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. accompany nors of Mastercard drawn THE When request the and Federal or Visa. on a U.S. a charge is be made payable Reserve 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 Mexico. Elsewhere, $35.00 per year or $3.00 each. 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 October 1984 264 pp. $11.50 1983 1984 October 1985 254 pp. $12.50 October 1986 $15.00 1985 231 pp. November 1987 288 pp. $15.00 1986 October 1988 $15.00 1987 272 pp. November 1989 $25.00 1988 256 pp. March 1991 $25.00 712 pp. 1980-89 November 1991 $25.00 1990 185 pp. November 1992 $25.00 215 pp. 1991 December 1993 $25.00 1992 215 pp. December 1994 $25.00 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.