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VOLUME 8 1 •

NUMBER 1 2 •

DECEMBER 1 9 9 5

FEDERAL RESERVE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE

Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn
• J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman

The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed
except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics Center under the direction
of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles.

Table of Contents
presents the views of the Board on issues
raised by various emerging electronic payment technologies that go under such names
as "digital cash" or "electronic money" and
says that the Federal Reserve does not want
to inhibit the evolution of this emerging
industry by regulation or to constrain its
growth and has encouraged, and will continue to encourage, innovations in payments
technologies that benefit consumers and businesses, before the Subcommittee on Domestic and International Monetary Policy of the
House Committee on Banking and Financial
Services, October 11,1995.

1065 DAYLIGHT OVERDRAFT FEES AND THE
FEDERAL RESERVE'S PAYMENT SYSTEM
RISK POLICY

In April 1994 the Federal Reserve began
charging fees for daylight overdrafts incurred
in accounts at Federal Reserve Banks. The
fees produced a dramatic decline in overdrafts and led to significant changes in market practices, particularly in the government
securities market. This article summarizes
the results to date of the implementation of
the Federal Reserve's daylight overdraft program, focusing on the effect of fees. It also
highlights related policies for large-value
payment systems in the private sector.
1078 TREASURY AND FEDERAL
RESERVE
FOREIGN EXCHANGE
OPERATIONS

During the third quarter of 1995, the dollar
rose 17.6 percent against the Japanese yen,
3.3 percent against the German mark, and
2.1 percent against the Mexican peso but fell
2.3 percent against the Canadian dollar. On
a trade-weighted basis against the currencies of the Group of Ten countries, it rose
3.2 percent.
1086 INDUSTRIAL
PRODUCTION
AND CAPACITY
UTILIZATION
FOR OCTOBER
1995

Industrial production declined 0.3 percent
in October, to 122.7 percent of its 1987
, after having edged up a revised
0.1 percent in September. Capacity utilization declined 0.5 percentage point, to
83.6 percent.
1089 STATEMENTS

TO THE

CONGRESS

Alan S. Blinder, Vice Chairman, Board of
Governors of the Federal Reserve System,

1093 Janet L. Yellen, Member, Board of Governors, discusses issues related to mergers
among U.S. banking organizations and says
that the very large bank mergers that have
been consummated or announced in recent
years, and particularly in recent months, have
raised a number of public policy questions
and concerns and that, in the view of the
Federal Reserve Board, the primary objectives of public policy in this area should be
to help manage the evolution of the banking
industry in ways that preserve the benefits of
competition for the consumers of banking
services and to ensure a safe and sound banking system, before the Subcommittee on
Financial Institutions and Consumer Credit
of the House Committee on Banking and
Financial Services, October 17, 1995.

1103

ANNOUNCEMENTS

Meeting of the Consumer Advisory Council.
Development of new software for institutions offering mortgage loans.
Schedule for review of major Federal
Reserve regulations.

Publication of revised lists of OTC margin
stocks and of foreign stocks subject to margin regulations.
Availability of some Federal Reserve statistical releases by fax.
1105 LEGAL DEVELOPMENTS
Various bank holding company, bank service
corporation, and bank merger orders; and
pending cases.

A68 INDEX TO STATISTICAL

TABLES

A 7 0 BOARD OF GOVERNORS

AND

STAFF

A 7 2 FEDERAL OPEN MARKET
COMMITTEE
AND STAFF; ADVISORY
COUNCILS

A74 FEDERAL RESERVE BOARD
PUBLICATIONS
A76 SCHEDULE
PERIODIC

OF RELEASE
RELEASES

DATES

FOR

A1 FINANCIAL AND BUSINESS STATISTICS
These tables reflect data available as of
October 27, 1995.
A3 GUIDE TO TABULAR

PRESENTATION

A4 Domestic Financial Statistics
A45 Domestic Nonfinancial Statistics
A53 International Statistics
A67 GUIDE TO STATISTICAL
SPECIAL TABLES

RELEASES

A78 INDEX TO VOLUME

A90 MAPS OF THE FEDERAL
SYSTEM
A92 FEDERAL RESERVE
AND OFFICES

AND

BANKS,

RESERVE

BRANCHES,

Daylight Overdraft Fees and the Federal
Reserve's Payment System Risk Policy
Heidi Willmann Richards, of the Board's Division
of Reserve Bank Operations and Payment Systems,
prepared this article.
In April 1994 the Federal Reserve began charging
fees for daylight overdrafts incurred in accounts at
Federal Reserve Banks. The event was an important step in the Federal Reserve's ten-year program
to control daylight overdrafts and their associated
payment system risk. The fees produced a dramatic
decline in overdrafts and led to significant changes
in market practices, particularly in the government
securities market. This article summarizes the
results to date of the implementation of the Federal
Reserve's daylight overdraft program, focusing on
the effect of fees. It also highlights related policies
for large-value payment systems in the private
sector.

BACKGROUND

Daylight overdrafts are a form of intraday credit
in which a holder of a deposit account at a bank
or other depository institution runs a negative
balance in its account during the day but ends the
day with a balance equal to or greater than zero.
An example of a daylight overdraft is the case in
which a deposit account holder (1) makes withdrawals from the account in the early part of the
day that exceed the account's opening cash balance
and (2) does not make deposits sufficient to cover
the withdrawals until later in the day. When the
customer's withdrawals require its bank to send
payments through Federal Reserve systems, this
type of customer activity can, in turn, cause daylight overdrafts in the Federal Reserve account of
the customer's bank. In addition, the bank's own
activity, such as federal funds borrowing and lending and the associated payment activity, can also
cause daylight overdrafts.

Historically, intraday credit extensions went
largely unmeasured because attention within the
banking industry was focused mainly on processing payments rather than on managing associated
intraday risks. In addition, nearly unlimited intraday credit was available from the Federal Reserve
at no cost. Banks normally accumulated payment
instructions during the day and posted them to
customers' accounts at the close of the banking
day, a practice that can be viewed as reasonable
and cost-effective given the operational and legal
infrastructure at that time. As a result, however,
settlement conventions related to the transactions
most often characterized by same-day settlement—
such as financing in the markets for federal funds
and repurchase agreements—came to be based
upon the availability of unlimited, free intraday
overdraft credit from the Federal Reserve.
Daylight overdrafts in accounts at Federal
Reserve Banks in fact arise from a variety of
causes. The Federal Reserve's original overdraft
policies were focused on intraday credit resulting
from the transfer of funds through Fedwire, the
Federal Reserve's electronic, real-time funds transfer system often used for large-value interbank
payments. Overdrafts are, however, also caused by
payments of banks and their customers that arise
from transfers of government securities via Fedwire as well as from non-Fedwire transactions such
as automated clearinghouse (ACH) payments,
checks, and other payment activity posted directly
to depository institution accounts at the Federal
Reserve.
For many institutions, payments made on a given
day may exceed that day's opening balance (the
previous day's overnight balance) with the Federal
Reserve. Indeed, in 1994, the total value of funds
and securities transfers through Fedwire, ACH
payments processed by the Federal Reserve, and
checks cleared through the Federal Reserve averaged $1.5 trillion per day; in contrast, the average

1066

Federal Reserve Bulletin • December 1995

daily opening balance of all depository institution
accounts at the Federal Reserve that year was
$32 billion (depository institutions maintain balances to satisfy reserve requirements as well as to
clear payments). Many of these payments were
covered by funds in the accounts, but a significant
portion were not. In 1994, for example, direct
measures of daylight overdrafts show that the Federal Reserve extended about $50 billion in intraday
overdraft credit on average during the day
(table 1); and on any given day an average of about
2,400 institutions incurred daylight overdrafts in
their accounts at the Federal Reserve out of a total
of nearly 11,000 institutions with such accounts.
Private payment systems such as the Clearing
House Interbank Payment System (CHIPS) also
involve extensions of intraday credit.1 Owned and
operated by the private New York Clearing House,
CHIPS currently has a membership of more than
100 banks, a large number of which are branches
and agencies of foreign banks. Through CHIPS,
members can send electronic payment messages to
one another during the day. The value of the payment messages is settled on a multilateral net basis
at the end of the business day. No accounts analogous to those at the Federal Reserve exist in
CHIPS, but members are exposed to credit risk
associated with payment messages they have
received until settlement has been successfully
completed each day. CHIPS currently handles a
1. For more information about CHIPS, see Bank for International Settlements, Payment Systems in the Group of Ten Countries
(December 1993), pp. 4 4 9 - 5 1 ; and Federal Reserve Bank of
N e w York, "The Clearing House Interbank Payments System"
(January 1991).

1. Daylight overdrafts of depository institutions at Federal
Reserve Banks, 1986-94
Millions of dollars
Average

1986
1987
1988
1989
1990
1991
1992
1993
1994

30,170
32,373
31,945
36,118
44,047
52,918
63,347
70,204
4-9,846

nUt

otSf1
62,940
65.203
63,228
72,984
91,170
106,185
121,427
128,523
84,449

NOTE. Annual averages of daily figures. See text note 7 for definitions
of average per-minute and peak daylight overdrafts.

greater dollar value of payments than does
Fedwire—in 1994, about $1.2 trillion per day for
CHIPS, and more than $800 billion per day for
Fedwire funds transfers.

ORIGINS AND DEVELOPMENT OF
THE PAYMENT SYSTEM RISK POLICY

The Federal Reserve's efforts to measure and control daylight overdrafts and other risks in the payment system date from the late 1970s and early
1980s.2 During that period, public policy concerns
were first raised about the size and growth of intraday credit related to large-value payment systems.
Because Fedwire payments are final and irrevocable, the Federal Reserve bears some degree of
intraday credit risk when such payments are processed without sufficient funds in the sending
bank's account.3 Daylight overdrafts, if not repaid
by, the end of the day, could readily become unsecured overnight overdrafts. The Federal Reserve
strongly discourages overnight overdrafts by imposing high monetary penalties on them and by
taking administrative action against institutions that
incur them repeatedly.
Concerns about the magnitude of the credit risk
borne by the Federal Reserve in regard to daylight
overdrafts were heightened in the early 1980s. During that time, the Reserve Banks began to monitor
the intraday account balances of institutions routinely and to collect data on institutions with the
largest daylight overdrafts. These data indicated
that aggregate daylight overdrafts on any given day
often ran into the billions of dollars; furthermore,
overdrafts for a small group of institutions often
exceeded their capital by several times.
Also during the early 1980s, intraday credit risk
exposures in private systems, such as CHIPS, drew
the attention of the Federal Reserve and private
participants. Under the rules then in effect, the
2. A summary of daylight overdraft issues and the Federal
Reserve's policies is in Terrence M. Belton, Matthew D. Gelfand,
David B. Humphrey, and Jeffrey C. Marquardt, "Daylight Overdrafts and Payments System Risk," Federal Reserve
Bulletin,
vol. 73 (November 1987), pp. 8 3 9 - 5 2 .
3. Under the Federal Reserve's Regulation J, Fedwire funds
tranfers are final and irrevocable when the Reserve Bank credits the
account of the receiving bank or sends the advice of payment to the
bank, whichever occurs first (12 CFR 210.31).

Daylight Overdraft Fees and Payment System Risk Policy

default of a large participant in CHIPS before endof-day settlement could have caused the unwinding
of that day's net settlement on CHIPS, leaving
some other participants with a large, sudden shortage of funds.4 The potential systemic repercussions
of such a scenario were substantial given the increasing volumes of large-value interbank transactions being processed over CHIPS.
Prompted by these concerns, the Federal Reserve
Board and private-sector groups began studies of
the causes and potential means of controlling payment system risk, including the risk arising from
daylight overdrafts in Federal Reserve accounts.
Between 1982 and 1988, they produced a series of
reports that analyzed a variety of potential means
of reducing overdrafts.5 Such measures included
quantitative limits on daylight overdrafts (caps),
fees, collateral, and increases in minimum required
account balances.
In April 1984 the Federal Reserve Board issued
for public comment a proposed policy statement
on reducing risk in large-dollar transfer systems.
The stated objectives of the policy at that time were
to contain the effects of a settlement failure, reduce
the volume of intraday credit exposures, control the
remaining credit risk, and promote the smooth
operation of the payment system. The 1988 study
by the Federal Reserve, Controlling Risk in the
Payments System, also included objectives of rapid
final payments, low operating expense for making
payments, equitable treatment of payment system
participants, and effective tools for implementing
monetary policy. Although the Fedwire system is
capable of automatically blocking funds transfers
that would create an overdraft (and is currently
used to do so in certain circumstances), the Federal
4. A discussion of settlement failure scenarios in netting
arrangements is in David B. Humphrey, "Payments Finality and
Risk of Settlement Failure," in Anthony Saunders and Lawrence
White, eds., Technology and the Regulation of Financial Markets
(Lexington Books, 1986), pp. 97-120.
5. Among the studies on controlling payment system risk were
Association of Reserve City Bankers, Issues and Needs in the
Nation's Payments System (Washington, 1982) and Risks in the
Electronic Payments Systems (1983); Large-Dollar Payments System Advisory Group, A Strategic Plan for Managing Risk in the
Payments System: Report . . . to the Payments System Policy
Committee of the Federal Reserve System (Board of Governors of
the Federal Reserve System for the . . . Advisory Group, 1988); and
Task Force on Controlling Payments System Risk, Controlling Risk
in the Payments System: Report...
to the Payments System Policy
Committee of the Federal Reserve System (Board of Governors of
the Federal Reserve System, 1988).

1067

Reserve did not endorse an outright prohibition of
daylight overdrafts as a necessary or desirable policy outcome. Indeed, concerns expressed then as
well as now are that the prohibition of all overdrafts could seriously disrupt the U.S. money markets, especially the markets for federal funds and
government securities.
As a result of these efforts, the Board in 1985
adopted a program of maximum limits, or net debit
caps, for each institution on the combined intraday
credit provided both by the Federal Reserve and by
participants in CHIPS. These net debit caps were
based on an institution's own assessment of its
capacity to absorb and control daylight credit risks,
including its financial condition and liquidity
resources, controls on intraday credit extensions to
customers, and its ability to monitor payments on
an intraday basis.
Under the 1985 initiative, the level of the cap
could be as high as three times an institution's
regulatory capital. The Federal Reserve monitored
daylight overdrafts daily as well as on average over
each two-week reserve maintenance period, and
the Reserve Banks took administrative measures
aimed at reducing the overdrafts of institutions
that repeatedly exceeded their caps. The Reserve
Banks also retained the flexibility to deal with
troubled institutions as circumstances required. The
Federal Reserve has modified its policy on caps
several times, most recently by incorporating a
streamlined approach to assessing an institution's
creditworthiness and by including an assessment of
its operating controls and contingency procedures.
In 1989 the Federal Reserve issued a policy
statement aimed at reducing systemic risk in private, large-dollar payment systems. In part, this
policy addressed concerns that efforts to reduce
the intraday credit risk borne by the Federal
Reserve, such as by reducing net debit caps or
charging fees for the use of Federal Reserve daylight credit, would cause risks to be shifted to
private networks. By 1984 the New York Clearing
House had implemented bilateral credit limits
among participants in CHIPS, and by 1986 it had
implemented net debit caps. In 1990, the New York
Clearing House adopted explicit arrangements for
loss sharing and took other steps to strengthen
settlement procedures in CHIPS. As a result, the
Federal Reserve eliminated its net debit caps on
CHIPS positions as of early 1991; the CHIPS caps

1068

Federal Reserve Bulletin • December 1995

were thereafter monitored automatically within the
CHIPS system.

Fee Policy on Daylight

Overdrafts

Studies conducted by the private sector and by the
Federal Reserve in the late 1980s concluded that
charging fees to reduce daylight overdrafts and
their associated risk would be preferable to other
means, such as collateralization and more restrictive net debit caps. The Federal Reserve also
expected fees on daylight overdrafts to provide
market-oriented incentives that would distribute
Federal Reserve intraday credit more efficiently,
that is, to those institutions that value it most highly
at a given time. In 1992, after considering public
comments, the Federal Reserve Board announced
its intention to charge fees for overdrafts, beginning in April 1994, as a supplement to the existing
net debit cap policy, which the Board decided to
retain in addition to fees. In effect, this decision left
institutions with two moderating influences on their
use of Federal Reserve credit: a credit limit (the net
debit cap) and an explicit price on the use of that
credit (the daylight overdraft fee).
The fee was set at a level intended to be comparable to the cost of measures institutions could take
to avoid daylight overdrafts. The Board set the
initial fee at an annual rate of 10 basis points
(0.10 percent) of chargeable daily daylight overdrafts, effective April 14, 1994. The chargeable
overdraft is the institution's average per-minute
daylight overdraft for a given day, less a deductible
amount equal to 10 percent of its risk-based capital.
The Board also scheduled increases in the fee, to
20 basis points in April 1995 and 25 basis points in
April 1996, while reserving the right to change the
the level of these fees or the timetable for their
implementation in light of experience with the
program.6
In early 1995, the Board determined that a
smaller fee increase for April 1995, to 15 basis
points, would be more appropriate than the doubling, to 20 basis points, originally planned. At that
6. These rates are quoted on a ten-hour basis, which is the
current length of the operating day of the Fedwire funds transfer
system. On a twenty-four-hour basis, the measure employed in the
Federal Reserve's policy statement, the initial fee was 24 basis
points, to be increased, in phases, to 60 basis points.

time, the Board stated that, rather than increase
the fee again in April 1996, it intended to wait
two years before evaluating the results of the April
1995 increase. The Board's decision to moderate,
but not eliminate, the scheduled fee increase was
based on three considerations. First, as discussed in
greater detail below, the response by depository
institutions and their customers to the 10 basis
point fee had significantly reduced the use of Federal Reserve daylight credit. Second, the Board
believed that some increase would provide a significant incentive for depository institutions and
their customers to further evaluate and modify payment practices that create daylight overdrafts.
Third, the Board was concerned that the more rapid
increase in fees originally planned could cause a
substantial volume of large-value payments to be
shifted to less secure payment systems and thereby
increase payment system risk.

EXPERIENCE WITH THE PAYMENT
RISK POLICY:
1986-93

SYSTEM

During the period between the imposition of caps
in March 1986 and the implementation of fees in
April 1994, daylight overdrafts in Federal Reserve
accounts increased almost continuously. The
increase is evident in two measures of aggregate
daylight overdrafts, the peak and the per-minute
average (chart 1). The peak daylight overdraft can
be viewed as the Federal Reserve's maximum
intraday credit exposure to all institutions com1.

Peak and average daylight overdrafts, 1986-93

NOTE. Quarterly averages of daily data. Here and in the following charts,
daylight overdrafts are for accounts of depository institutions at Federal
Reserve Banks. For definitions of peak and average, see text note 7.

Daylight Overdraft Fees and Payment System Risk Policy

bined, at any particular time during the day; and the
average per-minute daylight overdraft is the Federal Reserve's average exposure to all institutions
over the course of the day (and is the base upon
which daylight overdraft fees are assessed).7 During the 1986-93 period, peak and average overdrafts both grew at an average annual rate of about
12 percent; in fact, beginning in 1989, overdrafts
increased dramatically despite the fact that cap
levels had been reduced the year before.
Securities activity on Fedwire appears to have
generated much of the rise in overdrafts. Overdrafts related to securities transfers were monitored
separately because they were afforded special treatment under the net debt cap policy (as discussed
below). Although the method of allocating total
daylight overdrafts into a securities-related portion
and a funds-related portion is based on an accounting procedure that can be viewed as somewhat
arbitrary, the distinction between the two is important to an understanding of the major trends in
overdrafts during this period.

Securities-Related

Overdrafts

Concerns that caps on securities-related overdrafts
might disrupt the government securities market led
the Federal Reserve to apply net debit caps at the
outset to only the portion of daylight overdrafts not
related to transfers of securities through Fedwire.
Between 1986 and 1993, the size of securitiesrelated daylight overdrafts more than doubled
(chart 2), and their proportion of total overdrafts
swelled from about one-half to about two-thirds. In
early 1988, the Federal Reserve adopted a $50 million limit on the size of securities transfers to
discourage "position building" by dealers, a prac-

7. The aggregate peak daylight overdraft for a given day is the
greatest value reached by the sum of daylight overdrafts in Federal
Reserve accounts for all depository institutions at the end of each
minute during the day. (This measure is not to be confused with the
composite peak daylight overdraft, a measure that aggregates all
institutions' peak daily daylight overdrafts regardless of their
timing.)
The aggregate average per-minute daylight overdraft for a given
day is the sum of average per-minute daylight overdrafts for all
institutions on that day. An institution's average per-minute overdraft for a given day is the sum of its overdrafts at the end of each
minute in the standard operating day of the Fedwire funds transfer
system divided by the number of such minutes.

1069

tice that had contributed to overdrafts.8 Securitiesrelated overdrafts continued to rise, however. In
1991, the Federal Reserve began including
securities-related overdrafts within the measure of
overdrafts subject to a cap. But the Federal Reserve
allowed financially healthy institutions to exclude
securities-related overdrafts from the cap by pledging collateral against those overdrafts, and it mandated pledging of collateral for institutions that
breached their cap as a result of frequent and
material securities-related overdrafts. Indeed,
pledging collateral became standard practice
among the small group of securities clearing banks
whose customers' activity generated substantial
daylight overdrafts. Thus, even after 1991, net debit
caps did not have a significant effect on the majority of overdrafts related to securities transfers.
The most likely cause of the sharp rise in
securities-related daylight overdrafts during the

8. Securities dealers would hold securities until near the close of
the Fedwire securities transfer system (2:30 p.m. or later) to make
sure that they could complete large deliveries first and avoid costly
failures to deliver. This practice delayed the receipt of funds into
the dealers' accounts and exacerbated daylight overdrafts at major
securities clearing banks.

Securities-related and funds-related peak daylight
overdrafts, 1986-93

NOTE. Quarterly averages of daily data. An institution's securities-related
daylight overdraft at any minute during the day is defined as a negative
securities-related balance in its Federal Reserve account plus any fundsrelated positive balance at that minute. The securities-related balance is
defined as the sum of all credits and debits from Fedwire securities transfers
up until the given minute of the day. The funds-related balance is defined as
the sum of each institution's opening balance plus debits and credits for
Fedwire funds transfers up to that minute, plus debits and credits for
non-Fedwire payments posted according to the daylight overdraft measurement rules in effect at the time (see text).
The Federal Reserve initiated net debit caps in March 1986.
1. First reduction in net debit caps.
2. Second reduction in net debit caps.
3. Securities-related overdrafts included in net debit caps.

1070

Federal Reserve Bulletin • December 1995

1989-93 period was increased activity in the market for repurchase agreements (RPs). Securities
dealers commonly use RPs for overnight or very
short term financing of the securities they hold. In
the case of overnight RPs, the borrower of funds
(or the borrower's clearing bank in the case of
nonbank dealers) typically delivers securities used
as collateral to the lender in the afternoon and at
the same time receives funds in return. In the
morning the lender of funds returns the securities
(collateral) to the borrower (or its bank) and receives its funds in exchange. When the borrower
and the lender do not use the same clearing bank,
this process involves tranfers of securities against
payment via the Fedwire securities transfer system
and typically generates overdrafts in the Federal
Reserve accounts of the clearing banks. These
overdrafts start in the morning and extend into the
afternoon, when new RPs are arranged and settled.
No comprehensive measures of RP market activity are available, but data collected by the Federal
Reserve on RP positions of primary dealers in U.S.
government securities provides an approximate
picture of trends in this market. Indeed, the correlation between the growth in dealer RP positions
and securities-related daylight overdrafts over the
1989-93 period has been fairly close (chart 3).
Funds-Related

Overdrafts

During the 1986-93 period, net debit caps appear
to have been successful in restraining the growth of
3.

Changes in average securities-related daylight
overdrafts and in repurchase agreement positions
of primary dealers, 1989-93

1989

1990

1991

1992

1993

NOTE. See note to chart 2. Data on repurchase agreements are reported
monthly in table 1.43 of the Federal Reserve Bulletin.

funds overdrafts (those related to Fedwire funds
transfers as well as ACH payments, checks, and
miscellaneous other payments posted to Federal
Reserve accounts). Although not always binding
for all institutions, caps provide an incentive to
control intraday account balances. For example, to
reduce the probability of breaching caps, some
institutions have installed automated systems for
managing and queuing payments they send.
Moreover, because net debit caps are proportional to each institution's capital base, the growth
of funds-related overdrafts, if controlled, is likely
to be limited by the overall increase in the capital
of institutions that typically incur overdrafts. In
fact, during the 1986-93 period, daylight overdrafts related to Fedwire funds transfers and other
payments grew at 7 percent annually, on average,
roughly in line with growth in aggregate equity
capital at all U.S. commercial banks. In turn, that
rate was less than the 8 percent growth rate of
overall Fedwire funds transfer activity during this
period.
The level of funds overdrafts (as well as of total
overdrafts) was further affected by an October 1993 change in the method of measuring daylight overdrafts. The Federal Reserve's original
method tended to create additional intraday credit
("float") because credits for certain types of nonFedwire payments were posted before corresponding debits. This float tends to reduce measured
overdrafts by providing an implicit source of intraday credit.
The new method of measuring daylight overdrafts was designed to satisfy four basic principles:
the measurement method should (1) not provide
intraday credit through float, (2) reflect the legal
rights and obligations of parties to a payment,
(3) allow institutions to control their use of intraday credit, and (4) not give a competitive advantage to the payment services offered by the Reserve
Banks. The new method measured daylight overdrafts comprehensively by posting non-Fedwire
payments, such as checks and ACH payments,
according to a predetermined schedule based on the
type of payment and the time it was processed.
Fedwire payments continued to be posted to
accounts at the time they were executed.
At the time it was implemented, the 1993 change
in the method of measurement reduced average net
intraday float about $25 billion (as reflected in the

Daylight Overdraft Fees and Payment System Risk Policy

level of average net intraday balances—aggregate
positive balances less aggregate negative balances).
The reduction in float reduced the implicit credit
available to cover daylight overdrafts and therefore
caused such overdrafts to increase, as measured,
roughly $10 billion.9

EFFECT OF FEES ON OVERDRAFTS

The results of the initial implementation of daylight
overdraft fees has constituted the most significant
aspect of recent experience under the Federal
Reserve's daylight overdraft program. The implementation of the 10 basis point fee on April 14,
1994, had an immediate and dramatic effect on
daylight overdraft levels as well as on their typical
intraday pattern (chart 4).
All measures of intraday overdrafts declined significantly beginning on April 14, 1994. Indeed,
aggregate intraday peak overdrafts fell approximately 40 percent, from nearly $125 billion per
day, on average, during the six months preceding
April 14, to about $70 billion in the six months

1071

following April 14 (chart 5). Average per-minute
overdrafts, the base measure upon which fees are
assessed, also declined 40 percent, from $70 billion, on average, to $43 billion. Although these
data are not adjusted for seasonality and other
factors affecting longer-term trends in overdrafts,
the direction and general magnitude of the shift is
unmistakable. The effect has been proportionally
larger for securities-related overdrafts: Over the six
months following April 14, securities-related daylight overdrafts decreased about 45 percent, and
funds overdrafts decreased about 25 percent.
Preliminary evidence from the April 1995
increase in the fee, to 15 basis points, does not, to
date, show a significant additional effect on the
level of daylight overdrafts (chart 5 and table 2).
Per-minute overdrafts have averaged $43 billion in
the six months since the increase in the fee, the
same level as during the analogous period in 1994.
2.

Daylight overdrafts of depository institutions at Federal
Reserve Banks and assessed fees, 1994-95
Millions of dollars except as noted
Biweekly average of daily figures
Date

9. Although the dollar amount of increased overdrafts was not
large relative to peak overdrafts of $130 billion at the time, the new
measurement method made compliance with net debit caps difficult
for those institutions, mostly smaller, whose payment activity consists primarily of checks or ACH payments. In 1994, the Federal
Reserve modified its net debit cap classes and procedures somewhat to avoid undue burden on these institutions.

Intraday pattern of daylight overdrafts
before and after fees
Billions of dollars
— 120
y

—
—

Before fees

— 100

V
v
I

—

i Nv i

9:00 10:00 11:00 12:00 1:00 2:00 3:00 4:00 5:00 6:00
Eastern time
NOTE. Average at each fifteen-minute interval of the day for the sixmonth periods before (Oct. 14, 1993, to April 3,1994) and after (April 14 to
Oct. 12, 1994) the implementation of daylight overdraft fees on April 14,
1994.

1995
Jan. 4
Jan. 18
Feb 1
Feb. 15
Mar I
Mar 15
Mar. 29
Apr. 12
Apr. 26
Ma\ 10
Mav 24
June 7
June 21
July 5
July 19
Aug. 2

Average
per-minute
daylight
overdraft2

Peak daylight
overdraft7

696,804
680,195
660,652
645,067
715,900

41,106
40,448
43,247
42,006
42,408

66,946
68,574
71,137
65,546
66,675

553,912
630.555
716,532
726,262
685,962
746,700
640.989
760,791
855,770
981,653
1,060,085

41,539
42,001
42,430
42,173
44,079
42,896
38,888
44.178
36,635
40,222
42,619
46,875
43,087
44,797
44.052
44.171
41,899
41,328
44,799
44,669
46,948

61,099
60,822
59,699
59,281 S88S
64,789
67,457
62,882
69,180
54,986
62,328
67,885
74,623
72,674
69,979
68,698
68,903
70,194
66,648
72,925
71,770
72,932

1,074,798
1,089,331
1,017,343

Aug. 30

After fees

1994
Oct. 26
Nov. 9
Nov. 23
Dec. 7
Dec 21

Daylight
overdraft fees
(dollars)1

Oct. 11

1,010,447
1,096,635
1,090,043

«»

NOTE. Data for the period Oct. 27, 1993, to Nov. 23, 1994, were reported
in the Federal Reserve Bulletin, vol. 81 (January 1995), p. 31.
1. For the two-week period ending on the date shown; see text and text
note 6 for definition of rate. Two-week fees of $25 or less are waived; neither
waived fees nor daylight overdraft penalty fees are included in these totals.
2. See text note 7 for definition.

1072

Federal Reserve Bulletin • December 1995

Institutions may have already implemented new
systems and procedures in the period leading up to
April 1994 based on an expectation that fees would
eventually increase to 25 basis points. Alternatively, daylight overdraft levels may not be especially sensitive to relatively small changes in the
level of the fee, or other factors may have offset
any observable effect from the fee increase.
When viewed over the longer term, the overall
reduction in overdrafts has been particularly striking. In constant-dollar terms, the implementation
of fees has brought peak daylight overdrafts down
below the levels of the mid-1980s (chart 6).
Another useful scale by which to analyze long-term
trends in overdrafts is the dollar value of payments
made over the Fedwire funds and securities transfer
system. Relative to the total dollar value of such
payments, funds- and securities-related overdrafts
have now fallen to about the levels of 1988
(chart 7). This pattern suggests that the explicit
charges for the use of Federal Reserve daylight
credit has resulted in a significantly more efficient
use of such credit for a given volume of payments
relative to most of the experience of the last
decade.

DISTRIBUTION OF DAYLIGHT OVERDRAFTS
AND DAYLIGHT RESERVES
In addition to reducing daylight overdrafts in the
aggregate, fees have also led to some extent to a
redistribution of daylight overdrafts across institu5.

Peak daylight overdrafts, 1993-95

NOTE. Biweekly averages of daily data, Jan. 6, 1993, to Oct. 11, 1995.
See text note 7 for definition of peak daylight overdraft.
1. 10 basis point daylight overdraft fee implemented.
2. 15 basis point daylight overdraft fee implemented.

Real peak daylight overdrafts, 1986-95
Billions of 1986 dollars

V
N

— 100
1

- S O

— 60

NOTE. Quarterly averages of daily data adjusted to 1986 dollars using
the consumer price index. See text note 7 for definition of peak daylight
overdraft.

tions. Historically, overdrafts have been highly concentrated among a few institutions. In the six
months preceding the implementation of fees, for
example, the ten institutions with the largest overdrafts accounted for 80 percent of total average
overdrafts. The reduction in daylight overdrafts has
been similarly concentrated: More than 90 percent
of the Systemwide reduction in average overdrafts
has come from the six institutions that typically
incur average per-minute daylight overdrafts of
more than $1 billion; overdrafts among these banks
have fallen $25 billion overall, or 45 percent, over
the six months before and after the implementation
of fees. As a result, the ten institutions with the
largest overdrafts now account for about 70 percent
of overdrafts.
Under the daylight overdraft fee policy, net debit
caps have remained in effect and are not related to
the assessment of fees. For all but the largest institutions, net debit caps have continued to act as
the more relevant factor constraining daylight
overdrafts. For example, even after the 1995 fee
increase, only about 90 institutions typically
incurred fees of more than $100 in any two-week
period. In contrast, caps seemed to be the effective
boundary for management of daylight overdrafts
for an average of more than 700 institutions (those
with peak overdrafts of at least 75 percent of their
net debit caps in any given two-week reserve maintenance period and who tended to incur zero or
very low fees).
Another important aspect of reduced daylight
overdrafts has been the effect on institutions that do
not typically incur overdrafts but rather hold posi-

Daylight Overdraft Fees and Payment System Risk Policy

tive intraday balances. With the exception of activity that adds or removes intraday reserves from the
entire banking system, such as open market operations, changes in intraday float, or changes in Treasury cash balances, Federal Reserve accounts constitute a "closed" system. Thus, in general, for
each dollar of a negative balance, or overdraft, in
one institution's account, one or more other institutions must hold a corresponding dollar of positive
balances. Consequently, with the reduction in daylight overdrafts has come an overall reduction in
positive intraday balances in accounts held at the
Federal Reserve.
In the six months after the implementation of
fees, positive intraday balances held by depository
institutions in Federal Reserve accounts averaged
about $70 billion, compared with $90 billion in the
preceding six months. A small group of other institutions, particularly government-sponsored enterprises, also hold large positive intraday balances at
the Federal Reserve and have seen a similar reduction in these intraday balances since the onset of
fees. Depository institutions that typically carry
substantial positive intraday balances at the Federal
Reserve include custodian banks that hold securities and funds on behalf of institutional investors
such as mutual funds. These custodians often provide overnight financing in the form of repurchase
agreements secured by government securities.
Changes in the timing of RP settlements as a result
of daylight overdraft fees, discussed below, has
caused the duration of these loans to be lengthened
during a given twenty-four-hour period.
7.

Peak daylight overdrafts per daily dollar value
of Fedwire transfers, 1987-95
Dollars

NOTE. Quarterly averages of daily data. Securities-related overdrafts are
shown relative to value of securities transfers originated (exluding reversals).
Funds-related overdrafts are shown relative to value of funds transfers
originated. See text note 7 and note to chart 2.

EFFECT ON

1073

MARKETS

The most noticeable market response to the implementation of fees on daylight overdrafts has been
reflected in daily movements of government securities. In response to daylight overdraft fees, U.S.
government securities dealers began arranging their
financing transactions earlier in the morning and
delivering securities used as collateral for RPs more
quickly to their counterparties to cover overdrafts
caused by early-morning repayment of maturing
RPs. Traders reportedly facilitated faster backoffice processing by pricing the securities to be
used as collateral at the time of the trade rather than
later in the morning, as had been the practice.
Dealers also completed settlement of many secondary market trades in government securities earlier
in the day. These activities not only reduced
securities-related overdrafts but shifted the overall
intraday peak overdraft to earlier in the day
(chart 4).10
The anecdotal evidence on the earlier shift in
trading and settlement practices in the government
securities market is supported by data on the timing
of securities transfers over Fedwire. Before
April 1994, approximately 30 percent of the total
daily value of securities transfers was processed by
10:00 a.m. eastern time, 40 percent by 12 noon,
and 90 percent by 2:30 p.m. (chart 8), and Fedwire
securities transfer operations were frequently
extended to 4:00 p.m. or later because of surges in
transfer volume in the early afternoon. These proportions began to rise significantly with the
April 1994 implementation of overdraft fees and
continued to rise with the April 1995 increase in
fees. As a result, the Fedwire securities transfer
system has been able to close, on average, within

10. To encourage efforts to reduce overdrafts in the months
leading up to the implementation of fees in April 1994, the Public
Securities Association designated the week of December 6 - 1 0 ,
1993, as "Daylight Overdraft Prevention Week."
The earlier trading in the RP market has not had an adverse
effect on implementation of monetary policy. However, to reduce
the impact of its own activity on daylight overdrafts, the New York
Reserve Bank's Open Market Desk adopted a policy of returning
securities held under repurchase agreements later in the morning, at
11 a.m., thereby delaying the receipt of funds from the banking
sector. For a discussion of daylight overdraft fees in the context of
RP market activity and open market operations, see "Monetary
Policy and Open Market Operations during 1994," Federal Reserve
Bulletin (June 1995), pp. 5 7 9 - 8 1 .

1074

Federal Reserve Bulletin • December 1995

approximately fifteen minutes of its designated
final closing time of 3:00 p.m. In part because of
this development, the Federal Reserve has now
established a firm final closing time of 3:30 p.m.,
effective January 1996, for the Fedwire book-entry
securities transfer system.
The timing of Fedwire funds transfers, however,
has moved in the opposite direction, though in a
much less dramatic fashion than securities transfers. After the implementation of daylight overdraft
fees, the portion of the total daily value of Fedwire
funds transfers originated by noon decreased
approximately 5 percent, or roughly $40 billion,
relative to the period six months before fees were
implemented (chart 9). This pattern is not surprising given that the Federal Reserve account of an
institution initiating a Fedwire funds transfer is
debited (rather than credited as in the case of a
securities transfer). As a result, institutions naturally have an incentive to delay less time-critical
payments in order to reduce potential daylight
overdrafts. The intraday pattern of funds-related
overdrafts has likewise shifted to later in the day
as a result of the later average transfer pattern.
According to discussions with banks, this shift
appears to have been caused more by increased use
of their existing funds-transfer queuing capabilities
rather than by more explicit measures, such as
charging customers higher fees to send payments
earlier in the day.

Distribution of daily dollar value of Fedwire securities
transfers, by time of day, July 1993-Sept. 1995
Percent

NOTE. Monthly averages of daily data.
1. Public Securities Association test week; see text note 10.
2. 10 basis point daylight overdraft fee implemented.
3. 15 basis point daylight overdraft fee implemented.

Distribution of daily dollar value of Fedwire funds
transfers, by time of day, July 1993-Sept. 1995
Percent
April 19952

April 1994'

80
By 5 p.m.

By 2 p.m.
By 12 noon
t

1
1993

1
1994

—

20
i

1995

NOTE. Monthly averages of daily data.
1. 10 basis point daylight overdraft fee implemented.
2. 15 basis point daylight overdraft fee implemented.

INCIDENCE OF FEES
In the first twelve months of the daylight overdraft fee program, the Federal Reserve collected a
total of $18.5 million in fees from 280 depository
institutions. Of these institutions, approximately
110 have incurred charges in at least one of every
two reserve maintenance periods. Since the 50 percent increase in the fee in April 1995, overdraft
charges have averaged $27 million at an annual
rate, and about 120 institutions have incurred fees
regularly.
Like daylight overdrafts, daylight overdraft
charges have been highly concentrated among a
few institutions. In fact, the concentration of fees is
even greater than that of overdrafts because of the
overdraft deductible and the waiving of fees of less
than $25; these features effectively exempt many
smaller-overdrafting institutions from daylight
overdraft fees in most periods. The ten institutions
with the largest charges accounted for 86 percent
of the total. The largest U.S. banks (those with
assets of more than $10 billion) paid, on average,
92 percent of total charges.
Discussions with larger banks indicate that those
incurring the highest charges pass them on to those
customers whose activity generates much of the
banks' overdrafts. In particular, the securities clearing banks, who have experienced the largest reductions in overdrafts, have charged fees to their
securities-dealer customers whose market activity,
particularly RP transactions, creates overdrafts in

Daylight Overdraft Fees and Payment System Risk Policy

the Federal Reserve accounts of the clearing banks.
These customer fees are assessed against measures
of the overdrafts in customer accounts. Of course,
increases in costs to securities dealers could ultimately be passed on to dealers' customers or to the
Treasury in the form of higher borrowing costs;
given the amount of fees assessed for securitiesrelated overdrafts relative to the volume of U.S.
Treasury and federal agency securities transferred
via Fedwire each year, however (roughly $14 million in charges at the current 15 basis point fee
versus $145 trillion of securities transfers in 1994),
the incremental effect of any fees ultimately passed
on to the securities market would be small.
Indirect costs associated with daylight overdraft
fees include costs incurred by institutions to reduce
overdrafts and avoid fees. Such costs could include
the investments by banks in systems to assess fees
on customers, automate clearing procedures, or
improve control over their cash balances. In addition, some government securities dealers have
also reportedly made investments to improve their
back-office processing of government securities
transactions. Institutions are generally reluctant to
provide proprietary information about such costs; a
reasonable assumption is that institutions are not
likely to have spent more to avoid overdrafts than
they would have paid in daylight overdraft fees. An
upper bound on this amount is the additional
amount of fees that institutions would hypothetically have been assessed in the absence of the
dramatic reductions in overdrafts in April 1994.
Based on the experience in the six months before
the implementation of fees, this amount could have
ranged roughly between $15 million and $40 million annually based on daylight overdraft fees of
10-25 basis points.

PRIVATE

NETWORKS

Since it implemented daylight overdraft fees, the
Federal Reserve has taken additional steps to help
control risks in the payment system, most recently
in the area of multilateral netting systems. The
November 1990 Report of the Committee on Interbank Netting Schemes of the Central Banks of the
Group of Ten Countries (commonly referred to as
the "Lamfalussy Report," after the committee's
chairman, Alexandre Lamfalussy) identified six

1075

minimum standards that should be met by multilateral netting systems. In December 1994 the Federal
Reserve Board adopted a revised policy statement
on risks in large-value multilateral netting systems,
which incorporated the minimum standards in the
Lamfalussy report. The Board also stated that it
would work with each netting system separately to
determine whether higher risk management standards would be appropriate for those systems presenting a potentially higher degree of systemic risk.
Shortly thereafter, in July 1995, the New York
Clearing House announced changes to CHIPS rules
with the goal of reducing risk while maintaining
cost effectiveness and system efficiency.11 The
changes included a 20 percent reduction in CHIPS
net debit caps to be implemented in three stages
through early January 1997, an increase in the
minimum amount of collateral pledged by a participant, a modification to loss-sharing procedures in
the event of a multibank default, and certain additional procedures for liquidating collateral pledged
by participants. These changes', when implemented,
are expected to result in a further increase in the
certainty of settlement for payments made via
CHIPS.

POTENTIAL FUTURE DEVELOPMENTS
AFFECTING DAYLIGHT OVERDRAFTS

Further changes in market practices, greater use of
private payment systems, and further consolidation
in the banking system all might affect the volume
and distribution of daylight overdrafts in the future.

Changes in Market

Practices

Additional changes in market practices, such as
increased netting of securities transactions, may
have the potential to further reduce daylight overdrafts. For example, the Government Securities
Clearing Corporation (GSCC) has recently begun
accepting RPs into its trade matching system, and it
plans to begin netting RPs in the near future. Netting of RPs would reduce overdrafts to the extent

11. New York Clearing House Association, CHIPS: Settlement
Finality Improvements, Rules and Documents (July 1995).

1076

Federal Reserve Bulletin • December 1995

that they are caused by movements of securities
across Fedwire between GSCC members or their
customers.
Some private-sector participants have suggested
another potential change—the establishment of
settlement "windows" in which the settlement of
federal funds transfers would be more closely synchronized, thus reducing the duration of associated
overdrafts. Other potential changes in market practices, such as increased use of "rollovers," or continuing contracts, in the federal funds market do
not appear to have been implemented widely to
date, and the prospects for adoption are unclear.
The development of an intraday funds market, in
which institutions engage in explicit lending transactions for periods of several hours, may also be a
potential means of reducing overdrafts in Federal
Reserve accounts; however, institutions have suggested that such a development may not be costeffective at the current fee level. Institutions may
find other means of charging their counterparties
for the use of intraday credit, however, such as by
negotiating differential transaction prices based on
the timing of settlements for federal funds or RP
transactions. Such practices require the ability to
monitor closely and to enforce precise settlement
times, capabilities that do not currently exist at
many institutions.

Greater Use of Alternative Payment Systems
Greater use of private payment systems could further trim daylight overdrafts in Federal Reserve
accounts by reducing the volume of funds transfers
through the Federal Reserve. Whether daylight
overdraft fees will drive such a process is unclear,
as fees are only one of a large number of factors—
including service pricing and other associated
costs, risks, and patterns of usage—that may influence choices among payment and settlement systems. For example, although CHIPS has historically been used primarily to settle international
transactions, for some purposes market participants
may consider CHIPS and Fedwire to be fairly close
substitutes. Although the growth in dollar volume
on CHIPS has outpaced that on Fedwire over the
past few years, the differential does not appear to
have become more pronounced since the imposition of fees (chart 10).

Greater use of private systems for securities
transfers could also reduce use of daylight credit in
Federal Reserve accounts. Participants in such systems would have to weigh costs—such as those of
posting additional collateral to support additional
clearing activity, as well as differences in settlement timing and finality—against any benefits to
be realized from reduced daylight overdrafts in
Federal Reserve accounts. Several proposals have
been made to clear Fedwire-eligible securities on
existing private securities-clearing networks, but
no such service has yet been implemented. Some
anecdotal reports also cite greater use of "book"
transfers of government securities, those in which
securities are transferred on the books of a bank
rather than through the Fedwire system. This practice may be feasible when, for example, two RP
counterparties agree to use the same custodian bank
(a "tri-party RP").
In addition, some reports have suggested greater
use of what are primarily retail payment systems,
such as the ACH system, to settle interbank money
market transactions. These systems are not, however, designed with the high levels of security and
control over the timing of payments that characterize large-value payment systems. Moreover, their
use in large-value transfers would not necessarily
reduce daylight overdrafts in Federal Reserve
accounts relative to current methods because of
differences in the intraday timing of payments
posted to Federal Reserve accounts.

10.

Change in dollar values of Fedwire and CHIPS funds
transfers, 1990-95

NOTE. Four-quarter change of quarterly averages of daily values.
1. 10 basis point daylight overdraft fee implemented.

Daylight Overdraft Fees and Payment System Risk Policy

Increased Consolidation
in the Banking Industry
The current trend toward greater consolidation in
the banking industry may well continue. Moreover,
in July 1997, nationwide interstate branch banking
will become effective in states that have not explicitly "opted out." As a result, holding companies
may convert some or all of their banks into branch
banking organizations. Thus, many payments that
are currently settled between two banks within a
holding company may become transactions processed on the books of a single interstate bank.
This may, in turn, result in fewer payments and
associated daylight overdrafts being recorded on
the books of the Federal Reserve Banks.

CONCLUSION

The introduction of daylight overdraft fees has
reduced the level of daylight overdrafts in Federal
Reserve accounts, the aggregate amount of daylight credit provided by the Federal Reserve, and

1077

the associated direct credit risk, with little evidence
of disruption in the payment system or in the
financial sector generally. That such a large reduction in overdrafts was the result of a relatively
small fee suggests that the economic inefficiencies
created by the provision of free daylight credit by
the Federal Reserve were substantial. To date, the
response to the fees has been largely reflected in
changes in practices in the government securities
market, and the incidence of fees has fallen primarily on the largest depository institutions and dealers in government securities.
When the Federal Reserve Board in April 1995
increased the daylight overdraft fee to 15 basis
points, it recognized that significant progress had
been made in reducing overdrafts. Additional time
would be needed, however, to encourage the study
and evaluation of further changes in practices and
market conventions that could help reduce overdrafts. Thus, the Board stated that it will evaluate
the desirability of any additional changes in the fee
after two years in light of experience with the
current fee and the overall objectives of the payment system risk program.
•

1078

Treasury and Federal Reserve
Foreign Exchange Operations
This quarterly report describes Treasury and System foreign exchange operations for the period
from July 1995 through September 1995. It was
presented by Peter R. Fisher, Executive Vice President, Federal Reserve Bank of New York, and Manager for Foreign Operations, System Open Market
Account. Soo J. Shin was primarily responsible for
preparation of the report.1
During the third quarter of 1995, the dollar rose
17.6 percent against the Japanese yen, 3.3 percent
against the German mark, 2.1 percent against the
Mexican peso, and 3.2 percent on a trade-weighted
basis against other G-10 currencies, but it fell
2.3 percent against the Canadian dollar.2 The dollar's appreciation reflected relative changes in
market participants' expectations of economic performance and of the associated monetary policy
reactions of Japan, Germany, and the United States.
Exchange market cooperation among the monetary
authorities also contributed to the dollar's upward
trend.
The U.S. monetary authorities intervened in
the foreign exchange markets on three occasions
during the quarter—July 7, August 2, and
August 15—purchasing a total of $1,533 billion
against the German mark and the Japanese yen. On
each occasion, the dollar purchases by the U.S.
monetary authorities were divided evenly between
the Federal Reserve System and the U.S. Treasury
Department's Exchange Stabilization Fund (ESF).
In other operations, Mexico drew a total of $2.5 billion on its medium-term swap facility with the
ESF. The ESF and the Federal Reserve also

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.
2. The dollar's movements on a trade-weighted basis against
ten major currencies are measured using an index developed by
staff at the Board of Governors of the Federal Reserve System.

renewed short-term swap facilities for Mexico,
each in the amount of $1 billion, for an additional
ninety days.

CHANGING GLOBAL ECONOMIC

OUTLOOK

Even though the dollar had previously risen from
the historic lows against the yen and the mark
recorded in March and April, many market participants still perceived the dollar as undervalued
at the beginning of the third quarter, but they
remained unsure of factors or conditions that might
prompt a sustained upward trend in the dollar's
value. Moreover, as suggested by implied yields on
interest rate futures contracts, market participants
had come to expect that the Federal Reserve would
ease the federal funds rate as much as 50 basis
points by year-end and that the Bank of Japan
might ease call rates again but by a smaller increment (roughly 25 basis points). Meanwhile, market
participants held disparate views on the outlook for
Bundesbank monetary policy, with some expecting
an interest rate easing and others expecting no
change. Expectations among market participants
reflected concerns that (1) the U.S. economy might
slip into recession, (2) the Japanese economy was
unlikely to react to further monetary easing, and
(3) the German economy would moderately grow.
In July, however, soon after the Federal
Reserve's widely anticipated reduction in the federal funds rate of 25 basis points, different expectations about the three major industrial economies
began to emerge. In Japan, monetary, fiscal, and
regulatory actions undertaken by the Japanese
authorities increased confidence among market
participants that the authorities were prepared to
actively address the economy's weakness. The perception of softness in the German economy became
more pronounced. In the United States, however,

1079

fears of a material economic slowdown abated as
the likelihood of achieving steady growth increased
while hints of an economic rebound emerged later
in the quarter. Supported by these developments,
the dollar rose 15.4 percent against the Japanese
yen and 7.0 percent against the German mark by
mid-August to reach ¥97.65 and DM 1.4775
respectively. From the historical lows of ¥79.75
and DM 1.3438 that had been reached on April 19
and March 8 respectively, the dollar had risen
22.4 percent against the Japanese yen and 9.9 percent against the German mark.
Beginning in mid-August, the mark's downward
trend halted while the yen continued to depreciate
against most other currencies. Then in late September, the mark appreciated sharply against most
other European currencies as concerns grew about
Europe's political and fiscal prospects and the
achievability of European monetary union (EMU)
as scheduled. Doubts about France and Italy, in
particular, prompted a general flight to German
marks from French francs, Italian lira, and other

currencies from European countries where high
unemployment and concerns about fiscal consolidation persisted.
This sharp rise in the mark negatively affected
the dollar. Having reached a fifteen-month high of
¥104.68 and a seven-month high of DM 1.5045 by
mid-September, the dollar gave up some of its
gains in the third week of September as a combination of events initiated a bout of profit-taking on
long-dollar positions. The dollar consolidated at
the end of the month, however, and closed the
quarter at ¥99.55 and DM 1.4273.

JAPANESE POLICY MEASURES CONTRIBUTE
TO THE DOLLAR'S RALLY
At the start of the quarter, market participants
remained wary of further risks of deflation in Japan,
associated deterioration in the Japanese financial
system, and persistent, large trade and current
account surpluses. Without immediately apparent

Foreign exchange holdings of U.S. monetary authorities, based on current exchange rates
Millions of dollars
Q uarterly changes ii balances by sounX
Balance,
June 30, 1995

Item

Net purchases
and sales'

Impact of
sales 2

Investment

valuation

Sept 30, 1995

-- ' / f t - y v - L .

FEDERAL RESERVE

Deutsche marks
Japanese yen
Mexican pesos 4

13,936.0
8,931.4
967.5

Interest receivables6
Ibta!

-200.0
-566.7
-14.1

-11.9
-24.8
.0

147.7
33.6
14.1

-442.0
-1,220.7
-11.35

13,429.8
7,152.9
956.2

126.0

114.1

23,960.8

21,653.0

U . S . TREASURY
EXCHANGE STABILIZATION F U N D

Deutsche marks
Japanese ven
Mexican pesos*
Interest receivables6

Total

7,153,2
12,843.9
9,000.0

-200.0
-566.7
2,445.9

72.8

29,069.9

NOTE. Figures may not sum to totals because of rounding.
1. Purchases and sales include foreign currency sales and purchases
related to official activity, swap drawings and repayments, and warehousing.
2. Calculated using marked-to-market exchange rates; represents the difference between the sale exchange rate and the most recent revaluation
exchange rate. Realized profits and losses on sales of foreign currencies,
computed as the difference between the historic cost-of-acquisition exchange
rate and the sale exchange rate, are shown in table 2.
3. Foreign currency balances are marked to market monthly at monthend exchange rates.

-11.9
-24.8
.0

77.6
40.8
14.1

-223.7
-1,784.0
.0'

6,795.1
10,509.3
11,500.0
304.0

29,108.5
4. See table 4 for a breakdown of Mexican swap activities. Note that the
investment income on Mexican swaps is sold back to the Bank of Mexico.
5. Valuation adjustments on peso balances do not affect profit and loss
because the effect is offset by the unwinding of the forward contract at the
repayment date. Note that the ESF does not mark to market its peso holdings, but the Federal Reserve System does.
6. Interest receivables for the ESF are revalued at month-end exchange
rates. Interest receivables for the Federal Reserve System are carried at cost
and are not marked to market until interest is paid.

1080

Federal Reserve Bulletin • December 1995

remedies for these problems, market participants
anticipated a renewed ascent in the Japanese yen.
Several policy actions taken by the Japanese
authorities in July and August, however, prompted
a shift in expectations. These policy actions were
perceived as enhancing the prospects for Japan's
economic recovery, and they sparked a sharp rally
in the dollar against the yen. On July 7 the Bank of
Japan guided the overnight call money rate to a
historic low of 0.75 percent, below the official
discount rate (ODR). Market participants immediately began to anticipate a near-term reduction in
the ODR, which would further reduce Japanese
interest rates and weaken the yen.
On August 2 the Ministry of Finance announced
a series of deregulatory measures aimed at encouraging Japanese investment abroad, including
changes that would allow Japanese financial institutions to participate fully in longer-maturity, nonyen-denominated loan facilities. The measures
were well received by market participants as deliberate steps to weaken the yen and address domestic
deflationary pressures. Although a surge in Japanese purchases of overseas assets was not observed
immediately after the announcement of the deregulatory package, market participants noted broadbased sales of yen against a variety of currencies
and unwinding of currency hedges by Japanese
investors on their existing foreign assets. On
August 15, following the release of a lower-thanexpected Japanese trade surplus, the dollar rose
above ¥94.50 in Tokyo trading; for technical traders, the breach of this important level signified a
change in the dollar's five-year downward trend
against the yen.
In addition, confidence in Japan's resolve to deal
with the problems of nonperforming loans and
a weak financial sector increased following the
authorities' swift response to the failure of three
Japanese financial institutions. The closure of
Cosmo Credit Corporation, Japan's fifth largest
credit union, was announced on July 31. Subsequently, on August 30, the Japanese authorities
announced the failures of Hyogo Bank and Kizu
Shinyo Kumiai ("Kizu") credit union, Japan's
largest second-tier regional bank and largest credit
union respectively. On August 28 the resolution of
the Cosmo case was announced jointly by the
Ministry of Finance and the Tokyo metropolitan
authorities. This announcement was followed

promptly by (1) the August 30 announcement by
Governor Matsushita, of the Bank of Japan, of the
plan to reconstruct Hyogo bank and (2) the Osaka
Prefecture's decision to suspend Kizu's operations.
On August 30 the dollar surged to a seven-month
high of ¥99.40 as anticipation began to mount that
the Japanese authorities would announce broadbased measures to strengthen the banking system.
Over the subsequent three weeks, the yen continued to depreciate, particularly after the Bank of
Japan on September 8 lowered the ODR 50 basis
points, to 0.50 percent, and guided the call money
rate below the ODR. Increasingly, market participants turned their attention toward the economic
stimulus package scheduled to be unveiled on September 20. In the run-up to the package, the dollar
rose to ¥104.68, as market participants anticipated
another clear effort by the Japanese authorities to
weaken the yen.

THE GERMAN ECONOMY APPEARS TO SLOW
WHILE U.S. ECONOMY SHOWS SIGNS OF
QUICKENING ACTIVITY

At the start of the quarter, market participants generally expected German economic growth to
remain moderate, prices to stabilize, and official
interest rates to remain unchanged. Over the course
of July and August, however, expectations of German economic growth shifted perceptibly lower.
The lack of reliable official data, as government
agencies were in the process of recalibrating several key statistics, caused some confusion among
market participants. Available data and surveys of
the industrial sectors suggested low inflation and
weak current activity, which, coupled with weak
M3 money supply growth, contributed to lower
economic growth forecasts and increased expectations for monetary easing in Germany. Indeed, on
August 9, the Bundesbank guided the repo rate
lower by 5 basis points to 4.45 percent. This was
the first appreciable cut since early April 1995, and
it gave rise to expectations that the Bundesbank
had begun a process of gradual monetary easing.
As anticipated, the Bundesbank lowered the repo
rate six more times in the following weeks, bringing the cumulative repo rate reductions during the
quarter to 42 basis points, down 4.08 percent. In
addition, on August 24 the Bundesbank reduced

Treasury and Federal Reserve Foreign Exchange Operations

both its discount and Lombard rates 50 basis points,
to 3.5 percent and 5.5 percent respectively. After
the reduction in official German interest rates, the
dollar rose as high as DM 1.4990 in late August.
As perceptions of a slowing German economy
became increasingly widespread, the notion that
the U.S. growth rate may have hit a trough became
more prevalent in August. Within a few days after
the U.S. monetary easing on July 6, market participants substantially scaled back their expectations
for further easing, as reflected in the rise in implied
yields on interest rate futures contracts. Implied
yields moved gradually upward throughout July
and most of August after a series of stronger-thanexpected data releases—particularly June nonfarm
employment, June retail sales, and second-quarter
growth of gross domestic product—all of which
were released in July. These releases were followed
by the Philadelphia Federal Reserve Bank's diffusion index in late September, which similarly
pointed to better-than-expected economic conditions in the United States.
Notwithstanding the diverging economic outlooks for Germany and the United States, partici2.

N e t profits or l o s s e s ( - ) o n U.S. Treasury
and Federal R e s e r v e f o r e i g n e x c h a n g e o p e r a t i o n s ,
b a s e d o n historical c o s t - o f - a c q u i s i t i o n e x c h a n g e rates
Millions of dollars
U.S. Treasury
IXNMWJ
renoa

FAMN
anaJ :item

Federal
Reserve

Stabilization
Fund

Valuation profits and losses on
outstanding assets and liabilities,
June 30, 1995
Japanese yen

3,433.5
3.454.8

1,342.0
4,966.4

Total

6,888.3

6,308.5

Realized profits and losses
from foreign currency sales,1
June 30-Sept. 30, 1995
Deutsche marks
Japanese yen

39.8
192.9

27.4
193.0

Total

232.7

220.4

Valuation profits and losses on
outstanding assets and liabilities
Sept. 30, 1995*
Deutsche marks
Japanese ven

2,939.8
2,016.4

1,079.0
2,964.7

Ibtal

4,9563

4,043.7

NOTE. Figures may not sum to totals because of rounding.
1. As indicated in table 1, foreign currency sales totaled $400 million
against German marks and $1,133.3 million against Japanese yen.
2. Valuation profits or losses are not affected by peso holdings, which are
canceled by forward contracts.

1081

pants in the foreign exchange market appeared to
lack sufficient confidence in forecasts that called
for improving U.S. economic activity and for slowing German economic growth. In July the dollar
moved only slightly higher against the German
mark, hovering near DM 1.3900. Although the
dollar appreciated against the mark in the first two
weeks of August, its move upward appeared to
follow in sympathy with the dollar's move against
the yen rather than to reflect the shifting U.S. and
German economic outlooks.

THE U.S. MONETARY AUTHORITIES
INTERVENE ON THREE OCCASIONS

The first intervention operation of the quarter was
undertaken on July 7, when the dollar reached a
high of ¥86.20 after the monetary easing by the
Japanese authorities. The Federal Reserve Bank of
New York's Foreign Exchange Desk entered the
New York market on behalf of the U.S. monetary
authorities and purchased $333.3 million against
the yen. This operation was coordinated with the
Japanese monetary authorities. The dollar reached
a high of ¥87.15 after the intervention and before
closing the New York trading session at ¥86.70.
On August 2 the Desk again entered the
New York market after the dollar had risen to
¥90.15 following the announcement of Japanese
measures to promote overseas investment and
loans. The Desk purchased $500 million against
the yen on behalf of the U.S. monetary authorities.
This operation was also coordinated with the Japanese monetary authorities. The dollar strengthened
after the intervention and closed the New York
trading session at ¥90.99, near the day's high.
On both occasions, the U.S. Treasury confirmed
the operation. As the intervention began on
August 2, Treasury Secretary, Robert E. Rubin,
issued the following statement:
We welcome the actions taken by the Japanese authorities to remove impediments to capital movements. These
actions and our joint operations are consistent with the
April 25 G-7 communique.

In the subsequent weeks, shifting economic expectations combined with the concerted official intervention contributed to the dollar's appreciation

1082

Federal Reserve Bulletin • December 1995

against the yen. In addition, natural buyers of dollars, who in previous months had lagged their
purchase requirements in anticipation of more
advantageous levels, hastened to buy as the dollar
rose. In the first weeks of August, natural sellers of
dollars, including Japanese exporters, stayed on the
sidelines, thereby allowing the dollar to rise. Many
natural sellers, motivated by their concerns about
the future depreciation of the dollar, had accelerated their selling efforts in the earlier months and
had already largely fulfilled their then-current selling needs.
The third operation, on August 15, was coordinated with the Japanese monetary authorities and
the Bundesbank. The Desk entered the markets in
London, Frankfurt, and New York and purchased
$300 million against the Japanese yen and
$400 million against the German mark. The dollar
was trading near ¥95.02 and DM 1.4476 as the
operation began. After the intervention, the dollar
rose to highs of ¥96.98 and DM 1.4795 before
declining modestly to close at ¥96.81 and
DM 1.4765. In the next few days, market participants gained confidence in the view that the U.S.
Administration supported a stronger dollar not only
against the yen but also against other currencies.

MARKET REEXAMINES EUROPEAN
AND FISCAL PROSPECTS

POLITICAL

In July and August the French franc, Italian lira,
and other major European currencies strengthened
against the mark, benefiting from a combination of
factors, including expectations of gradual monetary
easing in Germany, continued investment shifts
into higher-yielding markets, greater seasonal tourism flows into southern European countries, and
modest optimism of fiscal tightening in most
European countries. By mid-August, the French
franc and Italian lira strengthened against the
German mark, reaching a thirteen-month high of
FRF 3.4014 and a six-month high of ITL 1084.70
respectively. Against the background of continuing
positive performance in high-yielding markets and
positive comments from local government officials,
market participants became more confident that
fiscal deficits in several European countries would
improve sufficiently to meet the targets established
for EMU.

In late August, however, upward momentum of
major European currencies against the German
mark began to dissipate as concerns surrounding
the process of EMU reemerged. The unexpected
resignation on August 25 of French Finance Minister Madelin cast doubts on the prospects of fiscal
contraction in Europe, particularly after reports that
Madelin had been forced to resign because of his
support for cuts in aggressive public spending. In
this context, the German mark appreciated against
other European currencies from mid-August to
mid-September, and, in turn, as the mark strengthened, the dollar's upward trend began to encounter
some resistance.

DOLLAR RETRACES ITS GAINS LATE
IN THE PERIOD

Toward the end of the quarter, the dollar retraced
some of its earlier gains as a confluence of events
in Japan, Europe, and the United States triggered
dollar selling. Early on September 20, after the
release of Japan's much-awaited economic stimulus package, the dollar came under pressure against
the yen. In the days before the release of the
package, comments from Japanese government
officials led to heightened expectations of a significant stimulus package that would help revive the
Japanese economy. Some market participants even
began to speculate that the package would encompass not only fiscal measures but also significant
regulatory changes and financial sector support,
despite earlier indications from Japanese officials
that the package would not include such measures.
Although the ¥14.2 trillion package was somewhat
larger than originally anticipated, the measures
were generally as expected and did not include any
new deregulatory or banking initiatives. In the
event, speculative players began to unwind their
long-dollar and short-yen positions that were established in anticipation of the release of the stimulus
package.
Also on September 20, European financial markets came under sharp selling pressure after reports
of comments by several German officials sparked
intensified skepticism about the viability of EMU.
German Finance Minister Waigel reportedly stated
that Italy was unlikely to qualify for the initial
group of states forming a single currency. In

Treasury and Federal Reserve Foreign Exchange Operations

addition, news reports indicated that Bundesbank
Council member Jochimsen had emphasized the
importance of member states' strict adherance to
the Maastricht Treaty and suggested that France
and Belgium might not meet EMU entry criteria.
Earlier on the same day, the official presentation of
France's 1996 budget had elicited little initial reaction among market participants, though some analysts voiced skepticism about the budget's targets;
following reports of the German officials' comments, however, skepticism escalated concerning
the fiscal situations in various European countries.
Market participants became more nervous as they
began to focus more closely on the forthcoming
presentation of Italy's 1996 budget. During the
week of September 18, the German mark rose
4.6 percent against the Italian lira, to ITL 1130.73,
and 0.7 percent against the French franc, to

Currency arrangements
Millions of dollars
Institution

Amount of
facility

Outstanding,
Sept. 30, 1995

250
1,000
2,000
250
3,000
2,000
6,000
3,000
5,000

fSHfllgW; J
I is-;-.-;.-.

FEDERAL RI SIRVE
RECIPROCAL ARRANGEMENTS

Austrian National Bank
National Bank of Belgium
Bank of Canada
National Bank of Denmark
Bank of England
Bank of France
Deutsche Bundesbank
Bank of Italy
Bank of Japan
Bank of Mexico 1
Regular swaps
Temporary swaps
Netherlands Bank
Bank of Norway
Bank of Sweden
Swiss National Bank
Bank for International Settlements
Dollars against Swiss francs
Dollars against other authorized

FRF 3.4645. This upward pressure on the mark
within Europe placed downward pressure on the
dollar in the subsequent days.
The dollar's decline was aided by the September 20 release of worse-than-expected U.S. trade
data for July, which disappointed some market
participants who had been hoping for evidence of
an improvement in the U.S. trade and current
account balances. In the background, some market
participants noted growing concern about the
debate between the Administration and the Congress regarding the budget process and debt limit
extension, which triggered some concerns of
possible disruptions to the upcoming Treasury
auctions.
Between September 20 and 22, the combination
of events outlined above prompted severe selling
pressure on the dollar. The dollar fell 4.7 percent
against the German mark and 4.4 percent against
the Japanese yen to close at DM 1.4225 and ¥99.90
respectively on September 22. Market participants,
many of whom had reportedly established long
positions in European currencies and short positions in the German mark during the summer,
began to sell European currencies against the mark.
The effect on the dollar was accentuated by investors' sales of dollars for marks as a proxy for the
less liquid cross exchange rates between the European currencies and the German mark.

3,000
3,000
500
250
300
4,000

1,000
JI

600
1,250

1,000

35,400

Total

1083

DOLLAR STABILIZES IN A NARROW

RANGE

In the final week of September, after the adjustment
of long-dollar positions had tapered off, the dollar
recovered partially and consolidated in trading
ranges of DM 1.42 to DM 1.44 and ¥99 to ¥101.
The dollar closed the quarter at DM 1.4273 and
¥99.55.

U . S . TREASURY
EXCHANGE
STABILIZATION F U N D

Deutsche Bundesbank
Bank of Mexico1
Regular swaps
United Mexican States'
Medium-term swaps

Total'

1,000
3,000

fcs«s

10,500

11,500

1. Facilities available to Mexico comprise short-term swaps between the
Bank of Mexico and both the Federal Reserve and the ESF, as well as
medium-term swaps and government guarantees between the government of
Mexico and the ESF. The total amount available from both medium-term
swaps and government guarantees is $20 billion, less any outstanding drawings on the short-term facilities.

CANADA

1,000

Over the quarter, the Canadian dollar was buffeted
by shifting prospects concerning Quebec sovereignty and Quebec's relationship with the rest of
Canada. Early in the quarter, the Canadian dollar
traded with a firmer tone as several polls showed
dwindling support for separation. As the currency
firmed, the Bank of Canada lowered short-term

1084

Federal Reserve Bulletin • December 1995

interest rates. Specifically, on July 6, immediately
following the FOMC's decision, the Bank of Canada reduced its overnight call target range 25 basis
points. In the following weeks the Bank of Canada
lowered interest rates three more times to arrive at
the end-of-quarter overnight range of 6.00 percent
to 6.50 percent, 175 basis points below the recent
peak in early May.
In late August the Canadian dollar rallied to a
nineteen-month high of Can$ 1.3345. In early September, however, the Canadian dollar came under
pressure after the official launch of the Quebec
referendum campaign. The referendum, set for
October 30, proposed sovereignty in conjunction
with economic and political links with the rest of
Canada.3 Following the release of the official referendum question, the Canadian currency declined
almost 2.4 percent as polls indicated growing support for Quebec sovereignty. In the final weeks of
the quarter, however, polls began to indicate an
improved outlook for a "no" outcome in the referendum. The Canadian dollar recovered much of its
losses of the earlier weeks and consolidated in a
narrower range, ending the quarter at Can$1.3416.

MEXICO

Over the quarter, the peso declined 2.1 percent
against the dollar to close at NP 6.377, from its
second-quarter close of NP 6.245. At the outset of
the quarter, the perception became more widespread that the Mexican authorities were conducting appropriately tight monetary and fiscal policies
as inflation and interest rates declined from April
highs, that the government would be able to meet
heavy tesobono maturities in July and August, and
that official transparency was improving.
Given these improvements, and against the backdrop of an easing of U.S. interest rates, Mexican
markets rallied, and the peso traded to a 1995 high
against the dollar of NP 5.98. In this environment,
Mexico returned to the international capital markets, successfully launching several international
3. The referendum question was introduced in the Quebec
National Assembly on September 7, 1995. It reads as follows. "Do
you agree that Quebec should become sovereign, after having made
a formal offer to Canada for a new economic and political partnership, within the scope of the bill respecting the future of Quebec
and the agreement signed on June 12, 1995?"

bond issues during the period. At the same time,
Mexican authorities took steps to reduce the peso's
volatility in the context of a floating exchange rate.
In particular, the Bank of Mexico encouraged the
early redemption of maturing dollar-indexed tesobonos directly through the central bank to minimize spikes in dollar demand during a period of
heavy tesobono maturities. During the quarter,
maturing tesobonos totaled $7.4 billion, reducing
the outstanding balance to $2.6 billion from
$29.2 billion at the beginning of the year. In addition, dollar borrowings from the central bank's
Fondo Bancario de Protection al Ahorro lending
facility were reduced to zero, as local banks continued to find alternative sources of dollar funding.
For most of the quarter, the peso traded in a
range of approximately NP 6.00 to NP 6.30 against
the dollar. As concern about default dissipated,
many market participants shifted their focus to
Mexico's longer-term prospects, cautiously assessing the timing and sources of a return to economic
growth and the effect of banking system problems.
In the past few weeks of the period, amid several
uncertainties on the domestic front, spillover from
events elsewhere in Latin America, and usual
quarter-end pressures, the peso's decline accelerated slightly to close at NP 6.3770.
The Mexican authorities drew $2.5 billion on
July 5 on their medium-term facility with the ESF,
bringing the total amount drawn by Mexico under
the Medium-Term Stabilization Agreement to
4.

Drawings and repayments ( - ) by Mexican monetary
authorities
Millions of dollars
Out
Item

June

July

Aug.

1995
Reciprocal currency
arrangements with
the Federal Reserve
Bank of Mexico

(regular)

Currency,
with the U.S. Treasury
Exchange.
Fund
Bank of Mexico
(regular)
Medium-term

1,000

1,000
0 1,000'
-1,000'
8,000 2400
0

NOTE. Data are on a value-date basis.
1. Drawing of February 2 was renewed on August 1 for an additional
three months.

Treasury and Federal Reserve Foreign Exchange Operations

$10.5 billion. In addition, on August 1 the ESF and
the Federal Reserve System renewed the Bank of
Mexico's short-term swaps, each for $1 billion, for
an additional three months.

TREASURY AND FEDERAL RESERVE FOREIGN
EXCHANGE RESERVES

The U.S. monetary authorities intervened three
times during the period, buying a total of
$1,133 billion against the Japanese yen and
$400 million against the German mark. On all three
occasions, intervention operations were divided
equally by the Federal Reserve System and the
ESF. On July 3 the Treasury issued $2.5 billion

1085

of special drawing rights certificates to Federal
Reserve Banks.
At the end of the period, the current values of the
foreign exchange reserve holdings of the Federal
Reserve System and the ESF were $21.7 billion
and $29.1 billion respectively. The U.S. monetary
authorities regularly invest their foreign currency
balances in a variety of official instruments that
yield market-related rates of return and have a high
degree of liquidity and credit quality. A significant
portion of the balances is invested in foreign
government-issued securities. As of September 30
the Federal Reserve and the ESF held, either
directly or under repurchase agreement, $7.7 billion and $11.2 billion respectively in foreign government securities.
•

1086

Industrial Production and Capacity Utilization
for October 1995
Released for publication November 15
Total industrial production declined 0.3 percent in
October after having edged up a revised 0.1 percent
in September. Overall industrial production was

held down by a strike at a major aircraft manufacturer, which sharply curtailed the output of
business equipment. Excluding the effects of the
aircraft strike, industrial production decreased
0.1 percent. A decline in motor vehicle assemblies

Industrial production indexes
Twelve-month percent change

Twelve-month percent change

Materials

Products

1989

1990

1991

1992

1993

Nondurable
manufacturing

1994

1989

1995

1990

1991

1992

1993

1994

1995

Capacity and industrial production
Ratio scale, 1987 production = 100

Ratio scale, 1987 production = 100
140

— Manufacturing

Capacity

——

- —

140

120

100

Production
80

80
1

Percent of capacity

Percent of capacity
Manufacturing

Total industry
Utilization

J
1981

I I I L

1983

1985

1987

J
1989

I I I

I I I L
1991

1993

1995

1981

1983

I I I
1985

1987

All series are seasonally adjusted. Latest series, October. Capacity is an index of potential industrial production.

I I I
1989

1991

J L
1993

1995

1087

Industrial production and capacity utilization, October 1995
Industrial production, index, 1987=100
Percentage change
1995

Category

19951

Total

July'

Aug.

Sept.'

121.5

122.9

123.1

Oct. P

Oct. 1994
to
Oct. 1995

-.3

2.7

.9
1.1
.1

-.6
-.5
-.8
-.6
.2

2.2
1.9
5.8
-1.0
3.5

.5
.9
.0
.3
-4.4

-.2
-.3
-.1
-1.8
-.4

2.8
4.4
.8
-.4
4.5

Oct. P

July

Aug.

122.7

1.2

1.1

-.2

Previous estimate

121.5

122.9

122.6

Major market groups
Products, total2
Consumer goods . . .
Business equipment
Construction supplies
Materials

118.6
114.4
157.0
107.8
126.1

120.0
116.0
159.3
108.1
127.4

120.2
115.7
160.9
109.3
127.5

119.4
115.2
159.6
108.7
127.7

.1
-.5
.9
.6
.2

1.2
1.5
1.5
.3
1.1

Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities

123.2
130.8
114.7
100.9
123.7

124.5
132.8
115.1
100.2
128.5

125.1
134.1
115.1
100.5
122.9

124.8
133.6
115.1
98.7
122.4

.0
.2
-.3
.5
1.4

1.0
1.6
.4
-.7
3.9

Sept.

-.3

MEMO

Capacity utilization, percent
1994
Average,
1967-94

Total

82.0

Low,
1982

71.8

84.9

Oct.

July'

Aug.r

Sept.r

Oct.P

84.4

83.6

84.3

84.1

83.6

3.6

83.6

84.2

83.8

82.5
81.1
86.2
90.6
90.2

83.1
82.0
86.1
90.0
93.6

83.3
82.1
86.3
90.3
89.4

82.8
81.7
85.8
88.7
88.9

4.1
4.6
2.8
-.1
1.5

Previous estimate
Manufacturing
Advanced processing
Primary processing .
Mining
Utilities

81.3
80.7
82.5
87.4
86.7

70.0
71.4
66.8
80.6
76.2

85.2
83.5
89.0
86.5
92.6

calculated from seasonally adjusted
monthly data.
1. Change from preceding month.

was the largest factor in the overall weakening in
the production of consumer goods. In addition, the
output of construction supplies declined. Apart
from the effects of the aircraft strike, however, the
output of materials and business equipment posted
small gains. At 122.7 percent of its 1987 average,
industrial production in October was 2.7 percent
higher than a year ago. Capacity utilization
declined 0.5 percentage point, to 83.6 percent.
When analyzed by market group, the data show
that the output of consumer goods declined 0.5 percent in October. A drop in motor vehicle assemblies accounted for nearly half of the decline. The
production of nondurable consumer goods edged
down as the output of clothing and of energy
products, such as gasoline, fell sharply and more
than offset a further rise in the production of con-

1995

High,
1988-89

Capacity,
percentage
change,
Oct. 1994
to
Oct. 1995

83.8
82.1
88.3
89.0
86.4

2. Contains components in addition to those shown.
r Revised.
p Preliminary.

sumer chemical products; the production of other
consumer nondurables was little changed. The production of business equipment fell 0.8 percent;
however, excluding the effects of the aircraft strike,
output in this sector rose about 0.3 percent. The
production of information processing equipment,
which includes computers and communication
equipment, rose sharply further. However, the production of industrial equipment, which had grown
rapidly earlier this year, was about unchanged in
both September and October; in addition, the output of transit equipment other than aircraft fell
sharply.
The output of materials edged up for a second
successive month, mainly reflecting gains in the
production of durables; the output of components
for high-technology equipment has been particu-

1088

Federal Reserve Bulletin • December 1995

larly strong. The output of nondurable materials,
which had weakened over the third quarter, was
little changed; the production of textiles and paper
remained weak. The output of energy materials
fell, mainly because of a decline in coal mining.
When analyzed by industry group, the data show
that the output of manufacturing decreased 0.2 percent in October after an upward revised gain of
0.5 percent in September; the aircraft strike
accounted for all of the October decline. Excluding
the aircraft strike, the output of durable manufacturing was about flat. Among the other major
industries, the production of motor vehicles and
parts, primary metals, and lumber products fell;
however, the output of both industrial and electrical
machinery rose sharply. The output of nondurable
manufacturing remained sluggish, with ongoing
weakness in apparel, textiles, and paper; over the
past few months, only chemical products and rubber and plastic products have shown signs of
strength.
Capacity utilization in manufacturing declined
0.5 percentage point, to 82.8 percent; the strikerelated plunge in aircraft production accounted for
about half of this overall drop. Utilization in both
the primary- and advanced-processing industries
also declined about V2 percentage point, with the
effects of the aircraft strike concentrated in the
advanced-processing aggregate. Even with the flattening in manufacturing output, operating rates for

most major industries were still noticeably above
their 1967-94 averages, with the gains in industrial
and electrical machinery the most pronounced. The
operating rates in mining and at utilities both
declined.

NOTICE
An annual revision to the measures of industrial
production, capacity, and capacity utilization is
scheduled to be published on November 30, 1995.
The revisions to the production indexes begin with
January 1991 and will incorporate updated figures
from the 1992 Census of Manufactures, new results
from the 1993 Annual Survey of Manufactures,
more comprehensive physical data on mining and
utilities for 1994, and updated monthly source data,
seasonal factors, and productivity relationships.
The revision to capacity and utilization will
reflect the revised production indexes and the
incorporation of preliminary results of the Census
Bureau's 1994 Survey of Plant Capacity, updated
manufacturing capital stocks, and new data on
physical capacity and utilization for selected industries. The estimates of capital stocks incorporate
data on manufacturing investment in 1993 from the
Annual Survey of Manufactures as well as investment plans for 1994 and 1995 reported in the
Census Bureau's Investment Plans Survey.
•

1089

Statements to the Congress
Statement by Alan S. Blinder, Vice Chairman,
Board of Governors of the Federal Reserve System,
before the Subcommittee on Domestic and International Monetary Policy of the Committee on Banking and Financial Services, U.S. House of Representatives, October 11, 1995
I appreciate this opportunity to present the views of
the Federal Reserve Board on issues raised by
various emerging electronic payment technologies
that go under such names as "digital cash" or
"electronic money." Spurred by recent advances in
computing, communications, and cryptography,
this nascent industry holds the promise of improving the efficiency of the payment system, particularly for consumers.
While the potential for exciting developments in
this field is certainly there, we should all keep the
latest round of innovations in historical perspective. First, the concept of "electronic money" is
not new; electronic transfer of bank balances has
been with us for years. Indeed, some of the new
proposals simply make available to consumers and
smaller businesses capabilities that large corporations and banks have had for many years. Second,
no one knows how this industry will evolve—
either qualitatively or quantitatively. Some of us,
for example, can recall predictions made a generation ago that the United States would soon be a
cashless, checkless society.
This last point reminds us that, at present, we
do not know which, if any, of the many potential
electronic innovations will succeed commercially.
In this testimony, I will concentrate on stored-value
cards and other types of so-called "electronic cash"
because they seem to raise the most challenging
public policy issues. In particular, depending on
their design, they could amount to a new financial
instrument—an electronic version of privately
issued currency. But even the concept of private
currency is not entirely new. Travelers checks are,
of course, familiar to everyone. And in the nineteenth century the United States had considerable

experience—not always happy—with private bank
notes. But widespread use of private electronic
currency would certainly raise a number of policy
questions.
On behalf of the entire Board, I want to state
clearly at the outset that the Federal Reserve has
not the slightest desire to inhibit the evolution of
this emerging industry by regulation, or to constrain its growth. On the contrary, the Board has
encouraged, and will continue to encourage, innovations in payments technologies that benefit consumers and businesses. I am here today to raise
questions and to bring some issues to the attention
of the Congress, not to provide answers. Given the
considerable uncertainties surrounding the design
and ultimate usage of these products, it is far too
soon for answers.
Nonetheless, it is not too early to begin thinking
about a number of interesting and complex issues
that may be raised by electronic currency. These
issues include the impact on federal revenues, the
legal and financial structure for these products,
risks to participants, the application of consumer
protection and anti-money laundering laws, and
some issues related to monetary policy. Some of
these issues may need to be addressed by the
Federal Reserve and other regulatory agencies and
some by the Congress. Some may need prompt
attention, while others can wait. The present is, we
believe, an appropriate time for public debate and
discussion but a poor time for regulation and
legislation.

SEIGNIORAGE AND THE

BUDGET

Let me start with a potential revenue issue that will
arise if the stored-value industry grows large. The
federal government currently earns substantial
revenue from what is sometimes referred to as
"seigniorage" on its currency issue. In effect, holders of the roughly $400 billion of U.S. currency are

1090

Federal Reserve Bulletin • December 1995

lending interest-free to the government. In 1994,
for example, the Federal Reserve turned over about
$20 billion of its earnings to the Treasury, most of
which was derived from seigniorage on Federal
Reserve notes.
Should some U.S. currency get replaced by
stored-value products—which are private monies—
this source of government revenue would decline.
Indeed, one of the major economic motives for
institutions to issue prepaid payment instruments is
to capture part of this seigniorage, just as issuers of
travelers checks do now. Because the demand for
stored-value products and the degree to which they
will substitute for U.S. currency is totally unknown
at present, the loss of seigniorage revenue is impossible to estimate. It is likely to be small. But it is
something that the Congress should keep an eye on.
We should not, by the way, jump to the conclusion that the government's lost seigniorage will go
to the companies that issue stored value—though
that will probably happen at first. It may be technically feasible to pay interest on stored-value products. To the extent that competition forces issuers
of these products to pay interest, the lost seigniorage will accrue to holders rather than to issuers.
This discussion raises the question of whether
the federal government should issue electronic currency in some form. (In posing this question, I refer
to general-purpose, stored-value cards, not to
special-purpose instruments such as government
benefit cards, which, in our view, do not raise
major issues.) Government-issued electronic currency would probably stem seigniorage losses and
provide a riskless electronic payment product to
consumers. In addition, should the industry turn
out to be a "natural monopoly" dominated by a
single provider, either regulation or government
provision of electronic money might be an appropriate response.
But such a conclusion seems quite premature.
And the availability of alternative payment mechanisms would mitigate any potential exercise of
market power. Further, government issuance might
preempt private-sector developments and stifle
important innovations. Finally, the government's
entry into this new and risky business might prove
unsuccessful, costing the taxpayer money. So,
while we would not rule out an official electronic
currency product in the future, the Federal Reserve
would urge caution.

LEGAL AND REGULATORY STRUCTURES
One area that may need prompt attention from both
policymakers and the industry is clarification of the
legal and regulatory structure that will govern electronic money products. In this case, failure of the
government to act may, ironically, impede rather
than facilitate private-sector developments.
As with other payment mechanisms, issuers and
holders of electronic currency take on some degree
of ongoing credit, liquidity, and operational risks.
The risk to a consumer using a stored-value card
for small "convenience" purchases may be inconsequential. But such risks can become significant
when larger amounts of money become involved—
for example, when merchants and banks accumulate and exchange significant amounts of storedvalue obligations during the business day.
Risks to participants arise from a number of
sources. Cards might malfunction or be counterfeited. Issuers might invest the funds they receive
in exchange for card balances in risky assets so as
to increase their earnings. But riskier investments
can turn sour, possibly impairing the issuer's ability to redeem stored-value balances at par and
imposing losses on consumers and other holders (if
the obligations are not insured). Further, the clearing and settlement mechanisms for stored-value
cards and similar products—if they become widely
used—could generate significant credit and other
settlement risks.
We believe that both the industry and the government should focus on answering several mundane
questions that seem to be receiving little attention
amid the continuing publicity about these products.
Some examples follow:
• Whose monetary liability is the particular form
of electronic money?
• If an issuer were to become bankrupt or insolvent, what would be the status of the claim represented by a balance on a card or other device?
• In such a situation, when and how would funds
be made available to the holder?
• Who is responsible for the clearing and settlement mechanism?
Developers of these products have discussed a
variety of possible options, but the industry does
not appear to be converging on one or more models
that would be transparent and readily understood

Statements to the Congress

by users. In addition, there is no specialized legal
framework for stored-value transactions as there is
for checks and other common retail payment
mechanisms. For example, state or federal law
specifies when an obligation is discharged by cash,
check, or wire transfer—but not if payment is by
stored value.
From the Federal Reserve's perspective, new
and exciting technological developments in payments mechanisms should not overshadow the conventional and ongoing need for clear and soundly
based legal and financial arrangements. It is essential that developers and issuers clarify the rights,
obligations, and risks borne by consumers, merchants, and other participants in new systems
before these products are widely introduced.
The need to attract and retain customers will
naturally drive developers and issuers of electronic
money products toward investment policies and
operational controls that make their products useful
and safe. So, to some extent, the market will be
self-policing. Nevertheless, it could be costly and
difficult for consumers and merchants to monitor
and evaluate the safety of electronic money products, especially given their technological complexity. So the government is likely to become involved
as well.
To guard against financial instability and to protect individual consumers, the government has, in
the past, mandated a range of regulatory measures
for private financial instruments. Three principal
approaches are used.
1. Disclosure and surveillance. In the case of
mutual funds, securities laws generally require disclosures about asset holdings. Audits and examinations of investment funds also help ensure that
reported assets are actually held.
2. Portfolio restrictions. In some cases, standards or restrictions on portfolios help limit the
riskiness of the assets. Money market mutual funds,
travelers checks in some states, and, historically,
privately issued bank notes are familiar examples.
3. Government insurance. Balances in depository institutions, of course, receive the most comprehensive protection mechanism available: federal
deposit insurance.
At some point, though certainly not now, the Congress will have to decide which, if any, of these
protection mechanisms should be applied to storedvalue products.

1091

For example, if stored-value obligations of banks
are treated as insured deposits—which is, by the
way, another legal question that needs to be cleared
up—then credit risk is effectively transferred from
consumers to the government. In fact, the European central banks have gone so far as to recommend that only banking institutions be permitted to
issue prepaid cards, presumably because that gives
such cards the same degree of protection and financial oversight as traditional bank deposits.
The Federal Reserve Board has not viewed such
a restrictive policy as appropriate. But the regulatory structure for electronic money products does
merit further analysis. At a minimum, we believe
that issuers of stored-value cards and similar products should clearly disclose the various risks that
holders bear, including their coverage, if any, by
deposit insurance.

CONSUMER PROTECTION
AND LAW ENFORCEMENT

The question of whether and how to apply the
Electronic Fund Transfer Act (EFTA) and the Federal Reserve's Regulation E to these products has
received considerable attention from industry participants, at the Federal Reserve, and in the Congress. Among other things, Regulation E limits
consumers' liability for unauthorized electronic
withdrawals from their accounts, provides procedures for resolving errors, and requires institutions
to provide disclosures, terminal receipts, and
account statements. Uncertainty regarding the
application of Regulation E may be holding back
the development of the industry, and resolving this
question would help clarify some of the major risks
that consumers may bear.
H.R.I858 would exempt all stored-value cards
and a potentially wide range of other products,
including transactions through the Internet, from
the EFTA and Regulation E. The industry seems
worried that without such an exemption, the Federal Reserve will apply Regulation E in a heavyhanded manner. On behalf of the Board, I would
like to assure industry participants and this committee that we have no such intention. The Board
recognizes that some of the requirements of Regulation E should not be applied to certain of these

1092

Federal Reserve Bulletin • December 1995

new payment products. For example, it makes little
sense to require either printed receipts at ordinary
vending machines or periodic statements detailing
small transactions.
It seems premature, however, to legislate a blanket exemption from the EFTA without first exploring some of the basic issues raised by these new
payments mechanisms. Disclosure policy is a good
example. If a consumer who loses a stored-value
card with a balance of several hundred dollars is
not entitled to a refund, he or she should know this
fact when the card is purchased. In this case at
least, Regulation E requirements could be beneficial at minimal additional expense. The Federal
Reserve would like to develop, and then put out for
public comment, proposals for applying parts of
the EFTA, such as appropriate disclosures, to
stored-value cards—and for exempting them from
the remainder. We would hope to be able to accomplish this within a few months.
Another issue related to consumer protection is
privacy. While physical cash leaves no audit trail,
many electronic currency products would. Such a
trail may be desirable for certain purposes. But
consumers would almost certainly be concerned
if each purchase from a vending machine was
recorded for possible reporting to marketers and
others. Privacy is not a traditional Federal Reserve
issue, but we do think it should be of concern to
members of the Congress.
The mention of privacy leads naturally to some
potential, future law-enforcement concerns. While
we would caution against establishing restrictive
rules that could stifle innovation, the eventual
opportunities for money laundering using electronic products may be serious. At present, the
menu of new products proposed for distribution in
the United States holds little appeal for illicit activities because of their relatively low balance limits,
the potential audit trail, and their limited acceptability as a means of payment—at least in the near
term. In fact, most of the proposed stored-value
products are not designed to circulate freely like
currency and thus should be of limited concern to
law-enforcement authorities. Over the longer term,
however, it seems possible that electronic mechanisms that can hold large balances and make large
untraceable transfers over communications networks could become attractive vehicles for money
laundering and other illicit activities—especially if

they are widely used and bypass the banking system. Existing anti-money laundering regulations
may then need modification.
A related side issue is the possibility that nonbank entities could offer banking services illegally
over the Internet. Using the term "bank" to market
banking services without an appropriate license is
generally a violation of federal or state laws. But
new electronic technologies may challenge both
traditional definitions of "banking services" and
the ability to enforce existing laws. At some point,
therefore, the Congress and the state legislatures
may want to review the basic legal concepts that
define banking and their methods for preventing
fraud and unlicensed banking activity. Because
electronic messages show little respect for national
borders, these issues will likely require the coordinated attention of the banking authorities in various
countries.

MONETARY POLICY ISSUES
Finally, let me say a few words about monetary
policy. Concerns have been expressed that introducing what amounts to a form of private currency
might damage the Federal Reserve's control of the
money supply and lead to inflationary pressures. I
can assure you that this is most unlikely. The
Federal Reserve currently issues or withdraws currency passively to meet demand, adjusting open
market operations accordingly to keep monetary
and credit conditions on track. We would presumably continue to do this if private parties began
issuing electronic currency that reduced the
demand for paper currency.
In any event, electronic currency, if it grows
large, will be only one of several changes in financial markets in the years ahead. Some of these may
change the details of how monetary policy is
implemented, just as financial innovations have in
the past. We believe we have the capability of
adjusting to these changing circumstances while
continuing to meet our traditional responsibilities
for economic stability.
However, there is a technical issue relating to our
reserve requirements. Depository institutions are
required to maintain reserves, either in cash or on
deposit with Federal Reserve Banks, in proportion
to their outstanding transaction accounts. Under

Statements to the Congress

current regulations, stored-value balances issued
by depository institutions would be treated as transaction accounts and hence subjected to reserve
requirements; the Board will need to review this
treatment as stored-value devices come into use.
But the Federal Reserve does not currently have
the authority to impose reserve requirements on
nondepository institutions. Thus there is a potential
issue of disparate treatment of bank and nonbank
issuers.
Depository institutions benefit from their access
to the federal safety net; but they pay for this
privilege by being subject to reporting obligations,
reserve requirements, regulation, and supervision
by the banking agencies. Nonbank issuers are free
of most such burdens and hence may have a competitive advantage over banks in certain product
lines. The Federal Reserve has often expressed
concern in the past about potential competitive
inequities that disadvantage banks. But because of

Statement by Janet L. Yellen, Member, 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,
October 17, 1995
I am pleased to appear before this subcommittee on
behalf of the Federal Reserve Board to discuss
issues related to mergers among U.S. banking organizations. The past fifteen years have seen considerable consolidation of our banking system, a process that probably will continue for some time.
This ongoing consolidation is in many ways a
natural response to the changing banking environment. However, the very large bank mergers that
have been consummated or announced in recent
years, and particularly in recent months, have
raised a number of public policy questions and
concerns. In the Board's view, the primary objectives of public policy in this area should be to help
manage the evolution of the banking industry in
ways that preserve the benefits of competition for
the consumers of banking services and to ensure a
safe and sound banking system. My statement
today will focus on how, within the context of

1093

the pervasive uncertainties that I emphasized at the
outset, it is far too early to have any useful insights
into the implications of this disparity. We simply
want to call it to your attention.

CONCLUSION

In summary, it is clear that new electronic payment
products raise a number of diverse policy issues,
both for the Congress and for the Federal Reserve.
I have not had time to mention all of them here.
But, at this point, the uncertainties regarding the
future of "electronic money" are so overwhelming
that we mainly suggest patience and study rather
than regulatory restrictions. We do believe, however, that certain rules need to be clarified and that
future developments should be monitored closely.
We look forward to working with the Congress and
other regulatory agencies in this regard.

existing law, the Federal Reserve is pursuing these
goals and will review the potential economic
effects of bank mergers.

TRENDS IN MERGERS
AND BANKING STRUCTURE

It is useful to begin a discussion of the public
policy and other implications of bank mergers with
a brief description of recent trends in merger activity and overall U.S. banking structure. The statistical tables in the appendix of my statement
provide some detail that may be of interest to the
subcommittee.1

Bank Mergers
From a variety of perspectives, the pace of bank
mergers (including mergers of banks and bank
holding companies and acquisitions of banks by
1. The attachments to this statement are available from Publications Services, Mail Stop 127, Board of Governors of the Federal
Reserve System, Washington, DC 20551.

1094

Federal Reserve Bulletin • December 1995

bank holding companies) has accelerated since
1980. For example, excluding acquisitions of failed
or failing banks by healthy banks and bank holding
companies, in 1980 there were less than 200 bank
mergers involving about $10 billion in acquired
assets; by 1987 the annual number of mergers
reached about 650 with almost $125 billion of
acquired assets. In 1989, the number of mergers
dropped back to 350, involving about $43 billion of
bank assets acquired. In the 1990s, however, the
number of mergers began to rise again, to nearly
450 in 1994 with about $110 billion of acquired
assets. Through September 1995, the pace of
merger activity has remained high, and there has
been an exceptional number of very large bank
merger announcements including Chase-Chemical,
First Union-First Fidelity, NBD-First Chicago,
Fleet-Shawmut, and PNC-Midlantic. Very large
mergers occurred with growing frequency after
1980. In 1980, there were no mergers or acquisitions of commercial banking organizations in
which both parties had more than $1.0 billion in
total assets. The years 1987 through 1994 averaged
fourteen such transactions per year and—reflecting
changes in state law—an increasing number of
these reflected interstate acquisitions by bank holding companies. Three of the largest mergers in U.S.
banking history took place during 1990-94—
Chemical-Manufacturers Hanover, NCNB-C&S
Sovran, and BankAmerica-Security Pacific. These
mergers would all be surpassed by the recently
announced proposal to merge Chemical and Chase
Manhattan.

National Banking

Structure

The high level of merger activity since 1980, along
with a large number of bank failures, is reflected in
a steady decline in the number of U.S. banking
organizations from 1980 through 1994. In 1980,
there were more than 12,000 banking organizations, defined as bank holding companies and independent banks; the independent banks and banks
owned by bank holding companies numbered
nearly 14,500 banks. By 1990 there were about
9,200 banking organizations, and in 1995 the number of organizations had fallen to about 7,700
(including more than 10,000 banks)—declines of
more than one-third in organizations and more than

one-fourth in numbers of banks from 1980. These
trends have also been accompanied by a substantial
increase in the share of total banking assets controlled by the largest banking organizations. For
example, the proportion of domestic banking assets
accounted for by the 100 largest banking organizations went from just more than one-half in 1980, to
nearly two-thirds in 1990, to more than 70 percent
in June 1995.
The trends I have just described must be placed
in perspective because taken by themselves they
hide some of the key dynamics of the banking
industry. Although there was a large decline in the
number of banking organizations over the period
1980-94, reflecting about 1,500 bank failures and
more than 6,300 bank acquisitions, about 3,200
new banks were formed, in spite of a sharp decline
in formations after 1989. Similarly, although during the period more than 13,000 bank branches
were closed, the same period saw the opening of
well over 28,000 new branches. Perhaps even more
important, the total number of banking offices
increased sharply from about 53,000 in 1980 to
more than 65,000 in 1994, a 23 percent rise, and
the population per banking office declined. Fewer
banking organizations clearly has not meant fewer
banking offices serving the public.
Data on the nationwide concentration of U.S.
banking assets must also be viewed in perspective.
The increases in nationwide concentration and
mergers reflect to a large degree a response by the
larger banking organizations to the removal of
legal restrictions on geographic expansion both
within and across states. That is, the industry is
moving from many separate state banking structures imposed by legal barriers toward more of a
nationwide banking structure that long would have
been in existence if legal restrictions had not stood
in the way. The sudden adjustment to a new legal
environment should not be a surprise, nor is the
large adjustment necessarily one that will continue
for an extended period.
The removal of legal restrictions on geographic
diversification began in earnest during the mid1980s, as did the merger movement. For example,
twenty-two states during the 1980s reduced branching restrictions compared with only six states during the 1970s. Also during the 1980s, most states
passed laws allowing the acquisition of in-state
banks by out-of-state organizations. As a result,

Statements to the Congress

although in 1987 only about 11 percent of banking
assets were owned by out-of-state organizations,
by mid-1995 that figure had risen to more than
one-fourth. Looked at another way, even by 1987
almost 92 percent of U.S. banking assets were open
to access by at least some out-of-state bank holding
companies, and by September 1995 that proportion
had risen to more than 99 percent. Passage of the
Interstate Banking and Branching Efficiency Act
in September 1994 further expanded geographic
diversification opportunities—opening up interstate
branching by banks and all interstate banking to
common rules. It is undoubtedly a major factor
behind the several large bank mergers and
announcements of mergers during 1995 as firms
expand into new areas or respond to the potential
for major firms entering their markets.
Other forces have also been transforming the
banking landscape, and the resulting acceleration
of competitive pressures has encouraged many
banks to seek merger partners. Chief among these
is technological change: the rapid growth of computers and telecommunications, which has allowed
a scale of operations that would not have been
manageable previously. Technological change has
also encouraged financial globalization, with
expanded cross-border asset holdings, trading, and
credit flows, and, in response, foreign and domestic banks and other financial institutions have
increased their cross-border operations. The resulting increase in domestic competition, especially for
larger banking organizations, has been intense.
Today, for example, more than 40 percent of the
domestic commercial and industrial bank loan market is accounted for by foreign banks.

Local Market Banking

Structure

Given the Board's statutory responsibility to ensure
competitive banking markets by applying antitrust
standards, it is critical to understand that nationwide concentration statistics are not the appropriate
metric for assessing competitive effects. Virtually
all observers agree that in the vast majority of cases
the relevant issue is competition in local banking
markets. From 1980 through 1994 the average percentage of bank deposits accounted for by the three
largest firms in both urban and rural markets has
remained steady or actually declined slightly even

1095

as nationwide concentration has increased substantially. This trend has continued since the mid1970s. Essentially similar trends are apparent when
local market bank concentration is measured by the
Herfindahl-Hirschman Index (HHI). Because of
the importance of local banking markets, I would
like to provide somewhat more detail on the
implications of bank mergers for local market
concentration.
Metropolitan statistical areas (MSAs) and nonMSA counties are often used as proxies for urban
and rural banking markets. The average three-firm
deposit concentration ratio for urban markets
increased only two-tenths of a percentage point
between 1980 and 1994. Average concentration in
rural counties actually declined six-tenths of a
point. Similarly, the average bank deposit-based
HHI for both urban and rural markets fell between
1980 and 1994. When thrift deposits are given a
50 percent weight in these calculations, average
HHIs are sharply lower than the bank-only HHIs,
but the trend becomes somewhat positive. On balance, the three-firm concentration ratios and the
HHI data strongly suggest that despite the fact that
there were more than 6,300 bank mergers between
1980 and 1994, local banking market concentration
has remained about the same.
Why have not all of these mergers increased
local market concentration? There are several reasons. First, many mergers are between firms operating primarily in different local banking markets.
Although these mergers may increase national or
state concentration, they do not tend to increase
concentration in local banking markets and thus do
not reduce competition.
Second, as I have already pointed out, there is
new entry into banking markets. In most markets
new banks can be formed fairly easily, and some
key regulatory barriers, such as restrictions on
interstate banking, have been all but eliminated.
New banks continue to be formed in states throughout the country, although the number of new bank
formations has declined sharply during the 1990s.
Third, the evidence overwhelmingly indicates
that banks from outside a market usually do not
increase their market share after entering a new
market by acquisition. An oft-mentioned example
here is the inability of the New York City banks to
gain significant market share in upstate New York.
More general studies indicate that, when a local

1096

Federal Reserve Bulletin • December 1995

bank is acquired by a large out-of-market bank,
there is normally some loss of market share. The
new owners are not able to retain all of the customers of the acquired bank.
Fourth, it is important to emphasize that small
banks have been, and continue to be, able to retain
their market share and profitability in competition
with larger banks. Our staff members have done
repeated studies of small banks; all these studies
indicate that small banks continue to perform as
well as, or better than, their large counterparts,
even in the banking markets dominated by the
major banks. Indeed, size is not an important determining factor even for international competition.
The United States has not had any banks among the
largest twenty in the world since 1989 and even if
all of the proposed mergers were consummated,
U.S. banks would still not rank among the largest
twenty. Yet those U.S. banks that compete in world
markets are consistently among the most profitable
in the world and include those that are ranked as
the most innovative. It is notable that U.S. banks,
besides being among the most profitable, have in
the 1990s demonstrated their ability to attract capital. When measured by equity, two of the largest
ten banks in the world are U.S. banks and the
number will be three of the largest ten if the
Chemical-Chase merger is consummated.
Finally, administration of the antitrust laws has
almost surely played a role. At a minimum, banking organizations have been deterred from proposing seriously anticompetitive mergers. And in some
cases, to obtain merger approval, banks have
divested banking assets and deposits in certain
local markets in which the merger would have
otherwise resulted in substantially more concentrated markets.
Overall, then, the picture that emerges is that of a
dynamic U.S. banking structure adjusting to the
removal of longstanding legal restrictions on geographic expansion, technological change, and
greatly increased domestic and international competition. Even as the number of banking organizations has declined, the number of banking offices
has continued to increase in response to the
demands of consumers, and measures of local
banking structure have remained quite stable. In
such an environment, it is potentially very misleading to make broad generalizations without looking
more deeply into what lies below the surface. In

part for the same reasons that make generalizations
difficult, the Federal Reserve devotes considerable
care and substantial resources to analyzing individual merger applications.

FEDERAL RESERVE METHODOLOGY
FOR ANALYZING PROPOSED BANK MERGERS

The Federal Reserve Board is required by the Bank
Holding Company Act (1956) and the Bank Merger
Act (1960) to assess the effects when (1) a holding
company acquires a bank or merges with another
holding company, or (2) the bank resulting from
a merger is a state-chartered member bank. The
Board must evaluate the likely effects of such
mergers on competition, the financial and managerial resources and future prospects of the firms
involved, the convenience and needs of the communities to be served, and Community Reinvestment Act requirements.
This section of my statement briefly discusses
the methodology the Board uses in assessing a
proposed merger. In light of the subcommittee's
interests, emphasis is placed on competitive
factors.

Competitive

Criteria

In considering the competitive effects of a proposed bank acquisition, the Board is required to
apply the same competitive standards contained in
the Sherman and Clayton Antitrust Acts. The Bank
Holding Company (BHC) Act and the Bank
Merger Act do contain a special provision, applicable primarily in troubled-bank cases, that permits
the Board to balance public benefits from proposed
mergers against potential adverse competitive
effects.
The Board's analysis of competition begins with
defining the geographic areas that are likely to be
affected by a merger. Under procedures established
by the Board, these areas are defined by staff
members at the local Reserve Bank in whose District the merger would occur, with oversight by
staff members in Washington. In mergers in which
one or both parties are in two Federal Reserve
Districts, the Reserve Banks cooperate, as required.
To ensure that market definition criteria remain

Statements to the Congress

current, and in an effort to better understand the
dynamics of the banking industry, the Board has
recently sponsored several surveys, including the
1988 and 1993 National Surveys of Small Business
Finances, a triennial national Survey of Consumer
Finances, and telephone surveys in specific merger
cases, to assist it in defining geographic markets in
banking. These surveys and other evidence continue to suggest that small businesses and households tend to obtain their financial services in thenlocal area. This local geographic market definition
would, of course, be less important for the financial
services obtained by large businesses.
With this basic local market orientation of households and small businesses in mind, the staff constructs a local market index of concentration, the
HHI, which is widely accepted as a sensitive measure of market concentration, to conduct a preliminary screen of a proposed merger. The HHI is
calculated based on local bank and thrift deposits.
The merger would not be regarded as anticompetitive if the resulting market share, the HHI, and the
change in that index do not exceed the criteria in
the Justice Department's merger guidelines for
banking. However, while the HHI is an important
indicator of competition, it is not a comprehensive
one. In addition to statistics on market share and
bank concentration, economic theory and evidence
suggest that other factors, such as potential competition, the strength of the target, and the market
environment may have important influences on
bank behavior. These other factors have become
increasingly important as a result of many recent
procompetitive changes in the financial sector.
Thus, if the resulting market share and the level
and change in the HHI are within Justice Department guidelines, there is a presumption that the
merger is acceptable, but if they are not, a more
thorough economic analysis is required.
Because the importance of the other factors that
may influence competition often varies from case
to case and market to market, an in-depth economic
analysis of competition is required in each of those
merger proposals when the Justice Department
guidelines are exceeded. To conduct such an analysis of competition, the Board uses information from
its own major national surveys noted above, from
telephone surveys of households and small businesses in the market being studied, from on-site
investigations by staff members, and from various

1097

standard databases with information on market
income, population, deposits, and other variables.
These data, along with results of general empirical
research by Federal Reserve System staff members,
academics, and others, are used to assess the importance of various factors that may affect competition. To provide the subcommittee with an indication of the range of other factors the Board may
consider in evaluating competition in local markets, I shall briefly outline these considerations.
Potential competition, or the possibility that
other firms may enter the market, may be regarded
as a significant procompetitive factor. It is most
relevant in markets that are attractive for entry and
when barriers to entry, legal or otherwise, are low.
Thus, for example, potential competition is of relatively little importance in markets in which entry is
unlikely for economic reasons, such as in smaller
markets. For potential competition to be a significant factor, it will generally be necessary for there
to be potential acquisition targets as well as meaningful potential entrants. These conditions are most
likely to be relevant in urban markets.
Thrift institution deposits are now typically
accorded 50 percent weight in calculating statistical measures of the effect of a merger on market
structure for the Board's analysis of competition.
In some instances, however, a higher percentage
may be included if thrift institutions in the relevant
market look very much like banks, as indicated
by the substantial exercise of their transactions
account, commercial lending, and consumer lending powers.
Competition from other depository and nonbank
financial institutions may also be given weight if
such entities clearly provide substitutes for the
basic banking services used by most households
and small businesses. In this context, credit unions
and finance companies may be particularly important, and over time, nonbank competition has
become substantially more important.
The competitive significance of the target firm
can be a factor in some cases. For example, if the
bank being acquired is not a reasonably active
competitor in a market, its market share might be
given a smaller weight in the analysis of competition than otherwise.
Adverse structural effects may be offset somewhat if the firm to be acquired is located in a
declining market. This factor would apply when a

1098

Federal Reserve Bulletin • December 1995

weak or declining market is clearly a fundamental
and long-term trend, and there are indications that
exit by merger would be appropriate because exit
by closing offices is not desirable and shrinkage
would lead to diseconomies of scale. This factor is
most likely to be relevant in rural markets.
Competitive issues may be reduced in importance if the bank to be acquired has failed or is
about to fail. In such a case, it may be desirable to
allow some adverse competitive effects if this
means that banking services will continue to be
made available to local customers rather than be
severely restricted or perhaps eliminated.
A very high level of the HHI could raise questions about the competitive effects of a merger
even if the change in the HHI is less than the
Justice Department criteria. This factor would be
given additional weight if there has been a clear
trend toward increasing concentration in the
market.
Finally, other factors unique to a market or firm
would be considered if they are relevant to the
analysis of competition. These factors might
include evidence on the nature and degree of competition in a market, information on pricing behavior, and the quality of services provided.
Some merger applications are approved only
after the applicant proposes the divestiture of offices in local markets, retention of which would
otherwise violate Justice Department guidelines,
and when the merger cannot be justified using any
of the criteria I have just discussed. We believe that
such divestitures have provided a useful vehicle for
eliminating the potentially anticompetitive effects
of a merger in specific local markets while allowing the bulk of the merger to proceed.

Safety and Soundness

Criteria

In acting upon merger applications, the Board is
required to consider financial and managerial
resources and the future prospects of the firm. In
doing so, the Board's goal is to promote and protect the safety and soundness of the banking system
and to encourage prudent acquisition behavior by
applicant banking organizations. Indeed, except in
very special circumstances, usually involving failing banks, the Board will not approve a merger or

acquisition unless the resulting organization is
expected to be strong and viable.
The Board expects that holding company parents
will be a source of strength to their bank subsidiaries. In doing so, the Board generally requires that
the holding company applicant and its subsidiaries
be in at least satisfactory overall condition and that
any weaknesses be addressed before Board action
on a proposal. The holding company applicant
must be able to demonstrate the ability to make the
proposed acquisition without unduly diverting
financial and managerial resources from the needs
of its existing subsidiary banks.
These general principles apply regardless of the
size or type of acquisition—banking or nonbanking. The financial and managerial analysis of an
application includes an evaluation of the existing
organization, including bank and nonbank subsidiaries, the parent company, and the consolidated
organization, as well as an evaluation of the entity
to be acquired. Also included in this analysis are
the financial and accounting effects of the transaction, that is, the purchase price, the funding and
sources thereof, and any purchase accounting
adjustments. Numerous factors are analyzed for
strengths and weaknesses, including earnings, asset
quality, cash flow, capital, risk management, internal controls, and compliance with law and regulation. As the size of the applicant or resulting organization increases because of mergers or internal
growth, so generally does the complexity of this
analysis. Additionally, areas in which weaknesses
or potential issues are identified receive more
intense scrutiny. The financial condition and management of the resulting organization are expected
to be satisfactory and financial and managerial
resources to be sufficient in relation to the risk of
the transaction; thus, significant problems or issues
must be resolved for favorable action.

Community Reinvestment Act Criteria
The Community Reinvestment Act (CRA) performance of banking organizations that seek the
Board's approval to acquire a bank or thrift institution is a major component of the "convenience and
needs" criteria that must be considered by the
Board. In making its judgments, the Board pays

Statements to the Congress

particular attention to CRA examination findings.
In addition, any comments received from the public regarding an applicant's CRA performance
become part of the official record, and such comments are reviewed carefully. The Board has developed a substantial record in this area.
Banks supervised by the Federal Reserve
System—regardless of the size or the geographic
scope of a bank's operations—are examined for
CRA purposes generally every eighteen months.
Banking organizations with identified weaknesses
in their consumer compliance are examined even
more frequently. Our practice is to review the performance of banks with large intrastate branching
systems by examining a sample of branches, which
consists of all major branches plus one-tenth of all
small branches selected on a rotating basis. The
agencies will need to develop a similar procedure
for large interstate branch systems as well. Some
adjustments may be necessary, though, to ensure
that the CRA examination process continues to
work well for banking organizations that span
several states.
The Board expects that banking organizations
will have policies and procedures in place and
working well to address and implement their CRA
responsibilities before Board consideration of bank
expansion proposals. The Board generally does not
accept promises for future action in this area as
a substitute for a demonstrated record of performance. Instead, the Board has accepted commitments for future action as a means of addressing
areas of weakness in an otherwise satisfactory
record. When commitments have been accepted,
the Board monitors progress in implementing the
proposed actions, both through reports and through
the application process.

POTENTIAL IMPLICATIONS
OF BANK MERGERS
The increased rate of bank mergers has raised a
number of concerns regarding the potential effects
of banking consolidation on those consumers
whose demands for banking services are primarily
local in nature and on the performance of the
merged banks (including prices paid by consumers
at those banks).

Effects of Mergers
on Locally Limited

1099

Customers

The current merger wave in the banking industry is
likely to have only modest effects on the availability of services to households and small businesses
that rely primarily on local providers for their
financial services and often have few convenient
alternatives for such services. There are two reasons for this: (1) to date, most mergers have not
been between banks operating primarily in the
same local banking markets; and (2) the effects of
intramarket mergers can be, and thus far have been,
limited by both market forces and antitrust constraints on such mergers.
Even in those places in which in-market mergers
have occurred, the effect on competition has, on
average, not been substantial. This, of course, does
not mean that users of bank services will never be
harmed by mergers. No policy can guarantee that
result. But, the trends in local market concentration
I discussed earlier indicate that the Board's application of antitrust standards to within-market merger
applications generally has preserved competition.
In addition, the Board's policies have almost certainly discouraged some potential bank mergers
before an application was ever filed. Moreover,
considerable intramarket consolidation could occur
without significant anticompetitive effects. Many
urban markets could see a relatively large number
of in-market mergers before antitrust guidelines
would be violated. Furthermore, legislation passed
during the 1980s made thrift institutions more
important competitors for banking services, and
this has helped to reduce concerns about anticompetitive effects from intramarket bank mergers.
Proposed legislation before this subcommittee may
make thrift institutions even more bank-like,
encouraging even greater competition.
Although many small banks remain viable competitors in markets after larger bank mergers, some
research suggests that large banks may adopt new
banking technologies—such as automated teller
machines and bank credit cards—more rapidly than
small banks. Thus, bank mergers may enhance
consumer convenience. On the other hand, inmarket bank mergers often lead to some branch
closings, raising concerns that consumer convenience may be harmed. Indeed, one of the factors
reviewed in a CRA examination is the bank's

1100

Federal Reserve Bulletin • December 1995

record of opening and closing offices. However, as
I pointed out earlier, there has been a substantial
increase in the number of bank offices in the United
States in recent years, and the number of ATMs has
increased dramatically (from almost 14,000 in 1980
to almost 110,000 in 1994). More important, there
is no reason to suspect that the market factors that
have led to this increase in the number of offices
and ATMs have changed. Indeed, the abolition of
constraints on interstate branches will greatly facilitate this process. That is, if merging banks should
close branches, the opening of branches by existing
competitors or by new entrants to the market is
likely to occur as new profit opportunities arise.
Such opportunities should become even easier with
full interstate branching, which will take effect
in June 1997 under the Interstate Banking and
Branching Efficiency Act of 1994. If consumers
demand locational convenience, banks of all sizes
will need to be responsive if they expect to remain
viable competitors for retail customers.

Effects of Mergers on Bank

Performance

Federal Reserve System staff members and others
have conducted numerous studies over many years
on the effects of bank mergers and acquisitions.
Some of these studies have focused on the effect of
mergers on bank profits and prices, while others
have looked at the potential for cost savings and
efficiencies derived from mergers.
Of those studies concerned with profits and
prices, some have looked directly at the effects of
mergers, while a majority have approached this
issue more indirectly by examining how bank profits and prices differ across banking markets. Each
type of study is relevant to an assessment of the
impact of bank mergers on performance.
Studies of differences in bank profitability across
markets with varying degrees of concentration represent the oldest type of study relevant to the issue.
Typically, such studies have found that banks operating in more concentrated markets exhibit somewhat higher profits than do banks in less concentrated markets. These higher profits may reflect the
lesser degree of competition in more concentrated
markets. Many have argued, however, that they are
simply an indication of the greater efficiency and
lower costs of the largest firms in such markets.

This challenge is suspect because if a market is
competitive, above-normal profits, whatever their
origin, should be driven down to a competitive
level.
Other studies have looked across banking markets for differences in the prices that banks charge
their loan and deposit customers. For the most part,
such studies have found that banks located in relatively concentrated markets tend to charge higher
interest rates for certain types of loans, particularly
small business loans, and tend to offer lower interest rates on certain types of deposits, particularly
transactions accounts, than do banks in less concentrated markets. These studies have been less subject to question than profit studies and therefore
tend to be clearer in terms of their implications for
merger policy. In particular, they suggest that mergers resulting in relatively high levels of local banking market concentration can adversely affect local
bank customers. That is, these studies support the
need to maintain antitrust constraints if locally
limited bank customers are to continue to receive
competitively priced banking services.
A related issue relevant to the effect of mergers
concerns the prospect that, through merger, greater
bank efficiency can be achieved, thus yielding a
healthier, more competitive banking firm. Studies
that are relevant to the effect of mergers on bank
efficiency may be divided into those that do and
those that do not look directly at the effects of
mergers.
A large number of studies have sought to determine whether larger banking organizations exhibit
lower average costs than do smaller organizations.
In general, these studies of "scale economies" find
that cost advantages of large firms either do not
exist or are quite small and that most do not find
scale economies to exist beyond the range of a
small- to medium-sized bank. Thus, simply by
achieving larger size, mergers seem unlikely to
yield greater efficiency.
Another strand of research has attempted to discover whether there are important differences in the
efficiency with which banks use inputs to produce a
given level of services. These studies, which essentially focus on the efficiency effects of management
skills, suggest that some banks, both large and
small, are just a lot better than others at using their
inputs, such as labor and capital, in a productive
way. Indeed, estimates of these so-called cost effi-

Statements to the Congress

ciencies suggest that management skills dominate
any benefits from economies of scale. In addition,
there is some evidence that these differences in
management efficiencies play a role in the incidence of bank failure. It is estimated that more than
50 percent of the bank failures in the 1980s came
from the highest (noninterest) cost quartile of
banks, while fewer than 10 percent are estimated to
have occurred in the lowest cost quartile.
In the past several years, numerous researchers
have sought to determine whether past mergers
have resulted in cost savings. Many such studies
examine the changes in noninterest expenses
observed before and after the merger and, in some
cases, compare them to the same changes observed
concurrently in banks that did not participate in
mergers. Other research has used the event study
methodology to examine how the stock market
reacted to merger announcements. The great majority of these studies have not found evidence of
substantial efficiency gains from mergers. Evidence on the relative efficiency of acquiring and
acquired firms is mixed.
Let me emphasize that most of these studies are
based on many mergers and thus provide the basis
for statistically valid generalizations. However, in
some individual merger cases, cost savings and
improved efficiency have been reported. Furthermore, the previously noted evidence indicating
substantial differences in the relative efficiency of
banks suggests that substantial cost savings are
theoretically possible for many banks. For example, a study done at the Board a few years ago
estimated that annual cost savings of about $17 billion would result if the lowest cost banks in the
country were to acquire the highest cost banks, and
if the costs of the acquired banking organizations
were subsequently reduced to the level of the acquiring banks. While some of these cost differences
may simply reflect differences in the level and
types of services offered to the public, such results
are nevertheless suggestive of potential gains from
acquisitions of inefficientfirmsby efficient ones. In
addition, it appears that in the evolving world of
high technology and global markets for corporate
banking, there is greater emphasis on efficiency to
survive. This has probably played a role in the
efficiency gains noted in some of the individual
recent large mergers. On balance, a possible future
scenario is that it may become increasingly com-

1101

mon for relatively efficient banks to take over
relatively inefficient ones and convert the more
poorly performing institutions into viable, low-cost
competitors. Surely consumers of financial services
could only be better off if such a future occurs and
competitive markets are maintained.

CONCLUSION

The recent wave of large mergers and merger
announcements reflects to a large degree a natural
response to new opportunities for geographic
expansion as legal restraints are removed. The
industry is moving away from a legally fragmented
banking structure toward a nationwide banking
structure. Rapid technological changes and global
competition in corporate banking are almost certainly a motivating factor for the very large banks.
The increased pace of bank mergers since the
early 1980s has greatly reduced the number of U.S.
banking organizations and resulted in a substantially higher nationwide concentration of banking
assets at the 100 largest banks. However, concentration in local banking markets, which is normally
considered most important for the analysis of possible competitive effects, has remained virtually
unchanged. In addition, there continues to be new
bank entry and there is a continuing increase in the
number of banking offices. This illustrates that the
U.S. banking structure is highly dynamic and that
sweeping generalizations are extremely difficult to
make.
The dynamic nature of U.S. banking means that
analysis of the potential competitive and other
effects of individual bank mergers must be done on
a case-by-case, market-by-market basis. The Federal Reserve devotes considerable resources to this
end. Many factors are considered in the analysis,
including actual competition from bank and nonbank sources, potential competition, the general
economic health of the market, and a variety of
other factors unique to a given market. In addition,
safety and soundness and CRA concerns are highly
relevant.
To date, the available evidence suggests that
recent mergers have not resulted in adverse effects
on the vast majority of consumers of banking services. It is certainly possible that some customers
have been disadvantaged by some mergers. And

1102

Federal Reserve Bulletin • December 1995

mergers can no doubt be very disruptive to bank
employees as functions are consolidated and reorganized. But these disruptions do not appear to
differ substantively from similar disruptions in
other industries that have experienced or are undergoing fundamental change.
It is also clear that substantial harm to consumers
would occur if mergers were allowed to decrease
competitive pressures significantly. However, market developments and the removal of geographic
restrictions on banks have significantly lessened
the chances for anticompetitive effects. In addition,
the antitrust standards enforced by the bank regulatory agencies and the Department of Justice have
helped to ensure the maintenance of competition.
The evidence to date does not indicate that, on
average, substantial efficiency improvements have
resulted from bank mergers. However, in recent
years, there appear to have been some cases of
improvements in efficiency, and our staff work
does suggest the potential for such savings if well-

managed entities acquire and modify the operations
of high-cost organizations. Given the continuing
pressures for cost minimization in banking, it certainly seems possible that some of this potential
will be realized in the future.
In sum, law, regulation, and market forces have
so far kept banking markets competitive, and the
same forces should continue to do so as banks
adjust to a new legal and more competitive environment. Bank consolidation to date has not
reduced competition in any meaningful way, and
we see no reason why it should begin to do so.
While there have been only a few cases of demonstrable efficiency gains from past mergers, there is
reason to expect that there may be a higher incidence of such gains in the future. Given that potential and the antitrust laws protecting competition,
the Board sees no reason to be concerned if a
banking organization's management and stockholders choose to respond to the changing environment
by consolidating with other such organizations. •

1103

Announcements
MEETING OF CONSUMER ADVISORY

COUNCIL

The Federal Reserve Board announced on
October 12, 1995, that the Consumer Advisory
Council would hold its next meeting on Thursday,
November 2, and that the session would be open to
the public. The council's function is to advise the
Board on the exercise of the Board's responsibilities under the Consumer Credit Protection Act
and on other matters on which the Board seeks its
advice.

DEVELOPMENT OF NEW SOFTWARE FOR
INSTITUTIONS OFFERING MORTGAGE LOANS
The Federal Reserve announced on October 19,
1995, the development of a computer software
program designed to serve as an analytic tool
for financial institutions in offering affordable
mortgage loans to low- and moderate-income
applicants.
The software program, entitled Partners, was
developed by Ron Zimmerman, a vice president of
the Federal Reserve Bank of Atlanta. The program
can determine within seconds if potential homebuyers can qualify, mathematically, for a home purchase loan, given the underwriting criteria and
financial information provided.
The program assists in breaking down the barriers between the loan officer and the potential applicant by offering new and innovative ways to look
at home purchase financing. It identifies ten qualifying alternatives, from self-help actions to loan
subsidies or grants, to help those applicants interested in obtaining a mortgage loan who may not
qualify for the loan based on their current financing
criteria.
Besides determining loan eligibility, Partners
offers loan amortization schedules, equity buildup
calculations, and secondary market considerations
and can instantly recognize the opportunities and

risks to financing safe and sound, affordable home
mortgage loans.
The Partners program can also be used by community groups, government agencies, and other
community development practitioners who offer
home purchase loans.
The software can be installed on a standalone, IBM compatible computer and operates in
a Microsoft Windows environment. Copies of the
program will be distributed free of charge to all
member banks (Federal Reserve state member
banks and national banks). A copy of the program may be ordered from the Federal Reserve
Community Affairs Office in each Federal Reserve
District: Atlanta, 404-589-7226; Boston, 617-9733095; Chicago, 312-322-5910; Cleveland, 216579-2891; Dallas, 214-922-5266; Kansas City, 816881-2476; Minneapolis, 612-340-6913; New York,
212-720-5921; Philadephia, 215-574-6482; Richmond, 804-697-8448; St. Louis, 314-444-8644; and
San Francisco, 415-974-3314.

SCHEDULE FOR REVIEW OF MAJOR FEDERAL
RESERVE REGULATIONS
The Federal Reserve Board issued on October 11,
1995, a schedule for review of its major regulations, policy statements, and other regulatory guidance, pursuant to the requirements of section 303
of the Riegle Community Development and Regulatory Improvement Act of 1994.
The timetable should enable interested parties
to comment meaningfully at various points in
the review process, including providing suggestions for the development of regulatory proposals.
Several major regulatory reviews are currently
under way: Regulation T (Credit by Brokers and
Dealers); Regulation E (Electronic Funds Transfers); Regulation M (Consumer Leasing); and
Regulation K (International Banking Operations), subpart A (Investments by Foreign Bank-

1104

Federal Reserve Bulletin • December 1995

ing Organizations in U.S. Subsidiaries). Copies
of the timetable are available from Publications Services, Mail Stop 127, Board of Governors
of the Federal Reserve System, Washington, DC
20551.

PUBLICATION OF THE REVISED LISTS OF
OTC STOCKS AND OF FOREIGN STOCKS
SUBJECT TO MARGIN REGULATIONS

The Federal Reserve Board on October 27, 1995,
published a revised list of over-the-counter stocks
that are subject to its margin regulations (OTC list).
Also published was a revised list of foreign equity
securities (foreign list) that meet the margin criteria
in Regulation T (Credit by Brokers and Dealers).
These lists are published quarterly for the information of lenders and the general public.
The lists became effective November 13, 1995,
and supersede the previous lists that were effective
August 14, 1995. The next revision of the lists is
scheduled to be effective February 1996.
The changes that were made to the revised OTC
list, which now contains 4,252 OTC stocks, are as
follows:
• One hundred ninety-eight stocks have been
included for the first time, 172 under National
Market System (NMS) designation.
• Forty-eight stocks previously on the list have
been removed for substantially failing to meet the
requirements for continued listing.

• Fifty-three stocks have been removed for
reasons such as listing on a national securities
exchange or involvement in an acquisition.
The OTC list is composed of OTC stocks that
have been determined by the Board to be subject to
margin requirements in Regulations G (Securities
Credit by Persons other than Banks, Brokers, or
Dealers), T, and U (Credit by Banks for Purchasing
or Carrying Margin Stocks). It includes OTC stocks
qualifying under Board criteria and also includes
all OTC stocks designated as NMS securities.
Additional NMS securities may be added in the
interim between quarterly Board publications; these
securities are immediately marginable upon designation as NMS securities.
The foreign list specifies those foreign equity
securities that are eligible for margin treatment at
broker-dealers. There was one addition to and one
deletion from the foreign list; it now contains
701 foreign equity securities.

FEDERAL RESERVE STATISTICAL RELEASES
Now MAILABLE BY FAX

Subscriptions to some of the Board's statistical
releases may now be ordered via fax. The list of
releases and their prices appears on pages A76A77 of this issue. To order a subscription to a
release, contact Publications Services, Board of
Governors of the Federal Reserve System, Washington, DC 20551; telephone (202) 452-3244 or by
fax (202) 728-5886.
•

1105

Legal Developments
ORDERS ISSUED UNDER BANK HOLDING

COMPANY

ACT

Orders Issued Under Section 3 of the Bank
Holding Company Act
NationsBank Corporation
Charlotte, North Carolina
NB Holdings, Inc.
Charlotte, North Carolina
Order Approving the Acquisition of a Bank
NationsBank Corporation and its wholly owned subsidiary, NB Holdings, Inc. (together, "NationsBank"), both
of Charlotte, North Carolina, bank holding companies
within the meaning of the Bank Holding Company Act
("BHC Act"), have applied for the Board's approval
under section 3 of the BHC Act (12 U.S.C. § 1842), to
acquire Intercontinental Bank, Miami, Florida ("Intercontinental").1
Notice of the application, affording interested persons
an opportunity to submit comments, has been published
(60 Federal Register 44,891 (1995)). The time for filing
comments has expired, and the Board has considered the
application and all comments received in light of the
factors set forth in section 3(c) of the BHC Act.
NationsBank, with total consolidated assets of
$184.2 billion, is the fourth largest commercial banking
organization in the United States, and operates subsidiary banks in nine states and the District of Columbia.2
NationsBank is the fourth largest depository institution
in Florida, controlling deposits of approximately
$17.1 billion, representing 10.8 percent of total deposits
in depository institutions in the state.3 Intercontinental is
the ninth largest depository institution in Florida, con-

1. NationsBank has established a de novo national bank subsidiary into which Intercontinental would be merged. Subsequent to
consummation of this proposal, NationsBank anticipates that the
surviving bank would be merged into its Florida banking subsidiary, NationsBank of Florida, N.A., Tampa, Florida.
2. Asset data are as of June 30, 1995. NationsBank also operates
a limited-purpose credit card bank in Delaware.
3. State deposit data are as of June 30, 1995. In this context,
depository institutions include commercial banks, savings banks,
and savings associations.

trolling deposits of approximately $952 million, representing less than 1 percent of total deposits in depository
institutions in the state. Upon consummation of this
proposal, NationsBank would remain the fourth largest
depository institution in Florida, controlling deposits of
approximately $18 billion, representing 11.5 percent of
total deposits in depository institutions in the state.
NationsBank and Intercontinental compete directly in
the Miami-Ft. Lauderdale and West Palm Beach banking
markets in Florida. The Board has carefully considered
the effects that consummation of this proposal would
have on competition in these banking markets in light of
all the facts of record, including the characteristics of the
markets, the competition offered by other depository
institutions in the markets, and the increase in the concentration of total deposits in depository institutions4 in
the markets as measured by the Herfindahl-Hirschman
Index ("HHI"). 5 Consummation of this proposal would
not exceed Justice Department guidelines in either of the
markets, and numerous competitors would remain in
each market. Based on all the facts of record, the Board
has concluded that consummation of this proposal would
not result in any significantly adverse effect on competi-

4. Market data are as of June 30, 1994. Market share data are
based on calculations in which the deposits of thrift institutions are
included at 50 percent. The Board previously has indicated that
thrift institutions have become, or have the potential to become,
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 calculations of market share
on a 50 percent basis. See, e.g., First Hawaiian, Inc., 11 Federal
Reserve Bulletin 52 (1991).
5. Under the revised Department of Justice Merger Guidelines,
49 Federal Register 26,823 (June 29, 1984), a market in which the
post-merger HHI is below 1000 is considered to be unconcentrated,
and a market in which the post-merger is between 1000 and 1800 is
considered to be moderately concentrated. The Justice Department
has informed the Board that a bank merger or acquisition generally
will not be challenged (in the absence of other factors indicating
anticompetitive effects) unless the post-merger HHI is at least 1800
and the merger 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 eflFects
implicitly recognize the competitive effects of limited-purpose and
other non-depository financial entities. Upon consummation of this
proposal, the HHI would increase by 44 points to 841 in the
Miami-Ft. Lauderdale banking market, and would increase by
11 points to 1149 in the West Palm Beach banking market.

1106

Federal Reserve Bulletin • December 1995

tion or the concentration of banking resources in any
relevant banking market.
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 bank holding company, if certain
conditions are met.6 These conditions 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.
Convenience and Needs

Considerations

In acting upon an application to acquire a depository
institution under the BHC Act, the Board must consider
the convenience and needs of the communities to be
served, and take into account the records of the relevant
depository institutions under the Community Reinvestment Act (12 U.S.C § 2901 et seq.) ("CRA"). The CRA
requires the federal financial supervisory agencies to
encourage financial institutions to help meet the credit
needs of the local communities in which they operate,
consistent with their safe and sound operation. To accomplish this end, the CRA requires the appropriate
federal supervisory authority to "assess the institution's
record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of
such institution," and to take that record into account in
its evaluation of bank holding company applications.8
The Board has received comments on this proposal
from the International Brotherhood of Teamsters, Warehousemen and Helpers ("Protestant") alleging that

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. For purposes
of the BHC Act, the home state of NationsBank is North Carolina.
7. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and
(B). NationsBank's subsidiary banks are adequately capitalized and
adequately managed. Intercontinental has been in existence and
continuously operated for the minimum period of time required
under Florida law. In addition, upon consummation of this proposal, NationsBank 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. All
other requirements of section 3(d) of the BHC Act also would be
met upon consummation of this proposal.
8. 12 U.S.C. § 2903.

NationsBank's subsidiary banks and NationsBanc Mortgage Corporation, Dallas, Texas ("NationsBanc Mortgage"), its nonbanking mortgage lending subsidiary, discriminate against African Americans in home mortgage
lending. In particular, Protestant asserts that data filed
under the Home Mortgage Disclosure Act ("HMDA")
for 1993 show that NationsBank denied a higher percentage of loan applications from African Americans than
from non-minorities in the cities of Miami, Dallas, Baltimore, and the District of Columbia.9 In addition, Protestant contends that both NationsBank and Intercontinental
made a disproportionately small number of loans to
African Americans in the Miami market. Protestant also
argues that NationsBank's ascertainment and marketing
efforts are not directed toward providing products and
services related to the needs of African-American members of the communities it serves, and that this proposal
may result in a reduction of branches, branch personnel
and banking services in the markets currently served by
Intercontinental.10
The comments submitted by Protestant in the context
of this application also were filed in connection with
NationBank's proposal to acquire CSF Holdings, Inc.,
Miami, Florida. The Board has fully addressed these
comments in its order approving that proposal.11 For the
reasons explained in the Board's order in that case,
which are incorporated by reference in this order, and
based on all the facts of record in these cases, the Board
believes that convenience and needs factors, including
CRA performance records, are consistent with approval

9. Protestant supports these allegations by citing several studies
and compilations of mortgage lending data by The Wall Street
Journal (1993), the National Community Reinvestment Coalition
(1995), the Washington Lawyers' Committee for Civil Rights and
Urban Affairs (1994), and an individual researcher at the University
of Texas (1992).
10. In addition, Protestant reiterates criticisms of NationsBank's
record of CRA performance that were considered by the Board in
connection with a 1994 application to acquire branches of California Federal Bank, F.S.B., Los Angeles, California. Protestant alleges, for example, that NationsBank illegally discriminates against
African Americans in mortgage lending in Florida, and, in particular, the Tampa Bay area. Protestant also contends that NationsBank
reneged on a commitment to support the Florida Community Development Assistance Corporation. Based on all the facts of record,
and for the reasons discussed in this order and the 1994 order
(which are incorporated herein), the Board does not believe that
these allegations warrant denial of this proposal. See NationsBank
Corporation, 80 Federal Reserve Bulletin 1A1 (1994). Protestant
also cites a 1994 civil judgment against NationsBank, which ordered it to honor the commitment of an acquired banking organization to purchase a Georgia federal savings bank, as additional
evidence of NationsBank's failure to comply with its commitments.
Based on all the facts of record, the Board does not believe that this
incident reflects so adversely on NationsBank as to warrant denial
of this proposal.
11. See NationsBank
1121 (1995).

Corporation,

81 Federal Reserve

Bulletin

Legal Developments

of this application. In particular, the Board notes that all
of NationsBank's subsidiary banks received either a
"satisfactory" or "outstanding" rating from the Office
of the Comptroller of the Currency ("OCC"), their
primary federal supervisor, in their most recent public
examinations for CRA performance. Intercontinental received a "satisfactory" CRA performance rating from
the Federal Deposit Insurance Corporation, its primary
federal supervisor, as of September 1994. NationsBank
has indicated that it would implement its CRA policies
and procedures at Intercontinental following consummation of this proposal.
In addition, the Board notes NationsBank's progress
under its Community Investment Program ("CIP"), a
10-year commitment to make a minimum of $10 billion
of community investment loans.12 Under this program,
NationsBank loaned $2.2 billion in 1992, $2.9 billion in
1993, and $3.4 billion in 1994. During 1993,
NationsBank made CIP loans totalling $91.9 million in
the Miami market; $358 million in the Dallas market;
$38.2 million in the Baltimore market; and $346.1 million in the District of Columbia market.
Other

should be, and hereby is, approved.14 The Board's approval is specifically conditioned upon compliance by
NationsBank with all commitments made in connection
with this application as well as the conditions discussed
in this order. The commitments and conditions relied on
by the Board in reaching this decision are deemed to be
conditions imposed in writing by the Board in connection with its findings and decision, and as such may be
enforced in proceedings under applicable law. This approval is also conditioned upon NationsBank receiving
all necessary Federal and state approvals.
This transaction shall not be consummated before the
fifteenth calendar day following the effective date of this
order, or later than three months after the effective date
of this order, unless such period is extended for good
cause by the Board or the Federal Reserve Bank of
Richmond, acting pursuant to delegated authority.
By order of the Board of Governors, effective
October 17, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
WILLIAM W. WILES

Considerations

The Board also has concluded that the financial and
managerial resources and future prospects of
NationsBank and its subsidiaries and of Intercontinental,
and the other supervisory factors the Board must consider under section 3 of the BHC Act, are consistent with
approval.13
Based on the foregoing, and in light of all the facts of
record, the Board has determined that this application

12. CIP is a collection of special products and services, such as
home mortgage loans, student loans, and loans to public/private
partnerships, designed to benefit low- and moderate-income individuals and small businesses.
13. Protestant notes published accounts regarding an alleged
violation of the anti-tying restrictions enacted by the BHC Act
amendments of 1970 by NationsBank's South Carolina banking
subsidiary and alleged improper marketing practices in the sale of
retail nondeposit investments by NationsBank's securities brokerage subsidiary. Both of these activities were reviewed by the OCC,
and the Board has carefully considered the information from this
review. In addition, the Board has considered the anti-tying policies
adopted by NationsBank and steps it has taken relating to the sale
of retail nondeposit investments. In response to an internal audit,
for example, NationsBank has adopted a revised Code of Ethics,
increased disclosure requirements, and expanded its audit procedures, to ensure that its retail nondeposit investment sales practices
are in compliance with all supervisory guidelines. The OCC has
indicated that NationsBank's progress in this regard is generally
satisfactory. In view of all the facts of record, including supervisory
information provided by the OCC, the Board does not believe that
these matters warrant denial of this proposal.

1107

Secretary of the Board

The Shorebank Corporation
Chicago, Illinois
Order Approving Acquisition of a Bank Holding
Company
The Shorebank Corporation, Chicago, Illinois ("Shorebank"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has
applied under section 3(a)(3) of the BHC Act
(12 U.S.C. § 1842(a)(3)) to acquire all the voting shares
of Indecorp, Inc., Chicago, Illinois ("Indecorp"), and
thereby indirectly acquire Indecorp's subsidiary banks,

14. Protestant references a newspaper account of an investigation
by the Department of Labor of alleged illegal discriminatory employment practices by NationsBank. The Board notes that because
NationsBank's subsidiary banks employ more than 50 people,
serve as depositories of government funds, and act as agents in
selling or redeeming U.S. savings bonds and notes, each bank is
required by Department of Labor regulations to:
(1) File annual reports with the Equal Employment Opportunity
Commission; and
(2) Have in place a written affirmative action compliance program which states its efforts and plans to achieve equal opportunity in the employment, hiring, promotion, and separation of
personnnel.
See 41 C.F.R. 60-1.7(a), 60-1.40. The record also indicates that
NationsBank and its other subsidiaries are subject to those equal
opportunity and affirmative action requirements.

1108

Federal Reserve Bulletin • December 1995

Independence Bank ("Independence") and Drexel
National Bank, Chicago, Illinois ("Drexel"). 1
Notice of the application, affording interested persons
an opportunity to submit comments, has been published
(60 Federal Register 37,448 (1995)). The time for filing
comments has expired, and the Board has considered the
application and all comments received in light of the
factors set forth in section 3(c) of the BHC Act. 2
Shorebank controls two banks and is the 73d largest
commercial banking organization in Illinois, controlling
deposits of $254.6 million, representing less than 1 percent of total deposits in commercial banking organizations in the state. Indecorp is the 84th largest commercial
banking organization in Illinois, controlling deposits of
$226.9 million, representing less than 1 percent of total
deposits in commercial banking organizations in the
state. Upon consummation of this proposal, Shorebank
would become the 45th largest commercial banking organization in the state, and control deposits of
$481.5 million as of June 30, 1995, representing less
than 1 percent of total deposits in commercial banking
organizations in the state.
Shorebank and Indecorp compete directly in the Chicago, Illinois, banking market ("Chicago banking market"). 3 The Board has carefully considered comments
maintaining that this proposal would have a significant
adverse effect on competition in this banking market.4
Shorebank is the 60th largest commercial banking
organization in the market, controlling deposits of
$241.1 million, representing less than 1 percent of total
deposits in commercial banking organizations in the
market ("market deposits"). Indecorp is the 58th largest
commercial banking organization in the market, controlling deposits of $246.2 million, representing less than
1 percent of market deposits. After consummation of this
proposal, Shorebank would become the 38th largest
commercial banking organization in the market, controlling deposits of $487.3 million as of June 30, 1994,
representing less than 1 percent of total deposits in
commercial banking organizations in the market. The

1. Shorebank would eventually merge both Drexel and Independence with and into Shorebank's lead bank subsidiary, South Shore
Bank, Chicago, Illinois ("South Shore Bank"). Shorebank's other
subsidiary, Shore Bank & Trust Company, Cleveland, Ohio, is a
recently chartered commercial bank that commenced business in
the first quarter of 1995.
2. The Board received 64 comments on this proposal during the
public comment period. Sixty-one commenters supported the proposal and three opposed it. After the expiration of the public
comment period, the Board received two additional comments
opposing the proposal.
3. The Chicago banking market is approximated by Cook,
Du Page, and Lake Counties, all in Illinois.
4. One commenter asserts that Shorebank would have a market
share exceeding 25 percent in the Chicago banking market but does
not provide the basis for his calculation.

Chicago banking market would remain unconcentrated
as measured by the Herfindahl-Hirschman Index
("HHI"), 5 and numerous competitors would remain in
the market.
The record also indicates that the institutions involved
in this application are among the smaller banking organizations in the Chicago banking market. Within this market, the combined share of market deposits for Shorebank and Indecorp (with savings associations weighted
at 50 percent) would be less than 1 percent. Moreover,
the market would remain unconcentrated following consummation and it would be served by more than 100
banking and thrift competitors. The Chicago banking
market also is an attractive market for entry and interstate acquisitions are authorized under Illinois law.
Based on all the facts of record, the Board concludes that
consummation of this proposal is not likely to result in
significantly adverse effects on competition or the concentration of banking resources in the Chicago banking
market or any other relevant banking market.6
Convenience and Needs

Considerations

In acting on an application to acquire a depository institution, the Board must consider the convenience and
needs of the communities to be served, and take into
account the records of the relevant depository institutions under the Community Reinvestment Act
(12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires
the federal financial supervisory agencies to encourage
financial institutions to help meet the credit needs of the
local communities in which they operate, consistent with
their safe and sound operation. To accomplish this end,
5. The post-merger HHI for the Chicago banking market would
remain unchanged at 546. Under the revised Department of Justice
Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a
market in which the post-merger HHI is less than 1000 is considered to be unconcentrated. In such markets, the Justice Department
is unlikely to challenge a merger. 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.
6. The Board also concludes that the proposed investment by
other bank holding companies in Shorebank in connection with this
transaction is not likely to have an adverse effect on competition in
the market. Each of these proposed investments is limited to
varying amounts of nonvoting equity of Shorebank, and is consistent with the Board's rules and precedents for noncontrolling
investments. In addition, the Board notes that these investments
would not have significantly adverse competitive effects in the
Chicago banking market in light of the small share of market
deposits controlled by Shorebank after consummation and the
unconcentrated nature of the Chicago banking market.

Legal Developments

the CRA requires the appropriate federal supervisory
authority to "assess the institution's record of meeting
the credit needs of its entire community, including lowand moderate-income neighborhoods, consistent with
the safe and sound operation of such institutions," and to
take that record into account in its evaluation of bank
expansion proposals.7
Numerous commenters expressed support for this proposal. These commenters cited personal experiences
with Shorebank and lauded Shorebank's record of lending in the communities it serves. A member of Congress
also commented that Shorebank's lead subsidiary bank,
South Shore Bank, Chicago, Illinois ("South Shore
Bank") has had a beneficial impact on the neighborhoods it serves through various community lending, real
estate development and business investment efforts.
The Board also received comments that asserted that
both Shorebank and Indecorp had poor records of helping to meet the credit needs of the African-American
community. For example, the Community Banking Coalition ("Coalition") and the Chicago Southside Branch
of the NAACP criticized the lending record of South
Shore Bank and Indecorp to African-American borrowers.8 These commenters also maintained that the proposed acquisition would significantly reduce the amount
of credit that would be available to the communities
served by Indecorp, substantially weaken the viability of
the last remaining African-American-owned bank in
Chicago, preclude entry of new minority-owned banks
into the Chicago banking market, and result in a loss of
jobs currently held by African Americans.
The Board has carefully reviewed the CRA performance records of the subsidiary banks of Shorebank and
Indecorp, all comments received regarding this application, Shorebank's response to these comments, and all
other relevant facts of record in light of the CRA, the
Board's regulations and the Statement of the Federal
Financial Supervisory Agencies Regarding the Community Reinvestment Act ("Agency CRA Statement").9
Record

of Performance

Under the CRA

A. CRA Performance Examinations
The Agency CRA Statement provides that a CRA examination is an important and often controlling factor in the

7. 12 U.S.C. § 2903.
8. The Coalition contends that South Shore approved only
411 loans in 1993, less than 1 percent of the loans made by banks
in Chicago, and denied over 40 percent of the loan applications it
received from African-American applicants. The Coalition also
noted low levels of lending to African-American borrowers by
Independence and Drexel.
9. 54 Federal Register 13,742 (1989).

1109

consideration of an institution's CRA record and that
reports of these examinations will be given great weight
in the applications process. 10 The Board notes that South
Shore Bank received an "outstanding" rating from its
primary federal supervisor, the Federal Deposit Insurance Corporation ("FDIC"), at its most recent examination for CRA performance, as of May 9, 1994. Indecorp's subsidiary bank, Independence, received "needs
to improve" ratings from the FDIC at its two most
recent CRA performance examinations, as of August 29,
1994, and May 7, 1993. Indecorp's other subsidiary
bank, Drexel, received a "satisfactory" rating from its
primary federal supervisor, the Office of the Comptroller
of the Currency ("OCC"), at its most recent examination for CRA performance, as of April 2, 1992.

B. Shorebank's Record Serving Low- and
Moderate-Income Communities
Shorebank became a bank holding company in 1972
through the acquisition of South Shore Bank, a commercial bank located in a deteriorating south side neighborhood of Chicago (the "South Shore community").
Shorebank's strategic plan has been to revitalize this
distressed community of over 80,000 residents through a
comprehensive neighborhood development approach
that has involved equity and debt financing. From 1974
to 1994, South Shore Bank has made approximately
$290 million in loans to individuals and entities in many
of Chicago's low- and moderate-income and minority
neighborhoods ("new development loans"). 11 During
this period, Shorebank has provided financial assistance
for rehabilitating over 16,000 housing units. In 1994,
Shorebank made more than 467 new development loans
totalling $30.8 million.
Shorebank offers a variety of residential mortgage
lending programs, including a single-family lending
product that provides financing of up to 97 percent of the
purchase price of the property. In 1994, South Shore
Bank made 141 one-to-four unit single family new development loans totalling $8.4 million. Forty-four of
these loans, totalling $3 million, were made to South
Shore community residents. In the same year, the bank
also made 68 multi-family new development loans totalling $11.6 million. Thirty-one of these loans, totalling

10. Id. at 13,742.
11. In addition to the South Shore community's minority and
low- and moderate-income communities of Chatham-Avalon,
Auburn-Gresham and South Woodlawn, Shorebank has assisted in
meeting the credit needs of Austin (Chicago's west side) and
businesses owned by African Americans and Hispanics in Chicago.
While South Shore Bank's lending in the South Shore community
concentrates primarily on the acquisition and rehabilitation of
multi-family housing, its lending in Austin is strongly focused on
single-family mortgages and the financing of small manufacturers.

1110

Federal Reserve Bulletin • December 1995

$6.1 million, were extended to residents of the South
Shore community. Also in 1994, South Shore Bank
made 85 home improvement new development loans
totalling $1.1 million. Sixteen of these loans, totalling
$236,000, were extended to South Shore community
residents. For the first eight months of 1995, the bank
has extended 93 housing-related loans totalling $8 million to South Shore community residents. The bank also
underwrites loans through Federal Housing Administration ("FHA") and Veterans Administration ("VA") loan
programs, and was recently approved as a qualified FHA
lender. FHA loan originations will commence during the
third quarter of 1995.
In addition, South Shore Bank is an active Small
Business Administration ("SBA") lender in Chicago and
participates in the Certified Lenders, Preferred Lenders,
Low-Doc, and Cap Line programs offered by the SBA.
Shorebank and South Shore Bank also actively engage
in small business lending, with special programs focusing on minority-owned businesses in low- and moderateincome areas. For example, South Shore Bank made
17 small business new development loans totalling
$2.7 million in 1994, which includes ten small business
loans totalling $1.8 million to businesses in Chicago's
South Shore community. For the first six months of
June 1995, the bank made ten small business loans
totalling $1.2 million to businesses in the South Shore
community.
Shorebank also uses its nonbank subsidiaries to assist
in community development activities. For example, City
Lands Corporation ("CLC") is a for-profit real estate
development company that was established by Shorebank to increase the number of rehabilitated residential
and commercial properties for rent or sale in the South
Shore community and Austin. 12 Since 1978, CLC has
developed more than 1,800 residential units and 129,000
square feet of commercial space totalling approximately
$122 million in fair market value. The Neighborhood
Fund ("TNF") is a SBA-licensed small business investment company created by Shorebank that specializes in
making equity and debt investments in minority-owned
businesses in Chicago. With a total portfolio of nineteen
investments totalling $1.9 million, TNF continues to
provide venture capital for minority businesses. TNF
also works closely with South Shore Bank by providing
additional financing to small businesses that have a
borrowing relationship with the bank.
Other Shorebank initiatives provide assistance to lowand moderate-income neighborhoods. For example, The
Neighborhood Institute ("TNI") provides low- and

12. CLC recently completed a complex subsidy and equity
finance package for the renovation of 87 apartment units in five
buildings in the South Shore community, and a 161-unit rental
project in Austin.

moderate-income residents with a variety of services
including job training and placement, remedial education, and housing and small business development assistance.13 Shorebank Advisory Services was established in
1988 to meet the increasing demand by depository and
non-depository institutions for Shorebank's expertise in
community development lending.

C. CRA Performance Record of Indecorp
As previously noted, Independence has received two
consecutive "needs to improve" CRA performance ratings from the FDIC. At the most recent examination,
conducted in August, 1994, examiners noted that the
bank's CRA performance had improved; however,
examiners identified continued deficiencies in the bank's
ascertainment and marketing activities, as well as limited lending within its delineated community and no
lending within certain specific neighborhoods of the
delineated service area.14
In light of all the facts of record, and for the reasons
previously discussed, the Board believes that Shorebank
has the types of policies and programs in place at South
Shore Bank that are effective in helping meet the credit
needs of its entire community, including low- and
moderate-income and minority neighborhoods. Shorebank has committed that, following consummation of
this proposal, it will implement policies and programs to
improve the CRA performance records of the Indecorp
banks. The Board expects Shorebank to improve the
CRA performance records of both Indecorp banks and
will review Shorebank's progress in future applications
to establish or acquire depository institutions.15

13. TNI has also provided financing for the construction of the
second phase of a 19-unit single-family housing project, and has
assisted the City of Chicago's New Homes for Chicago Program in
the construction of 12 new homes. In addition, TNI hosted six
home buyers and homeowners seminars and a Home Improvement
Fair in 1994. Moreover, 180 adults participated in TNI's literacy
program during this year.
14. An individual commenter objects to the proposal because
Shorebank intends to reduce the delineated service community of
Independence and Drexel. Shorebank responds that after acquisition, it will substantially increase the lending activity of Independence, and concentrate on community development lending. Shorebank believes that this objective requires a reduction in the size of
Independence's current delineated service community. Within one
year after acquiring Indecorp and merging the banks with South
Shore, Shorebank will reevaluate South Shore's community delineation. The Board notes that the proposed modification would be
subject to review by Independence's primary federal supervisor, the
FDIC. Based on all the facts of record, the Board believes that the
decision to modify Independence's delineated service community
is reasonable and does not warrant denial of the application.
15. The Board also has carefully considered the comments suggesting that this proposal should be denied, either because the
purchaser of Indecorp should be an African-American-owned bank

Legal Developments

D. HMDA Data
The Board has also carefully reviewed 1993 and 1994
data of Shorebank and Indecorp under the Home Mortgage Disclosure Act ("HMDA") in light of protestants'
comments. An analysis of South Shore Bank's HMDA
data indicate that African Americans constituted approximately 88 percent of the population in South Shore
Bank's delineated community in 1993 and 87 percent in
1994. During 1994, African Americans furnished approximately 91 percent of the total applications received
by South Shore Bank, a percentage that is significantly
higher than the percentage of applications received from
African Americans by the aggregate of all HMDA lenders in South Shore Bank's delineated community, which
is approximately 61 percent. In addition, South Shore
Bank's denial rate for African-American applicants was
13 percent in 1993, compared to a 16.7 percent denial
rate for white applicants. In 1994, South Shore Bank's
denial rate for African-American applicants increased to
25.8 percent, but its denial rate for white applicants
increased to 27.3 percent. In both years, South Shore
Bank's performance, as measured by either the percentage of applications received from, or loans originated to,
African-American applicants, compared favorably to
aggregate data for all banks in the delineated area. The
data also show that South Shore Bank's percentage of
applications and originations in minority census tracts
was greater than the aggregate's percentage of applications and originations these tracts in 1993 and 1994.
An analysis of Indecorp's HMDA data indicate that
African Americans furnished approximately 97.4 percent of the total applications received by Independence
in its delineated community in 1993, and 94.2 percent of
the total applications received by Independence in its

or bank holding company, or because the proposal would have an
adverse effect on the provision of credit in the African-American
community. Other commenters allege that the proposal would
result in a loss of jobs that are currently held by African Americans.
The CRA expresses Congress's intention that all communities
receive access to banking and credit services, and requires the
Board to carefully consider how banks making acquisitions have
fulfilled their responsibilities under the CRA. In this instance, the
Board's review indicates that South Shore is meeting the credit
needs of the communities that it serves, most of which are predominately African-American communities. Moreover, there is no evidence in the record that the proposed acquisition would in any way
prevent the establishment of any other bank to serve the AfricanAmerican community, or impair the ability of existing banks to
serve the African-American community. In addition, the Board is
prohibited by law and the U.S. Constitution from requiring that a
bank be purchased by members of a specific racial or ethnic group.
Accordingly, the Board concludes, based on its review of all the
facts of record, including South Shore's CRA performance examinations, and its plans to improve the lending performance of
Independence and Drexel, that these comments do not warrant
denial of the application.

1111

delineated community in 1994. In addition, Independence's denial rate for African-American applicants was
47.4 percent in 1993, and 32.7 percent in 1994. African
Americans furnished approximately 50.5 percent of the
total applications received by Drexel in 1993, and
71.7 percent of the total applications received by Drexel
in 1994. Drexel's denial rate for African-American applicants was 45.5 percent in 1993, and 47.4 percent in
1994. Data on denial rates for both banks in 1993 and
1994 compare unfavorably with data for the aggregate of
all HMDA lenders in the delineated area.
The Board has recognized that HMDA data alone
provide an incomplete measure of an institution's lending in its community, and that these data have limitations
that make the data an inadequate basis, absent other
information, for concluding that an institution has engaged in illegal discrimination in making lending decisions. The Board notes that reports of examination for all
the subsidiary banks of Shorebank and Indecorp by their
primary federal supervisors found the banks to be in
compliance with the substantive provisions of fair housing and fair credit laws. Examiners also found no evidence of illegal discriminatory credit practices at any of
the subsidiary banks.

E. Conclusion
The Board has carefully considered all the facts of
record, including the comments received on all subsidiary banks of Shorebank and Indecorp, Shorebank's responses, and the banks' CRA performance examinations. Based on a review of the entire record, the Board
concludes that convenience and needs considerations,
including the CRA records of performance of Shorebank's subsidiary banks, are consistent with approval of
this application.16

16. A commenter has requested that the Board hold a public
hearing or meeting on this proposal to clarify factual disputes and
present certain facts as part of the record. 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. No supervisory agency has recommended
denial of the proposal.
Generally, 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 this request. In the Board's view, the
commenter has had ample opportunity to submit his views, and has
presented written submissions to the Board. The commenter's
request fails to demonstrate why its written submissions do not
adequately present its allegations or why a public hearing or
meeting is otherwise warranted in this case. 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 this application, or otherwise warranted in this case.

1112

Federal Reserve Bulletin • December 1995

Other

Considerations

The Board also concludes that the financial and managerial resources17 and future prospects of Shorebank, Indecorp, and their respective subsidiary banks, and other
supervisory factors the Board must consider under section 3 of the BHC Act, are consistent with approval of
this proposal.18
Based on the foregoing, and in light of all the facts of
record and the commitments made in connection with
this application, the Board has determined that this application should be, and hereby is, approved. The Board's
approval is specifically conditioned on compliance by
Shorebank with all commitments made in connection
with this application. The commitments and conditions
Accordingly, the commenter's request for a public hearing or
meeting on this application is denied.
17. Some comments have alleged that investments in Shorebank
by several large non-minority-owned financial institutions would
permit these investors to control Shorebank to the detriment of the
African-American community, and represent an effort by large
majority-owned banks to eliminate minority-owned financial institutions. The Board has carefully reviewed the current and proposed
investments by bank holding companies in Shorebank. Shorebank
currently has 46 shareholders, none of which owns more than
7.5 percent of the total number of voting shares. Five bank holding
companies currently have investments in Shorebank, none of which
control more than 5 percent of the total voting shares of Shorebank.
As a part of this proposal, two additional bank holding companies
would provide financing to Shorebank for this acquisition in the
form of non-voting common stock and debt to Shorebank. Each of
these bank holding companies has made commitments that the
Board has previously relied upon to ensure that an investing bank
holding company does not exercise a controlling influence over the
institution it invests in and acquires shares as a passive investment.
In light of the wide dispersal of Shorebank's voting shares, the
commitments referred to above, and the public benefits that would
accrue as a result of increased funding capabilities at Shorebank,
the Board believes that the comments do not warrant denial of this
proposal.
18. The Board has received comments from an individual alleging that Shorebank has exercised a controlling influence over the
management and policies of Independence without prior Board
approval in violation of the BHC Act and the Board's Rules,
including the authorization by South Shore Bank's president to
terminate the employment of an Indecorp employee. Shorebank
responds that its representatives have not attended any meetings of
the Independence board of directors or its executive committee.
Shorebank notes that a representative has attended credit committee meetings, but that he had no vote at any such meetings, and no
authority to approve or veto matters that came before the committee. Indecorp also has represented that Shorebank does not exercise
control over the management, policies or operations of Independence or its subsidiaries. Finally, Indecorp and Shorebank deny that
Shorebank exercised any influence or control in connection with
the dismissal of the employee in question, noting that South Shore
Bank's president did not attend the meeting at which the termination of employment was decided. The commenter has provided no
evidence that contradict these statements, only allegations. Based
on all the facts of record, the Board concludes that no controlling
influence has been exercised by Shorebank and that these comments do not warrant denial of this proposal.

relied on by the Board in reaching this decision are
deemed to be conditions imposed in writing by the
Board in connection with its findings and decision, and,
as such, may be enforced in proceedings under applicable law.
This transaction shall not be consummated before the
fifteenth calendar day following the effective date of this
order, and 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 Chicago, acting pursuant
to delegated authority.
By order of the Board of Governors, effective
October 16, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Phillips, and Yellen. Absent and
not voting: Governor Lindsey.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

UB&T Financial Corporation
Dallas, Texas
UB&T Delaware Financial Corporation
Dover, Delaware
Order Approving Formation of Bank Holding
Companies and Acquisition of a Bank Holding
Company
UB&T Financial Corporation, Dallas, Texas, and its
wholly owned subsidiary, UB&T Delaware Financial
Corporation, Dover, Delaware (together, "Applicants"),
have applied under section 3 of the Bank Holding Company Act (12 U.S.C. § 1842(a)(1)) ("BHC Act") to become bank holding companies by acquiring all the voting shares of United Bank & Trust, N.A., Dallas, Texas
("United Bank"). Applicants also have applied under
section 3 of the BHC Act to acquire all the voting shares
of Southeast Bancshares, Inc. ("Southeast"), and
thereby indirectly acquire its wholly owned subsidiary,
Commercial National Bank ("Commercial Bank"), both
of Dallas, Texas.1
Notice of these applications, affording interested persons an opportunity to submit comments, has been published (60 Federal Register 26,436 and 37,897 (1995)).
The time for filing comments has expired, and the Board
has considered these applications and all comments re-

1. Applicants propose to dissolve Southeast immediately after its
acquisition, merge Commercial Bank into United Bank, and retain
Commercial Bank's sole office as a branch of United Bank.

Legal Developments

ceived in light of the factors set forth in section 3 of the
BHC Act.
Applicants are nonoperating companies formed for the
purpose of acquiring United Bank and Southeast. United
Bank is the 341st largest commercial banking organization in Texas, with deposits of $54.4 million, representing less than 1 percent of total deposits in commercial
banking organizations in the state.2 Southeast is the
378th largest commercial banking organization in Texas,
with deposits of $49 million, representing less than
1 percent of total deposits in commercial banking organizations in the state. Upon consummation of this proposal, Applicants would become the 171st largest commercial banking organization in Texas, with deposits of
$103.4 million, representing less than 1 percent of the
state's banking deposits.
United Bank and Commercial Bank compete directly
in the Dallas banking market.3 United Bank and Commercial Bank are the 45th and 49th largest depository
institutions, respectively, in the market.4 Upon consummation of this proposal, the market would remain moderately concentrated, as measured by the HerfindahlHirschman Index ("HHI"), and this proposal would not
exceed the Department of Justice merger guidelines.5 In
addition, numerous competitors would remain in the
market. Accordingly, based on all the facts of record, the
Board concludes that consummation of this proposal is
not likely to result in significantly adverse effects on

2. Deposit data are as of June 30, 1995.
3. The Dallas banking market consists of Dallas County, the
southwest quadrant of Collin County, the southeast quadrant of
Denton County, the northern half of Rockwall County, and the
communities of Forney and Terrell in Kaufman County, Midlothian, Waxahachie, and Ferris in Ellis County, and Grapevine and
Arlington in Tarrant County, all in Texas.
4. All market data are as of June 30, 1994. In this context,
depository institutions include commercial banks, savings banks,
and savings associations. Market share data are based on calculations in which the deposits of thrift institutions are included at
50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, significant
competitors of commercial banks. See WM Bancorp, 76 Federal
Reserve Bulletin 788 (1990); National City Corporation, 70 Federal Reserve Bulletin 743 (1984).
5. The HHI for the Dallas banking market would remain unchanged at 1281 as a result of this transaction. 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 postmerger 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.

1113

competition or the concentration of banking resources in
the Dallas banking market or any other relevant banking
market.
Convenience and Needs

Considerations

In considering an application to acquire a depository
institution, the Board must consider the convenience and
needs of the communities to be served and take into
account the records of the relevant depository institutions under the Community Reinvestment Act
(12 U.S.C. § 2901 et seq.) ("CRA"). The CRA requires
the federal financial supervisory agencies to encourage
financial institutions to help meet the credit needs of the
local communities in which they operate, consistent with
their safe and sound operation. To accomplish this end,
the CRA requires the appropriate federal supervisory
authority to "assess the institution's record of meeting
the credit needs of its entire community, including lowand moderate-income neighborhoods, consistent with
the safe and sound operation of such institutions," and to
take that record into account in its evaluation of these
applications.6
The Board has received comments from the Black
State Employees Association of Texas, Inc. ("Protestant"), criticizing the records of United Bank and Commercial Bank in making home mortgage loans to African
Americans, and alleging that United Bank discriminates
against African Americans in its lending practices. Protestant also alleges that neither bank has a program in
place to ascertain the credit needs of the AfricanAmerican community or engages in marketing and outreach activities directed to that community.7

6. 12 U.S.C. § 2903.
7. Protestant requested that the Board conduct an investigation of
the lending activities and operations of United Bank and Commercial Bank and delay action and extend the public comment period
on these applications until that investigation is complete. As noted
below, the CRA performance records of both United Bank and
Commercial Bank were recently examined by the Office of the
Comptroller of the Currency ("OCC"), which is the federal agency
charged under the CRA with responsibility for evaluating the
lending performance of these banks. In addition, Protestant had
more than 45 days to submit comments on these applications,
which included two extensions of the comment period.
The Board is required by the BHC Act and the regulations
thereunder to use the appropriate federal banking agency's report
of examination to the greatest extent possible in administering the
BHC Act, and to act on applications within specified time periods.
In evaluating these applications, the Board has considered the
OCC's examination reports for United Bank and Commercial Bank,
the information and analysis submitted by Protestant, information
submitted by Applicants regarding United Bank's record of lending, and other information. Based on all the facts of record, the
Board concludes that an independent review of the lending activities and operations of United Bank and Commercial Bank by the

1114

Federal Reserve Bulletin • December 1995

The Board has carefully reviewed the CRA performance records of United Bank and Commercial Bank,
Protestant's comments, and all other relevant facts of
record in light of the CRA, the Board's regulations, and
the Statement of the Federal Financial Supervisory
Agencies Regarding the Community Reinvestment Act
("Agency CRA Statement").8
Record

of CRA

Performance

A. Evaluation of CRA Performance
The Agency CRA Statement provides that a CRA examination is an important and often controlling factor in the
consideration of an institution's CRA record and that
reports of these examinations will be given great weight
in the applications process.9 United Bank received a
"satisfactory" rating from the OCC in its most recent
examination for CRA performance as of December 1994
("United Bank Examination"). Commercial Bank received a "needs to improve" rating from the OCC in its
most recent examination for CRA performance as of
January 1995 ("Commercial Bank Examination"). In
response to the OCC's criticisms, Commercial Bank
initiated a number of measures to improve its record of
lending to low- and moderate-income and minority
members of its community.10 United Bank, which would
acquire Commercial Bank as part of the proposed transaction, also has outlined initiatives it would implement
after consummation of this proposal to address the
OCC's criticisms of Commercial Bank's record of CRA
performance.11

Federal Reserve System is not appropriate and that further delay in
acting on these applications is not warranted.
8. 54 Federal Register 13,742 (1989).
9. Id. at 13,742.
10. For example, Commercial Bank introduced a home purchase
mortgage program for households with incomes up to $30,000,
featuring flexible underwriting guidelines and reduced closing
costs, and home improvement loans for low- and moderate-income
households. In addition, Commercial Bank increased its eiforts to
ascertain the credit needs of its community. The bank hired an
independent firm to conduct a geographical analysis of its lending,
and adopted procedures under which the loan committee of the
bank's board of directors receives monthly reports geographically
analyzing the number and dollar amount of loans approved and
denied. Commercial Bank's marketing efforts also have increased.
The bank uses various media, including newspapers and coupon
packages, that advertise specific credit products and are directed to
low- and moderate-income neighborhoods. Home loan applications
and brochures in Spanish also have been introduced.
11. In addition to continuing Commercial Bank's recent CRA
initiatives, United Bank would introduce its officer calling program,
customer and community survey program, and sales program,
featuring quantified production goals and incentive bonuses, to the
former Commercial Bank office. United Bank also proposes to
expand the role of its CRA officer to a full-time position reporting

B. Ascertainment and Marketing
United Bank uses an officer calling program to identify
the credit needs of its community. United Bank is primarily a commercial lender, and its ascertainment efforts
are concentrated on establishing personal contacts with
existing and prospective commercial customers, realtors,
non-profit developers, local government officials, and
community leaders and responding to the credit and
other banking needs identified in this manner.12 United
Bank has sponsored a meeting of business owners to
inform them about the Small Business Administration
("SBA") loan application process. United Bank also
sponsored a meeting of residents of South Dallas, a
predominantly low- and moderate-income area of the
bank's community, to identify housing credit needs in
this area. Based on information gathered at the housing
program, United Bank developed a home improvement
loan product for loans in amounts between $2500 and
$5000. 13 In addition, United Bank conducts regular surveys of both existing and former customers and the
general public to ascertain community credit needs. In
response to survey results, the bank introduced a reduced
interest rate credit card and an economy checking account for small businesses, and initiated the use of a
credit card application mailer in low- and moderateincome areas of its community. United Bank further
responded to survey results by testing extended hours of
operation, opening one new branch, and negotiating to
acquire a site for a drive-through banking facility.
United Bank adopts an annual advertising schedule
that is reviewed by its Operations, Advertising, and
Training Committee to ensure that the bank's products
and services are promoted throughout its delineated community. United Bank advertises its products and services
in metropolitan newspapers and in neighborhood newspapers that serve low- and moderate-income areas of
United Bank's delineated community. Advertisements
feature several loan products, including personal loans
and credit cards.

C. Other Aspects of CRA Performance
United Bank's lending business has focused on commercial real estate and corporate lending. During the twelve
months ending in May 1995, United Bank received
231 applications for small business loans and approved
215 of them, for a total of $21.1 million. The bank also
is an approved SBA lender.

directly to the bank's president, and to develop a consumer loan
department.
12. Bank officers made 422 calls during the first quarter of 1995.
13. The bank received 15 applications and approved 10 loans
under this program in 1994.

Legal Developments

The United Bank Examination report noted that the
bank's officers are encouraged to become active members of community development organizations that provide direct benefit to United Bank's delineated community, and all officers report quarterly to the bank's CRA
officer on their activities. During the period covered by
the United Bank Examination, United Bank originated a
$750,000 loan for the development of a Native American social services center, originated a $70,000 loan for
purchase and renovation of a low- to moderate-income
apartment facility in South Dallas, purchased $100,000
of a local municipal bond issue, and donated bank property in South Dallas valued at $35,000 to a shelter for
homeless children. Examiners also noted that United
Bank oifered flexible credit terms to community development borrowers that could not qualify for loans under
the bank's normal underwriting criteria.
United Bank also provides special products and services to its customers that are not credit related. For example, the bank offers low cost checking accounts with
no minimum balance requirement and 20 free checks
a month. These accounts constitute 19 percent of the bank's
individual checking accounts. The bank also offers a
reduced cost senior citizens account, cashes Social Security
Administration checks without charge, and waives service
charges for deposit accounts of nonprofit organizations.

D. HMDA Data
The Board has carefully reviewed data collected under
the Home Mortgage Disclosure Act ("HMDA") for
United Bank and Commercial Bank during 1993 and
1994, and for United Bank during the first six months of
1995, in light of Protestant's allegation that the number
of home mortgage loans made to African Americans was
insufficient for banks of their size. HMDA data indicate
that housing-related loans at United Bank are increasing,
although their number is relatively small.14 Between
1993 and 1994, HMDA-reported loan applications increased from 12 to 18.15 Nine of the 18 applications
received in 1994 were from African Americans. Four
applications were denied, two of which were from African Americans. During the first six months of 1995,
United Bank received 14 HMDA-reported loan applications, of which five were from African Americans. Two
applications were denied, one of which was from an
African American.16

14. Residential mortgages constituted 22 percent of United
Bank's loan portfolio in 1994.
15. In 1994, 20 other applicants who sought fixed-rate mortgages, which United Bank does not offer, were referred to other
lenders.
16. Commercial Bank received 11 HMDA-reported loan applications from African Americans during 1994, of which 5, or 45

1115

The Board recognizes that HMDA data alone provide
an incomplete measure of an institution's lending in its
community, and that they have limitations that make the
data an inadequate basis, absent other information, for
concluding that an institution has engaged in illegal
discrimination in making lending decisions. The United
Bank Examination did not find any evidence of practices
that would discourage applications for any kind of credit
or any evidence of discrimination or other illegal credit
practices. The bank was in compliance with all fair
lending laws and regulatory guidance in these areas. The
United Bank Examination further noted that the bank's
delineated community and the geographic distribution of
its loan applications was reasonable. The Commercial
Bank Examination also found no evidence of practices
that would discourage applications for any kind of credit
or any evidence of discrimination or other illegal credit
practices. In addition, it found that the bank accepted
credit applications from all segments of its community,
including low- and moderate-income neighborhoods.17

E. Conclusion on Convenience and Needs
Considerations
The Board has carefully considered all the facts of
record, including Protestant's comments, in reviewing
the CRA record of performance of United Bank and
Commercial Bank. The record indicates that United
Bank has achieved a satisfactory level of CRA performance, and Applicants have committed to implement
United Bank's outreach, ascertainment, and lending programs at the Commercial Bank branch location after
consummation of the proposed transaction. United Bank
also will address weaknesses in Commercial Bank's
CRA performance as noted by the OCC. Based on a
review of the entire record, including information provided by Protestant, information provided by United
Bank concerning its lending activities in its delineated
community and its proposed efforts to improve Commercial Bank's record of CRA performance, and relevant
reports of examination, the Board concludes that convenience and needs considerations, including United
Bank's record of CRA performance, are consistent with
approval of these applications. The Board expects Appli-

percent, were denied; 14 applications from Hispanics, of which 2,
or 14 percent, were denied; and 17 applications from non-minority
applicants, of which 6, or 35 percent, were denied.
17. The examiners noted technical violations of the Equal Credit
Opportunity Act and HMDA, but found that these violations did
not affect the substance of Commercial Bank's credit granting
process. The examiners expressed concern, however, about the
bank's low volume of total loans; the high percentage of HMDArelated loans and total loans outside the bank's delineated community; and the low percentage of total loans in low- and moderateincome neighborhoods within its delineated community.

1116

Federal Reserve Bulletin • December 1995

cants to address fully the OCC's concerns about the
CRA performance record of Commercial Bank.

Orders Issued Under Section 4 of the Bank
Holding Company Act

Other

Bank South Corporation
Atlanta, Georgia

Considerations

The financial and managerial resources18 and future
prospects of Applicants, Southeast, and their respective
subsidiary banks are consistent with approval of this
proposal, as are the other supervisory factors that the
Board is required to consider under section 3 of the BHC
Act.
Based on the foregoing and after a review of all the
facts of record, the Board has determined that these
applications should be, and hereby are, approved. The
Board's approval is specifically conditioned on compliance with all the commitments made by Applicants and
the principals of Applicants and related parties, in connection with these applications. 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.
This transaction shall not be consummated before the
fifteenth calendar day following the effective date of this
order, or later than three months after the effective date
of this order, unless such period is extended for good
cause by the Board or by the Federal Reserve Bank of
Dallas, acting pursuant to delegated authority.
By order of the Board of Governors, effective
October 23, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

18. Protestant also alleges that United Bank and Commercial
Bank have not hired African Americans in numbers proportionate
to their presence in the communities served and that United Bank
has failed to abide by the terms of its December 1993 undertaking
to use Protestant's assistance in its hiring decisions and selection of
third party vendors. While the Board fully supports programs
designed to stimulate and create economic opportunities for all
members of society, the Board believes that the alleged deficiencies
in the banks' hiring practices and in United Bank's third party
contracting practices are beyond the scope of the CRA or the BHC
Act.

Order Approving a Notice to Engage in Underwriting
"Private Ownership" Industrial Development Bonds
Bank South Corporation, Atlanta, Georgia ("Bank
South"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has
provided notice under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23) of its proposal
to engage de novo through its section 20 subsidiary,
Bank South Securities Corporation, Atlanta, Georgia
("Company"), in underwriting, to a limited extent, certain "private ownership" industrial development bonds,
which are issued for the provision of the following
governmental services: water facilities, sewer facilities,
solid waste disposal facilities, electric energy and gas
facilities, and local district heating or cooling facilities
(collectively, "traditional governmental services").
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 31,309 (1995)). The time for filing
comments has expired, and the Board has considered the
applications and all comments received in light of the
factors set forth in section 4(c)(8) of the BHC Act. 1
Bank South, with total consolidated assets of approximately $7.7 billion, controls one bank subsidiary in
Georgia.2 Company currently is engaged in limited underwriting and dealing in certain municipal revenue
bonds, activities permissible under section 20 of the
Glass-Steagall Act (12 U.S.C. § 377). 3 Company is, and
will continue to be, a broker-dealer registered with the
Securities and Exchange Commission ("SEC") 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. Bank South also engages directly and through
subsidiaries in other permissible nonbanking activities.
The Board previously has determined that, subject to
the prudential framework of limitations established in
previous decisions to address the potential for conflicts

1. The only comment received by the Board on this application
expressed support for the proposal.
2. Asset data are as of March 31, 1995.
3. See Bank South Corporation, 79 Federal Reserve Bulletin 716
(1993) ("Bank
South").

Legal Developments

of interests, unsound banking practices, or other adverse
effects, the activities of underwriting and dealing in
municipal revenue bonds, including industrial development bonds, are so closely related to banking as to be
proper incidents thereto within the meaning of section
4(c)(8) of the BHC Act. 4 In previous cases in which
bank holding companies have requested approval to
underwrite and deal in only municipal revenue bonds, as
opposed to a full range of debt securities, bank holding
companies had limited their requests to underwriting and
dealing in industrial development bonds that are "public
ownership" industrial development bonds. Public ownership industrial development bonds are those "tax exempt bonds where the issuer, or the governmental unit
on behalf of which the bonds are issued, is the sole
owner for federal income tax purposes of the financed
facility."5
Bank South now proposes to engage through Company in underwriting "private ownership" industrial development bonds issued solely for the provision of traditional governmental services. Bank South has committed
to conduct this activity subject to the same limitations
and other conditions that govern underwriting and dealing in public ownership industrial development bonds.6
The underwriting risk and the risk analysis required to
underwrite "private ownership" industrial development
bonds issued for traditional governmental services is
essentially the same as the risk and analysis related to
underwriting traditional "public ownership" bonds. In
both cases, the source of repayment of the bonds is
revenue generated by the financed facility, including
revenue generated by a service contract between the
owner/lessor of the financed facility and a state or local
government or political subdivision, pursuant to which
the state or local government or political subdivision

4. Citicorp, J.P. Morgan & Co. Incorporated, and Bankers Trust
New York Corporation, 73 Federal Reserve Bulletin 473 (1987),
aff'd sub nom. Securities Industry Ass'n v. Board of Governors of
the Federal Reserve System, 839 F.2d 47 (2d Cir.), cert, denied,
486 U.S. 1059 (1988), as modified by Order Approving
Modifications to Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989)
("Citicorp/Morgan/Bankers
Trust"). See also J.P. Morgan & Co.
Incorporated, et al., 75 Federal Reserve Bulletin 192 (1989), aff'd
sub nom. Securities Industries Ass'n v. Board of Governors of the
Federal Reserve System, 900 F.2d 360 (D.C. Cir. 1990).
5. Citicorp!J.P. Morgan!Bankers Trust, 73 Federal Reserve Bulletin at 502. Examples of financed facilities include airports and mass
commuting facilities. Id.
6. Citicorp/Morgan/Bankers
Trust. All the bonds that Bank South
proposes that Company underwrite would qualify as "exempt
facility bonds" under the Internal Revenue Code ("Code"). See
26 U.S.C. § 142. The types of exempt facility bonds that Company
would underwrite may, subject to certain volume caps and other
limitations, be tax-exempt under the Code even if the proceeds of
the bonds are used to finance facilities that are privately owned. See
26 U.S.C. §§ 103, 141, 142, 146, 147.

1117

agrees to purchase the output of the facility.7 Bank South
has committed that all the "private ownership" bonds
that Company would underwrite would be rated "investment quality" by a nationally recognized rating agency
to the same extent as are the municipal revenue bonds
that Company currently underwrites.
Under these circumstances, the Board concludes that
underwriting and dealing in private ownership bonds
issued for the provision of traditional governmental services is a permissible activity if conducted subject to the
conditions and prudential limitations set forth in
Citicorp/Morgan/Bankers Trust and agreed to by Bank
South in Bank South.
In every notice under section 4 of the BHC Act, the
Board considers the financial condition and resources of
the notificant and its subsidiaries and the effect of the
transaction on these resources.8 Based on the facts of this
case, the Board concludes that financial considerations
are consistent with approval of this notice. The managerial resources of Bank South also are consistent with
approval.
In order to approve this notice, the Board also must
determine that the performance of the proposed activities
by Bank South can reasonably be expected to produce
public benefits that would outweigh possible adverse
effects under the proper incident to banking standard of
section 4(c)(8) of the BHC Act. Under the framework
established in this order and prior decisions, consummation of this proposal is not likely to result in any significantly adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of
interests, or unsound banking practices, that are not
outweighed by public benefits. The Board expects that
the entry of Bank South into the market for the proposed
activities would provide added convenience to Bank
South'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 Bank South can

7. Typically, in the case of "public ownership" bonds, the
governmental unit that issues the bonds owns the financed facility
and repays the bonds from the revenue generated by the facility and
this service contract. The governmental unit may also enter into a
contract with a third party to operate the financed facility. In the
case of the "private ownership" bonds that Bank South proposes to
underwrite, the governmental unit that issues the bonds either uses
the proceeds of the bonds to acquire or construct a facility, which
the governmental unit then leases to a third party, or lends the
proceeds of the bonds to a third party to acquire or construct the
facility. The third party agrees to make lease payments or loan
repayments to the governmental unit that enable the governmental
unit to pay debt service on the bonds. As security for the lease or
loan agreement, the third party assigns and pledges the revenues
generated by the facility and a service contract with a state or local
government or political subdivision.
8. See 12 C.F.R. 225.24.

1118

Federal Reserve Bulletin • December 1995

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 Bank South, as well as all the
terms and conditions set forth in this order and in the
above-noted Board orders, the Board has determined
that the notice should be, and hereby is, approved. Approval of this proposal is specifically conditioned on
compliance by Bank South and Company with the commitments made in connection with its notice and with
the conditions in this order and the other referenced
orders. The Board's determination also is subject to all
of the conditions set forth in Regulation Y, including
those in sections 225.7 and 225.23(b), and to the Board's
authority to require modification or termination of the
activities of a bank holding company or any of its
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 this notice, the Board
has relied on all the facts of record, and all the representations and commitments made by Bank South. For the
purpose of this action, these commitments and conditions shall be deemed conditions imposed in writing 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 Atlanta, acting pursuant
to delegated authority.
By order of the Board of Governors, effective
October 24, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

First Union Corporation
Charlotte, North Carolina
Order Approving Acquisition of a Savings

Association

First Union Corporation, Charlotte, North Carolina
("First Union"), a bank holding company within the
meaning of the Bank Holding Company Act ("BHC
Act"), has given notice under section 4 of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23) of its proposal
to acquire all the voting shares of RS Financial Corporation ("RS Financial"), and thereby indirectly acquire RS

Financial's savings association subsidiary, Raleigh Federal Savings Bank ("Raleigh FSB"), both of Raleigh,
North Carolina.1
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 47,368 (1995)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors
set forth in section 4(c)(8) of the BHC Act. 2
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. 3 The Board requires savings associations acquired by bank holding companies to conform
their direct and indirect activities to those permissible
for bank holding companies under section 4(c)(8) of the
BHC Act and Regulation Y. First Union has committed
to conform all activities of Raleigh FSB to those requirements.4
First Union, with total consolidated assets of
$77.9 billion, operates subsidiary banks in Florida, North

1. First Union proposes to merge Raleigh FSB with and into its
subsidiary bank, First Union National Bank of North Carolina,
Charlotte, North Carolina ("FUNB-NC"). FUNB-NC has filed an
application with the Office of the Comptroller of the Currency
("OCC") pursuant to section 5(d)(3) of the Federal Deposit Insurance Act (12 U.S.C. § 1815(d)(3)) ("FDI Act"), as amended, for
approval of this merger.
2. Inner City Press/Community on the Move ("Protestant")
maintains that public notice of this proposal was inadequate because First Union did not publish notice of the proposal three times
in a local newspaper. The Board's Regulation Y requires notice of a
proposed acquisition of a savings association in the Federal Register. (12 C.F.R. 225.23(c)). As a matter of policy, the Board also has
required bank holding companies to publish notice in appropriate
newspapers of a proposal to acquire a savings association under
section 225.25(b)(9) of the Board's Regulation Y (12 C.F.R.
225.25(b)(9)). See Footnote 2 in the Board's notice of final rulemaking regarding applications processing, 57 Federal
Register
41,641 (September 11, 1992). The Board's Rules of Procedure
require that applications filed under the Bank Merger Act
(12 U.S.C. § 1828(c)) be published three times in an appropriate
newspaper. See 12 C.F.R. 262.3(b)(3). Notice of applications filed
under the BHC Act, however, is only required to be published one
time in appropriate newspapers under the Board's Regulation Y.
See 12 C.F.R. 225.23(c). This is an application filed under the BHC
Act. First Union published two notices in local newspapers stating
that consideration of this proposal would include a review of the
record of First Union in helping to meet local credit needs. Based
on all the facts of record, the Board concludes that public notice of
this proposal was sufficient.
3. See 12 C.F.R. 225.25(b)(9).
4. First Union has committed that all impermissible real estate
activities will be divested or terminated within two years of consummation of the proposal, that no new impermissible projects or
investments will be undertaken during this period, and that capital
adequacy guidelines will be met, excluding specified real estate
investments. First Union also has committed that any impermissible securities or insurance activities conducted by Raleigh FSB will
cease on or before consummation.

Legal Developments

Carolina, Georgia, Tennessee, Maryland, Virginia, South
Carolina, and the District of Columbia.5 First Union is
the fourth largest commercial banking organization in
North Carolina, controlling $10.6 billion in deposits,
representing approximately 13.9 percent of total deposits
in depository institutions in the state.6 RS Financial is
the tenth largest depository institution in North Carolina,
controlling $642.3 million in deposits, representing less
than 1 percent of total deposits in depository institutions
in North Carolina. Upon consummation of this proposal,
First Union would become the second largest commercial banking organization in the state, controlling deposits of $11.2 billion, representing approximately
14.7 percent of total deposits in depository institutions in
North Carolina.
Competitive

Considerations

Under section 4(c)(8) of the BHC Act, the Board is
required to consider whether a proposal is likely to result
in any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices. First
Union and Raleigh FSB compete directly in five banking
markets in North Carolina.7 Consummation of this proposal would not result in concentration levels in those
markets that would exceed the threshold standards of
market concentration as measured by the HerfindahlHirschman Index ("HHI") under the Department of
Justice merger guidelines.8 After considering the relatively small change in concentration as measured by the
HHI, First Union's share of total deposits in depository
institutions9 in the market ("market share"),

5. Asset data are as of June 30, 1995.
6. State deposit data are as of June 30, 1995. In this context,
depository institutions include commercial banks, savings banks,
and savings associations.
7. The banking markets are the Durham/Chapel Hill Ranally
Metro Area ("RMA"), the Goldsboro RMA, the Rocky Mount
RMA, the Raleigh RMA, and Moore County markets, all in North
Carolina.
8. Market data are as of June 30, 1994. Under the revised
Department of Justice Merger Guidelines, 49 Federal
Register
26,823 (June 29, 1984), a market in which the post-merger HHI is
over 1800 is considered to be highly concentrated. In such markets,
the Justice Department is likely to challenge a merger that increases
the HHI by more than 50 points. The Justice Department has
informed the Board that a bank merger or acquisition generally will
not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and
the merger increases the HHI by more than 200 points. The Justice
Department has stated that the higher than normal HHI thresholds
for screening bank mergers for anticompetitive effects implicitly
recognize 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

1119

the number of competitors that would remain in these
markets, and all other facts of record, the Board concludes that consummation of this proposal would not
result in any significantly adverse effects on competition
or the concentration of banking resources in any relevant
banking market.
Convenience and Needs

Considerations

In acting on an application to acquire a savings association under section 4 of the BHC Act, the Board reviews
the records of the relevant depository institutions under
the ' Community Reinvestment Act (12 U.S.C § 2901
et seq.) ("CRA").11 The CRA requires the federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and
sound operation. To accomplish this end, the CRA requires the appropriate federal supervisory authority to
"assess the institution's record of meeting the credit
needs of its entire community, including low- and
moderate-income neighborhoods, consistent with the
safe and sound operation of such institution," and to take
that record into account in its evaluation of bank holding
company applications.12

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 Raleigh FSB
would be transferred to a commercial bank under this proposal,
those deposits are included at 100 percent in the calculation of First
Union'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. Upon consummation of the proposal, the HHI for the five
North Carolina banking markets would increase in the Durham/
Chapel Hill RMA (1 point to 1574), Raleigh RMA (67 points to
1161), and Moore County (1 point to 1872); and decrease in the
Goldsboro RMA (16 points to 2479) and Rocky Mount RMA
(2 points to 2081). First Union's relative size by market share in
each market would be as follows after consummation: Durham/
Chapel Hill RMA (fifth largest with 8.7 percent market share);
Goldsboro RMA (fourth largest with 7.7 percent market share);
Rocky Mount RMA (third largest with 11 percent market share);
Raleigh RMA (third largest with 14.3 percent market share); and
Moore County (third largest with 10.7 percent market share).
11. The Board previously has determined that the CRA by its
terms generally does not apply to applications by bank holding
companies to acquire nonbanking companies under section 4(c)(8)
of the BHC Act. The Mitsui Bank, Ltd., 76 Federal
Reserve
Bulletin 381 (1990). The Board also has stated that, unlike other
companies that may be acquired by bank holding companies under
section 4(c)(8) of the BHC Act, savings associations are depository
institutions, as that term is defined in the CRA, and thus acquisitions of savings associations are subject to review under the express
terms of the CRA. Norwest Corporation, 76 Federal
Reserve
Bulletin 873 (1990).
12. 12 U.S.C. § 2903.

1120

Federal Reserve Bulletin • December 1995

Protestant contends that First Union's record of performance under the CRA is deficient in a number of respects, including ascertainment, marketing and outreach
activities; housing-related and small business lending;
available banking services; and branch locations and
closing policies. Protestant also maintains that data filed
under the Home Mortgage Disclosure Act 13 indicate that
First Union's subsidiary banks and mortgage company
illegally discriminate in their lending activities.
The Board notes that First Union's lead bank subsidiary, FUNB-NC, received an "outstanding" rating from
its primary federal supervisor, the OCC, at its most
recent publicly available examination for CRA performance in April 1994. First Union's remaining seven
subsidiary banks received "satisfactory" ratings from
the OCC in the most recent examinations of their CRA
performance.14 Examiners also found that all of First
Union's banks were in compliance with applicable antidiscrimination laws and regulations and that none of the
banks engaged in practices that would discourage individuals from applying for credit.15 Raleigh FSB received
an "outstanding" CRA performance rating from the
Office of Thrift Supervision, its primary federal supervisor, in July 1995. First Union has indicated that it would
incorporate FUNB-NC's CRA policies and procedures
at Raleigh FSB after consummation of this proposal.
Protestant's comments on this notice also were filed in
connection with First Union's proposal to acquire First
Fidelity Bancorporation, Newark, New Jersey, and Philadelphia, Pennsylvania. The Board fully addressed these
comments in its order approving that proposal.16 For the
reasons explained in the Board's order in that case,
which are incorporated by reference in this order, and
based on all the facts of record in these cases, the Board
believes that convenience and needs factors, including
CRA performance records, are consistent with approval
of this notice.
Other

Considerations

The Board also concludes that the financial and managerial resources and future prospects of First Union, RS
Financial, and their respective subsidiaries are consistent
with approval of this proposal.17

13. 12 U.S.C. § 2801 et seq.
14. The OCC conducted a joint CRA examination of all First
Union subsidiary banks, including FUNB-NC, in April 1994.
15. Based on all the facts of record, and for the reasons stated in
the First Union/First Fidelity Order, the Board believes that the
OCC's 1994 examinations sufficiently reviewed the fair lending
performance of First Union's subsidiary banks.
16. See First Union Corporation, 81 Federal Reserve Bulletin
1143 (1995) ("First Union/First Fidelity Order").
17. Protestant makes unsupported allegations that the bidding
process for RS Financial was flawed and that First Union has

The record also indicates that consummation of this
proposal would result in increased economies of scale
and a broader financial network through which First
Union could serve customers in North Carolina. In addition, former RS Financial customers would have increased services, including special lending and leasing
programs, corporate banking and cash management
products, trust services, and investment management
services, and access to First Union's entire banking
network. The Board also finds that consummation of this
proposal is not likely to result in any significantly adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interests, or
unsound banking practices that would outweigh the public benefits of this proposal. Accordingly, the Board has
determined that the balance of public interest factors it
must consider under section 4(c)(8) of the BHC Act is
favorable and consistent with approval.
Based on all the facts of record, including the commitments made to the Board by First Union in connection
with this notice, and for the reasons discussed in the
First Union/First Fidelity Order, the Board has determined that this notice should be, and hereby is, approved.18 The Board's approval is specifically condi-

improperly entered into contracts to sell certain RS Financial
branches before receiving regulatory approval. First Union denies
any improper actions, and states that five potential purchasers
submitted bids to acquire RS Financial, with First Union's being
selected by RS Financial as the winning bidder. In addition, First
Union notes that agreements to sell the RS Financial branches are
contingent on receipt of regulatory approval. The Board has carefully reviewed these and other comments submitted by Protestant
on First Union's application to acquire First Fidelity relating to
managerial resources in light of all the facts of record, including
reports of examination assessing the management and policies of
First Union and its subsidiary banks, and other supervisory information from First Union's primary federal supervisors. Based on
this review, and for the reasons stated above and in the First
Union/First Fidelity Order, the Board does not believe that these
comments warrant denial of the proposal.
18. Protestant has requested that the Board hold a public hearing
or meeting on this notice. The Board's rules for processing applications provide that a hearing is required under section 4 of the BHC
Act only if there are disputed issues of material fact that cannot be
resolved in some other manner. 12 C.F.R. 225.23(g). In addition,
the Board may, in its discretion, hold a public hearing or meeting
on an application to clarify factual issues related to the application
and to provide an opportunity for testimony, if appropriate.
12 C.F.R. 262.3(e) and 262.25(d). Protestant has had ample opportunity to present its views, and has submitted substantial written
comments that have been considered by the Board. After careful
review of all the facts of record, the Board believes that Protestant's request disputes the weight accorded to, and the conclusions
that may be drawn from, the facts of record, and does not identify
disputed issues of fact that are material to the Board's decision.
Protestant also fails to show why a written presentation would not
suffice and to summarize what evidence would be presented at a
hearing or meeting. See 12 C.F.R. 262.3(e). In light of the record in
this case, the Board does not believe that a hearing or meeting is

Legal Developments

tioned on compliance by First Union with all
commitments made in connection with this notice and
on First Union and FUNB-NC receiving all necessary
federal and state approvals, including approval of the
OCC under the FDI Act. 19
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(b)(3) (12 C.F.R. 225.7 and
225.23(b)(3)), and to the Board's authority to require
such modification or termination of the activities of a
holding company or any of its subsidiaries as the Board
finds necessary to assure compliance with, or to prevent
evasion of, the provisions and purposes of the BHC Act
and the Board's regulations and orders issued thereunder. The commitments and conditions relied on by the
Board in reaching this decision are deemed to be conditions imposed in writing by the Board in connection with
its findings and decision, and as such may be enforced in
proceedings under applicable law.
The transaction shall not be consummated later than
three months following the effective date of this order,
unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of Richmond,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
October 26, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

NationsBank Corporation
Charlotte, North Carolina
Order Approving the Acquisition of a Savings
Association
NationsBank Corporation, Charlotte, North Carolina
("NationsBank"), a bank holding company within the
meaning of the Bank Holding Company Act ("BHC
Act"), has filed notice pursuant to 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 CSF Holdings, Inc.
("CSF"), and thereby indirectly acquire its wholly

necessary to clarify the factual record or is otherwise required or
warranted. Accordingly, the request for a public meeting or hearing
on this notice is hereby denied.
19. For the reasons discussed in the First Union!First
Fidelity
Order, the Board does not believe that a delay in acting on this
application, as requested by Protestant, is warranted.

1121

owned subsidiary, Citizens Federal Bank, a Federal Savings Bank ("Citizens"), both of Miami, Florida.1
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 44,501 (1995)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors
set forth in section 4(c)(8) of the BHC Act.
The Board has determined that the operation of a
savings association is closely related to banking and
permissible for bank holding companies. 12 C.F.R.
225.25(b)(9). In making this determination, the Board
requires that savings associations acquired by bank holding companies conform their direct and indirect activities to those permissible for bank holding companies
under section 4 of the BHC Act. NationsBank has committed to conform all activities of CSF to the requirements of section 4 of the BHC Act and Regulation Y.
NationsBank, with total consolidated assets of
$184.2 billion, is the fourth largest commercial banking
organization in the United States, and operates subsidiary banks in nine states and the District of Columbia.2
NationsBank is the fourth largest depository institution
in Florida, controlling deposits of approximately
$17 billion, representing approximately 10.8 percent of
total deposits in depository institutions in the state.3 CSF
is the sixth largest depository institution in Florida,
controlling deposits of approximately $3.6 billion, representing approximately 2.3 percent of total deposits in
depository institutions in the state. Upon consummation
of this proposal, NationsBank would become the third
largest depository institution in Florida, controlling deposits of approximately $20.7 billion, representing approximately 13.1 percent of total deposits in depository
institutions in the state.
NationsBank and CSF compete directly in ten banking
markets in Florida. The Board has carefully considered
the effects that consummation of this proposal would
have on competition in these banking markets in light of
all the facts of record, including the characteristics of the
markets, the competition offered by other depository
institutions in the markets, and the increase in the con-

1. Citizens currently operates branches in California and Virginia
in addition to its main office and branches in Florida. Subsequent to
consummation of this proposal, NationsBank anticipates that Citizens would sell its California and Virginia branches to third parties
and, thereafter, that Citizens would merge into NationsBank's
Florida banking subsidiary, NationsBank of Florida, N.A., Tampa,
Florida. NationsBank also would retain Citizens' interest in Community Reinvestment Group, L.C., Ft. Lauderdale, Florida.
2. Asset data are as of June 30, 1995. NationsBank also operates
a limited-purpose credit card bank in Delaware.
3. State deposit data are as of June 30, 1995. In this context,
depository institutions include commercial banks, savings banks,
and savings institutions.

1122

Federal Reserve Bulletin • December 1995

centration of total deposits in depository institutions4 in
the markets as measured by the Herfindahl-Hirschman
Index ("HHI"). 5 Consummation of this proposal would
not exceed Justice Department guidelines in any of the
markets, and numerous competitors would remain in
each market.6 Based on all the facts of record, the Board
has concluded that consummation of this proposal would
not result in any significantly adverse effect on competition or the concentration of banking resources in any
relevant banking market.
Convenience and Needs

Considerations

In considering a notice to acquire a savings association
under section 4 of the BHC Act, the Board reviews the
records of performance of the relevant institutions under
the Community Reinvestment Act (12 U.S.C. § 2901
et seq.) ("CRA").7 The CRA requires the federal financial supervisory agencies to encourage financial institutions to help meet the credit needs of the local communities in which they operate, consistent with their safe and
sound operation. To accomplish this end, the CRA re-

4. Market data are as of June 30, 1994. 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 788 (1990);
National City Corporation,
70 Federal Reserve Bulletin 743
(1984). Because the deposits of CSF would be controlled by a bank
holding company under this proposal, those deposits are included
at 100 percent in the calculation of pro forma market share. See
Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992);
First Banks, Inc., 76 Federal Reserve Bulletin 669 (1990).
5. Under the revised Department of Justice Merger Guidelines,
49 Federal Register 26,823 (June 29, 1984), a market in which the
post-merger HHI is above 1800 is considered to be highly concentrated. In such markets, the Justice Department is likely to challenge a merger that increases the HHI by more than 50 points. The
Justice Department has informed the Board that a bank merger or
acquisition generally will not be challenged (in the absence of other
factors indicating anticompetitive effects) unless the post-merger
HHI is at least 1800 and the merger increases the HHI by more than
200 points. The Justice Department has stated that the higher than
normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effects of limitedpurpose and other non-depository financial entities.
6. The changes in the HHI in the ten banking markets are set
forth in the Appendix.
7. 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. See 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. See Norwest Corporation, 76 Federal Reserve
Bulletin 873 (1990).

quires the appropriate federal supervisory authority to
"assess the institution's record of meeting the credit
needs of its entire community, including low- and
moderate-income neighborhoods, consistent with the
safe and sound operations of such institutions," and to
take that record into account in its evaluation of bank
holding company applications.8
The Board has received comments on this notice from
the International Brotherhood of Teamsters, Warehousemen and Helpers ("Protestant") alleging that
NationsBank's subsidiary banks and NationsBanc
Mortgage Corporation, Dallas, Texas ("NationsBanc
Mortgage"), its nonbanking mortgage lending subsidiary, discriminate against African Americans in home
mortgage lending. In particular, Protestant asserts that
data filed under the Home Mortgage Disclosure Act
("HMDA") for 1993 show that NationsBank denied a
higher percentage of loan applications from African
Americans than from non-minorities in the cities of
Miami, Florida; Dallas, Texas; Baltimore, Maryland;
and Washington, D.C. 9 In addition, Protestant contends
that both NationsBank and CSF made a disproportionately small number of loans to African Americans in the
Miami market. Protestant also argues that NationsBank's
ascertainment and marketing efforts are not directed
toward providing products and services related to the
needs of African-American members of the communities
it serves, and that this proposal may result in a reduction
of branches, branch personnel and banking services in
the markets currently served by CSF.10

8. See 12 U.S.C. § 2903.
9. Protestant supports these allegations by citing several studies
and compilations of mortgage lending data by The Wall Street
Journal (1993), National Community Reinvestment Coalition
(1995), Washington Lawyers' Committee for Civil Rights and
Urban Affairs (1994), and an individual researcher at the University
of Texas (1992).
10. In addition, Protestant reiterates criticisms of NationsBank's
record of CRA performance that were considered by the Board in
connection with a 1994 application to acquire branches of California Federal Bank, F.S.B., Los Angeles, California. Protestant alleges, for example, that NationsBank illegally discriminates against
African Americans in mortgage lending in Florida, and, in particular, the Tampa Bay area. Protestant also contends that NationsBank
reneged on a commitment to support the Florida Community Development Assistance Corporation. Based on all the facts of record,
and for the reasons discussed in this order and the 1994 order
(which are incorporated herein), the Board does not believe that
these allegations warrant denial of this proposal. See NationsBank
Corporation, 80 Federal Reserve Bulletin 747 (1994). Protestant
also cites a 1994 civil judgment against NationsBank, which ordered it to honor the commitment of an acquired banking organization to purchase a Georgia federal savings bank, as additional
evidence of NationsBank's failure to comply with its commitments.
Based on all the facts of record, the Board does not believe that this
incident reflects so adversely on NationsBank as to warrant denial
of this proposal.

Legal Developments

The Board has carefully reviewed the CRA performance records of NationsBank and its subsidiaries, the
CRA performance records of CSF and Citizens, all comments received regarding these applications, NationsBank's responses to these comments, and all other
relevant facts of record in light of the CRA, the Board's
regulations, and the Statement of the Federal Financial
Supervisory Agencies Regarding the Community Reinvestment Act ("Agency CRA Statement").11
Record of Performance

Under the CRA

A. CRA Performance Examinations
The Agency CRA Statement provides that a CRA examination is an important and often controlling factor in the
consideration of an institution's CRA record and that
reports of these examinations will be given great weight
in the applications process. 12 The Board notes that all
NationsBank subsidiary banks received either a "satisfactory" or "outstanding" rating from the Office of the
Comptroller of the Currency ("OCC"), their primary
federal supervisor, in their most recent public examinations for CRA performance (collectively, the "OCC
Examinations"). In particular, the NationsBank subsidiary banks serving the cities mentioned in Protestant's
comments received the following performance ratings
from the OCC: NationsBank of Florida, N.A., Tampa,
Florida ("Florida Bank"), "satisfactory" as of September 1993; NationsBank of Texas, N.A., Dallas, Texas
("Texas Bank"), "outstanding" as of September 1993;
NationsBank of Maryland, N.A., Bethesda, Maryland,
"satisfactory" as of March 1993; and NationsBank of
D.C., N.A., Washington, D.C., "outstanding" as of September 1993. 13 The Board also has considered the preliminary results of the CRA performance examinations
recently completed by the OCC for all of NationsBank's
subsidiary banks. Citizens received a "satisfactory"
CRA performance rating from the Office of Thrift Supervision, its primary federal supervisor, as of December
1993. NationsBank has indicated that it would implement its CRA policies and procedures at CSF following
consummation of this proposal.

11. 54 Federal Register 13,742 (1989).
12. Id. at 13,745.
13. Subsequent to these examinations, NationsBank merged its
Maryland and District of Columbia banks into NationsBank of
Virginia, N.A., Richmond, Virginia ("Virginia Bank"), which received an "outstanding" rating as of September 1993. In addition,
NationsBank's subsidiary banks in North Carolina and South Carolina received "outstanding" ratings, and its subsidiary banks in
Kentucky, Tennessee, and Delaware received "satisfactory" ratings, all as of September 1993.

1123

B. HMDA Data
The Board has carefully considered Protestant's allegations regarding lending to African-American borrowers
in Miami, Dallas, Baltimore, and Washington in light of
1993 and 1994 HMDA data for NationsBank's subsidiary banks serving these cities and for NationsBanc
Mortgage.14 A comparison of the 1993 and 1994 HMDA
data indicate an increase in 1994 in the percentage of
applications received by NationsBank from African
Americans, applicants in minority census tracts, and
applicants in low- and moderate-income census tracts in
these MSAs. In addition, NationsBank received a higher
percentage of its total applications from African Americans during 1994 than did financial institutions in these
MSAs in the aggregate.15 The disparity between
NationsBank's denial rates for African-American applicants and non-minority applicants was reduced in each
of these MSAs. These data also show, however, that, in
some of these MSAs, this disparity rate exceeds the
disparity rate among lenders in the aggregate; and
NationsBank's denial rate for high-income AfricanAmerican applicants exceeded its denial rate for lowincome non-minority applicants.
The Board is concerned when the record of an institution indicates disparities in lending to minority applicants, and it 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
assure 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. The Board also
recognizes that HMDA data have limitations that make
the data an inadequate basis, absent other information,
for concluding that an institution has engaged in illegal
discrimination in lending.

14. HMDA data for Citizens in 1993 show that the institution
received 8.8 percent of its total applications from African Americans, while financial institutions in the Miami MSA in the aggregate received 8.3 percent of total applications from African Americans. In 1994, Citizens received 10.3 percent of its total
applications from African Americans, compared to 11.6 percent for
the aggregate. There was no disparity in its denial ratios for
African-American applicants and non-minority applicants during
1994.
15. In the Dallas MSA, applications from African Americans
increased from 652 to 1326 and from 11.3 percent to 19.2 percent
of all applications, while African Americans constituted 15.6 percent of the population as a whole. By comparison, lenders in the
Dallas MSA in the aggregate received 5.5 percent of all applications from African Americans in 1993 and 8.3 percent in 1994. In
the District of Columbia MSA, while NationsBank's total applications decreased 27 percent between 1993 and 1994, applications
from African Americans increased 27 percent and constituted
23.9 percent of all applications in 1994, compared to African
American's 25.1 percent share of the total population.

1124

Federal Reserve Bulletin • December 1995

The OCC Examinations found that all of
NationsBank's subsidiary banks are in compliance with
the substantive provisions of fair lending laws. 16 Examiners found no evidence of prohibited discriminatory
practices or of practices intended to discourage applications for the types of products set forth in the banks's
CRA statements. According to the examinations, each
bank has adequate policies, procedures, and training
programs in place to support nondiscrimination in lending activities, and conducts internal audits to evaluate
compliance with fair lending laws. Moreover, the examinations found that these banks's community delineations
were reasonable and did not arbitrarily exclude low- and
moderate-income areas, and that the banks annually reviewed their delineations and the geographic distribution
of their lending.
The Board also notes that NationsBank's Community
Investment Group, which includes its Fair Lending Program, has developed internal and external second and
third review programs for declined mortgage applications. In all the MS As identified in Protestant's comments, NationsBank, in cooperation with the National
Urban League, has established a Community Loan Review Board, which offers denied loan applicants the
opportunity to appeal their loan decision. In addition, in
Miami, Dallas, and the District of Columbia, all initially
rejected loan applications from low- to moderate-income
applicants are referred to a senior lending officer for a
second review before the loan decision is made final.

C. Record of Lending Activities
The Board also has considered NationsBank's progress
under its Community Investment Program ("CIP"), a
10-year commitment to make a minimum of $10 billion
of community investment loans.17 Under this program,
NationsBank loaned $2.2 billion in 1992, $2.9 billion in
1993, and $3.4 billion in 1994. During 1993,
NationsBank made CIP loans totalling $91.9 million in
the Miami market; $358 million in the Dallas market;
$38.2 million in the Baltimore market; and $346.1 million in the District of Columbia market.

16. A separate examination of NationsBanc Mortgage also disclosed no violations of the Fair Housing Act or the Equal Credit
Opportunity Act. The 1993 Examinations noted technical noncompliance with loan documentation requirements at Virginia Bank
and at NationsBank's subsidiary banks in Georgia and Tennessee,
but found no evidence that these exceptions resulted in the denial of
credit to an applicant on a prohibited basis. Management has
undertaken corrective actions, and the Board has considered these
findings in light of preliminary examination reports by the OCC.
17. CIP is a collection of special products and services, such as
home mortgage loans, student loans, and loans to public/private
partnerships, designed to benefit low- and moderate-income individuals and small businesses.

As part of the CIP initiative, NationsBanc Mortgage
developed two primary affordable home purchase loan
programs. The first mortgage product permits qualified
low- and moderate-income home purchasers to borrow
up to 95 percent of the purchase price, pay 3 percent of
the purchase price as a down payment, and finance the
remaining 2 percent of the purchase price and all closing
costs from a variety of non-traditional sources. The
second mortgage product is similar to the first, but
permits qualified low-income borrowers to provide as
little as $500 toward the down payment. During 1994,
NationsBanc Mortgage originated 4,895 loans for
$308.9 million nationwide under these two programs.
NationsBanc Mortgage has dedicated $75 million to
these programs for 1995, including $2 million in Miami,
$8 million in Dallas, $6 million in Baltimore, and
$5 million in the District of Columbia. In addition, in
1995 NationsBanc Mortgage established loan officer positions in each of the markets dedicated solely to originating home mortgage loans to low-and moderateincome and minority borrowers.18
Miami. During 1993, NationsBank made 157 home
purchase and home improvement loans for $7.2 million
in low- and moderate-income census tracts, and 583
home purchase and home improvement loans for
$46.4 million to minority borrowers.19 Florida Bank also
made 10 commercial real estate loans for $18 million
related to community development, such as for low- and
moderate-income single- and multi-family housing units
and renovation of community and retail centers in underserved areas. In addition, Florida Bank supported the
community development initiatives of other organizations designed to help to provide housing for low- and
moderate-income families. Florida Bank, for example,
committed $5 million to the Broward County Housing
Finance Authority Lender's Program to fund mortgage
loans for low- and moderate-income families, $3 million
to the Dade County Bond Program to fund mortgage
loans to first-time, low-income home buyers, and
$5 million to the Florida Housing Finance Agency Hurricane Relief Mortgage Revenue Bond Program. The
first project nationwide of NationsBank Community Development Corporation ("NationsBank CDC") was the
development of 25 new, single-family homes for lowand moderate-income families at the former Augustine
Quarters in Sarasota.20 Florida Bank also cooperated

18. During 1993, NationsBanc Mortgage made 5,290 home mortgage loans totalling $444 million to African Americans. It ranked
second nationwide in the number of loans made to African Americans, compared to a 15th rank in the number of loans overall.
19. Refinancings are not included in these loans or in the affordable housing loans discussed below.
20. Outside Miami, Florida Bank committed $16 million to a
$100 million loan pool established by ten banks and First Housing

Legal Developments

with the Urban League of Broward County to provide 10
home buyer classes attended by 220 participants and
with the Miami-Dade branch of the National Association
for the Advancement of Colored People to establish the
Overtown Homebuyers Club, a credit counseling and
savings program for prospective low- and moderateincome home buyers.
Dallas. NationsBank made 529 home mortgage loans
totalling $16 million in low- and moderate-income census tracts and 680 home mortgage loans totalling
$216 million to minority borrowers during 1993. Bank
also made 23 commercial real estate loans totalling
$7.8 million in low- and moderate-income areas. In
addition, Texas Bank cooperated with other organizations in several initiatives designed to promote community development and the production of affordable housing. Texas Bank, for example, invested $150,000 in the
South Fair Community Development Corporation to finance the development of a master plan for the South
Dallas/Fair Park area and committed to make $40 million of loans and equity investments in this area over 5
years, including the development of 100 single-family
homes and 300 multi-family housing units for low- and
moderate-income families, and two day care facilities.
Texas Bank also committed $1 million to the Dallas
Housing Finance Corporation to purchase revenue bonds
to fund below-market rate mortgages for low- and
moderate-income borrowers, and invested $600,000 in
the Southern Dallas Development Fund, a multi-bank
loan pool created to provide debt and equity investments
in and management assistance to small and minorityowned businesses.
Baltimore. In the Baltimore market during 1993, NationsBank made 84 home mortgage loans totalling
$4.5 million in low- and moderate-income census tracts
and 161 home mortgage loans totalling $14.3 million to
minority borrowers. Virginia Bank21 also made 7 commercial real estate loans totalling $2.7 million related to
community development in the market, such as low- and
moderate-income single- and multi-family housing units
and renovations of community and retail centers in
under-served areas. During 1994, to assist the community development initiatives of other organizations, Virginia Bank made a $3.2 million loan for the construction

Development Corporation to fund the development of multi-family
low-income housing in Tampa. The bank also established the East
Tampa Initiative and committed $5 million to housing and small
business loans in that area, which has been joined by a $35 million
commitment to investment in that area by state and local governmental entities. The first project nationwide of NationsBank Community Development Corporation ("NationsBank CDC") was the
development of 25 new, affordable single-family homes at the
former Augustine Quarters in Sarasota.
21. In this context, "Virginia Bank" also refers to its predecessor
banks in Maryland and the District of Columbia.

1125

of a 150 bed nursing home in west Baltimore that is
expected to employ 100 neighborhood residents and
generate approximately $2 million in annual wages.
Washington.
During 1993, NationsBank made
572 home mortgage loans totalling $60 million in lowand moderate-income census tracts, and 956 home mortgage loans totalling $118.5 million to minority borrowers. Virginia Bank also made 24 commercial real estate
loans totalling $19.8 million related to community development, such as loans to construct or rehabilitate affordable housing and renovate community and business centers in under-served areas. In addition, the bank
supported the community development initiatives of
other organizations designed to help to provide affordable housing. Virginia Bank committed $5.5 million to
Luther Place Church, for example, to provide 93 single
room occupancy and family units for homeless families,
financed the construction of Woodridge Place, which
constructed 37 new, single-family homes for low- and
moderate-income families, and loaned $5.2 million to a
non-profit housing developer to acquire and renovate
162 rental units for lower-income families in Arlington
County, Virginia. In addition, NationsBank CDC invested $1.35 million and borrowed an additional
$4 million to purchase and renovate an apartment building and produce 322 units of affordable housing in the
District of Columbia.

D. Ascertainment and Marketing Activities
NationsBank has engaged in a variety of outreach efforts
in order to ascertain the credit needs of and advertise its
credit products to African Americans and low- and
middle-income members of the banking markets it
serves. The officer call program at Florida Bank, for
example, has separate requirements for calling upon
individuals and businesses in low- and moderate-income
areas, and the results of all calls are reported to and
reviewed by senior management. NationsBanc Mortgage
also requires each of its account executives to make at
least three calls per month on minority realtors, realtors
located in low-and moderate-income census tracts, builders of affordable housing, and other persons familiar
with the housing-related credit needs of minority and
low- and moderate-income members of the community.
In May 1993, Florida Bank held a statewide public
meeting in Tampa to assess the needs of under-served
areas and receive ideas on ways to address these needs,
and throughout the year held several local meetings with
community leaders to identify local credit needs and
inform participants about NationsBank's available products and services. In the Miami area during 1993,
Florida Bank officers held over 500 meetings with community leaders and made almost 700 calls on small- and
minority-owned businesses. Florida Bank also maintains

1126

Federal Reserve Bulletin • December 1995

a special advertising budget to promote lower-cost loan
and deposit products, and uses newspapers that are oriented to African-American and Hispanic communities as
well as newspapers of general circulation, radio, and
direct mail in this effort.
Texas Bank conducts similar programs. In the Dallas
banking market during 1993, the bank participated in
more than 60 outreach programs to inform small businesses and residents of low- and moderate-income neighborhoods of available products and service. Texas Bank
also employs Spanish-speaking tellers and customer service representatives, and its ATMs permit customers to
conduct their transactions in Spanish.
In the Baltimore banking market, Virginia Bank conducted a public meeting during 1993 to ascertain community credit needs; and it meets with several organizations, including the Baltimore chapter of the NAACP
and the State of Maryland Office of Minority Affairs, on
at least a quarterly basis. Through these efforts, the bank
has identified certain credit needs requiring additional
efforts to be met, such as automobile refinancing loans,
home improvement loans, and loans for child care facilities, and has developed additional products to meet these
credit needs. In the District of Columbia, Virginia Bank
has worked extensively with the District of Columbia
Council, the Association of Community Organizations
for Reform Now, and the D.C. Reinvestment Alliance to
identify priority credit needs and locations for public/
private partnership redevelopment efforts.
In 1993, the bank also established a business banking
unit, to focus on small businesses with annual revenues
under $4 million and seeking loan amounts between
$25,000 and $500,000, and a government guaranteed
lending unit, to facilitate the use of Small Business
Administration and other government guarantee loan
programs. Virginia Bank also has entered into partnerships with 7 community organizations in the District of
Columbia to provide educational programs to the public,
and has sponsored two "loan mobiles" to accept loan
applications and provide technical assistance in underserved areas.

E. Branch Locations and Closings
NationsBank has a formal policy for all its subsidiary
banks concerning branch closings, changes in hours, and
service reductions. Decisions regarding these matters are
reviewed by the bank's management. The bank also
assesses several factors before closing a branch, including the potential impact on the level of banking services
in the community served by the branch or branches
affected, and seeks community input when appropriate.
In the OCC Examinations, the examiners concluded that
the branch closing records of all of NationsBank's subsidiary banks, including Florida Bank, Texas Bank, and

Virginia Bank, were reasonable. NationsBank has indicated that it would implement this policy at CSF following consummation of this proposal. NationsBank also
has indicated that it would offer a broader array of home
mortgage and consumer loans at Citizens, and apply
Florida Bank's underwriting and approval guidelines,
and adjust deposit products and rates to respond to
specific markets and consider establishing additional
branches in order to attract additional deposits to replace
deposits lost by the divestiture of out-of-state branches.

F. Conclusion Regarding Record of CRA
Performance
The Board has carefully considered all the facts of
record in reviewing NationsBank's record of CRA performance. For the reasons discussed above, the Board
believes that NationsBank and its subsidiary banks have
the types of policies and programs in place and working
well that support an effective record of CRA performance. Following consummation of this proposal,
NationsBank would introduce these CRA policies and
procedures at Citizens before Citizens is eventually
merged into Florida Bank. Based on a review of the
entire record of performance, including information provided by Protestants and NationsBank, and the CRA
performance examinations and other information from
the OCC, the Board believes that NationsBank's record
in assisting to meet the credit needs of all segments of
the communities served by its subsidiary banks, including low- and moderate-income neighborhoods, are consistent with approval of this proposal.
Other

Considerations

The Board also has concluded that the financial and
managerial resources of NationsBank, CSF, and their
respective subsidiaries are consistent with approval.22

22. Protestant notes published accounts regarding an alleged
violation of the anti-tying restrictions enacted by the 1970 Amendments to the BHC Act by NationsBank's South Carolina banking
subsidiary and alleged improper marketing practices in the sale of
retail nondeposit investments by NationsBank's securities brokerage subsidiary. Both of these activities were reviewed by the OCC,
and the Board has carefully considered the information from this
review. In addition, the Board has considered the anti-tying policies
adopted by NationsBank and steps it has taken relating to the sale
of retail nondeposit investments. In response to an internal audit,
for example, NationsBank has adopted a revised Code of Ethics,
increased disclosure requirements, and expanded its audit procedures, to ensure that its retail nondeposit investment sales practices
are in compliance with all supervisory guidelines. The OCC has
indicated that NationsBank's progress in this regard is generally
satisfactory. In view of all the facts of record, including supervisory
information provided by the OCC, the Board does not believe that
these matters warrant denial of this proposal.

Legal Developments

The Board also finds that consummation of this proposal
is not likely to result in any significantly adverse effects,
such as undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound
banking practices that are not likely to be outweighed by
the public benefits, such as increased competition and
added convenience, that are expected from 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 application.
Based on the foregoing and all the facts of record, the
Board has determined that the application should be, and
hereby is, approved.23 The Board's approval is specifically conditioned on compliance by NationsBank with
all the commitments made in connection with this application. The Board's determination also is subject to all
the conditions set forth in Regulation Y, including those
in sections 225.7 and 225.23(b)(3) of Regulation Y
(12 C.F.R. 225.25.7 and 225.23(b)(3)), and to the
Board's authority to require modification or termination
of the activities of a bank holding company or any of its
subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the provisions
and purposes of the BHC Act and the Board's regulations and orders issued thereunder. For the purpose 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.
This transaction shall 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 Richmond, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
October 17, 1995.

23. Protestant references a newspaper account of an investigation
by the Department of Labor of alleged illegal discriminatory employment practices by NationsBank. The Board notes that because
NationsBank's subsidiary banks employ more than 50 people,
serve as depositories of government funds, and act as agents in
selling or redeeming U.S. savings bonds and notes, each bank is
required by Department of Labor regulations to:
(1) File annual reports with the Equal Employment Opportunity
Commission; and
(2) Have in place a written affirmative action compliance program which states its efforts and plans to achieve equal opportunity in the employment, hiring, promotion, and separation of
personnnel.
See 41 C.F.R. 60-1.7(a), 60-1.40. The record also indicates that
NationsBank and its other subsidiaries are subject to those equal
opportunity and affirmative action requirements.

1127

Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
WILLIAM W. WILES

Secretary of the Board

Appendix
Florida Banking Markets in Which NationsBank and
CSF Currently Compete and the Post-Merger Increase
in HHI
(1) The Daytona Beach banking market consists of
Allandale, Daytona Beach, Daytona Beach Shores,
De Leon Springs, Edgewater, Holly Hill, New Smyrna
Beach, Ormond Beach, Ormond-by-the-Sea, Port
Orange, and South Daytona in Volusia County and the
town of Astor in Lake County. The HHI would not
increase.
(2) The Fort Myers banking market consists of Lee
County, minus the town of Boca Grande, and the town of
Immokalee in Collier County. The HHI would increase
by 33 points to 1378.
(3) The Miami-Ft. Lauderdale banking market consists
of Dade and Broward Counties. The HHI would increase
by 37 points to 834.
(4) The Naples banking market consists of Collier
County, minus the town of Immokalee. The HHI would
increase by 7 points to 1486.
(5) The Ocala banking market consists of Marion County
and the town of Citrus Springs in Citrus County. The
HHI would increase by 42 points to 1679.
(6) The Orlando banking market consists of Orange,
Osceola, and Seminole Counties, the western half of
Volusia County, and the towns of Clermont and Groveland in Lake County. The HHI would increase by
4 points to 1663.
(7) The Punta Gorda banking market consists of Charlotte County, minus the towns of Englewood and
Rotonda West, and the town of North Port in Sarasota
County. The HHI would not increase.
(8) The Sarasota banking market consists of Manatee
County, Sarasota County, minus the town of North Port,
and the towns of Englewood and Rotonda West in Charlotte County and Boca Grande in Lee County. The HHI
would increase by 66 points to 1599.
(9) The Tampa Bay banking market consists of Hernando, Hillsborough, Pasco, and Pinellas Counties. The
HHI would increase by 60 points to 1735.
(10) The West Palm Beach banking market consists of
Palm Beach County, minus the towns of Belle Glade,
Pahotee, and South Bay. The HHI would increase by
13 points to 1151.

1128

Federal Reserve Bulletin • December 1995

Norwest Corporation
Minneapolis, Minnesota
Order Approving a Notice to Engage in Asset-Based
Lending and Management of Assets
Norwest Corporation, Minneapolis, Minnesota ("Applicant"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has
given notice under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23), to acquire The
Foothill Group, Inc., Los Angeles, California ("Company"), 1 and thereby engage nationwide in asset-based
commercial lending and management of assets.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 44,891 (1995)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors
set forth in section 4(c)(8) of the BHC Act.
Applicant, with total consolidated assets of approximately $66.6 billion, controls bank subsidiaries in
15 states.2 Applicant also engages directly and through
subsidiaries in a broad range of permissible nonbanking
activities. Company is registered as investment adviser
with the Securities and Exchange Commission ("SEC")
and, therefore, is subject to the recordkeeping, reporting,
fiduciary standards, and other requirements of the Investment Advisers Act of 1940 (12 U.S.C. § 80b-1 et seq.)
and the SEC.
Proposed

Activities

The Board previously has determined by regulation that
engaging in commercial lending is closely related to
banking and permissible for bank holding companies
under section 4(c)(8) of the BHC Act.3 Applicant has
committed that Company will engage in this activity in
accordance with the limitations imposed by Regulation
Y. In addition to this activity, Applicant proposes to
engage through Company in managing certain assets as
the corporate general partner in two limited partnerships
("Partnerships").4 The Board previously has determined

1. In connection with this proposal, Applicant also has requested
approval to acquire an option to purchase up to 18.89 percent of the
outstanding voting shares of Company. This option would terminate upon consummation of the proposal.
2. Asset data are as of June 30, 1995.
3. 12 C.F.R. 225.25(b)(1).
4. The 1 percent general partner interest in Foothill Partners L.P.
("Partners I") is 60 percent owned by Company and 40 percent
owned by the managing general partners whereas the 1 percent
general partner interest in Foothill Partners II., L.P. ("Partners II")
is 49 percent owned by Company and 51 percent owned by the

that some of the activities that Applicant proposes to
conduct through Partnerships are permissible, and Applicant has committed to conduct these activities subject to
the limitations previously established by the Board.5
Certain of the activities proposed by the Partnerships
are new activities that the Board has not previously
approved.6 The Partnerships are engaged primarily in
making, servicing and investing in discounted bank loans
and other debt securities.7 The Partnerships acquire debt
that has been or that is in the process of being restructured, including secured and unsecured debt in the form

managing general partners. Partners I, by its terms, will terminate
and must commence liquidation of its assets on December 31,
1995. Partners II will continue its investment activities until the end
of 1999.
Institutional investors hold all the limited partnership interests.
The Partnerships are exempt from registration as investment com1940.
panies under the Investment Company Act of
12 U.S.C. § 80a-l et seq. The Partnerships are limited to not more
than 100 investors; both are fully subscribed, and no additional
limited partners may be admitted. In addition, the Partnerships will
not be engaged in issuing new shares or redeeming limited partnership interests. Because the Partnerships would be subsidiaries of
Applicant, Applicant must, for regulatory purposes, hold capital
and present financial information relating to Company and the
Partnerships on a consolidated basis.
5. See Meridian Bancorp, Inc., 80 Federal Reserve Bulletin 736
(1994) ("Meridian").
The Partnerships, together with Applicant
and its affiliates, would hold not more than 5 percent of any class of
voting securities of any issuer, and not more than 25 percent of the
total equity, including subordinated debt, of any issuer. In addition,
Applicant has committed that no directors, officers, or employees of
Applicant or its affiliates will serve as directors, officers, or employees of any issuer of which Applicant and its affiliates hold more
than 10 percent of the total equity. Applicant has committed that
future limited partnerships would be structured in the same manner
as the current Partnerships.
6. In order to approve a proposal under section 4(c)(8) of the
BHC Act, the Board is required to determine that the proposed
activity is "so closely related to banking or managing or controlling
banks
as
to
be
a proper
incident
thereto."
12 U.S.C. § 1843(c)(8). Under the National Courier test, the Board
may find that an activity is closely related to banking for purposes
of section 4(c)(8) if it concludes that banks generally:
(1) Provide the proposed services;
(2) Provide services that are operationally or functionally so
similar to the proposed services as to equip them particularly
well to provide the proposed services; or
(3) Provide services that are so integrally related to the proposed
services as to require their provision in a specialized form.
See National Courier Association v. Board of Governors, 516
F.2d 1229, 1237 (D.C. Cir. 1975) ("National Courier"). In addition, the Board may consider any other basis that may demonstrate
that the proposed activity has a reasonable or close connection or
relationship to banking or managing and controlling banks. See
Board Statement Regarding Regulation Y, 49 Federal Register 794,
806 (1984); Securities Association v. Board of Governors, 468 U.S.
207,210-211 n. 5 (1984).
7. The Partnerships are not leveraged, and Applicant has stated
that they will not be leveraged. Applicant has committed that
neither Applicant nor any of its subsidiaries would be permitted to
make loans to Partnerships.

Legal Developments

of bank loans, privately placed and publicly-traded debt
instruments, bonds, notes, debentures, and discounted
receivables.8 Applicant has stated that the Partnerships
will take an active role in the restructuring of the defaulted debt acquired by Partnerships, including participating on creditor committees. Applicant indicates that
such discounted debt would be acquired for the purpose
of restructuring the debt to achieve a higher yield and
greater collateral protection.
Some of the debt that would be acquired by the
Partnerships may be in default at the time of acquisition,
and may be secured by voting shares or other assets that
would be impermissible for a bank holding company to
hold without Board approval.9 Because the Partnerships
would have the right in some cases to take title immediately to shares or assets securing defaulted debt that the
Partnerships acquire, Applicant has committed that Partnerships would treat this collateral, as well as any other
assets acquired in renegotiating this debt, as assets acquired in satisfaction of a debt previously contracted
("DPC"). Under the BHC Act, a bank holding company
must divest any shares or assets acquired DPC within
two years from the date the asset is acquired. For this
purpose, Applicant has committed that it will consider
shares or assets acquired in satisfaction of defaulted debt
to have been acquired on the date the defaulted debt is
acquired.10
The Board believes that the acquisition of defaulted
debt under the circumstances and conditions proposed
by Applicant is an activity that is "closely related to
banking." Banks and bank holding companies provide
services that are operationally or functionally so similar
to the proposed services as to equip them particularly
well to provide the proposed services. Lending is a core
banking activity, and banks and bank holding companies
routinely make and purchase debt; collect, work out, and
restructure debt; and participate on creditors committees
for companies in default on debt in connection with the
bank's or the holding company's direct lending activities. Banks and bank holding companies have significant

8. The debt investments may include investments in companies
that may be contemplating, involved in, or recently have completed, a negotiated restructuring of their outstanding debt or a
reorganization under Chapter 11 of the Federal Bankruptcy Code.
9. Applicant has committed that Partnerships will not acquire
debt in default that is secured by shares of banks or bank holding
companies.
10. Applicant also may apply for three one-year extensions. See
12 C.F.R. 225.22(c)(1). The Board notes that the divestiture requirement would be satisfied if, during the divestiture period, the
Partnerships renegotiate the debt into a performing obligation and
release the collateral to the borrower as part of the renegotiation. To
the extent that defaulted debt acquired by the Partnerships is
secured by assets or shares that would be permissible investments
for a bank holding company, this divestiture commitment would
not apply.

1129

expertise in identifying, holding, valuing, and working
out defaulted debt; in determining the value of collateral
for loans; and in participating in the financial restructuring of companies whose debt obligations are impaired.
Applicant will only purchase debt, not equity, and will
stand in the position of a creditor.
Accordingly, and based on all the facts of record, the
Board concludes that the proposed activities are closely
related to banking under the National Courier standard.
Proper Incident to Banking Analysis
In determining whether an activity is a proper incident to
banking, the Board must consider whether the activity
"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."11 The Board expects that
the proposal would produce increased economies of
scale and gains in efficiency for Applicant. Moreover,
the proposal can reasonably be expected to produce
public benefits, such as an increase in funding available
to lenders as credit is purchased by Company. To address
the potential adverse effects of its performance of the
proposed activities, Applicant has committed to conduct
the proposed activities subject to a number of restrictions concerning extensions of credit. In particular, as
noted above, Applicant has committed that Partnerships
will divest any shares or assets securing debt in default
within the time period set out for the divestiture of DPC
property in the BHC Act. 12 In addition, there is no
evidence in the record to indicate that the proposed
activities would lead to any undue concentration of
resources since the activities involve a market which is
national in scope.
Based on the commitments made by Applicant regarding its conduct of the proposed activities, the limitations
noted in this order, and all the facts of record, the Board
has determined that the performance of the proposed
activities by Applicant could reasonably be expected to
produce public benefits that would outweigh the possible

11. 12 U.S.C. § 1843(c)(8).
12. The limited nature of the holding period restricts the ability
of the Partnerships to speculate in the value of the underlying
collateral. The length of the holding period and divestiture requirement also limits potential attempts to acquire assets or shares not
permissible for bank holding companies to hold in order to engage
in commercial or other activities. In addition, the Board notes that
the Partnership agreements require the establishment of conflict
review committees, nominated by the limited partners, to review
any potential conflicts of interest between the general partners and
their affiliates on the one hand, and the Partnership or a debtor
company on the other hand.

1130

Federal Reserve Bulletin • December 1995

Order Approving a Notice to Engage in the Activity of
Transmitting Money within the United States

Angeles, California, and Orlandi Valuta Nacional, Boulder City, Nevada (collectively, "Companies"), in the
activity of transmitting money for customers to third
parties within the United States and its territories ("domestic money transmission services").1 The proposed
activity would be conducted at first through a network of
approximately 1,200 "outside representative offices" located in California, Florida, Illinois, and Texas that are
under contract with Companies to provide money transmission services.2 Norwest proposes to engage in the
proposed activity nationwide.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 46,281 (1995)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors
set forth in section 4(c)(8) of the BHC Act.
Norwest, with total consolidated assets of approximately $61.8 billion, controls bank subsidiaries in
15 states.3 Norwest also engages directly and through
subsidiaries in a broad range of permissible nonbanking
activities. Companies are corporations that currently engage in the business of money transmission to Mexico
through representatives in California, Florida, Illinois,
and Texas.
Domestic money transmission services would be provided in the following manner. A customer would contact Companies directly by means of a dedicated telephone located in the outside representative office to
request Companies to transmit funds to a third party for
a fee. The outside representative would collect cash and
a fee from the customer, issue a receipt, and deposit
funds in an account maintained by the outside representative solely for the purpose of receiving funds in trust to
be transmitted to a third party. The outside representative
may maintain this account at any bank, including a
Norwest subsidiary bank, but would have no agreement
with any bank to accept deposits on its behalf. Neither
the outside representatives nor Companies would be
FDIC-insured institutions.
Companies would collect funds deposited in an outside representative's account on a daily basis through an
ACH or similar transaction and deposit an amount equal
to the amount to be transmitted into an account maintained by Companies at a bank, which may include a
Norwest subsidiary bank, located near the third party

Norwest Corporation, Minneapolis, Minnesota ("Norwest"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), and its
subsidiary, Norwest Financial Services, Inc., Des
Moines, Iowa ("NFS"), have filed notice under section
4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and
section 225.23 of the Board's Regulation Y (12 C.F.R.
225.23) to engage de novo through Orlandi Valuta, Los

1. The Board previously approved Norwest's acquisition of Orlandi to engage in the activity of transmitting funds to third parties
in Mexico by using an unaffiliated foreign bank to make the cash
payments. Norwest Corporation, 81 Federal Reserve Bulletin 974
(1995) ("Norwest Order").
2. Outside representative offices currently include grocery stores,
travel agencies, pharmacies, and insurance agencies, and would be
expanded to include Norwest's consumer finance offices.
3. Asset data are as of March 31, 1995.

adverse effects under the proper incident to banking
standard of section 4(c)(8) of the BHC Act. The financial
and managerial resources of Applicant and Company
also are consistent with approval.
Conclusion
Based on the foregoing and all the facts of record, the
Board has determined that the notice should be, and
hereby is, approved. Approval of this proposal is specifically conditioned on compliance by Applicant with the
commitments made in connection with this notice. 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(b) (12 C.F.R. 225.7 and
225.23(b)), and to the Board's authority to require such
modification or termination of the activities of a bank
holding company or any of its subsidiaries as the Board
finds necessary to 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 transaction, these commitments and
conditions shall be deemed to be conditions imposed in
writing by the Board in connection with its findings and
decision, and, as such, may be enforced in proceedings
under applicable law.
These activities shall not be commenced 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 Minneapolis, pursuant to
delegated authority.
By order of the Board of Governors, effective
October 17, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Phillips, and Yellen. Absent and
not voting: Governor Lindsey.
WILLIAM W. WILES

Secretary of the Board

Norwest Corporation
Minneapolis, Minnesota

Legal Developments

receiving the funds. The third party would be notified
that money is available at a local disbursement site,
which could include a Norwest bank subsidiary or consumer finance office, or an unaffiliated check cashing,
finance, or other type of office. Funds would be made
available to the third party by check drawn on Companies' account almost immediately after the transmission
order is placed by the customer.4
A customer may not transmit funds to any bank account maintained by the customer or any third party.
Thus, Norwest would not use this service to collect
deposits for customers of Norwest's subsidiary banks or
any other bank.
There is no agreement between a customer and a bank
to accept money in an account for use by the bank in
connection with the proposed domestic money transmission services. Companies and their outside representative would accept money from a customer for the sole
purpose of transmitting funds to a third party. A customer would not give funds to Companies with the
expectation that Companies would permit the customer
to reclaim the funds on demand or after a period of time.
Moreover, Companies would not maintain balances or
pay interest on the money they receive, and would only
hold funds long enough to transmit them to the designated third party.5

4. Domestic money transmission services do not involve lending
money because only funds provided by the customer would be
transmitted to a third party. Moreover, the proposal does not
involve the paying of checks because, although the third party
receives money by means of a check drawn on an account maintained by Companies, the receipt of funds in check form is not the
payment of a check. Independent Bankers Ass'n of America v.
Smith, 534 F.2d 921, 943^15 (D.C. Cir. 1976).
5. Many states permit companies that are not chartered as banks
to transmit money without deeming this activity to involve the
taking of deposits. Norwest must conduct the proposed activities in
compliance with licensing and other requirements of relevant state
law. Norwest operates several state chartered banks in Colorado,
South Dakota, and Texas. The state chartered banks are subject to
state law branching restrictions. The record in this case indicates
that the proposed activities would not constitute branch banking
under the laws of Colorado, South Dakota, and Texas. Colorado
has established procedures for licensing money transmitters, and
does not consider the proposed activities to constitute branch
banking. Companies are licensed to conduct domestic money transmission services in Illinois and Texas and have applied for a license
in Florida. California does not require a license to transmit money
to locations within the United States. A "payments instruments"
license, however, is required to issue checks at disbursements sites
in California. Furthermore, although South Dakota has not established formal licensing requirements for money transmitters, the
Office of the Director of Banking has indicated that the proposed
activities would not constitute banking under South Dakota law.
See S.D. Codified Laws Ann. § 51A-7-1 (1990).

1131

The Board previously has determined that money
transmission abroad is closely related to banking.6 The
Office of the Comptroller of the Currency ("OCC") also
has concluded that it is permissible for a national bank to
accept money from nonbank affiliates for the purpose of
transmitting the funds to a foreign country, and that a
nonbank affiliate that participates with the national bank
in transmitting money abroad would not become a
branch of the bank.7 Based on all the facts of record, and
for the reasons discussed in this order and the Board's
previous orders, the Board concludes that domestic
money transmission services are closely related to banking, and would not cause Norwest or its banks to be
engaged in illegal branching activities under federal law.
In determining whether an activity is a proper incident
to banking, the Board must consider whether the activity
"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."8 In weighing foreign money
transmission services under the public benefits test, the
Board relied on the fact that these companies are subject
to licensing and examination by state authorities.9 Companies have committed to comply with all applicable
reporting requirements, including reporting all transactions over $10,000 to the Internal Revenue Service.
Norwest also has committed to apply the internal controls currently in place at NFS to assure compliance with
the Bank Secrecy Act. 10
The record indicates that Norwest's de novo entry into
this market can reasonably be expected to result in
public benefits, including increased competition, greater

6. Norwest Corporation, supra; Philippine Commercial International Bank, 11 Federal Reserve Bulletin 270 (1991); Bergen Bank
A/S, 76 Federal Reserve Bulletin 457 (1990).
7. See Letter from Peter Liebesman, Assistant Director, Legal
Advisory Services Division, May 15, 1990 (unpublished). Most of
Norwest's banks are national banks, and the courts have determined that whether an entity would be a "branch" for purposes of
the National Bank Act is a matter of federal law. First National
Bank in Plant City v. Dickinson, 396 U.S. 122 (1969). The OCC
has reasoned that non-bank offices that transmit funds through a
national bank to a third party do not constitute "branches" under
federal law.
8. 12 U.S.C. § 1843(c)(8).
9. This order is specifically conditioned on Norwest obtaining all
necessary state licenses.
10. These procedures include a weekly review of all transactions
over $10,000. In addition, Companies will require customer identification, including the customer's current address and occupation,
for all transmissions above $3,000. Companies also will run a
computer match of all remitters and recipients by name and social
security number so that reporting requirements cannot be evaded
by means of a series of transactions. At this time, Orlandi does not
contemplate engaging in transactions over $9,000.

1132

Federal Reserve Bulletin • December 1995

convenience for customers, and gains in efficiencies in
the operation of Companies and Norwest. In addition,
there is no evidence in the record to indicate that the
proposed activities would lead to any undue concentration of resources, unsound banking practices, or other
adverse effects.
For these reasons, the Board believes that Norwest's
proposal to engage in domestic money transmission, as
described above, is not likely to result in significantly
adverse effects that would outweigh the public benefits
of Norwest's proposal. The financial and managerial
resources of Norwest and NFS also are consistent with
approval.
Based on the foregoing and all the facts of record, the
Board has determined to, and hereby does, approve the
notice. The Board's decision is specifically conditioned
on Norwest's complying with all the commitments made
in connection with this notice, and obtaining all necessary approvals from state regulators.11 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(b) of Regulation Y, and to the Board's
authority to require such modification or termination of
the activities of a bank holding company or any of its
subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of
the BHC Act and the Board's regulations and orders
issued thereunder. For purposes of this transaction, these
commitments and conditions shall be deemed to be
conditions imposed in writing by the Board in connection with its findings and decision, and, as such, may be
enforced in proceedings under applicable law.
These activities shall not be commenced 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 Minneapolis, pursuant to
delegated authority.
By order of the Board of Governors, effective
October 17, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
WILLIAM W. WILES

Secretary of the Board

11. This order is conditioned on Norwest consulting with the
Federal Reserve System before commencing domestic money transmission services in any state which does not require examination
and licensure to give the System the opportunity to consider
whether a separate application should be submitted for Board
review.

SouthTrust Corporation
Birmingham, Alabama
Order Approving a Notice to Engage in Private
Placement, Riskless Principal, and Investment
Advisory Activities
SouthTrust Corporation, Birmingham, Alabama ("Notificant"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has
given notice under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23), of its proposal
to engage de novo through its subsidiary, SouthTrust
Securities, Inc., Birmingham, Alabama ("Company"),
in the following nonbanking activities:
(1) Acting as agent in the private placement of all
types of debt and equity securities;
(2) Purchasing and selling all types of securities as a
"riskless principal" on the order of customers; and
(3) Providing investment advisory services pursuant
to 12 C.F.R. 225.25(b)(4));
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 53,618 (1995)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors
set forth in section 4(c)(8) of the BHC Act.
Notificant, with total consolidated assets of approximately $20 billion, is the largest banking organization in
Alabama.1 Notificant operates banking subsidiaries in
Alabama, Florida, Georgia, North Carolina, South Carolina, Mississippi, and Tennessee, and engages through
subsidiaries in various permissible nonbanking activities. Company is, and will continue to be, a registered
broker-dealer with the Securities and Exchange Commission ("SEC"), and is a member of the National Association of Securities Dealers, Inc. ("NASD"). Therefore,
Company is subject to the recordkeeping, reporting,
fiduciary standards, and other requirements of the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.),
the SEC, and the NASD.
As noted above, the proposed investment advisory
activities previously have been determined by regulation
to be closely related to banking for purposes of section 4(c)(8) of the BHC Act. 2 Notificant has committed
that Company will conduct these activities in accordance
with the limitations set forth in Regulation Y and the
Board's orders relating to these activities.

1. Asset data are as of September 30, 1995.
2. 12 C.F.R. 225.25(b)(4).

Legal Developments

Private Placement and "Riskless Principal"

Activities

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.
"Riskless principal" is the term used in the securities
business to refer to a transaction in which a brokerdealer, after receiving an order to buy (or sell) a security
from a customer, purchases (or sells) the security for its
own account to offset a contemporaneous sale to (or
purchase from) the customer.3 "Riskless principal"
transactions are understood in the industry to include
only transactions in the secondary market. Thus, Company would not act as a "riskless principal" in selling
securities at the order of a customer that is the issuer of
the securities to be sold, or in any transaction in which
Company has a contractual agreement to place the securities as agent of the issuer. Company also would not act
as a "riskless principal" in any transaction involving a
security for which it makes a market.
The Board previously has determined by order that,
subject to a number of prudential limitations that address
the potential for conflicts of interests, unsound banking
practices, or other adverse effects, the proposed private
placement and riskless principal activities are closely
related to banking within the meaning of section 4(c)(8)
of the BHC Act. 4 The Board also has determined that
acting as agent in the private placement of securities, and
purchasing and selling securities on the order of investors as a "riskless principal," do not constitute underwriting or dealing in securities for purposes of section 20
of the Glass-Steagall Act, and that revenue derived from
these activities is not subject to the 10 percent revenue
limitation on bank-ineligible securities underwriting and
dealing activities.5

3. See Securities and Exchange Commission Rule 10b-10.
17 C.F.R. 249.10b-10(a)(8)(i).
4. See J.P. Morgan & Company Incorporated, 76 Federal Reserve Bulletin 26 (1990) ("J.P. Morgan")-, Bankers Trust New York
Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers
Trust").
5. See Bankers Trust at 831-833.

1133

Notificant has committed that Company will conduct
its private placement and riskless principal activitiesusing the same methods and procedures, and subject to the
same prudential limitations, as those established by the
Board in Bankers Trust and J.P. Morgan,6 including the
comprehensive framework of restrictions imposed by the
Board in connection with underwriting and dealing in
securities, which were designed to avoid potential conflicts of interests, unsound banking practices, and other
adverse effects.

Other

Considerations

In evaluating a notice under section 4(c)(8) of the BHC
Act, the Board considers the financial and managerial
resources of the notificant and its subsidiaries and the
effect the proposal would have on such resources.7 Based
on all the facts of this case, the Board concludes that
financial and managerial considerations are consistent
with approval of this notice.
In order to approve this notice, the Board also must
determine that the performance of the proposed activities
by Company can reasonably be expected to produce
public benefits that would outweigh possible adverse
effects under the proper incident to banking standard of
section 4(c)(8) of the BHC Act. Under the framework
and conditions established in this and prior decisions,
consummation of this proposal is not likely to result in
significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, con-

6. 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, nor hold itself out as making a market in the
securities that it buys and sells as a "riskless principal." Moreover,
Company will not engage in "riskless principal" transactions on
behalf of any foreign affiliates that engage in securities dealing
activities outside the United States, and will not act as "riskless
principal" for registered investment company securities. In addition, Company will not act as a "riskless principal" with respect to
any securities of investment companies that are advised by Notificant or any of its affiliates. With respect to private placement
activities, Notificant has committed that Company will not privately place registered investment company securities or securities
of investment companies that are advised by Notificant or any of its
affiliates.
7. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG,
73 Federal Reserve Bulletin 155 (1987).

1134

Federal Reserve Bulletin • December 1995

flicts of interests, or unsound banking practices. Moreover, the Board expects that the entry of Company into
the market for the proposed services would provide
added convenience to Notificant's customers, and
would increase the level of competition among existing
providers of these services. 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 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 Notificant, as well as the terms
and conditions set forth in this order and in the abovenoted Board orders, the Board has determined that the
notice should be, and hereby is, approved. Approval of
this proposal is specifically conditioned on compliance
by Notificant and Company with the commitments made
in connection with this notice and the conditions in this
order and the above-referenced 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) of Regulation Y
(12 C.F.R. 225.7 and 225.23(g)), and to the Board's
authority to require modification or termination of the
activities of a bank holding company or any of its
subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of
the BHC Act and the Board's regulations and orders
issued thereunder. In approving this proposal, the Board
has relied upon all the facts of record, and all the
representations and commitments made by Notificant.
For purposes of this transaction, these commitments and
conditions shall be deemed to be conditions imposed in
writing by the Board in connection with its findings and
decision, and, as such, may be enforced in proceedings
under applicable law.
This transaction shall not be consummated later than
three months after the effective date of this order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Atlanta, acting pursuant
to delegated authority.
By order of the Board of Governors, effective
October 30, 1995.

Stichting Prioriteit ABN AMRO Holding
Stichting Administratiekantoor ABN AMRO
Holding
ABN AMRO Holding N.V.
ABN AMRO Bank N.V.
all of Amsterdam, The Netherlands
Order Approving a Notice to Engage in Underwriting
and Dealing in Bank-Ineligible Securities on a Limited
Basis
Stichting Prioriteit ABN AMRO Holding, Stichting Administratiekantoor ABN AMRO Holding, ABN AMRO
Holding N.V, and ABN AMRO Bank N.V., all of
Amsterdam, The Netherlands, (collectively referred to as
"Notificant"), bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"),
have provided notice under section 4(c)(8) of the BHC
Act (12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23) to retain
Alfred Berg, Inc., New York, New York ("Alfred
Berg"),1 and thereby engage in the following activities:
(1) Underwriting and dealing in, to a limited extent,
all types of debt and equity securities other than
ownership interests in open-end investment companies;2
(2) Acting as agent in the private placement of all
types of securities, including providing related advisory services, and buying and selling securities on the
order of investors as a "riskless principal";
(3) Providing securities brokerage services pursuant to
12 C.F.R. 225.25(b)(15); and
(4) Providing investment advisory services pursuant
to 12 C.F.R. 225.25(b)(4).
Alfred Berg would conduct these activities worldwide.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 48,997 (1995)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors
set forth in section 4(c)(8) of the BHC Act.

Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.

JENNIFER J. JOHNSON

Deputy Secretary of the Board

1. Notificant previously received approval pursuant to section
4(c)(9) of the BHC Act to retain temporarily Alfred Berg, the
United States subsidiary of Alfred Berg Holding AB, Stockholm,
Sweden ("Holding AB"). See Letter dated September 5, 1995,
from Jennifer J. Johnson, Deputy Secretary of the Board, to
Isaac B. Lustgarten ("4(c)(9) Letter").
2. Notificant currently has authority to engage in underwriting
and dealing, to a limited extent, in debt and equity securities
through ABN AMRO Securities (USA) Inc., New York, New York.
See 81 Federal Reserve Bulletin 182 (1995).

Legal Developments

Notificant, with total consolidated assets of $291 billion,3 controls seven depository institutions in Illinois
and one commercial bank in New York. ABN AMRO
Bank N.V. operates branches in Boston, Massachusetts;
Chicago, Illinois; New York, New York; Pittsburgh,
Pennsylvania; and Seattle, Washington; and operates
agencies in Atlanta, Georgia; Miami, Florida; Houston,
Texas; and Los Angeles and San Francisco, California.
Alfred Berg is, and will continue to be, a brokerdealer registered with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934 (12 U.S.C. § 78a et seq.). Therefore, Alfred Berg is
subject to the record-keeping and reporting obligations,
fiduciary standards, and other requirements of the Securities Exchange Act of 1934 and the SEC.
The Board previously has determined by regulation
that the proposed securities brokerage and investment
advisory services are closely related to banking.4 Notificant has committed that Alfred Berg will engage in the
proposed activities in accordance with Board regulations
and orders.5
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
("section 20 firewalls"), the proposed activities of underwriting and dealing in bank-ineligible securities are
so closely related to banking as to be a proper incident
thereto within the meaning of section 4(c)(8) of the BHC
Act. 6 Notificant has committed that Alfred Berg will

3. Asset data are as of December 31, 1994, and use exchange
rates then in effect.
4. See 12 C.F.R. 225.25(b)(4) and (15).
5. To address potential conflicts of interests arising from Alfred
Berg's conduct of full-service securities brokerage activities together with underwriting and dealing in bank-ineligible securities,
Notificant has committed that Alfred Berg will inform its customers at the commencement of the relationship that, as a general
matter, Alfred Berg may be a principal or may be engaged in
underwriting with respect to, or may purchase from an affiliate,
those securities for which brokerage and advisory services are
provided. In addition, at the time any brokerage order is taken, the
customer will be informed (usually orally) whether Alfred Berg is
acting as agent or principal with respect to a security. Confirmations sent to customers also will state whether Alfred Berg is acting
as agent or principal. See PNC Financial Corp., 75 Federal Reserve Bulletin 396 (1989).
6. See Canadian Imperial Bank of Commerce, et at., 76 Federal
Reserve Bulletin 158 (1990); J.P. Morgan & Co.
Incorporated,
et at., 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom.
Securities Industries Ass'n v. Board of Governors of the Federal
Reserve System, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al.,
73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities

1135

conduct the proposed underwriting and dealing activities
using the same methods and procedures and subject to
the same prudential limitations as were established by
the Board in the Section 20 Orders.
The Board also has determined that the conduct of
these securities underwriting and dealing activities is
consistent with section 20 of the Glass-Steagall Act
(12 U.S.C. § 377), provided that the company engaged in
the 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
two-year period.7 Notificant has committed that Alfred
Berg will conduct its underwriting and dealing activities
in bank-ineligible securities subject to the 10-percent
revenue test.8
Private Placement and "Riskless Principal"

Activities

Private placement involves the placement of new issues
of securities with a limited number of sophisticated
purchasers in a nonpublic offering. A financial intermediary in a private placement transaction acts solely as an
agent of the issuer in soliciting purchasers, and does not
purchase the securities and attempt to resell them. Securities that are privately placed are not subject to the
registration requirements of the Securities Act of 1933,
and are offered only to financially sophisticated institu-

Industry Ass'n v. Board of Governors of the Federal
Reserve
System, 839 F.2d 47 (2d Cir. 1988), cert, denied, 486 U.S. 1059
(1988) (collectively, "Section 20 Orders").
7. See Section 20 Orders. Compliance with the 10-percent revenue limitation shall be calculated in accordance with the method
stated in the Section 20 Orders, as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve
Bulletin 751 (1989); the Order Approving Modifications to the
Section 20 Orders, 79 Federal Reserve Bulletin 226 (1993); and the
Supplement to Order Approving Modifications to Section 20 Orders, 79 Federal Reserve Bulletin 360 (1993) (collectively, "Modification Orders"). In light of the fact that Notificant acquired a
going concern, the Board believes that allowing Alfred Berg to
calculate compliance with the revenue limitation on an annualized
basis during the first year after consummation of the acquisition
and thereafter on a rolling quarterly basis would be consistent with
the Section 20 Orders. See Dauphin Deposit Corporation,
11
Federal Reserve Bulletin 672 (1991). Notificant consummated the
acquisition of Holding AB and Alfred Berg on April 12, 1995. See
4(c)(9) Letter. The Board notes that Notificant has not adopted the
Board's alternative indexed-revenue test to measure compliance
with the 10-percent limitation on bank-ineligible securities activities, and, absent such election, will continue to employ the Board's
original 10-percent revenue test.
8. The Board also notes that Alfred Berg may engage in activities
that are necessary incidents to the proposed underwriting and
dealing activities, provided they are treated as part of the bankineligible securities activities, unless Alfred Berg has received
specific approval under section 4(c)(8) of the BHC Act to conduct
the activities independently. Until such approval is obtained, any
revenues from the incidental activities must be counted as ineligible revenues subject to the 10-percent revenue limitation.

1136

Federal Reserve Bulletin • December 1995

tions and individuals and not to the public. Alfred Berg
will not privately place registered securities and will
only place securities with customers that qualify as accredited investors.
"Riskless principal" is the term used in the securities
business to refer to a transaction in which a brokerdealer, after receiving an order to buy (or sell) a security
from a customer, purchases (or sells) the security for its
own account to offset a contemporaneous sale to (or
purchase from) the customer.9 Riskless principal transactions are understood in the industry to include only
transactions in the secondary market. Thus, Alfred Berg
would not act as a riskless principal in selling securities
at the order of a customer that is the issuer of the
securities to be sold, or in any transaction where Alfred
Berg has a contractual agreement to place the securities
as agent of the issuer. Alfred Berg also would not act as
a riskless principal in any transaction involving a security for which it makes a market.
The Board has determined by order that, subject to
prudential limitations that address the potential for conflicts of interests, unsound banking practices, or other
adverse effects, the proposed private placement and riskless principal activities are so closely related to banking
as to be a proper incident thereto within the meaning of
section 4(c)(8) of the BHC Act. 10
The Board also has determined that acting as agent in
the private placement of securities, and purchasing and
selling securities on the order of investors as a riskless
principal, do not constitute underwriting and dealing in
securities for purposes of section 20 of the GlassSteagall Act, and that revenue derived from these activities is not subject to the 10-percent revenue limitation on
bank-ineligible securities underwriting and dealing.11
Notificant has committed that Alfred Berg will conduct its private placement and riskless principal activities using the same methods and procedures, and subject
to the same prudential limitations as those established by
the Board in Bankers Trust and J.P. Morgan,12 including

9. See Securities and Exchange Commission Rule 10b-10.
17 C.F.R. 240.10b-10(a)(8)(i).
10. See J.P. Morgan & Alfred Berg Incorporated, 76 Federal
Reserve Bulletin 26 (1990) ("J.P. Morgan")-, Bankers Trust New
York Corporation, 75 Federal Reserve Bulletin 829 (1989) ("Bankers Trust").
11. See Bankers Trust at 831-833.
12. Among the prudential limitations detailed more fully in
Bankers Trust and J.P. Morgan are that Alfred Berg will maintain
specific records that will clearly identify all riskless principal
transactions, and that Alfred Berg will not engage in any riskless
principal transactions for any securities carried in its inventory.
When acting as a riskless principal, Alfred Berg will not hold itself
out as making a market in the securities that it buys and sells as a
riskless principal. Moreover, Alfred Berg will not act as riskless
principal for registered investment company securities or with
respect to any securities of investment companies that are advised

the comprehensive framework of restrictions imposed by
the Board in connection with underwriting and dealing
in securities, which were designed to avoid potential
conflicts of interests, unsound banking practices, and
other adverse effects. 13
Financial Factors, Managerial Resources, and Other
Considerations
In evaluating a notice under section 4(c)(8) of the BHC
Act, the Board considers the financial and managerial
resources of the notificant and its subsidiaries and the
effect the transaction would have on such resources.14
The Board has reviewed the capitalization of Notificant
and Alfred Berg in accordance with the standards set
forth in the Section 20 Orders, and finds the capitalization of each to be consistent with approval.15 With
respect to Alfred Berg, this determination is based on all
the facts of record, including Notificant's projections of
the volume of Alfred Berg's underwriting and dealing
activities in bank-ineligible securities. On the basis of all
the facts of record, including the foregoing, and, with
respect to Notificant's proposal to underwrite and deal in
bank-ineligible securities, subject to the completion of a
satisfactory review of the operational and managerial

by Notificant or any of its affiliates. With regard to private placement activities, Notificant has committed that Alfred Berg will not
privately place registered investment company securities or securities of investment companies that are advised by Notificant or any
of its affiliates.
13. In previous orders approving riskless principal activities, the
Board has relied on commitments by bank holding companies to
refrain from entering quotes for specific securities in the NASDAQ
or any other dealer quotation system in connection with riskless
principal transactions. Bankers Trust at 832. Notificant proposes
that Alfred Berg, in acting as a riskless principal, be permitted to
enter bid or ask quotations, or publish "offering wanted" or "bid
wanted" notices, on trading systems other than an exchange or the
NASDAQ.
In order to ensure that Alfred Berg would not hold itself out as a
market maker with respect to securities for which it acted as
riskless principal, Notificant has committed that Alfred Berg will
not enter price quotations on different sides of the market for a
particular security during the same two business day period. In
other words, Alfred Berg would not enter an "ask" quote for two
business days after entering a "bid" quote with respect to the same
security, and vice versa. The Board previously has determined that
these activities are permissible and do not constitute underwriting
and dealing in securities for purposes of the Glass-Steagall Act.
See BankAmerica Corporation, 79 Federal Reserve Bulletin 1163,
1165 n. 10 (1993); Dauphin Deposit Corporation, 11 Federal
Reserve Bulletin 672 (1991).
14. See 12 C.F.R. 225.24.
15. The Board notes that Notificant's capital ratios satisfy applicable risk-based standards under the Basle Accord, and are considered equivalent to the capital levels that would be required of a U.S.
banking organization.

Legal Developments

infrastructure of Notificant and Alfred Berg, the Board
has concluded that financial and managerial considerations are consistent with approval of this notice.
In order to approve this notice, the Board also must
determine that the performance of the proposed activities
by Notificant can reasonably be expected to produce
public benefits that would outweigh possible adverse
effects under the proper incident to banking standard of
section 4(c)(8) of the BHC Act. Under the framework
established in this and prior decisions, consummation of
this proposal is not likely to result in significantly adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interests, or
unsound banking practices. The Board expects that consummation of the proposal would provide added convenience to Notificant'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 Notificant can
reasonably be expected to produce public benefits that
outweigh possible adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC
Act.
Accordingly, and for the reasons set forth in this order
and in the Section 20 Orders, the Board has concluded
that Notificant's proposal to engage through Alfred Berg
in the proposed activities is consistent with the GlassSteagall Act, and that the proposed activities are so
closely related to banking as to be proper incidents
thereto within the meaning of section 4(c)(8) of the BHC
Act, provided that Notificant limits Alfred Berg's activities as specified in this order and the Section 20 Orders,
as modified by the Modification Orders.
On the basis of the record, the Board has determined
to, and hereby does, approve this notice subject to all the
terms and conditions discussed in this order and in the
Section 20 Orders as modified by the Modification Orders. The Board's approval of this proposal extends only
to activities conducted within the limitations of those
orders and this order, including the Board's reservation
of authority to establish additional limitations to ensure
that Alfred Berg's activities are consistent with safety
and soundness, conflicts of interests, and other relevant
considerations under the BHC Act. Underwriting and
dealing in any manner other than as approved in this
order and the Section 20 Orders (as modified by the
Modification Orders) is not authorized for Alfred Berg.
The Board's approval of Notificant's proposal to underwrite and deal in all types of debt and equity securities is conditioned on a future determination by the
Board that Notificant and Alfred Berg have established
policies and procedures to ensure compliance with the
section 20 firewalls and the other requirements of this
order and the Section 20 Orders, including computer,
audit, and accounting systems, internal risk management

1137

controls, and the necessary operational and managerial
infrastructure.
The Board's determination is also subject to all the
terms and conditions set forth in Regulation Y, including
those in sections 225.7 and 225.23(g), and to the Board's
authority to require modification or termination of the
activities of a bank holding company or any of its
subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the provisions of
the BHC Act and the Board's regulations and orders
issued thereunder. The Board's decision is specifically
conditioned on compliance with all the commitments
made in connection with this notice, including the commitments discussed in this order and the conditions set
forth in the above-noted Board regulations and orders.
These commitments and conditions shall be deemed to
be conditions imposed in writing by the Board in connection with its findings and decisions, and may be
enforced in proceedings under applicable law.
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
October 30, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

SunTrust Banks, Inc.
Atlanta, Georgia
Order Approving a Notice to Engage in Certain
Securities, Leasing and Interest Rate and Currency
Swaps Activities
SunTrust Banks, Inc., Atlanta, Georgia ("SunTrust"), a
bank holding company within the meaning of the Bank
Holding Company Act ("BHC Act"), has provided notice under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23) of its proposal
to expand the activities of its section 20 subsidiary,
SunTrust Capital Markets, Inc., Atlanta, Georgia
("Company"), to include underwriting and dealing in
certain unrated municipal revenue bonds,1 leasing per-

1. SunTrust is requesting a modification of a commitment to
which Company is currently subject. The modification would allow
Company to underwrite and deal in unrated municipal revenue
bonds. No single issue of unrated municipal revenue bonds under-

1138

Federal Reserve Bulletin • December 1995

sonal or real property and certain higher residual value
leasing, and acting as broker, agent, or advisor to institutional customers with respect to interest rate and currency swap transactions and related swap derivative
products.2
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 44,892 (1995)). The time for filing
comments has expired, and the Board has considered the
notice and all comments received in light of the factors
set forth in section 4(c)(8) of the BHC Act.
SunTrust, with total consolidated assets of $44.2 billion, operates subsidiary banks in four states.3 Company
currently is engaged in limited bank-ineligible securities 4 underwriting and dealing activities that are permissible under section 20 of the Glass-Steagall Act
(12 U.S.C. § 377). Company is, and will continue to be,
a broker-dealer registered with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (12 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 record-keeping and reporting obligations, fiduciary
standards, and other requirements of the Securities Exchange Act of 1934, the SEC, and the NASD.
In order to approve a proposal under section 4(c)(8) of
the BHC Act, the Board is required to determine that the
proposed activity is "so closely related to banking or
managing or controlling banks as to be a proper incident
thereto."5 The Board previously has determined by order
or regulation that the proposed activities are closely
related to banking within the meaning of section 4(c)(8).
SunTrust has committed that Company will conduct the
proposed activities in accordance with the limitations
and conditions relied on by the Board in its prior orders
and in Regulation Y.6

written by Company would exceed $7.5 million. In addition, SunTrust has committed that Company will not underwrite any unrated
municipal revenue bonds until SunTrust conducts an independent
credit review, using policies and procedures approved by the Federal Reserve, and determines that the securities are of investmentgrade quality.
2. As used herein, the term "swap derivative products" means
caps, floors, collars, and options on swaps, caps, floors, and collars.
SunTrust will not act as a principal or originator with respect to
swaps or swaps derivative products, but will act solely as agent or
broker.
3. Asset data are as of June 30, 1995.
4. Company has authority to underwrite and deal in, to a limited
extent, certain municipal revenue bonds, 1-^t family mortgagerelated securities, commercial paper, and consumer-receivablerelated securities. See SunTrust Banks, Inc., 80 Federal Reserve
Bulletin 938 (1994). Company also is authorized to engage in a
variety of other nonbanking activities.
5. 12 U.S.C. § 1843(c)(8).
6. See Letter Interpreting Section 20 Orders, 81 Federal Reserve
Bulletin 198 (1995) (authorizing underwriting and dealing in un-

Under section 4(c)(8) of the BHC Act, the Board
considers the financial and managerial resources of the
notificant and its subsidiaries and the effect of the transaction upon such resources.7 On the basis of all the facts
of record, the Board has concluded that financial and
managerial considerations are consistent with approval
of this notice.
In order to approve this notice, the Board also must
determine that the performance of the proposed activities
by SunTrust can reasonably be expected to produce
public benefits that outweigh possible adverse effects,
such as undue concentration of resources, decreased or
unfair competition, conflicts of interests, or unsound
banking practices. Under the framework and conditions
established in this and prior decisions, consummation of
this proposal is not likely to result in any significant
adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of
interests, or unsound banking practices. The Board expects that consummation of the proposal would provide
added convenience to SunTrust'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
SunTrust 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. Accordingly, the Board has concluded that
the proposed activities are so closely related to banking
as to be proper incidents thereto within the meaning of
section 4(c)(8) of the BHC Act.
Based on the foregoing and all the facts of record, the
Board has determined to, and hereby does, approve this
notice subject to all the terms and conditions set forth in
this order, and in the above-noted Board regulations and
orders that relate to these activities. The Board's determination also is subject to all the terms and conditions
set forth in Regulation Y, including those in sections 225.7 and 225.23(b), and to the Board's authority
to require modification or termination of the activities of

rated municipal revenue bonds; 12 C.F.R. 225.25(b)(5) (leasing);
Saban, S.A., RNYC Holdings Limited, Republic New York Corporation, 80 Federal Reserve Bulletin 249 (1994); The Sanwa Bank,
Limited, 77 Federal Reserve Bulletin 64 (1991); C&S/Sovran Corporation, 76 Federal Reserve Bulletin 857 (1990) (acting broker,
agent, or advisor to institutional customers with respect to interest
rate and currency swap transactions and related swap derivative
products). SunTrust has indicated that it expects that an affiliate of
Company would act as counterparty principal for transactions on
which Company would provide advice. In these situations, Company would be acting as the agent of its affiliate. In order to address
potential conflicts of interest that may arise, SunTrust has committed that Company will disclose to each customer that an affiliate of
Company will be the counterparty to the customer with respect to
the transaction which is the subject of the advice.
7. See 12 C.F.R. 225.24.

Legal Developments

a bank holding company or any of its subsidiaries as the
Board finds necessary to assure compliance with, and to
prevent evasion of, the provisions of the BHC Act and
the Board's regulations and orders issued thereunder.
The Board's decision is specifically conditioned on compliance with all the commitments made in connection
with this notice, including the commitments discussed in
this order and the conditions set forth in the above-noted
Board regulations and orders. For purposes of this action, these commitments and conditions shall be deemed
to be conditions imposed in writing by the Board in
connection with its findings and decisions, and may be
enforced in proceedings under applicable law.
This transaction shall not be consummated later than
three months after the effective date of this order unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Atlanta, acting pursuant
to delegated authority.
By order of the Board of Governors, effective
October 16, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Phillips, and Yellen. Absent and
not voting: Governor Lindsey.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

Orders Issued Under Sections 3 and 4 of the
Bank Holding Company Act
Banco Santander, S.A.,
Madrid, Spain,
Order Approving the Acquisition of Shares of a Bank
Holding Company
Banco Santander, S.A., Madrid, Spain, a foreign bank
subject to the Bank Holding Company Act ("BHC
Act"), and its wholly owned subsidiary, FFB Participa?oes e Servi90s, S.A., Funchal, Portugal (together, "Santander"), have applied under sections 3 and 4 of the
BHC Act (12 U.S.C. §§ 1842 and 1843) and sections 225.14, 225.21(a) and 225.23(a) of the Board's
Regulation Y (12 C.F.R. 225.14, 225.21(a), and
225.23(a)), to acquire approximately 12 percent of the
outstanding voting shares of First Union Corporation,
Charlotte, North Carolina ("First Union"). 1 Santander
would receive these shares from First Union in exchange
for Santander's 28.8 percent of the outstanding voting

1. A list of the bank and nonbank subsidiaries of First Union is
attached as Appendix A.

1139

shares of First Fidelity Bancorporation ("First Fidelity"), when First Union acquires First Fidelity.2
Notice of this proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 44,032 (1995)). The time for filing
comments has expired, and the Board has considered
this proposal and all comments received in light of the
factors set forth in sections 3 and 4 of the BHC Act.
Santander, with total consolidated assets equivalent to
approximately $129 billion, is the largest banking organization in Spain.3 In the United States, Santander has a
controlling interest in First Fidelity; controls a subsidiary
bank in Puerto Rico; operates a branch in New York,
New York; controls a finance company in Wilmington,
Delaware; and operates an agency and an Edge Corporation in Miami, Florida. In addition, Santander engages
directly and through subsidiaries in permissible nonbanking activities in the United States and abroad.
First Union, with consolidated assets of approximately
$83.1 billion, is the ninth largest commercial banking
organization in the United States. First Union operates
subsidiary banks in North Carolina, Florida, Georgia,
Tennessee, Maryland, Virginia, South Carolina, and the
District of Columbia. First Union also engages directly
and through subsidiaries in various nonbanking activities
under section 4 of the BHC Act. 4
The Board has carefully considered comments from
Inner City Press/Community on the Move ("Protestant") alleging that Santander's proposed ownership interest in First Union, when considered in light of certain
proposed relationships between Santander and First
Union, would result in Santander's exercising a controlling influence over First Union. In particular, Protestant
believes that Santander's representation on First Union's
board of directors and the existence of certain business
relationships between Santander and First Union warrant
a finding that Santander would control First Union for
purposes of the BHC Act.
After consummation of this proposal, Santander would
own approximately 12 percent of the voting shares of
First Union. Accordingly, under the terms of the BHC
Act, Santander would not control First Union for purposes of the BHC Act unless the Board has made a
determination of control after providing Santander an
opportunity for a hearing on the matter.

2. See First Union Corporation, 81 Federal Reserve Bulletin
1143 (1995) ("First Union!First Fidelity Order").
3. Asset data are as of June 30, 1995.
4. 12 U.S.C. § 1843. In particular, First Union engages in permissible securities and securities-related activities, community development activities, and acts as a futures commission merchant in
executing and clearing futures contracts on certain commodity
exchanges. First Union also operates an export trading company
pursuant to section 4(c)(14) of the BHC Act (12 U.S.C.
§ 1843(c)(14)).

1140

Federal Reserve Bulletin • December 1995

Protestant has not provided any evidence to support a
finding that Santander would exercise a controlling influence over the management or policies of First Union.
Moreover, Santander has made a number of commitments to the Board to maintain its investment in First
Union as a passive investment.5 In particular, Santander
will have discretion to exercise only 9.9 percent of the
voting shares of First Union. 6 Santander also has committed not to exercise a controlling influence over the
management or policies of First Union or any of its
subsidiaries; not to attempt to influence the loan and
credit decisions or policies, the pricing of services, any
personnel decision, the location of any offices, branching, the hours of operation or similar activities of First
Union or any of its subsidiaries; not to solicit or participate in soliciting proxies with respect to any matter
presented to the shareholders of First Union or any of its
subsidiaries; not to have or seek to have any employee or
representative serve as an officer, agent or employee
with management responsibility at First Union or any of
its subsidiaries;7 and not to dispose or threaten to dispose
of shares of First Union or any or its subsidiaries in any
manner as a condition of specific action or nonaction by
First Union or any of its subsidiaries.
Based on all the facts of record, including the size of
Santander and First Union, the independence of the
institutions and the historical relationships between
them, and the commitments made by Santander to maintain its investment as a passive investment and not to
exercise a controlling influence over First Union, the
Board concludes that the structure of the proposed relationship between Santander and First Union does not
support a finding at this time that Santander would
control First Union for purposes of the BHC Act or the
Board's rules.8

5. These commitments are set forth in Appendix B.
6. All shares of First Union owned by Santander in excess of 9.9
percent will be voted in proportion to shares held by parties not
affiliated with First Union.
7. Certain employees of Santander may serve as nonmanagement officers, agents or employees of First Union and its
subsidiaries as part of a training or information exchange program,
so long as:
(i) No such employee serves in such capacity for a term of more
than 24 months; and
(ii) No more than three such employees serve in such capacity at
the same time without further Federal Reserve System approval.
8. Protestant also alleges that the acquisition of First Fidelity by
First Union and the resulting investment by Santander in First
Union would remove decision making and accountability for the
former First Fidelity franchise out of the region currently served by
First Fidelity. As noted above, Santander would not control First
Union for purposes of the BHC Act and Santander has specifically
committed not to influence the daily operations of First Union or its
subsidiary banks. As discussed in the First Union/First
Fidelity
Order, each First Union subsidiary bank locally develops a strategic plan to take into account the unique needs of its community.

Competitive

Considerations

The Board previously has indicated that the acquisition
of less than a controlling interest in a bank or bank
holding company is not a normal acquisition for a bank
holding company.9 However, 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 of between
5 and 25 percent of the voting shares of a bank or a bank
holding company.10 Moreover, nothing in section 3(c) of
the BHC Act requires denial of an application solely
because a bank holding company proposes to acquire
less than a controlling interest in a bank or a bank
holding company. On this basis, the Board previously
has approved the acquisition by a bank holding company
of less than a controlling interest in a bank or bank
holding company.11
The question of whether acquisition of a minority
interest in a competing bank or bank holding company
would result in a substantial lessening of competition
must be answered in light of the specific facts of record
of each case. 12 The Board continues to believe that
noncontrolling interests in directly competing banks or
bank holding companies may raise serious questions
under the BHC Act. The Board previously has noted that
one company need not acquire control of another company in order to substantially lessen competition between them.13 It is possible, for example, that the acquisition of a substantial ownership interest in a competitor
or a potential competitor of the acquiring firm may alter
the market behavior of both firms in such a way as to
weaken or eliminate independence of action between the
organizations and increase the likelihood of cooperative
operations.14
Based on a careful analysis of all the facts of record, it
is the Board's judgment that in this case no significant
reduction in competition is likely to result from the

Based on all the facts of record, the Board does not believe that
these comments warrant denial of these applications.
9. See, e.g., North Fork Bancorporation, Inc., 81 Federal Reserve Bulletin 734 (1995) ("North Fork")-, State Street Boston
Corporation, 67 Federal Reserve Bulletin 82 (1981).
10. 12 U.S.C. § 1842(a)(3); 12 C.F.R. 225.11(c).
11. See, e.g., North Fork (acquisition of 19.9 percent of the
voting shares of a bank holding company); Mansura
Bancshares,
Inc., 79 Federal Reserve
Bulletin
37 (1993) (acquisition
of 9.7 percent of the voting shares of a bank holding company)
("Mansura"); and SunTrust Banks, Inc., 76 Federal Reserve Bulletin 542 (1990) ("SunTrust") (acquisition of up to 24.99 percent of
the voting shares of a bank).
12. See, e.g., Mansura', and SunTrust.
13. See The Summit Bancorporation, 75 Federal Reserve Bulletin 712 (1989).
14. See Mansura at 38.

Legal Developments

proposed acquisition. Upon consummation of the acquisition of First Fidelity by First Union, Santander and
First Union would continue to compete directly in the
Metropolitan New York-New Jersey banking market
("New York banking market").15 Assuming a combination of Santander and First Union, the combined organization would control deposits of $18.3 billion, representing 5.3 percent of total deposits in banking or thrift
organizations ("depository institutions") in the market
("market deposits"). 16 The Herfindahl-Hirschman Index ("HHI") 17 would increase by seven points to 536. 18
In light of all the facts of record, including the number of
competitors that would remain in this market, and the
modest increase in the concentration of market deposits
as measured by the HHI, the Board concludes that consummation of this proposal would not result in any
significantly adverse effect on competition or the concentration of banking resources in the New York banking
market or any other relevant banking market. Accordingly, the Board concludes that competitive considerations are consistent with approval of this proposal.

15. The New York banking market includes New York City;
Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan and
Westchester Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset,
Sussex, Union, Warren, and a portion of Mercer Counties in New
Jersey; Pike County in Pennsylvania; and portions of Fairfield and
Litchfield Counties in Connecticut.
16. In this context, depository institutions include commercial
banks and savings associations. Market share data are as of June
30, 1994, 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, major competitors of commercial banks. See
Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989);
National City Corporation,
70 Federal Reserve Bulletin 743
(1984). Thus, the Board regularly has 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).
17. 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 below 1000 is considered to be unconcentrated.
The Department of Justice has informed the Board that a bank
merger or acquisition generally will not be challenged (in the
absence of other factors indicating anticompetitive effects) unless
the post-merger HHI is at least 1800 and the merger increases the
HHI by 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 effects of limited-purpose lenders and other non-depository
financial entities.
18. If market deposits of Santander and First Union are not
combined,First Union would enter the New York banking market,
following its acquisition of First Fidelity, as the sixth largest
depository institution in the market, controlling deposits of
$15.8 billion, representing 4.6 percent of market deposits. Santander would be the 22d largest depository institution in the New
York banking market, controlling deposits of $2.6 billion, representing less than 1 percent of market deposits.

Convenience and Needs

1141

Considerations

The Community Reinvestment Act (12 U.S.C. § 2901
et seq.) ("CRA") requires the Board to take into account
the record of an institution in assisting to meet the credit
needs of its entire community, including low- and
moderate-income neighborhoods, consistent with the
safe and sound operation of such institution, in the
acquisition of shares requiring approval under section 3
of the BHC Act. The Board notes that Santander's
subsidiary bank, Banco Santander Puerto Rico, Hato
Rey, Puerto Rico ("BSPR"), received a "satisfactory"
rating for CRA performance at its most recent examination by its primary federal supervisor, the Federal Deposit Insurance Corporation, as of September 1993. The
New York branch of BSPR ("Branch") also received a
"satisfactory" rating for CRA performance from its
primary supervisor, the New York State Banking Department ("Department") in December 1994. 19 Based on all
the facts of record, including the nature of Santander's
investment in First Union, relevant reports of examination on its record of performance under the CRA, and the
performance record of First Union considered in the
Board's order issued today and incorporated herein, the
Board concludes that convenience and needs considerations, including the CRA performance records of both
Santander and First Union, are consistent with approval
of this proposal.20

19. Protestant maintains that the Department's examination
should be accorded little weight because Branch was not examined
on-site by Department examiners. The Board notes that an on-site
examination is not required by the CRA. Moreover, the Board
believes that the Department's analysis of the relevant CRA assessment factors in its examination, in light of Branch's size and the
scope of its activities, is sufficient. Branch, with total assets of
approximately $83 million and no retail banking operations, engages in CRA-related lending activities by making community
development housing and small business loans.
20. See First Union/First Fidelity Order. Protestant has requested
that a public hearing or meeting be held on the proposed acquisition
of First Fidelity by First Union, as well as the investment by
Santander in First Union. 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, neither the Office of the Comptroller of the
Currency nor any of the appropriate State supervisory authorities
have recommended that this proposal be denied.
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). The Board has carefully considered this request. In the
Board's view, Protestant has had an ample opportunity to and has
presented substantial written submissions. Protestant has not identified facts that are material to the Board's decision and that are in
dispute, what substantial evidence it would produce at a public
meeting or hearing, and why its written submissions do not ade-

1142

Federal Reserve Bulletin • December 1995

Other

Considerations

The Board previously has determined that Santander is
subject to comprehensive supervision or regulation on a
consolidated basis by its home country supervisor.21 The
Board also concludes that the financial and managerial
resources and future prospects of Santander and First
Union, and their respective subsidiaries, and other supervisory factors the Board must consider under section 3
of the BHC Act are consistent with approval of this
proposal.22
Nonbanking

Activities

Santander also has provided notice under section 4(c)(8)
of the BHC Act of its proposal to acquire shares of First
Union. In light of all the facts of record, including the
percentage of shares of First Union proposed to be
acquired in this transaction, the Board concludes that
Santander's investment in voting shares of First Union
would not significantly affect competition in any relevant market. Furthermore, 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 are not outweighed by benefits to the
public. 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 this proposal.23

mined that these applications should be, and hereby are,
approved.24 The Board's approval is specifically conditioned on compliance by Santander with all commitments made in connection with these applications, as
well as the conditions discussed in this order.
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(b) of Regulation Y
(12 C.F.R. 225.7 and 225.23(b)), and to the Board's
authority to require such modification or termination of
the activities of a bank holding company or any of its
subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of
the BHC Act and the Board's regulations and orders
issued thereunder. The commitments and conditions relied on by the Board in 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 shares of First Union's voting stock
shall not be consummated before the fifteenth day following the effective date of this order, and not 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 New York,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
October 26, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON

Conclusion
Based on the foregoing, and in light of all the facts of
record, including commitments made by Santander in
connection with these applications, the Board has deter-

quately present its allegations. Based on all the facts of record, the
Board has determined that a public meeting or hearing is not
necessary to clarify the factual record in this proposal, or otherwise
warranted in this case and the request for a public meeting or
hearing on this proposal is denied.
21. See First Fidelity Bancorporation and Banco Santander, S.A.,
79 Federal Reserve Bulletin 622 (1993). The Board also determined that Santander has provided adequate assurances of access to
information necessary to determine compliance with U.S. law.
22. The Board also has determined that the proposal is consistent
with the statutes of North Carolina, Rhode Island, and New York.
23. First Union controls three companies engaged in certain real
estate development and insurance activities pursuant to a grandfaAct
ther provision in section 4(a)(2) of the BHC
(12 U.S.C. § 1843(a)(2)). See First Union Corporation, 67 Federal
Reserve Bulletin 63 (1980). The Board has determined that First
Union may retain its interest in these companies under section
4(a)(2) after the acquisition by Santander of less than a controlling
interest in First Union.

Deputy Secretary of the Board
Appendix A
Subsidiary Banks
First Union National Bank of Florida, Jacksonville,
Florida;
First Union National Bank of North Carolina, Charlotte,
North Carolina;
First Union National Bank of Georgia, Atlanta, Georgia;
First Union National Bank of Tennessee, Nashville,
Tennessee;
First Union National Bank of Maryland, Rockville,
Maryland;
First Union National Bank of Virginia, Roanoke,
Virginia;

24. For the reasons discussed in the First Union/First
Fidelity
Order, the Board does not believe that a delay in acting on this
application, as requested by Protestant, is warranted.

Legal Developments

First Union National Bank of Washington, D.C.,
Washington, D.C.;
First Union National Bank of South Carolina,
Greenville, South Carolina; and
First Union Home Equity Bank, National Association,
Charlotte, North Carolina.
Nonbanking

Subsidiaries

First Union Capital Markets Corporation, Charlotte,
North Carolina;
First Union Community Development Corporation,
Charlotte, North Carolina;
First Union Development Corporation, Charlotte, North
Carolina;
First Union Export Trading Company, Charlotte, North
Carolina;
First Union Futures Corporation, Charlotte, North Carolina;
First Union Mortgage Corporation, Charlotte, North
Carolina; and
General Financial Life Insurance Company, Charlotte,
North Carolina.

Appendix B
As part of this proposal, Santander has committed that
it will not, without the Board's prior approval:
(a) Exercise or attempt to exercise a controlling influence over the management or policies of First Union or
any of its subsidiaries;
(b) Seek or accept representation on the board of directors of First Union or any of its subsidiaries, except that
it may have two representatives on the board of directors
of First Union, one of whom shall be a senior executive
officer of First Union;
(c) Have or seek to have any employee or representative
serve as an officer, agent or employee with management
responsibility at First Union or any of its subsidiaries;1
(d) Take any action causing First Union or any of its
subsidiaries to become a subsidiary of Santander or any
of its subsidiaries;
(e) Acquire or retain voting securities of First Union or
any of its subsidiaries that would cause the combined
interests of Santander or any of its subsidiaries and its

1. Certain employees of Santander may serve as nonmanagement officers, agents or employees of First Union and its
subsidiaries as part of a training or information exchange program,
so long as:
(i) No such employee serves in such capacity for a term of more
than 24 months; and
(ii) No more than three such employees serve in such capacity at
the same time without further Federal Reserve System approval.

1143

officers, directors and affiliates to exceed the percentage
of the outstanding voting securities of First Union or any
of its subsidiaries that they will own upon consummation of the merger;
(f) Exercise voting rights with respect to that portion of
the voting securities of First Union at any time owned by
Santander or any of its subsidiaries which exceeds 9.9
percent of the outstanding voting securities of First
Union at such time, other than to vote such shares for
and against any proposition in the same proportions as
the voting securities of First Union held by security
holders not affiliated with First Union have been voted;
(g) Propose a director or slate of directors in opposition
to a nominee or slate of nominees proposed by the
management or board of directors of First Union or any
of its subsidiaries;
(h) Attempt to influence the dividend policies or practices of First Union or any of its subsidiaries;
(i) Solicit or participate in soliciting proxies with respect
to any matter presented to the shareholders of First
Union or any of its subsidiaries;
(j) Attempt to influence the loan and credit decisions or
policies, the pricing of services, any personnel decision,
the location of any offices, branching, the hours of operation or similar activities of First Union or any of its
subsidiaries;
(k) Dispose or threaten to dispose of shares of First
Union or any or its subsidiaries in any manner as a
condition of specific action or nonaction by First Union
or any of its subsidiaries; or
(1) Enter into any banking or nonbanking transactions
with First Union or any of its subsidiaries other than
normal banking transactions and cooperative activities
that are in the ordinary course of business and on an
arm's-length basis.2

First Union Corporation
Charlotte, North Carolina
Order Approving the Acquisition of a Bank Holding
Company
First Union Corporation, Charlotte, North Carolina
("First Union"), a bank holding company within the
meaning of the Bank Holding Company Act ("BHC
Act"), and First Union Corporation of New Jersey, Newark, New Jersey, have applied under section 3 of the
BHC Act (12 U.S.C. § 1842) to acquire all the voting
shares of First Fidelity Bancorporation, Newark, New

2. These business relationships with First Union may include
correspondent banking relationships, participation in multilateral
clearing organizations, and training in areas such as operational and
computer systems and branch integration, but will not involve joint
ventures or cross-marketing activities.

1144

Federal Reserve Bulletin • December 1995

Jersey, and Philadelphia, Pennsylvania ("First Fidelity"), and thereby indirectly acquire its subsidiary banks,
First Fidelity Bank, N.A., Elkton, Maryland; First Fidelity Bank, Stamford, Connecticut; and First Fidelity
Bank, Delaware, Wilmington, Delaware.1
First Union also has provided notice under section
4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and
section 225.23 of the Board's Regulation Y (12 C.F.R.
225.23) of its proposal to acquire the nonbanking subsidiaries of First Fidelity set forth in the Appendix, and
thereby engage nationwide in these permissible nonbanking activities.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 40,381 (1995)). The time for filing
comments has expired and the Board has considered the
applications and notices and all comments received in
light of the factors set forth in sections 3 and 4 of the
BHC Act.
First Union, with total consolidated assets of
$83.1 billion, operates subsidiary banks in Florida, North
Carolina, Georgia, Tennessee, Maryland, Virginia, South
Carolina, and the District of Columbia.2 First Union is
the ninth largest banking organization in the United
States, controlling approximately 2.4 percent of total
banking assets in the United States. First Union also
engages in a number of permissible nonbanking activities nationwide. First Fidelity, with consolidated assets
of $35.4 billion, is the 27th largest banking organization
in the United States, controlling approximately 1.0 percent of total banking assets in the United States.3
Interstate

Analysis

1. First Union also would acquire First Fidelity's 24.4 percent
interest in the voting stock of ExecuFirst Bancorp, Inc.
("ExecuFirst"), which is the parent corporation of First Executive
Bank, both of Philadelphia, Pennsylvania. First Fidelity's investment in ExecuFirst is subject to certain commitments previously
relied on by the Board in cases involving passive investments of
less than 25 percent in a banking organization. These commitments
include a commitment not to exercise a controlling influence over
the management or policies of ExecuFirst; not to have any director,
officer, or employee interlocks with ExecuFirst; and not to solicit or
participate in soliciting proxies with respect to any matter presented
to the shareholders of ExecuFirst. First Union has committed that it
also would comply with all the commitments previously made by
First Fidelity to the Board in connection with First Fidelity's
acquisition of shares of ExecuFirst.
2. All asset data are as of June 30, 1995.
3. Upon consummation of this proposal, First Union would
become the nation's sixth largest banking organization.

acquire control of a bank located in a state other than the
home state of such bank holding company, if certain
conditions are met.4 These conditions 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.
Competitive

Considerations

First Union and First Fidelity own depository institutions
that compete directly in the Baltimore, Maryland, banking market ("Baltimore banking market"), and the
Washington, D.C., banking market ("DC banking market").6 First Union is the 20th largest banking or thrift
organization ("depository institution") in the Baltimore
banking market, controlling deposits of $85.5 million,
representing less than 1 percent of total deposits in
depository institutions in the market ("market deposits").7 First Fidelity is the third largest depository institution in the Baltimore banking market, controlling depos-

4. 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. For purposes
of the BHC Act, the home state of First Union is North Carolina.
5. 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and
(B). First Union is adequately capitalized and adequately managed.
First Fidelity's banks have been in existence and continuously
operated for the minimum periods of time required under Connecticut and Delaware law. Maryland does not have a state age requirement. In addition, upon consummation of this proposal, First Union
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, or the applicable state deposit cap,
if any, of the total amount of deposits of insured depository
institutions in Maryland, Connecticut, Delaware, New Jersey, Pennsylvania, or New York. All other requirements of section 3(d) of
the BHC Act also would be met upon consummation of this
proposal.
6. The Baltimore banking market is approximated by the Baltimore Ranally Metro Area ("RMA") plus the remainder of Harford
County. The DC banking market is approximated by the Washington, DC RMA plus the remainder of Loudoun County. While First
Union and First Fidelity also currently compete in the Annapolis,
Maryland, banking market ("Annapolis banking market"), First
Union has entered into a binding agreement to sell its only branch
in this banking market. Accordingly, any potential anticompetitive
effects of this proposal in the Annapolis banking market would be
eliminated by this divestiture.
7. Market data are as of June 30, 1994. Market share data are
based on calculations in which the deposits of thrift institutions are
included at 50 percent. The Board previously has indicated that
thrift institutions have become, or have the potential to become,
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 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).

Legal Developments

its of $2.6 billion, representing approximately
11.3 percent of market deposits. Upon consummation of
this proposal, First Union would remain the third largest
depository institution in the Baltimore banking market,
controlling deposits of $2.7 billion, representing approximately 11.7 percent of market deposits. The HerfindahlHirschman Index ("HHI") would increase by eight
points to 1130.8
First Union is the third largest depository institution in
the DC banking market, controlling deposits of
$5.9 billion, representing approximately 13.4 percent of
market deposits. First Fidelity is the 14th largest depository institution in the DC banking market, controlling
deposits of $453.3 million, representing approximately 1
percent of market deposits. Upon consummation of this
proposal, First Union would become the second largest
depository institution in the DC banking market, controlling deposits of $6.4 billion, representing approximately
14.4 percent of market deposits. The HHI would increase by 27 points to 983.
The Board sought comments from the United States
Attorney General, the Office of the Comptroller of the
Currency ("OCC"), and the Federal Deposit Insurance
Corporation ("FDIC") on the competitive effects of this
proposal. The Attorney General has indicated that the
proposed transaction would not have a significantly adverse effect on competition. The OCC and FDIC have
not objected to consummation of the proposal or indicated that it would have any significantly adverse competitive effects in any relevant banking market. Based on
all the facts of record, including the number of competitors that would remain in the Baltimore and DC banking
markets, and the relatively small increase in market
concentration and market share in these markets, the
Board has concluded that consummation of this proposal
would not result in any significantly adverse effects on
competition in the Baltimore or DC banking markets or
any other relevant banking market.9

8. Under the revised Department of Justice Merger Guidelines,
49 Federal Register 26,823 (June 29, 1984), a market in which the
post-merger HHI is less than 1000 is considered unconcentrated. 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 threshold for an
increase in the HHI when screening bank mergers and acquisitions
for anticompetitive effects implicitly recognizes the competitive
effect of limited-purpose lenders and other non-depository financial
entities.
9. Some commenters have alleged that this proposal would result
in significant anticompetitive effects by reducing competition
within the banking industry, which would cause increases in fees
for services, and encourage other large banking organizations to

Convenience and Needs

1145

Considerations

In acting on an application to acquire a depository institution under the BHC Act, the Board must consider the
convenience and needs of the communities to be served,
and take into account the records of the relevant depository institutions under the Community Reinvestment Act
(12 U.S.C § 2901 et seq.) ("CRA"). The CRA requires
the federal financial supervisory agencies to encourage
financial institutions to help meet the credit needs of the
local communities in which they operate, consistent with
their safe and sound operation. To accomplish this end,
the CRA requires the appropriate federal supervisory
authority to "assess the institution's record of meeting
the credit needs of its entire community, including lowand moderate-income neighborhoods, consistent with
the safe and sound operation of such institution," and to
take that record into account in its evaluation of bank
expansion proposals.10
The Board has received comments supporting and
opposing this proposal. Commenters favoring the acquisition included the Urban League, Inc.; the Local Initiatives Support Corporation; the Nashville Minority Business Center; the Clarksville-Montgomery County
(Tennessee) Regional Planning Commission; the Duval
County (Florida) Housing Finance Authority; the City of
Greenville, South Carolina; and the Northwest Corridor
Community Development Corporation of Charlotte,
North Carolina. These commenters, who are primarily
involved in affordable housing initiatives, commended
First Union's assistance in this area, which included
start-up funds, direct loans, and lending programs for
minorities and low- and moderate-income individuals.
First Union was also commended for providing leadership by encouraging bank personnel with financial expertise to assist in addressing housing-related and credit
needs of its entire community, including low- and
moderate-income neighborhoods.
Other commenters ("Protestants") criticized the CRA
performance records of First Union and First Fidelity in
helping to meet the credit needs of low- and moderateincome neighborhoods and communities with predominately minority populations. These Protestants include:
the Charlotte Organizing Project, Charlotte, North Carolina; Community Reinvestment Association of North
Carolina, Raleigh, North Carolina; Inner City Press/
Community on the Move, Bronx, New York; Community Reinvestment Alliance, Philadelphia, Pennsylvania;
United Congregations of Chester County, Coatesville,

merge in order to compete with First Union, particularly in the
Mid-Atlantic region. For the reasons discussed in this order, and
based on all the facts of record, the Board concludes that these
comments do not warrant denial of the proposal.
10. 12 U.S.C. § 2903.

1146

Federal Reserve Bulletin • December 1995

Pennsylvania; Regional Council of Neighborhood Organizations, Philadelphia, Pennsylvania; Neighborhood
Assistance Corporation of America, Boston, Massachusetts; and ACORN, Washington, D.C.11
On the basis of data filed under Home Mortgage
Disclosure Act ("HMDA"), 12 some Protestants maintained that the subsidiary banks of both organizations
illegally discriminate in their lending activities.13 In addition, Protestants alleged that the level of performance
by First Union and First Fidelity is deficient in ascertainment, marketing and outreach activities for their entire
communities, and in small business and housing-related
lending.14 Protestants also contended that the branch
locations of First Union and First Fidelity do not serve
the credit needs of low- and moderate-income and minority customers, and that First Union's strategy of
branch closings after an acquisition disproportionately
impacts these customers.15
The Board has carefully reviewed the CRA performance records of First Union, First Fidelity, and their
respective subsidiary banks; all comments received; responses to those comments by First Union and First
Fidelity; and all other relevant facts of record in light of
the CRA, the Board's regulations, and the Statement of
the Federal Financial Supervisory Agencies Regarding

11. The Board also has received comments from individual
Protestants, including a number of identical comments submitted
after the close of the comment period.
12. 12 U.S.C. § 2801 etseq.
13. Protestants's allegations relate to several large Metropolitan
Statistical Areas ("MSAs") where First Union's subsidiary banks
and First Union's subsidiary mortgage company, First Union Mortgage Corporation, Charlotte, North Carolina ("First Union Mortgage") lend, including Tampa and Jacksonville, Florida; the District of Columbia; Atlanta, Georgia; Baltimore, Maryland; and
Charlotte. Several Protestants compared First Union's lending to
that of its peers in North Carolina. Protestants also cite lending data
from Pennsylvania, New Jersey, and Connecticut to support their
allegations regarding First Fidelity's lending activities.
14. Some Protestants maintained that First Union has a history of
purchasing organizations with poor CRA performance records and
not improving their records. These commenters also alleged that
data processing conversion problems in these acquisitions have
resulted in reduced lending and banking services to customers.
Protestants contended that First Union's level of CRA performance
is lower for banks located away from its Charlotte headquarters.
Several Protestants also asserted that this proposal would remove
the lending authority of local bank officers and replace it with
centralized decision making by officials in Charlotte. Other commenters asserted that a number of jobs would be lost, particularly in
the Philadelphia area, as a result of this acquisition. Some Protestants speculated that this proposal is only a "foothold" acquisition
and that future acquisitions would result in more branch closures,
layoffs and reductions in services.
15. One Protestant claimed that First Union receives deposits
from customers at branches in low- and moderate-income communities but fails to reinvest funds in those communities.

the Community Reinvestment Act ("Agency CRA Statement"). 16

Record of Performance Under the CRA
A. CRA Performance Examinations
The Agency CRA Statement provides that a CRA examination is an important and often controlling factor in the
consideration of an institution's CRA record and that
reports of these examinations will be given great weight
in the applications process.17 The Board notes that First
Union's lead bank subsidiary, First Union National Bank
of North Carolina, Charlotte, North Carolina ("FUNBNC"), received an "outstanding" rating from its primary federal supervisor, the OCC, at its most recent
publicly available examination for CRA performance in
April 1994 ("1994 FUNB-NC Examination"). First
Union's remaining seven subsidiary banks received "satisfactory" ratings from the OCC in the most recent
examinations of their CRA performance.18 First Fideli-

16. 54 Federal Register 13,742 (1989). Several Protestants contended that First Union and First Fidelity have been uncooperative
in meeting with community-based organizations and unwilling to
reach specific agreements with them. The Board has indicated in
previous orders and in the Agency CRA Statement that communication by depository institutions with community groups provides a
valuable method of assessing and determining how best to address
the credit needs of the community. Neither the CRA nor the
Agency CRA Statement, however, requires depository institutions
to enter into agreements with particular organizations. Accordingly,
the Board's review has focused on the programs and policies that
First Union and First Fidelity have in place to assist in meeting the
credit needs of their entire communities. See Fifth Third Bancorp,
80 Federal Reserve Bulletin 838 (1994).
17. Id. at 13,745. One Protestant maintained that First Union's
most recent CRA performance examinations are out-of-date and
should not be a significant consideration in these applications. Each
of these examinations was completed within the past 18 months.
The Board has considered these applications in light of all the facts
of record, including the activities since these examinations were
conducted.
18. The OCC conducted a joint CRA examination of all First
Union's subsidiary banks, including FUNB-NC, in April 1994
(collectively, "1994 Examinations"). First Union's other subsidiary banks are: First Union National Bank of Florida, Jacksonville,
Florida; First Union National Bank of Georgia, Atlanta, Georgia;
First Union National Bank of Maryland, Rockville, Maryland; First
Union National Bank of South Carolina, Greenville, South Carolina; First Union National Bank of Tennessee, Nashville, Tennessee; First Union National Bank of Virginia, Roanoke, Virginia; and
First Union National Bank of Washington, D.C.
One Protestant noted that the 1994 Examinations identified weaknesses in First Union's banks' CRA performance records, particularly in Tennessee and Virginia. For example, examiners recommended better documentation of changes in CRA action plans,
closer monitoring of outreach efforts, and analysis of geocoded
lending data in some of the 1994 Examinations. Examiners also
noted that systems conversions had not yet been completed at
several of these banks. Nevertheless, the OCC determined that the

Legal Developments

ty's lead bank, First Fidelity Bank, N.A., Elkton, Maryland ("FFB-MD"), was rated "satisfactory" for CRA
performance by the OCC in July 1994. 19

B. HMDA Data
The Board has carefully reviewed 1993 and 1994
HMDA data for First Union and First Fidelity in light of
comments submitted by Protestants. These data indicate
that First Union has generally improved its lending
record of home mortgage loans to low- and moderateincome and African-American and Hispanic borrowers
and its lending approximates the level of lending in the
aggregate by HMDA-reporting lenders in most of its
service areas.20 For example, HMDA data for FUNB-NC
showed that, although the total number of HMDAreported loan applications decreased overall, the percentage of applications from low- and moderate-income
census tracts and African-American borrowers increased
in 1994 from 1993 levels. In addition, the percentage of
loan originations by FUNB-NC to low- and moderateincome census tracts and African-American borrowers
has increased during this same period. HMDA data for
most other subsidiary banks indicate that, while the
overall number of applications declined in 1994 compared to 1993, the number of applications from AfricanAmerican borrowers increased during this period.21

overall performance rating of all First Union's subsidiary banks
was "satisfactory," except FUNB-NC which was rated "outstanding." The Board notes that First Union has already begun to take
steps to address these remarks and the steps undertaken by First
Union's subsidiary banks to address the areas discussed in the 1994
Examinations will be evaluated by the OCC in future CRA performance examinations.
19. First Fidelity Bank, Stamford, Connecticut ("FFB-CT") received a "satisfactory" from the FDIC in March 1995. First Fidelity Bank, Wilmington, Delaware, which received a "satisfactory"
from the FDIC in April 1994, was only recently acquired by First
Fidelity in March 1995.
20. One Protestant said that it could not analyze First Union's
recent mortgage lending in North Carolina because the Federal
Financial Institutions Examination Council ("FFIEC") had not
provided it with the 1994 HMDA data for First Union and other
HMDA reporters in all North Carolina MS As. First Union provided
this Protestant with a copy of its 1994 Loan Application Register
for North Carolina in machine-readable format. Individual disclosure statements and aggregate data for each MSA were available at
a central repository in each MSA and from the FFIEC after September 1, 1995. The FFIEC does not have a record of a request for
aggregate data of all North Carolina MSAs from Protestant. The
Board notes that Protestant has submitted extensive comments on
First Union's HMDA data, and based on all facts of record, the
Board does not believe that this matter warrants delay or denial of
the proposal.
21. For several of First Union's subsidiary banks, including
Florida, Tennessee, Virginia, and Washington, D.C., the number of
loan originations to African-American borrowers also increased
during this same period.

1147

The 1993 and 1994 HMDA data for FFB-MD indicate
similar improvement.22 These data indicate an increase
in the number of loan applications received by FFB-MD
in 1994 from residents of low- to moderate-income
census tracts, as well as an increase in the percentage of
total loan applications from low- to moderate-income
census tracts. In addition, data for New Jersey also
shows an increase in originations to borrowers from
low- and moderate-income census tracts. FFB-MD also
has shown improvement in its record of lending to
communities with predominately minority populations.
In particular, HMDA data for New Jersey and Pennsylvania indicate that the number and percentage of loan
applications received from African Americans and Hispanics have increased. In addition, these data also show
that the number of loan originations to African-American
and Hispanic borrowers have increased during this same
period.
However, the data for First Union and First Fidelity
also reflect some disparities in the rate of loan originations, denials, and applications by racial group or income level. The Board is concerned when the record of
an institution's record indicates disparities in lending to
minority applicants, and the Board 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 assure 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. The Board also recognizes that HMDA data
have limitations that make the data an inadequate basis,
absent other information, for concluding that an institution has engaged in illegal discrimination in making
lending decisions.
The Board has carefully reviewed Protestants's allegations of illegal discriminatory lending practices by First
Union in light of publicly available and other information from the OCC. The 1994 Examinations found that
all of First Union's subsidiary banks were in substantial
compliance with applicable antidiscrimation laws and
regulations and that none of the banks engaged in practices that would discourage individuals from applying
for credit.23 Examiners also found that the geographic

22. This includes a review of HMDA data for the five Pennsylvania counties in the Philadelphia MSA.
23. One Protestant suggested that conclusions on First Union's
compliance with applicable fair lending laws in the 1994 Examinations were deficient because the OCC did not consider lending data
from First Union Mortgage. This Protestant also asserted that a fair
lending compliance examination of First Union Mortgage should
be conducted. In reviewing compliance with applicable fair lending
laws in each of the 1994 Examinations, the OCC did, contrary to
Protestant's assertion, sample loans made by First Union Mortgage.
The Board does not believe that the HMDA data cited by Protestant

1148

Federal Reserve Bulletin • December 1995

distribution of credit demonstrated reasonable penetration of all segments of each bank's communities, including low- and moderate-income neighborhoods.24 Moreover, the 1994 Examinations found that the delineations
of all subsidiaries of their local communities was reasonable25 and did not arbitrarily exclude low- to moderateincome areas.26 Finally, the 1994 Examinations indicated that all of First Union's subsidiary banks solicit
and accept credit applications from all segments of their
delineated communities, including individuals in lowand moderate-income areas.
First Union also has initiated a number of steps to
increase lending by its subsidiary banks to low- and
moderate-income and minority borrowers. For example,
First Union has implemented a second review of denied
loan applications in the mortgage and consumer lending
areas to ensure that consistent loan decisions are made.
The second review is conducted before a final decision is
made when denial of a mortgage application is recommended. In addition, First Union has introduced a pilot
credit counseling program for applicants who are denied
loans due to poor credit history. Other corporate fair
lending programs include semi-annual reviews of files to
assess the level of assistance and loan decisions made to
applicants, regression modeling to test for variances in
rates charged to borrowers, matched-pair shopping to
gauge the quality and level of assistance provided to
loan applicants, and annual policy reviews to ensure that
policies are nondiscriminatory. Examiners noted in the
1994 Examinations that management of all First Union's
subsidiary banks had implemented comprehensive training and compliance programs to support equal treatment
in lending and to ensure that all applicants are treated
fairly.

for First Union Mortgage would warrant a separate fair lending
examination of the mortgage subsidiary in light of all the facts of
record. Based on all the facts of record, the Board concludes that
the 1994 Examinations sufficiently reviewed the fair lending performance of First Union's subsidiary banks.
24. In the 1994 Examination of First Union's subsidiary bank in
Tennessee, examiners found a disproportionate distribution of credit
extensions in a few low- and moderate-income communities. In
other areas, however, examiners noted that the bank had satisfactory levels of credit extensions in low- and moderate-income census tracts.
25. First Union's delineation policy requires that low- and
moderate-income tracts bordering each community served by a
branch be included within a bank's delineated service area.
26. One Protestant criticized First Union's subsidiary bank in
Virginia for redefining its service community along state lines after
the acquisition of a federal savings bank. The bank's 1994 Examination noted that this action complied with applicable CRA regulations and First Union's policies, and that the bank had continued to
provide services to communities in West Virginia and Tennessee
that were excluded by the redefinition.

C. First Union Lending Policies and Programs
First Union's CRA plans and related lending activities
are developed locally by its subsidiary banks to incorporate the unique credit needs of particular communities.
First Union's corporate policy requires the development
of an annual action plan, which includes a discussion of
the bank's identification of and response to the credit
needs of each community within a state. These action
plans are forwarded to First Union's state CRA coordinator for review and to ensure that the plans are properly
implemented and that strategic objectives are achieved.
First Union has several specialized lending programs
designed to improve its lending to low- and moderateincome and minority communities. For example, the
1994 FUNB-NC Examination found that the bank
offered the Affordable Home Mortgage Loan, a specialized product that offers flexible terms, such as liberal
debt-to-income requirements and lower down payments.
Approximately 2,000 loans under this program were
outstanding at year-end 1993, totalling $90 million, and
as of August 1995, over $134 million in loans were
outstanding. FUNB-NC also offers other programs specifically designed for low- and moderate-income individuals, such as the Special Home Improvement Loan,
which offers rebates for timely payments, flexible debtto-income ratios, and no origination fee; Special Instant
Cash Reserve, a revolving line of credit that acts as an
instant loan and overdraft protection; and Special
FirstAdvance, an unsecured line of credit with flexible
debt-to-income ratios.27
FUNB-NC also participates, directly or through First
Union Mortgage, in government-insured loan programs,
including programs sponsored by the Small Business
Administration ("SBA"), the Housing and Urban
Development/Farmers Home Administration ("FmHA"),
the Federal Housing Authority ("FHA"), the Veterans
Administration ("VA"), and the Student Loan Corporation.28 For example, in 1993, FUNB-NC, a certified SBA
lender, originated 13 SBA loans, totalling $1.5 million,
and as of August 1995, the bank's SBA loans totalled
over $3.8 million. The bank also reported $25 million in
FmHA loans and $900,000 in outstanding student loans
at year-end 1993. In addition, First Union Mortgage
originated $123 million in FHA/VA loans in 1993 and
over $81 million between January 1994 and August
1995.
First Union's subsidiary banks also engage in other
small business lending activity. For example, in July
1993, FUNB-NC introduced a program for small busi-

27. The 1994 Examinations found that all First Union subsidiary
banks participated in these specialized lending programs.
28. All other First Union subsidiary banks actively participate in
these government-insured loan programs.

Legal Developments

ness owners to borrow amounts up to $100,000. The
1994 FUNB-NC Examination noted that during 1993 the
bank originated 1,854 loans, totalling $38 million under
this program. In addition, as of August 1995, FUNB-NC
had over $963 million outstanding in small business
loans to borrowers in low- and moderate-income census
tracts.29
All of First Union's subsidiary banks participate and
invest in local community development projects. In particular, the 1994 FUNB-NC Examination found that the
bank maintains a high level of participation in development and redevelopment programs within its local communities, including a $5 million commitment for a mortgage loan consortium to provide low-income housing
units throughout Charlotte, North Carolina, and
$580,000 to help finance the Jeffries Ridge Housing
Development in Raleigh, North Carolina. The bank also
is involved in several community development corporations. For example, since November 1994, FUNB-NC
provided a $500,000 revolving loan fund and a $300,000
contribution to the Monroe-Union County Community
Development Corporation to increase low- and
moderate-income homeownership.

D. First Union's Branching Network
The 1994 Examinations for all of First Union's subsidiary banks found that branch locations and services were
reasonably accessible to all segments of the delineated
communities. 30 First Union has a corporate policy for

29. The Board has considered comments on First Union's small
business lending in light of an article cited by one Protestant in
support of its contention that multi-state bank holding companies
tend to lend less to small businesses than subsidiary banks of small
single-state bank holding companies. As a general matter, the
article reviewed only one year of call report data from the Federal
Reserve System's Tenth District. As explained above, the Board
carefully reviewed First Union's record of ascertaining and helping
to meet the credit needs, including the small business credit needs,
of the communities served by its subsidiary banks. The Board also
notes that First Union has represented that it will make its programs
available to customers of First Fidelity (including the programs of
its small business lending unit) in connection with this proposal. In
this light, and based on all the facts of record, the Board does not
believe that Protestant's comments warrant denial of this proposal.
The Board notes that the CRA requires that every bank, including a
bank owned by an out-of-state bank holding company, be regularly
examined and rated on its performance in helping to meet the credit
needs of its community. Any diminution in First Union's CRArelated activities in any state would be reviewed by the OCC in
future performance examinations and by the Board in future applications by First Union for a depository facility under the BHC Act.
30. The 1994 Examinations specifically considered First Union's
closing of 91 branches in Virginia after it had acquired several
banking organizations in 1993. Approximately half these branches
were consolidated with urban branches in close proximity and the
remaining branches were in areas with low volumes of business
and limited prospects for growth. Examiners noted that these

1149

branch closings, consolidations, and reductions in service. All subsidiary banks have adopted the corporate
policy for branch closures that provides for objective
determination of branches to be closed, consideration of
alternative solutions, examination of options to minimize potential adverse effects on and inconvenience to
the communities, and sufficient advance notice to communities. The policy also requires additional analyses,
community contacts and/or review of need ascertainment calls when any branch closing affects a low- and
moderate-income community.
First Union also has sought alternative means to deliver services to its customers that do not depend on a
traditional branching network. For example, small business owners may call a toll free number to submit small
business loan applications and receive a response within
24 hours.

E. First Union's Ascertainment and Marketing
Efforts
All of First Union's subsidiary banks engage in various
activities to ascertain the credit needs of and market their
products to their communities. For example, the 1994
FUNB-NC examination stated that FUNB-NC has established a system of ongoing communications with community, civic, and neighborhood groups that represent a
broad range of the bank's communities, including lowand moderate-income areas. The bank has an officer call
program, conducts surveys, meets with community representatives, and uses advisory boards made up of local
business and community leaders to help identify community credit needs, market bank services, and assess performance. In addition, FUNB-NC's 1994 CRA Marketing Plan for North Carolina outlines several statecoordinated promotions, including banking seminars
given in cooperation with realtors, builders/developers,
community development corporations, financial counselors, or nonprofit organizations, bank sponsorship of community events such as conventions, home shows and
housing fairs, minority college promotions, and advertising in business publications directed towards minorities.
The 1994-1995 Community Reinvestment Act Statement for FUNB-NC indicates that the bank uses newspaper and radio to advertise its products and services to
low- and moderate-income segments of the community,
including a series featuring CRA products that is used in
local publications that reach low- and moderate-income
individuals and minority small business owners. In addi-

closings were part of the bank's plan to reduce the number of
branches while improving overall levels of service to its customers.
Examiners found that the bank's record of closing offices has not
adversely affected the level of services available in low- and
moderate-income areas in the delineated communities.

1150

Federal Reserve Bulletin • December 1995

tion, the bank has several brochures available at all
branches that highlight products designed to meet the
credit needs of low- to moderate-income individuals,
including a brochure describing the bank's Affordable
Home Mortgage product.

F. First Fidelity
As noted above, FFB-MD, 31 which constitutes over
90 percent of First Fidelity's consolidated assets, was
rated "satisfactory" for CRA performance by the OCC
in July 1994 ("1994 FFB Examination").32 The 1994
FFB Examination did not find any practices that would
discourage applications for credit and noted that FFBMD's credit policies and practices are in substantive
compliance with anti-discrimination laws and regulations. Examiners also noted that FFB-MD provides training to branch managers and loan officers on antidiscrimination laws and regulations, as well as diversity
awareness training for residential mortgage loan personnel, and solicited credit applications from all segments
of its delineated community.
FFB-MD has taken a number of steps to increase its
lending to low- and moderate-income individuals and
minorities. The 1994 FFB Examination found that a
second review process is in place to review denied
applications from low- and moderate-income borrowers
to help increase the number of approved applications
and assure equal credit opportunities. The examination
noted that as part of FFB-MD's efforts to improve lending to low- and moderate-income areas and to minority
individuals, goals for overall CRA lending in specified
areas have been established by product division. The
1994 CRA strategic plan allocated $105 million of the
$167 million Community Development Commitment for
discounted mortgage and secured VISA loan products.
The 1994 FFB Examination also found that the bank
actively participates in government-sponsored loan programs, particularly state government, for home pur-

31. FFB-MD operates branches in Maryland, New Jersey, Pennsylvania, and New York.
32. The Board also has carefully reviewed comments critical of
the CRA performance of FFB-CT. As noted above, FFB-CT received a satisfactory rating from the FDIC in March 1995. The
examination report indicated that FFB-CT had formalized procedures to ascertain community credit needs and markets credit
products throughout its delineated community. In addition, examiners found that the branch closing policy for FFB-CT included
consideration of the impact on the community, profitability, credit
access, and other available options, such as consolidation, downgrading of services, or sale. Although examiners noted some disparities in lending to minorities based on 1993-94 HMDA data, the
examination report also indicates that these disparities have decreased since 1993, and that there is no evidence that FFB-CT has
engaged in prohibited discriminatory or other illegal credit practices.

chase, home improvement, small business, and student
loans.33 For example, in 1993, FFB-MD originated 94
loans, totalling $10.2 million, under the guaranteed home
mortgage programs sponsored by the New Jersey Mortgage Financing Agency and 45 loans under a similar
program sponsored by the Pennsylvania Housing Finance Agency. In addition, FFB-MD participates in 11
small business lending programs sponsored by local
municipalities, including the New Jersey Economic Development Authority Small Business Loan Pool.
The 1994 FFB Examination found that FFB-MD's
branch locations provide reasonable access to all segments of its delineated community. In addition, examiners noted that a thorough written policy and checklist for
branch openings, closings, consolidations and reduction
in services is in effect. This policy addresses factors such
as continuity of services, the impact on profitability and
deposit levels, and potential community impact is analyzed and assessed with alternatives explored. FFBMD's policy also requires proper notification to municipal officials, community groups and regulatory agencies
prior to closing. 34
The First Fidelity Urban Investment Corporation
("FFUIC") develops projects and programs that benefit
the economic development and affordable housing needs
of urban areas within First Fidelity's delineated community. For example, in 1994, the FFUIC closed 801 mortgages, totalling $55.4 million, approximately 64 percent,
or 513 loans, were made to minority borrowers. In
addition, FFUIC made over $1.1 million in investments
for 1994 in organizations such as the Allentown Devel-

33. One Protestant criticized First Fidelity for not participating in
VA or FHA mortgage products. First Fidelity has indicated that it
actively participates in other government sponsored programs that
have more favorable terms for low- and moderate-income borrowers than VA or FHA products.
34. The Board also has carefully reviewed other aspects of
FFB-MD's record of CRA performance, in light of comments
received criticizing First Fidelity's record of CRA performance,
particularly in the Philadelphia area. The Board notes that OCC
examiners found FFB-MD's ascertainment efforts to be appropriate, its marketing of products designed for low and moderateincome markets to be successful, its delineations to be reasonable,
and the geographic distribution of its lending to be acceptable. In
addition, while noting that FFB-MD could improve its advertising
for small business loans, OCC examiners credited the bank's other
efforts to promote small business loans, including seminars, training programs, outreach efforts by its Urban Bankers program, and
referral from other First Fidelity units. The 1994 FFB Examination
also contained no exceptions to the bank's CRA Statement and no
criticism of the oversight of or the involvement in the CRA process
by its board of directors. Moreover, specific initiatives by FFB-MD
in Philadelphia and the surrounding area include a commitment for
approximately $4.5 million in loans to assist in providing affordable housing through programs sponsored by the Philadelphia
Bankers Development Initiative, Advocate Community Development Corporation, and the Women's Community Revitalization
Project.

Legal Developments

opment Corporation, Philadelphia Minority Venture
Partners, and Garden State Affordable Housing. Finally,
FFUIC participates in a number of loan pools, such as
Trenton Mortgage Plan and New Jersey Housing Opportunity Fund, LLC, to support development of affordable
housing.35

G. Conclusion Regarding Convenience and Needs
Factors
The Board has carefully considered the entire record,
including the comments filed in this case, in reviewing
the convenience and needs factors under the BHC Act. 36
Based on a review of the entire record of performance,
including information provided by Protestants, First
Union and First Fidelity; the CRA performance examinations and other information from the banks' primary
supervisors; and First Union's planned initiatives for
First Fidelity's banks after consummation, including the
35. One Protestant criticized FFB-MD because of decreased
participation in the Delaware Valley Mortgage Plan. FFB-MD has
indicated that the bank's participation in the program has continued, however, its percentage participation has dropped due to the
emphasis placed on the bank's own discounted mortgage plan,
which the bank believes offers more favorable terms to low- to
moderate-income borrowers.
36. Several Protestants contend that First Union practices "price
discrimination" by charging higher fees for some banking services
and "output discrimination" by making a lower quantity and
quality of loans available in states outside its home state of North
Carolina, particularly in Florida. Data presented in the analysis
supporting these allegations, however, have limitations that make
the data an inadequate basis to conclude that First Union discriminates against Florida customers in pricing its services. For example,
these data do not control for supply and demand conditions that
may directly affect pricing decisions. Moreover, First Union does
not have a dominant position in the 35 banking markets in which it
operates in Florida, and would not increase its market share in any
of these markets as a result of this proposal. In the majority of its
Florida banking markets, including all of the large Florida metropolitan banking markets, First Union controls less than 20 percent
of market deposits, as of June 1994, and there are numerous other
depository institution competitors under the market structure analysis used to assess the competitive effect of this acquisition. The
Board also notes that the Department of Justice has full statutory
authority to investigate and redress any illegal pricing practices that
Protestants can substantiate.
Convenience and needs considerations, including an institution's
record of performance under the CRA, focus on local communities
served by a banking organization. These considerations do not
require that the quantity and quality of loans or pricing of services
be comparable between geographic regions. First Union's record of
lending to all its communities in Florida has been assessed by the
OCC as "satisfactory" as of April 1994. This review found that
First Union's Florida subsidiary bank was in substantial compliance with applicable antidiscrimination laws and regulations and
that it does not engage in practices that would discourage individuals from applying for credit. Protestants' comments and analysis
have been provided to the OCC for consideration. In light of these
and other facts of record, the Board concludes that these comments
do not warrant denial of this proposal.

1151

implementation of First Union's corporate-wide CRArelated policies and specific lending programs,37 the
Board believes that the efforts of First Union and First
Fidelity to help meet the credit needs of all segments of
the communities served by their subsidiary banks, including low- and moderate-income neighborhoods, are
consistent with approval.38 For these reasons, and based
on all the facts of record, the Board concludes that
convenience and needs considerations, including the
CRA performance records of the companies and banks
involved in these proposals, are consistent with approval
of these applications.39

37. These initiatives include programs administered by First
Union's Small Business Lending Unit, Affordable Housing Group,
Municipal Finance Unit, and Direct Bank.
38. Several Protestants have contended that a longer public
comment period should have been provided or that action on the
proposal should be delayed. The Board notes that the public comment period for these applications was in accordance with the
Board's Rules of Procedure, and in fact provided 45 days for the
submission of comments. The Board believes that this period
provided a reasonable time in which to comment and notes that, in
fact, a number of commenters submitted their views on this proposal. Moreover, the BHC Act and the Board's Rules require that
the Board act on applications within specified time periods, and the
Board believes that the present record is sufficient to act on these
applications and notices. The Board has concluded that delay of
action on these applications and notices on this basis is not warranted.
39. Several Protestants have requested that the Board hold a
public meeting or hearing on the proposal. 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. In this case, neither the OCC nor any appropriate state
supervisory authority has recommended denial.
Generally, under the Board's rules, the Board may, in its discretion, hold a public hearing or meeting on an application to clarify
factual issues related to the application and to provide an opportunity for testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d).
The Board has carefully considered these requests. In the Board's
view, Protestants have had ample opportunity to and have presented substantial written submissions, and they have not identified
facts that are material to the Board's decision and that are in
dispute, what substantial evidence they would produce at a public
meeting or hearing, and why their written submissions do not
adequately present their allegations. Based on all the facts of
record, the Board has determined that a public meeting or hearing
is not necessary to clarify the factual record in this proposal, or
otherwise warranted in this case. Accordingly, Protestants' requests
for a public meeting or hearing on this matter are denied.

1152

Federal Reserve Bulletin • December 1995

Other

Considerations

The Board also has concluded that the financial40 and
managerial resources and future prospects of First
Union, First Fidelity, and their respective subsidiaries,
and other supervisory factors the Board must consider
under section 3 of the BHC Act and the Riegle-Neal Act,
are consistent with approval of this proposal 41

40. Some Protestants maintained that several recent publicly
announced events raise adverse financial considerations, including
criticism by industry analysts of the financial resources of First
Union to effect this transaction, and First Union's asset-backed
commercial paper activities. One Protestant has also questioned the
safety and soundness implications of First Union's recent acquisition strategy. The Board has carefully reviewed these matters in
light of the overall financial condition of First Union and its
subsidiaries. Based on all the facts of record, including reports of
examination assessing the financial resources of First Union and its
subsidiaries, other supervisory information from the primary federal supervisors of First Union's subsidiary banks, First Union's
current and pro forma capital levels, and the method for funding
this acquisition, the Board concludes that these comments do not
reflect adversely on the financial condition of First Union or
warrant denial of the proposal.
41. Some Protestants contend that alleged actions by First Union
in acquiring Southeast Bank from the FDIC in 1991 reflect adversely on its managerial resources. Protestants repeat allegations
attributed to several lawsuits that have been pending at various
times since the acquisition. Protestants do not, however, provide
any independent evidence to support these allegations. These comments include allegations that First Union had insider information
not available to other bidders, that Southeast Bank was inappropriately designated as a failed institution by federal supervisors, and
that First Union exerted improper influence over federal supervisors during the bid process. Other Protestants claim that isolated
events, including an order by the NASD requiring First Union to
pay a broker who was fired in connection with the sale of uninsured
investment products, and information that certain officers of First
Union have profited from trading First Union's stock, also raise
adverse managerial considerations.
The Board notes that the bid for Southeast Bank was awarded to
First Union under a process administered by the FDIC more than
four years ago. The FDIC denies any irregularities in the process
for reviewing and accepting the First Union bid for Southeast
Bank. In addition, the Board has considered supervisory information contained in reports of examination assessing the managerial
resources and policies of First Union and its subsidiary banks. The
facts of record in this case support that managerial resources are
satisfactory and consistent with approval, and these comments do
not present evidence that would alter those findings. Allegations
involving improper conduct on the part of FDIC officials, and
questions posed by Protestants concerning the role of First Union
and the Federal Reserve System, are beyond the scope of factors
considered under the BHC Act in reviewing this proposal.
Moreover, the allegations regarding Southeast Bank have been
the subject of civil litigation which provides an opportunity to
substantiate claims of wrongdoing and seek redress if appropriate.
The Board will monitor any pending litigation involving the Southeast Bank acquisition for evidence of wrongdoing by First Union
officials. Both the Board and the OCC have sufficient statutory
authority to address any misconduct on the part of holding company or bank officials if these allegations can be substantiated.

Nonbanking

Activities

First Union also has given notice, pursuant to section 4(c)(8) of the BHC Act, of its proposal to acquire
subsidiaries of First Fidelity engaged in certain credit
insurance and community development activities. The
Board has previously determined by regulation that the
proposed insurance and community development activities are closely related to banking for purposes of section 4(c)(8) of the BHC Act. First Union 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 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 those
resources.42 Based on all the facts of record, the Board
has concluded that financial and managerial considerations are consistent with approval.
In order to approve this notice, 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 considering First Union's acquisition of First Fidelity's nonbanking activities, 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.
Conclusion
Based on the foregoing, including the commitments
made to the Board by First Union in connection with
these applications and notices, and in light of all the
facts of record, the Board has determined43 that these

42. 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).
43. One Protestant maintains that the Federal Reserve Bank of
Richmond ("Reserve Bank") should recuse itself from consideration of this proposal because First Union is a shareholder and a
director of the Reserve Bank. First Union does not currently have a
director serving on the board of the Reserve Bank. Moreover,

Legal Developments

applications and notices should be, and hereby are, approved.44 The Board's approval is specifically conditioned on compliance by First Union with all commitments made in connection with these applications.45
The Board's determinations on the nonbanking activities to be conducted by First Union are subject to all the
conditions in the Board's Regulation Y, including those
in sections 225.7 and 225.23(b)(3) (12 C.F.R. 225.7 and
225.23(b)(3)), and to the Board's authority to require
such modification or termination of the activities of a
holding company or any of its subsidiaries as the Board
finds necessary to assure compliance with, or to prevent
evasion of, the provisions and purposes of the BHC Act
and the Board's regulations and orders issued thereunder. The commitments and conditions relied on by the
Board in reaching this decision are deemed to be condi-

Federal Reserve Bank directors do not participate in the direct
supervision of banks or bank holding companies or in matters such
as applications processing, examinations, or enforcement proceedings, and did not participate in or provide a recommendation to the
Board in this case.
44. Protestants also raise issues that are not related to First
Union's performance under the CRA, including general allegations
that First Union illegally discriminates in terminating the employment of its employees. The Board notes that because FUNB-NC
employs more than 50 people, serves as a depository of government funds, and acts as agent in selling or redeeming U.S. savings
bonds and notes, it is required by Department of Labor regulations
to:
(i) File annual reports with the Equal Employment Opportunity
Commission ("EEOC"); and
(ii) Have in place a written affirmative action compliance program which states its efforts and plans to achieve equal opportunity in the employment, hiring, promotion, and separation of
personnel.
See 41 C.F.R. 60-1.7(a), 60-1.40. The Board notes that, pursuant
to Department of Labor regulations, First Union, as the parent of
FUNB-NC, also is required to file an annual report with the EEOC
covering all employees in its entire corporate structure.
45. Several Protestants have requested that the Board delay
action on this proposal for a variety of reasons, including allegations that Protestants have not received nor had sufficient time to
review and comment on all the information submitted in connection with these applications; that First Union has not responded to
all issues raised by the Protestants; and that further consideration
should be given to information provided by the Protestants (including allegations in a recently filed lawsuit alleging that First Union
improperly excluded certain shareholders from a special shareholders' meeting). The Board notes that the comment period for this
application has extended at least 45 days in which to receive
comments from interested members of the public, and that Protestants have, in fact, submitted voluminous comments that have been
carefully considered by the Board. Based on all the facts of record,
and for the reasons discussed above, the Board believes that the
record is sufficient to permit action on this application under the
factors the Board is required to consider under the BHC Act. In this
light, the Board finds that these requests do not warrant delaying
action on this proposal. Moreover, the Board notes that the courts
may provide appropriate remedies of the allegations of improper
actions by First Union at the special shareholders meeting can be
substantiated.

1153

tions 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 First Fidelity's subsidiary banks
shall not be consummated before the fifteenth calendar
day following the effective date of this order, and the
banking and the nonbanking transactions shall not be
consummated later than three months following the effective date of this order, unless such period is extended
for good cause by the Board or by the Federal Reserve
Bank of Richmond, acting pursuant to delegated authority.
By order of the Board of Governors, effective
October 26, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Lindsey, Phillips, and Yellen.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

Appendix
Nonbanking Subsidiaries of First Fidelity

(1) Broad & Lombardy Associates, Inc., Newark, New
Jersey, and thereby engage in insurance activities, pursuant to sections 225.25(b)(8)(i) and (iv) of Regulation Y
(12 C.F.R. 225.25(b)(8)(i) and (iv)).
(2) Fidelcor Life Insurance Company, Phoenix, Arizona,
and thereby engage in credit reinsurance activities, pursuant to section 225.25(b)(8)(i) of Regulation Y
(12 C.F.R. 225.25(b)(8)(i)).
(3) First Fidelity Community Development Corporation,
Newark, New Jersey, and Waller House Corporation,
Philadelphia, Pennsylvania, and thereby engage in community development activities, pursuant to section
225.25(b)(6) of Regulation Y (12 C.F.R. 225.25(b)(6)).

National Australia Bank Limited
Melbourne, Australia
National Equities Limited
Melbourne, Australia
National Australia Group Limited
London, England
National Americas Holding Limited
London, England

1154

Federal Reserve Bulletin • December 1995

MNC Acquisition Co.
Melbourne, Australia
Order Approving the Formation of Bank Holding
Companies
National Australia Bank Limited, Melbourne, Australia
("NAB"), and its subsidiaries, National Equities Limited, Melbourne, Australia; National Australia Group
Limited, London, England; and National Americas Holding Limited, London, England (collectively, "Applicants"), have applied under section 3(a)(1) of the
Bank Holding Company Act ("BHC Act") (12 U.S.C.
§ 1842(a)(1)) to become bank holding companies within
the meaning of the BHC Act by acquiring all the voting
shares of Michigan National Corporation ("MNC"), and
thereby indirectly acquire Michigan National Bank, both
of Farmington Hills, Michigan.1
Applicants also have filed notices 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 the nonbanking subsidiaries of MNC listed in the Appendix.
Notice of the proposal, affording interested persons an
opportunity to submit comments, has been published
(60 Federal Register 38,838 (1995)). The time for filing
comments has expired, and the Board has considered the
applications and notices and all comments received in
light of the factors set forth in sections 3 and 4 of the
BHC Act.
NAB, with consolidated assets equivalent to approximately $99.4 billion, is the largest banking organization
in Australia,2 and operates a branch office in New York.
MNC is the fifth largest commercial banking organization in Michigan, controlling deposits of $6.8 billion,
representing approximately 8.6 percent of all deposits in
commercial banking organizations in the state.3

1. Applicants would acquire MNC by merger with MNC Acquisition Co., Melbourne, Australia ("Company"), a wholly owned
subsidiary of National Americas Holding Limited formed to effect
this proposal, and Applicants also have applied for approval of this
transaction under section 3 of the BHC Act. In connection with this
proposal, MNC granted NAB an option to purchase, under certain
circumstances, up to 19.9 percent of the outstanding voting common stock of MNC. This option will terminate upon consummation
of the proposed merger of Company and MNC.
Applicants also have applied to acquire Bloomfield Hills Bancorp, Inc. ("Bloomfield"), and its subsidiary bank, Bank of Bloomfield Hills, both of Bloomfield Hills, Michigan. MNC owns preferred stock of Bloomfield that represents 40 percent of
Bloomfield's total equity and is deemed voting stock for purposes
of the BHC Act. Any references to MNC in this order includes
Bloomfield.
2. Asset data are as of March 31, 1995.
3. State deposit and ranking data are as of June 30, 1995.

Supervisory

Considerations

In order to approve an application by a foreign bank to
acquire a U.S. bank or bank holding company, the BHC
Act and Regulation Y require the Board to determine
that the foreign bank is subject to comprehensive supervision or regulation on a consolidated basis by its home
country supervisor.4 The Board also must determine that
the foreign bank has provided adequate assurances that it
will make available to the Board such information on its
operations and activities and those of its affiliates that the
Board deems appropriate to determine and enforce compliance with applicable law.5
The Board considers a foreign bank to be subject to
comprehensive supervision or regulation on a consolidated basis if the Board determines that its home country
supervisor receives sufficient information on the foreign
bank's worldwide operations, including the bank's relationship to any affiliate, to assess the bank's overall
financial condition and compliance with law and regulation.6
Supervision and regulation of Australian banks, such
as NAB, is the responsibility of the Reserve Bank of
Australia. As NAB's home country supervisor, the Reserve Bank of Australia supervises NAB's operations on
a consolidated basis, including its foreign branches and
subsidiaries. As discussed below, the Reserve Bank of
Australia discharges its responsibilities through the review of external auditors' reports, annual consultations,
and the review of financial reports submitted directly to
the Reserve Bank of Australia.
The Reserve Bank of Australia has cooperative arrangements with the banks and their external auditors by
which the external auditors report directly to the Reserve
Bank of Australia on certain prudential aspects of the
banks' operations, both foreign and domestic. The Re-

4. See 12 U.S.C. § 1842(c)(3)(B); 12 C.F.R. 225.13(b)(5).
5. See 12 U.S.C. § 1842(c)(3)(A); 12 C.F.R. 225.13(b)(4).
6. In assessing this standard, the Board considers, among other
factors, the extent to which the home country supervisor:
(i) Ensures that the foreign bank has adequate procedures for
monitoring and controlling its activities worldwide;
(ii) Obtains information on the condition of the foreign bank and
its subsidiaries and offices outside the home country through
regular reports of examination, audit reports, or otherwise;
(iii) Obtains information on the dealings and relationships between the foreign bank and its affiliates, both foreign and domestic;
(iv) Receives from the foreign bank financial reports that are
consolidated on a worldwide basis, or comparable information
that permits analysis of the foreign bank's financial condition on
a worldwide, consolidated basis; and
(v) Evaluates 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. 12 C.F.R. 211.24(c)(1).

Legal Developments

serve Bank of Australia requires an annual opinion from
NAB's external auditors on the bank's observance of the
Reserve Bank of Australia's prudential standards, the
accuracy of the statistical data being provided to the
Reserve Bank of Australia, and compliance with laws
and regulations. In addition, the external auditors report
on NAB's risk management systems. NAB is required to
provide to the Reserve Bank of Australia a written
description of its systems for controlling exposures and
limiting risks with respect to credit, liquidity, and foreign exchange operations. The external auditor also is
required to bring to the attention of the Reserve Bank of
Australia any matter that may adversely affect the interests of the bank's depositors.
The Reserve Bank of Australia conducts formal annual consultations with NAB's management as part of its
ongoing supervision of the bank. In the course of this
process, representatives of the Reserve Bank of Australia meet with management of offices of NAB, both
domestic and foreign, to discuss, among other things,
NAB's global strategic plans, new regulatory developments and prudential supervision guidelines, financial
results and forecasts, and risk management policies and
practices. As a follow-up to these consultations, the
Reserve Bank of Australia prepares a report, which is
provided to NAB's board of directors, that discusses the
more significant matters discussed in the meetings. In
addition, the Reserve Bank of Australia has commenced
a program of on-site reviews of certain areas of NAB's
business.
NAB is required to submit a number of financial
reports to the Reserve Bank of Australia. These include
consolidated quarterly information on capital adequacy,
impaired assets, off-balance sheet business, large exposures, country exposure, and unaudited semi-annual and
audited annual consolidated balance sheets and income
statements. The consolidated reports generally include
NAB's domestic and foreign branches and subsidiaries.
With respect to affiliate transactions, exposures to
affiliates are treated as exposures to third parties and are
subject to a general limit and the reporting requirement
on large exposures. The Reserve Bank of Australia requires that financial dealings between a bank and its
affiliates be conducted on the same basis as dealings with
unrelated customers of similar status. In addition, Reserve Bank of Australia guidelines provide that details
with respect to transactions with affiliates should be
reported on a regular basis as agreed upon between the
bank and the Reserve Bank of Australia.
The Reserve Bank of Australia has statutory authority
to exercise its enforcement powers to protect depositors
and to take certain steps if a bank is found to be unable
to meet its obligations, including initiating an investigation of the affairs of the bank and closing or taking over
the management of the bank. There also are substantial

1155

penalties for being in breach of the Australian banking
statutes.
In Australia, NAB and certain of its securities and
insurance subsidiaries also are regulated by the Australian Securities Commission ("ASC") and the Insurance
and Superannuation Commission ("ISC"). Both the
ASC and the ISC require periodic reports from the
entities that they regulate and in some cases they conduct on-site examinations. Representatives of the Reserve Bank of Australia, ASC, and ISC meet regularly to
exchange information through the Australia Financial
Committee.
Based on all the facts of record, the Board concludes
that Applicants are subject to comprehensive supervision
on a consolidated basis by its home country supervisor.
The Board has reviewed the restrictions on disclosure
in certain jurisdictions where Applicants operate and
have communicated with the relevant government authorities concerning access to information. Applicants
have committed to make available to the Board such
information on the operations or activities of Applicants
and any affiliates of Applicants that the Board deems
necessary to determine and enforce compliance with the
International Banking Act, the BHC Act, as amended,
and other applicable federal law. To the extent that the
provision of such information to the Board may be
prohibited or impeded by law, Applicants have committed to cooperate with the Board in obtaining any necessary consent or waivers that might be required from third
parties for disclosure. In light of these commitments and
other facts of record, and subject to the condition described below, the Board concludes that Applicants have
provided adequate assurances of access to any necessary
information the Board may request.7
Other

Considerations

The Board also has considered the other factors enumerated in the BHC Act. Applicants' capital exceeds the
minimum standards contained in the Basle Accord and is
equivalent to capital that would be required of a U.S.
banking organization. Based on the foregoing and all
other facts of record, the Board has determined that the
financial and managerial resources and future prospects

7. Two commenters objected to this proposal on the basis that an
acquisition of a United States banking organization by a foreign
banking organization would be contrary to public policy. The BHC
Act and the International Banking Act of 1978 (12 U.S.C. § 3101
et seq.) clearly authorize acquisitions of domestic banking organizations by foreign banking organizations that meet the standards set
forth in those Acts. Based on all the facts of record and for the
reasons discussed in this order, the Board concludes that these
comments do not warrant denial of the applications and notices.

1156

Federal Reserve Bulletin • December 1995

of Applicants and MNC are consistent with approval.8
The convenience and needs factor, including the CRA
performance records of the depository institution subsidiaries of MNC, and the supervisory factors the Board
must consider under section 3 of the BHC Act are also
consistent with approval of this proposal.9
Applicants also have filed notice, pursuant to section
4(c)(8) of the BHC Act, to operate a savings association
and to engage in investment advisory and credit-related
insurance activities. The Board has determined by regulation that the operation of a savings association, and
that investment advisory and credit-related insurance
activities, are closely related to banking for purposes of

8. A minority shareholder of MNC ("Shareholder") requests that
the Board withhold any action on the proposal until MNC holds its
1995 annual meeting. Shareholder alleges that:
(1) The failure of MNC to hold an annual meeting since
April 19, 1994, violated shareholder's rights and Michigan law;
and
(2) The proxy materials ("Statements") provided to MNC shareholders in connection with the special shareholder meeting held
on June 2, 1995 ("Special Meeting"), to vote on the proposal
contained insufficient, misleading, and inaccurate disclosures
about Shareholder's separate proposal to structure an acquisition
of MNC on a tax-free basis.
Applicants respond that Michigan law only requires a corporation to designate a date for an annual meeting within 15 months
after the corporation's last annual meeting. See Mich. Stat. Ann.
§ 21.200(402) (Supp. 1995). Applicants contend that by designating, on July 10, 1995 (within 15 months of MNC's last annual
meeting), an annual meeting to be held in November 1995, MNC
has complied with the requirements of Michigan law. This reading
of the Michigan statutory provision appears to be consistent with
the express terms of the Michigan statute. The Corporations Division of the Michigan State Department of Commerce has reviewed
these allegations and indicated that corporate action taken by MNC
would not be invalidated under Michigan law even if MNC had
failed to hold its next annual meeting in a timely fashion. Id. The
Board also notes that Michigan law provides shareholders with
adequate remedies if they can demonstrate a violation of the annual
meeting requirement, and that a shareholder has, in fact, filed suit
in Michigan state court under the appropriate statutory provisions.
Based on a review of the Statements and relevant background
documents, as well as informal discussions with staff of the Securities and Exchange Commission ("SEC"), the shareholder's
securities-related allegations do not appear to warrant denial of this
proposal based on the factors that the BHC Act authorizes the
Board to consider. The SEC is charged under the federal securities
laws with jurisdiction to investigate and redress any violations
relating to the Statements or other disclosures required under the
securities laws. Based on all the facts of record, the Board concludes that these allegations do not warrant denial of the applications and notices.
9. Another commenter speculates that Applicants would eliminate many MNC jobs to recover their purchase price for the MNC
shares. Applicants respond that they intend to expand the MNC
franchise rather than reduce MNC's operations in order to recover
funds expended for the purchase price. Applicants also note that, as
a general matter, the access to capital and other resources provided
by this proposal would result in MNC's growth. Based on all the
facts of record, the Board has determined that this allegation does
not warrant denial of the applications and notices.

section 4(c)(8) of the BHC Act, 10 and the Board previously has approved applications by MNC to engage in
these proposed activities. Applicants have committed
that they will conduct these activities in accordance with
the Board's regulations and orders approving these activities for bank holding companies.11
In order to approve these applications and notices, the
Board also must determine that the proposed acquisition
of MNC's nonbanking subsidiaries by Applicants "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). The record in this case indicates that the financial and managerial resources of
Applicants should allow MNC's nonbanking and banking subsidiaries to provide additional products and services to customers, to operate more efficiently, and to
compete more effectively in their respective markets. In
addition, the record 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.
Based on the foregoing and all the facts of record, the
Board has determined that these applications and notices
should be, and hereby are, approved.12 Should any re-

10. See 12 C.F.R. 225.25(b)(4), (b)(8) and (b)(9).
11. Applicants also have committed that they will not reactivate
any currently inactive subsidiaries without the Board's prior approval.
12. Two minority shareholders allege that the compensation and
severance benefits that certain MNC executive officers could receive upon the proposal's consummation represent "unjust selfenrichment." In addition, these shareholders allege that potential
benefits from the transaction created a conflict of interest for these
officers that caused them to negotiate the proposal as an all-cash
merger rather than as a tax-free exchange of stock in violation of
their fiduciary duty to shareholders. One of the shareholders also
notes that some MNC shareholders have filed an action in federal
district court in Michigan, alleging that MNC management officials
committed fraud and violated securities laws when they failed to
disclose their negotiations with Applicants while MNC repurchased its shares from such shareholders.
These comments were submitted after the close of the public
comment period provided for these applications and notices and are
not required under the Board's Rules of Procedure to be considered. 12 C.F.R. 262.3(e). The Board notes, however, that these
benefits were disclosed to MNC shareholders in the Statements,
and that the proposed transaction was approved by the holders of a
majority of MNC's voting securities who voted at the Special

Legal Developments

strictions on access to information on the operations or
activities of Applicants and any of their affiliates subsequently interfere with the Board's ability to determine
compliance by Applicants or any of their affiliates with
applicable federal statutes, the Board may require termination of any of Applicants' direct or indirect activities
in the United States.
The Board's approval is specifically conditioned on
compliance by Applicants with all the commitments
made in connection with these applications and notices
and on receipt by Applicants of all necessary approvals
from state and federal regulators. The Board's determinations as to the nonbanking activities are subject to all
the terms and 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, or to prevent evasion of, the
provisions of the BHC Act and the Board's regulations
and orders issued thereunder. The commitments and
conditions relied on by the Board in 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 MNC's banking subsidiaries shall
not be consummated before the fifteenth calendar day
following the effective date of this order, and the banking and nonbanking 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 by the Federal Reserve Bank of Chicago, acting pursuant to delegated authority.
By order of the Board of Governors, effective
October 16, 1995.
Voting for this action: Chairman Greenspan, Vice Chairman
Blinder, and Governors Kelley, Phillips, and Yellen. Absent and
not voting: Governor Lindsey.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

Meeting. These benefits also would not adversely affect the financial condition of MNC or Applicants. The record also indicates that
Applicants began their negotiations to acquire MNC after MNC
concluded its share repurchase transactions. Moreover, the Board
notes that federal and Michigan state courts have authority to
provide these shareholders with an appropriate remedy if their
allegations of improper actions by MNC management can be
sustained, and that the SEC has the authority to address any
securities-related allegations. Based on all the facts of record, the
Board does not believe these allegations warrant denial of the
applications and notices.

1157

Appendix
Applicants have filed notices under section 4 of the
BHC Act to acquire the following nonbanking
subsidiaries of MNC:
(1) Independence One Capital Management Corp., Farmington Hills, Michigan, and thereby engage in providing
investment advisory services, pursuant to section 225.25(b)(4) of the Board's Regulation Y;
(2) Independence One Life Insurance Company, Phoenix, Arizona, and thereby engage in underwriting reinsurance of credit life and credit disability risk, pursuant
to section 225.25(b)(8)(i) of Regulation Y;
(3) Michigan Bank, F.S.B., Troy, Michigan, and thereby
engage in operating a savings association, pursuant to
section 225.25(b)(9) of Regulation Y;
(4) MNC Leasing Company, Detroit, Michigan, currently inactive;
(5) Independence One Asset Management Corporation,
Irvine, California, currently inactive; and
(6) MNC Operations and Services, Inc., Farmington
Hills, Michigan, currently inactive.

ORDERS ISSUED

UNDER BANK MERGER

ACT

Signet Bank/Virginia
Richmond, Virginia
Order Approving the Merger of Banks and
Establishment of Bank Branches
Signet B a n k / V i r g i n i a , Richmond, Virginia ("Signet Virginia"), a state member bank, has applied under section 18(c) of the Federal Deposit Insurance Act
(12 U.S.C. § 1828(c)) (the "Bank Merger Act") to merge
with Signet Bank/Maryland, Baltimore, Maryland ("Signet Maryland"), with Signet Virginia surviving the
merger.1 Signet Virginia also has applied under section
9 of the Federal Reserve Act (12 U.S.C. § 321) to establish branch offices at the current locations of the Signet
Maryland branch offices. 2
Notice of the application, 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

1. Upon consummation of the merger, Signet Virginia would
change its name to "Signet Bank."
2. The locations of the branches that Signet Virginia proposes to
establish are listed in the Appendix.

1158

Federal Reserve Bulletin • December 1995

Currency, and the Federal Deposit Insurance Corporation. The time for filing comments has expired, and the
Board has considered the application and all the facts of
record in light of the factors set forth in the Bank Merger
Act and section 9 of the Federal Reserve Act.
Signet Virginia and Signet Maryland are wholly
owned subsidiaries of Signet Banking Corporation,
Richmond, Virginia ("Signet"). Signet is the fifth largest commercial banking organization in Virginia, controlling deposits of $4.78 billion, representing 6.8 percent of the total deposits in commercial banking
organizations in Virginia, and is the fifth largest commercial banking organization in Maryland, controlling
deposits of $2.07 billion, representing 3.9 percent of the
total deposits in commercial banking organizations in
Maryland.3 This proposal represents a reorganization of
Signet's existing banking operations, and therefore consummation of the proposal would not have any significantly adverse effect on competition in any relevant
banking market.

Riegle-Neal Act Analysis
Section 102 of the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 ("Riegle-Neal Act")
(Pub. L. No. 103-328, 108 Stat. 2338 (1994)) authorizes
banks, after June 1, 1997, to conduct interstate mergers
and to convert the acquired bank offices into branches of
the acquiring institution. The Riegle-Neal Act, however,
provides that an interstate merger may be approved prior
to June 1, 1997, "if the home state of each bank involved in the transaction has in effect, as of the date of
the approval of such transaction, a law that:
(i) Applies equally to all out-of-state banks; and
(ii) Expressly permits interstate merger transactions
with all out-of state banks."4
Maryland and Virginia have adopted laws, which apply equally to all out-of-state banks, allowing interstate
mergers between banks located in their states and out-ofstate banks to occur prior to June 1, 1997.5 Both the

3. Deposit data are as of March 31, 1995.
4. 12 U.S.C. § 1831 u(a)(3)(A) (1994).
5. Effective September 29, 1995, the laws of Maryland authorize
out-of-state banks to merge with, and subsequently maintain
branches previously controlled by, Maryland banks if:
(1) The acquiring bank has sufficient capital to safely and
soundly support the acquired bank's operations;
(2) The consolidated bank will provide increased public benefit;
and
(3) The resulting banking institution would not control 30 percent or more of the state's deposits in depository institutions.
Md. Code Ann., Fin. Inst. § 5-1001 et seq. (1995).
The interstate banking laws of Virginia provide that "any Virginia state bank may maintain and operate one or more branches in
a state other than Virginia pursuant to an interstate merger transac-

State Corporation Commission of the Commonwealth of
Virginia and the Maryland Bank Commissioner have
approved this proposal. In light of the foregoing, it
appears that this proposal complies with the Maryland
and Virginia interstate banking laws.

Other Considerations
The Board also concludes that the financial and managerial resources and future prospects of Signet Virginia are
consistent with approval of this application, as are the
convenience and needs of the communities to be served,
and the other supervisory factors that the Board is required to consider under the Bank Merger Act, the
Riegle-Neal Act, and the Federal Reserve Act.
Based on the foregoing and all the facts of record, the
Board has determined that this application should be,
and hereby is, approved. The Board's approval of this
proposal is conditioned on compliance by Signet Virginia with the commitments made in connection with
this application. 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 Signet Maryland with and into Signet
Virginia may not be consummated before the fifteenth
calendar day following 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 Richmond, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
October 2, 1995.
Voting for this action: Vice Chairman Blinder and Governors
Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Chairman Greenspan.
JENNIFER J. JOHNSON

Deputy Secretary of Board

tion in which the Virginia state bank is the resulting bank," as long
as the resulting organization will have adequate management, will
be financially sound, and will provide some public benefit to the
state of Virginia. Va. Code Ann. § 6.1-44.15 et seq. (1995). In
addition, the Virginia interstate banking laws allow out-of-state
banks to merge with Virginia banks and to maintain and operate
Virginia branches acquired as a result of an interstate bank merger.
Id.

Legal Developments

Appendix
Branch offices of Signet Maryland to be established by
Signet Virginia:
1. 8411 Snouffer School Road, Gaithersburg, Maryland
20879
2. 930 Bay Ridge Road, Annapolis, Maryland 21403
3. 13801 York Road, Cockeysville, Maryland 21230
4. Race Street, Cambridge, Maryland 21613
5. Blaustein Building, 1 N. Charles Street, Baltimore,
Maryland 21201
6. 9940 York Road, Cockeysville, Maryland 21030
7. 1777 Reisterstown Road, Pikesville, Maryland 21208
8. 17 Center Place, Dundalk, Maryland 21222
9. 1111 Mt. Hermon Road, Salisbury, Maryland 21801
10.5701 Reisterstown Road, Baltimore, Maryland
21215
11. 563 Baltimore Pike, Bel Air, Maryland 21014
12. 4115 Ritchie Highway, Baltimore, Maryland 21225
13. 176 Carroll Island Road, Baltimore, Maryland 21220
14.9200 Baltimore National Pike, Ellicott City,
Maryland 21042
15. 10 Corporate Center, 10400 Little Patuxent,
Columbia, Maryland 21044
16. 1623 Crofton Center, Crofton, Maryland 21114
17. 1039 E. Baltimore Street, Baltimore, Maryland
21202
18. Dover Street, Easton, Maryland 21601
19. 201 Russell Avenue, Gaithersburg, Maryland 20877
20. 7101 Wisconsin Avenue, Bethesda, Maryland 20814
21. 15707 Columbia Pike, Burtonsville, Maryland 20866
22. 582 Frederick Avenue, Catonsville, Maryland 21228
23. Kent Plaza Shopping Center, Chestertown, Maryland

21620
24.8600 Baltimore/Washington Boulevard, Jessup,
Maryland 20794
25. 6309 York Road, Baltimore, Maryland 21212
26. 601 Crusader Road, Cambridge, Maryland 21613
27. 1427 Liberty Road, Eldersburg, Maryland 21784
28. 632 Eastern Avenue, Essex, Maryland 21221
29. 509 N. Frederick Avenue, Gaithersburg, Maryland
20877
30. 4830 Butler Road, Glyndon, Maryland 21071
31. 2056 Harford Road, Baltimore, Maryland 21218
32. 2030 E. Joppa Road, Baltimore, Maryland 21234
33. 4735 Liberty Heights Avenue, Baltimore, Maryland
21207
34. 8775 J. Cloudleap Court, Columbia, Maryland 21045
35. 3608 Milford Mill Road, Baltimore, Maryland 21207
36. 1241 W. Pratt Street, Baltimore, Maryland 21223
37. 5 Bel Air South Parkway, Bel Air, Maryland 21014
38. Glebe Road at Marlboro Avenue, Easton, Maryland

21601
39. 5234 York Road, Baltimore, Maryland 21212

1159

40. 4820 Eastern Avenue, Baltimore, Maryland 21224
41. 7400 Bradshaw Road, Kingsville, Maryland 21087
42. 721 N. Hammonds Ferry Road, Linthicum, Maryland 21090
43. 7 Street Paul Street, Baltimore, Maryland 21202
44. 8630 Fenton Street, Silver Spring, Maryland 20910
45. 4305 Mountain Road, Pasadena, Maryland 21122
46. 1 Newport Drive, Forest Hill, Maryland 21050
47.511 Crain Highway, S.E., Glen Burnie, Maryland
21061
48. 5439 Harford Road, Baltimore, Maryland 21214
49. 11234 York Road, Cockeysville, Maryland 21030
50. 313 S. Second Street, Laurel, Maryland 20707
51. 300 E. Lombard Street, Baltimore, Maryland 21202
52. 1782 Merritt Boulevard, Dundalk, Maryland 21222
53. 2008 E. Monument Street, Baltimore, Maryland
21205
54. 104 Bureau Drive, Gaithersburg, Maryland 20878
55. 2000 Linden Avenue, Baltimore, Maryland 21217
56.2337 E. Northern Parkway, Baltimore, Maryland
21214
57. 5040 Sinclair Lane, Baltimore, Maryland 21206
58. 4204 Ebenezer Road, Baltimore, Maryland 21236
59. 8807 Pulaski Highway, Baltimore, Maryland 21237
60. 10 N. Washington Street, Rockville, Maryland 20850
61. 564 Governor Ritchie Highway., Severna Park,
Maryland 21146
62. 36 S. Charles Street, Baltimore, Maryland 21201
63. 2100 York Road, Baltimore, Maryland 21093
64. 725 Mt. Wilson Lane, Baltimore, Maryland 21208
65. 6817 Belair Road, Baltimore, Maryland 21206
66. 2510 Riva Road, Annapolis, Maryland 21401
67. 3635 Old Court Road, Pikesville, Maryland 21208
68. 9060 Liberty Road, Randallstown, Maryland 21133
69. 5121 Roland Avenue, Baltimore, Maryland 21210
70. 16707 Crabbs Branch Way, Rockville, Maryland
20855
71. 1776 E. Jefferson Street, Rockville, Maryland 20852
72. 102 W. Pennsylvania Avenue, Towson, Maryland
21204
73. 1810 N. Salisbury Boulevard, Salisbury, Maryland

21801
74. 10345 Reisterstown Road, Owings Mills, Maryland
21117
75. 8070 Ritchie Highway, Pasadena, Maryland 21122
76. 1228 N. Charles Street, Baltimore, Maryland 21201
77. 11945 Reisterstown Road, Reisterstown, Maryland
21136
78. 860 N. Rolling Road, Baltimore, Maryland 21228
79. 850 Sligo Avenue, Silver Spring, Maryland 20910
80. 842 S. Salisbury Boulevard, Salisbury, Maryland
20910
81. 3200 W. North Avenue, Baltimore, Maryland 21216
82. 2439 Frederick Avenue, Baltimore, Maryland 21223
83. 6225 N. Charles Street, Baltimore, Maryland 21212

1160

Federal Reserve Bulletin • December 1995

84. 11427 Georgia Avenue, Wheaton, Maryland 20902
85. 989 Fairmount Avenue, Towson, Maryland 21204
86. 11161 New Hampshire Avenue, Silver Spring,
Maryland 20904

ORDERS ISSUED UNDER FEDERAL RESERVE

ACT

Chemical International Finance Limited
New York, New York
Order Granting Approval to Engage in the Execution
and Clearance, for its Own Account and that of
Non-Affiliated Parties, of Certain Futures Contracts on
the Oslo Stock Exchange, Oslo, Norway
Chemical International Finance Limited, ("Chemical International"), New York, New York, an Edge corporation subsidiary of Chemical Bank, New York, New
York, has applied under section 25A of the Federal
Reserve Act and section 211.5(d)(20) of the Board's
Regulation K (12 C.F.R. 211.5(d)(20)) for approval to
engage, through its subsidiary, Chemical Bank Norge,
A.S. ("CBN"), Oslo, Norway, in the execution and
clearing and execution only of futures contracts on Norwegian government bonds on the Oslo Stock Exchange
(the "Exchange"), both for its own account and the
account of non-affiliated customers, and to engage in
providing related investment advice to customers.
Chemical Bank is a principal bank subsidiary of
Chemical Banking Corporation, a bank holding company. Chemical Banking Corporation is the fourth largest banking organization in the United States, with consolidated assets of $179 billion as of June 30, 1995.
CBN had consolidated assets of approximately
$1.3 billion as of June 30, 1995. CBN, a bank that is
licensed and supervised by the Norwegian Banking,
Insurance and Securities Commission, is a primary
dealer in Norwegian government bonds. CBN trades
interest rate futures on Norwegian government bonds on
the Exchange for its own account and for the account of
affiliates.1 Chemical International proposes that CBN
execute and clear, and execute without clearing, these
futures contracts2 as a futures commission merchant
("FCM") for nonaffiliated customers, and offer custom-

1. CBN also engages in commercial lending, the issuance of
letters of credit and guarantees, foreign exchange activities, and the
trading of swaps, forward rate agreements and other instruments.
2. The futures contracts for which CBN seeks approval are based
on the 10-year Norwegian government bond S463 maturing in
2002 and the 7-year Norwegian government bond S462 maturing in
1999. The Board previously has approved the combination of
execution and clearance activities and the provision of investment
advice under Regulations K and Y for instruments similar to these
futures contracts. See The Hong Kong and Shanghai Banking

ers related investment advisory services. CBN would
continue to trade for its own account, for purposes other
than hedging, in the same futures contracts for which it
proposes to offer FCM and advisory services to third
parties.
The combination of activities proposed for CBN is not
on the list of activities that the Board has found to be
usual in connection with the transaction of banking or
financial operations abroad, because the Board's Regulation Y does not allow a subsidiary that engages in
proprietary trading for purposes other than hedging to
provide FCM services to third parties. 12 C.F.R.
211.5(d)(17), 225.25(b)(18)(ii). Under the Federal Reserve Act, however, the Board may permit Edge corporations to engage through subsidiaries in such other activities abroad that the Board determines are usual in
connection with the transaction of the business of banking or other financial operations abroad and are consistent with the Federal Reserve Act or the Bank Holding Company Act. 12 U.S.C. § 615(c), 12 C.F.R.
211.5(d)(20).
In its exercise of this authority, the Board considers
whether the conduct of the activity would enable U.S.
banking organizations to compete more effectively with
foreign organizations in the provision of banking and
other financial services. The Board also takes into account whether the performance of the activity by a U.S.
banking organization overseas would be consistent with
the prudent conduct and management of the company's
banking and nonbanking organizations. In this regard,
the Board takes into consideration the risks inherent in
the activity, especially whether those risks are of a type
and nature normally associated with banking or activities
conducted by banks. The Board also examines the effect
the activity would have on the capital and managerial
resources of the U.S. banking organization.
The Board recently approved the combination of FCM
and advisory services with proprietary trading in the
United States by a U.S. subsidiary of a foreign bank.3
Based on the Board's previous findings concerning activities of this nature and Chemical International's representation that other Norwegian banks engage in these
activities, the Board concludes that the proposed activities are usual in connection with the transaction of
banking or other financial operations abroad.4 The Board
also has considered the policies and procedures the appli-

Corporation, 76 Federal Reserve Bulletin 770 (1990) (United
Kingdom government bond futures).
3. Swiss Bank Corporation, 81 Federal Reserve Bulletin 185
(1995) ("Swiss
Bank").
4. The Board also has determined in its Regulation K that acting
as an FCM in accordance with the Board's Regulation Y and the
provision of investment advice are usual in connection with the
transaction of banking or other financial operations abroad. See
12 C.F.R. 211.5(d)(8) and (17).

Legal Developments

1161

cant has proposed for mitigating the potential conflicts
of interest arising from this combination of activities, as
well as certain other commitments made by Chemical
International. Based on all the facts of record, the Board
concludes that Chemical International has put into place
systems and procedures that are consistent with the
Board's existing policies and guidance in this area and
are adequate to minimize the potential conflicts of interest, and related risks presented by the proposed combination of activities.5
The Board also has considered the risks to which CBN
may be exposed as a result of providing execution-only
services on the Exchange, and the measures that would
be taken by applicant to manage and control these risks.6
Chemical International has committed that CBN, in evaluating prospective execution-only customers, will look
to the market reputation of the customer, as well as its
financial adviser, to determine whether the risks associated with executing trades for the customer are within
acceptable limits.7
On the basis of all the facts of record and the commitments made by Chemical International, and taking into
consideration the experience of Chemical Bank and its
subsidiaries with managing the risks associated with
FCM activities, the Board concludes that the risks of the
execution-only services to be provided by CBN would
be appropriately managed and limited. Moreover, the
proposed expansion of CBN's activities would not entail
any additional investment in CBN by Chemical International.
Based on the foregoing representations, other facts of
record and the commitments made by Chemical International, and the fact that the proposed expansion of the
activities of CBN would enhance the ability of Chemical

Order Granting Approval to Engage in the Execution
and Clearance of Certain Futures Contracts on the
MEFF Sociedad Rectora de Productos Financieros
Derivados de Renta Variable, S.A., Madrid, Spain

5. The proposed FCM activities would be conducted in accordance with the requirements of Regulation Y, other than its prohibition on proprietary trading for purposes other than hedging.
6. Brokers providing execution-only services on the Exchange
are subject only to limited credit risk. Under the rules of the
Exchange, a broker providing execution-only services is liable only
for the obligation of the customer to pay trading commissions and
option premium. Unlike the situation prevailing on other futures
exchanges, an execution-only broker cannot be held liable for a
customer's obligation to post margin or effect settlement of futures
contracts at maturity, which are risks borne entirely by the customer's clearing broker. See also Swiss Bank; Citicorp, 81 Federal
Reserve Bulletin 164 (1995); J.P. Morgan & Co. Incorporated, 80
Federal Reserve Bulletin 151 (1994).
7. The Board also has reviewed the rules of the Exchange to
assess the risks of acting as an FCM on the Exchange. Under these
rules, CBN would not share in the risks associated with default by
other clearing brokers. On the basis of its review of the rules of the
Exchange, including its customer margin rules and requirement that
futures positions be marked to market daily, the Board concludes
that CBN's conduct of the proposed execution and clearing and
execution-only FCM services on the Exchange would not subject
CBN to undue risk.

Citibank Overseas Investment Corporation ("COIC"),
New Castle, Delaware, an Edge corporation subsidiary
of Citibank, N.A., New York, New York, has applied
under section 25 A of the Federal Reserve Act and the
Board's Regulation K (12 C.F.R. 211.5(d)(17),
211.5(d)(20)) for approval to engage, through its subsidiary, Citibank Espana, S.A. ("CBE"), Madrid, Spain, in
the execution and clearing, execution only, and clearing
only of futures contracts on an equity index on the
MEFF Sociedad Rectora de Productos Financieros Derivados de Renta Variable, S.A. ("MEFFRV"), Madrid,
Spain.
Citibank, N.A. is a principal bank subsidiary of Citicorp, a bank holding company. Citicorp currently is the
largest banking organization in the United States, with
consolidated assets of $257 billion as of June 30, 1995.
CBE had consolidated assets of approximately $2.2 billion as of December 31, 1994. CBE, a bank that is
supervised by the Bank of Spain, is a custodian clearing
member of the MEFFRV, where it trades in futures for

International and Chemical Bank to compete in the
market for Norwegian government bonds and related
futures contracts by offering, through CBN, a more
complete range of financial products and services to
customers outside the United States, the Board has determined that the proposed activities should be approved.
The Board has further determined on the basis of the
record that the conduct of the proposed activities is
consistent with the supervisory purposes of the Federal
Reserve Act. Accordingly, the application is approved.
Approval of this application is conditioned on compliance by Chemical International and CBN with commitments made in connection with this application. The
commitments referred to above are conditions imposed
in writing by the Board in connection with its decision,
and may be enforced under applicable law against
Chemical International and its affiliates.
By order of the Board of Governors, effective
October 2, 1995.
Voting for this action: Vice Chairman Blinder and Governors
Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Chairman Greenspan.
JENNIFER J. JOHNSON

Deputy Secretary of the Board

Citibank Overseas Investment Corporation
New Castle, Delaware

1162

Federal Reserve Bulletin • December 1995

the account of its affiliates.1 COIC has applied for approval of a proposal for CBE to execute and clear,
execute without clearing, and clear without executing
futures on the IBEX 35 stock index2 a futures commission merchant ("FCM") for nonaffiliated customers.
The Board's Regulation K permits U.S. banking organizations to engage in executing and clearing futures
contracts as an FCM for third-party customers, on exchanges and with respect to contracts approved by the
Board.3 On the basis of the record, including the rules of
the MEFFRV, the Board determines that the MEFFRV
and the IBEX 35 futures contract meet the Board's
standards for futures exchanges and futures contracts,
respectively, and should be, and hereby are, approved for
the purposes of Regulation K. 4
The execution-only and clearing-only activities proposed for CBE are not on the list of activities in Regulation K that the Board has found to be usual in connection
with the transaction of banking or financial operations
abroad.5 Under the Federal Reserve Act, however, the
Board may permit Edge corporations to engage through
subsidiaries in such other activities abroad that the Board
determines are usual in connection with the transaction
of the business of banking or other financial operations
abroad and are consistent with the Federal Reserve Act
or the Bank Holding Company Act. 12 U.S.C. § 615(c),
12 C.F.R. 211.5(d)(20).
In its exercise of this authority, the Board considers
whether the conduct of the activity would enable U.S.
banking organizations to compete more effectively with

1. CBE also engages in commercial banking, underwriting, dealing, and swap market activities authorized by regulation K.
2. The IBEX 35 index is based on the 35 most heavily traded
Spanish stocks. Futures on the IBEX 35 index have terms and
conditions similar to those of foreign equity index contracts previously approved by the Board. See, e.g., Sakura Bank Limited, 79
Federal Reserve Bulletin 728 (1993) (CAC 40 stock index futures);
Northern Trust Corporation, 79 Federal Reserve Bulletin 723
(1993) ("Northern Trust") (Deutsche Aktienindex 30 stock index
and FT-SE 100 equity index futures).
3. 12 C.F.R. 211.5(d)(17). Such FCM activities are required to be
conducted in accordance with the limitations specified in Regulation Y, 12 C.F.R. 225.25(b)(18). COIC has represented that CBE
will execute and clear futures contracts in accordance with these
limitations.
4. The Board has not previously approved the conduct of FCM
activities on the MEFFRV, although it has approved the conduct of
such activities on a sister exchange. Board letter dated December 4,
1991, to Douglas E. Harris. The Board has reviewed the rules of the
MEFFRV to assess the risks of acting as an FCM there. On the
basis of its review of these rules, which do not subject members of
the exchange to liability for defaults by other members, the Board
concludes that CBE's conduct of the proposed activities would not
expose CBE to undue risk.
5. Regulations K and Y, while permitting execution and clearing
of futures contracts for customers under certain circumstances, do
not authorize the provision of execution-only or clearing-only FCM
services. 12 C.F.R. 211.5(d)(17), 225.25(b)(18).

foreign organizations in the provision of banking and
other financial services. The Board also takes into account whether the performance of the activity by a U.S.
banking organization overseas would be consistent with
the prudent conduct and management of the company's
banking and nonbanking organizations. In this regard,
the Board takes into consideration the risks inherent in
the activity, especially whether those risks are of a type
and nature normally associated with banking or activities
conducted by banks. The Board also examines the effect
the activity would have on the capital and managerial
resources of the U.S. banking organization.
In several cases, the Board has determined that the
provision of execution-only and clearing-only FCM services is closely related to banking under the Bank Holding Company Act. The Board has approved the conduct
of these activities in the United States by a subsidiary of
Citicorp, COIC's parent organization,6 as well as by
subsidiaries of other U.S. bank holding companies and
foreign banks.7
Based on the Board's previous findings concerning
these FCM activities, and on the fact that banks in Spain
and other countries engage in such activities, the Board
concludes that the proposed execution-only and clearingonly activities are usual in connection with the transaction of banking or other financial operations abroad.8
The Board also has considered the policies and procedures the applicant has proposed for managing and controlling the potential risks arising from these activities.
COIC has committed that CBE will conduct its
execution-only and clearing-only activities in accordance with the commitments made by its parent organization in Citicorp. Based on these commitments and all
the facts of record, and taking into consideration the
experience of Citicorp and its subsidiaries with managing the risks associated with FCM activities, the Board
concludes that COIC's proposed systems and procedures
are consistent with the Board's existing policies and
guidance in this area and are adequate to manage and
limit the risks presented by the proposed execution-only
and clearing-only activities on the MEFFRV. Moreover,
the proposed expansion of CBE's activities would not

6. Citicorp, 81 Federal Reserve Bulletin 164 (1995) {"Citicorp").
7. See, e.g., Swiss Bank Corporation, 81 Federal Reserve Bulletin 185 (1995); J.P. Morgan & Co. Incorporated,
80 Federal
Reserve Bulletin 151 (1994); Northern Trust. The Board recently
has also approved the provision of execution-only FCM services
outside the United States by a subsidiary of another U.S. banking
organization. Chemical International
Finance Corporation,
81
Federal Reserve Bulletin 1160 (1995).
8. The Board also has determined in its Regulation K that acting
asan FCM in accordance with the Board's Regulation Y is usual in
connection with the transaction of banking or other financial operations abroad. See 12 C.F.R. 211.5(d)(17).

Legal Developments

entail any additional investment in CBE by the Citicorp
organization.
Based on the foregoing and other facts of record, the
commitments made by COIC, and the fact that the
proposed expansion of the activities of CBE would enhance the ability of COIC and CBE to compete in the
Spanish market, the Board has determined that the proposed execution-only and clearing-only activities should
be approved. On the basis of the record, the Board has
further determined on the basis of the record that the
conduct of the proposed activities is consistent with the
supervisory purposes of the Federal Reserve Act. Accordingly, the application is approved. Approval of this
application is conditioned on compliance by COIC and

APPLICATIONS

APPROVED

UNDER BANK HOLDING

1163

CBE with commitments made in connection with this
application. The commitments referred to above are conditions imposed in writing by the Board in connection
with its decision, and may be enforced under applicable
law against COIC and its affiliates.
By order of the Board of Governors, effective
October 4, 1995.
Voting for this action: Chairman Greenspan and Governors
Kelley, Lindsey, Phillips, and Yellen. Absent and not voting: Vice
Chairman Blinder.

COMPANY

JENNIFER J. JOHNSON

Deputy Secretary of the Board

ACT

By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon
request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551

Section 3
Applicant(s)

Bank(s)

Effective Date

SunTrust Banks, Inc.,
Atlanta, Georgia
Sun Banks, Inc.,
Orlando, Florida

Ponte Vedra Banking Corporation,
Ponte Vedra Beach, Florida

October 23, 1995

Applicant(s)

Bank(s)

Effective Date

Old National Bancorp,
Evansville, Indiana
SunTrust Banks, Inc.,
Atlanta, Georgia
Trust Company of Georgia,
Atlanta, Georgia

First United Savings Bank, f.s.b.,
Greencastle, Indiana
Stephens Diversified Leasing, Inc.,
Reno, Nevada

October 20, 1995

Section 4

October 5, 1995

1164

Federal Reserve Bulletin • December 1995

APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT

By Federal Reserve

Banks

Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon
request to the Reserve Banks.
Section 3
Applicant(s)

Bank(s)

Reserve Bank

Effective Date

Ameribank Bankshares, Inc.
Hollywood, Florida
BancMidwest Corporation,
St. Paul, Minnesota

First National Bancshares, Inc.,
Hollywood, Florida
South St. Paul Bancshares, Inc.,
South St. Paul, Minnesota
Southview Bank,
South St. Paul, Minnesota
Banc West Corporation,
San Francisco, California
Bank of the West,
San Francisco, California
Cornerstone Financial Corporation,
Derry, New Hampshire
Citizens Progressive Bank,
Columbia, Louisiana
Texas Bank, N.A.,
San Antonio, Texas

Atlanta

October 6, 1995

Minneapolis

October 11, 1995

San Francisco

September 22, 1995

Boston

October 16, 1995

Dallas

October 19, 1995

Dallas

September 28, 1995

SouthTrust Bank of Dillon County,
Latta, South Carolina

Richmond

September 27, 1995

Peoples Bank,
Lavonia, Georgia
Citizens National Bank,
Victoria, Texas

Atlanta

September 29, 1995

Dallas

October 18, 1995

Citizens Community Bank,
Winchester, Tennessee

Atlanta

September 27, 1995

Peoples Bancshares, Inc.,
Lewisville, Arkansas
The Citizens National Bank of
Woodsfield,
Woodsfield, Ohio
Citizens Bancorp of Delaware, Inc.
Wilmington, Delaware
Citizens National Bank,
Victoria, Texas
Draper Bank and Trust,
Draper, Utah
The Farmers National Bank of
Kittanning,
Kittanning, Pennsylvania

St. Louis

October 24, 1995

Cleveland

October 13, 1995

Dallas

October 18, 1995

San Francisco

October 24, 1995

Cleveland

October 13, 1995

Banque Nationale de Paris,
Paris, France

BayBanks, Inc.,
Boston, Massachusetts
Caldwell Holding Company,
Columbia, Louisiana
Camino Real Bancshares, Inc.,
San Antonio, Texas
Camino Real Delaware, Inc.,
Wilmington, Delaware
Carolina Community Bancshares,
Inc.,
Latta, South Carolina
Century South Banks, Inc.,
Dahlonega, Georgia
Citizens Bancorp of Delaware,
Inc.,
Wilmington, Delaware
Citizens Community Bancshares,
Inc.,
Winchester, Tennessee
Citizens National Bancshares, Inc.
Hope, Arkansas
CNB Bancorp, Inc.,
Woodsfield, Ohio
CNB Bancshares of Victoria, Inc.,
Victoria, Texas

Draper Bancorp,
Draper, Utah
F&A Financial Company,
Kittanning, Pennsylvania

Legal Developments

1165

Section 3—Continued
Applicant(s)

Bank(s)

Reserve Bank

Effective Date

Farmers Bancshares, Inc.,
Cheneyville, Louisiana

The Farmers Bank & Trust of
Cheneyville,
Cheneyville, Louisiana
CF Bancorp, Inc.,
Davenport, Iowa
Citizens Federal Savings Bank,
FSB,
Davenport, Iowa
First National Bancshares, Inc.,
Goodland, Kansas

Atlanta

October 6, 1995

Chicago

October 18, 1995

Kansas City

October 24, 1995

The First National Bank of Paducah,
Paducah, Texas

Dallas

October 18, 1995

First Paducah Bancshares of
Delaware, Inc.,
Dover, Delaware
The First National Bank of
Paducah,
Paducah, Texas
FSB Bancshares of Delaware, Inc.,
Wilmington, Delaware
First State Bank,
Clute, Texas
First State Bank,
Clute, Texas
Farmers State Bank of Sublette,
Sublette, Illinois
First Bank of South Arkansas,
Junction City, Arkansas
Calhoun County Bank,
Hampton, Arkansas
Citizens Bank & Trust Company of
Mount Vernon,
Mount Vernon, Georgia
FNB Bancshares, Inc.,
Lake Providence, Louisiana
The First National Bank of Lake
Providence,
Lake Providence, Louisiana
Home Savings Bank, SSB,
Meridian, Mississippi

Dallas

October 18, 1995

Dallas

October 25, 1995

Dallas

October 25, 1995

Chicago

October 12, 1995

St. Louis

October 6, 1995

Atlanta

October 6, 1995

Atlanta

October 23, 1995

Atlanta

October 26, 1995

Boston

October 24, 1995

Minneapolis

September 27, 1995

First Midwest Bancorp, Inc.
Itasca, Illinois

First National Bancshares, Inc.,
ESOP and 401(k) Trusts,
Goodland, Kansas
First Paducah Bancshares of
Delaware, Inc.,
Dover, Delaware
First Paducah Bancshares of
Texas, Inc.,
Paducah, Texas

FSB Bancshares, Inc.,
Clute, Texas

FSB Bancshares of Delaware, Inc.
Wilmington, Delaware
FSB Corp.,
Sublette, Illinois
Harrell Bancshares, Inc.,
Camden, Arkansas

Heart of Georgia Bancshares, Inc.
Mount Vernon, Georgia
Hibernia Corporation,
New Orleans, Louisiana

Home Savings Bank, SSB
Employee Stock Ownership
Plan,
Meridian, Mississippi
Investors Financial Services Corp.
Boston, Massachusetts
Lake Elmo Bancshares, Inc.,
Lake Elmo, Minnesota

Investors Bank & Trust Company,
Boston, Massachusetts
Lake Elmo Bancorp, Inc.,
Lake Elmo, Minnesota

1166

Federal Reserve Bulletin • December 1995

Section 3—Continued
Applicant(s)

Bank(s)

Reserve Bank

Effective Date

Liberty Bancshares, Inc.,
Springfield, Missouri
Malvern Bancorporation,
Malvern, Pennsylvania
Marblehead Bancorp,
Marblehead, Ohio
Merchants Bancorp, Inc.,
Aurora, Illinois
National Westminster Bank Pic,
London, England
NatWest Holdings Inc.,
New York, New York
National Westminster Bancorp
Inc.,
Jersey City, New Jersey
National Westminster
Bancorp NJ,
Jersey City, New Jersey
Northwest Bancorp, MHC,
Warren, Pennsylvania
Overton Financial Corporation,
Overton, Texas
Overton Delaware Corporation,
Dover, Delaware
Park Bank Corporation of Duluth,
Duluth, Minnesota
Peoples of Fleming County
Bancorp, Inc.,
Flemingsburg, Kentucky
Pinnacle Bancorp, Inc.,
Central City, Nebraska

Liberty Bank,
Springfield, Missouri
The National Bank of Malvern,
Malvern, Pennsylvania
The Marblehead Bank,
Marblehead, Ohio
Valley Banc Services Corp.,
St. Charles, Illinois
Natwest Bank National Association,
Scranton, Pennsylvania

St. Louis

October 11, 1995

Philadelphia

October 18, 1995

Cleveland

October 2, 1995

Chicago

September 29, 1995

New York

October 6, 1995

Jamestown Savings Bank,
Lakewood, New York
Longview Financial Corporation,
Longview, Texas

Cleveland

October 6, 1995

Dallas

October 20, 1995

Park State Bank,
Duluth, Minnesota
The Peoples Bank of Fleming County,
Flemingsburg, Kentucky

Minneapolis

October 25, 1995

Cleveland

October 4, 1995

State Bank,
Palmer, Nebraska
The Farmers National Bank
of Central City,
Central City, Nebraska
Sweetwater Valley Corporation,
Sweetwater, Tennessee
The Citizens Bank,
Snarpsburg, Kentucky
Randall Holding Co., Inc.,
Pine River, Minnesota
Norbanc Group, Inc.,
Pine River, Minnesota
Republic Security Bank,
West Palm Beach, Florida

Kansas City

October 20, 1995

Atlanta

October 12, 1995

Cleveland

October 10, 1995

Minneapolis

October 19, 1995

Atlanta

October 19, 1995

Clayton State Bank,
Clayton, Oklahoma
Southern Financial Bank,
Warrenton, Virginia

Kansas City

October 23, 1995

Richmond

September 28, 1995

Pioneer Bancshares, Inc.,
Chattanooga, Tennessee
Premier Financial Bancorp, Inc.,
Vanceburg, Kentucky
Randall Bancorp, Inc.,
Pine River, Minnesota

Republic Security Financial
Corporation,
West Palm Beach, Florida
Shamrock Bancshares, Inc.,
Coalgate, Oklahoma
Southern Financial Bancorp, Inc.
Warrenton, Virginia

Legal Developments

1167

Section 3—Continued
Applicant(s)

Bank(s)

Reserve Bank

Effective Date

Texas Bancorp Shares, Inc.
San Antonio, Texas

Camino Real Bancshares, Inc.
San Antonio, Texas
Camino Real Delaware, Inc.,
Wilmington, Delaware
Camino Real Bank, N.A.,
Eagle Pass, Texas
Western National Bank,
Lenexa, Kansas
El Capitan Bancshares, Inc.,
Sonora, California
First Denver Corporation,
Englewood, Colorado
Norbanc Group, Inc.,
Pine River, Minnesota

Dallas

September 28, 1995

Kansas City

September 29, 1995

San Francisco

September 22, 1995

Kansas City

October 26, 1995

Minneapolis

September 27, 1995

Unison Bancorp, Inc.,
Lenexa, Kansas
ValliCorp Holdings, Inc.,
Fresno, California
Vectra Banking Corporation,
Denver, Colorado
White Pine Bancorp Inc.,
Pine River, Minnesota

Section 4
Applicant(s)

Nonbanking Activity/Company

Reserve Bank

Effective Date

Banc One Corporation,
Columbus, Ohio
Banc One Funding Corporation,
Columbus, Ohio
Banc One Payment Services,
L.L.C.,
Melville, New York

JP Mortgage Co.,
Columbus, Ohio

Cleveland

September 26, 1995

Will conduct permissible merchant
transaction (both debit and credit)
card processing and check
authorization and guarantee services
throughout the United States
Carlinville Tax Service,
Carlinville, Illinois

Cleveland

October 19, 1995

St. Louis

October 18, 1995

Chicago

October 12, 1995

New York

October 25, 1995

Richmond

October 13, 1995

San Francisco

September 22, 1995

Atlanta

October 20, 1995

Chicago

October 18, 1995

Cleveland

September 25, 1995

Carlinville National Bank Shares,
Inc.,
Carlinville, Illinois
Carroll County Bancshares Inc.,
Carroll, Iowa
Citicorp,
New York, New York
Crestar Financial Corporation,
Richmond, Virginia
Dartmouth Capital Group, Inc.,
Gilford, New Hampshire
Dartmouth Capital Group, L.P.,
Gilford, New Hampshire
First American Corporation,
Nashville, Tennessee
First Midwest Bancorp, Inc.,
Itasca, Illinois

Mellon Bank Corporation,
Pittsburgh, Pennsylvania

Carroll Credit, Inc.,
Carroll, Iowa
Citicorp North America, Inc.,
New York, New York
Loyola Capital Corporation,
Baltimore, Maryland
SDN Bancorp,
Encinitas, California

Charter Federal Savings Bank,
Bristol, Virginia
CF Bancorp, Inc.,
Davenport, Iowa
Citizens Federal Savings Bank, FSB,
Davenport, Iowa
Target Trust Company,
Philadelphia, Pennsylvania

1168

Federal Reserve Bulletin • December 1995

Section A—Continued
Applicant(s)

Nonbanking Activity/Company

Reserve Bank

Effective Date

MidWest Bancorporation, Inc.,
Minnetonka, Minnesota
Todd County Agency, Inc.,
Minnetonka, Minnesota
Norwest Corporation,
Minneapolis, Minnesota

Graceville Insurance Agency, Inc.,
Graceville, Minnesota

Minneapolis

September 27, 1995

AMFED Financial, Inc.,
Reno, Nevada
American Federal Savings Bank,
Reno, Nevada
To engage de novo in data processing
activities
LINC Financial Services, Inc.,
Chicago, Illinois

Minneapolis

October 26, 1995

Cleveland

October 17, 1995

Chicago

October 6, 1995

USB Mortgage Company, Inc.,
Spokane, Washington
USB Leasing, Inc.,
Spokane, Washington
To make and service loans

San Francisco

September 22, 1995

Chicago

October 18, 1995

To make and service loans

Chicago

October 11, 1995

Pikeville National Corporation,
Pikeville, Kentucky
Stichting Prioriteit ABN AMRO
Holding,
Amsterdam Zuid-Ooost, The
Netherlands
Stichting Administratiekantoor
ABN AMRO Holding,
Amsterdam Zuid-Ooost, The
Netherlands
ABN AMRO Holding N.V.,
Amsterdam Zuid-Ooost, The
Netherlands
ABN AMRO Bank N.V.,
Amsterdam Zuid-Ooost, The
Netherlands
MeesPierson N.V.,
Amsterdam and Rotterdam, The
Netherlands
United Security Bancorporation,
Spokane, Washington

Whitney Corporation of Iowa,
Atlantic, Iowa
WCN Bancorp,
Wisconsin Rapids, Wisconsin

Legal Developments

1169

Sections 3 and 4
Applicant(s)

Nonbanking Activity/Company

Reserve Bank

Effective Date

401k Plan and ESOP of United
States Trust Company of New
York and Affiliated Companies,
New York, New York
Camden National Corporation,
Camden, Maine

New USTC Holdings Corporation,
New York, New York

New York

October 25, 1995

UNITEDCORP,
Bangor, Maine
Trust Company of Maine, Inc.,
Bangor, Maine
Midwestern Services, Inc.,
Omaha, Nebraska
Southwest Holdings, Inc.,
Omaha, Nebraska
SWH & K Partnership,
Omaha, Nebraska
FBS Interim Bank, FSB,
Omaha, Nebraska
Midlantic Corporation,
Edison, New Jersey

Boston

October 20, 1995

Minneapolis

October 2, 1995

Cleveland

September 26, 1995

First Bank System, Inc.,
Minneapolis, Minnesota

PNC Bank Corp.,
Pittsburgh, Pennsylvania
PNC Bancorp, Inc.,
Wilmington, Delaware

APPLICATIONS APPROVED UNDER BANK MERGER ACT

Bank(s)

Effective Date

Rapides Bank and Trust Company,
Alexandria, Louisiana

Central Bank,
Monroe, Louisiana

October 26, 1995

1170

Federal Reserve Bulletin • December 1995

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

BankWest,
Goodland, Kansas
Crestar Bank MD,
Bethesda, Maryland

BankWest,
St. Francis, Kansas
The Chase Manhattan Bank of
Maryland,
Baltimore, Maryland
Bank One Cincinnati, N.A.,
Cincinnati, Ohio
First Virginia Bank-Southside,
Farmville, Virginia
Griswold State Bank,
Griswold, Iowa
Boatmen's Bank of Fort Dodge,
Fort Dodge, Iowa
Southern Financial Federal Savings
Bank,
Warrenton, Virginia
El Capitan National Bank,
Sonora, California
The First National Bank of Denver,
Denver, Colorado

Kansas City

October 12, 1995

Richmond

September 22, 1995

Cleveland

October 23, 1995

Richmond

October 26, 1995

Chicago

September 22, 1995

Chicago

September 29, 1995

Richmond

September 28, 1995

San Francisco

September 22, 1995

Kansas City

October 26, 1995

The Fifth Third Bank,
Cincinnati, Ohio
First Virginia Bank-Colonial,
Richmond, Virginia
Rolling Hills Bank & Trust,
Atlantic, Iowa
Security Savings Bank,
Farnhamville, Iowa
Southern Financial Bank,
Warrenton, Virginia
ValliWide Bank,
Fresno, California
Vectra Bank,
Denver, Colorado

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.
Menick v. Greenspan, No. 95-CV-01916 (D. D.C., filed
October 10, 1995). Complaint alleging sex, age, and
handicap discrimination in employment.
Kuntz v. Board of Governors, No. 95-1495 (D.C. Cir., filed
September 21, 1995). Petition for review of Board order
dated August 23, 1995, approving the applications of The
Fifth Third Bank, Cincinnati, Ohio, to acquire certain
assets and assume certain liabilities of 12 branches of
PNC Bank, Ohio, N.A., Cincinnati, Ohio, and to establish
certain branches. The Board's motion to dismiss was
filed on October 26, 1995.
Lee v. Board of Governors, No. 94-4134 (2nd Cir., filed
August 22, 1995). Petition for review of Board orders
dated July 24, 1995, approving certain steps of a corporate reorganization of U.S. Trust Corporation, New
York, New York, and the acquisition of U.S. Trust by
Chase Manhattan Corporation, New York, New York. On

September 12, 1995, the court denied petitioners' motion
for an emergency stay of the Board's orders.
Jones v. Board of Governors, No. 95-1359 (D.C. Cir., filed
July 17, 1995). Petition for review of a Board order dated
June 19, 1995, approving the application by First Commerce Corporation, New Orleans, Louisiana, to acquire
Lakeside Bancshares, Lake Charles, Louisiana. Petitioner
filed a motion for a stay of the Board's order pending
appeal on August 16, 1995. On August 29, 1995, the
Board filed a motion to dismiss, and on September 5 it
filed its opposition to the stay motion.
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. Oral argument is scheduled for
February 2, 1996.

Legal Developments

Jones v. Board of Governors, No. 95-1142 (D.C. Cir., filed
March 3, 1995). Petition for review of a Board order
dated February 2, 1995, approving the applications by
First Commerce Corporation, New Orleans, Louisiana, to
merge with City Bancorp, Inc., New Iberia, Louisiana,
and First Bankshares, Inc., Slidell, Louisiana. Petitioner
filed a motion for injunctive relief and for a stay of the
Board's order on April 3, 1995. On August 17, 1995, the
court denied the motion. Oral argument on the petition
for review is scheduled for February 27, 1996.
Kuntz v. Board of Governors, No. 95-3044 (6th Cir., filed
January 12, 1995). Petition for review of a Board order
dated December 19, 1994, approving an application by
KeyCorp, Cleveland, Ohio, to acquire BANKVERMONT
Corp., Burlington, Vermont. On September 21, the court
granted the Board's motion to dismiss.
In re Subpoena Duces Tecum, Misc. No. 95-06 (D.D.C.,
filed January 6, 1995). Action to enforce subpoena seeking pre-decisional 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.
Beckman v. Greenspan, No. 95-35473 (9th Cir., file 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. Ghaith R. Pharaon, No. 91-CIV6250 (S.D. New York, filed September 17, 1991). Action
to freeze assets of individual pending administrative adjudication of civil money penalty assessment by the Board.
On September 17, 1991, the court issued an order temporarily restraining the transfer or disposition of the individual's assets.

FINAL ENFORCEMENT DECISION ISSUED BY THE
BOARD OF GOVERNORS

1171

Final Decision
This is an administrative proceeding pursuant to section 8(e) of the Federal Deposit Insurance Act ("FDI
Act"), 12 U.S.C. § 1818(e), in which the Office of the
Comptroller of the Currency of the United States of
America ("OCC") seeks to prohibit Respondent William Vasa ("Vasa") from further participation in the
affairs of any federally-supervised financial institution as
a result of his conduct during his former affiliation as
vice-president and loan officer of First National Bank of
Southeast Denver, Denver, Colorado (the "Bank"). As
required by statute, the OCC has referred the action to
the Board of Governors of the Federal Reserve System
("Board") for final decision.
The proceeding comes before the Board in the form of
a Recommended Decision by Administrative Law Judge
("ALJ") Walter J. Alprin, issued following an administrative hearing held on December 13 and 14, 1994, in
Denver, Colorado, and the post-hearing filings of the
parties. In the Recommended Decision, the ALJ found
that Vasa used his position as vice-president and loan
officer of the Bank to originate fraudulent loans in order
to obtain the loan proceeds for himself. As a result of
such conduct, the Bank suffered a loss of $48,994.41.
The ALJ found that Vasa breached his fiduciary duty to
the Bank and committed unsafe or unsound banking
practices. Vasa did not submit exceptions to the Recommended Decision.
Accordingly, the Board hereby makes its Final Decision, and adopts the ALJ's Recommended Decision,
Recommended Findings of Fact and Recommended
Conclusions of Law together with the reasoning and
citations contained therein, except as specifically supplemented or modified herein. The Board therefore orders
that the attached Order of Prohibition issue against Vasa
prohibiting him from future participation in the affairs of
any federally-supervised financial institution without the
approval of the appropriate supervisory agency.

Statement of the Case
A. Standards for Prohibition Order

In the Matter of
William Vasa
Former Vice-President and
Loan Officer of
First National Bank of Southeast Denver
Denver, Colorado
OCC No. AA-EC-94—27
OCC No. AA-EC-94-28

Under the FDI Act, the ALJ is responsible for conducting an administrative hearing on a notice of intention to
prohibit participation. 12 U.S.C. § 1818(e)(4). Following
the hearing, the ALJ issues a recommended decision that
is referred to the Board. The parties may then file with
the Board exceptions to the ALJ's recommendations.
The Board makes the final findings of fact, conclusions
of law, and determination whether to issue an order of
prohibition. Id.-, 12 C.F.R. 263.40.
The FDI Act sets forth the substantive basis upon
which a federal banking agency may issue against a

1172

Federal Reserve Bulletin • December 1995

bank official an order of prohibition from further participation in banking. In order to issue such an order pursuant to section 1818(e)(1), the Board must make each of
three findings:
(1) There must be a specified type of misconduct—
violation of law, unsafe or unsound practice, or breach
of fiduciary duty;
(2) The misconduct must have a prescribed effect—
financial gain to the respondent or financial harm or
other damage to the institution; and
(3) The misconduct must involve culpability of a
certain degree — personal dishonesty or willful or
continuing disregard for the safety or soundness of the
institution.
B. Relevant Individuals and Business Entities
At all times relevant to this proceeding, the Bank was a
national banking association, chartered and examined by
the OCC. At all times relevant to this proceeding, Vasa
was vice-president and a loan officer of the Bank, and
therefore an "institution-affiliated party" under the terms
of the FDI Act subject to the OCC's supervisory authority.

Findings and Conclusions
Upon review of the record of this proceeding, the Board
hereby adopts such of the ALJ's recommended decision,
findings, and conclusions as are not specifically modified
herein as the findings and conclusions of the Board, and
incorporates by reference the ALJ's reasoning and citations to the record.

Findings
Vasa was vice-president and loan officer at the Bank
from October 1987 through June 1992, when he was
terminated. During that time, Vasa had authority to
originate unsecured loans up to $10,000 without other
approval. At the time he was terminated, Vasa handled a
loan portfolio in excess of $12 million. Of these,
90 percent were secured commercial loans, and, apart
from the fictitious loans at issue here, the remaining
unsecured loans were made to long-standing bank customers. Vasa was terminated by the Bank on June 8,
1992. The loans at issue were only discovered after a
review of Vasa's loan portfolio had been conducted by
the individual who replaced Vasa.
Vasa fabricated eight loans totalling $53,994.41 between October 18, 1990 and June 5, 1992. The evidence
that Vasa fabricated the loans, which were to eight

different purported individuals,1 although circumstantial,
was overwhelming. All of the loans were short-term,
unsecured loans under $10,000. At the time the loans
were made, Vasa knew that the Bank had no detailed
monitoring of such loans. Seven of the loans were to
fictitious individuals. The only loan not in a fictitious
name was to an individual who had a relationship with
the Bank, but who had no knowledge that Vasa had
originated loans in his name. Lastly, all but two of the
loans were single payment loans, requiring no payments
until maturity.
On October 18, 1990, Vasa originated the first fraudulent loan in the name of Frank Young for $4,045. Vasa
had prior dealings with Mr. Young, who lived in Las
Vegas, Nevada, because Young had applied to the Bank
in September 1989 for a loan. The evidence establishes
that Vasa completed a fictitious loan application, which
contained no credit information, using Young's name
and other personal information; but Vasa fabricated the
other information on the application, including the address. Vasa made additional extensions of credit in
Young's name on November 26, 1990, for $4,045 and on
January 15, 1991, for $2,089.39. 2
The ALJ found that Vasa cashed the loan proceed
checks, misappropriated the loan proceeds, and made
cash payments on the loans to keep them current.3 The
ALJ rejected Vasa's claim that he cashed the checks as
an accommodation to the customer. As a result of the
fraudulent loan, the Bank lost $7,776.76, the principal
remaining after payments had been made by Vasa.
The ALJ further found that Vasa originated loans to
seven apparently fictitious individuals. The social security numbers, addresses, and places of employment of
these purported borrowers were all fictitious, and credit
bureau checks showed no listing for any of these supposed individuals. The loans to the fictitious individuals
all followed a similar pattern. The loan applications for
each listed only assets that were not verifiable, such as
cash and automobiles.4 Furthermore, on some loans, in
order to prevent the fraud from being uncovered, Vasa
indicated on the application that the customer would
bring in additional credit information, and that only a
credit bureau check, and no other verification, should be
conducted by bank personnel.

1. In some cases, several extensions of credit were made to a
purported customer. But in each case, the separate credits were then
consolidated into a single loan.
2. The three credit extensions were consolidated into one note in
the amount of $10,000, for which payments were due monthly.
3. Vasa admitted that his handwriting was on the loan deposit
slips, which were used to make payments on the loan. Moreover,
the loan payments ceased at about the time that Vasa was terminated from the Bank.
4. None of the loan applications listed any bank account or
previous employer or had any supporting financial information.

Legal Developments

The loan applications to the fictitious individuals,
which were all typed5 and only partially completed, were
all substantially the same. The first loan to a fictitious
individual was made on March 13, 1991, when Vasa
originated a loan in the name of David Frater for $2,545.
Additional extensions of credit in the same name, which
were all consolidated, were made on April 22, 1991, and
May 20, 1991, in the amounts of $1,960.96 and
$2,406.19, respectively. Respondent made some payments on the loan, as evidenced by his handwriting on
the payment documents, but the Bank lost $5,537.65, the
remaining principal.
The next fictitious loan was made in the name of Jack
Rowland on July 1, 1991, in the amount of $8,545. This
loan was charged off prior to maturity, resulting in a loss
to the Bank of the full amount of the loan. The ALJ
found that the charging-off of the loan prior to its maturity was a further attempt by Vasa to conceal his fraudulent conduct because charged-off loans were not scrutinized to the same degree as loans that were past due, as
this loan would have become.
Following the same pattern as the earlier loans, Vasa
originated a $5,045 loan in the name of David Tinner on
August 19, 1991. A second loan of $3,955 was made in
the name of Tinner on December 16, 1991, and consolidated with the first loan, for a total of $9,000. Vasa made
no payments and the Bank lost the full amount of the
loan. Vasa next made two loans totalling $8,045 in the
name of Mark Jameson as follows: a $5,045 loan on
October 18, 1991, and a $3,000 loan on January 14,
1992. Vasa made no payments on these loans and the
Bank suffered a loss of principal of $8,045, the full
amount of the loan. On February 6, 1992, Vasa originated a loan for $4,045 in the name of Steven Zerbring.
Because no payments were made, the Bank suffered a
loss of the full amount of the loan.
Vasa's last two fraudulent loan applications followed
the same pattern. On April 10, 1992, Vasa made a
$6,045 loan in the name of Thomas Robret. Because no
payments were made, the Bank suffered a loss in the full
amount of the loan. The last loan application, for $5,000
in the name of Kyle Dry son, was made on June 5, 1992,
and was almost identical to one of the earlier fraudulent
loan applications. The ALJ found that the Dryson loan
application appeared to be a photocopy of the earlier
Tinner application, with the only difference being that a
few digits had been changed.6 However, the Bank did
not suffer a loss on the Dryson loan because the check

5. The head of the Bank's lending operations, Jerald B. Hirsch,
testified that it was very unusual for small loan applications to be
typed. He stated that most small loans are made to "walk-in"
customers, who typically hand-write their applications.
6. For instance, the addresses and social security numbers on
both applications, except for one digit, were identical.

1173

was never cashed. The ALJ found that Vasa was unable
to cash the check because he was terminated by the Bank
a few days after the check was issued.7
The ALJ found that Vasa misappropriated the proceeds from the fraudulent loans.8 The ALJ based his
finding on the evidence that all of the proceeds were
disbursed by cashier's checks and were cashed at the
Bank.9 In addition, for several of the loans there was
testimony that Vasa had bank tellers cash the checks and
that he then took the proceeds. Moreover, there were
unexplained large cash deposits into the bank accounts
of Vasa and his wife exceeding $20,000 that were made
at about the times Vasa originated the various loans. The
evidence further indicated that, on several occasions
within days of a fraudulent loan having been made, Vasa
paid large amounts of cash to repair his car.10
The ALJ reasonably found that Vasa failed to present
a credible defense. Vasa failed to rebut most of the
OCC's allegations and did not call any witnesses or offer
any documentary evidence at the hearing. The ALJ
rejected Vasa's claim that some of the cash deposits
were personal loans he had received from certain individuals. The ALJ found that Vasa's explanations, even if
true, accounted for only a small fraction of the overall
cash deposits into his accounts; and Vasa failed to offer
any evidence, other than his own testimony, to prove the
existence of these loans. Therefore, the ALJ reasonably
found that the OCC had supported its charges by a
preponderance of the relevant credible evidence.

Conclusions
A. Misconduct
Upon the aforementioned facts, the ALJ reasonably
found that Vasa's actions constituted both breaches of

7. Vasa had been absent from work for a few days prior to the
loan being finalized on June 8, 1992 — the same day that he was
terminated. Thus, he never had an opportunity to cash the check.
8. Because Vasa made payments on some of the loans, the
amount he benefitted (and the Bank was harmed) was $48,994.41,
which was less than the total principal amount of the loans.
9. This in itself was further proof that the loans were fabricated
because the evidence was that loan proceed checks were almost
always deposited into customers' accounts and not cashed.
10. The ALJ found that Vasa's close monitoring of the fraudulent
loans was further evidence of his fraud. The Bank's confidential
security system recorded which loans employees reviewed on their
computers. This system showed that on more than one day, Vasa
reviewed several of the fraudulent loans in succession. In fact, Vasa
reviewed these loans more frequently than any other loans. The
ALJ found Vasa's extra attention to be probative of the fraudulent
nature of the loans because loan officers generally reviewed loans
infrequently and only in response to customer inquiries, particularly where the loans were single payment loans, as most of the
loans were here.

1174

Federal Reserve Bulletin • December 1995

his fiduciary duty and unsafe and unsound practices. In
effecting his loan scheme, Vasa repeatedly falsified loan
documents over a period lasting more than a year. Moreover, he made misrepresentations to bank personnel in
order to induce them to cash third party cashier's checks,
and he took other actions to conceal the fraud. Lastly,
Vasa misappropriated the Bank's funds through the loan
scheme. The ALJ reasonably found this misconduct to
satisfy the applicable standards for breach of fiduciary
duty and unsafe or unsound banking practices.11
B. Effects
The ALJ also reasonably found that Vasa's misconduct
satisfied the "effects" test necessary for a prohibition
because the Bank was harmed by Vasa's conduct. As a
result of the fraudulent loans, the Bank lost $48,994.41,
the amount misappropriated by Vasa. In addition, Vasa
clearly received a financial benefit through his misappropriation of the loan proceeds.
C. Culpability
The ALJ also reasonably found that the "culpability"
requirement for a prohibition order was satisfied. The
ALJ found that the record was replete with instances of
Vasa's personal dishonesty and willful and continuing
disregard for the Bank's safety and soundness. In short,
Vasa created at least eight fictitious loans over a period
lasting more than a year. Vasa misrepresented facts and
defrauded the Bank each time he submitted a fraudulent
loan application. Moreover, in order to cash the loan
checks, Vasa deceived other Bank employees by telling
them that the proceeds were for customers.
D. Challenges to Evidentiary

Rulings

Vasa did not file any exceptions to the ALJ's evidentiary
rulings.

Conclusion
For the foregoing reasons, the Board orders that the
attached Order issue.

11. An "unsafe or unsound banking practice" has been defined
as a practice "deemed contrary to accepted standards of banking
operation which might result in abnormal risk or loss to a banking
institution or shareholder." First Nat'I Bank of Eden v. Comptroller
of the Currency, 568 F.2d 610, 611 n.2 (8th Cir. 1978). A scheme to
defraud a bank, as Vasa conducted here, certainly satisfies this
standard.

By order of the Board of Governors, this 10th day of
October, 1994.
Board of Governors of the
Federal Reserve System
WILLIAM W. WILES

Secretary of the Board

Order of Prohibition
WHEREAS, pursuant to section 8(e) of the Federal
Deposit Insurance Act, as amended (the "Act")
(12 U.S.C. § 1818(e)), the Board of Governors of the
Federal Reserve System ("the Board") is of the opinion,
for the reasons set forth in the accompanying Final
Decision, that a final Order of Prohibition should issue
against WILLIAM VASA,
NOW, THEREFORE, IT IS HEREBY ORDERED,
pursuant to sections 8(e) and 8(j) of the Act,
(12 U.S.C. §§ 1818(e) and 1818(j», that:
1. In the absence of prior written approval by the
Board, and by any other Federal financial institution
regulatory agency where necessary pursuant to section
8(e)(7)(B) of the Act (12 U.S.C. § 1818(e)(7)(B)),
WILLIAM VASA is hereby prohibited:
(a) From participating in the conduct of the affairs
of any bank holding company, any insured depository institution or any other institution specified in
subsection 8(e)(7)(A) of the Act (12 U.S.C.
§ 1818(e)(7)(A));
(b) From soliciting, procuring, transferring, attempting to transfer, voting or attempting to vote any
proxy, consent, or authorization with respect to any
voting rights in any institution described in
subsection 8(e)(7)(A) of the Act (12 U.S.C.
§ 1818(e)(7)(A));
(c) From violating any voting agreement previously
approved by the appropriate Federal banking
agency; or
(d) From voting for a director, or from serving or
acting as an institution-affiliated party as defined in
section 3(u) of the Act (12 U.S.C. § 1813(u)), including serving as an officer, director, or employee.
2. This Order, and each provision hereof, is and shall
remain fully effective and enforceable until expressly
stayed, modified, terminated or suspended in writing
by the Board.
This Order shall become effective upon the expiration
of thirty days after service is made.
By order of the Board of Governors, this 10th day of
October, 1995.
Board of Governors of the
Federal Reserve System
WILLIAM W. WILES
SECRETARY OF THE BOARD

Legal Developments

1175

FINAL ENFORCEMENT ORDERS ISSUED BY THE BOARD To support its action of a temporary Cease and Desist
Order, the Federal Reserve Board also issued a Notice of
OF GOVERNORS
Charges and Hearing against the bank and its New York
branch.
The Daiwa Bank, Limited

Osaka, Japan
The Federal Reserve Board and the New York State
Banking Department announced on October 2, 1995, the
issuance of an enforcement order against Daiwa Bank
and its New York branch in connection with unauthorized trading activities by an official in the New York
branch.

The Security State Bank of Pecos
Pecos, Texas
The Federal Reserve Board announced on October 18,
1995, the issuance of a Cease and Desist Order against
the Security State Bank of Pecos, Pecos, Texas.

Financial and Business Statistics
A3

GUIDE TO TABULAR
DOMESTIC

FINANCIAL

STATISTICS

Money Stock and Bank Credit
A4
A5
A6
A7

Reserves, money stock, liquid assets, and debt
measures
Reserves of depository institutions, Reserve Bank
credit
Reserves and borrowings—Depository
institutions
Selected borrowings in immediately available
funds—Large member banks

Policy Instruments
A8 Federal Reserve Bank interest rates
A9 Reserve requirements of depository institutions
A10 Federal Reserve open market transactions

Federal Reserve Banks
A l l Condition and Federal Reserve note statements
A12 Maturity distribution of loan and security
holdings

Monetary and Credit Aggregates
A13 Aggregate reserves of depository institutions
and monetary base
A14 Money stock, liquid assets, and debt measures
A16 Deposit interest rates and amounts outstanding—
commercial and BIF-insured banks
A17 Bank debits and deposit turnover

Commercial Banking Institutions
A18 Assets and liabilities, Wednesday figures

Weekly Reporting Commercial Banks—
Assets and liabilities
A21 Large reporting banks
A23 Branches and agencies of foreign banks

Financial Markets

PRESENTATION

A24 Commercial paper and bankers dollar
acceptances outstanding
A25 Prime rate charged by banks on short-term
business loans
A26 Interest rates—money and capital markets
A27 Stock market—Selected statistics

Federal Finance
A28
A29
A30
A30

Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—
Types and ownership
A31 U.S. government securities
dealers—Transactions
A32 U.S. government securities dealers—
Positions and financing
A3 3 Federal and federally sponsored credit
agencies—Debt outstanding

Securities Markets and Corporate Finance
A34 New security issues—Tax-exempt state and local
governments and corporations
A35 Open-end investment companies—Net sales
and assets
A35 Corporate profits and their distribution
A35 Nonfarm business expenditures on new
plant and equipment
A36 Domestic finance companies—Assets and
liabilities, and consumer, real estate, and business
credit

Real Estate
A37 Mortgage markets
A3 8 Mortgage debt outstanding

Consumer Installment Credit
A39 Total outstanding
A39 Terms

Federal Reserve Bulletin • December 1995

DOMESTIC FINANCIAL STATISTICSCONTINUED

Flow of Funds
A40
A42
A43
A44

Funds raised in U.S. credit markets
Summary of financial transactions
Summary of credit market debt outstanding
Summary of financial assets and liabilities

DOMESTIC NONFINANCIAL STATISTICS

Selected Measures
A45 Nonfinancial business activity—
Selected measures
A45 Labor force, employment, and unemployment
A46 Output, capacity, and capacity utilization
A47 Industrial production—Indexes and gross value
A49 Housing and construction
A50 Consumer and producer prices
A51 Gross domestic product and income
A52 Personal income and saving

Reported by Banks in the United States
A55
A56
A58
A59

Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A59 Banks' own claims on unaffiliated foreigners
A60 Claims on foreign countries—
Combined domestic offices and foreign branches

Reported by Nonbanking Business
Enterprises in the United States
A61 Liabilities to unaffiliated foreigners
A62 Claims on unaffiliated foreigners

Securities Holdings and Transactions
A63 Foreign transactions in securities
A64 Marketable U.S. Treasury bonds and
notes—Foreign transactions

Interest and Exchange Rates
INTERNATIONAL STATISTICS

Summary Statistics
A53
A54
A54
A54

U.S. international transactions—Summary
U.S. foreign trade
U.S. reserve assets
Foreign official assets held at Federal Reserve
Banks
A55 Selected U.S. liabilities to foreign official
institutions

A65 Discount rates of foreign central banks
A65 Foreign short-term interest rates
A66 Foreign exchange rates

A67 GUIDE TO STATISTICAL RELEASES AND
SPECIAL TABLES

A 6 8 INDEX TO STATISTICAL TABLES

Guide to Tabular Presentation
SYMBOLS AND

c
e
n.a.
n.e.c.
p
r
*
0
. ..
ATS
BIF
CD
CMO
FFB
FHA
FHLBB
FHLMC
FmHA
FNMA
FSLIC
G-7

GENERAL

ABBREVIATIONS

Corrected
Estimated
Not available
Not elsewhere classified
Preliminary
Revised (Notation appears on column heading
when about half of the figures in that column
are changed.)
Amounts insignificant in terms of the last decimal
place shown in the table (for example, less than
500,000 when the smallest unit given is millions)
Calculated to be zero
Cell not applicable
Automatic transfer service
Bank insurance fund
Certificate of deposit
Collateralized mortgage obligation
Federal Financing Bank
Federal Housing Administration
Federal Home Loan Bank Board
Federal Home Loan Mortgage Corporation
Farmers Home Administration
Federal National Mortgage Association
Federal Savings and Loan Insurance Corporation
Group of Seven

G-10
GNMA
GDP
HUD
IMF
IO
IPCs
IRA
MMDA
MSA
NOW
OCD
OPEC
OTS
PO
REIT
REMIC
RP
RTC
SAIF
SCO
SDR
SIC
VA

Group of Ten
Government National Mortgage Association
Gross domestic product
Department of Housing and Urban
Development
International Monetary Fund
Interest only
Individuals, partnerships, and corporations
Individual retirement account
Money market deposit account
Metropolitan statistical area
Negotiable order of withdrawal
Other checkable deposit
Organization of Petroleum Exporting Countries
Office of Thrift Supervision
Principal only
Real estate investment trust
Real estate mortgage investment conduit
Repurchase agreement
Resolution Trust Corporation
Savings Association Insurance Fund
Securitized credit obligation
Special drawing right
Standard Industrial Classification
Department of Veterans Affairs

INFORMATION

In many of the tables, components do not sum to totals because
of rounding.
Minus signs are used to indicate (1) a decrease, (2) a negative
figure, or (3) an outflow.
"U.S. government securities" may include guaranteed issues
of U.S. government agencies (the flow of funds figures also

include not fully guaranteed issues) as well as direct obligations of the Treasury. "State and local government" also includes municipalities, special districts, and other political
subdivisions.

A4
1.10

Domestic Financial Statistics • December 1995
RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES
Percent annual rate of change, seasonally adjusted 1
1994

1995

Monetary or credit aggregate
Q4

May

June

Julyr

Aug.

Sept.

1
2
3
4

Reserves of depository institutions2
Total
Required
Nonborrowed
Monetary base 3

-3.3
-3.0
-2.1
6.9

-3.7
-4.0
-2.4
6.4

-8.0
-7.0
-8.6
6.3r

-1.2
-2.3
-2.2
1.0

-4.1
-6.8
-4.9
7.2

-8.5
-10.4
-11.1
—2.6r

6.3
3.8
4.3
-.3

-2.9
-.8
-1.1
3.3

-3.1
-2.3
-3.0
1.1

!>
6
7
8
9

Concepts of money, liquid assets, and debt4
Ml
M2
M3
L
Debt

-1.2
-.3
1.7
2.2
5.2

.0
1.7
4.4r
6.4r
5.5

-.9
4.4r
7.1r
7.6r
6.7

-.9
7.7
8.8
n.a.
n.a.

-7.0r
5.5r
8.0
6.3r
8.3

.9
11.9r
12.8r
8.3r
5.0

1.3
6.2
8.4
11.5
3.3

- 1.5r
8.3
7.6r
7.6
3.5

-3.7
4.7
4.3
n.a.
n.a.

.2'
12.4

2.5r
18.5

6.9r
20.7

11.6
13.8

11.2r
20.8r

16.8r
17.6r

8.5
18.6

12.6
4.7r

8.4
2.3

-8.5
16.0
17.7

-13.2
24.3
12.7

-7.3
23.4
15.8r

10.3
9.2
14.3

2.0
17.7
23.7r

18.2
13.4
12.9r

4.3
9.2
19.6

14.5r
4.4
5.6'

11.7
1.9
8.1

-17.6
10.9r
14.1

-20.5
21.5r
23.3

-14.5
26.6r
14.6

-5.7
4.0
13.4

-7.2
20.9r
-13.5

-4.0
2.7f
6.8

-7.6
.7
30.5

—6.7r
1.7'
9.9

-.3
4.4
8.2

Money market mutual funds
18 General purpose and broker-dealer
19 Institution-only

7.5
7.3

7.9
10.0

18.l r
27.1

43.3
29.3

28.5r
11.8

61.6r
66.5

44.5
39.7

37.7r
-9.0

17.6
15.4

Debt components4
20 Federal
21 Nonfederal

5.9
5.0

5.3
5.7

5.3
7.2

n.a.
n.a.

5.9
9.1

8.4
3.8

4.1
3.0

1.9
4.2

n.a.
n.a.

Nontransaction components
10 In M2 5
11 In M3 only6
Time and savings deposits
Commercial banks
Savings, including MMDAs
Small time7
Large time 8,9
Thrift institutions
15
Savings, including MMDAs
16
Small time7
17
Large time8

12
13
14

1. Unless otherwise noted, rates of change are calculated from average amounts
outstanding during preceding month or quarter.
2. Figures incorporate adjustments for discontinuities, or "breaks," associated with
regulatory changes in reserve requirements. (See also table 1.20.)
3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters
whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted
difference between current vault cash and the amount applied to satisfy current reserve
requirements.
4. Composition of the money stock measures and debt is as follows:
Ml: (1) currency outside the 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 Ml is computed by summing currency, travelers checks, demand
deposits, and OCDs, each seasonally adjusted separately.
M2: Ml plus (1) overnight (and continuing contract) repurchase agreements (RPs)
issued by all depository institutions and overnight Eurodollars issued to U.S. residents by
foreign branches of U.S. banks worldwide, (2) savings (including MMDAs) and small
time deposits (time deposits—including retail RPs—in amounts of less than $100,000),
and (3) balances in both taxable and tax-exempt general-purpose and broker-dealer
money market funds. Excludes individual retirement accounts (IRAs) and Keogh balances
at depository institutions and money market funds. Also excludes all balances held by
U.S. commercial banks, money market funds (general purpose and broker-dealer), foreign
governments and commercial banks, and the U.S. government. Seasonally adjusted M2 is
computed by adjusting its non-Mi component as a whole and then adding this result to
seasonally adjusted Ml.
M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of $100,000 or
more) issued by all depository institutions, (2) term Eurodollars held by U.S. residents at
foreign branches of U.S. banks worldwide and at all banking offices in the United

Kingdom and Canada, and (3) balances in both taxable and tax-exempt, institution-only
money market funds. Excludes amounts held by depository institutions, the U.S. government, money market funds, and foreign banks and official institutions. Also excluded is
the estimated amount of overnight RPs and Eurodollars held by institution-only money
market funds. Seasonally adjusted M3 is computed by adjusting its non-M2 component as
a whole and then adding this result to seasonally adjusted M2.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury
securities, commercial paper, and bankers acceptances, net of money market fund holdings of these assets. Seasonally adjusted L is computed by summing U.S. savings bonds,
short-term Treasury securities, commercial paper, and bankers acceptances, each seasonally adjusted separately, and then adding this result to M3.
Debt: The debt aggregate is the outstanding credit market debt of the domestic
nonfinancial sectors—the federal sector (U.S. government, not including governmentsponsored 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 funds accounts, are break-adjusted (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) overnight RPs and overnight Eurodollars, (2) money market fund
balances (general purpose and broker-dealer), (3) savings deposits (including MMDAs),
and (4) small time deposits.
6. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. residents,
and (4) money market fund balances (institution-only), less (5) a consolidation adjustment
that represents the estimated amount of overnight RPs and Eurodollars held by institutiononly money market funds. This sum is seasonally adjusted as a whole.
7. Small time deposits—including retail RPs—are those issued in amounts of less
than $100,000. All IRA and Keogh account balances at commercial banks and thrift
institutions are subtracted from small time deposits.
8. Large time deposits are those issued in amounts of $100,000 or more, excluding
those booked at international banking facilities.
9. Large time deposits at commercial banks less those held by money market funds,
depository institutions, the U.S. government, and foreign banks and official institutions.

Money Stock and Bank Credit
1.11

RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT 1
Millions of dollars
Average of
daily figures

Average of daily figures for week ending on date indicated

1995

July

Aug.

Sept.

Aug. 16

Aug. 23

Aug. 30

Sept. 6

Sept. 13

Sept. 20

Sept. 27

411,634

409,402'

410,885

410,301

408,534'

408,495'

409,163

411,208

413,459

409,638

371,272
1,531

371,942
133

371,068
4,206

372,422
154

372,241
0

372,169
0

370,815
3,055

371,236
4,540

371,826
5,880

371,349
2,487

3,079
121
0

3,019
52
0

2,932
106
0

3,028
216
0

3,028
0
0

2,953
0
0

2,941
100
0

2,941
327
0

2,941
0
0

2,921
21
0

85
231
0
572
34,742

112
259
0
291'
33,595'

28
254
0
408
31,882

4
253
0
45
34,181

9
267
0
270'
32,719'

22
277
0
107'
32,967'

38
247
0
353
31,614

8
243
0
295
31,618

2
255
0
652
31,904

23
267
0
476
32,093

11,053
10,357
23,533'

11,053
10,518
23,623'

11,052
10,366
23,708

11,053
10,518
23,614'

11,053
10,518
23,637'

11,053
10,518
23,660'

11,053
10.518
23,682

11,053
10,518
23,696

11,053
10,368
23,710

11,052
10,168
23,724

410,930'
318

410,420'
310

410,989
322

411,083'
309

410,043'
309

409,344'
312

412,011
316

412,567
318

410,762
332

409,279
322

6,984
196
4,347
289
12,949
20,564

5,257
184
4,599
289
12,758
20,779'

6,850
179
4,688
348
12,176
20,459

5,221
176
4,521
296
12,858
21,021

5,541
183
4,738
285
12,805
19,837r

4,923
175
4,700
286
13,038
20,947'

5,083
172
4,612
362
11,445
20,416

4,903
182
4,643
339
11,876
21,648

10,002
174
4,693
362
12,241
20,024

6,651
181
4,759
329
12,694
20,368

SUPPLYING RESERVE FUNDS

1 Reserve Bank credit outstanding
U.S. government securities2
Bought outright—System account
2
3
Held under repurchase agreements
Federal agency obligations
4
Bought outright
5
Held under repurchase agreements
6 Acceptances
Loans to depository institutions
7
Adjustment credit
8
Seasonal credit
9
Extended credit
10 Float
11 Other Federal Reserve assets
12 Gold stock
13 Special drawing rights certificate account
14 Treasury currency outstanding
ABSORBING RESERVE FUNDS

15 Currency in circulation
16 Treasury cash holdings
Deposits, other than reserve balances, with
Federal Reserve Banks
17 Treasury
18 Foreign
19 Service-related balances and adjustments ..
20 Other
21 Other Federal Reserve liabilities and capital ,
22 Reserve balances with Federal Reserve Banks

Wednesday figures

End-of-month figures
July

Aug.

Sept.

Aug. 16

Aug. 23

Aug. 30

Sept. 6

Sept. 13

Sept. 20

Sept. 27

413,574

408,461'

410,194

411,234

408,861'

409,683'

412,115

416,668

420,340

412,324

375,524
0

369,818
3,055

367,669
6,445

374,597
0

372,085
0

373,531
0

372,665
3,055

372,102
8,175

370,992
13,020

369,652
6,487

3,063
0
0

2,941
100
0

2,895
75
0

3,028
0
0

2,941
0
0

2,941
100
0

2,941
1,209
0

2,941
0
0

2,895
150
0

3
245
0
73
34,666

4
266
0
686'
31,592'

160
261
0
73
32,616

3
259
0
694
32,651

14
v 271
0
598'
32,865'

63
280
0
45'
32,823'

6
245
0
1,361
31,743

3
246
0
-25
32,018

1
266
0
611
32,509

70
270
0
651
32,150

11,053
10,518
23,568'

11,053
10,518
23,682'

11,051
10,168
23,738

11,053
10,518
23,614'

11,053
10,518
23,637'

11,053
10,518
23,660'

11,053
10,518
23,682

11,053
10,518
23,696

11,053
10,168
23,710

11,051
10,168
23,724

409,508'
306

410,984'
316

409,244
322

411,562'
309

410,324'
311

410,988'
316

413,566
315

412,618
334

410,841
322

410,202
322

11,206
190
4,427
304
12,671
20,102

4,767
166
4,612'
298
11,438
21,134'

8,620
201
4,769
332
13,088
18,575

5,583
176
4,521
307
12,613
21,347

5,399
201
4,738
278
12,572
20,245'

5,653
180
4,700
290
12,829
19,957'

5,065
168
4,612
344
11,551
21,748

6,086
177
4,643
339
12,084
25,654

17,499
167
4,693
330
12,323
19,097

6,553
170
4,759
331
12,663
22,268

SUPPLYING RESERVE FUNDS

1 Reserve Bank credit outstanding
US. government securities
2
Bought outright—System account
Held under repurchase agreements
3
Federal agency obligations
4
Bought outright
Held under repurchase agreements
5
6 Acceptances
Loans to depository institutions
Adjustment credit
7
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
ABSORBING RESERVE FUNDS

1. Amounts of cash held as reserves are shown in table 1.12, line 2.
2. Includes securities loaned—fully guaranteed by U.S. government securities pledged
with Federal Reserve Banks—and 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.

Domestic Financial Statistics • December 1995

1.12

RESERVES AND BORROWINGS

Depository Institutions1

Millions of dollars
Prorated monthly averages of biweekly averages
Reserve classification

1
2
3
4
5
6
7
8
9
10

Reserve balances with Reserve Banks2
Total vault cash3
Applied vault cash4
Surplus vault cash5
Total reserves6
Required reserves
Excess reserve balances at Reserve Banks7
Total borrowings at Reserve Banks8
Seasonal borrowings
Extended credit9

1992

1993

1994

1995

Dec.

Mar.

Apr.

May

June

July

Aug.

Sept.

25,368
34,541
31,172
3,370
56,540
55,385
1,155
124
18
1

29,374
36,818
33,484
3,334
62,858
61,795
1,063
82
31
0

24,658
40,365
36,682
3,683
61,340
60,172
1,168
209
100
0

22,649
38,518
34,934
3,584
57,583
56,789
794
69
51
0

24,217
38,099
34,657
3,442
58,874
58,120
753
111
82
0

21,476
39,038
35,281
3,757
56,757
55,877
880
150
137
0

21,058
39,839
35,986
3,853
57,044
56,079
964
272
172
0

20,840
40,522
36,550
3,971
57,390
56,300
1,090
371
231
0

20,565
40,177
36,255r
3,923
56,819
55,832r
988r
282
258
0

20,519
40,648
36,640
4,008
57,159
56,209
950
278
252
0

Biweekly averages of daily figures for two week periods ending on dates indicated
1995

1
2
3
4
5
6
7
8
9
10

June 7

June 21

July 5

July 19

Aug. 2

Aug. 16

Aug. 30

Sept. 13

Sept. 27

Oct. 11

20,875
39,373
35,549
3,824
56,424
55,627
798
165
150
0

21,478
40,146
36,240
3,906
57,718
56,703
1,015
286
155
0

20,546
39,724
35,930
3,794
56,476
55,462
1,014
336
214
0

21,733
40,411
36,491
3,920
58,224
57,334
890
293
224
0

19,920
40,983
36,878
4,106
56,798
55,443
1,354
478
245
0

20,793
40,889
36,898
3,991
57,691
56,491
1,200
250
247
0

20,395
39,324
35,491
3,833
55,886
55,153r
733r
288
272
0

21,029r
40,554
36,693
3,862r
57,722
56,879r
843r
268
245
0

20,182
40,628
36,556
4,072
56,738
55,781
957
274
261
0

19,884
41,153
36,805
4,348
56,689
55,312
1,376
338
240
0

1. Data in this table also appear in the Board'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 "as-of" adjustments.
3. Total "lagged" vault cash held by depository institutions subject to reserve
requirements. Dates refer to the maintenance periods during which the vault cash 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 "bound" institutions
(that is, those whose required reserves exceed their vault cash) plus the amount of vault

cash applied during the maintenance period by "nonbound" institutions (that is, those
whose vault cash exceeds their required reserves) to satisfy current reserve requirements.
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).
1. 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 impact of
extended credit is similar to that of nonborrowed reserves.

Money Stock and Bank Credit
1.13

SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS

Large Banks1

Millions of dollars, averages of daily figures
1995, week ending Monday
Source and maturity

1
2
3
4

Federal funds purchased, repurchase agreements, and other
selected borrowings
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and official
institutions, and U.S. government agencies
For one day or under continuing contract
For all other maturities

July 31

Aug. 7

Aug. 14

Aug. 21

Aug. 28

Sept. 4

Sept. 11

Sept. 18

Sept. 25

77,305
17,639R

83,233
18,325'

79,795
18,350R

78,638
16,503R

73,023
17,227R

80,287
18,086

79,342
16,701

77,611
16,473

74,600
16,001

22,029
26,573R

24,885
26,356R

26,327
26,458R

27,244
26,029R

26,953
27,949R

24,256
27,651

23,443
27,431

22,768
25,979

26,575
24,595

Repurchase agreements on U.S. government and federal
agency securities
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
For all other maturities

17,040
36,946

17,837
36,877

18,730
38,159

21,678
31,571

18,956
36,273

19,873
34,723

19,126
33,827

18,285
35,204

18,985
33,489

37,810
18,517

38,574
17,902

38,416
18,374

40,180
18,401

40,360
18,740

42,318
19,004

41,470
18,585

40,377
18,440

39,681
17,692

MEMO
Federal funds loans and resale agreements in immediately
available funds in maturities of one day or under
continuing contract
9 To commercial banks in the United States
10 To all other specified customers2

56,819
29,713

57,530
29,600

55,140
30,061

57,032
27,794

53,380
25,921

58,363
29,034

55,344
29,813

55,844
32,721

55,159
28,334

5
6
7
8

1. Banks with assets of $4 billion or more as of Dec. 31, 1988.
Data in this table also appear in the Board's H.5 (507) weekly statistical release. For
ordering address, see inside front cover.

2. Brokers and nonbank dealers in securities, other depository institutions, foreign
banks and official institutions, and U.S. government agencies,

A8
1.14

Domestic Financial Statistics • December 1995
FEDERAL RESERVE BANK INTEREST RATES
Percent per year
Current and previous levels
Adjustment credit1

Federal Reserve
Bank

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta

On
11/3/95

Extended credit3

Effective date

Previous rate

On
11/3/95

Effective date

Previous rate

On
11/3/95

Effective date

Previous rate

2/1/95
2/1/95
2/2/95
2/9/95
2/1/95
2/2/95

4.75

5.75

10/26/95

5.85

6.25

10/26/95

6.35

4.75

5.75

10/26/95

5.85

6.25

10/26/95

6.35

5.25

Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

Seasonal credit2

2/1/95
2/1/95
2/2/95
2/1/95
2/2/95
2/1/95

5.25

Range of rates for adjustment credit in recent years

Effective date

In effect Dec. 31, 1977
1978—Jan.

Range (or
level)—
All F.R.
Banks
6

9
20
11
12
3
10
21
22
16
20
1
3

6-6.5
6.5
6.5-7
7
7-7.25
7.25
7.75
8
8-8.5
8.5
8.5-9.5
9.5

1979—July 20
Aug. 17
20
Sept. 19
21
Oct. 8
10

10
10-10.5
10.5
10.5-11
11
11-12
12

1980—Feb. 15
19
May 29
30
June 13
16
July 28
29
Sept. 26
Nov. 17
Dec. 5
8
1981—May 5
8

12-13
13
12-13
12
11-12
11
10-11
10
11
12
12-13
13
13-14
14

May
July
Aug.
Sept.
Oct.
Nov.

F.R.
Bank
of
N.Y.
6
6.5
6.5
7
7
7.25
7.25
7.75
8
8.5
8.5
9.5
9.5
10
10.5
10.5
11
11
12
12
13
13
13
12
11
11
10
10
11
12
13
13
14
14

Effectiv

1981—Nov. 2
Dec. 4
1982—July 20
23
Aug. 2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17

13-14
13
12

F.R.
Bank
of
N.Y.
13
13
12

11.5-12
11.5
11-11.5
11
10.5
10-10.5
10
9.5-10
9.5
9-9.5
9
8.5-9
8.5-9
8.5

11.5
11.5
11
11
10.5
10
10
9.5
9.5
9
9
9
8.5
8.5

9
13
Nov. 21
26
Dec. 24

8.5-9
9
8.5-9
8.5
8

9
9
8.5
8.5
8

1985—May 20
24

7.5-8
7.5

7.5
7.5

1986—Mar. 7
10
Apr. 21
23.
July 11
Aug. 21
22

7-7.5
7
6.5-7
6.5
6
5.5-6
5.5

7
7
6.5
6.5
6
5.5
5.5

1984—Apr.

1. Available on a short-term basis to help depository institutions meet temporary needs
for funds that cannot be met through reasonable alternative sources. The highest rate
established for loans to depository institutions may be charged on adjustment credit loans
of unusual size that result from a major operating problem at the borrower's facility.
2. Available to help relatively small depository institutions meet regular seasonal needs
for funds that arise from a clear pattern of intrayearly movements in their deposits and
loans and that cannot be met through special industry lenders. The discount rate on
seasonal credit takes into account rates 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). The discount rate applicable to
adjustment credit ordinarily is charged on extended-credit loans outstanding less than

Range (or
level)—
All F.R.
Banks

Effective date

Range (or
level)—
All F.R.
Banks

F.R.
Bank
of
N.Y.

1987—Sept. 4
11

5.5-6
6

6
6

1988—Aug. 9
11

6-6.5
6.5

6.5
6.5

1989—Feb. 24
27

6.5-7
7

7
7

1990—Dec. 19

6.5

1
4
30
2
13
17
6
7
20
24

6-6.5
6
5.5-6
5.5
5-5.5
5
4.5-5
4.5
3.5-4.5
3.5

6
6
5.5
5.5
5
5
4.5
4.5
3.5
3.5

2
7

3-3.5
3

1994—May 17
18
Aug. 16
18
Nov. 15
17

3-3.5
3.5
3.5-4
4
4-4.75
4.75

3.5
3.5
4
4
4.75
4.75

4.75-5.25
5.25

5.25
5.25

5.25

1991—Feb.
Apr.
May
Sept.
Nov.
Dec.
1992—July

1995—Feb.

1
9

In effect Nov. 3, 1995

3
3

thirty days; however, at the discretion of the Federal Reserve Bank, this time period may
be shortened. Beyond this initial period, a flexible rate somewhat above rates 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,
1970-1979.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term adjustmentcredit borrowings by institutions with deposits of $500 million or more that had borrowed
in successive weeks or in more than four weeks in a calendar quarter. A 3 percent
surcharge was in effect from Mar. 17, 1980, through May 7, 1980. A surcharge of 2
percent was reimposed on Nov. 17, 1980; the surcharge was subsequently raised to 3
percent on Dec. 5,1980, and to 4 percent on May 5,1981. The surcharge was reduced to 3
percent effective Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1,
1981, the formula for applying the surcharge was changed from a calendar quarter to a
moving thirteen-week period. The surcharge was eliminated on Nov. 17, 1981.

Policy Instruments
1.15

RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS 1
Requirement
Type of deposit2

Net transaction accounts3
1 $0 million-$54.0 million
2 More than $54.0 million4

1. Required reserves must be held in the form of deposits with Federal Reserve
Banks or vault cash. Nonmember institutions may maintain reserve balances with a
Federal Reserve Bank indirectly, on a pass-through basis, with certain approved
institutions. For previous reserve requirements, see earlier editions of the Annual
Report or the Federal Reserve Bulletin. Under the Monetary Control Act of 1980,
depository institutions include commercial banks, mutual savings banks, savings and
loan associations, credit unions, agencies and branches of foreign banks, and Edge
Act corporations.
2. Under the Garn-St 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 succeeding calendar year by 80 percent of the percentage increase in the total
reservable liabilities of all depository institutions, measured on an annual basis as of June
30. No corresponding adjustment is to be made in the event of a decrease. On Dec. 20,
1994, the exemption was raised from $4.0 million to $4.2 million. The exemption applies
only to accounts that would be subject to a 3 percent reserve requirement.
3. Transaction accounts include all deposits against which the account holder is
permitted to make withdrawals by negotiable or transferable instruments, payment orders
of withdrawal, and telephone and preauthorized transfers in excess of three per month for
the purpose of making payments to third persons or others. However, money market
deposit accounts (MMDAs) and similar accounts subject to the rules that permit no more
than six preauthorized, automatic, or other transfers per month, of which no more than
three may be checks, are savings deposits, not transaction accounts.

Percentage of
deposits

Effective date

3
10

12/20/94
12/20/94

12/27/90

The Monetary Control Act of 1980 requires that the amount of transaction accounts
against which the 3 percent reserve requirement applies be modified annually by 80
percent of the percentage change in transaction accounts held by all depository institutions, determined as of June 30 of each year. Effective Dec. 20, 1994 the amount was
increased from $51.9 million to $54.0 million.
4. The reserve requirement was reduced from 12 percent to 10 percent on
Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for institutions that
report quarterly.
5. For institutions that report weekly, the reserve requirement on nonpersonal time
deposits with an original maturity of less than 1 x/l years was reduced from 3 percent to
l l / i percent for the maintenance period that began Dec. 13, 1990, and to zero for the
maintenance period that began Dec. 27, 1990. The reserve requirement on nonpersonal
time deposits with an original maturity of 1 years or more has been zero since Oct. 6,
1983.
For institutions that report quarterly, the reserve requirement on nonpersonal time
deposits with an original maturity of less than 1VS years was reduced from 3 percent to
zero on Jan. 17, 1991.
6. The reserve requirement on Eurocurrency liabilities was reduced from 3 percent to
zero in the same manner and on the same dates as was the reserve requirement on
nonpersonal time deposits with an original maturity of less than 1 y e a r s (see note 5).

A10

Domestic Financial Statistics • December 1995

1.17 FEDERAL RESERVE OPEN MARKET TRANSACTIONS 1
Millions of dollars

1995
Type of transaction
and maturity

1992

1994

1993

Feb.

Mar.

Apr.

May

June

July

Aug.

0
0
31,530
0

0
0
36,449
0

0
0
30,983
0

0
0
31,663
0

4,470
0
42,983
0

0
0
25,213
0

433
0
39,195
0

0
0
—6,028R
—7,374R
0

0
0
0
0
0

U.S. TREASURY SECURITIES

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Outright transactions (excluding matched
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 transactions
25 Gross purchases
26 Gross sales
Repurchase agreements
27 Gross purchases
28 Gross sales
29 Net change in U.S. Treasury securities

14,714
1,628
308,699
1,600

17,717
0
332,229
0

17,484
0
376,277
0

1,096
0
36,662
-30,543
0

1,223
0
31,368
-36,582
0

1,238
0
0
-21,444
0

0
0
5,872
6,026R
0

0
0
4,802R
-2,096 R
0

13,118
0
-34,478
25,811

10,350
0
-27,140
0

9,168
0
-6,004
17,801

0
0
-5,872 R
3,606R

0
0
—4,802R
1,050R

2,549
0
-All'
0

0
0
-5,548 R
5,374R

0
0
0
0

2,818
0
-1,915
3,532

4,168
0
0
0

3,818
0
-3,145
2,903

0
0
0R
1,720R

0
0
0
L,046R

839
0
-310 R
0

0
0
1,248R
2,000R

0
0
0
0

2,333
0
-269
1,200

3,457
0
0
0

3,606
0
-918
775

0
0
0
700

0
0
0
0

1,138
0
0
0

0
0
-1,728 R
0

0
0
0
0

34,079
1,628
1,600

36,915
0
767

35,314
0
2,337

0
0
0

4,526
0
370

0
0
0

4,470
0
0

0
0
0

433
0
0

1,480,140
1,482,467

1,475,941
1,475,085

1,700,836
1,701,309

178,877
176,232

168,800
170,724

148,306
147,616

155,027
153,534

170,083
171,959

166,674
163,490

179,130
185,270

378,374
386,257

475,447
470,723

309,276
311,898

1,300
3,310

22,070
16,477

36,314
39,157

35,158
34,377

40,989
28,196

8,527
24,851

4,130
1,075

20,642

41,729

29,882

634

3,669

2,004

2,274

15,387

-13,141

-2,651

0
0
632

0
0
774

0
0
1,002

0
0
55

0
0
83

0
0
20

0
0
30

0
0
262

0
0
333

0
0
122

14,565
14,486

35,063
34,669

52,696
52,696

25
1,345

4,926
3,821

4,415
5,020

6,155
5,955

1,941
2,180

711
1,172

1,610
1,510

-554

-380

-1,002

-1,375

1,022

-625

170

-501

-794

-22

20,089

41,348

28,880

-741

4,691

1,379

2,444

14,886

-13,935

-2,673

0
0
787R
0
370R

FEDERAL AGENCY 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 change in System Open Market Account...

1. Sales, redemptions, and negative figures reduce holdings of the System Open Market
Account; all other figures increase such holdings.

Federal Reserve Banks
1.18

FEDERAL RESERVE BANKS

All

Condition and Federal Reserve Note Statements1

Millions of dollars

Account
Aug. 30

Sept. 6

Wednesday

End of month

1995

Sept. 13

Sept. 20

Sept. 27

July 31

Aug. 31

Sept. 30

Consolidated condition statement
ASSETS

1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4 To depository institutions
5 Other
6 Acceptances held under repurchase agreements
Federal agency obligations
7 Bought outright
8 Held under repurchase agreements

11,053
10,518
366

11,053
10,518
350

11,053
10,518
363

11,053
10,168
391

11,051
10,168
405

11,053
10,518
372

11,053
10,518
369

11,051
10,168
435

343
0
0

251
0
0

249
0
0

267
0
0

340
0
0

248
0
0

269
0
0

421
0
0

2,941
0

2,941
100

2,941
1,209

2,941
0

2,895
150

3,063
0

2,941
100

2,895
75

373,531

375,720

380,277

384,012

376,139

375,524

372,873

374,114

10 Bought outright2
11
Bills
12
Notes
13
Bonds
14 Held under repurchase agreements

373,531
183,154
147,804
42,573
0

372,665
182,289
147,804
42,573
3,055

372,102
181,526
147,904
42,673
8,175

370,992
180,416
147,904
42,673
13,020

369,652
179,076
147,904
42,673
6,487

375,524
185,148
146,698
43,679
0

369,818
179,441
147,804
42,573
3,055

367,669
177,093
147,904
42,673
6,445

15 Total loans and securities

376,815

379,012

384,676

387,220

379,524

378,835

376,183

377,505

4,839
1,105

8,858
1,108

5,532
1,111

5,918
1,112

5,594
1,112

1,867
1,096

3,929
1,107

3,978
1,114

22,920
8,721

21,366
9,208

21,378
9,435

21,391
9,996

21,405
9,599

23,508
9,875

21,473
8,948

21,653
9,814

436,336

441,473

444,066

447,250

438,858

437,124

433,580

435,717

386,263

9 Total U.S. Treasury securities

16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies3
19 All other4
20 Total assets
LIABILITIES

388,011

390,549

389,619

387,843

387,204

386,617

387,987

22 Total deposits

30,920

32,047

37,216

41,916

34,323

36,171

30,316

32,585

23
24
25
26

24,797
5,653
180
290

26,470
5,065
168
344

30,613
6,086
177
339

23,921
17,499
167
330

27,269
6,553
170
331

24,471
11,206
190
304

25,086
4,767
166
298

23,432
8,620
201
332

4,576
4,606

7,327
4,477

5,148
4,549

5,167
4,454

4,668
4,623

1,665
4,582

3,839
4,697

3,781
4,617

428,113

434,399

436,531

439,381

430,818

429,035

426,839

427,247

3,908
3,683
632

3,906
3,140
27

3,907
3,391
238

3,910
3,525
434

3,918
3,617
505

3,861
3,683
544

3,910
2,832
0

3,915
3,624
931

436,336

441,473

444,066

447,250

438,858

437,124

433,580

435,717

478,286

480,340

479,996

480,439

479,346

486,368

479,521

484,601

21 Federal Reserve notes

Depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other

27 Deferred credit items
28 Other liabilities and accrued dividends5
29 Total liabilities
CAPITAL ACCOUNTS

30 Capital paid in
31 Surplus
32 Other capital accounts
33 Total liabilities and capital accounts

MEMO

34 Marketable U.S. Treasury securities held in custody for
foreign and international accounts

Federal Reserve note statement
35 Federal Reserve notes outstanding (issued to Banks)
36
LESS: Held by Federal Reserve Banks
37
Federal Reserve notes, net
38
39
40
41

Collateral held against notes, net
Gold certificate account
Special drawing rights certificate account
Other eligible assets
U.S. Treasury and agency securities

42 Total collateral

470,304
82,294
388,011

470,192
79,644
390,549

470,948
81,329
389,619

471,742
83,898
387,843

472,233
85,029
387,204

469,711
83,094
386,617

470,405
82,418
387,987

472,874
86,611
386,263

11,053
10,518
0
366,440

11,053
10,518
0
368,978

11,053
10,518
0
368,048

11,053
10,168
0
366,623

11,051
10,168
0
365,985

11,053
10,518
0
365,046

11,053
10,518
0
366,417

11,051
10,168
0
365,044

388,011

390,549

389,619

387,843

387,204

386,617

387,987

386,263

1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly
statistical release. For ordering address, see inside front cover.
2. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged
with Federal Reserve Banks—and excludes securities sold and scheduled to be bought
back under matched sale-purchase transactions.

3. Valued monthly at market exchange rates.
4. Includes special investment account at the Federal Reserve Bank of Chicago in
Treasury bills maturing within ninety days.
5. Includes exchange-translation account reflecting the monthly revaluation at market
exchange rates of foreign exchange commitments.

A12
1.19

DomesticNonfinancialStatistics • December 1995
FEDERAL RESERVE BANKS

Maturity Distribution of Loan and Security Holding

Millions of dollars

Type of holding and maturity

1 Total loans
1

Wednesday

End of month

1995

Aug. 30

Sept. 6

Sept. 13

Sept. 20

Sept. 27

July 31

Aug. 31

Sept. 30

343

251

245

267

340

248

299

421
273
149

302
41

64
187

60
189

235
33

306
35

116
132

262
37

4 Total U.S. Treasury securities

373,531

375,720

380,277

384,012

376,139

375,524

369,818

367,669

Within fifteen days1
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

14,131
86,612
121,071
86,195
29,992
35,530

18,846
83,959
121,622
85,770
29,992
35,530

22,724
84,588
121,472
85,870
29,992
35,630

27,676
88,072
116,772
85,870
29,992
35,630

15,187
88,437
121,022
85,870
29,992
35,630

16,480
87,822
123,511
84,245
28,511
34,955

2,215
86,645
129,665
85,770
29,992
35,530

2,645
92,851
120,681
85,870
29,992
35,630

11 Total federal agency obligations

2,941

3,040

2,942

2,941

3,045

3,063

2,941

2,895

12
13
14
15
16
17

265
658
479
1,098
417
25

120
975
407
1,098
417
25

47
929
432
1,083
427
25

231
744
432
1,083
427
25

335
747
431
1,081
427
25

135
666
723
1,098
417
25

265
658
479
1,098
417
25

185
747
431
1,081
427
25

2 Within fifteen days
3 Sixteen days to ninety days

5
6
7
8
9
10

Within fifteen days'
Sixteen days to ninety days
Ninety-one days to one year
One year to five years
Five years to ten years
More than ten years

1. Holdings under repurchase agreements are classified as maturing within fifteen days
in accordance with maximum maturity of the agreements.

NOTE. Total acceptances data have been deleted from this table because data are no
longer available.

Monetary and Credit Aggregates
1.20

A13

AGGREGATE R E S E R V E S OF DEPOSITORY INSTITUTIONS A N D M O N E T A R Y BASE1
Billions of dollars, averages of daily figures
1995
1991
Dec.

1992
Dec.

1993
Dec.

1994
Dec.
Feb.

Mar.

Total reserves'
Nonborrowed reserves4
Nonborrowed reserves plus extended credit5
Required reserves
Monetary base6

June

July

Aug.

Sept.

57.76
57.61
57.61
56.88
430.69

57.35
57.08
57.08
56.39
429.76r

57.66
57.28
57.28
56.57
429.66r

57.52
57.23
57.23
56.53
430.86r

57.37
57.09
57.09
56.42
431.24

Seasonally adjusted

ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 2

1
2
3
4
5

May

Apr.

45.54
45.34
45.34
44.56
317.43

54.35
54.23
54.23
53.20
351.12

60.50
60.42
60.42
59.44
386.60

59.34
59.13
59.13
58.17
418.22

58.92
58.86
58.86
57.97
422.31

58.55
58.48
58.48
57.76
425.35

57.96
57.85
57.85
57.20
428.13

Not seasonally adjusted
6
7
8
9
10

Total reserves7
Nonborrowed reserves
Nonborrowed reserves plus extended credit5
Required reserves8
Monetary base9

46.98
46.78
46.78
46.00
321.07

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

57.72
57.66
57.66
56.78
419.25

57.62
57.55
57.55
56.83
423.27

58.93
58.82
58.82
58.18
428.74

56.82
56.68
56.68
55.95
429.29

57.13
56.85
56.85
56.16
430.26r

57.49
56.93
57.12
56.65
56.65
57.12
56.40
55.95
431.30r 431.08r

57.29
57.01
57.01
56.34
431.61

55.53
55.34
55.34
54.55
333.61
.98
.19

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

57.70
57.64
57.64
56.75
423.57
.95
.06

57.58
57.51
57.51
56.79
427.56
.79
.07

58.87
58.76
58.76
58.12
432.79
.75
.11

56.76
56.61
56.61
55.88
433.47
.88
.15

57.04
56.77
56.77
56.08
434.57r
.96
.27

57.39
57.02
57.02
56.30
435.56r
1.09
.37

56.82
56.54
56.54
55.83
435.59r
.99
.28

57.16
56.88
56.88
56.21
436.19
.95
.28

NOT ADJUSTED FOR
CHANGES IN RESERVE REQUIREMENTS 10

11
12
13
14
15
16
17

Total reserves"
Nonborrowed reserves
Nonborrowed reserves plus extended credit5
Required reserves
Monetary base12
Excess reserves13
Borrowings from the Federal Reserve

1. Latest monthly and biweekly figures are available from the Board's H.3 (502)
weekly statistical release. Historical data 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, DC 20551.
2. Figures reflect adjustments for discontinuities, or "breaks," associated with regulatory changes in reserve requirements. (See also table 1.10)
3. Seasonally adjusted, break-adjusted total reserves equal seasonally adjusted, breakadjusted required reserves (line 4) plus excess reserves (line 16).
4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, break-adjusted total reserves (line 1) less total borrowings of depository institutions from the Federal Reserve (line 17).
5. Extended credit consists of borrowing at the discount window under
the terms and conditions established for the extended credit program to help depository
institutions deal with sustained liquidity pressures. Because there is not the same need to
repay such borrowing promptly as with traditional short-term adjustment credit, the
money market effect of extended credit is similar to that of nonborrowed reserves.
6. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally
adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency
component of the money stock, plus (3) (for all quarterly reporters on the "Report of
Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly reporters
whose vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted
difference between current vault cash and the amount applied to satisfy current reserve
requirements.
7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus
excess reserves (line 16).

.21

8. To adjust required reserves for discontinuities that are due to regulatory changes in
reserve requirements, a multiplicative procedure is used to estimate what required
reserves would have been in past periods had current reserve requirements been in effect.
Break-adjusted required reserves include required reserves against transactions deposits
and nonpersonal time and savings deposits (but not reservable nondeposit liabilities).
9. The break-adjusted monetary base equals (1) break-adjusted total reserves (line 6),
plus (2) the (unadjusted) currency component of the money stock, plus (3) (for all
quarterly reporters on the "Report of Transaction Accounts, Other Deposits and Vault
Cash" and for all those weekly reporters whose vault cash exceeds their required
reserves) the break-adjusted difference between current vault cash and the amount applied
to satisfy current reserve requirements.
10. Reflects actual reserve requirements, including those on nondeposit liabilities, with
no adjustments to eliminate the effects of discontinuities associated with regulatory
changes in reserve requirements.
11. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy
reserve requirements.
12. The monetary base, not break-adjusted and not seasonally adjusted, consists of (1)
total reserves (line 11), plus (2) required clearing balances and adjustments to compensate
for float at Federal Reserve Banks, plus (3) the currency component of the money stock,
plus (4) (for all quarterly reporters on the "Report of Transaction Accounts, Other
Deposits and Vault Cash" and for all those weekly reporters whose vault cash exceeds
their required reserves) the difference between current vault cash and the amount applied
to satisfy current reserve requirements. Since the introduction of contemporaneous reserve
requirements in February 1984, currency and vault cash figures have been measured over
the computation periods ending on Mondays.
13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14).

A14
1.21

Domestic Financial Statistics • December 1995
M O N E Y STOCK, LIQUID ASSETS, A N D D E B T

MEASURES5

Billions of dollars, averages of daily figures

1995
Item

1991
Dec.

1992
Dec.

1993
Dec.

1994
Dec.
Juner

July'

Aug.

Sept.

Seasonally adjusted

1
2
3
4
5

Measures2
Ml
M2
M3
L
Debt

6
7
8
9

Ml components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6

897.3
3,457.9
4,176.0
4,989.8
11,179.9

1,024.4
3,515.3
4,182.9
5,059.3
11,719.6

1,128.6
3,583.6
4,242.3
5,145.8
12,341.5

1,148.0
3,616.8r
4,304.0r
5,269.8r
12,959.6

1,143.9
3,698.3
4,459.4
5,471.6
13,374.8

1,145.1
3,717.5
4,490.5
5,524.2
13,411.4

l,143.7 r
3,743.2r
4,519.1r
5,559.1
13,450.9

1,140.2
3,758.0
4,535.4
n.a.
n.a.

267.4
7.7
289.5
332.7

292.8
8.1
338.9
384.6

322.1
7.9
383.9
414.7

354.5
8.4
382.2
402.9

367.4
9.0
386.8
380.7

367.2
8.9
389.5
379.5

368.3
8.9
390.1
376.4

369.1
8.8
389.8
372.4

2,560.6
718.1

2,490.9
667.6

2,455.0
658.7

2,468.8r
687.2

2,554.4
761.2

2,572.4
773.0

2,599.5r
776.0r

2,617.8
777.5

Commercial banks
12 Savings deposits, including MMDAs
13 Small time deposits9
14 Large time deposits10, 11

665.6
602.5
333.3

754.7
508.1
286.7

785.8
468.6
271.2

752.3
502.6
296.6

728.1
562.4
318.5

730.7
566.7
323.7

739.5r
568.8
325.2'

746.7
569.7
327.4

Thrift institutions
15 Savings deposits, including MMDAs
16 Small time deposits9
17 Large time deposits10

375.6
464.1
83.3

428.9
361.1
67.1

429.8
316.5
61.6

391.9
318.3r
64.9

363.0
357.3
70.8

360.7
357.5
72.6

358.7r
358.0r
73.2

358.6
359.3
73.7

Money market mutual funds
18 General purpose and broker-dealer
19 Institution-only

374.2
180.0

356.9
200.2

360.1
198.1

389.0
180.8

426.2
205.6

442.0
212.4

455.9r
210.8

462.6
213.5

2,763.6
8,416.3

3,068.3
8,651.2

3,328.0
9,013.6

3,497.4
9,462.3r

3,602.0
9,772.9

3,614.4
9,797.0

3,620.0
9,830.9

n.a.
n.a.

Nontransaction components
10 In M27
11 In M3 only8

Debt components
20 Federal debt
21 Nonfederal debt

Not seasonally adjusted

22
23
24
25
26

Measures2
Ml
M2
M3
L
Debt

27
28
29
30

MI components
Currency3
Travelers checks4
Demand deposits5
Other checkable deposits6

916.0
3,472.7
4,189.4
5,014.2
11,176.9

1,046.0
3,533.6
4,201.4
5,088.9
11,720.2

1,153.7
3,606.1
4,266.1
5,180.3
12,333.7

1,173.7
3,640.4r
4,330. r
5,307.4r
12,951.6

1,139.3
3,693.8
4,453.1
5,459.9
13,309.0

1,144.1
3,717.0
4,483.8
5,510.7
13,356.5

l,137.3 r
3,736.2r
4,512.9r
5,548.1
13,389.1

1,136.2
3,747.9
4,523.0
n.a.
n.a.

269.9
7.4
302.4
336.3

295.0
7.8
354.4
388.9

324.8
7.6
401.8
419.4

357.6
8.1
400.3
407.6

368.2
9.2
382.6
379.3

369.0
9.5
388.7
376.8

369.0
9.5
386.6
372.2

369.2
9.3
388.2
369.5

2,556.6
716.7

2,487.7
667.7

2,452.5
660.0

2,466.7r
689.7

2,554.5
759.3

2,572.9
766.8

2,598.9r
116.1'

2,611.6
775.1

Commercial banks
33 Savings deposits, including MMDAs
34 Small time deposits9
35 Large time deposits10- "

664.0
601.9
332.6

752.9
507.8
286.2

784.3
468.2
270.8

751.1
502.2
296.3

730.2
562.0
320.0

732.6
567.5
322.3

740.8r
569.4
326.6r

746.8
570.2
328.6

Thrift institutions
36 Savings deposits, including MMDAs
37 Small time deposits9
38 Large time deposits10

374.8
463.7
83.1

427.9
360.9
67.0

429.0
316.2
61.5

391.2
318.1r
64.8

364.0
357.0
71.1

361.6
357.9
72.3

359.3r
358.3r
73.^

358.7
359.6
73.9

Money market mutual funds
39 General purpose and broker-dealer
40 Institution-only

372.2
180.8

355.1
201.7

358.3
200.0

387.1
183.1

423.9
199.2

438.9
206.6

452.6r
209.3

454.9
209.0

Repurchase agreements and Eurodollars
41 Overnight and continuing
42 Term

79.9
132.7

83.2
127.8

96.5
143.9

117.1
157.9

117.3
182.2

114.3
178.6

118.4
180.3r

121.4
176.8

2,765.0
8,411.9

3,069.8
8,650.4

3,329.5
9,004.2

3,499.0
9,452.7

3,579.3
9,729.7

3,588.8
9,767.7

3,602.2
9,786.9

Nontransaction components
31 In M2 7
32 In M3 only8

Debt components
43 Federal debt
44 Nonfederal debt
Footnotes appear on following page.

n.a.
n.a.

Monetary and Credit Aggregates

A15

NOTES TO TABLE 1.21
1. Latest monthly and weekly figures are available from the Board's H.6 (508)
weekly statistical release. Historical data 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:
Ml: (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 Ml is computed by summing currency, travelers checks, demand
deposits, and OCDs, each seasonally adjusted separately.
M2: Ml plus (1) overnight (and continuing contract) repurchase agreements (RPs)
issued by all depository institutions and overnight Eurodollars issued to U.S. residents by
foreign branches of U.S. banks worldwide, (2) savings (including MMDAs) and small
time deposits (time deposits—including retail RPs—in amounts of less than $100,000),
and (3) balances in both taxable and tax-exempt general-purpose and broker-dealer
money market funds. Excludes individual retirement accounts (IRAs) and Keogh balances
at depository institutions and money market funds. Also excludes all balances held by
U.S. commercial banks, money market funds (general purpose and broker-dealer), foreign
governments and commercial banks, and the U.S. government. Seasonally adjusted M2 is
computed by adjusting its non-Mi component as a whoie and then adding this result to
seasonally adjusted M1.
M3: M2 plus (1) large time deposits and term RP liabilities (in amounts of $100,000 or
more) issued by all depository institutions, (2) term Eurodollars held by U.S. residents at
foreign branches of U.S. banks worldwide and at all banking offices in the United
Kingdom and Canada, and (3) balances in both taxable and tax-exempt, institution-only
money market funds. Excludes amounts held by depository institutions, the U.S. government, money market funds, and foreign banks and official institutions. Also excluded is
the estimated amount of overnight RPs and Eurodollars held by institution-only money
market funds. Seasonally adjusted M3 is computed by adjusting its non-M2 component as
a whole and then adding this result to seasonally adjusted M2.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term Treasury
securities, commercial paper, and bankers acceptances, net of money market fund holdings of these assets. Seasonally adjusted L is computed by summing US. 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 governmentsponsored 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 funds accounts, are break-adjusted (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 NOW and ATS account balances at all depository institutions, credit
union share draft account balances, and demand deposits at thrift institutions.
7. Sum of (1) overnight RPs and overnight Eurodollars, (2) money market fund
balances (general purpose and broker-dealer), (3) savings deposits (including MMDAs),
and (4) small time deposits.
8. Sum of (1) large time deposits, (2) term RPs, (3) term Eurodollars of U.S. residents,
and (4) money market fund balances (institution-only), less (5) a consolidation adjustment
that represents the estimated amount of overnight RPs and Eurodollars held by institutiononly money market funds.
9. Small time deposits—including retail RPs—are those issued in amounts of less
than $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions
are subtracted from small time deposits.
10. Large time deposits are those issued in amounts of $100,000 or more, excluding
those booked at international banking facilities.
11. Large time deposits at commercial banks less those held by money market funds,
depository institutions, the U.S. government, and foreign banks and official institutions.

A16
1.22

DomesticNonfinancialStatistics • December 1995
DEPOSIT INTEREST RATES AND AMOUNTS OUTSTANDING

Commercial and BIF-insured saving banks1
1995

1993
Dec.

1994
Dec.
Jan.

Mar.

Feb.

Apr.

May

June

July

Aug.'

Sept.

Interest rates (annual effective yields)2
INSURED COMMERCIAL BANKS

1 Negotiable order of withdrawal accounts
2 Savings deposits3

3
4
5
6
7

Interest-bearing time deposits with balances of
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/l years
More than 2 vi years

1.86
2.46

1.96
2.91

1.98
2.98

2.01
3.09

2.00
3.14

1.95
3.17

1.96
3.20

1.94
3.19

1.91
3.15

1.93
3.12

1.93
3.14

2.65
2.91
3.13
3.55
4.29

3.81
4.44
5.12
5.74
6.30

3.96
4.67
5.39
6.00
6.47

4.19
4.83
5.57
6.12
6.52

4.24
4.97
5.60
6.12
6.45

4.28
4.94
5.60
6.05
6.37

4.25
4.93
5.49
5.83
6.11

4.19
4.81
5.27
5.53
5.79

4.17
4.77
5.18
5.38
5.62

4.10
4.77
5.15
5.39
5.63

4.10
4.76
5.14
5.32
5.60

1.87
2.63

1.95
2.88

1.99
2.91

2.04
2.95

1.99
2.94

1.99
2.93

2.00
2.95

1.98
2.97

1.96
2.97

1.98
2.95

1.98
2.96

2.70
3.02
3.31
3.66
4.62

3.80
4.89
5.52
6.09
6.43

3.98
5.13
5.75
6.29
6.68

4.17
5.33
5.94
6.37
6.75

4.21
5.37
5.94
6.32
6.68

4.18
5.38
5.87
6.25
6.59

4.24
5.31
5.83
6.08
6.32

4.24
5.22
5.61
5.78
5.98

4.28
5.16
5.47
5.62
5.82

4.34
5.12
5.45
5.60
5.78

4.29
5.08
5.35
5.51
5.73

BIF-INSURED SAVINGS BANKS 4

8 Negotiable order of withdrawal accounts
9 Savings deposits5

10
11
12
13
14

Interest-bearing time deposits with balances of
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 V5 years
More than 2 Vl years

Amounts outstanding (millions of dollars)
INSURED COMMERCIAL BANKS

15 Negotiable order of withdrawal accounts
16 Savings deposits3
17
Personal
18
Nonpersonal

19
20
21
22
23

Interest-bearing time deposits with balances of
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'/5 years
More than 2 vi years

24 IRA and Keogh plan deposits

305,223
766,413
597,838
168,575

303,724
734,519
578,459
156,060

291,355
723,295
569,619
153,676

290,188
714,955
564,877
150,078

292,811
713,440
564,086
149,354

286,987
698,963
550,674
148,289

274,281
714,989
560,563
154,426

274,573
718,393
563,795
154,599

271,777
723,302
567,624
155,678

266,715
733,011
572,916
160,096

252,223
743,305
585,501
157,804

29,455
110,069
146,565
141,223
181,528

32,375
95,901
161,831
162,486
190,897

32,154
96,895
163,939
168,515
190,215

31,777
98,248
169,103
176,877
191,383

31,623
95,583
176,657
183,275
194,722

31,530
94,368
179,625
189,652
194,426

31,472
93,188
184,560
194,963
192,542

32,140
91,999
187,185
198,541
195,024

32,950
91,347
186,716
201,761
194,500

30,722
89,896
187,141
203,466
199,944

29,761
91,322
187,505
204,376
200,336

143,985

143,428

143,900

145,040

145,959

146,679

146,842

148,894

148,878

149,320

148,886

11,151
80,115
77,035
3,079

11,317
70,642
67,673
2,969

11,127
71,639
68,760
2,878

10,950
69,982
67,144
2,837

11,218
68,595
65,692
2,902

11,005
67,453
64,204
3,248

11,019
67,322
64,484
2,838

11,354
67,185
63,966
3,219

11,262
66,706
63,524
3,182

11,104
66,776
63,483
3,293

11,393
69,669
66,374
3,294

2,793
12,946
17,426
16,546
20,464

2,166
11,793
18,753
17,842
21,600

2,041
12,084
19,336
20,460
21,888

2,086
11,953
19,979
21,870
22,275

1,943
11,707
20,277
22,648
22,446

1,780
11,245
21,051
23,445
22,671

1,885
11,449
20,956
24,014
22,819

1,567
11,025
21,702
24,658
22,935

1,784
11,131
22,157
25,141
22,930

1,873
11,183
22,488
25,296
22,780

1,735
11,233
24,779
27,784
23,301

19,356

19,325

19,802

20,099

20,221

20,388

20,236

20,499

20,568

20,531

21,789

BIF-INSURED SAVINGS BANKS 4

25 Negotiable order of withdrawal accounts
26 Savings deposits'
27
Personal
28
Nonpersonal

29
30
31
32
33

Interest-bearing time deposits with balances of
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'/5 years
More than 2 x/l years

34 IRA and Keogh plan accounts

1. BIF, Bank Insurance Fund. Data in this table also appear in the Board's H.6 (508)
Special Supplementary Table monthly statistical release. For ordering address, see inside
front cover. Estimates are based on data collected by the Federal Reserve System from a
stratified random sample of about 425 commercial banks and 75 savings banks on the last
day of each month. Data are not seasonally adjusted and include IRA and Keogh deposits
and foreign currency-denominated deposits. Data exclude retail repurchase agreements
and deposits held in U.S. branches and agencies of foreign banks.

2. As of October 31, 1994, interest rate data for NOW accounts and savings deposits
reflect a series break caused by a change in the survey used to collect these data.
3. Includes personal and nonpersonal money market deposits.
4. Includes both mutual and federal savings banks.

Monetary and Credit Aggregates
1.23

A17

BANK DEBITS AND DEPOSIT TURNOVER 1
Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates
1995
Bank group, or type of deposit
Feb.

Mar.

4 Other checkable deposits4
5 Savings deposits (including MMDAs)5

May

June

July

Seasonally adjusted

DEBITS

Demand deposits3
1 All insured banks
2 Major New York City banks
3 Other banks

Apr.

313,128.1
165,447.7
147,680.4

334,784.1
171,224.3
163,559.7

369,029.1
191,168.8
177,860.3

384,140.0
195,129.3
189,010.7

393,325.2
197,666.4
195,658.8

362,527.2
185,751.6
176,775.6

418,140.7
217,464.9
200,675.8

408,037.0
203,338.6
204,698.4

389,896.6
197,709.7
192,187.0

3,780.3
3,309.1

3,481.5
3,497.4

3,798.6
3,766.3

3,918.2
3,989.8

4,044.4
3,889.3

3,666.2
3,565.7

4,167.8
4,022.0

3,964.7
4,408.5

3,539.3
4,002.8

825.9
4,795.3
428.7

785.9
4,198.1
424.6

817.4
4,481.5
435.1

857.2
4,675.9
465.1

880.4
4,754.1
482.9

807.4
4,551.2
433.1

934.4
5,168.0
495.0

896.7
4,780.3
496.2

847.8
4,625.9
460.7

14.4
4.7

11.9
4.6

12.6
4.9

13.4
5.5

13.9
5.4

12.6
5.0

14.7
5.6

14.3
6.1

12.7
5.5

DEPOSIT TURNOVER

Demand deposits3
6 All insured banks
7 Major New York City banks
8 Other banks
9 Other checkable deposits4
10 Savings deposits (including MMDAs)5

Not seasonally adjusted

DEBITS

Demand deposits3
11 All insured banks
12 Major New York City banks
13 Other banks
14 Other checkable deposits4
15 Savings deposits (including MMDAs)5

313,344.9
165,595.0
147,749.9

334,899.2
171,283.5
163,615.7

369,121.8
191,226.1
177,895.7

355,792.9
181,697.8
174,095.1

412,196.9
209,255.5
202,941.4

357,561.2
180,169.1
177,392.1

407,765.3
207,259.8
200,505.5

420,396.4
209,349.5
211,046.9

389,072.0
196,873.1
192,198.9

3,783.6
3,310.0

3,481.7
3,498.3

3,795.6
3,764.4

3,609.9
3,611.3

4,083.5
3,989.3

3,874.2
3,727.1

4,004.2
3,981.9

4,078.9
4,516.3

3,472.0
4,070.5

826.1
4,803.5
428.8

786.1
4,197.9
424.8

818.2
4,490.3
435.3

812.4
4,347.5
439.5

946.3
5,145.1
513.9

796.3
4,459.5
434.1

927.6
5,095.1
502.6

936.0
5,037.0
517.8

846.7
4,658.7
460.6

14.4
4.7

11.9
4.6

12.6
4.9

12.3
5.0

14.0
5.6

13.0
5.2

14.3
5.6

14.8
6.2

12.7
5.6

DEPOSIT TURNOVER

Demand deposits3
16 All insured banks
17 Major New York City banks
18 Other banks
19 Other checkable deposits4
20 Savings deposits (including MMDAs)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, DC 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 (NOW)
accounts, were expanded to include telephone and preauthorized transfer accounts. This
change redefined OCDs for debits data to be consistent with OCDs for deposits data.
5. Money market deposit accounts.

A18
1.26

Domestic Financial Statistics • December 1995
A S S E T S A N D LIABILITIES OF C O M M E R C I A L B A N K S 1
Billions of dollars
Monthly averages
Account

1994r
Sept.

1995r
Mar.

Apr.

May

June

ALL COMMERCIAL
BANKING 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 credit2 .. .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security3
Other
Interbank loans4
Cash assets5
Other assets6

16 Total assets7
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 liabilities8

27 Total liabilities
28 Residual (assets less liabilities)9

Wednesday figures
1995
July

Aug.

Sept.

Sept. 6

Sept. 13

Sept. 20

Sept. 27

Seasonally adjusted

3,285.2
971.2
750.0
221.1
2,314.0
626.6
980.7
74.4
906.3
434.2
76.3
196.3
160.8
202.7
222.9

3,387.7
939.2
711.5
227.6
2,448.5
673.7
1,028.3
76.4
951.9
465.4
74.7
206.4
182.5
208.8
235.5

3,455.3
981.0
710.3
270.7
2,474.3
681.0
1,036.4
77.0
959.4
471.5
78.1
207.4
180.7
208.7
225.9

3,482.3
976.9
713.1
263.7
2,505.4
688.9
1,041.7
77.6
964.1
473.3
89.7
211.8
185.5
210.8
224.9

3,497.0
973.5
710.8
262.8
2,523.5
691.7
1,049.7
78.1
971.5
478.5
89.7
213.9
187.6
211.3
225.1

3,514.0
964.3
704.8
259.5
2,549.7
697.0
1,060.6
78.6
982.0
481.7
88.9
221.6
194.8
214.1
225.8

3,530.3
971.3
709.1
262.3
2,559.0
698.3
1,066.3
78.5
987.7
487.0
84.2
223.1
191.5
208.7
225.6

3,552.4
977.0
706.4
270.6
2,575.4
702.3
1,070.5
78.9
991.6
490.1
86.6
225.9
195.1
212.3
230.0

3,540.2
966.4
704.3
262.1
2,573.8
701.3
1,068.4
78.8
989.6
491.4
88.7
224.0
190.4
214.8
230.6

3,549.1
980.2
707.3
272.9
2,569.0
701.2
1,071.1
78.9
992.2
489.1
81.8
225.8
192.5
207.9
235.2

3,558.8
978.7
703.9
274.8
2,580.1
704.5
1,071.0
79.0
992.0
489.5
88.7
226.5
190.0
211.5
227.3

3,561.6
980.7
708.1
272.6
2,580.8
702.6
1,071.2
78.9
992.2
490.9
89.8
226.3
208.8
212.9
225.5

3,814.7

3,958.2

4,013.6

4,046.6

4,064.1

4,091.6

4,099.4

4,132.9

4,1193

4,128.0

4,130.8

4,151.9

2,517.6
803.2
1,714.4
347.4
1,367.0
580.1
160.5
419.6
211.4
178.1

2,546.5
793.3
1,753.2
382.3
1,370.9
654.7
186.3
468.4
241.7
189.8

2,554.7
788.6
1,766.1
388.6
1,377.5
682.7
186.1
496.6
234.8
218.0

2,567.3
785.3
1,782.0
392.9
1,389.2
688.8
187.6
501.2
239.8
213.4

2,584.5
781.2
1,803.3
395.9
1,407.4
676.6
187.5
489.0
244.8
211.1

2,608.2
793.4
1,814.9
400.8
1,414.1
691.9
201.0
490.9
236.4
202.2

2,614.3
784.8
1,829.5
407.3
1,422.3
672.6
196.5
476.1
248.0
205.4

2,627.8
782.3
1,845.5
414.0
1,431.6
676.8
200.3
476.5
254.0
215.3

2,627.5
787.4
1,840.1
411.6
1,428.5
653.5
194.3
459.2
248.0
213.5

2,617.9
776.1
1,841.8
412.7
1,429.1
670.1
200.3
469.7
258.1
224.0

2,628.8
788.1
1,840.7
411.8
1,428.9
679.0
193.1
485.9
256.6
215.7

2,633.9
780.4
1,853.5
416.7
1,436.9
700.7
215.9
484.7
254.3
210.7

3,4872

3,632.7

3,690.1

3,709.4

3,717.0

3,738.8

3,7403

3,773.9

3,742.5

3,770.1

3,780.1

3,799.5

327.6

325.5

323.6

337.2

347.1

352.8

359.0

359.1

376.8

358.0

350.7

352.3

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 credit2 . . .
Commercial and industrial
Real estate
Revolving home equity
Other
Consumer
Security3
Other
Interbank loans4
Cash assets5
Other assets6

44 Total assets7
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 liabilities8

55 Total liabilities
56 Residual (assets less liabilities)9
Footnotes appear onfollowingpage.

3,283.3
969.4
752.4
217.0
2,313.9
623.1
982.0
74.7
907.3
435.1
74.5
199.2
158.0
204.1
223.4

3,388.4
946.9
716.6
230.3
2,441.5
676.9
1,023.4
75.7
947.8
461.9
75.9
203.3
180.6
203.1
231.0

3,456.7
987.6
714.6
273.0
2,469.1
685.4
1,032.2
76.4
955.8
468.3
78.9
204.3
180.3
205.0
222.1

3,474.1
978.2
712.2
265.9
2,495.9
692.0
1,040.1
77.5
962.6
471.8
83.5
208.5
179.9
208.3
224.1

3,493.4
974.3
710.5
263.8
2,519.1
693.7
1,049.4
78.2
971.2
475.9
85.6
214.5
184.6
209.4
223.7

3,500.8
959.8
700.9
258.9
2,541.0
696.3
1,059.9
78.6
981.3
479.3
83.5
222.0
190.7
211.0
225.4

3,520.3
968.9
709.9
259.0
2,551.4
694.9
1,065.5
78.7
986.8
486.6
81.1
223.3
186.8
201.1
227.4

3,547.5
972.6
708.1
264.4
2,574.9
698.5
1,071.8
79.2
992.5
491.2
85.0
228.4
191.4
213.8
230.5

3,540.0
970.4
708.5
261.8
2,569.6
696.3
1,068.9
78.9
990.0
491.3
84.8
228.3
191.9
228.9
233.9

3,547.6
977.6
710.1
267.4
2,570.0
695.8
1,073.3
79.2
994.1
489.9
82.7
228.3
191.1
211.5
235.3

3,554.8
971.1
705.8
265.3
2,583.8
702.4
1,071.8
79.3
992.5
491.5
89.9
228.3
183.1
208.9
225.3

3,548.1
970.5
707.5
263.0
2,577.6
698.6
1,072.1
79.4
992.7
492.9
85.9
228.1
200.1
208.0
226.1

3,811.7

3,946.5

4,007.4

4,029.4

4,054.2

4,071.2

4,078.8

4,126.2

4,137.7

4,128.4

4,115.1

4,125.4

2,514.4
800.4
1,714.0
347.3
1,366.6
590.0
158.6
431.4
205.9
177.8

2,536.8
781.2
1,755.7
383.5
1,372.2
643.5
182.6
460.9
245.1
189.3

2,557.7
793.5
1,764.2
387.2
1,377.0
663.9
182.5
481.5
237.0
212.9

2,558.3
774.1
1,784.1
397.1
1,387.0
674.8
182.1
492.6
245.2
211.5

2,581.6
775.6
1,806.0
398.4
1,407.6
683.6
187.4
496.1
238.9
206.4

2,599.1
784.1
1,815.0
400.1
1,414.9
692.8
197.4
495.5
233.9
199.5

2,600.2
768.8
1,831.5
407.9
1,423.6
681.5
194.3
487.2
243.2
204.7

2,624.2
779.5
1,844.7
413.9
1,430.8
686.7
198.3
488.5
247.5
214.9

2,657.8
812.4
1,845.4
412.1
1,433.4
675.4
200.7
474.7
236.3
213.8

2,627.2
781.8
1,845.4
413.7
1,431.7
677.4
200.0
477.4
246.4
223.4

2,606.6
770.0
1,836.7
411.6
1,425.1
697.1
188.4
508.7
247.2
213.1

2,602.3
756.6
1,845.7
415.9
1,429.8
697.5
205.5
492.0
261.9
211.3

3,488.0

3,614.7

3,671.6

3,689.7

3,710.5

3,725.4

3,729.6

3,7733

3,7833

3,774.4

3,764.0

3,773.0

323.7

331.8

335.8

339.7

343.7

345.8

349.2

352.9

354.4

354.0

351.1

352.4

Commercial Banking Institutions
1.26

A19

A S S E T S A N D LIABILITIES OF C O M M E R C I A L BANKS1—Continued
Billions of dollars
Wednesday figures

Monthly averages
Account

1994r
Sept.

1995r
Mar.

Apr.

May

June

DOMESTICALLY CHARTERED
COMMERCIAL BANKS

57
58
59
60
61
6?
63
64
65
66
67
68
69
7ft
71

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
Security3
Other
Interbank loans4
Cash assets5
Other assets6

72 Total assets7
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 liabilities8

83 Total liabilities
84 Residual (assets less liabilities)9

1995
July

Aug.

Sept.

Sept. 6

Sept. 13

Sept. 20

Sept. 27

Seasonally adjusted

2,930.0
882.7
681.8
200.9
2,047.3
469.2
938.7
74.4
864.3
434.2
43.6
161.7
137.2
180.7
168.9

3,022.8
853.1
648.1
205.0
2,169.7
502.3
988.2
76.3
911.9
465.4
46.0
167.9
157.2
182.1
176.1

3,057.2
862.9
645.3
217.6
2,194.3
510.5
997.3
77.0
920.4
471.5
45.5
169.5
157.8
182.5
173.4

3,081.5
860.4
646.8
213.6
2,221.0
516.6
1,003.3
77.6
925.7
473.3
54.0
173.7
160.6
182.6
170.6

3,097.8
858.8
646.7
212.1
2,239.1
518.9
1,011.4
78.1
933.3
478.5
55.4
174.7
164.3
184.4
170.3

3,109.1
849.4
640.9
208.5
2,259.7
523.4
1,022.7
78.6
944.1
481.7
52.1
179.8
172.3
187.3
172.9

3,123.0
852.6
642.6
210.0
2,270.3
524.4
1,029.3
78.5
950.8
487.0
50.4
179.2
164.6
182.5
172.5

3,139.0
857.4
642.7
214.7
2,281.6
526.7
1,034.0
78.9
955.1
490.1
50.8
180.1
167.6
187.0
174.7

3,129.3
851.1
641.3
209.8
2,278.3
525.4
1,031.9
78.8
953.2
491.4
49.9
179.5
164.9
190.0
174.3

3,133.1
857.2
641.5
215.7
2,275.9
525.0
1,034.5
78.9
955.6
489.1
47.4
180.0
167.0
181.9
175.2

3,143.2
857.7
640.2
217.5
2,285.5
527.8
1,034.5
79.0
955.5
489.5
53.7
180.0
166.6
186.4
173.6

3,150.1
862.4
645.9
216.5
2,287.7
528.1
1,034.9
78.9
955.9
490.9
53.5
180.3
173.4
188.4
173.2

3,360.0

3,481.8

3,514.0

3,538.4

3,560.0

3,584.5

3,585.8

3,611.7

3,601.8

3,600.6

3,612.9

3,6283

2,367.7
793.2
1,574.5
209.8
1,364.7
476.0
143.5
332.5
60.2
133.5

2,395.8
782.9
1,612.9
242.4
1,370.5
540.6
167.4
373.2
85.3
139.7

2,398.6
778.7
1,619.9
244.4
1,375.5
565.1
165.3
399.9
82.0
151.9

2,409.5
775.9
1,633.6
247.1
1,386.6
569.6
164.9
404.8
84.0
147.1

2,424.1
771.9
1,652.2
247.6
1,404.6
563.2
168.2
395.0
90.2
145.4

2,447.2
784.0
1,663.3
247.9
1,415.4
572.7
181.5
391.2
82.1
137.8

2,448.0
775.4
1,672.6
248.9
1,423.7
555.6
178.4
377.2
91.0
138.6

2,457.1
773.3
1,683.8
252.6
1,431.2
561.6
182.2
379.5
93.4
146.2

2,458.2
778.6
1,679.7
251.1
1,428.5
536.2
174.2
362.0
87.8
145.2

2,449.2
767.2
1,682.0
253.3
1,428.7
549.6
179.8
369.8
97.2
149.3

2,461.1
779.3
1,681.7
252.7
1,429.0
567.7
176.5
391.2
92.0
148.2

2,458.5
771.0
1,687.6
252.2
1,435.3
586.0
199.5
386.5
97.0
143.8

3,037.5

3,161.3

3,197.7

3,210.2

3,223.0

3,239.8

3,233.1

3,2583

3,227.4

3,245-3

3,269.0

3,2853

322.5

320.4

316.2

328.2

337.0

344.7

352.7

353.4

374.4

355.3

343.9

342.9

Not seasonally adjusted

85
86
87
88
89
90
91
92
93
94
95
96
97
98
99

100 Total assets7
101
10?
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 liabilities8

111 Total liabilities
112 Residual (assets less liabilities)'
Footnotes appear on following page.

2,930.7
881.6
684.7
196.9
2,049.1
466.1
939.7
74.7
865.0
435.1
43.7
164.4
133.8
180.9
170.3

3,022.0
859.8
652.5
207.4
2,162.2
505.0
983.3
75.7
907.7
461.9
46.7
165.3
156.6
177.0
172.9

3,061.4
870.8
650.7
220.1
2,190.6
514.8
993.5
76.4
917.1
468.3
46.8
167.3
157.7
179.6
170.9

3,079.9
862.9
647.7
215.2
2,217.0
520.4
1,001.8
77.5
924.3
471.8
51.9
171.1
155.4
181.4
169.9

3,098.7
861.8
647.6
214.3
2,236.9
520.8
1,011.2
78.2
933.1
475.9
54.2
174.7
162.7
182.0
169.6

3,099.3
845.8
637.9
207.9
2,253.6
522.3
1,022.1
78.6
943.5
479.3
50.0
179.8
167.8
184.0
173.3

3,114.8
850.4
643.6
206.8
2,264.4
520.6
1,028.4
78.7
949.7
486.6
49.3
179.6
161.1
174.2
173.4

3,137.3
854.3
645.0
209.4
2,283.0
523.4
1,035.0
79.2
955.8
491.2
50.9
182.5
163.0
187.1
176.2

3,132.2
854.5
645.6
208.9
2,277.7
520.9
1,032.1
78.9
953.2
491.3
50.0
183.4
168.2
202.8
177.7

3,134.1
856.0
645.1
211.0
2,278.0
520.7
1,036.5
79.2
957.3
489.9
48.6
182.4
164.6
184.3
176.1

3,142.0
852.6
642.8
209.8
2,289.4
525.9
1,034.9
79.3
955.7
491.5
55.3
181.8
158.9
182.3
173.1

3,140.0
854.1
645.7
208.4
2,285.9
524.6
1,035.6
79.4
956.2
492.9
51.0
181.7
161.2
181.5
174.9

3,358.7

3,472.0

3,513.0

3,529.7

3,556.1

3,567.8

3,566.7

3,606.8

3,624.1

3,602.1

3,5993

3,600.7

2,365.1
789.7
1,575.4
210.7
1,364.7
485.2
141.2
344.1
56.8
133.3

2,384.3
771.3
1,613.0
241.2
1,371.8
531.2
163.8
367.5
89.7
140.1

2,402.9
784.0
1,618.8
243.7
1,375.2
546.6
162.8
383.8
84.1
148.7

2,398.5
765.2
1,633.3
248.7
1,384.6
560.0
161.6
398.5
91.8
144.9

2,418.3
766.5
1,651.8
247.2
1,404.6
568.3
167.8
400.5
89.6
141.6

2,438.3
774.7
1,663.6
248.0
1,415.6
570.9
177.4
393.5
81.7
136.7

2,434.3
759.5
1,674.8
250.7
1,424.2
562.5
176.4
386.1
89.1
137.4

2,454.4
769.9
1,684.5
253.6
1,430.9
570.8
179.6
391.2
88.7
145.9

2,489.6
803.2
1,686.4
252.8
1,433.6
556.9
180.1
376.8
84.0
144.9

2,459.3
772.4
1,686.9
255.2
1,431.7
555.1
177.8
377.3
91.0
148.5

2,440.1
760.4
1,679.7
253.9
1,425.8
582.0
171.3
410.7
85.6
146.2

2,426.8
746.2
1,680.7
251.9
1,428.8
586.4
189.3
397.1
96.4
144.4

3,040.4

3,145-3

3,182-3

3,195.2

3,217.8

3,227.6

3,2233

3,259.8

3,275.5

3,253.9

3,254.1

318.4

326.7

330.7

334.5

338.3

340.2

343.4

347.0

348.6

348.2

345.2

346.6

A20

DomesticNonfinancialStatistics • December 1995

NOTES TO TABLE 1.26
1. Covers the following types of institutions in the fifty states and the District of
Columbia: domestically chartered commercial banks that submit a weekly report of
condition (large domestic); other domestically chartered commercial banks (small domestic); branches and agencies of foreign banks; New York State investment companies, and
Edge Act and agreement corporations (foreign-related institutions). Excludes international banking facilities. Data are Wednesday values, or pro rata averages of Wednesday
values. Large domestic banks constitute a universe; data for small domestic banks and
foreign-related institutions are estimates based on weekly samples and on quarter-end
condition reports. Data are adjusted for breaks caused by reclassifications of assets and
liabilities.
2. Excludes federal funds sold to, reverse repurchase agreements with, and loans to
commercial banks in the United States.
3. Consists of reserve repurchase agreements with broker-dealers and loans to purchase and carry securities.

4. Consists of federal funds sold to, reverse repurchase agreements with, and loans to
commercial banks in the United States.
5. Includes vault cash, cash items in process of collection, demand balances due from
depository institutions in the United States, balances due from Federal Reserve Banks,
and other cash assets.
6. Excludes the due-from position with related foreign offices, which is included in
lines 25, 53, 81, and 109.
7. Excludes unearned income, reserves for losses on loans and leases, and reserves for
transfer risk. Loans are reported gross of these items.
8. Excludes the due-to position with related foreign offices, which is included in lines
25, 53, 81, and 109.
9. This balancing item is not intended as a measure of equity capital for use in capital
adequacy analysis.

Weekly Reporting Commercial Banks
1.27

A21

ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS
Millions of dollars, Wednesday figures
1995
Account
Sept. 13

Sept. 20

Sept. 27

Aug. 30

Sept. 6

103,019
300,076
20,070
280,007
101,816

102,961
297,480
18,970
278,510
102,167

124,827
298,857
20,964
277,893
102,169

114,432
297,171
21,641
275,530
101,803

114,874
294,945
19,806
275,139
103,327

115,730
296,670
20,331
276,339
104,771

44,555
73,576
59,523
123,003
1,635
62,619
19,950
5,106
14,844
42,669
58,748

44,115
74,511
59,564
122,471
1,698
62,904
19,970
5,107
14,862
42,934
57,869

44,201
72,950
59,192
124,709
1,600
62,690
20,065
5,215
14,850
42,625
60,419

45,051
71,715
58,958
124,435
1,475
62,833
19,926
5,196
14,729
42,907
60,127

43,900
70,771
59,056
126,387
1,484
63,015
19,970
5,193
14,777
43,045
61,888

43,506
69,702
58,605
125,268
1,429
62,873
19,992
5,216
14,776
42,882
60,965

42,937
70,568
58,063
124,192
1,487
62,687
19,936
5,189
14,747
42,751
60,017

101,260
63,707
31,402
6,152
1,243,132
344,199r
1,557r
342,643r
339,882r
2,761
493,964r
48,439r
445,524r
244,990r
65,295
41,219
3,575
20,501
14,745
6,74 l r
10,972
1,329
24,985
35,912r
1,643
34,322
1,207,167
138,285

102,327
68,325
28,777
5,226
1,241,618
342,357r
l,579r
340,778r
338,198r
2,580
493,596r
48,523r
445,073r
246,683r
64,078
41,032
3,032
20,014
14,953
6,718
11,014
1,052
25,214
35,953r
1,638
34,319
1,205,660
138,633

92,357
61,257
26,182
4,918
1,244,203
340,536r
l,516r
339,020r
336,429r
2,591
494,678r
48,516r
446,162r
248,719r
64,489
41,713
2,715
20,062
15,108
6,72 l r
11,015
1,078
25,728
36,132r
1,679
34,204
1,208,319
135,285

98,693
66,042
27,503
5,147
1,247,173
340,085r
l,556r
338,529r
336,022'
2,506
495,409r
48,557r
446,852'
250,541'
66,053
42,539
2,858
20,656
15,896
6,741'
10,991
1,086
24,150
36,221'
1,646
34,185
1,211,342
135,246'

101,769
66,164
29,466
6,140
1,249,317
341,598
1,423
340,175
337,635
2,540
496,236
47,988
448,248
249,537
65,629
41,747
2,814
21,068
14,552
6,718
10,939
1,243
26,332
36,534
1,625
34,279
1,213,412
138,997

102,962
67,357
28,139
7,467
1,248,518
341,561
1,496
340,065
337,530
2,536
499,311
47,738
451,573
247,711
65,349
41,629
2,986
20,734
14,764
6,712
10,946
994
24,384
36,785
1,671
34,292
1,212,554
138,741

104,314
66,766
32,080
5,469
1,256,708
345,621
1,568
344,053
341,539
2,514
497,033
47,797
449,236
249,014
64,880
38,015
2,860
24,005
17,843
6,731
10,941
1,020
26,684
36,941
1,669
34,346
1,220,693
139,383

102,266
68,694
28,741
4,830
1,256,662
344,060
1,561
342,500
340,027
2,473
498,112
47,882
450,230
249,581
65,477
38,516
2,987
23,974
16,877
6,726
10,935
1,125
26,498
37,271
1,672
34,194
1,220,795
138,834

1,969,287

1,975,430

1,961,526

l,970,430r

2,002,297

1,992,248

1,999,478

1,998,487

Aug. 2

Aug. 9

Aug. 16

115,646
296,1 l l r
20,549
275,561
99,016

104,701
298,123
21,793
276,330
99,020

108,438
297,369
19,296
278,073
100,420

44,834
71,671
60,041
120,869
1,532
62,357
19,718
5,072
14,646
42,639
56,981

44,808
72,606
59,896
119,751
1,465
62,490
19,688
5,077
14,611
42,801
55,796

40 Lease-financing receivables
41 LESS: Unearned income
47
Loan and lease reserve5
43 Other loans and leases, net
44 All other assets

112,113
75,898
30,104
6,112
1,244,874
345,781r
l,559r
344,222r
341,494r
2,728
491,873r
48,152r
443,721r
245,022r
66,312
42,520
3,246
20,546
14,627
6,692r
10,970
1,295
26,625
35,676r
1,623
34,156
1,209,095
138,873

45 Total assets6

1,992,706

Aug. 23

ASSETS

1 Cash and balances due from depository institutions
2 U.S. Treasury and government securities
Trading account
4 Investment account
Mortgage-backed securities'
5
All others, by maturity
One year or less
7
One year through five years
8
More than five years
9
10 Trading account
11 Investment account
12
State and local government, by maturity
N
One year or less
14
More than one year
15
Other bonds, corporate stocks, and securities
16 Other trading account assets
17 Federal funds sold2
18 To commercial banks in the United States
19 To nonbank brokers and dealers in securities
?0
?1 Other loans and leases, gross
7?
Commercial and industrial
?3
Bankers acceptances and commercial paper
74
All other
75
U.S. addressees
76
Non-U.S. addressees
71
?8
Revolving, home equity
?9
All other
30
To individuals for personal expenditures
31
To depository and financial institutions
3?
Commercial banks in the United States
33
Banks in foreign countries
34
Nonbank depository and otherfinancialinstitutions
35 For purchasing and carrying securities
36 To finance agricultural production
37 To states and political subdivisions
38 To foreign governments and official institutions
39

Footnotes appear on the following page.

A22
1.27

DomesticNonfinancialStatistics • December 1995
ASSETS A N D LIABILITIES OF L A R G E WEEKLY REPORTING C O M M E R C I A L

BANKS—Continued

Millions of dollars, Wednesday figures
1995
Account
Aug. 9

Aug. 16

Aug. 23

Aug. 30

Sept. 6

Sept. 13

Sept. 20

Sept. 27

1,172,115
290,921"
247,109'
43,812R
7,309R
1,745
18,728
4,556
714
10,759
109,745
771,449
748,555R
22,894'
18,708R
2,365
1,502
319

1,183,515
300,950
254,897'
46,052'
7,944'
2,431
21,114
4,719
605
9,240
109,236
773,329
750,520'
22,810'
18,529'
2,338
1,644
299

1,159,680'
284,479'
241,404'
43,075'
7,887'
1,501
17,467
4,954
633
10,633
104,792
770,409'
747,380'
23,029'
18,792'
2,320
1,618
300

1,164,187
289,972
247,413'
42,559'
8,226'
1,523
17,994
5,113
702
9,000
104,213
770,002
747,201'
22,800'
18,584'
2,339
1,580
298

1,202,963
315,471
266,474
48,997
7,955
1,798
23,487
4,873
924
9,961
109,468
778,023
755,011
23,012
18,835
2,247
1,631
300

1,184,986
300,159
254,786
45,373
7,999
2,425
19,406
4,755
892
9,895
106,876
777,951
754,773
23,179
18,929
2,276
1,648
325

1,176,596
301,366
249,801
51,565
9,447
3,188
20,711
4,915
759
12,545
102,951
772,280
749,369
22,910
18,705
2,274
1,593
338

1,167,484
297,980
246,800
51,180
8,930
1,844
20,709
4,719
852
14,126
97,980
771,524
748,543
22,981
18,835
2,299
1,532
315

426,958
700
27,523
398,734
194,269R

407,964
0
12,319
395,645
202,255

405,582
0
5,286'
400,297'
199,744

403,622
0
5,559'
398,063'
211,288

403,999
50
3,804
400,145
215,347'

400,955
0
1,006
399,948
209,522

397,584
0
2,489
395,095
220,068

419,214
0
30,689
388,524
213,874

421,017
0
26,005
395,013
220,922

1,805,446

1,782,334

1,788,841

l,774,590 r

l,783,533 r

1,813,440

1,802,638

1,809,684

1,809,423

187,260R

186,953

186,590

186,936'

186,897

188,857

189,611

189,794

189,064

1,655,548
109,451
1,520
282
1,238
25,465
72,892R

1,657,340
109,200
1,520
282
1,238
24,865
79,760

1,654,959
110,893
1,509
282
1,227
24,603
79,190

1,656,137
110,036'
1,498
281
1,216
25,503
88,391

1,659,473
110,390
1,485
281
1,204
25,692
91,245

1,666,466
111,243
1,476
281
1,195
25,733
78,667

1,666,052
112,190
1,465
281
1,184
25,539
85,794

1,676,455
110,707
1,453
281
1,172
25,759
80,873

1,672,579
108,281
1,443
281
1,162
25,951
91,136

Aug. 2
LIABILITIES
46 Deposits
1,184,220
47
303,931
Demand deposits
48
Individuals, partnerships, and corporations
256,333R
49
Other holders
47,598R
50
8,864R
States and political subdivisions
1,967
51
U.S. government
52
Depository institutions in the United States
20,515
53
4,910
Banks in foreign countries
54
Foreign governments and official institutions
645
10,697
55
Certified and officers' checks
56
112,158
Transaction balances other than demand deposits4
57
768,130
Nontransaction balances
745,531R
58
Individuals, partnerships, and corporations
59
22,599R
Other holders
60
18,453R
States and political subdivisions
2,391
61
U.S. government
62
Depository institutions in the United States
1,456
Foreign governments, official institutions, and banks . .
298
63
64 Liabilities for borrowed money5
65
Borrowings from Federal Reserve Banks
66
Treasury tax and loan notes
67
Other liabilities for borrowed money 6
68 Other liabilities (including subordinated notes and debentures) . . .
69 Total liabilities
70 Residual (total assets less total liabilities)7
71
72
73
74
75
76
77

MEMO
Total loans and leases, gross, adjusted, plus securities8
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates9
Commercial and industrial
Other
Foreign branch credit extended to U.S. residents10
Net owed to related institutions abroad

1. Includes certificates of participation, issued or guaranteed by agencies of the U.S.
government, in pools of residential mortgages.
2. Includes securities purchased under agreements to resell.
3. Includes allocated transfer risk reserve.
4. Includes negotiable order of withdrawal (NOWs) and automatic transfer service
(ATS) accounts, and telephone and preauthorized transfers of savings deposits.
5. Includes borrowings only from other than directly related institutions.
6. Includes federal funds purchased and securities sold under agreements to repurchase.
7. This balancing item is not intended as a measure of equity capital for use in
capital-adequacy analysis.

8. Excludes loans to and federal funds transactions with commercial banks in the
United States.
9. Affiliates include a bank's own foreign branches, nonconsolidated nonbank affiliates
of the bank, the bank's holding company (if not a bank), and nonconsolidated nonbank
subsidiaries of the holding company.
10. Credit extended by foreign branches of domestically chartered weekly reporting
banks to nonbank U.S. residents. Consists mainly of commercial and industrial loans, but
includes an unknown amount of credit extended to other than nonfinancial businesses.

Weekly Reporting Commercial Banks A23
1.28

LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS
Assets and Liabilities
Millions of dollars, Wednesday figures
1995
Account
Aug. 2

Aug. 9

Aug. 16

Aug. 23

Aug. 30

Sept. 6

Sept. 13

Sept. 20

Sept. 27

ASSETS
1 Cash and balances due from depository

institutions
2 U.S. Treasury and government agency
secunties
3 Other securities
4 Federal funds sold'
5 To commercial banks in the United States
6 To others2
7 Other loans and leases, gross
8 Commercial and industrial
9
Bankers acceptances and commercial paper .
10
All other
U.S. addressees
11
Non-U.S. addressees
1?
13 Loans secured by real estate
14 Loans to depository and financial
institutions
15
Commercial banks in the United States
16
Banks in foreign countries
Nonbank financial institutions
17
18 For purchasing and carrying securities
19 To foreign governments and official
institutions
70 All other
21 Other assets (claims on nonrelated parties)
22 Total assets3

16,821

16,737

17,059

17,178

17,337

16,504

17,156

16,850

16,941

41,957
30,681
30,651
7,612
23,039
176,796
113,292r
3,864
109,428r
104,508r
4,920
23,127

43,016
30,696
30,782
7,173
23,609
176,443
113,045r
3,864
109,182r
104,294'
4,887
23,070

44,472
32,787
28,212
7,329
20,883
175,877
113,622r
3,943
109,679r
104,822r
4,857
22,994

44,466
31,211
29,482
8,498
20,984
176,035
113,145r
3,594
109,55 l r
104,738'
4,813
22,959

44,921
32,125
32,716
11,093
21,622
176,350
113,340r
3,512
109,828rr
104,924
4,904
22,905

41,726
32,074
31,618
7,616
24,002
177,517
113,916
3,508
110,408
105,498
4,910
22,775

43,212
34,459
32,223
9,185
23,038
178,154
113,766
3,469
110,297
105,387
4,910
22,777

41,854
33,823
31,029
8,226
22,803
180,123
114,723
3,667
111,056
106,101
4,954
22,811

41,450
33,534
37,903
15,333
22,570
180,667
114,193
3,703
110,490
105,442
5,048
22,803

28,527
4,613
2,038
21,876
5,5 ll r

28,659
4,724
2,206
21,729
5,566r

28,419
4,536
1,909
21,974
5,106r

28,767
4,224
1,898
22,645
5,110r

28,286
4,116
1,974
22,196
4,842r

28,834
4,141
2,144
22,549
5,680

29,051
3,912
2,201
22,938
6,048

29,601
3,758
2,277
23,566
6,540

29,689
3,863
2,355
23,471
7,304

951
4,04 r
38,328

850
3,940r
38,988

517
3,915r
39,288

858
3,898r
40,014

876
4,576r
40,230

858
4,090
41,351

961
4,164
43,941

892
4,167
38,145

872
4,354
37,778

364,303

363,991

363,919

370,409

373,932

370,787

378,199

368,468

374,477

109,900
3,706
3,010
696
106,194
71,365
34,829

107,641
3,680
2,922
759
103,961
69,875
34,086

105,930
3,806
2,932
874
102,124
69,618
32,506

110,779
3,769
3,071
698
107,010
72,947
34,063

110,414r
4,484
3,012
1,472
105,930
73,348
32,581

109,310
3,818
3,134
684
105,492
73,572
31,919

108,448
3,964
3,074
890
104,485
73,237
31,248

107,077
3,992
3,048
944
103,085
72,023
31,061

112,108
4,515
3,449
1,066
107,593
75,201
32,392

86,276
43,777
9,035
34,742
42,498
6,165
36,333
49,929

85,223
42,936
7,970
34,966
42,287
6,320
35,968r
51,303

79,618
37,990
5,838
32,152
41,629r
5,502
36,127
53,010

84,048
41,085
6,067
35,018
42,963
5,910
37,053
52,886

82,841
40,698
5,605
35,092
42,143
5,461
36,683
53,965

82,242
41,679
8,621
33,058
40,564
5,372
35,192
53,474

84,412
43,938
8,946
34,992
40,474
5,694
34,780
58,204

80,464
43,902
7,644
36,257
36,562
4,812
31,750
51,257

76,784
40,378
6,611
33,767
36,406
4,697
31,709
50,905

364,303

363,991

363,919

370,409

373,932

370,787

378,199

368,468

374,477

267,860
89,129

269,040
92,494

269,483
99,137

268,473
90,674

270,901
96,458

271,177
95,763

274,950
98,079

274,845
103,026

274,358
108,476

LIABILITIES

73 Deposits or credit balances owed to other
than directly related institutions
?4 Demand deposits4
7.5 Individuals, partnerships, and corporations . . . .
76 Other
71 Nontransaction accounts
78 Individuals, partnerships, and corporations . . . .
79 Other
30 Borrowings from other than directly
related institutions
31 Federal funds purchased
37 From commercial banks in the United States . .
33 From others
34 Other liabilities for borrowed money
35
To commercial banks in the United States
36 To others
37 Other liabilities to nonrelated parties
38 Total liabilities6
MEMO

39 Total loans (gross) and securities, adjusted7
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 "due from" position,
includes net due from 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 "due to" position,
includes net owed to related institutions abroad.
7. Excludes loans to and federal funds transactions with commercial banks in the
United States.

A24
1.32

DomesticNonfinancialStatistics • December 1995
COMMERCIAL PAPER AND BANKERS DOLLAR ACCEPTANCES OUTSTANDING
Millions of dollars, end of period
Year ending December

1995

Item
1990

1991

1992

1993

1994

Mar.

Apr.

May

June

July

Aug.

Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers

562,656

528,832

545,619

555,075

595,382

633,324

651,128

650,580

648,819

657,938

660,719

Financial companies1
2 Dealer-placed paper2, total
3 Directly placed paper1, total

214,706
200,036

212,999
182,463

226,456
171,605

218,947
180,389

223,038
207,701

243,949
218,269

252,846
219,281

258,006
216,879

251,555
218,005

262,695
215,473

261,904
215,361

147,914

133,370

147,558

155,739

164,643

171,106

179,001

175,695

179,259

179,770

183,454

4 Nonfinancial companies

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 Banks6
Foreign correspondents
Others

By basis
11 Imports into United States
12 Exports from United States
13 All other

54,771

43,770

38,194

32,348

29,835

9,017
7,930
1,087

11,017
9,347
1,670

10,555
9,097
1,458

12,421
10,707
1,714

11,783
10,462
1,321

918
44,836

1,739
31,014

1,276
26,364

725
19,202

410
17,642

13,095
12,703
28,973

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 allfinancial-companypaper sold by dealers in the open market.
3. As reported byfinancialcompanies 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.

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.

Financial Markets
1.33

PRIME RATE CHARGED BY BANKS

A25

Short-Term Business Loans'

Percent per year

Date of change

Period

Rate

1992—Jan.
July

1
2

6.50
6.00

1994—Mar.
Apr.
May
Aug.
Nov.

24
19
17
16
15

6.25
6.75
7.25
7.75
8.50

1995—Feb.
July

1
7

9.00
8.75

Average
rate

1992
1993
1994

6.25
6.00
7.15

1992—Jan
Feb
Mar
Apr.
May
June
July
Aug
Sept
Oct
Nov
Dec

6.50
6.50
6.50
6.50
6.50
6.50
6.02
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

Period

Average
rate

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

1994—Jan
Feb
Mar.
Apr.
May
June
July
Aug

6.00
6.00
6.06
6.45
6.99
7.25
7.25
7.51

Period

Average
rate

1994—Sept
Oct
Nov
Dec

7.75
7.75
8.15
8.50

1995—Jan
Feb
Mar.
Apr
May
June
July
Aug
Sept
Oct

8.50
9.00
9.00
9.00
9.00
9.00
8.75r
8.75
8.75
8.75

recent Call 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,

A26
1.35

DomesticNonfinancialStatistics • December 1995
INTEREST RATES

Money and Capital Markets

Percent per year; figures are averages of business day data unless otherwise noted

1995
Item

1992

1993

1995, week ending

1994
June

July

Aug.

Sept.

Sept. 1

Sept. 8

Sept. 15

Sept. 22

Sept. 29

MONEY MARKET INSTRUMENTS
1 Federal funds' ,2 ' 3
2 Discount window borrowing2'4

3.52
3.25

3.02
3.00

4.21
3.60

6.00
5.25

5.85
5.25

5.74
5.25

5.80
5.25

5.71
5.25

5.77
5.25

5.73
5.25

5.78
5.25

5.80
5.25

3
4
5

Commercial papei'3'5'6
1-month
3-month
6-month

3.71
3.75
3.80

3.17
3.22
3.30

4.43
4.66
4.93

6.05
5.94
5.79

5.87
5.79
5.68

5.85
5.82
5.75

5.82
5.74
5.66

5.84
5.79
5.73

5.82
5.76
5.70

5.81
5.72
5.63

5.80
5.70
5.60

5.85
5.76
5.70

6
7
8

Finance paper, directly placed3'5-7
1-month
3-month
6-month

3.62
3.65
3.63

3.12
3.16
3.15

4.33
4.53
4.56

5.92
5.73
5.47

5.74
5.60
5.39

5.72
5.64
5.51

5.71
5.58
5.45

5.73
5.63
5.51

5.73
5.58
5.48

5.71
5.58
5.44

5.69
5.54
5.42

5.72
5.60
5.47

9
10

Bankers acceptances3'5'8
3-month
6-month

3.62
3.67

3.13
3.21

4.56
4.83

5.80
5.65

5.66
5.56

5.68
5.62

5.66
5.58

5.67
5.62

5.66
5.60

5.64
5.56

5.62
5.54

5.70
5.63

11
12
13

Certificates of deposit, secondary marked'9
1-month
3-month
6-month

3.64
3.68
3.76

3.11
3.17
3.28

4.38
4.63
4.96

5.97
5.90
5.80

5.80
5.77
5.73

5.77
5.77
5.79

5.74
5.73
5.73

5.76
5.75
5.77

5.75
5.75
5.74

5.73
5.71
5.71

5.72
5.70
5.69

5.76
5.78
5.79

3.70

3.18

4.63

5.89

5.79

5.74

5.76

5.74

5.69

5.78

3.43
3.54
3.71

3.00
3.12
3.29

4.25
4.64
5.02

5.47
5.42
5.33

5.42
5.37
5.28

5.40
5.41
5.43

5.28
5.30
5.31

5.31
5.32
5.34

5.33
5.32
5.32

5.31
5.29
5.29

5.22
5.25
5.26

5.26
5.35
5.37

3.45
3.57
3.75

3.02
3.14
3.33

4.29
4.66
5.02

5.50
5.46
5.38

5.47
5.41
5.38

5.41
5.40
5.55

5.26
5.28
5.21

5.34
5.34
n.a.

5.30
5.30
n.a.

5.34
5.33
n.a.

5.25
5.22
5.21

5.14
5.27
n.a.

3.89
4.77
5.30
6.19
6.63
7.01
n.a.
7.67

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

5.64
5.72
5.80
5.93
6.05
6.17
6.59
6.57

5.59
5.78
5.89
6.01
6.20
6.28
6.74
6.72

5.75
5.98
6.10
6.24
6.41
6.49
6.92
6.86

5.62
5.81
5.89
6.00
6.13
6.20
6.65
6.55

5.66
5.86
5.96
6.08
6.23
6.31
6.74
6.68

5.63
5.80
5.88
5.99
6.13
6.20
6.65
6.59

5.59
5.76
5.84
5.96
6.08
6.15
6.61
6.51

5.57
5.79
5.87
5.98
6.12
6.17
6.64
6.53

5.69
5.89
5.97
6.08
6.20
6.26
6.70
6.57

7.52

6.45

7.41

6.59

6.71

6.90

6.63

6.73

6.63

6.59

6.62

6.68

6.09
6.48
6.44

5.38
5.83
5.60

5.77
6.17
6.18

5.62
5.89
5.84

5.68
5.91
5.92

5.83
5.95
6.06

5.71
5.90
5.91

5.90
5.93
5.98

5.70
5.90
5.90

5.65
5.85
5.83

5.60
5.85
5.91

5.70
5.98
6.00

8.55

7.54

8.26

7.54

7.66

7.81

7.56

7.66

7.58

7.54

7.56

7.58

8.14
8.46
8.62
8.98
8.52

7.22
7.40
7.58
7.93
7.46

7.97
8.15
8.28
8.63
8.29

7.30
7.43
7.53
7.90
7.60

7.41
7.54
7.65
8.04
7.72

7.57
7.69
7.79
8.19
7.84

7.32
7.45
7.56
7.93
7.55

7.41
7.53
7.64
8.04
7.60

7.33
7.45
7.57
7.95
7.58

7.29
7.41
7.53
7.91
7.48

7.31
7.44
7.56
7.93
7.58

7.33
7.47
7.58
7.95
7.49

2.99

2.78

2.82

2.55

2.50

2.49

2.42

2.48

2.46

2.42

2.39

2.41

14 Eurodollar deposits, 3-month 3 ' 10

18
19
20

U.S. Treasury bills
Secondary market3'5
3-month
6-month
1-year
Auction average 3 ' 5 '"
3-month
6-month
1-year

21
22
23
24
25
26
27
28

Constant maturities12
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year

15
16
17

U.S. TREASURY NOTES AND BONDS

Composite
29 More than 10 years (long-term)
STATE AND LOCAL NOTES AND BONDS
Moody's series'3
30 Aaa
31 Baa
32 Bond Buyer series' 4
CORPORATE BONDS
33 Seasoned issues, all industries15
Rating group
34
35
36
37
38

Aa
A
Baa
A-rated. recently offered utility bonds16

MEMO
Dividend-price ratio17
39 Common stocks

1. The daily effective federal funds rate is a weighted average of rates on trades
through New York brokers.
2. Weekly figures are averages of seven calendar days ending on Wednesday of the
current week; monthly figures include each calendar day in the month.
3. Annualized using a 360-day year for bank interest.
4. Rate for the Federal Reserve Bank of New York.
5. Quoted on a discount basis.
6. An average of offering rates on commercial paper placed by several leading dealers
for firms whose bond rating is AA or the equivalent.
7. An average of offering rates on paper directly placed by finance companies.
8. Representative closing yields for acceptances of the highest-rated money center
banks.
9. An average of dealer offering rates on nationally traded certificates of deposit.
10. Bid rates for Eurodollar deposits at 11:00 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; Moody's Investors Service.
14. State and local government general obligation bonds maturing in twenty years are
used in compiling this index. The twenty-bond index has a rating roughly equivalent to
Moodys' A1 rating. Based on Thursday figures.
15. Daily figures from Moody's Investors Service. Based on yields to maturity on
selected long-term bonds.
16. Compilation of the Federal Reserve. This series is an estimate of the yield on
recently offered, A-rated utility bonds with a thirty-year maturity and five years of call
protection. Weekly data are based on Friday quotations.
17. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks
in the price index.
NOTE. Some of the 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
1.36

STOCK MARKET

All

Selected Statistics
1995

Indicator

1992

1993

1994
Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Prices and trading volume (averages of daily figures)
Common stock prices (indexes)
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
3
Transportation
4
Utility
5
Finance

229.00
284.26
201.02
99.48
179.29

249.71
300.10
242.68
114.55
216.55

254.16
315.32
247.17
104.96
209.75

253.56
319.93
230.25
100.58
201.05

261.86
328.98
237.29
103.87
211.76

266.81
337.96
252.37
102.08
213.29

274.38
347.69
254.36
104.70
219.38

281.81
357.01
254.70
106.02
228.45

289.52
366.75
256.80
108.12
236.26

298.18
379.13
279.15
109.59
240.49

300.05
379.79
285.63
111.06
245.27

310.41
390.42
295.54
114.67
260.72

6 Standard & Poor's Corporation
(1941-43 = 10)'

415.75

451.63

460.42

465.25

481.92

493.20

507.91

523.83

539.35

557.37

559.11

578.77

7 American Stock Exchange
(Aug. 31, 1973 = 50)2

391.28

438.77

449.49

436.09

446.37

456.06

471.54

487.03

492.60

513.25

526.86

547.64

202,558
14,171

263,374
18,188

290,652
17,951

326,652
18,829

333,020
18,424

338,733
17,905

331,184
19,404

341,905
19,266

345,547
24,622

363,780
23,283

309,879
21,825

352,184
25,422

Volume of trading (thousands of shares)
8 New York Stock Exchange
9 American Stock Exchange

Customer financing (millions of dollars, end-of-period balances)
10 Margin credit at broker-dealers

43,990

60,310

61,160

64,380

59,800

60,270

62,520

64,070

66,340

67,600

71,440

77,076

Free credit balances at brokers4
11 Margin accounts5
12 Cash accounts

8,970
22,510

12,360
27,715

14,095
28,870

13,225
26,440

12,380
25,860

12,745
26,680

12,440
26,670

13,403
27,464

13,710
29,860

13,830
28,600

13,900
29,190

14,806
29,796

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

Jan. 3, 1974
50
50
50

credit is collateralized by securities. Margin requirements on securities other than options
are the difference between the market value (100 percent) and the maximum loan value of
collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, 1934;
Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; and
Regulation X, effective Nov. 1, 1971.
On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T
the initial margin required for writing options on securities, setting it at 30 percent of the
current market value of the stock underlying the option. On Sept. 30, 1985, the Board
changed the required initial margin, allowing it to be the same as the option maintenance
margin required by the appropriate exchange or self-regulatory organization; such maintenance margin rules must be approved by the Securities and Exchange Commission.
Effective Jan. 31, 1986, the SEC approved new maintenance margin rules, permitting
margins to be the price of the option plus 15 percent of the market value of the stock
underlying the option.
Effective June 8, 1988, margins were set to be the price of the option plus 20 percent of
the market value of the stock underlying the option (or 15 percent in the case of
stock-index options).

A28
1.38

Domestic Financial Statistics • December 1995
FEDERAL FISCAL AND FINANCING OPERATIONS
Millions of dollars
Calendar year

Fiscal 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 Other 2
MEMO
13 Treasury operating balance (level, end of
period)
14
Federal Reserve Banks
15
Tax and loan accounts

1994

1995
May

June

July

Aug.

Sept.

1,153,226
841,292
311,934
1,408,532
1,141,945
266,587
-255,306
-300,653
45,347

1,257,45 l r
922,425r
335,026
l,460,553r
l,181,181r
279,372
-203,370
258,756r
55,654

1,350,576
999,496
351,080
1,514,389
1,225,724
288,665
-163,813
-226,228
62,415

165,392
126,170
39,222
115,673
90,628
25,045
49,720
35,542
14,178

90,405
61,027
29,378
129,958
103,184
26,773
-39,553
-42,157
2,604

147,868
115,998
31,870
135,054
120,236
14,818
12,814
-4,237
17,051

92,749
65,788
26,961
106,328
80,931
25,397
-13,579
-15,143
1,564

96,560
69,265
27,295
130,411
104,135
26,276
-33,851
-34,870
1,019

143,219
112,510
30,709
135,933
105,098
30,836
7,286
7,412
-126

248,594
6,283
429

184,696'
16,564
1,842'

171,288
-2,007
-5,468

-27,638
-19,972
-2,110

44,740
11,841
22,578

8,491
-34,312
12,250

10,627
11,635
15,523

16,071
30,776
12,996

-6,618
-19,820
19,152

52,506
17,289
35,217

35,942
6,848
29,094

37,949
8,620
29,329

38,069
8,241
29,828

26,228
4,646
21,582

60,540
20,977
39,563

48,905
11,206
37,700

18,129
4,767
13,363

37,949
8,620
29,329

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

Apr.

gold; net gain or loss for U.S. currency valuation adjustment; net gain or loss for IMF
loan-valuation adjustment; and profit on sale of gold.
SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts
and Outlays of the U.S. Government; and U.S. Office of Management and Budget, Budget
of the U.S. Government.

Federal Finance
1.39

A29

U.S. BUDGET RECEIPTS AND OUTLAYS 1
Millions of dollars
Calendar year

Fiscal year
1994

1993

Source or type
1994r

1995

1995
H2

July

Aug.

Sept.

RECEIPTS
1 All sources
2 Individual income taxes, net
3
Withheld
4
Presidential Election Campaign Fund
5
Nonwithheld
6
Refunds
Corporation income taxes
7
Gross receipts
8
Refunds
9 Social insurance taxes and contributions, net . . .
10
Employment taxes and contributions2
11
Self-employment taxes and contributions .
12
Unemployment insurance
13
Other net receipts4
14
15
16
17

Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts5

1,257,453

1,350,576

582,038

652,234

625,557

710,542

92,749

96,560

143,219

543,055
459,699
70
160,047
76,761

590,157
499,898
69
175,815
85,624

262,073
228,423
2
41,768
8,115

275,052
225,387
63
117,937
68,325

273,474
240,062
10
42,031
9,207

307,498
251,398
58
132,006
75,958

42,819
41,532
6
3,094
1,812

44,122
41,631
1
4,146
1,657

60,909
36,295
1
24,743
2,551

154,205
13,820
461,475
428,810
24,433
28,004
4,661

174,422
17,334
484,474
451,046
27,127
28,878
4,550

68,266
6,514
206,176
192,749
4,335
11,010
2,417

80,536
6,933
248,301
228,714
20,762
17,301
2,284

78,392
7,331
220,141
206,613
4,135
11,177
2,349

92,132
10,399
261,837
228,663
23,429
18,001
2,267

4,476
1,079
36,498
34,514
186
1,636
349

3,284
782
39,804
34,914
135
4,454
436

33,719
730
39,902
39,304
2,910
235
364

55,225
20,099
15,225
21,988

57,485
19,300
14,764
27,306

25,994
10,215
6,617
9,227

26,444
9,500
8,197
11,170

30,062
11,042
7,071
13,305

27,452
8,847
7,424
15,749

5,074
1,603
1,037
2,320

4,757
1,794
1,500
2,081

5,706
1,634
1,289
789

1,460,553

1,514,389

727,685

710,620

752,150r

760,824

106,328

130,411

135,933

23,882
1,877
1,668
13
2,116
-462

26,040
1,479
1,612
969
1,915
-102

-2,592
3,359
909

2,490
3,719
1,043

OUTLAYS

18 All types
19
20
21
22
23
24

National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture

281,563
17,083
16,227
5,219
21,064
15,057

272,179
16,448
17,563
5,146
23,328
9,763

146,672
10,186
8,880
1,663
11,221
7,516

133,844
5,800
8,502
2,237
10,111
7,451

141,876
1 l,889 r
7,603r
2,923r
11,91 l r
7,623r

135,931
4,727
8,611
2,358
10,273
4,039

18,069
517
1,355
547
1,811
-482

25
26
27
28

Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services

-5,122
38,134
10,454

-18,740
38,555
11,000

-1,490
19,570
4,288

-4,962
16,739
4,571

—4,270r
21,835r
6,283r

-13,936
18,192
4,858

-733
3,324
1,191

46,307

52,706

26,753

19,262

27,446r

25,738

2,869

5,785

4,802

29 Health
30 Social security and Medicare
31 Income security

106,836
464,312
214,036

114,760
495,701
220,214

52,958
223,735
102,380

53,195
232,777
109,080

54,147r
236,817
101,806r

58,759
251,975
117,639

8,777
40,015
15,310

10,422
42,790
16,919

9,401
42,605
19,591

32
33
34
35
36

37,642
15,238
11,316
202,957
-37,772

37,935
16,255
13,856
232,175
-44,455

19,852
7,400
6,531
99,914
-20,344

16,686
7,718
5,084
99,844
-17,308

19,761r
1,15V
7,356r
109,435
—20,066r

19,267
8,062
5,797
116,170
-17,632

1,591
1,664
421
20,245
-10,163

3,267
1,400
1,464
20,619
-3,022

4,517
1,335
1,385
18,929
-5,796

Veterans benefits and services
Administration of justice
General government
Net interest6
Undistributed offsetting receipts7

1. Functional details do not sum to total outlays for calendar year data because
revisions to monthly totals have not been distributed among functions. Fiscal year total for
outlays does not correspond to calendar year data because revisions from the Budget have
not been fully distributed across months.
2. Old-age, disability, and hospital insurance, and railroad retirement accounts.
3. Old-age, disability, and hospital insurance.
4. Federal employee retirement contributions and civil service retirement and
disability fund.

5. Deposits of earnings by Federal Reserve Banks and other miscellaneous receipts.
6. Includes interest received by trust funds.
7. Rents and royalties for the outer continental shelf, U.S. government contributions for
employee retirement, and certain asset sales.
SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of Receipts
and Outlays of the U.S. Government; and U.S. Office of Management and Budget, Budget
of the U.S. Government, Fiscal Year 1996.

A30

DomesticNonfinancialStatistics • December 1995

1.40

FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION
Billions of dollars, end of month

1993

1994

1995

Item
Sept. 30

Dec. 31

Mar. 31

June 30

Sept. 30

Dec. 31

Mar. 31

June 30

Sept. 30

1 Federal debt outstanding

4,436

4,562

4,602

4,673

4,721

4,827

4,891

4,978

5,001

2 Public debt securities
3
Held by public
4
Held by agencies

4,412
3,295
1,117

4,536
3,382
1,154

4,576
3,434
1,142

4,646
3,443
1,203

4,693
3,480
1,213

4,800
3,543
1,257

4,864
3,610
1,255

4,951
3,635
1,317

4,974
n.a.
n.a.

25
25
0

27
27
0

26
26
0

28
27
0

29
29
0

27
27
0

27
26
0

27
27
0

27
n.a.
n.a.

5 Agency securities
6
Held by public
7
Held by agencies
8 Debt subject to statutory limit
9 Public debt securities
10 Other debt1

4,316

4,446

4,491

4,559

4,605

4,711

4,775

4,861

4,885

4,315
0

4,445
0

4,491
0

4,559
0

4,605
0

4,711
0

4,774
0

4,861
0

4,885
0

4,900

MEMO

11 Statutory debt limit

1. Consists of guaranteed debt of U.S. Treasury and other federal agencies, specified
participation certificates, notes to international lending organizations, and District of
Columbia stadium bonds.

1.41

GROSS PUBLIC DEBT OF U.S. TREASURY

SOURCES. U.S. Department of the Treasury, Monthly Statement of the Public Debt of
the United States and Treasury Bulletin.

Types and Ownership

Billions of dollars, end of period

1994
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 and local government series
Foreign issues2
Government
Public
Savings bonds and notes
Government account series3
Non-interest-bearing

By holder 4
15 U.S. Treasury and other federal agencies and trust funds
16 Federal Reserve Banks
17 Private investors
18
Commercial banks
19
Money market funds
20
Insurance companies
21
Other companies
22
State and local treasuries
Individuals
23
Savings bonds
24
Other securities
25
Foreign and international5
26
Other miscellaneous investors6

1991

1993

1995

1994
Q4

3,801.7

4,177.0

4,535.7

4,800.2

4,864.1

4,951.4

4,974.0

3,798.9
2,471.6
590.4
1,430.8
435.5
1,327.2
159.7
41.9
41.9
.0
135.9
959.2
2.8

4,173.9
2,754.1
657.7
1,608.9
472.5
1,419.8
153.5
37.4
37.4
.0
155.0
1,043.5
3.1

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

4,860.5
3,227.3
756.5
1,938.2
517.7
1,633.2
122.9
41.8
41.8
.0
178.8
1,259.2
3.6

4,947.8
3,252.6
748.3
1,974.7
514.7
1,695.2
121.2
41.4
41.4
.0
180.1
1,322.0
3.6

4,950.6
3,260.5
742.5
1,9f (0 3
522.6
1,690.2
113.4
41.0
41.0
.0
181.2
1,324.3
23.3

968.7
281.8
2,563.2
232.5
80.0
181.8
150.8
485.1

1,047.8
302.5
2,839.9
294.4
79.7
197.5
192.5
476.7

1,153.5
334.2
3,047.7
322.2
80.8
234.5
213.0
508.9

1,257.1
374.1
3,168.0
290.6
67.6
242.8
226.5
443.3

1,254.7
369.3
3,239.1
303.5
67.7
259.0
230.3
415.2

1,316.6
389.0
3,244.6
305.0
58.7
260.0
227.7
415.0

138.1
125.8
491.7
677.4

157.3
131.9
549.7
760.2

171.9
137.9
623.0
755.4

180.5
152.5
688.6
875.6

181.4
161.4
729.6
891.0

182.6
161.6
783.7
850.4

1. Includes (not shown separately) securities issued to the Rural Electrification Administration, depository bonds, retirement plan bonds, and individual retirement bonds.
2. Nonmarketable series denominated in dollars, and series denominated in foreign
currency held by foreigners.
3. Held almost entirely by U.S. Treasury and other federal agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust funds are
actual holdings; data for other groups are Treasury estimates.

1992

n a.

5. Consists of investments of foreign balances and international accounts in the United
States.
6. Includes savings and loan associations, nonprofit institutions, credit unions, mutual
savings banks, corporate pension trust funds, dealers and brokers, certain U.S. Treasury
deposit accounts, and federally sponsored agencies.
SOURCES. U.S. Treasury Department, data by type of security, Monthly Statement of the
Public Debt of the United States; data by holder, Treasury Bulletin.

Federal Finance
1.42

A31

Transactions1

U.S. GOVERNMENT SECURITIES DEALERS
Millions of dollars, daily averages
1995

1995, week ending

Item
June

July

Aug.

Aug. 2

Aug. 9

Aug. 16

Aug. 23

Aug. 30

Sept. 6

Sept. 13

Sept. 20

Sept. 27

OUTRIGHT TRANSACTIONS2

By type of security
1 U.S. Treasury bills
Coupon securities, by maturity
2
Five years or less
3
More than five years
4 Federal agency
5 Mortgage-backed
By type of counterparty
With interdealer broker
U.S. Treasury
Federal agency
Mortgage-backed
With other
9
U.S. Treasury
10
Federal agency
Mortgage-backed
11
6
7
8

47,751

42,521

44,812r

38,841

35,175

52,740

46,277

46,234 r

50,858

46,628

48,928

50,634

98,618
55,441
22,595
31,425

88,585
48,238
21,442
29,364

88,513
51,000
21,039
27,588

90,852
51,120
20,578
23,017

83,099
57,784
19,585
39,828

103,772
62,429
20,150
32,581

84,489
36,884
21,165
21,232

83,590
47,257
23,049
18,769

79,347
48,983
22,997
26,438

74,783
45,900
22,975
46,352

87,213
52,648
24,819
23,911

118,160
49,971
27,798
23,504

120,661
638
10,912

105,382
673
10,315

107,723
757
8,587

105,599
556
8,003

101,375
708
11,741

126,137
587
10,116

99,012
1,057
6,300

106,013
835
6,339

103,750
374
9,023

100,114
769
16,930

110,626
749
9,008

130,628
657
10,174

81,150
21,957
20,513

73,961
20,770
19,049

76,60 f
20,282
19,001

75,214
20,022
15,014

74,683
18,878
28,087

92,804
19,563
22,465

68,637
20,108
14,932

71,068r
22,213
12,431

75,438
22,623
17,415

67,198
22,206
29,422

78,164
24,070
14,904

88,137
27,141
13,329

916

493

764

434

304

786

725

1,240

1,424

1,177

800

887

1,118
12,639
0
0

1,328
15,494
0
0

1,553
10,107
0
0

2,973
13,914
0
0

2,440
16,211
0
0

2,009
14,983
0
0

1,779
16,563
0
0

2,347
16,948
0
0

FUTURES TRANSACTIONS3

By type of deliverable security
12 U.S. Treasury bills
Coupon securities, by maturity
13
Five years or less
14
More than five years
15 Federal agency
16 Mortgage-backed

2,799
17,667
0
0

1,773
13,585
0
0

1,747
13,206
0
0

1,437
13,377
0
0

2,489
2,872
0
666

2,197
4,116
0
1,597

2,293
4,363
0
1,211

OPTIONS TRANSACTIONS4

By type of underlying security
17 U.S. Treasury bills
Coupon securities, by maturity
18
Five years or less
19
More than five years
20 Federal agency
21 Mortgage-backed

2,653
4,319
0
1,201

2,806
4,265
0
1,117

2,257
4,019
0
1,123

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 "whenissued" securities that settle on the issue date of offering. Transactions for immediate delivery
of mortgage-backed agency securities include purchases and sales for which delivery is scheduled
in thirty business days or less. Stripped securities are reported at market value by maturity of
coupon or corpus.

n.a.
2,602
4,838
0
507

0
1,975
3,148
0
1,429

n.a.
1,588
4,374
0
767

0
1,044
4,425
0
1,353

n.a.
1,699
4,120
0
609

0
1,850
4,273
0
710

Forward transactions are agreements made in the over-the-counter market that specify
delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days. Forward
contracts for mortgage-backed agency securities are included when the time to delivery is
more than thirty business days.
3. Futures transactions are standardized agreements arranged on an exchange. All
futures transactions are included regardless of time to delivery.
4. Options transactions are purchases or sales of put and call options, whether arranged
on an organized exchange or in the over-the-counter market, and include options on
futures contracts on U.S. Treasury and federal agency securities.
NOTE, "n.a." indicates that data are not published because of insufficient activity.
Major changes in the report form filed by primary dealers induced a break in the dealer
data series as of the week ending July 6, 1994.

A32
1.43

DomesticNonfinancialStatistics • December 1995
U.S. GOVERNMENT SECURITIES DEALERS

Positions and Financing1

Millions of dollars
1995
June

1995, week ending
Aug.

July

Aug. 2

Aug. 9

Aug. 16

Aug. 23

Aug. 30

Sept. 6

Sept. 13

Sept. 20

Positions2
NET OUTRIGHT POSITIONS 3

1
2
3
4
5

By type of security
U.S. Treasury bills
Coupon securities, by maturity
Five years or less
More than five years
Federal agency
Mortgage-backed

634

8,454

5,044

10,058

9,258

-148

6,177

1,492

18,803

11,173

8,738

4,291
-14,742
23,438
31,381

2,934
-17,954
20,134
32,714

778
-17,786
19,128
30,040

303
-19,950
17,556
32,934

3,777
-18,482
20,083
30,972

-5,491
-17,555
20,270
29,475

3,933
-18,223
16,917
29,005

169
-16,364
19,133
29,738

6,781
-17,106
23,026
31,054

7,447
-15,742
21,239
31,607

2,771
-16,475
20,380
33,770

-7,706

-5,615

-3,539

-4,927

-4,605

-3,177

-2,509

-3,453

-3,656

-3,569

-997

2,020
-7,797
0
0

1,913
-1,271
0
0

2,329
-1,283
0
0

2,483
323
0
0

2,315
-1,659
0
0

2,707
-224
0
0

2,610
-496

1,831
-2,677
0
0

990
-5,033
0
0

1,086
-8,322
0
0

535
-11,675
0
0

NET FUTURES POSITIONS 4

6
7
8
9
10

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

NET OPTIONS POSITIONS

By type of deliverable security
11 U.S. Treasury bills
Coupon securities, by maturity
12
Five years or less
13
More than five years
14 Federal agency
15 Mortgage-backed

555
-2,537
0
2,816

846
-3,260
0
1,802

2,239
-2,883
0
1,567

n.a.
2,607
-2,458
0
2,045

n.a.
1,641
-2,068
0
1,228

n.a.
2,118
-2,652
0
1,137

2,537
-3,876
0
1,790

2,514
-3,057
0
2,136

2,536
-2,895
0
465

2,085
-4,441
0
1,195

2,355
-1,833
0
1,294

n.a.

Financing5
Reverse repurchase agreements
16 Overnight and continuing
17 Term

237,727
396,685

222,594
419,813

222,035
406,450

230,011
435,650

224,967
462,297

235,306
373,898

216,262
388,247

211,239
396,801

208,646
379,952

213,107
420,523

230,402
437,529

Securities borrowed
18 Overnight and continuing
19 Term

158,449
55,058

156,460
59,037

156,456
62,392

153,449
65,165

152,405
64,843

158,770
59,662

158,343
60,762

156,079
63,666

164,046
61,276

167,213
61,460

167,421
68,088

3,127
102

2,740
81

2,063
112

2,391
135

2,158
120

2,052
120

1,954
99

1,930
91

2,514
180

2,654
113

2,517
45

Repurchase agreements
22 Overnight and continuing
23 Term

490,204
341,771

479,826
357,225

476,058
344,449

488,088
371,468

484,479
399,306

486,452
313,290

461,895
328,838

464,861
333,828

497,826
308,141

501,084
353,552

510,364
380,314

Securities loaned
24 Overnight and continuing
25 Term

4,971
2,003

5,717
2,132

4,631
2,102

5,552
2,095

4,427
2,160

4,444
2,099

4,260
2,070

4,820
2,067

6,793
2,194

6,669
2,534

6,350
2,530

Securities pledged
26 Overnight and continuing . .
27 Term

33,240
4,251

30,162
3,909

28,712
3,062

29,601
3,981

27,661
3,815

27,891
2,748

27,693
2,698

30,836
2,803

32,290
2,503

31,225
2,277

29,361
4,427

Collateralized loans
28 Overnight and continuing . .
29 Term

13,613
4,177

18,645
4,177

16,913
n.a.

20,267
n.a.

18,672
n.a.

15,490
n.a.

16,683
n.a.

16,050
n.a.

15,511
n.a.

14,345
n.a.

13,927
n.a.

MEMO: Matched book 6
Securities in
30 Overnight and continuing
31 Term

219,216
367,824

209,502
397,443

210,081
386,600

218,311
415,688

213,121
435,287

225,599
354,902

207,382
369,435

192,412
382,459

206,305
358,637

215,693
404,962

226,512
427,363

Securities out
32 Overnight and continuing
33 Term

286,362
287,643

298,309
304,492

306,428
291,160

316,582
317,840

310,888
343,447

314,299
260,943

297,949
274,728

297,731
282,980

320,041
255,589

326,389
300,029

330,499
321,887

Securities received as pledge
20 Overnight and continuing
21 Term

1. Data for positions and financing are obtained from reports submitted to the Federal
Reserve Bank of New York by the U.S. government securities dealers on its published list
of primary dealers. Weekly figures are close-of-business Wednesday data. Positions for
calendar days of the report week are assumed to be constant. Monthly averages are based
on the number of calendar days in the month.
2. Securities positions are reported at market value.
3. Net outright positions include immediate and forward positions. Net immediate
positions include securities purchased or sold (other than mortgage-backed agency securities) that have been delivered or are scheduled to be delivered in five business days or less
and "when-issued" securities that settle on the issue date of offering. Net immediate
positions for mortgage-backed agency securities include securities purchased or sold that
have been delivered or are scheduled to be delivered in thirty business days or less.
Forward positions reflect agreements made in the over-the-counter market that specify
delayed delivery. Forward contracts for U.S. Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business days. Forward
contracts for mortgage-backed agency securities are included when the time to delivery is
more than thirty business days.

4. Futures positions reflect standardized agreements arranged on an exchange. All
futures positions are included regardless of time to delivery.
5. Overnight financing refers to agreements made on one business day that mature on
the next business day; continuing contracts are agreements that remain in effect for more
than one business day but have no specific maturity and can be terminated without
advance notice by either party; term agreements have a fixed maturity of more than one
business day. Financing data are reported in terms of actual funds paid or received,
including accrued interest.
6. Matched-book data reflect financial intermediation activity in which the borrowing
and lending transactions are matched. Matched-book data are included in the financing
breakdowns given above. The reverse repurchase and repurchase numbers are not always
equal because of the "matching" of securities of different values or different types of
collateralization.
NOTE, "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
1.44

FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES

A33

Debt Outstanding

Millions of dollars, end of period
1995
Agency

1991

1992

1993

1994
Mar.

Apr.

May

June

July

442,772

483,970

570,711

738,928

754,658

759,681

771,524

785,982r

788,323

41,035
7
9,809
397

41,829
7
7,208
374

45,193
6
5,315
255

39,186
6
3,455
116

38,759
6
3,156
65

38,777
6
3,156
70

38,720
6
3,156
78

38,412
6
2,652
81

39,403
6
2,652
84

n.a.
8,421
22,401
n.a.

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.
7,873
27,659
n.a.

n.a.
7,873
27,672
n.a.

n.a.
7,615
27,865
n.a.

n.a.
7,615
28,058
n.a.

n.a.
8,615
28,046
n.a.

10 Federally sponsored agencies7
11
Federal Home Loan Banks
12
Federal Home Loan Mortgage Corporation
13
Federal National Mortgage Association
14
Farm Credit Banks8
15
Student Loan Marketing Association 9
16
Financing Corporation10
17
Farm Credit Financial Assistance Corporation"
18
Resolution Funding Corporation12

401,737
107,543
30,262
133,937
52,199
38,319
8,170
1,261
29,996

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

715,899
210,185
101,673
258,653
53,947
51,554
8,170
1,261
29,996

720,904
211,944
106,432
258,176
53,629
50,758
8,170
1,261
29,996

732,804
218,131
107,686
263,023
54,054
49,993
8,170
1,261
29,996

747,570'
223,089
108,484
270,937
53,915
51,268
8,170
1,261
29,996

748,920
223,100
111,427
268,458
54,635
51,325
8,170
1,261
29,996

MEMO
19 Federal Financing Bank debt 13

185,576

154,994

128,187

103,817

98,266

95,374

92,739

90,638

88,892

9,803
8,201
4,820
10,725
n.a.

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.

3,150
7,873
n.a.
3,200
n.a.

3,150
7,615
n.a.
3,200
n.a.

2,646
7,615
n.a.
3,200
n.a.

2,646
8,615
n.a.
3,200
n.a.

48,534
18,562
84,931

42,979
18,172
64,436

38,619
17,578
45,864

33,719
17,392
37,984

32,759
17,293
33,991

31,769
17,299
32,083

30,759
17,313
30,702

30,004'
17,256R
29,917'

28,419
17,274
28,738

1 Federal and federally sponsored agencies
2 Federal agencies
3
Defense Department'
4
Export-Import Bank 2,3
5
Federal Housing Administration4
6
Government National Mortgage Association certificates of
participation5
7
Postal Service6
8
Tennessee Valley Authority
9
United States Railway Association6

20
21
22
23
24

Lending to federal and federally sponsored agencies
Export-Import Bank3
Postal Service6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association6

Other lending]4
25 Farmers Home Administration
26 Rural Electrification Administration
27 Other

1. Consists of mortgages assumed by the Defense Department between 1957 and 1963
under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. On-budget since Sept. 30, 1976.
4. Consists of debentures issued in payment of Federal Housing Administration
insurance claims. Once issued, these securities may be sold privately on the securities
market.
5. Certificates of participation issued before fiscal year 1969 by the Government
National Mortgage Association acting as trustee for the Farmers Home Administration,
the Department of Health, Education, and Welfare, the Department of Housing and Urban
Development, the Small Business Administration, and the Veterans' Administration.
6. Off-budget.
7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes Federal Agricultural Mortgage Corporation, therefore details do not sum to total.
Some data are estimated.
8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is
shown on line 17.
9. Before late 1982, the association obtained financing through the Federal Financing
Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 22.

10. The Financing Corporation, established in August 1987 to recapitalize the Federal
Savings and Loan Insurance Corporation, undertook its first borrowing in October 1987.
11. The Farm Credit Financial Assistance Corporation, established in January 1988 to
provide assistance to the Farm Credit System, undertook its first borrowing in July 1988.
12. The Resolution Funding Corporation, established by the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, undertook its first borrowing in October
1989.
13. The FFB, which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt
solely for the purpose of lending to other agencies, its debt is not included in the main
portion of the table to avoid double counting.
14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans
guaranteed by numerous agencies, with the amounts guaranteed by any one agency
generally being small. The Farmers Home Administration entry consists exclusively of
agency assets, whereas the Rural Electrification Administration entry consists of both
agency assets and guaranteed loans.

A34
1.45

DomesticNonfinancialStatistics • December 1995
NEW SECURITY ISSUES

Tax-Exempt State and Local Governments

Millions of dollars

1995
Type of issue or issuer,
or use

1992

1993

1994
Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

1 All issues, new and refunding'

226,818

279,945

153,950

7,366

11,844

8,552

11,804

17,956

9,777

12,308

9,764

By type of issue
2 General obligation
3 Revenue

78,611
136,580

90,599
189,346

54,404
99,546

3,714
3,652

5,459
6,385

3,536
5,016

4,332
7,472

5,755
12,201

3,529
6,248

4,519
7,789

3,635
6,129

By type of issuer
4 State
5 Special district or statutory authority2
6 Municipality, county, or township

24,874
138,327
63,617

27,999
178,714
73,232

19,186
95,896
38,868

1,032
4,889
1,445

2,315
6,572
2,957

994
5,814
1,744

1,315
8,039
2,450

1,329
11,382
5,245

645
7,399
1,733

617
7,491
4,200

1,510
5,821
2,433

7 Issues for new capital

101,865

91,434

105,972

5,670

10,538

6,497

8,406

13,796

8,384

7,142

6,843

18,852
14,357
12,164
16,744
6,188
33,560

16,831
9,167
12,014
13,837
6,862
32,723

21,267
10,836
10,192
20,289
8,161
35,227

1,464
671
249
869
215
2,202

1,666
454
633
2,556
1,011
4,218

1,863
615
345
1,547
391
1,736

2,594
606
1,282
1,738
416
1,770

2,494
3,127
1,235
2,062
411
4,467

1,924
1,926
485
1,333
500
2,216

1,180
869
1,504
1,421
201
1,967

1,929
446
563
1,228
627
2,050

SOURCES. Securities Data
Dealer's Digest before then.

Company

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

beginning

January

1993;

Investment

U.S. Corporations

Millions of dollars

1995
Type of issue, offering,
or issuer

1992

1993

1994
Jan.

Feb.
r

Mar.

Apr.
r

May
r

Julyr

June
r

Aug.

1 All issues'

559,827

754,969

n.a.

37,412

42,121

40,008

54,103'

55,237

33,096

46,557

2 Bonds2

471,502

641,498

n.a.

34,510r

37,290

37,088r

26,734r

48,105r

48,140r

28,971

40,626

By type of offering
3 Public, domestic
4 Private placement, domestic3
5 Sold abroad

378,058
65,853
27,591

486,879
116,240
38,379

365,050
n.a.
56,238

24,55 l r
n.a.
9,959

29,392
n.a.
7,898

32,900r
n.a.
4,188

22,58 l r
n.a.
4,153r

39,777r
n.a.
8,328r

42,063r
n.a.
6,076r

23,051
n.a.
5,921

32,139
n.a.
8,487

82,058
43,111
9,979
48,055
15,394
272,904

88,002
60,293
10,756
56,272
31,950
394,226

31,981
27,900
4,573
11,713
11,986
333,135

l,567 r
2,391
0
659
813
29,079

4,450
3,038
100
215
1,127
28,360

2,184
1,978r
403
959
411
31,154'

2,701
l,815 r
800
331
3361
20,75 l r

1,745r
6,085r
945
2,470
l,767 r
35,092r

5,925
4,499r
657r
2,650
1,745
32,664r

4,299
1,078
10
498
1,520
21,566

3,650
2,480
123
620
1,422
32,330

12 Stocks2

88,325

113,472

n a.

2,902

4,831

2,920

3,529

5,998

7,097

4,125

5,931

By type of offering
13 Public preferred
14 Common
15 Private placement3

21,339
57,118
9,867

18,897
82,657
11,917

12,432
47,881

430
2,472
n.a.

296
4,535
n.a.

205
2,715
n.a.

381
3,148
n.a.

1,407
4,591
n.a.

726
6,371
n.a.

753
3,372
n.a.

1,234
4,697
n.a.

22,723
20,231
2,595
6,532
2,366
33,879

22,271
25,761
2,237
7,050
3,439
52,021

1,086
390
19
134
496
776

1,582
1,430r
15
258
0
1,546r

1,010
907
60
137
20
786

612
1,841
48
141
0
887

2,258
1,050
101
185
74
2,232

2,243
2,413
0
183
0
2,258

1,235
1,601
0
124
64
1,101

2,192
1,304
75
91
0
2,262

6
7
8
9
10
11

16
17
18
19
20
21

By industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial

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 closed-end, intracorporate transactions, equities sold abroad, and Yankee bonds.
Stock data include ownership securities issued by limited partnerships.

30,263

2. Monthly data cover only public offerings.
3. Monthly data are not available.
SOURCES. Beginning July 1993, Securities Data Company and the Board of Governors
of the Federal Reserve System.

Securities Market and Corporate
1.47

OPEN-END INVESTMENT COMPANIES

Finance

A35

Net Sales and Assets'

Millions of dollars
1995
Item

1994

1993

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

1 Sales of own shares2

851,885

841,286

75,099

59,121

69,898

68,294

70,798

74,749

76,081

72,113

2 Redemptions of own shares
3 Net sales3

567,881
284,004

699,823
141,463

63,737
11,362

50,738
8,383

60,970
8,928

59,957
8,337

57,033
13,765

61,932
12,817

56,344
19,736

57,610
14,503

4 Assets4

1,510,209

1,550,490

1,563,187

1,619,705

1,657,370

1,710,280

1,769,287

1,808,753

1,880,754

1,908,525

5 Cash5
6 Other

100,209
1,409,838

121,296
1,429,195

124,351
1,438,836

126,307
1,493,399

121,424
1,535,946

124,092
1,586,187

128,375
1,640,913

122,461
1,686,292

126,340
1,754,415

127,173
1,781,352

4. Market value at end of period, less current liabilities.
5. Includes all U.S. Treasury securities and other short-term debt securities.
SOURCE. Investment Company Institute. Data based on reports of membership, which
comprises substantially all open-end investment companies registered with the Securities
and Exchange Commission. Data reflect underwritings of newly formed companies after
their initial offering of securities.

1. Data on sales and redemptions exclude money market mutual funds but include
limited-maturity municipal bond funds. Data on asset positions exclude both money
market mutual funds and limited-maturity municipal bond funds.
2. Includes reinvestment of net income dividends. Excludes reinvestment of capital
gains distributions and share issue of conversions from one fund to another in the same
group.
3. Excludes sales and redemptions resulting from transfers of shares into or out of
money market mutual funds within the same fund family.

1.48

CORPORATE PROFITS AND THEIR DISTRIBUTION
Billions of dollars; quarterly data at seasonally adjusted annual rates
1994

1993
1992

Account

1993

1995

1994
Q3

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

405.1
395.9
139.7
256.2
171.1
85.1

485.8
462.4
173.2
289.2
191.7
97.5

542.7
524.5
202.5
322.0
205.2
116.9

493.5
458.7
169.9
288.9
193.2
95.6

533.9
501.7
191.5
310.2
194.6
115.6

508.2
483.5
184.1
299.4
196.3
103.0

546.4
523.1
201.7
321.4
202.5
118.9

556.0
538.1
208.6
329.5
207.9
121.6

560.3
553.5
215.6
337.9
213.9
124.0

569.7
570.6
220.0
350.7
217.1
133.5

581.1
574.1
220.4
353.6
219.9
133.8

7 Inventory valuation
8 Capital consumption adjustment

-6.4
15.7

-6.2
29.5

-19.5
37.7

3.0
31.7

-6.5
38.8

-12.3
37.0

-14.1
37.4

-19.6
37.5

-32.1
38.8

-39.0
38.1

-28.2
35.2

SOURCE. U.S. Department of Commerce, Survey of Current Business.

1.50

NONFARM BUSINESS EXPENDITURES

New Plant and Equipment

Billions of dollars; quarterly data at seasonally adjusted annual rates
1993
Industry

1992

1993

1994

1994'
Ql

Q41

1 Total nonfarm business

546.60

586.73

638.37

563.48

578.95

594.56

604.51

619.34

637.08

651.92

645.13

Manufacturing
2 Durable goods industries
3 Nondurable goods industries

73.32
100.69

81.45
98.02

92.78
99.77

78.19
95.80

80.33
97.22

82.74
99.74

83.64
98.51

86.03
99.02

91.71
102.28

98.97
98.39

94.44
99.39

Nonmanufacturing
4 Mining
Transportation
5 Railroad
6 Air
7 Other
Public utilities
8 Electric
9 Gas and other
10 Commercial and other2

8.88

10.08

11.24

8.98

9.10

11.09

10.92

11.43

10.70

11.57

11.27

6.67
8.93
7.04

6.14
6.42
9.22

6.72
3.95
10.53

6.16
7.26
8.96

5.94
6.63
8.92

5.89
6.70
8.74

6.55
5.06
10.23

7.46
4.23
10.77

5.36
4.53
9.70

6.65
3.86
10.22

7.40
3.16
11.42

48.22
23.99
268.84

52.55
23.43
299.44

52.25
24.20
336.93

49.98
23.79
284.35

50.61
23.83
296.35

52.96
22.98
303.74

55.60
23.27
310.73

48.68
24.51
327.20

53.55
22.96
336.28

54.15
24.35
343.76

52.60
24.97
340.48

1. Figures are amounts anticipated by business.
2. "Other" consists of construction, wholesale and retail trade, finance and insurance,
personal and business services, and communication.

SOURCE. U.S. Department of Commerce, Survey of Current Business.

A36
1.51

DomesticNonfinancialStatistics • December 1995
DOMESTIC FINANCE COMPANIES

Assets and Liabilities1

Billions of dollars, end of period; not seasonally adjusted
1993

Account

1992

1993

1994

1995

1994
Q4

ASSETS
2

1 Accounts receivable, gross
2
Consumer
3
Business
4
Real estate

491.8
118.3
301.3
72.2

482.8
116.5
294.6
71.7

551.0
134.8
337.6
78.5

482.8
116.5
294.6
71.7

494.5
120.1
302.3
72.1

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

53.2
16.2

50.7
11.2

55.0
12.4

50.7
11.2

51.2
11.6

51.9
12.1

51.1
12.1

55.0
12.4

58.9
12.9

62.2
13.7

7 Accounts receivable, net
8 All other

422.4
142.5

420.9
170.9

483.5
183.4

420.9
170.9

431.7
171.2

447.3
174.6

460.9
177.2

483.5
183.4

496.7
194.6

511.1
198.0

9 Total assets

564.9

591.8

666.9

591.8

602.9

621.9

638.1

666.9

691.4

709.1

37.6
156.4

25.3
159.2

21.2
184.6

25.3
159.2

24.2
165.9

23.3
171.2

21.6
171.0

21.2
184.6

21.0
181.3

21.5
181.3

39.5
196.3
68.0
67.1

42.7
206.0
87.1
71.4

51.0
235.0
99.5
75.7

42.7
206.0
87.1
71.4

41.1
211.7
90.5
69.5

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

564.9

591.8

666.9

591.8

602.9

621.9

638.1

666.9

691.4

709.1

5 LESS: Reserves for unearned income
6
Reserves for losses

LIABILITIES AND CAPITAL

10 Bank loans
11 Commercial paper
12
13
14
15

Debt
Owed to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits

16 Total liabilities and capital

1. Includes finance company subsidiaries of bank holding companies but not of
retailers and banks. Data are amounts carried on the balance sheets of finance 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

Type of credit

1993
Apr.

May

July

Seasonally adjusted

1 Total

539,996

545,533

614,784

637,911

644,041

653,872

660,714

661,881

671,221

2 Consumer.
3 Real estate'
4 Business . .

157,579
72,473
309,944

160,349
71.965
313,219

176,198
78,770
359,816

180,029
81,210
376,672

181,775
81,877
380,389

186,584
82,843
384,446

188,666r
84,198
387,850

189,924
84,978
386,980

191,251
85,939
394,030

Not seasonally adjusted
5 Total
6 Consumer
7 Motor vehicles
8 Other consumer1
9
Securitized motor vehicles4
10 Securitized other consumer'
11 Real estate2
12 Business
13 Motor vehicles
14
Retail5
15
Wholesale6
16
Leasing
17 Equipment
18
Retail
19
Wholesale6
20
Leasing
21 Other business7
22 Securitized business assets4
23
Retail
24
Wholesale
25
Leasing

544,691

550,751

620,975

640,378

646,621

653,503

661,910

658,365

664,955

159,558
57,259
61,020
29,734
11,545
72,243
312,890
89,011
20,541
29,890
38,580
151,424
33,521
8,680
109,223
60,856
11,599
1,120
5,756
4,723

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

180,653
61,256
74,534
32,155
12,708
80,762
378,963
125,805
21,652
38,868
65,285
161,306
42,024
8,913
110,369
64,815
27,037
4,404
16,653
5,980

181,598
62,435
75,369
31,261
12,533
82,104
382,919
128,572
22,370
39,574
66,628
162,623
40,880
9,661
112,082
64,426
27,298
4,937
16,561
5,800

184,616
63,689
75,943
32,117
12,867
82,735
386,152
128,312
21,228
39,512
67,572
165,219
41,264
10,643
113,312
64,099
28,522
5,224
17,676
5,622

187,303
65,162
76,581
32,135
13,425
83,351
391,256
127,487
22,142
36,989
68,356
169,995
42,008
11,725
116,262
64,365
29,409
4,989
18,310
6,110

187,829
65,861
76,302
32,381
13,285
85,079
385,457
123,883
22,945
32,147
68,791
170,497
42,541
12,107
115,849
63,849
27,228
4,784
16,474
5,970

190,278
67,667
77,251
31,551
13,809
86,291
388,386
123,804
23,471
31,392
68,941
171,493
43,121
12,272
116,100
64,701
28,388
4,587
17,986
5,815

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.

Real Estate
1.53

MORTGAGE MARKETS

A37

Mortgages on New Homes

Millions of dollars except as noted
1995
Item

1992

1993
Mar.

Apr.

June

May

July

Aug.

Sept.

Terms and yields in primary and secondary markets
PRIMARY MARKETS

1
2
3
4
5

Terms'
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan-to-price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount)2

Yield (percent per year)
6 Contract rate1
7 Effective rate1,3
8 Contract rate (HUD series)4

158.1
118.1
76.6
25.6
1.60

163.1
123.0
78.0
26.1
1.30

170.4
130.8
78.8
27.5
1.29

173.3
132.6
78.2
28.6
1.18

174.7
134.6
79.2
28.1
1.14

178.1
136.3
78.7
28.4
1.30

181.7
137.7
78.2
27.2
1.18

169.4
130.4
78.9
26.6
1.18

170.4
130.6
78.9
27.3
1.12

174.8
131.8
78.1
28.0
1.20

7.98
8.25
8.43

7.03
7.24
7.37

7.26
7.47
8.58

8.02
8.21
8.60

7.96
8.15
8.44

7.79
7.99
7.84

7.54
7.73
7.80

7.58
7.78
7.98

7.56
7.75
7.91

7.50
7.69
7.78

8.46
7.71

7.46
6.65

8.68
7.96

8.60
8.08

8.56
7.96

8.03
7.53

8.00
7.24

8.09
7.27

8.03
7.49

8.03
7.26

SECONDARY MARKETS

Yield (percent per year)
9 FHA mortgages (Section 203)5
10 GNMA securities6

Activity in secondary markets
FEDERAL NATIONAL MORTGAGE ASSOCIATION

Mortgage holdings (end of period)
11 Total
12
FHA/VA insured
13
Conventional

158,119
22,593
135,526

190,861
23,857
167,004

222,057
28,377
194,499

223,956
28,672
195,998

226,197
28,664
198,161

228,078
28,576
200,004

232,534
28,886
204,022

235,882
28,761
207,227r

238,850
28,640
210,063r

241,378
28,515
212,652

14 Mortgage transactions purchased (during period)

75,905

92,037

62,389

2,390

3,709

3,787

6,575

5,657

5,688

5,002

Mortgage commitments (during period)
15 Issued7
16 To sell8

74,970
10,493

92,537
5,097

54,038
1,820

3,372
64

3,277
22

6,085
28

5,605
9

4,512
26

6,284
53

6,019
9

33,665
352
33,313

55,012
321
54,691

72,693
276
72,416

77,313
266
77,047

79,147
262
78,885

81,008
257
80,751

85,532
253
85,278

88,874
250
88,624

91,544
246
91,298

94,989
245
94,744

Mortgage transactions (during period)
20 Purchases
21 Sales

191,125
179,208

229,242
208,723

124,697
117,110

4,609
3,546

4,530
3,805

10,982
10,479

7,001
5,326

7,316
6,074

9,594
8,161

11,458
10,239

22 Mortgage commitments contracted (during period)'

261,637

274,599

136,067

12,704

13,437

4,549

6,198

8,106

10,578

12,469

FEDERAL HOME LOAN MORTGAGE CORPORATION

Mortgage holdings (end of periodf
17 Total
18
FHA/VA insured
19
Conventional

1. Weighted averages based on sample surveys of mortgages originated by major
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 "points" 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
US. 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, minimum-downpayment first mortgages
insured by the Federal Housing Administration (FHA) for immediate delivery in the
private secondary market. Based on transactions on first day of subsequent month.

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 swap programs, whereas the corresponding data for FNMA
exclude swap activity.

A38
1.54

DomesticNonfinancialStatistics • December 1995
MORTGAGE DEBT OUTSTANDING1
Millions of dollars, end of period
1994
Type of holder and property

1991

1992

1995

1993
Q2

Q2P

1 All holders

3,926,337

4,056,233

4,229,592

4,315,839

4,375,155

4,426,606

4,474,715

4,527,103

By type of property
2 One- to four-family residences
3 Multifamily residences
4 Commercial
5

2,781,327
306,551
759,154
79,305

2,963,391
295,417
716,687
80,738

3,149,634
291,985
706,780
81,194

3,235,939
295,013
702,821
82,066

3,292,201
297,650
702,679
82,625

3,344,791
296,902
701,941
82,971

3,383,139
298,230
709,942
83,404

3,431,841
300,629
710,266
84,367

1,846,726
876,100
483,623
36,935
337,095
18,447
705,367
538,358
79,881
86,741
388
265,258
11,547
29,562
214,105
10,044

1,769,187
894,513
507,780
38,024
328,826
19,882
627,972
489,622
69,791
68,235
324
246,702
11,441
27,770
198,269
9,222

1,767,835
940,444
556,538
38,635
324,409
20,862
598,330
469,959
67,362
60,704
305
229,061
9,458
25,814
184,305
9,484

1,763,227
956,840
569,512
38,609
326,800
21,918
585,671
462,219
66,281
56,872
299
220,716
8,122
24,958
178,194
9,442

1,786,074
981,365
592,021
38,004
328,931
22,408
587,545
466,704
65,532
55,017
291
217,165
7,984
24,534
175,168
9,479

1,815,810
1,004,280
611,697
38,916
331,100
22,567
596,198
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

1,865,145
1,052,882
648,815
40,519
339,983
23,564
598,876
481,434
64,373
52,788
281
213,387
7,817
24,019
171,493
10,058

266,146
19
19
0
41,713
18,496
10,141
4,905
8,171
10,733
4,036
6,697
45,822
14,535
15,018
16,269
0
0
0
0
0
0
112,283
100,387
11,896
28,767
1,693
27,074
26,809
24,125
2,684

286,263
30
30
0
41,695
16,912
10,575
5,158
9,050
12,581
5,153
7,428
32,045
12,960
9,621
9,464
0
0
0
0
0
0
137,584
124,016
13,568
28,664
1,687
26,977
33,665
31,032
2,633

328,598
22
15
7
41,386
15,303
10,940
5,406
9,739
12,215
5,364
6,851
17,284
7,203
5,327
4,754
0
14,112
2,367
1,426
10,319
0
166,642
151,310
15,332
28,460
1,675
26,785
48,476
45,929
2,547

329,725
12
12
0
41,370
14,459
11,147
5,526
10,239
11,169
4,826
6,343
13,908
6,045
4,230
3,633
0
11,407
1,706
1,701
8,000
0
175,377
159,437
15,940
28,475
1,675
26,800
48,007
45,427
2,580

329,304
12
12
0
41,587
14,084
11,243
5,608
10,652
10,533
4,321
6,212
15,403
6,998
4,569
3,836
0
9,169
1,241
2,090
5,838
0
177,200
161,255
15,945
28,538
1,679
26,859
46,863
44,208
2,655

323,491
6
6
0
41,781
13,826
11,319
5,670
10,966
10,964
4,753
6,211
10,428
5,200
2,859
2,369
0
7,821
1,049
1,595
5,177
0
178,059
162,160
15,899
28,555
1,671
26,885
45,876
43,046
2,830

319,770
15
15
0
41,857
13,507
11,418
5,807
11,124
10,890
4,715
6,175
9,342
4,755
2,494
2,092
0
6,730
840
1,310
4,580
0
177,615
161,780
15,835
28,065
1,651
26,414
45,256
42,122
3,134

315,211
10
10
0
41,917
13,217
11,512
5,949
11,239
10,098
4,838
5,260
6,456
2,870
1,940
1,645
0
6,039
731
1,135
4,173
0
178,462
162,674
15,788
28,005
1,648
26,357
44,224
40,963
3,261

1,250,666
425,295
415,767
9,528
359,163
351,906
7,257
371,984
362,667
9,317
47
11
0
19
17
94,177
84,000
3,698
6,479
0

1,425,546
419,516
410,675
8,841
407,514
401,525
5,989
444,979
435,979
9,000
38
8
0
17
13
153,499
132,000
6,305
15,194
0

1,553,818
414,066
404,864
9,202
446,029
441,494
4,535
495,525
486,804
8,721
28
5
0
13
10
198,171
164,000
8,701
25,469
0

1,652,999
435,709
426,363
9,346
479,555
475,733
3,822
514,855
505,730
9,125
22
4
0
10
8
222,858
179,500
11,514
31,844
0

1,682,421
444,976
435,511
9,465
482,987
479,539
3,448
523,512
514,375
9,137
20
4
0
9
7
230,926
182,300
13,891
34,735
0

1,703,076
450,934
441,198
9,736
486,480
483,354
3,126
530,343
520,763
9,580
19
3
0
9
7
235,300
183,600
14,925
36,774
0

1,714,357
454,401
444,632
9,769
488,723
485,643
3,080
533,262
523,903
9,359
14
2
0
7
5
237,957
184,400
15,743
37,814
0

1,737,483
457,101
446,855
10,246
496,139
493,105
3,034
543,669
533,091
10,578
13
2
0
6
5
240,561
187,000
15,745
37,816
0

562,798
370,157
83,937
93,541
15,164

575,237
382,572
85,871
91,524
15,270

579,341
387,345
86,586
91,401
14,009

569,887
375,167
89,417
91,943
13,360

577,356
379,964
90,924
93,538
12,929

584,229
387,057
91,201
93,292
12,681

598,772
398,279
92,137
95,620
12,736

609,264
406,770
93,218
96,413
12,863

By type of holder
6 Major financial institutions
7 Commercial banks2
8
One- to four-family
9
Multifamily
Commercial
10
11
Farm
12 Savings institutions3
One- to four-family
13
14
Multifamily
15
Commercial
16
Farm
17 Life insurance companies
18
One- to four-family
19
Multifamily
20
Commercial
21
Farm
22 Federal and related agencies
23 Government National Mortgage Association
24
One- to four-family
25
Multifamily
26 Farmers Home Administration4
One- to four-family
27
28
Multifamily
Commercial
29
30
Farm
31 Federal Housing and Veterans' Administrations
One- to four-family
32
33
Multifamily
34 Resolution Trust Corporation
35
One- to four-family
36
Multifamily
37
Commercial
Farm
38
39 Federal Deposit Insurance Corporation
40
One- to four-family
41
Multifamily
42
Commercial
Farm
43
44 Federal National Mortgage Association
One- to four-family
45
46
Multifamily
47 Federal Land Banks
48
One- to four-family
49
Farm
50 Federal Home Loan Mortgage Corporation
51
One- to four-family
52
Multifamily
53 Mortgage pools or trusts5
54 Government National Mortgage Association
One- to four-family
55
56
Multifamily
57 Federal Home Loan Mortgage Corporation
58
One- to four-family
59
Multifamily
60 Federal National Mortgage Association
61
One- to four-family
Multifamily
62
63 Fanners Home Administration4
One- to four-family
64
Multifamily
65
66
Commercial
Farm
67
68 Private mortgage conduits
69
One- to four-family
70
Multifamily
71
Commercial
Farm
72
73 Individuals and others6
74 One- to four-family
75 Multifamily
76 Commercial
77

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 FmHA mortgage pools to FmHA 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.
SOURCES. 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.

Consumer Installment Credit

A3 9

CONSUMER INSTALLMENT CREDIT1

1.55

Millions of dollars, amounts outstanding, end of period
1995
Holder and type of credit

1992

1994

1993

Apr.

Mar.

May

June

Julyr

Aug.

Seasonally adjusted
1 Total

730,847

790,351

902,853

933,717

946,452r

959,593

970,741

979,550

988,605

2 Automobile
3 Revolving
4 Other2

257,436
258,081
215,331

280,566
286,588
223,197

317,237
334,511
251,106

323,502
352,741
257,474

326,43 l r
359,655
260,366

330,390
367,117
262,086r

333,164
373,572
264,005

337,588
376,818
265,145

339,052
381,149
268,405

Not seasonally adjusted
748,057

809,440

925,000

927,260

938,108

951,096

964,362

971,578

987,871

By major holder
Commercial banks
Finance companies
Credit unions
Savings institutions
Nonfinancial business3
Pools of securitized assets4

330,088
118,279
91,694
37,049
49,561
121,386

367,566
116,453
101,634
37,855
55,296
130,636

427,851
134,830
119,594
38,468
60,957
143,300

425,208
135,790
121,946
37,519
55,351
151,446

431,444
137,804
123,233
37,499
55,116
153,012

434,863
139,632
125,052
37,500
55,914
158,135

437,498
141,743
126,352
37,501
56,349r
164,919r

441,165
142,163
127,549
38,001
56,360
166,340

450,985
144,918
129,314
38,000
55,723
168,931

By major type of credit5
12 Automobile
13
Commercial banks
Finance companies
14
Pools of securitized assets4
15

258,226
109,623
57,259
33,888

281,458
122,000
56,057
39,481

318,213
141,851
61,609
34,918

321,592
141,857
61,256
35,172

324,146
142,014
62,435
35,319

328,932
142,865
63,689
36,244

333,194
144,761
65,162
36,690

336,614
146,149
65,861
37,071

340,993
147,989
67,667
36,681

16 Revolving
17
Commercial banks
18
Nonfinancial business3
Pools of securitized assets4
19

271,850
132,966
44,466
74,921

301,837
149,920
50,125
79,878

352,266
180,183
55,341
94,376

348,411
175,800
49,959
101,571

355,012
180,609
49,773
103,188

362,283
183,006
50,595
106,811

368,809
182,950
51,040'
112,575'

372,046
184,245
51,077
113,782

379,256
189,132
50,437
116,268

20 Other
21
Commercial banks
Finance companies
22
23
Nonfinancial business3
24
Pools of securitized assets4

217,981
87,499
61,020
5,095
12,577

226,145
95,646
60,396
5,171
11,277

254,521
105,817
73,221
5,616
14,006

257,257
107,551
74,534
5,392
14,703

258,950
108,821
75,369
5,343
14,505

259,881
108,992
75,943
5,319
15,080

262,359
109,787
76,581
5,309
15,654

262,918
110,771
76,302
5,283
15,487

267,622
113,864
77,251
5,286
15,982

5 Total

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 Board'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 CREDIT1
Percent per year except as noted
1995
Item

1992

1993

1994
Feb.

Mar.

Apr.

May

June

July

Aug.

INTEREST RATES

Commercial banks2
1 48-month new car
2 24-month personal

9.29
14.04

8.09
13.47

8.12
13.19

9.70
14.10

n.a.
n.a.

9.78
14.03

n.a.
n.a.

9.44
13.84

Credit card plan
3 All accounts
4 Accounts assessed interest

n.a.
n.a.

15.69
15.77

16.14
15.27

n.a.
n.a.

16.15
16.23

n.a.
n.a.

15.98
15.94

Auto finance companies
5 New car
6 Used car

9.93
13.80

9.48
12.79

9.79
13.49

11.89
15.06

11.95
15.10

11.74
14.99

11.43
14.78

11.08
14.63

11.01
14.35

10.85
14.23

54.0
47.9

54.5
48.8

54.0
50.2

54.1
52.0

54.5
52.1

54.6
52.2

54.4
52.2

53.9
52.3

54.1
52.4

53.5
52.3

89
97

91
98

92
99

92
100

92
99

92
100

92
99

13,584
9,119

14,332
9,875

15,375
10,709

15,774
11,181

15,826
11,220

16,029
11,505

16,155
11,396

16,083
11,518

16,086
11,637

16,056
11,662

OTHER TERMS 3

Maturity (months)
7 New car
8 Used car
Loan-to-value ratio
9 New car
10 Used car
Amount financed (dollars)
11 New car
12 Used car

2. Data are available for only the second month of each quarter,
3. At auto finance companies,

A40
1.57

DomesticNonfinancialStatistics • December 1995
F U N D S R A I S E D I N U.S. C R E D I T M A R K E T S '
Billions of dollars; quarterly data at seasonally adjusted annual rates
1993
TmnsnrHnn rate unrv nr sprtnr

1992

1993

1994

1995

1994
Q4

Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors....

635.3

478.7

540.6

618.5

602.4

660.0

650.3

527.8

607.6

623.9

842.4

819.6

By sector and instrument
2 US. government
3 Treasury securities
4 Budget agency issues and mortgages

246.9
238.7
8.2

278.2
292.0
-13.8

304.0
303.8
.2

256.1
248.3
7.8

155.9
155.7
.2

274.2
266.5
7.7

210.5
211.8
-1.3

122.9
118.2
4.7

133.6
130.7
2.9

156.4
162.1
-5.7

271.8
273.0
-1.2

193.6
192.0
1.6

5 Private

388.4

200.4

236.7

362.4

446.6

385.8

439.7

404.9

474.0

467.5

570.6

626.0

6
7
8
9
10
11
12
13
14
15
16

By instrument
Tax-exempt obligations
Corporate bonds
Mortgages
Home mortgages
Multifamily residential
Commercial
Farm
Consumer credit
Bank loans n.e.c
Commercial paper
Other loans

48.7
47.1
199.5
185.6
4.8
9.3
-.3
15.6
.4
9.7
67.5

68.7
78.8
161.4
163.8
-3.1
.4
.4
-14.8
-40.9
-18.4
-34.4

31.1
67.6
123.9
179.5
-11.2
-45.5
1.1
7.3
-13.8
8.6
11.9

75.5
75.2
155.7
183.9
-6.0
-22.6
.5
58.9
4.8
10.0
-17.7

-29.9
22.0
187.2
195.2
1.7
-11.4
1.8
121.2
71.4
21.4
53.2

27.3
67.4
148.5
184.6
-2.3
-33.9
.2
110.1
26.9
3.8
1.8

13.1
35.4
166.4
194.7
.4
-29.3
.6
68.7
69.1
8.2
78.9

-28.4
35.9
170.3
164.4
4.4
-1.4
2.9
122.8
53.6
16.4
34.3

-46.4
14.2
221.0
220.8
6.6
-8.6
2.2
131.6
89.5
33.8
30.2

-57.9
2.7
191.3
200.7
-4.6
-6.2
1.4
161.5
73.6
27.2
69.2

-57.4
41.4
241.1
207.2
3.6
28.6
1.7
100.3
139.8
1.1
104.3

-20.3
119.5
163.2
153.3
8.0
-1.9
3.9
147.9
102.2
44.8
68.6

17
18
19
20
21
22

By borrowing sector
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
State and local government

218.5
123.9
2.3
10.1
111.4
46.0

171.1
-33.3
2.1
-27.9
-7.4
62.6

214.2
.8
1.0
-43.5
43.2
21.7

280.9
18.5
2.0
-24.6
41.1
63.0

353.5
137.1
2.8
15.5
118.8
-44.0

335.0
33.8
3.6
-15.3
45.5
17.0

307.4
135.2
2.9
11.8
120.6
-2.9

308.0
144.2
8.7
12.7
122.7
-47.2

392.1
135.2
2.2
18.1
115.0
-53.4

406.4
133.8
-2.4
19.2
117.0
-72.6

324.4
302.4
.6
71.8
230.0
-56.2

324.7
328.8
6.8
32.0
289.9
-27.5

23 Foreign net borrowing in United States
24 Bonds
25 Bank loans n.e.c
26 Commercial paper
27 U.S. government and other loans

23.9
21.4
-2.9
12.3
-7.0

14.8
15.0
3.1
6.4
-9.8

22.6
15.7
2.3
5.2
-.6

68.8
81.3
.7
-9.0
-4.2

-20.3
7.1
1.4
-27.3
-1.6

41.8
60.1
-6.3
-12.0
.0

-98.0
-2.6
6.0
-101.8
.5

-37.0
-17.4
-4.5
-5.2
-9.9

20.6
20.8
4.7
-8.1
3.3

32.9
27.7
-.5
5.9
-.2

64.3
13.5
8.1
37.9
4.9

36.0
46.7
5.6
-9.6
-6.7

28 Total domestic plus foreign

659.2

493.4

563.3

687.3

582.1

701.8

552.3

490.9

628.2

656.8

906.7

855.6

Financial sectors
29 Total net borrowing by financial sectors
30
31
32
33
34
35
36
37
38
39

By instrument
U.S. government-related
Government-sponsored enteiprises securities
Mortgage pool securities
Loans from U.S. government
Corporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Loans from Federal Home Loan Banks

By borrowing sector
40 Government-sponsored enterprises
41 Federally related mortgage pools
42
43 Commercial banks
44 Bank holding companies
45 Funding corporations
46 Savings institutions
47 Credit unions
48 Life insurance companies
49 Finance companies
50 Mortgage companies
51 Real estate investment trusts (REITs)
52 Brokers and dealers
53 Issuers of asset-backed securities (ABSs)

202.6

151.7

239.2

289.5

456.3

364.3

520.6

370.8

412.1

521.9

315.3

381.7

167.4
17.1
150.3
-.1

145.7
9.2
136.6
.0

155.8
40.3
115.6
.0

164.2
80.6
83.6
.0

284.3
176.9
112.1
-4.8

143.3
53.4
89.9
.0

336.8
160.0
196.0
-19.2

254.7
146.6
108.1
.0

243.1
152.1
91.0
.0

302.4
249.0
53.4
.0

125.4
62.9
62.5
.0

186.1
127.2
59.0
.0

35.3
46.0
.6
4.7
8.6
-24.7

6.0
66.8
.5
8.8
-32.0
-38.0

83.4
80.5
.6
2.2
-.7
.8

125.3
118.6
3.6
-14.0
-6.2
23.3

172.1
110.2
9.8
-12.3
41.6
22.8

221.0
140.8
5.5
-18.0
76.0
16.8

183.8
158.1
9.8
-9.9
36.6
-10.8

116.1
95.4
12.4
-27.7
3.6
32.3

169.0
95.9
12.0
-11.9
42.3
30.7

219.5
91.2
4.9
.5
84.0
38.8

189.9
150.3
5.1
17.8
40.3
-23.6

195.6
145.3
4.8
10.1
33.3
2.2

17.0
150.3
35.3
-.7
-27.7
15.4
-30.2
.0
.0
23.8
.0
.8
1.5
52.3

9.1
136.6
6.0
-11.7
-2.5
-6.5
-44.5
.0
.0
17.7
-2.4
1.2
3.7
51.0

40.2
115.6
83.4
8.8
2.3
13.2
-6.7
.0
.0
-1.6
8.0
.3
2.7
56.3

80.6
83.6
125.3
5.6
8.8
2.9
11.1
.2
.2
.2
-1.0
3.4
12.0
81.8

172.1
112.1
172.1
10.0
10.3
24.2
12.8
.2
.3
50.2
-11.5
13.7
.5
61.2

53.4
89.9
221.0
1.2
12.2
36.7
8.8
.1
.4
16.3
-10.4
6.1
29.3
120.3

140.8
196.0
183.8
2.0
3.5
48.8
-5.6
.1
.0
63.3
-21.6
14.5
-9.9
88.7

146.6
108.1
116.1
12.4
10.1
-17.2
5.8
.2
.0
67.0
-18.2
15.3
.3
40.5

152.1
91.0
169.0
22.8
11.5
47.2
14.8
.5
.0
16.9
-7.0
18.8
-7.6
51.1

249.0
53.4
219.5
2.9
16.0
17.9
36.1
.2
1.3
53.7
1.0
6.3
19.3
64.7

62.9
62.5
189.9
9.3
13.4
62.3
-19.2
-.3
.0
82.5
8.2
6.9
-29.5
56.3

127.2
59.0
195.6
18.4
20.3
10.4
-6.9
-.1
.1
61.1
1.2
6.4
-.1
84.7

Flow of Funds A41
1.57

F U N D S R A I S E D I N U.S. C R E D I T M A R K E T S 1 — C o n t i n u e d
1994

1993

Transaction category or sector

1990

1991

1992

1993

1995

1994
Q4

All sectors
54 Total net borrowing, all sectors

861.8

645.2

802.5

976.8

1,038.4

1,066.1

1,072.9

861.7

1,040.3

1,178.7

1,222.0

1,237.3

55
56
57
58
59
60
61
62

414.4
48.7
114.5
200.1
15.6
2.2
30.7
35.8

424.0
68.7
160.6
161.9
-14.8
-29.1
-44.0
-82.2

459.8
31.1
163.8
124.5
7.3
-9.4
13.1
12.1

420.3
75.5
275.1
159.2
58.9
-8.5
-5.1
1.3

444.9
-29.9
139.3
197.0
121.2
60.6
35.7
69.6

417.5
27.3
268.3
154.0
110.1
2.6
67.7
18.6

566.5
13.1
190.9
176.2
68.7
65.1
-57.0
49.4

377.6
-28.4
113.8
182.7
122.8
21.4
14.8
56.8

376.7
-46.4
130.9
233.0
131.6
82.2
68.0
64.3

458.8
-57.9
121.7
196.2
161.5
73.6
117.1
107.8

397.2
-57.4
205.1
246.2
100.3
165.6
79.3
85.6

379.8
-20.3
311.5
168.0
147.9
117.9
68.5
64.1

U.S. government securities
Tax-exempt securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans

Funds raised through mutual funds and corporate equities
63 Total net share issues
64 Mutual funds
65 Corporate equities
66 Nonfinancial corporations
67 Financial corporations
68 Foreign shares purchased in United States

19.7

215.4

296.0

440.1

162.1

429.5

343.7

207.9

159.6

-62.9

49.6

146.6

65.3
-45.6
-63.0
10.0
7.4

151.5
64.0
18.3
15.1
30.7

211.9
84.1
27.0
26.4
30.7

320.0
120.1
21.3
38.3
60.5

138.3
23.7
-44.9
26.0
42.7

287.7
141.8
21.5
41.0
79.3

236.4
107.3
-9.6
48.4
68.5

144.0
63.9
-2.0
20.0
45.9

165.4
-5.7
-50.0
21.2
23.1

7.6
-70.5
-118.0
14.3
33.2

104.5
-54.9
-68.4
.7
12.8

178.5
-31.9
-73.2
5.6
35.7

1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release,
tables F.2 through F.5. For ordering address, see inside front cover.

A42
1.58

Domestic Financial Statistics • December 1995
SUMMARY OF FINANCIAL TRANSACTIONS 1
Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates

1993
Transaction category or sector

NET LENDING IN CREDIT MARKETS

1 Total net lending in credit markets
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 domestic nonfinancial sectors
Households
Nonfarm noncorporate business
Nonfinancial corporate business
State and local governments
U.S. government
Foreign
Financial sectors
Government sponsored enterprises
Federally related mortgage pools
Monetary authority
Commercial banking
U.S. commercial banks
Foreign banking offices
Bank holding companies
Banks in U.S. affiliated areas
Funding corporations
Thrift institutions
Life insurance companies
Other insurance companies
Private pension funds
State and local government retirement funds
Finance companies
Mortgage companies
Mutual funds
Closed-end funds
Money market funds
Real estate investment trusts (REITs)
Brokers and dealers
Asset-backed securities issuers (ABSs)
Bank personal trusts

1990

1991

1992

1993

1994

1995

1994
Q4

861.8

645.2

802.5

976.8

1,038.4

1,066.1

1,072.9

861.7

1,040.3

1,178.7

1,222.0

1,237.3

189.9
157.0
-1.7
-3.7
38.3
33.7
85.5
552.7
13.9
150.3
8.1
125.1
94.9
28.4
-2.8
4.5
16.1
-154.0
94.4
26.5
17.2
34.9
28.8
.0
41.4
.2
80.9
-.7
2.8
51.1
15.9

-7.4
-39.6
-3.7
6.7
29.2
10.5
26.6
615.4
15.2
136.6
31.1
80.8
35.7
48.5
-1.5
-1.9
15.8
-123.5
83.2
32.6
85.7
46.0
-9.8
11.2
90.3
14.7
30.1
-.7
17.5
48.9
10.0

75.9
74.2
-1.1
29.6
-26.8
-11.9
101.2
637.3
69.0
115.6
27.9
95.3
69.5
16.5
5.6
3.7
23.5
-61.3
79.1
12.8
37.3
34.4
5.0
.1
123.7
17.4
1.3
1.1
-6.9
53.8
8.0

15.8
3.1
-3.2
14.5
1.5
-18.4
121.7
857.7
90.2
83.6
36.2
142.2
149.6
-9.8
.0
2.4
18.1
-1.7
105.1
33.3
40.2
25.5
-9.0
:0
169.6
10.2
14.6
.6
9.2
80.5
9.5

234.9
317.4
-2.0
24.1
-104.6
-24.2
132.1
695.6
123.3
112.1
31.5
162.0
148.1
11.2
.9
1.9
13.8
34.9
58.1
21.1
-42.4
60.8
68.2
-22.9
7.6
3.5
28.5
4.7
-34.0
57.8
7.1

104.4
196.7
-3.5
12.2
-101.0
-7.7
204.2
765.2
71.2
89.9
38.5
188.1
197.3
-6.5
-4.8
2.1
42.6
-13.3
86.4
32.1
-60.1
36.9
22.6
-13.3
138.9
7.7
56.9
.2
-82.8
113.7
8.9

288.8
337.0
-3.6
19.9
-64.4
-46.5
123.9
706.7
92.4
196.0
48.8
184.7
120.6
59.0
3.1
2.1
19.5
13.6
47.6
27.9
-97.7
72.9
72.1
-43.5
61.7
8.3
-45.0
6.6
-55.7
87.9
8.9

270.4
385.9
-1.8
12.2
-125.9
-16.2
64.3
543.2
101.1
108.1
17.9
109.1
128.4
-21.5
.2
1.9
33.5
42.6
6.4
20.8
-30.7
69.3
49.8
-36.3
9.4
3.2
32.2
6.6
-52.6
42.8
10.2

141.9
186.2
-1.9
25.1
-67.6
-9.3
132.2
775.6
125.6
91.0
24.0
191.1
164.4
22.1
2.7
1.9
25.1
52.8
80.5
16.0
-17.6
26.3
58.9
-14.0
24.2
1.4
50.0
5.5
-19.3
46.3
7.7

238.5
360.3
-.5
39.2
-160.5
-24.7
208.1
756.8
174.3
53.4
35.4
163.3
178.9
-15.0
-2.4
1.8
-23.0
30.5
98.1
19.7
-23.6
74.6
91.8
2.1
-64.8
1.0
76.7
.2
-8.6
54.3
1.4

-33.8
148.3
.9
6.2
-189.2
-13.0
260.1
1,008.8
12.2
62.5
24.8
359.6
177.5
182.3
-1.9
1.7
22.3
29.4
109.9
13.0
97.6
64.5
95.7
16.5
-10.1
.8
25.5
2.5
30.7
49.8
1.6

-238.2
-157.1
.9
26.6
-108.6
-25.7
340.8
1,160.5
86.7
59.0
12.6
292.8
212.6
75.4
3.2
1.7
-36.6
5.4
91.1
14.9
138.9
65.7
56.1
2.3
25.2
1.1
138.2
3.1
124.2
78.3
1.8

861.8

645.2

802.5

976.8

1,038.4

1,066.1

1,072.9

861.7

1,040.3

1,178.7

1,222.0

1,237.3

2.0
1.5
1.0
25.7
165.1
35.0
43.6
63.7
-66.1
70.3
-24.2
38.2
65.3
-45.6
3.5
37.0
-4.8
-27.1
29.7
139.0

-5.9
.0
.0
25.7
360.3
-3.4
86.3
1.5
-58.5
41.2
-16.5
-16.7
151.5
64.0
51.4
3.8
-6.2
-4.2
16.1
203.4

-1.6
-2.0
.2
27.3
249.7
43.5
113.5
-57.2
-73.2
3.9
35.5
-7.2
211.9
84.1
4.2
41.1
8.5
18.3
-7.1
270.2

.8
.0
.4
35.2
309.2
50.9
117.3
-70.3
-23.5
19.2
65.5
-11.7
320.0
120.1
61.9
50.0
4.6
-11.7
1.6
315.6

-5.8
.0
.7
20.1
103.6
85.5
-10.1
-40.5
19.0
45.4
84.3
30.1
138.3
23.7
-2.3
93.4
3.0
-30.0
18.8
269.6

2.2
.0
.7
35.5
251.6
4.7
81.9
-36.6
13.7
61.1
-14.4
32.8
287.7
141.8
86.5
54.4
4.9
-27.5
17.6
389.9

-.2
.0
.7
20.0
6.8
173.0
173.1
2.5
-39.6
-35.1
23.0
16.0
236.4
107.3
29.9
36.6
15.3
-49.5
15.0
386.7

-14.6
.0
.6
10.6
102.6
165.8
-66.1
-62.4
-4.4
68.5
176.4
16.9
144.0
63.9
-17.7
96.3
-14.4
-25.0
24.7
223.1

.2
.0
.8
23.8
155.4
-55.0
-89.6
-57.2
81.2
49.9
82.8
23.2
165.4
-5.7
-62.3
115.8
8.2
-17.2
23.6
320.1

-8.6
.0
.7
26.2
149.6
58.0
-57.7
-44.9
39.0
98.4
54.8
64.3
7.6
-70.5
40.9
125.0
3.0
-28.3
11.9
148.7

17.8
.0
.7
25.4
393.6
27.4
117.7
52.9
95.1
16.6
167.0
5.0
104.5
-54.9
-15.1
74.7
20.9
-40.8
21.0
534.7

10.3
.0
.7
25.3
311.2
119.4
103.0
134.3
44.0
275.4
127.5
10.0
178.5
-31.9
12.6
65.3
-5.8
-13.1
22.3
298.8

1,414.5

1,539.0

1,765.9

2,332.1

1,885.5

2,454.6

2,190.7

1,750.6

1,803.7

1,796.9

2,786.1

2,925.1

3.3
8.5
9.1

-13.1
4.5
9.7

.7
1.6
4.5

-1.5
-1.3
14.2

-4.8
-2.8
5.6

-15.5
-6.2
10.5

-2.4
.6
-27.7

-1.4
-1.1
16.0

15.2
-6.2
29.4

-30.7
-4.3
4.9

13.9
-5.0
-18.0

-19.0
-5.4
-5.4

.2
1.6
-24.0
.1
-32.2

-.6
26.2
6.2
1.3
-31.6

-.2
-4.9
27.9
14.0
-51.8

-.2
4.2
82.5
1.0
-44.9

-.2
-2.7
48.6
-2.0
29.1

-.2
24.0
22.8
-8.6
23.0

-.2
-29.1
13.5
.8
41.3

-.2
5.3
117.0
1.4
-170.0

-.2
11.6
66.8
1.0
149.4

-.2
1.2
-3.0
-11.1
95.6

-.2
-3.9
87.6
-16.3
-90.2

-.1
9.7
-32.8
30.6
-122.3

1,447.9

1,536.4

1,774.2

2,278.1

1,814.7

2,404.6

2,194.1

1,783.4

1,536.9

1,744.5

2,818.2

3,069.9

RELATION OF LIABILITIES
TO FINANCIAL ASSETS

33 Net flows through credit markets
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53

Other financial sources
Official foreign exchange
Special drawing rights certificates
Treasury currency
Life insurance reserves
Pension fund reserves
Interbank claims
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Foreign deposits
Mutual fund shares
Corporate equities
Security credit
Trade debt
Taxes payable
Noncorporate proprietors' equity
Investment in bank personal trusts
Miscellaneous

54 Total financial sources
Floats not included in assets (—)
55 U.S. government checkable deposits
56 Other checkable deposits
57 Trade credit
58
59
60
61
62

Liabilities not identified as assets ( - )
Treasury currency
Interbank claims
Security repurchase agreements
Taxes payable
Miscellaneous

63 Total identified to sectors as assets

1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release,
tables F.6 and F.7. For ordering address, see inside front cover.

2. Excludes corporate equities and mutual fund shares,

Flow of Funds A43
1.59

S U M M A R Y OF CREDIT MARKET DEBT OUTSTANDING1
Billions of dollars, end of period

1991

1992

1993

1995

1994

1993
Transaction category or sector

1994
Q4

Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors

11,184.1

11,727.9

12,368.3

12,970.5

12,368.3

12,490.8

12,620.8

12,776.8

12,970.5

13,140.6

13,343.2

By sector and instrument
2 U.S. government
Treasury securities
4
Budget agency issues and mortgages

2,776.4
2,757.8
18.6

3,080.3
3,061.6
18.8

3,336.5
3,309.9
26.6

3,492.3
3,465.6
26.7

3,336.5
3,309.9
26.6

3,387.7
3,361.4
26.3

3,395.4
3,368.0
27.4

3,432.3
3,404.1
28.2

3,492.3
3,465.6
26.7

3,557.9
3,531.5
26.4

3,583.5
3,556.7
26.8

5 Private

8,407.7

8,647.6

9,031.8

9,478.2

9,031.8

9,103.1

9,225.3

9,344.5

9,478.2

9,582.7

9,759.7

6
7
8
9
10
11
1?
n
14
i1)
16

By instrument
Tax-exempt obligations
Corporate bonds
Mortgages
Home mortgages
Multifamily residential
Commercial
Farm
Consumer credit
Bank loans n.e.c
Commercial paper
Other loans

1,108.6
1,086.9
3,920.0
2,780.0
304.8
755.8
79.3
797.2
686.0
98.5
710.6

1,139.7
1,154.5
4,043.9
2,959.6
293.6
710.3
80.4
804.6
672.1
107.1
725.7

1,215.2
1,229.7
4,220.6
3,149.6
289.0
700.8
81.2
863.5
677.0
117.8
707.9

1,185.2
1,251.7
4,407.9
3,344.8
290.7
689.4
83.0
984.7
748.3
139.2
761.1

1,215.2
1,229.7
4,220.6
3,149.6
289.0
700.8
81.2
863.5
677.0
117.8
707.9

1,217.6
1,238.6
4,248.3
3,184.4
289.1
693.5
81.3
859.6
687.4
129.9
721.7

1,209.9
1,247.5
4,301.3
3,235.9
290.2
693.1
82.1
891.6
706.3
135.7
733.1

1,200.9
1,251.1
4,357.6
3,292.2
291.9
691.0
82.6
929.4
725.4
138.7
741.5

1,185.2
1,251.7
4,407.9
3,344.8
290.7
689.4
83.0
984.7
748.3
139.2
761.1

1,170.2
1,262.1
4,454.7
3,383.1
291.6
696.5
83.4
988.7
776.9
149.8
780.3

1,164.6
1,292.0
4,505.9
3,431.8
293.6
696.1
84.4
1,026.6
807.9
162.5
800.3

17
18
19
20
21
22

By borrowing sector
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
State and local government

3,784.5
3,712.1
135.0
1,116.9
2,460.2
911.1

3,998.7
3,716.1
136.0
1,075.0
2,505.1
932.8

4,285.8
3,750.1
138.3
1,050.4
2,561.5
995.9

4,638.9
3,887.5
141.2
1,065.8
2,680.5
951.8

4,285.8
3,750.1
138.3
1,050.4
2,561.5
995.9

4,326.3
3,782.5
136.7
1,052.6
2,593.2
994.3

4,417.7
3,825.8
141.5
1,056.3
2,628.0
981.9

4,520.9
3,852.5
143.1
1,060.2
2,649.2
971.1

4,638.9
3,887.5
141.2
1,065.8
2,680.5
951.8

4,684.8
3,960.8
138.9
1,083.0
2,738.9
937.1

4,780.1
4,050.0
143.4
1,091.5
2,815.1
929.6

21 Foreign credit market debt held in
United States

299.7

313.1

381.9

361.6

381.9

356.5

348.7

352.4

361.6

376.8

387.1

74
?5
26
27

130.5
21.6
81.8
65.9

146.2
23.9
77.7
65.3

227.4
24.6
68.7
61.1

234.6
26.1
41.4
59.6

227.4
24.6
68.7
61.1

226.8
26.2
43.3
60.3

222.4
25.1
42.0
59.2

227.6
26.3
39.9
58.6

234.6
26.1
41.4
59.6

237.9
28.2
50.9
59.8

249.6
29.6
48.5
59.5

11,483.8

12,041.0

12,750.2

13,332.2

12,750.2

12,847.3

12,969.5

13,129.2

13,332.2

13,517.4

13,730.4

Bonds
Bank loans n.e.c
Commercial paper
U.S. government and other loans

28 Total credit market debt owed by nonfinancial
sectors, domestic and foreign

Financial sectors
29 Total credit market 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 maricet paper
Loans from Federal Home Loan Banks

By borrowing sector
40 Government-sponsored enterprises
41 Federally related mortgage pools
42 Private financial sectors
43 Commercial banks
44 Bank holding companies
45 Funding corporations
46 Savings institutions
47 Credit unions
48 Life insurance companies
49 Finance companies
50 Mortgage companies
51 Real estate investment trusts (REITs)
52 Brokers and dealers
53 Issuers of asset-backed securities (ABSs)

2,751.0

3,005.7

3,300.6

3,762.2

3,300.6

3,426.5

3,525.7

3,626.8

3,762.2

3,834.1

3,936.3

1,564.2
402.9
1,156.5
4.8
1,186.8
638.9
4.8
78.4
385.7
79.1

1,720.0
443.1
1,272.0
4.8
1,285.8
725.8
5.4
80.5
394.3
79.9

1,884.1
523.7
1,355.6
4.8
1,416.5
844.4
8.9
66.5
393.5
103.1

2,168.4
700.6
1,467.8
.0
1,593.8
952.1
18.7
54.3
442.8
125.9

1,884.1
523.7
1,355.6
4.8
1,416.5
844.4
8.9
66.5
393.5
103.1

1,961.5
563.7
1,397.8
.0
1,465.1
882.0
11.4
62.4
408.8
100.4

2,030.5
600.3
1,430.1
.0
1,495.2
906.6
14.5
55.3
410.3
108.5

2,089.8
638.3
1,451.5
.0
1,537.0
930.4
17.5
52.4
420.5
116.2

2,168.4
700.6
1,467.8
.0
1,593.8
952.1
18.7
54.3
442.8
125.9

2,192.7
716.3
1,476.4
.0
1,641.4
990.2
20.0
57.1
454.1
120.0

2,245.0
748.1
1,496.9
.0
1,691.3
1,027.3
21.2
59.4
462.8
120.5

407.7
1,156.5
1,186.8
65.0
112.3
139.1
94.6
.0
.0
391.9
22.2
13.6
19.0
329.1

447.9
1,272.0
1,285.8
73.8
114.6
161.6
87.8
.0
.0
390.4
30.2
13.9
21.7
391.7

528.5
1,355.6
1,416.5
79.5
123.4
169.9
99.0
.2
.2
390.5
29.2
17.4
33.7
473.5

700.6
1,467.8
1,593.8
89.5
133.6
199.3
111.7
.5
.6
440.7
17.8
31.1
34.3
534.7

528.5
1,355.6
1,416.5
79.5
123.4
169.9
99.0
.2
.2
390.5
29.2
17.4
33.7
473.5

563.7
1,397.8
1,465.1
78.4
124.2
190.7
97.6
.3
.3
401.9
23.8
21.0
31.3
495.7

600.3
1,430.1
1,495.2
82.1
126.8
191.5
99.0
.3
.3
414.2
19.3
24.8
31.3
505.8

638.3
1,451.5
1,537.0
87.5
129.6
200.6
102.7
.4
.3
420.9
17.5
29.5
29.4
518.6

700.6
1,467.8
1,593.8
89.5
133.6
199.3
111.7
.5
.6
440.7
17.8
31.1
34.3
534.7

716.3
1,476.4
1,641.4
90.3
137.0
221.2
106.9
.4
.6
456.7
19.8
32.8
26.9
548.8

748.1
1,496.9
1,691.3
95.4
142.0
229.1
105.2
.3
.6
467.3
20.1
34.4
26.8
570.0

16,756.0

17,094.3

17,351.5

17,666.7

5,522.1
1,200.9
2,409.1
4,375.2
929.4
804.0
599.2
916.2

5,660.7
1,185.2
2,438.4
4,426.6
984.7
828.8
623.5
946.6

5,750.6
1,170.2
2,490.2
4,474.7
988.7
862.1
654.7
960.1

5,828.5
1,164.6
2,568.9
4,527.1
1,026.6
896.9
673.8
980.4

All sectors
54 Total credit market debt, domestic and foreign....
55
56
57
58
59
60
61
62

U.S. government securities
Tax-exempt securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans

14,234.8
4,335.7
1,108.6
1,856.3
3,924.8
797.2
785.9
565.9
860.4

15,046.7
4,795.5
1,139.7
2,026.4
4,049.3
804.6
776.6
579.0
875.7

1. Data in this table also appear in the Board's Z.l (780) quarterly statistical
tables L.2 through L.4. For ordering address, see inside front cover.

16,050.7

17,094.3

16,050.7

16,273.8

16,495.2

5,215.8
1,215.2
2,301.5
4,229.6
863.5
768.2
580.0
877.0

5,660.7
1,185.2
2,438.4
4,426.6
984.7
828.8
623.5
946.6

5,215.8
1,215.2
2,301.5
4,229.6
863.5
768.2
580.0
877.0

5,349.2
1,217.6
2,347.3
4,259.7
859.6
776.0
582.0
882.5

5,425.9
1,209.9
2,376.5
4,315.8
891.6
786.7
587.9
900.8

release,

A44
1.60

Domestic Financial Statistics • December 1995
S U M M A R Y OF FINANCIAL ASSETS A N D

LIABILITIES1

Billions of dollars except as noted, end of period

1993
Transaction category or sector

CREDIT MARKET DEBT OUTSTANDING

1 Total credit market 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

Private domestic nonfinancial sectors
Households
Nonfarm noncorporate business
Nonfinancial corporate business
State and local governments
U.S. government
Foreign
Financial sectors
Government-sponsored enterprises
Federally related mortgage pools
Monetary authority
Commercial banking
U.S. commercial banks
Foreign banking offices
Bank holding companies
Banks in U.S. affiliated areas
Funding corporations
Thrift institutions
Life insurance companies
Other insurance companies
Private pension funds
Stale and local government retirement funds
Finance companies
Mortgage companies
Mutual funds
Closed-end funds
Money market funds
Real estate investment trusts (REITs)
Brokers and dealers
Asset-backed securities issuers (ABSs)
Bank personal trusts

1991

1992

1993

1994

1995

1994
Q4

14,234.8

15,046.7

16,050.7

17,094.3

16,050.7

16,273.8

16,495.2

16,756.0

17,094.3

17,351.5

17,666.7

2,240.1
1,446.5
44.1
196.2
553.3
246.9
958.0
10,789.8
390.7
1,156.5
272.5
2,853.3
2,502.5
319.2
11.9
19.7
51.5
1,192.6
1,199.6
376.6
693.0
479.9
487.5
60.3
450.5
50.3
402.7
7.0
124.0
317.8
223.5

2,320.1
1,524.8
42.9
225.8
526.5
235.0
1,055.0
11,436.6
459.7
1,272.0
300.4
2,948.6
2,571.9
335.8
17.5
23.4
75.0
1,134.5
1,278.8
389.4
730.4
514.3
492.6
60.5
574.2
67.7
404.1
8.1
117.1
377.9
231.5

2,351.5
1,541.7
39.7
244.9
525.2
230.7
1,172.2
12,296.3
549.8
1,355.6
336.7
3,090.8
2,721.5
326.0
17.5
25.8
93.1
1,132.7
1,383.9
422.7
770.6
542.6
482.8
60.4
743.8
77.9
418.7
8.6
126.3
458.4
240.9

2,623.2
1,926.4
37.7
269.0
390.0
206.5
1,272.7
12,991.9
673.2
1,467.8
368.2
3,252.8
2,869.6
337.1
18.4
27.8
106.9
1,167.6
1,442.1
443.8
728.2
603.3
551.0
37.5
751.4
81.4
447.1
13.3
92.3
516.1
248.0

2,351.5
1,541.7
39.7
244.9
525.2
230.7
1,172.2
12,296.3
549.8
1,355.6
336.7
3,090.8
2,721.5
326.0
17.5
25.8
93.1
1,132.7
1,383.9
422.7
770.6
542.6
482.8
60.4
743.8
77.9
418.7
8.6
126.3
458.4
240.9

2,397.5
1,640.7
38.8
240.0
478.0
219.0
1,203.0
12,454.3
572.0
1,397.8
341.5
3,120.2
2,743.8
331.8
18.2
26.4
97.9
1,134.2
1,402.7
429.6
746.2
560.8
494.5
49.5
759.2
80.0
422.0
10.3
112.4
480.3
243.2

2,450.6
1,717.1
38.4
245.9
449.2
215.4
1,218.4
12,610.7
597.9
1,430.1
351.6
3,156.2
2,780.3
330.8
18.3
26.8
106.3
1,146.1
1,407.6
434.8
738.5
578.1
511.3
40.4
761.5
80.8
421.4
11.9
99.3
491.0
245.7

2,497.3
1,779.9
37.9
249.7
429.8
212.6
1,254.4
12,791.7
629.4
1,451.5
356.8
3,204.1
2,822.3
335.5
19.0
27.3
112.6
1,160.3
1,428.1
438.8
734.1
584.7
524.1
37.0
767.6
81.1
423.4
13.3
94.5
502.6
247.7

2,623.2
1,926.4
37.7
269.0
390.0
206.5
1,272.7
12,991.9
673.2
1,467.8
368.2
3,252.8
2,869.6
337.1
18.4
27.8
106.9
1,167.6
1,442.1
443.8
728.2
603.3
551.0
37.5
751.4
81.4
447.1
13.3
92.3
516.1
248.0

2,586.1
1,946.9
38.0
259.8
341.5
203.2
1,336.5
13,225.8
675.3
1,476.4
367.1
3,326.1
2,906.5
373.6
17.9
28.2
112.4
1,173.1
1,476.8
447.0
752.6
619.5
568.5
41.6
748.9
81.6
467.9
13.9
100.0
528.6
248.4

2,511.4
1,885.7
38.2
269.3
318.1
197.1
1,421.4
13,536.8
697.7
1,496.9
375.7
3,407.9
2,963.5
397.2
18.7
28.6
103.3
1,175.7
1,503.0
450.8
787.3
635.9
586.7
42.2
755.2
81.9
494.0
14.7
131.0
548.2
248.8

14,234.8

15,046.7

16,050.7

17,094.3

16,050.7

16,273.8

16,495.2

16,756.0

17,094.3

17,351.5

17,666.7

55.4
10.0
16.3
405.7
4,138.3
96.4
5,045.1
1,020.9
2,350.7
488.4
539.6
355.8
289.6
813.9
188.9
936.1
71.2
608.3
2,991.9

51.8
8.0
16.5
433.0
4,516.5
132.6
5,059.1
1,134.4
2,293.5
415.2
543.6
392.3
280.1
1,042.1
217.3
977.4
79.6
629.6
3,176.7

53.4
8.0
17.0
468.2
4,974.7
183.9
5,155.5
1,251.7
2,223.2
391.7
562.7
457.8
268.4
1,446.3
279.3
1,027.4
84.2
660.9
3,430.7

53.2
8.0
17.6
488.4
5,017.0
270.3
5,283.8
1,241.6
2,182.7
410.7
608.2
542.1
298.5
1,562.9
277.0
1,120.8
87.3
670.0
3,746.3

53.4
8.0
17.0
468.2
4,974.7
183.9
5,155.5
1,251.7
2,223.2
391.7
562.7
457.8
268.4
1,446.3
279.3
1,027.4
84.2
660.9
3,430.7

56.4
8.0
17.1
473.2
4,896.4
215.8
5,163.7
1,220.5
2,233.8
382.6
579.7
474.9
272.4
1,483.9
282.8
1,024.9
89.2
655.2
3,560.9

54.9
8.0
17.3
475.9
4,898.5
230.7
5,186.2
1,229.7
2,214.1
379.0
573.9
512.9
276.6
1,506.9
278.0
1,049.2
82.0
650.1
3,600.2

55.5
8.0
17.5
481.8
5,013.4
243.1
5,211.8
1,204.8
2,198.7
402.2
583.5
540.2
282.4
1,587.7
263.2
1,086.0
86.3
671.5
3,701.5

53.2
8.0
17.6
488.4
5,017.0
270.3
5,283.8
1,241.6
2,182.7
410.7
608.2
542.1
298.5
1,562.9
277.0
1,120.8
87.3
670.0
3,746.3

64.1
8.0
17.8
494.7
5,252.7
266.3
5,369.1
1,193.5
2,206.3
435.2
638.9
595.4
299.7
1,607.2
268.8
1,127.6
93.5
707.2
3,872.5

67.1
8.0
18.0
501.0
5,472.4
267.0
5,531.6
1,245.4
2,235.5
444.0
684.1
620.5
302.2
1,747.1
271.6
1,144.4
88.5
745.7
3,907.9

RELATION OF LIABILITIES
TO FINANCIAL ASSETS

33 Total credit market debt
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52

Other liabilities
Official foreign exchange
Special drawing rights certificates
Treasury currency
Life insurance reserves
Pension fund reserves
Interbank claims
Deposits at financial institutions
Checkable deposits and currency
Small time and savings deposits
Large time deposits
Money market fund shares
Security repurchase agreements
Foreign deposits
Mutual fund shares
Security credit
Trade debt
Taxes payable
Investment in bank personal trusts
Miscellaneous

29,612.4

31,386.8

33,840.1

35,696.9

33,840.1

34,201.4

34,533.1

35,183.2

35,696.9

36,501.1

37,437.3

Financial assets not included in liabilities (+)
54 Gold and special drawing rights
55 Corporate equities
56 Household equity in noncorporate business

22.3
4,863.6
2,448.7

19.6
5,462.9
2,413.7

20.1
6,278.5
2,425.4

21.1
6,293.4
2,512.8

20.1
6,278.5
2,425.4

20.4
6,142.6
2,474.2

20.8
5,965.8
2,502.7

21.0
6,228.7
2,526.6

21.1
6,293.4
2,512.8

22.7
6,835.8
2,525.7

22.9
7,393.0
2,528.5

Floats not included in assets (—)
57 U.S. government checkable deposits
58 Other checkable deposits
59 Trade credit

3.8
40.4
-130.6

6.8
42.0
-125.9

5.6
40.7
-107.1

3.4
38.0
-101.4

5.6
40.7
-107.1

.3
36.3
-127.1

.9
38.7
-134.2

1.2
30.6
-126.9

3.4
38.0
-101.4

4.2
32.3
-120.3

2.0
33.7
-133.0

-4.7
-4.2
9.2
17.8
-320.7

-4.9
-9.3
38.1
25.2
-378.2

-5.1
-4.7
120.5
26.2
-457.3

-5.4
-6.5
169.1
24.2
-347.8

-5.1
-4.7
120.5
26.2
-457.3

-5.2
-7.7
135.9
15.5
-398.7

-5.2
-7.4
162.5
21.3
-387.1

-5.3
-3.4
189.3
22.0
-395.6

-5.4
-6.5
169.1
24.2
-347.8

-5.4
-2.7
203.3
6.6
-382.3

-5.4
-2.6
192.0
21.2
-390.3

37,336.0

39,689.2

42,945.3

44,750.6

42,945.3

43,189.2

43,332.9

44,247.7

44,750.6

46,149.7

47,664.3

53 Total liabilities

60
61
62
63
64

Liabilities not identified as assets ( - )
Treasury currency
Interbank claims
Security repurchase agreements
Taxes payable
Miscellaneous

65 Total identified to sectors as assets

1. Data in this table also appear in the Board's Z.l (780) quarterly statistical release,
tables L.6 and L.7. For ordering address, see inside front cover.

2. Excludes corporate equities and mutual fund shares,

Selected Measures
2.10

NONFINANCIAL BUSINESS ACTIVITY

A45

Selected Measures

Monthly data seasonally adjusted, and indexes 1 9 8 7 = 1 0 0 , except as noted
1995
1992

1993

1994
Jan.

Feb.

Mar.

Apr.

May

June'

July'

Aug.

Sept.

1 Industrial production'

107.6

112.0

118.1

122.0

122.1

122.0

121.2

121.4

121.5

122.9r

122.6

Market groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials

106.5
109.0
105.9
113.4
98.8
109.2

110.7
113.4
109.4
119.3
102.4
114.1

115.9
118.4
113.2
126.5
108.1
121.5

119.1
121.6
115.7
130.9
111.3
126.5

119.1
121.8
115.7
131.2
110.9
126.7

118.9
121.6
114.9
132.0
110.7
126.7

118.0
121.0
114.4
131.3
108.9
126.1

118.2
121.1
114.4
131.4
109.4
126.3

118.5
121.5
114.9
131.7
109.3
125.8

118.4
121.4
114.2
132.7
109.4
126.4

119.7'
122.8'
115.8'
133.9'
110.3'
127.7

119.5
122.7
115.2
134.4
110.0
127.5

108.0

112.9

119.7

124.5

124.2

123.3

123.2

123.1

124.3

124.6

79.2

80.9

83.4

85.2

84.7

84.4

83.5

83.1

82.8

82.5

83.0

82.9

97.4

105.2r

114.3'

111.0

115.0

116.0r

107.0r

117.0r

120.0

114.0

120.0'

116.0

106.5
94.2
95.3
94.9
110.5
135.6
131.6
118.0
137.0
126.4

108.4
94.3
94.8
94.9
112.9
141.4
136.2
120.0
142.5
134.7

111.3
95.6
95.1
96.1
116.3
150.0
145.0
126.0
150.8
145.2

113.6
98.5
97.4
98.9
118.4
156.0
150.0
129.0
156.8
150.7

113.9
98.6
97.5
99.1
118.8
156.8
150.7
131.0
157.6
149.6

114.1
98.8
97.5
99.1
119.0
157.6
150.9
130.6
158.4
150.6

114.1
98.6
97.4
99.0
119.0
157.9
151.7
128.9
157.l r
150.5

114.0
98.2
97.1
98.6
119.1
157.6
150.6
128.1
158.3r
152.2

114.3
98.2
97.0
98.3
119.4
158.5
151.8
128.4
159.0
153.5

114.3
97.9
96.6
97.8
119.6
159.5
153.0
128.4
159.9
152.9

114.6
97.9
96.6
97.9
119.9
159.5
152.8
128.9
159.9
153.6'

114.7
97.9
96.5
97.8
120.1
n.a.
n.a.
n.a.
n.a.
154.0

140.3
123.2

144.5
124.7

148.2
125.5

150.3
126.6

150.9
126.9

151.4
127.1

151.9
127.6

152.2
128.1r

152.5
128.2

152.5
128.3

152.9
128.1

153.2
127.9

2
3
4
5
6
7

Industry groupings
8 Manufacturing
9 Capacity utilization, manufacturing (percent)'
10 Construction contracts3
11 Nonagricultural employment, total4
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 income5
20 Retail sales5
Prices6
21 Consumer (1982-84=100)
22 Producer finished goods (1982=100)

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 Survey of Current Business.
Figures for industrial production for the latest month are preliminary, and many figures
for the three months preceding the latest month have been revised. See "Recent Developments in Industrial Capacity and Utilization," Federal Reserve Bulletin, vol. 76 (June
1990), pp. 411-35. See also "Industrial Production Capacity and Capacity Utilization
since 1987," Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605.

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 November
1994. See "Industrial Production and Capacity Utilization: A Revision," Federal Reserve
Bulletin, vol. 81 (January 1995), pp. 16^26. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204.
2. Ratio of index of production to index of capacity. Based on data from the Federal
Reserve, DRI McGraw-Hill, U.S. Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential, nonresidential, and heavy engineering, from McGraw-Hill Information Systems Company, F.W.
Dodge Division.
4. Based on data from U.S. Department of Labor, Employment and Earnings. Series
covers employees only, excluding personnel in the armed forces.

2.11

LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT
Thousands of persons; monthly data seasonally adjusted
1995
Category

1992

1993

1994
Feb.

Mar.

Apr.

May

June

July'

Aug.'

Sept.

HOUSEHOLD SURVEY DATA

1 Civilian labor force2
Employment
2
Nonagricultural industries3
Agriculture
3
Unemployment
4
Number
5
Rate (percent of civilian labor force)

126,982

128,040

131,056

132,308

132,511

132,737

131,811

131,869

132,519

132,211

132,591

114,391
3,207

116,232
3,074

119,651
3,409

121,469
3,656

121,576
3,698

121,478
3,594

120,962
3,357

121,034
3,451

121,550
3,409

121,417
3,362

121,867
3,273

9,384
7.4

8,734
6.8

7,996
6.1

7,183
5.4

7,237
5.5

7,665
5.8

7,492
5.7

7,384
5.6

7,559
5.7

7,431
5.6

7,451
5.6

108,604

110,525

113,423

116,123

116,302

116,310

116,248

116,547

116,575

116,837

116,958

18,104
635
4,492
5,721
25,354
6,602
29,052
18,653

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

18,523
588
5,213
6,156
27,069
6,929
32,404
19,241

18,525
589
5,256
6,175
27,047
6,938
32,524
19,248

18,506
583
5,242
6,184
27,062
6,924
32,548
19,261

18,456
582
5,190
6,177
27,045
6,925
32,630
19,243

18,428
582
5,230
6,192
27,118
6,930
32,784
19,283

18,353
577
5,226
6,195
27,184
6,938
32,820
19,282

18,357
575
5,231
6,212
27,178
6,947
32,984
19,353

18,325
573
5,247
6,218
27,227
6,955
33,090
19,323

ESTABLISHMENT SURVEY DATA

6 Nonagricultural payroll employment 4
7
8
9
10
11
12
13
14

Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government

1. Beginning January 1994, reflects redesign of current population survey and population controls from 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.

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, selfemployed 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.

A46
2.12

Domestic Nonfinancial Statistics • December 1995
OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1
Seasonally adjusted
1994
Q4

1995

1994
Q3

Output (1987=100)

1994

1995

Capacity (percent of 1987 output)

1995

Capacity utilization rate (percent)2

1 Total industry

120.5

122.0

121.3

122.3

141.9

143.1

144.5

145.8

84.9

85.2

84.0 r

83.9

2 Manufacturing

122.7

124.3

123.2

124.0

145.3

146.6

148.2

149.7

84.5

84.7

83.2'

82.8

Primary processing3
Advanced processing4

118.4
124.8

119.3
126.6

117.2'
126.1

116.6
127.5

132.3
151.3

133.2
152.9

134.2
154.7

135.1
156.5

89.5
82.5

89.5
82.8

87.4'
81.5

86.3
81.4

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

129.4
107.9
119.4
123.3
113.9
167.5
169.4
141.5

131.6
107.6
120.4
125.4
113.7
171.5
174.0
145.9

130.4
103.9'
116.8
120.6
111.6
172.9'
176.9'
136.0

132.4
105.8
114.8
116.4
112.3
178.2
184.8
136.0

153.1
116.5
125.4
128.8
120.5
184.1
188.5
162.2

154.9
117.1
126.7
130.9
120.9
187.8
193.8
164.2

157.1
118.0
127.5
131.7
121.6
192.6
199.9
166.5

159.2
118.8
128.2
132.5
122.3
197.4
205.9
168.8

84.6
92.7
95.2
95.8
94.5
91.0
89.9
87.2

84.9
91.9
95.0
95.9
94.1
91.3
89.8
88.8

83.0
88.0
91.6
91.6
91.8
89.8
88.5'
81.7

83.1
89.0
89.5
87.9
91.8
90.3
89.8
80.6

80.8

81.5

82.1

81.6

129.1

128.8

128.5

128.3

62.6

63.3

63.9

63.6

14
15
16
17
18
19

Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials....
Petroleum products . . . .

115.3
111.6
120.6
126.0
130.2
106.5

116.1
111.8
120.3
129.7
134.3
107.8

115.3'
108.7'
119.7'
127.9'
128.8
106.4

114.7
105.3
118.0
128.2

137.1
122.7
128.4
156.2
132.6
115.1

138.0
123.5
129.3
157.6
133.8
115.3

138.9
124.3
130.1
159.0
115.5

84.6
91.4
94.4
81.4
98.9
92.5

84.7
91.1
93.6
83.1
101.3
93.7

83.5
88.1'
92.6'
81.2'
96.2
92.2'

82.6
84.8
90.7
80.6

106.9

136.3
122.0
127.7
154.7
131.6
115.1

92.6

99.2
116.3
117.3

100.3
118.2
118.5

100.5
120.7'
120.9

101.0
125.2
126.6

111.4
135.8
133.6

111.4
136.3
134.1

111.4
136.8
134.7

111.4
137.3
135.3

89.0
85.6
87.8

90.0
86.8
88.4

90.2
88.2
89.7

90.7
91.2
93.6

1973

1975

Previous cycle5

High

Low

High

3
4

20 Mining
21 Utilities
22
Electric

Low

Latest cycle6
High

Low

1994
Sept.

1995
Apr.

May

June'

July'

Aug.

Sept.?

Capacity utilization rate (percent)2
1 Total industry

89.2

72.6

87.3

71.8

84.9

78.0

84.2

84.1

84.0

83.7

83.6

84.2

83.8

2 Manufacturing

88.9

70.8

87.3

70.0

85.2

76.6

83.6

83.5

83.1

82.8

82.5

83.0

82.9

92.2
87.5

68.9
72.0

89.7
86.3

66.8
71.4

89.0
83.5

77.9
76.2

88.2
81.8

88.0
81.8

87.5
81.4

86.6
81.3

86.4
81.0

86.3
81.7

86.3
81.6

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
76.3
74.0
72.1
75.0

83.6
92.6
92.6
92.0
93.5

83.4
89.1
92.6
93.3
91.8

82.8
87.1
92.3
92.7
91.9

82.7
88.0
90.0
88.9
91.6

82.6
88.2
90.3
87.9
93.6

83.4
89.4
88.6
87.0
90.7

83.5
89.4
89.7
88.8
91.1

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

72.5
76.6
57.6

90.2
88.9
85.3

90.2
88.5
83.9

90.0
88.5
80.7

89.2
88.5
80.5

89.9
89.3
78.8

90.5
89.9
81.5

90.5
90.1
81.4

77.0

66.6

81.1

66.9

88.4

79.4

62.9

64.1

63.8

63.5

63.8

63.5

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

80.4
78.9
86.5
78.9
74.8
83.7

83.8
89.0
93.2
80.4
95.7
91.4

83.8
90.2
92.7
81.3
97.1
92.8

83.7
88.7
93.8
81.1
97.0
92.1

83.1
85.2
91.2
81.1
94.6
91.8

82.6
83.4
92.7
80.6
92.8
92.6

82.7
86.0
90.9
80.7

82.4
84.9
88.5
80.7

91.0

94.1

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

86.0
83.2
86.5

89.8
86.0
87.9

90.4
86.4
88.1

90.2
89.2
90.2

90.1
89.1
90.7

91.2
90.3
92.5

90.2
94.2
97.4

90.7
89.0
90.8

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Primary processing3
Advanced processing4

20 Mining
21 Utilities
22 Electric

1. Data in this table also appeal 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 November
1994. See "Industrial Production and Capacity Utilization: A Revision," Federal Reserve
Bulletin, vol. 81 (January 1995), pp. 16—26. 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.

Selected Measures
2.13

INDUSTRIAL PRODUCTION

A47

Indexes and Gross Value1

Monthly data seasonally adjusted

portion

1995

1994

1992
Group

1994
avg.
Sept.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

Juner

Julyr

Aug.

Sept.p

Index (1987 = 100)
MAJOR MARKETS

100.0

118.1

119.0

119.5

120.3

121.7

122.0

122.1

122.0

121.2

121.4

121.5

122.9

122.6

60.9
46.6
28.5
5.5
2.5
1.6
.9
.7
.9
3.0

115.9
118.4
113.2
119.4
125.5
125.4
94.9
180.7
123.2
114.1

116.4
118.9
113.0
119.1
123.8
122.5
90.2
181.5
123.9
115.2

116.9
119.2
113.0
119.4
124.5
122.3
92.9
175.5
126.6
115.2

117.5
119.8
113.9
120.5
127.1
126.5
94.0
185.8
125.7
115.0

118.7
121.2
115.5
123.4
131.1
131.4
100.5
187.3
127.8
116.8

119.1
121.6
115.7
124.5
131.7
132.7
103.6
184.6
126.9
118.3

119.1
121.8
115.7
123.4
132.3
133.5
103.6
187.1
127.0
115.9

118.9
121.6
114.9
121.4
129.7
130.8
103.1
180.0
124.8
114.3

118.0
121.0
114.4
119.4
126.1
124.9
94.4
180.2
126.1
113.8

118.2
121.1
114.4
116.5
121.1
119.0
88.2
175.4
122.9
112.6

118.5
121.5
114.9
117.1
122.9
120.2
86.6
182.3
125.9
112.2

118.4
121.4
114.2
115.5
119.7
115.4
88.9
162.9
126.3
112.1

119.7
122.8
115.8
118.9
125.0
123.8
88.6
188.9
124.9
113.7

119.5
122.7
115.2
119.9
126.4
124.6
90.6
187.1
127.6
114.5

.7
.8
1.5
23.0
10.3
2.4
4.5
2.9
2.9
.9
2.1

126.0
105.0
113.8
111.8
110.5
95.9
129.7
104.7
113.9
106.7
116.8

130.2
104.1
114.6
111.7
111.9
95.5
127.5
105.2
110.5
107.4
111.8

124.9
107.4
114.9
111.5
112.2
96.2
127.2
103.6
109.8
103.9
112.2

126.9
105.9
114.5
112.4
112.4
96.2
130.5
104.6
110.6
109.8
110.7

131.5
108.0
114.9
113.7
114.3
96.8
134.0
104.3
109.6
107.4
110.3

132.1
110.2
116.5
113.6
113.1
96.1
137.0
103.4
110.4
107.4
111.6

125.8
107.9
115.8
113.9
112.9
94.7
136.6
104.1
114.1
109.1
116.0

122.7
106.5
114.7
113.5
112.9
94.6
135.9
102.9
113.3
110.6
114.3

121.9
106.9
113.8
113.3
113.8
93.6
133.7
104.2
111.2
109.9
111.6

123.6
104.1
112.3
114.0
114.1
93.3
133.5
103.7
116.8
108.3
120.4

124.8
101.9
112.3
114.5
115.2
91.1
135.4
103.2
117.0
108.2
120.6

125.9
102.4
114.0
113.9
89.7
134.2
105.0
118.6
108.3
122.9

127.7
105.4
111.8
115.1
114.2
90.2
136.8
104.0
123.1
105.4
130.6

129.9
105.9
112.1
114.2
114.1
89.6
137.0
103.1
117.3
110.6
120.1

18.1
14.0
5.7
1.5
4.0
2.6
1.2
1.7
3.4
.5
.2

126.5
146.7
176.4
284.2
120.9
137.9
148.0
129.4
71.0
90.8
137.3

128.0
149.5
181.1
295.8
123.0
136.8
147.7
133.3
68.8
93.9
138.4

128.8
150.9
183.2
300.5
124.4
137.1
149.2
134.3
68.7
88.3
142.0

128.9
151.0
184.2
305.7
124.1
137.5
151.6
133.1
69.0
86.0
143.1

130.1
152.6
188.3
311.9
124.1
137.8
152.6
133.1
68.7
86.0
153.6

130.9
153.7
188.7
318.0
125.9
139.7
157.2
133.5
68.6
86.7
153.6

131.2
154.5
189.1
325.3
126.1
143.4
157.7
132.9
67.7
89.1
147.4

132.0
155.9
192.3
331.8
126.2
144.7
154.9
132.6
67.5
85.7
148.3

131.3
154.9
193.7
340.0
124.8
140.8
147.1
130.4
66.8
89.2
147.2

131.4
154.9
194.3
346.8
125.6
137.4
142.2
131.2
66.8
91.9
150.4

131.7
155.5
196.3
350.5
125.8
138.0
142.8
128.8
66.9
86.4
152.4

132.7
156.9
198.2
360.0
127.2
138.2
145.7
130.7
66.5
89.6
147.6

133.9
158.8
201.8
366.8
128.8
138.1
146.2
130.5
66.2
89.6
153.7

134.4
159.5
203.1
374.2
129.3
138.3
147.7
130.7
65.6
91.3

Equipment
Business equipment
Information processing and related
Computer and office equipment
Industrial
Transit
Autos and trucks
Other
Defense and space equipment
Oil and gas well drilling
Manufactured homes

34
35
36

Intermediate products, total
Construction supplies
Business supplies

14.3
5.3
9.0

108.1
106.8
109.1

108.6
108.6
108.7

109.9
109.7
110.1

110.6
109.8
111.3

110.9
111.6
110.7

111.3
112.2
110.9

110.9
111.0
111.0

110.7
110.5
110.9

108.9
108.6
109.3

109.4
107.1
111.0

109.3
107.2
110.8

109.4
107.7
110.6

110.3
108.3
111.8

110.0
109.0
110.9

37
38
39
40
41
4?
43
44
45
46
47
48
49
50

Durable goods materials
Durable consumer parts
Equipment parts
Other
Basic metal materials
Nondurable goods materials
Textile materials
Paper materials
Chemical materials
Other
Energy materials
Primary energy
Converted fuel materials

39.1
20.6
3.9
7.5
9.1
3.0
8.9
1.1
1.8
4.0
2.0
9.6
6.3
3.3

121.5
131.2
132.2
143.1
121.3
119.7
118.4
105.3
118.7
123.2
116.9
105.2
100.3
114.9

122.9
133.3
133.1
146.7
122.8
121.1
119.8
105.9
121.5
124.0
118.2
105.6
100.8
115.1

123.4
134.2
133.8
149.0
122.7
121.3
120.3
106.9
120.5
124.6
119.5
105.2
100.3
115.1

124.6
136.0
135.8
150.7
124.6
123.2
121.5
110.3
122.1
125.9
119.3
104.9
100.7
113.4

126.3
138.6
139.7
152.3
127.3
126.0
122.8
108.7
121.3
127.5
123.4
105.3
101.7
112.3

126.5
139.1
139.1
153.6
127.6
125.6
122.3
109.8
120.8
128.6
119.1
105.6
101.7
113.4

126.7
139.2
139.1
155.1
126.7
124.8
121.8
108.5
122.1
128.3
116.8
106.6
102.0
115.6

126.7
139.2
138.3
156.2
126.3
125.2
121.7
108.8
124.1
127.6
116.0
106.6
102.5
114.7

126.1
138.4
134.7
157.7
124.9
123.5
120.9
108.1
121.9
127.0
115.8
106.7
102.4
115.2

126.3
138.3
132.7
158.9
124.7
123.6
121.4
106.7
125.8
127.5
114.7
107.1
102.1
116.9

125.8
138.2
132.8
160.1
123.6
120.9
119.5
102.4
120.4
126.1
116.0
107.2
102.6
116.2

126.4
139.0
131.1
163.3
123.6
122.5
119.0
97.5
123.9
126.3
113.5
108.2
103.3
118.0

127.7
141.1
135.6
166.0
124.2
121.4
119.3
102.9
121.7
126.2
113.4
108.7
103.0
120.1

127.5
142.0
135.8
168.1
124.5
122.4
118.2
101.4
117.9
126.0
113.3
107.1
102.0
117.2

97.2
95.2

117.6
117.1

118.6
118.0

119.1
118.5

119.8
119.2

121.1
120.5

121.4
120.8

120.8
120.3

121.2
120.7

121.1
120.7

121.4
121.0

122.6
122.1

122.3
121.9

98.3
26.9
25.6

115.4
112.4
113.1

116.1
112.4
113.3

116.6
112.4
113.3

117.4
113.1
114.2

118.7
114.5
116.2

118.9
114.6
116.3

118.9
114.5
115.9

118.7
113.9
115.1

117.9
113.8
114.8

118.0
114.1
114.1

117.9
114.6
114.7

118.0
114.2
113.7

119.3
115.2
114.9

119.0
114.6
115.0

12.8

146.5

149.5

151.0

150.9

152.5

153.3

154.1

155.9

155.6

156.1

156.7

157.9

159.9

160.5

134.7
133.8

135.4
134.0

135.6
133.9

136.6
133.9

135.0
133.0

134.4
133.1

134.7
132.5

135.5
132.9

136.8
134.4

137.0
134.7

1 Total index

? Products
Final products
Consumer goods, total
4
Durable consumer goods
6
Automotive products
Autos and trucks
7
8
Autos, consumer
9
Trucks, consumer
Auto parts and allied goods
in
Other
n
Appliances, televisions, and air
12
conditioners
Carpeting and furniture
N
14
Miscellaneous home goods
Nondurable consumer goods
15
Foods and tobacco
16
Clothing
17
Chemical products
18
Paper products
19
Energy
?N
Fuels
71
Residential utilities
22
?3

?4
75
?6
?7
?8
?9
31
3?

111.1

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

12.5
29.5

130.7
127.3

132.7
129.2

133.8
129.9

133.6
131.6

A48
2.13

Domestic Nonfinancial Statistics • December 1995
INDUSTRIAL PRODUCTION

Group

sie
code

Indexes and Gross Value 1 —Continued

1992
proportion

1994
avg.
Sept.

Oct.

Nov.

Dec

Apr.

May

Juner

Julyr

Aug.

Sept.F

Index (1987 = 100)
MAJOR INDUSTRIES

59 Total index

100.0

118.1

119.0

119.5

120.3

121.7

122.0

122.1

122.0

121.2

121.4

121.5

122.9

122.6

60 Manufacturing
61 Primary processing
62 Advanced processing

85.5
26.5
59.0

119.7
115.3
121.8

120.9
116.2
123.1

121.5
116.6
123.8

122.6
118.4
124.6

124.2
120.3
126.0

124.5
119.8
126.6

124.2
119.1
126.6

124.2
118.9
126.7

123.3
117.7
126.0

123.2
117.4
125.9

123.2
116.5
126.3

123.1
116.4
126.3

124.3
116.6
127.9

124.6
116.9
128.2

63
64
65
66

45.1
2.0
1.4

125.5
106.0
111.4

127.2
107.6
112.4

128.0
106.7
114.8

129.1
106.7
113.0

131.2
110.4
114.7

131.6
110.2
116.0

131.5
107.4
115.6

131.6
105.2
113.8

130.4
104.9
112.7

130.1
102.7
111.4

130.5
104.0
112.3

130.9
104.5
112.3

132.7
106.2
113.5

133.5
106.5
113.2

2.1
3.1
1.7

104.9
114.5
118.3
107.9
109.3
110.8

105.8
116.0
118.2
109.9
112.7
111.6

105.4
115.9
118.8
109.0
111.8
112.2

106.9
119.1
121.9
114.2
115.2
113.3

110.1
123.0
129.3
121.9
114.8
115.3

108.7
120.9
125.9
114.6
114.2
115.3

107.4
119.8
124.3
117.2
113.8
114.9

108.1
120.5
126.1
117.2
113.1
114.6

105.8
117.8
122.6
114.3
111.5
112.9

106.1
117.7
122.1
112.4
111.8
113.8

106.8
115.0
117.3
112.7
111.6
114.5

105.6
115.6
116.2
110.9
114.3
113.3

105.3
113.6
115.3
113.6
111.0
115.4

106.0
115.3
117.8

79
80

Durable goods
Lumber and products
"'24
Furniture and fixtures
25
Stone, clay, and glass
products
32
Primary metals
33
Iron and steel
331,2
Raw steel
Nonferrous
333-6,9
Fabricated metal products. . .
34
Industrial machinery and
equipment
35
Computer and office
equipment
357
Electrical machinery
36
Transportation equipment. . .
37
Motor vehicles and parts .
371
Autos and light trucks .
371
Aerospace and
miscellaneous
transportation
equipment
372-6,9
Instruments
38
Miscellaneous
39

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

67
68
69
70
71
72
73
74
75
76
77
78

92 Mining
93 Metal
94 Coal
95 Oil and gas extraction
96 Stone and earth minerals
97 Utilities
98 Electric
99 Gas

"20
21
22
23
26
27
28
29
30
31
"lO
12
13
14
49L3PT
492,3PT

1.4
5.0

11L6
116.3

7.9

159.9

164.6

166.5

167.5

168.5

171.4

171.1

172.0

172.3

173.3

173.1

175.9

178.6

180.0

1.7
7.3
9.6
4.8
2.5

284.2
160.0
109.7
137.9
131.9

295.8
165.0
108.8
137.4
128.4

300.5
166.9
109.0
138.4
128.6

305.7
168.8
110.5
141.4
132.7

311.9
172.5
111.9
144.6
138.4

318.0
172.9
112.6
146.1
140.0

325.3
174.0
113.5
146.7
140.8

331.8
175.2
112.9
144.8
138.2

340.0
175.1
110.1
139.0
131.3

346.8
176.9
107.6
134.4
124.8

350.5
178.7
107.7
134.7
125.7

360.0
182.1
106.4
132.4
121.6

366.8
185.1
109.1
137.6
129.4

374.2
187.3
109.1
138.1
130.4

4.8
5.4
1.3

82.6
107.4
116.2

81.4
108.0
117.0

80.8
108.2
118.4

80.9
107.7
118.6

80.6
108.9
117.6

80.4
108.4
119.1

81.7
107.7
120.3

82.3
108.5
119.0

82.4
108.4
118.2

82.0
107.5
117.3

82.0
108.1
118.2

81.5
107.8
115.7

81.8
109.1
116.8

81.4
108.4
117.8

40.5
9.4
1.6
1.8
2.2
3.6
6.8

113.3
112.8
96.5
109.0
96.3
117.4
101.1
124.1
105.3
133.5
85.8

113.7
114.6
96.1
108.3
96.8
118.7
100.9
123.7
105.3
134.7
85.4

114.2
113.4
104.5
110.6
96.9
118.9
101.4
123.8
104.0
136.7
85.6

115.4
113.9
101.5
112.0
96.8
121.3
102.0
126.2
107.6
138.3
84.5

116.4
114.7
108.0
112.2
97.0
121.7
101.6
128.0
107.7
140.0
84.4

116.5
115.9
97.3
113.3
96.6
119.8
101.3
130.4
107.4
140.2
82.9

116.1
115.7
96.4
110.9
95.8
120.3
100.8
129.7
107.6
140.5
82.8

115.8
115.4
97.9
111.2
95.4
120.6
100.4
129.2
108.5
139.1
82.7

115.4
115.3
104.1
111.2
93.9
119.6
99.7
127.8
106.9
139.6
80.2

115.5
116.5
101.4
109.6
93.5
121.2
100.3
127.8
106.2
136.6
80.5

115.0
116.8
104.3
105.4
91.1
118.2
99.6
128.2
105.9
136.3
78.5

114.5
115.6
103.2
103.5
89.8
120.3
99.4
127.7
106.9
135.9
76.8

114.9
116.2
102.1
106.8
90.4
118.3
100.3
128.3
105.1
136.7
78.5

114.7
116.4
99.5
105.7
89.8
115.4
99.8
128.7
108.7
137.3
79.0

6.8
.4
1.0
4.7

99.8
159.4
112.0

100.1
160.0
110.7

93.0

93.7

107.0

106.7

99.2
158.9
110.2
92.2
109.3

98.3
154.3
110.1
91.2
109.9

100.1
156.2
117.8
92.2
109.9

100.0
158.5
117.9
91.2
115.1

100.6
160.4
118.6
92.3
112.0

100.2
159.3
117.4
91.6
114.8

100.7
158.7
114.1
93.0
114.2

100.5
159.9
109.7
93.7
112.5

100.4
162.5
111.9
93.1
111.5

101.6
167.5
114.5
93.6
114.6

100.4
173.3
108.4
92.9
114.0

101.0
169.7
113.8
92.8
115.3

7.7

6.1
1.6

118.1
117.8
119.2

116.5
117.1
114.2

117.2
117.9
114.4

116.5
117.5
112.3

115.2
116.5
109.8

116.5
117.2
113.7

119.2
119.0
120.1

118.9
119.3
117.3

118.0
118.6
115.9

122.1
121.6
123.9

122.0
122.4
120.4

123.9
124.9
119.7

129.3
131.8
119.3

122.3
123.0
119.6

80.7

118.6

119.9

120.5

121.5

122.9

123.2

122.9

122.4

122.5

122.6

123.5

123.8

83.8

116.5

117.5

118.1

119.1

120.6

120.8

120.5

120.4

119.4

119.2

119.1

119.0

120.0

120.3

9.9

1.4
3.5
.3

SPECIAL AGGREGATES

100 Manufacturing excluding motor
vehicles and parts
101 Manufacturing excluding office
and computing machines . . .

Gross value (billions of 1987 dollars, annual rates)

MAJOR MARKETS

102 Products, total

1,707.0 2,006.2 2,015.6 2,020.4 2,037.2 2,056.5 2,063.2 2,066.5 2,065.1 2,049.6 2,051.8 2,056.4 2,056.4 2,078.6 2,082.4

103 Final
104 Consumer goods
105 Equipment
106 Intermediate

1,314.6 1,576.3 1,584.2 1,584.4 1,598.4 1,615.1 1,621.1 1,626.4 1,626.1 1,615.5 1,616.5 1,621.6 1,620.2 1,639.6 1,643.9
866.6
981.5
977.0
982.5
988.5
999.6 1,000.2 1,001.9
997.3
989.6
989.3
992.4
984.5
997.2
997.9
448.0
593.8
602.7
607.3
609.9
615.5
620.9
624.5
628.7
625.9
627.2
629.3
635.7
642.3
646.0
392.5
431.4
436.0
441.4
429.8
438.8
442.0
440.1
434.1
435.3
439.0
434.7
436.1
439.1
438.5

1. Data in this table also appeal' 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 November
1994. See "Industrial Production and Capacity Utilization: A Revision," Federal Reserve

Bulletin, vol. 81 (January 1995), pp. 16-26. For a detailed description of the industrial
production index, see "Industrial Production: 1989 Developments and Historical Revision," Federal Reserve Bulletin, vol. 76, (April 1990), pp. 187-204.
2. Standard industrial classification.

Selected Measures
2.14

A49

HOUSING AND CONSTRUCTION
Monthly figures at seasonally adjusted annual rates except as noted
1995

1994
Item

1992

1993

1994
Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May

June

Julyr

Aug.

Private residential real estate activity (thousands of units except as noted)
NEW UNITS
1,095
911
184
1,200
1,030
170
612
473
140
1,158
964
194
210

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

1,358
1,025
333
1,536
1,186
350
787
587
200
1,371
1,136
235
322

1,420
1,105
315
1,545
1,250
295
791
584
207
1,388
1,173
215
347

1,293
990
303
1,366
1,055
311
792
578
214
1,436
1,209
227
361

1,282
931
351
1,319
1,048
271
797
579
218
1,302
1,080
222
335

1,235
911
324
1,238
987
251
769
552
217
1,443
1,222
221
333

1,243
905
338
1,269
1,009
260
763
544
219
1,334
1,089
245
318

1,243
930
313
1,282
988
294
755
536
219
1,342
1,072
270
329

1,275
958
317
1,298
1,034
264
756
534
222
1,256
1,053
203
329

1,355
1,011
344
1,432
1,107
325
762
537
225
1,322
1,045
277
319

1,368
1,044
324
1,392
1,127
265
776
549
227
1,217
986
231
335

610
265

666
293

670
338

642
335

627
338

643
342

575
347

612
347

607
348

667r
347

726
347

785
346

710
352

121.3
144.9

126.1
147.6

130.4
153.7

129.9
155.4

135.0
159.6

127.9
147.4

135.0
160.2

130.0
153.3

134.0
157.8

133.9r
158.0r

133.6
160.3

131.1
154.8

133.0
162.6

18 Number sold

3,520

3,800

3,946

3,690

3,760

3,610

3,420

3,620

3,390

3,550

3,800

3,990

4,120

Price of units sold (thousands
of dollars)2
19 Median
20 Average

103.6
130.8

106.5
133.1

109.6
136.4

108.7
134.7

109.1
135.6

108.1
135.3

107.0
133.4

107.9
134.5

108.1
134.2

109.0
135.4

116.2
143.3

115.9
142.2

117.6
144.4

1
2
3
4
5
6
7
8
9
10
11
12
13

Permits authorized
One-family
Two-family or more
Started
One-family
Two-family or more
Under construction at end of period1
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 period1
Price of units sold (thousands
of dollars)2
16 Median
17 Average
EXISTING UNITS (one-family)

Value of new construction (millions of dollars)3
CONSTRUCTION

435,022

464,504

506,904

520,183

521,771

521,054

521,429

523,467 526,297 r 518,616 r

523,277

531,614

530,421

22 Private
23
Residential
24
Nonresidential
Industrial buildings
25
26
Commercial buildings
27
Other buildings
Public utilities and other
28

315,695
187,870
127,825
20,720
41,523
21,494
44,088

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

387,052
242,447
144,605
25,060
52,008
24,147
43,390

386,103
243,565
142,538
22,769
53,491
24,694
41,584

384,806
241,938
142,868
22,715
53,338
24,373
42,442

383,652
240,207
143,445
23,370
53,687
24,039
42,349

383,301
237,894
145,407
23,911
55,439
23,062
42,995

386,423r 380,249r
238,312r 235,443r
148,111' 144,806r
24,707r
24,760r
55,01 l r 51,779r
r
23,948
24,319r
43,948'
44,445r

381,830
232,732
149,098
24,416
55,420
23,447
45,815

390,052
237,844
152,208
24,399
56,259
24,424
47,126

390,333
241,783
148,550
23,878
52,916
23,808
47,948

79 Public
30
Military
Highway
31
32
Conservation and development
33
Other

119,322
2,502
34,899
6,021
75,900

125,342
2,454
37,431
5,978
79,479

130,337
2,319
39,882
6,228
81,908

133,131
2,354
39,283
6,331
85,163

135,668
2,784
38,464
7,466
86,954

136,248
2,925
38,574
6,681
88,068

137,777
2,624
38,681
7,128
89,344

140,166
3,048
40,667
7,139
89,312

139,874r
2,736r
41,158r
6,273r
89,707r

141,447
2,569
40,875
6,117
91,886

141,562
2,362
44,099
5,259
89,842

140,088
2,451
41,996
5,336
90,305

21 Total put in place

1. Not at annual rates.
2. Not seasonally adjusted.
3. Recent data on value of new construction may not lie strictly comparable with data
for previous periods because of changes by the Bureau of the Census in its estimating
techniques. For a description of these changes, see Construction Reports (C-30-76-5),
issued by the Census Bureau in July 1976.

138,367r
2,442r
38,657'
5,531'
91,737'

SOURCES. Bureau of the Census estimates for all series except (1) mobile homes, which
are private, domestic shipments as reported by the Manufactured Housing Institute and
seasonally adjusted by the Census Bureau, and (2) sales and prices of existing units,
which are published by the National Association of Realtors. All back and current figures
are available from the originating agency. Permit authorizations are those reported to the
Census Bureau from 19,000 jurisdictions beginning in 1994.

A50
2.15

Domestic Nonfinancial Statistics • December 1995
CONSUMER AND PRODUCER PRICES
Percentage changes based on seasonally adjusted data except as noted
Change from 12
months earlier
Item

Change from 3 months earlier
(annual rate)
1994

1994
Sept.

Change from 1 month earlier

1995

1995
Sept.
Dec.

Mar.

June

Index
level,
Sept.
1995 1

1995
Sept.

Mayr

June r

July

Aug.

Sept.

CONSUMER PRICES2

(1982-84=100)
I All items

3.0

2.5

1.9

3.2

1.8

153.2

2 Food
3 Energy items
4 All items less food and energy
5
Commodities
6
Services

2.8
2.9
3.0
1.9
3.5

2.7
-1.8
2.9
1.5
3.6

3.9
.4
2.0
.3
2.6

.0
-1.1
4.1
2.6
4.8

3.6
5.4
3.0
.6
4.3

3.6
-11.5
2.8
2.3
3.0

.1
.5
.2
.0
.3

.1
.5
.2
-.1
.3

.2
-.8
.2
.1
.3

.2
-.8
.2
.4
.1

.5
-1.4
.2
.1
.3

148.9
106.2
162.1
139.7
174.9

7 Finished goods
8
Consumer foods
9
Consumer energy
10
Other consumer goods
11
Capital equipment

1.5
.5
.1
1.8
2.5

1.8
2.9
-.8
2.2
1.6

2.2
9.2
.0
.6
-.3

3.2
-1.2
11.3
2.9
3.0

.9
-4.9
2.0
3.2
2.4

.9
9.1
-14.7
2.3
1.5

.2
-.7
.6
.4
.2

-.2
-.4
-1.0
.1
.1

.0
1.2
-2.5
.2
.1

-.1
.0
-.9
.1
.1

.3
1.0
-.5
.3
.1

127.9
129.9
79.0
141.3
135.7

Intermediate materials
12 Excluding foods and feeds
13 Excluding energy

2.9
3.6

5.1
6.2

7.2
8.3

10.6
10.5

3.9
4.2

-.6
1.8

.3
.3

.0
.1

.0
.3

-.1
.1

126.6
136.2

-5.9
-4.3
13.9

7.3
-5.8
7.5

-1.2
-7.6
27.9

-4.6
-4.5
21.9

-.4
15.3
4.1

41.7
-22.4
-17.8

-2.8
.6
-.3

3.9
-1.1
.1

4.1
-5.4
-1.8

.7
-3.8
-.9

4.2
3.2
-2.1

108.7
67.2
171.1

PRODUCER PRICES

(1982=100)

Crude materials
14 Foods
15 Energy
16 Other

1. Not seasonally adjusted.
2. Figures for consumer prices are for all urban consumers and reflect a rentalequivalence measure of homeownership.

SOURCE. U.S. Department of Labor, Bureau of Labor Statistics.

Selected Measures
2.16

A51

GROSS DOMESTIC PRODUCT AND INCOME
Billions of current dollars except as noted; quarterly data at seasonally adjusted annual rates
1995

1994
Account

1992

1993

1994
Q2

Q2r

GROSS DOMESTIC PRODUCT

6,020.2

6,343.3

6,738.4

6,689.9

6,791.7

6,897.2

6,977.4

7,030.0

4,136.9
492.7
1,295.5
2,348.7

4,378.2
538.0
1,339.2
2,501.0

4,628.4
591.5
1,394.3
2,642.7

4,586.4
580.3
1,381.4
2,624.7

4,657.5
591.5
1,406.1
2,659.9

4,734.8
617.7
1,420.7
2,696.4

4,782.1
615.2
1,432.2
2,734.8

4,851.0
620.3
1,446.2
2,784.5

788.3
785.2
561.4
171.1
390.3
223.8

882.0
866.7
616.1
173.4
442.7
250.6

1,032.9
980.7
697.6
182.8
514.8
283.0

1,034.4
967.0
683.3
181.8
501.5
283.6

1,055.1
992.5
709.1
184.6
524.5
283.4

1,075.6
1,020.8
732.8
192.0
540.7
288.0

1,107.8
1,053.3
766.4
198.6
567.8
286.8

1,094.1
1,056.9
779.3
204.3
575.0
277.6

Change in business inventories
Nonfarm

3.0
-2.7

15.4
20.1

52.2
45.9

67.4
60.4

62.6
53.4

54.8
47.4

54.5
54.1

37.2
37.9

14 Net exports of goods and services
15
Exports
16
Imports

-30.3
638.1
668.4

-65.3
659.1
724.3

-98.2
718.7
816.9

-97.6
704.5
802.1

-109.6
730.5
840.1

-98.9
765.5
864.4

-111.1
778.8
889.9

-124.7
797.5
922.2

17 Government purchases of goods and services
18
Federal
State and local

1,125.3
449.0
676.3

1,148.4
443.6
704.7

1,175.3
437.3
738.0

1,166.7
435.1
731.5

1,188.8
444.3
744.5

1,185.8
431.9
753.8

1,198.7
434.4
764.3

1,209.6
434.7
774.8

By major type of product
20 Final sales, total
21
Goods
22
Durable
23
Nondurable
24
Services
25
Structures

6,017.2
2,292.0
968.6
1,323.4
3,227.2

6,327.9
2,390.4
1,032.4
1,358.1
3,405.5
532.0

6,686.2
2,532.4
1,118.8
1,413.6
3,576.2
577.6

6,622.5
2,493.7
1,099.4
1,394.3
3,555.4
573.4

6,729.1
2,543.6
1,125.8
1,417.8
3,603.6
581.9

6,842.4
2,603.3
1,151.8
1,451.5
3,641.9
597.3

6,922.9
2,638.1
1,175.0
1,463.1
3,680.6
604.3

6,992.8
2,650.0
1,178.6
1,471.4
3,741.0
601.8

3.0
-13.0
16.0

15.4

52.2
34.8

67.4

4,979.3

4,829.5

1 Total
2
3
4
5

By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services

6 Gross private domestic investment
7
Fixed investment
8
Nonresidential
9
Structures
in
Producers' durable equipment
n
Residential structures
12
13

26 Change in business inventories
27
Durable goods
28
Nondurable goods

498.1

38.2
29.2

62.6
44.1
18.5

54.8
36.3
18.5

54.5
48.0
6.5

37.2
28.3

17.4

5,134.5

5,344.0

5,314.1

5,367.0

5,433.8

5,470.1

5,487.8

5,131.4

5,458.4

5,430.7

5,494.9

5,599.4

5,688.4

5,719.4

4,157.3
3,403.4
617.2
2,786.2
753.9
354.3
399.6

4,183.0
3,422.3
620.3
2,802.0
760.8
356.8
403.9

493.6
449.2
44.4

487.2
452.2
35.0

8.6
6.7

8.9

MEMO

29 Total GDP in 1987 dollars
NATIONAL INCOME

30 Total
31 Compensation of employees
32
Wages and salaries
33
Government and government enterprises
34
Other
35
Supplement to wages and salaries
36
Employer contributions for social insurance
37
Other labor income
38 Proprietors' income'
39
Business and professional1
40
Farm1

41 Rental income of persons2

4,004.6
3,279.0
602.8
2,676.2
725.6
344.6
381.0

3,979.3
3,257.2
601.9
2,655.4
722.0
343.6
378.4

4,023.7
3,293.9
604.4
2,689.6
729.7
346.0
383.7

4,095.3
3,356.4
609.0
2,747.4
738.9
350.2
388.7

441.6

473.7
434.2
39.5

471.3
431.9
39.3

467.0

404.3
37.3

437.1
29.8

485.7
444.0
41.7

3,591.2
2,954.8
567.3
2,387.5
636.4
307.7
328.7

3,780.4
3,100.8
583.8
2,517.0
679.6
324.3
355.3

418.7
374.4
44.4
-5.5

24.1

27.7

34.1

32.6

29.0

25.4

24.2

42 Corporate profits'
43
Profits tefore tax3
44
Inventory valuation adjustment
45
Capital consumption adjustment

405.1
395.9
-6.4
15.7

485.8
462.4
-6.2
29.5

542.7
524.5
-19.5
37.7

546.4
523.1
-14.1
37.4

556.0
538.1
-19.6
37.5

560.3
553.5
-32.1
38.8

569.7
570.6
-39.0
38.1

581.1
574.1
-28.2
35.2

46 Net interest

420.0

399.5

409.7

399.7

415.7

429.2

442.4

444.0

1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.

3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. U.S. Department of Commerce, Survey of Current Business.

A52
2.17

Domestic Nonfinancial Statistics • December 1995
PERSONAL INCOME AND SAVING
B i l l i o n s of current dollars e x c e p t as noted; quarterly data at seasonally adjusted annual rates

1994
Account

1992

1993

1995

1994
Q2

Q2R

PERSONAL INCOME AND SAVING
1 Total personal income

5,154.3

5,375.1

5,701.7

5,659.9

5,734.5

5,856.6

5,962.0

6,008.1

?
3
4

2,974.8
757.6
578.3
682.3
967.6
567.3

3,080.8
773.8
588.4
701.9
1,021.4
583.8

3,279.0
818.2
617.5
748.5
1,109.5
602.8

3,257.2
811.6
612.8
742.5
1,101.2
601.9

3,293.9
821.8
618.3
753.5
1,114.3
604.4

3,356.4
837.3
629.5
769.6
1,140.5
609.0

3,403.4
848.5
638.1
776.8
1,160.9
617.2

3,422.3
842.0
629.6
782.9
1,177.0
620.3

328.7
418.7
374.4
44.4
-5.5
161.0
665.2
860.2
414.0

355.3
441.6
404.3
37.3
24.1
181.3
637.9
915.4
444.4

381.0
473.7
434.2
39.5
27.7
194.3
664.0
963.4
473.5

378.4
471.3
431.9
39.3
34.1
191.7
649.4
957.6
470.7

383.7
467.0
437.1
29.8
32.6
196.9
674.2
969.0
476.5

388.7
485.7
444.0
41.7
29.0
202.7
701.1
979.7
483.1

399.6
493.6
449.2
44.4
25.4
205.5
723.6
1,004.8
496.7

403.9
487.2
452.2
35.0
24.2
208.1
739.3
1,018.6
503.4

6
7

Commodity-producing industries

Government and government enterprises

8
9
in
Business and professional'
11
1? Rental income of persons 2
n
14 Personal interest income
15
16
Old age survivors, disability, and health insurance benefits
17

LESS: Personal contributions for social insurance

18 EQUALS: Personal income

248.7

261.3

281.4

279.9

282.9

286.6

293.8

295.4

5,154.3

5,375.1

5,701.7

5,659.9

5,734.5

5,856.6

5,962.0

6,008.1

648.6

686.4

742.1

746.4

744.1

754.7

777.6

807.0

20 EQUALS: Disposable personal income

4,505.8

4,688.7

4,959.6

4,913.5

4,990.3

5,101.9

5,184.4

5,201.0

LESS: Personal outlays

4,257.8

4,496.2

4,756.5

4,712.4

4,787.0

4,869.3

4,920.7

4,994.9

22 EQUALS: Personal saving

247.9

192.6

203.1

201.1

203.3

232.6

263.7

206.1

19,489.7
13,110.4
14,279.0

19,878.8
13,390.8
14,341.0

20,475.8
13,715.4
14,696.0

20,389.7
13,650.9
14,625.0

20,536.5
13,716.6
14,697.0

20,739.8
13,853.5
14,927.0

20,836.3
13,880.1
15,048.0

20,858.6
13,965.7
14,973.0

5.5

4.1

4.6

5.1

4.0

LESS: Personal tax and nontax payments

MEMO
Per capita (1987 dollars)
23 Gross domestic product
?4 Personal consumption expenditures
25 Disposable personal income
26 Saving rate (percent)
GROSS SAVING
27 Gross saving

722.9

787.5

920.6

923.3

922.6

950.3

1,006.0

983.8

28 Gross private saving

980.8

1,002.5

1,053.5

1,041.4

1,052.7

1,082.7

1,126.4

1,090.0

99
30 Undistributed corporate profits 1
31 Corporate inventory valuation adjustment

247.9
94.3
-6.4

192.6
120.9
-6.2

203.1
135.1
-19.5

201.1
142.3
-14.1

203.3
139.5
-19.6

232.6
130.7
-32.1

263.7
132.6
-39.0

206.1
140.8
-28.2

396.8
261.8

407.8
261.2

432.2
283.1

425.9
272.1

432.6
277.3

438.0
281.3

445.3
284.7

454.7
288.4

-257.8
-282.7
24.8

-215.0
-241.4
26.3

-132.9
-159.1
26.2

-118.1
-145.1
27.0

-130.1
-154.0
23.9

-132.3
-161.1
28.8

-120.4
-148.6
28.2

-106.2
-129.6
23.4

37 Gross investment

731.7

789.8

889.7

899.3

901.5

907.9

947.4

916.8

38 Gross private domestic investment
39 Net foreign investment

788.3
-56.6

882.0
-92.3

1,032.9
-143.2

1,034.4
-135.1

1,055.1
-153.6

1,075.6
-167.7

1,107.8
-160.4

1,094.1
-177.3

8.8

2.3

-30.9

-24.0

-21.1

-42.4

-58.6

-67.0

Capital consumption

allowances

33 Noncorporate
34 Government surplus, or deficit ( - ) , national income and
35
36

State and local

40 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.

SOURCE. U.S. Department of Commerce, Survey of Current Business.

Summary Statistics
3.10

U.S. INTERNATIONAL TRANSACTIONS

A53

Summary

Millions of dollars; quarterly data seasonally adjusted except as noted1
1995

1994
Item credits or debits

1 Balance on current account
? Merchandise trade balance2
3
Merchandise exports
Merchandise imports
4
Military transactions, net
6 Other service transactions, net
7 Investment income, net
8 U.S. government grants
9 U.S. government pensions and other transfers
10 Private remittances and other transfers
11 Change in U.S. government assets other than official
reserve assets, net (increase, —)

1992

1993

1994
Q2

Q2P

-37,986
-41,494
122,730
-164,224
376
14,195
-2,285
-3,703
-1,063
-4,012

-39,714
-44,627
127,384
-172,011
1,124
14,696
-2,533
-3,488
-1,064
-3,822

-43,276
-43,488
133,926
-177,414
679
15,342
-4,571
-6,245
-1,063
-3,931

-39,025
-45,050
138,061
-183,111
542
15,068
-1,961
-2,867
-782
-3,975

-43,622
-49,040
142,543
-191,583
537
15,135
-2,874
-2,356
-988
-4,036

-61,548
-96,106
440,352
-536,458
-2,142
58,767
10,080
-15,083
-3,735
-13,330

-99,925
-132,618
456,823
-589,441
448
57,328
9,000
-16,311
-3,785
-13,988

-151,245
-166,099
502,485
-668,584
2,148
57,739
-9,272
-15,814
-4,247
-15,700

-1,661

-330

-322

491

-283

-931

-152

-157

-165
0
-111
273
-327

2,033
0
-121
-27
2,181

-5,318
0
-867
-526
-3,925

-2,722
0
-156
-786
-1,780

12 Change in U.S. official reserve assets (increase, - )
13 Gold
14 Special drawing rights (SDRs)
15 Reserve position in International Monetary Fund
16 Foreign currencies

3,901
0
2,316
-2,692
4,277

-1,379
0
-537
-44
-797

5,346
0
-441
494
5,293

3,537
0
-108
251
3,394

17 Change in U.S. private assets abroad (increase, - )
18 Bank-reported claims3
19 Nonbank-reported claims
20 U.S. purchases of foreign securities, net
21 U.S. direct investments abroad, net

-68,115
20,895
45
-46,415
-42,640

-182,880
29,947
1,581
-141,807
-72,601

-130,875
915
-32,621
-49,799
-49,370

-10,001
15,107
-10,230
-7,128
-7,750

-27,492
1,590
-8,051
-10,976
-10,055

-56,258
-16,651
-12,449
-15,238
-11,920

-69,873
-29,284
-11,518
-6,567
-22,504

-72,228
-35,534

40,466
18,454
3,949
2,180
16,571
-688

72,146
48,952
4,062
1,706
14,841
2,585

39,409
30,723
6,025
2,211
2,923
-2,473

9,162
5,919
2,360
174
1,674
-965

19,691
16,477
2,222
494
1,298
-800

-421
7,470
1,228
692
-9,856
45

22,308
10,131
1,126
-154
10,940
265

37,759
25,169
1,326
513
7,802
2,949

113,357
15,461
13,573
36,857
29,867
17,599

176,382
20,859
10,489
24,063
79,864
41,107

251,956
114,396
-4,324
33,811
58,625
49,448

37,364
28,231
-2,047
-7,317
12,551
5,946

60,045
19,650
487
5,428
14,762
19,718

85,136
34,676
-5,242
25,929
10,195
19,578

72,533
-531
10,113
29,910
15,816
17,225

76,459
15,006
29,966
20,202
11,285

0
-26,399

0
35,985

0
-14,269

-26,399

35,985

-14,269

0
-2,567
587
-3,154

0
-12,082
-6,641
-5,441

0
13,718
782
12,936

0
19,527
6,183
13,344

0
4,511
410
4,101

22 Change in foreign official assets in United States (increase, +)
23 U.S. Treasury securities
24 Other U.S. government obligations
2.5 Other U.S. government liabilities
26 Other U.S. liabilities reported by U.S. banks
27 Other foreign official assets5
28 Change in foreign private assets in United States (increase, +)
29 U.S. bank-reported liabilities3
30 U.S. nonbank-reported liabilities
31 Foreign private purchases of U.S. Treasury securities, net
32 Foreign purchases of other U.S. securities, net
33 Foreign direct investments in United States, net
34 Allocation of special drawing rights
35 Discrepancy
36 Due to seasonal adjustment
37 Before seasonal adjustment

-20,597
-16,097

MEMO

Changes in official assets
38 U.S. official reserve assets (increase, —)
39 Foreign official assets in United States, excluding line 25
(increase, +)
40 Change in Organization of Petroleum Exporting Countries official
assets in United States (part of line 22)

3,901

-1,379

5,346

3,537

-165

2,033

-5,318

-2,722

38,286

70,440

37,198

8,988

19,197

-1,113

22,462

37,246

5,942

-3,717

-1,184

-4,217

3,564

1,120

-322

1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38^10.
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 institution as well as some brokers
and dealers.

4. Associated primarily with military sales contracts and other transactions arranged
with or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of private
corporations and state and local governments.
SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of
Current Business.

A54
3.11

International Statistics • December 1995
U.S. FOREIGN TRADE 1
Millions of dollars; monthly data seasonally adjusted
1995
Item

1992

1993

1994
Feb.

Mar.

Apr.

May

June

July

Aug."

1 Goods and services, balance
2
Merchandise
3
Services

-39,480
-96,106
56,626

-74,841
-132,618
57,777

-106,212
-166,099
59,887

-9,504
-14,271
4,767

-9,209
-14,537
5,328

-11,076
-16,336
5,260

-10,780
-15,976
5,196

-11,280
-16,493
5,213

-11,186
-16,230
5,044

-8,819
-13,830
5,011

4 Goods and services, exports
5
Merchandise
6
Services

618,969
440,352
178,617

644,578
456,823
187,755

701,201
502,485
198,716

62,093
45,638
16,455

65,342
47,947
17,395

64,412
47,157
17,255

65,595
48,307
17,288

64,599
47,381
17,218

63,408
46,368
17,040

65,743
48,718
17,025

7 Goods and services, imports
8
Merchandise
9
Services

-658,449
-536,458
-121,991

-719,420
-589,441
-129,979

-807,413
-668,584
-138,829

-71,597
-59,909
-11,688

-74,551
-62,484
-12,067

-75,488
-63,493
-11,995

-76,375
-64,283
-12,092

-75,879
-63,874
-12,005

-74,594
-62,598
-11,996

-74,562
-62,548
-12,014

-84,501

-115,568

-150,630

-13,350

-12,886

-14,797

-14,058

-14,730

-15,290

-12,823

MEMO

10 Balance on merchandise trade, Census
basis

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 Fund1
3 Special drawing rights2'3
4 Reserve position in International Monetary
Fund2
5 Foreign currencies4

1992

1993

1994
Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.p

71,323

73,442

74,335

81,439

86,761

88,756

90,549

90,063

91,534

86,648

87,152

11,056
8,503

11,053
9,039

11,051
10,039

11,050
11,158

11,053
11,651

11,055
11,743

11,054
11,923

11,054
11,869

11,053
11,487

11,053
11,146

11,051
11,035

11,759
40,005

11,818
41,532

12,030
41,215

12,853
46,378

13,418
50,639

14,206
51,752

14,278
53,294

14,276
52,864

14,761
54,233

14,470
49,979

14,681
50,385

been used. U.S. SDR holdings and reserve positions in the IMF also have been valued on
this basis since July 1974.
3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1 of the
year indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—$710 million; 1979—$1,139 million; 1980—$1,152 million; 1981—$1,093 million; plus net
transactions in SDRs.
4. Valued at current market exchange rates.

1. Gold held "under earmark' at Federal Reserve Banks for foreign and international
accounts is not included in the gold stock of the United States; see table 3.13, line 3. Gold
stock is valued at $42.22 per fine troy ounce.
2. Special drawing rights (SDRs) are valued according to a technique adopted by the
International Monetary Fund (IMF) in July 1974. Values are based on a weighted average
of exchange rates for the currencies of member countries. From July 1974 through
December 1980, sixteen currencies were used; since January 1981, five currencies have

3.13

FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS 1
Millions of dollars, end of period
1995
Asset

1992

1993

1994
Feb.

1 Deposits
Held in custody
2 U.S. Treasury securities2
3 Earmarked gold3

Apr.

May

June

July

Aug.

Sept.p

205

386

250

188

370

166

227

167

190

165

201

314,481
13,118

379,394
12,327

441,866
12,033

447,206
12,033

459,694
11,964

469,482
11,897

474,181
11,800

482,506
11,725

505,613
11,728

502,737
11,741

506,572
11,728

1. Excludes deposits and U.S. Treasury securities held for international and regional
organizations.
2. Marketable U.S. Treasury bills, notes, and bonds and nonmarketable U.S. Treasury
securities, in each case measured at face (not market) value.

Mar.

3. Held in foreign and international accounts and valued at $42.22 per fine troy ounce;
not included in the gold stock of the United States.

Summary Statistics
3.15

A55

SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period

1 Total1
By type
2 Liabilities reported by banks in the United States'
3 US. Treasury bills and certificates3
US. Treasury bonds and notes
4
Marketable
5
Nonmarketable4
6 US. securities other than U.S. Treasury securities'
7
8
9
10
11
12

By area
Europe1
Canada
Latin America and Caribbean
Asia
Africa
Other countries6

Mayr

June r

July

Aug.'

483,002

520,578r

527,541r

542,768r

552,623

560,324

580,053

604,054

611,933

151,100

73,03 l r
139,570

80,556r
134,341

83,697r
141,716

85,564
146,417

84,859
154,575

91,563
154,517

93,405
159,654

105,044
156,322

212,237
5,652
44,205

254,059
6,109
47,809

257,998
6,095
48,551

262,020
6,135
49,200

265,178
6,174
49,290

263,404
6,209
51,277

274,254
6,245
53,474

291,034
53,673

290,670
6,329
53,568

207,121
15,285
55,898
197,702
4,052
2,942

215,024
17,235
41,492'
236,819
4,179
5,827

213,876
18,655
42,43 l r
244,650
4,066
3,861

218,385r
19,268
39,847
256,845r
4,583
3,838

216,771
19,248
42,475
266,089
4,200
3,838

217,793
19,631
44,707
270,519
4,281
3,391

223,814
19,549
50,268
278,767
4,427
3,226

224,343
21,746
57,662
290,885
4,309
5,107

219.911
21,508
62,994
297.912
4,433
5,173

1. Includes the Bank for International Settlements.
2. Principally demand deposits, time deposits, bankers acceptances, commercial paper,
negotiable time certificates of deposit, and borrowings under repurchase agreements.
3. Includes nonmarketable certificates of indebtedness (including those payable in
foreign currencies through 1974) and Treasury bills issued to official institutions of
foreign countries.
4. Excludes notes issued to foreign official nonreserve agencies. Includes bonds and
notes payable in foreign currencies; zero coupon bonds are included at current value.

3.16

Apr/

LIABILITIES TO, AND CLAIMS ON, FOREIGNERS
Payable in Foreign Currencies

6,288

5. Debt securities of U.S. government corporations and federally sponsored agencies,
and U.S. corporate stocks and bonds.
6. Includes countries in Oceania and Eastern Europe.
SOURCE. Based on 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'

Millions of dollars, end of period
1994r
Item

1 Banks' liabilities
2 Banks' claims
3
Deposits
4
Other claims
5 Claims of banks' domestic customers2

1991

75,129
73,195
26,192
47,003
3,398

1. Data on claims exclude foreign currencies held by U.S. monetary authorities.

1992

72,796
62,799
24,240
38,559
4,432

1995'

1993r

78,259
61,425
20,401
41,024
9,103

Sept.

Dec.

Mar.

June

83,444
64,161
20,731
43,430
12,719

89,587
60,249
19,640
40,609
15,020

96,190
72,511
24,257
48,254
11,637

106,069
77,195
28,915
48,280
13,070

2. Assets owned by customers of the reporting bank located in the United States that
represent claims on foreigners held by reporting banks for the accounts of the domestic
customers.

A56
3.17

International Statistics • December 1995
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars

Reported by Banks in the United States1

Millions of dollars, end of period
1995
Item

1992

1993

1994'
Feb.'

Mar.

Apr.'

May'

June'

July

Aug.P

BY HOLDER AND TYPE OF LIABILITY

1 Total, all foreigners

810,259

926,793r

1,017,047

2 Banks' own liabilities
3 Demand deposits
4 Time deposits"
5
Other3
6
Own foreign offices4

606,444
21,828
160,385
93,237
330,994

627,040'
21,573
175,032r
112,056'
318,379

721,624
23,376
186,400
115,933
395,915

726,939
24,090
185,681
126,737
390,431

725,066'
22,746'
184,124'
120,939'
397,257'

720,976
22,950
182,196
123,852
391,978

722,735
23,567
184,299
127,544
387,325

732,820
22,226
192,883
122,065
395,646

726,116
24,100
189,317
139,247
373,452

741,188
21,771
195,651
137,028
386,738

203,815
127,644

299,753
176,739

295,423
162,826

294,729
160,353

306,212'
170,138

316,648
175,540

318,704
182,046

322,247
182,204

329,109
188,621

329,286
185,980

21,974
54,197

36,289
86,725

42,177
90,420

43,378
90,998

44,921
91,153'

48,278
92,830

40,331
96,327

45,112
94,931

44,252
96,236

45,052
98,254

9,350
6,951
46
3,214
3,691

10,936
5,639
15
2,780
2,844

8,606
8,176
29
3,298
4,849

8,355
7,706
35
3,548
4,123

9,263
8,639
31
3,899
4,709

8,710
7,547
214
3,954
3,379

8,576
7,609
34
3,516
4,059

9,776
8,972
114
4,459
4,399

11,955
10,884
43
4,977
5,864

9,920
8,616
40
4,486
4,090

2,399
1,908

5,297
4,275

430
281

649
407

624
314

1,163
763

967
510

804
312

1,071
551

1,304
826

486
5

1,022
0

149
0

242
0

307
3

400
0

456
1

492
0

520
0

478
0

159,563
51,202
1,302
17,939
31,961

220,908
64,231
1,601
21,654
40,976

212,601
59,580
1,564
23,511
34,505

214,897
67,544
1,587
25,614
40,343

225,413'
69,196'
1,705
23,925'
43,566

231,981
67,999
1,485
25,788
40,726

239,434
68,974
1,575
27,462
39,937

246,080
73,109
1,398
27,406
44,305

253,059
75,041
1,429
29,472
44,140

261,366
83,645
1,547
31,685
50,413

108,361
104,596

156,677
151,100

153,021
139,570

147,353
134,341

156,217
141,716

163,982
146,417

170,460
154,575

172,971
154,517

178,018
159,654

177,721
156,322

3,726
39

5,482
95

13,245
206

12,943
69

14,351
150

17,473
92

15,771
114

18,325
129

18,159
205

20,735
664

547,320
476,117
145,123
10,170
90,296
44,657
330,994

592,208
478,792
160,413
9,719
105,192
45,502
318,379

680,738
566,647
170,732
10,633
111,156
48,943
395,915

678,858
562,029
171,598
10,996
107,157
53,445
390,431

685,733'
565,555'
168,298'
10,878'
107,507'
49,913
397,257'

681,438
558,903
166,925
10,701
100,613
55,611
391,978

680,063
560,440
173,115
11,406
103,681
58,028
387,325

686,230
566,759
171,113
10,554
111,439
49,120
395,646

665,995
545,393
171,941
12,121
104,566
55,254
373,452

683,767
562,327
175,589
10,061
110,045
55,483
386,738

71,203
11,087

113,416
10,712

114,091
11,219

116,829
12,328

120,178'
15,723

122,535
15,717

119,623
14,437

119,471
15,021

120,602
15,535

121,440
15,489

7,555
52,561

17,020
85,684

14,234
88,638

15,232
89,269

15,254
89,201'

15,815
91,003

10,955
94,231

11,188
93,262

10,583
94,484

10,142
95,809

94,026
72,174
10,310
48,936
12,928

102,741'
78,378'
10,238
45,406'
22,734'

115,102
87,221
11,150
48,435
27,636

119,558
89,660
11,472
49,362
28,826

110,869'
81,676'
10,132
48,793'
22,751'

115,495
86,527
10,550
51,841
24,136

113,366
85,712
10,552
49,640
25,520

112,981
83,980
10,160
49,579
24,241

124,216
94,798
10,507
50,302
33,989

115,421
86,600
10,123
49,435
27,042

21,852
10.053

24,363
10,652

27,881
11,756

29,898
13,277

29,193
12,385

28,968
12,643

27,654
12,524

29,001
12,354

29,418
12,881

28,821
13,343

10,207
1,592

12,765
946

14,549
1,576

14,961
1,660

15,009
1,799

14,590
1,735

13,149
1,981

15,107
1,540

14,990
1,547

13,697
1,781

9,111

17,567

17,895

17,137

16,741r

17,651

11,938

12,158

10,129

10,409

7 Banks' custodial liabilities5
8 U.S. Treasury bills and certificates6
9 Other negotiable and readily transferable
instruments7
10 Other
11 Nonmonetary international and regional organizations8 . . .
12 Banks' own liabilities
Demand deposits
13
14
Time deposits2
Other3
15
16

17
18
19

Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other

20 Official institutions'
21 Banks' own liabilities
22
Demand deposits
23
Time deposits2
24
Other3
25
26
27
28

Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other

29 Banks10
30 Banks' own liabilities
31
Unaffiliated foreign banks
32
Demand deposits
33
Time deposits2
34
Other3
Own foreign offices4
35
36
37
38
39

Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other

40 Other foreigners
41
Banks' own liabilities
42
Demand deposits
43
Time deposits2
44
Other3
45

46
47
48

Banks' custodial liabilities5
U.S. Treasury bills and certificates6
Other negotiable and readily transferable
instruments7
Other

1,021,668 l,031,278r

1,037,624 1,041,439 1,055,067

1,055,225 1,070,474

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.
2. Excludes negotiable time certificates of deposit, which are included in "Other
negotiable and readily transferable instruments."
3. Includes borrowing under repurchase agreements.
4. For U.S. banks, includes amounts 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.

6. Includes nonmarketable certificates of indebtedness and Treasury bills issued to
official institutions of foreign countries.
7. Principally bankers acceptances, commercial paper, and negotiable time certificates
of deposit.
8. Principally the International Bank for Reconstruction and Development, the InterAmerican Development Bank, and the Asian Development Bank. Excludes "holdings of
dollars" of the International Monetary Fund.
9. Foreign central banks, foreign central governments, and the Bank for International
Settlements.
10. Excludes central banks, which are included in "Official institutions."

Nonbank-Reported
3.17

Data

LIABILITIES TO FOREIGNERS Reported by Banks in the United States 1 —Continued
1995
Item

1992

1993

1994'
Feb.'

Mar.

Apr.'

May'

June'

July

Aug.P

AREA
50 Total, all foreigners
51 Foreign countries
52 Europe
53
Austria
54
Belgium and Luxembourg
55
Denmark
Finland
56
France
57
58
Germany
59
Greece
60
Italy
61
Netherlands
6?
Norway
63
Portugal
Russia
64
65
Spain
66
Sweden
Switzerland
67
68
Turkey
69
United Kingdom
Yugoslavia"
70
Other Europe and other former U.S.S.R.
71

810,259

926,793 r

800,909

307,670
1,611
20,567
3,060
1,299
41,411
18,630
913
10,041
7,365
3,314
2,465
577
9,793
2,953
39,440
2,666
111,805
504
29,256

915,857

378,107
1,917
28,670R
4,517
1,872
40,316R
26,685R
1,519
11,759
16,096
2,966
3,366
2,511
20,493
2,738R
41,561
3,227
133,993R
570
33,331

1,017,047

1,021,668 l,031,278 r

1,037,624

1,041,439

1,055,067

1,055,225

1,070,474

1,008,441

1,013,313 l,022,015 r

1,028,914

1,032,863

1,045,291

1,043,270

1,060,554

374,451
3,853
21,076
2,432
1,455
45,029
34,257
2,325
10,368
11,449
1,305
2,671
7,177
10,495
3,454
47,241
3,253
141,042
220
25,349

377,294
3,922
24,791
2,131
2,390
42,864
33,705
2,272
10,215
11,742
1,119
3,161
6,313
9,051
2,170
42,190
2,971
151,262
214
24,811

374,982
3,868
24,588
2,468
2,270
43,251
31,217
2,358
10,808
10,684
2,087
1,735
7,265
9,924
2,859
41,642
3,521
150,703
146
23,588

392,931
3,649
21,978
2,784
1,436
45,207
27,190
1,393
10,882
15,971
2,338
2,846
2,714
14,655
3,093
41,881
3,341
163,768
245
27,760

387,677
4,021
22,094
1,971
1,753
44,482
27,521
2,065
12,021
15,891
2,147
4,007
2,642
11,106
2,247
40,100
2,701
163,525
255
27,328

381,150'
4,012
23,942'
2,396
1,222'
41,447'
28,285'
2,264
8,686
15,784
2,066
2,810
3,469
11,675
2,474
39,355
2,513
160,162'
210'
28,478'

368,495
4,030
22,855
2,567
2,028
38,668
28,496
2,195
9,414
12,545
1,374
2,940
5,011
9,859
1,845
41,258
3,624
153,431
219
26,136

377,387
3,961
25,734
2,811
1,708
40,976
31,968
2,160
9,810
14,622
1,289
2,855
7,042
9,780
1,437
39,984
3,187
151,052
220
26,791

22,420

20,235R

24,627

26,580

27,035'

28,563

27,716

29,443

28,880

28,278

73 Latin America and Caribbean
74
Argentina
75
Bahamas
76
Bermuda
Brazil
77
British West Indies
78
79
Chile
80
Colombia
81
Cuba
Ecuador
8?
83
Guatemala
84
Jamaica
85
Mexico
86
Netherlands Antilles
Panama
87
88
Peru
89
Uruguay
90
Venezuela
Other
91

317,228
9,477
82,284
7,079
5,584
153,033
3,035
4,580
3
993
1,377
371
19,454
5,205
4,177
1,080
1,955
11,387
6,154

362,161R
14,477
73,800
8,117R
5,301
193,649'
3,183
3,171
33
880
1,207
410
28,018
4,686
3,582
926
1,611
12,786
6,324R

422,781
17,199
103,684
8,467
9,140
229,620
3,114
4,579
13
873
1,121
529
12,244
4,530
4,542
899
1,594
13,975
6,658

421,845
11,886
98,837
8,574
10,628
233,826
3,327
4,037
5
1,511
1,079
464
16,767
4,495
4,281
892
1,610
12,970
6,656

422,812'
9,978
100,400'
9,044'
10,860
236,331'
3,587
3,644
5
1,117
1,062
491
15,750
4,013
4,361
893
1,754
12,632
6,890'

431,632
10,154
97,304
8,955
13,114
244,233
3,446
3,598
6
1,054
1,094
422
17,246
4,076
4,816
931
1,930
12,122
7,131

429,741
10,210
92,324
8,617
15,563
242,895
2,911
3,401
5
1,048
1,069
542
18,174
6,001
4,881
1,004
2,091
12,041
6,964

443,505
10,719
97,044
7,156
18,202
252,841
3,270
3,245
5
1,177
1,127
449
19,109
3,957
4,193
985
2,023
10,867
7,136

432,660
12,250
88,375
6,907
21,181
244,710
2,625
3,401
5
1,117
1,098
426
20,915
4,395
4,495
932
1,945
11,083
6,800

444,531
11,379
95,644
6,606
26,692
243,857
2,837
3,318
3
1,159
1,120
444
22,028
3,833
4,856
1,016
1,929
10,658
7,152

143,540

144,529R

155,556

165,978

178,417'

187,634

186,272

187,456

191,334

198,663

3,202
8,408
18,499
1,399
1,480
3,773
58,435
3,337
2,275
5,582
21,437
15,713

4,011
10,627
17,132'
1,114
1,986
4,435
61,466
4,913
2,035
6,137
15,824
14,849

10,066
9,826
17,087
2,338
1,587
5,155
64,259
5,124
2,714
6,466
15,475
15,459

15,661
9,942
18,059
2,119
1,957
4,955
63,200
4,175
2,363
9,906
14,935
18,706

12,017
10,021
19,888
2,354
2,107
5,003
77,846
4,374'
2,297
9,564
15,516
17,430

12,138
9,630
20,069
2,194
1,696
5,411
84,761
4,760
2,257
10,416
15,730
18,572

9,459
9,137
22,690
1,939
2,331
5,326
83,174
5,030
2,704
11,582
15,612
17,288

10,579
9,689
22.709
2.102
1,818
4,568
83,332
4.971
2,513
11,472
16,843
16,860

11,908
9,103
24,764
2,267
1,656
4,594
85,785
5,050
2,634
11,229
16,465
15,879

13,208
9,766
23,784
2,653
1,941
4.718
89,066
4,862
2,774
11,163
15,757
18,971

105 Africa
106
Egypt
Morocco
107
South Africa
108
109
Zaire
Oil-exporting countries 14
110
Other
111

5,884
2,472
76
190
19
1,346
1,781

6,633
2,208
99
451
12
1,303
2,560

6,511
1,867
97
433
9
1,343
2,762

6,203
1,830
73
400
10
1,122
2,768

6,817
1,781
70
706
9
1,599
2,652

6,583
2,102
66
401
12
1,328
2,674

6,707
2,045
72
539
10
1,302
2,739

6,766
2,143
89
594
18
1,418
2,504

6,949
1,840
93
1,000
13
1,364
2,639

6,969
1,924
86
744
15
1,666
2,534

11? Other
113
Australia
114
Other

4,167
3,043
1,124

4,192
3,308
884

6,035
5,141
894

5,030
4,351
679

5,784
5,024
760

6,007
4,912
1,095

5,040
4,255
785

3,670
2,943
727

6,153
5,471
682

7,131
5,457
1,674

115 Nonmonetary international and regional organizations. . .
116
International 15
Latin American regional 16
117
Other regional 17
118

9,350
7,434
1,415
501

10,936
6,851
3,218
867

8,606
7,537
613
456

8,355
7,202
582
571

9,263
8,092
576
595

8,710
7,173
666
871

8,576
6,597
1,067
912

9,776
8,124
804
848

11,955
10,266
834
855

9,920
7,875
1,039
1,006

72 Canada

93
94
95
96
97
98
99
ION
101
10?
103
104

China
People's Republic of China
Republic of China (Taiwan)
Hong Kong
India
Indonesia
Israel
Japan
Korea (South)
Philippines
Thailand
Middle Eastern oil-exporting countries
Other

11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
12. Includes the Bank for International Settlements. Since December 1992, has
included all parts of the former U.S.S.R. (except Russia), and Bosnia, Croatia, and
Slovenia.
13. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United
Arab Emirates (Trucial States).

14. Comprises Algeria, Gabon, Libya, and Nigeria.
15. Principally the International Bank for Reconstruction and Development. Excludes
"holdings of dollars" of the International Monetary Fund.
16. Principally the Inter-American Development Bank.
17. Asian, African, Middle Eastern, and European regional organizations, except the
Bank for International Settlements, which is included in "Other Europe."

A57

A58
3.18

International Statistics • December 1995
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States'
Payable in U.S. Dollars
Millions of dollars, end of period
1995
Area or country

1992

1994r

1993

Feb.r

Mar.r

Apr.'

Mayr

Juner

July

Aug.P

1 Total, all foreigners

499,437

486,250

483,372

477,172

491,402

480,697

483,947

518,617

506,534

515,373

2 Foreign countries

494,355

483,845r

478,781

476,288

487,668

477,760

482,337

515,984

505,217

513,944

123,377
331
6,404
707
1,418
14,723
4,222
717
9,047
2,468
355
325
3,147
2,755
4,923
4,717
962
63,430
569
2,157

122,823r
413
6,532r
382
594
1 l,822r
7,722r
680r
8,836r
3,063
396
834
2,310
2,800r
4,252r
6,603r
l,301r
61,963r
536
1,784

124,609
692
6,737
1,030
691
12,767
6,732
592
6,041
2,957
504
938
949
3,529
4,096
7,492
874
66,558
265
1,165

123,066
425
4,965
636
452
12,305
7,707
765
6,553
3,319
997
1,045
759
2,800
4,040
8,074
882
65,574
265
1,503

127,193
589
7,424
723
564
13,480
7,097
611
6,396
3,182
1,442
907
770
3,066
3,394
7,854
690
67,724
247
1,033

122,538
461
8,505
549
700
13,132
7,156
560
6,209
3,551
1,295
915
657
2,076
3,522
7,398
810
63,642
247
1,153

123,304
756
8,052
508
431
14,083
6,644
407
6,219
5,998
1,382
990
511
2,138
3,319
7,631
722
62,218
248
1,047

128,932
581
5,148
599
394
15,362
7,986
442
6,734
4,356
1,019
1,208
508
3,565
2,939
10,290
713
65,790
229
1,069

125,948
616
8,063
443
967
15,419
6,272
445
6,066
4,478
1,206
987
495
3,626
3,557
7,539
725
63,746
230
1,068

126,587
685
8,249
428
1,001
15,192
7,827
393
5,729
4,371
1,047
916
504
3,480
2,819
7,361
764
64,479
230
1,112

13,845

18,543r

18,150

19,098

20,302

17,482

20,553

19,715

18,870

17,266

24 Latin America and Caribbean
25
Argentina
26
Bahamas
27
Bermuda
28 Brazil
29
British West Indies
30 Chile
31
Colombia
32
Cuba
33
Ecuador
34 Guatemala
35 Jamaica
36
Mexico
37
Netherlands Antilles
38 Panama
39 Peru
40
Uruguay
41
Venezuela
42
Other

218,078
4,958
60,835
5,935
10,773
101,507
3,397
2,750
0
884
262
162
14,991
1,379
4,654
730
936
2,525
1,400

223,997r
4,473r
63,296r
8,532r
ll,845 r
98,708r
3,619
3,179
0
680
288
195
15,713r
2,682
2,893
656
969r
2,907
3,362'

222,541
5,834
66,096
8,381
9,579
95,609
3,794
4,003
0
680
366
258
17,721
1,055
2,179
996
503
1,828
3,659

221,274
6,348
63,931
11,907
10,144
91,855
4,207
3,818
0
659
349
281
17,244
1,437
2,344
1,117
416
1,725
3,492

224,955
6,297
65,458
8,804
10,871
96,422
4,348
3,983
0
567
379
275
17,187
1,187
2,470
1,096
355
1,649
3,607

224,901
6,178
64,352
11,843
10,896
94,155
4,247
3,928
0
565
359
262
17,182
1,333
2,507
1,116
366
1,679
3,933

223,659
6,352
62,297
10,884
11,192
95,284
3,867
4,034
0
663
353
258
17,375
1,778
2,433
1,095
398
1,662
3,734

242,360
6,596
63,038
8,549
11,522
113,870
4,316
4,032
0
767
344
264
17,277
2,258
2,506
1,359
377
1,608
3,677

237,548
6,255
59,170
6,373
12,528
113,951
4,245
4,182
0
767
340
277
17,146
2,730
2,512
1,332
424
1,647
3,669

245,610
6,164
60,102
8,944
12,974
117,416
4,646
4,348
0
724
350
290
17,018
2,912
2,494
1,366
424
1,767
3,671

43 Asia
China
44
People's Republic of China
45
Republic of China (Taiwan)
46
Hong Kong
India
47
48
Indonesia
49
Israel
50
Japan
51
Korea (South)
52
Philippines
53
Thailand
54
Middle Eastern oil-exporting countries4
55
Other

131,789

11 l,765r

107,337

106,779

109,512

106,749

108,780

118,697

117,180

118,189

906
2,046
9,642
529
1,189
820
79,172
6,179
2,145
1,867
18,540
8,754

2,271
2,623
10,826r
589
1,527
826
60,029r
7,539r
1,409
2,170
15,113'
6,843

836
1,444
9,159
994
1,470
688
59,425
10,286
660
2,902
13,741
5,732

869
1,286
11,193
1,059
1,426
683
57,216
10,740
550
2,635
13,341
5,781

841
1,549
14,396
1,040
1,513
811
55,602
12,303
550
2,778
13,069
5,060

980
1,534
11,602
1,139
1,463
683
55,191
11,953
496
2,757
13,292
5,659

879
1,519
12,069
1,126
1,427
783
58,475
12,265
532
2,755
11,643
5,307

1,143
1,794
14,894
1,210
1,443
949
61,039
12,617
915
2,688
12,570
7,435

1,206
1,913
14,735
1,732
1,516
748
61,268
13,142
596
2,670
11,946
5,708

1,163
1,600
14,493
1,903
1,618
699
63,286
12,844
621
2,594
11,401
5,967

56 Africa
57
Egypt
58 Morocco
59
South Africa
60
Zaire
61
Oil-exporting countries5
62
Other

4,279
186
441
1,041
4
1,002
1,605

3,857
196
481
633
4
1,129
1,414

3,015
225
429
671
2
842
846

2,918
234
442
599
2
772
869

2,875
205
424
644
2
731
869

2,741
181
440
584
2
700
834

2,751
237
454
579
2
658
821

2,919
204
686
563
2
657
807

2,907
193
645
531
7
659
872

2,838
194
653
544
2
614
831

63 Other
64
Australia
65
Other

2,987
2,243
744

2,860r
2,037r
823

3,129
2,186
943

3,153
1,891
1,262

2,831
1,723
1,108

3,349
1,768
1,581

3,290
1,877
1,413

3,361
1,999
1,362

2,764
2,072
692

3,454
2,072
1,382

66 Nonmonetary international and regional organizations6 .. .

5,082

2,405

4,591

884

3,734

2,937

1,610

2,633

1,317

1,429

3 Europe
4
Austria
5 Belgium and Luxembourg
6
Denmark
7
Finland
8 France
9
Germany
10 Greece
11 Italy
12 Netherlands
13 Norway
14 Portugal
15 Russia
16 Spain
17 Sweden
18 Switzerland
19 Turkey
20
United Kingdom
21
Yugoslavia2
22
Other Europe and other farmer U.S.S.R.3
23 Canada

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 "Other
Europe."

Nonbank-Reported
3.19

BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS
Payable in U.S. Dollars

Data

Reported by Banks in the United States1

Millions of dollars, end of period
1995
Type of claim

1992

1994r

1993r

Feb.r

Mar.r

Apr.r

Mayr

Juner

480,697
22,193
282,383
104,883
54,970
49,913
71,238

483,947
19,075
285,843
104,005
51,454
52,551
75,024

1 Total

559,495

560,040

580,496

2 Banks' claims
3 Foreign public borrowers
4 Own foreign offices2
5 Unaffiliated foreign banks
6
Deposits
7
Other
8 All other foreigners

499,437
31,367
303,991
109,342
61,550
47,792
54,737

486,250
29,004
284,270
100,169
49,186
50,983
72,807

483,372
23,470
282,143
111,494
59,142
52,352
66,265

60,058
15,452

73,790
34,291

97,124
56,649

101,609
56,584

106,445
58,526

31,474

25,819

27,188

30,565

31,591

13,132

13,680

13,287

14,460

16,328

8,655

7,846

8,377

8,415

8,499

38,623

29,287

32,004

9 Claims of banks' domestic customers3
10 Deposits
11 Negotiable and readily transferable
instruments4
12 Outstanding collections and other
claims

593,011
477,172
18,253
278,010
106,122
54,290
51,832
74,787

491,402
23,722
292,092
105,406
53,485
51,921
70,182

July

Aug.P

506,534
19,716
291,720
113,321
59,456
53,865
81,777

515,373
21,435
295,610
111,544
57,386
54,158
86,784

32,296

n.a.

625,062
518,617
23,772
300,293
112,184
58,583
53,601
82,368

MEMO

13 Customer liability on acceptances
14 Dollar deposits in banks abroad, reported by
nonbanking business enterprises in the
United States5

37,843

26,429

29,437

34,754

and to 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 and bankers acceptances.
5. Includes demand and time deposits and negotiable and nonnegotiable certificates of
deposit denominated in U.S. dollars issued by banks abroad. For description of changes in
data reported by nonbanks, see Federal Reserve Bulletin, vol. 65 (July 1979), p. 550.

1. For banks' claims, data are monthly; for claims of banks' domestic customers, data
are 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 filed with bank
regulatory agencies. For agencies, branches, and majority-owned subsidiaries of foreign
banks, consists principally of amounts due from the head office or parent foreign bank,

3.20

35,259

BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS
Payable in U.S. Dollars

Reported by Banks in the United States1

Millions of dollars, end of period
1994r
Maturity, by borrower and area2

1 Total
2
3
4
5
6
7

8
9
10
11
12
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
Asia
Africa
Allother3
Maturity of more than one year
Europe
Canada
Latin America and Caribbean
Asia
Africa
Allother3

1992

1991

Sept.

Dec.

Mar.

June

195,302

195,119

201,611

196,600

201,117

198,959

217,954

162,573
21,050
141,523
32,729
15,859
16,870

163,325
17,813
145,512
31,794
13,266
18,528

171,786
17,763
154,023
29,825
10,880
18,945

169,769
17,368
152,401
26,831
7,414
19,417

175,429
15,557
159,872
25,688
7,670
18,018

170,580
15,749
154,831
28,379
7,689
20,690

189,651
15,916
173,735
28,303
7,726
20,577

51,835
6,444
43,597
51,059
2,549
7,089

53,300
6,091
50,376
45,709
1,784
6,065

57,392
7,673
59,689
41,419
1,820
3,793

59,803
7,304
58,735
37,086
1,530
5,311

58,188
7,360
61,448
40,696
1,371
6,366

54,389
7,417
63,803
38,213
1,223
5,535

60,573
8,210
70,491
44,327
1,443
4,607

3,878
3,595
18,277
4,459
2,335
185

5,367
3,287
15,312
5,038
2,380
410

5,276
2,558
14,007
5,600
1,936
448

4,038
2,683
12,714
5,093
1,840
463

3,865
2,495
12,230
4,731
1,553
814

4,496
3,596
13,003
5,215
1,592
477

3,700
3,084
14,116
5,491
1,372
540

1. Reporting banks include all types of depository institutions as well as some brokers
and dealers.

1995

1993r

2. Maturity is time remaining until maturity.
3. Includes nonmonetary international and regional organizations.

A59

A60
3.21

International Statistics • December 1995
CLAIMS ON FOREIGN COUNTRIES

Held by U.S. and Foreign Offices of U.S. Banks1

Billions of dollars, end of period
1993
Area or country

1991

June
1 Total

1994

1995

1992
Sept.

Dec.

Mar.

June

Sept.

Dec.

Mar.

June

343.5r

344.7r

376.3r

387.4r

405.2r

477.7r

486.5r

485.8r

494.2r

541.0r

525.3

137.2
.0
11.0
8.3
5.6
.0
1.9
3.4
68.4r
5.8
22.2r

131.2
5.6
15.3
9.1r
6.5
2.8
2.3
4.8
59.7r
6.3
18.8r

149.0
7.0
14.0
10.7r
7.9
3.7
2.5
4.7
72.9r
8.0
17.6r

152.0
7.1
12.3
12.2r
8.7
3.7
2.5
5.6
73.9r
9.7
16.4r

161.6
7.4
12.0r
12.6
7.6
4.7
2.7r
5.9
84.2r
6.8
17.6r

180.7
8.1r
16.6r
30.2r
15.6r
4.1
2.9r
6.3
69.2r
7.8r
19.9'

174.8
8.8r
19.f
25.3
14.0
3.6
3.0r
6.5
64.l r
9.1'
20.7r

183.7
9.7r
21.2r
24.5
11.6
3.5r
2.6
6.2
78.0r
9.9'
16.5r

189.0
7.0r
19.7r
24.1r
11.8r
3.6
2.7
6.9
82.5r
9.T
21.0r

204.3r
8.2r
20. l r
30.4r
10.6
3.6r
3.1
6.2
86.9r
10.6r
24.5r

198.7
7.1
19.3
29.1
10.7
4.3
3.0
6.1
86.2
10.8
22.1

13 Other industrialized countries
14
Austria
15
Denmark
16
Finland
17
Greece
18
Norway
19
Portugal
20
Spain
21
Turkey
22
Other Western Europe
23
South Africa
24
Australia

22.8
.6
.9
.7
2.6
1.4
.6
8.3
1.4
1.8
1.9
2.7

24.0
1.2
.9
.7
3.0
1.2
.4
8.9
1.3
1.7
1.7
2.9

27.2
1.3
1.0
.9
3.1
1.8
.9
10.5
2.1
1.7
1.3
2.5

26.0
.6
1.1
.6
3.2
2.1
1.0
9.3
2.1
2.2
1.2
2.8

24.6
.4
1.0
.4
3.2
1.7
.8
8.9
2.1
2.6
1.1
2.3

41.3r
1.0
1.1
1.0
3.8
1.6
1.2
12.3
2.4
3.0r
1.2
12.7

41.7r
1.0
1.1
.8
4.6
1.6
1.1
11.7
2.1
2.8
1.2
13.7

41,6r
1.0
.9'
.8
4.3r
1.6
1.0
13.l r
1.8
1.0
1.2
15.0

45.2
1.1
1.2
1.0
4.5
2.0
1.2
13.6
1.6
2.7
1.0
15.4r

43.9r
.9
1.6
1.1
4.9r
2.4
1.0
14.1r
1.4
2.5
1.4
12.6

43.5
.7
1.1
.5
5.0
1.8
1.2
13.6
1.4
2.6
1.4
14.3

25 OPEC 2
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries

14.5
.7
5.4
2.7
4.2
1.5

15.8r
.6
5.2
2.7r
6.2
1.1

15.7
.6
5.5
3.1
5.4
1.1

14.8
.5
5.4
2.8
4.9
1.1

17.4
.5
5.1
3.3
7.4
1.2

22.9r
.5
4.7r
3.4r
13.2
l.l r

21.6r
.5
4.4r
3.2r
12.4
i.r

21.6r
.4
3.9r
3.3r
13.0
1.0

22. r
.5
3.7r
3.8r
13.3
.9'

19.5r
.5
3.5r
4.0
10.7
.7

20.3
.7
3.5
4.1
11.4
.6

31 Non-OPEC developing countries

64.3r

72.6r

76.9r

11 A'

82.9r

94.6r

95.0r

93.1r

97.9r

100.9r

105.8

4.8
9.6
3.6
1.7
15.5
.4
2.1

6.6
10.8
4.4
1.8
16.0
.5
2.6

6.6
12.3
4.6
1.9
16.8
.4
2.7

1.2
11.7
4.7
2.0
17.5
.3
2.7

7.7
12.0
4.7
2.1
17.6r
.4
3.r

8.9r
12.7r
5.1
2.2
18.8r
.6
2.9r

10.T
12.0r
5.1
2.4
18.4r
.6
2.9r

10.7r
9.3r
5.4
2.4
19.6r
.6
2.9'

11.2r
8.4r
6.1
2.6
18.4r
.5
2.9r

11.4r
9.2r
6.3
2.6
17.8r
.6
2.6r

12.3
10.0
7.0
2.6
17.6
.8
2.6

.3
4.1
3.0
.5
6.8
2.3
3.7
1.7
2.4r

.7
5.2
3.2
.4
6.6
3.1
3.6
2.2
3.1r

1.6
5.9
3.1
.4
6.9
3.7
2.9
2.4
2.9r

.5
6.4
2.9
.4
6.5
4.1
2.6
2.8
3.4r

2.0
7.3
3.2
.5
6.7
4.4
3.1
3.1
3.1r

.8
1.6'
3.6
.4
14.1
5.2
3.4
3.0r
3.1

.8
7.1
3.7
.4
14.3
5.2
3.2
3.3
3.5

1.0
6.9
3.9r
.4
14.4r
3.7
2.9
3.5
3.6

1.1
9.2r
4.2
.4
16.2
3.1
3.3
3.8
4.8

1.1
10.6
3.8
.6
16.9
3.9
3.0
3.3
5.2

1.4
11.0
4.0
.6
18.7
4.1
3.6
3.8
3.8

.4
.7
.0
.7

.2
.6
.0
1.0

.2
.6
.0
.9

.2
.6
.0
.8

.4
.7
.0
.8

.4
.7
.0
1.0

.5
.7
.0
.9

.3
.7
.0
.9

.3
.6
.0
.8

.4
.6
.0
.7

.4
.9
.0
.6

2.4
.9
.9
.7

3.1
1.9
.6
.6

3.2
1.9
.6
.8

3.0
1.7
.6
.7

3.1
1.6
.6
.9

3.4
1.5
.5
1.4

3.0
1.2
.5
1.4

3.0
i.r
.5
1.5

2.7
.8
.5
1.4

2.4
.6
.4
1.3

2.0
.4
.3
1.3

56 Offshore banking centers
57
Bahamas
58
Bermuda
59
Cayman Islands and other British West Indies
60
Netherlands Antilles
61
Panama6
62
Lebanon
63
Hong Kong
64
Singapore
65
Other'

54.r
11.9
2.3
15.8
1.2
1.4
.1
14.3r
7.1
.0

58.2r
6.9
6.2
21.6r
1.1
1.9
.1
13.9
6.5
.0

58.0
7.1
4.5
15.6
2.5
2.1
.1
16.9
9.3
.0

67.9
12.7
5.5
15.1
2.8
2.1
.1
19.1
10.4
.0

72.0r
10.8
8.6r
17.4
2.6
2.4
.1
18.7
11.2
.1

78.6r
13.7
8.9r
17.6
3.5
2.0
.1
19.7
13.0
.0

80.4r
13.4
6.5r
23.5r
2.5
1.9
.1
21.8r
10.6
.0

16.1'
13.7r
6.0r
2i.r
1.7
1.9r
.1
20.3
11.8
.0

70.5r
10.0r
8.3r
19.8r
1.0
1.3
.1
19.9
10.1
.1

84.8r
12.6r
8.7r
19.3
.9
1.1
.1
22.8
19.2
.0

82.3
7.6
8.5
23.3
1.9
1.3
.1
23.2
16.4
.0

66 Miscellaneous and unallocated8

47.9r

39.7

46. r

46.2r

43.4

55.9r

69.7r

65.8r

66.6r

85.2r

72.6

2 G-10 countries and Switzerland
3
Belgium and Luxembourg
4
France
5
Germany
6
Italy
7
Netherlands
8
Sweden
9
Switzerland
10
United Kingdom
11
Canada
12
Japan

32
33
34
35
36
37
38

Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other

39
40
41
42
43
44
45
46
47

Asia
China
People's Republic of China
Republic of China (Taiwan)
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia

48
49
50
51

Africa
Egypt
Morocco
Zaire
Other Africa 3

52 Eastern Europe
53
Russia4
54
Yugoslavia5
55
Other

1. The banking offices covered by these data include U.S. offices and foreign branches
of U.S. banks, including U.S. banks that are subsidiaries of foreign banks. Offices not
covered include U.S. agencies and branches of foreign banks. Beginning March 1994, the
data include large foreign subsidiaries of U.S. banks. The data also include other types of
U.S. depository institutions as well as some types of brokers and dealers. To eliminate
duplication, the data are adjusted to exclude the claims on foreign branches held by a U.S.
office or another foreign branch of the same banking institution.
These data are on a gross claims basis and do not necessarily reflect the ultimate
country risk or exposure of U.S. banks. More complete data on the country risk exposure
of U.S. banks are available in the quarterly Country Exposure Lending Survey published
by the Federal Financial Institutions Examination Council.

2. Organization of Petroleum Exporting Countries, shown individually; other members
of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and
United Arab Emirates); and Bahrain and Oman (not formally members of OPEC).
3. Excludes Liberia. Beginning March 1994 includes Namibia.
4. As of December 1992, excludes other republics of the former Soviet Union.
5. As of December 1992, excludes Croatia, Bosnia and Hercegovinia, and Slovenia.
6. Includes Canal Zone.
7. Foreign branch claims only.
8. Includes New Zealand, Liberia, and international and regional organizations.

Nonbank-Reported Data
3.22

A61

LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in
the United States1
Millions of dollars, end of period
1994
Type of liability, and area or country

1991

1992

1995

1993
Mar.

June

Sept.

Dec.'

Mar.

Junep

1 Total

44,708

45,511

50,330r

52,102r

55,350r

57,190r

54,586

51,092r

50,565

2 Payable in dollars
3 Payable in foreign currencies

39,029
5,679

37,456
8,055

38,728'
11,602'

38,543'
13,559'

42,936'
12,414'

42,712'
14,478'

39,651
14,935

37,204'
13,888

35,635
14,930

By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies

22,518
18,104
4,414

23,841
16,960
6,881

28,959
18,545
10,414

30,485'
18,930
11,555'

33,245
22,819
10,426

35,871'
23,262
12,609'

32,852
19,792
13,060

29,752'
17,645'
12,107

28,832
15,876
12,956

7 Commercial liabilities
8
Trade payables
9
Advance receipts and other liabilities . . .

22,190
9,252
12,938

21,670
9,566
12,104

21,371'
8,802'
12,569

21,617'
8,979'
12,638'

22,105'
9,911'
12,194'

21,319'
9,550'
11,769'

21,734
10,005
11,729

21,340'
9,908'
11,432'

21,733
10,558
11,175

10
11

Payable in dollars
Payable in foreign currencies

20,925
1,265

20,496
1,174

20,183'
1,188'

19,613'
2,004'

20,117'
1,988'

19,450'
1,869'

19,859
1,875

19,559'
1,781

19,759
1,974

12
13
14
15
16
17
18

By area or country
Financial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom

12,003
216
2,106
682
1,056
408
6,528

13,387
414
1,623
889
606
569
8,610

18,810
175
2,539
975
534
634
13,332

20,582'
525
2,606
1,214
564
1,200
13,865'

23,689
524
1,590
939
533
631
18,255

23,813'
661
2,241
1,467
648
633
16,848'

20,870
495
1,727
1,961
552
688
14,709

16,804
612
2,046
1,755
633
883
10,025

17,217
778
1,101
1,589
530
1,056
11,133

Canada

292

544

859

508

698

618

629

1,817

894

20
21
22
23
24
25
26

Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela

4,784
537
114
6
3,524
7
4

4,053
379
114
19
2,850
12
6

3,359
1,148
0
18
1,533
17
5

3,554
1,158
120
18
1,613
14
5

3,125
1,052
115
18
1,297
13
5

3,139
1,112
15
7
1,344
15
5

3,021
926
80
207
1,160
0
5

3,024
931
149
58
1,231
10
5

2,808
851
138
58
1,118
3
4

27
28
29

Asia2
Japan
Middle Eastern oil-exporting countries"

5,381
4,116
13

5,818
4,750
19

5,689
4,620
23

5,650
4,638
24

5,694
4,760
24

8,149
6,947
31

8,147
7,013
35

7,911'
6,890'
27

7,720
6,791
25

Africa

6
4

6
0

133
123

133
124

9
0

133
123

135
123

156
122

151
122

109

8,701
248
1,039
1,052
710
575
2,297

7,398
298
700
729
535
350
2,505

6,827'
239
655
684
688
375
2,039'

6,553'
263'
554
577
628
388
2,142'

6,919'
254
712
670
649
473
2,309'

6,866'
287
742
552
674
391
2,350'

6,835
241
760
604
722
327
2,444

31
32
33
34
35
36
37
38
39
40

Oil-exporting countries4
All other5
Commercial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada

6,812'
271'
692'
504'
574'
329'
2,848'

6,964
288
581
575
476
434
2,902

1,014

1,002

879

1,039

1,070

1,068

1,037

1,198'

1,107

41
42
43
44
45
46
47

Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela

1,355
3
310
219
107
307
94

1,533
3
307
209
33
457
142

1,658'
21
350
214'
27
481'
123'

1,900'
8
493
209'
20
554'
147'

2,000'
2
418
215'
24
703'
192'

1,783'
6
200
147'
33
672'
189'

1,857
19
345
161
23
574
276

1,389'
8
265
97
29
362'
273

1,856
3
401
108
12
428
204

48
49
50

Asia2
Japan
Middle Eastern oil-exporting countries^

9,334
3,721
1,498

10,594
3,612
1,889

10,980'
4,314
1,534'

10,927'
4,617
1,534'

10,968'
4,389
1,834'

10,501'
4,235
1,680'

11,058
4,801
1,603

10,937'
4,785'
1,800

10,874
4,350
1,810

51
52

Africa
Oil-exporting countries4

715
327

568
309

453'
167'

478'
194'

510'
241'

468'
264'

428
256

463
248

482
252

Other5

1,071

575

574

720

638

633

519

541

450

1. For a description of the changes in the international statistics tables, see Federal
Reserve Bulletin, vol. 65, (July 1979), p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).

3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.

A62

International Statistics • December 1995

3.23

CLAIMS ON UNAFFILIATED FOREIGNERS
the United States'

Reported by Nonbanking Business Enterprises in

Millions of dollars, end of period

1994'
Type of claim, and area or country

1991

1992

1995

1993
Mar.

June

Sept.

Dec.

Mar.'

June p

1 Total

45,262

45,073

48,88l r

50,716

49,513

51,406

56,743

52,177

57,558

2 Payable in dollars
3 Payable in foreign currencies

42,564
2,698

42,281
2,792

44,883r
3,998r

46,596
4,120

45,018
4,495

47,065
4,341

52,690
4,053

47,878
4,299

53,177
4,381

By type
4 Financial claims
5
Deposits
6
Payable in dollars
7
Payable in foreign currencies
Other financial claims
8
9
Payable in dollars
10
Payable in foreign currencies

27,882
20,080
19,080
1,000
7,802
6,910
892

26,509
17,695
16,872
823
8,814
7,890
924

27,528
15,681
15,146
535
11,847
10,655
1,192

29,379
16,404
15,847
557
12,975
11,788
1,187

27,337
15,842
15,203
639
11,495
10,172
1,323

28,930
16,764
16,153
611
12,166
10,978
1,188

32,876
18,720
18,245
475
14,156
13,096
1,060

28,651
17,218
16,609
609
11,433
10,266
1,167

33,478
22,053
21,381
672
11,425
10,338
1,087

11 Commercial claims
12
Trade receivables
13
Advance payments and other claims

17,380
14,468
2,912

18,564
16,007
2,557

21,353'
18,390r
2,963r

21,337
18,480
2,857

22,176
19,375
2,801

22.476
19,713
2,763

23,867
21,034
2,833

23,526
20,581
2,945

24,080
21,139
2,941

14
15

Payable in dollars
Payable in foreign currencies

16,574
806

17,519
1,045

19,082r
2,271r

18,961
2,376

19,643
2,533

19,934
2,542

21,349
2,518

21,003
2,523

21,458
2,622

16
17
18
19
20
21
22

By area or country
Financial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom

13,441
13
269
283
334
581
11,534

9,331
8
764
326
515
490
6,252

7,249
134
826
526
502
530
3,535

7,411
125
790
466
503
535
3,853

6,763
83
995
459
472
509
3,127

8,156
114
831
413
503
747
4,440

7,679
86
800
540
429
523
4,436

7,277
69
808
443
606
490
3,919

7,428
81
706
355
601
499
4,482

Canada

24
25
26
27
28
29
30

Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela

31
32
33
34
35
36
37
38
39
40
41
42
43

Japan
Middle Eastern oil-exporting countries2
Africa
Oil-exporting countries3
All other4
Commercial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom

2,642

1,833

2,032

2,294

3,080

3,164

3,801

4,064

3,929

10,717
827
8
351
9,056
212
40

13,893
778
40
686
11,747
445
29

16,031
1,310
125
654
12,536
868
161

16,645
1,385
34
672
13,281
850
26

14,799
1,288
39
466
11,993
614
33

14,952
1,086
52
411
12,271
655
32

18,841
2,369
27
520
14,880
606
35

15,500
905
37
487
13,274
475
27

20,529
2,299
85
460
16,771
524
27

640
350
5

864
668
3

1,657
892
3

2,550
1,657
5

2,234
1,349
2

2,175
662
19

1,838
931
141

1,457
584
4

1,226
467
5

57
1

83
9

99
1

76
0

74
1

87
1

249
0

77
9

64
9

385

505

460

403

387

396

468

276

302

8,793
182
1,830
950
355
415
2,348

8,952
189
1,779
940
294
686
2,443

8,812
179
1,766
883
331
538
2,505

9,517
213
1,879
1,027
307
557
2,547

9,047
198
1,783
995
335
562
2,404

9,219
216
1,673
1,021
349
620
2,457

8,193
194
1,585
955
645
295
2,086

8,451
189
1,537
933
552
362
2,094

9,105
184
1,947
1,018
423
432
2,311'

Canada

1,121

1,286

l,781 r

1,870

1,875

1,906

1,988

2,006

1,982

45
46
47
48
49
50
51

Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela

2,655
13
264
427
41
842
203

3,043
28
255
357
40
924
345

3,274r
11
182
460r
71
990'
293'

3,560
13
222
419
58
1,011
292

3,900
18
295
500
67
1,048
303

3,960
34
246
471
49
1,136
388

4,117
9
234
612
83
1,243
348

4,146
17
202
678
59
1,114
294

4,340
21
207
765
85
1,112
317

4,591
1,899
620

4,866
1,903
693

5,979'
2,275'
701'

5,932
2,447
654

6,266
2,490
608

6,561
2,586
605

6,881
2,623
690

7,013
2,725
690

7,168
2,805
695

52
53
54

Japan
Middle Eastern oil-exporting countries2

55
56

Africa
Oil-exporting countries3

430
95

554
78

493'
72'

487
88

472
78

445
59

454
67

475
75

460
73

Other4

390

364

721'

695

711

792

910

839

911

1. For a description of the changes in the international statistics tables, see Federal
Reserve Bulletin, vol. 65 (July 1979), p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).

3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.

Securities Holdings and Transactions
3.24

A63

FOREIGN TRANSACTIONS IN SECURITIES
Millions of dollars
1995

1995
1993

Transaction, and area or country

1994
Jan.Aug.

Feb.

Mar.

Apr.

May

June

July

Aug.P

38,769
36,087

45,429
43,199

42,444
40,009

41,908
39,366

U.S. corporate securities
STOCKS
319,664
298,086

1 Foreign purchases
2 Foreign sales

350,558
348,648

288,409
281,101

29,445R
29,685

35,332
37,653

30,082
29,206

3 Net purchases, or sales (—)

21,578

1,910

7,308

—240r

-2,321

876

2,682

2,230

2,435

2,542

4 Foreign countries

21,306

1,900

7,397

— 195r

-2,291

877

2,692

2,238

2,443

2,565

10,658
-103
1,642
-602
2,986
4,559
-3,213
5,719
-321
8,198
3,825
63
202

6,717
-201
2,110
2,251
-30
840
-1,160
-2,108
-1,142
-1,207
1,190
29
771

2,555
-479
-1,564
2,194
-3,159
6,420
-1,476
6,401
-384
169
-3,008
12
120

—9'
-21
-55
232
-78
—50R
28R
766
-133
-851
-541
0
4

-1,304
-250
-243
296
-475
-309
-333
-243
-73
-342
-321
-10
14

165
-80
-261
349
-673
1,125
-197
570
59
314
29
-10
-24

381
-66
-528
174
-476
1,382
75
-26
-87
2,013
86
41
295

-44
-79
-224
70
-201
243
-740
1,651
-99
1,358
-466
15
97

2,045
261
8
364
-20
1,445
-425
881
-24
107
141
-5
-136

1,836
17
-104
431
-847
2,330
-10
1,811
-5
-961
-1,076
17
-123

272

-89

-30

-1

-10

-8

-23

283,824
217,824

289,614R
229,665R

184,901
127,710

22,809R
16,354

25,390
17,552

18,163
14,111

22,830
16,609

27,934
18,774

23,786
14,943

24,742
16,741

66,000

59,949r

57,191

6,455r

7,838

4,052

6,221

9,160

8,843

8,001

65,462

57,580

4,035

6,309

9,167

9,010

7,982

7,772
44
667
-59
-130
7,062
159
289
64
785
293
47
51

6,221
7
51
557
317
4,944
169
1,145
348
1,189
1,026
-13
-49

5,561
538
1,163
45
-99
3,775
415
754
281
919
1,008
64
-12

-7

-167

5
6
7
8
9
in
11
17
13
14
15
16
17

Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East1
Other Asia
Japan
Africa
Other countries

18 Nonmonetary international and
regional organizations

-45

BONDS2
19 Foreign purchases
20 Foreign sales
21 Net purchases, or sales (—)
22 Foreign countries
2.3
74
75
76
77
28
29
30
31
37
33
34
35

Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East1
Other Asia
Japan
Africa
Other countries

36 Nonmonetary international and
regional organizations

59,064

6,509

8,151

22,587
2,346
887
-290
-627
19,686
1,668
15,691
3,248
20,846
11,569
1,149
273

37,093
242
657
3,322
1,055
31,592R
2,958
5,442
771
12,153
5,486
-7
654

44,589
110
3,647
736
283
39,405
1,933
3,905
1,499
5,392
3,779
108
154

6,037
296
526
126
304
4,800
195R
-480
119
595
132
-4
47

4,976
-85
-176
154
-61
5,248
289
1,285
328
1,150
570
22
101

2,271
-874
-83
-37
-87
3,396
184
889
326
356
275
-11
20

4,944
27
-17
191
124
4,764
277
678
-26
426
871
-5
15

538

885

-389

-54

-313

-88

Foreign securities
37 Stocks, net purchases, or sales ( —)
38
Foreign purchases
39
Foreign sales
40 Bonds, net purchases, or sales ( - )
Foreign purchases
41
Foreign sales
42

-62,691
245,490
308,181
-80,377
745,952
826,329

-47,236 R
386,942
434,178R
—9,212'
848,288R
857,560R

-29,355
224,662
254,017
-24,118
572,780
596,898

—1,112R
27,158R
28,270R
- L,793R
61,389R
63,182R

—2,856R
28,925R
31,781R
- L,223R
79,170R
80,393R

-2,135 R
24,519R
26,654R
—824R
53,639
54,463R

—3,648R
29,229'
32,877R
-4,368 R
75,199R
79,567R

—4,379R
29,067R
33,446R
—7,473R
96,154
103,627R

-8,188
28,582
36,770
-4,990
66,737
71,727

-6,868
30,861
37,729
-2,648
72,217
74,865
-9,516

-143,068

-56,508 r

-53,473

-2,905 r

—4,079r

-2,959 r

—8,016r

-ll,852r

-13,178

44 Foreign countries

-143,232

—57,028r

-52,741

-2,741 r

-3,990 r

—3,115r

—8,020r

—11,541*

-12,959

-9,343

45
46
47
48
49
50

-100,872
-15,664
-7,600
-15,159
-185
-3,752

—2,712R
—1,415'
- 18,347R
—24,276R
-467
-3,751

-27,374
-5,853
-3,117
-17,298
-190
1,091

-l,261 R
853R
-2,496
13
-116
266

— 1,892'
— 1,154R
-L,304R
9
85
266R

- L,893R
- L,193R
585R
-558 R
-14
-42 R

-7,561 R
- f
47 R
-1,388
-68
527

-5,857
-1,425 R
-512 R
—2,941R
-67
-739

-7,961
-1,751
-640
-3,158
-45
596

-2,540
-996
1,087
-7,231
34
303

-164

-89

-219

-173

43 Net purchases, or sales ( - ) , of stocks and bonds

Europe
Canada
Latin America and Caribbean
Asia
Africa
Other countries

51 Nonmonetary international and
regional organizations

....

164

520

1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman,
Qatar, Saudi Arabia, and United Arab Emirates (Trucial States).

-732

156

-311

2. Includes state and local government securities and securities of U.S. government
agencies and corporations. Also includes issues of new debt securities sold abroad by U.S.
corporations organized to finance direct investments abroad.

A64
3.25

International Statistics • December 1995
MARKETABLE U.S. TREASURY BONDS AND NOTES

Foreign Transactions1

Millions of dollars; net purchases, or sales (—) during period
1995
Area or country

1995

1994

1993

Jan.Aug.

Feb.

Mar.

Apr.

May

June

July

Aug."

1 Total estimated

23,552

78,796

134,335

14,103

9,211

6,400

14,519

22,578

31,865

26,081

2 Foreign countries

23,368

78,632

133,946

13,385

9,107

6,416

14,568

22,395

31,382

26,441
9,169
580
2,995
-1,468
100
-515
7,950
-473
-825

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

-2,373
1,218
-9,976
-515
1,421
-1,501
6,197
783
10,309

38,608
1,098
5,709
1,254
794
481
23,438
5,834
3,491

48,492
221
233
2,432
520
-232
38,204
7,114
4,235

13,294
107
-543
-239
97
165
10,448
3,259
1,486

3,109
51
1,461
-7
30
-418
3,099
-1,107
434

3,152
62
1,216
-243
-70
-173
2,251
109
-1,391

509
-512
-4,129
40
211
353
5,203
-657
201

2,665
-148
-1,866
1,078
63
9
1,359
2,170
433

13,336
-53
1,039
883
124
206
7,315
3,822
720

12
13
14
15
16
17
18
19

Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles

-4,561
390
-5,795
844
20,582
17,070
1,156
-1,745

-10,179
-319
-20,493
10,633
47,042
29,518
240
-570

19,197
321
12,515
6,361
61,203
35,378
145
674

-3,268
329
-3,325
-272
1,730
2,316
49
94

-2,332
387
-3,358
639
8,445
4,167
-9
-540

3,212
184
2,189
839
1,189
1,487
-36
290

3,803
-16
2,425
1,394
9,845
6,291
39
171

5,368
121
5,158
89
12,605
5,585
242
1,082

513
-114
1,034
-407
16,490
6,658
-1
324

11,265
-359
5,364
6,260
7,322
5,430
-130
-360

184
-330
653

164
526
-154

389
182
244

718
608
199

104
458
-367

-16
-294
228

-49
356
-528

183
-409
629

483
311
99

-360
-140
-10

23 Foreign countries
24 Official institutions
25 Other foreign

23,368
1,306
22,062

78,632
41,822
36,810

133,946
36,611
97,335

13,385
2,110
11,275

9,107
4,022
5,085

6,416
3,158r
3,258r

14,568
-1,774
16,342

22,395
10,850
11,545

31,382
16,780
14,602

26,441
-364
26,805

Oil-exporting countries
26 Middle East 2
27

-8,836
-5

-38
0

5,660
2

-89
0

152

733
0

-1,063
0

815

3,582
0

1,890
0

Japan
Africa
Other

20 Nonmonetary international and regional organizations
21 International
22 Latin American regional
MEMO

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.

2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab
Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.

Interest and Exchange Rates
3.26

A65

D I S C O U N T RATES OF FOREIGN C E N T R A L B A N K S 1
Percent per year, averages of daily figures
Rate on Oct. 31, 1995

Rate on Oct. 31, 1995
Country

Month
effective
Austria..
Belgium.
Canada..
Denmark
France2 .

3.5
3.5
6.18

5.0
5.0

Aug. 1995
Aug. 1995
Oct. 1995
Aug. 1995
July 1994

Month
effective

Month
effective
Germany...
Italy
Japan
Netherlands

3.5
9.0
0.5
3.5

1. Rates shown are mainly those at which the central bank either discounts or makes
advances against eligible commercial paper or government securities for commercial
banks or brokers. For countries with more than one rate applicable to such discounts or
advances, the rate shown is the one at which it is understood that the central bank
transacts the largest proportion of its credit operations.

3.27

Rate on Oct. 31, 1995

Country

Aug. 1995
June 1995
Sept. 1995
Aug. 1995

Norway
Switzerland
United Kingdom

4.75
2.0

12.0

Feb. 1994
Sept. 1995
Sept. 1992

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 RATES1
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

1992

3.70
9.56
6.76
9.42
7.67
9.25
10.14
13.91
9.31
4.39

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

1. Rates are for three-month interbank loans, with the following exceptions: Canada,
finance company paper; Belgium, three-month Treasury bills; and Japan, CD rate.

Apr.

May

June

July

Aug.

Sept.r

Oct.

6.13
6.64
8.16
4.58
3.33
4.60
7.60
10.94
5.22
1.55

6.03
6.64
7.56
4.49
3.29
4.41
7.29
10.38
5.16
1.31

5.89
6.63
7.07
4.43
3.09
4.21
7.04
10.91
4.62
1.16

5.79
6.73
6.69
4.46
2.77
4.14
6.31
10.93
4.52
.91

5.79
6.74
6.62
4.35
2.79
4.02
5.81
10.45
4.41
.82

5.74
6.71
6.66
4.09
2.67
3.85
5.86
10.36
4.20
.56

5.81
6.69
6.66
4.00
2.15
3.88
6.73
10.74
4.14
.51

A66
3.28

International Statistics • December 1995
FOREIGN EXCHANGE RATES1
Currency units per dollar except as noted
1995
Country/currency unit

1
2
3
4
5
6
7
8
9
10

Australia/dollar2
Austria/schilling
Belgium/franc
Canada/dollar
China, P.R./yuan
Denmark/krone
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma

11
12
13
14
15
16
17
18
19
20

Hong Kong/dollar
India/rupee
Ireland/pound2
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder 2
New Zealand/dollar
Norway/krone
Portugal/escudo

21
22
23
24
25
26
27
28
29
30

Singapore/dollar
South Africa/rand
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound2

1992

1993

1994
May

June

July

Aug.

Sept.'

Oct.

73.521
10.992
32.148
1.2085
5.5206
6.0372
4.4865
5.2935
1.5618
190.81

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

72.716
9.912
29.009
1.3609
8.3370
5.5194
4.3386
4.9869
1.4096
228.46

71.959
9.854
28.790
1.3775
8.3206
5.4604
4.3134
4.9172
1.4012
226.56

72.792
9.765
28.562
1.3612
8.3207
5.4073
4.2592
4.8307
1.3886
225.45

74.137
10.168
29.735
1.3552
8.3253
5.6060
4.3170
4.9727
1.4456
232.38

75.371
10.270
30.044
1.3509
8.3374
5.6587
4.3754
5.0352
1.4601
235.65

75.699
9.955
29.105
1.3458
8.3353
5.4912
4.2781
4.9374
1.4143
232.65

7.7402
28.156
170.42
1,232.17
126.78
2.5463
1.7587
53.792
6.2142
135.07

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

7.7351
31.418
161.98
1,652.78
85.11
2.4684
1.5779
66.740
6.2980
148.40

7.7356
31.404
162.87
1,639.75
84.64
2.4396
1.5686
66.947
6.2387
147.63

7.7385
31.385
163.96
1,609.71
87.40
2.4500
1.5557
67.417
6.1710
145.88

7.7416
31.592
160.25
1,607.18
94.74
2.4813
1.6195
65.687
6.3438
149.88

7.7368
33.310
159.05
1,613.41
100.55
2.5124
1.6354
65.607
6.3943
152.11

7.7317
34.656
161.32
1,605.69
100.84
2.5324
1.5846
65.899
6.2397
148.94

1.6294
2.8524
784.66
102.38
44.013
5.8258
1.4064
25.160
25.411
176.63

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

1.3947
3.6574
764.43
123.22
49.558
7.3072
1.1693
25.537
24.663
158.74

1.3953
3.6627
763.88
121.71
50.210
7.2631
1.1588
25.784
24.672
159.48

1.3984
3.6404
760.05
119.71
50.899
7.1749
1.1556
26.278
24.755
159.52

1.4116
3.6402
768.88
123.45
51.227
7.2383
1.1962
27.234
24.960
156.68

1.4331
3.6616
772.04
125.41
52.547
7.1227
1.1868
27.432
25.129
155.90

1.4231
3.6502
767.20
122.51
52.539
6.8301
1.1453
26.925
25.115
157.79

86.61

93.18

91.32

82.73

82.27

81.90

84.59

85.69

84.10

MEMO

31 United States/dollar3

1. Averages of certified noon buying rates in New York for cable transfers. Data in this
table also appear in the Board's G.5 (405) monthly statistical release. For ordering
address, see inside front cover.
2. Value in U.S. cents.
3. Index of weighted-average exchange value of U.S. dollar against the currencies of
ten industrial countries. The weight for each of the ten countries is the 1972-76 average

world trade of that country divided by the average world trade of all ten countries
combined. Series revised as of August 1978 (see Federal Reserve Bulletin, vol. 64
(August 1978), p. 700).

A67

Guide to Statistical Releases and Special Tables
STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference
Anticipated schedule of release dates for periodic releases

Issue
December 1995

Page
A76

Issue

Page

SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference
Title and Date
Assets and liabilities

of commercial

banks

March 31, 1993
June 30, 1993
September 30, 1993
December 31, 1993
Terms of lending at commercial
November 1994
February 1995
May 1995
August 1995

of foreign

Assets and liabilities of life insurance
June 30, 1991
September 30, 1991
December 31, 1991
September 30, 1992

A70
A70
A70
A68

February
May
August
November

1995
1995
1995
1995

A68
A68
A68
A68

February
May
October
November

1995
1995
1995
1995

All
A72
A68
A72

August
October
August
October

1992
1992
1995
1995

A80
A70
A76
A72

December
May
August
March

1991
1992
1992
1993

A79
A81
A83
A71

September 1995

A68

banks

Pro forma balance sheet and income statements for priced service
March 31, 1992
June 30, 1992
March 31, 1995
June 30, 1995

lending reported

1993
1993
1994
1994

banks

Assets and liabilities of U.S. branches and agencies
September 30, 1994
December 31, 1994
March 31, 1995
June 30, 1995

Residential
1994

August
November
February
May

operations

companies

under the Home Mortgage

Disclosure

Act

A68

Index to Statistical Tables
References are to pages A3-A66 although the prefix 'A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 21, 22
Assets and liabilities (See also Foreigners)
Banks, by classes, 18-23
Domestic finance companies, 36
Federal Reserve Banks, 11
Financial institutions, 28
Foreign banks, U.S. branches and agencies, 23
Automobiles
Consumer installment credit, 39
Production, 47, 48
BANKERS acceptances, 11, 12, 21-24, 26
Bankers balances, 18-23. (See also Foreigners)
Bonds {See also U.S. government securities)
New issues, 34
Rates, 26
Branch banks, 23
Business activity, nonfinancial, 45
Business expenditures on new plant and equipment, 35
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 46
Capital accounts
Banks, by classes, 18
Federal Reserve Banks, 11
Central banks, discount rates, 65
Certificates of deposit, 26
Commercial and industrial loans
Commercial banks, 21, 22
Weekly reporting banks, 21-23
Commercial banks
Assets and liabilities, 18-23
Commercial and industrial loans, 18-23
Consumer loans held, by type and terms, 39
Deposit interest rates of insured, 16
Loans sold outright, 22
Real estate mortgages held, by holder and property, 38
Time and savings deposits, 4
Commercial paper, 24, 26, 36
Condition statements (See Assets and liabilities)
Construction, 4 5 , 4 9
Consumer installment credit, 39
Consumer prices, 45
Consumption expenditures, 52, 53
Corporations
Profits and their distribution, 35
Security issues, 34, 65
Cost of living (See Consumer prices)
Credit unions, 39
Currency in circulation, 5, 14
Customer credit, stock market, 27
DEBITS to deposit accounts, 17
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 18-23
Ownership by individuals, partnerships, and
corporations, 22, 23
Turnover, 17

Depository institutions
Reserve requirements, 9
Reserves and related items, 4, 5, 6, 13
Deposits (See also specific types)
Banks, by classes, 4, 18—23
Federal Reserve Banks, 5 , 1 1
Interest rates, 16
Turnover, 17
Discount rates at Reserve Banks and at foreign central banks and
foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 35
EMPLOYMENT, 45
Eurodollars, 26
FARM mortgage loans, 38
Federal agency obligations, 5, 10, 11, 12, 31, 32
Federal credit agencies, 33
Federal finance
Debt subject to statutory limitation, and types and ownership
of gross debt, 30
Receipts and outlays, 28, 29
Treasury financing of surplus, or deficit, 28
Treasury operating balance, 28
Federal Financing Bank, 33
Federal funds, 7, 21, 22, 23, 26, 28
Federal Home Loan Banks, 33
Federal Home Loan Mortgage Corporation, 33, 37, 38
Federal Housing Administration, 33, 37, 38
Federal Land Banks, 38
Federal National Mortgage Association, 33, 37, 38
Federal Reserve Banks
Condition statement, 11
Discount rates (See Interest rates)
U.S. government securities held, 5, 11, 12, 30
Federal Reserve credit, 5, 6, 11, 12
Federal Reserve notes, 11
Federally sponsored credit agencies, 33
Finance companies
Assets and liabilities, 36
Business credit, 36
Loans, 39
Paper, 24, 26
Financial institutions, loans to, 21, 22, 23
Float, 5
Flow of funds, 4 0 - 4 4
Foreign banks, assets and liabilities of U.S. branches and
agencies, 2 2 , 2 3
Foreign currency operations, 11
Foreign deposits in U.S. banks, 5, 22
Foreign exchange rates, 66
Foreign trade, 54
Foreigners
Claims on, 55, 58, 59, 60, 62
Liabilities to, 22, 54, 55, 56, 61, 63, 64
GOLD
Certificate account, 11
Stock, 5, 54

A69

Government National Mortgage Association, 33, 37, 38
Gross domestic product, 51
HOUSING, new and existing units, 49
INCOME, personal and national, 45, 51, 52
Industrial production, 45, 47
Installment loans, 39
Insurance companies, 30, 38
Interest rates
Bonds, 26
Consumer installment credit, 39
Deposits, 16
Federal Reserve Banks, 8
Foreign central banks and foreign countries, 65
Money and capital markets, 26
Mortgages, 37
Prime rate, 25
International capital transactions of United States, 53-65
International organizations, 55, 56, 58, 6 1 , 6 2
Inventories, 51
Investment companies, issues and assets, 35
Investments (See also specific types)
Banks, by classes, 18—23
Commercial banks, 4, 18-23
Federal Reserve Banks, 11, 12
Financial institutions, 38
LABOR force, 45
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 18—23
Commercial banks, 18-23
Federal Reserve Banks, 5, 6, 8, 11, 12
Financial institutions, 38
Insured or guaranteed by United States, 37, 38
MANUFACTURING
Capacity utilization, 46
Production, 46, 48
Margin requirements, 27
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 7
Reserve requirements, 9
Mining production, 48
Mobile homes shipped, 49
Monetary and credit aggregates, 4, 13
Money and capital market rates, 26
Money stock measures and components, 4 , 1 4
Mortgages (See Real estate loans)
Mutual funds, 35
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 29
National income, 51
OPEN market transactions, 10
PERSONAL income, 52
Prices
Consumer and producer, 45, 50
Stock market, 27
Prime rate, 25
Producer prices, 45, 50
Production, 4 5 , 4 7
Profits, corporate, 35

REAL estate loans
Banks, by classes, 21, 22, 38
Terms, yields, and activity, 37
Type of holder and property mortgaged, 38
Repurchase agreements, 7
Reserve requirements, 9
Reserves
Commercial banks, 18
Depository institutions, 4, 5, 6, 13
Federal Reserve Banks, 11
U.S. reserve assets, 54
Residential mortgage loans, 37
Retail credit and retail sales, 39, 45
SAVING
Flow of funds, 4 0 - 4 4
National income accounts, 51
Savings institutions, 38, 39, 40
Savings deposits (See Time and savings deposits)
Securities (See also specific types)
Federal and federally sponsored credit agencies, 33
Foreign transactions, 63
New issues, 34
Prices, 27
Special drawing rights, 5, 11, 53, 54
State and local governments
Deposits, 21, 22
Holdings of U.S. government securities, 30
New security issues, 34
Ownership of securities issued by, 21, 23
Rates on securities, 26
Stock market, selected statistics, 27
Stocks (See also Securities)
New issues, 34
Prices, 27
Student Loan Marketing Association, 33
TAX receipts, federal, 29
Thrift institutions, 4. (See also Credit unions
and Savings institutions)
Time and savings deposits, 4, 14, 16, 18-23
Trade, foreign, 54
Treasury cash, Treasury currency, 5
Treasury deposits, 5, 11, 28
Treasury operating balance, 28
UNEMPLOYMENT, 45
U.S. government balances
Commercial bank holdings, 18-23
Treasury deposits at Reserve Banks, 5, 11, 28
U.S. government securities
Bank holdings, 18-23, 30
Dealer transactions, positions, and financing, 32
Federal Reserve Bank holdings, 5, 11, 12, 30
Foreign and international holdings and
transactions, 11, 30, 64
Open market transactions, 10
Outstanding, by type and holder, 30, 31
Rates, 26
U.S. international transactions, 53-66
Utilities, production, 48
VETERANS Administration, 37, 38
WEEKLY reporting banks, 18-23
Wholesale (producer) prices, 45, 50
YIELDS (See Interest rates)

A70

Federal Reserve Board of Governors
and Official Staff
ALAN GREENSPAN,
ALAN S. BLINDER,

Chairman
Vice Chairman

EDWARD W. KELLEY, JR.
LAWRENCE B. LINDSEY

OFFICE OF BOARD MEMBERS

DIVISION 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

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

Reserve System

Federal

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

LEGAL DIVISION
J. VIRGIL MATTINGLY, JR., General
Counsel
SCOTT G. ALVAREZ, Associate
General
Counsel
RICHARD M . ASHTON, Associate
General
Counsel
OLIVER IRELAND, Associate
General
Counsel
KATHLEEN M . O'DAY, Associate
General
Counsel
ROBERT DEV. FRIERSON, Assistant General
Counsel
KATHERINE H. WHEATLEY, Assistant General
Counsel

OFFICE OF THE SECRETARY
WILLIAM W . WILES,

Secretary

JENNIFER J. JOHNSON, Deputy
Secretary
BARBARA R. LOWREY, Associate
Secretary and
DAY W. RADEBAUGH, JR., Assistant
Secretary1

Ombudsman

DIVISION OF BANKING
SUPERVISION AND REGULATION
RICHARD SPILLENKOTHEN,

Director

STEPHEN C. SCHEMERING, Deputy
Director
DON E. KLINE, Associate
Director
WILLIAM A . RYBACK, Associate
Director
FREDERICK M . STRUBLE, Associate
Director
HERBERT A . BIERN, Deputy Associate
Director
ROGER T. COLE, Deputy Associate
Director
JAMES I. GARNER, Deputy Associate
Director
HOWARD A . AMER, Assistant
Director
GERALD A . EDWARDS, JR., Assistant
Director
STEPHEN M . HOFFMAN, JR., Assistant
Director
LAURA M . HOMER, 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
Director
MOLLY S. WASSOM, Assistant
WILLIAM SCHNEIDER, Project
Director,

National Information

Center

1. On loan from the Division of Information Resources Management

DIVISION OF RESEARCH AND STATISTICS
MICHAEL J. PRELL,

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 WHITE, Assistant

Director

JOYCE K. ZICKLER, Assistant
Director
JOHN J. MINGO, Senior
Adviser
G L E N N B . CANNER,

Adviser

DIVISION OF MONETARY AFFAIRS
DONALD L . KOHN,

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

DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS
GRIFFITH L . GARWOOD,

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

Board

SUSAN M . PHILLIPS
JANET L. YELLEN

OFFICE OF
STAFF DIRECTOR FOR MANAGEMENT

DIVISION OF RESERVE BANK OPERATIONS
AND PAYMENT SYSTEMS

S. DAVID FROST, Staff
Director
SHEILA CLARK, EEO Programs

CLYDE H . FARNSWORTH, JR.,

DAVID L. ROBINSON, Deputy

Director

(Finance

and

Control)

DIVISION OF HUMAN RESOURCES
MANAGEMENT
DAVID L . S H A N N O N ,

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

JOHN R. WEIS, Associate
Director
ANTHONY V. DIGIOIA, Assistant
Director
JOSEPH H. HAYES, JR., Assistant
Director
FRED HOROWITZ, Assistant
Director

OFFICE

OFFICE OF THE CONTROLLER
GEORGE E . LIVINGSTON,

Controller

STEPHEN J. CLARK, Assistant

Controller

(Programs

Budgets)
DARRELL R. PAULEY, Assistant

Controller

(Finance)

DIVISION OF SUPPORT SERVICES
ROBERT E . FRAZIER,

Director

GEORGE M . LOPEZ, Assistant
DAVID L. WILLIAMS, Assistant

Director
Director

DIVISION OF INFORMATION RESOURCES
MANAGEMENT
STEPHEN R . MALPHRUS,

Director

MARIANNE M . EMERSON, Assistant
Director
P o KYUNG KIM, Assistant
Director
RAYMOND H. MASSEY, Assistant
Director
EDWARD T. MULRENIN, Assistant
Director
ELIZABETH B . RIGGS, Assistant
Director
RICHARD C. STEVENS, Assistant
Director

OF THE INSPECTOR

BRENT L. BOWEN, Inspector
and

DONALD L. ROBINSON, Assistant
BARRY R. SNYDER, Assistant

GENERAL

General
Inspector

Inspector

General
General

A72

Federal Reserve Bulletin • December 1995

Federal Open Market Committee
and Advisory Councils
FEDERAL

OPEN MARKET

COMMITTEE
MEMBERS

A L A N GREENSPAN,

Chairman

WILLIAM J. MCDONOUGH, Vice

ALAN S. BLINDER

LAWRENCE B . LINDSEY

THOMAS M . HOENIG

THOMAS C . MELZER

SUSAN M . PHILLIPS

EDWARD W . KELLEY, JR.

CATHY E . MINEHAN

JANET L. YELLEN

MICHAEL H . MOSKOW

ALTERNATE MEMBERS
EDWARD G . BOEHNE

ROBERT D . MCTEER

JERRY L . JORDAN

ERNEST T. PATRIKIS

GARY H . STERN

STAFF
DONALD L . KOHN, Secretary

and

Economist

NORMAND R.V. BERNARD, Deputy

Secretary

JOSEPH R . COYNE, Assistant
GARY P. GILLUM, Assistant

THOMAS C . BAXTER, JR., Deputy

General

CHARLES J. SIEGMAN, Associate
LAWRENCE SLIFMAN, Associate

Economist

LYNN E. BROWNE, Associate

DAVID J. STOCKTON, Associate

Economist

PETER R . FISHER, Manager,

FEDERAL ADVISORY

System

Open

Market

Economist
Economist
Economist
Economist
Economist
Economist

Account

COUNCIL
ANTHONY P. TERRACCIANO,

President

MARSHALL N . CARTER, Vice

President

Seventh District
B. CRAIG, III, Eighth District
RICHARD M . KOVACEVICH, Ninth District
CHARLES E. NELSON, Tenth District
CHARLES R . HRDLICKA, Eleventh District
EDWARD A . CARSON, Twelfth District

First District
Second District
ANTHONY P. TERRACCIANO, Third District
FRANK V. CAHOUET, Fourth District
RICHARD G . TILGHMAN, Fifth District
CHARLES E. RICE, Sixth District

ROGER L. FITZSIMONDS,

MARSHALL N . CARTER,

ANDREW

WALTER V. SHIPLEY,

Economist

LARRY J. PROMISEL, Associate

Counsel

Economist

EDWIN M . TRUMAN,

Economist

WILLIAM C . HUNTER, Associate
FREDERIC S . MISHKIN, Associate

Counsel

Economist

WILLIAM G . DEWALD, Associate
DAVID E. LINDSEY, Associate

Secretary

J. VIRGIL MATTINGLY, JR., General
MICHAEL J. PRELL,

THOMAS E . DAVIS, Associate

Secretary

HERBERT V. PROCHNOW, Secretary
JAMES ANNABLE,
WILLIAM J. KORSVIK,

Chairman

Emeritus

Co-Secretary
Co-Secretary

CONSUMER ADVISORY

COUNCIL

JAMES L. WEST,
KATHARINE W . MCKEE,

Tijeras, New Mexico, Chairman
Durham, North Carolina, Vice Chairman

St. Paul, Minnesota
R. BUTLER, Riverwoods, Illinois
ROBERT A. COOK, Baltimore, Maryland
ALVIN J. COWANS, Orlando, Florida
MICHAEL FERRY, St. Louis, Missouri
ELIZABETH G . FLORES, Laredo, Texas
EMANUEL FREEMAN, Philadelphia, Pennsylvania
NORMA L. FREIBERG, New Orleans, Louisiana
DAVID C. FYNN, Cleveland, Ohio
LORI GAY, Los Angeles, California
ROBERT G . GREER, Houston, Texas
KENNETH R. HARNEY, Chevy Chase, Maryland
GAIL K . HILLEBRAND, San Francisco, California
RONALD A. HOMER, Boston, Massachusetts

Dallas, Texas
Cando, North Dakota
EUGENE I. LEHRMANN, Madison, Wisconsin
RONALD A . PRILL, Minneapolis, Minnesota
LISA RICE-COLEMAN, Toledo, Ohio
JOHN R . RINES, Detroit, Michigan
JULIA M. SEWARD, Richmond, Virginia
A N N E B. SHLAY, Philadelphia, Pennsylvania
REGINALD J. SMITH, Kansas City, Missouri
JOHN E. TAYLOR, Washington, D.C.
LORRAINE VANETTEN, Troy, Michigan
GRACE W. WEINSTEIN, Englewood, New Jersey
LILY K. YAO, Honolulu, Hawaii
ROBERT O. ZDENEK, Newark, New Jersey

D . DOUGLAS BLANKE,

THOMAS L . HOUSTON,

THOMAS

THRIFT INSTITUTIONS

ADVISORY

TERRY JORDE,

COUNCIL
Cleveland, Ohio, President
D. TAYLOR, Miami, Florida, Vice President

CHARLES JOHN KOCH,
STEPHEN

Hazleton, Pennsylvania
Hillsborough, California
MALCOLM E . COLLIER, Lakewood, Colorado
GEORGE L. ENGELKE, JR., Lake Success, New York
BEVERLY D. HARRIS, Livingston, Montana
E . LEE BEARD,

JOHN E . BRUBAKER,

F. HOLLAND, Burlington, Massachusetts
C. SCULLY, Chicago, Illinois
JOHN M. TIPPETS, DFW Airport, Texas
LARRY T. WILSON, Raleigh, North Carolina
WILLIAM W. ZUPPE, Spokane, Washington
DAVID

JOSEPH

A74

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use. Multiple

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are

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The Board of Governors of the Federal Reserve S y s t e m
The Federal Open Market Committee
Federal Reserve Bank Board o f Directors
Federal Reserve Banks
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A Consumer's Guide to Mortgage Lock-Ins
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H o m e Mortgages: Understanding the Process and Your Right
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H o w to File a Consumer Complaint
Making Deposits: W h e n Will Your M o n e y B e Available?
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SHOP: The Card You Pick Can Save You M o n e y
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A75

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
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1 6 2 . EVIDENCE ON THE SIZE OF BANKING MARKETS FROM
MORTGAGE LOAN RATES IN TWENTY CITIES, b y S t e p h e n

A. Rhoades. February 1992. 11 pp.
1 6 3 . CLEARANCE AND SETTLEMENT IN U . S . SECURITIES MAR-

KETS, by Patrick Parkinson, A d a m Gilbert, E m i l y Gollob,
Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary
A n n Taylor. March 1992. 3 7 pp.
1 6 4 . THE 1 9 8 9 - 9 2 CREDIT CRUNCH FOR REAL ESTATE, b y

Staff Studies 1 - 1 5 7 are out of print.

James T. Fergus and John L. G o o d m a n , Jr. July 1993.
2 0 pp.

1 5 8 . THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIREMENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE

1 6 5 . THE DEMAND FOR TRADE CREDIT: A N INVESTIGATION OF
MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES,

PRODUCTS, by Mark J. Warshawsky with the assistance of
Dietrich Earnhart. September 1989. 2 3 pp.

by Gregory E. Elliehausen and John D. Wolken. September 1 9 9 3 . 1 8 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

1 6 6 . THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET,

and Donald Savage. February 1990. 12 pp.
1 6 0 . BANKING MARKETS AND THE USE OF FINANCIAL SERVICES BY SMALL AND MEDIUM-SIZED BUSINESSES, b y

Gregory E. Elliehausen and John D . Wolken. September
1990. 35 pp.
161. A

REVIEW OF CORPORATE RESTRUCTURING ACTIVITY,

1 9 8 0 - 9 0 , by Margaret Hastings Pickering. M a y
21pp.

1991.

by Mark Carey, Stephen Prowse, John Rea, and Gregory
Udell. January 1994. I l l pp.
1 6 7 . A SUMMARY OF MERGER PERFORMANCE STUDIES IN
BANKING, 1 9 8 0 - 9 3 , AND AN ASSESSMENT OF THE "OPERATING PERFORMANCE" AND "EVENT S T U D Y " METHOD-

OLOGIES, by Stephen A . Rhoades. July 1994. 37 pp.

A76

ANTICIPATED SCHEDULE OF RELEASE DATES FOR PERIODIC RELEASES OF THE BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM (PAYMENT MUST ACCOMPANY REQUESTS)

Release number and title

Annual
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Annual
fax
rate

Approximate
release
days 1

Period or date to
which data refer

Corresponding
Bulletin
table numbers 2

Weekly Releases
H.2.

Actions of the Board:
Applications and Reports
Received

$55.00

n.a.

Friday

Week ended
previous
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H.3.

Aggregate Reserves of
Depository Institutions and
the Monetary Base

$20.00

Thursday

Week ended
previous
Wednesday

1.20

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Depository Institutions and
Condition Statement of
Federal Reserve Banks

$20.00

$35.00

Thursday

Week ended
previous
Wednesday

1.11,1.18

H.4.2. Weekly Consolidated Condition
Report of Large Commercial
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Friday

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week earlier

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H.5.

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Week ended
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1.13

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A77

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A78

Index to Volume 81
GUIDE TO PAGE REFERENCES IN MONTHLY ISSUES
Issue

January .
February
March ..
April
May
June

"A" Pages

Text

1-70
71-218
219-322
323-406
407-544
545-628

1-78
1-86
1-78
1-78
1-86
1-80

Issue

Index to
tables
68-69
76-77
68-69
68-69
76-77
68-69

The "A" pages consist of statistical tables and reference information.

Pages
ADVERSE material supervisory determination, appeals
process
435
American Association of Retired Persons
436
American Gas Association
20
Annual Report 1994, publication
597
Annual Report: Budget Review, 1994-95, publication
597
Annuities, sale by banks, education campaign and
videotape availability
436, 941
Anti-tying restrictions, safe harbor
595
Argentina, Central Bank of
939
Articles
Credit risk and the provision of mortgages to
lower-income and minority homebuyers
989-1016
Daylight overdraft fees and the Federal Reserve's
payment system risk policy
1065-77
FIMS: A new monitoring system for banking
institutions
1-15
Financial services used by small businesses: Evidence
from the 1993 National Survey of Small Business
Finances
629-67
German monetary targeting: A retrospective view
917-31
Home purchase lending in low-income neighborhoods
and to low-income borrowers
71-103
Household sector borrowing and the burden of debt ... 323-38
Industrial production and capacity utilization:
A revision
16-26
Monetary policy and open market operations
during 1994
570-84
Monetary policy reports to the Congress
219-43, 757-74
Overview of derivatives disclosures by major
U.S. banks
817-31
Profits and balance sheet developments at U.S.
commercial banks in 1994
545-69
Treasury and Federal Reserve foreign exchange
operations
244-50, 585-91, 832-37, 1078-85
U.S. International transactions in 1994
407-18
ATM identification, interim rule to Regulation E
32
Automated clearinghouse access, proposed action
940
BANK failures, article on monitoring and prevention

July
August
September
October
November
December ....

Text

629- 756
757- 816
817- 916
917- 988
989-1064
1065-1175

"A" pages

1-78
1-88
1-86
1-84
1-86
1-77

Index to
tables
68-69
78-79
76-77
74—75
76-77
68-69

Statistical tables are indexed separately (see p. A68 of this issue).

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
1st Jackson Bancshares, Inc
751
215 Holding Co
1058
401 (k) Plan and ESOP of United States Trust
Company of New York and Affiliated Companies .. 1169
A. Wilbert's Sons Lumber and Shingle Co
401
A.N.B. Holding Company, Ltd
401
Abess Properties, Ltd
912
ABN AMRO Bank N.V., Amsterdam Zuid-Ooost,
The Netherlands
1168
ABN AMRO Holding N.V., Amsterdam Zuid-Ooost,
The Netherlands
1168
Ace Gas, Inc
751
Affiliated Community Bancorp, Inc
913
Albina Community Bancorp
1059
Allied Irish Banks, p.l.c., Dublin, Ireland
624, 912
Alpha Financial Group, Inc
65
AMCORE Financial, Inc
62, 814
Ameribank Bankshares, Inc
1164
Ameribank Corporation
751
American Bancorporation
65
American Bancorporation, Inc
526
American Bancshares, Inc
1058
American Community Bankshares, Inc
523
American National Corporation
319
American River Holdings
751
Ames National Corporation
62
ANB Corporation
401
ANB Delaware Corporation
401
Anchor Bancorp, Inc
319
Andover Bancorp of New Hampshire, Inc
985
Andover Bancorp, Inc
985
Andrews Bancshares, Inc
910
Andrews Delaware Financial Corporation
910
Associated Banc-Corp
319, 910, 912
Associated Illinois Banc-Corp
910
Aurora Holding Company
317
Baltz Family Partners, Ltd
523
Banc One Corporation
1167
Banc One Funding Corporation
1167
Banc One Payment Services, L.L.C
1167

A79

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
BancBoston Holdings, Inc
316
BancFirst Ohio Corp
752
BancMidwest Corporation
1164
Banco de Sabadell, S.A., Sabadell, Spain
754
Banco Santander, S.A., Madrid, Spain
401
Bancock Corporation
317
BancorpSouth Inc
403
BancTenn Corporation
987
Bank of Boston Corporation
316
Bank of Colorado Holding Company
752
Bank of Kentucky Financial Corporation
403
Bank of New York Company, Inc
909
Banner Bancorp, Ltd
403
BanPonce Corporation
320
Banque Nationale de Paris, Paris, France
1164
Barlow Banking Corporation
985
Baraett Banks, Inc
403, 624, 1058
Barry Limited Partnership
401
BayBanks, Inc
1164
Baylor Bancshares, Inc
813
Baylor/Delaware Corp
813
BB&T Bancshares Corp
752
Beaman Bancshares, Inc
1058
Bellevue Service Company
63
Bellevue State Bank Employee Stock Ownership
Plan
63, 65
Benjamin Franklin Bancorp, M.H.C
524
BJ Morgan Bancshares, Inc
524
Blumberg BancUnits, Limited Partnership
752
Blumberg Family Partnership, Limited Partnership . . . . 752
Boatmen's Bancshares, Inc
317, 524, 1058
Boatmen's-Illinois, Inc
317
BOK Financial Corporation
813
Brannen Banks of Florida, Inc
754
Brazosport Corporation
754
Brazosport Corporation-Nevada, Inc
754
Bremer Financial Corporation
525
Bridger Company
401
Brill Bancshares, Inc
622
Byron State Inc
401
Cabot Bankshares, Inc
320
Caldwell Holding Company
1164
Camden National Corporation
1169
Camino Real Bancshares, Inc
1164
Camino Real Delaware, Inc
1164
Campello Bancorp
401
Campello Co-operative Bank
401
Capital Bancorporation, Inc
624
Capitol Bankshares, Inc
910
Carlinville National Bank Shares, Inc
1167
Carolina Community Bancshares, Inc
1164
1167
Carroll County Bancshares Inc
Cass Commercial Corporation
624
CBI-Illinois, Inc
622
CCB Financial Corporation
400
CENIT Bancorp, Inc
910
Centennial Holdings, Ltd
1060
Central Bancompany, Inc
813, 910
Central Corporation
985
Central Illinois Bancorp, Inc
1060
Central Louisiana Capital Corporation
403, 525
Centura Banks, Inc
752
Century South Banks, Inc
1164
CFX Corporation
622
Chambers Bancshares, Inc
622
Charter Bancshares, Inc
66
Chase Manhattan Corporation
524
Chase Manhattan National Holding Corporation
524
Chatuge Bank Shares, Inc
986
Chemical Banking Corporation
624
Chittenden Corporation
401

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
Citicorp
1167
Citizens Bancorp of Delaware, Inc
1164
Citizens Bancshares Corporation
912, 1058
Citizens Bancshares, Inc
63
Citizens Community Bancshares, Inc
1164
Citizens Independent Bancorp, Inc
401
Citizens National Bancshares of Bossier, Inc
1058
Citizens National Bancshares, Inc
1164
Citizens National Corporation
317
City National Bancshares, Inc
912
Clinton Bancorp, Inc
63
CNB Bancorp, Inc
1164
CNB Bancshares of Victoria, Inc
1164
CNB Bancshares, Inc
317
Colfax Bancshares, Inc
1058
Colonial BancGroup, Inc
987
Comerica California Incorporated
1058
Comerica Incorporated
1058
Comerica Texas Incorporated
1058
Commerce Bancshares, Inc
317, 622, 752
Commerce Bankshares, Inc
813
Commercial Bancgroup, Inc
912
Commercial Bancshares, Inc
401
Commercial Bank of Mott Employee Stock
Ownership Plan and Trust
1058
Commerzbank AG, Frankfurt, Germany
1060
Community Bancshares, Inc. Employee Stock
Ownership Plan
622
Community Capital Corporation
813
Community Financial Corporation
752
Community First BancShares, Inc
317
Community First Bankshares, Inc
63, 401, 752, 986
Community Group, Inc
622
Community National Corporation
912
Community Trust Financial Services Corporation
987
Community Bancorp, Inc
401
Confluence Bancshares Corporation
1058
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
Rabobank Nederland, Utrecht, The Netherlands . 403, 912
Country Bank Shares Corporation
403
Country Bank Shares, Inc
1058
CRACO, Inc
752
CRB Financial Corp
622
Crestar Financial Corporation
320, 1167
CSB Financial Group, Inc
910
Cullen/Frost Bankers, Inc
524
Dacotah Banks, Inc
751, 985
Dakotah Bank Holding Co
316
Danny Management, Inc
622
Dartmouth Capital Group, Inc
1167
Dartmouth Capital Group, L.P.
1167
Dauphin Deposit Corporation
403
Davis Bancshares, Inc
910
Decatur Investment, Inc
63
Delhi Bank Corp
63
Dentel Bancorporation
1058
Deposit Guaranty Arkansas Corporation
986
Deposit Guaranty Corporation
524, 986
Deutsche Bank, AG, Frankfurt, Federal Republic of
Germany
526, 624, 814
Draper Bancorp
1164
Duke Financial Group, Inc
752
Eastside Holding Corporation
910
Eiden Interests, Ltd
402
Eitzen Independents, Inc
403
Elgin Bancshares, Inc
402
Ercil P. and Lee Nell Phillips Charitable Remainder
Unitrust
1058
ESB Bancorp, Inc
623
Estes Park Bank Restated Employee Stock Ownership
401(k) Plan & Retirement Trust
402

A80

Federal Reserve Bulletin • December 1995

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
Executive Auto Lease, Inc
755
F&A Financial Company
1164
F&M Bancorporation
1059
Fairbanco Holding Company, Inc., ESOP
63
Falcon Bancshares, Inc
63
Farmers & Merchants Bank Employee Stock
Ownership Plan
813, 814
Farmers Bancshares, Inc
1165
FBD Holding Company
623
FBOP Corporation
317
FCFT, Inc
623
FCNBCorp
1057
FCT Bancshares, Inc
1059
FFB Participacoes e Servicos, S.A., Funchal,
Portugal
401
Fifth Third Bancorp
65, 524, 910
Fifth Third Trust Co. & Savings Bank, FSB
910
Financial Trust Corp
1059
66
Finger Interests Number One, Ltd
First American Corporation
754, 1167
First Bancorp, Inc.
525
First Bank System, Inc
318, 402, 1169
First Banks, Inc
65, 317, 402, 987
First Bankshares, Inc
910
First Business Bancshares, Inc
912
First Central Holdings, Inc
1059
First Centralia Bancshares, Inc
524
First Citizens Bancorporation of South Carolina, Inc. . 910
First Citizens BancShares, Inc
63, 524
First Commerce Corporation
1057
First Commercial Corporation
984
First Community Bank Group, Inc
623
First Dakota Financial Corporation Employee Stock
Ownership Plan
910
First Delaware Bancorp, Inc
525
First Empire State Corporation
1057
First Fidelity Bancorporation
402
First Financial Bancorp
752, 1062
First Hawaiian, Inc
912, 987
First Interstate BancSystem Of Montana, Inc
623
First Mariner Bancorp
752
First Maryland Bancorp
624
First Michigan Bank Corporation
402
First Midwest Bancorp, Inc
1165, 1167
First Mountain Company
752
First Mutual Bancorp, Inc
755
First National Bancorp
625
First National Bancshares, Inc., ESOP and 401 (k)
Trusts
1165
First National Corporation
911
First National Corporation North Dakota
912
First National Corporation of Ardmore, Inc
986
First National of Nebraska, Inc
400, 751, 985
First of America Bank Corporation
65, 403
First Paducah Bancshares of Delaware, Inc
1165
First Paducah Bancshares of Texas, Inc
1165
First Peoples Bankshares, Inc
911
First Security Bancorp
752
First Security Corporation
1060
First Southern Bancshares, Inc
752
First Southern Holding Bancorp, Inc
911
First State Bancorp of Monticello, Inc., Employee
Stock Option Plan
625
First State Bancorp, Inc
1059
First State Bancshares, Inc
318
First State Banking Corporation
912
First Sterling Bancshares, Inc
911
First Tennessee National Corporation
402
First Union Corporation
403, 754, 814
First United Bancorporation
320
First United Bancshares, Inc
62, 1057

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
First United of Texas, Inc
62
Firstar Bank Illinois
912
Firstar Corporation
317, 320, 402, 752
Firstar Corporation of Iowa
317
Firstar Corporation of Minnesota
320, 402
Firstar Corporation of Wisconsin
752
FirstBancorp, Inc
986
FirstBank Holding Company of Colorado
986
FirstBank Holding Company of Colorado Employee
Stock Ownership Plan
63, 986, 1059
Firstbank of Illinois Co
1059
Fleet Financial Group, Inc
754
Flint Creek Holding Company
63
Foursquare Cornerstone, Inc
911
Foxdale Bancorp
524
Frandsen Financial Corporation
63
Franklin Bancorp, Inc
63
FSB Bancshares of Delaware, Inc
1165
FSB Bancshares, Inc
1165
FSB Corp
1165
Galatia Bancorp, Inc
63
General Bancshares, Inc
911
Georgia Bancshares, Inc
813
Gibbon Exchange Company
751
Gillmor Financial Services, Inc
526
GNB Bancorporation
909
Golden Bancshares, Inc
623
Great Southern Bancorp
986
GreatBanc, Inc
752
Greater Brazos Valley Bancorp, Inc
813
Greater Brazos Valley Delaware Bancorp, Inc
813
Greater Delaware Valley Holdings, A Mutual
Company
402
Greater Rome Bancshares, Inc
623
Gulf West Banks, Inc
63
Habersham Bancorp
623
Hansen-Lawrence Agency, Inc
753
Harrell Bancshares, Inc
1165
Harris Taubman Financial Corporation
986
Haugo Bancshares, Inc
65
Heart of Georgia Bancshares, Inc
1165
Heartland Financial USA, Inc
911
Heritage Bancorp, Inc
63, 318
HF Limited Partnership
318
ffiberaia Corporation
623, 1060, 1165
Hoeme Family Partnership
402
Home Savings Bank, SSB Employee Stock
Ownership Plan
1165
Horizon Bancshares, Inc
63
HSBC Holdings B.V., Amsterdam, The Netherlands .. 1060
HSBC Holdings pic, London, England
1060
Huxley Bancorp
320
IBW, Inc
524
Ida Grove Bancshares, Inc
524, 986, 987
IJB Financial Corp
813
Independent Bancorp, Inc
524
Intervest Bancshares Corporation
913
InterWest Bancorp, Inc
911
Investors Financial Services Corp
1165
ISB Financial Corporation
524, 526
Jacksonville Bancorp, M.H.C
623
Jacob Schmidt Company
526
JDOB, Inc
1060
JSBC Holdings pic, London, United Kingdom
814
Keene Bancorp, Inc., 401 (k) Employee Stock
Ownership Plan and Trust
911
Kensington Bancorp, Inc
1059
Key Bancshares of Wyoming
754
KeyCorp
63, 318, 404, 754
Kidd Partners, Ltd
402
L.B.S. McMullan Limited Partnership
524

Index to Volume 81

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
Lake Elmo Bancshares, Inc
1165
Laurel Capital Group, Inc
210
Lexington Holding, Inc
913
Liberty Bancshares, Inc
1166
Libertyville Bancorp, Inc
1059
Lima Bancshares, Inc
623
Linn Holding Company, Inc
402
Lisco State Company
909
Longview Capital Corporation
402
Maedgen & White, Ltd
1059, 1061
Malvern Bancorporation
1166
Marblehead Bancorp
1166
Marshall & Ilsley Corporation
318, 913
Mason-Dixon Bancshares, Inc
911
MBNA Corporation
1061
Mediapolis Bancorporation
63
MeesPierson N.V., Amsterdam and Rotterdam,
The Netherlands
1168
Mellon Bank Corporation
624, 814, 1168
Menard Bancshares, Inc
318
Mercantile Bancorporation Inc
623, 624, 813, 814
Mercantile Bancorporation Inc. of Arkansas
623
Merchants Bancorp, Inc
1166
Mid Am, Inc
814
Midland Bancorporation, Inc
1059
MidWest Bancorporation, Inc
1168
Minnesota Valley Bancshares, Inc
63
Mission-Heights Management Company, Ltd
318
MNB Bancshares, Inc
524
Morrill Bancshares, Inc
524
Mott Bankshares, Inc
1058
Moundville Bancshares, Inc
755, 911
Mountain Bancshares, Inc
753, 913
Mountain Parks Financial Corp
753
MSB Holding Company
754
MWN Corporation, d.b.a. CCB Services
814
Nashville Holding Company
404
National Bancorp, Inc
524
National City Bancshares, Inc
524, 624, 987
National Commerce Bancorporation
913
National Commerce Corporation
814
National Westminster Bancorp, Inc
1166
National Westminster Bancorp NJ
1166
National Westminster Bank Pic,
London, England
404, 814, 1166
NationsBank Corporation
66
NatWest Holdings Inc
404, 1166
NBD Bancorp, Inc
624, 1059, 1061
N B D Illinois, Inc
624
New Central Illinois Financial Co., Inc
753
New England Community Bancorp, Inc
986
New Era Bancorporation, Inc
754, 1061
New York Mills Bancshares, Inc
1061
North Fork Bancorporation, Inc
753
Northeast Federal Corp
319
Northeast Portland Community Development
1059
Northern Plains Investment, Inc
911
Northern Trust Corporation
985
Northwest Bancorp, MHC
1166
Norwest Corporation
64, 65, 318, 320, 402,
404, 524, 623, 624, 753,
9 1 1 , 9 1 3 , 1059, 1061, 1168
Norwest Financial Special Services, Inc
65
Norwest Financial, Inc
65
Norwood Associates II
1059
Old National Bancorp
400, 523, 984, 1057, 1163
Old Second Bancorp, Inc
623
Olympia Bancorporation, Inc., Employee Stock
Ownership Plan
1059
Omega Financial Corporation
911
Otto Bremer Foundation
525

A81

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
623
Overland Bancorp, Inc
Overton Delaware Corporation
1166
Overton Financial Corporation
1166
Paladon Investments, Ltd
316
Paladon Management Co., Inc
316
Palmer National Bancorp, Inc
404
Panhandle Aviation, Inc
813
Park Bank Corporation of Duluth
1166
Pea River Capital Corporation
318
Peoples Bancorp of Delaware, Inc
525
Peoples Bancorp, Inc
525
Peoples Holding Company
987
Peoples Independent Bancshares, Inc
753
Peoples of Fleming County Bancorp, Inc
1166
Persons Banking Company
525
Philipps Investment Company Limited
Partnership
318, 1060
Philipps Investments Limited Partnership
319
Pikeville Acquisition Corp
753
Pikeville National Corporation
753, 1060, 1168
Pinnacle Bancorp, Inc
1166
Pinnacle Banc Group, Inc
64
Pioneer Bancshares, Inc
1166
Plains Capital Corporation
1059, 1061
Platte Valley Cattle Company
1060
Pleasant Hope Bancshares, Inc
753
PNC Bancorp, Inc
1169
PNC Bank Corp
1169
Pointe Financial Corporation
754
Pony Express Bancorp, Inc
911
Premier Bancshares, Inc
753
Premier Bankshares Corporation
64, 320
Premier Financial Bancorp, Inc
1166
Professional Bancorp
624
Provident Bancorp, Inc
65, 1061
Ramsey Financial Corporation
1061
Randall Bancorp, Inc
1166
Randall Holding Company, Inc
64
Raritan State Bancorp, Inc
64
Regency Bancorp
64
Regions Corporation
64
Regions Financial Corporation
64, 402, 624, 913
Republic Security Financial Corporation
1166
Rice Insurance Agency, Inc
1060
Riverside Acquisition Corporation
64
Riverside Bancshares, Inc
403
Riverway Holdings of Delaware, Inc
64
Riverway Holdings, Inc
64
RNYC Holdings Limited, Gibraltar
64
Royal Bancshares of Pennsylvania, Inc
813
Saban S.A., Panama
64
Security Richland Bancorporation
753
Security State Agency of Aitkin, Inc
320
Security State Bank Holding Company
1060
Shamrock Bancshares, Inc
1166
Shawmut National Corporation, Boston,
Massachusetts
319
Shawmut National Corporation, Hartford,
Connecticut
319, 1061
Shorebank Corporation
404, 986
Sidell Bancorp, Inc
624
Signature Bancshares, Inc
400
Signature Delaware Financial Corporation
400
Signet Banking Corporation
316, 751
Simmons First National Corporation
400, 909
SN, Ltd
64
SNB Bancshares, Inc
911
SNB Corporation
911
Societe Generale, Paris, France
404, 754
South Banking Company
986
South Pointe Financial Corporation
64

A82

Federal Reserve Bulletin • December 1995

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
South Trust Corporation
523
South Valley Bancorporation
754
Southeast Bancorp of Texas, Inc
1061
Southern Bancshares, Inc
911
Southern Financial Bancorp, Inc
1166
Southern National Banks, Inc
65
SouthTrust Corporation
751, 985
SouthTrust of Florida, Inc
751
SouthTrust of Georgia, Inc
812
Southwestern Bancshares, Inc
911
Southwestern Delaware Financial Corporation
911
Spencer Bancorporation, Inc
1061
Standard Chartered Bank, London, England
1062
Standard Chartered Holdings Limited, London,
England
1062
Standard Chartered PLC, London, England
1062
State Bank Employees Stock Ownership Plan
525
Stearns Financial Services, Inc., Employee Stock
Ownership Plan
320
Stichting Administratiekantoor ABN AMRO Holding,
Amsterdam Zuid-Ooost, The Netherlands
1168
Stichting Prioriteit ABN AMRO Holding, Amsterdam
Zuid-Ooost, The Netherlands
1168
Stine Family Partnership
623
Stratford Bancshares of Delaware, Inc
65
Stratford Bancshares, Inc
65
Suburban Illinois Bancorp, Inc
753
Summit Financial Corporation
65, 754, 913
Sun Banks, Inc
909, 1163
Sun Capital Bancorp
753
SunTrust Banks, Inc
400, 909, 985, 1057, 1163
Swiss Bank Corporation, Basle, Switzerland
624, 913
403, 525
Synovus Financial Corp
TB&C Bancshares, Inc
403, 525
Texas Bancorp Shares, Inc
1167
Texas Bancshares Subsidiary Corporation, Inc
403
Texas Bancshares, Inc
403
Texas Financial Bancorporation, Inc
525
Thomasville Bancshares, Inc
1060
Tilden Bancshares, Inc
319
Todd County Agency, Inc
623, 1168
Toronto-Dominion Bank, Toronto, Canada
526
Towne Bancorp, Inc
986
Trenton Bankshares, Inc
912
Triangle Bancorp, Inc
319
Trust Company of Georgia
1163
Turner Bancshares, Inc
623
U.S. Bancorp
400
Union Bancorporation
624
Union Bancshares, Inc
319
Union Bank of Switzerland, Zurich, Switzerland
404
Union Illinois Company Employee Stock
Ownership Trust
753
Union-Calhoun Investments, Ltd
754
Unison Bancorp, Inc
1167
United Bancshares, Inc
985
United Community Banks, Inc
986
United Security Bancorporation
1168
United Valley Bancorp, Inc
525
Vail Bank
753
Valley Financial Corporation
64
ValliCorp Holdings, Inc
1167
Valrico Bancorp, Inc
623
Vectra Banking Corporation
1167
Victoria Bankshares, Inc
912
Victoria Financial Services, Inc
912
Wachovia Corporation
812, 985
Warren County Bancshares, Inc
525
Watford City Bancshares, Inc
912
Waupaca Bancorporation, Inc
403
WCN Bancorp
1168

Pages
Bank Holding Company Act of 1956—Continued
Applications approved under—Continued
Wells Fargo & Company
Wes-Tenn Bancorp, Inc
West Bancorp, Inc
West Bend Bancorp
West Plains Investors, Inc
West Town Bancorp, Inc
Westamerica Bancorporation
Western Dakota Holding Company
Western Oklahoma Financial Services, Inc
Whipple Family Limited Partnership
Whitcorp Financial Company
White Pine Bancorp Inc
Whitewater Bancshares, Inc
Whitley Acquisition Corp
Whitney Corporation of Iowa
Wilmot Bank Holding Company
Windsor Bancshares, Inc
Winton Jones Limited Partnership
Wisconsin Bank Services, Inc
Withee Bank Shares, Inc
Orders issued under
A.N.B. Holding Company, Ltd
ABN AMRO Bank N.V., Amsterdam,
The Netherlands
ABN AMRO Holding N.V., Amsterdam,
The Netherlands
ABN AMRO North American, Inc
Abrams Centre Bancshares, Inc
Alpha Bancorp
Altus NBC Corporation
Ameribanc, Inc
American Bancshares, Inc
Associated Banc-Corp
Banc One Corporation
Banco Santander, S.A., Madrid, Spain
212,
Bank of Ireland First Holdings, Inc
Bank of Ireland, Dublin, Ireland
Bank of Kentucky Financial Corporation
Bank of Montreal, Toronto, Canada
Bank of Tokyo, Ltd., Tokyo, Japan
Bank South Corporation
BankAmerica Corporation
Bankmont Financial Corp
Banque Nationale de Paris, Paris, France
Banterra Corp
Barnett Banks, Inc
Battle Creek State Company
Bay Bancorporation
BayBanks, Inc
BB&T Financial Corporation
Berlau Bancshares, Inc
Berliner Handels-und Frankfurter Bank, Frankfurt
am Main, Germany
BNCCORP, Inc
Boatmen's Bancshares, Inc
BOK Financial Corporation
California Bancshares, Inc
Canadian Imperial Bank of Commerce, Toronto,
Ontario, Canada
Capital City Bancshares, Inc
Carbon County Holding Company
Casey Bancorp, Inc
CBI-Illinois, Inc
Centennial Holdings, Ltd
Centura Banks, Inc
Century Capital Financial, Inc
Century Capital Financial-Delaware, Inc
Century South Banks, Inc
Chadwick Bancshares, Inc
Charles Henderson Trust
Charter Bancorporation, Inc

1062
319
319
987
525
404
64, 623
1060
813
404
912
1167
753
1060
1168
525
813
319
913
1062
212
182, 1134
182, 1134
182
42
480
207
608
208
212
491, 492
501, 1139
511
511
208
212
279
207, 1116
212
212
386
212
207, 212
281
791
723
207
208
390
295
213, 299
1052
208
878
208
504
208
376
208
208
208
208
208
213
873
213

Index to Volume 81

Pages
Bank Holding Company Act of 1956—Continued
Orders issued under—Continued
Chase Manhattan Corporation
467, 883
Chemung Financial Corporation
208
Cheyenne Banking Corporation
375
China Trust Capita] B.V., Amsterdam,
The Netherlands
155
China Trust Holdings Corp
155
China Trust Holdings, N.V., Curacao, Netherlands
Antilles
155
Cho Hung Bank, Seoul, Korea
475
Citicorp
164
CNB Bancshares, Inc
166, 208, 213
Coal City Corporation
283
Colonial BancGroup, Inc
208
Comerica Incorporated
475
Commerce Bancshares, Inc
376
Commercial Bancorp
378
Commerzbank Aktiengesellschaft, Frankfurt,
Germany
213
Community Bancshares of Delaware, Inc
209
Community Bancshares of Mississippi, Inc
209
Community Bancshares, Inc
209
Community Bankshares, Inc
209
Community First Bankshares, Inc
209
Community First Financial, Inc
209
Compass Bancshares, Inc
207
Conrad Company
209
Consumers Bancorp, Inc
209
CoreStates Financial Corp
491, 492
Corporation Bancaria de Espana, Madrid, Spain
598
Credit Commercial de France S.A., Paris, France
390
Credit Suisse, Zurich, Switzerland
46, 803
CS Holding, Zurich, Switzerland
46, 803
Dakota Community Bancshares, Inc
209
Dakota County Bancshares, Inc
209
Dutton Bancorporation, Inc
209
Farmington Bancorp
792
Farmington Finance Corporation, Tortola,
British Virgin Islands
792
FBOP Corporation
209
FCNB Corp
207
Fifth Third Bancorp
603
Fifth Third Bank of Northeastern Ohio
603
First Bancorporation of Ohio
213
First Bancshares of Valley City, Inc
286
First Bank System, Inc
169
First Citizens Bancshares, Inc
207
First Commerce Corporation
379, 793, 1033
First Deposit Bancshares, Inc
213
First International Bancorp America
156
First International Bancorp Texas, Inc
156
First Interstate Bancorp
207
First Interstate Bank of California
207
First Mid-Illinois Bancshares, Inc
209
First National Company
805
First National of Colorado, Inc
209
First National of Nebraska, Inc
209
First NH Bank
511
First of America Bank Corporation
213
First Place Financial Corporation
716
First Security Bankshares, Inc
209
First Southeastern BancGroup, Inc
210
First Union Corporation
207, 726, 1042, 1118, 1143
First Virginia Banks, Inc
213
Firstar Corporation
209
Florida Gulfcoast Bancorp, Inc
210
Fourth Financial Corporation
156, 210
Fulton Financial Corporation
970
Hancock Holding Company
210
HCB Bancorp
210
Hemisphere Financial, Ltd., Road Town,
British Virgin Islands
795

A83

Pages
Bank Holding Company Act of 1956—Continued
Orders issued under—Continued
Henderson Bancshares, Inc
873
Hibernia Corporation
215
HSBC Holdings BV, Amsterdam,
The Netherlands
728, 1037, 1044
HSBC Holdings pic, London,
United Kingdom
728, 1037, 1044
Huntington Bancshares Florida, Inc
599
Huntington Bancshares Incorporated
47, 598
Huntington Bancshares Kentucky, Inc
47
Illinois Financial Services, Inc
480
Industrial Bank of Japan, Limited, Tokyo, Japan
731
Investors Banking Corporation
483
Irving National Bancshares, Inc
484
Johnson International, Inc
507
KeyCorp
160, 286, 491, 492
Keystone Financial, Inc
207
LCS Bancorp, Inc
210
Lone Star National Bancshares-Texas, Inc
717
Lowndes Bancshares, Inc
213
M&I Data Services, Inc
213
M&L Holding Company
210
Malmo Bancorp, Inc
210
Manufacturers National Corporation
283
Marine Midland Bank
1044
Marine Midland Banks, Inc
1037, 1044
Marshall & Ilsley Corporation
213, 795
Mellon Bank Corporation
605
Mercantile Bancorporation, Inc
180, 608
Mercantile Bankshares Corporation
1034
Mercantile Financial Enterprises, Inc
795
Merchants Bancorp of Pennsylvania, Inc
210
Merit Holding Corporation
210
Mid Am, Inc
210, 214
MNC Acquisition Co., Melbourne, Australia
1154
N.S. Bancorp, Inc
215
National Americas Holding Limited, London,
England
1153
National Australia Bank Limited, Melbourne,
Australia
1153
National Australia Group Limited, London, England .. 1153
National Bank of Canada, Montreal, Quebec, Canada . 181
National City Corporation
491, 492, 807, 809
National Equities Limited, Melbourne, Australia
1153
National Westminster Bancorp, Inc
210
National Westminster Bancorp NJ
210
National Westminster Bank Pic., London, England . . . . 210
NationsBank Corporation
207, 214, 1042, 1105, 1121
NatWest Holdings Inc
210
NB Holdings, Inc
1105
New American Bank Holding Corporation
163
New Prosperity Banking Corporation
210
North Fork Bancorporation, Inc
509, 734
Northern Bankshares, Inc
214
Northern Trust Corporation
486, 797
Northern Trust of Florida Corporation
486
Norwest Corporation
210, 214, 733, 974, 1128, 1130
Oak Bancorporation
210
Ogden Bancshares, Inc
719
Old Kent Financial Corporation
211
One Valley Bancorp of West Virginia, Inc
214
PAB Bankshares, Inc
214
Peak Banks of Colorado, Inc
289
Peoples Trust of 1987
211
Pilot Bancshares, Inc
874
Pioneer Bancshares, Inc., Employee Stock
Ownership Plan
211
PNC Bank Corp
214, 491, 492
Principal National Bancorp, Inc
211
Raddatz Family Limited Partnership
211
Regions Financial Corporation
44
Republic Bancorp, Inc
214

A84

Federal Reserve Bulletin • December 1995

Pages
Bank Holding Company Act of 1956—Continued
Orders issued under—(Continued
Republic New York Corporation
214
RNYC Holdings Limited, Marina Bay, Gibraltar
214
Rockcastle Bancorp, Inc
211
Roxton Corporation Employees' Stock
Ownership Plan
211
Royal Bancshares, Inc
211
Saban, S.A., Panama City, Panama
214
Salinas Valley Bancorp
211
San Jose Banco, Inc
211
Security Richland Corporation
214
Shorebank Corporation
1107
Societe Generale, Paris, France
880
South Texas Capital Group, Inc
384
Southern National Corporation
207, 307, 1042
SouthTrust Corporation
1132
State Street Boston Corporation
297, 1049
Stichting Administratiekantoor ABN AMRO Holding,
Amsterdam, The Netherlands
182, 1134
Stichting Prioriteit A B N AMRO Holding, Amsterdam,
The Netherlands
182, 1134
Summerville/Trion Bancshares, Inc
211
Sun Belt Bancshares Corporation
385
SunTrust Banks, Inc
207, 1137
Swiss Bank Corporation, Basle, Switzerland
185
Synovus Financial Corp
207
TB&C Bancshares, Inc
207
Texas Financial Bancorporation, Inc
211
Totalbank Corporation of Florida
876
Truman Bancorp, Inc
211
U.S. Trust Corporation
893
UB&T Delaware Financial Corporation
1112
UB&T Financial Corporation
1112
Union Bank of Switzerland, Zurich, Switzerland
392
Union Planters Corporation
45, 49, 800
United Carolina Bancshares Corporation
207
Wachovia Corporation
207, 1042
Wells Fargo & Company
1037
West Concord Bancshares, Inc
214
Westamerica Bancoiporation
601
Whitney Holding Corporation
290
Woodforest Bancshares, Inc
385
Woodforest Holdings Corporation
385
Yoakum National Bancshares, Inc
212
Yoakum National Bancshares-Delaware, Inc
211
Bank Holding Company Performance Report
4
Bank Holding Company Supervision Manual, publication of
supplements
116, 784
Bank holding companies
Applications, report on processing of
596
Capital adequacy guidelines
113, 268, 939, 952
Discounts for products and services
114, 148
Mergers among U.S. banking organizations, statement ... 1093
Public welfare investments
114, 133
Risk-based capital guidelines
112, 127
Bank Insurance Fund
1, 1020
Bank Merger Act
Applications approved under
1st United Bank
526
BancFirst
321
Banco Popular de Puerto Rico, San Juan,
Puerto Rico
66
Bank of Great Neck
405
Bank of Naples
914
Bank of Oakfield
1062
BankWest
1170
Callaway Bank
405
Centura Bank
405, 755
Chemung Canal Trust Company
215
Cleveland Interim Bank
215
Community Bank and Trust
625
Community Bank of the Islands
1062

Pages
Bank Merger Act—Continued
Applications approved under—Continued
Crestar Bank MD
1170
Dakota County State Bank
216
Enterprise Bank and Trust Company
526
F&M Bank-Massanutten
66
Fanners Trust Bank
405
Fifth Third Bank
815, 1170
Fifth Third Bank of Central Indiana
625
526
Fifth Third Bank of Northeastern Ohio
First Community Bank, Inc
216
First Interstate Bank of California
215
First Interstate Bank of Commerce
321
First State Bank of Taos
987
First Virginia Bank-Colonial
914, 1170
First-Citizens Bank & Trust Company
815
Firstar Bank Illinois
526
Home Bank
815
Humboldt Bank
66
Integra Bank/North
216
Integra Bank/Pittsburgh
216, 405
Integra Bank/South
216
Manufacturers and Traders Trust Company
755
Mercantile Bank of Kansas City
815
Merchants Bank
625
Minden Bank & Trust Company
405
Montour Interim Bank
914
New Pace American Bank
66
Old Kent Bank
527
Old Kent Bank and Trust Company
67
Pace American Bank
527
Premier Bank-North
405
Princess Anne Bank
914
Rapides Bank and Trust Company
1169
Rolling Hills Bank & Trust
1170
Security Savings Bank
1170
Shelby County State Bank
527
Southern Financial Bank
1170
SouthTrust Bank of West Florida
215
Sterling Bank and Trust Co
914
Texas State Bank
914
Triangle Bank
1062
Triangle East Bank
321
United Jersey Bank
815
United Valley Bank
527
Vail Bank
216
Valliwide Bank
67, 1170
VectraBank
1170
Wesbanco Bank Wheeling
216
Westamerica Bank
216, 755, 914
Orders issued under
Crestar Bank
200
Fifth Third Bank
976
First Interstate Bank of California
515
Marine Midland Bank
56
Premier Bank
613
Signet Bank/Virginia
1157
Westamerica Bank
900
Bank mergers, statement
1093
Bank Secrecy Act, wire transfers, final rule on
recordkeeping
113, 150
Banking institutions, mergers, statement
1093
Banking supervision, hemispheric conference held
939
Basle Committee on Banking Supervision
684
Bentsen, Lloyd, U.S. Treasury Secretary
245
Blinder, Vice Chairman Alan S., statement on electronic
money,
1089
Board of Governors (See also Federal Reserve System)
Applications, report on processing of
596
Consumer Advisory Council
New member appointments
266
Nominations for appointments, announcement
684
Litigation (See Litigation)

Index to Volume 81

Pages
Board of Governors—Continued
Members
LaWare, John P., resignation as Governor
434
List, 1913-95
627
Orders issued or actions taken by, indexes . 355, 398, 748, 982
Proposed actions
32, 115, 268, 596, 784, 850, 940, 1024
Publications (See Publications, 1994 and 1995)
Regulations (See Regulations, Board of Governors)
Staff changes
Clark, Sheila
269
Goetzinger, James D
941
Lowrey, Barbara R
941
Ombudsman position established
941
Statements to the Congress (See Statements to the
Congress)
Statistical releases, available by fax
1104
Thrift Institutions Advisory Council
Ill
Book-entry securities, Fedwire closing time
940
Brochure, Shop . . . The Card You Pick Can Save You
Money
685
Business fixed investment
108
Businesses, small, use of financial services, article
629
CAEL
4
Call Report data
3, 8
CAMEL
2
Canada, financial markets
590
Canner, Glenn B.
Credit risk and provision of mortgages to lower-income
and minority homebuyers, article
989
Home purchase lending, article
71
Household sector borrowing, article
323
Capital accounts in international transactions
417
Capital adequacy guidelines
Amendment to Regulation H
371
Deferred tax assets
113
Originated mortgage servicing rights
850
Treatment of certain transfers of assets, amendment . 939, 952
Census of Manufactures, 1992
16, 20
Census of Mineral Industries, 1992
20
Center for Latin American Monetary Studies
939
Central Bank of Argentina
939
Clark, Sheila, appointed EEO Programs Director, Office
of Board Members
269
Cole, Rebel A., articles
1, 629
Commercial banks
Business sector loans
546
Capital accounts
556
Derivatives disclosures, article
817-31
Household sector loans
549
Income and expenses, tables
559-69
Interest income and expenses
554
Profits and balance sheet developments, article
545-69
Committee on Interbank Netting Schemes of the Central
Banks of the Group of Ten Countries, report
Ill
Community Reinvestment Act
Federal Reserve perspectives, statement
424
Home purchase lending, article
72-79
Notice
713
Revision to regulations
595
Conference of State Bank Supervisors
350
Construction
108
Consumer Advisory Council
Meeting
1103
New member appointments
266
Nominations for appointments, announcement
684
Consumer leasing, proposed action
1024
Cornyn, Barbara G., FIMS, article
1
Corra, Claudia, articles
585, 832
Credit
Applications, proposal to permit banks to request
information on race
596
Risk to lower-income and minority homebuyers,
article
989-1016

A85

Pages
DAYLIGHT overdraft fees
31, 355, 1065-77
Debt burden, household
323, 326
Defense spending
109
Depository institutions (See also specific types)
Daylight overdrafts
31
Increase in amounts of transaction accounts covered by
reserve requirements
30, 41
Derivatives
Activities, supervision
684
Classes of
819
Contracts, amendments to risk-based capital
standards
939,952
Overview of disclosures, article
817-31
Products, use of, statement
251
Directors of Federal Reserve Banks and Branches, list
529
Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments (SFAS 119)
823
Discount rate changes
30, 41, 265, 371
ECONOMIC Growth and Regulatory Paperwork Reduction
Act of 1995, statement
671
Economy, U.S.
Performance, monetary policy reports
760
Statements
255, 258, 342
Edison Electric Institute
20
Edwards, Gerald A., Jr., article
817
Electronic money, statement
1089
Eller, Gregory E., article
817
Employment increases
256
Energy, U.S. Department of
20
English, William B., article
545
Euro-currency Standing Committee of the Group of Ten ... 824
Examination Manual for U.S. Branches and Agencies of
Foreign Banking Organizations, publication
268
Exports of U.S. goods and services, effect on GDP
108
FANNIE Mae
993
Farm loans, issuance of report
115
Federal Deposit Insurance Corporation Improvement
Act of 1991
Actions taken under
Crestar Bank
206, 316
Fifth Third Bank
62
First of America Bank-West Michigan
206
First Security Bank
60
Provident Bank
907
SouthTrust Bank of West Florida
315
United Jersey Bank
206
West One Bank, Idaho
812
Risk-based capital standards, final rule
939
Federal Financial Institutions Examination Council
92
Federal Home Loan Mortgage Corporation
101
Federal Housing Administration
991
Federal National Mortgage Association
101
Federal Open Market Committee
Action to decrease degree of pressure on bank reserve
positions
849
Disclosure of policy decisions
265
Meetings, minutes
Sept. 27, 1994
33
Nov. 15, 1994
117
Dec. 20, 1994
358
Jan. 31, 1995
437
Mar. 28, 1995
686
May 23, 1995
853
July 5-6, 1995
942
Aug. 22, 1995
1025
Transcripts, 1989
435
Federal programs, adjustment factors, statement
431
Federal Reserve and Treasury foreign exchange operations
(See Foreign exchange operations)

A86

Federal Reserve Bulletin • December 1995

Pages
Federal Reserve Act
Orders issued under
Chemical International Finance Limited
1160
Citibank Overseas Investment Corporation ..
1161
Citizens State Bank
59
Manufacturers and Traders Trust Company
394
Marine Midland Bank
310, 739
Republic Bank
977
Federal Reserve Banks
Directors, list
529
Fee schedules for 1995
30
New York Trading Desk
570
Federal Reserve Board (See Board of Governors)
Federal Reserve System (See also Board of Governors),
Regulations, review planned
1103
Fedwire
Book-entry securities, closing time
940
Change in format
114, 115, 146
Third-party access policy
940
Fees (for Federal Reserve services to depository institutions)
Daylight overdrafts
355, 1065
Schedules for 1995
30
FIMS monitoring system for banking institutions, article . . .
1
FIMS rating model
9, 10, 12, 13
Financial Accounting Standards Board
Accounting for Certain Investments in Debt Equity
Securities (FAS 115)
112
Accounting for Income Taxes (FAS 109)
113
Financial Institutions Monitoring System (FIMS)
1
Financial Institutions Regulatory Relief Act of 1995,
statement,
679
Financial services
Expansion of permissible affiliations, statement
349
Small businesses, article
629-67
Fisher Group, The
824
Fisher, Peter R., Executive Vice President,
Federal Reserve Bank of New York,
articles,
244, 570, 585, 832, 1078
Fleet Financial Group, public meetings regarding
application
851
Flood hazard determination form, final rule
871
Foreign exchange developments
241, 590
Foreign exchange operations,
articles
2 4 4 - 5 0 , 5 8 5 - 9 1 , 8 3 2 - 3 7 , 1078-85
Foreign stocks, list of marginable
268, 271, 596, 851, 1104
Freddie Mac
993
G-7 countries, monetary targeting
918
German monetary targeting: A retrospective view,
article
917-31
Germany, monetary targeting
922
Ginnie Mae
993
Goetzinger, James D., Assistant Director, Division of
Banking Supervision and Regulation, retirement
941
Government mortgage insurance
991
Government National Mortgage Association
101, 993
Greenspan, Chairman Alan, statements
Backdrop of the economy
255, 258
Federal programs, adjustment factors
431
Financial Services Competitiveness Act of 1995
778
Financial services, expansion of permissible affiliations . 349
Mexican economy
261
Monetary policy
107, 342, 422, 844, 1022
Savings Association Insurance Fund
935, 1020
U.S. government budget
253
Use of derivative products
251
Gunther, Jeffery W., Federal Reserve Bank of Dallas,
FIMS, article
1
H.R.1062, statement
H.R.I362, statement
Hemispheric conference on banking supervision
Hilton, Spence, article

778
679
939
570

Pages
Home Mortgage Disclosure Act, data
9 2 - 1 0 3 , 852
Home mortgage lending, article
71-103
Home Ownership and Equity Protection Act of 1994
435
Homebuying process, educational programs televised
850
Household debt payment performance
326
Household finances study, Survey of Consumer Finances .. 941
Household sector borrowing and the burden of debt,
article
323-38
Housing starts
108
INCOME growth
Industrial production and capacity utilization
Releases

108

27, 104, 248, 339,
419, 592, 668, 775,
838, 932, 1017, 1086
Revision, article
16
Information on Depository Credit for Small Businesses and
Small Farms, report
115
Interagency Statement on Retail Sales of Nondeposit
Investment Products
941
Interest rates, developments
235, 939
International Banking Act of 1978
Orders issued under
Banco Bandeirantes, S.A., Sao Paulo, Brazil
742
Banco Exterior de Espana, S.A., Madrid, Spain
616
Banco Frances del Rio de la Plata S.A., Buenos Aires,
Argentina
618
Banco Roberts, S.A., Buenos Aires, Argentina
202
Bank Austria Aktiengesellschaft, Vienna, Austria
979
Banpais, S.A., Mexico City, Mexico
204
Banque Nationale de Paris, Paris, France
515
Caisse Nationale de Credit Agricole, Paris, France
1055
Dongha Bank, Seoul, Korea
744
Farmers Bank of China, Taipei, Taiwan
620
Hongkong and Shanghai Banking Corporation,
Limited, Hong Kong
902
Liu Chong Hing Bank Limited, Hong Kong
905
Standard Bank of South Africa, Johannesburg,
South Africa
517
Taiwan Business Bank, Taipei, Taiwan
746
Turkiye Vakiflar Bankasi, T.A.O., Ankara, Turkey
313
West Merchant Bank Limited, London, England
519
International banking operations, proposed action
1024
International transactions in 1994, article
407-18
Investment income from international transactions
414, 416
KELLEY, Governor Edward W., Jr., statements on
one dollar coin
Kennickell, Arthur B., article
Kole, Linda S„ article

675, 841
323
917

LAMFALUSSY report
Ill
LaWare, Governor John P., resignation
434
Leach bill
349
Leach, James A
349
Lindsey, Governor Lawrence B., Community Reinvestment
Act, statement
424
Litigation
Final enforcement orders issued by Board of Governors
Banco Latino C.A., S.A.C.A., Caracas, Venezuela . . . . 217
Bank Saderat Iran, Tehran
68
Bank Sepah Iran, Tehran
69
Besler, Daniel E
406
Britton, Dane
626, 915
Cummings, A.G
756
Daiwa Bank, Limited
1175
DLG Financial Corp
322
Echols, Earl E
69
Echols, Thomas E
69
First National Bank of Southeast Denver
1171
Harlow, John "Bud," Jr.
915
Hirsch, Steven J
626
Hotchkiss, Robert L
406

Index to Volume 81

Pages
Litigation—Continued
Final enforcement orders issued by
Board of Governors—Continued
Jacobs, Michael A
217
Kim, Sunnie S
322
Long, James J
816
MacCallum, James A
217
Sebastian Bankshares, Inc
69
Security State Bank of Pecos
1175
Texas Coastal Bank
756
Urban, Stuart G
915
Vasa, William
1171
Vickerie, Colin
1063
Termination of enforcement orders
Banca Nazionale del Lavaro, Rome, Italy
915
Citizens State Bank & Trust Co
915
Columbus Junction State Bank
915
Constitution Bancorp, Inc
1064
Constitution Bank
1064
915
CSB Bancshares, Inc
First Prairie Bankshares, Inc
915
Security Bank Corporation
1064
Sparta State Bank
1064
Union State Bank
1064
United American Bank of Central Florida
1064
USTCorp
1064
Index of orders and actions taken
398, 982
Pending cases involving the Board of Governors,
list
68,216,321,405,
522, 626, 755, 815,
914, 988, 1063, 1170
Written agreements approved by Federal Reserve Banks
Bank Meli Iran, Tehran
69
Bankers Trust New York Corporation
217
CBC Bancorp, Inc
69
Citizens Bancshares, Inc
218
Equitable Bank
523
Execufirst Bancorp, Inc
816
First Security Banshares, Inc
406
First State Bank of Manchester
69
Hanmi Bank
218
P.T. Bank Ekspor Impor Indonesia (Persero), Jakarta,
Indonesia
322
P.T. Bank Niaga, Jakarta, Indonesia
322
San Francisco Company
218
Southern Security Bank Corporation, Inc
626
United Bank Limited, Karachi, Pakistan
915
Loan payment performance
326
Loans to small businesses and farms, report
115
Lowrey, Barbara R., Associate Secretary of the Board,
appointed Ombudsman
941
Luckett, Charles A., article
323
MANUFACTURING output
256
Meade, Ellen E., article
917
Members, Board of Governors, list
627
Mergers among U.S. banking organizations
1093
Mergers and acquisitions by Board of Governors,
indexes
398, 748, 982
Meulendyke, Ann-Marie, article
570
Mexico
Bank of, reciprocal currency arrangement
increase
265, 368, 446
Economy, statement
261
Swap line activity
590, 837
Monetary policy
Business sector
226
Credit and money
flows
238
Developments, statements
107, 232, 235, 422, 844, 1022
Foreign exchange
229, 241
Government sector
227
Household sector
223
Labor markets
230

A87

Pages
Monetary policy—Continued
Open market operations, article
570-84, 685
Reports to the Congress
219-^3, 757-74
Money stock data, revisions
355, 357-60
Mortgage lending, low-income and minorities
72, 323, 989
Mortgage loans, new software for financial institutions
1103
Multilateral Program to Restore Financial Stability
in Mexico
265
Mutual fund sales by banks, education campaign and
videotape availability
436, 941
NATIONAL Opinion Research Center
National Survey of Small Business Finances, 1993
Article
Publication
Netting systems, policy statement

941
629
597
Ill

OFFICIAL Staff Commentary, Regulation Z, revisions to .. 435
Oil imports to the U.S
414
One dollar coin, statement on legislation for
substitution
675, 841
Open market operations, article
570-84
Osier, Carol, article
244
Over-the-counter margin stocks,
list of marginable
268, 271, 596, 851, 1104
PARTNERS, software program
1103
Passmore, Wayne
Credit risk and provision of mortgages to lower-income
and minority homebuyers, article
989
Home purchase lending, article
71
Payment system risk policy, article
1065
Phillips, Governor Susan M.
Economic Growth and Regulatory Paperwork Reduction
Act of 1995, statement
671
Financial Institutions Regulatory Relief Act of 1995,
statement
679
Policy statements, netting systems
Ill
Private mortgage insurance
991
Privately operated large-dollar multilateral netting systems,
policy statement
Ill
Proposed actions
Automated clearinghouse access
940
Capital adequacy guidelines
268
Consumer leasing
1024
Credit by Brokers and Dealers, regulation
784
Equal Credit Opportunity
115
Fedwire
115
Home Mortgage Disclosure, regulation
784
International Banking Operations
115, 1024
Loans to Executive Officers, amendment
596
Permission for banks to request additional information
in credit applications
596
Reports on crime and suspicious financial transactions .. 784
Reserve mortgages, Regulation Z
32
Risk-based capital guidelines
850
Truth in lending
115, 784
Wire transfers
940
Publications
81st Annual Report, 1994
597
Annual Report: Budget Review, 1994-95
597
Annual Statistical Digest, 1993
115
Bank Holding Company Supervision Manual,
supplements
116, 784
Examination Manual for U.S. Branches and Agencies
of Foreign Banking Organizations
268
597
National Survey of Small Business Finances, report
Purposes and Functions, 8th edition
355
RADDOCK, Richard D„ article
Real estate appraisals, guidelines
Real estate secured loans

16
32
458

A88

Federal Reserve Bulletin • December 1995

Pages
Regulations (Board of Governors, See also Rules)
A, Extensions of Credit by Federal Reserve Banks
Discount rate increases
41, 371
B, Equal Credit Opportunity
Official Staff Commentary, revision
684, 787
C, Home Mortgage Disclosure Act
Community Reinvestment Act, revision
595, 714
Requirement to report in machine-readable form .. 113, 130
D, Reserve Requirements of Depository Institutions
Increase in amounts of transaction accounts covered
by reserve requirements
41
E, Electronic Fund Transfers
ATM identification, interim rule
32
Identification of consumer accounts
435, 449
H, Membership of State Banking Institutions
in the Federal Reserve System
Back-office facilities
449, 595
Capital adequacy guidelines
141, 371, 955
Netting contracts, capital adequacy guidelines
135
Nontraditional activities
127
Public welfare investments
114, 133
Reports of condition, publication requirement
removed
42
O, Loans to Executive Officers, Directors, and Principal
Shareholders of Member Banks
Proposed action to conform definition of unimpaired
capital and unimpaired surplus
596, 784, 790
S, Reimbursement for Providing Financial Records
Fedwire recordkeeping requirements
115, 146
Y, Bank Holding Companies and Change in Bank Control
Capital adequacy guidelines
141, 371, 970
Discounts for products or services
114, 148
Netting contracts, capital adequacy guidelines
135
Public welfare investments
114
Risk-based capital guidelines, nontraditional
activities
127
Safe harbor from anti-tying restrictions, revision .. 595, 598
Third-party sales of shares or assets
790
Z, Truth in lending
Official Staff Commentary, revision
435
Real estate secured loans
458
Riegle Community Development and Regulatory
Improvement Act of 1994
371, 450
Texas, financial assistance with flood disaster
148
BB, Community Reinvestment Act
Final rule to emphasize performance
697
Revision
595
Review scheduled
1103
Reid, Brian K., article
545
Reserve requirements, transaction account increases
30, 41
Richards, Heidi Willmann, article
1065
Riegle Community Development and Regulatory
Improvement Act of 1994
371, 450
Risk-based capital guidelines
Derivative contracts
939, 952
Interest rate risk, final rule
939
Netting contracts, amendment
112
Nontraditional activities, amendment
112, 127
Revision
849,850
Statement of policy
952
Stockholders' equity, amendment
112
Rules Regarding Access to Personal Information,
amendment
274
Rules Regarding Delegation of Authority
Approval authority for certain welfare investments
715
Foreign banking authorities, request for assistance
375
S.650, statement
S.874, statement
Safe harbor from anti-tying restrictions
Safety and soundness standards, state
member banks
Savings Association Insurance Fund, statements

671
841
595, 598
849, 861, 869
935, 1020

Pages
Section 20 securities
Factors to adjust interest income, table released
785
Underwriting
351
Securities and Exchange Commission
351
Senior Loan Officer Opinion Survey on Bank Lending
Practices
547
Shawmut National Corp., public meetings regarding
application
851
Shin, Soo J., article
1078
Shop . . .The Card You Pick Can Save You Money,
brochure available
685
Small businesses
Characteristics, tables
642-67
Financial services, use of, article
629
Loans, issuance report
115
Sniderman, Mark S., elected Associate Economist,
Federal Open Market Committee
358
Software for institutions offering mortgage loans,
announcement
1103
Standard Flood Hazard Determination Form, final rule
871
State member banks
Applications, report on processing of
596
Back-office facilities, interpretation
595
Capital adequacy guidelines
113, 268, 939, 952
Public welfare investments
114, 133
Loan production and back-office facilities
449
Reports of condition, publication requirement removed ..
42
Risk-based capital guidelines
112, 127
Safety and soundness standards
849
Statement of Financial Accounting Standards,
(SFAS 119)
823
Statements to the Congress (including reports and letters)
Backdrop of the economy (Chairman Greenspan) . . . . 255, 258
Community Reinvestment Act (Governor Lindsey)
424
Economic Growth and Regulatory Paperwork Reduction
Act of 1995 (Governor Phillips)
671
Electronic money (Vice Chairman Blinder)
1089
Federal programs, adjustment factors
(Chairman Greenspan)
431
Financial Institutions Regulatory Relief Act of 1995
(Governor Phillips)
679
Financial Services Competitiveness Act of 1995
(Chairman Greenspan)
349, 778
Mergers among U.S. banking organizations
(Governor Yellen)
1093
Mexico, economy in (Chairman Greenspan)
261
Monetary policy
(Chairman Greenspan)
107, 342, 422, 844, 1022
One dollar coin, (Governor Kelley)
675, 841
Savings Association Insurance Fund
(Chairman Greenspan)
935, 1020
U.S. government budget (Chairman Greenspan)
253
Use of derivative products (Chairman Greenspan)
251
Statistical releases, available by fax
1104
Stock market credit, over-the-counter stocks (See
Over-the-counter stocks, list of marginable;
Foreign stocks, list of marginable, and Regulations:
G, T, U, and X)
Survey of Consumer Finances
326, 337
Survey of Terms of Bank Lending to Business
548
TABLES (For index to tables published monthly,
see guide at top of page A78; for special tables
published during the year, see list on page A67.)
Technical Committee of the International Organisation of
Securities Commissions
684
Texas, financial assistance for flood disaster
113
Thomas, Charles P., article
407
Thrift Institutions Advisory Council, new members
Ill
Tietmeyer, Hans, Bundesbank President
245
Trading Desk, Federal Reserve Bank of New York
570
Treasury and Federal Reserve foreign exchange operations,
articles
244-50, 585-91, 832-37, 1078-85

Index to Volume 81

Pages
U.S. dealer banks, comparison of Annual Reports
of the top ten
825
U.S. economy, statements
255, 258, 342
U.S. government budget, statement
253
Uniform Bank Performance Report
4
Uniform Bank Surveillance Screen (UBSS)
3
Uniform Financial Institutions Rating System
2
Uniform Rules of Practice and Procedure, Administrative
Procedure Act, ex parte communications
149
Unimpaired capital or surplus, definition
596, 784, 790

VETERANS Affairs, Department of
WIRE transfers

A89

Pages
991
113, 940

YELLEN, Governor Janet L., mergers among U.S. banking
organizations, statement
1093
ZIMMERMAN, Ron, developer of Partners software

1103

A90

Maps of the Federal Reserve System

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 terri
tories 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.

A91

1-A

2-B

3-C

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•Cincinnati
KY

5-E

Pittsburgh

Buffalo
f
CT

4-D

BOSTON

NEW YORK

CLEVELAND

PHILADELPHIA
7-G

RICHMOND
8-H

•

Detroit •

Louisville

—™

•Memphis

Little
Rock/
CHICAGO

ATLANTA

Louis

ST.

9-1
ND

MINNEAPOLIS
12-L

10-J

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KS

uenver

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MO
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11-K

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HAWAII

DALLAS

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OR

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UT

SAN FRANCISCO

A92

Federal Reserve Banks, Branches,
and Offices
FEDERAL RESERVE B A N K
branch, or facility
Zip

Chairman
Deputy Chairman

President
First Vice President

BOSTON*

02106

Jerome H. Grossman
William C. Brainard

Cathy E. Minehan
Paul M. Connolly

NEW YORK*

10045

Maurice R. Greenberg
John C. Whitehead
Joseph J. Castiglia

William J. McDonough
Ernest T. Patrikis

Buffalo

14240

Carl W. Turnipseed 1

PHILADELPHIA

19105

James M. Mead
Donald J. Kennedy

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.
Robert P. Bozzone

RICHMOND*

23219

J. Alfred Broaddus, Jr.
Walter A. Varvel

Baltimore
Charlotte
Culpeper

21203
28230
22701

Henry J. Faison
Claudine B. Malone
Michael R. Watson
James O. Roberson

Leo Benatar
Hugh M. Brown
Patricia B. Compton
Lana Jane Lewis-Brent
Michael T. Wilson
James E. Dalton, Jr.
Jo Ann Slay don

Robert P. Forrestal
Jack Guynn

Robert M. Healey
Richard G. Cline
John D. Forsyth

Michael H. Moskow
William C. Conrad

Robert H. Quenon
John F. McDonnell
Janet M. Jones
Daniel L. Ash
Woods E. Eastland

Thomas C. Melzer
James R. Bowen

Gerald A. Rauenhorst
Jean D. Kinsey
Matthew J. Quinn

Gary H. Stern
Colleen K. Strand

Herman Cain
A. Drue Jennings
Sandra K. Woods
Ernest L. Holloway
LeRoy W. Thom

Thomas M. Hoenig
Richard K. Rasdall

Cece Smith
Roger R. Hemminghaus
W. Thomas Beard III
Isaac H. Kempner III
Carol L. Thompson

Robert D. McTeer, Jr.
Tony J. Salvaggio

Judith M. Runstad
James A. Vohs
Anita E. Landecker
Ross R. Runkel
Gerald R. Sherratt
George F. Russell, Jr.

Robert T. Parry
Patrick K. Barron

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
K A N S A S CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio

59601
64198
80217
73125
68102
75201
79999
77252
78295

S A N 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
Donald E. Nelson 1
Fred R. Herr1
James D. Hawkins 1
James T. Curry III
Melvyn K. Purcell
Robert J. Musso

David R. Allardice 1

Robert A. Hopkins
Howard Wells
John P. Baumgartner

John D.Johnson

Kent M. Scott 1
Mark L. Mullinix
Harold L. Shewmaker

Sammie C. Clay
Robert Smith, III 1
James L. Stull 1

John F. Moore 1
Raymond H. Laurence
Andrea P. Wolcott
Gordon Werkema 1

* Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; East Rutherford, New Jersey 07016; Jericho,
New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311;
Des Moines, Iowa 50306; Indianapolis, Indiana 46204; Milwaukee, Wisconsin 53202; and Peoria, Illinois 61607.
1. Senior Vice President.
2. Assistant Vice President.

Full text of Federal Reserve Bulletin : December 1995

FRASER