Full text of Federal Reserve Bulletin : August 1996
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VOLUME 8 2 • NUMBER 8 • AUGUST 1 9 9 6 FEDERAL RESERVE BULLETIN B O A R D 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 7 0 1 MONETARY POLICY REPORT practices on behalf of the Federal Reserve and says that the continuing growth in bank sales of mutual funds and other uninsured investments necessitates a commitment on the part of the banking industry and bank supervisors to the principle that effective disclosure of risks is in the best interest of the customer and the banking organization, before the Subcommittee on Capital Markets, Securities and GovernmentSponsored Enterprises of the House Committee on Banking and Financial Services, June 26, 1996. TO THE CONGRESS The U.S. economy performed well in the first half of 1996. After rising only fractionally in the fourth quarter of 1995, real gross domestic product posted a solid gain over the first half of 1996, providing a considerable lift to job growth. Moreover, the underlying trend of prices still appears to have been well contained: Over the past twelve months, the consumer price index excluding food and energy items has risen 23/4 percent—near the lower end of the narrow range that has prevailed since early 1994. Looking ahead, the members of the Federal Open Market Committee anticipate that economic activity will grow more moderately, on average, in coming quarters and that the unemployment rate will remain around the level it has averaged over the past year and a half. 7 1 7 INDUSTRIAL PRODUCTION UTILIZATION FOR JUNE AND 1996 CAPACITY Industrial production increased 0.5 percent in June, to 125.7 percent of its 1987 average, after a downward revised gain of 0.5 percent in May. Industrial capacity utilization rose 0.1 percentage point in June, to 83.2 percent. 7 2 0 STATEMENTS TO THE CONGRESS Griffith L. Garwood, Director, Division of Consumer and Community Affairs, Board of Governors, comments on issues concerning the coverage of electronic benefit transfer (EBT) programs under the Electronic Fund Transfer Act (EFTA) and the Board's Regulation E and says that coverage of EBT programs by the EFTA and Regulation E is appropriate under the law as it currently exists so that all citizens, regardless of the source of their electronic transactions, are covered essentially by the same rules, before the Subcommittee on Financial Institutions and Consumer Credit of the House Committee on Banking and Financial Services, June 19, 1996. 723 Edward W. Kelley, Jr., member, Board of Governors, discusses the supervision of bank sales 727 ANNOUNCEMENTS Reappointment of Alan Greenspan as Chairman of the Board of Governors. Appointment of Alice M. Rivlin as a member of the Board of Governors and as Vice Chair. Appointment of Laurence H. Meyer as a member of the Board of Governors. Issuance of an Investment Scheme Advisory about the proliferation of illegal "prime bank" financial instruments and scams. Modification of prudential limitations established by the Board for the "riskless principal" activities of bank holding companies. Proposal to simplify and update the requirements of Regulation D. Issuance of a report on the combined statement of condition of the Federal Reserve Banks. Publication of the June 1996 update of the Bank Holding Company Supervision Manual. 7 3 1 LEGAL DEVELOPMENTS Various bank holding company, bank service corporation, and bank merger orders; and pending cases. 7 7 8 MEMBERSHIP GOVERNORS SYSTEM, OF THE BOARD OF THE FEDERAL OF RESERVE 1913-96 List of appointive and ex officio members. 7 8 0 COMBINED FINANCIAL STATEMENTS THE FEDERAL RESERVE BANKS OF These financial statements were prepared by an independent accounting firm and certify the combined statement of condition of the Federal Reserve Banks as of the end of 1995 together with related statements of income and changes in capital. A 1 FINANCIAL AND BUSINESS STATISTICS These tables reflect data available as of June 26, 1996. A 3 GUIDE TO TABULAR PRESENTATION A4 Domestic Financial Statistics A42 Domestic Nonfinancial Statistics A50 International Statistics A 6 3 GUIDE TO STATISTICAL SPECIAL RELEASES AND TABLES A 6 8 INDEX TO STATISTICAL A 7 0 BOARD OF GOVERNORS TABLES AND STAFF A 7 2 FEDERAL OPEN MARKET COMMITTEE STAFF; ADVISORY COUNCILS A 7 4 FEDERAL A 7 6 MAPS RESERVE BOARD OF THE FEDERAL A 7 8 FEDERAL RESERVE AND OFFICES PUBLICATIONS RESERVE BANKS, AND SYSTEM BRANCHES, Monetary Policy Report to the Congress Report submitted to the Congress on July 18, 1996, pursuant to the Full Employment and Balanced Growth Act of 19781 MONETARY ECONOMIC POLICY AND THE inflationary forces to intensify would ultimately disrupt the growth process. The Federal Reserve recognizes that its contribution to promoting the optimal performance of the economy involves containing the rate of inflation and, over time, moving toward price stability. OUTLOOK The U.S. economy performed well in the first half of 1996. In early February, when the Federal Reserve prepared its last report on monetary policy, there was some concern about the strength and durability of the current economic expansion: The economy was operating at a relatively high level of resource utilization, but it was not exhibiting a great deal of forward momentum. As the year has unfolded, however, economic activity has proved quite robust. After rising only fractionally in the fourth quarter of 1995, real gross domestic product posted a solid gain over the first half of 1996, providing a considerable lift to job growth. Looking ahead, the members of the Federal Open Market Committee (FOMC) anticipate that economic activity will grow more moderately, on average, in coming quarters and that the unemployment rate will remain around the level it has averaged over the past year and a half. Although overall consumer price inflation was boosted by higher energy prices during the first half of the year, the underlying trend of prices still appears to have been well contained. Over the past twelve months, the consumer price index excluding food and energy items has risen 23/4 percent—near the lower end of the narrow range that has prevailed since early 1994. Moreover, the deflator for personal consumption expenditures on items other than food and energy derived from data reported in the national income and product accounts (NIPA) has continued to show a slowing trend. The combination of brisk growth and favorable underlying inflation so far this year has, of course, been welcome. Nonetheless, mounting pressures on resources are apparent in some segments of the economy—most notably in the labor market—and these pressures must be monitored closely. Allowing 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. Monetary Policy, Financial Markets, and the Economy over the First Half of 1996 Information available around the turn of the year suggested that the economy had downshifted after posting a strong gain in the third quarter of 1995. The growth of final demand appeared to have slowed, reflecting importantly a deceleration of consumer spending. In addition, hesitant growth abroad and a strengthening in the foreign exchange value of the dollar relative to the levels prevailing at mid-1995 were seen as limiting the prospects for further growth in exports. The slowdown in the growth of final demand had given rise to inventory buildups in some industries; in turn, the production cutbacks undertaken in response to those buildups were having a further damping effect on economic activity. Meanwhile, data on prices and wages suggested that inflation performance continued to be fairly satisfactory— indeed, better than many members of the FOMC had expected as of midyear 1995. To keep the stance of monetary policy from becoming effectively more restrictive owing to the slowdown in inflation in the second half of last year and to promote sustainable growth, the Committee eased the stance of policy in December 1995 and again at the end of January 1996, bringing the federal funds rate down a half percentage point in total, to 5XA percent. Most participants in financial markets were unsurprised by these policy adjustments, given the economic backdrop. Moreover, they anticipated that there would be scope for additional easing steps in the coming months. Thus, between mid-December and the end of January, interest rates on Treasury securities generally moved lower, especially at short and intermediate maturities, and stock price indexes edged higher on balance. The dollar strengthened slightly on net against the currencies of the other Group of Ten (G-10) countries, reflecting, in part, 702 Federal Reserve Bulletin • August 1996 disappointing news about the pace of activity in Europe and consequently larger declines in interest rates there than in the United States. The underlying trends in the economy early in the year were obscured to a degree by extraordinarily adverse weather that affected a significant part of the country. Through the course of the next few months, however, it became increasingly clear that the economy had regained vitality. Consumer spending perked up after a lackluster holiday season and was only temporarily depressed by the severe winter. Business demand for equipment proved quite strong, as did housing demand. The strengthening in sales facilitated businesses' efforts to control their inventories, and as that situation improved, industrial production rebounded smartly. Overall employment growth was brisk, and by June the unemployment rate reached its lowest level in six years. Inflation during the first half of the year was generally well behaved. Energy prices surged, mainly in response to a run-up in the world price of oil, and bad news about grain crops raised the prospect of higher food prices down the road. However, price inflation for consumer items other than food and energy held steady or moved a bit lower. Labor costs presented a mixed picture. The increase in total hourly compensation over the first three months of the year, as measured by the employment cost index (ECI), was in line with its recent moderate trend. However, within total compensation, the wage and salary component of the ECI surged in the first quarter, and further signals of wage acceleration came from a more rapid increase in average hourly earnings in the second quarter. Against the backdrop of stronger activity but subdued inflation trends, the Federal Reserve made no adjustments to its policy stance after January. With economic activity more clearly on the upswing, however, and prospects for a breakthrough on the federal budget seeming to fade, intermediate- and long-term interest rates reversed course in February and trended up over subsequent months. Since the end of December, the yield on the thirty-year Treasury bond has increased about 1 percentage point, on net, while the yield on the five-year note has risen about VA percentage points over the same period. The rate on three-month bills has edged up only slightly. Despite the backup in bond yields, major stock-price indexes rose considerably further through the first half of the year; most of those gains were erased in late June and the first half of July, however, as company reports raised questions about the pace of earnings growth. The rise in bond yields has boosted the dollar in foreign exchange markets; since mid-April, the dollar has generally traded against an average of the currencies of the other major industrial countries about 4 percent above its level at the end of December. During the first half of the year, credit remained easily available to most household and business applicants. Interest rate spreads on private debt over Treasury securities remained narrow. In response to the recent increase in delinquencies on credit card accounts, many banks have tightened their standards for approval of new accounts, but this appears to have only partially reversed a marked relaxation of such standards earlier this decade, and banks overall remain aggressive in the pursuit of new borrowers, especially business clients. The debt of all domestic nonfinancial sectors combined expanded at about a 43/4 percent annual pace, placing this aggregate near the middle of its monitoring range. M2 and M3 are currently near the 5 percent and 6 percent upper boundaries of their respective growth ranges, in line with the FOMC's expectation as of last February. In contrast to the experience of the early 1990s, growth in the monetary aggregates relative to nominal gross domestic product has been broadly in line with historical relationships, given the structure of interest rates. Economic Projections for 1996 and 1997 As noted previously, the members of the Board of Governors and the Reserve Bank presidents, all of whom participate in the deliberations of the Federal Open Market Committee, generally think it likely that economic activity will return to a moderate growth path in the second half of 1996 and in 1997 after the larger gains in the first half of this year. The resulting increase in real GDP over 1996 as a whole would be in the range of 2Vi percent to 23/4 percent, somewhat above the forecasts in the February report on monetary policy. For 1997, the central tendency of the forecasts spans a range of 13A percent to 2 XA percent. The civilian unemployment rate, which averaged around 5V2 percent in the second quarter of 1996, is expected to stay near this level through the end of this year and perhaps to edge higher during 1997. Economic activity clearly retains considerable momentum. The trend in final demand is positive, and inventories appear to be well aligned with the current pace of sales—perhaps even a bit lean. Accordingly, the members of the FOMC recognize the possibility that growth could remain elevated a while, with the potential for putting greater pressure on resources. Nonetheless, most members think that Monetary Policy Report to the Congress 703 some slowing from the rapid growth pace recorded, on average, in the first half is the most likely outcome. Housing construction and other interestsensitive activity should be restrained to some degree by the rise in long-term interest rates over the past several months. And although some of the lagging economies abroad are expected to perform better this year, there are still concerns about the solidity of that acceleration and the associated lift to U.S. exports. In addition, growth in real business fixed investment appears to be tapering off, although spending will likely remain buoyant because of the rapid rate of product innovation and dramatic price declines in the computer area. Consumer spending is also expected to grow less rapidly in coming quarters. Household wealth has been boosted substantially by the run-up in stock prices over the past year and a half, but for many households, debt burdens have risen significantly in recent years and may represent a constraint on purchases of big-ticket items. Most members of the FOMC expect the rise in the consumer price index over the four quarters of 1996 to be in the range of 3 percent to 3lA percent, about VA percentage point higher than they predicted last winter. The projected increase in the consumer price index is also somewhat larger than that recorded in 1995. However, that step-up would mainly reflect developments in the food and energy sectors, which are likely to add to overall inflation in 1996 after having damped it in 1995. Apart from these volatile sectors, inflation has remained in check so far this year despite high levels of resource utilization and reports that tightness in some parts of the labor market is placing upward pressure on wages. Assuming no further adverse shocks to food and energy prices, and in the context of the Federal Reserve's intent to keep trend inflation well contained, the Committee believes that overall CPI inflation should recede. Accordingly, the central tendency of the FOMC's forecasts shows CPI inflation dropping back to the range of 23A percent to 3 percent in 1997. The Committee's inflation projections incorporate the technical improvements the Bureau of Labor Statistics is making to the CPI in 1996 and 1997; they are expected to shave a little from inflation in both years. The Committee also recognizes that the remaining biases in the CPI are not negligible and may not be stable over time. Thus, it will continue to monitor a variety of alternative measures of price change as it attempts to gauge progress toward the long-run goal of price stability. The Administration has just released its midyear update to its economic and budgetary projections. Its forecasts for real growth and inflation in 1996 and 1997 are broadly in line with the central tendencies of the forecasts of Federal Reserve policymakers. 1. Money and Debt Ranges for 1996 and E c o n o m i c projections for 1996 and 1997 1997 Percent Federal Reserve governors and Reserve Bank presidents Administration Indicator n.nn. Range Central tendency 1996 Change, fourth quarter to fourth quarter1 Nominal G D P Real G D P Consumer price index 2 .. 43/4-5% 21/2-3 3-3'/4 5-51/2 254-2*4 3 - 3 V* 5.0 2.6 3.2 5V*-53A About 5Vi 5.6 Average level, fourth quarter Civilian unemployment At its meeting earlier this month, the Committee reaffirmed the ranges for 1996 growth of money and debt that it had established in February: 1 percent to 5 percent for M2, 2 percent to 6 percent for M3, and 3 percent to 7 percent for the debt of the domestic nonfinancial sectors. In addition, the Committee set provisional growth ranges for 1997 at the same levels. In setting the ranges for M2 and M3, the Committee intended to communicate its expectation as to the growth of these monetary aggregates that would 1997 Change, fourth quarter to fourth quarter1 Nominal G D P Real GDP Consumer price index 2 2. .. Average level, fourth quarter Civilian unemployment rate 4-51/2 V/Z-2V2 21/2-3'/4 414-5 P/4-2'/4 2^/4-3 5.1 2.3 2.8 5V4-6 5>/2~53/4 5.7 1. Change from average for fourth quarter of preceding year to average for fourth quarter of year indicated. 2. All urban consumers. R a n g e s f o r g r o w t h of m o n e t a r y a n d d e b t a g g r e g a t e s Percent Aggregate M2 M3 Debt' 1995 1996 Provisional for 1997 1-5 2-6 3-7 1-5 2-6 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. Monitoring range for debt of domestic nonfinancial sectors. 704 Federal Reserve Bulletin • August 1996 result under conditions of approximate price stability, assuming that the aggregates exhibit the same trends relative to nominal spending that prevailed for many years until the early 1990s and that seem to have reemerged after an intervening period of marked deviation. Based on that reemergence and on Committee members' expectations for the growth of nominal GDP in 1996 and 1997, the Committee anticipates that both M2 and M3 will probably finish near the upper boundaries of their respective ranges each year. The Committee expects that the debt of the domestic nonfinancial sectors will remain near the middle of its monitoring range in 1996 and 1997. In light of the rapid pace of technological change and innovation still occurring in the financial sector—and the attendant uncertainty about the future behavior of the aggregates—the Committee will continue to rely on a wide range of other information in determining its policy stance. ECONOMIC IN AND FINANCIAL DEVELOPMENTS 1996 Economic activity has increased substantially thus far this year. Real gross domestic product grew at an annual rate of about 2lA percent in the first quarter of 1996, and the available data point to a much larger increase in the second quarter. The increases in activity have been facilitated by generally supportive financial conditions: Although long-term interest rates have risen considerably on net since early 1996, intermediaries have continued to supply credit to most borrowers on favorable terms, and interest rate spreads on corporate securities over Treasury securities have remained narrow. In the foreign exchange markets, the dollar has appreciated, on average, against the currencies of the other major industrial countries. Economic Developments The Household Sector After a sluggish performance in late 1995, spending by households has picked up noticeably this year. Consumer expenditures increased about V/i percent at an annual rate in real terms in the first quarter and appear to have posted another sizable gain in the second quarter. In addition, according to indexes such as those compiled by the Survey Research Center at the University of Michigan and the Conference Board, consumer sentiment has generally been rela tively upbeat. In the real estate market, sales of new single-family dwellings have posted an average level well above that of last year, thus encouraging builders to boost housing starts. Outlays for durable goods have continued to be the strongest component of spending, extending the longstanding uptrend in the share of durables in total real consumption. Declining relative prices and the availability of innovative products have continued to lift demand for home electronic equipment and software products. In addition, sales of light motor vehicles, bolstered by relatively generous incentives and perhaps by the cash freed up by the surge in mortgage refinancings last winter, averaged a healthy 15 million unit annual rate in the first half of 1996. After a lackluster performance in 1995, real outlays for nondurable goods have also risen this year; the average level of these expenditures in April and May was nearly 3 percent at an annual rate above that recorded in the fourth quarter. Meanwhile, spending on services has remained on a moderate uptrend, with short-run variations reflecting the effects of weather on household energy use. Consumer spending has been supported by brisk gains in wage and salary income associated with the better pace of hiring this year. However, other components of before-tax income, taken together, have risen less rapidly than they did in 1995, and gains in after-tax income were restrained by largerthan-usual tax bills (final payments less refunds) this spring. Accordingly, the level of the personal saving rate in May was somewhat below that recorded in late 1995, although fragmentary data suggest that saving rose sharply in June. In any event, taking a longer perspective, spending and income have grown at roughly similar rates over the past few years, and the saving rate has generally fluctuated in a fairly narrow band between 4 percent and 5 percent since 1993—a low level historically. The recent developments in financial markets may have had an important influence on the spending decisions of individual households. In particular, households holding large stock portfolios have enjoyed sizable increases in wealth over the past year and a half, which may be inducing them to consume greater fractions of their incomes than they would otherwise. At the same time, a growing number of households are apparently finding it difficult to meet their debt-service obligations, judging from the appreciable rise in delinquency rates on consumer loans in recent years. In addition, it is possible that job insecurity and longer-run concerns about retirement income have caused many households to raise their targets for asset accumulation. However, the Monetary Policy Report to the Congress relative stability of the saving rate over the past few years suggests that the net effect of these factors on overall consumption—at least to date—has been limited. Residential construction has, on the whole, been robust this year. Private housing starts averaged nearly 1.5 million units at an annual rate through June, a pace appreciably above that in 1995. In addition, the volume of shipments of mobile homes ("manufactured housing"), which has doubled over the past five years, now stands around 350,000 units at an annual rate, the highest level since 1974. In the single-family sector, starts and sales of new homes were surprisingly firm in the face of severe weather in early 1996, and they moved still higher in the second quarter. Moreover, the regular survey of the National Association of Homebuilders continued to indicate solid demand through early July, and the Mortgage Bankers Association reported that loan applications for home purchases remained brisk through midyear. Relative to the lows reached in early 1996, the rate on thirty-year conventional fixed-rate home mortgages has risen nearly 1 Vi percentage points and has been fluctuating around 8'/4 percent in recent weeks. However, a number of factors seem to have cushioned the effects of these higher mortgage rates. In particular, rates on adjustable-rate mortgages have risen only about half as much as have those on thirty-year fixed-rate loans. Also, house prices have firmed somewhat, which may have raised confidence in the investment value of residential real estate and thus contributed to the recent rise in the homeownership rate, which is now at its highest level since the early 1980s. Probably more important in this regard, however, is the trend in the affordability of housing. One simple measure of affordability is the monthly mortgage payment on a new home having a given set of attributes, divided by average monthly household income. Despite the increase in mortgage rates this year, this measure suggests that the cash-flow burden of homeownership is still only modestly above the lows of the past thirty years. Construction of multifamily housing averaged about 300,000 units at an annual rate in the first half of 1996, a rate somewhat above that in 1995 but a fairly low one historically. Market conditions vary geographically, but the rental vacancy rate for the nation as a whole seems to have tilted back up, after generally trending down between mid-1993 and mid1995. Also, the absorption rate, which measures the percentage of apartments that are rented within three months of their completion, edged back down in 1995 after several years of increases. 705 The Business Sector Developments in the business sector were quite favorable in the first half of 1996. After decelerating in 1995, real business fixed investment rose at a \2Vi percent annual rate in the first quarter of 1996, with sizable advances for both equipment and structures. And, although real investment appears to have decelerated again in the second quarter, it probably posted an appreciable gain. Over the past four years, real investment has grown around 8 percent per year, on average, and now stands at a level that implies quite substantial growth in the capital stock. The updating of capital and the increase in capital per worker are key to lifting productivity growth and living standards. Outlays for producers' durable equipment rose at an annual rate of about 14 percent in real terms in the first quarter, after a IVi percent rise over the course of 1995. As has been true throughout the expansion, much of the first-quarter growth was in real outlays for computers and other information-processing equipment; such investment received particular impetus from extensive price cutting in virtually all segments of the computer market and from a push to acquire the state-of-the-art equipment needed to take full advantage of popular new software and opportunities for information transfer. However, incoming orders data and recent anecdotal reports suggest that the growth in real outlays for computers may be slowing. Meanwhile, demand for other types of capital equipment, which had softened in 1995, firmed somewhat in the first quarter. In the nonresidential construction area, real investment continued to expand in the first quarter. However, the monthly data suggest that outlays softened in the second quarter, an occurrence that is consistent with the downturn in contracts—a forward-looking indicator of construction outlays—since late 1995. Trends within the construction sector have been divergent. In the office sector, the modest recovery that seemed to be under way appears to have waned even though vacancy rates have continued to fall and transactions prices have continued to rise. Outlays dropped noticeably in the fourth quarter of 1995 and the first quarter of 1996, and preliminary data suggest that they remained at a fairly low level in the second quarter. In contrast, spending for commercial structures other than office buildings, which has been rising briskly since 1992, continued to advance through the first quarter—although further gains may be limited by an emerging excess of retail space in some parts of the country and the recent leveling out of transactions prices. Elsewhere, outlays for indus- 706 Federal Reserve Bulletin • August 1996 trial construction, which had moved up over 1994 and the first half of 1995, have been nearly flat over the past few quarters, while construction of hotels and motels, which account for less than 10 percent of structures outlays, has boomed. Investment in nonfarm business inventories slowed dramatically in the fourth quarter of 1995 after running at a fairly rapid pace over much of last year, and it nearly ceased in the first quarter of 1996 as motor vehicle stocks plummeted. Automotive stocks had risen appreciably over the second half of 1995, and some reduction was in train even before a March strike at General Motors curbed production; with the strike, dealer stocks were drawn down sharply. In addition, although firms outside motor vehicles apparently made considerable progress in rectifying inventory imbalances in late 1995, many continued to restrain production in response to continued weak orders in early 1996; producers of household durables and textiles are notable examples. Inventory investment evidently rebounded in the second quarter, mainly because motor vehicle stocks stabilized as sales and production returned to rough balance. Outside of motor vehicles, stocks accumulated moderately, on balance, in April and May. As of May, inventory-sales ratios for all major sectors were noticeably below their levels in late 1995; the decline in the ratio for retailers was especially steep. Economic profits of all U.S. corporations continued to surge in the first quarter, extending the steep climb that began in the early 1990s. The strength in profits in recent quarters has been attributable in large part to robust earnings growth at domestic financial institutions and a rebound in profits at foreign subsidiaries of U.S. corporations. In the domestic nonfinancial corporate sector, the profit share—pretax profits divided by the sector's GDP—has been hovering around 10 percent since mid-1994, after having risen appreciably over the preceding few years; its current level is similar to the levels attained in the mid-1980s but well below the highs of the 1960s and 1970s. About half of the increase in the sector's profit share since the early 1990s has reflected a reduction in net interest expenses. The Government Sector Although the nation continues to grapple with the prospect of growing federal budget deficits in the years ahead, the incoming news on the budget for fiscal 1996 has been extremely favorable. The deficit in the unified budget over the first eight months of the fiscal year—the period from October to May—was only $109 billion, $27 billion less than during the comparable period of fiscal 1995. The improvement in the deficit primarily reflected exceptionally rapid growth in receipts; outlays continued to rise at about the same pace as had been recorded, on average, over the preceding four years. If present trends continue, the fiscal 1996 deficit, when measured as a percentage of nominal GDP, will be the smallest since 1979. Federal receipts in the first eight months of fiscal 1996 were 8 percent higher than in the same period a year earlier; the rise was considerably greater than that of nominal GDP. Boosted by the upswing in business profits, corporate taxes have been increasing at double-digit rates since fiscal 1993, and that path has extended into fiscal 1996. Individual income taxes have also risen sharply this year; little information is available on the factors behind the surge in individual payments, but it may have resulted, at least in part, from capital gains realizations associated with the strong performance in financial markets last year. In total, federal outlays in the first eight months of fiscal 1996 were 4 percent higher than during the corresponding period of fiscal 1995. Outlay growth was damped by the reductions in discretionary domestic spending implied by this year's appropriations legislation. However, expenditures for "mandatory" programs continued to rise rapidly, and net outlays for deposit insurance were less negative than in 1995 (that is, insurance premiums and the proceeds from net sales of thrift assets declined). In addition, net interest payments increased moderately, reflecting the growth in the stock of outstanding federal debt. Federal expenditures on consumption and investment—the part of federal spending included directly in GDP—increased at an annual rate of about 6 percent in real terms in the first quarter of 1996 after declining about 13 percent in the fourth quarter of 1995. In part, real spending rose in the first quarter because the government shutdowns that occurred during the budget crisis depressed real spending less in the first quarter than in the fourth. Even so, given the enacted appropriations, the first-quarter increase was almost surely a transitory spike. The fiscal position of states and localities has been relatively stable in the aggregate over the past few years. As measured in the NIPA, the surplus (net of social insurance funds) in the sector's operating accounts has fluctuated in the range of $30 billion to $40 billion (annual rate) since the beginning of 1994; it stood around the middle of that range in the first Monetary Policy Report to the Congress quarter. On the whole, these governments are in considerably better shape than they were in the early 1990s. Even so, the sector remains under pressure to balance rising demand for services—especially in education, corrections, and health care—against the public desire for tax relief. Real expenditures on consumption and gross investment—the part of state and local spending included directly in GDP—declined somewhat in the first quarter of 1996. However, the decrease reflected primarily the effects of the unusually adverse winter weather, and spending appears to have rebounded in the second quarter. State and local employment posted a respectable gain, on net, over the first six months of the year. In addition, outlays for construction rose about 3V2 percent in real terms over the year ending in the first quarter, reflecting higher spending on highways and schools; monthly construction data through May suggest that spending rose substantially in the second quarter. Receipts of state and local governments rose about 4 percent in nominal terms over the year ending in the first quarter, about matching the rise in nominal GDP. The sector's own-source general receipts, which comprise income, corporate, and indirect business taxes, rose about 1 percentage point faster, with solid gains in all major components. Federal grants have changed little, on net, over the past four quarters. The External Sector The nominal trade deficit in goods and services widened from its low fourth-quarter level of $78 billion at an annual rate to $97 billion in the first quarter of 1996, slightly less than the deficit of $105 billion for 1995 as a whole. The current account deficit stood at $142 billion (annual rate) in the first quarter, about the same as the figure for 1995 as a whole. In April, the trade deficit increased from the average level for the first quarter. After expanding very slowly during the second half of 1995, the quantity of U.S. imports of goods and services rose about 10 percent at an annual rate in the first quarter, and preliminary data for April show another sizable increase. The rebound in imports largely reflected the strengthening of U.S. economic activity. In addition, non-oil import prices have declined somewhat since last fall, after having risen sharply in late 1994 and early 1995. A turnaround in imported automotive vehicles, consumer goods, and non-oil industrial supplies, following 707 more than six months of declines, accounted for most of the increase in imports during the first four months of 1996. The quantity of U.S. exports of goods and services expanded at a 2 percent annual rate during the first quarter; it also appears to have expanded at about this pace in April. The somewhat subdued pace of export growth so far this year reflects, in part, a bunching of shipments, particularly of machinery, that resulted in an unusually strong increase in exports in the fourth quarter of last year. Trends in economic activity have varied across the major foreign industrial countries so far in 1996. In Japan, economic recovery appears to have taken hold, although the underlying pace of real GDP growth is clearly less than the nearly 13 percent annual rate reported for the first quarter; the first-quarter growth rate was boosted, in part, by a temporary surge in government spending and measurement practices associated with the leap year.2 In Canada, growth remained subdued in the first quarter as real GDP rose only 1 lA percent at an annual rate despite much stronger growth in domestic demand; indicators for the second quarter suggest some strengthening. Economic performance so far this year in Europe has been mixed. In Germany, real GDP declined another IV2 percent at an annual rate in the first quarter, largely because severe weather caused a substantial contraction in construction spending; preliminary data suggest that construction activity rebounded in the second quarter with the return to more normal weather. In contrast, French real GDP expanded nearly 5 percent at an annual rate in the first quarter, supported by a very sizable rebound in consumption as well as leap-year effects; strikes during the fourth quarter of last year depressed economic activity and contributed to a decline in private consumption spending. Indicators for the second quarter suggest that output growth moderated from its first-quarter pace. In the United Kingdom, real GDP grew at an annual rate of IV2 percent during the first quarter, somewhat more slowly than during the second half of 1995. On the policy front, most European countries are seeking to rein in their fiscal deficits during 1996 and 1997, in part to comply with the criterion in the Maastricht Treaty that countries participating in the third stage of the European Monetary Union, now scheduled to begin on January 1, 1999, not have excessive fiscal deficits. As a reference value, the 2. Although the statistical agencies in many countries take the number of working days in the quarter into account when seasonally adjusting data, the statistical agencies in Japan, France, and Italy among the G-10 countries do not make working-day adjustments. 708 Federal Reserve Bulletin • August 1996 treaty specifies that deficits greater than 3 percent of a country's GDP are excessive, but it also provides scope for accepting deficits above that level in some circumstances. In Mexico, robust growth of real GDP in the first quarter extended the recovery in economic activity that began in the second half of 1995. Through June, the Mexican trade balance remained roughly stable at the level reached toward the end of last year after having improved markedly over the course of 1995. Argentina also appears to be emerging from the steep declines in output experienced during the first half of 1995, while Chile continues to enjoy steady growth. Activity in Brazil has begun to expand again in recent months, following a sharp contraction in mid-1995. Economic growth in our major Asian trading partners (other than Japan) appears to have picked up again this year after slowing noticeably during the second half of 1995 from the extremely rapid rates recorded in 1994 and the first half of 1995. The recent pickup in activity was associated with an easing of monetary policy in some of these countries in the second half of last year and the early part of this year. In China, output appears to have expanded during the first quarter at around the 10 percent annual rate recorded in 1995, with a pickup in consumption spending compensating for weaker growth in the external sector. Consumer price inflation generally stayed low in the major foreign industrial countries and declined or remained moderate elsewhere. In Japan, prices in the second quarter, on average, were slightly above their year-earlier levels because of the effects of yen depreciation on import prices; this upturn followed a year of deflation. In western Germany, inflation slowed through June to only about 1 lA percent. Inflation in Italy remained higher than in the other major foreign industrial countries but slowed to below 4 percent through June. In Canada, inflation also moved down further this year, to about IV2 percent in May. Inflation trends in Latin America have been mixed. In Mexico, the twelve-month change in consumer prices diminished to about 32 percent in June, compared with a reading of 52 percent for the twelve months ending in December 1995. Consumer price inflation has also declined further in Brazil and remained low in Argentina. In contrast, prices have picked up in Venezuela in response to the depreciation of its currency associated with the adoption of a program of macroeconomic stabilization. In Asia, inflation has decreased so far in 1996 in China and remained moderate to low elsewhere. Labor Market Developments Labor demand was strong over the first half of 1996. Growth in nonfarm payroll employment exhibited considerable month-to-month variability but averaged a hefty 235,000 per month. In addition, the civilian unemployment rate remained low, holding in the narrow range around 5V2 percent that has prevailed since late 1994. Employment gains were fairly broadly based over the first half of the year. The services sector, which now accounts for nearly 30 percent of nonfarm employment, continued to be a mainstay of job growth, showing increases of nearly 120,000 per month, on average, over the first half. Within services, growth in employment in business services remained rapid, with large gains at computer and data processing firms as well as at temporary help agencies, and employment in health services trended up further. In addition, construction payrolls rose a brisk 30,000 per month, on average—an annual rate of about 7 percent. Elsewhere, payrolls at wholesale and retail trade establishments continued to increase at about the same pace as that in 1995, and employment in the finance, insurance, and real estate category picked up after having been nearly flat over 1994 and 1995. Developments in manufacturing were uneven but showed some improvement in the second quarter. As 1996 started, firms were still adjusting employment to the slower path of output that had been evident since early 1995, and payrolls—especially at firms producing nondurable goods—were reduced further. In the past three months, manufacturing employment has held fairly steady, buoyed by the pickup in industrial activity, and the average factory workweek, which had contracted appreciably in 1995, trended up through June. For the nonfarm business sector as a whole, productivity rose at an annual rate of about 2 percent in the first quarter of 1996, echoing the acceleration in output. However, productivity had posted an outright decline in the fourth quarter of 1995; all told, productivity rose about 1 percent over the year ending in the first quarter of 1996, in line with the average pace this decade. In the manufacturing sector, productivity rose 41/4 percent over the past year, although the reported increase was probably overstated because firms in this sector have been relying increasingly on workers supplied by temporary help firms, who are counted as service industry employees rather than as manufacturing employees in the establishment survey of the Bureau of Labor Statistics. Labor force participation has remained sluggish this year. The participation rate, which measures the Monetary Policy Report to the Congress percentage of the working-age population that is either employed or looking for work, did retrace the dip that occurred in late 1995. But taking a longer perspective, the overall participation rate (adjusted for the redesign of the household survey in 1994) has changed little, on net, since 1989 after rising fairly steadily from the mid-1960s to the late 1980s. The flattening reflects mainly a marked deceleration in women's participation, owing both to a leveling off in the percentage of women who are in the labor force for at least part of a given year and slower growth in the average number of weeks they spend in the labor force that year. Moreover, with the average number of weeks these women spend in the labor force having risen to a level only slightly below the average for men, a significant rebound in participation does not seem very likely over the near term. The sluggishness in participation tends to restrain the growth of potential output unless it is offset by a better productivity performance or by faster growth in the working-age population—neither of which has yet been in evidence. Despite the tightness in labor markets in recent quarters, the broad trends in hourly compensation appear to have held fairly steady. The employment cost index for private industry—a measure that includes wages and benefits—rose at an annual rate of about 3 percent over both the first three months of 1996 and over the twelve months ending in March; the ECI had also increased about 3 percent over the twelve months ending in March 1995. Compensation growth has continued to be damped by a marked deceleration in employer-paid benefits— especially payments for medical insurance, which have been restrained by the slowing in medical care costs, the switch in insurance arrangements from traditional indemnity plans to health maintenance organizations and other managed care plans, and changes in the provisions of health plans (including greater sharing of health care costs by employees). On the whole, wages also seem to have been held in check, although the most recent data may be hinting at some acceleration. Notably, the wage and salary component of the ECI rose sharply in the first quarter; although the data are volatile and the first-quarter figure likely overstates current wage trends, the twelve-month change in the series moved up to 3lA percent, nearly Vi percentage point larger than the increases in the preceding two years. Separate data on average hourly earnings of production or nonsupervisory workers also show a recent acceleration in wages; the twelve-month change in this series moved up to about V/2 percent in June. 709 Price Developments The underlying trend of prices has remained favorable this year—notably, the CPI excluding food and energy rose at an annual rate of 23A percent over the first six months of the year, near the lower end of the narrow range than has been evident since early 1994. Developments in food and energy markets boosted overall inflation, however, and the total CPI rose at an annual rate of 3V2 percent over the first half; this pattern was the reverse of that seen in 1995, when a small drop in energy prices, combined with only a modest increase in food prices, held the rise in the total CPI to just 2V2 percent. Meanwhile, the producer price index for finished goods rose about 23A percent over the twelve months ending in June; excluding food and energy, the PPI rose 1V2 percent, a bit less than over the preceding year. Consumer energy prices picked up around the turn of the year and rose at an annual rate of about 12 percent, on net, over the first six months of 1996. With crude oil stocks drained by strong worldwide demand for heating oil and weather-related supply disruptions in the North Sea and elsewhere, the spot price of West Texas intermediate (WTI) soared from around $18 per barrel, on average, in the second half of 1995 to a high of around $25 per barrel in mid-April; the WTI price has since retraced much of that run-up. Reflecting the surge in crude oil prices, retail prices of refined petroleum products rose sharply through May, on balance. However, they fell markedly in June, and private surveys of gasoline prices imply a further decrease in early July. Retail food prices rose at an annual rate of about 4 percent over the first six months of 1996, somewhat above the pace of the preceding few years. At the farm level, prices of grains and other commodities rose to exceptionally high levels as adverse crop conditions in some parts of the country exacerbated an already tight stock situation. For some foods— notably, dairy products, cereals and bakery products, poultry, and pork—the pass-through tends to occur relatively rapidly, and retail prices of such items have already risen appreciably. Beef prices fell through May as producers sold off herds in response to higher feed costs and poor range conditions; they turned around in June and will likely rise further over the next several quarters as the selloff of breeding stock will eventually lead to tighter supplies. Price increases for consumer goods other than food and energy slowed to 1 percent at an annual rate over the first half of 1996, after averaging about 1V2 percent per year over the preceding three years. Increases in goods prices have been restrained, in 710 Federal Reserve Bulletin • August 1996 part, by the uptrend in the dollar since mid-1995, which has helped to damp import prices. In addition, with the operating rate in the manufacturing sector having fallen to about its long-term average, pressure from the materials side has been limited. Indeed, the PPI for intermediate materials (excluding food and energy) actually fell a bit over the past twelve months, after having risen IVi percent over the preceding year. Looking ahead, however, the latest report from the National Association of Purchasing Managers suggests that vendor performance deteriorated markedly in June, a development that could portend some firming of prices of materials and supplies over the near term. Prices of non-energy services rose 33/4 percent at an annual rate over the first half, about the same as the rise over 1995 as a whole. Airfares accelerated significantly in the first half. However, shelter costs increased less rapidly than they had in 1995, and prices of medical care continued to decelerate; over the six months ending in June, the CPI for medical care services rose at an annual rate of only about 3j/4 percent, roughly 1 percentage point below the 1995 pace. Moreover, there is some evidence that the CPI may be understating the recent slowing in medical care inflation, in part because it does not fully capture the discounts negotiated between medical providers and insurers, including managed care plans. The price measure used to deflate consumer expenditures on medical care in the NIPA better reflects such factors; it rose less than 2 percent over the year ending in the first quarter of 1996 after having risen AVi percent over the preceding year. Judging from the various surveys of consumers and forecasters, expectations of near-term CPI inflation deteriorated slightly in the first half of 1996. Notably, although both the University of Michigan and the Conference Board had reported a noticeable drop in their one-year-ahead measures in the second half of 1995, that improvement was not sustained in 1996; the recent monthly readings have bounced around, but the June results from both surveys were similar to those recorded, on average, in the first half of 1995. In contrast, longer-run inflation expectations, which have presumably been less affected by the recent news in food and energy markets, have held fairly steady. Smoothing through the monthly data, the University of Michigan's measure of expected CPI inflation over the next five to ten years has not changed much since late 1994, and the survey of professional forecasters conducted by the Federal Reserve Bank of Philadelphia during the second quarter of 1996 produced the same expectation for the succeeding ten years as that in the survey taken in the fourth quarter of 1995. Financial Developments Credit Financial conditions in the first half of 1996 supported the pickup in the growth of spending. For the most part, lenders continued to pursue credit applicants aggressively as reflected, for example, in narrow spreads of interest rates on corporate securities over those on Treasury securities. The debt of domestic nonfinancial sectors increased about 43A percent at an annual rate from the fourth quarter of 1995 through May of this year, a pace that was a bit slower than last year but still sufficient to place the level of this aggregate in the middle of its monitoring range for 1996. The Government Sector. Federal debt outstanding increased about 4 percent at an annual rate over the first half of 1996, a shade below the average rate of increase last year. The impasse over the debt ceiling disrupted the timing and size of some Treasury auctions but did not alter the longer-term trajectory of federal debt. The pattern of net borrowing by state and local governments in the past several years has been heavily influenced by their efforts to retire debt issued at relatively high interest rates in the mid-1980s. They have pursued these efforts through a strategy of advance refunding: In the early 1990s, when bond yields were seen as especially favorable, state and local governments issued new debt, even before call provisions on the older bonds could be exercised, and placed the proceeds in escrow accounts. As it became possible to do so, the issuing governments began calling the older debt, using the contents of the escrow accounts to complete the transactions. Reflecting these retirements, the amount of state and local government debt outstanding declined about 4 percent per year in 1994 and 1995. This process is still in train but evidently on a smaller scale; available information suggests that state and local government debt outstanding declined only marginally during the first half of this year. The Household Sector. The pace of borrowing by households appears to have moderated somewhat from the elevated rates of 1994 and 1995, but it remains substantial. In particular, consumer credit expanded at a 9Vi percent annual rate from the fourth Monetary Policy Report to the Congress quarter of 1995 through May of this year, a rate that was down from \4Vi percent over the four quarters of 1995. Mortgage debt actually expanded somewhat more rapidly during the first quarter than in 1995 (VA percent at an annual rate versus 6V2 percent), and available indicators suggest that growth during the second quarter dropped back only to about last year's pace. The recent backup in mortgage rates, which only began in February, has had little effect on borrowing thus far and might even have increased it temporarily by accelerating transactions. The rapid growth in household debt during the past few years has resulted in a sizable increase in the estimated ratio of scheduled payments of principal and interest to disposable personal income. This measure of debt-servicing burden has trended up over the past two years, and as of the first quarter of 1996, was approaching—but still short of—the levels attained toward the end of the last business cycle expansion. Several other recent indicators suggest that some households are experiencing financial strains. For example, the Consolidated Report of Condition and Income shows that the delinquency rate on creditcard receivables at commercial banks has increased significantly in recent quarters, retracing about onethird of the improvement that took place during the first few years of the current economic expansion. The delinquency rate on auto loans at the finance companies affiliated with the major manufacturers moved up sharply beginning about two years ago and since late last year has hovered around historically high levels. Anecdotal evidence suggests that the rise in both credit card and auto-loan delinquency rates reflects a strategy to liberalize lending standards as part of an overall marketing effort. The auto loan delinquency rate has also been boosted a bit by the increased prevalence of leasing. Lease customers tend to be better credit risks than the average conventional borrower, and the shift toward leasing has had the effect of skimming the more financially secure car buyers and thus degrading somewhat the remaining pool of people financing their purchases through conventional loan contracts. The personal bankruptcy rate also surged to a new high this year. The extent to which this development reflects mounting financial difficulties of households is clouded, however, by changes in federal law (effective at the start of 1995) that may have increased the attractiveness of bankruptcy by increasing the value of assets that can be protected from liquidation in bankruptcy proceedings. The "cost" of bankruptcy to households has also been effectively lowered by the greater willingness of lenders to extend credit to 711 riskier borrowers—even those with a previous bankruptcy on their records. Other indicators are less suggestive of a deterioration in the financial condition of households. For example, the delinquency rate for mortgage loans sixty days or more past due at all lenders is near its lowest level in two decades, while the rate on closedend consumer loans—despite having moved up over the past eighteen months—remains low by historical standards. Moreover, the aggregate balance sheet of the household sector clearly is in very good shape; owing in large part to the surge in equity prices over the past year and a half, the ratio of household net worth to disposable personal income moved up into record territory recently. Apparently in response to the recent run-up in delinquency and charge-off rates on consumer loans, banks have selectively tightened their standards for consumer lending. These actions reversed steps taken earlier in the decade, when many card issuers increased the growth of their credit card receivables by offering accounts to customers who previously would have been denied credit. The belief was that more sophisticated credit-scoring techniques would control risks adequately, but it appears that some "adverse selection" occurred and that the uptick in delinquencies has been larger than at least some banks had planned. About 20 percent of the respondents in the Federal Reserve's most recent survey of senior loan officers reported having tightened standards for approving applications for credit cards, and 10 percent reported tightening standards for other consumer loans. Notwithstanding the recent tightening of standards, supply conditions for loans from banks to consumers still appear accommodative. The Business Sector. The debt of nonfinancial businesses also appears to have expanded somewhat less rapidly during the first half of 1996 than it did last year. In part, the moderation in borrowing can be traced to the behavior of the financing gap for incorporated nonfinancial enterprises—the excess of their capital expenditures (including inventory investment) over their internally generated funds. During 1995, this gap narrowed quite substantially, reflecting strong profits and a marked reduction in inventory investment. Available indications are that the gap has remained small this year. External funding for business spending has been in plentiful supply thus far this year. One piece of evidence on this point is that interest rate spreads on investment-grade bonds have edged down slightly since the beginning of the year. Additionally, spreads on high-yield bonds have declined markedly and 712 Federal Reserve Bulletin • August 1996 are as low as they have been in at least a decade. Also, supply conditions for loans from banks to businesses continue to look quite favorable. According to the Federal Reserve's most recent survey of bank lending officers, standards for approval of commercial and industrial loans were about unchanged from January to May of this year, and terms on such loans were eased on net. Surveys by the National Federation of Independent Business indicate that small businesses have not faced difficulty getting credit, and stories abound of new small-business lending programs of banks. Gross offerings of long-term bonds by nonfinancial corporations have been running about in line with last year's pace. However, the mix of issuers has shifted somewhat, reflecting the changing structure of rates. Late last year and early this year, investment-grade corporations were issuing a hefty volume of bonds to pay down commercial paper and to refinance existing long-term debt. As the rates on investment-grade bonds increased this year, issuance of such debt dropped off. Rates on high-yield bonds moved up less, however, and issuers of those bonds continued to offer new debt at a rapid pace. Gross issuance of equity shares by nonfinancial corporations has been exceedingly strong this year. Indeed, total offerings in each of the three months of the second quarter set successive monthly records. This activity has been fueled by initial public offerings and other equity issuance by relatively young companies. Share retirements by nonfinancial corporations have also been very heavy. Announced stock buybacks by such firms in both the first and second quarters ran at $28 billion per quarter—the fastest pace since the late 1980s. On net, available information suggests that nonfinancial corporations retired even more equity during the first half of 1996 than they had in 1995. Share retirements and merger activity have generated much less issuance of debt recently than they did in the 1980s. Recent share repurchases have been undertaken mostly by companies seeking to return the excess cash on their balance sheets to stockholders. And recent mergers and acquisitions have mainly been accomplished through stock swaps between companies in similar lines of business, rather than the leveraged transactions commonplace in the 1980s. In line with the limited extent of debt financing, the mergers executed thus far in 1996 have resulted in little net change in bond ratings—again in marked contrast to the experience of the 1980s. Depository Intermediation. The growth of credit provided by depository institutions slowed sharply in the fourth quarter of last year and first quarter of this year, and commercial bank credit—a component of total depository credit for which more recent data are available—slowed further in the second quarter. The share of thrift institutions in total depository credit has continued to decline in recent quarters. This long-standing trend may have been given additional impetus last summer by the opening up of a differential between the premium rates paid by banks and thrifts for their deposit insurance; this differential has reduced the cost of funds for banks relative to the cost of funds for thrift institutions. The reduction and subsequent elimination of the deposit insurance premium for financially sound banks probably played a role in shifting bank funding toward deposits. During the first half of 1996, banks increased their deposit liabilities more rapidly than their nondeposit liabilities—a contrast from the preceding few years when banks relied disproportionately for their funding on nondeposit sources, including borrowing from their foreign offices. The Monetary Aggregates The increased reliance on deposit sources of funding by banks has helped support the growth of the broad money aggregates of late. Between the fourth quarter of last year and June of this year, M3 expanded at an annual rate of about 6 percent, putting it at the upper boundary of its annual growth cone. As in 1995, the growth in M3 this year was led by those components not included in M2. In the aggregate, these components increased about 11 percent at an annual rate between the fourth quarter of last year and June of this year, only moderately below the 1995 average pace of W/2 percent. Institution-only money-market mutual funds increased about 18 percent at an annual rate over this period. This component of the money stock increased especially rapidly during the first three months of the year. Often, the yields on these funds lag changes in short-term market interest rates, making them particularly attractive investments when short-term market rates are declining, as they were around the turn of the year when the Federal Reserve eased policy. M2 increased 43A percent at an annual rate between the fourth quarter of 1995 and June of this year, leaving it near the upper boundary of its growth range. For many years before the early 1990s, the velocity of M2 (defined as the ratio of nominal GDP to M2) moved roughly in tandem with the opportunity cost of holding M2—that is, the interest earnings forgone by holding M2 assets rather than market Monetary Policy Report to the Congress instruments such as Treasury bills. This relationship implied that M2 tended to move in proportion to nominal GDP, except as it was influenced by changes in the opportunity cost of holding it. When the opportunity cost rose, owners of M2 tended to economize on their holdings, driving up the velocity of M2. Beginning around the early 1990s, however, this historical relationship began to break down. Indeed, in 1991 and 1992, the velocity of M2 rose sharply even as the opportunity cost of holding M2 declined. A number of reasons for this development have been adduced, including the unusually steeply sloped yield curve and very low level of short-term interest rates, which helped to attract the public out of liquid balances and into more readily available long-term mutual funds; the credit crunch at banks and the resolution of troubled thrift institutions, which reduced the aggressiveness with which these institutions sought retail deposits; and household balancesheet restructuring, which entailed in part repayment of loans out of liquid money balances. The divergent movement of the velocity of M2 and its opportunity cost continued until the end of 1992. More recently, the variables have once again been moving essentially in parallel. In light of the rapid ongoing pace of innovation and technological change in financial services, however, it is impossible to know whether the new parallel movement of velocity and the opportunity cost will persist. Ml declined about VA percent at an annual rate during the first half of 1996, just as it had done over the four quarters of 1995. The recent sluggish behavior of Ml reflects the ongoing spread of so-called sweep programs, under which idle reservable deposits are "swept" into money-market-deposit accounts (MMDAs). (The appendix provides additional information on sweep accounts.) Estimates based on initial amounts swept suggest that Ml would have expanded at about a 7 percent annual rate during the first half of 1996 in the absence of these programs. Another factor contributing to the recent weakness in Ml has been the growth of currency, which has been sluggish by the standards of the early 1990s. Foreign demand for currency apparently has tailed off somewhat. In large part, the slackening in net foreign demand owes to substantial reflows from Argentina and Mexico, where earlier worst-case fears about the stability of the financial system have not been realized. Reflows from Western Europe and Asia have also been significant, but net shipments to the former Soviet Union remain sizable. On the whole, demand for the new $100 bill has been substantial, but this has not had any detectable effect on the stock of currency outstanding. 713 The sluggish growth of currency has held down expansion of the monetary base to only about 2 percent at an annual rate thus far this year. The other restraint on the growth of the base has been the turnaround in the behavior of required reserves. After surging at double-digit rates in 1992 and 1993, required reserves have been on a downward trend, and at an increasing rate. Thus far this year, required reserves have contracted about 7V2 percent at an annual rate. The emergence of this trend is perhaps the most direct consequence of the spread of sweep programs. Absent such programs, required reserves probably would have increased about 10 percent over the same period, owing to strong growth in demand deposits. Continued spread of sweep programs could affect the federal funds market, perhaps leading to greater volatility like that experienced in early 1991 following the elimination of reserve requirements on nontransactions deposits. Thus far, such instabilities have not been realized, but the Federal Reserve is monitoring the situation carefully. Interest Rates, Equity Prices, and Exchange Rates Interest Rates. Interest rates on Treasury securities rose over the first half of 1996, with the most pronounced increases occurring for intermediate-term securities. Between the end of December 1995 and the middle of July, the rate on three-month bills increased somewhat less than lA percentage point, the rate on five-year notes rose about VA percentage points, and the rate on thirty-year bonds rose about 1 percentage point. Despite these increases, nominal Treasury rates overall continued to be relatively low by the standards of the past twenty years. The spread between interest rates on investmentgrade private bonds and those on comparablematurity Treasury securities remained narrow during the first half of the year. In particular, the average spread on Baa-rated industrial bonds over thirty-year Treasury bonds continued to fluctuate near where it has been for the past several years and well below the levels typical of the 1980s. The spread on investmentgrade utility bonds continued to drift upward, but this appeared to reflect the market's increasing perception that some firms in that industry might become riskier as a result of deregulation and new competitive pressures. The rate spread on high-yield bonds over the comparable Treasury notes narrowed sharply, reversing the upward drift of 1995, and returning this measure to the low end of its range over the past decade. The continuing low level of spreads on most 714 Federal Reserve Bulletin • August 1996 investment-grade securities, as well as the marked decline of the spread on high-yield securities, appeared to reflect in part market participants' increasing confidence in the durability of the economic expansion and consequent optimism about the creditworthiness of corporate borrowers. Equity Prices. Share prices have fallen in recent weeks, most notably those of "high-tech" companies whose ability to maintain steep earnings trajectories has come into question. On net, though, broad indexes of equity prices have held steady or moved up slightly since the end of 1995. As of July 16, the S&P 500 composite index of stock prices had increased 2 percent thus far this year, while the NASDAQ index had returned to its beginning-of-year level. Even this performance has been impressive, given that it occurred in the face of appreciable upward movement in long-term interest rates. Exchange Rates. Since mid-April, the weightedaverage value of the dollar in terms of the other G-10 currencies has generally been about 4 percent above its level at the end of December, although the dollar has moved down somewhat in mid-July. When compared with an index of currencies from a somewhat broader group of U.S. trading partners, the dollar has appreciated 3 percent since December after adjustment for changes in relative consumer prices. The dollar has risen on balance about 4 percent in terms of the German mark and about 6 percent in terms of the Japanese yen. The dollar has been supported by perceptions of a disparity in the performance of the U.S. economy relative to that of many of our major trading partners and the resulting expectations for the course of relative interest rates. Specifically, while data suggesting robust growth in the United States caused interest rates to rise, questions remained about the strength of expansions in a number of other industrial countries, particularly in Europe. Average long-term (ten-year) interest rates in the other G-10 countries have risen only slightly, about 20 basis points, since the end of December. With U.S. rates rising substantially more than that, the appreciation of the dollar over this period is consistent with the shift in the long-term interest differential in favor of the dollar. In addition, the dollar was lifted to an extent against the yen by data early in the year showing that the Japanese external surpluses were narrowing. Despite a weak output performance, long-term interest rates in Germany have risen about 50 basis points, with much of that increase coming during the first quarter. Long-term interest rates have actually fallen since the end of last year in some European countries, such as France and Italy, where political and economic policy uncertainties have been reduced. In Japan, long-term interest rates have risen about 30 basis points, on balance. Short-term market interest rates abroad are generally lower than they were at the end of last year. German short-term market rates are down nearly 50 basis points, while rates in France are down more than 100 basis points and those in the United Kingdom are down 70 basis points. Official lending rates have been reduced by the central banks in Germany, France, the United Kingdom, and several other European countries in 1996. In Japan, short-term market interest rates remain near the historically low levels reached during the second half of 1995 as the Bank of Japan's official rates have been unchanged. Stock markets in the foreign G-10 countries have risen 3 percent to 15 percent since the end of December, except in the United Kingdom, where stock prices, on balance, are about unchanged. The Mexican peso traded during the first half of 1996 in a range somewhat stronger than that which prevailed at the end of 1995. Mexican twenty-eightday treasury bill (cetes) rates have declined from nearly 50 percent in December to around 30 percent as the rate of inflation has fallen. The economic positions of Mexican households and firms have improved since early 1995, but problems in the financial system remain, as evidenced by increasing amounts of nonperforming loans at banks. Stock prices have risen, on balance, about 5 percent in peso terms since December, buoyed by the interest rate declines and evidence of recovery in the Mexican economy. The pace at which private foreigners acquired U.S. assets increased markedly in the first quarter. Although private net purchases of U.S. Treasury securities were small, there were large increases in the private holdings of U.S. government agency bonds and U.S. corporate bonds, as U.S. corporations issued heavily in the Eurobond market. In addition, direct investment capital inflows surged to almost $30 billion in the first quarter, reflecting a pickup in foreign acquisitions of U.S. firms. Together, these gross inflows totaled nearly $80 billion, roughly twice the U.S. current account deficit for the quarter. U.S. net purchases of foreign stocks and bonds were also sizable in the first quarter, with net purchases of foreign stocks from Japan particularly large. U.S. direct investment abroad slowed somewhat between the fourth quarter of 1995 and the first quarter of 1996 but remained near the record pace for all of last year. In April and May, private foreign interest in Monetary Policy Report to the Congress U.S. securities continued to be strong while U.S. investor interest in foreign stocks cooled somewhat from the strong first-quarter pace. Foreign official holdings in the United States increased about $52 billion in the first quarter of 1996 after a record $110 billion rise in 1995. These increases reflected both intervention to support the foreign exchange value of the dollar by certain industrial countries and substantial reserve accumulation by several developing countries. Data for April and May indicated continued increases in official holdings in the United States but on a much more modest scale. APPENDIX: SWEEPS TRANSACTION OF S w e e p s of transaction deposits into savings accounts Billions of dollars Period 1994 January February April July September October November December 1995 January February RETAIL June July DEPOSITS In January 1994, depository institutions began implementing sweep programs for retail customers.3 In such programs, balances in household transaction accounts (typically NOW accounts, but also some demand deposits, both of which are included in M l ) are swept into savings deposits, which are part of the non-Mi portion of M2. Such sweeps shift deposits from reservable (transactions) accounts to nonreservable (savings) accounts without impairing depositors' ability to access the funds for transactions purposes. Depositories have an incentive to establish these programs because reserves held at the Federal Reserve earn no interest. Retail sweep programs reduce reported reserves, the monetary base, and Ml. They have no effect on M2, because both transactions and savings accounts are in M2. Retail sweep programs have been established either as daily sweeps or as weekend sweeps. Under a daily sweep, a depositor's transaction balances above a target level are shifted each night into a special savings account created for the purpose. If debits threaten to reduce the remaining transaction account balances below zero, enough funds are transferred back from the savings account to reestablish the target level of transaction balances. Because only six transfers are allowed out of a savings account within a statement month, on the sixth transfer, the entire 3. S w e e p a c c o u n t s f o r b u s i n e s s c u s t o m e r s o f b a n k s b e c a m e w i d e s p r e a d in t h e m i d - 1 9 7 0 s . T h e y i n v o l v e s w e e p s o f d e m a n d d e p o s i t s into repurchase agreements or other m o n e y market instruments w h o s e m i n i m u m sizes are too large to a c c o m m o d a t e households. 3. 715 September December Monthly averages of initial amounts Cumulative total 5.3 2.2 .0 .0 .0 .0 .0 .0 1.5 .6 .3 .0 5.3 7.5 7.5 7.5 7.5 7.5 7.5 7.5 9.0 9.6 9.9 9.9 .0 .0 .0 .0 5.0 7.3 .6 4.6 5.9 7.7 4.3 9.2 9.9 9.9 9.9 9.9 14.9 22.2 22.8 27.4 33.3 41.0 45.3 54.5 13.7 7.0 6.4 7.8 8.4 68.2 75.2 81.6 89.4 97.8 1996 February May NOTE. Figures are the estimated total of transaction account balances initially swept into savings accounts owing to the introduction of new sweep programs. Monthly totals are averages of daily data. Regular monthly updates of initial amounts swept may be obtained by email by sending an email address along with a phone number to sweeps-frb@frb.gov. Those without access to email may request data by calling (202) 872-7577. savings balance is returned to the transaction account. Alternatively, in a weekend sweep program, all affected transaction account balances are swept into the special purpose savings account over the weekend and then returned on Monday. Some "weekend sweep" programs undertake sweeps on certain holidays as well. No information is available on the current amounts of transaction balances that are being swept into savings accounts. The Federal Reserve has obtained data from depositories only on the initial amounts swept on the date each program was established. The table, which is updated and made available to the public on an ongoing basis, shows that the initial amounts swept under programs implemented through May 1996 have cumulated to $98 billion. With a marginal reserve requirement of 10 percent on most of these balances, the cumulative reduction of required reserves attributable to the initial amounts swept has been nearly $10 billion. (Table 4 appears on the following page.) 716 4. Federal Reserve Bulletin • August 1996 G r o w t h of m o n e y a n d d e b t 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 .6 8.6 9.2 4.2 5.7 5.2 7.7 9.0 5.9 6.3 4.0 14.4 13.3 10.0 8.8 7.9 1990 1991 1992 1993 1994 4.1 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 4.0 5.9 5.6 -.1 -.5 -1.5 -5.1 1.0 3.8 6.9 4.1 4.5 6.3 7.9 4.5 5.4 7.1 4.9 4.7 -2.7 -.5 5.9 4.1 7.2 5.3 4.7 n.a. Period 1995 Quarter (annual 1995:1 2 3 4 3 rate) 1996:1 2 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. 717 Industrial Production and Capacity Utilization for June 1996 Released for publication July 16 Industrial production increased 0.5 percent in June after a downward revised gain of 0.5 percent in May. The output of consumer durables, business equipment, construction supplies, and materials advanced nearly 1 percent or more. After a relatively hot May, however, the production of nondurable consumer goods fell as electricity output slackened. At 125.7 percent of its 1987 average, total industrial production in June was 3.5 percent higher than it was in June 1995. For the second quarter, industrial production increased at a seasonally adjusted annual rate of 5.6 percent, up from 3.0 percent in the first quarter; the recovery in the output of motor vehicles and parts after the General Motors strike in March accounted for the acceleration. Industrial production indexes Twelve-month percent change Twelve-month percent change 10 Materials Products 1990 1992 1991 1994 1993 1995 1996 1990 1991 1992 1993 1994 1995 1996 Capacity and industrial production Ratio scale, 1987 production = 100 — Total industry C a p a c i t y ^ — Ratio scale, 1987 production = 1 0 0 140 — Manufacturing Capacity _ • — 120 - Production 120 100 100 Production 80 1 1 1 1 1 1 1 1 1 1 1 1 1 80 1 1 1 1 1 Percent of capacity Percent of capacity Manufacturing Total industry 90 Utilization Utilization 80 70 I 1982 1984 I I 1986 I I 1988 I 1990 J 1992 I 1994 L 1996 J 1982 1984 1986 All series are seasonally adjusted. Latest series, June. Capacity is an index of potential industrial production. 140 I L 1988 1990 1992 1994 1996 718 Federal Reserve Bulletin • August 1996 Industrial production and capacity utilization, J u n e 1996 Industrial production, index, 1 9 8 7 = 1 0 0 Percentage change 1996 Category 1996 1 June 1995 to June 1996 Mar.r Apr/ May' June? Mar/ Apr/ May r Junef Total 123.6 124.5 125.1 125.7 -.5 .7 .5 .5 3.5 Previous estimate 123.6 124.4 125.3 -.5 .7 .7 Major market groups Products, total 2 Consumer goods Business equipment Construction supplies Materials 120.0 115.3 162.7 111.5 129.1 120.7 115.8 166.4 109.5 130.2 121.1 116.1 166.5 110.6 131.2 121.5 116.2 168.3 111.5 132.3 -.6 -1.1 -1.3 2.0 -.2 .6 .5 2.3 -1.7 .9 .3 .2 .1 .9 .8 .3 .0 1.0 .9 .8 3.0 1.2 8.5 4.0 4.3 Major industry Manufacturing Durable Nondurable Mining Utilities 125.2 135.6 113.6 101.1 128.0 126.5 138.4 113.4 100.5 126.0 126.9 139.0 113.6 101.0 129.2 127.6 140.4 113.6 102.5 127.6 -.9 -1.4 -.2 3.2 1.1 1.1 2.0 -.2 -.5 -1.6 .3 .4 .1 .5 2.6 .6 1.0 .1 1.5 -1.3 3.5 6.8 -.6 1.5 5.4 groups Capacity utilization, percent 1995 Average, 1967-95 Low, 1982 June Total Apr. r May r June? 83.1 83.2 3.9 82.0 80.4 85.7 91.7 93.3 4.4 5.1 2.6 -.1 1.3 71.8 84.9 83.5 82.6 82.9 82.6 82.9 83.2 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 82.7 80.8 87.0 90.2 89.7 81.3 79.6 85.3 90.3 94.0 81.8 80.4 85.3 89.9 92.4 81.8 80.2 85.6 90.3 94.6 NOTE. Data seasonally adjusted or calculated from seasonally adjusted monthly data. 1. Change from preceding month. Industrial capacity utilization rose 0.1 percentage point in June, to 83.2 percent. When analyzed by market group, the data show that the output of consumer goods was unchanged in June, with a 1.6 percent increase in the production of durable consumer goods offset by a 0.4 percent decrease in the output of the much larger consumer nondurables category. The increase in the output of durables resulted from roughly equal gains in automotive products and other durable goods; most of the increase in the latter reflected a jump in the output of appliances. About half of the decline in the production of consumer nondurables resulted from the drop in the residential use of electricity. The output of paper products, gasoline, and food also decreased. The production of business equipment rose 1.0 percent, bolstered by sizable gains in both information processing equipment and transit equipment. The 1.7 percent increase in the output of information processing equipment was led by another large gain in the output of office and computing equipment, but Mar.1 82.1 Previous estimate Manufacturing Advanced processing Primary processing . Mining Utilities 1996 High, 1988-89 2. Contains components in addition to those shown, r Revised, p Preliminary. the output of other components of this group, including communications equipment, copiers, and measuring instruments also advanced strongly. Increases in auto and light truck assemblies and in aircraft manufacturing boosted the output of transit equipment, although cuts in heavy and medium truck assemblies partly offset those gains. The production of industrial equipment was unchanged for a second month, and the output of other equipment edged up; production in both groups has fallen off after having peaked in February. The output of defense and space equipment, pushed down by a strike at an aircraft manufacturer, more than reversed its 0.7 percent increase in May. The output of construction supplies rose 0.9 percent for a second month. The production of durable goods materials grew 1 percent, with strength throughout the components of this group, including semiconductors, computer parts, basic metals, and the parts used to make motor vehicles. The output of nondurable materials edged up; a drop in paper partly Industrial Production and Capacity Utilization offset gains in textiles, chemicals, and containers. The production of energy materials rose, despite the drop in electricity output, because of gains in natural gas and crude oil extraction, as well as an increase in coal mining. When analyzed by industry group, the data show that manufacturing output advanced 0.6 percent after a gain of half that size in May. Gains were widespread among industries in durable manufacturing; the only easing was in the output of furniture and fixtures, which had increased 2.2 percent in May. Production increased more than 1 percent for computers, electrical machinery, steel, and motor vehicles and parts. The output of nondurables rose 0.1 percent, the same amount as in May. Although output advanced in most of the industries within nondurable manufacturing, the declines in the output of foods and paper and products offset most of the gains. After an increase in May, the production in mining rose 1.5 percent; the output at utilities fell a similar amount. The strength in durables and the weakness in nondurables continue their patterns of the past year or more; the output of durables has risen 6.8 percent since June 1995, and the production of nondurables has declined 0.6 percent over the same period. Utilities have also shown solid gains during the past year, rising 5.4 percent. Utility output grew about l3/4 percent per year, on average, between 1977 and 1995. The factory operating rate advanced 0.2 percentage point in June, to 82.0 percent, the same level as in the fourth quarter of 1995. Utilization rates increased for both advanced- and primary-processing industries, with most industries showing increases in operating rates. The rate for iron and steel rose more than 1 percentage point, while the rates for leather and products, tobacco, motor vehicles and parts, and textile mill products rose more than Vi percentage point. The largest decrease in utilization came in paper and products, where the operating rate fell 0.9 percentage point. The utilization rate for mining increased 1.4 percentage points; although the rate for utilities fell 1.3 percentage points, it remains more than 6 percentage points above its 1967-95 average. This release and the history for all series published here are available on the Internet at the Board of Governors' World Wide Web site, http://www.bog.frb.fed.us. 1996 REVISION ANNOUNCEMENT During the fourth quarter of 1996, the Federal Reserve will publish a revision of its measures of industrial production, capacity utilization, and indus 719 trial use of electric power. The revision of IP and capacity will both incorporate updated source data for recent years and feature a change in the method of aggregating the indexes. From 1977 onward, the value-added proportions used to weight individual series will be updated annually rather than quinquennially. In addition, the production and capacity indexes will be rebased so that 1992 actual output equals 100. The aggregate IP indexes will be constructed with a superlative index formulation similar to that introduced by the Bureau of Economic Analysis in its December 1995 revision of the National Income and Product Accounts. At present, the aggregate IP indexes are computed as linked Laspeyres indexes, with the weights updated every five years. Because of the rapid fall in the relative price of computing power, that periodic updating of weights is too infrequent to provide reliable estimates of current changes in output and capacity. With the publication of the revision, we will update our value-added proportions annually and use a Fisher index-number methodology. This new superlative index formulation will be applied to all aggregates of IP, capacity, and gross value of product. The regular updating of source data for IP will include the introduction of annual data from the 1994 Annual Survey of Manufactures of the Bureau of the Census. The statistics on the industrial use of electric power will be revised back to 1972. These revisions stem from three basic sources. First, the new figures incorporate more complete reports received from utilities for the past few years. Second, an updated panel of reporters on cogeneration will be fully integrated into our survey of electric power use. Third, the levels of the monthly electric power series for manufacturing industries will be benchmarked to indexes derived from data published in the Census Bureau's annual surveys and censuses of manufactures. These indexes will also be revised so that 1992 electric power usage equals 100. The revised data will be available at the Board's World Wide Web site. The data will also be available on diskettes from the Board of Governors of the Federal Reserve System, Publication Services, 202452-3245. The revised data will also be available through the Economic Bulletin Board of the Department of Commerce; for information call 202-4821986. In addition to the data currently provided, the time series of implicit prices necessary for a user to aggregate IP and capacity under the new methodology will be provided. For information on the plans for these revisions, call 202-452-3151. 720 Statements to the Congress Statement by Griffith L. Garwood, Director, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, before the Subcommittee on Financial Institutions and Consumer Credit of the Committee on Banking and Financial Services, U.S. House of Representatives, June 19, 1996 The Board of Governors of the Federal Reserve System appreciates this opportunity to comment on issues concerning the coverage of electronic benefit transfer (EBT) programs under the Electronic Fund Transfer Act (EFTA) and the Board's Regulation E. Under amendments to Regulation E adopted by the Board in February 1994, EBT programs are subject to modified Regulation E requirements scheduled to take effect on a mandatory basis on March 1, 1997. This hearing will examine the potential impact of applying Regulation E to these programs, particularly the potential costs of compliance with the rules that limit a recipient's liability for unauthorized transfers. I will discuss coverage of EBT programs under the EFTA, which the Board is responsible for implementing; address the states' concern that the costs of complying with Regulation E could impede the development of EBT programs; and make some comments about legislative proposals. Government agencies have developed EBT programs in which recipients use plastic cards and personal identification numbers (PINs) to access food stamp benefits at point-of-sale (POS) terminals in food stores and cash benefits at either automated teller machines (ATMs) or at POS terminals. The Board supports the nationwide effort to provide public benefits—such as social security, food stamps, and Aid to Families with Dependent Children—to citizens electronically. The electronic transfer of benefits offers numerous advantages over paper-based delivery systems, both for recipients and for program agencies. For recipients, these advantages include faster access to benefits, greater convenience in terms of times and locations for obtaining benefits, improved security because funds may be accessed as needed, lower costs because recipients avoid check-cashing fees, and greater privacy and dignity. For agencies, EBT programs offer a single, integrated system that can more efficiently deliver benefits for both state and federal programs by reducing the cost of benefit delivery, facilitating the management of program funds, and helping to reduce fraud. As EBT programs developed in the early 1990s, the Board considered whether, and in what manner, Regulation E ought to apply. The objective was to provide legal certainty so that agencies could make informed decisions about developing or expanding programs. The EFTA, enacted in 1978, provides the basic framework that establishes the rights and responsibilities of participants in electronic payment systems. The Congress directed the Board to prescribe regulations implementing the law and to demonstrate—to the extent practicable—that the consumer protection of the regulation outweighs the compliance costs necessary to provide this protection. Transfers covered by the act and Regulation E include transfers initiated through ATMs, point-ofsale terminals, telephone bill-payment systems, or home banking programs. The act and regulation restrict the unsolicited issuance of ATM cards and other access devices. They provide for disclosure of the terms and conditions of an EFT service, limitations on consumer liability for unauthorized transfers, error resolution, and documentation of transfers through terminal receipts and periodic statements. Under the EFTA, the Board has a broad mandate to determine coverage when electronic services are offered by entities other than traditional financial institutions. Section 904(d) of the act provides that if EFT services are made available to consumers by a person other than a financial institution holding a consumer's account, the Board shall ensure that the act's provisions are made applicable to such persons and services. It was under this mandate that the Board considered whether, and how, government agencies that offer EBT programs should be required to comply. The legislative history of the EFTA provided guidance on the Board's authority to determine if particular services should be covered by the act. Under section 904(c), rules issued by the Board "may contain such classifications, differentiations, or other provisions—as in the judgment of the Board are necessary or proper to effectuate the purposes of this title, [or] to prevent circumvention or evasion 721 thereof. . . ." In discussing section 904(c), a Senate Banking Committee report stated that "since no one can foresee EFT developments in the future, regulations would keep pace with new services and assure that the act's basic protections continue to apply."1 In February 1993, the Board proposed amendments to Regulation E providing modified coverage of EBT programs. In February 1994, the Board adopted final amendments. In adopting the amendments, the Board noted that the act's legislative history, the language of the act and regulation, and the strong similarity of EBT systems to other EFT services supported coverage of EBT programs under the act and regulation. From a public viewpoint, an EBT program functions much like a checking account with direct deposit of government benefits and ATM and POS services available to access the benefits. The Board considered the arguments presented by governments and agencies on why Regulation E ought not to apply. Agencies suggested, for example, that it was inappropriate for Regulation E to apply because government agencies differ from privatesector financial institutions in a number of ways related to how compliance costs can be borne. Despite these arguments, the Board determined that all consumers using EFT services are entitled to receive substantially the same protections under the EFTA and Regulation E and that this includes recipients of government benefits. Thus, the Board's rules provide benefit recipients much the same rights that are available to other users of electronic payment mechanisms and apply to government agencies requirements that are largely equivalent to those that govern private-sector EFT services. In essence, the Board rejected the idea of treating benefit recipients differently from other citizens by denying them the rights and protections of the Electronic Fund Transfer Act. To facilitate compliance, the Board made certain modifications to Regulation E as it would apply to EBT. Under the rules that go into effect next March, modified requirements apply to EBT programs that recognize their special characteristics. First, an agency must disclose a recipient's liability for unauthorized transfers, the types of transfers the recipient may make, a notice about error resolution procedures, and certain fees that may be imposed; generally, EBT programs provide training for benefit recipients that includes written disclosures. Second, an agency must document EFTs through receipts at 1. Fair Fund Transfer Act, Senate Report 95-915, 95 Cong. 2 Sess. (GPO, 1978). ATMs and POS terminals; EBT programs generally use existing payment systems or dedicated terminals, and both provide receipts. To address the cost concerns of program agencies, the Board provided an exception from the periodic statement requirement under certain circumstances. Instead of sending monthly statements, EBT programs may provide account balance information by telephone or at a terminal and a written account history upon request. The purpose of this modification was to eliminate paper. The attached chart summarizes the applicable provisions.2 To enable states that are interested in EBT to test and implement their programs, the Board delayed the date of mandatory compliance with the final rule to March 1, 1997. The Board approved the delay in response to a request made by the Federal EBT Task Force and endorsed by the Vice President. The task force—which represents all the major federal agencies with benefit programs—has been working toward a nationwide system for the electronic delivery of government benefits. The task force asked for the three-year delay so that, in cooperation with the states, the agencies could take the necessary measures for implementing EBT programs in compliance with Regulation E. The Board was, and remains, aware of the states' concern that the costs of complying with Regulation E could impede the development of EBT programs. Before adopting the final rule, the Board specifically solicited comment on the operational and cost impacts of coverage, particularly in the areas of liability for unauthorized transfers and error resolution. In its proposal, the Board stated that any comments opposing application of Regulation E on the basis of cost should be supported by substantial and persuasive data. While many states submitted cost estimates in response to the proposal, the Board was not persuaded that a case had been made for exempting programs from Regulation E. Today, many states continue to assert that the application of Regulation E would make EBT prohibitively expensive, primarily because of the rules that limit the recipient's liability for unauthorized transfers. Generally, Regulation E limits liability to $50 if the recipient notifies the agency within two business days of learning of the loss or theft of the card. States express concern that potential losses from fraud and misuse could force them to discontinue EBT pro- 2. The attachment to this statement is available from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551. 722 Federal Reserve Bulletin • August 1996 grams when compliance with Regulation E becomes mandatory next March. Without minimizing the states' concern, it is important not to overstate the risks. Regulation E does not mandate an automatic replacement of benefits when a claim of lost or stolen funds is made by a consumer. The agency will investigate the claim, consider the available evidence, and make a determination about whether a transfer was unauthorized or was made by the recipient or by someone to whom the recipient furnished access. If it turns out that a recipient has given a family member or someone else access to benefits, the recipient is fully liable for transfers. And although an agency may not routinely reject a claim because the recipient has filed a claim previously, the agency could factor in previous claims and losses by the recipient in deciding whether to honor a claim of unauthorized use. The Board recognizes that there are legitimate concerns about the need to control for fraudulent claims. But there are means that an agency may adopt to help minimize fraudulent claims that do not conflict with Regulation E, means that exist today in the paper-based system. For example: the agency could put recipients on restricted issuance (such as crediting the recipient's benefits biweekly, rather than monthly); restrict the sites at which the recipient could receive benefits; or appoint a representative payee. The agency could also place the recipient on a paper back-up system. Although these limitations may be desirable only in certain circumstances, such measures are possible approaches for dealing with recipients who misuse the EBT system. Since 1994, states have had an opportunity to develop effective management controls and operating rules to control the cost of compliance with Regulation E. This has provided a chance to find other practical solutions to the liability exposure. In addition, the Department of Agriculture has carried out test programs that should provide useful data about the actual costs of coverage. The Board is aware of the various bills that would exempt EBT programs from the EFTA. The "Personal Responsibility and Work Opportunity Act of 1995," H.R.4, which was passed by the Congress and vetoed by the President, would have exempted EBT programs that distribute needs-tested benefits and are established or administered by states or localities. Other bills remain under consideration. Whether these legislative proposals to exempt EBT programs from the EFTA are wise is obviously a decision for the Congress should it choose to amend the law, and the Board would not object to such action. However, the Board offers one observation. If an exemption is granted, limited to a particular category of EBT programs (such as needs-tested programs administered at the state and local level) without applying to EBT programs across the board, varying rules for different government benefit programs would result. This could make it very difficult to implement the multipurpose, one-card, unified national delivery system envisioned by the Congress and by the federal government. Either the federal and state programs would have to issue separate cards or they would have to explain to recipients how and why different rules apply depending on the source of the funds. In conclusion, the Board believes that coverage of EBT programs by the EFTA and Regulation E is appropriate under the law as it currently exists. The EFTA provides that all consumers using electronic fund transfer services have certain rights and responsibilities in connection with the transfer of their funds. Thus, the rule extends to benefit recipients the same rights that are available to other users of electronic payment services. The rule applies to government agencies requirements and responsibilities equivalent to those that apply to private-sector EFT services. Therefore all citizens, regardless of the source of their electronic transactions, are covered by essentially the same rules. The Board also believes that it should be possible to implement EBT programs in conformity with Regulation E and EFTA and at the same time maintain the integrity of the programs and their accountability for public funds. But to the extent that it is necessary to balance the consumer protection afforded by the EFTA against concern about the potential effect of the law's compliance costs on the nationwide delivery of EBT, the Congress may wish to reexamine the scope of the law's coverage. Today's hearing provides a very useful forum for that examination, and we appreciate the opportunity to participate. Statements to the Congress Statement by Edward W. Kelley, Jr., Member of the Board of Governors of the Federal Reserve System, before the Subcommittee on Capital Markets, Securities and Government-Sponsored Enterprises, Committee on Banking and Financial Services, U.S. House of Representatives, June 26, 1996 It is a pleasure to appear before this subcommittee to discuss the supervision of bank sales practices on behalf of the Federal Reserve. The recent publication of various survey results has focused attention on the performance of the banking and securities industries in educating customers about the critical differences between FDIC-insured deposits and uninsured investment products sold on bank premises. The Board has a long history of concerns about possible customer confusion between insured deposit instruments and uninsured investment products sold on bank premises. We have worked and continue to work diligently to minimize customer confusion through a number of supervisory and educational initiatives. These initiatives include coordination among the banking agencies to formulate clear and comprehensive guidelines governing the conduct of sales programs for nondeposit investment products offered on bank premises; the development of detailed examination procedures covering all aspects of sales of nondeposit products; and the development and implementation of an ambitious, multifaceted education program for consumers and for banks. We also have developed a productive relationship with the National Association of Securities Dealers (NASD) that includes the coordination of examinations of bank-affiliated broker-dealers and the sharing of examination information in appropriate circumstances. Finally, the banking agencies and the securities self-regulatory organizations have been working together to extend the same professional qualification standards found in the securities industry to bank sales personnel. Before discussing these matters in more detail, I believe it would be helpful to discuss briefly the continuing growth of the banking industry's sale of mutual funds and other nondeposit investment products that has occurred since early 1994, when the Board last testified on this subject. MUTUAL FUND SALES It is estimated that there were $3.1 trillion of mutual funds outstanding as of April 1996, up about 50 percent from year-end 1994. Of this amount, bank proprietary funds accounted for about $420 billion, about 723 60 percent of which were money market funds. As you can see, the banking industry's share of total mutual funds outstanding is relatively small, particularly when money market funds are excluded. With respect to sales volume, excluding money market funds, banks sold about $32 billion of equity and debt funds in 1995, up from $29 billion in 1994. These uninsured investment products—whose prices are most susceptible to changes in interest rates and other market factors—generate the most concern that customers understand they could lose the principal that they invested. Over the years, the banking agencies have consistently sought to protect and educate customers who might incorrectly believe that such investments are insured deposit instruments. INTERAGENCY STATEMENT In February 1994, the banking agencies jointly issued an Interagency Statement on the Retail Sales of Nondeposit Investment Products. The interagency statement calls for banks selling such products on their premises to intensify their disclosure efforts to advise retail customers that the investments are not deposits insured by the FDIC, are not guaranteed by the bank, and are subject to the risk of loss of principal. These three disclosures are quite similar to those that have been required by the Federal Reserve since 1972, when it issued interpretations of Regulation Y pertaining to bank holding company sales of uninsured investment instruments such as commercial paper. Banks were required to provide disclosures that were intended to enhance customer awareness and minimize the mistaken notion that an investment product purchased on bank premises was the same as an insured deposit. The interagency statement also formalized the agencies' expectation that sales of investment products would take place in an area of the lobby distinctly separate from teller windows and other locations where deposits could be made. Moreover, advertisements and account statements that contain information about both insured deposits and uninsured investment products must separate the information and provide the three disclosures I mentioned earlier. Appropriate standards for training, compensation, suitability, and supervision also were discussed. Finally, the interagency statement addressed the relationship between banks and third parties that sell investment products on bank premises—by far the most typical scenario, because approximately 87 percent of all sales on bank premises occur through broker-dealers. 724 Federal Reserve Bulletin • August 1996 EXAMINATION PROCEDURES Shortly after issuing the interagency statement, the Federal Reserve developed detailed examination procedures for use in state member banks that sell mutual funds to retail customers. The procedures are intended to enhance the supervision of these activities and to ensure bank compliance with the guidelines contained in the interagency statement. The procedures focus on the adequacy of disclosure, the physical separation of securities sales from deposittaking activities, and other procedures intended to avoid customer confusion and ensure customer protection. In the two years since implementation, our examiners have found that banks generally have procedures in place that comply with the guidelines in the interagency statement. In some cases, examiners have identified material deficiencies in sales programs and instructed that they be corrected. Although the Federal Reserve is prepared to initiate an enforcement action against any bank found to operate a sales program in a manner not consistent with principles of safety and soundness, in each case in which problems were discovered the bank responded promptly. In some cases this included a temporary suspension of sale activities until deficiencies were corrected. We have also found many banks to be proactive in their efforts to operate investment sales programs in a safe and sound manner, and our staff answers frequent inquiries concerning compliance with the requirements of the interagency statement. NASD COORDINATION In January 1995, the banking agencies entered into an Agreement in Principle with the NASD to coordinate the supervision and examination of bank-affiliated broker-dealers between the NASD and the banking agencies. In the interest of functional supervision and to avoid duplicative efforts to supervise and examine entities subject to the legal jurisdiction of both the NASD and the banking agencies, arrangements were made to share examination schedules, coordinate examinations, and share pertinent findings relevant to the retail securities sales activities of such firms. Pursuant to the agreement, the Federal Reserve has worked closely with the NASD on several occasions to address supervisory issues arising from the examination of a state member bank and an affiliated broker-dealer that conducts retail sales activities on the bank's premises. While the Federal Reserve has addressed the issues with the bank to seek corrective action in response to the problems, the NASD has addressed the matter with the affiliated broker-dealer, thereby ensuring that all parties to the business activity are responding to the supervisors' collective concerns. Most important, we have established effective lines of communication and a cooperative working relationship with the NASD. We think that this relationship has made our supervisory programs more effective. NASD PROPOSED RULEMAKING In late 1994, the NASD proposed new rules governing sales of securities on bank premises by member firms. The Federal Reserve worked with NASD staff and provided extensive comments on the proposal, many of which were incorporated into its revised rule. The NASD also relied on the expertise of the many commenters as well as on the advice of a newly created committee of bank-affiliated broker-dealers and third-party providers that sell through banks. The result is that the NASD's proposed rule now is generally consistent with the interagency statement with respect to the important issues of separation and disclosure. We informally have communicated with NASD representatives on issues, such as use of confidential information, that need additional clarification. The extensive communication in connection with this rulemaking demonstrates the commitment of both the industry and the regulators to achieve consistency in rules and guidelines governing this area. Our goal is to maximize the benefits and minimize the burdens resulting from our joint jurisdiction in this area. BANKING AGENCIES' ON PROFESSIONAL PROPOSED RULEMAKING QUALIFICATIONS The staff of the banking agencies is nearing completion of a proposed rule to establish a professional qualifications program for banks selling securities to retail customers that closely follows securities industry requirements. We believe the establishment of professional qualification requirements is in the best interests of the banking industry and of consumers. Briefly, the proposed rule would require bank employees to take and pass a securities industry professional qualification examination before beginning to sell securities to retail customers. This will ensure that bank securities representatives are appropriately trained and educated as required by the interagency statement and will enhance the ability of Statements to the Congress banks to serve their retail securities customers. Continuing education requirements, such as those required of broker-dealers and their employees, also would be imposed to ensure continued familiarity with industry practices, securities issues, and regulatory requirements. Finally, bank sales personnel would be subject to a registration process under which employment and certain disciplinary and customer complaint information could be accessed by members of the public. The banking agencies are working with the NASD to arrange for the NASD's new Central Registration Depository to maintain registration information filed with the banking agencies. In our discussions with the trade organizations and industry participants, we have encountered strong support for the proposed rule. We will encourage the banking industry to participate by commenting on the proposal as the banking agencies work closely with the securities self-regulatory organizations to bring this proposal to fruition. MARKET TRENDS SURVEY The FDIC recently released the results of its market trends survey, which show that some banks and securities firms selling on bank premises need to improve their efforts to advise customers of the risks associated with nondeposit investment products. We agree. While there have been various consumer surveys that have shown an increasing awareness among the investing public that mutual funds and other investment products purchased at banks are not FDICinsured, more can be done. For those investors who do not understand the risks associated with the lack of F D I C i n s u r a n c e , point-of-sale d i s c l o s u r e s r e m a i n important. In this regard, the Federal Reserve is working closely with the other federal banking agencies to promote disclosure by banks through the examination process, promote greater consumer understanding through education, and promote professional qualification standards for bank sales personnel. We also will continue to work with the NASD to obtain further improvements in disclosure by broker-dealers selling securities on banks premises. As I noted earlier, approximately 87 percent of all securities sold on bank premises are through sales representatives of NASD-registered broker-dealers. EDUCATION INITIATIVES In an effort to help bank customers understand that not all products sold at banks are insured by the 725 federal government, the Federal Reserve launched a multidimensional, national education program designed to deliver this message to consumers. In addition to the interagency statement, for the past eighteen months the Federal Reserve has been engaged in an intensive education program aimed at both retail customers and bankers. Mutual Funds: Understand the Risks, as the program is known, is quite comprehensive. It includes material for both a consumer seminar presentation and a banker compliance program; a video that can be used by bankers and other professionals in their dealings with retail customers; and compliance checklists to help bankers operate in a manner that complies with the interagency statement. The goal of the consumer seminar program is to help retail customers understand the differences between insured deposits and uninsured investments; the goal of the banker education program is to increase compliance with the interagency statement, which in turn will help inform and protect customers. The program has been well received and has been discussed in numerous publications. The American Bankers Association has featured the program in its newsletter and has broadcast the video on its Skylink System. To date, seventy consumer seminars and fortyseven banker training programs have been held around the country, reaching more than 7,500 consumers—including a seminar in Spanish to an audience in Puerto Rico—and nearly 1,400 bankers. Materials have been distributed to another 3,150 consumers via exhibits and town meetings sponsored by the Securities and Exchange Commission. Nearly 10,000 copies of the video, more than 7,000 copies of the compliance checklists, and approximately 1,500 copies of the consumer outreach package have been distributed. The materials have been shared with federal and state regulators and are available from the Board. Selected materials have been translated into Spanish. These seminars and educational initiatives appear to work. A comparison of knowledge levels before and after a consumer seminar indicates that individuals seem to have a better understanding of the risks associated with nondeposit investment products: 91 percent know these products are not FDIC-insured, compared with 65 percent before the seminar; 87 percent know these products carry the risk of loss of principal, compared with 72 percent before the seminar. Bankers who attended our training sessions report that they feel better able to comply with the interagency statement, especially with respect to disclosure and the physical separation 726 Federal Reserve Bulletin • August 1996 of the investment sales area from deposit-taking activities. We intend to do more. We have completed a video public service announcement that will be distributed this summer to 145 stations in the top forty national television markets. Materials for the bankers training program are currently being updated, and we hope to initiate another round of banker education programs soon. CONCLUSION The continuing growth in bank sales of mutual funds and other uninsured investments necessitates a com- mitment on the part of the banking industry and bank supervisors to the principle that effective disclosure of risks is in the best interest of the customer and the banking organization. Banks can best ensure that their sales staffs are operating in a manner consistent with this objective if they develop comprehensive training programs and effectively monitor compliance with policies and procedures governing sales of nondeposit products. The Federal Reserve will continue to seek ways to strengthen its educational and supervisory programs to promote compliance with the guidelines in the interagency statement so that bank customers are served in a safe and sound manner consistent with principles of customer protection. • 727 Announcements ALAN GREENSPAN: AS CHAIRMAN REAPPOINTMENT OF THE BOARD OF GOVERNORS ALICE M. RIVLIN: APPOINTMENT AS A MEMBER OF THE BOARD OF AND AS VICE CHAIR GOVERNORS LAURENCE H. MEYER: APPOINTMENT AS A MEMBER OF THE BOARD OF GOVERNORS On February 22, 1996, President Clinton announced his intention to reappoint Alan Greenspan as Chairman of the Board of Governors and to nominate Alice M. Rivlin as a member of the Board of Governors and Vice Chair, and Laurence H. Meyer as a member of the Board of Governors. The three appointments were confirmed by the Senate on June 20, and the oaths of office were administered as follows: Dr. Greenspan on June 21, Dr. Meyer on June 24, and Dr. Rivlin on June 25. A formal swearing-in ceremony was held on June 25 for Dr. Greenspan, with Secretary of the Treasury Robert Rubin administering the oath of office. The text of President Clinton's announcement follows: The President. Good afternoon. As we seek to sustain economic growth there is no more important institution in our country than the Federal Reserve. Its decision can help determine whether businesses can borrow and grow, whether families can buy a home, and whether our financial system is sound. Its independence and its professionalism are an important safeguard for our economy. Over the past three years, my administration has had a respectful and productive relationship with the Federal Reserve. During this time, we have done our job to help grow this economy, first by cutting our deficit in half, and secondly, by increasing important investments in education, technology and defense conversion. The Fed, in turn, has done its job making independent and professional judgments on monetary policy. Together our efforts have helped to create a climate for sustained economic growth—the lowest combination of unemployment, inflation and mortgage rates in 27 years. This relationship has worked. Today I am pleased to announce my decision, first, to reappoint Alan Greenspan as the Chairman of the Federal Reserve Board. He brings his years of experience as a prominent economist and, I might add, a leading Republican, and a career capped by eight years of service as the Chairman of the Federal Reserve. During his tenure he has inspired confidence and for good reason. He has worked with our administration to safeguard the stability of global financial markets, recognizing that today even temporary difficulties in one corner of the globe can have far-reaching effects in another. And more importantly, his decisions have helped us to work toward a period of sustained economic growth. I'm also proud to announce my intention to nominate two distinguished economists to join Chairman Greenspan at the Fed. First, I am nominating Dr. Alice Rivlin as the Vice Chair of the Federal Reserve Board. As a founding director of the Congressional Budget Office, a Senior Fellow at Brookings Institution, and President of the American Economics Association, she is one of our nation's foremost experts on how to keep the economy growing. And as my Director of the Office of Management and Budget, she has been my strong right arm as we have cut wasteful spending and moved toward a balanced budget. I have come to deeply value her independence. She always calls it as she sees it. And I know from working with her for three years that her ultimate test is how the decisions we make affect the lives and future of ordinary American citizens. Alice Rivlin has the right combination of mind and heart to serve our country well as the Vice Chair of the Federal Reserve. I will miss her, and I appreciate her willingness to take on this new responsibility. For the position of Member of the Federal Reserve Board I am today nominating Laurence Meyer. Dr. Meyer is a professor of economics at Washington University. He is renowned as one of our nation's leading economic forecasters. This year he received the annual award as the most accurate forecaster among blue-chip economists, an award he also won in 1993. Because of that, his economic forecasts are closely listened to at both OMB and CBO. Now, that is no small feat. (Laughter.) He consults widely for American businesses, and his judgment and experience will serve our nation well at the Federal Reserve. If we all continue to do our part and the Federal Reserve continues to be strong, forthright, and resolute, we can create a climate for sustained growth and prosperity for the American people for years to come. I look forward to working with these nominees, and I hope the Senate will give them speedy and favorable consideration. Thank you, Mr. Greenspan. Alice, Dr. Meyer, thank you very much. Q. Do you have any guarantees from the Senate, Mr. President? The President. I don't know that there are any guarantees left in this old world, but I feel quite confident that this team of people will be confirmed. Q. Mr. President, do you think these three people will be able to engage in the kind of debate you were talking about in New York last week? 728 Federal Reserve Bulletin • August 1996 The President. I do. And I feel good about it. After all, what should our objective be? Our objective should be to achieve the maximum sustainable economic growth in our country consistent with not letting inflation get out of hand. And the Fed can't do that alone. The rest of us have to do our part, too. I think balancing the budget is an important part of it. I think bringing the benefits of education and technology to all the members of the work force who are stuck in stagnant wages now is a very important part of it. I think creating incentives to invest in the areas where there aren't enough jobs of any kind, in the inner cities and the rural areas, is an important part of it—that's what our empowerment zone meeting today is about. And I think paying some special attention to all those people who have been downsized and trying to devise ways that will speed their reentry into the job market at appropriate levels is an important part of it. So no one can do this job alone, but I think that the truth is that we're entering a new economy and it's a subject that ought to be open to honest debate. I was encouraged by the comments that Chairman Greenspan made in his two appearances before the Congress in the last couple of days. And I feel good about this group of distinguished Americans being in the positions for which I have nominated them. Q. Thank you, Mr. President. The President. Thank you. Q. Can we ask Dr. Rivlin a question? The President. Sure. Q. What level of growth would you like to see, Dr. Rivlin? (Laughter.) And Dr. Meyer as well if you could. Dr. Rivlin. A sustainable level consistent with low inflation. (Laughter.) Q. Dr. Rivlin, could we ask, have you had a change of heart? Didn't you indicate just recently that you weren't really interested in this job? Dr. Rivlin. Yes, I did. (Laughter.) Q. Is the President persuasive or— The President. I haven't lost all my powers of persuasion. (Laughter.) Battered and bloody though I may be, I can still, once in a while, make a good argument. (Laughter.) Thank you. The Press. Thank you. ISSUANCE OF INVESTMENT SCHEME ADVISORY The Federal Reserve Board on June 11, 1996, issued an Investment Scheme Advisory alert cautioning the public about the continued proliferation of illegal "prime bank" financial instruments and scams. This Investment Scheme Advisory updates an October 1993 interagency alert concerning fraudulent "prime bank" financial instruments and investment programs that supposedly invest in them. The advisory also states that, contrary to statements in some of the written materials used by individuals involved with the fraudulent schemes, the Federal Reserve does not, among other things, autho- rize, sanction, or oversee any investment programs or plans involving "prime bank" products. The Federal Reserve also does not license traders in "prime bank" instruments or have agents abroad to sell or redeem such financial instruments. MODIFICATION OF PRUDENTIAL LIMITATIONS ON RISKLESS PRINCIPAL TRANSACTIONS The Federal Reserve Board announced on June 11, 1996, the modification of the prudential limitations established by the Board for the "riskless principal" activities of bank holding companies. Bank holding companies that previously have received Board approval to conduct riskless principal transactions may engage in this activity subject to the modified framework of limitations. PROPOSED ACTION The Federal Reserve Board on June 27, 1996, requested public comment on a proposal to simplify and update the requirements of its Regulation D governing the reserve requirements of depository institutions. Comments should be received by August 16. ISSUANCE OF A REPORT ON THE COMBINED STATEMENT OF CONDITION OF THE FEDERAL RESERVE BANKS The Federal Reserve Board issued on July 2, 1996, a report by an independent accounting firm certifying the combined statement of condition of the Federal Reserve Banks as of the end of 1995 together with related statements of income and changes in capital. This was the first financial audit of the combined financial statements of the Reserve Banks performed by an independent accounting firm, in this case by Coopers & Lybrand. The certified financial statements and footnotes appear in this issue of the Bulletin on pages 780-89. Audits of each Reserve Bank have long been conducted by each Bank's general auditor and by the Board's financial examiners. This is the first year that the System has issued independently audited combined Reserve Bank financial statements and footnotes similar to those provided in the private sector. Other audits of the Board and Reserve Banks are conducted by the General Accounting Office and the Board's Inspector General. Announcements PUBLICATION OF THE JUNE 1 9 9 6 UPDATE OF THE BANK HOLDING COMPANY SUPERVISION MANUAL The June 1996 update of the Bank Holding Company Supervision Manual, Supplement No. 10, has been published. The inspection guidance dealing with mortgage banking nonbank subsidiaries of bank holding companies has been substantially revised. This revision provides supervisory guidance regarding oversight by a company's board of directors and senior management; activities comprising loan production, marketing, servicing, and administration; and issues relating to mortgage-servicing rights, financial analysis, and intercompany transactions. The update also includes inspection guidance on rating the adequacy of risk management processes 729 and internal controls. In addition, the Manual includes new or revised summaries of certain nonbanking activities that have been approved by Board order—including Futures Commission Merchants, Section 20 companies, futures (and options thereon) involving financial and nonfinancial commodities, and related advisory services. The sections for Regulation O (Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks) and intercompany transactions have been changed to incorporate the new definition of unimpaired capital and surplus. A more detailed list of changes is included in the revision package. The public may obtain the Manual and the updates (including pricing information) from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551. • 731 Legal Developments FINAL RULE-AMENDMENT TO REGULATION S The Board of Governors is amending 12 C.F.R. Part 219, Subpart A of its Regulation S (Reimbursement for Providing Financial Records; Recordkeeping Requirements for Certain Financial Records), which implements the requirement.,under the Right to Financial Privacy Act ("RFPA") that the Board establish the rates and conditions under which payment shall be made by a government authority to a financial institution for assembling or providing financial records pursuant to RFPA. These amendments update the fees to be charged and streamline the subpart generally. Effective July 12, 1996, 12 C.F.R. Part 219 is amended as follows: Part 219—Reimbursement for Providing Financial Records; Recordkeeping Requirements for Certain Financial Records (Regulation S) Subpart A—Reimbursement to Financial Institutions for Providing Financial Records 1. The authority citation for Subpart A continues to read as follows: Authority: 12 U.S.C. 3415 2. Subpart A is amended by revising sections 219.2 through 219.6 to read as follows: Section 219.2—Definitions. For the purposes of this subpart, the following definitions shall apply: Customer means any person or authorized representative of that person who uses any service of a financial institution, or for whom a financial institution acts or has acted as a fiduciary in relation to an account maintained in the person's name. Customer does not include corporations or partnerships comprised of more than five persons. Financial institution means any office of a bank, savings bank, card issuer as defined in section 103 of the Consumers Credit Protection Act (15 U.S.C. 1602(n)), industrial loan company, trust company, savings association, building and loan, or homestead association (including cooperative banks), credit union, or consumer finance institution, located in any State or territory of the United States, the District of Columbia, Puerto Rico, Guam, American Samoa, or the Virgin Islands. Financial record means an original or copy of, or information known to have been derived from, any record held by a financial institution pertaining to a customer's relationship with the financial institution. Government authority means any agency or department of the United States, or any officer, employee or agent thereof. Person means an individual or a partnership of five or fewer individuals. Section 219.3—Cost reimbursement. (a) Fees payable. Except as provided in section 219.4, a government authority, or a court issuing an order or subpoena in connection with grand jury proceedings, seeking access to financial records pertaining to a customer shall reimburse the financial institution for reasonably necessary costs directly incurred in searching for, reproducing or transporting books, papers, records, or other data as set forth in this section. The reimbursement schedule for a financial institution is set forth in Appendix A to this section. If a financial institution has financial records that are stored at an independent storage facility that charges a fee to search for, reproduce, or transport particular records requested, these costs are considered to be directly incurred by the financial institution and may be included in the reimbursement. (b) Search and processing costs. (1) Reimbursement of search and processing costs shall cover the total amount of personnel time spent in locating, retrieving, reproducing, and preparing financial records for shipment. Search and processing costs shall not cover analysis of material or legal advice. (2) If itemized separately, search and processing costs may include the actual cost of extracting information stored by computer in the format in which it is normally produced, based on computer time and necessary supplies; however, personnel time for computer search may be paid for only at the rates specified in Appendix A to this section. (c) Reproduction costs. The reimbursement rates for reproduction costs for requested documents are set forth in Appendix A to this section. Copies of photographs, films, computer tapes, and other materials not listed in Appendix A to this section are reimbursed at actual cost. (d) Transportation costs. Reimbursement for transportation costs shall be for the reasonably necessary costs directly incurred to transport personnel to locate and retrieve the requested information, and to convey such material to the place of examination. 732 Federal Reserve Bulletin • August 1996 Appendix A to Section Schedule 219.3—Reimbursement Reproduction: Photocopy, per page Paper copies of microfiche, per frame Duplicate microfiche, per microfiche Computer diskette $.25 $.25 $.50 $5.00 Search and Processing: Clerical/Technical, hourly rate Manager/Supervisory, hourly rate $11.00 $17.00 (j) General Accounting Office requests. Financial records sought by the General Accounting Office pursuant to an authorized proceeding, investigation, examination, or audit directed at a government authority. (k) Federal Housing Finance Board requests. Financial records or information sought by the Federal Housing Finance Board (FHFB) or any of the Federal home loan banks in the exercise of the FHFB's authority to extend credit to financial institutions or others. (1) Department of Veterans Affairs. The disclosure of the name and address of any customer to the Department of Veterans Affairs where such disclosure is necessary to, and used solely for, the proper administration of benefits programs under laws administered by that Department. Section 219.4—Exceptions. Section 219.5—Conditions for payment. A financial institution is not entitled to reimbursement under this subpart for costs incurred in assembling or providing financial records or information related to: (a) Security interests, bankruptcy claims, debt collection. Any financial records provided as an incident to perfecting a security interest, proving a claim in bankruptcy, or otherwise collecting on a debt owing either to the financial institution itself or in its role as a fiduciary. (b) Government loan programs. Financial records that are necessary to permit the appropriate government authority to carry out its responsibilities under a government loan, loan guaranty or loan insurance program. (c) Nonidentifiable information. Financial records that are not identified with or identifiable as being derived from the financial records of a particular customer. (d) Financial supervisory agencies. Financial records disclosed to a financial supervisory agency in the exercise of its supervisory, regulatory, or monetary functions with respect to a financial institution. (e) Internal Revenue summons. Financial records disclosed in accordance with procedures authorized by the Internal Revenue Code. (f) Federally required reports. Financial records required to be reported in accordance with any federal statute or rule promulgated thereunder. (g) Government civil or criminal litigation. Financial records sought by a government authority under the Federal Rules of Civil or Criminal Procedure or comparable rules of other courts in connection with litigation to which the government authority and the customer are parties. (h) Administrative agency subpoenas. Financial records sought by a government authority pursuant to an administrative subpoena issued by an administrative law judge in an adjudicatory proceeding subject to 5 U.S.C. 554, and to which the government authority and the customer are parties. (i) Investigation of financial institution or its noncustomer. Financial records sought by a government authority in connection with a lawful proceeding, investigation, examination, or inspection directed at the financial institution in possession of such records, or at an entity that is not a customer as defined in section 219.2 of this part. (a) Direct costs. Payment shall be made only for costs that are both directly incurred and reasonably necessary to provide requested material. Search and processing, reproduction, and transportation costs shall be considered separately when determining whether the costs are reasonably necessary. (b) Compliance with legal process, request, or authorization. No payment may be made to a financial institution until it satisfactorily complies with the legal process, the formal written request, or the customer authorization. When the legal process or formal written request is withdrawn, or the customer authorization is revoked, or where the customer successfully challenges disclosure to a grand jury or government authority, the financial institution shall be reimbursed for the reasonably necessary costs incurred in assembling the requested financial records prior to the time the financial institution is notified of such event. (c) Itemized bill or invoice. No reimbursement is required unless a financial institution submits an itemized bill or invoice specifically detailing its search and processing, reproduction, and transportation costs. Search and processing time should be billed in 15-minute increments. Section 219.6—Payment procedures. (a) Notice to submit invoice. Promptly following a service of legal process or request, the court or government authority shall notify the financial institution that it must submit an itemized bill or invoice in order to obtain payment and shall furnish an address for this purpose. (b) Special notice. If a grand jury or government authority withdraws the legal process or formal written request, or if the customer revokes the authorization, or if the legal process or request has been successfully challenged by the customer, the grand jury or government authority shall promptly notify the financial institution of these facts, and shall also notify the financial institution that it must submit an itemized bill or invoice in order to obtain payment of costs incurred prior to the time of the notice to the financial institution receives this notice. Legal Developments Section 219.7—[Removed] 3. Section 219.7 is removed. ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT Orders Issued Under Section 3 of the Bank Holding Company Act Bank of Boston Corporation Boston, Massachusetts Order Approving Acquisition Company of a Bank Holding Bank of Boston Corporation ("Bank of Boston"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire The Boston Bancorp ("Bancorp") and thereby indirectly acquire its wholly owned subsidiary, South Boston Savings Bank ("Savings Bank"), all in Boston, Massachusetts. 1 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 11,639 (1996)). 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. 2 Bank of Boston, with consolidated assets of approximately $47.4 billion, operates subsidiary banks in Massachusetts, Connecticut, Florida, and Rhode Island, and a special purpose bank in Maine that provides cash management services. Bank of Boston is the largest commercial banking organization in Massachusetts, controlling deposits of $15.4 billion, representing approximately 15.2 percent in total deposits in commercial banks or thrift institu- 1. Bank of Boston proposes to acquire Bancorp by merging its wholly owned subsidiary, BancBoston Merger Co., into Bancorp with Bancorp to be the surviving company. After consummation of this proposal, Bank of Boston would merge Savings Bank with and into its wholly owned subsidiary bank, The First National Bank of Boston ("FNBB"). The Office of the Comptroller of the Currency ( " O C C " ) has approved this merger under the Bank Merger Act (12 U.S.C. § 1828(c)). Bank of Boston also has requested Board approval to acquire options for up to 19.9 percent of Bancorp's stock. 2. The Board received comments from an individual ("Protestant") contending, without providing any supporting evidence, that acquisitions of small institutions by large bank holding companies have a number of adverse effects, including decreased competition, increased risk of failure to the banking system, increased collusion to set fees for banking products and services, and higher fees for fewer services to customers, particularly small businesses. The Board has carefully considered these comments in light of all the facts of record, including supervisory information and examination reports, in the Board's evaluation of the competitive effects of this proposal, and in its consideration of the financial and managerial resources of the companies involved, the future prospects of these companies and the effect of the proposal on the convenience and needs of the community served. 733 tions ("depository institutions") in Massachusetts. 3 Bancorp is the tenth largest commercial banking organization in Massachusetts, controlling $1.4 billion of deposits, representing approximately 1.3 percent of total deposits in depository institutions in the state. On consummation of the proposal, Bank of Boston would remain the largest commercial banking organization in Massachusetts, controlling $16.8 billion of deposits, representing approximately 16.5 percent of total deposits in depository institutions in Massachusetts. Competitive Considerations The BHC Act prohibits the Board from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly, or if the proposal would substantially lessen competition in any relevant market, unless such anticompetitive effects are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. Bank of Boston and Bancorp compete directly in the Boston banking market. 4 Bank of Boston is the second largest depository institution in the market, controlling deposits of approximately $12.2 billion, representing approximately 18.3 percent of total deposits in depository institutions in the market ("market deposits"). 5 Savings Bank is the tenth largest depository institution in the market, controlling deposits of $1.4 billion, representing approximately 1 percent of market deposits. On consummation of this proposal, Bank of Boston would become the largest depository institution in the market, controlling deposits of approximately $13.6 billion, representing approximately 20.1 percent of market deposits. The market would remain moderately concentrated as measured by the Herfindahl-Hirschman Index ("HHI"), and numerous competitors would remain in the market. 6 3. Asset data are as of December 31, 1995. State deposit data are as of June 30, 1995. 4. The Boston banking market is approximated by the Boston RMA and the towns of Greenville, Lyndeborough, Mason, and New Ipswich in Hillsborough County, all in New Hampshire. 5. Market share data are as of June 30, 1995, and are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); 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 Savings Bank would be controlled by a commercial banking organization after consummation of the proposal, they have been included at 100 percent in the calculation of market shares for Bank of Boston after consummation of this proposal. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992). 6. The HHI for the Boston banking market would increase by 55 points to 1090. 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 between 1000 and 1800 is considered to be moderately concentrated. The Justice Department has informed the 734 Federal Reserve Bulletin • August 1996 The Board sought comments from the Department of Justice ( " D O J " ) on the competitive effects of this proposal, and DOJ advised the Board that the proposal is not likely to have a significantly adverse effect on competition in any relevant banking market. 7 In light of all the facts of record, and for the reasons discussed above, the Board concludes that consummation of the proposal is not likely to have a significantly adverse effect on competition or on the concentration of banking services in the Boston banking market or any other relevant market. Other BHC Act Factors The BHC Act also requires the Board to consider the factors specified in section 3 in light of all the facts of record presented by an application. Those factors include considerations relating to the financial and managerial resources and future prospects of the institutions involved as well as other supervisory factors, and the convenience and needs of the community to be served. The Board has carefully considered the financial and managerial resources and future prospects of Bank of Boston and Bancorp, and their respective subsidiaries, and other supervisory factors in light of all the facts of record. These facts include supervisory reports of examination assessing the financial and managerial resources of the organizations, confidential financial information provided by Bank of Boston and the relative size of the two institutions. Bank of Boston would incur no additional debt in connection with this proposal and has sufficient financial and managerial resources to effect this transaction without impairing those resources. After consummation of this proposal, moreover, all of Bank of Boston's subsidiary banks would remain well capitalized. Based on these and all the facts of record, the Board concludes that all the supervisory factors under the BHC Act weigh in favor of approving this proposal. A. Convenience and Needs Factor The Board has long held that consideration of the convenience and needs factor should include a review of the records of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As provided in the CRA, the Board has evaluated this factor in light of examination by the primary federal supervisor of the CRA performance records of the relevant institutions. The institution's most recent CRA 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 recognizes the competitive effect of limited-purpose lenders and other nondepository financial entities. 7. Protestant presented no facts to indicate that Bank of Boston or Bancorp have colluded with any other party to set fees in violation of federal antitrust laws. performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance under the CRA by its primary federal supervisor. 8 In addition, the Board considers an institution's policies and practices for compliance with applicable fair lending laws. The Board also takes into account information on an institution's lending activities that assist in meeting the credit needs of low- and moderate-income neighborhoods, including programs and activities initiated since the most recent CRA performance examination. Performance Examinations. All of Bank of Boston's subsidiary banks received a rating of "satisfactory" or "outstanding" in their most recent examinations for CRA performance by their primary federal supervisors. FNBB, which would survive the merger with Savings Bank, received an "outstanding" rating in its most recent examination for CRA performance by its primary supervisor, the OCC, as of December 19, 1994 ("1994 Examination"). Record of Performance by FNBB. The 1994 Examination found that FNBB had initiated a number of successful strategies to help address identified housing and small business credit needs and that the volume of residential mortgage, housing rehabilitation and small business loans originated and purchased was significant throughout the bank's community. 9 Overall, credit extensions and loan applications reflected a reasonable geographic distribution in each of the bank's communities, including low- and moderate-income areas. No evidence of prohibited discriminatory or other illegal credit practices was noted in the examination. Examiners also commended FNBB for its leadership in working with government sponsored loan programs for affordable housing and small business, 10 and its high level of participation in community development and redevelopment projects. 11 8. The Board notes that the Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act 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. 54 Federal Register at 13,745. 9. Protestant asserts that consolidation of the banking industry has substantially impaired the ability of small businesses to negotiate with banks, thereby making them vulnerable to high bank fees. The record indicates that FNBB has taken steps designed to provide special services to assist small businesses with their banking needs. FNBB formed a Small Business Banking Department in 1993, for example, and introduced the "Business Focus Account" with overdraft protection and other special features. The bank also expanded its lending to small businesses through its "Credit Initiative Program" and features a simplified small business loan application. 10. FNBB participates in loan programs sponsored by the Small Business Administration ("SBA") and was the largest SBA lender in Massachusetts in 1994. FNBB also participates in other programs that promote small business lending such as the Massachusetts Business Development Corporation and the Economic Development Individual Corporation. 11. The record does not support Protestant's allegation about excessive fees. The record indicates that Bank of Boston has an established record of providing a full range of banking services in its delineated Legal Developments FNBB's efforts to ascertain the credit needs of its community include contacts with community-based organizations and a review of demographic data in designing products to meet those needs. Examiners also noted that FNBB uses effective marketing strategies that include marketing and advertising programs to reach residents in low- and moderate-income areas. Conclusion on Convenience and Needs Factor. As discussed above, the Board has carefully reviewed the relevant CRA examination information, the programs and policies implemented by the relevant institutions, comments and concerns raised by Protestant, and other facts of record in its consideration of the effect of this transaction on the convenience and needs of the community. Based on this review, the Board concludes that convenience and needs considerations are consistent with approval of this application. Conclusion Based on the foregoing and all other facts of record, the Board has determined that the application should be, and hereby is, approved. 12 The Board's approval is expressly conditioned on Bank of Boston's compliance with all the commitments made in connection with this application. The commitments and conditions relied on by the Board in reaching this decision 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. The 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 communities, including substantial lending services and offers a range of retail banking services. Examiners noted, for example, that FNBB offers a "First Step" product line with low-cost services including, a low-fee checking account that waives fees for individuals over 65 years of age, and under certain other circumstances. First Step also includes a basic savings account with no minimum balance, no charge for check cashing, and a monthly fee, which may be waived for individuals older than 65 or younger than 18. The record does not support the conclusion that the fees charged by Bank of Boston for checking accounts or other banking services are based in any way on a factor prohibited by law. 12. Protestant requested notification of any public meeting or hearing on this application but did not request that such a meeting or hearing be held as provided in the Board's Rules of Procedure. 12 C.F.R. 262.3(e). The Board notes that a hearing is required under section 3(b) of the BHC Act only if the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial. No supervisory agency has recommended denial of the proposal. 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). All interested parties have had an opportunity to present their views and Protestant has submitted comments that have been considered by the Board. On the basis of all the facts of record, the Board has determined that a public meeting or hearing is not necessary to clarify the factual record of the application, or otherwise warranted in this case. 735 this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Boston, acting pursuant to delegated authority. By order of the Board of Governors, effective June 3, 1996. Voting for this action: Chairman Pro Tempore Greenspan and Governors Lindsey, Phillips, and Yellen. Absent and not voting: Governor Kelley. JENNIFER J. JOHNSON Deputy Secretary of the Board Community Bancshares of Marysville, Inc. Marysville, Kansas Order Approving Acquisition of a Bank Community Bancshares of Marysville, Inc., Marysville, Kansas ("Community"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act") has applied for the Board's approval under section 3 of the BHC Act to acquire Community State Bank, Hanover, Kansas ("Bank"). 1 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 15,263 (1996)). 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. Community is the 47th largest banking organization in Kansas controlling $101.1 million in deposits, representing less than 1 percent of total deposits in commercial banks in Kansas. 2 Bank is the 226th largest banking organization in Kansas, with $21.3 million in deposits, representing less than 1 percent of total deposits in commercial banking organizations in Kansas. On consummation of this proposal, Community would become the 35th largest banking organization in Kansas, controlling deposits of $122.4 million, representing less than 1 percent of total deposits in commercial banking organizations in the state. 1. On consummation of the proposal, Community would merge Bank into its subsidiary bank, Citizens State Bank, Marysville, Kansas ( " C S B " ) . This transaction requires approval under the Bank Merger Act (12 U.S.C. § 1828(c)) by the Federal Deposit Insurance Corporation, the primary federal supervisor of CSB. 2. All banking data are as of June 30, 1995. Market shares 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, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 143 (1984). Thus, the Board regularly has included thrift deposits in the calculation of market share on a 50percent weighted basis. See, e.g., First Hawaiian, Inc., 11 Federal Reserve Bulletin 52 (1991). 736 Federal Reserve Bulletin • August 1996 Community and Bank compete directly in the MarshallWashington County, Kansas, banking market. 3 In the Marshall-Washington County banking market, Community is the largest depository institution in the market, controlling deposits of $101.1 million, representing 28.7 percent of total deposits in commercial banks in the market ("market deposits"). Bank is the fourth largest depository institution in the market, controlling $21.3 million in deposits, representing 6.0 percent of total market deposits. On consummation of the proposal, Community would remain the largest depository institution in the market with $122.4 million in deposits, representing 34.7 percent of market deposits. The Herfindahl-Hirschman Index ("HHI") would increase by 347 points to 1848 as a result of the proposed transaction. 4 The Board notes that the HHI levels are only guidelines that are used by the Board, the Department of Justice, and the other banking agencies to help identify cases in which a more detailed competitive analysis is appropriate to assure that the proposal would not have a significantly adverse effect on competition in any relevant market. A proposal that fails to pass the HHI market screen may, nonetheless, be approved because other information may indicate that the proposal would not have a significantly adverse effect on competition. In this case, the Department of Justice has reviewed the proposal and advised the Board that consummation of the proposal is not likely to have any significantly adverse competitive effects in the MarshallWashington County banking market and any other relevant banking market. Other facts indicate that the market concentration as measured by the HHI tends to overstate the competitive effects of this proposal in the Marshall-Washington County banking market. Thirteen commercial bank competitors and one thrift institution would remain in this sparsely populated, rural market after consummation of this proposal. Two of the commercial bank competitors would each have more than 10 percent of market deposits. Kansas law, moreover, permits Kansas banks to branch statewide. 5 Accordingly, based on all the facts of record, the Board concludes that consummation of the proposal would not result in a significantly adverse effect on competition in any relevant market. 3. The Marshall-Washington County, Kansas, banking market consists of all of Marshall and Washington Counties, in Kansas, except the town of Clifton. 4. 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 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 anti-competitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anti-competitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 5. Kan. Stat. Ann. § 9-1111(b) (Supp. 1995). The Board concludes that the financial and managerial resources and future prospects of the organizations involved in the proposal are consistent with approval as are the other supervisory factors the Board must consider under section 3 of the BHC Act. 6 In addition, considerations relating to the convenience and needs of the communities to be served are consistent with approval of the application. 7 Based on the foregoing and all the facts of record, the Board has determined that the proposal should be, and hereby is, approved. 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 transactions shall not be consummated before the fifteenth calendar day following the effective date of this order, and the transactions 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 Kansas City, acting pursuant to delegated authority. By order of the Board of Governors, effective June 17, 1996. 6. Protestants have requested that the Board hold a public hearing on the application. Section 3(b) of the BHC Act does not require the Board to hold a hearing 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 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). Protestants have had an opportunity to present written submissions, and have submitted written comments that have been considered by the Board. Protestants' request fails to demonstrate why their written submissions do not adequately present their allegations or why a public hearing is otherwise warranted in this case. Based on all the facts of record, the Board has determined that a public hearing is not necessary to clarify the factual record in this application and is not warranted in this case. Accordingly, Protestants' request for a public hearing is denied. 7. The Board carefully considered letters and a petition opposing the proposal from a number of residents in Barnes, Kansas (collectively "Protestants"), a town in the north central part of the state with a population of 150. Protestants object to Community's plans to close Bank's branch in Barnes following the merger of Bank with CSB. This branch is the only financial institution currently operating in Barnes. CSB has responded that its full-service branch in Waterville, Kansas, which is approximately six miles from Barnes, would continue to provide banking services to the residents of Barnes as part of its primary service area. This branch also offers direct-deposit and bank-by-mail services. The Board notes that in connection with the proposal Bank has already contracted to sell the branch building in Barnes to another bank and that purchasing bank has agreed to open a branch at the Barnes location. In light of these facts, it appears that the convenience and needs of the community, including banking services to the residents of Barnes, would continue to be served after consummation of the proposal. Legal Developments Voting for this action: Governors Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Chairman Pro Tempore Greenspan. JENNIFER J . JOHNSON Deputy Secretary of the Board Croghan Bancshares, Inc., Fremont, Ohio Order Approving the Acquisition of a Bank Holding Company, the Merger of Banks, and the Establishment Branches Croghan Bancshares, Inc., Fremont, Ohio, ("Croghan"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire Union Bancshares Corp. ("Union"), and thereby indirectly acquire its wholly owned subsidiary bank, Union Bank and Savings Company, ("Union Bank"), both in Bellevue, Ohio. 1 Croghan's subsidiary bank, The Croghan Colonial Bank, Fremont, Ohio ("Croghan Bank"), a state member bank, also has requested Board approval under 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 Union Bank and establish branches at the current locations of Union Bank's branches. 2 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 15,946 (1996)) and given in accordance with the Bank Merger Act and the Board's Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effects of the merger were requested from the United States Attorney General ("Department of Justice"), the Office of the Comptroller of the Currency ("OCC"), and the Federal Deposit Insurance Corporation ("FDIC"). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3(c) of the BHC Act, the Bank Merger Act, and section 9 of the Federal Reserve Act. Croghan is the 71st largest commercial banking organization in Ohio, controlling deposits of approximately $205.9 million, representing less than 1 percent of total deposits in commercial banks or thrift institutions ("depository institutions") in Ohio. 3 Union is the 148th largest commercial banking organization in Ohio, controlling approximately $81.9 million in deposits, representing less 1. Croghan proposes to acquire Union by merging its wholly owned subsidiary, Croghan Acquisition Corp., into Union, with Union as the surviving company. Union would be dissolved after the merger of Croghan Bank and Union Bank. 2. Croghan Bank would establish branches at the following Union Bank locations: One Union Square, Bellevue; 114 N. Sandusky Street, Bellevue; and 100 S. Main Street, Clyde; and 11 Monroe Street, Monroeville, all in Ohio. 3. State deposit data are as of June 30, 1995. than 1 percent of total deposits in depository institutions in the state. On consummation of the proposal, Croghan would become the 54th largest commercial banking organization in Ohio, controlling $287.8 million in deposits, representing less than 1 percent of total deposits in depository institutions in Ohio. Competitive of 737 Considerations Croghan and Union compete directly in the Fremont, Ohio, banking market ("Fremont banking market"). 4 Croghan is the largest commercial banking organization in the Fremont banking market, controlling deposits of approximately $205.9 million, representing approximately 40.2 percent of total deposits in depository institutions in the market ("market deposits"). 5 Union is the 10th largest commercial banking organization in the market, controlling deposits of approximately $7.6 million, representing 1.5 percent of market deposits. On consummation of the proposal, Croghan would remain the largest commercial banking organization in the market, controlling deposits of approximately $213.5 million, representing approximately 41.7 percent of market deposits, and the HerfindahlHirschman Index ( " H H I " ) for the Fremont banking market would increase by 119 points to 2326. 6 This increase in market concentration as measured by the HHI would not exceed the Department of Justice Merger Guidelines. The Board notes, moreover, that ten competitors would remain in the Fremont banking market. Four of these competitors are among the largest commercial banking organizations in Ohio, and three of the competitors would each have more than 11 percent of market deposits. In addition, Ohio law permits statewide branching. 7 The Department of Justice has reviewed the proposal and advised the Board that consummation of the proposal would not likely have any 4. The Fremont banking market is approximated by Sandusky County, Ohio, excluding the areas of the Woodville Township and the City of Bellevue. 5. Market share data are as of June 30, 1995, and are based on a calculation in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); 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., 77 Federal Reserve Bulletin 52 (1991). 6. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the postmerger 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 recognizes the competitive effect of limitedpurpose lenders and other nondepository financial entities. 7. Ohio Rev. Code Ann. § 1111.03 (Anderson 1988). 738 Federal Reserve Bulletin • August 1996 isignificantly adverse competitive effects in the Fremont banking market or any other relevant banking market. 8 Based on these and all of the facts of record, the Board concludes that consummation of the proposal is not likely to have a significantly adverse effect on competition or the concentration of banking services in the Fremont banking market or any other relevant market. In light of all the facts of record, the Board also concludes that the financial and managerial resources and future prospects of Croghan and Union and their respective subsidiaries are consistent with approval, as are supervisory factors the Board must consider under the BHC Act, the Bank Merger Act, and the Federal Reserve Act. In addition, considerations relating to the convenience and needs of the community to be served are consistent with approval. For these reasons, and in light of all the other facts of record, the Board has determined that the applications should be, and hereby are, approved. The Board's approval is expressly conditioned on Croghan's compliance with all the commitments made in connection with the applications. The commitments relied on by the Board in reaching this decision 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. 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 Board or by the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority. By order of the Board of Governors, effective June 10, 1996. Voting for this action: Chairman Pro Tempore Greenspan, and Governors Lindsey, Phillips, and Yellen. Absent and not voting: Governor Kelley. JENNIFER J. JOHNSON Deputy Secretary of the Board First Commerce Banks of Florida, Inc. Winter Haven, Florida Order Approving the Acquisition of a Bank First Commerce Banks of Florida, Inc., Winter Haven ("First Commerce"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire all the voting shares of Prime Bank of Central Florida, Titusville, both in Florida ("Prime Bank"). 1 8. The OCC and FDIC also have not objected to the proposal. 1. First Commerce proposes to merge Prime Bank into Prime Successor Bank, an interim Florida state-chartered bank, with Prime Successor Bank surviving the merger. Prime Successor Bank would Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 9459 (1996)). 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 of the BHC Act. First Commerce is the 91st largest commercial banking organization in Florida, controlling deposits of approximately $103.9 million, representing less than 1 percent of total deposits in commercial banks in the state. Prime Bank is the 177th largest commercial banking organization in Florida, controlling deposits of approximately $46.4 million, representing less than 1 percent of total deposits in commercial banking organizations in the state. On consummation of this proposal, First Commerce would become the 63d largest commercial banking organization in Florida, controlling approximately $150.3 million in deposits, representing less than 1 percent of total deposits in commercial banking organizations in the state. 2 Competitive Considerations The Board is prohibited from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly, or if the proposal would substantially lessen competition in any relevant market unless such anticompetitive effects are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. First Commerce and Prime Bank do not compete in any banking market. Based on all the facts of record, the Board concludes that consummation of this proposal would not result in any significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market. Other Factors under the BHC Act A. Supervisory Factors The BHC Act also requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved, the convenience and needs of the community to be served, and certain other supervisory factors. The Board has carefully considered the financial and managerial resources and future prospects of First Commerce, its subsidiary bank, and Prime Bank, as well as other supervisory factors in light of all the facts of record. These facts include supervisory reports of examination assessing the financial and managerial resources of the organizations and confidential financial information pro- be renamed Prime Bank of Central Florida. The Florida Department of Banking and Finance approved the merger of Prime Bank with Prime Successor Bank on May 29, 1996, conditioned on the receipt of all required approvals and compliance with other filing requirements under Florida law. 2. State deposit data are as of December 31, 1995. Legal Developments vided by First Commerce. Based on these and all other facts of record, the Board concludes that all the supervisory factors under the BHC Act, including financial and managerial resources, weigh in favor of approving this proposal. B. Convenience and Needs Factor The Board long has held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As provided in the CRA, the Board has evaluated this factor in light of examinations by the primary federal supervisor of the CRA performance records of the relevant institutions. The Board also has carefully considered comments from The Fair Housing Continuum, Inc., Cocoa, Florida ("Protestant"), contending that Prime Bank does not adequately ascertain, or assist in meeting, the credit needs of communities with predominately low- to moderate-income ("LMI") and minority residents. 3 Protestant also alleges, on the basis of data filed under the Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA"), that Prime Bank illegally discriminates in its mortgage lending. 4 In addition, Protestant alleges that Prime Bank opens branches only in neighborhoods with predominately nonminority residents. First Commerce states that it intends to continue Prime Bank's current CRA program and would review and monitor this program after consummation of the proposal. First Commerce believes that Prime Bank will benefit from the collective resources of First Commerce, including additional lending resources and CRA experience, and has 3. Protestant also maintains that Prime Bank initiates but does not complete community development projects, and has not completed two projects involving the City of Titusville and one involving Habitat for Humanity ("Habitat"). Prime Bank has provided documentation from the City of Titusville that confirmed Prime Bank's participation in its housing incentive plan. This submission stated that the delays in implementing a new home buyers program were not related to any action or lack of action by Prime Bank. Prime Bank also noted that it presented several real estate proposals to Habitat that were declined for reasons involving zoning issues or because Habitat had surplus real estate inventory at the time. 4. Protestant has filed a housing discrimination complaint with the Department of Housing and Urban Development ( " H U D " ) , alleging that Prime Bank engaged in lending practices that discriminate on the basis of race and national origin. This complaint is in the initial stages of investigation by HUD and no finding of illegal discrimination has been made against Prime Bank. Moreover, under the Fair Housing Act (42 U.S.C. § 3601 et seq.), HUD has jurisdiction to determine whether Prime Bank is in compliance with fair lending laws and to adjudicate Protestant's complaint. The Board previously has noted that its limited jurisdiction under the specific statutory factors set forth in the BHC Act does not authorize the Board to adjudicate disputes between a commenter and an applicant or target institution that arise under a statute administered and enforced by another agency. On the other hand, substantiated improper actions may be considered by the Board in light of all facts of record of an application under the factors in the BHC Act or in the context of the Board's supervisory authority over its regulated banking organizations. See Norwest Corporation, 82 Federal Reserve Bulletin 580 (1996). 739 stated that it is committed to assuring that all of its subsidiary banks maintain satisfactory or outstanding CRA ratings. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance under the CRA by the institution's primary federal supervisor.5 In addition, the Board considers an institution's policies and practices for compliance with applicable fair lending laws. The Board also takes into account information on an institution's lending activities that assist in meeting the credit needs of LMI neighborhoods, including programs and activities initiated since the institution's most recent CRA performance examination. Performance Examinations. First Commerce's subsidiary bank, First Commerce Bank of Polk County, Winter Haven, Florida ("First Commerce Bank"), received a "satisfactory" rating from its primary federal supervisor, the Federal Deposit Insurance Corporation ("FDIC"), in its most recent examination for CRA performance as of October 1995 ("First Commerce Bank Examination"). 6 Prime Bank also received a "satisfactory" rating from the FDIC at its most recent examination for CRA performance as of April 1994 ("Prime Bank Examination"). Performance Record of First Commerce Bank. The First Commerce Bank Examination stated that the bank's community delineation was reasonable and did not exclude any LMI neighborhoods. Examiners found that First Commerce Bank solicited loan applications from all segments of the community and that First Commerce Bank had not engaged in illegal credit practices or practices that discouraged applications for any type of credit. Examiners also found that extensions of credit, applications, withdrawals, and denials were sufficiently distributed throughout First Commerce Bank's delineated community. In addition, examiners noted that employees of First Commerce Bank received training regarding fair lending and antidiscrimination laws, and that the board of directors reviewed geocoding data to ensure that applications were received from all areas of First Commerce Bank's delineated community. Examiners also noted that First Commerce Bank advertised in newspapers and other publications that are distributed throughout the community. First Commerce Bank's branch offices were considered by examiners to be readily accessible to all members of the community. 5. The Board notes that the Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act 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. 54 Federal Register 13,742, 13,745 (1989). 6. First Commerce received approval from the Federal Reserve Bank of Atlanta to acquire First Mercantile National Bank, Longwood, Florida, in May 1996. First Mercantile National Bank received a "satisfactory" rating from the Office of the Comptroller of the Currency in its most recent examination for CRA performance as of September 1993. 740 Federal Reserve Bulletin • August 1996 First Commerce Bank engages in several lending and community development programs to help meet the credit needs of its community, including LMI neighborhoods. For example, First Commerce Bank extended four loans in connection with the Affordable Housing Program of the City of Winter Haven, and also extended an interest-free line of credit to the Habitat for Humanity, which assists in the construction of affordable housing for low-income families throughout First Commerce Bank's community. Examiners also found that First Commerce Bank's officers and directors were involved in a variety of community organizations, including the Auburndale Redevelopment Committee, the Lakeland Housing Authority, and the Minority Lending Advisory Council. Performance Record of Prime Bank. Prime Bank is a small banking organization with assets of $53 million and deposits of less than $50 million. Accordingly, it is unable to originate a large number of mortgages for its own portfolio. Prime Bank, however, originates and processes mortgages through a number of government loan programs that are designed to increase credit availability in its community, including loans for LMI residents, such as the Federal Housing Administration ("FHA"), Veterans Administration ("VA"), and the Farmers Home Administration programs. 7 The Prime Bank Examination noted Prime Bank's participation in the Brevard County Housing Authority Bond Program ("Bond Program"), which is designed to benefit first-time LMI home buyers. As part of the Bond Program, Prime Bank originates VA and FHA loans. The record indicates that from 1991 through 1994, Prime Bank originated FHA and VA loans totalling more than $9 million for the Bond Program. Prime Bank states that, in 1995, it originated approximately $2.5 million in Bond Program loans, most of which were FHA and VA loans. Examiners also found that Prime Bank is actively involved in local community development and redevelopment projects. For example, Prime Bank has agreed to provide home purchase financing for a new subdivision development that will provide housing for 32 low-income families. The Prime Bank Examination found that the bank maintained contact with government officials and community leaders in an effort to determine the credit needs within Prime Bank's community. In addition, examiners noted that Prime Bank had ongoing contact with community development organizations. The Prime Bank Examination also concluded that Prime Bank effectively advertised its residential loans and other credit products throughout the local community, including LMI neighborhoods. 8 In addition, examiners noted that Prime Bank's branch offices are 7. Prime Bank also is a Federal National Mortgage Associationapproved lender and servicer. 8. Prime Bank advertises its banking products in local newspapers and on local radio. Prime Bank also has sponsored several continuing education seminars for local realtors on conventional loans, FHA, VA, and other loan programs designed to meet the credit needs of LMI individuals. centrally located and reasonably accessible to all segments of the delineated community. The Board has carefully reviewed HMDA data for Prime Bank in light of Protestant's comments. 9 These data indicate that the number and percentage of applications from and loans to individuals in LMI census tracts increased between 1993 and 1995. In addition, Prime Bank's percentage of applications from and loans to African-American applicants increased during this same period and is comparable to or exceeds the representation of AfricanAmericans in Prime Bank's service community. The percentage of loans that Prime Bank made to LMI applicants also increased from 1994 to 1995. Moreover, the Prime Bank Examination found that the bank's 1993 HMDA data disclosed a reasonable penetration of the various census tracts that comprise its delineated community, including LMI neighborhoods. The HMDA data, however, also reflect disparities in the rate of denials by racial group. The Board is concerned when the record of an institution 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 lending, 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 because these data cover only a few categories of housing-related lending and provide limited information about the covered loans. 10 HMDA data, therefore, have limitations that make the data an inadequate basis, absent other information, for concluding that an institution has engaged in illegal discrimination in lending. The Prime Bank Examination, which, as noted, included a review of Prime Bank's 1993 HMDA data, found no evidence of illegal discrimination or other prohibited credit practices. In addition, examiners noted that Prime Bank's loan policies and procedures revealed no practices designed to discourage applications for credit, and found no substantive violations of fair lending laws or HMDA reporting requirements. Moreover, Prime Bank indicates that it has established a loan review program to assure that 9. Protestant contends that Prime Bank defines its service area to exclude potential minority borrowers. The Board believes that an assessment of an institution's delineated community can be most elfectively considered in an on-site examination by the institution's primary federal supervisor and that such an 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. See North Fork Bancorporation, 82 Federal Reserve Bulletin 338 (1996). The Prime Bank Examination found that Prime Bank's delineated community was reasonable and did not arbitrarily exclude any areas, particularly LMI areas. 10. For example, these data do not provide a basis for an independent assessment of whether an applicant who was denied credit was in fact creditworthy. Credit history problems and excessive debt levels relative to income, reasons most frequently cited for a credit denial, are not available from HMDA data. Legal Developments applicants receive equal treatment and are not denied credit on a prohibited basis. Conclusion Regarding Convenience and Needs Factor. As discussed above, the Board has carefully reviewed the relevant CRA examination information, the programs implemented by the relevant institutions, the policies in place to ensure fair lending, relevant HMDA and other lending data, comments and concerns raised by Protestant, and other facts of record in its consideration of the effect of this transaction on the convenience and needs of the community. Based on this review, the Board concludes that convenience and needs considerations, including the records of performance of First Commerce and Prime Bank, are consistent with approval of this application. Conclusion Based on the foregoing and all the facts of record, the Board has determined that the application should be, and hereby is, approved. 11 The Board's approval of the proposal is conditioned on compliance by First Commerce with the commitments made in connection with this application. The commitments and conditions relied on by the Board in reaching this decision 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. The acquisition 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 Federal Reserve Bank of Atlanta, acting pursuant to delegated authority. By order of the Board of Governors, effective June 5, 1996. 11. Protestant requests that the Board hold a public hearing or meeting on this proposal to permit oral presentations on the application and Protestant's 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. In this case, neither the FDIC nor any state supervisory authority has recommended denial. Under the Board's rules, the Board may, in its discretion, hold a public hearing or meeting on an application to clarify factual issues and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered Protestant's request in light of all the facts of record. Protestant has had ample opportunity to submit its views, and has, in fact, made written submissions that have been considered by the Board in acting on this application. Protestant does not indicate what, if any, additional views would be expressed at a public hearing or meeting, or why Protestant's written submissions do not adequately present its views. 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 this application, or otherwise warranted in this case. Accordingly, Protestant's request for a public hearing or meeting on this application is hereby denied. 741 Voting for this action: Chairman Pro Tempore Greenspan and Governors Kelley, Lindsey, Phillips, and Yellen. JENNIFER J. JOHNSON Deputy Secretary of the Board Flathead Holding Company of Bigfork Bigfork, Montana Order Approving Acquisition of Shares of a Bank Flathead Holding Company of Bigfork, Bigfork ("Flathead"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire up to 23.4 percent of the voting shares of Bank West, N.A., Kalispell, both in Montana ("Bank West"). Notice of this proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 15,483 (1996)). 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 section 3 of the BHC Act. Flathead is affiliated with Mountain Bank System, Inc., Whitefish, Montana ("MBS"), through common ownership.1 Together, Flathead and MBS are the 14th largest depository institution in Montana, controlling approximately $108 million in deposits, representing approximately 1.5 percent of total deposits in depository institutions in the state. 2 BankWest, with total consolidated assets of approximately $40.9 million, is the 48th largest depository institution in Montana, controlling approximately $32.5 million in deposits, representing less than 1 percent of total deposits in depository institutions in the state. On consummation of this proposal, Flathead and MBS collectively would become the 12th largest depository institution in Montana, controlling deposits of $140 million, representing approximately 2 percent of the total deposits in depository institutions in the state. Flathead proposes to acquire less than 25 percent of the voting shares of BankWest, which is not a normal acquisition for a bank holding company. Nonetheless, the requirement in section 3(a)(3) of the BHC Act that the Board's approval be obtained before a bank holding company acquires more than 5 percent of the voting shares of a bank suggests that Congress contemplated the acquisition by bank holding companies of between 5 and 25 percent of the voting shares of a bank or a bank holding company. 3 The Board has indicated that acquisitions of less than a 1. MBS controls Mountain Bank, Whitefish ("Mountain Bank"), and Valley Bank of Belgrade, Belgrade, both in Montana. 2. Asset and deposit data are as of March 31, 1996. In this context, depository institutions include commercial banks, savings banks, and savings associations. 3. Asset and deposit data are as of March 31, 1996. In this context, depository institutions include commercial banks, savings banks, and savings associations. 742 Federal Reserve Bulletin • August 1996 25-percent voting interest may nevertheless permit a bank holding company to exercise a controlling influence over the management and policies of another bank holding company. 4 On consummation of the proposal, Flathead would be the largest shareholder of BankWest and would have the ability to elect at least one member to BankWest's board of directors. Flathead has indicated, moreover, that it might, from time to time, exercise a controlling influence over the management or polices of BankWest if, in its view, circumstances would warrant such action. Based on all the facts of record, the Board concludes that Flathead would have the ability to exercise a controlling influence over the management or policies of BankWest and thereby would control BankWest for purposes of the BHC Act. 5 Competitive Considerations The BHC Act provides that the Board may not approve a proposal submitted under section 3 of the Act if the proposal would result in a monopoly or if the effect of the proposal may be substantially to lessen competition in any relevant market unless the Board finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. In evaluating the competitive effects of this proposal, the Board has carefully considered BankWest's contentions that consummation of this proposal would result in significantly adverse effects on competition for banking services, particularly for small business loans, and that the relevant geographic banking market is smaller than the market defined by the Federal Reserve Bank of Minneapolis ("Reserve Bank"). A. Relevant Product Market The Board has long held that the product market for evaluating bank mergers and acquisitions is the cluster of products and services offered by banking institutions, 6 and the Supreme Court has emphasized that it is the cluster of products and services that, as a matter of trade reality, makes banking a distinct line of commerce. 7 According to 4. See McLeod Bancshares, Inc., 73 Federal Reserve Bulletin 724 (1987); Hudson Financial Associates, 72 Federal Reserve Bulletin 150(1986). 5. Flathead has acknowledged that, if the Board deems Flathead to control BankWest, Flathead must serve as a source of financial and managerial strength to BankWest and would be subject to crossguarantee liability provisions of the Federal Deposit Insurance Corporation Act in connection with any default by or insurance fund assistance to BankWest. See 12 C.F.R. 225.4(a); 12 U.S.C. § 1815(e)(1). 6. See Chase Manhattan Corporation, 81 Federal Reserve Bulletin 883 (1995); The Bank of New York Company, Inc., 74 Federal Reserve Bulletin 257, 261 (1988). 7. United States v. Philadelphia National Bank, 374 U.S. 321, 357 (1963) ("U.S. v. Philadelphia National"). Accord United States v. Connecticut National Bank, 418 U.S. 656 (1974); United States v. the Court, this clustering facilitates the convenient access to these products and services and vests the cluster with economic significance beyond the individual products and services that constitute the cluster. 8 Other courts have followed this position. 9 In addition, a study conducted by Board staff supports the conclusion that customers continue to seek to obtain this cluster of services. 10 After carefully considering all the facts of record in light of relevant Board and judicial precedents, the Board concludes that the appropriate product market in this case is the cluster of banking products and services. B. Definition of Relevant Banking Market The Board and the courts have found that the relevant banking market for analyzing the competitive effect of a proposal must reflect commercial and banking realities and should consist of the local area where the banks involved offer their services and where local customers can practicably turn for alternatives. 11 Flathead and MBS compete directly with BankWest in the Kalispell banking market, an area that is approximated by Flathead and Lincoln Counties and the Bigfork-Swan River and Poison Divisions of Lake County, all in Montana ("Kalispell Banking Market"). In reaching this conclusion, the Board has carefully considered BankWest's argument that the relevant geographic market for this proposal should be limited to Flathead County. Kalispell, with a population of 11,917, is a regional trade center in Flathead County. 12 In 1992, the Board considered whether Lincoln County and Flathead County are in the same banking market. The Board noted at that time that a number of considerations indicated an economic integra- Phillipsburg National Bank, 399 U.S. 350 (1969) ("U.S. v. Phillipsburg"). 8. U.S. v. Phillipsburg, 399 U.S. at 361. 9. See United States v. Central State Bank, 621 F.Supp. 1276 (W.D. Mich. 1985), aff'dper curiam, 817 F.2d 22 (6th Cir. 1987). 10. See Gregory E. Elliehausen and John D. Walken, Banking Markets and the Use of Financial Services by Small and MediumSized Businesses, 76 Federal Reserve Bulletin 726 (1990). For a discussion of this study, see First Hawaiian, Inc., 77 Federal Reserve Bulletin 52(1991). 11. Protestant maintains that the relevant geographic market for analyzing the competitive effects of this proposal should be limited to the areas included in the delineated service areas of the subsidiary banks of Flathead and its affiliate, MBS. The Board believes that a bank's delineated community under the Community Reinvestment Act does not necessarily represent the appropriate geographic market for analyzing the competitive effects of a proposal. The geographic market for analyzing competitive effects takes into account the presence of other banks, access by the bank's customers to competitors of and reasonable substitutes for the bank, and economic or demographic factors that contribute to competition. See St. Joseph Valley Bank, 68 Federal Reserve Bulletin 673 (1982). The key question to be considered in making this selection "is not where the parties to the merger do business or even where they compete, but where, within the area of competitive overlap, the effect of the merger on competition will be direct and immediate." U.S. v. Philadelphia National, 374 U.S. at 357; US. v. Phillipsburg, 399 U.S. at 364-65. 12. Population data are based on 1990 data from the United States Department of Commerce, Bureau of the Census ("Census Bureau"). Legal Developments tion of Kalispell and the rest of Flathead County with Lincoln County and the northern part of Lake County, both of which are adjacent to Flathead County, and supported the conclusion that Lincoln County and the northern part of Lake County are part of the Kalispell Banking Market. 13 Kalispell has continued to develop as a regional trade center and the number of health care and commercial facilities in Kalispell that are available to residents in the region has increased. 14 A recent survey by the Reserve Bank indicates that merchants in Kalispell regularly advertise in newspapers with substantial circulation in Lincoln County and northern Lake County. Commuting data also support the inclusion of northern Lake County in the Kalispell Banking Market. 15 Banking data also indicate that the relevant banking market should include Lincoln County. For example, approximately 18 percent of the loan accounts in Flathead's affiliate bank, Mountain Bank, and approximately 9.4 percent of Mountain Bank's deposit accounts were held by Lincoln County residents. 16 In addition, recent interviews conducted by Reserve Bank staff with members of the Chambers of Commerce in the towns of Libby and Eureka in Lincoln County indicated that depository institutions in those towns ensure that interest rates for deposits and loans are competitive with the rates for depository institutions in Flathead County. These interviews also indicated that small business owners in Lincoln County considered Flathead County banks as feasible alternatives to banks in Libby and Eureka. Based on all the facts of record, and for the reasons stated, the Board concludes that the relevant banking market within which to evaluate the competitive effects of this proposal is the Kalispell Banking Market, which includes Flathead County, Lincoln County, and the northern part of Lake County. 13. These considerations included Kalispell's designation as a "second level trading center" by the Bureau of Business and Economic Research at the University of Montana in Missoula ("Bureau of Business"), the availability of hospitals and the region's only airport in Kalispell, the number of stores in Kalispell and Lincoln County residents shopping in Kalispell, and the limited number of banking facilities in Lincoln County. See Glacier Bancorp, Inc., 78 Federal Reserve Bulletin 713 (1992). These factors also were applicable to the northern part of Lake County and supported its inclusion in the Kalispell Banking Market. 14. The Bureau of Business has indicated that Kalispell has become a more influential regional trade center since 1992. In addition, Kalispell's population has grown approximately 16 percent between 1990 and 1994, including a 6 percent increase from 1992 to 1994. 15. 1990 data from the Census Bureau indicate that 18.6 percent of the Lake County workforce commutes to jobs in Flathead County. 16. Flathead also has indicated that residents of Lake County hold a significant number of loan and deposit accounts at its subsidiary bank, Flathead Bank of Bigfork, Bigfork, Montana, which is located approximately 2.5 miles from the border of Lake County. 743 C. Competitive Eifects in the Kalispell Banking Market Flathead and MBS collectively are the fourth largest depository institution in the Kalispell Banking Market, controlling deposits of approximately $85 million, representing approximately 11.4 percent of the total deposits in depository institutions in the market ("market deposits"). 17 BankWest is the eighth largest depository institution in the market, controlling deposits of approximately $32.5 million, representing approximately 4.4 percent of market deposits. On consummation of this proposal, Flathead and MBS would become the second largest depository institution in the Kalispell Banking Market, controlling deposits of approximately $117 million, representing approximately 15.8 percent of market deposits. The market, as measured by the Herfindahl-Hirschman Index ("HHI"), would remain moderately concentrated, and the HHI would increase by 100 points to 1474 as a result of this transaction. 18 This increase would not exceed the threshold standards in the Department of Justice Merger Guidelines ("Merger Guidelines"). In addition, ten depository institution competitors would remain in the Kalispell Banking Market. The Department of Justice has reviewed the proposal and advised the Board that consummation of the proposal would not likely have any significantly adverse competitive effects in the Kalispell Banking Market or any other relevant banking market. 19 In light of all the facts of record, the Board concludes that consummation of the proposal would not result in any significantly adverse effects on competition or the concentration of banking resources in the Kalispell Banking Market, or any other relevant banking market. 20 17. Market share data are as of March 31, 1996. These data are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board has previously indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). 18. Under the revised Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is between 1000 and 1800 is considered to be moderately concentrated and a market above 1800 is considered to be highly concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive eifects) 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 limitedpurpose lenders and other non-depository financial entities. 19. The Office of the Comptroller of the Currency ( " O C C " ) and the Federal Deposit Insurance Corporation ( " F D I C " ) also have not objected to the proposal. 20. The Board also notes that, if Flathead County alone were considered to be the relevant banking market, the HHI increase (175 points to 1860) based on the cluster of banking services would not exceed the threshold limits in the Merger Guidelines. In addition, the threshold limits in the Merger Guidelines would not be exceeded by 744 Other Federal Reserve Bulletin • August 1996 Factors The Board has carefully reviewed the financial and managerial resources and future prospects of Flathead, MBS and BankWest, and their subsidiary banks, in light of all the facts of record, including comments from BankWest and relevant supervisory reports of examination. 21 The Board notes that Flathead and its affiliated banks and BankWest are in satisfactory financial condition and would remain so after consummation of the proposal. In addition, reports of examination assessing the managerial resources of Flathead and MBS indicate this factor is consistent with approval. Based on all the facts of record, including comments received and supervisory information, and for the reasons discussed above, the Board concludes that considerations related to the financial and managerial resources and future prospects of Flathead, MBS, and BankWest, and their subsidiary banks, are consistent with approval, as are other supervisory factors the Board must consider. 22 Considerations relating to the convenience and needs of the commuthis proposal in the Kalispell Banking Market if small business loans were considered as a separate product market. Thus, assuming that the relevant banking market is Flathead County alone and the relevant banking product is small business loans—assumptions that the Board rejects for the reasons discussed above—the Board does not believe this transaction would have a significantly adverse effect on competition in light of all the facts of record. For example, five commercial banking organization competitors would remain in Flathead County to serve a relatively small population. Four of those competitors each would hold more than 10 percent of the small business loans outstanding in Flathead County. In addition, the presence of Kalispell in this area makes Flathead County an attractive market for entry, and Montana banks are permitted to branch statewide without limitation. 21. BankWest contends that this proposal would weaken Flathead's financial condition and render Flathead unable to serve as a source of financial strength to BankWest. BankWest also maintains that an Order of Prohibition by the FDIC against a principal shareholder of Flathead and Mountain Bank presents adverse considerations. The shareholder's voting shares in both organizations have been transferred to independent trustees with the approval of the FDIC and the Federal Reserve System in order to prevent the shareholder from participating directly or indirectly in the management or control of these organizations. Recent inspection and examination reports indicate that the shareholder has not exercised or attempted to exercise a controlling influence over the management and policies of Flathead or Mountain Bank. 22. BankWest contends that this proposal would violate the Depository Institution Management Interlocks Act (12 U.S.C. § 3201) ("Interlocks Act") because Flathead would be able to elect at least one director to the bank's board of directors and an affiliate bank is located in the same community as BankWest. Under the Interlocks Act and the Board's Regulation L (12 C.F.R. 212 et seq.), the prohibition against interlocking management officials for banks located in the same community does not apply to institutions that are affiliates. As noted above, Flathead would be considered to control BankWest after consummation of the proposal, thereby making Flathead and BankWest affiliates. Accordingly, a management official interlock between Flathead and BankWest would not be prohibited under the Interlocks Act. Another commenter has objected to Flathead's direct solicitation of BankWest shareholders to purchase shares instead of directing such offers to the bank's board of directors. There is no legal or regulatory prohibition under applicable law against direct offers to purchase shares of a bank or bank holding company, as long as there are no material misstatements or omissions. nities to be served also are consistent with approval of this application. Conclusion Based on all the facts of record, the Board has determined that this application should be, and hereby is, approved. 23 The Board's approval is specifically conditioned on compliance by Flathead with all the commitments made in connection with this application. For the purpose of this action, the commitments and conditions relied on by the Board in reaching its 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 proposed acquisition of BankWest's voting shares shall not be consummated before the fifteenth calendar day following the effective date of this order, and not 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 Reserve Bank, acting pursuant to delegated authority. By order of the Board of Governors, effective June 24, 1996. Voting for this action: Chairman Greenspan and Governors Kelley, Lindsey, Phillips, and Yellen. Abstaining from this action: Governor Meyer. W I L L I A M W. W I L E S Secretary of the Board 23. BankWest also has requested a formal hearing in connection with this proposal to permit the bank the opportunity to present evidence, to challenge the representations made by Flathead, and to obtain information from Flathead on the disputed issues in this case, including information on the principal shareholder's shares held by the voting trust and the effects of the proposal in the relevant product and geographic markets. Section 3(b) of the BHC Act does not require the Board to hold a public hearing on an application unless the appropriate supervisory authority for 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 from the OCC, BankWest's primary federal supervisor. Under its rules, the Board may, in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered BankWest's request in light of all the facts of record. In the Board's view, BankWest has had ample opportunity to submit its views, and has in fact submitted materials that have been considered by the Board in acting on this application. BankWest's request fails to demonstrate why its substantial written submissions do not adequately present its allegations or why a public hearing or meeting is otherwise warranted in this case. After a careful review of all the facts of record, moreover, the Board has concluded that BankWest disputes the weight that should be accorded to, and the conclusions that may be drawn from, the facts of record or disputes facts that are not material to the Board's decision. For these reasons, and 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 the application, and is not warranted in this case. Accordingly, BankWest's request for a public hearing or meeting is denied. Legal Developments R & G Financial Corporation Hato Rey, Puerto R i c o Order Approving the Formation of a Bank Holding Company R&G Financial Corporation, Hato Rey ("Applicant"), has applied for the Board's approval under section 3 of the Bank Holding Company Act (12 U.S.C. § 1842) ("BHC Act") to become a bank holding company by acquiring 88.1 percent of the voting shares of R-G Premier Bank of Puerto Rico, Hato Rey ("Bank"), both in Puerto Rico. Applicant also has requested the Board's consent under section 4(c)(13) of the BHC Act and section 211.5(c) of the Board's Regulation K (12 C.F.R. 211.5(c)) to acquire all the voting shares of R&G Mortgage Corporation, Hato Rey, Puerto Rico ("Company"), and thereby engage in home mortgage lending and servicing activities in Puerto Rico. Notice of the proposal, aifording interested persons an opportunity to submit comments, has been published (61 Federal Register 15,070 (1996)). 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. Bank is the 12th largest commercial banking organization in Puerto Rico, controlling total deposits of $479.6 million, representing 2.2 percent of total deposits in commercial banks in the commonwealth. 1 The proposal represents a reorganization of his ownership interest by the principal shareholder of Bank and would not result in the acquisition of any additional banking assets. Based on all the facts of record, the Board concludes that the proposal would not result in any significantly adverse effects on competition or concentration of banking resources in any relevant banking market. The BHC Act also requires the Board to consider the financial and managerial resources and future prospects of Applicant, Bank, and Company, the convenience and needs of the community to be served, and certain other supervisory factors. 2 The Board has carefully considered all these factors in light of all the facts of record, including reports of examination and other supervisory information from the bank's primary federal supervisor. Based on these and other facts of record, the Board concludes that all the factors the Board is required to consider under section 3 of the BHC Act are consistent with approval of the proposal. Applicant also has applied under section 4(c)(13) of the BHC Act and section 211.5(c) of Regulation K for the Board's prior consent to acquire all the voting shares of Company. Company engages in home mortgage lending and servicing activities in Puerto Rico and, under section 4(c)(13) and Regulation K, is deemed to operate outside the United States. The Board has considered all the factors specified in section 4(c)(13) and Regulation K and, based 1. Deposit data are as of June 30, 1995. 2. See 12 U.S.C. § 1842(c)(2) and (3). 745 on all the facts of record, finds these factors to be consistent with approval. 3 Based on the foregoing and all the facts of record, the Board has determined that the application and request for consent should be, and hereby are, approved. The Board's approval is specifically conditioned on compliance with all the commitments made in connection with the application and request for consent. 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 acquisition of Bank 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 by the Federal Reserve Bank of New York, acting pursuant to delegated authority. The acquisition of Company shall not be consummated later than one year after the effective date of this order, unless such period is extended for good cause by the Board. By order of the Board of Governors, effective June 17, 1996. Voting for this action: Governors Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Chairman Pro Tempore Greenspan. JENNIFER J. J O H N S O N Deputy Secretary of the Board U n i o n Planters Corporation M e m p h i s , Tennessee Order Approving the Acquisition of a Bank Union Planters Corporation, Memphis, Tennessee ("Applicant"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire all the voting shares of Eastern National Bank, Miami, Florida ("Bank"). 1 Notice of this proposal, affording interested persons an opportunity to submit comments, has been published (60 Federal Register 56,151 (1995)). 2 The time for filing 3. See 12 C.F.R. 211.5(c). Although these activities also are permissible under the Board's Regulation Y (12 C.F.R. 225.25(b)(1)), Applicant is not required to obtain approval under Regulation Y because the Board is approving this acquisition under Regulation K. See 12 C.F.R. 225.22(g). 1. Applicant proposes to merge its de novo subsidiary bank, Eastern Interim National Bank, Miami, Florida, with and into Bank. The Office of the Comptroller of the Currency ( " O C C " ) has approved this merger pursuant to section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)). Bank's name would be changed to Union Planters Bank of Florida, N.A., Miami, Florida. 2. Comments from the Mid-South Peace and Justice Center, Memphis, Tennessee ("Protestant"), maintain that two typographical errors in the newspaper notice published in Memphis require republication. The name of Bank and the street address of Applicant were misspelled 746 Federal Reserve Bulletin • August 1996 comments has expired and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act. Applicant, with total consolidated assets of $11.3 billion, operates subsidiary banks in Arkansas, Kentucky, Louisiana, Missouri, Mississippi, and Tennessee, and thrifts in Alabama and Tennessee. 3 Applicant is the fourth largest commercial banking organization in Tennessee, controlling deposits of $4.8 billion, representing approximately 9.2 percent of the total deposits in commercial banking organizations in Tennessee. Bank, with total consolidated assets of $266.9 million, is the 35th largest commercial banking organization in Florida, controlling deposits of $233.8 million, representing less than 1 percent of total deposits in commercial banking organizations in Florida. Competitive Interstate Other Factors under the BHC Act Analysis Section 3(d) of the BHC Act, as amended by Section 101 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, allows the Board to approve a proposal by a bank holding company to acquire control of a bank located in a state other than the home state of such bank holding company, if certain conditions are met. For purposes of the BHC Act, the home state of Applicant is Tennessee, and Applicant would acquire a bank in Florida. 4 The conditions for an interstate acquisition under section 3(d) are met in this case. 5 In view of all the facts of record, the Board is permitted to approve this proposal under section 3(d) of the BHC Act. in this notice. As required by the Board's Rules of Procedure and Regulation Y, notice of the proposal was published correctly in the Federal Register and in a newspaper of general circulation in Miami, Florida, where Bank is located. See 12 C.F.R. 262.3(b) and 225.14(b). In light of the minor nature of the errors, the fact that the names of Applicant and Bank were correctly spelled in the newspaper notices published in the respective cities where these institutions are located and in the Federal Register, and the fact that the misspellings did not mask the identity or location of Applicant or Bank, the Board concludes that notice was sufficient to provide interested parties the opportunity to comment on the proposal, as evidenced by Protestant's submissions, and that republication of the notice in Memphis is not warranted in light of all the facts of record. 3. Asset and deposit data are as of December 31, 1995. 4. 12 U.S.C. § 1842(d). Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 5. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Applicant's subsidiary banks are adequately capitalized and adequately managed. Bank has been in existence and continuously operated for the minimum periods of time required under Florida law. In addition, on consummation of this proposal, Applicant and its affiliates would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States and less than 30 percent of the total amount of deposits of insured depository institutions in Florida. Considerations The BHC Act prohibits the Board from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly, or if the proposal would substantially lessen competition in any relevant banking market, unless such anticompetitive effects are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. Applicant and Bank do not compete directly in any relevant banking market. Based on all the facts of record, the Board concludes that consummation of this proposal would not result in any significantly adverse effects on competition or on the concentration of banking resources in any relevant banking market. The BHC Act also requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved, the convenience and needs of the community to be served, and certain other supervisory factors. A. Supervisory Factors The Board has carefully considered the financial and managerial resources and future prospects of Applicant, its subsidiaries, and Bank, as well as other supervisory factors in light of all the facts of record. 6 These facts include supervisory reports of examination assessing the financial and managerial resources of the organizations and confidential financial information provided by Applicant. 7 6. The Venezuelan Superintendent of Banks and Other Financial Institutions ("Superintendent") has requested the Board to delay the sale or transfer of shares of Bank to Applicant until alleged claims regarding ownership of Bank's stock arising from prior stock transfers can be resolved. The Superintendent has taken no legal action in or outside the United States to adjudicate its alleged claims regarding the ownership of Bank's stock, and no such claims have been substantiated to date. In reviewing applications under section 3 of the BHC Act, the Board is limited to considering the specific factors set forth in the BHC Act, and the Board has carefully considered the effects of this proposal under the factors specified in the BHC Act. See Western Bancshares, Inc. v. Board of Governors, 480 F.2d 749 (10th Cir. 1973). For example, the Board has reviewed the potential impact of such claims on the financial resources of Applicant. The limited jurisdiction granted to the Board to review applications under the BHC Act does not authorize the Board to adjudicate such claims. Moreover, processing of this application has been delayed beyond the time periods provided under the procedures in Regulation Y, and Applicant has informed the Board that the contract to purchase Bank terminates on June 30th unless Applicant receives Board action and all appropriate waiting periods have expired. Based on all the facts of record, and for the reasons discussed above, the Board concludes that the record is sufficient to act on the proposal and that a delay is not warranted under the facts presented. 7. Protestant also contends that an action filed under the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. § 1961) in connection with the sale of securitized automobile receivables by three nonbank subsidiaries of Applicant on behalf of a third party raises adverse managerial considerations. In 1991, a federal jury in Legal Developments Based on all the facts of record, the Board concludes that all the supervisory factors under the BHC Act, including financial and managerial resources, weigh in favor of approving this proposal. B. Convenience and Needs Factor The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). As provided in the CRA, the Board has evaluated this factor in light of examinations by the primary federal supervisor of the CRA performance records of the relevant institutions. The Board also has carefully considered comments from Protestant criticizing Applicant's record of performance under the CRA in meeting the credit needs of minority individuals and low- and moderate-income communities in Memphis, Tennessee, and contending that Applicant's management is insensitive to such credit needs. In addition, Protestant alleges that data filed under the Home Mortgage Disclosure Act ("HMDA") (12 U.S.C. § 2801) indicate that Applicant's lead bank, Union Planters National Bank, Memphis, Tennessee ("UPNB"), illegally discriminates in its lending activities and compares unfavorably to other banks operating in the Memphis community.8 Protestant also generally references comments it submitted in connection with prior applications, which include criticisms regarding Applicant's record of providing services at its branches and Applicant's branch closing policies. An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance under the CRA by its primary federal supervisor. 9 In addition, the Board considers an institution's policies and practices for compliance with applicable fair lending laws. The Board also takes into account information on an institution's lending activities that assist in meeting the credit needs of low- and moderate-income neighborhoods, in- this action found that Applicant's subsidiaries were civilly liable, under RICO, for losses that a savings association sustained after purchasing these instruments from the subsidiaries in 1988 and 1989. Applicant's subsidiaries settled the case and have ceased engaging in this activity. Moreover, corrective actions and operational controls to ensure compliance with relevant laws have been implemented by Applicant and found to be sufficient after review in subsequent examinations by the Federal Reserve Bank of St. Louis. 8. Protestant also contends that Applicant should present a plan to community groups for redevelopment of low- and moderate-income neighborhoods in Memphis. 9. The Board notes that the Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act 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. 54 Federal Register 13,742, 13,745 (1989). 1A1 eluding programs and activities initiated since its most recent CRA performance examination. Performance Examinations. All of Applicant's subsidiary banks and thrifts that have been examined for CRA performance received "outstanding" or "satisfactory" ratings from their primary federal supervisors in their most recent examinations. In particular, UPNB received a "satisfactory" CRA performance rating from its primary federal supervisor, the OCC, at its most recent examination as of October 1994 ("1994 Examination"). The 1994 Examination found no evidence of prohibited discrimination or other illegal credit practices. Moreover, examiners found no evidence of practices intended to discourage applications for the types of credit listed in the bank's CRA statements. 10 Bank received a "satisfactory" rating for CRA performance from the OCC as of September 1994. Previous Review of CRA Record. The Board has reviewed Applicant's CRA performance record in light of substantially similar comments submitted by Protestant in connection with two recent applications filed by Applicant. " In these cases, the Board carefully considered UPNB's CRA performance record, including HMDA data, lending activities, marketing and outreach activities, 12 services provided at branches, and branch closing policies. For the reasons discussed in detail in the Capital Order and the First State Order, which are hereby incorporated by reference, the Board concluded that the convenience and needs factor, including the CRA performance record of Applicant, was consistent with approval of acquisitions under the BHC Act. Conclusion on Convenience and Needs Factor. In this case, the Board has carefully considered the entire record in its review of the convenience and needs factor under the BHC Act. Based on all the facts of record, including information provided by Protestant and Applicant, CRA performance examinations and other information from Applicant's primary federal supervisors, and the previous reviews of Applicant's CRA record described in the Capital Order and the First State Order, the Board concludes 10. Protestant notes that several individuals have described instances in which Applicant's subsidiary banks may have illegally denied credit to minority borrowers. The Board has referred these comments to the appropriate federal supervisor of the institutions, which has sufficient regulatory authority to address these situations if the individuals can substantiate their allegations to the agency. 11. See Union Planters Corporation, 82 Federal Reserve Bulletin 78 (1996) ("Capital Order"); and Union Planters Corporation, 81 Federal Reserve Bulletin 800 (1995) ("First State Order"). 12. Protestant contends that the absence of African-American loan officers in Applicant's newspaper advertisements indicates a focus on affluent, nonminority customers and an insensitivity to the credit needs of the African-American community. Applicant responds that it advertises credit products in newspapers and radio stations owned by minorities that focus on communities with predominantly minority residents throughout the Memphis community, and uses minority actors in numerous newspaper and television advertisements. In addition, the 1994 Examination found that UPNB's marketing program is effective and designed to inform all segments of its delineated community of the availability of credit products and services, and that UPNB advertises its credit products and services throughout its delineated community. 748 Federal Reserve Bulletin • August 1996 that the efforts of Applicant and Bank to help meet the credit needs of all segments of the communities served, including low- and moderate-income neighborhoods and minority residents, are consistent with approval. 13 In this light, the Board concludes that convenience and needs considerations, including the CRA performance records of the companies and banks involved in this proposal, are consistent with approval. Conclusion Based on the foregoing and all other facts of record, the Board has determined that the application should be, and hereby is, approved. 14 The Board's approval is specifically conditioned on compliance by Applicant with all commitments made in connection with this application as well as the conditions discussed in this order and in the abovereferenced orders. For purposes of this action, these commitments and conditions will both be considered conditions imposed in writing and, as such, may be enforced in proceedings under applicable law. The acquisition shall not be consummated before the fifteenth 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 by the Federal Reserve Bank of St. Louis, acting pursuant to delegated authority. By order of the Board of Governors, effective June 5, 1996. Voting for this action: Chairman Pro Tempore Greenspan and Governors Kelley, Lindsey, Phillips, and Yellen. JENNIFER J. JOHNSON Deputy Secretary of the Board 13. Protestant's comments also reiterate allegations regarding the ineffective enforcement of the CRA by federal supervisors and certain management misconduct at a Mississippi state bank acquired by Applicant in 1994. These matters were considered in the Capital Order and the First State Order. The Board also has referred Protestant's comments regarding the state bank to the Federal Deposit Insurance Corporation, the primary federal supervisor of the bank, for investigation and appropriate supervisory action if these allegations can be substantiated. 14. Protestant alleges that the election of only one African-American director to UPNB's board of directors indicates illegal employment discrimination. Applicant responds that this director, who successfully manages one of the largest churches in Memphis and is influential throughout the community, was elected to provide additional insight and diversity to UPNB's board of directors. Applicant and UPNB are required under the regulations of the Department of Labor to file annual reports with the Equal Employment Opportunity Commission ( " E E O C " ) , and the EEOC has jurisdiction to investigate and determine whether companies are in compliance with federal equal employment laws. The Board has noted that unsubstantiated allegations of improper actions under a statute administered by another federal agency is beyond the scope of the Board's review under the factors specified in the BHC Act. On the other hand, substantiated improper actions may be considered by the Board in light of all the facts of record of an application under the BHC Act's factors or in the context of the Board's general supervisory authority over its regulated banking organizations. See Norwest Corporation, 82 Federal Reserve Bulletin 580 (1996). Orders Issued Under Section 4 of the Bank Holding Company Act The Bank of New York Company, Inc. New York, New York Order Approving a Notice to Engage in Certain Nonbanking Activities The Bank of New York Company, Inc., New York, New York ( " B N Y " ) , a bank holding company within the meaning of the Bank Holding Company ( " B H C " ) Act, has 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 of the Board's Regulation Y (12 C.F.R. 225.23) to engage de novo in the following nonbanking activities through its indirect wholly owned subsidiary, BNY Capital Markets, Inc., New York, New York ("Company"): (1) Making, acquiring and servicing loans and other extensions of credit, pursuant to section 225.25(b)(1) of Regulation Y (12 C.F.R. 225.25(b)(1)); (2) Providing investment and financial advisory services, pursuant to section 225.25(b)(4) of Regulation Y (12 C.F.R. 225.25(b)(4)); (3) 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)); (4) Underwriting and dealing in obligations of the United States, general obligations of states and their political subdivisions, and other obligations in which state member banks may underwrite and deal 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)); (5) Underwriting and dealing in, to a limited extent, certain municipal revenue bonds (including certain unrated and "private ownership" municipal revenue bonds), 1^1 family mortgage-related securities, consumer receivable-related securities, and commercial paper (collectively, "bank-ineligible securities"); and (6) 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." Company currently is a subsidiary of BNY's principal bank subsidiary, The Bank of New York, New York, New York ("Bank of New York"). 1 Company would engage in the proposed activities worldwide following a reorganization in which Company would become a subsidiary of BNY's wholly owned nonbank subsidiary, BNY Capital Markets Holdings, Inc., New York, New York. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 19,627 (1996)). The time for filing comments has expired, and the Board has considered the 1. Company currently engages in limited private placement and financial advisory activities. Legal Developments notice and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act. BNY, with total consolidated assets of approximately $54 billion, is the 14th largest banking organization in the United States. 2 BNY operates commercial bank subsidiaries in New York, New Jersey, and Connecticut, and engages, through other subsidiaries, in various permissible nonbanking activities. Company is registered as a brokerdealer with the Securities and Exchange Commission ( " S E C " ) under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and is a member of the National Association of Securities Dealers, Inc. ("NASD"). Accordingly, Company is subject to the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934, the SEC, and the NASD. Activities Approved by Regulation As noted above, Company proposes to engage in lending, investment and financial advisory, securities brokerage, and bank-eligible securities underwriting and dealing activities that have all been determined by regulation to be closely related to banking for purposes of section 4(c)(8) of the BHC Act. 3 BNY 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. 4 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. 5 BNY has committed that Company will conduct these underwriting and dealing activities using the 2. Asset and ranking data are as of December 31, 1995. 3. See 12 C.F.R. 225.25(b)(1), (b)(4), (b)(15) and (b)(16). 4. To address the potential conflicts of interests arising from Company's conduct of both full-service brokerage activities and bankineligible securities underwriting and dealing activities, BNY has committed that Company will inform its 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, Company will inform brokerage customers (usually orally) whether Company is acting as agent or principal with respect to a security. Confirmations sent to customers also will state whether Company is acting as agent or principal. See PNC Financial Corporation, 75 Federal Reserve Bulletin 396 (1989); Bankers Trust New York Co., 74 Federal Resen>e Bulletin 695 (1988). 5. See Citicorp, 73 Federal Reserve Bulletin 473 (1987) ("Citicorp"), 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 749 same methods and procedures and subject to the same prudential limitations established by the Board in the Section 20 Orders. 6 The Board has also previously concluded that underwriting and dealing in "private ownership" industrial development bonds that qualify as "exempt facility bonds" under section 142 of the Internal Revenue Code ("Code") 7 is a permissible activity under section 4(c)(8) of the BHC Act. 8 BNY will conduct this activity according to the prudential limitations set forth in the Section 20 Orders. 9 BNY proposes to have two director interlocks between Company and its affiliated banks. The interlocking directors would not be officers of the affiliated banks and would represent less than a majority of the board of directors of Company and the affiliated banks. The directors also would not have authority to conduct the day-to-day business of the affiliated banks or to handle individual transactions. The Board previously has permitted the type of limited Modifications to Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989) (collectively, "Section 20 Orders"). 6. BNY has requested that the Board permit The Bank of New York Capital Markets Ltd. United Kingdom ( " B N Y U K " ) , a foreign subsidiary of the Bank of New York established under section 25(a) of the Federal Reserve Act (12 U.S.C. § 615(c)), to market the structured finance and loan syndication services of Company to overseas issuers and investors. The Board previously has permitted Regulation K subsidiaries of domestic banks, subject to certain conditions, to market the services and securities of their section 20 affiliates. See BankAmerica Corporation, 80 Federal Reserve Bulletin 1104 (1994); Letter from Jennifer J. Johnson, Deputy Secretary of the Board, to Marjorie E. Gross, Chemical Banking Corp. (Mar. 29, 1995). BNY has committed that BNY UK will engage in these activities subject to the conditions and restrictions previously relied on by the Board in approving such cross-marketing activities. 7. See 26 U.S.C. § 142. 8. See Bank South Corporation, 81 Federal Reserve Bulletin 1116 (1995) ("Bank South"). In addition to the private ownership bonds discussed in Bank South, BNY proposes that Company be permitted to underwrite and deal in, to a limited extent, private ownership bonds that are issued for the following traditional government services: airports, docks and wharves, mass commuting facilities, and highspeed intercity rail facilities, all of which qualify as "exempt facility bonds" under the Code. Under the Code, exempt facility bonds are issued to finance the acquisition or construction of facilities that provide certain types of traditional government services. 9. In connection with its proposal to underwrite and deal in unrated municipal revenue bonds, including unrated public ownership and "private ownership" industrial development bonds, BNY has committed that Company will not underwrite any unrated municipal revenue bond until Company conducts an independent credit review to determine that the securities are of investment grade quality and 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. BNY also 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). In addition, BNY has committed that Company will not underwrite or deal in unrated municipal revenue bonds until BNY submits and Board staif reviews the credit evaluation packages that Company will use to determine that unrated municipal revenue bonds are of investment grade quality. 750 Federal Reserve Bulletin • August 1996 director interlocks proposed by BNY. 10 The Board expects BNY to ensure that the framework established pursuant to the Section 20 Orders will be maintained in all other respects. The Board has determined that the conduct of the securities underwriting and dealing activities proposed by BNY is consistent with section 20 of the Glass-Steagall 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 any twoyear period. 11 BNY has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities subject to the 10-percent revenue test established by the Board in previous orders. 12 Private Placement Act. 13 The Board also has determined that acting as agent in the private placement of securities does 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 consequently not subject to the 10-percent revenue limitation on bank-ineligible securities underwriting and dealing. 14 BNY has committed that Company will conduct its private placement 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, 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. 15 Activities Riskless Principal 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. 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 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 10. See Bank South Corporation, 79 Federal Reserve Bulletin 346 (1993). 11. See Section 20 Orders. Compliance with the 10-percent revenue limitation shall be calculated in accordance with the method stated in J.R Morgan & Co. Inc., 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 Resen>e Bulletin 226 (1993), and the Supplement to Order Approving Modifications to Section 20 Orders, 79 Federal Reserve Bulletin 360 (1993). The Board notes that BNY 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, BNY would continue to employ the Board's original 10-percent revenue test. 12. 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 receives specific approval under section 4(c)(8) of the BHC Act to conduct the activities independently, any revenues from the incidental activities must be counted as ineligible revenues subject to the 10-percent revenue limitation. Activities "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. 16 A broker-dealer acting as a riskless principal is not obligated to buy (or sell) a security for its customer until after the broker-dealer executes the offsetting purchase (or sale) for its own account. The Board previously has concluded that, subject to certain conditions, riskless principal activities do not constitute the underwriting, public sale, or distribution of securities for purposes of the Glass-Steagall Act. 17 BNY has committed that Company would comply with these conditions, as listed in Appendix A. As a SEC registered broker-dealer, Company also will conduct its riskless principal activities in accordance with federal securities laws and regulations. In Bankers Trust, the Board also determined that riskless principal activities are closely related to banking within the meaning of section 4(c)(8) of the BHC Act. In order to approve this notice, the Board must consider whether the activities proposed are a proper incident to banking, that is whether the activities proposed "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 interest, or unsound banking prac- 13. See J.P. Morgan & Co. Inc., 76 Federal Reserve Bulletin 26 (1990) ("J.P. Morgan")-, Bankers Trust New York Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). 14. See Bankers Trust. 15. Among the prudential limitations discussed more fully in Bankers Trust and J.P. Morgan, BNY has committed that Company will not privately place registered investment company securities or securities of investment companies that are sponsored or advised by BNY or any of its affiliates. In addition, Company will make no general solicitation or general advertising for securities it places. 16. See SEC Rule 10b-10(a)(8)(i) (17 C.F.R. 240.10b-10(a)(8)(i)). 17. J.P. Morgan; Bankers Trust. Legal Developments tices." 18 In reaching the conclusion that riskless principal activities were a proper incident to banking in Bankers Trust, the Board relied on commitments that the applicant in that case would conduct its riskless principal activities subject to many of the prudential limitations established by the Board with respect to bank-ineligible securities underwriting and dealing ("Underwriting Conditions"). 19 BNY proposes in this case that Company be permitted to act as a riskless principal without subjecting this activity to the Underwriting Conditions. The Board sought public comment on BNY's proposal seeking relief from the Underwriting Conditions in connection with the conduct of its riskless principal activities. See 61 Federal Register 19,627 (1996). The Board received no comments on this aspect of the proposal. In Bankers Trust, the Board concluded that riskless principal transactions conducted in accordance with the conditions proposed by BNY do not constitute securities underwriting or dealing and are essentially equivalent to brokerage transactions. 20 Because securities brokerage transactions do not raise the potential for conflicts of interest, unsound banking practices or other adverse effects that may be presented by bank-ineligible securities underwriting and dealing activities, the Board has not required bank holding companies to conduct securities brokerage activities in compliance with the Underwriting Conditions. 21 For the reasons set forth below and based on the Board's experience in supervising riskless principal activities, the Board concludes that riskless principal transactions conducted in accordance with the conditions discussed in this order also do not present the types of concerns that the Underwriting Conditions are designed to address. The Underwriting Conditions seek to prevent the conflicts of interest and other potential adverse effects that may arise because an underwriting subsidiary bears principal and reputational risks with respect to the bank-ineligible securities in which it underwrites and deals and to prevent the transfer of the risks associated with the underwriting subsidiary's bank-ineligible securities activities to its affiliated banks and thrifts. Because an underwriting subsidiary is engaged in bank-ineligible securities activities, the Underwriting Conditions also seek to separate, both operationally and in the public's mind, the underwriting subsidiary from its bank and thrift affiliates. In addition, the Underwriting Conditions seek to prevent unfair competition in bank-ineligible securities activities by prohibiting the lending affiliates of an underwriting subsidiary from disclosing 18. 12 U.S.C. § 1843(c)(8). 19. Bankers Trust at 834. 20. See Bankers Trust at 834. The SEC also has stated that riskless principal transactions are functionally equivalent to agency transactions. See Exchange Act Rel. No. 33,743, reprinted in [1993-1994 Transfer Binder] Fed. Sec. L. Rep. (CCH) H 85,326 (March 9, 1994); Exchange Act Rel. No. 21,708, reprinted in [1984-1985 Transfer Binder] Fed. Sec. L. Rep. (CCH) ^ 83,734 (Feb. 4, 1985). 21. See 12 C.F.R. 225.25(b)(15); see also BankAmerica Corporation, 69 Federal Reserve Bulletin 105 (1983). 751 confidential customer information to the underwriting subsidiary (and vice-versa) without the customer's consent. 22 As noted above, riskless principal activities have been carefully defined to distinguish these activities from securities underwriting and dealing activities. These definitional limitations ensure that Company's riskless principal transactions will be customer-driven and that Company will not bear principal or reputational risk with respect to the securities that it purchases (or sells) as a riskless principal. 23 Accordingly, BNY and its affiliates would not face the type of conflicts of interests sought to be addressed by the Underwriting Conditions. In addition, because banks themselves may engage in riskless principal activities, 24 it does not appear necessary to retain limitations that separate operationally the riskless principal activities of a subsidiary from its bank or thrift affiliates. BNY proposes to conduct Company's riskless principal activities in accordance with the limitations established by the Board for the full-service securities brokerage activities of bank holding companies. These limitations require that Company make certain disclosures to its customers 25 and prohibit Company and its affiliates from sharing any confidential information concerning their respective customers without the consent of the customer. 26 Based on its experience in monitoring and examining riskless principal activities conducted by bank holding companies since 1989, the Board has determined that riskless principal activities, when conducted in accordance with the federal securities laws and the definitional limitations and customer disclosure requirements in Appendix A, are not securities underwriting or dealing activities and are not likely to give rise to the potential adverse effects that the Underwriting Conditions are designed to address. For these reasons, and based on all the facts of record, including the commitments made by BNY, the Board has determined to grant BNY's request to conduct riskless principal activities without applying the Underwriting Conditions listed in Appendix B to the conduct of that activity. 27 This does not affect the applicability of the Underwriting Conditions to the private placement, or the underwriting, dealing, and other bank-ineligible securities activities conducted by Company. 22. See Citicorp at 500. 23. Although Company's customer (or counterparty) may fail to pay for securities purchased or fail to deliver securities sold in a riskless principal transaction, the Board previously has determined that this risk, which is similar to the risk incurred in brokerage transactions, does not transform a riskless principal transaction into a transaction for Company's own account. See Bankers Trust at 833. 24. See OCC Interp. Ltr. No. 626, reprinted in [1993-1994 Transfer Binder] Fed. Banking L. Rep. (CCH) f 83,508 (July 7, 1993). 25. See 12 C.F.R. 225.25(b)(15)(ii). These limitations are included in Appendix A. 26. Id. 27. The Board has today determined to grant relief from these conditions to other bank holding companies conducting riskless principal activities. See Order Revising the Limitations Applicable to Riskless Principal Activities, 82 Federal Reserve Bulletin 759 (1996). 752 Federal Reserve Bulletin • August 1996 Other Considerations Banking Standard Regarding the Proper Incident to As part of the Board's evaluation of the proper incident to banking 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. 28 Based on all the facts of record, the Board concludes that financial and managerial considerations are consistent with approval of the notice. As noted above, BNY has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities in accordance with the prudential framework established by the Board's Section 20 Orders. Under the framework and conditions established in this order and the Section 20 Orders, the Board concludes that Company's proposed limited conduct of bank-ineligible securities underwriting and dealing activities 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. Similarly, the Board finds no evidence that Company's private placement and other activities—conducted under the framework and conditions established in this order—would likely result in any significantly adverse effects. The Board expects, moreover, that the de novo entry of Company into the market for the proposed services would provide added convenience to BNY's customers, would lead to improved methods of meeting customer financing needs, and would increase the level of competition among existing providers of these services. The Board also expects that Company's performance of the private placement and financial advisory activities, in which BNY currently engages to a limited extent, will lead to greater efficiencies within the BNY corporate system and thereby permit BNY to provide better services to its customers. Accordingly, the Board has determined that the performance of the proposed activities by BNY 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. Based on all the facts of record, and subject to the commitments made by BNY, 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 the proposal is specifically conditioned on compliance by BNY and Company with the commitments made in connection with the 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 modifi- 28. See 12 C.F.R. 225.24; see also The Fuji Bank, Ltd., 75 Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve Bulletin 155 (1987). cation 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. In approving the proposal, the Board has relied on all the facts of record and all the representations and commitments made by BNY. 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 New York, acting pursuant to delegated authority. By order of the Board of Governors, effective June 10, 1996. Voting for this action: Chairman Pro Tempore Greenspan and Governors Lindsey, Phillips and Yellen. Absent and not voting: Governor Kelley. JENNIFER J . J O H N S O N Deputy Secretary of the Board Appendix A BNY has committed that Company would comply with the following conditions with respect to its riskless principal activities: (1) Company will engage in riskless principal transactions only in the secondary market. (2) Company will not act as riskless principal in selling bank-ineligible securities at the order of a customer that is the issuer of the securities or in any transaction where Company has a contractual agreement to place the securities as agent of the issuer. (3) Company will not engage in any riskless principal transaction for any bank-ineligible security carried in its inventory. (4) Company will not engage in riskless principal transactions on behalf of any U.S. affiliate that engages in bankineligible securities underwriting and dealing, or any foreign affiliate that engages in securities dealing activities outside the United States. (5) Company will not act as a riskless principal in any transaction involving a bank-ineligible security for which Company or an affiliate makes a market. (6) Neither Company nor its affiliates will hold themselves out as making a market in the bank-ineligible securities that Company buys and sells as riskless principal, nor enter quotes for specific bank-ineligible securities in any dealer quotation system in connection with Company's riskless principal transactions; except that Company and its affiliates may enter bid or ask quotations, or publish "offering wanted" or "bid wanted" notices on trading systems other than NASDAQ or an exchange, if Company or the affiliate Legal Developments does not enter price quotations on different sides of the market for a particular security for two business days. (That is, Company or its affiliate must wait at least two business days after entering a "bid" quotation on a security before entering an "ask" quotation with respect to the same security, and vice-versa.) (7) Company will not act as riskless principal for registered investment company securities or for any securities of investment companies that are advised by BNY or any of its affiliates. (8) Company will maintain specific records, including records time-stamped in accordance with SEC requirements, that clearly identify all riskless principal transactions. (9) Because BNY proposes to provide riskless principal services in combination with investment advisory services, Company will prominently disclose in writing to its customers that: (a) Company is solely responsible for its contractual obligations and commitments; (b) Company is not a bank and is separate from any affiliated bank; and (c) The securities sold, offered, or recommended by Company are not insured by the FDIC and are not obligations of, or endorsed or guaranteed in any way by, any bank (unless this is the case). These disclosures must be made before Company provides any riskless principal or advisory services to a customer, and the disclosure in clause (a) also must be made by Company in its customer account statements. The disclosures may be provided orally so long as written disclosures are provided to the customer immediately thereafter. In addition, Company and its affiliates will not share any confidential information concerning their respective customers without the consent of the customer. See 12 C.F.R. 225.25(b)(15)(ii). Appendix B BNY hereby is relieved from the following Underwriting Conditions with respect to Company's riskless principal activities: (1) Neither BNY nor any subsidiary shall directly or indirectly extend credit, issue or enter into a stand-by letter of credit, asset purchase agreement, indemnity, guarantee, insurance or other facility that might be viewed as enhancing the creditworthiness or marketability of ineligible securities purchased (or sold) as a riskless principal by Company. (2) Neither BNY nor any subsidiary (other than Company) shall knowingly extend credit to a customer directly or indirectly secured by, or for the purpose of purchasing, any ineligible security that Company purchases (or sells) as a riskless principal. (3) Neither BNY nor any of its subsidiaries may, directly or indirectly, extend credit to issuers of ineligible securities 753 purchased (or sold) as riskless principal by Company for the purpose of the payment of principal, interest or dividends on such securities, except that BNY and its subsidiaries may extend credit to an issuer of securities purchased (or sold) as riskless principal by Company for purposes of paying the principal on the securities, provided that at least three years has elapsed since the date of Company's purchase (or sale) and the credit extension meets prudent and objective credit standards. (4) BNY shall adopt appropriate procedures, including maintenance of necessary documentary records, to assure that any extension of credit by it or any of its subsidiaries to issuers of ineligible securities purchased (or sold) as riskless principal by Company are on an arm's length basis for purposes other than payment of principal, interest or dividends on the issuer's ineligible securities being purchased (or sold) as riskless principal by Company. (5) The requirements relating to credit extensions to issuers noted in paragraphs above also shall apply to extensions of credit to parties that are the major users of projects that are financed by industrial revenue bonds. (6) BNY's affiliated banks and thrifts may not express an opinion on the value or the advisability of the purchase or sale of ineligible securities that are purchased (or sold) as riskless principal by Company unless the bank or thrift affiliate notifies the customer that Company is purchasing (or selling) the security. (7) Neither BNY nor its bank, thrift or trust or investment advisory subsidiaries shall purchase, as a trustee or in any other fiduciary capacity, for accounts over which they have investment discretion, ineligible securities that are purchased (or sold) as riskless principal by Company unless such purchase is specifically authorized under the instrument creating the fiduciary relationship, by court order, or by the law of the jurisdiction under which the trust is administered. (8) Neither BNY nor any of its subsidiaries shall purchase as principal ineligible securities that are sold as a riskless principal by Company. 1 (9) Company may only purchase (or sell) as riskless principal ineligible securities issued by (or representing interests in, or secured by, obligations of) affiliates if the securities are: (a) Rated by an unaffiliated, nationally recognized statistical rating organization; 1. As noted above, BNY has committed that Company will conduct its riskless principal activities in accordance with the limitations set forth in Appendix A. These limitations prohibit Company from engaging in riskless principal transactions on behalf of any foreign affiliate that engages in securities dealing activities outside the United States, or any U.S. affiliate that engages in bank-ineligible securities underwriting and dealing. In addition, these limitations prohibit Company from purchasing or selling as riskless principal any bank-ineligible security that Company holds in its inventory. Because BNY proposes to engage in riskless principal through its section 20 affiliate, the structural limitations contained in the Underwriting Conditions continue to apply to that subsidiary. 754 Federal Reserve Bulletin • August 1996 (b) Issued or guaranteed by FNMA, FHLMC, or GNMA (or represent interests in securities issued or guaranteed by FNMA, FHLMC, or GNMA); or (c) Purchased from or sold to sophisticated institutions. Caisse Nationale de Credit Agricole, S.A. Paris, France Order Approving a Notice to Engage in Various Nonbanking Activities Through a Joint Venture Caisse Nationale de Credit Agricole, S.A., Paris, France ( " C N C A " ) , a foreign banking organization subject to the Bank Holding Company Act ( " B H C Act"), has 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 of the Board's Regulation Y (12 C.F.R. 225.23) to engage through CALFP (US), Inc., New York, New York ( " C o m p a n y " ) , a joint venture, in the following nonbanking activities: (1) Providing securities brokerage services pursuant to section 225.25(b)(15) of Regulation Y; (2) Providing investment advisory services pursuant to section 225.25(b)(4) of Regulation Y; (3) Providing foreign exchange advisory and transactional services pursuant to section 225.25(b)(17) of Regulation Y; (4) Acting as agent in the private placement of securities, and providing related advisory services; (5) Acting as riskless principal in the purchase and sale of all types of securities on behalf of customers; (6) Acting as broker and agent and providing advisory services with respect to interest rate and currency swaps and swap derivative products, and swaps, swap derivative products and over-the-counter options linked to certain commodities, stock, bond or commodity indices, a hybrid of interest rates and such commodities or indices, a specially tailored basket of securities selected by the parties, or particular equity securities; and (7) Providing advisory services, including discretionary portfolio management services, with respect to futures and options on futures on financial and nonfinancial commodities. Company would only provide these services to institutional customers, as defined in section 225.2(g) of Regulation Y (12 C.F.R. 225.2(g)), and has proposed to conduct these activities worldwide. Company is an indirect subsidiary of Credit Agricole Lazard Financial Products Bank, London, England ( " C A L F P Bank"), and Credit Agricole Lazard Financial Products Limited, London, England ( " C A L F P Holding"). 1 CNCA owns 75 percent of the capital of CALFP Holding, 1. CALFP Holding is the parent company of CALFP Bank, a U.K. company licensed as a bank in the United Kingdom. CALFP Bank intends to hold its investment in Company through a U.K. holding company whose sole function would be to hold the shares of Company. and Three Houses Investment Company, Limited, London, England ("Three Houses"), owns the remaining 25 percent. 2 Three Houses is controlled by Lazard Freres & Co., L.L.C., New York, New York; Lazard Freres et Cie, Paris, France; and Lazard Brothers & Co., Limited, London, England (collectively, "Lazard Freres"). Lazard Freres provides a wide array of advisory and brokerage services, and underwrites and deals in all types of debt and equity securities. Notice of this proposal, affording interested persons an opportunity to submit comments, has been published (60 Federal Register 62,092 and 63,527 (1995)). 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 section 4(c)(8) of the BHC Act. CNCA, with total consolidated assets equivalent to approximately $334.2 billion, is the 15th largest banking organization in the world, and the largest banking organization in France. 3 In the United States, CNCA operates branches in Chicago, Illinois, and New York, New York; and maintains representative offices in San Francisco, California, and Houston, Texas. CNCA also engages directly and through subsidiaries in permissible nonbanking activities in the United States and abroad. Company is, and will continue to be, a broker-dealer registered with the Securities and Exchange Commission ( " S E C " ) under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), and is a member of the National Association of Securities Dealers, Inc. ( " N A S D " ) . Accordingly, Company is subject to the record-keeping and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934, the SEC, and the NASD. 4 Private Placement and Riskless Principal Activities The Board previously has determined that the proposed private placement 5 and riskless principal 6 activities are so 2. CNCA and Three Houses have equal voting rights in CALFP Holding. Three Houses has an option to acquire additional voting shares of CALFP Holding that could raise its interest in CALFP Holding to 50 percent. 3. Asset data are as of December 31, 1995. 4. CNCA does not expect Company to conduct its business in such a way as to require it to register as a commodity trading advisor ("CTA") under the Commodity Exchange Act (7 U.S.C. § 1 et seq.), or as an investment adviser under the Investment Advisers Act of 1940(15 U.S.C. § 80b-1 et seq.). 5. Private placement involves the placement of new 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 for 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 only place securities with customers who qualify as accredited investors. 6. "Riskless principal" is the term used in the securities business to refer to a transaction in which a broker-dealer, after receiving an order to buy (or sell) a security from a customer, purchases (or sells) the Legal Developments closely related to banking within the meaning of section 4(c)(8) of the BHC Act, provided that the activities are conducted within the prudential framework of limitations established in previous decisions to address the potential for conflicts of interests, unsound banking practices, and other adverse effects. 7 The Board also previously has determined that acting as agent in the private placement of securities, and purchasing and selling securities on the order of customers as riskless principal, do not constitute underwriting or dealing in securities for purposes of section 20 of the Glass-Steagall Act, when conducted in the manner established by prior orders, and, accordingly, that revenues derived from these activities are not subject to the 10-percent revenue limitation on bank-ineligible securities underwriting and dealing activities. 8 CNCA 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, as were established by the Board in J.P. Morgan and Bankers Trust.9 These methods, procedures, and prudential limitations include the comprehensive restrictions designed to avoid potential conflicts of interests, unsound banking practices, and other adverse effects imposed by the Board in cases involving underwriting and dealing in bankineligible securities. security for its own account to offset a contemporaneous sale to (or purchase from) the customer. See Securities and Exchange Commission Rule 10b-10. 17 C.F.R. 249.10b-10(a)(8)(i). Riskless principal transactions are understood in the industry to include only transactions in the secondary market. 7. 12 U.S.C. § 1843(c)(8). See J.P. Morgan & Company Incorporated, 76 Federal Reserve Bulletin 26 (1990) ("J.P. Morgan")-, and Bankers Trust New York Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"). 8. See Bankers Trust at 831-833. The term "bank-ineligible securities" refers to all types of debt and equity securities that a bank may not underwrite or deal in directly under the Glass-Steagall Act (12 U.S.C. §§ 24(7) and 335). 9. Among the prudential limitations detailed more fully in J.P. Morgan and Bankers Trust 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 engage only in transactions in the secondary market, and not at the order of a customer that is the issuer of the securities to be sold; will not act as riskless principal in any transaction involving a security for which it makes a market; and will not hold itself out as making a market in the securities that it buys and sells as a riskless principal. Moreover, Company will not engage in riskless principal transactions on behalf of any foreign affiliates that engage in securities dealing activities outside the United States, and will not act as riskless principal for registered open-end 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 CNCA or any of its affiliates. With respect to private placement activities, CNCA has committed that Company will not privately place registered investment company securities or securities of investment companies that are sponsored or advised by CNCA or any of its affiliates. Other 755 Activities The Board previously has determined that a bank holding company may act as broker or agent and provide advisory services with respect to various swap transactions, including commodity and index swaps based on a specially tailored basket of securities selected by the parties. 10 The Board also previously has determined by regulation or order that a bank holding company may provide securities brokerage services, investment advisory services, foreign exchange advisory and transactional services, and advisory services with respect to futures and options on futures on financial and nonfinancial commodities. 11 CNCA has committed that Company will conduct its activities in accordance with the limitations set forth in Regulation Y, the Board's orders, and related interpretations. Proper Incident to Banking Standard In order to approve this proposal, the Board also must determine that the proposed activities are 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." 12 As part of its review 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. 13 The Board notes that CNCA's capital ratios satisfy applicable risk-based capital standards established under the Basle Accord, and are considered equivalent to the capital levels that would be required of a U.S. banking organization. Based on all the facts of record, the Board concludes that financial and managerial considerations are consistent with approval of this proposal. The Board previously has expressed concern that joint ventures not lead to a matrix of relationships between 10. See Swiss Bank Corporation, 81 Federal Reserve Bulletin 185, 190 (1995). CNCA proposes that Company also act as broker or agent with respect to swaps and swap derivative products linked to particular equity securities. Company would not own or take possession of any of the underlying securities, nor would it act as act as principal or counter-party in any such transaction. The Board believes that this activity is operationally and functionally similar to the swaps activities previously approved by the Board and, therefore, the activity is permissible for bank holding companies. 11. 12 C.F.R. 225.25(b)(4), (15), and (17); Credit Suisse, 81 Federal Reserve Bulletin 803 (1996) (providing futures-related discretionary portfolio management services); J.P. Morgan & Company Incorporated, 80 Federal Reserve Bulletin 151 (1994) (providing futuresrelated advisory services with respect to contracts on nonfinancial commodities); and Security Pacific Corporation, 1A Federal Reserve Bulletin 820 (1988) (providing futures-related advisory services without registering as a CTA). 12. 12 U.S.C. § 1843(c)(8). 13. 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). 756 Federal Reserve Bulletin • August 1996 co-venturers that could break down the legally mandated separation of banking and commerce. 14 The Board has stated that this concern is particularly acute where the joint venture involves a relationship between a bank holding company and a securities firm, and the potential exists for the mingling of permissible and impermissible securities activities. 15 In this case, CNCA would engage in the proposed activities in a manner consistent with previously approved joint venture proposals and has made a number of commitments similar to those the Board has relied on in prior joint venture cases intended to separate the activities of a bank holding company and the joint venture from the impermissible activities of a securities co-venturer. 16 These include a commitment that CNCA and Lazard Freres conduct their business on an arm's-length, non-preferential basis with no solicitation of business for, nor referral of customers to, each other, and that CNCA not invest in, or nominate directors of, Lazard Freres in the United States. For the reasons discussed above, and in reliance on all the commitments made in connection with this proposal and the conditions discussed in this order, the Board believes that the proposal is not likely to result in decreased or unfair competition, conflicts of interests, unsound banking practices, undue concentration of resources, or other adverse effects. The Board expects, moreover, that the entry of Company into the market for the proposed services would provide added convenience to CNCA's customers, and would increase the level of competition among existing providers of these services. Accordingly, the Board has determined that the performance of the proposed activities by Company can reasonably be expected to produce public benefits that outweigh possible adverse eifects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Conclusion Based on the foregoing and all the facts of record, including the commitments discussed above and all commitments made in connection with this proposal, the Board has determined to, and hereby does, approve this proposal subject to all the terms and conditions set forth in this order, and in the above-referenced regulations and orders that relate to the proposed activities. The Board's determination also is subject to all the terms and conditions set forth in the Board's 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 such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the 14. See, e.g., The Maybaco Company and Equitable Bancorporation, 69 Federal Reserve Bulletin 375 (1983). 15. See Amsterdam-Rotterdam Bank, N.V., 70 Federal Reserve Bulletin 835 (1984); The Chuo Trust and Banking Company, Limited, 78 Federal Reserve Bulletin 446 (1992) ("Chuo Trust"). 16. See Banque Nationale de Paris, 80 Federal Reserve Bulletin 638 (1994); Chuo Trust. 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 proposal, including the commitments discussed in this order and in the above-noted Board regulations and orders. These commitments and conditions shall both 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 Chicago, acting pursuant to delegated authority. By order of the Board of Governors, effective June 10, 1996. Voting for this action: Chairman Pro Tempore Greenspan and Governors Lindsey, Phillips, and Yellen. Absent and not voting: Governor Kelley. JENNIFER J . J O H N S O N Deputy Secretary of the Board Union Planters Corporation Memphis, Tennessee Order Approving the Acquisition Association of a Savings Union Planters Corporation, Memphis, Tennessee ("Applicant"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has 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 of the Board's Regulation Y (12 C.F.R. 225.23) to acquire all the voting shares of Franklin Financial Group, Inc., and thereby acquire Franklin Federal Savings Bank ("FFSB"), both of Morristown, Tennessee, and engage in the operation of a savings association pursuant to section 225.25(b)(9) of Regulation Y (12 C.F.R. 225.25(b)(9)). 1 Notice of this proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 18,145 (1996)). 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 section 4(c)(8) of the BHC Act. Applicant, with total consolidated assets of $11.3 billion, operates subsidiary banks in Alabama, Arkansas, Ken- 1. Applicant also would acquire the subsidiaries of FFSB: (1) Colonial Loan Association, Morristown, Tennessee, and thereby make, acquire, and service loans pursuant to section 225.25(b)(1) of Regulation Y (12 C.F.R. 225.25(b)(1)); and (2) Franklin Insurance Group, Inc., Morristown, Tennessee, and thereby act as agent in the sale of insurance directly related to extensions of credit pursuant to section 225.25(b)(8)(i) and (ii) of Regulation Y (12 C.F.R. 225.25(b)(8)(i) and (ii)). Legal Developments tucky, Louisiana, Mississippi, Florida, and Tennessee. 2 Applicant is the third largest commercial banking organization in Tennessee, controlling $4.9 billion in deposits, representing approximately 8.9 percent of total deposits in depository institutions in the state. 3 FFSB, with total consolidated assets of $125 million is the 74th largest depository institution in Tennessee, controlling $108 million in deposits, representing less than 1 percent of total deposits in depository institutions in the state. On consummation of the transaction, Applicant would remain the third largest commercial banking organization in Tennessee, controlling deposits of $5.0 billion, representing approximately 9.1 percent of total deposits in depository institutions in the state. Proposed Activities The Board has determined that the operation of a savings association by a bank holding company is closely related to banking for purposes of section 4(c)(8) of the BHC Act. 4 The Board requires savings associations acquired by bank holding companies to conform their direct and indirect activities to those that are permissible for bank holding companies under section 4(c)(8) of the BHC Act and Regulation Y. Applicant has committed to conform all activities of FFSB to those requirements. 5 The Board also has determined by regulation that the proposed lending and credit-related insurance activities are closely related to banking within the meaning of section 4(c)(8) of the BHC Act. 6 Applicant has committed to conduct these activities subject to the limitations in Regulation Y. 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, decreased or unfair competition, conflicts of interests, or unsound banking practices. Applicant and FFSB compete directly in the Morristown, Tennessee, banking market. 7 Consummation of this proposal would not result in concentration levels in this market that would exceed the threshold standards of market concentration as measured by the Herfindahl-Hirschman Index ("HHI") 2. All data are as of June 30, 1995, and are adjusted to reflect acquisitions by Applicant consummated through January 26, 1996. 3. In this context, depository institutions include commercial banks, savings banks, and savings associations. 4. See 12 C.F.R. 225.25(b)(9). 5. Applicant 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. Applicant also has committed that any impermissible securities or insurance activities conducted by FFSB will cease on or before consummation. 6. See 12 C.F.R. 225.25(b)(1) and (b)(8)(i) and (ii). 7. The Morristown, Tennessee, banking market is approximated by Hamblen and Grainger Counties, minus the town of Blaine in Grainger County, and the towns of Baneberry, Jefferson City, Jefferson Estates, Leadvale, Talbot, and White Pine in Jeiferson County, all in Tennessee. 757 under the Department of Justice merger guidelines. 8 After considering the relatively small change in concentration as measured by the HHI, Applicant's share of total deposits in depository institutions 9 in the market ("market share"), the number of competitors that would remain in this market, 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 on the concentration of banking resources in the Morristown, Tennessee, banking market, or any other relevant banking market. Record of Performance Reinvestment Act under the Community In acting on a proposal to acquire a savings association under section 4(c)(8) of the BHC Act, the Board reviews the records of the relevant depository institutions under the Community Reinvestment Act (12 U.S.C § 2901 et seq.) ("CRA"). 1 0 As provided in the CRA, the Board has evaluated this factor in light of examinations by the primary federal supervisor of the CRA performance of the relevant institutions. The Board also has carefully considered comments from The Mid-South Peace and Justice Center, Memphis, Tennessee ("Protestant"), criticizing the record of performance of Applicant under the CRA in meeting the credit needs of minority individuals and low- and moderateincome communities in Memphis, Tennessee, and contending that Applicant's management is insensitive to such 8. On consummation of the proposal, the HHI would increase 249 points to 1418. 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 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 non-depository financial entities. 9. Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 743 (1984). Because the deposits of FFSB would be transferred to a commercial bank under this proposal, those deposits are included at 100 percent in the calculation of Applicant's pro forma market share. See Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First Bank, Inc., 76 Federal Reserve Bulletin 669, 670 n.9 (1990). 10. 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). 758 Federal Reserve Bulletin • August 1996 credit needs. 11 The Board has reviewed Applicant's CRA performance record in light of substantially similar comments that were submitted by Protestant in connection with recent applications filed by Applicant. 12 An institution's most recent CRA performance evaluation is a particularly important consideration in the applications process because it represents a detailed on-site evaluation of the institution's overall record of performance under the CRA by its primary federal supervisor. 13 In addition, the Board considers an institution's policies and practices for compliance with applicable fair lending laws. The Board also takes into account information on an institution's lending activities that assist in meeting the credit needs of low- and moderate-income neighborhoods, including programs and activities initiated since its most recent CRA performance examination. All of Applicant's subsidiary banks and thrifts that have been examined for CRA performance received "outstanding" or "satisfactory" ratings from their primary federal supervisors in their most recent examinations. Applicant's lead bank, Union Planters National Bank, Memphis, Tennessee ("UPNB"), received a "satisfactory" CRA performance rating from its primary federal supervisor, the Office of the Comptroller of the Currency ("OCC"), at its most recent examination as of October 1994 ("1994 Examination"). 14 The 1994 Examination found no evidence of prohibited discrimination or other illegal credit practices. 15 Moreover, examiners found no evidence of practices intended to discourage applications for the types of credit 11. Protestant cites the failure by Applicant to close its offices in observance of Martin Luther King Day as an example of management's insensitivity to African Americans. Applicant states that its holiday closing policy is designed to coincide with the holidays on which essentially all of its customers are closed for business, namely New Year's Day, Independence Day, Thanksgiving Day, and Christmas Day, and to provide banking services to its customers on all other nationally recognized holidays. Applicant's employees may be approved to take two additional holidays under this policy. 12. See Union Planters Corporation, 82 Federal Reserve Bulletin 745 (1996) (acquisition of Eastern National Bank) ("Eastern National Order"); Union Planters Corporation, 82 Federal Reserve Bulletin 78 (1996); and Union Planters Corporation, 81 Federal Reserve Bulletin 800 (1995) (collectively, "the Union Planters Orders"). 13. The Board notes that the Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act 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. 54 Federal Register 13,742, 13,745 (1989). 14. Protestant requests that the Board review the 1995 data filed by UPNB under the Home Mortgage Disclosure Act (12 U.S.C. § 2801) ("HMDA"). HMDA data for 1995 are preliminary and have not been released to the public by the banking agencies. However, these data indicate decreases in the denial ratios for applications received from low- and moderate-income census tracts compared to high income census tracts, and for applications received from African Americans compared to nonminorities, from 1994 to 1995. 15. Protestant indicates, based on the experience of an unidentified housing developer, that delays in processing mortgage loan applications from low- and moderate-income customers at the Whitehaven branch of UPNB may have been racially motivated. The Board has referred these comments to the primary federal supervisor of the bank, the OCC, for review and consideration. listed in the bank's CRA statements. FFSB also received a "satisfactory" rating for CRA performance from its primary federal supervisor, the Office of Thrift Supervision, as of October 1994. The Board has reviewed Applicant's CRA performance record in light of all the facts of record, including information provided by Protestant and Applicant, CRA performance examinations and other information from Applicant's primary federal supervisors, and the previous reviews of Applicant's CRA record that have included consideration of HMDA data, lending activities, marketing and outreach activities, services provided at branches, and branch closing policies, as more fully described in the Union Planters Orders and incorporated herein by reference. Based on all the facts of record, the Board concludes that the efforts of Applicant and FFSB to help meet the credit needs of all segments of the communities served, including low- and moderate-income neighborhoods and minority residents, are consistent with approval. 16 Other Considerations In order to approve this proposal, the Board also must determine that the proposed activities are 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." 17 16. Protestant reiterates allegations of certain management misconduct at a Mississippi state bank that was acquired by Applicant in 1994. Protestant requests the Board to delay action on all proposals by Union Planters until these matters are resolved. The Board has previously considered these allegations and referred the matter to the primary federal supervisor of the state bank involved, the Federal Deposit Insurance Corporation, for review and consideration. Based on all the facts of record, and in light of applicable processing time frames prescribed by the BHC Act and the Board's Regulation Y, the Board believes that the record is sufficient to act on this proposal and that delay of consideration of this application is not warranted. 17. 12 U.S.C. § 1843(c)(8). Protestant contends that allegations in pending lawsuits filed against Applicant raise adverse considerations for the convenience and needs of the public if Applicant is permitted to engage in the sale of credit-related insurance as agent. These allegations involve the forced placement of collateral insurance, a provision in the loan agreement that allows a lender to obtain insurance for its collateral at the borrower's expense if coverage lapses. Protestant maintains, for example, that Applicant should not be permitted to extend credit and simultaneously sell credit-related insurance. Applicant states that the pending lawsuits in Mississippi are based principally on activities conducted by a state-chartered bank before it was acquired by Applicant. These activities have been terminated. Applicant also denies that any improper activities have occurred, and there has been no adjudication of wrongdoing by Applicant in the pending actions. The Board notes, moreover, that Applicant may not require a borrower to purchase credit-related insurance from Applicant as a condition or requirement of obtaining an extension of credit from any affiliate of Applicant under applicable anti-tying restrictions. See 12 U.S.C. §§ 1972 and 1464(q); 12 C.F.R. 225.7. Legal Developments As part of its review of these factors, the Board has considered the financial and managerial resources of Applicant, FFSB, and their respective subsidiaries and the effect the transaction would have on such resources. 18 Based on all the facts of record, the Board concludes that financial and managerial considerations are consistent with approval of this proposal. 19 For the reasons discussed above, and in reliance on all the commitments made in connection with this proposal, and the conditions discussed in this order, the Board concludes that the proposal is not likely to result in decreased or unfair competition, conflicts of interests, unsound banking practices, undue concentration of resources, or other adverse effects. The Board expects, moreover, that the acquisition of FFSB by Applicant would provide added convenience to FFSB's customers. In particular, FFSB would be able to offer its customers additional products and services that are currently offered by Applicant and its subsidiaries, including discount brokerage services, investment products, credit card services, trust services, and management advice. Accordingly, the Board has determined that this proposal can reasonably be expected to produce public benefits that outweigh any adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Conclusion Based on all the facts of record, including commitments made to the Board by Applicant in connection with this proposal, the Board has determined that this proposal should be, and hereby is, approved. The Board's approval is specifically conditioned on compliance by Applicant with all commitments made in connection with this proposal and on Applicant receiving all necessary federal and state approvals. The Board's determination is subject to all the conditions in the Board's Regulation Y, including those in sections 225.7 and 225.23(g)(3) (12 C.F.R. 225.7 and 225.23(g)(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 18. 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). 19. Protestant contends that a suspension in processing Applicant's application to acquire Eastern National Bank, Miami, Florida ( " B a n k " ) , raises adverse managerial considerations about the extent of the due diligence review of the transaction by Applicant. As discussed in the Eastern National Order, the Venezuelan Superintendent of Banks and other Financial Institutions requested the Board to delay action on the proposal by Applicant to acquire Bank until alleged claims against the selling parties regarding ownership of Bank's stock could be resolved. For the reasons discussed fully in the Eastern National Order, the Board found the statutory factors related to the acquisition of Bank, in that case, to be satisfied and approved the proposal. 759 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 St. Louis, acting pursuant to delegated authority. By order of the Board of Governors, effective June 10, 1996. Voting for this action: Chairman Pro Tempore Greenspan and Governors Lindsey, Phillips, and Yellen. Absent and not voting: Governor Kelley. JENNIFER J . J O H N S O N Deputy Secretary of the Board Order Revising the Limitations Applicable Principal Activities to Riskless In 1989, the Board first authorized a bank holding company to engage in buying and selling all types of securities on the order of customers as a "riskless principal." 1 "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. A broker-dealer acting as a riskless principal is not obligated to buy (or sell) a security for its customer until after the broker-dealer executes the offsetting purchase (or sale) for its own account. The Board has carefully defined riskless principal activities and has imposed several limitations designed to distinguish riskless principal activities from securities underwriting and dealing. 2 In Bankers Trust, the Board concluded that riskless principal activities conducted in accordance with these limitations do not constitute the underwriting, public sale, or distribution of securities for purposes of section 20 of the Glass-Steagall Act (12 U.S.C. § 377). The Board also concluded that riskless principal activities are closely related to banking for purposes of section 4(c)(8) of the Bank Holding Company ( " B H C " ) Act (12 U.S.C. § 1843(c)(8)). In determining that the conduct of riskless principal activities is a proper incident to banking, the Board relied on the applicant's commitment to conduct its riskless principal activities in accordance with many of the prudential limitations ("Underwriting Conditions") established by the Board in connection with approvals authorizing bank holding companies to underwrite 1. See Bankers Trust New York Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust"); see also J.P. Morgan & Company, Inc., 76 Federal Reserve Bulletin 26 (1990). 2. These limitations are set forth in Appendix A. 760 Federal Reserve Bulletin • August 1996 and deal in securities in which state member banks may not underwrite or deal ("bank-ineligible securities"). In connection with a proposal considered today by a bank holding company to engage in riskless principal activities, the Board has reviewed the continued appropriateness of applying the Underwriting Conditions to the conduct of riskless principal activities. In that case, the Board determined, based on its experience in monitoring and examining the conduct of riskless principal activities by bank holding companies, that the Underwriting Conditions were not necessary to address identifiable adverse effects. Accordingly, the Board permitted the bank holding company to engage in riskless principal transactions through a nonbank subsidiary without conducting this activity in accordance with the Underwriting Conditions. 3 The riskless principal activities must be conducted in accordance with the limitations set forth in Appendix A, which are designed to distinguish riskless principal activities from securities underwriting and dealing activities. In reaching its decision, the Board noted that riskless principal transactions are essentially equivalent to securities brokerage transactions and must be conducted in compliance with the federal securities laws. 4 Bank holding companies are not required to conduct securities brokerage activities in accordance with the Underwriting Conditions. The Board concluded that the definitional limitations set forth in Appendix A would ensure that riskless principal transactions would be customer-driven and that the bank holding company would not bear principal or reputational risk with respect to the securities that it would purchase (or sell) as a riskless principal. 3 To ensure that customers are informed, the bank holding company agreed that, if it provides riskless principal services in combination with advisory services, it would provide its customers the disclosures established by the Board for the full-service brokerage activities of bank holding companies. 6 In light of the Board's decision today in the application by The Bank of New York Company, Inc., the Board has determined to grant identical relief to other bank holding companies previously approved to conduct riskless principal activities pursuant to section 4(c)(8) of the BHC Act. Accordingly, for the reasons discussed in this order and in the BNY Order, the Board hereby determines that bank holding companies that have been authorized by the Board to engage in riskless principal activities pursuant to section 4(c)(8) of the BHC Act may conduct these activities without applying the Underwriting Conditions set forth in Appendix B to the conduct of these activities, provided that 3. See The Bank of New York Company, Inc., 82 Federal Reserve Bulletin 748 (1996) ("BNY Order"). Notice of the bank holding company's proposal was published in the Federal Register in accordance with the Board's rules. See 61 Federal Register 19,627 (May 2, 1996). The Board received no comments on the proposal. 4. See Bankers Trust. 5. The Board also noted that banks may engage in riskless principal transactions on behalf of their customers. See OCC Interp. Ltr. No. 626, reprinted in [1993-1994 Transfer Binder] Fed. Banking L. Rep. (CCH) % 83,508 (July 7, 1993). 6. See 12 C.F.R. 225.25(b)(15)(ii). the bank holding company continues to comply with the limitations set forth in Appendix A. This action does not relieve bank holding companies that conduct riskless principal activities through subsidiaries that also engage in bank-ineligible securities underwriting and dealing activities or private placement activities from complying with the Underwriting Conditions or any other condition established by the Board with respect to those activities, including conditions that limit a subsidiary's relationships with its affiliates. In addition, this action does not grant relief from any other conditions or commitments. By order of the Board of Governors, effective June 10, 1996. Voting for this action: Chairman Pro Tempore Greenspan and Governors Lindsey, Phillips and Yellen. Absent and not voting: Governor Kelley. JENNIFER J . J O H N S O N Deputy Secretary of the Board Appendix A (1) The bank holding company subsidiary authorized to engage in riskless principal activities ("Company") may engage in riskless principal transactions only in the secondary market. (2) Company may not act as riskless principal in selling bank-ineligible securities at the order of a customer that is the issuer of the securities or in any transaction where Company has a contractual agreement to place the securities as agent of the issuer. (3) Company may not engage in any riskless principal transaction for any bank-ineligible security carried in its inventory. (4) Company may not engage in riskless principal transactions on behalf of any U.S. affiliate that engages in bankineligible securities underwriting and dealing, or any foreign affiliate that engages in securities dealing activities outside the United States. (5) Company may not act as a riskless principal in any transaction involving a bank-ineligible security for which Company or an affiliate makes a market. (6) Neither Company nor its affiliates may hold themselves out as making a market in the bank-ineligible securities that Company buys and sells as riskless principal, nor enter quotes for specific bank-ineligible securities in any dealer quotation system in connection with Company's riskless principal transactions; except that Company and its affiliates may enter bid or ask quotations, or publish "offering wanted" or "bid wanted" notices on trading systems other than NASDAQ or an exchange, if Company or the affiliate does not enter price quotations on different sides of the market for a particular security for two business days. (That is, Company or its affiliate must wait at least two business days after entering a "bid" quotation on a security before entering an "ask" quotation with respect to the same security, and vice-versa.) Legal Developments 761 (7) Company may not act as riskless principal for registered investment company securities or for any securities of investment companies that are advised by the bank holding company or any of its affiliates. (8) Company will maintain specific records, including records time-stamped in accordance with SEC requirements, that clearly identify all riskless principal transactions. (9) If the bank holding company provides riskless principal services in combination with investment advisory services, the bank holding company will prominently disclose in writing to its customers that: (a) The bank holding company is solely responsible for its contractual obligations and commitments; (b) The bank holding company is not a bank and is separate from any affiliated bank; and (c) The securities sold, offered, or recommended by the bank holding company are not insured by the FDIC and are not obligations of, or endorsed or guaranteed in any way by, any bank (unless this is the case). issuers of ineligible securities purchased (or sold) as riskless principal by the Riskless Principal Subsidiary for the purpose of the payment of principal, interest or dividends on such securities, except that the bank holding company and its subsidiaries may extend credit to an issuer of securities purchased (or sold) as riskless principal by the Riskless Principal Subsidiary for purposes of paying the principal on the securities, provided that at least 3 years has elapsed since the date of the Riskless Principal Subsidiary's purchase (or sale) and the credit extension meets prudent and objective credit standards. (4) The bank holding company shall adopt appropriate procedures, including maintenance of necessary documentary records, to assure that any extension of credit by it or any of its subsidiaries to issuers of ineligible securities purchased (or sold) as riskless principal by Riskless Principal Subsidiary are on an arm's length basis for purposes other than payment of principal, interest or dividends on the issuer's ineligible securities being purchased (or sold) as riskless principal by Riskless Principal Subsidiary. These disclosures must be made before the bank holding company provides any riskless principal or advisory services to a customer, and the disclosure in clause (a) also must be made by the bank holding company in its customer account statements. The disclosures may be provided orally so long as written disclosures are provided to the customer immediately thereafter. In addition, Company and its affiliates will not share any confidential information concerning their respective customers without the consent of the customer. See 12 C.F.R. 225.25(b)(15)(ii). (5) The requirements relating to credit extensions to issuers noted in paragraphs above also shall apply to extensions of credit to parties that are the major users of projects that are financed by industrial revenue bonds. (6) The bank holding company's affiliated banks and thrifts may not express an opinion on the value or the advisability of the purchase or sale of ineligible securities that are purchased (or sold) as riskless principal by Riskless Principal Subsidiary unless the bank or thrift affiliate notifies the customer that Riskless Principal Subsidiary is purchasing (or selling) the security. (7) Neither the bank holding company nor its bank, thrift or trust or investment advisory subsidiaries shall purchase, as a trustee or in any other fiduciary capacity, for accounts over which they have investment discretion, ineligible securities that are purchased (or sold) as riskless principal by Riskless Principal Subsidiary unless such purchase is specifically authorized under the instrument creating the fiduciary relationship, by court order, or by the law of the jurisdiction under which the trust is administered. (8) Neither the bank holding company nor any of its subsidiaries shall purchase as principal ineligible securities that are sold as a riskless principal by Riskless Principal Subsidiary. 2 (9) The Riskless Principal Subsidiary may only purchase (or sell) as riskless principal ineligible securities issued Appendix B Bank holding companies are hereby relieved from the following Underwriting Conditions in connection with the conduct of riskless principal activities: (1) Neither the bank holding company nor any subsidiary shall directly or indirectly extend credit, issue or enter into a stand-by letter of credit, asset purchase agreement, indemnity, guarantee, insurance or other facility that might be viewed as enhancing the creditworthiness or marketability of ineligible securities purchased (or sold) as a riskless principal by Riskless Principal Subsidiary. 1 (2) Neither the bank holding company nor any subsidiary (other than the Riskless Principal Subsidiary) shall knowingly extend credit to a customer directly or indirectly secured by, or for the purpose of purchasing, any ineligible security that the Riskless Principal Subsidiary purchases (or sells) as a riskless principal. (3) Neither the bank holding company nor any of its subsidiaries may, directly or indirectly, extend credit to I. "Riskless Principal Subsidiary" refers to any nonbank subsidiary of a bank holding company authorized to engage in riskless principal activities under section 4(c)(8) of the BHC Act. 2. As noted above, a bank holding company may rely on the relief provided by this order only if the bank holding company conducts its riskless principal activities in accordance with the limitations set forth in Appendix A. These limitations prohibit a bank holding company subsidiary from engaging in riskless principal transactions on behalf of any foreign affiliate that engages in securities dealing activities outside the United States, or any U.S. affiliate that engages in bankineligible securities underwriting and dealing. In addition, these limitations prohibit a bank holding company subsidiary from purchasing or selling as riskless principal any bank-ineligible security that the subsidiary holds in its inventory. 762 Federal Reserve Bulletin • August 1996 by (or representing interests in, or secured by, obligations of) affiliates if the securities are: (a) Rated by an unaffiliated, nationally recognized statistical rating organization; (b) Issued or guaranteed by FNMA, FHLMC, or GNMA (or represent interests in securities issued or guaranteed by FNMA, FHLMC, or GNMA); or (c) Purchased from or sold to sophisticated institutions. The following limitations on the conduct of riskless principal activities are relieved only with respect to those bank holding company subsidiaries that engage in riskless principal and securities brokerage activities, but that do not engage in bank-ineligible securities underwriting and dealing or private placement activities. 3 (10) There will be no officer, director, or employee interlocks between Riskless Principal Subsidiary and any of the bank holding company's bank or thrift subsidiaries. The Riskless Principal Subsidiary will have separate offices from any affiliated bank or thrift. (11) The Riskless Principal Subsidiary will provide each of its customers with a special disclosure statement describing the difference between the Riskless Principal Subsidiary and its bank and thrift affiliates and pointing out that an affiliated bank or thrift could be a lender to an issuer and referring the customer to the disclosure documents for details. Riskless Principal Subsidiary also should disclose any material lending relationship between the issuer and a bank or lending affiliate of Company as required under the securities laws. 4 (12) No bank or thrift affiliate of a Riskless Principal Subsidiary will act as agent for, or engage in marketing activities on behalf of, the Riskless Principal Subsidiary. In this regard, prospectuses and sales literature relating to securities being purchased (or sold) by Riskless Principal Subsidiary as riskless principal may not be distributed by a bank or thrift affiliate, nor should any such literature be made available to the public at any offices of any such affiliate, unless specifically requested by a customer. (13) The bank holding company shall assure that no bank or thrift subsidiary shall, directly or indirectly, extend credit in any manner to a Riskless Principal Subsidiary or a subsidiary thereof; or issue a guarantee, acceptance, or letter of credit, including an endorsement or standby letter of credit, for the benefit of Riskless Principal Subsidiary or a subsidiary thereof. (14) No bank or thrift affiliate of bank holding company shall, directly or indirectly, for its own account, purchase financial assets of Riskless Principal Subsidiary or a subsidiary thereof or sell such assets to Riskless Principal 3. As discussed above, this order does not relieve a bank holding company authorized to engage in bank-ineligible securities underwriting and dealing or private placement activities from any of the conditions established by the Board with respect to the conduct of those activities, including any of the limitations that apply generally to the subsidiary conducting those activities. 4. The disclosures required to be made in the conduct of riskless principal activities are listed in Appendix A. Subsidiary or any subsidiary thereof. This limitation shall not apply to the purchase and sale of U.S. Treasury securities or direct obligations of the Canadian federal government that are not subject to repurchase or reverse repurchase agreements between Riskless Principal Subsidiary and its bank and thrift affiliates. Orders Issued Under Sections 3 and 4 of the Bank Holding Company Act Firstar Corporation Milwaukee, Wisconsin Firstar Corporation of Minnesota Bloomington, Minnesota Order Approving the Acquisition Companies of Bank Holding Firstar Corporation, Milwaukee, Wisconsin ( " F C M " ) , and its wholly owned subsidiary, Firstar Corporation of Minnesota, Bloomington, Minnesota (together, "Firstar"), both bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire Jacob Schmidt Company ("Jacob"), and its subsidiary, American Bancorporation, Inc. ("American"), 1 both in St. Paul, and thereby indirectly acquire American's subsidiary banks: American Bank, N.A. and American Commercial Bank, both in St. Paul; American Bank Lake City, Lake City; and American Bank Moorhead, Moorhead, all in Minnesota. 2 In addition, Firstar has 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 acquire all the voting shares of American's wholly owned nonbank subsidiaries. 3 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (61 Federal Register 13,496 (1996)). The time for filing 1. Jacob currently owns approximately 51 percent of the voting shares of American. Firstar has entered into agreements to purchase the remaining voting share interest in American from the other shareholders. 2. The Office of the Comptroller of the Currency ( " O C C " ) has approved Firstar's application under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c) (the Bank Merger Act), to merge American Bank and Commercial Bank with and into Firstar Bank of Minnesota, N.A., Minneapolis, Minnesota. Firstar intends to sell Lake City Bank and Moorhead Bank. 3. Firstar would acquire American Credit Corporation, St. Paul, Minnesota, and thereby engage in asset-based lending pursuant to section 225.25(b)(l)(iv) of Regulation Y (12 C.F.R. 225.25(b)(l)(iv)). In addition, Firstar would acquire Lake City Agency, Inc., Lake City, Minnesota, which engages in insurance agency activities pursuant to section 225.25(b)(8)(iv) of Regulation Y (12 C.F.R. 225.25(b)(8)(iv)). Firstar also would acquire two inactive nonbank subsidiaries of American, First Agency of Barnesville, Barnesville, and Glasser-American Mortgage Company, St. Paul, both in Minnesota, and has committed not to engage in activities through these subsidiaries without the prior approval of the Federal Reserve System. Legal Developments comments has expired, and the Board has considered this proposal and all comments received in light of the factors set forth in sections 3 and 4(c)(8) of the BHC Act. Firstar, with total consolidated assets of $19.2 billion, operates subsidiary banks in Arizona, Illinois, Iowa, Minnesota, and Wisconsin. 4 Firstar is the third largest banking or thrift organization ("depository institution") in Minnesota, controlling deposits of approximately $1.6 billion, representing approximately 3.2 percent of total deposits in depository institutions in the state. 5 American is the sixth largest depository institution in Minnesota, controlling deposits of $953 million, representing approximately 1.9 percent of total deposits in depository institutions in the state. On consummation of this proposal, Firstar would remain the third largest depository institution in Minnesota, controlling deposits of $2.5 billion, representing approximately 5.1 percent of total deposits in depository institutions in the state. Interstate Analysis Section 3(d) of the BHC Act, as amended by Section 101 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, allows the Board to approve an application by a bank holding company to acquire control of a bank located in a state other than the home state of such a bank holding company, if certain conditions are met. For purposes of the BHC Act, the home state of Firstar is Wisconsin, and Firstar would acquire banks in Minnesota. 6 The conditions for an interstate acquisition under section 3(d) are met in this case. 7 In view of all the facts of record, the Board is permitted to approve this proposal under section 3(d) of the BHC Act. Competitive Considerations Firstar and American compete directly in the MinneapolisSt. Paul, Minnesota banking market ("Minneapolis-St. Paul banking market"). 8 4. Asset data are as of December 31, 1995. 5. State deposit data are as of December 31, 1995. 6. Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 7. See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Firstar is adequately capitalized and adequately managed. American's banks have been in existence and continuously operated for the minimum period of time required under Minnesota law. In addition, upon consummation of this proposal, Firstar and its affiliates would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States and less than 30 percent of the total amount of deposits in Minnesota, as required by law. 8. The Minneapolis-St. Paul banking market is approximated by all of Anoka, Hennepin, Ramsey, Washington, Carver, Scott, and Dakota Counties in Minnesota; Lent, Chisago Lake, Shafer, Wyoming and Franconia townships in Chisago County, Minnesota; Blue Hill, Orrock, Livonia, and Big Lake Townships and the City of Elk River in Sherburn County, Minnesota; Monticello, Otsego, Bulfalo, Frankfort, 763 Firstar operates the third largest depository institution in the market, and controls deposits of approximately $1.6 billion, representing approximately 5.9 percent of total deposits in depository institutions in the market ("market deposits"). 9 American operates the fifth largest depository institution in the market, and controls deposits of approximately $778.5 million, representing approximately 2.9 percent of market deposits. On consummation of this proposal, Firstar would remain the third largest depository institution in the market, controlling deposits of $2.4 billion, representing approximately 8.8 percent of market deposits. The change in market concentration, as measured by the HerfindahlHirschman Index ("HHI"), would not exceed the threshold levels in the Department of Justice merger guidelines. 10 In addition, numerous competitors would remain in this market. Based on all the facts of record, the Board concludes that consummation of this proposal would not result in any significantly adverse effect on competition or concentration of banking resources in the Minneapolis-St.Paul banking market or any other relevant banking market. Other Factors Under the BHC Act The BHC Act also requires the Board to consider the convenience and needs of the community to be served, the financial and managerial resources and future prospects of the companies and banks involved, and certain other supervisory factors. In its consideration of the convenience and needs factor, the Board has carefully reviewed comments from the Fair Lending Coalition, Inc. ("Protestant"), which maintain that the closing of the Teutonia Avenue branch in Milwaukee by Firstar Bank Milwaukee, N.A., Milwaukee, Wisconsin ("Milwaukee Bank") in April 1996, adversely af- Rockford, and Franklin Townships in Wright County, Minnesota; Lanesburgh Township in Le Sueur County, Minnesota; and the Town of Hudson in St. Croix County, Wisconsin. 9. Market data are as of December 31, 1995. 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, significant competitors of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin 788 (1990); 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, First Hawaiian Inc., 77 Federal Reserve Bulletin 52 (1991). 10. On consummation of this proposal, the HHI would increase by 34 points to a level of 1866. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the post-merger HHI is above 1800 is considered to be highly concentrated. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by more than 200 points. The Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limited-purpose lenders and other non-depository financial entities. 764 Federal Reserve Bulletin • August 1996 fected access to banking services for African Americans and elderly persons residing in this low- to moderateincome area. Protestant also requests that the Board investigate whether the branch closing fostered racial and economic segregation in Milwaukee. The Board has considered these comments carefully in light of the limited scope of the Board's authority under the BHC Act and the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA") and all the facts of record, including the bank's "outstanding" rating at its most recent examination for performance under the CRA, as of October 1995, by its primary federal supervisor, the OCC ("OCC examination"), and the branch closing information filed by Milwaukee Bank with the OCC under the Joint Agency Policy Statement on Branch Closings and section 42 of the Federal Deposit Insurance Act (12 U.S.C. § 1831r-l) ("FDIC Act"). The OCC examination found that the branch closing policy for Milwaukee Bank was satisfactory and noted no materially adverse effects from branch closings in low- to moderate-income neighborhoods during the examination period. The branch closing policy required the bank to study the economic impact of any proposed branch closing on the community served by the branch, to solicit input from the community, and to consider whether alternative financial facilities were available to the affected customers before deciding to close the Teutonia Avenue branch. Firstar has indicated, moreover, that this branch was closed because the bank's lease was not renewed. Marketing studies conducted by Firstar over a five-month period showed that 80 percent of the customers that used the Teutonia Avenue branch also used one or more of the bank's other branches, and 64 percent of the branch's customers that responded to a telephone survey stated that another branch of Firstar could conveniently serve their banking needs. Firstar has three branches, and seven other depository institution maintain branches, within three miles of the Teutonia Avenue branch. Firstar does not propose to close any branches of the depository institution subsidiaries of American in connection with this proposal. Based on all the facts of record, including the comments by Protestant, and for the reasons discussed above, the Board concludes that convenience and needs considerations are consistent with approval. For these reasons, the Board also concludes that the facts of record do not support Protestant's request to delay action on this application in order to conduct a special investigation. In light of all the facts of record, the Board also concludes that the financial and managerial resources and future prospects of Firstar and Jacob, and their respective subsidiaries, are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act. Firstar also has requested Board approval, pursuant to section 4(c)(8) of the BHC Act, to acquire the nonbanking subsidiaries of American. The Board previously has determined by regulation or order that these activities are closely related to banking for purposes of section 4(c)(8) of the BHC Act. Firstar has committed that it will conduct these activities in accordance with the Board's regulations and orders approving these activities for bank holding companies. In order to approve this proposal, the Board also must determine that the performance of the proposed nonbanking activities "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests or unsound banking practices," 12 U.S.C. § 1843(c)(8). In every case under section 4 of the BHC Act, the Board considers the financial condition and resources of the applicant and its subsidiaries and the effect of the transaction on these resources. 11 Based on all the facts of record, the Board has concluded that financial and managerial considerations are consistent with approval. The Board also concludes that this proposal would enable Firstar to provide greater convenience and improved service to Firstar's customers and to customers of American's nonbanking subsidiaries. The record in this case indicates that there are numerous providers of these nonbanking services, and there is no evidence in the record to indicate that consummation of this proposal is likely to result in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking 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 of the notice to acquire American's nonbanking subsidiaries. Conclusion Based on the foregoing, including the commitments made to the Board by Firstar in connection with this application and notice, and in light of all the facts of record, the Board has determined that the application and notice should be, and hereby are, approved. 12 The Board's approval is specif11. 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). 12. Protestant requests that the Board hold a public hearing or public meeting on the adverse effects of closing the Teutonia Avenue branch. 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. In this case, the Board has not received such a recommendation from any state or federal supervisory authority. Under its rules, the Board may, in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has carefully considered Protestant's request in light of all the facts of record. In the Board's view, Protestant has had ample opportunity to submit its views, and has, in fact, submitted materials that have been considered by the Board in acting on this application. Protestant's request fails to demonstrate why its substantial written submissions do not adequately present its allegations or Legal Developments ically conditioned on compliance by Firstar with all the commitments made in connection with the proposal. The Board's determinations on the proposed nonbanking activities also are subject to all the conditions set forth in Regulation Y, including those in sections 225.7 and 225.23(b)(3) of Regulation Y (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 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, 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 acquisition of American's subsidiary banks shall not be consummated before the fifteenth calendar day following the effective date of this order, and this proposal 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 Chicago, acting pursuant to delegated authority. By order of the Board of Governors, effective June 24, 1996. Voting for this action: Chairman Greenspan and Governors Kelley, Lindsey, Phillips, and Yellen. Abstaining from this action: Governor Meyer. WILLIAM W . W I L E S Secretary of the Board ORDERS ISSUED UNDER BANK MERGER ACT West One Bank, Idaho Boise, Idaho Order Approving the Merger of Banks and of Bank Branches Establishment West One Bank, Idaho, Boise ("West One"), a state member bank, has requested the Board's approval under section 18(c) of the Federal Deposit Insurance Act why a public hearing or meeting is otherwise warranted in this case. Protestant participated in several meetings that were held by Firstar on the closing of the Teutonia Avenue branch. In addition, section 42 of the FDIC Act also provides a mechanism for interested persons to request a public meeting regarding a branch closing at the time the closing is announced and Protestant did not avail himself of this opportunity. After a careful review of all the facts of record, the Board has concluded that Protestant disputes the weight that should be accorded to, and the conclusions that may be drawn from, the facts of record, or disputes facts that are not material to the Board's decision. For these reasons, and 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 the application, and is not warranted in this case. Accordingly, Protestant's request for a public hearing or meeting is denied. 765 (12 U.S.C. § 1828(c)) (the "Bank Merger Act") to merge with U. S. Bank of Idaho, National Association, Coeur D'Alene, both in Idaho ("U.S. Bank"), with West One surviving the merger. West One also has requested the Board's approval under section 9 of the Federal Reserve Act (12 U.S.C. § 321) to establish branches at the current locations of the U.S. Bank branches. 1 Notice of the proposal, affording interested persons an opportunity to submit comments, has been given in accordance with the Bank Merger Act and the Board's Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effects of the merger were requested from the United States Attorney General, the Office of the Comptroller of the Currency ("OCC"), and the Federal Deposit Insurance Corporation. 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 section 9 of the Federal Reserve Act. West One and U.S. Bank are wholly owned subsidiaries of U. S. Bancorp, Portland, Oregon ("U.S. Bancorp"). U.S. Bancorp, with total consolidated assets of $31.9 billion, is the largest commercial banking organization in Idaho, controlling deposits of approximately $3.4 billion, representing 37.8 percent of the total deposits in commercial banking organizations in Idaho. 2 The Bank Merger Act prohibits the Board from approving a proposal under the Act if the proposal would result in a monopoly or if the proposal would substantially lessen competition in any relevant banking market unless such anticompetitive effects are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. The proposal represents a corporate reorganization of U.S. Bancorp's existing banking operations in Idaho. Based on all the facts of record, consummation of the proposal would not have any significantly adverse effects on competition or the concentration of banking resources in any relevant banking market. The Bank Merger Act also requires the Board to consider the financial and managerial resources and future prospects of the banks involved. The Board has carefully reviewed these factors in light of all the facts of record, including comments received from several individuals ("Commenters"), and relevant reports of examination and other supervisory information from federal supervisory agencies. Based on all the facts of record, the Board concludes that these factors are consistent with approval of the proposal. 3 Considerations relating to the convenience 1. The locations of the branches that West One proposes to establish are listed in the Appendix. 2. Asset data are as of December 31, 1995. Deposit data are as of June 30, 1995. 3. Commenters maintain that their pending legal actions against West One have not been properly disclosed in the proposal or to shareholders, and that their claims adversely affect the financial resources of the bank. These lawsuits are based on allegations that relate to Commenters' loan transactions with West One that resulted in 766 Federal Reserve Bulletin • August 1996 and needs of the community, also required to be reviewed under the Bank Merger Act, are consistent with approval. The Board also has considered the factors it is required to consider when reviewing a proposal to establish branches under section 9 of the Federal Reserve Act (12 U.S.C. § 321 et seq.), and has determined that those factors are consistent with approval of the establishment of West One branches at the present sites of the U.S. Bank branch offices. Based on the foregoing and all the facts of record, the Board has determined that these applications should be, and hereby are, approved. 4 The Board's approval of the proposal is conditioned on compliance with the commitments made in connection with these applications. For purposes of this action, the commitments and conditions relied on in reaching this decision are both conditions imposed in writing by the Board and, as such, may be enforced in proceedings under applicable law. The merger of U.S. Bank and West One may not be consummated before the fifteenth calendar day following foreclosure proceedings by the bank more than ten years ago. The Board notes that Commenters litigated their claims in courts that had the authority to provide Commenters with appropriate remedies, if improper actions could have been substantiated. Trial and appellate courts have not granted relief to Commenters. U.S. Bancorp, the only shareholder of West One, is aware of these legal actions. The Board has considered the effect of these claims on the financial resources of West One in light of reports of examination and other information about the financial strength of the bank and its parent holding company. One Commenter also contends that from 1984 through 1987, West One misreported its allowance for loan and lease losses. West One was a nationally chartered institution before it became a state member bank in 1992. The Board has consulted with the OCC, the primary federal supervisor of West One at that time, and has provided a copy of Commenter's allegations to the OCC. In addition, the Board has considered West One's record for accuracy in its reports since it became a state member bank. The Board also notes that the same allegations of misreporting by West One were considered by the Securities and Exchange Commission ( " S E C " ) in connection with U.S. Bancorp's acquisition of West One Bancorp in 1995, and the SEC determined that the allegations did not warrant investigation under the securities laws. 4. Commenters have requested that the Board hold a public hearing or meeting on issues raised by their comments. Neither the Bank Merger Act nor section 9 of the Federal Reserve Act provide for public hearings or meetings on an application. Under the Board's Rules of Procedure, however, 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). The Board notes that Commenters have had ample opportunity to submit their views and have, in fact, submitted comments on these applications. The requests fail to demonstrate why the written submissions do not adequately present commenters' allegations or why a public hearing or meeting is otherwise warranted in the case. For these reasons, and 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 the proposal and are not warranted in this case. Accordingly, Commenters' request for a public hearing or meeting is denied. Commenters have also requested that the Board delay acting on the proposal until their allegations are investigated. Based on all the facts of record, and for the reasons previously discussed, the Board concludes that a delay is not warranted and that the record is sufficient to act on the proposal. the effective date of this order, and this proposal may not be consummated 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 San Francisco, acting pursuant to delegated authority. By order of the Board of Governors, effective June 17, 1996. Voting for this action: Governors Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Chairman Pro Tempore Greenspan. JENNIFER J . J O H N S O N Deputy Secretary of the Board Appendix Locations of branches of U.S. Bank to be established West One: Coeur D'Alene 301 North 3rd Street Coeur D'Alene, Idaho 83816 Eight & Bannock Branch 802 West Bannock Boise, Idaho 83702 Bryden Avenue Financial (Supermarket location) 332 Thain Road Lewiston, Idaho 83501 Silver Lake Mall Branch 123 West Hanley Avenue Coeur D'Alene, Idaho 83814 Meridian Branch 132 East Fairview Meridian, Idaho 83642 Post Falls Branch 709 East Seltice Way Post Falls, Idaho 83854 Caldwell Branch 2615 East Cleveland Blvd. Caldwell, Idaho 83602 Appleway Financial Market West 225 Apple Way Coeur D'Alene, Idaho 83814 Westpark Towne Plaza Branch 675 North Milwaukee Avenue Boise, Idaho 83704 Vista Avenue Branch 1103 Vista Avenue Boise, Idaho 93705 by Legal Developments Colverdale McMillan Branch 12195 West McMillan Road Boise, Idaho 83704 ORDERS ISSUED UNDER FEDERAL RESERVE ACT Iowa State Bank Hull, Iowa Order Approving Establishment of a Branch Iowa State Bank, Hull, Iowa ("Bank"), a state member bank, has requested the Board's approval under section 9 of the Federal Reserve Act (12 U.S.C. § 321 et seq.) to establish a branch at 1101 Main Street, Hull, Iowa. 1 Notice of the proposal, affording interested persons an opportunity to submit comments, has been published in accordance with the Board's Rules of Procedure. 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 9 of the Federal Reserve Act. Bank, with total assets of $33.9 million, 2 is a wholly owned subsidiary of Vogel Bancshares, Inc., Orange City, Iowa ("Vogel Bancshares"). Bank operates in the Sioux County, Iowa, banking market, which includes the towns of Hull and Sheldon. 3 The Board has carefully reviewed the factors it is required to consider in proposals to establish a branch under the Federal Reserve Act. 4 Based on all the facts of record, the Board concludes that these factors, including the financial condition of Bank, the general character of its management, and the proposed exercise of corporate powers, are consistent with approval and the purposes of section 9 of the Federal Reserve Act. 5 The Board also concludes that Bank's efforts to meet the credit needs of its entire commu- 1. Bank proposes to relocate its main office from Hull to Sheldon, Iowa, 16 miles away, and to retain the Main Street location in Hull as a full-service branch. The Iowa Superintendent of Banking has approved the proposed relocation to Sheldon and the establishment of a branch in Hull. 2. Asset data are as of March 31, 1996. 3. The banking market is approximated by Sioux County and Floyd, Carroll, Baker, and Caledonia townships in O'Brien County, Iowa. 4. See 12 U.S.C. § 322. 5. The Board has carefully considered comments from two banks in Sheldon contending that the town is unable to support an additional competitor and that Bank's proposal would adversely affect the safety and soundness of the commercial banks that currently serve the town. The Board notes that there is no evidence of record to indicate that this proposal would have an adverse effect on the safety and soundness of Bank or Vogel Bancshares. In addition, the number of competitors in the Sioux County banking market would remain the same, and the residents of Sheldon would have the benefit of an additional provider of banking services. The increase in competition under these circumstances is a positive aspect of the proposal. Based on all the facts of record, the Board concludes that these comments do not raise adverse considerations under the statutory factors the Board is required to consider under the Federal Reserve Act. 767 nity, including low- and moderate-income neighborhoods, are consistent with approval. 6 Based on the foregoing and all other facts of record, the Board has determined that this notice should be, and hereby is, approved. The Board's approval is specifically conditioned on Bank's compliance with all commitments made in connection with the application. 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. The Hull office shall be in operation as a branch no later than one year after the effective date of this order, unless such period is extended for good cause shown by the Board or by the Federal Reserve Bank of Chicago, acting pursuant to delegated authority. By order of the Board of Governors, effective June 24, 1996. Voting for this action: Chairman Greenspan and Governors Kelley, Lindsey, Phillips and Yellen. Abstaining from this action: Governor Meyer. WILLIAM W. WILES Secretary of the Board Korea Long Term Credit Bank Seoul, Korea Order Approving Establishment of a Branch Korea Long Term Credit Bank, Seoul, Korea ("Bank"), a foreign bank within the meaning of the International Banking Act (the "IBA"), has applied under section 7(d) of the IBA (12 U.S.C. § 3105(d)) to establish a state-licensed 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, February 28, 1996). The time for filing comments has expired, and all comments have been considered. Bank, with assets of $27.5 billion, 1 is primarily engaged in wholesale banking, providing a broad range of financial services to private business enterprises. Shares of Bank are widely held, and no individual shareholder owns more than 10 percent of any class of the voting securities of Bank. In Korea, Bank operates 34 branches and has seven nonbank subsidiaries involved in activities such as investment bank- 6. Bank received a "satisfactory" rating from the Federal Reserve Bank of Chicago under the Community Reinvestment Act in its most recent examination, as of July 25, 1995. 1. Data are as of December 31, 1995, unless otherwise noted. 768 Federal Reserve Bulletin • August 1996 ing, credit card operations, consumer lending, factoring, equipment rental, and investment management and advisory services. Bank's foreign operations include bank subsidiaries in London and Hong Kong, branches in Tokyo and the Cayman Islands, and representative offices in Hong Kong, Singapore, New York, and China. Bank proposes to upgrade its New York representative office to a state-licensed branch that would engage in a variety of activities, including trade finance, lending, deposit-taking, and fund management. Bank does not engage directly or indirectly in any nonbanking activities in the United States and would be a qualifying banking organization within the meaning of Regulation K (12 C.F.R. 211.23) after establishing the proposed branch. Bank has received preliminary approval from Korea's Ministry of Finance and Economy (the "Ministry") to establish the proposed branch, subject to approval of the branch by the relevant U.S. authorities. 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 assess the application adequately. The Board must also 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); 12 C.F.R. 211.24(c)(1)). The Board may also take into account additional standards set forth in the IBA and Regulation K (12 U.S.C. § 3105(d)(3)(4); 12 C.F.R. 211.24(c)). Bank engages directly in the business of banking outside of the United States through its banking operations in Korea. 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 bank's worldwide operations, including the relationship of the bank to any affiliates, to assess the overall financial condition of the bank and its compliance with law and regulation. 2 In making its determination 2. 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 under this standard, the Board has considered the following information. Bank is licensed in Korea under the Long Term Credit Bank Law of 1980 and is currently the only long-term credit bank in Korea. The Long Term Credit Bank Law grants the Ministry primary supervisory authority over long-term credit banks and sole authority in Korea to grant a license to, or to authorize the establishment of a branch of, a long-term credit bank. The Ministry cooperates with the Office of Bank Supervision and Examination of the Bank of Korea (the " O B S E " ) in supervising Bank, in recognition of the OBSE's expertise in banking supervisory matters arising from its responsibilities in relation to commercial banks. 3 Bank is required to submit a number of periodic reports to the Ministry and the OBSE, and the Ministry may request any other information concerning Bank's business that it deems appropriate. Bank must provide the Ministry with annual consolidated financial statements covering its worldwide operations. Other required reports include annual risk-based capital reports, semi-annual bank-only financial statements, quarterly statements on foreign exchange dealings, and monthly reports covering topics such as classification of unsecured loans, funding, and investment and trust activities. The Ministry reviews the reports submitted directly by Bank or indirectly through the OBSE and is kept apprised of Bank's operations through regular and frequent contacts with Bank's senior management. In addition, the Ministry conducts regular and special on-site examinations of Bank, often in conjunction with the OBSE. The Ministry's general examination policy is to conduct on-site examinations of Bank once a year, although the Ministry may waive the on-site examination for a given year. Each annual on-site examination includes the head office and approximately 10 percent of Bank's randomly selected branches. These examinations generally cover matters such as capital adequacy, asset quality, compliance with applicable law, and the adequacy of internal controls and record-keeping practices. Whenever it is deemed necessary, the Ministry also conducts special onsite examinations of Bank regarding specific matters or specific branch offices. The Ministry's supervisory authority extends to all nonbank business conducted by Bank through its domestic subsidiaries. Several of these subsidiaries also are subject (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. 3. Commercial banks are licensed in Korea under the General Banking Act rather than the Long Term Credit Bank Law and are subject to the primary supervisory authority of the OBSE. The Board has previously determined, in connection with applications by Korean commercial banks, that these banks were subject to home country supervision on a comprehensive, consolidated basis. See Donghwa Bank, 81 Federal Reserve Bulletin 744 (1995); Cho Hung Bank, 81 Federal Reserve Bulletin 475 (1995); KorAm Bank, 80 Federal Reserve Bulletin 184 (1994). Legal Developments to regulation by other Korean governmental agencies. In addition, Bank is prohibited by law from making a loan in an amount equal to or greater than 25 percent or more of its capital and surplus to any single person or entity. The Ministry monitors Bank's proposals regarding loans to affiliates. Under Korea's Foreign Exchange Control Law, Bank's international operations are supervised by the OBSE pursuant to authority delegated to it by the Ministry. The Ministry may obtain supervisory information from the other Korean supervisory authorities, which directly oversee Bank's domestic affiliates. The Ministry has various enforcement powers over Bank. The Ministry may suspend all or part of Bank's business if it finds that Bank has violated any provision of applicable Korean law or has engaged in acts contrary to the public interest. In addition, an officer or director of Bank who knowingly submits false information in reports to the Ministry or who hinders the Ministry's supervision of Bank may be subject to fine or imprisonment. 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 taken into account the additional standards set forth in section 7 of the IBA and in Regulation K. (See 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. 211.24(c)(2)). As noted above, Bank has received preliminary authority from the Ministry to establish the state-licensed branch, subject to approval of the proposed branch by the relevant U.S. authorities. Bank must comply with risk-based capital standards adopted by Korea. 4 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 are also 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 applicable U.S. law, as well as controls and procedures for its worldwide operations generally. Bank has committed to make available to the Board such information on the operations or activities of Bank and any of 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. The Board has reviewed the restrictions on disclosure in Korea and has communicated with the appropriate authorities regarding access to information. To the extent that the provision of such information may be pro- 4. As of January 1, 1996, all Korean banking institutions, including Bank, have been required to maintain a capital adequacy ratio of at least 8 percent in conformance with the minimum standards required by the Basle Capital Accord. Bank is currently in full compliance with these standards. 769 hibited or impeded 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 addition, subject to certain conditions, the Ministry and the OBSE 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 has concluded 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 branch should be, and hereby is, approved. 5 Should any restrictions on access to information on the operations or activities of Bank or any of its affiliates subsequently interfere with the Board's ability to determine the safety and soundness of Bank's U.S. operations or the compliance by Bank or any of its affiliates with applicable federal law, the Board may require termination of any of Bank's direct or indirect activities in the United States. Approval of this application also is conditioned specifically on compliance by Bank with the commitments made in connection with this application and with the conditions in this order. The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision and may be enforced in proceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 against Bank, its offices, or its affiliates. By order of the Board of Governors, effective June 24, 1996. Voting for this action: Chairman Greenspan and Governors Kelley, Lindsey, Phillips, and Yellen. Abstaining from this action: Governor Meyer. WILLIAM W . W I L E S Secretary of the Board ORDERS ISSUED UNDER INTERNATIONAL BANKING ACT National Bank of Canada Montreal, Canada Order Approving Establishment of Representative Offices National Bank of Canada, Montreal, Canada ("Bank"), 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 of- 5. 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. 770 Federal Reserve Bulletin • August 1996 fices in Denver, Colorado; Boca Raton, Florida; Baltimore, Maryland; Boston, Massachusetts; Southfield, Michigan; Charlotte, North Carolina; Cincinnati, Ohio; Cleveland, Ohio; Pittsburgh, Pennsylvania; Memphis, Tennessee; and Richmond, Virginia. 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 representative office in the United States. Notice of the application, affording interested persons an opportunity to submit comments, has been published in the following newspapers of general circulation: The Denver Post, February 26, 1996; The Miami Herald, February 26, 1996; The Baltimore Sun, February 26, 1996; The Boston Globe, February 26, 1996; The Detroit Free Press, February 26, 1996; The Charlotte Observer, February 26, 1996; The Cincinnati Enquirer, February 26, 1996; The Cleveland Plain Dealer, February 26, 1996; The Pittsburgh Post-Gazette, February 26, 1996; The Memphis Commercial Appeal, February 26, 1996; and The Richmond TimesDispatch, February 26, 1996. The time for filing comments has expired, and all comments have been considered. Bank, with total consolidated assets of approximately $36 billion, 1 is the sixth largest bank in Canada, providing wholesale and retail financial services to customers throughout Canada. The shares of Bank are publicly traded and widely held, with no shareholders owning more than 10 percent of Bank. Bank operates 644 domestic branches and 14 international offices, including branches, representative offices and banking and financial subsidiaries in Europe, Asia, and the Caribbean. In the United States, Bank operates branches in New York, New York, and Chicago, Illinois; agencies in Atlanta, Georgia, and Los Angeles, California; representative offices in Buffalo, New York, and Dallas, Texas; and a regional administrative office in New York, New York. Bank also wholly owns a savings bank subsidiary in Pompano Beach, Florida, and a nonbanking subsidiary engaged in permissible activities. 2 Bank's primary purpose for establishing the proposed representative offices is to market the products and services of Bank, solicit loan business for Bank, and serve as a liaison between the head office in Montreal and potential and existing customers in the states served by the representative offices. The proposed representative offices would not solicit deposits for Bank; would not have authority to make any business decisions for Bank; and would not have authority to contract in the name of Bank. In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board shall take into account whether the foreign bank engages 1. Asset data are as of October 31, 1995. 2. National Canada Finance Corporation ( " N C F C " ) , New York, New York, which engages in asset-based lending to middle market companies, operates 13 offices in the United States. The proposed representative offices would share premises with NCFC. Bank has stated that the proposed representative offices would not represent nor provide services to NCFC. directly in the business of banking outside of the United States and has furnished to the Board 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). 3 The Board may also take into account additional 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 supervised and regulated by the Office of the Superintendent of Financial Institutions ("OSFI"). The OSFI is responsible for the prudential supervision and regulation of federally regulated financial institutions. The Board has previously determined, in connection with an application involving another Canadian bank, Bank of Montreal, Montreal, Canada ("BOM"), that BOM was subject to home country supervision on a consolidated basis. 4 Bank is supervised by the OSFI on the same terms and conditions as BOM. 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 also has 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)). The OSFI has approved the establishment of the proposed representative offices. With respect to the financial and managerial resources of Bank, 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 has also 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 also has established controls and procedures for the proposed representative offices to ensure compliance with U.S. law. 3. 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. 4. See Bank of Montreal, 80 Federal Reserve Bulletin 925 (1994). Legal Developments Finally, with respect to access to information about Bank's operations, 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 to 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 BHC Act, 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 to obtain any necessary consents or waivers that might be required from third parties for disclosure. In addition, subject to certain conditions, the OSFI 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 the representative offices 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 APPLICATIONS APPROVED By the Secretary UNDER BANK HOLDING COMPANY 771 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 the application, and with the conditions in this order. 5 The commitments and conditions referred to above are conditions imposed in writing by the Board in connection with its decision, and may be enforced in proceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847 against Bank, its offices, and its affiliates. By order of the Board of Governors, effective June 10, 1996. Voting for this action: Chairman Pro Tempore Greenspan and Governors Lindsey, Phillips, and Yellen. Absent and not voting: Governor Kelley. JENNIFER J . JOHNSON Deputy Secretary of the Board 5. The Board's authority to approve the establishment of the proposed representative office parallels the continuing authority of the various state banking departments to license offices of foreign banks. The Board's approval of this application does not supplant the authority of these states, and their agents, the state banking departments, to license the proposed representative offices of Bank in accordance with any terms or conditions that these states may impose. ACT 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 Boatmen's Bancshares, Inc., St. Louis, Missouri Canadian Bancshares, Inc., Canadian, Texas First State Bank of Canadian, Canadian, Texas Union National Bancorp, Liberty, Indiana The Union County National Bank of Liberty, Liberty, Indiana Boulder Bancorporation, Boulder, Colorado The Bank of Boulder, Boulder, Colorado Twentieth Bancorp, Inc., Huntington, West Virginia June 5, 1996 First Merchants Corporation, Muncie, Indiana First National of Nebraska, Inc. Omaha, Nebraska First National of Colorado, Omaha, Nebraska Horizon Bancorp, Inc., Beckley, West Virginia June 11, 1996 June 21, 1996 June 28, 1996 772 Federal Reserve Bulletin • August 1996 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 Acadiana Bancshares, Inc., Lafayette, Louisiana Associated Banc-Corp., Green Bay, Wisconsin Associated Illinois Banc-Corp., Chicago, Illinois LBA Savings Bank, Lafayette, Louisiana Mid-America National Bancorp, Inc., Chicago, Illinois Mid-America National Bank of Chicago, Chicago, Illinois The Middle Tennessee Bank, Columbia, Tennessee Owen-Curtiss State Bank, Owen, Wisconsin Atlanta May 23, 1996 Chicago May 23, 1996 Atlanta June 7, 1996 Commercial Bancorp of Georgia, Inc., Lawrenceville, Georgia Commercial Bank of Georgia, Lawrenceville, Georgia Southern Banking Corporation, Orlando, Florida Southern Bank of Central Florida, Altamonte Springs, Florida Klickitat Valley Bank, Goldendale, Washington Commerce Bank of Virginia, Richmond, Virginia Atlanta May 23, 1996 Atlanta May 31, 1996 San Francisco May 29, 1996 Richmond June 4, 1996 Community Bank Delavan, Delavan, Wisconsin Community State Bank, Algoma, Wisconsin First Community Bank, Orange City, Florida Chicago May 29, 1996 Chicago June 5, 1996 Atlanta June 7, 1996 ANB Financial Corporation, Kennewick, Washington National Bank of York County, Rock Hill, South Carolina The First National Bank of Christiansburg, Christiansburg, Virginia Fort Brooke Bank, Brandon, Florida Jackson Bancorporation, Inc., Fairmont, Minnesota Bank Midwest, Minnesota Iowa, N.A., Fairmont, Minnesota Sheridan State Bank, Sheridan, Illinois San Francisco June 17, 1996 Richmond June 14, 1996 Richmond May 29, 1996 Atlanta June 6, 1996 Chicago June 18, 1996 Chicago June 19, 1996 Brookwood Group, L.R, Columbia, Tennessee Central Wisconsin Bancorporation, Inc., Colby, Wisconsin The Colonial BancGroup, Inc., Montgomery, Alabama The Colonial BancGroup, Inc., Montgomery, Alabama Columbia Bancorp, The Dalles, Oregon Community Bankshares Incorporated, Petersburg, Virginia Delavan Bancshares, Inc., Delavan, Wisconsin F&M Bancorporation, Kaukauna, Wisconsin First Community Bank Holding Corporation, Orange City, Florida First Hawaiian, Inc., Honolulu, Hawaii First National Corporation, Orangeburg, South Carolina FNB Corporation, Christiansburg, Virginia Fort Brooke Bancorporation, Brandon, Florida Goodenow Bancorporation, Okoboji, Iowa Granville Bancshares, Inc., Granville, Illinois Chicago June 4, 1996 Legal Developments Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date Hills Bancorporation, Hills, Iowa Alliance Bancorporation, Lisbon, Iowa Trimpe's, Inc., Lisbon, Iowa Lisbon Bank and Trust Company, Lisbon, Iowa Horizon Bancorp, Michigan City, Indiana Chicago June 6, 1996 Chicago June 14, 1996 New York June 7, 1996 Atlanta May 30, 1996 Atlanta May 30, 1996 Kansas City June 18, 1996 Atlanta May 23, 1996 Dallas May 30, 1996 Dallas May 30, 1996 Palm Beach National Bank and Trust Company, North Palm Beach, Florida First McKinney Bancshares, Inc., McKinney, Texas First Bank, McKinney, Texas Prairieland Bancorp, Inc., Bushnell, Illinois Atlanta June 19, 1996 Dallas May 30, 1996 Chicago June 13, 1996 Farmers Deposit Bancorp, Eminence, Kentucky CitNat Bancorp, Urbana, Ohio Citizens National Bank of Urbana, Urbana, Ohio Port Neches Bancshares, Inc., Port Neches, Texas Cleveland June 6, 1996 Cleveland May 30, 1996 Dallas May 29, 1996 Horizon Bancorp Employee Stock Ownership Plan, Michigan City, Indiana HUBCO, Inc., Mahwah, New Jersey Independent Bancshares, Inc., Powder Springs, Georgia Key Florida Bancorp, Inc., Bradenton, Florida Lindoe, Inc., Ordway, Colorado Newnan Holdings, Inc., Newnan, Georgia Outsource Capital Group, Inc., Lubbock, Texas Outsource Delaware Capital Group, Inc., Dover, Delaware Palm Beach National Holding Company, North Palm Beach, Florida Piano Bancshares, Inc., Piano, Texas Piano Bancshares of Delaware, Inc.. Dover, Delaware Prairieland Employees Stock Ownership Plan, Bushnell, Illinois Premier Financial Bancorp, Inc., Georgetown, Kentucky Security Banc Corporation, Springfield, Ohio Southeast Texas Bancshares, Inc., Beaumont, Texas Lafayette American Bank and Trust Company, Bridgeport, Connecticut Independent Bank & Trust Company, Powder Springs, Georgia Liberty National Bank, Bradenton, Florida Pueblo Bancorporation, Inc., Pueblo, Colorado Southside Financial Group, Inc., Fayetteville, Georgia Citizens Bank & Trust of Fayette County, Fayetteville, Georgia Outsource Delaware Capital Group, Inc., Dover, Delaware First Bank & Trust Company, White Deer, Texas First Bank & Trust Company, White Deer, Texas 773 774 Federal Reserve Bulletin • August 1996 Section 3—Continued Applicant(s) Bank(s) Reserve Bank Effective Date State National Bancshares, Inc. Lubbock, Texas State National Bancshares of Delaware, Inc., Dover, Delaware State National Bank of West Texas, Lubbock, Texas State National Bank of West Texas, Lubbock, Texas Dallas June 14, 1996 Dallas June 14, 1996 Comerica Bank-Illinois, Franklin Park, Illinois Chicago May 29, 1996 Gateway State Bank, Clinton, Iowa Savanna Bancorp, Inc., Savanna, Illinois Savanna State Bank, Savanna, Illinois East Des Moines National Bank, Des Moines, Iowa Vancouver Bancorp, Vancouver, Washington Hartford-Carlisle Savings Bank, Carlisle, Iowa XIT Delaware, Inc., Dover, Delaware Security State Bank, Littlefield, Texas Security State Bank, Littlefield, Texas Chicago June 6, 1996 Chicago June 4, 1996 San Francisco May 22, 1996 Chicago May 31, 1996 Dallas June 12, 1996 Dallas June 12, 1996 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Anita Bancorporation, Atlantic, Iowa The Bank of Nova Scotia, Toronto, Ontario, Canada Barnett Banks, Inc., Jacksonville, Florida To engage in making and servicing loans Scotia Capital Markets (USA) Inc., New York, New York Barnett Community Development Corporation, Jacksonville, Florida To engage in making and servicing loans Chicago May 29, 1996 New York June 11, 1996 Atlanta June 7, 1996 Chicago May 23, 1996 State National Bancshares of Delaware, Inc., Dover, Delaware 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 ABN AMRO North America, Inc., Chicago, Illinois Thomson Investment Company, Inc., Savanna, Illinois Van Diest Investment Company, Ankeny, Iowa West Coast Bancorp, Lake Oswego, Oregon Wildcat, Inc., Cedar Rapids, Iowa XIT Bancshares, Inc., Littlefield, Texas XIT Delaware, Inc., Dover, Delaware Section 4 Boscobel Bancorp, Inc., Boscobel, Wisconsin Legal Developments Section 4—Continued Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Community Bancshares, Inc., Joseph, Oregon Community Bank System, Inc., Dewitt, New York D & D Bancshares, Inc., Mount Auburn, Iowa HSBC Holdings pic, London, England HSBC Holdings BV, Amsterdam, The Netherlands Newnan Holdings, Inc., Newnan, Georgia Norwest Corporation, Minneapolis, Minnesota Norwest Financial Services, Inc., Des Moines, Iowa Norwest Corporation, Minneapolis, Minnesota Outsource Capital Group, Inc., Lubbock, Texas Outsource Delaware Capital Group, Inc., Dover, Delaware Tattnall Bancshares, Inc., Reidsville, Georgia VCR Bancorporation Ltd., Carlisle, Iowa Citizens Title and Escrow Service, Inc., Enterprise, Oregon Mayer Management Co., Inc., Utica, New York To engage de novo in making and servicing loans HSBC Futures, Inc., New York, New York San Francisco June 12, 1996 New York June 4, 1996 Chicago May 24, 1996 New York June 7, 1996 Atlanta May 23, 1996 Minneapolis May 23, 1996 Real Estate Financial, Palm Harbor, Florida Outsource Lease, Inc., Lubbock, Texas Rail Mortgage Corporation, Lubbock, Texas Minneapolis June 14, 1996 Dallas May 30, 1996 Reidsville Insurance Agency, Inc., Reidsville, Georgia To engage de novo in the making and servicing of loans Atlanta June 18, 1996 Chicago June 7, 1996 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date Center Bancorp, Inc., Union, New Jersey Union Center Interim National Bank, Union, New Jersey Lehigh Savings Bank, S.L.A., Union, New Jersey Northern Illinois Financial Corporation, Wauconda, Illinois Premier Insurance Services, Inc., Warren, Illinois New York May 29, 1996 Chicago May 24, 1996 To engage in operating a savings association Aman Collection Service, Inc., Aberdeen, South Dakota Sections 3 and 4 Grand Premier Financial, Inc., Wauconda, Illinois 775 776 Federal Reserve Bulletin • August 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 Adams Bank & Trust, Ogallala, Nebraska Adams Savings & Loan Association of Chappell, Chappell, Nebraska The Bank, Manawa, Wisconsin Essex Savings Bank, F.S.B., Virginia Beach, Virginia Household Bank, f.s.b., Prospect Heights, Illinois Kansas City May 29, 1996 Chicago June 12, 1996 Richmond May 30, 1996 Chicago May 29, 1996 Baylake Bank, Sturgeon Bay, Wisconsin Centura Bank, Rocky Mount, North Carolina Harris Trust and Savings Bank, Chicago, Illinois PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Federal Reserve Banks in which the Board of Governors is not named a party. Interamericas Investments, Ltd. v. Board of Governors, No. 96-60326 (5th Cir., filed May 8, 1996). Petition for review of order imposing civil money penalties and cease and desist order in enforcement case. Kuntz v. Board of Governors, No. 96-1137 (D.C. Cir., filed April 25, 1996). Petition for review of a Board order dated March 25, 1996, approving an application by CoreStates Financial Corp., Philadelphia, Pennsylvania to acquire Meridian Bancorp, Inc., Reading, Pennsylvania. The Board's motion to dismiss was filed on June 3, 1996. Kuntz v. Board of Governors, No. 96-1079 (D.C. Cir., filed March 7, 1996). Petition for review of a Board order dated February 7, 1996, approving applications by The Fifth Third Bank, Cincinnati, Ohio, and The Fifth Third Bank of Columbus, Columbus, Ohio, to acquire certain assets and assume certain liabilities of 25 branches of NBD Bank, Columbus, Ohio. Petitioner has moved to consolidate the case with Kuntz v. Board of Governors, No. 95-1495. On April 8, 1996, the Board filed a motion to dismiss the action. 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. Petitioners' motion for a stay was denied on March 7, 1996. Research Triangle Institute v. Board of Governors, No. L96CV00102 (M.D.N.C., filed February 12, 1996). Contract dispute. On May 3, 1996, the Board filed a motion to dismiss the action. In re: Subpoena Duces Tecum, Misc. No. 96-MS-43(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 action was dismissed by stipulation on May 16, 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 Bank to merge with The Chase Manhattan Bank, N.A., both of New York, New York. Petitioners' motion for an emergency stay of the transaction was denied following oral argument on March 26, 1996. The case has been consolidated for oral argument and decision with Lee v. Board of Governors, No. 95^4134 (2d Cir.). 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. On June 21, 1996, appellant filed a notice of voluntary dismissal. 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. 95^-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 Legal Developments Corporation, New York, New York. On September 12, 1995, the court denied petitioners' motion for an emergency stay of the Board's orders. The Board's brief was filed on April 16, 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. On May 6, 1996, the court denied the motion for reconsideration. The intervenors' notice of appeal was filed May 31, 1996. Money Station, Inc. v. Board of Governors, No. 95-1182 (D.C. Cir., filed March 30, 1995). Petition for review of a 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. On April 23, 1996, the court vacated the Board's order. The Board's petition for rehearing and suggestion for rehearing in banc was filed on June 7, 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 79 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 OF ORDERS ISSUED BY THE BOARD GOVERNORS Gary S. Missner New York, New York The Federal Reserve Board announced on June 11, 1996, the issuance of a combined Cease and Desist Order and Assessment of a Civil Money Penalty against Gary S. Missner, a former employee of BT Securities Corporation, New York, New York, a subsidiary of Bankers Trust New York Corporation, New York, New York. TERMINATION OF ENFORCEMENT ACTIONS The Federal Reserve Board announced on June 3, 1996, the termination of the following enforcement actions: Bank of White Sulphur Springs White Sulphur Springs, West Virginia Written Agreement dated February 28, 1992—terminated May 10, 1996. Bank Bumiputra Malaysia Berhard Kuala Lumpur, Malaysia Written Agreement dated April 26, May 13, 1996. 1991—terminated Dyer F&M Bancshares Dyer, Tennessee Cease and Desist Order dated January terminated May 3, 1996. 14, 1994— 778 Membership of the Board of Governors of the Federal Reserve System, 1913-96 APPOINTIVE MEMBERS Name 1 Federal Reserve District Date of initial oath of office Charles S. Hamlin Boston Aug. 10, 1914 Paul M. Warburg Frederic A. Delano W.P.G. Harding Adolph C. Miller New York Chicago Atlanta San Francisco Aug. Aug. Aug. Aug. Albert Strauss Henry A. Moehlenpah . Edmund Piatt David C. Wills John R. Mitchell Milo D. Campbell Daniel R. Crissinger George R. James Edward H. Cunningham Roy A. Young Eugene Meyer Way land W. Magee Eugene R. Black M.S. Szymczak J.J. Thomas Marriner S. Eccles New York Chicago New York Cleveland Minneapolis Chicago Cleveland St. Louis Chicago Minneapolis New York Kansas City Atlanta Chicago Kansas City San Francisco Oct. 26, 1918 Nov. 10, 1919 June 8, 1920 Sept. 29, 1920 May 12, 1921 Mar. 14, 1923 May 1, 1923 May 14, 1923 May 14, 1923 Oct. 4, 1927 Sept. 16, 1930 May 18, 1931 May 19, 1933 June 14, 1933 June 14, 1933 Nov. 15, 1934 Joseph A. Broderick John K. McKee Ronald Ransom Ralph W. Morrison Chester C. Davis Ernest G. Draper Rudolph M. Evans James K. Vardaman, Jr. Lawrence Clayton Thomas B. McCabe .... Edward L. Norton Oliver S. Powell Wm. McC. Martin, Jr. . A.L. Mills, Jr J.L. Robertson C. Canby Balderston ... Paul E. Miller Chas. N. Shepardson ... G.H. King, Jr George W. Mitchell J. Dewey Daane Sherman J. Maisel Andrew F. Brimmer William W. Sherrill Arthur F. Burns John E. Sheehan Jeffrey M. Bucher Robert C. Holland Henry C. Wallich Philip E. Coldwell New York Cleveland Atlanta Dallas Richmond New York Richmond St. Louis Boston Philadelphia Atlanta Minneapolis New York San Francisco Kansas City Philadelphia Minneapolis Dallas Atlanta Chicago Richmond San Francisco Philadelphia Dallas New York St. Louis San Francisco Kansas City Boston Dallas Feb. 3, 1936 Feb. 3, 1936 Feb. 3, 1936 Feb. 10, 1936 June 25, 1936 Mar. 30, 1938 Mar. 14, 1942 Apr. 4, 1946 Feb. 14, 1947 Apr. 15, 1948 Sept. 1, 1950 Sept. 1, 1950 April 2, 1951 Feb. 18, 1952 Feb. 18, 1952 Aug. 12, 1954 Aug. 13, 1954 Mar. 17, 1955 Mar. 25, 1959 Aug. 31, 1961 Nov. 29, 1963 Apr. 30, 1965 Mar. 9, 1966 May 1, 1967 Jan. 31, 1970 Jan. 4, 1972 June 5, 1972 June 11, 1973 Mar. 8, 1974 Oct. 29, 1974 10, 10, 10, 10, 1914 1914 1914 1914 Other dates and information relating to membership 2 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Term expired Aug. 9, 1918. Resigned July 21, 1918. Term expired Aug. 9, 1922. Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Resigned Mar. 15, 1920. Term expired Aug. 9, 1920. Reappointed in 1928. Resigned Sept. 14, 1930. Term expired Mar. 4, 1921. Resigned May 12, 1923. Died Mar. 22, 1923. Resigned Sept. 15, 1927. Reappointed in 1931. Served until Feb. 3, 1936.4 Died Nov. 28, 1930. Resigned Aug. 31, 1930. Resigned May 10, 1933. Term expired Jan. 24, 1933. Resigned Aug. 15, 1934. Reappointed in 1936 and 1948. Resigned May 31, 1961. Served until Feb. 10, 1936.3 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Resigned Sept. 30, 1937. Served until Apr. 4, 1946.3 Reappointed in 1942. Died Dec. 2, 1947. Resigned July 9, 1936. Reappointed in 1940. Resigned Apr. 15, 1941. Served until Sept. 1, 1950.3 Served until Aug. 13, 1954.3 Resigned Nov. 30, 1958. Died Dec. 4, 1949. Resigned Mar. 31, 1951. Resigned Jan. 31, 1952. Resigned June 30, 1952. Reappointed in 1956. Term expired Jan. 31, 1970. Reappointed in 1958. Resigned Feb. 28, 1965. Reappointed in 1964. Resigned Apr. 30, 1973. Served through Feb. 28, 1966. Died Oct. 21, 1954. Retired Apr. 30, 1967. Reappointed in 1960. Resigned Sept. 18, 1963. Reappointed in 1962. Served until Feb. 13, 1976.3 Served until Mar. 8, 1974.3 Served through May 31, 1972. Resigned Aug. 31, 1974. Reappointed in 1968. Resigned Nov. 15, 1971. Term began Feb. 1, 1970. Resigned Mar. 31, 1978. Resigned June 1, 1975. Resigned Jan. 2, 1976. Resigned May 15, 1976. Resigned Dec. 15, 1986. Served through Feb. 29, 1980. 779 Federal Reserve District Name Philip C. Jackson, Jr. J. Charles Partee Stephen S. Gardner .. David M. Lilly G. William Miller ... Nancy H. Teeters Emmett J. Rice Frederick H. Schultz Paul A. Volcker Lyle E. Gramley Preston Martin Martha R. Seger Wayne D. Angell Manuel H. Johnson . H. Robert Heller Edward W. Kelley, Jr. Alan Greenspan John P. LaWare David W. Mullins, Jr. Lawrence B. Lindsey Susan M. Phillips Alan S. Blinder Janet L. Yellen Laurence H. Meyer . Alice M. Rivlin Chairmen 4 Charles S. Hamlin W.P.G. Harding Daniel R. Crissinger Roy A. Young Eugene Meyer Eugene R. Black Marriner S. Eccles Thomas B. McCabe Wm. McC. Martin, Jr. Arthur F. Burns G. William Miller Paul A. Volcker Alan Greenspan Ex- OFFICIO Atlanta Richmond Philadelphia .Minneapolis San Francisco Chicago New York Atlanta Philadelphia Kansas City San Francisco Chicago Kansas City Richmond San Francisco Dallas New York Boston St. Louis Richmond Chicago Philadelphia San Francisco St. Louis Philadelphia Date of initial oath of office July 14, 1975 Jan. 5, 1976 Feb. 13, 1976 June 1, 1976 Mar. 8, 1978 Sept. 18, 1978 June 20, 1979 July 27, 1979 Aug. 6, 1979 May 28, 1980 Mar. 31, 1982 July 2, 1984 Feb. 7, 1986 Feb. 7, 1986 Aug. 19, 1986 May 26, 1987 Aug. 11, 1987 Aug. 15, 1988 May 21, 1990 Nov. 26, 1991 Dec. 2, 1991 June 27, 1994 Aug. 12, 1994 June 24, 1996 June 25, 1996 Aug. 10, 1914-Aug. 9, 1916 Aug. 10, 1916-Aug. 9, 1922 May 1, 1923-Sept. 15, 1927 Oct. 4, 1927-Aug. 31, 1930 Sept. 16, 1930-May 10, 1933 May 19, 1933-Aug. 15, 1934 Nov. 15, 1934-Jan. 31, 19485 Apr. 15, 1948-Mar. 31, 1951 Apr. 2, 1951-Jan. 31, 1970 Feb. 1, 1970-Jan. 31, 1978 Mar. 8, 1978-Aug. 6, 1979 Aug. 6, 1979-Aug. 11, 1987 Aug. 11, 1987—6 Other dates and information relating to membership 2 Resigned Nov. 17, 1978. Served until Feb. 7, 1986.3 Died Nov. 19, 1978. Resigned Feb. 24, 1978. Resigned Aug. 6, 1979. Served through June 27, 1984. Resigned Dec. 31, 1986. Served through Feb. 11, 1982. Resigned August 11, 1987. Resigned Sept. 1, 1985. Resigned April 30, 1986. Resigned March 11, 1991. Served through Feb. 9, 1994. Resigned August 3, 1990. Resigned July 31, 1989. Reappointed in 1990. Reappointed in 1992. Resigned April 30, 1995. Resigned Feb. 14, 1994. Term expired Jan. 31, 1996. Vice Chairmen4 Frederic A. Delano Paul M. Warburg Albert Strauss Edmund Piatt J.J. Thomas Ronald Ransom C. Canby Balderston J.L. Robertson George W. Mitchell Stephen S. Gardner Frederick H. Schultz Preston Martin Manuel H. Johnson David W. Mullins, Jr. Alan S. Blinder Alice M. Rivlin Aug. 10, 1914-Aug. 9, 1916 Aug. 10, 1916-Aug. 9, 1918 Oct. 26, 1918-Mar. 15, 1920 July 23, 1920-Sept. 14, 1930 Aug. 21, 1934-Feb. 10, 1936 Aug. 6, 1936-Dec. 2, 1947 Mar. 11, 1955-Feb. 28, 1966 Mar. 1, 1966-Apr. 30, 1973 May 1, 1973-Feb. 13, 1976 Feb. 13, 1976-Nov. 19, 1978 July 27, 1979-Feb. 11, 1982 Mar. 31, 1982-Apr. 30, 1986 Aug. 4, 1986-Aug. 3, 1990 July 24, 1991-Feb. 14, 1994 June 27, 1994-Jan. 31, 1996 June 25, 1996- MEMBERS1 Secretaries of the Treasury W.G. McAdoo Carter Glass David F. Houston Andrew W. Mellon Ogden L. Mills William H. Woodin Henry Morgenthau Jr Dec. 23, 1913-Dec. 15, 1918 Dec. 16, 1918-Feb. 1, 1920 Feb. 2, 1920-Mar. 3, 1921 Mar. 4, 1921-Feb. 12, 1932 Feb. 12, 1932-Mar. 4, 1933 Mar. 4, 1933-Dec. 31, 1933 Jan. 1, 1934-Feb. 1, 1936 1. Under the provisions of the original Federal Reserve Act, the Federal Reserve Board was composed of seven members, including five appointive members, the Secretary of the Treasury, who was ex-officio chairman of the Board, and the Comptroller of the Currency. The original term of office was ten years, and the five original appointive members had terms of two, four, six, eight, and ten years respectively. In 1922 the number of appointive members was increased to six, and in 1933 the term of office was increased to twelve years. The Banking Act of 1935, approved Aug. 23, 1935, changed the name of the Federal Reserve Board to the Board of Governors of the Federal Reserve System and provided that the Board should be composed of seven appointive members; that the Secretary of the Treasury and the Comptroller of the Currency should continue to serve as members until Feb. 1, 1936; that the appoint- Comptrollers of the Currency John Skelton Williams Feb. 2, 1914-Mar. 2, 1921 Daniel R. Crissinger Mar. 17, 1921-Apr. 30, 1923 Henry M. Dawes May 1, 1923-Dec. 17, 1924 Joseph W. Mcintosh Dec. 20, 1924-Nov. 20, 1928 J.W. Pole Nov. 21, 1928-Sept. 20, 1932 J.F.T. O'Connor May 11, 1933-Feb. 1, 1936 ive members in office on the date of that act should continue to serve until Feb. 1, 1936, or until their successors were appointed and had qualified; and that thereafter the terms of members should be fourteen years and that the designation of Chairman and Vice Chairman of the Board should be for a term of four years. 2. Date after words "Resigned" and "Retired" denotes final day of service. 3. Successor took office on this date. 4. Chairman and Vice Chairman were designated Governor and Vice Governor before Aug. 23, 1935. 5. Served as Chairman Pro Tempore from February 3, 1948, to April 15, 1948. 6. Served as Chairman Pro Tempore from March 3, 1996, to June 20, 1996. 780 Combined Financial Statements of the Federal Reserve Banks The financial statements of the Federal Reserve Banks were audited by Coopers & Lybrand, independent public accountants, for the year ended December 31, 1995 I Coopers I &Lybrand Coopers & Lybrand L.L.R a professional firm R E P O R T OF I N D E P E N D E N T A C C O U N T A N T S To the Board of Governors of The Federal Reserve System and the Board of Directors of The Federal Reserve Banks: We have audited the accompanying combined statement of condition of The Federal Reserve Banks (the "Reserve Banks") as of December 31, 1995, and the related statements of income and changes in capital for the year then ended. These financial statements are the responsibility of the Reserve Banks' management. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurances about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 3, the combined financial statements were prepared in conformity with the accounting principles, policies, and practices established by the Board of Governors of The Federal Reserve System. These principles, policies, and practices, which were designed to meet the specialized accounting and reporting needs of The Federal Reserve System, are set forth in the Financial Accounting Manual for Federal Reserve Banks and constitute a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of the Reserve Banks at December 31, 1995, and combined results of their operations for the year ended, on the basis of accounting described in Note 3. This report is intended solely for the information and use of the Board of Governors of The Federal Reserve System and the Boards of Directors and management of The Federal Reserve Banks, and should not be used for any other purpose. Washington, D.C. March 22, 1996 781 FEDERAL RESERVE BANKS C O M B I N E D S T A T E M E N T OF C O N D I T I O N December 31, 1995 (in millions) ASSETS Gold certificates Special drawing rights certificates Coin Items in process of collection Loans to depository institutions U.S. government and federal agency securities, net Investments denominated in foreign currencies Accrued interest receivable Bank premises and equipment, net Other assets Total assets $ 11,050 10,168 425 4,769 135 396,491 21,099 4,101 1,646 1,271 $451,155 LIABILITIES AND CAPITAL LIABILITIES Federal Reserve notes outstanding, net Deposits Depository institutions U.S. Treasury, general account Other deposits Deferred credit items Interest on Federal Reserve notes due U.S. Treasury Accrued benefit cost Other liabilities Total liabilities $400,935 29,611 5,979 669 4,538 650 672 169 443,223 CAPITAL Capital paid-in Surplus Total capital Total liabilities and capital The accompanying notes are an integral part of these financial statements. 3,966 3,966 7,932 $451,155 782 Federal Reserve Bulletin • August 1996 FEDERAL RESERVE BANKS COMBINED STATEMENT OF INCOME for the year ended December 31, 1995 (in millions) Interest income Interest on U.S. government securities Interest on foreign currencies Interest on loans to depository institutions Total interest income $23,826 784 11 24,621 Other operating income Income from services Reimbursable services to government agencies Foreign currency gains, net Government securities gains, net Other income 739 221 1,005 6 56 Total other operating income 2,027 Operating expenses Salaries and other benefits Occupancy expense Equipment expense Cost of unreimbursed Treasury services Assessments by Board of Governors Other expenses 1,226 165 243 38 532 452 Total operating expenses 2,656 Income before cumulative effect of accounting change Cumulative effect of change in accounting principle Net income prior to distribution Distribution of net income Dividends paid to member banks Transferred to surplus Payments to U.S. Treasury 23,992 (89) $23,903 $ 231 283 23,389 $23,903 The accompanying notes are an integral part of these financial statements. Combined Financial Statements of the Federal Reserve Banks 783 FEDERAL RESERVE BANKS COMBINED S T A T E M E N T OF C H A N G E S IN C A P I T A L for the year ended December 31, 1995 (in millions) Balance at December 31, 1994 ( 7 3 . 6 7 million shares) Net income transferred to surplus Net change in capital stock issued (5.66 million shares) Balance at December 31, 1995 ( 7 9 . 3 3 million shares) Capital paid-in Surplus Total capital $3,683 $3,683 $7,366 283 283 283 283 $3,966 $3,966 $7,932 The accompanying notes are an integral part of thesefinancialstatements. NOTES TO COMBINED FINANCIAL STATEMENTS OF THE FEDERAL RESERVE BANKS, DECEMBER 3 1 , 1995 ( 1 ) ORGANIZATION AND BASIS OF PRESENTATION Board of Directors The twelve Federal Reserve Banks (Reserve Banks) are part of the Federal Reserve System (System) created by Congress under the Federal Reserve Act of 1913 (Federal Reserve Act) which established the central bank of the United States. The Reserve Banks are federal instrumentalities chartered by the federal government and possess a unique set of governmental, corporate, and central bank characteristics. Other major elements of the System are the Board of Governors of the Federal Reserve System (Board of Governors), the Federal Open Market Committee, and the Federal Advisory Council. The Reserve Banks are not subject to federal or state income taxes. Although the Reserve Banks are chartered as independent organizations overseen by the Board of Governors, the Reserve Banks work jointly to carry out their statutory responsibilities. The majority of the assets, liabilities, and income of the Reserve Banks is derived from central bank activities and responsibilities with regard to monetary policy and currency. For this reason, the accompanying combined set of financial statements for the twelve independent Reserve Banks is prepared, adjusted to eliminate interdistrict accounts and transactions. The Federal Reserve Act specifies the composition of Reserve Bank boards of directors. Each board is composed of nine members serving three-year terms: three directors, including those designated as Chairman and Deputy Chairman, are appointed by the Board of Governors; and six directors are elected by member banks. Of the six elected by member banks, three represent the public and three represent member banks. Member banks are divided into three classes according to size. Member banks in each class elect one director representing member banks and one representing the public. In any election of directors, each member bank receives one vote, regardless of the number of shares of Reserve Bank stock it holds. Corporate Structure The Reserve Banks serve twelve Federal Reserve Districts nationwide. In accordance with the Federal Reserve Act, each Reserve Bank has a corporate structure with supervision and control exercised by a Board of Directors chosen partly by nomination and election by member banks and partly by the Board of Governors. Banks that are members of the System include all national banks and any state-chartered bank that elects to become a member. ( 2 ) OPERATIONS AND SERVICES The System performs a variety of services and operations. Functions include formulating and conducting monetary policy; participating actively in the payments mechanism, including large-dollar transfers of funds, automated clearing house operations, and check processing; distribution of coin and currency; fiscal agency functions for the U.S. Treasury and certain federal agencies; serving as the federal government's bank; providing short-term loans to depository institutions; serving the consumer and the community by providing educational materials and information regarding consumer laws; supervising bank holding companies and state member banks; and administering other regulations of the Board of Governors. The Board of Governors' operating costs are funded through assessments on the Reserve Banks. 784 Federal Reserve Bulletin • August 1996 ( 3 ) SIGNIFICANT ACCOUNTING POLICIES (B) Special Drawing Rights Certificates In carrying out various responsibilities as the n a t i o n ' s central bank, the Reserve B a n k s participate in activities that result in income, particularly interest i n c o m e f r o m securities held in the S y s t e m O p e n M a r k e t A c c o u n t ( S O M A ) . T h e i n c o m e is incidental to the Reserve B a n k s ' public responsibilities and does not motivate activities or policy decisions. Specialized accounting principles f o r entities with the unique p o w e r s and responsibilities of the n a t i o n ' s central bank h a v e not been formulated by the Financial A c c o u n t i n g Standards Board. T h e Board of G o v e r n o r s has d e v e l o p e d specialized accounting principles and practices that it believes are appropriate f o r the significantly different nature and f u n c t i o n of a central bank as c o m p a r e d to the private sector. T h e s e accounting principles and practices are generally d o c u m e n t e d in the Financial Accounting Manual for Federal Reserve Banks (the Financial Accounting Manual), which is published by the B o a r d of G o v e r n o r s . All Reserve B a n k s are required to adopt and apply accounting policies and practices that are consistent with the Financial Accounting Manual. T h e financial statements have been prepared in a c c o r d a n c e with the Financial Accounting Manual. Differences exist b e t w e e n the policies of the System and generally accepted accounting principles ( G A A P ) . The primary difference is the presentation of all security holdings at amortized cost rather than at the fair value presentation requirements of G A A P . A c c o u n t i n g policies and practices f o r U.S. g o v e r n m e n t and federal agency securities and investments denominated in foreign currencies are f u r t h e r described in note 3(D). In addition, the Board of G o v e r n o r s and the R e s e r v e Banks have elected not to include a Statement of C a s h Flows, as the liquidity and cash position of the Reserve B a n k s are not of primary concern to the shareholders and other users of these financial statements. Other information regarding the Reserve Banks' activities is provided, or m a y b e derived f r o m , the Statements of Condition, Income, and C h a n g e s in Capital. T h e r e f o r e , a Statement of Cash F l o w s would not provide any additional useful information. There are n o other significant differences b e t w e e n the policies outlined in the Financial Accounting Manual and GAAP. The preparation of financial statements in conformity with the Financial Accounting Manual requires m a n a g e m e n t to m a k e estimates and assumptions that affect the reported a m o u n t s of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported a m o u n t s of i n c o m e and expenses during the reporting period. Actual results could differ f r o m those estimates. Unique accounts and significant accounting policies are explained below. Special d r a w i n g rights ( S D R s ) are issued by the International M o n e t a r y F u n d (the F u n d ) to its m e m b e r s in proportion to each m e m b e r ' s quota in the F u n d at the time of issuance. S D R s serve as a supplement to international monetary reserves and m a y b e transferred f r o m o n e national monetary authority to another. U n d e r the law providing f o r U.S. participation in the S D R system, the Secretary of the U.S. Treasury is authorized to issue S D R certificates, s o m e w h a t like gold certificates, to the Reserve B a n k s . At such time, equivalent a m o u n t s in dollars are credited to the account established f o r the U.S. Treasury, and Reserve B a n k s ' S D R certificate account is increased. T h e R e s e r v e B a n k s are required to purchase S D R s , at the direction of the U.S. Treasury, f o r the purpose of financing S D R certificate acquisitions or f o r financing e x c h a n g e stabilization operations. (A) Gold Certificates T h e Secretary of the Treasury is authorized to issue gold certificates to the System to monetize gold held by the U.S. Treasury. P a y m e n t f o r the gold certificates by the Reserve Banks is m a d e by crediting equivalent a m o u n t s in dollars into the account established f o r the U.S. Treasury. T h e s e gold certificates held by the Reserve B a n k s are required to b e backed by the gold of the U.S. Treasury. T h e U.S. Treasury may reacquire the gold certificates at any time, and the Reserve B a n k s must deliver them to the U.S. Treasury. At such time, the U.S. T r e a s u r y ' s account is charged and the Reserve B a n k s ' gold certificate account is lowered. The value of gold f o r purposes of backing the gold certificates is set by law at $ 4 2 % a fine troy ounce. (C) Loans to Depository Institutions T h e Depository Institutions Deregulation and M o n e t a r y Control Act of 1980 provides that all depository institutions that maintain reservable transaction accounts or nonpersonal time deposits, as defined in Regulation D issued by the B o a r d of Governors, h a v e b o r r o w i n g privileges at the discretion of the Reserve B a n k s . Borrowers execute certain lending agreements and deposit sufficient collateral before credit is extended. L o a n s are evaluated f o r collectibility, and currently all are considered collectible and fully collateralized. If any loans w e r e d e e m e d to be uncollectible, an appropriate reserve would b e established. Interest is recorded on the accrual m e t h o d and is charged at the discount rate established at least every fourteen days by the Boards of Directors of the Reserve Banks, subject to review by the Board of Governors. However, Reserve B a n k s retain the option to i m p o s e a surcharge a b o v e that rate in certain circumstances. (D) U.S. Government and Federal Agency Securities and Investments Denominated in Foreign Currencies T h e Federal O p e n M a r k e t C o m m i t t e e ( F O M C ) is c o m p o s e d of m e m b e r s of the Board of Governors, the president of the Federal Reserve B a n k of N e w York ( F R B N Y ) , and, on a rotating basis, f o u r other Reserve B a n k presidents. T h e F O M C has designated the F R B N Y to execute o p e n market transactions on its behalf. T h e F O M C establishes policy regarding open market operations, oversees these operations, and issues authorizations and directives to the F R B N Y for its execution of transactions. Authorized transaction types include direct purchases and sales of securities, m a t c h e d s a l e - p u r c h a s e transactions, and the purchase of securities u n d e r a g r e e m e n t s for repurchase. T h e s e transactions are conducted in U.S. g o v e r n m e n t and federal agency securities. Specifically, the F R B N Y provides or absorbs reserve deposits of depository institutions by purchasing or selling g o v e r n m e n t securities respectively in the o p e n market. W h i l e the application of current market prices to the securities currently held by the Reserve B a n k s may result in values substantially a b o v e or b e l o w their carrying values, these unrealized c h a n g e s in value would h a v e no necessary effect on the quantity of reserves available to the banking system or on the prospects f o r f u t u r e Reserve B a n k earnings or capital. In addition to conducting outright sales and purchases of securities, F R B N Y is also authorized by the F O M C to enter into matched s a l e - p u r c h a s e transactions. T h e s e are generally overnight transactions in w h i c h F R B N Y sells a security and buys it Combined Financial Statements of the Federal Reserve Banks back the next day at the rate specified at the commencement of the transaction. These transactions are accounted for as separate sale and purchase transactions. At December 31, 1995, matched salepurchase transactions involving U.S. government securities with a par value of $12.3 billion were outstanding. In addition to authorizing and directing operations in the domestic securities market, the FOMC authorizes and directs the FRBNY to execute operations in foreign exchange markets for major currencies and to invest the resulting balances, to the extent possible, in assets with maturities of twelve months or less. Balances and changes in balances arise from transactions to counter disorderly conditions in exchange markets and other needs specified by the FOMC in carrying out the System's central bank responsibilities. The above activities result in income for the Reserve Banks. Although the resulting portfolio generates interest income and the transactions can result in gains or losses when holdings are sold prior to maturity, decisions regarding the securities and foreign currencies, including their purchase and sale, are motivated by monetary policy objectives rather than profit. Accordingly, earnings and any gains or losses resulting from the sales of such currencies and securities are incidental to the open market operations and do not motivate its activities or policy decisions. In order to ensure the effective conduct of open market operations, the FOMC authorizes the Reserve Banks to lend U.S. government securities held in SOMA to U.S. government securities dealers and to banks participating in U.S. government securities clearing arrangements conducted through a Reserve Bank, under such instructions as the FOMC may specify from time to time. At December 31, 1995, U.S. government securities with a par value of $1.1 billion were loaned. These securities-lending transactions are fully collateralized by other U.S. government securities. It is the FOMC's policy to take possession of the collateral in amounts in excess of the market values of the securities loaned. The market values of the collateral and the securities loaned are monitored by the Reserve Banks on a daily basis, with additional collateral obtained as necessary. The securities lent continue to be carried in SOMA. Income earned by the Reserve Banks on securities-lending transactions is reported as "Other income." In accordance with the Federal Reserve Act, and as further explained in note 3(F), all domestic securities and investments denominated in foreign currencies are available as collateral for net Federal Reserve notes outstanding. At December 31, 1995, securities with a par value of $379.7 billion were pledged as collateral. (E) Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over estimated useful lives of assets ranging from two to fifty years. New assets, major alterations, renovations, and improvjments are capitalized at cost as additions to the asset accounts. Maintenance, repairs, and minor replacements are charged to operations in the year incurred. (F) Federal Reserve Notes Federal Reserve notes are the circulating currency of the United States. These notes are issued through the various Federal Reserve agents to the Reserve Banks upon deposit with such agents of certain classes of collateral security, typically U.S. government 785 securities. These notes are identified as issued to a specific Reserve Bank. The Federal Reserve Act provides that the collateral security tendered by the Reserve Bank to the Federal Reserve agent must be equal to the sum of the notes applied for by such Reserve Bank. The collateral value is equal to the par value of the securities tendered. The Board of Governors may, at any time, call upon a Reserve Bank for additional security to adequately collateralize the Federal Reserve notes. To satisfy the obligation to provide sufficient collateral for its outstanding Federal Reserve notes, the Reserve Banks have entered into an agreement that provides that certain assets of the Reserve Banks are jointly pledged as collateral for the Federal Reserve notes of all Reserve Banks. In the event that this collateral is insufficient, the Act provides that Federal Reserve notes become a first and paramount lien on all the assets of the Reserve Banks. Finally, as obligations of the United States, Federal Reserve notes are backed by the full faith and credit of the U.S. government. The Federal Reserve notes outstanding, net account represents Federal Reserve notes reduced by cash held in the vaults of the Reserve Banks. (G) Capital Paid-in The Federal Reserve Act requires that each member bank subscribe to the capital stock of the Reserve Bank in an amount equal to 6 percent of the capital and surplus of the member bank. As a member bank's capital and surplus changes, its holdings of the Reserve Bank's stock must be adjusted. Member banks are those state-chartered banks that choose to join the System and all national banks. Currently, only one-half of the subscription is paid-in and the remainder is subject to call. These shares are nonvoting with a par value of $100. They may not be transferred or hypothecated. By law, each member bank is entitled to receive an annual dividend of 6 percent on the paid-in capital stock. This cumulative dividend is paid semiannually. A member bank is liable for Reserve Bank liabilities up to twice the par value of stock subscribed by it. (H) Surplus The Board of Governors requires Reserve Banks to maintain a surplus equal to the amount of capital paid-in as of December 31 of the prior year. This amount is intended to provide additional capital and reduce the possibility that the Reserve Banks would be required to call on member banks for additional capital. Reserve Banks are required by the Board of Governors to transfer to the U.S. Treasury excess earnings, after providing for the costs of operations, payment of dividends, and reservation of an amount necessary to equate surplus with capital paid-in, as payment of interest on Federal Reserve notes outstanding. In the event of losses, payments to the U.S. Treasury are suspended until such losses are recovered through subsequent earnings. Weekly payments to the U.S. Treasury vary significantly. (I) Cost of Unreimbursed Treasury Services Reserve Banks are required by the Federal Reserve Act to serve as fiscal agents and depositories of the United States. By statute, the Department of the Treasury is permitted, but not required, to pay for these services. The costs of providing fiscal agency and depository services to the Treasury Department that have been billed but will not be paid are reported as the "Cost of unreimbursed Treasury services." 786 Federal Reserve Bulletin • August 1996 (J) Accounting Change Effective January 1, 1995, the Financial Accounting Manual was changed to require that Reserve Banks use the accrual method of accounting to recognize the obligation to provide benefits to former or inactive employees consistent with Statement of Financial Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits." Prior to 1995, the Reserve Banks recognized costs for postemployment benefits when paid. The cumulative effect of this change in accounting for benefits was recognized by the Reserve Banks as a one-time charge to expense of $54.8 million. Additionally, the Reserve Banks recognized an increase in 1995 operating expenses of approximately $4.7 million, net of a one-time credit of $1.5 million that reflects the effect of a special early retirement benefit offered by one District during 1995. Effective January 1, 1995, the Reserve Banks also began accruing a liability for employees' rights to receive compensation for future absences consistent with SFAS No. 43, "Accounting for Compensated Absences." Prior to 1995, the Reserve Banks recognized these costs when paid. The cumulative effect of this change in accounting for compensated absences was recognized by the Reserve Banks as a one-time charge to expense of $19.3 million. Ongoing operating expenses for the year ended December 31, 1995, were not materially affected by the change in accounting for these costs. Effective January 1, 1995, the Reserve Banks began recognizing impairment losses consistent with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Prior to 1995, the Reserve Banks did not recognize impairment losses. The cumulative effect of this change in accounting for impairment losses was recognized as a one-time charge to expense of $14.5 million. The impairment loss represented the impairment in value of certain bank buildings. Fair value of the buildings was based on management's estimate of market value. The impairment recognized was a result of management's intention to relocate and resulted from structural defects and asbestos. An additional impairment loss was recognized during 1995, as discussed in note 6. (4) U.S. GOVERNMENT AND FEDERAL AGENCY SECURITIES Securities bought outright and held under repurchase agreements are held in the SOMA at the FRBNY. These securities are recorded at cost on a settlement-date basis, adjusted for the amortization of premiums and accretion of discounts. Interest income is recorded on the accrual method and is reported as "Interest on U.S. government securities." Gains and losses resulting from sales of securities are determined by the specific identification method and are reported as "Government securities gains, net." Securities held at December 31, 1995, that were bought outright were as follows (in thousands): Par value Federal agency U.S. Treasury Bills Notes Bonds $ 2,633,995 183,115,712 151,013,150 44,068,604 Total par value 380,831,461 Unamortized premiums Unaccreted discounts 4,508,183 (3,477,093) $381,862,551 Securities held under repurchase agreements at December 31, 1995, were as follows (in thousands): Par value Federal agency U.S. Treasury $ 1,100,000 12,762,000 Total par value 13,862,000 Unamortized premiums Unaccreted discounts 902,643 (136,641) $14,628,002 The maturities of investment securities held at December 31, 1995, that were bought outright were as follows (in thousands): Par value Maturities of securities held Within 15 days 16 days to 90 days 91 days to 1 year Over 1 year to 5 years Over 5 years to 10 years Over 10 years Total U.S. government securities $ Federal agency obligations 7,580,018 93,738,368 123,216,569 85,272,558 31,469,096 36,920,857 $ 240,000 474,000 527,295 840,950 526,750 25,000 $378,197,466 $2,633,995 The maturities of all repurchase agreements are fifteen days or less. (5) INVESTMENTS D E N O M I N A T E D IN FOREIGN CURRENCIES The FRBNY, on behalf of the Reserve Banks, holds foreign currency deposits and government debt instruments denominated in foreign currencies with foreign central banks and the Bank for International Settlements. Investments denominated in foreign currencies are limited to maturities of one year or less and are accounted for at cost on a settlement date basis, adjusted for amortization of premiums and accretion of discounts. Foreign currency-denominated assets of the Reserve Banks are revalued monthly at current market exchange rates in order to report these assets in U.S. dollars, with any gains or losses reported as "Foreign currency gains, net." Interest income is recorded on the accrual basis and is reported as "Interest on foreign currencies." These investments are guaranteed as to principal and interest by the foreign governments or are contracts with the central banks or the Bank for International Settlements. During 1995, the FRBNY was authorized to hold balances of, and to have outstanding spot and forward contracts to receive or to deliver, the following foreign currencies: Combined Financial Statements of the Federal Reserve Banks Austrian schillings Belgian francs Canadian dollars Danish kroner Pounds sterling French francs German marks Italian lire Japanese yen Mexican pesos Netherlands guilders Norwegian kroner Swedish kroner Swiss francs In addition, at the direction of the FOMC, the FRBNY is authorized to maintain reciprocal currency arrangements (F/X swaps) for SOMA for periods up to a maximum of twelve months with the following foreign central banks: Foreign central bank Austrian National Bank National Bank of Belgium Bank of Canada National Bank of Denmark Bank of England Bank of France German Federal Bank Bank of Italy Bank of Japan Bank of Mexico Netherlands Bank Bank of Norway Bank of Sweden Swiss National Bank Bank for International Settlements: Dollars against Swiss francs Dollars against authorized European currencies other than Swiss francs Amount of arrangement (millions of dollars equivalent) $ 250 1,000 2,000 250 3,000 2,000 6,000 3,000 5,000 6,000' 500 250 300 4,000 600 1,250 1 The swap arrangement with the Bank of Mexico consisted of a regular $3 billion line and a special temporary $3 billion line. The special line expired on January 31, 1996. As of December 31, 1995, the Bank of Mexico had $650 million outstanding under its facility; however, this amount was repaid in January 1996. In connection with its foreign currency activities, the FRBNY, on behalf of the Reserve Banks, enters into contracts that may involve off-balance-sheet market risk and credit risk because they may represent contractual commitments involving future settlement. The credit risk is controlled through credit approvals, limits, and daily monitoring procedures. Foreign exchange contracts are contractual agreements between two parties to exchange specified currencies, at a specified price, on a specified date. Spot foreign contracts normally settle two days after the trade date, whereas the settlement date on forward contracts is negotiated between the contracting parties but will extend beyond two days from the trade date. FRBNY generally enters into spot contracts, with any forward contracts generally limited to the second leg of a swap/warehousing transaction. As of December 31, 1995, the Reserve Banks had no open foreign exchange contracts except as noted below. An F/X swap arrangement is a renewable, short-term reciprocal currency arrangement, generally for up to one year, between two parties, the FRBNY, on behalf of the Reserve Banks, and an authorized foreign central bank, who agree to exchange their currencies up to a prearranged maximum amount and for an agreed upon period of time. These arrangements give the Federal Reserve temporary access to the foreign currencies that it needs for intervention operations to support the dollar or give the partner foreign central bank temporary access to dollars it needs to support its own currencies. Drawings under the F/X swap arrangements can be initiated by either the FRBNY or the partner foreign central banks. The F/X swaps are structured so that the party 787 initiating the transaction (the drawer) bears the exchange rate risk upon maturity. The FRBNY will generally invest the foreign currency received under an F/X swap in interest-bearing instruments. As of December 31, 1995, there was an open F/X swap of $650 million, which was drawn at the direction of a foreign central bank. Interest income on the resulting foreign currency holdings is accrued and reported as "Interest on foreign currencies." Unrealized gains and losses on revaluation of the resulting currency holdings are reported as a component of "Other assets," since there is no exchange rate risk to FRBNY at maturity of the F/X swap. The FOMC has an agreement to "warehouse" foreign currencies for the U.S. Treasury and the Exchange Stabilization Fund (ESF). This is an arrangement under which the FOMC agrees to exchange, at the request of the Treasury, U.S. dollars for foreign currencies held by the Treasury or ESF over a limited period of time. The purpose of the warehousing facility is to supplement the U.S. dollar resources of the Treasury and ESF for financing purchases of foreign currencies and related international operations. As of December 31, 1995, this facility was $20 billion, with nothing outstanding. ( 6 ) B A N K PREMISES AND EQUIPMENT A summary of bank premises and equipment at December 31, 1995, is as follows (in millions): Bank premises Land Buildings Building machinery and equipment Construction in progress Less accumulated depreciation Bank premises, net Furniture and equipment Less accumulated depreciation $ 167 883 231 129 1,410 284 $1,126 $1,192 672 Furniture and equipment, net $ 520 Bank premises and equipment, net $1,646 Depreciation expense for the year ended December 31,1995 was $180 million. Bank premises and equipment include the following amounts for leases that have been capitalized (in millions): Bank premises and equipment Accumulated depreciation $92.5 29.0 Capitalized leases, net $63.5 Certain of the Reserve Banks lease unused space to outside tenants. Those leases have terms ranging from one to fifteen years. Rental income from such leases was $16 million in 1995. Future minimum lease payments under agreements existing at December 31, 1995, were (in thousands): 1996 1997 1998 1999 2000 Thereafter $12,953 11,846 10,366 9,225 8,953 19,227 $72,570 During 1995, one Reserve Bank recognized impairment losses of $16.3 million on the value of bank buildings. Fair value of the buildings was based on appraised value. The impairment was 788 Federal Reserve Bulletin • August 1996 recognized as a result of m a n a g e m e n t ' s intention to relocate and resulted f r o m a general decline in real estate values in the area in w h i c h the buildings w e r e located. This loss is included on the Statement of I n c o m e as a c o m p o n e n t of " O t h e r expenses." (7) tributed by the participating employers, and net pension costs f o r the period is the required contribution f o r the p e r i o d . Following is a reconciliation between the p l a n ' s f u n d e d status and amounts included in the Reserve B a n k s ' balance sheet at D e c e m b e r 31, 1995 (in millions): COMMITMENTS At D e c e m b e r 31, 1995, the Reserve Banks were obligated under noncancelable leases f o r premises and e q u i p m e n t with terms, including renewal options, ranging f r o m one to approximately twenty-eight years. T h e s e leases provide for increased rentals based u p o n increases in real estate taxes, operating costs, or selected price indices. Rental expense u n d e r operating leases f o r certain operating facilities, warehouses, data processing, and office e q u i p m e n t (including taxes, insurance, and maintenance w h e n included in rent), net of sublease rentals, w a s $ 6 4 million in 1995. Certain of the Reserve B a n k s ' leases h a v e options to renew. Future m i n i m u m rental p a y m e n t s under capital leases and noncancelable operating leases, net of sublease rentals with terms of one year or more, at D e c e m b e r 31, 1995, were (in thousands): 1996 1997 1998 1999 2000 Thereafter Amounts representing interest Present value of net minimum lease payments Accumulated benefit obligation Vested Nonvested Total Plan assets at fair value, primarily listed stocks and bonds Less: Actuarial present value of projected benefit obligation $ 1,679 91 $ 1,770 $ 3,628 (2,130) Plan assets in excess of projected benefit obligation 1,498 Less: Unrecognized net transition obligation Unrecognized net gain Unrecognized prior service cost Prepaid pension cost 272 606 (156) $ 776 Costs were projected using a 7 percent discount rate. T h e rate of compensation increase used w a s 5 percent per year and a 9 percent long-term rate of return on plan assets w a s assumed. The c o m p o n e n t s of the net pension credit f o r 1995 are s h o w n below (in millions): Operating Capital $18,121 8,087 16,518 14,987 14,375 23,924 $ 4,681 3,878 1,337 122 Service costs—benefits earned during the year Interest cost on projected benefit obligation Actual return on plan assets Net amortization and deferral Cost of special termination benefits $ $96,012 $10,018 Net pension (credit) $(119) 653 $ 9,365 T h e Reserve B a n k s had the following other material c o m m i t ments and long-term obligations at D e c e m b e r 31, 1995: Contractual c o m m i t m e n t s and long-term obligations totaling $258.2 million through 1999 f o r the land, construction, relocation, and other costs related to new buildings. A s of D e c e m b e r 31, 1995, $70.1 million of this amount w a s recognized. Contractual c o m m i t m e n t s totaling $81.3 million through 1996 for the purchase of high-speed currency processing machines. ( 8 ) RETIREMENT AND THRIFT PLANS 49 133 (842) 537 4 T h e net periodic cost f o r 1995 is based on a discount rate of 8.75 percent, average c o m p e n s a t i o n increase rate of 5.5 percent, and expected long-term rate of return on assets of 9 percent. E m p l o y e e s of the Reserve B a n k s m a y also participate in the Federal Reserve S y s t e m ' s Thrift Plan. U n d e r the Thrift Plan, e m p l o y e e s m a y contribute a percentage of their salaries u p to a m a x i m u m 19 percent limit as prescribed by the Internal R e v e n u e Service. M a t c h i n g contributions by the Reserve B a n k s are based on a fixed percentage of each e m p l o y e e ' s basic contributions. Currently, the Reserve B a n k s m a t c h 80 percent of the first 6 percent of salary contributed by the employee. T h e Reserve B a n k s ' Thrift Plan contributions totaled $38 million in 1995. ( 9 ) POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS OTHER T H A N PENSIONS Substantially all of the Reserve B a n k s ' employees participate in the Retirement Plan f o r E m p l o y e e s of the System. T h e S y s t e m ' s plan is a defined benefit plan w h i c h covers employees of the R e s e r v e Banks, the Board of Governors, and the Plan Administrative Office. Benefits are based on length of service and level of compensation. F R B N Y acts as the plan sponsor. T h e prepaid pension cost is reported as a c o m p o n e n t of Other assets. T h e prepaid pension cost includes a m o u n t s related to Board of Governors participation in the plan. Contributions to the S y s t e m ' s plan are actuarially determined and fully f u n d e d by participating employers at amounts prescribed by the Plan Administrator (with the exception of a mandatory contribution of 7 percent of salary by employees of the Board of Governors). N o separate accounting is maintained of assets con- In addition to the Reserve B a n k s ' defined benefit retirement plan, e m p l o y e e s w h o have met certain age and length-of-service requirements are eligible f o r both medical benefits and life insurance coverage during retirement. The retiree medical plan is contributory and provides benefits to retirees, their covered dependents, and beneficiaries. T h e life insurance plan is noncontributory and covers retirees only. T h e Reserve B a n k s f u n d benefits payable u n d e r the medical and life insurance plans as due. T h e Reserve B a n k s use a January 1 m e a s u r e m e n t date. T h e following is a reconciliation b e t w e e n the p l a n ' s f u n d e d status and the amounts recognized in the Reserve B a n k s ' c o m b i n e d balance sheet as of D e c e m b e r 31, 1995, (in millions): Combined Financial Statements of the Federal Reserve Banks Accumulated postretirement benefit obligation Retirees and covered spouses Actives eligible to retire Other actives and disabled Total accumulated postretirement benefit obligation Unamortized net transition obligation Unrecognized net loss Unrecognized prior service cost Accrued postretirement benefit cost $303.0 54.8 238.5 596.3 0.0 (61.7) 77.4 $612.0 Costs f o r the Reserve B a n k s were projected using a 7 percent discount rate and the f o l l o w i n g health care cost trend rates. T h e initial trend rate f o r medical costs f o r 1996 is 10 percent f o r retirees over sixty-five and f o r retirees under sixty-five with the ultimate trend rate decreasing to 5.5 percent by 2004. C h a n g i n g the a s s u m e d health care cost trend rates by 1 percentage point in each year would c h a n g e the accumulated postretirement benefit obligation at D e c e m b e r 31, 1995, b y approximately $111.5 million, and the aggregate service and interest cost c o m p o n e n t s of net periodic postretirement benefit cost recognized as of D e c e m b e r 31 by approximately $12.0 million. T h e following is a s u m m a r y of the c o m p o n e n t s of net periodic postretirement cost f o r the year ended D e c e m b e r 31, 1995 (in millions): Service cost Interest cost of accumulated benefit obligation Net amortization and deferral Cost of special termination benefits Net periodic cost $13.0 42.5 (5.1) .6 $51.0 789 The R e s e r v e B a n k s began using the accrual method of accounting to recognize the obligation to provide benefits to f o r m e r or inactive e m p l o y e e s , consistent with S F A S 112, " E m p l o y e r s A c c o u n t i n g f o r P o s t e m p l o y m e n t Benefits," effective January 1, 1995. Benefits include medical and dental insurance, survivor income, disability i n c o m e , and those w o r k e r s ' c o m p e n s a t i o n expenses self-insured by individual R e s e r v e B a n k s . Costs were projected using the same discount and health care trend rates as w e r e used f o r p r o j e c t i n g postretirement costs. T h e accrued p o s t e m p l o y m e n t benefit costs recognized by the R e s e r v e B a n k s at D e c e m b e r 31, 1995, w e r e $59.6 million. This cost is included as a c o m p o n e n t of A c c r u e d benefit cost on the Statement of Condition. Net periodic costs of $13.6 miilion w e r e inciuded in 1995 operating expenses. (10) CONTINGENCIES The Reserve B a n k s are involved in certain legal actions and claims arising in the ordinary course of business. A l t h o u g h it is difficult to predict the ultimate o u t c o m e of these actions, in m a n a g e m e n t ' s opinion, based on discussions with counsel, the aforementioned litigation and claims will be resolved without material adverse effect on the financial position of the Reserve B a n k s or results of operations. 1 Financial and Business Statistics A3 GUIDE TO TABULAR DOMESTIC FINANCIAL STATISTICS Money Stock and Bank Credit A4 A5 A6 A6 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 A25 A26 A27 A27 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 A28 U.S. government securities dealers—Transactions A29 U.S. government securities dealers— Positions and financing A30 Federal and federally sponsored credit agencies—Debt outstanding Securities Markets and Corporate Finance Policy Instruments A7 A8 A9 Federal Reserve Bank interest rates Reserve requirements of depository institutions Federal Reserve open market transactions Federal Reserve Banks A10 Condition and Federal Reserve note statements A l l Maturity distribution of loan and security holdings Monetary and Credit Aggregates A12 Aggregate reserves of depository institutions and monetary base A13 Money stock, liquid assets, and debt measures A15 Deposit interest rates and amounts outstanding— commercial and BIF-insured banks A16 Bank debits and deposit turnover A31 New security issues—Tax-exempt state and local governments and corporations A32 Open-end investment companies—Net sales and assets A32 Corporate profits and their distribution A33 Domestic finance companies—Assets and liabilities, and consumer, real estate, and business credit Real Estate A34 Mortgage markets A35 Mortgage debt outstanding Consumer Installment Credit A36 Total outstanding A36 Terms Flow of Funds Commercial Banking Institutions All Assets and liabilities, Wednesday figures Weekly Reporting Commercial Banks— Assets and liabilities A19 Large reporting banks A21 Branches and agencies of foreign banks A37 A39 A40 A41 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 A22 Commercial paper and bankers dollar acceptances outstanding A22 Prime rate charged by banks on short-term business loans A23 Interest rates—money and capital markets A24 Stock market—Selected statistics A42 Nonfinancial business activity— Selected measures A42 Labor force, employment, and unemployment A43 Output, capacity, and capacity utilization A44 Industrial production—Indexes and gross value A46 Housing and construction A47 Consumer and producer prices 2 Federal Reserve Bulletin • August 1996 DOMESTIC NONFINANCIAL STATISTICS- CONTINUED Selected A48 Gross domestic product and income A49 Personal income and saving Summary Securities Statistics U.S. international transactions—Summary U.S. foreign trade U.S. reserve assets Foreign official assets held at Federal Reserve Banks A52 Selected U.S. liabilities to foreign official institutions by Banks in the United A52 A53 A55 A56 States Liabilities to and claims on foreigners Liabilities to foreigners Banks' own claims on foreigners Banks' own and domestic customers' claims on foreigners A56 Banks' own claims on unaffiliated foreigners A57 Claims on foreign countries— Combined domestic offices and foreign branches Holdings and Transactions A60 Foreign transactions in securities A61 Marketable U.S. Treasury bonds and notes—Foreign transactions STATISTICS A50 A51 A51 A51 Reported Business States A58 Liabilities to unaffiliated foreigners A59 Claims on unaffiliated foreigners Measures—Continued INTERNATIONAL Reported by Nonbanking Enterprises in the United Interest and Exchange Rates A61 Discount rates of foreign central banks A61 Foreign short-term interest rates A62 Foreign exchange rates A 6 3 GUIDE TO STATISTICAL SPECIAL TABLES SPECIAL TABLE RELEASES AND A64 Terms of lending at commercial banks, May 1996 A 6 8 INDEX TO STATISTICAL TABLES 3 Guide to Tabular Presentation SYMBOLS c e n.a. n.e.c. p r * 0 . . . ATS BIF CD CMO FFB FHA FHLBB FHLMC FmHA FNMA FSLIC G-7 GENERAL AND 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 H o m e Loan Bank Board Federal H o m e Loan Mortgage Corporation Farmers H o m e Administration Federal National Mortgage Association Federal Savings and Loan Insurance Corporation Group of Seven G-10 GNMA GDP HUD IMF 10 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 g o v e r n m e n t " also includes municipalities, special districts, and other political subdivisions. A4 DomesticNonfinancialStatistics • August 1996 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Percent annual rate of change, seasonally adjusted1 1995 1996 1996 Monetary or credit aggregate Q3 Q4 Q1 Jan. Feb. Mar. Apr. May -7.5 -6.6 -8.2 5.8 -1.5 -2.5 -2.4 1.7 -6.9 -7.7 -6.4 2.7 -7.9 -8.5 -6.5 1.5 -16.1 -21.0 -11.5 .4 -16.4 -2.7 -16.3 -4.1 19.2 13.2 19.6 8.8 -11.7 -11.6 -13.2 -.7 -20.5 -15.4 -21.3 1.0 -.4 3.8 6.3 7.3 7.0 -1.5 6.9 8.0 9.1 4.6 -5.1 4.1 r 4.5 r 5.9 4.5 -2.7 5.9 r 1.2' 5.\' 5.4 r -6.1 4.8 7.4 r 4.0 r 5.3 r -2.0 5.4 r 10.0 r 4.4 r 1.1' 10.0 11.1' 11.0' 12.5 4.3 r -3.1 2.0 r 1.8 r 4.5 4.8 -6.6 -1.6 3.5 n.a. n.a. 5.8 16.9 10.9 12.1 8.3 r 6.3 9.1' 12.5' 9.7 17.9 r 8.6' 28.5 r 12.4 r 8.3 r 4.2 r .9' .6 23.1 -6.5 20.4 13.6 9.0 11.0 13.0 r 13.1 4.8 r 19.4 22.6 2.5 r 8.8 28.2 5.0 r -6.3 16.5 - 1.2 r 19.7 25.2 -4.5r 27.4 r 8.8 -3.5r 8.5 r 4.1 -2.3 19.2 -14.5 23.5 16.7 -7.3 4.r 13.7 -2.8 5.0 r 8.0 -.3 —2.4 r 6.2 -3.0 — 8.7 r 16.0 6.0 .3' 1.6 5.7 -8.7r -9.5 14.3 - 1.7 r 1.6 4.9 -2.7 -9.5 14.2 30.5 36.9 27.6 16.5 10.3 14.7 27.9 9.0 18.0 15.6 69.2 32.6 21.6 7.4 18.6 -5.0 9.4 -14.6 -6.7 1.3 15.7 r 45.9 56.6' 11.7 11.3 r -13.5 - 34.9 r -7.8r 25.6 r 5.4 7.6 4.6 4.7 2.3 5.3 2.1' 6.3 r -2.0' 1.9' 1.6' 1.0' 11.2' 1.9' 3.0 5.5 Q2 1 2 3 4 Reserves of depository Total Required Nonborrowed. Monetary base 5 6 7 8 9 Concepts Ml M2 M3 L Debt of money, liquid assets, and Nontransaction 10 In M 2 5 11 In M 3 only 6 12 13 14 15 16 17 institutions2 debt4 components Time and savings deposits Commercial banks Savings, including M M D A s Small time 7 Large time 8 , 9 Thrift institutions Savings, including M M D A s Small time 7 Large time 8 Money market mutual 18 Retail 19 Institution-only funds Repurchase agreements and 20 Repurchase agreements 1 0 21 Eurodollars 1 0 Debt components4 22 Federal 23 Nonfederal -3.2 -10.3 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 " b r e a k s , " 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 " R e p o r t 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. M 2 : 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 funds with minimum 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: M 2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) balances in institutional money f u n d s (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 2.7 -13.0 91.9 16.3 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 f u n d balances, R P liabilities, and Eurodollars, each seasonally adjusted separately, and adding this result to seasonally adjusted M 2 . 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 f u n d 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 n o n f a r m 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 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). 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 f u n d 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 I R A 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 O F DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT 1 Millions of dollars Average of daily figures Average of daily figures for week ending on date indicated Apr. May Apr. 17 Apr. 24 May 1 May 8 377,309 2,398 378,891 4,566 380,178 1,983 379,270 5,830 380,152 2,559 417 2,492 180 2,442 503 10 10 57 33 614 31,025 M a y 15 M a y 22 6,126 379,507 529 380,618 1,405 379,272 727 380,634 2,315 2,491 22 2,491 266 2,444 179 2,444 99 2,444 2 2,444 876 24 106 4 24 179 36 21 64 22 78 27 92 26 113 315 31,857 517 31,054 397 32,094 140 32,431 -10 31,968 932 31,937 867 31,832 393 30,143 11,053 10,168 24,221 11,052 10,168 24,281 11,051 10,168 24,343 11,053 10,168 24,278 11,052 10,168 24,292 11,052 10,168 24,306 11,051 10,168 24,320 11,051 10,168 24,334 11,051 10,168 24,348 415.770 297 418,246 312 419,977 276 419,308 319 417,635 319 416,902 292 418,248 306 419,385 265 419,663 265 5,610 7,318 187 5,938 370 12,813 18,709 5,714 196 6,188 362 12,885 16,771 7,655 189 5,800 363 12,950 19,047 8,251 6,053 366 12,898 21,632 8,709 177 6,055 381 12,664 15,048 6,537 189 6,001 368 12,705 18,721 5,673 185 6,037 381 12,930 15,961 365 12,929 17,932 May 8 M a y 15 M a y 22 SUPPLYING RESERVE FUNDS 1 Reserve B a n k 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 415,263 421,821 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 Banks 17 Treasury 18 Foreign 19 Service-related balances and adjustments . . 20 Other 21 Other Federal Reserve liabilities and capital .. 22 Reserve balances with Federal Reserve B a n k s ' 186 5,992 394 13,022 18,515 End-of-month 180 Wednesday figures Apr. 17 Apr. 24 May 1 5,127 224 6,006 figures Apr. May 415,996 416,892 420,961 427,165 418,328 423,609 377,056 3,896 381,806 381,346 5,704 379,827 13,412 380,316 17,544 379,571 3,701 380,121 6,392 380,134 5,089 380,661 7,903 2,526 1,000 2,444 2,428 1,350 2,491 152 2,491 1,820 2,444 1,250 2,444 2,444 15 2,444 1,867 34 9 21 71 21 71 21 148 78 51 80 23 103 18 124 28 31,447 821 31,728 -341 30,318 336 32,532 302 33,691 -17 32,060 5,190 32,298 573 29,948 62 30,529 11,053 10,168 24,250 11,052 10,168 24,306 11,051 10,168 24,376 11,053 10,168 24,278 11,052 10,168 24,292 11,052 10,168 24,306 11,051 10,168 24,320 11,051 10,168 24,334 11,051 10,168 24,348 422,332 265 419,404 319 417,793 316 417,918 313 419,742 265 420,381 265 421,021 264 11,042 3,757 6,055 360 12,559 14,268 6,237 300 13,148 20,358 15,668 224 5,800 358 12,755 19,758 7,837 210 6,053 370 12,771 36,455 11,967 187 6,055 414 12,239 15,534 5,877 173 6,001 361 12,779 27,508 4,079 229 6,037 376 12,712 19,803 4,906 175 6,006 353 12,805 23,648 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 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 0 0 0 0 0 0 0 0 436,292 0 1 34 0 0 0 0 0 620 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 Other Federal Reserve liabilities and capital , 22 Reserve balances with Federal Reserve Banks' 416,261 314 7,021 191 5,928 348 12,714 18,690 166 160 1. A m o u n t s of cash held as reserves are shown in table 1.12, line 2. 2. Includes securities l o a n e d — f u l l y guaranteed by U.S. g o v e r n m e n t securities pledged with Federal Reserve B a n k s — a n d excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. 3. Excludes required clearing balances and adjustments to compensate for float. A5 A6 DomesticNonfinancialStatistics • August 1996 1.12 RESERVES AND BORROWINGS Depository Institutions 1 Millions of dollars Prorated monthly averages of biweekly averages Reserve classification 1 2 3 4 5 6 7 8 9 10 Reserve balances with Reserve Banks" Total vault cash 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 Dec. Dec. Dec. Nov. Dec. Jan. Feb. Mar. Apr. May 29,374 36,818 33,484 3,334 62,858 61,795 1,063 82 31 0 24.658 40,378 36,682 3,696 61,340 60.172 1,168 209 100 0 20,440 42,117 37,460 4,657 57,900 56.622 1,278 257 40 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 17,763 44,790 39,170 5,620 56,934 55,449 1,485 38 7 0 16,792 42,205 36,957 5,248 53,749 52,898 851 35 7 0 18,426 40,968 36,458 4,510 54,884 53,747 1,137 21 10 0 19,181 40,967 36,688 4,278 55,869 54,750 1,120 91 34 0 16,752 41,229 36.393 4,836 53,145 52,274 871 127 105 0 1995 1996 Biweekly averages of daily figures for two week periods ending on dates indicated 1996 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" Total reserves 6 Required reserves Excess reserve balances at Reserve Banks 7 Total borrowings at Reserve Banks 8 Seasonal borrowings Extended credit 9 Jan. 31 Feb. 14 Feb. 28 Mar. 13 Mar. 27 Apr. 10 Apr. 24 May 8 May 22 June 5 15,055 46,042 39,626 6,416 54,681 53,356 1,326 16 5 0 15.546 44,132 38.455 5,677 54,001 53,288 713 24 7 0 17,938 40,326 35,468 4,858 53,406 52,436 970 47 8 0 18,192 41,536 36,845 4,691 55,037 53,926 1,111 15 8 0 18,492 40,438 36,011 4,428 54,502 53,346 1,156 20 12 0 18,954 40,977 36,767 4,210 55,721 54,567 1,154 47 16 0 20,331 40,478 36,417 4,061 56,748 55,629 1,119 122 30 0 16,876 r 42,089 37,190 4,900 54,065 r 53,002 l,063 r 92 71 0 16,946 40,901 36,091 4,810 53.037 52,201 836 129 103 0 16,339 40,976 36,156 4,820 52,495 51,741 754 156 138 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. 1.13 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. SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks' Millions of dollars, averages of daily figures 1996, week ending Monday Source and maturity Apr. 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 1 Apr. 8 Apr. 15 Apr. 22 Apr. 29 83,135 13,693 93,383 15,245 90.606 13,622 87,706 15,649 81,920 17,657 20,235 20,089 23.383 24,078 17,583 17,066 17.877 18,141 24,315 14.939 28,287 33.927 21,031 32,227 35,665 14.188 34.918 18.634 59.288 23,208 May. 6 90,634 May. 13 May. 20 May. 27 17.658 90,281 18,091 87,271 17,719 83,461 18,158 19,054 19,876 26,513 22,613 21,793 19,418 21,270 21,738 21,868 23,296 19,212 37,802 16,707 40,479 19,490 20,268 44,427 24,202 21,354 41,910 38,923 40,445 36,844 34,546 35,314 36,149 37.594 38,331 39,166 13,684 13,150 13,962 13,732 14,125 14,259 14,130 65,123 64.862 64,377 68,117 74,721 68,708 65,644 65,153 27,200 26.093 25,851 26,548 29,922 26,396 26,432 25,647 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" 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, Policy Instruments 1.14 A7 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels On 7/5/96 On 7/5/96 Previous rate Boston New York. . . . Philadelphia . . Cleveland Richmond. . . . Atlanta 2/1/96 1/31/96 1/31/96 1/31/96 2/1/96 1/31/96 Chicago St. Louis Minneapolis . . Kansas City . . Dallas San Francisco. 2/1/96 2/5/96 1/31/96 2/1/96 1/31/96 1/31/96 Extended credit Seasonal credit" Adjustment credit Federal Reserve Bank On 7/5/96 Effective date 7/5/96 7/5/96 7/5/96 7/5/96 Range of rates for adjustment credit in recent years Range (or level)—All F.R. Banks F.R. Bank of N.Y. 9 20 May 11 1V 3 July 10 Aug. Sept. •>•> Oct. 16 ?0 Nov. 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 ->0 Sept. 19 10 10-10.5 10.5 10.5-11 11 11-12 12 1981—Nov. In effect Dec. 31, 1977 1978—Jan. >\ Oct. 8 10 15 19 79 May <0 June 13 16 July 98 1980—Feb. >9 Sept. 96 Nov. 17 Dec. 5 1981—May 5 8 Range (or level)—All F.R. Banks 10 10.5 10.5 11 11 12 12 12-13 13 12-13 12 11-12 11 10-11 10 11 12 12-13 13 13-14 13 13 14 13 12 11 11 10 10 11 12 13 13 14 14 Dec. 2 6 4 1982—July 20 23 Aug. 2 3 16 27 30 Oct. 12 13 Nov. 22 26 Dec. 14 15 17 1984—Apr. 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 13 13 12 11.5 11.5 11 11 10.5 10 10 9.5 9.5 9 9 9 8.5 8.5 8.5-9 9 8.5-9 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 7 7 6.5 6.5 7 10 Apr. 21 23. July 11 Aug. 21 22 1987—Sept. 4 11 6 9 ... . 11 6-6.5 6.5 6.5 6.5 1989—Feb. 24 . . . . 27 . . . . 6.5-7 7 7 7 1988—Aug. 1990—Dec. 19 . . . . 1991—Feb. 1... 4 ... Apr. 30 . . . May 2 . . . Sept. 13 17 Nov. 6 . . . 8.5 8.5 6 5.5-6 5.5 5.5 5.5 5.5-6 6 6 6 . . . . . 1 .... Dec. 20 . . . . 24 . . . . 6.5 6.5 6-6.5 6 5.5-6 5.5 5-5.5 5 4.5-5 4.5 3.5^.5 3.5 6 6 5.5 5.5 5 5 4.5 4.5 3.5 3.5 2 ... . 3-3.5 3 3 3 1994—May 17 18 Aug. 16 18 Nov. 15 17 . . . . 3-3.5 3.5 3.5—4 4 1992—July 9 13 Nov. 21 26 Dec. 24 1. Available on a short-term basis to help depository institutions meet temporary needs for funds that cannot be met through reasonable alternative sources. The highest rate established for loans to depository institutions may be charged on adjustment credit loans of unusual size that result from a 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 funds that arise from a clear pattern of intrayearly movements in their deposits and loans and that cannot be met through special industry lenders. The discount rate on seasonal credit takes into account rates charged by market sources of funds and ordinarily is reestablished on the first business day of each two-week reserve maintenance period; however, it is never less than the discount rate applicable to adjustment credit. 3. May be made available to depository institutions when similar assistance is not reasonably available from other sources, including special industry lenders. Such credit may be provided when exceptional circumstances (including sustained deposit drains, impaired access to money market funds, or sudden deterioration in loan repayment performance) or practices involve only a particular institution, or to meet the needs of institutions experiencing difficulties adjusting to changing market conditions over a longer period (particularly at times of deposit disintermediation). T h e 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 Range (or level)—All F.R. Banks F.R. Bank of N.Y. 1 .... 4.75 3.5 3.5 4 4 4.75 4.75 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 In effect July 5, 1996 5.00 5.00 1995—Feb. 1 .... 9 ... . 4-4.15 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 funds is charged. The rate ordinarily is reestablished on the first business day of each two-week reserve maintenance period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis points. 4. For earlier data, see the following publications of the Board of Governors: Banking and Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest. 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 from Mar. 17, 1980, through May 7, 1980. A surcharge of 2 percent was reimposed on Nov. 17, 1980; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the surcharge was changed from a calendar quarter to a moving thirteen-week period. The surcharge was eliminated on Nov. 17, 1981. A8 DomesticNonfinancialStatistics • August 1996 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1 Requirement Type of deposit 1 Net transaction accounts2 $0 million-$52.0 million 3 1. R e q u i r e d reserves must be held in the f o r m 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 m a i n t a i n reserve balances with a Federal R e s e r v e B a n k indirectly, o n a p a s s - t h r o u g h basis, with certain a p p r o v e d institutions. For p r e v i o u s 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 C o n t r o l 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 f o r e i g n 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, or telephone or 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 by check, draft, debit card, or similar order) are savings deposits, not transaction accounts. 3. T h e 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. Effective 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 Percentage of deposits Effective date 3 10 12/19/95 12/19/95 0 12/27/90 0 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. N o corresponding adjustment is m a d e in the event of a decrease. T h e exemption applies only to accounts that would be subject to a 3 percent reserve requirement. Effective Dec. 19, 1995, the exemption was raised f r o m $4.2 million to $4.3 million. 4. The 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 1 '/2 years was reduced from 3 percent to 1 l /l percent for the maintenance period that began Dec. 13, 1990, and to zero for the maintenance period that began Dec. 27, 1990. For institutions that report quarterly, the reserve requirement on nonpersonal time deposits with an original maturity of less than 1Vi years was reduced f r o m 3 percent to zero on Jan. 17, 1991. The reserve requirement on nonpersonal time deposits with an original maturity of 1 l/l years or more has been zero since Oct. 6, 1983. 6. The reserve requirement on Eurocurrency liabilities was reduced f r o m 3 percent to zero in the same manner and on the same dates as the reserve requirement on nonpersonal time deposits with an original maturity of less than 1 [/2 years (see note 5). Policy Instruments A9 1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS' Millions of dollars 1996 1995 Type of transaction and maturity 1993 1994 1995 Oct. U.S. TREASURY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Dec. Jan. Feb. Mar. Apr. 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 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 FEDERAL AGENCY Nov. 17,717 0 332,229 0 17,484 0 376,277 0 10,932 0 398,487 900 1,350 0 29,397 900 4,271 0 39,057 0 0 0 31,535 0 0 0 31,476 0 0 0 39,332 0 0 0 30,556 0 88 0 32,218 0 1,223 0 31,368 -36,582 0 1,238 0 0 -21,444 0 390 0 0 0 0 0 0 1,745 -2,049 0 0 0 6,108 -4,937 0 390 0 0 0 0 0 0 2,048 -3,287 1,228 0 0 2,746 -7,575 0 0 0 0 0 0 35 0 3,511 -4,824 787 10,350 0 -27,140 0 9,168 0 -6,004 17,801 4,966 0 0 0 0 0 -1,745 2,049 0 0 -5,292 3,237 2,317 0 0 0 0 0 -2,048 3,287 0 0 -1,908 5,175 0 0 0 0 1,899 0 3,511 4,824 4,168 0 0 0 3,818 0 -3,145 2,903 1,239 0 0 0 0 0 0 0 400 0 -816 1,700 0 0 0 0 0 0 0 0 0 0 -818 1,500 0 0 0 0 479 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 1,884 0 0 0 0 0 0 0 0 0 -20 900 0 0 0 0 1,065 0 0 0 36,915 0 767 35,314 0 2,337 20,649 0 2,376 1,350 0 1,385 4,671 0 0 4,591 0 0 0 0 1,228 0 0 0 0 0 0 3,566 0 787 1,475,941 1,475,085 1,700,836 1,701,309 2,197,736 2,202,030 216,755 213,161 226,340 228,419 227,858 228,071 260,425 259,186 274,290 275,979 251,623 251,086 253,482 251,510 475,447 470,723 309,276 311,898 331,694 328,497 28,825 32,980 44,569 39,876 34,325 28,546 16,040 28,802 6,230 6,230 31,602 27,706 48,869 50,345 41,729 29,882 17,175 -597 7,285 10,157 -12,751 -1,689 4,433 3,274 0 0 774 0 0 1,002 0 0 1,303 0 0 83 0 0 120 0 0 58 0 0 0 0 0 0 0 0 108 0 0 82 35,063 34,669 52,696 52,696 36,851 36,776 3,740 3,605 3,763 3,973 2,888 1,788 9,793 10,893 765 765 5,640 4,640 2,372 3,372 -380 -1,002 -1,228 52 -330 1,042 -1,100 0 892 -1,082 41,348 28,880 15,948 -545 6,955 11,199 -13,851 -1,689 5,325 2,192 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. A10 1.18 DomesticNonfinancialStatistics • August 1996 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements' Millions of dollars Account May 1 May 8 Wednesday End of month 1996 1996 May 15 May 22 May 29 Mar. 31 Apr. 30 May 31 Consolidated condition statement ASSETS 1 2 Gold certificate account Special drawing rights certificate account 3 11,051 10,168 538 11,053 10,168 579 11,052 10,168 574 11,051 10,168 552 161 43 93 155 0 0 0 0 0 0 0 0 2,444 1,867 2,428 2,526 2,444 2,428 850 1,000 0 1,350 11,051 11,052 10,168 574 11,051 10,168 11,051 10,168 579 575 10,168 569 92 0 101 0 126 0 142 0 0 0 0 0 2,444 1,250 2,444 620 2,444 15 6 Loans To depository institutions Other Acceptances held under repurchase agreements 7 8 Federal agency obligations Bought outright Held under repurchase agreements 9 Total U.S. T r e a s u r y securities 383,272 386,513 385,223 388,564 385,154 380,952 381,806 387,050 379,571 183,026 380,121 183,576 380,134 380,661 184,116 381,789 185,244 150,102 46,443 150,102 46,443 150,102 46,443 150,102 150,102 377,056 183,202 148,885 381,806 185,262 150,102 381,346 184,801 150,102 13 14 Bought outright* Bills Notes Bonds Held under repurchase agreements 44,969 46,443 6,392 5,089 46,443 7,903 46,443 3,701 3,365 3,896 0 46,443 5,704 15 Total l o a n s a n d securities 387,058 389,678 387,808 393,017 388,593 384,521 384,343 390,983 16 Items in process of collection Bank premises 6,450 1,158 11,677 1,161 6,268 1,171 5,388 8,200 1,170 4,197 1,150 8,452 1,158 4,007 1,171 19,706 19,713 11,344 19,721 19,985 19,705 19,561 9,306 19,729 9,585 19,737 11,131 9,693 10,333 10,760 9,538 447,297 455,372 446,068 450,678 449,151 441,986 446,211 447,032 394,498 396,265 396,887 397,505 400,169 392,903 394,236 398,773 34,285 40,424 30,924 35,245 28,579 32,301 31,975 30,901 21,716 34,013 26,241 29,811 22,660 20,407 26,685 11,967 187 414 5,877 173 4,079 229 4,906 191 11,042 166 3,757 160 361 376 175 353 5,381 180 357 24,740 7,021 348 360 300 6,275 4,064 5,904 5,545 4,226 5,123 4,217 4,069 7,441 4,153 4,261 4,061 4,210 4,542 440,523 433,534 437,713 438,426 4,154 4 5 10 11 1? 17 18 19 Other assets Denominated in foreign currencies 3 All other 4 20 Total assets 21 Federal Reserve notes 183,589 1,171 LIABILITIES 22 Total deposits 26 Depository institutions U.S. Treasury—General account Foreign—Official accounts Other 27 28 Deferred credit items Other liabilities and accrued dividends 5 23 24 25 29 Total liabilities 30 31 32 Capital paid in Surplus Other capital accounts 33 Total liabilities a n d c a p i t a l a c c o u n t s 34 Marketable U.S. Treasury securities held in custody for foreign and international accounts CAPITAL 4,328 7,622 439,122 446,921 437,583 442,091 4,023 4,020 3,966 4,050 3,966 469 4,100 3,966 521 4,100 3,966 562 4,037 3,966 449 4,023 3,957 465 518 3,960 492 447,297 455,372 446,068 450,678 449,151 441,986 446,211 447,032 549,259 551,297 553,043 550,963 553,973 550,496 550,662 556,832 507,928 514,098 ACCOUNTS 3,957 195 MEMO Federal Reserve note statement 114,102 114,435 116,120 513,943 113,774 506,144 113,404 113,241 113,691 115,325 394,498 396,265 396,887 397,505 400,169 392,903 394,236 398,773 38 11,052 11,051 11,051 11,051 11,051 11,053 11,052 11,051 39 10,168 10,168 10,168 10,168 10,168 10,168 10.168 10,168 0 0 375,046 0 375,668 0 0 0 0 373,278 376,286 378,950 371,682 373,017 0 377,554 394,498 396,265 396,887 397,505 400,169 392,903 394,236 398,773 35 36 37 Federal Reserve notes outstanding (issued to Banks) LESS: Held by Federal Reserve Banks Federal Reserve notes, net Collateral held against notes, net Gold certificate account Special drawing rights certificate account 4f Other eligible assets 4 1 U.S. Treasury and agency securities 42 Total c o l l a t e r a l 507,902 510,367 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical release. For ordering address, see inside front cover. 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. 511,322 513,625 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. Federal Reserve Banks 1.19 FEDERAL RESERVE BANKS All Maturity Distribution of Loan and Security Holding Millions of dollars Type of holding and maturity May 1 Wednesday End of month 1996 1996 May 8 May 15 M a y 22 May 29 Mar. 31 Apr. 3 0 M a y 31 1 Total l o a n s 92 101 126 142 161 43 92 156 2 Within fifteen days' 3 Sixteen days to ninety days 36 56 37 64 52 74 135 7 148 12 36 7 59 33 75 80 4 Total U.S. T r e a s u r y securities 383,349 386,513 385,223 388,564 385,154 377,056 381,806 381,346 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 21,349 87,527 111,381 91,995 32,299 38,721 20,117 89,053 114,327 91,995 32,299 38,721 19,563 84,416 117,906 91,676 32,941 38,721 23,838 86,962 114,426 91,676 32,941 38,721 20,249 92,031 109,536 91,676 32,941 38,721 8,963 99,039 109,875 89,228 32,151 37,801 15,945 91,464 111,381 91,995 32,299 38,721 2,926 98,950 116,114 91,694 32,941 38,721 11 Total f e d e r a l a g e n c y o b l i g a t i o n s 3,694 3,064 2,459 4,311 3,278 2,526 2,443 2,428 12 13 14 15 16 17 1,250 685 731 512 492 25 620 841 575 512 492 25 31 845 575 512 472 25 2,215 513 575 512 472 25 1,222 473 575 512 472 25 280 569 600 526 527 25 154 685 577 512 492 25 372 473 575 512 472 25 5 6 7 8 9 10 Within fifteen d a y s ' 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 f r o m this table because data are no longer available. A12 1.20 DomesticNonfinancialStatistics • August 1996 AGGREGATE RESERVES O F DEPOSITORY INSTITUTIONS AND MONETARY BASE 1 Billions of dollars, averages of daily figures 1996 1995 1992 Dec. Item 1993 Dec. 1994 Dec. 1995 Dec. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 55.61 55.57 55.57 54.12 435.17 54.85 54.81 54.81 54.00 433.67 55.73 55.71 55.71 54.59 436.86 55.18 55.09 55.09 54.06 436.60 54.24 54.11 54.11 53.37 436.95 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 1 2 3 4 5 REQUIREMENTS2 Total reserves 3 Nonborrowed reserves 4 Nonborrowed reserves plus extended credit 5 Required reserves Monetary base 6 54.37 54.24 54.24 53.21 351.24 60.52 60.44 60.44 59.46 386.88 59.36 59.16 59.16 58.20 418.72 56.36 56.11 56.11 55.09 435.01 56.84 56.59 56.59 55.76 432.74 56.33 56.13 56.13 55.39 433.21 56.36 56.11 56.11 55.09 435.01 Not seasonally adjusted 6 7 8 9 10 Total reserves 7 Nonborrowed reserves Nonborrowed reserves plus extended credit 3 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 58.02 57.76 57.76 56.74 439.03 56.56 56.31 56.31 55.48 431.60 56.57 56.37 56.37 55.63 433.22 58.02 57.76 57.76 56.74 439.03 56.95 56.91 56.91 55.47 436.01 53.80 53.77 53.77 52.95 430.29 54.97 54.95 54.95 53.84 434.85 56.00 55.90 r 55.90 r 54.88 437.07 r 53.30 53.17 53.17 52.43 436.08 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 56.62 444.45 1.28 .26 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 56.62 444.45 1.28 .26 56.93 56.90 56.90 55.45 441.96 1.49 .04 53.75 53.72 53.72 52.90 436.26 .85 .04 54.88 54.86 54.86 53.75 440.75 1.14 .02 55.87 55.78 55.78 54.75 442.91 1.12 .09 53.15 53.02 53.02 52.27 442.11 .87 .13 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 1 0 11 12 13 14 15 16 17 Total reserves' 1 Nonborrowed reserves Nonborrowed reserves plus extended credit 5 Required reserves Monetary base 1 2 Excess r e s e r v e s ' 3 Borrowings f r o m the Federal Reserve 1. Latest monthly and biweekly figures are available from the Board'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 from 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 " 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 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 " 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 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 n o 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). Monetary and Credit Aggregates 1.21 A13 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES 1 Billions of dollars, averages of daily figures 1996 Item 1992 Dec. 1993 Dec. 1994 Dec. 1995 Dec. Mar. r Apr. May 1,117.3 3,693.9 r 4,642.9 r 5,725.lr 14,015.6 r 1,126.6 3,729.9 4,685.5 5,784.5 14,066.2 1,123.7 3,736. l r 4,692.4 r 5,806.1 14,122.6 1,117.5 3,731.1 4,705.9 n.a. n.a. Feb. Seasonally adjusted 1 2 3 4 5 Measures2 Ml M2 M3 L Debt 6 7 8 9 Ml components Currency 3 Travelers checks 4 Demand deposits' Other checkable deposits 6 1,124.9 3,662.6 r 4,576.0 r 5,685.5' 13,871.3 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 4,319.7 5,303.7 13,153.2 292.9 8.1 339.1 384.2 322.4 7.9 384.3 414.0 354.9 8.5 382.4 402.9 373.2 8.9 389.8 353.0 373.3 8.9 397.4 337.8 375.2 8.9 407.1 335.4 375.9 8.9 406.3 332.6 377.0 8.7 409.7 322.1 2,414.3 748.6 2,365.4 755.6 2,360.7 810.3 2,537.7 r 913.4 2,576.6 r 949.0 r 2,603.3 955.6 2,612.4 r 956.3 r 2,613.6 974.7 Commercial hanks 12 Savings deposits, including M M D A s 13 Small time deposits 9 14 Large time deposits' 0 , " 754.1 509.3 286.6 785.0 470.4 272.3 751.9 505.4 298.7 775.0 578.5 r 342.4 804.1 580.3 r 346.2 821.0 578.1 354.1 827.0 576.4 r 356.6' 829.8 575.3 362.3 Thrift institutions 15 Savings deposits, including M M D A s 16 Small time deposits 9 17 Large time deposits' 0 433.0 361.9 67.1 433.8 317.6 61.5 397.0 318.2 64.8 359.5 359.6 r 75.0 360.4 357.r 76.1 362.1 354.5 75.5 366.4 354.0 r 75.6 367.9 353.2 75.0 Money market mutual 18 Retail 19 Institution-only 356.0 199.8 358.7 197.9 388.1 183.7 465.1 227.2 474.7 243.9 487.6 248.3 488.7 245.6 487.4 243.5 128.1 66.9 157.5 66.3 180.8 82.3 177.6 91.2 186.2 96.4 r 184.1 93.6 182.9' 95.6' 196.9 96.9 3,068.6 8,813.1 3,328.3 9,188.1 3,497.6 9,655.6 3,644.6 10,226.7 3,661.7 r 10,353.9 r 3,696.0 10,370.2 3,705.2 10,417.4 n.a. n.a. 1,115.9 3,722.7 4,675.4 5,785.3 14,023.9 1,130.0 3,749.0' 4,697.3' 5,811.7 14,052.9 1,104.3 3,716.6 4,690.8 n.a. n.a. Nontransaction 10 In M 2 7 11 In M 3 only 8 components funds Repurchase agreements and 20 Repurchase a g r e e m e n t s ' 2 21 Eurodollars' 2 Eurodollars Debt components 22 Federal debt 23 Nonfederal debt Not seasonally adjusted Measures2 24 M l 25 M 2 26 M 3 1,150.7 3,682.3 r 4,597. l r 5,715.0 r 13,858.0 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 4,341.5 5,333.2 13,145.8 295.0 7.8 354.4 388.9 324.8 7.6 401.8 419.4 357.5 8.1 400.1 408.4 376.1 8.5 407.9 358.1 370.8 8.5 388.3 336.0 374.3 8.6 397.5 335.5 375.8 8.6 406.1 339.5 377.5 8.6 399.5 318.7 2,409.1 750.2 2,360.4 757.1 2,355.6 811.7 2,531.5 r 914.8 2,570.8 r 949.6 r 2,606.8 952.7 2,619.0' 948.3' 2,612.3 974.2 Commercial banks 35 Savings deposits, including M M D A s 36 Small time deposits 9 37 Large time deposits 1 0 , " 752.9 507.8 286.2 784.3 468.2 272.1 751.6 502.5 298.5 775.0 574.5 r 342.3 798.9 579.4 r 344.7 819.0 579.3 352.6 826.0 578.3' 353.9' 827.8 577.4 364.6 Thrift institutions 38 Savings deposits, including M M D A s 39 Small time deposits 9 40 Large time d e p o s i t s ' 0 432.4 360.9 67.0 433.4 316.1 61.5 396.9 316.4 64.8 359.5 357.1' 75.0 358.1 356.4 r 75.8 361.2 355.3 75.2 365.9 355.2' 75.0 367.0 354.5 75.5 Money market mutual 41 Retail 42 Institution-only 355.1 201.1 358.3 199.4 388.2 185.5 465.4 229.4 478.0 249.6 492.1 248.7 493.5 242.8 485.5 241.1 127.2 68.7 156.6 67.6 179.6 83.4 176.1 91.9 183.5 96. l r 182.3 94.0 182.3' 94.3' 197.2 95.7 3,069.8 8,813.4 3,329.5 9,179.8 3,499.0 9,646.8 3,645.9 10,212.1 3,655.5 r 10,310.3 r 3,698.1 10,325.8 28 Debt 29 30 31 32 MI components Currency 3 Travelers checks 4 Demand deposits 5 Other checkable deposits 6 Nontransaction 33 In M 2 7 34 In M 3 only 8 1,103.6 3,674.4 r 4,624. l r 5,714.2 r 13,965.8 r components funds Repurchase agreements and 43 Repurchase agreements' 2 44 Eurodollars' 2 Eurodollars Debt components 45 Federal debt 4 6 Nonfederal debt Footnotes appear on following page. 3,697.6 10,355.3 n.a. n.a. A14 DomesticNonfinancialStatistics • August 1996 N O T E S T O TABLE 1.21 1. Latest monthly and weekly figures are available from the B o a r d ' 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, DC 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 f u n d s (money funds with minimum 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) issued by all depository institutions, (2) balances in institutional money funds (money funds with minimum initial investments of $50,000 or more), (31 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, RP 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 from the Federal Reserve Board'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). 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 f u n d 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. Monetary and Credit Aggregates 1.22 DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING Commercial and BIF-insured saving banks 1 1996 r 1995 1993 Dec. A15 1994 r Dec. Sept. Oct. Nov. Dec. r Jan. Feb. Mar. Apr. May 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-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 Vi years More than 2Vl years BIF-INSURED SAVINGS 1.96 2.92 1.92 3.13 r 1.91 3.11 1.93 3.13 1.91 3.10 1.90 3.01 1.91 2.98 1.85 2.91 1.89 2.91 1.88 2.89 2.65 2.91 3.13 3.55 4.28 3.79 4.45 5.12 5.74 6.30 4.10 4.75 5.13 5.32 5.59 4.11 4.75 5.15 5.31 5.56 4.13 4.74 5.11 5.27 5.49 4.10 4.68 5.02 5.17 5.40 4.02 4.57 4.91 5.03 5.26 3.99 4.45 4.79 4.89 5.10 4.02 4.49 4.83 4.94 5.19 4.01 4.51 4.86 5.03 5.28 3.99 4.51 4.89 5.11 5.36 1.87 2.63 1.94 2.87 2.00 2.95 1.98 2.96 1.94 2.99 1.91 2.98 1.85 2.95 1.84 2.92 1.83 2.86 1.84 2.85 1.82 2.84 2.81 3.02 3.31 3.67 4.62 3.80 4.89 5.52 6.09 6.42 4.27 5.07 5.35 5.52 5.73 4.32 5.05 5.31 5.51 5.68 4.43 5.02 5.28 5.47 5.64 4.43 4.95 5.18 5.33 5.46 4.38 4.86 5.06 5.22 5.34 4.26 4.77 4.91 5.10 5.24 4.37 4.76 4.89 5.15 5.24 4.42 4.77 4.91 5.23 5.32 4.49 4.83 4.96 5.25 5.38 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 x/i years More than 2Vl years of Amounts outstanding (millions of dollars) INSURED COMMERCIAL BANKS 15 Negotiable order of withdrawal accounts 16 Savings deposits 3 1/ Personal Nonpersonal 18 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 x/i years More than 2 '/> years 253,568 746,351 585,762 160,589 258,175 745,936 r 585,896 r 160,040 r 257,098 r 753,139 r 588,995 164,144' 248,417 776,466 615,113 161,353 245,749 768,071 612,321 155,750 242,930 784,035 623,110 160,925 218,604 827,666 661,919 165,748 228,736 805,431 640,003 165,428 208,932 839,656 670,277 169,379 29,362 109,050 145,386 139,781 180,461 32,218 96,461 163,282 164,499 192,632 29,794 92,250 189,663 r 204,869 201,006 29,906 r 93,390 r 187,727 r 206,579 199,47 l r 31,093 r 95,513 r 184.7041" 208,315 r 199,389 r 32,170 93,941 183,834 208,601 199,002 33,783 95,350 184,046 212,394 199,254 35,719 97,219 184,095 210,493 198,922 35,377 97,141 186,158 208,915 198,980 34,076 96,064 190.045 208,277 197,797 33,417 96,272 193,043 207,849 196,558 144,011 144,092 150,298 150,101 r 149,647 r 150,067 150,366 149,965 150,496 150,586 150,089 11,191 80,376 77,263 3,113 10,698 68,223 65,396 2,826 10,884 67,726 64,519 3,207 10,789 67,732 64,432 3,300 11,088 68,345 64,932 3,413 11,918 68,643 65,366 3,277 11,139 66,702 63,377 3,325 11,597 67,614 64,524 3,090 11,703 67,276 64,208 3,068 11,492 66,808 63,559 3,249 11,744 67,715 64.199 3,516 2,746 12,974 17,469 16,589 20,501 2,068 10,867 17,484 16,964 20,339 1,656 10,757 23,654 26,558 22,251 1,691 10,790 24,006 26,678 22,411 1,819 11,394 24,833 27,149 22,552 2,001 12,140 25,686 27,482 22,866 2,009 12,334 26,304 26,582 22,449 2,131 13,247 26,863 26,945 21,819 2,140 13,477 26,534 25,934 22,646 2,179 13,911 27,265 25,684 22,526 2,345 13,934 28,079 25,422 22,638 19,791 18,376 21,029 21,042 21,23 l r 21,408 20,827 20,845 20,615 20,553 20,543 BANKS4 25 Negotiable order of withdrawal accounts 26 Savings deposits 3 Personal 27 Nonpersonal 28 29 30 31 32 33 304,901 737,081 580,449 156,633 of 24 IRA and Keogh plan deposits BIF-INSURED SAVINGS 305,237 767,035 598,276 168,759 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'/? years More than l'/2 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 N O W 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. A16 1.23 Domestic Financial Statistics • August 1996 BANK DEBITS AND DEPOSIT TURNOVER1 Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates 1996 1995 Bank group, or type of deposit 1993 2 Nov. Oct. 4 Other checkable deposits 4 5 Savings deposits (including M M D A s ) 5 Jan. Feb. Mar. Seasonally adjusted DEBITS Demand deposits3 1 All insured banks 2 Major N e w York City banks 3 Other banks Dec. 334,784.1 171,224.3 163,559.7 369,029.1 191,168.8 177,860.3 397,649.3 201,161.4 196,487.9 413,927.0 210,336.6 203,590.4 409,460.9 204,484.0 204,976.9 397,538.3 203,977.5 193,560.8 430,522.2 r 229,379.9 201,142.2' 447,959.6 r 238,537.8 209,421.7 r 422,702.6 224,066.4 198,636.2 3,481.5 3,497.4 3,798.6 3,766.3 4,207.4 4,507.8 4,690.4 5,328.6 4,891.5 5,679.4 4,595.5 5,703.6 4,960.5 r 6,025.9 r 5,034.7 6,397.2 r 5,024.1 6,340.6 785.9 4,198.1 424.6 817.4 4,481.5 435.1 874.1 4,867.3 475.2 907.5 5,269.7 489.2 905.5 5,222.3 496.3 852.7 5,069.7 454.4 917.1 5,368.0 471.4 950.8 5,852.3 486.6 881.0 5,608.2 451.6 11.9 4.6 12.6 4.9 15.4 6.1 18.0 7.1 19.1 7.5 18.6 7.4 20.8 7.7 21.6 8.1 22.1 7.8 DEPOSIT TURNOVER Demand deposits3 6 All insured banks Major New York City banks 7 8 Other banks 9 Other checkable deposits 4 10 Savings deposits (including M M D A s ) 5 Not seasonally adjusted DEBITS Demand deposits3 11 All insured banks 12 Major N e w York City banks Other banks 13 14 Other checkable deposits 4 15 Savings deposits (including M M D A s ) 5 334,899.2 171,283.5 163,615.7 369,121.8 191,226.0 177,895.7 397,657.8 201.182.6 196,475.3 413,547.6 212,506.0 201,041.7 398,219.1 202,744.5 195,474.6 411,802.7 210,780.0 201,022.7 429,314.0 r 227,293.7 202,020.3 r 414,903.0 r 222,007.5 192,895.5 r 442,983.8 236,954.2 206,029.6 3,481.7 3,498.3 3,795.6 3,764.4 4,202.6 4,500.8 4,565.4 5,075.1 4,566.6 5,388.7 4,784.8 6,013.9 5,385.9 6,299.2 r 4,638.6 r 5,790.4 r 5,072.7 6,503.7 786.1 4,197.9 424.8 818.2 4,490.3 435.3 874.6 4,873.1 475.4 895.4 5,292.2 476.7 860.5 5,046.6 462.5 847.5 4,900.9 453.9 895.6 5,109.7 464.5 901.1 5,427.5 459.8 947.0 6,060.5 480.6 11.9 4.6 12.6 4.9 15.3 6.1 17.7 6.8 17.8 7.1 19.0 7.8 22.0 8.1 19.9 7.3 22.2 8.0 DEPOSIT TURNOVER Demand deposits3 16 All insured banks 17 Major N e w York City banks Other banks 18 19 Other checkable deposits 4 20 Savings deposits (including M M D A s ) 5 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. 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. Commercial Banking Institutions 1.26 A17 ASSETS AND LIABILITIES OF COMMERCIAL BANKS 1 Billions of dollars Wednesday figures Monthly averages Account 1995 May 1996 r 1995 Nov. Dec. Jan. Feb. A L L COMMERCIAL Mar. 1996 Apr. May May 8 May 15 May 22 May 29 Seasonally adjusted 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 3,491.4' 985.7 r 710.7 r 275.0 r 2,505.7 687.8 1,043.8 77.2 966.6 472.9 88.3 213.0 185.6 210.5 223. l r 3,593.1' gsgxf 714.5 274.5 r 2,604.1 713.6 1,078.1 78.8 999.3 492.9 86.9 232.5' 196.4 216.2 230.9' 3,605.1' 990.7' 710.8 279.8' 2,614.5' 716.6 1,079.3 79.1 1,000.2 495.7 83.7 239.2 196.8 223.7 239.6' 3,631.6 990.1 702.9 287.2 2,641.5 722.5 1,086.2 79.7 1,006.6 500.4 84.9 247.4 204.0 233.1 237.0 3,642.4 995.8 715.8 280.0 2,646.7 725.5 1,089.3 79.9 1,009.4 500.5 85.7 245.6 194.2 219.1 242.6 3,633.5 979.7 705.2 274.5 2,653.7 723.1 1,094.2 79.8 1,014.3 503.6 85.1 247.8 205.4 215.7 241.6 3,649.4 978.6 704.9 273.7 2,670.8 728.5 1,095.8 80.0 1,015.8 506.2 85.6 254.7 212.2 221.6 243.5 3,653.8 985.5 713.5 272.0 2,668.3 732.7 1,095.7 79.8 1,015.9 503.8 81.8 254.2 212.1 218.6 243.8 3,655.2 982.8 715.2 267.6 2,672.4 731.5 1,095.4 79.7 1,015.8 503.6 87.8 254.0 213.8 223.1 245.9 3,650.6 988.7 715.6 273.1 2,661.9 734.5 1,096.1 79.7 1,016.4 502.6 74.6 254.2 215.8 221.6 244.2 3,661.7 986.7 713.4 273.3 2,675.0 734.6 1,096.0 79.6 1,016.3 502.7 85.6 256.1 208.4 222.0 241.4 3,648.2 985.4 712.7 272.7 2,662.9 730.6 1,095.2 79.7 1,015.5 504.8 78.7 253.5 209.1 209.6 238.8 4,053.r 4,180.1 r 4,208.7' 4,249.0 4,241.8 4,239.5 4,269.9 4,271.6 4^81.4 4,275.4 4,276.8 4,249.1 2,570.6 786.7 1,784.0 391.6 1,392.3 677.5 185.3 492.2 241.1' 222.8 r 2,642.1 768.2 1,873.9 423.3 1,450.6 674.7 198.5 476.2 263.5' 228.4' 2,659.2 773.9 1,885.3 421.3 1,464.0 690.5' 198.4 492.2 262.6' 238.7' 2,687.3 783.4 1,903.9 421.7 1,482.1 705.3 208.2 497.1 270.1 231.1 2,681.0 766.6 1,914.4 425.8 1,488.5 691.4 195.5 495.9 276.5 234.4 2,701.5 768.4 1,933.1 428.3 1,504.8 687.2 207.7 479.5 261.4 225.6 2,717.4 771.9 1,945.5 432.5 1,513.0 707.7 209.9 497.8 254.4 233.6 2,716.7 758.4 1,958.2 439.2 1,519.1 707.1 209.5 497.6 255.8 222.8 2,709.5 757.5 1,952.0 434.6 1,517.4 726.1 212.6 513.5 268.2 221.4 2,737.3 778.0 1,959.2 438.4 1,520.8 704.8 213.5 491.4 237.8 227.3 2,714.6 754.6 1,960.1 439.6 1,520.5 702.2 204.8 497.5 265.6 219.2 2,703.0 743.3 1,959.7 443.4 1,516.3 699.6 206.0 493.5 255.1 218.2 3,712.1 r 3,808.6' 3,851.0" 3,893.8 3,8833 3,875.7 3,913.1 3,902-3 3,925.2 3,907.1 3,901.7 3,875.8 341.6 r 371.5' 357.7' 355.2 358.5 363.8 356.8 369.3 356.1 368.3 375.1 373.2 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 h o m e equity Other Consumer Security 3 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 on following page. 3,489.8' 991.4' 712.2' 279.2' 2,498.5 692.7 1,041.0 77.1 963.9 471.3 83.8 209.7 179.9 208.4 223.7' 3,599.4' m f f 712.9 275.0' 2,611.5 711.9 1,083.8 79.3 1,004.5 493.7 88.3' 233.8 199.6 220.3 230.4' 3,612.9' 980.9' 706.2 274.7' 2,632.0' 714.7 1,084.0 79.2 1,004.9 501.5 87.6 244.C 209.2 238.4 239.3' 3,622.5 977.9 697.6 280.3 2,644.6 719.6 1,086.0 79.5 1,006.5 505.0 86.8 247.3 213.0 240.6 237.7 3,634.1 990.9 711.2 279.6 2,643.3 723.6 1,086.2 79.4 1,006.8 501.1 88.7 243.7 196.1 219.9 242.0 3,627.8 984.2 709.6 274.7 2,643.6 727.0 1,088.6 79.1 1,009.5 499.3 85.0 243.7 203.2 208.5 240.1 3,650.5 983.9 711.0 272.9 2,666.6 734.4 1,091.9 79.4 1,012.5 503.4 86.4 250.4 209.2 216.1 241.0 3,650.7 989.9 714.3 275.6 2,660.8 738.2 1,092.7 79.7 1,013.0 502.1 77.7 250.2 205.5 216.0 244.8 3,657.8 992.6 718.1 274.5 2,665.2 739.0 1,092.3 79.6 1,012.8 501.7 83.2 249.0 207.4 214.4 249.6 3,649.5 992.6 715.9 276.7 2,656.9 739.9 1,093.6 79.7 1,013.9 501.2 71.5 250.6 208.5 217.0 245.0 3,649.1 987.6 713.1 274.5 2,661.5 738.9 1,092.1 79.5 1,012.6 501.2 80.0 249.3 198.5 206.3 237.2 3,644.6 988.0 711.9 276.1 2,656.6 735.2 1,092.3 79.6 1,012.7 503.2 74.6 251.4 204.3 226.2 242.2 4,045.0 r 4,193.1 r 4,243.1' 4,257.2 4,235.5 4,222.8 4,260.2 4,260.2 4,272.4 4,263.2 4,234.5 4,260.7 2,560.2 774.4 1,785.8 396.5 1,389.3 676.2 183.0 493.2 244.3' 225.1' 2,658.0 781.7 1,876.3 424.3 1,452.0 683.7 200.6' 483.1 262.6' 230.4' 2,690.4 809.2' 1,881.2 420.3 1,461.0 695.2 211.4' 483.8' 263.8' 233.8' 2,694.0 795.1 1,898.9 418.8 1,480.1 692.2 215.2 477.0 277.2 232.9 2,672.0 759.5 1,912.6 426.4 1,486.1 685.4 197.2 488.2 278.2 234.8 2,687.8 753.6 1,934.2 429.8 1,504.4 678.7 202.7 476.0 262.1 227.1 2,714.3 770.9 1,943.4 432.4 1,511.0 693.3 208.6 484.7 254.7 229.9 2,706.3 746.0 1,960.3 444.6 1,515.7 704.5 206.6 497.9 258.3 225.4 2,697.5 743.3 1,954.2 439.6 1,514.7 718.7 208.8 509.9 263.6 226.0 2,725.3 765.2 1,960.1 443.7 1,516.4 700.6 209.6 491.1 244.0 229.9 2,678.4 717.8 1,960.5 446.2 1,514.3 699.4 199.6 499.8 271.3 219.6 2,713.0 750.5 1,962.4 449.1 1,513.4 698.9 205.6 493.3 260.6 221.6 3,705.8' 3,834.7' 3,883.1 r 3,896.4 3,870.5 3,855.7 3,892.3 3,894.5 3,905.7 3,899.8 3,868.7 3,894.1 360.9 365.0 368.0 365.7 366.6 363.4 365.7 366.5 339.2 358.4 m a 367.1 A18 1.26 DomesticNonfinancialStatistics • August 1996 ASSETS AND LIABILITIES OF COMMERCIAL BANKS 1 —Continued Billions of dollars Monthly averages Account 1995 May 1996 r 1995 Nov. Wednesday Dec. Jan. Feb. DOMESTICALLY CHARTERED Mar. figures 1996 Apr. May May 8 May 15 May 22 May 29 Seasonally adjusted COMMERCIAL BANKS 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 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 72 Total assets 7 73 74 75 76 77 78 79 80 81 82 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 83 Total liabilities 84 Residual (assets less liabilities) 9 3,079.3 858.3 r 645.5 r 2X2.1' 2,221.1 515.4 1,005.3 77.2 928.1 472.9 53.4 174.1 161.7 183.0 169.8 3,162.6 854.5 647.4 207.0 2,308.1 534.9 1,041.1 78.8 962.2 492.9 53.5 185.7 169.1 186.2 177.7 3,176.4 855.0 643.9 211.1 2,321.4 535.2 1,043.0 79.1 963.9 495.7 56.2 191.2r 173.7 193.6 184.4 3,197.8 854.6 640.1 214.5 2.343.1 540.1 1,051.0 79.6 971.3 500.4 55.6 196.1 182.2 202.0 182.6 3,196.3 853.3 643.3 210.0 2,343.0 540.5 1,055.0 79.8 975.2 500.5 52.3 194.7 173.5 189.8 186.0 3,197.6 843.8 635.5 208.3 2,353.8 540.6 1,060.9 79.8 981.1 503.6 51.5 197.2 184.6 188.3 186.6 3,209.3 842.2 635.0 207.1 2,367.1 544.8 1,062.6 80.0 982.6 506.2 53.2 200.4 191.2 195.5 188.6 3,211.7 846.0 637.4 208.6 2,365.8 549.0 1,062.6 79.8 982.9 503.8 50.8 199.5 190.8 192.5 188.4 3,215.2 846.4 639.5 207.0 2,368.8 549.0 1,062.5 79.7 982.8 503.6 54.4 199.2 194.3 196.7 192.0 3,213.4 850.1 640.1 210.0 2,363.3 550.4 1,063.2 79.7 983.5 502.6 47.6 199.6 198.8 196.1 187.5 3,213.4 845.5 636.5 209.0 2,367.9 549.5 1,062.5 79.6 982.9 502.7 53.0 200.2 188.3 195.4 185.3 3,206.3 844.1 635.8 208.3 2,362.2 547.6 1,062.1 79.7 982.4 504.8 48.6 199.0 181.2 183.4 184.1 3,537.1 3,639.1 3,671.7 3,707.7 3,689.1 3,700.5 3,727.7 3,726.8 3,741.6 3,739.2 3,725.8 3,6983 2,411.4 777.1 1,634.3 246.0 1,388.3 560.1 163.2 396.9 86.3 143.8 2,473.6 758.3 1,715.3 267.7 1,447.6 565.7 178.7 387.0 89.6 148.1 2,491.9 r 763.4 1,728.4 270.1 1,458.3 577.5 r 179.9r 397.6 91.0 155.3r 2,523.4 772.7 1,750.7 272.1 1,478.6 591.0 186.7 404.3 93.0 153.5 2,516.2 756.0 1,760.2 273.9 1,486.4 573.7 176.0 397.7 90.5 155.7 2,533.6 758.6 1,775.0 272.5 1,502.5 575.4 187.2 388.2 81.2 149.8 2,547.9 761.4 1,786.5 274.8 1,511.7 588.3 186.7 401.6 84.6 157.9 2,544.0 747.5 1,796.6 278.6 1,518.0 582.1 186.0 396.1 87.9 150.5 2,539.9 746.4 1,793.5 277.3 1,516.2 602.4 191.1 411.4 95.8 152.0 2,565.1 766.9 1,798.2 278.9 1,519.3 577.2 185.0 392.2 83.7 153.7 2.542.2 743.7 1,798.5 279.2 1,519.3 575.3 181.8 393.5 93.7 147.5 2,526.9 732.5 1,794.4 278.9 1,515.6 577.4 186.1 391.3 82.3 144.3 331.6 3,277.0 3,315.7 3,360.9 3,336.0 3,339.9 3378.6 3,364.6 3390.2 3379.7 3358.7 3330.9 335.5 362.1 356.0 346.8 353.1 360.6 349.1 362.1 351.4 359.4 367.1 367.4 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 credit2 Commercial and industrial Real estate Revolving home equity Other Consumer Security 3 Other Interbank loans 4 Cash assets 5 Other assets 6 100 Total assets 7 101 102 103 104 105 106 107 108 109 110 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 8 111 Total liabilities 112 Residual (assets less liabilities) 9 3,080.4 862.1 647.6 r 214.5 r 2,218.3 520.4 1,002.7 77.1 925.6 471.3 52.1 171.9 155.9 181.5 169.8 3,172.3 855.3 646.6 208.8 2,317.0 533.9 1,046.5 79.3 967.3 493.7 55.4 187.4 173.2 190.7 176.3 3.182.4 848.5 640.2' 208.4 2,333.9 533.2 1,047.7 79.2 968.6 501.5 56.9 194.5 184.7 208.5 183.7 3,186.1 843.6 632.9 210.7 2,342.5 537.0 1,050.8 79.5 971.3 505.0 54.0 195.7 189.9 209.8 183.5 3,188.3 849.4 639.3 210.2 2,338.9 539.7 1,051.7 79.4 972.4 501.1 53.3 193.0 177.2 191.7 184.9 3,190.5 847.2 638.7 208.5 2,343.3 543.7 1,055.2 79.1 976.1 499.3 51.6 193.5 183.2 181.5 185.9 3,212.1 847.5 640.8 206.6 2,364.7 550.7 1,059.1 79.4 979.7 503.4 54.1 197.3 189.0 190.6 187.8 3,212.2 849.3 639.0 210.3 2,362.9 554.5 1,059.7 79.7 980.1 502.1 49.6 196.9 184.0 190.2 188.6 3,219.0 852.5 642.0 210.5 2,366.6 556.3 1,059.4 79.5 979.8 501.7 53.1 196.1 188.1 188.7 194.2 3,214.9 853.1 641.7 211.4 2,361.8 556.0 1,060.7 79.6 981.1 501.2 46.9 196.9 191.2 192.0 187.5 3,207.6 846.5 637.6 208.9 2,361.0 554.2 1,058.9 79.5 979.4 501.2 50.9 195.8 177.5 180.4 181.1 3,206.4 846.3 636.4 210.0 2,360.1 552.2 1,059.5 79.6 979.9 503.2 47.2 198.0 176.0 200.0 186.6 3,530.7 3,655.8 3,702.6 3,712.8 3,685.5 3,6843 3,723.0 3,7183 3,733.2 3,728.9 3,689.9 3,712.5 2,399.3 765.4 1,634.0 248.7 1.385.2 560.6 162.3 398.4 91.8 145.0 2,488.5 771.8 1,716.8 267.4 1,449.3 576.8 181.2 395.6 88.4 149.8r 2,522.1 798.3 1,723.8 265.8 1,458.1 584.0' 191.8' 392.2 89.3 153.3 2,529.2 784.3 1,744.9 269.4 1,475.5 581.7 193.7 388.0 92.9 154.2 2.507.5 748.8 1,758.7 275.3 1,483.4 572.5 178.5 394.0 92.3 154.1 2,519.5 743.9 1,775.5 273.0 1,502.6 567.5 182.1 385.5 84.5 151.6 2,547.1 760.9 1,786.2 276.2 1,510.0 573.0 186.3 386.7 85.0 156.0 2,532.3 735.8 1,796.5 281.8 1,514.7 581.3 184.9 396.4 93.2 152.0 2,527.5 733.1 1,794.5 280.8 1,513.7 593.2 188.4 404.8 97.6 154.2 2,552.5 754.9 1,797.6 282.1 1.515.5 576.5 183.8 392.8 87.7 154.8 2,504.2 707.8 1,796.4 283.0 1,513.4 576.9 179.8 397.1 101.5 147.6 2,534.2 740.0 1,794.2 281.8 1,512.4 579.3 186.1 393.2 91.3 147.1 3,196.7 3303.4 3348.8 3358.0 3326.4 3323.1 3361.0 3358.7 3372.6 3371.5 3330.2 3352.0 334.0 352.4 353.8 354.8 359.1 361.2 361.9 359.6 360.6 357.4 359.7 360.5 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 f r o m 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 2 5 , 5 3 , 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. Weekly Reporting Commercial Banks 1.27 A19 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS Millions of dollars, Wednesday figures 1996 Account M a y 15 May 22 Apr. 3 Apr. 10 Apr. 17 Apr. 2 4 May 1 May 8 May 29 113,267 282.446 22,237 260.209 113,268 113,019 286,488 24,467 262,021 112,767 117,100 283,560 21,686 261,874 113,273 127,447 281,055 19,411 261,644 114,323 117,760 281,287 19,002 262,285 116,027 118.673 283.773 21,981 261,792 115,626 119,831 284,139 23,863 260,276 116,562 111,182 280,103 22,017 258,086 116,001 123,090 279,703 22.965 256,737 115,604 36,039 61.755 49,147 118.950 r 1,840 64,181 18,978 4,222 14,756 45,203 52,929 37.568 62,575 49,112 119,879' 1,911 63,792 18,955 4,220 14.735 44.838 54,176' 36,182 63,577 48,843 118,988' 1,542 63,425 19,019 4,205 14,814 44,406 54,021 35,363 63,498 48,460 119,007' 1,641 63,411 19,065 4,219 14,847 44,346 53.955' 35,950 62,094 48,215 123,995 2,014 63,385 18,931 4,074 14,857 44,454 58,596 35,602 62,703 47,860 123.802 1,830 63,387 18,800 4,037 14,762 44,588 58,584 33,392 62,682 47,641 124,607 2.481 63,557 18,789 4,016 14,773 44,768 58,570 32,722 61,815 47,547 122,294 1,123 63,397 18,815 4,032 14,784 44,581 57,775 33,337 60,835 46,961 123,354 1,237 63,411 18,829 4,019 14,811 44,582 58,706 111,299 72.837 32,078 6.384 l,290.073r 356.920r 1.618 355,302' 352.601' 2,702 506,887 47.014 459,873 247,995' 73.287' 40,666' 3,033 29,588 14,187 6,518 10,470' 1.123 27,918 44,767 1.764 33,250 1,255,059' 149,526' 116,084 81,396 28,716 5,973 1.293,902' 357.048' 1,603 355,446' 352,765' 2,681 508,717 47.033 461.684 248.359' 74,462' 41,144' 3,900 29,418 14.894 6,575 10,407' 1.323 26,697 45,420 1.812 33,062 1,259,027' 148,647' 114,112 75,435 33,823 4,854 1,296,727' 359,959' 1,458 358.501' 355,762' 2,739 508,812 47,967 460,845 249,404' 73,059' 40,950' 3,021 29,088 15.122 6,587 10,415' 1,237 26,563 45,569 1,813 33,049 1,261.866' 148,091' 118.498 79.263 35.032 4.203 1,297.023' 359.721' 1.431 358.289' 355.551' 2,738 507,879 48,191 459.688 249,929' 73,539 41,242 3,510 28.787 15,795 6,645 10,317 1,095 26,397 45,706 1,808 32.968 1,262,246' 141,600' 125,734 87,062 34,525 4,146 1.302,723 363,620 1,501 362,119 359,354 2,765 505.936 48,776 457,161 250,460 73,852 42,580 4.104 27,168 15,864 6,697 10,188 1,124 29,080 45,903 1,805 33,117 1,267.801 147,023 121,656 83,777 33,468 4,412 1,297,559 361,247 1,489 359,758 356,983 2,775 506,170 48,095 458,075 250,763 74,151 42,332 3,813 28,006 14,031 6,762 10,260 1,080 26,628 46,467 1.869 33,228 1,262.462 148,727 119,912 87,610 26,860 5,443 1,295.867 360,797 1,432 359,365 356,543 2,822 505,496 48,102 457,393 249,981 72,666 42,673 2,877 27,116 14,517 6,814 10,359 1,117 27,507 46,614 1,877 33,181 1,260,809 150,537 112,698 78,385 28,966 5,348 1,293,845 359,063 1,373 357,690 354,877 2,812 503,691 47,996 455,695 250,345 71,717 41.619 3,532 26,566 16,614 6,902 10,507 1,096 27,202 46,707 1,880 33,087 1,258,878 143,923 106,695 74,940 26,801 4,953 1,296,182 356,880 1,418 355.462 352,687 2,775 504.185 48,046 456,139 251.739 74,426 43,517 3,780 27,129 15,015 6,913 10,461 1,086 28,597 46,880 1,865 33,033 1,261,284 143,349 2,030,547r 2,043,145r 2,043,717r 2,049,854r 2,063,598 2,059,092 2,059,836 2,029,078 2,037,475 ASSETS 1 C a s h a n d b a l a n c e s d u e f r o m d e p o s i t o r y institutions 2 U.S. T r e a s u r y a n d g o v e r n m e n t securities Trading account 3 Investment account 4 M o r t g a g e - b a c k e d secu rities' 5 All others, by m a t u r i t y O n e y e a r or less 6 O n e y e a r t h r o u g h five vears 7 M o r e than five vears 8 9 O t h e r securities Trading account in Investment account 11 State a n d local g o v e r n m e n t , bv m a t u r i t y 12 O n e y e a r or less 13 M o r e than o n e y e a r 14 O t h e r b o n d s , c o r p o r a t e stocks, a n d securities 15 O t h e r trading a c c o u n t 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 F e d e r a l f u n d s sold" To c o m m e r c i a l b a n k s in the U n i t e d States To n o n b a n k b r o k e r s a n d d e a l e r s in securities To others1 O t h e r loans and leases, gross C o m m e r c i a l and industrial B a n k e r s a c c e p t a n c e s and c o m m e r c i a l p a p e r All other U.S. a d d r e s s e e s Non-U.S. a d d r e s s e e s Real estate loans Revolving, home equity All other To individuals for personal e x p e n d i t u r e s To depository and financial institutions C o m m e r c i a l b a n k s in the U n i t e d States B a n k s in foreign c o u n t r i e s Nonbank depository and other financial institutions F o r p u r c h a s i n g and c a r r y i n g securities To finance agricultural p r o d u c t i o n To states and political s u b d i v i s i o n s To foreign g o v e r n m e n t s and official institutions All other loans L e a s e - f i n a n c i n g receivables LESS: U n e a r n e d i n c o m e L o a n and lease reserve" O t h e r loans and leases, net All other assets 45 Total assets F o o t n o t e s a p p e a r on the f o l l o w i n g page. A20 1.27 DomesticNonfinancialStatistics • August 1996 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS—Continued Millions of dollars, Wednesday figures 1996 Account Apr. Apr. 3 10 Apr. 17 Apr. 24 May 1 May 8 May 15 May 22 May 29 LIABILITIES 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 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 1,236,948R 315,277R 270,698 44,579R 8,128 2,258 21,446R 4,977 621 7,149 86,892 834,779 807,932' 26,847' 22,981 2.037' 1,524' .. 67 68 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 64 65 66 305 392,692' 0 11,355 381,337' 1,232,452' 311,202' 267,244 1,236,517' 316,236' 269,122 1,212,132 302,621 254,789 43,958' 8,690 47,113' 8,123 2,493 19,894' 5,403 665 6,813 1,231,923 322,658 1,215,696 301,096 47,832 8,820 274,400 48,258 9,802 258,201 42,896 8,264 5,178 20,939' 4,567 6,535 19,640 5,279 3,136 21,798 5,042 640 7,666 578 6,979 82,854 663 7,818 1,731 20,457 5,293 594 86,267 834,984 89,990 830,291 826,658 807,935' 27,048' 803,515' 26,775' 797,958' 28,699' 22,367 2,558' 22,325 4,032' 2,039' 23,073 2,265' 1,406' 305 1,537' 312 406,785' 398,615' 0 5,921 400,864' 373,821' 0 24,794 303 416,631' 0 26,456 207,175' 208,103' 212,936' 390,175' 224,582' l,836,815r l,847,340r l,848,068r l,853,345r 193,732' 195.805' 195,649' 1,689,264' 119,407 1,693,813' 118,241 1,697,002' 119,119 196,509 1,236,930 323,033 275,727 47,306 8,914 3,075 22,383 5,443 1,202,246 294,104 1,221,291 315,572 252,379 267,838 47,734 41,725 8,303 1,739 19,637 5,004 8,535 1,470 24,101 5,546 776 6,557 691 6,800 590 6,452 80,823 828,442 80,250 834,349 76,766 837,131 799,310 29,132 22,872 804,613 29,736 23,441 807,569 29,562 71,437 836,705 806,910 833,687 804,219 29,468 23,225 4,019 23,261 4,042 29,795 23,478 4,014 1,941 1,948 311 4,040 1,884 306 1,966 310 4,040 1,958 411,525 421,002 0 24,225 0 14,238 406,764 406,865 0 7,306 72,032 318 319 405,250 0 406,709 3,648 2,782 0 3,355 227,195 403,217 220,868 402,468 225,742 403,354 213,297 1,863,893 1,864,663 1,833,238 1,841,296 194,909 195,199 195,173 195,840 196,178 1,704,096 121,537 1,700,680 123,988 1,694,243 125,319 1,688,936 125,591 1,687,476 124,714 1,080 268 812 1,056 268 1,048 268 1,032 268 789 27,113 93,087 780 28,057 83,508 1,039 268 771 387,300 225,242 1,868,689 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 1,116 268 848 26,901 71,204' 1,106 268 838 27,107 67,716' 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 f u n d s 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. 1,695,077' 122,439 1,098 268 829 1,088 268 820 27,861 73,346' 27,837 95,160' 27,527 91,145 27,880 97,840 765 28,262 87,464 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 b a n k s 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 A21 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS Assets and Liabilities Millions of dollars, Wednesday figures 1996 Account Apr. 3 Apr. 10 Apr. 17 16,273 15,855 15,506 Apr. 24 May 1 May 8 May 15 May 22 May 29 ASSETS 1 Cash and balances due from depository institutions 2 U.S. Treasury and government agency securities 3 Other securities 4 Federal f u n d s sold' To commercial banks in the United States 5 6 To others 2 7 Other loans and leases, gross Commercial and industrial 9 Bankers acceptances and commercial paper . All other 10 U.S. addressees 11 12 Non-U.S. addressees Loans secured by real estate 13 14 Loans to depository and financial institutions Commercial banks in the United States 15 Banks in foreign countries 16 Nonbank financial institutions 17 18 For purchasing and carrying securities 19 To foreign governments and official institutions 20 All other 21 Other assets (claims on nonrelated parties) 22 Total assets 3 15,133 15,613 15,215 15,727 15,991 44,960 44,864 r 31,479 6,907 24,573 183,795 r 121,761 r 5,154 116,607 r 110,229 r 6,378 20,224 r 44,910 r 45,378 r 28,065 8,634 19,431 185,495 r 121,027 r 5,162 115,865 r 109,674 r 6,191 20,380 r 47,839 44,309 28,785 7,079 21,706 185,595 119,407 4,735 114,671 108,344 6,327 20,322 49,834 42,792 26,813 6,889 19,923 183,506 118,350 4,792 113,558 107,269 6,288 20,374 48,825 43,770 21,056 5,720 15,337 185,905 119,599 4,787 114,812 108,613 6,199 20,389 49,549 43,888 25,291 7,242 18,049 187,250 119,906 4,756 115,150 108,953 6,197 20,612 49,983 44,567 27,644 10,570 17,075 187,162 119,734 4,912 114,823 108.625 6,197 20.533 31,001 r 2,548 3,110 25,343 r 4,952 30,110 2,244 3,051 24,815 4,862 31,676 2,560 3,120 25,997 5,134 33,165 2,138 3,271 27,755 5,668 33,279 2,171 3,089 28,018 4,517 33,939 2,466 3,328 28,145 4,608 34,024 2,627 3,008 28,389 5,325 34,482 2,895 3,021 28,567 5,036 621 4,372 37,119 r 582 4,228 37,752 r 689 4,247 37,413 r 605 4,610 37,080 r 575 4,462 38,649 585 4,423 39,085 584 4,687 40,867 601 4,685 39,636 596 4,684 39,469 384,801 r 387,305 r 393,819 r 392,324 r 395,636 393,997 394,132 397,039 401,131 105,656 3,996 3,119 877 101,660 72,501 29,159 101,344 3,936 3,217 719 97,408 69,256 28,153 105,173 4,036 3,311 725 101,137 72,258 28,879 108,433 4,216 3,481 735 104,217 74,789 29,428 108,436 4,202 3,481 721 104,234 75,123 29,110 108,354 4,253 3,422 831 104,100 74,808 29,293 109,334 4,203 3,550 652 105,131 77,091 28,040 111,375 4,104 3,510 594 107,271 79,368 27,903 112,528 4,355 3,573 783 108,172 79,222 28,951 74,049 47,698 12,094 35,604 26,351 4,357 21,994 59,469 r 76,140 45,281 9,753 35,528 30,859 4,251 26,608 62,373 r 82,875 52,877 12,657 40,220 29,998 4,328 25,670 62,623 r 75,963 44,693 8,762 35,931 31,270 4,543 26,727 60,354 r 88,351 55,066 16,175 38,890 33,285 4,068 29,218 60,558 85,024 50,405 10,602 39,804 34,619 4,221 30,398 60,368 83,075 49,206 13,804 35,402 33,869 4,201 29,667 62,440 82,707 46,632 8,888 37,744 36,075 4,472 31,604 60,571 79,485 45,657 8,760 36,897 33,828 4,100 29,728 61,855 384,801 r 387,305 r 393,819 r 392,324 r 395,636 393,997 394,132 397,039 401,131 291,141 r 112,983 r 292,272 r 115,670 r 295,949 r 107,347 r 292,655 r 111,749 r 297,312 102,966 293,884 103,897 291,371 100,790 296,109 106,688 295,893 110,949 46,342 r 42,660 r 24,361 5,248 19,113 185,40l r 122,743 r 5,163 117,580 r 11 l,364 r 6,216 20,207 r 46,785 43,614 r 26,693 7,100 19,593 184,827 r 121,945 r 5,429 116,516 r 110,362 r 6,154 20,226 r 30,564 2,376 3,061 25,127 4,937 r 15,572 r LIABILITIES 23 Deposits or credit balances owed to other than directly related institutions 24 Demand deposits 4 Individuals, partnerships, and corporations . . . . 25 26 Other 27 Nontransaction accounts 28 Individuals, partnerships, and corporations . . . . 29 Other 30 Borrowings from other than directly related institutions 31 Federal funds purchased' 32 From commercial banks in the United States . . 33 From others 34 Other liabilities for borrowed money To commercial banks in the United States 35 36 To others 37 Other liabilities to nonrelated parties 38 Total liabilities 6 MEMO 39 Total loans (gross) and securities, adjusted 7 40 Net owed to related institutions abroad 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 f u n d s transactions with commercial banks in the United States. A22 DomesticNonfinancialStatistics • August 1996 1.32 COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING Millions of dollars, end of period 1995 Year ending December 1996 Item 1992 1991 1994 1993 1995 Nov. Dec. Jan. Feb. Mar. Apr. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 528,832 545,619 555,075 595,382 674,927 669,661 674,927 685,797 687,669 695,201 710,749 Financial companies' 2 Dealer-placed paper 2 , total 3 Directly placed paper 3 , total 212,999 182,463 226,456 171,605 218,947 180,389 223,038 207,701 275,814 210,853 276,222 213,578 275,814 210,853 288,368 208,166 293,313 208,046 292,533 208,880 303,567 211,833 4 Nonfinancial companies 4 133,370 147,558 155,739 164,643 188,260 179,861 188,260 189,264 186,310 193,788 195,349 Bankers dollar acceptances (not seasonally adjusted)" 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. 1.33 PRIME RATE CHARGED BY BANKS 29,242 5. Data on bankers dollar acceptances are gathered from approximately 100 institutions. The 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. Short-Term Business Loans' Percent per year Date of change 1993 Jan 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. Period Rate 1 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 Oct 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 1995—Jan Feb Mar. Apr May June July Aug Sept Oci Average rate Dec 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 Mar . Apr May June 8.50 8.25 8.25 8.25 8.25 8.25 Report. Data in this table also appear in the Board's H.15 (519) weekly and G.13 (415) monthly statistical releases. For ordering address, see inside front cover. Financial Markets 1.35 INTEREST RATES A23 M o n e y and Capital Markets Percent per year; figures are averages of business day data unless otherwise noted 1996 Item MONEY MARKET 1993 Commercial 1-month 3-month 6-month 6 7 8 Finance paper, directly 1-month 3-month 6-month II Mar. Apr. May May 3 M a y 10 M a y 17 M a y 24 May 31 3.02 3.00 4.21 3.60 5.83 5.21 5.22 5.00 5.31 5.00 5.22 5.00 5.24 5.00 5.30 5.00 5.22 5.00 5.26 5.00 5.22 5.00 5.19 5.00 3.17 3.22 3.30 4.43 4.66 4.93 5.93 5.93 5.93 5.29 5.15 4.99 5.39 5.31 5.26 5.40 5.39 5.38 5.38 5.39 5.42 5.40 5.40 5.41 5.40 5.40 5.44 5.38 5.38 5.40 5.36 5.37 5.40 5.38 5.38 5.41 3.12 3.16 3.15 4.33 4.53 4.56 5.81 5.78 5.68 5.20 5.00 4.77 5.29 5.18 5.04 5.31 5.28 5.20 5.29 5.29 5.23 5.29 5.29 5.21 5.31 5.29 5.24 5.28 5.28 5.23 5.28 5.27 5.23 5.27 5.28 5.24 3.13 3.21 4.56 4.83 5.81 5.80 5.07 4.91 5.21 5.17 5.28 5.28 5.29 5.31 5.29 5.31 5.30 5.33 5.28 5.30 5.27 5.29 5.30 5.33 3.11 3.17 3.28 4.38 4.63 4.96 5.87 5.92 5.98 5.23 5.15 5.03 5.31 5.29 5.30 5.34 5.36 5.42 5.32 5.36 5.47 5.33 5.36 5.46 5.33 5.37 5.49 5.31 5.36 5.45 5.31 5.35 5.45 5.31 5.36 5.47 3.18 4.63 5.93 5.14 5.28 5.36 5.36 5.36 5.38 5.36 5.34 5.35 3.00 3.12 3.29 4.25 4.64 5.02 5.49 5.56 5.60 4.83 4.77 4.69 4.96 4.96 5.06 4.95 5.06 5.23 5.02 5.12 5.33 5.00 5.10 5.33 5.00 5.12 5.35 5.01 5.11 5.28 5.04 5.12 5.27 5.04 5.14 5.39 3.02 3.14 3.33 4.29 4.66 5.02 5.51 5.59 5.69 4.87 4.79 4.64 4.96 4.96 4.98 4.99 5.08 5.17 5.02 5.12 5.31 5.00 5.08 5.30 5.02 5.14 n.a. 5.02 5.14 n.a. 5.03 5.11 n.a. 5.03 5.14 5.32 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 4.94 5.03 5.14 5.38 5.64 5.81 6.30 6.24 5.34 5.66 5.79 5.97 6.19 6.27 6.74 6.60 5.54 5.96 6.11 6.30 6.48 6.51 6.98 6.79 5.64 6.10 6.27 6.48 6.66 6.74 7.11 6.93 5.63 6.08 6.24 6.46 6.65 6.74 7.13 6.96 5.67 6.14 6.33 6.55 6.74 6.82 7.21 7.02 5.59 6.04 6.21 6.42 6.60 6.68 7.05 6.87 5.59 6.03 6.20 6.41 6.57 6.65 7.02 6.84 5.70 6.17 6.34 6.55 6.69 6.77 7.09 6.93 6.45 7.41 6.93 6.28 6.72 6.94 7.08 7.10 7.17 7.03 6.99 7.07 5.38 5.83 5.60 5.77 6.17 6.18 5.80 6.10 5.95 5.24 5.59 5.43 5.33 5.72 5.79 5.62 5.94 5.94 5.75 5.97 5.98 5.72 6.00 6.06 5.85 5.89 6.08 5.79 5.87 5.96 5.70 6.10 5.87 5.70 6.01 5.94 7.54 8.26 7.83 7.27 7.65 7.80 7.91 7.94 8.01 7.86 7.82 7.89 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 6.99 7.16 7.31 7.63 7.31 7.35 7.52 7.68 8.03 7.75 7.50 7.68 7.83 8.19 7.90 7.62 7.77 7.94 8.30 8.02 7.65 7.80 7.97 8.33 8.22 7.72 7.87 8.04 8.40 8.01 7.57 7.72 7.90 8.25 7.92 7.53 7.68 7.85 8.20 7.90 7.61 7.75 7.92 8.27 8.08 2.78 2.82 2.56 2.22 2.22 2.24 2.21 2.21 2.26 2.20 2.17 2.22 placed3'^'1 Bankers acceptances3'5'8 3-month 6-month Certificates of deposit, 1-month 3-month 6-month secondary market3'9 14 Eurodollar deposits, 3 - m o n t h 3 1 0 18 19 20 U.S. Treasury bills Secondary market 3 ' 5 3-month 6-month 1-year Auction a v e r a g e 3 ' 5 ' " 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 Feb. paper3'^b 3 4 5 12 13 1996, week ending 1995 INSTRUMENTS 1 Federal funds '' 2 ' 3 2 Discount window borrowing"' 4 9 10 1994 U.S. TREASURY NOTES AND BONDS maturities'' Composite 29 More than 10 years (long-term) STATE AND LOCAL NOTES AND BONDS Moody's series13 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 1 6 MEMO Dividend-price ratio11 39 C o m m o n stocks 1. T h e daily effective federal f u n d s 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 N e w York. 5. Quoted on a discount basis. 6. A n average of offering rates on commercial paper placed by several leading dealers for firms w h o s e bond rating is A A or the equivalent. 7. A n 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. A n 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 g o v e r n m e n t general obligation bonds maturing in twenty years are used in compiling this index. T h e 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 & P o o r ' s corporate series. C o m m o n stock ratio is based on the 500 stocks in the price index. NOTE. S o m e 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. A24 1.36 DomesticNonfinancialStatistics • August 1996 STOCK MARKET Selected Statistics 1995 1994 1993 Indicator 1996 1995 Sept. Nov. Oct. Jan. Dec. Prices and trading volume (averages of daily Feb. Mar. Apr. May figures) Common stock prices (indexes) 1 New York Stock Exchange (Dec. 31, 1965 = 50) 2 Industrial Transportation 3 4 Utility 5 Finance 249.71 300.10 242.68 114.55 216.55 254.16 315.32 247.17 104.96 209.75 291.18 367.40 270.14 114.61 238.48 310.41 390.42 295.54 114.67 260.72 311.78 389.63 291.16 123.59 265.12 317.58 398.66 300.06 119.49 266.12 327.90 412.11 303.53 173.95 273.36 329.22 413.05 300.43 127.09 274.96 346.46 435.92 315.29 135.51 290.97 346.73 439.55 324.77 122.83 290.44 347.50 441.99 326.42 122.44 287.92 354.84 452.63 334.66 124.86 290.43 6 Standard & P o o r ' s Corporation ( 1 9 4 1 - 4 3 = 10)' 451.63 460.42 541.72 578.77 582.92 595.53 614.57 614.42 649.54 647.07 647.17 661.23 438.77 449.49 498.13 547.64 530.26 529.93 538.01 540.48 562.34 565.69 580.60 600.93 263.374 18.188 290.652 17,951 345,729 20.354 r 352,184 25,422 365.108 17,672 r 360,199 16,724 384,310 21,085 416,048 21,069 434,607 27,107 426,198 22.988 419,941 24,886 404,184 28,127 7 American Stock Exchange (Aug. 31, 1973 = 5 0 ) : Volume of trading (thousands X 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 at 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 77,076 75,005 77,875 76,680 73,530 77,090 78,308 81,170 86,100 12,360 27,715 14,095 28,870 16,250 34,340 14,806 29,796 14.753 29,908 15,590 30,340 16.250 34,340 14,950 32,465 15,840 34,700 15.770 33,113 15,780 33,100 16,890 33,760 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 40 financial. 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting previous readings in half. 3. Since July 1983, under the revised Regulation T, margin credit at 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 "margin 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). Federal Finance 1.38 A25 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Fiscal year Calendar year Type of account or operation 1995 1993 U.S. budget1 1 Receipts, total 2 On-budget 3 Off-budget 4 Outlays, total 5 On-budget 6 Off-budget 7 Surplus or deficit (—), total 8 On-budget 9 Off-budget Source of financing (total) 10 Borrowing from the public 11 Operating cash (decrease, or increase ( - ) ) 12 O t h e r 2 1994 1996 1995 Dec. Jan. Feb. Mar. Apr. May 1,153,535 841,601 311,934 1,408,675 1,142,088 266,587 -255,140 -300,487 45,347 1,257,737 922,711 335,026 1,460,841 1,181,469 279,372 -203,104 -258,758 55,654 1,355,213 1,004,134 351,079 1,519,133 1,230,469 288,664 -163,920 -226,335 62,415 138,271 110,322 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 89,349 60,912 28,437 133,644 105,711 27,933 -44,295 -44,799 504 89,011 56,677 32,334 136,286 108,365 27,921 -47,275 -51,688 4,413 203,386 160,774 42,612 130,993 105,131 25,862 72,393 55,643 16,750 90,044 60,106 29,938 143,342 114,486 28,856 -53,298 -54,380 1,082 248,594 6,283 429 184,998 16,564 1,542 171,288 -2,007 -5,361 -18,358 5,610 7,462 -4,747 -16,959 2,432 47,022 6,297 -9,024 39,189 9,283 -197 -35,466 -26,449 -10,478 20,633 43,809 -11,144 52,506 17,289 35,217 35,942 6,848 29,094 37,949 8,620 29,329 20,495 5,979 14,515 37,454 8,210 29,243 31,157 5,632 25,525 21,874 7,021 14,853 48,323 11,042 37,281 4,514 3,757 757 MEMO 13 Treasury operating balance (level, end of period) 14 Federal Reserve Banks 15 Tax and loan accounts 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. Monthly totals: U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government; fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S. Government. A26 1.39 DomesticNonfinancialStatistics • August 1996 U.S. BUDGET RECEIPTS AND OUTLAYS 1 Millions of dollars Fiscal year Calendar year Source or type 1994 1994 1995 1996 1995 HI H2 HI H2 Mar. Apr. May RECEIPTS 1 All s o u r c e s 2 Individual income taxes, net 3 Withheld 4 Nonwithheld Refunds 5 Corporation income taxes 6 Gross receipts 7 Refunds 8 Social insurance taxes and contributions, net . . . 9 Employment taxes and contributions 2 10 Unemployment insurance 11 Other net receipts 3 12 13 14 15 Excise taxes Customs deposits Estate and gift taxes Miscellaneous receipts 4 1,257,737 1,355,213 652,235 r 625,556" 710,542 656,402' 89,011 203,386 90,044 543,055 459,699 160,363 r 11,011' 590,244 499,927 175,786 85,538 275,052 225,387 111,929' 68,325 273,315' 240,063' 42,029' 8,787' 307,498 251,398 132,001' 75,959' 292,393 256,916 43,100 10,058 22,523 41,834 5,790 25,118 107,513 38,930 89,392 20,822 29,914 45,399 6,352 21,850 154,205 13,820 461,475 428,810 28,004 4,661 174,422 17,418 484,473 451,045 28,878 4,550 80,535 r 6,932' 248,301 228,715 r 17,301 2,284 78,393' 7,747' 220,140' 206,615' 11,177 2,349 92,132 10,399 261,837 241,557' 18,001 2,279' 88,302 7,518 224,269 211,323 10,702 2,247 17,793 2,332 41,763 41,086 258 419 26,912 1,975 60,588 56,615 3,628 346 3,647 1,077 48,676 38,104 10,155 417 55,225 20,099 15,225 22,274 57,484 19,301 14,763 31,944 26,443 r 9,499 r 8,196' 11,141' 30,178' 11,041' 7,067' 13,169' 27,452 8,848' 7,425' 15,750' 30,014 9,849 7,718 11,374 4,133 1,528 1,137 2,467 4,577 1,388 2,704 1,680 4,113 1,427 1,415 1,929 OUTLAYS 16 All t y p e s 1,460,841 1,519,133 710,620 752,151 760,824 752,511 136,286 130,993 143,342 17 18 19 20 21 22 National defense International affairs General science, space, and technology Energy Natural resources and environment Agriculture 281,642 17,083 16,227 5,219 21,064 15,046 272,066 16,434 16,724 4,936 22,105 9,773 133,844 5,800 8,502 2,237 10,111 7,451 141,885 11,889 7,604 2,923 11,911 7,623 135,678' 4,797' 8,611 2,357 10,272 4,040 132,954 6,994 8,810 2,203 12,633 3,062 22,479 1,391 1,381 131 1,592 -62 22,725 988 1,534 17 1,660 -249 26,609 1,165 1,584 216 1,757 -175 23 24 25 26 C o m m e r c e and housing credit Transportation Community and regional development Education, training, employment, and social services -5,118 38,066 10,454 -14,441 39,350 10,641 -4,962 16,739 4,571 -4,270 21,835 6,283 -13,937 18,192' 5,043' -4,412 19,931 6,085 -1,443 2,864 1,007 -1,741 2,864 1,026 256 3,324 826 46,307 54,263 19,262 27,450 25,875' 24,894 4,301 4,014 3,961 27 Health 28 Social security and Medicare 29 Income security 107,122 464,312 214,031 115,418 495,701 220,449 53,195 232,777 109,080 54,147 236,817 101,806 58,917' 251,975 117,347' 57,078 251,387 104,078 10,317 43,239 25,927 10,458 44,216 21,417 11,201 46,727 21,407 30 31 32 33 34 37,642 15,256 11,303 202,957 -37,772 37,938 16,223 13,835 232,173 -44,455 16,686 7,718 5,084 99,844 -17,308 19,761 7,753 7,355 109,434 -20,066 19,268 8,053' 5,795' 116,169 -17,632 18,684 8,117 7,621 119,350 -26,994 3,300 1,341 766 20,244 -2,490 2,974 1,585 -25 20,463 -2,932 5,254 1,683 180 20,359 -2,991 Veterans benefits and services Administration of justice General government Net interest 5 Undistributed offsetting receipts 6 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 receipts and outlays do 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. Federal 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 retirement and disability f u n d . 4. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts. 5. Includes interest received by trust funds. 6. Rents and royalties for the outer continental shelf, U.S. government contributions for employee retirement, and certain asset sales. SOURCE. Fiscal year totals: U.S. Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 1997; monthly and half-year totals: U.S. Department of the Treasury, Monthly Treasury Statement of Receipts and Outlays of the U.S. Government. Federal Finance 1.40 A27 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 1994 1995 1996 Item Sept. 3 0 D e c . 31 4,978 5,001 5,017 5,153 4,951 3,635 1,317 4,974 3,653 1,321 4,989 3,684 1,305 5,118 n.a. n.a. 27 27 0 27 27 0 28 28 0 36 n.a. n.a. 4,775 4,861 4,885 4,900 5,030 4,774 0 4,861 0 4,885 0 4,900 0 5,030 0 4,900 4,900 4,900 5,500 June 30 Sept. 3 0 1 F e d e r a l debt o u t s t a n d i n g 4,602 4,673 4,721 4,827 4,891 2 P u b l i c d e b t securities 3 H e l d by p u b l i c 4 H e l d by a g e n c i e s 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 26 26 0 28 27 0 29 29 0 27 27 0 27 26 0 4,491 4,559 4,605 4,711 4,491 0 4,559 0 4,605 0 4,711 0 4,900 4,900 4,900 4,900 4,900 5 A g e n c y securities 6 H e l d by public 7 Held by agencies 8 Debt subject to statutory limit 9 P u b l i c d e b t securities 10 O t h e r d e b t 1 D e c . 31 M a r . 31 M a r . 31 June 30 Mar. 31 MEMO 11 Statutory d e b t limit 1. C o n s i s t s of g u a r a n t e e d d e b t of U.S. T r e a s u r y a n d other f e d e r a l a g e n c i e s , s p e c i f i e d participation certificates, n o t e s to international l e n d i n g o r g a n i z a t i o n s , a n d District of C o l u m bia s t a d i u m b o n d s . 1.41 GROSS PUBLIC DEBT O F U.S. TREASURY SOURCE. U.S. D e p a r t m e n t of the T r e a s u r y , Monthly United States a n d Treasury Bulletin. Statement of the Public Debt of the Types and Ownership Billions of dollars, end of period 1995 Type and holder 1 Total gross public debt 2 3 4 5 6 7 8 9 10 11 12 13 14 By type Interest-bearing Marketable Bills Notes Bonds Nonmarketable1 State a n d local g o v e r n m e n t series F o r e i g n issues 2 Government Public Savings bonds and notes G o v e r n m e n t account series3 Non-interest-bearing By holder 4 15 U.S. T r e a s u r y a n d o t h e r f e d e r a l a g e n c i e s a n d trust f u n d s 16 F e d e r a l R e s e r v e B a n k s 17 P r i v a t e investors 18 Commercial banks 19 Money market funds 20 Insurance companies 21 Other companies 22 State a n d local t r e a s u r i e s 5 , 6 Individuals Savings bonds 23 24 O t h e r securities 25 Foreign and international7 26 Other miscellaneous investors6'8 1992 1994 1996 1995 Q2 Q3 Q4 Q1 4,177.0 4,535.7 4,800.2 4,988.7 4,951.4 4,974.0 4,988.7 5,117.8 4,173.9 2,754.1 657.7 1,608.9 472.5 1,419.8 153.5 37.4 37.4 .0 155.0 1,043.5 3.1 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 4,947.8 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 5,083.0 3,375.1 811.9 2,014.1 534.1 1,707.9 96.5 40.4 40.4 .0 183.0 1,357.7 34.8 1,047.8 302.5 2,839.9 294.4 79.7 197.5 192.5 579.3 1,153.5 334.2 3,047.4 322.2 80.8 234.5 213.0 631.9 1,257.1 374.1 3,168.0 290.1 67.6 240.1 226.5 521.4 1,304.5 391.0 3,294.9 285.0 71.3 252.0 288.8 420.0 1,316.6 389.0 3,245.0 298.0 58.7 248.6 227.7 470.9 1,320.8 374.1 3,279.5 289.0 64.2 250.5 224.1 422.9 1,304.5 391.0 3,294.9 285.0 71.3 252.0 288.8 420.0 157.3 131.9 549.7 657.5 171.9 137.9 623.0 632.3 180.5 150.7 688.6 802.5 185.0 162.7 861.8 768.3 182.6 161.6 784.1 812.8 183.5 162.4 848.1 834.8 185.0 162.7 861.8 768.3 1. I n c l u d e s (not s h o w n s e p a r a t e l y ) securities issued t o the Rural Electrification A d m i n i s t r a tion, d e p o s i t o r y b o n d s , r e t i r e m e n t p l a n b o n d s , a n d individual r e t i r e m e n t b o n d s . 2. N o n m a r k e t a b l e series d e n o m i n a t e d in dollars, a n d series d e n o m i n a t e d in f o r e i g n c u r rency h e l d by f o r e i g n e r s . 3. H e l d a l m o s t entirely by U.S. T r e a s u r y a n d o t h e r f e d e r a l a g e n c i e s a n d trust f u n d s . 4 . D a t a f o r F e d e r a l R e s e r v e B a n k s a n d U.S. g o v e r n m e n t a g e n c i e s a n d trust f u n d s are actual h o l d i n g s ; d a t a f o r other g r o u p s are T r e a s u r y e s t i m a t e s . 5. I n c l u d e s state a n d local p e n s i o n f u n d s . 6. In M a r c h 1996, in a r e d e f i n i t i o n of series, f u l l y d e f e a s e d d e b t b a c k e d by n o n m a r k e t a b l e f e d e r a l securities w a s r e m o v e d f r o m " O t h e r m i s c e l l a n e o u s i n v e s t o r s " a n d a d d e d to " S t a t e a n d local t r e a s u r i e s . " T h e d a t a s h o w n h e r e h a v e b e e n r e v i s e d accordingly. 1993 n.a. 7. C o n s i s t s of i n v e s t m e n t s of f o r e i g n b a l a n c e s a n d i n t e r n a t i o n a l a c c o u n t s in the U n i t e d States. 8. I n c l u d e s s a v i n g s a n d l o a n a s s o c i a t i o n s , n o n p r o f i t institutions, credit u n i o n s , m u t u a l s a v i n g s b a n k s , c o r p o r a t e p e n s i o n trust f u n d s , d e a l e r s a n d b r o k e r s , certain U S . T r e a s u r y deposit accounts, and federally sponsored agencies. SOURCE. U.S. T r e a s u r y D e p a r t m e n t , d a t a by t y p e of security, Monthly Statement of the Public Debt of the United States; d a t a by holder, Treasury Bulletin. A28 1.42 DomesticNonfinancialStatistics • August 1996 U.S. GOVERNMENT SECURITIES DEALERS Transactions 1 Millions of dollars, daily averages 1996 1996, week ending Item OUTRIGHT By type of counterparty With interdealer broker U.S. Treasury Federal agency Mortgage-backed With other U.S. Treasury 9 10 Federal agency 11 Mortgage-backed 6 7 8 12 13 14 15 16 17 18 19 20 21 Apr. Apr. 3 Apr. 10 Apr. 17 Apr. 24 May 1 May 8 May 15 May 22 65,579 56,391 55,901 70,854 57,295 52,787 50,364 54,108 46,741 46,521 40,748 50,427 102,533 44,926 30,480 33,798 102,601 39,363 30,338 24,402 86,613 43,591 35,186 28,855 108,826 60,332 28,211 53,716 94,074 52,906 30,051 42,084 83,123 46,403 28,324 23,317 92,097 38,724 28,629 23,526 May 29 125,757 67,611 26,759 40,755 r 107,071 49,903 27,395 r 42,087 r 97,390 41,998 28,936 34,788' 89,934 40,022 26,832 44,091' 100,814 41,521 20,583 47,964 148,665 1,107 14,640 r 124,458 671 15,597 r 112,758 795 11,326' 111,975 586 15,704' 115,861 648 13,976' 114,531 697 12,030 112,998 1,046 8,046 107,725 907 8,614 126,461 616 18,088 113,545 824 13,906 98,482 710 8,543 104,682 474 10,361 110,281 25,652 26,114 r 88,907 26,725 r 26,490 r 82,531 28,141 23,461' 88,835 26,246 28,387' 83,768 19,935 33,987' 85,715 29,783 21,768 79,331 29,291 16,356 76,586 34,279 20,240 89,438 27,595 35,628 79,956 29,227 28,178 71,792 27,615 14,774 76,566 28,155 13,165 TRANSACTIONS3 By type of deliverable security U.S. Treasury bills Coupon securities, by maturity Five years or less More than five years Federal agency Mortgage-backed OPTIONS Mar. TRANSACTIONS2 By type of security 1 U.S. Treasury bills Coupon securities, by maturity Five years or less 2 3 More than five years 4 Federal agency 5 Mortgage-backed FUTURES Feb. 346 487 369 212 541 302 581 131 426 859 96 256 2,269 17,420 0 0 2,055 14,824 0 0 1,203 11,717 0 0 1,216 10,186 0 0 1,435 12,738 0 0 1,443 14,023 0 0 1,031 10,297 0 0 876 10,736 0 0 1,645 17,060 0 0 1,532 12,218 0 0 1,327 10,771 0 0 1,598 10,765 0 0 TRANSACTIONS4 By type of underlying security U.S. Treasury bills Coupon securities, by maturity Five years or less More than five years Federal agency Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 0 2,730 4,580 0 1,341 2,775 3,073 0 1,125 1,582 3,773 0 1,110 2,213 3,117 0 1,250 1,376 3,712 0 1,401 1,585 4,669 0 979 1,408 3,625 0 1,116 1,526 3,391 0 868 1,328 4,099 0 1,565 3,217 3,982 0 1,417 2,640 4,878 0 625 2,126 2,987 0 541 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 deliveiy of mortgagebacked agency securities include purchases and sales for which delivery is scheduled in thirty business days or less. Stripped securities are repotted at market value by maturity of coupon or corpus. Forward transactions are agreements m a d e 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 saleo 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. Federal Finance 1.43 U.S. GOVERNMENT SECURITIES DEALERS A29 Positions and Financing 1 Millions of dollars 1996 1996, week e n d i n g Mar. Feb. Apr. Apr. 3 Apr. 10 Apr. 17 Apr. 24 May 1 May 8 M a y 15 M a y 22 Positions" NET 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 maturity 2 F i v e years or less 3 M o r e than five years 4 Federal a g e n c v Mortgage-backed NET FUTURES 6 / 8 9 10 II 12 13 14 15 20.889 17,119 44.826 24.141 12,884 7.229 11,554 12,031 16,296 14,951 6,296 7.771 -14,139 -24,377 -27.702 23,424 40,161 25,754 36,887 26,566 32,583 4,387 -26.494 24,016 31.979 8,709 -31.028 25,682 31,757 4.651 -28.372 23.995 33,353 12,474 -25,451 27,192 32,930 6,523 -26,268 31,139 32,543 6,242 -25,003 28.135 30,376 1,796 -23,338 23,321 35,251 -462 -22,041 24,464 35,657 -2,582 -2.842 -3,560 -3.298 -2,626 -2,685 -4,636 -4,547 -4.610 -4,898 -4,563 -587 -9.037 0 0 623 1.073 -4,285 0 346 -5,215 1.222 -3,418 0 1.132 -6.664 788 -5,351 0 0 0 0 0 1.062 -2.783 0 0 1,267 -2,466 0 1,419 -1,462 0 401 -4,541 0 0 POSITIONS4 By type of deliverable security U.S. Treasury bills C o u p o n securities, by maturity Five years or less M o r e than five years Federal agency Mortgage-backed NET OPTIONS 8,316 11,937 -4.361 0 0 0 0 0 0 0 POSITIONS By type of deliverable security U.S. Treasury bills C o u p o n securities, by maturity Five years or less M o r e than five years Federal agency Mortgage-backed 0 0 0 0 0 0 0 0 0 0 0 5 2,706 1,381 177 0 4,949 1,542 1,081 0 4,435 2,257 2.377 0 3.662 1.720 1.946 0 4,896 1,796 572 0 4,275 1.250 727 0 4,144 1,023 429 0 4,808 691 -1,491 -307 688 4,570 676 -1,366 0 3.688 0 3,052 0 0 3,603 Financing5 Reverse repurchase agreements l b O v e r n i g h t and continuing 17 Term 264,559r 424,730 258,213 R 435.402 256.694 467.590 249,264 r 425,695 273,465 445,217 264.387 475.409 239,1 10 490,874 252,381 478,354 245,232 499,560 271,735 416,344 252.858 448,774 Securities borrowed 18 Overnight and continuing 19 Term 166,781 65,051 172,347 66,212 166,490 67,330 164,068 65,146 170,460 64,465 166,267 67,651 163,797 69,072 166,473 69,357 168,222 69,339 175,434 62,296 178.128 62,976 1,878 126 4,477 65 3,275 53 3,910 92 4,377 53 3,532 81 2,529 31 2,241 27 2,063 39 2,487 29 2,446 41 Repurchase agreements 22 O v e r n i g h t and continuing 2 3 Term 562,396 387,953 557.094 393,406 577.949 399,259 562,672 374,236 594,664 377,959 600.073 392.801 554,265 425,905 567,907 413,066 560.778 426,042 577,866 357,241 564,022 392,652 Securities loaned 24 O v e r n i g h t and continuing 25 Term 4,714 2,409 5,202 2.362 4,728 2,611 4.909 2,270 4,852 n.a. 4,592 n.a. 4.589 2,217 4,812 3.242 4,803 3,223 4,579 3,086 4,769 n.a. Securities pledged O v e r n i g h t and continuing 27 Term 33,230 7,230 40.936 8,343 37.160 8.518 36,223 8,148 36,552 8,088 38,533 8,837 37,322 8,831 36,547 8.465 36,965 8,025 41,397 6,738 43,031 6,163 Collateralized loans 28 O v e r n i g h t and continuing 29 Term 30 Total n.a. n.a. 14,667 n.a. n.a. 12.176 n.a. n.a. n.a. n.a. 14,555 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14,052 14,443 15,108 15,317 10,638 n.a. n.a. 13,316 n.a. n.a. 12,567 n.a. n.a. 12,697 MEMO: M a t c h e d b o o k 6 Securities in 31 O v e r n i g h t and continuing 32 Term 253,15lr 426,056r 239,030* 433,86 lr 244,480 464,018 243,714 r 424,355 253,469 437,701 248,186 471.000 231,552 486,355 245,137 480,346 236,730 488,139 259,949 407,901 250,282 437,150 Securities out 33 O v e r n i g h t and continuing 34 333,340 330,450 328,321 338.096 348,557 349,263 339,129 323,134 364,716 324,955 359,919 345,158 328,711 374,859 344,315 365,614 341,079 372,213 345,621 303,369 334,007 332,831 Securities received as pledge 20 O v e r n i g h t and continuing 21 Term 26 1. D a t a for positions and financing are obtained f r o m reports submitted to the Federal Reserve B a n k of N e w York by the U.S. g o v e r n m e n t securities dealers on its published list of primary dealers. Weekly 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 for calendar days of the report week are a s s u m e d to be constant. Monthly averages are based on the n u m b e r of calendar days in the m o n t h . 2. Securities positions are reported at m a r k e t value. 3. N e t outright positions include i m m e d i a t e and f o r w a r d positions. Net immediate positions include securities purchased or sold (other than m o r t g a g e - b a c k e d agency securities) that have b e e n delivered or are s c h e d u l e d to be delivered in five business d a y s or less and " w h e n - i s s u e d " securities that settle on the issue date of offering. Net immediate positions for m o r t g a g e - b a c k e d agency securities include securities purchased or sold that have been delivered or are scheduled to be delivered in thirty business days or less. F o r w a r d positions reflect a g r e e m e n t s m a d e in the over-the-counter market that specify d e l a y e d delivery. Forward contracts for U.S. Treasury securities and federal agency debt securities are included when the time to delivery is m o r e than five business days. Forward contracts for m o r t g a g e - b a c k e d agency securities are included w h e n the time to delivery is m o r e than thirty business days. 4. Futures positions reflect standardized a g r e e m e n t s arranged on an e x c h a n g e . All futures positions are included regardless of time to delivery. 5. Overnight financing refers to a g r e e m e n t s m a d e on o n e business day that mature on the next business day; continuing contracts are a g r e e m e n t s that remain in effect f o r m o r e than one business day but have n o specific maturity and can be terminated without a d v a n c e notice by either party; term a g r e e m e n t s have a fixed maturity of m o r e than one business day. Financing data are reported in t e r m s of actual f u n d s paid or received, including accrued interest. 6. M a t c h e d - b o o k data reflect financial intermediation activity in w h i c h the b o r r o w i n g and lending transactions are m a t c h e d . M a t c h e d - b o o k data are included in the financing breakd o w n s given above. T h e reverse repurchase and repurchase n u m b e r s are not always equal because of the " m a t c h i n g " of securities of different values or different types of collateralization. NOTE, " n . a . " indicates that data are not published because of insufficient activity. M a j o r c h a n g e s in the report f o r m tiled by primary dealers induced a break in the dealer data series as of the week e n d i n g July 6, 1994. A30 1.44 DomesticNonfinancialStatistics • August 1996 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1996 1995 1992 Agency 1993 1994 1995 Nov. 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 3 Defense Department 1 4 Export-Import Bank 2 ' 3 Federal Housing Administration 4 5 Government National Mortgage Association certificates of 6 participation 5 Postal Service 6 7 8 Tennessee Valley Authority United States Railway Association 6 9 10 Federally sponsored agencies 7 Federal Home Loan Banks 11 Federal H o m e Loan Mortgage Corporation 1? n Federal National Mortgage Association 14 Farm Credit Banks 8 15 Student Loan Marketing A s s o c i a t i o n 9 Financing Corporation 10 16 Farm Credit Financial Assistance C o r p o r a t i o n " 17 Resolution Funding Corporation 1 " 18 n.a. n.a. Dec. n.a. Jan. n.a. Feb. 483,970 570,711 738,928 41.829 7 7.208 374 45.193 6 5.315 255 39,186 6 3,455 116 37,347 6 2,050 97 39.207 6 2.512 93 37,347 6 2,050 97 37,273 6 2,050 31 31,986 6 2,050 35 n.a. 10.660 23,580 n.a. n.a. 9,732 29,885 n.a. n.a. 8,073 27,536 n.a. n.a. 5.765 29,429 n.a. n.a. 7.265 29.331 n.a. n.a. 5,765 29,429 n.a. n.a. 5,765 29,421 n.a. n.a. 300 29.595 n.a. 442,141 114.733 29,631 166,300 51,910 39,650 8,170 1.261 29.996 523,452 139.512 49,993 201,112 53,123 39.784 8,170 1,261 29,996 699,742 205,817 93,279 257,230 53,175 50,335 8,170 1,261 29,996 807.264 243.194 119,961 299,174 57,379 47,529 8.170 1.261 29,996 791.660 239.034 115,603 289.768 56.694 50,535 8.170 1,261 29.996 807,264 243,194 119,961 299,174 57,379 47,529 8,170 1,261 29.996 799,547 234,664 120,868 297,657 58,659 47,673 8,170 1,261 29,996 808,398 233,404 123,777 304,159 57,536 49,495 8,170 1,261 29,996 154,994 128,187 103,817 78,681 81,693 78,681 78,512 68,037 7.202 10.440 4.790 6.975 n.a. 5,309 9.732 4,760 6.325 n.a. 3,449 8.073 n.a. 3,200 n.a. 2,044 5,765 n.a. 3,200 n.a. 2,506 7,265 n.a. 3,200 n.a. 2,044 5,765 n.a. 3,200 n.a. 2,044 5,765 n.a. 3,200 n.a. 2,044 300 n.a. n.a. n.a. 42,979 18.172 64.436 38,619 17.578 45.864 33.719 17.392 37.984 21,015 17,144 29,513 21.015 17.141 30,566 21.015 17,144 29,513 21,015 17,026 29,462 21,015 17,040 27,638 Mar. n.a. n.a. 815,523 239,253 124,278 306,815 59,428 • 45,723 8,170 1,261 29,996 MEMO 19 F e d e r a l F i n a n c i n g B a n k d e b t 1 3 2(1 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 Other lending14 25 Farmers H o m e Administration 26 Rural Electrification Administration 27 Other agencies 1. Consists of mortgages assumed by the Defense Department between 1957 and 1963 under family housing and homeowners assistance programs. 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. 3. On-budget since Sept. 30, 1976. 4. Consists of debentures issued in payment of Federal Housing Administration insurance claims. Once issued, these securities may be sold privately on the securities market. 5. Certificates of participation issued before fiscal year 1969 by the Government National Mortgage Association acting as trustee for the Farmers Home Administration, the Department of Health, Education, and Welfare, the Department of Housing and Urban Development, the Small Business Administration, and the Veterans Administration. 6. Off-budget. 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. 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 f r o m the FFB, which is shown on line 22. n.a. 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. Securities Market and Corporate Finance 1.45 NEW SECURITY ISSUES A31 Tax-Exempt State and Local Governments Millions of dollars 1996 1995 Type of issue or issuer, or use 1993 1994 1995 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 All issues, n e w a n d r e f u n d i n g ' 279,945 153,950 143,101 13,898 16,839 16,978 11,545 11,598 15,244 13,199 14,991 By type of issue 2 General obligation 3 Revenue 90,599 189,346 54,404 99,546 55,737 86,555 6,184 7,714 6,194 10,645 5,489 11,489 6,074 5,471 2,063 9,535 4,846 10,398 5,083 8,116 5,476 9,515 By type of issuer 4 State 5 Special district or statutory authority 2 6 Municipality, county, or township 27,999 178,714 73,232 19,186 95,896 38,868 14,215 91,419 36,658 1,825 8,155 3,918 1,491 10,736 4,612 951 11,678 4,349 1,630 7,052 2,863 695 7,820 3,083 904 10,141 4,199 926 9,571 2,702 2,807 9,824 2,360 91,434 105,972 94,412 7,868 11,415 11,070 6,517 6,383 10,621 9,487 9,594 16,831 9,167 12,014 13,837 6,862 32,723 21,267 10,836 10,192 20,289 8,161 35,227 24,926 11,887 9,618 18,612 6,566 26,518 1,785 367 1,780 1,716 227 1,993 3,377 1,469 554 2,177 650 3,188 2,968 1,178 1,664 1,614 1,325 2,321 2,065 573 439 935 322 2,183 2,226 359 582 904 110 2,202 1,847 1,417 892 2,715 785 2,965 2,142 682 592 1,669 751 3,651 2,442 778 1,368 1,764 302 2,940 beginning January 7 Issues f o r n e w capital 8 9 10 11 12 13 By use of proceeds Education Transportation Utilities and conservation Social welfare 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 SOURCE. Securities Data Dealer's Digest before then. Company 1993; Investment U.S. Corporations Millions of dollars 1996 1995 Type of issue, offering, or issuer 1993 1994 1995 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 All issues' 769,088 583,240 n.a. 57,262 52,112 55,349 40,149 47,394 r 60,715 r 54,524 r 44,978 2 Bonds2 646,634 498,039 n.a. 49,905 43,452 47,568 34,619 42,643 r 51,560 r 47,356 r 32,500 By type of offering 3 Public, domestic 4 Private placement, domestic" 5 Sold abroad 487,029 121,226 38,379 365,222 76,065 56,755 408,806 n.a. 76,910 43,137 n.a. 6,768 36,692 n.a. 6,760 43,336 n.a. 4,232 32,219 n.a. 2,399 33,882 r n.a. 8,761 44,904 n.a. 6,656 r 40,612 r n.a. 6,744 27,000 n.a. 5,500 88,160 58,559 10,816 56,330 31,950 400,820 43,423 40,735 6,867 13,322 13,340 380,352 42,950 37,139 5,727 11,974 18,158 369,769 3,284 2,607 908 911 2,829 39,365 3,397 3,532 187 1,241 2,389 32,706 4,017 4,178 225 485 3,333 35,330 3,205 3,099 1,240 685 648 25,742 3,809 r 2,151 664 1,821 748 33,450 r 2,472 2,601 584 r 955 2,691 42,258 3,210 3,852 57 678 1,873 37,686 r 2,210 3,064 120 471 535 26,100 122,454 85,155 n.a. 7,357 8,660 7,781 5,530 4,756 r 9,160 r 7,393 r 12,478 18,897 82,657 20,900 12,570 47,828 24,800 1,035 6,322 n.a. 836 7,824 n.a. 2,210 5,571 n.a. 890 4,640 n.a. 2,167 2,589 r n.a. 3,258 5,902 r n.a. 967 6,426 r n.a. 2,000 10,478 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 2,383 2,801 32 190 47 1,905 1,815 4,628 39 60 0 2,118 2,209 3,274 97 36 0 2,166 681 2,632 156 322 0 1,739 295 r 2,52 r 38 115 200 1,588 l,543 r 2,659 r 141 809 122 3,719 r 2.036 r 3,577 r 232 r 319 100 r 1,130 3,966 4,112 37 149 144 4,070 6 7 8 9 10 11 By industry group Manufacturing Commercial and miscellaneous Transportation Public utility Communication Real estate and financial 12 S t o c k s 2 By type of offering 13 Public preferred 14 C o m m o n 15 Private placement 3 16 17 18 19 20 21 By industry group Manufacturing Commercial and miscellaneous Transportation Public utility Communication Real estate and financial 10,964 57,809 n.a. 1. Figures represent gross proceeds of issues maturing in more than one year; they are the principal amount or number of units calculated by multiplying by the offering price. Figures exclude secondary offerings, employee stock plans, investment companies other than closedend, intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include ownership securities issued by limited partnerships. 2. Monthly data cover only public offerings. 3. Monthly data are not available. SOURCE. Beginning July 1993, Securities Data Company and the Board of Governors of the Federal Reserve System. A32 DomesticNonfinancialStatistics • August 1996 1.47 O P E N - E N D INVESTMENT COMPANIES Net Sales and Assets' Millions of dollars 1995 Item 1994 1996 1995 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 Sales of o w n s h a r e s 2 841,286 871,415 68,694 72,730 70,499 94,719 112,332 90,370 93,856 101,847 2 Redemptions of own shares 3 Net sales 3 699,823 141,463 699,497 171,918 54,473 14,221 56,174 16,556 52,727 17,772 67,945 26,774 75,354 36,978 60,398 29,972 65,748 28,108 81,008 20,839 1,550,490 2,067,337 1,962,817 1,963,496 2,032,958 2,067,337 2,143,185 2,181,711 2,212,517 r 2,292,722 121,296 1,429,195 142,572 1,924,765 127,446 1,835,371 133,653 1,829,843 141,489 1,891,470 142,572 1,924,765 150,772 1,992,414 144,520 2,037,191 142,697 2,069,820 148,794 2,143,928 4 Assets 4 5 5 Cash 6 Other 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 f u n d s and limited-maturity municipal bond funds. 2. Includes reinvestment of net income dividends. Excludes reinvestment of capital gains distributions and share issue of conversions f r o m one fund to another in the same group. 3. Excludes sales and redemptions resulting f r o m transfers of shares into or out of money market mutual funds 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 C o m p a n y 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 Billions of dollars; quarterly data at seasonally adjusted annual rates 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 1996 1995 Q2 Q3 Q4 Qi Q2 Q3 Q4 Qi 464.5 464.3 163.8 300.5 197.3 103.3 526.5 528.2 195.3 332.9 211.0 121.9 588.6 600.8 218.7 382.1 227.4 154.7 531.5 523.2 192.8 330.4 208.8 121.7 549.8 547.5 203.4 344.1 212.5 131.6 568.9 570.4 213.5 356.8 218.5 138.3 559.6 594.1 217.3 376.8 221.7 155.1 561.1 588.4 214.2 374.1 224.6 149.6 614.9 609.6 224.5 385.1 228.5 156.6 618.6 611.0 218.7 392.3 234.7 157.6 652.0 649.0 233.4 415.6 239.9 175.7 -6.6 6.7 -13.3 11.6 -28.1 15.9 -9.8 18.1 -16.5 18.8 -22.8 21.3 -51.9 17.4 -42.3 15.0 -9.3 14.6 -8.8 16.5 — 17.4 r 20.4 r Business. Securities Markets and Corporate Finance 1.51 DOMESTIC FINANCE COMPANIES A3 3 Assets and Liabilities' Billions of dollars, end of period; not seasonally adjusted 1994 Account 1994 1993 1995 1995 Q2 Q3 Q4 QI Q2 Q3 Q4 ASSETS 1 Accounts receivable, gross 2 2 Consumer Business 3 4 Real estate 482.8 116.5 294.6 71.7 551.0 134.8 337.6 78.5 614.6 152.0 375.9 86.6 511.3 124.3 313.2 73.8 524.1 130.3 317.2 76.6 551.0 134.8 337.6 78.5 568.5 135.8 351.9 80.8 586.9 141.7 361.8 83.4 594.7 146.2 362.4 86.1 614.6 152.0 375.9 86.6 50.7 11.2 55.0 12.4 63.2 14.1 51.9 12.1 51.1 12.1 55.0 12.4 58.9 12.9 62.1 13.7 61.2 13.8 63.2 14.1 7 Accounts receivable, net 8 All other 420.9 170.9 483.5 183.4 537.3 210.7 447.3 174.6 460.9 177.2 483.5 183.4 496.7 194.6 511.1 198.1 519.7 198.1 537.3 210.7 9 Total assets 591.8 666.9 748.0 621.9 638.1 666.9 691.4 709.2 717.8 748.0 25.3 159.2 21.2 184.6 23.1 184.5 23.3 171.2 21.6 171.0 21.2 184.6 21.0 181.3 21.5 181.3 21.8 178.0 23.1 184.5 42.7 206.0 87.1 71.4 51.0 235.0 99.5 75.7 62.3 284.7 106.2 87.2 44.7 219.6 89.9 73.2 50.0 228.2 95.0 72.3 51.0 235.0 99.5 75.7 52.5 254.4 102.5 79.7 57.5 264.4 102.1 82.5 59.0 272.1 102.4 84.4 62.3 284.7 106.2 87.2 591.8 666.9 748.0 621.9 638.1 666.9 691.4 709.2 717.8 748.0 5 LESS; Reserves for unearned income 6 Reserves for losses LIABILITIES AND CAPITAL 10 Bank loans 11 Commercial paper 12 13 14 15 Debt O w e d to parent Not elsewhere classified All other liabilities Capital, surplus, and undivided profits 16 Total liabilities a n d c a p i t a l 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 2. Before deduction for unearned income and losses, Consumer, Real Estate, and Business Credit' Millions of dollars, amounts outstanding, end of period 19 96 1995 Type of credit 1993 1995 Nov. Dec. Jan. Feb. Mar.' Apr. Seasonally adjusted 1 Total 2 Consumer 3 Real estate 2 4 Business 546,103 r 615,618 r 691,616 r 687,894 r 691,616 r 696,099 r 700,977 r 702,925 707,741 160,227 r 72,043 r 313,833 r 176,085 r 78,910 r 360,624 r 198,861 r 87,077 r 405,678 r 196,773 r 87,550 r 403,57 l r 198,861 r 87,077 r 405,678' 200,162' 88,084' 407,853' 202,548' 88,188' 410,241' 203,280 89,502 410,144 205,184 89,943 412,614 Not seasonally adjusted 5 Total 6 Consumer Motor vehicles 7 8 Other consumer 3 Securitized motor vehicles 4 9 10 Securitized other consumer 4 11 Real estate 2 12 Business Motor vehicles 13 14 Retail 5 Wholesale 6 15 Leasing 16 Equipment 17 Retail 18 19 Wholesale 6 Leasing 20 21 Other business 7 22 Securitized business assets 4 23 Retail 24 Wholesale Leasing 25 550,751 620,975 697,340 687,944 697,340 697,312 701,576 r 705,173 710,154 162,770 56,057 60,396 36,024 10,293 71,727 316,254 95,173 18,091 31,148 45,934 145,452 35,513 8,001 101,938 53,997 21,632 2,869 10,584 8,179 178,999 61,609 73,221 31,897 12,272 78,479 363,497 118,197 21,514 35,037 61,646 157,953 39,680 9,678 108,595 61,495 25,852 4,494 14,826 6,532 202,101 70,061 81,988 33,633 16,419 86,606 408,633 133,277 25,304 36,427 71,546 177,297 48,843 10,266 118,188 65,363 32,696 4,723 21,327 6,646 198,072 68,167 78,926 34,394 16,585 87,672 402,200 129,708 24,564 33,519 71,625 173,183 44,194 10,889 118,100 66,678 32,631 4,974 21,208 6,449 202,101 70,061 81,988 33,633 16,419 86,606 408,633 133,277 25,304 36,427 71,546 177,297 48,843 10,266 118,188 65,363 32,696 4,723 21,327 6,646 201,774 71,420 81,186 32,128 17,040 88,495 407,043 132,062 25,906 34,198 71,958 175,984 48,737 9,260 117,987 66,643 32,354 4,467 21,130 6,757 202,108 73,312 81,214 30,364 17,218 88,520 410,948' 132,153 26,591 33,386 72,176 176,461' 48,660 8,914 118,887' 68,070 34,264 4,252 23,460 6,552 202,337 72,129 79,779 31,093 19,336 89,056 413,780 133,621 26,663 33,910 73,048 177,285 48,696 9,213 119,376 69,497 33,377 4,067 22,622 6,688 203,532 73,810 79,489 30,476 19,757 89,975 416,647 133,892 27,346 32,155 74,391 178,507 47,913 9,663 120,931 69,193 35,055 4,367 24,327 6,361 1. Includes finance company subsidiaries of bank holding companies but not of retailers and banks. Data are before deductions for unearned income and losses. Data in this table also appear in the Board's G.20 (422) monthly statistical release. For ordering address, see inside front cover. 2. Includes all loans secured by liens on any type of real estate, for example, first and junior mortgages and home equity loans. 3. Includes personal cash loans, mobile home loans, and loans to purchase other types of consumer goods such as appliances, apparel, general merchandise, and recreation vehicles. 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. A34 1.53 DomesticNonfinancialStatistics • August 1996 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 1996 1995 Item 1993 1994 1995 Nov. Dec. Jan. Feb. Mar. Apr. May Terms and yields in primary and secondary markets PRIMARY 1 2 3 4 5 MARKETS Terms1 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)* 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 1.21 178.6 136.4 78.9 27.7 1.22 181.7 140.9 79.1 27.6 1.21 179.2 135.8 77.3 27.7 1.07 181.7 143.2 80.3 27.8 1.24 184.5 141.5 77.8 26.4 1.3(1 175.2 133.2 78.4 27.1 1.17 179.5 137.6 79.3 27.2 1.16 7.03 7.24 7.37 7.26 7.47 8.58 7.65 7.85 8.05 7.27 7.46 7.46 7.20 7.40 7.30 7.15 7.32 7.23 7.00 7.20 7.56 7.25 7.49 7.97 7.57 7.76 8.22 7.61 7.80 8.34 7.46 6.65 8.68 7.96 8.18 7.57 7.51 7.01 7.52 6.82 7.11 6.71 7.57 6.85 8.09 7.40 8.52 7.63 8.57 7.81 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. . 12 FHA/VA insured 13 Conventional ASSOCIATION period) 190,861 23,857 167,004 222.057 27,558 194,499 253.51 1 28,762 224.749 249,928 28,901 221,027 253.511 28.762 224.749 255.619 28,622 226,997 257.970 28.502 229.468 262.014 28,744 233.270 263.809 29.132 234,677 267,330 30,442 236.888 14 Mortgage transactions purchased (during period) . . . 92,037 62,389 56,598 6.148 6,243 4,810 5.371 7.681 5.339 6,720 Mortgage 15 Issued 7 16 To sell 8 92,537 5,097 54.038 1.820 56.092 360 6.038 10 4,765 0 5.750 3 7,013 0 6.293 29 5,599 0 5.228 13 55,012 321 54,691 72,693 276 72,416 107.424 267 107.157 102.997 271 102.726 107.424 267 107.157 111,143 226 110.917 114,793 223 114,570 117,420 220 117.200 119,520 216 119,304 121.058 212 120,846 229,242 208,723 124,697 117,110 98,470 85,877 9,989 9,011 13,108 11,712 13.357 11.624 10,891 9.733 11.9X4 1 1.384 12,740 11.958 12,385 11.904. 274,599 136.067 118,659 11,339 14,609 12,765 10.378 14.520 13.009 11.075 commitments (during period) FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 18 FHA/VA insured 19 Conventional Mortgage transactions 20 Purchases 21 Sales (during 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; from 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 Housing Administration ( F H A ) for immediate delivery in the private secondary market. Based on transactions on first day of subsequent m o n t h . 6. Average net yields to investors on fully modified pass-through securities backed by mortgages and guaranteed by the Government National Mortgage Association (GNMA), assuming prepayment in twelve years on pools of 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 Home Loan Mortgage Corporation's mortgage commitments and mortgage transactions include activity under mortgage securities sw ap programs, whereas the corresponding data for FN MA exclude swap activity. Real Estate 1.54 A3 5 MORTGAGE DEBT OUTSTANDING 1 Millions of dollars, end of period 1996 1995 Type of holder and property 1992 1994 1993 Qi Q2 Q3 Q4 Qlp 1 All h o l d e r s 4,092,984 4,268,420 r 4,473,100 r 4,515,854" 4,584,566' 4,663,864" 4,715,884 4,773,998 By type of property One- to tour-tamilv residences 3 Multit'amily residences 4 Commercial 5 3.037,408 274,234 700,604 80.738 3,227.134 r 270.796 689.296 81,194 3,430,023 r 275.303 r 684.803 82,971 3,465.065' 276,398 690,988 83,403 3.524,378' 280,390 695,947 83,850 3,593,966' 284,238' 701,241' 84.420 3,634,698 288,090 708,467 84,629 3,682,610 292,448 713,751 85,189 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 1,815,810 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 1,895,285 1.072,780 662,126 43,003 343,826 23,824 604,614 489,150 63,569 51,604 291 217,892 8,006 24,601 175,643 9,643 1,890,539 1,080,373 663,588 43,846 349,109 23,829 596,789 482.765 61.926 51.809 288 213,377 7,833 24,070 171,855 9,619 1,895,878 1,087,174 666,306 45,201 351,736 23,931 595,903 484,020 60,494 51,089 299 212,801 7,815 24,013 171,445 9,528 286.263 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 2,633 327,014 r 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 46,892 r 44,345 r 2,547 319.401' 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 41.786 r 38,956 r 2,830 317,753' 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 43.239 r 40,105' 3,134 315,722' 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 44,738' 41.477' 3,261 319,923' 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 48,243' 44,809' 3.434 320,828 2 2 0 41.791 12,643 11,617 6,248 11,282 9,809 5,180 4,629 1.864 691 647 525 0 4,303 492 428 3,383 0 183,782 168,122 15,660 28,428 1,673 26,755 50,849 46,997 3,852 322,131 2 2 0 41,594 12,327 11,636 6,365 11,266 8,439 4,228 4,211 0 0 0 0 0 5,553 1.848 560 3,145 0 183,531 167,895 15.636 28,891 1,700 27,191 54,120 50,058 4,062 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 1,564.57 l r 414.066 404,864 9,202 447,147 r 442,612 r 4.535 495,525 486,804 8,721 28 5 0 13 10 207.806 173,635 8,701 25,469 0 l,718,297 r 450,934 441,198 9,736 490,85 l r 487,725 r 3,126 530.343 520,763 9,580 19 3 0 9 7 246.1501" 194,45 l r 14,925 36,774 0 1,731,468' 454,401 444,632 9,769 492,194' 489,114' 3,080 533,262 523,903 9,359 14 2 0 7 5 251.597' 198,040' 15,743 37.814 0 1,759,091' 457,101 446,855 10,246 498,216' 495,182' 3,034 543,669 533,091 10,578 13 i 0 6 5 260,093' 202,718' 17,281 40,094 0 1,795,041' 463,654 453,114 10,540 503.370' 500.417' 2,953 559.585 548,400 11,185 12 5 5 268,420' 207,679' 18,903 41,838 0 1,853,613 472,298 461,453 10,845 515,051 512,238 2,813 582,959 569,724 13,235 11 2 0 5 4 283,294 214,635 21,279 47,380 0 1,895,309 475,823 464,644 11,179 524,326 521,721 2,605 599,546 585,527 14,019 10 1 0 5 4 295,604 220,022 24,477 51,104 0 603,270 447,871 64,688 75,441 15.270 609,000 r 455,676 r 65.397 73,917 14.009 619,592' 461.157' 69,601' 76.153 12.681 624,819' 465,111' 70,305 76,667 12,736 641,578' 480,447' 71,050' 77,284 12,796 653,615' 491,463' 71,897' 77,384' 12,872 650,904 486,660 73,243 78,152 12,850 660,680 494,495 74,354 78,861 12,970 B\ type of holder 6 Major financial institutions Commercial b a n k s 7 X One- to four-familv 9 Multifamilv Commercial 10 1 1 Farm Savings institutions 12 One- to four-familv 13 14 Multifamilv Commercial 15 Farm 16 17 Life insurance companies 18 One- to tour-family 19 Multit'amily 20 Commercial 21 Farm 22 Federal and related agencies Government National Mortgage Association 23 24 One- to four-familv Multit'amily 25 26 Farmers Home Administration 4 One- to four-familv 27 Multifamilv 28 Commercial 29 30 Farm Federal Housing and Veterans' Administrations 31 One- to four-family 32 33 Multifamilv 34 Resolution Trust Corporation One- to four-familv 35 Multit'amily 36 37 Commercial 38 Farm 39 Federal Deposit Insurance Corporation 40 One- to four-familv 41 Multit'amily Commercial 42 43 Farm 44 Federal National Mortgage Association One- to four-family 45 46 Multifamilv Federal Land Banks 47 48 One- to four-familv 49 Farm 50 Federal Home Loan Mortgage Corporation 51 One- to four-family 52 Multit'amily 53 Mortgage pools or trusts' 54 Government National Mortgage Association 55 One- to four-family 56 Multit'amily 57 Federal Home Loan Mortgage Corporation 58 One- to four-family 59 Multit'amily 60 Federal National Mortgage Association 61 One- to four-family Multifamily 62 Farmers Home Administration 4 63 64 One- to four-family Multifamily 65 66 Commercial 67 Farm 68 Private mortgage conduits 69 One- to four-family Multifamily 70 71 Commercial 72 Farm 73 Individuals and others 6 74 One- to four-familv Multifamily 75 76 Commercial 77 Farm 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 from 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. A36 1.55 DomesticNonfinancialStatistics • August 1996 CONSUMER INSTALLMENT CREDIT 1 Millions of dollars, amounts outstanding, end of period 1995 r Holder and type of credit 1993' 1994 r 1996 r 1995 r Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted 1 Total 844,118 966,457 1,103,164 1,094,352 1,103,164 1,113,509 1,124,253 1,133,642 1,140,181 2 Automobile 3 Revolving 4 Other 2 279,786 287,011 277,321 317,182 339,337 309,939 351,052 413,894 338,218 347,234 407,381 339,737 351,052 413,894 338,218 352,461 419,030 342,018 354,810 425,778 343,666 356,310 431,196 346,136 359,507 438,460 342,214 Not seasonally adjusted 5 Total 863,924 990,247 1,131,747 1,101,356 1,131,747 1,123,813 1,121,348 1,123,315 1,129,433 By major holder Commercial banks Finance companies Credit unions Savings institutions Nonfinancial business 3 Pools of securitized assets 4 399,683 116,453 101,634 37,855 77,229 131,070 462,923 134,830 119,594 38,468 86,621 147,811 507,414 152,624 131,939 40,106 85,061 214,603 495,978 147,093 130,940 40,505 77,948 208,892 507,414 152,624 131,939 40,106 85,061 214,603 502,400 152,606 131,257 40,000 80,733 216,817 500,140 154,365 130,839 40,000 78,138 217,866 499,762 151,749 130,837 40,000 76,681 224,286 504,652 153,299 131,873 39,999 73,765 225,845 By major type of credi? 12 Automobile 13 Commercial banks 14 Finance companies 15 Pools of securitized assets 4 281,538 122,000 56,057 39,561 319,715 141,895 61,609 36,376 354,260 149,094 70,626 44,616 351,029 147,995 68,167 44,691 354,260 149,094 70,626 44,616 351,969 148,186 71,420 42,569 352,583 147,703 73,312 41,755 352,634 148,455 72,129 42,868 355,073 150,455 73,810 40,596 16 Revolving 1/ Commercial banks 18 Nonfinancial business 3 19 Pools of securitized assets 4 302,201 149,920 50,125 80,242 357,307 182,021 56,790 96,130 435,674 210,298 53,525 147,934 410,493 197,088 48,536 141,934 435,674 210,298 53,525 147,934 426,024 200,080 50,520 151,640 424,657 198,886 48,613 153,390 425,823 196,836 47,416 157,690 431,733 201,858 44,526 161,185 20 Other 21 Commercial banks 22 Finance companies 23 Nonfinancial business 3 24 Pools of securitized assets 4 280,185 127,763 60,396 27,104 11,267 313,225 139,007 73,221 29,831 15,305 341,813 148,022 81,998 31,536 22,053 339,834 150,895 78,926 29,412 22,267 341,813 148,022 81,998 31,536 22,053 345,820 154,134 81,186 30,213 22,608 344,108 153,551 81,053 29,525 22,721 344,858 154,471 79,620 29,265 23,728 342,627 152,339 79,489 29,239 24,064 6 7 8 9 10 11 1. The Board's series on amounts of credit covers most short- and intermediate-term credit extended to individuals that is scheduled to be repaid (or has the option of repayment) in two or more installments. Data in this table also appear in the B o a r d ' s G.19 (421) monthly statistical release. For ordering address, see inside front cover. 2. Comprises mobile home loans and all other installment loans that are not included in automobile or revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be secured or unsecured. 1.56 3. Includes retailers and gasoline companies. 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. Totals include estimates for certain holders for which only consumer credit totals are available. TERMS OF CONSUMER INSTALLMENT CREDIT 1 Percent per year except as noted 1995 Item 1993 1994 1996 1995 Oct. Nov. Dec. Jan. Feb. Mar. Apr. INTEREST RATES Commercial banks2 1 48-month new car 2 24-month personal 8.09 13.47 8.12 13.19 9.57 13.94 n.a. n.a. 9.36 13.80 n.a. n.a. n.a. n.a. 9.12 13.63 n.a. n.a. Credit card plan 3 All accounts 4 Accounts assessed interest n.a. n.a. 15.69 15.77 16.02 15.79 n.a. n.a. 15.81 15.71 n.a. n.a. n.a. n.a. 15.82 15.41 n.a. 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 10.89 14.06 10.84 13.98 10.52 13.83 9.74 13.27 9.86 13.28 9.77 13.19 9.64 13.26 54.5 48.8 54.0 50.2 54.1 52.2 54.6 52.3 54.5 52.2 53.6 51.8 51.8 52.2 52.3 52.1 51.8 52.0 51.5 51.8 91 98 92 99 92 99 92 99 92 99 92 99 92 99 91 98 91 98 91 99 14,332 9,875 15,375 10,709 16,210 11,590 16,430 11,883 16,583 12,012 17,034 12,152 16,698 12,059 16,627 11,990 16,520 11,934 16,605 12,024 companies OTHER Maturity 7 N e w car 8 Used car TERMS1 (months) Loan-to-value 9 N e w car 10 Used car ratio Amount financed 11 N e w car 12 Used car (dollars) 1. The B o a r d ' s series on amounts of credit covers most short- and intermediate-term credit extended to individuals that is scheduled to be repaid (or has the option of repayment) in two or more installments. Data in this table also appear in the Board's G.19 (421) monthly statistical release. For ordering address, see inside front cover. 2. Data are available for only the second month of each quarter, 3. At auto finance companies, Flow of Funds 1.57 F U N D S R A I S E D I N U.S. C R E D I T A37 MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 1995 r 1994 Transaction category or sector 1991 1996 1992 Q4 Q3 Ql Q2 880.4 888.3 Q3 Q4 Ql 578.2 863.5 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial s e c t o r s . . . . By sector and instrument ? U.S. government Treasury securities Budget agency issues and mortgages 4 481.7 R R 543.0 628.5 R 618.9 R 732.9 587.6 R 634.8 R 584.8 278.2 292.0 -13.8 304.0 303.8 .2 256.1 248.3 7.8 155.9 155.7 .2 144.4 142.9 1.5 135.6 132.8 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 42.4 37.2 5.1 288.7 291.0 -2.3 203.5 r 239.0 r 372.3 r 463.1 r 588.5 452.0 r 484.7 r 613.6 685.6 519.1 535.9 574.8 i? n 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 87.8 78.8 158.4 173.6 -5.5 -10.0 .4 - 13.7r -40.9 -18.4 -48.5 30.5 67.6 130.9 187.6 -10.4 -47.8 1.4 5.0 r -13.7 8.6 10.1 74.8 75.2 157.2 187.9 -6.0 -25.0 .5 61.5 r 3.8 10.0 -10.2 -29.3 23.3 194.3 r 202.4 r 1.3 -11.1 1.8 124.9 r 73.l r 21.4 55.4 -41.3 73.3 237.5 204.7 11.0 20.1 1.7 142.9 103.0 18.1 54.9 -58.4 15.4 205.5 r 210.3 r 5.6 -12.7 2.2 133.8 r 92. r 28.5 r 35.1 -53.8 6.2 210.6 r 216.8 r -4.2 -3.4 1.4 141.8 r 16.1' 30.7 r 72.4 -45.8 53.0 222.5 196.8 2.7 21.2 1.7 138.3 152.5 12.3 80.8 -4.3 98.4 239.6 207.2 14.2 16.3 1.8 156.9 96.8 39.1 59.1 -107.4 59.8 290.5 256.8 13.7 17.7 2.3 158.5 76.8 13.9 27.1 -7.6 82.0 197.4 157.8 13.6 25.2 .8 118.2 86.0 7.2 52.7 -6.4 58.9 285.4 250.1 15.6 17.4 2.2 121.7 52.8 37.9 24.5 17 18 19 ?o ?i 22 By borrowing sector Household Nonfinancial business Farm Nonfarm noncorporate Corporate State and local government 183.81 -61.9 2.1 -11.0 -53.0 81.6 198.41 19.5 1.3 -16.0 34.1 21.1 249.l r 61.0 2.0 7.0 52.0 62.3 362.2 r 144.3 2.8 12.1 129.3 -43.4 383.5 250.6 2.0 35.9 212.7 -45.7 385.3 r 132.r 2.4 8.8 120.9 r -65.4 392.4 1 160.8 r -2.0 16.5 146.3' -68.5 358.6 300.1 .9 51.3 247.9 -45.1 393.0 303.6 3.6 34.4 265.6 -11.1 448.1 181.5 4.3 29.8 147.4 -110.6 334.5 217.4 -.8 28.2 190.0 -16.0 387.7 190.7 .9 29.3 160.5 -3.7 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 67.7 46.5 8.5 13.6 -.8 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 94.1 52.1 8.2 30.9 2.9 75.1 70.6 11.9 -3.4 -4.1 36.9 45.4 8.7 -13.8 -3.3 5 Private 7 8 in II ?4 75 26 27 Foreign net borrowing in United States Bonds Bank loans n.e.c Commercial paper Other loans and advances 28 Total domestic plus foreign 496.5 R R 565.6 697.3 R 598.6 R 800.7 607.2 R 668.3 R 941.8 928.8 273.1 436.1 653.3 900.4 490.0 580.4 313.6 678.9 Financial sectors 29 Total net borrowing by financial sectors 30 31 3? 33 34 35 36 37 38 39 By instrument U.S. government-related Government-sponsored enterprise 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 47 Private financial sectors 43 Commercial banks Bank holding companies 44 Funding corporations 45 Savings institutions 46 47 Credit unions 48 Life insurance companies 49 Finance companies Mortgage companies 50 51 Real estate investment trusts (REITs) 5? Brokers and dealers Issuers of asset-backed securities (ABSs) 53 155.6 R 240.0 R 145.7 9.2 136.6 .0 155.8 40.3 115.6 .0 9.8 r 69.9 r .5 8.8 -32.0 -37.3 84.2 r 82.7 r .6 2.2 -.7 -.6 9.1 136.6 9.8 r -10.7 -2.5 -6.5 -44.7 .0 .0 17.7 -2.4 1.2 3.7 54.0 r 40.2 115.6 84.2 r 7.7 2.3 13.2 -7.0 .0 .0 -1.6 8.0 .3 2.7 58.5 r 291.L R 467.9 R 444.9 428.7 R 536.8 R 164.2 80.6 83.6 .0 288.6 r 176.9 116.5 r —4.8 205.1 106.9 98.2 .0 250.3 r 152.1 98.3 r .0 321.2 r 249.0 12.2' .0 89.4 62.9 26.4 .0 192.1 127.2 64.9 .0 221.4 101.5 119.9 .0 317.5 136.1 181.4 .0 147.2 37.4 109.8 .0 126.91" 179.2r 117.5 r 9.8 -12.3 41.6 22.6 239.8 185.5 5.3 3.0 42.6 3.4 178.3 r 103.9 r 12.0 -11.7 41.3 32.8 215.6 r 84.9 r 4.9 1.9 85.9 38.1 183.7 167.5 5.2 -3.0 38.5 -24.5 244.0 182.3 5.2 21.2 34.0 1.3 268.6 208.1 5.2 7.1 43.3 4.9 262.9 184.0 5.6 -13.4 54.7 32.0 166.4 136.2 5.5 7.6 22.6 -5.5 80.6 83.6 126.9 r 4.6 8.8 2.9 11.3 172.1 116.5 r 179.2 r 9.9 10.3 24.2 12.8 .3 50.2 -11.5 13.7 .5 68.5 r 152.1 98.3 r 178.3 r 23.9 11.5 47.3 14.8 .5 .0 16.3 -7.0 18.8 -7.6 59.8 r 249.0 12.2' 215.6 r 4.1 16.0 11.1 36.1 .2 1.3 57.3 1.1 6.3 19.3 62.8 r 62.9 26.4 183.7 6.3 16.3 61.5 -18.9 -.3 .0 83.1 -7.4 5.2 -29.5 67.6 127.2 64.9 244.0 18.2 20.8 21.7 -7.2 -.1 .1 57.2 14.8 5.2 -.1 113.2 101.5 119.9 268.6 8.8 28.2 52.1 5.1 .1 -.1 6.5 4.0 5.2 136.1 181.4 262.9 -.9 -7.8 -7.3 31.5 .0 -.4 59.6 -20.0 6.0 7.7 194.5 37.4 109.8 166.4 -4.8 -25.8 26.6 10.9 .2 106.9 98.2 239.8 8.1 14.4 32.0 2.6 -.1 -.1 51.6 -2.1 5.4 -5.0 133.0 i2o.r 3.6 -13.0 -6.2 22.4 .2 .2 .0 3.4 12.0 83.3 r .2 2.1 156.5 -.1 2.5 50.0 .7 5.9 -31.8 132.2 A38 1.57 DomesticNonfinancialStatistics • August 1996 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued 1994 Transaction category or sector 1992 1993 1994 1996 1995' 1995' Q3 Q4 Qi Q2 Q3 Q4 QI All sectors 54 Total net b o r r o w i n g , all s e c t o r s 652.1 r 805.6 r 988.4 r l,066.5r 1,245.6 1,035.9' l,205.2r 1,214.8 1,364.9 1,169.0 1,233.7 1,214.0 55 56 57 58 59 60 61 62 424.0 87.8 163.6 r 158.9 — 13.7 r —29.1 -44.0 -95.6 459.8 30.5 166.0 r 131.5 5.0 r -9.3 13.1 8.9 420.3 74.8 276.6 r 160.8 61.5 r — 8.5 — 5.1 8.0 449.3' -29.3 147.9' 204.1' 124.9' 62.2' 35.7 71.7 349.5 -41.3 305.3 242.8 142.9 114.5 74.3 57.5 386.0' -58.4 140.1' 217.5' 133.8' 85.1' 61.7' 70.2 471.3' -53.8 118.8' 215.5' 141.8' 78.1' 122.5' 111.0 356.2 -45.8 234.0 227.7 138.3 157.6 88.8 58.1 394.9 -4.3 330.6 244.8 156.9 123.7 61.9 56.5 287.2 -107.4 320.0 295.7 158.5 92.1 88.1 34.9 359.9 -7.6 336.7 202.9 118.2 84.5 58.5 80.6 435.9 -6.4 240.5 290.9 121.7 69.0 46.6 15.7 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 Funds raised through mutual f u n d s and corporate equities 63 Total net s h a r e issues 209.4 294.9 442.1 150.8 159.3 113.2 -81.1 40.0 156.7 196.1 244.3 273.4 64 Mutual funds 65 Corporate equities 66 Nonfinancial corporations 67 Financial corporations 68 Foreign shares purchased by U.S. residents 147.2 62.2 18.3 13.3 30.7 209.1 85.8 27.0 28.1 30.7 323.7 118.4 21.3 36.6 60.5 128.9 21.9 -44.9 24.1 42.7 173.9 -14.7 -74.2 12.3 47.2 129.7 -16.4 -50.0 10.5 23.1 -12.6 -68.5 -118.0 16.3 33.2 78.5 -38.5 -60.0 8.7 12.8 173.3 -16.6 -71.3 17.7 37.0 195.3 .7 -92.8 9.7 83.9 248.6 -4.3 -72.8 13.3 55.3 290.9 -17.6 -118.0 11.5 89.0 1. Data in this table also appear in the B o a r d ' s Z . l (780) quarterly statistical release, tables F.2 through F.5. For ordering address, see inside front cover. Flow of Funds 1.58 SUMMARY OF FINANCIAL A39 TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 r 1994 Transaction category or sector 1991 1992 1993 1994 1996 1995 r Q3 Q4 Qi Q2 Q3 Q4 Qi NET LENDING IN CREDIT MARKETS 2 1 T o t a l n e t l e n d i n g in c r e d i t m a r k e t s 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 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 b u s i n e s s 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 sponsored enterprises Federally related m o r t g a g e p o o l s 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 Bank 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 c o m p a n i e s Mortgage companies Mutual f u n d s 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 A s s e t - b a c k e d securities issuers ( A B S s ) Bank personal trusts 652.1r 805.6r 988.4r l,066.5r 1,245.6 l,035.9r l,205.2r 1,214.8 1,364.9 1,169.0 1,233.7 1,214.0 105.21" 29.0 r -5.3 30.7 50.8 10.5 13.3 523.T 15.1 136.6 31.1 80.8 35.7 48.5 -1.5 -1.9 8.2 -146.1 86.5 30.0 35.4 41.1 -9.2 11.2 80.1 12.8 32.7 -.7 17.5 50.0 r 10.0 87.9 r 81.7 r -.1 27.8 -21.5 -11.9 98.2 631.5 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 53.7 r 8.0 65.6 r 52.2 r .6 9.1 r 3.7 -18.4 128.3 812.8 90.2 83.6 36.2 -84.8 51.5 1.0 -3.5 -133.7 -21.3 271.7 1,080.0 94.7 98.2 12.7 266.3 186.6 75.4 4.7 6.2 8.7 98.7 21.4 61.3 21.4 63.6 -3.4 52.5 5.8 86.5 1.8 90.1 112.3 -18.8 213.4 r 292.3 r .7 31.3' -117.0 -11.3 137.5 696.3 r 121.9 r 98.3 r 29.7 183.4 155.6 22.9 2.7 2.2 —43.4 r 53.8 89.5 25.3 42.5 -11.1 63.8 r -14.0 -29.3 -13.6 57.7 5.5 -21.9 50.6 r 7.7 221.8' 343.4' .9 53.2' -169.7 -24.4 210.9 790.8 r 171,4 r 12.2' 30.0 174.5 174.2 -5.6 -2.4 8.3 -4.2r 32.4 79.4 30.4 74.7 36.6 81.7 r 2.1 -70.4 -10.0 53.9 .2 -8.0 42.6r 1.4 35.3 170.8 .5 -41.1 -94.9 149.6 -9.8 .0 2.4 -19.4' -1.7 100.9 27.7 45.9 19.8 -9.0 .0 159.5 11.0 20.4 .6 14.8 80.8 r 9.5 258.9 r 304.7 r .7 48.lr -94.6 -24.2 134.4 697.4' 119. r 116.5 r 31.5 163.4 148.1 11.2 .9 3.3 -27.4 34.9 66.3 24.9 47.0 29.0 68.2 -22.9 -7.1 -5.5 30.0 4.7 -44.2 61,9 r 7.1 241.2 951.6 28.2 26.4 16.3 343.1 183.4 158.8 -1.5 2.4 39.8 28.2 132.4 19.2 58.9 62.4 92.5 -14.4 -15.1 3.5 53.1 1.8 30.5 55.5 -10.8 -142.3 -77.2 1.1 39.5 -105.7 -24.3 326.1 1,205.3 97.5 64.9 20.8 315.6 222.4 83.9 5.3 4.0 -3.5 9.7 131.2 21.7 57.2 3.2 65.7 29.9 21.5 6.4 135.2 1.8 146.2 100.9 -20.6 -54.9 203.2 1.1 -50.2 -209.0 -23.9 358.0 889.8 61.5 119.9 -11.1 248.9 227.5 24.1 -9.6 7.0 5.5 43.6 77.0 21.8 50.5 6.8 43.7 7.3 52.0 8.4 33.2 1.8 -1.8 144.6 -23.7 -177.3 -90.7 1.2 37.6 -125.3 -23.9 161.7 1,273.1 191.7 181.4 24.7 157.7 112.9 35.0 4.6 5.2 -17.0 -46.8 54.3 22.8 78.5 13.2 52.7 -36.4 151.5 5.0 124.6 1.9 185.6 148.0 -20.2 -133.6 -103.6 1.2 52.7 -83.9 -24.6 327.6 1,044.5 42.3 109.8 14.3 130.7 85.9 51.1 -5.3 -.9 154.9 -2.1 122.1 22.2 77.8 87.3 56.7 1.7 62.9 -1.2 170.1 1.9 -101.1 112.2 -18.1 652.1 1 " 805.6r 988.4r l,066.5r 1,245.6 l,035.9r l,205.2r 1,214.8 1,364.9 1,169.0 1,233.7 1,214.0 -5.9 .0 .0 25.7 198.2 -3.4 86.3 1.5 -58.5 41.6 -16.5 -26.5 147.2 62.2 51.4 31.0 -7.4r ,5 r 16.1 278.2 r -1.6 -2.0 .2 27.3 238.6 49.4 r 113.5 -57.2 -73.2 4.5 43.1 -3.5 209.1 85.8 4.6 46.6 9.7 r 16.7 r — 7.1 280.5 r .8 .0 .4 35.2 247.3 50.5 r 117.3 -70.3 -23.5 20.2 71.2 -18.5 323.7 118.4 61.4 54.4 r 5.2 r 1.6 364.6 r -5.8 .0 .7 34.0 248.0 89.7 r -9.7 -40.0 19.6 43.3 78.3 45.8 128.9 21.9 -.1 111.0' 3.2 r 22.6 r 18.8 236.8 r 8.8 2.2 .6 49.9 258.5 10.1 -12.5 96.5 65.6 142.3 110.7 5.8 173.9 -14.7 26.7 106.0 1.3 38.7 -47.7 461.9 .2 .0 .8 67.7 238.0 4.1 -66.0 -51.8 84.0 56.4 86.0 28.1 129.7 -16.4 -59.3 91.2' 10.2' 46.0r 23.6 264.8 r -8.6 .0 .7 21.6 293.4 99.9 r -40.5 -46.9 36.5 86.5 51.9 97.9 -12.6 -68.5 37.1 149.4 r 4.2 r 23.1' 11.9 303.4 r 17.8 .0 .7 54.0 302.5 -13.6 42.8 18.1 116.8 59.9 161.8 39.2 78.5 -38.5 -10.7 113.6 15.3 26.9 -44.3 327.2 10.3 .0 .7 49.9 310.7 25.2 133.5 112.0 69.2 233.5 130.7 90.6 173.3 -16.6 30.8 30.5 -4.3 33.5 -45.6 505.1 9.0 8.6 .8 29.9 223.0 -43.2 -151.5 142.2 76.3 121.2 85.1 -63.8 195.3 .7 35.4 183.2 4.0 48.6 -63.9 347.6 -1.9 .0 .0 66.0 197.7 71.8 -75.0 113.6 .3 154.8 65.2 -42.8 248.6 -4.3 51.3 96.8 -9.8 45.7 -37.1 667.6 -2.1 .0 .0 56.0 301.5 -80.9 51.7 174.7 52.0 225.6 -31.6 -32.0 290.9 -17.6 80.3 129.7 9.5 53.1 -47.3 466.0 l,473.9r l,790.4r 2,351.7r 2,113.5r 2,730.1 l,979.2r 2,245.7r 2,482.9 3,237.8 2,357.5 2,842.3 2,893.5 .7 1.6 13.2 -16.3 -3.9 12.7 3.5 -3.5 -44.1 -24.3 -4.2 -107.3 17.8 -3.9 -71.6 142.2 -.3 -13.2 RELATION OF LIABILITIES TO FINANCIAL ASSETS 33 N e t flows t h r o u g h c r e d i t m a r k e t s 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Other financial sources Official f o r e i g n 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 c l a i m s C h e c k a b l e deposits and currency Small time and s a v i n g s deposits L a r g e time deposits M o n e y m a r k e t f u n d shares Security r e p u r c h a s e a g r e e m e n t s Foreign deposits Mutual f u n d shares C o r p o r a t e equities Security credit Trade payables Taxes payable N o n c o r p o r a t e proprietors' equitv Investment in bank personal trusts Miscellaneous 54 T o t a l f i n a n c i a l s o u r c e s 3.4r Floats not included in assets ( —) 55 U.S. g o v e r n m e n t c h e c k a b l e deposits 56 O t h e r checkable deposits 57 T r a d e credit -13.1 4.5 36.1 11.3 -1.5 -1.3 —6.6 r -4.8 -2.8 -7.8r -6.0 -3.8 -14.8 7.4 -3.3 12.6 r —44.0r Liabilities not identified as assets T r e a s u r y currency Interbank c l a i m s Security repurchase a g r e e m e n t s Foreign deposits T a x e s payable Miscellaneous -.6 26.2 -9.5 -24.0 -2.2r 9.1' -.2 -4.9 3.6 -2.8 11.9 r -A' -.2 4.2 34.3 ~1.0' 11. l r -126.T -.2 -2.7 31.5 r 36.9 8.6 r -138.7r -.5 -3.1 11.0 -1.5 8.7 -29.8 -.2 10.1 -53.5r 39.5 10.8 —44.3 r -1.7 86.7 r 55.7 r — .9' -107.3 1 " .8 64.4 45.6 -8.9 -230.6 -.4 8.2 -47.3 81.6 31.6 -36.9 -.3 7.6 39.6 -93.6 10.8 -4.8 -1.0 -29.1 -12.7 -39.5 1.4 153.1 -.9 12.4 -76.7 -41.5 -24.0 123.3 l,446.8r l,769.3r 2,444.9r 2,193.7r 2,769.8 2,000.1r 2,284.2r 2,522.7 3,208.3 2,442.4 2,905.9 2,958.8 58 59 60 61 62 63 -3.7 79.5 ( —) 64 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 F.6 a n d F.7. For ordering address, see inside front cover. -24.4 -2.3 -.2 -.2 2. Excludes corporate equities and m u t u a l f u n d shares. A40 1.59 DomesticNonfinancialStatistics • August 1996 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING 1 Billions of dollars, end of period 1994 1995' 1996 tyyz Q4 Q3 QI Q2 Q3 Q4 QI Nonfinancial sectors 1 Total c r e d i t m a r k e t d e b t owed by domestic nonfinancial sectors ll,894.5r 12,537.8' 13,163.0 r 13,895.9 12,965.8 r 13,163.0' 13,339.3 13,548.4 13,707.8 13,895.9 14,072.1 By sector and instrument 2 U.S. government Treasury securities 3 4 Budget agency issues and mortgages 3,080.3 3,061.6 18.8 3,336.5 3,309.9 26.6 3,492.3 3,465.6 26.7 3,636.7 3,608.5 28.2 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 3,636.7 3,608.5 28.2 3,717.2 3,689.6 27.6 5 Private 8,814.2 r 9,201.3' 9.670.7' 10,259.2 9,533.6' 9,670.7' 9,781.4 9,964.9 10,104.4 10,259.2 10,354.9 6 / 8 9 10 11 12 13 14 15 16 By instrument Municipal securities Corporate bonds Mortgages H o m e mortgages Multifamily residential Commercial Farm Consumer credit Bank loans n.e.c Commercial paper Other loans and advances 1,302.8 1,154.5 4,088.7 3,037.4 272.5 698.1 80.7 802.4' 672.2 107.1 686.5 1.377.5 1,229.7 4,260.0 3.227.6 267.8 683.4 81.2 863.9' 676.0 117.8 676.3 1.348.2 1,253.0 4,454.4' 3,430.0' 269.1 672.3 83.0 988.8' 749.0' 139.2 738.0 1,307.0 1,326.3 4,691.8 3,634.7 280.2 692.4 84.6 1,131.7 852.0 157.4 792.9 1,362.6 1,251.5 4,400.5' 3,374.6' 270.2 673.1 82.6 933.9' 724.9' 138.7 721.6 1,348.2 1,253.0 4.454.4' 3,430.0' 269.1 672.3 83.0 988.8' 749.0' 139.2 738.0 1,335.4 1,266.3 4.495.8 3,465.1 269.8 677.6 83.4 989.3 782.8 149.8 762.0 1,331.7 1,290.9 4,563.2 3,524.4 273.3 681.6 83.9 1,029.7 810.6 162.9 775.8 1,309.9 1,305.8 4.641.2 3,594.0 276.8 686.1 84.4 1,077.5 825.6 163.3 781.2 1,307.0 1,326.3 4,691.8 3,634.7 280.2 692.4 84.6 1,131.7 852.0 157.4 792.9 1,304.1 1,341.0 4,748.6 3,682.6 284.1 696.7 85.2 1,123.3 861.9 173.2 802.7 1/ 18 19 20 21 22 By borrowing sector Household Nonfinancial business Farm Nonfarm noncorporate Corporate State and local government 4,021.4' 3.696.8 136.3 1,122.9 2,437.6 1,095.9 4,272.9' 3,770.3 138.3 1,129.9 2,502.0 1,158.2 4,634.7' 3,921.1 141.2 1.142.0 2,638.0 1.114.8 5,018.3 4.171.8 143.2 1,178.0 2.850.7 1,069.1 4,515.1' 3,885.6 143.1 1,137.4 2,605.0 1,132.8 4,634.7' 3,921.1 141.2 1,142.0 2,638.0 1,114.8 4,676.5 4,002.7 138.9 1,154.5 2,709.2 1,102.2 4,784.1 4,084.0 142.8 1,163.3 2,777.8 1,096.8 4,908.0 4,122.3 144.9 1,170.4 2,807.0 1,074.1 5,018.3 4,171.8 143.2 1,178.0 2,850.7 1,069.1 5,063.2 4,224.8 140.9 1,185.0 2,898.9 1,066.9 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 313.1 381.9 361.6 429.4 352.4 361.6 376.8 387.6 409.9 429.4 438.5 24 25 26 27 146.2 23.9 77.7 65.3 227.4 24.6 68.7 61.1 234.6 26.1 41.4 59.6 281.1 34.6 55.0 58.7 227.6 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 59.5 263.4 31.6 55.8 59.0 281.1 34.6 55.0 58.7 292.4 36.8 51.5 57.8 13,716.1 13,935.9 14,117.7 14,325.3 14,510.7 Bonds Bank loans n.e.c Commercial paper Other loans and advances 28 Total credit m a r k e t debt owed bv nonfinancial sectors, domestic and foreign 12,207.6' 12,919.7 r 13,524.6' 14,325.3 13,318.3' 13,524.6 r Financial secto 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 Corporate bonds Mortgages Bank loans n.e.c Open market paper Other loans and advances Bv borrowing sector 40 Government-sponsored enterprises 41 Federally related mortgage pools 42 Private financial sectors 43 Commercial banks 44 Bank holding companies Funding corporations 45 46 Savings institutions 47 Credit unions Life insurance companies 48 49 Finance companies 50 Mortgage companies 51 Real estate investment trusts (REITs) 52 Brokers and dealers 53 Issuers of asset-backed securities (ABSs) 3,025.0' 3,321.5' 3,794.6 r 4,242.1 3,656.2 r 3,794.6 r 3,861.4 3,971.8 4,093.9 4,242.1 4,317.1 1,720.0 443.1 1,272.0 4.8 1,305.1' 738.4' 5.4 80.5 394.3 86.6 1,884.1 523.7 1,355.6 4.8 1,437.4' 858.5' 8.9 67.6 393.5 108.9 2,172.7' 700.6 1,472.1' .0 1.621.9' 973.5' 18.7 55.3 442.8 131.6 2,377.8 807.5 1,570.3 .0 1.864.3 1.158.9 24.0 58.3 488.1 135.0 2.093.3' 638.3 1,454.9' .0 1,563.0' 949.5' 17.5 53.4 420.5 122.0 2,172.7' 700.6 1,472.1' .0 1,621.9' 973.5' 18.7 55.3 442.8 131.6 2,196.2 716.3 1,479.9 .0 1,665.2 1,012.3 20.0 53.4 454.1 125.4 2,247.1 748.1 1,499.0 .0 1,724.7 1,056.4 21.3 58.4 462.8 125.7 2,300.1 773.5 1,526.6 .0 1,793.8 1,110.2 22.6 60.3 473.6 127.0 2,377.8 807.5 1,570.3 .0 1,864.3 1,158.9 24.0 58.3 488.1 135.0 2,416.6 816.9 1,599.7 .0 1,900.6 1,189.6 25.4 59.1 492.8 133.6 447.9 1,272.0 1,305.1' 80.0 114.6 161.6 88.4 .0 .0 390.4 30.2 13.9 21.7 404.3' 528.5 1,355.6 1,437.4' 84.6 123.4 169.9 99.6 .2 .2 390.5 30.2 17.4 33.7 487.6' 700.6 1.472.1' 1,621.9' 94.5 133.6 199.3 112.4 .5 .6 440.7 18.7 31.1 34.3 556.1' 807.5 1,570.3 1,864.3 102.6 148.0 233.9 115.0 .4 .5 492.3 16.6 36.5 29.3 689.1 638.3 1,454.9' 1,563.0' 92.6 129.6 200.6 103.4 .4 .3 420.9 18.5 29.5 29.4 537.7' 700.6 1,472.1' 1,621.9' 94.5 133.6 199.3 112.4 .5 .6 440.7 18.7 31.1 34.3 556.1' 716.3 1,479.9 1.665.2 95.0 137.7 221.0 107.7 .4 .6 456.7 16.9 32.4 26.9 570.0 748.1 1,499.0 1,724.7 99.9 142.9 229.9 105.9 .3 .6 467.2 20.6 33.7 26.8 596.8 773.5 1,526.6 1,793.8 102.0 150.0 240.0 107.2 .4 .6 471.9 21.6 35.0 27.4 637.8 807.5 1,570.3 1,864.3 102.6 148.0 233.9 115.0 .4 .5 492.3 16.6 36.5 29.3 689.1 816.9 1,599.7 1,900.6 100.5 141.6 244.6 117.8 .4 1.1 499.8 16.8 38.0 21.4 718.8 All sectors 54 Total credit m a r k e t debt, domestic a n d foreign. . . . 55 56 5/ 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 15,232.6 r 16,241.2 r 17,319.2 r 18,567.4 16,974.5 r 17,319.2' 17,577.5 17,907.8 18,211.5 18,567.4 18,827.8 4,795.5 1,302.8 2,039.0' 4,094.1 802.4' 776.6 579.0 843.1 5.215.8 1,377.5 2,315.6' 4,269.0 863.9' 768.2 580.0 851.1 5.665.0' 1,348.2 2,461.0' 4,473.1' 988.8' 830.4' 623.5 929.1 6,014.6 1,307.0 2,766.3 4,715.9 1,131.7 944.9 700.4 986.6 5,525.6' 1.362.6 2,428.6' 4,418.0' 933.9' 804.5' 599.2 902.2 5,665.0' 1,348.2 2,461.0' 4,473.1' 988.8' 830.4' 623.5 929.1 5,754.1 1,335.4 2,516.5 4,515.9 989.3 864.4 654.7 947.2 5,830.6 1,331.7 2,597.7 4,584.6 1,029.7 898.6 673.8 961.0 5,903.5 1,309.9 2,679.5 4,663.9 1,077.5 917.4 692.7 967.1 6,014.6 1,307.0 2,766.3 4,715.9 1,131.7 944.9 700.4 986.6 6,133.8 1,304.1 2,823.1 4,774.0 1,123.3 957.8 717.6 994.2 1. Data in this table also appear in the B o a r d ' s Z. 1 (780) quarterly statistical release, tables L.2 through L.4. For ordering address, see inside front cover. 1.60 Flow of Funds A41 1995 r 1996 SUMMARY O F FINANCIAL ASSETS AND LIABILITIES 1 Billions of dollars except as noted, end of period 1994 Transaction category or sector CREDIT MARKET DEBT 1995 r Q3 Q4 Q1 Q2 Q3 Q4 Qi OUTSTANDING2 1 Total credit m a r k e t assets 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 1994 1992 Private d o m e s t i c nonfinancial sectors Households Nonfarm noncorporate business Nonfinancial c o r p o r a t e b u s i n e s s 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 p o o l s M o n e t a r y authority Commercial banking U.S. chartered b a n k s Foreign b a n k i n g offices in United States Bank holding companies 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 L i f e 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 ) B r o k e r s and dealers A s s e t - b a c k e d securities issuers ( A B S s ) B a n k personal trusts 15,232.6r 16,241.2r 17,319.2r 18,567.4 16,974.5r 17,319.2r 17,577.5 17,907.8 18,211.5 18,567.4 18,827.8 2,671.6 r l,618.5r 38.1 257.8 757.2 235.0 1,022.8 11,303.2 r 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 8.1 122.7 378.0 r 231.5 2,730. r l,658.9r 38.8 271.5 r 760.8 230.7 1,146.6 12,133.8 r 548.0 • 1,355.6 336.7 3,090.8 2,721.5 326.0 17.5 25.8 149.2 r 1,132.7 1,420.6 422.7 617.6 437.3 482.8 60.4 725.9 78.6 429.0 8.6 137.5 458.8 r 240.9 3,019.3 r l,993.9r 39.5 319.7 r 666.3 206.5 1,255.7 12,837.7 r 667. r l,472.1r 368.2 3,254.3 2,869.6 337.1 18.4 29.2 129.5 r 1,167.6 1,487.0 446.4 664.6 466.3 551.0 37.5 718.8 73.1 459.0 13.3 93.3 520.7 r 248.0 2,930.4 2,041.3 40.4 316.1 532.5 185.2 1,527.5 13,924.3 761.8 1,570.3 380.8 3,520.6 3,056.1 412.6 18.0 33.8 138.3 1,176.3 1,585.7 471.9 725.9 487.7 614.6 34.1 771.3 78.9 545.5 15.1 183.4 632.9 229.2 2,900.6 r l,857.7r 39.3 295.3 r 708.3 212.6 1,240.7 12,620.6 r 624.3 r 1,454.9 r 356.8 3,203.9 2,822.3 335.5 19.0 27.1 130.2 r 1,160.4 1,470.7 439.1 645.9 454.3 524.1 37.0 741.8 75.6 437.9 13.3 95.3 507.3 r 247.7 3,019.3 r l,993.9r 39.5 319.7 r 666.3 206.5 1,255.7 12,837.7 r 667. r l,472.1r 368.2 3,254.3 2,869.6 337.1 18.4 29.2 129.5 r 1,167.6 1,487.0 446.4 664.6 466.3 551.0 37.5 718.8 73.1 459.0 13.3 93.3 520.7r 248.0 2,984.8 2,013.6 39.6 291.0 640.6 203.2 1,324.4 13,065.2 673.5 1,479.9 367.1 3,327.8 2,906.5 373.6 18.0 29.8 140.8 1,173.4 1,523.1 451.8 679.3 480.7 568.5 33.9 719.3 74.0 480.6 13.8 101.0 531.5 245.3 2,935.1 1,974.3 39.9 302.8 618.1 197.1 1,402.6 13,372.9 698.6 1,499.0 375.7 3,409.8 2,963.7 396.0 19.3 30.8 137.4 1,177.4 1,557.1 458.5 693.6 482.1 586.9 41.4 724.8 75.6 508.0 14.2 137.5 555.2 240.2 2,942.2 2,048.3 40.2 290.4 563.4 191.2 1,493.1 13,585.1 714.0 1,526.6 370.6 3,474.2 3,023.7 401.1 16.9 32.5 143.1 1,188.9 1,575.5 464.4 706.2 481.8 594.7 43.2 739.2 77.7 505.7 14.7 137.0 593.2 234.2 2,930.4 2,041.3 40.4 316.1 532.5 185.2 1,527.5 13,924.3 761.8 1,570.3 380.8 3,520.6 3,056.1 412.6 18.0 33.8 138.3 1,176.3 1,585.7 471.9 725.9 487.7 614.6 34.1 771.3 78.9 545.5 15.1 183.4 632.9 229.2 2,858.6 2,001.8 40.7 306.6 509.4 179.0 1,617.8 14,172.5 771.7 1,599.7 379.6 3,541.4 3,068.8 422.3 16.7 33.6 174.9 1,174.6 1,619.2 478.1 745.3 508.2 623.3 34.5 791.7 78.6 595.6 15.6 158.2 657.6 224.7 15,232.6r 16,241.2r 17,319.2r 18,567.4 16,974.5r 17,319.2r 17,577.5 17,907.8 18,211.5 18,567.4 18,827.8 51.8 8.0 16.5 433.0 4,055.1 138.5 r 5,050.2 1,134.4 2,293.5 415.2 539.5 399.9 267.7 992.5 217.7 995.1 79.7 660.6 4,785.2r 53.4 8.0 17.0 468.2 4,471.6 189.3 5,154.9 1,251.7 2,223.2 391.7 559.6 471.1 257.6 1,375.4 279.0 l,049.4r 84.9 r 691.3 5,165.2 r 53.2 8.0 17.6 502.2 4,693.9 280.0' 5,296.0 1,242.0 2,183.3 411.2 602.9 549.4 307.1 1,477.3 279.0 l,160.5r 88.0 r 699.4 5,397.3 r 63.7 10.2 18.2 552.1 5,499.6 290.7 5,704.4 1,229.5 2,279.7 476.9 745.3 660.1 312.9 1,852.8 305.6 1,266.5 89.3 767.4 5,769.9 55.5 8.0 17.5 496.8 4,677.0 250.1 5,212.4 1,205.0 2,199.1 402.6 578.7 548.1 278.9 1,515.8 263.9 l,099.8r 87.1 r 701.1 5,373.0 r 53.2 8.0 17.6 502.2 4,693.9 280.0 r 5,296.0 1,242.0 2,183.3 411.2 602.9 549.4 307.1 1,477.3 279.0 l,160.5r 88.0 r 699.4 5,397.3 r 64.1 8.0 17.8 515.7 4,895.7 273.0 5,389.5 1,193.9 2,200.1 441.1 634.0 603.4 316.9 1,553.3 269.5 1,159.8 94.3 719.7 5,459.7 67.1 8.0 18.0 528.1 5,095.4 265.9 5,572.4 1,246.3 2,222.4 456.2 678.5 629.3 339.6 1,661.0 277.9 1,174.2 89.2 739.7 5,537.2 65.1 10.2 18.2 535.6 5,318.1 267.4 5,615.3 1,200.4 2,255.6 477.4 702.7 655.6 323.6 1,782.0 286.2 1,217.3 91.9 758.6 5,626.9 63.7 10.2 18.2 552.1 5,499.6 290.7 5,704.4 1,229.5 2,279.7 476.9 745.3 660.1 312.9 1,852.8 305.6 1,266.5 89.3 767.4 5,769.9 62.1 10.2 18.2 566.1 5,745.6 266.2 5,799.1 1,183.8 2,336.4 490.6 816.9 666.5 304.9 2,004.8 318.3 1,269.7 94.2 781.6 5,836.4 40,757.9 36,732.4r 37,271.6r 37,997.6 38,941.9 39,804.3 40,757.9 41,600.4 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 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 c l a i m s D e p o s i t s at financial institutions C h e c k a b l e deposits and currency Small time and savings deposits Large 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 payable I n v e s t m e n t in b a n k personal trusts Miscellaneous 32,716.4r 35,248.7r 37,271.6r Financial assets not included in liabilities (+) 54 G o l d and special d r a w i n g rights 55 C o r p o r a t e equities 56 H o u s e h o l d equity in n o n c o r p o r a t e b u s i n e s s 19.6 5.462.9 2,458.3 20.1 6,278.5 2,476.3 21.1 6,293.4 2,564.6 22.1 8,345.4 2,657.7 21.0 6,228.7 2,550.9 21.1 6,293.4 2,564.6 22.7 6,835.8 2,576.7 22.9 7,393.0 2,607.0 22.1 8,013.8 2,619.3 22.1 8,345.4 2,657.7 22.1 8,820.5 2,669.9 Floats not included in assets ( - ) 57 U.S. g o v e r n m e n t c h e c k a b l e deposits 58 O t h e r c h e c k a b l e deposits 5 9 T r a d e credit 6.8 42.0 - 2 5 1 . LR 5.6 40.7 -251.4' 3.4 38.0 -260.1' 3.1 34.2 -274.9 1.2 30.6 -323.2r 3.4 38.0 -260.1r 4.2 33.3 -297.1 2.0 35.7 -315.8 .6 27.3 -331.3 3.1 34.2 -274.9 .0 29.6 -356.1 Liabilities not identified as assets T r e a s u r y currency I n t e r b a n k claims Security repurchase a g r e e m e n t s F o r e i g n deposits T a x e s payable Miscellaneous -4.9 -9.3 43.0 217.6 25.2 r —514.5 r -5.1 -4.7 77.3 218.4 r 26.8 r -667.2r -5.4 -6.5 108.8 r 258.7 25.0 r -830.5r -5.8 -9.0 119.8 257.2 33.7 -859.2 -5.3 -3.4 100.7 r 241.3 22.8 r -688.2r -5.4 -6.5 108.8 r 258.7 25.0 r -830.5r -5.4 -2.7 132.9 270.1 10.0 -892.2 -5.5 -2.9 114.5 290.5 25.6 -878.5 -5.6 .1 136.4 267.1 28.7 -884.9 -5.8 -9.0 119.8 257.2 33.7 -859.2 -6.0 -2.5 108.7 246.8 13.5 -896.0 41,102.3r 44,583.2r 46,819.3r 52,483.9 46,156.5r 46,819.3r 48,179.7 49,699.2 51,221.1 52,483.9 53,975.0 5 3 T o t a l liabilities 60 61 62 63 64 65 (-) 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. D a t a 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. F o r ordering address, see inside f r o n t cover. 2. E x c l u d e s corporate equities and m u t u a l f u n d shares. A42 2.10 Domestic Nonfinancial Statistics • August 1996 NONFINANCIAL BUSINESS ACTIVITY Selected Measures Monthly data seasonally adjusted, and indexes 1987=100, except as noted 1996 r 1995 1993 1994 1995 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 Industrial production 111.5 118.1 121.9 122.8 122.2 122.6 122.8 122.5 124.2 123.6 124.4 125.3 Market groupings Products, total Final, total Consumer goods Equipment Intermediate Materials 110.0 112.7 109.5 117.5 101.8 113.8 115.6 118.3 113.7 125.3 107.3 122.0 118.3 121.4 115.1 131.4 109.0 127.4 119.4 122.6 116.0 133.1 109.5 128.1 118.3 121.3 114.9 131.5 109.2 128.1 118.8 121.9 115.9 131.4 109.3 128.4 119.2 122.1 115.7 132.3 110.1 128.4 118.6 121.9 114.6 133.7 108.5 128.5 120.7 124.5 116.6 137.3 109.3 129.4 120.0 123.5 115.3 136.7 109.4 129.2 120.9 124.9 116.1 139.3 108.7 129.8 121.6 125.6 116.5 140.4 109.4 131.0 112.3 119.7 123.9 124.9 124.4 124.5 124.8 124.5 126.2 125.2 126.5 127.2 80.6 83.3 83.0 82.8 82.2 8-2.0 81.9 81.4 82.3 81.3 81.9 82.0 105.0 r 114.2 118.0 r 120.0 120.0 121.0 116.0 r 119.0 113.0 124.0 124.0 120.0 108.6 r 94.3 94.8 95.3 112.9 141.3 136.0 119.3 142.4 134.7 112.0 r 95.6 95.1 97.4 116.3 148.3 142.6 125.0 149.2 144.8 115.0 r 98.2 96.9 98.3 119.5 157.4 150.5 129.3 157.8 152.2 115.4 r 98.0 r 96.9 r 98.4 r 120.9 r 158.8 152.0 129.6 159.3 153.4 115.5 r 97.9 96.1' 98.1' 121.r 159.6 153.0 129.5 160.0 153.0 115.6 r 97.8 96.6 r 98.0 r 121.3 r 160.1 152.9 129.5 160.6 154.3 115.9 r 91.9' 96.1' 98.1' 121.6' 161.1 153.7 129.8 161.7 155.3 115.8 97.7 96.4 97.7 121.6 161.2 153.4 128.4 161.7 155.3 116.3 98.3 96.5 97.8 122.1 162.5 155.1 129.8 162.8 158.6 116.5 98.1 96.2 97.4 122.3 163.2 155.8 129.1 163.4 159.3 116.6 98.1 96.2 97.4 122.5 164.0 156.6 131.0 162.5 159.0 117.0 98.2 96.2 97.4 122.9 n.a. n.a. n.a. n.a. 160.2 144.5 124.7 148.2 125.5 152.4 127.9 153.2 127.9 153.7 128.7 153.6 128.7 153.5 129.1 154.4 129.4 154.9 129.4 155.7 130.2 156.3 130.8 156.6 131.0 2 3 4 5 6 7 Industry groupings 8 Manufacturing 9 Capacity utilization, manufacturing (percent)* 10 Construction contracts 3 11 Nonagricultural employment, total 4 12 Goods-producing, total 13 Manufacturing, total 14 Manufacturing, production workers 15 Service-producing 16 Personal income, total 17 Wages and salary disbursements 18 Manufacturing 19 Disposable personal income 5 20 Retail sales 5 Prices6 21 Consumer ( 1 9 8 2 - 8 4 = 1 0 0 ) 22 Producer finished goods ( 1 9 8 2 = 1 0 0 ) 1. Data in this table also appear in the Board'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 N o v e m b e r 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 f r o m 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 from U.S. Department of Labor, Employment and Earnings. Series covers employees only, excluding personnel in the armed forces. 2.11 5. Based on data from U.S. Department of Commerce, 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 Sun>ey 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 1995 r Category HOUSEHOLD SURVEY 1993 ESTABLISHMENT SURVEY Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Manufacturing Mining Contract construction Transportation and public utilities Trade Finance Service Government 128,040 131,056 132,304 132,473 132,471 132,352 132,903 133,018 133,655 133,361 133,910 116.232 3,074 119,651 3,409 121,460 3,440 121,810 3,434 121,739 3,323 121,656 3,325 121,698 3,529 122,143 3,519 122,664 3,487 122,726 3,368 122,971 3,491 8,734 6.8 7,996 6.1 7,404 5.6 7,229 5.5 7,409 5.6 7,371 5.6 7,677 5.8 7,355 5.5 7,504 5.6 7,266 5.4 7,448 5.6 110,525 113,423 116,597 117,749 117,899 118,136 118,070 118,579 118,737 118,900 119,248 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 18,378 573 5,200 6,212 27,728 6,859 33,460 19,339 18,353 569 5,211 6,233 27,778 6,871 33,546 19,338 18,367 570 5,223 6,249 27,832 6,887 33,661 19,347 18,309 569 5,234 6,254 27,780 6,894 33,694 19,336 18,332 573 5,349 6,270 27,869 6,919 33,902 19,365 18,282 574 5,340 6,289 27,891 6,932 34,035 19,394 18,278 574 5,351 6,288 27,970 6,940 34,100 19,399 18,284 575 5,379 6,305 28,022 6,960 34,281 19,442 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. 1996 r 1995 DATA1 Civilian labor force 2 Employment 2 Nonagricultural industries- 1 3 Agriculture Unemployment 4 Number 5 Rate (percent of civilian labor force) 1 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 from U.S. Department of Labor, Employment and Earnings. Selected Measures 2.12 A43 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION 1 Seasonally adjusted 1995 1996 1995 1995 1996 1996 Series Q2 Q3 Q4 Qlr 121.4 2 Manufacturing 123.3 122.3 124.1 122.5 Q4 Q3 QI Capacity (percent of 1987 output) Output ( 1 9 8 7 = 1 0 0 ) 1 Total i n d u s t r y Q2 123.4 124.6 125.3 145.0 148.7 147.7 146.3 150.2 151.9 149.1 153.5 Q2 Q3 Q4 Qir Capacity utilization rate (percent) 2 83.7 83.6 82.9 83.0 82.6 82.0 82.8 81.6 86.1 80.3 85.2 80.2 3 Primary processing Advanced processing 4 117.7 126.0 117.1 127.5 117.1 128.1 116.6 129.4 134.3 155.6 135.2 157.5 136.1 159.5 136.9 161.5 87.6 81.0 86.6 80.9 5 6 7 8 9 10 11 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 . . . 131.4 102.9 119.1 121.9 115.1 174.4 171.2 140.5 133.0 104.6 118.2 121.3 113.9 178.9 178.4 140.7 134.2 105.8 118.8 121.3 115.3 186.8 182.9 140.5 136.0 104.6 118.6 122.6 113.1 195.6 186.4 132.6 159.2 118.7 128.1 132.4 122.5 200.5 199.0 174.4 161.7 119.8 128.8 132.9 123.3 206.1 206.3 176.8 164.2 120.9 129.5 133.5 124.0 212.0 213.9 179.2 166.7 121.7 130.3 134.4 124.8 218.1 221.8 181.3 82.5 86.7 92.9 92.1 94.0 87.0 86.0 80.6 82.3 87.3 91.8 91.3 92.4 86.8 86.5 79.6 81.7 87.5 91.8 90.9 93.0 88.1 85.5 78.4 81.6 85.9 91.0 91.2 90.7 89.7 84.0 73.2 88.7 86.9 79.0 83.9 130.9 130.1 129.3 128.6 67.7 66.8 61.1 65.2 14 15 16 17 18 19 Nondurable goods Textile mill products Paper and products Chemicals and products Plastics materials Petroleum products 114.4 113.7 121.2 124.0 122.9 108.0 114.3 110.9 119.5 124.6 118.3 109.2 113.9 109.4 118.1 126.4 123.1 107.7 113.5 106.5 114.4 127.0 126.9 109.6 137.1 130.4 131.7 154.7 133.8 116.2 137.7 131.6 132.8 155.6 135.4 116.4 138.4 132.8 133.9 156.5 137.1 116.6 139.0 133.7 134.9 157.5 138.6 116.8 83.5 87.2 92.0 80.2 91.9 92.9 83.0 84.3 90.0 80.1 87.3 93.8 82.3 82.4 88.2 80.7 89.7 92.4 81.6 79.7 84.8 80.6 91.6 93.9 100.7 120.7 120.4 100.2 124.7 125.0 98.2 124.1 123.7 98.7 126.7 126.4 112.0 134.8 132.1 111.9 135.2 132.5 111.9 135.6 133.0 111.9 136.0 133.4 89.9 89.5 91.1 89.5 92.3 94.3 87.8 91.5 93.1 88.2 93.2 94.8 1973 1975 Previous cycle 5 High Low High 3 4 20 Mining 21 Utilities 22 Electric Low Latest cycle 6 High Low 1996 1995 May Dec. Jan. Feb. r Mar/ Apr. Mayp 83.2 Capacity utilization rate (percent) 2 1 Total i n d u s t r y 89.2 72.6 87.3 71.8 84.9 78.0 83.7 82.9 82.4 83.3 82.6 82.9 2 Manufacturing 88.9 70.8 87.3 70.0 85.2 76.6 82.8 81.9 81.4 82.3 81.3 81.9 82.0 92.2 87.5 68.9 72.0 89.7 86.3 66.8 71.4 89.0 83.5 77.9 76.1 87.8 80.8 86.0 80.2 85.4 79.7 84.9 81.1 85.2 79.6 85.0 80.5 85.2 80.6 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 82.3 85.7 93.3 93.0 93.7 81.7 88.1 92.6 91.8 93.5 81.3 84.8 93.5 95.6 90.7 82.5 84.8 89.8 88.9 91.0 81.0 88.1 89.6 89.1 90.2 82.3 89.6 90.5 90.1 91.1 82.5 88.9 90.2 88.6 92.1 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 87.1 86.0 79.6 88.8 84.4 78.4 88.8 83.2 75.0 89.9 85.1 77.9 90.3 83.8 66.7 89.8 83.0 79.1 90.0 83.0 79.3 77.0 66.6 81.1 66.9 88.4 78.8 67.6 61.5 63.8 65.5 66.3 66.7 66.9 Nondurable goods Textile mill products Paper and products Chemicals and products Plastics materials Petroleum products 87.9 92.0 96.9 87.9 102.0 96.7 71.8 60.4 69.0 69.9 50.6 81.1 87.0 91.7 94.2 85.1 90.9 89.5 76.9 73.8 82.0 70.1 63.4 68.2 86.7 92.1 94.8 85.9 97.0 88.5 80.3 78.8 86.7 79.0 74.8 84.6 83.5 87.1 93.0 80.2 91.9 92.4 82.1 81.2 88.1 80.6 89.6 93.3 81.4 78.0 85.3 80.8 90.8 93.3 81.9 79.4 84.1 80.7 91.3 94.3 81.6 81.6 85.0 80.2 92.6 94.0 81.2 78.9 85.1 79.7 81.2 79.4 85.8 79.5 94.3 93.6 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 89.7 90.6 91.7 87.7 92.2 93.1 86.8 92.4 94.2 87.6 93.1 94.9 90.4 93.9 95.2 89.2 92.1 93.7 89.2 94.8 97.3 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 22 Electric 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. 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. A44 2.13 Domestic Nonfinancial Statistics • August 1996 INDUSTRIAL PRODUCTION Indexes and Gross Value 1 Monthly data seasonally adjusted _roup 1992 proportion 1995 1996 1995 avg. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. r Mar/ Apr. Mayp Index (1987 = 100) MAJOR MARKETS 1 Total i n d e x 2 Products Final products 3 4 Consumer goods, total Durable consumer goods 6 Automotive products 7 Autos and trucks 8 Autos, consumer 9 Trucks, consumer Auto parts and allied goods 10 Other 11 Appliances, televisions, and air 12 conditioners 13 Carpeting and furniture 14 Miscellaneous home goods Nondurable consumer goods 15 Foods and tobacco 16 17 Clothing 18 Chemical products Paper products 19 Energy 20 Fuels 21 22 Residential utilities 100.0 121.9 121.3 121.4 121.5 122.7 122.8 122.2 122.6 122.8 122.5 124.2 123.6 124.4 125.3 60.6 46.3 28.6 5.6 2.5 1.6 .9 .7 .9 3.0 118.3 121.4 115.1 124.2 130.7 131.4 103.1 181.7 127.8 118.6 117.5 120.6 114.1 121.6 127.1 127.4 99.4 177.1 125.0 116.7 117.9 121.1 114.8 122.3 129.1 129.5 99.2 183.6 126.8 116.3 118.0 121.2 114.6 121.4 125.3 123.9 101.0 163.9 126.6 118.1 119.2 122.4 115.9 124.0 130.7 132.0 100.6 188.2 126.6 118.1 119.4 122.6 116.0 125.8 132.9 133.1 102.6 187.7 130.8 119.6 118.3 121.3 114.9 123.4 128.5 128.6 100.2 179.1 126.7 118.9 118.8 121.9 115.9 124.9 130.5 129.8 100.2 182.8 130.2 119.9 119.2 122.1 115.7 126.3 132.8 132.1 99.5 190.6 132.7 120.5 118.6 121.9 114.6 120.3 125.9 124.1 92.8 180.4 128.1 115.5 120.7 124.5 116.6 125.1 133.1 133.5 99.7 194.4 130.7 118.1 120.0 123.5 115.3 119.3 120.3 111.1 77.0 173.1 137.3 118.4 120.9 124.9 116.1 126.0 134.5 135.9 104.1 192.7 130.0 118.5 121.6 125.6 116.5 126.4 135.2 135.9 107.1 187.0 132.3 118.7 .7 .8 1.5 23.0 10.3 2.4 4.5 2.9 2.9 .9 2.1 135.5 105.8 118.2 112.9 111.3 94.8 131.3 106.6 116.5 108.8 119.6 131.2 103.0 118.1 112.4 111.5 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 92.9 135.7 106.6 113.1 107.3 115.4 145.3 104.1 117.6 113.8 110.9 91.5 135.0 108.4 121.1 108.2 126.6 141.9 107.4 118.3 113.2 110.6 89.7 136.5 106.3 119.5 108.6 124.1 132.2 101.1 116.2 113.3 110.6 88.2 138.1 104.9 121.0 108.6 126.1 137.5 103.4 117.7 114.5 112.0 90.3 138.1 106.0 122.6 111.8 127.2 135.9 107.2 116.9 114.4 112.2 89.0 136.8 105.8 123.8 112.2 128.7 139.9 104.4 117.0 113.7 112.2 88.7 134.6 106.3 121.3 112.2 125.1 137.6 105.0 118.0 114.1 111.9 88.6 134.8 107.0 124.8 113.0 129.8 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 h o m e s 17.7 13.7 5.7 1.4 4.0 2.6 1.2 1.4 3.3 .6 .2 131.4 155.7 198.1 373.5 127.5 136.3 140.1 123.2 65.9 87.1 152.7 130.8 154.3 193.9 362.1 126.5 139.6 137.8 122.7 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 83.5 158.9 131.4 156.9 208.1 417.8 129.1 119.6 134.2 121.4 62.9 83.1 161.8 132.3 158.4 209.4 431.7 129.5 124.5 135.3 121.7 62.0 83.8 164.4 133.7 160.5 213.3 442.9 129.6 128.1 129.1 122.1 61.6 85.1 158.1 137.3 164.8 220.5 463.3 131.3 133.2 136.0 123.5 63.1 89.7 157.8 136.7 163.0 222.8 481.0 130.5 120.4 113.6 122.5 64.0 96.3 168.2 139.3 166.4 225.5 495.4 130.1 135.3 140.0 122.3 63.8 100.6 170.7 140.4 167.7 229.3 506.5 130.6 134.2 138.6 121.0 64.0 104.3 34 35 36 Intermediate products, total Construction supplies Business supplies 14.3 5.3 9.0 109.0 108.2 109.6 108.2 106.6 109.4 108.2 107.2 109.1 108.5 107.3 109.5 109.4 107.0 111.0 109.5 108.4 110.3 109.2 108.3 109.9 109.3 108.7 109.9 110.1 110.5 110.0 108.5 107.2 109.6 109.3 109.3 109.5 109.4 111.0 108.5 108.7 110.4 107.9 109.4 110.7 108.7 37 Materials 38 Durable goods materials Durable consumer parts 39 40 Equipment parts 41 Other Basic metal materials 42 Nondurable goods materials 43 44 Textile materials 45 Paper materials Chemical materials 46 Other 47 48 Energy materials 49 Primary energy Converted fuel materials 50 39.4 20.8 4.0 7.5 9.2 3.1 8.9 1.1 1.8 3.9 2.1 9.7 6.3 3.3 127.4 141.5 138.5 163.0 126.2 125.7 119.8 109.2 120.5 124.4 116.5 106.6 101.9 116.0 127.2 139.8 135.9 160.3 125.6 125.5 122.2 112.8 125.6 126.2 116.9 107.2 102.3 116.9 126.8 139.7 135.8 161.7 124.5 123.5 120.4 109.0 121.0 125.2 117.4 107.2 103.0 115.5 126.8 140.2 133.9 164.4 124.4 124.9 118.9 102.6 123.9 124.4 113.8 107.5 102.3 118.1 128.1 142.3 138.4 167.1 124.9 123.1 118.8 109.2 120.4 123.1 114.6 108.5 101.4 122.8 128.1 144.1 139.8 169.1 126.8 127.0 117.8 106.2 117.0 123.3 115.1 105.8 101.2 115.0 128.1 143.9 138.6 169.4 126.5 124.3 118.7 107.3 121.4 122.9 114.6 105.5 101.7 113.1 128.4 145.3 140.1 171.0 127.9 128.1 116.6 104.8 114.3 122.7 114.1 105.7 100.8 115.4 128.4 144.8 139.3 170.8 127.2 126.6 117.4 103.3 115.2 121.9 118.9 106.0 101.0 116.2 128.5 145.8 140.6 171.7 128.2 125.7 115.7 100.3 113.4 121.8 115.2 105.9 100.6 116.6 129.4 147.3 141.1 176.3 127.8 123.7 116.1 101.8 113.4 121.3 117.1 106.1 101.3 115.5 129.2 145.7 132.3 177.3 127.4 124.2 116.2 103.1 112.9 121.6 116.4 108.3 104.0 117.0 129.8 147.7 142.3 177.9 127.1 123.5 116.1 100.8 113.3 121.6 117.1 106.7 102.1 115.8 131.0 149.1 143.9 180.2 127.7 123.3 116.4 102.6 114.9 121.0 116.9 108.1 103.3 117.8 97.2 95.2 121.5 120.9 121.0 120.5 121.1 120.5 121.2 120.7 122.3 121.7 122.4 121.8 121.9 121.3 122.3 121.7 122.5 121.9 122.4 121.9 123.8 123.3 123.9 123.7 124.0 123.4 124.9 124.3 98.2 27.0 25.7 118.2 114.0 114.9 117.8 113.3 113.9 117.8 113.9 114.7 117.8 114.0 114.5 118.9 114.8 115.1 118.9 114.9 115.7 118.1 114.0 115.1 118.4 115.0 115.3 118.5 114.7 115.3 118.0 114.0 113.9 119.5 115.5 115.9 118.7 115.6 114.3 119.4 114.8 115.5 120.1 115.2 115.5 12.5 157.0 155.8 156.5 157.2 158.9 159.5 158.4 159.0 160.5 163.5 167.5 167.9 168.9 170.5 12.2 29.7 133.0 134.9 132.5 134.4 133.2 133.8 133.2 133.7 134.4 135.1 134.3 136.1 131.6 136.2 130.8 136.6 131.3 136.4 132.6 136.6 135.5 137.8 132.3 136.7 134.7 138.1 135.1 139.1 SPECIAL 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 Selected Measures 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value 1 —Continued 1992 proportion SIC Z code Group A45 1995 avg. May June July Aug. Sept Feb/ Mar.1" Apr. Mayp Index (1987 = 100) MAJOR INDUSTRIES 100.0 121.9 121.3 121.4 121.5 122.7 122.8 122.2 122.6 122.8 122.5 124.2 123.6 124.4 125.3 85.4 26.6 58.9 123.9 117.6 126.8 123.2 117.9 125.7 123.3 117.1 126.3 123.3 116.9 126.3 124.2 116.6 127.8 124.9 117.8 128.2 124.4 117.0 127.9 124.5 117.1 128.0 124.8 117.3 128.4 124.5 116.7 128.2 126.2 116.3 131.0 125.2 116.9 129.1 126.5 116.9 131.1 127.2 117.4 131.8 " ' 24 25 45.0 2.0 1.4 132.5 104.5 111.6 131.1 101.7 110.8 131.5 103.0 111.3 131.5 103.7 111.1 133.2 103.7 110.9 134.4 106.2 112.0 133.5 105.7 110.9 134.3 104.8 109.8 134.8 106.9 109.3 134.9 103.1 109.3 137.5 103.3 110.5 135.7 107.4 108.7 138.6 109.5 109.0 139.7 108.8 111.2 2.1 3.1 1.7 .1 1.4 5.0 104.1 119.2 122.4 114.7 114.8 113.9 104.1 119.5 123.0 113.0 114.8 113.7 103.8 117.5 119.2 112.9 114.9 113.7 103.2 118.3 119.3 111.5 116.5 112.4 103.0 115.4 117.7 114.2 111.9 114.3 103.8 121.0 127.0 118.6 113.2 115.1 104.5 115.7 115.1 111.3 115.8 114.0 104.9 120.8 126.1 116.4 113.8 114.5 104.3 120.0 122.7 118.0 116.2 115.0 105.5 121.5 128.1 113.9 113.0 115.6 104.1 117.1 119.5 112.5 113.6 117.0 103.0 117.1 120.2 114.9 112.8 116.0 104.3 118.6 121.9 112.9 114.1 115.8 104.6 118.4 120.3 . 32 33 331,2 331PT 333-6,9 34 35 8.0 177.8 174.6 174.4 176.0 179.5 181.3 183.8 186.5 190.1 191.9 196.1 198.7 199.6 202.1 1.8 7.2 9.5 4.8 2.5 373.5 174.9 113.3 141.9 131.3 362.1 171.1 113.2 138.8 127.3 363.2 173.0 113.4 139.7 129.2 371.7 175.7 111.6 136.7 124.3 379.6 178.7 114.1 142.1 131.6 390.0 180.8 114.1 143.3 132.8 402.9 182.4 109.3 139.7 128.4 417.8 183.6 108.6 140.7 129.6 431.7 182.8 109.7 141.2 131.5 442.9 182.4 108.3 135.5 123.5 463.3 . . . 357 36 37 371 371PT 188.7 112.1 141.1 132.8 481.0 188.0 102.9 121.3 109.9 495.4 188.5 114.3 144.3 135.5 506.5 190.8 114.8 145.0 135.8 372-6,9 38 39 4.7 5.4 1.3 85.8 110.7 122.7 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 77.7 111.5 123.3 79.4 109.7 123.5 82.2 111.0 122.1 84.2 113.4 124.0 85.2 113.0 124.0 85.5 112.7 122.7 85.7 113.7 122.5 40.5 9.4 1.6 1.8 2.2 3.6 6.8 9.9 1.4 3.5 114.4 115.9 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 79.7 113.7 114.8 88.9 108.9 92.4 116.2 99.3 126.0 107.4 140.3 78.2 113.8 114.8 88.4 108.3 91.5 98.8 126.5 108.9 139.3 76.8 113.1 114.8 87.1 104.1 89.2 114.9 97.9 127.1 108.9 139.0 75.6 113.8 116.0 90.9 106.2 90.9 113.5 98.7 127.1 110.2 139.7 77.1 113.6 115.8 91.7 109.3 89.6 114.9 96.8 .3 114.3 115.3 90.2 112.6 95.7 119.8 99.4 125.0 108.3 139.4 81.3 109.9 140.6 76.6 113.2 115.8 93.1 105.7 90.2 115.3 96.4 126.1 110.3 138.0 75.4 113.4 115.9 90.1 106.6 90.4 116.6 96.6 126.0 109.6 140.1 75.3 6.9 .5 1.0 4.8 .6 99.9 169.3 112.9 91.9 112.3 100.5 164.3 110.8 93.4 111.1 101.0 166.8 112.2 93.6 111.9 100.7 172.2 117.0 91.9 113.5 100.0 172.1 109.7 92.4 111.6 100.0 170.8 116.2 91.2 113.1 98.2 178.3 112.3 89.2 112.4 98.3 175.9 109.5 90.1 110.9 98.1 172.8 108.5 90.1 112.4 97.1 159.5 103.3 90.8 108.9 98.0 157.1 108.0 90.2 117.2 101.1 166.0 114.8 92.7 117.5 99.8 160.5 109.5 92.6 114.0 99.8 158.3 111.9 92.5 111.9 7.7 122.0 122.1 121.7 122.1 121.2 125.5 121.0 121.2 120.6 122.7 122.2 124.5 128.8 130.0 124.3 122.7 122.7 122.4 121.6 125.4 123.7 113.6 125.6 125.5 125.6 127.1 125.6 125.3 132.5 125.1 123.9 129.9 126.6 1.6 126.3 131.1 126.6 129.4 130.3 125.8 80.6 122.8 122.2 122.3 122.5 123.1 123.8 123.4 123.6 123.9 123.9 125.4 125.4 125.5 126.1 83.7 119.5 118.9 119.1 118.9 119.8 120.3 119.6 119.6 119.7 119.3 120.7 119.4 120.6 121.1 59 Total index 60 Manufacturing 61 Primary processing Advanced processing 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 products.. Industrial machinery and equipment Computer and office equipment Electrical machinery Transportation equipment. . Motor vehicles and 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 93 Metal 94 Coal Oil and gas extraction 95 96 Stone and earth minerals 97 Utilities Electric 98 99 Gas " ' 20 21 22 23 26 27 28 29 30 31 10 12 13 14 491,493PT 492.493PT 6.1 123.6 118.2 126.6 126.6 127.9 115.6 116.8 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 101 Manufacturing excluding office and computing m a c h i n e s . . . Gross value (billions of 1992 dollars, annual rates) MAJOR MARKETS 102 Products, total 2,002.9 2,245.6 2,231.5 2,239.1 2,238.8 2,257.8 2,268.1 2,240.3 2,255.8 2,265.7 2,248.9 2,293.1 2,268.4 2,303.8 2,312.8 103 Final Consumer goods 104 Equipment 105 106 Intermediate 1,552.2 1,033.4 518.8 450.7 1,748.7 1,130.5 618.3 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 1,756.8 1,139.3 617.5 499.0 1,761.9 1,139.0 622.9 503.8 1,753.0 1,124.7 628.4 495.9 1,794.2 1,148.4 645.8 498.8 1,767.0 1,803.7 1,128.9 1,146.7 638.1 657.0 500.1 1,811.9 1,150.0 661.9 500.9 496.9 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 N o v e m b e r 1995. See "A Revision to Industrial Production and Capacity Utilization, 1 9 9 1 - 9 5 , " Federal Reserve 501.3 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. A46 2.14 Domestic Nonfinancial Statistics • August 1996 HOUSING AND CONSTRUCTION Monthly figures at seasonally adjusted annual rates except as noted 1996 r 1995 item iyy.5 iyy4 iyyo July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1,378 1,056 322 1,453 1,146 307 803 569 234 1,403 1,113 290 352 1,417 1,087 330 1,514 1,183 331 800 565 235 1,328 1,052 276 341 1,423 1.097 326 1,439 1,163 276 819 582 237 1,390 1,112 278 364 1,459 1,115 344 1,505 1,201 304 832 592 240 1,334 1,063 271 378 Private residential real estate activity (thousands of units except as noted) NEW 1 2 3 4 5 6 7 8 9 10 11 12 13 UNITS Permits authorized One-family Two-family or more Started One-family Two-family or more Under construction at end of period' One-family Two-family or more Completed One-family Two-family or more 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)' 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 l,332 r 997 335 1,354 1,076 278 776 547 229 1,313 1,066 247 340 l,358 r 1,017 r 34 r 1,450 1,125 325 762 539 223 1,332 1,034 298 337 l,379 r 1,046 r 333 r 1,401 1.135 266 772 547 225 1,247 1,019 228 344 l,427 r l,079 r 348 r 1,401 1,130 271 783 555 228 1,267 1,009 258 352 l,393 r l,050 r 343 r 1,351 1,109 242 781 560 221 1,320 1,039 281 354 l,450 r l,073 r 377 r 1,458 1,129 329 790 562 228 1,360 1,081 279 355 l,487 r 1,123 r 364 r 1,425 1,150 275 800 569 231 1,225 1,003 222 352 666 293 670 337 665 372 782 344 707 349 684 350 673 360 679 368 683 372 743 370 786 357 727 368 776 370 126.1 147.6 130.4 153.7 133.4 157.6 131.0 154.2 134.9 162.0 130.0 155.6 135.2 156.2 137.0 160.7 138.6 165.6 131.9 155.3 139.5 164.1 137.0 162.0 138.7 173.7 3.800 3,946 3,801 3.970 4,050 4,090 4,070 4,000 3,870 3,720 3,940 4,200 4,200 106.5 133.1 109.6 136.4 112.2 138.4 116.0 142.5 117.6 144.5 114.8 140.2 113.2 138.7 114.3 139.5 113.9 138.7 114.8 141.2 114.0 138.7 115.7 140.1 116.5 141.9 (thousands EXISTING UNITS ( o n e - f a m i l y ) 18 Number sold Price of units sold of dollars)' 19 Median 20 Average (thousands Value of new construction (millions of dollars) 3 CONSTRUCTION 21 Total p u t in place 464,504 506,904 526,597 528,673 528,397 535,106 534,488 531,710 535,143 540,566 531,344 544,012 551,744 22 Private 23 Residential 24 Nonresidential 25 Industrial buildings 26 Commercial buildings 2/ Other buildings 28 Public utilities and other 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 44,097 383,887 236,114 147,773 24,154 55,159 23,990 44,470 384,307 231,002 153,305 24,399 57.015 24.525 47.366 385,653 233,982 151,671 24,202 55,709 24,015 47,745 386,960 237,618 149,342 24,096 55.079 23,962 46,205 388,882 237,741 151,141 24,964 56,472 24,547 45,158 386,666 239,427 147,239 24,579 55,482 23,753 43,425 390,266 241,950 148,316 24,153 57,596 24,033 42,534 392,738 241,565 151,173 25,125 56,185 24,511 45,352 390,450 242,029 148,421 23,746 55,301 24,438 44,936 397,832 247,877 149,955 23,458 56,624 24,849 45,024 403,479 251,332 152,147 23,370 57,636 25,516 45,625 29 Public 30 Military 31 Highway 32 Conservation and development Other 33 125,342 2,454 37,431 5.978 79,479 130,337 2,319 39,882 6,228 81,908 142,713 2,905 42,221 6,316 91,271 144,366 3,124 44,274 6,603 90,365 142,744 3,010 42,902 6,769 90,063 148,146 3,090 42,942 6,469 95,645 145,606 2,527 44,351 5,191 93,537 145,044 3,195 43,361 6,048 92,440 144,877 3,216 43,914 5,823 91,924 147,828 3,176 43,735 5,618 95,299 140,894 3,225 46,483 5,187 85,999 146,180 2,608 45,377 5,668 92,527 148,265 2,917 44,941 5,108 95,299 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 - 3 0 - 7 6 - 5 ) , issued by the Census Bureau in July 1976. 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. Selected Measures 2.15 CONSUMER AND PRODUCER A47 PRICES Percentage changes based on seasonally adjusted data except as noted Change from 3 months earlier (annual rate) Change from 12 months earlier Item Index level, May 1996 1 1996 1996 May June CONSUMER 1996 1995 1995 May Change from 1 month earliei Sept. Dec. Mar. Jan. Feb. Mar. Apr. May PRICES2 (1982-84=100) 1 3.2 2.9 3.5 1.6 2.4 4.0 .4 .2 .4 .4 .3 156.6 2.5 6.2 2.7 1.5 3.2 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 3.2 15.8 3.5 2.6 3.4 .1 1.9 .3 .4 .3 .1 .4 .2 -.1 .3 .6 1.4 .3 .4 .2 .3 3.2 .1 -.1 .3 .1 4 3.3 3.3 3.1 1.5 3.8 1.1 .2 .0 .3 152.0 112.9 165.1 141.7 178.4 2.2 1.1 5.5 2.1 1.8 2.3 2.6 5.0 1.7 1.4 1.3 -2.5 1.5 2.9 1.8 1.6 8.8 -10.2 2.3 1.8 4.4 4.4 10.8 3.4 2.9 2.5 .3 17.8 .3 -.3 .2 — ,4 r 2.4 1 - . R .4 -.3 2.8 .0 .2 -.1 .0 -.6 .1 -.1 131.0 131.3 84.4 144.1 138.4 7.4 7.9 .0 -1.0 3.9 4.2 -.6 1.5 -.6 -2.9 -1.0 -3.2 -9.2 -1.4 19.2 27.9 15.9 -12.5 4.0 14.6 3.9 34.8 -21.0 -17.6 20.8 33.9 -18.4 -3.8 38.1 -10.2 "S PRODUCER PRICES (1982=100) 7 R q 10 11 Intermediate .1 .1 .R — .3 r -A' -,3r .1 -.2 .3 -.2 .2 .2 126.0 134.2 -,4r 1.1' -,2r -,6r -5.0r — .7 r .1 5.9 -1.8 4.0 10.9 -.5 6.3 -3.8 -.3 127.4 83.9 158.0 materials P 13 Crude M 15 16 Other - . R .5 .6 2.4 .1 -.1 -,2r materials 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. A48 2.16 Domestic Nonfinancial Statistics • August 1996 GROSS DOMESTIC PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1995 Account GROSS DOMESTIC By source Personal consumption expenditures Durable goods Nondurable goods Services 2 3 4 6 / 8 y 10 11 13 Gross private domestic investment Fixed investment Nonresidential Structures Producers' durable equipment Residential structures Change in business inventories Nonfarm 16 Net exports of goods and services Exports Imports 17 18 19 Government consumption expenditures and gross investment Federal State and local 14 15 20 21 22 23 24 2B 26 2/ 28 By major type of Final sales, total Goods Durable Nondurable Services Structures 1994 1996 1995 QI Q2 Q3 Q4 Qi r PRODUCT Total 1 12 1993 6,550.2 6,931.4 7,245.8 7,147.8 7,196.5 7,298.5 7,340.4 7,417.8 4,454.1 4,960.0 615.8 1,491.4 4,992.3 612.8 1,494.8 5,062.7 625.2 2,852.8 2,884.7 2,914.9 1,064.0 1,046.2 1,068.9 1,070.7 749.7 204.0 769.0 208.4 530.7 4,698.7 580.9 4,924.3 606.4 4,836.3 593.0 4,908.7 604.0 1,368.9 2,554.6 1,429.7 2,688.1 1,486.1 2,831.8 1,471.6 2,771.7 1,486.9 2,817.9 1,065.3 1,028.2 1,072.0 1,050.3 1,074.8 1,013.9 723.6 1,016.3 734.4 197.6 1,036.6 746.3 871.1 1,014.4 850.5 598.8 171.8 954.9 667.2 180.2 427.0 251.7 487.0 287.7 538.8 289.8 194.5 529.0 290.4 20.6 26.8 59.5 48.0 37.0 39.6 -64.9 -96.4 660.0 724.9 722.0 818.4 1,289.9 738.5 199.7 1,522.6 536.8 281.9 202.5 543.8 290.3 545.7 296.5 560.6 301.7 58.1 60.8 34.0 36.1 38.2 41.5 17.8 19.9 -1.7 2.7 -102.3 -106.6 -122.4 -100.8 804.5 906.7 778.6 885.1 796.9 919.3 812.5 913.3 -79.3 829.9 -97.5 832.2 1,314.7 1,358.5 1,346.0 1,359.9 522.1 767.8 516.3 798.4 516.7 841.7 519.9 826.1 6,529.7 6.871.8 7,208.8 7,089.7 2,400.9 2,534.2 1.085.9 1,448.3 3,742.4 2,660.3 1,144.9 1,515.4 2,617.3 1,013.8 1,387.2 909.2 929.7 1,364.5 1,363.5 1,383.7 522.6 837.3 516.7 847.7 507.8 855.7 518.6 865.1 7,162.5 2,642.3 7,260.3 2,684.5 7,322.6 2,697.1 1,134.0 1,508.3 1,162.5 1,522.1 1,164.5 1,532.6 7,419.6 2,749.1 1,191.4 3,904.5 615.7 3,943.2 632.6 3,983.1 642.3 34.0 product 3,920.9 1,118.6 1,498.7 3,852.6 595.3 627.6 619.8 20.6 59.5 15.7 4.9 31.9 27.7 37.0 34.9 58.1 54.4 2.2 3.7 28.5 5.4 38.2 29.2 9.1 27.3 -9.4 -14.0 6,383.8 6,604.2 6,739.0 6,701.6 6,709.4 6,768.3 6,776.5 6,812.7 3,581.7 547.0 Change in business inventories Durable goods Nondurable goods 17.8 1,557.7 4,019.1 651.4 -1.7 12.3 MEMO 29 Total G D P in c h a i n e d 1992 d o l l a r s NATIONAL INCOME 30 Total 5,194.4 5,495.1 5,799.2 5,697.7 5,738.9 5,849.2 5,911.1 6,001.4 31 32 Compensation of employees Wages and salaries Government and government enterprises Other Supplement to wages and salaries Employer contributions for social insurance Other labor income 3,809.4 4,008.3 3,255.9 602.5 2,653.4 4,209.1 4,178.9 3,393.3 619.6 4,235.9 3,442.3 624.1 4,280.2 4,325.7 3,419.7 621.7 4,141.6 3,363.0 616.3 2,746.6 778.6 2,773.6 785.6 2,818.2 793.7 3,480.1 626.9 2,853.2 3,521.6 634.0 2,797.9 789.5 402.2 365.5 424.0 360.8 417.7 363.6 422.0 367.8 425.9 369.8 430.2 450.9 415.9 478.3 449.3 474.7 447.1 29.0 479.6 451.5 28.1 486.7 454.9 35.0 472.0 443.5 28.5 33 34 35 36 37 3.095.2 584.2 2,511.0 714.2 333.3 380.9 752.4 350.2 800.1 2,887.6 804.1 375.0 429.1 40 Proprietors' income 1 Business and professional 1 Farm 1 41 Rental income of persons 2 102.5 116.6 122.2 120.6 121.6 120.9 125.8 126.9 42 43 44 464.5 464.3 -6.6 6.7 526.5 528.2 -13.3 11.6 588.6 600.8 -28.1 15.9 559.6 594.1 -51.9 17.4 561.1 588.4 -42.3 15.0 614.9 609.6 -9.3 14.6 618.6 611.0 -8.8 45 Corporate profits 1 Profits before tax 3 Inventory valuation adjustment Capital consumption adjustment 16.5 652.0 649.0 -17.4 20.4 46 Net interest 398.1 392.8 401.0 403.9 402.6 397.8 399.7 397.3 38 39 1. With inventory valuation and capital consumption adjustments. 2. With capital consumption adjustment. 420.0 388.1 32.0 27.6 31.8 3. For after-tax profits, dividends, and the like, see table 1.48. SOURCE. U.S. Department of C o m m e r c e , Survey of Current Business. 499.5 461.1 38.4 Selected Measures 2.17 A49 PERSONAL INCOME A N D SAVING Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates 1996 1995 Account 1993 1995 1994 Q2 QI Q4 Q3 Qlr PERSONAL INCOME AND SAVING 1 Total personal income 5,479.2 5,750.2 6,101.7 5,995.5 6,061.9 6,135.6 6,213.9 6,288.4 2 W a g e a n d salary d i s b u r s e m e n t s Commodity-producing industries 3 4 Manufacturing D i s t r i b u t i v e industries 6 S e r v i c e industries 7 G o v e r n m e n t and government enterprises 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 3,419.7 858.7 642.8 787.9 1,151.3 621.7 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 3,481.5 863.5 644.5 808.9 1,182.2 626.9 3,520.2 866.2 643.0 821.6 1,198.4 634.0 Other labor income Proprietors' income1 Business and professional' Farm' R e n t a l i n c o m e of p e r s o n s Dividends P e r s o n a l interest i n c o m e 15 T r a n s f e r p a y m e n t s 16 O l d a g e s u r v i v o r s , disability, a n d h e a l t h i n s u r a n c e b e n e f i t s 380.9 420.0 388.1 32.0 102.5 186.8 647.3 910.7 444.4 402.2 450.9 415.9 35.0 116.6 199.6 661.6 956.3 472.9 424.0 478.3 449.3 29.0 122.2 214.8 714.6 1,022.6 507.4 417.7 472.0 443.5 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 1,029.9 510.7 430.2 486.7 454.9 31.8 125.8 221.7 725.2 1,041.4 516.1 429.1 499.5 461.1 38.4 126.9 226.6 724.2 1,063.0 529.9 17 259.6 278.1 294.5 290.2 292.7 296.2 298.8 301.0 6,213.9 6,288.4 8 9 10 11 12 13 14 LESS: P e r s o n a l c o n t r i b u t i o n s f o r social i n s u r a n c e 5,479.2 5,750.2 6,101.7 5,995.5 6,061.9 6,135.6 689.9 731.4 794.3 770.0 801.5 798.4 807.2 824.9 2 0 EQUALS: D i s p o s a b l e p e r s o n a l i n c o m e 4,789.3 5,018.8 5,307.4 5,225.5 5,260.4 5,337.2 5,406.7 5,463.5 21 LESS: P e r s o n a l o u t l a y s 4,572.9 4,826.5 5,066.7 4,972.2 5,049.0 5,104.6 5,140.9 5,214.7 2 2 EQUALS: P e r s o n a l s a v i n g 216.4 192.4 240.8 253.3 211.4 232.6 265.8 248.8 24,724.1 16,807.4 18,075.0 25,332.7 17,150.5 18,320.0 25,613.7 17,402.2 18,757.0 25,559.1 17,280.4 18,672.0 25,540.2 17,391.6 18,634.0 25,695.9 17,465.4 18,794.0 25,668.7 17,477.5 18,926.0 25,747.1 17,592.7 18,988.0 4.5 3.8 4.5 4.8 4.0 4.4 4.9 4.6 27 G r o s s s a v i n g 938.4 1,055.9 1,141.6 1,110.5 1,092.3 1,155.7 1,207.9 1,207.5 2 8 G r o s s private s a v i n g 964.5 1,006.0 1,062.5 1,039.9 1,007.3 1,076.1 1,126.6 1,123.6 29 Personal saving 30 Undistributed corporate profits' 31 C o r p o r a t e i n v e n t o r y v a l u a t i o n a d j u s t m e n t 216.4 103.4 -6.6 192.4 120.2 -13.3 240.8 142.5 -28.1 253.3 120.6 -51.9 211.4 122.3 -42.3 232.6 162.0 -9.3 265.8 165.2 -8.8 248.8 178.7 -17.4 Capital consumption 32 C o r p o r a t e 33 N o n c o r p o r a t e 417.0 223.1 441.0 237.7 454.0 225.2 444.4 220.2 451.3 222.4 456.9 224.7 463.6 233.4 465.6 229.1 -26.1 -186.5 68.2 -254.7 160.5 65.6 94.9 49.9 -119.3 70.6 -189.9 169.2 69.4 99.7 79.1 -88.8 73.8 -162.6 167.9 72.9 95.0 70.5 -99.9 73.5 -173.3 170.4 71.4 99.0 85.0 -86.3 74.2 -160.5 171.3 72.3 99.0 79.6 -87.7 73.8 -161.6 167.3 73.4 93.9 81.3 -81.1 73.8 -154.9 162.4 74.3 88.1 83.9 -82.2 73.2 -155.5 166.1 75.1 91.0 41 G r o s s i n v e s t m e n t 993.5 1,087.2 1,146.1 1,146.7 1,113.9 1,150.7 1,173.0 1,168.0 42 Gross private domestic investment 4 3 Gross government investment 44 Net foreign investment 871.1 210.6 -88.2 1,014.4 212.3 -139.6 1,065.3 221.9 -141.1 1,072.0 219.1 -144.4 1,050.3 223.7 -160.1 1,074.8 224.7 -148.9 1,064.0 220.1 -111.0 1,068.9 228.8 -129.8 55.1 31.3 4.5 36.2 21.6 -5.0 -34.9 -39.5 18 EQUALS: P e r s o n a l i n c o m e 19 LESS: P e r s o n a l tax a n d n o n t a x p a y m e n t s MEMO Per capita (chained 1992 dollars) 23 Gross domestic product 24 Personal consumption expenditures 25 D i s p o s a b l e p e r s o n a l i n c o m e 26 S a v i n g rate ( p e r c e n t ) GROSS SAVING allowances 34 Gross government saving 35 Federal 36 C o n s u m p t i o n of fixed capital C u r r e n t s u r p l u s or deficit ( - ) , n a t i o n a l a c c o u n t s 37 38 State a n d local 39 C o n s u m p t i o n of fixed capital C u r r e n t s u r p l u s or deficit ( - ) , national a c c o u n t s 40 45 Statistical d i s c r e p a n c y 1. W i t h i n v e n t o r y v a l u a t i o n a n d capital c o n s u m p t i o n a d j u s t m e n t s . 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 . 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. A50 3.10 International Statistics • August 1996 U.S. I N T E R N A T I O N A L T R A N S A C T I O N S Summary Millions of dollars; quarterly data seasonally adjusted except as noted 1 1995 r Item credits or debits 1 Balance on current account 2 Merchandise trade balance 2 3 Merchandise exports 4 Merchandise imports Military transactions, net Other service transactions, net 6 7 Investment income, net 8 U.S. government grants y U.S. government pensions and other transfers 10 Private remittances and other transfers n Change in U.S. government assets other than official reserve assets, net (increase, - ) 1994 r 1993 r 1996 1995 r -99,936 -132,609 456,832 -589,441 881 59.690 9.742 -16.823 -4,081 -16,736 -148.405 -166.121 502.463 -668.584 1.963 59.779 -4.159 -15.816 -4.544 -19.506 -148,154 -173,424 575,940 -749,364 3,585 64,775 -8,016 -10.959 -3,420 -20,696 Q1 Q2 Q3 Q4 Qlp -39,054 -44,923 138,551 -183.474 628 14.780 -900 -2.846 -758 -5.035 -40,976 -47,927 142,983 -190,910 859 15,244 -862 -2.381 -967 -4,942 -37.688 -42.548 144.984 -187,532 1,120 17.093 -4,361 -2,933 -964 -5,095 -30.435 -38.026 149.422 -187.448 978 17.657 -1.890 -2,799 -731 -5,624 -35,588 -42,738 150.019 -192,757 628 17,758 -395 -4,340 -1,026 -5.475 -342 -341 -280 -154 -179 252 -199 52 12 Change in U.S. official reserve assets (increase, - ) 13 Gold 14 Special drawing rights (SDRs) Reserve position in International Monetary Fund 15 16 Foreign currencies -1.379 0 -537 -44 -797 5.346 0 -441 494 5.293 -9,742 0 -808 -2,466 -6.468 -5,318 0 -867 -526 -3,925 -2.722 0 -156 -786 -1,780 -1.893 0 362 -991 -1.264 191 0 -147 -163 501 17 0 -199 -849 1,065 17 Change in U.S. private assets abroad (increase, —) 18 Bank-reported claims 3 iy Nonbank-reported claims U.S. purchases of foreign securities, net 20 21 U.S. direct investments abroad, net -192.889 29.947 1,581 -146.253 -78,164 -155.700 -8.161 -32.804 -60.270 -54.465 -297,834 -69.146 -34.219 -98,960 -95.509 -56.275 -29.114 -4,537 -7.571 -15.053 -105.398 -41,236 -22,904 -23,011 -18.247 -37,954 8,476 7,500 -35,839 -18,091 -98.206 -7,272 -14.278 -32,539 -44,117 -55.801 4,510 -33.492 -26.819 72,153 48,952 4.062 1,713 14.841 2,585 40.253 30.745 6.077 2.344 3.560 -2.473 109,757 68,813 3.734 1,082 32.862 3,266 21,822 10.132 1,126 -331 10,630 265 37.380 25.208 1,326 235 7.662 2.949 39,186 20.489 518 -71 18.478 -228 11.369 12.984 764 1,249 -3.908 280 51,582 55.600 52 -195 -3.664 -211 178,843 20.859 10,489 24.381 80.092 43,022 245.123 111.842 -7.710 34,225 57.006 49.760 314,705 25,283 34.578 99.340 95,268 60,236 69.173 3,860 9,076 29,969 15,480 10,788 78.041 10.200 7.285 30.368 20.496 9.692 79.630 -21,542 6.945 37,269 31.971 24.987 87,860 32.765 11,272 1.734 27.321 14,768 47,234 -29.449 0 43,550 0 13.724 0 31.548 43,550 13.724 31.548 0 9.806 6.519 3,287 0 33,854 -266 34.120 0 -41,533 -7,407 -34.126 0 29,420 1.153 28.267 0 -7.496 6.365 -13.861 22 Change in foreign official assets in United States (increase, + ) U.S. Treasury securities 23 Other U.S. government obligations 24 Other U.S. government liabilities 4 25 2b Other U.S. liabilities reported bv U.S. banks 3 27 Other foreign official assets 5 28 Change in foreign private assets in United States (increase, + ) 29 U.S. bank-reported liabilities 3 30 U.S. nonbank-reported liabilities 31 Foreign private purchases of U.S. Treasury securities, net Foreign purchases of other U.S. securities, net 32 33 Foreign direct investments in United States, net 34 Allocation of special drawing rights 35 Discrepancy 36 Due to seasonal adjustment 3/ Before seasonal adjustment 11,734 35.437 29.512 MEMO Changes in official assets 38 U.S. official reserve assets (increase. - ) Foreign official assets in United States, excluding line 25 (increase, + ) -1.379 5.346 -9.742 -5,318 — 2 722 -1,893 191 17 70,440 37.909 108.675 22.153 37.145 39.257 10,120 51,777 -3,717 -1.529 3.959 -412 -341 6.147 -1.435 -1,417 3Y 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 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 from the Census basis data, shown in table 3.11, for reasons of coverage and timing. Military exports are excluded from merchandise trade data and are included in line 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. Summary Statistics 3.11 A51 U.S. FOREIGN TRADE 1 Millions of dollars; monthly data seasonally adjusted 1995 r Item 1993' 1994 r 1996 1995 r Oct. Nov. Dec. Jan. r Feb/ Mar. Apr. p 1 G o o d s and services, balance Merchandise 2 3 Services -72,037 -132,607 60,570 -104,381 -166,123 61,742 -105,064 -173,424 68,360 -6,902 -13,109 6,207 -6,098 -12,324 6,226 -6,399 -12,601 6.202 -9,686 -15,505 5,819 -6,654 -12,784 6,130 -8,012 -14,450 6,438 -8,629 -14,656 6,027 4 Goods and services, exports 5 Merchandise 6 Services 642,953 456,834 186,119 698,301 502,462 195,839 786,529 575,939 210,590 67,534 49,528 18,006 67,997 49,777 18,220 68,088 50,120 17,968 66,493 48,645 17,848 69,163 50,883 18,280 69,277 50,490 18,787 69,941 51,670 18,271 7 G o o d s and services, imports 8 Merchandise 9 Services -714,990 -589,441 -125,549 -802,682 -668,585 -134,097 -891,593 -749,363 -142,230 -74,436 -62,637 -11,799 -74,095 -62,101 -11,994 -74,487 -62,721 -11,766 -76,179 -64,150 -12,029 -75,817 -63,667 -12,150 -77,289 -64,940 -12,349 -78,570 -66,326 -12,244 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. RESERVE ASSETS Millions of dollars, end of period 1995 Asset 1 Total 2 Gold stock, including Exchange Stabilization Fund 1 3 Special drawing rights 4 Reserve position in International Monetary Fund" 5 Foreign currencies 4 1992 1993 Oct. Nov. Dec. Jan. Feb. Mar. Apr. Mayp 71,323 73,442 74,335 86,224 85,755 85,832 82,717 84,270 84,212 83,710 83,469 11.056 8,503 11,053 9,039 11,051 10,039 11,051 10,949 11,050 11,034 11,050 11,037 11,052 10,778 11,053 11,106 11,053 11,049 11,052 10,963 11,052 11,037 11,759 40,005 11,818 41,532 12,030 41,215 14.700 49,524 14,572 49,099 14,649 49,096 14,312 46,575 14,813 47,298 15,249 46,861 15,117 46,578 15,227 46,153 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 SDR holdings and reserve positions in the IMF also have been valued on this basis since July 1974. 3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the year indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979— $1,139 million; 1980—$1,152 million; 1981—$1,093 million: plus net transactions in SDRs. 4. Valued at current market exchange rates. FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS 1 Millions of dollars, end of period 1996 1995 Asset 1992 1993 1994 Oct. 1 Deposits Held in custody 2 U.S. Treasury securities 2 3 Earmarked gold 3 Dec. Jan. Feb. Mar. Apr. Mayp 205 386 250 275 194 386 165 209 191 166 160 314,481 13,118 379,394 12,327 441,866 12,033 507,075 11,709 522,950 11,702 522,170 11,702 532,776 11,702 559,741 11,689 573,435 11,590 573,924 11,445 578,608 11,339 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. Nov. 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. A52 3.15 International Statistics • August 1996 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 1996 1995 Item 1 Total 1 2 3 4 5 6 By type Liabilities reported by banks in the United States U.S. Treasury bills and certificates U.S. Treasury bonds and notes Marketable Nonmarketable 4 U.S. securities other than U.S. Treasury securities 5 1994 1993 Oct. Nov. Dec. Jan. Feb. Mar. Apr. p 482,915 520,934 r 618,072 r 632,860r 630,645r 644,570r 670,229r 682,470 r 686,645 69,721 151,100 73,386 139,571 r 108,235 r 157,277 109,646 r 171,366 107,128 r 168,534 103,919' 173,949 103,242 r 191,188 103,512 r 198,382 110,447 186,638 212,237 5,652 44,205 254,059 6,109 47,809 291,948 6,407 54,205 291,033 6,449 54,366 293,684 6,491 54,808 306,299 6,120 54,283 314,980 6,159 54,660 319,728 6,199 54,649 327,981 6,236 55,343 207,034 15,285 55,898 197,702 4,052 2,942 215,374 17,235 41,492 236,824 4,180 r 5,827 222,003 20,355 61,694 r 305,025 4,761 4,232 228,180 19,535 62,474 r 311,638 6,086 4,945 222,184 19,473 66,720 r 310,966 6,296 5,004 223,569 19,078 70,28 l r 320,512 6,924 4,204 231,389 18,850 70,497 r 338,999 r 6,574 3,918 242,589 r 20,846 72,557 r 335,006 6,584 4,886 241,161 20,878 70,503 341,360 7,388 5,353 By area 7 8 9 10 11 12 Canada Latin America and Caribbean Africa Other countries 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 LIABILITIES TO, AND 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 1995 Item 1 B a n k s ' liabilities 2 Banks' claims Deposits 3 4 Other claims 5 Claims of banks' domestic customers 2 1992 72,796 62,799 24,240 38,559 4,432 1. Data on claims exclude foreign currencies held by U.S. monetary authorities. 1993 78,259 62,017 20,993 41,024 12,854 1996 1994 89,284 60,689 19,661 41,028 10,878 June Sept.' Dec. Mar. 106,621 77,138 28,909 48,229 10,244 102,147 69,508 25,712 43,796 6,624 112,556 r 74,874 22,688 52,186 6,145 109,620 69,548 22,220 47,328 6,064 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. Nonbank-Reported 3.17 LIABILITIES TO FOREIGNERS Payable in U.S. dollars Data A53 Reported by Banks in the United States 1 Millions of dollars, end of period 1996 1995 Item 1993 1994 1995 Oct. Nov. Dec. Jan. Feb. Mar. Apr.P BY HOLDER AND TYPE OF LIABILITY 1 Total, all f o r e i g n e r s 926,672 l,014,808r l,095,603r 1,098,512 1,104,705 l,095,603r l,094,332r l,097,342r 1,096,389 1,096,416 2 Banks' own liabilities 3 Demand deposits 4 Time deposits 2 5 Other 3 6 O w n foreign offices 4 626,919 21,569 175,106 111,971 318,273 718,440 23,386 186,512 112,984 395,558 749,483 r 24,460 r 193,238 139,247 r 392,538 762,723 23,161 202,532 146,456 390,574 755,089 23,114 193,884 154,115 383,976 749,483 r 24.460 1 193,238 139,247 r 392,538 743,153' 22,182 198,513 141,963' 380,495 728,352' 23,507 192,152' 149,000' 363,693' 725,768 23,852 193,121 138,334 370,461 731,691 24,410 191,770 146,597 368,914 299,753 176,739 296,368 r 162,908' 346,120 197,341 335,789 188,575 349,616 201,845 346,120 197,341 351,179 203,478 368,990 223,395 370,621 228,705 364,725 217,106 36,289 86,725 42,532 90,928 52,246 96,533 47,911 99,303 49,969 97,802 52,246 96,533 46,973 100,728 43,404 102,191 40,483 101,433 44,707 102,912 10,936 5,639 15 2,780 2,844 8,606 8,176 29 3,298 4,849 1 l,039 r 10,347 r 21 4,656 5,670 r 10,294 8,466 77 3,901 4,488 9,794 8,339 33 3,631 4,675 9,476 8,558 16 3,527 5,015 11,216 10,390 28 3,979 6,383 5,297 4,275 430 281 692 350 1,828 1,342 1,455 962 692 350 994 764 795 555 918 564 826 426 1,022 0 149 0 341 1 486 0 493 0 341 1 230 0 230 10 298 56 400 0 220,821 64,144 1,600 21,653 40,891 212,957 r 59,935 1,564 23,511 34,860 275,662 r 83,18 l r 2,098 31,120 r 49,963 265,512 r 83,997' 1,646 30,794 r 51,557 281,012 r 85,681 r 1,690 30,757 r 53,234 275,662 r 83,181 r 2,098 31,120 r 49,963 277,868' 85,040' 1,522 28,069' 55,449 294,430' 84,077' 1,655 29,861' 52,561' 301,894 88,055 1,423 31,877 54,755 297,085 91,032 1,679 35,810 53,543 156,677 151,100 153,022 r 139,57 l r 192,481 168,534 181,515 157,277 195,331 171,366 192,481 168,534 192,828 173,949 210,353 191,188 213,839 198,382 206,053 186,638 5,482 95 13,245 206 23,603 344 24,000 238 23,610 355 23,603 344 18,532 347 18,138 1,027 14,970 487 19,065 350 592,171 478,755 160,482 9,718 105,262 45,502 318,273 678,367 r 563,466 167,908 10,633 111,171 46,104 395,558 687,620 r 564,045 r 171,507 r ll,756r 103,687 r 56,064 392,538 698,949 r 575,518 r 184,944 r 11,341 114,24 l r 59,362 390,574 687,285' 561,985 r 178,009 r 11,232 105,27 l r 61,506 383,976 687,620' 564,045 r 171,507' 11,756' 103,687' 56,064 392,538 . 682,872' 554,643' 174,148' 10,247 110,515' 53,386 380,495 666,209' 536,903' 173,210' 10,948 104,309' 57,953 363,693' 663,190 536,108 165,647 11,453 101,117 53,077 370,461 661,499 533,978 165,064 11,905 96,810 56,349 368,914 113,416 10,712 114,901 r ll,251r 123,575 15,869 123,431 16,429 125,300 16,687 123,575 15,869 128,229 15,992 129,306 17,947 127,082 15,967 127,521 16,801 17,020 85,684 14,505 89,145 13,035 94,671 9,754 97,248 13,070 95,543 13,035 94,671 13,590 98,647 12,094 99,265 11,864 99,251 10,699 100,021 102,744 78,381 10,236 45,411 22,734 114,878 r 86,863 11,160 48,532 27,171 121,282 91,910 10,585 53,775 27,550 123,757 94,742 10,097 53,596 31,049 126,614 99,084 10,159 54,225 34,700 121,282 91,910 10,585 53,775 27,550 122,970 93,842 10,383 55,544 27,915 125,646' 97,110' 10,861 54,503' 31,746' 121,829 93,047 10,960 56,600 25,487 126,616 96,291 10,798 55,171 30,322 24,363 10,652 28,015 r 11,805 r 29,372 12,588 29,015 13,527 27,530 12,830 29,372 12,588 29,128 12,773 28,536 13,705 28,782 13,792 30,325 13,241 12,765 946 14,633 1,577 15,267 1,517 13,671 1,817 12,796 1,904 15,267 1,517 14,621 1,734 12,942 1,889 13,351 1,639 14,543 2,541 17,567 17,895 9,099 10,290 9,837 9,099 10,479 10,544 10,005 8,306 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 Other 3 15 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 Time deposits 2 23 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 Time deposits 2 43 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 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 pustomers. 1 l,039 r 10,347 r 21 4,656 5,670 r 10,622' 9,628' 30 4,385 5,213' 11,057' 10,262' 43 3,479' 6,740' 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." A54 3.17 International Statistics • August 1996 LIABILITIES TO FOREIGNERS Reported by Banks in the United States 1 —Continued 1995 Item 1993 1996 1995R 1994 Oct. Nov. Dec. 1,098,512 1,104,705 l,095,603r 1,088,218 1,094,911 l,084,564 r 376,427 4,887 25,192 3,177 2,419 43,134 26,362 2,033 10,251 384,013 4,755 28,357 3,418 2,315 40,415 26,798 2,265 10,759 15,317 1,287 2,718 8,979 10,809 3,720 41,178 4,010 148,384 362,786 3,537 24,842 2,921 2,831 39,204 Jan. Feb. Mar. l,094,332r l,097,342r l,096,389r 1,096,416 1,083,710 l,086,285r l,086,913r 1,085,200 375,642 3,477 27,572 2,787 2,203 41,364 24,854 1,714 10,178 12,397 915 2,529 8,798 19,548 3,943 36,805 4.453 146,669 145 25.291 Apr." AREA 5 0 T o t a l , all f o r e i g n e r s 51 52 53 54 53 56 37 58 39 60 61 62 63 64 63 66 6/ 68 69 70 /I Foreign countries Austria B e l g i u m and L u x e m b o u r g Denmark Finland France Germany Greece Italy Netherlands Norway Portugal Russia Spain Sweden Switzerland Turkey United Kingdom Yugoslavia 1 1 Other Europe and other former U.S.S.R.12 72 Canada 73 Latin A m e r i c a a n d C a r i b b e a n Argentina Bahamas Bermuda Brazil British W e s t Indies Chile Colombia Cuba Ecuador Guatemala Jamaica Mexico Netherlands Antilles Panama 74 /3 76 II 78 19 80 81 82 83 84 83 86 8/ 88 89 90 91 Uruguay Venezuela Other 92 93 94 93 96 97 98 99 100 101 102 103 104 China P e o p l e ' s R e p u b l i c of C h i n a R e p u b l i c of C h i n a ( T a i w a n ) Hong Kong India Indonesia Israel Japan Korea (South) Philippines Thailand Middle Eastern oil-exporting countries13 Other 926,672 l,014,808r l,095,603r 915,736 r l,084,564 r 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 33,331 390,710R 3,588 21.877 2,884 1,436 44,36 lr 27,109 1,393 10,885 16,033 2,338 2.846 2,726 14.675 3,094 40,515 3,341 163,795R 245 27,769 362,786 3,537 24,842 2,921 2,831 39,204 24,035 2,011 20,235 24,768 l,006,202 10.875 13,724 1,394 2,761 7,950 10,012 3,245 43,627 4,124 139,127 177 26,389 26,373R R 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 6,327 423,830 17,203 104,002 8,424 14,933 1,048 2,902 7,338 13,467 2,035 42,588 4,067 147.448 210 22,936 35,378 171 28,358 27,450 9.145 229,599' 3,127R 4,615 13 875 1,121 529 12,227R 5,217 4.551 900 1,597 13,985R 6,700 440,216 12,236 94,991 4,897 23,797 239,083 2,825 3,666 8 1,315 1,275 481 24,555 4,672 4,265 974 1,835 11,810 7,531 439,920 11.539 96,287 6,589 27,366 236,053 2,574 3,399 13 1,311 1,068 430 20,894 5,349 4.561 897 1,856 12,642 7,092 436,580 13,031 87,719 6,561 27,364 144,527 154,334R 240,775 222,967 4,011 10,627 17,132 1,114 1,986 10,066 9,844 17,104R 2.338 1.587 5,157 62.98 lr 5.124 33,750 11,714 20,304 3,373 2,708 4,073 109,193 5,782 4,435 61,466 4,913 2,035 2.714 6,137 6,466 15,822 14,849 15,482 15,471 24,035 2,011 10,875 13,724 1,394 2,761 7,950 10,012 3,245 43,627 4,124 139,127 177 26,389 26,373R 440,216 12,236 94,991 27,434 27,360R 26,749 433,725R 11,985 88,09 R 5,035 21,489R 240,630R 2,815 3,846 7 1,274 431,101 14,117 85,910 4,262 20,107 239,269 2,838 3,990 57 1,265 1,085 516 23,330 5,272 3,889 1,081 1,748 14,244 R 24,555 4,672 4,265 974 1,835 11,810 7,531 227.438R 2,772 3,890 7 1,201 L,075 R 495 23,899 4,461 4,166R 1,092 1,726 12,611 232,222 240,775 238,175 249,447R 241,944R 237,820 22,341 10,729 21,893 3,010 2,174 3,812 104,566 5,368 29,875 11,365 20,287 3,272 2,485 4.090 105,546 5,593 33,750 11,714 20,304 3,373 2,708 4,073 109,193 5,782 35,733 12.311 20,307 3,263 2,011 4,348 106,728 5,092 32,200 12,955 22,286 3.527 2,349 5,780 3,089 12,279 15,582 18,928 2,839 10,458 17,350 18,427 2,880 12,144 2,394 13,121 14,417 18,450 25,861 14,953 18,479 3,752 2,627 5.450 111,654 5,860 2,463 18,447 3,089 12,279 15,582 18,928 24,430 15,513 20,187 3,990 2,169 5,344R 117,313R 5,875R 2,336 7,641 2,136 104 7,211 1,948 7,793 1,907 7,641 7,679 2,136 66 739 10 1.797 2,855 934 4 1,544 2,715 60 1,206 9 1,826 2,785 104 739 10 1,797 2,855 1,848 99 1,217 11 1.774 2,730 16,238 4,897 23,797 239,083 2,825 3,666 8 1,315 1,275 481 6,524R 1,879 97 433 9 1,343 2,163' 112 O t h e r Australia 113 114 Other 4,192 3,308 884 6.036 5,142 894 6,773 5.644 1,129 6,315 5,007 1,308 6,853 5,758 1,095 6,773 5,644 1,129 10,936 6,851 3,218 867 8,606 7.537 613 456 11.039 r 9,300r 893 846 10,294 8,458 552 1,284 9,794 8,470 ll,039r 9,300r 893 846 28,625 233,383 2,978 3,713 7 1,236 1,058 500 23,643 4,448 4,030 1,025 1,799 12,662 7,499 240,353 2,696 3,443 8 1,307 1,210 447 20,993 5,644 4,287 916 1.912 11,622 7,067 2,208 99 451 12 1,303 2,560 11. S i n c e D e c e m b e r 1992, h a s e x c l u d e d B o s n i a , Croatia, and S l o v e n i a . 12. I n c l u d e s the B a n k f o r I n t e r n a t i o n a l S e t t l e m e n t s . S i n c e D e c e m b e r 1992, h a s i n c l u d e d all p a r t s of the f o r m e r U.S.S.R. ( e x c e p t R u s s i a ) , a n d B o s n i a , Croatia, a n d S l o v e n i a . 13. C o m p r i s e s B a h r a i n , Iran, Iraq, K u w a i t , O m a n , Qatar, S a u d i A r a b i a , a n d U n i t e d A r a b E m i r a t e s (Trucial States). 14. C o m p r i s e s A l g e r i a , G a b o n , L i b y a , a n d N i g e r i a . 370,572R 2,848R 25,584R 2,876 1,768 41,330R 25,229R 1,966 11,475 12,839R L,034R 2,843 9,321 18,976 2,256 39,083 4,103 144,129 143 22,769R 422,029 11,764 91,203 4,702 21,761 6,633 115 N o n m o n e t a r y international a n d r e g i o n a l o r g a n i z a t i o n s . . . International15 116 Latin A m e r i c a n r e g i o n a l 1 6 117 Other regional17 118 374,048 2,996 27,182 3,861 2,409 41,099 24,695 2,063 12,468 12,173 1,246 2,931 9,180 11,589 2,813 42,010 4,559 146,985 163 23,626 435,703 13,524 96,850 4,633 22,715 105 A f r i c a Egypt Morocco 107 108 South Africa 109 Zaire Oil-exporting countries14 110 Other 111 106 368,325 3,437 24,881 2,979 2,421 39,697 25,988 1,998 9,616 11,350 1,067 3,055 7,858 11,838 2,555 40.806 4,350 152,654 163 21,612 371 953 1,166' 113,36 l r 5,607 2,366 1,060R 503 24,574R 4,402 4,026R 962R 1,908 13,255R 7,863' 12,158 8,121 13,389 13.491 13,741R 22,136 18,888 12,905 14,895 18,921 7,818 2,375 52 7,089 2,057 7,832 2,002 65 114 8 1,968 2,750 413r 9r 1,706 2,839 1,001 8 1,904 2,803 5.203 4,326 877 5,509 4,503 1,006 6,223 5,239 984 6,056 4,896 1,160 10,622' 9,639r 349 634 1 l,057r 10,023 r 292r 742 9,476 7,938 758 780 11,216 9,932 422 862 665 15. P r i n c i p a l l y the International B a n k f o r R e c o n s t r u c t i o n a n d D e v e l o p m e n t . E x c l u d e s " h o l d i n g s of d o l l a r s " of the I n t e r n a t i o n a l M o n e t a r y F u n d . 16. Principally the I n t e r - A m e r i c a n D e v e l o p m e n t B a n k . 17. A s i a n , A f r i c a n , M i d d l e E a s t e r n , and E u r o p e a n r e g i o n a l o r g a n i z a t i o n s , e x c e p t the B a n k f o r International S e t t l e m e n t s , w h i c h is i n c l u d e d in " O t h e r E u r o p e . " Nonbank-Reported 3.18 Data A55 BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States 1 Payable in U.S. Dollars Millions of dollars, end of period 1996 1995 Area or country 1993 1994 1995 Oct. 1 Total, all f o r e i g n e r s 2 Foreign countries 3 Europe 4 Austria Belgium and Luxembourg 5 6 Denmark Finland 7 8 France 9 Germany 10 Greece 11 Italy 12 Netherlands 13 Norway 14 Portugal 15 Russia 16 Spain Sweden 17 18 Switzerland 19 Turkey United Kingdom 20 21 Yugoslavia 2 22 Other Europe and other former U.S.S.R. 3 Nov. Dec. Jan. Feb. Mar, Apr.P 483,242 526,341 r 522,636 r 533,891 r 526,34lr 522,929 r 516,195 r 525,176 521,174 486,092 478,651 524,410 r r r r r 513,416 r 521,362 518,458 123,741 412 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 62,013 473 1,784 123,380 692 6,738 1,129 512 12,146 7,608 604 6,043 2,959 504 938 973 3,530 4,098 5,746 878 66,846 265 1,171 130,316 565 7,599 403 1,055 14,799 8,864 449 5,364 5,051 665 888 660 2,166 2,060 7,074 785 67,388 147 4,334 138,574 773 8,519 599 1,313 13,161 8,774 603 4,838 4,722 1,408 743 775 4,041 2,151 4,016 707 78,040 118 3,273 137,429 792 5,778 398 1,782 13,732 9,260 507 5,855 5,553 1,016 773 868 5,420 2,056 4,841 810 73,175 120 4,693 134,650 1,083 8,611 293 1,305 11,488 8,647 622 5,696 6,264 793 889 741 5,349 3,514 6,374 973 68,576 208 3,224 488,497 520,978 131,519 880 7,103 634 1,916 14,807 8,081 404 5,530 4,592 1,457 1,036 696 3,162 2,642 6,335 830 69,015 233 2,166 532,470 131,660 639 10,691 602 1,097 15,259 8,431 378 5,390 4,909 1,376 862 949 3,191 2,362 5,925 926 66,911 237 1,525 524,410 130,316 565 7,599 403 1,055 14,799 8,864 449 5,364 5,051 665 888 660 2,166 2,060 7,074 785 67,388 147 4,334 520,627 133,923 683 8,365 541 1,397 12,253 8,072 555 5,010 4,305 1,098 853 678 3,811 2,315 4,613 732 75,147 481 3,014 18,617 18,490 16,095 r 17,810 r 17,000 r 16,095 r 15,680 r 13,824 r 13,395 17,339 24 Latin America and Caribbean 25 Argentina 26 Bahamas 27 Bermuda 28 Brazil 29 British West Indies 30 Chile 31 Colombia 32 Cuba Ecuador 33 34 Guatemala 35 Jamaica Mexico 36 37 Netherlands Antilles 38 Panama 39 Peru 40 Uruguay 41 Venezuela 42 Other 225,238 4,474 63,353 8,901 11,848 99,319 3,643 3,181 0 681 288 195 15,879 2,683 2,894 657 969 2,910 3,363 223,523 5,844 66,410 8,481 9,583 95,741 3,820 4,004 0 682 366 258 17,749 1,396 2,198 997 503 1,831 3,660 257,399 6,439 59,258 5,718 13,297 123,914 5,024 4,550 0 825 457 323 18,028 9,229 3,018 1,829 466 1,661 3,363 251,325 6,003 55,788 5,537 13,334 123,700 4,660 4,593 0 846 385 289 16,657 9,233 2,846 1,501 441 1,826 3,686 266,635 6,090 60,030 8,096 12,983 129,472 4,775 4,516 0 847 424 285 16,826 12,048 3,049 1,577 434 1,695 3,488 257,399 6,439 59,258 5,718 13,297 123,914 5,024 4,550 0 825 457 323 18,028 9,229 3,018 1,829 466 1,661 3,363 257,146 6,185 60,284 5,011 13,252 122,759 4,996 4,622 0 841 439 299 17,114 11,043 2,845 1,762 422 1,575 3,697 248,554 6,057 63,311 4,742 13,915 108,833 4,593 4,492 0 842 461 362 17,167 12,973 2,820 1,928 463 1,572 4,023 252,724 6,214 65,628 4,829 13,817 113,236 4,559 4,547 0 977 465 332 16,951 10,902 2,612 1,936 623 1,559 3,537 245,773 6,206 54,496 5,031 14,270 118,566 4,653 4,523 0 959 473 335 17,193 8,728 2,503 2,129 579 1,375 3,754 43 111,775 107,079 115,406 114.575 11 l,438 r 115,406 108,989 106,987 111,265 114,590 3,405 1,625 15,320 1,796 1,479 642 54,543 16,922 779 2,972 7,300 7,807 23 C a n a d a 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 2,271 2,625 10,828 589 1,527 826 60,032 7,539 1,410 2,170 15,115 6,843 836 1,448 9,161 994 1,470 688 59,151 10,286 662 2,902 13,748 5,733 1,023 1,713 12,895 1,846 1,678 739 61,308 14,136 1,350 2,597 9,639 6,482 1,241 1,595 12,539 1,924 1,623 886 61,878 13,357 673 2,568 9,963 6,328 1,069 1,484 10,713 1,823 l,578 r 728 60,522 14,115 789 2,538 9,604 6,475 1,023 1,713 12,895 1,846 1,678 739 61,308 14,136 1,350 2,597 9,639 6,482 1,014 1,407 13,254 1,864 1,458 668 55,897 14,501 814 2,397 8,053 7,662 1,351 1,404 13,867 1,859 1,478 683 55,077 15,454 779 3,256 6,410 5,369 2,439 1,729 15,545 1,869 1,604 665 52,771 17,242 1,202 3,061 7,145 5,993 56 Africa 57 Egypt 58 Morocco 59 South Africa 60 Zaire 61 Oil-exporting countries 5 62 Other 3,861 196 481 633 4 1,129 1,418 3,050 225 429 671 2 856 867 2,727 210 514 465 1 552 985 2,783 224 457 604 1 586 911 2,732 268 433 462 1 578 990 2,727 210 514 465 1 552 985 2,798 208 514 483 1 589 1,003 2,879 237 561 520 1 526 1,034 2,884 247 585 567 1 516 968 2,743 225 594 493 1 501 929 63 Other 64 Australia 65 Other 2,860 2,037 823 3,129 2,186 943 2,467 1,622 845 2,966 2,095 871 3,005 1,969 1,036 2,467 1,622 845 2,091 1.822 269 2,598 2,243 355 3,665 2,645 1,020 3,363 2,620 743 66 Nonmonetary international and regional organizations 6 . . . 2,405 4,591 1,931 1,658 1,421 1,931 2,302 2,779 r 3,814 2,716 44 45 46 47 48 49 50 51 52 53 54 55 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." A56 3.19 International Statistics • August 1996 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Payable in U.S. Dollars Reported by Banks in the United States 1 Millions of dollars, end of period 1995 r Type of claim 1993 1996 1995 r 1994 Oct. Nov. 522,636 20,878 303,573 103,947 47,103 56,844 94,238 533,891 19,368 308,664 99,555 42,905 56,650 106,304 Dec. Jan. r Feb. r 522,929 23,148 300,730 97,238 35,520 61,718 101,813 516,195 24,365 290,691 98,137 37,565 60,572 103,002 Mar. 1 Total 575,818 r 599,521 649,108 2 Banks' claims 3 Foreign public borrowers 4 Own foreign offices 2 Unaffiliated foreign banks 5 6 Deposits 7 Other 8 All other foreigners 488,497 29,228 285,510 100,865 49,892 50,973 72,894 483,242 23,416 283,183 109,228 59,250 49,978 67,415 526,341 22,522 303,902 98,700 37,343 61,357 101,217 87,32 l r 41.734 116,279 64,829 122,767 58,519 122,767 58,519 125,891 68,800 31,186 36,008 44,161 44,161 39,274 14.40T 15,442 20,087 20,087 17,817 7.920 r 8,427 8.410 8,410 9,026 29.150 32,796 30,717 9 Claims of banks' domestic customers 3 10 Deposits 11 Negotiable and readily transferable instruments 4 12 Outstanding collections and other claims MEMO 13 Customer liability on acceptances 14 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States 5 33,828 31,355 30,717 27,830 525,176 27,668 293,465 101,620 41,609 60,011 102,423 35,042 32,777 521,174 25,111 294,167 99,686 37,621 62,065 102,210 n.a. principally of amounts due from 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 from own foreign branches and foreign subsidiaries consolidated in quarterly Consolidated Reports of Condition tiled with bank regulatory agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 3.20 651,067 649,108 526,341 22,522 303,902 98,700 37,343 61,357 101.217 Apr. p BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Payable in U.S. Dollars Reported by Banks in the United States 1 Millions of dollars, end of period 1995 Maturity, by borrower and area" 1 Total 2 3 4 5 6 7 8 9 10 11 1? 13 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 Africa All other 3 Maturity of more than one year Europe Canada Latin America and Caribbean Asia Africa All other 3 1992 1993 June Sept. Dec/ Mar. p 195,119 202,566 200,042 220,289 r 216,966 r 222,338 231,724 163,325 17,813 145,512 31,794 13,266 18,528 172,662 17,828 154,834 29,904 10,874 19,030 168,331 15,435 152,896 31,711 7,838 23,873 186,312 15,822 r 170,490 r 33,977 r 7,892 26,085 r 178,666 14,192 r 164,474 r 38,300 r 8,220 30,080 r 176,177 15,015 161,162 46,161 7,506 38,655 191,916 19,574 172,342 39,808 8,110 31,698 53,300 6,091 50,376 45,709 1,784 6,065 57,413 7,727 60,490 41,418 1,820 3,794 55,742 6,690 58,877 39,851 1,376 5,795 60,323 7,838 68,630 43,945 1,447 4,129 52,045 7,135 71,319 42,536 1,261 4,370 53,897 6,089 72,397 40,133 1,272 2,389 56,631 4,966 84,407 40,212 1,302 4,398 5,367 3,287 15,312 5,038 2,380 410 5,310 2,581 14,025 5,606 1,935 447 4,203 3,505 15,717 5,318 1,583 1,385 4,240 3,685 17,557 6,058 r 1,389 1,048 4,594 3,57 l r 20,224 7,373 1,389 1,149 4,885 2,731 27,807 8,023 1,429 1,286 6,827 2,563 19,546 8,467 1,474 931 1. Reporting banks include all types of depository institutions as well as some brokers and dealers. 1996 1994 2. Maturity is time remaining until maturity. 3. Includes nonmonetary international and regional organizations. Nonbank-Reported 3.21 CLAIMS ON FOREIGN COUNTRIES Data A57 Held by U.S. and Foreign Offices of U.S. Banks 1 Billions of dollars, end of period 1992 1996 1995 1994 Area or country 1993 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar. p 540.9 r 525.0 r 526.3 r 549.7 r 568.8 10.2 19.8 31.2 10.6 3.5 3.1 5.7 89.4 r 10.5 25.9 201.6 r 9.4 r 19.3 29.8 r 10.7 4.3 3.0 6.2 85.9 r 11.1 22.1 196.6 r 10.7 r 17.4 r 27.2 r 12.6 4.r 2.7 6.3 r 79.8 11.9 24.0 203.7 r 13.5 r 19.2 26.8 r 11.5 3.4 r 2.7 6.3 r 82.4 r 9.4 28.5 201.3 10.5 17.9 31.5 13.1 3.0 3.2 5.2 84.8 9.2 22.9 344.7 407.7 475.7 r 484.8 r 485.7 r 495.6 r 131.3 ,0 r 15.3 9.1 6.5 ,0 r 2.3 4.8 59.7 6.3 18.8 161.8 7.4 12.0 12.6 7.7 4.7 2.7 5.9 84.3 6.9 17.6 177.8 r 7.9 r 16.6 29.7 15.6 3.8 2.9 4.5 69.4 r 7.8 19.6 172.4 r 8.6 18.6 24.7 14.0 3.4 3.0 5.4 64.0 r 9.9 20.7 182.2 r 9.6 20.7 24.0 11.6 3.4 2.6 5.5 78.1 r 10.2 16.5 189.9 r 7.0 19.1 24.7 11.8 3.6 2.7 5.1 85.2 r 10.0 20.7 13 Other industrialized countries Austria 14 Denmark 15 Finland 16 Greece 17 Norway 18 Portugal 19 Spain 20 Turkey 21 22 Other Western Europe South Africa 23 Australia 24 24.0 1.2 .9 .7 3.0 1.2 .4 8.9 1.3 1.7 1.7 2.9 25.6 .4 1.0 .4 3.2 1.7 .8 9.9 2.1 2.6 1.1 2.3 42.0 r 1.0 1.0 r 1.0 3.7 r 1.6 1.2 13.2 2.4 3.1 1.2 12.7 42.5 r 1.0 1.1 .8 4.6 1.6 1.1 12.6 2.1 2.8 1.2 13.7 42.5 r 1.0 ,9 r .8 4.2 r 1.6 1.0 14.0 1.8 1.0 1.2 15.0 45.0 r 1.1 1.3 .9 4.4 r 2.0 1.2 13.6 1.6 2.7 1.0 15.4 43.9 r .9 1.7 1.1 4.8 r 2.4 1.0 14.1 1.4 2.5 1.5 12.6 43.lr .7 1.1 .5 4.9 r 1.8 1.2 13.3 1.4 2.6 1.4 14.3 50.0 r 1.2 1.8 .7 5.0 r 2.3 1.9 r 13.3 1.9 r 3.0 1.3 17.4 50.0 .9 2.6 .8 5.6 r 3.2 l.3 r 11.6 1.8 r 4.7 1.2 16.4 60.7 1.2 3.1 .7 5.5 2.1 1.6 17.5 1.9 3.8 1.7 21.7 25 O P E C 2 Ecuador 26 Venezuela 27 Indonesia 28 Middle East countries 29 African countries 30 15.8 .6 5.2 2.7 6.2 1.1 17.4 .5 5.1 3.3 7.4 1.2 22.9 .6 4.6 3.4 13.2 1.1 21.6 .5 4.4 3.2 12.4 1.1 21.6 r .4 3.9 3.3 13.0 1.1 23.8 r .5 3.7 3.8 15.0 ,8 r 19.5 .5 3.5 4.0 10.7 .7 20.2 r .7 3.5 4.1 11.4 .5 r 22.4 r .7 3.0 4.4 13.6 r .6 22.r .7 2.7 4.8 r 13.3 .6 21.1 .8 2.9 4.7 12.3 .5 31 N o n - O P E C developing countries 72.6 83.1 94.5 r 94.7 r 93.1' 95.9 r 98.4 r 103.6 104.0 r 112.5 r 116.2 6.6 10.8 4.4 1.8 16.0 .5 2.6 7.7 12.0 4.7 2.1 17.8 .4 3.1 8.7 12.7 5.1 2.r 19.0 .6 2.9 9.8 12.0 5.1 2.4 18.6 .6 2.7 10.5 9.3 5.5 2.4 19.8 .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 9.9 r 7.1 2.6 17.6 .8 2.6 10.9 13.6 r 6.4 2.9 16.3 .7 2.6 12.9 13.7 r 6.8 2.9 17.3 .8 2.8 12.7 17.2 6.4 2.9 16.1 .9 3.1 .7 5.2 3.2 .4 6.6 3.1 3.6 2.2 3.1 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 .7 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 3.7 1.8 9.4 4.4 .5 19.1 4.4 4.1 4.9 4.5 3.3 9.7 4.7 .5 19.4 4.7 3.9 5.2 4.3 .2 .6 .0 1.0 .4 .7 .0 .8 .3 r .8 .0 1.1 ,4 r .7 .0 1.0 .3 .7 .0 .9 .3 .6 .0 .8 .4 .6 .0 .7 .4 .9 .0 .6 .4 ,8 r .0 .7 .4 .7 .0 .9 .2 .7 .0 .7 3.1 1.9 .6 .6 3.2 1.6 .6 .9 3.8 1.6 .5 1.6 3.2 1.3 .5 1.4 3.0 1.1 .5 1.5 2.7 .8 .5 1.4 2.3 .7 .4 1.2 1.8 .4 .3 1.0 3.4 .6 .4 2.3 4.2 1.0 .3 2.8 6.2 1.4 .3 4.5 56 Offshore banking centers Bahamas 57 Bermuda 58 Cayman Islands and other British West Indies 59 Netherlands Antilles 60 Panama 6 61 Lebanon 62 Hong Kong 63 Singapore 64 Other' 65 58.1 6.9 6.2 21.5 1.1 1.9 .1 13.9 6.5 .0 73.0 10.9 8.9 18.0 2.6 2.4 .1 18.7 11.2 .1 78.5 r 13.7 8.8 17.8 3.4 2.0 .1 19.7 13.0 .0 80.5 r 13.3 6.5 23.8 2.5 2.0 .1 21.8 10.6 .0 77.r 13.8 6.0 21.5 1.7 1.8 r .1 20.3 11.8 .0 71.3' 10.3 8.4 19.9 1.3 1.3 .1 19.9 10.1 .1 84.3 r 12.5 8.6 19.4 .9 1.1 .1 22.4 r i9.r .0 82.1 8.4 8.3 23.7 2.4 1.3 .1 23.1 14.8 .0 85.9 r 12.6 6.1 23.4 5.5 1.2 r .1 23.7 13.3 .1 99.5 r 11.5 r 6.3 32.1 9.9 1.4 .1 25.1 13.1 .1 100.2 13.4 5.3 28.5 10.7 1.1 .1 25.6 15.4 .1 8 66 Miscellaneous and unallocated 39.7 43.4 55.9 69.6 r 65.7 r 66.6 r 82.2 r 72.3 r 63.9 r 57.4 r 62.5 1 Total 2 G - 1 0 countries and Switzerland Belgium and L u x e m b o u r g 3 France 4 Germany 5 6 Italy Netherlands 7 Sweden 8 9 Switzerland United Kingdom 10 Canada 11 12 Japan 32 33 .34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Latin America Argentina Brazil Chile Colombia Mexico * Other Asia China People's Republic of China Republic of China (Taiwan) Korea (South) Malaysia Philippines Thailand Other Asia Africa Egypt Morocco Other Africa 3 52 Eastern Europe Russia 4 53 Yugoslavia 5 54 Other 55 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. 2io.rr 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. A58 International Statistics • August 1996 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 1994 Type of liability, and area or country 1992 1993 1995 1994 Sept. Dec. Mar. June Sept. Dec. p 1 Total 45,511 50,597 54,309 57,630 54,309 50,187 49,973 47,673 46,494 2 Payable in dollars 3 Payable in foreign currencies 37,456 8,055 38,728 11,869 38,298 16,011 41,879 15,751 38,298 16,011 35,903 14,284 34,281 15,692 33,908 13,765 33,949 12,545 By type 4 Financial liabilities Payable in dollars 6 Payable in foreign currencies 23,841 16,960 6,881 29,226 18,545 10,681 32,954 18,818 14,136 36,440 22,558 13,882 32,954 18,818 14,136 29,775 16,704 13,071 29,282 15,028 14,254 26,237 13,872 12,365 24,287 12,949 11,338 7 Commercial liabilities 8 Trade payables 9 Advance receipts and other liabilities 21,670 9,566 12,104 21,371 8,802 12,569 21,355 10,005 11,350 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 22,207 11,013 11,194 10 11 Payable in dollars Payable in foreign currencies 20,496 1,174 20,183 1,188 19,480 1,875 19,321 1,869 19,480 1,875 19,199 1,213 19,253 1,438 20,036 1,400 21,000 1,207 12 13 14 (5 16 17 18 By area or country Financial liabilities Europe Belgium and Luxembourg France Germany Netherlands Switzerland United Kingdom 13,387 414 1,623 889 606 569 8,610 18,810 175 2,539 975 534 634 13,332 21,703 495 1,727 1,961 552 688 15,543 25,288 661 2,241 1,467 648 633 18,323 21,703 495 1,727 1,961 552 688 15,543 17,541 612 2,046 1,755 633 883 10,764 18,223 778 1,101 1,589 530 1,056 12,138 16,401 347 1,365 1,670 474 948 10,518 15,622 369 999 1,974 466 895 10,138 19 Canada 20 21 22 23 24 23 26 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 27 28 29 30 31 32 33 34 33 36 37 38 39 Japan Middle Eastern oil-exporting countries' Africa Oil-exporting countries 2 All other 3 Commercial liabilities Europe Belgium and Luxembourg France Germany Netherlands Switzerland United Kingdom 544 859 629 618 629 1,817 893 797 632 4,053 379 114 19 2,850 12 6 3,359 1,148 0 18 1,533 17 5 2,034 101 80 207 998 0 5 1,977 121 15 7 1,173 15 5 2,034 101 80 207 998 0 5 2,065 135 149 58 1,068 10 5 1,950 81 138 58 1,030 3 4 1,904 79 144 111 930 3 3 1,829 68 152 57 898 12 2 5,818 4,750 19 5,956 4,887 23 8,403 7,314 35 8,405 7,248 31 8,403 7,314 35 8,156 7,182 27 8,023 7,141 25 6,947 6,308 25 5,988 5,436 27 6 0 133 123 135 123 133 123 135 123 156 122 151 122 149 122 150 122 33 109 50 19 50 40 42 39 66 7,398 298 700 729 535 350 2,505 6,827 239 655 684 688 375 2,039 6,773 241 728 604 722 327 2,444 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 7,700 331 481 767 500 413 3,568 40 Canada 1,002 879 1,037 1,068 1,037 1,235 1,146 1,219 1,040 41 42 43 44 45 46 47 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 1,533 3 307 209 33 457 142 1,658 21 350 214 27 481 123 1,857 19 345 161 23 574 276 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 1,740 1 205 98 56 416 221 10,594 3,612 1,889 10,980 4,314 1,534 10,741 4,555 1,576 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 10,421 3,315 1,912 48 49 50 Japan Middle Eastern oil-exporting countries' 51 32 Africa Oil-exporting countries 2 568 309 453 167 428 256 468 264 428 256 463 248 481 252 589 241 619 254 53 Other 3 575 574 519 633 519 553 474 483 687 1. Comprises Bahrain, Iran, Iraq, Kuwait, O m a n , Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 2, Comprises Algeria, Gabon, Libya, and Nigeria, 3. Includes nonmonetary international and regional organizations. Nonbank-Reported Data 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS the United States A59 Reported by Nonbanking Business Enterprises in Millions of dollars, end of period 1995 1994 Type of claim, and area or country 1992 1993 1994 Sept. Dec. Mar. June Sept. Dec. p 1 45,073 49,159 57,888 54,833 57,888 52,218 58,051 53,424 52,483 2 Payable in dollars 3 Payable in foreign currencies 42,281 2,792 45,161 3,998 53,805 4,083 50,460 4,373 53,805 4,083 48,425 3,793 54,138 3,913 49,696 3,728 48,687 3,796 By type 4 Financial claims Deposits 5 6 Payable in dollars Payable in foreign currencies 7 8 Other financial claims 9 Payable in dollars 10 Payable in foreign currencies 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 33,897 18,507 18,026 481 15,390 14,306 1,084 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 34,574 22,046 21,351 695 12,528 11,370 1,158 29,891 17,974 17,393 581 11,917 10,689 1,228 27,398 15,133 14,654 479 12,265 10,976 1,289 11 Commercial claims 12 Trade receivables Advance payments and other claims 13 18,564 16,007 2,557 21,388 18,425 2,963 23,991 21,158 2,833 22,597 19,825 2,772 23,991 21,158 2,833 22,612 20,415 2,197 23,477 21,326 2,151 23,533 21,409 2,124 25,085 22,973 2,112 14 15 Payable in dollars Payable in foreign currencies 17,519 1,045 19,117 2,271 21,473 2,518 20,055 2,542 21,473 2,518 20,692 1,920 21,417 2,060 21,614 1,919 23,057 2,028 16 17 18 19 20 21 22 By area or country Financial claims Europe Belgium and Luxembourg France Germany Netherlands Switzerland United Kingdom 9,331 8 764 326 515 490 6,252 7,299 134 826 526 502 530 3,585 7,936 86 800 540 429 523 4,649 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 7,927 155 730 356 601 514 4,790 7,840 160 753 301 522 530 4,924 7,609 193 803 436 517 498 4,303 23 Canada 24 25 26 27 28 29 30 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 31 32 33 Asia Japan Middle Eastern oil-exporting countries' 34 35 Africa Oil-exporting countries 2 36 37 38 39 40 41 42 43 All other 3 Commercial claims Europe Belgium and Luxembourg France Germany Netherlands Switzerland United Kingdom 1,833 2,032 3,581 3,812 3,581 3,848 3,705 3,526 2,851 13,893 778 40 686 11,747 445 29 16,224 1,336 125 654 12,699 872 161 19,536 2,424 27 520 15,228 723 35 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 21,159 2,355 85 502 17,013 635 27 15,345 1,552 35 851 11,816 487 50 14,500 1,965 81 830 10,393 554 32 864 668 3 1,657 892 3 1,871 953 141 2,176 661 19 1,871 953 141 1,504 621 4 1,235 471 3 2,160 1,404 4 1,579 871 3 83 9 99 1 373 0 197 0 373 0 141 9 138 9 188 6 276 5 505 460 600 529 600 374 410 832 583 8,451 189 1,537 933 552 362 2,094 9,105 184 1,947 1,018 423 432 2,377 9,540 213 1,881 1,027 311 557 2,556 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 9,200 218 1,669 1,023 341 612 2,469 8,862 224 1,706 997 338 438 2,479 9,822 231 1,830 1,070 452 520 2,655 44 Canada 1,286 1,781 1,988 1,906 1,988 2,010 2,003 1,971 1,950 45 46 47 48 49 50 51 Latin America and Caribbean Bahamas Bermuda Brazil British West Indies Mexico Venezuela 3,043 28 255 357 40 924 345 3,274 11 182 460 71 990 293 4,117 9 234 612 83 1,243 348 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 4,370 21 210 777 83 1,109 319 4,359 26 245 745 66 1,026 325 4,348 30 272 897 79 985 285 52 53 54 Asia Japan Middle Eastern oil-exporting countries' 4,866 1,903 693 6,014 2,275 704 6,982 2,655 708 6,679 2,591 617 6,982 2,655 708 6,200 1,911 689 6,516 2,011 707 6,826 1,998 775 7,307 1,868 974 55 56 Africa Oil-exporting countries 2 554 78 493 72 454 67 447 61 454 67 468 71 478 60 544 74 654 87 57 Other 3 364 721 910 792 910 847 910 971 1,004 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. A60 3.24 International Statistics • August 1996 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 1996 Transaction, and area or country 1994 1995 1996 1995 Jan.Apr. » Oct. Nov. Dec. Jan. Feb. Mar. Apr. p U.S. corporate securities STOCKS 1 Foreign purchases 2 Foreign sales 350,593 348,716 462,884 451,709 204,159 196,253 41,492 42,860 41,937 39,071 46,479 44,372 43,574 41,948 52,260 r 51,083 r 55,280 54,450 53,045 48,772 1,877 11,175 7,906 -1,368 2,866 2,107 1,626 l,177r 830 4,273 1,867 11,380 7,934 -1,328 2,877 2,109 1,623 l,306r 876 4,129 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 3,687 328 462 1,125 1,381 -284 1,125 2,697 -831 1,185 660 -69 140 1,647 -54 5 528 449 878 -74 -2,920 -8 61 56 -17 -17 954 -58 -131 230 227 543 405 1,361 -63 342 -406 -26 -96 1,028 -382 -11 373 191 1,277 -175 219 148 883 1,231 -1 7 1,954 164 239 660 639 -165 645 -487 -507 -40 94 6 52 -1,072 -161 -37 20 -441 -223 518 2,694 r -285 -336 -131 -62 -151 1,376 661 86 208 566 -242 -90 -318 -33 -291 -749 -44 276 1,429 -336 174 237 617 346 52 808 -6 1,852 1,446 31 -37 10 -205 -28 -40 -11 -2 3 -129 -46 144 289,586 229,665 293,030 206,951 122,765 85,140 26,424 19,199 31,642 20,741 21,698 21,117 26,591 17,726 32,759 23,608 39,308 25,113 24,107 18,693 21 Net p u r c h a s e s , o r sales ( - ) 59,921 86,079 37,625 7,225 10,901 581 8,865 9,151 14,195 5,414 22 F o r e i g n c o u n t r i e s 59,036 86,533 37,543 7,293 10,948 553 8,823 9,230 14,107 5,383 23 Europe 24 France 25 Germany Netherlands 26 Switzerland 28 United Kingdom 29 Canada 30 Latin America and Caribbean 31 Middle East 1 3 2 Other Asia Japan 33 34 Africa 35 Other countries 37,065 242 657 3,322 1,055 31,642 2,958 5,442 771 12,153 5,486 -7 654 69,815 1,143 5,806 1,463 494 57,220 2,569 6,141 1,869 5,659 2,250 234 246 24,515 2,608 3,021 403 -212 16,643 847 8,556 -393 4,349 1,045 30 -361 6,418 732 113 204 148 4,599 139 -61 -246 1,126 645 -223 140 9,759 101 894 219 101 6,999 20 1,426 188 -705 -899 240 20 1,309 137 236 101 -381 925 181 -848 187 -293 -904 86 -69 5,624 839 -26 156 56 3,854 104 2,096 -194 1,272 338 -16 -63 8,968 314 1,859 365 -86 6,280 235 -713 -334 1,161 336 -40 -47 5,976 670 467 -66 -38 4,245 149 7,140 13 831 245 37 -39 3,947 785 721 -52 -144 2,264 359 33 122 1,085 126 49 -212 885 -454 82 -68 -47 28 42 -79 88 31 3 Net p u r c h a s e s , o r sales ( - ) 4 Foreign countries 5 Europe 6 France Germany 7 Netherlands 8 9 Switzerland 10 United Kingdom 11 Canada 12 Latin America and Caribbean 13 Middle East 1 14 Other Asia 15 Japan 16 Africa 1 7 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 organizations BONDS2 19 Foreign purchases 20 Foreign sales 21 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 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 4 3 N e t p u r c h a s e s , o r sales (—), of s t o c k s a n d b o n d s -48,071 386,106 434,177 -9,224 848,368 857,592 .... -50,786 345,498 396,284 -47,159 889,143 936,302 -29,115 144,801 173,916 -11,779 354,041 365,820 -5,769 29,382 35,151 -7,580 76,889 84,469 -1,725 30,307 32,032 -6,235 78,563 84,798 -6,830 32,366 39,196 -3,923 80,310 84,233 -6,432 33,481 39,913 -4,472 84,508 88,980 -5,704r 37.457 r 43,161 r -1,304 95,095 96,399 -10,341 36,117 46,458 -6,115 93,239 99,354 -6,638 37,746 44,384 112 81,199 81,087 -57,295 -97,945 -40,894 -13,349 -7,960 -10,753 -10,904 -7,008r -16,456 -6,526 44 F o r e i g n c o u n t r i e s -57,815 -97,140 -40,747 -13,240 -7,882 -10,812 -10,935 —6,883 r -16,460 -6,469 45 Europe 4 6 Canada 47 Latin America and Caribbean 48 49 Japan 5 0 Africa 51 Other countries -3,516 -7,475 -18,334 -24,275 -17,427 -467 -3,748 -47,905 -7,871 -7,071 -34,049 -25,070 -327 83 -12,817 -3,957 -4,714 -16,990 -9,194 -707 -1,562 -7,249 1,311 -3,883 -2,511 -849 5 -913 -4,609 -494 -184 -2,001 -1,388 19 -613 -6,033 -14 -802 -4,389 -3,685 -44 470 -3,973 -2,649 -3 -4,685 -3,427 -96 471 —2,451 r -59r — 1,03 l r —2,557 — 1,592 -161 -624r -4,584 -1,863 -2,582 -5,755 -3,225 -436 -1,240 -1,809 614 -1,098 -3,993 -950 -14 -169 520 -805 -147 -109 -78 59 31 4 -57 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 organizations 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). -125 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. Securities Holdings and Transactions/Interest and Exchange Rates 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES A61 Foreign Transactions' Millions of dollars; net purchases, or sales (—) during period 1996 1995 1996 1994 Area or country 1995 Jan.Apr. Nov. Oct. Dec. Feb. Jan. Mar. Apr. p 1 Total e s t i m a t e d 78,801 133,991 52,965 4,819 15,307 -9,454 14,008 15,451 7,017 16,489 2 Foreign countries 78,637 133,552 54,165 4,650 14,936 -9,016 13,703 16,192 6,406 17,864 38,542 1,098 5,709 1,254 794 481 23,365 5,841 3,491 50,000 591 6,136 1,891 358 -472 34,778 6,718 252 29,277 509 6,005 -2,573 1,416 1,554 11,140 11,226 5,531 -4,608 -25 2,831 160 92 174 -5,965 -1,875 -1,864 821 81 52 833 -30 -568 1,309 -856 -43 -1,120 171 452 381 -285 -664 -4,377 3,202 208 7,281 149 1,385 807 -45 76 1,167 3,742 1,867 8,462 -120 1,829 354 803 84 1,644 3,868 1,863 4,075 81 958 -1,597 372 65 2,262 1,934 35 9,459 399 1,833 -2,137 286 1,329 6,067 1,682 1,766 -10,383 -319 -20,493 10,429 47,317 29,793 240 -570 48,609 -2 25,152 23,459 32,319 16,863 1,464 908 -8,580 -275 8,186 -16,491 26,955 10,513 976 6 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 -5,695 252 -275 -2,648 -142 8,922 -11,428 6,920 2.619 515 -232 -2,931 -93 -1,896 -942 8,616 3,069 -100 282 -4,985 -44 -2,696 -2,245 6,941 2,443 311 29 1,984 4 3,856 -1,876 4,478 2,382 250 -73 164 526 -154 439 9 261 -1,200 135 -1,295 169 2 185 371 368 -43 -438 -347 -115 305 210 -45 -741 -308 -254 611 647 12 -1,375 -414 -1,008 78,637 41,822 36,815 133,552 39,625 93,927 54,165 34,297 19,868 4,650 5,705 -1,055 14,936 -915 15,851 -9,016 2,651 -11,667 13,703 12,615 1,088 16,192 8,681 7,511 6,406 4,748 1,658 17,864 8,253 9,611 -38 0 3,075 2 1,454 1 -624 0 -826 0 -1,085 0 -658 0 122 1 1,127 0 863 0 3 4 5 6 7 8 9 10 11 Europe Belgium and Luxembourg Germany Netherlands Sweden Switzerland United Kingdom Other Europe and former U.S.S.R Canada 1? 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 ?1 22 Latin American regional MEMO 23 Foreign countries 74 Official institutions Other foreign 25 Oil-exporting countries ?6 Middle East" 27 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. 3.26 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 3. Comprises Algeria, Gabon, Libya, and Nigeria. DISCOUNT RATES OF FOREIGN CENTRAL BANKS' Percent per year, averages of daily figures Rate on June 30, 1996 Rate on June 30, 1996 Country Country Month effective Apr. Apr. Apr. Apr. June 2.5 2.5 5.0 3.25 3.6 Austria.. Belgium. . Canada. . Denmark France 2 . , 1996 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 2.5 9.0 .5 2.5 1.5 Germany . . . Italy Japan Netherlands . Switzerland . 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 Dec. Jan. Feb. Mar. Apr. May June 5.64 6.42 5.91 3.82 1.94 3.58 5.47 10.58 3.74 .52 5.40 6.31 5.58 3.51 1.65 3.20 4.56 10.05 3.47 .55 5.14 6.13 5.22 3.26 1.61 3.00 4.29 9.90 3.23 .61 5.28 6.02 5.23 3.25 1.68 3.09 4.14 9.82 3.25 .60 5.36 5.97 5.03 3.22 1.68 2.83 3.87 9.60 3.23 .61 5.36 6.03 4.82 3.19 1.99 2.61 3.78 8.88 3.19 .62 5.46 5.80 4.87 3.29 2.53 2.81 3.84 8.73 3.23 .57 A62 3.28 International Statistics • August 1996 FOREIGN EXCHANGE RATES' Currency units per dollar except as noted 1996 Country/currency unit 1 2 3 4 5 6 7 8 9 10 Australia/dollar* Austria/schilling Belgium/franc Canada/dollar China, P.R./yuan Denmark/krone Finland/markka France/franc Germany/deutsche mark Greece/drachma 11 12 13 14 15 16 17 18 19 20 Hong Kong/dollar India/rupee Ireland/pound 2 Italy/lira Japan/yen Malaysia/ringgit Netherlands/guilder N e w Zealand/dollar 2 Norway/krone Portugal/escudo 21 22 23 24 25 26 27 28 29 30 Singapore/dollar South Africa/rand South Korea/won Spain/peseta Sri Lanka/rupee Sweden/krona Switzerland/franc Taiwan/dollar Thailand/baht United Kingdom/pound 2 1993 1994 1995 Jan. Feb. Mar. Apr. May June 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 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 77.136 10.391 30.371 1.3656 8.3495 5.7074 4.6066 5.0583 1.4776 241.54 78.566 10.580 30.902 1.3592 8.3583 5.9414 4.7288 5.1049 1.5048 242.00 79.700 10.782 31.502 1.3693 8.3479 5.9160 4.7541 5.1855 1.5324 243.27 79.122 10.755 31.433 1.3658 8.3424 5.8941 4.6710 5.1787 1.5282 241.75 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 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 7.7325 34.485 157.21 1,562.43 105.94 2.5417 1.6540 68.079 6.4277 152.93 7.7345 34.320 156.51 1,565.60 107.20 2.5113 1.6805 68.242 6.4901 154.51 7.7363 35.025 156.29 1,556.71 106.34 2.4936 1.7135 68.571 6.5748 157.54 7.7404 35.100 158.31 1,542.30 108.96 2.4967 1.7120 67.650 6.5376 157.40 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 1.4211 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 1.4095 3.9293 781.31 124.39 53.748 6.7318 1.1959 27.400 25.251 152.71 1.4082 4.2130 780.42 125.49 54.163 6.7141 1.2180 27.188 25.290 151.60 1.4074 4.3679 780.86 127.97 54.868 6.7984 1.2539 27.352 25.289 151.52 1.4090 4.3519 798.45 128.87 55.529 6.6807 1.2579 27.674 25.354 154.16 84.25 86.23 86.41 86.57 87.46 88.28 88.16 MEMO 31 United States/dollar 3 93.18 91.32 1. Averages of certified noon buying rates in New York for cable transfers. Data in this table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, see inside front cover. 2. Value in U.S. cents. 3. Index of weighted-average exchange value of U.S. dollar against the currencies of ten industrial countries. The weight for each of the ten countries is the 1972-76 average world trade of that country divided by the average world trade of all ten countries combined. Series revised as of August 1978 (see Federal Reserve Bulletin, vol. 64 (August 1978), p. 700). 63 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 SPECIAL TABLES—Data Published Irregularly, June 1996 with Latest Bulletin Reference Title and Date Assets and liabilities Issue of commercial of U.S. branches and agencies of foreign Pro forma balance sheet and income statements for priced service of life insurance lending reported November February May August 1995 1996 1996 1996 A68 A68 A68 A64 October November February May 1995 1995 1996 1996 A68 A72 A72 A72 August October January July 1995 1995 1996 1996 A76 A72 A68 A64 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 1994 A70 A70 A70 A68 operations March 31, 1995 June 30, 1995 September 30, 1995 March 31, 1996 Residential 1993 1993 1994 1994 banks March 31, 1995 June 30, 1995 September 30, 1995 December 31, 1995 Assets and liabilities August November February May banks August 1995 November 1995 February 1996 May 1996 Assets and liabilities Page banks March 31, 1993 June 30, 1993 September 30, 1993 December 31, 1993 Terms of lending at commercial Page A72 under the Home Mortgage Disclosure Act A64 4.23 Special Tables • August 1996 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 19961 Commercial and industrial loans Type and maturity of loan Amount of loans (thousands of dollars) size (thousands of dollars) Weighted average maturity 2 Days Loan rate (percent) Loans secured by collateral (percent) Loans made under commitment (percent) 6.37 6.18 7.06 15.1 9.0 37.4 82.4 79.0 94.8 12.1 7.53 6.85 8.12 48.6 38.7 57.2 86.7 87.1 86.3 6.9 10.4 3.8 7.24 5.94 7.85 47.4 18.3 61.0 56.9 33.9 67.7 4.8 9.1 2.9 Weighted average effective 3 Participation loans (percent) ALL BANKS 1 Overnight 6 8,721 2 One month or less (excluding overnight) Fixed rate 3 4 Floating rate 11,628,749 9,131,845 2,496,904 1,031 3,109 299 5 More than one month and less than one year 6 Fixed rate 7 Floating rate 13,696,214 6,405,619 7,290,596 191 263 154 8 Demand 7 9 Fixed rate 10 Floating rate 14,525,096 4,619,674 9,905,422 350 1,237 263 11 Total s h o r t - t e r m 56,742,099 449 6.76 30.7 70.5 12 Fixed rate (thousands of dollars) 13 1-99 14 100-499 15 500-999 16 1,000-4,999 17 5,000-9,999 18 10,000 or more 37,021,716 363,323 467,930 659,429 4,338,235 4,192,103 27,000,695 1,122 14 197 685 2,236 6,644 21,730 22 138 99 65 42 38 13 6.17 9.54 8.31 7.34 6.71 6.55 5.92 16.9 82.3 68.9 55.1 29.8 28.7 10.3 66.4 51.7 69.4 80.3 73.6 62.8 7.9 6.6 8.3 4.6 19 Floating rate (thousands of dollars) 20 1-99 21 100-499 500-999 22 23 1,000-4,999 24 5,000-9,999 25 10,000 or more 19,720,383 1,788,525 3,401,205 1,538,485 4,247,062 1,991,186 6,753,920 211 25 200 655 2,106 6,647 24,059 117 173 7.85 9.64 9.10 8.69 7.88 7.08 6.75 56.5 81.1 76.4 71.2 53.3 43.4 42.4 78.0 88.2 90.1 89.9 84.2 83.4 61.1 4.4 1.4 4.9 6.6 5.1 6.7 3.2 125 95 151 166 165 114 97 64 81.1 5.7 4.0 6.1 26 Total long-term 9,793,519 300 7.96 56.5 72.7 27 Fixed rate (thousands of dollars) . . 28 1-99 29 100-499 30 500-999 31 1,000 or more 2,323,557 239,945 383,381 177,088 1,523,143 173 22 206 665 4,037 7.91 9.68 8.85 7.97 7.39 57.2 93.5 84.9 55.0 44.8 64.4 32.4 34.5 49.8 78.6 15.6 4.7 8.9 15.4 19.1 32 Floating rate (thousands of dollars) 33 1-99 34 100-499 35 500-999 36 1,000 or more 7,469,963 327,790 1,098,232 627,999 5,415,941 389 28 208 655 4,935 7.97 9.62 8.99 8.63 7.59 56.3 85.8 81.3 71.8 47.7 75.4 74.0 88.3 88.5 71.3 6.5 3.2 7.1 11.6 6.0 Loan rate (percent) Days LOANS M A D E BELOW Effective Nominal PRIME1" 6 37 Overnight 38 One month or less (excluding overnight) 39 More than one month and less than one year 40 Demand 7 16,528,837 10,761,821 11,037 3,797 5.91 6.12 5.74 5.95 10.9 10.1 60.0 82.0 3.1 5.8 8,812,694 8,625,015 691 2,267 6.52 5.99 6.34 5.88 34.0 33.2 88.9 37.5 8.9 5.2 41 Total s h o r t - t e r m 44,728,367 2,141 42 Fixed rate 43 Floating rate 35,423,032 9,305,335 3,465 873 6.02 6.38 5.86 6.20 14.0 40.7 65.9 69.4 5.4 5.0 44 Total long-term 4,937,917 824 45 Fixed rate 46 Floating rate . . . 1,382,264 3,555,652 507 6.63 6.69 6.46 6.52 34.9 38.6 67.9 60.6 20.6 1.7 Footnotes appear at the end of the table. Financial 4.23 Markets TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 1996'—Continued Commercial and industrial loans—Continued Type and maturity of loan Amount of loans (thousands of dollars) Average size (thousands of dollars) Weighted average maturity 2 Days LARGE Loan rate (percent) Loans secured by collateral (percent) Loans made under commitment (percent) Participation loans (percent) 6.27 6.18 6.63 13.2 9.3 29.6 86.6 84.1 97.1 5.9 3.8 14.7 7.19 6.82 7.63 42.0 36.2 49.0 91.6 90.5 92.8 7.8 11.4 3.6 Weighted average effective 3 Standard BANKS 1 Overnight 6 12,857,346 11,265 2 One month or less (excluding overnight) Fixed rate 3 4 Floating rate 9,097,408 7,357,538 1,739,870 2,592 7,053 705 5 More than one month and less than one year 6 Fixed rate 7 Floating rate 8,443,491 4,598,409 3,845,082 765 2,507 418 8 Demand 7 Fixed rate 9 10 Floating rate 11,627,780 4,368,228 7,259,552 561 3,095 376 6.93 5.85 7.58 40.8 15.9 55.8 48.4 31.4 58.7 5.1 9.6 2.5 11 Total s h o r t - t e r m 42,026,025 1,155 6.54 25.9 70.9 5.2 5.5 2.2 10.8 6.8 6.8 5.0 4.4 1.1 3.8 5.9 5.9 7.8 3.4 76 124 12 Fixed rate (thousands of dollars) 13 1-99 14 100-499 15 500-999 16 1,000-4,999 17 5,000-9,999 18 10,000 or more 29,159,556 43,684 171,520 348,287 2,965,152 3,503,268 22,127,646 5,373 33 230 695 2,274 6,735 21,688 18 94 70 53 38 32 12 6.13 8.32 7.63 7.25 6.77 6.54 5.95 15.1 72.9 68.5 49.5 31.9 26.4 10.0 69.5 73.1 88.4 81.9 80.4 74.7 66.9 19 Floating rate (thousands of dollars) 20 1-99 21 100-499 22 500-999 23 1,000-4,999 24 5,000-9,999 25 10,000 or more 12,866,469 651,580 1,640,954 833,081 2,498,922 1,445,855 5,796,077 415 32 203 668 2,137 6,787 27,524 90 161 146 150 101 81 55 7.47 9.48 9.01 8.55 7.52 7.00 6.74 50.2 76.4 73.3 65.4 47.6 41.6 41.7 74.1 86.7 90.1 90.8 82.9 81.0 60.3 26 Total long-term 5,444,213 769 7.86 55.7 88.8 11.8 27 Fixed rate (thousands of d o l l a r s ) . . 28 1-99 29 100-499 30 500-999 31 1,000 or more 1,016,549 16,917 65,170 86,571 847,891 906 31 228 685 5,040 6.89 8.83 8.38 7.86 6.64 38.6 79.0 73.3 69.1 32.0 81.4 59.7 71.1 81.2 82.6 29.0 1.0 10.5 29.1 31.0 32 Floating rate (thousands of dollars) 33 1-99 34 100-499 35 500-999 36 1,000 or more 4,427,664 91,502 530,070 394,793 3,411,299 743 41 220 675 4,578 8.59 7.87 59.6 74.8 72.1 61.1 57.1 90.5 88.9 95.3 93.1 89.6 7.8 5.8 6.7 7.9 8.1 8.6 Loan rate (percent) Days LOANS M A D E BELOW Effective' Nominal PRIME10 12,638,649 8,714,304 12,557 6,756 5.90 6.13 5.73 5.95 9.4 10.7 66.2 86.2 3.0 5.8 6,372,214 7,850,723 2,913 3,361 6.54 5.96 6.35 5.85 31.4 32.0 91.0 31.8 9.1 5.5 41 Total s h o r t - t e r m 35,575,891 5,217 6.08 42 Fixed rate 43 Floating rate 28,240,286 7,335,604 7,396 2,444 6,03 6,30 68.8 64.6 5.5 4.7 37 Overnight 6 38 One month or less (excluding overnight) 39 More than one month and less than one year 40 D e m a n d ' 44 Total long-term 2,689,074 2,236 45 Fixed rate 46 Floating rate . . . 786,859 1,902,215 1,871 2,431 Footnotes appear at the end of the table. 18.7 5.87 6.13 13.0 40.6 82.4 6.44 42 6.24 6.77 6.10 6.57 30.1 52.9 80.2 83.4 32.0 2.7 A65 A66 4.23 Special Tables • August 1996 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 1996'—Continued Commercial and industrial loans—Continued Type and maturity of loan Amount of loans (thousands of dollars) Average size (thousands of dollars) Weighted average maturity 2 Days OTHER Loan rate (percent) Loans secured by collateral (percent) Loans made under commitment (percent) 6.74 6.18 8.04 22.1 7.9 55.4 67.2 57.7 89.5 5.1 4.6 8.07 6.94 8.66 59.1 45.3 66.3 78.8 78.2 79.1 5.3 7.8 4.0 8.48 7.44 8.58 73.7 60.1 75.0 91.1 77.4 92.4 3.6 .2 3.9 Weighted average effective 3 Participation loans (percent) BANKS 1 Overnight 6 4,034,693 5,072 2 One month or less (excluding overnight) 3 Fixed rate 4 Floating rate 2,531,341 1,774,307 757,033 326 937 129 5 More than one month and less than one year 6 Fixed rate 7 Floating rate 5,252,723 1,807,209 3,445,514 8 Demand 7 9 Fixed rate 10 Floating rate 2,897,316 251,446 2,645,870 11 Total s h o r t - t e r m 167 141 181 140 108 144 6.1 14,716,073 164 7.37 44.4 69.1 4.4 12 Fixed rate (thousands of dollars) 13 1-99 14 100-499 15 500-999 16 1,000-4,999 17 5,000-9,999 18 10,000 or more 7,862,159 319,639 296,410 311,143 1,373,083 688,835 4,873,049 285 13 182 675 2,156 6,217 21,925 37 141 115 76 50 61 18 6.33 9.70 8.70 7.44 6.60 6.61 5.78 23.5 83.6 69.1 61.4 25.2 40.1 4.5 11.6 55.0 48.8 58.4 78.4 82.5 68.1 44.1 4.6 4.7 6.2 15.8 2.7 19 Floating rate (thousands of dollars) 20 1-99 21 100-499 22 500-999 23 1,000-4,999 24 5,000-9,999 25 10,000 or more 6,853,914 1,136,945 1,760,251 705,404 1,748,140 545,331 957,843 110 22 197 641 2,064 6,303 13,655 152 176 177 179 131 139 8.56 9.73 9.19 8.85 8.39 7.30 6.82 68.4 83.8 79.4 78.1 61.4 48.3 46.9 85.4 89.1 90.0 88.8 86.0 89.9 66.1 4.2 1.6 5.9 7.4 4.1 3.8 2.4 .6 26 Total long-term 4,349,306 170 8.08 57.6 52.6 27 Fixed rate (thousands of dollars) . . 28 1-99 29 100-499 30 500-999 31 1,000 or more 1,307,008 223,028 318,211 90,518 675,252 106 22 201 647 3,230 8.70 9.75 8.95 8.08 8.33 71.7 94.6 87.3 41.4 60.9 51.2 30.4 27.1 19.7 73.6 5.2 5.0 8.6 2.3 4.2 32 Floating rate (thousands of dollars) 33 1-99 34 100-499 35 500-999 36 1,000 or more 3,042,299 236,288 568,162 233.206 2,004,643 230 24 198 624 5,690 7.81 9.74 9.09 51.5 90.0 89.9 89.8 31.6 53.2 68.3 81.8 80.7 40.2 4.6 2.2 7.4 17.8 2.5 Loan rate (percent) Days Effective3 LOANS M A D E BELOW PRIME10 6 37 Overnight 38 One month or less (excluding overnight) 39 More than one month and less than one year 40 Demand 7 3,890,187 2,047,517 7,922 1,326 2,440,480 774,292 231 527 41 Total s h o r t - t e r m 9,152,476 42 Fixed rate 43 Floating rate 7,182.746 1,969,730 44 Total long-term 2,248,842 45 Fixed rate 46 Floating rate . . . 595,405 1,653.437 Footnotes appear at the end of the table. Nominal 8 12 139 5.94 6.10 5.77 5.92 15.7 7.5 39.9 63.9 3.4 5.7 6.48 6.31 6.30 6.14 40.6 45.3 83.5 94.8 8.4 54.6 87.0 4.9 6.3 51.7 34.3 5.5 .5 2.8 5.98 1,121 257 31 112 6.01 6.67 5.84 6.48 18.0 41.2 7.14 6.60 6.94 6.45 41.2 22.2 27.2 258 666 Financial Markets 4.23 A67 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 1996'—Continued NOTES 1. The survey of terms of bank lending to business collects data on gross loan extensions made during the first full business week in the mid-month of each quarter by a sample of 340 commercial banks of all sizes. A sample of 250 banks reports loans to farmers. The sample data are blown up to estimate the lending terms at all insured commercial banks during that week. The estimated terms of bank lending are not intended for use in collecting the terms of loans extended over the entire quarter or residing in the portfolios of those banks. Construction and land development loans include both unsecured loans and loans secured by real estate. Thus, some of the construction and land development loans would be reported on the statement of condition as real estate loans and the remainder as business loans. Mortgage loans, purchased loans, foreign loans, and loans of less that $1,000 are excluded f r o m the survey. As of September 30, 1990 assets of most of the large banks were at least $7.0 billion. For all insured banks, total assets averaged $275 million. 2. Average maturities are weighted by loan size; excludes demand loans. 3. Effective (compounded) annual interest rate calculated from the stated rate and other terms of the loans and weighted by loan size. 4. The chances are about two out of three that the average rate shown would differ by less than the amount of the standard error f r o m the average rate that would be found by a complete survey of lending at all banks. 5. The rate used to price the largest dollar volume of loans. Base pricing rates include the prime rate (sometimes referred to as a b a n k ' s " b a s i c " or " r e f e r e n c e " rate); the federal funds rate; domestic money market rates other than the federal funds rate; foreign money market rates; and other base rates not included in the foregoing classifications. 6. Overnight loans mature on the following business day. 7. Demand loans have no stated date of maturity. 8. Nominal (not compounded) annual interest rate calculated f r o m the stated rate and other terms of the loans and weighted by loan size. 9. Calculated by weighting the prime rate reported by each bank by the volume of loans reported by that bank, summing the results, and then averaging over all reporting banks. 10. The proportion of loans made at rates below the prime may vary substantially from the proportion of such loans outstanding in banks' portfolios. 68 Index to Statistical Tables References are to pages A3-A67 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Agricultural loans, commercial banks, 19, 20 Assets and liabilities (See also Foreigners) Banks, by classes, 17—21 Domestic finance companies, 33 Federal Reserve Banks, 10 Financial institutions, 25 Foreign banks, U.S. branches and agencies, 21 Automobiles Consumer installment credit, 36 Production, 44, 45 Deposits (See also specific types) BANKERS acceptances, 10, 11, 19-22, 23 Bankers balances, 17-21. (See also Foreigners) Bonds (See also U.S. government securities) New issues, 31 Rates, 23 Branch banks, 21 Business activity, nonfinancial, 42 Business loans (See Commercial and industrial loans) FARM mortgage loans, 35 Federal agency obligations, 5, 9, 10, 11, 28, 29 Federal credit agencies, 30 Federal finance Debt subject to statutory limitation, and types and ownership of gross debt, 27 Receipts and outlays, 25, 26 Treasury financing of surplus, or deficit, 25 Treasury operating balance, 25 Federal Financing Bank, 30 Federal funds, 6, 19, 20, 21, 23, 25 Federal Home Loan Banks, 30 Federal Home Loan Mortgage Corporation, 30, 34, 35 Federal Housing Administration, 30, 34, 35 Federal Land Banks, 35 Federal National Mortgage Association, 30, 34, 35 Federal Reserve Banks Condition statement, 10 Discount rates (See Interest rates) U.S. government securities held, 5, 10, 11, 27 Federal Reserve credit, 5, 6, 10, 11 Federal Reserve notes, 10 Federally sponsored credit agencies, 30 Finance companies Assets and liabilities, 33 Business credit, 33 Loans, 36 Paper, 22, 23 Financial institutions, loans to, 19, 20, 21 Float, 5 Flow of funds, 37-41 Foreign banks, assets and liabilities of U.S. branches and agencies, 20, 21 Foreign currency operations, 10 Foreign deposits in U.S. banks, 5, 20 Foreign exchange rates, 62 Foreign trade, 51 Foreigners Claims on, 52, 55, 56, 57, 59 Liabilities to, 20, 51, 52, 53, 58, 60, 61 CAPACITY utilization, 43 Capital accounts Banks, by classes, 17 Federal Reserve Banks, 10 Central banks, discount rates, 61 Certificates of deposit, 23 Commercial and industrial loans Commercial banks, 19, 20 Weekly reporting banks, 19-21 Commercial banks Assets and liabilities, 17-21, 64-67 Commercial and industrial loans, 17-21 Consumer loans held, by type and terms, 36 Deposit interest rates of insured, 15 Loans sold outright, 20 Real estate mortgages held, by holder and property, 35 Terms of lending, 64-67 Time and savings deposits, 4 Commercial paper, 22, 23, 33 Condition statements (See Assets and liabilities) Construction, 42, 46 Consumer installment credit, 36 Consumer prices, 42 Consumption expenditures, 49, 50 Corporations Profits and their distribution, 32 Security issues, 31, 61 Cost of living (See Consumer prices) Credit unions, 36 Currency in circulation, 5, 13 Customer credit, stock market, 24 DEBITS to deposit accounts, 16 Debt (See specific types of debt or securities) Demand deposits Banks, by classes, 17-21 Ownership by individuals, partnerships, and corporations, 20, 21 Turnover, 16 Depository institutions Reserve requirements, 8 Reserves and related items, 4, 5, 6, 12 Banks, by classes, 4, 17—21 Federal Reserve Banks, 5, 10 Interest rates, 15 Turnover, 16 Discount rates at Reserve Banks and at foreign central banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) Dividends, corporate, 32 EMPLOYMENT, 42 Eurodollars, 23 GOLD Certificate account, 10 Stock, 5, 51 Government National Mortgage Association, 30, 34, 35 Gross domestic product, 48 HOUSING, new and existing units, 46 INCOME, personal and national, 42, 48, 49 Industrial production, 42, 44 Installment loans, 36 69 Insurance companies, 27, 35 Interest rates Bonds, 23 Commercial banks, 64-67 Consumer installment credit, 36 Deposits, 15 Federal Reserve Banks, 7 Foreign central banks and foreign countries, 61 Money and capital markets, 23 Mortgages, 34 Prime rate, 22 International capital transactions of United States, 50-61 International organizations, 52, 53, 55, 58, 59 Inventories, 48 Investment companies, issues and assets, 32 Investments (See also specific types) Banks, by classes, 17-21 Commercial banks, 4, 17-21 Federal Reserve Banks, 10, 11 Financial institutions, 35 LABOR force, 42 Life insurance companies {See Insurance companies) Loans (See also specific types) Banks, by classes, 17—21 Commercial banks, 17-21 Federal Reserve Banks, 5, 6, 7, 10, 11 Financial institutions, 35 Insured or guaranteed by United States, 34, 35 MANUFACTURING Capacity utilization, 43 Production, 43, 45 Margin requirements, 24 Member banks (See also Depository institutions) Federal funds and repurchase agreements, 6 Reserve requirements, 8 Mining production, 45 Mobile homes shipped, 46 Monetary and credit aggregates, 4, 12 Money and capital market rates, 23 Money stock measures and components, 4, 13 Mortgages (See Real estate loans) Mutual funds, 32 Mutual savings banks (See Thrift institutions) NATIONAL defense outlays, 26 National income, 48 OPEN market transactions, 9 PERSONAL income, 49 Prices Consumer and producer, 42, 47 Stock market, 24 Prime rate, 22 Producer prices, 42, 47 Production, 42, 44 Profits, corporate, 32 REAL estate loans Banks, by classes, 19, 20, 35 Terms, yields, and activity, 34 Type of holder and property mortgaged, 35 Repurchase agreements, 6 Reserve requirements, 8 Reserves Commercial banks, 17 Depository institutions, 4, 5, 6, 12 Federal Reserve Banks, 10 U.S. reserve assets, 51 Residential mortgage loans, 34 Retail credit and retail sales, 36, 42 SAVING Flow of funds, 37-41 National income accounts, 48 Savings institutions, 35, 36, 37 Savings deposits (See Time and savings deposits) Securities (See also specific types) Federal and federally sponsored credit agencies, 30 Foreign transactions, 60 New issues, 31 Prices, 24 Special drawing rights, 5, 10, 50, 51 State and local governments Deposits, 19, 20 Holdings of U.S. government securities, 27 New security issues, 31 Ownership of securities issued by, 19, 21 Rates on securities, 23 Stock market, selected statistics, 24 Stocks (See also Securities) New issues, 31 Prices, 24 Student Loan Marketing Association, 30 TAX receipts, federal, 26 Thrift institutions, 4. (See also Credit unions and Savings institutions) Time and savings deposits, 4, 13, 15, 17-21 Trade, foreign, 51 Treasury cash, Treasury currency, 5 Treasury deposits, 5, 10, 25 Treasury operating balance, 25 UNEMPLOYMENT, 42 U.S. government balances Commercial bank holdings, 17-21 Treasury deposits at Reserve Banks, 5, 10, 25 U.S. government securities Bank holdings, 17-21, 27 Dealer transactions, positions, and financing, 29 Federal Reserve Bank holdings, 5, 10, 11, 27 Foreign and international holdings and transactions, 10, 27, 61 Open market transactions, 9 Outstanding, by type and holder, 27, 28 Rates, 23 U.S. international transactions, 50-62 Utilities, production, 45 VETERANS Administration, 34, 35 WEEKLY reporting banks, 17-21 Wholesale (producer) prices, 42, 47 YIELDS (See Interest rates) 70 Federal Reserve Board of Governors and Official Staff A L A N GREENSPAN, ALICE M . RIVLIN, OFFICE OF BOARD Chairman Vice Chair EDWARD W . KELLEY, JR. LAWRENCE B . LINDSEY DIVISION MEMBERS OF INTERNATIONAL FINANCE 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 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 III, 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 BANKING SUPERVISION AND REGULATION RICHARD SPILLENKOTHEN, Director STEPHEN C. SCHEMERING, Deputy Director WILLIAM A. RYBACK, Associate Director Director HERBERT A. BIERN, Deputy Associate 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 JAMES V. HOUPT, Assistant Director 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 MICHAEL 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 ALICE PATRICIA W H I T E , Assistant Director JOYCE K. ZICKLER, Assistant Director JOHN J. MINGO, Senior Adviser G L E N N 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 GRIFFITH L . GARWOOD, AFFAIRS Director GLENN E. LONEY, Associate Director DOLORES S. SMITH, Associate Director MAUREEN P. ENGLISH, Assistant Director IRENE SHAWN M C N U L T Y , Assistant Director 71 SUSAN M . PHILLIPS LAURENCE H . MEYER JANET L . YELLEN OFFICE OF STAFF DIRECTOR S. DAVID FROST, Staff Director SHEILA CLARK, EEO Programs DIVISION DIVISION OF RESERVE BANK AND PA YMENT SYSTEMS FOR MANAGEMENT OF HUMAN CLYDE H . FARNSWORTH, JR., RESOURCES Director JOHN R. WEIS, Associate Director JOSEPH H. HAYES, JR., Assistant Director FRED HOROWITZ, Assistant Director OFFICE OF THE CONTROLLER GEORGE E . LIVINGSTON, 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 and 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 Director MANAGEMENT DAVID L . SHANNON, OPERATIONS Budgets) 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 • August 1996 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS A L A N GREENSPAN, WILLIAM J. M C D O N O U G H , Vice Chairman EDWARD G . B O E H N E LAWRENCE B . LINDSEY ALICE M . RIVLIN JERRY L . JORDAN ROBERT D . M C T E E R , JR. GARY H . STERN EDWARD W . KELLEY, JR. LAURENCE H . MEYER JANET L . YELLEN Chairman SUSAN M . PHILLIPS ALTERNATE MEMBERS J . ALFRED BROADDUS, JR. MICHAEL H . MOSKOW JACK G U Y N N ROBERT T. PARRY ERNEST T . PATRIKIS STAFF and Economist DAVID E . LINDSEY, Associate NORMAND R . V . BERNARD, Deputy Secretary FREDERIC S . MISHKIN, Associate D O N A L D L . K O H N , Secretary JOSEPH R . COYNE, Assistant GARY P. GILLUM, Assistant THOMAS C . BAXTER, JR., Deputy E D W I N M . TRUMAN, ARTHUR J . ROLNICK, Associate Secretary J . VIRGIL MATTINGLY, JR., General M I C H A E L J. PRELL, LARRY J. PROMISEL, Associate Secretary Counsel General Counsel Economist RICHARD W . L A N G , Associate PETER R . FISHER, Manager, FEDERAL ADVISORY Economist Economist CHARLES J. SIEGMAN, Associate Economist THOMAS D . SIMPSON, Associate Economist DAVID J. STOCKTON, Associate Economist Economist Economist HARVEY ROSENBLUM, Associate M A R K S . SNIDERMAN, Associate Economist Economist System Open Market Economist Economist Account COUNCIL RICHARD G . TILGHMAN, President FRANK V. CAHOUET, Vice President WILLIAM M . CROZIER, JR., F i r s t D i s t r i c t ROGER L . FITZSIMONDS, S e v e n t h D i s t r i c t WALTER V. SHIPLEY, S e c o n d D i s t r i c t THOMAS H . JACOBSEN, E i g h t h D i s t r i c t WALTER E . DALLER, JR., T h i r d D i s t r i c t RICHARD M . KOVACEVICH, N i n t h D i s t r i c t FRANK V. CAHOUET, F o u r t h D i s t r i c t CHARLES E . NELSON, T e n t h D i s t r i c t RICHARD G . TILGHMAN, F i f t h D i s t r i c t CHARLES T. DOYLE, E l e v e n t h D i s t r i c t CHARLES E . RICE, S i x t h D i s t r i c t WILLIAM F. Z U E N D T , T w e l f t h D i s t r i c t HERBERT V. PROCHNOW, Secretary JAMES ANNABLE, WILLIAM J. KORSVIK, Emeritus Co-Secretary Co-Secretary 73 CONSUMER ADVISORY COUNCIL KATHARINE W. M C K E E , Durham, North Carolina, Chairman Richmond, Virginia, Vice Chairman JULIA M . SEWARD, S. AMADOR, LOS Angeles, California R. BUTLER, Riverwoods, Illinois ROBERT A. COOK, Baltimore, Maryland ALVIN J . COWANS, Orlando, Florida ELIZABETH G . FLORES, Laredo, Texas HERIBERTO FLORES, Springfield, Massachusetts EMANUEL FREEMAN, Philadelphia, Pennsylvania DAVID C. FYNN, Cleveland, Ohio ROBERT G . GREER, Houston, Texas KENNETH R. HARNEY, Chevy Chase, Maryland GAIL K . HILLEBRAND, San Francisco, California TERRY JORDE, Cando, North Dakota FRANCINE JUSTA, New York, New York EUGENE I. LEHRMANN, Madison, Wisconsin RICHARD THOMAS THRIFT INSTITUTIONS ADVISORY DAVID T. LOUIS, Brooklyn, New York N. L U N D , Falmouth, Maine RONALD A. PRILL, Minneapolis, Minnesota LISA RICE-COLEMAN, Toledo, Ohio JOHN R . RINES, Detroit, Michigan MARGOT SAUNDERS, Washington, D.C. A N N E B. SHLAY, Philadelphia, Pennsylvania REGINALD J . SMITH, Kansas City, Missouri GEORGE P. SURGEON, Arkadelphia, Arkansas GREGORY D. SQUIRES, Milwaukee, Wisconsin JOHN E . TAYLOR, Washington, D.C. LORRAINE VANETTEN, Troy, Michigan THEODORE J . WYSOCKI, JR., Chicago, Illinois LILY K. YAO, Honolulu, Hawaii ERROL WILLIAM COUNCIL E. L E E BEARD, Hazleton, Pennsylvania, President F. HOLLAND, Burlington, Massachusetts, Vice President C. BURKHOLDER, Houston, Texas T. CROWLEY, JR., Milwaukee, Wisconsin GEORGE L. ENGELKE, JR., Lake Success, New York DOUGLAS A. FERRARO, Englewood, Colorado BEVERLY D . HARRIS, Livingston, Montana Irwindale, California C. SCULLY, Chicago, Illinois RONALD W. STIMPSON, Memphis, Tennessee LARRY T. WILSON, Raleigh, North Carolina WILLIAM W. ZUPPE, Spokane, Washington BARRY CHARLES R . RINEHART, MICHAEL JOSEPH 74 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, M S - 1 2 7 , B o a r d of G o v e r n o r s of the F e d e r a l R e s e r v e S y s t e m , W a s h i n g t o n , D C 2 0 5 5 1 o r t e l e p h o n e (202) 4 5 2 - 3 2 4 4 o r F A X (202) 728-5886. You may also use the publications order form available on the Board's World Wide Web site (http://www.bog.frb.fed.us). When a charge is indicated, payment should accompany request and be made payable to the Board of Governors of the Federal Reserve System or may be ordered via Mastercard or Visa. Payment from foreign residents should be drawn on a U.S. bank. BOOKS AND MISCELLANEOUS PUBLICATIONS THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. 1994. 157 pp. ANNUAL REPORT. ANNUAL REPORT: BUDGET REVIEW, 1 9 9 4 - 9 5 . FEDERAL RESERVE BULLETIN. 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Consumer Handbook on Adjustable Rate Mortgages C o n s u m e r H a n d b o o k to C r e d i t P r o t e c t i o n L a w s A G u i d e to B u s i n e s s C r e d i t f o r W o m e n , M i n o r i t i e s , a n d S m a l l Businesses Series on the Structure of the Federal Reserve System T h e B o a r d of G o v e r n o r s of the F e d e r a l R e s e r v e S y s t e m The Federal Open Market Committee F e d e r a l R e s e r v e B a n k B o a r d of D i r e c t o r s Federal Reserve Banks Organization and Advisory Committees A C o n s u m e r ' s G u i d e to M o r t g a g e L o c k - I n s A C o n s u m e r ' s Guide to Mortgage Settlement Costs A C o n s u m e r ' s G u i d e to M o r t g a g e R e f i n a n c i n g s H o m e M o r t g a g e s : U n d e r s t a n d i n g the P r o c e s s a n d Your R i g h t to Fair L e n d i n g H o w to F i l e a C o n s u m e r C o m p l a i n t Making Deposits: W h e n Will Your M o n e y Be Available? M a k i n g S e n s e of S a v i n g s S H O P : T h e C a r d You P i c k C a n S a v e You M o n e y W e l c o m e to t h e F e d e r a l R e s e r v e W h e n Y o u r H o m e is o n t h e L i n e : W h a t You S h o u l d K n o w A b o u t H o m e E q u i t y L i n e s of C r e d i t 75 STAFF STUDIES: Only Summaries Printed in the BULLETIN 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. Staff Studies 1 - 1 5 7 are out of print. 1 5 8 . T H E ADEQUACY AND CONSISTENCY OF MARGIN REQUIREMENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE PRODUCTS, b y M a r k J . W a r s h a w s k y w i t h t h e a s s i s t a n c e o f Dietrich Earnhart. S e p t e m b e r 1989. 23 pp. 1 5 9 . N E W DATA ON THE PERFORMANCE OF NONBANK SUBSIDIARIES OF BANK HOLDING COMPANIES, b y N e l l i e L i a n g a n d D o n a l d S a v a g e . F e b r u a r y 1 9 9 0 . 12 p p . 1 6 0 . BANKING MARKETS AND THE USE OF FINANCIAL SERVICES BY SMALL AND M E D I U M - S I Z E D BUSINESSES, b y Gregory E. Elliehausen and J o h n D. Wolken. September 1990. 35 pp. 1 6 1 . A R E V I E W OF CORPORATE RESTRUCTURING ACTIVITY, 1980-90, by Margaret Hastings Pickering. M a y 1991. 21 pp. 1 6 2 . EVIDENCE ON THE S I Z E OF BANKING MARKETS FROM M O R T GAGE LOAN RATES IN T W E N T Y CITIES, b y S t e p h e n A . R h o a d e s . F e b r u a r y 1 9 9 2 . 11 p p . 1 6 3 . CLEARANCE AND SETTLEMENT IN U . S . SECURITIES M A R KETS, b y P a t r i c k P a r k i n s o n , A d a m G i l b e r t , E m i l y G o l l o b , Lauren Hargraves, Richard M e a d , Jeff Stehm, and M a r y A n n Taylor. M a r c h 1992. 37 pp. 1 6 4 . T H E 1 9 8 9 — 9 2 CREDIT C R U N C H FOR R E A L ESTATE, b y J a m e s T . F e r g u s a n d J o h n L . G o o d m a n , Jr. J u l y 1 9 9 3 . 20 pp. 1 6 5 . T H E D E M A N D FOR TRADE CREDIT: A N INVESTIGATION OF MOTIVES FOR TRADE CREDIT U S E BY SMALL BUSINESSES, b y Gregory E. Elliehausen and John D. Wolken. September 1 9 9 3 . 18 p p . 1 6 6 . T H E ECONOMICS OF THE PRIVATE PLACEMENT M A R K E T , b y M a r k Carey, Stephen Prowse, John Rea, and Gregory Udell. January 1994. I l l pp. 1 6 7 . A SUMMARY OF MERGER PERFORMANCE STUDIES IN B A N K ING, 1 9 8 0 - 9 3 , AND AN ASSESSMENT OF THE " O P E R A T I N G PERFORMANCE" AND " E V E N T S T U D Y " METHODOLOGIES, by Stephen A. R h o a d e s . July 1994. 37 pp. 1 6 8 . T H E ECONOMICS OF THE PRIVATE EQUITY M A R K E T , b y George W. Fenn, Nellie Liang, and Stephen Prowse. N o v e m ber 1995. 6 9 pp. 1 6 9 . B A N K MERGERS AND INDUSTRYWIDE STRUCTURE, 1 9 8 0 - 9 4 , by Stephen A. Rhoades. February 1996. 32 pp. 76 Maps of the Federal Reserve System MINNEAPOLIS * • TETON pm TO 1 2 cJom CHI.CAUUH F FRANCISCO 1 0 I i i i i l i i i i i CANSAS CITY M J1 • • NEW YORK CLEVELAND PHILADELPHIA • JPt ST. LOUIS RICHMOND 5 8 6 11 • ATLANTA A • DALLAS ALASKA HAWAII LEGEND Both pages • Federal Reserve Bank city • Board of Governors of the Federal Reserve System, Washington, D.C. Facing page • Federal Reserve Branch city — Branch boundary NOTE The Federal Reserve officially identifies Districts by number and Reserve Bank city (shown on both pages) and by letter (shown on the facing page). In the 12th District, the Seattle Branch serves Alaska, and the San Francisco Bank serves Hawaii. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank serves American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. The Board of Governors revised the branch boundaries of the System most recently in December 1991. 77 1-A 2-B 4-D 3-C 5-E Baltimore md v</ l CT li. VT NH MA Buffalo •Cincinnati Bj •Charlotte I S NY cr sc NEW YORK BOSTON CLEVELAND PHILADELPHIA 7-G 6-F RICHMOND 8-H •Nashville Birmingham _ • Detroit • ^ •. ... Louisville A- ; IN f, -TN Jacksonville LA •Memphis Little) Rock ( MS H, New Orleans J Miami ATLANTA ST. LOUIS CHICAGO 9-1 MINNEAPOLIS 12-L 10-J WY 1 NB Omaha* CO Denver ALASKA WA Seattle 1 MM Oklahoma City Pwtland OK OR ) KANSAS CITY ID NV~7 11-K rx • MM B ?l Paso ) Salt l a k e City LA w ""^Xtlcaiston •Los Angeles • A ? San Antomo HAWAII AZ DALLAS SAN FRANCISCO 78 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK branch, or facility Zip Chairman Deputy Chairman President First Vice President BOSTON* 02106 Jerome H. Grossman 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. vacancy 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 J e a n 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. Thorn 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. Helen E. Holcomb 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 59601 64198 80217 73125 68102 75201 79999 77252 78295 SAN FRANCISCO 94120 Los Angeles Portland Salt Lake City Seattle 90051 97208 84125 98124 Vice President in charge of branch Charles A. Cerino 1 Harold J. Swart 1 William J. Tignanelli 1 Dan M. Bechter 1 Julius Malinowski, Jr. 2 James M. Mckee 1 Fred R. Herr 1 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 Kelly J. Dubbert Harold L. Shewmaker Sammie C. Clay Robert Smith, III 1 James L. Stull 1 Mark Mullinix 1 Raymond H. Laurence 1 Andrea P. Wolcott Gordon Werkema 3 * 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 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 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. 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- 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. The Federal Reserve Regulatory Service is also available on diskette for use on personal computers. For a standalone PC, the annual subscription fee is $300. For network subscriptions, the annual fee is $300 for 1 concurrent user, $750 for a maximum of 10 concurrent users, $2,000 for a maximum of 50 concurrent users, and $3,000 for a maximum of 100 concurrent users. Subscribers outside the United States should add $50 to cover additional airmail costs. For further information, call (202) 452-3244. 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. 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. A Consumer's Guide to Mortgage Lock»ins 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. Quid* to Costs Business Credit for Women, Minorities, and Small B u s i n e s s e s SHOP The Card You Pick Can Save You Money 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