r o m U.S. Department of Labor, Employment and Earnings. Series covers
employees only, excluding personnel in the armed forces.
2.11
81.8
81.0
5. Based on data f r o m U.S. Department of C o m m e r c e , Survey of Current
Business.
6. Based on data not seasonally adjusted. Seasonally adjusted data for changes in the price
indexes can be obtained from the U.S. Department of Labor, Bureau of Labor Statistics,
Monthly Labor
Review.
NOTE. Basic data (not indexes) for series mentioned in notes 4 and 5, and indexes for series
mentioned in notes 3 and 6, 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 " R e c e n t Developments in
Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June 1990), pp.
4 1 1 - 3 5 . See also "Industrial Production Capacity and Capacity Utilization since 1987,"
Federal Reserve Bulletin, vol. 79 (June 1993), pp. 5 9 0 - 6 0 5 .
LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
Thousands of persons; monthly data seasonally adjusted
1996
1995
Category
HOUSEHOLD SURVEY
1993
1995
1 Civilian labor force
Employment
Nonagricultural industries 3
Agriculture
Unemployment
4
Number
5
Rate (percent of civilian labor force)
2
3
ESTABLISHMENT SURVEY
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
128,040
131,056
132,304
131,869
132,519
132,211
132,591
132,648
132,442
132,284
132,837
116,232
3,074
119,651
3,409
121,460
3,440
121,034
3,451
121,550
3,409
121,417
3,362
121,867
3,273
121,944
3,455
121,734
3,276
121,598
3,306
121,615
3,548
8,734
6.8
7,996
6.1
7,404
5.6
7,384
5.6
7,559
5.7
7,431
5.6
7,451
5.6
7,249
5.5
7,432
5.6
7,380
5.6
7,674
5.8
110,525
113,423
116,597
116,547
116,575
116,838
116,932
117,000
117,212
117,373
117,172
18,003
611
4,642
5,787
25,675
6,712
30,278
18,817
18,064
604
4,916
5,842
26,362
6,789
31,805
19,041
18,406
579
5,244
6,194
27,156
6,948
32,788
19,282
18,428
582
5,230
6,192
27,118
6,930
32,784
19,283
18,353
577
5,226
6,195
27,184
6,938
32,820
19,282
18,357
575
5,233
6,217
27,177
6,947
32,986
19,346
18,322
573
5,262
6,206
27,245
6,957
33,047
19,320
18,301
571
5,287
6,217
27,256
6,977
33,076
19,315
18,272
567
5,295
6,240
27,362
6,991
33,185
19,300
18,316
566
5,302
6,251
27,362
7,001
33,250
19,325
18,244
565
5,315
6,242
27,317
7,009
33,167
19,313
DATA
6 Nonagricultural payroll employment4
1. Beginning January 1994, reflects redesign of current population survey and population
controls f r o m the 1990 census.
2. Persons sixteen years of age and older, including Resident Armed Forces. 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.
3. Includes self-employed, unpaid family, and domestic service workers.
June
DATA1
2
7
8
9
10
11
12
13
14
1994
4. 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 1992 benchmark, and only seasonally adjusted data are available at this
time.
SOURCE. Based on data f r o m U.S. Department of Labor, Employment and Earnings.
A46
2.12
Domestic Nonfinancial Statistics • April 1996
OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION 1
Seasonally adjusted
1995
Ql
Q2
1995
Q4 r
Q3
Output ( 1 9 8 7 = 1 0 0 )
Ql
Q2
1995
Q3
Q4
Capacity (percent of 1987 output)
Ql
Q2
Q3
Q4 r
Capacity utilization rate (percent) 2
1 Total i n d u s t r y
121.8
121.4
122.3
122.4
143.7
145.0
146.4
147.8
84.8
83.7
83.6
2 Manufacturing
124.0
123.3
124.1
124.5
147.2
148.7
150.3
152.0
84.3
82.9
82.6
82.0
Primary processing 3
Advanced processing 4
119.1
126.3
117.7
126.0
117.1
127.5
117.1
128.1
133.4
153.8
134.4
155.6
135.4
157.5
136.4
159.5
89.3
82.2
87.6
81.0
86.5
80.9
85.8
80.3
5
6
/
8
y
10
u
12
13
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Industrial machinery and equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment
132.0
105.3
121.2
125.4
115.6
171.9
167.9
147.7
131.4
102.9
119.1
121.9
115.1
174.4
171.2
140.5
133.0
104.6
118.2
121.3
113.9
178.9
178.4
140.7
134.2
105.9
118.7
121.5
114.8
186.4
182.9
140.5
156.8
117.4
126.9
130.9
121.5
194.8
191.6
172.1
158.9
118.0
127.5
131.7
121.9
199.6
197.6
174.2
161.1
118.6
128.0
132.5
122.2
204.5
203.9
176.4
163.4
119.2
128.6
133.2
122.5
209.7
210.4
178.7
84.2
89.7
95.6
95.8
95.2
88.2
87.7
85.8
82.7
87.2
93.4
92.6
94.5
87.4
86.7
80.6
82.5
88.2
92.3
91.6
93.2
87.5
87.5
79.8
82.1
88.8
92.3
91.2
93.7
88.9
86.9
78.6
89.6
88.7
86.9
79.3
132.2
132.2
132.1
132.1
67.8
67.1
65.8
60.0
14
15
16
17
18
19
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
115.2
116.4
121.0
125.3
127.5
108.3
114.4
113.7
121.2
124.0
122.9
108.0
114.3
110.9
119.5
124.6
118.3
109.2
113.9
109.6
117.9
125.9
137.5
130.1
131.5
154.7
133.8
116.2
138.4
131.1
132.5
155.6
135.4
116.4
139.4
132.1
133.4
156.6
116.6
84.3
90.2
92.7
81.5
96.5
93.3
83.2
87.5
92.1
80.1
91.9
92.9
82.6
84.6
90.2
80.1
87.3
93.8
81.7
83.0
88.4
80.4
107.7
136.6
129.1
130.6
153.7
132.1
116.0
92.4
100.6
118.4
118.9
100.7
120.7
120.4
100.2
124.7
125.0
98.1
123.0
123.7
112.0
134.4
131.7
112.0
134.8
132.1
112.0
135.2
132.5
112.1
135.6
133.0
89.8
88.0
90.3
89.9
89.5
91.1
89.4
92.3
94.3
87.5
90.7
93.0
1973
1975
Previous cycle 5
High
Low
High
3
4
20 Mining
21 Utilities
22
Electric
Low
Latest cycle 6
High
Low
1995
Jan.
1995
Aug.
82.8
1996
Sept.
Oct. r
Nov. r
Dec.
Jan. p
81.9
Capacity utilization rate (percent)"
1 Total i n d u s t r y
89.2
72.6
87.3
71.8
84.9
78.0
85.1
83.8
83.6
82.9
82.8
82.7
2 Manufacturing
88.9
70.8
87.3
70.0
85.2
76.6
84.6
82.6
82.8
82.1
82.0
81.8
81.0
92.2
87.5
68.9
72.0
89.7
86.3
66.8
71.4
89.0
83.5
77.9
76.1
89.7
82.5
86.1
81.2
86.8
81.1
86.0
80.5
85.9
80.3
85.6
80.1
85.0
79.3
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Industrial machinery and
equipment
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment
88.8
90.1
100.6
105.8
92.9
68.5
62.2
66.2
66.6
61.3
86.9
87.6
102.4
110.4
90.5
65.0
60.9
46.8
38.3
62.2
84.0
93.3
92.8
95.7
88.7
73.7
76.1
74.2
72.0
75.2
84.4
91.4
96.0
96.1
95.7
82.6
87.5
90.1
88.9
91.6
83.0
89.4
94.4
95.7
92.6
82.0
88.8
90.1
86.5
94.6
82.2
88.6
94.1
95.0
93.0
82.1
89.1
92.6
92.0
93.4
81.4
87.4
94.3
95.7
92.5
96.4
87.8
93.4
74.5
63.8
51.1
92.1
89.4
93.0
64.9
71.1
44.5
84.0
84.9
85.1
71.8
77.0
56.6
88.7
87.9
85.9
87.8
87.7
80.6
87.9
87.8
80.9
88.4
87.6
78.5
88.8
87.2
78.7
89.5
86.0
78.7
89.2
84.4
75.3
77.0
66.6
81.1
66.9
88.4
78.8
67.7
66.0
65.0
60.6
58.8
60.6
62.4
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.y
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
86.7
92.1
94.8
85.9
97.0
88.5
80.3
78.8
86.7
79.0
74.8
84.6
84.9
91.0
92.9
82.3
100.6
92.9
82.6
85.7
89.6
80.0
85.4
93.2
82.4
84.1
89.2
80.4
88.7
94.5
82.2
84.3
90.0
81.1
89.4
91.8
81.6
82.7
87.1
80.3
90.3
92.2
81.3
81.8
88.0
79.9
80.5
79.7
87.0
79.3
93.3
94.2
94.4
95.6
99.0
88.4
82.5
82.7
96.6
88.3
88.3
80.6
76.2
78.7
86.5
92.6
94.8
86.1
83.1
86.7
89.8
87.3
89.7
89.2
95.3
98.1
89.2
90.7
92.5
87.6
89.8
93.1
87.5
90.9
93.0
87.4
91.4
93.0
87.2
90.6
92.0
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Primary processing 3
Advanced processing 4
20 Mining
21 Utilities
Electric
22
1. Data in this table also appear in the B o a r d ' s G.17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal
Reserve
Bulletin, vol. 82 (January 1996), pp. 16—25. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision,"
Federal Resen-e Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Capacity utilization is calculated as the ratio of the Federal Reserve's seasonally adjusted
index of industrial production to the corresponding index of capacity.
3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic
materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass;
primary metals; and fabricated metals.
4. Advanced processing includes foods; tobacco; apparel; furniture and fixtures; printing
and publishing; chemical products such as drugs and toiletries; agricultural chemicals; leather
and products; machinery; transportation equipment; instruments; and miscellaneous manufactures.
5. Monthly highs, 1978-80; monthly lows, 1982.
6. Monthly highs, 1988-89; monthly lows, 1990-91.
Selected Measures
2.13
INDUSTRIAL PRODUCTION
A47
Indexes and Gross Value1
Monthly data seasonally adjusted
Group
1992
proportion
1996
1995
1995
avg. r
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct/
Nov.1"
Dec.
Jan. p
Index (1987 = 100)
MAJOR
MARKETS
1 Total i n d e x
2 Products
Final products
3
Consumer goods, total
4
Durable consumer goods
5
Automotive products
6
Autos and trucks
7
Autos, consumer
8
Trucks, consumer
y
Auto parts and allied goods
10
Other
N
Appliances, televisions, and air
12
conditioners
Carpeting and furniture
13
Miscellaneous h o m e goods
14
Nondurable consumer goods
15
Foods and tobacco
16
Clothing
17
Chemical products
18
Paper products
19
Energy
20
Fuels
21
Residential utilities
22
100.0
121.9
121.8
60.6
46.3
28.6
5.6
2.5
1.6
.9
.7
.9
3.0
118.3
121.3
115.0
124.2
130.7
131.4
103.1
181.7
127.8
118.6
118.4
121.3
115.5
127.1
134.4
136.6
111.4
180.6
128.4
120.8
121.7
118.3
121.1
114.9
127.3
135.3
138.2
111.5
185.2
127.9
120.4
118.5
121.5
115.3
126.0
134.4
137.5
111.2
183.6
126.7
118.6
117.7
120.9
114.4
124.9
131.7
132.8
105.5
180.9
128.0
119.0
117.5
120.6
114.1
121.6
127.1
127.4
99.4
177.1
125.0
116.7
.7
.8
1.5
23.0
10.3
2.4
4.5
2.9
2.9
.9
2.1
135.6
105.8
118.3
112.8
111.3
95.0
131.1
106.6
115.8
108.8
118.7
137.9
106.4
121.3
112.7
111.5
99.6
131.3
106.0
110.9
107.6
112.2
135.0
108.3
120.7
111.9
110.1
98.3
129.2
106.6
113.1
108.7
114.8
132.2
106.1
119.7
112.7
111.5
98.7
129.7
105.9
113.9
110.4
115.2
131.6
109.1
118.8
111.8
111.2
96.9
126.9
106.9
112.2
108.8
113.5
121.9
121.4
121.5
122.7
122.8
122.2
122.4
122.6
121.9
117.9
121.1
114.8
122.3
129.1
129.5
99.2
183.6
126.8
116.3
118.0
121.2
114.6
121.4
125.3
123.9
101.0
163.9
126.6
118.1
119.2
122.4
115.9
124.0
130.7
132.0
100.6
188.2
126.6
118.1
119.4
122.6
116.0
125.8
132.9
133.1
102.6
187.7
130.8
119.6
118.3
121.3
114.9
123.4
128.5
128.6
100.2
179.1
126.7
118.9
118.6
121.7
115.5
124.9
130.5
129.8
100.2
182.8
130.2
120.0
119.0
121.9
115.3
126.4
132.9
132.1
99.5
190.6
133.0
120.7
118.2
121.2
113.6
121.4
126.6
123.4
92.0
179.9
131.4
116.8
131.2
103.0
118.1
112.4
111.5
96.7
127.3
106.5
115.8
108.2
119.0
131.4
101.8
118.0
113.1
113.1
94.6
128.6
106.3
115.8
108.8
118.7
132.2
107.9
117.4
113.0
112.8
93.6
128.6
107.6
116.1
108.2
119.4
135.8
104.4
118.0
113.9
111.8
93.9
132.6
106.7
122.3
108.4
128.2
139.4
106.9
117.8
113.7
111.6
93.4
134.0
107.3
119.0
111.4
122.2
140.1
105.6
116.9
112.9
111.1
92.9
135.7
106.6
113.1
107.3
115.4
145.3
104.3
117.6
113.3
111.3
91.9
134.3
108.4
116.8
108.2
120.3
142.7
107.0
118.6
112.6
110.5
90.9
134.1
106.1
117.6
108.7
121.4
131.4
104.9
117.0
111.8
109.7
88.4
133.4
105.9
117.7
109.3
121.2
121.3
121.4
23
24
25
26
27
28
29
30
31
32
33
Equipment
Business equipment
Information processing and related
Computer and office equipment
Industrial
Transit
Autos and trucks
Other
Defense and space equipment
Oil and gas well drilling
Manufactured homes
17.7
13.7
5.7
1.4
4.0
2.6
1.2
1.4
3.3
.6
.2
131.4
155.7
198.1
373.4
127.4
136.3
140.1
123.3
65.9
87.1
152.7
130.4
153.2
187.3
324.2
126.5
143.8
145.6
127.2
68.9
87.7
153.1
131.0
154.3
188.7
334.9
127.2
145.9
147.7
127.2
68.2
88.8
144.6
131.4
155.1
191.6
343.6
126.9
145.7
146.2
126.3
67.8
87.2
145.8
131.3
155.0
194.5
356.4
126.1
142.9
141.5
123.2
67.1
89.3
146.6
130.8
154.3
193.9
362.1
126.5
139.6
137.8
122.7
66.8
90.5
148.3
131.2
155.1
196.0
363.2
126.2
140.3
139.5
122.6
66.8
86.8
149.6
131.6
155.7
197.2
371.7
127.1
139.8
139.9
122.6
66.5
88.4
148.6
132.9
157.5
201.0
379.6
129.1
138.0
141.3
122.2
66.1
89.5
155.9
133.1
158.2
203.0
390.0
128.7
137.9
143.3
123.3
65.2
88.3
158.0
131.5
156.5
206.5
402.9
128.6
122.3
135.7
120.9
64.4
83.5
158.9
131.3
156.8
207.7
417.4
129.1
119.7
134.2
121.9
62.8
83.1
161.8
132.4
158.5
210.0
430.8
129.1
124.3
135.3
122.1
62.1
83.8
164.4
133.4
160.0
212.9
441.8
128.7
128.2
128.5
121.6
61.6
85.1
34
35
36
Intermediate products, total
Construction supplies
Business supplies
14.3
5.3
9.0
109.0
108.2
109.6
109.5
109.7
109.5
109.5
109.5
109.6
109.2
109.2
109.3
108.2
108.0
108.5
108.2
106.6
109.4
108.2
107.2
109.1
108.5
107.3
109.5
109.4
107.0
111.0
109.5
108.4
110.3
109.2
108.3
109.9
109.4
109.2
109.7
110.0
110.6
109.8
109.1
109.1
109.2
37 Materials
Durable goods materials
38
Durable consumer parts
39
Equipment parts
40
Other
41
Basic metal materials
42
Nondurable goods materials
43
Textile materials
44
Paper materials
45
Chemical materials
46
Other
47
Energy materials
48
Primary energy
49
Converted fuel materials
50
39.4
20.8
4.0
7.5
9.2
3.1
8.9
1.1
1.8
3.9
9.7
6.3
3.3
127.4
141.5
138.5
163.1
126.1
125.6
119.7
109.2
120.4
124.4
116.5
106.5
101.8
116.0
127.1
140.0
142.9
154.0
127.7
126.7
122.2
115.1
120.9
126.4
119.5
106.2
102.0
114.3
127.1
140.2
142.6
155.4
127.0
126.4
121.5
113.5
121.6
125.7
117.8
106.4
102.3
114.5
127.2
140.3
140.4
157.3
127.0
126.7
121.5
113.6
122.5
125.6
117.4
106.4
102.1
114.9
127.0
139.8
137.9
158.9
125.9
126.1
121.7
113.2
122.3
125.6
118.4
106.6
102.2
115.5
127.2
139.8
135.9
160.3
125.6
125.5
122.2
112.8
125.6
126.2
116.9
107.2
102.3
116.9
126.8
139.7
135.8
161.7
124.5
123.5
120.4
109.0
121.0
125.2
117.4
107.2
103.0
115.5
126.8
140.2
133.9
164.4
124.4
124.9
118.9
102.6
123.9
124.4
113.8
107.5
102.3
118.1
128.1
142.3
138.4
167.1
124.9
123.1
118.8
109.2
120.4
123.1
114.6
108.5
101.4
122.8
128.1
144.1
139.8
169.1
126.8
127.0
117.8
106.2
117.0
123.3
115.1
105.8
101.2
115.0
128.1
143.9
138.6
169.4
126.5
124.3
118.7
107.3
121.4
122.9
114.6
105.5
101.7
113.1
128.3
145.2
140.0
170.9
127.6
128.4
116.7
104.8
114.3
122.7
114.1
105.4
100.4
115.3
128.2
144.7
139.5
171.5
126.5
126.3
117.1
103.0
115.0
121.9
118.0
105.7
100.3
116.5
127.6
144.3
136.9
171.3
126.9
128.5
116.0
100.9
113.3
121.4
116.7
105.0
99.8
115.5
97.2
95.2
121.5
120.8
121.3
120.5
121.1
120.4
121.3
120.6
120.9
120.3
121.0
120.5
121.1
120.5
121.2
120.7
122.3
121.7
122.4
121.8
121.9
121.3
122.1
121.5
122.3
121.7
121.8
121.2
98.2
27.0
25.7
118.1
113.9
114.9
118.6
114.1
116.0
118.4
113.4
115.1
118.5
113.8
115.4
117.9
113.1
114.6
117.8
113.3
113.9
117.8
113.9
114.7
117.8
114.0
114.5
118.9
114.8
115.1
118.9
114.9
115.7
118.1
114.0
115.1
118.2
114.6
115.4
118.3
114.2
115.0
117.4
113.0
113.2
12.5
157.0
153.7
154.7
155.8
156.2
155.8
156.5
157.2
158.9
159.5
158.4
158.9
160.6
163.0
12.2
29.7
133.0
134.8
134.3
134.6
134.6
134.5
134.8
134.6
133.7
134.3
132.5
134.4
133.2
133.8
133.2
133.7
134.4
135.1
134.3
136.1
131.6
136.2
130.7
136.4
131.4
136.3
132.2
135.6
SPECIAL
2.1
AGGREGATES
51 Total excluding autos and trucks
52 Total excluding motor vehicles and parts
53 Total excluding computer and office
equipment
54 Consumer goods excluding autos and trucks .
55 Consumer goods excluding energy
56 Business equipment excluding autos and
trucks
57 Business equipment excluding computer and
office equipment
58 Materials excluding energy
A48
2.13
Domestic Nonfinancial Statistics • April 1996
INDUSTRIAL PRODUCTION
Group
Indexes and Gross Value 1 —Continued
1992
proportion
SIC
code
1995
avg. r
Apr.
May
June
July
Aug.
Sept.
Oct. r
Nov/
Dec
Index (1987 = 100)
MAJOR
INDUSTRIES
59
Total index
60
Manufacturing
Primary processing
Advanced processing
61
62
79
80
Durable goods
Lumber and products
Furniture and fixtures
Stone, clay, and glass
products
Primary metals
Iron and steel
Raw steel
Nonferrous
Fabricated metal p r o d u c t s . . .
Industrial machinery and
equipment
Computer and office
equipment
Electrical machinery
Transportation equipment.. .
Motor vehicles arid parts .
Autos and light trucks .
Aerospace and
miscellaneous
transportation
equipment
Instruments
Miscellaneous
81
82
83
84
85
86
87
88
89
90
91
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
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
92 Mining
Metal
93
94
Coal
95
Oil and gas extraction
Stone and earth minerals
96
97 Utilities
98
Electric
99
Gas
100.0
121.9
121.8
121.7
121.9
121.4
121.3
121.4
121.5
122.7
122.8
122.2
122.4
122.6
121.9
85.4
123.9
124.1
123.9
124.0
123.2
119.4
126.4
119.1
126.2
117.9
123.3
116.9
124.2
116.6
124.4
117.6
126.8
123.3
117.1
124.9
26.6
58.9
125.7
126.3
126.3
127.8
117.8
128.2
117.0
127.9
124.5
117.2
128.0
124.7
117.1
126.5
123.5
118.2
126.0
124.0
116.4
127.6
45.0
2.0
1.4
132.5
104.5
132.2
131.6
131.1
111.6
131.8
107.1
113.8
132.1
25
105.0
114.9
103.9
113.4
103.9
111.4
101.7
110.8
32
2.1
104.0
3.1
1.7
119.2
122.4
105.5
121.5
125.5
104.7
33
331,2
103.4
120.2
" 2 4
331PT
104.7
120.8
124.9
116.4
118.9
121.3
125.8
123.5
131.5
103.0
131.5
103.7
133.2
103.7
134.4
106.2
133.5
105.7
105.6
134.8
106.4
111.3
111.1
110.9
112.0
110.9
110.3
109.3
104.1
103.8
119.5
123.0
117.5
119.2
103.2
134.3
128.3
118.3
103.0
115.4
103.8
121.0
104.5
115.7
119.3
111.5
117.7
114.2
127.0
115.1
116.5
112.4
111.9
118.6
113.2
111.3
115.8
114.0
114.3
115.1
114.0
114.5
134.2
104.5
108.0
104.6
104.0
103.4
121.1
126.5
116.4
119.3
122.8
128.0
121.6
333-6,9
34
.1
1.4
114.7
114.7
114.9
116.2
115.3
116.8
115.4
114.7
115.7
113.0
114.8
112.9
114.9
5.0
113.9
114.3
115.0
114.3
112.3
113.7
113.7
35
8.0
177.7
171.4
171.8
172.4
174.3
174.6
174.4
176.0
179.5
181.3
183.8
186.2
189.3
190.2
357
36
37
1.8
371PT
7.2
9.5
4.8
2.5
373.4
174.9
113.4
141.9
131.3
324.2
166.7
117.8
147.3
137.1
334.9
167.7
118.5
148.4
138.6
343.6
169.4
118.0
147.6
137.9
356.4
169.6
115.7
143.0
132.9
362.1
171.1
113.2
138.8
127.3
363.2
173.0
113.4
139.7
129.2
371.7
175.7
111.6
136.7
124.3
379.6
178.7
114.1
142.1
131.6
390.0
180.8
114.1
143.3
132.8
402.9
182.4
109.3
139.7
128.4
417.4
183.6
108.6
140.7
129.6
430.8
182.8
110.0
141.2
131.5
441.8
181.3
108.4
135.5
122.7
372-6,9
38
39
4.7
5.4
1.3
85.9
110.7
122.7
89.5
110.8
123.5
89.7
110.5
124.1
89.5
110.9
123.3
89.4
111.2
122.7
88.5
109.6
122.3
88.1
110.9
123.1
87.6
110.2
121.4
87.2
111.4
122.4
85.9
111.3
122.9
80.0
111.4
122.2
77.7
111.2
123.3
80.0
110.8
123.6
82.4
110.7
123.0
20
21
22
23
26
27
28
29
30
31
40.5
9.4
1.6
1.8
2.2
3.6
6.8
9.9
1.4
3.5
.3
114.3
115.3
90.0
112.6
95.8
119.8
99.4
124.9
108.3
139.4
81.3
115.6
115.9
88.6
117.2
100.6
121.0
100.1
126.2
107.7
141.8
85.4
114.8
114.2
88.1
115.9
99.8
121.0
100.3
124.7
108.0
141.9
85.1
115.1
115.0
92.3
116.2
99.3
99.3
125.0
109.1
141.1
85.8
114.6
115.1
92.0
117.2
97.4
121.2
99.2
123.5
107.8
140.8
82.7
114.4
115.9
89.3
113.6
97.5
122.4
99.0
124.0
107.4
138.2
83.0
114.3
116.1
96.4
110.4
95.5
119.9
98.6
124.4
108.6
137.8
81.2
114.3
115.3
99.1
109.9
94.8
121.3
99.0
124.0
109.0
137.7
78.7
114.3
115.5
91.3
112.4
94.5
118.6
100.5
124.4
108.5
138.7
80.8
114.4
115.5
90.2
110.5
94.5
118.5
99.8
125.3
110.0
139.8
80.5
114.3
115.4
88.2
111.1
93.3
119.7
98.9
126.7
106.9
139.7
79.7
113.8
115.2
89.2
109.3
92.5
116.3
99.4
125.7
107.5
140.1
78.3
113.5
114.9
86.2
108.3
92.5
117.7
98.9
125.4
108.8
139.2
77.0
112.6
114.7
83.7
105.7
90.3
116.6
98.2
124.7
109.9
138.3
75.6
6.9
.5
1.0
4.8
.6
99.9
169.4
112.9
91.8
112.3
100.6
164.2
116.0
92.4
113.1
100.8
165.5
115.1
93.0
111.3
100.3
164.5
114.0
92.2
114.2
100.6
164.6
112.3
93.1
112.7
100.5
164.3
110.8
93.4
111.1
101.0
166.8
112.2
93.6
111.9
100.7
172.2
117.0
91.9
113.5
100.0
10
12
13
14
109.7
92.4
111.6
100.0
170.8
116.2
91.2
113.1
98.2
178.3
112.3
89.2
112.4
98.1
175.7
109.5
89.7
111.7
98.0
174.1
108.5
89.8
112.2
97.7
173.7
103.6
90.5
111.4
491,493PT
492.493PT
7.7
6.1
1.6
121.7
122.1
120.0
117.3
118.0
114.3
118.5
119.1
116.4
119.2
119.5
118.0
118.8
118.9
118.4
122.1
121.2
125.5
121.0
121.2
120.6
122.7
122.2
124.5
128.8
130.0
124.3
122.7
122.7
122.4
121.6
123.7
113.6
123.3
123.6
121.9
124.1
123.8
125.3
123.0
122.5
125.0
371
121.1
172.1
118.0
114.5
115.1
11X5
113.8
SPECIAL A G G R E G A T E S
100 Manufacturing excluding motor
vehicles and parts
101 Manufacturing excluding office
and computing machines . . .
80.6
122.8
122.8
122.4
122.6
122.3
122.2
122.3
122.5
123.1
123.8
123.4
123.6
123.7
123.3
83.7
119.5
120.4
120.0
120.1
119.3
118.9
119.1
118.9
119.8
120.3
119.6
119.6
119.6
118.7
Gross value (billions of 1992 dollars, annual rates)
MAJOR MARKETS
102 Products, total
2,002.9
2,244.7
2,247.3
2,246.9
2,252.0
2,236.5
2,231.5
2,239.1
2,238.8
2,257.8
2,268.1
2,240.3
2,251.7
2,261.0
2,244.6
103 Final
104
Consumer goods
105
Equipment
106 Intermediate
1,552.2
1,033.4
518.8
450.7
1,747.9
1,129.6
618.2
496.8
1,748.3
1,134.6
613.8
499.0
1,748.6
1,131.1
617.5
498.3
1,755.0
1,135.5
619.5
497.0
1,743.1
1,125.2
617.9
493.4
1,737.4
1,122.3
615.1
494.0
1,745.6
1,128.4
617.1
493.5
1,743.2
1,124.0
619.2
495.6
1,760.5
1,135.7
624.8
497.3
1,768.2
1,141.1
627.1
499.9
1,741.9
1,125.1
616.7
498.4
1,752.3
1,135.1
617.2
499.4
1,758.0
1,134.9
623.1
503.0
1,745.6
1,118.6
627.1
498.9
1. Data in this table also appear in the B o a r d ' s G. 17 (419) monthly statistical release. For
the ordering address, see the inside front cover. The latest historical revision of the industrial
production index and the capacity utilization rates was released in November 1995. See "A
Revision to Industrial Production and Capacity Utilization, 1991-95," Federal
Reserve
Bulletin, vol. 82 (January 1996), pp. 16-25. For a detailed description of the industrial
production index, 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
1995
Item
1993
1994
1995
Mar.
Apr.
May
June
Aug.
July
Sept.
Oct. r
Nov.
Dec.
1,384
1,051
333
1,351
1,109
242
785
562
223
1,312
1,032
280
354
1,448 r
l,069 r
379 r
l,458 r
1,129 r
329 r
795
566
229
1,337
1,043
294
355
1,478
1,110
368
1,385
1,116
269
Private residential real estate activity (thousands of units except as noted)
NEW
UNITS
1 Permits authorized
One-family
?
3
Two-family or more
4 Started
5
One-family
Two-family or m o r e
6
7 Under construction at end of period'
One-family
8
Two-family or more
9
10 Completed
One-family
11
Two-family or more
12
13 Mobile homes shipped
Merchant builder activity in
one-family
units
14 Number sold
15 Number for sale at end of period'
Price of units sold
of dollars)2
16 Median
17 Average
1,199
987
213
1,288
1,126
162
680
543
137
1,193
1,040
153
254
1,372
1,068
303
1,457
1,198
259
762
558
204
1,347
1,160
187
304
666
293
670
338
126.1
147.6
1,331
997
335
1,351
1,073
277
1,235
911
324
1,241 r
992 r
249 r
769
552
217
1,443
1,222
221
326 r
1,243
905
338
l,278 r
1,017 r
261 r
763
544
219
1,334
1,089
245
327 r
1,243
930
313
1,300 r
l,005 r
295 r
755
536
219
1,342
1,072
270
335 r
1,275
958
317
1,30 l r
l,036 r
265 r
756
534
222
1,256
1,053
203
333 r
1,355
1,011
344
1,450 r
1,125 r
325
761
538
223
1,345
1,037
308
337 r
1,368
1,044
324
l,401 r
l,135 r
266
773
548
225
1,246
1,012
234
344 r
1,405
1.073
332
1,401 r
1,130 r
271
781
553
228
1,254
998
256
352 r
n.a.
n.a.
612
347
607
348
667
347
723
347
781
344
703
349
682
352
663
362
649
375
n.a.
n.a.
130.4
153.7
n.a.
n.a.
130.0
153.3
134.0
157.8
133.9
158.0
133.7
160.2
131.0
154.2
134.9
162.0
130.0
156.0
137.0
155.3
132.4
155.5
n.a.
n.a.
3,800
3,946
3,812
3,620
3,390
3,550
3,800
3,990
4,120
4,150
4,110
4,040
3,910
106.5
133.1
109.6
136.4
112.2
138.4
107.9
134.5
108.1
134.2
109.0
135.4
116.2
143.3
115.9
142.2
117.6
144.4
115.2
140.5
113.3
138.7
114.3
139.7
113.8
138.6
1
n.a.
1
1
i
340
F
1
n.a.
1
1
f
352
(thousands
EXISTING UNITS ( o n e - f a m i l y )
18 Number sold
Price of units sold
of dollars)2
19 Median
20 Average
(thousands
Value of new construction (millions of dollars) 3
CONSTRUCTION
21 Total p u t in p l a c e
464,504
506,904
527,169
523,467
522,094
518,934
528,673 r
528,397 r
535,106 r
r
537,589
532,856
537,452
22 Private
Residential
23
Nonresidential
24
Industrial buildings
25
Commercial buildings
26
Other buildings
27
Public utilities and other
28
339,161
210,455
128,706
19,533
42,627
23,626
42,920
376,566
238,884
137,682
21,121
48,552
23,912
44,097
384,366
236,175
148,191
24,138
55,261
23,993
44,799
383,301
237,894
145,407
23,911
55,439
23,062
42,995
382,220
234,109
148,111
24,707
55,011
23,948
44,445
376,148
231,342
144,806
24,760
51,779
24,319
43,948
377,486
228,388
149,098
24,416
55,420
23,447
45,815
384,307
231,002 r
153,305 r
24,399 r
57,015 r
24,525 r
47,366 r
385,653'
233,982'
151,671'
24,202'
55,709
24,015'
47,745'
386,960'
237.618'
149,342'
24,096'
55,079'
23,962'
46,205'
390,111
238,302
151,809
24,940
56,576
24,557
45,736
387,824
239,459
148,365
24,579
55,842
23,760
44,184
392,31 1
241,163
151,148
24,050
58,888
24,063
44,147
29 Public
Military
30
Highway
31
Conservation and development
32
Other
33
125,342
2,454
37,431
5,978
79,479
130,337
2,319
39,882
6,228
81,908
142,806
2,938
42,258
6,425
91,185
140,166
3,048
40,667
7,139
89,312
139,874
2,736
41,158
6,273
89,707
138,367
2,442
38,657
5,531
91,737
141,447
2,569
40,875
6,117
91,886
144,366'
3,124 r
44,274'
6,603'
90,365'
142,744'
3,010'
42,902'
6,769'
90,063'
148,146'
3,090'
42,942'
6,469'
95,645'
147,478
3,164
44,416
6,483
93,415
145,032
3,169
43,319
6,189
92,355
145,141
3,194
44,286
6,028
91,633
1. Not at annual rates.
2. Not seasonally adjusted.
3. Recent data on value of new construction may not be strictly comparable with data for
previous periods because of changes by the Bureau of the Census in its estimating techniques.
For a description of these changes, see Construction
Reports (C—30-76-5), issued by the
Census Bureau in July 1976.
514,515
SOURCE. Bureau of the Census estimates for all series except (1) mobile homes, which are
private, domestic shipments as reported by the Manufactured Housing Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices of existing units, which are
published by the National Association of Realtors. All back and current figures are available
from the originating agency. Permit authorizations are those reported to the Census Bureau
from 19,000 jurisdictions beginning in 1994.
A50
2.15
Domestic Nonfinancial Statistics • April 1996
CONSUMER A N D PRODUCER PRICES
Percentage changes based on seasonally adjusted data except as noted
Change f r o m 12
months earlier
Change from 3 months earlier
(annual rate)
Item
1995 r
1995
Jan.
CONSUMER
Change from 1 month earlier
1995 r
1996
1996
Jan.
Mar.
June
Sept.
Dec.
Sept.
Oct.
Nov.
Dec.
Jan.
Index
level,
Jan.
1996 1
PRICES2
(1982-84=100)
1 All items
2.8
2.7
3.2
3.5
1.6
2.4
.1
.3
.1
.2
.4
154.4
2 Food
3 Energy items
4 All items less food and energy
5
Commodities
Services
6
2.6
2.9
2.9
1.7
3.5
2.4
.8
3.0
1.9
3.4
.3
-1.5
4.1
2.6
4.8
3.6
5.8
3.0
.9
4.3
2.7
-10.5
2.8
2.0
3.0
1.9
1.9
2.2
1.7
2.5
.3
-1.3
.2
.1
.3
.3
.3
.3
.2
.3
.0
-.9
.1
.1
.2
.1
1.1
.1
.1
.1
.1
1.9
.3
.4
.3
151.0
105.0
163.4
140.3
176.6
7 Finished goods
8
Consumer foods
9
Consumer energy
10
Other consumer goods
11
Capital equipment
1.7
.7
4.1
1.4
2.0
2.3
2.3
2.5
2.3
1.8
1.6
-2.5
3.6
2.6
2.7
1.3
-2.5
1.5
2.9
1.8
1.6
8.8
-10.2
2.3
1.8
4.1
4.4
10.3
3.1
2.7
.3
1.2
-.5
.3
.1
.0
-.2
-.8
.2
.1
.4
1.1
-.4
.3
.4
.6
.2
3.7
.2
.1
.3
-.2
2.7
-.1
-.1
129.5
130.9
78.5
143.8
138.3
Intermediate
materials
12 Excluding foods and feeds
13 Excluding energy
5.9
6.3
1.9
1.6
9.5
10.5
3.9
4.2
-.6
1.5
-.9
-3.2
-.2
.0
-.2
-.2
-.1
-.2
.1
-.4
.1
-.3
125.3
134.7
-8.9
-4.3
17.7
12.1
7.4
-7.1
-4.6
-4.5
20.5
4.0
14.6
3.9
34.8
-21.0
-17.6
20.4
15.7
-19.6
3.5
2.7
-1.7
2.1
-.7
-2.3
2.9
2.1
-2.1
-.3
2.3
-1.0
-.4
7.3
.0
114.6
75.0
161.7
PRODUCER
PRICES
(1982=100)
Crude
materials
14 Foods
15 Energy
16 Other
1. Not seasonally adjusted.
2. Figures for consumer prices are for all urban consumers and reflect a rental-equivalence
measure of homeownership.
SOURCE. U.S. Department of Labor, Bureau of Labor Statistics.
Selected Measures
2.16
A51
GROSS DOMESTIC PRODUCT A N D INCOME
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1995
1994
1993
Account
GROSS DOMESTIC
1994
1995
Q4
Ql
Q2
Q3 r
Q4
PRODUCT
6,550.2
6,931.4
7,247.7
7,080.0
7,147.8
7,196.5
7,298.5
7,348.1
4,454.1
530.7
1,368.9
2,554.6
4,698.7
580.9
1,429.7
2,688.1
4,923.4
606.5
1,485.2
2,831.7
4,796.0
602.7
1.459.0
2,734.4
4,836.3
593.0
1.471.6
2.771.7
4.908.7
604.0
1.486.9
2.817.9
4,960.0
615.8
1,491.4
2,852.8
4,988.8
613.2
1,491.2
2,884.4
871.1
850.5
598.8
171.8
427.0
251.7
1,014.4
954.9
667.2
180.2
487.0
287.7
1,067.5
1,029.3
739.9
200.1
539.8
289.4
1,050.1
991.4
697.9
188.8
509.1
293.5
1.072.0
1.013.9
723.6
194.5
529.0
290.4
1.050.3
1,016.3
734.4
197.6
536.8
281.9
1.074.8
1.036.6
746.3
202.5
543.8
290.3
1,072.7
1,050.5
755.3
205.8
549.5
295.2
20.6
20.1
59.5
45.9
38.1
n.a.
58.7
55.1
58.1
60.8
34.0
36.1
38.2
41.5
22.2
24.4
-64.9
660.0
724.9
-96.4
722.0
818.4
-101.7
804.5
906.2
-99.7
763.6
863.3
-106.6
778.6
885.1
-122.4
796.9
919.3
-100.8
812.5
913.3
-76.9
830.1
907.0
17 Government consumption expenditures and gross investment
18
State and local
19
1,289.9
522.1
767.8
1,314.7
516.3
798.4
1,358.5
516.8
841.7
1,333.5
520.9
812.6
1,346.0
519.9
826.1
1,359.9
522.6
837.3
1,364.5
516.7
847.7
1,363.5
508.0
855.4
By major type of
70 Final sales, total
71
??
73
Nondurable
74
Structures
25
6,529.7
2,400.9
1,013.8
1,387.2
3,581.7
547.0
6,871.8
2,534.2
1,085.9
1,448.3
3,742.4
595.3
7,209.6
2,660.7
1,146.9
1,513.8
3.921.2
627.7
7,021.3
2,600.9
1,113.3
1,487.6
3,806.3
614.1
7,089.7
2,617.3
1,118.6
1,498.7
3,852.6
619.8
7.162.5
2,642.3
1,134.0
1,508.3
3.904.5
615.7
7,260.3
2,684.5
1.162.5
1.522.1
3,943.2
632.6
7,325.9
2,698.5
1,172.6
1,525.9
3,984.6
642.8
20.6
15.7
59.5
31.9
27.7
38.1
35.3
2.9
58.7
33.1
25.6
58.1
54.4
34.0
28.5
38.2
4.9
3.7
5.4
9.1
22.2
28.9
-6.7
6,383.8
6,604.2
6,740.8
6,691.3
6,701.6
6,709.4
6,768.3
6,783.8
30
5,194.4
5,495.1
n.a.
5,635.0
5,697.7
5,738.9
5,849.2
n.a.
31 Compensation of employees
3?
33
Government and government enterprises
Other
34
Supplement to wages and salaries
35
Employer contributions for social insurance
36
Other labor income
37
3,809.4
3,095.2
584.2
2,511.0
714.2
333.3
380.9
4,008.3
3,255.9
602.5
2,653.4
752.4
350.2
402.2
4,209.4
3,419.7
621.7
2,798.0
4.083.7
3,320.2
608.3
2,711.9
4,141.6
3,363.0
4.178.9
3.393.3
4,235.9
3.442.3
616.3
624.1
2.818.2
4,281.1
3,480.3
626.9
2,746.6
619.6
2,773.6
789.7
365.7
763.6R
355.8
778.6
360.8
785.6
363.6
424.0
407.8
417.7
422.0
793.7
367.8
425.9
800.8
370.6
430.2
420.0
388.1
32.0
450.9
415.9
35.0
477.9
449.2
28.7
469.4
472.0
443.5
474.7
447.1
479.6
451.5
485.2
437.1
32.3
28.5
27.6
28.1
1
2
3
4
5
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
6 Gross private domestic investment
Fixed investment
7
Nonresidential
8
9
Structures
Producers' durable equipment
in
Residential structures
n
17.
13
Change in business inventories
14 Net exports of goods and services
Exports
15
Imports
16
product
26 Change in business inventories
Durable goods
27
28
29.2
MEMO
29 Total G D P in c h a i n e d 1992 d o l l a r s
NATIONAL
INCOME
38 Proprietors' income 1
39
Business and professional 1
40
2,853.4
454.7
30.6
41 Rental income of persons"
102.5
116.6
122.2
121.9
120.6
121.6
120.9
125.7
42
43
44
45
464.5
464.3
-6.6
6.7
526.5
528.2
-13.3
11.6
n.a.
n.a.
-27.6
15.9
568.9
570.4
-22.8
21.3
559.6
561.1
594.1
588.4
614.9
609.6
-51.9
17.4
-42.3
-9.3
15.0
14.6
n.a.
n.a.
-6.8
16.5
398.1
392.8
391.1
403.9
402.6
397.8
Inventory valuation adjustment
Capital consumption adjustment
46
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
n.a.
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. U.S. Department of Commerce, Survey of Current
Business.
n.a.
A52
2.17
Domestic Nonfinancial Statistics • April 1996
P E R S O N A L I N C O M E A N D SAVING
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1995
1994
Account
1993
1994
1995
Q4
Q3r
Q2
Ql
Q4
PERSONAL INCOME AND SAVING
1 Total personal income
?
W a c c and salary d i s b u r s e m e n t s
C o m m o d i t y - p r o d u c i n g industries
4
6
7
Service industries
G o v e r n m e n t and g o v e r n m e n t enterprises
8
1
0 Proprietors' income
Business and professional 1
farm1
Rental income of persons"
Di\idends
14 Personal interest income
Transfer payments
16
Old ace survivors, disability, and health insurance benefits
in
11
i?
n
17
L e s s . Personal contributions for social insurance
18 E o r \ ! S: Personal i n c o m e
5,479.2
5,750.2
6,101.0
5,893.9
5,995.5
6,061.9
6,135.6
6,210.9
3.090.6
781.3
593.1
698.4
1,026.6
584.2
3,241.1
825.0
621.3
739.3
1,074.3
602.5
3,419.7
858.7
642.9
787.8
1,151.4
621.7
3,318.5
846.0
636.0
762.7
1,101.6
608.3
3,361.6
856.2
643.4
768.8
1,120.2
616.3
3,393.3
855.0
640.5
778.6
1,140.0
619.6
3,442.3
859.9
642.9
795.4
1,162.8
624.1
3,481.8
863.8
644.8
808.5
' 1,182.5
626.9
380.9
420.0
388.1
32.0
102.5
186.8
647.3
910.7
444.4
402.2
450.9
415.9
35.0
116.6
199.6
661.6
956.3
472.9
424.0
477.9
449.2
28.7
122.2
214.8
714.4
1,022.6
507.4
407.8
469.4
437.1
32.3
121.9
206.7
678.4
974.7
482.1
417.7
472.0
443.5
28.5
120.6
209.5
701.9
1,002.4
497.6
422.0
474.7
447.1
27.6
121.6
212.2
713.9
1,016.8
505.1
425.9
479.6
451.5
28.1
120.9
215.8
717.5
1,029.9
510.7
430.2
485.2
454.7
30.6
125.7
221.7
724.2
1,041.4
516.3
259.6
278.1
294.6
283.5
290.2
292.7
296.2
299.4
5,479.2
5,750.2
6,101.0
5,893.9
5,995.5
6,061.9
6,135.6
6,210.9
689.9
731.4
794.6
770.0
801.5
798.4
808.3
4,789.3
5,018.8
5,306.4
5,145.8 r
5,225.5
5,260.4
5,337.2
5,402.5
LESS: Personal outlays
4,572.9
4,826.5
5,065.7
4,927.9
4,972.2
5,049.0
5,104.6
5,137.2
22 EOU AI S: Personal saving
216.4
192.4 r
240.7
217.8
253.3
211.4
232.6
265.4
24,724.2
16.807.5
18.075.0
25,332.6
17,150.4
18,320.0
34,199.9
23,223.7
25,033.0
25,568.6
17,280.5
18,544.0
25,559.1
17,280.3
18,672.0
25,540.2
17,391.7
18,634.0
25,695.9
17,465.5
18,794.0
25,696.2
17,461.0
18,907.0
4.5
3.8
4.5
4.2
4.8
4.0
4.4
4.9
27 G r o s s s a v i n g
938.4
1,055.9
n.a.
l,064.9r
1,110.5
1,092.3
1,155.7
n.a.
28 Gross private saving
964.5
1,006.0
n.a.
1,012.8
1,039.9
1,007.3
1,076.1
n.a.
7 9 Personal saving
30 Undistributed corporate profits'
31 Corporate inventory valuation a d j u s t m e n t
216.4
103.4
-6.6
192.41"
120.2
-13.3
240.7
n.a.
-27.6
217.8
136.8
-22.8
253.3
120.6
-51.9
211.4
122.3
-42.3
232.6
162.0
-9.3
265.4
n.a.
-6.8
Capital consumption
Corporate
33 N o n c o r p o r a t e
417.0
223.1
441.0
237.7
454.0
225.1
439.3
217.3
444.4
220.2
451.3
222.4
456.9
224.7
463.6
233.3
-159.8
-254.7
94.9
-90.2
-189.9
99.7
n.a.
n.a.
n.a.
-91.1
-190.4
99.3
-74.4
-173.3
99.0
-61.5
-160.5
99.0
-67.7
-161.6
93.9
37 G r o s s i n v e s t m e n t
993.5
1,087.2
n.a.
1,104.5
1,146.7
1,113.9
1,150.7
G r o s s private domestic investment
3 9 N'et foreign investment
871.1
-88.2
1,014.4
-139.6
1,050.1
-161.9
1,072.0
-144.4
1,050.3
-160.1
1,074.8
-148.9
55.1
31.3
39.7
36.2
21.6
-5.0
19
l.FSS: Personal tax and nontax p a y m e n t s
20 EQCAI S: Disposable personal i n c o m e
21
Mr\io
Per t apiia i chained 1992
dollars)
? 3 G r o s s domestic product
24 Personal c o n s u m p t i o n e x p e n d i t u r e s
25 Disposable personal income
26 S a v i n s rate (percent)
GROSS
SAVING
allowances
~4 G o v e r n m e n t surplus, or deficit ( —), national income and
product accounts
35
Federal
36
^S
40
Statistical discrepancy
1. With inventory valuation and capital c o n s u m p t i o n adjustments.
2. W i t h capital c o n s u m p t i o n a d j u s t m e n t .
748.1
1,067.5
n.a.
n.a.
SOURCE. U.S. D e p a r t m e n t of C o m m e r c e , Survey
of Current
Business.
n.a.
n.a.
n.a.
n.a.
1,072.7
n.a.
n.a.
Summary Statistics
3.10
U.S. INTERNATIONAL TRANSACTIONS
A53
Summary
Millions of dollars; quarterly data seasonally adjusted except as noted1
1994
Item credits or debits
1 Balance on current account
2
Merchandise trade balance 2
Merchandise exports
3
4
Merchandise imports
Military transactions, net
5
Other service transactions, net
6
Investment income, net
7
U.S. government grants
8
U.S. government pensions and other transfers
9
Private remittances and other transfers
10
1992
-61,548
-96,106
440,352
-536,458
-2,142
58,767
10,080
-15,083
-3,735
-13,330
1995
1994
1993
-99,925
-132,618
456,823
-589,441
448
57,328
9,000
-16,311
-3,785
-13,988
-151,245
-166,099
502,485
-668,584
2,148
57,739
-9,272
—15,814
-4,247
-15,700
Q3
Q4
Ql
Q2
Q3 P
-39,714
-44,627
127,384
-172,011
1,124
14,696
-2,533
-3,488
-1,064
-3,822
-43,277
-43,488
133,926
-177,414
679
15,342
-4,571
-6,245
-1,063
-3,931
-39,025
-45,050
138,061
-183,111
542
15,068
-1,961
-2,867
-782
-3,975
-43,267
-48,802
142,850
-191,652
587
14,782
-2,614
-2,284
-989
-3,947
-39,482
-43,433
145,315
-188,748
736
15,178
-4,153
-2,834
-987
-3,989
11 Change in U.S. government assets other than official
reserve assets, net (increase, —)
-1,661
-330
-322
-283
-931
-152
-180
136
12 Change in U.S. official reserve assets (increase, —)
Gold
13
14
Special drawing rights (SDRs)
Reserve position in International Monetary Fund
15
Foreign currencies
16
3,901
0
2,316
-2,692
4,277
-1,379
0
-537
-44
-797
5,346
0
-441
494
5,293
-165
0
-111
273
-327
2,033
0
-121
-27
2,181
-5,318
0
-867
-526
-3,925
-2,722
0
-156
-786
-1,780
-1,893
0
362
-991
-1,264
17 Change in U.S. private assets abroad (increase, —)
Bank-reported claims 3
18
Nonbank-reported claims
19
U.S. purchases of foreign securities, net
20
U.S. direct investments abroad, net
21
-68,115
20,895
45
-46,415
-42,640
-182,880
29,947
1,581
-141,807
-72,601
-130,875
915
-32,621
-49,799
-49,370
-27,492
1,590
-8,051
-10,976
-10.055
-56,258
-16,651
-12,449
-15,238
-11,920
-69,873
-29,284
-11,518
-6,567
-22,504
-97,340
-39,982
-18,499
-21,731
-17,128
-41,095
14,851
40,466
18,454
3,949
2,180
16,571
-688
72,146
48,952
4,062
1,706
14,841
2,585
39,409
30,723
6,025
2,211
2,923
-2,473
19,691
16,477
2,222
494
1,298
-800
-421
7,470
1,228
692
-9,856
45
22,308
10,131
1,126
-154
10,940
265
37,836
25,169
1,326
506
7,886
2,949
39,479
20,597
518
194
18,398
-228
113,357
15,461
13,573
36,857
29,867
17,599
176,382
20,859
10,489
24,063
79,864
41,107
251,956
114.396
-4,324
33,811
58,625
49,448
60,045
19,650
487
5,428
14,762
19,718
85,136
34,676
-5,242
25,929
10,195
19,578
72,533
-531
10,113
29,910
15,816
17,225
86,495
12,239
10,527
30,315
20,549
12,865
66,185
-19,958
0
-26,399
0
35,985
0
-14,269
-26,399
35,985
-14,269
0
-12,082
-6,641
-5,441
0
13,718
782
12,936
0
19,527
6,183
13,344
0
19,178
331
18,847
0
-23,330
-7,086
-16,244
22 Change in foreign official assets in United States (increase, + )
U.S. Treasury securities
23
24
Other U.S. government obligations
Other U.S. government liabilities 4
25
Other U.S. liabilities reported by U.S. banks 3
26
Other foreign official assets 5
27
28 Change in foreign private assets in United States (increase, + )
U.S. bank-reported liabilities 3
29
U.S. nonbank-reported liabilities
30
Foreign private purchases of U.S. Treasury securities, net
31
Foreign purchases of other U.S. securities, net
32
Foreign direct investments in United States, net
33
34 Allocation of special drawing rights
35 Discrepancy
Due to seasonal adjustment
36
Before seasonal adjustment
37
-34,251
-21,695
36,778
30,024
19,341
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)
3,901
-1,379
5,346
-165
2,033
-5,318
-2,722
-1,893
38,286
70,440
37,198
19,197
-1,113
22,462
37,330
39,285
5,942
-3,717
-1,184
3,564
1,120
-322
-11
6,365
1. Seasonal factors are not calculated for lines 12-16, 18-20, 2 2 - 3 4 , and 38^40.
2. Data are on an international accounts basis. The data differ f r o m 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 5.
3. Reporting banks include all types of depository institutions 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, Bureau of Economic Analysis, Survey of Current
Business.
A54
3.11
International Statistics • April 1996
U.S. F O R E I G N T R A D E 1
Millions of dollars; monthly data seasonally adjusted
1995
Item
1993
1994
1995
June
July
Aug.
Sept.
Oct.
Nov.
Dec. p
1 Goods and services, balance
2
Merchandise
Services
3
-74,842
-132,618
57,777
-106,214
-166,101
59,887
-111,042
-174,469
63,427
-11,385
-16,493
5,108
-11,070
-16,226
5,156
-8,248
-13,504
5,256
-8,245
-13,746
5,501
-8,160
-13,742
5,582
-6,712
-12,176
5,464
-6,777
-12,264
5,487
4 Goods and services, exports
Merchandise
3
Services
6
644,579
456,824
187,755
701,200
502,484
198,716
783,661
574,878
208.783
64,681
47,381
17,300
63,645
46,372
17,273
66,410
49,084
17,326
67,460
49,779
17,681
66,738
48,982
17,756
67,584
49,584
18,000
68,329
50,461
17,868
7 Goods and services, imports
8
Merchandise
9
Services
-719,421
-589,442
-129,979
-807,414
-668,585
-138,829
-894,703
-749,347
-145,356
-76,066
-63,874
-12,192
-74,715
-62,598
-12,117
-74,658
-62,588
-12,070
-75,705
-63,525
-12,180
-74,898
-62,724
-12,174
-74,296
-61,760
-12,536
-75,106
-62,725
-12,381
1. Data show monthly values consistent with quarterly figures in the U.S. balance of
payments accounts.
3.12
SOURCE. FT900, U.S. Department of Commerce, Bureau of the Census and Bureau of
Economic Analysis.
U.S. R E S E R V E A S S E T S
Millions of dollars, end of period
1995
Asset
1 Total
2 Gold stock, including Exchange
Stabilization Fund'
3 Special drawing rights 2 ' 3
4 Reserve position in International Monetary
Fund 2
5 Foreign currencies 4
1992
1993
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan. p
71,323
73,442
74,335
90,063
91,534
86,648
87,152
86,224
85,755
85,832
82,717
11,056
8,503
11,053
9,039
11,051
10,039
11,054
11,869
11,053
11,487
11,053
11,146
11,051
11,035
11,051
10,949
11,050
11,034
11,050
11,037
11,052
10,778
11,759
40,005
11,818
41,532
12,030
41,215
14,276
52,864
14,761
54,233
14,470
49,979
14,681
50,385
14,700
49,524
14,572
49,099
14,649
49,096
14,312
46,575
SDR holdings and reserve positions in the I M F 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.
1. Gold held " u n d e r e a r m a r k " 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, sixteen currencies were used; since January 1981, five currencies have been used. U.S.
3.13
1996
1994
F O R E I G N O F F I C I A L A S S E T S H E L D AT F E D E R A L R E S E R V E B A N K S 1
Millions of dollars, end of period
1995
Asset
1992
1993
June
1 Deposits
Held in custody
2 U.S. Treasury securities 2
3 Earmarked gold 3
July
205
386
250
167
190
314.481
13,118
379,394
12,327
441,866
12,033
482,506
11,725
505,613
11,728
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, in each case measured at face (not market) value.
1996
1994
Aug.
165
502,737
1 l,728 r
Sept.
Oct.
Nov.
Dec.
Jan. p
201
275
194
386
165
506,572
11,728
507,075
11,709
522,950
11,702
522,170
11,702
532,776
11,702
3. Held in 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
3.15
A55
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1995
Item
1 Total 1
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 3
U.S. Treasury bonds and notes
Marketable
Nonmarketable 4
U.S. securities other than U.S. Treasury securities 5
By area
Europe 1
Canada
Latin America and Caribbean
Asia
Africa
Other countries
1994
1993
July
Aug.
Sept.
Nov,
Oct.
Dec. p
482,915
520,578
580,151
604,548
612,972
619,517
618,417
632,446
629,160
69,721
151,100
73,031
139,570
91,573
154,517
93,801
159,654
104,791
157,516
110,051
163,093
107,870
157,987
109,232
171,366
105,643
168,534
212,237
5,652
44,205
254,059
6,109
47,809
274,342
6,245
53,474
291,132
6,288
53,673
290,768
6,329
53,568
286,243
6,366
53,764
291,948
6,407
54,205
291,033
6,449
54,366
293,684
6,491
54,808
207,034
15,285
55,898
197,702
4,052
2,942
215,024
17,235
41,492
236,819
4,179
5,827
223,853
19,549
50,327
278,767
4,427
3,226
224,380
21,746
58,126
290,878
4,309
5,107
221,130
21,508
63,383
297,343
4,433
5,173
222,869
20,522
63,424
303,809
4,684
4,207
222,679
20,355
61,335
305,053
4,761
4,232
228,180
19,535
62,060
311,638
6,086
4,945
221,604
19,473
65,826
310,955
6,296
5,004
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 and Treasury bills issued to official
institutions of foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of
zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning
March 1988, 20-year maturity issue and beginning March 1990, 30-year maturity issue;
3.16
June
LIABILITIES TO, A N D CLAIMS ON, FOREIGNERS
Payable in Foreign Currencies
Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April
1993, 30-year maturity issue.
5. Debt securities of U.S. government corporations and federally sponsored agencies, and
U.S. corporate stocks and bonds.
SOURCE. Based on U.S. Department of the Treasury data and on data reported to the
department by banks (including Federal Reserve Banks) and securities dealers in the United
States, and on the 1989 benchmark survey of foreign portfolio investment in the United
States.
Reported by Banks in the United States 1
Millions of dollars, end of period
1994
Item
1 Banks' liabilities
2 Banks' claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers 2
1991
75,129
73,195
26,192
47,003
3,398
1. Data on claims exclude foreign currencies held by U.S. monetary authorities.
1992
72,796
62,799
24,240
38,559
4,432
1995
1993 r
78,259
62,017
20,993
41,024
12,854
Dec.
Mar.
June
Sept.
89,661
60,279
19,670
40,609
10,587 r
96,190
72,694
24,440
48,254
8,732 r
106,715
77,171
28,915
48,256
9,890 r
102,148
69,312
25,648
43,664
6,274 r
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.
A56
3.17
International Statistics • April 1996
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Reported by Banks in the United States'
Millions of dollars, end of period
1995
Item
1993
1994
1995
June
July
Aug.
Sept.
Oct.'
Nov.
Dec?
1,093,270
1,058,071 r
l,060,388r
l,076,399r
l,073,999r
1,099,123
1,105,061
1,093,270
731,017'
24,104'
191,793'
141,518'
373,602
745,652'
21,779'
197,099'
139,305'
387,469
735,112'
23,703'
188,153'
136,559'
386,697'
762,614
23,159
202,532
146,364
390,559
754,816
23,114
193,829
153,912
383,961
747,355
24,353
192,680
138,240
392,082
B Y HOLDER AND TYPE OF LIABILITY
1 Total, all f o r e i g n e r s
2 Banks' own liabilities
3
Demand deposits
4
Time deposits 2
5
Other 3
6
O w n foreign offices 4
7 Banks' custodial liabilities 5
8
U.S. Treasury bills and certificates 6
9
Other negotiable and readily transferable
instruments 7
10
Other
11 Nonmonetary international and regional organizations 8 . . .
12
Banks' own liabilities
13
Demand deposits
14
Time deposits 2
15
Other 3
16
17
18
19
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
20 Official institutions 9
21
Banks' own liabilities
22
Demand deposits
23
Time deposits 2
24
Other 3
25
26
27
28
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
29 Banks 1 0
30
Banks' own liabilities
31
Unaffiliated foreign banks
32
Demand deposits
33
Time deposits 2
34
Other 3
35
O w n foreign offices 4
36
37
38
39
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
40 Other foreigners
41
Banks' own liabilities
42
Demand deposits
43
Time deposits 2
44
Other 3
45
46
47
48
Banks' custodial liabilities 5
U.S. Treasury bills and certificates 6
Other negotiable and readily transferable
instruments 7
Other
926,672
l,018,472r
626,919
21,569
175,106
111,971
318,273
r
722,155
23,386 r
186,512 r
116,699
395,558
747,355
24,353
192,680
138,240
392,082
735,824 r
22,252'
195,237'
123,304'
395,031
299,753
176,739
296,317
162,857
345,915
197,101
322,247
182,204
329,371
188,621
330,747
187,318
338,887
193,070
336,509
189,285
350,245
201,890
345,915
197,101
36,289
86,725
42,532
90,928
52,247
96,567
45,112
94,931
44,514
96,236
45,175
98,254
47,279
98,538
47,905
99,319
50,220
98,135
52,247
96,567
10,936
5,639
15
2,780
2,844
8,606
8,176
29
3,298
4,849
9,461
8,769
21
4,311
4,437
12,185'
11,114 r
43
5,057'
6,014'
10,289 r
8,985'
40
4,642'
4,303'
13,011'
12,120'
24 r
4,315
7,781 r
10,202
8,374
77
3,901
4,396
9,561
8,106
33
3,576
4,497
9,461
8,769
21
4,311
4,437
5,297
4,275
430
281
692
350
804
312
1,071
551
1,304
826
891
354
1,828
1,342
1,455
962
692
350
1,022
0
149
0
341
1
492
0
520
0
478
0
537
0
486
0
493
0
341
1
220,821
64,144
1,600
21,653
40,891
212,601
59,580
1,564
23,511
34,505
274,177
81,706
2,101
30,101
49,504
246,090
73,119
1,398
27,253
44,468
253,455
75,437
1,429
29,411
44,597
262,307
83,392
1,547
31,600
50,245
273,144
85,998
1,362
32,048
52,588
265,857
83,588
1,646
30,385
51.557
280,598
85,277
1,690
30,353
53,234
274,177
81,706
2,101
30,101
49,504
156,677
151,100
153,021
139,570
192,471
168,534
172,971
154,517
178,018
159,654
178,915
157,516
187,146
163,093
182,269
157,987
195,321
171,366
192,471
168,534
5,482
95
13,245
206
23,593
344
18,325
129
18,159
205
20,735
664
23,777
276
24,028
254
23,600
355
23,593
344
592,171
478,755
160,482
9,718
105,262
45,502
318,273
681,301
566,411
170,853
10,633
111,171
49,049
395,558
687,649
564,309
172,227
11,740
104,423
56,064
392,082
685,827'
566,356'
171,325'
10,554
111,435
49,336'
395,031
665,993
545,391
171,789
12,121
104,477
55,191
373,602
684,269
562,829
175,360
10,061
108,855
56,444
387,469
670,524'
547,916'
161,219
11,817
98,861
50,541
386,697'
699,341
575,910
185,351
11,339
114,650
59,362
390,559
687,649
562,349
178,388
11,232
105,675
61,481
383,961
687,649
564,309
172,227
11,740
104,423
56,064
392,082
113,416
10,712
114,890
11,240
123,340
15,634
119,471
15,021
120,602
15,535
121,440
15,489
122,608
16,170
123,431
16,429
125,300
16,687
123,340
15,634
17,020
85,684
14,505
89,145
13,035
94,671
11,188
93,262
10,583
94,484
10,142
95,809
9,690
96,748
9,754
97,248
13,070
95,543
13,035
94,671
102,744
78,381
10,236
45,411
22,734
115,964 r
87,988 r
11,160 r
48,532 r
28,296
121,983
92,571
10,491
53,845
28,235
116,188'
87,187'
10,186'
51,970 r
25,031'
128,755'
99,075'
10,511'
52,848 r
35,716'
119,534'
90,446'
10,131'
52,002 r
28,313'
117,320'
89,078'
10,500'
52,929'
25,649'
123,723
94,742
10,097
53,596
31,049
127,253
99,084
10,159
54,225
34,700
121,983
92,571
10,491
53,845
28,235
24,363
10,652
27,976
11,766
29,412
12,583
29,001
12,354
29,680
12,881
29,088
13,487
28,242
13,453
28,981
13,527
28,169
12,875
29,412
12,583
12,765
946
14,633
1,577
15,278
1,551
15,107
1,540
15,252
1,547
13,820
1,781
13,275
1,514
13,637
1,817
13,057
2,237
15,278
1,551
17,567
17,895
9,098
12,157
10,179
10,409
9,938
10,290
10,064
9,098
9,966'
9,162'
114
4,579'
4,469'
MEMO
49 Negotiable time certificates of deposit in custody for
foreigners
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers. Excludes bonds and notes of maturities longer than one year.
2. Excludes negotiable time certificates of deposit, which are included in " O t h e r negotiable and readily transferable instruments."
3. Includes borrowing under repurchase agreements.
4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory
agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists
principally of amounts owed to the head office or parent foreign bank, and to foreign
branches, agencies, or wholly owned subsidiaries of the 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 for foreign customers.
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 InterAmerican 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
3.17
Data
LIABILITIES TO FOREIGNERS Reported by Banks in the United States'—Continued
1995
Item
1993
1994
1995
June
July
Aug.
Sept.
Oct.'
Nov.
Dec. p
AREA
926,672
l,018,472r
51 F o r e i g n c o u n t r i e s
915,736
l,009,866
r
52 Europe
Austria
53
54
Belgium and Luxembourg
55
Denmark
56
Finland
France
5/
58
Germany
Greece
59
60
Italy
61
Netherlands
62
Norway
Portugal
63
64
Russia
Spain
65
66
Sweden
67
Switzerland
68
Turkey
United K i n g d o m
69
70
Yugoslavia"
Other Europe and other former U.S.S.R.' 2
71
377,911
1,917
28,670
4,517
1,872
40,316
26,685
1,519
11,759
16,096
2,966
3,366
2,511
20,496
2,738
41,560
3,227
133,993
372
33,331
393,141
3,653
21,978
2,784
1,436
45,217
27,191
1,393
10,885
16,033
2,338
2,846
2,714
14,675
3,094
41,956
3,341
163,793
245
27,769
50 Total, all f o r e i g n e r s
72 Canada
1,093,270
l,058,071r
l,060,388r
l,076,399r
l,073,999r
1,099,123
1,105,061
1,093,270
1,083,809
1,048,105
r
r
r
l,060,988r
1,088,921
1,095,500
1,083,809
364,276
3,726
24,626
2,921
2,829
39,194
24,062
2,011
10,670
15,211
1,394
2,755
7,949
10,011
3,245
43,604
4,124
139,419
177
26,348
374.85 I r
3,855
21,079
2,432
1,455
45,038 r
34,345
2,365
10.373
11,449
1,305
2,675
7,177
10,558
3,471
47,285 r
3,255
141,165 r
220
25,349
376,545'
3,869
24,598 r
2,468
2,270
43,314 r
31,257 r
2,398
10,823 r
10,685
2,087
2,933
7,265
10,000 r
2,896 r
41,644
3,523
150,781
146
23,588
362,080 r
5,221
24,039 r
2,476
1,972
38,112 r
31,390
2,119
8,947 r
13,107
1,011
3,033
6,367
10,100
3,167 r
41,406
3,936
141,577
215
23,885
377,102
4,887
25,192
3,177
2,419
43,128
26,362
2,033
10,251
15,609
1,048
2,902
7,338
13,467
2,035
42,588
4,067
147,448
210
22,941
384,238
4,755
28,357
3,418
2,315
40,410
26,798
2,265
10,759
15,541
1,287
2,718
8,979
10,809
3,720
41,178
4,010
148,384
171
28,364
364,276
3,726
24,626
2,921
2,829
39,194
24,062
2,011
10,670
15,211
1,394
2,755
7,949
10,011
3,245
43,604
4,124
139,419
177
26.348
l,048,203
377,662 r
3,923
24,803 r
2,131
2,390
42,880 r
33,794 r
2,311
10,223 r
11,743
1,119
3,165
6,313
9,127 r
2,209 r
42,192
2,973
151,341
214
24,811
1,066,110
20,235
24,727
26,139
29,458
28,898
28,296
28,872
35,358
27,730
26,139
73 Latin America and Caribbean
74
Argentina
75
Bahamas
76
Bermuda
77
Brazil
78
British West Indies
Chile
79
Colombia
80
Cuba
81
82
Ecuador
Guatemala
83
84
Jamaica
Mexico
85
86
Netherlands Antilles
Panama
87
88
Peru
Uruguay
89
90
Venezuela
91
Other
362,238
14,477
73,820
8,117
5,301
193,699
3,183
3,171
33
880
1,207
410
28,019
4,686
3,582
929
1,611
12,786
6,327
423,797
17,203
104,002 r
8,445 r
9,145
229,525
3,126
4,615
13
875
1,121
529
12,250
5,217
4,551
900
1,597
13,983
6,700
438,213
12,236
94,622
4,897
23,764
236,853
3,421
3,658
8
1,315
1,271
477
24,580
4,682
4,260
973
1,828
11,781
7,587
444,989
10,873
97,402 r
7,074 r
18,250
252,401
3,320
3,276
5
1,179
1,129
449
19,201
4,628
4,314
997
2,031
11,248
7,212
436,258
12,404
88,731 r
7,092 r
21,232
245,065
2,677
3,432
5
1,118
1,100
426
21,006
6,068
4,641
944
1,953
11,482
6,882
447,523
11,539
96,017 r
6,794 r
26,743
244,291
2,890
3,349
3
1,160
1,122
444
22,120
4,778
4,998
1,028
1,937
11,195
7,115
434,352'
11,180
92,850'
5,996'
27,592'
234,629
2,698
3,257
4
1,130
1,197
484
22,069
5,016
4,682'
909
1,839
11,971
6,849
439,956
11,539
96,287
6,589
27,366
236,039
2,574
3,399
13
1,311
1,068
430
20,924
5,349
4,561
897
1,856
12,642
7,112
436,613
13,034
87,719
6,561
27,364
240,339
2,696
3,443
8
1.307
1,210
447
21,010
5,644
4,287
916
1,912
11,624
7,092
438.213
12,236
94,622
4,897
23,764
236,853
3,421
3,658
8
1,315
1,271
477
24,580
4,682
4,260
973
1,828
11,781
7,587
92 Asia
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
144,527
155,642 r
240,750
188,352 r
192,264 r
199,624 r
223,057'
222,979
232,273
240,750
4,011
10,627
17,132
1,114
1,986
4,435
61,466
4,913
2,035
6,137
15,822
14,849
10,066
9,844
17,102
2,338
1,587
5,157
64,284 r
5,124
2,714
6,466
15,489
15,471
33,774
11.706
20,319
3,373
2,708
4,071
109,192
5,743
3,090
12,253
15,582
18,939
10,579
9,751
23,040
2,106
2,119
4,573
83,370 r
4,989 r
2,539
11,502
16,851
16,933 r
11,908
9,165
25,134
2,271
1,966
4,599
85,833 r
5,068 r
2,653
11,244
16,474
15,949
13,208
9,838
24,152
2,745
2,175
4,723
89,117 r
4,883 r
2,793
11,177
15,779
19,034
22,273
10,253
21,852
2,914
2,366
4,209'
104,315'
5,460'
2,786
11,803
16,895'
17,931
22,364
10,729
21,879
3,010
2,174
3,812
104,566
5,367
2,844
10,458
17,350
18,426
29,898
11,365
20,273
3,272
2,485
4,085
105.546
5,593
2,889
12,144
16,277
18,446
33,774
11,706
20,319
3,373
2,708
4,071
109,192
5,743
3,090
12,253
15,582
18,939
105 Africa
106
Egypt
107
Morocco
South Africa
108
Zaire
109
110
Oil-exporting countries' 4
Other
111
6,633
2,208
99
451
12
1,303
2,560
6,523
1.879
97
433
9
1,343
2,762
7,641
2,136
739
10
1,797
2,855
6,784
2,144
90
596
18
1,418
2,518
6,966
1,840
94
1,002
13
1,364
2,653
6,989
1,924
87
746
15
1,667
2,550
7,033
2,127
79
467
9
1,792
2,559
7,211
1,948
66
934
4
1,544
2,715
7,793
1,907
60
1,206
9
1,826
2,785
7,641
2,136
104
739
10
1,797
2,855
112 Other
Australia
114
Other
4,192
3,308
884
6,036
5,142
894
6,790
5.648
1,142
3,671
2,944
727
6,155
5,473
682
7,133
5,459
1,674
5,594
4,777
817
6,315
5,007
1,308
6,853
5,758
1,095
6,790
5,648
1,142
10,936
6,851
3,218
867
8,606
7,537
613
456
9,461
7,812
893
756
9,966 r
8,314 r
804
848
12,185 r
10,496 r
834
855
10,289 r
8,273 r
1,010
1,006
13,011'
11,279'
876
856
10.202
8,366
552
1,284
9,561
8,237
371
953
9,461
7,812
893
756
93
94
95
96
97
98
99
100
101
102
103
104
113
115 Nonmonetary international and regional organizations. . .
116
International"
117
Latin American r e g i o n a l ' 6
118
Other regional 1 7
11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
12. Includes the Bank for International Settlements. Since December 1992, has
included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia.
13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
14. Comprises Algeria, Gabon, Libya, and Nigeria.
104
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 Europe."
A57
A58
3.18
International Statistics • April 1996
B A N K S ' O W N C L A I M S O N F O R E I G N E R S Reported by Banks in the United States 1
Payable in U.S. Dollars
Millions of dollars, end of period
1995
Area or country
1993
1994
1995
June
1 Total, all f o r e i g n e r s
2 Foreign countries
3 Europe
4
Austria
3
Belgium and Luxembourg
6
Denmark
7
Finland
8
France
9
Germany
10
Greece
11
Italy
12
Netherlands
13
Norway
14
Portugal
13
Russia
16
Spain
1/
Sweden
18
Switzerland
19
Turkey
20
United Kingdom
21
Yugoslavia 2
22
Other Europe and other former U.S.S.R. 3
23 Canada
488,384 r
486,263 r
July
Aug.'
Sept.'
Oct.'
Nov.
Dec. p
525,963
521,761 r
508,977 r
521,107
515,042
522,609
533,806
525,963
r
507,660 r
519,690
512,215
520,951
532,385
524,097
127,027'
616
8,073'
443
967
15,443'
7,149'
445
6,070'
4,478
1,206
987
495
3,640'
3,580'
7,540
725
63,871'
230
1,069
127,681
685
8,257
428
1,001
15,200
8,731
386
5,757
4,354
1,047
916
506
3,494
2,840
7,362
768
64,607
230
1,112
116,578
670
7,056
410
1,221
13,956
8,691
385
5,921
4,696
1,392
986
421
3,520
2,700
7,207
802
54,522
234
1,788
131,504
880
7,103
634
1,916
14,807
8,081
404
5,651
4,471
1,456
1,036
696
3,162
2,642
6,320
830
69,016
233
2,166
131,643
639
10,691
602
1,097
15,259
8,431
378
5,390
4,907
1,375
862
949
3,191
2,362
5,910
926
66,912
237
1,525
130,424
565
7,557
404
1,055
14,742
8,812
441
5,364
5,048
665
897
660
2,169
2,057
7,087
785
67,661
147
4,308
485,979 r
481,672 r
524,097
519,128
123,784 r
412
6,532
382
594
11,822
7,724
691
8,834
3,063
396
834
2,310
3,717
4,254
6,605
1,301
62,056 r
473
1,784
125,807 r
692
6,738
. 1,030
691
12,768
7,608
604
6,043
2,957
504
938
949
3,530
4,098
7,493
874
66,858 r
265
1,167
130,424
565
7,557
404
1,055
14,742
8,812
441
5,364
5,048
665
897
660
2,169
2,057
7,087
785
67,661
147
4,308
129,976 r
581
5,149
599
394
15,363
8,862
442
6,736
4,356
1,019
1,208
508
3,566
2,940
10,291
713
65,949 r
229
1,071
18,620 r
18,298 r
16,017
19,750 r
r
r
18,903'
17,306
18,623
17,834
17,014
16,017
24 Latin America and Caribbean
23
Argentina
26
Bahamas
27
Bermuda
28
Brazil
29
British West Indies
30
Chile
31
Colombia
32
Cuba
33
Ecuador
34
Guatemala
33
Jamaica
36
Mexico
37
Netherlands Antilles
38
Panama
39
Peru
40
Uruguay
41
Venezuela
42
Other
225,079
4,474
63,353 r
8,901
11,848
99,319 r
3,643
3,181
0
681
288
195
15,720
2,683
2,894
657
969
2,910
3,363
224,060
5,845
66,775 r
8,481
9,582
95,766'
3,819
4,004
0
681
366
258
17,728
1,580
2,184
997
503
1,831
3,660
257,243
6,440
59,236
5,818
13,297
123,797
5,036
4,544
0
811
447
323
17,985
9,228
3,021
1,818
472
1,656
3,314
244,315 r
6,598
63,93 l r
8,549
11,525
114,258'
4,341
4,033
0
768
344
264
17,285
2,881
2,514
1,360
377
1,611
3,676
238,847'
6,242
59,906'
6,373
12,511
114,504'
4,264
4,183
0
768
340
277
17,152
2,730
2,520
1,333
424
1,650
3,670
250,189
6,151
61,224
8,944
12,962
117,892
4,663
4,270
0
725
350
290
16,832
6,313
2,503
1,368
424
1,596
3,682
250,335
6,114
62,888
6,295
13,022
120,013
4,388
4,358
0
805
361
287
16,486
5,602
2,594
1,464
386
1,480
3,792
251,306
6,003
55,788
5,537
13,334
123,682
4,660
4,593
0
846
385
289
16,656
9,233
2,846
1,501
441
1,826
3,686
266,631
6,090
60,030
8,096
12,978
129,500
4,775
4,516
0
847
424
285
16,804
12,048
3,044
1,577
451
1,678
3,488
257,243
6,440
59,236
5,818
13,297
123,797
5,036
4,544
0
811
447
323
17,985
9,228
3,021
1,818
472
1,656
3,314
43
111,775
107,350
115,273
118,807 r
117,212'
118,234
120,194
114,558
111,360
115,273
2,271
2,625
10,828
589
1,527
826
60,032
7,539
1,410
2,170
15,115
6,843
836
1,447
9,162
994
1,470
688
59,428
10,286
662
2,902
13,743
5,732
1,023
1,713
12,890
1,846
1,675
736
61,303
14,062
1,350
2,581
9,629
6,465
1,143
1,796
14,934
1,210
1,443
950
61,050'
12,669
918
2,688
12,571
7,435
1,206
1.915
14,756
1,732
1,516
749
61,280'
13,134
598
2,670
11,948
5,708
1,163
1,600
14,520
1,905
1,620
700
63,301
12,836
623
2,594
11,403
5,969
1,316
1,584
15,677
1,944
1,596
712
63,075
12,975
725
2,594
11,723
6,273
1,241
1,595
12,539
1,924
1,623
886
61,878
13,340
673
2,568
9,963
6,328
1,069
1,484
10,710
1,823
1,580
728
60,522
14,038
789
2,538
9,604
6,475
1,023
1,713
12,890
1,846
1,675
736
61,303
14,062
1,350
2,581
9,629
6,465
3,861
196
481
633
4
1,129
1,418
3,028
225
429
671
2
842
859
2,724
209
514
459
1
552
989
2,919
204
686
563
2
657
807
2,907
193
645
531
7
659
872
2,826
194
653
544
2
614
819
2,705
202
647
454
2
615
785
2,783
224
457
604
1
586
911
2,732
268
433
462
1
578
990
2,724
209
514
459
1
552
989
63 Other
64
Australia
65
Other
2,860
2,037
823
3,129 r
2,186
943 r
2,416
1.571
845
3,361
1,999
1,362
2,764
2,072
692
3,454
2,072
1,382
3,780
2,639
1,141
2,966
2,095
871
3,005
1,969
1,036
2,416
1,571
845
66 Nonmonetary international and regional o r g a n i z a t i o n s 6 . . .
2,405
4,591
1.866
2,633
1,317
1,417
2,827
1,658
1,421
1,866
44
43
46
4/
48
49
30
31
32
33
34
33
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 4
Other
56
37
38
59
60
61
62
Egypt
Morocco
South Africa
Zaire
Oil-exporting countries 5
Other
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
2. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
3. Includes the Bank for International Settlements. Since December 1992, has included all
parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and Slovenia.
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 " O t h e r Europe."
Nonbank-Reported
3.19
BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS
Data
A59
Reported by Banks in the United States 1
Payable in U.S. Dollars
Millions of dollars, end of period
1995
Type of claim
June'
July r
Aug. r
508,977
19,734
293,151
113,753
59,798
53,955
82,339
521,107
21,449
297,045
112,029
57,718
54,311
90,584
Sept. r
1 Total
575,500
601,615
2 Banks' claims
Foreign public borrowers
3
4
O w n foreign offices 2
5
Unaffiliated foreign banks
6
Deposits
Other
7
All other foreigners
8
488,384
29,069
285,510
100,865
49,892
50,973
72,940
486,263
23,410
283,548
111,682
59,230
52,452
67,623
87,116
41,734
115,352
64,829
127,694
69,362
125,978
59,417
31,186
36,008
39,237
45,217
14,196
14,515
19,095
21,344
7,850
8,377
8,739
8,751
29,150
32,565
9 Claims of banks' domestic customers 3
10
Deposits
11
Negotiable and readily transferable
instruments 4
12
Outstanding collections and other
claims
521,761
23,790
301,847
112,479
58,793
53,686
83,645
Nov.
Dec. p
522,609
20,888
303,977
103,904
47,106
56,798
93,840
533,806
19,359
308,931
99,483
42,904
56,579
106,033
525,963
21,681
303,944
97,725
37,344
60,381
102,613
32,821
30,197
n.a.
641,020
649,455
525,963
21,681
303,944
97,725
37,344
60,381
102,613
Oct/
515,042
22,292
298,238
107,294
50,764
56,530
87,218
MEMO
13 Customer liability on acceptances
14 Dollar deposits in banks abroad, reported by
nonbanking business enterprises in the
United States 5
n.a.
35,599
35,452
34,274
principally of amounts due f r o m the head office or parent foreign bank, and from foreign
branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank.
3. Assets held by reporting banks in the accounts of their domestic customers.
4. Principally negotiable time certificates of deposit, bankers acceptances, and commercial
paper.
5. Includes demand and time deposits and negotiable and nonnegotiable certificates of
deposit denominated in U.S. dollars issued by banks abroad.
1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are
for quarter ending with month indicated.
Reporting banks include all types of depository institution as well as some brokers and
dealers.
2. For U.S. banks, includes amounts due f r o m own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory
agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists
3.20
34,221
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS
Payable in U.S. Dollars
Reported by Banks in the United States'
Millions of dollars, end of period
1994
Maturity, by borrower and area 2
1991
1992
Dec.
1 Total
2
3
4
5
6
7
8
9
10
11
12
1.3
14
15
16
17
18
19
By borrower
Maturity of one year or less
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
Asia
Africa
All other 3
Maturity of more than one year
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other 3
Mar.
June
Sept. r
195,302
195,119
202,576
202,705 r
199,836 r
219,480 r
216,480
162,573
21,050
141,523
32,729
15,859
16,870
163,325
17,813
145,512
31,794
13,266
18,528
172,662
17,772
154,890
29,914
10,881
19,033
176,870 r
15,575
161,295 r
25,835
7,670
18,165
171,297 r
15,758
155,539 r
28,539
7,689
20,850
191,090 r
15,954
175,136 r
28,390
7,726
20,664
184,419
14,745
169,674
32,061
7,721
24,340
51,835
6,444
43,597
51,059
2,549
7,089
53,300
6,091
50,376
45,709
1,784
6,065
57,413
7,727
60,490
41,418
1,820
3,794
58,473 r
7,482 r
62,477 r
40,696
1,376
6,366
54,763 r
7,472 r
64,073 r
38,227
1,227
5,535
60,749 r
8,219 r
71,678 r
44,365
1,447
4,632
52,374
7,721
73,923
44,210
1,261
4,930
3,878
3,595
18,277
4,459
2,335
185
5,367
3,287
15,312
5,038
2,380
410
5,310
2,581
14,028
5,611
1,936
448
3,901
2,521
12,293
4,744
1,561
815
4,533
3,622
13,074
5,228
1,605
477
3,704
3,110
14,149
5,493
1,389
545
4,170
2,815
17,397
5,698
1,389
592
1. Reporting banks include all types of depository institutions as well as some brokers and
dealers.
1995
1993 r
2. Maturity is time remaining until maturity,
3. Includes nonmonetary international and regional organizations.
A60
3.21
International Statistics • April 1996
CLAIMS O N FOREIGN COUNTRIES
Held by U.S. and Foreign Offices o f U.S. Banks 1
Billions of dollars, end of period
1993
Area or country
1 Total
1991
1994
1995
1992
Sept.
Dec.
Mar.
June
Sept.
Dec.
Mar.
June
Sept.
343.5
344.7
387.4
407.6 r
478.7 r
487.7 r
487.2 r
499.6 r
539.9 r
523.9 r
524.5 r
137.5
.0
11.3
8.3
5.6
.0
1.9
3.4
68.4
5.8
22.2
131.3
5.6
15.3
9.1
6.5
2.8
2.3
4.8
59.7
6.3
18.8
152.0
7.1
12.3
12.2
8.7
3.7
2.5
5.6
73.9
9.7
16.4
161.9 r
7.4
12.0
12.6
7.7
4.7
2.7
5.9
84.4
6.9 r
17.6
180.8
8.0
16.6
29.9
15.6
4.1
2.9
6.3
70.0
7.8
19.6
175.41"
8.6
19.1
25.0
14.0
3.6
3.0
6.5
65. r
9.7
20.7
183.8
9.6
21.2
24.2
11.6
3.5
2.6
6.2
78.4
10.0
16.5
193.0
7.0
19.7
24.7
11.8
3.6
2.7
6.9
85.8 r
9.8
21.0
208.3
8.3
20.1
31.3
10.6
3.6
3.1
6.2
89.9
10.7
24.5
200.3 r
7.3
19.3
29.9
10.7
4.3
3.0
6.1
86.7 r
10.8
22.1
195.3 r
8.5
17.5 r
28.6
12.6
3.9
2.7
6.0
19.8'
11.7
24.0
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
22.8
.6
.9
.7
2.6
1.4
.6
8.3
1.4
1.8
1.9
2.7
24.0
1.2
.9
.7
3.0
1.2
.4
8.9
1.3
1.7
1.7
2.9
26.0
.6
1.1
.6
3.2
2.1
1.0
9.3
2.1
2.2
1.2
2.8
25.6
.4
1.0
.4
3.2
1.7
.8
9.9
2.1
2.6
1.1
2.3
42.2
1.0
1.1
1.0
3.8
1.6
1.2
13.2
2.4
3.r
1.2
12.7
42.6
1.0
1.1
.8
4.6
1.6
1.1
12.6
2.1
2.8
1.2
13.7
42.5
1.0
.9
.8
4.3
1.6
1.0
14.0
1.8
1.0
1.2
15.0
45.3
1.1
1.2
1.0
4.5
2.0
1.2
13.6
1.6
2.7
1.0
15.4
43.9
.9
1.6
1.1
4.9
2.4
1.0
14.1
1.4
2.5
1.4
12.6
43.2
.7
1.1
.5
5.0
1.8
1.2
13.3
1.4
2.6
1.4
14.3
49.7 r
1.2
1.6
.7
5.1
2.3
1.7
13.3
2.0
3.0
1.3
17.4
25 O P E C 2
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries
14.5
.7
5.4
2.7
4.2
1.5
15.8
.6
5.2
2.7
6.2
1.1
14.8
.5
5.4
2.8
4.9
1.1
17.4
.5
5.1
3.3
7.4
1.2
22.9
.5
4.7
3.4
13.2
1.1
21.6
.5
4.5
3.2
12.4
1.1
21.6
.4
3.9
3.3
13.0
1.0
23.9
.5
3.7
3.8
15.0
.9
19.5
.5
3.5
4.0
10.7
.7
20.3
.7
3.5
4.1
11.4
.6
22.3
.7
3.0
4.4
13.5
.6
31 N o n - O P E C developing countries
64.3
72.6
77.4
83.0
94.2
94.5
93.0
95.9
98.4
103.6
103.5
4.8
9.6
3.6
1.7
15.5
.4
2.1
6.6
10.8
4.4
1.8
16.0
.5
2.6
7.2
11.7
4.7
2.0
17.5
.3
2.7
7.7
12.0
4.7
2.1
17.6
.4
3.1
8.7
12.7
5.1
2.2
18.8
.6
2.8
9.9
12.0
5.1
2.4
18.4
.6
2.7
10.5
9.3
5.5
2.4
19.6
.6
2.8
11.2
8.4
6.1
2.6
18.4
.5
2.7
11.4
9.2
6.4
2.6
17.8
.6
2.4
12.3
10.0
7.1
2.6
17.6
.8
2.6
10.9
13.1
6.4
2.9
16.3
.7
2.6
.3
4.1
3.0
.5
6.8
2.3
3.7
1.7
2.4
.7
5.2
3.2
.4
6.6
3.1
3.6
2.2
3.1
.5
6.4
2.9
.4
6.5
4.1
2.6
2.8
3.4
2.0
7.3
3.2
.5
6.7
4.4
3.1
3.1
3.1
.8
7.6
3.4
.4
14.1
5.2
3.4
3.0
3.1
.8
7.1
3.7
.4
14.3
5.2
3.2
3.3
3.2
1.0
6.9
3.9
.4
14.4
3.9
2.9
3.5
3.4
1.1
9.2
4.2
.4
16.2
3.1
3.3
2.1
4.7
1.1
8.5
3.8
.6
16.9
3.9
3.0
3.3
4.9
1.4
9.0
4.0
.6
18.7
4.1
3.6
3.8
3.5
1.7
9.0
4.4
.5
18.0
4.3
3.3
3.9
3.6
.4
.7
.0
.7
1
.6
.0
1.0
.2
.6
.0
.8
.4
.7
.0
.8
.4
.7
.0
1.0
.5
.7
.0
.9
.3
.7
.0
.9
.3
.6
.0
.8
.4
.6
.0
.7
.4
.9
.0
.6
.4
.9
.0
.7
2.4
.9
.9
.7
3.1
1.9
.6
.6
3.0
1.7
.6
.7
3.2
1.6
.6
.9
3.4
1.5
.5
1.4
3.0
1.2
.5
1.4
3.0
1.1
.5
1.5
2.7
.8
.5
1.4
2.3
.6
.4
1.2
1.8
.4
.3
1.0
3.4
.6
.4
2.3
56 Offshore banking centers
57
Bahamas
58
Bermuda
59
Cayman Islands and other British West Indies
60
Netherlands Antilles
61
Panama 6
62
Lebanon
63
Hong Kong
64
Singapore
65
Other'
53.8
11.9
2.3
15.5
1.2
1.4
.1
14.3
7.1
.0
58.1
6.9
6.2
21.5
1.1
1.9
.1
13.9
6.5
.0
67.9
12.7
5.5
15.1
2.8
2.1
.1
19.1
10.4
.0
73.0 r
10.9 r
8.9
18.0 r
2.6
2.4
.1
18.7
11.2
.1
78.9 r
13.7
8.9
17.9 r
3.5
2.0
.1
19.7
13.0
.0
80.6 r
13.3
6.5
23.8 r
2.5
1.9
.1
21.8
10.6
.0
11.2'
13.8
6.0
21.5 r
1.7
1.9
.1
20.3
11.8
.0
72.0 r
10.7 r
8.4
19.9
1.5
1.3
.1
19.9
10.1
.1
85.3 r
13.3 r
8.7
19.4
.9
1.1
.1
22.4
19.2
.0
82.4 r
8.4 r
8.5
23.1'
2.5
1.3
.1
23.1
14.8 r
.0
86.4 r
12.6 r
6.3
23.4 r
5.5
1.3
.1
23.7
13.3
.1
66 Miscellaneous and unallocated 8
47.9
39.7
46.2
43.4
55.9
69.7
65.8
66.7
82.0
72.1
63.7 r
2 G-10 countries and Switzerland
3
Belgium and Luxembourg
France
4
Germany
5
6
Italy
Netherlands
7
8
Sweden
9
Switzerland
10
United Kingdom
11
Canada
12
Japan
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
People's Republic of China
Republic of China (Taiwan)
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa 3
52 Eastern Europe
53
Russia 4
54
Yugoslavia 5
55
Other
1. The banking offices covered by these data include U.S. offices and foreign branches of
U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not covered
include U.S. agencies and branches of foreign banks. Beginning March 1994, the data include
large foreign subsidiaries of U.S. banks. The data also include other types of U.S. depository
institutions as well as some types of brokers and dealers. To eliminate 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.
These data are on a gross claims basis and do not necessarily reflect the ultimate country
risk or exposure of U.S. banks. More complete data on the country risk exposure of U.S. banks
are available in the quarterly Country Exposure Lending Survey published by the Federal
Financial Institutions Examination Council.
2. Organization of Petroleum Exporting Countries, shown individually; other members of
O P E C (Algeria, Gabon, Iran, Iraq. Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United
Arab Emirates); and Bahrain and O m a n (not formally members of OPEC).
3. Excludes Liberia. Beginning March 1994 includes Namibia.
4. As of December 1992, excludes other republics of the former Soviet Union.
5. As of December 1992. excludes Croatia, Bosnia and Hercegovinia, and Slovenia.
6. Includes Canal Zone.
7. Foreign branch claims only.
8. Includes New Zealand, Liberia, and international and regional organizations.
Nonbank-Reported Data
3.22
A61
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in
the United States
Millions of dollars, end of period
1995
1994
Type of liability, and area or country
1991
1992
1993
June
Sept.
Dec.
Mar.
June
Sept. p
1 Total
44,708
45,511
50,597
57,193
59,163
55,656
51,530
51,236
48,912
2 Payable in dollars
3 Payable in foreign currencies
39,029
5,679
37,456
8,055
38,728
11,869
43,410
13,783
43,412
15,751
39,645
16,011
37,246
14,284
35,530
15,706
35,147
13,765
By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies
22,518
18,104
4,414
23,841
16,960
6,881
29,226
18,545
10,681
35,256
23,461
11,795
37,973
24,091
13,882
34,301
20,165
14,136
31,118
18,047
13,071
30,545
16,277
14,268
27,476
15,111
12,365
7 Commercial liabilities
8
Trade payables
9
Advance receipts and other liabilities
22,190
9,252
12,938
21,670
9,566
12,104
21,371
8,802
12,569
21,937
9,911
12,026
21,190
9,550
11,640
21,355
10,005
11,350
20,412
9,844
10,568
20,691
10,527
10,164
21,436
10,061
11,375
10
11
Payable in dollars
Payable in foreign currencies
20,925
1,265
20,496
1,174
20,183
1,188
19,949
1,988
19,321
1,869
19,480
1,875
19,199
1,213
19,253
1,438
20,036
1,400
12
13
14
15
16
17
18
By area or country
Financial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
12,003
216
2,106
682
1,056
408
6,528
13,387
414
1,623
889
606
569
8,610
18,810
175
2,539
975
534
634
13,332
25,396
524
1,590
939
533
631
19,962
25,614
661
2,241
1,467
648
633
18,649
22,018
495
1,727
1,961
552
688
15,858
17,880
612
2,046
1,755
633
883
11,103
18,571
778
1,101
1,589
530
1,056
12,486
16,735
347
1,354
1,670
474
948
10,876
19
Canada
292
544
859
698
618
629
1,817
893
797
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
4,784
537
114
6
3,524
7
4
4,053
379
114
19
2,850
12
6
3,359
1,148
0
18
1,533
17
5
3,125
1,052
115
18
1,297
13
5
3,139
1,112
15
7
1,344
15
5
3,021
926
80
207
1,160
0
5
3,024
931
149
58
1,231
10
5
2,808
851
138
58
1,118
3
4
2,762
849
144
111
1,018
3
3
27
28
29
Asia
Japan
Middle Eastern oil-exporting countries'
5,381
4,116
13
5,818
4,750
19
5,956
4,887
23
5,998
5,064
24
8,450
7,248
31
8,448
7,314
35
8,201
7,182
27
8,080
7,153
25
6,994
6,310
25
30
31
Africa
Oil-exporting countries 2
6
4
6
0
133
123
9
0
133
123
135
123
156
122
151
122
149
122
52
33
109
30
19
50
40
42
39
8,701
248
1,039
1,052
710
575
2,297
7,398
298
700
729
535
350
2,505
6,827
239
655
684
688
375
2,039
6,887
254
680
670
649
473
2,309
6,868
287
744
552
674
391
2,350
6,773
241
728
604
722
327
2,444
6,642
271
642
482
536
327
2,848
6,776
311
504
556
448
432
2,902
7,263
349
528
660
566
255
3,351
32
33
34
35
36
37
38
39
All other 3
Commercial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
40
Canada
1,014
1,002
879
1,070
1,068
1,037
1,235
1,146
1,219
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,355
3
310
219
107
307
94
1,533
3
307
209
33
457
142
1,658
21
350
214
27
481
123
2,000
2
418
215
24
703
192
1,783
6
200
147
33
672
189
1,857
19
345
161
23
574
276
1,368
8
260
96
29
356
273
1,836
3
397
107
12
420
204
1,607
1
219
143
5
357
175
48
49
50
Asia
Japan
Middle Eastern oil-exporting countries'
9,334
3,721
1,498
10,594
3,612
1,889
10,980
4,314
1,534
10,832
4,250
1,835
10,370
4,128
1,663
10,741
4,555
1,576
10,151
4,110
1,787
9,978
3,531
1,790
10,275
3,475
1,647
51
52
Africa
Oil-exporting countries 2
715
327
568
309
453
167
510
241
468
264
428
256
463
248
481
252
589
241
53
Other 3
1,071
575
574
638
633
519
553
474
483
1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
2. Comprises Algeria, Gabon, Libya, and Nigeria.
3. Includes nonmonetary international and regional organizations.
A62
International Statistics • April 1996
3.23
CLAIMS ON UNAFFILIATED FOREIGNERS
the United States
Reported by Nonbanking Business Enterprises in
Millions of dollars, end of period
1994
Type of claim, and area or country
1991
1992
1995
1993
June
Sept.
Dec.
Mar.
June
Sept. p
1 Total
45,262
45,073
49,159
52,510
54,833
57,888
52,218
58,030
53,616
2 Payable in dollars
3 Payable in foreign currencies
42,564
2,698
42.281
2,792
45,161
3,998
48,003
4,507
50,460
4,373
53,805
4,083
48,425
3,793
54,145
3,885
49,935
3,681
By type
4 Financial claims
Deposits
6
Payable in dollars
/
Payable in foreign currencies
8
Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
27,882
20,080
19,080
1,000
7,802
6,910
892
26.509
17,695
16,872
823
8,814
7,890
924
27,771
15,717
15,182
535
12,054
10,862
1.192
30,234
17,824
17,203
621
12,410
11,057
1,353
32,236
19,118
18,502
616
13,118
11,903
1,215
33,897
18,507
18,026
481
15,390
14,306
1,084
29,606
17,115
16,458
657
12,491
11,275
1,216
34,567
22,021
21,349
672
12,546
11,388
1,158
29,802
17,889
17,345
544
11,913
10,690
1,223
11 Commercial claims
12
Trade receivables
13
Advance payments and other claims
17,380
14,468
2,912
18,564
16,007
2,557
21,388
18,425
2,963
22,276
19,475
2,801
22,597
19,825
2,772
23,991
21,158
2,833
22,612
20,415
2,197
23,463
21,312
2,151
23,814
21,687
2,127
14
15
Payable in dollars
Payable in foreign currencies
16,574
806
17.519
1,045
19,117
2,271
19,743
2,533
20,055
2,542
21,473
2,518
20,692
1,920
21,408
2,055
21,900
1,914
16
17
18
19
20
21
22
By area or country
Financial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
13,441
13
269
283
334
581
11,534
9,331
8
764
326
515
490
6,252
7,299
134
826
526
502
530
3,585
7,372
84
995
459
472
539
3,673
8,914
115
931
413
503
777
5,023
7,936
86
800
540
429
523
4,649
7,630
146
808
527
606
490
4,040
7,923
155
731
355
601
514
4,787
7,807
160
754
299
522
530
4,895
23
Canada
24
23
26
21
28
2y
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
31
32
33
Asia
Japan
Middle Eastern oil-exporting countries'
34
33
Africa
Oil-exporting countries"
36
37
38
3y
40
41
42
43
All other 3
Commercial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
2,642
1,833
2,032
3,470
3,812
3,581
3,848
3,705
3,525
10,717
827
8
351
9,056
212
40
13,893
778
40
686
11.747
445
29
16,224
1,336
125
654
12.699
872
161
16,465
1,376
39
466
13,390
629
32
16,608
1,121
52
411
13,694
691
31
19,536
2,424
27
520
15,228
723
35
16,109
940
37
528
13,531
583
27
21,160
2,355
85
502
17,013
638
27
15,300
1,552
35
851
11,769
490
50
640
350
5
864
668
3
1,657
892
3
2,221
1,344
1
2,176
661
19
1,871
953
141
1,504
621
4
1,231
467
3
2,150
1,393
4
57
1
83
9
99
1
185
0
197
0
373
0
141
9
138
9
188
6
385
505
460
521
529
600
374
410
832
8,193
194
1,585
955
645
295
2,086
8,451
189
1,537
933
552
362
2,094
9.105
184
1,947
1,018
423
432
2,377
8,976
189
1,788
940
294
686
2,445
8,810
178
1,766
883
331
538
2,505
9,540
213
1,881
1,027
311
557
2,556
8,947
199
1,790
977
324
556
2,388
9,190
218
1,669
1,023
341
612
2,459
8,884
226
1,706
996
337
437
2,501
44
Canada
1,121
1,286
1,781
1,875
1,906
1,988
2,010
2,003
2,001
45
46
47
48
4y
30
31
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,655
13
264
427
41
842
203
3,043
28
255
357
40
924
345
3,274
11
182
460
71
990
293
3,904
18
295
500
67
1,048
304
3,963
34
246
471
49
1,137
388
4,117
9
234
612
83
1,243
348
4,140
17
208
695
55
1,106
295
4,368
21
210
777
83
1,108
319
4,582
101
245
745
175
1,023
335
52
33
54
Asia
Japan
Middle Eastern oil-exporting countries'
4,591
1,899
620
4.866
1.903
693
6,014
2,275
704
6,330
2,498
642
6,679
2,591
617
6,982
2,655
708
6,200
1,911
689
6,514
2,010
707
6,830
1,996
778
55
36
Africa
Oil-exporting countries 2
430
95
554
78
493
72
480
83
447
61
454
67
468
71
478
60
546
74
57
Other 3
390
364
721
711
792
910
847
910
971
1. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
2. Comprises Algeria, Gabon, Libya, and Nigeria.
3. Includes nonmonetary international and regional organizations.
Securities Holdings and Transactions
3.24
A63
FOREIGN T R A N S A C T I O N S IN SECURITIES
Millions of dollars
1995
1995
Transaction, and area or country
1994
1995
Jan.Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec. p
44,450
44,218
41,492
42,860
41,937
39,071
46,479
44,372
U.S. corporate securities
STOCKS
Foreign purchases
2 Foreign sales
350,593
348,716
1
462,884
451,709
462,884
451,709
45,445
43,218
42,444
40,009
41,908
39,366
3 Net p u r c h a s e s , o r sales (—)
1,877
11,175
11,175
2,227
2,435
2,542
232
-1,368
2,866
2,107
4 Foreign countries
1,867
11,380
11,380
2,235
2,443
2,565
295
-1,328
2,877
2,109
6,714
-201
2,110
2,251
-30
840
-1,160
-2,111
-1,142
-1,234
1,162
29
771
4,847
-1,099
-1,837
3,507
-2,283
8,001
-1,517
5,814
-337
2,503
-2,725
2
68
4,847
-1,099
-1,837
3,507
-2,283
8,001
-1,517
5,814
-337
2,503
-2,725
2
68
-47
-79
-224
70
-201
240
-740
1,651
-99
1,358
-466
15
97
2,045
261
8
364
-20
1,445
-425
881
-24
107
141
-5
-136
1,836
17
-104
431
-847
2,330
-10
1,811
-5
-961
-1,076
17
-123
-1,319
-126
-136
197
9
-1,114
-197
752
-77
1,048
-598
34
54
1,647
-54
5
528
449
878
-74
-2,920
-8
61
56
-17
1,028
-382
-11
373
191
1,277
-175
219
148
883
1,231
- 1 7
954
-58
-131
230
227
543
405
1,361
-63
342
-406
-26
-96
10
-205
-205
-8
-8
-23
-63
-40
-11
-2
289,586
229,665
291,938
206,951
291,938
206,951
27,939
18,835
23,911
14,949
24,742
16,741
27,212
17,759
26,367
19,199
31,642
20,741
21,686
21,117
21 Net p u r c h a s e s , o r sales (—)
59,921
84,987
84,987
9,104
8,962
8,001
9,453
7,168
10,901
569
22 F o r e i g n c o u n t r i e s
59,036
85,441
85,441
9,111
9,129
7,982
9,431
7,236
10,948
541
23
24
25
26
27
28
29
30
31
32
33
34
35
37,065
242
657
3,322
1,055
31,642
2,958
5,442
771
12,153
5.486
-7
654
68,723
1,143
5,806
1,463
494
56,128
2,569
6,141
1,869
5,659
2,250
234
246
68,723
1,143
5,806
1,463
494
56,128
2,569
6,141
1,869
5,659
2,250
234
246
7,716
44
667
-59
-130
7,006
159
289
64
785
293
47
51
6,340
7
51
557
317
5,063
169
1,145
348
1,189
1,026
-13
-49
5,561
538
1,163
45
-99
3,775
415
754
281
919
1,008
64
-12
6,959
63
916
203
343
4,511
349
1,719
241
139
-371
23
1
6,361
732
113
204
148
4,542
139
-61
-246
1,126
645
-223
140
9,759
101
894
219
101
6,999
20
1,426
188
-705
-899
240
20
1,297
137
236
101
-381
913
181
-848
187
-293
-904
86
-69
885
-454
-454
-7
-167
19
22
-68
-47
28
5 Europe
6
France
7
Germany
8
Netherlands
9
Switzerland
10
United Kingdom
11 Canada
12 Latin America and Caribbean
13 Middle East'
14 Other Asia
15
Japan
16 Africa
17 Other countries
18 N o n m o n e t a r y i n t e r n a t i o n a l a n d
regional o r g a n i z a t i o n s
- 1
7
BONDS2
19 Foreign purchases
20 Foreign sales
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Japan
Africa
Other countries
36 N o n m o n e t a r y i n t e r n a t i o n a l a n d
regional organizations
Foreign securities
-48,071
386,106
434,177
-9,224
848,368
857,592
-51,250
345,164
396,414
-46,825
892,578
939,403
-51,250
345,164
396,414
-46,825
892,578
939,403
-4,409
29,123
33,532
-7,378
96,268
103,646
-8,188
28,582
36,770
-4,079
67,187
71,266
-5,904
30,867
36,771
-3,755
72,277
76,032
-7,959
28,712
36,671
-5,206
83,396
88,602
-5,755r
29,382
35,137 r
-7,580r
76,889 r
84,469 r
-1,725
30,307
32,032
-6,058
78,563
84,621
-57,295
-98,075
-98,075
-11,787
-12,267
-9,659
-13,165
-13,335r
-7,783
-11,423
44 F o r e i g n c o u n t r i e s
-57,815
-97,270
-97,270
-11,476
-12,048
-9,486
-13,220
— 13,226 r
-7,705
-11,482
45
46
47
48
49
50
51
-3,516
-7,475
-18,334
-24,275
-17,427
-467
-3,748
-48,040
-7,805
-6,938
-34,097
-25,119
-475
85
-48,040
-7,805
-6,938
-34,097
-25,119
-475
85
-5,788
-1,427
-513
-2,942
-1,264
-67
-739
-7,955
-1,301
-185
-3,158
-3,586
-45
596
-2,539
-851
817
-7,250
-5,499
34
303
-2,928
-3,471
781
-7,533
-5,360
-117
48
—7,243 r
1,311
-3,883
—2,503 r
— 849 r
5
—913 r
-4,609
-434
-67
-2,001
-1,388
19
-613
-6,226
-8
-786
-4,742
-4,031
-192
472
520
-805
-805
-311
-219
-173
55
-78
59
37 Stocks, net purchases, or sales ( - )
38
Foreign purchases
39
Foreign sales
4 0 Bonds, net purchases, or sales ( —)
41
Foreign purchases
42
Foreign sales
43 Net p u r c h a s e s , o r sales (—), of stocks a n d b o n d s
Europe
Canada
Latin America and Caribbean
Japan
Africa
Other countries
52 N o n m o n e t a r y i n t e r n a t i o n a l a n d
regional o r g a n i z a t i o n s
....
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, O m a n . Qatar,
Saudi Arabia, and United Arab Emirates (Trucial States).
—109
-7,360
32,032
39,392
-4,063
80,310
84,373
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.
A64
3.25
International Statistics • April 1996
MARKETABLE U.S. TREASURY BONDS A N D NOTES
Foreign Transactions'
Millions of dollars; net purchases, or sales (—) during period
1995
1995
Area or country
1994
1995
Jan.Dec.
June
July
Aug.
Sept.
Oct.
Nov.
Dec. p
1 Total e s t i m a t e d
78,801
133,987
133,987
22,631
31,871
26,082
-11,072
4,819
15,307
-9,458
2 Foreign countries
78.637
133,552
133,552
22,432
31,382
26,442
-11,002
4,650
14,936
-9,016
38,542
1,098
5,709
1,254
794
481
23,365
5,841
3,491
50,004
591
6,136
1,891
358
-472
34,782
6,718
252
50,004
591
6,136
1,891
358
-472
34,782
6,718
252
2,702
-148
-1,866
1,078
63
9
1,396
2,170
433
13,336
-53
1,039
883
124
206
7,315
3,822
720
9,170
580
2,995
-1,468
100
-515
7,950
-472
-825
6,377
143
2,568
-1,915
61
818
5,570
-868
-2,284
-4,608
-25
2,831
160
92
174
-5,965
-1,875
-1,864
821
81
52
833
-30
-568
1,309
-856
-43
-1,116
171
452
381
-285
-664
-4,373
3,202
208
-10,383
-319
-20,493
10,429
47,317
29,793
240
-570
48,609
-2
25,152
23,459
32,319
16,863
1,460
908
48,609
-2
25,152
23,459
32,319
16,863
1,460
908
5,368
121
5,158
89
12,605
5,585
242
1,082
513
-114
1,034
-407
16,490
6,658
-1
324
11,265
-359
5,364
6,260
7,322
5,430
-130
-360
-5,299
-524
1,171
-5,946
-10,055
-4,021
108
151
17,453
-92
3,033
14,512
-6,879
-10,115
501
47
13,496
232
3,723
9,541
-107
1,316
458
311
3,762
61
4,710
-1,009
-11,843
-5,695
248
-275
164
526
-154
435
5
261
435
5
261
199
-409
623
489
311
105
-360
-140
-10
-70
-196
-6
169
2
185
371
368
-43
-442
-351
-115
78,637
41,822
36,815
133,552
39,625
93,927
133,552
39,625
93,927
31,382
16,790 r
14,592 r
26,442
-364
26,806
-11,002
-4,525
-6,477
4,650
5,705
-1,055
-38
0
3,075
2
3,075
2
1,890
0
-50
0
-624
0
3
4
5
6
7
8
9
in
n
Europe
Belgium and Luxembourg
Germany
Netherlands
Sweden
Switzerland
United Kingdom
Other Europe and former U.S.S.R
Canada
17.
13
14
15
16
17
18
19
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Japan
Africa
Other
20 Nonmonetary international and regional organizations
International
71
Latin American regional
22
MEMO
23 Foreign countries
Official institutions
24
Other foreign
25
Oil-exporting
countries
26 Middle E a s t "
27 Africa 3
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.
22,432
10,87 r
1 l,561 r
815
1
3,582
0
14,936
-915r
15,85 r
-826
0
-9,016
2,651
-11,667
-1,085
0
2. Comprises Bahrain, Iran, Iraq, Kuwait, O m a n , Qatar, Saudi Arabia, and United A r a b
Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
Interest and Exchange Rates
3.26
A65
D I S C O U N T RATES OF FOREIGN C E N T R A L B A N K S '
Percent per year, averages of daily figures
Feb. 29, 1996
Rate on Feb. 29, 1996
Country
Country
Month
effective
Austria. . .
Belgium..
Canada. .
Denmark
France 2 .
Dec.
Dec.
Feb.
Jan.
Feb.
3.0
3.0
5.5
4.0
3.90
1995
1995
1996
1996
1996
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
Germany . . .
Italy
Japan
Netherlands .
Switzerland .
3.0
9.0
2. Since February 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'
Percent per year, averages of daily figures
1995
Type or country
1
2
3
4
5
6
7
8
9
10
Eurodollars
United Kingdom
Canada
Germany
Switzerland
Netherlands
France
Italy
Belgium
Japan
1993
3.18
5.88
5.14
7.17
4.79
6.73
8.30
10.09
8.10
2.96
1994
4.63
5.45
5.57
5.25
4.03
5.09
5.72
8.45
5.65
2.24
5.93
6.63
7.14
4.43
2.94
4.30
6.43
10.43
4.73
1.20
1. Rates are for three-month interbank loans, with the following exceptions: Canada,
finance company paper; Belgium, three-month Treasury bills; and Japan, C D rate.
1996
1995
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
5.79
6.74
6.62
4.35
2.79
4.02
5.81
10.45
4.41
.82
5.74
6.71
6.66
4.09
2.67
3.85
5.86
10.36
4.20
.56
5.81
6.69
6.66
4.00
2.15
3.88
6.73
10.74
4.14
.51
5.75
6.61
6.02
3.91
1.98
3.73
5.74
10.65
3.87
.54
5.64
6.42
5.91
3.82
1.94
3.58
5.47
10.58
3.74
.52
5.40
(i.3l
5.58
3.51
1.65
3.20
4.56
10.05
3.47
.55
Feb.
5.14
6.13
5.22
3.26
1.61
3.00
4.29
9.90
3.23
.61
A66
3.28
International Statistics • April 1996
FOREIGN E X C H A N G E RATES 1
Currency units per dollar except as noted
1995
Country/currency unit
1
2
3
4
3
6
7
8
9
10
Australia/dollar"
Austria/schilling
Belgium/franc
Canada/dollar
China, P.R./'yuan
Denmark/krone
11
12
13
14
13
16
1/
18
19
20
H o n g Konc/dollar
India/rupee
Ireland/'oound"
Italy/lira
Japan/yea
Malaysia, 'nncgit
Netherlands/suilder
Neyv Z e a l a n d / d o l l a r
Norway/krone
Portugal/escudo
21
22
23
24
23
26
27
28
29
30
Singapore/dollar
South Airica/rand
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United K i n g d o m / p o u n d 2
Francc/franc
Germany/dcutsche mark
Greece/drachma
1993
1994
1996
1995
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
75.699
9.955
29.105
1.3458
8.3353
5.4912
4.2781
4.9374
1.4143
232.65
74.534
9.974
29.154
1.3534
8.3334
5.4923
4.2489
4.8882
1.4173
234.16
74.053
10.142
29.615
1.3693
8.3350
5.5791
4.3361
4.9565
1.4406
238.06
74.171
10.296
30.081
1.3669
8.3384
5.6618
4.4510
5.0117
1.4635
240.91
75.557
10.321
30.115
1.3752
8.3338
5.6749
4.5532
5.0440
1.4669
242.21
67.993
11.639
34.581
1.2902
5.7795
6.4863
5.7251
5.6669
1.6545
229.64
73.161
11.409
33.426
1.3664
8.6404
6.3561
5.2340
5.5459
1.6216
242.50
74.073
10.076
29.472
1.3725
8.3700
5.5999
4.3763
4.9864
1.4321
231.68
75.371
10.270
30.044
1.3509
8.3374
5.6587
4.3754
5.0352
1.4601
235.65
7.7357
31.291
146.47
1,573.41
111.08
2.5738
1.8585
54.127
7.1009
161.08
7.7290
31.394
149.69
1,611.49
102.18
2.6237
1.8190
59.358
7.0553
165.93
7.7357
32.418
160.35
1.629.45
93.96
2.5073
1.6044
65.625
6.3355
149.88
68
^3.310
. \05
1 61.'.41
10d.55
2.5124
1.6354
65.607
6.3943
152.11
7.7317
34.656
161.32
1,605.69
100.84
2.5324
1.5846
65.899
6.2397
148.94
7.7338
34.710
160.54
1,592.67
101.94
2.5389
1.5877
65.224
6.2536
148.68
7.7345
34.966
159.18
1,593.88
101.85
2.5399
1.6127
64.996
6.3579
151.03
7.7329
35.812
158.18
1,584.87
105.75
2.5563
1.6388
66.195
6.4275
151.90
7.7323
36.595
158.10
1,570.00
105.79
2.5487
1.6424
67.495
6.4103
152.49
1.6158
3.2729
805.75
127.48
48.211
7.7956
1.4781
26.416
25.333
150.16
1.5275
3.5526
806.93
133.88
49.170
7.7161
1.3667
26.465
25.161
153.19
1.4171
3.6286
772.82
124.64
51.047
7.1406
1.1812
26.495
24.921
157.85
1.4331
3.6616
772.04
125.41
52.547
7.1227
1.1868
27.432.
25.129
155.90
1.4231
3.6502
767.20
122.51
52.539
6.8301
1.1453
26.925
25.115
157.79
1.4128
3.6499
769.78
121.81
53.199
6.6088
1.1437
27.257
25.166
156.25
1.4148
3.6632
771.31
122.53
53.808
6.6393
1.1631
27.315
25.164
154.05
1.4211
3.6413
787.13
123.38
53.874
6.7405
1.1818
27.406
25.298
152.88
1.4115
3.7420
780.12
123.65
53.716
6.8775
1.1967
27.485
25.250
153.60
ir
MEMO
31 United States/dollar 3
93.18
91.32
84.25
1. Averages of certified noon buying rates in New York for cable transfers. Data in this
table also appear in the B o a r d ' s G.5 (405) monthly statistical release. For ordering address.
see inside front cover.
2. Value in U S . cents.
85.69
84.10
84.14
85.07
86.23
86.41
3. Index of weighted-average e x c h a n g e value of U.S. dollar against the currencies of ten
industrial countries. T h e weight for each of the ten countries is the 1 9 7 2 - 7 6 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).
A67
Guide to Statistical Releases and Special Tables
STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference
Issue
Anticipated schedule of release dates for periodic releases
December 1995
Page
A76
SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference
Title and Date
Assets and liabilities
Issue
of commercial
banks
March 31, 1993
June 30, 1993
September 30, 1993
December 31, 1993
Terms of lending at commercial
of U.S. branches
and agencies
of foreign
balance sheet and income statements for priced service
of life insurance
lending reported
1994
May
August
November
February
1995
1995
1995
1996
A68
A68
A68
A68
May
October
November
February
1995
1995
1995
1996
A72
A68
A72
All
October
August
October
January
1992
1995
1995
1996
A70
A76
A72
A68
December
May
August
March
1991
1992
1992
1993
A79
A81
A83
A71
September 1995
A68
companies
June 30, 1991
September 30, 1991
December 31, 1991
September 30, 1992
Residential
A70
A70
A70
A68
operations
June 30, 1992
March 31, 1995
June 30, 1995
September 30, 1995
Assets and liabilities
1993
1993
1994
1994
banks
December 31, 1994
March 31, 1995
June 30, 1995
September 30, 1995
Pro forma
August
November
February
May
banks
February 1995
May 1995
August 1995
November 1995
Assets and liabilities
Page
under the Home Mortgage
Disclosure
Act
A68
Index to Statistical Tables
References are to pages A3-A66 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, 18-23
Domestic finance companies, 36
Federal Reserve Banks, 11
Financial institutions, 28
Foreign banks, U.S. branches and agencies, 23
Automobiles
Consumer installment credit, 39
Production, 47, 48
BANKERS acceptances, 11, 12, 21-24, 26
Bankers balances, 18-23. (See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 34
Rates, 26
Branch banks, 23
Business activity, nonfinancial, 45
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 46
Capital accounts
Banks, by classes, 18
Federal Reserve Banks, 11
Central banks, discount rates, 65
Certificates of deposit, 26
Commercial and industrial loans
Commercial banks, 21, 22
Weekly reporting banks, 21-23
Commercial banks
Assets and liabilities, 18-23
Commercial and industrial loans, 18-23
Consumer loans held, by type and terms, 39
Deposit interest rates of insured, 16
Loans sold outright, 22
Real estate mortgages held, by holder and property, 38
Time and savings deposits, 4
Commercial paper, 24, 26, 36
Condition statements (See Assets and liabilities)
Construction, 45, 49
Consumer installment credit, 39
Consumer prices, 45
Consumption expenditures, 52, 53
Corporations
Profits and their distribution, 35
Security issues, 34, 65
Cost of living (See Consumer prices)
Credit unions, 39
Currency in circulation, 5, 14
Customer credit, stock market, 27
DEBITS to deposit accounts, 17
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 18-23
Ownership by individuals, partnerships, and
corporations, 22, 23
Turnover, 17
Depository institutions
Reserve requirements, 9
Reserves and related items, 4, 5, 6, 13
Deposits (See also specific types)
Banks, by classes, 4, 18-23
Federal Reserve Banks, 5, 11
Deposits—Continued
Interest rates, 16
Turnover, 17
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, 35
EMPLOYMENT, 45
Eurodollars, 26
FARM mortgage loans, 38
Federal agency obligations, 5, 10, 11, 12, 31, 32
Federal credit agencies, 33
Federal finance
Debt subject to statutory limitation, and types and ownership
of gross debt, 30
Receipts and outlays, 28, 29
Treasury financing of surplus, or deficit, 28
Treasury operating balance, 28
Federal Financing Bank, 33
Federal funds, 7, 21, 22, 23, 26, 28
Federal Home Loan Banks, 33
Federal Home Loan Mortgage Corporation, 33, 37, 38
Federal Housing Administration, 33, 37, 38
Federal Land Banks, 38
Federal National Mortgage Association, 33, 37, 38
Federal Reserve Banks
Condition statement, 11
Discount rates (See Interest rates)
U.S. government securities held, 5, 11, 12, 30
Federal Reserve credit, 5, 6, 11, 12
Federal Reserve notes, 11
Federally sponsored credit agencies, 33
Finance companies
Assets and liabilities, 36
Business credit, 36
Loans, 39
Paper, 24, 26
Financial institutions, loans to, 21, 22, 23
Float, 5
Flow of funds, 4 0 - 4 4
Foreign banks, assets and liabilities of U.S. branches and agencies,
22, 23
Foreign currency operations, 11
Foreign deposits in U.S. banks, 5, 22
Foreign exchange rates, 66
Foreign trade, 54
Foreigners
Claims on, 55, 58, 59, 60, 62
Liabilities to, 22, 54, 55, 56, 61, 63, 64
GOLD
Certificate account, 11
Stock, 5, 54
Government National Mortgage Association, 33, 37, 38
Gross domestic product, 51
HOUSING, new and existing units, 49
INCOME, personal and national, 45, 51, 52
Industrial production, 45, 47
Installment loans, 39
Insurance companies, 30, 38
A69
Interest rates
Bonds, 26
Consumer installment credit, 39
Deposits, 16
Federal Reserve Banks, 8
Foreign central banks and foreign countries, 65
Money and capital markets, 26
Mortgages, 37
Prime rate, 25
International capital transactions of United States, 53-65
International organizations, 55, 56, 58, 61, 62
Inventories, 51
Investment companies, issues and assets, 35
Investments (See also specific types)
Banks, by classes, 18-23
Commercial banks, 4, 18-23
Federal Reserve Banks, 11,12
Financial institutions, 38
LABOR force, 45
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 18-23
Commercial banks, 18-23
Federal Reserve Banks, 5, 6, 8, 11, 12
Financial institutions, 38
Insured or guaranteed by United States, 37, 38
MANUFACTURING
Capacity utilization, 46
Production, 46, 48
Margin requirements, 27
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, 26
Money stock measures and components, 4, 14
Mortgages (See Real estate loans)
Mutual funds, 35
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 29
National income, 51
OPEN market transactions, 10
PERSONAL income, 52
Prices
Consumer and producer, 45, 50
Stock market, 27
Prime rate, 25
Producer prices, 45, 50
Production, 45, 47
Profits, corporate, 35
REAL estate loans
Banks, by classes, 21, 22, 38
Terms, yields, and activity, 37
Type of holder and property mortgaged, 38
Repurchase agreements, 7
Reserve requirements, 9
Reserves
Commercial banks, 18
Depository institutions, 4, 5, 6, 13
Federal Reserve Banks, 11
U.S. reserve assets, 54
Residential mortgage loans, 37
Retail credit and retail sales, 39, 45
SAVING
Flow of funds, 4 0 - 4 4
National income accounts, 51
Savings institutions, 38, 39, 40
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 33
Foreign transactions, 63
New issues, 34
Prices, 27
Special drawing rights, 5 , 1 1 , 53, 54
State and local governments
Deposits, 21, 22
Holdings of U.S. government securities, 30
New security issues, 34
Ownership of securities issued by, 21, 23
Rates on securities, 26
Stock market, selected statistics, 27
Stocks (See also Securities)
New issues, 34
Prices, 27
Student Loan Marketing Association, 33
TAX receipts, federal, 29
Thrift institutions, 4. (See also Credit unions and Savings
institutions)
Time and savings deposits, 4, 14, 16, 18-23
Trade, foreign, 54
Treasury cash, Treasury currency, 5
Treasury deposits, 5, 11, 28
Treasury operating balance, 28
UNEMPLOYMENT, 45
U.S. government balances
Commercial bank holdings, 18-23
Treasury deposits at Reserve Banks, 5, 11, 28
U.S. government securities
Bank holdings, 18-23, 30
Dealer transactions, positions, and financing, 32
Federal Reserve Bank holdings, 5, 11, 12, 30
Foreign and international holdings and
transactions, 11, 30, 64
Open market transactions, 10
Outstanding, by type and holder, 30, 31
Rates, 26
U.S. international transactions, 53-66
Utilities, production, 48
VETERANS Administration, 37, 38
WEEKLY reporting banks, 18-23
Wholesale (producer) prices, 45, 50
YIELDS (See Interest rates)
A70
Federal Reserve Board of Governors
and Official Staff
A L A N GREENSPAN,
Chairman Pro Tempore
EDWARD W . KELLEY, JR.
LAWRENCE B . LINDSEY
OFFICE OF BOARD
MEMBERS
JOSEPH R. COYNE, Assistant to the Board
DONALD J. WINN, Assistant to the Board
THEODORE E. ALLISON, Assistant to the Board for Federal
Reserve System Affairs
LYNN S. FOX, Deputy Congressional
Liaison
WINTHROP P. HAMBLEY, Special Assistant to the Board
BOB STAHLY MOORE, Special Assistant to the Board
DIANE E. WERNEKE, Special Assistant to the Board
PORTIA W. THOMPSON, Equal Employment
Opportunity
Programs
Adviser
DIVISION
OF INTERNATIONAL
FINANCE
EDWIN M. TRUMAN, Staff Director
LARRY J. PROMISEL, Senior Associate
Director
CHARLES J. SIEGMAN, Senior Associate
Director
DALE W. HENDERSON, Associate
Director
DAVID H. HOWARD, Senior Adviser
DONALD B. ADAMS, Assistant
Director
THOMAS A. CONNORS, Assistant
Director
PETER HOOPER HI, Assistant
Director
KAREN H. JOHNSON, Assistant
Director
CATHERINE L. MANN, Assistant
Director
RALPH W. SMITH, JR., Assistant
Director
LEGAL
DIVISION
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
ROBERT DEV. FRIERSON, Assistant General Counsel
KATHERINE H. WHEATLEY, Assistant General
Counsel
OFFICE
OF THE
WILLIAM W . WILES,
SECRETARY
Secretary
JENNIFER J. JOHNSON, Deputy
Secretary
BARBARA R. LOWREY, Associate Secretary and
DIVISION
OF
SUPERVISION
BANKING
AND
RICHARD SPILLENKOTHEN,
REGULATION
Director
STEPHEN C. SCHEMERING, Deputy
Director
DON E. KLINE, Associate
Director
WILLIAM A. RYBACK, 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
STEPHEN M. HOFFMAN, JR., Assistant
Director
LAURA M. HOMER, Assistant
Director
Director
JAMES V. HOUPT, Assistant
JACK P. JENNINGS, Assistant
Director
MICHAEL G. MARTINSON, Assistant
Director
RHOGER H PUGH, Assistant
Director
SIDNEY M. SUSSAN, Assistant
Director
MOLLY S. WASSOM, Assistant
Director
WILLIAM SCHNEIDER, Project Director,
National Information
Center
Ombudsman
OF RESEARCH
M I C H A E L J. PRELL,
AND
STATISTICS
Director
EDWARD C. ETTIN, Deputy
Director
DAVID J. STOCKTON, Deputy
Director
MARTHA BETHEA, Associate
Director
WILLIAM R. JONES, Associate
Director
MYRON L. KWAST, Associate
Director
PATRICK M. PARKINSON, Associate
Director
THOMAS D. SIMPSON, Associate
Director
LAWRENCE SLIFMAN, Associate
Director
MARTHA S. SCANLON, Deputy Associate
Director
PETER A. TINSLEY, Deputy Associate
Director
FLINT BRAYTON, Assistant
Director
DAVID S. JONES, Assistant
Director
STEPHEN A. RHOADES, Assistant
Director
CHARLES S. STRUCKMEYER, Assistant
Director
A L I C E PATRICIA W H I T E , Assistant
Director
JOYCE K. ZICKLER, Assistant
Director
JOHN J. MINGO, Senior Adviser
GLENN B. CANNER,
DIVISION
Adviser
OF MONETARY
DONALD L. KOHN,
AFFAIRS
Director
DAVID E. LINDSEY, Deputy
Director
BRIAN F. MADIGAN, Associate
Director
RICHARD D. PORTER, Deputy Associate
Director
VINCENT R. REINHART, Assistant
Director
NORMAND R.V. BERNARD, Special Assistant to the Board
DIVISION
OF
CONSUMER
AND COMMUNITY
AFFAIRS
GRIFFITH L . G A R W O O D ,
Director
GLENN E. LONEY, Associate
Director
DOLORES S. SMITH, Associate
Director
MAUREEN P. ENGLISH, Assistant
Director
IRENE S H A W N M C N U L T Y , Assistant
Director
A71
S U S A N M . PHILLIPS
JANET L . Y E L L E N
OFFICE
OF
STAFF DIRECTOR
FOR
S. DAVID FROST, Staff Director
SHEILA CLARK, EE0 Programs
DIVISION
DIVISION
OF RESERVE
BANK
AND PAYMENT
SYSTEMS
MANAGEMENT
OF HUMAN
C L Y D E H . F A R N S W O R T H , JR.,
Director
RESOURCES
Director
JOHN R. WEIS, Associate
Director
ANTHONY V. DIGIOIA, Assistant
Director
JOSEPH H. HAYES, JR., Assistant
Director
FRED HOROWITZ, Assistant
Director
OFFICE
OF THE
CONTROLLER
GEORGE E . L I V I N G S T O N ,
Controller
STEPHEN J. CLARK, Assistant Controller (Programs and
DARRELL R. PAULEY, Assistant Controller
(Finance)
DIVISION
OF SUPPORT
ROBERT E . FRAZIER,
SERVICES
Director
GEORGE M. LOPEZ, Assistant
DAVID L. WILLIAMS, Assistant
Director
Director
DIVISION
OF INFORMATION
MANAGEMENT
STEPHEN R . MALPHRUS,
RESOURCES
Director
MARIANNE M. EMERSON, Assistant
Director
P o KYUNG KIM, Assistant
Director
RAYMOND H. MASSEY, Assistant
Director
EDWARD T. MULRENIN, Assistant
Director
DAY W. RADABAUGH, JR., Assistant
Director
ELIZABETH B. RIGGS, Assistant
Director
RICHARD C. STEVENS, Assistant
Director
Director
DAVID L. ROBINSON, Deputy Director (Finance
LOUISE L. ROSEMAN, Associate
Director
CHARLES W. BENNETT, Assistant
Director
JACK DENNIS, JR., Assistant
Director
EARL G. HAMILTON, Assistant
Director
JEFFREY C. MARQUARDT, Assistant
Director
JOHN H. PARRISH, Assistant
Director
FLORENCE M. YOUNG, Assistant
Director
MANAGEMENT
DAVID L. S H A N N O N ,
OPERATIONS
Budgets)
and
OFFICE OF THE INSPECTOR
GENERAL
BRENT L. BOWEN, Inspector
General
DONALD L. ROBINSON, Assistant Inspector
General
BARRY R. SNYDER, Assistant Inspector
General
Control)
72
Federal Reserve Bulletin • April 1996
Federal Open Market Committee
and Advisory Councils
FEDERAL
OPEN MARKET
COMMITTEE
MEMBERS
A L A N GREENSPAN,
WILLIAM J. MCDONOUGH, Vice
Chairman
EDWARD G . B O E H N E
LAWRENCE B . LINDSEY
GARY H . STERN
JERRY L . JORDAN
ROBERT D . M C T E E R , JR.
JANET L . YELLEN
EDWARD W . KELLEY, JR.
S U S A N M . PHILLIPS
ALTERNATE
MEMBERS
J. ALFRED BROADDUS, JR.
MICHAEL H . MOSKOW
JACK G U Y N N
ROBERT T. PARRY
ERNEST T. PATRIKIS
STAFF
DAVID E. LINDSEY, Associate
Economist
FREDERIC S. MISHKIN, Associate
Economist
LARRY J. PROMISEL, Associate
Economist
ARTHUR J. ROLNICK, Associate
Economist
HARVEY ROSENBLUM, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
THOMAS D. SIMPSON, Associate
Economist
MARK S. SNIDERMAN, Associate
Economist
DAVID J. STOCKTON, Associate
Economist
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
THOMAS C. BAXTER, JR., Deputy General
Counsel
MICHAEL J. PRELL,
EDWIN M . TRUMAN,
Economist
Economist
RICHARD W. LANG, Associate
Economist
PETER R. FISHER, Manager,
System
Open Market
Account
FEDERAL ADVISORY COUNCIL
RICHARD G . TILGHMAN,
President
FRANK V. CAHOUET, Vice
President
First District
Second District
WALTER E. DALLER, JR., Third District
FRANK V. CAHOUET, Fourth District
RICHARD G . TILGHMAN, Fifth District
CHARLES E. RICE, Sixth District
Seventh District
Eighth District
M . KOVACEVICH, Ninth District
E. N E L S O N , Tenth District
T. D O Y L E , Eleventh District
E. B . SIART, Twelfth District
WILLIAM M . CROZIER, JR.,
ROGER L . FITZSIMONDS,
WALTER V. SHIPLEY,
THOMAS H . JACOBSEN,
Chairman
RICHARD
CHARLES
CHARLES
WILLIAM
HERBERT V. PROCHNOW, Secretary
JAMES A N N A B L E ,
WILLIAM J. KORSVIK,
Emeritus
Co-Secretary
Co-Secretary
A73
CONSUMER ADVISORY
COUNCIL
KATHARINE W. MCKEE, Durham, North Carolina, Chairman
JULIA M. SEWARD, Richmond, Virginia, Vice Chairman
RICHARD S . A M A D O R , L o s A n g e l e s , C a l i f o r n i a
ERROL T. LOUIS, B r o o k l y n , N e w Y o r k
THOMAS R . B U T L E R , R i v e r w o o d s , I l l i n o i s
WILLIAM N . L U N D , F a l m o u t h , M a i n e
ROBERT A . COOK, B a l t i m o r e , M a r y l a n d
R O N A L D A . PRILL, M i n n e a p o l i s ,
ALVIN J. COWANS, O r l a n d o , F l o r i d a
LISA R I C E - C O L E M A N , T o l e d o , O h i o
ELIZABETH G . FLORES, L a r e d o , T e x a s
JOHN R . RINES, D e t r o i t , M i c h i g a n
HERIBERTO FLORES, S p r i n g f i e l d , M a s s a c h u s e t t s
MARGOT S A U N D E R S , W a s h i n g t o n , D . C .
Minnesota
E M A N U E L FREEMAN, P h i l a d e l p h i a , P e n n s y l v a n i a
A N N E B . SHLAY, P h i l a d e l p h i a , P e n n s y l v a n i a
DAVID C . F Y N N , C l e v e l a n d , O h i o
REGINALD J. SMITH, Kansas City, Missouri
ROBERT G . GREER, H o u s t o n , T e x a s
GEORGE P. SURGEON, A r k a d e l p h i a , A r k a n s a s
KENNETH R. HARNEY, Chevy Chase, Maryland
GREGORY D . SQUIRES, M i l w a u k e e ,
G A I L K . HILLEBRAND, S a n F r a n c i s c o , C a l i f o r n i a
JOHN E . TAYLOR, W a s h i n g t o n , D . C .
TERRY JORDE, Cando, North Dakota
LORRAINE V A N E T T E N , T r o y , M i c h i g a n
FRANCINE JUSTA, N e w Y o r k , N e w Y o r k
THEODORE J. WYSOCKI, JR., C h i c a g o , I l l i n o i s
E U G E N E I. L E H R M A N N , M a d i s o n , W i s c o n s i n
LILY K. YAO, Honolulu, Hawaii
THRIFT INSTITUTIONS ADVISORY
Wisconsin
COUNCIL
E. LEE BEARD, Hazleton, Pennsylvania, President
DAVID F. HOLLAND, Burlington, Massachusetts, Vice President
BARRY C . BURKHOLDER, H o u s t o n , T e x a s
CHARLES R . RINEHART, I r w i n d a l e , C a l i f o r n i a
M I C H A E L T. CROWLEY, JR., M i l w a u k e e , W i s c o n s i n
JOSEPH C . SCULLY, C h i c a g o , I l l i n o i s
GEORGE L . ENGELKE, JR., L a k e S u c c e s s , N e w Y o r k
R O N A L D W . STIMPSON, M e m p h i s , T e n n e s s e e
D O U G L A S A . FERRARO, E n g l e w o o d , C o l o r a d o
LARRY T. WILSON, Raleigh, North Carolina
BEVERLY D . HARRIS, L i v i n g s t o n , M o n t a n a
WILLIAM W . Z U P P E , S p o k a n e , W a s h i n g t o n
A74
Federal Reserve Board Publications
For
ordering
assistance,
write
PUBLICATIONS
SERVICES,
MS-127, Board of Governors of the Federal Reserve System,
Washington, DC 20551 or telephone (202) 452-3244 or FAX
(202)
728-5886.
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nors
of
Mastercard
drawn
THE
When
request
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and
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or
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on a U.S.
a charge
is
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payable
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Payment
System
from
indicated,
payment
to the Board
or
foreign
may
be
residents
should
of
ordered
should
Govervia
be
bank.
FEDERAL RESERVE
SYSTEM—PURPOSES
AND
FUNCTIONS.
1994. 157 pp.
A N N U A L REPORT.
1994-95.
Monthly. $25.00 per year or $2.50
each in the United States, its possessions, Canada, and
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A N N U A L STATISTICAL DIGEST: period covered, release date, number of pages, and price.
October 1982
$ 6.50
1981
239 pp.
1982
December 1983
266 pp.
$ 7.50
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264 pp.
$11.50
1983
1984
October 1985
254 pp.
$12.50
October 1986
$15.00
1985
231 pp.
November 1987
288 pp.
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1986
October 1988
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1987
272 pp.
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$25.00
1988
256 pp.
March 1991
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712 pp.
1980-89
November 1991
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1990
185 pp.
November 1992
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215 pp.
1991
December 1993
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1992
215 pp.
December 1994
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1993
281 pp.
1994
December 1995
190 pp.
$25.00
A N N U A L REPORT: B U D G E T REVIEW,
FEDERAL RESERVE BULLETIN.
SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF
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.
T H E FEDERAL RESERVE A C T and other statutory provisions affecting the Federal Reserve System, as amended through August
1990. 646 pp. $10.00.
CHARTS.
REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM.
PERCENTAGE RATE TABLES (Truth in Lending—
Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp.
Vol. II (Irregular Transactions). 1969. 116 pp. Each volume
$2.25.
G U I D E TO THE FLOW OF F U N D S ACCOUNTS. 672 pp. $8.50 each.
ANNUAL
Loose-leaf; updated
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. Four vols. (Contains all
four Handbooks plus substantial additional material.) $200.00
per year.
FEDERAL RESERVE REGULATORY SERVICE.
Rates
for
and
subscribers
include
outside
additional
the
United
air mail
States
are
as
follows
costs:
Federal Reserve Regulatory Service, $250.00 per year.
Each Handbook, $90.00 per year.
T H E U . S . ECONOMY IN AN INTERDEPENDENT WORLD: A M U L T I -
May 1984. 590 pp. $14.50 each.
EDITION. December 1986.
440 pp. $9.00 each.
COUNTRY M O D E L ,
INDUSTRIAL
FINANCIAL
PRODUCTION—1986
FUTURES
AND
OPTIONS
IN
THE
U.S.
ECONOMY.
December 1986. 264 pp. $10.00 each.
FINANCIAL SECTORS IN O P E N ECONOMIES: EMPIRICAL
SIS AND POLICY ISSUES.
EDUCATION
Short
PAMPHLETS
pamphlets
available
ANALY-
August 1990. 608 pp. $25.00 each.
suitable
without
for
classroom
use.
Multiple
copies
are
charge.
Consumer Handbook on Adjustable Rate Mortgages
Consumer Handbook to Credit Protection Laws
A Guide to Business Credit for Women, Minorities, and Small
Businesses
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
How to File a Consumer Complaint
Making Deposits: When Will Your Money Be Available?
Making Sense of Savings
SHOP: The Card You Pick Can Save You Money
Welcome to the Federal Reserve
When Your Home is on the Line: What You Should Know
About Home Equity Lines of Credit
A75
STAFF STUDIES: Only Summaries
BULLETIN
Printed
in the
1 6 3 . CLEARANCE A N D SETTLEMENT IN U . S . SECURITIES M A R -
1 6 5 . T H E D E M A N D FOR TRADE CREDIT: A N INVESTIGATION OF
Staff Studies 1-157 are out of print.
MOTIVES FOR TRADE CREDIT U S E BY SMALL BUSINESSES, b y
1 5 8 . T H E ADEQUACY A N D CONSISTENCY OF MARGIN REQUIREMENTS IN THE MARKETS
by Patrick Parkinson, Adam Gilbert, Emily Gollob,
Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary
Ann Taylor. March 1992. 37 pp.
164. T H E 1989-92 CREDIT C R U N C H FOR R E A L ESTATE, by
James T. Fergus and John L. Goodman, Jr. July 1993.
20 pp.
KETS,
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.
FOR STOCKS
AND
Gregory E. Elliehausen and John D. Wolken. September
1993. 18 pp.
DERIVATIVE
1 6 6 . T H E ECONOMICS OF THE PRIVATE PLACEMENT MARKET, b y
by Mark J. Warshawsky with the assistance of
Dietrich Earnhart. September 1989. 23 pp.
Mark Carey, Stephen Prowse, John Rea, and Gregory Udell.
January 1994. I l l pp.
1 5 9 . N E W DATA ON THE PERFORMANCE OF N O N B A N K SUBSIDI-
1 6 7 . A SUMMARY OF MERGER PERFORMANCE STUDIES IN B A N K -
PRODUCTS,
ARIES OF B A N K HOLDING COMPANIES,
by Nellie Liang and
Donald Savage. February 1990. 12 pp.
160.
BANKING
VICES
MARKETS
BY
SMALL
AND
AND
THE U S E
PERFORMANCE"
OF FINANCIAL
MEDIUM-SIZED
SER-
BUSINESSES,
by
Gregory E. Elliehausen and John D. Wolken. September
1990. 35 pp.
161.
A
REVIEW
1980-90,
OF
CORPORATE
RESTRUCTURING
ACTIVITY,
by Margaret Hastings Pickering. May
1991.
21 pp.
1 6 2 . EVIDENCE ON THE S I Z E OF BANKING MARKETS FROM MORTGAGE L O A N
RATES IN T W E N T Y
Rhoades. February 1992. 11 pp.
ING, 1 9 8 0 - 9 3 , A N D AN ASSESSMENT OF THE
CITIES,
by Stephen
A.
AND
"EVENT
STUDY"
"OPERATING
METHODOLOGIES,
by Stephen A. Rhoades. July 1994. 37 pp.
1 6 8 . T H E ECONOMICS OF THE PRIVATE EQUITY
MARKET,
by
George W. Fenn, Nellie Liang, and Stephen Prowse. November 1995. 69 pp.
169. B A N K MERGERS A N D INDUSTRYWIDE STRUCTURE, 1980-94,
by Stephen A. Rhoades. February 1996. 32 pp.
A76
Maps of the Federal Reserve System
l
9
^
MINNEAPOLIS
12
SAN FRANCISCO
7
10
O
_
CHICAGO I
CLEVELAND
4
KANSAS CITY I
B O S T O N
• NEW YORK
PHILADELPHIA
f
RICHMOND
ST. LOUIS
6
11
ATLANTA
DALLAS
ALASKA
HAWAII
LEGEND
Both pages
• Federal Reserve Bank city
• Board of Governors of the Federal
Facing page
• Federal Reserve Branch city
— Branch boundary
Reserve System, Washington, D.C.
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.
A77
2-B
1-A
4-D
3-C
XV
f
\Buffalo
MA
'
Bj
1
CT
S
^SVA
wv
— N C ~ ~
•Cincinnati
NY
NEW YORK
Baltimore
FA
•Charlotte
KY
CT
BOSTON
5-E
Pittsburgh
PHILADELPHIA
RICHMOND
CLEVELAND
8-H
7-G
&
)wi
/
LcSisville
JUL
Jacksonville
R.
LA
New Orleans
m
-
Little)
Rock <
CHICAGO
ATLANTA
#Memphis
m
ST. LOUIS
9-1
MS
MINNEAPOLIS
12-L
10-J
|se
Omaha*
Demrer
Oklahonra City
OK
KANSAS CITY
11-K
At
DALLAS
SAN FRANCISCO
A78
Federal Reserve Banks, Branches,
and Offices
FEDERAL RESERVE B A N K
branch, or facility
Zip
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106
Jerome H. Grossman
William C. Brainard
Cathy E. Minehan
Paul M. Connolly
NEW YORK*
10045
John C. Whitehead
Thomas W. Jones
Joseph J. Castiglia
William J. McDonough
Ernest T. Patrikis
Buffalo
14240
Carl W. Turnipseed 1
PHILADELPHIA
19105
Donald J. Kennedy
Joan Carter
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101
Jerry L. Jordan
Sandra Pianalto
Cincinnati
Pittsburgh
45201
15230
A. William Reynolds
G. Watts Humphrey, Jr.
John N. Taylor, Jr.
John T. Ryan III
RICHMOND*
23219
J. Alfred Broaddus, Jr.
Walter A. Varvel
Baltimore
Charlotte
Culpeper
21203
28230
22701
Claudine B. Malone
Robert L. Strickland
Michael R. Watson
James O. Roberson
Hugh M. Brown
Daniel E. Sweat, Jr.
Donald E. Boomershine
Joan D. Ruffier
R. Kirk Landon
Paula Lovell
Lucimarian Roberts
Jack Guynn
Patrick K. Barron
Robert M. Healey
Lester H. McKeever, Jr.
John D. Forsyth
Michael H. Moskow
William C. Conrad
John F. McDonnell
Susan S. Elliott
Janet M. Jones
John A. Williams
John V. Myers
Thomas C. Melzer
W. LeGrande Rives
Jean D. Kinsey
David A. Koch
Lane W. Basso
Gary H. Stern
Colleen K. Strand
Herman Cain
A. Drue Jennings
Peter I. Wold
Barry L. Eller
LeRoy W. Thom
Thomas M. Hoenig
Richard K. Rasdall
Cece Smith
Roger R. Hemminghaus
Patricia Z. Holland-Branch
Issac H Kempner III
Carol L. Thompson
Robert D. McTeer, Jr.
Tony J. Salvaggio
Judith M. Runstad
James A. Vohs
Anita E. Landecker
Ross R. Runkel
Gerald R. Sherratt
George F. Russell, Jr.
Robert T. Parry
John F. Moore
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
S A N FRANCISCO . . . .
Los Angeles
Portland
Salt Lake City
Seattle
59601
64198
80217
73125
68102
75201
79999
77252
78295
94120
90051
97208
84125
98124
Vice President
in charge of branch
Charles A. Cerino 1
Harold J. Swart 1
William J. Tignanelli 1
Dan M. Bechter 1
Julius Malinowski, Jr.2
James M. Mckee 1
Fred R. Herr1
James D. Hawkins 1
James T. Curry III
Melvyn K. Purcell
Robert J. Musso
David R. Allardice 1
Robert A. Hopkins
Thomas A. Boone
John P. Baumgartner
John D.Johnson
Carl M. Gambs 1
Mark L. Mullinix
Harold L. Shewmaker
Sammie C. Clay
Robert Smith, III 1
James L. Stull 1
Temporarily vacant 3
Raymond H. Laurence
Andrea P. Wolcott
Gordon Werkema 1
•Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, 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; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607.
1. Senior Vice President.
2. Assistant Vice President.
3. Executive Vice President.
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 subscription.
For further information regarding a subscription to
the economic bulletin board, please call (202) 4821986. The releases transmitted to the economic bulletin board, on a regular basis, are the following:
Reference
Number
Statistical release
Frequency of release
H.3
Aggregate Reserves
Weekly/Thursday
H.4.1
Factors Affecting Reserve Balances
Weekly/Thursday
H.6
Money Stock
Weekly/Thursday
H.8
Assets and Liabilities of Insured Domestically Chartered
and Foreign Related Banking Institutions
Weekly/Monday
H.10
Foreign Exchange Rates
Weekly/Monday
H. 15
Selected Interest Rates
Weekly/Monday
G.5
Foreign Exchange Rates
Monthly/end of month
G.17
Industrial Production and Capacity Utilization
Monthly/midmonth
G.19
Consumer Installment Credit
Monthly/fifth business day
Z.7
Flow of Funds
Quarterly
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.
Three booklets on the mortgage process are 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. 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.
Shop . . . The Card You Pick Can Save You Money is
designed to help consumers comparison shop when
looking for a credit card. It contains the results of the
Federal Reserve Board's survey of the terms of credit
card plans offered by credit card issuers throughout the
United States. Because the terms can affect the amount
an individual pays for using a credit card, the booklet
lists the annual percentage rate (APR), annual fee, grace
period, type of pricing (fixed or variable rate), and a
telephone number for each card issuer surveyed.
Copies of consumer publications are available free
of charge from Publications Services, Mail Stop 127,
Board of Governors of the Federal Reserve System,
Washington, DC 20551. Multiple copies for classroom
use are also available free of charge.
A
tsinr*
$*tttement
•B
^
V
U
H
H
Business
Credit
for W o m e n ,
Minorities, and
Small B u s i n e s s e s
SHOP
I
'V
The Card You Pick
Can Save Vou Money
Publications of Interest
FEDERAL RESERVE REGULATORY SERVICE
To promote public understanding of its regulatory functions, the Board publishes the Federal Reserve Regulatory Service, a four-volume loose-leaf 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
GUIDE TO THE FLOW OF FUNDS
ACCOUNTS
A recent Federal Reserve publication, Guide to the Flow
of Funds Accounts, explains in detail how the U.S.
financial flow accounts are prepared. The accounts,
which are compiled by the Division of Research and
Statistics, are published in the Board's quarterly Z.l
statistical release, "Flow of Funds Accounts, Flows and
Outstandings." The Guide updates and replaces Introduction to Flow of Funds, published in 1980.
The 670-page Guide begins with an explanation of
the organization and uses of the flow of funds accounts
and their relationship to the national income and
product accounts prepared by the U.S. Department of
Commerce. Also discussed are the individual data
series that make up the accounts and such proce-
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, BB, and DD,
and associated materials.
The Payment System Handbook deals with expedited
funds availability, check collection, wire transfers, and
risk-reduction policy. It includes Regulations CC, J, and
EE, related statutes and commentaries, 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 127, Board
of Governors of the Federal Reserve System, Washington, DC 20551.
dures as seasonal adjustment, extrapolation, and
interpolation.
The balance of the Guide contains explanatory tables
corresponding to the tables of financial flows data that
appeared in the September 1992 Z.l release. These
tables give, for each data series, the source of the data or
the methods of calculation, along with annual data for
1991 that were published in the September 1992 release.
Guide to the Flow of Funds Accounts is available for
$8.50 per copy from Publications Services, Board of
Governors of the Federal Reserve System, Washington,
DC 20551. Orders must include a check or money order,
in U.S. dollars, made payable to the Board of Governors
of the Federal Reserve System.
@FedFRASER