Full text of Federal Reserve Bulletin : July 1994
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VOLUME 8 0 •
NUMBER 7 •
JULY 1994
FEDERAL RESERVE
BULLETIN
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn
• J. Virgil Mattingly, Jr. • Michael J. Prell • Richard Spillenkothen • Edwin M. Truman
The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions
expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by S. Ellen Dykes, the Graphics
Center under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles.
Table of Contents
571 HOME EQUITY LENDING: EVIDENCE
FROM RECENT SURVEYS
Borrowing against home equity appears to
have leveled off after its rapid rise in the late
eighties. In 1993, about one in eight homeowners had home equity credit; roughly twothirds of the loans were lines of credit and
one-third were traditional home equity loans.
This article describes the consumers who borrow against their home equity and the lending
institutions that make the loans, presents estimates of aggregate home equity debt outstanding, and discusses influences on growth.
584 TREASURY AND FEDERAL RESERVE
FOREIGN EXCHANGE OPERATIONS
During the February-April period, the dollar
declined 4.6 percent against the German mark,
6.5 percent against the Japanese yen, and
3.6 percent on a trade-weighted basis.
589 STAFF STUDY SUMMARY
In A Summary of Merger Performance Studies
in Banking, 1980-93, and an Assessment of
the "Operating Performance" and "Event
Study" Methodologies, the author examines
thirty-nine studies published from 1980 to
1993 on the effects of bank mergers on efficiency, profitability, or stockholder wealth.
The review looks for general conclusions
regarding the performance effects of bank
mergers and also offers a broad assessment of
the two methodological approaches used by
the studies.
591 INDUSTRIAL PRODUCTION AND
CAPACITY UTILIZATION FOR MAY
594 STATEMENTS
TO THE
CONGRESS
Alan Greenspan, Chairman, Board of Governors, sets forth the Board's views on the impact of derivative instruments on our nation's
financial system, identifies the challenges that
derivatives pose to users and to policymakers,
discusses the steps that the Federal Reserve
has taken or plans to take to meet those challenges, and concludes with the Board's assessment of the need for remedial legislation
relating to derivative instruments, before the
Subcommittee on Telecommunications and
Finance of the House Committee on Energy
and Commerce, May 25, 1994.
606 Chairman Greenspan discusses recent monetary policy and says that the intention of the
Federal Reserve is to promote financial conditions under which our economy can grow at
its greatest potential, consistent with steady,
noninflationary expansion of employment and
incomes and that if the Federal Reserve is
successful in its current endeavors, there will
not be an increase in overall inflation and
trends toward price stability will be extended,
before the Senate Committee on Banking,
Housing, and Urban Affairs, May 27, 1994.
610 ANNOUNCEMENTS
Change in the discount rate and federal funds
rate.
Meeting of Consumer Advisory Council.
1994
Industrial production rose 0.2 percent in May
after a revised 0.1 percent increase in April.
At 116.1 percent of its 1987 average, total
industrial production was 5.5 percent higher
in May than it was a year earlier. The utilization of total industrial capacity edged down
0.1 percentage point, to 83.5 percent.
Proposal to amend the Federal Reserve's riskbased capital guidelines for state member
banks and bank holding companies; joint
interagency proposal of advanced rulemaking
concerning the regulatory treatment of
recourse arrangements and direct credit substitutes; proposed amendments to Regulation DD.
A1 FINANCIAL AND BUSINESS STATISTICS
Extension of comment period on proposal to
simplify and update Regulation E.
A3 GUIDE TO TABULAR PRESENTATION
Changes in Board staff.
612 MINUTES OF THE FEDERAL OPEN
MARKET COMMITTEE MEETING
At its meeting on March 22, 1994, the Committee adopted a directive that called for a
slight increase in the degree of pressure on
reserve positions and that did not include a
presumption about the likely direction of any
adjustment to policy during the intermeeting
period. Accordingly, the directive indicated
that, in the context of the Committee's longrun objectives for price stability and sustainable economic growth, and giving careful
consideration to economic, financial, and
monetary developments, slightly greater or
slightly lesser reserve restraint might be
acceptable during the intermeeting period.
623 LEGAL DEVELOPMENTS
Various bank holding company, bank service
corporation, and bank merger orders; and
pending cases.
These tables reflect data available as of
May 26, 1994.
A4 Domestic Financial Statistics
A45 Domestic Nonfinancial Statistics
A53 International Statistics
A67 GUIDE TO STATISTICAL RELEASES AND
SPECIAL TABLES
A68 INDEX TO STATISTICAL TABLES
A70 BOARD OF GOVERNORS AND STAFF
All
FEDERAL OPEN MARKET COMMITTEE
AND STAFF; ADVISORY COUNCILS
A74 FEDERAL RESERVE BOARD
PUBLICATIONS
A76 MAPS OF THE FEDERAL RESERVE
SYSTEM
A78 FEDERAL RESERVE BANKS, BRANCHES,
AND OFFICES
Home Equity Lending:
Evidence from Recent Surveys
Glenn B. Canner and Charles A. Luckett of the
Board's Division of Research and Statistics and
Thomas A. Durkin of the Office of the Secretary
prepared this article.
Accumulated equity in homes is one of the largest
components of the wealth of U.S. households.
Home equity differs from many other assets in that
it cannot be readily used to purchase goods or
services or to repay debt. It is widely accepted as
collateral, however, and in recent years homeowners have raised substantial amounts of spendable
funds by borrowing against the equity in their
homes.
Homeowners can convert their home equity to a
liquid form in several ways: by selling a home and
either purchasing a lower-priced home or renting,
by refinancing an existing mortgage for an amount
greater than the outstanding mortgage balance plus
closing costs, or by obtaining home equity credit.
Home equity credit takes either of two forms.
One form, referred to here as a "traditional home
equity loan," is a closed-end loan extended for a
specific period that generally requires repayment of
interest and principal in equal monthly installments. Such a loan typically has an interest rate
that is fixed for the life of the loan. The other form,
a "home equity line of credit," is a revolving
account that permits borrowing from time to time,
at the homeowner's discretion, up to the amount of
the credit line; it typically has a more flexible
repayment schedule than a traditional home equity
loan. Most home equity credit lines have a variable
interest rate that is pegged to an index such as the
prime rate. Substantial equity in homes, aggressive
competition among financial institutions, and revisions of the tax code all have contributed to the
increased use of home equity credit.
Over the past few years, considerable information about home equity lending has become available through surveys of households and lending
institutions. The Federal Reserve Board, for
instance, periodically surveys households about
their home equity borrowing. The regulatory agencies have for several years collected data from
commercial banks on amounts outstanding under
home equity lines of credit, via quarterly Reports
of Condition and Income (frequently referred to as
Call Reports). The agencies recently began collecting information about outstanding balances under
traditional home equity loans as well.
To learn more about the current status of home
equity lending, the Federal Reserve Board participated in a special nationwide survey of households conducted over the period November 1993
through March 1994. Results of this recent survey
give a picture of current household borrowing
activity and, together with results of earlier surveys, provide a means of measuring changes in
consumer behavior.1 This article presents results
from the recent household survey and data obtained
from other sources of information on home equity
lending.
HOLDINGS OF HOME EQUITY LOANS
Growth of home equity credit, and of home equity
lines of credit in particular, gained momentum in
the mid-1980s with a boost from the Tax Reform
Act of 1986, which mandated the phaseout of fed1. The 1993-94 household survey (formally, the 1993-94 Surveys of Consumers), conducted by the Survey Research Center of
the Universityof Michigan, is described in the appendix. Descriptions of the easier surveys appear in the following publications:
1977 survey—Thomas A. Durkin and Gregory E. Elliehausen,
1977 Consumer Credit Survey (Board of Governors of the Federal Reserve Sy9tem, 1978); 1983 survey—Robert B. Avery,
Gregory E. Elliehausen, Glenn B. Canner, and.Thomas A.
Gustafson, "Survey of Consumer Finances, 1983," Federal
Reserve Bulletin, vol. 70 (September 1984), pp. 679-92; 1988
survey—Glenn B. Canner, Charles A. Luckett, and Thomas A.
Durkin, "Home Equity Lending," Federal Reserve Bulletin,
vol. 75 (May 1989), pp. 333-44.
572
1.
Federal Reserve Bulletin • July 1994
P e r c e n t a g e o f h o m e e q u i t y credit u s e r s c i t i n g
2.
a d v a n t a g e s o f h o m e e q u i t y credit o v e r o t h e r t y p e s
Percentage o f h o m e o w n e r s with h o m e equity credit,
selected years, b y type of credit
o f credit
Type of credit
Advantage
Low interest rate
Easy to get
Tax advantage
Convenient1
Can defer repayment of principal
Other2
..
Home equity
line of
credit
Traditional
home
equity loan
35
21
31
57
7
5
51
32
28
5
*
26
NOTE. Data have been weighted to ensure the representativeness of the
sample. Percentages sum to more than 100 percent because respondents were
allowed to cite up to two advantages for each type of credit.
* Less than 0.5 percent.
1. Includes immediate access to funds and other responses indicating that
convenience was an advantage.
2. Includes ability to borrow a large amount, absence of closing costs,
ability to consolidate debts, and miscellaneous other responses.
SOURCE. 1993-94 Surveys of Consumers.
eral income tax deductions for interest paid on
nonmortgage consumer debt. This change in tax
law enhanced the attractiveness of using debt
secured by homes to fund expenditures that consumers previously had typically financed by consumer credit: Almost one-third of the homeowners
in the 1993-94 household survey who reported
having home equity credit cited its favorable tax
treatment as an advantage over other types of credit
(table 1). Attractive interest rates on home equity
credit relative to rates on most other types of consumer credit, as well as aggressive marketing and
price competition among creditors, have further
encouraged consumer interest in home equity
credit.
Before the mid-1980s, nearly all home equity
debt was of the traditional type. Since that time,
growing numbers of homeowners have preferred
lines of credit as the means of borrowing on their
home equity. Although relatively low interest rates
and tax deductibility characterize both types of
home equity borrowing, the convenience of being
able to draw against a line of credit as needed has
proved to be a particularly attractive feature of
credit lines and undoubtedly has spurred their relative growth.
In 1977, 5.4 percent of homeowners had home
equity debt (table 2). By 1983, the proportion had
risen only slightly, to 6.8 percent. By the second
half of 1988, however, 11.0 percent of homeowning households, roughly 6.5 million in number, had
debt secured by home equity; about equal proportions had home equity lines of credit and traditional
Any type
Home equity line of credit
Traditional home equity loan ..
1977
1983
|
1988
|
1993-94
5.4
6.8
n.a.
n.a.
n.a.
n.a.
11.0
5.7
5.4
12.9
8.3
4.9
n.a.
n.a.
.1
.3
MEMO
Both types
NOTE. Data have been weighted to ensure the representativeness of the
sample. Components do not sum to totals because some homeowners had
both types of home equity credit.
n.a. Not available.
SOURCES. 1977 Consumer Credit Survey; 1983 Survey of Consumer
Finances; 1988 and 1993-94 Surveys of Consumers.
home equity loans. The most recent survey indicates that 12.9 percent of all homeowners, or about
8.2 million households, have home equity debt:
8.3 percent have a home equity line of credit and
4.9 percent have a traditional home equity loan (a
small proportion of households have both forms).
Although the use of home equity credit, as
reported in the two most recent household surveys,
was greater in 1993 than in 1988, the extraordinary
volume of mortgage refinancing in the past three
years or so has no doubt curtailed its growth. Since
the 1988 survey, interest rates on home mortgages
have fallen substantially (particularly between mid1990 and October 1993). Millions of consumers
have refinanced their first mortgages, and in the
process some have rolled the outstanding balances
on their home equity obligations into a single new
loan. As a consequence, the proportion of homeowners having home equity credit at the time of the
1993-94 survey is likely smaller than it would
have been had longer-term interest rates not fallen
so sharply.
SOURCES OF HOME EQUITY
CREDIT
Many types of lending institutions extend home
equity credit. Today, the market is dominated by
depository institutions, especially commercial
banks, although savings institutions (savings banks
and savings and loan associations) continue to play
an important role (table 3). Household surveys
reveal some specialization among creditors by type
of credit. In particular, finance companies continue
to be a major source of traditional home equity
loans (originating almost 30 percent of these loans),
Home Equity Lending: Evidence from Recent Surveys
3.
573
P e r c e n t d i s t r i b u t i o n o f s o u r c e s o f h o m e e q u i t y credit, 1 9 8 8 a n d 1 9 9 3 - 9 4 , b y t y p e o f c r e d i t
1988
Source
Commercial banks
Savings institutions1
Credit unions
Other creditors2
Total
1993-94
Home equity lines
of credit
Traditional home
equity loans
Home equity lines
of credit
Traditional home
equity loans
54
31
11
4
100
33
27
8
32
100
60
21
13
7
100
29
30
11
29
100
NOTE. Percentages are based on numbers of loans or lines of credit. Data
have been weighted to ensure the representativeness of the sample. In
this and subsequent tables, components may not sum to totals because of
rounding.
1. Includes savings banks and savings and loan associations.
2. Includes finance and loan companies, brokerage firms, mortgage companies, and individuals.
but they provide relatively few home equity lines
of credit.
The larger role of finance companies in the traditional home equity loan market can be traced to
several factors. First, finance companies (except
those affiliated with depository institutions) typically do not offer deposit services; consequently,
they are not well suited to offering credit accounts
(such as lines of credit) that can be accessed by
check, a basic feature of virtually all home equity
lines of credit. Second, finance companies historically have tended to serve consumers who have
somewhat lower incomes and smaller amounts of
home equity.2 Many lenders prefer to exercise
tighter control over the credit use of such customers by granting them loans of specified amounts
having predetermined repayment schedules.
Among depository institutions, commercial
banks and savings institutions have nearly equal
shares of the market for traditional home equity
loans, but commercial banks are the predominant
source of home equity lines of credit, with a 60 percent market share. Responses to the two most
recent household surveys indicate that the commercial bank share of the market for home equity
credit lines has increased in recent years.
Although commercial banks are the predominant
source of home equity lines of credit, not all banks
offer this type of loan. At the end of 1993, 46 percent of all U.S. commercial banks held outstanding
balances on home equity lines of credit (table 4).
By comparison, 81 percent held traditional home
equity loans.
Home equity lines of credit are more complex to
administer than are traditional home equity loans;
consequently, larger banks are more likely than
smaller banks to offer lines of credit. Although the
vast majority of commercial banks with assets
exceeding $250 million offered home equity lines
of credit in 1993, only 24 percent of those with
assets of less than $50 million did so. The pattern is
quite different for traditional home equity loans,
with most banks at all asset levels offering such
loans.
SOURCES. 1 9 8 8 and 1 9 9 3 - 9 4 S u r v e y s o f C o n s u m e r s .
USERS AND USES OF HOME EQUITY
CREDIT
Homeowners can be grouped into one of four categories on the basis of their mortgage debt status—
those without mortgage debt, those with only an
4.
Percentage of U.S. commercial banks with
o u t s t a n d i n g h o m e e q u i t y credit, 1 9 9 3 ,
by type o f credit
Assets of banks
(millions of dollars)
Home equity
lines of credit
Traditional home
equity loans
1,000 or more
24
49
69
84
89
89
69
90
94
92
95
90
All banks
46
81
Less than 50
50-99
100-249
250-499
500-999
MEMO
2. According to the 1 9 9 3 - 9 4 household survey, the average
family income of home equity borrowers at finance companies was
$46,000, compared with $ 5 9 , 0 0 0 at commercial banks and savings
institutions. Finance company borrowers also typically had less
home equity than depository institution borrowers: $ 3 9 , 0 0 0 compared with $97,000. (Data not shown in tables.)
Lines of credit in use (percent)1
...
53
1. Calculated by summing the outstanding balances under home equity
lines of credit and dividing by the sum of outstanding balances under home
equity lines of credit and the amount of unused lines of credit available to
account holders.
SOURCE. Reports of Condition and Income, December 31,1993.
574
Federal Reserve Bulletin • July 1994
outstanding first mortgage, those with a home
equity line of credit, and those with a traditional
home equity loan. The "average" characteristics of
the homeowners in these four categories differ, in
some instances rather substantially (table 5). Homeowners who have no mortgage debt stand out
because they are much more likely than those who
do, to be headed by an older individual (in many
cases retired). Moreover, although they typically
have substantial equity in their homes, their current
incomes are not especially high compared with the
incomes of other homeowners.
Characteristics
of
with Home Equity
Households
Credit
Homeowners who have a home equity line of credit
typically own more expensive homes, have higher
incomes, and have accumulated substantially more
equity in their homes than other homeowners,
including those who have traditional home equity
loans and those with only first mortgage debt. They
also tend to be somewhat better educated. For these
reasons, a home equity line of credit is often characterized as an "upscale" product. In 1993, the
average family income for homeowners with credit
line accounts was $61,234, compared with $46,162
for those with traditional home equity loans and
$51,756 for those with only first mortgage debt.
Differences in levels of home equity are more
substantial: The average for credit line holders was
more than twice that for traditional home equity
loan users and almost twice that for homeowners
with only first mortgage debt.
5.
The strong relationship between having a home
equity credit line and high levels of income and
remaining home equity can be seen when homeowners are grouped by level of income and home
equity (table 6). For homeowners in the two highest family income groups, the proportions with
credit lines are two to nearly four times as large as
the proportions for the three lowest income groups;
the linkage with income is much less pronounced
for holders of traditional home equity loans. The
proportion of homeowners who have a line of
credit also increases sharply with the level of home
equity, but the relationship is reversed for traditional home equity loans. Similarly, homeowners
who own relatively expensive homes are more
likely to have a line of credit than are owners of
less expensive homes. The relationship between
home value and having home equity credit appears
to be much weaker for traditional home equity
loans: The proportion rises from the lowest-value
categories but drops off again in the higher-value
categories.
The prevalence of home equity credit varies
somewhat by region of the country (table 6).
Specifically, a smaller proportion of homeowners
in the South have home equity credit of either type
than in the other three major regions of the country.
As in 1988, the Northeast has the highest incidence of lines of credit, although the North Central
and West regions experienced the largest percentage increases from 1988 to 1993-94; in both
regions the proportions rose from 4 percent to
9 percent.
Additional evidence of the regional character of
home equity lending is the large differences among
Characteristics of homeowners, 1993-94, by debt status
Homeowner debt status
No mortgage debt
First mortgage only
Home equity line of credit
Traditional home equity loan ..
Market value of
home (dollars)
Home equity1
(dollars)
1993 family income
(dollars)
Age 2
(median
years)
Education2
(median
grade
completed)
Nonwhite
and
Hispanic
(percent)
Mean
Median
Mean
Median
Mean
Median
90,987
129,174
165,838
113,282
65,000
90,000
139,000
92,500
90,987
59,000
109,564
43,302
65,000
35,000
76,500
35,000
33,688
51,756
61,234
46,162
24,000
45,000
50,000
45,000
63
41
51
43
12
14
16
13
12
15
8
9
117,725
83,000
74,499
49,000
45,603
35,000
48
13
13
MEMO
All homeowners
NOTE. Data have been weighted to ensure the representativeness of the
sample.
1. Market value of home less all debts secured by home, including
balances outstanding on home equity credit lines and traditional home equity
loans.
2. Characteristic of head of household,
SOURCE. 1993-94 Surveys of Consumers.
Home Equity Lending: Evidence from Recent Surveys
6.
Percentage of homeowners with home equity credit,
1993-94, by homeowner characteristics
Homeowner
characteristic
Home equity
line of credit
Traditional
home equity
loan
7.
Ratio of commercial bank home equity loan balances
outstanding to all outstanding loans and leases,
December 31, 1993, by state
Either type
Home equity
lines of credit1
Traditional
home equity
loans'
Total2
3.1
1.6
4.5
.7
5.5
2.6
2.2
7.1
3.8
2.1
3.9
5.1
3.8
7.1
7.0
2.3
8.5
6.6
8.5
5.8
4.9
3.1
2.2
10.1
4.5
4.9
2.5
2.3
2.8
3.9
12.4
8.3
6.8
4.6
4.0
14.0
Kansas
Kentucky
2.6
5.6
2.3
.9
1.1
2.0
1.8
2.8
2.1
1.8
1.5
2.0
3.3
5.9
3.6
2.0
1.9
3.1
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
1.5
7.3
6.2
5.8
3.4
3.2
2.6
2.3
3.4
1.8
2.4
2.7
3.0
8.3
8.6
6.8
4.9
4.4
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
2.0
2.3
1.6
.9
3.1
6.1
3.0
1.6
1.7
1.5
1.6
2.1
3.6
2.8
2.2
1.7
4.2
7.0
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
10.1
.8
6.2
6.3
2.2
3.6
7.0
3.1
3.5
2.7
1.0
2.0
16.3
3.4
7.7
8.6
1.6
4.7
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
.8
2.1
4.2
6.3
4.7
1.2
2.0
2.7
6.2
11.8
2.7
1.1
2.2
4.2
9.4
17.1
6.5
1.5
Tennessee
Utah
Vermont
Virginia
Washington
2.9
.7
7.1
5.6
5.1
2.2
2.5
1.1
3.7
1.2
3.9
5.1
4.0
1.1
8.4
5.5
7.7
6.2
West Virginia
Wisconsin
Wyoming
2.9
2.2
.8
2.3
2.4
1.8
4.2
3.4
2.2
All states
3.6
2.6
4.5
State
1
Age, in years
18-34
35-44
45-54
55-64
65 or older
4
10
11
15
5
5
8
7
4
*
8
17
17
19
5
Annual family income,
in dollars
Less than 15,000
15,000-24,999
25,000-34,999
35,000-44,999
45,000-59,999
60,000 or more
4
4
6
9
11
15
3
3
5
5
6
6
6
7
11
14
17
20
Home equity, in dollars2
Less than 50,000
50,000-99,999
100,000 or more
4
10
14
7
4
2
11
12
15
Market value of home,
in dollars3
Less than 50,000
50,000-99,999
100,000-149,999
150,000-199,999
200,000 or more
1
7
11
16
16
3
6
9
3
4
4
13
18
19
20
Region
West
North Central
Northeast
South
9
9
12
6
4
7
7
3
13
15
19
8
4.9
12.9
MEMO
All homeowners
8.3
NOTE. Data have been weighted to ensure the representativeness of the
sample.
* Less than 0.5 percent.
1. Age of head of household.
2. Market value of home less all debts secured by home, including
balances outstanding on home equity credit lines and traditional home equity
loans.
3. Estimated by respondent.
SOURCE. 1993-94 Surveys of Consumers.
banks, depending on the location of their headquarters, in the share of their loan portfolio devoted to
home equity lending (table 7). Among all domestically chartered commercial banks, outstanding balances on home equity lines of credit accounted for
only 3.6 percent of outstanding balances on all
loans and leases at the end of 1993, and traditional
home equity loans for only 2.6 percent. However,
the proportions varied substantially from state to
state. Banks headquartered in the New England
states had relatively high ratios of total home equity
loans to total loans and leases, as did banks in
several Mid-Atlantic states (see map). In the West,
banks headquartered in California, Utah, Hawaii,
and Arizona also had relatively high ratios.
575
Alabama
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia . . .
Florida
Georgia
Hawaii
Idaho
Illinois
NOTE. Data are for domestically chartered commercial banks. Banks are
assigned to states according to the location of the headquarters.
1. Includes only banks that make specified type of home equity loan.
2. Includes only banks that make at least one type of home equity loan.
SOURCE. Reports of Condition and Income, December 31, 1993.
Amounts
Borrowed
Amounts borrowed under home equity lines of
credit and traditional home equity loans differ
576
Federal Reserve Bulletin • July 1994
Share of home equity loans in loan portfolios
of domestically chartered commercial banks, 1993
Status of home equity debt, 1993-94,
by type of credit
Percent distribution except as noted
Home equity lines Traditional home
of credit
equity loans
Item
Outstanding balance, in dollars
22
26
30
22
100
42
40
19
100
14,401
10,000
16,199
11,000
1-9,999
10,000-24,999
25,000 or more
Total
MEMO 2
Mean (dollars)
Median (dollars)
Percentage of credit line in use 3
Share, by thirds
•
H Lowest
Middle
I Highest
Share of loan portfolio is measured as the ratio of home equity loan
balances outstanding to all loans and leases for commercial banks headquartered in the state. Ratio excludes commercial banks with no outstanding
balances on home equity loans. Specific values portrayed on map are given
in column 3 of table 7.
SOURCE. Derived from Reports of Condition and Income, December 31,
1993.
(table 8). On average, credit line users (including
those who have no outstanding balance) owe
less than users of traditional home equity loans,
although both groups have similar proportions
owing relatively large amounts (outstanding balances of $25,000 or more). In 1993-94, the mean
and median amounts owed by homeowners with
traditional home equity loans were $16,199 and
$11,000 respectively, compared with $14,401 and
$10,000 respectively for users of credit lines. A
comparison with the 1988 household survey indicates that the average balance owed on traditional
home equity loans has fallen roughly $3,000 (measured in nominal dollars) since 1988, whereas the
average amount owed on home equity lines of
credit has changed little.
Most consumers who have home equity lines of
credit owe an amount well below the maximum
allowed under their credit line. In 1993-94, the
median credit line available to homeowners with
lines of credit was $25,000, two and one-half times
the median amount actually owed. A substantial
proportion of homeowners who reported having
a credit line (about one-fifth) had no balance
outstanding. Although significant numbers of
1-19
20-49
50-74
75-100
12
19
36
33
MEMO 3
Mean (percent)
Median (percent)
58
62
NOTE. Data have been weighted to ensure the representativeness of the
sample.
1. Includes respondents who reported that they had never used their
account and respondents who had paid off outstanding debt.
2. Figures for home equity lines of credit include accounts with no
outstanding balance.
3. Includes only those accounts with outstanding balances.
SOURCE. 1 9 9 3 - 9 4 S u r v e y s o f C o n s u m e r s .
homeowners surveyed in 1993-94 had no outstanding balance, the proportion with no balance outstanding was down substantially from 1988 (the
proportion in that year was two-fifths).
Three-fifths of homeowners who had no outstanding balance on their line of credit when surveyed in 1993-94 had never used their account;
some of these were new account holders, but many
were not. The large number of unused accounts
suggests that many homeowners who have established lines of credit have done so either to meet
anticipated specific needs at some future time or as
a standby source of funds. If some homeowners do
view home equity lines of credit as a standby
source of funds, lending to them might be viewed
as relatively risky, as they could choose to borrow
only if they were experiencing financial distress.
To date, however, lenders report low delinquency
rates for home equity lines of credit.
Delinquency
Rates
Compared with other types of consumer lending,
home equity debt, particularly lines of credit, has
Home Equity Lending: Evidence from Recent Surveys
had low delinquency rates over time (table 9). Such
experience is not surprising. Because home equity
debt is typically secured by the homeowner's principal residence, borrowers would be expected to go
to great lengths to make their payments. Also,
home equity borrowers, with substantial levels of
home equity and relatively high incomes, are typically better off financially than other homeowners,
and consumers in general. Finally, as is discussed
later, a large share of the funds borrowed under
home equity loans are used for home improvement,
adding to the value of the home, or for other
purposes that enhance the borrower's financial circumstances (for example, repayment of other debts
that carry higher interest rates).
Rates of delinquency on home equity lines of
credit to date have typically been only about half
those on traditional home equity loans. Several
factors may account for the differences. As noted,
credit line borrowers, on average, have higher
incomes and more equity in their homes than do
traditional loan borrowers. Also, traditional loan
borrowers, on average, owe more than credit line
users. Finally, many line of credit plans have flexible repayment schedules that allow nominal payments in the first few years but larger payments in
subsequent periods to fully amortize the debt.
Credit line borrowers who are in financial distress
may be better able to meet their near-term obligations than traditional home equity borrowers, who
typically face fully amortizing, fixed repayment
schedules.
9.
Percentage of commercial bank consumer loans
d e l i n q u e n t thirty d a y s or m o r e ,
1986-93,
by type of loan
Home
equity lines
of credit
Year
Traditional
home
Credit card Automobile
equity
loans
loans1
loans
Personal
loans
1986
1987
1988
1989
....
....
....
....
n.a.
.70 2
.72
.80
1.92
1.79
1.80
1.65
3.13
2.36
2.34
2.31
1.78
1.77
1.89
1.87
3.45
3.36
3.30
3.36
1990
1991
1992
1993
....
....
....
....
.78
.88
.78
.72
1.56
1.81
1.79
1.62
2.48
3.21
2.98
2.73
2.05
2.18
2.27
1.90
3.41
3.29
3.43
2.79
NOTE. Rates are based on numbers of loans and are averages of monthly
data.
n.a. Not available.
1. Includes only direct lending.
2. Based on only final three quarters of the year.
SOURCE. American Bankers Association.
10.
577
Percentage of borrowers citing uses for funds
borrowed, 1 9 9 3 - 9 4 , b y type o f credit
Home equity lines
of credit
Traditional home
equity loans
Home improvement
Repayment of other debts ..
Education
Real estate
Auto or truck
64
45
21
12
30
38
68
4
8
3
Medical expenses
Business expenses
Vacation
Other1
5
28
6
1
1
1
1
3
Use
NOTE. Data have been weighted to ensure the representativeness of the
sample. Percentages sum to more than 100 percent because respondents were
allowed to cite multiple uses for a single loan or drawdown and more than
one draw for one line of credit.
1. Includes purchase of furniture or appliance, purchase of boat or other
recreational vehicle, payment of taxes, and personal financial investments.
SOURCE. 1 9 9 3 - 9 4 S u r v e y s o f C o n s u m e r s .
Uses of Borrowed
Funds
The 1993-94 household survey, like the 1988 survey, found that the principal uses for both types of
home equity credit have been to finance home
improvements and to repay other debts (table 10).
The patterns of usage diverge, however, when other
purposes of borrowing are considered: Vehicle purchases, education expenses, and business uses are
relatively more important uses of credit line borrowings than of traditional home equity loans.
Perhaps the most notable changes from 1988 to
1993-94 were a surge in the reported business use
of lines of credit and less frequent use of traditional
home equity loans to purchase real estate. The
decline in the reported use of traditional home
equity loans to purchase real estate may indicate
that fewer homeowners are willing to leverage their
principal residence to purchase other real property
during a period when real estate values have appreciated more slowly, or even declined, in many parts
of the country. For some homeowners, declines in
home equity may have precluded their ability to
make other real estate purchases.
CONSUMER KNOWLEDGE ABOUT AND
SATISFACTION WITH HOME EQUITY CREDIT
To learn more about their concerns, motivations,
and behavior with respect to their home equity
credit, the 1993-94 survey asked consumers a
series of questions about their understanding of the
578
11.
Federal Reserve Bulletin • July 1994
C o n s u m e r s ' k n o w l e d g e o f a n d attitudes t o w a r d their
h o m e e q u i t y c r e d i t a n d i n s t a l l m e n t credit,
1993-94,
b y t y p e o f credit
Percentage of account holders within each group
Consumer knowledge
or attitude
Knew or learned there was
lien on home
Knew or learned there
was right to cancel
Searched for information1 . . .
Obtained the information
sought2
Recalled receiving Truth in
Lending statement
Saved Truth in Lending
statement3
Found Truth in Lending
statement helpful 3
Said Truth in Lending
statement affected credit
decision 3
Indicated satisfication with
account4
Traditional
Home equity
home equity
line of credit
loan
Installment
credit
99
98
90
40
89
44
'37
93
97
95
89
85
68
90
93
91
67
63
63
8
6
12
95
89
88
NOTE. Data have been weighted to ensure the representativeness of the
sample.
1. Searched for information about other creditors or credit terms before
obtaining credit.
2. Proportion of those who "searched for information."
3. Proportion of those who "recalled receiving Truth in Lending
statement."
4. Includes respondents who said they were "very satisfied" or "somewhat satisfied" with account.
SOURCE. 1993-94 Surveys of Consumers.
product, their shopping for credit, their knowledge
of consumer protections, and their attitudes toward
their home equity accounts. For comparison, similar questions were asked of consumers who were
users of other forms of installment credit but who
did not have any home equity debt outstanding.
One line of questioning focused on consumers'
understanding about creditors' security interest in
their residences. Almost all users of home equity
credit (99 percent of credit line holders and 98 percent of traditional home equity loan borrowers)
indicated that the lender had explained, or they had
already known, that their home was collateral for
the loan (table 11). About 90 percent of both groups
recalled the lender informing them that they had
the right to cancel the credit arrangement within
three days, or said that they had already known
about that protection.3
Consumers with home equity credit cited many
courses of action a creditor might take if they
3. The three-day right to cancel a home equity loan transaction,
known as the right of rescission, is part of the Truth in Lending
Act.
missed several payments, including foreclosing on
their home, sending late-payment notices, contacting a collection agency, assessing late-payment
fees, and working out a revised payment schedule.
When asked what they thought was the worst thing
a lender could do if several payments were missed,
most respondents (78 percent of credit line holders
and 87 percent of traditional home equity loan
borrowers) said the lender could foreclose on the
loan. Thus, although virtually all home equity
account holders recognized that a lien had been
placed on their property, not all believed that foreclosure and loss of the property was the most
severe possible outcome, perhaps indicating that
some borrowers have substantial other resources
available to meet obligations.
Another group of questions concerned efforts to
gather information before opening an account.
About two-fifths of home equity credit account
holders searched for information about home equity
credit before opening the account, slightly more
than the proportion of installment credit users.
Most of the information searches involved calling
or visiting one or more institutions to ask about
interest rates. Well over 90 percent of the searchers
said they were able to get all the information they
were looking for, and a few more said they were
able to obtain at least some of the information they
sought.4 Eighty-nine percent of credit line holders
recalled having received a Truth in Lending (TIL)
disclosure statement, and 90 percent of that group
had saved the statement.5 The proportion that
recalled having received a TIL statement was
slightly lower for users of traditional home equity
loans, although the proportion of this group that
had saved the statement, at 93 percent, was slightly
higher. About two-thirds of those who recalled
having received a TIL statement said the statement
had been helpful to them in some way, but only
6 percent to 12 percent said the TIL statement had
affected their decisions to use credit.
4. These questions were asked only of those w h o had obtained
home equity credit or installment credit. The survey did not address
the experience of any households that might have sought h o m e
equity credit but did not obtain it.
5. Truth in Lending disclosure statements must be provided to
consumers by creditors in connection with credit transactions. The
statements include information about key terms related to the
transaction, including the annual percentage rate.
Home Equity Lending: Evidence from Recent Surveys
years. Commercial banks, the dominant provider of
credit under home equity lines of credit, had receivables of $73 billion at the end of 1993, nearly
double the amount for all other lenders combined
(table 12). They are also the leading provider of
traditional home equity loans, although their market share is much smaller for this type of credit.
In an earlier article, based on less-complete institutional data, we estimated that debt outstanding on
home equity lines of credit was about $75 billion at
the end of 1988.6 Given this estimate, debt on
home equity credit lines grew $35 billion over the
five-year period through 1993, or at an average rate
of around 9 percent per year. The pattern of growth
was far from smooth, however. Much of the
increase occurred in 1989 and 1990, with total
credit line debt apparently peaking at about
$114 billion in 1991 and 1992 and then contracting
a small amount in 1993.
The extent to which traditional home equity debt
has increased or contracted since 1988 is difficult
to determine precisely. With virtually no institutional data as a basis for calculations five years ago,
we estimated traditional home equity debt at the
end of 1988 to have been within a range of
$135 billion to $190 billion. As more detailed data
have become available, it has become possible to
make more accurate estimates for subsequent years.
Although our estimates from 1990 forward should
still be viewed as subject to a fairly wide margin of
error, it seems reasonable to conclude that this type
of home equity debt also contracted a bit in recent
years, and perhaps leveled off in 1993.
A final set of questions concerned consumer
satisfaction with their home equity or installment
credit. Ninety-five percent of home equity credit
line holders were somewhat or very satisfied with
the account, a bit higher than for traditional home
equity loan and installment credit users. Of the
small percentage of account holders who were dissatisfied, most complaints concerned the interest
rate associated with the loan.
AGGREGATE HOME EQUITY DEBT
Data from lending institutions, together with information from the household survey, suggest that
outstanding home equity debt totaled about
$255 billion at the end of 1993. Borrowing against
home equity lines of credit is estimated to have
totaled about $110 billion, and traditional home
equity loans, about $145 billion. Aggregate estimates suggest that the growth of home equity debt
slowed considerably after 1988, and that the
amount of such debt outstanding apparently contracted slightly during 1992 and 1993. The following paragraphs summarize aggregate estimates of
home equity debt outstanding and discuss various
factors underlying the apparent recent weakness
(an explanation of the construction of the aggregate
figures is given in the box).
Amounts
Outstanding
Comprehensive figures on home equity lending are
not available for all types of lenders, although more
complete data have been reported in the past few
12.
6. Canner and others, "Home Equity Lending."
Estimates o f aggregate h o m e equity debt outstanding, 1 9 8 8 - 9 3 , by type and source o f credit
Billions of dollars
Traditional home equity loans
Home equity lines of credit
Year
1988
1989
1990
1991
1992
1993
...
...
..
..
..
Total
Commercial
banks
Other sources
All lenders
Commercial
banks
Other sources
All lenders
40
51
61
70
73
73
35
39
44
44
41
37
75
90
105
114
114
110
n.a.
n.a.
54
53
50
49
n.a.
n.a.
99
95
94
96
135-190
n.a.
153
148
144
145
NOTE. n.a. Not available.
SOURCES. Reports of Condition and Income, various years; Credit Union
National Association; Federal Reserve; and Surveys of Consumers.
579
210-265
n.a.
258
262
258
255
580
Federal Reserve Bulletin • July 1994
Estimation of Aggregate Debt
The procedure for constructing aggregate estimates of
home equity debt outstanding for 1993 is described here.
The same approach was used to estimate debt outstanding for the preceding two years; before 1991, however,
much of the source data was not available.
Commercial banks have reported receivables under
home equity lines of credit on their quarterly Call Reports since 1987, and have provided data on holdings of
traditional home equity loans since 1991. Mutual savings
banks also report these data on Call Reports. Savings and
loan associations and federal savings banks report credit
line receivables on Call Reports but do not separate
traditional home equity loans from first mortgage debt.
Finance companies report monthly to the Federal Reserve
on total real estate credit on their books, but they do not
differentiate first and second mortgages, nor do they
distinguish residential from commercial mortgages. Estimates of both types of home equity debt outstanding at
credit unions are available from the Credit Union
National Association. Data from these institutional
sources, supplemented by information on sources of
credit from the household survey, were used to estimate
aggregate home equity debt outstanding. 1
Debt Under Home Equity Lines of Credit
1. Because the data from most institutional sources reflect
only home equity credit carried on their own balance sheets,
receivables that have been securitized and removed from the
balance sheets of loan originators are not fully reflected in these
estimates.
Summing the totals for all types of institutions yields
an aggregate estimate of $110 billion for debt outstanding on credit lines at the end of 1993.
Continued on next page
Influences
on
Growth
Several factors may account for the weakness of
home equity lending in the recent past. Stagnant
real estate values in many localities for considerable stretches of time since 1988 have tempered the
growth of equity in homes. With slower growth of
home equity, fewer homeowners have become
qualified for home equity credit—and those that
have qualified may have become more cautious,
perhaps because of lowered expectations about
future increases in home values. Reacting to similar concerns about prospective trends in home
values, lenders may have been more cautious in
approving or soliciting applications for home
equity credit.
According to Call Reports, commercial banks had
$73 billion of receivables under home equity lines of
credit at the end of 1993, and savings institutions—
mutual savings banks, federal savings banks, and savings
and loan associations—together had about $18 billion
outstanding (table). Credit unions held $11 billion. The
relative magnitudes of these figures appear roughly consistent with the distribution of sources of credit lines
reported in the household survey.
N o direct estimate of credit line receivables is available for finance companies. Total real estate debt held by
these firms was nearly $69 billion at the end of 1993.
Discussions with industry members suggest that twothirds to three-quarters of this total, or $46 billion to
$50 billion, was home equity debt of households. Relatively little of the home equity lending by finance companies is carried out via credit lines, a fact reflected in the
household survey responses: Finance companies supplied
only 6 percent of the credit lines surveyed. If the survey
estimates of market share by type of lending institution
are reasonably accurate, then finance company receivables from credit lines at the end of 1993 were about a
tenth the size of commercial bank holdings, or about
$7 billion to $8 billion.
The geographic regions of the nation where gains
in home prices since 1988 have been weakest have
also generally experienced the smallest increases in
the proportion of households having home equity
debt. The Northeast, which by most measures experienced a decline in average home prices between
1990 and 1993, was the only region in which the
proportion of households with home equity lines of
credit did not increase over the 1988-93 period.
The proportion in the Northeast, at 12 percent for
1993, was still higher than elsewhere, but other
regions, particularly the North Central, narrowed
the gap considerably. The North Central region,
which apparently was least affected by the weak
home prices, was the only region that showed
increases in both the proportion of homeowners
Home Equity Lending: Evidence from Recent Surveys
581
Estimation of Aggregate Debt—Continued
Debt Under Traditional Home Equity Loans
Estimating the amount of traditional home equity debt
outstanding is somewhat more difficult, because fewer
institutions provide specific data on this type of loan, and
those that do report these loans as a separate item (commercial banks and credit unions) have much smaller
market shares than is the case for credit line debt. According to the household survey, commercial banks and credit
unions together account for about 40 percent of traditional home equity debt outstanding. Commercial bank
holdings reported on Call Reports totaled $49 billion at
the end of 1993, and credit unions had receivables of
$9 billion; their combined holdings, as a 4 0 percent share
of the market, imply a total of around $145 billion in
traditional home equity loans outstanding.
Savings and loan associations and federal savings
banks do not report traditional home equity loans separately from their other residential mortgage debt. The
household survey indicates that savings institutions
(including mutual savings banks) accounted for about
22 percent of the volume of traditional home equity loans
outstanding. If so—and assuming that $145 billion is a
reasonable approximation of the total—the savings institution share of home equity loans outstanding at the end
of 1993 was about $32 billion.
As stated earlier, finance companies had an estimated
$46 billion to $50 billion of home equity debt on their
books at the end of 1993, about $8 billion of which was
probably taken out under lines of credit. The remaining
$40 billion or so would be traditional home equity debt,
making finance companies the second largest supplier of
this type of loan. Other types of lenders—including mortgage bankers and individuals—also supply a significant
amount of funds to users of traditional home equity
loans. The household survey suggests that close to 10 percent of traditional loans outstanding comes from these
other sources, which would amount to about $15 billion
at the end of 1993.
Estimates of aggregate home equity debt outstanding, 1993, by source
Billions of dollars
Type of home equity debt
Home equity line of credit
Traditional home equity loan
Total
Commercial
banks
Savings
institutions1
Credit
unions
Finance
companies
Other2
All sources
73
49
122
18
32
50
11
9
20
8
40
48
*
15
15
110
145
255
NOTE. * Amount is negligible.
1. Includes savings and loan associations, federal saving banks, and
mutual saving banks.
2. Includes mortgage bankers, individuals, and any other source mentioned by respondents.
with home equity credit lines and the proportion
with traditional home equity loans.
More generally, the recession that beset the economy in 1990 and 1991 no doubt had a damping
effect on home equity borrowing, indirectly by
contributing to the sluggishness of home values
and directly by affecting household propensities to
spend. Concerns of many consumers about job and
income security, and in some cases actual income
reduction and job loss, deterred some consumers
from carrying out home improvement projects, purchasing automobiles, and making other types of
major expenditures often financed through home
SOURCES. 1993-94 Surveys of Consumers; Reports of Condition and
Income, various years; Credit Union National Association; and Federal
Reserve.
equity credit. Constrained spending meant simply
that households had less need for home equity
credit than they might otherwise have had.
Movements in interest rates likely affected the
use of home equity debt in several ways. For
instance, sharp declines in rates paid on deposits
and other assets held by consumers may have led
some borrowers to liquidate assets to pay down
debt, particularly fixed-rate debt such as traditional
home equity loans. For precautionary and other
reasons, many people hold sizable amounts of
interest-bearing assets even though they have debt,
but changes in relative interest rates can induce
582
Federal Reserve Bulletin • July 1994
balance sheet adjustments. Rather than roll over a
maturing certificate of deposit or Treasury note at a
sharply lower rate, many people during the past
two years probably decided to sacrifice some
liquidity to retire debts on which rates had not
adjusted downward.
Large declines in interest rates on originations of
consumer loans since 1991 may have prompted
some households to choose a consumer loan rather
than home equity credit to finance certain expenditures. For example, between late 1991 and early
1994, the average rate on a forty-eight-month newcar loan at banks dropped from K M percent to
about IV2 percent. The typical rate on a home
equity line of credit, indexed at IV2 percentage
points over the prime rate and tax deductible,
would still have been somewhat below the auto
loan rate. However, the narrower margin between
rates on consumer loans and home equity lines may
have moved some potential home equity borrowers
to decide that the lower cost of credit-line debt no
longer outweighed the risk of having a lien on the
home. Most recently, the upturn since late 1993 in
market interest rates—to the extent that the rise
fostered expectations of further rate increases in the
future—may have made households more wary
about borrowing through variable-rate lines of
credit.
Having perhaps the greatest impact on home
equity borrowing in 1993 was the wave of refinancings of first mortgage debt prompted by the lowest
mortgage interest rates in more than twenty
years. Receivables on home equity lines at commercial banks actually declined during the second
half of 1993, and at year-end they were virtually
unchanged from their 1992 ending level. As mortgage rates fell throughout 1993, and especially
when they dropped below 7 percent (for a thirtyyear fixed-rate loan) in October, refinancing activity soared. Homeowners with equity-backed credit
lines typically folded them into the new first mortgage to lock in a low rate. Some refinancing homeowners in this situation might have been able to
obtain a new home equity credit line, given sufficient equity, but any outstanding balance probably
would have been much smaller than the balance on
the previous line that had been refinanced into the
new first mortgage.
OUTLOOK
Borrowing against home equity is unlikely to grow
again as explosively as it did in the mid-1980s;
rather, it is expected to register periods of brisk
expansion alternating with periods of more subdued growth, roughly in line with fluctuations in
big-ticket expenditures. In the near term, some
pickup is likely because mortgage refinancing
should pose less of a constraint in coming months,
in view of the exceptionally heavy volume of refinancing that has already been completed and the
recent rise in mortgage interest rates. Over the
longer term, the appeal of comparatively low interest rates, tax deductibility, convenience in borrowing, and flexibility in repayment should continue to
attract credit seekers to home equity lines of credit.
Movements in home values will play a key role in
determining the vitality of home equity borrowing
but are difficult to predict. Moderate recovery from
the housing market doldrums of the past few years
appears to be under way in many localities, but few
observers anticipate the sort of all-out boom that
characterized substantial parts of the 1970s and
1980s.
APPENDIX:
THE SURVEYS OF
CONSUMERS
To obtain information on the prevalence of home
equity accounts and their use by homeowners, the
Federal Reserve Board helped develop questions
for inclusion in the Surveys of Consumers for the
period November 1993 through March 1994, conducted by the Survey Research Center of the University of Michigan. Survey interviews were conducted by telephone, with telephone numbers
chosen from a cluster sample of residential numbers. The sample was chosen to be broadly representative of the four major regions—Northeast,
North Central, South, and West—in proportion to
their populations (residents of Alaska and Hawaii
were not included). For each telephone number
drawn, an adult from the household was randomly
selected as the respondent.
The survey defined a household as any group of
persons living together who are related by marriage, blood, or adoption, or any individual living
Home Equity Lending: Evidence from Recent Surveys
alone or with persons to whom the individual is not
related. The head of the household was defined as
an individual living alone, the male of a married
couple, or the adult in a household composed of
more than one person and only one adult; generally, where there was no married couple and more
than one adult, the head was the person most familiar with the household's finances, or the one closest
to age 45. Adults were persons age eighteen or
older.
The survey sampled 2,537 households, 1,762
of which were homeowners; 153 homeowners
reported having a home equity line of credit, 88
reported having a traditional home equity loan, and
5 reported having both types. The survey data have
been weighted to be representative of the population, thereby correcting for differences among
households in the probability of their being
A.l.
583
A p p r o x i m a t e s a m p l i n g errors o f s u r v e y results, b y
size of sample
Percentage points
Survey results
(percent)
50
30 or 70
20 or 80
10 or 90
5 or 95
Size of sample
100
300
1,000
2,000
10.5
9.6
8.4
6.3
4.6
6.2
5.7
4.9
3.7
2.7
3.6
3.3
2.9
2.2
1.6
2.8
2.5
2.2
1.7
1.2
NOTE. Ninety-five percent confidence level, 1.96 standard errors.
selected as survey respondents. Estimates of population characteristics derived from samples are subject to errors based on the degree to which the
sample differs from the general population.
Table A.l indicates the sampling errors for proportions derived from samples of different sizes.
•
584
Treasury and Federal Reserve
Foreign Exchange Operations
This quarterly report describes Treasury and System foreign exchange operations for the period
from February through April 1994. It was presented by Peter R. Fisher, Senior Vice President
and Manager for Operations for the Federal
Reserve Bank of New York. Ladan
Archin
was primarily responsible for preparation of the
report.1
During the February-April period, the dollar
declined 4.6 percent against the German mark,
6.5 percent against the Japanese yen, and 3.6 percent on a trade-weighted basis.2 On the last business day of the period, April 29, the Federal
Reserve Bank of New York's Foreign Exchange
Desk entered the market to purchase $500 million
against the German mark and $200 million against
the yen for the U.S. monetary authorities. Contemporaneously, Treasury Secretary Bentsen issued a
statement confirming the intervention. In other
operations, the Desk liquidated the nonyen and
nonmark reserves of the Federal Reserve System
and the U.S. Treasury Department's Exchange
Stabilization Fund (ESF). After the assassination of
the leading Mexican presidential candidate, U.S.
monetary authorities provided a $6 billion temporary swap facility to Mexico. This facility was
superseded on April 26, when the monetary authorities of the United States, Canada, and Mexico
announced the creation of the North American
Financial Group and the establishment of a trilateral foreign exchange swap facility.
1. The charts for the report are available from Publications
Services, Board of Governors of the Federal Reserve System, Mail
Stop 127, Washington, DC 20551.
2. The dollar's movements on a trade-weighted basis are measured using an index developed by the staff at the Board of
Governors of the Federal Reserve System.
THE DOLLAR RISES BRIEFLY IN EARLY
FEBRUARY
As the period opened, many market participants
had positioned themselves for an extended dollar
rally. This anticipated appreciation of the dollar
rested in part on the expectation that interest rate
differentials would start to move more rapidly in
the dollar's favor. Dealers believed that as the U.S.
economy strengthened, the Federal Reserve would
eventually tighten monetary conditions in the
United States, perhaps by the end of the first quarter. Dealers also expected that the Bundesbank
would bring short-term German interest rates down
quickly, allowing rates in other parts of Europe to
fall as well. Against this backdrop, market participants entered the period holding substantial longdollar positions against the mark and the yen and
also holding large positions in European government bonds. On February 4, Chairman Greenspan
announced the decision of the Federal Open Market Committee (FOMC) to increase pressure on
bank reserves, a move that resulted in an increase
in the federal funds rate from 3.0 percent to
3.25 percent. The dollar spiked higher in the days
immediately after the tightening, reaching period
highs of DM1.7675 and ¥109.65 before starting to
drift lower.
THE DOLLAR DECLINES FIRST AGAINST
YEN AND THEN THE MARK
THE
As the February 11 summit meeting between
President Clinton and Japanese Prime Minister
Hosokawa approached, market participants increasingly expected that the two leaders would announce some form of compromise resolution of
trade issues under discussion between the two
countries in bilateral "framework" talks. Correspondingly, expectations grew that the dollar would
585
start to appreciate once the meeting was over, and
market participants began to build up significant
long-dollar positions. The dollar closed at ¥108.13
on Thursday, February 10. Reflecting this positive
sentiment toward the dollar, the premium on the
dollar put options over equally out-of-the-money
dollar call options diminished a few days before
the meeting. Thus, when President Clinton and
Prime Minister Hosokawa announced late in the
afternoon on Friday, February 11, that they had
failed to reach an agreement and were suspending
the framework talks, surprised market participants
began to unwind their long-dollar positions. The
dollar began to decline in late New York trading
and continued to move lower through Asian, European, and early New York dealings on Monday,
February 14. The dollar's price adjustment against
the yen culminated at about midday, when the
dollar dropped sharply to an intraday low of
¥101.10. The dollar recovered by the end of the
day, however, and traded above ¥103 for the balance of the month.
As the Bundesbank's council meeting on February 17 approached, market participants anticipated
that the German central bank would act to lower
interest rates for the first time since early December 1993. Although the Bundesbank did reduce its
discount rate 50 basis points to 5.25 percent, it
disappointed these expectations by leaving its key
money market rate, the securities repurchase rate,
unchanged. The dollar-mark exchange rate began
to trade lower in subsequent days, but sharp selloffs in U.S. and European bond markets generally
dominated market attention during late February.
In early March, the dollar traded above the ¥105
level, gaining support from signs that Japan was
considering private and public initiatives to address
its trade surplus. Market participants also appeared
to take comfort in the fact that the Clinton Administration's decision to revive "Super 301" trade
sanction powers would not result—at least in the
short term—in new trade sanctions. However, in
mid-March attention increasingly focused on
reports of the substantial foreign flows of funds
into Japanese equity and bond markets leading to
further strength in the yen.
Against the mark, a slower-than-expected narrowing of short-term interest rate differentials
weighed on the dollar during much of March. A
surge in German M3 money supply growth, cou-
pled with growing frustration over the Bundesbank's cautious step-by-step reduction of its securities repurchase rate, spurred market participants to
reassess their expectation of sharply lower German
interest rates. These developments also encouraged
the view that further rate reductions by the Bundesbank would be calibrated to the Federal Reserve's
rate increases to minimize the impact on the dollarmark exchange rate. In this environment, the
second increase of 25 basis points in the federal
funds rate resulting from the FOMC's decision,
announced after its March 22 meeting, had little
impact on the dollar.
DOLLAR MOVES UP
AND THEN DOWN IN APRIL
In early April, the dollar moved higher against the
mark and the yen on a much higher-than-expected
increase in March U.S. nonfarm payrolls and on a
brief recovery in U.S. securities prices. The dollar
soon came under pressure against the yen, however, when the resignation of Prime Minister
Hosokawa led to a widespread perception in the
foreign exchange market that the bilateral trade
talks would encounter further delays. Political
uncertainty in Japan lingered, and dealers came to
doubt whether Japan would be able to meet its
commitment to have a new package of marketopening measures in place before the Group of
Seven (G-7) summit in July. The political uncertainty in Japan also created a concern among dealers that the Japanese government would be unable
to pass measures to stimulate domestic demand and
that the yen would consequently appreciate over
the longer term as well.
During April, a change in market perception
strengthened the mark against both the dollar and
the yen. With the Bundesbank easing cautiously
since mid-February, the expected trend in shortterm German interest rates, as implied by several
series of Euromark futures contracts, backed up
sharply over the latter part of the period. The
surprise announcement by the Bundesbank on
April 14 that it was cutting its discount and
Lombard rates 25 basis points, to 5.0 percent and
6.5 percent respectively, appeared to signal to market participants that further significant near-term
easing was unlikely. This can be seen in the flatten-
586
Federal Reserve Bulletin • July 1994
ing of near-term Euromark contracts around the
5 percent level. This was followed by the third
25 basis-point increase in the federal funds rate on
April 18. With market participants perceiving little
prospect for a further narrowing in the interest
differential in the short run, the mark strengthened
against both the dollar and the yen, as the short end
of the German yield curve looked increasingly
attractive.
The mark continued to rise against the dollar
through the end of April, even though expected
interest rate differentials, as implied by futures
contracts on Eurodollar and Euromark deposits,
were now moving more clearly in the dollar's
favor. Sentiment toward the dollar became increasingly negative as dealers expressed growing anxiety that the dollar-yen exchange rate might break
swiftly below its historical lows. This risk was
reflected in options markets, where dollar put
options traded at a substantial premium over
equally out-of-the-money dollar call options. With
market participants focused on the risk that the
dollar might decline against the yen and with the
mark having found solid support against the yen at
the ¥60 per mark level, the prospect for the dollar
appreciating against the mark appeared remote.
After the G-7 meetings the weekend of April
23-24, market participants were somewhat disappointed over the lack of official guidance on
exchange rates, and the dollar began to move down
against both the mark and the yen. At this time, a
perception was growing that dollar weakness had
begun to affect the U.S. bond market adversely, and
market participants expressed concern that a lower
dollar would spark inflationary pressures and
thereby diminish the value of dollar-denominated
assets. Dealers increasingly focused on the parallel
movements in U.S. bond prices and the value of the
dollar. On Thursday, April 28, the U.S. bond
market recorded sharp losses, and the dollar
approached its postwar low of ¥100.40 in thin and
nervous trading.
U.S. MONETARY AUTHORITIES ENTER THE
MARKET TO BUY DOLLARS AGAINST THE
MARK AND THE YEN
On Friday, April 29, in early New York trading, the
dollar started to drop abruptly against the mark,
falling nearly two pfennigs in less than an hour
before bottoming out at a six-month low of
DM1.6440. At the time, the dollar was trading just
below ¥102. Trading became increasingly volatile,
with market participants reporting that dealers were
not answering phones and that customers were
having trouble finding out whether their orders had
been filled. Shortly before 10:30 a.m., the Federal
Reserve Bank of New York's Foreign Exchange
Desk entered the market, purchasing dollars against
the mark for the U.S. monetary authorities. Soon
thereafter, Treasury Secretary Lloyd Bentsen issued
the following statement confirming the intervention: "U.S. monetary authorities intervened today
in foreign exchange markets to counter disorderly
conditions. This is in line with our previously
articulated policy which recognizes that excessive
volatility is counterproductive to growth. We stand
ready to continue to cooperate in foreign exchange
markets."
Shortly before 11:30 a.m., the Desk again
entered the market, purchasing dollars against both
the mark and the yen. In total, U.S. monetary
authorities purchased $500 million against the mark
and $200 million against the yen; these amounts
were equally divided between the Federal Reserve
and the ESF.
After the intervention, the dollar began to gain
ground in orderly trading, reaching an intraday
high of 1.6635 against the mark, and 102.50 against
the yen. The dollar drifted lower in the afternoon,
however, and closed the period at DM1.6535 and
¥101.55.
NORTH AMERICAN SWAP LINES
After the March 23 assassination of Luis Donaldo
Colosio, the presidential candidate of Mexico's
Institutional Revolutionary Party (PRI), U.S. monetary authorities established a $6.0 billion temporary
bilateral swap facility for the Bank of Mexico at
the request of the Mexican authorities. The facility
included reciprocal swap arrangements already in
place. The assassination of Colosio had prompted
the closing of Mexican markets on March 24 and
gave rise to concerns that the reopening of the
markets on March 25 would be accompanied by
market disorders that could spill over into the U.S.
Treasury and Federal Reserve Foreign Exchange Operations
1.
Foreign exchange holdings of U.S. monetary
authorities at period end
3.
Federal Reserve reciprocal currency arrangements
Millions of dollars
Millions of dollars
Item
Federal
Reserve
U.S. Treasury
Exchange
Stabilization Fund
German marks
Japanese yen
13,615.8
9,375.3
8,413.7
12,600.3
Total
22,991.1
21,014.0
financial markets. No drawings were made on this
facility.
On April 26, the monetary authorities of the
United States, Canada, and Mexico announced the
creation of the North American Financial Group to
provide a forum for more regular consultation on
economic and financial developments and policies
in these countries. These arrangements were unrelated to developments in Mexico; they had been
planned several months earlier in recognition of the
three nations' increasingly interdependent economic relationships. In connection with the North
American Financial Group, the monetary authorities of the three countries announced the establishment of the trilateral foreign exchange swap facility to expand the pool of potential resources
available to the monetary authorities of each country to maintain orderly exchange markets. The
United States and Mexico put in place swap agreements for up to $6.0 billion, with the Treasury and
2.
587
Net profits or losses ( - ) on U.S. Treasury
and Federal Reserve foreign exchange operations,
based on historical cost-of-acquisition exchange rates
Institution
Amount of
facility,
April 30, 1994
Drawings
during period
Austrian National Bank
National Bank of Belgium
Bank of Canada
National Bank of Denmark
Bank of England
Bank of France
Deutsche Bundesbank
Bank of Italy
Bank of Japan
250
1,000
2,000
250
3,000
2,000
6,000
3,000
5,000
Bank of Mexico
Netherlands Bank
Bank of Norway
Bank of Sweden
Swiss National Bank
3,000
500
250
300
4,000
Bank for International Settlements
Dollars against Swiss francs
Dollars against other authorized
European currencies
1,250
0
32,400
0
Total
0
JIk
r
600
the Federal Reserve each participating up to
$3.0 billion. In addition, the Bank of Canada and
the Bank of Mexico expanded their existing swap
agreement to C$1.0 billion. Finally, the Federal
Reserve and the Bank of Canada reaffirmed their
existing swap agreement in the amount of $2.0 billion. Each party has reciprocal privileges to draw
on the other's currency in amounts equivalent to
the amounts indicated.
The Mexican peso, which opened the period at
3.1060, traded to a low of 3.3694 per dollar after
the assassination but strengthened toward the end
of the period to close at 3.2700 pesos per dollar.
Millions of dollars
Period and item
Valuation profits and losses on
outstanding assets and liabilities
as of January 31, 1994
Realized profits and losses,
January 31-April 29, 1994
,
Valuation profits and losses on
outstanding assets and liabilities
as of April 29, 1994
Federal
Reserve
2,858.4
81.7 1
4,163.4
U.S. Treasury
Exchange
Stabilization
Fund
2,513.0
5.6 2
3,804.9
NOTE. Data are on a value-date basis.
1. This figure represents net realized profit on market sales of Swiss
francs, British sterling, Canadian dollars, French francs, Belgian francs, and
Dutch guilders. The figure excludes intervention sales transacted on April 29,
which settled during the first week of May, and are thus not reflected here.
2. This figure represents net realized profit on market sales of Swiss francs
and British sterling. The figure excludes intervention sales transacted on
April 29, which settled during the first week of May and are thus not
reflected here.
OTHER
OPERATIONS
During the period, the Federal Reserve Bank of
New York sold in the market all nonmark and
nonyen foreign exchange reserve holdings of the
Federal Reserve and the Exchange Stabilization
Fund (ESF) of the U.S. Treasury. The Federal
Reserve liquidated the equivalent of $703.8 million, while the ESF liquidated the equivalent of
$64.4 million. Swiss francs represented $629.0 million of the amount liquidated by the Federal
Reserve and $37.3 million of the amount liquidated
by the Treasury. Swiss franc sales took place on the
following days: February 15, February 22,
March 1, March 8, April 5, April 12, and April 26.
588
Federal Reserve Bulletin • July 1994
The remaining sales for the account of the Federal
Reserve were as follows: $1.0 million of Belgian
francs on February 25; $38.0 million of Dutch
guilders on March 29; $0.3 million of Canadian
dollars on March 29; $26.9 million of British
pounds on April 12; and $8.7 million of French
francs on April 12. The remaining sales for the
account of the Treasury was a liquidation of
$27.1 million of British pounds on April 26. It was
decided to eliminate these currency holdings in
light of the practice of the U.S. monetary authorities in recent years to conduct intervention operations exclusively in German marks and Japanese
yen. The sales were conducted in accordance with
a preestablished schedule, reflecting the maturity of
investments in the individual currencies.
At the end of the period, the current value of the
foreign exchange reserve holdings of the Federal
Reserve and the U.S. Treasury was $23.0 billion
and $21.0 billion respectively. These holdings are
invested in a variety of instruments that yield
market-related rates of return and have a high
degree of liquidity and credit quality. The Federal
Reserve and the U.S. Treasury held, either directly
or under repurchase agreements, $11.7 billion and
$11.3 billion respectively in foreign government
securities.
•
589
Staff Studies
The staff members of the Board of Governors of the
Federal Reserve System and of the Federal Reserve
Banks undertake studies that cover a wide range of
economic and financial subjects. From time to time
the studies that are of general interest are published in the Staff Studies series and summarized in
the Federal Reserve Bulletin. The analyses and
conclusions set forth are those of the authors and
do not necessarily indicate concurrence by the
Board of Governors, by the Federal Reserve Banks,
or by members of their staffs.
Single copies of the full text of each study are
available without charge. The titles available are
shown under "Staff Studies" in the list of Federal
Reserve Board publications at the back of each
Bulletin.
STUDY SUMMARY
A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANKING, 1980-93, AND AN ASSESSMENT
OF THE "OPERATING PERFORMANCE" AND "EVENT STUDY"METHODOLOGIES
Stephen A. Rhoades
Prepared as a staff study in winter 1993-94
Mergers reached record levels in the banking
industry as well as in the industrial sector in the
second half of the 1980s. The general economic
conditions of the period and changes in the enforcement of the antitrust laws regarding mergers may
have eased the way for some combinations, but
there is good reason to believe that the increased
merger activity is likely to persist on its own and
result in a restructuring of the industry.
The effect of mergers on firm performance is the
subject of ongoing debate, and studies of the question have been growing in number. To assess the
current state of knowledge, the present work examines the thirty-nine studies found to have been
published from 1980 to 1993 on the effects of bank
mergers on efficiency, profitability, or stockholder
wealth. The first of these studies appeared in 1983;
most of them have been published since 1987. This
recent burgeoning of research is reminiscent of the
period around 1970. At that time, passage of the
1970 amendments to the Bank Holding Company
Act and liberalization of bank holding company
laws by many states, particularly those with unit
banking laws, set off a substantial increase in bank
holding company formations, acquisitions, and
expansion. That activity in turn stimulated many
studies of the performance effects of bank holding
company affiliations and acquisitions. By 1980,
however, the holding company movement had
slowed, and, through the mid-1980s, bank mergers
generated little research interest. Then another
combination of legislative and marketplace developments led to a resurgence of interest in the
performance effects of bank mergers.
This overview is intended to determine whether,
in the aggregate, the research since 1980 permits
any general conclusions regarding the performance
effects of bank mergers. It is not intended to be a
study-by-study critique of the research. However,
about half of the thirty-nine studies published in
the 1980-93 period used a fundamentally different
methodology than the other half: nineteen used the
"operating performance" (or "observed performance") approach, which observes the financial
performance of a firm following a merger; and
twenty-one were "event" studies, which measure
590
Federal Reserve Bulletin • July 1994
the reaction of the stock price of acquirers and
targets to a merger announcement (one study used
both methods). Hence, after presenting what, on
balance, appear to be the conclusions represented
by the entire body of studies in the period, the
present work concludes with a broad assessment of
the two methodological approaches. An appendix
summarizes, in a table, the methodological details
and results of each study.
Findings of the operating performance studies
are generally consistent. Almost all of these
studies that find no gain in efficiency also find no
improvement in profitability if they include both
measures. In contrast, the six studies that show at
least some indication of a performance improvement do not obtain consistent efficiency and profitability results, or they are unique in some respect,
or both. In general, despite substantial diversity
among the nineteen operating performance studies,
the findings point strongly to a lack of improvement in efficiency or profitability as a result of
bank mergers, and these findings are robust both
within and across studies and over time.
In contrast, some inconsistency exists in the main
findings of the event studies. For example, seven
studies find that a merger announcement has a
significantly negative influence on the returns to
stockholders of the bidding firm. Seven other studies find no effect on bidder returns, three studies
find positive returns, and four find mixed effects on
bidder returns. The differences in findings are not
readily explicable from differences in approach or
the years covered by the analysis. In contrast to the
frequently negative or neutral returns to bidders
from merger announcements, eight of nine studies
that analyze the merger announcement effect on the
target bank find a positive return to target stockholders, and one study finds no abnormal return.
In general, the basic findings from the event
studies of the announcement effects of mergers
provide generally consistent evidence that there are
gains to stockholders of target firms. However, the
evidence regarding returns to bidders, as well as
that regarding the net returns to bidders and targets
combined, is too inconsistent to permit any clear
conclusion. On balance then, evidence from the
event studies does not provide much support for
the hypothesis that mergers are expected by the
financial markets to improve bank performance
because of efficiency gains or other factors.
Two factors seriously undermine the usefulness
of event studies relative to operating performance
studies. First, and least subject to debate, is that
the financial market response to a merger
announcement, in terms of abnormal returns to
stockholders, reflects expectations about all of the
elements (not only efficiency) that may influence
the general performance results of a merger as well
as differences in expectations between investors
and bidders.
Second, event studies are based on short-term
movements in stock prices, which may reflect speculation by sophisticated investors who seek shortterm trading gains by outguessing other sophisticated market players. To the extent that stock price
changes surrounding a merger announcement
reflect short-run trading as opposed to long-term
investments, abnormal returns would appear to be
of limited use for assessing the performance effects
of mergers.
On balance, the problems inherent in the event
study methodology with regard to the effects of
bank mergers appear to be substantially more troublesome than those inherent in the operating performance methodology; one is therefore justified in
giving greater weight to the findings of the operating performance studies. Those findings indicate
consistently that bank mergers do not generally
result in gains in efficiency or general operating
performance.
Three caveats attend these findings. First, the
findings do not imply that no bank mergers yield
efficiency gains. Second, almost all the mergers
analyzed occurred before 1989, and mergers after
that time might yield different results. And third,
the findings by economists that bank mergers generally do not result in efficiency gains is not necessarily inconsistent with the argument by some
bankers that mergers lead to significant cost cutting. The difference in the apparently conflicting
positions may arise from the fact that economists
focus on the efficiency effects of mergers, which
are typically measured by an expense ratio such as
total expenses to total assets, whereas bankers typically focus on the dollar volume, or percentage, of
costs that will be cut. Nonetheless, from the standpoint of public policy and the real long-term performance of the industry, an efficiency measure is the
relevant benchmark.
•
591
Industrial Production and Capacity Utilization
for May 1994
Released for publication
June 15
Industrial production rose 0.2 percent in May after
a downwardly revised 0.1 percent increase in April.
Although the output of motor vehicles fell for the
third consecutive month, gains in the production of
other types of business equipment and of construction supplies continued to push up overall output.
As measured with revised seasonal factors,
motor vehicle assemblies peaked in February at an
annual rate of 13.4 million units. Output decreased
to an 11.5 million unit pace in May, in part because
Industrial production indexes
Twelve-month percent change
1988
1989
1990
1991
1992
Twelve-month percent change
1994
1993
1988
1990
1989
1991
1992
1993
1994
Capacity and industrial production
Ratio scale, 1987 production = 1 0 0
— Total industry
Capacity
Ratio scale, 1987 production = 100
140
_
— Manufacturing
Capacity
140
__
120
-
120
^
100
Production
100
Production
80
1
1
1
1
1
1
1
1
1
1
1
I
1
1
1
1
1
1
1
1
80
1
Percent of capacity
Percent of capacity
Manufacturing
Total industry
90
90
Utilization
Utilization
J
1980
1982
1984
I
I
1986
I
I
1988
I
I
1990
I
I L
1992
1994
80
80
70
70
1
1980
1
1
1982
1
1984
All series are seasonally adjusted. Latest series, May. Capacity is an index of potential industrial production..
^ ^
1986
1988
1
1
1990
1
1
1992
1
1994
592
Federal Reserve Bulletin • July 1994
Industrial production and capacity utilization, May 1994
Industrial production, index, 1987=100
Percentage change
Category
1994
1994'
Feb.
r
1
Mar.
r
Apr.
Mayf
116.1
Total
115.0
115.7
115.9
Previous estimate
115.1
115.7
116.0
Major market groups
Products, total2
Consumer goods
Business equipment
Construction supplies
Materials
114.2
111.6
145.0
98.9
116.2
114.6
111.8
145.3
100.1
117.5
114.8
Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities
116.1
120.9
110.1
98.8
119.8
117.0
121.6
111.5
99.5
118.0
117.3
115.0
111.2
147.4
111.8
146.1
101.8
117.4
111.4
99.1
117.4
Mar.'
Apr.'
Mayf
5.5
117.8
.5
.6
1.5
-1.6
.2
117.6
122.3
111.7
99.5
117.1
.5
.4
.5
1.9
-1.7
102.8
122.1
Feb.'
.3
.2
.1
.2
.2
.0
.5
1.7
-.5
.9
.9
.3
1.2
-.1
1.1
.4
-.1
-.4
-.5
MEMO
1993
Low,
1982
1994
High,
1988-89
May
5.2
3.2
10.5
7.1
6.0
5.8
8.1
3.0
2.4
4.2
.2
.5
1.2
.7
-1.5
Capacity utilization, percent
Average,
1967-93
May 1993
to
May 1994
Feb.'
Mar.'
Apr.'
MayP
Capacity,
percentage
change,
May 1993
to
May 1994
Total
81.9
71.8
84.8
81.0
83.3
83.7
83.6
83.5
2.3
Manufacturing
Advanced processing
Primary processing ..
Mining
Utilities
81.2
80.6
82.2
87.4
86.7
70.0
71.4
66.8
80.6
76.2
85.1
83.3
89.1
87.0
92.6
80.2
78.8
83.5
87.2
84.1
82.4
81.2
85.3
89.3
89.0
82.8
81.4
86.2
89.9
87.5
82.8
81.3
86.4
89.6
87.0
82.8
81.2
86.6
90.0
86.6
2.6
3.2
1.2
-.7
1.2
NOTE. Data seasonally adjusted or calculated from seasonally adjusted
monthly data.
1. Change from preceding month.
capacity constraints hindered manufacturers in
achieving their normal seasonal gains. Declines in
motor vehicles and parts have reduced growth of
the overall index by about 0.2 percentage point per
month since March.
At 116.1 percent of its 1987 average, total industrial production was 5.5 percent higher in May than
it was a year earlier. The utilization of total industrial capacity edged down 0.1 percentage point, to
83.5 percent.
When analyzed by market group, the data show
that the decrease in motor vehicle assemblies contributed to declines in the indexes for both consumer durable goods and transit equipment. A fall
in the output of appliances also weakened the production of consumer durables. The output of consumer nondurables was unchanged for the second
consecutive month. Although sales of electricity to
residences fell a bit, most other categories of con-
2. Contains components in addition to those shown,
r Revised,
p Preliminary.
sumer nondurables showed small increases. The
output of business equipment rose nearly 1 percent
as a strong gain in information processing equipment and increases in other categories offset the
decline in transit equipment.
The production of construction supplies posted
another sizable increase; gains in the past three
months have pushed output well above its December level, despite losses in January and February as
the severe winter weather slowed the construction
industry. The production of materials advanced
0.3 percent in May, with significant increases in the
output of computer parts, semiconductors, chemicals, and paper materials.
When analyzed by industry group, the data show
that manufacturing production picked up 0.2 percent, with similar gains for both durable and nondurable goods manufacturing. Excluding motor
vehicles and parts, manufacturing output rose
Industrial Production and Capacity Utilization
0.5 percent. Total factory utilization held steady at
82.8 percent. Utilization for primary-processing
industries edged up, to 86.6 percent; the operating
rate for advanced-processing industries fell back a
notch, to 81.2 percent. During the past twelve
months, the operating rate for primary-processing
industries has risen about 3 percentage points and
that for advanced-processing industries has
increased nearly 2Vi percentage points. The
primary-processing industries with the greatest
gains in the past twelve months have been primary
593
metals, lumber, fabricated metals products, and
petroleum refining. Within the advancedprocessing grouping, the biggest increases in the
period have come in industrial machinery and
equipment, most notably computers, motor vehicles, electrical machinery, and furniture.
Mining output increased 0.4 percent in May as
gains in crude oil extraction, metal mining, and
stone and earth mining more than offset a decrease
in coal mining. The output from utilities edged
down.
•
594
Statements to the Congress
Statement by Alan Greenspan, Chairman, Board
of Governors of the Federal Reserve System,
before the Subcommittee on Telecommunications and Finance of the Committee on Energy
and Commerce, U.S. House of Representatives,
May 25, 1994
Thank you for this opportunity to present the
views of the Federal Reserve Board on the recent
report on financial derivatives by the General
Accounting Office (GAO). Derivatives activities
have important implications for the global financial system and the world economy. The Federal
Reserve has devoted considerable resources to
understanding these implications and to working
with other authorities in the United States and
abroad to develop appropriate public policies.
This hearing offers an opportunity to review the
policy actions that have already been taken and
to discuss the need for further action by financial
regulators, central banks, or the Congress.
As suggested in your letter of invitation, I shall
begin by setting forth the Board's overall views
on the impact of derivative instruments on our
nation's financial system. Then I shall identify
the challenges that derivatives pose to users and
to policymakers and discuss the steps that the
Federal Reserve has taken or plans to take to
meet those challenges. I shall conclude with the
Board's assessment of the need for remedial
legislation relating to derivative instruments. In
the course of this discussion, I shall respond to
the principal findings and recommendations contained in the GAO report.
IMPACT OF DERIVATIVES
FINANCIAL
SYSTEM
ON THE
The Board believes that the array of derivative
products that has been developed in recent years
has enhanced economic efficiency. The economic function of these contracts is to allow risks
that formerly had been combined to be unbundled and transferred to those most willing to
assume and manage each risk component. The
importance of this function has increased, as
competitive pressures have intensified in many
economic sectors and as interest rates, exchange
rates, and other asset prices have tended to be
quite volatile. In this environment, many financial and nonfinancial businesses, federally sponsored agencies, and state and local governments
have concluded that active management of their
interest rate, exchange rate, and other financial
market risks is essential. They recognize that
such risks, if left unmanaged, can jeopardize
their ability to perform their primary economic
functions successfully. Financial derivatives, especially customized over-the-counter (OTC) derivatives, allow financial market risks to be
adjusted more precisely and at lower cost than is
possible with other financial instruments. For
this reason, many of these entities have come to
rely on derivatives to achieve their risk management objectives.
Although derivatives have enhanced the
overall efficiency of financial markets and the
economy, the Board recognizes that some derivatives are complex instruments that, if not
properly understood and managed, can pose
risks to individual users and possibly also to the
overall stability of the financial system. The
risks to individual institutions have been underscored by press reports of losses on certain
derivatives contracts in the wake of the recent
sharp increases in interest rates here and
abroad. Case studies of these episodes undoubtedly will offer useful insights to users of
derivatives and to policymakers. But it would
be wrong to draw sweeping conclusions from
these events. Changes in interest rates and
other market variables necessarily affect the
fortunes of individual economic units. Many
entities undoubtedly decreased their vulnerability through use of derivatives, and many others
595
that elected not to use derivatives undoubtedly
suffered losses.
The impact of derivatives on the stability of the
financial system is a subject of ongoing debate.
As I have noted, derivatives have allowed many
businesses and governments to manage their
risks more effectively. Nonetheless, several
plausible scenarios have been identified in which
derivatives activities could be a source of systemic disturbance.
First, the failure of a major derivatives dealer
could impose credit losses on its counterparties
that could threaten their financial health. To be
sure, the failures of derivatives dealers that have
occurred in recent years have not imperiled any
counterparties. Nonetheless, concentrations of
credit exposures to derivatives dealers, like any
other concentrations of credit exposure, clearly
constitute at least a potential source of systemic
difficulties.
Second, the dynamic hedging of options positions and certain other risk management techniques lead market participants to buy assets
when prices are rising and sell when prices are
declining. In principle, such behavior could amplify market price movements. For example,
some believe that hedging associated with "portfolio insurance" programs contributed to the
stock market crash in October 1987. Aside from
these unusual market movements, little statistical evidence supports the contention that derivatives activities heighten volatility in cash markets. Nonetheless, some discount the results of
such studies because their concerns relate to
very infrequent events. The price amplification
effects of dynamic hedging may be significant
only after large price shocks.
Even if derivatives activities are not themselves a source of systemic risk, they may help
speed the transmission of a shock from some
other source to other markets and institutions.
Linkages among financial markets, both domestically and internationally, have become considerably tighter in recent years. Derivatives have
contributed to this development, although other
forces—the increasing importance of institutional investors, improvements in information
and telecommunications technology, and the removal of capital controls by many countries—
clearly have been at work. Given these tighter
linkages, if a major international financial firm
came under severe financial stress, authorities
could face significant difficulties in containing the
effects on other institutions and markets. At a
minimum, success would require close coordination with relevant authorities in the home country and abroad.
CHALLENGES
POSED BY
DERIVATIVES
The Board believes that to fully realize the
benefits of derivatives aritktp prevent systemic
disturbances, several important challenges must
be met. The first, and perhaps most important,
challenge is for both dealers and end users of
derivatives to implement sound risk management
practices. Sound risk management clearly is the
key to protecting individual firms. Perhaps less
obviously, it also is the key to addressing systemic risk concerns. Consider the two scenarios
that were identified earlier in which derivatives
could be the source of systemic problems. In the
first scenario, the failure of a derivatives dealer
inflicts serious credit losses on its counterparties.
This amounts to a concern that these counterparties will not have prudently managed their credit
exposures to the dealer. The most effective preventive measure is sound risk management—in
this case, the consistent application of counterparty credit limits to the dealer and the use of risk
mitigation techniques, such as netting or collateralization. In the second scenario, dynamic
hedging strategies used by option writers produce selling pressures that impair market liquidity and amplify price declines, and, in the event,
render the dynamic hedges ineffective. Here the
underlying concern is that option writers have
presumed a greater degree of market liquidity
than in fact exists and thus have overlooked the
pitfalls of dynamic hedging. The best preventive
measure is the systematic conduct of stress tests
that would highlight those pitfalls and discourage
excessive reliance on such vulnerable hedging
techniques.
A second important challenge is to improve the
transparency of derivatives activities. Accounting, public disclosure, and regulatory reporting
requirements have fallen far behind developments in the marketplace. Improvements in pub-
596 Federal Reserve Bulletin • July 1994
lie disclosure would aid derivatives participants
in assessing the creditworthiness of their counterparties and would allow shareholders to gauge
more accurately the effects of derivatives activities on public companies' risks and returns.
Regulatory reporting also must be strengthened.
This reporting includes that to financial regulators for purposes of assessing the safety and
soundness of regulated institutions. It also includes reporting of data required for macroprudential purposes, including reliable measures of
the size of derivatives markets and the degree to
which dealing activity in various market segments is concentrated.
A third set of challenges involves ensuring that
the legal and institutional infrastructure of financial markets can safely accommodate the growth
of derivatives activities. The potential for legal
enforceability problems to result in losses was
forcefully brought home to derivatives dealers in
1991, when a British court decision to invalidate
derivatives contracts with certain local authorities in the United Kingdom resulted in significant
losses to some dealers. Legislation has substantially reduced legal uncertainty in the United
States and several other important jurisdictions,
although significant doubts about the enforceability of netting agreements persist in other countries. With respect to the institutional infrastructure, the tightening of linkages among markets,
to which derivatives have contributed, heightens
the importance of strengthening settlement systems for primary and derivative instruments so
that they contain disturbances rather than transmit them to other systems and their participants.
STEPS TAKEN BY THE FEDERAL
RESERVE
TO RESPOND TO THE
CHALLENGES
The Federal Reserve has taken a series of steps
to strengthen the supervision and regulation of
bank derivatives activities. As the central bank,
with its overall responsibility for the soundness
and stability of the financial system, we have
worked to enhance the transparency of derivatives activities and to identify and eliminate legal
uncertainties relating to derivatives and weaknesses in settlement systems.
In all of these efforts, we have worked closely
and cooperatively with other regulatory authorities and central banks. Domestically, much of the
work on banking regulation has been coordinated
by the Federal Financial Institutions Examination Council (FFIEC) and, more recently, by the
Interagency Task Force on Bank-Related Derivatives Issues. Also, since Secretary Bentsen
asked the Presidential Working Group on Financial Markets to add derivatives to its agenda, this
group has served as an important forum for
coordinating government policy toward derivatives.
Internationally, the Federal Reserve has
strongly supported, and frequently provided
leadership for, cooperative efforts by the central
banks and supervisory authorities of the Group
of Ten countries. These efforts have included the
Basle Supervisors Committee's work on capital
requirements, the Eurocurrency Standing Committee's plans to develop meaningful comprehensive measures of the size of the derivatives
markets, and the Committee on Payment and
Settlement System's work on netting and other
payment and settlement issues.
Strengthening Supervision and
of Bank Derivatives
Activities
Regulation
The complexity and diversity of derivative instruments and activities present significant challenges to banks and supervisors alike, as the
report by the General Accounting Office (GAO)
points out. These challenges are being actively
addressed by the Federal Reserve, the other
banking regulators, and the banking industry.
The Federal Reserve's own efforts in this area
date back to the introduction of OTC derivatives
in the early 1980s, and these efforts have intensified in the last two years, as bank derivatives
activities have expanded, especially at the largest
banks.
It is important to recognize that significant
advances in the management of market and
credit risks, including improvements both in financial methodology and in the design of management information systems, lie behind the recent surge in derivatives activity. These
advances have made independent, highly skilled
risk management staff members and rigorous
Statements
measurement and analysis of market and credit
risks key elements of a sound risk management
approach for trading activities, and more generally, for banking activities. The Group of Thirty
report, Derivatives: Principles and Practices,
published last summer, lays out these elements,
and banking companies in the United States and
abroad are aggressively pursuing the goal of
comprehensive, state-of-the-art risk management
systems. These systems will, without question,
greatly strengthen the banking system's resilience.
Such major advances in risk management and
internal control also have important implications
for our supervisory approach to derivatives and
other trading activities. The Federal Reserve is
swiftly moving to assess these implications and
incorporate them into its supervisory process. In
adapting this supervisory approach, we face the
more fundamental challenge of ensuring safe and
sound banking practices, while preserving financial innovation, not only in products but, most
important, in the risk management process itself.
The Examination Process
The cornerstone of our supervisory approach is
the annual full-scope examination. In the past six
months, the Federal Reserve has completed two
important initiatives that we believe have substantially enhanced the effectiveness of our examinations of derivatives activities and of trading
activities generally. Last December, the Federal
Reserve issued a letter (SR-93-69) to each Reserve Bank that set out a comprehensive examination policy for trading activities of state member banks, bank holding companies, and other
banking offices under our supervisory jurisdiction. The Reserve Banks were instructed to
distribute this letter broadly to banks involved in
derivatives activities. The letter highlighted, for
both examiners and banks, key considerations in
evaluating the adequacy of an organization's risk
management process and internal controls. Although the statement focuses on trading activities by dealers, much of its guidance is relevant
to the derivatives activities of end users, especially its emphasis on the importance of oversight
of the risk management process by senior management and boards of directors.
to the Congress
597
Earlier this year, the Federal Reserve also
issued a new comprehensive trading activities
examination manual. This manual provides extensive guidance to examiners on preparing for
and conducting the examination of trading activities, including examination objectives and procedures, internal control questionnaires, and indepth discussions of how to evaluate all aspects
of a bank's risk management systems. In this last
area especially, we have substantially revised
and expanded earlier examiner guidance to reflect recent advances in bank risk management
practices.
The manual also discusses at length procedures for evaluating internal controls in trading
areas. For more than two decades, internal controls have been an important focus of our examinations of banks with significant trading activities. The procedures we have developed rest on
the extensive experience of our examination
force and include the lessons learned from internal control breakdowns over this long period in a
wide variety of trading operations.
Between examinations, the Federal Reserve
actively monitors developments in trading and
derivatives activities at the major banks in these
markets. Supervisory staff members at each Reserve Bank maintain close contact through meetings and telephone conversations with the management of the institutions they supervise.
Supervisory staff members also have ready access to management reports and other data not
collected in quarterly reports of condition and
income. During the volatile market conditions of
the first quarter, for example, this access allowed
the Federal Reserve supervisory staff members
to monitor the impact of market developments on
bank trading activity and bank profitability.
The Board endorses the principles underlying
the GAO's recommendations for strengthening
the bank examination process. We believe that
our current coverage of risk management and
internal controls in the annual full-scope examination meets the GAO's principal objectives.
With the implementation of section 112 of the
Federal Deposit Insurance Corporation Improvement Act, banking companies active in derivatives are further strengthening their internal controls to meet the act's specific requirements for
independent, knowledgeable audit committees
598
Federal Reserve Bulletin • July 1994
and internal control reporting. We believe that
we have made significant progress in incorporating the internal control assessments by the board
of directors, management, and auditors into our
supervisory process, as the GAO recommends.
The Board also agrees that bank supervisors
should continue to enhance the information gathered in the examination process for trading and
derivatives activities, and we believe that our
broad information-gathering power under our
existing examination authority is an essential and
adequate supervisory tool.
Capital Adequacy
The Board recognizes the key role that bank
capital plays in protecting the deposit insurance
fund from the market, credit, legal, and operational risks that banks assume and manage. The
growth in bank derivatives activities is requiring
changes in the methods that bank supervisors
utilize to assess capital adequacy, including
changes in the key risk-based capital measure.
As the GAO report notes, measures of the
credit risks associated with OTC derivatives
were part of the original Basle Accord that was
published in 1989. Two significant enhancements
to the current measures are under development.
First, the risk-reducing effects of legally enforceable netting agreements would be recognized
under a proposal issued by the Basle Supervisors
Committee last year. Last week the Board and
the Office of the Comptroller of the Currency
issued for public comment a proposal to recognize such netting in its risk-based capital guidelines, and a coordinated proposal by all the U.S.
banking regulators is expected to be issued
shortly. Second, the Basle Committee is giving
serious consideration to increasing capital
charges for credit risk on equity and commodity
contracts and on longer-dated derivatives contracts generally.
Market risks are not yet incorporated in the
risk-based capital measure, and the Board agrees
with the GAO's conclusion that this significant
omission must be addressed as soon as possible.
It is important to recognize, however, that this
issue is as complex and difficult as it is important.
Regulators have traditionally utilized relatively
simple, generic models to measure capital ade-
quacy. Last year, for example, the Basle Supervisors issued proposals for revisions to the Basle
Accord for the market risks of trading activities
in debt, equity, and foreign exchange that involved fixed and relatively simple rules. Likewise, efforts by U.S. banking regulators to incorporate interest rate risk into risk-based capital
standards initially focused solely on simple models specified by the regulators.
Although the market risks of many banking
instruments, including many derivatives contracts, can be accurately assessed using such
simple models, a considerably more sophisticated approach is necessary to assess more complex instruments, especially those with options
characteristics, and to aggregate different categories of market risk. The recognition of the need
for a more sophisticated approach has led banking regulators in the United States and abroad to
carefully explore the potential for allowing banks
to use their own internal models to assess the
need for capital to cover market risk.
Under such an approach, regulators would
specify the magnitude of the market shocks that
they expect banks to be able to withstand. The
banks would then use their internal models to
simulate the effects of such shocks on the market
value of their trading portfolio. Banks would then
be expected to maintain adequate capital to withstand the declines in market value produced by
the specified market stresses. Examiners would
assess the adequacy of the models and related
internal controls and allow this approach only if
the models and internal controls met or exceeded
specified standards.
The Board believes that this type of simulation
or "stress testing" approach to assessing capital
for market risk is the best means of addressing
concerns about the complexity of derivative activities and about the potential adverse impacts
of dynamic hedging strategies on cash and exchange-traded derivatives markets. Some of the
market shocks that regulators would specify
would be instantaneous and, therefore, would
generate large simulated losses on dynamically
hedged options positions. The need to maintain
capital to support these losses would strongly
discourage undue reliance on dynamic hedging.
Explicit in this approach is the need for regulators to make difficult judgments about the mag-
Statements
nitude of shocks that bank capital should be
expected to absorb. The temptation will be to
embrace the notion that bank capital must be
capable of withstanding every conceivable set of
adverse circumstances. However, it is important
that supervisors recognize that bank shareholders must earn a competitive rate of return on the
capital they place at risk and that unnecessarily
high capital requirements will impede the functioning of the banking system. Although the
scenarios need to be sufficiently rigorous to provide prudential coverage in times of stress, we
must recognize that even in very adverse market
circumstances, banks can take steps to reduce
their risk and conserve capital. Finally, we must
also recognize that when market forces threaten
to build momentum and break loose of economic
fundamentals, as they threatened to do in the
stock market crash in 1987, sound public policy
actions, and not just bank capital, are necessary
to preserve financial stability.
Disclosure
Public disclosure is another key element in our
supervisory approach. The banking agencies
have recently expanded the quarterly call reports
in several ways to address trading and derivatives activities, as the GAO report points out.
Relevant reporting changes implemented in
March include revised reporting procedures to
reflect the adoption by the banking agencies of
Financial Accounting Standards Board (FASB)
Interpretation Number 39 (FIN 39) and the collection of information on past-due payments on
interest rate swaps. Under FIN 39, organizations
may offset the on-balance-sheet assets and liabilities of multiple derivatives contracts with a
single counterparty and report the net amount
only when the right of set-off is legally enforceable.
The banking agencies have issued for comment
a proposal to expand derivatives reporting significantly in September 1994. The proposed enhancements would, among other things, collect
notional values and gross positive and gross
negative fair values for exchange-traded and
OTC contracts separately. The proposal also
requests comment on collecting information on
exposures reflecting bilateral netting agreements
to the Congress
599
and on the effect of derivatives activities on
interest income, interest expenses, and trading
revenues of the institution.
Reporting of market risks will also begin to be
included in the regulatory report framework by
March 1995, as the banking agencies design
reporting in conjunction with the implementation
of the domestic capital standard for interest rate
risk mandated under FDICIA section 305. Data
required to implement the market risk capital
standards being developed by the Basle Committee on Banking Supervision would be incorporated into this reporting framework as well.
I would stress that all of these efforts are only
initial steps in a broader program of strengthening public disclosure in response to major
changes in the management of risks at banks and
in the financial system more generally. The key
to that program is the identification of a core set
of information that all major financial market
participants need to disclose so that counterparties, investors, and financial regulators can adequately assess the financial condition and risk
profile of those they deal with.
This core set of information should not be
confined to derivatives activities but should encompass all the risk activities of the bank. In
particular, the Board believes that measures of
credit risk concentrations must aggregate exposures on derivatives contracts with exposures
from loans and other activities. Likewise, measures of the sources of trading revenues must
recognize that derivatives positions and cash
positions are typically managed as a single portfolio. Requirements to report gains and losses on
derivatives separately from gains and losses on
cash instruments would produce a distorted picture of the sources of trading revenues whenever
derivatives positions are offsetting other positions within the portfolio. A breakdown of trading revenues by underlying markets or risk factors would be useful to users of bank financial
statements, rather than a breakdown based on
legal definitions of the instruments used to create
the positions in the underlying risk factors.
Accounting
The development of comprehensive and consistent accounting rules is also an important con-
600
Federal Reserve Bulletin • July 1994
cern of the Federal Reserve. As the GAO report
points out, there is currently no single, cohesive
framework for accounting for derivatives and, as
a result, banks are applying different accounting
treatment to similar transactions. Obviously, it is
difficult for regulators or the public to properly
evaluate the risk of an institution—other than
through an on-site examination—without consistent accounting treatment of derivatives transactions. Accordingly, the Board joins the GAO in
strongly urging the Financial Accounting Standards Board (FASB) and the industry to move
promptly toward a consistent and meaningful set
of accounting standards. The Board will continue
to work with the Interagency Task Force and the
Working Group to find ways to advance this goal.
Sales Practices
In your invitation, you requested that I address
the nature and adequacy of existing protections
afforded to end users of OTC derivatives from
abusive practices in connection with sales of
such instruments. In OTC derivatives markets,
as in the wholesale banking markets, banks have
fundamental responsibilities to their shareholders that require them to conduct a thorough
credit assessment of their customers. In making a
credit assessment for a derivatives transaction,
our supervisory guidance indicates that banks
should not only assess the overall financial
strength of a counterparty and its ability to
perform on its obligation but should consider the
counterparty's ability to understand and manage
the risks inherent in the product. Our supervisory guidance says that if counterparties are not
sophisticated, the bank should provide sufficient
information to make them aware of the risks in
the transaction. When banks recommend specific
transactions for unsophisticated counterparties,
the Board's policy guidance instructs the bank to
ensure that the bank has adequate information
regarding its counterparty on which to base its
recommendation.
A bank active in OTC derivatives contracts has
a particularly strong self-interest in creating and
maintaining counterparty relationships because it
has a continuing exposure to the nonperformance
of its counterparty for the duration of the contract. Necessarily, the bank must be concerned
and must satisfy itself that its counterparties are
sufficiently able to handle the risks associated
with the derivatives transactions. Because of the
importance of these ongoing relationships, many
bank derivatives dealers have responded to the
recent reports of end-user losses in transactions
by reviewing their existing policies and procedures for possible strengthening, and we are
closely following those developments.
But the burden of being informed in the marketplace, especially a wholesale marketplace,
must not fall only on the dealer. As I noted at the
outset of my testimony, derivatives increase economic efficiency by allowing the transfer of risk to
those willing to bear it. For the transfer of risk to
be effective and the efficiency to be realized, end
users must retain ultimate responsibility for transactions they choose to make. In a wholesale
market, sophisticated and unsophisticated end
users alike must ensure that they fully understand
the risks attendant to any transaction they enter.
The federal banking agencies put this principle
to work in our supervision of bank end users of
derivatives. Before a bank engages in such transactions, we expect that senior management and
the board of directors will have a good understanding of the risks in derivatives transactions
and will ensure that the bank has sufficient personnel with the required expertise, adequate
accounting, risk reporting, and internal control
systems to manage those transactions and the
requisite financial strength.
Thus, the Board does not see the need for
legislative or regulatory protection for end users.
Nonetheless, additional steps can and should be
taken to heighten the effectiveness of existing
protections in the marketplace. Much more can be
done to educate end users and to heighten their
awareness of the risks in derivatives and of sound
risk management practices. News reports of the
recent losses incurred by sophisticated end users
of derivatives have no doubt intensified discussion of these instruments between boards of directors and financial management at many end
users and should spur consideration of enhancements to policies, controls, and reporting. Many
information resources already are available to end
users, and the financial industry plans additional
educational efforts. The Group of Thirty report, in
particular, was directed at the end user as well as
Statements to the Congress
the dealer community, and it probably deserves
much wider reading among end users than it
appears to have received to date.
Improving
Transparency
Besides its efforts to strengthen banking supervision, the Board has supported a variety of initiatives that seek to meet challenges faced by all
dealers and end users of derivatives, banks and
nonbanks. In particular, the Board believes that
the most effective means of promoting sound risk
management by the full range of dealers and end
users is by achieving improved public disclosure
of derivatives activities. Enhanced financial disclosure by end users of the nature and size of the
risks being managed through derivatives transactions would contribute importantly to heightening board and senior management involvement in
these activities. More important, it enhances the
effectiveness of market discipline by derivatives
counterparties, other creditors, and shareholders
or constituents.
Along with the Securities and Exchange Commission and other U.S. banking and financial
regulators, the Federal Reserve has been encouraging the Financial Accounting Standards Board
to accelerate its efforts to improve public disclosures by U.S. companies. In mid-April, the
FASB released a proposal that would require
disclosure of additional information on the scale
of derivatives activities, the purpose of those
activities (trading or risk management), and, in
the case of trading activities, the resulting net
gains or losses. In addition, the proposal encourages (but does not require) disclosure of quantitative information on interest rate risks and market risks that is consistent with the way the entity
manages its risks. We plan to thoroughly respond
to the FASB's request for comments on this
proposal at a later date. Many of the requirements are similar to those proposed by the banking regulators for inclusion in the quarterly call
reports. As I noted earlier, however, the Board
does not believe that isolating derivatives trading
revenues from other trading revenues is a useful
step toward understanding the sources of revenues or the risks entailed.
The Board has also been actively involved in
efforts by the G-10 central banks to address
601
concerns about the transparency of derivatives
activities. In October 1992, the Bank for International Settlements published a Study of Recent
Developments in International Interbank Relations (the Promisel Report) that stressed the need
for greater transparency. As a follow-up to this
study, the Eurocurrency Standing Committee of
the G-10 central banks created a working group
to assess what data on derivatives would be
useful to central banks in their responsibilities for
conducting monetary policy and overseeing the
stability of the financial system. The study group
concluded that it would be very useful to have
statistics on market size, measured both in terms
of amounts outstanding and in terms of turnover.
Because of the global nature of derivatives markets, comprehensive measures of market size
require a coordinated international effort. In response to a recommendation by the study group,
the G-10 governors recently approved the addition of questions on derivatives to the triennial
survey on foreign exchange turnover that is
planned for April 1995. The foreign exchange
survey is a proven vehicle for collecting data
from banks and other financial institutions. It is
conducted by central banks and monetary authorities in more than twenty-five countries, including all significant financial centers.
More recently, the Eurocurrency Standing
Committee has formed a working group to consider means of improving market transparency
through enhanced public disclosure by market
participants. Work is being done to explore the
core information needs of market participants,
including shareholders, creditors, and counterparties, with the goal of contributing ideas to the
larger public discussion of improvements in financial disclosure. Similar efforts are being undertaken in the private sector, and the Board
hopes that significant progress can soon be made
toward international agreement on a framework
for fuller and more meaningful financial disclosures.
Strengthening
Infrastructure
the Legal and Institutional
of Financial Markets
The Federal Reserve has also worked with authorities in the United States and abroad to
clearly understand the legal risks associated with
602
Federal Reserve Bulletin • July 1994
derivatives and to reduce legal uncertainty. The
Board has been especially concerned about the
legal enforceability of the netting agreements for
derivatives that dealers and other users increasingly rely on to mitigate counterparty credit
exposures. The Board believes that certainty
with respect to enforceability is critical for financial stability. If counterparties measure their
exposures as net when the true exposures are
gross, they could face losses far larger than
expected and possibly larger than they could
readily absorb.
In the United States, legislation and regulatory
action by the Federal Reserve have ensured legal
enforceability for most derivatives contracts and
counterparties. The most recent legislative action was a far-reaching provision of the Federal
Deposit Insurance Corporation Improvement
Act. This provision validated under U.S. law all
netting contracts between and among depository
institutions, broker-dealers, and futures commission merchants. Furthermore, it authorized the
Board to broaden the coverage to other financial
institutions if the Board determined that such
action would promote market efficiency or reduce systemic risk. In March this year, the Board
adopted a new regulation (Regulation EE) that
expanded the act's coverage to include all major
derivatives dealers, including affiliates of brokerdealers and insurance companies. Under the
umbrella of the Working Group on Financial
Markets, the Board is working with the other
financial regulators to identify remaining enforceability problems under U.S. law and to develop
solutions that the Working Group could recommend to the Congress.
The stock market crash in 1987 demonstrated
quite clearly that the capacity of the financial
system to absorb shocks depends critically on
the robustness of payment and settlement systems. Since then, financial transactions have
grown rapidly and linkages between financial
markets have tightened, in part because of the
expansion of derivatives activities, making payment and settlement systems even more important for financial stability.
A 1989 study by the Group of Thirty set out
recommendations for strengthening arrangements for securities settlements that are relevant
to financial instruments generally. The study
recommended that trades be settled promptly (no
later than three business days after the trade date
or T+3), in same-day funds, and according to the
principle of delivery versus payment. The report
also noted the potential benefits of bilateral and
multilateral netting arrangements.
In the United States, the Federal Reserve has
supported the Security and Exchange Commission's (SEC's) adoption of a rule requiring T+3
settlement of broker-dealer transactions in corporate securities. Together with the SEC, we are
overseeing efforts by the Depository Trust Company and the National Securities Clearing Corporation to develop liquidity safeguards and
other risk controls that would permit settlement
of corporate securities trades in same-day funds.
Other significant improvements to settlement arrangements in recent years have been the creation of a book-entry, delivery-versus-payment
system for Government National Mortgage Association securities (the Participants Trust Company) and a multilateral trade netting system for
U.S. government securities (the Government Securities Clearing Corporation). In both cases, the
Federal Reserve, the SEC, and the Treasury
cooperated to ensure that the system operators
employed adequate risk controls.
Internationally, the Federal Reserve has
worked with the other G-10 central banks to
address concerns about the policy implications of
the development of cross-border and multicurrency netting arrangements for payments and for
foreign exchange contracts. In November 1990,
the Bank for International Settlements published
the Report on Netting (Lamfalussy Report). This
report, which was endorsed by the G-10 governors, concluded that such netting agreements
have the potential to reduce systemic risks, provided that certain conditions are met. Regarding
those conditions, the report set out minimum
standards for the design and operation of such
systems. To enforce the standards, it established
a framework for cooperative central bank oversight of cross-border and multicurrency netting
systems.
Follow-up work to the Lamfalussy Report has
been carried forward by the G-10 Committee on
Payment and Settlement Systems (CPSS), currently chaired by President McDonough of the
Federal Reserve Bank of New York. The CPSS
Statements to the Congress
has afforded central banks the opportunity to
discuss emerging payment system issues and to
provide systematic public policy analysis of
these issues to the international financial community. The committee has also discussed proposals
by groups of banks in Europe and North America
to create clearing houses (multilateral netting
systems) for foreign exchange contracts.
The CPSS recently issued a report on Central
Bank Payment and Settlement Services with
Respect to Cross-Border and Multicurrency
Transactions, which examined a range of possible central bank service options to reduce settlement risks, especially in foreign exchange transactions. Some of the same issues were examined
by Federal Reserve staff members in a study of
the potential benefits of expanded hours of operation for the Fedwire funds transfer service. This
study concluded that longer Fedwire funds transfer hours could facilitate private sector efforts to
reduce risk in foreign exchange settlements, such
as the proposed foreign exchange clearing
houses. This conclusion helped support the
Board's decision in February 1994 to open the
funds transfer service eight hours earlier, at 12:30
a.m. eastern time, effective in 1997.
NEED FOR REMEDIAL
LEGISLATION
The GAO report recommends that the Congress
enact legislation requiring federal regulation of
the safety and soundness of all major U.S. OTC
derivatives dealers, including securities and insurance firm affiliates that currently are not subject to such regulation. The report also urges that
the Congress begin systematically addressing the
need to revamp and modernize the entire U.S.
regulatory system. As part of such an effort, the
report suggests that the Congress should debate
and decide whether large-scale proprietary trading of derivatives or other financial instruments
should be conducted only through separately
capitalized subsidiaries of bank holding companies.
In light of the progress that the private sector
and financial regulators have made in addressing
the challenges posed by derivatives and the further progress that it anticipates, the Board believes that remedial legislation relating to deriv-
603
atives is neither necessary nor desirable at this
time. In particular, the Board does not support
the specific legislative recommendations that are
contained in the GAO report. As the Board has
stated repeatedly, there is a pressing need to
modernize the U.S. financial system and regulatory structure. However, the Board believes that
legislation directed at derivatives is no substitute
for broader reform and, absent broader reform,
could actually increase risks in the U.S. financial
system by creating a regulatory regime that is
itself ineffective and that diminishes the effec-r
tiveness of market discipline.
Regulation
Dealers
of Nonbank
Derivatives
The Board is not persuaded that public policy
considerations require regulation of nonbank derivatives dealers. The rationale for such regulation apparently is that the activities of such
dealers pose risks to their counterparties or otherwise heighten systemic risk and that federal
intervention, possibly including a taxpayer bailout, could be necessary to protect the financial
system. However, in our judgment market forces
have been effective in restraining risk-taking by
such dealers. Moreover, even if one of these
dealers were to fail, its failure is unlikely to
threaten the safety net. Finally, absent broader
changes in the federal regulatory framework for
nonbank financial institutions, we foresee significant difficulties in fashioning an effective regulatory regime for the derivatives activities of
such entities.
Market forces, reinforced by broad acceptance
of the risk management principles I have discussed, appear to be effectively constraining
risk-taking by nonbank dealers and encouraging
implementation of sound risk management practices. Counterparties to derivatives contracts are
generally quite sensitive to credit exposures and
often transact only with dealers they judge to be
of the highest credit standing. Such concerns
about creditworthiness have prompted many of
the unregulated derivatives dealers to establish
derivatives products companies (DPCs) that conform to capital and operating guidelines set out
by the credit rating agencies. The Group of
Thirty's report appears to have captured the
604
Federal Reserve Bulletin • July 1994
attention of senior managers of unregulated dealers, many of whom participated in preparing or
financing the report. Many of these firms are now
using the G-30 standards as a benchmark to
evaluate their practices and, when necessary, to
implement improvements.
As I have discussed, the Board believes that
the effectiveness of market forces will be
strengthened by enhancements to public disclosure requirements that would apply to nearly all
of the currently unregulated U.S. dealers. The
Board also takes note of initiatives by the Securities Industry Association and others in the
derivatives industry to work with the SEC and
other regulators to develop voluntary minimum
standards for business conduct by derivatives
dealers. The details of such standards have yet to
be worked out, and such an initiative may not yet
have the support of all unregulated dealers. Still,
it seems a promising means of reinforcing the
market forces that thus far appear to be working
well. The enactment of legislation could well
bring this promising initiative up short.
Of course, market forces and industry initiatives cannot eliminate the possibility that an
unregulated derivatives dealer could fail. Even if
such a failure were to occur, however, it is
unlikely to place taxpayers at risk. The Bank
Insurance Fund could be placed at risk if insured
commercial banks failed to prudently manage
their counterparty credit exposures to the failed
derivatives dealer. But our examiners are trained
to identify and criticize concentrations of credit
exposure to a derivatives dealer or to any other
counterparty. Nor is the fund maintained for
protection of securities customers by the Securities Investor Protection Corporation (SIPC)
likely to be jeopardized. Even if the failure of a
derivatives dealer affiliate created financial difficulties for a broker-dealer, SEC requirements to
segregate customer funds and securities protect
the SIPC fund.
To be sure, resolving the failure of an unregulated derivatives dealer would pose challenges to
financial regulators. The Federal Reserve and
other authorities would carefully monitor the
effects of a failure and would work with market
participants to achieve an orderly wind-down of
its activities, as they did in 1990 when the Drexel
Burnham Lambert Group failed. However, it is
important to recognize that this type of federal
"intervention" does not place taxpayer funds at
risk.
The GAO does not discuss clearly how the
currently unregulated dealers should be regulated, but it appears to assume that the banking
regulators' approach to safety and soundness
could readily be applied to unregulated derivatives dealers. To the contrary, the Board foresees significant difficulties in implementing such
an approach without more thorough regulatory
reform. Derivatives contracts and related hedge
positions often are booked at different legal entities. For example, the market risk associated
with derivatives contracts booked at derivatives
products companies is transferred to, and managed by, other affiliates. Consequently, regulation of the full range of risks associated with
derivatives dealing would require broad authority over affiliated companies or probably authority to regulate the entire firm on a consolidated
basis. But such an approach would be difficult to
implement at those dealers that combine financial
and nonfinancial activities. In particular, design
of appropriate capital standards would be especially difficult for such firms.
The Congress should recognize that the enactment of legislation could create the mistaken
expectation that federal regulation will somehow
remove the risk from derivatives activities. We
must not lose sight of the fact that risks in
financial markets are regulated by private parties. The relevant question that we must address
is whether private market regulation is enhanced
or weakened by the addition of government
regulation. For the reasons I have discussed, the
Board fears that, in this instance, a weakening of
private market regulation is the more likely outcome.
Proprietary
Trading by
Banks
The GAO report suggests that the Congress
should review whether banks' proprietary trading activities in derivatives and other financial
instruments should be forced into separately
capitalized subsidiaries of bank holding companies. The basis for this recommendation apparently is a concern that such activities at some
banks have become so large and so complex that
Statements
they pose unacceptable risks to the deposit insurance fund. However, the Board does not
perceive the risks associated with proprietary
trading to be inherently greater than those associated with other banking activities. Indeed, the
same types of risks are involved—credit risks,
market risks, legal risks, and operational risks.
Some derivative contracts, notably options products, are quite complex, but a complex, difficultto-manage option is embedded in every fixed-rate
home mortgage. As is the case for home mortgage lending or any other banking activity,
whether proprietary trading places the deposit
insurance fund at risk depends on the bank's
capital, the degree of concentration in its risk
exposures, the strength of its risk management
systems and internal controls, and the expertise
of its personnel, including senior management
and risk managers as well as traders.
Moreover, we believe that implementing a
segregation of proprietary trading activities
would be extremely difficult. Proprietary trading
activities are difficult to define in principle and
certainly difficult in practice to distinguish from
market-making and other customer accommodation activities of banks. Forcing all trading activities into a subsidiary would be a radical change,
affecting what are by any definition traditional
banking functions (foreign exchange dealing, for
example). Such a drastic change could significantly impair U.S. banks' competitive positions
vis-a-vis those of foreign banks.
I have discussed the steps that the Federal
Reserve and other banking regulators have already taken to ensure that proprietary trading
activities are conducted prudently. In particular,
the Federal Reserve has made considerable progress in providing its examiners with the tools
necessary to assess the effectiveness of risk management systems and internal controls for trading
activities and to identify and demand elimination
of any material weaknesses. The Board has
placed the highest priority on efforts to revise
risk-based capital requirements to cover market
to the Congress
605
risks. Although this effort is not yet complete, an
assessment of the adequacy of capital to cover
potential trading losses already is a critical element in our annual on-site, full-scope examinations. If a bank were to take trading positions that
posed a threat to its solvency, we would insist that
those positions be closed out promptly and that
the board of directors take strong measures to
prevent such a situation from recurring.
Recent examinations of the state member
banks that are most actively involved in proprietary trading activities have not revealed significant problems arising from these activities. Although our examination reports have cited
certain deficiencies in specific internal controls,
management is well along toward correcting
them. The risk management systems of major
dealer banks were severely tested by the recent
volatility in financial markets. Although the
banks suffered losses trading in some markets,
their risk controls worked. As losses developed,
senior management of the banks were aware of
the size of risk positions and of the losses. A
combination of loss limits and senior management decisions brought risk positions down.
Moreover, because their trading positions tended
to be well diversified across fixed income, foreign
exchange, commodity, and equity markets in the
United States and in many other countries, their
overall trading activities most often remained
profitable. Even viewed in isolation, the losses
incurred in individual markets were a very small
fraction of the capital that supports these banks'
trading activities and ensures that shareholders,
not taxpayers, bear the costs.
Of course, we must be cautious about drawing
inferences from this single episode of market
volatility. The banks involved are closely studying their recent experience and identifying ways
in which risk management systems can be
strengthened further. For its part, the Federal
Reserve is reviewing these banks' experiences to
identify ways to make further improvements to
its supervisory and regulatory program.
•
606
Federal Reserve Bulletin • July 1994
Statement by Alan Greenspan, Chairman, Board
of Governors of the Federal Reserve System,
before the Committee on Banking, Housing, and
Urban Affairs, U.S. Senate, May 27, 1994
I appreciate the opportunity to appear before you
to discuss recent monetary policy.
The Federal Reserve's moves to increase
short-term interest rates this year are most appropriately understood in a historical context.
In the spring of 1989, we began to ease monetary conditions as we observed the consequence
of balance sheet strains resulting from increased
debt, along with significant weakness in the collateral underlying that debt. Households and
businesses became much more reluctant to borrow and spend, and lenders to extend credit—a
phenomenon often referred to as the "credit
crunch." In an endeavor to defuse these financial
strains, we moved short-term rates lower in a
long series of steps through the summer of 1992,
and we held them at unusually low levels through
the end of 1993—both absolutely and, importantly, relative to inflation. These actions, together with those to reduce budget deficits, facilitated a significant decline in long-term rates as
well.
Lower interest rates fostered a dramatic improvement in the financial condition of borrowers and lenders. Households rolled outstanding
mortgage and consumer loans into much-lowerrate debt. Business firms were able to pay down
high-cost debt by issuing bonds and stocks on
very favorable terms. And banks, which had cut
back on credit availability partly because of their
own balance sheet problems, were able to
strengthen their capital positions by issuing a
substantial volume of equity shares and other
capital instruments and by retaining much of
their improved flow of earnings. Moreover, the
lower interest rates, together with expanding
economic activity, recently have bolstered the
commercial real estate market, stemming losses
on the collateral underlying some of the largest
problem credits of banks and other intermediaries and, in some cases, permitting them to find
purchasers for these assets.
The sharp, sustained decline in debt-service
charges and the restructuring of balance sheets
alleviated the financial distress, enabling the
economy to begin to move again in a normal
expansionary pattern. When I last testified before you on monetary policy, in July 1993, the
likelihood that the economy would soon respond
more vigorously to these financial developments
already was evident both to the Federal Reserve
and to outside analysts. Indeed, I mentioned
that, with short-term real rates not far from zero,
". . . market participants anticipate that shortterm real interest rates will have to rise as the
headwinds diminish if substantial inflationary imbalances are to be avoided." But lingering questions into the second half of 1993 about whether
the economy had fully recuperated made the
appropriate timing of such action unclear.
Since the latter part of 1993, however, the
expansionary effects of the monetary policy of
the past few years have become increasingly
apparent. Although quarter-to-quarter developments are subject to considerable statistical
noise, in an underlying sense real gross domestic
product clearly has accelerated. Strength has
been particularly evident in interest-sensitive
sectors. Business investment has been quite robust, and order books for producers of durable
equipment have expanded appreciably. Housing
starts rose in the last three months of 1993 to
their highest level in more than four years; although they have dropped back some more recently, they remain 18 percent above a year ago.
Demand for motor vehicles has been strong,
lifting production of many types of automobiles
and light trucks to capacity. Moreover, as economic conditions have improved in other industrial countries, the growth of our merchandise
exports has picked up markedly. Overall industrial capacity utilization has increased to 83 Vi
percent, its highest level since the late 1980s. In
excess of 2 million jobs have been created over
the past twelve months, and the unemployment
rate has fallen substantially.
In this more robust financial and economic
climate, expansion of money and credit has
picked up. Business loans—which had contracted over the 1990-93 period—grew at a
9Vi percent annual rate in the first four months of
1994. Bank lending to consumers also has been
quite brisk. The pickup in loan growth seems to
reflect both stepped-up short-term credit demands and a greater willingness on the part of
Statements
banks to extend credit. Our surveys as well as
anecdotal reports indicate that banks have been
easing standards and terms on business loans for
more than a year, and they have become more
aggressive in seeking to extend consumer and
residential mortgage loans. The total debt of
private borrowers and state and local governments, which had risen at only a 2Vi percent
annual rate over the first half of 1993, accelerated
to more than a AVi percent rate over the second
half and has maintained the stronger pace during
recent months. Although ongoing portfolio adjustments have kept growth of M2 relatively
sluggish, it has been increasing a little more
quickly this year than last.
Given the stronger economic and financial
conditions, it became evident by early 1994 that
the mission of monetary policy of the past few
years had been accomplished. The "headwinds"
were substantially reduced, and the expansion
appeared solid and self-sustaining.
Having met our objective, we confronted the
question of whether there was any reasonable
purpose in maintaining the stimulative level of
interest rates held throughout 1993. The answer
to that question was "no." Maintenance of that
degree of accommodation, history shows, would
have posed a risk of mounting inflationary pressures that we perceived as wholly unacceptable.
Given the resumption of more normal patterns of
economic activity and credit flows, a shift in
policy stance was clearly indicated.
The question that remained was how to implement this shift. The economy looked quite robust, but we were concerned about the effects on
financial markets of a rapid move away from
accommodation. Short-term rates had remained
unusually low for a long time, and long-term
rates persisted well above short-term rates. The
resulting attractiveness of holding stocks and
bonds was further enhanced by a nearly unbroken stream of capital gains as long-term rates fell,
which imparted the false impression that returns
on long-term investments were not only quite
high but consistently so. The recovery of the
stock market after the October 1987 crash, along
with the successful fending off of any significant
adverse consequences from that event, may also
have contributed to investor complacency.
Moreover, in these extraordinary circumstances
to the Congress
607
of persistent, low short-term interest rates, moderate growth in the economy, and gradually
diminishing market concerns about future inflation, fluctuations in bond and stock prices around
broader trends remained quite narrow by historical standards.
Thus, lured by consistently high returns in
capital markets, people exhibited increasing willingness to take on market risk by extending the
maturity of their investments. In retrospect, it is
evident that all sorts of investors made this
change in strategy—from the very sophisticated
to the much less experienced. One especially
notable feature of the shift was the large and
accelerating pace of flows into stock and bond
mutual funds in recent years. In 1993 alone, $281
billion moved into these funds, representing the
lion's share of net investment in the U.S. bond
and stock markets. A significant portion of the
investments in longer-term mutual funds undoubtedly was diverted from deposits, money
market funds, and other short-term, loweryielding but less speculative instruments. And
some of those buying the funds perhaps did not
fully appreciate the exposure of their new investments to the usual fluctuations in bond and stock
prices. To the degree that maturity extension was
built on a false sense of security and certainty, it
posed a risk to financial markets once that sense
began to dissipate.
Federal Reserve moves initiated in February
along with a number of other developments in the
United States and other major industrial economies in the same period were instrumental in
radically altering perceptions of where interest
rates were going and of the risk of holding
longer-term assets. In early February, we had
thought long-term rates would move a little
higher temporarily as we tightened, but that
anticipation was in the context of expectations of
a more moderate pace of economic activity both
here and abroad than emerged shortly thereafter.
The sharp jump in rates that occurred appeared
primarily to reflect the dramatic rise in market
expectations of economic growth and associated
concerns about possible future inflation pressures. The behavior of interest rate spreads between Treasury and private debt—or credit risk
premiums—in securities markets offers confirming evidence; the fact that such spreads failed to
608
Federal Reserve Bulletin • July 1994
widen even as long-term interest rates rose dramatically suggests that the rise in long-term rates
was seen by market participants as a consequence of a strong economy—not a precursor of
a weak one. Given the change in economic
conditions, and the market's perception of them,
longer-term rates eventually would have increased significantly even had the Federal Reserve done nothing this year.
The rise in long-term rates has reflected increased uncertainty as well as expectations of a
stronger economy. Although generally expected,
the move from accommodation, interacting with
the news on the domestic and global economy,
triggered a reexamination by investors of their
overly sanguine assumptions about price risk in
longer-term financial assets. As volatility and
uncertainty increased, people began to reverse
their previous maturity extensions. They fled
toward more price-certain investments at the
short end of the yield curve. For example, some
flows into bond mutual funds were reversed;
investors, fearing further rate increases and
awakening to the nature of the risk they had
taken on, shifted funds back into shorter-term
money market mutual funds and deposits. The
sales of securities by bond mutual funds likely
contributed to pressures on yields, especially in
markets in which they had been important buyers.
Such reduced confidence about predictions of
future interest rate movements evidently is a key
element in explaining one of the more unusual
characteristics of financial market developments
in this recent period—the apparent degree of
coupling of bond rates in many industrial countries facing different cyclical situations. To be
sure, part of the rise in long-term rates in other
countries is accounted for by brighter economic
prospects, especially in continental Europe and
to some extent in Japan, so that market participants now expect less monetary policy ease in
those regions.
But, added to this were the effects of additional
uncertainty. In globalized financial markets, with
investors having increasingly diversified portfolios across currencies, uncertainty, wherever it
originates, can have similar effects on markets
for securities denominated in a variety of currencies. When investors were confronted with a
market environment they did not anticipate, they
quickly disengaged not only from dollar assets
but from all investments that rested on a confident view of the future. The loss of confidence in
one's ability to perceive the future does not
discriminate between investments in dollar- or
mark-denominated securities, for example. The
process of disengaging largely resulted in sales of
stocks and bonds, with the proceeds placed in
short-term debt instruments whose prices tend to
be more stable. As a consequence, long-term
rates rose appreciably in most industrial countries. That the effects of decreased confidence
partially overrode the differences in economic
conditions between the United States and our
major trading partners is evidence of the degree
of uncertainty in financial markets.
Because we at the Federal Reserve were concerned about sharp reactions in markets that had
grown accustomed to an unsustainable combination of high returns and low volatility, we chose
a cautious approach to our policy actions, moving by small amounts at first. Members of the
Federal Open Market Committee agreed that
excess monetary accommodation had to be eliminated expeditiously, and a rapid shift would not
in itself have been expected to destabilize the
economy. We recognized, however, that our
shift could impart uncertainty to markets, and
many of us were concerned that a large immediate move in rates would create too big a dose of
uncertainty, which could destabilize the financial
system, indirectly affecting the real economy. In
light of the substantial variations in prices of
financial assets over the past few months as we
adjusted our posture, our worries seem to have
been justified. Delaying our actions would not
have been constructive; unrealistic expectations
would only have become more firmly embedded,
and the inevitable adjustment in the financial
markets could have been far more difficult to
contain. Through this period, many of those who
had purchased long-term securities with unduly
optimistic expectations about the level and fluctuations in yields have made the needed adjustments. Thus, we judged at our May 17 meeting
that we could initiate a larger adjustment, without an undue adverse market reaction. Indeed,
markets reacted quite positively, on balance,
perhaps because they saw timely action as reduc-
Statements
ing the degree and frequency of tightening that
might be needed in the future.
We initiated the removal of excess monetary
accommodation without widespread indications
that inflation has picked up. To be sure, manufacturers have reported paying higher prices to
suppliers, and prices of basic industrial commodities have risen a good deal in recent months.
Moreover, the behavior of the dollar on foreign
exchange markets over the past several months
has been a source of some concern. But wage
growth has remained moderate and unit labor
costs have been well contained by marked improvements in productivity. To date, underlying
cost increases have been absorbed with little
evidence that they have yet passed through into
prices for final products.
If we are successful in our current endeavors,
there will not be an increase in overall inflation,
and trends toward price stability will be extended. And to be successful, we must implement the necessary monetary policy adjustments
in advance of the potential emergence of inflationary pressures, so as to forestall their actual
occurrence. Shifts in the stance of monetary
policy influence the economy and inflation with a
considerable lag, as long as a year or more. The
challenge of monetary policy is to interpret current data on the economy and financial markets
with an eye to anticipating future inflationary or
contractionary forces and to countering them by
taking action in advance.
The alternative—maintaining an accommodative monetary policy until inflation actually begins to pick up—would be detrimental to the best
interests of our nation's economy. History un-
to the Congress
609
equivocally demonstrates that monetary accommodation when the economy is strong risks a
significant acceleration of inflation. Because of
the lags in the effects of monetary policy, inflation once initiated would likely continue to rise
for a time even after monetary policy began to
tighten. Inflationary expectations would begin to
increase, influencing patterns of wage bargaining
and interest rates. As a result, monetary policy
would need eventually to tighten more sharply
than if a more timely and measured approach
were taken, possibly even placing the continuation of the economic expansion at risk. Such
go-stop policies—implying appreciable fluctuations in inflation rates and amplified business
cycle swings—surely impede long-range economic planning, saving, and investment and diminish our economy's prospects for long-run
growth and our ability to employ our growing
labor force.
We have attempted to avoid such an outcome
by taking actions this year that have substantially
removed the degree of accommodation that had
been in place last year. Our judgment was that
with the financial condition of both borrowers and
lenders greatly improved, such action would not
impede satisfactory economic growth but rather
would help such growth to be sustained. Clearly,
uncertainties regarding the economic outlook remain, and the Federal Reserve will need to monitor economic and financial developments to judge
the appropriate stance of monetary policy. Our
intention is to promote financial conditions under
which our economy can grow at its greatest potential, consistent with steady, noninflationary
expansion of employment and incomes.
•
610
Announcements
CHANGE IN THE DISCOUNT
RATE
The Federal Reserve announced on May 17, 1994,
two actions designed to maintain favorable trends
in inflation and thereby sustain the economic
expansion.
The Board approved an increase in the discount
rate from 3 percent to 3V2 percent, effective immediately, and the Federal Open Market Committee (FOMC) agreed that this increase should be
allowed to show through completely into interest
rates in reserve markets.
These actions, combined with the three adjustments initiated earlier this year by the FOMC,
substantially remove the degree of monetary
accommodation that prevailed throughout 1993. As
always, the Federal Reserve will continue to monitor economic and financial developments to judge
the appropriate stance of monetary policy.
In taking the discount action, the Board
approved requests submitted by the boards of directors of eleven Federal Reserve Banks—Boston,
New York, Philadelphia, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas,
and San Francisco. On May 18, the Board
approved an action by the board of directors of the
Federal Reserve Bank of Cleveland, increasing the
discount rate of that bank from 3 percent to 3Vi percent. The discount rate is the interest rate that is
charged depository institutions when they borrow
from their District Federal Reserve Bank.
MEETING OF THE CONSUMER
COUNCIL
ADVISORY
The Federal Reserve Board announced that the
Consumer Advisory Council held a meeting on
Thursday, June 23. The Council's function is to
advise the Board on the exercise of the Board's
responsibilities under the Consumer Credit Protec-
tion Act and on other matters on which the Board
seeks its advice.
PROPOSED
ACTIONS
The Federal Reserve requested on May 18, 1994,
public comment on a proposal that would amend
the Federal Reserve's risk-based capital guidelines
for state member banks and bank holding companies to recognize the risk-reducing benefits of netting arrangements. This proposal was issued jointly
with the Office of the Comptroller of the Currency,
which is seeking comment on a similar amendment
to its capital guidelines for national banks. Comments were requested by June 20, 1994.
The Federal Reserve Board on May 25, 1994,
requested public comment on a joint interagency
proposal of advanced rulemaking concerning the
regulatory treatment of recourse arrangements and
direct credit substitutes. Comments should be
received by July 25, 1994.
The Federal Reserve Board on May 4, 1994,
issued for public comment proposed amendments
to Regulation DD (Truth in Savings), which clarify that once interest is credited to an account,
it becomes part of the principal. Comments are
requested by July 5.
EXTENSION
OF COMMENT
PERIOD
The Federal Reserve Board on May 17, 1994,
extended for sixty days its comment period on a
proposal to simplify and update Regulation E
(Electronic Fund Transfers). In the proposal, the
Board also requested comment on changes to
the staff commentary. The public now has until
August 1 to submit comments on this proposal.
Comments should refer to Docket Numbers R-0830
and R-0831.
611
CHANGES IN BOARD STAFF
The Board of Governors announced on June 9,
1994, the appointments of Robert deV. Frierson
and Katherine H. Wheatley to the position of Assistant General Counsel in the Legal Division.
Mr. Frierson joined the Board's staff in 1987. He
holds an undergraduate degree and a J.D. from the
University of Virginia.
Ms. Wheatley joined the Board's staff in 1989.
She holds an undergraduate degree from Radcliffe
College and a J.D. from Harvard Law School.
The Board also announced on June 9, 1994, the
following official staff promotions in the Division
of Research and Statistics:
David J. Stockton, from Associate Director to
Deputy Director; Martha Bethea, from Deputy
Associate Director to Associate Director; Myron L.
Kwast, from Assistant Director to Associate
Director; Patrick M. Parkinson, from Assistant
Director to Associate Director; and Martha S. ScanIon, from Assistant Director to Deputy Associate
Director.
The changes also included the following promotions to the official staff:
Flint Brayton to Assistant Director, David S.
Jones to Assistant Director, John Rea to Assistant
Director, Stephen A. Rhoades to Assistant Director,
Charles S. Struckmeyer to Assistant Director, Alice
Patricia White to Assistant Director, and Glenn B.
Canner to Adviser.
Mr. Brayton has been at the Board since 1976.
He received his Ph.D. from Johns Hopkins
University.
Mr. Jones has been at the Board since 1981. He
completed his Ph.D. at Harvard University.
Mr. Rea joined the Board's staff in 1987.
He received his Ph.D. from the University of
Wisconsin.
Mr. Rhoades began his career with the Board in
1971. He received his Ph.D. from the University of
Maryland.
Mr. Struckmeyer joined the Board's staff in
1983. He completed his Ph.D. at Yale University.
Ms. White has been at the Board since 1971. She
received her Ph.D. from Yale University.
Mr. Canner joined the Board's staff in 1979. He
received his Ph.D. from Brown University.
•
612
Minutes of the
Federal Open Market Committee Meeting
Held on March 22, 1994
A meeting of the Federal Open Market Committee
was held in the offices of the Board of Governors
of the Federal Reserve System in Washington, D.C., on Tuesday, March 22, 1994, at
9:00 a.m.
Present:
Mr. Greenspan, Chairman
Mr. McDonough, Vice Chairman
Mr. Broaddus
Mr. Forrestal
Mr. Jordan
Mr. Kelley
Mr. LaWare
Mr. Lindsey
Mr. Parry
Ms. Phillips
Messrs. Hoenig, Keehn, Melzer, and Oltman,
Alternate Members of the Federal Open
Market Committee
Messrs. Boehne, McTeer, and Stern, Presidents of
the Federal Reserve Banks of Philadelphia,
Dallas, and Minneapolis respectively
Ms. Minehan, First Vice President, Federal Reserve
Bank of Boston
Mr. Kohn, Secretary and Economist
Mr. Bernard, Deputy Secretary
Mr. Coyne, Assistant Secretary
Mr. Gillum, Assistant Secretary
Mr. Mattingly, General Counsel
Mr. Prell, Economist
Mr. Truman, Economist
Messrs. Beebe, J. Davis, Goodfriend, Promisel,
Siegman, Simpson, Stockton, and
Ms. Tschinkel, Associate Economists
Ms. Lovett, Manager for Domestic Operations,
System Open Market Account
Mr. Fisher, Manager for Foreign Operations,
System Open Market Account
Mr. Ettin, Deputy Director, Division of Research
and Statistics, Board of Governors
Mr. Slifman, Associate Director, Division of
Research and Statistics, Board of Governors
Mr. Madigan, Associate Director, Division of
Monetary Affairs, Board of Governors
Ms. Low, Open Market Secretariat Assistant,
Division of Monetary Affairs, Board of
Governors
Mr. Bennett, Ms. Browne, Messrs. T. Davis,
Dewald, Lang, Rolnick, and Scheld,
Senior Vice Presidents, Federal Reserve
Banks of New York, Boston, Kansas City,
St. Louis, Philadelphia, Minneapolis, and
Chicago respectively
Mr. Cox, Vice President, Federal Reserve Bank
of Dallas
Mr. Hilton, Manager, Open Market Operations,
Federal Reserve Bank of New York
By unanimous vote, the minutes of actions taken
at the meeting of the Federal Open Market Committee held on February 3—4, 1994, were approved.
The Manager for Foreign Operations reported on
developments in foreign exchange markets and on
System transactions in foreign currencies during
the period February 4, 1994, through March 21,
1994. By unanimous vote, the Committee ratified
these transactions.
The Manager for Domestic Operations reported
on developments in domestic financial markets and
on System open market transactions in government
securities and federal agency obligations during the
period February 4, 1994, through March 21, 1994.
By unanimous vote, the Committee ratified these
transactions.
By unanimous vote, paragraph 1(a) of the Authorization for Domestic Open Market Operations was
amended to raise from $8 billion to $11 billion the
dollar limit on intermeeting changes in System
613
Account holdings of U.S. government and federal
agency securities for the intermeeting period ending with the close of business on May 17, 1994.
The Committee then turned to a discussion of the
economic and financial outlook and the implementation of monetary policy over the intermeeting
period ahead. A summary of the economic and
financial information available at the time of the
meeting and of the Committee's discussion is
provided below, followed by the domestic policy
directive that was approved by the Committee and
issued to the Federal Reserve Bank of New York.
The information reviewed at this meeting indicated that economic activity had expanded appreciably further in the early months of 1994, despite
unusually severe winter weather. Consumer spending and construction activity had been held down
to some extent by the adverse weather conditions,
but motor vehicle production had continued at a
very strong pace and business fixed investment
appeared to be headed for a significant gain in the
first quarter. Factory utilization rates had moved
still higher, and labor demand seemed to have
grown moderately further. Outside of a surge in
energy prices, increases in broad indexes of consumer and producer prices remained moderate.
Nonfarm payroll employment was unchanged in
January but posted a February advance comparable
to the sizable monthly increases recorded in the
final quarter of 1993. Employment in the service
industries declined slightly in January, then
rebounded substantially in February. Manufacturing payrolls rose in January and February, but the
number of jobs in construction declined in both
months, reflecting that industry's vulnerability to
weather disruptions. The civilian unemployment
rate, calculated on the new basis, fell to 6.5 percent
in February; however, the Bureau of Labor Statistics cautioned that a variety of technical factors
might have exaggerated the decline in joblessness
in early 1994.
After a sharp rise in the fourth quarter, industrial
production increased considerably further in January and February. Manufacturing output continued
to rise, despite the apparent damping effect of
adverse weather on a number of industries. Assemblies of motor vehicles remained quite buoyant,
accounting for more than half of the increase in
manufacturing production in the first two months
of the year and reaching in February their highest
level since the late 1970s. Production of manufactured goods other than motor vehicles also was up
in the two months, but the advances were smaller
than those of late 1993. Output of utilities surged in
January, reflecting the heating demand resulting
from abnormally cold temperatures, but a portion
of that gain was retraced in February. Total utilization of industrial capacity increased in both January
and February and was at relatively elevated levels,
judged by historical norms; operating rates in primary processing industries were especially high.
Retail sales were little changed on balance over
the first two months of the year, with sales recovering in February from a large January decline. By
contrast, sales of motor vehicles remained quite
brisk on average over the two months, despite the
California earthquake and the severe weather. Soaring outlays for home heating contributed to rapid
growth of consumer spending on services in January. The unusual weather also affected housing
activity; starts were down considerably in January
and February from the very high levels of late
1993, and new home sales plunged in January.
Sales of existing homes in January were only
slightly below their high December level.
The limited available evidence pointed to a
noticeably smaller gain in business fixed investment in the first quarter of 1994 after a very large
increase in the previous quarter. Shipments of nondefense capital goods slowed in January, retracing
part of the sharp rise of the fourth quarter, but the
buoyancy of orders in recent months pointed to a
further increase in shipments in coming months.
Sales of heavy trucks were strong in January, and
the backlog of orders for such vehicles remained
large. Nonresidential construction activity, perhaps
owing in part to bad weather, was down in January
after trending up over most of 1993. The largest
decline was in office building, which had posted
large increases in the preceding two months.
Business inventories fell slightly in January, and
stocks were lean, especially at manufacturing firms.
Inventories in manufacturing rose, retracing in January part of a large December decline; much of the
January increase was at producers of machinery,
where stocks had fallen to very low levels relative
to shipments. At both the wholesale and retail
levels, inventories posted sizable decreases. In the
wholesale sector, the inventory-to-sales ratio edged
down and had changed little since May of last year.
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Federal Reserve Bulletin • July 1994
The inventory-to-sales ratio for the retail sector
was up slightly, reflecting weak sales in January.
The nominal deficit on U.S. trade in goods
and services, measured on the new balance-ofpayments basis, was slightly smaller in January
than the average for the fourth quarter. However,
the January deficit was substantially larger than
that of December, with exports down by more than
imports. Much of the reduction in exports was in
agricultural goods, aircraft, and gold; the drop in
imports mainly reflected both lower quantities and
lower prices of imported oil. The limited available
data suggested that economic activity in the major
foreign industrial countries picked up in early 1994
after a mixed performance in the fourth quarter of
1993.
Producer prices of finished goods were boosted
in February by a surge in energy prices, especially
for gasoline and heating oil, that more than offset a
further decline in food prices. Excluding the food
and energy components, producer prices edged
higher in February; for the twelve months ended in
February, producer prices increased by a significantly smaller amount than in the twelve-month
period ended in February 1993. At the consumer
level, higher energy prices in February were offset
by lower food prices. For items other than food and
energy, consumer prices also rose less over the
twelve months ended in February than in the previous twelve months. Average hourly earnings of
production or nonsupervisory workers increased
more slowly in February, but for the twelve months
ended in February, the advance was about the same
as that recorded for the previous twelve months.
At its meeting on February 3^4, 1994, the Committee adopted a directive that called for a slight
increase in the degree of pressure on reserve positions and that did not include a presumption about
the likely direction of any adjustment to policy
during the intermeeting period. The directive stated
that in the context of the Committee's long-run
objectives for price stability and sustainable economic growth, and giving careful consideration to
economic, financial, and monetary developments,
slightly greater or slightly lesser reserve restraint
might be acceptable during the intermeeting
period. The reserve conditions associated with this
directive were expected to be consistent with moderate growth of M2 and M3 over the first half of
1994.
Immediately following the February meeting,
Chairman Greenspan announced the Committee's
decision, and open market operations were directed
toward implementing the slightly less accommodative degree of reserve pressures sought by the Committee. The federal funds rate increased by LA percentage point and then remained close to
3»/4 percent over the intermeeting period, while
adjustment plus seasonal borrowing averaged a
little less than anticipated.
Most other market interest rates rose considerably more than the federal funds rate in frequently
volatile markets. Market participants generally had
anticipated a tightening of monetary policy, but the
Committee's action apparently came a little sooner
than had been expected. Strong fourth-quarter economic data and evidence of solid growth in early
1994 were seen as suggesting greater credit
demands and the need for higher interest rates in
the future to contain inflation. Heightened trade
tensions and unsettled market conditions abroad
also contributed to market concerns. In these circumstances, intermediate- and longer-term interest
rates increased by appreciably more than shortterm money market rates. Major indexes of stock
prices had fallen on balance since early February in
sometimes volatile trading.
The trade-weighted value of the dollar in terms
of the other G-10 currencies initially rose following
the tightening of monetary policy on February 4.
The dollar depreciated over the balance of the
intermeeting period, however, despite higher U.S.
interest rates and the release of data indicating
generally strong U.S. economic activity. The dollar
declined against both the Japanese yen and the
German mark; trade frictions between the United
States and Japan and disappointment over the pace
of monetary easing in Germany appeared to be
contributing factors in the depreciation of the dollar. Bond yields in all the major foreign industrial
countries rose on average by almost as much as
yields on comparable U.S. bonds.
M2 declined somewhat and M3 was down
sharply in February. A substantial drop in mortgage
refinancings since late 1993 that depressed demand
deposits, and to a lesser extent savings deposits,
contributed to the weakness of M2 in February. M3
also was affected by a precipitous decline in
institution-only money funds as investors reacted
quickly following the monetary tightening to
Minutes of the Federal Open Market Committee Meeting
widening spreads between returns on these funds
and higher-yielding short-term instruments. Data
for early March pointed to some rebound in both
monetary aggregates, perhaps owing to portfolio
readjustments that involved sizable net redemptions of bond funds and apparently weaker inflows
to stock funds. Total domestic nonfinancial debt
expanded at a moderate rate in recent months.
The staff forecast prepared for this meeting suggested that economic expansion would slow from
the very strong pace of the fourth quarter but that
the economy would advance in 1994 at a rate
slightly in excess of the growth of potential. Consumer spending, which had tended for some time to
outpace income growth, was projected to increase
at a rate more in line with disposable incomes;
spending on durable goods, in particular, was projected to slow markedly as stock-adjustment
motives diminished and higher interest rates
exerted some restraint. Business fixed investment
was expected to increase less rapidly in 1994,
reflecting the diminishing effect of the earlier
pickup in output growth and the slower growth of
corporate cash flow. Homebuilding activity was
anticipated to continue at a relatively brisk pace,
spurred by the greater cash-flow affordability of
housing and the good prospects for continued
growth in employment and incomes. The restraint
on output growth from federal spending cutbacks
and weak export demand was projected to diminish
somewhat. In light of the limited margins of slack
in labor and product markets that were expected
to prevail over the forecast horizon, little further
reduction in the core rate of inflation was expected.
In the Committee's discussion of current and
prospective economic developments, members
referred to widespread indications of appreciable
momentum in the economic expansion and
decreasing margins of unemployed labor and other
producer resources. While the members continued
to anticipate a marked slowing in economic growth
from the very rapid pace of the fourth quarter, some
commented that despite unusually severe winter
weather in large parts of the country the deceleration in the current quarter appeared to be less than
they had expected. The indications of continuing
strength in aggregate demand along with a stillaccommodative monetary policy suggested a much
reduced risk that the economic expansion would
stall. Indeed, members continued to expect moder-
615
ate economic growth, though perhaps for a time at
a rate somewhat above the economy's potential.
The amount of resources that could be mobilized
readily to meet this demand was subject to substantial uncertainty, but the degree of slack in the
economy clearly had diminished considerably in
recent quarters to relatively low levels and likely
would shrink further. The immediate outlook for
inflation remained favorable: Costs and prices were
being contained by moderate wage increases,
continuing pressures for productivity-enhancing
investment, and competitive prices from abroad
where slack was still quite ample; and broad measures of money and credit, though strengthening
over the last half of 1993, remained moderate by
historical standards. Nevertheless, looking ahead,
members were concerned that, unless monetary
policy were adjusted further from its stillaccommodative stance, pressures on resources
would intensify and inflation would pick up.
Members assessed the outlook for economic
activity and prices against the backdrop of sharp
changes in bond and, to a lesser extent, equity
prices over the intermeeting period. Clearly, the
tightening of reserve conditions announced on
February 4 had played a role in market movements,
but other factors had been at work as well. Members variously stressed the possibility that the
backup in interest rates had reflected much stronger
aggregate demand, added uncertainty about the
course of interest rates, influences from foreign
exchange and foreign capital markets, changes in
trading strategies by wary participants, and rising
inflation expectations. On balance, financial conditions were still seen as supportive of solid economic expansion, and a number of members
referred in particular to the more accommodative
lending policies of many depository institutions;
however, some commented on the risk, which they
viewed as having a low probability, that weakness
and volatility in financial markets could at some
point have a significantly inhibiting effect on business and consumer confidence and spending. To
date, business sentiment was described as quite
positive in most parts of the country, and although
there were some exceptions—notably in
California—members commented on numerous
indications of improving regional economies.
A number of members observed that they
expected consumer spending to be relatively well
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Federal Reserve Bulletin • July 1994
maintained, buttressed by considerable strength in
expenditures for motor vehicles and other consumer durables. Reports on retail sales from various parts of the country tended to support such
assessments, and many contacts among retailers
were expressing optimism about the outlook for
their sales. At the same time, some members
observed that a number of factors were likely to
limit the potential strength of consumer spending.
They referred in particular to the already low saving rate, relatively high consumer indebtedness,
and recent declines in the value of securities held
by households. More importantly, however, consumer confidence and spending would continue to
depend heavily on the outlook for further growth in
employment and incomes.
Business investment expenditures remained on a
solid uptrend as firms continued to focus on the
need to control costs and improve operating efficiencies in the face of vigorous competitive pressures. Members also cited some examples of
investment spending induced by rising demands
pressing against limitations in production capacity.
While business investment had tended to be concentrated in new, more productive equipment, nonresidential construction also had strengthened and
anecdotal reports from numerous areas tended to
confirm more positive nationwide statistics. The
rising levels of nonresidential construction activity
tended to be concentrated in commercial and industrial facilities and public works projects; the construction of office buildings continued to lag but
this sector appeared to have stabilized or perhaps
improved marginally after a long period of decline.
More generally, currently positive business attitudes augured well for further growth in overall
business investment, but on the negative side it was
noted that further turbulence in financial markets
could erode confidence with adverse implications
for investment spending. Residential construction
was described as quite strong in numerous areas,
although overall housing construction had been
held down thus far this year by severe winter
weather in numerous parts of the country. Shortages of skilled construction workers and building
materials were reported in many areas.
Despite generally rising final demands, business
firms were continuing to maintain lean inventory
positions in their ongoing efforts to hold down
costs. Nonetheless, with production levels in many
industries approaching or reaching full capacity
utilization, prices of some materials and other business purchases coming under increasing pressure,
and delivery lead times tending to lengthen at least
in some industries, efforts to build inventories
could be expected to materialize and in one view
the potential for such a development represented a
key upside risk from current forecasts. In this connection, some members referred to scattered indications of efforts to increase inventories, notably of
steel products. Manufacturers of motor vehicles
also were in the process of rebuilding depleted
inventories, though the currently stimulative impact of such rebuilding on overall production was
likely to be reversed when motor vehicle stocks
reached desired levels in the months ahead.
The foreign trade sector was expected to remain
a negative factor in the economic outlook. However, the members anticipated some improvement
in the economies of major foreign industrial nations
which, together with some moderation in the
growth of domestic final demands, was likely to
slow the decline in real net exports. A few members cited growing indications that last year's
NAFTA legislation would have quite positive
effects on U.S. foreign trade, though those effects
were still largely in the future.
In the discussion of the outlook for prices and
wages, many of the members expressed concern
about the potential for a pickup in inflation if, as
they anticipated, margins of unemployed resources
narrowed further or disappeared. The members
acknowledged that broad measures of prices relating to final purchases and of wages currently did
not suggest any increase in inflation. Indeed, in the
view of at least some members, those measures still
suggested on balance that the inflation trend had
retained a downward tilt thus far. In this connection, some commented that the overall performance
of the broad measures had been somewhat better in
recent months than they had anticipated, especially
given the very rapid expansion of the economy
over the closing months of 1993 and the less than
expected moderation thus far this year. Developments that had been exerting a favorable effect on
prices included above-trend growth in productivity,
relatively low prices in world oil markets, and
strong competition in many markets from both
domestic and foreign firms. Moreover, the strong
rise in credit usage that often had accompanied
Minutes of the Federal Open Market Committee Meeting
intensified inflation pressures in the past had yet to
materialize. To date, the pickup in price increases
had been uneven and had tended to be concentrated
in some regions or industries and in the early stages
of the production process, and a number of members reported that they saw little change in inflation
trends in their areas. Nonetheless, warning signs
had emerged of the prospect of greater inflation,
though perhaps not over the nearer term. These
included increases in a wide range of commodity
prices and anecdotal reports from various parts of
the country suggesting a further rise in the number
of business firms that were facing somewhat higher
prices of materials and other purchases and in turn
were able, often for the first time in recent years, to
raise their selling prices. Price and wage pressures
appeared to be especially pronounced in the construction industry, where capacity constraints had
been encountered in many localities. Members also
referred to the potential for higher prices in the
food and energy sectors; low crop carryovers for
some grains made food prices vulnerable to unfavorable growing conditions, should they materialize; oil prices currently were at relative lows but
were likely to come under some upward pressures
as world economic growth accelerated and if political developments led to disruptions in world supplies. More fundamentally, the relatively robust
economic expansion over the second half of 1993
and the further advance in early 1994 appeared in
the view of many members to have appreciably
diminished the gap between actual and potential
GDP and to have reduced the rate of unemployment to a level that could well be not far from the
natural rate. If this assessment proved to be correct,
further economic expansion at a pace above the
economy's potential would bring more industries
and the economy more generally to capacity production levels before very long and could well
generate growing inflation thereafter.
In the Committee's discussion of policy for the
intermeeting period ahead, all the members supported a further move toward a less accommodative policy stance. An initial move in that direction
had been made in early February, but the members
still viewed monetary policy as too stimulative. In
this regard, members cited the very low inflationadjusted interest rates in short-term debt markets as
an indicator of excessive policy accommodation,
and one member also referred to the rapid growth
617
in reserves and narrow measures of money over an
extended period. While a quite accommodative
policy stance had been entirely appropriate earlier
in the economic recovery, when constraints such as
the widespread rebuilding of balance sheets and
business restructuring activities were strongly
inhibiting the expansionary forces in the economy,
those constraints had greatly diminished and the
expansion clearly had gained considerable momentum. In the circumstances, maintaining an accommodative monetary policy could be expected
before too long to foster growing pressures on
labor and capital resources with a resulting pickup
in inflation. While actual inflation remained subdued and credit growth was still damped, it was
only a matter of time before the current monetary
policy induced a surge in credit extensions that
could fuel an outbreak of inflation.
In these circumstances, the members concluded
that monetary policy needed to move fairly quickly
toward what might be characterized as a more
neutral position. Such a policy posture could not be
defined with precision and it undoubtedly varied to
some extent with changing circumstances. Nonetheless, it provided a useful conceptual approach to
policy in current circumstances and could be identified as a policy stance that sought to foster sustained noninflationary expansion consistent with
the economy's potential. The members generally
concluded that such a policy stance was still some
distance away, and the key issue facing the Committee was not whether but how promptly the necessary policy adjustment should be completed.
Whether further tightening beyond that point would
be needed later could not be determined at this time
but would depend on the potential emergence of
conditions pointing to an acceleration of inflation.
As had been the case at the February meeting,
views differed on how much further current monetary policy should be adjusted at this meeting.
Many members noted that money market interest
rates would have to rise by a relatively sizable
amount from current levels, given underlying economic conditions, but a majority indicated a preference for another small move at this time. Many
were concerned about a possible overreaction in
financial markets that had become quite sensitive
and volatile since early February. A few also placed
some emphasis on their expectations of a considerable slowdown in the rate of economic growth and
618
Federal Reserve Bulletin • July 1994
the possibility that the moderation of the expansion
might prove to be somewhat more pronounced than
was currently projected. In this view, a degree of
caution was advisable to permit an assessment of
ongoing developments.
Members who preferred a more sizable policy
adjustment, or perhaps a small move through open
market operations that was associated with a rise in
the discount rate, believed that the increasing risks
of greater inflation pointed to the need to move
more promptly and decisively away from a policy
stance that had become overly accommodative.
A stronger policy action at this point would serve
to underscore the Committee's commitment to its
price stability objective and would help to counteract what some members interpreted as a significant
increase in inflationary expectations since earlier in
the year. A reduction in such expectations would
over time have beneficial implications for bond
markets and the economy. In the view of some
members, continued market expectations of further
actions to tighten reserve conditions were themselves contributing to market instability. Some
members also commented that any policy choice
incurred the risk of proving to be wrong, but they
viewed the greatest risk at this juncture to be a
policy that allowed inflationary pressures to gather
momentum. A policy decision that in hindsight led
to the implementation of too much restraint could
be corrected more readily and with less damage to
the economy in this view.
In the Committee's discussion of possible intermeeting adjustments to the degree of reserve pressure, a majority of the members indicated a preference for retaining a symmetric directive. While the
probability of an easing action during this period
was deemed to be very low, the members also did
not see as very likely any firming over the intermeeting period beyond that to be implemented
after today's meeting. The Committee had
embarked on a course of moving away from an
accommodative stance toward one that was more
neutral. The timing of the actions to implement this
policy was not independent of the behavior of the
economy, of course, but it was not as dependent on
the nuances of incoming data as policy might be at
other times when the course of policy was less
clear. Symmetry did not rule out an intermeeting
adjustment of policy by the Chairman on behalf of
the Committee, as had been done with some fre-
quency in the past when that seemed warranted by
intermeeting developments. Members who favored
an asymmetric directive observed that such a directive seemed more consistent with the current thrust
of monetary policy toward less accommodation
and the related need to respond promptly to indications of accelerating inflation. These members indicated, however, that they could support a symmetric directive that was associated with the prospect
of intermeeting consultations.
At the conclusion of the Committee's policy
discussion, all but two of the members indicated
that they could accept a directive that called for a
slight increase in the degree of pressure on reserve
positions and that did not include a presumption
about the likely direction of any adjustment to
policy during the intermeeting period. Accordingly,
in the context of the Committee's long-run objectives for price stability and sustainable economic
growth, and giving careful consideration to economic, financial, and monetary developments, the
Committee decided that slightly greater or slightly
lesser reserve restraint might be acceptable during
the intermeeting period. According to a staff analysis, the reserve conditions contemplated at this
meeting would be consistent with moderate growth
in M2 and M3 over the first half of 1994.
At the conclusion of the meeting, the Federal
Reserve Bank of New York was authorized and
directed, until instructed otherwise by the Committee, to execute transactions in the System Account
in accordance with the following domestic policy
directive:
The information reviewed at this meeting suggests
that economic activity has expanded appreciably further
in the early months of 1994. Severe weather and changes
in statistical methodology distorted movements in official labor market data in January and February, but it
appears that employment increased somewhat on balance over the two months and that unemployment fell.
Industrial production also increased substantially over
this period after a sharp rise in the fourth quarter. Consumer spending and housing activity apparently have
been held down to some extent by adverse weather in
January and February; retail sales were little changed on
balance over the two months and housing starts fell
considerably. Trends in contracts and orders point to a
sizable increase in business fixed investment but at a rate
well below that for the fourth quarter of 1993. The
nominal deficit on U.S. trade in goods and services in
January was slightly smaller than the average in the
fourth quarter. Increases in broad indexes of consumer
Minutes of the Federal Open Market Committee Meeting
and producer prices have remained moderate in recent
months despite a surge in energy prices.
Most market interest rates have risen considerably
since the Committee meeting on February 3-4, 1994. In
foreign exchange markets, the trade-weighted value of
the dollar in terms of the other G-10 currencies depreciated over the intermeeting period.
M2 declined somewhat and M3 was down sharply
in February, but data for early March point to some
rebound in both aggregates. Total domestic nonfinancial
debt has expanded at a moderate rate in recent
months.
The Federal Open Market Committee seeks monetary
and financial conditions that will foster price stability
and promote sustainable growth in output. In furtherance
of these objectives, the Committee at its meeting in
February established ranges for growth of M2 and M3 of
1 to 5 percent and 0 to 4 percent respectively, measured
from the fourth quarter of 1993 to the fourth quarter of
1994. The Committee anticipated that developments
contributing to unusual velocity increases could persist
during the year and that money growth within these
ranges would be consistent with its broad policy objectives. The monitoring range for growth of total domestic
nonfinancial debt was set at 4 to 8 percent for the year.
The behavior of the monetary aggregates will continue
to be evaluated in the light of progress toward price level
stability, movements in their velocities, and developments in the economy andfinancialmarkets.
In the implementation of policy for the immediate
future, the Committee seeks to increase slightly the
existing degree of pressure on reserve positions. In the
context of the Committee's long-run objectives for price
stability and sustainable economic growth, and giving
careful consideration to economic, financial, and monetary developments, slightly greater reserve restraint or
slightly lesser reserve restraint might be acceptable in
the intermeeting period. The contemplated reserve conditions are expected to be consistent with moderate
growth in M2 and M3 over the first half of 1994.
Votes for this action: Messrs. Greenspan, McDonough, Forrestal, Kelley, LaWare, Lindsey, Parry,
and Ms. Phillips. Votes against this action: Messrs.
Broaddus and Jordan.
Messrs. Broaddus and Jordan dissented because
they preferred a stronger move toward a more
neutral policy stance. In their view, the recent
sharp increases in longer-term interest rates indicated clearly that inflationary expectations were
rising and that the principal policy risk had become
one of remaining accommodative for too long a
period. In this environment, they believed that a
more aggressive move would underscore the Committee's commitment to fostering sustainable
longer-term growth and reduce the risk that a
619
highly restrictive policy might be required at a later
date to contain inflation.
The Committee then turned to a discussion of the
desirability of making an immediate announcement of today's policy decision. All the members
favored prompt disclosure in principle, but some
expressed reservations about announcing today's
decision immediately after the meeting. These
members preferred to consider a decision on announcements of policy actions in the context of a
broad range of disclosure issues, some of which
had yet to be fully explored. Some stressed that
they remained concerned about the inhibiting
effects of some types of disclosures on the Committee's deliberations, and one member emphasized
that the Committee also needed to consider the
implications of immediate announcements of
changes in open market policy for the role of the
discount rate. Several members commented that
announcing a decision reached at this meeting,
because it would come after a similar announcement following the most recent meeting in early
February, would in effect set a precedent that would
tend to limit the Committee's future options. A
majority of the members concluded, however, that
while the Committee was not making a formal,
binding decision on this issue at this meeting, the
Chairman would be authorized to release a short
press statement regarding today's policy decision.
A useful purpose would be served in reducing or
eliminating potential misinterpretation of the Committee's policy decision and the related risk of
overreactions in financial markets at a time of
considerable uncertainty and volatility in those
markets. The news of the Committee's action
would be conveyed unambiguously to the entire
public at once and not filtered through the financial
markets' interpretation of open market operations.
Moreover, the Committee would retain the option
of specifying the exact contents and timing of
future policy announcements, including intermeeting policy actions. Most of the members concluded
that the advantages to the public of prompt release
today outweighed the potential disadvantages.
It was agreed that the next meeting of the Committee would be held on Tuesday, May 17, 1994.
This meeting adjourned at 2:05 p.m.
At a telephone conference held on March 24,
1994, the Committee approved a temporary
increase, from $700 million to $3.0 billion, in the
620
Federal Reserve Bulletin • July 1994
Federal Reserve System's reciprocal currency
("swap") arrangement with the Bank of Mexico.
Concurrently, the U.S. Treasury announced a
$3 billion swap arrangement between the U.S.
Exchange Stabilization Fund and the Bank of Mexico and the Mexican Ministry of Finance. The
System's action was effective immediately and,
subject to certain conditions, it authorized the Bank
of Mexico to draw on the enlarged arrangement
until April 29, 1994, with full repayment of any
drawings to be made by July 29, 1994.
A permanent increase in the System's swap
arrangement with the Bank of Mexico had been
discussed at the Committee's recent meeting on
March 22, and it had been contemplated at that
meeting that the Committee would vote on such an
increase during April in the context of the establishment of a consultative mechanism involving the
finance ministries and central banks of Canada,
Mexico, and the United States. However, the assassination of a major candidate for the presidency of
Mexico on the evening of March 23 had prompted
the closing of Mexican financial markets on
March 24 and had given rise to concerns regarding
possible financial market disorder in reaction to
unfolding political developments when those markets reopened. Against this background, the Committee decided to join the U.S. Treasury in an
action that would help confirm continued U.S. support for Mexico's economic policies at a potentially critical time for Mexican financial markets.
Votes for this action: Messrs. Greenspan, McDonough, Forrestal, Jordan, Kelley, LaWare, Lindsey,
Parry, and Ms. Phillips. Vote against this action:
Mr. Broaddus.
Effective April 26,1994, the Committee by notation vote approved a recommendation by Chairman
Greenspan to establish an enlarged swap arrangement of $3 billion on a permanent basis. As is the
case for all swap arrangements, this arrangement is
subject to periodic annual review after an initial
maturity date of December 15, 1995. Simultaneously, the maturity date of the System's swap
facility with the Bank of Canada was extended by
one year to December 15, 1995.
Votes for this action: Messrs. Greenspan, McDonough, Forrestal, Jordan, Kelley, LaWare, Lindsey,
Parry, and Ms. Phillips. Vote against this action:
Mr. Broaddus.
The enlarged foreign exchange swap arrangement with the Bank of Mexico constituted part of a
new trilateral foreign exchange swap facility established in connection with the newly formed consultative group called the North American Financial
Group and comprised of the Finance Ministers and
Central Bank Governors of Canada, Mexico, and
the United States. The purpose of this standing
facility is to expand the pool of potential resources
available to the monetary authorities of each country to maintain orderly exchange markets. Its establishment at this time was deemed desirable in light
of the outlook for expanding and increasingly interdependent economic relationships among the three
economies after the successful conclusion of the
North American Free Trade Agreement.
The components of the trilateral facility include
(1) swap agreements between the United States and
Mexico for up to $6.0 billion, with the Treasury
and the Federal Reserve each participating up to
$3.0 billion; (2) an expansion of the swap agreement between the Bank of Canada and the Bank of
Mexico to CAN$1.0 billion; and (3) a reaffirmation
of the existing swap agreement between the Bank
of Canada and the Federal Reserve in the amount
of $2.0 billion, with the above-noted maturity
extension.
Mr. Broaddus dissented because he was concerned about the appropriateness of the System's
involvement in this type of foreign currency operation. In his view, the System's swap network raised
a number of broad issues that he felt the Committee
needed to review at some point. Accordingly, he
would not favor increasing any existing swap
arrangement until such a review had taken place.
At a telephone conference on April 18, Committee members reviewed economic and financial
developments since the March meeting and discussed the desirability of taking further action to
move policy away from its still accommodative
stance. Broad indicators of economic activity, supported by widespread anecdotal evidence, pointed
to considerable momentum in economic activity
and further reductions in already limited margins of
unutilized labor and other production resources. In
financial markets, sharp declines in bond and stock
prices suggested that speculative excesses had been
Minutes of the Federal Open Market Committee Meeting
reduced, and ongoing portfolio realignments probably were shifting long-term financial assets to
firmer hands. As a result, financial markets now
appeared to be less likely to overreact to adverse
developments or to policy actions. In the circumstances, the members supported the Chairman's
decision to reduce the degree of accommodation in
reserve markets slightly further at this time rather
621
than to await the next regularly scheduled meeting
in mid-May. Some members expressed the view
that an increase in the discount rate would provide
a desirable supplement to this policy action.
Donald L. Kohn
Secretary
623
Legal Developments
FINAL RULE—AMENDMENT
TO REGULATION
H
The Board of Governors is amending 12 C.F.R. Part
208, its Regulation H (Membership of State Banking
Institutions in the Federal Reserve System), to allow a
state member bank that meets certain conditions to
invest in its premises in an amount up to 50 percent of
its Tier 1 capital without obtaining specific approval.
The Board believes that a general approval for a state
member bank to invest an amount not exceeding
50 percent of its Tier 1 capital is appropriate for a bank
that meets those conditions. This action will significantly reduce the number of applications to invest in
bank premises that are filed with the Board and will
thereby reduce regulatory burden.
Effective June 30, 1994, 12 C.F.R. Part 208 is
amended as follows:
Part 208—Membership of State Banking
Institutions in the Federal Reserve System
(Regulation H)
1. The authority citation for part 208 continues to read
as follows:
(1) Does not exceed the capital stock account of the
bank; or
(2) Does not exceed 50 percent of the bank's Tier 1
capital and the bank:
(i) Is well capitalized as defined in section
208.33(b)(1) of this part;
(ii) Received a composite CAMEL rating of "1"
or "2" as of its most recent examination by the
relevant Federal Reserve Bank or state regulatory
authority; and
(iii) Is not subject to any written agreement, cease
and desist order, capital directive, or prompt
corrective action directive issued by the Board or
a Federal Reserve Bank.
ORDERS ISSUED UNDER BANK
COMPANY ACT
HOLDING
Orders Issued Under Section 3 of the Bank
Holding Company Act
Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a,
371d, 461, 481-486, 601, 611, 1814, 18230), 1828(o),
1831o, 1831p-l, 3105, 3310, 3331-3351, and 3906-3909;
15 U.S.C. 1(b), 1(g), l(i), 78b, 78o-4(c)(5), 78q, 78q-l,
and 78w; 31 U.S.C. 5318.
BankAmerica Corporation
San Francisco, California
2. Section 208.22 is added to subpart A to read as
follows:
BankAmerica Corporation, San Francisco, California
("BankAmerica"), a bank holding company within the
meaning of the Bank Holding Company Act ("BHC
Act"), has applied under section 3 of the BHC Act
(12 U.S.C. § 1842) to acquire Liberty Bank, Honolulu,
Hawaii ("Liberty"), through a merger of Liberty into
Bank of America, FSB, Portland, Oregon ("Bank of
America FSB"), a wholly owned subsidiary of BankAmerica, with Bank of America FSB surviving the
merger.
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (58 Federal Register 67,411 (1993)). The
time for filing comments has expired, and the Board
has considered all comments received in light of the
factors set forth in section 3(c) of the BHC Act.
Section 208.22—Investment in bank premises.
(a) Under Section 24A of the Federal Reserve Act,
state member bank investments in bank premises or in
the stock, bonds, debentures, or other such obligations of any corporation holding the premises of the
bank, and loans on the security of the stock of such
corporation, do not require the approval of the Board
if the aggregate of all such investments and loans,
together with the indebtedness incurred by any such
corporation that is an affiliate of the bank (as defined
in section 2 of the Banking Act of 1933, as amended,
12 U.S.C. 221a):
Order Approving Acquisition of a Bank
624
Federal Reserve Bulletin • July 1994
BankAmerica, with total consolidated assets of approximately $197.2 billion,1 is the second largest commercial banking organization in the United States and
controls banking or savings association subsidiaries in
Alaska, Arizona, California, Idaho, Nevada, New
Mexico, New York, Oregon, Texas, and Washington.
BankAmerica is the third largest commercial banking
organization in Hawaii, controlling deposits of $1.6
billion, representing approximately 11.4 percent of
total deposits in commercial banks in the state.2 Liberty is the seventh largest commercial banking organization in Hawaii, controlling deposits of $265.8 million, representing 1.9 percent of total deposits in
commercial banks in the state. Upon consummation of
this proposal, BankAmerica would remain the third
largest commercial banking organization in Hawaii,
controlling deposits of $1.8 billion, representing approximately 13.3 percent of total deposits in commercial banks in the state.
operating in Hawaii.4 Hawaiian law provides that a
federal thrift whose operations are conducted principally in Hawaii may, with the approval of the Hawaii
Commissioner of financial institutions (the "Commissioner"), merge with a Hawaii financial institution if
the merger is permitted by federal law.5 Liberty is a
Hawaii financial institution,6 and Bank of America
FSB's operations are principally conducted in Hawaii
for purposes of this statute.7 Furthermore, the merger
is permitted under federal law because the Home
Owners' Loan Act permits Bank of America FSB, as a
federal savings bank, to merge with Liberty, a depository institution insured by the Federal Deposit Insurance Corporation (the "FDIC"), upon obtaining prior
approval of the OTS.8
The Commissioner has indicated that this proposal
is authorized by section 412:3-609(c) of Hawaii's
banking law.9 In light of all the facts of record, the
Board has determined that its approval of this proposal
is not prohibited by the Douglas Amendment.10 Ap-
Douglas Amendment Analysis
Section 3(d) of the BHC Act ("Douglas Amendment")
prohibits the Board from approving an application by a
bank holding company to acquire control of a bank
located outside of the state in which the operations of
such bank holding company's banking subsidiaries
were principally conducted on July 1, 1966, or the date
on which such company became a bank holding company, whichever is later, "unless the acquisition
of . . . a State bank by an out-of-State bank holding
company is specifically authorized by the statute laws
of the State in which such bank is located, by language
to that effect and not merely by implication."3 For
purposes of the Douglas Amendment, on the relevant
date, the banking operations of BankAmerica were
principally conducted in California. Thus, in reviewing
whether BankAmerica may acquire a bank in a state
other than California, the Board must consider
whether the laws of the state in which the bank is
located specifically authorize the acquisition.
BankAmerica would not operate Liberty as a bank
upon consummation of this transaction. Instead,
BankAmerica would acquire Liberty by merging Liberty into Bank of America FSB, its existing thrift
1. Asset data are as of March 31, 1994.
2. All deposit data are as of June 30, 1993.
3. 12 U.S.C. § 1842(d). Under the Douglas Amendment, the operations of a bank holding company are considered principally conducted in the state in which the total deposits of its banking subsidiaries were largest on the date in question. The operations of
BankAmerica were principally conducted in California on April 1,
1969, the date on which it became a bank holding company.
4. Bank of America FSB is a federal savings association organized
under the provisions of the Home Owners' Loan Act (12 U.S.C.
§ 1461 et seq.), and it operates 31 full-service branch offices in Hawaii.
BankAmerica acquired Bank of America FSB (successor to The
Benjamin Franklin Federal Savings and Loan Association) in 1990 in
an assisted emergency transaction pursuant to section 13(k) of the
Federal Deposit Insurance Act (the "FDI Act"). 12 U.S.C. § 1823(k).
In approving that transaction, the Office of Thrift Supervision
("OTS") granted Bank of America FSB the authority to branch into
three states, one of which was Hawaii, for as long as the bank
maintained total deposits of at least $1 billion. See OTS Order No.
90-1659 (Sept. 7, 1990) (the "OTS Order"). Bank of America FSB
exercised that authority in 1992 by acquiring the branch offices of
HonFed Bank, a federal savings bank in Honolulu, Hawaii ("HonFed"). The Board concluded that the acquisition of HonFed by Bank
of America FSB was permitted under the branching authorization for
federal savings associations and was consistent with the regulatory
framework of savings association acquisitions under the BHC Act.
See BankAmerica
Corporation,
78 Federal Reserve Bulletin 707
(1992). As noted above, Bank of America FSB currently meets the
total deposit requirements in the OTS Order.
5. Haw. Rev. Stat. § 412:3-609(c).
6. Liberty is a Hawaii financial institution since it is chartered under
Hawaiian law and authorized to accept deposits, make loans, or engage
in the business of a trust company. Haw. Rev. Stat. § 412:1-109.
7. The term "operations are principally conducted" is defined under
Hawaiian law to mean the state where total deposits are largest. Haw.
Rev. Stat. § 412:1-109. The largest amount of deposits of Bank of
America FSB is located in Hawaii, and the Commissioner has
determined that this "principally conducted" provision of Haw. Rev.
Stat. § 412:3-609(c) has been satisfied.
8. 12 U.S.C. § 1467a(s). In addition, Bank of America FSB may
establish additional branches in Hawaii with the prior approval of the
OTS. See the OTS Order. See also 12 C.F.R. 556.5.
9. Both sections 412:3-609(c) and (d) of Hawaii's banking law
permit a merger of a Hawaii financial institution with a federal savings
bank with the resulting institution to be operated as a thrift. Furthermore, section 412:3—609(d) permits financial institutions chartered or
licensed under the laws of another state, or whose operations are
conducted principally in any state other than Hawaii, to merge with a
Hawaii financial institution if the resulting institution conducts its
operations principally in Hawaii.
10. If the institution resulting from the merger were to be a bank
rather than a thrift, it does not appear that this proposal would be
permitted under the Douglas Amendment.
Legal Developments
proval of this proposal is specifically conditioned upon
BankAmerica and Bank of America FSB receiving all
required state regulatory approvals and the approval
of the OTS under section 18(c) of the FDI Act
(12 U.S.C. § 1828(c)).
Competitive
Considerations
The BHC Act provides that the Board may not approve a proposal submitted under section 3 of the
BHC Act if the proposal would result in a monopoly or
the effect of the proposal would be substantially to
lessen competition in any relevant market. The Board
has received comments opposing the proposal from
organizations in Hawaii (the "Hawaii Protestants")
maintaining that approval of the transaction would
have a substantially adverse effect on the competitive
environment for mortgage lending services in Hawaii,11 and that post-merger increases in the Herfindahl-Hirschman Index ("HHI") and the lack of mitigating factors indicate that the proposed merger would
be anticompetitive.
BankAmerica and Liberty compete directly in the
Honolulu banking market.12 BankAmerica is the third
largest depository institution13 in this market, with
deposits of $1.5 billion, representing 11.6 percent of
total deposits in depository institutions in the market
11. The Board has long held that the product market for evaluating
bank mergers and acquisitions is the cluster of products and services
offered by banking organizations, and the Supreme Court has emphasized that it is this cluster of products and services that, as a matter of
trade reality, makes banking a distinct line of commerce. See First
Hawaiian, Inc., 79 Federal Reserve Bulletin 966 (1993) ("First Hawaiian Order") and authorities cited therein; see also United States v.
Philadelphia National Bank, 374 U.S. 321, 357 (1963). The Board also
has found that the ability of thrifts and banks to offer their products
and services in combination distinguishes them from other institutions. First Hawaiian Order, p. 967. After considering all the facts of
record in light of relevant Board and judicial precedents, the Board
believes that the appropriate product market in this case is the cluster
of banking products and services.
Even assuming that mortgage lending constitutes a separate product
market as maintained by the Hawaii Protestants, the record does not
demonstrate that this proposal would result in significantly adverse
competitive effects in that product market. The Board notes that a
number of other institutions, including finance companies, offer mortgage products in Hawaiian banking markets. See First Hawaiian
Order, p. 967.
12. The Honolulu banking market is approximated by Honolulu
County, Hawaii, which is coextensive with the Island of Oahu.
13. 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, major
competitors of commercial banks. See WM Bancorp, 76 Federal
Reserve Bulletin 788 (1990); National City Corporation, 70 Federal
Reserve Bulletin 743 (1984). Thus, the Board has regularly included
thrift deposits in the calculation of market share on a 50 percent
weighted basis. See, e.g., First Hawaiian, Inc., 77 Federal Reserve
Bulletin 52 (1991). Because Bank of America FSB is controlled by a
commercial banking organization, its deposits are included at 100
percent in the calculation of market share.
625
("market deposits"). Liberty is the seventh largest
depository institution in the Honolulu banking market,
with deposits of $265.8 million, representing 2.1 percent of market deposits. Upon consummation of this
proposal, BankAmerica would remain the third largest
depository institution in the Honolulu banking market,
controlling deposits of $1.7 billion, representing
13.7 percent of market deposits. BankAmerica's market share would increase from 11.6 percent to 13.7
percent, and the HHI for the market would increase by
49 points to 2293.14 There are a number of depository
institution competitors in the Honolulu banking market, and ten depository institutions will remain in this
market following consummation of this proposal.
The Board also has considered the views of the
Justice Department on the likely competitive effects of
this proposal. The Justice Department has advised the
Board that BankAmerica's acquisition of Liberty is
not likely to have a significantly adverse effect on
competition.
Based on all the facts of record, including the
comments submitted by the Hawaii Protestants and
BankAmerica's response to those comments, the
Board's previous consideration of the Honolulu banking market, and the relatively small increase in market
share and market concentration in this market as
measured by the HHI, the Board concludes that
consummation of the proposal would not have a
significantly adverse effect on competition in the Honolulu banking market.
Convenience and Needs Considerations
In acting on an application to acquire a depository
institution as proposed in these applications, 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
14. 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 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 institutions.
626
Federal Reserve Bulletin • July 1994
the safe and sound operation of such institutions. To
accomplish this end, the CRA requires the appropriate
federal supervisory authority to "assess the institution's record of meeting the credit needs of its entire
community, including low- and moderate-income
neighborhoods, consistent with the safe and sound
operation of such institution," and to take that record
into account in its evaluation of this application.15
The Board has received comments from the Hawaii
Protestants and an individual in California ("California
Protestant") (the California Protestant and the Hawaii
Protestants to be referred to collectively as "Protestants") critical of the efforts of BankAmerica, its
subsidiary banks, and Liberty to meet the credit and
banking needs of their communities. The Hawaii Protestants allege that Bank of America FSB has not
generally met the convenience and needs of minority
and low- and moderate-income individuals, and in
particular, illegally discriminates in its efforts to meet
the credit needs of native Hawaiians and Filipinos
residing in its banking communities.16 The California
Protestant alleges generally that Bank of America
National Trust and Savings Association ("Bank of
America - California"), BankAmerica's subsidiary
bank operating in California, has not met the banking
and credit needs of minorities, and in particular,
Hispanics, and low- and moderate-income individuals
in five counties in California.
In its consideration of the convenience and needs
factor, the Board has carefully reviewed the entire
record of CRA performance of BankAmerica, its subsidiary banks, and Liberty; all comments received on
this application, and BankAmerica's response to those
comments; and all the 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").17
The Board also has evaluated the CRA performance
record of Bank of America FSB, taking into consideration the fact that BankAmerica did not commence its
activities in Hawaii until August 1992, and that the
bank's overall volume of lending decreased in 1993
due, in part, to BankAmerica's reorganization of HonFed's operations and loan programs.
15. 12 U.S.C. § 2903.
16. The Hawaii Protestants maintain that data required to be filed by
Bank of America FSB under the Home Mortgage Disclosure Act
(12 U.S.C. § 2801 et seq.) ("HMDA") indicate that the bank's lending
policies result in discriminatory treatment of individuals of Hawaiian
and Filipino ancestry, and that the outreach efforts of both Bank of
America FSB and Liberty are targeted primarily to nonminorities.
17. 54 Federal Register 13,742 (1989).
Record of CRA Performance
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 these reports will be given great
weight in the applications process.18 In this case, the
Board notes that all of BankAmerica's subsidiary
banks evaluated for CRA performance received "outstanding" or "satisfactory" ratings from their primary
regulators during their most recent examinations.
Bank of America FSB received a "satisfactory" rating
from its primary federal regulator, the OTS, at its most
recent examination for CRA performance as of September 7, 1993, and Bank of America — California
received an "outstanding" rating from its primary
federal regulator, the Office of the Comptroller of the
Currency (the "OCC"), at its most recent examination
for CRA performance as of January 28, 1994. Liberty
received a "satisfactory" rating from its primary federal regulator, the FDIC, at its most recent examination for CRA performance as of May 27, 1992.
B. CRA Record of Performance of Bank of
America FSB
HMDA Data. The Hawaii Protestants allege that 1992
HMDA data filed by Bank of America FSB indicate
that the bank's lending policies resulted in discriminatory treatment of individuals of Hawaiian and Filipino
ancestry.19 The Board has carefully reviewed these
comments and the 1992 data in light of the preliminary
1993 HMDA data for the bank which represents the first
full year of data accumulated under BankAmerica's
ownership of the former HonFed. These data indicate
that the volume of loan applications received from
individuals within the Asian/Pacific Islander group20
was proportional to that group's representation in the
community, and that denial rates for that group were
lower than denial rates for white applicants.21
18. Id. at 13,745.
19. The Hawaii Protestants also allege that Bank of America FSB
has "redlined" the islands of Molokai and Lanai, which have large
populations of Filipinos and native Hawaiians, by excluding them
from the bank's delineated lending area. The OTS reviewed these
exclusions in its most recent examination and determined that they
were reasonable, noting that the primary owner of land on Lanai is
converting the land to an affluent resort area, and that Molokai has a
limited population to sustain a market presence.
20. Under the HMDA, separate reporting of loans made to native
Hawaiians or Filipinos is not required, because these ethnic groups are
included in the category of Asian/Pacific Islander for reporting purposes.
21. In 1993, the bank received 62 percent of HMDA-related loan
applications from Asian/Pacific Islanders (60 percent of the population), with 65 percent of the banks' HMDA-related loans originated to
Legal Developments
The Board also notes, however, that the 1993 preliminary data and the OTS's most recent CRA performance examination indicate that Bank of America
FSB had a low level of lending to African-Americans
and Hispanic applicants, and to individuals in low- and
moderate-income areas.22 The Board is concerned
when an institution's record indicates disparities in
lending to minority or low- and moderate-income
applicants, and believes that all banks are obligated to
ensure that their lending practices are based on criteria
that assure not only safe and sound lending, but also
equal access to credit by creditworthy applicants
regardless of race. The Board recognizes, however,
that HMDA data alone provide an incomplete measure
of an institution's lending in its community. The Board
also recognizes that HMDA data have limitations that
make the data an inadequate basis, absent other information, for conclusively determining that an institution has engaged in illegal discrimination in making
lending decisions.
The Board notes that the most recent examination of
Bank of America FSB found no evidence of illegal
discrimination or policies that discourage applicants
from pursuing credit applications. Examiners did find
numerous technical violations to the recordkeeping
and notice requirements of fair lending regulations,
many of which, according to the OTS, resulted from
staffing and control issues that were in the process of
being addressed through a new compliance program at
the bank.23 This program includes staff training and
periodic reviews of fair lending issues. In addition,
BankAmerica intends to perform an on-site review of
the bank's CRA program within 60 days of the merger,
and to monitor responses by the bank to any concerns
raised in OTS's recent examination.24
Bank of America FSB also has initiated steps to
improve its lending record to minority and low- and
moderate-income borrowers. For example, the bank
has implemented a program whereby all residential
mortgage applications that are recommended for denial receive a second review to insure that the recom-
this group. The denial rate for this group was 17 percent, and the
denial rate for white applicants was 19 percent.
22. As previously noted, the bank's overall loan volume decreased
significantly in 1993 while BankAmerica was revising HonFed's operations and loan programs. OTS examiners found that this decrease cut
across all census tracts and involved all types of loans, and concluded
that this was an acceptable short-term strategy to strengthen the bank's
long-term ability to assist in addressing unmet credit needs.
23. Examiners did not find that these violations had a disproportionate effect on members of protected groups.
24. In this regard, the OTS examiners have questioned whether a
credit program offered by the bank's California consumer lending
division could have a disparate impact on certain groups. Bank management represented that issues relating to this program, which existed
prior to the bank's acquisition of the program, would be addressed.
627
mendation is appropriate.25 Furthermore, the bank has
established employee incentive programs to encourage
the origination of loans in low- and moderate-income
areas and to low- and moderate-income individuals.
Loan Programs. Bank of America FSB intends to
expand its presence in all markets in Hawaii, and has
introduced two new loan products to assist in meeting
the credit needs of the bank's community, including lowand moderate-income individuals. In May 1993, the bank
introduced its "Neighborhood Advantage" program,
which offers mortgage loans with low down payments
and flexible underwriting criteria.26 The bank indicates
that as of December 31, 1993, it had approved 39 loans
totalling approximately $5.4 million under this program.
The bank also introduced its "BASIC" consumer
loan program in the last half of 1993. Loans under this
program offer favorable financing terms and flexible
underwriting criteria.27 The bank indicates that as of
December 31, 1993, it had approved 69 loans totalling
$542,255 under this program.
The OTS's recent CRA performance examination of
Bank of America FSB found that the bank had established a productive relationship with the Office of
Hawaiian Affairs in an effort to become involved in its
programs for native Hawaiians. During 1992 and 1993,
the bank originated or booked as agent 44 mortgages totalling approximately $2.9 million under the
Department of Hawaiian Home Lands "Panaewa"
project for native Hawaiians. The bank also has made
14 low-interest construction loans totalling approximately $1.3 million to low- and moderate-income families assisting in the construction of their own homes. In
addition, the bank has a 10 percent investment in a $55
million loan fund established by the Hawaii Community
Reinvestment Corporation, a non-profit consortium
providing financing for affordable housing projects.28
25. All consumer loan applications recommended for denial for
reasons other than credit history or debt-to-income ratios also receive
a second review.
26. Loans can be made for a maximum loan-to-value ratio of 95
percent, and underwriting criteria allow for higher than normal
debt-to-income ratios. In acknowledgement of the high cost of housing
in Hawaii, the bank offers this program to individuals with up to
150 percent of median income, and individuals acquiring properties
located in low- and moderate-income census tracts. BankAmerica
represents that the utilization of 150 percent of median income is
consistent with the affordability programs of the Federal National
Mortgage Association.
27. The savings bank has been offering a discounted interest rate
under this program, and personal loans for as low as $1,000 are
available. Unsecured loans under the program are available to individuals with incomes equal to 80 percent or less of median income, and
secured loans are available to individuals residing in low- and moderateincome census tracts or with incomes equal to 150 percent or less of
median income.
28. The bank also has committed to take part in the development of
the Hawaii Housing Development Corporation, a non-profit organization that will focus on producing rental housing for low-income
individuals.
628
Federal Reserve Bulletin • July 1994
Bank of America FSB recently announced a comprehensive program to enhance service to the native
Hawaiian and Filipino communities. The program
includes a four-year commitment to provide
$150 million in residential mortgage loans for native
Hawaiians seeking housing on Department of Hawaiian Home Lands. The bank also has appointed two
community lending specialists to develop and implement outreach programs for the Hawaiian and Filipino
communities, and has committed $100,000 over three
years for use by nonprofit organizations that provide
affordable housing for Filipinos. In a separate program, the bank, through its community development
division, has committed $30 million over the next two
years to Kauai County's efforts to build affordable
housing in Kauai in the aftermath of Hurricane Iniki.29
In September 1993, Bank of America FSB launched
its new business banking initiative, which focuses on
lending to small businesses. In connection with this
initiative, the bank established its Advantage Business
Credit program which provides loans to small businesses in the amount of $2,500 to $100,000. In addition, the bank has committed $650,000 to a new
Hawaii Small Business Loan Program, which will
provide loans guaranteed by the Small Business Administration (the "SBA").
In 1992, BankAmerica established corporate-wide
CRA-related goals, committing to provide $12 billion
over a ten-year period for housing loans in low- and
moderate-income census tracts and for lower-income
and minority borrowers, funding for the development
and long-term financing of low-income housing, consumer loans for lower-income households, and
government-guaranteed and conventional small business loans.30 Bank of America FSB booked loans
totalling approximately $11 million as of September
30, 1993, representing 92 percent of its $12 million 1993
goal under this corporate-wide initiative. The bank
plans to double that goal in 1994.
Other Aspects of CRA Performance. The OTS
found that Bank of America FSB's efforts to ascertain
community credit needs generally have been successful considering the limited time that the bank has been
in the Hawaiian market. The bank's CRA officer
communicates with a variety of community-based and
non-profit organizations, business organizations, and
state governmental entities. Bank of America FSB has
a formal call program in place, and its employees serve
on the boards of organizations involved in the development of affordable housing in Hawaii. The bank has
29. Loans under this program will be offered at below market rates
to projects serving low- and very-low-income families.
30. BankAmerica has allocated $8 billion of this commitment to
California, and $4 billion to all other states.
established an advisory board to inform its board of
directors about local credit needs. This advisory board
is composed of residents who are involved in local
business, government and/or community activities.
Bank of America FSB has sponsored credit-education fairs with the International Credit Association,
and "Better Home Shows" that include information
on new affordable housing projects sponsored by the
State of Hawaii. The bank also co-sponsored two
events in 1993 relating to community-based and small
business lending. These events were targeted to the
native Hawaiian community.31
C. Record of Performance of Bank of
America - California
The Board has carefully reviewed the 1992 and preliminary 1993 data filed by Bank of America - California under HMDA in light of the California Protestant's
allegations that the bank does not lend to minorities,
particularly Hispanics, and low- and moderate-income
individuals in five counties in California.32 These data
show that Bank of America - California does make
loans to minorities and to residents of low- and moderate-income areas of San Joaquin, Stanislaus and
Merced Counties.33 In addition, the bank's originations to African-Americans and Hispanics and lowand moderate-income census tracts, as a percentage of
total originations, met or exceeded the performance of
its peers in 1992. Furthermore, Bank of America
31. The Hawaii Protestants have alleged that the outreach efforts of
Liberty are targeted primarily to nonminorities. The FDIC's most
recent CRA performance evaluation of Liberty found that diverse
ethnic groups were targeted by advertisements in local media in
various languages, including Chinese, Japanese, Korean, Tagalog and
Vietnamese. The FDIC also found that the bank demonstrated a
strong record of helping to meet the credit needs of its entire
community, and that mapping of loan activity indicated a reasonable
penetration of all segments of the bank's community, including lowand moderate-income neighborhoods.
32. The California Protestant specifically alleges that Bank of
America - California
(1) has "redlined" Hispanic individuals and businesses in Stanislaus, Merced, Madera, Tuolumne and San Joaquin counties (the
"Target Counties");
(2) has closed branches in downtown areas of the Target Counties
that were accessible to minorities, particularly Hispanics;
(3) has not provided sufficient marketing to the Hispanic community; and
(4) has not provided sufficient assistance or other support to individuals and organizations working with the Hispanic community.
33. For example, the bank made 35 mortgage loans to AfricanAmericans and 227 mortgage loans to Hispanics in these three
counties in 1992, and made 45 and 236 mortgage loans to AfricanAmericans and Hispanics, respectively in these counties in 1993.
Furthermore, in 1992 and 1993, the bank made 275 and 288 HMDArelated loans to low- and moderate-income census tracts in San
Joaquin, Stanislaus and Merced Counties.
Madera and Tuolumne counties are located outside metropolitan
statistical areas and, therefore, loans made to individuals in these
counties are not separately reported under HMDA.
Legal Developments
Community Development Bank generated a total of
376 units of low- and very-low-income housing for
residents of San Joaquin, Merced and Stanislaus counties during the three year period ending in 1993.
As noted above, Bank of America - California received an "outstanding" rating from the OCC at its
1994 examination for CRA performance, which included a fair lending examination of residential loan
files. The OCC found no evidence of illegal discrimination or other practices designed to discourage credit.34
Bank of America - California also offers a variety of
credit products and services designed to meet the
credit needs of low- and moderate-income and minority neighborhoods within its delineated communities,
including the "Neighborhood Advantage" and
"BASIC" loan programs. The bank also offers a
low-cost checking account to lower-income customers. The bank participates in a number of government
sponsored credit programs by offering Farmers Home
Administration loans, SB A loans, and federally insured student loans.35 Furthermore, in November
1993, the bank introduced a loan program offering
flexible underwriting criteria and a simplified application process for minority and women business owners.
In its most recent CRA examination of Bank of
America - California, the OCC found that the bank had
a program of ongoing, productive communications
with a wide range of community-based and social
service organizations and small business associations.
In addition, the OCC indicated that the bank's marketing programs are designed to reach wide segments
of the delineated community and include multilingual
advertisements appearing in general circulation newspapers and magazines, as well as community and
ethnic newspapers. In 1991, the bank introduced a
Spanish language promotional kit including posters,
print advertisements, brochures and video for use in
34. The California Protestant alleged that the bank's appraisal
practices discriminate against minorities and low income individuals.
Bank of America - California has in place a second-review process
when appraised values for homes in low- and moderate-income census
tracts are less than the amount of financing requested, and in 1993, the
bank hired an "appraisal ombudsperson" for Northern California to
independently investigate complaints about appraisals.
The Board has also considered a housing discrimination complaint
filed with the Department of Housing and Urban Development
( " H U D " ) by an individual alleging discrimination on the basis of his
Hispanic origin. The complainant contends that he received a low
appraisal on his house when he applied for a refinancing through Bank
of America - California. The Board has carefully reviewed this
complaint in light of all facts of record, including relevant examination
information. The Board notes that HUD's investigation of this complaint is in its early stages, and will provide the individual with an
opportunity to fully assert his claims and obtain a remedy if his
allegations are proved and a remedy is appropriate. Based on all the
facts of record, the Board believes that this matter does not warrant
denial of this application.
35. During 1993, the bank made 334 small business loans totalling
$27.5 million in the Target Counties.
629
branches. The bank also has targeted advertising campaigns to the African-American community.
The bank supports the Stanislaus County Hispanic
Chamber of Commerce's Banking Community Outreach project, and Desarollo Latino Americano (formerly the Hispanic Task Force of Stanislaus County),
a community-based non-profit organization created to
provide low-income housing in Stanislaus County. The
bank also has contributed to Spanish-language radio
broadcasts that educate individuals in the Target
Counties about banking services.36
Conclusion Regarding Convenience and Needs Factors
In considering the overall CRA performance records
of BankAmerica, its subsidiary banks, and Liberty,
the Board has carefully considered the entire record,
including the public comments in this case. 37 Based on
a review of the entire record of performance, including
Protestant's comments, BankAmerica's response to
those comments, and relevant reports of examination,
the Board concludes that convenience and needs considerations, including the CRA performance records of
BankAmerica, its subsidiary banks, and Liberty are
consistent with approval of this application.38 As dis-
36. The California Protestant alleges that Bank of America California recently has closed branches in downtown areas of the
Target Counties that are accessible to minorities, particularly Hispanics. In the 1994 CRA examination of Bank of America - California, the
OCC found that the bank's branch closure process included actions
taken to minimize the impact on the local community. Another
California-based organization has raised concerns that BankAmerica
is not in compliance with commitments made to the Board regarding
the transfer by Bank of America - California of a branch to a
community-based, non-profit organization in lieu of closure. Bank of
America - California responds that no decision on the disposition of
the branch in question has been made and that it fully intends to
comply with commitments regarding the disposition of branches,
37. The Hawaii Protestants have alleged that the terms of this
proposal were not negotiated on an arm's length basis and the legal
rights and interests of account holders and borrowers were not given
proper recognition and protection. BankAmerica disputes this assertion and maintains that the proposed merger was negotiated at all
times on an arm's length basis, and that it has fully recognized and
addressed safety and soundness issues relative to the customers of
Bank of America FSB and Liberty.
The Hawaii Protestants also have alleged that shareholders of Liberty were not given full disclosure of all the ramifications of the
proposal. The Board notes that BankAmerica filed a Registration
Statement with the Securities and Exchange Commission (the "SEC")
relating to its shares of common stock to be distributed in connection
with the proposed merger, and Liberty issued a Proxy Statement/
Prospectus to its shareholders describing the terms of the merger. Both
documents are subject to SEC regulations requiring complete and
accurate disclosure of all material terms of the merger transaction, and
both Bank of America FSB and Liberty would be subject to action by
the SEC if they failed to comply with these regulations.
38. Several commenters from Texas have expressed concern over
the reduction of staff in the SBA department at BankAmerica's Texas
subsidiary, and the impact this will have on the availability of loans to
minority businesses in Houston. BankAmerica responds that, while
the bank has made some personnel and organizational changes to
streamline its SBA lending activities, it is committed to providing the
630
Federal Reserve Bulletin • July 1994
cussed in this order, BankAmerica plans to increase its
CRA-related lending in Hawaii. The Board believes
that these plans, when viewed in the context of the
outstanding or satisfactory performance ratings for
BankAmerica's subsidiary banks, support approval of
this application.
The Board expects Bank of America FSB to implement fully its CRA initiatives and to continue to improve its CRA performance, including its housingrelated lending, in all of its delineated communities, and
to address the issues raised by the OTS in its most
recent CRA performance examination. The Board will
continue to monitor implementation by Bank of America FSB of an effective CRA program in Hawaii, and
will take this review into account in future applications
by BankAmerica to establish a depository facility. In
this regard, the Board requires as a condition of its
action in this case, that BankAmerica submit to the
Federal Reserve Bank of San Francisco copies of any
reports submitted to the OTS in connection with Bank
of America FSB's CRA performance, including the
results of its lending programs and initiatives and its
progress in increasing the levels of its lending to lowand moderate-income and minority individuals and
communities.
Other Considerations
The financial and managerial resources and future
prospects of BankAmerica, Bank of America FSB,
and Liberty, and other supervisory factors the Board
must consider under section 3 of the BHC Act, are
consistent with approval of this proposal.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved.39 The Board's approval is
Houston community with SBA loans, as well as conventional lines of
credit. In support of this assertion, BankAmerica notes that since
entering the Texas market in 1991, its Texas subsidiary has introduced
several new business products to help meet the credit needs of small
businesses, including the Advantage Business Credit and the
Minority-Owned Business Enterprise/Women-Owned Business Enterprise Credit, to enhance its ability to provide financing for small
businesses that traditionally have not had access to credit.
39. Protestants have criticized the employment practices of Bank of
America - California, Bank of America FSB and Liberty. Specifically,
the California Protestant believes that Bank of America - California
should hire more Spanish speaking personnel and should be using more
Hispanic businesses to perform contract services. The Hawaii Protestants have commented on the absence of minorities in decision making
positions at both Bank of America FSB and Liberty. In this regard, the
Board notes that because these three institutions each employ more
than 50 people and act as agents to sell or redeem U.S. savings bonds
and notes, they are required by Treasury Department 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 their efforts and plans to achieve equal opportunity in
the employment, hiring, promotion and separation of personnel.
specifically conditioned upon compliance with all of
the commitments made by BankAmerica in connection with this application and with the conditions
referred to in this order. This approval is further
subject to BankAmerica obtaining the approval of the
OTS under the FDI Act, and the approval of the
Commissioner under applicable state law. For purposes of this action, the commitments and conditions
relied on in reaching this decision shall be deemed to
be conditions imposed in writing by the Board and, as
such, may be enforced in proceedings under applicable
law.
The acquisition of Liberty shall not be consummated before the thirtieth calendar day following the
effective date of this order, or later than three months
after the effective date of this order, unless such period
is extended for good cause by the Federal Reserve
Bank of San Francisco acting pursuant to delegated
authority.
By order of the Board of Governors, effective
May 31, 1994.
Voting for this action: Chairman Greenspan and Governors
Kelley, LaWare, and Phillips. Absent and not voting: Governor Lindsey.
J E N N I F E R J. JOHNSON
Associate Secretary of the Board
BB&T Financial Corporation
Wilson, North Carolina
Order Approving the Acquisition of a Bank Holding
Company
BB&T Financial Corporation, Wilson, North Carolina
("BB&T"), and its wholly owned subsidiary, BB&T
Financial Corporation of South Carolina, Greenville,
South Carolina ("BB&T-SC"), 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 merge with L.S.B. Bancshares, Inc. of
South Carolina, Lexington, South Carolina ("LSB"),
and thereby indirectly acquire LSB's subsidiary
banks, The Lexington State Bank, Lexington, South
Carolina, and The Community Bank of South Carolina, Varnville, South Carolina.1
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (59 Federal Register 13,323 (1994)). The
time for filing comments has expired, and the Board
1. BB&T-SC will merge with and into LSB, with BB&T-SC
surviving the merger.
Legal Developments
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the BHC Act.
BB&T, with total deposits of $6.3 billion, controls
two banking subsidiaries located in North Carolina and
South Carolina. BB&T is the ninth largest bank holding
company in South Carolina, controlling total deposits
of $437.3 million, representing approximately 2.1 percent of total deposits in commercial banking organizations in the state.2 LSB is the sixth largest commercial
banking organization in South Carolina, controlling
$573.7 million in deposits, representing 2.8 percent of
total deposits in commercial banks in the state. Upon
consummation of BB&T's acquisition of LSB, BB&T
would become the fifth largest commercial banking
organization in South Carolina, controlling $1 billion in
deposits, representing 4.9 percent of the total deposits
in commercial banks in South Carolina.
Douglas Amendment
Section 3(d) of the BHC Act, the Douglas Amendment, prohibits the Board from approving an application by a bank holding company to acquire control of
any bank located outside of the bank holding company's home state, unless such acquisition is "specifically authorized by the statute laws of the State in
which such bank is located, by language to that effect
and not merely by implication."3 For purposes of the
Douglas Amendment, the home state of BB&T is
North Carolina.
The Board previously has determined that the interstate statutes of North and South Carolina permit a
bank holding company located in North Carolina to
acquire a banking organization in South Carolina.4 In
light of the foregoing, the Board concludes that approval of the proposal is not prohibited by the Douglas
Amendment. Approval of this proposal is conditioned
upon BB&T receiving all required state regulatory
approvals.
Competitive, Financial, Managerial and Supervisory
Considerations
BB&T and LSB compete directly in the Columbia,
South Carolina banking market.5 BB&T is the 17th
2. State deposit data are as of December 31, 1993.
3. 12 U.S.C. § 1842(d).
4. See Wachovia Corporation, 77 Federal Reserve Bulletin 1011
(1991); First Union Corporation, 72 Federal Reserve Bulletin 263
(1986); and NCNB Corporation,
72 Federal Reserve Bulletin 57
(1986).
5. The Columbia, South Carolina, banking market is approximated
by the Columbia Rand McNally Area and by the remainder of
Lexington and Richland Counties, South Carolina.
631
largest depository institution in that market, controlling $20.8 million in deposits, representing less than
1 percent of the total deposits in depository institutions in the market ("market deposits").6 LSB is the
third largest depository institution in the market, controlling $456.8 million in deposits, representing 10.4
percent of market deposits. Upon consummation of
this proposal, BB&T would control $477.6 million in
deposits, representing 10.9 percent of market deposits.
The Herfindahl-Hirschman Index ("HHI") for the
market would increase by 10 points to 1813.7
In light of all the facts of record, including the
number of competitors that would remain in the Columbia market, and the small increase in market share
and market concentration as measured by the HHI,
the Board concludes that consummation of the proposal would not have a significantly adverse effect on
competition in the Columbia banking market or any
relevant banking market.
The Board also concludes that the financial and
managerial resources and future prospects of BB&T,
LSB, and their respective subsidiaries and the other
supervisory factors the Board must consider under
section 3 of the BHC Act are consistent with approval
of this proposal. In addition, the Board has determined
that convenience and needs considerations are consistent with approval of this application for the reasons
more fully discussed in the Board's approval of
BB&T's acquisition of three savings-associations under section 5(d)(3) of the FDI Act and incorporated by
reference in this order.8
Based on the foregoing and all other facts of record,
the Board has determined that this application should
be, and hereby is, approved. This approval is subject
to BB&T obtaining all necessary regulatory approvals
for the proposed acquisition. The Board's approval of
this application also is conditioned upon BB&T's
compliance with the commitments made in connection
6. In this context, depository institutions include commercial banks,
savings banks, and savings associations. Market deposit data are as of
June 30, 1993, 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 WM Bancorp,
76 Federal Reserve Bulletin 788 (1990); National City Corporation, 70
Federal Reserve Bulletin 743 (1984).
7. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (June 29, 1984), a market in which the
post-merger HHI is over 1800 is considered to be concentrated. The
Justice Department has informed the Board that a bank merger or
acquisition generally will not be challenged (in the absence of other
factors indicating anti-competitive effects) unless the post-merger
HHI is at least 1800 and the merger increases the HHI by 200 points.
The Justice Department has stated that the higher than normal HHI
thresholds for screening bank mergers for anti-competitive effects
implicitly recognize the competitive effect of limited-purpose lenders
and other non-depository financial entities.
8. BB&T Financial Corporation, 80 Federal Reserve Bulletin 667
(1994).
632
Federal Reserve Bulletin • July 1994
with this application. For purposes of this action, the
commitments and conditions relied on in reaching this
decision are conditions imposed in writing by the
Board and, as such, may be enforced in proceedings
under applicable law.
This acquisition may not be consummated before
the thirtieth calendar day after the effective date of this
order, or later than three months after the effective
date of this order, unless such period is extended by
the Board or the Federal Reserve Bank of Richmond,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 23, 1994.
total deposits in commercial banking organizations in
the state. Upon consummation of the proposal, First
Michigan would remain the seventh largest depository
institution in Michigan, controlling deposits of
$1.7 billion, representing approximately 2.4 percent of
total deposits in commercial banks in the state.
The bank subsidiaries of First Michigan and Old
State do not compete in any relevant banking market.
Based on all the facts of record, the Board concludes
that First Michigan's acquisition of Old State and its
subsidiary bank would not result in any significant
adverse effects on competition in any relevant banking
market.
Voting for this action: Chairman Greenspan, Governors
Kelley, Lindsey, and Phillips. Absent and not voting: Governor LaWare.
Convenience and Needs Considerations
JENNIFER J. JOHNSON
Associate Secretary of the Board
First Michigan Bank Corporation
Holland, Michigan
Order Approving the Merger of Bank Holding
Companies
First Michigan Bank Corporation, Holland, Michigan
("First Michigan"), a bank holding company within
the meaning of the Bank Holding Company Act
("BHC Act"), has applied under section 3(a)(5) of the
BHC Act (12 U.S.C. § 1842(a)(5)) to merge with Old
State Bank Corporation ("Old State"), and thereby
indirectly acquire Old State's bank subsidiary, Old
State Bank of Fremont ("Old State Bank"), both of
Fremont, Michigan.
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (59 Federal Register 6261 (1994)). 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.
First Michigan, with total assets of approximately
$2.3 billion, controls 11 subsidiary banks in Michigan.1
First Michigan is the seventh largest commercial banking organization in Michigan, controlling deposits of
$1.7 billion, representing approximately 2.3 percent of
total deposits in commercial banking organizations in
the state.2 Old State is the 92d largest commercial
banking organization in Michigan, controlling deposits
of $50.4 million, representing less than 1 percent of the
1. Asset data are as of September 30, 1993.
2. State deposit data are as of June 30, 1992.
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 the
safe and sound operation of such institutions. To
accomplish this end, the CRA requires the appropriate
federal supervisory authority to "assess the institution's record of meeting the credit needs of its entire
community, including low- and moderate-income
neighborhoods, consistent with the safe and sound
operation of such institution," and to take that record
into account in its evaluation of applications.3
In connection with this application, the Board has
received comments from the Muskegon Heights
Neighborhood Association ("Protestant") alleging
that First Michigan's subsidiary bank, FMB-Lumberman's Bank, Muskegon, Michigan ("Lumberman
Bank"), as well as all other banks in the area, has
failed to meet the home mortgage needs of Muskegon
Heights residents. In particular, Protestant alleges, on
the basis of 1992 data collected under the Home
Mortgage Disclosure Act ("HMDA"), that Lumberman Bank has demonstrated a pattern of illegally
discriminating against Muskegon Heights and other
low- income and minority areas of Muskegon County
by making fewer housing-related loans in these areas
than in the higher-income and non-minority areas of
Muskegon County. Protestant also alleges that Lumberman Bank has not adequately marketed its lending
products to all segments of its community.
3. See 12 U.S.C. § 2903.
Legal Developments
During the processing of this application, First
Michigan provided the Board with a number of comments from public officials, community development
organizations, businesses, and members of the public,
that support Lumberman Bank's CRA efforts in
Muskegon Heights. These commenters noted with
approval Lumberman Bank's activities in areas such
as lending programs, community development programs, employment outreach efforts, and funding for
low-income and first-time homebuyers.
In its consideration of the convenience and needs
factor, the Board has carefully reviewed the entire
CRA performance record of First Michigan, all comments received regarding the application and First
Michigan's response to these comments, and all the
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").4
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 these reports will be given great
weight in the applications process.5 In this case, the
Board notes that all of First Michigan's subsidiary
banks received "outstanding" or "satisfactory" ratings at their most recent CRA performance examinations. In particular, Lumberman Bank received a
"satisfactory" rating from its primary regulator, the
Federal Deposit Insurance Corporation ("FDIC"), at
its most recent CRA performance examination as of
January 4, 1993 ("1993 Examination"). Old State
Bank also received a "satisfactory" rating from the
FDIC at its most recent CRA performance examination as of December 7, 1992.
B. Home Mortgage Disclosure Act ("HMDA")
Data and Lending Practices
The Board has carefully reviewed the 1992 HMDA
data for Lumberman Bank in light of Protestant's
comments regarding the bank's lending activities in
Muskegon Heights and other areas included within the
Muskegon, Michigan, Metropolitian Statistical Area
("MSA"). In this regard, these data show that Lum-
4. 54 Federal Register
5. Id. at 13,745.
13,742 (1989).
633
berman Bank has achieved higher penetration rates in
the low- to moderate-income area of Muskegon
Heights in comparison to the other three high-income
areas in the Muskegon MSA. The Board also notes
that Lumberman Bank is the leading lender in low- and
moderate-income and minority areas in the Muskegon
MSA. The 1992 HMDA data, however, also indicate
that the bank makes a larger absolute number of loans
in areas in the Muskegon MSA other than Muskegon
Heights.
The Board is concerned when an institution's
record indicates disparities in lending to minority
applicants and believes that all banks are obligated to
ensure that their lending practices are based on
criteria that assure not only safe and sound 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 notes that the 1993 Examination found
no evidence of prohibited discriminatory or other
illegal practices at the bank and that the Lumberman
Bank is in compliance with applicable fair housing and
fair credit laws and regulations. Moreover, no practices intended to discourage applications for the types
of credit listed in the bank's CRA Statement or actual
lending were noted. In connection with this examination, the examiners reviewed 1991 HMDA data and
commented favorably on the bank's overall distribution of housing-related credit extensions.
Lumberman Bank also has initiated a number of
steps to assist in meeting the housing-related credit
needs in low- to moderate-income areas of Muskegon
Heights. For example, in January 1994, the bank
introduced the FMB Affordable Mortgage Program to
its banking market. The loan program, which targets
low- to moderate-income borrowers, offers relaxed
underwriting standards to assist borrowers who might
not otherwise qualify for mortgage credit and allows
for a down payment as low as 5 percent, a portion of
which may be borrowed or otherwise acquired from
outside sources.
In addition, Lumberman Bank offers low-interest
home-improvement loans through the Michigan State
Housing Authority ("MSHA") to assist low-income
homeowners, and a MSHA Mortgage Credit Certificate that is designed to promote home ownership for
low- and moderate-income and first-time home buyers.
Lumberman Bank also has pledged $300,000 to the
Muskegon Oceana Community Reinvestment Corpo-
634
Federal Reserve Bulletin • July 1994
ration (the "Corporation"). The Corporation will
sponsor a mortgage pool for the acquisition and rehabilitation of homes by low- and moderate-income
persons.
Lumberman Bank participates in numerous government-sponsored lending programs including the Small
Business Administration ("SBA"), Michigan Strategic
Fund ("MSF"), and the City of Muskegon Revolving
Fund. In this regard, the bank has outstanding six SBA
loans totalling $4.6 million, and, as of December 1992,
had extended 19 MSF loans totalling over $800,000.
Lumberman Bank also extended 12 loans totalling
over $690,000 through the City of Muskegon Revolving Fund.6 The bank also has initiated a second review
program designed to ensure that all lending decisions
are made in accordance with fair lending laws.
Lumberman Bank was chosen to participate in a pilot
program, sponsored by the State of Michigan, to help
families on public assistance move toward self-sufficiency. As part of the program, Lumberman Bank
provides direct-deposit services and financial counseling in the areas of budgeting and financial management
to participating families. Lumberman Bank also provides training to participants on the consumer and
mortgage loan application process.7 In addition, Lumberman Bank recently contributed to the Spring Street
Community Services Project, which facilitates community projects such as vocational training, neighborhood development, elderly care, and consumer counseling. The bank also works with Catholic Family
Services in providing financial counseling to teenage
mothers.
C. Marketing and Outreach Activities
E. Conclusion Regarding Convenience and
Needs Factors
Lumberman Bank's marketing programs are designed
to ensure that all segments of its community, including
low- and moderate-income and minority residents, are
informed of the bank's products and services. For
example, in January 1994, Lumberman Bank, in conjunction with the Greater Muskegon Urban League
(the "Urban League") and the Muskegon YFCA (the
"YFCA"), introduced its Home Mortgage Target Program in which the bank accepts mortgage applications
at the Muskegon and Muskegon Heights offices of the
Urban League and the YFCA. This pilot program
allows the bank to familiarize low- and moderateincome applicants with the credit-application process.
Direct mailers advertising this service will be sent to
all low- and moderate-income areas in Muskegon and
Muskegon Heights.
Lumberman Bank also markets its products through
its officer call program and "town meetings". In this
regard, the bank has worked closely with many area
organizations to market its credit products under the
bank's Turn Key Program. Pursuant to this program,
the bank has presented seminars at several local
churches regarding the process of applying for a
mortgage.
D. Community Development Activities
Lumberman Bank participates in a number of community development activities and projects. For example,
6. In addition, Lumberman Bank participates in the Michigan
Economic Growth Alliance ("M.E.G.A.") Micro-Loan Program,
which is designed to assist unemployed or displaced workers starting
a small business. The bank also participates in M.E.G.A.'s L.E.A.P.
Program, which allows lenders to advise small businesses on all stages
of business development including start-up, financing, and relocation.
The Board has carefully considered all the facts of
record, including the comments filed in this case, in
reviewing the convenience and needs factor under the
BHC Act. Based on a review of the entire record of
this application, including the most recent CRA performance examination of Lumberman Bank, the
Board believes that the efforts of First Michigan to
help meet the credit needs of all segments of the
communities it serves, including low- and moderateincome neighborhoods, and all other convenience and
needs considerations, are consistent with approval of
this application.8
Other Considerations
The Board also finds that the financial and managerial
resources and future prospects of First Michigan and
Old State, and their respective subsidiaries and the
7. The bank has completed eight training sessions to date, and
expects to have 50 families trained under this program by May 1994.
8. Protestant has requested that the Board hold a public meeting or
hearing on these applications. Section 3(b) of the BHC Act does not
require the Board to hold a public hearing on an application unless the
appropriate supervisory authority for the bank to be acquired makes a
timely written recommendation of denial of the application. In this
case, the Board has not received such a recommendation.
Generally, under its rules, the Board may, in its discretion, hold a
public meeting or hearing on an application to clarify factual issues
related to the application and to provide an opportunity for testimony,
if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The Board has
carefully considered Protestant's request. In the Board's view, the
protestant has had ample opportunity to present written submissions,
and the protestant has submitted substantial written comments that
have been considered by the Board. In light of the foregoing and all the
facts of record, the Board has determined that a public meeting or
hearing is not necessary to clarify the factual record on these
applications, or otherwise warranted in this case. Accordingly, the
request for a public meeting or hearing on these applications is hereby
denied.
Legal Developments
other supervisory factors the Board must consider
under section 3 of the BHC Act are consistent with
approval of this proposal.
Based on the foregoing and all the facts of record,
the Board has determined that this application should
be, and hereby is, approved. The Board's approval is
specifically conditioned upon compliance with all the
commitments made by First Michigan in connection
with this application. For purposes of this action, the
commitments and conditions relied on in reaching this
decision shall be deemed to be conditions imposed in
writing by the Board and, as such, may be enforced in
proceedings under applicable law.
This transaction shall not be consummated before
the thirtieth calendar day following the effective date
of this order, or later than three months after the
effective date of this order, unless such period is
extended for good cause by the Board or the Federal
Reserve Bank of Chicago, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
May 9, 1994.
Voting for this action: Governors Kelley, LaWare, Lindsey, and Phillips. Absent and not voting: Chairman
Greenspan.
WILLIAM W . WILES
Secretary of the Board
United Community Banks, Inc.
Blairsville, Georgia
Order Approving Acquisition of a Controlling
Interest in a Bank
United Community Banks, Inc., Blairsville, Georgia
("United Community"), a bank holding company
within the meaning of the Bank Holding Company Act
(BHC Act"), has applied for the Board's approval
under section 3(a)(3) of the BHC Act (12 U.S.C.
§ 1842(a)(3)) to acquire up to 51 percent of the voting
shares of White County Bank, Cleveland, Georgia
("Bank").1
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (59 Federal Register 7998 (1994)). The time
1. United Community proposes to acquire a debenture of the bank
holding company parent of Bank, White County Bancshares, Inc.,
Cleveland, Georgia ("WCB"). This debenture is convertible into
approximately 51 percent of Bank's outstanding voting shares, and
United Community projects that conversion will require up to two
years to complete.
Existing shareholders of WCB were first offered the opportunity to
purchase additional shares of WCB in lieu of WCB's entering into this
debenture arrangement with United Community.
635
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.
United Community, which controls four subsidiary
banks in Georgia and North Carolina, is the 15th
largest commercial banking organization in Georgia,
controlling $251.1 million in deposits, representing less
than 1 percent of the total deposits in commercial
banking organizations in the state.2 Bank is the 75th
largest commercial bank in Georgia, controlling
$69.2 million in deposits, representing less than 1
percent of the total deposits in commercial banking
organizations in the state. Upon consummation of this
transaction, United Community would become the
12th largest commercial banking organization in Georgia, controlling $320.3 million in deposits, representing
less than 1 percent of the total deposits in commercial
banking organizations in the state. United Community
and Bank do not compete directly in any relevant
banking market. Based on all the facts of record, the
Board concludes that this proposal would not result in
any significantly adverse effects on competition in any
relevant banking market.
The Board has received several comments objecting
to this proposal on the basis that shareholder value in
Bank has diminished and that Bank has not been
effectively operated by its board of directors and
management.3 These commenters also suggest that
alternative purchasers for Bank should have been
solicited. The Board has carefully reviewed these
comments in light of the factors required to be considered under the BHC Act.
In considering the financial factors in this case, the
Board has reviewed the financial condition of Bank,
and considered United Community's proposal to provide substantial new capital to Bank. Bank is subject
to a formal agreement with state and federal banking
regulators to raise capital to address financial problems Bank has encountered in recent years. To satisfy
the requirements of this agreement, management of
Bank offered existing shareholders of Bank the opportunity to buy additional shares of Bank, and then
offered the subject debenture to a number of bank
2. Deposit data are as of June 30, 1993.
3. In addition to these allegations, one commenter alleges that
Bank's management has engaged in insider transactions to the detriment of Bank. Another commenter believes that Bank's policies of
protecting confidential loan and credit information are deficient. The
Board has carefully reviewed these comments in light of the most
recent examinations by Bank's primary regulator, the Federal Deposit
Insurance Corporation. On the basis of all facts of record, including
the examiners' assessment of managerial resources and compliance
with applicable laws and procedures, the Board does not believe that
these comments warrant denial of this application.
636
Federal Reserve Bulletin • July 1994
holding companies.4 United Community's proposal
should permit Bank to restore its capital to the levels
required by these regulators.5 In considering the managerial factors in this case, the record indicates that
management of Bank has taken positive steps to
address identified weaknesses, including hiring new
personnel and devising a plan for improving the financial condition of Bank. The Board also notes that
United Community has an established record of improving the financial condition of acquired troubled
institutions and monitoring the performance of its
subsidiary banks.6
In this light, and based on all facts of record,
including the comments filed in this case, the Board
concludes that the financial and managerial resources
and future prospects of United Community, its subsidiaries, and Bank, are consistent with approval of this
proposal.7 Considerations relating to the convenience
and needs of the communities to be served and other
supervisory factors the Board must consider under
section 3 of the BHC Act also are consistent with
approval of this proposal.
Based on the foregoing and all the facts of record,
the Board has determined that the application should
be, and hereby is, approved. The Board's approval is
specifically conditioned upon compliance with all the
commitments made by United Community in connection with this application. For purposes of this action,
the commitments and conditions relied on by the
Board in reaching this decision both 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 purchase of the debenture of WCB shall not be
consummated before the thirtieth calendar day following the effective date of this order, or later than three
months after the effective date of this order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Atlanta, acting pursuant to delegated authority.
4. Bank management has represented that two bank holding companies expressed interest in purchasing this debenture, including
United Community, and Bank management decided to sell the debenture to United Community because of United Community's strong
financial condition and outstanding record of bank management.
5. The Georgia Department of Banking and Finance has approved
this proposal.
6. One commenter maintains that a subsidiary bank of United
Community assumed the accounting responsibilities of Bank prior to
regulatory approval of this proposal. The record indicates that United
Community provides (on a fee basis) data processing services to Bank,
as well as to other unaffiliated banks, but has not acquired any of
Bank's operations or departments, or otherwise engaged in any
conduct that would constitute prior control of Bank.
7. See, e.g., Western Bancshares, Inc. v. Board of Governors, 480
F.2d 749 (10th Cir. 1973).
By order of the Board of Governors, effective
May 9, 1994.
Voting for this action: Governors Kelley, LaWare, Lindsey, and Phillips. Absent and not voting: Chairman
Greenspan.
WILLIAM W . WILES
Secretary of the Board
NBT Northwest Bancorp
Tukwila, Washington
Order Approving the Formation of a Bank Holding
Company
NBT Northwest Bancorp, Tukwila, Washington
("NBT Northwest"), has applied under section 3(a)(1)
of the Bank Holding Company Act (12 U.S.C.
§ 1842(a)(1) et seq.) ("BHC Act"), to become a bank
holding company by acquiring all the voting shares of
the National Bank of Tukwila, Tukwila, Washington
("Tukwila Bank").1 Notice of the application, affording interested persons an opportunity to submit comments, has been published (59 Federal Register 11,606
(1994)). 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.
NBT Northwest is a nonoperating company formed
for the purpose of acquiring Tukwila Bank. Tukwila
Bank is the 68th largest commercial banking institution
in Washington, controlling deposits of $25.5 million,
representing less than 1 percent of total deposits in
commercial banking institutions in the state.2 Tukwila
Bank operates in the Seattle banking market,3 controlling less than 1 percent of the total deposits in commercial banking organizations in this market. Based on
all the facts of record, the Board believes that consummation of the proposal would not result in any significantly adverse effects on competition or the concentration of banking resources in any relevant banking
market. Accordingly, the Board concludes that competitive considerations are consistent with approval.
The Board also concludes that the financial and
managerial resources and future prospects of NBT
1. NBT Northwest proposes to merge Tukwila Bank with Tukwila
Interim National Bank, Tukwila, Washington ("Interim Bank"), a
newly chartered national bank and wholly owned subsidiary of NBT
Northwest, with Interim Bank surviving the merger and operating
under the name of National Bank of Tukwila. On April 25, 1994,
Tukwila Bank's primary regulator, the Office of the Comptroller of the
Currency ("OCC"), approved this proposal.
2. Market and deposit data are as of June 30, 1993.
3. The Seattle, Washington, banking market is approximated by the
Seattle Rand-McNally Metropolitan Area.
Legal Developments
Northwest and Tukwila Bank, and the convenience
and needs and other supervisory factors that the Board
is required to consider under section 3 of the BHC
Act, are consistent with approval of this proposal.4
Based on the foregoing and all the facts of record,
the Board has determined that this application should
be, and hereby is, approved. The Board's approval is
specifically conditioned upon compliance with all the
commitments made by NBT Northwest in connection
with this application. For purposes of this action, the
commitments and conditions relied on in reaching this
decision shall be deemed to be conditions imposed in
writing by the Board and, as such, may be enforced in
proceedings under applicable law.
This transaction should not be consummated before
the thirtieth calendar day following the effective date of
this order, or later than three months after the effective
date of this order, unless such period is extended for
good cause by the Federal Reserve Bank of San Francisco, acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 31, 1994.
Voting for this action: Chairman Greenspan and Governors
Kelley, LaWare, and Phillips. Absent and not voting: Governor Lindsey.
JENNIFER J. JOHNSON
Associate Secretary of the Board
United Bankers' Bancorporation
Bloomington, Minnesota
Order Approving the Formation of a Bank Holding
Company
United Bankers' Bancorporation, Bloomington, Minnesota ("UBB"), has applied under section 3(a)(1) of
the Bank Holding Company Act ("BHC Act")
(12 U.S.C. § 1842(a)(1)) to become a bank holding
company by acquiring at least 85 percent of United
Bankers' Bank, Bloomington, Minnesota ("Bank").
4. The Board has carefully reviewed comments from NBT Bancorp,
Norwich, New York ("Protestant"), a registered bank holding company, maintaining that investors and customers will be confused by
the similarity between the names of Protestant and NBT Northwest.
NBT Northwest has provided specific notice in its stock offering
circular disclaiming any relationship with Protestant. The Securities
and Exchange Commission ("SEC") has reviewed similar comments
from Protestant and determined that this issue presented no substantive violation of the Securities and Exchange Act of 1934 (15 U.S.C.
§ 78a et seq.). In addition, the Washington Supervisor of Banking has
indicated that Protestant's comments do not raise an issue under state
law. Based on these and all facts of record, in light of the significant
geographic separation between these companies' relevant banking
markets, and the relatively small amount of public trading in NBT
Northwest's stock, and the written disclaimer provided by NBT
Northwest, the Board does not believe that Protestant's comments
warrant denial of this application.
637
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (58 Federal Register 60,858 (1993)). 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.
UBB is a company formed for the purpose of
becoming a bank holding company by acquiring Bank,
a state member "bankers' bank" chartered under
Minnesota law, which will perform correspondent
services for other depository institutions.1 Bankers'
banks are "banks" within the meaning of the BHC Act
and national and state member banks may hold stock
of these institutions or their parent holding companies.2 Bank will be engaged exclusively in providing
services for other depository institutions and their
officers, directors and employees. These correspondent services include discounting bills, notes and other
evidences of debt and receiving deposits from and
through banks. Bank will compete only with other
banks that offer similar services to banks. Based on all
facts of record, the Board has determined that consummation of this proposal would not have a significant adverse effect on competition or banking resources in any relevant banking market.
The financial and managerial resources of UBB and
Bank are consistent with approval, in view of the
nature of the activities of a bankers' bank, and the
prospects of each are consistent with approval. Factors relating to the convenience and needs of the
community to be served and other supervisory factors
the Board must consider under section 3 of the BHC
Act also are consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The Board's approval is
specifically conditioned upon compliance with all conditions imposed in connection with this approval,
including the condition that the activities of Bank are
conducted in accordance with the limitations imposed
on bankers' banks under applicable law, and all commitments made by UBB and Bank in connection with
1. The Federal Reserve Act also imposes reserve requirements on
bankers' banks under certain circumstances. See section 19(b)(9) of
the Federal Reserve Act (12 U.S.C. § 461(b)(9)), as implemented by
the Board's Interpretation on Bankers' Banks, 12 C.F.R. 204.121. In
this case, Bank has complied with the System's reserve requirements
as a condition of its approval for membership.
2. Section 24(Seventh) of the National Bank Act (12 U.S.C.
§ 24(Seventh)), as amended by the Depository Institutions Deregulation and Monetary Control Act of 1980 (P.L. 96-221) and the Garn-St
Germain Depository Institutions Act of 1982 (P.L. 97-320). State
member banks may invest in stock subject to the same limitations as
national banks. 12 U.S.C. § 335. UBB will be owned by national and
state member banks.
638
Federal Reserve Bulletin • July 1994
the application. For purposes of this action, the conditions and commitments relied on in reaching this
decision shall be deemed to be conditions imposed in
writing by the Board and, as such, may be enforced in
proceedings under applicable law.
This transaction shall not be consummated before the
thirtieth 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 Minneapolis, acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 11, 1994.
Voting for this action: Chairman Greenspan and Governors
Kelley, LaWare, Lindsey, and Phillips.
WILLIAM W . WILES
Secretary of the Board
Orders Issued Under Section 4 of the Bank
Holding Company Act
Banque Nationale de Paris
Paris, France
Order Approving an Application to Engage in
Various Investment Advisory and Related Activities
Through a Joint Venture
Banque Nationale de Paris, Paris, France ("Applicant"), a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has
applied under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)), and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23), to acquire a
50 percent voting equity interest in a de novo joint
venture company ("Company") that would engage in
a variety of investment advisory activities, including
discretionary management services. The remaining
50 percent voting equity interest in Company would be
held by Neuberger & Berman, L.P., New York, New
York ("N&B"), a registered broker-dealer that underwrites and deals in securities.
Specifically, Company would engage in the following activities:
(1) Acting as investment or financial advisor, including the discretionary purchase and sale of securities
on behalf of an institutional customer, as permitted
under sections 225.25(b)(4)(ii), (iii) and (iv) of Regulation Y;1
1. See also 12 C.F.R. 225.25(b)(15), note 17.
(2) Providing foreign exchange advisory and transactional services as permitted under section
225.25(b)(17) of Regulation Y; and
(3) Acting as a commodities trading advisor with
respect to financial futures and options on futures as
permitted under section 225.25(b)(19) of Regulation Y.
In connection with this proposal, Applicant also seeks
authority to acquire a nonvoting, non-controlling limited partnership interest in N&B.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (58 Federal Register 13,782
(1993)). The time for filing comments has expired, and
the Board has considered the application and all
comments received in light of the factors set forth in
section 4(c)(8) of the BHC Act.
Applicant, with total consolidated assets equivalent
to approximately $284 billion, is the 13th largest bank
in the world, and the third largest banking organization
in France.2 In the United States, Applicant controls a
bank in California; operates branches in New York
and Chicago; and maintains agencies in Los Angeles,
San Francisco, Miami, and Houston.3 Applicant
would hold its limited partnership interest in Company
through its existing New York Article 12 Corporation,4 French-American Banking Corporation, and
would form a special purpose subsidiary, US JV Based
Holdings Inc., to hold its general partnership interest
in Company.
N&B is registered with the Securities and Exchange
Commission as a broker-dealer under the Securities
Exchange Act of 1934 (15 U.S.C. § 78a et seq.), and as
an investment adviser under the Investment Advisers
Act of 1940 (15 U.S.C. § 80b-l et seq.) ("Investment
Advisers Act") with offices in New York, Chicago,
and San Francisco. N&B engages in activities involving bank-ineligible securities that are not generally
permissible for bank holding companies.5 N&B would
hold its limited partnership interest in Company directly, and would form a special purpose subsidiary,
Neuberger & Berman Global Asset Management Inc.,
to hold its general partnership interest in Company.
2. Data are as of June 30, 1993.
3. Applicant's subsidiary bank is Bank of the West, San Francisco,
California, a state-chartered non-member bank.
4. See N.Y. Banking Law § 508 et seq. (Consol. 1990) (investment
companies).
5. The term "bank-ineligible securities" refers to all types of debt
and equity securities that a bank may not underwrite or deal in directly
under the Glass-Steagall Act. See 12 U.S.C. §§ 24(7) and 335. N&B's
securities activities include underwriting and dealing in bank-ineligible
securities, the management and distribution of mutual funds, risk
arbitrage, over-the-counter market making, and option sales.
Legal Developments
Company would engage only in activities permissible for bank holding companies under the Board's
Regulation Y and would provide these services only to
institutional customers as that term is defined in Regulation Y. 6 Applicant anticipates that Company would
register with the Securities and Exchange Commission
as an investment adviser under the Investment Advisers Act, and with the Commodity Futures Trading
Commission as a commodities trading advisor under
the Commodity Exchange Act (7 U.S.C. § 1 et seq.).
Applicant and N&B have entered into a joint venture
arrangement overseas, BNP-N&B Global Asset Management S.A., Paris, France ("French Joint Venture"), that engages in activities similar to those in
which Company would engage.7
The Board has previously determined, by regulation, that the investment advisory, discretionary management and other activities proposed for Company
are closely related to banking within the meaning of
section 4 of the BHC Act. Applicant has committed
that Company will conduct these activities pursuant to
the conditions and limitations specified in the Board's
regulations. In every case under section 4 of the BHC
Act, the Board also must determine whether the
performance of the proposed activities by the applicant can reasonably be expected to produce benefits to
the public that outweigh the possible adverse effects.
In prior cases, the Board has expressed concern that
joint ventures not lead to a matrix of relationships
between co-venturers that could break down the legally mandated separation of banking and commerce.8
The Board has stated that this concern is particularly
acute where the joint venture involves a relationship
between a bank holding company and a securities firm,
and the potential exists for the mingling of permissible
and impermissible securities activities.9 In this case,
Applicant would engage in the proposed activities in a
manner consistent with previously approved joint venture proposals, except to the extent discussed below,
and has made a number of commitments similar to
6. See 12 C.F.R. 225.2(g).
7. The French Joint Venture, formerly BNP Investment Management S.A., is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act.
Company would retain the French Joint Venture as a sub-adviser on
occasion, and vice versa. In addition, Applicant, N&B, and their
respective affiliates may independently contract sub-advisory services
with Company, as they currently do with the French Joint Venture.
Finally, Applicant and Company would continue to engage the other
as a sub-adviser from time to time. Applicant has committed that all
such transactions would be conducted on an arm's-length, nonexclusive, and non-preferential basis.
8. See, e.g., The Maybaco Company and Equitable
Bancorporation, 69 Federal Reserve Bulletin 375 (1983).
9. See Amsterdam-Rotterdam
Bank, N.V., 70 Federal
Reserve
Bulletin 835 (1984) C'AmRo"); The Chuo Trust and Banking Company, Limited, 78 Federal Reserve Bulletin 446 (1992) ("Chuo
Trust").
639
those the Board has relied upon in prior joint venture
cases intended to separate the activities of a bank
holding company and the joint venture from the impermissible activities of a securities co-venturer.10
These include a commitment that Applicant and
N&B will conduct their business on an arm's-length,
non-preferential basis with no solicitation of business
for, nor referral of customers to, each other. In addition, Applicant will not make any investments in or
loans to N&B or any N&B partner, except as proposed in this application, without prior Board approval. Other commitments relate specifically to
N&B's impermissible activities such as Applicant's
commitment not to engage in the public sale or distribution of N&B securities, including shares of any
N&B mutual fund, and not to purchase for its own
account any of the mutual funds N&B distributes or
from N&B any securities as to which N&B is acting as
underwriter or dealer.11 Applicant also will not extend
credit to a N&B mutual fund nor accept a N&B mutual
fund as collateral for a loan to purchase shares of a
N&B mutual fund. Applicant will not extend credit to
Company or customers of Company on favorable
terms.12 Moreover, Company will not act as an investment adviser to a N&B mutual fund, solicit N&B
mutual fund customers or have access to lists of such
customers.
Company's proposed investment advisory and discretionary investment management services would
include recommending and the discretionary purchase
and sale of bank-ineligible securities that N&B underwrites or deals in, and recommending shares of mutual
funds and insurance company investment funds13 (collectively, "N&B Funds") that N&B or its affiliates
manage or distribute.
In its 1984 AmRo decision, the Board permitted a
joint venture between a banking organization and a
mutual fund advisor and distributor to provide investment advice subject to limitations on advice relating to
those mutual funds and the use of common employees
of the mutual fund co-venturer. In Chuo Trust, the
joint venture did not propose to recommend the mutual funds of the co-venturer.
10. A complete list of these commitments is set forth in the appendix
to this order.
11. In addition, no U.S. branch, agency or subsidiary of Applicant
will engage in the public sale or distribution of, nor purchase, directly
or indirectly, for their own account any security as to which N&B is
acting as underwriter.
12. In this regard, transactions between Applicant's U.S. bank or
thrift subsidiaries and Company are subject to the limitations imposed
under sections 23A and 23B of the Federal Reserve Act (12 U.S.C.
§ 371c and 371c-l), and Company, as a subsidiary of Applicant, will
observe the anti-tying restrictions imposed by the Bank Holding
Company Act Amendments of 1970 (12 U.S.C. § 1971-1978).
13. The insurance company investment funds are invested primarily
in variable rate annuities.
640
Federal Reserve Bulletin • July 1994
The Board believes that the types of commitments
made in these cases should be re-examined in light of
significant developments with respect to the securities
activities of bank affiliates. In this regard, the Board
has allowed bank holding company subsidiaries to
provide investment advisory and discretionary management services with respect to securities underwritten or dealt in by an affiliated section 20 subsidiary
subject to certain conditions to prevent conflicts of
interests and unsafe banking practices.14 These conditions include disclosure of the relationship between
the investment adviser and the section 20 subsidiary
and limitations on the purchase of bank-ineligible
securities in a fiduciary capacity. Applicant has committed that Company's investment advisory activities
involving securities underwritten or dealt in by N&B
would comply with the same safeguards that apply
when banks recommend securities underwritten or
marketed by their section 20 affiliates.15
In addition, the Board has recently amended its
interpretive rule on investment advisory activities to
permit a bank holding company to recommend and
broker shares of a mutual fund that is advised by an
affiliate.16 Company has committed to comply with the
terms of the Board's interpretive rule with respect to
shares of the N&B Funds.17 Consistent with the
Board's interpretive rule, Company will not purchase
in its sole discretion in a fiduciary capacity any securities of the N&B Funds. Although Applicant's relationship in this case with the N&B Funds is through its
joint venture affiliation with N&B, and not as a direct
subsidiary of a bank holding company advising a
mutual fund, the Board believes that the framework
under the Board's interpretive rule appropriately addresses the issues raised by such an affiliation when
14. Citicorp, J.P. Morgan & Co. Incorporated, and Bankers Trust
New York Corporation, 73 Federal Reserve Bulletin 473, 498 (1987).
15. In particular, neither Company, nor any affiliated U.S. bank,
thrift, branch or agency shall express an opinion on the value or
advisability of the purchase or the sale of ineligible securities underwritten or dealt in by N&B unless Company or the affiliate notifies the
customer that N&B is underwriting, making a market, distributing or
dealing in the security, and that Company is affiliated with N&B.
Company and its affiliates also would refrain from purchasing for a
customer in a fiduciary capacity securities that N&B underwrites
(during the period of the underwriting or selling syndicate and for a
period of 60 days after the termination thereof) or makes a market in
unless the purchase is specifically authorized by the fiduciary instrument, by court order, or by local law.
16. 57 Federal Register 30,387 (1992); 12 C.F.R. 225.125. See also
Norwest Corporation, 76 Federal Reserve Bulletin 79 (1990).
17. Under the Board's interpretive rule, bank holding companies are
required to disclose these dual roles to customers, to caution customers to read the prospectus of a mutual fund before investing in the
mutual fund, and to advise customers in writing that the mutual fund's
shares are not deposits, are not obligations of any bank, are not
insured by the Federal Deposit Insurance Corporation, and are not
endorsed or guaranteed in any way by any bank (unless such is the
case).
Company is engaging in investment advisory and
discretionary investment management activities that
involve the N&B Funds.
In view of these commitments to comply with the
section 20 limitations and the limitations in the Board's
interpretive rule on investment advisory activities, the
Board believes that Applicant should be permitted to
recommend and make discretionary purchases of
bank-ineligible securities underwritten and dealt in by
N&B.18
N&B would also have certain common officers and
employees with Company. The Board has permitted a
joint venture to have common employees who were
involved in strategic planning for the co-venturer's
mutual fund but has required that the joint venture
refrain from recommending that mutual fund to its
customers.19 In this case, Company's proposed activities with respect to securities underwritten and dealt
in by N&B will be conducted under the limitations
discussed above. In addition, Applicant has committed that no partner, officer, or employee of N&B who
is involved in the selling or marketing of the N&B
Funds or responsible for underwriting or dealing in
any bank-ineligible securities will serve concurrently
as an officer or employee of Company. Applicant has
also committed that the N&B dual employees will not
sell, market or recommend the shares of the N&B
Funds to Company's customers, or have any role in
marketing any security as to which N&B acts as
underwriter or dealer. Under these circumstances, the
Board does not believe that the proposed officer and
employee interlocks would cause Applicant to be
involved in impermissible securities activities.
The Board has also carefully reviewed Applicant's
proposed 10 to 13 percent nonvoting limited partnership interest in N&B in light of the joint venture,
placing particular emphasis on the structure of the
investment and its significance relative to the assets
and revenues of N&B. The Board notes that the
proposed limited partnership interest complies with
guidelines used by the Board in approving nonvoting
equity investments and that the proposal is insignificant in terms of both N&B's total assets and revenues.
In this light, and based on all the facts of record and
subject to Applicant's commitments, the Board does
not believe that the proposed nonvoting equity investment would permit Applicant to exercise a controlling
influence over the management, policies or affairs of
N&B.
18. As noted above, Company's commitment to comply with the
Board's interpretive rule on investment adviser activities would not
permit Company to purchase in its sole discretion in a fiduciary
capacity shares of the N & B Funds.
19. Chuo Trust, supra.
Legal Developments
Applicant and N&B do not compete with each other
in any relevant market. Accordingly, consummation of
the proposed transaction would not eliminate any
existing competition between Applicant and N&B.
In every case under section 4 of the BHC Act, the
Board also must consider the financial condition and
resources of the applicant and its subsidiaries and the
effect of the proposal on these resources.20 In this
case, the Board notes that Applicant meets the relevant risk-based capital standards established under the
Basle Accord, and has capital equivalent to that which
would be required of a United States banking organization. In view of these and other facts of record, the
Board has determined that the financial factors are
consistent with approval of this application. The managerial resources of Applicant also are consistent with
approval.
The Board expects that the de novo entry of Applicant into the market for the proposed services in the
United States would provide added convenience to
Applicant's customers, and would increase the level of
competition among existing providers of these services. Accordingly, the Board has determined that
performance of the proposed activities by Company
can reasonably be expected to produce benefits to the
public.
For the reasons discussed above, and in reliance on
all the commitments made in connection with this
application, and the conditions in this order, the Board
believes that the proposal is not likely to result in
decreased or unfair competition, conflicts of interests,
unsound banking practices, concentration of resources
or other adverse effects, and that the balance of public
interest factors that the Board is required to consider
under section 4 of the BHC Act is favorable.
Based on the foregoing and all the facts of record,
including the commitments discussed above and all
commitments made in connection with the application,
the Board has determined to, and hereby does, approve the application subject to all the terms and
conditions set forth in this order, and in the abovenoted Board regulations and orders that relate to these
activities. The Board's determination is also subject to
all of the terms and conditions set forth in the Board's
Regulation Y, including those in sections 225.4(d) and
225.23(b), and to the Board's authority to require such
modification or termination of the activities of a bank
holding company or any of its subsidiaries as the
Board finds necessary to assure compliance with, and
to prevent evasion of, the provisions of the BHC Act
and the Board's regulations and orders issued there-
20. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal
Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal
Bulletin 155 (1987).
Reserve
Reserve
641
under. The Board's decision is specifically conditioned
on compliance with all of the commitments made in
this application, including the commitments discussed
in this order, and with the conditions set forth in this
order and in the above-noted Board regulations and
orders. These commitments and conditions shall both
be deemed to be conditions imposed in writing by the
Board in connection with its findings and decision,
and, as such, may be enforced in proceedings under
applicable law.
This transaction shall not be consummated later
than three months after the effective date of this order,
unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of San Francisco, pursuant to delegated authority.
By order of the Board of Governors, effective
May 12, 1994.
V o t i n g for this action: Chairman G r e e n s p a n and G o v e r n o r s
K e l l e y , L a W a r e , L i n d s e y , and Phillips.
WILLIAM W . WILES
Secretary of the Board
Appendix
A. Joint Venture Commitments1
1. The name of Company will not include the words
"Neuberger & Berman".
2. Neither Neuberger & Berman nor a partner, officer,
or employee of Neuberger & Berman ("N&B") will
acquire stock in, or serve concurrently as a director,
officer, or employee of, Applicant or any subsidiary of
Applicant (other than Company and the French Joint
Venture). In addition, Applicant will not acquire any
stock in or interest in (other than the proposed equity
investment), or have any directors or management
officials on the board or committees of, N&B (other
than Company and the French Joint Venture); nor
shall Applicant's name be used by N&B or N&B's
name by Applicant or any of its affiliates.
3. Applicant will apply for the Board's prior approval
to retain its investment in Company should N&B
expand into a line of business other than the businesses it currently engages in. If required by the Board
in such circumstances, Applicant will divest its investment in Company.
4. The offices of N&B and Company will have separate
entrances.
1. For the purpose of these commitments, the name Neuberger &
Berman or, as abbreviated, N&B, refers to Neuberger & Berman as
well as any subsidiary or affiliate of Neuberger & Berman.
642
Federal Reserve Bulletin • July 1994
5. The names of customers of Bank of the West and of
any of Applicant's United States branches or agencies
will not be furnished to N&B.
6. Applicant and its subsidiaries will not act as registrar, transfer agent or custodian for any of the N&B
mutual funds.
7. Applicant and its subsidiaries will not, directly or
indirectly, (a) engage in the public sale or distribution
of, or purchase for their account, any shares of the
N&B Funds, or (b) whether as underwriter, dealer, or
in any other capacity, purchase for their account from
N&B any securities as to which N&B is acting as
underwriter or dealer. In addition, the United States
branches, agencies and subsidiaries of Applicant will
not, directly or indirectly, engage in the public sale or
distribution of, or purchase for their account, any
security as to which N&B is acting as an underwriter.
8. Neither Applicant nor any of its subsidiaries (including Company) will purchase in its sole discretion any
securities of the N&B Funds in a fiduciary capacity,
extend credit to any such N&B Mutual Fund, or
accept securities of any such N&B Mutual Fund as
collateral for a loan which is for the purpose of
purchasing securities of any such N&B Mutual Fund.
9. Applicant and any subsidiary of Applicant will
obtain the Board's prior approval before making further investments in or loans to N&B or any N&B
partner, other than the investment proposed in the
application as approved by the Board, and will not
nominate any general partner of N&B.
10. No United States office of Applicant nor any of
Applicant's United States subsidiaries will take into
account the fact that a potential borrower competes
with Company or N&B in determining whether to
extend credit to that borrower.
11. No office of Applicant nor any of Applicant's
subsidiaries will extend credit directly or indirectly to
Company or any customer of Company on terms more
favorable than those afforded similar borrowers in
similar circumstances.
12. Company will not solicit customers of the N&B
Funds and Company will not request or accept access
to the customer lists of any such N&B Fund.
13. Company will not act as investment adviser to any
investment company organized and advised by N&B
(or any other investment company that may in the
future be so organized and advised).
14. Company will provide advice only to "institutional
customers" as that term is defined in section 225.2(g)
of Regulation Y.
15. None of the dual employees of Company and N&B
will be engaged at N&B in bank-ineligible securities
activities, or activities that are impermissible for bank
holding companies.
16. No partner, officer, or employee of N&B whose
responsibility consists of, or who is involved in, selling, marketing, distributing, underwriting or dealing in
any bank-ineligible securities, including the shares of
any of the N&B Funds (or any other open-end investment company that may be established by N&B), or
whose responsibility consists of overseeing the corporate affairs of any of the N&B Funds, will serve
concurrently as an officer or employee of Company.
17. Any partners, officers or employees of Company
who are also partners, officers or employees of N&B
will have no role in marketing the N&B Funds, or any
other security as to which N&B acts as underwriter, or
as to which N&B directly or indirectly acts as dealer,
and will not sell, market, or recommend shares of the
N&B Funds to Company's customers.
18. The non-officer employees of Company who are
also employees of N&B will perform only clerical or
administrative functions, and will be limited in number.
19. As a subsidiary of a bank holding company,
Company will observe the anti-tying provisions of the
BHC Amendments of 1970 as required under section
225.4(d) of the Board's Regulation Y (12 C.F.R.
225.4(d)). Company is an affiliate of Applicant's
United States bank and thrift subsidiaries for purposes
of sections 23A and 23B of the Federal Reserve Act.
20. In the event that Applicant or any of its United
States nonbank subsidiaries (including Company) provides either brokerage or investment advisory services
to customers in the United States with respect to the
shares of an investment company for which Applicant,
any of its nonbank subsidiaries (including Company),
N&B or any of N&B's subsidiaries acts as an investment adviser:
(i) Applicant will instruct its officers and employees, and the officers and employees of such
United States nonbank subsidiaries, to:
(A) caution customers to read the prospectus of
the investment company before investing, and
(B) advise customers in writing that the investment company's shares:
(1) are not insured by the Federal Deposit
Insurance Corporation, are not deposits, and
are not obligations of, or endorsed or guaranteed in any way by, any bank, unless that is
the case; and
(2) are subject to investment risks, including
possible loss of the principal invested; and
(ii) Applicant or such United States nonbank
subsidiary will disclose in writing to the customer
the appropriate entity's role as adviser to the
investment company, as well as the existence of
any fees, penalties and surrender charges with
respect to the investment company's shares; provided that the disclosures described in this com-
Legal Developments
mitment (ii) may be made orally so long as written
disclosure is provided to the customer immediately thereafter.
21. Neither Company nor any affiliated United States
bank, thrift, branch, or agency shall express an opinion on the value or the advisability of the purchase or
the sale of ineligible securities underwritten or dealt in
by N&B unless Company or the affiliate notifies the
customer that N&B is underwriting, making a market,
distributing or dealing in the security, and that Company is an affiliate of N&B.
22. Neither Company nor any affiliated United States
bank, thrift, branch, agency, trust, or investment
advisor shall purchase, as a trustee or in any other
fiduciary capacity, for accounts over which it has
investment discretion ineligible securities (a) underwritten by N&B as lead underwriter or syndicate
member during the period of any underwriting or
selling syndicate, and for a period of 60 days after the
termination thereof, and (b) from N&B if it makes a
market in that security, unless, in either case, such
purchase is specifically authorized under the instrument creating the fiduciary relationship, by court
order, or by the law of the jurisdiction under which the
relationship is administered.
23. All business transactions between Applicant and
N&B will be on an arm's-length, non-exclusive, and
non-preferential basis. Applicant will not solicit any
business for N&B or vice versa. There will be no
advertising or marketing of each other's services.
Neither Applicant nor its subsidiaries will refer customers to N&B, and N&B will not refer customers to
Applicant or its subsidiaries, in each case except for
referrals to and by Company and the French Joint
Venture.
24. Applicant commits that it will waive any right to
select general partners of N&B under New York law
and that the voting arrangements under the limited
partnership agreement will provide that Applicant will
not have the right to vote for or participate in the
selection of N&B's general partners or other management officials or vote for or direct other policies of
N&B; provided, however, that, consistent with existing Board interpretation (12 C.F.R. 225.2(p)(2)), this
commitment shall not affect or limit any voting rights
accorded to Applicant solely of the type customarily
provided by statute with regard to matters that would
significantly and adversely affect the rights or preference of Applicant's limited partnership interest in
N&B such as the issuance of additional amounts or
classes of senior securities or other matters referenced
in the Board's interpretation.
25. N&B's limited partnership agreement will provide
that, in the event that the Board finds, in accordance
with section 225.31(c) of Regulation Y, that Applicant
643
has the power to exercise a controlling influence over
N&B and unless the situation which resulted in such a
finding is eliminated:
(i) Applicant's investment in N&B, including its
limited partnership interest, will be promptly terminated; and
(ii) any amounts then owing by N&B to Applicant
in connection with such investment will be
promptly paid. Applicant and N&B understand
that such termination and payment will be considered to have been effected "promptly" if accomplished within two years following such Board
finding, provided that, prior to such termination
and payment, Applicant and N&B will implement
measures reasonably available in light of the circumstances to further separate the parties.
26. Applicant and its subsidiaries (except for Company
and the French Joint Venture) will not distribute
prospectuses or sales literature for N&B's Funds or
make any such literature available to the public at any
of their offices.
27. None of N&B's mutual funds will have offices in
any building which is likely to be identified in the
public's mind with Applicant or its subsidiaries (except for Company and the French Joint Venture).
28. Applicant commits that the French Joint Venture
will conduct its activities in accordance with all of the
joint venture commitments, with the exception of
commitments 10 and 11.
B. Investment Advisory Commitments
1. Except as authorized by a client of Company or
French Joint Venture, no confidential information
supplied by the client to Company and not to Applicant or a subsidiary of Applicant will be made
available to Applicant or any of its subsidiaries or
N&B. This commitment would not apply to information sharing between Company and French Joint
Venture.
2. Company will disclose to each client of Company
that Company is an affiliate of Applicant and N&B.
3. Advice by Company to any client on an explicit fee
basis will be rendered without regard to correspondent
balances maintained by that client at Applicant or any
depository institution subsidiary of Applicant.
4. Company's financial advisory activities will not
encompass the performance of routine tasks or operations for a client on a daily or continuous basis.
5. Company will not act as broker in connection with
the purchase or sale of, and will not purchase in its
sole discretion in a fiduciary capacity, any securities of
any Neuberger & Berman Fund which invests in
variable or fixed rate annuities.
644
Federal Reserve Bulletin • July 1994
CoreStates Financial Corp.
Philadelphia, Pennsylvania
Order Approving Application to Acquire Nonbanking
Company and Engage in Certain Investment
Advisory Activities
CoreStates Financial Corp, Philadelphia, Pennsylvania
("Applicant"), a bank holding company within the
meaning of the Bank Holding Company Act ("BHC
Act"), has applied for the Board's approval under
section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8))
and section 225.23 of the Board's Regulation Y
(12 C.F.R. 225.23) to acquire all of the voting shares of
Rittenhouse Financial Services, Inc., Radnor, Pennsylvania ("Company"). Applicant proposes that Company
continue serving as investment adviser to investment
companies and providing portfolio investment advice
and management services, including discretionary investment management services, to institutional customers, pursuant to sections 225.25(b)(4)(ii) and (iii) of
Regulation Y.1 Applicant also proposes that Company
continue to provide discretionary investment management services to customers who do not qualify as
institutional customers under Regulation Y.2
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (59 Federal Register 19,722
(1994)). The time for filing comments has expired, and
the Board has considered the application and all
comments received in light of the factors set forth in
section 4(c)(8) of the BHC Act.
Applicant, with total consolidated assets of
$25.9 billion, is the 33d largest commercial banking
organization in the United States, and operates bank
subsidiaries in Delaware, New Jersey and Pennsylvania.3 Applicant engages through its subsidiaries in a
broad range of banking and permissible nonbanking
activities. Company is registered as an investment
adviser under the Investment Advisers Act of 1940 (15
U.S.C. § 80b-l et seq.) ("Investment Advisers Act").
Section 4(c)(8) of the BHC Act provides that a bank
holding company may, with Board approval, engage in
any activity that the Board determines to be "closely
related to banking or managing or controlling banks."
The Board also must determine that the activity is a
proper incident to banking. In judging whether the
1. Applicant proposes to effect the acquisition by organizing a
first-tier subsidiary, RFS Target Corporation, and merging RFS Target Corporation with and into Company, with Company as the
surviving corporation. Applicant intends to maintain Company as a
separate and distinct entity, which will not hold itself out to the public
as being affiliated with Applicant.
2. 12 C.F.R. 225.2(g).
3. Asset data are as of December 31, 1993.
performance of an activity meets the proper incident
to banking test, the Board must determine whether the
proposed activity may be reasonably expected to
produce public benefits that outweigh any possible
adverse effects.
The Board has previously determined, by regulation,
that acting as investment adviser to registered investment companies and providing portfolio investment
advice are closely related to banking.4 Applicant has
committed that, except as discussed below, Company
will conduct these activities pursuant to the conditions
and limitations specified in the Board's regulations.5
With respect to the proper incident to banking
standard under section 4(c)(8) of the BHC Act, the
Board has authorized bank holding companies to provide discretionary investment management services
only to institutional customers, and only at the request
of the customer, due to the potential for adverse
effects arising from this activity.6 The Board's concern
about abuse and conflicts of interest, such as account
churning or biased investment advice, is heightened
when a bank holding company exercising discretion
also provides execution services for the discretionary
account customer.7 In determining to limit discretionary investment management activities to institutional
customers, the Board reasoned that institutional customers are generally financially sophisticated, less
likely in general than retail customers to place undue
reliance on investment advice, and better able to
monitor the activities of, and potential conflicts of
interest from, a nonbank subsidiary providing discretionary investment management services.8
In this case, the Board notes that, as a registered
investment adviser under the Investment Advisers
Act, enforceable fiduciary responsibilities govern
Company's activities.9 In addition, Applicant has provided certain commitments intended to mitigate any
potential for abuse, conflicts of interest or customer
confusion arising from the proposed activity.10
4. See 12 C.F.R. 225.25(b)(4)(ii) and (iii).
5. See id.; 12 C.F.R. 225.125.
6. See 12 C.F.R. 225.25(b)(15) n.17; 57 Federal Register 41,381 (1992).
7. See, e.g., J.P. Morgan & Co., Incorporated, 73 Federal Reserve
Bulletin 810 (1987).
8. See 57 Federal Register 41,381 (1992).
9. The Securities and Exchange Commission ("SEC") has determined that investment advisers are fiduciaries who owe their clients a
series of fiduciary duties, including the duty of full disclosure of
conflicts of interest, the duty of utmost and exclusive loyalty, the duty
of best execution, and the duty to provide only suitable investment
advice. See 59 Federal Register 13,464 (1994) (citing regulatory
precedent). In addition, the SEC has determined that an investment
adviser's fiduciary duty to provide only suitable investment advice is
enforceable under the anti-fraud provision in section 206 of the
Investment Advisers Act (15 U.S.C. § 80b-6). The SEC has sanctioned investment advisers for violating this duty and, recently, has
proposed to make this duty explicit in a new rule. Id.
10. A list of these commitments is set forth in the appendix to this order.
Legal Developments
These include a commitment that Company would
not, without prior Board approval, execute trades for
non-institutional discretionary account customers
through Applicant, any affiliate of Applicant, or any
entity currently affiliated with Company. Applicant
also has committed that Rittenhouse would not purchase, for discretionary investment advisory accounts, securities that are underwritten, dealt in, or
privately placed by Applicant or any of its affiliates,
other than obligations of the United States, unless
directed to do so in writing by the customer prior to
each such transaction and after disclosure of any such
affiliated relationship involved in the transaction. In
the Board's view, these commitments substantially
minimize the potential for adverse effects.
In addition, Applicant has committed that Company
would not alter its name to one similar to that of
Applicant, would operate exclusively out of offices
that are not in the same building as, or otherwise
geographically proximate to, any branch of Applicant's depository subsidiaries, and would not market
Company's investment advisory services through any
such branch. Applicant also has committed that none
of Applicant's depository institution subsidiaries
would make referrals of non-institutional customers to
Company. These commitments should minimize potential confusion by non-institutional customers about
the nature of the products and services they are
receiving, as well as the difference between Company
and any CoreStates depository affiliate.
In every case involving a nonbanking acquisition
under section 4 of the BHC Act, the Board also must
consider the financial condition and resources of the
applicant and its subsidiaries and the effect of the
proposal on these resources.11 Based on all the facts of
record, the Board has concluded that financial and
managerial considerations are consistent with approval of this proposal.
The Board also expects that Company's conduct of
the proposed activities would enable Applicant to provide added convenience and services to its customers,
and would not significantly reduce the level of competition among existing providers of these services.12
Accordingly, based on all of the facts of record, including the commitments provided by Applicant, the Board
has concluded that the performance of the proposed
activities by Company can reasonably be expected to
11. See 12 C.F.R. 225.24. See also The Fuji Bank, Limited, 75
Federal Reserve Bulletin 94 (1989); Bayerische Vereinsbank AG, 73
Federal Reserve Bulletin 155 (1987).
12. Although Company engages in investment advisory activities
that are also provided by Applicant's affiliates, such activities have a
national market with numerous alternative outlets for service. Therefore, the Board believes that the proposal is not likely to result in
decreased or unfair competition.
645
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.
Based on the foregoing and all the facts of record,
including the commitments discussed above and all
other commitments made in connection with the application, the Board has determined to, and hereby
does, approve the application.13 The Board's approval
is specifically conditioned upon compliance with the
commitments made in connection with this application
and with the conditions referred to in this order. The
Board's determination also is subject to all the terms
and conditions set forth in Regulation Y, including
those in section 225.4(d) 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 action, these commitments
and conditions are deemed to be conditions imposed in
writing by the Board in connection with its findings
and decision, and, as such, may be enforced in proceedings under applicable 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 Philadelphia,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 25, 1994.
V o t i n g for this action: A c t i o n C o m m i t t e e c o m p o s e d o f
Chairman G r e e n s p a n a n d G o v e r n o r s L a W a r e , and Phillips.
A b s e n t and not voting: G o v e r n o r s K e l l e y and L i n d s e y .
J E N N I F E R J. JOHNSON
Associate Secretary of the Board
Appendix
Commitments
1. No investment transactions will be effected by
Company through Rittenhouse Financial Securities,
Inc., Applicant or any affiliate of Applicant on behalf
of discretionary investment advisory accounts maintained for customers who do not qualify as "institutional customers" as defined in the Board's Regula-
13. This approval is limited to Applicant's proposal to acquire
Company and for Company to engage in providing discretionary
investment management services subject to the terms and conditions
of this order. This order does not otherwise authorize Applicant to
engage in providing discretionary investment management services to
non-institutional customers without prior Board approval.
646
Federal Reserve Bulletin • July 1994
tion Y (such customers hereinafter referred to, collectively, as "Non-Institutional Customers" and, individually, as a "Non-Institutional Customer").
2. Fees charged by Company for its discretionary
investment advisory services to Non-Institutional
Customers will not be based upon the number of
account transactions executed.
3. Company will not adopt a name v/hich is the same or
similar to Applicant's name, and its affiliation with
Applicant will not be advertised or promoted, unless
and to the extent disclosure is required by law.
4. Company's offices will not be located in any of the
branches of Applicant's depository institution subsidiaries and will not be located in the same building as,
or be geographically proximate to, any of such
branches.
5. The services of Company will not be advertised,
promoted or otherwise marketed through any
branches of Applicant's depository institution subsidiaries, and no depository institution subsidiary of
Applicant will refer any Non-Institutional Customers
to Company.
6. Company, Applicant and affiliates of Applicant will
not share confidential information regarding their respective customers without the customer's consent.
7. Company will not purchase, for discretionary investment advisory accounts, securities for which Applicant or any affiliate of Applicant acts as underwriter, dealer, distributor, or placement agent, other
than obligations of the United States, unless directed
to do so in writing by the customer prior to each such
transaction and after disclosure of any such affiliated
relationships involved in the particular transaction.
Societe Generale
Paris, France
Order Approving an Application to Engage De Novo
in Certain Interest Rate and Currency Swap,
' 'Riskless Principal,'' and Foreign-Exchange-Related
Activities
Societe Generale, Paris, France ("Applicant"), a foreign bank subject to the provisions of the Bank Holding Company Act ("BHC Act"), has applied for the
Board's approval under section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.23 of the
Board's Regulation Y (12 C.F.R. 225.23) to engage
de novo through its subsidiary, FIMAT Futures USA,
Inc., Chicago, Illinois ("Company"),1 in the following
nonbanking activities:
1. Company is wholly owned by FIMAT International, Paris,
France, a wholly owned subsidiary of Applicant. Company also
maintains an office in N e w York, N e w York.
(1) Acting as agent in arranging, and providing
investment advice in connection with, interest rate
swap and currency swap transactions and certain
interest rate and currency risk-management products, such as caps, floors and collars;
(2) Buying and selling, on the order of investors as
"riskless principal," foreign government securities
issued by nations that are full members of the
Organization of Economic Cooperation and Development; and
(3) Acting as agent in executing, and providing
investment advice in connection with, spot, forward
and over-the-counter options transactions in the
foreign exchange market.
Notice of this application, affording interested persons an opportunity to submit comments, has been
published (58 Federal Register 19,175 (1994)). The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 4(c)(8)
of the BHC Act.
Applicant, with total consolidated assets equivalent
to approximately $259.9 billion, is the fourth largest
commercial banking organization in France.2 In the
United States, Applicant operates branches in New
York, New York; Chicago, Illinois; and Los Angeles,
California; and operates an agency in Dallas, Texas,
and representative offices in Houston, Texas, and San
Francisco, California.
Company is a futures commission merchant registered with the Commodity Futures Trading Commission ("CFTC") and a member of the National Futures
Association ("NFA"), and as such, is subject to the
recordkeeping, reporting, fiduciary standards, and
other requirements of the Commodity Exchange Act
(7 U.S.C. § 1 et seq.), the CFTC, and the NFA. 3
Company also intends to register as a broker-dealer
with the Securities and Exchange Commission
("SEC"), and to seek admission to the National
Association of Securities Dealers Inc. ("NASD").
Upon such registration with the SEC and admission to
the NASD, Company would be subject to the recordkeeping, reporting, fiduciary standards, and other re-
2. Asset data are as of June 30, 1993.
3. The Board has previously authorized Company to engage in the
following activities:
(1) Executing without clearing, executing and clearing, and providing investment advisory services with regard to exchange-traded
derivative securities;
(2) Providing securities brokerage and investment advisory services, both separately and on a combined basis, with respect to
certain securities; and
(3) Buying and selling "bank-eligible" securities on the order of
investors as a "riskless principal".
See Societe Generale, 80 Federal Reserve Bulletin 156 (1993).
Legal Developments
quirements of the Securities Exchange Act of 1934
(15 U.S.C. § 78a et seq.), the SEC, and the NASD.
Riskless Principal Activities
"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.4 "Riskless principal" transactions are understood in the
industry to include only transactions in the secondary
market. Thus, Applicant proposes that Company
would not act as a "riskless principal" in selling
securities at the order of a customer that is the issuer
of the securities to be sold, or in any transaction where
Company has a contractual agreement to place the
securities as agent of the issuer. Company also would
not act as a "riskless principal" in any transaction
involving a security for which it makes a market.
The Board previously has determined that, subject
to a number of prudential limitations that address the
potential for conflicts of interests, unsound banking
practices, and other adverse effects, the proposed
riskless principal activities are closely related to banking within the meaning of section 4(c)(8) of the BHC
Act.5 In those orders, the Board also found that
purchasing and selling securities on the order of investors as a "riskless principal" does not constitute
underwriting and dealing in securities for purposes of
section 20 of the Glass-Steagall Act (12 U.S.C. § 377),
and that revenue derived from such activities is not
subject to the 10-percent revenue limitation on underwriting and dealing in ineligible securities.6 In order to
address the potential for conflicts of interests, unsound
banking practices, or other adverse effects, Applicant
has committed that Company will conduct its "riskless
principal" activities in a manner consistent with the
limitations, methods, and procedures established by
the Board in prior orders,7 as modified to reflect
Applicant's status as a foreign bank.8
4. See Securities Exchange Commission Rule 10b-10. 17 C.F.R.
240.10(a)(8)(i).
5. See J.P. Morgan & Company Incorporated, 76 Federal Reserve
Bulletin 26 (1990); Bankers Trust New York Corporation, 75 Federal
Reserve Bulletin 829 (1989).
6. Id.
1. Id.
8. See Sumitomo Bank Limited, 77 Federal Reserve Bulletin 339
(1991); Creditanstalt-Bankverein,
77 Federal Reserve Bulletin 183
(1991); The Royal Bank of Scotland Group PLC, 76 Federal Reserve
Bulletin 866 (1990). As detailed more fully in these orders, in addition
to the commitments imposed by the Board in connection with underwriting and dealing in securities, Applicant has made a number of
commitments regarding the conduct of this activity. In particular,
Applicant has committed that Company will maintain specific records
79
Swap Activities
Applicant proposes to act as agent in arranging, and
providing investment advice in connection with, interest rate swap and currency swap transactions and
certain interest rate and currency risk-management
products, such as caps, floors and collars. The Board
has determined, by order, that these proposed activities are closely related to banking and permissible for
bank holding companies within the meaning of section
4(c)(8) of the BHC Act. 9 Applicant will not act as a
principal or originator with respect to these instruments, but will act solely as agent or broker. Applicant
proposes to engage in these activities in accordance
with all the provisions and conditions set forth in the
Board's prior orders relating to the proposed swap and
swap advisory activities.10
that will clearly identify all "riskless principal" transactions, and that
Company will not engage in any "riskless principal" transactions for
any securities carried in its inventory. When acting as a "riskless
principal", Company will only engage in transactions in the secondary
market, and not at the order of a customer that is the issuer of the
securities to be sold; will not act as "riskless principal" in any
transaction involving a security for which it makes a market; and will
not hold itself out as making a market in the securities that it buys and
sells as a "riskless principal". Moreover, Company will not engage in
"riskless principal" transactions on behalf of its foreign affiliates that
engage in securities dealing activities outside the United States and
will not act as "riskless principal" for registered investment company
securities. In addition, Company will not act as a "riskless principal"
with respect to any securities of investment companies that are
advised by Applicant or any of its affiliates.
9. The Sanwa Bank, Limited, 77 Federal Reserve Bulletin 64
(1991); C&SISovran Corporation, 76 Federal Reserve Bulletin 857
(1990); The Fuji Bank, Limited, 76 Federal Reserve Bulletin 768
(1990); The Sumitomo Bank, Limited, 75 Federal Reserve Bulletin 582
(1989).
10. In order to minimize any possible conflicts of interests between
Company's role as agent or broker in swaps and related transactions
and its role as advisor to potential counterparties, Applicant has
committed that Company will disclose to each customer the fact that
Company may have an interest as a counterparty agent or broker in
the course of action ultimately taken by the customer. Also, in any
case in which an affiliate of Company has an interest in a specific
transaction as a principal or intermediary, Company will advise its
customer of that fact before recommending participation in that
transaction. In any transaction in which Company arranges a swaps
transaction between an affiliate and a third party, Company will
inform the third party that it is acting on behalf of the affiliate. In
addition, Company's advisory services will be offered only to sophisticated customers who would be unlikely to place undue reliance on
investment advice received and would be better able to detect
investment advice motivated by self-interest. Moreover, Company
will not make available to Applicant or any of its subsidiaries
confidential information received from Company's clients except with
the consent of the client, and disclosure will always be made to each
potential client of Company that Company is an affiliate of Applicant.
Advice rendered by Company on an explicit fee basis will be rendered
without regard to correspondent balances maintained by the customer
of Company at Applicant or any depository subsidiary of Applicant.
Finally, Company's financial advisory activities shall not encompass
the daily or continuous performance of routine tasks or operations for
a customer.
648
Federal Reserve Bulletin • July 1994
Foreign Exchange Advisory and Execution Services
Section 225.25(b)(17) of the Board's Regulation Y
authorizes bank holding companies to engage in foreign exchange advisory and transactional services,
provided the activities are conducted in a separately
incorporated subsidiary that does not execute foreign
exchange transactions.11 This regulation does not authorize a foreign exchange advisory company simultaneously to execute transactions, because of concerns
regarding potential conflicts of interests that could
arise from combining the functions of giving advice
and executing transactions relating to that advice.12
The Board has, by order, permitted an applicant in
limited circumstances to combine the functions of
providing foreign exchange advisory services and executing transactions in foreign exchange in the same
subsidiary. In approving Banca Commerciale, the
Board concluded that the potential adverse effects that
could result from the proposal were limited because
Banca Commerciale was conducting the proposed
foreign exchange activities as a relatively small part of
its securities brokerage business, and would be executing transactions in foreign exchange only for sophisticated customers, and only for purposes of hedging customer positions in foreign securities.13
Applicant proposes in this case to provide investment advice relating to, and execute transactions in,
foreign exchange on behalf of customers for other than
hedging purposes.14 Applicant asserts that its proposal, as structured, would pose no more risk to
Company, or potential for abusing client accounts,
than permitting the execution of foreign exchange
transactions for customers' hedging needs. In this
regard, the Board notes that the proposed services are
analogous to the full-service brokerage activities conducted by bank holding companies.15
11. See 12 C.F.R. 225.25(b)(17).
12. See Banca Commerciale Italiana S.p.A., 76 Federal
Reserve
Bulletin 649, (1990) ("Banca
Commerciale").
13. See id. Specifically, Banca Commerciale proposed that its
subsidiary:
(1) Would provide foreign exchange services on behalf of customers
as necessary to facilitate securities brokerage transactions for
international customers and to permit these customers to hedge
foreign exchange risks related to positions in foreign securities;
(2) Would not hold itself out as a foreign exchange business, except
in connection with its securities brokerage services; and
(3) Did not expect to execute foreign exchange transactions on
behalf of its customers for investment or speculative purposes or to
advise its customers with respect to foreign exchange transactions
for such purposes.
14. Company would not engage in any foreign exchange activities
for its own account.
15. In particular, a full-service brokerage subsidiary of a bank
holding company may advise a client to buy a particular security for
investment purposes, then purchase the security on behalf of the
customer. See 12 C.F.R. 225.25(b)(15).
In order to address the potential for conflicts of
interests that could arise from conducting the proposed foreign exchange activities, Applicant has committed that Company would only provide such services to sophisticated institutional customers with
sufficient expertise to monitor trading activity and
prevent churning. In addition, Company will not exercise any investment discretion on behalf of such customers in foreign exchange-related matters, and will
only execute a foreign exchange transaction with the
prior authorization of the client. Finally, Company will
receive a fee for investment services it provides, but
will not charge its customers a fee for executing
transactions in foreign exchange.
Other Considerations
In every case involving a nonbanking acquisition under section 4 of the BHC Act, the Board considers the
financial condition and resources of Applicant and its
subsidiaries and the effect of the proposal on these
resources.16 Applicant's consolidated Tier 1 and total
risk-based capital ratios meet applicable risk-based
standards under the Basle Accord. In view of these
and other facts of record, the Board has determined
that the financial factors are consistent with approval
of this application. Managerial resources of Applicant
and its subsidiaries also are consistent with approval.
Consummation of the proposal would provide added
convenience to Applicant's customers. In addition,
the Board also expects that the de novo entry of
Applicant into the market for these services would
increase the level of competition among providers of
these services. Accordingly, the Board has determined
that the performance of the proposed activities by
Company can reasonably be expected to produce
benefits to the public.
Under the framework established in this and prior
decisions, the Board believes that the public benefits
resulting from this proposal can reasonably be expected to outweigh any adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking
practices, that may result from the proposal.
Based on the above, the Board has determined to,
and hereby does, approve this application subject to
all the terms and conditions set forth in this order and
in the above-noted Board orders that relate to these
activities. The Board's determination also is subject to
all the conditions set forth in the Board's Regulation
Y, including those in sections 225.4(d) and 225.23(b)(3),
16. 12 C.F.R. 225.24; Fuji Bank, Limited, 75 Federal
Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal
Bulletin 155 (1987).
Reserve
Reserve
Legal Developments
and to the Board's authority to require modification or
termination of the activities of a bank holding company
or any of its subsidiaries as the Board finds necessary to
assure compliance with, and to prevent evasion of, the
provisions and purposes of the BHC Act and the
Board's regulations and orders issued thereunder. The
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 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
May 16, 1994.
Voting for this action: Chairman Greenspan and Governors
Kelley, LaWare, Lindsey, and Phillips.
J E N N I F E R J. JOHNSON
Associate Secretary of the Board
Societe Generale
Paris, France
Order Approving an Application to Engage in
Futures Commission Merchant Activities
Societe Generale, Paris, France ("Applicant"), a foreign bank subject to the provisions of the Bank Holding Company Act ("BHC Act"), has applied under
section 4(c)(8) of the BHC Act (12 U.S.C.
§ 1843(c)(8)) and section 225.23 of the Board's Regulation Y (12 C.F.R. 225.23), to engage through its
indirect subsidiary, FIMAT Futures USA, Inc., Chicago, Illinois ("Company").1 In providing futures
commission merchant ("FCM") execution, clearance,
and advisory services to customers with respect to
futures and options on futures on non-financial commodities.2 A complete list of the proposed contracts is
1. Company is wholly owned by FIMAT International Bank, Paris,
France, a wholly owned subsidiary of Applicant. Company, which
also maintains an office in New York, New York, currently engages in
various futures commission merchant and securities-related activities.
See Societe Generale 80 Federal Reserve Bulletin 646 (1994).
2. Company may conduct the proposed FCM activities through
omnibus trading accounts established in its own name with clearing
members of exchanges on which Company would not itself be a
clearing member. See Northern Trust Corporation, 79 Federal Reserve Bulletin 723, 724 (1993) ("Northern Trust"). Applicant has
committed that, with respect to Company's omnibus account customers, Company will employ the same credit approval and risk management procedures developed for its executing and clearing activities.
649
set forth in the Appendix to this order. Company
would not trade in the proposed derivative instruments
for its own account for any purpose, and would not
trade in the physical commodities themselves, except
when necessary to assist in the orderly resolution of an
account.3 Company would provide the proposed FCM
services only to institutional customers and natural
persons whose individual net worth (or joint net worth
with spouse) exceeds $1 million.4 Company would not
provide such services to retail brokerage customers,
locals, or market makers.
Consistent with previously approved proposals to engage in these
activities, Applicant must provide at least 20 days prior written notice
to the Federal Reserve System before:
(i) Engaging in FCM activities with respect to additional exchange-traded derivative contracts on agricultural, energy, or
non-precious metal commodities (unless the Board has approved
the contracts for any other bank holding company under the BHC
Act) to assure that such contracts are comparable to previously
approved contracts; or
(ii) Becoming a clearing or non-clearing member of any commodities exchange that previously has been reviewed and approved
by the Board under the BHC Act.
However, Applicant must obtain prior Board approval before
becoming a clearing or non-clearing member of any commodities
exchange that has not been reviewed and approved by the Board
under the BHC Act.
Applicant also proposes to provide execution-only and clearingonly services to customers pursuant to customer agreements and
"give-up agreements" that would afford the clearing FCM the right to
refuse to clear customer trades that the clearing FCM reasonably
deems unsuitable in light of market conditions or a customer's
financial situation or objectives. These activities have been approved
by the Board. See Northern Trust; J.P. Morgan & Co. Incorporated,
80 Federal Reserve Bulletin 151 (1994) ("J.P. Morgan"). Company
would conduct its proposed execution-only and clearing-only activities subject to the limitations, conditions and commitments relied on
by the Board in J.P. Morgan. In this regard, Applicant has committed
that Company will not serve as the primary or qualifying clearing firm
for any unaffiliated parties, and will subject its clearing-only and
execution-only customers to the same credit review procedures set
forth in J.P. Morgan.
3. In those circumstances when a customer defaults on a contract
after the contract expires and Company is required to make or take
delivery of the underlying commodity, or where Company exercises
its rights to liquidate a customer's account, Company is permitted to
take those actions necessary to mitigate its damages, including acting
for its own account in retendering or redelivering the commodity,
entering into an exchange-for-physical transaction, or entering into an
offsetting transaction in the cash market, provided these or other
appropriate actions are taken as soon as commercially practicable.
4. Applicant anticipates that following consummation of the proposal, a small percentage of Company's business would be conducted
on behalf of managed commodity funds (or commodity pools), which
are regulated by the Commodity Futures Trading Corporation and the
National Futures Association. With the exception of commodity pools
organized abroad, owned entirely by non-U.S. persons, and that
conduct substantially all of their business outside of the United States,
none of Company's managed commodity fund customers would be
owned or sponsored by, or otherwise affiliated with, Applicant.
Company will not act as a commodity pool operator without prior
Board approval, and Applicant will not engage in commodity pool
operator activities of any kind inside the United States without prior
Board approval. Company will apply its standard credit approval
procedures to its commodity pool customers. Applicant has committed to provide the Federal Reserve System with prior notice of any
material change in the characteristics of Company's customer base.
650
Federal Reserve Bulletin • July 1994
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (59 Federal Register 19,175 (1994)). The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 4(c)(8)
of the BHC Act.
Applicant, with total consolidated assets equivalent
to approximately $260 billion, is the fourth largest
commercial banking organization in France.5 In the
United States, Applicant operates branches in New
York, New York; Chicago, Illinois; and Los Angeles,
California; an agency in Dallas, Texas; and representative offices in Houston, Texas; and San Francisco,
California.
Company6 is an FCM registered with the Commodity Futures Trading Commission ("CFTC"), and a
member of the National Futures Association
("NFA"), and, therefore, is subject to the recordkeeping, reporting, fiduciary standards, and other requirements of the Commodity Exchange Act (7 U.S.C. § 1
et seq.), the CFTC, and the NFA. In addition, the
Board recently granted Company authority to engage
in certain securities-related activities,7 and, in connection therewith, Company intends to become a brokerdealer registered with the Securities and Exchange
Commission ("SEC"), and a member of the National
Association of Securities Dealers, Inc. ("NASD").
Accordingly, Company will become 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.
The Board previously has determined that providing
FCM execution, clearance and advisory services with
respect to non-financial commodity derivatives are
activities closely related to banking within the meaning
of section 4 of the BHC Act, and are, therefore,
permissible activities for bank holding companies.8 In
order to approve this application, the Board also must
determine that the performance of the proposed activities by Applicant can reasonably be expected to
produce benefits to the public, such as greater convenience, increased competition and gains in efficiency,
that outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interest, and unsound banking
practices.
5. Asset data are as of June 30, 1993.
6. Company is currently a clearing member on the Chicago Board of
Trade and Chicago Mercantile Exchange, and Company intends to
seek membership on the N e w York Mercantile Exchange to conduct
the proposed activities.
7. See Societe Generate, 80 Federal Reserve Bulletin 156 (1994).
8. See J.P. Morgan.
The Board expects that the de novo entry of Applicant into the market for the proposed services would
provide added convenience to Applicant's customers,
and would increase the level of competition among
existing providers of these services. To address the
potential adverse effects of the proposed activities,
Applicant has committed to conduct the proposed
activities subject to the same rules and procedures
imposed by the Board on FCM activities in derivatives
of financial commodities.9 In addition, in order to
minimize risks associated with the delivery of nonfinancial commodities, Applicant has committed to
take a number of steps in the event one of Company's
customers has an open position in a contract after the
contract has expired, and the customer is unable or
unwilling to make or take delivery.10
Based on the commitments made by Applicant
regarding its conduct of the proposed activities, the
limitations on the activities 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 adverse effects
that may result from the proposal.
In every case under section 4 of the BHC Act, the
Board must consider the financial condition and resources of the applicant and its subsidiaries and the
effect of the proposal on these resources.11 Based on
the facts of this case, the Board concludes that financial considerations are consistent with approval of this
application. The managerial resources of Applicant
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 application subject to all the terms and
conditions set forth in this order, and in the 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 the Board's Regulation Y, including those in sections 225.4(d) and
225.23(b), and to the Board's authority to require
modification or termination of the activities of a bank
9. See 12 C.F.R. 225.25(b)(18). Applicant also has committed that
Company will not enter into any impermissible tying arrangements
with any lending affiliates, and that all customer trading positions of
Company will be marked to market at least daily.
10. Among the steps Applicant will take are:
(1) Retendering the commodity;
(2) Offsetting the customer's open position through an exchangefor-physical transaction;
(3) Offsetting the commodity in the cash market; and
(4) Seeking to avoid delivery through some other mechanism. See
Bank of Montreal, 79 Federal Reserve Bulletin 1049, 1052 n.21
(1993).
11. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve
Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve
Bulletin 155 (1987).
Legal Developments
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 by
Applicant in this application, including the commitments discussed in this order and the conditions set
forth in this order and 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, as
such, may be enforced in proceedings under applicable
law.
This transaction shall not be consummated later
than three months after the effective date of this order,
unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of New York,
pursuant to delegated authority.
By order of the Board of Governors, effective
May 23, 1994.
V o t i n g for this action: Chairman G r e e n s p a n and G o v e r n o r s
K e l l e y , L i n d s e y , and Phillips. A b s e n t a n d n o t voting: G o v ernor L a W a r e .
J E N N I F E R J . JOHNSON
Associate Secretary of the Board
Appendix
Chicago Board of Trade
Corn Futures
Options on Corn Futures
Wheat Futures
Options on Wheat Futures
Soybean Futures
Options on Soybean Futures
Chicago Mercantile Exchange:
Live Cattle Futures
Options on Live Cattle Futures
Feeder Cattle Futures
Options on Feeder Cattle Futures
Live Hog Futures
Options on Live Hog Futures
New York Mercantile Exchange:
Light Sweet Crude Oil Futures
Options on Light Sweet Crude Oil Futures
Sour Crude Oil Futures
651
Gulf Coast Unleaded Gasoline Futures
New York Harbor Unleaded Gasoline Futures
Options on New York Harbor Unleaded Gasoline
Futures
Heating Oil Futures
Options on Heating Oil Futures
Propane Futures
Natural Gas Futures
Options on Natural Gas Futures
Singapore International Monetary Exchange
Limited:
High Sulphur Fuel Oil Futures
Gas Oil Futures
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
ABN AMRO North America, Inc.
Chicago, Illinois
Order Approving the Acquisition of a Savings and
Loan Holding Company
Stichting Prioriteit ABN AMRO Holding, Stichting
Administratiekantoor ABN AMRO Holding, and ABN
AMRO Holding N.V., all of Amsterdam, The Netherlands, foreign banking organizations subject to the
Bank Holding Company Act ("BHC Act"); and ABN
AMRO Bank N.V., Amsterdam, The Netherlands,
and ABN AMRO North America, Inc., Chicago, Illinois ("AMRO North America"), bank holding companies within the meaning of the BHC Act (collectively, "Applicant"), have applied under section 4(c)(8) of
the BHC Act (12 U.S.C. § 1843(c)(8)) and section
225.23 of the Board's Regulation Y (12 C.F.R. 225.23)
to acquire Cragin Financial Corp., Chicago, Illinois
("Cragin"), and thereby indirectly acquire Cragin's
savings association subsidiary, Cragin Federal Bank
for Savings, Chicago, Illinois ("Cragin Federal").1
Notice of the application, affording interested persons an opportunity to submit comments, has been
published (58 Federal Register 57,612 (1993)). The
1. Applicant would acquire Cragin by merging Cragin with and into
Cragin Acquisition Company ("Company"), a Delaware corporation
that is a wholly owned subsidiary of AMRO North America, with
Company surviving the merger. After its acquisition by Applicant,
Cragin Federal would change its name to LaSalle Cragin Bank, F.S.B.
The Office of Thrift Supervision, Cragin Financial's primary federal
regulator, has not yet acted on this proposal.
652
Federal Reserve Bulletin • July 1994
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 4(c)(8)
of the BHC Act.
The Board has determined that the operation of a
savings association by a bank holding company is
closely related to banking for purposes of section
4(c)(8) of the BHC Act. 12 C.F.R. 225.25(b)(9). In
making this determination, 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 of the BHC Act and Regulation Y. 2 Applicant has
committed to conform all activities of Cragin to the
requirements of section 4 of the BHC Act and Regulation Y. 3
In considering an application under section 4(c)(8) of
the BHC Act, the Board is required to determine that
the applicant's ownership and operation of the acquired company "can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking
practices."4
Applicant, with total consolidated assets of approximately $253 billion,5 controls eight depository institutions6 in Illinois and one commercial bank in New
York. Applicant is the third largest depository institution in Illinois, controlling deposits of $10.2 billion,
representing 5.5 percent of total deposits in depository
institutions in the state.7 Cragin is the third largest
2. Cragin engages in the sale as agent of insurance products in
Illinois under the Home Owners' Loan Act that would not be
permissible for bank holding companies under section 4 of the BHC
Act. These activities include the sale of life, health, and property and
casualty insurance and will be transferred to a subsidiary of Applicant's thrift subsidiary, LaSalle Talman Bank, F.S.B., Chicago,
Illinois ("Talman"), upon consummation of the proposal. The Board
has determined that Talman is a Qualified Savings Association within
the meaning of section 4(i)(3) of the BHC Act and is, therefore,
entitled to engage in these types of insurance agency activities in
Illinois. See Stichting Prioriteit ABN AMRO Holding, 78 Federal
Reserve Bulletin 296 (1992)
("AMROITalman").
3. Cragin engages in real estate activities that are not permissible for
bank holding companies under the BHC Act. Applicant has committed that all impermissible real estate activities will be divested or
terminated within two years of consummation of the proposal, that no
new impermissible projects or investments will be undertaken during
this period, and that capital adequacy guidelines will be met excluding
specified real estate investments. Applicant also has committed that
any impermissible securities activities conducted by Cragin or its
subsidiaries will cease on or before consummation of this proposal.
4. 12 U.S.C. § 1843(c)(8).
5. Asset data are as of December 31, 1993.
6. In this context, depository institution includes commercial banks,
savings banks, and savings associations.
7. State commercial bank and thrift deposit data are as of June 30,
1992.
thrift organization in Illinois, controlling deposits of
$2.1 billion, representing 4.1 percent of total deposits
in thrift institutions in the state. Upon consummation
of this proposal, Applicant would remain the third
largest depository organization in Illinois. Applicant
and Cragin compete in the Chicago, Illinois, banking
market.8 After considering the competition offered by
other depository institutions in this market,9 the number of competitors that would remain in the market,
the small increase in market concentration as measured by the Herfindahl-Hirschman Index ("HHI"), 10
and other facts of record, the Board has concluded
that consummation of the proposal would not result in
a significantly adverse effect on competition in the
Chicago banking market or any other relevant banking
market.
Community Reinvestment Act Considerations
In considering an application 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").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,
8. The Chicago banking market is defined as Cook, Lake, and
DuPage Counties, all in Illinois.
9. Market share data before consummation are based on calculations in which the deposits of thrift institutions are included at
50 percent. The Board previously has indicated that thrift institutions
have become, or have the potential to become, significant competitors
of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin
788 (1990); National City Corporation, 70 Federal Reserve Bulletin
743 (1984). Because the deposits of Cragin would be controlled by a
commercial banking organization upon consummation of this proposal, these deposits are included at 100 percent in the calculation of
Applicant's post-consummation share of market deposits. See Norwest Corporation,
78 Federal Reserve Bulletin 452 (1992); First
Banks, Inc., 76 Federal Reserve Bulletin 669, 670 n.9 (1990).
10. The HHI would increase by 16 points to 569. 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 unconcentrated. The Justice Department has informed
the Board that a bank merger or acquisition generally will not be
challenged (in the absence of other factors indicating anticompetitive
effects) unless the post-merger HHI is at least 1800 and the merger
increases the HHI by more than 200 points. The Justice Department
has stated that the higher than normal HHI thresholds for screening
bank mergers for anticompetitive effects implicitly recognize the
competitive effect of limited-purpose lenders and other non-depository financial entities.
11. The Board 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).
Legal Developments
consistent with the safe and sound operation of such
institutions. To accomplish this end, the CRA requires
the appropriate Federal supervisory authority to "assess the institution's record of meeting the credit
needs of its entire community, including low- and
moderate-income neighborhoods, consistent with the
safe and sound operation of such institution," and to
take that record into account in its evaluation of bank
holding company applications.12
In connection with this application, the Board has
reviewed comments received from several organizations ("Protestants") alleging that Applicant and Cragin have failed to meet the credit needs of residents of
low- and moderate-income census tracts in Chicago,
Illinois, with predominately minority populations.13
Specifically, Protestants contend that the percentage
of loans made by Cragin and Talman in predominately
minority census tracts is disproportionately small in
light of the number of minority residents in those
tracts. Protestants also maintain that Talman's ascertainment efforts do not include groups representative
of low- and moderate-income communities in Chicago.
In addition, Protestants allege that Cragin Federal
does not maintain lending offices at its deposit-taking
facilities located in low- and moderate-income areas of
Chicago and that its CRA service area is drawn to
exclude minority areas of Chicago.
The Board has carefully reviewed the CRA performance records of Applicant and Cragin and their
subsidiary depository institutions, the comments received and Applicant's responses to those 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").14
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 these reports will be given great weight
in the applications process.15 In this regard, the Board
notes that Talman received an "outstanding" rating
from its primary federal regulator, the Office of Thrift
Supervision ("OTS"), at its most recent examination
for CRA performance as of March 1, 1993. In addition,
LaSalle National Bank ("LaSalle National"), the lead
12. 12 U.S.C. § 2903.
13. The Board also received comments from other commenters
opposing this application. After discussions with Applicant, these
commenters withdrew their protests and supported the application.
14. 54 Federal Register 13,742 (1989).
15. Id. at 13,745.
653
bank of AMRO North America, received a "satisfactory" rating from its primary federal regulator, the
Office of the Comptroller of the Currency ("OCC"), at
its most recent CRA examination as of May 7, 1993.16
All the other AMRO North America subsidiary banks
received "outstanding" or "satisfactory" ratings from
their primary regulators in their most recent CRA
examinations. Cragin Federal received a "satisfactory" CRA rating in its most recent examination by its
primary regulator, the OTS, as of June 1, 1993.17
B. Applicant's CRA Performance Record
Lending in low- and moderate-income areas. Talman's most recent CRA performance examination
concluded that the geographic distribution of its credit
extensions reflected a reasonable penetration in all
segments of its delineated community, including lowand moderate-income neighborhoods.18 This examination also found no evidence of any pattern or practice
of illegal discriminatory credit practices or other practices designed to discourage credit applications.
Housing-related lending data indicate that Talman
made 68.9 percent of its total loans within its delineated
community in 1992. Of these loans, 21 percent were to
minority borrowers, and approximately 32 percent
were to low- or moderate-income borrowers. Data
submitted under the Home Mortgage Disclosure Act
("HMDA") indicate that the number of loan applications received from African-Americans and the number
of loans made to African-Americans increased from
1991 to 1992,19 and the denial rate for African-Ameri-
16. The OCC raised LaSalle National's performance rating from its
previous rating of "needs to improve." LaSalle National's progress in
addressing the weaknesses in its CRA performance through the
initiatives previously discussed by the Board in
AMRO/Talman,
supra, has been monitored through quarterly reporting by Applicant
to the Federal Reserve Bank of Chicago ("Reserve Bank"). The
Board believes that these steps have satisfactorily resolved the bank's
CRA performance issues, and, therefore, Applicant is no longer
required to submit quarterly reports to the Reserve Bank.
17. This examination concluded that Cragin Federal's delineated
CRA community did not exclude low- and moderate-income neighborhoods and that loan origination data indicated reasonable penetration of all segments of its community. Examiners noted that more than
one-third of the thrift's housing-related loans were made to borrowers
located in low- and moderate-income zip codes, and no evidence of
illegal discriminatory practices or practices intended to discourage
applications were found. Although loan applications are accepted at
only seven out of 26 of Cragin Federal's branch offices, each office
makes loan application kits available. In addition, loan originators are
available to meet loan applicants at any of the thrift's 27 offices or at
the applicant's home.
18. The examiners noted that Talman's 1992 analysis of the geographic distribution of its credit extensions and denials focused only
on Cook County.
19. The number of housing-related loans applications from AfricanAmericans increased by 16.2 percent from 1991 to 1992, and the
number of loans made to African-Americans increased by 53 percent
from 1991 to 1992.
654
Federal Reserve Bulletin • July 1994
cans decreased from 32 to 14 percent over the same
period. HMDA data also show that Talman makes
loans in low- and moderate-income census tracts with
ethnically diverse populations.20 In 1992, 37 percent of
the housing-related loans originated by Talman in lowand moderate-income census tracts were made in predominantly minority census tracts and 61 percent were
made in integrated census tracts. In addition, Talman
made a higher percentage of its housing-related loans to
African-Americans and to borrowers in low- and moderate-income census tracts in 1992 than lenders reporting HMDA data in the market in the aggregate.21
Talman has in place steps designed to increase the
number of loans made to low- and moderate-income
and minority borrowers. Under its "second look"
program, all denied loans are carefully documented to
explain the reason for the decision. A denied loan can
be resubmitted to the underwriting department (where
the denial decision is initially made) with the recommendations of the loan officer and manager. An underwriting supervisor will review the loan application file,
and if the loan is a marginal risk but might still qualify,
it is sent to a member of the credit committee for a final
decision. From January to June 1993, approximately
20 percent of originally denied loan applications were
approved.
Access to Talman's lending services is provided
through Talman's 27 financial and mortgage offices.
Loan applications are accepted at each office.22 The
thrift's most recent CRA performance examination
concluded that Talman had branch offices accessible
to all segments of the institution's local community.
Talman participates in a number of other programs
designed to assist in meeting credit needs for housingrelated loans. For example, Talman was a codeveloper of the FNMA Community Home Buyers
Program, which began as a five city pilot program and
is now national. This program permits low down
payments and higher-than-normal debt-to-income ratios. From January 1 through October 31, 1993, Talman originated loans totalling $25.5 million under this
program. Talman is also an active participant in government guaranteed loan programs. Talman originated
553 FHA/VA loans totalling $45.4 million during the
20. Applicant states that Talman made 35 loans totalling $2.3 million
in the predominantly African-American South Lawndale neighborhood of Chicago in 1992, and made 4.6 percent of all loans in that
neighborhood from 1986-1991.
21. In 1992, Talman made 5.3 percent of all housing-related loans
that were made by all lenders in the Chicago MSA, but it made
9 percent of the total number of such loans made to AfricanAmericans in the Chicago MSA and it made 6.1 percent of the total
number of such loans made in low- and moderate-income census
tracts in the Chicago MSA.
22. Talman also maintains a staff of 78 loan originators who actively
solicit loan applications throughout its delineated community.
period January 1991 to February 1993. The thrift is the
leading lender under the various programs of the
Illinois Housing Development Authority, originating
467 loans totalling $36.2 million during 1991 and 1992.
In addition, in the first 9 months of its participation in
the Illinois State Treasurer's HomeStart program,
which is targeted to first-time home buyers and lowand moderate-income individuals, Talman originated
269 loans totaling $21.9 million.
Talman also is a participant in several new lending
programs such as the Federal Home Loan Bank of
Chicago's Affordable Housing Program/Neighborhood
Housing Services of Chicago, Inc., Program, which
provides for the acquisition of properties from the
Department of Housing and Urban Development, the
Resolution Trust Corporation, and the Veterans Administration.23 Talman also has a $10 million investment in Community Investment Corporation, a notfor-profit mortgage banker engaged in the acquisition
and rehabilitation of multi-unit apartment buildings
whose tenants are primarily minority and low- and
moderate-income individuals.
LaSalle National has made special efforts to increase its lending to small businesses within its delineated community. The bank's Business Banking Division makes use of the contacts developed by the
bank's Community Development Department, which
is responsible for ascertaining the credit needs of small
businesses in its community through a variety of
calling programs, focus groups, and market research.
In response to its ascertainment efforts, LaSalle National developed a line of credit for businesses with
under $1 million in annual sales and began to offer
bridge financing for affordable housing tax credit syndications. At the end of 1992, LaSalle National also
had $100.4 million of housing rehabilitation loans
outstanding.
Ascertainment and community group contact. Talman' s most recent CRA performance examination
characterized its ascertainment efforts as excellent,
and commended the thrift's meaningful, ongoing contact with a wide range of individuals, groups and
organizations representing the local community, governmental units, and not-for-profit housing organizations. In Chicago, these groups include the Greater
Southwest Development Corporation, Eighteenth
Street Development Corporation, Pilsen Neighbors
Community Council, and the North River Commission. Talman also has an ongoing working relationship
23. The acquired properties are rehabilitated and leased to low- and
moderate-income borrowers under a lease-purchase agreement in
which borrowers acquire direct ownership in three years. Through
October 1993, Talman had made over $1 million in loans under this
program.
Legal Developments
with the National Training and Information Center
("NTIC"), an umbrella group of community organizations focused on affordable housing and CRA.
Talman worked with NTIC and FNMA to develop
the Community Home Buyers Program. In addition,
Talman assisted in the formation of Neighborhood
Housing Services of Chicago, Inc. ("NHS"), a notfor-profit partnership that addresses neighborhood
preservation and low- and moderate-income housing
needs. 24
These ascertainment efforts have identified a need
for more affordable housing programs for low- and
moderate-income individuals and for first-time home
buyers. Talman has responded to these needs by
participating in a number of special loan programs
sponsored by government or not-for-profit organizations discussed above. Talman also conducts home
buying and home improvement seminars in conjunction with community-based organizations. In addition,
from January 1991 to October 1992, Talman conducted
11 seminars and a direct mailing of brochures (in
Spanish and English language versions) to promote its
Affordable Home Ownership Program.
Talman's marketing efforts were also considered
excellent in its most recent CRA performance examination. Talman sponsors a weekly one-hour cable
television program, Chicago: Passport to the World.
The program, which is produced and hosted by Talman' s CRA officer, is a forum for neighborhood and
community groups to present their programs and solicit contributions and volunteers. Talman also advertises its credit products and services during this program. In addition, Talman advertises its credit
products over television and radio stations and in the
print media, including community organization publications and media directed to the African-American
and Hispanic communities.25
Other aspects of CRA performance. Applicant has a
variety of CRA policies and procedures designed to
ensure an effective CRA program at each of its depository institution subsidiaries. As noted above, all of
Applicant's subsidiaries have "satisfactory" or "outstanding" CRA ratings, and the ratings of two of these
subsidiaries improved after their acquisition by Applicant. After consummation of this proposal, Applicant
would coordinate the programs of Cragin Federal.
AMRO North America has an internal monitoring and
24. A subsidiary of N H S has acquired and rehabilitated more than
300 units of rental housing for the benefit of low- and moderate-income
tenants.
25. Of the 21 newspapers in which Talman advertises, the Chicago
Defender is directed to the African-American community and Lazara
and Extra are directed to the Hispanic community. Talman also
advertises on three radio stations directed to the African-American
community.
655
compliance program pursuant to which each subsidiary must submit a CRA action plan describing goals
for training and lending. As a subsidiary of AMRO
North America, Cragin Federal would develop such a
plan, and personnel from AMRO North America and
Talman would assume oversight responsibilities for
Cragin Federal's CRA activities.
The record indicates that Cragin Federal plans to
adopt specific outreach programs currently used by
Talman to reach low- and moderate-income areas of
Chicago, including:
(1) CRA Community Contact Program,
(2) Community Outreach Program, and
(3) LaSalle Talman Home Mortgage Corporation's
Loan Originator Call Program in several predominantly minority and low- and moderate-income communities. In addition, Applicant plans to make
credit products such as FHA/VA loans and homeimprovement loans available through Cragin
Federal. Talman will also provide Cragin with assistance in making loans under various Illinois-sponsored home loan programs such as the Illinois
Housing Development Authority and State Treasurer's home loan program.
C. Conclusion Regarding Convenience and
Needs Factor
The Board has carefully considered all the facts of
record, including the comments received, in reviewing
the convenience and needs factor under the BHC Act.
Based on a review of the entire record of performance
by Applicant, Cragin, and their subsidiary depository
institutions, the Board believes that the efforts of
Applicant, Cragin, and their subsidiary banks to help
meet the convenience and needs of all segments of the
communities they serve, including the credit needs of
low- and moderate-income neighborhoods, are consistent with approval of this proposal.26
26. Protestants have requested that the Board hold a public meeting
or hearing on this application regarding the CRA records of Applicant
and Cragin. The Board's rules 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. 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), 262.25(d), and 225.23(g). The Board has carefully considered
this request. In the Board's view, interested parties have had a
sufficient opportunity to present written submissions, and they have
submitted detailed written comments that have been considered by
the Board. On the basis of all the facts of record, the Board has
determined that a public meeting or hearing is not necessary to clarify
the factual record in this application or otherwise required under the
Board's rules. Accordingly, the request for a public meeting or
hearing on this application is hereby denied.
656
Federal Reserve Bulletin • July 1994
Orders Issued Under Sections 3 and 4 of the
Bank Holding Company Act
Other Considerations
The Board concludes that the financial27 and managerial resources of Applicant and Cragin and their respective subsidiaries are consistent with approval. In
addition, the record does not indicate that consummation of this proposal is likely to result in any significantly adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts
of interest, or unsound banking practices that are not
likely to be outweighed by the public benefits of this
proposal. Accordingly, the Board has determined that
the balance of public interest factors it must consider
under section 4(c)(8) of the BHC Act is favorable and
consistent with approval of the application.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The Board's approval is
specifically conditioned upon compliance with all the
commitments made by Applicant 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 225.4(d) 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 action, these commitments
and conditions will be considered conditions imposed
in writing by the Board 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 the Federal Reserve Bank of Chicago, acting
pursuant to delegated authority.
By order of the Board of Governors, effective
May 23, 1994.
Voting for this action: Chairman Greenspan and Governors
Kelley, Lindsey, and Phillips. Absent and not voting: Governor LaWare.
JENNIFER J . JOHNSON
Associate Secretary of the Board
27. Protestants also assert that Applicant's capital levels are inconsistent with approval of this application. The Board has carefully
reviewed these comments in light of Applicant's reports of examinations and other confidential financial information from the Applicant.
The Board notes that Applicant is currently in compliance with all
capital requirements and would remain so upon consummation of this
proposal. Based on all facts of record, the Board concludes that these
comments do not warrant denial of this application.
CoreStates Financial Corp
Philadelphia, Pennsylvania
Order Approving the Merger of Bank Holding
Companies
CoreStates Financial Corp, Philadelphia, Pennsylvania ("CoreStates"), a bank holding company within
the meaning of the Bank Holding Company Act (the
"BHC Act"), has applied under section 3 of the BHC
Act (12 U.S.C. § 1842) to merge with Independence
Bancorp, Inc. ("IBI"), and thereby indirectly acquire
Bucks County Bank and Trust Company, both of
Perkasie; Cheltenham Bank, Cheltenham; Lehigh Valley Bank, Bethlehem; and Third National Bank and
Trust Company of Scranton, Scranton; all of Pennsylvania.1 CoreStates also has applied under section
4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) to
acquire IBI's wholly owned insurance subsidiary, Independence Life Insurance Company, Phoenix, Arizona, and thereby act as a principal in reinsuring credit
life, accident, and health insurance that is directly
related to extensions of credit by its bank subsidiaries
pursuant to section 225.25(b)(8)(i) of the Board's Regulation Y.
Notice of the applications, affording interested persons an opportunity to submit comments, has been
published (59 Federal Register 11,078 and 14,165
(1994)). The time for filing comments has expired, and
the Board has considered the applications and all
comments received in light of the factors set forth in
sections 3 and 4 of the BHC Act.
CoreStates, with total deposits of approximately
$18.4 billion, controls three banking subsidiaries in
Delaware, New Jersey, and Pennsylvania. CoreStates
is the third largest commercial banking organization in
Pennsylvania, controlling deposits of approximately
$11.8 billion, representing 8.5 percent of total deposits
in commercial banks in the state.2 IBI is the 11th
largest commercial banking organization in Pennsylvania, controlling deposits of approximately $2.2 billion,
representing 1.6 percent of total deposits in commercial banks in the state. Upon consummation of this
proposal, CoreStates would remain the third largest
commercial banking organization in Pennsylvania,
with approximately $14 billion in total deposits, repre-
1. In connection with this application, CoreStates has requested
approval to acquire approximately 9.8 percent of IBI, upon certain
triggering events. This option will become moot upon consummation
of the merger of the bank holding companies.
2. Deposit and market data are as of June 30, 1992.
Legal Developments
senting 10.1 percent of total deposits in commercial
banks in the state.
Competitive
Considerations
CoreStates and IBI compete directly in the Philadelphia-Trenton, banking market.3 Upon consummation
of this proposal, CoreStates would remain the largest
depository institution in the market, controlling deposits of $13.8 billion, representing 20.1 percent of total
deposits in depository institutions in the market.4
After considering the number of competitors that
would remain in the market and the relatively small
increase in concentration as measured by the Herfindahl-Hirschman Index ("HHI"),5 and all other facts
of record, the Board concludes that consummation of
this proposal would not result in a significantly adverse
effect on competition in the Philadelphia-Trenton
banking market or any other relevant banking market.
Other Considerations
Based on all the facts of record, the Board concludes
that financial and managerial resources and future
prospects of CoreStates, IBI and their subsidiaries and
the other supervisory factors that the Board must
consider under section 3 of the BHC Act are consistent with approval of this proposal.6 Considerations
3. The Philadelphia-Trenton banking market is approximated by
Bucks, Chester, Delaware, Montgomery, and Philadelphia Counties
in Pennsylvania and Burlington, Camden, Gloucester, and Mercer
Counties in N e w Jersey.
4. When used in this context, depository institutions include commercial banks and savings associations. Market share data are based
on calculations in which the deposits of thrift institutions are included
at 50 percent. The Board previously has indicated that thrift institutions have become, or have the potential to become, major competitors of commercial banks. See Midwest Financial Group, 75 Federal
Reserve Bulletin 386 (1989); National City Corporation, 70 Federal
Reserve Bulletin 743 (1984).
5. The HHI for the market is currently 890 and will increase by 73
points to 963 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 less than
1000 is considered unconcentrated. The Justice Department has
informed the Board that a bank merger or acquisition generally will
not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and
the merger increases the HHI by 200 points. The Justice Department
has stated that the higher than normal HHI thresholds for screening
bank mergers for anti-competitive effects implicitly recognize the
competitive effect of limited-purpose lenders and other non-depository financial entities.
6. The Board has carefully reviewed comments from an individual
about the trading activity in IBI stock before this proposal was
announced. In this regard, the Securities Exchange Commission has
announced an investigation of IBI stock purchases by certain individuals immediately prior to the public announcement of the transaction.
Based on all the facts of record, including the scope of the investigation and reports of examination on the managerial resources of the
institutions involved, the Board does not believe that this matter
warrants denial of the applications.
657
relating to the convenience and needs of the communities to be served also are consistent with approval.7
CoreStates also has applied for approval to acquire
Independence Life Insurance Company and thereby
engage as a principal in credit related insurance activities. The Board previously has determined that this
activity is permissible for bank holding companies
under section 4(c)(8) of the BHC Act, and under the
Board's Regulation Y, and CoreStates will conduct
this activity in accordance with the relevant Board
regulations and orders. The record in this case indicates that there are numerous providers of this service, and there is no evidence in the record to indicate
that consummation of this proposal is likely to result in
any significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices that would outweigh the public benefits of this
proposal. Accordingly, the Board has determined that
the balance of public interest factors it must consider
under section 4(c)(8) of the BHC Act is favorable and
consistent with approval of these applications.
Conclusion
Based on the foregoing and other facts of record, the
Board has determined that the applications should be,
and hereby are, approved. The Board's approval is
expressly conditioned upon compliance with all the
commitments made by CoreStates in connection with
these applications. The determination as to the nonbanking activities is subject to all the conditions in the
Board's Regulation Y including those in sections
225.4(d) and 225.23(b)(3) (12 C.F.R. 225.4(d) and
225.23(b)(3)), and to the Board's authority to require
such modification or termination of the activities of a
holding company or any of its subsidiaries as the
Board finds necessary to assure compliance with, or to
prevent evasions of, the provisions and purposes of
the BHC Act and the Board's regulations and orders
issued thereunder. The commitments and conditions
relied on by the Board in reaching this decision are
both deemed to be conditions imposed in writing by
7. This commenter has also raised issues regarding the effect of the
merger of CoreStates and IBI on the local services presently offered
by Bucks County Bank and Trust Company ("Bank"). CoreStates has
stated that current management and staff of Bank will be responsible
for the Bucks County branches of CoreStates after consummation of
the proposal, and CoreStates will place the Bank's directors on
CoreStates's regional advisory board. In addition, a review of the
records of performance by CoreStates banks under the Community
Reinvestment Act ("CRA") indicates that all the banks have received
a rating of "satisfactory" or "outstanding" in meeting the credit
needs of their communities. In light of these and all facts of record, the
Board concludes that these comments do not warrant denial of this
proposal.
658
Federal Reserve Bulletin • July 1994
the Board in connection with its findings and decision,
and, as such, may be enforced in proceedings under
applicable law.
The acquisition of the subsidiary banks shall not be
consummated before the thirtieth calendar day following the effective date of this order, and the acquisition
of the banks and nonbanking subsidiary 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 Philadelphia, acting under delegated authority.
By order of the Board of Governors, effective
May 23, 1994.
Voting for this action: Chairman Greenspan, Governors
Kelley, Lindsey, and Phillips. Absent and not voting: Governor La Ware.
JENNIFER J. JOHNSON
Associate Secretary of the Board
Insurance Corporation. The time for filing comments
has expired, and the Board has considered the applications and all the comments received in light of the
factors set forth in the Bank Merger Act and the
Federal Reserve Act.
BMJ is the 23d largest commercial banking organization in New Jersey, controlling deposits of approximately $402.2 million, representing less than 1 percent
of the total deposits in commercial banking organizations in the state.1 Mount Holly is the 51st largest
commercial banking organization in the state, controlling deposits of approximately $127 million, representing less than 1 percent of total deposits in commercial
banks in the state. B.M.J. Financial currently owns
BMJ and Mount Holly, and thus this transaction
represents a reorganization of B.M.J. Financial's corporate structure. Based on the facts of record, the
Board has determined that consummation of this proposal would not have a significantly adverse effect on
competition or the concentration of resources in any
relevant market.
Convenience and Needs
Considerations
ORDERS ISSUED UNDER BANK MERGER ACT
Bank of Mid-Jersey
Bordentown, New Jersey
Order Approving the Merger of Banks
Bank of Mid-Jersey, Bordentown, New Jersey
("BMJ"), a state member bank, has applied for the
Board's approval under section 18(c) of the Federal
Deposit Insurance Act (12 U.S.C. § 1828(c)) (the
"Bank Merger Act"), to merge with Mount Holly
State Bank, Mount Holly, New Jersey ("Mount Holly"). BMJ and Mount Holly are both subsidiaries of
B.M.J. Financial Corp., Bordentown, New Jersey
("B.M.J. Financial"), a bank holding company within
the meaning of the Bank Holding Company Act
(12 U.S.C. § 1841 et seq.). BMJ also has applied for
the Board's approval to establish branches at the sites
of the current Mount Holly branches pursuant to
section 9 of the Federal Reserve Act (12 U.S.C.
§ 321) and to make an additional investment in bank
premises pursuant to section 24A of the Federal Reserve Act (12 U.S.C. § 371(d)).
Notice of the applications, affording interested persons an opportunity to submit comments, has been
given in accordance with the Bank Merger Act and the
Board's Rules of Procedure (12 C.F.R. 262.3(b)). As
required by the Bank Merger Act, reports on the
competitive effects of the merger were requested from
the United States Attorney General, the Office of the
Comptroller of the Currency, and the Federal Deposit
In acting on an application under the Bank Merger
Act, the Board is required to 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 the safe and sound operation of such
institutions. To accomplish this end, the CRA requires
the appropriate federal supervisory authority to "assess the institution's record of meeting the credit
needs of its entire community, including low- and
moderate-income neighborhoods, consistent with the
safe and sound operation of such institution" and to
take that record into account in its evaluation of
applications under the Bank Merger Act or under the
Federal Reserve Act to establish domestic branches.2
In this regard, the Board has received comments
from New Jersey Citizens Action ("Protestant") critical of the efforts of BMJ to meet the credit and
banking needs of the communities it serves. In particular, Protestant maintains that BMJ's performance
under the CRA is deficient in the following respects:
(1) Providing products and services that meet the
credit needs of the bank's entire community;
1. Data are as of June 30, 1993.
2. 12 U.S.C. § 2903.
Legal Developments
(2) Participating in local community development
and redevelopment projects; and
(3) Ascertaining the credit needs of, and marketing
its products and services to, the bank's entire community.
In its consideration of the convenience and needs
factor, the Board has carefully reviewed the entire
record of CRA performance of BMJ and Mount Holly,
all comments received regarding this application, including the response to the comments by B.M.J.
Financial, and all the 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").3
The Board has also carefully considered the scope of
BMJ's CRA-related activities, discussed in greater
detail below, in light of information contained in reports
of examination assessing the financial and managerial
resources of the bank. The Board notes that management has recently devoted substantial efforts to improving the financial condition of BMJ Financial's subsidiary banks, and that these efforts have had a positive
effect on the financial resources of both BMJ and
Mount Holly. The Board believes that these efforts are
an important consideration in assessing BMJ's overall
record of performance under the CRA and that these
efforts will enhance the ability of BMJ to assist in
meeting the credit needs of all its communities, including low- and moderate-income areas in the future.
Record of CRA Performance
Examination Record. The Agency CRA Statement
provides that a CRA examination is an important and
often controlling factor in the consideration of an
institution's CRA record, and that these reports will be
given great weight in the applications process.4 In this
regard, the Board notes that BMJ received a "satisfactory" rating from the Federal Reserve Bank of
Philadelphia at its most recent examination for CRA
performance as of September 30, 1992. Mount Holly
also received a "satisfactory" rating from its primary
regulator, the Federal Deposit Insurance Corporation,
at its most recent examination for CRA performance
as of October 10, 1993. Examiners at both banks found
no evidence of illegal discrimination or of illegal credit
practices, and also that both banks were in substantial
compliance with the provisions of antidiscrimination
laws and regulations.
3. 54 Federal Register
4. 54 Federal Register
13,742 (1989).
13,745 (1989).
659
Lending and Community Development. BMJ has
developed programs designed to address the special
credit needs of low- and moderate-income borrowers.
For example, in 1993, when the New Jersey Housing
and Mortgage Finance Agency ("NJHMFA") temporarily suspended funding for its First Time Home
Buyers and Community Home Buyers Programs, BMJ
created an in-house mortgage plan. BMJ's program
currently operates in conjunction with NJHMFA programs to offer up to 100 percent mortgage financing. In
addition, BMJ has applied to be a full member of the
Trenton Home Buyer Plan ("Plan") which is a cooperative reinvestment effort by financial institutions
located in Trenton, New Jersey. Under the Plan, the
Bank has committed $500,000 for below-market rate
30-year fixed-rate mortgages. BMJ has committed
$15,000 to Burlington Housing Development Corporation's emergency loan program, which provides emergency home repairs loans to low- and moderateincome individuals in Burlington, New Jersey. The
bank has also initiated a "second look" review of all
denied, cancelled, or withdrawn mortgage and home
improvement loan requests in an effort to improve its
housing-related lending record.
BMJ also participates in local community development and redevelopment projects consistent with its
financial resources. The 1992 CRA examination indicates that BMJ provided a line of credit to support a
housing development project for low- and moderateincome residents in Burlington City, New Jersey. In
addition, BMJ's investment department purchases local county and municipal bonds, and acts as underwriter for banks of various governmental entities. BMJ
also provides financial assistance to various civic,
educational and community service organizations in
its area.
Ascertainment and Marketing. BMJ uses several
methods to ascertain the credit needs of its community. The bank's branch managers, and its mortgage
loan, consumer loan, and commercial loan officers are
required to make CRA-related calls each quarter.
Through its CRA Outreach Program, BMJ has contacted numerous civic and community organizations,
including the Mercer County Hispanic Association,
Mercer County Office of Housing, Neighborhood
Housing Services, Inc., and Burlington County Community Action Program ("BCCAP").5 In conjunction
with BCCAP, BMJ has begun monthly seminar pro-
5. Protestant has asserted that certain organizations involved in
BMJ's ascertainment efforts are not effective in ascertaining credit
needs. BMJ has clarified that its officers and employees actively
participate in the organizations discussed in Protestant's comments,
but these organizations are not linked to the bank's ascertainment
efforts.
660
Federal Reserve Bulletin • July 1994
grams for prospective homebuyers. BMJ also surveys
its customers to determine their satisfaction with its
products and services.
BMJ currently advertises in the largest newspapers
in the Trenton, New Jersey area, and also uses radio
advertisements and billboards to advertise its banking
products. BMJ also has developed a brochure detailing
its specific credit programs that are targeted for lowand moderate-income areas.
On the basis of all the facts of record, including
comments provided by Protestant, BMJ's response to
those comments, and information from relevant reports of examination, the Board concludes that considerations relating to the convenience and needs of
the community to be served are consistent with approval.6
specifically conditioned upon compliance by BMJ with
all the commitments made in connection with this
application. For the purpose of this action, these
commitments and conditions are both considered conditions imposed in writing by the Board in connection
with its findings and decisions, and as such, may be
enforced by proceedings under applicable law. This
transaction shall not be consummated before the thirtieth calendar day following the effective date of this
order, or later than three months after the effective
date of this order, unless such period is extended for
good cause by the Board or by the Federal Reserve
Bank of Philadelphia, acting pursuant to delegated
authority.
By order of the Board of Governors, effective
May 24, 1994.
Other Considerations
Voting for this action: Chairman Greenspan and Governors
Kelley, Lindsey, and Phillips. Absent and not voting: Governor LaWare.
The financial and managerial resources and future
prospects of BMJ and Mount Holly are consistent with
approval. The Board notes that the merger of BMJ and
Mount Holly should result in a reduction of expenses
for BMJ.
The Board also has considered the factors it is
required to consider when reviewing applications for
establishing branches pursuant to section 9 of the
Federal Reserve Act (12 U.S.C. § 321 et seq.) and
finds those factors to be consistent with approval of
the establishment of BMJ branches at the present sites
of the Mount Holly branches.
In connection with the applications to establish
these branches, BMJ also has requested permission
under section 24A of the Federal Reserve Act
(12 U.S.C. § 37Id) to make an additional investment
in bank premises. The Board concludes that BMJ's
additional investment in bank premises is consistent
with approval.
Based on the foregoing and other facts of record, the
Board has determined that the applications should be,
and hereby are, approved. The Board's approval is
6. Protestant has requested that the Board hold a public meeting or
hearing on these applications. The Board is not required to hold a
public hearing on these applications under the Bank Merger Act or the
Federal Reserve Act. Under its rules, the Board may, in its discretion,
hold a public meeting or hearing on an application to clarify factual
issues related to the application and to provide an opportunity for
testimony, if appropriate. 12 C.F.R. 262.3(e) and 262.25(d). The
Board has carefully considered Protestant's request, and its written
comments. In the Board's view, interested parties have had ample
opportunity to submit and have submitted substantial written comments that have been considered by the Board. In light of the
foregoing and all the facts of record, the Board has determined that a
public meeting or hearing is not necessary to clarify the factual record
on these applications, or otherwise warranted in this case. Accordingly, the request for a public meeting or hearing on these applications
is hereby denied.
J E N N I F E R J. JOHNSON
Associate Secretary of the Board
ORDERS ISSUED UNDER FEDERAL
ACT
RESERVE
First Virginia Bank of Tidewater
Norfolk, Virginia
Order Approving Establishment of a Branch
First Virginia Bank of Tidewater, Norfolk, Virginia
("Bank"), a state member bank, has applied under
section 9 of the Federal Reserve Act (12 U.S.C.
§ 321) to establish a branch office at the Shore Plaza
Shopping Center, Route 13 By-Pass (Lankford Highway), Exmore, Virginia, to replace an existing branch
at 3305 Main Street, in Exmore.
Notice of this application, affording interested persons an opportunity to submit comments, has been
published. The time for filing comments has expired,
and the Board has considered the application and all
comments received in light of the factors contained in
the Federal Reserve Act.
Bank, with assets of approximately $517.4 million,1
has 41 branches, of which 37 are in the NorfolkVirginia Beach-Newport News Metropolitan Statistical Area (the "MSA"), and four are in rural Accomack
and Northampton Counties on the Eastern Shore of
Virginia.
1. Asset data are as of March 31, 1994.
Legal Developments
In its evaluation of an application to establish a
branch, the Board is required to take into account the
institution's record of performance under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.)
("CRA"). 2 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
the safe and sound operation of such institutions. To
accomplish this end, the CRA requires the appropriate federal supervisory authority to "assess the
institution's record of meeting the credit needs of its
entire community, including low- and moderateincome neighborhoods, consistent with the safe and
sound operation of such institution," and to take that
record into account in its evaluation of branch applications.3
In this light, the Board has considered comments
from an individual ("Protestant") opposing the proposal. Protestant alleges that Bank does not adequately meet the credit needs of the agricultural community on the Eastern Shore of Virginia, which
Protestant describes as an area of poverty and few job
opportunities. In particular, Protestant contends that
Bank is unwilling to implement flexible terms for loans
to young farmers in this area. The Board has carefully
reviewed the entire record of Bank's CRA performance in light of the Board's regulations and the
Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act (the
"Agency CRA Statement").4
The Agency CRA Statement provides that a CRA
examination is an important and often controlling
factor in the consideration of an institution's CRA
record and that these reports will be given great weight
in the applications process. The Board notes that Bank
received a "satisfactory" rating from the Federal
Reserve Bank of Richmond at its most recent examination for CRA performance as of August 16, 1993 (the
"1993 Examination"). In addition, the 1993 Examination found that Bank is in compliance with all provisions of antidiscrimination laws and regulations.5
Bank has a number of programs designed to assist
in meeting the credit needs of low- and moderateincome borrowers. For example, in conjunction with
the Virginia Beach Department of Housing, Bank has
actively promoted its FHA Title I home improvement loan program, which provides funding to resi-
2. See 12 U.S.C. §§ 2902(3)(C), 2903(2).
3. 12 U.S.C. § 2903.
4. 54 Federal Register 13,742, 13,745 (1989).
5. The 1993 Examination included a sampling of approved and
denied mortgage loans to verify Bank's equal application of its credit
criteria.
661
dents of substandard properties regardless of the
borrower's equity in the property. Bank also has
made loans to minority-owned and other developers
to purchase and rehabilitate housing for lease to lowand moderate-income families in the MSA and on the
Eastern Shore. Altogether, approximately 11 percent
of Bank's total loans extended in 1992 were made in
low- and moderate-income areas in the MSA. 6 In
addition, both Bank and an affiliated bank, First
Virginia Bank, Falls Church, Virginia, have purchased Virginia Housing Development Authority
multifamily housing bonds that fund projects within
Bank's service area.
Bank assists in meeting the credit needs of small
businesses throughout its service area, including those
located in low- and moderate-income areas. In the
period reviewed in the 1993 Examination, Bank extended 488 loans aggregating $96 million for the establishment, expansion, and operation of small businesses.
Bank's Eastern Shore branches offer loans and lines
of credit to farmers and agricultural loans. In 1992,
1993 and through April 1994, these branches made
50 installment loans aggregating $708,000 to farmers or
for agricultural purposes. During the same period,
these branches also made or made available 103 time
and demand loans and lines of credit, representing a
total commitment of $6,532,000 to farmers or for
agricultural purposes. In addition, these branches
made six real estate loans aggregating $306,000 to
farmers or for agricultural purposes.
Bank ascertains community credit needs and markets its products and services in several ways. For
example, Bank has appointed ten officers as CRA
Coordinators, one in each of the eight cities and two
rural counties in its delineated community. These
officers maintain contact with local governments,
economic development groups, and housing organizations to assist in identifying credit needs, and
identify census tracts where Bank has a low penetration and needs to concentrate its outreach efforts. In
addition, all branch managers and commercial/real
estate loan officers have monthly quotas for calls on
small business customers and prospects. Directors
and senior officers participate in local trade and
development organizations. Bank markets its products and services to its entire delineated community
through local newspaper advertisements and mail
solicitations.
6. Accomack and Northampton Counties on the Eastern Shore of
Virginia are predominantly rural. Accordingly, census tract data for
low- and moderate-income areas are not available for these counties
and Bank does not track loans made in these low- and moderateincome areas.
662
Federal Reserve Bulletin • July 1994
Bank has also formed an Eastern Shore Advisory
Board, which includes local business people, members
of the farming community, and a representative of the
Virginia Department of Agriculture. The Advisory
Board meets quarterly with Bank officers to review the
performance of Bank and the Eastern Shore branches,
including community reinvestment activities, and to
provide input on how better to serve the needs of the
Eastern Shore.
Bank is involved in a number of community development projects, including loans to a minority-owned
import business and construction and development
loans to a local minority church to build a youth
training center and facilities to feed the homeless.
Bank also helped found the Hampton Roads Development Corporation to promote affordable housing in the
area, and has provided it with a $100,000 construction
line of credit in addition to donations and technical
assistance.
Based on all facts of record, including the relevant
examination reports and information provided by Protestant and Bank, the Board believes that Protestant's
comments do not warrant denial of this application and
that Bank's record of performance under the CRA is
consistent with approval. The Board also concludes on
the basis of all facts of record that the factors required
to be considered when approving applications for the
establishment of branches, including the financial condition of Bank, the general character of its management, and the proposed exercise of corporate powers,
are consistent with approval and the purposes of
section 9 of the Federal Reserve Act.
Based on the foregoing and other facts of record, the
Board has determined that this application should be,
and hereby is, approved. The Board's approval is
specifically conditioned upon compliance by Bank
with all the commitments made in connection with
these applications. For purposes of this action, these
commitments and conditions are considered conditions imposed in writing by the Board in connection
with its findings and decisions, and, as such, may be
enforced in proceedings under applicable law.
This branch shall be in operation no later than one
year after the effective date of this order, unless such
period is extended for good cause by the Board or by
the Federal Reserve Bank of Richmond, acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 31, 1994.
Voting for this action: Chairman Greenspan and Governors
Kelley, LaWare, and Phillips. Absent and not voting: Governor Lindsey.
JENNIFER J. JOHNSON
Associate Secretary of the Board
ORDERS ISSUED UNDER
BANKING ACT
INTERNATIONAL
MeesPierson N.V.
Amsterdam, The Netherlands
Order Approving Establishment of an Agency and a
Representative Office
MeesPierson N.V. ("Bank"), Amsterdam, The Netherlands, a foreign bank within the meaning of the
International Banking Act ("IBA"), has applied under
section 7(d) of the IBA (12 U.S.C. § 3105(d)) to establish a state-licensed agency in New York, New York
and section 10(a) of the IBA (12 U.S.C. § 3107(a)) to
establish a representative office in Dallas, Texas. A
foreign bank must obtain the approval of the Board to
establish a branch, agency, commercial lending company, or representative office in the United States
under the Foreign Bank Supervision Enhancement
Act of 1991 ("FBSEA"), which amended the IBA.
Notice of the applications, affording interested persons an opportunity to submit comments, has been
published in newspapers of general circulation in New
York, New York (The New York Times, May 6, 1993),
and Dallas, Texas (The Dallas Morning News,
March 16, 1993). The time for filing comments has
expired and the Board has considered all comments
received.
Bank is the surviving entity of the April 1993 merger
of two Dutch banks, Bank Mees & Hope N.V. and
Pierson, Heldring & Pierson N.V., both of which were
wholly owned subsidiaries of ABN AMRO Bank N.V.
("ABN AMRO Bank"), the largest bank in the Netherlands. Bank had assets of $18.8 billion as of December 31, 1993, and remains a wholly owned subsidiary
of ABN AMRO Bank. Bank is a merchant bank and
provides corporate banking services (including specialized finance to the shipping, energy, and aircraft
industries), trade and commodity finance, asset finance, securities trading, capital management services, and private banking and trust services.
Bank operates through an extensive worldwide network, with offices in approximately 20 countries in
Europe, Asia and the Caribbean. Bank currently engages indirectly in permissible nonbanking activities in
the United States through two wholly owned subsidiaries that are held through Bank's wholly owned U.S.
holding company. Bank also has a representative
office in New York City, which would be converted to
the proposed agency. Bank would be a qualifying
foreign banking organization as defined in Regulation K. 12 C.F.R. 211.23(b).
Bank's parent company, ABN AMRO Bank, is in
turn owned by ABN AMRO Holding N.V. ("ABN
Legal Developments
AMRO Holding").1 ABN AMRO Holding, which operates in nearly 60 countries, reported total consolidated assets of $253 billion as of December 31, 1993.
ABN AMRO Bank operates an extensive worldwide
network of offices, including five branches, five agencies, and a representative office in the United States.
Through its U.S. holding company, ABN AMRO
North America Inc., ABN AMRO Bank owns LaSalle
National Corporation, Chicago, Illinois, and its subsidiary banks. In addition, ABN AMRO Bank owns
100 percent of European American Bank, New York,
New York. ABN AMRO Bank's U.S. nonbanking
subsidiaries engage in commercial finance, problem
asset workouts and collections, brokerage and investment advisory services, and leasing. ABN AMRO
Bank is a qualifying foreign banking organization as
defined in Regulation K. 12 C.F.R. 211.23(b).
In order to approve an application by a foreign bank
to establish an agency in the United States, the IB A
and Regulation K require the Board to determine that
the foreign bank engages directly in the business of
banking outside of the United States and has furnished
to the Board the information it needs to assess adequately the application. The Board also must determine that the foreign bank applicant and any foreign
bank parent are subject to comprehensive supervision or regulation on a consolidated basis by its
home country supervisor. 12 U.S.C. § 3105(d)(2),
12 C.F.R. 211.24(c)(1). The IBA and Regulation K
also permit the Board to take into account additional
standards. 12 U.S.C. § 3105(d)(3)-(4)), 12 C.F.R.
211.24(c)(2).2
Bank and ABN AMRO Bank engage directly in the
business of banking outside of the United States
through their extensive banking operations in Europe,
Asia and elsewhere. Bank also has provided the Board
with the information necessary to assess the application through submissions that address the relevant
issues.
Regulation K provides that a foreign bank and any
parent foreign bank will be considered to be subject to
comprehensive supervision or regulation on a consolidated basis if the Board determines that the bank is
1. A B N AMRO Holding is owned by two foundations: Stichting
Prioriteit A B N AMRO Holding ("Stichting Prioriteit") and Stichting
Administratiekantoor A B N AMRO Holding ("Stichting Administratiekantoor"). These foundations have no assets, liabilities, or
capital other than the preferred and priority shares of A B N AMRO
Holding.
2. In acting on an application to establish a representative office, the
Board is required only to take into account the standards applicable to
the establishment of a branch, agency or commercial lending company. 12 U.S.C. § 3107(a)(2), 12 C.F.R. 211.24(d)(2). Because Bank
has applied to establish both an agency and a representative office, the
Board has made its findings in accordance with the stricter standards
applicable to agency applications.
663
supervised and regulated in such a manner that its
home country supervisor receives sufficient information on the bank's worldwide operations, including its
relationship to any affiliate, to assess the bank's overall financial condition and its compliance with law and
regulation.3 12 C.F.R. 211.24(c)(1). In making its determination on these applications, the Board considered the following information.
De Nederlandsche Bank N.V. ("DNB") is the supervisory authority for Dutch credit institutions and,
as such, is the home country supervisor of Bank and
ABN AMRO Bank. DNB monitors the solvency,
liquidity, profitability, and administrative and corporate organization of such institutions. With respect to
the supervision of Bank and ABN AMRO Bank, DNB
receives information on the worldwide operations of
both Bank and ABN AMRO Bank, including domestic
and foreign branches and affiliates, through the conduct of targeted on-site examinations, as well as
through the review of audit reports and periodic financial reports.
DNB conducts on-site examinations of Dutch credit
institutions such as Bank and ABN AMRO Bank,
including their banking subsidiaries and branches,
both in the Netherlands and abroad. The scope of
on-site examinations of credit institutions, including
Bank and ABN AMRO Bank, generally is determined
according to the potential risks associated with an
institution's activities, the significance of these risks in
relation to its overall operations, and the internal
controls and procedures utilized in relation to these
risks. DNB also reviews compliance with applicable
laws and regulations during its on-site examinations.
Bank and ABN AMRO Bank submit a variety of
financial reports to DNB for supervisory purposes in
the form prescribed by DNB regulations. Financial
statements are consolidated to include generally the
operations of domestic and foreign subsidiaries and
companies over which significant economic or organizational control is exercised. The external auditors of
Bank and ABN AMRO Bank must certify the accu-
3. In assessing this standard, the Board considers, among other
factors, the extent to which the home country supervisor:
(i) Ensures that the bank has adequate procedures for monitoring
and controlling its activities worldwide;
(ii) Obtains information on the condition of the bank and its
subsidiaries and offices outside the home country through regular
examination reports, audit reports, or otherwise;
(iii) Obtains information on the dealings with and relationship
between the bank and its affiliates, both foreign and domestic;
(iv) receives from the bank financial reports that are consolidated on
a worldwide basis, or comparable information that permits analysis
of the bank's financial condition on a worldwide consolidated basis;
(v) Evaluates prudential standards, such as capital adequacy and
risk asset exposure, on a worldwide basis. These are indicia of
comprehensive, consolidated supervision. N o single factor is essential, and other elements may inform the Board's determination.
664
Federal Reserve Bulletin • July 1994
racy and sufficiency of the financial statements on an
annual basis, and verify the accuracy and consistency
of Bank's implementation of DNB guidelines. DNB
also meets with Bank's external auditors to discuss
particular matters, such as asset quality, administrative organization and internal controls.
DNB imposes certain investment and lending limits
on credit institutions, such as Bank and ABN AMRO
Bank, that are applicable to affiliates. The lending
limits are expressed as a percentage of a bank's total
capital and are monitored by DNB through reporting
requirements. Prior DNB approval is required for
various investments and changes in the structure of
Dutch banks.
Bank's significant domestic subsidiaries are engaged
in banking and securities activities. Bank's securities
affiliates are supervised by the Securities Board of the
Netherlands (the "Securities Board"), which obtains
information on the operations and activities of these
subsidiaries through the securities exchanges to which
the subsidiaries belong as well as through on-site
examinations and reports filed directly with the Securities Board. Bank indicates that the Securities Board
shares information with DNB.
Based on all the facts of record, which include the
information described above, the Board concludes
that Bank and ABN AMRO Bank are subject to
comprehensive supervision on a consolidated basis by
their home country supervisor.
In considering these applications, the Board also has
taken into account the additional standards set forth in
section 7 of the IBA. 12 U.S.C. § 3105(d)(3)-(4).
Bank's home country supervisor, DNB, has indicated
that it has no objection to the establishment by Bank of
the proposed agency or representative office. In addition, subject to certain conditions, DNB has agreed to
cooperate in providing the Board with information on
Bank's and ABN AMRO Bank's operations.
The Netherlands is a signatory to the Basle riskbased capital standards, and Dutch risk-based capital
standards meet those established by the Basle Capital
Accord and the European Union. Bank's capital is in
excess of the minimum levels that would be required
by the Basle Capital Accord and is considered equivalent to capital that would be required of a U.S.
banking organization.
Managerial and financial resources of Bank are also
considered consistent with approval. Bank, which has
a number of branches and subsidiaries outside the
Netherlands, appears to have the experience and
capacity to conduct banking operations in the United
States through the proposed agency and to conduct the
business of the proposed representative office. In
addition, Bank has established controls and procedures for its U.S. offices to ensure compliance with
U.S. law. Under the IBA, the proposed state-licensed
agency may not engage in any type of activity that is
not permissible for a federally licensed branch without
the Board's approval.
Finally, with respect to access to information regarding Bank's operations, the Board has reviewed
relevant provisions of Dutch law and has communicated with the appropriate government authorities.
Bank, ABN AMRO Bank and its parent companies
have committed that they will make available to the
Board such information on the operations of Bank and
any affiliate of Bank that the Board deems necessary to
determine and enforce compliance with the IBA, the
Bank Holding Company Act of 1956, as amended, and
other applicable federal law. To the extent that the
provision of such information to the Board may be
prohibited or impeded by law, Bank, ABN AMRO
Bank and its parent companies have committed to
cooperate with the Board in obtaining any necessary
consents or waivers that might be required from third
parties in connection with disclosure of certain necessary information. In light of these commitments and
other facts of record, and subject to the condition
described below, the Board concludes that Bank has
provided adequate assurances of access to any necessary information the Board may request.
On the basis of all the facts of record, and subject to
the commitments made by Bank, ABN AMRO Bank
and its parent companies, as well as the terms and
conditions set forth in this order, the Board has
determined that Bank's applications to establish an
agency and a representative office should be, and
hereby are, approved. Should any restrictions on
access to information on the operations or activities of
Bank and any of its affiliates subsequently interfere
with the Board's ability to determine the safety and
soundness of Bank's U.S. operations or the compliance by Bank or its affiliates with applicable federal
statutes, the Board may require termination of any of
Bank's direct or indirect activities in the United
States. Approval of this application is also specifically
conditioned on compliance by Bank with the commitments made in connection with this application, and
with the conditions contained in this order.4 The
commitments and conditions referred to above are
conditions imposed in writing by the Board in connec4. The Board's authority to approve the establishment of the
proposed agency parallels the continuing authority of the N e w York
State Banking Department to license offices of a foreign bank. The
Board's approval of this application does not supplant the authority of
the State of N e w York, and its agent, the N e w York State Banking
Department, to license the proposed agency of Bank in accordance
with any terms or conditions that the N e w York State Banking
Department may impose.
The prior approval of the Texas Commissioner of Banking is not
required to establish the Dallas representative office.
Legal Developments
tion with its decision, and may be enforced in proceedings under 12 U.S.C. § 1818 or 12 U.S.C. § 1847
against Bank, its offices and its affiliates.
By order of the Board of Governors, effective
May 23, 1994.
V o t i n g for this action: C h a i r m a n G r e e n s p a n and G o v e r n o r s
K e l l e y , L i n d s e y , and Phillips. A b s e n t and n o t voting: G o v ernor L a W a r e .
JENNIFER J. JOHNSON
Associate Secretary of the Board
Societe Generale
Paris, France
Order Approving Establishment of a Representative
Office
Societe Generale, Paris, France ("Bank"), a foreign
bank within the meaning of the International Banking
Act ("IBA"), has applied under section 10(a) of the
IBA (12 U.S.C. § 3107(a)) to establish a representative
office in Atlanta, Georgia. The Foreign Bank Supervision Enhancement Act of 1991, which amended the
IBA, provides that a foreign bank must obtain the
approval of the Board to establish a representative
office in the United States.
Notice of the application, affording interested persons an opportunity to comment, has been published
in a newspaper of general circulation in Atlanta {The
Atlanta Journal and Constitution, February 21, 1994).
The time for filing comments has expired, and the
Board has considered the application and all comments received.
Bank, with $254.2 billion in consolidated assets,1 is
a commercial bank chartered in France. Bank ranks
fifteenth among the world's largest banks in terms of
total assets, and in France, Bank ranks fourth in terms
of total assets.
Bank's domestic activities include commercial
banking, securities activities, leasing, real estate investment and marketing of data processing services.
Bank has a significant presence in the United States in
the form of branches, agencies and representative
offices.2 Bank's loan operations in the southern United
States are currently conducted through representatives based in its New York branch and Texas agency.
Bank believes that the establishment of a representa-
1. Data are as of June 30, 1993, unless otherwise noted.
2. Applicant currently operates branches in New York, New York;
Chicago, Illinois; and Los Angeles, California; an agency in Dallas,
Texas; and representative offices in San Francisco, California and
Houston, Texas. In addition, Bank has a number of non-bank subsidiaries engaged in permissible activities.
665
tive office in Atlanta, Georgia would help solidify its
market position in the southeastern United States.
The proposed representative office in Atlanta would
perform loan solicitation functions similar to those
performed by Bank's existing representative offices in
Texas and California. These activities may include the
taking of loan applications, soliciting loans, and other
activities central to the loan origination process. All
credit decisions and funding of any loans originated at
the proposed office, however, would occur at a licensed domestic branch or agency of Bank that is
authorized to engage in such activities.
In acting on an application to establish a representative office, the IBA and Regulation K provide that the
Board shall take into account whether the foreign bank
engages directly in the business of banking outside the
United States, has furnished to the Board the information it needs to assess adequately the application, and is
subject to comprehensive supervision or regulation on a
consolidated basis by its home country supervisor
(12 U.S.C. § 3105(d)(2); 12 C.F.R. 211.24). The Board
may also take into account additional standards as set
forth in the IBA (12 U.S.C. § 3105(d)(3) - (4)) and
Regulation K (12 C.F.R. 211.24(c)).
The Board has previously stated that the standards
that apply to the establishment of a branch or agency
need not in every case apply to the establishment of a
representative office because representative offices do
not engage in a banking business and cannot take
deposits or make loans (see 58 Federal Register 6348,
6351 (1993)). In evaluating an application to establish a
representative office under the IBA and Regulation K,
the Board will take into account the standards that apply
to establishment of branches and agencies, subject to
the following considerations. With respect to supervision by home country authorities, a foreign bank that
proposes to establish a representative office must be
subject to a significant degree of supervision by its
home country supervisor. Among the factors the Board
may consider are the extent to which there is regular
review of a substantial portion of the bank's operations
by the home country supervisor through examination,
review of external audits, or a comparable method,
submission of periodic reports relating to financial
performance, and assurance that the bank itself has a
system of internal monitoring and control that enables
bank management to administer properly the bank's
operations. The home country supervisor must also
have indicated that it does not object to the establishment of the representative office in the United States.
A foreign bank's financial and managerial resources
will be reviewed to determine whether its financial
condition and performance demonstrate that it is capable of complying with applicable laws and has an
operating record that would be consistent with the
666
Federal Reserve Bulletin • July 1994
establishment of a representative office in the United
States. If the financial condition of the foreign bank
significantly differs from international norms, the foreign bank would be evaluated to determine whether
such difference can be justified in the context of the
operations of the applicant and the proposed representative office. All foreign banks, whether operating
through branches, agencies or representative offices,
will be required to provide adequate assurances of
access to information on the operations of bank and its
affiliates necessary to determine compliance with U.S.
laws.
In this case, with respect to the issue of supervision
by home country authorities, the Board has considered the following information. Bank is subject to the
supervisory authority of the Bank of France, the
Commission Bancaire ("Commission"), the French
Ministry of Finance, the National Credit Counsel, and
the Credit Establishment Committee. The Bank of
France, which has authority for, inter alia, the proposed expansion of operations of credit institutions,
has indicated that it does not object to Bank's establishment of the representative office. The Commission, which has primary responsibility for supervising
Bank, monitors its compliance with French law and
regulatory standards as well as its financial condition.
The Commission reviews periodic financial reports
submitted by Bank and annual reports prepared by
independent auditors.3 Bank is required to file annual,
semi-annual and quarterly financial reports with the
Commission. Audited consolidated financial statements of Bank are submitted to the Commission
annually. Bank's quarterly and semi-annual reports
include unaudited balance sheets and income statements, and basic financial statements and key financial
ratios covering such areas as risk-based capital, liquidity, foreign exchange, and concentration of credit. In
addition to reviewing these reports, the Commission
meets regularly with Bank management.
Examiners from the Bank of France perform on-site
examinations of Bank on behalf of the Commission.
The examinations are performed once every five years
and take approximately three months to complete. A
written report is provided to Bank, and Bank is
requested to forward a copy of the report to its
statutory auditors. Bank's board of directors is required to meet to discuss the examination's findings.
The examiners also meet with bank's statutory auditors during the examination. The examination includes
review of Bank's loan portfolio, deposit composition,
banking services, securities and portfolio management
3. Bank's auditors are chosen from a list of firms approved by the
Commission. Representatives from these firms meet frequently with
the Commission to discuss general banking issues.
activities, operations and profitability. If any problems
are detected, the Commission has the authority to
conduct more frequent examinations and to require
additional information from Bank at any time.
Bank is required to maintain records on all of its
subsidiaries and operations worldwide. Bank represents that it has procedures in place to monitor and
control its worldwide activities in accordance with
regulatory requirements. Bank conducts annual internal audits of its offices and subsidiaries. Based on all
the facts of record, which include the information
described above, the Board concludes that factors
relating to the supervision of Bank by its home country
supervisors are consistent with approval of the proposed representative office.
The Board has also found that Bank engages directly
in the business of banking outside the United States
through its commercial banking operations in France.
Bank has provided the Board with the information
necessary to assess the application through submissions that address the relevant issues.
The Board has also taken into account the additional
standards set forth in section 7 of the IBA and Regulation K (see 12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R.
211.24(c)(2)). The Bank of France has given its consent to Bank's establishment of the proposed representative office.
The Board has determined that financial and managerial factors are consistent with approval of the
proposed representative office. Bank appears to have
the experience and capacity to support the proposed
office and has also established controls and procedures
for the proposed representative office to ensure compliance with U.S. law.
Bank has committed that it will make available to
the Board such information on the operations of Bank
and any of its affiliates that the Board deems necessary
to determine and enforce compliance with the IBA,
the Bank Holding Company Act of 1956, as amended,
and other applicable Federal law. If the disclosure of
such information is prohibited by law, Bank has committed to cooperate with the Board to obtain approvals
or consents that may be required for the Board to gain
access to information that the Board may request. The
Board has reviewed the restrictions on disclosure of
information in France, and has communicated with
certain government authorities regarding access to
information. In light of these commitments and other
facts of record, and subject to the condition described
below, the Board concludes that Bank has provided
adequate assurances of access to any necessary information the Board may request.
On the basis of all the facts of record, and subject to
the commitments made by Bank, as well as the terms
and conditions set forth in this order, the Board has
Legal Developments
determined that Bank's application to establish a representative office should be, and hereby is, approved.
If any restrictions on access to information on the
operations or activities of Bank and any of its affiliates
subsequently interfere with the Board's ability to
determine the compliance by Bank or its affiliates with
applicable federal statutes, the Board may require
termination of any of Bank's direct or indirect activities in the United States. Approval of this application
is also specifically conditioned on compliance by Bank
with the commitments made in connection with this
application, and with the conditions contained in this
order. The commitments and conditions referred to
above are conditions imposed in writing by the Board
in connection with its decision, and may be enforced in
proceedings under 12 U.S.C. § 1818 or 12 U.S.C.
§ 1847 against Bank, its officers, and its affiliates.
By order of the Board of Governors, effective
May 16, 1994.
Voting for this action: Chairman Greenspan and Governors
Kelley, LaWare, Lindsey, and Phillips.
JENNIFER J. JOHNSON
Associate Secretary of the Board
ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT
INSURANCE CORPORATION IMPROVEMENT ACT
By the Board
BB&T Financial Corporation
Wilson, North Carolina
Order Approving the Merger of Savings
With a Commercial Bank
Associations
BB&T Financial Corporation, Wilson, North Carolina
("BB&T"), proposes to merge its savings-association
subsidiaries, Citizens Savings Bank, S.S.B., Inc.,
Newton, ("Newton"); Mutual Savings Bank of Rockingham County, Inc., S.S.B., Reidsville, ("Reidsville"); and Citizens Savings Bank, Inc., S.S.B.,
Mooresville, ("Mooresville"); all of North Carolina,
with and into Branch Banking and Trust Company,
Wilson, North Carolina ("BB&T-NC"), a wholly
owned state chartered bank subsidiary of BB&T.1
1. The proposed transaction would be completed through a series of
mergers with interim institutions in accordance with North Carolina
law. The first step would result in each of the state savings banks
becoming interim SAIF-insured, state-chartered savings and loan
associations. These interim associations would then be converted into
interim SAIF-insured, state-chartered commercial banks under applicable state and federal law. See N.C. Gen. Stat. Section 53-17.2 and
667
BB&T has requested the Board's approval of these
transactions pursuant to section 5(d)(3) of the Federal
Deposit Insurance Act (12 U.S.C. § 1815(d)(3) ("FDI
Act")), as amended by the Federal Deposit Insurance
Corporation Improvement Act of 1991 (Pub. L. 102—
242, § 501, 105 Stat. 2236, 2388-2392 (1991)).
Section 5(d)(3) of the FDI Act requires the Board to
review any proposed merger between a SAIF member
and any BIF member if the acquiring or resulting
institution is a BIF insured subsidiary of a bank
holding company, and, in reviewing these proposals,
to follow the procedures and consider the factors set
forth in section 18(c) of the FDI Act, (12 U.S.C.
§ 1828(c)) (the "Bank Merger Act"). 2 The proposed
mergers also are subject to review under the Bank
Merger Act by the Federal Deposit Insurance Corporation (the "FDIC"), the primary banking regulator
for BB&T-NC, and the FDIC has approved these
transactions.
Notice of the applications, affording interested persons an opportunity to submit comments, has been
given in accordance with the Bank Merger Act and the
Board's Rules of Procedure (12 C.F.R. 262.3(b)). In
addition, reports on the competitive effects of the
merger were requested from the United States Attorney General, the Office of the Comptroller of the
Currency, the FDIC, and the Office of Thrift Supervision. The time for filing comments has expired, and the
Board has considered the applications and all comments received in light of the factors set forth in the
Bank Merger Act and section 5(d)(3) of the FDI Act.
BB&T is the fourth largest bank holding company in
North Carolina, controlling total deposits of $5.8 billion, representing approximately 9.6 percent of total
deposits in commercial banking organizations in the
s t a t e . 3 B B & T currently o w n s a n d c o n t r o l s N e w t o n ,
Reidsville, and Mooresville, and the proposed transaction represents a reorganization of BB&T's corporate structure. The Federal Reserve Bank of Richmond reviewed the competitive effects of the affiliation
of these savings banks and BB&T-NC at the time that
BB&T acquired these savings banks, and determined
that the competitive effects were not significantly
adverse in any relevant market.4 The Board concludes
that consummation of the proposal would not have a
significantly adverse effect on competition or the con-
12 U.S.C. § 1815(d)(2)(G). Each of these steps would occur sequentially, but in effect simultaneously, so that none of the interim
institutions would ever operate or conduct business with the public.
2. 12 U.S.C. § 1815(d)(3)(E). These factors include considerations
relating to competition, financial and managerial resources, future
prospects of the existing and proposed institutions, and the convenience and needs of the communities to be served. 12 U.S.C. § 1828(c).
3. State deposit data are as of December 30, 1993.
4. 79 Federal Reserve Bulletin 985 (1993) and 80 Federal Reserve
Bulletin 64 (1994).
668
Federal Reserve Bulletin • July 1994
centration of banking resources in any relevant banking market.
The Board is also required under section 5(d)(3) of
the FDI Act to consider the effect of the proposal on
the convenience and needs of the communities to be
served, and to take into account the records of the
relevant depository institutions under the Community
Reinvestment Act (12 U.S.C. § 2901 et seq.)
("CRA"). The Board notes that all of BB&T's subsidiary banks received "satisfactory" ratings from their
primary regulators at their most recent CRA performance examinations. BB&T-NC received a "satisfactory" rating from the FDIC at its most recent CRA
performance examination as of April 12, 1993 ("1993
Examination").5 The 1993 Examination, however,
also noted substantive but isolated instances of disparate treatment involving three of the bank's minority
loan applicants in apparent violation of the Fair Housing Act and the Equal Credit Opportunity Act.
In light of this examination, BB&T has initiated a
number of steps to strengthen its compliance with fair
lending laws. For example, BB&T has implemented a
Fair Lending Policy to ensure that loan applications at
all of its subsidiary banks will be processed in full
compliance with fair lending laws.6 The BB&T-NC's
second-level review program has been expanded to
include all denied and withdrawn applications for
mortgages and home loans.7 BB&T-NC also has implemented an extensive training program, which includes an examination in fair lending compliance, for
mortgage, retail, and business loans that must be
successfully completed before a prospective lender
has the authority to make housing-related loans.8
BB&T has also adopted a new Non-Discrimination
Policy Statement which requires each officer and employee of the BB&T-NC to certify annually that he or
she has read the statement and will comply with its
5. BB&T's South Carolina subsidiary, Branch Banking & Trust
Company, Greenville, South Carolina, was rated "outstanding" by
the FDIC at its most recent examination, July 20, 1992. Newton and
Mooresville received "satisfactory" ratings in their most recent
examinations, July, 1991. Reidsville was formed in 1992, and no
CRA/compliance examination has been performed.
6. As part of this initiative, BB&T-NC has instituted a standardized
"Quality of Assistance/Loan Counseling Contact Log" to assist in
ensuring consistency in credit counseling and in the amount of
assistance offered to applicants. The bank's mortgage and retail
divisions also use a work sheet to assist in evaluating the consistency
in the treatment of all applicants. Adverse action notices have been
centralized as a safeguard to monitor whether these forms are being
completed properly and whether notification is made within the
prescribed time period. Mitigating factors to be considered for applicants not meeting all standard underwriting criteria are now formally
incorporated into the loan evaluation process.
7. This program has been in place since February 7, 1994, and is
staffed with experienced lenders who have the authority to reverse an
initial decision and approve a previously denied loan.
8. As of April 21, 1994, 1345 employees have attended one of the
three training courses.
terms. To support these and other CRA-related initiatives, BB&T has filled 15 out of 17 new positions for
full-time employees working in the area of compliance
and CRA matters.
BB&T-NC's CRA-related initiatives include programs to increase its lending to low- and moderateincome and minority borrowers. For example, the
bank has developed the Community Homeownership
Incentive Program which provides home mortgages
with a flexible credit history evaluation, a higher
qualifying "debt-to-equity" ratio, reduced down payment requirements, lower closing costs, and no required mortgage insurance. BB&T-NC has also invested in an apartment complex for low-income
renters in Charlotte and Durham, North Carolina. In
addition, the bank has provided assistance for the
creation of a $1 million loan pool with other banks to
help economic development for Shelby, North Carolina. BB&T-NC is a participating lender in the city of
High Point Homeownership Assistance Program,
which provides loans to low- and moderate-income
first-time home buyers.
BB&T-NC's CRA initiatives emphasize participation by the board of directors and an improved method
of market delineation. BB&T also met with outside
advertising agencies and marketing specialists in an
effort to increase the number of loan applications from
minorities, especially African-Americans.9
Based on these and all the facts of record, the Board
believes that the convenience and needs considerations under the CRA are consistent with approval of
these applications. The Board expects BB&T-NC to
fully implement all its CRA-related initiatives, and, in
particular, the steps designed to address compliance
with fair lending laws. The Board will continue to
monitor BB&T-NC's progress in these areas and in
future applications to establish depository facilities.
After considering these efforts, the FDIC determined under the Bank Merger Act that the convenience and needs factors raised by these mergers are
consistent with approval. On this basis, the FDIC
approved these transactions under the Bank Merger
Act.
The Board also concludes that the financial and
managerial resources and future prospects of BB&T
and its subsidiaries are consistent with approval of
these applications. Moreover, the record in this case
shows that:
(1) The transactions will not result in the transfer of
any federally insured depository institution's federal
9. These meetings resulted in the launching of a three-month media
campaign in February 1994, which focused on home ownership for
African-Americans. The advertisements appeared in minority-owned
newspapers in metropolitan markets.
Legal Developments
deposit insurance from one federal deposit insurance fund to the other;
(2) Newton, Reidsville, Mooresville, and BB&T-NC
currently meet, and upon consummation of the
proposed transaction will continue to meet, all applicable capital standards; and
(3) Because BB&T-NC is located in North Carolina
and is merging with an institution located in North
Carolina, the proposed transaction complies with
the interstate banking provisions of the Bank Holding Company Act (12 U.S.C. § 1842(d)). See
12 U.S.C. § 1815(d)(3).
Based on the foregoing and all other facts of record,
the Board has determined that these applications
should be, and hereby are, approved. These approvals
are subject to BB&T-NC obtaining all necessary regulatory approvals for the proposed merger transactions. The Board's approval of these applications also
is conditioned upon BB&T's compliance with the
commitments made in connection with these applications. For purposes of this action, the commitments
and conditions relied on in reaching this decision are
conditions imposed in writing by the Board and, as
such, may be enforced in proceedings under applicable
law.
These transactions may not be consummated before
the thirtieth calendar day after the effective date of this
order, or later than three months after the effective
date of this order, unless such period is extended by
the Board or the Federal Reserve Bank of Richmond,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 23, 1994.
Voting for this action: Chairman Greenspan and Governors
Kelley, Lindsey, and Phillips. Absent and not voting: Governor La Ware.
J E N N I F E R J. JOHNSON
Associate Secretary of the Board
SouthTrust Corporation
Birmingham, Alabama
Order Approving Application to Acquire Branches of
a Savings Bank
SouthTrust Corporation, Birmingham, Alabama
("SouthTrust"), and SouthTrust of Georgia, Inc.,
Atlanta, Georgia (collectively, "Applicants"), propose to purchase certain assets and assume certain
liabilities of the seven branch offices of HomeBanc,
FSB, Atlanta, Georgia ("HomeBanc"), by merging
these offices with SouthTrust Bank of Georgia, N.A.,
669
Atlanta, Georgia ("SouthTrust-Georgia"), a wholly
owned subsidiary of SouthTrust of Georgia, Inc. Applicants seek Board approval of this transaction pursuant to section 5(d)(3) of the Federal Deposit Insurance Act (12 U.S.C. § 1815(d)(3) ("FDI Act")), as
amended by the Federal Deposit Insurance Corporation Improvement Act of 1991 (Pub. L. No. 102-242,
§ 501, 105 Stat. 2236, 2388-2392 (1991)).
Section 5(d)(3) of the FDI Act requires the Board to
review any proposed merger between a Savings Association Insurance Fund member and any Bank Insurance Fund ("BIF") member if the acquiring or resulting institution is a BIF insured subsidiary of a bank
holding company, and, in reviewing these proposals,
to follow the procedures and consider the factors set
forth in section 18(c) of the FDI Act (12 U.S.C.
§ 1828(c) ("the Bank Merger Act")).1 The proposed
transaction also is subject to review under the Bank
Merger Act by the Office of the Comptroller of the
Currency, SouthTrust-Georgia's primary regulator.
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)).
Reports on the competitive effects of the merger were
requested from the United States Attorney General,
the Office of the Comptroller of the Currency
("OCC"), and the Federal Deposit Insurance Corporation ("FDIC"). The time for filing comments has
expired, and the Board has considered the application
and all comments received in light of the factors set
forth in the Bank Merger Act and section 5(d)(3) of the
FDI Act.
SouthTrust, with consolidated assets of $14.7 billion, controls 40 banks in Alabama, Florida, Georgia,
North Carolina, South Carolina, and Tennessee.2
SouthTrust is the seventh largest depository institution
in Georgia, controlling total deposits of $2.1 billion,
representing approximately 3.4 percent of total deposits in depository institutions in the state.3 HomeBanc
1. 12 U.S.C. § 1815(d)(3)(E). These factors include considerations
relating to competition, financial and managerial resources, and future
prospects of the existing and proposed institutions, and the convenience and needs of the communities to be served. 12 U.S.C. § 1828(c).
2. Asset data are as of December 31, 1993.
3. Deposit data are as of June 30, 1993. In this context, depository
institutions include commercial banks, savings banks, and savings
associations. Market share data before consummation are based on
calculations in which the deposits of thrift institutions are included at
50 percent. The Board previously has indicated that thrift institutions
have become, or have the potential to become, significant competitors
of commercial banks. See WM Bancorp, 76 Federal Reserve Bulletin
788 (1990); National City Corporation, 70 Federal Reserve Bulletin
743 (1984). Because the deposits of HomeBanc would be transferred
to a commercial bank under this proposal, those deposits are included
at 100 percent in the calculation of pro forma market share. See
Norwest Corporation, 78 Federal Reserve Bulletin 452 (1992); First
Banks, Inc., 76 Federal Reserve Bulletin 669 (1990).
670
Federal Reserve Bulletin • July 1994
is the 40th largest depository institution in Georgia,
controlling deposits of $265.3 million, representing less
than 1 percent of total deposits in depository institutions in Georgia. Upon consummation of the proposed
transaction, SouthTrust would remain the seventh largest depository institution in Georgia, controlling deposits of $2.4 billion, representing 3.8 percent of total
deposits in depository institutions in the state.
SouthTrust and HomeBanc compete directly in the
Atlanta banking market.4 SouthTrust is the sixth largest depository institution in that market, controlling
deposits of $2.2 billion, representing approximately
6.7 percent of total deposits in depository institutions
in the market ("market deposits"). HomeBanc is the
16th largest depository institution in the market, controlling deposits of $265.3 million, representing less
than 1 percent of market deposits. Upon consummation of this proposal, SouthTrust would control
$2.5 billion in deposits, representing approximately
7.5 percent of market deposits. The HerfindahlHirschman Index ("HHI") for this market would
increase 1 point to 1178.5 Based on all the facts of
record in this case, including the de minimis effect on
market concentration as measured by the HHI and the
number of competitors that would remain in the market after consummation of the proposal, the Board
concludes that consummation of this proposal would
not have a significantly adverse effect on competition
or the concentration of banking resources in the Atlanta banking market. The Board also concludes that
consummation of this proposal would not have a
significantly adverse effect on competition in any other
relevant banking market.
Convenience and Needs Considerations
The Board also is required under section 5(d)(3) of the
FDI Act to consider the effect of the proposal on the
convenience and needs of the communities to be
served. Accordingly, the Board has reviewed the
comments submitted to the Board by the Alabama
4. The Atlanta banking market is approximated by Bartow, Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth,
Fulton, Gwinett, Henry, Newton, Paulding, Rockdale, and Walton
Counties, plus the towns of Auburn and Winder in Barrow County,
and the town of Flowery Branch in Hall County, all in Georgia.
5. Under the revised Department of Justice Merger Guidelines, 49
Federal Register 26,823 (June 29, 1984), a market in which the postmerger HHI is between 1000 and 1800 is considered moderately
concentrated. The Justice Department has informed the Board that a
bank merger or acquisition generally will not be challenged (in the
absence of other factors indicating anticompetitive effects) unless the
post-merger HHI is at least 1800 and the merger increases the HHI by
more than 200 points. The Justice Department has stated that the higher
than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competitive effect of limitedpurpose lenders and other non-depository financial institutions.
Community Reinvestment Alliance, Birmingham, Alabama ("Protestant"). Protestant alleges that SouthTrust has not met the convenience and needs of lowand moderate-income African-American residents in
Jefferson County and Birmingham, Alabama. In light
of these comments, the Board has carefully considered
SouthTrust's record of performance under the CRA
and the programs that SouthTrust has in place to serve
community needs.
All of SouthTrust's subsidiary banks that have been
evaluated for CRA performance received "outstanding" or "satisfactory" ratings from their primary
regulators in their most recent examinations for CRA
performance. SouthTrust's lead bank, SouthTrust
Bank of Alabama, N.A., Birmingham, Alabama
("SouthTrust-Alabama"), which includes Birmingham and Jefferson County in its delineated area,
received a "satisfactory" rating for CRA performance
from the OCC in November 1993 (the "1993 examination").6 In addition, SouthTrust-Georgia received a
satisfactory rating from the OCC in June 1993.
The Board has carefully reviewed the data filed by
SouthTrust-Alabama and its wholly owned subsidiaries, SouthTrust Mortgage Corporation ("STMC") and
SouthTrust Mobile Services ("STMS"), under the
Home Mortgage Disclosure Act (12 U.S.C. § 2801
et seq.) ("HMDA") for 1992 and 1993.7 These data,
particularly for STMC, show some improvement in
lending to low- and moderate-income individuals and
African-Americans in the Birmingham Metropolitan
Statistical Area ("MSA").8 However, these data also
indicate some disparities in approvals and denials of
loan applications according to racial group and income
status in the MSA.
The Board is concerned when an institution's record
indicates disparities in lending to minority applicants
and believes that all banks are obligated to ensure that
their lending practices are based on criteria that assure
not only safe and sound lending, but also equal access
to credit by creditworthy applicants regardless of race.
The Board recognizes, however, that HMDA data
alone provide an incomplete measure of an institution's lending in its community, and also have limita-
6. The Board notes that SouthTrust-Alabama's CRA performance
rating as of October 1991 was "outstanding," and that the recent
rating reflects issues regarding the accuracy of data reported under the
Home Mortgage Disclosure Act ("HMDA") for 1992. SouthTrustAlabama has submitted corrected 1992 HMDA data and has prepared
a plan acceptable to the OCC for assuring the accuracy of its 1993 data
and its future data submissions.
7. STMC specializes in FHA-type loans, conventional mortgages,
and refinancing of home purchase loans. STMS provides financing for
mobile homes.
8. SouthTrust's delineated community comprises 82.7 percent of
the Birmingham MSA, and includes both the City of Birmingham and
Jefferson County, Alabama.
Legal Developments
tions 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 none of the recent CRA
performance examinations for SouthTrust-Alabama
found any evidence of illegal discrimination or illegal
credit practices. In addition, the OCC recently performed a targeted fair lending review of STMC's
residential mortgage lending and found no violation of
fair lending laws. The OCC examiners reviewed
all denied conventional mortgage applications and
75 percent of denied government-insured mortgage
applications received from minorities during a 12month period. The OCC found no evidence of disparate treatment based on race or ethnicity. SouthTrustAlabama and STMC also have instituted a secondary
review process in which a committee reviews the file
of every mortgage application recommended for denial
to ensure that the recommendation is appropriate.
Furthermore, the 1993 examination indicated that the
geographic distribution of the bank's credit extensions, applications, and denials reflected a reasonable
penetration of all segments of the local community,
including low- and moderate-income tracts.
The Board notes that SouthTrust-Alabama and its
subsidiary, STMC, have undertaken a number of steps
to increase their lending activities in low- and
moderate-income areas in the Birmingham MSA. For
example, in April 1993, SouthTrust-Alabama introduced its Blueprint Loan Program in response to an
ascertained need for affordable home purchase and
home improvement products designed to meet the
specific housing needs of low- and moderate-income
individuals. The home purchase product has low down
payment requirements, and both the home purchase
and home improvement products offer financing of
closing costs and flexible underwriting criteria.9 As of
October 1993, SouthTrust-Alabama has extended 44
Blueprint Program loans totalling over $774,000.
SouthTrust, through STMC, also offers residential
loans with flexible lending criteria under the Birmingham Residential Mortgage Plan.10 STMC has closed 59
loans totalling $1.4 million under this program as of
November 1993.11 In addition, the 1993 examination
9. Low- and moderate-income neighborhoods were specifically
targeted under this program through a direct mail campaign in the first
quarter of 1993.
10. The Birmingham Mortgage Plan was initiated by SouthTrustAlabama and eight other lenders in the Birmingham area who committed to provide a total of $25 million in FHA and VA loans to
low-income area residents.
11. SouthTrust-Alabama, through STMC and STMS, also offers
FHA and VA home mortgage loans under its own auspices. In 1992,
the bank and its subsidiaries originated 257 FHA and VA loans in the
Birmingham MSA totalling almost $16 million.
671
found that SouthTrust-Alabama has developed special
marketing initiatives to ensure that low- and moderateincome neighborhoods are informed about credit services offered by the bank. The programs include
advertising in newspapers and on radio stations that
target the minority populations living in these communities.
SouthTrust-Alabama's participation in a variety of
projects that support community development activities in providing housing for low- and moderate-income
individuals was noted in the 1993 examination. STMC
has committed to provide $300,000 in first mortgage
financing at favorable interest rates for the purchase by
eligible low- and moderate-income families of housing
units being developed by the Rosedale Community
Development Corporation. In addition, in April 1993,
STMC committed $350,000 for residential first mortgage loans to be used in conjunction with down payment funding provided through the City of Birmingham
to Smithfield Neighborhood, Inc.12 SouthTrust-Alabama also has provided $1 million in construction and
permanent financing in connection with the rehabilitation of a 64-unit, multi-family housing project located in
a low-income area of Birmingham.13 Subsequent to that
investment, the SouthTrust Community Reinvestment
Corporation, a corporation established by SouthTrustAlabama,14 made a $1 million equity investment for
land acquisition and construction of a 24-unit apartment
complex designed to provide housing for low- and
moderate-income families.
Examiners also noted that as further evidence of its
support for the community, SouthTrust-Alabama
joined with eight banks to form a Community Development Corporation to provide financial assistance to
small businesses that are considered "disadvantaged"
under the City of Birmingham's Disadvantaged Business Enterprise Program. SouthTrust-Alabama has
committed to provide 29.8 percent of the $1.5 million
annual budget. As of May 1993, loans totalling $3.8
million have been made under the program. SouthTrust-Alabama also provides loans through the Small
Business Administration ("SBA"). As of year end
1992, SouthTrust-Alabama had 154 outstanding SBA
loans totalling approximately $14.5 million.15
The 1993 examination concluded that SouthTrustAlabama has in place many of the elements of an
12. Loans under this program offer flexible underwriting criteria and
special financing terms.
13. Groundbreaking for this project occurred on October 9, 1993.
14. This organization was formed on February 2, 1993, to provide
low-income housing in cities with SouthTrust bank subsidiaries.
15. SouthTrust-Alabama is a charter member of the Alabama Small
Business Investment Company, Inc., a Minority Enterprise Small
Investment Company with over $2 million in loans to minority-owned
small businesses.
672
Federal Reserve Bulletin • July 1994
effective CRA program. The board of directors of
SouthTrust-Alabama has approved a comprehensive
CRA policy that outlines goals, objectives, and levels
of responsibility and accountability for management
and employees of the bank. STMC has implemented a
formal community outreach program, which includes
calls on area realtors and seminars on the availability
and use of mortgage loan products. In addition, STMC
employs a full-time Community Development Officer
who meets with government officials and nonprofit and
neighborhood associations in an effort to create products that meet the credit needs of low- and moderateincome communities.
For the foregoing reasons, and based on all the
facts of record in this case, including Protestant's
comments and SouthTrust's response to these comments, the Board concludes that convenience and
needs considerations, including the records of SouthTrust, SouthTrust-Alabama, and SouthTrust-Georgia under the CRA, are consistent with approval of
this application.
The Board also concludes that the financial and
managerial resources and future prospects of SouthTrust and HomeBanc are consistent with approval of
this application. Moreover, the record in this case
shows that:
(1) The transaction will not result in the transfer of
any federally insured depository institution's federal
deposit insurance from one federal deposit insurance fund to the other;
(2) Applicants and SouthTrust-Georgia currently
meet, and upon consummation of the proposed
transaction will continue to meet, all applicable
capital standards; and
(3) The proposed transaction would comply with the
interstate banking provision of the Bank Holding
Company Act (12 U.S.C. § 1842(d)) if HomeBanc
were a state bank that SouthTrust was applying to
acquire directly. See 12 U.S.C. § 1815(d)(3).
Based on the foregoing and all the facts of record,
the Board has determined that this application should
be, and hereby is, approved. The Board's approval of
this application is conditioned upon SouthTrust's compliance with the commitments made in connection
with this application. This approval is further subject
to SouthTrust obtaining the OCC's approval for the
proposed transaction. 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. This approval is limited to the
proposal presented to the Board by SouthTrust, and
may not be construed as applying to any other transaction.
This transaction may not be consummated before
the thirtieth calendar day after the effective date of this
order, or later than three months after the effective
date of this order, unless such period is extended by
the Board or the Federal Reserve Bank of Atlanta,
acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 31, 1994.
Voting for this action: Chairman Greenspan, and Governors Kelley, LaWare, and Phillips. Absent and not voting:
Governor Lindsey.
JENNIFER J. JOHNSON
Associate Secretary of the Board
ACTIONS TAKEN UNDER THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF
1991
By the Secretary of the Board
Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of
Governors of the Federal Reserve System, Washington, D.C. 20551.
Bank Holding Company
First Interstate Bancorp,
Los Angeles, California
Acquired
Thrift
Great American Federal
Savings Association,
San Diego, California
Acquiring
Bank(s)
First Interstate Bank
of Washington,
N.A.,
Seattle, Washington
Approval
Date
May 13, 1994
Legal Developments
673
By the Director of the Division of Banking Supervision and Regulation and the General Counsel of
the Board
Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of
Governors of the Federal Reserve System, Washington, D.C. 20551.
Acquired
Thrift
Acquiring
Bank(s)
First-Citizens Bank & Trust
Company,
Raleigh, North Carolina
Citadel Federal Savings &
Loan Association,
Charleston, South
Carolina
Edgecombe Homestead
Savings Bank, Inc., SSB,
Tarboro, North Carolina
First Union National Bank of
Florida,
Jacksonville, Florida
Citizens Federal Savings
Association,
Jacksonville, Florida
Shawmut National Corporation,
Hartford, Connecticut
Northeast Savings, F.A.,
Hartford, Connecticut
Carolina First
Corporation,
Greenville, South
Carolina
First Citizens
BancShares, Inc.,
Raleigh, North
Carolina
First Union
Corporation,
Charlotte, North
Carolina
Shawmut Bank
Connecticut, N.A.,
Hartford,
Connecticut
Shawmut Bank,
N.A.,
Boston,
Massachusetts
Bank Holding Company
Carolina First Bank,
Greenville, South Carolina
Approval
Date
April 29, 1994
May 4, 1994
April 29, 1994
May 9, 1994
APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT
By the Secretary of the Board
Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon
request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.
Section 3
Applicant(s)
Bank(s)
Union Planters Corporation, Memphis,
Tennessee
Union Planters Bank of Middle
Tennessee, N.A.,
Nashville, Tennessee
Union Planters Bank of Jackson, N.A.
Jackson, Tennessee
Union Planters Bank of East
Tennessee, N.A.,
Knoxville, Tennessee
Union Planters Bank of Chattanooga,
N.A.,
Chattanooga, Tennessee
Effective
Date
May 31, 1994
674
Federal Reserve Bulletin • July 1994
Section 3—Continued
Applicant(s)
USB AN CORP, Inc.,
Johnstown, Pennsylvania
Bank(s)
^Date^
Johnstown Savings Bank,
Johnstown, Pennsylvania
May 9, 1994
Section 4
Applicant(s)
Signet Banking Corporation,
Richmond, Virginia
Effective
Date
Bank(s)
Pioneer Financial Corporation,
Chester, Virginia
May 12, 1994
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)
Bren-Mar Properties, Inc.
Columbia, Missouri
Citizens Development Company,
Billings, Montana
Citizens State Bancshares, Inc.,
Wichita, Kansas
CNB Holdings, Inc.,
Pulaski, Virginia
Commercial Investment
Company, Inc.,
Ainsworth, Nebraska
Community Charter Corporation,
St. Louis, Missouri
Bank(s)
Jack's Fork Bancorporation, Inc.,
Columbia, Missouri
First Missouri Bancorporation,
Inc.,
Columbia, Missouri
First Heritage National Bank,
Davis, Oklahoma
Western Bank, N.A.,
Chinook, Montana
Citizens State Bank,
Hamilton, Montana
First National Bank of Lewistown,
Lewistown, Montana
Citizens State Bank of Cheney,
Cheney, Kansas
Community National Bank,
Pulaski, Virginia
Springview Bancorporation,
Springview, Nebraska
Missouri State Bank and Trust
Company,
St. Louis, Missouri
Reserve
Bank
Effective
Date
St. Louis
May 3, 1994
Minneapolis
May 12, 1994
Kansas City
May 17, 1994
Richmond
May 13, 1994
Kansas City
May 18, 1994
St. Louis
April 29, 1994
Legal Developments
Applicant(s)
Community Corporation,
Cannelton, Indiana
Community Grain Company,
Coon Rapids, Iowa
Community Investment Services,
Inc.,
North Branch, Minnesota
Employee Stock Ownership Plan
for Employees of Payne
County Bank,
Perkins, Oklahoma
Farmers State Bank of Hardtner
Employee Stock Ownership
Plan,
Hardtner, Kansas
First Alabama Bancshares, Inc.,
Birmingham, Alabama
First Bancorporation of Ohio,
Akron, Ohio
First Community Corporation,
Rogersville, Tennessee
First National Bank of Bemidji
Employee Stock Ownership
Plan,
Bemidgi, Minnesota
First National Bank Shares, Ltd.,
Great Bend, Kansas
First Sleepy Eye Bancorporation,
Inc.,
Sioux Falls, South Dakota
Fulton Financial Corporation,
Lancaster, Pennsylvania
Harrisburg Bancshares, Inc.,
Houston, Texas
Harrisburg Bancshares (Nevada),
Inc.,
Reno, Nevada
Heritage Financial Services, Inc.,
Tinley Park, Illinois
Hibernia Corporation,
New Orleans, Louisiana
HSB Financial Corporation,
Harwood, North Dakota
Ida Grove Bancshares, Inc.,
Ida Grove, Iowa
Jefferson County Bancshares,
Inc.,
Day kin, Nebraska
Bank(s)
Reserve
Bank
675
Effective
Date
St. Louis
April 26, 1994
Chicago
May 5, 1994
Minneapolis
April 29, 1994
Kansas City
May 19, 1994
B-K Agency, Inc.,
Hardtner, Kansas
Kansas City
May 12, 1994
First Fayette Bancshares, Inc.,
Fayette, Alabama
Peoples National Bank,
Wooster, Ohio
First Community Bank of East
Tennessee,
Rogersville, Tennessee
First Bemidji Holding Company,
Bemidji, Minnesota
Atlanta
May 16, 1994
Cleveland
April 29, 1994
Atlanta
April 29, 1994
Minneapolis
May 24, 1994
Kansas City
May 4, 1994
Minneapolis
May 6, 1994
Mid-Atlantic Bankcorp,
Hagerstown, Maryland
Westside National Bank,
Pearland, Texas
Philadelphia
May 12, 1994
Dallas
May 2, 1994
Midlothian State Bank,
Midlothian, Illinois
Commercial Bancshares, Inc.,
Abbeville, Louisiana
Harwood State Bank,
Harwood, North Dakota
P.S.B. Bancorporation, Inc.,
West Des Moines, Iowa
Plymouth Investment Company,
Plymouth, Nebraska
Chicago
May 24, 1994
Atlanta
May 26, 1994
Minneapolis
May 10, 1994
Chicago
April 29, 1994
Kansas City
May 18, 1994
First National Bank of Perry
County, Indiana,
Cannelton, Indiana
Farmers National Bank,
Bayard, Iowa
A&P Bank Holding Company,
North Branch, Minnesota
Community National Bank,
North Branch, Minnesota
Payne County Bancshares, Inc.,
Perkins, Oklahoma
Urban Bancshares, Inc.,
Kansas City, Missouri
First Security Bank of Benson,
Benson, Minnesota
676
Federal Reserve Bulletin • July 1994
Section 3—Continued
Applicant(s)
Ohio State Bancshares, Inc.,
Marion, Ohio
Olney Bancshares of Texas, Inc.,
Olney, Texas
Pipestone Bancshares, Inc.,
Pipestone, Minnesota
Raton Capital Corporation,
Raton, New Mexico
South wide Financial Group, Inc.
Fayetteville, Georgia
State Financial Investments,
Inc.,
Winfield, Kansas
Stockgrowers State Banc
Corporation,
Ashland, Kansas
Thirdtier, Inc.,
Wilmington, Delaware
UJB Financial Corp.,
Princeton, New Jersey
United Nebraska Financial
Company,
Grand Island, Nebraska
Bank(s)
The Marion Bank,
Marion, Ohio
Thirdtier, Inc.,
Wilmington, Delaware
Olney Bancshares, Inc.,
Olney, Texas
Olney Bancorp of Delaware, Inc.,
Wilmington, Delaware
First Coleman National Bank,
Coleman, Texas
Graham National Bank,
Graham, Texas
The First National Bank of Olney,
Olney, Texas
Farmers National Bank,
Seymour, Texas
Upper Midwest Financial
Corporation,
Garretson, South Dakota
Farmers & Stockmens
Bancorporation,
Clayton, New Mexico
The Citizens Bank and Trust of
Fayette County,
Fayetteville, Georgia
Holroyd Insurance Agency,
Winfield, Kansas
Reserve
Bank
Effective
Date
Cleveland
April 29, 1994
Dallas
May 18, 1994
Minneapolis
May 10, 1994
Kansas City
May 19, 1994
Atlanta
May 18, 1994
Kansas City
May 12, 1994
Peoples Bank, N.A.,
Coldwater, Kansas
Kansas City
May 18, 1994
Olney Bancshares, Inc.,
Olney, Texas
Olney Bancorp of Delaware, Inc.,
Wilmington, Delaware
First Coleman National Bank,
Coleman, Texas
Graham National Bank,
Graham, Texas
The First National Bank of Olney,
Olney, Texas
Farmers National Bank,
Seymour, Texas
VSB Bancorp, Inc.,
Closter, New Jersey
United Nebraska Bank,
Grand Island, Nebraska
Dallas
May 18, 1994
New York
May 11, 1994
Kansas City
April 28, 1994
Legal Developments
677
Section 4
Applicant(s)
Community First Bankshares,
Inc.,
Fargo, North Dakota
The Sumitomo Trust & Banking
Co., Ltd.,
Osaka,Japan
The Summit Bancorporation,
Chatham, New Jersey
Nonbanking
Activity/Company
Reserve
Bank
Effective
Date
Key Insurance, Inc.,
Gettysburg, South Dakota
Minneapolis
May 24, 1994
Boullioun Aviation Services, Inc.,
Bellevue, Washington
New York
May 13, 1994
Lancaster Financial Ltd., Inc.,
Parsippany, New Jersey
New York
May 18, 1994
Sections 3 and 4
Applicant(s)
Capitol Bancorp, Ltd.,
Lansing, Michigan
Liberty Bancorp of Georgia,
Inc.,
Clayton, Georgia
Nonbanking
Activity/Company
Financial Center Corporation,
Holland, Michigan
Paragon Bank & Trust,
Holland, Michigan
Consolidated Bank Services, Inc.,
Holland, Michigan
The Gordon Bank, F.S.B.,
Gordon, Georgia
The Gordon Bank,
Gordon, Georgia
Reserve
Bank
Effective
Date
Chicago
May 25, 1994
Atlanta
April 29, 1994
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)
Chemical Bank and Trust
Company,
Midland, Michigan
First State Bank of Taos,
Taos, New Mexico
First Virginia Bank-Shenandoah
Valley,
Woodstock, Virginia
Wilmington Trust of
Pennsylvania,
West Chester, Pennsylvania
Bank(s)
First of America
Bank-MidMichigan,
Bay City, Michigan
First State Bank of Santa Fe,
Santa Fe, New Mexico
First Virginia Bank of Augusta,
Staunton, Virginia
First Virginia Bank-Planters,
Bridgewater, Virginia
Wilmington Trust Company,
Wilmington, Delaware
Reserve
Bank
Effective
Date
Chicago
May 4, 1994
Kansas City
May 2, 1994
Richmond
May 24, 1994
Philadelphia
April 29, 1994
678
Federal Reserve Bulletin • July 1994
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.
National Title Resource Agency v. Board of Governors, No. 94-2050 (8th Cir., filed April 28, 1994).
Petition for review of Board's order, issued under
section 4 of the Bank Holding Company Act, approving the application of Norwest Corp., Minneapolis, Minnesota, to acquire Double Eagle Financial
Corp., Phoenix, Arizona, and its subsidiary, and
thereby engage in title insurance agency activities
and real estate settlement services (80 Federal
Reserve Bulletin 453 (1994)).
Scott v. Board of Governors, No. 94-4117 (10th
Cir.), filed April 28, 1994. Appeal of dismissal of
action against Board and others for damages and
injunctive relief for alleged constitutional and statutory violations caused by issuance of Federal
Reserve notes.
Beckman v. Greenspan, No. CV 94-41-BCG-RWA
(D. Mont., filed April 13, 1994). Action against
Board and others seeking damages for alleged violations of constitutional and common law rights. The
Board's motion to dismiss was filed May 19, 1994.
DLG Financial Corp. v. Board of Governors, No.
94-10078 (5th Cir., filed January 20, 1994). Appeal
of district court dismissal of appellants' action to
enjoin the Board and the Federal Reserve Bank of
Dallas from taking certain enforcement actions, and
for money damages on a variety of tort and contract
theories. The case has been consolidated on appeal
with Board of Governors v. DLG Financial Corp.,
Nos. 93-2944 and 94-20013 (5th Cir., filed December 14, 1993, and December 31, 1993), an appeal of
a temporary restraining order and a preliminary
injunction obtained by the Board freezing assets of a
corporation and an individual pending administrative adjudication of civil money penalty assessments
by the Board. Oral argument on the consolidated
appeal is scheduled for June 1, 1994.
Richardson v. Board of Governors, et ah, No. 944020 (10th Cir.), filed January 14, 1994. Appeal of
dismissal of action against Board and others for
damages and injunctive relief for alleged constitutional and statutory violations caused by issuance of
Federal Reserve notes. The Board's brief is due
June 3, 1994.
Board of Governors v. Oppegard, No. 93-3706 (8th
Cir., filed November 1, 1993). Appeal of district
court order ordering appellant Oppegard to comply
with prior order requiring compliance with Board
removal, prohibition, and civil money penalty order.
Oral argument is scheduled for June 16, 1994.
Jackson v. Board of Governors, No. CV-N-93-401ECR (D. Nev., filed June 14, 1993). Pro se action for
violation of a prisoner's civil rights. On November 26, 1993, the Board filed a motion to dismiss.
First National Bank ofBellaire v. Board of Governors,
No. H-93-1708 (S.D. Texas, filed June 8, 1993).
Action to enjoin possible enforcement actions by
Board of Governors and other bank regulatory agencies. On March 8, 1994, the district court granted the
agencies' motion to dismiss; plaintiff's motion for
reconsideration was filed March 22, 1994.
Kubany v. Board of Governors, et al., No. 93-1428 (D.
D.C., filed July 9, 1993). Action challenging Board
determination under the Freedom of Information
Act. The Board's motion to dismiss was filed on
October 15, 1993.
Bennett v. Greenspan, No. 93-1813 (D. D.C., filed
April 20, 1993). Employment discrimination action.
Trial is scheduled to commence August 1, 1994.
Amann v. Prudential Home Mortgage Co., et al., No.
93-10320 WD (D. Massachusetts, filed February 12,
1993). Action for fraud and breach of contract
arising out of a home mortgage. On April 17, 1993,
the Board filed a motion to dismiss.
Adams v. Greenspan, No. 93-0167 (D. D.C., filed
January 27, 1993). Action by former employee under
the Civil Rights Act of 1964 and the Rehabilitation
Act of 1973 concerning termination of employment.
The Board's motion for partial summary judgment
was filed on January 4, 1994.
CBC, Inc. v. Board of Governors, No. 93-1458 (U.S.
Supreme Court, filed March 17, 1994). Petition for
review of civil money penalty assessment against a
bank holding company and three of its officers and
directors for failure to comply with reporting requirements. On November 30, 1993, the Court of
Appeals for the 10th Circuit denied the petition for
review. On March 17, 1994, CBC filed a petition for
certiorari. The Solicitor General has waived opposition on behalf of the Board.
Zemel v. Board of Governors, No. 92-1056 (D. D.C.,
filed May 4, 1992). Age Discrimination in Employment Act case. The parties' cross-motions for summary judgment are pending.
Board of Governors v. Ghaith R. Pharaon, No. 91CIV-6250 (S.D. New York, filed September 17,
1991). Action to freeze assets of individual pending
administrative adjudication of civil money penalty
assessment by the Board. On September 17, 1991,
the court issued an order temporarily restraining the
transfer or disposition of the individual's assets.
Legal Developments
FINAL ENFORCEMENT ORDERS ISSUED BY THE
BOARD OF GOVERNORS
Edwin M. Bergsmark
Toledo, Ohio
679
both of Anaheim, California, and Pacific Inland Mortgage Company, San Jose, California.
Bruno Zbinden
N e w York, N e w York
The Federal Reserve Board announced on May 16,
1994, the issuance of a Consent Order against Edwin
M. Bergsmark, the former Executive Vice-President
and General Counsel of Trustcorp, Inc., Toledo, Ohio,
a former bank holding company, and of Trustcorp's
former subsidiary State member bank, the Trustcorp
Bank, Toledo, Ohio. Mr. Bergsmark also was a director of the Trustcorp Bank.
The Federal Reserve Board announced on May 16,
1994, the issuance of a combined Order to Cease and
Desist and Order of Prohibition against Bruno Zbinden, a former officer of the New York branch of Swiss
Bank Corporation, Basle, Switzerland.
Robert F. Bruning and Robert C. Richmond
Pemberville, Ohio
WRITTEN AGREEMENTS APPROVED BY FEDERAL
RESERVE BANKS
The Federal Reserve Board announced on May 12,
1994, the issuance of a combined Order to Cease and
Desist and Order of Prohibition against Robert F.
Bruning, former President of The Citizens Savings
Bank Company, Pemberville, Ohio, and an Order of
Prohibition against Robert C. Richmond, a former
officer of The Citizens Savings Bank Company.
Pacific Inland Bancorp and Pacific Inland Bank
Anaheim, California
Pacific Inland Mortgage Company
San Jose, California
The Federal Reserve Board announced on May 12,
1994, the issuance of a Cease and Desist Order against
Pacific Inland Bancorp, and the Pacific Inland Bank,
Garfield Bank
Montebello, California
The Federal Reserve Board announced on May 12,
1994, the execution of a Written Agreement between
the Federal Reserve Bank of San Francisco and the
Garfield Bank, Montebello, California.
Pioneer Bancorp
Fullerton, California
The Federal Reserve Board announced on May 23,
1994, the execution of a Written Agreement between
the Federal Reserve Bank of San Francisco and Pioneer Bancorp, Fullerton, California.
A1
Financial and Business Statistics
WEEKLY REPORTING COMMERCIAL BANKS
CONTENTS
A3
Guide to Tabular
Domestic
Financial
Presentation
Statistics
Assets and liabilities
A21 Large reporting banks
A23 Branches and agencies of foreign banks
MONEY STOCK AND BANK CREDIT
FINANCIAL MARKETS
A4
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
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
FEDERAL FINANCE
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
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
2
Federal Reserve Bulletin • July 1994
Domestic Financial
Statistics—Continued
REAL ESTATE
A3 7 Mortgage markets
A3 8 Mortgage debt outstanding
CONSUMER INSTALLMENT CREDIT
FLOW OF FUNDS
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
REPORTED BY BANKS
IN THE UNITED STATES
A55
A56
A58
A59
A39 Total outstanding
A39 Terms
A40
A42
A43
A44
A54 U.S. reserve assets
A54 Foreign official assets held at Federal Reserve
Banks
A55 Selected U.S. liabilities to foreign official
institutions
Statistics
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
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
International
Statistics
SUMMARY STATISTICS
A53 U.S. international transactions—Summary
A54 U.S. foreign trade
SECURITIES HOLDINGS AND TRANSACTIONS
A63 Foreign transactions in securities
A64 Marketable U.S. Treasury bonds and
notes—Foreign transactions
INTEREST AND EXCHANGE RATES
A65 Discount rates of foreign central banks
A65 Foreign short-term interest rates
A66 Foreign exchange rates
A67 Guide to Statistical Releases
Special Tables
and
A3
Guide to Tabular Presentation
SYMBOLS AND ABBREVIATIONS
c
e
n.a.
n.e.c.
p
r
*
0
. . .
ATS
BIF
CD
CMO
FFB
FHA
FHLBB
FHLMC
FmHA
FNMA
FSLIC
G-7
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
GENERAL 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
Domestic Financial Statistics • July 1994
1.10
RESERVES, M O N E Y STOCK, LIQUID ASSETS, A N D DEBT MEASURES
Percent annual rate of change, seasonally adjusted'
1993
1994
1993
Dec.
1994
Monetary or credit aggregate
Reserves of depository
1 Total
Required
3 Nonborrowed
4 Monetary base 3
Concepts
Ml
M2
M3
L
Debt
of money,
Nontransaction
10 In M2 5
II In M3 only 6
Q3
Q4
Ql
10.4
12.0
10.2
10.1
12.5
12.4
11.0
10.6
14.2
14.1
15.6
9.8
3.1
2.5
3.7
10.2
3.1
3.9
3.2
5.7
2.5
-5.2
2.7
11.7
10.7
2.2
2.1
3.1
4.5
12.0
2.4
1.0
.9
5.7
9.4
1.9
2.2
l.5 r
5.0 r
6.0
1.8r
,2 r
2.6
5.3
6.4
2.3
3.5 r
4.4
7.1 r
-1.4
1.6
-1.7
-6.7
-1.4
3.8 r
-.r
-8.5r
5.1
-9.2
-.7
4.9
-10.6
-7.7
3.6
-7.4
-.5
.7
-11.9
-8.5
2.3
-14.4
-4.5
.2
-2.2
10.4
2.4
Feb. r
Mar.
Apr.
3.2
9.5
3.3
13.4
-3.4
,0 r
-3.1
9.3
-7.4
-11.2
-8.8
6.2
5.4
2.0 r
1.2 r
4.8 r
4.4 r
5.4
-1.4
-7.5
-2.1
4.4
4.0 r
4.9 r
2.8 r
1.9
5.8
-1.3
2.7
2.6
n.a.
n.a.
.4
io.r
,4 r
-3.T
-4.6
-40.2
5.4 r
-9.4r
4.6
2.3
4.3 r
-5.2
~3.4 r
4.4
-2.6
4.8
7.3
-7.7
8.7 r
1.5
-4.1
-24.1
-1.2r
-3.4r
-8.8r
-3.8
-2.1
-8.0
-.4
-11.9
-6.7
,4 r
-11.2r
-9.3
2.0
-15.8
-32.1
.0
-9.9
3.9
-1.4
-12.7
-5.8
5.3 r
-5.4
-15.6
1.9
-3.9
5.9
-1.8
-10.5
1.2
8.8
.0
-26.7
6.2
13.6
-3.4
-26.2
-14.1
-98.4
17.1
3.4
9.2
4.5
5.5
4.8 r
7.0
4.7
13.3
4.8 r
4.9
4.3
9.1
4.7
Jan.
institutions'
">
S
6
7
8
9
Q2
liquid assets,
and
debt4
components
Time and savings
deposits
Commercial banks
Savings, including M M D A s
Small time 7
Large time 8 ' 9
Thrift institutions
Savings, including M M D A s
15
Small time 7
16
17
Large time 8 9
12
13
14
Monex market mutual funds
18 General purpose and broker-dealer
19 Institution-only
Debt
components4
20
21 Nonfederal
1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding during preceding month or quarter.
2. Figures incorporate adjustments for discontinuities, or " b r e a k s , " associated with regulatory changes in reserve requirements. (See also table 1.20.)
3. T h e seasonally adjusted, break-adjusted monetary base consists of (1)
seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally
adjusted currency component of the money stock, plus (3) (for all quarterly
reporters on the " R e p o r t of Transaction Accounts, Other Deposits, and Vault
C a s h " and for all weekly reporters whose vault cash exceeds their required
reserves) the seasonally adjusted, break-adjusted difference between current vault
cash and the amount applied to satisfy current reserve requirements.
4. Composition of the money stock measures and debt is as follows:
M l : (I) 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 M l .
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
2.8
4.9 r
45.8
-2.7
n.a.
n.a.
tax-exempt, institution-only money market funds. Excludes amounts held by
depository institutions, the U.S. government, money market f u n d s , and foreign
banks and official institutions. Also excluded is the estimated amount of overnight
RPs and Eurodollars held by institution-only money market funds. Seasonally
adjusted M3 is computed by adjusting its non-M2 component as a whole and then
adding this result to seasonally adjusted M2.
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper, and bankers acceptances, net of money
market fund holdings of these assets. Seasonally adjusted L is computed by
summing U.S. savings bonds, short-term Treasury securities, commercial paper,
and bankers acceptances, each seasonally adjusted separately, and then adding
this result to M3.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. Data are derived from the Federal
Reserve Board's flow of funds accounts. Data on debt of domestic nonfinancial
sectors are monthly averages, derived by averaging adjacent month-end levels.
Growth rates for debt reflect adjustments for discontinuities over time in the levels
of debt presented in other tables.
5. Sum of (1) overnight RPs and Eurodollars, (2) money market fund balances
(general purpose and broker-dealer), (3) 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 institution-only money market funds. This sum is
seasonally adjusted as a whole.
7. Small time deposits—including retail RPs—are those issued in amounts of
less than $100,000. All IRA and Keogh account balances at commercial banks and
thrift institutions are subtracted from small time deposits.
8. Large time deposits are those issued in amounts of $100,000 or m o r e ,
excluding those booked at international banking facilities.
9. Large time deposits at commercial banks less those held by money market
funds, depository institutions, U.S. government and foreign banks and official
institutions.
Money Stock and Bank Credit
1.11
A5
RESERVES OF DEPOSITORY INSTITUTIONS A N D RESERVE BANK CREDIT1
Millions of dollars
Feb.
SUPPLYING RESERVE
A v e r a g e of
daily figures
A v e r a g e of daily figures f o r w e e k e n d i n g on d a t e i n d i c a t e d
1994
1994
Mar.
Apr.
M a r . 16
M a r . 23
M a r . 30
Apr. 6
A p r . 13
A p r . 20
A p r . 27
FUNDS
1 R e s e r v e B a n k credit o u t s t a n d i n g
U.S. government securities2
Bought o u t r i g h t — S y s t e m a c c o u n t . . . .
Held under repurchase agreements . . .
3
F e d e r a l agency obligations
4
Bought outright
5
Held u n d e r r e p u r c h a s e a g r e e m e n t s . . .
6
Acceptances
L o a n s to d e p o s i t o r y institutions
7
A d j u s t m e n t credit
S e a s o n a l credit
8
9
E x t e n d e d credit
10
Float
11
O t h e r Federal R e s e r v e a s s e t s
12 Gold s t o c k
13 Special d r a w i n g rights certificate a c c o u n t
14 T r e a s u r y c u r r e n c y o u t s t a n d i n g
.
373,196
375,629
382,420
375,627
375,371 r
375,885 r
382,405
380,871
384,496
382,062
332,397
2,565
335,371
2,721
341,226
2,452
334,014
4,494
336,682
1,293
337,265
1,145
338,049
4,924
338,384
3,975
343,611
2,366
343,561
0
4,401
214
0
4,235
261
0
4,115
99
0
4,237
291
0
4,237
236
0
4,228
173
0
4,184
171
0
4,145
131
0
4,101
143
0
4,076
0
0
56
15
0
1,226
32,323
41
24
0
585
32,391
61
55
0
628
33,783
35
18
0
269
32,268
24
27
0
343 r
32,529
48
37
0
282 r
32,705
115
38
0
1,419
33,504
54
42
0
452
33,689
35
53
0
335
33,850
67
74
0
400
33,872
11,053
8,018
22,200
11,053
8,018
22,265
11,052
8,018
22,327
11,053
8,018
22,260
11,052
8,018
22,274
11,052
8,018
22,288
11,052
8,018
22,302
11,052
8,018
22,316
11,052
8,018
22,330
11,052
8,018
22,344
363,796
372
366,753
377
370,738
376
366,654
378
366,961
382
367,541
374
369,669
371
371,284
376
371,152
378
370,552
378
6,263
260
5,122
189
5,701
248
5,463
171
4,971
176
4,847
185
6,073
304
3,965
209
6,568
330
5,473
213
6,988
313
6,565
358
6,371
311
6,742
354
6,654
396
6,334
313
6,232
333
6,231
303
6,714
297
6,308
309
9,784
10,066
10,386
10,015
9,982
29,685
27,181
ABSORBING RESERVE F U N D S
15 C u r r e n c y in circulation
16 T r e a s u r y c a s h holdings
D e p o s i t s , o t h e r than r e s e r v e b a l a n c e s , with
Federal Reserve Banks
17
Treasury
18
Foreign
19
S e r v i c e - r e l a t e d b a l a n c e s and
adjustments
20
Other
21 O t h e r F e d e r a l R e s e r v e liabilities a n d
capital
22 R e s e r v e b a l a n c e s with F e d e r a l
Reserve Banks1
26,691
27,536
r
End-of-month
Feb.
27,193
r
10,654
10,740
10,144
10,132
30,140
29,149
30,313
30,111
Wednesday
figures
Mar.
9,970
27,678 r
Apr.
figures
M a r . 16
M a r . 23
M a r . 30
Apr. 6
A p r . 13
A p r . 20
A p r . 27
SUPPLYING RESERVE F U N D S
1 R e s e r v e B a n k credit o u t s t a n d i n g
U . S . g o v e r n m e n t securities"
2
Bought o u t r i g h t — S y s t e m a c c o u n t . . . .
3
Held under repurchase agreements . . .
F e d e r a l a g e n c y obligations
4
Bought outright
5
Held u n d e r r e p u r c h a s e a g r e e m e n t s . . .
6
Acceptances
L o a n s to d e p o s i t o r y institutions
7
A d j u s t m e n t credit
8
S e a s o n a l credit
9
E x t e n d e d credit
10
Float
11
Other Federal Reserve assets
12 Gold s t o c k
13 Special d r a w i n g rights certificate a c c o u n t
14 T r e a s u r y c u r r e n c y o u t s t a n d i n g
.
375,262
381,272 r
381,576
378,908
378,934 r
380,314 r
383,490
378,045
384,970
382,112
333,404
4,925
337,260
5,300
343,079
0
335,800
5,729
336,824
3,725
337,620
4,634
340,054
4,423
338,513
374
343,454
3,034
343,160
0
4,335
160
0
4,227
150
0
4,047
0
0
4,237
505
0
4,237
550
0
4,227
510
0
4,177
200
0
4,102
0
0
4,098
0
0
4,047
0
0
34
14
0
382
32,008
426
37
0
448 r
33,424
151
82
0
48
34,168
99
19
0
129
32,389
24
37
0
673 r
32,863
37
37
0
244 r
33,004
12
39
0
964
33,621
187
43
0
1,313
33,513
60
67
0
169
34,086
75
83
0
753
33,971
11,053
8,018
22,232
11,052
8,018
22,302
11,053
8,018
22,358
11,053
8,018
22,260
11,052
8,018
22,274
11,052
8,018
22,288
11,052
8,018
22,302
11,052
8,018
22,316
11,053
8,018
22,330
11,052
8,018
22,344
364,947
365
369,016
370
370,677
378
367,503
383
367,748
375
369,184
370
371,369
375
372,074
378
371,389
378
371,556
378
4,886
191
6,181
454
7,965
171
8,193
173
3,952
187
5,562
198
4,308
209
3,904
209
9,166
235
7,543
200
7,226
373
6,235
316
6,322
312
6,742
382
6,654
513
6,334
300
6,232
318
6,231
274
6,714
305
6,308
308
10,337
10,618
10,189
9,820
9,835
ABSORBING RESERVE F U N D S
15 C u r r e n c y in circulation
16 T r e a s u r y c a s h holdings
D e p o s i t s , o t h e r t h a n r e s e r v e b a l a n c e s , with
Federal Reserve Banks
17
Treasury
18
Foreign
19
S e r v i c e - r e l a t e d b a l a n c e s and
adjustments
20
Other
21 O t h e r F e d e r a l R e s e r v e liabilities and
capital
22 R e s e r v e b a l a n c e s with F e d e r a l
Reserve Banks3
28,240
29,455
r
26,990
1. F o r a m o u n t s of c a s h held a s r e s e r v e s , see table 1.12.
2. I n c l u d e s securities l o a n e d — f u l l y g u a r a n t e e d by U . S . g o v e r n m e n t securities
pledged with F e d e r a l R e s e r v e B a n k s — a n d e x c l u d e s securities sold a n d s c h e d u l e d
to be b o u g h t back u n d e r m a t c h e d s a l e - p u r c h a s e t r a n s a c t i o n s .
27,042
31,014
r
9,835
10,535
9,955
9,993
9,989
29,889 r
31,515
26,405
28,190
27,245
3. E x c l u d e s r e q u i r e d clearing b a l a n c e s a n d a d j u s t m e n t s t o c o m p e n s a t e f o r
float,
A6
Domestic Financial Statistics • July 1994
1.12
RESERVES A N D BORROWINGS
D e p o s i t o r y Institutions 1
Millions of dollars
Prorated monthly averages of biweekly averages
Reserve classification
1 Reserve balances with Reserve Banks"
Total vault c a s h '
Applied vault cash
3
Surplus vault cash"
4
Total reserves 6
6
Required reserves
7
Excess reserve balances at Reserve Banks
x Total borrowings at Reserve Banks 8
9
Seasonal borrowings
Extended credit 9
•>
...
10
1991
1992
1993
Dec.
Dec.
Dec.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
26,659
32,509
28,872
3,637
55,532
54,553
979
192
38
1
25,368
34,542
31,172
3,370
56,540
55,385
1,155
124
18
1
29,374
36,812
33,484
3,328
62,858
61,795
1,063
82
31
0
28,297
35,184
31,739
3,445
60,036
58,947
1,089
285
192
0
29,018
35,655
32,278
3,377
61,296
60,195
1,101
89
75
0
29,374
36,812
33,484
3,328
62,858
61,795
1,063
82
31
0
27,817
37,907
34,254
3,653
62,072
60,624
1,448
73
15
0
26,922
36,295
32,671
3,624
59,593
58,454
1,140
70
15
0
27,396 r
35,585
32,208
3,377
59,605
58,638 r
967 r
55
24
0
29,613
35,216
32,026
3,189
61,639
60,491
1,148
124
57
0
1994
1993
Biweekly averages of daily figures for weeks ending on date indicated
1994
1 Reserve balances with Reserve Banks Total vault cash 3
Applied vault cash 4
3
4
Surplus vault cash'
Total reserves 6
6
Required reserves
7
Excess reserve balances at Reserve Banks
8 Total borrowings at Reserve Banks 8
9
Seasonal borrowings
Extended credit 9
10
...
Jan. 5
Jan. 19
Feb. 2
Feb. 16
Mar. 2
Mar. 16
Mar. 30
Apr. 13r
Apr. 27
May 11
30,367
36,489
33,279
3,210
63,646
62,405
1,241
142
16
0
28,745
38,241
34,691
3,550
63,435
61,759
1,676
74
11
0
25,672
38,108
34,152
3,957
59,824
58,557
1,267
45
18
0
26,339
37,475
33,651
3,824
59,989
58,878
1,112
95
15
0
27,811
34,617
31,282
3,335
59,093
57,942
1,151
45
15
0
27,139
36,654
33,105
3,549
60,244
59,192
1,052
39
17
0
27,434
34,667
31,440
3,227
58,874
58,013 r
861 r
68
32
0
29,641
35,434
32,268
3,167
61,909
61,012
897
125
40
0
30,212
34,749
31,598
3,151
61,810
60,353
1,457
114
64
0
26,693
36,447
32,980
3,467
59,673
58,880
793
170
102
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.
2. Excludes required clearing balances and adjustments to compensate for float
and includes other off-balance-sheet " a s - o f " adjustments.
3. Total " l a g g e d " vault cash held by depository institutions subject to reserve
requirements. Dates refer to the maintenance periods during which the vault cash
can be used to satisfy reserve requirements. The maintenance period for weekly
reporters ends sixteen days after the lagged computation period during which the
vault cash is held. Before Nov. 25, 1992, the maintenance period ended thirty days
after the lagged computation period.
4. All vault cash held during the lagged computation period by " b o u n d "
institutions (that is, those whose required reserves exceed their vault cash) plus
the amount of vault cash applied during the maintenance period by " n o n b o u n d "
institutions (that is, those whose vault cash exceeds their required reserves) t o
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).
7. Total reserves (line 5) less required reserves (line 6).
8. Also includes adjustment credit.
9. Consists of borrowing at the discount window under the terms and conditions established for the extended credit program to help depository institutions
deal with sustained liquidity pressures. Because there is not the same need t o
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
S E L E C T E D B O R R O W I N G S IN I M M E D I A T E L Y A V A I L A B L E F U N D S
A7
Large Banks1
Millions of dollars, averages of daily figures
1994, week ending Monday
Source and maturity
1
2
3
4
5
6
7
8
Federal funds purchased, repurchase agreements,
and
other selected
borrowings
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and
official institutions, and U.S. government agencies
For one day or under continuing contract
For all other maturities
Repurchase agreements on U.S. government
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
and
Feb. 28
Mar. 7
Mar. 14
Mar. 21
Mar. 28
Apr. 4
Apr. 11
Apr. 18
Apr. 25
67,817
12,273
72,061
11,227
70,228
12,393
66,607
12,080
64,511
11,902
72,139
13,350
71,680
11,423
69,568
12,784
63,721
13,225
22,806
17,384
25,708
18,524
24,179
20,512
26,751
17,679
27,318
18,003
23,688
20,146
24,751
19,158
21,512
19,909
22,305
21,662
19,883
31,065
23,111
30,796
26,200
33,244
26,058
32,636
23,828
32,874
20,969
36,030
26,002
35,477
25,591
37,190
23,081
34,276
30,743
17,615
30,570
17,038
30,966
17,372
30,044
16,986
30,789
16,946
28,186
19,496
31,750
16,099
31,907
16,396
29,831
16,464
41,945
24,834
44,037
25,409
42,657
25,143
43,880
24,335
44,544
23,888
52,960
23,638
43,928
25,634
45,846
24,176
48,626
21,753
federal
MEMO
Federal funds loans and resale agreements in
immediately available funds in maturities of one day or
under continuing
contract
9 To commercial banks in the United States
10 To all other specified customers 2
I. 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
Domestic Financial Statistics • July 1994
1.14
FEDERAL RESERVE B A N K INTEREST RATES
Percent per year
Current and previous levels
Adjustment credit 1
Federal Reserve
Bank
On
6/3/94
Effective date
Previous rate
On
6/3/94
5/17/94
5/17/94
5/17/94
5/18/94
5/17/94
5/17/94
3.0
4.35
3.5
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco . . .
5/17/94
5/17/94
5/17/94
5/17/94
5/17/94
5/17/94
3.5
Extended credit 3
Seasonal credit'
3.0
4.35
Effective date
Previous rate
On
6/3/94
5/26/94
5/26/94
5/26/94
5/26/94
5/26/94
5/26/94
4.05
4.85
5/26/94
5/26/94
5/26/94
5/26/94
5/26/94
5/26/94
4.05
4.85
Effective date
Previous rate
5/26/94
5/26/94
5/26/94
5/26/94
5/26/94
5/26/94
4.55
5/26/94
5/26/94
5/26/94
5/26/94
5/26/94
5/26/94
4.55
Range of rates for adjustment credit in recent years 4
Effective date
In effect Dec. 31, 1977
1978—Jan.
May
July
Aug.
Sept.
Oct.
Nov.
9
20
11
12
3
10
21
22
16
20
1
3
1979—July 20
Aug. 17
20
Sept. 19
21
Oct.
8
10
1980—Feb.
May
June
July
Sept.
Nov.
Dec.
15
19
29
30
13
16
29
28
26
17
5
Range (or
level)—
All F.R.
Banks
6
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
10
10-10.5
10.5
10.5-11
11
11-12
12
12-13
13
12-13
12
11-12
11
10
10-11
11
12
12-13
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
II
11
10
10
II
12
13
Effective
1981-—May
5
Nov.
7
6
4
Dec.
1982-- J u l y
70
73
7
3
16
?7
30
Oct. 1?
13
Nov. 77
?6
Dec. 14
15
17
13-14
14
13-14
13
12
F.R.
Bank
of
N.Y.
14
14
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. 71
76
Dec. 74
8.5-9
9
8.5-9
8.5
8
9
9
8.5
8.5
8
1985-—May 70
7.5-8
7.5
7.5
7.5
1986-- M a r .
7-7.5
7
6.5-7
6
7
7
6.5
6
Aug.
Range (or
level)—
All F . R .
Banks
F.R.
Bank
of
N.Y.
1986—Aug. 21
22
5.5-6
5.5
5.5
5.5
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
Effective date
1990—Dec. 19
1991—Feb.
Apr.
May
Sept.
Nov.
1984-—Apr.
74
1
10
Apr. 71
July 11
1. Available on a short-term basis to help depository institutions meet temporary needs for funds that cannot be met through reasonable alternative sources.
The highest rate established for loans to depository institutions may be charged on
adjustment-credit loans of unusual size that result from a major operating problem
at the borrower's facility.
2. Available to help relatively small depository institutions meet regular
seasonal needs for funds that arise from a clear pattern of intrayearly movements
in their deposits and loans and that cannot be met through special industry
lenders. The discount rate on seasonal credit takes into account rates on market
sources of funds and ordinarily is reestablished on the first business day of each
two-week reserve maintenance period; however, it is never less than the discount
rate applicable to adjustment credit.
3. May be made available to depository institutions when similar assistance is
not reasonably available from other sources, including special industry lenders.
Such credit may be provided when exceptional circumstances (including sustained deposit drains, impaired access to money market f u n d s , or sudden
deterioration in loan repayment performance) or practices involve only a particular institution, or to meet the needs of institutions experiencing difficulties
adjusting to changing market conditions over a longer period (particularly at times
of deposit disintermediation). The discount rate applicable to adjustment credit
Range(or
level)—
All F.R.
Banks
Dec.
1992—July
6.5
6.5
1
4
30
2
13
17
6
7
20
24
6-6.5
6
5.5-6
5.5
5-5.5
5
4.5-5
4.5
3.5-4.5
3.5
6
6
5.5
5.5
5
5
4.5
4.5
3.5
3.5
2
7
3-3.5
3
In effect June 3, 1994
3.5
3
3
3.5
ordinarily is charged on extended-credit loans outstanding less than thirty days;
however, at the discretion of the Federal Reserve Bank, this time period may be
shortened. Beyond this initial period, a flexible rate somewhat above rates on
market sources of funds is charged. The rate ordinarily is reestablished on the first
business day of each two-week reserve maintenance period, but it is never less
than the discount rate applicable to adjustment credit plus 50 basis points.
4. For earlier data, see the following publications of the Board of G o v e r n o r s :
Banking and Monetary Statistics,
1914-1941, and 1941-1970; and the Annual
Statistical Digest,
1970-1979.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term
adjustment-credit borrowings by institutions with deposits of $500 million or more
that had borrowed in successive weeks or in more than four weeks in a calendar
quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7,
1980. A surcharge of 2 percent was reimposed on Nov. 17, 1980; the surcharge
was subsequently raised to 3 percent on Dec. 5, 1980, and to 4 percent on May 5,
1981. The surcharge was reduced to 3 percent effective Sept. 22, 1981, and to 2
percent effective Oct. 12, 1981. As of Oct. 1, 1981, the formula for applying the
surcharge was changed from a calendar quarter to a moving thirteen-week period.
The surcharge was eliminated on N o v . 17, 1981.
Policy Instruments
1.15
A9
RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1
Requirement
Type of deposit 2
1
2
Net transaction
accounts3
$0 million-$51.9 million
More than $51.9 million 4
1. Required reserves must be held in the form of deposits with Federal Reserve
Banks or vault cash. N o n m e m b e r institutions may maintain reserve balances with
a Federal Reserve Bank indirectly on a pass-through basis with certain approved
institutions. For previous reserve requirements, see earlier editions of the Annual
Report or the Federal Reserve Bulletin. Under provisions of the Monetary
Control Act, depository institutions include commercial banks, mutual savings
banks, savings and loan associations, credit unions, agencies and branches of
foreign banks, and Edge Act corporations.
2. The G a r n - S t Germain Depository Institutions Act of 1982 (Public Law
97-320) requires that $2 million of reservable liabilities of each depository
institution be subject to a zero percent reserve requirement. The Board is to adjust
the amount of reservable liabilities subject to this zero percent reserve requirement each year for the succeeding calendar year by 80 percent of the percentage
increase in the total reservable liabilities of all depository institutions, measured
on an annual basis as of June 30. N o corresponding adjustment is to be made in
the event of a decrease. On Dec. 21, 1993, the exemption was raised from $3.8
million to $4.0 million. The exemption applies in the following order: (1) net
negotiable order of withdrawal (NOW) accounts (NOW accounts less allowable
deductions); and (2) net other transaction accounts. The exemption applies only to
accounts that would be subject to a 3 percent reserve requirement.
3. Includes all deposits against which the account holder is permitted t o make
withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers for the purpose of making
payments to third persons or others, other than money market deposit accounts
(MMDAs) and similar accounts that permit no more than six preauthorized,
Percentage of
deposits
Effective date
3
10
12/21/93
12/21/93
0
12/27/90
0
12/27/90
automatic, or other transfers per month, of which no more than three may be
checks. Accounts subject to such limits are savings deposits.
The Monetary Control Act of 1980 requires that t h e amount of transaction
accounts against which the 3 percent reserve requirement applies be modified
annually by 80 percent of the percentage change in transaction accounts held by
all depository institutions, determined as of June 30 each year. Effective Dec. 21,
1993, for institutions reporting quarterly and weekly, the amount was increased
from $46.8 million to $51.9 million.
4. T h e reserve requirement was reduced f r o m 12 percent to 10 percent on
Apr. 2, 1992, for institutions that report weekly, and on Apr. 16, 1992, for
institutions that report quarterly.
5. For institutions that report weekly, the reserve requirement on nonpersonal
time deposits with an original maturity of less than IVi years was reduced f r o m 3
percent to 1 Vi percent for the maintenance period that began Dec. 13, 1990, and
to zero for the maintenance period that began Dec. 27, 1990. T h e r e s e r v e
requirement on nonpersonal time deposits with an original maturity of 1 Vi years
or more has been zero since Oct. 6, 1983.
For institutions that report quarterly, the reserve requirement on nonpersonal
time deposits with an original maturity of less than 1 Vl years was reduced f r o m 3
percent to zero on Jan. 17, 1991.
6. The reserve requirement on Eurocurrency liabilities w a s reduced f r o m 3
percent to zero in the same manner and on the same dates as was the reserve
requirement on nonpersonal time deposits with an original maturity of less than
1 Vi years (see note 5).
A10
Domestic Financial Statistics • July 1994
1.17 F E D E R A L R E S E R V E O P E N M A R K E T T R A N S A C T I O N S 1
Millions of dollars
1993
Type of transaction
and maturity
1991
1992
1994
1993
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
U . S . TREASURY SECURITIES
Outright transactions (excluding
transactions)
Treasury bills
Gross purchases
Gross sales
Exchanges
Redemptions
Others within one year
Gross purchases
Gross sales
Maturity shifts
Exchanges
Redemptions
One to five years
Gross purchases
Gross sales
Maturity shifts
Exchanges
Five to ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
More than ten years
Gross purchases
Gross sales
Maturity shifts
Exchanges
All maturities
Gross purchases
Gross sales
Redemptions
matched
20,158
120
277,314
1,000
14,714
1,628
308,699
1,600
17,717
0
332,229
468
366
0
31,128
0
1,3%
0
25,783
468
5,911
0
27,641
0
1,394
0
33,536
0
0
0
28,986
0
1,264
0
28,709
0
900
0
33,163
0
3,043
0
24,454
-28,090
1,000
1,096
0
36,662
-30,543
0
1,223
0
31,368
-36,582
0
411
0
3,074
-1,861
0
0
0
913
-1,566
0
0
0
5,158
-7,641
0
189
0
2,910
-2,910
0
0
0
0
0
0
0
0
0
0
0
147
0
0
0
0
6,583
0
-21,211
24,594
13,118
0
-34,478
25,811
10,350
0
-27,140
0
2,400
0
-3,074
1,861
0
0
-31
1,566
100
0
-4,689
5,341
2,619
0
-2,910
2,910
0
0
0
0
0
0
0
0
1,413
0
0
0
1,280
0
-2,037
2,894
2,818
0
-1,915
3,532
4,168
0
0
0
797
0
0
0
0
0
-882
0
0
0
-272
2,300
1,008
0
0
0
0
0
0
0
0
0
0
0
1,103
0
0
0
375
0
-1,209
600
2,333
0
-269
1,200
3,457
0
0
0
717
0
0
0
0
0
0
0
0
0
-197
0
826
0
0
0
0
0
0
0
0
0
0
0
618
0
0
0
31,439
120
1,000
34,079
1,628
1,600
36,915
0
468
4,691
0
0
1,396
0
468
6,011
0
0
6,035
0
0
0
0
616
1,264
0
0
4,181
0
0
1,570,456
1,571,534
1,482,467
1,480,140
1,475,085
1,475,941
124,898
122,578
115,160
112,837
109,941
112,772
137,645
136,821
132,872
133,468
124,125
124,270
155,950
155,625
310,084
311,752
378,374
386,257
475,447
470,723
62,905
61,399
27,693
30,397
38,493
34,072
33,751
29,577
25,818
29,348
33,693
37,425
38,490
38,115
29,729
20,642
42,027
3,878
-4,099
13,263
9,386
-3,550
-2,323
4,232
0
5
292
0
0
632
0
0
1,072
0
0
35
0
0
70
0
0
15
0
0
81
0
0
202
0
0
102
0
0
108
Repurchase
agreements
33 Gross purchases
34 Gross sales
22,807
23,595
14,565
14,486
35,063
34,669
9,810
7,734
3,812
5,509
2,841
2,861
2,211
1,615
2,600
3,106
3,277
3,636
3,160
3,170
35 Net change in federal agency obligations
-1,085
-554
-678
2,041
-1,767
-35
515
-708
-461
-118
36 Total net change in System Open Market
Account
28,644
20,089
41,348
5,919
-5,866
13,228
9,901
-4,258
-2,784
4,114
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Matched
transactions
25 Gross sales
26 Gross purchases
Repurchase
agreements
27 Gross purchases
28 Gross sales
29 Net change in U.S. Treasury securities
FEDERAL AGENCY OBLIGATIONS
Outright
transactions
30 Gross purchases
31 Gross sales
32 Redemptions
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
C o n d i t i o n and Federal R e s e r v e N o t e S t a t e m e n t s 1
Millions of dollars
Account
Mar. 30
Apr. 6
Wednesday
End of month
1994
1994
Apr. 13
Apr. 20
Apr. 27
Feb. 28
Mar. 31
Apr. 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
11,052
8,018
431
11,052
8,018
424
11,052
8,018
417
11,053
8,018
418
11,052
8,018
415
11,053
8,018
446
11,052
8,018
435
11,053
8,018
429
75
0
0
52
0
0
230
0
0
127
0
0
158
0
0
48
0
0
463
0
0
234
0
0
4,227
510
4,177
200
4,102
0
4,098
0
4,047
0
4,335
160
4,227
150
4,047
0
342,254
344,477
338,887
346,488
343,160
338,329
342,560
343,079
10 Bought outright*
11
Bills
12
Notes
13
Bonds
14 Held under repurchase agreements
337,620
163,307
133,858
40,455
4,634
340,054
165,740
133,858
40,455
4,423
338,513
164,200
133,858
40,455
374
343,454
164,541
137,445
41,467
3,034
343,160
164,248
137,445
41,467
0
333,404
162,372
131,311
39,721
4,925
337,260
162,947
133,858
40,455
5,300
343,079
164,167
137,445
41,467
0
15 Total loans and securities
347,066
348,905
343,219
350,713
347,365
342,872
347,400
347,360
5,202
1,054
6,678
1,054
6,941
1,058
6,491
1,057
6,135
1,056
2,435
1,053
4,735
1,054
4,571
1,055
22,640
9,283
23,313
9,247
23,225
9,207
23,098
9,919
23,115
9,808
22,769
8,209
23,297
9,021
23,149
9,967
404,746
408,692
403,136
410,767
406,964
396,855
405,013
405,602
9 Total U.S. Treasury securities
16 Items in process of collection
17 Bank premises
Other assets
18 Denominated in foreign currencies
19 All other 4
20 Total assets
LIABILITIES
347,697
349,867
350,554
349,856
350,006
343,526
347,520
349,127
22 Total deposits
42,386
42,720
37,348
45,115
41,866
41,244
42,683
41,922
23
24
25
26
36,329
5,562
198
300
37,884
4,308
209
318
32,958
3,904
209
274
35,410
9,166
235
305
33,816
7,543
200
308
35,794
4,886
191
373
35,733
6,181
454
316
33,474
7,965
171
312
4,829
2,625
5,570
2,659
5,279
2,705
5,803
2,749
5,104
2,705
1,748
2,514
4,192
2,684
4,363
2,763
397,537
400,816
395,885
403,523
399,681
389,031
397,080
398,176
3,445
3,401
364
3,445
3,401
1,030
3,456
3,401
393
3,468
3,401
375
3,479
3,401
403
3,437
3,401
985
3,445
3,401
1,088
3,479
3,401
546
404,746
408,692
403,136
410,767
406,964
396,855
405,013
405,602
361,644
369,706
366,814
370,252
368,705
364,104
371,757
367,031
21 Federal Reserve notes
Depository institutions
U.S. Treasury—General account
Foreign—Official accounts
Other
27 Deferred credit items
28 Other liabilities and accrued dividends
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 B a n k s ) . . . .
36
LESS: Held by Federal Reserve Banks
37
FederalReservenotes.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
414,413
66,716
347,697
415,238
65,370
349,867
416,838
66,284
350,554
418,201
68,345
349,856
419,232
69,226
350,006
411,834
68,308
343,526
414,534
67,014
347,520
419,336
70,209
349,127
11,052
8,018
0
328,627
11,052
8,018
0
330,797
11,052
8,018
0
331,483
11,053
8,018
0
330,785
11,052
8,018
0
330,935
11,053
8,018
0
324,455
11,052
8,018
0
328,450
11,053
8,018
0
330,056
347,697
349,867
350,554
349,856
350,006
343,526
347,520
349,127
1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly
statistical release. F o r 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
Domestic Financial Statistics • July 1994
FEDERAL RESERVE
BANKS
Maturity Distribution of L o a n and Security
Holding
Millions of dollars
Type of holding and maturity
Wednesday
End of month
1994
1994
Feb. 28
Mar. 31
Apr. 29
158
48
463
234
148
10
0
45
3
0
445
18
0
196
38
0
Mar. 30
Apr. 6
Apr. 13
Apr. 20
Apr. 27
1 Total loans
75
52
230
127
2 Within fifteen days'
3 Sixteen days to ninety days
4 Ninety-one days to one year
71
4
0
27
25
0
196
34
0
126
1
0
5 Total acceptances
0
0
0
0
0
0
0
0
6 Within fifteen days'
7 Sixteen days to ninety days
8 Ninety-one days to one year
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
342,253
344,477
338,887
346,488
343,160
333,404
337,260
343,079
23,556
77,339
104,689
79,435
24,553
32,682
22,727
83,833
99,588
81,093
24,553
32,682
13,795
83,479
103,285
81,093
24,553
32,682
20,800
79,338
103,561
84,250
24,961
33,578
17,576
79,084
103,711
84,250
24,961
33,578
9,168
84,699
106,001
77,654
23,818
32,064
9,213
77,058
112,661
81,093
24,553
32,682
11,062
89,445
99,783
84,250
24,961
33,578
16 Total federal agency obligations
4,837
4,377
4,102
4,098
4,047
4,335
4,227
4,047
17
18
19
20
21
22
935
527
960
1,913
477
25
319
684
960
1,913
477
25
55
638
955
1,853
477
25
156
533
955
1,853
577
25
130
528
955
1,833
577
25
318
565
954
1,921
552
25
325
527
960
1,913
477
25
130
528
955
1,833
577
25
9 Total U.S. Treasury securities
10
11
12
13
14
15
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
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.
Monetary
1.20
and Credit Aggregates
A13
A G G R E G A T E 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
1994
1993
Item
1990
Dec.
1991
Dec.
1992
Dec.
1993
Dec.
Sept.
Total reserves 3
Nonborrowed reserves 4
Nonborrowed reserves plus extended credit 5 .
Required reserves
Monetary base 6
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
60.48
60.39
60.39
59.41
385.86
60.60
60.53
60.53
59.16
389.61
60.76
60.69
60.69
59.62
393.96
60.59
60.53
60.53
59.62 r
397.00 r
60.21
60.09
60.09
59.07
399.06
Seasonally adjusted
A D J U S T E D FOR
C H A N G E S IN R E S E R V E R E Q U I R E M E N T S 1
1
2
3
4
5
Oct.
41.77
41.44
41.47
40.11
293.16
45.53
45.34
45.34
44.55
317.12
54.34
54.22
54.22
53.19
350.61
60.48
60.39
60.39
59.41
385.86
58.81
58.39
58.39
57.72
378.08
59.75
59.46
59.46
58.66
381.40
60.32
60.23
60.23
59.22
384.03
Not seasonally adjusted
6
7
8
9
10
Total reserves
Nonborrowed reserves
Nonborrowed reserves plus extended c r e d i t 5 . .
Required reserves 8
Monetary base 9
43.07
42.74
42.77
41.40
296.68
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
58.65
58.22
58.22
57.56
377.72
59.48
59.20
59.20
58.39
380.80
60.67
60.58
60.58
59.57
384.29
62.37
62.29
62.29
61.31
390.59
62.04
61.96
61.96
60.59
391.00
59.53
59.46
59.46
58.39
390.86
59.50
59.44
59.44
58.53
394.14 r
61.40
61.27
61.27
60.25
399.73
59.12
58.80
58.82
57.46
313.70
1.66
.33
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
59.14
58.71
58.71
58.05
384.25
1.09
.43
60.04
59.75
59.75
58.95
387.51
1.09
.29
61.30
61.21
61.21
60.20
391.14
1.10
.09
62.86
62.78
62.78
61.80
397.62
1.06
.08
62.07
62.00
62.00
60.62
397.89
1.45
.07
59.59
59.52
59.52
58.45
397.93
1.14
.07
59.61
59.55
59.55
58.64
400.77 r
,97 r
.06
61.64
61.52
61.52
60.49
406.29
1.15
.12
N O T A D J U S T E D FOR
C H A N G E S IN R E S E R V E R E Q U I R E M E N T S 1 0
11
12
13
14
15
16
17
Total r e s e r v e s "
Nonborrowed reserves
Nonborrowed reserves plus extended c r e d i t 5 . .
Required reserves
Monetary base 1 "
Excess r e s e r v e s ' 3
Borrowings from the Federal Reserve
1. Latest monthly and biweekly figures are available from the Board's H.3 (502)
weekly statistical release. Historical data and estimates of the impact on required
reserves of changes in reserve requirements are available from the Monetary and
Reserves Projections Section, Division of Monetary Affairs, Board of Governors
of the Federal Reserve System, Washington, DC 20551.
2. Figures reflect adjustments for discontinuities, or " b r e a k s , " associated with
regulatory changes in reserve requirements. (See also table 1.10)
3. Seasonally adjusted, break-adjusted total reserves equal seasonally
adjusted, break-adjusted required reserves (line 4) plus excess reserves (line 16).
4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally
adjusted, break-adjusted total reserves (line 1) less total borrowings of depository
institutions from the Federal Reserve (line 17).
5. Extended credit consists of borrowing at the discount window under
the terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as with traditional shortterm adjustment credit, the money market impact of extended credit is similar to
that of nonborrowed reserves.
6. The seasonally adjusted, break-adjusted monetary base consists of (1)
seasonally adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally
adjusted currency component of the money stock, plus (3) (for all quarterly
reporters on the " R e p o r t of Transaction Accounts, Other Deposits and Vault
C a s h " and for all those weekly reporters whose vault cash exceeds their required
reserves) the seasonally adjusted, break-adjusted difference between current vault
cash and the amount applied to satisfy current reserve requirements.
7. Break-adjusted total reserves equal break-adjusted required reserves (line 9)
plus excess reserves (line 16).
8. To adjust required reserves for discontinuities that are due to regulatory
changes in reserve requirements, a multiplicative procedure is used to estimate
what required reserves would have been in past periods had current reserve
requirements been in effect. 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 " R e p o r t of Transaction A c c o u n t s , Other
Deposits and Vault C a s h " and for all those weekly reporters whose vault cash
exceeds their required reserves) the break-adjusted difference between current
vault cash and the amount applied to satisfy current reserve requirements.
10. Reflects actual reserve requirements, including those on nondeposit liabilities, with no adjustments to eliminate the effects of discontinuities associated
with changes in reserve requirements.
11. Reserve balances with Federal Reserve Banks plus vault cash used to
satisfy reserve requirements.
12. The monetary base, not break-adjusted and not seasonally adjusted,
consists of (1) total reserves (line 11), plus (2) required clearing balances and
adjustments to compensate for float at Federal Reserve Banks, plus (3) the
currency component of the money stock, plus (4) (for all quarterly reporters on
the " R e p o r t of Transaction Accounts, Other Deposits and Vault C a s h " and for all
those weekly reporters whose vault cash exceeds their required reserves) the
difference between current vault cash and the amount applied to satisfy current
reserve requirements. Since the introduction of changes in reserve requirements
(CRR), currency and vault cash figures have been measured over the computation
periods ending on Mondays.
13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14).
A14
1.21
Domestic Financial Statistics • July 1994
MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES'
Billions of dollars, averages of daily figures
1994
1990
Dec.
1991
Dec.
1992
Dec.
1993
Dec.
Jan.
Feb.r
Mar. r
Apr.
Seasonally adjusted
1
2
3
4
5
Measures'
Ml
M2
M3
L
Debt
6
7
8
9
Mi
components
Currency Travelers checks 4
Demand deposits
Other checkable deposits 6
826.4
3,353.0
4,125.7
4,974.8
10,670.1
897.7
3,455.3
4,180.4
4,992.9
11,147.3
1,024.8
3,509.0
4,183.0
5,057.1
11,721.5
1,128.4
3,563.1
4,225.3 r
5,122.8 r
12,309.6 r
1,133.5
3,569.0 r
4,229.5 r
5,143.4 r
12,354.4 r
1,138.6
3,564.7
4,203.1
5,134.5
12,400.2
1,142.4
3,579.4
4,212.8
5,142.6
12,460.6
1,141.2
3,587.5
4,222.1
n.a.
n.a.
246.7
7.8
277.9
294.0
267.1
7.7
290.0
332.8
292.2
8.1
339.6
384.9
321.4
7.9
384.8
414.3
325.2 r
7.9
388.3 r
412.0
329.2
7.9
390.3
411.2
332.4
8.0
390.0
411.9
334.7
8.1
388.9
409.4
2,526.6
772.7
2,557.6
725.2
2,484.3
674.0
2,435.5 r
660.5 r
2,426.1
638.4
2,437.0
633.4
2,446.3
634.6
Commercial
banks
12 Savings deposits, including M M D A s
13 Small time deposits 9
14 Large time deposits l 0 - "
582.1
611.3
368.6
665.5
602.9
342.4
754.6
508.7
292.8
785.3
468.5
277.0
790.1
465.5
279.0 r
791.1
463.9
273.4
790.3
462.6
271.4
787.8
461.8
269.6
Thrift
institutions
15 Savings deposits, including M M D A s
16 Small time deposits 9
17 Large time deposits'"
338.3
563.2
120.9
375.6
464.5
83.4
429.0
361.8
67.5
430.2
314.3
61.8
430.2
311.7
62.0
429.7
308.4
61.7
431.6
307.0
60.9
432.3
306.0
61.2
Money market mutual funds
18 General purpose and broker-dealer
19 Institution-only
355.5
135.0
370.4
181.0
352.0
201.5
348.8
197.0
347.8
192.7
343.7
176.9
348.6
177.4
361.9
177.0
2,490.7
8,179.4
2,763.8
8,383.5
3,068.4
8,653.1
3,327.9
8,981.8 r
3,349.3
9,050.9
3,374.7
9,086.0
Nontransaction
10 In M2 7
11 In M3 8
components
Debt
components
20 Federal debt
21 Nonfederal debt
2,434.7
662.2 r
3,335.6
9,018.8 r
n.a.
n.a.
Not seasonally adjusted
Measures'
Ml
M2
843.8
3,366.0
4,135.5
4,997.2
10,667.7
916.7
3,470.4
4,191.9
5,018.0
11,144.6
1,046.7
3,527.6
4,198.2
5,087.6
11,723.3
1,153.8
3,585.7
4,244.7 r
5,157.5 r
12,309.6 r
1,142.8
3,575.7 r
4,230.4 r
5,157.6 r
12,340.0 r
1,124.7
3,552.6
4,193.9
5,126.1
12,374.0
1,131.9
3,577.8
4,212.7
5,146.4
12,437.3
1,153.2
3,604.8
4,237.7
n.a.
n.a.
249.5
7.4
289.9
297.0
269.9
7.4
303.1
336.3
295.0
7.8
355.1
388.9
324.9
7.6
402.6
418.6
324.0
7.7
393. r
417.9
327.3
7.7
380.6
409.1
330.7
7.8
380.7
412.9
334.4
7.8
390.3
420.8
2,522.3
769.5
2,553.7
721.6
2,480.9
670.5
2,431.9 r
659.0 r
2,432.9 r
654.7 r
2,427.9
641.3
2,445.8
635.0
2,451.6
632.9
Commercial
banks
33 Savings deposits, including M M D A s
34 Small time deposits 9
35 Large time deposits' 0 - 11
580.8
610.5
367.7
664.0
601.9
341.3
752.9
507.8
291.7
783.9
467.6
275.8 r
786.1
465.6
276.0 r
787.7
463.8
271.7
791.3
462.1
271.2
790.2
461.4
268.9
Thrift
institutions
36 Savings deposits, including M M D A s
37 Small time deposits 9
38 Large time deposits 1 0
337.6
562.4
120.6
374.8
463.8
83.1
428.1
361.2
67.2
429.4
313.6
61.6
428.0
311.8
61.4
427.9
308.3
61.3
432.2
306.7
60.9
433.6
305.7
61.0
Money market mutual funds
39 General purpose and broker-dealer
40 Institution-only
353.8
134.7
368.5
180.4
350.2
200.4
347.2
195.8
348.1
196.2
349.4
186.1
357.6
180.5
367.6
176.2
Repurchase
41 Overnight
42 Term
77.3
158.3
80.6
130.1
80.7
126.7
90.3
141.3 r
93.3 r
136.2 r
90.8
137.5
95.8
138.7
93.1
142.5
2,491.3
8,176.3
2,765.0
8,379.7
3,069.8
8,653.5
3,329.5
8,980. r
3,333.0
9,007.0 r
3,345.4
9,028.7
3,374.4
9,062.8
22
23
24
25
26
2/
28
29
30
L
Debt
Ml
components
Currency 3
Travelers checks
Demand deposits
Other checkable deposits 6
Nontransaction
31 In M2 7
32 In M3 8
components
agreements
and
Eurodollars
Debt
components
43 Federal debt
44 Nonfederal debt
Footnotes appear on following page.
n.a.
n.a.
Monetary
and Credit Aggregates
A15
N O T E S T O T A B L E 1.21
1. Latest monthly and weekly figures are available from the Board's H.6 (508)
weekly statistical release. Historical data are available from the Money and
Reserves Projection Section, Division of Monetary Affairs, Board of Governors of
the Federal Reserve System, Washington, DC 20551.
2. Composition of the money stock measures and debt is as follows:
M l : (I) 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 O C D s , 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 f u n d s (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 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 U.S. savings bonds, short-term Treasury securities, commercial paper,
and bankers acceptances, each seasonally adjusted separately, and then adding
this result to M3.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. Data are derived f r o m the Federal
Reserve Board's flow of funds accounts. Debt data are based on monthly
averages. This sum is seasonally adjusted as a whole.
3. Currency outside the U . S . Treasury, Federal Reserve Banks, and vaults of
depository institutions.
4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Travelers checks issued by depository institutions are included in
demand deposits.
5. Demand deposits at commercial banks and foreign-related institutions other
than those owed to depository institutions, the U.S. government, and foreign
banks and official institutions, less cash items in the process of collection and
Federal Reserve float.
6. Consists of N O W and ATS account balances at all depository institutions,
credit union share draft account balances, and demand deposits at thrift institutions.
7. Sum of (1) 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 institution-only money market funds.
9. Small time deposits—including retail RPs—are those issued in amounts of
less than $100,000. All IRAs and Keogh accounts at commercial banks and thrift
institutions are subtracted from small time deposits.
10. Large time deposits are those issued in amounts of $100,000 or more,
excluding those booked at international banking facilities.
11. Large time deposits at commercial banks less those held by money market
funds, depository institutions, U.S. government, and foreign banks and official
institutions.
A16
1.22
DomesticNonfinancialStatistics • July 1994
DEPOSIT INTEREST RATES A N D AMOUNTS OUTSTANDING
Commercial and BIF-insured saving banks 1
1994
1993
1991
Dec.
em
1992
Dec.
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Interest rates (annual effective yields)
INSURED COMMERCIAL BANKS
Negotiable order of withdrawal accounts
2 Savings deposits
1
J
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'/i years
More than 2 Vl years
3.76
4.30
2.33
2.88
2.01
2.55
1.96
2.51
1.92
2.49
1.89
2.48
1.86
2.46
1.84
2.46
1.82
2.43
1.82 r
2.43
1.81
2.45
4.18
4.41
4.59
4.95
5.52
2.90
3.16
3.37
3.88
4.77
2.66
2.96
3.17
3.63
4.40
2.63
2.92
3.13
3.55
4.28
2.63
2.91
3.11
3.54
4.27
2.64
2.92
3.13
3.54
4.28
2.65
2.91
3.13
3.55
4.29
2.65
2.90
3.14
3.56
4.31
2.68
2.94
3.18
3.61
4.35
2.76
3.02
3.27
3.69
4.46
2.87
3.13
3.42
3.87
4.66
4.44
4.97
2.45
3.20
2.07
2.80
2.01
2.73
1.98
2.68
1.95
2.65
1.87
2.63
1.89
2.62
1.88
2.64
1.83
2.63
1.85
2.65
4.68
4.92
4.99
5.23
5.98
3.13
3.44
3.61
4.02
5.00
2.79
3.12
3.37
3.73
4.73
2.76
3.05
3.33
3.69
4.62
2.75
3.05
3.34
3.68
4.57
2.73
3.03
3.32
3.69
4.60
2.70
3.02
3.31
3.66
4.62
2.69
3.03
3.33
3.72
4.61
2.69
3.04
3.34
3.76
4.66
2.71
3.08
3.37
3.85
4.75
2.72
3.13
3.47
3.96
4.85
B I F - I N S U R E D SAVINGS BANKS3
8 Negotiable order of withdrawal accounts
9 Savings deposits 2
10
11
12
IJ
14
...
Interest-bearing
time deposits with balances
of less than $100,000, by maturity
1 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2Vi years
More than 2'/2 years
Amounts outstanding (millions of dollars)
INSURED COMMERCIAL BANKS
244,637
652,058
508,191
143,867
286,541
738,253
578,757
159,496
287,675
761,919
593,318
168,601
286,056
758,835
592,028
166,807
289,813
765,372
595,715
169,657
297,329
770,609
598,200
172,408
305,223
766,413
597,838
168,575
293,806
771,559
606,615
164,944
295,573
776,204
611,725
164,479
297,496 r
779,340 r
615,875 r
163,465 r
293,712
770,909
610,963
159,945
47,094
158,605
209,672
171,721
158,078
38,474
127,831
163,098
152,977
169,708
30,017
109,603
155,074
141,377
181,762
30,384
108,574
152,501
139,406
184,414
30,022
108,504
149,758
139,042
183,790
29,730
109,228
147,334
139,315
180,972
29,455
110,069
146,565
141,223
181,528
29,312
109,110
144,037
141,204
182,193
29,578
109,444
143,624
141,006
181,240
29,539 r
107,407 r
144,022 r
139,946 r
I80,973 r
29,447
105,562
146,615
139,166
181,833
147,266
147,350
145,955
145,636
144,776
145,002
143,985
143,875
143,409
142,002 r
142,107
25 Negotiable order of withdrawal accounts. . . .
26 Savings deposits
27
Personal
Nonpersonal
28
9,624
71,215
68,638
2,577
10,871
81,786
78,695
3,091
10,468
78,387
75,153
3,234
10,471
78,182
74,978
3,204
10,548
77,995
74,737
3,258
10,852
77,948
74,664
3,284
11,151
80,115
77,035
3,079
10,796
78,660
75,445
3,215
10,870
78,016
74,756
3,260
11,078
78,701 r
75,444 r
3,257
10,913
78,547
75,314
3,234
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 2l/2 years
More than 2 Vi years
4,146
21,686
29,715
25,379
18,665
3,867
17,345
21,780
18,442
18,845
2,928
13,525
18,143
16,200
19,331
2,886
13,261
17,798
16,161
19,610
2,839
13,131
17,441
16,124
19,657
2,778
12,926
17,178
15,995
19,645
2,793
12,946
17,426
16,546
20,464
2,737
13,094
17,418
16,281
20,630
2,735
13,165
17,436
16,338
20,939
2,671
13,177
17,511
16,180 r
21,110 r
2,678
12,945
17,325
16,289
21,308
23,007
21,713
19,802
19,766
19,601
19,382
19,356
19,395
19,474
19,447
19,906
15 Negotiable order of withdrawal accounts
16 Savings deposits
17
Personal
18
Nonpersonal
19
20
21
22
23
...
Interest-bearing
time deposits with balances
of less than $100,000, by maturity
1 to 91 days
92 to 182 days
183 days to 1 year
More than 1 year to 2l/i years
More than 2V5 years
24 IRA/Keogh Plan deposits
B I F - I N S U R E D SAVINGS BANKS3
29
30
31
32
33
34 IRA/Keogh Plan accounts
1. B1F, 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 f r o m a stratified random sample of about 460 commercial
banks and 80 savings banks on the last Wednesday of each period. Data are not
seasonally adjusted and include IRA/Keogh deposits and foriegn currency denominated deposits. Data exclude retail repurchase agreements and deposits held in
U.S. branches and agencies of foreign banks.
2. Includes personal and nonpersonal money market deposits.
3. BIF-insured savings banks include both mutual and federal savings banks.
Monetary
1.23
and Credit Aggregates
A17
B A N K DEBITS A N D DEPOSIT TURNOVER1
Debits are in billions of dollars; turnover is ratio of debits to deposits; monthly data are at annual rates
1994
1993
Sept.
4 Other checkable deposits 4
5 Savings deposits (including MMDAs)
Nov.
Dec.
Jan.r
Feb.
Seasonally adjusted
DEBITS
Demand
deposits3
1 All insured banks
2
Major N e w York City banks
3
Other banks
Oct.
277,741.7
137,337.2
140,404.5
313,251.6
165,484.5
147,767.2
334,793.7
171,312.0
163,481.7
353,605.3
180,532.6
173,072.7
329,586.5
168,055.5
161,530.9
358,503.0
187,022.4
171,480.6
367,734.8
189,024.1
178,710.7
349,711.9
183,246.0
166,465.8
371,997.3
200,049.3
171,948.0
3,643.1
3,206.4
3,781.5
3,310.6
3,486.8
3,507.3
3,461.0
3,619.2
3,348.0
3,403.1
3,598.6
3,740.5
3,809.5
3,933.6
3,453.3
3,596.6
3,816.8
4,058.2
803.7
4,267.1
448.1
826.0
4,794.5
428.9
786.5
4,200.6
424.8
808.5
4,178.0
439.1
741.7
3,937.7
402.1
803.0
4,352.2
425.0
826.9
4,550.0
443.3
771.7
4,268.3
405.8
823.6
4,674.4
420.5
16.2
5.2
14.4
4.7
11.9
4.6
11.6
4.7
11.1
4.4
12.0
4.8
12.6
5.1
11.4
4.6
12.7
5.2
DEPOSIT TURNOVER
Demand
deposits3
6 All insured banks
7
Major N e w York City banks
8
Other banks
9 Other checkable deposits 4
10 Savings deposits (including MMDAs)
Not seasonally adjusted
DEBITS
Demand
deposits3
11 All insured banks
12
Major N e w York City banks
13
Other banks
14 Other checkable deposits 4
15 Savings deposits (including M M D A s ) '
277,752.4
137,307.2
140,445.2
313,416.8
165,595.0
147,821.9
334,775.6
171,283.5
163,492.1
347,783.4
179,869.7
167,913.7
336,009.2
172,675.6
163,333.6
344,140.1
180,990.2
163,149.9
380,187.5
194,541.0
185,646.4
349,807.5
181,971.7
167,835.7
345,709.2
187,904.4
157,804.8
3,645.2
3,209.2
3,784.4
3,310.0
3,485.2
3,505.8
3,493.2
3,534.2
3,323.3
3,336.0
3,370.1
3,511.8
3,888.9
4,066.4
3,774.3
3,782.2
3,509.4
3,618.0
803.6
4,269.0
448.1
826.3
4,803.5
429.0
786.5
4,197.9
424.9
798.6
4,196.6
427.7
750.0
4,059.2
402.8
754.8
4,129.6
395.9
820.6
4,387.8
443.1
759.8
4,047.8
404.0
783.4
4,319.0
396.7
16.2
5.2
14.4
4.7
11.9
4.6
11.8
4.6
11.2
4.3
11.2
4.5
12.7
5.2
12.2
4.8
11.7
4.6
DEPOSIT TURNOVER
Demand
deposits3
16 All insured banks
17
Major N e w York City banks
18
Other banks
19 Other checkable deposits 4
20 Savings deposits (including M M D A s )
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 B o a r d ' 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 O C D s for debits data to be consistent with O C D s
for deposits data.
5. Money market deposit accounts.
A18
1.26
Domestic Financial Statistics • July 1994
ASSETS A N D LIABILITIES OF COMMERCIAL BANKS1
Billions of dollars
Monthly averages
Account
1993r
1993
Apr/
Oct.
Nov.
1
11
12
13
14
15
Assets
Bank credit
Securities in bank credit
U.S. government securities . . .
Other securities
Loans and leases in bank c r e d i t 2 .
Commercial and industrial . . . .
Real estate
Revolving home equity
Other
Consumer
Security 3
Other
Interbank loans 4
Cash a s s e t s 5
Other a s s e t s 6
16 Total assets 7
17
18
19
20
21
22
23
24
25
26
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U . S
Net due to related foreign
offices
Other liabilities 8
27 Total liabilities
28 Residual (assets less l i a b i l i t i e s ) 9 . . . .
1994r
1994
Dec.
Jan. r
ALL COMMERCIAL
B A N K I N G INSTITUTIONS
2
3
4
5
6
7
8
9
10
Wednesday figures
Feb. r
Mar. r
Apr.
Apr. 6
Apr. 13
Apr. 20
Apr. 27
Seasonally adjusted
2,991.9
878.8
697.2
181.6
2,113.1
587.8
902.8
75.1
827.8
367.0
63.6
191.8
147.9
209.9
219.2
3,075.1
900.0
717.1
182.9
2,175.1
586.0
927.0
73.8
853.2
384.6
81.6
195.8
151.7
220.4
219.0
3,091.1
903.1
720.3
182.8
2,188.0
584.4
933.8
73.5
860.3
388.2
87.9
193.7
154.0
218.8
217.5
3,104.6
910.9
726.7
184.2
2,193.8
583.6
940.9
73.2
867.7
390.9
87.3
191.0
153.0
219.2
214.6
3,124.1
924.8
732.3
192.5
2,199.2
588.7
942.1
73.0
869.1
393.8
80.9
193.8
153.7
219.6
220.7
3,138.3
930.1
732.3
197.8
2,208.1
591.0
940.9
73.1
867.8
397.1
82.2
197.0
153.5
225.4
223.5
3,165.6
950.0
747.7
202.2
2,215.7
595.7
940.8
73.1
867.6
401.3
83.3
194.7
145.9
216.9
223.5
3,193.1
967.6
758.9
208.7
2,225.5
602.3
943.0
73.2
869.8
407.3
76.9
196.1
146.0
210.3
230.0
3,201.5
971.7
764.4
207.4
2,229.8
601.2
943.0
73.1
869.9
405.6
82.8
197.3
139.3
217.7
229.1
3,192.4
969.8
763.9
205.8
2,222.6
599.1
943.3
73.2
870.1
406.3
78.3
195.6
147.9
209.4
228.4
3,185.3
965.0
756.4
208.6
2,220.3
604.4
942.5
73.2
869.3
407.4
69.5
196.4
134.4
211.5
233.6
3,197.9
966.0
754.4
211.6
2,231.9
603.3
942.9
73.2
869.7
408.6
80.9
196.2
161.0
205.0
227.7
3,508.0
3,606.8
3,622.6
3,633.1
3,660.4
3,683.3
3,694.6
3,722.1
3,730.3
3,720.7
3,707.4
3,734.2
2,494.4
753.8
1,740.7
364.3
1,376.4
4%. 1
147.3
348.8
2,524.2
810.3
1,713.9
346.2
1,367.7
516.9
152.6
364.4
2,533.2
816.5
1,716.7
347.4
1,369.3
515.7
153.3
362.5
2,537.9
819.1
1,718.8
349.8
1,368.9
522.4
152.5
370.0
2,537.2
815.9
1,721.2
348.2
1,373.0
544.2
150.1
394.0
2,530.9
818.1
1,712.8
339.9
1,372.8
542.1
149.5
392.6
2,515.9
814.4
1,701.5
331.7
1,369.8
552.8
141.5
411.3
2,505.5
801.5
1,704.1
334.3
1,369.8
577.1
144.7
432.5
2,509.2
810.5
1,698.7
327.8
1,371.0
568.6
140.5
428.2
2,506.4
802.7
1,703.7
332.2
1,371.5
585.3
148.8
436.5
2,496.9
792.5
1,704.4
337.4
1,366.9
577.7
132.0
445.7
2,509.3
802.8
1,706.6
337.0
1,369.5
581.1
156.9
424.2
88.3
149.8
124.1
144.7
121.9
144.1
119.6
143.1
116.3
155.1
136.3
162.0
157.8
159.0
172.6
165.7
182.6
167.3
170.5
165.2
177.1
165.2
164.1
164.2
3,228.7
3,309.9
3,314.9
3,323.0
3,352.7
3,371.2
3,385.6
3,421.0
3,427.7
3,427.4
3,416.9
3,418.7
279.2
297.0
307.6
310.2
307.7
312.1
309.1
301.1
302.5
293.3
290.5
315.5
Not seasonally adjusted
Assets
29 Bank credit
Securities in bank credit
U.S. government securities . . .
31
32
Other securities
Loans and leases in bank c r e d i t 2 .
33
Commercial and industrial . . . .
34
Real estate
35
Revolving home equity
36
Other
37
Consumer
38
Security 3
39
40
Other
41 Interbank loans 4
42 Cash assets 5
43 Other a s s e t s 6
3,101.9
3,120.2
3,125.1
3,136.9
3,164.4
3,191.5
3,197.7
880.6
902.2
908.5
910.4
920.8
930.1
953.3
968.5
977.2
699.2
181.3
2,110.1
590.7
900.3
74.5
825.7
364.1
66.0
189.0
149.3
207.2
215.7
718.8
183.4
2,175.6
584.0
929.5
74.5
855.0
384.5
80.4
197.2
150.7
219.7
724.4
184.1
2,193.4
585.2
936.3
74.0
862.3
388.4
87.8
195.7
155.6
226.3
221.4
220.3
726.2
184.2
2,209.9
585.6
944.1
73.5
870.6
395.2
89.3
195.7
161.3
232.5
218.6
728.3
192.4
2,204.3
587.9
940.6
73.1
867.5
398.2
83.2
194.5
157.9
224.6
223.1
731.1
199.0
2,206.8
590.2
937.4
72.9
864.5
398.4
86.8
194.0
154.3
219.9
223.0
751.4
201.9
2,211.1
598.6
937.0
72.5
864.5
398.5
85.5
191.6
145.7
211.6
222.0
761.0
207.5
2,223.0
605.2
941.0
72.7
868.4
404.1
79.6
193.0
147.4
207.7
226.4
769.6
207.6
2,220.6
604.0
940.2
72.3
867.8
400.9
79.7
195.8
149.0
212.8
225.8
3,191.6
971.2
765.8
205.3
2,220.5
600.6
942.8
72.4
870.4
402.2
82.8
192.1
150.5
209.3
225.0
3,191.2
966.9
759.8
207.1
2,224.3
608.4
940.5
72.8
867.7
404.4
76.6
194.4
138.4
210.4
227.7
3,187.9
961.8
753.2
208.6
2,226.1
606.0
939.8
73.0
866.8
406.8
82.4
191.2
151.6
197.7
224.4
44 Total assets 7
3,502.2
3.610.6
3,645.0
3,673.9
3,673.2
3,676.4
3,686.0
3,715.8
3,728.1
3,719.2
3,710.4
3,704.5
2,501.0
761.8
1,739.3
365.7
1,373.6
490.0
149.3
340.7
2,516.1
804.4
1,711.8
342.4
1,369.4
525.2
149.8
375.5
2,544.0
828.1
1,715.9
344.3
1,371.6
526.6
154.2
372.4
2,566.7
853.6
1,713.1
346.0
1,367.1
532.4
159.6
372.8
2,540.5
825.5
1,714.9
344.7
1,370.3
546.0
155.8
390.2
2,520.6
809.0
1,711.6
340.3
1,371.3
546.4
152.0
394.4
2,507.6
802.8
1,704.7
334.3
1,370.4
546.9
143.0
403.9
2,512.2
809.8
1,702.4
335.5
1,367.0
561.9
146.2
415.7
2,533.0
826.8
1,706.2
329.5
1,376.7
550.7
146.1
404.6
2,529.5
823.3
1,706.2
332.5
1,373.7
550.2
147.6
402.6
2,504.2
805.4
1,698.8
338.4
1,360.4
569.8
138.4
431.4
2,483.7
786.4
1,697.3
338.1
1,359.2
573.7
151.6
422.1
86.1
145.0
124.6
147.4
124.7
150.0
126.7
146.6
124.4
157.3
139.3
162.1
162.5
158.8
171.6
160.1
170.2
162.7
167.4
159.6
170.6
157.7
178.6
159.2
3,222.1
3,313.4
3,345.4
3,372.4
3,368.2
3,368.4
3,375.7
3,405.7
3,416.6
3,406.7
3,402.3
3,395.1
280.1
297.2
299.6
301.5
305.0
308.0
310.3
310.0
311.6
312.5
308.1
309.4
30
45
46
47
48
49
50
51
52,
53
54
Liabilities
Deposits
Transaction
Nontransaction
Large time
Other
Borrowings
From banks in the U.S
From nonbanks in the U.S
Net due to related foreign
offices
Other liabilities 8
55 Total liabilities
56 Residual (assets less l i a b i l i t i e s ) 9 . . . .
Footnotes appear onfollowingpage.
2,990.7
3,077.7
Commercial
1.26
Banking Institutions
A19
ASSETS A N D LIABILITIES OF COMMERCIAL BANKS1—Continued
Billions of dollars
Wednesday figures
Monthly averages
Account
1993r
1993
Apr. r
Oct.
Nov.
1994r
1994
Dec.
Jan. r
DOMESTICALLY C H A R T E R E D
COMMERCIAL BANKS
Feb.1"
Mar. r
Apr.
Apr. 6
Apr. 13
Apr. 20
Apr. 27
Seasonally adjusted
Assets
57 Bank credit
58
Securities in bank credit
59
U.S. government securities . .
AO
Other securities
Loans and leases in bank credit 2 .
61
Commercial and industrial . . .
6?
Real estate
A3
Revolving home equity . . . .
64
6S
Other
66
67
Security 3
68
Other
A9 Interbank loans 4
70
71 Other a s s e t s 6
2,665.1
807.1
650.2
156.9
1,858.0
436.6
852.9
75.0
777.9
367.0
44.7
156.7
129.8
183.0
173.1
2,738.5
822.5
665.0
157.6
1,916.0
433.8
879.7
73.8
805.9
384.6
56.6
161.2
129.9
193.7
173.2
2,756.1
826.1
668.2
158.0
1,930.0
434.2
886.8
73.5
813.3
388.2
60.0
160.8
132.9
193.2
172.4
2,771.9
833.6
673.3
160.3
1,938.3
435.6
894.7
73.2
821.5
390.9
57.9
159.2
133.6
193.8
171.6
2,792.7
846.3
678.4
167.9
1,946.4
440.4
897.3
73.0
824.3
393.8
54.4
160.6
135.3
194.5
175.4
2,801.0
850.1
676.8
173.3
1,950.9
442.5
896.4
73.1
823.3
397.1
54.5
160.4
130.4
200.9
175.8
2,825.8
869.2
691.2
177.9
1,956.6
444.3
896.9
73.1
823.7
401.3
55.5
158.7
125.9
191.5
177.0
2,841.3
877.4
695.5
181.9
1,963.9
448.2
900.4
73.2
827.3
407.3
49.5
158.4
124.3
184.2
182.8
2,848.3
884.1
700.7
183.4
1,964.2
447.1
899.9
73.1
826.8
405.6
52.3
159.3
118.8
192.4
180.7
2,841.3
879.2
698.7
180.6
1,962.1
446.8
901.0
73.2
827.8
406.3
50.7
157.3
124.9
183.5
181.9
2,835.0
874.5
693.2
181.3
1,960.5
449.4
900.2
73.2
827.0
407.4
44.5
158.9
116.0
185.5
185.1
2,842.8
873.9
691.6
182.4
1,968.9
448.5
900.3
73.2
827.1
408.6
52.5
158.9
136.8
177.6
183.1
72 Total assets 7
3,090.3
3,176.0
3,195.9
3,212.5
3,240.3
3,251.0
3,263.0
3,275.3
3,282.8
3,274.4
3,264.3
3,283.1
2,339.8
743.0
1,596.8
223.9
1,373.0
378.3
107.7
270.6
2,371.6
798.0
1,573.7
211.8
1,361.8
411.9
120.5
291.4
2,378.9
804.9
1,574.0
210.8
1,363.2
410.3
121.5
288.9
2,379.4
808.2
1,571.2
208.9
1,362.3
417.2
121.9
295.3
2,381.6
805.0
1,576.6
210.4
1,366.3
437.4
119.2
318.2
2,381.4
806.7
1,574.7
208.6
1,366.1
440.2
120.7
319.6
2,375.2
802.9
1,572.3
207.2
1,365.0
455.2
115.8
339.4
2,362.1
790.7
1,571.4
207.5
1,364.0
475.1
116.1
359.0
2,368.8
798.7
1,570.1
204.9
1,365.3
470.8
114.0
356.7
2,364.2
792.6
1,571.7
206.3
1,365.4
481.8
122.8
359.0
2,351.4
781.6
1,569.8
208.5
1,361.3
474.6
103.9
370.7
2,365.0
792.1
1,573.0
209.0
1,363.9
475.9
123.7
352.2
-9.2
106.3
-6.2
105.6
-2.7
104.9
1.7
104.7
3.4
113.1
3.2
119.0
14.0
117.9
21.1
123.4
20.1
125.9
20.3
122.8
26.5
122.9
18.5
121.9
2,815.2
2,882.9
2,891.4
2,903.0
2,935.5
2,943.9
2,962.2
2,981.7
2,985.6
2,989.2
2,975.4
2,981.4
275.1
293.1
304.5
309.6
304.7
307.1
300.8
293.6
297.3
285.2
288.8
301.7
Liabilities
73 Deposits
Transaction
74
75
Nontransaction
76
Large time
77
Other
78 Borrowings
79
From banks in the U.S
80
From nonbanks in the U.S
81 Net due to related foreign
offices
82 Other liabilities 8
83 Total liabilities
84 Residual (assets less liabilities) 9 ...
Not seasonally adjusted
Assets
85 Bank credit
8A
Securities in bank credit
87
U.S. government securities . .
Other securities
88
89
Loans and leases in bank credit 2 .
Commercial and industrial . . .
W
91
Real estate
9?
Revolving home equity . . . .
03
Other
Consumer
94
9S
Security 3
96
Other
97 Interbank loans 4
98 Cash a s s e t s 5
99 Other a s s e t s 6
2,665.3
809.6
653.3
156.2
1,855.8
439.2
850.4
74.5
775.9
364.1
47.0
155.0
131.8
181.2
170.6
2,743.5
825.3
666.7
158.6
1,918.2
433.3
882.0
74.5
807.5
384.5
55.8
162.6
128.4
191.9
175.6
2,764.9
830.2
670.8
159.4
1,934.6
435.0
889.1
74.0
815.2
388.4
59.8
162.3
134.6
200.6
173.7
2,778.6
830.9
670.6
160.3
1,947.7
435.6
898.0
73.5
824.6
395.2
57.2
161.7
138.9
206.8
173.7
2,785.8
840.0
672.3
167.7
1,945.8
437.9
895.9
73.1
822.8
398.2
53.9
159.9
138.4
199.7
176.5
2,797.2
849.4
675.6
173.7
1,947.8
441.7
892.8
72.9
819.9
398.4
56.6
158.3
132.6
196.0
175.0
2,820.7
869.9
692.8
177.0
1,950.9
446.2
893.1
72.5
820.5
398.5
56.7
156.5
126.5
186.6
176.1
2,841.9
879.6
699.1
180.6
1,962.3
450.9
898.6
72.7
825.9
404.1
52.1
156.6
126.3
182.4
180.1
2,848.0
889.3
706.5
182.8
1,958.7
449.4
897.1
72.3
824.8
400.9
52.3
159.0
129.1
188.4
179.0
2,843.5
882.5
702.8
179.7
1,961.0
448.0
900.6
72.4
828.1
402.2
54.9
155.4
128.9
184.4
179.4
2,840.2
878.0
698.3
179.7
1,962.1
452.8
898.1
72.8
825.3
404.4
49.2
157.7
120.6
185.0
180.3
2,836.2
872.1
692.2
179.8
1,964.2
451.3
897.5
73.0
824.5
406.8
53.4
155.1
127.2
171.7
180.3
100 Total assets 7
3,088.3
3,180.5
3,214.7
3,239.3
3,243.0
3,243.2
3,252.4
3,273.6
3,287.3
3,279.1
3,268.9
3,258.4
Liabilities
101 Deposits
10?
103
Nontransaction
104
105
Other
106 Borrowings
107
From banks in the U.S
108
From nonbanks in the U.S
109 Net due to related foreign
2,344.9
751.2
1,593.7
223.1
1,370.6
373.7
110.5
263.2
2,369.3
791.8
1,577.4
212.9
1,364.5
417.5
117.7
299.8
2,394.0
816.5
1,577.5
211.3
1,366.2
420.1
121.3
298.8
2,411.4
842.5
1,569.0
207.5
1,361.4
425.8
126.7
299.1
2,386.6
814.3
1,572.2
208.8
1,363.4
439.1
123.9
315.2
2,370.2
797.6
1,572.7
208.7
1,364.0
446.1
123.9
322.2
2,363.7
791.8
1,571.9
206.6
1,365.3
449.9
117.2
332.7
2,367.6
799.2
1,568.4
206.8
1,361.6
461.4
118.5
342.9
2,391.8
815.7
1,576.0
204.6
1,371.4
451.5
118.3
333.2
2,387.0
813.0
1,574.0
205.8
1,368.2
448.3
121.9
326.4
2,358.1
795.1
1,563.0
207.5
1,355.5
467.4
110.7
356.7
2,337.0
775.4
1,561.6
207.9
1,353.7
473.5
122.2
351.4
-9.9
102.5
-6.6
108.6
-3.3
109.6
-1.8
107.3
3.0
114.4
5.4
118.5
16.0
117.9
20.6
118.8
15.9
550.7
18.7
550.2
22.5
569.8
24.8
573.7
2,811.2
2,888.7
2,920.5
2,942.8
2,943.1
2,940.3
2,947.5
2,968.4
2,981.7
2,972.6
2,964.7
2,952.9
277.1
291.8
294.2
296.5
299.9
302.9
304.8
305.2
305.6
306.5
304.1
305.5
110 Other liabilities 8
111 Total liabilities
112 Residual (assets less liabilities) 9 ...
Footnotes appear on following page.
A20
DomesticNonfinancialStatistics • July 1994
N O T E S T O T A B L E 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; N e w 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 f u n d s 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 f r o m 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
1.27
Commercial
Banks
A21
ASSETS A N D LIABILITIES OF LARGE W E E K L Y REPORTING COMMERCIAL B A N K S
Millions of dollars, Wednesday figures
1994
Account
Mar. 16
Mar. 23
Mar. 30
Apr. 6
Apr. 13
Apr. 20
Apr. 27
Mar. 2
Mar. 9
124,236 r
314,056
26,601
287,455
90,970
107,898 r
316,955
29,208
287,747
90,722
115,500 r
317,115
29,948
287,167
90,259
109,986 r
316,554
26,217
290,337
91,528
112,186 r
318,573
24,755
293,818
91,372
113,279
325,948
29,031
296,917
92,804
108,545
322,845
27,778
295,067
92,051
110,876
319,316
27,129
292,186
90,318
101,279
313,008
24,357
288,650
87,385
49,925
76,778
69,783
88,460
1,841
57,469
21,518
4,220
17,298
35,952
29,150
49,525
77,161
70,339
88,794
1,764
57,572
21,679
4,247
17,432
35,893
29,457
49,234
78,156
69,517
89,039
1,640
57,562
21,650
4,266
17,384
35,912
29,837
49,605
79,733
69,471
84,715
1,838
57,423
21,624
4,229
17,395
35,799
25,454
50,975
80,349
71,122
87,892 r
1,940
57,847
21,748
4,231
17,517
36,099
28,105 r
48,993
83,142
71,978
94,213
1,970
58,000
21,701
4,172
17,529
36,299
34,243
48,288
82,957
71,771
90,677
1,638
58,311
21,796
4,407
17,389
36,515
30,728
49,409
80,758
71,701
90,765
1,773
58,075
21,819
4,387
17,432
36,256
30,917
50,401
79,559
71,305
90,449
1,784
57,771
21,842
4,412
17,430
35,929
30,893
17 Federal funds sold"
18
To commercial banks in the United States
To nonbank brokers and dealers
19
70
To others 3
?1 Other loans and leases, gross
Commercial and industrial
??
73
Bankers acceptances and commercial paper
All other
74
U.S. addressees
75
Non-U.S. addressees
76
Real estate loans
77
Revolving, home equity
78
79
All other
30
To individuals for personal expenditures
To financial institutions
31
Commercial banks in the United States
37
33
Banks in foreign countries
Nonbank financial institutions
34
35
For purchasing and carrying securities
36
To finance agricultural production
To states and political subdivisions
37
38
To foreign governments and official institutions
39
All other loans 4
Lease-financing receivables
40
41 LESS: Unearned income
Loan and lease reserve
47
43 Other loans and leases, net
44 Other assets
97,923
58,892
32,412
6,618
l,042,418 r
284,104
3,122
280,981
278,969
2,013
417,914 r
43,569
374,346 r
208,802 r
37,539
15,590
3,064
18,885
21,946
5,846
12,128
1,039
26,393
26,707
1,834
35,327
l,005,258 r
164,780 r
91,513
52,556
32,511
6,447
l,037,224 r
283,194
3,174
280,020
278,007
2,013
419,213 r
43,521
375,692 r
208,193 r
37,223
15,685
3,040
18,499
20,872
5,854
12,076
1,075
22,999
26,526
1,624
35,424
l,000,177 r
163,352 r
93,922
58,354
30,232
5,335
1,041,200^
286,627
2,951
283,676
281,696
1,980
418,806 r
43,436
375,370 r
208,669 r
36,436
15,759
2,406
18,271
21,064
5,837
12,087
1,028
24,052
26,595
1,613
35,417
I,004,170 r
165,279 r
89,669
56,008
27,890
5,770
l,040,806 r
285,974
2,608
283,366
281,318
2,049
417,310 r
43,559
373,751 r
209,730
36,065
15,522
2,769
17,775
22,988
5,880
12,027
1,069
23,095
26,667
1,610
35,374
l,003,821 r
163,684r
92,762
61,388 r
25,950"
5,423
1,041,609"'
287,670 r
2,663
285,007 r
282,991 r
2,016
419,208 r
43,482
375,726 r
209,579 r
35,517
14,898
2,519
18,099
19,836
5,945
11,972
1,064
24,073
26,746
1,605
34,971
l,005,033 r
162,158 r
91,996
56,739
29,412
5,845
1,043,921
288,806
2,688
286,118
284,191
1,927
422,239
43,433
378,806
209,440
37,167
15,107
3,011
19,049
16,491
6,017
11,904
1,034
24,068
26,756
1,590
34,826
1,007,505
165,590
96,296
59,596
31,140
5,560
1,043,222
286,890
2,858
284,032
282,120
1,912
424,571
43,546
381,025
210,225
35,775
14,930
2,580
18,266
17,565
6,019
11,914
986
22,485
26,792
1,588
34,797
1,006,836
164,918
91,330
59,165
26,209
5,956
1,048,448
290,830
2,972
287,858
285,920
1,938
421,970
43,759
378,211
211,357
35,871
15,424
2,443
18,004
17,216
6,106
11,921
1,075
25,201
26,901
1,594
34,704
1,012,151
164,417
100,447
65,794
29,398
5,256
1,047,488
290,281
2,882
287,399
285,604
1,795
421,099
43,850
377,249
212,447
35,948
16,078
2,233
17,638
18,286
6,097
11,882
1,011
23,525
26,910
1,586
34,585
1,011,317
162,953
45 Total assets
l,794,713 r
l,768,688 r
l,785,025 r
l,768,429 r
l,778,604 r
1,798,529
1,790,116
1,788,854
1,779,452
ASSETS
1 Cash and balances due from depository institutions
? U.S. Treasury and government securities
Trading account
1
Investment account
4
Mortgage-backed securities'
5
All others, by maturity
One year or less
6
One year through five years
7
8
More than five years
9 Other securities
Trading
account
10
Investment account
II
State
and
political subdivisions, by maturity
17
One year or less
N
14
More than one year
Other bonds, corporate stocks, and securities
H
16 Other trading account assets
Footnotes appear on the following page.
A22
1.27
DomesticNonfinancialStatistics • July 1994
ASSETS A N D LIABILITIES OF LARGE W E E K L Y REPORTING COMMERCIAL
BANKS—Continued
Millions of dollars, Wednesday figures
1994
Account
Mar. 9
M a r . 16
M a r . 23
M a r . 30
Apr. 6
A p r . 13
A p r . 20
A p r . 27
1,153,459
308,249
253,666
54,583
9,095
2,830
24,539
5,159
679
12,281
....
125,826
719,383 r
696,453 r
22,93 l r
18,729
2,122 r
1,787
292
....
l,136,360 r
289,264
242,266
46,998
8,236
2,162
20,872
5,084
778
9,867
125,415
721,681
698,852 r
22,829 r
18,600
2,105 r
1,831
293
1,144,993
300,543
249,377
51,166
8,868
3,733
22,301
4,985
894
10,385
124,701
719,749
697,178 r
22,57 l r
18,368
l,996 r
1,910
298
1,123,396
284,299
233,647 r
50,651
8,853
1,585
19,642
5,027
1,018
14,526
123,384
715,713
693,662 r
22,051 r
17,962
l,887 r
1,898
304
1,129,390
293,288
243,567
49,721
8,734
2,073
20,789
5,444
593
12,088
123,769
712,332
690,993 r
21,339
17,818
1,513
1,707
301
1,149,060
300,862
250,299
50,563
8,468
2,169
22,213
6,566
648
10,499
129,064
719,134
698,781
20,353
17,915
622
1,514
301
1,147,134
300,322
252,570
47,752
8,763
2,255
21,010
5,030
737
9,957
128,424
718,388
698,080
20,308
17,788
610
1,611
300
1,131,055
292,226
243,520
48,706
10,032
3,420
20,288
5,195
589
9,182
127,229
711,600
689,177
22,423
17,676
2,832
1,614
301
1,119,976
286,899
236,501
50,398
10,148
3,061
20,235
5,304
1,030
10,619
122,056
711,020
688,411
22,609
17,755
2,800
1,757
299
339,51 l r
0
25,981
98,722 r
326,20I r
0
6,036
113,778 r
337,276 r
0
15,315
108,567 r
345,26lr
0
18,585
108,229 r
345,776 r
0
14,291
112,716 r
340,208
0
6,466
118,482
337,390
150
9,166
114,595
351,964
0
31,776
97,485
351,752
0
33,420
95,763
Mar. 2
LIABILITIES
46 D e p o s i t s
Demand deposits
47
Individuals, p a r t n e r s h i p s , and c o r p o r a t i o n s
48
49
Other holders
50
S t a t e s a n d political s u b d i v i s i o n s
51
U.S. government
D e p o s i t o r y institutions in the United S t a t e s
52
B a n k s in f o r e i g n c o u n t r i e s
53
F o r e i g n g o v e r n m e n t s a n d official institutions
54
Certified a n d o f f i c e r s ' c h e c k s
55
Transaction balances other than demand deposits
56
Nontransaction balances
57
Individuals, p a r t n e r s h i p s , a n d c o r p o r a t i o n s
58
59
Other holders
S t a t e s a n d political s u b d i v i s i o n s
60
61
U.S. government
D e p o s i t o r y institutions in t h e United States
62
Foreign governments, official institutions, and banks
63
64 Liabilities f o r b o r r o w e d m o n e y 5
65
Borrowings from Federal Reserve Banks
66
T r e a s u r y tax and loan n o t e s
67
O t h e r liabilities f o r b o r r o w e d m o n e y 6
68 O t h e r liabilities (including s u b o r d i n a t e d n o t e s and
debentures)
69 Total liabilities
70 Residual (total a s s e t s less total liabilities) 7
MEMO
71
72
73
74
75
76
77
137,715 r
141,269 r
138,363 r
135,083 r
139,480 r
144,361
140,534
141,006
142,801
l,630,686 r
l,603,830 r
I,620,632 r
l,603,740 r
l,614,646 r
1,633,628
1,625,059
1,624,025
1,614,529
164,027
r
Total loans and l e a s e s , g r o s s , a d j u s t e d , plus s e c u r i t i e s 8 . . l,468,375
97,341 r
T i m e d e p o s i t s in a m o u n t s of $100,000 or m o r e
9
752
L o a n s sold outright to affiliates
373
C o m m e r c i a l a n d industrial
378
Other
20,435
Foreign b r a n c h credit e x t e n d e d to U . S . r e s i d e n t s
7,031
N e t o w e d to related institutions a b r o a d
164,859
164,393
164,689
163,958
164,901
165,058
164,829
164,924
l,466,245 r
97,118
751
373
378
20,277
11,076
l,467,162 r
95,233
750
373
377
21,869
6,453
l,460,213 r
94,084
735
368
367
22,110
12,682
l,464,549 r
91,561
697
334
363
21,882
16,17l r
1,484,231
92,382
694
329
365
21,774
10,625
1,478,514
93,488
694
329
365
21,958
13,663
1,475,269
95,373
693
329
364
22,026
17,644
1,469,519
95,477
695
329
366
22,107
19,806
1. I n c l u d e s certificates of p a r t i c i p a t i o n , issued or g u a r a n t e e d by agencies of the
U . S . g o v e r n m e n t , in pools of residential m o r t g a g e s .
2. I n c l u d e s securities p u r c h a s e d u n d e r a g r e e m e n t s to resell.
3. I n c l u d e s allocated t r a n s f e r risk r e s e r v e .
4. I n c l u d e s negotiable o r d e r of w i t h d r a w a l a c c o u n t s ( N O W s ) , a u t o m a t i c transfer service ( A T S ) , and t e l e p h o n e a n d p r e a u t h o r i z e d t r a n s f e r s of savings d e p o s i t s .
5. I n c l u d e s b o r r o w i n g s o n l y f r o m o t h e r t h a n directly related institutions.
6. Includes federal funds purchased and securities sold under agreements to
repurchase.
7. This balancing item is not i n t e n d e d a s a m e a s u r e of equity capital for use in
capital-adequacy analysis.
8. E x c l u d e s l o a n s t o a n d f e d e r a l f u n d s t r a n s a c t i o n s with c o m m e r c i a l b a n k s in
the U n i t e d S t a t e s .
9. Affiliates include a b a n k ' s o w n foreign b r a n c h e s , n o n c o n s o l i d a t e d n o n b a n k
affiliates of the b a n k , the b a n k ' s holding c o m p a n y (if not a b a n k ) , a n d n o n c o n solidated n o n b a n k subsidiaries of t h e holding c o m p a n y .
10. Credit e x t e n d e d by f o r e i g n b r a n c h e s of d o m e s t i c a l l y c h a r t e r e d w e e k l y
reporting b a n k s to n o n b a n k U . S . r e s i d e n t s . C o n s i s t s mainly of c o m m e r c i a l a n d
industrial loans, but i n c l u d e s a n u n k n o w n a m o u n t of credit e x t e n d e d to o t h e r t h a n
nonfinancial b u s i n e s s e s .
NOTE. D a t a that f o r m e r l y a p p e a r e d in table 1.28, A s s e t s a n d Liabilities of L a r g e
W e e k l y Reporting C o m m e r c i a l B a n k s in N e w Y o r k C i t y , c a n b e o b t a i n e d f r o m t h e
B o a r d ' s H . 4 . 2 (504) w e e k l y statistical r e l e a s e . F o r o r d e r i n g a d d r e s s , s e e inside
front cover.
Weekly Reporting
1.28
Commercial
LARGE W E E K L Y REPORTING U.S. BRANCHES A N D AGENCIES OF FOREIGN B A N K S
Liabilities'
Banks
A23
A s s e t s and
Millions of dollars, Wednesday figures
1994
Account
Mar. 2
Mar. 9
Mar. 16
Mar. 23
Mar. 30
Apr. 6
Apr. 13
Apr. 20
Apr. 27
ASSETS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Cash and balances due from depository
institutions
U.S. Treasury and government agency
securities
Other securities.
Federal funds sold
To commercial banks in the United States . . .
To others"
Other loans and leases, gross
Commercial and industrial
Bankers acceptances and commercial
paper
All other
U.S. addressees
Non-U.S. addressees
Loans secured by real estate
To financial institutions
Commercial banks in the United S t a t e s . .
Banks in foreign countries
Nonbank financial institutions
For purchasing and carrying securities . . . .
To foreign governments and official
institutions
All other
Other assets (claims on nonrelated parties) . .
22 Total assets 3
15,896
16,815
17,045
17,042
16,412
15,670
16,016
16,309
16,790
35,844
8,676
23,563
6,677
16,885
156,601
94,189
37,562
8,608
21,621
3,929
17,692
157,031
94,894
37,150
8,625
22,293
4,433
17,861
159,436
97,476
39,154
8,388
24,023
5,853
18,170
158,693
97,456
38,776
8,670
27,290
7,438
19,852
160,813
98,505
41,128
8,567
25,055
5,344
19,711
159,447
98,704
41,176
8,887
26,813
6,509
20,304
157,353
97,613
40,089
9,478
24,234
4,374
19,860
159,567
99,407
39,920
9,956
28,989
8,204
20,785
159,526
99,039
2,971
91,218
87,898
3,321
29,062
21,298
4,807
1,556
14,935
7,605
3,123
91,771
88,333
3,438
29,091
21,320
4,790
1,664
14,865
7,341
3,269
94,207
90,755
3,452
28,924
21,779
5,050
1,572
15,157
6,914
3,170
94,286
90,725
3,561
28,804
21,564
4,838
1,565
15,161
6,407
3,380
95,125
91,45 l r
3,674 r
28,428
23,251
5,449
2,349
15,453
6,121
3,812
94,892
91,191
3,701
28,180
23,931
5,660
2,237
16,034
4,233
3,582
94,031
90,466
3,565
27,694
23,608
5,477
2,069
16,063
3,819
3,820
95,586
92,002
3,584
27,751
23,341
5,392
2,026
15,922
4,577
3,794
95,245
91,595
3,650
27,781
23,649
5,448
1,965
16,237
4,446
612
3,834
33,648
601
3,784
32,771
579
3,764
30,557
599
3,864
32,338
545
3,963
31,934
666
3,733
32,413
815
3,804
31,569
656
3,836
33,541
629
3,982
31,044
295,578
293,886
295,133
299,193
301,457
300,952
300,787
303,882
303,278
89,980
4,834
87,661
4,369
89,286
4,559
89,858
4,506
90,288
5,194
87,282
4,688
87,936
4,210
91,200
4,275
90,056
4,611
3,820
1,013
85,147
3,563
806
83,292
3,627
932
84,727
3,604
902
85,353
3,891
1,303
85,094
3,728
961
82,594
3,498
713
83,725
3,550
725
86,925
3,497
1,115
85,445
59,179
25,967
57,873
25,419
58,867
25,860
59,025
26,328
58,123
26,971
55,941
26,653
56,861
26,865
58,999
27,926
58,004
27,441
70,642
35,343
69,305
33,201
72,398
38,777
67,932
34,987
65,572
31,944
70,869
37,749
72,973
37,648
72,192
37,172
68,760
35,753
9,689
25,653
35,299 r
6,581
26,620
36,104 r
10,800
27,977
33,620 r
7,344
27,643
32,945 r
7,015
24,929
33,628 r
9,435
28,314
33,121
8,093
29,555
35,325
8,161
29,011
35,020
8,068
27,685
33,007
5,115
30,185
30,320
5,590
30,514
29,289
6,109
27,511
26,595
6,231
26,714
28,172
5,948
27,681
28,801
6,029
27,091
27,876
5,969
29,356
28,479
5,718
29,302
29,303
6,225
26,782
29,268
295,578
293,886
295,133
299,193
301,457
300,952
300,787
303,882
303,278
213,199
83,286
216,102
88,152
218,020
86,828
219,567
93,675
222,662
99,233
223,194
96,254
222,243
92,426
223,602
90,524
224,739
98,140
LIABILITIES
23 Deposits or credit balances owed to other
than directly-related institutions
24 Demand deposits 4
Individuals, partnerships, and
25
corporations
Other
26
27 Nontransaction accounts
Individuals, partnerships, and
28
corporations
Other
29
30 Borrowings from other than directlyrelated institutions
31 Federal funds purchased"
From commercial banks in the
32
United States
From others
33
34 Other liabilities for borrowed money
To commercial banks in the
35
United States
To others
36
37 Other liabilities to nonrelated parties
38 Total liabilities 6
MEMO
39 Total loans (gross) and securities, adjusted ..
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. Includes net due from related institutions abroad for U.S. branches and
agencies of foreign banks having a net " d u e f r o m " position.
4. Includes other transaction deposits.
5. Includes securities sold under agreements to repurchase.
6. Includes net owed to related institutions abroad for U . S . branches and
agencies of foreign banks having a net " d u e t o " position.
7. Excludes loans to and federal funds transactions with commercial banks in
the United States.
A24
1.32
DomesticNonfinancialStatistics • July 1994
COMMERCIAL PAPER A N D BANKERS DOLLAR ACCEPTANCES
OUTSTANDING
Millions of dollars, end of period
Year ending December
1994
1993
Item
1989
1990
1992
1991
1993
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Commercial paper (seasonally adjusted unless noted otherwise)
1 AH issuers
2
3
4
5
Financial companies'
Dealer-placed
paper~
Total
Bank-related (not seasonally
adjusted)
Directly placed
paper4
Total
Bank-related (not seasonally
adjusted) -
6 Nonfinancial companies 5
525,831
562,656
528,832
545,619
555,075
547,425
547,982
555,075
559,443 r
560,352
183,622
214,706
212,999
226,456
218,947
218,822
216,887
218,947
219,350 r
221,649
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
210,930
200,036
182,463
171,605
180,389
172,489
175,868
180,389
182,075
186,318
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
131,279
147,914
133,370
147,558
155,739
156,114
155,227
155,739
158,018 r
152,385
n.a.
Bankers dollar acceptances (not seasonally adjusted) 6
7 Total
8
9
10
11
12
B\ holder
Accepting banks
Own bills
Bills bought f r o m other banks
Federal Reserve Banks 7
Foreign correspondents
Others
By basis
13 Imports into United States
14 Exports from United States
15 All other
62,972
54,771
43,770
38,194
32,348
33,069
31,997
32,348
31,792
30,994
31,061
9,433
8,510
924
9,017
7,930
1,087
11,017
9,347
1,670
10,555
9,097
1,458
12,325
10,611
1,714
12,332
10,886
1,446
12,475
10,853
1,622
12,325
10,611
1,714
11,317
9,860
1,457
11,159
10,149
1,010
11,623
10,653
969
1,066
52,473
918
44,836
1,739
31,014
1,276
26,364
725
19,298
582
20,155
650
18,872
725
19,298
869
19,605
753
19,082
693
18,746
15,651
13,683
33,638
13,095
12,703
28,973
12,843
10,351
20,577
12,209
8,096
17,890
10,217
7,293
14,838
10,810
7,101
15,158
10,368
7,054
14,575
10,217
7,293
14,838
10,649
7,123
14,020
10,707
6,872
13,414
10,554
6,708
13,800
1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, personal, and mortgage financing; factoring, finance leasing, and other
business lending; insurance underwriting; and other investment activities.
2. Includes all financial-company paper sold by dealers in the open market.
3. Series were discontinued in January 1989.
4. As reported by financial companies that place their paper directly with
investors.
5. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
6. Data on bankers dollar acceptances are gathered f r o m approximately 100
institutions. The reporting group is revised every January.
7. 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 1
Percent per year
Average
rate
Date of change
1991—Jan.
1
2
Feb. 4
May 1
Sept. 13
Nov. 6
Dec. 23
10.00
9.50
9.00
8.50
8.00
7.50
6.50
2
6.00
1994— Mar. 24
Apr. 19
May 17
6.25
6.75
7.25
1992—July
1991
1992
1993
8.46
6.25
6.00
1991
Feb.
Mar.
Apr.
May .
June
July .
Aug.
Sept.
Oct. .
Nov.
Dec.
9.52
9.05
9.00
9.00
8.50
8.50
8.50
8.50
8.20
8.00
7.58
7.21
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
Average
rate
Average
rate
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
1993—Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
..
.
.
.
..
.
..
.
..
...
.
1994—Jan. .
Feb.
Mar.
Apr.
May .
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.00
6.06
6.45
6.99
size, based on the most recent Call Report. Data in this table also appear in the
Board's H.15 (519) weekly and G.13 (415) monthly statistical releases. F o r
ordering address, see inside front cover.
A26
1.35
DomesticNonfinancialStatistics • July 1994
INTEREST RATES
M o n e y and Capital M a r k e t s
Averages, percent per year; figures are averages of business day data unless otherwise noted
1994
1991
1992
1994, week ending
1993
Jan.
Feb.
Mar.
Apr.
Apr. 1
Apr. 8
Apr. 15
Apr. 22
Apr. 29
MONEY MARKET INSTRUMENTS
1 Federal f u n d s 1 2 ' 3
2 Discount window borrowing 2 - 4
3.52
3.25
3.02
3.00
3.05
3.00
3.25
3.00
3.34
3.00
3.56
3.00
3.49
3.00
3.69
3.00
3.37
3.00
3.59
3.00
3.59
3.00
5.89
5.87
5.85
3.71
3.75
3.80
3.17
3.22
3.30
3.14
3.19
3.30
3.39
3.49
3.62
3.63
3.85
4.08
3.81
4.05
4.40
3.68
3.88
4.13
3.77
3.99
4.28
3.71
3.96
4.27
3.88
4.11
4.49
3.89
4.15
4.56
5.73
5.71
5.60
3.62
3.65
3.63
3.12
3.16
3.15
3.07
3.11
3.15
3.30
3.40
3.39
3.53
3.71
3.70
3.71
3.94
4.03
3.60
3.75
3.77
3.67
3.87
3.94
3.60
3.84
3.96
3.78
4.01
4.09
3.81
4.07
4.15
5.70
5.67
3.62
3.67
3.13
3.21
3.10
3.21
3.40
3.56
3.73
3.96
3.96
4.27
3.75
4.02
3.88
4.18
3.84
4.17
4.04
4.37
4.06
4.39
5.82
5.83
5.91
3.64
3.68
3.76
3.11
3.17
3.28
3.08
3.15
3.29
3.31
3.43
3.62
3.56
3.77
4.03
3.75
4.01
4.38
3.64
3.84
4.15
3.71
3.93
4.29
3.66
3.90
4.29
3.79
4.08
4.46
3.84
4.12
4.50
5.86
3.70
3.18
3.15
3.43
3.75
4.00
3.80
3.90
3.89
4.09
4.14
5.38
5.44
5.52
3.43
3.54
3.71
3.00
3.12
3.29
2.98
3.15
3.39
3.25
3.43
3.69
3.50
3.78
4.11
3.68
4.09
4.57
3.50
3.81
4.21
3.60
3.97
4.49
3.57
3.98
4.46
3.73
4.18
4.64
3.85
4.26
4.72
5.42
5.49
5.54
3.45
3.57
3.75
3.02
3.14
3.33
3.02
3.19
3.52
3.21
3.38
3.59
3.52
3.79
4.03
3.74
4.13
4.30
3.50
3.85
n.a.
3.71
4.02
4.30
3.63
4.03
n.a.
3.76
4.21
n.a.
3.85
4.25
n.a.
5.86
6.49
6.82
7.37
7.68
7.86
n.a.
8.14
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
3.54
4.14
4.48
5.09
5.43
5.75
6.39
6.29
3.87
4.47
4.83
5.40
5.72
5.97
6.57
6.49
4.32
5.00
5.40
5.94
6.28
6.48
7.00
6.91
4.82
5.55
5.99
6.52
6.80
6.97
7.40
7.27
4.46
5.18
5.62
6.19
6.53
6.72
7.18
7.06
4.71
5.44
5.92
6.47
6.81
6.97
7.41
7.29
4.70
5.45
5.91
6.47
6.78
6.93
7.39
7.26
4.90
5.66
6.09
6.60
6.85
7.03
7.44
7.31
4.99
5.67
6.08
6.56
6.77
6.96
7.34
7.22
8.16
7.52
6.45
6.24
6.44
6.90
7.32
7.10
7.34
7.31
7.36
7.27
6.56
6.99
6.92
6.09
6.48
6.44
5.38
5.82
5.60
5.14
5.60
5.31
5.06
5.52
5.40
5.29
5.74
5.91
n.a.
n.a.
6.23
5.39
5.83
6.07
5.39
5.83
6.34
n.a.
n.a.
6.22
n.a.
n.a.
6.19
n.a.
n.a.
6.16
9.23
8.55
7.54
7.25
7.39
7.78
8.17
7.95
8.21
8.16
8.21
8.11
8.77
9.05
9.30
9.80
9.32
8.14
8.46
8.62
8.98
8.52
7.22
7.40
7.58
7.93
7.46
6.92
7.12
7.30
7.65
7.24
7.08
7.29
7.44
7.76
7.45
7.48
7.69
7.82
8.13
7.82
7.88
8.08
8.22
8.52
8.20
7.65
7.86
8.00
8.30
8.04
7.90
8.11
8.25
8.56
8.22
7.87
8.06
8.21
8.51
8.25
7.93
8.11
8.25
8.55
8.18
7.81
8.01
8.14
8.46
8.27
8.17
3.24
7.46
2.99
6.89
2.78
6.97
2.69
7.00
2.70
7.07
2.78
7.33
2.90
7.27
2.90
7.29
2.88
7.27
2.90
7.42
2.93
7.34
2.88
paper3'5'6
3
4
5
Commercial
1-month
3-month
6-month
6
7
8
Finance paper,
1-month
3-month
6-month
directly
9
10
Bankers
acceptances3,5,8
3-month
6-month
11
12
13
Certificates of deposit,
market
1-month
3-month
6-month
placed3'5'1
secondary
14 Eurodollar deposits, 3-month 3 ' 0
18
19
20
U.S. Treasury bills
Secondary market 3 , 5
3-month
6-month
1-year
Auction average 3
3-month
6-month
1-year
21
22
23
24
25
26
27
28
Constant
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
15
16
17
5.69
5.45
U . S . TREASURY N O T E S AND B O N D S
maturities'"
Composite
29 More than 10 years (long-term)
STATE AND LOCAL NOTES AND BONDS
Moody's
series13
30 Aaa
31 Baa
32 Bond Buyer series
CORPORATE BONDS
33 Seasoned issues, all industries' 5
34
35
36
37
38
Rating group
Aaa
Aa
A
Baa
A-rated, recently offered utility bonds
.
MEMO
Dividend-price
ratio17
39 Preferred stocks
40 Common stocks
1. The daily effective federal funds rate is a weighted average of rates on
trades through N e w York brokers.
2. Weekly figures are averages of seven calendar days ending on Wednesday
of the current week; monthly figures include each calendar day in the month.
3. Annualized using a 360-day year or bank interest.
4. Rate for the Federal Reserve Bank of N e w 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. Treasury.
13. General obligations based on Thursday figures; M o o d y ' s Investors Service.
14. General obligations only, with twenty years to maturity, issued by twenty
state and local governmental units of mixed quality. Based on figures for
Thursday.
15. Daily figures from M o o d y ' s Investors Service. Based on yields to maturity
on selected long-term bonds.
16. Compilation of the Federal Reserve. This series is an estimate of the yield
on recently offered, A-rated utility bonds with a thirty-year maturity and five
years of call protection. Weekly data are based on Friday quotations.
17. Standard & P o o r ' s corporate series. Preferred stock ratio is based on a
sample of ten issues: four public utilities, four industrials, one financial, and one
transportation. 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 B o a r d ' s H.15 (519)
weekly and G.13 (415) monthly statistical releases. F o r ordering a d d r e s s , see
inside front cover.
Financial Markets
1.36
STOCK MARKET
A27
Selected Statistics
1994
1993
Indicator
1991
1992
1993
Aug.
Oct.
Sept.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Prices and trading volume (averages of daily figures)
Common stock prices
{indexes)
1 New York Stock Exchange
(Dec. 31, 1965 = 50)
Industrial
7.
Transportation
3
Utility
4
Finance
5
206.35
258.16
173.97
92.64
150.84
229.00
284.26
201.02
99.48
179.29
249.71
300.10
242.68
114.55
216.55
251.93
298.83
250.82
118.72
224.96
254.86
300.92
247.74
122.32
229.35
257.53
306.61
254.04
120.49
228.18
255.93
310.84
262.96
115.08
214.08
257.73
313.22
268.11
114.97
216.00
262.11
320.92
278.29
112.67
218.71
261.97
322.41
276.67
116.22
217.12
257.32
318.08
265.68
107.72
211.02
247.97
304.48
250.43
105.04
208.12
6 Standard & P o o r ' s Corporation
( 1 9 4 1 - 4 3 = 10)'
376.20
415.75
451.63
454.13
459.24
463.90
462.89
465.95
472.99
471.58
463.81
447.23
7 American Stock Exchange
(Aug. 31, 1973 = 5 0 ?
360.32
391.28
438.77
444.75
454.91
472.73
472.41
465.95
481.14
476.25
465.72
437.01
179,411
12,486
202,558
14,171
263,374
n.a.
247,324
19,352
261,770
18,889
280,503
21,279
277,886
18,436
259,457
17,461
313,223
19,211
307,269
19,630
311,096
19,481
301,242
15,805
Volume of trading (thousands
8 N e w York Stock Exchange
9 American Stock Exchange
of
shares)
Customer financing (millions of dollars, end-of-period balances)
10 Margin credit at broker-dealers
36,660
43,990
60,310
52,760
53,700
56,690
59,760
60,310
61,250
62,020
61,960
60,700
Free credit balances
11 Margin accounts
12 Cash accounts
8,290
19,255
8,970
22,510
12,360
27,715
9,480
21,915
10,030
23,170
10,270
22,450
10,940
23,560
12,360
27,715
12,125
26,020
12,890
25,665
13,185
26,190
13,175
24,800
at
brokers'
Margin requirements (percent of market value and effective date) 5
13 Margin stocks
14 Convertible bonds
15 Short sales
Mar. 11, 1968
June 8, 1968
May 6, 1970
Dec. 6, 1971
N o v . 24, 1972
70
50
70
80
60
80
65
50
65
55
50
55
65
50
65
1. Effective July 1976, includes a new financial group, banks and insurance
companies. With this change the index includes 400 industrial stocks (formerly
425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40
financial.
2. On July 5, 1983, the American Stock Exchange rebased its index, effectively
cutting previous readings in half.
3. Since July 1983, under the revised Regulation T, margin credit at b r o k e r 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. N e w series since June 1984.
6. These requirements, stated in regulations adopted by the Board of Governors pursuant to the Securities Exchange Act of 1934, limit the amount of credit
that can be used to purchase and carry "margin securities" (as defined in the
regulations) when such credit is collateralized by securities. Margin requirements
Jan. 3, 1974
50
50
50
on securities other than options are the difference between the market value (100
percent) and the maximum loan value of collateral as prescribed by the Board.
Regulation T was adopted effective Oct. 15, 1934; Regulation U , effective May 1,
1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective N o v . 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 S E C
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
DomesticNonfinancialStatistics • July 1994
FEDERAL FISCAL A N D FINANCING OPERATIONS
Millions of dollars
Fiscal year
Calendar year
Type of account or operation
1993
1991
U.S.
budget
1 Receipts, total
On-budget
2
Off-budget
3
4 Outlays, total
On-budget
5
Off-budget
6
7 Surplus or deficit ( - ) , total
On-budget
8
Off-budget
9
Source of financing
(total)
10 Borrowing from the public
11 Operating cash (decrease, or increase ( - ) ) . . .
12 Other 2
1992
1994
1993
Nov.
Dec.
Jan.
Feb,
Mar.
Apr.
1,054,272
760,388
293,885
1,323,793
1,082,106
241,687
-269,521
-321,719
52,198
1,090,453
788,027
302,426
1,380,856
1,128,518
252,339
-290,403
-340,490
50,087
1,153,226
841,292
311,934
1,407,910
1,141,323
266,587
-254,684
-300,031
45,347
83,107
58,700
24,407
121,488
96,724
24,764
-38,381
-38,024
-357
125,408
99,714
25,694
133,660
121,977
11,682
-8,252
-22,263
14,012
122,966
94,396
28,570
107,718
83,527
24,191
15,248
10,869
4,379
72,874
46,879
25,995
114,440
88,523
25,918
-41,566
-41,644
77
93,108
64,612
28,496
125,423
100,260
25,163
-32,315
-35,648
3,333
141,326
104,311
37,015
123,872
100,625
23,247
17,454
3,686
13,768
276,802
-1,329
-5,952
310,918
-17,305
-3,210
248,619
6,283
-218
71,028
-13,450
-19,197
13,995
-17,413
11,670
-6,933
-8,089
-226
31,633
19,666
-9,733
26,511
-6,461
12,265
-21,801
-4,124
8,471
41,484
7,928
33,556
58,789
24,586
34,203
52,506
17,289
35,217
32,310
6,334
25,977
49,723
14,809
34,914
57,812
21,541
36,271
38,146
4,886
33,259
44,607
6,181
38,426
48,731
7,965
40,766
MEMO
13 Treasury operating balance (level, end of
period)
Federal Reserve Banks
14
Tax and loan accounts
15
1. In accordance with the Balanced Budget and Emergency Deficit Control Act
of 1985, all former off-budget entries are now presented on-budget. Federal
Financing Bank (FFB) activities are now shown as separate accounts under the
agencies that use the F F B to finance their programs. The act has also moved two
social security trust funds, (federal old-age survivors insurance and federal
disability insurance) off-budget. The Postal Service is included as an off-budget
item in the Monthly Treasury Statement beginning in 1990.
2. Includes special drawing rights (SDRs); reserve position on the U.S. quota
in the International Monetary Fund (IMF); loans to the I M F ; other cash and
monetary assets; accrued interest payable to the public; allocations of S D R s ;
deposit funds; miscellaneous liability (including checks outstanding) and asset
accounts; seigniorage; increment on gold; net gain or loss for U . S . currency
valuation adjustment; net gain or loss for I M F 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 Office of Management and
Budget, Budget of the U.S.
Government.
Federal Finance
1.39
A29
U.S. B U D G E T RECEIPTS A N D OUTLAYS1
Millions of dollars
Calendar year
Fiscal year
Source or type
1994
1993
1992
1992
1993r
HI
H2
HI
H2
Feb.
Mar.
Apr.
RECEIPTS
1 All sources
7 Individual income taxes, net
3
Withheld
4
Presidential Election Campaign Fund
5
Nonwithheld
6
Refunds
Corporation income taxes
7
Gross receipts
Refunds
8
9 Social insurance taxes and contributions.
net
Employment taxes and
10
contributions
Self-employment taxes and
n
contributions
Unemployment insurance
12
Other net receipts 4
13
14
15
16
17
Excise taxes
Customs deposits
Estate and gift taxes
Miscellaneous receipts
1,090,453
1,153,226
560,318
540,484
593,212
582,054
72,874
93,108
141,326
475,964
408,352
30
149,342
81,760
509,680
430,331
28
154,868
75,546
236,576
198,868
20
110,995
73,308
246,938
215,584
10
39,288
7,942
255,556
209,649 r
25
113,501 r
67,468
262,073
228,429
2
41,765
8,114
28,107
37,335
10
1,151
10,388
29,917
42,805
14
4,434
17,336
60,038
34,979
17
47,201
22,160
117,951
17,680
131,548
14,027
61,682
9,403
58,022
7,219
69,044
7,198
68,266
6,514
2,888
1,294
17,234
1,660
21,994
1,408
413,689
428,300
224,569
192,599
227,177
206,174
35,989
36,957
50,323
385,491
396,939
208,110
180,758
208,776
192,749
32,957
35,976
47,348
24,421
23,410
4,788
20,604
26,556
4,805
20,434
14,070
2,389
3,988
9,397
2,445
16,270
16,074
2,326
4,335
11,010
2,417
1,577
2,664
367
1,630
522
459
13,754
2,605
370
45,569
17,359
11,143
26,459
48,057
18,802
12,577
18,273
22,389
8,146
5,701
10,658
23,456
9,497
5,733
11,458
23,398
8,860
6,494
9,879
25,994
10,215
6,617
9,227
3,249
1,419
1,093
1,424
5,285
1,745
1,211
2,418
4,050
1,479
2,378
2,472
l,380,856 r
1,407,910
704,266
723,527
673,340
728,200 r
114,440
125,423
123,872
298,350
16,107
16,409
4,500 r
20,025
15,205
291,086
16,826
17,030
4,319
20,239
20,443
147,065
8,540
7,951
1,442
8,594
7,526
155,231
9,916
8,521
3,109
11,467
8,852
140,535
6,565
7,996
2,462
8,592
11,872
146,177
10,534
8,904
1,641
11,077
7,335
21,830"
948
1,269
159
1,449
1,817
24,476
696
1,685
510
1,631
1,439
24,501
1,554
1,238
316
1,463
1,641
10,083 r
33,333
6,838
-22,725
35,004
9,051
15,615
15,651
3,903
-7,697
18,425
4,464
-15,112
16,082 r
4,929
-1,724
20,375
5,606
-4,608
2,784
445
-1,260
2,845
1,276
-702
2,620
938
45,248 r
50,012
23,767
21,241
24,036 r
25,515
2,666
2,285
3,694
89,497
406,569
196,958 r
99,415
435,137
207,257
44,164
205,500
104,537
47,232
232,109
98,382
49,882
195,933
108,046 r
52,631
223,735
103,163
8,229
37,224
22,466
10,014
40,350
20,549
8,410
37,872
20,957
34,138 r
14,426
12,990 r
199,421 r
-39,280
35,720
14,955
13,009
198,811
-37,386
15,597
7,435
5,050
100,161
-18,229
18,561
7,238
8,223
98,692
-20,628
16,385
7,482 r
5,205
99,635
-17,035
19,848
7,448
6,565
99,963
-20,407
3,135
1,105
782
15,524
-2,815
2,793
1,760
779
16,594
-2,999
3,930
1,230
-148
17,080
-2,721
OUTLAYS
18 All types
19
70
21
7?
73
24
National defense
International affairs
General science, space, and technology . . . .
Energy
Natural resources and environment
Agriculture
?5
76
27
28
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment, and
social services
79 Health
30 Social security and Medicare
31 Income security
32
33
34
35
36
Veterans benefits and services
Administration of justice
General government
Net interest 6
Undistributed offsetting receipts
1. Functional details d o 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 f u n d s .
7. Consists of 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 the U . S . Office of Management and Budget, Budget of the U.S. Government,
Fiscal Year 1995.
A30
1.40
DomesticNonfinancialStatistics • July 1994
F E D E R A L D E B T S U B J E C T TO S T A T U T O R Y L I M I T A T I O N
Billions of dollars, end of month
1992
1994
1993
Item
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
1 Federal debt outstanding
3,897
4,001
4,083
4,196
4,250
4,373
2 Public debt securities
Held by public
3
4
Held by agencies
3,881
2,918
964
3,985
2,977
1,008
4,065
3,048
1,016
4,177
3,129
1,048
4,231
3,188
1,043
4,352
3,252
1,100
16
16
0
16
16
0
18
18
0
19
19
0
20
20
0
21
21
0
25
25
0
27
27
0
3,784
3,891
3,973
4,086
4,140
4,256
4,316
4,446
4,491
3,783
0
3,890
0
3,972
0
4,085
0
4,139
0
4,256
0
4,315
0
4,445
0
4,491
0
4,145
4,145
4,145
4,145
4,145
4,370
4,900
4,900
4,900
5 Agency securities
6
Held by public
7
Held by agencies
8 Debt subject to statutory limit
9 Public debt securities
10 Other debt 1
June 30
Sept. 30
Dec. 31
Mar. 31
4,436
4,562
4,576
4,412
3,295
1,117
4,536
3,382
1,154
4
T
1
n.a.
1
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 D E B T OF U.S. T R E A S U R Y
SOURCES. U.S. Department of the Treasury, Monthly
Debt of the United States and Treasury
Bulletin.
Statement
of the
Public
T y p e s and O w n e r s h i p
Billions of dollars, end of period
1994
1993
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
Nonmarketable'
State and local government series
Foreign issues 2
Government
Public
Savings bonds and notes
Government account series
Non-interest-bearing
By holder 4
15 U.S. Treasury and other federal agencies and trust funds
16 Federal Reserve Banks
17 Private investors
Commercial banks
18
19
Money market f u n d s
Insurance companies
20
21
Other companies
State and local treasuries
22
Individuals
Savings bonds
23
Other securities
24
Foreign and international
25
Other miscellaneous investors
26
1990
1992
1993
Q2
Q3
Q4
Ql
3,364.8
3,801.7
4,177.0
4,535.7
4,352.0
4,411.5
4,535.7
n.a.
3,362.0
2,195.8
527.4
1,265.2
388.2
1,166.2
160.8
43.5
43.5
.0
124.1
813.8
2.8
3,798.9
2,471.6
590.4
1,430.8
435.5
1,327.2
159.7
41.9
41.9
.0
135.9
959.2
2.8
4,173.9
2,754.1
657.7
1,608.9
472.5
1,419.8
153.5
37.4
37.4
.0
155.0
1,043.5
3.1
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
4,349.0
2,860.6
659.3
1,698.7
487.6
1,488.4
152.8
43.0
43.0
.0
164.4
1,097.8
2.9
4,408.6
2,904.9
658.4
1,734.2
497.4
1,503.7
149.5
42.5
42.5
.0
167.0
1,114.3
2.9
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
4,572.6
3,042.9
721.2
1,802.5
504.2
1,529.7
145.5
42.7
42.7
,0
172.6
1,138.4
3.3
828.3
259.8
2,288.3
171.5
45.4
142.0
108.9
490.4
968.7
281.8
2,563.2
233.4
80.0
168.7
150.8
520.3
1,047.8
302.5
2,839.9
294.0
79.4
197.5
192.5
534.8
1,153.5
334.2
3,047.7
316.0
80.5
216.0
213.0
564.0
1,099.8
328.2
2,938.4
306.5 r
76.2
210.2 r
206.1
553.9
1,116.7
325.7
2,983.0
313.3 r
75.2
215.5 r
215.6
558.0
1,153.5
334.2
3,047.7
316.0
80.5
216.0
213.0
564.0
126.2
107.6
458.4
637.7
138.1
125.8
491.8
651.3
157.3
131.9
549.7
702.4
171.9
137.9
623.3
725.0
166.5
136.4
568.2
714.3 r
169.1
136.7
592.3
707.2 r
171.9
137.9
623.3
725.0
1. Includes (not shown separately) securities issued to the Rural Electrification
Administration, depository bonds, retirement plan bonds, and individual retirement bonds.
2. Nonmarketable series denominated in dollars, and series denominated in
foreign currency held by foreigners.
3. Held almost entirely by U.S. Treasury and other federal agencies and trust
funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust
f u n d s are actual holdings; data for other groups are Treasury estimates.
1991
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 f u n d s , dealers and brokers, certain
U.S. Treasury deposit accounts, and federally sponsored agencies.
SOURCES. U.S. Treasury Department, data by type of security,
Monthly
Statement of the Public Debt of the United States; data by holder, Treasury
Bulletin.
Federal Finance
1.42
U.S. G O V E R N M E N T SECURITIES D E A L E R S
A31
Transactions1
Millions of dollars, daily averages
1994, week ending
1994
Item
Apr. 20
Apr. 27
46,593
55,007
38,570
46,897
35,305
28,702
12,728
56,159
43,142
27,106
14,610
53,447
37,946
21,636
14,960
13,503
572
674
13,398
667
530
13,663
413
854
10,952
404
487
22,319
3,359
25,199
3,502
35,887
3,577
28,898
3,041
14,921
2,399
Mar. 2
Mar. 9
Mar. 16
Mar. 23
Mar. 30
Apr. 6
Apr. 13
54,077
53,580
53,776
50,653
46,672
63,400
64,117
60,771
45,280
31,297 r
19,964
63,646
50,142
32,128
20,234
57,132
42,912
31,527
19,682
58,004
43,675
31,005
21,105
66,157
48,436
29,040
19,341
58,870
43,769
31,054
19,170
69,629
47,199
42,450
22,206
11,177
695
525
12,927
664
536
12,548
602
509
12,109
730
693
12,609
615
392
13,288
740
440
13,740
613
601
23,264 r
3,807
24,765
3,411 r
25,878
4,098
27,178
3,746
27,923
3,450
21,108
2,794
Feb.
Mar.
51,660
53,692
52,525
41,483
26,382
18,752
68,772
48,599
34,565
22,524
11,346
724 r
558
25,587
3,661 r
Jan.
IMMEDIATE TRANSACTIONS2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
By type of security
U.S. Treasury securities
Bills
Coupon securities, by maturity
Less than 3.5 years
3.5 to 7.5 years
7.5 to 15 years
15 years or more
Federal agency securities
Debt, by maturity
Less than 3.5 years
3.5 to 7.5 years
7.5 years or more
Mortgage-backed
Pass-throughs
All others
By type of
counterparty
Primary dealers and brokers
U.S. Treasury securities
Federal agency securities
Debt
Mortgage-backed
Customers
U.S. Treasury securities
Federal agency securities
Debt
Mortgage-backed
144,393
137,235
140,529
135,634
134,528
135,073
138,966
154,331
109,384
128,265
107,150
1,763
12,886r
1,666
ll,377 r
2,023
12,317r
2,041
13,855
2,248
12,146
1,907
11,650
1,911
11,879
1,961
12,896
2,301
12,735
2,206
17,002
2,176
14,977
1,774
8,402
73,120
83,759
74,155 r
79,201
69,395
69,913
74,575
77,296
91,270
60,841
67,760
59,408
10,731
15,693 r
12,104
15,858 r
11,618
16,121
11,283
18,778
11,709
19,723
12,557
12,023
12,993
12,782
12,448
15,966
12,389
22,461
12,754
16,962
10,069
8,918
2,250
3,094
3,733 r
5,586
2,581
4,386
3,547
2,865
7,797
3,246
3,701
1,899
2,232
1,905
3,238
11,933
3,197
2,836
5,007
13,903
3,399
2,444 r
5,031
14,204 r
4,162
3,895
6,383
15,534
3,546
2,411
4,791
14,095
3,059
1,841
5,129
15,945
4,444
3,034
5,489
13,061
2,265
1,927
4,018
12,808
3,288
2,354
5,804
16,078
1,747
1,326
3,870
10,396
2,336
1,873
4,038
13,279
2,680
2,209
3,741
11,295
123
127
70
237
211
201
181
133
80
220
194
92
94
202
99
100
186
147
264
92
28
269
36
49
85
99
37
90
255
6
211
178
33
30
6
70
26,028 r
1,891
24,752 r
2,198
25,161 r
1,522
21,282
1,289
33,885
1,032
34,079
2,030
17,339
2,281
15,597
887
31,634
1,276
29,053
983
18,667
747
12,785
1,141
2,216
808
1,262
2,086
3,329
899
1,613
2,554
3,428
1,253
1,297
2,096
2,948
839
1,262
2,113
3,185
1,200
1,118
1,684
3,538
1,197
680
2,724
3,450
1,340
1,403
1,919
3,134
1,388
1,907
2,081
6,423
1,522
1,766
1,933
3,387
735
1,079
1,510
2,884
589
711
1,539
3,171
912
1,041
1,610
954
952
801
1,341
997
899
372
600
1,390
979
514
308
117,681
10,866
16,362
r
FUTURES AND FORWARD
TRANSACTIONS4
By type of deliverable
security
U.S. Treasury securities
17 Bills
Coupon securities, by maturity
18
Less than 3.5 years
3.5 to 7.5 years
19
7.5 to 15 years
20
15 years or more
21
Federal agency securities
Debt, by maturity
Less than 3.5 years
22
3.5 to 7.5 years
23
7.5 years or more
24
Mortgage-backed
Pass-throughs
25
Others 3
26
OPTIONS TRANSACTIONS5
27
28
29
30
31
By type of underlying
security
U.S. Treasury, coupon
securities, by maturity
Less than 3.5 years
3.5 t o 7.5 years
7.5 to 15 years
15 years or more
Federal agency, mortgagebacked securities
Pass-throughs
1. Transactions are market purchases and sales of securities as reported to the
Federal Reserve Bank of N e w York by the U.S. government securities dealers on
its published list of primary dealers. Averages are based on the number of trading
days in the period. Immediate, forward, and futures transactions are reported at
principal value, which does not include accrued interest; options transactions are
reported at the face value of the underlying securities.
Dealers report cumulative transactions for each week ending Wednesday.
2. Transactions for immediate delivery include purchases or sales of securities
(other than mortgage-backed agency securities) for which delivery is scheduled in
five business days or less and " w h e n - i s s u e d " 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.
3. Includes such securities as collateralized mortgage obligations (CMOs), real
estate mortgage investment conduits (REMICs), interest-only securities (IOs),
and principal-only securities (POs).
4. Futures transactions are standardized agreements arranged on an exchange.
Forward transactions are agreements made in the over-the-counter market that
specify delayed delivery. All futures transactions are included regardless of time
to delivery. Forward contracts for U . S . Treasury securities and federal agency
debt securities are included when the time to delivery is more than five business
days. Forward contracts for mortgage-backed agency securities are included
when the time to delivery is more than thirty business days.
5. Options transactions are purchases or sales of put-and-call options, whether
arranged on an organized exchange or in the over-the-counter market, and include
options on futures contracts on U . S . Treasury and federal agency securities.
NOTE. In tables 1.42 and 1.43, " n . a . " indicates that data are not published
because of insufficient activity.
Data for several types of options transactions—U.S. Treasury securities, bills;
Federal agency securities, debt; and federal agency securities, mortgage-backed,
other than pass-throughs—are no longer available because activity is insufficient.
A32
1.43
DomesticNonfinancialStatistics • July 1994
U.S. G O V E R N M E N T SECURITIES DEALERS
P o s i t i o n s and F i n a n c i n g 1
Millions of dollars
1994
1994, week ending
Item
Jan.
Feb.
Mar.
Mar. 2
Mar. 9
Mar. 16
Mar. 23
Mar. 30
Apr. 6
Apr. 13
Apr. 20
Positions 2
N E T IMMEDIATE POSITIONS3
1
2
3
4
5
6
7
8
9
10
11
12
13
By type of security
U.S. Treasury securities
Bills
Coupon securities, by maturity
Less than 3.5 years
3.5 to 7.5 years
7.5 to 15 years
15 years or more
Federal agency securities
Debt, by maturity
Less than 3.5 years
3.5 to 7.5 years
7.5 years or more
Mortgage-backed
Pass-throughs
All others
Other money market instruments
Certificates of deposit
Commercial paper
Bankers acceptances
6,629
3,681
-8,303
-20,637
-3,361
8,246
-9,169
-24,417
-2,424
5,994
10,272
2,888
4,987
12,031
3,226
3,798
50,003
29,844
4,792
1,714
2,447
7,711
7,110
1,838
11,375
14,931
9,561
-15,782
-22,189
-3,417
4,386
-15,355
-26,847
-3,685
4,794
-21,683
-27,341
-4,530
2,795
-19,226
-23,722
-2,508
1,364
-19,779
-25,156
-5,893
-1,151
-22,696
-24,087
-7,414
-889
-28,330
-25,521
-7,110
-2,258
-20,993
-28,030
-7,028
-3,008
8,925
4,707
4,174
11,686
4,039
3,685
10,740
4,205
4,087
9,321
4,803
4,606
7,993
4,881
4,363
6,919
5,009
3,695
8,500
5,542
4,775
7,982
5,834
5,211
7,924
5,792
5,133
51,071
28,837
51,257
32,642 r
47,180
32,761
63,827
32,118
61,349
30,945
51,511
29,650
31,442
37,396
37,717
35,632
55,359
33,098
46,279
33,640
3,650
6,313
935
3,925
7,619
777
2,431
5,489
553
4,198
8,265
599
2,761
5,795
598
2,457
5,450
758
2,264
5,212
390
1,840
4,799
475
1,702
4,839
383
2,240
4,409
498
2,177
5,774
479
-2,569
-1,382
2,030 r
1,076
1,415
1,941
2,793
2,384
1,058
3,029
3,092
-1,123
1,639r
5,687 r
—4,17 l r
-175
2,608 r
8,091 r
-6,634r
2,739 r
3,115 r
10,679 r
-10,013r
3,535
2,444
8,801
-10,088
2,144
2,213
9,247
-10,394
2,020
2,933
8,750
-11,054
3,792
3,722
11,494
-10,941
2,863
3,879
13,719
-7,813
2,116
2,458
10,982
-8,809
868
2,230
8,847
-7,581
1,995
1,711
7,178
-8,150
246
303
-93
3
123
438
126r
127
-157r
-53
-54
567
64
318
395
11
343
-545
309
-51
-626
161
-50
-56
206
138
-173
117
176
-144
38
91
24
-28,772r
3,294
-225,011
-37,532r
8,687
-241,652
-39,342r
9,561 r
-186,475
-33,954r
7,424
-237,312
-48,048
8,774
-247,206
-52,098
11,900
-170,162
-40,445
12,590
-154,511
-20,327
6,053
-164,886
-25,255
6,314
-148,732
-43,303
8,012
-159,956
-34,266
7,984
-135,904
— 18,921r
-25,482r
-4,212r
2,016 r
F U T U R E S A N D F O R W A R D POSITIONS 5
By type of deliverable security
U.S. Treasury securities
14 Bills
Coupon securities, by maturity
Less than 3.5 years
15
3.5 to 7.5 years
16
17
7.5 to 15 years
15 years or more
18
Federal agency securities
Debt, by maturity
19
Less than 3.5 years
3.5 to 7.5 years
20
7.5 years or more
21
Mortgage-backed
Pass-throughs
22
All others
23
24 Certificates of deposit
Financing 6
Reverse repurchase
agreements
25 Overnight and continuing
26 Term
250,861
401,867
274,179
409,887
296,274
398,163
290,102
379,608
300,486
395,569
308,744
400,875
304,633
400,260
273,517
406,468
292,619
361,633
295,517
400,928
289,758
402,640
Repurchase
agreements
27 Overnight and continuing
28 Term
461,215
372,657
483,847
382,705
479,210
375,510
492,811
342,902
489,948
364,255
497,689
381,800
488,715
382,725
438,311
390,186
467,253
322,254
483,478
363,039
472,957
375,200
Securities borrowed
29 Overnight and continuing
30 Term
143,505
51,583
147,476
45,587
151,645
39,793
150,726
41,215
149,201
42,796
152,565
39,941
152,911
37,953
152,127
38,661
151,914
35,702
156,126
35,907
153,458
35,552
Securities loaned
31 Overnight and continuing
32 Term
5,113
167
5,444
294
4,579
348
4,636
416
4,560
339
4,631
338
4,887
369
4,316
346
3,914
201
3,617
302
3,735
132
Collateralized loans
33 Overnight and continuing
16,169
16,243
20,074
15,229
16,722
20,122
19,540
24,751
23,876
26,035
25,339
MEMO; Matched book 7
Reverse repurchase
agreements
34 Overnight and continuing
35 Term
175,650
361,748
182,784
359,530
200,306
348,058
188,596
332,157
194,285
351,434
202,241
350,853
207,929
348,948
199,853
350,977
202,131
309,999
204,543
349,530
213,257
348,351
Repurchase
agreements
36 Overnight and continuing
37 Term
238,867
281,109
240,887
290,676
244,375
286,309
249,763
256,051
249,052
275,308
247,667
289,605
245,543
292,353
234,106
302,695
241,528
243,751
255,676
281,812
253,576
284,981
1. Data for positions and financing are obtained from reports submitted to the
Federal Reserve Bank of N e w York by the U . S . government securities dealers on
its published list of primary dealers. Weekly figures are close-of-business Wednesday data; monthly figures are averages of weekly data.
2. Securities positions are reported at market value.
3. Net immediate positions include securities purchased or sold (other than
mortgage-backed agency securities) that have been delivered or are scheduled to
be delivered in five business days or less and " w h e n - i s s u e d " securities that settle
on the issue date of offering. Net immediate positions of mortgage-backed agency
securities include securities purchased or sold that have been delivered or are
scheduled to be delivered in thirty business days or less.
4. Includes such securities as collateralized mortgage obligations (CMOs), real
estate mortgage investment conduits (REMICs), interest-only securities (IOs),
and principal-only securities (POs).
5. Futures positions reflect standardized agreements arranged on an exchange.
Forward positions reflect agreements made in the over-the-counter market that
specify delayed delivery. All futures positions are included regardless of time to
delivery. Forward contracts for U . S . Treasury securities and federal agency debt
securities are included when the time to delivery is more than five business d a y s .
Forward contracts for mortgage-backed agency securities are included when the
time to delivery is more than thirty business days.
6. Overnight financing refers to agreements made on one business day that
mature on the next business day; continuing contracts are agreements that remain
in effect for more than one business day but have no specific maturity and c a n be
terminated without advance notice by either party; term agreements have a fixed
maturity of more than one business day.
7. Matched-book data reflect financial intermediation activity in which the
borrowing and lending transactions are matched. Matched-book data are included
in the financing breakdowns given above. The reverse repurchase and repurchase
numbers are not always equal because of the " m a t c h i n g " of securities of different
values or different types of collateralization.
NOTE. Data for futures and forward commercial paper and bankers acceptances and
for term financing of collateralized loans are no longer available because of insufficient
activity.
Federal Finance
1.44
F E D E R A L A N D F E D E R A L L Y SPONSORED CREDIT AGENCIES
A33
Debt Outstanding
Millions of dollars, end of period
1994
1993
Agency
1
1989
Federal and federally sponsored agencies
Federal agencies
Defense Department 1
Export-Import Bank
Federal Housing Administration 4
Government National Mortgage Association certificates of
participation
/ Postal Service 6
Tennessee Valley Authority
8
9
United States Railway Association 6
2
3
4
5
6
12
13
14
15
16
17
18
Federally sponsored agencies 7
Federal H o m e Loan Banks
Federal H o m e Loan Mortgage Corporation
Federal National Mortgage Association
F a r m Credit Banks
Student L o a n Marketing Association 9
Financing Corporation
F a r m Credit Financial Assistance Corporation 1 1
Resolution Funding Corporation 1 2
19
Federal Financing Bank debt
20
21
22
23
24
Lending to federal and federally sponsored
Export-Import Bank 3
Postal Service 6
Student Loan Marketing Association
Tennessee Valley Authority
United States Railway Association 6
25
26
27
Other lending14
Farmers Home Administration
Rural Electrification Administration
Other
10
II
1990
1991
1992
Oct.
Nov.
Dec.
Jan.
Feb.
411,805
434,668
442,772
483,970
564,956
568,021
570,711
581,886
592,751
35,664
7
10,985
328
42,159
7
11,376
393
41,035
7
9,809
397
41,829
7
7,208
374
43,796
7
5,801
243
44,055
7
5,801
255
45,193
6
5,315
255
44,988
6
5,315
80
44,753
6
5,315
99
0
6,445
17,899
0
0
6,948
23,435
0
0
8,421
22,401
0
0
10,660
23,580
0
0
9,732
28,016
0
0
9,732
28,260
0
0
9,732
29,885
0
0
9,732
29,855
0
0
9,732
29,601
0
375,428
136,108
26,148
116,064
54,864
28,705
8,170
847
4,522
392,509
117,895
30,941
123,403
53,590
34,194
8,170
1,261
23,055
401,737
107,543
30,262
133,937
52,199
38,319
8,170
1,261
29,996
442,141
114,733
29,631
166,300
51,910
39,650
8,170
1,261
29,996
521,160
133,365
63,427
193,925
51,759
38,790
8,170
1,261
29,996
523,966
139,364
56,809
195,165
51,861
40,840
8,170
1,261
29,996
525,518
141,577
49,993
201,112
53,123
39,784
8,170
1,261
29,996
536,898
139,241
61,245
203,013
52,621
40,861
8,170
1,261
29,996
547,998
137,862
70,482
206,493
52,839
40,407
8,170
1,261
29,996
134,873
179,083
185,576
154,994
127,348
126,490
128,187
125,182
123,304
10,979
6,195
4,880
16,519
0
11,370
6,698
4,850
14,055
0
9,803
8,201
4,820
10,725
0
7,202
10,440
4,790
6,975
0
5,795
9,732
4,760
6,325
0
5,795
9,732
4,760
6,325
0
5,309
9,732
4,760
6,325
0
5,309
9,732
2,760
6,075
0
5,309
9,732
1,760
6,075
0
53,311
19,265
23,724
52,324
18,890
70,896
48,534
18,562
84,931
42,979
18,172
64,436
38,619
17,561
44,556
38,619
17,561
43,698
38,619
17,578
45,864
38,619
17,511
45,176
38,619
17,512
43,667
MEMO
agencies
1. Consists of mortgages assumed by the Defense Department between 1957
and 1963 under family housing and homeowners assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. On-budget since Sept. 30, 1976.
4. Consists of debentures issued in payment of Federal Housing Administration
insurance claims. Once issued, these securities may be sold privately on the
securities market.
5. Certificates of participation issued before fiscal year 1969 by the Government
National Mortgage Association acting as trustee for the Farmers H o m e Administration, the Department of Health, Education, and Welfare, the Department of
Housing and Urban Development, the Small Business Administration, and the
Veterans' Administration.
6. Off-budget.
7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Some data are estimated.
8. Excludes borrowing by the F a r m Credit Financial Assistance Corporation,
shown on line 17.
9. Before late 1982, the Association obtained financing through the Federal
Financing Bank (FFB). Borrowing excludes that obtained f r o m the F F B , which is
shown on line 22.
10. The Financing Corporation, established in August 1987 to recapitalize the
Federal Savings and L o a n Insurance Corporation, undertook its first borrowing in
October 1987.
11. The Farm Credit Financial Assistance Corporation, established in J a n u a r y
1988 to provide assistance to the F a r m 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 F F B , which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Because F F B
incurs debt solely for the purpose of lending to other agencies, its debt is not
included in the main portion of the table in order to avoid double counting.
14. Includes F F B 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 H o m e 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 • July 1994
NEW SECURITY ISSUES
Tax-Exempt State and Local Governments
Millions of dollars
1993
Type of issue or issuer,
or use
1991
I Ail issues, new and refunding'
1992
1994
1993
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
154,402
215,191
279,945
23,504
21,900
18,094
24,520
16,560
14,698
15,461
10,129
By type of issue
2 General obligation
3 Revenue
55,100
99,302
78,611
136,580
90,599
189,346
5,884
17,620
7,495
14,405
6,422
11,672
6,542
17,978
4,622
11,000
4,365
8,553
7,371
8,090
3,469
6,660
Bv type of issuer
4 State
i
5 Special district or statutory authority6 Municipality, county, or township
24,939
80,614
48,849
25,295
129,686
60,210
28,285
164,169
84,972
2,758
13,113
7,476
3,216
9,875
8,418
885
10,992
4,528
1,265
16,485
6,770
1,235
10,672
4,653
921
10,263
3,514
3,302
6,145
6,014
n.a.
n.a.
n.a.
116,953
120,272
91,434
8,759
7,261
6,734
9,543
5,558 r
8,774 r
10,114
7,724
21,121
13,395
21,039
25,648
8,376
30,275
22,071
17,334
20,058
21,796
5,424
33,589
17,098
9,571
11,802
n.a.
6,381
29,519
1,886
789
1,255
2,199
329
2,362
547
304
593
1,764
518
3,737
1,416
979
687
n.a.
673
1,820
1,227
429
1,454
2,171
1,272
2,990
1,573
293
480
825
392
5,558
2,292
1,223
243
1,660
1,316
8,774
1,859
401
540
1,670
470
n.a.
2,102
1,453
707
n.a.
n.a.
n.a.
7 Issues for new capital
By use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
8
9
10
11
12
13
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts.
1.46
NEW SECURITY ISSUES
SOURCES. Securities Data Company beginning January
Dealer's Digest before then.
1993;
Investment
U.S. Corporations
Millions of dollars
1993
Type of issue, offering,
or issuer
1991
1992
1994
1993
Aug.
Sept.
Oct.
Nov.
Dec.
Jan. r
Feb.
Mar.
1 All issues'
465,246
559,827 r
765,721
52,955
64,495 r
56,143
54,813 r
44,394 r
57,649
47,918 r
53,623
2 Bonds 2
389,822
471,502 r
642,543
43,688
53,837
45,608
43,214
33,863 r
51,612
39,177 r
43,030
By type of offering
3 Public, domestic
4 Private placement, domestic 3
5 Sold abroad
286,930
74,930
27,962
378,058 r
65,853
27,591
487,924 r
116,240
38,379 r
40,447
n.a.
3,241
49,132
n.a.
4,705
42,645
n.a.
2,963
39,525
n.a.
3,689
32,282 r
n.a.
1,582
46,168
n.a.
5,444
31,860"^
n.a.
7,317 r
40,492
n.a.
2,538
86,628
36,666
13,598
23,944
9,431
219,555
82,058
43,lllr
9,979
48,055
15,394
272,904 r
88,002 r
60,443 r
10,756 r
56,272 r
31,950 r
395,121 r
6,132
2,331
723
3,474
2,979
28,049
4,036
2,378
288
5,163
2,237
39,735
3,273
6,306
1,416
2,585
2,991
29,039
3,334
3,078
648
1,763
1,015
33,376
3,068
2,525
895
2,336
2,001
23,039 r
4,635
2,869
693
2,566
2,495
38,354
3,5ir
2,362 r
100
l,868 r
2,212
29,124 r
1,716
3,419
870
1,489
2,090
33,447
12 Stocks 2
75,424
88,325
123,009
9,267
10,658 r
10,535
ll,599r
10,531
5,727 r
7,702 r
9,099 r
By type of offering
13 Public preferred
14 Common
15 Private placement
17,085
48,230
10,109
21,339
57,118
9,867
20,533
90,559
11,917
3,319
5,948
n.a.
1,358
9,336
n.a.
2,549
7,987
n.a.
1,385
10,209
n.a.
650
9,881
n.a.
1,592
4,135
n.a.
1,318
6,383
n.a.
1,969
7,131
n.a.
24,111
19,418
2,439
3,474
475
25,507
22,723
20,231
2,595
6,532
2,366
33,879
22,271
25,761
2,237
7,050
3,439
49,889
1,961
1,457
466
582
115
4,675
2,274
2,242
153
908
248
4,666
2,121
1,842
128
1,103
18
5,323
2,169
3,061
221
371
1,074
4,486
2,267
1,970
162
129
1,603
4,381
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
By industry group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
1. Figures represent gross proceeds of issues maturing in more than one year;
they are the principal amount or number of units calculated by multiplying by the
offering price. Figures exclude secondary offerings, employee stock plans,
investment companies other than closed-end, intracorporate transactions, equities sold abroad, and Yankee bonds. Stock data include ownership securities
issued by limited partnerships.
4
T
4
T
4
T
n.a.
n.a.
n.a.
I
t
1
f
2,397
3,800
1
t
4,360
2. Monthly data cover only public offerings.
3. Monthly data are not available.
SOURCES. IDD Information Services, Inc., Securities Data C o m p a n y , and the
Board of Governors of the Federal Reserve System.
Securities Market and Corporate Finance
1.47
A35
N e t S a l e s and A s s e t s 1
OPEN-END INVESTMENT COMPANIES
Millions of dollars
1993
Item
1992
1994
1993
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.r
Mar.
1 Sales of own shares 2
647,055
73,032
69,938
74,490
72,865
89,775
98,679
78,032
87,373
2 Redemptions of own shares
3 Net sales 3
447,140
199,915
46,382
26,650
49,270
20,667
47,168
27,322
51,306
21,559
62,764
27,011
61,829
36,849
56,235
21,797
73,864
13,509
1,056,310
1,343,920
1,370,654
1,411,628
1,416,841
1,510,047
1,572,907
1,561,705
1,501,156
73,999
982,311
92,771
1,251,149
96,848
1,273,807
104,301
1,307,327
103,352
1,303,489
100,209
1,409,838
110,022
1,462,879
113,975
1,447,730
111,540
1,389,616
4 Assets 4
5 Cash 5
6 Other
n. a.
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
4. Market value at end of period, less current liabilities.
5. Includes all U.S. Treasury securities and other short-term debt securities.
SOURCE. Investment Company Institute. Data based on reports of membership,
which comprises substantially all o p e n - e n d investment companies registered with
the Securities and Exchange Commission. Data reflect underwritings of new
companies.
CORPORATE PROFITS A N D THEIR DISTRIBUTION
Billions of dollars; quarterly data at seasonally adjusted annual rates
1992
Account
1991
I Profits with inventory valuation and
capital consumption adjustment
2 Profits before taxes
3 Profits tax liability
4 Profits after taxes
5
Dividends
6
Undistributed profits
7 Inventory valuation
8 Capital consumption adjustment
1994
1993
1993r
Q2
Q3
Q4
Ql
Q2
Q3
Q4
Ql
369.5
362.3
129.8
232.5
137.4
95.2
407.2
395.4
146.3
249.1
150.5
98.6
466.6
449.4
174.0
275.4
169.0
106.4
411.7
409.5
153.0
256.5
146.1
110.4
367.5
357.9
130.1
227.8
155.2
72.7
439.5
409.9
155.0
254.9
162.9
92.0
432.1
419.8
160.9
258.9
167.5
91.4
458.1
445.6
173.3
272.3
168.5
103.9
468.5
443.8
169.5
274.3
169.7
104.6
507.9
488.4
192.5
295.9
170.3
125.6
n.a.
n.a.
n.a.
n.a.
171.7
n.a.
4.9
2.2
-5.3
17.1
-7.1
24.3
-13.7
16.0
-7.8
17.4
4.9
24.7
-12.7
25.1
-12.2
24.7
1.0
23.8
-4.3
23.9
-17.7
20.6
SOURCE. U.S. Department of C o m m e r c e , Survey of Current
1.50
1992
Business.
NONFARM BUSINESS EXPENDITURES
N e w Plant and E q u i p m e n t
Billions of dollars; quarterly data at seasonally adjusted annual rates
1992
Industry
1992
1993
1993
1994
19941
Q3
Q4
Ql
Q2
Q3
Q4
Ql
Q21
1 Total nonfarm business
546.60
585.64
632.76
547.40
559.24
564.13
579.79
594.11
604.51
621.28
624.99
Manufacturing
2 Durable goods industries
3 Nondurable goods industries
73.32
100.69
81.33
97.84
89.09
103.60
72.09
100.77
73.30
103.56
79.11
95.94
80.88
96.21
81.99
100.18
83.35
99.04
91.81
99.42
87.68
101.41
Nonmanufacturing
4 Mining
Transportation
Railroad
5
Air
6
Other
7
Public utilities
8
Electric
Gas and other
9
10 Commercial and other
8.88
10.03
10.63
8.98
8.47
8.89
9.10
11.14
10.98
10.84
11.51
6.67
8.93
7.04
6.23
6.43
9.22
6.30
4.69
10.27
6.70
9.69
7.52
7.04
7.60
6.97
6.00
7.30
9.17
6.00
6.54
9.04
5.91
6.92
8.88
7.01
4.95
9.78
5.67
5.58
8.81
5.91
5.38
9.27
48.22
23.99
268.84
52.26
23.46
298.83
52.96
25.32
329.90
48.17
24.01
269.46
49.57
24.50
278.24
49.92
23.59
284.21
50.51
24.04
297.46
52.74
22.88
303.47
55.88
23.33
310.20
51.14
22.55
325.47
53.66
23.94
326.23
1. Figures are a m o u n t s anticipated by business.
2. " O t h e r " consists of construction, wholesale and retail trade, finance and
insurance, personal and business services, and communication.
SOURCE. U . S . Department of C o m m e r c e , Survey of Current
Business.
A36
1.51
DomesticNonfinancialStatistics • July 1994
DOMESTIC FINANCE COMPANIES
A s s e t s and Liabilities 1
Billions of dollars, end of period; not seasonally adjusted
1992
Account
1991
1992
1993
1993
Q2
Q3
Q4
QL
Q2
Q3
Q4
476.7
116.7
293.2
66.8
473.9
116.7
288.5
68.8
482.1
117.1
296.5
68.4
469.6
111.9
289.6
68.1
469.3
111.3
290.7
67.2
467.6
112.6
287.8
67.2
476.1
117.5
290.1
68.6
ASSETS
1
2
3
4
Accounts receivable, gross"
Consumer
Business
Real estate
5
6
LESS: Reserves for unearned income
Reserves for losses
7
8
9
480.6
121.9
292.9
65.8
482.1
117.1
296.5
68.4
55.1
12.9
50.8
15.8
49.01
11.0 R
51.2
12.3
50.8
12.0
50.8
15.8
47.4
15.5
47.5
13.8
47.9
11.1
49.0R
11.
Accounts receivable, net
All other
412.6
149.0
415.5
150.6
416.1R
177.3 R
413.2
139.4
411.1
146.5
415.5
150.6
406.6
155.0
408.0
156.6
408.6
169.7
416.1R
177.3R
Total assets
561.6
566.1
593.4 r
552.6
557.6
566.1
561.6
564.6
578.3
593.4 r
42.3
159.5
37.6
156.4
25.3
159.2
37.8
147.7
38.1
153.2
37.6
156.4
34.1
149.8
29.5
144.5
25.8
149.9
25.3
159.2
476.1
117.5
290.1
68.6
LIABILITIES AND CAPITAL
10
11
Bank loans
Commercial paper
12
13
14
15
16
17
Debt
Other short-term
Long-term
Owed to parent
Not elsewhere classified
All other liabilities
Capital, surplus, and undivided profits
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
34.5
191.3
69.0
64.8
37.8
195.3
71.2
67.8
46.1
199.9
91.1
71.7
34.8
191.9
73.4
67.1
34.9
191.4
73.7
68.1
37.8
195.3
71.2
67.8
41.9
195.1
74.2
66.6
46.4
195.8
81.3
67.1
47.9
198.1
87.6
68.9
46.1
199.9
91.1
71.7
18
Total liabilities and capital
561.2
566.1
593.4
552.7
559.4
566.1
561.7
564.6
578.3
593.4
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,
C o n s u m e r , Real E s t a t e , and B u s i n e s s Credit 1
Millions of dollars, amounts outstanding, end of period
1993
Type of credit
1991
1992
1994
1993
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Seasonally adjusted
1 Total
519,910
534,845
532,828
529,310
532,687
532,828
535,567
539,513 r
545,601
2 Consumer
3 Real estate"
4 Business
154,822
65,383
299,705
157,707
68,011
309,127
159,791
68,174
304,863
155,700
67,983
305,627
157,438
68,540
306,709
159,791
68,174
304,863
159,313
69,441
306,813
160,371 r
69,543 r
309,599 r
159,704
69,650
316,246
Not seasonally adjusted
5 Total
6 Consumer
Motor vehicles
7
Other consumer 3
8
Securitized motor vehicles 4
9
Securitized other consumer 4
10
11 Real estate*
12 Business
Motor vehicles
13
Retail 5
14
15
Wholesale 6
16
Leasing
Equipment
17
Retail
18
Wholesale 6
19
Leasing
20
Other business 7
21
Securitized business assets 4
22
Retail
23
24
Wholesale
25
Leasing
523,192
538,158
536,124
528,869
532,354
536,124
535,138
537,278 r
545,779
155,713
63,415
58,522
23,166
10,610
65,760
301,719
90,613
22,957
31,216
36,440
141,399
30,962
9,671
100,766
60,900
8,807
576
5,285
2,946
158,631
57,605
59,522
29,775
11,729
68,410
311,118
87,456
19,303
29,962
38,191
151,607
32,212
8,669
110,726
57,464
14,590
1,118
8,756
4,716
160,734
55,274
62,189
34,659
8,611
68,577
306,814
90,172
16,024
31,067
43,081
148,858
33,266
8,007
107,585
51,054
16,730
1,830
9,697
5,203
156,712
54,324
58,278
35,212
8,898
68,425
303,732
86,129
16,599
27,144
42,386
148,357
33,357
8,091
106,909
53,969
15,277
1,690
8,785
4,802
157,848
55,337
59,463
34,301
8,747
68,718
305,788
88,510
16,723
29,260
42,526
146,703
32,360
7,802
106,541
53,886
16,690
1,953
9,407
5,330
160,734
55,274
62,189
34,659
8,611
68,577
306,814
90,172
16,024
31,067
43,081
148,858
33,266
8,007
107,585
51,054
16,730
1,830
9,697
5,203
159,186
56,509
61,427
32,924
8,325
69,385
306,568
88,377
16,965
27,975
43,437
147,915
33,109
7,996
106,810
50,821
19,456
1,696
12,358
5,402
158,543 r
56,963
61,132 r
32,280
8,168
69,446 r
309,289 r
90,668 r
17,514 r
29,435
43,720
147,425
33,033
7,972
106,420
5I,489 r
19,707
1,593
13,006
5,108
158,331
56,431
62,515
31,439
7,946
69,051
318,397
95,644
19,087
31,070
45,487
149,721
33,861
8,281
107,579
53,596
19,436
1,486
12,866
5,084
1. Includes finance company subsidiaries of bank holding companies but not of
retailers and banks. Data are before deductions for unearned income and losses.
Data in this table also appear in the B o a r d ' s G.20 (422) monthly statistical release.
For ordering address, see inside front cover.
2. Includes all loans secured by liens on any type of real estate, for example,
first and junior mortgages and home equity loans.
3. Includes personal cash loans, mobile home loans, and loans to purchase other
types of consumer goods such as appliances, apparel, general merchandise, and
recreation vehicles.
4. Outstanding balances of pools upon which securities have been issued; these
FRASER
balances are no longer carried on the balance sheets of the loan originator.
Digitized for
5. Passenger car fleets and commercial land vehicles for which licenses are
required.
6. Credit arising from transactions between manufacturers and dealers, that is,
floor plan financing.
7. includes loans on commercial accounts receivable, factored commercial
accounts, and receivable dealer capital; small loans used primarily for business or
farm purposes; and wholesale and lease paper for mobile homes, c a m p e r s , and
travel trailers.
Real Estate
1.53
MORTGAGE MARKETS
A37
Mortgages on New Homes
Millions of dollars except as noted
1994
1993
Item
1991
1992
1993
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Terms and yields in primary and secondary markets
PRIMARY MARKETS
1
2
3
4
5
Terms1
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan-to-price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount)
Yield (percent per year)
6 Contract rate 1
7 Effective rate 1 , 5
8 Contract rate ( H U D series) 4
155.0
114.0
75.0
26.8
1.71
158.1
118.1
76.6
25.6
1.60
163.1
123.0
78.0
26.1
1.30
169.2
128.4
78.0
26.7
1.23
174.4
134.0
79.1
26.9
1.23
167.9
128.7
79.2
26.8
1.10
168.1
127.9
78.0
27.2
1.18
157.9
124.1
80.2
27.0
1.16
167.8
131.0
80.2
27.6
1.20
166.1
127.6
79.3
26.7
1.16
9.02
9.30
9.20
7.98
8.25
8.43
7.02
7.24
7.37
6.61
6.80
7.05
6.61
6.80
7.38
6.74
6.92
7.26
6.77
6.95
7.13
6.67
6.85
7.54
6.81
6.99
8.31
7.13
7.31
n.a.
9.25
8.59
8.46
7.71
7.46
6.65
7.08
6.11
7.51
6.61
7.52
6.58
7.05
6.45
7.59
6.72
8.57
7.40
n.a.
7.93
SECONDARY MARKETS
Yield (percent per year)
5
9 F H A mortgages (Section 203)
10 G N M A securities
Activity in secondary markets
F E D E R A L N A T I O N A L MORTGAGE ASSOCIATION
Mortgage holdings (end of
11 Total
F H A / V A insured
12
Conventional
13
Mortgage transactions
14 Purchases
Mortgage
15 Issued
16 To sell 8
commitments
period)
(during
(during
122,837
21,702
101,135
142,833
22,168
120,664
172,791
22,876
149,914
182,524
22,978
159,546
185,463
23,334
162,129
190,861
23,857
167,004
194,441
23,7%
170,645
196,078
23,789
172,289
197,770
24,226
173,544
201,542
25,088
176,454
37,202
75,905
92,037
8,780
8,979
12,123
7,919
5,427
5,820
6,677
40,010
7,608
74,970
10,493
92,537
5,097
7,515
0
11,144
0
8,461
209
6,159
664
4,858
525
8,683
136
4,788
90
24,131
484
23,283
29,959
408
29,552
42,789
327
42,462
50,108
321
49,787
52,933
324
52,610
55,012
321
54,691
56,067
319
55,747
57,245
318
56,928
58,498
315
59,184
57,352
n.a.
n.a.
99,965
92,478
191,125
179,208
229,242
208,723
18,658
15,985
27,062
24,028
29,396
26,607
22,611
21,253
17,840
16,719
15,970
14,486
14,589
14,175
114,031
261,637
274,599
24,614
39,977
24,176
31,393
12,880
22,533
22,765
period)
period)
FEDERAL H O M E L O A N MORTGAGE CORPORATION
Mortgage holdings (end of
17 Total
F H A / V A insured
18
Conventional
19
Mortgage transactions
20 Purchases
21 Sales
Mortgage commitments
22 Contracted
period)8
(during
(during
period)
9
period)
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 " p o i n t s " paid (by the
borrower or the seller) to obtain a loan.
3. Average effective interest rate on loans closed for purchase of newly built
homes, assuming prepayment at the end of ten years.
4. Average contract rate on new commitments for conventional first mortgages; f r o m U.S. Department of Housing and Urban Development (HUD). Based
on transactions on the first day of the subsequent month.
5. Average gross yield on thirty-year, m i n i m u m - d o w n p a y m e n t first mortgages insured by the Federal Housing Administration ( F H A ) for immediate
delivery in the private s e c o n d a r y m a r k e t . Based on transactions on first day of
subsequent m o n t h .
6. Average net yields to investors on fully modified pass-through securities
backed by mortgages and guaranteed by the G o v e r n m e n t National Mortgage
Association (GNMA), assuming prepayment in twelve years on pools of thirtyyear mortgages insured by the Federal Housing Administration or guaranteed by
the Department of Veterans Affairs.
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. T h e Federal
H o m e L o a n Mortgage Corporation's mortgage commitments and mortgage transactions include activity under mortgage securities swap programs, whereas the
corresponding data for F N M A exclude swap activity.
A38
1.54
DomesticNonfinancialStatistics • July 1994
MORTGAGE DEBT OUTSTANDING1
Millions of dollars, end of period
1992
Type of holder and property
1990
1991
1993
1992
Q4
Ql
Q2
Q3
Q4 P
1 All holders
3,761,525
3,923,371
4,042,645
4,042,645
4,059,199
4,099,591
4,155,690
4,218,693
By type of property
2 One- to four-family residences
3 Multifamily residences
4 Commercial
5
2,615,435
309,369
758,313
78,408
2,778,803
306,410
759,023
79,136
2,953,527
294,976
713,701
80,441
2,953,527
294,976
713,701
80,441
2,975,134
294,042
708,966
81,057
3,024,789
291,178
702,210
81,414
3,085,698
290,679
698,299
81,014
3,146,381
292,052
699,488
80,772
1,914,315
844,826
455,931
37,015
334,648
17,231
801,628
600,154
91,806
109,168
500
267,861
13,005
28,979
215,121
10,756
1,846,726
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
1,769,187
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
1,753,045
891,755
507,497
37,425
326,853
19,980
617,163
480,415
70,608
65,808
332
244,128
11,316
27,466
196,100
9,246
1,765,176
910,989
526,817
38,058
325,519
20,595
612,458
480,722
68,303
63,111
322
241,729
11,195
27,174
194,012
9,348
1,768,931
922,492
538,906
37,621
325,124
20,841
609,584
478,297
68,649
62,318
320
236,855
10,967
26,620
190,061
9,206
1,777,772
940,547
556,778
38,150
324,749
20,870
603,559
472,492
68,533
62,214
319
233,667
10,814
26,248
187,403
9,201
239,003
20
20
0
41,439
18,527
9,640
4,690
8,582
8,801
3,593
5,208
32,600
15,800
8,064
8,736
0
104,870
94,323
10,547
29,416
1,838
27,577
21,857
19,185
2,672
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
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
137,584
124,016
13,568
28,664
1,687
26,977
33,665
31,032
2,633
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
137,584
124,016
13,568
28,664
1,687
26,977
33,665
31,032
2,633
287,081
45
37
8
41,529
16,536
10,650
5,187
9,156
13,027
5,631
7,396
27,331
11,375
8,070
7,886
0
141,192
127,252
13,940
28,536
1,679
26,857
35,421
32,831
2,589
298,991
45
38
7
41,446
16,133
10,739
5,250
9,324
12,945
5,635
7,311
21,973
8,955
6,743
6,275
0
151,513
137,340
14,173
28,592
1,682
26,909
42,477
39,905
2,572
309,579
43
37
7
41,424
15,714
10,830
5,347
9,533
11,797
4,850
6,947
19,925
8,381
6,002
5,543
0
160,721
146,009
14,712
28,810
1,695
27,115
46,859
44,315
2,544
321,907
43
37
7
41,386
15,303
10,940
5,406
9,739
12,215
5,364
6,851
17,284
7,202
5,284
4,797
0
166,642
151,310
15,332
28,860
1,698
27,162
55,476
52,929
2,547
1,079,103
403,613
391,505
12,108
316,359
308,369
7,990
299,833
291,194
8,639
66
17
0
24
26
59,232
53,335
731
5,166
0
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
1,425,546
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
1,462,181
421,514
412,798
8,716
420,932
415,279
5,654
457,316
448,483
8,833
34
7
0
16
11
162,385
137,000
6,665
18,720
0
1,473,323
413,166
404,425
8,741
422,882
417,646
5,236
465,220
456,645
8,575
32
6
0
15
11
172,023
145,000
7,407
19,616
0
1,514,002
415,076
405,963
9,113
430,089
425,154
4,935
481,880
473,599
8,281
30
6
0
14
10
186,927
158,000
7,991
20,936
0
1,546,818
414,066
404,864
9,202
439,029
434,494
4,535
495,525
486,804
8,721
28
5
0
13
10
198,171
164,000
8,701
25,469
0
529,104
348,638
85,969
80,761
13,737
559,833
367,633
83,796
93,410
14,994
561,649
372,708
85,430
88,538
14,973
561,649
372,708
85,430
88,538
14,973
556,892
366,998
86,023
88,396
15,474
562,101
372,645
86,140
88,412
14,904
563,178
373,805
86,428
88,956
13,990
572,1%
382,288
87,000
89,438
13,471
By type of holder
6 Major financial institutions
7
Commercial banks
8
One- to four-family
9
Multifamily
10
Commercial
Farm
11
12
Savings institutions 3
One- to four-family
13
14
Multifamily
Commercial
15
16
Farm
17
Life insurance companies
18
One- to four-family
19
Multifamily
20
Commercial
Farm
21
22 Federal and related agencies
23
Government National Mortgage Association
24
One- to four-family
25
Multifamily
26
Farmers H o m e Administration 4
27
One- to four-family
28
Multifamily
29
Commercial
30
Farm
31
Federal Housing and Veterans' Administrations
32
One- to four-family
Multifamily
33
34
Resolution Trust Corporation
One- to four-family
35
36
Multifamily
37
Commercial
38
Farm
39
Federal National Mortgage Association
40
One- to four-family
41
Multifamily
42
Federal Land Banks
43
One- to four-family
44
Farm
Federal Home L o a n Mortgage Corporation
45
46
One- to four-family
47
Multifamily
48 Mortgage pools or trusts 5
49
Government National Mortgage Association
50
One- to four-family
51
Multifamily
52
Federal H o m e Loan Mortgage Corporation
53
One- to four-family
54
Multifamily
55
Federal National Mortgage Association
56
One- to four-family
57
Multifamily
58
F a r m e r s H o m e Administration
59
One- to four-family
60
Multifamily
Commercial
61
62
Farm
63
Private mortgage conduits
64
One- to four-family
65
Multifamily
Commercial
66
67
Farm
68 Individuals and others 6
69
One- to four-family
70
Multifamily
71
Commercial
72
Farm
1. Based on data from various institutional and governmental sources; figures
for some quarters estimated in part by the Federal Reserve. Multifamily debt
refers to loans on structures of five or more units.
2. Includes loans held by nondeposit trust companies but not loans held by
bank trust departments.
3. Includes savings banks and savings and loan associations.
4. FmHA-guaranteed securities sold to the Federal Financing Bank were
reallocated from F m H A mortgage pools to F m H A mortgage holdings in 1986:Q4
because of accounting changes by the Farmers Home Administration.
5. Outstanding principal balances of mortgage-backed securities insured or
guaranteed by the agency indicated.
6. Other holders include mortgage companies, real estate investment trusts,
state and local credit agencies, state and local retirement f u n d s , noninsured
pension funds, credit unions, and finance companies.
SOURCES. Based on data f r o m various institutional and government sources.
Separation of nonfarm mortgage debt by type of property, if not reported directly,
and interpolations and extrapolations, when required, are estimated mainly by the
Federal Reserve. Line 64, f r o m Inside Mortgage Securities.
Consumer Installment Credit
1.55
A39
C O N S U M E R I N S T A L L M E N T CREDIT1
Millions of dollars, amounts outstanding, end of period
1994
1993
Holder and type of credit
1991
1992
1993
Nov.
Oct.
Dec.
Jan.
Feb.r
Mar.
Seasonally adjusted
1 Total
733,510
741,093
790,082
775,620
782,561
790,082
796,458
800,440
807,865
2 Automobile
3 Revolving
4 Other
260,898
243,564
229,048
259,627
254,299
227,167
278,321
281,474
230,288
273,822
277,125
224,673
276,853
279,273
226,435
278,321
281,474
230,288
279,046
284,898
232,514
280,444
287,414
232,582
282,897
288,685
236,283
Not seasonally adjusted
749,052
756,944
807,298
776,101
784,148
807,298
801,883
798,387
800,256
By major holder
Commercial banks
Finance companies
Credit unions
Retailers
Savings institutions
Gasoline companies
Pools of securitized assets
340,713
121,937
92,681
39,832
45,965
4,362
103,562
331,869
117,127
97,641
42,079
43,461
4,365
120,402
367,140
117,464
114,451
47,382
33,000
4,212
123,649
352,559
112,602
110,830
40,310
34,251
4,599
120,950
358,429
114,800
112,342
42,047
33,500
4,507
118,523
367,140
117,464
114,451
47,382
33,000
4,212
123,649
365,607
117,937
115,055
44,986
32,500
4,189
121,609
365,136
118,095
116,034
43,164
32,000
3,952
120,006
368,816
118,946
118,031
43,088
31,751
3,769
115,855
B\ major type of credit3
13 Automobile
Commercial banks
14
15
Finance companies
Pools of securitized assets"
16
261,219
112,666
63,415
28,915
259,964
109,743
57,605
33,878
278,690
123,734
55,274
36,781
275,882
122,162
54,324
37,630
277,060
122,989
55,337
36,569
278,690
123,734
55,274
36,781
278,265
123,916
56,509
34,947
278,733
124,491
56,963
34,217
280,351
126,900
56,431
33,275
17 Revolving
Commercial banks
18
Retailers
19
Gasoline companies
20
21
Pools of securitized assets"
256,876
138,005
34,712
4,362
63,595
267,949
132,582
36,629
4,365
74,243
296,445
148,698
41,378
4,212
77,416
275,109
137,844
34,668
4,599
73,556
280,080
142,382
36,319
4,507
72,357
296,445
148,698
41,378
4,212
77,416
290,197
144,874
39,057
4,189
77,280
286,351
143,633
37,293
3,952
76,581
284,874
145,114
37,191
3,769
73,612
22 Other
Commercial banks
23
Finance companies
24
25
Retailers
Pools of securitized assets"
26
230,957
90,042
58,522
5,120
11,052
229,031
89,544
59,522
5,450
12,281
232,162
94,708
62,189
6,004
9,452
225,110
92,553
58,278
5,642
9,764
227,008
93,058
59,463
5,728
9,597
232,162
94,708
62,189
6,004
9,452
233,420
96,817
61,427
5,929
9,382
233,303
97,012
61,132
5,871
9,208
235,031
96,802
62,515
5,897
8,968
5 Total
6
7
8
9
10
11
12
1. The Board's series on amounts of credit covers most short- and
intermediate-term credit extended to individuals that is scheduled to be repaid (or
has the option of repayment) in two or more installments.
Data in this table also appear in the Board's G.19 (421) monthly statistical
release. For ordering address, see inside front cover.
1.56
2. Outstanding balances of pools upon which securities have been issued; these
balances are no longer carried on the balance sheets of the loan originator.
3. Totals include estimates for certain holders for which only c o n s u m e r credit
totals are available.
TERMS OF C O N S U M E R I N S T A L L M E N T CREDIT1
Percent per year except as noted
1994
1993
Item
1991
1992
1993
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
INTEREST RATES
1
2
3
4
Commercial
banks'
48-month new car
24-month personal
120-month mobile home
Credit card
Auto finance
5 New car
6 Used car
11.14
15.18
13.70
18.23
9.29
14.04
12.67
17.78
8.09
13.47
11.87
16.83
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.63
13.22
11.55
16.30
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
7.54
12.89
11.56
16.06
n.a.
n.a.
n.a.
n.a.
12.41
15.60
9.93
13.80
9.48
12.79
9.21
12.52
9.25
12.58
8.96
12.41
8.80
12.33
7.55
12.02
8.93
12.23
9.13
12.68
55.1
47.2
54.0
47.9
54.5
48.8
54.7
48.8
55.0
48.2
54.5
48.4
54.0
48.3
52.9
50.0
54.4
50.3
54.0
50.1
88
96
89
97
91
98
91
98
90
98
91
98
90
98
91
98
91
99
92
99
12,494
8,884
13,584
9,119
14,332
9,875
14,348
9,808
14,650
9,969
14,839
10,230
15,097
10,349
15,330
10,434
14,904
10,449
14,821
10,427
companies
OTHER TERMS3
Maturity
7 New car
8 Used car
(months)
Loan-to-value
9 N e w car
10 Used car
ratio
Amount financed
I I New car
12 Used car
(dollars)
1. T h e 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. Data are available for only the second month of each quarter,
3. At auto finance companies,
A40
1.57
DomesticNonfinancialStatistics • July 1994
F U N D S RAISED IN U.S. CREDIT MARKETS1
Billions of dollars; quarterly data at seasonally adjusted annual rates
1993
1992
1989
1990
Q2
Q3
Q4
Ql
Q2
Q3
Q4
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors ..
723.0
631.0
475.5
582.4
606.5
586.2
611.1
529.5
404.5
677.6
577.0
767.0
By sector and instrument
2 U.S. government
3
Treasury securities
4
Budget agency issues and mortgages
146.4
144.7
1.6
246.9
238.7
8.2
278.2
292.0
-13.8
304.0
303.8
.2
256.1
248.3
7.8
352.9
352.5
.4
299.1
290.)
9.0
240.1
237.4
2.7
229.6
226.4
3.2
348.2
344.1
4.1
177.2
160.9
16.2
269.6
261.9
7.7
5 Private
576.6
384.1
197.3
278.4
350.4
233.3
312.0
289.4
175.0
329.3
399.8
497.4
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
65.3
73.8
269.1
212.5
12.0
47.3
-2.7
49.5
36.4
21.4
61.0
57.3
47.1
188.7
177.2
3.4
8.9
-.8
13.4
4.2
9.7
63.6
69.6
78.8
165.1
166.0
-2.5
.9
.7
-13.1
-46.8
-18.4
-37.8
65.7
67.5
120.8
176.0
-11.1
-45.5
1.3
9.3
-5.6
8.6
12.1
59.4
71.3
172.2
192.7
-4.4
-16.5
.3
49.0
4.7
10.0
-16.3
76.6
77.8
69.6
111.6
-16.9
-25.7
.6
-14.7
27.7
-2.6
-1.0
75.8
61.7
134.8
203.3
-11.2
-57.8
.6
13.5
-24.0
9.3
40.8
42.4
54.0
94.0
172.8
-27.8
-51.5
.5
48.3
21.3
25.4
4.1
62.4
82.0
101.3
121.8
-4.7
-18.2
2.5
19.2
-39.7
-27.1
-23.1
67.2
72.0
134.4
174.2
-12.4
-28.9
1.4
22.9
31.7
33.7
-32.5
48.3
68.0
201.5
226.9
-4.0
-19.8
-1.6
60.7
7.3
23.8
-9.8
59.9
63.0
251.5
247.9
3.6
1.0
-1.0
93.3
19.7
9.7
.4
17
18
19
20
21
22
By borrowing sector
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
State and local government
276.7
236.3
.5
49.4
186.5
63.5
207.7
121.9
1.8
19.4
100.7
54.5
168.4
-33.4
2.4
-24.5
-11.3
62.3
215.0
4.0
1.2
-39.4
42.1
59.4
251.2
34.5
2.0
-19.3
51.9
64.7
176.5
-10.1
3.5
-47.4
33.8
66.9
217.9
20.6
-.2
-37.3
58.2
73.5
266.5
-12.2
-1.9
-51.0
40.7
35.1
130.8
-27.6
-.3
-32.7
5.4
71.7
213.7
46.6
3.8
-31.4
74.3
69.1
321.7
26.0
2.0
-23.1
47.1
52.1
338.5
93.2
2.6
9.9
80.6
65.7
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
10.2
4.9
-.1
13.1
-7.6
23.9
21.4
-2.9
12.3
-7.0
13.9
14.1
3.1
6.4
-9.8
24.2
17.3
2.3
5.2
-.6
46.5
60.5
.5
-9.0
-5.6
57.7
21.9
14.1
27.8
-6.1
37.8
20.3
3.9
13.1
.5
-.6
22.2
-10.3
-12.1
-.4
50.3
75.6
1.6
-21.7
-5.3
40.1
42.4
6.5
-.6
-8.2
81.8
83.7
1.0
-1.6
-1.3
13.8
40.3
-7.0
-12.0
-7.5
28 Total domestic plus foreign
733.1
654.9
489.4
606.6
653.0
643.9
649.0
528.8
454.8
717.6
658.8
780.8
Financial sectors
29 Total net borrowing by financial sectors
30
31
32
33
By instrument
U.S. government-related
Government-sponsored enterprises securities
Mortgage pool securities
Loans from U.S. government
213.7
149.5
25.2
124.3
.0
'
193.5
150.4
216.4
239.1
211.6
304.1
174.8
146.1
131.6
386.1
292.8
167.4
17.1
150.3
-.1
145.7
9.2
136.6
.0
155.8
40.3
115.6
.0
157.2
80.6
76.6
.0
195.2
48.3
146.9
.0
169.3
67.7
101.6
.0
131.8
33.6
98.4
-.1
165.8
32.2
133.5
.0
62.7
68.8
-6.1
.0
273.7
167.8
105.9
.0
126.4
53.4
73.0
.0
34 Private
35
Corporate bonds
36
Mortgages
Bank loans n.e.c
37
38
Open market paper
39
Loans from Federal Home Loan Banks
64.2
37.3
.5
6.0
31.3
-11.0
26.1
40.8
.4
1.1
8.6
-24.7
4.6
56.8
.8
17.1
-32.0
-38.0
60.6
65.3
.0
-4.8
-.7
.8
82.0
69.0
3.9
-7.9
-6.2
23.3
16.3
64.4
.1
-39.1
-14.8
5.8
134.8
81.2
.4
17.5
17.5
18.1
42.9
79.4
.0
-19.8
-6.5
-10.1
-19.6
55.3
.9
-21.2
-73.1
18.6
68.9
55.8
2.7
-5.9
-17.3
33.5
112.4
97.7
6.2
-14.0
-9.7
32.3
166.3
67.1
5.7
9.4
75.5
8.6
By borrowing sector
40 Government sponsored enterprises
41 Federally related mortgage pools
42 Private
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
Issuers of asset-backed securities (ABSs)
25.2
124.3
64.2
-1.4
6.2
13.8
-15.1
.0
.0
27.4
3.0
1.3
28.9
17.0
150.3
26.1
-.7
-27.7
12.5
-30.2
.0
.0
24.0
-4.0
1.0
51.1
9.1
136.6
4.6
-11.7
-2.5
-13.6
-44.5
.0
.0
18.6
5.7
1.6
51.0
40.2
115.6
60.6
8.8
2.3
1.6
-6.7
.0
.0
-3.6
.1
.1
58.0
80.6
76.6
82.0
5.7
7.1
-10.6
11.2
.2
.2
-5.0
6.0
3.3
64.0
48.3
146.9
16.3
5.5
-9.2
29.2
-5.4
.0
.0
-20.1
-35.3
1.3
50.3
67.7
101.6
134.8
12.1
6.6
-7.7
11.2
.0
.2
21.2
14.4
2.3
74.3
33.5
98.4
42.9
14.5
.8
-31.1
-14.4
.1
-.2
19.9
-6.4
-5.1
64.8
32.2
133.5
-19.6
5.4
21.1
-51.9
7.9
.0
.1
-33.1
-10.4
-1.4
42.6
68.8
-6.1
68.9
10.1
1.3
8.2
17.7
.3
.6
-38.6
15.9
2.5
50.8
167.8
105.9
112.4
6.2
-2.1
-13.2
18.4
.3
-.1
16.0
2.4
6.1
78.4
53.4
73.0
166.3
.9
7.9
14.3
.7
.1
.4
35.8
16.0
6.1
84.2
Flow of Funds
1.57
A41
F U N D S R A I S E D IN U . S . CREDIT MARKETS1—Continued
1993
1992
Transaction category or sector
1989
1990
1991
1992
1993
Q2
Q3
Q4
Q1
Q2
Q3
Q4
All sectors
53 Total net borrowing, all sectors
946.8
848.4
639.8
822.9
892.1
855.5
953.1
703.6
600.9
849.2
1,044.9
1,073.5
54
55
56
57
58
59
60
61
295.8
65.3
116.0
269.6
49.5
42.3
65.9
42.4
414.4
57.3
109.2
189.1
13.4
2.4
30.7
31.8
424.0
69.6
149.6
165.8
-13.1
-26.6
-44.0
-85.6
459.8
65.7
150.1
120.8
9.3
-8.1
13.1
12.2
413.3
59.4
200.7
176.0
49.0
-2.7
-5.1
1.4
548.1
76.6
164.1
69.7
-14.7
2.8
10.3
-1.3
468.5
75.8
163.3
135.3
13.5
-2.5
39.9
59.3
372.0
42.4
155.6
93.9
48.3
-8.8
6.8
-6.6
395.3
62.4
212.9
102.2
19.2
-59.3
-121.9
-9.9
410.9
67.2
170.2
137.1
22.9
32.3
15.7
-7.2
450.9
48.3
249.4
207.7
60.7
-5.8
12.5
21.2
396.0
59.9
170.5
257.1
93.3
22.1
73.2
1.5
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
62 Total net share issues
63 Mutual funds
64 Corporate equities
Nonfinancial corporations
65
Financial corporations
66
67
Foreign shares purchased in United States
-59.6
22.2
210.6
284.0
432.4
264.1
297.7
300.3
300.7
470.7
502.1
456.0
38.5
-98.1
-124.2
8.8
17.2
67.9
-45.7
-63.0
9.9
7.4
150.5
60.1
18.3
11.2
30.7
206.7
77.3
27.0
19.6
30.6
310.7
121.6
23.0
33.1
65.5
199.5
64.5
36.0
17.4
11.2
235.2
62.5
12.0
15.7
34.8
217.7
82.6
14.0
21.1
47.5
240.9
59.7
9.0
18.8
31.9
357.5
113.2
25.0
34.2
54.0
337.6
164.5
30.0
37.1
97.5
306.9
149.1
28.0
42.5
78.7
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 • July 1994
SUMMARY OF FINANCIAL
TRANSACTIONS1
B i l l i o n s of dollars e x c e p t as n o t e d ; quarterly data at s e a s o n a l l y adjusted annual rates
1992
Transaction category or sector
1988
1989
1990
1991
1993
1992
Q2
Q3
Q4
Ql
Q2
Q3
Q4
N E T L E N D I N G IN C R E D I T M A R K E T S 2
1 Total net lending in credit markets
2 Private domestic nonfinancial sectors
3
Households
4
Nonfarm noncorporate business
5
Nonfinancial corporate business
6
State and local governments
7 U.S. government
8 Foreign
y Financial sectors
10
Government sponsored enterprises
II
Federally related mortgage pools
12
Monetary authority
Commercial banking
13
14
U.S. commercial banks
Foreign banking offices
15
16
Bank holding companies
1/
Banks in U.S. affiliated areas
18
Private nonbank finance
19
Thrift institutions
Insurance
20
21
Life insurance companies
22
Other insurance companies
Private pension funds
23
24
State and local government retirement funds . . . .
25
Finance n.e.c
Finance companies
26
27
Mortgage companies
Mutual funds
28
29
Closed-end funds
30
Money market funds
31
Real estate investment trusts (REITs)
32
Brokers and dealers
33
Asset-backed securities issuers (ABSs)
34
Bank personal trusts
998.8
946.8
848.4
639.8
822.9
855.5
953.1
703.6
600.9
849.2
1,044.9
1,073.5
196.1
170.3
3.1
5.7
17.1
-10.6
108.6
704.8
33.2
74.9
10.5
156.5
126.4
29.4
-.1
.8
429.7
114.8
199.0
104.0
29.2
29.2
36.6
115.9
38.1
-7.4
11.9
19.8
10.7
.9
-8.2
35.9
14.3
122.6
78.6
13.6
31.1
-3.1
84.4
742.9
-4.1
124.3
-7.3
177.2
146.1
26.7
2.8
1.6
452.9
-86.6
257.4
101.8
29.7
81.1
44.7
282.2
32.0
6.1
23.8
6.3
67.1
.5
96.3
27.7
22.4
162.8
140.1
-1.7
-5.3
29.6
33.7
82.1
569.9
16.4
150.3
8.1
125.1
94.9
28.4
-2.8
4.5
270.0
-153.3
181.6
94.4
26.5
17.2
43.5
241.7
28.4
-8.0
41.4
.0
80.9
-.7
34.9
49.9
14.8
-16.1
-49.7
-4.2
4.3
33.5
10.5
25.6
619.8
14.2
136.6
31.1
84.3
39.2
48.5
-1.5
-1.9
353.7
-123.0
234.3
83.2
32.3
85.3
33.5
242.3
-12.1
11.4
90.3
15.2
30.1
-1.0
49.0
49.0
10.4
65.3
37.0
-2.4
36.3
-5.7
-12.0
100.8
668.8
69.0
115.6
27.9
94.8
69.8
16.5
5.6
2.9
361.6
-59.5
177.9
82.4
12.7
37.3
45.5
243.2
1.7
.1
123.7
12.3
1.3
.4
40.2
55.5
8.0
145.6
99.8
-2.7
36.8
11.7
-23.0
140.8
592.1
38.6
146.9
19.0
72.7
13.3
56.7
-.4
3.2
314.9
-75.7
190.4
66.9
16.4
74.1
33.0
200.2
-16.0
-38.5
123.7
9.4
3.8
2.6
73.0
50.5
-8.4
-105.4
-135.7
-2.0
46.5
-14.1
-26.7
78.1
1,006.9
73.0
101.6
15.7
148.0
123.5
5.2
16.4
3.0
668.6
-42.6
261.4
85.1
-2.8
99.9
79.2
449.7
4.0
28.9
156.9
8.7
8.5
-.3
180.3
72.0
-9.3
87.0
66.6
-1.0
36.9
-15.5
-13.3
87.8
542.1
71.7
98.4
48.3
73.3
66.0
4.8
-.6
3.0
250.4
-15.0
161.6
103.7
8.3
8.4
41.2
103.8
24.0
-12.8
119.2
13.1
-26.1
-.1
-90.2
59.2
17.3
-93.1
-88.6
-3.7
-12.6
11.8
-24.7
73.2
645.6
14.6
133.5
44.5
86.4
100.4
-12.5
-4.3
2.9
366.5
-33.3
257.0
122.1
8.9
118.0
8.0
142.8
-34.0
-20.8
130.2
8.9
-65.0
2.9
79.5
42.1
-.9
-95.8
-91.9
-3.0
6.7
-7.5
-27.8
92.6
880.1
134.1
-6.1
32.6
153.4
142.0
-.7
9.5
2.6
566.0
-5.2
172.9
108.0
10.6
11.1
43.2
398.3
-22.8
31.7
193.4
13.0
51.5
.8
66.7
49.7
14.4
-126.2
-139.6
-2.2
40.1
-24.6
-15.2
140.8
1,045.5
157.7
105.9
28.2
131.9
147.0
-17.2
-.4
2.5
621.8
12.2
261.6
117.1
8.6
91.9
44.0
347.9
8.1
-1.9
168.4
11.0
11.5
1.0
69.0
81.3
-.5
-14.2
-18.5
-1.0
10.0
-4.7
-11.3
220.8
878.2
59.7
73.0
39.5
201.1
219.2
-14.5
-5.8
2.3
504.9
-.1
115.9
125.3
9.7
-62.1
42.9
389.0
27.2
23.0
160.7
12.7
48.8
1.7
4.9
87.9
22.2
998.8
946.8
848.4
639.8
822.9
855.5
953.1
703.6
600.9
849.2
1,044.9
1,073.5
4.0
24.8
2.0
-5.9
-1.6
-6.5
-8.5
5.1
3.4
-4.0
1.7
-3.4
.5
25.3
140.1
2.9
278.6
43.2
121.6
53.1
21.9
23.7
15.2
6.1
-104.7
3.0
89.6
5.3
-24.0
7.2
199.2
4.1
28.8
309.7
-16.5
284.8
6.1
100.4
13.9
90.1
77.8
-3.6
38.5
-98.1
15.6
59.4
2.0
-31.1
23.1
292.1
2.5
25.7
158.1
34.2
98.1
44.2
59.0
-65.7
70.3
-24.2
14.6
67.9
-45.7
3.5
32.1
-4.5
-35.5
21.5
98.2
.0
25.7
358.8
-3.7
48.2
75.8
16.7
-60.8
-16.5
-8.2
150.5
60.1
51.4
-2.2
-8.5
-12.5
29.8
169.9
-1.8
27.3
227.8
48.1
9.3
122.8
-60.8
-80.0
3.9
33.6
-10.2
206.7
77.3
4.2
54.9
7.9
-5.7
-7.5
195.7
.3
15.6
208.0
36.9
6.3
110.8
-81.8
-109.9
26.7
103.7
-43.2
199.5
64.5
-4.9
54.7
6.2
15.9
20.2
273.5
.2
41.5
291.7
79.8
174.1
200.4
-83.6
-52.9
-22.4
89.6
43.0
235.2
62.5
82.8
54.0
6.7
-27.5
-55.4
202.6
-7.7
26.3
267.0
50.0
-142.7
93.5
-37.8
-84.2
-32.9
-67.1
-14.2
217.7
82.6
5.5
33.0
10.3
10.5
-35.2
211.8
.3
53.6
325.2
19.8
-.4
25.0
-155.9
1.9
-37.7
180.3
-13.9
240.9
59.7
39.7
26.9
7.6
-12.5
-10.1
213.4
.4
39.5
223.0
49.5
219.6
232.2
-57.3
-17.5
66.5
17.6
-21.9
357.5
113.2
38.3
37.4
2.2
-21.0
35.8
385.1
.4
59.5
296.1
-19.8
-5.3
96.3
-72.6
-57.3
-15.8
78.7
-34.6
337.6
164.5
77.2
47.8
4.2
-6.7
-23.0
93.5
.7
69.6
123.3
46.2
134.0
126.1
-36.2
9.6
49.3
-2.9
-12.0
306.9
149.1
80.7
54.6
5.2
-59.4
40.8
341.9
1,632.0
1,883.8
1,306.5
1,501.3
1,665.5
1,745.8
2,092.8
1,437.9
1,568.5
2,325.7
2,072.7
2,363.5
1.6
.8
-6.2
8.4
-3.2
-1.9
3.3
2.5
2.5
-13.1
2.0
8.1
.7
1.6
18.5
-9.5
2.0
9.5
4.4
-11.7
40.2
-3.6
2.3
1.2
.1
-1.8
-20.1
6.2
-1.4
5.1
-6.4
-5.6
10.4
-7.7
-6.3
-.1
-.1
-3.0
-29.6
6.3
47.3
-.2
-4.4
32.4
2.3
-77.8
.2
1.6
-31.5
.5
-23.6
-.6
26.2
5.2
.4
-32.1
-.2
-4.9
31.1
6.9
-21.1
-18.2
84.1
7.1
-65.9
-.2
-7.8
43.5
24.1
1.2
-.1
-1.7
23.4
4.0
49.3
-.2
11.4
155.2
-13.2
-7.8
-.2
-5.7
16.5
14.1
-36.1
-.2
-16.5
67.7
8.3
-34.9
-.2
27.6
46.8
-6.0
9.0
1,614.8
1,928.2
1,351.0
1,505.2
1,632.8
1,736.9
1,999.2
1,363.1
1,444.9
2,327.3
2,049.9
2,300.4
-.7
RELATION OF LIABILITIES
TO F I N A N C I A L A S S E T S
35 Net flows through credit markets
36
3/
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
Other financial sources
Official foreign exchange
Treasury currency and special drawing rights
certificates
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
Corporate equities
Security credit
Trade debt
Taxes payable
Noncorporate proprietors' equity
Investment in bank personal trusts
Miscellaneous
56 Total financial sources
Floats not included in assets ( — )
57 U.S. government checkable deposits
58 Other checkable deposits
59 Trade credit
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 F.6 and F.7. For ordering address, see inside front cover.
41.2
-.2
2. Excludes corporate equities and mutual fund shares,
Flow of Funds
1.59
A43
SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1
B i l l i o n s o f dollars, e n d o f period
1993
1992
Transaction category or sector
1989
1990
1991
1992
Q2
Q4
Q3
Q1
Q2
Q3
Q4
Nonfinancial sectors
1 Total credit market debt owed by
domestic nonfinancial sectors
10,054.3
10,692.0
11,160.6
11,747.2
11,427.2
11,580.6
11,747.2
11,824.7
11,983.4
12,128.9
12,354.4
By lending sector and instrument
7. U.S. government
Treasury securities
4
Budget agency issues and mortgages
2,251.2
2,227.0
24.2
2,498.1
2,465.8
32.4
2,776.4
2,757.8
18.6
3,080.3
3,061.6
18.8
2,923.3
2,907.4
15.9
2,998.9
2,980.7
18.1
3,080.3
3,061.6
18.8
3,140.2
3,120.6
19.6
3,201.2
3,180.6
20.6
3,247.3
3,222.6
24.7
3,336.5
3,309.9
26.6
5 Private
7,803.1
8,193.9
8,384.3
8,666.9
8,503.9
8,581.7
8,666.9
8,684.5
8,782.1
8,881.7
9,018.0
6
7
8
9
10
11
1?
n
14
is
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
1,004.7
961.1
3,512.8
2,380.5
304.3
747.6
80.5
799.5
750.8
107.1
667.0
1,062.1
1,008.2
3,715.4
2,580.6
305.5
750.8
78.4
813.0
747.8
116.9
730.6
1,131.6
1,086.9
3,880.4
2,746.6
303.0
751.7
79.1
799.9
701.0
98.5
685.9
1,197.3
1,154.4
4,001.6
2,922.7
291.9
706.5
80.4
809.2
695.6
107.1
701.6
1,163.7
1,125.5
3,941.3
2,825.6
301.7
733.8
80.2
776.9
694.0
112.0
690.5
1,186.4
1,140.9
3,979.4
2,880.8
298.9
719.4
80.3
784.5
686.2
108.2
696.1
1,197.3
1,154.4
4,001.6
2,922.7
291.9
706.5
80.4
809.2
695.6
107.1
701.6
1,210.0
1,174.9
4,017.9
2,944.1
290.7
702.0
81.1
793.7
683.0
113.9
691.1
1,225.7
1,192.9
4,057.6
2,993.8
287.6
694.8
81.4
802.3
691.8
124.0
687.7
1,241.8
1,209.9
4,112.2
3,054.7
286.6
689.8
81.0
821.7
691.6
123.2
681.2
1,256.8
1,225.7
4,173.7
3,115.4
287.5
690.0
80.8
858.3
700.3
117.8
685.4
17
18
19
70
71
22
By borrowing sector
Household
Nonfinancial business
Farm
Nonfarm noncorporate
Corporate
State and local government
3,371.4
3,615.7
134.4
1,199.6
2,281.7
816.1
3,594.8
3,728.5
134.9
1,219.0
2,374.6
870.5
3,762.7
3,688.7
134.8
1,192.3
2,361.6
932.8
3,978.0
3,696.7
136.0
1,154.5
2,406.1
992.2
3,837.3
3,705.6
136.8
1,177.3
2,391.5
961.0
3,900.1
3,698.6
137.6
1,165.1
2,395.8
983.1
3,978.0
3,696.7
136.0
1,154.5
2,406.1
992.2
3,980.6
3,696.7
133.7
1,145.3
2,417.8
1,007.2
4,044.6
3,714.2
137.1
1,139.3
2,437.8
1,023.4
4,132.7
3,708.5
138.5
1,130.8
2,439.2
1,040.5
4,229.2
3,731.9
138.0
1,135.2
2,458.7
1,056.9
73 Foreign credit market debt held in
United States
261.2
285.1
298.9
313.8
304.7
312.9
313.8
324.8
336.5
355.6
360.3
Bonds
Bank loans n.e.c
Commercial paper
U.S. government and other loans
94.1
21.4
63.0
82.7
115.4
18.5
75.3
75.8
129.5
21.6
81.8
66.0
146.9
23.9
77.7
65.4
136.2
25.5
77.4
65.6
141.3
26.5
80.7
64.4
146.9
23.9
77.7
65.4
165.8
24.3
72.3
62.5
176.4
25.9
72.1
62.0
197.3
26.2
71.7
60.4
207.4
24.4
68.7
59.8
10,315.5
10,977.1
11,459.5
12,061.0
11,732.0
11,893.5
12,061.0
12,149.5
12,319.8
12,484.5
12,714.8
74
7")
76
27
78 Total credit market debt owed by nonfinancial
sectors, domestic and foreign
Financial sectors
79 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 market paper
Loans from Federal Home Loan Banks
By borrowing sector
40 Government-sponsored enterprises
41 Federally related mortgage pools
47 Private financial'sectors
Commercial banks
43
Bank holding companies
44
Funding corporations
45
Savings institutions
46
Credit unions
47
48
Life insurance companies
49
Finance companies
Mortgage companies
50
51
Real estate investment trusts (REITs)
Issuers of asset-backed securities ( A B S s ) . . . .
52
2,362.7
2,559.4
2,709.7
2,941.7
2,815.2
2,889.3
2,941.7
2,974.3
3,010.3
3,104.7
3,186.2
1,247.8
1,418.4
1,564.2
1,720.0
1,641.6
1,683.5
1.720.0
1,755.8
1,774.5
1,842.2
1,877.1
451.2
1,299.8
4.8
1,218.5
692.0
5.4
56.9
379.2
85.0
468.4
1,301.3
4.8
1,235.8
706.0
6.0
55.8
375.9
92.1
510.3
1,327.1
4.8
1,262.5
730.4
7.6
52.4
373.2
98.9
523.7
1,348.6
4.8
1,309.1
747.2
9.0
56.3
393.5
103.1
373.3
869.5
5.0
1,114.8
509.1
4.0
50.9
409.1
141.8
393.7
1,019.9
4.9
1,140.9
549.9
4.3
52.0
417.7
117.1
402.9
1,156.5
4.8
1,145.6
606.6
5.1
69.1
385.7
79.1
443.1
1,272.0
4.8
1,221.7
678.2
5.1
64.2
394.3
79.9
417.8
1,219.0
4.8
1,173.6
638.0
5.0
63.1
390.5
76.9
434.7
1,244.0
4.8
1,205.8
658.3
5.1
67.5
394.6
80.2
443.1
1,272.0
4.8
1,221.7
678.2
5.1
64.2
394.3
79.9
378.3
869.5
1,114.8
77.4
142.5
125.4
169.2
.0
.0
350.4
11.3
11.4
227.3
398.5
1,019.9
1,140.9
76.7
114.8
137.9
139.1
.0
.0
374.4
7.3
12.4
278.3
407.7
1,156.5
1.145.6
65.0
112.3
124.3
94.6
.0
.0
393.0
13.0
14.0
329.4
447.9
1,272.0
1,221.7
73.8
114.6
135.2
87.8
.0
.0
389.4
13.0
14.1
393.7
422.6
1,219.0
1,173.6
66.2
112.7
144.9
87.6
.0
.0
377.4
11.0
14.8
358.9
439.5
1,244.0
1,205.8
69.0
114.4
143.0
89.2
.0
.0
382.7
14.6
15.3
377.5
447.9
1,272.0
1,221.7
73.8
114.6
135.2
87.8
.0
.0
389.4
13.0
14.1
393.7
456.0
1,299.8
1,218.5
73.1
119.9
127.6
90.3
.0
.0
379.1
10.4
13.7
404.3
473.2
1,301.3
1,235.8
76.6
120.2
129.7
93.4
.1
.2
369.8
14.4
14.4
417.1
515.1
1,327.1
1,262.5
77.9
119.7
126.4
96.8
.2
.1
373.9
15.0
15.9
436.7
528.5
1,348.6
1,309.1
79.5
121.6
130.0
99.0
.2
.2
384.4
19.0
17.4
457.7
All sectors
53 Total credit market debt, domestic and foreign..
54
55
56
57
58
59
60
61
U.S. government securities
Tax-exempt securities
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans
12,678.2
13,536.5
14,169.3
15,002.7
14,547.1
14,782.8
15,002.7
15,123.8
15,330.1
15,589.3
15,900.9
3,494.1
1,004.7
1,564.3
3,516.8
799.5
823.0
579.2
896.5
3,911.7
1,062.1
1,673.5
3,719.7
813.0
818.3
609.9
928.4
4,335.7
1,131.6
1,823.1
3,885.5
799.9
791.7
565.9
835.8
4,795.5
1,197.3
1,979.5
4,006.7
809.2
783.7
579.0
851.7
4,560.1
1,163.7
1,899.8
3,946.3
776.9
782.7
579.9
837.7
4,677.6
1,186.4
1,940.6
3,984.5
784.5
780.2
583.6
845.5
4,795.5
1,197.3
1,979.5
4,006.7
809.2
783.7
579.0
851.7
4,891.2
1,210.0
2,032.7
4,023.3
793.7
764.3
565.4
843.4
4,970.9
1,225.7
2,075.3
4,063.7
802.3
773.5
572.0
846.7
5,084.7
1,241.8
2,137.6
4,119.7
821.7
770.2
568.2
845.3
5,208.8
1,256.8
2,180.2
4,182.7
858.3
781.1
580.0
853.1
1. Data in this table also appear in the Board's Z.l
release, tables L.2 through L.4. For ordering address,
(780) quarterly statistical
see inside front cover.
A44
1.60
DomesticNonfinancialStatistics • July 1994
S U M M A R Y OF F I N A N C I A L ASSETS A N D LIABILITIES1
Billions of dollars except as noted, end of period
1992
Transaction category or sector
1989
1990
1991
1993
1992
Q2
Q3
Q4
Ql
Q2
Q3
Q4
CREDIT MARKET DEBT OUTSTANDING1
2
3
4
5
6
7
8
9
10
II
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
Total credit market assets
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
Private nonbank finance
Thrift institutions
Insurance
Life insurance companies
Other insurance companies
Private pension f u n d s
State and local government retirement f u n d s . . .
Finance n.e.c
Finance companies
Mortgage companies
Mutual funds
Closed-end funds
Money market f u n d s
Real estate investment trusts (REITs)
Brokers and dealers
Asset-backed securities issuers (ABSs)
Bank personal trusts
12,678.2
13,536.5
14,169.3
15,002.7
14,547.1
14,782.8
15,002.7
15,123.8
15,330.1
15,589.3
15,900.9
2,096.4
1,326.8
56.5
181.2
531.9
205.4
778.7
9,597.7
355.4
869.5
233.3
2,647.4
2,371.9
242.3
16.2
17.1
5,491.9
1,475.4
2,320.7
1,022.0
3)7.5
590.2
390.9
1,695.9
468.6
22.6
307.2
37.1
291.8
8.4
142.9
219.3
198.0
2,246.8
1,454.6
54.9
175.8
561.5
239.1
897.5
10,153.1
371.8
1,019.9
241.4
2,772.5
2,466.7
270.8
13.4
21.6
5,747.4
1,324.6
2,473.7
1,116.5
344.0
607.4
405.9
1,949.1
497.0
14.6
360.2
37.1
372.7
7.7
177.9
269.1
212.9
2,205.8
1,380.0
50.7
180.1
595.1
247.0
936.2
10,780.3
397.7
1,156.5
272.5
2,856.8
2,506.0
319.2
11.9
19.7
6,0%.7
1,197.3
2,708.0
1,199.6
376.3
692.7
439.4
2,191.5
484.9
25.9
450.5
52.4
402.7
6.8
226.9
318.1
223.3
2,288.3
1,434.2
48.3
216.4
589.4
235.0
1,031.6
11,447.8
466.7
1,272.0
300.4
2,951.6
2,575.7
335.8
17.5
22.5
6,457.1
1,140.9
2,874.9
1,282.0
389.0
719.0
484.9
2,441.2
486.6
26.1
574.2
64.6
404.1
7.4
267.1
379.9
231.2
2,231.4
1,392.5
48.7
192.6
597.5
246.3
995.9
11,073.5
429.0
1,219.0
282.6
2,887.6
2,525.2
328.2
13.1
21.0
6,255.4
1,153.8
2,789.3
1,243.6
387.6
703.3
454.8
2,312.3
480.5
22.1
510.2
59.2
412.0
7.5
244.6
347.1
229.2
2,209.1
1,369.4
48.1
199.5
592.1
239.2
1,015.5
11,319.0
446.3
1,244.0
285.2
2,928.2
2,560.0
328.9
17.5
21.8
6,415.3
1,144.9
2,854.5
1,264.7
386.9
728.2
474.6
2,415.9
477.8
29.3
550.2
61.3
408.2
7.4
289.6
365.1
226.9
2,288.3
1,434.2
48.3
216.4
589.4
235.0
1,031.6
11,447.8
466.7
1,272.0
300.4
2,951.6
2,575.7
335.8
17.5
22.5
6,457.1
1,140.9
2,874.9
1,282.0
389.0
719.0
484.9
2,441.2
486.6
26.1
574.2
64.6
404.1
7.4
267.1
379.9
231.2
2,257.0
1,412.7
47.0
205.9
591.5
229.2
1,041.3
11,596.2
464.1
1,299.8
303.6
2,960.9
2,594.6
326.7
16.4
23.3
6,567.7
1,130.0
2,943.9
1,317.3
391.2
748.5
486.9
2,493.8
473.7
20.9
611.4
66.9
404.5
8.1
287.0
390.4
231.0
2,215.3
1,365.9
46.3
211.7
591.4
223.2
1,064.5
11,827.1
496.7
1,301.3
2,187.7
1,341.7
45.6
217.1
583.4
218.9
1,099.7
12,083.0
535.1
1,327.1
318.2
324.2
3,003.2
2,633.8
327.1
18.4
23.9
6,707.8
1,129.8
2,992.3
1,349.5
393.8
751.3
497.7
2,585.7
473.5
28.8
659.9
70.1
403.9
8.3
303.6
402.8
234.6
3,040.2
2,674.7
322.3
18.6
24.5
6,856.4
1,134.4
3,057.5
1,378.6
396.0
774.3
508.7
2,664.4
472.0
28.3
703.6
72.8
400.6
8.6
320.9
423.1
234.5
2,226.4
1,370.0
45.8
227.5
583.1
215.3
1,154.9
12,304.3
552.4
1,348.6
336.7
3,094.8
2,727.9
324.5
17.3
25.1
6,971.9
1,134.4
3,076.7
1,400.1
398.4
758.7
519.5
2,760.8
481.3
34.1
737.4
76.0
415.8
9.0
322.1
445.1
240.0
12,678.2
13,536.5
14,169.3
15,002.7
14,547.1
14,782.8
15,002.7
15,123.8
15,330.1
15,589.3
15,900.9
RELATION OF LIABILITIES
TO F I N A N C I A L A S S E T S
35
Total credit market debt
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
Other liabilities
Official foreign exchange
Treasury currency and special drawing rights
certificates
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
54
Total liabilities
36
37
Financial assets not included in liabilities ( + )
5 5 Gold and special drawing rights
5 6 Corporate equities
5 7 Household equity in noncorporate business
53.6
61.3
55.4
51.8
54.4
55.4
51.8
54.5
53.9
55.6
53.4
23.8
354.3
3,356.1
32.4
4,736.7
888.6
2,277.4
603.4
428.1
396.5
142.8
566.2
133.9
904.2
81.8
503.2
2,591.1
26.3
380.0
3,400.3
64.0
4,836.8
932.8
2,336.3
537.7
498.4
372.3
159.4
602.1
137.4
936.4
77.4
509.9
2,732.4
26.3
405.7
4,056.5
65.2
4,885.2
1,008.5
2,353.0
476.9
539.6
355.8
151.3
813.9
188.9
926.7
68.9
596.7
2,884.3
24.5
433.0
4,357.8
113.1
4,892.1
1,131.0
2,292.2
397.2
543.6
389.4
138.8
1,042.1
217.3
978.1
76.8
619.1
3,053.7
26.4
416.0
4,115.0
68.5
4,870.6
1,032.9
2,325.8
427.5
556.9
393.5
133.9
924.4
193.3
945.5
70.7
612.7
2,958.0
26.5
426.4
4,250.0
100.7
4,909.3
1,072.0
2,303.7
418.4
552.9
417.6
144.6
965.6
214.5
965.1
74.6
610.9
3,026.7
24.5
433.0
4,357.8
113.1
4,892.1
1,131.0
2,292.2
397.2
543.6
389.4
138.8
1,042.1
217.3
978.1
76.8
619.1
3,053.7
24.6
446.4
4,492.2
109.5
4,887.8
1,092.2
2,262.0
398.3
556.6
443.5
135.3
1,134.6
225.1
975.8
81.0
625.0
3,074.7
24.7
456.2
4,555.3
116.8
4,930.0
1,169.1
2,242.2
389.9
549.8
448.4
130.5
1,225.8
234.7
984.5
77.2
635.6
3,153.0
24.8
471.1
4,701.7
127.7
4,926.1
1,182.6
2,223.1
379.7
547.9
470.9
121.9
1,342.4
254.5
1,002.8
80.7
643.6
3,193.8
25.0
488.5
4,775.9
136.8
4,979.8
1,250.9
2,211.7
381.3
559.1
457.9
118.9
1,426.8
276.3
1,020.9
81.6
658.6
3,276.6
26,015.5
27,300.7
29,143.0
30,862.1
29,802.8
30,408.2
30,862.1
31,255.0
31,777.7
32,413.9
33,101.1
21.0
3,812.9
2.508.1
22.0
3,543.7
2,440.6
22.3
4,869.4
2,344.6
19.6
5,540.6
2,274.5
22.7
4,837.0
2,340.3
23.2
4,995.4
2,320.3
19.6
5,540.6
2,274.5
19.8
5,721.3
2,259.2
20.0
5,741.9
2,260.3
20.3
6,006.6
2,252.2
20.1
6,120.7
2,221.2
58
59
60
Floats not included in assets ( - )
U.S. government checkable deposits
Other checkable deposits
Trade credit
6.1
26.5
-148.6
15.0
28.9
-146.0
3.8
30.9
-144.1
6.8
32.5
-128.5
1.4
32.6
-155.6
4.0
23.3
-149.6
6.8
32.5
-128.5
3.4
27.2
-138.1
3.5
29.6
-148.1
2.2
21.7
-149.3
5.7
28.7
-128.6
61
62
63
64
65
Liabilities not identified as assets ( - )
Treasury currency
Interbank claims
Security repurchase agreements
Taxes payable
Miscellaneous
-4.3
-31.0
13.7
20.6
-210.7
-4.1
-32.0
-17.7
17.8
-213.4
-4.8
-4.2
-12.5
15.5
-254.6
-4.9
-9.3
18.6
22.4
-254.9
-4.9
-4.0
19.6
13.1
-285.0
-4.9
-5.0
33.1
18.2
-273.2
-4.9
-9.3
18.6
22.4
-254.9
-5.0
-5.6
71.8
12.2
-300.7
-5.0
-5.7
79.5
19.4
-294.5
-5.1
-7.8
101.6
20.3
-329.7
-5.1
-4.8
90.2
30.7
-345.3
66
Total identified to sectors as assets
32,685.1
33,658.6
36,749.2
39,014.1
37,385.4
38,101.2
39,014.1
39,590.2
40,121.3 41,039.1
41,791.6
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
N O N F I N A N C I A L BUSINESS ACTIVITY
A45
Selected Measures
Monthly data seasonally adjusted, and indexes 1987=100, except as noted
1994
1993
Measure
1991
1992
1993
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.r
Feb.r
Mar.
1 Industrial production 1
104.1
106.5
110.9
111.1
111.3
111.9
112.8
114.0
114.6
115.1
115.7
116.0
Market
groupings
? P r o d u c t s , total
3
Final, total
Consumer goods
4
5
Equipment
6
Intermediate
7 Materials
103.2
105.3
102.8
108.9
96.8
105.4
105.7
108.0
105.7
111.2
99.0
107.7
110.2
112.7
108.7
118.5
102.6
111.9
110.4
112.7
108.6
118.6
103.3
112.1
110.6
113.1
108.5
119.8
103.0
112.2
111.2
113.8
109.2
120.4
103.5
112.8
112.1
114.6
109.7
121.8
104.3
113.9
113.0
115.4
110.1
123.1
105.4
115.5
113.6
116.2
110.9
123.9
105.7
116.0
114.3
117.4
111.9
125.3
105.1
116.2
114.7
117.7
112.1
125.9
105.3
117.2
115.0
117.9
112.0
126.5
106.1
117.4
Industry
groupings
8 Manufacturing
103.7
106.8
111.7
111.8
112.1
112.9
114.0
115.4
115.6
116.2
117.1
117.5
9 Capacity utilization, m a n u f a c t u r i n g
(percent) 2
77.8
78.6
80.6
80.3
80.4
80.8
81.5
82.3
82.2
82.5
82.9
89.7
97.7
99.8 r
99.0
101.0
103.0
105.0
102.0
103.0
107.0
110.0
n.a.
4
II Nonagricultural e m p l o y m e n t , total
G o o d s - p r o d u c i n g , total
1?
M a n u f a c t u r i n g , total
13
Manufacturing, production workers . . .
14
15
Service-producing
16 Personal i n c o m e , total
17
W a g e s and salary d i s b u r s e m e n t s
Manufacturing
18
Disposable personal income
19
20 Retail sales 6
106.2
96.6
97.1
96.0
109.4
127.6
124.5
113.7
128.6
121.1
106.4
94.9
95.8
94.5
110.5
135.3
131.5
117.8
136.8
126.9
108.1
93.1
93.7
93.7
112.8
141.7
136.2
117.8
143.1
135.2
108.2
92.8
93.3
93.2
113.1
142.9
138.2
118.6
144.1
136.0
108.4
92.8
93.2
93.2
113.4
143.1
138.0
119.1
144.4
136.0
108.5
93.0
93.2
93.3
113.5
144.1
138.8
119.1
145.4
138.7
108.8
93.2
93.4
93.6
113.7
145.0
139.2
119.9
146.3
139.6
109.0
93.3
93.4
93.7
114.0
145.9
139.9
120.7
147.3
141.1
109.0
93.3
93.5
94.0
113.9
144.7
141.1
120.8
145.6
139.3
109.2
93.3
93.6
94.2
114.3
147.3
141.4
121.8
148.5
141.9
109.7
93.7
93.7
94.4
114.8
148.2
142.1
122.0
149.4
144.3
109.9
94.0
93.7
94.5
115.0
n.a.
n.a.
n.a.
n.a.
143.2
Prices7
71 C o n s u m e r (1982-84=100)
22 P r o d u c e r finished g o o d s (1982=100)
136.2
121.7
140.3
123.2
144.5
124.7
144.8
124.2
145.1
123.8
145.7
124.6
145.8
124.5
145.8
124.1
146.2
124.4
146.7
124.8
147.2
125.0
147.4
125.0
10 C o n s t r u c t i o n c o n t r a c t s
3
1. A m a j o r revision of the industrial production index and the capacity
utilization rates w a s released in April 1990. See " I n d u s t r i a l Production: 1989
D e v e l o p m e n t s and Historical R e v i s i o n , " Federal Reserve Bulletin, vol. 76 (April
1990), pp. 187-204.
2. Ratio of index of p r o d u c t i o n t o index of capacity. Based on d a t a f r o m the
Federal R e s e r v e , DR1 McGraw-Hill, U . S . D e p a r t m e n t of C o m m e r c e , and other
sources.
3. Index of dollar value of total c o n s t r u c t i o n c o n t r a c t s , including residential,
nonresidential, and heavy engineering, f r o m McGraw-Hill Information S y s t e m s
C o m p a n y , F . W . Dodge Division.
4. Based on data f r o m U.S. D e p a r t m e n t of L a b o r , Employment
and
Earnings.
Series c o v e r s e m p l o y e e s only, excluding personnel in the a r m e d forces.
5. Based on data f r o m U . S . D e p a r t m e n t of C o m m e r c e . Survey of Current
Business.
2.11
LABOR FORCE, EMPLOYMENT, A N D
83.0
6. Based on d a t a f r o m U . S . D e p a r t m e n t of C o m m e r c e , Survey of
Current
Business.
7. Based on data not seasonally a d j u s t e d . Seasonally a d j u s t e d d a t a f o r c h a n g e s
in the price indexes can be obtained f r o m the U . S . D e p a r t m e n t of L a b o r , B u r e a u
of L a b o r Statistics, Monthly Labor
Review.
NOTE. Basic d a t a (not indexes) for series m e n t i o n e d in n o t e s 4, 5,and 6, and
indexes for series mentioned in notes 3 and 7 c a n also be f o u n d in the Survey of
Current
Business.
Figures for industrial p r o d u c t i o n for the latest m o n t h are p r e l i m i n a r y , a n d m a n y
figures for the three m o n t h s preceding the latest m o n t h h a v e b e e n revised. See
" R e c e n t D e v e l o p m e n t s in Industrial Capacity and U t i l i z a t i o n , " Federal
Reserve
Bulletin, vol. 76 (June 1990). pp. 411-35. See also " I n d u s t r i a l P r o d u c t i o n C a p a c i t y
and Capacity Utilization since 1987," Federal Reserve Bulletin, vol. 79, (June
1993), p p . 5 9 0 - 6 0 5 .
UNEMPLOYMENT
Thousands of persons; monthly data seasonally adjusted except as noted
1994
1993
Category
1991
1992
1993
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.r
Feb.r
Mar.
H O U S E H O L D SURVEY D A T A 1
125,303
126,982
128,040
128,108
128,580
128,662
128,898
130,667
130,776
130,580
130,747
114,644
3,233
114,391
3,207
116,232
3,074
116,475
3,093
116,920
3,021
117,218
3,114
117,565
3,096
118,639
3,331
118,867
3,391
118,611
3,426
118,880
3,459
8,426
6.7
9,384
7.4
8,734
6.8
8,540
6.7
8,639
6.7
8,330
6.5
8,237
6.4
8,696
6.7
8,518
6.5
8,543
6.5
8,408
6.4
6 Nonagricultural payroll employment 4
108,256
108,519
110,171
110,502
110,664
110,880
111,110
111,079
111,357
111,821
112,088
Manufacturing
Mining
Contract c o n s t r u c t i o n
T r a n s p o r t a t i o n and public utilities
18,455
689
4,650
5,762
25,365
6.646
28,336
18.402
18,192
631
4,471
5,709
25,391
6,571
29,053
18,653
17,804
599
4,571
5,710
25,849
6,605
30,193
18,841
17,698
596
4,592
5,692
25,953
6,616
30,433
18,922
17,709
596
4,629
5,693
25,968
6,632
30,534
18,903
17,735
595
4,664
5,700
25,982
6,651
30,649
18,904
17,738
605
4,665
5,697
26,082
6,660
30,709
18,954
17,769
602
4,653
5,708
26,079
6,656
30,683
18,929
17,783
599
4,650
5,719
26,153
6,666
30,853
18,934
17,796
597
4,732
5,732
26,242
6,679
31,079
18,964
17,799
594
4,796
5,665
26,338
6,688
31,225
18,983
1 Civilian labor f o r c e 1
Employment
Nonagricultural i n d u s t r i e s 3
7
3
Agriculture
Unemployment
Number
4
Rate (percent of civilian labor force)
5
ESTABLISHMENT SURVEY D A T A
7
8
9
10
11
17
13
14
Finance
Service
Government
1. Beginning J a n u a r y 1994, reflects redesign of current population survey and
population controls f r o m the 1990 c e n s u s .
2. P e r s o n s sixteen y e a r s of age and older, including Resident A r m e d F o r c e s .
Monthly figures are based on sample data collected during the calendar week that
c o n t a i n s the twelfth d a y ; annual data are averages of monthly figures. By
definition, seasonality d o e s not exist in population figures.
2. Includes self-employed, unpaid family, and domestic service w o r k e r s .
3. Includes all full- and part-time e m p l o y e e s w h o w o r k e d during, or r e c e i v e d
pay for, the pay period that includes the twelfth d a y of the m o n t h ; e x c l u d e s
proprietors, self-employed p e r s o n s , h o u s e h o l d and unpaid family w o r k e r s , a n d
m e m b e r s of the armed f o r c e s . D a t a are a d j u s t e d to the M a r c h 1992 b e n c h m a r k ,
and only seasonally a d j u s t e d d a t a are available at this time.
SOURCE. Based on d a t a f r o m U . S . D e p a r t m e n t of L a b o r , Employment
and
Earnings.
A46
Domestic Nonfinancial Statistics • July 1994
2.12
OUTPUT, CAPACITY, A N D CAPACITY UTILIZATION1
Seasonally adjusted
1993
Q2
Q3
1994
Q4
Qi r
Output (1987=100)
1993
Q2
Q3
1994
Q4
Ql
Capacity (percent of 1987 output)
1994
1993
Q2
Q4
Q3
Ql r
Capacity utilization rate (percent) 2
1 Total industry
110.3
111.1
112.9
115.1
135.9
136.5
137.2
138.0
81.2
81.4
82.3
83.4
2 Manufacturing
111.2
111.8
114.1
116.3
138.4
139.2
140.0
140.9
80.3
80.3
81.5
82.5
Primary processing 3
Advanced processing 4
107.0
113.2
107.7
113.8
109.9
116.1
110.6
119.0
127.9
143.4
128.3
144.4
128.6
145.4
129.0
146.6
83.6
78.9
83.9
78.8
85.5
79.9
85.7
81.2
5
6
7
8
9
10
11
12
13
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Nonelectrical machinery
Electrical machinery
Motor vehicles and parts
Aerospace and miscellaneous
transportation equipment
113.2
98.0
105.2
109.7
99.0
141.7
125.9
118.1
114.2
100.8
106.7
112.3
98.9
147.2
129.7
112.0
118.1
104.9
109.6
115.6
101.4
152.7
132.6
131.7
121.2
104.1
108.8
113.1
103.1
158.6
136.7
144.7
144.5
114.8
123.3
127.4
117.6
173.1
153.8
153.4
145.4
115.0
123.0
126.9
117.6
175.7
155.7
154.8
146.3
115.2
122.6
126.3
117.6
178.2
157.7
156.1
147.6
115.4
122.4
126.0
117.5
181.7
160.3
157.8
78.4
85.4
85.3
86.1
84.1
81.8
81.9
76.9
78.5
87.6
86.8
88.6
84.1
83.8
83.2
72.3
80.7
91.1
89.4
91.5
86.2
85.7
84.1
84.4
82.2
90.2
88.9
89.7
87.7
87.3
85.3
91.7
90.3
87.4
85.2
82.4
133.7
133.2
132.8
132.2
67.6
65.6
64.2
62.4
14
15
16
17
18
19
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
108.7
108.4
113.2
117.7
112.8
104.0
108.9
108.0
111.7
118.6
111.5
104.0
109.2
107.7
114.2
118.6
114.4
107.7
110.3
108.7
114.3
120.0
131.6
119.4
124.8
145.9
131.1
115.7
132.1
119.9
125.3
146.8
132.0
115.6
132.7
120.5
125.8
147.7
115.4
83.0
91.3
91.1
81.2
86.7
89.8
82.8
90.5
89.6
81.2
85.1
89.9
82.6
89.8
91.2
80.8
86.6
93.2
83.1
90.2
90.9
81.3
105.0
131.0
118.8
124.3
145.1
130.1
115.8
91.0
97.5
114.1
114.8
96.8
117.5
118.0
97.3
115.6
114.8
98.3
119.4
117.6
111.4
133.6
130.8
111.1
134.0
131.2
110.8
134.3
131.7
110.6
134.7
132.2
87.5
85.4
87.7
87.1
87.8
89.9
87.8
86.1
87.2
88.9
88.7
89.0
1975
Previous cycle 2
Dec.
Jan.
r
Feb/
Mar/
Apr. p
3
4
20 Mining
21 Utilities
22
Electric
1973
High
Low
High
Low
Latest cycle 3
High
Low
1993
1993
Apr.
Nov.
1994
Capacity utilization rate (percent) 2
1 Total industry
99.0
82.7
87.3
71.8
84.8
78.3
81.4
82.2
82.9
83.2
83.4
83.6
83.6
2 Manufacturing
99.0
82.7
87.3
70.0
85.1
76.6
80.6
81.5
82.3
82.2
82.5
82.9
83.0
Primary processing 3
Advanced processing 4
99.0
99.0
82.7
82.7
89.7
86.3
66.8
71.4
89.1
83.3
77.9
76.1
83.6
79.3
85.5
79.8
86.4
80.6
85.9
80.7
85.3
81.3
85.9
81.6
86.3
81.6
5
6
7
8
9
10
11
12
13
Durable goods
Lumber and products
Primary metals
Iron and steel
Nonferrous
Nonelectrical machinery
Electrical machinery
Motor vehicles and parts . . . .
Aerospace and miscellaneous
transportation equipment.
99.0
99.0
99.0
99.0
99.0
99.0
99.0
99.0
82.7
82.7
82.7
82.7
82.7
82.7
82.7
82.7
86.9
87.6
102.4
110.4
90.5
92.1
89.4
93.0
65.0
60.9
46.8
38.3
62.2
64.9
71.1
44.5
83.9
93.3
92.9
95.7
88.9
83.7
84.9
84.5
73.8
76.8
74.3
72.3
75.9
73.0
76.8
57.9
78.7
85.7
85.0
85.3
84.6
81.3
82.0
79.1
80.6
91.0
89.5
90.6
88.0
85.3
83.7
84.8
81.9
91.3
92.2
94.5
88.9
87.0
84.8
88.5
81.9
91.2
90.3
91.9
87.9
86.7
84.7
90.5
82.2
89.2
88.0
88.6
87.2
87.0
85.2
94.4
82.4
90.1
88.4
88.7
88.0
88.1
86.0
90.4
82.4
90.5
89.4
89.5
89.3
88.6
86.8
87.4
99.0
82.7
81.1
66.9
88.3
78.1
68.6
64.5
63.7
63.0
61.9
62.2
62.2
14
15
16
17
18
19
Nondurable goods
Textile mill products
Paper and products
Chemicals and products
Plastics materials
Petroleum products
99.0
99.0
99.0
99.0
99.0
99.0
82.7
82.7
82.7
82.7
82.7
82.7
87.0
91.7
94.2
85.1
90.9
89.5
76.9
73.8
82.0
70.1
63.4
68.2
86.8
92.1
94.9
85.9
97.0
88.5
80.4
78.7
86.0
78.5
75.5
84.2
83.1
90.4
91.3
81.0
87.2
89.9
82.6
90.0
91.4
81.0
85.2
93.3
82.9
89.4
92.1
81.2
90.3
92.7
82.7
89.6
90.4
81.0
87.3
90.8
82.9
90.1
91.3
81.3
88.2
90.6
83.6
90.9
91.1
81.6
83.7
90.5
91.7
81.4
91.6
93.6
99.0
99.0
99.0
82.7
82.7
82.7
96.6
88.3
88.3
80.6
76.2
78.7
87.0
92.6
94.8
86.8
83.4
87.4
87.4
85.8
87.8
87.5
86.4
87.5
87.5
86.2
87.6
87.6
90.6
90.2
89.2
88.8
89.3
89.8
86.6
87.4
89.9
86.0
87.0
3
4
20 Mining
21 Utilities
22
Electric
1. Data in this table also appear in the Board's G.17 (419) monthly statistical
release. For ordering address, see inside front cover. For a detailed description of
the series, see "Recent Developments in Industrial Capacity and Utilization,"
Federal Reserve Bulletin, vol. 76 (June 1990), pp. 411-35. See also "Industrial
Production Capacity and Capacity Utilization Since 1987," Federal
Reserve
Bulletin, vol. 79, (June 1993), pp. 590-605.
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;
petroleum refining; rubber and plastics; stone, clay, and glass; and primary and
fabricated metals.
4. Advanced processing includes food, tobacco, apparel, furniture, printing,
chemical products such as drugs and toiletries, leather and products, machinery,
transportation equipment, instruments, miscellaneous manufacturing, and ordnance.
5. Monthly highs, 1978 through 1980; monthly lows, 1982.
6. Monthly highs, 1988-89; monthly lows, 1990-91.
Selected Measures
2.13
INDUSTRIAL PRODUCTION
A47
Indexes and Gross Value 1
Monthly data seasonally adjusted
portion
1994
1993
1987
Group
1993
avg.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan. r
Feb. r
Mar. r
Apr."
114.0
114.6
115.1
115.7
116.0
114.7
117.7
112.1
119.6
127.9
135.9
105.7
188.2
114.6
112.3
126.0
105.4
109.0
109.9
108.8
95.2
125.3
102.7
114.4
106.8
117.3
115.0
117.9
112.0
118.4
124.9
131.0
100.8
183.3
114.7
112.7
128.8
105.3
108.3
110.2
108.3
96.6
125.5
104.4
114.4
108.5
116.6
Index (1987 = 100)
MAJOR MARKETS
1 Total index
?
4
6
7
8
9
10
II
1?
N
14
IS
16
17
18
19
?0
?l
22
73
74
76
77
78
79
30
31
3?
33
34
35
36
37
38
39
40
41
4?
43
44
45
46
47
48
49
50
Final products
Consumer goods, total
Durable consumer goods
Automotive products
Autos and trucks
Autos, consumer
Trucks, consumer
Auto parts and allied g o o d s . . .
Other
Appliances, A/C, and TV
Carpeting and furniture
Miscellaneous home goods . . .
Nondurable consumer goods
Foods and tobacco
Clothing
Chemical products
Paper products
Energy
Fuels
Residential utilities
Equipment
Business equipment
Information processing and related . .
Office and computing
Autos and trucks
Other
Defense and space equipment
Oil and gas well drilling
Manufactured homes
Intermediate products, total
Construction supplies
Business supplies
Durable goods materials
Durable consumer parts
Equipment parts
Other
Basic metal materials
Nondurable goods materials
Pulp and paper materials
Other
Energy materials
Primary energy
Converted fuel materials
100.0
110.9
110.5
110.0
110.4
110.9
111.1
111.3
111.9
112.8
110.4
126.4
102.4
106.4
108.4
105.9
93.3
124.1
103.2
115.3
108.0
118.2
111.2
113.8
109.2
112.7
113.8
114.9
85.2
166.4
111.9
111.8
130.4
104.1
106.3
108.2
105.9
93.3
122.6
104.0
114.6
111.3
115.9
112.1
114.6
109.7
115.8
120.2
124.9
95.4
176.0
112.3
112.0
130.7
102.5
107.5
107.9
105.2
94.3
122.3
103.3
115.2
110.6
117.0
113.0
115.4
110.1
118.2
124.9
131.5
98.8
188.0
113.9
112.2
130.5
102.8
108.0
107.9
105.8
95.1
122.0
102.6
113.1
108.6
114.9
113.6
116.2
110.9
119.0
127.7
134.6
102.0
191.0
116.3
111.3
123.7
104.0
109.1
108.6
106.1
93.8
121.6
102.6
119.7
105.1
125.4
114.3
117.4
111.9
122.2
134.8
146.2
110.6
207.9
115.7
111.2
123.2
105.5
108.0
109.0
106.9
94.0
124.1
102.4
116.7
104.3
121.5
118.6
134.8
158.2
230.6
113.3
126.2
119.6
119.1
74.0
87.0
115.5
119.8
136.3
160.6
234.8
113.2
129.8
126.5
119.1
73.7
89.7
120.7
120.4
137.7
162.0
241.8
112.5
136.1
139.6
119.4
72.7
86.5
123.4
121.8
139.7
164.5
248.6
113.0
141.5
150.5
119.3
72.5
82.9
130.4
123.1
141.8
167.2
256.1
114.8
142.8
154.9
120.8
71.5
82.3
141.1
123.9
142.9
170.1
261.5
114.0
145.2
161.0
119.4
71.0
82.4
145.3
125.3
145.1
172.7
267.5
114.5
150.5
172.3
120.8
69.7
87.4
139.7
125.9
146.0
176.1
274.8
115.4
144.5
161.1
121.3
69.5
88.6
143.6
126.5
146.7
178.2
280.8
115.8
141.7
156.1
122.7
69.6
89.6
102.9
96.4
107.3
103.3
97.3
107.2
103.0
97.8
106.4
103.5
98.6
106.7
104.3
99.5
107.5
105.4
101.3
108.1
105.7
100.5
109.2
105.1
98.9
109.2
105.3
100.2
108.8
106.1
100.9
109.5
111.7
114.5
111.0
123.0
109.0
112.0
114.3
104.9
115.7
117.3
112.6
104.4
100.7
111.9
111.7
115.1
110.3
123.8
110.1
112.0
113.7
105.5
112.4
116.9
113.8
103.6
98.0
114.4
112.1
115.6
111.4
124.7
109.9
111.2
114.6
106.1
111.5
118.6
114.9
103.7
98.0
114.9
112.2
116.5
112.6
126.0
110.4
111.7
113.6
103.1
112.7
117.1
114.1
103.1
98.4
112.3
112.8
117.5
116.0
127.0
110.3
112.9
114.1
104.0
113.2
117.2
115.1
103.0
98.2
112.6
113.9
119.1
120.4
127.5
111.6
114.7
115.3
103.7
115.2
119.1
114.9
103.1
97.6
113.8
115.5
121.5
125.7
128.6
113.6
117.6
116.6
102.1
115.2
119.9
120.2
103.2
97.5
114.5
116.0
122.2
126.7
130.7
113.2
116.2
115.4
103.2
114.0
119.7
115.6
104.8
97.3
119.6
116.2
122.0
125.9
132.0
112.0
113.3
116.1
104.3
116.0
120.0
115.4
105.5
100.2
115.8
117.2
123.8
127.3
134.3
113.5
113.7
117.0
106.2
117.5
120.1
116.9
105.0
99.9
114.8
117.4
124.5
126.1
136.1
114.2
115.0
116.7
105.4
117.1
119.8
117.0
104.8
100.1
114.1
110.3
110.2
111.0
110.9
111.2
111.1
111.2
111.1
111.5
111.3
112.2
111.8
113.2
112.7
113.7
113.2
113.9
113.4
114.8
114.3
115.3
114.8
111.6
130.6
103.8
105.8
109.1
107.0
95.2
123.9
103.7
114.8
104.0
119.0
110.4
112.7
108.6
107.3
103.9
99.2
71.8
146.7
111.8
110.2
124.9
103.2
106.4
109.0
107.0
94.3
123.7
103.1
115.8
103.8
120.4
118.0
133.9
155.6
221.4
112.4
133.0
127.2
114.8
74.9
81.2
111.6
118.5
134.6
158.1
226.5
113.6
127.5
118.9
116.2
74.6
83.5
115.8
101.7
95.9
105.5
101.8
95.3
106.1
111.4
114.3
112.5
121.8
109.0
111.5
113.5
103.9
115.9
115.2
113.7
104.1
100.8
110.7
111.1
114.4
111.7
122.4
109.1
112.1
113.7
104.7
114.2
116.7
112.8
102.9
101.0
106.6
110.1
109.9
109.8
109.6
60.8
46.0
26.0
5.6
2.5
1.5
.9
.6
1.0
3.1
.8
.9
1.4
20.4
9.1
2.6
3.5
2.5
2.7
.7
2.0
110.2
112.7
108.7
110.5
111.6
112.2
86.1
157.3
110.6
109.5
122.9
102.2
106.7
108.2
106.1
94.9
122.5
103.2
113.7
106.6
116.5
109.8
112.3
108.6
110.9
112.7
114.3
90.2
155.9
110.1
109.3
123.1
100.7
106.9
108.0
105.9
95.9
122.7
103.8
110.8
104.9
113.0
109.3
111.8
107.8
109.0
110.4
110.1
86.5
150.9
110.8
107.8
116.6
101.6
106.7
107.4
105.9
95.8
122.2
103.7
107.6
104.9
108.6
109.6
112.1
108.1
107.2
106.5
105.0
83.5
142.3
109.1
107.7
115.5
103.3
106.1
108.3
106.2
96.0
123.0
104.7
111.1
104.7
113.6
20.0
13.9
5.6
1.9
4.0
2.5
1.2
1.9
5.4
.6
.2
118.5
134.6
155.8
223.1
112.2
136.7
134.5
115.6
74.8
82.5
118.9
117.7
133.1
151.0
209.2
112.3
141.2
136.2
114.0
76.9
75.2
112.6
117.7
133.5
153.5
215.6
111.8
138.2
133.1
113.2
75.6
78.2
110.7
14.7
6.0
8.7
102.6
96.8
106.5
102.2
94.8
107.2
39.2
19.4
4.2
7.3
7.9
2.8
9.0
1.2
1.9
3.8
2.1
10.9
7.2
3.7
111.9
115.5
113.9
123.4
109.7
112.5
113.8
104.2
113.7
116.9
113.8
103.7
99.1
112.7
97.3
95.3
110.6
110.4
110.4
112.8
108.9
108.2
104.3
100.3
78.2
138.6
111.0
110.6
113.1
108.5
108.7
106.7
104.1
75.4
153.9
111.1
SPECIAL AGGREGATES
51 Total excluding autos and trucks
52 Total excluding motor vehicles and parts . . .
53 Total excluding office and computing
machines
54 Consumer goods excluding autos and
trucks
55 Consumer goods excluding energy
56 Business equipment excluding autos and
trucks
57 Business equipment excluding office and
computing equipment
58 Materials excluding energy
97.5
108.2
108.1
107.5
107.8
108.1
108.2
108.3
108.8
109.6
110.6
111.1
111.5
111.9
112.0
24.5
23.3
108.5
108.2
108.2
108.3
107.6
107.8
108.3
107.7
109.5
108.2
109.3
107.8
108.8
107.7
108.8
108.6
108.6
109.0
108.7
109.8
109.3
109.9
109.6
111.4
110.4
111.8
110.7
111.7
12.7
134.6
132.8
133.5
134.5
136.0
136.1
137.2
137.5
138.7
140.6
141.3
142.8
144.7
145.9
12.0
28.4
119.7
115.0
120.3
114.1
119.6
114.2
119.2
114.4
119.2
114.7
118.7
115.3
119.8
115.6
120.2
116.5
121.3
118.0
122.5
120.0
123.0
120.1
124.6
120.2
124.4
121.7
124.2
122.1
A48
2.13
Domestic Nonfinancial Statistics • July 1994
INDUSTRIAL PRODUCTION
_ oup
SIC
code 2
1987
proportion
Indexes and Gross Value 1 —Continued
1994
1993
1993
avg.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan. r
Feb. r
Mar. r
Apr."
Index (1987 = 100)
MAJOR INDUSTRIES
59 Total index
100.0
110.9
110.5
110.0
110.4
110.9
111.1
111.3
111.9
112.8
114.0
114.6
115.1
115.7
116.0
60 Manufacturing
Primary processing
61
Advanced processing
62
84.3
27.1
57.1
111.7
107.6
113.7
111.3
106.8
113.5
111.1
106.9
113.1
111.2
107.3
113.0
111.6
107.4
113.6
111.8
107.9
113.6
112.1
107.7
114.2
112.9
108.5
115.0
114.0
109.9
116.0
115.4
111.3
117.4
115.6
110.7
117.9
116.2
110.1
119.2
117.1
111.0
120.0
117.5
111.6
120.3
63
64
65
66
Durable goods
Lumber and p r o d u c t s . . .
"'24
25
Furniture and f i x t u r e s . . .
Clay, glass, and stone
32
products
Primary metals
33
Iron and steel
331,2
Raw steel
Nonferrous
333-6,9
Fabricated metal
products
34
Industrial and commercial
machinery and
computer equipment .
35
Office and computing
machines
357
Electrical m a c h i n e r y . . . .
36
Transportation
equipment
37
Motor vehicles and
371
parts
Autos and light
trucks
Aerospace and miscellaneous transportation e q u i p m e n t . . . 3 7 2 - 6 , 9
Instruments
38
Miscellaneous
39
46.5
1.5
114.3
100.6
103.3
113.5
98.3
102.4
113.2
98.2
101.5
113.0
97.6
102.7
113.7
99.6
103.5
113.9
100.9
105.2
115.0
101.8
105.2
116.2
104.6
104.8
118.0
104.9
104.2
120.1
105.2
106.3
120.4
105.2
105.4
121.2
103.0
107.3
122.0
104.1
107.8
122.5
104.6
107.6
2.4
3.3
1.9
.1
1.4
98.7
106.5
111.6
105.7
99.5
97.8
105.0
108.9
103.5
99.5
97.9
105.0
109.1
105.5
99.2
98.2
105.6
111.1
106.6
98.1
98.8
105.6
111.9
106.9
97.0
98.4
107.2
112.8
106.3
99.4
99.9
107.3
112.4
105.9
100.3
99.7
106.1
113.3
107.2
96.2
100.5
109.8
114.4
106.2
103.5
104.6
113.0
119.1
110.9
104.5
101.1
110.5
115.8
102.0
103.3
100.6
107.8
111.6
105.8
102.4
103.1
108.2
111.7
103.4
109.4
112.7
103.4
104.9
5.4
99.5
99.2
98.5
98.3
99.6
99.6
99.6
100.7
102.1
102.6
103.9
103.2
104.3
104.9
Nondurable goods
Foods
Tobacco products
Textile mill p r o d u c t s . . . .
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
79
80
81
82
83
84
85
86
87
88
89
90
91
92 Mining
Metal
93
Coal
94
95
Oil and gas extraction
96
Stone and earth minerals . .
97 Utilities
Electric
98
99
Gas
2.1
8.5
144.1
140.1
141.6
143.3
146.1
147.1
148.4
150.3
152.0
155.7
156.3
158.1
161.4
163.7
2.3
6.9
223.1
127.5
209.2
125.6
215.6
125.7
221.4
126.4
226.5
128.6
230.6
129.5
234.8
130.9
241.8
131.4
248.6
132.1
256.1
134.3
261.5
134.8
267.5
136.6
274.8
138.8
280.8
140.9
9.9
104.2
105.9
104.2
101.2
98.9
98.5
100.4
104.2
108.3
110.7
111.9
114.4
111.6
109.6
4.8
120.7
120.9
118.5
114.7
110.2
110.6
115.1
124.1
132.4
138.5
142.1
149.0
143.1
139.0
2.2
118.4
120.9
116.4
111.2
106.0
104.0
109.2
120.8
131.7
138.4
141.8
154.0
143.6
138.2
5.1
5.1
1.3
88.7
104.0
109.3
91.7
105.3
110.6
90.7
104.6
109.4
88.6
104.4
108.5
88.3
104.8
108.8
87.2
103.2
108.8
86.7
104.0
110.3
85.5
102.7
109.6
85.7
102.4
110.1
84.5
102.3
110.3
83.4
103.7
110.7
81.9
104.1
109.8
82.0
104.4
110.8
81.9
104.1
111.7
"20
21
22
23
26
27
28
29
37.8
8.8
1.0
1.8
2.3
3.6
6.5
8.8
1.3
108.7
108.6
91.0
107.8
93.1
112.3
101.3
117.8
104.9
108.7
108.2
92.6
107.3
93.3
113.4
102.6
117.3
104.1
108.5
107.9
94.1
108.7
93.5
112.1
101.1
117.6
103.7
108.9
108.8
89.4
109.3
93.6
114.1
101.3
118.3
104.2
109.1
108.8
97.3
108.5
93.6
111.7
101.6
118.6
103.2
109.2
109.6
90.3
108.8
93.2
112.1
100.9
118.8
103.5
108.5
109.0
85.4
106.6
92.1
111.4
101.1
118.3
105.3
108.8
109.0
86.4
107.7
92.1
112.7
101.6
117.8
108.2
109.1
108.4
83.3
108.0
92.6
114.5
101.7
118.8
107.8
109.7
109.0
84.3
107.4
93.1
115.5
101.9
119.3
107.1
109.6
109.2
88.2
107.8
92.4
113.5
101.7
119.3
104.8
110.1
110.1
87.2
108.6
92.4
114.8
102.2
120.1
104.5
111.1
111.9
88.8
109.7
93.7
114.7
102.8
120.7
105.8
111.5
111.2
90.1
109.5
94.6
115.7
103.5
120.8
108.0
30
31
3.2
.3
115.9
85.0
115.0
85.8
115.4
85.6
115.1
84.7
116.9
83.8
117.5
83.6
116.7
83.5
116.5
83.9
117.8
83.5
119.3
85.1
120.3
84.8
119.7
83.1
121.2
84.8
122.2
85.3
"lO
11,12
13
14
8.0
.3
1.2
5.8
.7
97.3
167.6
103.8
92.2
93.8
97.4
165.7
104.6
92.7
91.6
97.1
171.2
102.9
92.1
93.4
97.9
169.7
106.9
92.6
91.3
96.4
170.4
100.9
91.6
92.7
96.6
152.9
98.5
93.3
94.1
97.4
159.4
104.4
92.6
94.5
98.0
175.8
104.4
92.6
94.1
96.9
168.5
101.1
91.8
98.2
96.9
177.3
104.7
90.9
93.9
97.0
177.8
104.0
91.0
94.9
98.7
167.3
114.4
91.8
95.5
99.3
171.1
120.4
91.2
95.3
99.4
171.5
120.7
91.4
93.3
49i,3PT
492,3PT
7.7
6.1
1.6
116.2
115.9
117.2
114.5
114.7
113.9
112.4
114.2
105.7
115.4
115.5
115.1
118.0
118.8
115.0
118.4
119.5
114.4
116.2
115.8
118.0
114.9
113.7
119.1
116.1
115.2
119.4
115.8
115.5
117.0
121.9
119.1
132.6
119.6
118.1
125.2
116.8
115.7
120.8
116.1
115.4
118.7
79.5
111.2
110.7
110.6
110.9
111.7
111.8
111.9
112.2
112.9
114.0
114.0
114.3
115.6
116.2
81.9
108.6
108.5
108.1
108.0
108.3
108.4
108.6
109.2
110.2
111.4
111.4
111.9
112.6
112.9
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 1,886.9 1,879.5 1,868.0 1,871.8 1,878.8 1,878.2 1,886.3 1,908.8 1,928.2 1,943.9 1,955.4 1,969.5 1,969.1 1,973.0
103 Final
104
Consumer goods
Equipment
105
106 Intermediate
1,314.6 1,480.7 1,475.2 1,466.1 1,468.2 1,471.4 1,470.0 1,479.5 1,498.9 1,514.9 1,525.7 1,535.0 1,553.6 1,552.4 1,552.4
944.1
866.6
941.8
933.6
939.2
936.1
937.3
940.2
953.1
960.2
978.6
977.6
963.7
968.7
976.3
536.7
448.0
533.4
532.5
532.1
532.2
532.7
545.7
539.2
554.7
574.8
576.1
561.9
566.3
575.1
392.5
406.1
404.3
401.9
403.7
407.4
408.2
410.0
413.3
416.7
406.9
420.4
415.9
418.2
420.6
1. Data in this table also appear in the Board's G.17 (419) monthly statistical
release. F o r ordering address, see inside front cover.
A revision of the industrial production index and the capacity utilization rates
was released in May 1993. See "Industrial Production, Capacity, and Capacity
Utilization since 1987," Federal Reserve Bulletin, vol. 79 (June 1993), pp. 590-605.
2. Standard industrial classification.
Selected Measures
2.14
HOUSING A N D
A49
CONSTRUCTION
M o n t h l y figures at s e a s o n a l l y adjusted annual rates e x c e p t as n o t e d
1994
1993
1991
Item
1992
1993
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan. r
Feb. r
Mar.
Private residential real estate activity (thousands of units except as noted)
NEW
UNITS
1 Permits authorized
->
Two-or-more-family
3
4
5
Two-or-more-family
6
7 Under construction at end of period . .
8
Two-or-more-family
9
10
11
Two-or-more-family
1?
13 Mobile homes shipped
Merchant builder activity in
one-family units
14
15 Number for sale at end of period
Price of units sold
...
l,122 r
926r
196r
1,238
1,067
171
649
518
131
1,168
997
171
238
l,169 r
973R
196r
1,245
1,076
169
658
526
132
1,097
955
142
246
1,234r
l,004 r
230r
1,319
1,178
141
662
534
128
1,248
1,068
180
247
1,265r
1,036r
229r
1,359
1,160
199
678
544
134
1,172
1,041
131
254
l,298 r
1,078r
22 (Y
1,409
1,231
178
686
551
135
1,248
1,081
167
260
1,363r
l,132 r
23 l r
1,406
1,248
158
699
564
135
1,248
1,107
141
283
1,474r
l,181 r
293r
1,612
1,383
229
713
574
139
1,289
1,139
150
308
1,312
1,071
241
1,271
1,125
146
716
577
139
1,216
1,075
141
316
1,252
1,054
198
1,328
1,121
207
723
580
143
1,326
1,177
149
301
1,313
1,068
245
1,492
1,260
232
736
589
147
1,251
1,090
161
308
666
294r
641
274
647
277
645
286
738
288
723
291
766
294
817 r
294 r
640
297
665
302
739
304
121.3
144.9
126.1
147.6
124.5
145.7
123.9
143.4
126.6
150.6
129.4
150.1
125.0
146.9
130.0
152.5
125.0
146.4r
125.8
152.5
129.9
153.5
130.0
154.5
3,219
3,520
3,800
3,700
3,850
3,860
3,990
4,030
4,120
4,350
4,250
3,840
4,070
99.7
127.4
103.6
130.8
106.5
133.1
109.2
137.3
108.4
135.8
108.8
135.4
107.2
133.6
106.6
133.0
107.1
133.1
107.4
133.7
107.9
134.6
107.2
133.3
107.6
134.4
508,720
496,907
491,713
495,377
361,313
231,021
130,292
20,522
41,984
22,582
45,204
368,467
234,367
134,100
20,482
44,813
23,662
45,143
130,400
2,464
38,435
6,829
82,672
126,911
2,235
38,856
5,256
80,564
949
754
195
1,014
840
174
606
434
173
1,091
838
253
171
1,095
911
184
1,200
1,030
169
612
473
140
1,158
964
194
210
l,199 r
986r
213r
1,288
1,126
162
680
543
137
1,193
1,040
153
254
507
284
610
266
120.0
147.0
(thousands
16
17 Average
EXISTING UNITS (one-family)
18 Number sold
Price of units sold
of dollars)2
(thousands
19
20 Average
Value of new construction (millions of dollars) 3
CONSTRUCTION
21 Total put in place
403,439
436,043
470,118
460,680
466,593
468,547
477,125
488,661
497,875
22 Private
23
Residential
24
Nonresidential
25
Industrial buildings
26
Commercial buildings
27
Other buildings
28
Public utilities and other
293,536
157,837
135,699
22,281
48,482
20,797
44,139
317,256
187,820
129,436
20,720
41,523
21,494
45,699
342,953
208,092
134,861
20,654
43,145
23,405
47,657
335,028
200,496
134,532
19,316
42,723
23,849
48,644
337,909
204,631
133,278
19,799
41,524
23,817
48,138
341,351
206,594
134,757
20,126
42,342
25,047
47,242
345,572
209,520
136,052
21,346
42,225
24,487
47,994
354,506
215,934
138,572
21,251
44,224
24,609
48,488
364,512
222,797
141,715
22,194
45,967
23,998
49,556
371,444
229,245
142,199
21,767
48,160
24,140
48,132
366,146
230,190
135,956
21,265
45,407
22,936
46,348
29 Public
30
Military
31
Highway
32
Conservation and development
33
Other
109,900
1,837
32,026
4,861
71,176
118,784
2,502
34,929
5,918
75,435
127,166
2,448
37,299
5,937
81,482
125,652
2,234
37,649
6,103
79,666
128,684
2,493
37,376
5,661
83,154
127,196
2,583
35,148
5,620
83,845
131,553
2,492
39,147
6,307
83,607
134,155
2,315
40,644
5,951
85,245
133,362
2,237
41,341
5,249
84,535
137,276
2,310
40,857
5,311
88,798
130,761
2,759
40,966
5,681
81,355
1. Not at annual rates.
2. Not seasonally adjusted.
3. Recent data on value of new construction may not be strictly comparable
with data for previous periods because of changes by the Bureau of the Census in
its estimating techniques. For a description of these changes, see Construction
Reports (C-30-76-5), issued by the Census Bureau in July 1976.
SOURCE. Bureau of the Census estimates for all series except (1) mobile homes,
which are private, domestic shipments as reported by the Manufactured Housing
Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices
of existing units, which are published by the National Association of Realtors. All
back and current figures are available from the originating agency. Permit
authorizations are those reported to the Census Bureau from 17,000 jurisdictions
beginning in 1984.
A50
2.15
Domestic Nonfinancial Statistics • July 1994
C O N S U M E R A N D PRODUCER PRICES
Percentage changes based on seasonally adjusted data except as noted
Change f r o m 12
months earlier
Change f r o m 3 months earlier
(annual rate)
Item
1993
1993
Mar.
Change from 1 month earlier
1994
Index
level,
Mar.
1994 1
19941
1993
1994
Mar.
June
Sept.
Dec.
Mar.
Nov.
Dec.
Jan.
Feb.
Mar.
CONSUMER PRICES2
(1982-84=100)
1 All items
3.2
2.4
2.5
2.0
3.3
2.5
.2
.0
.3
.3
.1
147.4
2 Food
3 Energy items
4 All items less food and energy
5
Commodities
Services
6
1.8
3.6
3.5
2.7
3.8
2.0
-1.1
2.8
.9
3.7
2.3
-3.8
3.2
.9
4.1
2.6
-4.2
2.1
.0
3.5
4.9
1.2
3.4
2.4
3.7
-1.1
4.7
2.9
.6
4.2
.5
-.7
.2
.1
.3
-.1
-.8
.1
.0
.2
-.3
1.6
.3
-.1
.4
.1
.4
.3
.3
.4
.1
-.4
.2
.1
.2
143.4
102.0
155.9
137.2
166.6
7 Finished goods
8
Consumer foods
9
Consumer energy
Other consumer goods
10
Capital equipment
11
2.5
3.0
3.8
2.2
1.6
-.4
.4
-3.7
-1.0
2.1
.0
1.3
-5.4
.6
.6
-2.5
3.2
-7.4
-6.4
2.2
-.3
5.2
-15.6
1.5
.3
3.9
-.9
16.6
2.3
4.6
-.1
.6
.2
-.3
-2.9R
I.R
,2 r
,2 r
,2 r
.8 r
.5
-.4
2.8
.2
.1
.2
.5
.0
.1
.3
-.1
-.5
-.1
-.1
.4
125.0
127.0
75.4
138.6
133.9
Intermediate
materials
12 Excluding foods and feeds
Excluding energy
13
2.3
1.9
.2
1.0
.3
.0
-1.0
1.0
-.3
1.6
2.8
1.6
-,3r
.2
.R
.4
.0
.2
.2
.0
.2
116.8
125.3
Crude
materials
14 Foods
15 Energy
16 Other
4.6
4.0
9.0
2.4
-6.4
9.1
-3.0
17.5
11.2
13.1
-28.1
-4.5
18.4
-22.1
15.4
-4.8
18.9
23.4
l.C
-1.5r
1.2
-6.4
2.0
-1.0
9.3
.9
-1.1
-.1
-.3
113.1
73.0
153.5
PRODUCER PRICES
(1982=100)
1. Not seasonally adjusted.
2. Figures for consumer prices are for all urban consumers and reflect a
rental-equivalence measure of homeownership.
1.2 r
.2
2.R
2.5 r
SOURCE. U.S. Department of L a b o r , Bureau of L a b o r Statistics.
Selected Measures
2.16
A51
GROSS DOMESTIC PRODUCT A N D INCOME
Billions o f current dollars e x c e p t a s n o t e d ; quarterly data at s e a s o n a l l y a d j u s t e d annual rates
1993
1992
Account
1991
1992
1993 R
Q4
Q1
Q2
Q3
Q4R
GROSS DOMESTIC PRODUCT
1
Total
5,722.9
6,038.5
6,377.9
6,261.6
6,327.6
6,395.9
6,526.5
6,609.4
2
3
4
5
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
3,906.4
457.8
1,257.9
2,190.7
4,139.9
497.3
1,300.9
2,341.6
4,391.8
537.9
1,350.0
2,503.9
4,296.2
515.3
1,335.3
2,445.5
4,359.9
531.6
1,344.8
2,483.4
4,419.1
541.9
1,352.4
2,524.8
4,492.0
562.8
1,367.5
2,561.8
4,549.4
577.4
1,376.1
2,595.9
736.9
745.5
555.9
182.6
373.3
189.6
796.5
789.1
565.5
172.6
392.9
223.6
891.7
876.1
623.7
178.7
445.0
252.4
874.1
839.5
594.7
172.4
422.2
244.9
874.1
861.0
619.1
177.6
441.6
241.9
884.0
876.3
624.9
179.1
445.8
251.3
934.5
927.6
656.0
185.8
470.2
271.6
978.0
943.8
664.7
178.9
485.8
279.1
-8.6
-8.6
7.3
2.3
15.6
21.1
34.6
33.0
13.1
16.8
7.7
22.6
6.9
12.0
34.2
33.7
-19.6
601.5
621.1
-29.6
640.5
670.1
-63.6
661.7
725.3
-48.3
651.3
699.6
-65.1
660.0
725.0
-71.9
653.2
725.1
-69.1
682.4
751.5
-82.4
668.8
751.2
Gross private domestic investment
Fixed investment
Nonresidential
Structures
Producers' durable equipment
Residential structures
6
7
8
9
10
11
Change in business inventories
Nonfarm
12
13
14
15
16
Net exports of goods and services
Exports
Imports
17
18
19
Government purchases of goods and services
Federal
State and local
1,099.3
445.9
653.4
1,131.8
448.8
683.0
1,158.1
443.4
714.6
1,139.7
442.7
697.0
1,158.6
447.5
711.1
1,164.8
443.6
721.2
1,169.1
440.0
729.2
1,164.4
434.0
730.3
20
21
22
7.3
24
25
By major type of product
Final sales, total
Goods
Durable
Nondurable
Services
Structures
5,731.6
2,227.0
934.3
1,292.8
3,032.7
471.9
6,031.2
2,305.5
975.8
1,329.6
3,221.1
504.7
6,362.3
2,406.4
1,037.0
1,369.3
3,410.5
545.5
6,227.1
2,362.9
1,003.5
1,359.3
3,341.8
522.4
6,314.5
2,395.0
1,037.8
1,357.1
3,388.1
531.5
6,388.2
2,401.7
1,032.9
1,368.8
3,437.8
548.7
6,519.6
2,465.8
1,073.7
1,392.1
3,474.3
579.5
6,575.2
2,485.5
1,087.9
1,397.6
3,516.5
573.1
26
27
28
Change in business inventories
Durable goods
Nondurable goods
-8.6
-12.9
4.3
7.3
2.1
5.3
15.6
10.9
4.7
34.6
15.0
19.5
13.1
2.7
10.4
7.7
14.8
-7.2
6.9
-4.1
34.2
30.1
4.1
29
Total GDP in 1987 dollars
4,861.4
4,986.3
5,136.0
5,078.2
5,102.1
5,138.3
5,225.6
5,259.0
11.0
MEMO
NATIONAL INCOME
30
Total
4,598.3
4,836.6
5,140.3 r
5,038.9
5,104.0
5,143.2
5,275.0 r
n.a.
31
32
33
34
3.5
36
37
Compensation of employees
Wages and salaries
Government and government enterprises
Other
Supplement to wages and salaries
Employer contributions for social insurance
Other labor income
3,402.4
2,814.9
545.3
2,269.6
587.5
290.6
296.9
3,582.0
2,953.1
567.5
2,385.6
629.0
306.3
322.7
3,772.2
3,100.5
589.7
2,510.8
671.7
321.0
350.7
3,705.1
3,054.3
584.1
2,470.2
650.7
312.2
338.5
3,750.6
3,082.7
586.3
2,496.3
668.0
321.4
346.6
3,793.9
3,115.4
592.8
2,522.6
678.5
323.8
354.7
3,839.2
3,149.6
595.4
2,554.2
689.6
326.7
362.9
3,907.2
3,200.7
602.0
2,598.8
706.5
334.5
371.9
38
39
40
Proprietors' income 1
Business and professional 1
Farm 1
376.4
339.5
36.8
414.3
370.6
43.7
443.2
397.3
46.0
444.1
388.4
55.7
439.4
392.4
47.0
422.5
397.6
24.8
467.0
410.6
56.4
475.6
415.6
60.0
41
Rental income of persons 2
-12.8
-8.9
12.6
7.5
12.7
13.7
42
43
44
45
Corporate profits'
Profits before tax 3
Inventory valuation adjustment
Capital consumption adjustment
369.5
362.3
4.9
2.2
407.2
395.4
-5.3
17.1
466.6R
449.4R
-7.1
24.3
432.1
419.8
-12.7
25.1
458.1
445.6
-12.2
24.7
468.5
443.8
1.0
23.8
507.9R
488.4R
-4.3
23.9
-17.7
20.6
46
Net interest
462.8
442.0
445.6
450.1
443.2
444.6
444.5
n.a.
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
16.4
3. For after-tax profits, dividends, and the like, see table 1.48.
SOURCE. U.S. Department of Commerce, Survey of Current
Business.
3.5
n.a.
n.a.
A52
2.17
Domestic Nonfinancial Statistics • July 1994
PERSONAL INCOME A N D SAVING
B i l l i o n s o f current dollars e x c e p t as n o t e d ; quarterly data at s e a s o n a l l y adjusted annual rates
1992
Account
1991
1992
1993
1993 R
Ql
Q4
Q2
Q4R
Q3
P E R S O N A L I N C O M E A N D SAVING
1
Total personal income
4,850.9
5,144.9
5,388.3
5,254.7
5,373.2
5,412.7
5,512.7
5,578.1
7
Wage and salary disbursements
Commodity-producing industries
Manufacturing
Distributive industries
Service industries
Government and government enterprises
2,815.0
738.1
557.2
648.0
883.5
545.4
2,973.1
756.5
577.6
682.0
967.0
567.5
3,080.5
763.6
577.3
706.6
1,020.6
589.7
2,974.3
740.7
559.7
682.9
966.6
584.1
3,082.7
765.1
580.3
709.1
1,022.2
586.3
3,115.4
769.4
581.5
714.4
1,038.8
592.8
3,149.6
779.3
587.8
720.1
1,054.7
595.4
3,200.7
789.5
595.8
733.5
1,075.8
602.0
296.9
376.4
339.5
36.8
-12.8
127.9
715.6
769.9
382.3
322.7
414.3
370.6
43.7
-8.9
140.4
694.3
858.4
413.9
350.7
443.2
397.3
46.0
12.6
158.3
695.2
912.1
438.4
338.5
444.1
388.4
55.7
7.5
157.0
695.4
894.4
433.1
346.6
439.4
392.4
47.0
12.7
157.8
693.1
905.5
435.0
354.7
422.5
397.6
24.8
13.7
159.0
695.7
918.5
439.4
362.9
467.0
410.6
56.4
16.4
159.4
696.7
929.8
446.1
371.9
475.6
415.6
60.0
3.5
160.7
700.2
944.6
457.6
4
6
7
8
Q
10
Other labor income
Proprietors' income
Business and professional
ii
l? Rental income of persons
n
14
Personal interest income
is Transfer payments
16
Old-age survivors, disability, and health insurance benefits . . .
17
LESS: Personal contributions for social insurance
18 EQUALS: P e r s o n a l i n c o m e
237.8
249.3
264.3
256.6
264.5
266.8
269.2
279.1
4,850.9
5,144.9
5,388.3
5,254.7
5,373.2
5,412.7
5,512.7
5,578.1
620.4
644.8
681.6
657.1
681.0
689.0
699.2
715.7
4,230.5
4,500.2
4,706.7
4,597.5
4,692.2
4,723.7
4,813.5
4,862.4
LESS: P e r s o n a l o u t l a y s
4,029.0
4,261.5
4,516.8
4,419.7
4,483.6
4,544.0
4,620.1
4,680.4
2 2 EQUALS: P e r s o n a l s a v i n g
201.5
238.7
189.9
177.9
208.7
179.7
193.4
182.0
19,237.9
12,895.2
13,965.0
19,518.0
13,080.9
14,219.0
19,887.4
13,371.3
14,330.0
19,744.4
13,234.2
14,163.0
19,785.4
13,311.6
14,326.0
19,868.8
13,416.2
14,341.0
20,150.1
13,522.7
14,491.0
20,230.9
13,617.3
14,554.0
4.8
5.3
4.0
3.9
4.4
3.8
4.0
3.7
733.7
717.8
780.2 r
762.0
766.7
774.3
817.8 r
n.a.
R
1,024.8
988.3
988.7
L,017.5R
n.a.
n.a.
19
20
21
LESS: Personal tax and nontax payments
EQUALS: Disposable personal income
MEMO
73
74
25
Per capita (1987 dollars)
Gross domestic product
Personal consumption expenditures
Disposable personal income
26
Saving rate (percent)
GROSS SAVING
27
Gross saving
28
Gross private saving
929.9
986.9
79
30
31
Personal saving
Undistributed corporate profits
Corporate inventory valuation adjustment
201.5
102.3
4.9
238.7
110.4
-5.3
189.9
123.6R
-7.1
177.9
103.7
-12.7
208.7
116.3
-12.2
179.7
129.3
1.0
193.4
145.L R
-4.3
383.2
242.8
396.6
261.3
408.8
262.5
402.2
261.0
405.2
258.1
414.0
265.7
413.9
265.1
State and local
-196.2
-203.4
7.3
-269.1
-276.3
7.2
-262.8
-263.5
.8
-221.5
-222.6
1.1
-214.4
-212.7
-1.7
37
Gross investment
743.3
741.4
795.4
796.5
778.7
787.6
819.0
n.a.
38
39
Gross private domestic
Net foreign
736.9
6.4
796.5
-55.1
891.7
-96.2
874.1
-77.6
874.1
-95.4
884.0
-96.4
934.5
-115.5
n.a.
40
Statistical discrepancy
9.6
23.6
34.4
12.0
13.3
Capital consumption
33
Noncorporate
34
Government surplus, or deficit ( - ) , national income and
product accounts
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
182.0
-17.7
allowances
37
35
36
L,004.8
-224.6R
-226.4R
1.8 R
15.2r
-199.7R
-207.0R
7.2R
SOURCE. U.S. Department of Commerce, Survey of Current
1.2 r
Business.
432.8
301.7
n.a.
n.a.
n.a.
978.0
n.a.
Summary
3.10
U.S. INTERNATIONAL TRANSACTIONS
Statistics
A53
Summary
Millions o f dollars; quarterly data s e a s o n a l l y a d j u s t e d e x c e p t a s n o t e d 1
1993
1992
Item credits or debits
Balance on current account
Merchandise trade balance
Merchandise exports
Merchandise imports
4
Military transactions, net
Other service transactions, net
6
Investment income, net
7
U.S. government grants
8
U.S. government pensions and other transfers
9
Private remittances and other transfers
10
1
?
3
1991
1992
-8,324
-73,802
416,937
-490,739
-5,851
51,733
13,021
24,073
-3,461
-14,037
-66,400
-96,138
440,138
-536,276
-2,751
59,163
6,222
-14,688
-3,735
-14,473
1993
-109,242
-132,478
456,766
-589,244
-1,027
56,706
66
-14,438
-3,946
-14,126
Q4
Q1
Q2
Q3
Q4 P
-23,687
-25,962
113,992
-139,954
-836
14,265
-806
-5,883
-846
-3,619
-22,375
-29,325
111,480
-140,805
-145
14,799
-112
-3,242
-985
-3,365
-27,235
-34,398
113,067
-147,465
-226
14,716
-27
-2,730
-986
-3,584
-28,091
-35,972
111,935
-147,907
-128
13,983
1,617
-3,029
-985
-3,577
-31,539
-32,783
120,284
-153,067
-528
13,209
-1,411
-5,437
-989
-3,600
11
Change in U.S. government assets other than official
reserve assets, net (increase, —)
2,905
-1,609
-106
-737
535
-275
-180
-186
12
13
14
15
16
Change in U.S. official reserve assets (increase. - )
Gold
Special drawing rights (SDRs)
Reserve position in International Monetary Fund
Foreign currencies
5,763
0
-177
-367
6,307
3,901
0
2,316
-2,692
4,277
-1,379
0
-537
-44
-797
1,542
0
2,829
-2,685
1,398
-983
0
-140
-228
-615
822
0
-166
313
675
-545
0
-118
-48
-378
-673
0
-113
-80
-480
17
18
19
70
21
Change in U.S. private assets abroad (increase, - )
Bank-reported claims 3
Nonbank-reported claims
U.S. purchases of foreign securities, net
U.S. direct investments abroad, net
-68,643
3,278
1,932
-44,740
-29,113
-53,253
24,948
4,551
-47,961
-34,791
-142,388
34,582
-12,267
28,055
-4,774
-26,889
-8,659
-30,244
5,317
443
-24,098
-11,906
-42,674
8,487
2,982
-45,794
-8,349
-57,203
-7,277
-125,377
-50,244
-31,243
-3,481
1,132
-17,405
-11,489
?? Change in foreign official assets in United States (increase, +) . . .
23
U.S. Treasury securities
Other U.S. government obligations
24
Other U.S. government liabilities
25
Other U.S. liabilities reported by U.S. banks
76
Other foreign official assets
27
17,564
14,846
1,301
1,542
-1,484
1,359
40,684
18,454
3,949
2,542
16,427
-688
71,225
48,700
4,091
1,890
13,959
2,585
5,931
-7,379
874
943
11,219
274
10,929
1,039
710
-395
8,171
1,404
17,699
5,668
1,082
396
9,454
1,099
19,237
19,098
1,345
1,105
-2,495
184
23,360
22,895
954
784
-1,171
-102
Change in foreign private assets in United States (increase, + ) . . .
U.S. bank-reported liabilities 3
U.S. nonbank-reported liabilities
Foreign private purchases of U.S. Treasury securities, net .
31
37
Foreign purchases of other U.S. securities, net
Foreign direct investments in United States, net
33
65,876
-11,371
-699
18,826
35,144
23,975
88,895
18,609
741
36,893
30,274
2,378
155,154
12,208
32,914
-1,171
-2,717
21,232
12,478
3,092
14,946
-18,862
2,057
13,599
9,394
8,758
24,838
-1,381
1,361
-623
15,025
10,456
52,400
24,941
4,069
3,474
17,257
2,659
62,970
7,510
34 Allocation of special drawing rights
35 Discrepancy
Due to seasonal adjustment
36
Before seasonal adjustment
37
0
-15,140
0
-12,218
0
26,735
-15,140
-12,218
26,735
0
15,280
1,222
14,058
0
9,215
6,082
3,133
0
14,395
943
13,452
0
-148
-7,319
7,171
0
3,271
292
2,979
78
79
30
n.a.
n.a.
24,328
79.612
31,519
-28,596
-21,330
7,878
37,936
9,646
MEMO
Changes in official assets
38 U.S. official reserve assets (increase, - )
39 Foreign official assets in United States, excluding line 25
(increase, +)
5,763
3,901
-1,379
1,542
-983
822
-544
-673
16,022
38,142
69,335
4,988
11,324
17,303
18,132
22,576
40 Change in Organization of Petroleum Exporting Countries
official assets in United States (part of line 22)
-4,882
5,857
-3,968
2,336
463
-916
-3,244
-271
1. Seasonal factors are not calculated for lines 12-16, 18-20, 22-34, and 38-40.
2. Data are on an international accounts basis. The data differ from the Census
basis data, shown in table 3.11, for reasons of coverage and timing. Military
exports are excluded from merchandise trade data and are included in line 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 • July 1994
U. S. FOREIGN TRADE 1
M i l l i o n s o f dollars; m o n t h l y data s e a s o n a l l y adjusted
1994
1993
Item
1991
1992
1993
Sept.
Oct.
Nov.
Dec.
Jan.
Feb. r
Mar. p
I Goods and services, balance
Merchandise
2
Services
3
-27,920
-73,802
45,882
-39,727
-96,138
56,411
-76,761
-132,439
55,678
-8,183
-12,568
4,385
-8,460
-12,644
4,184
-7,455
-11,351
3,896
-4,148
-8,748
4,600
-6,643r
-ll,349r
4,706
-9,153
-13,516
4,363
-7,459
-12,039
4,580
4 Goods and services, exports
5
Merchandise
Services
6
581,197
416,937
164,260
619,848
440,138
179,710
643,563
456,771
186,792
53,660
38,134
15,526
54,957
39,371
15,586
54,735
39,451
15,284
57,250
41,469
15,781
54,295
38,528
15,767
53,239
37,406
15,833
58,331
42,169
16,162
7 Goods and services, imports
8
Merchandise
9
Services
-609,117
-490,739
-118,378
-659,575
-536,276
-123,299
-720,324
-589,210
-131,114
-61,843
-50,702
-11,141
-63,417
-52,015
-11,402
-62,190
-50,802
-11,388
-61,398
-50,217
-11,181
-60,938r
-49,877 r
-11,061
-62,392
-50,922
-11,470
-65,790
-54,208
-11,582
-66,723
-84,501
-115,738
-10,621
-10,897
-9,679
-7,367
-10,169
-11,990
-10,121
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 o f d o l l a r s , e n d o f p e r i o d
1994
1993
Asset
1 Total
2 Gold stock, including Exchange
Stabilization Fund'
3 Special drawing rights*
4 Reserve position in International
Monetary Fund"
5 Foreign currencies 4
1990
1991
1992
Nov.
Dec.
Jan.
Feb.
Mar.
Apr."
83,316
77,719
71,323
74,550
74,042
73,442
74,243
75,766
76,809
76,565
11,058
10,989
11,057
11,240
11,056
8,503
11,056
9,038
11,054
9,091
11,053
9,039
11,053
9,070
11,053
9,295
11,052
9,383
11,053
9,440
9,076
52,193
9,488
45,934
11,759
40,005
11,908
42,548
11,827
42,070
11,818
41,532
11,906
42,214
11,974
43,444
12,135
44,239
11,899
44,173
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
3.13
Oct.
1981, five currencies have been used. U.S. SDR holdings and reserve positions in
the IMF also have been valued on this basis since July 1974.
3. Includes allocations of SDRs by the International Monetary Fund on Jan. 1
of the year indicated, as follows: 1970—$867 million; 1971—$717 million; 1972—
$710 million; 1979—$1,139 million; 1980—$1,152 million; 1981—$1,093 million;
plus net transactions in SDRs.
4. Valued at current market exchange rates.
FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS 1
Millions of dollars, e n d o f p e r i o d
1994
1993
Asset
1990
1991
1992
Oct.
1 Deposits
Held in custody
i
2 U.S. Treasury securities*
3 Earmarked gold 3
Dec.
Jan.
Feb.
Mar.
Apr. p
369
968
205
390
596
386
257
190
454
171
278,499
13,387
281,107
13,303
314,481
13,118
358,975
12,464
373,864
12,381
379,394
12,327
388,065
12,302
393,238
12,238
399,817
12,145
396,495
12,104
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 at face value.
Nov.
3. Held in foreign and international accounts and valued at $42.22 per fine troy
ounce; not included in the gold stock of the United States.
Summary
3.15
Statistics
A55
SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, e n d o f period
1994
1993
Item
1 Total1
2
3
4
5
6
7
8
9
10
11
12
1991
360,530
1992
398,816
Sept.
Oct.
Nov.
Dec.
Jan.
Feb. r
Mar. p
445,693
444,107
457,129
468,825
478,608 r
477,817 r
479,084
r
r
79,269
148,707
BY type
Liabilities reported by banks in the United States
U.S. Treasury bills and certificates'
U.S. Treasury bonds and notes
Marketable
Nonmarketable
U.S. securities other than U.S. Treasury securities 5
38,396
92,692
54,967
104,596
70,220
139,638
65,668
140,525
67,964
144,865
69,633
150,900
78,546
146,940
203,677
4,858
20,907
210,553
4,532
24,168
200,346
5,542
29,947
201,965
5,579
30,370
208,188
5,615
30,497
211,825
5,652
30,815
216,109 r
5,689
31,324
220,154 r
5,725
30,894
215,271
5,762
30,075
BY area
Europe'
Canada
Latin America and Caribbean
Asia
Africa
Other countries 6
171,317
7,460
33,554
139,465
2,092
6,640
191,708
7,920
40,025
152,276
3,565
3,320
198,254
8,260
54,704
177,164
3,888
3,421
193,676
9,441
54,275
178,889
3,665
4,159
208,790
8,657
50,410
182,437
3,650
3,183
209,229
9,505
57,950
185,289
3,894
2,956
216,794 r
10,084
57,661 r
187,337
3,681
3,049
210,751 r
9,844
61,127 r
189,025
4,043
3,025
217,244
8,328
55,124
191,704
3,559
3,123
77,822
143,222
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.
5. Debt securities of U.S. government corporations and federally sponsored
agencies, and U.S. corporate stocks and bonds.
6. Includes countries in Oceania and Eastern Europe.
SOURCE. Based on Treasury Department data and on data reported to the
Treasury Department by banks (including Federal Reserve Banks) and securities
dealers in the United States and on the 1984 benchmark survey of foreign portfolio
investment in the United States.
3.16
Reported by Banks in the United States 1
LIABILITIES TO, A N D CLAIMS ON, FOREIGNERS
Payable in Foreign Currencies
Millions o f dollars, e n d o f p e r i o d
1993
Item
1 Banks' liabilities
2 Banks' claims
3
Deposits
4
Other claims
5 Claims of banks" domestic customers"
1. Data on claims exclude foreign currencies held by
authorities.
1990
70,477
66,796
29,672
37,124
6,309
U.S. monetary
1991
75,129
73,195
26,192
47,003
3,398
1992
72,796
62,799
24,240
38,559
4,432
Mar.
June
Sept.
Dec.
81,091
64,256
23,142
41,114
2,625
75,206
55,533
20,464
35,069
3,234
81,205
59,116
20,930
38,186
2,640
77,627
60,271
19,379
40,892
3,145
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 • July 1994
LIABILITIES TO FOREIGNERS
P a y a b l e in U . S . dollars
R e p o r t e d by B a n k s in the U n i t e d S t a t e s 1
M i l l i o n s o f dollars, e n d o f p e r i o d
1994
1993
Item
1991
1992
1993
Feb.
Mar. p
Sept.
Oct.
Nov.
Dec.
Jan.
875,947
877,062
893,284
906,003 r
889,604 r
914,239 r
947,255
r
H O L D E R AND TYPE OF LIABILITY
1 Total, all foreigners
Banks' own liabilities
Demand deposits
4
Time deposits
Other 3
Own foreign offices
6
7.
3
7 Banks' custodial liabilities 5
8
U.S. Treasury bills and certificates
Other negotiable and readily transferable
9
instruments 7
Other
10
11 Nonmonetary international and regional
organizations 8
Banks' own liabilities
13
Demand deposits
14
Time deposits
15
Other 3
12
16
17
18
19
Banks' custodial liabilities 5
U.S. Treasury bills and certificates
Other negotiable and readily transferable
instruments 7
Other
7.0 Official institutions 9
Banks' own liabilities
Demand deposits
22
23
Time deposits
24
Other 3
71
25
26
27
28
Banks' custodial liabilities 5
U.S. Treasury bills and certificates
Other negotiable and readily transferable
instruments 7
Other
29 Banks 1 0
30
Banks' own liabilities
Unaffiliated foreign banks
31
32
Demand deposits
33
Time deposits
Other 3
34
35
Own foreign offices
36
37
38
39
Banks' custodial liabilities 5
U.S. Treasury bills and certificates
Other negotiable and readily transferable
instruments 7
Other
40 Other foreigners
41
Banks' own liabilities
Demand deposits
42
43
Time deposits
44
Other 3
45
46
47
48
Banks' custodial liabilities 5
U.S. Treasury bills and certificates
Other negotiable and readily transferable
instruments 7
Other
756,066
810,259
906,003 r
575,374
20,321
159,649
66,305
329,099
606,444
21,828
160,385
93,237
330,994
620,689
21,576 r
174,984
109,873
314,256 r
615,305
25,376
154,405
112,0%
323,428
610,744
22,014
159,375
128,942
300,413
616,209
25,462
156,994
126,845
306,908
620,689
21,576 r
174,984
109,873
314,256 r
608,947
23,488 r
158,943r
129,423r
297,093 r
630,692 r
24,217 r
159,413r
135,769r
311,293 r
648,343
22,728
176,608
112,053
336,954
180,692
110,734
203,815
127,644
285,314 r
176,430
260,642
165,151
266,318
164,365
277,075
169,729
285,314 r
176,430
280,657 r
170,694
283,547 r
166,977
298,912
173,133
18,664
51,294
21,974
54,197
36,078
72,806 r
30,879
64,612
37,562
64,391
38,555
68,791
36,078
72,806 r
37,329
72,634 r
41,829
74,741 r
41,635
84,144
8,981
6,827
43
2,714
4,070
9,350
6,951
46
3,214
3,691
10,846
5,550
15
2,780
2,755
11,409
7,995
21
4,062
3,912
10,994
6,790
71
2,978
3,741
12,965
9,091
34
2,863
6,194
10,846
5,550
15
2,780
2,755
10,869
6,855
21
3,305
3,529
6,999
5,624
120
2,503
3,001
7,768
5,323
22
2,424
2,877
2,154
1,730
2,399
1,908
5,2%
4,275
3,414
3,199
4,204
3,566
3,874
3,201
5,296
4,275
4,014
3,497
1,375
1,321
2,445
2,097
424
0
486
5
1,021
0
215
0
638
0
672
1
1,021
0
517
0
54
0
338
10
131,088
34,411
2,626
16,504
15,281
159,563
51,202
1,302
17,939
31,961
220,533
64,056
1,601
21,634
40,821
209,858
63,619
1,951
20,825
40,843
206,193
60,995
2,121
14,885
43,989
212,829
62,168
2,089
17,188
42,891
220,533
64,056
1,601
21,634
40,821
225,486 r
71,531 r
1,631
20,237 r
49,663 r
221,044 r
67,193 r
1,406
19,958 r
45,829 r
227,976
66,568
1,757
23,713
41,098
96,677
92,692
108,361
104,596
156,477
150,900
146,239
139,638
145,198
140,525
150,661
144,865
156,477
150,900
153,955
146,940
153,851
143,222
161,408
148,707
3,879
106
3,726
39
5,482
95
6,149
452
4,491
182
5,614
182
5,482
95
6,855
160
10,527
102
12,414
287
522,265
459,335
130,236
8,648
82,857
38,731
329,099
547,320
476,117
145,123
10,170
90,296
44,657
330,994
573,924r
474,642
160,386r
9,719 r
105,192
45,475
314,256 r
558,092
470,946
147,518
12,809
83,484
51,225
323,428
553,351
461,827
161,414
9,948
95,704
55,762
300,413
562,372
468,526
161,618
13,369
92,265
55,984
306,908
573,924 r
474,642
160,386r
9,719 r
105,192
45,475
314,256 r
549,192 r
451,260 r
154,167r
11,025 r
87,788 r
55,354
297,093 r
579,543 r
479,125 r
167,832r
11,986r
92,301 r
63,545 r
311,293 r
606,772
497,530
160,576
10,609
104,847
45,120
336,954
62,930
7,471
71,203
11,087
99,282 r
10,707
87,146
11,794
91,524
10,046
93,846
10,539
99,282 r
10,707
97,932 r
9,832
100,418r
11,051
109,242
10,745
5,694
49,765
7,555
52,561
16,810
71,765 r
12,688
62,664
19,106
62,372
17,124
66,183
16,810
71,765 r
17,136
70,964 r
17,010
72,357 r
17,383
81,114
93,732
74,801
9,004
57,574
8,223
94,026
72,174
10,310
48,936
12,928
100,700
76,441
10,241
45,378
20,822
96,588
72,745
10,595
46,034
16,116
106,524
81,132
9,874
45,808
25,450
105,118
76,424
9,970
44,678
21,776
100,700
76,441
10,241
45,378
20,822
104,057
79,301
10,811
47,613
20,877
106,653r
78,750 r
10,705
44,651
23,394 r
104,739
78,922
10,340
45,624
22,958
18,931
8,841
21,852
10,053
24,259
10,548
23,843
10,520
25,392
10,228
28,694
11,124
24,259
10,548
24,756
10,425
27,903
11,383
25,817
11,584
8,667
1,423
10,207
1,592
12,765
946
11,827
1,496
13,327
1,837
15,145
2,425
12,765
946
12,821
1,510
14,238
2,282
11,500
2,733
7,456
9,111
17,567
11,264
17,533
17,089
17,567
17,509
17,888
18,675
MEMO
49 Negotiable time certificates of deposit in custody for
foreigners
1. Reporting banks include all types of depository institution, as well as some
brokers and dealers.
2. Excludes negotiable time certificates of deposit, which are included in
"Other negotiable and readily transferable instruments."
3. Includes borrowing under repurchase agreements.
4. For U.S. banks, includes amounts owed to own foreign branches and foreign
subsidiaries consolidated in Consolidated Report of Condition filed with bank
regulatory agencies. F o r agencies, branches, and majority-owned subsidiaries of
foreign banks, consists principally of amounts owed to head office or parent
foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of
head office or parent foreign bank.
5. Financial claims on residents of the United States, other than long-term
securities, held by or through reporting banks.
6. Includes nonmarketable certificates of indebtedness and Treasury bills
issued to official institutions of foreign countries.
7. Principally bankers acceptances, commercial paper, and negotiable time
certificates of deposit.
8. Principally the International Bank for Reconstruction and Development, the
Inter-American Development Bank, and the Asian Development Bank. Excludes
"holdings of dollars" of the International Monetary Fund.
9. Foreign central banks, foreign central governments, and the Bank for
International Settlements.
10. Excludes central banks, which are included in "Official institutions."
Nonbank-Reported
3.17
Data
LIABILITIES TO FOREIGNERS Reported by Banks in the United States 1 —Continued
1994
1993
Item
1991
1992
1993
Sept.
Feb.r
Jan.
Dec.
Mar.p
Oct.
Nov.
877,062
893,284
906,003 r
889,604 r
914,239 r
947,255
r
r
907,240 r
939,487
368,736 r
2,567
29,402
5,089
1,843
32,244
27,576
1,361
10,702
17,532
2,533
3,131
2,208
19,652
2,301
40,854 r
3,120
130,778
549
35,294 r
393,522 r
2,159
30,624
4,831
1,737
38,429
30,249
1,481
12,742
17,083
2,350
3,170
2,017
18,119
2,429
41,065 r
3,242
148,083
428
33,290"
398,847
2,515
31,827
3,093
1,495
42,009
31,771
1,425
12,786
17,687
2,429
3,131
1,971
19,618
1,067
39,043
2,922
150,528
414
33,116
AREA
1 Total, all foreigners
2 Foreign countries
3 Europe
Austria
4
5
Belgium and L u x e m b o u r g
Denmark
6
Finland
7
France
8
9
Germany
10
Greece
Italy
11
Netherlands
1?
13
Norway
Portugal
14
15
Russia
Spain
16
Sweden
17
Switzerland
18
19
Turkey
United Kingdom
70
Yugoslavia"
71
Other Europe and former U . S . S . R .
22
810,259
906,003 r
747,085
800,909
895,157
r
864,538
866,068
880,319
895,157
249,097
1,193
13,337
937
1,341
31,808
8,619
765
13,541
7,161
1,866
2,184
241
11,391
2,222
37,238
1,598
100,292
622
12,741
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
376,642 r
1,907
28,650
4,517
1,872
39,705
26,617
1,530
11,561
16,031
2,975
3,366
2,511
20,494
2,573
41,588
3,228
133,788
570
33,159"
340,430
1,672
23,635
3,135
2,347
40,622
22,530
1,378
11,285
11,429
2,901
3,180
2,229
20,496
3,474
41,909
2,553
116,267
524
28,864
357,848
1,808
24,641
5,084
2,712
43,034
22,820
1,366
10,466
13,368
2,796
3,215
2,623
20,182
2,355
43,195
2,897
130,941
541
23,804
369,534
1,797
27,541
4,151
2,250
36,638
27,025
1,704
10,734
14,737
3,199
3,229
2,530
19,705
2,672
42,506
2,947
135,712
546
29,911
376,642 r
1,907
28,650
4,517
1,872
39,705
26,617
1,530
11,561
16,031
2,975
3,366
2,511
20,494
2,573
41,588
3,228
133,788
570
33,159 r
756,066
875,947
878,735
21,605
22,420
20,228
24,711
27,452
24,152
20,228
20,589
23,126
21,212
74 Latin America and Caribbean
75
Argentina
Bahamas
76
77
78
79
British West Indies
30
Chile
31
Colombia
37
Cuba
33
Guatemala
34
35
36
Netherlands Antilles
37
Panama
38
39
Peru
Uruguay
40
Venezuela
41
Other
42
345,529
7,753
100,622
3,178
5,704
163,620
3,283
4,661
2
1,232
1,594
231
19,957
5,592
4,695
1,249
2,096
13,181
6,879
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
342,78 l r
14,493
73,077
7,875
5,307
175,710r
3,197 r
3,173
33
881
1,207
410
28,060
4,206
3,625
926
1,617
12,806
6,178
340,502
14,052
79,363
7,239
5,268
169,550
3,867
3,988
6
819
1,278
375
24,487
4,695
3,743
903
1,752
12,868
6,249
327,666
14,320
76,557
8,021
5,057
159,434
3,952
3,025
7
868
1,275
376
24,249
5,283
3,567
873
1,716
12,903
6,183
331,875
13,695
78,354
7,287
5,069
166,637
3,455
3,101
7
851
1,243
401
21,947
4,725
3,468
890
1,643
13,076
6,026
342,781 r
14,493
73,077
7,875
5,307
175,710 r
3,197 r
3,173
33
881
1,207
410
28,060
4,206
3,625
926
1,617
12,806
6,178
338,524 r
14,495
71,687 r
7,794
5,127
171,892 r
3,576
3,587
34
891
1,258
387
27,667
5,139
3,592
880
1,727
12,460
6,331
340,762 r
14,451
72,579
6,750
5,385 r
170,564 r
3,755
3,287
30
858
1,223
420
30,693
6,230
3,474
907
1,537
12,438
6,181
356,355
13,990
77,424
6,181
5,243
186,595
3,572
3,416
38
822
1,163
419
27,523
5,531
3,424
864
1,472
12,670
6,008
43
120,462
143,540
144,653
147,672
141,363
144,476
144,653
140,0%
139,600
152,639
2,626
11,491
14,269
2,418
1,463
2,015
47,069
2,587
2,449
2,252
15,752
16,071
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
10,634
17,233
1,113
1,986
4,436
61,483
4,913
2,035
6,137
15,825
14,847
3,261
9,969
16,388
1,288
1,715
3,241
65,650
2,735
5,846
17,255
15,968
3,280
9,804
16,389
1,251
1,504
5,450
60,171
3,889
2,192
6,446
14,681
16,306
3,187
10,960
18,673
1,425
1,674
4,582
58,866
4,409
1,902
6,231
15,489
17,078
4,011
10,634
17,233
1,113
1,986
4,436
61,483
4,913
2,035
6,137
15,825
14,847
4,075
9,960
18,675
1,436
1,807
4,138
58,606
4,721
1,912
6,156
13,131
15,479
4,535
9,506
17,763
1,127
1,659
4,630
60,112
4,856
1,820
5,838
11,921
15,833
5,294
9,306
18,721
1,658
2,366
4,579
66,530
4,808
2,542
5,985
13,323
17,527
56 Africa
Egypt
57
Morocco
58
59
South Africa
60
Zaire
Oil-exporting countries
61
Other
62
4,825
1,621
79
228
31
1,082
1,784
5,884
2,472
76
190
19
1,346
1,781
6,638
2,209
99
451
12
1,303
2,564
6,127
2,457
86
275
16
1,281
2,012
6,179
2,220
87
367
15
1,271
2,219
5,762
2,089
110
272
10
1,446
1,835
6,638
2,209
99
451
12
1,303
2,564
5,823
1,961
94
214
13
1,186
2,355
6,329
2,060
73
294
8
1,433
2,461
5,745
1,658
89
285
11
1,139
2,563
63 Other
Australia
64
Other
65
5,567
4,464
1,103
4,167
3,043
1,124
4,215 r
3,308
907 r
5,096
4,045
1,051
5,560
4,434
1,126
4,520
3,317
1,203
4,215 r
3,308
907 r
4,967
3,809
1,158
3,901
2,511
1,390
4,689
3,006
1,683
66 Nonmonetary international and regional
organizations
International
Latin American regional
Other regional
8,981
6,485
1,181
1,315
9,350
7,434
1,415
501
11,409
7,679
2,448
1,282
10,994
7,350
2,539
1,105
12,965
9,094
3,050
821
10,846
6,761
3,218
867
10,869
6,357
3,402
1,110
6,999
5,760
357
882
7,768
6,055
332
1,381
23 Canada
44
45
46
47
48
49
50
M
57
53
54
55
China
People's Republic of China
Republic of China (Taiwan)
Hong Kong
Indonesia
Israel
Japan
K o r e a (South)
Philippines
Thailand
Middle Eastern oil-exporting countries 1 3
Other
67
68
69
11. Since December 1992, has excluded Bosnia, Croatia, and Slovenia.
12. Includes the Bank for International Settlements. Since December 1992,
includes 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, G a b o n , Libya, and Nigeria.
10,846
6,761
3,218
867
4,356
15. Principally the International Bank for Reconstruction and Development.
Excludes "holdings of dollars" of the International Monetary F u n d .
16. Principally the Inter-American Development Bank.
17. Asian, African, Middle Eastern, and E u r o p e a n regional organizations,
except the Bank for International Settlements, which is included in " O t h e r
Western E u r o p e . "
A57
A58
3.18
International Statistics • July 1994
B A N K S ' O W N C L A I M S O N F O R E I G N E R S R e p o r t e d b y B a n k s in the U n i t e d S t a t e s 1
P a y a b l e in U . S . D o l l a r s
M i l l i o n s o f dollars, e n d o f p e r i o d
1993
Area and country
1 Total, all foreigners
2 Foreign countries
3 Europe
4
Austria
Belgium and Luxembourg
5
Denmark
6
Finland
7
France
8
Germany
9
Greece
10
11
Italy
Netherlands
12
13
Norway
Portugal
14
Russia
15
Spain
16
Sweden
17
18
Switzerland
Turkey
19
United Kingdom
20
21
Yugoslavia 2
Other Europe and former U . S . S . R . 3
22
1991
1992
499,437
483,152 r
508,056
494,355
480,747
r
114,310
327
6,158
686
1,907
15,112
3,371
553
8,242
2,546
669
344
1,970
1,881
2,335
4,540
1,063
60,395
825
1,386
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
121,036
413
6,535
382
598
11,490
7,683
679
8,876
3,064
396
720
2,295
2,763
4,100
6,567
1,287
60,930
536
1,722
514,339
1994
1993
Sept.
Oct.
Nov.
Dec.
477,188
465,861
468,770
483,152 r
470,679 r
477,339
481,232
r
467,566 r
475,645
479,518
114,390r
720r
5,169 r
507
699
11,705
7,364
653 r
8,950
3,878
738
805
2,142
3,299
3,704
7,177
1,118
53,219*
470
2,073
124,661
598
6,327
600
725
11,033
7,966
669
8,477
2,761
777
918
2,005
2,688
3,608
4,535
1,627
66,993
414
1,940
129,682
489
6,762
612
570
11,484
8,164
736
7,666
2,939
531
936
1,957
2,668
3,443
8,602
1,559
68,137
376
2,051
474,809
464,618
466,569
480,747
124,259
457
6,589
631
594
10,974
7,994
629
8,971
3,383
841
787
2,547
3,652
4,630
5.216
1.418
62.508
542
1,8%
124,593
568
5,516
1,056
730
11,516
7,570
592
8,035
3,163
779
826
2,581
4,747
4,111
4,647
1,638
64,044
535
1,939
120,650
501
5,911
1,261
606
11,622
6,961
684
8,402
3,607
598
787
2,295
4,388
3,531
5,946
1,790
59,403
549
1,808
121,036
413
6,535
382
598
11,490
7,683
679
8,876
3,064
396
720
2,295
2,763
4,100
6,567
1,287
60,930
536
1,722
Jan.
Feb.
Mar."
15,113
13,845
18,432
19,007
15,697
15,478
18,432
19,126
16,884
16,985
24 Latin America and Caribbean
Argentina
25
Bahamas
26
Bermuda
27
28
Brazil
British West Indies
29
30
Chile
Colombia
31
Cuba
32
Ecuador
33
Guatemala
34
Jamaica
35
36
Mexico
Netherlands Antilles
37
Panama
38
39
Peru
Uruguay
40
41
Venezuela
Other
42
246,137
5,869
87,138
2,270
11,894
107,846
2,805
2,425
0
1,053
228
158
16,567
1,207
1,560
739
599
2,516
1,263
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
223,967 r
4,425
65,045
8,032
11,803
97,930 r
3,614
3,179
0
673
286
195
15,833
2,367
2,913
651
951
2,904 r
3,166
215,660
4,715
60,906
5,550
11,294
97,409
3,832
2,921
0
701
244
183
15,750
3,155
2,370
617
926
2,835
2,252
212,002
4,390
60,350
8,915
11,675
90,041
3,857
2,957
0
707
269
175
16,155
3,310
2,491
636
926
2,815
2,333
216,687
4,518
63,242
7,565
11,677
92,621
3,728
3,040
0
704
286
186
16,073
3,048
2,625
620
918
3,054
2,782
223,967 r
4,425
65,045
8,032
11,803
97,930 r
3,614
3,179
0
673
286
195
15,833
2,367
2,913
651
951
2,904 r
3,166
226,04 l r
4,569
66,411
10,234
12,719
94,348 r
3,546
3,241
0
679
316
180
16,466r
3,115
2,843
693
793
2,763 r
3,125
226,228
4,459
65,439
9,969
12,841
95,230
3,763
3,053
2
722
294
176
16,827
3,093
2,983
726
742
2,709
3,200
226,951
4,633
66,023
8,322
12,907
99,243
3,659
3,057
0
702
288
162
15,974
2,406
2,474
748
530
2,644
3,179
43
125,262
131,789
110,684
109,020
105,497
107,541
110,684
101,406 r
101,501
98,890
747
2,087
9,617
441
952
860
84,807
6,048
1,910
1,713
8,284
7,7%
906
2,046
9,642
529
1,189
820
79,172
6,179
2,145
1,867
18,540
8,754
2,299
2,628
10,864
589
1,522
826
59,576
7,556
1,408
2,154
14,398
6,864
700
1,594
11,155
585
1,330
747
60,163
7,106
1,143
2,143
14,251
8,103
773
1,674
9,640
635
1,268
752
60,283
7,133
1,168
2,145
13,580
6,446
706
2,003
10,449
657
1,474
787
59,934
7,148
1,265
2,110
13,853
7,155
2,299
2,628
10,864
589
1,522
826
59,576
7,556
1,408
2,154
14,398
6,864
881
2,611
10,224 r
638
1,556
947 r
54,164
7,373
1,132
2,375 r
12,903
6,602 r
842
1,487
9,990
664
1,532
798
54,583
7,503
1,183
2,543
13,190
7,186
7%
2,158
11,662
737
1,605
675
49,838
7,464
1,307
2,651
14,153
5,844
56 Africa
Egypt
57
Morocco
58
South Africa
59
Zaire
60
Oil-exporting countries 5
61
Other
62
4,928
294
575
1,235
4
1,298
1,522
4,279
186
441
1,041
4
1,002
1,605
3,819
196
444
633
4
1,128
1,414
4,023
176
454
713
3
1,206
1,471
3,919
160
433
663
3
1,187
1,473
3,799
218
437
664
4
1,119
1,357
3,819
196
444
633
4
1,128
1,414
3,746
198
489
581
4
1,169
1,305
3,770
222
521
558
6
1,197
1,266
3,690
205
511
564
4
1,210
1,1%
63 Other
Australia
64
Other
65
2,306
1,665
641
2,987
2,243
744
2,809
2,072
737
2,840
2,414
426
2,910
2,401
509
2,414
1,873
541
2,809
2,072
737
2,857
2,030
827
2,601
1,692
909
3,320
1,684
1,636
66 Nonmonetary international and regional
organizations 6
6,283
5,082
2,405
2,379
1,243
2,201
2,405
3,113
1,694
1,714
23 Canada
44
45
46
47
48
49
50
51
52
53
54
55
China
People's Republic of China
Republic of China (Taiwan)
Hong Kong
India
Indonesia
Israel
Japan
Korea (South)
Philippines
Thailand
Middle Eastern oil-exporting countries 4
Other
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,
includes 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 Western E u r o p e . "
Nonbank-Reported
3.19
BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS
United States'
Payable in U.S. Dollars
Data
Reported by Banks in the
Millions of dollars, e n d o f period
1994
1993
Sept.
2 Banks' claims
Foreign public borrowers
3
Own foreign offices
4
Unaffiliated foreign banks
5
Deposits
6
7
Other
All other foreigners
8
9 Claims of banks' domestic c u s t o m e r s 3 . . .
10
Deposits
Negotiable and readily transferable
11
instruments 4
Outstanding collections and other
12
claims
Nov.
Dec.
559,495
523,562r
518,469
514,339
37,126
318,800
116,602
69,018
47,584
41,811
499,437
31,367
303,991
109,342
61,550
47,792
54,737
r
483,152
28,814 r
286,848 r
98,018 r
46,875 r
51,143
69,472
477,188
31,925
286,710
96,000
44,928
51,072
62,553
65,344
15,280
60,058
15,452
40,410
9,619
41,281
9,343
37,125
31,474
17,155
18,475
17,155
12,939
13,132
13,636
13,463
13,636
8,974
8,655
7,871
8,190
7,871
43,024
36,213
22,733
24,507
579,683
1 Total
Oct.
Jan. r
Feb.
Mar. p
470,679
30,677
275,478
90,994
40,662
50,332
73,530
477,339
26,649
273,611
97,724
45,813
51,911
79,355
481,232
25,494
287,901
94,101
44,068
50,033
73,736
21,569
21,350
523,562 r
465,861
31,320
269,968
91,888
43,777
48,111
72,685
468,770
29,761
279,876
92,030
44,005
48,025
67,103
483,152 r
28,814 r
286,848 r
98,018 r
46,875 r
51,143
69,472
40,410
9,619
MEMO
13 Customer liability on acceptances
14 Dollar deposits in banks abroad,
reported by nonbanking business
enterprises in the United S t a t e s 5 . . . .
1. For banks' claims, data are monthly; for claims of banks' domestic customers, data are quarterly.
Reporting banks include all types of depository institution, as well as some
brokers and dealers.
2. For U.S. banks, includes amounts due from own foreign branches and
foreign subsidiaries consolidated in Consolidated Report of Condition filed with
bank regulatory agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists principally of amounts due from head office or parent
3.20
27,002
21,830
22,733
foreign bank, and foreign branches, agencies, or wholly owned subsidiaries of
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.
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS
Payable in U.S. Dollars
Reported by Banks in the United States 1
Millions of dollars, end of period
1993
Maturity, by borrower and area 2
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
All other 3
Maturity of more than one year
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other 3
1990
1991
Mar.
June
Sept.
Dec.
206,903
195,302
195,119
182,205
182,975
189,716
194,838
165,985
19,305
146,680
40,918
22,269
18,649
162,573
21,050
141,523
32,729
15,859
16,870
163,325
17,813
145,512
31,794
13,266
18,528
151,986
21,239
130,747
30,219
12,214
18,005
154,312
17,962
136,350
28,663
11,255
17,408
162,005
21,211
140,794
27,711
10,507
17,204
166,288
17,447
148,841
28,550
10,828
17,722
49,184
5,450
49,782
53,258
3,040
5,272
51,835
6,444
43,597
51,059
2,549
7,089
53,300
6,091
50,376
45,709
1,784
6,065
54,838
7,874
45,082
37,741
1,677
4,774
54,372
7,893
48,552
38,654
1,712
3,129
57,238
9,833
51,619
37,624
1,916
3,775
56,273
7,564
56,686
40,274
1,783
3,708
3,859
3,290
25,774
5,165
2,374
456
3,878
3,595
18,277
4,459
2,335
185
5,367
3,287
15,312
5,038
2,380
410
4,896
3,120
14,574
5,063
2,130
436
4,579
2,909
13,828
4,808
2,050
489
4,433
2,549
13,519
4,732
2,049
429
4,327
2,553
13,877
5,412
1,934
447
1. Reporting banks include all kinds of depository institutions besides commercial banks, as well as some brokers and dealers.
1992
2. Maturity is time remaining to maturity,
3. Includes nonmonetary international and regional organizations.
A59
A60
3.21
International Statistics • July 1994
CLAIMS ON FOREIGN COUNTRIES
Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks 1
B i l l i o n s o f dollars, e n d o f p e r i o d
1991
Area or country
1989
1992
1993
1990
Dec.
Mar.
June
Sept.
Dec.
Mar.
June
Sept.
Dec. p
340.9
320.1
343.6
351.7
358.7
344.5
346.5
361.0
377.1
388.1
403.3
152.9
6.3
11.7
10.5
7.4
3.1
2.0
7.1
67.2
5.4
32.3
132.2
5.9
10.4
10.6
5.0
3.0
2.2
4.4
60.9
5.9
24.0
137.6
6.0
11.0
8.3
5.6
4.7
1.9
3.4
68.5
5.8
22.6
130.9
5.3
10.0
8.4
5.4
4.3
2.0
3.2
64.7
6.5
21.1
135.6
6.2
11.9
8.8
8.0
3.3
1.9
4.6
65.6
6.5
18.7
136.0
6.2
15.3
10.9
6.4
3.7
2.2
5.2
61.0
6.3
18.9
132.9
5.6
15.3
9.3
6.5
2.8
2.3
4.8
60.8
6.3
19.3
142.4
6.1
13.5
9.9
6.7
3.6
3.0
5.3
65.7
8.2
20.4
150.1
7.0
14.0
10.8
7.9
3.7
2.5
4.7
73.5
8.1
17.9
153.4
7.1
12.3
12.4
8.7
3.7
2.5
5.6
74.7
9.7
16.9
160.9
7.4
11.7
12.6
7.6
4.7
2.5
5.9
84.4
6.6
17.4
13 Other industrialized countries
14
Austria
15
Denmark
16
Finland
17
Greece
18
Norway
19
Portugal
20
Spain
21
Turkey
22
Other Western Europe
23
South Africa
24
Australia
21.0
1.5
1.1
1.0
2.5
1.4
.4
7.1
1.2
1.0
2.0
1.6
22.9
1.4
1.1
.7
2.7
1.6
.6
8.3
1.7
1.2
1.8
1.8
22.8
.6
.9
.7
2.6
1.4
.6
8.3
1.4
1.8
1.9
2.7
21.4
.8
.8
.8
2.3
1.5
.5
7.7
1.2
1.5
1.8
2.3
25.5
.8
1.3
.8
2.8
1.7
.5
10.1
1.5
2.0
1.7
2.2
25.0
.7
1.5
1.0
3.0
1.6
.5
9.7
1.5
1.5
1.7
2.3
24.0
1.2
.9
.7
3.0
1.2
.4
8.9
1.3
1.7
1.7
2.9
25.4
1.2
.8
.7
2.7
1.8
.7
9.5
1.4
2.0
1.6
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
25 OPEC 2
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries
17.1
1.3
7.0
2.0
5.0
1.7
12.8
1.0
5.0
2.7
2.5
1.7
14.5
.7
5.4
2.7
4.2
1.5
15.8
.7
5.4
3.0
5.3
1.4
16.2
.7
5.3
3.0
5.9
1.4
15.9
.7
5.4
3.0
5.4
1.4
16.1
.6
5.2
3.0
6.2
1.1
16.8
.6
5.3
3.1
6.6
1.1
15.9
.6
5.6
3.1
5.4
1.1
14.9
.5
5.6
2.8
4.9
1.1
16.9
.5
5.3
3.2
6.7
1.2
31 Non-OPEC developing countries
77.5
65.4
63.9
69.7
68.1
72.8
72.1
74.4
76.6
76.9
82.5
6.3
19.0
4.6
1.8
17.7
.6
2.8
5.0
14.4
3.5
1.8
13.0
.5
2.3
4.8
9.6
3.6
1.7
15.5
.4
2.1
5.0
10.8
3.9
1.6
17.7
.4
2.2
5.1
10.6
4.0
1.6
16.3
.4
2.2
6.2
10.8
4.2
1.7
17.1
.5
2.5
6.6
10.8
4.4
1.8
16.0
.5
2.6
7.0
11.6
4.6
1.9
16.8
.4
2.6
6.6
12.3
4.6
1.9
16.8
.4
2.7
7.2
11.6
4.7
2.0
17.5
.3
2.6
7.7
12.0
4.7
2.1
17.7
.4
3.0
39
40
41
42
43
44
45
46
47
Asia
China
Peoples Republic of China
Republic of China (Taiwan)
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia 3
.3
4.5
3.1
.7
5.9
1.7
4.1
1.3
1.0
.2
3.5
3.3
.5
6.2
1.9
3.8
1.5
1.7
.3
4.1
3.0
.5
6.8
2.3
3.7
1.7
2.0
.3
4.8
3.6
.4
6.9
2.5
3.6
1.7
2.3
.3
4.6
3.8
.4
6.9
2.7
3.1
1.9
2.5
.3
5.0
3.6
.4
7.4
3.0
3.6
2.2
2.7
.7
5.2
3.2
.4
6.6
3.1
3.6
2.2
2.7
.6
5.3
3.1
.5
6.5
3.4
3.4
2.2
2.7
1.6
5.9
3.1
.4
6.9
3.7
2.9
2.4
2.6
.5
6.4
2.9
.4
6.5
4.1
2.6
2.8
3.0
2.0
7.3
3.2
.5
6.7
4.4
3.1
3.1
2.9
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa 3
.4
.9
.0
1.0
.4
.8
.0
1.0
.4
.7
.0
.7
.3
.7
.0
.7
.5
.7
.0
.6
.3
.6
.0
.9
.2
.6
.0
1.0
.2
.5
.0
.8
.2
.6
.0
.9
.2
.6
.0
.8
.4
.6
.0
.8
52 Eastern Europe
53
Russia
Yugoslavia
54
55
Other
3.5
.7
1.6
1.3
2.3
.2
1.2
.9
2.4
.9
.9
.7
2.9
1.4
.8
.6
3.0
1.7
.7
.6
3.1
1.8
.7
.7
3.1
1.9
.6
.6
2.9
1.7
.6
.7
3.2
1.9
.6
.7
3.0
1.7
.6
.7
3.0
1.6
.6
.9
56 Offshore banking centers
57
Bahamas
58
Bermuda
59
Cayman Islands and other British West Indies
Netherlands Antilles
60
61
Panama 4
62.
Lebanon
63
Hong Kong
Singapore
64
65
Other 5
38.4
5.5
1.7
9.0
2.3
1.4
.1
11.3
7.0
.0
44.7
2.9
4.4
11.7
7.9
1.4
.1
9.7
6.6
.0
54.2
11.9
2.3
15.8
1.2
1.4
.1
14.4
7.1
.0
63.0
15.3
3.9
18.6
1.0
1.6
.1
14.0
8.5
.0
61.4
12.9
5.1
19.3
.8
1.9
.1
14.9
6.4
.0
54.5
8.9
3.8
16.9
.7
2.0
.1
15.2
6.8
.0
58.3
6.9
6.2
21.8
1.1
1.9
.1
13.8
6.5
.0
60.1
9.6
4.1
17.6
1.6
2.0
.1
16.7
8.4
.0
57.8
6.9
4.5
15.6
2.5
2.1
.1
16.9
9.3
.0
67.5
12.4
5.5
15.1
2.8
2.1
.1
19.1
10.4
.0
72.0
12.6
8.1
16.5
2.3
2.4
.1
18.7
11.2
.1
66 Miscellaneous and unallocated 6
30.5
39.9
48.0
47.8
48.6
36.8
39.7
38.8
46.2
46.3
43.3
1 Total
2 G-10 countries and Switzerland
3
Belgium and Luxembourg
4
France
5
Germany
6
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
Other
1. The banking offices covered by these data are the U.S. offices and foreign
branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks.
Offices not covered include (1) U.S. agencies and branches of foreign banks, and
(2) foreign subsidiaries of U.S. banks. U.S. office data include other types of
U.S.-owned depository institutions as well as some types of brokers and dealers.
To minimize duplication, the data are adjusted to exclude the claims on foreign
branches held by a U.S. office or another foreign branch of the same banking
institution. The data in this table combine foreign branch claims in table 3.14 (the
sum of lines 7 through 10) with the claims of U.S. offices in table 3.18 (excluding
those held by agencies and branches of foreign banks and those constituting
claims on own foreign branches).
Since June 1984, reported claims held by foreign branches have been reduced
by an increase in the reporting threshold for "shell" branches from $50 million to
$150 million equivalent in total assets, the threshold now applicable to all
reporting branches.
2. Organization of Petroleum Exporting Countries, shown individually; other
members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar,
Saudi Arabia, and United Arab Emirates); and Bahrain and Oman (not formally
members of OPEC).
3. Excludes Liberia.
4. Includes Canal Zone.
5. Foreign branch claims only.
6. Includes New Zealand, Liberia, and international and regional
organizations.
Nonbank-Reported
3.22
Data
A61
L I A B I L I T I E S T O U N A F F I L I A T E D F O R E I G N E R S R e p o r t e d b y N o n b a n k i n g B u s i n e s s E n t e r p r i s e s in
the United States1
M i l l i o n s o f d o l l a r s , e n d o f period
1993
1992
Type of liability and area or country
1990
1991
1992
Sept.
Dec.
Mar.
June
Sept.
Dec. p
1 Total
46,043
44,708
45,351
47,089
45,351
46,181
46,424
48,674
49,453
2 Payable in dollars
3 Payable in foreign currencies
40,786
5,257
39,029
5,679
37,209
8,142
38,344
8,745
37,209
8,142
37,823
8,358
37,014
9,410
39,280
9,394
37,804
11,649
By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies
21,066
16,979
4,087
22,518
18,104
4,414
23,380
16,623
6,757
24,518
17,453
7,065
23,380
16,623
6,757
23,947
17,021
6,926
24,714
16,870
7,844
26,067
18,635
7,432
27,445
18,112
9,333
7 Commercial liabilities
8
Trade payables
9
Advance receipts and other liabilities . . .
24,977
10,683
14,294
22,190
9,252
12,938
21,971
9,886
12,085
22,571
10,234
12,337
21,971
9,886
12,085
22,234
10,005
12,229
21,710
9,687
12,023
22,607
9,483
13,124
22,008
9,011
12,997
23,807
1,170
20,925
1,265
20,586
1,385
20,891
1,680
20,586
1,385
20,802
1,432
20,144
1,566
20,645
1,962
19,692
2,316
10,978
394
975
621
1,081
545
6,357
12,003
216
2,106
682
1,056
408
6,528
13,101
414
1,608
810
606
569
8,424
14,334
256
2,785
738
980
627
8,146
13,101
414
1,608
810
606
569
8,424
13,461
306
1,610
820
639
503
9,029
14,060
268
2,216
787
585
491
9,058
16,341
278
2,074
779
573
378
11,669
17,862
175
2,323
902
534
634
12,690
10
11
12
13
14
15
16
17
18
Payable in dollars
Payable in foreign currencies
By area or country
Financial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
19
Canada
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
27
28
29
Asia
Japan
Middle East oil-exporting countries
30
Africa
31
32
33
34
35
36
37
38
39
40
..
Oil-exporting countries
All other 4
Commercial liabilities
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
229
292
516
345
516
576
492
663
859
4,153
371
0
0
3,160
5
4
4,784
537
114
6
3,524
7
4
4,053
369
114
19
2,860
12
6
3,997
230
115
18
2,933
12
5
4,053
369
114
19
2,860
12
6
4,299
521
114
18
2,970
13
5
4,199
426
124
18
2,951
11
5
3,719
1,301
114
18
1,600
15
5
3,359
1,148
0
18
1,533
17
5
5,295
4,065
5
5,381
4,116
13
5,676
4,608
19
5,752
4,678
17
5,676
4,608
19
5,550
4,539
24
5,793
4,611
19
5,194
4,165
23
5,203
4,134
23
2
0
6
4
6
0
5
0
6
0
6
0
130
123
132
124
133
123
409
52
28
85
28
55
40
18
29
10,310
275
1,218
1,270
844
775
2,792
8,701
248
1,039
1,052
710
575
2,297
7,377
296
697
717
535
349
2,503
7,478
173
756
851
601
482
2,268
7,377
296
697
717
535
349
2,503
6,985
262
705
650
537
471
2,117
6,801
267
773
603
577
440
2,185
7,045
255
640
571
601
535
2,319
6,809
238
646
684
687
373
2,053
1,261
1,014
1,002
1,114
1,002
1,005
941
847
881
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,672
12
538
145
30
475
130
1,355
3
310
219
107
307
94
1,532
3
307
209
33
457
142
1,515
3
325
121
85
326
147
1,532
3
307
209
33
457
142
1,776
11
429
236
34
553
171
1,828
6
356
226
16
659
172
1,759
4
340
214
36
577
173
1,661
21
348
216
26
485
126
48
49
50
Asia
Japan
Middle Eastern oil-exporting countries'
9,483
3,651
2,016
9,334
3,721
1,498
10,917
3,951
1,889
11,026
3,918
1,813
10,917
3,951
1,889
11,067
4,035
1,796
10,823
3,715
1,815
11,736
4,546
1,934
11,620
5,097
1,543
51
52
Africa
Oil-exporting countries
844
422
715
327
568
309
675
335
568
309
675
322
665
378
641
320
445
153
53
Other 4
1,406
1,071
575
763
575
726
652
579
592
1. For a description of the changes in the international statistics tables, see
Federal Reserve Bulletin, vol. 65, (July 1979), p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
5. Revisions include a reclassification of transactions, which also affects the
totals for Asia and the grand totals.
A62
3.23
International Statistics • July 1994
CLAIMS ON UNAFFILIATED FOREIGNERS
the United States1
R e p o r t e d by N o n b a n k i n g B u s i n e s s E n t e r p r i s e s in
M i l l i o n s of dollars, e n d o f p e r i o d
1992
Type, and area or country
1990
1991
1993
1992
Sept.
Dec.
Mar.
June
Sept.
Dec. p
1 Total
35,348
45,262
41,894
46,271
41,894
45,784
41,470
42,003
42,552
2 Payable in dollars
3 Payable in foreign currencies
32,760
2,589
42,564
2,698
39,287
2,607
43,297
2,974
39,287
2,607
42,904
2,880
38,346
3,124
38,732
3,271
39,022
3,530
By type
4 Financial claims
Deposits
5
Payable in dollars
6
Payable in foreign currencies
7
Other financial claims
8
Payable in dollars
9
Payable in foreign currencies
10
19,874
13,577
12,552
1,025
6,297
5,280
1,017
27,882
20,080
19,080
1,000
7,802
6,910
892
23,532
15,100
14,302
798
8,432
7,667
765
28,573
19,524
18,387
1,137
9,049
8,028
1,021
23,532
15,100
14,302
798
8,432
7,667
765
26,064
16,508
15,450
1,058
9,556
8,803
753
21,808
11,646
10,728
918
10,162
9,238
924
23,324
13,286
12,307
979
10,038
9,279
759
23,047
12,981
12,171
810
10,066
9,096
970
11 Commercial claims
Trade receivables
12
Advance payments and other claims
13
15,475
13,657
1,817
17,380
14,468
2,912
18,362
15,804
2,558
17,698
14,755
2,943
18,362
15,804
2,558
19,720
17,364
2,356
19,662
17,180
2,482
18,679
15,698
2,981
19,505
16,291
3,214
14
15
14,927
548
16,574
806
17,318
1,044
16,882
816
17,318
1,044
18,651
1,069
18,380
1,282
17,146
1,533
17,755
1,750
9,645
76
371
367
265
357
7,971
13,441
13
269
283
334
581
11,534
9,310
8
762
326
515
490
6,234
11,301
16
768
292
750
587
8,078
9,310
8
762
326
515
490
6,234
10,321
6
905
388
544
478
6,968
9,620
13
781
383
499
460
6,550
8,251
9
708
361
485
454
5,227
8,042
131
749
472
483
506
4,535
16
17
18
19
20
21
22
Payable in dollars
Payable in foreign currencies
By area or country
Financial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
23
Canada
2,934
2,642
1,709
2,281
1,709
2,007
1,781
1,593
1,810
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
6,201
1,090
3
68
4,635
177
25
10,717
827
8
351
9,056
212
40
11,122
658
40
686
9,266
286
29
13,837
1,248
65
589
11,492
239
26
11,122
658
40
686
9,266
286
29
9,718
320
79
592
8,266
235
23
6,704
697
258
590
4,650
270
24
10,067
494
197
590
8,109
385
25
10,868
452
125
599
8,614
634
161
31
32
33
Asia
Japan
Middle East oil-exporting countries
860
523
8
640
350
5
807
643
3
717
471
4
807
643
3
3,263
3,066
3
2,961
2,444
10
2,709
2,199
5
1,751
1,063
3
34
35
Africa
Oil-exporting countries
37
0
57
1
79
9
71
1
79
9
128
1
125
1
88
1
99
1
195
385
505
366
505
627
617
616
477
7,044
212
1,240
807
555
301
1,775
8,193
194
1,585
955
645
295
2,086
8,401
189
1,525
931
551
362
2,081
8,196
174
1,825
900
589
308
2,011
8,401
189
1,525
931
551
362
2,081
8,744
170
1,476
974
730
436
2,326
8,885
172
1,488
979
560
442
2,514
7,975
163
1,394
898
399
376
2,213
8,418
182
1,754
953
387
417
2,176
36
37
38
39
40
41
42
43
All other
4
Commercial claims
Europe
Belgium and Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
1,074
1,121
1,258
1,155
1,258
1,312
1,330
1,326
1,284
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,375
14
246
326
40
661
192
2,655
13
264
427
41
842
203
3,024
28
255
356
40
920
344
3,225
12
256
410
43
977
307
3,024
28
255
356
40
920
344
3,431
18
195
834
17
985
341
3,414
17
239
786
43
898
314
3,023
20
225
406
39
848
282
3,145
11
173
442
69
925
293
52
53
54
Asia
Japan
Middle Eastern oil-exporting countries 2
4,127
1,460
460
4,591
1,899
620
4,764
1,879
682
4,328
1,779
513
4,764
1,879
682
5,360
2,145
761
5,113
1,853
659
5,439
2,496
446
5,689
2,338
645
55
56
Africa
Oil-exporting countries
488
67
430
95
552
78
439
60
552
78
457
75
510
98
487
107
488
71
57
Other 4
367
390
363
355
363
416
410
429
481
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
M i l l i o n s of dollars
1994
Transaction and area or country
1992
1994
1993
1993
Jan.Mar.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar. p
U.S. corporate securities
STOCKS
1 Foreign purchases
2 Foreign sales
221,367
226,503
319,449
297,913
103,012
96,748
23,892
23,023
32,350
27,840
31,924
28,755
32,843
28,362
32,238
28,965
34,428
30,709
36,346
37,074
3 Net purchases or sales (—)
-5,136
21,536
6,264
869
4,510
3,169
4,481
3,273
3,719
-728
4 Foreign countries
-5,169
21,264
6,333
951
4,598
3,099
4,457
3,273
3,786
-726
-4,927
-1,350
-80
-262
168
-3,301
1,407
2,203
-88
-3,943
-3,598
10
169
10,615
-103
1,647
-603
2,986
4,510
-3,213
5,709
-311
8,199
3,826
63
202
6,789
-278
1,942
224
857
2,218
-29
1,827
-56
-2,583
-1,362
6
379
434
-152
112
69
-259
570
-596
139
10
977
1,016
3
-16
3,095
198
328
134
409
1,709
-300
1,245
-77
602
349
5
28
1,407
45
130
-767
205
1,470
11
941
53
601
488
6
80
2,415
61
266
183
338
1,078
-110
1,058
11
965
681
20
98
2,951
119
1,170
169
254
614
314
948
-100
-911
-800
10
61
3,447
190
440
210
505
1,215
-284
910*
-17
-379r
-447
-17
126
33
272
-69
-82
-88
70
24
0
214,922
175,842
283,745
217,481
77,205
63,476
24,845
16,294
27,565
18,938
28,947
21,545
28,395
17,427
24,607
19,418
22,233 r
18,309
30,365
25,749
r
4,616
5
6
7
8
9
10
11
12
13
14
15
16
17
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Japan
Africa
Other countries
18 Nonmonetary international and
regional organizations
-67
391
-587
332
-155
98
389
-59
-31
61
-1,293
-115
13
192
-2
BONDS2
19 Foreign purchases
20 Foreign sales
21 Net purchases or sales ( - )
39,080
66,264
13,729
8,551
8,627
7,402
10,968
5,189
3,924
22 Foreign countries
37,964
65,726
13,627
7,865
8,488
7,375
10,901
5,205
3,893 r
4,529
23
24
75
76
77
7.8
79
30
31
37.
33
34
35
17,435
1,203
2,480
540
-579
12,421
237
9,300
3,166
7,545
-450
354
-73
22,055
2,346
883
-290
-627
19,158
1,653
16,493
3,257
20,846
11,569
1,149
273
7,448
28
-75
504
364
7,584
-17
4,397
137
1,567
-421
-51
146
3,913
13
-419
219
-204
4,059
249
846
171
2,373
993
236
77
3,973
512
913
-518
203
2,666
95
1,727
375
2,256
1,574
47
15
1,534
110
-231
49
-80
2,300
54
2,650
432
2,765
1,478
-2
-58
3,118
145
-62
95
28
2,853
319
3,681
383
3,137
2,477
119
144
2,742
53
-101
75
176
1,676
23
1,638
161
670
-95
-51
22
2,680 r
-57
90
99
57
2,761
-141
909
-83
480
37
10
38
2,026
32
-64
330
131
3,147
101
1,850
59
417
-363
-10
86
1,116
538
102
686
139
27
67
-16
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Japan
Africa
Other countries
36 Nonmonetary international and
regional organizations
31
87
Foreign securities
37 Stocks, net purchases or sales ( - ) 3
Foreign purchases
38
39
Foreign sales
40 Bonds, net purchases or sales ( - )
Foreign purchases
41
Foreign sales
42
-32,259
150,051
182,310
-15,605
513,589
529,194
-63,320
246,011
309,331
-61,023
839,118
900,141
-17,819
107,714
125,533
-10,957
288,925
299,882
-5,236
21,475
26,711
-9,903
80,145
90,048
-7,474
24,740
32,214
-2,479
76,034
78,513
-6,931
28,408
35,339
-54
87,459
87,513
-6,503
31,135
37,638
-8,158
79,334
87,492
-5,860
32,432
38,292
-9,483r
84,223
93,706 r
—6,248r
38,374 r
44,622 r
-4,728r
85,847 r
90,575 r
-5,711
36,908
42,619
3,254
118,855
115,601
43 Net purchases or sales ( - ) , of stocks and bonds
-47,864
-124,343
-28,776
-15,139
-9,953
-6,985
-14,661
-15,343'
-10,976'
-2,457
44 Foreign countries
-51,274
-124,504
-28,664
-15,215
-10,302
-6,994
-14,691
—15,386r
-10,844'
-2,434
45
46
47
48
49
50
-31,350
-6,893
-4,340
-7,923
-13
-755
-81,175
-14,649
-9,549
-15,044
-185
-3,902
-1,969
-4,511
-6,325
-15,102
-244
-513
-13,217
-1,404
1,905
-2,221
14
-292
-5,004
-949
-1,280
-2,002
14
-1,081
-4,530
709
-2,248
-502
0
-423
-4,351
-1,733
-4,566
-3,555
13
-499
-5,512
-2,741
-3,124r
-3,171r
-60
-778
-3,599 r
-2,416r
-327r
-4,450r
18
-70
7,142
646
-2,874
-7,481
-202
335
3,410
161
-112
76
349
9
30
43
Europe
Canada
Latin America and Caribbean
Africa
Other countries
51 Nonmonetary international and
regional organizations
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait,
Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States).
2. includes state and local government securities and securities of U.S.
government agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. corporations organized to finance direct investments
abroad.
-132
-23
3. In a July 1989 merger, the former stockholders of a U.S. company received
$5,453 million in shares of the new combined U.K. company. This transaction is
not reflected in the data.
A64
3.25
International Statistics • July 1994
MARKETABLE U.S. TREASURY BONDS A N D NOTES
Foreign Transactions
M i l l i o n s o f dollars
1994
Country or area
1992
1994
1993
1993
Jan.Mar.
Sept.
Oct.
Nov.
Dec.
Mar. p
Feb.
Jan.
Transactions, net purchases or sales ( - ) during period'
1 Estimated total
2 Foreign countries
24,294
39,288
13,973
-10,890
3,925
15,203
507
l,853 r
12,995 r
r
12,884r
-891
2,501
269
-729
-971
34
1,385
856
1,657
727
37,935
24,091
13,585
-10,748
5,055
14,584
696
1,592
-875
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
19,625
1,985
2,076
-2,959
-804
488
24,184
-5,345
562
-2,311
1,218
-9,977
-515
1,421
-1,501
6,266
777
11,252
6,167
334
543
-501
259
2,253
1,423
1,856
927
-5,917
207
1,209
137
53
-209
-8,201
887
-1,119
3,500
-205
1,176
-506
47
448
833
1,707
-342
-841
22
-750
206
141
573
-1,900
867
1,358
499
-65
571
-189
-31
-70
-412
695
846
114
-63
2,327
52
-4
313
-1,888
-623
32
3,552
128
-1,055
418
229
555
2,455
822
168r
12
13
14
15
16
17
18
19
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Asia
Japan
Africa
Other
-3,222
539
-1,956
-1,805
23,517
9,817
1,103
-3,650
-4,692
389
-5,925
844
20,532
17,070
1,156
-1,846
7,806
-30
1,772
6,064
-890
-1,607
-273
-152
-3,311
32
-1,700
-1,643
-574
-1,809
616
-443
3,701
-102
676
3,127
-2,034
156
74
156
2,070
19
-36
2,087
11,771
5,661
35
191
-4,830
56
-1,061
-3,825
4,029
649
115
37
3,677 r
-358r
3,118
917
-2,152
-3,074
-135
56
7,512
235
2,860
4,417
1,191
-1,403
-120
581
-3,383
93
-4,206
730
71
2,870
-18
-789
1,353
1,018
533
203
-302
654
388
517
86
-142
-99
18
-1,130
-874
-23
619
855
40
-189
124
261
455
7
lllr
116
16
61
-37
37,935
6,876
31,059
24,091
1,272
22,819
13,585
3,446
10,139
-10,748
3,181
-13,929
5,055
1,619
3,436
14,584
6,223
8,361
696
3,637
-2,941
l,592 r
4,284 r
-2,692
12,884r
4,045
8,839 r
-891
-4,883
3,992
4,317
11
-8,836
-5
-585
0
-980
0
-820
0
-6
0
84
-9
20 Nonmonetary international and regional organizations
International
21
22
Latin American regional
-1
MEMO
23 Foreign countries
24
Official institutions
Other foreign
25
Oil-exporting countries
2
26 Middle E a s t
27
1. Official and private transactions in marketable U.S. Treasury securities
having an original maturity of more than one year. Data are based on monthly
transactions reports. Excludes nonmarketable U.S. Treasury bonds and notes
held by official institutions of foreign countries.
-1,518
0
R
900
0
33
0
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
3.26
Rates
A65
DISCOUNT RATES OF FOREIGN CENTRAL BANKS1
P e r c e n t per year
Country
Country
4.75
4.50
6.59
5.25
5.40
May
May
May
May
May
1994
1994
1994
1994
1994
May 1994
May 1994
Sept. 1993
May 1994
4.5
7.0
1.75
4.5
Germany...
Italy
Japan
Netherlands
I. 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
Month
effective
Month
effective
Month
effective
Austria . .
Belgium .
Canada..
Denmark
France"..
Rate on May 31, 1994
Rate on May 31, 1994
Rate on May 31, 1994
Country
4.75
3.5
12.0
Norway
Switzerland . . . .
United Kingdom
Feb. 1994
Apr. 1994
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
P e r c e n t per y e a r , a v e r a g e s o f daily
figures
1993
Type or country
1
2
3
4
5
6
7
8
9
10
Eurodollars
United Kingdom
Canada
Germany
Switzerland
Netherlands . . . .
France
Italy
Belgium
Japan
5.86
11.47
9.07
9.15
8.01
9.19
9.49
12.04
9.30
7.33
3.70
9.56
6.76
9.42
7.67
9.25
10.14
13.91
9.31
4.39
3.18
5.88
5.14
7.17
4.79
6.73
8.30
10.09
8.10
2.96
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.
3.36
5.52
4.34
6.20
4.44
5.85
6.56
8.94
7.93
2.31
Dec.
Jan.
Feb.
Mar.
Apr.
May
3.26
5.29
4.09
5.99
4.10
5.50
6.39
8.56
7.03
2.06
3.15
5.34
3.89
5.76
3.90
5.12
6.19
8.38
6.88
2.13
3.43
5.15
3.89
5.78
4.04
5.19
6.18
8.42
6.39
3.75
5.12
4.45
5.73
3.99
5.23
6.11
8.36
6.10
2.26
4.00
5.14
6.07
5.48
3.96
5.22
5.89
8.07
5.84
2.26
4.51
5.13
6.38
5.07
3.94
5.04
5.52
7.76
5.27
2.17
2.21
A66
3.28
International Statistics • July 1994
FOREIGN E X C H A N G E RATES'
C u r r e n c y units per dollar e x c e p t a s n o t e d
1993
Country/currency unit
1991
1992
Dec.
1
2
3
4
5
6
7
8
9
10
Australia/dollar
Austria/schilling
Belgium/franc
Canada/dollar
China, P.R./yuan
Denmark/krone
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
11
12
13
14
15
16
17
18
19
20
Hong Kong/dollar
India/rupee
Ireland/pound"
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar"
Norway/krone
Portugal/escudo
21
22
23
24
25
26
27
28
29
30
Singapore/dollar
South Africa/rand
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound"
1994
1993
Jan.
Feb.
Mar.
Apr.
May
77.872
11.686
34.195
1.1460
5.3337
6.4038
4.0521
5.6468
1.6610
182.63
73.521
10.992
32.148
1.2085
5.5206
6.0372
4.4865
5.2935
1.5618
190.81
67.993
11.639
34.581
1.2902
5.7795
6.4863
5.7251
5.6669
1.6545
229.64
67.364
12.025
35.694
1.3308
5.8210
6.7042
5.7602
5.8477
1.7105
245.51
69.608
12.252
36.206
1.3173
8.7219
6.7697
5.7004
5.9207
1.7426
250.29
71.611
12.200
35.768
1.3424
8.7249
6.7668
5.5930
5.8955
1.7355
250.48
71.087
11.896
34.862
1.3644
8.7241
6.6296
5.5436
5.7647
1.6909
246.71
71.565
11.948
34.979
1.3830
8.7251
6.6642
5.4997
5.8170
1.6984
249.08
72.433
11.651
34.108
1.3808
8.6859
6.4857
5.4194
5.6728
1.6565
245.41
7.7712
22.712
161.39
1,241.28
134.59
2.7503
1.8720
57.832
6.4912
144.77
7.7402
28.156
170.42
1,232.17
126.78
2.5463
1.7587
53.792
6.2142
135.07
7.7357
31.291
146.47
1,573.41
111.08
2.5738
1.8585
54.127
7.0979
161.08
7.7245
31.440
141.82
1,687.17
109.91
2.5737
1.9162
55.631
7.4211
174.58
7.7251
31.440
143.03
1,699.45
111.44
2.7160
1.9516
56.263
7.5064
176.04
7.7353
31.449
141.91
1,685.96
106.30
2.7624
1.9464
57.436
7.4885
175.15
7.7268
31.415
143.40
1,666.63
105.10
2.7171
1.9006
57.093
7.3419
174.00
7.7269
31.391
143.42
1,626.07
103.48
2.6887
1.9074
56.908
7.3680
173.54
7.7262
31.375
147.12
1,594.56
103.75
2.6169
1.8597
58.347
7.1789
171.15
1.7283
2.7633
736.73
104.01
41.200
6.0521
1.4356
26.759
25.528
176.74
1.6294
2.8524
784.58
102.38
44.013
5.8258
1.4064
25.160
25.411
176.63
1.6158
3.2729
805.75
127.48
48.205
7.7956
1.4781
26.416
25.333
150.16
1.5975
3.3788
812.57
140.42
49.322
8.3501
1.4634
26.768
25.460
149.13
1.6037
3.4107
813.55
143.04
49.460
8.1184
1.4716
26.495
25.543
149.23
1.5873
3.4520
812.24
141.08
49.113
7.9869
1.4565
26.440
25.382
147.92
1.5819
3.4586
810.69
138.78
48.931
7.9156
1.4292
26.414
25.325
149.19
1.5628
3.5789
811.71
138.14
48.925
7.8850
1.4383
26.389
25.268
148.23
1.5464
3.6346
809.79
136.62
49.067
7.7181
1.4125
26.792
25.212
150.42
93.18
95.73
96.54
95.79
94.35
MEMO
31 United States/dollar 1
89.84
86.61
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
94.39
92.79
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
June 1994
Page
A76
Issue
Page
SPECIAL TABLES—Quarterly 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
August
November
February
May
1993
1993
1994
1994
A70
A70
A70
A68
Terms of lending at commercial banks
May 1993
August 1993
November 1993
February 1994
August
November
February
May
1993
1993
1994
1994
A76
A76
A76
A74
Assets and liabilities of U.S. branches and agencies of foreign banks
March 31, 1993
June 30, 1993
September 30, 1993
December 31, 1993
August
November
February
May
1993
1993
1994
1994
A80
A80
A80
A78
Pro forma balance sheet and income statements for priced service operations
June 30, 1991
September 30, 1991
March 30, 1992
June 30, 1992
November
January
August
October
1991
1992
1992
1992
A80
A70
A80
A70
Assets and liabilities of life insurance companies
June 30, 1991
September 30, 1991
December 31, 1991
September 30, 1992
December
May
August
March
1991
1992
1992
1993
A79
A81
A83
A71
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, 1 8 - 2 2
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
B A N K E R S acceptances, 10, 22, 26
Bankers balances, 1 8 - 2 2 . (See also Foreigners)
Bonds (See also U.S. government securities)
N e w issues, 35
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, 4 6
Capital accounts
Federal Reserve Banks, 11
Central banks, discount rates, 65
Certificates of deposit, 26
Commercial and industrial loans
Commercial banks, 21
Weekly reporting banks, 2 1 - 2 3
Commercial banks
Assets and liabilities, 1 8 - 2 2
Commercial and industrial loans, 1 8 - 2 3
Consumer loans held, by type and terms, 39
Deposit interest rates of insured, 16
Loans sold outright, 21
Real estate mortgages held, by holder and
property, 38
Time and savings deposits, 4
Commercial paper, 24, 26, 36
Condition statements (See Assets and liabilities)
Construction, 45, 49
Consumer installment credit, 39
Consumer prices, 45, 46
Consumption expenditures, 52, 53
Corporations
Nonfinancial, assets and liabilities, 35
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
Demand deposits
Banks, by classes, 1 8 - 2 3
securities)
Demand deposits—Continued
Ownership by individuals, partnerships, and
corporations, 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, 1 8 - 2 2 , 2 4
Federal Reserve Banks, 5, 11
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, 28, 33
Federal funds, 7, 19, 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, 51
Flow of funds, 40, 42, 43, 4 4
Foreign banks, assets and liabilities of U.S. branches and
agencies, 22, 23
Foreign currency operations, 11
Foreign deposits in U.S. banks, 5, 11, 21, 22
Foreign exchange rates, 66
Foreign trade, 5 4
Foreigners
Claims on, 55, 58, 59, 60, 6 2
Liabilities to, 22, 54, 55, 56, 61, 63, 6 4
A69
GOLD
Certificate account, 11
Stock, 5, 5 4
Government National Mortgage Association, 33, 37, 38
Gross domestic product, 51
HOUSING, new and existing units, 49
INCOME, personal and national, 45, 5 1 , 5 2
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, 66
Money and capital markets, 26
Mortgages, 37
Prime rate, 25
International capital transactions of United States, 5 3 - 6 5
International organizations, 55, 56, 58, 61, 6 2
Inventories, 51
Investment companies, issues and assets, 35
Investments (See also specific types)
Banks, by classes, 1 8 - 2 3
Commercial banks, 4, 1 8 - 2 3
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, 1 8 - 2 3
Commercial banks, 4, 1 8 - 2 3
Federal Reserve Banks, 5, 6, 8, 11, 12
Financial institutions, 38
Insured or guaranteed by United States, 37, 38
R E A L estate loans
Banks, by classes, 21, 22, 38
Terms, yields, and activity, 37
Type of holder and property mortgaged, 38
Repurchase agreements, 7, 2 1 - 2 3
Reserve requirements, 9
Reserves
Commercial banks, 18
Depository institutions, 4, 5, 6, 13
Federal Reserve Banks, 11
U.S. reserve assets, 5 4
Residential mortgage loans, 37
Retail credit and retail sales, 39, 40, 45
SAVING
Flow of funds, 40, 42, 43, 4 4
National income accounts, 51
Savings and loan associations, 38, 39, 4 0
Savings banks, 38, 39
Savings deposits (See Time and savings deposits)
Securities (See also specific
types)
Federal and federally sponsored credit agencies, 33
Foreign transactions, 63
N e w issues, 34
Prices, 27
Special drawing rights, 5, 11, 53, 5 4
State and local governments
Deposits, 21, 22
Holdings of U.S. government securities, 30
N e w security issues, 3 4
Ownership of securities issued by, 21, 2 2
Rates on securities, 26
Stock market, selected statistics, 27
Stocks (See also Securities)
N e w issues, 34
Prices, 27
Student Loan Marketing Association, 33
TAX receipts, federal, 29
MANUFACTURING
Capacity utilization, 4 6
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, 4 9
Monetary and credit aggregates, 4, 13
Money and capital market rates, 2 6
Money stock measures and components, 4, 14
Mortgages (See Real estate loans)
Mutual funds, 35
Mutual savings banks (See Thrift institutions)
NATIONAL defense outlays, 29
National income, 51
OPEN market transactions, 10
PERSONAL income, 5 2
Prices
Consumer and producer, 45, 50
Stock market, 27
Prime rate, 25
Producer prices, 45, 50
Production, 45, 47
Profits, corporate, 35
Thrift institutions, 4. (See also Credit unions and Savings and
loan associations)
Time and savings deposits, 4, 14, 16, 1 8 - 2 3
Trade, foreign, 5 4
Treasury cash, Treasury currency, 5
Treasury deposits, 5, 11, 28
Treasury operating balance, 28
UNEMPLOYMENT, 45
U.S. government balances
Commercial bank holdings, 1 8 - 2 3
Treasury deposits at Reserve Banks, 5, 11, 28
U.S. government securities
Bank holdings, 1 8 - 2 3 , 30
Dealer transactions, positions, and financing, 32
Federal Reserve Bank holdings, 5, 11, 12, 30
Foreign and international holdings and
transactions, 11, 30, 6 4
Open market transactions, 10
Outstanding, by type and holder, 28, 3 0
Rates, 25
U.S. international transactions, 5 3 - 6 6
Utilities, production, 48
V E T E R A N S Administration, 37, 38
WEEKLY reporting banks, 2 2 - 2 4
Wholesale (producer) prices, 45, 5 0
YIELDS (See Interest rates)
A70
Federal Reserve Board of Governors
and Official Staff
Chairman
A L A N GREENSPAN,
EDWARD W . KELLEY, JR.
JOHN P. LAWARE
OFFICE OF BOARD MEMBERS
DIVISION
JOSEPH R . COYNE, Assistant
to the
Board
EDWIN M . TRUMAN, Staff
DONALD J. WINN, Assistant
to the
Board
LARRY J. PROMISEL, Senior Associate
Director
CHARLES J. SIEGMAN, Senior Associate
Director
DALE W. HENDERSON, Associate
Director
THEODORE E. ALLISON, Assistant to the Board for Federal
Reserve System Affairs
LYNN S. FOX, Deputy Congressional Liaison
WINTHROP P. HAMBLEY, Special Assistant to the Board
BOB STAHLY MOORE, Special Assistant to the Board
DIANE E. WERNEKE, Special Assistant to the Board
OF INTERNATIONAL
FINANCE
Director
DAVID H . HOWARD, Senior
Adviser
DONALD B . ADAMS, Assistant
Director
PETER HOOPER III, Assistant
Director
KAREN H. JOHNSON, Assistant
Director
RALPH W . SMITH, JR., Assistant
Director
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
DIVISION
OF RESEARCH
MICHAEL J. PRELL,
AND
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
OFFICE
OF THE
WILLIAM W . WILES,
Secretary
JENNIFER J. JOHNSON, Associate
Secretary
BARBARA R . LOWREY, Associate
Secretary
DON E. KLINE, Associate
JOHN REA, Assistant
Director
Director
WILLIAM A . RYBACK, Associate
Director
FREDERICK M. STRUBLE, Associate
Director
HERBERT A. BIERN, Deputy Associate Director
ROGER T. COLE, Deputy Associate Director
JAMES I. GARNER, Deputy Associate Director
HOWARD A . AMER, Assistant
Director
GERALD A . EDWARDS, JR., Assistant
JAMES D . GOETZINGER, Assistant
Director
Director
STEPHEN A . RHOADES, Assistant
Director
STEPHEN C . SCHEMERING, Deputy
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
DIVISION OF BANKING
SUPERVISION AND
REGULATION
RICHARD SPILLENKOTHEN,
Director
THOMAS D . SIMPSON, Associate
SECRETARY
Director
Director
STATISTICS
Director
Director
CHARLES S. STRUCKMEYER, Assistant
ALICE PATRICIA WHITE, Assistant
JOYCE K. ZICKLER, Assistant
JOHN J. MINGO, Senior
GLENN B . CANNER,
Director
Director
Director
Adviser
Adviser
LEVON H . GARABEDIAN, Assistant
Director
(Administration )
DIVISION OF MONETARY AFFAIRS
DONALD L. KOHN,
Director
JAMES V. HOUPT, Assistant
Director
DAVID E. LINDSEY, Deputy Director
BRIAN F MADIGAN, Associate
Director
RICHARD D. PORTER, Deputy Associate
Director
JACK P. JENNINGS, Assistant
Director
VINCENT R. REINHART, Assistant
STEPHEN M . HOFFMAN, JR., Assistant
LAURA M . HOMER, Assistant
Director
MICHAEL G . MARTINSON, Assistant
RHOGER H PUGH, Assistant
Director
Director
Director
NORMAND R.V. BERNARD, Special Assistant to the Board
Director
SIDNEY M . SUSSAN, Assistant
Director
MOLLY S. WASSOM, Assistant
Director
DIVISION OF
CONSUMER
AND COMMUNITY
AFFAIRS
WILLIAM SCHNEIDER, Project
Director,
GRIFFITH L. GARWOOD,
National Information
Center
Director
GLENN E. LONEY, Associate
DOLORES S. SMITH, Associate
Director
Director
MAUREEN P. ENGLISH, Assistant
IRENE SHAWN MCNULTY, Assistant
Director
Director
A71
LAWRENCE B . LINDSEY
S U S A N M . PHILLIPS
OFFICE OF
STAFF DIRECTOR FOR MANAGEMENT
DIVISION OF RESERVE BANK
AND PAYMENT
SYSTEMS
S. DAVID FROST, Staff
CLYDE H . FARNSWORTH, JR.,
Director
PORTIA W. THOMPSON, Equal Employment
Programs Officer
Opportunity
Director
DAVID L. ROBINSON, Deputy Director (Finance and
Control)
CHARLES W. BENNETT, Assistant
Director
DIVISION OF HUMAN RESOURCES
MANAGEMENT
JACK DENNIS, JR., Assistant
DAVID L. SHANNON,
JEFFREY C . MARQUARDT, Assistant
Director
JOHN R. WEIS, Associate
ANTHONY V. DIGIOIA, Assistant
Director
JOSEPH H . HAYES, JR., Assistant
FRED HOROWITZ, Assistant
OFFICE
OF THE
Director
Director
GEORGE E. LIVINGSTON,
Controller
STEPHEN J. CLARK, Assistant Controller (Programs and
Budgets)
DARRELL R. PAULEY, Assistant Controller (Finance)
DIVISION OF SUPPORT SERVICES
ROBERT E. FRAZIER,
Director
GEORGE M . LOPEZ, Assistant
Director
DAVID L. WILLIAMS, Assistant
Director
DIVISION OF INFORMATION
MANAGEMENT
STEPHEN R . MALPHRUS,
RESOURCES
Director
MARIANNE M. EMERSON, Assistant Director
Po KYUNG KIM, Assistant Director
RAYMOND H . MASSEY, Assistant
EDWARD T. MULRENIN, Assistant
DAY W. RADEBAUGH, JR., Assistant
Director
Director
Director
ELIZABETH B . RIGGS, Assistant
Director
RICHARD C . STEVENS, Assistant
Director
Director
Director
Director
LOUISE L. ROSEMAN, Assistant
Director
FLORENCE M . YOUNG, Assistant
OFFICE
CONTROLLER
Director
EARL G. HAMILTON, Assistant
JOHN H. PARRISH, Assistant
Director
OPERATIONS
Director
OF THE INSPECTOR
BRENT L. BOWEN, Inspector
GENERAL
General
DONALD L. ROBINSON, Assistant Inspector General
BARRY R. SNYDER, Assistant Inspector General
A72
Federal Reserve Bulletin • July 1994
Federal Open Market Committee
and Advisory Councils
FEDERAL OPEN MARKET COMMITTEE
MEMBERS
A L A N GREENSPAN, Chairman
WILLIAM J. MCDONOUGH, Vice
J. ALFRED BROADDUS, JR.
EDWARD W . KELLEY, JR.
SUSAN M . PHILLIPS
ROBERT P. FORRESTAL
JOHN P. LAWARE
ROBERT T. PARRY
JERRY L . JORDAN
LAWRENCE B . LINDSEY
Chairman
ALTERNATE MEMBERS
THOMAS M . HOENIG
THOMAS C . MELZER
JAMES H . OLTMAN
SILAS KEEHN
STAFF
DONALD L. KOHN, Secretary
and
NORM AND R.V. BERNARD, Deputy
JOHN M. DAVIS, Associate
Economist
MARVIN S. GOODFRIEND, Associate
Economist
DAVID E. LINDSEY, Associate
Economist
LARRY J. PROMISEL, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
THOMAS D. SIMPSON, Associate
Economist
DAVID J. STOCKTON, Associate
Economist
SHEILA L. TSCHINKEL, Associate
Economist
Economist
Secretary
JOSEPH R. COYNE, Assistant
Secretary
GARY P. GILLUM, Assistant
Secretary
J. VIRGIL MATTINGLY, JR., General
Counsel
ERNEST T. PATRIKIS, Deputy General Counsel
MICHAEL J. PRELL,
EDWIN M . TRUMAN,
Economist
Economist
JACK H. BEEBE, Associate
Economist
JOAN E. LOVETT, Manager for Domestic Operations, System Open Market Account
PETER R. FISHER, Manager for Foreign Operations, System Open Market Account
FEDERAL ADVISORY COUNCIL
RICHARD M . ROSENBERG,
President
EUGENE A. MILLER, Vice
President
EUGENE A. MILLER, Seventh District
ANDREW B. CRAIG, III, Eighth District
JOHN F. GRUNDHOFER, Ninth District
DAVID A. RISMILLER, Tenth District
CHARLES R. HRDLICKA, Eleventh District
RICHARD M. ROSENBERG, Twelfth District
MARSHALL N. CARTER, First District
J. CARTER BACOT, Second District
ANTHONY P. TERRACCIANO, Third District
FRANK V. CAHOUET, Fourth District
RICHARD G. TILGHMAN, Fifth District
CHARLES E. RICE, Sixth District
HERBERT V. PROCHNOW, Secretary
WILLIAM J. KORSVIK,
JAMES ANNABLE,
Emeritus
Co-Secretary
Co-Secretary
A73
CONSUMER
ADVISORY
COUNCIL
JEAN POGGE, Chicago, Illinois, Chairman
JAMES L. WEST, Tijeras, New Mexico, Vice Chairman
BARRY A . ABBOTT, S a n F r a n c i s c o , C a l i f o r n i a
RONALD HOMER, B o s t o n , M a s s a c h u s e t t s
JOHN R . ADAMS, P h i l a d e l p h i a , P e n n s y l v a n i a
THOMAS L. HOUSTON, D a l l a s , T e x a s
JOHN A . BAKER, A t l a n t a , G e o r g i a
KATHARINE W. MCKEE, Durham, North Carolina
MULUGETTA BIRRU, P i t t s b u r g h , P e n n s y l v a n i a
EDMUND MIERZWINSKI, W a s h i n g t o n , D . C .
DOUGLAS D . BLANKE, St. P a u l , M i n n e s o t a
A N N E B . SHLAY, P h i l a d e l p h i a , P e n n s y l v a n i a
GENEVIEVE BROOKS, B r o n x , N e w Y o r k
JOHN V. SKINNER, I r v i n g , T e x a s
CATHY CLOUD, W a s h i n g t o n , D . C .
REGINALD J. SMITH, Kansas City, Missouri
ALVIN J. COWANS, O r l a n d o , F l o r i d a
LOWELL N . SWANSON, P o r t l a n d , O r e g o n
MICHAEL D . EDWARDS, Y e l m , W a s h i n g t o n
JOHN E. TAYLOR, W a s h i n g t o n , D . C .
MICHAEL FERRY, St. L o u i s , M i s s o u r i
MICHAEL W . TIERNEY, W a s h i n g t o n , D . C .
ELIZABETH G . FLORES, L a r e d o , T e x a s
LORRAINE VANETTEN, T r o y , M i c h i g a n
NORMA L. FREIBERG, N e w O r l e a n s , L o u i s i a n a
GRACE W . WEINSTEIN, E n g l e w o o d , N e w J e r s e y
LORI GAY, LOS Angeles, California
LILY K. YAO, Honolulu, Hawaii
GARY S . HATTEM, N e w Y o r k , N e w Y o r k
ROBERT O . ZDENEK, G r e e n w i c h , C o n n e c t i c u t
THRIFT INSTITUTIONS
ADVISORY
COUNCIL
BEATRICE D'AGOSTINO, Somerville, New Jersey, President
CHARLES JOHN KOCH, Cleveland, Ohio, Vice President
MALCOLM E . COLLIER, L a k e w o o d , C o l o r a d o
ROBERT MCCARTER, N e w B e d f o r d , M a s s a c h u s e t t s
WILLIAM A . COOPER, M i n n e a p o l i s , M i n n e s o t a
NICHOLAS W. MITCHELL, JR., Winston-Salem, North Carolina
PAUL L. ECKERT, D a v e n p o r t , I o w a
STEPHEN W. PROUGH, I r v i n e , C a l i f o r n i a
GEORGE R . GLIGOREA, S h e r i d a n , W y o m i n g
STEPHEN D . TAYLOR, M i a m i , F l o r i d a
KERRY KILLINGER, S e a t t l e , W a s h i n g t o n
JOHN M . TIPPETS, D F W A i r p o r t , T e x a s
A74
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THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS.
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Consumer Handbook on Adjustable Rate Mortgages
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Series on the Structure of the Federal Reserve System
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A Consumer's Guide to Mortgage Lock-Ins
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Home Mortgages: Understanding the Process and Your Right
to Fair Lending
Making Deposits: When Will Your Money Be Available?
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When Your Home is on the Line: What You Should Know
About Home Equity Lines of Credit
A75
STAFF STUDIES: Only Summaries Printed in the
1 5 6 . INTERNATIONAL TRENDS FOR U . S . BANKS AND BANKING
BULLETIN
Studies and papers on economic and financial subjects that are
of general interest. Requests to obtain single copies of the full
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MARKETS, by James V. Houpt. May 1988. 47 pp.
1 5 7 . M 2 PER UNIT OF POTENTIAL G N P AS AN ANCHOR FOR
THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D.
Porter, and David H. Small. April 1989. 28 pp.
1 5 8 . THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIREMENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE
PRODUCTS, by Mark J. Warshawsky with the assistance of
Dietrich Earnhart. September 1989. 23 pp.
Staff Studies 1-145 are out of print.
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 4 6 . THE ROLE OF THE PRIME RATE IN THE PRICING OF
BUSINESS LOANS BY COMMERCIAL BANKS, 1 9 7 7 - 8 4 , b y
Thomas F. Brady. November 1985. 25 pp.
1 4 7 . REVISIONS IN THE MONETARY SERVICES (DIVISIA) INDEXES OF THE MONETARY AGGREGATES, b y H e l e n T. Farr
and Deborah Johnson. December 1985. 42 pp.
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 4 8 . T H E MACROECONOMIC AND SECTORAL EFFECTS OF THE
ECONOMIC RECOVERY TAX ACT: SOME SIMULATION
1980-90, by Margaret Hastings Pickering. May 1991.
21pp.
RESULTS, by Flint Bray ton and Peter B. Clark. December
1985. 17 pp.
1 6 2 . EVIDENCE ON THE SIZE OF BANKING MARKETS FROM
MORTGAGE LOAN RATES IN TWENTY CITIES, b y S t e p h e n
1 4 9 . THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN
BANKING BEFORE AND AFTER ACQUISITION, b y S t e p h e n
1 6 3 . CLEARANCE AND SETTLEMENT IN U . S . SECURITIES MAR-
A. Rhoades. April 1986. 32 pp.
1 5 0 . STATISTICAL COST ACCOUNTING MODELS IN BANKING:
A REEXAMINATION AND AN APPLICATION, b y J o h n T.
Rose and John D. Wolken. May 1986. 13 pp.
FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Alice
P. White, Paul F. O'Brien, and Mary M. McLaughlin.
January 1987. 30 pp.
A
REVIEW OF THE LITERATURE, by Mark J. Warshawsky.
April 1987. 18 pp.
1 5 3 . STOCK MARKET VOLATILITY, b y C a r o l y n D . D a v i s a n d
Alice P. White. September 1987. 14 pp.
154.
KETS, by Patrick Parkinson, Adam Gilbert, Emily Gollob,
Lauren Hargraves, Richard Mead, Jeff Stehm, and Mary
Ann Taylor. March 1992. 37 pp.
1 6 4 . THE 1 9 8 9 - 9 2 CREDIT CRUNCH FOR REAL ESTATE, b y
1 5 1 . RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRICING
1 5 2 . DETERMINANTS OF CORPORATE MERGER ACTIVITY:
A. Rhoades. February 1992. 11 pp.
James T. Fergus and John L. Goodman, Jr. July 1993.
20 pp.
1 6 5 . THE DEMAND FOR TRADE CREDIT: A N INVESTIGATION OF
MOTIVES FOR TRADE CREDIT USE BY SMALL BUSINESSES,
by Gregory E. Elliehausen and John D. Wolken. September 1993. 18 pp.
1 6 6 . THE ECONOMICS OF THE PRIVATE PLACEMENT MARKET,
by Mark Carey, Stephen Prowse, John Rea, and Gregory
Udell. January 1994. I l l pp.
T H E EFFECTS ON CONSUMERS AND CREDITORS OF
PROPOSED CEILINGS ON CREDIT CARD INTEREST RATES,
by Glenn B. Canner and James T. Fergus. October 1987.
26 pp.
1 5 5 . THE FUNDING OF PRIVATE PENSION PLANS, b y M a r k J.
Warshawsky. November 1987. 25 pp.
REPRINTS OF BULLETIN ARTICLES
A limited number of reprints of Bulletin articles are available.
One reprint of an article will be sent on request to Publications
Services.
A76
Maps of the Federal Reserve System
9
BOSTON
MINNEAPOLIS!
7
•
NEW YORK
CHICAGO!
I SAN FRANCISCO
10
CLEVELAND
4
KANSAS C I T Y B
RICISIOND
S R LOUIS
11
I PHILADELPHIA
6 .
ATLANTA
DALLAS
LEGEND
Both pages
• Federal Reserve Bank city
• Board of Governors of the Federal
Reserve System, Washington, D.C.
Facing page
• Federal Reserve Branch city
— Branch boundary
NOTE
The Federal Reserve officially identifies Districts
by number and Reserve Bank city (shown on both
pages) and by letter (shown on the facing page).
In the 12th District, the Seattle Branch serves
Alaska, and the San Francisco Bank serves Hawaii.
The System serves commonwealths and territories as follows: the New York Bank serves the
Commonwealth of Puerto Rico and the U.S. Virgin
Islands; the San Francisco Bank serves American
Samoa, Guam, and the Commonwealth of the
Northern Mariana Islands. The Board of Governors
revised the branch boundaries of the System most
recently in December 1991.
All
1-A
2-B
3-C
5_E
4-D
Baltimore
Pittsburgh
NY
VT
CT
NH
• Cincinnati
/• \
Buffalo
MAH
CT
Charlotte
/
NJ
VB
NY
N E W YORK
BOSTON
6-F
PHILADELPHIA
7-G
• Nashville
RICHMOND
CLEVELAND
8-H
TN
Birmingham
W1
MO
•
Ml
J " *
"
Q
'
n. •
Jacksonville
New Orleans
^/ KY Louisville
Detroit •
IA
-
IN
4
LtalfS
Rock f
JMiami
FL
• Memphis
MS
ST. LOUIS
CHICAGO
ATLANTA
L/TN
9-1
1 ND
• Helena
MM
1
MI
'WSUBsH^lfsmmttt'
•
/ SD
Wl
If^mm&a
MINNEAPOLIS
10-J
12-L
CO
Omaha •
L
> MO
•
Denver
NM
r-L
Oklahoma• City
KANSAS CITY
11-K
Salt Lake City
• Los Angeles
San Antonio (
HAWAII
DALLAS
SAN FRANCISCO
@FedFRASER